Fisher v. Ward (2015) & Trustee Obligations in Maryland

Whenever a person assumes the role of a trustee in a given situation, that person immediately acquires multiple fiduciary obligations. Essentially, the trustee gains a formal duty to perform the responsibilities which fall upon him or her, and failure to perform these formal duties may result in negative repercussions for the trustee. Depending on the exact nature of the situation, the trustee may be required to compensate whomever suffered economic damages as a result of the failure.

In the past, when we have discussed trustees, this discussion has been more or less limited to trustees in the context of trusts. Although trustees are used in the context of trusts, they also show up in other contexts, such as foreclosure sales or auctions. Where a piece of real estate is held by a mortgage or deed or trust, for instance, the deed holder may utilize a trustee to orchestrate an auction in cases of default. If the trustee fails to perform its duties, then such a breach may carry consequences. Marylanders who are preparing for estate planning should still take the time to be aware of trustee obligations in other contexts aside from trusts, because the repercussions for failing to perform fiduciary obligations tend to be largely the same.

A case from awhile back, Fisher v. Ward (2015), involved trustees appointed to facilitate an auction sale on a foreclosed property. When the trustees allegedly failed to perform their duties, the issue of whether this alleged failure should lead to damage recovery was litigated. Let’s go over the details of this case.

‍

Facts of the Case

Fisher fell behind on the payments to a piece of real estate, and the deed of trust was held by Fannie Mae. At a certain point of delinquency, the note holder had the right to appoint a trustee or trustees to facilitate a foreclosure auction sale. Fannie Mae chose to exercise that right, and subsequently several trustees were appointed to oversee the sale.

The auction date was scheduled, and then on auction day only one bid was received and entered. But, this single bid was for a price above what was considered fair market value, and so that bid was accepted. Importantly, during the auction, none of the appointed trustees were physically present, although at least one of the trustees coordinated with the auctioneer to execute the sale. Fisher argued that the law requires trustees to be physically present at the time of sale, otherwise the sale may be collapsed and overturned. The trustees argued that physical presence was not a firm requirement and, even if it had been, no damages derived from that alleged defect and so consequently the alleged defect should be ignored. Fisher lost at the circuit court level and then the matter went before the Court of Special Appeals in Maryland.

‍

Ruling & Discussion

After discussing the applicable standard of review for the case, the appellate division referenced a specific precedent which was used as authority and guidance, the case of Wicks v. Westcott (1883). In that case, the court basically determined that a trustee’s absence from a sale, such as the auction in Fisher v. Ward, doesn’t necessarily collapse an entire transaction, but instead may be used as one factor in the overall analysis of the transaction for fairness. If the absence didn’t have sort of prejudicial impact, and therefore didn’t produce an unfair transaction, then the transaction may be upheld despite the defect.

In this situation, the appellate division ruled that the procedural defect on absenteeism in this auction didn’t unfairly prejudice Fisher, and consequently the ruling for Ward was upheld. This result is exactly the sort of information which future trustees need to know about. Trustee obligations are always things to be taken seriously, but the potential implications for violating obligations are context dependent. The consequences may not be as straightforward or easily predictable as laypeople may suppose. Assistance by a skilled attorney in these situations in always advised.

‍

Contact the Murphy Law Firm for Additional Information

To learn more about trustee obligations, potential ramifications for failure to perform trustee obligations, understanding fiduciary obligations generally, creating a trust, or any other related matter, contact one of the estate planning attorneys at the Murphy Law Firm today by calling 240-219-1187.

‍

‍