The first issue was a choice of law issue, as the trust document designated Connecticut law as controlling for trust administration and interpretation. The enforceability of this provision was at issue, particularly whether Texas or Connecticut law should apply to the requested modifications and accounting.
The court determined that the choice-of-law provision was enforceable, as the trust expressly intended Connecticut law to govern questions of validity and effect of its provisions:
When a party contends that a contractual choice-of-law provision requires us to apply the law of another jurisdiction, we first determine if the applicable laws of the two jurisdictions differ. Here, there is no dispute that Connecticut’s and Texas’s applicable law differ. Compare, e.g., Tex. Prop. Code §§ 112.051-059 (Subchapter C: Revocation, Modification, and Termination of Trusts), and id. § 113.151 (Demand for Accounting), with Conn. Gen. Stat. §§ 45a-499dd-499ff (providing substantively different laws for modifying or terminating trust under various circumstances), and id. § 45a-499kkk (providing substantively different laws for trustee’s duty to inform and report to beneficiaries).
Because these laws conflict, we next decide whether the choice-of-law provision in the trust agreement is enforceable. “[W]hether a choice-of-law provision is enforceable depends initially on whether the issue in dispute is one that the parties could have resolved by including an explicit provision in their contract.” Here, the trust agreement states that the choice-of-law provision expressly applies to questions regarding “the validity and effect of the provisions hereof.” That is, the trust agreement clarifies that the parties intended for the choice-of-law provision to apply to questions involving the interpretation and enforcement of the trust. Thus, the trust agreement’s choice-of-law provision is enforceable, and we consider whether the trial court erred in dismissing Robert’s claims under Rule 91a by applying Connecticut law.
Id.
The court then discussed the modification claim. The plaintiff sought judicial reformation and modification of two trust provisions: (1) to change the choice-of-law provision from Connecticut to Texas law, and (2) to require the trustee to provide annual accountings upon request. The legal basis for modification was Conn. Gen. Stat. § 45a-499ee, which allows modification of a noncharitable irrevocable trust upon consent of all beneficiaries if not inconsistent with a material purpose of the trust, and § 45a-499ee(e), which allows modification even without all beneficiaries’ consent if their interests are adequately protected. The court found that the plaintiff’s allegations, taken as true, established a basis for modification under Connecticut law, as the requested changes were not inconsistent with the trust’s material purpose.
The court also reviewed the plaintiff’s accounting and disclosure claim. The plaintiff alleged that the trustee failed to provide requested information and accountings, including details about trustee compensation and trust property transactions. The legal basis for an accounting was Conn. Gen. Stat. § 45a-499kkk, which allows a beneficiary to petition for an accounting if certain standards are met, and Conn. Gen. Stat. § 45a-499kkk(a), which requires the trustee to keep beneficiaries reasonably informed and to respond promptly to requests for information. The court determined that Robert’s factual allegations were sufficient to support claims for both an accounting and for disclosure of material facts necessary to protect his interests.
The appellate court held that, when pleadings are construed liberally and factual allegations are accepted as true, that the plaintiff’s claims had a basis in law and fact under Connecticut law and reversed the Rule 91a dismissal and remanded the case for further proceedings.