Aaron Isby-Israel, Appellant-Petitioner v. Catherine Borkowski a/k/a Kate Borkowski, Arrow Fiduciary Services, Trustee, Appellee-Respondent (2025)

MEMORANDUM DECISION

Case Summary

[1] In 2021, Aaron Isby-Israel established the Aaron Isby-Israel 2021 Legacy Irrevocable Trust (“Trust”) naming Catherine Borkowski (“Trustee”) as the trustee. In 2022, Isby-Israel filed a petition in the trial court alleging Trustee committed breach of trust and requesting her removal. Trustee defended the breach of trust allegations but indicated her willingness to resign when a successor trustee was found. After the bench trial concluded, Trustee petitioned for payment of her attorney and expert witness fees from the Trust, and Isby-Israel sought to appoint a non-Indiana resident to replace Trustee. Addressing all pending matters in its judgment, the trial court found there was no breach of trust, denied Isby-Israel's request to appoint his selected trustee, and ordered payment of Trustee's fees from the Trust.

[2] Isby-Israel, pro se, appeals the trial court's judgment, raising several issues for our review, which we consolidate and restate as follows: (1) Is the trial court's judgment that there was no breach of trust clearly erroneous?; (2) Did the trial court err in denying Isby-Israel's request to appoint a non-resident trustee?; and (3) Was the trial court's order for the Trust to pay Trustee's attorney and expert witness fees contrary to law and unsupported by the evidence? We affirm.

Facts and Procedural History

[3] Isby-Israel has been incarcerated in an Indiana Department of Correction (“DOC”) facility since 1989. In 2019, the U.S. District Court for the Southern District of Indiana awarded Isby-Israel compensatory and punitive damages plus costs, attorney fees, and post-judgment interest in a civil suit he filed against the DOC. Isby-Israel's civil litigation attorneys ¹ put the monetary award in their trust account and began working with Isby-Israel to establish a trust to manage his money while he remains in the DOC with limited access to suitable financial services. Isby-Israel requested David Harris, his friend and “trusted advisor,” be included in communications because Harris “is not incarcerated [and] would be able to help him” avoid financial information going through standard DOC channels “once the trust had been established.” Tr. Vol. 2 at 111.

[4] Trustee is an attorney who acts as trustee, guardian, executor, and power of attorney for clients through Arrow Fiduciary Services. In 2020, Isby-Israel's civil litigation attorneys recommended Isby-Israel hire Trustee, informing Isby-Israel that she “charges a flat hourly fee of $150; given the amount of work that likely will be necessary, that would mean fees of approximately $500 per year.” Ex. Vol. 4 at 71. Isby-Israel, his civil litigation attorneys, and Harris had at least one phone call with Trustee to discuss her potential hire. Emails were shared between Isby-Israel's civil litigation attorneys, Harris, and Trustee during this time. In mid-2021, Isby-Israel signed the Trust, appointed Trustee, and funded the Trust with his lawsuit proceeds of $360,417.52. Trustee placed the funds in a Trust checking account.

[5] In July 2021, after the Trust was created, Isby-Israel's civil litigation attorneys sent an email to Harris on which Trustee was copied because Isby-Israel “identified [Harris] as someone he would want copies of statements sent to and also that [Harris] may be speaking to her from time to time on [Isby-Israel's] behalf.” Ex. Vol. 4 at 112. Isby-Israel told Trustee “not to send [him] statements in prison. So, the arrangement was to send the documents to David Harris,” which Trustee did. Tr. Vol. 3 at 45. Trustee made three distributions from the Trust in August. She received no further requests for distributions but would have made the distributions if asked. In September, Isby-Israel told Trustee he did not want her to continue as trustee because he was unhappy about her fee. He thought her fee was going to be $500 per year rather than the hourly rate for work performed. Trustee “stopped trying to do work” for Isby-Israel because she expected him to imminently remove her and appoint a successor trustee. Id. at 47. She left the Trust funds in the checking account so they would be available to transfer to a successor trustee. But in early 2022, Isby-Israel told Trustee he was not appointing a successor trustee. In March, Trustee invested $350,000 of the Trust funds with Charles Schwab through a registered investment advisory firm, leaving a small amount in the checking account.

[6] In September 2022, Isby-Israel, acting pro se, filed a Petition to Compel and/or for Injunctive Relief with the trial court, alleging breach of trust claims against Trustee.² The trial court held a two-day bench trial that concluded in February 2024. Trustee testified she had over twenty years of experience in trust management and had not encountered a professional fiduciary with a smaller fee than hers. She testified Isby-Israel told her not to send statements to him in prison but to send them to Harris, which she did. When Harris told her he no longer wanted to receive the statements, she stopped sending them to him but was given no instructions about where to send them instead. Once Isby-Israel filed a lawsuit against her, Trustee hired an attorney because Isby-Israel “wouldn't give [her] the time to discuss the situation and explain how it works.” Id. at 77. At the time of trial, the Trust investment account was worth over $363,000. The trial court took the matter under advisement.

[7] After the trial, Trustee petitioned for approval of the attorney and expert witness fees she incurred in defending the lawsuit. The trial court held a hearing on the petition and took the matter under advisement. The same day as the hearing, Isby-Israel filed a Notice of Appointment purporting to appoint a successor trustee with a Maryland address.

[8] The trial court issued an order in May 2024 addressing all pending matters. The court found Trustee committed no breaches of trust and entered judgment on Isby-Israel's complaint in Trustee's favor. The court declined to approve the appointment of Isby-Israel's proposed successor trustee because she is not a resident of Indiana. And the trial court concluded Trustee was entitled to be reimbursed from the Trust for her attorney fees and a portion of her expert witness fees.³ The trial court subsequently denied Isby-Israel's motion to correct error.

The trial court's judgment for Trustee regarding breach of trust is not clearly erroneous.4

[9] The trial court entered findings of fact and conclusions thereon to support its judgment. We will “not set aside the findings or judgment unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.” Ind. Trial Rule 52(A). In other words, we will not reweigh the evidence or judge the credibility of the witness for ourselves and we will view the evidence most favorably to the judgment. Best v. Best, 941 N.E.2d 499, 502 (Ind. 2011). Where, as here, the trial court enters findings sua sponte, we review issues covered by the findings by determining first whether the evidence supports the findings and, if so, whether the findings support the judgment. Steele-Giri v. Steele, 51 N.E.3d 119, 123 (Ind. 2016). Findings are clearly erroneous if the record contains no facts or inferences supporting them. State v. Int'l Bus. Mach. Corp., 51 N.E.3d 150, 158 (Ind. 2016). A judgment is clearly erroneous if it relies on an incorrect legal standard. Id. We apply a general judgment standard to issues on which the trial court made no findings. Steele-Giri, 51 N.E.3d at 123–24; see T.R. 52(D). We will affirm a general judgment entered with findings if it can be sustained on any legal theory supported by the evidence. Miller v. Lucas, 264 N.E.3d 651, 655 (Ind. Ct. App. 2025) (quoting Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind. 1997)).

[10] Isby-Israel's complaint alleged Trustee breached the Trust in several ways: by charging improper fees to serve as trustee; by failing to provide funds from the Trust for his support; by not providing periodic statements to him; and by violating the Prudent Investor Act in managing Trust funds. The trial court made findings about each of these allegations.

[11] First, the trial court found Trustee was entitled to reasonable compensation for her services under the terms of the Trust. See Appellant's App. Vol. 2 at 66 (Section VII(J) of the Trust, stating the Trustee “shall be entitled” to reasonable compensation for administering and distributing the Trust property and to reimbursement of expenses); see also Ind. Code § 30-4-5-16(a) (stating a trustee is entitled to “reasonable compensation from the trust estate for acting as trustee” unless the terms of the trust provide otherwise or the trustee has been found in breach of trust). The court found Trustee charged $150.00 per hour for her services, which was communicated to Isby-Israel before the creation of the Trust, and which is “a very reasonable rate.” Appellant's App. Vol. 2 at 21. Isby-Israel argues this finding is erroneous because there is no evidence “of a separate contractual agreement” between Trustee and Isby-Israel to pay this fee. Appellant's Br. at 20.⁵ But as Trustee testified, the Trust is the agreement, and its terms provide for reasonable compensation. The evidence showed Isby-Israel's civil litigation attorneys recommended engaging Trustee and advised Isby-Israel in a letter sent before the Trust was created that Trustee “charges a flat hourly fee of $150.” Ex. Vol. 4 at 71. Isby-Israel testified he thought Trustee's compensation was $500 per year based on his counsel's statement that fees charged at $150 per hour would likely amount to approximately $500 per year. But the letter was clear about the hourly rate, and Trustee testified she also explained her fee structure to Isby-Israel. Isby-Israel presented no evidence the hourly rate was unreasonable, or the amounts Trustee charged were unearned. The evidence supports the trial court's findings about Trustee's fee “reflect[ing] reasonable charges for work performed” during the Trust administration. Appellant's App. Vol. 2 at 21.

[12] Second, the trial court found the terms of the Trust did not require Trustee to make distributions to Isby-Israel. See id. at 59–60 (Section III(A) of the Trust, stating the Trustee “may pay over to or use for the benefit of [Isby-Israel], such amounts of the trust income and trust corpus as the Trustee, in the exercise of the Trustee's discretion, shall deem necessary for [Isby-Israel's] health, support and maintenance”) (emphasis added). But the trial court also found there was “no credible evidence” that Isby-Israel requested distributions that were not honored by Trustee. Id. at 22. Trustee testified she was unaware of any requests from Isby-Israel to make a distribution that she did not comply with and stated she “absolutely” would have made a distribution if Isby-Israel had requested one. Tr. Vol. 3 at 60. In fact, Trustee asked Isby-Israel at the conclusion of the bench trial if he wanted a distribution and, despite arguing throughout the trial that Trustee had not given him money for his support, Isby-Israel declined. Id. at 123–24, 126. The evidence supports the trial court's findings about distributions.

[13] Third, the trial court found the Trust required an annual accounting to be made and given to Isby-Israel. Appellant's App. Vol. 2 at 66 (Section VII(G) of the Trust, stating Trustee “shall render an annual accounting” of the Trust to Isby-Israel). But during the process of setting up the Trust, Isby-Israel's counsel primarily communicated with him through an intermediary because Isby-Israel was concerned about the privacy of information sent to him directly through the DOC. The practice of communicating through Harris continued during the Trust administration. Trustee testified she “was told not to send anything to [Isby-Israel] in prison.” Tr. Vol. 3 at 61. An email from Isby-Israel's civil litigation attorneys introduced Harris to Trustee as “someone [Isby-Israel] would want copies of statements sent to” and who may speak “from time to time on [Isby-Israel's] behalf.” Ex. Vol. 4 at 112. Although Isby-Israel testified he was “not really comfortable” with his financial information being sent to the DOC and Harris was a “candidate” to receive information on his behalf, he also said he never told Trustee where or to whom to send the information. Tr. Vol. 3 at 94. The evidence supports the trial court's finding that “Trustee reasonably understood that Harris would serve as intermediary for communications between [Isby-Israel] and the Trustee regarding the Trust administration.” Appellant's App. Vol. 2 at 21.

[14] And fourth, the trial court found Trustee's management of Trust funds “was reasonable and consistent with the Trustee's duties” according to the Trust's terms. Id. The trial court also found Trustee did not violate the Prudent Investor Act because “losses to the Trust's investments during the Trustee's administration were the result of market fluctuations, not improper action by the Trustee.” Id. The Prudent Investor Act states:

A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms of the trust, distribution requirements, and other circumstances of the trust.

I.C. § 30-4-3.5-2(a). Section VII(K) of the Trust “specifically authorize[s] [Trustee] to enter into investment advisory arrangements with an investment advisor” and to “delegate investment responsibilities to such advisor without any liability for the delegation thereof,” if in the Trustee's judgment “the management and investment objectives of the trust may be better accomplished” by such delegation. Appellant's App. Vol. 2 at 66; see also I.C. § 30-4-3.5-9(a) (stating a trustee “may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances”). Isby-Israel now claims Trustee violated the Prudent Investor Act by investing “during a volatile stock market from March 2022 to October 2022” during which time the investment account lost nearly $40,000. Appellant's Br. at 25. But the evidence showed Isby-Israel wanted the funds to be invested and not residing in an interest-bearing checking account, Trustee deposited most of the funds into an investment account with a “highly regarded” financial institution, and the value of the Trust ultimately increased during Trustee's administration. Tr. Vol. 2 at 212. Trustee's expert witness—an accredited investment fiduciary with four decades of experience in financial planning—testified his review of Trustee's accountings and the account statements showed no cause for concern about how the trust funds were invested or managed. The evidence supports the trial court's finding that Trustee's decision to engage an investment advisor and invest Trust funds was not improper.

[15] In sum, the evidence supports the trial court's findings that Trustee did not breach any provision of the Trust about which Isby-Israel complains. Isby-Israel's arguments to the contrary are largely requests to reweigh the evidence, which we will not do. See Best, 941 N.E.2d at 502. In turn, the findings support the trial court's judgment for Trustee.

The trial court correctly declined to approve an out-of-state resident as successor trustee.

[16] Trustee, while denying any breach of Trust, indicated her willingness to resign as Trustee upon appointment of a qualified successor. After the final day of the bench trial but before the trial court issued its judgment, Isby-Israel filed a Notice of Appointment of Successor Trustee naming Monique Elling of Frederick, Maryland, as successor trustee. The trial court determined Elling was not a qualified trustee because she was not an Indiana resident. The court directed Isby-Israel to identify a qualified trustee, after which the court would accept Trustee's resignation. Isby-Israel claims “Indiana residency is not a qualification ․ to serve as a trustee,” citing Indiana Code Section 30-4-2-11— describing capacity to serve as a trustee—and Article IV, Section 2 of the United States Constitution—stating the citizens of each state are “entitled to all Privileges and Immunities of Citizens in the several States.” Appellant's Br. at 26.

[17] The Trust at issue here is a legacy trust. See Appellant's App. Vol. 2 at 59 (Section II(A) of the Trust stating, “The trust created by this Trust Agreement is a legacy trust as that term is defined” by Indiana Code Chapter 30-4-8); see also I.C. § 30-4-8-2(6) (defining a legacy trust as an irrevocable trust established under Indiana Code Section 30-4-8-3). A “qualified trustee” of a legacy trust is “a person qualified to serve as the trustee of a legacy trust under” Indiana Code Section 30-4-8-6. I.C. § 30-4-8-2(12). And Section 30-4-8-6(a)(1) requires an individual serving as trustee of a legacy trust to be a resident of Indiana.

[18] Section 30-4-8-6 is clear: as a non-resident, Elling was not a person qualified to serve as trustee of the Trust. See also Appellant's App. Vol. 2 at 67 (Section VIII(C) of the Trust stating, “Any successor Trustee must be a ‘Qualified Trustee’ as that term is defined” by Indiana Code). Isby-Israel fails to demonstrate how his cited authority conflicts with or supersedes the plain language of the legacy trust chapter and the terms of the Trust itself. He therefore fails to show clear error in the trial court's decision.⁶

[19] At any rate, after the trial court entered its judgment, Isby-Israel identified a different successor trustee. Satisfied this individual was an Indiana resident and therefore a qualified trustee, the trial court accepted the appointment and also accepted the resignation of Trustee. See id. at 26 (trial court's order of June 23, 2024). As a new trustee of Isby-Israel's choosing has been appointed and Isby-Israel does not claim error in this appointment on appeal, this issue is moot.

Isby-Israel is not entitled to relief on his claims of error in the trial court's approval of Trustee's attorney and expert fees.

[20] After the two-day bench trial on Isby-Israel's complaint concluded but before the trial court issued its order, Trustee sought authorization to pay her attorney and expert witness fees from the Trust. Isby-Israel objected. The trial court held a hearing about the request on May 3, 2024, and took the matter under advisement. Ultimately, the trial court addressed this issue as part of the final judgment, approving payment of the requested attorney fees and part of the requested expert fees. See id. at 25.

[21] Isby-Israel claims the trial court's fee order is erroneous in two ways. First, he claims the order is erroneous as a matter of law because it violates the American Rule for payment of attorney fees. Second, he claims the ordered fees were “excessive, unreasonable and unsupported by the evidence,” charged for “unnecessary legal work,” and based on an “uncertified paper record.” Appellant's Br. at 6.

The order is not erroneous as a matter of law.

[22] Isby-Israel argues the trial court's decision to award fees to Trustee is contrary to law. Indiana generally follows the American Rule, which requires each party to a lawsuit to pay its own attorney fees unless a statute or contract provides otherwise. Loparex, LLC v. MPI Release Techs., LLC, 964 N.E.2d 806, 816 (Ind. 2012). But the trial court here determined this was a situation in which Trustee could be reimbursed from the Trust estate for fees she incurred in defending against Isby-Israel's complaint. See Appellant's App. Vol. 2 at 24–25.

[23] The Trust Code allows a trustee to defend actions for the protection of trust property and of herself in the performance of her duties and to employ attorneys for that purpose. I.C. § 30-4-3-3(10), (16). Additionally, the Trust Code provides that a trustee “is entitled to be reimbursed out of the trust property” for expenses properly incurred in the administration of the trust. I.C. § 30-4-5-16(c). And section VII(H) of the Trust states:

The Trustee may employ such attorneys as are, in the judgment of the Trustee, necessary, may consult with such attorneys and shall be protected in any action taken or omitted to be taken in accordance with, and in reliance upon, the opinion of counsel.

Appellant's App. Vol. 2 at 66. Accordingly, the American Rule does not apply here, as both statutes and a contract provide otherwise.

[24] The award or denial of the reimbursement of attorney fees from a trust to a trustee who successfully defends an action brought by a beneficiary is within the sound discretion of the trial court. See In re Mitchell, 788 N.E.2d 433, 436–37 (Ind. Ct. App. 2003) (citing Malachowski v. Bank One, 682 N.E.2d 530, 533 (Ind. 1997)). “[I]n the absence of an affirmative showing of error or abuse of discretion we must affirm” the order. Malachowski, 682 N.E.2d at 533 (quoting Zaring v. Zaring, 39 N.E.2d 734, 737 (Ind. 1942)).

[25] “A trustee may be precluded from recovering attorney fees from the trust if the litigation arose because of the misconduct and/or negligence of the trustee.” Mitchell, 788 N.E.2d at 437. The Supreme Court in Malachowski, and a panel of this Court in Mitchell, affirmed trial court denials of reimbursement of fees because there was evidence of trustee misconduct leading to litigation. Malachowski, 682 N.E.2d at 534; Mitchell, 788 N.E.2d at 438. But here, the trial court found no misconduct or negligence, and we have affirmed that finding. Isby-Israel has not affirmatively shown error under these circumstances and the trial court's order for the Trust to reimburse Trustee for fees incurred in defending this action was not an abuse of its discretion.

Isby-Israel's challenge of the attorney fee award is waived.

[26] In his Notice of Appeal, Isby-Israel did not request that a transcript be prepared of the May 3, 2024, hearing about attorney fees. See Appellant's App. Vol. 2 at 12 (Notice of Appeal requesting the court reporter transcribe only the January 29 and February 23, 2024, bench trial).

[27] Generally, a transcript of the evidence and proceedings at trial must be included in the record for it to be deemed sufficient. Although not fatal to the appeal, failure to include a transcript works a waiver of any specifications of error which depend upon the evidence.

Campbell v. Criterion Grp., 605 N.E.2d 150, 160 (Ind. 1992) (citations omitted). Isby-Israel's challenge to the amount of the award as excessive, unreasonable, and unsupported by the evidence is waived because he failed to provide a record sufficient to allow us to review the evidence presented in order to assess his complaints. See Graddick v. Graddick, 779 N.E.2d 1209, 1210 (Ind. Ct. App. 2002) (“The appellant bears the burden of presenting a record that is complete with respect to the issues raised on appeal.”).⁷

Conclusion

[28] The trial court's judgment is affirmed.

[29] Affirmed.

FOOTNOTES

1.   Several attorneys represented Isby-Israel during the civil litigation in federal court and assisted in setting up the Trust. For ease of reference, we will refer to them throughout as Isby-Israel's “civil litigation attorneys” without naming each attorney separately.

2.   Isby-Israel amended the complaint in May 2023, mostly to correct a statement about the amount that funded the Trust.

3.   Trustee requested payment of the expert witness’ $8,375 fee. The expert charged $400 per hour and was the final witness to testify on the first day of the bench trial. The trial court observed Trustee could have minimized the fee by telling the expert witness to arrive later in the day or by asking the trial court to hear his testimony out of order. The trial court found the Trust “can be reasonably expected to reimburse the Trustee” $6,375 of the expert witness’ fee. Appellant's App. Vol. 2 at 25.

5.   The pages of Isby-Israel's brief are misnumbered, so we have cited to the .pdf page number.

6.   To be clear, an individual must also have capacity to serve as trustee, but that requirement does not replace the residency requirement. See I.C. § 30-4-2-11. To the extent Isby-Israel claims error with respect to the Privileges and Immunities Clause of the Constitution, any claim of discrimination under the Indiana statute requiring an Indiana resident to serve as trustee would belong to Elling as the nonresident, not to Isby-Israel. See Bradwell v. Illinois, 83 U.S. 130, 138 (1872) (recognizing the Privileges and Immunities Clause does not afford state residents any protection against their own state's laws).

7.   Isby-Israel also claims the “exorbitant sum” of the attorney fee award “has no purpose other than to penalize him for daring to vindicate his rights under the [F]irst [A]mendment to [the] United States Constitution.” Appellant's Br. at 30. Isby-Israel fails to make a cogent First Amendment argument in this context, and this claim of error is also waived. See Basic, 58 N.E.3d at 984.

Kenworthy, Judge.

Pyle, J., and DeBoer, J., concur.