In a West Virginia case filed in September 2018, two trust beneficiaries sought to take Huntington National Bank to court for allegedly making poor investment choices and trust administration decisions on their behalf. The basis of their complaint was that if the bank had made better decisions, the trust would be worth more than its current value. But can a bank be held liable for a trust’s poor performance? Courts have found that only in special circumstances does a bank actually have a duty to protect its customers’ best interests. This makes holding a bank accountable for breach of fiduciary duty difficult, though not impossible.

What is fiduciary duty?

“Fiduciary duty” refers to one party’s obligation to act in a way that will benefit another party, whether financially or in some other capacity. Generally, it is not a fiduciary relationship but rather a borrower-lender relationship that exists between a bank and its customers. A bank may be considered to have a fiduciary duty if an exceptional relationship of trust or confidence can be shown to exist between the bank and customer.

Fiduciary duty of West Virginia banks

Under state law, banks and trust companies that act in a fiduciary capacity are able to:

• Invest or reinvest trust assets in mutual funds
• Purchase insurance or securities on behalf of beneficiaries

State law also requires banks and trusts to report purchases made under the terms of their fiduciary duty to each beneficiary or any other party entitled to receive bank account statements. These reports must be provided in writing or electronically, at least once a year.

How breaches occur

A bank may breach its fiduciary duty in West Virginia if it:

• Makes a purchase or investment in a way that goes against the terms of a trust or another governing agreement
• Purchases insurance coverage or securities that are not considered prudent
• Charges unreasonable fees for its services
• Fails to provide required reports to beneficiaries
• Allows a financial advisor to take advantage of a longtime customer with whom he purports to be a friend
• Commits fraud

If you accuse your bank of breaching its fiduciary duty to you, the bank may defend itself by claiming that it intended to act in your best interests. To ensure your rights are asserted, it is important to secure representation from a qualified attorney. A legal professional who possesses an in-depth understanding of West Virginia’s banking and estate laws can be a great asset in helping you to prove you were wronged by your bank. The attorneys at Calwell Luce diTrapano PLLC are assertive and ethical advocates for victims of bank breach of fiduciary duty and other instances of consumer fraud. Call our Charleston, West Virginia office at [ln::phone] or contact us online to schedule a consultation with one of our knowledgeable attorneys.