Van Gundy v. Van Gundy
Colorado Court of Appeals
292 P.3d 1201 (2012)
Eldon (plaintiff), as trust beneficiary, created an irrevocable trust naming his son Quinton (defendant) trustee, with a provision expressly authorizing investments regardless of fiduciary-law permissibility or diversification; Quinton invested trust assets in stocks, mutual funds, a Venezuelan gold-mining company (Crystallex), and margin purchases, and when the assets' value plummeted and Eldon ordered liquidation, a $340,000 loss resulted. Eldon sued for breach of contract, fiduciary duty, and accounting; the trial court held Quinton liable for both the margin purchases/diversification failure and the Crystallex investment, and Quinton appealed the margin and diversification rulings.
Whether a trustee may be held liable for violating the prudent investor rule if (1) investments conformed to a trust provision expressly permitting conduct contrary to the rule and (2) the trustee's conduct otherwise complied with the parties' intent.