Miller v. Bank of America

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In 2007, the remainder beneficiaries of two testamentary trusts sued defendant Bank of America for its actions as trustee from 1991 through 2003. The beneficiaries alleged that the Bank had invested trust assets in an unproductive commercial building in direct violation of express trust provisions and had thereby caused the loss of trust value in breach of its duty of care. The beneficiaries also alleged that, as part of this investment, the Bank arranged loans to the trust from its own affiliates that were secured by mortgages on the building and collected loan fees and mortgage interest from the trust in breach of its duty of loyalty. The New Mexico Uniform Trust Code provided that when a trustee breaches its duty of care and causes a loss to the trust, that lost value must be returned to the trust as restoration damages. It also provided that when a trustee breaches its duty of loyalty by self-dealing, any profit from such self-dealing must be disgorged so that the trustee cannot profit from its wrongdoing. "Restoration and disgorgement are not mutually exclusive, and recovery need not be limited to the amount of a beneficiary’s loss if more is required to ensure that both remedial goals are met." Because it was unclear whether the principles of disgorgement and restoration have both been satisfied in this case, the Supreme Court remanded to the district court to determine whether the profit wrongfully earned by the trustee was included in the restoration award to the beneficiary. View "Miller v. Bank of America" on Justia Law