Sarah E. Lavoie, Partner at Burns, Bryant, Cox, Rockefeller & Durkin Dover, NH


No. 2019-0319

September 23, 2020

Affirmed

 

  • Whether the trial court erred in holding that former co-trustees, with the exception of attorney’s fees and costs incurred for certain administrative tasks, were not entitled to be reimbursed from the Trusts for the post-trial fees and costs they incurred personally to defend decantings and in holding that they must reimburse the Trusts for the fees and costs the trusts incurred to defend the decantings at trial?

 

The trial court had previously held that the failure of the co-trustees of irrevocable trusts to consider the interests of the disinherited trust beneficiaries was an abuse of their power to decant and that removal of the former co-trustees was in the beneficiaries’ best interest given the hostility and lack of trust between the parties.  The Court previously affirmed the trial court’s decision and interpreted the trial court’s decision to mean that the co-trustees’ failure to consider the plaintiffs’ future beneficial interests was a violation of the statutory duty of impartiality.  After the case was returned to the trial court, successor co-trustees were appointed by the trial court.  The former co-trustees filed a motion for attorneys’ fees and costs requesting reimbursement from the trusts for their personal fees and costs incurred in defending the decantings.  The successor co-trustees objected to the motion and requested that the former co-trustees reimburse the trusts for fees and costs paid by the trusts in defending the co-trustees in the decantings at trial.  The trial court denied the former co-trustees’ motion, granted the successor co-trustees’ motion and ordered the former co-trustees to reimburse the trusts.  On appeal, the former co-trustees argued that they had a fiduciary duty to defend the decantings and therefore, that their fees and costs were proper.  The Court discussed that the former co-trustees had no fiduciary duty to defend their misconduct and that the trial court did not err in finding that the former co-trustees could have filed a Petition for Instructions or obtained independent legal advice before participating in the decantings.  The former co-trustees also argued that the trial court erred in finding that RSA 564-B:8-805 did not entitle them to indemnification.  The Court affirmed the trial court’s ruling that the former co-trustees were not entitled to indemnification under the statute because of their serious and egregious breaches of trust and that the use of trust funds to defend those acts would not be reasonable.  The Court also affirmed the trial court’s ruling that it would be unfair and unjust to charge the trusts for the defense of their serious breach of fiduciary duty.

 

Hage Hodes, of Manchester (Jamie N. Hage on the brief and orally and Katherine E. Hedges on the brief), for the plaintiffs. Barradale, O’Connell, Newkirk & Dwyer, of Bedford (Pamela J. Newkirk on the brief and orally)  and The Stein Law Firm, of Concord (Robert A. Stein on the brief) for the defendants.  Flood Sheehan & Tobin, of Concord (filed no brief) for Joanne M. Hodges.