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In re Trust of Smillie

Supreme Court of New Hampshire

December 8, 2011

In re Trust of Lillian M. Smillie

UNPUBLISHED OPINION

The appellants, the current trustees of the Lillian M. Smillie Trust, appeal an order of the probate court finding that, because there was no proof of actual damages to the trust beneficiary, the claim against the fiduciary bond and request for punitive damages could not succeed. They argue that the trial court erred in: (1) finding that they failed to prove actual damages; and (2) denying their request for interest income, punitive damages and attorney's fees. We affirm.

The scope of our review on appeal is limited by RSA 567-A:4 (2007); it provides that the "findings of fact of the judge of probate are final unless they are so plainly erroneous that such findings could not be reasonably made." We will therefore affirm the probate court's order unless it is unsupported by the evidence or plainly erroneous as a matter of law. In re Guardianship of Dorson, 156 N.H. 382, 384 (2007).

The record before us is incomplete. See Bean v. Red Oak Prop. Mgmt., 151 N.H. 248, 250 (2004) (appealing party's burden to provide supreme court with record sufficient to decide issues raised on appeal). The trial court's order indicates that a petition was filed by the trustee of the Lillian Smillie Trust seeking an order to pursue suit on the probate bond for the trust and for surcharge of the prior trustee, Michael Tessier. There appears to be no dispute that a breach of trust occurred. Under RSA 564-B:10-1002 (2007), a "trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of: (1) the amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred; or (2) the profit the trustee made by reason of the breach."

In this case, the appellants challenge the following findings of the trial court: (1) the assets of the trust were fully restored; (2) proceeds of a policy that insured the life of Beatrice Jakobiec were repaid to the trust; and (3) the trust and bond carrier were entitled to credit for return of the trust assets deposited to the Members First Credit Union account. The appellants contend that the testimony of Attorney William Boesch was: (1) unreliable; (2) insufficient to support the trial court's conclusion that the trust assets had been fully restored; and (3) directly and conclusively rebutted by the audit report.

In support of their position, the appellants challenge the source of the funds used to make the trust whole. They argue that the evidence that they produced at trial "conclusively prove[s] that no reimbursements were ever made by Thomas Tessier, Michael Tessier or the Christy & Tessier client trust account to the Smillie Trust or the Members First Credit Union account established by Michael Tessier under the fraudulent Thaddeus Jakobiec Trust." As trustees, the appellants' obligation is to protect the funds of the trust. They do not cite any authority, and we have found none, that supports their claim that they can challenge the source of the repayment funds in this case. Because there is evidence in the record from which the trial court could have concluded that the assets of the trust were fully restored, we affirm this ruling.

We turn then to whether the trial court erred in failing to award interest income on the trust assets for the period of time that they were misappropriated. The record before us indicates that the trial court made several findings concerning the value of the trust during the relevant period. It is the appealing party's burden to demonstrate error. Having reviewed the record provided on appeal, we conclude that the appellants have failed to carry their burden.

Finally, we will assume without deciding that the appellants have presented sufficient developed argument addressing their contention that they are entitled to the assessment of a surcharge, punitive damages and attorney's fees against former trustee Tessier. See Waterfield v. Meredith Corp., 161 N.H. 707, 713 (2011). The trial court found that no proof had been presented that the trust beneficiary had suffered any damages. As we have observed, there is support in the limited record before us to support this finding. See Dorson, 156 N.H. at 386 (whether to impose equitable remedy, which may include surcharge and punitive damages, is within sound discretion of trial court); RSA 564-B:10-1004 (court has discretionary authority to award attorney's fees in judicial proceeding involving administration of a trust).

Affirmed.

DUGGAN, CONBOY and LYNN, JJ., ...


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