I tried a case this year where we sought to hold the trustee responsible for breaches of duties to a trust.
Among other things, the trustee caused a check of about $32,000 to make its way into her personal bank account. Our side uncovered this check during her deposition, and the trustee returned the money with interest days later.
At the trial, the trustee minimized this discovery by claiming (a) she wasn't sure how it got into her account and (b) it was repaid, so she questioned whether the trust or its beneficiaries were damaged.
In trial, the cross-examination was comical, watching her trying to maintain that she wasn't sure how it got into her account when we showed her and the court her signature on the check; the bank account signature card for this personal account; and other evidence showing her "fingerprints" on the transaction. However, the real comedy commenced with closing arguments.
She argued in closing: “this same sum, plus interest, made its way back into the trust account.”
I responded in my final argument: "Perhaps most remarkably, Respondent ['Trustee'] tries to avoid her unassailable fraud... by claiming she put it back. [ ] In taking euphemism to Himalayan heights, Trustee [ ] tries to dress up her theft with the following language: 'this same sum, plus interest, made its way back into the trust account.'
"What [Trustee] glosses over is that it 'made its way back' only after Petitioner [ ] had to bring this action, made numerous demands for information about trust assets, and received misleading information about the trust, including the glaring absence of this very sum from any of the information received from the Trustee. Indeed, this sum was only paid back after the deposition of [Trustee]—well into this costly case. Moreover, there was an unexplained and suspicious delay of 48 days before this sum was deposited into [Trustee's] personal account.
"But this attempted linguistic legerdemain reminds one of a bank robber’s offer to return the money—only after being caught and prosecuted. That it was belatedly returned—after [Trustee] was caught—does not unwind the underlying fraud in carrying out the misconduct that was only uncovered at the considerable effort and expense of Petitioner.
"Again, nowhere will one find the disclosure of the wrongfully purloined $32,000 in the initial accounting submitted to this Court and Petitioner. (Citation omitted.) It is conspicuously absent and evidencing [Trustee's] fraudulent intent and conduct.
* * *
"Moreover, even if the $32,000 was 'ultimately' returned (after filing of the Petition and taking of [Trustee's] deposition) this does not erase the underlying fraud and breaches of fiduciary duties in taking it in the first place, as discussed above. "
I further argued that the repayment was irrelevant because California Probate Code Section 859 authorizes the court to double the damages. So, I submitted the court could award $32,000 even though the $32,000 was repaid.
The statement of decision arrived last Friday, containing this summarizing excerpt:
"This court cannot think of a better example of a total breach of trust than the actions of [Trustee]. Her attitude toward her brothers and toward her testimony showed the court that she was not trustworthy in her descriptions of what occurred. She simply took from her mother's trust and she did it to help herself."
Here's how the trial judge dealt with the $32,000: "[Trustee] took $32,000 and then put it back (with interest). She claimed that wasn't a taking. If she gave it back, then what was it?" Good point.
Then the court repaid her actions with a sizable judgment (containing double damages) approximating a quarter of a million dollars, stripped her of any future distribution from the trust, ordered her to bear her own attorney's fees, and ordered her to pay our attorney's fees.