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Estate of Sturm ( 2024 )


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<div>24CA0015 Estate of Sturm 10-03-2024 </div>
<div> </div>
<div>COLORADO COURT OF APPEALS </div>
<div> </div>
<div> </div>
<div>Court of Appeals No. 24CA0015 </div>
<div>Jefferson <span>County District Court No. 21CV30119 </span>
</div>
<div>Honorable Todd L. Vriesman, Judge </div>
<div> </div>
<div> </div>
<div>In the Matter of the <span>Estate of </span>Sharon G. Sturm, deceased. </div>
<div> </div>
<div>John C. Taylor, Jr.<span>, and Sherril A. Sturm, </span>
</div>
<div> </div>
<div>Appellees, </div>
<div> </div>
<div>v. </div>
<div> </div>
<div>Bob L. Sturm Trust and Sharon G. Sturm Trust by the Trustee, Bob L. Sturm, </div>
<div>Jr.<span>, </span>
</div>
<div> </div>
<div>Appellants. </div>
<div> </div>
<div> </div>
<div>ORDER REVERSED AND CASE </div>
<div>REMANDED WITH DIRECTIONS<span> </span>
</div>
<div> </div>
<div>Division VII </div>
<div>Opinion by JUDGE PAWAR </div>
<div>Tow and Schutz, JJ., concur </div>
<div> </div>
<div>NOT PUBLISHED PURSUANT TO C.A.R. 35(e) </div>
<div>Announced October 3, 2024 </div>
<div> </div>
<div> </div>
<div>Ross<span>-Shannon &amp; Proctor, P.C., Joshua R. Proctor, Lakewood Colorado; Proctor </span>
</div>
<div>Brant, P.C., Jesse O. Brant, Englewood, Colorado, for Appellee John C. Taylor, </div>
<div>Jr.<span> </span>
</div>
<div> </div>
<div>TNS Associates, P.C., William G. Dornan, Michael J. McNally, Jonathan R. Slie, </div>
<div>Denver, Colorado, for Appellee Sherril A. Sturm </div>
<div> </div>
<div>The Klug Law Firm, LLC, Noah Klug, Breckenridge, Colorado, for Appellants<span> </span>
</div>
<div> </div>
<div> </div>
</div></div>
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<div>1 </div>
<div>¶ 1<span> </span><span>In this <span>case</span>, a trust beneficiary who successfully sued the </span>
</div>
<div>trustee for breach of fiduciary duty was awarded his attorney fees </div>
<div>and costs <span>to be paid from trust assets</span><span>.</span><span>  </span>We conclude that<span></span> section 15-</div>
<div>10<span>-504(2), C.R.S. 2024, does not authorize such an <span></span>award to be </span>
</div>
<div>paid from the trust.  In contrast, section 15-<span>10</span>-602(7), C.R.S. 2024, </div>
<div>could authorize such an award to be paid from the trust.  <span></span>But </div>
<div>because the procedures set out in section 15-<span>10</span>-602(7) were not </div>
<div>followed in this case, we conclude that section cannot suppo<span></span>rt th<span>e </span>
</div>
<div>fees and costs award here.  We therefore reverse the att<span></span>orney fees </div>
<div>and costs award and remand with directions. </div>
<div>I.<span> <span>Background </span></span>
</div>
<div>¶ 2<span> <span>Sherril A. Sturm was the trustee of her parents’ trusts, <span></span>the </span></span>
</div>
<div>Bob L. Sturm Trust and Sharon G. Sturm Trust.  Th<span></span>e beneficiaries </div>
<div>of both trusts were Sherril</div>
</div>
<div><div>1</div></div>
<div>
<div> and her siblings Bob L. Sturm, Jr., and </div>
<div>John C. Taylor, Jr. </div>
<div>¶ 3<span> <span>Taylor sued Sherril, the trusts, his mother’s estate, and B<span></span>ob </span></span>
</div>
<div>Jr.  As relevant here, the action alleged that Sherril breached he<span></span>r </div>
<div> </div>
</div>
<div><div>1</div></div>
<div>
<div> Sherril and Bob Jr. share a surname.  We refer to them by their </div>
<div>first names for ease of reference.  We intend no disrespect in doing </div>
<div>so. </div>
</div>
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<div>2 </div>
<div>fiduciary duty by overcompensating herself as trustee and giving<span></span> </div>
<div>herself and her uncle interest-free loans from the trusts.  The action </div>
<div>sought damages and removal of Sherril as trustee. </div>
<div>¶ 4<span> </span><span>At the summary judgment stage, the trial court determined </span>
</div>
<div>that the loans constituted a breach of fiduciary duty.<span></span>  However, the </div>
<div>court ruled that there were disputed factual issues about whether </div>
<div>She<span>rril also breached her fiduciary duty by overcompensatin<span></span>g </span>
</div>
<div>herself as trustee.  Accordingly, the court held a bench trial to </div>
<div>determine (1) damages for the loans and (2) liability and damage<span></span>s </div>
<div>for the alleged overcompensation. </div>
<div>¶ 5<span> </span><span>At trial, Sherril agreed to her removal as trustee and the court </span>
</div>
<div>determined that her overcompensation constituted a breach <span></span>of </div>
<div>fiduciary duty.  The court awarded damages for both <span></span>breaches.  The </div>
<div>court also awarded Taylor his attorney fees and costs and r<span></span>uled </div>
<div>that they “may be charged against trust assets.”</div>
</div>
<div><div>2</div></div>
<div>
<div> </div>
<div> </div>
</div>
<div><div>2</div></div>
<div>
<div> The court also awarded Sherril her attorney fees and costs <span></span>to be </div>
<div>charged against trust assets but that award is not challenge<span></span>d in </div>
<div>this appeal. </div>
</div>
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<div>3 </div>
<div>¶ 6<span> </span><span>Bob Jr., in his capacity as trustee for both trusts, appeals.  He </span>
</div>
<div>argues that the trial court erred by ordering <span>Taylor’s fees and costs </span>
</div>
<div>award <span>to</span> be paid by the trusts.  We agree. </div>
<div>II.<span> <span>Trial Court Erred </span></span>
</div>
<div>¶ 7<span> <span>Determining whether the trial court erred by chargin<span></span>g Taylor’s </span></span>
</div>
<div>fees and costs to the trusts requires us to interpret the <span></span>relevant </div>
<div>statutes.  We do so de novo, with the aim of giving effect t<span></span>o the </div>
<div>legislature’s intent.<span>  </span><span>See In re Estate of Gonzalez<span>,
    2024 COA 63
    , </span></span>
</div>
<div>¶¶<span> 24, 32.  We determine legislative intent by examining t<span></span>he </span>
</div>
<div>statute’s plain language and giving the words the legislature ch<span></span>ose </div>
<div>their plain and ordinary meaning.  <span>Id.</span> <span>at ¶ 32.  If the statute’s </span>
</div>
<div>language is clear and unambiguous, our analysis ends <span>th</span><span>ere</span><span>.  </span><span>Id.</span> </div>
<div>¶ 8<span> </span><span>As identified above, the two separate attorney fees and costs </span>
</div>
<div>provisions relevant to this appeal are sections 15-<span>10</span>-504(2) and 15-</div>
<div>10<span>-602(7). </span>
</div>
<div>¶ 9<span> </span><span>Section 15-<span>10</span>-504(2) provides that if a court determines after </span>
</div>
<div>a hearing that a fiduciary has breached their duty, “the court may </div>
<div>surcharge the fiduciary for any damage or loss to the estate, </div>
</div></div>
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<div>4 </div>
<div>beneficiaries, or interested persons.”</div>
</div>
<div><div>3</div></div>
<div>
<div>  <span>§ 15-<span>10</span>-504(2)(a).  These </span>
</div>
<div>damages may include attorney fees and costs.  <span>Id.</span><span>  </span>The clear and </div>
<div>unambiguous language of this provision authorizes a surcharge </div>
<div>against <span>“the fiduciary,” not the </span>estate. </div>
<div>¶ 10<span> </span><span>In contrast, section 15-<span>10</span>-602(7) authorizes an estate to </span>
</div>
<div>compensate a lawyer or other person not appointed by t<span></span>he court for </div>
<div>services or costs that result in an order benefitting the estate.  But </div>
<div>there are various procedural prerequisites to such an awar<span></span>d, </div>
<div>including filing a request for one within thirty-five days after entry </div>
<div>of the order benefitting the estate.  § 15-<span>10</span>-602(7)(b)(I). </div>
<div>¶ 11<span> </span><span>Sherril and Taylor seem to recognize that neither section </span>
</div>
<div>504(2)(a) nor section 602(7) independently authorizes charging </div>
<div>Taylor’s attorney fees and costs to the trusts.  They <span></span>do not argue </div>
<div>that section 504(2)(a)’s authorization to surcharge “the <span></span>fiduciary” </div>
<div>includes authorization to surcharge the trusts.  And they <span></span>do not </div>
<div>argue <span>that section 602(7)’s prerequisites were either satisfie<span></span>d or </span>
</div>
<div>inapplicable for some reason. </div>
<div> </div>
</div>
<div><div>3</div></div>
<div>
<div> The trusts at issue in this appeal each qualify as an estat<span></span>e for </div>
<div>purposes of the cited statutes.  <span>See</span> § 15-<span>10</span>-601(1), C.R.S. 2024. </div>
</div>
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<div><div>
<div>5 </div>
<div>¶ 12<span> </span><span>Instead, they <span>argue the trial court’s award should be affirmed </span></span>
</div>
<div>based on section 15-<span>10</span>-504(2)(b), which says, <span>“In awarding attorney </span>
</div>
<div>fees and costs pursuant to this section, a court may consi<span></span>der the </div>
<div>provisions of part 6 of this article 10.”  This “may consider” </div>
<div>language, according to Sherril and Taylor, allowed the court to </div>
<div>charge Taylor’s fees and costs to the trusts<span> instead of the <span></span>fiduciary </span>
</div>
<div>(Sherril) under section 504(2) without having to comply with any <span></span>of </div>
<div>section 602(7)’s procedures.<span> </span>
</div>
<div>¶ 13<span> <span>In essence, they argue that section 504(2)(b)’s “may consi<span></span>der” </span></span>
</div>
<div>language allows a trial court to take two independent mechanism<span></span>s </div>
<div>for awarding fees and costs (sections 504(2) and 602(7)), cherry-</div>
<div>pick discrete elements from each, and use only the selected </div>
<div>elements to create an entirely new third mechanism.  From section </div>
<div>602(7), Sherril and Taylor take the authority to char<span></span>ge attorney fees </div>
<div>and costs against the estate <span>—</span> but not the procedural requirements </div>
<div>that go with it<span>.  </span>Sherril and Taylor combine that with section </div>
<div>504(2)’s authority to surcharge<span> attorney fees and costs as dam<span></span>ages.  </span>
</div>
<div>The end result, according to Sherril and Taylor, is autho<span></span>rity to </div>
<div>surcharge attorney fees and costs as damages against t<span></span>he estate </div>
<div>without adhering to section 602(7)’s procedures<span>. </span>
</div>
</div></div>
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<div>6 </div>
<div>¶ 14<span> </span><span>This interpretation of the statutory scheme is unreasonable.  </span>
</div>
<div>Instead, the only reasonable interpretation is that sections 5<span></span>04(2) </div>
<div>and 602(7) are separate and distinct provisions under which <span></span>fees </div>
<div>and costs can be awarded.  Section 504(2) allows fees and <span></span>costs to </div>
<div>be awarded as damages, but only so long as they are charged t<span></span>o the </div>
<div>fiduciary.  Separately, an award under section 602(7) <span></span>is chargeable </div>
<div>to the estate<span>, </span>but it requires compliance with the procedures set out </div>
<div>in section 602(7)(b)(I)-(IV).</div>
</div>
<div><div>4</div></div>
<div>
<div>  <span>Absent compliance with the entirety of </span>
</div>
<div>one of these provisions, Taylor is responsible for his own fees and </div>
<div>costs.<span>  <span>See Guarantee Tr. Life Ins. Co. v. Est. of Casper<span>,
    2018 CO 43
    , </span></span></span>
</div>
<div>¶ 23 (parties are generally responsible for their own litigation </div>
<div>expenses absent a contrary applicable provision). </div>
<div>¶ 15<span> <span>We conclude that Taylor’s award was not authorized by either </span></span>
</div>
<div>provision.  Section 504(2) does not authorize a surcharge to t<span></span>he </div>
<div>trusts, and although section 602(7) does, nobody argues that the </div>
<div>procedural requirements of that provision were satisfied.  In so </div>
<div>holding, we express no opinion about whether Taylor’s fees an<span></span>d </div>
<div> </div>
</div>
<div><div>4</div></div>
<div>
<div> As set out above, <span>a </span>section <span>15</span><span>-<span>10</span></span>-602(7), C.R.S. 2024, award also </div>
<div>requires that a lawyer or other person not appointed by t<span></span>he court </div>
<div>provides services that result in an order beneficial to t<span></span>he estate. </div>
</div>
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<div><div>
<div>7 </div>
<div>costs can be charged to Sherril as the fiduciary under secti<span></span>on </div>
<div>504(2)(a). </div>
<div>III.<span> <span>Appellate Attorney Fees and Costs </span></span>
</div>
<div>¶ 16<span> </span><span>The trusts and Sherril request their appellate fees and costs </span>
</div>
<div>(Taylor does not).  <span>We address only the trusts’ request because t<span></span>hat </span>
</div>
<div>is the only one supported by citation to authority.  <span>See Andres </span>
</div>
<div>Trucking Co. v. United Fire &amp; Cas. <span>Co.</span><span>,
    2018 COA 144
    , ¶ 63 </span>
</div>
<div>(declining to consider request for appellate fees presented wit<span></span>hout </div>
<div>legal or factual basis). </div>
<div>¶ 17<span> </span><span>The trusts argue that they are entitled to recover their </span>
</div>
<div>appellate attorney fees and costs under section 504(2), surcharge<span></span>d </div>
<div>to Sherril as the party who breached her fiduciary duty <span></span>as trustee.  </div>
<div>We decline this request.  <span>See</span> § 15-<span>10<span>-</span></span><span>504(2) (a court “may” </span>
</div>
<div>surcharge the fiduciary for fees and costs).<span>  </span>Unlike <span>In re Estat<span></span>e of </span>
</div>
<div>Ybarra<span>,
    2024 COA 3
    , ¶ 30, the trusts are not challenging <span></span>the court’s </span>
</div>
<div>determination that Sherril breached her fiduciary duty, <span></span>nor the </div>
<div>amount of damages that breach caused.  The trusts are ch<span></span>allenging </div>
<div>only the trial <span>court’s decision to charge </span>a portion of the damages </div>
<div>(Taylor’s attorney fees and costs) to the trusts.  Because th<span>is issue </span>
</div>
<div>is at least slightly attenuated from Sherril’s breach of f<span></span>iduciary </div>
</div></div>
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<div>8 </div>
<div>duty, we decline to award the trusts their appellate attorney fee<span></span>s </div>
<div>and costs under section 504(2). </div>
<div>IV.<span> </span><span>Disposition </span>
</div>
<div>¶ 18<span> </span><span>The attorney fees and costs award to Taylor is reversed, and </span>
</div>
<div>the case is remanded to the trial court for further proceedings </div>
<div>consistent with this opinion. </div>
<div>JUDGE TOW and JUDGE SCHUTZ concur.<span> </span>
</div>
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Document Info

Docket Number： 24CA0015

Filed Date： 10/3/2024

Precedential Status： Precedential

Modified Date： 10/5/2024