ACCEPTED
04-14-00751-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
10/9/2015 4:47:15 PM
KEITH HOTTLE
CLERK
No. 04-14-00751-CV FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS SAN ANTONIO, TEXAS
FOURTH DISTRICT OF TEXAS 10/9/2015 4:47:15 PM
SAN ANTONIO, TEXAS KEITH E. HOTTLE
Clerk
JOSEFINA ALEXANDER GONZALEZ, ET AL.,
Appellants
v.
RAYMOND S. DE LEON II, ET AL.,
Appellees
APPELLANTS’ MOTION FOR REHEARING
Barry Snell Eduardo Romero
State Bar No. 18789000 State Bar No. 24056227
David C. “Clay” Snell Victor Villarreal
State Bar No. 24011309 State Bar No. 24058160
BAYNE, SNELL & KRAUSE VILLARREAL & ROMERO, PLLC
1250 N.E. Loop 410, Suite 725 201 W. Del Mar Blvd., Suite 15
San Antonio, Texas 78209 Laredo, Texas 78041
Tel: (210) 824-3278 Tel: (956) 727-2402
Fax: (210) 824-3937 Fax: (956) 727-2404
Email: bsnell@bsklaw.com Email: romero@vrlawfirm.com
Email: dsnell@bsklaw.com Email: villarreal@vrlawfirm.com
Jesus M. Dominguez
State Bar No. 00798151
ATTORNEY & COUNSELOR AT LAW
201 W. Hillside Road, Suite 17
Laredo, Texas 78041
Tel: (956) 728-1477
Email: (956) 728-1491
ATTORNEYS FOR APPELLANTS
No. 04-14-00751-CV
IN THE COURT OF APPEALS
FOURTH DISTRICT OF TEXAS
SAN ANTONIO, TEXAS
JOSEFINA ALEXANDER GONZALEZ, ET AL,
Appellants
v.
RAYMOND S. DE LEON II, ET AL,
Appellees
APPELLANTS’ MOTION FOR REHEARING
TO THE HONORABLE FOURTH COURT OF APPEALS:
Josefina Alexander Gonzalez, by and through her Co-Attorneys-in-Fact, Judith
Zaffirini, David H. Arredondo, and Clarissa N. Chapa; Judith Zaffirini, David H. Arredondo,
and Clarissa N. Chapa, as Independent Co-Executors of the Estate of Delfina E. Alexander,
Deceased, and as Co-Trustees of the Rocio Gonzalez Guerra Exempt Trust; Alexander
Residential Development, LP; Alexander Commercial Development, LP; Alexander Retail
Development, LP; D&J Alexander Construction, LP; D&J Alexander Management, LP;
Delfina E. and Josefina Alexander LLC-1; and Delfina and Josefina Alexander Family Limited
Partnership, Appellants, file this Motion for Rehearing, and respectfully show as follows:
ii
Table of Contents
PAGE
Table of Authorities ……………………………………………………………………..iv
Issues Presented for Review………………………………………………………………1
Summary of the Argument ……………………………………………………………….2
Argument
I. The Court erred in concluding that Appellants, as
Attorneys-in-Fact of Josefina Gonzalez, did not having
standing because, as representatives of the settlor, they
clearly were “affected by the administration of the trust”…………………...3
II. The Court erred in concluding that the Alexander Limited
Partnerships were not affected by the administration
of the Family Trust because there is no distinction between
administration of the Trust and its role as a limited partner
in the Alexander Limited Partnerships ……………………………………..6
III. The Court was incorrect in concluding that the portion
of the judgment directing Appellants to produce documents
was insufficient to give them standing to attack the judgment ..……………8
Conclusion and Request for Relief ………………………………………………………..9
Certificate of Service …………………………………………………………………….10
iii
Table of Authorities
CASES PAGE
Carr v. Carr,
71 N.W. 785, 786 (IA. 1919) …………………………………………………………….5
Faulkner v. Bost,
137 S.W.3d 254, 259 (Tex.App.—Tyler 2004, no pet.) ……………………………….3,6
Grynberg v. Christiansen,
727 S.W.2d 665, 666-67 (Tex.App.—Dallas 1987, no pet.) …………………………2,8,9
HSBC Bank USA, N.A. v. Watson,
377 S.W.3d 766, 774-75 (Tex. App.—Dallas 2012, pet. dism’d)…………………….5
Ray Malooly Trust v. Juhl,
186 S.W.3d 568, 570 (Tex. 2006)……………………………………………………6
Rosenblatt v. Birnbaum,
212 N.E.2d 37, 40-41 (N.Y. Court App. 1965) ………………………………………….5
STATUTES
Tex. Prop. Code § 111.004(7) ………………………………………………………………….3,4
Tex. Prop. Code § 112.054 …………………………………………………………………1,2,3,4
Tex. Prop. Code § 112.054(b) ………………………………………………………………….5,6
iv
Issues Presented for Review
1. Whether the Court was incorrect in concluding that Appellants lacked standing
as attorneys-in-fact for Josefina Alexander Gonzales when Section 112.054 of the Texas
Property Code specifically requires the court to consider her intent in deciding whether to
reform a trust or appoint a new trustee.
2. Whether the Court was incorrect in concluding that Appellants lacked standing
as the Alexander Limited Partnerships when the Order appointing DeLeon gave him control
of the limited partner and gave him the ability to take various actions with regard to the
partnership.
3. Whether the Court was incorrect in concluding that Appellants lacked standing
to attack a judgment that required them to produce confidential financial information, which
information Josefina was duty bound to protect.
1
Summary of the Argument
The Court was incorrect in concluding that Appellants, as attorneys-in-fact of Josefina
Alexander Gonzales, lacked standing. Section 112.054 of the Texas Property Code specifically
requires the court to consider the “probable intention” of the settlor before reforming a trust
or appointing a new trustee. Josefina Alexander Gonzales, one of the settlors of the trust, was
alive at the time the court reformed the trust and appointed DeLeon trustee. Any person
“affected by the administration of a trust” has standing to complain of the action. The
appointment of a new trustee and reformation of the trust clearly constitutes “administration”
of the trust. Therefore, Josefina, as settlor, was affected by the order appointing DeLeon
trustee and reforming the Trust.
The Court was further incorrect in concluding that Appellants, as the Alexander
Limited Partnerships, lacked standing. The Court was incorrect in concluding there is
distinction between the administration of the Trust and the Trust’s service as limited partner.
Any decision DeLeon makes as limited partner concerning the Partnership necessarily
constitutes “administration of the trust.” The Alexander Limited Partnership is clearly affected
by DeLeon’s decisions in that DeLeon has brought suit against the Partnership.
Finally, the Court was incorrect in concluding that the portion of the judgment that
ordered Appellants to produce records did not confer standing upon them to challenge the
judgment. Unlike the judgment in the Grynberg case, the judgment in this case specifically
imposed various duties upon appellant, which could potentially have exposed Appellants to
contempt charges. Accordingly, Appellants have a significant interest affected by the
judgment.
2
Argument
I. The Court erred in concluding that Appellants, as Attorneys-in-Fact of Josefina
Gonzalez, did not having standing because, as representatives of the settlor,
they clearly were “affected by the administration of the trust.”
In concluding that Appellants, as Co-Attorneys-in-Fact and Co-Executors of Delfina
and Josefina Alexander Gonzalez, were not affected by the administration of the Family Trust,
this Court reasoned that Appellants, who stand in the shoes of the original settlors of the
Family Trust, “do not manage any aspects of the Family Trust and do not stand to inherit any
of the Trust assets.” Memorandum Opinion, at 10. This Court further reasoned that “how
the Family Trust is administered has no impact on Gonzalez’s abilities to fulfill her duties as
Co-Attorneys-in-Fact or Administrator of Delfina’s Estate.” Id. However, in reaching this
conclusion, the Court did not consider and did not address the argument Appellants raised in
the trial court and on appeal that Tex. Prop. Code § 112.054 specifically requires the Court to
consider the probable intention of the settlor in deciding whether to reform or modify a trust.
As this Court correctly acknowledged, Section 111.004(7) of the Texas Property Code
defines an “interested person” to include “any person who is affected by the administration
of the Trust.” Memorandum Opinion, at 9. The Court further acknowledge that the phrase
“administration of a trust” refers to when a trustee manages a trust in accordance with the
trust’s terms and conditions and the Texas Property Code. Memorandum Opinion, at 13
(citing Faulkner v. Bost, 137 S.W.3d 254, 259 (Tex.App.—Tyler 2004, no pet.)). More
importantly, “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
3
purposes of and matter involved in the proceeding.” Id. (quoting Tex. Prop. Code §
111.004(7)(emphasis added)).
This case involves a bill of review seeking to vacate the judgment entered on March
12, 2012 in Cause No. 2012CVQ000262-D4 that appointed a successor trustee and modified
certain provisions of the Trust. The “particular purposes of and matter involved” in the
proceeding which resulted in the 2012 judgment was the petition of Rocio Gonzalez Guerra
to appoint a successor trustee and to reform or modify the original trust instrument.
At the time Appellees brought the 2012 action, one of the settlors and former trustees,
Josefina Alexander Gonzalez (“Josefina”), was still alive. (CR 37). As settlor, Josefina clearly
was affected by the action because Guerra was seeking to reform the very trust Josefina
created.
That a settlor is affected by attempts to reform the trust is underscored by Section
112.054 of the Texas Property Code. This section recognizes the importance of the settlor’s
intentions in determining whether reformation is appropriate. Section 112.054 provides, in
relevant part, as follows:
(a) On the petition of a trustee or a beneficiary, a court may order that the trustee
be changed, that the terms of the trust be modified, that the trustee be directed
or permitted to do acts that are not authorized or that are forbidden by the
terms of the trust, that the trustee be prohibited from performing acts required
by the terms of the trust, or that the trust be terminated in whole or in part,
…
(b) The court shall exercise its discretion to order a modification or termination
under Subsection (a) in the manner that conforms as nearly as possible to
the probable intention of the settlor…
(Emphasis added).
4
Given that Section 112.054(b) requires the court to exercise its discretion to order
modification in a manner that conforms as nearly as possible to the probable intention of the
Settlor, it cannot be said that Josefina would not be affected by a request by the beneficiaries
to reform the trust she created. As settlor, Josefina clearly had an interest in seeing that her
wishes as expressed in the trust instrument were carried out and in seeing that the court
correctly considered here “probable intention[s]” in reforming the trust she created.
Although no Texas case addresses the issue of whether the settlor has standing to bring
suit to ensure her wishes are carried out by the trustee, various courts from other states have
recognized that the settlor has standing under these circumstances. For example, in Rosenblatt
v. Birnbaum, 212 N.E.2d 37, 40-41 (N.Y. Court App. 1965), the court held that a parent who
paid child support to the other parent in trust for the benefit of a child under a separation
agreement had standing in equity to sue the trustee to ensure that the intention of the trust
agreement was carried out. In addition, in Carr v. Carr, 71 N.W. 785, 786 (IA. 1919), the Iowa
Supreme Court recognized that the donor of a trust has standing to maintain a suit in equity
to compel the carrying out of the terms of the trust. For the same reasons, Josefina had
standing to ensure that her intentions in creating the Trust were not thwarted by Guerra’s
attempt at reforming the Trust.
Whether the current actions of the Co-Attorneys-in-Fact are unrelated to the
administration of the Family Trust, as suggested by this Court in its Memorandum Opinion,
is immaterial. The ability to bring a bill of review is an assignable right. HSBC Bank USA,
N.A. v. Watson, 377 S.W.3d 766, 774-75 (Tex. App.—Dallas 2012, pet. dism’d). Appellants, as
co-attorneys-in-fact of Josefina, succeeded to Josefina’s right to bring the bill of review.
5
Therefore, the issue is whether Josefina herself, as settlor, was affected by the administration
of the trust. Josefina, and now Appellants, were affected by the administration of the Family
Trust in that the intent of a living settlor and former trustee was frustrated by the reformation
of the trust instrument without the settlor having the opportunity to express her probable
intention as required by Section 112.054(b). Therefore, the Court was incorrect in determining
that the administration of the Family Trust, including the reformation of the rust instrument
and the appointment of a new trustee, did not affect Josefina.
II. The Court erred in concluding that the Alexander Limited Partnerships were
not affected by the administration of the Family Trust because there is no
distinction between administration of the Trust and its role as a limited partner
in the Alexander Limited Partnerships.
In rejecting Appellants’ argument that the Alexander Limited Partnerships have
standing to bring the underlying suit, the Court attempted to draw a distinction between
administration of the Trust and the Trust’s role as a limited partner in the Alexander Limited
Partnerships. As stated above, the phrase “administration of a trust” refers to when a trustee
manages a trust in accordance with the trust’s terms and conditions and the Texas Property
Code. Memorandum Opinion, at 13. (citing Faulkner v. Bost, 137 S.W.3d 254, 259 (Tex.App.—
Tyler 2004, no pet.)). The Court correctly acknowledged that “the Alexander Limited
Partnerships may be affected by the actions of the limited partners—and thus the Family Trust
. . . .” Id. Nevertheless, the Court reasoned “the management of a trust in accordance with its
terms and conditions, i.e., its administration, is separate and distinct from the service of the
Family Trust as a limited partner.” Memorandum Opinion, pg. 13.
The Court was incorrect in attempting to draw a distinction between administration of
the Trust and the Trust’s service as a limited partner. A trust is not a separate legal entity and
6
can only act through its trustee. See Ray Malooly Trust v. Juhl, 186 S.W.3d 568, 570 (Tex. 2006).
Any action by De Leon as trustee regarding the Alexander Limited Partnerships could only
have been undertaken through management of the Trust in accordance with its terms and
conditions and the Property Code.
The Order appointing De Leon trustee, which is the very order Appellants seek to
vacate with their bill of review action, clearly constituted “administration of a trust.” De Leon
accepted the duty as trustee and was required to manage the Trust in accordance with its terms
and conditions. De Leon’s ability to bring suit on behalf of the Trust against the general
partners arises under his authority to manage the Trust in accordance with its terms and
conditions. Therefore, De Leon’s decisions in this case, including the decision to seek
appointment as Trustee and to sue Appellants, absolutely constitute “administration.”
Moreover, the Court should not consider the Partnership as being separate from the
Family Trust. As DeLeon himself has argued, the Family Trust is an integral part of a complex
estate plan on the part of Josefina and Delfina. CR 248-54; 249-55.
As the Court further pointed out, as a passive limited partner, the Family Trust had the
ability to vote to amend the partnership agreements or remove the general partner.
Memorandum Opinion, at 13. The only person who could vote on behalf of the Trust is De
Leon. De Leon’s decision to vote on behalf of the Trust with respect to the Family Limited
Partnership would clearly constitute “administration of a trust” because he would be making
decisions regarding the Trust’s sole asset. Any such decision would necessarily have to be
made in accordance with the terms and conditions of the Trust and the Texas Property Code.
7
There is no question that Appellants have been affected by De Leon’s management of
the Trust. In particular, DeLeon has brought a suit to wind up the Partnership, which
absolutely affects the Partnership. Yet another reason that Appellants are affected by the
administration of the Trust is that Appellants, as general partner, owe various duties to the
limited partner and by extension to De Leon. The order at issue in the bill of review
proceeding is the order that appoints De Leon as trustee. The order changed the identity of
the person to whom the general partner owes these duites. Accordingly, the general
partnership was affected by the order appointing De Leon, and this order related to
administration of the Trust.
III. The Court was incorrect in concluding that the portion of the judgment
directing Appellants to produce documents was insufficient to give them
standing to attack the judgment.
In concluding that the portion of the judgment directing all individuals or entities
possessing financial records to deliver that information to the successor trustee did not grant
Appellants standing to bring the Bill of Review action, the Court relied upon Grynberg v.
Christiansen, 727 S.W.2d 665, 666-67 (Tex.App.—Dallas 1987, no pet.). While it is true that
the Grynberg court concluded that a person who is ordered to produce voluminous records
does not, on that ground alone, have an interest affected by the judgment so as to have
standing to collaterally attack the judgment, Grynberg is distinguishable from the case at bar in
one key respect. The plaintiff in Grynberg was the son of the person against whom the judgment
being collaterally attacked had been rendered. 727 S.W.2d at 666. The judgment at issue did
not require the son to produce documents or attend a deposition. Id. at 665-66. Rather, the
son’s obligation to produce documents and attend a deposition arose from a post-judgment
8
deposition notice. Id. The court concluded that the son lacked standing because he lacked an
interest affected by the judgment. Id. at 667.
In the present case, the judgment itself—not a deposition notice—affects an interest
of Appellants in that it requires them to turn over all of the Trust’s financial information. As
prior trustee, Josefina and Delfina retained certain duties to the trust beneficiaries, including
the duty not to disclose confidential information. The judgment at issue required Appellants
to turn over this information to a third-party. Moreover, unlike the son in Grynberg, who had
no obligations under the judgment, Appellants could conceivably be held in contempt of court
for refusing to turn over financial information. Therefore, Appellants’ interest affected by the
judgment is much more significant than the son in Grynberg.
Conclusion and Request for Relief
WHEREFORE, Appellants respectfully request the Court to grant a rehearing of their
appeal and, upon rehearing, reverse the judgment of the trial court and remand this matter for
further proceedings. Appellants request such other relief to which they may be entitled.
Respectfully submitted,
/s/ David C. “Clay” Snell
Barry Snell
State Bar No. 18789000
David C. “Clay” Snell
State Bar No. 24011309
Bayne, Snell & Krause
1250 NE Loop 410, Suite 725
San Antonio, Texas 78209
Tel: (210) 824-3278
Fax: (210) 824-3937
Email: bsnell@bsklaw.com
Email: dsnell@bsklaw.com
9
Eduardo Romero
Texas State Bar No. 24056227
Victor Villarreal
Texas State Bar No. 24058160
VILLARREAL & ROMERO, PLLC
201 W. Del Mar Blvd., Suite 15
Laredo, Texas 78041
Tel.: (956) 727-2402
Fax: (956) 727-2404
Email: romero@vrlawfirm.com
Email: villarreal@vrlawfirm.com
Jesus M. Dominguez
Texas State Bar No. 00798151
Attorney at Law
201 W. Hillside Rd., Suite # 17
Laredo, Texas 78041
Tel: (956)728-1477
Fax: (956)728-1491
Email: lawjmd@swbell.net
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the above and foregoing document has been served
on October 9, 2015 to the following counsel of record:
Judith R. Blakeway
Email: Judith.blakeway@strasburger.com
James Maverick McNeel
Email: james.mcneel@strasburger.com
Laura C. Mason
Email: laura.mason@strasburger.com
STRASBURGER & PRICE, LLP
2301 Broadway
San Antonio, Texas 78215
Attorneys for Raymond S. De Leon II, Trustee of the Family Trust
Jeffrey T. Knebel
Email: jtknebel@ohkdlaw.com
Michael B. Knisely
Email: mbknisely@ohkslaw.com
OSBORNE, HELMAN, KNEBEL & DELEERY, LLP
301 Congress Avenue, Suite 1910
Austin, Texas 78701
Attorneys for Rocio G. Guerra
/s/ David C. “Clay” Snell
DAVID C. “CLAY” SNELL
10