In Goepp v. Comerica Bank & Trust, N.A., the settlors created inter vivos trusts and their three children were the remainder beneficiaries. No. 03-19-00485-CV, 2021 Tex. App. LEXIS 5461 (Tex. App.—Austin July 9, 2021, no pet. history). The three children became co-trustees and then had disputes. They entered into a family settlement agreement, and had a corporate trustee appointed successor trustee. The corporate trustee then filed a “First Amended Petition for Settlement of Trustee’s Final Account and Order of No Liability.” Id. One of the children objected “to the Trustee’s Petition, complaining about the timing of certain preferential distribution payments, about the calculations of interest on the distributions, and that he ‘has yet to be reimbursed the monies owed to him for out of pocket expenses of durable medical equipment purchased on behalf of Iraida.’” Id. After the trial court entered the relief requested by the corporate trustee, several of the children appealed.

One child argued that the statutory probate court did not have jurisdiction over the inter vivos trust dispute. The court of appeals disagreed:

Although subsection 115.001(a) of the Texas Property Code grants a district court “original and exclusive jurisdiction over all proceedings by or against a trustee and all proceedings concerning trusts,” that subsection is prefaced with “[e]xcept as provided by Subsection (d) of this section.” Tex. Prop. Code § 115.001(a). Subsection (d)(1) states, “The jurisdiction of the district court is exclusive except for jurisdiction conferred by law on: (1) a statutory probate court[.]”And jurisdiction is conferred by law on a statutory probate court by section 32.006 of the Texas Estates Code: “In a county in which there is a statutory probate court, the statutory probate court has jurisdiction of” both “an action by or against a trustee” and “an action involving an intervivos trust, testamentary trust, or charitable trust.” It is undisputed that the Goepp Trusts are intervivos trusts and that Comerica, as trustee, brought the underlying suit in a statutory probate court in Travis County. Thus, in light of section 32.006 of the Texas Estates Code, section 115.001 of the Texas Property Code did not deprive the probate court of subject matter jurisdiction over the underlying case.

Id. The court also rejected the child’s argument that the venue statute meant that the trial court did not have jurisdiction: “But ‘[v]enue pertains solely to where a suit may be brought and is a different question from whether the court has ‘jurisdiction of the property or thing in controversy,’’ and ‘unlike subject-matter jurisdiction . . . venue may be waived if not challenged in due order and on a timely basis.’” Id.

The court also rejected the child’s complaint about the “no liability” order for the corporate trustee because it was not preserved and was waived:

In her fifth and final issue, Heidi argues that the probate court “abus[ed] [its] discretion in issuing an order of ‘no liability’ . . . to extinguish [Heidi’s] claims for breach of trust and breach of fiduciary duty in violation of the law.” Heidi does not challenge the sufficiency of the evidence supporting the order; rather, she argues that the probate court “cannot rule that Comerica . . . has no liability or attempt to adjudicate this claim, which would have a preclusive effect on further litigation elsewhere.” Heidi’s argument is not exactly clear. To the extent Heidi is challenging the order on the jurisdictional grounds raised in her first four issues, we have overruled those issues. And if Heidi is raising a nonjurisdictional ground to challenge the issuance of the “no liability” order, she did not preserve error as to this issue by making this complaint to the probate court and obtaining a ruling on the complaint.


Interesting Note: Trustees often file suits and seek some form of discharge or no liability relief. The Texas Trust Code provides that a court has jurisdiction to “determine the powers, responsibilities, duties, and liability of a trustee” and also to “require an accounting by a trustee, review trustee fees, and settle interim or final accounts.” Tex. Prop. Code 115.001(a). The Texas Trust Code also authorizes the court to accept a trustee’s resignation and discharge the trustee from the trust on the terms and conditions necessary to protect the rights of other interested parties. Texas Trust Code 113.081(b).

Due to this right, when a trustee resigns or has some other significant event occur, it is standard practice to request that the beneficiaries provide the trustee with a private release. If the beneficiary refuses, the trustee has the right to file an accounting and request a discharge, which would normally be paid for by the trust. So, the beneficiary is encouraged to sign the private release to save on expense. There is nothing particularly unfair about this where there is a corporate trustee that has produced regular statements and the beneficiary has had the opportunity to raise a complaint if he or she has one.

There is a difference between an approval of accounting and discharge and a finding of no-liability. Obtaining court approval of a final accounting alone is not or should not be an adjudication of claims by the beneficiaries. Texas State Bank v. Amaro, 87 S.W. 3d 538 (Tex. 2002). In Amaro, the Texas Supreme Court stated:

[T]he Trust Code does not contemplate that an accounting will settle the trustee’s tort liability. As noted, section 113.152 establishes the contents of an accounting and requires the trustee to list trust property, transactions, property, cash, and all known liabilities owed by the trust. It simply does not reach the trustee’s tort liability. This conclusion is supported by the Trust Code’s structure, which includes Subchapter E “Accounting by Trustee” within Chapter 113, entitled “Administration.” In contrast, Chapter 114 concerns “liabilities, rights, and remedies of trustees,   beneficiaries, and third persons.” Thus, the final accounting “forms the basis for a winding up of the trust to ascertain the balance due to the beneficiary.” Supra, 74 S.W.3d at 397. As TSB states in its brief, “TSB’s requested relief in essence provided for determination of what amounts should be paid to Vargas by TSB and the closing of the trust and issues relating thereto.” Determining TSB’s tort liability is not necessary to the closing of the trust or ascertaining the trust balance due the beneficiary, and, as we held above, was not within the scope of TSB’s requested relief. Accordingly, because approving the accounting, including the distributions, costs, and expenses, was not an adjudication of TSB’s tort liabilities, Vargas was not entitled to a jury or to forty-five days notice of the hearing.

Id. See also  Riley v. Alpert, No. 01-11-00430-CV,2012 Tex. App. LEXIS 6049, 2012 WL 3042991(Tex. App. July 26, 2012, no pet.); Bank of Texas, N.A. Trustee v. Mexia, 135 S.W.3d 356, 362 (Tex. App.—Dallas 2004, pet. denied)(approval of an accounting is an administrative function, not an adjudication of trustee’s tort liability).

So, the trustee must plead for a release and no tort liability finding, and the court must conduct an evidentiary hearing regarding the trustee’s actions. The trustee can do so under Section 115.001(a) and also via the Texas Uniform Declaratory Judgment Act in the Texas Civil Practice and Remedies Code Chapter 37. The case discussed above raises an important point, if a court grants a no-liability finding, and no one preserves any error regarding that finding, then it will be res judicata and enforceable. Cable Walt Trust Co. Inc. v. Palmer, 859 S.W.2d 475, 480-81 (Tex. App.—San Antonio 1993, writ denied).

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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…

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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 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