Alexander v. Marshall
| Decision Date | 16 March 2021 |
| Docket Number | NO. 14-18-00425-CV,14-18-00425-CV |
| Parties | EDWARD ALEXANDER; ADAM JOHNSON; WAYNE THOMPSON, JR.; LILYNN CUTRER; AND KAREN AUCOIN; INDIVIDUALLY AND AS CO-TRUSTEES, Appellants v. PRESTON MARSHALL, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the Probate Court No. 4 Harris County, Texas
A Texas resident and trustee of a trust, which was settled in Texas and holds property in Texas for the benefit of only Texas beneficiaries, appointed five Louisiana residents as co-trustees. The co-trustees knew that the primary beneficiary was a Texas resident. The co-trustees traveled to Texas because of their appointments, conducted trust business jointly with the Texas trustee by telephone, and accepted payments for their services from the Texas trustee. We hold that these contacts are sufficient to establish specific personal jurisdiction over the co-trustees for a beneficiary's claims for breach of fiduciary duty and a declaratory judgment. Thus, the trial court did not err by denying the co-trustees' special appearance. The trial court's order is affirmed.
In 2006, E. Pierce Marshall settled two trusts (the Harrier and Falcon Trusts) and named his son, Preston Marshall, as a beneficiary of both trusts and Preston's children as beneficiaries of one trust. E. Pierce Marshall was a resident of Texas and signed the trust instruments in Texas. He named Elaine Marshall—his wife and Preston's mother—as the trustee of each trust.
The trust instruments give the trustee broad discretion to accumulate or distribute income and to distribute the trust principal. The instruments allow the trustee to designate co-trustees. The instruments provide that they are governed by the Louisiana Trust Code, and the trustee "shall apply to the 14th Judicial District Court for Calcasieu Parish, Louisiana, for instructions regarding any questions that might arise regarding administration of the Trust."
At all relevant times, Elaine, Preston, and his children have been Texas residents. All the bookkeeping for the trusts has been done in Texas. The trusts' bank accounts are in Texas. All of the trusts' assets are held and managed in Texas.
In December 2016, Elaine appointed the appellants as co-trustees of the trusts for a term that will continue for the duration of the trusts. Elaine signed appointment documents in Texas. The appellants are Louisiana residents. They each signed acceptance documents in Louisiana. All of the co-trustees testified that they knew, at or around the time of their appointments, that Preston was aTexas resident. The appointment and acceptance documents describe a compensation scheme for the co-trustees that is based on the "gross trust receipts" of the trusts.
After their appointments, each of the co-trustees traveled to Texas to meet with Elaine.1 One of the co-trustees testified that the purpose of the meeting was "to get to know her—meet her." Another co-trustee testified that they discussed Preston during the meeting in Texas. The co-trustees also had one or two conference calls with Elaine. During one of the calls, they discussed trust business and voted to not distribute any money to Preston. For their service as co-trustees during part of 2017, Elaine paid each of the co-trustees about $50,000.
In September 2017, Preston sued Elaine and the co-trustees in their individual and official capacities. He sought a declaratory judgment that the appointment of the co-trustees and their compensation scheme violated the terms of the trust instruments. He also alleged a claim against the co-trustees for aiding and abetting Elaine's breach of fiduciary duties by (1) agreeing to an unconscionable compensation scheme and (2) withholding trust distributions from Preston.
The co-trustees jointly filed a special appearance, and both sides presented evidence. The trial court signed an order denying the special appearance and issued findings of fact and conclusions of law. The co-trustees appeal.
In two issues with several sub-issues, the co-trustees contend that the trial court erred by denying their special appearance and exercising specific personal jurisdiction over the co-trustees regarding Preston's claim for aiding and abettingElaine's breach of fiduciary duties. The co-trustees contend that (1) the special appearance must be reversed as to the co-trustees in their individual capacity; (2) some of the trial court's findings are not supported by the evidence; and (3) exercising personal jurisdiction over the co-trustees in Texas does not comport with due process.
As an initial matter, the co-trustees contend that Preston failed to establish personal jurisdiction over them "in their individual capacities," and the trial court abused its discretion by "failing to differentiate its exercise of personal jurisdiction over the Co-Trustees in their various capacities."
The co-trustees rely on Stauffer v. Nicholson, in which the court of appeals held that the trial court abused its discretion by not granting a special appearance and dismissing all claims against the defendant in his capacity as a successor trustee. 438 S.W.3d 205, 212 (Tex. App.—Dallas 2014, no pet.). But in Stauffer, there was no evidence when, if ever, the defendant was a successor trustee of a trust, so there was no evidence that he was a trustee at the time of his alleged contacts with Texas. Id.
The co-trustees ask this court to extend Stauffer to hold that the trial court abused its discretion by not dismissing them in their individual capacities because of a lack of specific allegations or evidence that the co-trustees in this case were acting in their individual capacities. But this reasoning is faulty because a person is always liable for their own torts in an individual capacity, and Preston has alleged that the co-trustees aided and abetted a tort—breach of fiduciary duty. See, e.g., Yujie Ren v. ANU Res., LLC, 502 S.W.3d 840, 849 (Tex. App.—Houston [14th Dist.] 2016, no pet.) (upholding personal jurisdiction over defendant inindividual capacity despite claim that defendant acted only in official capacity because plaintiff alleged a tort, rather than contract, claim against the defendant).
The trial court did not err by not dismissing the co-trustees in their individual capacities.
The co-trustees challenge the sufficiency of the evidence to support some of the trial court's factual findings. We review determinations of personal jurisdiction de novo. M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017). But when, as here, the trial court resolves questions of fact and issues findings of fact, we may review challenged findings for legal and factual sufficiency of the evidence. BMC Software Belgium, N.V. v. Marchland, 83 S.W.3d 789, 794 (Tex. 2002). Consistent with the co-trustees' request, we apply the familiar legal and factual sufficiency standards discussed in Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014), and Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). We review the challenged findings in turn.
Three of the co-trustees unambiguously testified that they knew Preston was a Texas resident before accepting their appointments. One of the co-trustees could not recall exactly when he learned that Preston was a Texas resident. But he knew that it was "shortly before or during or shortly after the time—the time that we were appointed as trustees." He was "not one hundred percent sure whether that was prior to becoming a trustee or after becoming a trustee," but he knew it was "in close proximity." The final trustee, a lawyer, testified that he could not recall exactly when he learned that Preston was a Texas resident, but he learned this facteither at the time he was appointed or some point later. And, the co-trustee continued to act as a trustee knowing that Preston was a Texas resident.
The trial court, as the sole judge of the witnesses, could have resolved the inconsistencies in the latter two co-trustees' testimonies and found that they knew Preston was a Texas resident when they accepted their appointments. See, e.g., Salomon v. Lesay, 369 S.W.3d 540, 549 (Tex. App.—Houston [1st Dist.] 2012, no pet.) ( that a fact finder may believe or disbelieve the testimony of a witness, in whole or in part, and may resolve any inconsistencies in a witness's testimony). Considering the evidence that the other three co-trustees were made aware of Preston's residence before accepting their appointments, the finding is rational when applied to the other two co-trustees. The evidence is legally and factually sufficient to support this finding.
Finding #20 — "After July 2015, all accounting and administrative functions for the Trusts moved to Dallas, Texas."
Finding #21 — "All bookkeeping, accounting, and other administrative functions for the Trusts takes place in Dallas, Texas."
The co-trustees challenge these findings by referring to evidence that the co-trustees performed their duties while in Louisiana. They also cite to one co-trustee's testimony that he received some documents regarding a trust from a Louisiana law firm. But this co-trustee testified that he did not know what books and records were kept in Louisiana. He also acknowledged that he was aware that the property of the trusts is "held and managed in Dallas, Texas."
These findings are supported by other evidence. Sheena Bonadona, the controller of the administrative service company that performs work for the trustsat issue in this case, testified that she works out of an office in Dallas. She testified further:
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