In Ard v. Hudson, a beneficiary sued testamentary trustees and executors for breach of fiduciary duty and also sought temporary injunctive relief and also sought a receiver. No. 02-13-00198-CV, 2015 Tex. App. LEXIS 8727 (Tex. App.—Fort Worth August 20, 2015, no pet. history). The trial court granted a summary judgment for the defendants on the basis of a no-contest clause. The court of appeals held that a breach of a forfeiture clause will be found only when the beneficiary’s or devisee’s actions fall clearly within the express terms of the clause. The court mentioned other precedent where challenging a fiduciary did not trigger a no-contest clause. The defendants agreed with that, but argued that the beneficiary’s requests for temporary and permanent injunctive relief and her motions to suspend her brothers as co-trustees and to appoint a receiver triggered the clause. The court held: “[The] inherent right [to challenge a fiduciary] would be worthless absent the beneficiary’s corresponding inherent right to seek protection during such an ongoing challenge of what is left of his or her share of the estate or trust assets, and any income thereon, that the testator or grantor, as the case may be, intended the beneficiary to have.” Id. The defendants also argued that a condition precedent barred the beneficiary’s claims: “Each benefit conferred herein is made on the condition precedent that the beneficiary shall accept and agree to all provisions of this Will.” Id. The court rejected this argument, holding: “We construe the condition precedent language located within the forfeiture clause to be consistent with the forfeiture clause as a whole.” The court reversed the summary judgment.
INTERESTING NOTE: Courts regularly do not enforce no-contest clauses where the beneficiary does not challenge the will for undue influence or mental capacity. Simply holding a fiduciary to his or her duties will not trigger a no-contest clause. Moreover, the Texas Estates Code section 254.005 codified the common law, which held that clauses will not be enforced where just cause existed for bringing the action and the action was brought in and maintained in good faith. Having said all of that, the existence of a clause still deters litigation. Attorneys have to warn clients that they risk losing assets by bringing claims – no one ever knows exactly what a court or jury will do. For such a clause to have any teeth, a testator should leave some assets to a “black-sheep” relative. Otherwise, there is no risk in the “black-sheep” relative challenging the will.