Oral Argument June 25, 2013.
Reconsideration denied November 27, 2013.
Appeal from Clallam Superior Court. Docket No: 11-2-00741-6. Date filed: 03/02/2012. Judge signing: Honorable Jay Bryan Roof.
Carl L. Gay (of Greenaway Gay & Tulloch ), for appellant.
Sam B. Franklin and William L. Cameron (of Lee Smart PS ); Steven Goldstein and Shawna M. Lydon (of Betts Patterson & Mines PS ); and James R. Hennessey and Julia K. Doyle (of Smith & Hennessey PLLC ), for respondents.
Authored by Christine Quinn-Brintnall. Concurring: Jeanette Marie Dalton, J.P.T., and Jill M Johanson, A.C.J.
[177 Wn.App. 81] ¶ 1 Shortly before her 21st birthday, Rachel Anderson brought suit against a host of defendants she believed mismanaged the " special needs" trust established for her when she was injured as a minor. In her complaint, Anderson alleged tat the two members of the " trust advisory committee" --her mother, Andrea Davey, and attorney Richard McMenamin--and the trustee, Wells Fargo Bank, NA, breached their fiduciary duties by approving trust disbursements contrary to the spirit of the trust. Anderson also alleged that William Dussault, the attorney hired by Wells Fargo to submit annual reports for court approval, committed legal malpractice.
¶ 2 McMenamin, Dussault, and Wells Fargo all moved for summary judgment, arguing, inter alia, that Anderson's claims were barred by the " Trustees' Accounting Act," ch. 11.106 RCW, res judicata, or judicial estoppel. Alternatively, each defendant argued that the trust's express language allowed for the disbursements in question and Anderson's claims failed, as a matter of law, to establish breach of fiduciary or legal duties. Without explaining its rationale, [177 Wn.App. 82] the
trial court granted summary judgment to McMenamin, Dussault, and Wells Fargo. Anderson now appeals, arguing that (1) the Trustees' Accounting Act does not apply to her trust and does not bar her claims, (2) neither res judicata nor judicial estoppel bar her claims, (3) the terms of the trust do not bar her claims, and (4) she presented enough evidence concerning the disbursements in question to warrant surviving summary judgment in light of disputed material facts. Because the Trustees' Accounting Act bars Anderson's claims, we affirm.
¶ 3 In November 1996, shortly after her sixth birthday, Anderson (formerly " Rachel M. Rodgers" ) was kicked in the face by a horse. Anderson " sustained major skull and facial damage" from the injury, required extensive surgery, and suffered substantial " psychological and emotional impact." 3 Clerk's Papers (CP) at 477. Anderson's family hired attorney McMenamin to settle her case and to that end, McMenamin retained attorney Dussault to prepare a trust in which to place the settlement proceeds. The trust was designed to " supplement all other financial and service benefits to which [Anderson] might be eligible as a result of her disability." 3 CP at 478.
¶ 4 On August 25, 1997, Clallam County Superior Court approved the settlement agreement and the parties' creation [177 Wn.App. 83] of the " Rachel Marguerite Rodgers Trust."  The trust agreement made Wells Fargo the trustee and established a trust advisory committee (TAC) consisting of McMenamin and Davey. The agreement gave the TAC " absolute and unfettered discretion to determine when and if [Anderson] needs regular and extra supportive services." 3 CP at 482.
¶ 5 The explicit language of the trust agreement explained that the trust was designed to
provide extra and supplemental medical, health, and nursing care, dental care, developmental services, support, maintenance, education, rehabilitation, therapies, devices, recreation, social opportunities, assistive devices, advocacy, legal services, respite care, personal attendant care, income and other tax liabilities, and consultant services for [Anderson]. To this end, the [TAC] may provide such resources and experiences as will contribute to and make the beneficiary's life as pleasant, comfortable and happy as feasible. Nothing herein shall preclude the [TAC] from purchasing those services and items which promote the beneficiary's happiness, welfare and development, including but not limited to vacation and recreation trips away from places of residence, expenses for a traveling companion if requested or necessary, entertainment expenses, and transportation costs.
3 CP at 481-82. The agreement also provided that the " Trustee shall make an annual statement of transactions and assets concerning all financial and investment activity undertaken on behalf of the Trust" to be delivered to Anderson, any court-appointed representative of Anderson, and the members of the TAC. 3 CP at 493.
¶ 6 The trust was initially funded with settlement proceeds amounting to $187,160.66. Wells Fargo hired Dussault [177 Wn.App. 84] to
prepare its annual reports for court approval. Dussault filed his first report to the court on January 25, 2000. The first report detailed all investment activities and trust disbursements between the trust's establishment date (August 25, 1997) and August 31, 1999. Among other expenses, the report stated that trust funds were used for " vehicle expenses in the total of $14,159.98," including the " purchase of a 1997 Mercury Tracer." 2 CP at 351. The superior court approved the report in its entirety. Dussault submitted the second report on February 12, 2001, which covered " all financial activity" from September 1, 1999 through August 31, 2000. 2 CP at 356. This report stated that " [d]isbursements from the Trust were in the total amount of $41,461.86" and included the " purchase of real estate." 2 CP at 356. The superior court also approved this report in its entirety.
¶ 7 On August 27, 2001, attorney Carl Gay (who represents Anderson in the current matter) sent a letter to Davey, Dussault, Wells Fargo, and McMenamin. The letter stated, in part,
This letter will advise that I represent Ken Chace III and Janet Gesualdi, respectively the biological father and maternal grandmother of [Anderson]. At their request, I have recently had the opportunity to review the court file in the referenced matter. Based upon a review of recent accountings filed with the court, my clients are concerned that [Anderson]'s trust funds have not been fully and properly invested and it would appear numerous disbursements of trust funds have been made in violation of the letter and spirit of the trust agreement. Improper distributions include use of trust funds to purchase real estate which purportedly is not held in the name of the trust, purchase of ...