In Melton v. Waddell, a sister sued her brother for breach of fiduciary duty for misapplying funds in a joint account and not properly allocating revenues from real estate that they owned as tenants in common. No. 07-18-00105-CV, 2019 Tex. App. LEXIS 9531 (Tex. App.—Amarillo October 30, 2019, no pet. history). The brother filed a motion for summary judgment alleging that the statute of limitations had run because the sister had access to the account and could have discovered the alleged breaches of fiduciary duty. The trial court granted the motion, and the sister appealed.

The court of appeals held that the brother had the duty to establish when the statute of limitations accrued and to disprove the application of the discovery rule. Regarding the discovery rule, the court held that there was a fact issue:

The discovery rule applies in instances of breached fiduciary duty. Goughnour v. Patterson, No. 12-17-00234-CV, 2019 Tex. App. LEXIS 1665, at *8-9 (Tex. App.—Tyler Mar. 5, 2019, pet. filed) (mem. op.). Normally, under that rule, the accrual of a cause of action is deferred until the  plaintiff knew or, in exercising reasonable diligence, should have known of facts giving rise to the claim. Id. at *8. Yet, the second prong of the test is inapplicable in fiduciary situations. Id. That is, our Supreme Court deemed a fiduciary’s misconduct to be inherently undiscoverable. S.V. v. R.V., 933 S.W.2d 1, 8 (Tex. 1996). So, the person to whom the fiduciary duty is owed is relieved of the responsibility of diligent inquiry. Id. That means the cause accrues when the misconduct becomes known or apparent. See id.; Goughnour, 2019 Tex. App. LEXIS 1665, at *8-9. Consequently, Rhea’s ready access to the account and her ability to have discovered the alleged misconduct had she used diligence is irrelevant given the alleged fiduciary relationship. Furthermore, Rhea proffered summary judgment evidence indicating that she did not know of his supposed misconduct until 2015. Having filed suit in 2016, a material issue of fact existed as to whether the four-year limitations period had lapsed. See Agar Corp. v. Electro Circuits Int’l, L.L.C., 580 S.W.3d 136, 139 (Tex. 2019) (noting that the four-year period applies to claims of breached fiduciary duty).

Id. The court also held that the brother’s summary judgment motion did not address the sister’s other claims, especially the claim that the brother did not properly allocate revenues from their cattle operation. The court reversed the trial court’s summary judgment.

In In re Estate of Ethridge, a testatrix signed a will that provided that “all my personal effects” would be devised to her nephew in law and that her half interest in a home went to another person. No. 11-17-00291-CV, 2019 Tex. App. LEXIS 9564 (Tex. App.—Eastland October 31, 2019, no pet.). The trial court concluded that the term “all my personal effects” did not include all of the testatrix’s property other than the home, and that she died partially intestate. The nephew in law, who had argued to the contrary, appealed.

The court of appeals described the commonly understood meaning of “personal effects”:

Personal effects has customarily been defined narrowly as a subset of personal property. Estate of Neal, No. 02-16-00381-CV, 2018 Tex. App. LEXIS 120, 2018 WL 283780, at *4 (Tex. App.—Fort Worth Jan. 4, 2018, no pet.) (mem. op.). The term generally refers to articles bearing intimate relation or association to the person of the testator. Id.; see also Dearman v. Dutschmann, 739 S.W.2d 454, 455 (Tex. App.—Corpus Christi 1987, writ denied) (explaining that “personal effects” are “articles of personal property” that bear an intimate relation to a person, such as “clothing, jewelry, and similar chattels”); Teaff v. Ritchey, 622 S.W.2d 589, 591-92 (Tex. App.—Amarillo 1981, no writ) (defining “personal effects” to include items such as “clothes, toilet articles, eye glasses[,] and dentures”); First Methodist Episcopal Church S. v. Anderson, 110 S.W.2d 1177, 1182 (Tex. App.—Dallas 1937, writ dism’d) (finding “personal effects” to mean “articles pertaining to or associated with the person of the deceased, such as wearing apparel, luggage, jewelry, and the like”). “[W]here the meaning of the language used in the will has been settled by usage and sanctioned by judicial decisions, it is presumed to be used in the sense that the law has given to it, and should be so construed, unless the context of the will shows a clear intention to the contrary.” Stephens v. Beard, 485 S.W.3d 914, 917 (Tex. 2016) (alteration in original) (quoting Mitchell v. Mitchell, 151 Tex. 1, 244 S.W.2d 803, 806 (Tex. 1951)). As was the case in Stephens, Mildred’s will does not clearly demonstrate an intent to use “personal effects” contrary to its well-settled legal usage. See id.

Id. The court held that mineral interests do not fall within the typical definition of personal effects. The court held “it does not appear that Mildred intended ‘personal effects’ to include any of her real property.” Id.

The court held that because the testatrix’s will did not contain a residuary clause, it failed to dispose of all of her property and she died partially intestate. The court held that the following presumption did not apply: “[t]he mere making of a will is evidence that the testator had no intent to die intestate and creates a presumption that the testator intended to dispose of his entire estate, and that he did not intend to die intestate as to the whole or any part of his property.” Id. Finally, the court affirmed the trial court’s finding that the nephew in law had improperly taken possession of assets of the estate.

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I. Introduction

Individuals execute trusts and wills to determine how certain assets are to be managed and distributed. Those same individuals may want to have some control over the dispute resolution process for any conflicts that arise in the future. Specifically, an individual may want to keep disputes in the court system, but want to waive all parties’ rights to a jury trial. A jury-waiver clause can potentially waive a party’s right to a jury trial and require that all disputes be resolved by a judge. This clause has been enforced in Texas in contract and tort-related disputes. There are issues, however, in enforcing these clauses in trust and estate litigation where all of the relevant parties rarely sign a document that contains the clause.

II. Jury Waivers Compared To Arbitration Clauses

A jury waiver is a provision that expressly states that the parties waive their right to a jury should a dispute arise between them. If a dispute arises, one party could sue the other in court, but neither party would have the option to request a jury to determine the outcome. The judge sits as the finder of fact. Of course, this would seem to conflict with a party’s constitutional right to a jury trial. See Tex. Const. Art. I, § 15 (“The right of trial by jury shall remain inviolate.”); Tex. Const. Art. V, § 10 (granting right to jury trial in district courts). Yet, Texas courts, and almost all other jurisdictions, have held that contractual jury waivers are permissible and enforceable under certain circumstances.

A natural question is why a party would choose to use a contractual jury waiver as compared to an arbitration clause. Arbitration clauses may not be such a good idea for some disputes. There are multiple reasons for this, but a few are as follows. Arbitrations are not as inexpensive as advertised. The parties have to pay the arbitrator(s), and this can be very expensive depending on the expertise required. The parties still do discovery, and it is normally about as expensive as regular litigation. Moreover, arbitrators have an incentive to keep the arbitration going, and therefore, do not generally grant pre-hearing dispositive motions. Judges do not have that incentive, and at least in Texas, grant partial or complete summary judgments on a regular basis. So, if a party is in an arbitration, an evidentiary hearing will most likely be required, which will be expensive and uncertain in outcome. In a court of law, that may not be the case. Also, and importantly, in an arbitration there is basically no appellate review. An arbitrator’s decision is almost impossible to overturn no matter the facts or the law. In a court of law, there is an appellate remedy to correct the insufficiency of evidence and the incorrect application of law.

As a result, parties are turning to the alternative of the contractual jury waiver. These clauses are recognized in federal courts and most state courts. This eliminates the uncertainty of a runaway jury finding, but preserves other rights that exist in a court of law. When coupled with a forum-selection clause and venue provisions, a party may be able to eliminate the risk of being in an unfavorable jurisdiction or area of a jurisdiction as well.

III. Texas Courts Have Enforced Arbitration and Forum-Selection Clauses in Trust Disputes

Texas courts have enforced arbitration and forum-selection clauses in trust disputes. The Texas Supreme Court held that an arbitration clause was enforceable in a trust dispute. Rachel v. Reitz, 403 S.W.3d 840 (Tex. 2013). The Court did so for two primary reasons: 1) the settlor determines the conditions attached to her gifts, which should be enforced on the basis of the settlor’s intent; and 2) the issue of mutual assent can be satisfied by the theory of direct-benefits estoppel, so that a beneficiary’s acceptance of the benefits of a trust constitutes the assent required to form an enforceable agreement to arbitrate. See id. See Saks v. Rogers, No. 04-16-00286-CV, 2017 Tex. App. LEXIS 6923 (Tex. App.—San Antonio July 26, 2017, no pet.) (court of appeals rejected a trust beneficiary’s challenge to a trial court’s enforcement of an arbitration decision); Archer v. Archer, No. 05-13-013410-CV, 2014 Tex. App. LEXIS 6551 (Tex. App.—Dallas June 17, 2014, no pet.) (court held that arbitration clauses in trusts are enforceable, but refused to enforce arbitration where the clause was not a mandatory clause). A Texas court has enforced a forum-selection clause in a trust dispute. In re JP Morgan Chase Bank, N.A., No. 05-17-01174-CV, 2018 Tex. App. LEXIS 1883 (Tex. App.—Dallas March 14, 2018, original proceeding). Courts do not require any conspicuousness requirements for the enforcement of these clauses and do not require that the parties prove that they were entered into knowingly and voluntarily. Indeed, all presumptions are implied in favor of arbitration.

IV. Standards for Enforcement of Jury Waivers

In In re Prudential, the Texas Supreme Court held that contractual jury waivers were enforceable. 148 S.W.3d 124 (Tex. 2004). The Court analogized contractual jury waivers to arbitration agreements and forum-selection clauses, and held that such clauses were less imposing on a party’s rights than an arbitration clause. The Court held that such an agreement would be enforceable:

[A] waiver of constitutional rights must be voluntary, knowing, and intelligent, with full awareness of the legal consequences. We echo the United States Supreme Court’s admonition that ‘waivers of constitutional rights not only must be voluntary but must be knowing, intelligent acts done with sufficient awareness of the relevant circumstances and likely consequences.’ Under those conditions, however, a party’s right to trial by jury is afforded the same protections as other constitutional rights.

Id. Therefore, the Court found that a contractual jury waiver had to be entered into knowingly and voluntarily.

In In re GE Capital, the Court followed up the In re Prudential opinion by once again granting mandamus relief to enforce a contractual jury waiver. 203 S.W.3d 314, 316-17 (Tex. 2006). The Court held that “a conspicuous provision is prima facie evidence of a knowing and voluntary waiver and shifts the burden to the opposing party to rebut it.” Id.

In In Re Bank Of America, N.A., the Texas Supreme Court granted mandamus relief and ordered the court of appeals to enforce the trial court’s order enforcing the contractual jury waiver. 278 S.W.3d 342 (Tex. 2009). The Court disagreed with the court of appeals’s inference that a contractual jury waiver was not enforceable. Id. The Court first held that a presumption against waiver would violate the parties’ freedom to contract. The Court held that “a presumption against contractual jury waivers wholly ignores the burden-shifting rule” previously found by the Court that “a conspicuous provision is prima facie evidence of a knowing and voluntary waiver and shifts the burden to the opposing party to rebut it.” Id. Courts presume that “a party who signs a contract knows its contents.” Id. Therefore, the Court concluded that “as long as there is a conspicuous waiver provision, Mikey’s Houses is presumed to know what it is signing.” Id.  Interestingly, the Court noted that if the party opposing the jury waiver had alleged fraud with regard to the jury waiver provision, that it would have shifted the burden to the party seeking to enforce the jury waiver to establish a knowing and voluntary waiver: “As for the extent of the allegation that would be necessary to shift the burden to Bank of America to prove knowledge and voluntariness, an allegation could be sufficient to shift the burden if there is fraud alleged in the execution of the waiver provision itself.” Id.

Several courts of appeals have addressed contractual jury waivers. Some courts treat jury waivers the same as arbitration and forum-selection clauses. One court has held that contractual jury waiver provisions are enforced like any other contractual clause, including an arbitration clause. In re Wild Oats Mkts., No. 09-09-00031-CV, 2009 Tex. App. LEXIS 2316 (Tex. App.—Beaumont Apr. 2, 2009, orig. proceeding). That court stated: “In its response, Kuykendahl suggests arbitration cases are treated more favorably than other contractual jury waiver cases. We disagree.” Id. at n. 1. Ultimately, the court denied the petition for writ of mandamus because the plaintiff was not a signatory to the agreement, and though potentially available, direct-benefits estoppel did not apply due to the facts of the case. See id. Other courts have enforced jury waivers and held that they were the same as arbitration agreements. See, e.g., Great Hans, LLC v. Liberty Bankers Life Ins., No. 05-17-01144-CV, 2019 Tex. App. LEXIS 2111, 2019 WL 1219110 (Tex. App.—Dallas Mar. 15, 2019, no pet.); In re MCO Mgmt., LLC, No. 05-17-00882-CV, 2018 Tex. App. LEXIS 2180 (Tex. App.—Dallas March 27, 2018, original proceeding) (all clauses construed the same); In re Guggenheim Corp. Funding, LLC, 380 S.W.3d 879, 885–887 (Tex. App.—Houston [14th Dist.] 2012, orig. proceeding) (court decided that both enforcement and scope of jury waiver should be determined in same manner as other dispute resolution agreements, such as forum selection clauses and arbitration clauses); In re Key Equipment Fin. Inc., 371 S.W.3d 296, 301 (Tex. App.—Houston [1st Dist.] 2012, orig. proceeding) (contractual jury waiver deserves no more scrutiny than agreement to waive judicial forum and arbitrate future dispute).

Other older courts of appeals’s opinions have not been as friendly to the enforcement of contractual jury waivers. For example, in Mikey’s Houses, LLC v. Bank of America, N.A., the Fort Worth Court of Appeals found that a trial court erred in enforcing a contractual jury waiver because the defendant did not prove that it was entered into voluntarily and knowingly.  232 S.W.3d 145 (Tex. App.—Fort Worth 2007, no pet.), rev’d by mandamus, In re Bank of America, N.A., 278 S.W.3d 342, 344–346 (Tex. 2009). In In re Credit Suisse First Boston Mortgage Capital, L.L.C., the Houston Fourteenth Court of Appeals similarly refused to enforce a contractual jury waiver. 257 S.W.3d 486 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding). The court stated that because the clause expressly only applied to the signatories, the non-signatory defendant could not enforce the provision, and also held that it would not apply equitable estoppel in the context of contractual jury waivers. Id.

Most recently, the Texas Supreme Court held in In re Frank Kent Motor Co., that an employer can require an employee to sign a jury waiver in fear of termination without that constituting coercion. 361 S.W.3d 628 (Tex. 2012). The Court held:

There is no reason to treat the effect of the at-will employment relationship on a waiver of jury trial differently from its effect on an arbitration agreement. Arbitration removes the case from the court system almost altogether, and is every bit as much of a surrender of the right to a jury trial as a contractual jury waiver. Additionally, refusing to allow the enforcement of jury trial waivers in the context of the at-will employment relationship would create a practical problem. Since employers can fire at-will employees for almost any reason, employers could resort to firing all employees when they wanted to implement new dispute resolution procedures and rehiring only those employees who signed the waiver.

Id. at 632. The Court concluded: “An employer’s threat to exercise its legal right [to fire an employee for any reason] cannot amount to coercion that invalidates a contract.” Id.

There is no question that contractual jury waivers are enforceable in Texas under the right circumstances. The issue facing Texas courts is whether the clause is something different from an arbitration clause or a forum-selection clause and thus should be judged by different standards. Does Texas law require a conspicuous jury waiver clause? Does the clause have to be entered into by both parties on a knowing and voluntary basis? If so, whose burden is it to prove a knowing and voluntary waiver? Are there any presumptions in favor of or against jury waivers? What factors will Texas Courts look to in determining a voluntary and knowing waiver?

The opinion in In re Bank of America could be read narrowly. Just as the Court determined in In re General Electric, the jury-waiver clause was conspicuous, and therefore, the burden was on the party opposing the waiver to prove that it was not entered into knowingly and voluntarily. The Court did not deal with a non-conspicuous clause and did not expressly hold that the party opposing a non-conspicuous clause would have that initial burden of proving a knowing and voluntary waiver. Further, the holding in In re Frank Kent Motor Co., that jury waivers should be treated the same as arbitration clauses specially dealt with the issue of whether an employer coerced an employee by requiring the employee to sign the agreement containing the clause in order to maintain employment. The Court did not address with the issue of conspicuousness or burden to prove a knowing and voluntary waiver. Therefore, there is still a question as to whether the burden of proving a knowing and voluntary waiver is on the party attempting to enforce a non-conspicuous jury-waiver clause.

Another issue is the application of choice-of-law clauses on the interpretation and enforcement of jury wavier clauses. For example, it is not uncommon for dispute resolution clauses to also provide that all of the contractual clauses will be construed by a foreign jurisdiction’s law. Where the issue has been raised, some courts hold that dispute resolution clauses are to be construed under the law of the forum on which the parties have contractually agreed. Lost Maples Gen. Store, LLC v. Ascentium Capital, LLC, No. 14-18-00215-CV, 2019 Tex. App. LEXIS 3549, 2019 WL 1966671 (Tex. App.—Houston [14th Dist.] May 2, 2019, no pet.) (contractual jury waiver); Hooks Indus., Inc. v. Fairmont Supply Co., No. 14-00- 00062-CV, 2001 Tex. App. LEXIS 2568 (Tex. App.—Houston [14th Dist.] April 19, 2001, pet. denied) (not designated for publication) (court interpreted contract with forum-selection clause under law designated by parties). Determining how a foreign country would interpret or enforce a clause may require the admission of evidence. Under Texas Rule Evidence 203, a trial court may consider affidavits in determining the law of a foreign nation. Tex. R. Evid. 203; Dankowski v. Dankowski, 922 S.W.2d 298, 302-03 (Tex. App.—Fort Worth 1996, writ denied). A trial court will likely not abuse its discretion in believing one credible expert witness over another. See Phoenix Network Techs. Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 618 n. 15 (Tex. App.—Houston [14th Dist.] 2005, no pet.) (in the context of whether a foreign jurisdiction would enforce a forum-selection clause, a trial court did not abuse discretion in being advised on foreign law by one party expert’s affidavit over the opponent’s expert’s affidavit). Accordingly, if a trust or will designates the law to use in construing the document, a court should use that law to determine the enforceability and scope of a jury waiver provision.

V. Jury Waivers in Trust and Estate Litigation

One Texas court enforced a contractual jury waiver in a trust document, largely on the basis that the beneficiary waived her complaint. Laven v. THBN, LLC, No. 14-13-00440-CV, 2014 Tex. App. LEXIS 13281, 2014 WL 6998098 (Tex. App.—Houston [14th Dist.] Dec. 11, 2014, no pet.) (mem. op.). In this case, the plaintiff anticipated difficulty making mortgage payments on her recently-purchased suburban home. She and an entity executed multiple documents which accomplished the following: created a land trust; transferred the home into the trust, subject to the existing mortgage; assigned her interest in the trust to the entity; and gave an individual power of attorney relative to the property. The entity and its representative, both individually and as trustee, filed suit requesting a declaratory judgment that the documents were valid and enforceable. The defendant filed a counterclaim, alleging fraud, breach of fiduciary duty, negligence and gross negligence, violations of the Texas Deceptive Trade Practice Act and Texas Real Estate Licensing Act, conspiracy, and conversion. The defendant timely filed a jury demand. The plaintiff moved to strike the demand on the ground that the defendant contractually waived her right to a jury trial. The trial court signed an order striking the jury demand as to the entire case. Therefore, trial was to the bench. After hearing evidence, the trial court signed a judgment, declaring the documents are valid and enforceable and awarding attorney’s fees to appellees and also denying relief on the counterclaims. The defendant appealed on the basis that the trial court improperly enforced the jury waiver in the trust document.

The court of appeals held:

Parties may contractually agree to waive their constitutional right to a jury trial. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 132 (Tex. 2004). A contractual jury waiver is enforceable as long as the waiver is voluntary, knowing, and made with full awareness of the legal consequences. Id.

Id. The court noted:

The provision on which appellees relied as a contractual jury waiver is contained in only one of the documents executed during the transaction, entitled “Agreement and Declaration of Trust,” which created the trust and appointed Arnold as trustee and Laven as original beneficiary. Only Laven and Arnold, as trustee, signed that document. It was executed immediately before other pertinent documents transferring Laven’s interest in the trust to THBN and transferring the property into the trust. The following language is included within a section of the “Agreement and Declaration of Trust” entitled “Governing Law”: “The parties herein waive trial by jury . . . .”


The defendant contended that (1) the trial court erred by striking the jury demand as to “THBN and Arnold individually because they were not signatories to the ‘Agreement and Declaration of Trust,’” and (2) the jury waiver was unenforceable as to all appellees because she was not fully aware of its legal consequences when she signed the “Agreement and Declaration of Trust.” Id. In support of her second issue, she argued that she was a teacher at the time of the transaction (although she subsequently became a lawyer), there was a disparity in bargaining power, she was not given the opportunity to negotiate terms or consult counsel, and the jury waiver was inconspicuous.

The court of appeals did not decide these issues, rather, it concluded that the defendant failed to preserve error on her appellate complaints because she did not present them to the trial court. The court noted: “In her response, Laven did make a specific objection, but it was distinctly different than the complaint she raises on appeal. The objection did not in any manner inform the trial court that Laven opposed enforcement of the jury waiver because it was applicable to Arnold as trustee only, nor was such a complaint apparent from the context.” Id. She first advanced such complaints in a motion for new trial, but the court concluded “that her presenting this new ground to attack enforcement of the contractual jury waiver after the trial court had conducted a bench trial was not a timely objection.” Id.

With respect to her second issue, the court held:

Texas law does not impose a presumption against contractual jury waivers; therefore, the party seeking enforcement does not bear the burden to prove that the opposing party agreed to waive its constitutional right to a jury trial knowingly, voluntarily, and with full awareness of the legal consequences. A conspicuous jury waiver in an agreement shifts the burden to the opposing party to rebut that the waiver was made voluntarily, knowingly, and with full awareness of the legal consequences. In response to the motion to strike, Laven did not assert the jury waiver was inconspicuous and thus that appellees failed to meet their burden to enforce the provision. Moreover, Laven failed to complain in her response that the jury waiver was not knowing or voluntary and she did not understand its legal effects, much less present evidence supporting such a contention. As stated above, the only ground on which Laven opposed enforcement of the jury waiver was the timing of the motion to strike.

Id. In summary, because she did not preserve error on her appellate challenges to enforcement of the jury waiver, the court of appeals overruled her appellate issues and affirmed the trial court’s judgment.

An important note about this case is that the beneficiary actually signed the trust document. This was not a typical private trust, but rather was a part of a business transaction. The trustee and beneficiary signed a number of documents, including the trust document. So, the many issues involving a trustee attempting to enforce the jury waiver against non-signatory beneficiary were simply not present in the case.

VI. Conclusion

It is still unclear whether a Texas court would enforce a jury waiver provision in a trust where the beneficiary/plaintiff does not sign the trust document. There are many questions involving such an issue: 1) whether such a clause can be enforced against a non-signatory; 2) whether direct-benefits estoppel can apply to such a clause like it does in the arbitration context; 3) which party has the burden to establish that an unconspicuous clause was entered into knowingly and voluntarily; and 4) what evidence has to be present to prove a knowing and voluntary waiver. Fundamentally, arbitration, forum-selection, and jury waiver clauses should all be judged by the same standard. They all deprive a party of constitutional rights – however, as courts acknowledge, a party can waive those rights.  They should all be judged either under the contract/mutual assent standard of arbitration agreements or by some higher “knowing and voluntary” standard. There is no logical difference between them. In the author’s view, courts are too ready to enforce arbitration, forum-selection, and jury-waiver clauses. The right to a trial by jury is “one of our most precious rights,” and holds “a sacred place” in our history. General Motors Corp. v. Gayle, 951 S.W.2d 469, 476 (Tex. 1997) (orig. proceeding). Restrictions placed on that right will therefore be subject to “utmost scrutiny.” Bell Helicopter Textron, Inc. v. Abbott, 863 S.W.2d 139, 141 (Tex. App.—Texarkana 1993, writ denied); Jones v. Jones, 592 S.W.2d 19 (Tex. Civ. App.—Beaumont 1979, no writ); Rayson v. Johns, 524 S.W.2d 380 (Tex. Civ. App.—Texarkana 1975, writ ref’d n.r.e.); Silver v. Shefman, 287 S.W.2d 316 (Tex. Civ. App.—Austin 1956, writ ref’d n.r.e.). Respectfully, the Texas Supreme Court has not done a very good job of requiring “utmost scrutiny” in allowing a defendant to deny a plaintiff their day in court (a Texas court). The words “knowing and voluntary” waiver should mean something and should apply to arbitration, forum-selection, and jury-waiver clauses.


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In In re Alexander, a beneficiary filed suit against the trustee based on multiple allegations of breach of fiduciary duty, including an allegation that the trustee attempted to transfer the trustee position to successors in violation of the trust’s terms. No. 14-18-00466-CV, 2019 Tex. App. LEXIS 6474 (Tex. App.—Houston [14th Dist.] July 30, 2019, original proc.). The beneficiary filed a motion to compel trust documents and emails regarding same that were drafted by an attorney, but which were never executed. After the trial court granted the motion to compel, the trustee filed a petition for writ of mandamus, challenging the order on the basis of the attorney-client privilege and attorney work product.

The court of appeals first discussed the concept of an attorney representing multiple clients:

The “joint client” or “co-client” doctrine, applies in Texas “[w]hen the same attorney simultaneously represents two or more clients on the same matter.” “Joint representation is permitted when all clients consent and there is no substantial risk that the lawyer’s representation of one client would be materially adversely affected by the lawyer’s duties to the other.” “‘Where [an] attorney acts as counsel for two parties, communications made to the attorney for the purpose of facilitating the rendition of legal services to the clients are privileged, except in a controversy between the clients.'”

Id. The court stated that the trustee filed affidavits proving that the drafts and communications were prepared in the course of the attorney’s representation of the trustees and were for legal advice. The court then discussed the concept of a trustee’s communications with its counsel being privileged:

In Huie, the [Texas Supreme Court] considered whether the attorney-client privilege protects communications between a trustee and his or her attorney relating to the administration of a trust from discovery by a trust beneficiary. There, a trust beneficiary sued the trustee, alleging that he had mismanaged the trust, engaged in self-dealing, diverted business opportunities from the trust, and commingled and converted trust property. The beneficiary noticed the deposition of the trustee’s attorney, who appeared but refused to answer questions about the management and business dealings of the trust. After an evidentiary hearing, the trial court held that the attorney-client privilege did not prevent the beneficiary from discovering the attorney’s pre-lawsuit communications. The court in Huie observed that trustees “owe beneficiaries ‘a fiduciary duty of full disclosure of all material facts known to them that might affect [the beneficiaries’] rights.'” Furthermore, this duty exists independently of the rules of discovery and applies even if no litigious dispute exists between the trustee and beneficiaries. While the attorney-client privilege protects confidential communications between a client and the attorney made for the purpose of facilitating the rendition of professional legal services to the client, a person cannot cloak a material fact with the attorney-client privilege merely by communicating it to an attorney. The Huie court illustrated the point with the following hypothetical:

Assume that a trustee who has misappropriated money from a trust confidentially reveals this fact to his or her attorney for the purpose of obtaining legal advice. The trustee, when asked at trial whether he or she misappropriated money, cannot claim the attorney-client privilege. The act of misappropriation is a material fact of which the trustee has knowledge independently of the communication. The trustee must therefore disclose the fact (assuming no other privilege applies), even though the trustee confidentially conveyed the fact to the attorney. However, because the attorney’s only knowledge of the misappropriation is through the confidential communication, the attorney cannot be called on to reveal this information.

Nonetheless, the court flatly rejected the beneficiary’s argument that a trustee’s duty of disclosure extends to any and every communication between the trustee and his attorney. The court explained that (1) its holding did not affect the trustee’s duty to disclose all material facts and to provide a trust accounting to the beneficiary, even as to information conveyed to the attorney; (2) the beneficiary could depose the attorney and question him about his handling of trust property and other factual matters involving the trust; and (3) the attorney-client privilege did not bar the attorney from testifying about factual matters involving the trust, so long as he was not called on to reveal confidential attorney-client communications.

Although a trustee owes a duty to a trust beneficiary, the trustee in Huie did not retain the attorney to represent the beneficiary but to represent himself in carrying out his fiduciary duties. Contrary to Preston’s point, the Huie court recognized that communications between a trustee and the trustee’s attorney made confidentially and for the purpose of facilitating legal services remain protected. The hypothetical in Huie involved the trustee’s misappropriation of trust funds, which he revealed to his attorney for purpose of obtaining legal advice. The trustee’s misappropriation was a material fact of which the trustee knew independent of the communication.

In contrast to the circumstances in Huie, and as explained above, HHS and all the Co-Trustees had an attorney-client relationship at the relevant time, and any communications among HHS and their joint clients regarding the contents of the draft documents were made for the purpose of obtaining legal services from HHS, and the Co-Trustees’ knowledge of the draft documents was not gained independent of receiving legal advice. Accepting Preston’s view of the discoverability of the subject documents would strip the attorney-client privilege and joint-client doctrine of their core purpose and meaning. Therefore, relators had no duty under Huie to disclose the draft documents to Preston.

Id. The court also held that the trustee had not waived the privilege by testifying in a deposition about the drafts of the documents. The court held that the testimony was not specific enough to constitute a waiver. The court granted the petition and ordered the trial court to reverse its order compelling production of the documents and communications.

In Austin v. Austin, after the decedent passed, his daughters probated an April 2016 will, and his wife then sought to probate a December 2016 will. No. 03-18-00678-CV, 2019 Tex. App. LEXIS 8255 (Tex. App.—Austin September 12, 2019, no pet. history). The daughters alleged that the December 2016 will was a forgery. After an evidentiary hearing, the trial court admitted the December 2016 will to probate, and the daughters appealed.

The court of appeals first discussed admitting a subsequent will to probate after admitting an earlier will:

 After a will has been admitted to probate, a person may file an application to admit a later will by the same decedent. An application under this provision is not considered a contest of the validity of the earlier will. Instead, the court considers the second application under the same standards and criteria as the first and may admit the second will to probate. An order admitting a second, later will to probate “effectively revokes the probate of the first will.”

Id. The court of appeals then reviewed whether there was sufficient evidence to support the trial court’s finding that the decedent had signed the December 2016 will. The daughters offered their testimony that it was not the decedent’s signature and an expert’s testimony to the same effect. However, there was also testimony from witnesses who stated that they saw the decedent sign the will. The court of appeals held that the trial court was within its discretion to believe the witnesses that testified that the decedent signed the will. The court of appeals also held that the admission of notes from medical records that indicated that the daughters had improperly obtained some of the decedent’s assets were not hearsay because they were not offered for the truth of the matter asserted, but to prove that the decedent’s state of mind to change his will. The court of appeals affirmed the trial court’s order admitting the December 2016 will to probate.

In In re Topletz, the trial court ordered a party jailed for civil contempt for failing to comply with an order to produce documents from a family-run trust during post-judgment discovery in a suit against him individually where the party contended the documents were not within his possession, custody, or control. No. 05-19-00327-CV, 2019 Tex. App. LEXIS 8249 (Tex. App.—Dallas September 11, 2019, original proceeding). The party was a beneficiary of a trust that provided that the beneficiaries had the right to access the trust’s books and records. During post-judgment discovery, the parties agreed that the party would produce the trust instrument and tax returns from the trust subject to a protective order. After changing attorneys, the party refused to produce documents from the trust, citing In re Kuntz, 124 S.W.3d 179 (Tex. 2003) as legal authority that he did not have possession of the trust documents. Ultimately, the trial court ordered the party to produce the documents, and when he refused, the trial court held him in contempt and placed him in jail. The party then filed a petition for habeas corpus.

The court of appeals first described the Supreme Court’s Kuntz opinion:

In In re Kuntz, the relator was a manager at a consulting company that evaluated oil and gas prospects for an oil company. The favorable prospects were documented in letters of recommendation that were kept at both the consulting firm and the oil company. The consulting agreement between Kuntz’s employer and the oil company provided that the letters and associated information are the property of the oil company and may not be disclosed to a third party without the oil company’s consent. The consulting firm’s operation agreement required Kuntz to keep the information the company generated confidential and prohibited disclosure without the written consent of the company’s board. Kuntz’s ex-wife sought production of the letters as part of post-judgment discovery in the couple’s divorce case. After the trial court ordered production of the letters, Kuntz pursued mandamus relief, arguing that he did not have possession, custody or control of the letters. The supreme court agreed with Kuntz, holding that mere access to the documents does not constitute physical possession in a situation where the person with access does not have a legal right to produce the relevant documents. The court noted that if Kuntz produced the documents, he would not only be violating his company’s consulting agreement with the oil company, he would also be potentially exposing himself to a suit for damages.

Id. The party contended that like Kuntz, the trust instrument gives him access to the documents but does not permit him to copy the documents and produce them in discovery. The court disagreed and held:

Under the terms of the trust, relator, as beneficiary, has the right to access the documents at any time during regular business hours and the right to obtain prepared summary information in the form of a profit and loss statement and balance sheet toward the end of each fiscal year. Thus, unlike the defendant in Kuntz, relator has a right to access and no contractual impediment to production. As beneficiary of the trust, relator has the right to obtain possession from the trustee who is his agent. Thus, we conclude appellant has constructive possession of the trust’s financial documents and tax returns as was recognized by his former counsel who agreed to produce the documents.

Id. The court affirmed the trial court’s contempt order.

Interesting Note. This case raises an interesting issue concerning the right to access and provide trust information. Typically, a trustee has the right to control access to the trust information and has a duty of loyalty to beneficiaries. This duty of loyalty typically also includes a duty of confidentiality. Regarding the duty of loyalty, the Restatement of Trusts states:

(1) Except as otherwise provided in the terms of the trust, a trustee has a duty to administer the trust solely in the interest of the beneficiaries, or solely in furtherance of its charitable purpose.

(2) Except in discrete circumstances, the trustee is strictly prohibited from engaging in transactions that involve self-dealing or that otherwise involve or create a conflict between the trustee’s fiduciary duties and personal interests.

(3) Whether acting in a fiduciary or personal capacity, a trustee has a duty in dealing with a beneficiary to deal fairly and to communicate to the beneficiary all material facts the trustee knows or should know in connection with the matter.

Restatement (Third) of Trusts, § 78. It further provides:

The trustee is under a duty to the beneficiary in administering the trust not to be guided by the interest of any third person. Thus, it is improper for the trustee to sell trust property to a third person for the purpose of benefiting the third person rather than the trust estate.…The trustee is under a duty to the beneficiary not to disclose to a third person information which he has acquired as trustee where he should know that the effect of such disclosure would be detrimental to the interest of the beneficiary.

Restatement (Second) of Trusts §170. Further, the Restatement provides a duty of confidentiality to prevent the disclosure of trust information to third parties:

Incident to the duty of loyalty, but necessarily more flexible in its application, is the trustee’s duty to preserve the confidentiality and privacy of trust information from disclosure to third persons, except as required by law (e.g., rules of regulatory, supervisory, or taxing authorities) or as necessary or appropriate to proper administration of the trust. Thus, the trustee’s duty of loyalty carries with it a related duty to avoid unwarranted disclosure of information acquired as trustee whenever the trustee should know that the effect of disclosure would be detrimental to possible transactions involving the trust estate or otherwise to the interests of the beneficiaries.

Restatement (Third) of Trusts §78.

So, as a general proposition, a trustee should not administer the trust to benefit anyone but the beneficiary. Even though the trust provides that the beneficiary has a right to access certain information, a trustee may determine that allowing a beneficiary to access that information to provide it to a third party is not appropriate, especially if it is a spendthrift trust and the information is sought by a creditor of the beneficiary.

In the case described above, the beneficiary should have “sought” the trust’s information and have the trustee refuse to provide it for the purpose sought. The beneficiary then could have provided evidence to the trial court that he sought and was denied trust information to defend his inability to access the information. It seems that the judgment creditor should have then been in the position of having to subpoena the trustee for the information. The trustee is really the correct party for a request for information about the trust; not the beneficiary.

In Hoffpauir v. Cormier, parties sought to modify the terms of a trust agreement under Texas Property Code section 112.054(a) to extend the trust’s term. No. 09-18-00358-CV, 2019 Tex. App. LEXIS 8473 (Tex. App.—Beaumont August 21, 2019, no pet. history). After an evidentiary hearing, the trial court granted the modification. A pro se beneficiary appealed but failed to have the reporter’s record prepared.

The court of appeals summarily affirmed due to an inadequate record. The court first set forth the standard of review for a suit to modify a trust: “We review an order modifying the terms of a trust under an abuse of discretion standard.” Id. The court noted that “[T]he appellant bears the burden to supply this Court with a complete record demonstrating the trial court abused its discretion.” Id. “Appellate courts generally presume pretrial hearings are non-evidentiary and that the trial court only considered evidence filed with the clerk. However, if the proceeding’s nature, the trial court’s order, the parties’ briefs, or other indications show that an evidentiary hearing took place, then the complaining party must present a record of the hearing to establish harmful error.” Id. The court held that multiple indicators showed that the trial court conducted an evidentiary hearing on the modification of the trust agreement. The court then held that “When a party fails to make the reporter’s record part of the appellate record, we presume sufficient evidence was presented to support the trial court’s finding and judgment.” Id. The court then concluded: “Here, Hoffpauir complains of the trial court’s order allowing for modification of the trust agreement following an evidentiary hearing, but she has failed to present us with the reporter’s record of the hearing. Therefore, we presume the trial court properly conducted the hearing on July 17, 2018, and sufficient evidence was presented for the trial court to make all necessary findings.” Id. The court affirmed the modification.

In In the Estate of Sakima, the probate court appointed a decedent’s sister as his administrator in 2011. No. 05-18-01288-CV, 2019 Tex. App. LEXIS 8209 (Tex. App.—Dallas September 10, 2019, no pet. history). After multiple show-cause notices, the probate court removed the administrator in 2018. The court held that an estate with a foreclosed home and a $30,000 bank account should not still be open after seven years. There was also a $8,000 check had not been negotiated, and the administrator filed incorrect accountings. The administrator appealed.

Continue Reading Texas Court Affirms Removal Of Administrator For Failing To Properly Administer Estate

In Gray vs. Ward, Ward and Gray started a limited partnership where Ward was a limited partner and Gray was a limited partner and the manager of the general partner. No. 05-18-00266-CV, 2019 Tex. App. LEXIS 6992 (Tex. App.—Dallas August 9, 2019, no pet.). Ward was also an employee of the partnership, but there was no written employment agreement. Ward wanted to exit the relationship, and the parties had a dispute concerning the amount to buy him out. Ward alleged that Gray fired him, but told employees that Ward resigned. Ward sued Gray and the general partner for breach of contract and fiduciary duties arising out of the buy-out of his interests, wrongful termination related to his firing, and defamation. Gray filed a motion to compel arbitration due to the following arbitration clause in the partnership agreement:

Continue Reading Texas Court Compels A Limited Partner’s Employment And Defamation Claims To Arbitration Due To The Partnership Agreement’s Arbitration Clause

David F. Johnson, lead writer for the Texas Fiduciary Litigator blog, presented “Detecting Elder Abuse and The Duty to Report Financial Exploitation” to the Southwest Association of Bank Counsel on Thursday, September 26, 2019, in Santa Fe, New Mexico.  This presentation focused on factors to detect the two main tools of elder abuse, undue influence and mental incompetence, and also discussed a financial institution’s duty to report elder abuse to the proper authorities.  David also discussed financial institutions’ potential liability risk for failing to detect and report elder abuse. The paper, PowerPoint, and a recent CFPB alert on elder abuse are attached.

Continue Reading Presentation: Detecting Elder Abuse and The Duty to Report Financial Exploitation