Trustees for the estate of deceased Indianapolis businessman Harrison Eiteljorg breached their duty to distribute more than $1 million from his trust, a panel of state appellate court judges ruled Monday.

The judges affirmed an earlier decision from the Marion Superior Court, which determined the trustees should have distributed $1.2 million in October 2004 to Eiteljorg’s sons, Harrison Eiteljorg II and Jack Eiteljorg. The trustees distributed the money the next year, after being ordered to by a court.

Harrison Eiteljorg founded the Eiteljorg Museum of American Indians and Western Art in downtown Indianapolis in 1989.

Trustees for his estate are Eiteljorg’s stepson, Roger Eiteljorg, and accountant John Lienhart. The trustees were appealing rulings by judges Charles Dieter and Tanya Walton Pratt in 2005, claiming they erred in finding a breach of duty and in assessing damages and attorneys'  fees.

Two of the three appellate judges on the panel affirmed Pratt’s decision, while one dissented.

Harrison Eiteljorg died in 1997 and named his second wife, Sonja, as sole beneficiary. She died in July 2003. At the time, the assets of the Eiteljorg trust totaled about $6.5 million, including $3.2 million in liquid assets, according to court documents.

The two Eiteljorg sons requested a distribution in October 2004 of $2 million, which Lienhart considered excessive because the trust may have owed as much as $2 million in additional taxes, the documents said.

Instead, Lienhart and Roger Eiteljorg countered by offering a total of $1 million.

Following failed attempts at negotiating, the brothers petitioned the court in January 2005 to remove Lienhart and Roger Eiteljorg as trustees, and later raised 13 claims of breach of trust.

Judge Charles Dieter issued an order denying their removal as trustees but required an immediate distribution of $1.5 million. In July 2005, the trustees complied by distributing $1.2 million in cash, in addition to non-liquid assets, according to court documents.

Dieter also determined that the trustees breached their duty by failing to promptly distribute the assets, but the judge found them not liable on the 11 remaining breach of trust claims.

Judge Dieter found the trustees breached their duties, but died before ruling on damages. Pratt took over the case and concluded that $1.2 million should have been distributed at an October 2004 meeting.

“The bottom line is that [trustees] John and Roger, in violation of the explicit terms of the trust agreement, and knowing that the property was available, did not distribute $1 million in trust assets or seek guidance from the courts for at least six months following the October meeting,” the judges wrote in supporting Pratt.

Pratt also awarded Harrison Eiteljorg II $156,701 in lost earnings from investments he planned to make with the money from the trust and awarded Jack Eiteljorg $112,046 in lost profits from a missed real estate deal. In addition, she awarded the two $353,612 in attorney’s fees.

But the panel of judges in the appeal said the brothers are only entitled to interest on their withheld distributions and found the damages awarded by Pratt to be “erroneous.”

The appellate judges also found the attorney’s fees to be excessive and concluded a fee of $150,000 to be more appropriate.

The appellate judges remanded the awarding of compensatory damages and attorney’s fees back to the trial court.