ILNews

COA: Bank didn't breach duties as trustee

Back to TopCommentsE-mailPrintBookmark and Share

Although tempted to analyze with "the benefit of hindsight" a suit filed by beneficiaries of a trust against a bank that served as the trustee, the Indiana Court of Appeals affirmed summary judgment in favor of the bank after finding the bank acted in good faith.

The beneficiaries of a trust set up by their father, Chanell and Micaela Cochran, filed the suit In re: Matter of the Trust of Stuart Cochran Irrevocable Trust v. KeyBank, N.A., No. 71A04-0806-CV-3847, alleging KeyBank, as trustee, had breached its obligations and violated the prudent investor rule.

Stuart Cochran set up the trust in 1987 with his then-minor daughters as beneficiaries and received assistance from insurance advisor Art Roberson. KeyBank became successor trustee in 1999, just after Roberson had recommended the trust be replaced with two variable universal life policies. Stuart agreed to change his policy to a safer John Hancock one in 2003 with a fixed payout of around $2.5 million after his variable universal life policies continued to lose money in the stock market following Sept. 11, 2001. The previous policy was originally valued around $8 million before losses.

Stuart died unexpectedly shortly after the new policy was confirmed, leaving his daughters with only the $2 million in life insurance funds instead of the larger amount they could have had from the previous variable universal life policies. The daughters filed suit and the trial court ruled in favor of the bank.

On appeal, the Court of Appeals reviewed the case under the Indiana Prudent Investor Act, which cautions that compliance with the act's rules should be made in light of the facts and circumstances at the time a trustee made a decision or action, not by hindsight. Now it is known that the stock market would rebound and the variable universal life policies would have been worth more than the John Hancock policy, wrote Chief Judge John Baker, and the appellate court can understand why the daughters wish that KeyBank had made a different decision. However, KeyBank acted in good faith in making the switch and had an independent outside insurance consultant review all the policies before making the decision.

The Court of Appeals also affirmed that under the Prudent Investor Act, KeyBank didn't improperly delegate certain decision-making functions to Roberson and Stuart, the bank didn't violate the PIA by disregarding the insurance consultant's recommendations regarding the variable universal life policies, and that the bank didn't violate the PIA for failing to investigate alternatives for other life insurance policies.

While the appellate court found KeyBank's decision-making process and communication with Stuart's daughters wasn't perfect, the trial court didn't err in finding it was sufficient.

"Although it is tempting to analyze these cases with the benefit of hindsight, we are not permitted to do so, nor should we. KeyBank chose between two viable, prudent options, and given the facts and circumstances it was faced with at that time, we do not find that its actions were imprudent, a breach of any relevant duties, or a cause of any damages to the (daughters)," wrote the chief judge.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Call it unauthorized law if you must, a regulatory wrong, but it was fraud and theft well beyond that, a seeming crime! "In three specific cases, the hearing officer found that Westerfield did little to no work for her clients but only issued a partial refund or no refund at all." That is theft by deception, folks. "In its decision to suspend Westerfield, the Supreme Court noted that she already had a long disciplinary history dating back to 1996 and had previously been suspended in 2004 and indefinitely suspended in 2005. She was reinstated in 2009 after finally giving the commission a response to the grievance for which she was suspended in 2004." WOW -- was the Indiana Supreme Court complicit in her fraud? Talk about being on notice of a real bad actor .... "Further, the justices noted that during her testimony, Westerfield was “disingenuous and evasive” about her relationship with Tope and attempted to distance herself from him. They also wrote that other aggravating factors existed in Westerfield’s case, such as her lack of remorse." WOW, and yet she only got 18 months on the bench, and if she shows up and cries for them in a year and a half, and pays money to JLAP for group therapy ... back in to ride roughshod over hapless clients (or are they "marks") once again! Aint Hoosier lawyering a great money making adventure!!! Just live for the bucks, even if filthy lucre, and come out a-ok. ME on the other hand??? Lifetime banishment for blowing the whistle on unconstitutional governance. Yes, had I ripped off clients or had ANY disciplinary history for doing that I would have fared better, most likely, as that it would have revealed me motivated by Mammon and not Faith. Check it out if you doubt my reading of this, compare and contrast the above 18 months with my lifetime banishment from court, see appendix for Bar Examiners report which the ISC adopted without substantive review: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS

  2. Wow, over a quarter million dollars? That is a a lot of commissary money! Over what time frame? Years I would guess. Anyone ever try to blow the whistle? Probably not, since most Hoosiers who take notice of such things realize that Hoosier whistleblowers are almost always pilloried. If someone did blow the whistle, they were likely fired. The persecution of whistleblowers is a sure sign of far too much government corruption. Details of my own personal experience at the top of Hoosier governance available upon request ... maybe a "fake news" media outlet will have the courage to tell the stories of Hoosier whistleblowers that the "real" Hoosier media (cough) will not deign to touch. (They are part of the problem.)

  3. So if I am reading it right, only if and when African American college students agree to receive checks labeling them as "Negroes" do they receive aid from the UNCF or the Quaker's Educational Fund? In other words, to borrow from the Indiana Appellate Court, "the [nonprofit] supposed to be [their] advocate, refers to [students] in a racially offensive manner. While there is no evidence that [the nonprofits] intended harm to [African American students], the harm was nonetheless inflicted. [Black students are] presented to [academia and future employers] in a racially offensive manner. For these reasons, [such] performance [is] deficient and also prejudice[ial]." Maybe even DEPLORABLE???

  4. I'm the poor soul who spent over 10 years in prison with many many other prisoners trying to kill me for being charged with a sex offense THAT I DID NOT COMMIT i was in jail for a battery charge for helping a friend leave a boyfriend who beat her I've been saying for over 28 years that i did not and would never hurt a child like that mine or anybody's child but NOBODY wants to believe that i might not be guilty of this horrible crime or think that when i say that ALL the paperwork concerning my conviction has strangely DISAPPEARED or even when the long beach judge re-sentenced me over 14 months on a already filed plea bargain out of another districts court then had it filed under a fake name so i could not find while trying to fight my conviction on appeal in a nut shell people are ALWAYS quick to believe the worst about some one well I DID NOT HURT ANY CHILD EVER IN MY LIFE AND HAVE SAID THIS FOR ALMOST 30 YEARS please if anybody can me get some kind of justice it would be greatly appreciated respectfully written wrongly accused Brian Valenti

  5. A high ranking Indiana supreme Court operative caught red handed leading a group using the uber offensive N word! She must denounce or be denounced! (Or not since she is an insider ... rules do not apply to them). Evidence here: http://m.indianacompanies.us/friends-educational-fund-for-negroes.364110.company.v2#top_info

ADVERTISEMENT