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Chapter 20 - § 20.16 • LIABILITY FOR LACK OF PRUDENCE
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The representative will be liable to the estate28 for any loss to the estate resulting from lack of diligence on his or her part. The law is not settled on the question of whether the representative is liable for the mistakes of agents employed by him or her.29 The representative is not in any sense an insurer or guarantor that all of his or her actions will turn out for the best, but the test of liability is whether he or she has been guilty of some violation of fiduciary duty. C.R.S. § 15-12-712; see Estate of Blanpied, 393 P.2d 355. See also Chapter 40, "Fiduciary and Attorney Misconduct."
Where a trustee bank's periodic accounting was unclear and inconsistent, the bank breached its duty to account and reasonable accountant fees were properly awarded as part of a surcharge remedy. An award of damages with interest and reduction of trustee's compensation were also upheld. Heller v. First Nat'l Bank of Denver, 657 P.2d 992 (Colo. App. 1982).
In a surcharge action, being essentially equitable in nature, the claimant was not entitled to receive exemplary damages or have the case tried to a jury. Kaitz v. District Court, 650 P.2d 553 (Colo. 1982). See also In re Trust of Malone, 658 P.2d 284 (Colo. App. 1992) (where complaint states equitable causes of action, counterclaim raises a legal issue, does not change the basic nature of the suit so as to allow a jury trial on the counterclaim); DiFede v. Mountain States Tel. & Tel. Co., 763 P.2d 298 (Colo. App. 1988) (equitable issues may be tried to a jury only with the consent of the parties); Snow Basin Ltd. v. Boettcher & Co. Inc., 805 P.2d 1151 (Colo. App. 1990). But see Virdanco, Inc. v. MTS Int'l, 820 P.2d 352 (Colo. App. 1991), where it was held that an award of exemplary or punitive damages was appropriate in breach of fiduciary duty cases that are attended by wanton and reckless conduct.
In Murphy v. Central Bank & Trust Co., 699 P.2d 13 (Colo. App. 1985), a trustee was surcharged for breach of duty regarding management of real estate and sale of real estate for inadequate consideration. Accounting and trustee fees were included as elements of surcharge remedy.
In Zeligman v. Juergens, 762 P.2d 783 (Colo. App. 1988), it was held that a fiduciary accused of breach of duty has the benefit of affirmative defenses such as estoppel. In Beyer v. First National Bank of Colorado Springs, 843 P.2d 53 (Colo. App. 1992), the court adopted the standards of Restatement of Trusts § 216 to determine the effectiveness of the consent of beneficiaries to approve fiduciary misconduct. The court noted that, in applying the principles of the Restatement, the court should not use the advantage of hindsight. See also § 40.10 regarding defenses to surcharge actions.
In Conservatorship of Roth, 804 P.2d 265 (Colo. App. 1990), it was held that a bank became a fiduciary when it acknowledged, and then acted in violation of, restricted letters of conservatorship. Under the circumstances, the minor's estate was entitled to reasonable attorney fees for defending the action and defense on appeal.
Formerly, a majority of the breach of fiduciary cases arose out of traditional fiduciary relationships involving personal representatives, trustees, and conservators. In addition, a fiduciary duty may arise out of agency relationships and contractual relationships. However, a substantial number of cases have involved breach of fiduciary duty claims, often joined with negligence and fraud claims, arising out of business relationships.
Stock brokerage cases include:
• Paine Webber, Jackson & Curtis, Inc. v. Adams, 718 P.2d 508 (Colo. 1986);...
• Rupert v. Clayton Brokerage Co. of St. Louis, 737 P.2d 1106 (Colo. 1987); and
•
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- Chapter 20 Management of Assets
- Chapter 20 - CHAPTER 20 MANAGEMENT OF ASSETS
- Chapter 20 - § 20.1 • STATUTORY POWERS AND DUTIES
- Chapter 20 - § 20.2 • DISTINCTIONS BETWEEN DUTIES TOWARD REAL AND PERSONAL PROPERTY
- Chapter 20 - § 20.3 • DUTY OF LOYALTY
- Chapter 20 - § 20.4 • SELF-DEALING
- Chapter 20 - § 20.5 • DELEGATION
- Chapter 20 - § 20.6 • RECORDS AND INFORMATION
- Chapter 20 - § 20.7 • CARE — PRUDENCE
- Chapter 20 - § 20.8 • PROTECTING ESTATE
- Chapter 20 - § 20.9 • SEGREGATION OF ASSETS
- Chapter 20 - § 20.10 • BANK ACCOUNTS
- Chapter 20 - § 20.11 • INCOME
- Chapter 20 - § 20.12 • IMPARTIALITY
- Chapter 20 - § 20.13 • CO-FIDUCIARIES
- Chapter 20 - § 20.14 • ADVISORS
- Chapter 20 - § 20.15 • DILIGENCE
- Chapter 20 - § 20.16 • LIABILITY FOR LACK OF PRUDENCE
- Chapter 20 - § 20.17 • ADVICE OF COUNSEL
- Chapter 20 - § 20.18 • CONTINUING BUSINESS
- Chapter 20 - § 20.19 • PARTNERSHIP INTERESTS
- Chapter 20 - § 20.20 • COLLECTING AND PROTECTING ASSETS
- Chapter 20 - § 20.21 • INSURANCE COVERAGE
- Chapter 20 - § 20.22 • DECEDENT'S UNCOMPLETED SECURITY ORDERS
- Chapter 20 - § 20.23 • NOTIFYING BANKS
- Chapter 20 - § 20.24 • INVESTMENTS — PRUDENT INVESTMENT RULE
- Chapter 20 - § 20.25 • REGISTRATION OF TITLE TO PROPERTY
- Chapter 20 - § 20.26 • RENT AND REPAIR OF REAL ESTATE
- Chapter 20 - § 20.27 • LIENS AND TAXES
- Chapter 20 - § 20.28 • CLAIMS AGAINST OTHERS
- Chapter 20 - § 20.29 • CLAIMS AGAINST THE ESTATE
- Chapter 20 - § 20.30 • COMMISSION OF TORTS
- Chapter 20 - § 20.31 • CONTRACTS
- Chapter 20 - § 20.32 • WASTE
- Chapter 20 - § 20.33 • QUIETING TITLE
- Chapter 20 - § 20.34 • PURCHASE CONTRACTS
- Chapter 20 - § 20.35 • SPECIFIC PERFORMANCE OF SALE CONTRACTS
- Chapter 20 - § 20.36 • JOINDER IN CERTAIN FEDERAL TAX RETURNS
- Chapter 20 - § 20.37 • BUYING AT EXECUTION SALE
- Chapter 20 - § 20.38 • BORROWING AND PLEDGING
- Chapter 20 - § 20.39 • COLORADO FIDUCIARIES' POWERS ACT
- Chapter 20 - § 20.40 • FIREARMS
- Chapter 20 - § 20.41 • FIDUCIARY ACCESS TO DIGITAL ASSETS
- Chapter 20 - CHAPTER BIBLIOGRAPHY
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