In Courtade v. Estrada, Estrada created an inter vivos irrevocable trust and deeded real estate into the trust. No. 02-14-00295-CV, 2016 Tex. App. LEXIS 3105 (Tex. App.—Fort Worth March 24, 2016, no pet. history). Two days later, Estrada attempted to deed the same property to a daughter. After Estrada died, the trustee of her trust and her daughter sued each other regarding the real property and other issues. The trial court entered summary judgment for the trustee, holding that the trust owned the real estate.

The court of appeals affirmed that decision. The court held that “It is axiomatic that a grantor cannot convey to a grantee a greater or better title than he holds.” Id. at *11. The court held:

The issue decided by summary judgment concerned the title to the rental properties and the validity of the deeds to Estrada-Davis executed on August 8, 2012. Appellee presented uncontroverted evidence that the rental properties were transferred to the Trust by deeds executed on August 6, 2012. While there is also evidence that Gloria attempted to transfer the rental properties to Estrada-Davis on August 8, 2012, such evidence does not raise a fact issue concerning the title to the rental properties because Gloria did not own the rental properties on August 8, 2012. Although the transcripts reflect that Gloria possibly later changed her mind concerning the rental properties, “the deed was already done”-title to the properties had been transferred to the Trust on August 6, 2012.

The daughter also filed a counterclaim against her siblings alleging fraud and undue influence; she alleged that her siblings made certain misrepresentations to Estrada immediately prior to the signing of the trust agreement and that they unduly influenced her to sign the agreement. The trial court dismissed these claims on the basis that the daughter did not have standing to assert them. The court of appeals affirmed, holding that Estrada’s estate would have sole standing to assert those claims and not her daughter.

The daughter also alleged that the trust was invalid because Estrada had revoked it. The trial court and court of appeals disagreed for two reasons. First, the document that had the revocation language did not expressly mention the trust, and therefore it was not operative as to the trust. Second, the trust stated: “[t]his Trust may not be amended, modified or revoked without the written consent and agreement of the Trustee.” As the trustee did not consent in writing to the revocation of the trust, any alleged revocation by the settlor was not effective.

Finally, the daughter challenged the trial court’s award of fees for the trustee. One of the grounds for fees alleged by the trustee was that section 114.031 of the property code provides that a beneficiary is liable for loss to the trust if the beneficiary “misappropriated or otherwise wrongfully dealt with the trust property.” Id (citing Tex. Prop. Code Ann. § 114.031).  The court of appeals held that the trial court could have found that the daughter misappropriated trust property by living in the trust’s real property without permission and without paying any rent and by directing other tenants to send rent checks to her. The court concluded: “The trial court was therefore within its discretion to offset those attorney’s fees against Estrada-Davis’s interest in the Trust.”

Interesting Note: To avoid the standing issue, the daughter could have pled a tortious interference with inheritance claim against her siblings. That claim could have potentially allowed for a damage remedy.  Also, the daughter could have alleged that the executor of Estrada’s estate refused to assert the fraud and undue influence claims, and when that is pled, there is precedent that would allow a beneficiary of an estate to bring estate claims. Though recent precedent, In re XTO Energy Inc., No. 05-14-01446-CV, 2015 Tex. App. LEXIS 7723 (Tex. App.—Dallas July 27, 2015, original proceeding), which was previously cited on this blog, may limit that standing exception. If the daughter could successfully challenge the creation of the trust and the deeds, those documents would be voidable, and potentially, the second deeds to her may have been effective.

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Photo of David Fowler Johnson David Fowler Johnson

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David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law