Austin v. U.S. Bank of Washington
| Decision Date | 14 February 1994 |
| Docket Number | No. 14986-9-II,14986-9-II |
| Citation | 73 Wn.App. 293,869 P.2d 404 |
| Court | Washington Court of Appeals |
| Parties | Susan F. AUSTIN, Sally F. Jones, and William W. Fogg, Respondent, v. U.S. BANK OF WASHINGTON, Appellant. |
James Rollen Hermsen, Miller, Nash, Wiener, Hager & Carlsen, Seattle, for appellant.
Franklin K. Fogg, Tacoma, for respondent.
U.S. Bank of Washington appeals a judgment of the Pierce County Superior Court in favor of Susan F. Austin, Sally Fogg Jones and William W. Fogg on their claim that U.S. Bank, acting as a trustee, breached a fiduciary duty it owed to them, as remainderpersons of a trust established by their grandfather, by wrongfully disbursing funds from the trust. Austin, Jones and Fogg cross-appeal, contending that the trial court erred in failing to include, as damages, an amount for the interest that the wrongfully disbursed funds would have earned if retained in the trust corpus. They also assert that the trial court erred in determining the amount of attorney's fees and costs the Bank should be required to pay to them by way of judgment. We affirm in part and reverse in part.
In his last will, James M. Wade devised his entire estate to Old National Bank of Washington, 1 in trust. The will provided, in part, for payments by the trustee to Wade's sister, Mrs. W.D. Lawrence, as follows:
The trustee shall pay ... $100.00 per month to my sister, MRS. W.D. LAWRENCE, of Trenton, Tennessee for the remainder of her natural life, and such additional sums therefrom as may be required for any emergency or need, in the sole discretion of my trustee.
In addition the will provided that the remainder of the net income of the trust was to be paid out as follows:
To pay the remainder of the net income therefrom to or for the use and benefit of my daughter, SAMMIE WADE GRAHM, my granddaughter, SUSAN FOGG AUSTIN, my granddaughter, SALLY FOGG JONES, and my grandson, WILLIAM W. FOGG, as may be deemed advisable by my trustee for the maintenance and support of such persons. I expressly direct that such distribution shall be made to such persons only when they are in actual need of income for their maintenance, support and medical expenses and that the trustee shall take into consideration other income available to them, particular[l]y income from the ELOUISE D. WADE trust....
The trust was to terminate upon the death of Wade's daughter, Sammie Wade Graham, 2 at which time the corpus of the trust was to be divided into equal shares and distributed to Wade's grandchildren, Susan F. Austin, Sally F. Jones and William Fogg, the children of Sammie Wade Graham. 3
On December 10, 1979, Lawrence's attorney in Tennessee, Gayle Malone, wrote to U.S. Bank, asking that Lawrence's monthly payment from the trust be increased from $100 to $500 per month. Attached to Malone's letter was a letter from Lawrence's doctor stating that Lawrence had severe arthritis, diverticulitis, and a hiatal hernia. The doctor concluded:
In my opinion she needs some household help. Due to her physical ailments, age, and the fact that she does live alone makes it virtually impossible for her to meet all the problems that occur.
An assistant vice president of U.S. Bank responded to Malone's letter and indicated that the Bank did "not want to appear arbitrary", but that "it would help us if before approving this additional payment we had knowledge of her other sources of income and her expenses."
Malone responded to the Bank's letter on January 16, 1980 with another letter in which he outlined Lawrence's financial situation as follows:
Income per year Expenses per year
S.S. payments $1940.40 Dr. bills $2000.00
Payments from estate 1200.00 Hospitalization 1500.00
Dividends 5000.00 Food & Medicine 3000.00
Property Taxes 300.00
Utilities 1300.00
House maintenance 410.00
-------- --------
Total $8140.00 Total $8510.00
Malone indicated, further, that Lawrence's dividend income was "from stocks she inherited from another brother, Bruce Wade." Malone said that those stocks produced "dividend payments [which] fluctuate from $2000 to $5000 per year." Malone also stated that Lawrence's Medicare payments "have about reached the limitation of payment" and that "[t]he household help she has need of would eliminate most of the required hospitalization". Finally, Malone noted that Lawrence "is seventy-six years of age and has no relatives here or anyone to be attentive to her."
Relying upon Malone's letter, the Bank's Trust Administrative Committee 4 approved the $400 monthly increase sought by Malone on behalf of Lawrence. Several members of the Committee later testified that the $400 increase was considered permanent, and that no provision was made for further review because of Lawrence's advanced age and medical problems.
U.S. Bank sent monthly statements regarding the trust to Austin, Jones and Fogg, as well as to their mother, Sammie Wade Graham. Austin, Jones and Fogg all noted that the payment to Lawrence from the Trust had increased but they questioned the amount of the payments amongst themselves because they had an impression, largely due to "family lore", that Lawrence was wealthy and, thus, not needy. Although Austin, Jones and Fogg had had little contact with Lawrence, Jones had visited Lawrence in Tennessee in 1972 and concluded from that visit that Lawrence was financially "comfortable".
On January 10, 1986, Malone again wrote to U.S. Bank, on behalf of Lawrence, requesting an additional $500 per month increase for his client. Malone averred that although Lawrence's income was the same as in 1980, Lawrence had recently been hospitalized for a number of weeks and "[h]er required additional expense for medical and self care does now exceed $1000.00 per month." Again, Malone's letter was accompanied by a letter from Lawrence's doctor, which stated: "It is my opinion that Mrs. Lawrence is likely to have expenses in excess of $1000.00 per month for an indefinite period of time."
Relying upon these letters, U.S. Bank's trust committee approved the requested increase. This action brought the total payment to Lawrence from the trust up to $1,000 per month.
In early May of 1986, Fogg called U.S. Bank and expressed his disagreement with the Bank's decision to increase payments to Lawrence. Fogg indicated to U.S. Bank that it was his belief that Lawrence had "plenty of money." Austin also called the Bank, expressing similar concerns and indicating that she understood Lawrence to be "well off."
On September 15, 1988, Sammie Wade Graham died and, consequently, the trust was to be divided into equal shares and distributed to the grandchildren, Austin, Jones and Fogg, according to the terms of Wade's will. U.S. Bank asked Lawrence, who was now represented by attorney Richard Gossum, to provide detailed financial information to assist it in making a final distribution of the remaining trust corpus. 5 Gossum responded and described Lawrence's assets as follows: (1) $157,105.20 in Exxon stock; (2) $1,705 in Consolidated Natural Gas stock; (3) $6,156 in Citizens Bank stock; (4) $2,080 in Santa Fe Southern Pacific Corp. stock; (5) $93,277 in certificates of deposit; (6) $9,500 "Cash on Hand or in Banks"; and (7) a home valued at $35,000.
On October 17, 1988, Austin, Jones and Fogg requested information from U.S. Bank about the basis for its decision to increase Lawrence's payments. U.S. Bank responded by sending each of them a letter indicating its refusal to release any such information, claiming that the requested information was confidential and could only be released with Lawrence's consent. U.S. Bank's letter also expressed its intent to continue to pay Lawrence $1,000 per month by "creating an annuity", notwithstanding termination of the trust. It explained its decision was due in part to the fact that, according to the Bank's estimation of current health costs, Lawrence's assets would be completely depleted within 4 years.
On August 24, 1989, Austin, Jones and Fogg filed suit against U.S. Bank in Pierce County Superior Court, alleging that it breached a fiduciary duty it owed them, and was negligent in increasing Lawrence's monthly payments.
Both U.S. Bank and Austin, Jones and Fogg moved for summary judgment. U.S. Bank's motion, which was primarily based upon its assertion that the statute of limitations had run on the plaintiffs' claim, was denied. The motion made by Austin, Jones and Fogg was granted in part, the hearing judge concluding that U.S. Bank had abused its discretionary powers under the trust instrument by increasing the payments to Lawrence. In reaching that determination, the court said:
the objectives of the trust clearly stated were: One, to provide Mrs. Lawrence with $100 a month and, Two, in the sole discretion of the trustee to provide additional sums if required by any emergency or need. That discretion is premised or is conditioned upon a showing of emergency or need. I believe that a sufficient inquiry clearly was not made and that the trustee abused their discretionary powers in arbitrarily making these payments in the sense that they didn't make a reasonable or sufficient inquiry as to her ability to meet these expenses herself.
The hearing judge concluded, however, that questions of fact remained relative to the Bank's defense of lack of causation and its affirmative defense of the statute of limitations. In that regard, the trial court stated:
The burden of proof lies with the defendants as to: 1) whether plaintiff[']s claim is barred in whole or in part by the statute of limitations, and 2) defendant[']s claim that their failure to investigate Lucille Lawrence[']s need was...
To continue reading
Request your trial
-
Osborne v. Seymour
...and citation to authority to advise us of the appropriate grounds for an award of attorney fees and costs. Austin v. U.S. Bank of Wash., 73 Wash.App. 293, 313, 869 P.2d 404, review denied, 124 Wash.2d 1015, 880 P.2d 1005 (1994). This requirement is mandatory. Phillips Bldg. Co. v. An, 81 Wa......
-
Maytown Sand & Gravel, LLC v. Thurston Cnty.
...us of the appropriate grounds for an award of attorney fees as costs." Id. at 711 n.4, 952 P.2d 590 (citing Austin v. U.S. Bank of Wash., 73 Wash. App. 293, 313, 869 P.2d 404 (1994) ). Here, Maytown provided more than a single, generic sentence at the end of its brief. Maytown provided two ......
-
Wright v. Dave Johnson Ins. Inc.
...claim; defined as an amount capable of determination without recourse to opinion or discretion. Austin v. U.S. Bank of Washington, 73 Wash.App. 293, 312–13, 869 P.2d 404 (1994). Even in the dissolution context, where the trial court is authorized to impose an interest rate below the 12 perc......
-
Pruitt v. Douglas County
...outlined in RAP 18.1(b) is mandatory. Phillips Bldg. Co. v. An, 81 Wash.App. 696, 705, 915 P.2d 1146 (1996); Austin v. U.S. Bank of Wash., 73 Wash.App. 293, 313, 869 P.2d 404 (1994). And the showing here is not enough. Wilson Court Ltd. P'ship v. Tony Maroni's, Inc., 134 Wash.2d 692, 710 n.......
-
Table of Cases
...August v. U.S. Bancorp, 146 Wn.App. 328, 190 P.3d 86 (2008), review denied, 165 Wn.2d 1034 (2009): 13.1(3) Austin v. U.S. Bank of Wash., 73 Wn.App. 293, 869 P.2d 404, review denied, 124 Wn.2d 1015 (1994): 13.11(1) B____________________________________________________________________ Bachmei......
-
Table of Cases
...495 P.2d 686, review denied, 81 Wn.2d 1001 (1972): 12.5 Ault v. Blackman, 8 Wash. 624, 36 P. 694 (1894): 20.4(4)(c) Austin v. U.S. Bank, 73 Wn.App. 293, 869 P.2d 404, review denied, 124 Wn.2d 1015 (1994): 2.3(1)(a) Auwarter v. Kroll, 89 Wash. 347, 154 P. 438 (1916): 4.4(3) B _______________......
-
§2.3 - Trusts-Duties of Trustee While Holding Property
...(a) Duty of loyalty In general, a trustee's primary duty is to carry out the trustor's intent. Austin v. U.S. Bank, 73 Wn. App. 293, 869 P.2d 404, review denied, 124 Wn.2d 1015 (1994). That intent is determined by the terms of the trust instrument, if it exists. Id. Generally, if the trust......
-
§13.11 Establishing The Reasonableness of Attorney Fees and Costs
...431, 434, 949 P.2d 401 (1998). The award must be based on the record, not on mere estimation or conjecture. Austin v. U.S. Bank of Wash., 73 Wn.App. 293, 309-10, 869 P.2d 404, review denied, 124 Wn.2d 1015 (a) Documentation The attorney must provide documentation of work performed. Bowers v......