Affirmed and Majority and Concurring Opinion filed July 10, 2007.
In The
Fourteenth Court of Appeals
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NO. 14-05-00677-CV
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CAROLYN ANN LESIKAR MOON, Individually and as Named Trustee of the CAROLYN ANN LESIKAR MOON SPECIAL TRUST, Appellant
V.
WOODY K. LESIKAR, Individually, as Trustee of the WOODROW V. LESIKAR FAMILY TRUST, Trustee of the WOODY K. LESIKAR SPECIAL TRUST, and Independent Executor of the ESTATE OF WOODROW V. LESIKAR; WEST HOUSTON AIRPORT CORPORATION; SHELLY ANN LESIKAR, Individually and as Trustee of the S&S TRUST; STACY JAYNE LESIKAR MARTIN, Individually and as Trustee of the S&S TRUST; and the S&S TRUST, Appellees
On Appeal from the 149th District Court
Brazoria County, Texas
Trial Court Cause No. 33,207
C O N C U R R I N G O P I N I O N
I agree with much of the reasoning of the cases on which the majority relies, but those cases are more suited to an analysis of standing under the common law rather than a determination of standing conferred by statute. Here, we need not look outside the Texas Trust Code to determine whether Carolyn has statutory standing. Thus, although I agree with the majority=s disposition of the case, as a threshold matter I would hold that Carolyn has standing to bring her claims under the Texas Trust Code. I would therefore reach the same result as that stated by the majority only after considering Carolyn=s claims on the merits. Accordingly, I concur in the result reached by the majority, but write separately on the merits of Carolyn=s ten issues.
I. Standing
Standing may be predicated on statutory or common-law authority. See Williams v. Lara, 52 S.W.3d 171, 178B79 (Tex. 2001); Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 850 (Tex. App.CFort Worth 2005, no pet.). When standing has been statutorily conferred, the statute itself serves as the proper framework for a standing analysis. Everett, 178 S.W.3d at 851; In re Sullivan, 157 S.W.3d 911, 915 (Tex. App.CHouston [14th Dist.] 2005, orig. proceeding).
Applying the statutory framework, the majority notes that Carolyn, Awould appear to meet the definition of an interested person with standing to bring suit against a trustee for breach of fiduciary duty.@ I agree. Although the majority then looks to the common law of other jurisdictions and finds an exception to the standing conferred by the Texas Trust Code, I would confine the analysis to the provisions of relevant statutes. See In re Sullivan, 157 S.W.3d at 920 (holding that the Texas Family Code confers standing on a purported sperm donor to maintain suit adjudicating parentage and stating that A[u]nless and until the Texas Legislature amends the Texas Family Code to achieve the result [relator] urges, there is no basis to deny standing@).
AThe determination of whether a plaintiff possesses standing to assert a particular claim depends on the facts pleaded and the cause of action asserted.@ Mazon Assocs., Inc. v. Comerica Bank, 195 S.W.3d 800, 803 (Tex. App.CDallas 2006, no pet.). Texas courts have historically recognized a distinction between the analysis employed in reviewing common-law and statutory standing. See Williams, 52 S.W.3d at 178 (AAs a general rule of Texas law, to have standing, unless it is conferred by statute, a plaintiff must demonstrate that he or she possesses an interest in a conflict . . . such that the defendant=s actions have caused the plaintiff some particular injury.@) (emphasis added); In re Sullivan, 157 S.W.3d at 915 (A[T]he judge-made criteria regarding standing do not apply when the Texas Legislature has conferred standing through a statute.@). Because Carolyn claims standing under the Texas Trust Code, Athe analysis is a straight statutory construction of the relevant statute to determine upon whom the Texas Legislature conferred standing and whether the claimant in question falls in that category.@ In re Sullivan, 157 S.W.3d at 915.
Under the relevant terms of the Trust Code, I would conclude that Carolyn is an interested person entitled to bring suit. See Tex. Prop. Code Ann. '' 111.004(2),(6),(7),(25), 114.008, 115.001, 115.011 (Vernon 2007).[1] Accordingly, I would sustain Carolyn=s tenth issue and address her nine remaining issues on the merits.
II. Trust in Effect at the Time of the Stock Sale
In her third and fourth issues, Carolyn argues that the 1997 Amended Family Trust was in effect at the time the Airport Stock was sold, or in the alternative, that there are genuine issues of material fact concerning which Family Trust instrument was in effect at the time of the sale. Although Carolyn correctly points out that there is a question of fact regarding the date the stock was sold, I would hold that this is not a material fact, considering the similarity of the key terms of the two agreements. Under both trusts, the settlor has the right to revoke or modify the trust upon written notice, and the trustee is authorized Ato enter into any transaction on behalf of the trusts despite the fact that another party to the transaction is (I) a trust of which a Trustee of these trusts is also a trustee, . . . [or] (iii) a Trustee or any one or more of the beneficiaries acting on their own behalf . . . .@[2] In light of the similarity of these key provisions addressing the rights of the settlors and the trustees, I would overrule Carolyn=s third and fourth issues.
III. Woody=s Alleged Breach of Duty to Carolyn
In her first issue, Carolyn argues that the trial court erred in denying her motion for summary judgment because no competent evidence proved that Woody=s purchase of the Airport Stock was fair. Similarly, she argues in her second issue that the trial court erred in granting the Lesikar Defendants=[3] counter-motion for interlocutory summary judgment because Woody=s alleged self-dealing in purchasing the Airport Stock was not excused by exculpatory language in the trust. In her eighth issue, Carolyn contends that Woody had a fiduciary obligation as co-trustee to avoid self-dealing transactions, Aeven if the Family Trust was revocable and even if [the Settlor] participated in and directed those transactions.@
This argument is rebutted by the terms of the trusts and of the Trust Code. As previously noted, Article VII, section 7.1(h) of each trust permits such Aself-dealing.@ Moreover, at the time the summary judgment motions were filed, heard, and decided, the Texas Trust Code provided as follows:
If a trust instrument reserves or vests authority in any person to the exclusion of the trustee, including the settlor . . . to direct the making or retention of an investment or to perform any other act in the management or administration of the trust, the excluded trustee or cotrustee is not liable for a loss resulting from the exercise of the authority in regard to the investments, management, or administration of the trust.
Tex. Prop. Code Ann. ' 114.003 (Vernon 1995).[4] As amended, the statute now provides:[5]
(a) The terms of a trust may give a trustee or other person a power to direct the modification or termination of the trust.
(b) If the terms of a trust give a person the power to direct certain actions of the trustee, the trustee shall act in accordance with the person=s direction unless:
(1) the direction is manifestly contrary to the terms of the trust; or
(2) the trustee knows the direction would constitute a serious breach of a fiduciary duty that the person holding the power to direct owes to the beneficiaries of the trust.
(c) A person, other than a beneficiary, who holds a power to direct is presumptively a fiduciary required to act in good faith with regard to the purposes of the trust and the interests of the beneficiaries. The holder of a power to direct is liable for any loss that results from a breach of the person=s fiduciary duty.
Tex. Prop. Code Ann. ' 114.003 (Vernon 2007).[6] A>[T]erms of the trust= means the manifestation of intention of the settlor with respect to the trust expressed in a manner that admits of its proof in judicial proceedings.@ Id. ' 111.004(15).
Here, each of the trusts reserved to the settlor the power to modify or revoke the trust, in whole or in part, and Carolyn does not argue that Mr. Lesikar=s decision was the result of coercion, undue influence, lack of capacity, or was otherwise involuntary. To the contrary, Carolyn essentially complains that Woody violated his fiduciary duty to her by failing to influence her father to abandon his intent to transfer the Airport Stock to him. She contends that, as a trustee, Woody has a fiduciary duty to the contingent beneficiaries, and must therefore prevent the co-trustee from removing property from the trust or transferring former trust property to him. In effect, she argues that, in his capacity as a trustee, Woody=s duty to her as a contingent beneficiary trumps his duty to fulfill the expressed intent of the settlor.
But this argument elevates the rights of a beneficiary above the rights of the settlor. Here, the settlor is also a trustee; thus, under the fiduciary duties that Carolyn suggests, the settlor would share the same duty to prevent the removal of trust property. See id. ' 114.006. Thus, the settlor could revoke the trust only by breaching his duty to every beneficiary, contingent beneficiary, and remainderman who held an interest, however attenuated, in the trust property. Under this interpretation, the trust would no longer be freely revocable. Because a fiduciary must also place the interests of the one to whom a duty is owed above his own interests, it would seem that the settlor, in his capacity as trustee, would have a duty to prevent himself, in his capacity as settlor, from revoking the trust. This result is inconsistent with the Trust Code and the terms of the trust documents. Id. ' 112.051(a) (AA settlor may revoke the trust unless it is irrevocable by the express terms of the instrument creating it or of an instrument modifying it.@).
I would hold that Woody=s cooperation in the stock purchase was in accordance with the direction of his father, who was empowered to direct his actions. Moreover, Woody=s purchase of the stock was not manifestly contrary to the terms of the trust, but complied with the intent of Mr. Lesikar as demonstrated not only in the written terms of the trust, but in the written stock transfer and the endorsed check. See Haldeman v. Openheimer, 119 S.W. 1158, 1162 (Tex. Civ. App. 1909), aff=d as modified, 103 Tex. 275, 126 S.W. 566 (1910).[7] In arguing the contrary, Carolyn relies on authorities that speak generally of the duties a trustee owes to a remainderman or to a contingent beneficiary, but that do not adequately reconcile the exculpatory terms of the trust, the rights of the settlor, the rights of other beneficiaries, and the trustee=s obligation to comply with the lawful directions of the settlor: In construing a trust, the whole instrument creating or declaring the trust must be considered, in order to determine the settlor=s intent, and not merely any particular provision, part, clause, or phrase by itself, and consideration should not be given merely to disjoined parts. All parts, provisions, or terms of the instrument are to be considered, each paragraph provision, or phrase must be read in the light of the whole instrument, and not in isolation, and no clause is to be given undue preference. The meaning of a part of a provision must be determined from the provision as a whole.
Brown v. Scherck, 393 S.W.2d 172, 183 (Tex. Civ. App.CCorpus Christi 1965, no writ) (quoting 90 C.J.S. Trusts ' 161, p. 22B23).
Under the terms of each of the trusts, Mr. Lesikar manifested an intent to exercise control over the trust property during his lifetime. Indeed, the following language concerning a testamentary trust is largely applicable to Mr. Lesikar=s rights as settlor:
[Testatrix], as the owner of the property in question, had the absolute right to dispose of it . . . as she saw fit, and to put upon the title or the use of the property such limitations as she deemed proper, not in violation of law nor against public policy. [Her] daughter[] had only such interest in the property as her mother conferred upon her, and it is not for the courts to say that the limitation created by the trust is unreasonable or unjust, if it be lawful. Bank v. Adams, 133 Mass. 170, 43 Am. Rep. 504; Claflin v. Claflin, 149 Mass. 19, 20 N.E. 454, 3 L. R. A. 370, 14 Am. St. Rep. 393. In the latter case, the court said: AA testator has a right to dispose of his own property with such restrictions and limitations, not repugnant to law, as he sees fit, and his intentions ought to be carried out, unless they contravene some positive rule of law, or are against public policy.@
Lanius v. Fletcher, 100 Tex. 550, 555, 101 S.W. 1076, 1078 (1907). Like the testatrix described a hundred years ago in Lanius, Mr. Lesikar, as the settlor, had the right to dispose of his property as he saw fit, and the trustee=s primary duty under the terms of the trust at issue was to carry out the settlor=s lawful intentions. Here, the settlor=s manifest intent was to transfer the Airport Stock out of the trust.[8]
But Carolyn argues that her father had the right to revoke the Family Trust only if he did so in writing and in his capacity as settlor, rather than as trustee. She contends that until such a writing was received by a trustee, her father and brother owed her fiduciary duties. For the reasons discussed below and in the majority=s discussion of Starcrest Trust v. Berry,[9] I would hold that Mr. Lesikar was not required to provide the written notice Carolyn suggests.
IV. Requirements for the Sale of the Airport Stock
In her seventh issue, Carolyn contends that the Airport Defendants failed to differentiate between actions by Mr. Lesikar in his capacity as Settlor and in his capacity as Trustee. In her ninth issue, Carolyn contends that the transfer of the Airport Stock did not meet the requirements of an amendment or revocation of the Family Trust. According to her interpretation of the trusts, Mr. Lesikar could not transfer the Airport Stock to Woody unless he first removed the Airport Stock from the trust by writing a notice of the revocation, in his capacity as Settlor, and delivering the notice to Woody or to himself, in their capacities as trustees.
I do not read the trusts to impose such a requirement. Mr. Lesikar could combine the removal of the stock from the trust with the transfer of his stock to Woody, to Woody=s children, or to a trust for either of them. Simply stated, Mr. Lesikar (as Settlor) could direct
himself (as trustee) to make the transfer directly on behalf of the Settlor. See Art. II, ' 2.1 of Trust (ATrustee may distribute to or apply for the benefit of Settlor=s children . . . such amounts of trust, income and/or principal as Settlor shall direct in writing.@); see also Tex. Prop. Code Ann. ' 113.002 (AExcept as provided by Section 113.001, a trustee may exercise any powers in addition to the powers authorized by this subchapter that are necessary or appropriate to carry out the purposes of the trust.@); id. ' 113.024 (AThe powers, duties, and responsibilities under this subtitle do not exclude other implied powers, duties, or responsibilities that are not inconsistent with this subtitle.@). I would therefore overrule Carolyn=s first, second, seventh, eighth, and ninth issues.
V. Limitations
In her fifth and sixth issues, Carolyn contends that the Lesikar Defendants= limitations defense fails as a matter of law, or alternatively, there are material fact issues concerning the Lesikar Defendants= limitations defense. Because I would affirm the trial court=s order on other grounds, I would not reach these issues.
VI. Conclusion
I agree with the majority=s conclusion that Mr. Lesikar could and did remove the Airport Stock from the trust corpus without writing and delivering notice to himself; moreover, I agree with the majority that it would be absurd to read the trust documents to impose such a requirement. I further agree that Carolyn=s complaints regarding the sale of the Airport Stock are without merit because the evidence manifests Mr. Lesikar=s intent to sell the stock to Woody for $2,000, and Mr. Lesikar had the right and the unchallenged capacity to do so. However, I would hold that this evidence, while important in evaluating
the merits of the arguments, does not undermine Carolyn=s standing under the Texas Trust Code.
/s/ Eva M. Guzman
Justice
Judgment rendered and Majority Opinion and Concurring Opinion filed July 10, 2007.
Panel consists of Justices Anderson, Hudson, and Guzman. (Hudson, J. Majority)
[1] I disagree with the majority=s conclusion that Carolyn had no interest in the Airport Stock under the 1990 Family Trust. Carolyn was a contingent beneficiary, and the stock would pass to her if Woody died without living descendants. Under the terms of the Texas Trust Code, this contingent interest is sufficient to confer standing. See Tex. Prop. Code Ann. '' 111.004(2), (6), (7); In re Estate of Bivins, No. 07-01-0131-CV, 2002 WL 1478661, *1 (Tex. App.CAmarillo July 10, 2002, no pet.) (not designated for publication) (holding that a contingent beneficiary of a trust has a justiciable interest and standing to prosecute the suit). Carolyn also has standing as a remainderman under the 1997 Amended Family Trust. See Yturri v. Yturri, 504 S.W.2d 809, 812 (Tex. Civ. App.CSan Antonio 1973, no writ) (holding that a remainderman as to the corpus of a trust Ais clearly a person >actually interested=@ and has standing to maintain suit under the predecessor to the Texas Trust Code).
[2] 1990 Family Trust, Art. VII, ' 7.1(h); 1997 Amended Family Trust, Art. VII, ' 7.1(h).
[3] Carolyn defines the ALesikar Defendants@ as her brother Woody, individually and as trustee of the Woodrow V. Lesikar Family Trust, as trustee of the Woody K. Lesikar Special Trust, and as independent executor of the Estate of Woodrow V. Lesikar.
[4] Amended by Act of May 12, 2005, 79th Leg., R.S., ch. 148, ' 19, 2005 Tex. Gen. Laws 287, 293, effective Jan. 1, 2006.
[5] The terms of both trusts include any amendments to the Texas Trust Code.
[6] Section 31 of Acts 2005, 79th Leg., ch. 148 provides:
(a) Except as otherwise provided by a will, the terms of a trust, or this Act, the changes in law made by this Act apply to:
(1) a trust existing or created on or after January 1, 2006;
(2) the estate of a decedent who dies before January 1, 2006, if the probate or administration of the estate is pending on or after January 1, 2006; and
(3) the estate of a decedent who dies on or after January 1, 2006.
[7] AIt is true that the appellants, though only with a remote and contingent interest, may be allowed to object to a wasteful or extravagant administration of the trust, or to a disposition of the property not provided for in the will or allowed by law; but the fact that their future interest may be affected by a sale of the property or a change in its form would afford no just ground of complaint, if such change or sale was authorized by the will, or to accomplish a purpose either expressly or impliedly provided for by its terms.@
[8] The majority states that Mr. Lesikar wrote to Carolyn explaining his decision. But Carolyn contests the authenticity of the September 5, 1997 letter that was purportedly written by her father, and this dispute was not resolved in the trial court. In light of this continuing disagreement, I respectfully disagree with the majority=s characterization of this document as a letter from Mr. Lesikar; however, the letter is not necessary to the resolution of the issues presented on appeal.
[9] 926 S.W.2d 343, 352B53 (Tex. App.CAustin 1996, no writ).