Thursday, February 25, 1999 7:00:00 AM
Another appellate case from California in 1990 awarded a significant judgment against the trustee for investing primarily in bonds where the appellate court was left to decide whether to use the S&P 500 of the bank’s proprietary equity fund to measure appropriate damages. Again, such precedent from the world of investment trusts gives beneficiaries (and trial lawyers) clear parallel case law to seek damages from trustees for the difference between death benefits actually received versus death benefits they “should have been received” based on a publicly available benchmark like the S&P 500 for investment performance and the Veralytic for cost of insurance charges (COIs), fixed administration expenses (FAEs), cash-value-based “wrap fees” (e.g. M&Es), premium loads, and historical performance of assets underlying policy cash values.
You can read the full case history here; the summary opinion was as follows:
"A number of residuary beneficiaries of several related testamentary trusts sued the bank acting as the trustee of all of the trusts. A judgment was entered in favor of the beneficiaries but for less than they thought was due to them. The bank appeals, contending specified claims were barred by a three-year statute of limitations. The beneficiaries cross-appeal, contending other claims were not (as the probate court found) barred by the doctrine of res judicata. We affirm in part, reverse in part, and remand with directions."