Noelle Hanks, Successor Trustee of the William L Hanks Trust Agreement of June 14, 2006 v. Phil Morris , 432 S.W.3d 293 ( 2014 )

In the
Missouri Court of Appeals
Western District

NOELLE HANKS, SUCCESSOR 
TRUSTEE OF THE WILLIAM L.  WD76608
HANKS TRUST AGREEMENT OF
JUNE 14, 2006,  OPINION FILED:

Respondent,  JUNE 3, 2014

v. 

PHIL MORRIS, 

Appellant.
Appeal from the Circuit Court of Nodaway County, Missouri
The Honorable Roger Martin Prokes, Judge
Before Division One: Joseph M. Ellis PJ., Karen King Mitchell,
Anthony Rex Gabbert, JJ.
Phil Morris appeals from a judgment entered upon a jury verdict finding in favor of
Noelle Hanks (Plaintiff), successor trustee of the William L. Hanks Trust Agreement of June 14,
2006. The jury’s verdict was against Morris for compensatory damages in the amount of
$450,000 and punitive damages in the amount of $400,000 on Plaintiff’s “Second Amended
Petition for Accounting, Surcharges to the Former Trustees and for Damages for Fraud and
Conversion and for Punitive Damages and Other Relief” which claimed that Morris and his co-
defendants improperly managed the William L. Hanks Trust. Morris asserts four points on
appeal. First, Morris contends that the circuit court erred in refusing to instruct the jury that, if it
determined Morris was a trustee with special skills or knowledge, or named as trustee on that
basis, it could consider whether Morris was entitled to additional compensation. Second, Morris
contends that the circuit court erred in refusing to instruct the jury on the proper legal standard
for the imposition of liability upon a trustee for the actions of a co-trustee. Third, Morris asserts
that the circuit court erred in giving Instruction No. 6 to the jury because he claims that the
instruction failed to set forth the essential statutory elements for co-trustee liability. Fourth,
Morris asserts that the circuit court erred in denying his post-trial motion for remittitur of
punitive damages alleging that the damages imposed by the jury are grossly excessive and
contrary to the law. We affirm.
The evidence in the light most favorable to the jury’s verdict shows that Morris began
farming for William Hanks’s father in 1969. Morris developed a friendship and business
relationship with William Hanks in 1977 when Hanks moved back to Missouri after living in
Oregon. Morris testified that, in 2006, Hanks called Morris to Hanks’s home and asked Morris if
he would act as trustee of his trust, along with Larry D. Owens, after Hanks’s death. Morris
testified that Hanks told him that he wanted Morris as trustee because he had knowledge of
Hanks’s farms. On June 14, 2006, Hanks executed the William L. Hanks Revocable Trust
Agreement wherein he designated himself as trustee and Morris and Owens as successor co-
trustees. In May of 2008, Hanks died and Morris and Owens became acting co-trustees of the
Hanks Trust. At the time Morris and Owens took over as trustees, the trust had beginning assets
valued at nearly 1.5 million dollars. These assets consisted mainly of farm real estate and a
brokerage account.
On June 4, 2008, Morris and Owens hired Debra Owens, Owens’s wife, as the accountant
for the Hanks Trust. Debra operated a sole-proprietorship titled Dollars and Cents Accounting
2
and Tax Service. The engagement letter indicated that service reimbursement would be at the
rate of $50 per hour. For the approximate three year period from June 3, 2008, to May 15, 2011,
Debra’s business was paid $67,544 in service fees from the Hanks Trust. During that same three-
year time period, Morris collected $100,908 in trustee’s fees and Larry Owens collected
$163,720 in trustee’s fees.
Morris testified at trial that, prior to Hanks’s death, Morris worked with Hanks on
improving his farm properties through terracing work for soil conservation to maintain the value
of the farmland and meet government guidelines for a government cost share program. Morris
testified that he was not paid for his work on these farm improvements at the time he did the
work. Some of the work Morris contended that he was not paid for went as far back as 2004.
There is no dispute, however, that all of this alleged work was performed prior to Hanks’s death.
Morris testified that he paid himself for these farm improvements out of the trust after Hanks’s
death and these payments totaled over $92,000. Morris acknowledged, however, that only
approximately $9,000 of the $92,000 that he was paid for these farm improvements was for work
done to land in the Hanks Trust. Morris testified that the other over $80,000 was actually for
improvements he did to land in Hanks’s father’s trust. Although Hanks was one beneficiary of
his father’s trust, there were other beneficiaries in that trust different from the beneficiaries
named in Hanks’s trust.1 The documentation Morris had to support his billing for the farm
improvements consisted of brief summaries that he claims to have made from original time card
records. He testified that he kept the original time cards in a box, but destroyed those original
records after he made his bills out to Dollars and Cents Accounting.
1
It appears from the record that William Hanks’s father had established a trust of his own prior to his death
which included land that Morris apparently farmed and/or helped maintain.
3
Larry Owens, Morris’s co-trustee, was part owner of a developmental league baseball
team located in Hannibal, Missouri, known as the Hannibal Cavemen. There were three entities
involved in this venture: Clemens Field Development, Hannibal Sports and Entertainment
Group, and Hannibal Baseball Investment Group. Owens owned one-third of Clemens Field
Development, 50% of Hannibal Sports and Entertainment Group, and 38% of Hannibal Baseball
Investment Group. In March of 2009, the Hanks Trust transferred $150,000 to Clemens Field
Development. In September of 2009, Morris and Owens signed a document pledging a loan in
the amount of $200,000 to Hannibal Sports and Entertainment Group.2
Larry Owens and his wife, Debra, were also co-owners of a startup winery/bed and
breakfast named Casa de Loco Winery. Larry owned a 95% interest and Debra owned a 5%
interest in the business. Approximately two months after Hanks died, both Morris and Owens
signed a check transferring $30,000 from the Hanks Trust to Casa de Loco. On January 2, 2009,
Owens transferred another $40,000 to Casa de Loco, and on March 1, 2009, Owens transferred
$20,000 to Casa de Loco. The transfers from the Hanks Trust to Casa de Loco eventually
reached nearly $140,000. The evidence at trial showed that the Trust would likely be unable to
recover any assets from the baseball investment or Casa de Loco Winery.
In March of 2009, all creditors of the Hanks Trust and estate had been paid and all
beneficiaries of the Hanks Trust had received their bequests with the exception of Hanks’s
daughters, Noelle Hanks and Tiffany Wiederhorn, whom Morris and Owens did not pay. These
daughters were each bequeathed $1,000. Larry Owens’s son, Casey Owens, was bequeathed
$100,000 and was paid his share from the Trust on January 2, 2009.
2
Morris confirmed in his trial testimony that he authorized this transaction.
4
The University of Oregon Foundation was the remainder beneficiary of the Hanks Trust.
On June 4, 2008, Morris’s and Owens’s then attorney, Jere Loyd, sent the Foundation a letter
advising the Foundation of Hanks’s death and notifying the Foundation that Morris and Owens
were the successor co-trustees of the Hanks Trust. Over the next several months, the
Foundation’s attorney corresponded with Loyd in an attempt to receive an accounting from the
co-trustees. On April 22, 2009, Loyd sent Morris and Owens a letter advising them of the
Foundation’s requests for an accounting and informing them that they were obligated to report to
the beneficiary at least annually. Loyd suggested to Morris and Owens that an accounting be
prepared from the beginning of their administration through the end of 2008. Morris and Owens
failed to provide an accounting at that time. Morris testified that, at some point, Morris and
Owens discussed contacting the Foundation to determine the Foundation’s position with regard
to whether the trust should be left open or whether the Foundation wanted to directly take the
land in the trust, but instead decided to “just let it ride for a while.” Over eight months after
Loyd sent his first letter to Morris and Owens, Loyd sent another letter advising them again of
the Foundation’s request for an accounting and their obligation to provide one. Eventually, on
January 28, 2010, the Foundation was provided “Charge and Discharge Statements” for 2008 and
2009 and was later provided statements for 2010. On July 14, 2010, counsel for the Foundation
sent a letter to Loyd expressing concern that the statements evidenced “bafflingly large” and
“extreme” accounting and trustee’s fees and requested a prompt and comprehensive explanation.
The letter also expressed concern that the trustees were supposed to be expeditiously liquidating
the assets of the Hanks Trust, but little progress had been made towards that end.
Approximately one year later, in July of 2011, the Foundation and Hanks’s two daughters
filed suit against Morris and Owens seeking, among other relief, an injunction against further
5
spending or asset disposition by Morris and Owens and their removal as trustees. A Second
Amended Petition added claims for punitive damages and added Debra Owens as a party. Morris
and Owens ultimately resigned as trustees.3 On April 12, 2013, the jury found Morris liable to
the Hanks Trust for $450,000 in compensatory damages and $400,000 in punitive damages.
Morris’s post-trial Motion for New Trial and for Remittitur of Punitive Damages was denied.
Morris appeals.
In Morris’s first point on appeal, he contends that the circuit court erred in refusing to
instruct the jury that, if it determined Morris was a trustee with special skills or knowledge, or
named as trustee on that basis, it could consider whether Morris was entitled to additional
compensation. Morris argues that he was entitled to an instruction on his affirmative defense
theory that he was a trustee with special skills and knowledge who applied those skills in
carrying out his fiduciary duty, and he was prejudiced by the jury not being instructed that it
could take those skills and knowledge into consideration in determining the appropriate
compensation due Morris. He argues that his proffered “Instruction Y” was a proper statement
of Missouri law and supported by the evidence. We find no error.
When a party claims that the trial court erred in refusing to submit a non-MAI instruction,
we review the court’s denial of that instruction for abuse of discretion. McCullogh v. Commerce
Bank, 349 S.W.3d 389, 396 (Mo. App. 2011). The court abuses its discretion when its ruling is
clearly against the logic of the circumstances and is so arbitrary and unreasonable that it shocks
the sense of justice and indicates a lack of careful consideration. St. Louis County v. River Bend
3
On May 22, 2012, Morris filed suit against Owens for his alleged breaches of trust as co-trustee of the
Hanks Trust. He received a default judgment against Owens in the amount of $705,646.54. Morris assigned his
rights in the judgment to the Hanks Trust, but the trust declined to accept the assignment. Morris’s brief indicates
that Owens declared personal bankruptcy the day before the trial date and has a bankruptcy case pending. The
record indicates that, at some point, the Foundation chose to accept what it had already received under the Hanks
Trust and removed itself from the litigation.
6
Estates Homeowners’ Ass’n, 408 S.W.3d 116, 134 (Mo. banc 2013). If we find that the court
erred in refusing to give an instruction, we will only reverse if the refusal was prejudicial to the
offering party and materially affected the merits of the action. Freight House Lofts Condo Ass’n
v. VSI Meter Services, Inc., 402 S.W.3d 586, 595 (Mo. App. 2013). Rule 70.02(a) provides that
all instructions “shall be given or refused by the court according to the law and the evidence in
the case.” “[A] party is entitled to an instruction upon any theory supported by the evidence.”
Cluck v. Union Pacific R. Co., 367 S.W.3d 25, 33 (Mo. banc 2012). However, “even when a
party is entitled to have an instruction submitted, the trial court does not have a duty to submit a
correct instruction in the place of the parties’ erroneous instruction.” Id.
Morris proffered “Instruction Y” which Morris presented as being applicable to Section
456.8-806, RSMo Cum. Supp. 2013. He claims that the instruction addressed his affirmative
defense that he provided valuable and necessary services to the Trust, including work related to
maintaining the condition of the farm property as a productive asset for which the beneficiaries
benefitted. He also contends that Instruction Y reflects a proper statement of Missouri law
pursuant to the official comments to Section 456.7-708, RSMo Cum. Supp. 2013. Morris’s
proposed Instruction Y stated:
On the claim of the plaintiff for compensatory damages against Phil Morris
related to his Trustee fees if you believe:
First, either
Phil Morris was a trustee who has special skills or expertise
Phil Morris was named trustee in reliance upon the his [sic] representation
that he had special skills or expertise,
Second, you are entitled to consider if Phil Morris may be entitled to extra
compensation for performing services that would ordinarily be delegated.
7
We do not find Morris’s proposed Instruction Y to be a proper statement of Missouri law
pursuant to Section 456.8-806 or Section 456.7-708. Section 456.8-806 does not address trustee
compensation. Section 456.8-806 merely states that, “[a] trustee who has special skills or
expertise, or is named trustee in reliance upon the trustee’s representation that the trustee has
special skills or expertise, shall use those special skills or expertise.”
Although Morris proffered Instruction Y as following Section 456.8-806 and argues on
appeal its applicability to that statute, he also argues that a Uniform Trust Code comment to
Section 456.7-708 suggests relevant factors that may be taken into consideration when
determining reasonable compensation pursuant to Section 456.7-708. See 4C FRANCIS M.
HANNA, MISSOURI PRACTICE, TRUST CODE AND LAW MANUAL § 456.7-708 UTC
Comment (2013-1014). He argues that the factors suggested in the comment are applicable to
him and for consideration of the compensation he received as trustee under the Hanks Trust. Yet,
Morris and his proposed Instruction Y ignore the express language Section 456.7-708. Section
456.7-708 states, in relevant part:
1. If the terms of the trust do not specify the trustee’s compensation, a trustee is
entitled to compensation that is reasonable under the circumstances.
2. If the terms of a trust specify the trustee’s compensation, the trustee is entitled
to be compensated as specified, but the court may allow more or less
compensation if:
(1) the duties of the trustee are substantially different from those contemplated
when the trust was created; or
(2) the compensation specified by the terms of the trust would be
unreasonably low or high.
Here, the terms of the Hanks Trust specify the trustee’s compensation. The Hanks Trust
provides that the trustee “shall be compensated for its services as provided in the schedule of fees
8
published by The Country Club Trust Company, of Kansas City, Missouri, in effect at the date
the services are rendered.” Therefore “the terms of the trust [] override the reasonable
compensation standard, subject to the court’s inherent equity power to make adjustments
downward or upward in appropriate circumstances.” HANNA, MISSOURI PRACTICE,
TRUST CODE AND LAW MANUAL § 456.7-708 UTC Comment. Pursuant to Section 456.7-
708, Morris would have only been entitled to compensation above that provided by the trust
document if his trustee duties were substantially different from those contemplated when the
trust was created or if the compensation specified by the terms of the trust was unreasonably low
under the circumstances. Nothing within Morris’s proffered Instruction Y mentions this
significant provision of Section 456.7-708. Clearly, as Morris claims that he was named trustee
based on his knowledge, skills, and the expertise he was to provide to the trust, he cannot argue
that his trustee duties were substantially different from those contemplated when the trust was
created. Additionally, the evidence does not support that the compensation provided for in the
trust was unreasonably low for the services Morris actually provided, thereby justifying an
instruction based on Section 456.7-708.4
Morris argues that, because of his special skills and expertise, he was entitled to fees for
special or extraordinary services under the Country Club Trust Company fee schedule because
the schedule allows for such in its provision for “Fees for Special or Extraordinary Services.”
This provision states:
The foregoing charges are for standard and customary services performed by
Country Club Trust Company. Additional charges may be assessed if special or
extraordinary services are required, including reimbursement of actual costs to
third-parties. These include, but are not limited to, processing discretionary
4
We view the evidence in the light most favorable to submission of the instruction. Vandergriff v. Missouri
Pacific R.R., 769 S.W.2d 103, 104 (Mo. banc 1989).
9
distributions, payment of bills, preparation of tax returns, monthly adjustments to
the principal balance of assets, preparation for and involvement in litigation, and
participation in the management or sale of a business venture.
Thomas Wallingford, a Country Club Trust Company trust officer, confirmed in his testimony
that the Country Club Trust Company might assess additional charges against a trust if special or
extraordinary services are required in managing the trust. He testified that, active management
of a farm would be an extraordinary service. He testified that, dealing with partition actions,
dealing with quiet title actions, doing actual farm maintenance, and acting as an agent on behalf
of the trust in negotiating a sale price are also extraordinary services. He testified that, if the
County Club Trust Company utilizes extraordinary services, the beneficiaries are consulted and
advised.
We first note that Morris accepted the position of trustee under the terms of the trust and
could have petitioned the court pursuant to Section 456.7-708.2 to consider additional fees if he
believed the fees set forth by the trust were unreasonably low. This would have allowed the
beneficiaries of the trust the opportunity to dispute Morris’s contention and protect their interests.
Morris did not consult the court nor did he consult or advise the trust beneficiaries of the need for
additional fees for extraordinary services. Instead, Morris chose to determine his own fee
schedule and relies on the language in the Country Club Trust Company fee schedule regarding
extraordinary services to argue that he justifiably charged the trust for those extraordinary
services and that he was entitled to an instruction regarding that defense. Yet, there is no
evidence that the schedule of fees published by the Country Club Trust Company was
unreasonably low for the services Morris performed.
The Country Club Trust Company was named in the Hanks Trust as the successor trustee
if Morris and Owens failed to serve or chose not to serve. Wallingford, a trust officer for the
10
Country Club Trust Company, testified at trial that, the fee schedule at the time Morris and
Owens first became trustees was 1.1 % on the first million dollars in assets, and .6% for the next
$500,000 in assets. Wallingford testified that these fees would have included accounting services
provided by the Country Club Trust Company. Wallingford testified that, if the Country Club
Trust Company had managed the Hanks Trust, the trust would have been charged $38,000 in
trustee fees for the approximate three-year time period that Morris and Hanks governed the trust.
The approximate total of trustee and accounting fees paid by the Hanks Trust to Morris and
Owens, excluding the $67,544 paid to Owens’s wife for accounting services, was $264,628.
The Country Club Trust Company fee schedule sets forth a fee for standard and
customary services performed by the trustee, and then allows for additional charges for
extraordinary services. There was no evidence at trial that Morris first accepted the fee within
the schedule for his standard and customary services, and then assessed additional charges for
extraordinary services. Rather, Morris assessed the trust $125 per hour for all services he
performed. While Morris’s affirmative defense, as set forth in his petition, claims that he
performed work related to maintaining the condition of the farm property as a productive asset
for which the beneficiaries benefitted, Morris billed the trust $92,000 separately for these farm
improvements. While Morris argues that an extensive portion of his time as trustee was also
devoted to the marketing and sale of the farm property, the evidence shows that a realtor was
paid $37,339 for the sale of one tract of land and an auctioneer was paid $20,280 for the sale of
another. One could reasonably infer that these professionals earned their fees based on their own
marketing and sale of the farm properties.
Morris’s own evidence reflects that many hours of trustee work for which Morris billed
the trust did not require special skills and knowledge in maintaining farm property, installing soil
11
conservation terraces, and maintaining terrace work. For example, Morris’s Exhibit 101 contains
a section titled “Farm Sale & Maintenance.” It describes trustee work performed and the number
of hours worked. On April 1, 2010, Morris billed the trust one hour ($125) for: “Spoke to Phil
Blasier about days for trash.” On April 3, 2010, Morris billed the trust eight and a half hours
($1062.50) for: “Rain so I worked in implement shed to start cleaning out junk iron and trash all
day.” On April 12, 2010, Morris billed the trust three hours ($375) for: “Rain again – contacted
people to please dump scrap and trash dumpster and then hauled load to Mound City myself.”
On April 24, 2010, three hours ($375) for: “Rain – pulled old pickup out of the building and re-
inflated [tires] and cleared out cab of paper and documents of registration and licensing.” On
April 25, 2010, seven hours ($875) for: “started on west wall now; doors and signs and junk that
was of no value moved to the north wall.”
Also on Morris’s Exhibit 101 is a section titled “General Trust Fund Duties” and a section
titled “Legal.” Morris billed the trust a total of $11,062.50 for “General Trust Fund Duties” and
$12,437.50 for “Legal” duties. There was no evidence that these “general” or “legal” duties
utilized Morris’s special farm knowledge or expertise such that they would be considered
“extraordinary.” Morris’s argument on appeal that “there was no evidence presented that Morris
did not perform the work shown on exhibits 101 and 102, nor the farm improvement work as
shown on exhibits 108 and 109” and that the evidence showed that Morris “has special skill and
knowledge in his profession with regard to maintaining farm property, installing soil
conservation terraces and maintaining that terracing work” suggests entitlement to a presumption
that he used his special skill and knowledge in all of the work he performed for the trust. Given
the evidence, such a presumption is unwarranted.
12
We find that the circuit court did not abuse its discretion in refusing to submit Instruction
Y to the jury. Instruction Y did not follow substantive law with regard to Morris’s affirmative
defense that he performed special skills as trustee thereby entitling him to additional fees for the
performance of extraordinary services. Further, even if the evidence might have supported an
instruction setting forth Morris’s affirmative defense, which we find questionable, the court had
no duty to submit a correct instruction in the place of Morris’s erroneous instruction. Point one
is denied.
In Morris’s second point on appeal, he argues that the circuit court erred in refusing to
instruct the jury on the proper legal standard for the imposition of liability upon a trustee for the
actions of a co-trustee. Morris contends that he was entitled to an instruction that was a proper
and complete statement of Missouri law and supported by the evidence. He contends that he
took remedial action in response to the breach of duty by his co-trustee and was prejudiced by
the jury not being instructed that such remedial actions could be a basis for relieving Morris of
liability for the actions of co-trustee Owens. Therefore, he claims that the court erred in failing
to submit his proposed Instruction X to the jury. We find no error.
Morris’s proposed Instruction X reads:
On the claim of the plaintiff for compensatory damages against Phil Morris
related to the activities of Larry Owens:
First, your verdict must be for the plaintiff and against Phil Morris if you believe
Phil Morris joined in the actions of Larry Owens.
Second, your verdict must be for Phil Morris and against the plaintiff if you
believe:
(1) Phil Morris exercised reasonable care to prevent Larry Owens from
committing that serious breach of trust; and
(2) Phil Morris exercised reasonable care to compel Larry Owens to
redress that serious breach of trust.
13
If you do not believe Phil Morris exercised reasonable care under paragraphs (1)
and (2) above your verdict must be for the plaintiff and against Phil Morris
Morris’s proposed Instruction X is misleading with regard to the substantive law of co-
trustee liability as set forth in Section 456.7-703, RSMo Cum. Supp. 2013, and we disagree with
Morris’s contention that Instruction X parallels this statute. Section 456.7-703.6 states: “Except
as otherwise provided in subsection 7 of this section, a trustee who does not join in an action of
another trustee is not liable for the action.” (Emphasis added). Subsection 7 provides that:
“Each trustee shall exercise reasonable care to: (1) prevent a cotrustee from committing a
serious breach of trust; and (2) compel a cotrustee to redress a serious breach of trust.”
Instruction X does not parallel Section 456.7-703 because it presents the statutory language in
the reverse and fails to note at the outset that there are exceptions to a co-trustee’s avoidance of
liability for the actions of a malfeasant co-trustee where the co-trustee does not join in that
action. It is misleading in that it states in the first paragraph that Morris must have joined in the
actions of Owens in order to incur liability, and then in the second paragraph presents that the
jury verdict must be for Morris if he exercised reasonable care to prevent a serious breach of
trust by Owens and exercised reasonable care to compel Owens to redress that breach. Therein,
Morris confusingly inserts a converse instruction in the body of the verdict director.
Significantly, Instruction X omits a necessary element for tortious conduct – that the Hanks Trust
suffered damage as a result of Morris’s conduct.5 We find that the court did not abuse its
discretion in refusing to submit Instruction X to the jury. Point two is denied.
5
“Tort law focuses on three basic elements: duty, breach and damages.” L.A.C. ex rel. D.C. v. Ward
Parkway Shopping Center Co., L.P., 75 S.W.3d 247, 257 (Mo. banc 2002).
14
In Morris’s third point on appeal, he claims that, in addition to erring by not submitting
his proposed Instruction X to the jury, it was concurrent error for the court to instead submit
Instruction No. 6 to the jury because the instruction failed to set forth the essential statutory
elements for co-trustee liability. We find no error.
“Whether a jury was instructed properly is a question of law this [c]ourt reviews de
novo.” Hervey v. Missouri Dept. of Corrections, 379 S.W.3d 156, 159 (Mo. banc 2012).
Although Morris claims that Instruction No. 6 was erroneous, he failed to object to this
instruction at trial and, therefore, did not preserve this argument for review. Gorman v. Wal-Mart
Stores, Inc., 19 S.W.3d 725, 729 (Mo. App. 2000). While Morris argues in his brief that
“[n]either Plaintiff or Defendant were given the opportunity to object on the record to the
instruction ordered by the Court,” the record reflects that the court discussed Instruction No. 6 on
the record, indicated that it would be submitted, and then moved on to discuss Instruction No. 7.
There is nothing in the record to indicate that Morris was prevented from objecting. Rule 70.03
requires that a party make a specific objection to jury instructions prior to submission to the jury.
Id. Rule 70.03 states: “Counsel shall make specific objections to instructions considered
erroneous. No party may assign as error the giving or failure to give instructions unless that
party objects thereto before the jury retires to consider its verdict, stating distinctly the matter
objected to and the grounds of the objection.”
Morris further argues that he preserved this claim because he objected to the instruction
offered by the Plaintiff which the court ultimately modified to create Instruction No. 6. He
argues that the part of that instruction that he objected to remained the same in Instruction No. 6.
We find that, even if Instruction No. 6 was properly objected to, Morris’s claims as to its error
still have no merit.
15
Instruction No. 6 reads:
On the claim of plaintiff for compensatory damages against defendant your
verdict must be for plaintiff and against defendant if you believe:
First, either:
defendant failed to administer the trust solely in the interests of the
beneficiaries, or
defendant failed to administer the trust as a prudent person would, or
defendant failed to keep the beneficiaries of the trust reasonably informed
about the administration of the trust and of the material facts necessary for
them to protect their interests, or
defendant failed to exercise reasonable care to prevent co-Trustee, Larry
Owens, from committing a serious breach of trust, and
Second, as a direct result of any of the actions specified in paragraph First, above,
the William L. Hanks Trust sustained damage.
First, Morris complains that Instruction No. 6 does not track Section 456.7-703 as it pertains to
co-trustee liability. There is no requirement that a non-MAI instruction’s language must track
statutory language, just that it must follow the substantive law and be readily understood. See
Peel v. Credit Acceptance Corp., 408 S.W.3d 191, 200 (Mo. App. 2013). Second, Morris argues
in essence that, Instruction No. 6 does not follow the substantive law of Section 456.7-703.7
because it fails to include both the “prevention” and “redress” elements as a defense to Morris’s
liability for Owens’s serious breaches of trust. Morris argues that there was substantial evidence
that Morris undertook efforts to redress Owens’s breaches once discovered6 and, therefore,
Instruction No. 6 should have included the defense of exercising reasonable care to compel a co-
6
Morris’s evidentiary support for this contention is that he filed suit against Owens for Owens’s breaches to
the Hanks Trust. The record reflects that Morris did not file suit against Owens until suit had already been filed
against both Morris and Owens by the beneficiaries of the Hanks Trust.
16
trustee to redress a serious breach of trust.7 Yet, Section 456.7-703.7 states that each trustee shall
exercise reasonable care to: (1) prevent a co-trustee from committing a serious breach of trust;
and (2) compel a co-trustee to redress a serious breach of trust. Therefore, even if the evidence
showed that Morris exercised reasonable care to compel Owens to redress his breaches of trust,
this would still not provide Morris a defense to failing to exercise reasonable care to prevent
Owens from committing a serious breach of trust. Instruction No. 6’s exclusion of the “redress”
language actually removed one possible option for which the jury could have found Morris
liable. This exclusion benefitted, rather than harmed, Morris. Therefore, although we find no
error in the exclusion of the “redress” language, even if Morris could prove error, he cannot
prove prejudice. Point three is denied.
In Morris’s fourth point on appeal, he argues that the circuit court erred in denying his
post-trial motion for remittitur of punitive damages alleging that the damages imposed by the
jury are grossly excessive and contrary to the law. “We review the trial court’s denial of a
motion for remittitur for an abuse of discretion.” Peel, 408 S.W.3d at 211. “The assessment of
punitive damages is peculiarly committed to the discretion of the jury and the circuit court, and
appellate courts will interfere only in extreme cases.” Payne v. Markeson, 414 S.W.3d 530, 543
(Mo. App. 2013). Such cases must evidence an abuse of discretion so grossly excessive that it
shocks the conscience of the court. Peel, 408 S.W.3d at 211. Three factors considered by courts
to assess whether a punitive damage award is grossly excessive are: “(1) the degree of
reprehensibility of the defendant’s conduct; (2) the disparity between the actual or potential harm
7
With regard to the language regarding co-trustee liability, Instruction No. 6 stated that on Plaintiff’s claim
for compensatory damages the verdict must be for the Plaintiff if the jury believed that “defendant failed to exercise
reasonable care to prevent co-[t]rustee, Larry Owens, from committing a serious breach of trust” and, as a result, the
Hanks Trust sustained damage.
17
suffered by the plaintiff and the punitive damages award; and (3) the difference between the
punitive damages awarded by the jury and the civil penalties authorized or imposed in
comparable cases.” Estate of Overbey v. Chad Franklin National Auto Sales North, LLC, 361
S.W.3d 364, 372 (Mo. banc 2012) (internal quotations and citations omitted). “We review the
evidence and its reasonable inferences in the light most favorable to the award” and “disregard
all adverse inferences.” Holmes v. Kansas City Missouri Bd. of Police Com’rs ex rel. Its
Members, 364 S.W.3d 615, 628 (Mo. App. 2012).
Morris argues that there was no evidence that he acted with an intentional purpose, goal,
or motive to cause economic harm to the Trust. He contends that, “[w]hile there may be dispute
as to the hourly rate charged by Morris or whether the hours charged were not maintained as
accurately as would have been optimal, those relatively minor items do not warrant the
imposition of punitive damages.” He argues that there was no evidence that he personally
participated in or profited from the inappropriate actions of his co-trustee, Owens, and Morris’s
failure to discover Owens’s activities “perhaps rose to the level of plain negligence,” which is not
enough for an award of exemplary damages.
We find no abuse of discretion. Morris focuses almost exclusively on co-trustee Owens’s
breaches and argues that Morris was merely negligent, at most, for failing to discover those
breaches. In his brief he argues that the jury must have assigned liability to him based upon
damage to the trust caused by Owens’s activities because “the compensatory damages award
assessed by the jury exceeds by over $250,000 the total sums Morris received as trustee fees and
reimbursements for accrued farm maintenance and improvements.” Yet, our review of the record
reveals that the jury could have arrived at its compensatory damage figure solely by considering
Morris’s own authorized debits from the Hanks trust. Exhibit 2B lists all debits from the trust
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account and the signatories for those debits. Exhibit 2B shows that Morris personally authorized
trustee payments to himself, farm improvement payments to himself, trustee payments to Owens,
and accounting payments to Debra Owens that totaled approximately $290,150.47. Including the
$200,000 loan to Hannibal Sports and Entertainment that Morris pledged in writing and admitted
to authorizing in his trial testimony, the total disbursements authorized by Morris amount to
$490,150.47.8 Wallingford, the trust officer for the Country Club Trust Company, testified that if
the Country Club Trust Company had managed the Hanks Trust, the trust would have been
charged $38,000 in trustee fees for the approximate three-year time period that Morris and Hanks
governed the trust and that sum would have included accounting fees. Thus, the jury could have
found that Morris alone authorized disbursements of approximately $452,150.47 in excess of
what the fee schedule set forth for trustee compensation.9 The jury assessed compensatory
damages in the amount of $450,000. Therefore, the jury’s verdict does not require a presumption
that the jury held Morris accountable for Owens’s actions as well as his own.
The evidence was more than sufficient to establish all of the Plaintiff’s claims against
Morris - that Morris failed to administer the trust solely in the interests of the beneficiaries, failed
to administer the trust as a prudent person would, failed to keep the beneficiaries of the trust
reasonably informed about the administration of the trust and of the material facts necessary for
them to protect their interests, and failed to exercise reasonable care to prevent co-trustee Owens
from committing a serious breach of trust. The compensatory and punitive damages awards
combined total $850,000. As the Hanks Trust was depleted of over a million dollars on Morris’s
8
These disbursements signed for by Morris do not include the disbursements solely authorized by Owens or
Debra Owens that Morris claims he had only belated knowledge of.
9
If solely considering Morris’s disbursements in this figure, the jury would have also had to find that
Morris was not entitled to the $92,000 in farm improvements he purportedly performed prior to the death of William
Hanks and prior to becoming trustee.
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watch, nearly half of that directly attributable to Morris without even considering the actions of
his co-trustee, we cannot find the punitive damage award of $400,000 to be an abuse of
discretion. Morris flagrantly ignored requests and warnings to account to the trust beneficiaries
who were dependent upon his accounting and trustworthiness to protect their interests. The
Hanks Trust was financially vulnerable and the evidence showed that Morris took advantage of
that vulnerability for his own benefit.10 Point four is denied.
We conclude, therefore, that the circuit court did not abuse its discretion in refusing to
submit Morris’s Instruction Y to the jury. Instruction Y does not follow substantive law with
regard to Morris’s affirmative defense that he performed special skills as trustee thereby entitling
him to additional fees for the performance of extraordinary services and, even if the evidence
might have supported an instruction setting forth Morris’s affirmative defense, the court had no
duty to submit a correct instruction in the place of Morris’s erroneous instruction. Further, we
conclude that the court did not abuse its discretion in refusing to submit Morris’s proposed
Instruction X to the jury. Instruction X is misleading with regard to the substantive law of co-
trustee liability as set forth in Section 456.7-703 and omits the necessary element of damages.
Additionally, we conclude that the court did not abuse its discretion by submitting Instruction
No. 6 to the jury. The “redress” language of Section 456.7-703.7 was not necessary to the
instruction and Morris was not prejudiced by its exclusion. Finally, the court did not abuse its
discretion in denying Morris’s post-trial motion for remittitur of punitive damages because the
10
Morris’s brief displays that the damages imposed are not excessive in relation to damages allowed in
other jurisdictions. Morris notes that the Kansas Trust Code imposes double damages against a breaching trustee
who engaged in self dealing transactions. K.S.A. 58a-1002(3)(a). This statute allows for punitive damages in
addition to double damages. K.S.A. 58a-1002(3)(c). Here, the combined compensatory and punitive damages total
less than double the compensatory damages.
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damages imposed are not grossly excessive in light of the evidence. We affirm the circuit court’s
judgment.11
Anthony Rex Gabbert, Judge
All concur.
11
We grant appellate Respondent Noelle Hanks’s Motion for Award of Attorneys’ Fees and Costs on appeal
in the amount of $13,555.50. Section 456.10-1004, RSMo Cum. Supp. 2013.
21