In Austin Trust Co. v. Houren, beneficiaries of a trust executed a family settlement agreement with the former trustee’s estate. No. 21-0355, 2023 Tex. LEXIS 285 (Tex. March 23, 2023). After the settlement agreement was executed, one of the parties sued the former trustee’s estate for over a $37 million alleged debt. The former trustee was the primary beneficiary and distributed the $37 million to himself over a long period of time and categorized he payments as accounts receivable on software program. The beneficiaries alleged that this was a debt due to the entries. The former executor’s estate alleged that the entries simply showed distributions, not loans. The beneficiaries asserted claims in the alternative, that the trustee’s estate owed a debt and that even if it was not a debt that the distributions were inappropriately large.

The trustee’s estate filed a motion for summary judgment based on the release in the settlement agreement, which the trial court granted. The court of appeals affirmed, finding that the release’s language was sufficiently broad to cover these claims and that the release was effective. Id. (Austin Trust Co. v. Houren. No. 14-19-00387-CV, 2021 Tex. App. LEXIS 1955 (Tex. App.—Houston March 16, 2021, pet. granted)). The Texas Supreme Court affirmed the lower courts.

The Court first addressed the scope of the release in the family settlement agreement and stated:

The parties agreed to release “the other Parties . . . with respect to any and all liability arising from any and all Claims . . . in connection with the other Parties . . . and the Covered Activities.” “Claims” is broadly defined as “any and all obligations, causes of action, suits, promises, agreements, losses, damages, charges, expenses, challenges, contests, liabilities, costs, claims, and demands of any nature whatsoever, known or unknown,  which have now accrued or may ever accrue in the future.” The released claims include, but are not limited to, “claims of any form of sole, contributory, concurrent, gross, or other negligence, undue influence, duress, breach of fiduciary duty, or other misconduct by the other parties, the professionals, or their affiliates.” And as noted, “Covered Activities” includes claims based on the “operation, management, or administration of the Estate . . . or the Trusts”; “the distribution (including, but not limited to, gifts or loans) (or failure to distribute) of any property or asset of or by [Bob], the Estate, the Companies, or the Trusts”; and “any Claims related to, based upon, or made evident in the Disclosures” or the facts stated in Article I of the Agreement.

Id. The Court held that this was broad enough to cover any claim that the former trustee’s estate had a debt or that the trustee made inappropriate distributions to himself. The plaintiff alleged that a separate provision dealing with paying of estate debts was the applicable provision and meant that the estate still had to pay back the $37 million. The Court disagreed:

Read in isolation, Paragraph 3.11’s requirement that Houren pay “all” debts of and claims against the Estate does not distinguish between the source of those claims. But Houren argues that this paragraph, when read within the context of the entire Agreement, does not require payment of claims and debts that (1) are asserted by parties to the Agreement and (2) otherwise fall within the scope of the Agreement’s releases in Article IV. We agree with the result Houren urges because other provisions within the Agreement confirm that Paragraph 3.11 was not intended to override the Article IV releases.


In the FSA, the parties agreed that the releases contained therein generally applied to “any and all liability arising from any and all Claims,” as defined in the FSA, against the other parties or relating to “Covered Activities,” as defined in the FSA. The released claims included, but were not limited to “claims of any form of sole, contributory, concurrent, gross, or other negligence, undue influence, duress, breach of fiduciary duty, or other misconduct by the other parties, the professionals, or their affiliates[.]” The FSA defined “Covered Activities” as (1) “the formation, operation, management, or administration of the Estate, . . . or the Trusts,” (2) “the distribution (including, but not limited to, gifts or loans) (or failure to distribute) of any property or asset of or by the Mayor, the Estate, . . . or the Trusts,” (3) “any actions taken (or not taken) in reliance upon this Agreement or the facts listed in Article I,” (4) “any Claims related to, based upon, or made evident in the Disclosures,” and (5) “any Claims related to, based upon, or made evident in the facts set forth in Article I” of the FSA. We conclude that this language specifically and unambiguously released appellants’ claims asserted in their First Amended Counterclaim.


The Court then addressed the validity of the releases in the family settlement agreement. The Court discussed that a fiduciary has a duty to make disclosures to a beneficiary for a release to be enforceable:

A family settlement agreement is an alternative method of estate administration in Texas that is a favorite of the law. Generally, settlement agreements are enforceable in the same manner as any other written contract. However, when the agreement purports to release claims against one who owes the other party a fiduciary duty, the policies of freedom of contract and encouragement of final settlement agreements must be balanced against the duties of care and loyalty owed by the released fiduciary. Under longstanding common law, trustees and executors owe the beneficiaries of a respective trust or estate a fiduciary duty of full disclosure of all material facts known to them that might affect the beneficiaries’ rights. With respect to agreements releasing a fiduciary from liability, the duty includes ensuring that the beneficiary “was informed of all material facts relating to the release.” The condition on release agreements involving trustees is reflected in the Texas Trust Code, which provides that “[a] beneficiary who has full legal capacity and is acting on full information may relieve a trustee from any duty, responsibility, restriction, or liability as to the beneficiary that would otherwise be imposed on the trustee by this subtitle, including liability for past violations.”


The Court next held that the beneficiaries of the trust were not a beneficiary of the estate, and that therefore, the executor of the trustee’s estate had no duty to disclose facts to those parties. The court held:

We have described an estate executor as “trustee of the property of the estate, . . . subject to the high fiduciary standards applicable to all trustees.” The executor’s duty runs to the estate and its beneficiaries. The duty is reflected in the Estates Code, which “vests” a decedent’s estate immediately in his devisees or heirs at law, subject to payment of the decedent’s debts, and requires the executor or administrator to “recover possession of the estate and hold the estate in trust to be disposed of in accordance with the law.” Here, it is undisputed that no Estate assets passed by devise to the First Marriage Children, either directly or via the respective Descendants Trusts of which they were beneficiaries, under Bob’s will. Although Bob exercised the testamentary power of appointment granted in Elizabeth’s will to direct the Marital Trust’s remaining assets to pass to the trustee of the Descendants Trusts, those assets were not probate assets that passed through the Estate, and Houren was not responsible for taking possession or disposing of them… Because the Beneficiary Parties had an interest in only nontestamentary property at the time the Agreement was signed, they did not qualify as beneficiaries of Bob’s estate to whom Houren owed a corresponding fiduciary duty. Rather, any duty Houren owed to the Beneficiary Parties as executor of the Estate was no different from the duty he owed to any other unsecured creditor.

Id. The Court then held that an executor owes no fiduciary duties to estate creditors:

[T]o the extent Austin Trust argues that an independent executor owes a fiduciary duty to the estate’s creditors, we reject that contention. We have never recognized such a relationship, nor does the Estates Code. As the Fourteenth Court of Appeals persuasively explained in FCLT Loans, L.P. v. Estate of Bracher, while an independent executor has various statutory duties regarding the approval and payment of proper claims against the estate,12Link to the text of the note the language of those provisions gives no indication that the executor holds the estate’s assets in trust for the benefit of creditors or otherwise owes them a fiduciary duty.

Id. The Court therefore affirmed the lower courts’ summary judgment on the debt claim as that claim did not involve fiduciary duties:

In the absence of a fiduciary relationship between Houren as executor and the Beneficiary Parties as creditors, we reject Austin Trust’s argument that “full disclosure” is the standard for evaluating the releases of the debt claim. Accordingly, we evaluate their enforceability using the same standard applicable to any other contract. In this Court, Austin Trust offers no contractual grounds to invalidate the releases apart from the absence of full disclosure. The court of appeals therefore properly affirmed the trial court’s summary judgment on the debt claim.


The Court then turned to the breach of fiduciary duty claim, that the decedent breached duties by distributing assets that he was not entitled to distribute and whether that claim was effectively released. The Court first held that a beneficiary’s consent is effective when it is made with full knowledge:

In Slay v. Burnett Trust, we confirmed the “established rule” governing when a beneficiary’s “consent to an act of his trustee which would constitute a violation of the duty of loyalty precludes him from holding the trustee liable for the consequences of the act.” We explained that such consent does not foreclose liability “unless it is made to appear that when he gave his consent the beneficiary had full knowledge of all the material facts which the trustee knew.” Further, releases of liability for certain fiduciaries, including trustees, are governed by statute. Under the Trust Code, “[a] beneficiary who has full legal capacity and is acting on full information may relieve a trustee from any duty, responsibility, restriction, or liability as to the beneficiary that would otherwise be imposed on the trustee by this subtitle, including liability for past violations.” Tex. Prop. Code § 114.005(a).

Id. The Court then discussed the court of appeals looking at six factors to determine whether the beneficiaries’ releases were effective:

Without addressing Section 114.005, the court of appeals here identified six “factors” it considered in holding that the releases were valid: (1) the terms of the contract were negotiated rather than boilerplate, and the disputed issue was specifically discussed; (2) the complaining party was represented by legal counsel; (3) [*24]  the negotiations occurred as part of an arms-length transaction; (4) the parties were knowledgeable in business matters; (5) the release language was clear; and (6) the parties were working to achieve a once and for all settlement of all claims so they could permanently part ways. These factors were gleaned from this Court’s precedent governing when a settlement agreement’s disclaimer of reliance on the parties’ representations forecloses one of the parties from claiming the agreement was fraudulently induced and thus unenforceable…

This Court has not addressed whether the Forest Oil factors—which assist courts in evaluating whether a disclaimer of reliance in a settlement agreement defeats a claim of fraudulent inducement—should be used to assess the validity of a release of a breach-of-fiduciary-duty claim. Nor does it appear that any Texas court, including the court of appeals here, has addressed how those factors should interact with the established common-law requirements for trustee releases we adopted in Slay. But we need not definitively answer that question in this case because (1) Section 114.005 of the Trust Code expressly enables beneficiaries to consent to the releases at issue when they have “full information” and (2) as discussed below, we hold that the Marital Trust’s beneficiaries had such “full information” when they executed the Agreement.

Under the Trust Code, a “trustee who commits a breach of trust is chargeable with any damages resulting from such breach of trust, including . . . any loss or depreciation in value of the trust estate as a result of the breach of trust.” However, as noted, “[a] beneficiary who has full legal capacity and is acting on full information may relieve a trustee from any duty, responsibility, restriction, or liability that would otherwise be imposed on the trustee by this subtitle, including liability for past violations.” Here, the Beneficiary Parties agreed to release Houren, as executor of Bob’s estate, from liability for Bob’s alleged breach of the Marital Trust, thereby triggering Section 114.005’s conditions.

Id. The Court held that Section 114.005 did apply in this case as it applies to a release of a deceased trustee’s estate. The Court also assumed without deciding that the requirement of full knowledge cannot be waived by a beneficiary. The Court reviewed the evidence and held that it proved that the beneficiaries did have sufficient knowledge to enforce the release:

Section 114.005 does not define “full information,” but we presume the Legislature enacted the provision “with full knowledge of the existing condition of the law and with reference to it.” In the context of Section 114.005, we see nothing indicating that the Legislature intended “full information” to mean something other than we have required under the common law—specifically, “full knowledge of all the material facts which the trustee knew.” Both Section 114.005 and Slay echo the Restatement (Third) of Trusts, which, in turn, gives color to the phrase “acting on full information.” According to the Restatement, which we find persuasive:

It is not necessary that the trustee inform the beneficiary of all the details of which the trustee has knowledge; but, because of the strict fiduciary relationship between trustee and beneficiary, a trustee who would rely on a beneficiary’s consent, ratification, or release normally has the burden of showing that the beneficiary (or his or her representative) was sufficiently informed to understand the character of the act or omission and was in a position to reach an informed opinion on the advisability of consenting, ratifying, or granting a release. . . .

Whether such “full information” has been provided necessarily depends on the facts and circumstances of each case. The Restatement and our precedent clarify the purpose behind the full-information requirement, which is to ensure the beneficiary makes a meaningful and informed decision before signing away any rights he may have. Knowledge of the full scope, extent, and details of the acts the beneficiary is releasing, while certainly preferable, is not required so long as he is informed enough to understand the nature and consequences of what he is giving up. We hold that the Beneficiary Parties were sufficiently informed to understand the character of the act they were releasing and were in a position to reach an informed opinion on the advisability of agreeing to the release. This conclusion is supported by both the parties’ acknowledgments in the Agreement itself as well as the circumstances surrounding its execution.

Id. The Court concluded:

In sum, while the sufficiency of disclosure will depend on the facts and circumstances of each case, the underlying legal principle remains constant: a beneficiary has full information when he is in a position to make a meaningful and informed decision about releasing a trustee from liability or, said differently, when he is informed enough to understand the nature and consequences of what he is releasing. Here, the Beneficiary Parties were fully aware that they were waiving the right to challenge the propriety of any of the prior distributions from the Marital Trust, even if they did not know the exact amount, in exchange for an expedited distribution of the trust’s remaining assets.

Id. Therefore, the Court affirmed the lower courts’ judgment for the former trustee’s estate due to the release in the family settlement agreement.

In In re Est. of Brown, a charity attempted to probate a copy of a lost will. No. 01-19-00953-CV, 2022 Tex. App. LEXIS 9259 (Tex. App.—Houston [1st Dist.] December 20, 2022, no pet. history). The trial court denied the application, and the charity appealed. The court of appeals affirmed. The court first discussed the law regarding lost wills:

A copy of a will may be probated when the original will cannot be found. A party seeking to probate a copy of a will, rather than the original, must prove the will “in the same manner as provided” for an attested written will or holographic will. The “same amount and character of testimony is required to prove the will not produced in court as is required to prove a will produced in court.” The proponent of the will must also prove “the cause of the non[-]production” of the original will in a manner “sufficient to satisfy the court that the will cannot by any reasonable diligence be produced.” The proponent satisfies this burden by showing by a preponderance of the evidence that the original will could not be located after a reasonably diligent search. The proponent need not establish how the original will was lost.

Id. The trial court found that there was not sufficient evidence as to the cause of non-production of the will. The evidence showed as follows:

At the hearing on her application to probate a copy of the October 2009 will, Eriks testified that she did not know whether Brown ever revoked the October 2009 will and she had “no firsthand knowledge” that the original October 2009 will had been accidentally disposed of. Eriks also testified that she did not think that Brown had “any reason” to tear up or dispose of the original October 2009 will, Brown “tended to save every scrap of paper,” and Brown “had a history of hiding.” Significantly though, as to non-production of the original October 2009 will, Eriks testified that she did not search anywhere for Brown’s original October 2009 will, and Eriks did not testify that anyone else searched for Brown’s original October 2009 will.

Id. The court of appeals then ignored statements by an attorney where they were not given under oath:

The Humane Society, in its briefing, points to the statements made during the hearing by Wylie, the attorney who served as Brown’s guardian ad litem and the guardian of Brown’s estate, to assert that “all the evidence demonstrate[d] that the [original October 2009] will could not be found after a diligent search.” …

Significantly, Wylie was not called as a witness at the hearing, not sworn in as a witness, and not subject to cross-examination. She did not offer her comments during the hearing as a witness. An attorney’s unsworn statements are not evidence… We conclude that the Humane Society, on appeal, has failed to show that the evidence establishes, as a matter of law, that the original October 2009 will could not be located after a reasonably diligent search… Thus, we hold that the evidence is legally and factually sufficient to support the trial court’s finding on non-production, and the trial court did not err in denying the application to probate a copy of Brown’s October 2009 will.


In Bean v. Bean, a dissenting co-executor sought relief from a probate court regarding whether certain assets were separate property or community property. No. 05-21-00286-CV, 2022 Tex. App. LEXIS 9058 (Tex. App.—Dallas December 13, 2022, no pet. history). Alan Lavern Bean was an astronaut during Apollo-era space programs. He owned 39 artifacts from his experience as an astronaut. Such “artifacts” were in his possession before his 1982 marriage to Leslie Bean. Alan consistently characterized the artifacts as his separate property, and Congress confirmed “full ownership” and “clear title” of such artifacts in 2012 when it enacted H.R. 4158. Notwithstanding, his wife Leslie was a co-executor and took the position that they were community property. Another co-executor disagreed, and they had a third co-executor appointed to break ties. The third co-executor agreed with Leslie, and the dissenting co-executor filed claims in the probate court challenging those decisions. The probate court agreed with the dissenting co-executor, and the majority appealed.

After a detailed review of the federal statute holding that artifacts were owned by the possessing astronauts, the court of appeals agreed with the probate court and held that the disputed 39 artifacts were he decedent’s separate property. Leslie also had another argument, that the trial court improperly reviewed this issue because he majority had the right to resolve construction issues under the will:

In a February 20, 2020 email to counsel, Tom interpreted HR 4158 and decided “title to space artifacts in Alan’s possession had not been vested in Alan prior to the date of House Bill 4158 and therefore constituted community property at his death.” Leslie asserts the probate court erred by disregarding Tom’s decision because that decision was “final and binding” pursuant to the Will. We disagree.

A provision in a will making the executor’s decision on disputed questions regarding the will’s construction binding on all interested parties is generally valid. Nations v. Ulmer, 139 S.W.2d 352, 356 (Tex. App.—El Paso 1940, writ dism’d). Such decisions by the executor, if fairly and honestly made and reasonably susceptible to the terms of the will, are binding and final on all interested parties. Id.; Key v. Metcalf, No. 14-04-00782-CV, 2006 Tex. App. LEXIS 1271, 2006 WL 348149, at *2 (Tex. App.—Houston [14th Dist.] Feb. 16, 2006, no pet.) (mem. op.). However, a gross departure from the testator’s intent cannot be considered an honest endeavor by the executor to determine that intent. Pray v. Belt, 26 U.S. (1 Pet.) 670, 680, 7 L. Ed. 309 (1828). The executor’s construction of the will is subject to court review “[i]f an unreasonable use be made of such a power so given in a will, one not foreseen, and which could not be intended by the testator . . . .” Id. Such is the case here.

Id. The court of appeals then held that the tie-breaker co-executor was not reasonable, and that notwithstanding, that the probate court had the right to resolve legal issues:

Throughout his life, Alan consistently maintained that his space artifacts and mementos were his separate property. This was central to his property settlement with Sue and the prenuptial agreement with Leslie. He vehemently reiterated this view in the Will. Indeed, the Will included fifteen pages of detailed explanations and instructions concerning Alan’s space artifacts and mementos. Alan adamantly believed his space artifacts and mementos were his separate property and explicitly provided those items should remain his separate property and be distributed after his death per his instructions in the Will. Tom’s decision to characterize all of Alan’s space artifacts and mementos as community property directly contradicts Alan’s stated intent. The decision is such a gross departure from Alan’s intent that it cannot be considered an honest endeavor by Tom to determine that intent. Further, there is some evidence to support a finding that Tom acted with bias toward Amy and in favor of Leslie. In his affidavit, Tom testified he knew his role was to determine disputes fairly. However, he also conceded that he viewed his role was to protect Leslie because Alan knew Amy “was often tough on and in disagreement with Leslie.” This evidence of slight bias in favor of Leslie further supported the probate court’s decision to review Tom’s determination of how to characterize the 39 Space Artifacts.

Moreover, the probate court properly disregarded Tom’s decision. Not only does the decision directly contradict Alan’s stated intent, but the decision is a legal one properly delegated to the probate court. The Will provided for Tom to break ties concerning issues related to the administration of the estate on which Leslie and Amy could not agree. That tie-breaker role does not explicitly or implicitly provide Tom with the authority to make legal decisions such as determining Alan’s intent or applying a legal characterization to property of the estate. Tom is not an attorney and lacks the education and training to interpret a federal statute and determine its legal meaning. Amy had a right to have such decisions addressed by the probate court.

Id. The court of appeals affirmed the trial court’s judgment.

In In re McIntire, trust beneficiaries sued a trustee for multiple allegations of breach of fiduciary duty. No. 07-22-00249-CV, 2023 Tex. App. LEXIS 60 (Tex. App.—Amarillo January 5, 2023, original proceeding). The trust beneficiaries filed a motion for partial summary judgment, which the trial court denied. The trust beneficiaries also sought an order requiring the trustee to reimburse trust assets used to pay his attorneys and also ordering him to deposit trust assets into the registry of the court. The trial court denied those motions as well, and the beneficiaries filed a petition for writ of mandamus.

The court of appeals first determined whether it could grant mandamus review for the denied summary judgment motion.  The court note that the Texas Supreme Court has held that utilizing mandamus to review a decision rendered upon a summary judgment motion may be appropriate when it ends the litigation. “We too have recognized this when observing that ‘[i]n those cases where the benefits of mandamus relief outweigh the detriments, an appellate court should not allow the hyper-technical application of procedural devices and constructs to thwart the rule of law and the ends of justice.’” Id. However, the court noted that in this case the summary judgment motion was a partial one and did not resolve all of the issues. The court determined that it was not appropriate to use mandamus relief to review the denied summary judgment motion in this case.

The court then turned to the issue of the trial court denying the injunction requiring the trustee to reimburse the trust for funds used to pay his attorneys in defending against the breach of fiduciary duty claims. The beneficiaries argued that there was not an adequate remedy at law (which is a requirement for mandamus relief) because the trustee did not have sufficient personal assets to reimburse the trust if he lost the case. The court disagreed with the factual component of this argument:

Assuming the temporary injunction lens to be an appropriate means of analyzing a mandamus question, the McIntires’ argument would seem influential only if Jahnel could not respond to an award of damages. Logically, if he could so respond, then there would be no need to act in the interim. In other words, assets would be available to pay what they fear would be lost. Yet, the McIntires directed us to no evidence indicating Jahnel lacked the ability to reimburse the attorney’s fees paid or to be paid as the trial progressed. Nor did we find any. Indeed, at the hearing below, they represented to the trial court that they do not know if he could or could not so respond. That means the financial risk they claim to face is mere speculation, and, speculation does not prove impending injury.

Id. Regarding a clear abuse of discretion element for mandamus relief, the court of appeals noted that the authority cited by the beneficiaries allowed a court to provide the requested relief, but did not require it:

Their effort to carry that burden consisted of citing authority recognizing a trial court’s ability to act. See, e.g., Tex. Prop. Code Ann. § 114.008(a); 760 ILCS 3/1001; Castilleja v. Camero, 414 S.W.2d 431 (Tex. 1967). Yet, the two statutes they mentioned speak of what the trial court “may” do to “remedy a breach of trust.” Tex. Prop. Code Ann. § 114.008(a); 760 ILCS 3/1001(b). Neither specify what a court must do. Nor do they mandate a court to sequester the trust estate, order the reimbursement of previously paid fees, and effectively place the trustee in the position of funding his own defense against claims which may ultimately prove baseless. In short, the implementation of any remedies mentioned in the two statutes is discretionary, and none required the court to grant the relief sought by the McIntires.


In conclusion, the court also held that, absent a finding of a breach, the trial court did not err in refusing the interim relief sought by the beneficiaries:

[T]here had and has been no formal adjudication that any breach occurred. So, given the rule that “a trustee may charge the trust for attorney’s fees the trustee, acting reasonably and in good faith, incurs defending charges of breach of trust,” Moody Found. v. Estate of Moody, No. 03-99-00034-CV, 1999 Tex. App. LEXIS 8597, at *15-16 (Tex. App.—Austin Nov. 18, 1999, pet. denied) (mem. op.), a finding of breach would seem a prerequisite to barring a trustee from turning to the trust for payment. In short, the legal authority offered does not establish that the trial court had but one choice, which was to grant the specific relief sought by the McIntires. This is not to say the court is unable to fashion other relief which protects all involved as this aging suit winds its way to final disposition. It is to say that the McIntires failed to prove their entitlement to a writ of mandamus when the trial court denied their motion below.


This webinar will provide guidance regarding the appropriate limitation of liability (LOL) clauses in contracts dealing with fiduciary relationships. The LOL clause can operate to limit a party’s direct, indirect, consequential, special, and incidental damages or may cap damages at either an amount agreed upon by the parties, the contract amount, or the parties’ insurance coverage limits. The speaker will discuss critical considerations when crafting the provisions, enforceability challenges, the interplay of LOL clauses with other provisions, and the impact of the fiduciary relationship on the limitation being enforceable.

Date: Tuesday, March 14, 2023
Time: 10:00 – 11:00 a.m. Central Time
Cost: Complimentary
Speaker: David F. Johnson

Continuing Education Credit Information:
This course has been approved by the State Bar of Texas Committee on MCLE in the amount of 1 credit hour. This course has also been approved for 1 CTFA credit by the American Bankers Association, attendees can self report.

Who should attend:
In-house counsel and other litigation contacts, trust officers, risk management contacts, and wealth advisors


In In re John O. Yates Trust, a trustee of a trust filed suit to obtain declarations on whether it could sell certain real estate held in the trust, and if so, whether the proceeds should be designated as principal. No. 04-21-00365-CV, 2022 Tex. App. LEXIS 9470 (Tex. App.—San Antonio December 28, 2022, no pet. history). A beneficiary appeared and argue that the trustee could not sell the real estate, and if it did, the proceeds should be considered income. The trial court rule that the trustee could sell the real estate and that the proceeds would be considered principal. The beneficiary appealed.

Article IX(c) of the will provides: “Except as may otherwise be provided herein, my Trustee or its successor shall not have or exercise the right, power, privilege or authority to sell, convey or dispose of any of the trust property or any part thereof.” Article IX(m) states:

Otherwise, my Executor and/or Trustee shall, with the consent and approval of the Advisory Committee, lease or otherwise dispose of said properties [the disputed ranch] and the rentals or proceeds shall become part of the income or principal of the trusts created under my Will in equal parts or by stirpes as the case may be.

Id. The court of appeals held that the term “dispose” allowed the trustee to sell the ranch:

As these definitions illustrate, the plain and usual meaning of the term “dispose of” encompasses the sale of property. Nothing in Yates’s will demonstrates a clear intent to use the term “dispose of” in a different sense. Focusing, as we must, on the meaning of the words Yates actually used in his will, we conclude that the phrase “otherwise dispose of said properties” includes the sale of the Bexar County ranch.

Id. The court concluded: “The trial court did not err in declaring that the language at issue in article IX(m) authorizes the trustee, with the consent and approval of the advisory committee, to sell the Bexar County ranch.” Id.

Regarding whether the proceeds should be considered principal or income, the will stated that, generally, the Texas Trust Code would control. “The current statutory scheme governing trusts, the Texas Trust Code, provides that ‘money or other property received from the sale . . . of a principal asset’ ‘shall’ be allocated to the principal of the trust. Id. (citing Tex. Prop. Code § 116.161(2)). Despite a general provision that stated that receipts should be considered income where possible, the court noted that a different provision “specifically addresses the permissible dispositions of the Bexar County ranch, [and] does not contain any language creating an exception to the general rule set out in article IX(a) that the administration of the trust ‘shall be in accordance with and governed by the terms and provisions of the Texas Trust Act . . . as it may hereafter be amended.’” Id. The court held that the proceeds should be considered principal.

The Court noted that a claim generally accrues when the defendant’s wrongful conduct causes the claimant to suffer a legal injury. Id. The Court also noted that the discovery rule can defer accrual of limitations:

In Marcus & Millichap Real Est. Inv. Servs. of Nev. v. Triex Tex. Holdings, LLC, Triex purchased a gas station in 2008 from Hamilton Holdings. No. 21-0913, 2023 Tex. LEXIS 22 (Tex. January 13, 2023) (per curiam). Both the buyer and seller used Marcus & Millichap as their broker for the transaction. In 2012, the operator of the gas station defaulted on the lease. A little over three years later, Triex sued Hamilton Holdings and others for breach of contract, fraud, and related torts. After some discovery, Triex added Marcus & Millichap to the lawsuit in March 2017 and asserted claims for breach of fiduciary duty, fraud by nondisclosure, and conspiracy. Marcus & Millichap moved for summary judgment, arguing that Triex’s claims were time-barred. The trial court granted the motion, and the court of appeals reversed and remanded, concluding that a fact issue existed as to whether Triex “knew or should have known on [December 1, 2012,] that the injury was the result of wrongful acts committed by Marcus & Millichap.” The Texas Supreme Court granted review.

Continue Reading The Texas Supreme Court Affirms A Summary Judgment For A Fiduciary Defendant Based On The Statute Of Limitations And The Duty To Use Reasonable Diligence To Discover Claims

David F. Johnson ‘s recent article “The More the Merrier? Issues Arising from Co-Trustees Administering Trusts” was published in the Texas Tech Estate Planning and Community Property Law Journal. The article addresses the benefits and detriments of appointing co-trustees, who can be a co-trustee and succession issues, fiduciary duties of co-trustees to beneficiaries and each other, management of the trust by co-trustees, delegation of duties, compensation, deadlock issues, liability for co-trustee’s conduct, duty to pursue claims against a co-trustee, and issues involving attorney/client communications. David’s article addresses many of the issues that he has addressed in representing co-trustees in litigation across Texas.

Click here to read “The More the Merrier? Issues Arising from Co-Trustees Administering Trusts.”

David F. Johnson co-presented with Zachary S. Davis from Stoel Rives LLP, in Portland, Oregon, on “Limitation of Liability Clauses in Business Contracts: Limiting Potential Damages and Avoiding Pitfalls” on January 31, 2023, for national CLE provider Strafford. This CLE webinar was intended to guide business counsel and owners to draft and negotiate appropriate limitation of liability (LOL) clauses in business contracts. The panel discussed critical considerations when crafting the provisions, enforceability challenges, the interplay of LOL clauses with other provisions, and the use of conditions that must be met for the limitation to be enforceable. David provided comments from a litigator’s perspective, having litigated many LOL provisions and other similar provisions. The PowerPoint presentation is attached.

Click here for PowerPoint: Limitation of Liability Clauses in Business Contracts

A recent bill (H.B. 1552) has been submitted that would provide a trustee release relief for transactions described in an accounting where a beneficiary fails to timely object to the accounting and there is no fraud, intentional misrepresentation, or material omission. A similar bill was introduced in 2021, but the Legislature did not pass it. The new bill provides:

Continue Reading New Texas Bill Would Provide Qualified Release Relief To Trustees Who Deliver Adequate Accountings Without A Timely Objection By The Beneficiary