State Trial Courts

Carl B. Stanley Trust v. Eastern Savings Bank

Edward Guza (Guza, Nesbitt &. Putzier), Bozeman, for the Trust;

Paul Collins & Justin Harkins (Crowley Fleck), Billinga, for ESB.

Carl Stanley established the Carl B. Stanley Trust with his children Thomas Stanley, Shirley Stevens, Susan Barber, and Robert Stanley as beneficiaries, and with Thomas and Shirley as co-trustees. One of the assets was a condo at Big Sky. Carl died in 11/04. The Trust, by current Trustee Susan Barber, claimed that Eastern Savings Bank had actual knowledge that Thomas ex­ceeded and improperly exercised his trustee powers when in 3/07, unbeknownst to his siblings, he received a $151,200 loan from ESB by pledging the condo as collateral. He had forged documents to persuade ESB that Shirley had resigned as co-trustee and that his sib­lings consented to the Joan. The Trust sued ESB in 3/10 alleging that it was negligent in making the loan and violated the CPA and that the Trust had been damaged by the loan, and claiming punitives. 

ESB denied that it had actual knowledge that Thomas was exceeding or improperly exercising his trustee powers, and denied that it was negligent. It argued at trial that if the jury found that it was negligent, the negligence of Thomas and/or Shirley exceeded its negligence. It further argued that the Trust suffered little or no damage as a result of the loan, and that the Trust was responsible for the loss caused by Thomas's criminal acts. 

Both sides requested summary judgment as to whether ESB had "actual knowledge" under §70-36-201(1) that a trustee had "exceeded" or "improperly exercised" his powers.§201 creates absolute immunity if "actual knowl­edge" is shown. Judge John Brown determined that it was a fact issue. 

The Bozeman jury found that ESB had actual knowl­edge that Thomas was exceeding his powers as trustee or was improperly exercising them in the course of issuing the loan, that it was negligent in issuing the loan based on the forged resignation-of-trustee document submitted by Thomas, and that ESB 's negligence caused damage co the Trust. It found that Shirley was also negligent but that Thomas was not negligent. It apportioned fault 85% to ESB and 15 % to Shirley. It found that $162,582.39 damages were caused to the Trust with reduction for the Trust's failure to mitigate or minimize damages such that "Bank would pay 138195.03 Trust would pay 24387.36." It found that the Trust was entitled to puni­tives. The parties settled the entire claim for an undis­closed amount after the verdict and before the punitives hearing. 

verdict

$138,195 (85/15), punitives liability, negligent issuance of loan based on forged resignation­of-trustee document. .. settled for undisclosed amount. 

Plaintiff's expert: Michael Richards, Manhattan (banking, deposed and testified after observing trial pursuant to Rule 703). 

Defendant's expert: Title expert Michael Kleese, Stevensville (Plaintiff's motion to exclude him as a Rule 37 sanction was granted 6th day of trial for failure to disclose materials associated with seminars he had taught; he was going to testify that, like ESB, the title company had reviewed the resignation document and trust agree­ment and issued a title policy). 

Jury request, $162,582.39; jury suggestion, 0.

Steve Reida, mediator. 

Jury deliberated 3 hours 7th day. 

Johnson v. Glorvigen and Camp Three Forks LLC. Broadwater DV-17-03, 12/6/18.