As noted, punitive damages are not available in actions by a beneficiary against the trustee in the usual case.[1] Although the Kann Court held that punitive damages were not available based on the venerable law/equity distinction, it also hinted at a policy basis for the rule, quoting Learned Hand: “The law ought not make trusteeship so hazardous that responsible individuals and corporations will shy away from it.”[2] The remedies available for the breach of duty, however, are broad, and include:
- Compelling the trustee to perform the trustee’s duty.
- Enjoining the trustee from committing a breach of trust.
- Compelling the trustee to redress a breach of trust by paying money or restoring property.
- Ordering the trustee to account.
- Appointing a special trustee to take possession of the trust property and administer the trust.
- Suspend the trustee.
- Remove the trustee.
- Reduce or deny compensation to the trustee.
- In certain circumstances void the act of the trustee and impose a lien or construct a trust on trust property wrongfully disposed of.[3]
Under Maryland practice, the petition includes asking the Court to assume jurisdiction of the trust in order to implement the remedies. Md. Rule 10-501. Although the Maryland Trust Code has yet to be enacted, Maryland has codified the grounds for removal:
(a)(1) A court shall remove a fiduciary who has:
(i) Willfully misrepresented material facts leading to his appointment or to other action by the court in reference to the fiduciary estate;
(ii) Willfully disregarded an order of court;
(iii) Shown himself incapable, with or without fault to properly perform the duties of his office; or
(iv) Breached his duty of good faith or loyalty in the management of property of the fiduciary estate.
(2) A court may remove a fiduciary who has:
(i) Negligently failed to file a bond within the time required by rule or order of court;
(ii) Negligently failed to obey an order of court; or
(iii) Failed to perform any of his duties as fiduciary, or to competently administer the fiduciary estate.
(b) Procedures for the removal of a fiduciary shall be conducted by the court in accordance with the provisions of the Maryland Rules applying to a fiduciary.
(c) The provisions of this section shall not apply to personal representatives.[4]
Obviously, the statute essentially feeds back to the Common Law of trusts providing that the Court shall remove the trustee who has breached his duty of good faith or loyalty in the management of the trust property and may remove a trustee for failure to perform any of his fiduciary duties, leaving both of these categories undefined.
