But Villia also relied on Hawaii's common law of trusts. Citing In re Estate of Dwight, 681 P.2d 563, 566 (Haw. 1984), Villia asserted that she was entitled to recover all fees and costs she incurred as a result of Marylin's breach of her fiduciary duties.
See e.g., Ching, 145 Hawai‘i at 170, 449 P.3d at 1168 ("Article XI, section 1 of the Hawai‘i Constitution places upon the State a fiduciary duty analogous to the common law duty of a trustee with respect to lands held in public trust.") Given that a fiduciary's duties require the exercise of reasonable care, the cost of inquiry should be considered in determining whether a trustee's duty to investigate is triggered by an allegation of harm. See Estate of Dwight, 67 Haw. 139, 146, 681 P.2d 563, 568 (1984) ("A trustee is [ ] under a duty to the beneficiary to use reasonable care and skill[.]" (emphasis added)); see also Restatement (Second) of Trusts § 176 ("The trustee is under a duty to the beneficiary to use reasonable care and skill to preserve the trust property."
And, manifestly, it is not reasonable for a trustee to delegate the supervision of a third party's compliance with an agreement that is designed to protect trust property to the third party itself. Ching, 145 Hawai‘i at 181, 449 P.3d at 1179 ("It is self-evident that, as a general matter, it is not reasonable for a trustee to delegate the supervision of a lessee's compliance with the terms of a lease of trust property to the lessee."); see also In re Estate of Dwight, 67 Haw. 139, 146, 681 P.2d 563, 568 (1984) ("A trustee is under a duty to use the care and skill of a [person] of ordinary prudence to preserve the trust property." (citing Bishop v. Pittman, 33 Haw. 647, 654 (Haw.
As the State concedes, our case law and the common law of trusts make the State "subject to certain general trust duties, such as a general duty to preserve trust property." See, e.g., Zimring, 58 Haw. at 121, 566 P.2d at 735 ("Under public trust principles, the State as trustee has the duty to protect and maintain the trust property and regulate its use."); Kaho‘ohanohano v. State, 114 Hawai‘i 302, 325, 162 P.3d 696, 719 (2007) ("[It] is always the duty of a trustee to protect the trust property ...." (quoting Brenizer v. Supreme Council, Royal Arcanum, 141 N.C. 409, 53 S.E. 835, 838 (1906) )); In re Estate of Dwight, 67 Haw. 139, 146, 681 P.2d 563, 568 (1984) ("A trustee is under a duty to use the care and skill of a [person] of ordinary prudence to preserve the trust property." (citing Bishop v. Pittman, 33 Haw. 647, 654 (Haw.
Petitions for surcharge initiated by beneficiaries against trustees for breach of trust are an established practice in Hawai‘i. See HRS § 560:7-306(b) and (d) (2006);Matter of Estate of Dwight, 67 Haw. 139, 146, 681 P.2d 563, 569 (1984) ; Dowsett v. Hawaiian Tr. Co., 47 Haw. 577, 578, 393 P.2d 89, 91 (1964) ; Steiner v. Hawaiian Tr. Co., 47 Haw. 548, 575, 393 P.2d 96, 111 (1964). However, Hawai‘i courts have not previously addressed whether a beneficiary can be held liable as set forth in § 104 of the Restatement (Third) of Trusts.
In Hawai‘i, a fiduciary duty is imposed by statute or special relationship. See, e.g., Hawai‘i Revised Statutes (HRS ) § 425–123 (2004 Repl.) (providing that a partner owes certain fiduciary duties to the partnership and other partners); Matter of Estate of Dwight, 67 Haw. 139, 145, 681 P.2d 563, 567 (1984) (holding that a trustee owed a fiduciary duty to the beneficiaries of the trust via a special relationship); In re Trask, 46 Haw. 404, 412, 380 P.2d 751, 756 (1963) (holding that an attorney owed a fiduciary duty to his client via a special relationship). One Wailea does not cite to a statute or case imposing fiduciary duty on an engineer who is contracted to provide professional services.
“A trustee is also under a duty to the beneficiary to use reasonable care and skill to make the trust property productive, and where the trust corpus is land, the trustee is normally under a duty to manage it so that it will produce income.” Matter of Estate of Dwight, 67 Haw. 139, 146, 681 P.2d 563, 568 (1984) (citation omitted). If a trustee has incurred a liability for a breach of trust, the amount of his reimbursement can be reduced to the extent of his liability for the breach.