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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Schultz v. Wells Fargo Bank, N.A. (6/7/2013) sp-6786

Schultz v. Wells Fargo Bank, N.A. (6/7/2013) sp-6786

       Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER . 

        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  


JEAN SCHULTZ, as Guardian of                     ) 

Dennis P. Hutchinson, Jr.; and THE               ) 

TRUST ADVISORY COMMITTEE,                        ) 

created under THE DENNIS P.                      ) 

HUTCHINSON, JR. TRUST,                           ) 

                                                 )   Supreme Court No. S-14673 

                       Appellants,               ) 

                                                 )   Superior Court No. 3AN-10-01399 PR 

        v.                                       ) 

                                                 )   O P I N I O N 

WELLS FARGO BANK, N.A.,                          ) 

                                                 )   No. 6786 - June 7, 2013 

                       Appellee.                 ) 


               Appeal from the Superior Court of the State of Alaska, Third 

               Judicial District, Anchorage, Sen K. Tan, Judge. 

               Appearances: Russell L. Winner, Winner & Associates, P.C., 

               Anchorage, for Appellants.       Gary A. Zipkin and Josh Van 

               Gorkom, Guess & Rudd P.C., Anchorage, for Appellee. 

               Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and 

               Bolger, Justices. 

               WINFREE, Justice. 


               A trust advisory committee spent four years seeking property insurance 

premium and coverage information from the trustee.  The committee then petitioned the 

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superior court for relief, contending that the trustee's failure to disclose information was 

a breach of fiduciary duty, requesting that the court compel the trustee to fulfill multiple 

information and document requests, and seeking an attorney's fees award under Alaska 

Civil   Rule   82.    The   superior   court   granted   approximately   half   of   the   committee's 

information and document requests and required the trustee to provide copies of the 

insurance policy.  But the superior court found that neither party clearly prevailed and 

denied the committee's attorney's fees request. The committee appeals, arguing that the 

superior court misinterpreted Rule 82 and abused its discretion by not determining that 

the committee was the prevailing party entitled to a fee award.              We reverse. 


                The Dennis P. Hutchinson, Jr. Trust owns two residential properties. Wells 

Fargo Bank, N.A., has   been the trustee since 1999.               Jean Schultz, the beneficiary's 

mother and guardian, is one of three Trust Advisory Committee members.1                       The trust 

agreement      requires    the  trustee   to  manage     trust  finances,   meet   annually    with   the 

Committee, provide statements of trust transactions and assets, and "maintain insurance 

against such hazards as the [trustee] and [the Committee] shall deem appropriate." 

                In   2005   the   Committee   learned   that   the   trust's   real   property   insurance 

premiums had increased significantly.  After the Committee's attorney contacted Wells 

Fargo, the Committee learned that the trust's real property insurance policies were not 

purchased through local insurance markets; rather, they were purchased through a Wells 

Fargo   insurance   program   under   a   master   policy   issued   to   Wells   Fargo.      Between 

September 2005 and August 2009 the Committee's attorney corresponded with Wells 

Fargo   on   multiple   occasions,   requesting   to   review   the   insurance   policy   and   other 

        1       Although Schultz is a party in this matter independent of the Committee, 

our further references to the Committee include her and her independent claim. 

                                                   -2-                                               6786 

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documents relating to the higher premiums being paid by the trust under Wells Fargo's 

insurance   program.       Unsatisfied      with   the   responses   and   information     received,   the 

Committee ultimately petitioned the superior court to require Wells Fargo to provide the 

insurance policy, related documents, and information about Wells Fargo's insurance 

program and its relationship to other entities involved in the insurance program. 

                The Committee alleged that after repeated requests for the insurance policy 

and   other   documents   and   information,   it   learned   that:    (1)   Wells   Fargo   insured   all 

properties of trusts it managed through the master insurance policy; (2) the trust was 

unable to opt out of Wells Fargo's insurance program; (3) the insurance purchased for 

the   trust's  properties    was    purchased     without    the  Committee's      agreement;     (4)  the 

premiums   paid      under   Wells   Fargo's     master   policy    appeared     higher   than   standard 

insurance coverage; (5) the policy also protected Wells Fargo from liability with respect 

to the trust; (6) Wells Fargo was the insured under the policy; and (7) Wells Fargo 

refused to provide insurance documents relevant to the trust's interests.   The Committee 

further alleged that after years of requests it remained "uninformed about many of the 

basic   facts   regarding   the   insurance   that   Wells   Fargo   obtained   under   the   [insurance 

program] and is charging to the [t]rust [and has] received no underlying documents to 

confirm what [it has] been told by Wells Fargo." 

                The Committee requested an order requiring Wells Fargo to provide the 

master   insurance      policy.   The   Committee   also   sought   information   and   documents 

detailing:    (1)   Wells   Fargo's   relationship   to   other   entities   involved   in   the   insurance 

program; (2) individual trust property premium allocation determinations; (3) how Wells 

Fargo handled losses and replacement valuations; (4) the number and type of trusts held 

by    Wells   Fargo;    (5)  Wells    Fargo's    internal   trust  administration      procedures;     and 

(6) proposals for a new   master insurance policy under the insurance program.   The 

Committee attached a list of 14 specific requests for information and 12 specific requests 

                                                   -3-                                              6786

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for documents.   Finally, the Committee requested costs and attorney's fees for having to 

file the petition. 

                  Wells Fargo responded that it did not use trust assets to insure itself against 

potential liability to beneficiaries, it did not profit from the insurance on trust properties, 

and the Committee's requests for documents and information "far exceed[ed] the scope 

of AS 13.36.080(a), which only entitles trust beneficiaries to relevant information about 

the   administration   of   the   trust   in   question."2      Wells   Fargo   did   not   dispute   that   its 

fiduciary duty included keeping a trust beneficiary "reasonably informed of the trust and 

its   administration   .   .   .   [and],   upon   reasonable   request,   [to]   provide        .   .   .   relevant 

information        about     the   assets    of   the   trust   and    the    particulars     relating    to   the 

administration,"3 but asserted that it had been responsive to the Committee's requests and 

had never refused to provide relevant information.  Wells Fargo further maintained that 

"AS 13.36.080 does not sanction unrestricted access to all of the trustee's internal files, 

processes, policies and communications, especially where the trustee is responsible for 

insuring over 7,000 separate properties." (Emphasis in original.)                       Finally, Wells Fargo 

contended that the Committee's petition was more like a request for pre-suit discovery, 

         2        AS 13.36.080(a) provides: 

                          The   trustee   shall   keep   the   beneficiaries   of   the   trust 

                  reasonably informed of the   trust and its administration. In 


                           . . . . 

                          (2) upon reasonable request, the trustee shall provide 

                  the   beneficiary   with   a   copy   of   the   terms   of   the   trust   that 

                  describe or affect the beneficiary's interest and with relevant 

                  information about the assets of the trust and the particulars 

                  relating to the administration . . . . 

         3       Id. 

                                                       -4-                                                  6786

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the Committee had not followed the proper procedures for pre-suit discovery outlined 

in Rule 27, and the Committee was not entitled to pre-suit discovery. 

                Wells Fargo offered to provide the Committee the master insurance policy, 

but only if the policy were redacted and subject to a protective order.                  Wells Fargo 

explained     that  redaction    was   necessary    because    it   was  not   authorized   to  disclose 

information about the thousands of other trust properties insured under the policy, and 

that   the  protective    order   was   necessary    because    it  "has  a  proprietary    interest   in 

maintaining the confidentiality of the terms and conditions of coverage and Wells Fargo 

would potentially suffer a competitive disadvantage should the Master Insurance Policy 

be    disclosed   to   competitors."     Wells     Fargo    contended     that  the  majority    of  the 

Committee's       14   information     and   12   document      requests    exceeded     the  scope    of 

information it was required to provide the Committee. 

                In February 2011 a probate master considered the dispute.                  The master 

analyzed     the   fiduciary   duty   that  trustees   owe    beneficiaries   under    AS   13.36.080, 

explaining that "the [Committee] in the reasonable exercise of [its] own fiduciary duty 

seek[s] responses to requests for information and supporting documentation from [Wells 

Fargo] to assuage [its] concerns about trust property insurance, coverage and cost."  The 

master further explained that "Wells Fargo . . . should be required to provide to [the 

Committee] all information and documents reasonably required for the beneficiary's 

representatives   to   be   fully   informed   and   equipped   to   appropriately   meet   its   duties 

according to the [t]rust." 

                The   master   found   that   the   Committee's   requests   for   information   about 

Wells Fargo's internal decision making and relationship to other financial entities went 

beyond Wells Fargo's fiduciary duty to provide information.   The master recommended 

"that the Court direct the Trustee to provide document[s] and information in response to 

only those requests which appear to clearly pertain to the Trustee's duty to inform."  The 

                                                  -5-                                             6786

----------------------- Page 6-----------------------

master recommended that Wells Fargo be ordered to comply with six of the Committee's 

information requests and seven of the Committee's document requests.              Finally, the 

master recommended that no party be liable for costs and attorney's fees, explaining that 

"[w]here each party may be found to have prevailed in part on contested issues the court 

may fairly conclude that neither is a prevailing party and entitled to a Civil Rule 82 

award of costs and fees." 

               After the master issued the report, the Committee submitted its objections 

to the superior court.   The Committee argued that Wells Fargo should be required to 

provide all of the requested information and documents, rather than only those items the 

master identified.  The Committee also argued that the information and documents the 

master did identify for production were "the essential, core information and documents 

that [the Committee] had requested."       The Committee requested full attorney's fees, 

arguing that it was the prevailing party and that, under Rule 82(b)(3)(K) and common 

law, a trustee's breach of fiduciary duty warrants a full attorney's fees award. 

               In    September     2011    the   superior    court   adopted    the   master's 

recommendations. The court's order denied the Committee's request for attorney's fees, 

explaining that "the [t]rust is allowed roughly half of its disclosure requests.      Neither 

party clearly prevailed here. Therefore, the court declines to award attorney's fees."  The 

court   also  granted  Wells   Fargo   a  protective  order  regarding  the  information   and 

documents to be provided to the Committee. 

               The Committee appeals the superior court's determination that neither party 

prevailed and its decision not to award attorney's fees to the Committee. 


               "We exercise our independent judgment in reviewing whether a trial court 

                                              -6-                                        6786

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has applied the appropriate legal standard in making its prevailing party determination."4 

We have held that we will review "a trial court's prevailing party determination for abuse 

of   discretion"5   and   "will   overturn   prevailing   party   determinations   'only   if   they   are 

manifestly unreasonable.' "6 


                Rule 82(a) provides:        "Except as otherwise provided by law or agreed to 

by   the   parties,   the   prevailing   party   in   a   civil   case   shall   be   awarded   attorney's   fees 

calculated under this rule."      We have "consistently held that both the determination of 

prevailing   party   status   and   the   award   of   costs   and   fees   are   committed   to   the   broad 

discretion of the trial court."7     "Therefore, any party seeking to overturn a trial court's 

decision in this regard has a heavy burden of persuasion."8 

                The Committee argues that we should not defer to the   superior court's 

decision - that we should review de novo and not apply the abuse of discretion standard 

of review - because the superior court misinterpreted Rule 82 and aggregated claims 

when making its prevailing party determination. The Committee alternatively argues that 

the trial court erred in determining that the Committee was not the prevailing party. 

        4       State v. Jacob, 214 P.3d 353, 358 (Alaska 2009) (quoting Halloran v. State, 

Div. of Elections , 115 P.3d 547, 550 (Alaska 2005)) (internal quotation marks omitted). 

        5       Taylor v. Moutrie-Pelham, 246 P.3d 927, 928-29 (Alaska 2011). 

        6       Alliance of Concerned Taxpayers, Inc. v. Kenai Peninsula Borough , 273 

P.3d 1123, 1126 (Alaska 2012) (quoting Progressive Corp. v. Peter ex rel. Peter , 195 

P.3d 1083, 1092 (Alaska 2008)). 

        7       K & K Recycling, Inc. v. Alaska Gold Co. , 80 P.3d 702, 721 (Alaska 2003) 

(quoting Tobeluk v. Lind, 589 P.2d 873, 878 (Alaska 1979)) (internal quotation marks 


        8       Western Airlines, Inc. v. Lathrop Co., 535 P.2d 1209, 1217 (Alaska 1975). 

                                                  -7-                                             6786

----------------------- Page 8-----------------------

                The   Committee   argues   that   our   prior   decisions   have   established   legal 

standards for prevailing party determinations - courts may not aggregate claims and 

parties prevail if they obtain some meaningful relief - and that the superior court's 

application of these standards should be reviewed de novo.             The Committee is correct 

that we have explained a party may prevail even if it wins only one of many claims9 and 

that we have cautioned courts not to merely count claims to determine prevailing party 

status.10 Although these cases provide some support for the Committee's argument, we 

believe our decisions explaining that parties may prevail when winning only a few claims 

and cautioning against aggregating claims are better characterized as identifying the 

bounds of judicial discretion, rather than as adding legal standards to Rule 82.11 

                "The    prevailing   party   is  the  one  who   has  successfully    prosecuted    or 

defended against the action, the one who is successful on the main issue of the action and 

in   whose    favor  the   decision   or  verdict  is  rendered    and  the  judgment     entered."12 

"[D]etermination of prevailing party status has therefore traditionally focused on the 

litigation itself."13 "A plaintiff may prevail even if he or she failed to recover all of the 

        9       See, e.g., Progressive Corp. , 195 P.3d at 1093. 

        10      See, e.g., State, Dep't of Corr. v. Anthoney, 229 P.3d 164, 168 (Alaska 


        11      See id. (discussing whether it is improper for courts to count claims and 

determining that court did not abuse its discretion when designating as prevailing a party 

who won on only a few claims). 

        12      Taylor   v.   Moutrie-Pelham,   246   P.3d  927,   929   (Alaska   2011)   (quoting 

Progressive Corp. , 195 P.3d at 1092) (internal quotation marks omitted). 

        13      City of Kenai v. Friends of the Recreation Ctr., Inc., 129 P.3d 452, 460 

(Alaska 2006). 

                                                 -8-                                           6786

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relief prayed for,"14 and "a plaintiff who recovers on only one claim may be designated 

the prevailing party."15     When "considering prevailing party status the trial court should 

ask the 'objective question . . . whether [the party] obtained the relief it sought.' "16 

                "[A] trial court does not abuse its discretion in refusing to award fees where 

neither   party   can   be   characterized   as   the   prevailing   party."17 "[W]hen   both   parties 

prevail on main issues, the superior court may also opt not to designate a prevailing 

party."18  If a   court "refrain[s] from characterizing either [party] as the prevailing party, 

[then] a denial of attorney costs and fees . . . is appropriate."19       We have found "no abuse 

of discretion in the superior court declaring the case a 'wash' and ordering each party to 

bear [its] own costs and fees."20 

                 In this case the master stated that "[w]here each party may be found to have 

prevailed in part on contested issues the court may fairly conclude that neither party is 

a prevailing party and entitled to a Civil Rule 82 award of costs and fees."  The master's 

explanation that each party prevailed in part on contested issues appears to mean that 

each party prevailed on some issues - that there were 26 issues corresponding to the 

Committee's 26 information and document requests. The superior court's order adopting 

        14      Blumenshine v. Baptiste , 869 P.2d 470, 474 (Alaska 1994). 

        15      Anthoney , 229 P.3d at 167 (citing Progressive Corp., 195 P.3d at 1093). 

        16      Taylor, 246 P.3d at 929-30 (alteration in original) (quoting Alaska Ctr. for 

the Env't v. State, 940 P.2d 916, 922 (Alaska 1997)). 

        17      Chambers v. Scofield, 247 P.3d 982, 989 (Alaska 2011). 

        18      Alliance of Concerned Taxpayers, Inc. v. Kenai Peninsula Borough , 273 

P.3d 1123, 1126 (Alaska 2012). 

        19      Tobeluk v. Lind, 589 P.2d 873, 877 (Alaska 1979). 

        20      Pavone v. Pavone , 860 P.2d 1228, 1233 (Alaska 1993). 

                                                  -9-                                             6786

----------------------- Page 10-----------------------

the master's recommendation explained that "the [Committee] is allowed roughly half 

its disclosure requests.    Neither party clearly prevailed here."      There is no additional 

explanation in the record of the superior court's attorney's fees decision. 

               The Committee argues that it was the prevailing party because it "prevailed 

on the main issue - in fact, on the only issue - in this case[,]" namely whether "Wells 

Fargo [may] be required to provide the insurance policy and attendant information and 

documents to [the Committee]."  (Emphasis in original.)  The Committee further argues 

that the superior court required Wells Fargo to provide the insurance policy and the 

primary information and documents requested, and that the superior court denied only 

the   Committee's   secondary   requests.    Comparing   its   recovery   to   prevailing   parties 

receiving lower monetary awards than requested, the Committee argues that the superior 

court failed to base its decision on the objective question of whether the Committee 

obtained relief it sought and that the superior court improperly counted claims when 

making     its  prevailing  party  decision.   Wells    Fargo   responds   that  the  Committee 

characterized each information and document request as necessary but it prevailed on 

fewer than half of its requests, and the Committee therefore did not prevail on the main 

issue in this case. 

               When a court has determined that a party did not prevail despite obtaining 

substantial affirmative relief, we have concluded there was an abuse of discretion.21  Here 

we conclude it was an abuse of discretion not to determine that the Committee was the 

        21     See, e.g., Alaska Ctr. for the Env't , 940 P.2d at 922 (identifying main issue 

and determining trial court erred when failing to declare appellant prevailed); Shepherd 

v. State, Dep't of Fish & Game, 897 P.2d 33, 44 (Alaska 1995) (holding trial court's 

characterization of main issue manifestly unreasonable and reversing decision awarding 

neither party attorney's fees); Blumenshine v. Baptiste , 869 P.2d 470, 474 (Alaska 1994) 

(holding abuse of discretion where plaintiff obtained affirmative recovery on main issue 

and trial court named defendant prevailing party). 

                                              -10-                                          6786

----------------------- Page 11-----------------------

prevailing party in light of its success in the litigation.         The record reflects that prior to 

the litigation Wells Fargo refused to give the Committee a copy of the master insurance 

policy and much of the other requested information.  The Committee was forced to resort 

to litigation before Wells Fargo complied with its fiduciary duties. We recognize that the 

Committee argued for a very expansive interpretation of disclosure requirements under 

AS 13.36.080 and that the superior court did not agree.              But the Committee obtained a 

court order (1) stating that Wells Fargo had a fiduciary obligation to provide documents 

and information necessary for the Committee to fulfill its own fiduciary obligations, and 

(2) directing Wells Fargo to give the Committee the insurance policy and about half of 

the   other   information   and   documents   it   requested.      Under   these   circumstances   the 

Committee was the prevailing party entitled to an award of attorney's fees.22 


                 We REVERSE the superior court's determination that the Committee was 

not   the   prevailing   party  and  REMAND   for   renewed   consideration   of   an   award   of 

attorney's fees to the Committee.23 

        22      See Progressive Corp. v. Peter ex rel Peter, 195 P.3d 1083, 1093 (Alaska 

2008) (declaring party that recovered less than hoped for but more than a de minimis 

amount   was   prevailing).       In   light   of   our   holding,   we   do   not   need   to   consider   the 

Committee's other arguments that the superior court abused its discretion by failing to 

adequately explain its decision, and that the superior court abused its discretion by failing 

to find that the Committee prevailed under the catalyst theory. 

        23      We leave it to the superior court to first consider the Committee's argument 

that   Wells   Fargo's   breach   of   its   fiduciary   duty   is   relevant   to   the   calculation   of   an 

attorney's fees award. 

                                                  -11-                                                6786 

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