Legal Question in Securities Law in California

Re: Attorneys fees recoverable?

An oral constructive trust? In usual parlance, a constructive trust is a trust implied in law and imposed (created) by a court as a remedy upon someone who has come into possession of the property of another by improper means, often but not always by fraud. Either I am missing some information, or my understanding of a constructive trust doesn't jibe with yours. I will do a little further research into constructive trusts and see if there is any way they can be created orally. Of course, the foundational facts which led to the imposition of the constructive trust might be, say, fraud by oral misstatements or breach of an oral promise.

Also, I should point out that since express trusts are (usually) created by written instruments, and constructive trusts, being imposed by a court of law rather than a trustor's writing, might be thought of as "unwritten" or "not based upon a writing," but that doesn't quite make them oral, since a court's judgment or decree imposing a constructive trust will at some point be reduced to writing in the record.

A quick review of case law does not suggest that attorney fees are recoverable at all in most cases of breach of fiduciary duty, unless (1) there is an express agreement between the breaching party and the plaintiff for attorney fees, such as one might find in a contract; or (2) the tort-of-another rule might apply. Here, there is probably no written agreement for recovery of attorney fees by a prevailing party, and there simply aren't enough facts given to disclose a possible third-party tort recovery of fees.

Finally, I question why recovery from the trust res is even an option in your thinking. Generally speaking, the person suing a trustee for breach of fiduciary duty is a beneficiary of the trust, so paying damages or fees from the trust res is like paying yourself damages out of your own pocket.

I'd love to discuss this situation with you at greater length, but this is about all I can tell you now. I will research "oral constructive trust" and get back to you with a follow-up answer if I learn anything new.

Re: Attorneys fees recoverable?

The three-word phrase "oral constructive trust" does not appear in any California reported case, according to WestLaw.