Beaudoin v. Davidson Trust Co.

• Decision Date: 01 November 2011
• Docket Number: No. 37828.,37828.
• Citation: 151 Idaho 701,263 P.3d 755
• Court: Idaho Supreme Court
• Parties: Virginia R. BEAUDOIN, Plaintiff–Appellant, v. DAVIDSON TRUST COMPANY, Defendant–Respondent.

151 Idaho 701

263 P.3d 755

Virginia R. BEAUDOIN, Plaintiff–Appellant,

v.DAVIDSON TRUST COMPANY, Defendant–Respondent.

No. 37828.

Supreme Court of Idaho, Coeur D'Alene, September 2011 Term.

Nov. 1, 2011.

John C. Mitchell, Lewiston, for appellant.

Randall Danskin, P.S., Spokane, Washington, for respondent. Keith D. Brown argued.

J. JONES, Justice.

This is an appeal from a summary judgment dismissing Virginia Beaudoin's breach of fiduciary duty claim against Davidson Trust Company, which stemmed from Davidson Trust's mistaken distribution of trust funds to Beaudoin when Beaudoin's two children were, in fact, the designated beneficiaries. Because we find that Davidson Trust owed Beaudoin no fiduciary duty at the time of the alleged breach, we affirm.

I.FACTUAL AND PROCEDURAL HISTORY

Virginia Beaudoin's mother, Geraldine Schneider, was trustor and Davidson Trust Company was trustee of a May 9, 1996 trust instrument entitled "2nd Amended And Restated Geraldine M. Schneider Revocable Living Trust." Upon Ms. Schneider's death, the trust property was to be divided into two equal shares for the lifetime use of her two daughters, Beaudoin and Margaret Van Dyke. Beaudoin's share was to be held in trust for her lifetime benefit, remainder to her appointee or estate. Van Dyke's share was also to be held in trust for her lifetime benefit,¹ remainder to "the surviving issue by right of representation of [Beaudoin]." The trust further provided that "[i]n the event that [Beaudoin's] issue are not surviving then to [Beaudoin]."

Beaudoin was admittedly knowledgeable about the trust provisions and was present when her mother gave instructions to her lawyer to amend the trust to name Beaudoin's children the remainder beneficiaries of Van Dyke's share. Beaudoin was also appointed Advisor to the Trust pursuant to the 1996 trust instrument, and Davidson Trust was required to obtain her consent regarding investment strategy, discretionary payments, loans, and in determining whether and when Schneider was incapable of handling her own affairs. Ms. Schneider also gave Beaudoin a durable power of attorney and, beginning in 1999, when Ms. Schneider was determined incompetent, Beaudoin used that authority to make annual gifts from the trust to herself, her sister, and her immediate family.

Schneider died on March 10, 2004, and by October 2006, Beaudoin had withdrawn her entire $374,346.87 share of the trust principal. Van Dyke died on March 30, 2007. At that time, Beaudoin had two children—Brooks and Brianna—whose contingent interest in Van Dyke's share vested, according to the trust, upon their survival of Van Dyke. However, Beaudoin spoke to a trust assistant for Davidson Trust, Jan Shelby, on March 31, 2007, and was allegedly told that she was the beneficiary of the remainder of Van Dyke's share. Although the parties' affidavits conflict on what exactly was said during that conversation, Beaudoin admitted in her deposition that she knew at the time that the children were the proper beneficiaries but thought it was Davidson Trust's duty to find that fact out.²

Beaudoin later consulted with Scott Baldwin, her financial advisor at D.A. Davidson & Co., about whether she could retire from her job as a cosmetologist based on the additional trust distribution, and he suggested a meeting with the trustee. Around the second week of April 2007, Beaudoin put in her notice of retirement at her workplace and worked her last day during the last week of April 2007. That same week, subsequent to her last day of work, Beaudoin and Baldwin met with J. Todd Edmonds—a vice president, trust officer, and branch manager of Davidson Trust—to discuss Beaudoin's retirement plans, and it was decided that she could retire.³ Davidson Trust thereafter made a partial distribution of the trust funds into one of Beaudoin's accounts. Beaudoin asserted that based on Davidson Trust's conduct, she retired, sold all her business supplies and inventory, booked a non-refundable vacation, took distributions from her account, and made monetary gifts to her children.

When the mistake was discovered, Beaudoin sued Davidson Trust, claiming breach of fiduciary duty, negligent representation, and infliction of emotional distress. She claimed damages for the costs she allegedly incurred in reliance on the mistaken designation. The district court granted summary judgment to Davidson Trust on all of Beaudoin's claims, finding in regard to the fiduciary duty claim—the only finding appealed—that no fiduciary relationship existed between the parties at the time of the alleged breach. The court reasoned:

Prior to Margaret's death, Beaudoin had exhausted her share of the Schneider Trust in 2006, thus, her status as a beneficiary ended at that time. Further, any remote contingent interest she may have held in Margaret's share ceased upon Margaret's death, when Brooks and Brianna's status as beneficiaries became fixed.

The court further found that Beaudoin showed no legal support for her claim that Davidson Trust assumed a fiduciary duty by treating her as if she was the designated beneficiary. Beaudoin timely appealed from the district court's final judgment.

II.ISSUES ON APPEAL

I. Whether the district court erred in granting summary judgment on the basis that no fiduciary duty is owed to a contingent beneficiary after the contingency has failed to occur?

II. Whether the district court erred in granting summary judgment on the basis that no fiduciary duty was assumed by Davidson Trust in this case?

III. Whether any fiduciary duty that Davidson Trust owed Beaudoin was breached?

III.DISCUSSION

A. Standard of Review

"This Court reviews a motion for summary judgment pursuant to the same standards as the district court." Mackay v. Four Rivers Packing Co., 145 Idaho 408, 410, 179 P.3d 1064, 1066 (2008). Summary judgment is appropriate where "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c). "[A]ll reasonable inferences that can be drawn from the record are to be drawn in favor of the nonmoving party," and disputed facts will be liberally construed in favor of the nonmoving party. Mackay, 145 Idaho at 410, 179 P.3d at 1066. "Summary judgment is appropriate where the nonmoving party bearing the burden of proof fails to make a showing sufficient to establish the existence of an element essential to that party's case." Id. This Court reviews questions of law de novo. Martin v. Camas County ex rel. Bd. of Comm'rs, 150 Idaho 508, 511, 248 P.3d 1243, 1246 (2011).

B. The district court did not err in granting summary judgment on Beaudoin's fiduciary duty claim because no fiduciary duty is owed to a contingent beneficiary once the contingency has failed to occur.

On appeal, Beaudoin first argues that although her status as lifetime beneficiary ended when she exhausted her trust share in October 2006, she remained a contingent beneficiary of her sister's share under the terms of the trust. Although she cites little legal support for her theory, she argues that as a contingent beneficiary, she was owed a fiduciary duty that survived Van Dyke's death and continued until her children actually accepted the trust distribution and the trust was terminated. Davidson Trust responds that even if a fiduciary duty was owed to Beaudoin after she exhausted her share, it terminated upon Van Dyke's death and, thus, no duty was owed at the time of the alleged breach.

Although we have held that a trustee indeed owes some fiduciary duty to a contingent beneficiary, Beaudoin's status as a contingent beneficiary was eliminated upon Van Dyke's death and, thus, no fiduciary duty was owed at the time of the alleged breach. To establish a claim for breach of fiduciary duty, the plaintiff must first establish that a fiduciary relationship existed at the time of the breach. Sorensen v. St. Alphonsus Reg'l Med. Ctr., Inc., 141 Idaho 754, 760, 118 P.3d 86, 92 (2005) ; Podolan v. Idaho Legal Aid Services, Inc., 123 Idaho 937, 946, 854 P.2d 280, 289 (Ct.App.1993). A fiduciary relationship exists when one party is "under a duty to act or to give advice for the benefit of the other upon a matter within the scope of the relation." Podolan, 123 Idaho at 946, 854 P.2d at 289 (citing RESTATEMENT (SECOND) OF TORTS S § 874 cmt. a (1979)). Whether a fiduciary relationship exists is a question of law. Hayden Lake Fire Protection Dist. v. Alcorn, 141 Idaho 388, 401, 111 P.3d 73, 86 (2005).

Although this Court has not specifically addressed the scope of a trustee's fiduciary duty to a contingent beneficiary, we have recognized that a residual beneficiary of a trust may have a sufficient interest to complain about actions that jeopardize its corpus. Taylor v. Maile, 142 Idaho 253, 258, 127 P.3d 156, 161 (2005). Indeed, it seems generally accepted that "a trustee owes the same fiduciary duty to a contingent beneficiary as to one with a vested interest insofar as necessary for the protection of the contingent beneficiary's rights in the trust property." 90A C.J.S. Trusts § 335 (2011) (citing Kenny v. Citizens Nat'l Trust & Savings Bank of Los Angeles, 269 P.2d 641 (Cal.App.2d Dist.1954) ); see also RESTATEMENT OF TRUSTS § 214(1), cmt. a (1959) ("[A]ny beneficiary can maintain a suit against the trustee to enforce the duties of the trustee to him ...," a right that is "applicable to beneficiaries who have vested or contingent interests"). Thus, Beaudoin may be correct that Davidson Trust's fiduciary duty to her continued even after she had exhausted her share of the trust because pursuant to the trust terms, she was a named contingent beneficiary of her sister's share.

Notwithstanding, Beaudoin's contingent interest—and Davidson Trust's accompanying fiduciary duty to her—ended upon Van Dyke's death, when Brooks' and Brianna's contingency occurred and Beaudoin's contingency did not....