Seventh Circuit Affirms Dismissal of Breach of Fiduciary Duty Claim

In French v. WachoviaBank, French decided to move the interlocking irrevocable trust accountsbenefitting his children to Wachovia Bank. After consulting with French, Wachovia replaced the two whole lifeinsurance policies within the trust portfolio with new policies providing thesame death benefit but for lower premiums. For this service, Wachovia received a large but industry-standardcommission, which led French’s children to sue for breach of fiduciary duty andself-dealing. 

The district court dismissed this claim because of anexpress conflict of interest waiver found in the trust instrument.  The Seventh Circuit affirmed this decision,concluding “the terms of the trust instrument override the common-lawprohibition against self-dealing and displace the prudent-investor rule givingWachovia the broad discretion to invest trust property without regard to conflictsof interest, risk, lack of diversification, or unproductivity.”

See Seventh Circuit Upholds Dismissal of Breachof Fiduciary Duty Lawsuit, Professional Liability Attorney Network.