July 20, 2019

Colorado Court of Appeals: Consent of All Beneficiaries Necessary to Ratify Action Contravened by Terms of Trust

The Colorado Court of Appeals issued its opinion in In re Estate of Foiles: Foiles v. Foiles on Thursday, August 14, 2014.

Trust—Beneficiaries—Breach of Fiduciary Duty.

The trustees of the Clyde Foiles Trust were Ruth Foiles, Larry Foiles, and the Farmers State Bank of Fort Morgan (Bank). Larry Foiles, along with Larry’s two children and his nephew Gregory Foiles, were beneficiaries of the trust. The trust prohibited Larry Foiles from exercising powers as trustee that were directly or indirectly for his own benefit, and required that any such actions be taken solely by the Bank. Gregory Foiles contested two transactions undertaken at least in part by Larry Foiles, alleging that the transactions were a breach of his fiduciary duty. The trial court entered judgment in favor of Larry Foiles.

On appeal, Gregory Foiles contended that the trial court improperly ruled on his breach of fiduciary duty claim. In the absence of a trust provision that would allow ratification by a co-trustee of otherwise invalid actions of a trustee, only the consent of all beneficiaries, with full capacity to give such consent and full knowledge of the relevant facts, could ratify an action of a trustee that is in violation of the express terms of a trust. Here, because Larry Foiles’s undertaking of the 2001 Section 1031 exchange of real property violated the terms of the trust, the Bank, as co-trustee, could not validly ratify that action. Under the terms of the trust, only the Bank would have been authorized to undertake such a transaction. Therefore, Gregory Foiles established a prima facie claim that Larry breached his fiduciary duty, and the trial court erred in ruling that ratification by the Bank precluded Gregory Foiles’s breach of fiduciary duty claim. The judgment was reversed and the case was remanded to the trial court to make additional findings as to whether Larry Foiles met his burden to go forward with some evidence that the questionable transaction was fair and reasonable, and, ultimately, whether he was liable for breach of fiduciary duty in connection with that transaction.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Colorado State Treasurer Not Allowed Unfettered Access to PERA Records

The Colorado Court of Appeals issued its opinion in Stapleton v. Public Employees Retirement Association on Thursday, August 1, 2013.

Unfettered Access to Records—Trustee.

Plaintiff Walker Stapleton, in his capacities as Colorado State Treasurer and as a trustee of defendant Public Employees’ Retirement Association (PERA), appealed the district court’s order upholding the decision of the PERA Board of Trustees (Board) denying his request for unfettered access to PERA records. The Court of Appeals affirmed.

In 2010, Stapleton was elected as state treasurer. By statute, the state treasurer is one of the members of the Board. In June 2011, Stapleton wrote a letter to the Board president requesting unfettered access to PERA records. Stapleton’s request was denied.

Stapleton argued that the district court erred in ruling as a matter of law that Stapleton is not entitled to unfettered access to PERA records. Although a PERA trustee may need to access PERA records to fulfill his or her statutory duties, such access is guided by the statutory requirements that it be (1) solely in the interest of the members and benefit recipients, and (2) for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law. Therefore, the Board may place reasonable conditions on, or refuse, a co-trustee’s wholesale request for information. Thus, Stapleton was not entitled to unfettered access to the PERA records that he requested.

Summary and full case available here.