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In re Becker

Court of Appeals of Colorado, First Division

August 24, 2017

In the Interest of Kylee Becker, Protected Person,
Wells Fargo Bank, N.A., Appellant. and Aaron Becker, Conservator for Kylee Becker, Petitioner-Appellee,

         Logan County District Court No. 11PR17 Honorable Carl S. McGuire, III, Judge

          No Appearance for Petitioner-Appellee

          Brown Dunning Walker P.C., David C. Walker, Denver, Colorado, for Appellant

          TAUBMAN, JUDGE

         ¶ 1 In this conservatorship case, appellant, Wells Fargo Bank, N.A. (Wells Fargo), appeals the trial court's denial of its motion for reconsideration of the order to restore funds to a conservatorship account. We affirm in part, reverse in part, and remand to the trial court for further factual findings.

         I. Background

         ¶ 2 In June 2011, the trial court ordered Wells Fargo to establish a conservatorship account for the benefit of eleven-year-old Kylee Becker (the beneficiary) to be maintained by her father, Aaron Becker (Becker). It was intended to be a restricted account for the beneficiary's settlement funds obtained as a result of a personal injury claim. In its order, the court stated that no funds could be withdrawn from the account except by "separate certified order of this court." In August 2011, Wells Fargo complied with this order and deposited funds into the account. In August 2014, Becker reported to the trial court that the account had a balance of $56, 642.46. The court approved this report.

         ¶ 3 In May 2012, Wells Fargo allowed Becker to make unauthorized transfers from the account until it had a negative balance of $11.98. Wells Fargo closed the account in November 2015.

         ¶ 4 In August 2016, the trial court issued a show cause order to Wells Fargo and Becker related to the removal of funds without a court order. The court required "Wells Fargo to show cause why [it] had not opened a restricted account. . . . And for Aaron Becker to show cause why he has not been complying with the court's orders of filing annual reports to account for the money to the court, and to otherwise show he has not breached his fiduciary duty to the ward[.]" At the show cause hearing, Becker testified that he took funds from the account for his personal expenses, as well as to pay rent, groceries, utilities, sports activities expenses, and other expenses for the beneficiary. The trial court ordered Becker to file an accounting of how the funds were used from August 2013 to the date that the account was emptied and closed. Becker agreed.

         ¶ 5 A representative for Wells Fargo testified that Becker was able to withdraw funds from the account without a court order because the account was not opened as a restricted account. Instead, due to a "coding error, " it was opened as an unrestricted fiduciary account. The court then ordered Wells Fargo to provide additional bank statements from the conservatorship account.

         ¶ 6 A week after the hearing, the court ordered Becker and Wells Fargo to restore funds taken from the depleted account and found them jointly and severally liable for breach of fiduciary duty. Accordingly, the court ordered Wells Fargo to restore $56, 642.46, the amount last reported to the court, to a new restricted conservatorship account.

         ¶ 7 Wells Fargo moved to reconsider the order to restore funds, arguing that no evidence suggested that Wells Fargo was 100% liable, and that the trial court should have considered the percentage of fault attributable to Wells Fargo and Becker as required by section 13-21-111.5, C.R.S. 2016. It further requested that the court set a hearing to determine the relative degrees of liability between it and Becker regarding the mismanagement of the account and that the court determine the amount of the depleted funds actually spent for the benefit of the beneficiary so as not to afford her a double recovery.

         ¶ 8 The trial court denied this motion, concluding that its order was based on the court's powers under sections 15-10-501 to -505, C.R.S. 2016, and that section 13-21-111.5 did not apply. The trial court further stated that Wells Fargo had had the power to correct the coding error, and that but for Wells Fargo's negligence ab initio, Becker would not have been able to drain the account. Further, it stated that Wells Fargo could exercise its rights to seek contribution and comparative negligence from Becker by filing a separate civil action.

         ¶ 9 The trial court certified its order to restore funds and its order denying Wells Fargo's motion pursuant ...

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