December 10, 2013 – George Robert Miller, Barbara Jean Miller, and Charles Richard Mailler v. Bank of America, N.A., as Trustee of the Qualified Terminable Interest Marital Trust and Family Trust created under the Last Will and Testament of Rudolph C. Miller, Jr., Deceased, No. 31,463

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Filing Date: December 10, 2013
NO. 31,463
GEORGE ROBERT MILLER,
BARBARA JEAN MILLER, and
CHARLES RICHARD MILLER,
Plaintiffs-Appellants/Cross-Appellees,
v.
BANK OF AMERICA, N.A.,
As Trustee of the Qualified Terminable
Interest Marital Trust and Family Trust
created under the Last Will and Testament
of Rudolph C. Miller, Jr., Deceased,
Defendant-Appellee/Cross-Appellant.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Beatrice Brickhouse, District Judge
Catron, Catron, Pottow, & Glassman P.A.
Michael T. Pottow
Santa Fe, NM
Tucker Law Firm, P.C.
Steven L. Tucker
Santa Fe, NM
for Appellants

Keleher & McLeod, P.A.
Thomas C. Bird
Phil Krehbiel
Cassandra R. Malone
Albuquerque, NM
for Appellee

OPINION
GARCIA, Judge.
{1} 	Three of the remainder beneficiaries (Beneficiaries) of their father’s two
testamentary trusts appeal a judgment awarding them damages in an amount lower
than they claimed that the trust Beneficiaries were entitled to recover. The trustee,
Bank of America (the Bank), cross-appeals. The Bank’s cross-appeal challenges the
court’s determination of liability. We deny the Bank’s cross-appeal but we partially
agree with Beneficiaries regarding the calculation of certain compensatory damages.
As a result, we affirm in part and reverse in part.
BACKGROUND
{2} 	This dispute concerns two trusts created by the Last Will and Testament of
Rudolph C. Miller, Jr. (the Will). The two trusts created by the Will were a qualified
terminable interest property marital trust for Father’s widow and a remainder trust for
Beneficiaries (the Trusts). The central purposes of the Trusts were: (1) the generation
of income for beneficiary distribution, and (2) the preservation of the value of the
principal assets for distribution to Beneficiaries upon the surviving spouse’s (Ann’s)
death. In 1985, the Bank assumed the position of trustee of the Trusts. It administered
the trusts until their termination on January 30, 2004.
{3} 	The original lawsuit and this appeal arise from the Bank’s actions as trustee

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from the end of 1991 through 2003. As of 1991, the net value of the Trusts was
$669,996.07 and primarily consisted of real property in Virginia, Hawaii, and New
Mexico. At the end of 2003, the Trusts consisted of one “ratty piece of property,” and
the net value of the Trusts was effectively zero. As a result, Beneficiaries brought this
action to recover damages and other remedies against the Bank for breaches of its
fiduciary duty and duty of loyalty.
{4} 	Following the bench trial, the district court ruled in favor of Beneficiaries but
awarded damages in an amount lower than Beneficiaries believe they were entitled to
receive. Beneficiaries timely appealed the district court’s judgment regarding the
damages awarded. The Bank timely filed a cross-appeal challenging the district
court’s imposition of liability in favor of Beneficiaries. The additional facts and
procedural history pertinent to each argument will be included in the appropriate
section of the discussion below.
DISCUSSION
{5} 	We first address the issue of liability raised by the Bank. Because we affirm the
district court on liability, we will then address Beneficiaries’ challenge to the district
court’s determination of the amount of damages.
I. 	LIABILITY
{6} 	The Bank had very little experience with commercial property management.
However, in late 1991, it acquired a commercial building in Albuquerque (the

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Building) as an asset of the Trusts. At some point prior to April 1995, the Building
was unproductive of net income and a drain to the income and other assets of the
Trusts. The crux of the district court’s liability determination revolves around the
Bank’s continued investment in the Building despite its status as a wasting
commercial real estate asset. The Will provided that the “Trustee shall not invest any
portion of the [T]rust assets in unproductive property . . . but may retain unproductive
property received into the trust.”
{7} 	In 1995, when the Bank became aware that the Building was unproductive,
Patrick Schaefer, the trust officer responsible for administering the Trusts, stated in
a handwritten note that the Building was “draining income of [the] trust.” Schaefer did
not communicate this information to Beneficiaries. Yet Schaefer instead told
Beneficiaries that it would be prudent to “look into sale of [the] property.” After
evaluating the Building and the other real property owned by the Trusts, however, the
Bank instead recommended obtaining a $395,000 loan to renovate the Building.
Without disclosing the Building’s unproductive status to the Beneficiaries, the Bank’s
recommendation stated, “[I]t is obvious that the most advantageous scenario to
increase income would be to renovate the [Building] to a competitive condition.” The
Bank advocated that Beneficiaries agree to sell the other properties owned by the
Trusts and to use the proceeds from the sale to reduce the loan balance on the
Building. The Bank implemented this plan without objection from Beneficiaries.

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{8} 	In implementing its recommendations, the Bank borrowed from an affiliate
entity in amounts much greater than the $350,000 amount initially approved by
Beneficiaries. It also proceeded to sell the other property belonging to the Trusts. The
record demonstrates, however, that the sales proceeds were not used to reduce the loan
balance on the Building. By 2003, the Bank had invested $800,000 of the Trusts’
assets into the Building for the speculative purpose of reversing its declining
condition. As a result of this investment, the Bank was also able to produce $400,000
in “phantom income” for distribution to Beneficiaries.
{9} 	After trial, the district court issued a letter decision against the Bank on the
issue of liability. Based on the Bank’s conduct with regard to the Building, the district
court found that the Bank had committed breaches of its fiduciary duty to the Trusts
and its responsibility of loyalty to protect the best interest of the Beneficiaries by (1)
investing in unproductive property, (2) failing to administer the trust prudently, (3)
failing to preserve principal, and (4) failing to produce income. The district court also
found the Bank liable for at least four additional breaches of trust and loyalty based
on conduct unrelated to the Building. The district court did not enter findings or
conclusions that correlated specific breaches of particular duties with all or any
specific portion of the damages awarded.
{10} 	The Bank challenges the district court’s liability determinations that the Bank
owed certain duties as the trustee of the Trusts, breached its duties, and caused harm

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to Beneficiaries, as remainder beneficiaries of one of the Trusts. We address each
challenge in turn.
A. 	Standard of Review
{11} 	The issues raised by the Bank on cross-appeal involve only evidentiary
challenges to the district court’s findings of fact and conclusions of law. Thus, we
apply 	a 	substantial 	evidence 	standard 	of 	review. 	Koprian 	v. 	Mennecke,
1949-NMSC-023, ¶ 5, 53 N.M. 176, 204 P.2d 440; Roybal v. Morris, 1983-NMCA-
101, ¶ 30, 100 N.M. 305, 669 P.2d 1100. “Substantial evidence is such relevant
evidence that a reasonable mind would find adequate to support a conclusion.”
Landavazo v. Sanchez, 1990-NMSC-114, ¶ 7, 111 N.M. 137, 802 P.2d 1283. In
reviewing a substantial evidence claim, “[t]he question is not whether substantial
evidence exists to support the opposite result, but rather whether such evidence
supports the result reached.” Las Cruces Prof’l Fire Fighters v. City of Las Cruces,
1997-NMCA-044, ¶ 12, 123 N.M. 329, 940 P.2d 177. “[W]e will not reweigh the
evidence nor substitute our judgment for that of the [factfinder].” Id.; Williams v.
Williams, 1989-NMCA-072, ¶ 7, 109 N.M. 92, 781 P.2d 1170 (explaining that the
duty to weigh the credibility of witnesses and to resolve conflicts in the evidence lies
with the trial court, not the appellate court). We consider the evidence in the light most
favorable to the prevailing party and disregard any inferences and evidence to the
contrary. Williams, 1989-NMCA-072, ¶ 7; see Las Cruces Prof’l Fire Fighters, 1997-

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NMCA-044, ¶ 12 (resolving all factual disputes in favor of the successful party and
indulging all reasonable inferences in support of the prevailing party).
B. 	Duties Owed by the Bank
{12} 	The Bank argues that the district court misapplied unambiguous terms in the
Will and the relevant law when it defined the duties owed by the Bank as trustee of
the Trusts. Specifically, the Bank disputes the district court’s findings that it had
duties to maintain a depreciation reserve, not to lend money to the Trusts, to treat
Beneficiaries and Ann impartially, and not to allocate between principal and income.
The Bank does not challenge the district court’s findings that it owed four other duties
as trustee: (1) a duty not to invest in unproductive property, (2) a duty to administer
the trust prudently, (3) a duty to preserve trust principal, and (4) a duty to produce
income. For the reasons that follow, we will not fully address the merits of this
argument on appeal.
{13} 	The Bank’s cross-appeal challenges the imposition of four duties, but the
district court based its liability determination on at least eight distinct breaches of
duty. The district court did not enter findings or conclusions correlating any breach
of a particular duty with any portion or the entirety of the damages award, and the
Bank asserted that Beneficiaries were entitled to one assessment of damages
regardless of the number of separate duties that the district court might determine had
been breached. McCauley v. Ray, 1968-NMSC-194, ¶ 11, 80 N.M. 171, 453 P.2d 192

7
(“[A] party litigant may not invite error and then take advantage of it.” (internal
quotation marks and citation omitted)). Thus, the Bank’s liability for damages rests
on the assumption that any one or all of the breaches found to exist by the district
court caused the full decline in the value of the Trusts’ assets. As a result, even if we
were to determine that it was error for the district court to impose certain duties on the
Bank as trustee, the Bank’s cross-appeal concedes that the Bank properly owed four
specific duties with regard to its administration of the Trusts and that a breach of any
one of these other duties was sufficient to cause the damages claimed by Beneficiaries.
See Rule 12-213(A)(4) NMRA (“A contention that a verdict, judgment [,] or finding
of fact is not supported by substantial evidence shall be deemed waived unless the
argument identifies with particularity the fact or facts that are not supported by
substantial evidence[.]”); Giovannini v. Turrietta, 1966-NMSC-103, ¶ 4, 76 N.M. 344,
414 P.2d 855 (“The [district] court’s findings, not properly attacked, are conclusive
on appeal.”). Therefore, we need only address the merits of the Bank’s
argument if we determine that the Bank did not breach any of the duties it owed as
trustee of the Trusts. See Newcum v. Lawson, 1984-NMCA-057, ¶ 33, 101 N.M. 448,
684 P.2d 534 (“Even if a finding of fact or conclusion is erroneous, if it is unnecessary
to the court’s decision, the mistake is not a basis for reversal.”).
{14} 	As we discuss below, the district court did not err in imposing liability against

8
the Bank for the breach of its unchallenged duties as trustee of the Trusts. As a result,
it is not necessary to address the Bank’s argument regarding whether the district court
may have erroneously imposed additional duties upon the Bank as the Bank contends.
C. 	Breach of Duty
{15} 	We now address the Bank’s contention that it was error to impose liability
against the Bank for its continued investment in the Building. On cross-appeal, the
Bank does not argue that its conduct did not breach the express terms of the Trusts or
any of the four undisputed duties owed to Beneficiaries. Rather, the Bank asserts that
it was error to hold the Bank liable for any possible breach of duty because
Beneficiaries consented to or ratified the Bank’s actions when it continued to invest
in the Building. In response, Beneficiaries take the position that the Bank may not rely
upon consent as a defense to liability because Beneficiaries were not fully informed
of their rights or the material facts with regard to the Building.
{16} 	When a fiduciary relationship arises from a trust instrument, the fiduciary is
held to a strict standard of care and loyalty, generally prohibiting the fiduciary or
trustee from making non-traditional investments that put at risk the preservation of the
corpus or the amount and regularity of income to be derived. See State ex rel. King v.
Lyons, 2011-NMSC-004, ¶ 103, 149 N.M. 330, 248 P.3d 878 (reasoning that “[a]
trustee’s duties include the protection and management of the trust property to provide
returns or other benefits to the trust[.]” (citing Restatement (Third) of Trusts § 86 cmt.

9
b (2007))); Pino v. Budwine, 1977-NMSC-068, ¶ 9, 90 N.M. 750, 568 P.2d 586 (“A
trust relationship imposes stringent and high standards of conduct upon the trustee.”).
However, this standard is considerably reduced if a beneficiary consents to a deviation
from the traditionally strict investment policies imposed upon a fiduciary. Restatement
(Second) of Trusts § 216 (1959). Where the beneficiary has consented to an
investment strategy with full knowledge of the material facts and their legal rights, the
beneficiary may not later complain if the investment strategy results in a breach of
trust. Id.; see NMSA 1978, § 46A-10-1008 (2003) (recompiled at NMSA 1978, §
46A-10-1009 (2007)).
{17} 	The Bank contends that Beneficiaries did not assert, and the district court did
not find, that Beneficiaries were not fully informed of the Bank’s actions. This
contention does not properly represent the record. Instead, the record reflects that the
district court addressed the disputed factual issues regarding informed consent by
Beneficiaries and rejected Bank’s requested findings of fact regarding whether
Beneficiaries properly consented to and ratified the Bank’s conduct and whether the
Bank kept Beneficiaries reasonably informed about the administration of the Trusts,
including the necessary material facts related to their interests. See In re Yalkut, 2008-
NMSC-009, ¶ 18, 143 N.M. 387, 176 P.3d 1119 (“[F]ailure to make a finding of fact
is regarded as a finding against the party seeking to establish the affirmative.”). While
the district court did not make more specific findings on this issue, the findings

10
entered by the court include references that Beneficiaries received limited information
about the Bank’s actions, had many unanswered questions about the management of
the Trusts, and the Bank actually misrepresented the value of the Building that was
carried on its books. The issue is whether the evidence in the record is sufficient to
reflect 	that 	the 	Bank 	did 	not 	reasonably 	inform 	Beneficiaries 	regarding 	the
unproductive status of the Building or improperly advised Beneficiaries when the
Bank was exercising its special skills and expertise to prudently administer and
manage the Trusts’ unproductive asset while also preserving trust principal and
producing reasonable income.
{18} 	The record established that the Bank knew that the Building was unproductive
of net income and draining the income and assets of the Trusts as early as April 1995.
Yet the district court found that the Bank never accurately communicated this
information to Beneficiaries, and the evidence supports these findings. Based upon its
skills and expertise, the Bank also recommended that Beneficiaries deplete the Trusts’
assets and reinvest them in the Building. This recommendation directly violated an
express provision of the Trusts. See Rutanen v. Ballard, 678 N.E.2d 133, 139 (Mass.
1997) (finding a breach of fiduciary duty where a trustee has a duty to sell
unproductive property and fails to do so). In addition, there was evidence that the
Bank was not experienced in managing commercial real estate, but the Bank fails to
identify any evidence in the record to establish that this deficiency was communicated

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to Beneficiaries. Without a fully informed consent or ratification from Beneficiaries,
the Bank’s imprudent conduct that resulted from rashly investing the entirety of the
Trusts’ assets in the unproductive and declining Building reflected a failure to exercise
the reasonable care, special skills, or expertise required of a trustee. See Mattocks v.
Moulton, 24 A. 1004, 1007 (Me. 1892) (reasoning that it is imprudent to invest trust
funds in a new venture that is sensitive to market changes, has no working capital, and
is liable to be overwhelmed “at the first unfavorable turn of affairs”).
{19} 	On cross-appeal, the Bank merely directs this Court to the evidence favorable
to its argument and ignores the evidence relied upon by the district court in finding
liability against the Bank. The Bank points to Beneficiaries’ alleged consent to certain
actions but fails to address the evidence supporting the district court’s findings
regarding 	the 	Bank’s 	fiduciary 	responsibilities 	and 	its 	deficient 	investment
recommendations or decisions regarding the Building. See Rule 12-213; see also
Aspen Landscaping, Inc. v. Longford Homes of N.M., Inc., 2004-NMCA-063, ¶¶ 28-
29, 135 N.M. 607, 92 P.3d 53 (explaining that a party challenging a finding for lack
of substantial evidence must refer to “all of the evidence, both favorable and
unfavorable, followed by an explanation of why the unfavorable evidence does not
amount to substantial evidence, such as is necessary to inform both the appellee and
the Court of the true nature of the appellant’s arguments”). Further, the Bank has not
specifically identified or challenged any of the district court’s findings that were

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entered 	to 	support 	the 	inferences 	regarding 	a 	lack 	of 	informed 	consent 	by
Beneficiaries. See Giovannini, 1966-NMSC-103, ¶ 4. As a result, we affirm the
district court’s decision that Beneficiaries did not give fully informed consent. State
v. Rojo, 1999-NMSC-001, ¶ 53, 126 N.M. 438, 971 P.2d 829; see Landavazo, 1990-
NMSC-114, ¶ 7 (explaining that the duty to weigh the credibility of witnesses and to
resolve conflicts in the evidence is for the district court, and this Court will not
reweigh the evidence or substitute our judgment for the trier of fact on appeal); see
also Hines v. Hines, 1958-NMSC-098, ¶ 5, 64 N.M. 377, 328 P.2d 944 (“As to the
[district] court’s refusal of appellant’s requested findings of fact, suffice it to say that
the refused findings were diametrically opposed to or inconsistent with the facts
properly found by the [district] court in support of the final decree and judgment.
Therefore, the refusal was not error.”).
{20} 	We conclude the record provides support for a determination that Beneficiaries
were unaware of all the material facts regarding the Building and did not fully consent
to the Bank’s conduct. It follows that the district court did not err in rejecting the
Bank’s requested findings of fact and conclusions of law that Beneficiaries were fully
informed and consented to or ratified the Bank’s conduct. See Fox v. Doak, 1968-
NMSC-031, ¶ 10, 78 N.M. 743, 438 P.2d 153 (concluding that it is not error for the
district court to reject requested findings of fact where the requested findings are
inconsistent with findings of the district court that are supported by substantial

13
evidence); see also Hines, 1958-NMSC-098, ¶ 5.
D. 	Harm to Beneficiaries
{21} 	The Bank’s final contention challenges the district court’s finding that it failed
to keep adequate accounting records. The Bank further asserts that even if it failed to
keep adequate accounting records, Beneficiaries failed to show how any accounting
errors caused them losses or resulted in any profit to the Bank.
{22} 	We first note that, based on the Bank’s inadequate record keeping and lack of
financial evidence, the district court concluded that it would resolve all doubts related
to the Trusts’ administration against the Bank. The Bank has not challenged this
conclusion by the district court, and it is therefore conclusive on appeal. See
Giovannini, 1966-NMSC-103, ¶ 4 (“The [district] court’s findings, not properly
attacked, are conclusive on appeal.”). Second, as previously discussed, the Bank’s
liability for damages rested on the unopposed presumption that any and all of the
breaches of duty found to exist by the district court were the cause of the decline in
the value of the Trusts’ assets. Because the Bank has not challenged four of the
undisputed fiduciary duties claimed to give rise to damages and because its defenses
of waiver and ratification were not sufficient to defeat liability for the breaches of its
fiduciary duties, damages for the decline in value of the Trusts were properly awarded,
irrespective of the district court’s ruling regarding inadequate record keeping. It is
unnecessary to address the issue of inadequate record keeping any further. We

14
conclude that the district court did not err in finding the Bank liable for damages to
Beneficiaries resulting from the decline in value of the Trusts. We now address
Beneficiaries’ issues regarding the amount awarded as damages.
II. 	DAMAGES
{23} 	The district court’s damage award was calculated to restore the value of trust
property lost through the Bank’s mismanagement and breach of its fiduciary duty that
started in late 1991. Relying on testimony from accounting expert Henry Carl South
regarding the standard adjustment for inflation (the inflation adjustment) from 1991
to 2003 totaling “about 33.5 percent,” the district court’s ruling found that the
$670,000 value of the Trusts in 1991 would have an inflation adjusted value expressed
in 2003 dollars of $894,000. The remedy fashioned by the district court in its decision
letter consisted of $894,000 in restoration damages plus prejudgment interest thereon,
a $540,000 self-dealing disgorgement award for interest paid to the Bank, as well as
post-judgment interest, costs, and attorney fees. In its decision letter, the court rejected
Beneficiaries’ claim that they should also recover trustee fees paid to the Bank in the
amount of $173,710. It then ordered, “[Beneficiaries’] counsel shall prepare the
judgment incorporating the above findings/conclusions” adopted by the district court
in its decision letter.
{24} 	Beneficiaries prepared a proposed form of judgment for presentment to the
district court. The Bank disputed Beneficiaries’ form of judgment and argued that it

15
contained 	“impermissible 	damage[s]” because 	it: 	(1) 	failed 	to 	offset 	income
distributions previously made from the Trusts to Beneficiaries in the amount of
$404,421; (2) provided for a double recovery because it awarded both restorative
damages and disgorgement of profits on the loan interest paid to the Bank; and (3)
provided for an adjustment for inflation as part of the restorative damages. After
hearing the parties’ arguments at the presentment hearing, the district court agreed
with the Bank and entered its proposed form of judgment awarding damages in the
amount of $171,000 plus post-judgment interest, attorney fees, and costs.
{25} 	The final judgment was an inconsistent mix of proposed findings and
conclusions offered by Beneficiaries along with the award of damages in the amount
requested by the Bank. Accordingly, it included the inflation adjustment for
calculating the diminution of the value of Trusts assets at $894,000 but instead of
using this amount to calculate restorative damages, it used $575,000, representing the
decline in value without an adjustment for inflation. The district court further
explained that this $171,000 restorative damage amount also included the $540,000
in loan interest paid to the Bank. Thus, the total net damage amount award to
Beneficiaries was only $171,000 rather than the higher amount adopted in the court’s
decision letter. It excluded any additional or alternative damages for the self-dealing
disgorgement claim made by Beneficiaries even though the court entered findings of
fact and conclusions of law determining liability on the Trusts’ claim against the Bank

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for self-dealing.
{26} 	Beneficiaries filed a timely appeal of the judgment entered, arguing that the
damages award is flawed in three ways: (1) despite the determination that an inflation
adjustment was proper, the inflation adjustment was not included in the amount of
damages calculated to properly restore the principal value of the Trusts; (2) the Bank
was not entitled to an offset for the income distributions made from 1991 to 2003
against the damages awarded to restore the principal value of the Trusts to their proper
2003 level; and (3) the failure to award the $540,000 amount as disgorgement
damages for improper self-dealing by the Bank. We first address the issues dealing
with restorative damages and then discuss the award of disgorgement damages for
self-dealing. As a result of our decision regarding restorative damages, we reject
Beneficiaries’ contention that they are also entitled to an additional disgorgement
damage award of $540,000.
A. 	STANDARD OF REVIEW
{27} 	The parties disagree on the standard of review that applies to this issue.
Beneficiaries contend that the proper measure of damages is a question of law that is
subject to a de novo standard of review. The Bank contends that the question presents
issues controlled by abuse of discretion and substantial evidence standards of review.
Both parties appear to be partially correct regarding the standard of review.
{28} 	Generally, we review findings regarding damages to determine whether they

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are supported by substantial evidence. See Jacobs v. Phillippi, 1985-NMSC-029, ¶
5,102 N.M. 449, 697 P.2d 132. Damages need not be proven with mathematical
certainty. See Nosker v. W. Farm Bureau Mut. Ins. Co., 1970-NMSC-046, ¶ 8, 81
N.M. 300, 466 P.2d 866. Substantial evidence is “that which a reasonable mind
accepts as adequate to support a conclusion.” Bill McCarty Constr. Co. v. Seegee
Eng’g Co., 1988-NMSC-019, ¶ 7, 106 N.M. 781, 750 P.2d 1107. “[I]n determining
the amount of damages to be awarded, the focus shifts to the objective of such an
award: to fully compensate the plaintiff and to put the plaintiff in as good a position
as if the harm or injury had not occurred.” Cent. Sec. & Alarm Co. v. Mehler, 1996-
NMCA-060, ¶ 17, 121 N.M. 840, 918 P.2d 1340. Likewise, “[t]he decision whether
to order a defendant to disgorge profits and the amount of profits to be disgorged rests
within the sound discretion of the [district] court.” Peters Corp. v. N.M. Banquest
Investors Corp., 2008-NMSC-039, ¶ 32, 144 N.M. 434, 188 P.3d 1185. A
discretionary decision based on a misapprehension of the law is reviewed de novo.
N.M. Right to Choose/NARAL v. Johnson, 1999-NMSC-028, ¶ 7, 127 N.M. 654, 986
P.2d 450.
{29} 	Thus, we review de novo the question of whether the district court applied the
correct law and its application of that law to the facts. Id. ¶¶ 7-8. After we determine
whether the correct law has been applied, we then review the award to determine
whether it is supported by substantial evidence and, finally, we review for any abuse

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of discretion. An abuse of discretion will require reversal “only if it [is] contrary to
logic and reason.” Id. ¶ 8 (internal quotation marks and citation omitted).
B. 	ADJUSTMENT FOR INFLATION
{30} 	We first address Beneficiaries’ argument that it was error to use the value of
$575,000 to calculate the amount of damage to the Trusts’ principal because
Beneficiaries were entitled to be made whole, and this would require including an
adjustment for inflation. Beneficiaries assert that the inflation adjustment was required
to restore the real principal value of the trust assets as of June 1, 2004, and should not
have been excluded from the district court’s damages award. The Bank does not
dispute that Beneficiaries are entitled to be made whole but responds that an inflation
adjustment would constitute an improper double recovery as Beneficiaries have
already been compensated for this amount based upon the court’s award of
prejudgment interest. We disagree.
{31} 	This appeal arises from the Bank’s actions as Trustee from 1991 through 2003.
During this time period, the district court determined that the Bank breached its
fiduciary duty when it improperly depleted the Trusts’ assets for the purpose of
improving the Building, an unproductive property. The district court’s original
decision letter and its final judgment concluded that the inflation adjusted amount
required to restore the real value of the Trusts’ assets from 1991 through June 1, 2004,
was $894,000. This lawsuit was not filed by Beneficiaries until June 14, 2007. The

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Bank’s only argument asserted that the inflation adjustment would provide a double
recovery and duplicate the district court’s additional award of prejudgment interest.
Having accepted the Bank’s argument, the district court in its judgment excluded the
inflation adjustment from the damages award and calculated the amount required to
restore the real value of the Trusts’ assets on June 1, 2004 at $575,000, despite finding
that “the inflation adjustment [was] required to keep [B]eneficiaries whole through
2003.” (Emphasis added.)
{32} 	We agree with the district court’s finding that the inflation adjustment was
required to keep Beneficiaries whole and to properly calculate the amount needed to
restore the real value of the trust for the period from the end of 1991 through June 1,
2004. See Hubbard v. Albuquerque Truck Ctr., Ltd., 1998-NMCA-058, ¶ 15, 125
N.M. 	153, 	958 	P.2d 	111 	(“[D]amage 	awards 	should 	provide 	full 	and 	just
compensation for the injured party. Full and just compensation is synonymous with
the concept of making the injured person whole.” (internal quotation marks and
citations omitted)). The adjustment for inflation accounted for the changes in the value
or purchasing power of the dollar. See Dan B. Dobbs, Handbook on the Law of
Remedies, § 3.7 at 366 (2d ed. 1993); see also NMSA 1978, § 46A-10-1002(A)(1),
(2) (2003, amended 2007) (“A trustee who commits a breach of trust is liable to
Beneficiaries affected for the greater of: (1) the amount required to restore the value
of the trust property and trust distributions to what they would have been had the

20
breach not occurred; or (2) the profit the trustee made by reason of the breach.”);
2.60.25.9 NMAC (Recompiled 10/1/2001) (measuring income value in real dollars by
adjusting for inflation); Restatement (Third) of Trusts § 100(a) (2011) (stating that a
trustee who commits breach of trust is chargeable with “the amount required to restore
the values of the trust estate and trust distributions to what they would have been if
the portion of the trust affected by the breach had been properly administered”). The
only issue this Court must address is the Bank’s argument that the inflation adjustment
would constitute a double recovery and overlap the recovery for prejudgment interest.
{33} 	Neither party disputes the award of prejudgment interest in this case. The award
of prejudgment interest compensates Beneficiaries for the lost use of the real value of
the Trusts from either June 1, 2004, or June 14, 2007, until the date that judgment was
entered on February 9, 2011. See Pub. Serv. Co. v. Diamond D Constr. Co., 2001-
NMCA-082, ¶ 52, 131 N.M. 100, 33 P.3d 651 (explaining that the purpose of
prejudgment interest is to “compensate a plaintiff for the lost opportunity to use the
money owed between the time the plaintiff’s claim accrued and the time of
judgment”).
{34} 	The district court determined that Beneficiaries’ compensatory damages—the
value of their Trust shares—were readily ascertainable as of June 1, 2004, the date on
which the Trusts’ assets became distributable to Beneficiaries. The district court also
agreed that this amount was $894,000, including the inflation adjustment. Simply put,

21
the evidence established that the adjustment for inflation (to account for the change
in the value of the dollar from 1991 to 2004) does not duplicate the award of
prejudgment interest (to account for the loss of Beneficiaries’ use of their money from
either 2004 or 2007 through 2011). Prejudgment interest was, therefore, necessary and
appropriate to compensate Beneficiaries for the loss of use of the value of their Trust
shares from either June 1, 2004, or the subsequent date this lawsuit was filed, June 14,
2007, until judgment was entered in this case on February 9, 2011. See Ponder v. State
Farm Mut. Auto Ins. Co., 2000-NMSC-033, ¶ 37, 129 N.M. 698, 12 P.3d 960
(explaining that the obligation to pay prejudgment interest “constitutes an obligation
to pay damages to compensate a claimant for the lost opportunity to use money owed
the claimant and retained by the obligor between the time the claimant’s claim accrues
and the time of judgment (the loss of use and earning power of the claimant’s funds”)
(internal quotation marks and citation omitted)); Cavnar v. Quality Control Parking,
Inc., 696 S.W.2d 549, 552 (Tex. 1985) (“The purpose of awarding prejudgment
interest is to compensate the injured plaintiff for lost use of money due as damages
between the accrual of the claim and the judgment.”). Even if the district court were
to award prejudgment interest back to June 1, 2004, there is no overlap.
{35} 	The undisputed facts in the record fail to support the Bank’s argument that the
prejudgment interest award also served to compensate Beneficiaries for the effects of
inflation prior to June 1, 2004. In devising a remedy for the Bank’s violation of its

22
duties as trustee, the district court appropriately concluded that a proper trustee would
have maintained the value of the Trusts from 1991 through 2004. Cf. In re Trusteeship
under Agreement with Mayo, 105 N.W.2d 900, 905 (Minn. 1960) (authorizing a
trustee to deviate from the express terms of a trust for the purpose of preserving the
value of the trust when changed conditions due to inflation impaired the dominant
purpose of the trust). As a result, the Bank’s argument fails. The award of
prejudgment interest and the inflation adjustment are not duplicative. Adjusting for
inflation “simply ensures that inflation does not erode the value of money; it does not
compensate for the lost use of the money in the intervening time.” State of Kan. v.
State of Colo., No. 105, 2000 WL 34508307, at *37 (U.S. 2000) (internal quotation
marks and citation omitted). Beneficiaries are entitled to the inflation adjustment, and
the district court should have determined the compensatory damages award by
utilizing the $894,000 amount set forth in the court’s findings of fact.
A. 	OFFSET FOR INCOME DISTRIBUTIONS
{36} 	We now address whether it was proper for the district court to reduce
compensatory damages by the amount of income distributions the Bank made to
beneficiaries from 1996 to 2006. The district court allowed a reduction in the amount
of $404,421 for these income distributions. Beneficiaries argue that using income
distributions to offset restorative damages to the principal of the Trusts allowed the
Bank to use the legitimate property of Beneficiaries to improperly offset liability for

23
other damages they incurred. The Bank contends that the fact that income distributions
were the property of Beneficiaries does not address the issue of whether the
distributions were justifiable offsets against compensatory damages resulting from a
decline in the principal value of the Trusts. We partially agree with both parties’
arguments but the evidence in this case favors Beneficiaries’ position.
{37} 	It is undisputed that the Trusts had a net value of $669,996.07 in 1991 and
consisted of the Building and other real property in Virginia, Hawaii, and New
Mexico. At the end of 2003, all of the real property except the Building had been sold.
The Building was a wasting asset with a net value of $129,033.38. During the same
period, the return on trust assets—or income—was negative.
{38} 	The Trusts were created with two unambiguous central purposes: providing
income to the lifetime beneficiaries and, upon Wife’s death, distributing the principal
of the Trusts to Beneficiaries. Invasion of the principal of the Trusts to make
distributions to the income beneficiaries was not allowed under the terms of the
Trusts. Where the Trusts were created for both income and remainder beneficiaries,
and where the trust assets included unproductive property, the Bank was under a duty
to convert the unproductive property within a reasonable time and to invest the
proceeds in productive property. See 4 Austin Wakeman Scott, William Franklin
Fratcher & Mark L. Ascher, Scott and Ascher on Trusts § 20.8 at 1559-60 (5d ed.
2006) (requiring, if any part of trust property should become unproductive property,

24
that a trustee take action to protect the income beneficiary’s interests or to convert the
unproductive 	property 	into 	income-producing 	property). 	The 	Bank 	held 	the
unproductive Building for its entire term as trustee and did so at the expense of all
other assets of the Trusts. Despite the negative return on the principal value of the
Trusts’ assets, the Bank further depleted principal when it paid out $404,421 as
income distributions to the lifetime beneficiaries. The Bank now asserts that it is
entitled to reduce the compensatory damages that it caused to the principal value of
the Trusts by the $404,421 paid to the lifetime beneficiaries as income distributions.
See Restatement (Second) of Trusts, § 209 illus. 1 (1959) (allowing an offset to
damages for the dividends received during the period that the trustee should have, but
did not, sell the property); but see Restatement (Third) of Trusts, § 101 cmt. a (2012)
(“[T]he law is well settled that profits arising from proper administration do not
reduce a trustee’s liability for breach of trust; it would be ironic to permit a profit from
improper administration to be offset against a trustee’s liability.”).
{39} 	The argument proffered by the Bank relies on two fatal assumptions: (1) that
the lifetime beneficiaries were not entitled to reasonable distributions of income from
the Trusts and that the Bank was not obligated to keep the Trusts productive of income
for their benefit; and (2) that the improper retention of the unproductive Building
resulted in some “net gain” to the lifetime beneficiaries of the Trusts. Here, the
$404,421 of so-called trust income was produced by investing $800,000 of borrowed

25
funds into the Building at a point when the Building continued to be a wasting asset.
The district court recognized that this phantom trust income was produced from the
$800,000 investment in the Building. The total return of the Building remained
negative, and any distributions the Bank allocated as income to the lifetime
beneficiaries were actually made from the principal of the Trusts. See, e.g., In re
Winthrop’s Estate, 6 N.Y.S.2d 539, 541 (N.Y.Sur. 1938) (refusing to permit a trustee
to make up a deficiency in income for failure to sell unproductive property out of the
principal of a trust); Stone v. Littlefield, 24 N.E. 592, 593 (Mass. 1890) (charging
expenses incurred to maintain unproductive property yielding no income to trust
principal for the protection of a life-tenant beneficiary who would otherwise receive
nothing).
{40} 	No evidence was offered by the Bank to indicate that the $404,421 in income
distributions exceeded the amount that would have been actually received by the
lifetime beneficiaries if the Bank had timely sold the Building and properly invested
the principal in assets that produced a reasonable rate of return, while continuing to
preserve principal. As a result, there is no evidence of a “net gain” of income
distributed to the lifetime beneficiaries of the Trusts from 1996 to 2006. When the
Bank was trustee and managed the Building, it had a duty to preserve the principal
value of the Trusts and to also produce a reasonable return in order to make the
required income distributions to the lifetime beneficiaries. Thus, the proper measure

26
of damages is the amount required to restore the value of the trust estate and all of its
income distributions to what they would have been if the trust had been properly
administered. See Restatement (Third) of Trusts § 100 cmt. b (2012); see also
Restatement (Second) of Trusts § 205 (1959); see also § 46A-10-1002(A)(1), (2).
{41} 	Beneficiaries chose not to present any evidence to establish their damages
arising from the amount of additional income distributions that should have been
made if the Bank had properly administered the Trusts. If Beneficiaries had pursued
damages for lost income, the district court may have been authorized to subtract the
$404,421 in income distributions actually paid from the proper amount of income
distributions that should have been paid to Beneficiaries, thereby producing a “net
gain” or a “net loss.” If the net calculation would have resulted in a benefit to the
Bank’s position, it could have presented this evidence as well. The net amount might
have then adjusted the $894,000 in compensatory damages awarded to restore the
principal value of the Trusts. Without any evidence of a net gain or net loss, the
district court abused its discretion when it offset the compensatory damage award by
the $404,421 in income distributions made from 1996 to 2006. No such offset can be
calculated in this case. We reinstate the full inflation adjusted compensatory damage
award of $894,000 that would restore the principal value of the Trusts.
B. 	DISGORGEMENT
{42} 	We now address Beneficiaries’ argument that it is entitled to an additional

27
damages award of $540,000 as a proper disgorgement of profits to the Bank for self-
dealing arising from the $800,000 in loans to the Trusts. The district court agreed with
the Bank and did not include the disgorgement award in the final judgment because
it found that the amount was included by definition in the compensatory damage
award to restore the principal value of the Trusts. We agree with the Bank and hold
that an award of disgorgement damages in this particular case would constitute a
double recovery.
{43} 	“Disgorgement is an equitable remedy whereby a wrongdoer is forced to give
up the benefits obtained as a result of his wrongdoing.” Peters Corp., 2008-NMSC-
039, ¶ 32. The remedy of disgorgement is not a punitive remedy. See id. (requiring a
causal connection to exist between the breach and the benefit sought to be disgorged);
S.E.C. v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978) (“Disgorgement is remedial and
not punitive. The court’s power to order disgorgement extends only to the amount .
. . by which the defendant profited from his wrongdoing.”). “The decision whether to
order a defendant to disgorge profits and the amount of profits to be disgorged rests
within the sound discretion of the [district] court.” Peters Corp., 2008-NMSC-039,
¶ 32; see United Props. Ltd. v. Walgreen Props., Inc., 2003-NMCA-140, ¶ 7, 134
N.M. 725, 82 P.3d 535 (“[T]he issue of how the district court uses its equitable powers
to provide an appropriate remedy is reviewed only for abuse of discretion.”
{44} 	“It is a well-settled rule that a trustee can make no profit out of his [position to

28
administer a] trust. The rule . . . springs from [the trustee’s] duty to protect the
interests of the estate, and not to permit his personal interest to in any wise conflict
with his duty in that respect. The intention is to provide against any possible selfish
interest exercising an influence which can interfere with the faithful discharge of the
duty which is owing in a fiduciary capacity.” Magruder v. Drury, 235 U.S. 106, 119
(1914) (internal quotation marks and citation omitted). However, a fundamental rule
of damages prohibits multiple recovery for a single harm. Salazar v. Torres, 2007-
NMSC-019, ¶ 20, 141 N.M. 559, 158 P.3d 449. “[E]quity will not act if there is a
complete and adequate remedy at law.” Sims v. Sims, 1996-NMSC-078, ¶ 28, 122
N.M. 618, 930 P.2d 153 (internal quotation marks and citation omitted). The fact that
Beneficiaries 	seek 	to 	recover 	two 	types 	of 	damages—restorative 	and
disgorgement—does not convert a single claim into multiple claims. Instead,
Beneficiaries have offered alternative theories of recovery in pursuit of one claim.
Section 46A-10-1002(A)(1), (2) (“A trustee who commits a breach of trust is liable
to Beneficiaries affected for the greater of: (1) the amount required to restore the
value of the trust property and trust distributions to what they would have been had
the breach not occurred; or (2) the profit the trustee made by reason of the breach.”
(emphasis added)); see Eckman v. Columbia Oldsmobile, Inc., 585 N.E.2d 451,
452-53 (Ohio Ct. App. 1989) (prohibiting duplicative recovery for an injury that had
been “cured” by an earlier award of relief).

29
{45} 	A restorative award of damages from a trustee is based on the equitable
principle of making the beneficiary whole by placing the beneficiary in the position
that he/she would have been in if the trustee had performed the required duty. See §
46A-10-1002; Restatement (Third) of Trusts § 100 (“A trustee who commits a breach
of trust is chargeable with (a) the amount required to restore the values of the trust
estate and trust distributions to what they would have been if the portion of the trust
affected by the breach had been properly administered; or (b) the amount of any
benefit to the trustee personally as a result of the breach.” (emphasis added));
Restatement (Second) of Trusts § 205 (“If the trustee commits a breach of trust, he is
chargeable with (a) any loss or depreciation in value of the trust estate resulting from
the breach of trust; or (b) any profit made by him through the breach of trust; or (c)
any profit which would have accrued to the trust estate if there had been no breach of
trust.” (emphasis added)). In compensating Beneficiaries, the district court put them
in the place they would have been if the Bank had never engaged in its self-dealing.
Because the disgorgement damages of $540,000 were less than the $849,000 in
compensatory damages awarded by this Court to make Beneficiaries whole, any
additional recovery for disgorgement would amount to a double recovery and
improperly impose a penalty on the Bank. See Sheldon v. Metro-Goldwyn Pictures
Corp., 309 U.S. 390, 399 (1940) (holding that the remedy of disgorgement is meant
“not to inflict punishment but to prevent an unjust enrichment by allowing injured

30
complainants to claim that which . . . is theirs, and nothing beyond this” (internal
quotation marks and citations omitted)).
{46} 	Plaintiffs are entitled to be fully compensated, but there can only be one
recovery. The district court’s initial award set forth in the decision letter, as now
reinstated by this Court, made Beneficiaries whole and effectively included the
$540,000 Beneficiaries also claimed for disgorgement damages. Equity will not allow
an award beyond the amount required to make Beneficiaries whole. As a result of this
Court’s redetermination of restorative damages in the amount of $849,000, the district
court did not abuse its discretion in refusing to award further disgorgement damages
of $540,000 to Beneficiaries.
CONCLUSION
{47} 	For the foregoing reasons, we deny the cross-appeal filed by the Bank and
affirm the district court’s judgment of liability against the Bank. We correct the
district court’s compensatory damages award to properly reflect the inflation
adjustment amount submitted by Beneficiaries. This adjusted amount is not offset by
the income distributions to Beneficiaries. The proper compensatory damages amount
required to restore the principal value of the Trust’s assets was $894,000. We deny
Beneficiaries’ appeal requesting an additional compensatory damages award of
$540,000 for disgorgement damages. We remand to the district court for the entry of
a final judgment consistent with our decision.

31
{48} 	IT IS SO ORDERED.
__________________________________
TIMOTHY L. GARCIA, Judge
WE CONCUR:
__________________________
CYNTHIA A. FRY, Judge
__________________________
J. MILES HANISEE, Judge