Opinion
NO. 03-19-00719-CV
08-12-2020
Debra V. Benge, Appellant v. Justin G. Roberts and Dwayne A. Whitley, individually and as co-trustees of the Thomas Family 2012 Trust, Appellees
FROM PROBATE COURT NO. 1 OF TRAVIS COUNTY
NO. C-1-PB-19-000324 , THE HONORABLE GUY HERMAN, JUDGE PRESIDING MEMORANDUM OPINION
Debra V. Benge appeals the trial court's order granting the summary-judgment motion of Justin G. Roberts and Dwayne A. Whitley, the co-trustees of the Thomas Family 2012 Trust (the Trust) established by Anne Friar Thomas, Benge's grandmother. For the reasons explained below, we will affirm the trial court's order.
BACKGROUND
This is the second lawsuit Benge has filed to challenge actions of trustees of the Trust. Thomas created the Trust in 2012 and appointed herself and Benge's mother, Margaret "Missi" Thomas, as co-trustees. The original beneficiaries were Benge, Benge's sister (Dinah Voelkel), and Missi. The Trust permitted the co-trustees to appoint their successor trustees. When Thomas died in 2015 she had not appointed a successor trustee and, therefore, Missi became the sole trustee.
Benge joined Voelkel as a nominal defendant in this lawsuit but does not seek any relief against her.
Benge later sued Missi in DeWitt County after becoming aware of what Benge believed constituted breaches of Missi's fiduciary duty. The parties refer to this original litigation as the "Consolidated Matter" wherein Benge sought to remove Missi as trustee and to recover damages to the Trust. She also sued other parties as joint tortfeasors for their alleged participation in Missi's breaches.
The "Consolidated Matter" involves two separate DeWitt County lawsuits that Benge filed against Missi, four days apart, that were consolidated.
While the Consolidated Matter was pending, Missi executed a codicil to her will appointing Roberts and Whitley as the Trust's successor co-trustees. Appellee Roberts was one of Missi's attorneys in the Consolidated Case. Appellee Whitley, an accountant, represented Missi in her capacity as trustee of the Trust and was a key witness for Missi in a hearing that resulted in the dismissal of many of Benge's claims in the Consolidated Matter.
In two summary-judgment rulings in the Consolidated Matter, the trial court rendered take-nothing judgments against Benge on her breach-of-fiduciary-duty claims and signed a final judgment on October 8, 2018. Benge appealed the final judgment to the Thirteenth Court of Appeals. Missi died shortly after Benge filed her notice of appeal, and Roberts and Whitley succeeded as co-trustees of the Trust shortly thereafter. That appeal remains pending.
Meanwhile, Benge filed the underlying proceeding in Travis County Probate Court seeking to remove Roberts and Whitley as co-trustees and have herself and her sister appointed in their stead. Benge's petition asserted three "counts," the first and third of which are at issue in this appeal:
Voelkel has filed an appellee's brief adopting the arguments Roberts and Whitley made in their brief. Voelkel asserts that she "chose not to join with [Benge] at the trial court in either the Consolidated Matter or [this] underlying proceeding, and chooses not to join with [her] now" and "opposes [Benge] pursuing such claims on behalf of [Voelkel's] 2012 Trust sub-trust."
In the second count, Benge prayed that she and her sister be appointed as permanent successor co-trustees if Roberts and Whitley are removed.
Count One: Removal of the Co-Trustees
7.4 If Missi, acting as the sole trustee of the 2012 Trust, were to have committed a breach of trust while administering the 2012 Trust, any remedy involving damages would have to be brought against the personal representatives of her estate. Defendants, acting as co-trustees of the 2012 Trust, have irreconcilable conflicts that prevent them from redressing any breach of trust Missi committed.
7.5 Equally importantly, Defendants actually participated in both Missi's administration of the 2012 Trust and her defense of the breach-of-fiduciary-duty claims asserted against her by Plaintiff. Consequently, it would be impossible for Defendants to impartially evaluate any causes of action brought against Missi for breach of fiduciary duty in connection with the 2012 Trust.
Count Three: Disgorgement of Compensation
9.2 Texas Trust Code Section 113.082 provides that the Court may, in its discretion, remove a trustee and deny part or all of the trustee's compensation if the Court finds cause for removal.
9.3 Plaintiff PRAYS that, pursuant to Texas Trust Code Section 113.082, the Court deny all compensation to Defendants for purportedly serving as co-trustees of the 2012 Trust.
The co-trustees filed a motion for partial summary judgment as to counts one and three, which the trial court granted after a hearing. The co-trustees' motion was based on two grounds: res judicata (which they had pleaded as an affirmative defense) and a clause in the Trust exculpating successor trustees from responsibility for the acts of predecessor trustees. The trial court granted the motion without specifying the basis of its ruling, ordering that Benge "take nothing on the entirety of Counts One and Three of her Original Petition." The parties non-suited their remaining claims on the same date the partial summary-judgment order was signed, making the summary-judgment order a final judgment. Benge appeals the summary judgment and the trial court's denial of her motion for rehearing and new trial.
DISCUSSION
In four issues, Benge contends that the trial court erred in granting more relief than the co-trustees requested in their motion, in granting summary judgment on either ground the co-trustees asserted, and in denying her motion for rehearing and new trial. We review summary judgments de novo, Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009), and we review the denial of motions for reconsideration and new trial for abuse of discretion, Hermosillo v. K. Hovnanian Homes-DFW, LLC, 329 S.W.3d 181, 185 (Tex. App.—Dallas 2010, no pet.).
In her first issue, Benge contends that the trial court improperly granted summary judgment on "the entirety of Count One" because the co-trustees' motion addressed only the paragraph 7.4 "ground" that she alleged as cause for removal and not the paragraph 7.5 "ground." See G&H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011) ("Summary judgments . . . may only be granted upon grounds expressly asserted in the summary judgment motion."). We disagree.
In their motion, the co-trustees quoted paragraphs 7.4 and 7.5 of Benge's petition as constituting the only bases that Benge asserted for their removal and later summarized Benge's allegations: the co-trustees' "purported failure to pursue breach of trust and breach of fiduciary duty claims against Missi's Estate." The co-trustees contended that because Benge's claims in this lawsuit "mirror exactly the claims [she] asserted, and lost, in the Consolidated Matter," she is barred by res judicata from litigating them again. They also contended that the co-trustees are "expressly relieved of any duty which they would otherwise have to inquire into or satisfy as to the 'acts, defaults, or omissions' of" Missi by virtue of the Trust's exculpatory clause.
Benge asserts that the paragraph 7.5 "ground" for removal "has nothing to do with the merits of [her] claims regarding Missi's breaches of fiduciary duty," but the following plain language in the paragraph belies her assertion: because the co-trustees "actually participated in both Missi's administration of the [] Trust and her defense of the breach-of-fiduciary-duty claims . . . it would be impossible for the[m] to impartially evaluate any causes of action brought against Missi for breach of fiduciary duty." This claim at its core alleges that Missi breached her fiduciary duty as trustee and that the co-trustees had particular duties with respect to investigating or redressing Missi's alleged breaches. Because the co-trustees adequately challenged both of Benge's Count One allegations in their motion for summary judgment, we overrule her first issue.
We next consider Benge's second issue: whether the trial court properly granted summary judgment on either ground the co-trustees raised. When a trial court's order granting summary judgment does not specify the ground or grounds relied on for the ruling, we will affirm the summary judgment if any of the theories advanced by the movant are meritorious. Rogers v. Ricane Enters. Inc., 772 S.W.2d 76, 79 (Tex. 1989). Because we conclude that summary judgment was proper on the basis of the exculpatory clause in the Trust, we need address only that ground. See id.
Section 5.5 of the Trust provides:
No successor Trustee shall have, or ever have, any duty, responsibility, obligation, or liability whatever for acts, defaults, or omissions of any predecessor Trustee, but such successor Trustee shall be liable only for its own acts and defaults with respect to the trust funds actually received by it as Trustee.The Trust Code expressly permits such clauses. See Tex. Prop. Code § 114.007(c) ("Except as provided in Section 111.0035,[] this section does not prohibit the settlor, by the terms of the trust, from expressly . . . relieving the trustee from a duty or restriction imposed by this subtitle or by common law."). Furthermore, the Trust Code provides that the terms of a trust prevail over any provisions of the code, except in limited circumstances not present in this case. See id. § 111.0035(b); Kirby v. Tjarks, No. 03-05-00063-CV, 2006 WL 733648, at *7 (Tex. App.—Austin Mar. 23, 2006, no pet.) (mem. op.); see also Texas Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 248-51 (Tex. 2002) (upholding trust's exculpatory clause that relieved trustees from liability for certain forms of self-dealing because such clauses are expressly authorized in Trust Code); Clifton v. Hopkins, 107 S.W.3d 755, 760-61 (Tex. App.—Waco 2003, no pet.) (relying on Grizzle to affirm summary judgment in favor of trustee on ground that trust contained valid exculpatory clause).
Section 111.0035(b) qualifies the general rule that a trust's terms prevail over any provision of the Trust Code except, as relevant here, that the trust's terms may not limit "the applicability of Section 114.007 to an exculpation term of a trust." Tex. Prop. Code § 111.0035(b)(2).
Benge contends that cause exists for the co-trustees' removal because they have "actual conflicts of interest" due to their participation in the Consolidated Matter, rendering them incapable of "impartially evaluat[ing]" whether to "continue to fight" Benge in the appeal of the Consolidated Matter and incur attorney's fees, depleting the Trust. She contends that removal of the co-trustees because of their conflict of interest is a distinct claim from one alleging that they have liability for Missi's alleged breaches of fiduciary duty and, therefore, is not subject to the exculpatory clause.
We reject this argument because it directly conflicts with the broad language in the exculpatory clause relieving the co-trustees from any "duty, responsibility, [or] obligation" for the "acts, defaults, or omissions" of Missi. While ordinarily a successor trustee has the duty to "make a reasonable effort to compel a redress" of any breaches by a predecessor, see Tex. Prop. Code § 114.002(3)—which presumably would include impartially evaluating whether to "fight" Benge in the appeal of the Consolidated Matter—the exculpatory clause in the Trust relieves the co-trustees of that duty, as permitted by the Trust Code. See id. §§ 111.0035(b), 114.007(c). The co-trustees cannot as a matter of law have a conflict of interest due to allegedly lacking the ability to be "impartial" about deciding whether or how to redress Missi's alleged breaches when they have no duty to redress such breaches in the first instance. Accordingly, we hold that the trial court properly granted summary judgment on the basis of the Trust's exculpatory clause. See Clifton, 107 S.W.3d at 761.
We also reject Benge's contention that the co-trustees will continue to incur attorney's fees in fighting her appeal of the Consolidated Matter, which will "deplete the Trust," because the judgment in that matter awarded Missi as trustee (and, by extension, the co-trustees in her stead) appellate attorney's fees in the event of an unsuccessful appeal by Benge. On the other hand, if Benge is successful on appeal, the cause is remanded, and Benge is ultimately successful after a trial on the merits (and any further appeal), the Trust would not be responsible for the co-trustees' legal fees. See DuPont v. Southern Nat'l Bank, 575 F. Supp. 849, 864 (S.D. Tex. 1983) (noting that under Texas law, trustee is not entitled to reimbursement for expenses related to litigation resulting from fault of trustee), aff'd in part and vacated and remanded in part, 771 F.2d 874 (5th Cir. 1985).
As to Benge's fourth issue, in which she contends that the trial court abused its discretion in denying her motion for reconsideration and for new trial, we conclude that she waived the issue by not providing any supporting argument or authorities therefor. See Tex. R. App. P. 38.1; Liberty Mut. Ins. v. Griesing, 150 S.W.3d 640, 648 (Tex. App.—Austin 2004, pet. dism'd w.o.j.) ("Bare assertions of error, without citations to authority, waive error."). However, even had she not waived the issue, we would conclude that the trial court did not abuse its discretion in denying the motion because the effect of the exculpatory clause on the facts alleged—that is, whether it relieves the co-trustees of any duties vis à vis Missi's alleged breaches—is a legal question that we review de novo, and thus the trial court had no discretion but to determine that summary judgment was proper on the basis of the clause. See Nowlin v. Frost Nat'l Bank, 908 S.W.2d 283, 286 (Tex. App.—Houston [1st Dist.] 1995, no writ) ("Construction of a trust instrument is a question of law for the trial court when no ambiguity exists."); see also Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding) ("A trial court has no discretion in determining what the law is or in applying the law to the facts."); Clifton, 107 S.W.3d at 760-61 (holding that because exculpatory clause was valid, and based on facts alleged, there was no issue of fact about whether trustee was exculpated). Accordingly, we overrule Benge's fourth and final issue.
CONCLUSION
Having overruled Benge's issues, we affirm the trial court's summary judgment.
/s/_________
Thomas J. Baker, Justice Before Chief Justice Rose, Justices Baker and Triana Affirmed Filed: August 12, 2020