Nickel

This appeal presents a single issue: the appropriate remedy under California law for breach of trust by a professional trustee, a profit-making bank. Holding that the appropriate remedy is a proportionate share of the profits the bank made with the misappropriated trust funds, we reverse the judgment of the district court.

FACTS

Security Pacific National Bank (SP) was the trustee for 2,500 or more trusts (the parties are not more precise), for which its compensation was set by contract and could only be increased by consent or by order of the probate court. Nine times between 1975 and 1990 SP raised its fees without consent or court order. On April 22, 1992, the Bank of America (the B of A) acquired SP by merger and discovered its illegal practice. The B of A, however, was unable to correct that practice until 1994. It then refunded $24 million of overcharges to the trusts together with $17.8 million interest for the period of the overcharges. The B of A calculated the interest at the legal rate of 7% for 1975-1981 and 10% for 1981-1994. The B of A did not compound the interest.

PROCEEDINGS

On August 5, 1994, Carol F. Nickel brought a class action in the San Francisco…

Dissenting.

I dissent because I believe that the district court opinion was, essentially, correct. I adopt it 1 as my own, with one important caveat. That is, as I read the opinion, the court determined that in most instances the appropriate remedy for taking an excess fee should be repayment of that fee with simple interest. 2 Nickel I, 991 F.Supp. at 1179-82. However, there may be times when it is proper to use a different measure.

Because of the lack of tracing, the small amount of the fees in the whole picture, and the excessively speculative and inappropriate nature of the alternate solutions propounded by Nickel, this is not one of those times. Thus, the wisdom of the usual approach is apparent, and the proper remedy remains reimbursement plus simple interest. Even if the district court’s opinion could be read as stating that the possibility of other solutions is always excluded, I still read it in this more limited way.

Thus, I respectfully dissent.

. Nickel v. Bank of Am. Nat’l Trust & Sav. Ass'n, 991 F.Supp. 1175 (N.D.Cal.1997) (Nickel I).

. I do not much like the simple interest approach, but it is, as the majority points out, the one chosen by the California…