Today, the Texas Supreme Court denied review in Wells Fargo v. Militello, No. 05-15-01252-CV, 2017 Tex. App. LEXIS 5640 (Tex. App.—Dallas June 20, 2017, pet. denied). In Militello, the court of appeals affirmed a trial court’s judgment against a trustee regarding a beneficiary’s claims for breach of fiduciary duty, negligence, and fraud where the trial court awarded $1,328,448.35 past economic damages, $29,296.75 disgorgement of trust fees, $1,000,000.00 past mental anguish damages, $3,465,490.20 exemplary damages, and $467,374.00 attorney’s fees. The trustee appealed, alleging that the evidence was not sufficient to support many of the damages awarded but did not appeal the liability finding. The beneficiary agreed that the economic damages should be remitted (decreased) by around $340,000, which would also impact the exemplary damages award.
The court of appeals affirmed an award of damages based on Militello’s expenses associated with dealing with tax issues, including accountant fees and attorney’s fees, incurred due to Militello having to litigate tax issues caused by the trustee’s actions. The court of appeals also affirmed, in part, the award of mental anguish damages, holding that the $1 million award was not supported by the evidence and suggested a remittitur down to $310,000 based on evidence of other actual damages. The court of appeals also affirmed the award of exemplary damages because it concluded there was clear and convincing evidence to support the trial court’s express finding that the trustee was grossly negligent. The court did suggest a remittitur due to the decrease in economic damages.
This is an interesting case because it dealt with a relatively new area of potential damages: an award for expenses incurred by a beneficiary in remedying a breach of duty by a trustee. Further, though several cases in Texas hold that a plaintiff could recover mental anguish for a breach of fiduciary duty, few cases discuss the claim and the standards for such an award in a trustee/breach-of-fiduciary-duty case. Similarly, few cases discuss the standards for an exemplary damage award in a trustee/breach-of-fiduciary-duty case. So, it would seem that the issues in the case would be ripe for Texas Supreme Court review. The trustee has the right to file a motion for rehearing on the denial of its petition for review.