In In the Interest of K.K.W., an ex-wife sued an ex-husband and the trustee of a trust that they created for breaches of fiduciary duty and sought to remove the trustee, among other claims, arising out of the trustee’s alleged unfair distribution of trust assets. No. 05-16-00795-CV, 2018 Tex. App. LEXIS 6539 (Tex. App.—Dallas August 20, 2018). The trial court granted a summary judgment for the ex-husband and trustee, and the ex-wife appealed.
The trustee moved for summary judgment on the breach of fiduciary duty, removal and reformation claims on the ground that the ex-wife lacked standing to assert those claims. He argued that because the only relationship the ex-wife had with the trust was as a co-settlor, she did not qualify as an “interested person” under the trust code for standing. The court of appeals disagreed:
Mother pleaded she had standing pursuant to sections 111.004(2), (6), (7); 115.001(a); and 115.011(a) and (b) of the Texas Trust Code. See Tex. Prop. Code Ann. §§ 111.004 (2), (6), (7); 115.001(a); 115.011(a) and (b) (West 2014). Section 115.011 of the trust code confers standing on any “interested person” which is defined as “a trustee, beneficiary, or any other person having an interest in or claim against the trust or any person who is affected by the administration of the trust.” See id. at §§ 111.004(7) and 115.011(a). A “beneficiary,” in turn, is defined as a person for whose benefit property is held in trust, regardless of the nature of the interest. Id. at § 111.004(2). The “interest” may be legal or equitable or both, present or future, vested or contingent, defeasible or indefeasible. Id. at § 111.004(6). Whether a person, excluding a trustee or named beneficiary, is an interested person may vary from time to time and must be determined according to the particular purpose of and matter involved in any proceeding. Id. at §111.004(7). Applying this law to the facts, we conclude that Trustee failed to establish as a matter of law that Mother lacked standing to pursue these claims.
Section 3.9 of the trust provides that if K.K.W and his children and remote descendants die before the trust terminates, the trust’s principal and income shall be distributed to Father, if living, otherwise to Mother, if living. Mother, therefore, has a contingent remainder interest and contingent reversionary interest in trust property. Trustee asserts that Mother’s interest is “a remote, contingent, inheritance” interest and therefore insufficient to confer standing under the property code. However, even a remote and contingent interest is sufficient to confer standing as an interested person pursuant to the property code. See Aubrey, 523 S.W.3d at 313 (future remainder interest sufficient for standing for removal of trustee under code even if interest contingent); see also Hill v. Hunt, No. 3:07-CV-2020-O, 2009 U.S. Dist. LEXIS 121494, 2009 WL 5178021, at *2 (N.D. Tex. Dec. 30, 2009) (contingent remainder interest is “interest” under section 111.004(6) and makes holder an “interested person” under section 111.004(7)). Because Trustee failed to conclusively establish that Mother was not an interested person for purposes of bringing suit under section 115.011(a), the trial court erred in granting summary judgment on these claims based on lack of standing.
The court also reversed the summary judgment as to the removal claim. The ex-wife sought removal of the trustee pursuant to section 113.082 (a)(3) and (4) of the trust code alleging, among other things, that the trustee failed to provide her with a full and complete accounting of the trust after repeated requests, failed to disclose the arrangement between the ex-husband and the trustee, and failed to provide her with notice as required by the trust instrument upon rejection of a reimbursement claim. The court held that because the trustee was not entitled to summary judgment on the sole ground he raised relative to this claim—ex-wife’s lack of standing—and none of the other bases for summary judgment which were otherwise affirmed resolved as a matter of law the bases for removal, the court reversed the summary judgment on that claim as well.
The ex-wife argued that the trustee committed constructive fraud based on a failure to disclose an alleged side-agreement with the ex-husband. The court of appeals held that:
[W]e agree Mother has a contingent remainder interest and contingent reversionary interest in trust property, so she is a beneficiary. Generally, a trustee owes the same fiduciary duty to a contingent beneficiary as to one with a vested interest. See Brown v. Scherck, 393 S.W.2d 172, 181 (Tex. Civ. App.—Corpus Christi 1965, no writ) (citing 90 C.J.S. Trust 247, page 235). Therefore, the record contains more than a scintilla of evidence Trustee owed a fiduciary duty to Mother as a contingent beneficiary of the trust. The trial court erred, therefore, when it granted summary judgment on the basis in Trustee’s motion for summary judgment against Mother’s constructive fraud cause of action.
Finally, the ex-wife argued that the partial reversal of the summary judgment warrants a reconsideration of the trial court’s award of attorney’s fees for the trustee. The trustee contended the award of attorney’s fees in his favor should not be disturbed because it was not based solely on the outcome of the case and the ex-wife had not challenged the reasonableness and necessity of the fee award. The court stated:
We review a decision to award attorney’s fees under the trust and Declaratory Judgments Act for an abuse of discretion. A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Section 114.064 of the trust code and section 37.009 of the Declaratory Judgments Act authorize the trial court to make an award of costs and reasonable and necessary attorney’s fees as are equitable and just. Whether it is equitable and just to award attorney’s fees depends on the concept of fairness, in light in light of all surrounding circumstances. The conclusion that an award is equitable and just is not dependent on a finding that a party substantially prevailed. And reversal of a trial court’s decision on a declaratory judgment does not necessarily require reversal of the attorney’s fees award.
Here, based on the record before us, we cannot conclude the trial court abused its discretion in connection with its award of attorney’s fees to Trustee. Although the trial court found Trustee prevailed on all causes of action filed against him by Mother, it also found Trustee only incurred attorney’s fees defending against Mother’s claims and seeking attorney’s fees for that defense. Moreover, the trial court found Mother caused Trustee to incur additional fees by “unnecessarily prolonging this suit,” and by having her expert provide “an exorbitant number of opinions,” and repeatedly changing her theories of the case.
Even with our reversal of the trial court’s judgment with respect to Mother’s claims for removal of trustee, Trustee has still prevailed on all but one of Mother’s claims, including the central premise of case expressed in her declaratory judgment claim, which also authorized the attorney’s fees award. Further, Trustee’s argument asserted as to Mother’s removal claim was asserted against Mother’s claims for constructive fraud and breach of fiduciary duty, both of which we have affirmed. Moreover, in light of the trial court’s other findings regarding Mother’s conduct during the case, we cannot conclude the trial court abused its discretion in connection with its attorney’s fee award to Trustee. Accordingly, we resolve Mother’s fifth issue against her and will not disturb the trial court’s attorney’s fees award.