Brent v. Smathers

• Decision Date: 25 July 1989
• Docket Number: No. 88-2779,88-2779
• Citation: 14 Fla. L. Weekly 1772,547 So.2d 683
• Parties: 14 Fla. L. Weekly 1772 Maxine M. BRENT, Appellant, v. George A. SMATHERS, Alicia Lammerts and James F. Breuil, Jr., Appellees.
• Court: Florida District Court of Appeals

Page 683

547 So.2d 683

14 Fla. L. Weekly 1772

Maxine M. BRENT, Appellant, v. George A. SMATHERS, Alicia Lammerts and James F. Breuil, Jr., Appellees.

No. 88-2779.

District Court of Appeal of Florida Third District.

July 25, 1989.

Rehearing Denied Sept. 26, 1989.

McDermott, Will & Emery and Steven E. Siff and Eileen L. Parsons, Miami, for appellant.

Floyd Pearson Richman Greer Weil Zack & Brumbaugh and Ray H. Pearson and Andrew J. Mirabito and Sally R. Doerner, Miami, for appellee Smathers.

Jones, Brown & Brennan and Rickman P. Brown, Atlanta, Ga., for appellees Lammerts and Breuil.

Before BASKIN, FERGUSON and LEVY, JJ.

FERGUSON, Judge.

James F. Breuil, now deceased, left a will which created a master trust and a marital trust naming as trust beneficiaries, his wife, Maxine Brent, and his two children by a prior marriage, James Breuil, Jr. and Alicia Lammerts. Mrs. Brent and Breuil's attorney, George Smathers, were named cotrustees for the administration of the trust. Both were also co-representatives of the estate. Smather's law firm, Smathers and Thompson, represented Mrs. Brent in both her capacities as cotrustee and personal representative.

After the estate was closed, Brent commenced this action against Smathers, as trustee, for breach of fiduciary duty, and against the other beneficiaries for unjust enrichment, alleging that as the beneficiary of the marital trust she received less than her proper share of income, and that a misallocation of capital gains taxes to the marital trust resulted in that trust incurring a disproportionate tax liability. The defendants filed motions for summary judgment contending that Brent, as a beneficiary and a trustee, had acquiesced in the disbursements she now claims were erroneous, and that she is, therefore, estopped from making the claims. The trial court agreed and granted summary judgment. We affirm in part and reverse in part.

Cause of Action Against Cotrustee

There is no allegation of mismanagement or abuse of discretion by Smathers in his capacity as cotrustee. See Cohen v. Friedland, 450 So.2d 905 (Fla. 3d DCA 1984). Instead, Mrs. Brent's claim against Smathers sounds in negligence resulting in an inequitable impact upon the marital trust to which she was the sole beneficiary. Our focus then must be on Smather's conduct vis-a-vis Brent, rather than on the relationship of Smathers to the trust, since the harm, as alleged, is only that suffered by Brent as sole beneficiary to the marital trust.

Although Mrs. Brent admits that she was aware of, and approved the transactions in question, she contends that her consent does not negate a cause of action for breach of fiduciary duty against Smathers as cotrustee because when she gave her consent she had no knowledge of the effects of the disbursements. Mrs. Brent alleges that as a lay trustee, she relied on Smather's expertise as a trustee attorney to provide her with the necessary guidance in her role as cotrustee, and that his failure to properly advise her constituted a breach of fiduciary duty.

We agree that consent may be vitiated where a beneficiary "did not know of his rights and of the material facts which the trustee knew or should have known and which the trustee did not reasonably believe that the beneficiary knew," Restatement (Second) of Trusts § 216(2)(b) at 499 (1959); Smith v. Bank of Clearwater, 479 So.2d 755 (Fla. 2d DCA 1985). Nevertheless, we do not accept Mrs. Brent's argument that a lay trustee for an estate may rely on the expertise of a cotrustee attorney in matters regarding the administration of the estate, and maintain an action against the attorney in his capacity as cotrustee where an administrative decision approved by all the trustees results in a diminishment of the estate to the detriment of the trustee-beneficiary. We reach this holding based on the following legal principles.

A beneficiary who consents to, acquiesces or concurs in, or ratifies with full knowledge, an act of a trustee in allocating trust assets may, on the ground of waiver or estoppel, be precluded from later objecting to the impropriety of the act and from holding the trustee liable for any resulting loss. See Voorhies v. Blood, 126 Fla. 710, 171 So. 658 (1936) (beneficiaries who acquiesced in substitution of trustees and who accepted benefits of investment could not later complain). See generally Annotation, Beneficiary's Consent to, Acquiescence in, or Ratification of, Trustees' Improper Allocation or Distribution of Assets, 29 A.L.R.2d 1034 (1953); Restatement (Second) of Trusts § 216 (1959). The axiom is based on the proposition that "[i]t would be unfair to allow the [beneficiary] to contend that the act which he impliedly said would be rightful was in fact wrongful." G. Bogert, Trusts & Trustees § 941 at 448 (rev. 2d ed. 1982). When the beneficiary is also a cotrustee, the rule applies with particular force. 76 Am.Jur.2d Trusts § 336 (1975).

A trustee is under a duty to keep the beneficiaries reasonably informed about the trust and its administration. G. Bogert, Trusts & Trustees § 961 (rev. 2d ed. 1982); § 737.303, Fla.Stat. (1987). In setting forth the extent of this duty to inform, the Restatement (Second) of Trusts § 173 at 378 (1959), provides as follows:

The trustee is under a duty to the beneficiary to give him upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property, and to permit him or a person duly authorized by him to inspect the subject matter of the trust and the accounts and vouchers and other documents relating to the trust.

Comment (d) to section 173 states that in the absence of a request, the trustee is ordinarily not under a duty to furnish information to the beneficiary. However, "he is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person with respect to his interest." Id. at 379. See also Zottarelli v. Pacific States Savs. & Loan, 94 Cal.App.2d 480, 211 P.2d 23 (1949). Therefore, as a trustee, Smathers had no affirmative duty to explain the effects of the transactions to the beneficiaries unless such an explanation was requested or he knew that they did not have knowledge of the facts. It is undisputed that Mrs. Brent never inquired about the effects of the disbursements.

Facts known to Mrs. Brent in her capacity as cotrustee, or which should have been known, are imputed to her as a beneficiary. Scullin v. Clark, 242 S.W.2d 542 (Mo.1951) (trustee who is also a beneficiary cannot withhold information from himself). As a cotrustee, she had, or should have had, knowledge equal to that of the cotrustee Smathers regarding the disputed transactions. In administering a trust, a trustee is obligated to be fully informed as to all relevant facts. 90 C.J.S. Trusts § 247 (1955); § 737.302, Fla.Stat. (1987). If there are several trustees, each is under a duty to participate fully in the administration of the...