Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Monday, August 18, 2014

New Case: The Woodward School for Girls v. City of Quincy

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Failure to take inflation into account is breach of duty of prudence.  The trial court held that the trustee of a perpetual charitable trust had breached the duty of prudence by investing the fund solely in bonds and awarded damages based on what the portfolio would have been worth had the trustee followed specific investment advice it had sought but ignored.  The Massachusetts Supreme Judicial Court affirmed the finding of breach of the duty to invest prudently, holding that the failure to invest to protect the principal of the fund from erosion in value because of inflation “alone” was sufficient to constitute a breach.  The court affirmed the use of unrealized gains as a measure of damages but remanded for further hearing on the amount of the unrealized gains that must consider not the ignored advice but rather what the prudent investor should have done in the specific situation. The court also held that the action sounded in tort rather than contract but that the usual rule for award of pre-judgment interest in tort actions does not apply and that the trial court properly awarded interest from the date of the last breach.  The Woodward School for Girls v. City of Quincy, 469 Mass. 151 (2014).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2014/08/new-case-the-woodward-school-for-girls-v-city-of-quincy.html

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