Co-Trustees Cannot Seek Damages from One Another for Investment Loss

In Matter of Bloomingdale, 48 A.D.3d 559, __ N.Y.S.2d __, 2008 NY Slip Op 01339 (2d Dep't 2008), the Appellate Division Second Judicial Department held that two trust remaindermen who became co-trustees cannot pursue objections against the third trustee for retention of high concentrations of certain stocks as a failure to diversify under the Prudent Investor Act. The Court stated that because co-fiduciaries are regarded in law as one entity and a fiduciary has the means to know of a cofiduciary's acts, and has assented or acquiesced, the fiduciary is bound by those acts and jointly liable for those acts. Accordingly the Court dismissed their objections for the period of time they were acting as co-trustees, but permitted the claim to be asserted for the period before they became co-trustees.