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Factual Background:

In 1995, Erna Strawn executed a revocable living trust naming her adult daughters, Delores Cronin and Elaine Klinkerfuss, as the primary beneficiaries.  Ms. Strawn named herself and her grandson, defendant William Cronin, as co-trustees, with Mr. Cronin continuing as sole trustee upon Ms. Strawn’s incapacity or death.  The trust also provided that the trust assets would be divided into two equal shares, and each beneficiary would receive three distributions after Ms. Strawn’s death, the last being 10 years after her death.  After Ms. Strawn’s death in July 1999, Ms. Klinkerfuss, Plaintiff, informed the trustee, Defendant, that she intended to break the trust, have the trustee removed, and take her share of the trust outright.

Plaintiff filed suit in 2000 for removal of the trustee, an accounting, and actual and punitive damages.  The suit to remove the trustee went to trial in 2002, and the trial court found for Defendant, finding that Plaintiff had sued for selfish reasons and not to protect the trust.  The judgment was affirmed on appeal.  Defendant then filed a motion for trustee’s fees and attorneys’ fees, requesting that the attorneys’ fees be allocated exclusively against Plaintiff’s share of the trust.  The trial court awarded only a portion of the attorneys’ fees against the Plaintiff’s share, and the judgment was reversed in part on appeal, the court finding that the second appeal represented a continuation of the Plaintiff’s groundless and selfish litigation against the trustee.   The appellate court remanded with instructions that the trial court determine the reasonable attorneys’ fees caused by the beneficiary’s vexatious litigation and allocate those amounts against Plaintiff’s share of the trust.  The trial court then conducted a hearing in July 2007 to determine the reasonable amount of attorneys’ fees.

Held:

The Circuit Court of St. Louis County issued a judgment allocating a total of $161,728.95 in attorneys’ fees and expenses against the beneficiary’s share of the trust, which exceeds the Plaintiff’s share and thus exhausts it.  Plaintiff Klinkerfuss appealed.

On Appeal:

Affirmed.  The trial court properly determined and allocated the amount of attorneys’ fees and expenses against the plaintiff beneficiary’s share of the trust.   Regarding additional attorneys’ fees and expenses incurred on appeal, the Plaintiff can be held personally liable for these fees pursuant to RSMo. §456.10-1004 and exceptions to the American Rule of attorneys’ fees.

Rationale:

As to the trial court’s determination of attorneys’ fees, the trial court conducted the hearing in accordance with instructions given on remand, and despite the Plaintiff’s numerous contentions to the contrary, there was no error.

As to the motion for attorneys’ fees on appeal, there are two independent bases for awarding attorneys’ fees and expenses against the beneficiary personally.  The first is RSMo. §456.10-1004, which provides that “[i]n a judicial proceeding involving the administration of a trust, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney’s fees, to any party, to be paid by another party or from the trust that is the subject of the controversy.”  No Missouri appellate decisions have interpreted this statute, but the plain language of the statute supports a finding that equity and justice requires that the Plaintiff pay attorneys’ fees and costs when she has instituted baseless and vexatious litigation against the trust.  Otherwise, the “innocent beneficiary” would find her share depleted by the Plaintiff’s vexatious litigation, or the trustee would have to personally bear the expense for performing his duty.

The second basis for awarding attorneys’ fees and expenses against the Plaintiff personally is the “special circumstances” exception to the American Rule of attorneys’ fees.  Missouri adheres to the American Rule, meaning that generally, absent statutory authorization or contractual agreement, each litigant pays his or her own attorneys’ fees, with few exceptions.  The exceptions include special circumstances where an award of attorneys’ fees is necessary in equity to balance the benefits.  One situation considered “special circumstances” is when there has been intentional misconduct by a party.  When a party institutes litigation and proceeds in pursuing the litigation through three appeals, despite the characterization of the case by the trial and appellate courts as “vexatious” and “groundless and unsuccessful,” that party’s intentional actions of misconduct are the sole cause of all costs incurred by the opposing party.  Thus, a Plaintiff beneficiary who causes a Defendant trust to incur litigation costs through the litigation of meritless claims can be held personally responsible for the trust’s attorneys’ fees and expenses.