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Keywords

appealsummary judgmentfiduciarytrustfiduciary duty
plaintiffappealsummary judgmentfiduciarytrustfiduciary duty

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Ebling v. Hasken, 912 N.W.2d 499 (Table), 2017 WL 6034124

Facts

The George L. McDonald Trust was established for the benefit of Eelen Young Ebling and Abby Lyon McDonald, who are the sole income beneficiaries. Sarah Hasken, one of the trust advisors, was removed from her position as vice president of A.Y. McDonald Industries, Inc. by Robert McDonald. Following her removal, Hasken did not vote on her own removal from the board and later withheld her vote at a shareholders meeting. Ebling and Abby McDonald filed a petition alleging Hasken breached her fiduciary duty, leading to her removal as trust advisor.

The George L. McDonald Trust at issue was established in 1970 for the benefit of the plaintiffs, Eelen Young Ebling and Abby Lyon McDonald. … Hasken did not attend the meeting, and she did not vote the 625 shares entrusted to her as a trust advisor on the question of her removal from the board.

Issue

Did Sarah Hasken breach her fiduciary duty as a trust advisor by failing to vote at the shareholders meeting, and was the district court correct in removing her as trust advisor?

Did Sarah Hasken breach her fiduciary duty as a trust advisor by failing to vote at the shareholders meeting, and was the district court correct in removing her as trust advisor?

Rule

A trustee or trust advisor owes a fiduciary duty to the beneficiaries, which includes acting with total loyalty and excluding self-interests. Removal of a trustee is an extreme remedy that should only occur if the trustee endangers the trust fund.

A trustee or trust advisor owes a fiduciary duty to the beneficiaries, which includes acting with total loyalty and excluding self-interests.

Analysis

The court analyzed whether Hasken's decision not to vote constituted a breach of her fiduciary duty. It noted that while Hasken's actions may have appeared to create a conflict of interest, there was no explicit obligation in the trust instrument requiring her to vote. The court found that Hasken's choice to withhold her vote did not necessarily harm the beneficiaries and that there were genuine issues of material fact regarding her actions.

The court noted: 'The facts here are not in dispute. The only dispute is whether Hasken’s failure or refusal to vote constitutes a breach of her fiduciary duty.' … 'Hasken acted in her own self-interests, rather than putting the interests of the beneficiary first.'

Conclusion

The appellate court reversed the district court's decision to remove Hasken as trust advisor, indicating that there were unresolved factual issues regarding her fiduciary duty.

The appellate court indicated that there were unresolved factual issues regarding her fiduciary duty.

Who won?

Sarah Hasken prevailed in the appeal because the appellate court found that the district court erred in its summary judgment removing her as trust advisor.

Sarah Hasken prevailed in the appeal because the appellate court found that the district court erred in its summary judgment removing her as trust advisor.

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