State says trustee abused position in handling charitable trust. Marin County.
Summary
Woman leaves estate to charity, but trustee does not follow her wishes.
The Case
- Case Name: People v. William Shine, et al.
- Court and Case Number: Marin Superior Court / PR1305238
- Date of Verdict or Judgment: Tuesday, February 27, 2018
- Date Action was Filed: Thursday, December 26, 2013
- Type of Case: Breach of Fiduciary Duty
- Judge or Arbitrator(s): Hon. Kelly Vieira Simmons
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Plaintiffs: People of the State of California, Petitioner
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Defendants: William Shine, Respondent
- Type of Result: Bench Verdict
The Result
- Gross Verdict or Award: $1,421,598.
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Award as to each Defendant:
The trial court ultimately found Shine's conduct as trustee “grossly negligent” and “wholly unacceptable,” (with respect to 5% of the claims of the California Attorney General per defense counsel), and awarded over $1.4 million in damages to the trust. The award includes the disgorgement of Shine's trustee fees that he had paid himself over the years.
Per defense counsel:
While the the Petitioner/AG alleged breach of the fiduciary duty for failure to form and fund a charitable foundation, the court found that there were no damages pertaining to that claim and that no assets were misappropriated or diverted – rather that the foundation was not formed due to intervening interfamily litigation and advice of (prior) counsel.Mr. Shine withdrew his request to be reinstated as trustee in consideration and exchange for release from certain issues. -
Economic Damages:
$1,421,598
- Trial or Arbitration Time: 17 days.
The Attorneys
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Attorney for the Plaintiff:
California Department of Justice, Office of the Attorney General, by Deputy Attorneys General Alicia Berry and Caitlin Whitwell Noble.
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Attorney for the Defendant:
Epstein Law Firm by Robert Epstein and Robyn Christo, San Rafael.
Joseph Wolberg, Greenbrae.
The Experts
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Plaintiff's Technical Expert(s):
Alan Yoshitake, fiduciary duty, Los Angeles.
Merrie Turner Lightner, property management, San Francisco. -
Defendant's Technical Expert(s):
Kenneth Feinfield, fiduciary duty, Los Angeles.
Timothy Jorstad, economics, San Rafael.
Scott Gerber, real estate, San Rafael.
Facts and Background
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Facts and Background:
Under the terms of the Eva LindskogTrust, the trustee was to form and fund a charitable foundation. In early 2014, the Court removed Shine as trustee and appointed an interim trustee.
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Plaintiff's Contentions:
The People alleged that, instead of forming a charitable foundation and investing trust funds into it, trustee William Shine used trust funds to invest in hard-money loans; used trust property to employ and house his friends and family; operated the trust's rental properties at a net loss for nine years (2005-2013); and donated trust funds to his own alma mater rather than to the charitable causes identified by Eva Lindskog in her trust.
The People alleged numerous breaches of fiduciary duties, including failure to form and fund a charitable foundation, failure to make a Subchapter S election, failure to maintain books and records, and diversion of charitable assets through multiple self-dealing transactions that benefited Shine's children, friends, and business partners.
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Defendant's Contentions:
Respondent Shine contended he breached no duty and that he was entitled to indemnification and attorneys' fees based on the broad exculpatory and discretionary provisions in the trust. (The trial and appellate court upheld this claim but deferred it tothe end of the case where it still remains to be adjudicated.)
He asserted he was protected by the doctrine of equitable excuse (Probate Code section 16440(b)) in that he relied, to his detriment, on the bad advice of counsel from three prior law firms. He also asserted waiver and estoppel.
Additional Notes
During his second day of trial testimony, Shine withdrew his request to be reinstated as trustee.