In re Troy S. Poe Trust

• Citation: 646 S.W.3d 771
• Decision Date: 17 June 2022
• Docket Number: 20-0179
• Parties: In the MATTER OF TROY S. POE TRUST
• Court: Supreme Court of Texas

646 S.W.3d 771

In the MATTER OF TROY S. POE TRUST

No. 20-0179

Supreme Court of Texas.

Argued December 2, 2021

OPINION DELIVERED: June 17, 2022

Samuel S. Sipes, El Paso, Rachel Anne Ekery, Houston, Wallace B. Jefferson, Austin, Nicholas B. Bacarisse, Joseph L. Hood Jr., El Paso, for Petitioner Bock, Anthony E.

John P. Mobbs, Stancy Stribling, El Paso, for Petitioner Troy S. Poe, named beneficiary of the Troy S. Poe Trust.

Michael J. Collins, William A. Brewer III, Robert Mark Millimet, Dallas, Michael J. Shane, El Paso, Craig T. Enoch, Austin, James Michael Stanton, Dallas, Shelby L. O'Brien, Austin, for Respondent.

Justice Huddle delivered the opinion of the Court.

The question before us is whether parties seeking or opposing a trust modification under Texas Trust Code Section 112.054 have a right to a trial by jury. Here, the probate court modified a trust under Section 112.054 but denied a trustee's demand for a jury trial. The court of appeals reversed, holding that the Trust Code conferred a right to a jury trial and that denial of the trustee's jury demand was harmful error. The court of appeals reasoned that the Trust Code "generally provides for jury trials" by incorporating the Texas Rules of Civil Procedure, which in turn set forth the procedures for requesting a jury. We hold that there is no statutory right to a jury trial in a Section 112.054 judicial trust-modification proceeding. Accordingly, we reverse and remand for the court of appeals to address in the first instance petitioners’ constitutional argument—not raised until the motion for rehearing in the court of appeals—that a Section 112.054 judicial trust-modification proceeding is not a "cause" within the meaning of Article V, Section 10 of the Texas Constitution but, rather, a "special proceeding" falling outside its purview.

I. Background

A. Dick establishes the Troy S. Poe Trust

Richard C. "Dick" Poe established the Troy S. Poe Trust in 2007 to provide for his son, Troy, who has cerebral palsy

and requires round-the-clock care. The trust designates three trustees: (1) Dick; (2) Dick's other son, Richard C. Poe II¹ ; and (3) Dick's longtime accountant, Anthony Bock. The trust has significant net assets and produces enough income that there has been no need to invade the trust corpus in the years since it was formed. Troy is the trust's sole beneficiary. Upon Troy's death, the trust will terminate, and the corpus must be distributed to Dick's issue; currently, Dick's only living issue are Troy and Richard.

A few trust provisions are relevant to this dispute. For one, the trust mandates that the trustees act "jointly," which the parties all agree imposes a unanimity requirement on their decision-making regarding trust administration. Further, in the event a trustee can no longer serve, the remaining trustee or trustees shall serve without appointment of a successor. And if no trustee remains, a designated bank will serve as sole trustee.

The trust is a party to a long-term Care Agreement that sets forth the terms under which Troy's caregiver, Angel Reyes, will care for Troy and be compensated for doing so.² Under that agreement, Reyes lives with and provides full-time care to Troy in a home that Dick built. On top of meeting Troy's day-to-day needs, Reyes's duties include ensuring that Troy enjoys "a wholesome and healthy home environment," "companionship," and "social interaction and entertainment to the extent possible." In exchange, the agreement provides that Reyes shall be paid a salary and reimbursed for "reasonable out-of-pocket expenses for Troy's care." But reimbursement is subject to a monthly cap, and Reyes must document expenses.³

B. During his lifetime, Dick effectively acts as sole trustee

Before his death, Dick administered the trust essentially on his own, often making decisions without consulting Richard or Bock, the two other trustees. For example, Dick unilaterally authorized the trust's reimbursement of expenses Reyes incurred in connection with Troy's social activities.⁴ And Dick sometimes approved reimbursements of Reyes's expenses that exceeded the monthly cap. Though the trust required that the three trustees act "jointly," no one complained about Dick's unilateral administration of the trust.

C. Multiple disputes arise after Dick's death

Things changed dramatically after Dick's death. At first, Bock unilaterally administered the trust, and he largely sought to mirror Dick's past practices. But Bock and Richard's relationship deteriorated not long thereafter. Bock served as co-executor of Dick's estate and, as Dick's longtime accountant, had extensive knowledge of Dick's financial matters. Richard formed the opinion that Bock was acting improperly and against Richard's interests. This adversity led Richard to sue Bock and seek revocation of Bock's CPA license.

Their animosity spilled over to trust matters. Richard's attorney demanded that Bock "strictly comply" with the trust's requirement that the co-trustees "act jointly." Richard asserted that Bock should take no further actions on behalf of the trust without obtaining Richard's consent. In particular, Richard demanded that Bock not make any "unilateral decisions ... in connection with the Care Agreement."

Bock began including Richard in the trust's decision-making, but, due to their fraught relationship, they had difficulty reaching agreement on some matters. Richard denied Bock's request to preapprove recurring expenses, and Richard complained that Bock was late in submitting bills. He accused Bock of stealing and balked at expenses he believed benefitted Reyes's family and friends rather than Troy himself. For his part, Bock contended that Richard ignored and delayed responding to requests for approval of trust expenditures. Fueled by these and other disputes unrelated to the trust, their relationship fractured to the point that Bock refused to communicate with Richard orally.

D. Bock requests trust modification

Bock filed a petition in the probate court seeking modification of the trust under Texas Trust Code Section 112.054. Section 112.054 empowers a court, on the petition of a trustee or beneficiary, to modify the trust's terms if any one of five conditions is met. TEX. PROP. CODE § 112.054(a).⁵ Bock alleged that two of the statute's five conditions were met: "(1) the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill" and "(2) because of circumstances not known to or anticipated by the settlor, the [modification] order will further the purposes of the trust." Id. § 112.054(a)(1), (2). Bock alleged that "differences of opinion" and the "pending litigation" between Bock and Richard made it difficult to act unanimously, put a strain on Troy, and made the purposes of the trust "impossible to accomplish." Bock requested that the court modify the trust to add a third trustee, remove the unanimity requirement, and further specify the relevant considerations governing the trustees’ distributions. Bock also requested that the court ratify his actions regarding the trust since Dick's death.

Troy, acting through his court-appointed guardian ad litem and attorney ad litem, supported the modification request. Richard opposed modification and counterclaimed against Bock for breach of trust. Richard also demanded a jury trial on all triable issues.

E. The probate court modifies the trust

The probate court denied Richard's jury demand and conducted a two-day bench trial solely on Bock's request for a trust modification. The probate court found that, because of "changed circumstances" since Dick's death, "the purposes of the Trust have become impossible to fulfill, and modification will further the Trust purposes." The court also effected several changes to the trust's terms and entered an Order Modifying Trust, which:

• appointed a third trustee to replace Dick;

• required at least three trustees and provided a method for appointing successor trustees;

• eliminated the requirement that the trustees act "jointly" and permitted decisions to be made by majority vote;

• authorized trustees to pay expenses associated with periodic vacations for Troy's benefit and associated expenses for assistants or travel companions;

• required trustees, in making distributions from the trust, to consider Troy's standard of living at the time of Dick's death and the fact that, to accomplish that standard of living, it is often necessary to include substantial ancillary expenses;

• acknowledged that there will be "indirect benefit" to Troy's caregivers, their families, and Troy's family, and required trustees to consider these additional expenses that enhance the quality and enjoyment of Troy's life; and

• required trustees, in making distributions from the trust, to give "primary consideration" to Troy's needs and interests "without giving any consideration to ... any vested or contingent remainder beneficiaries."

The probate court severed the remaining claims, including Richard's counterclaim, and the modification order became a final judgment.

F. The court of appeals reverses and remands for a jury trial

Richard appealed, arguing that (1) he was erroneously denied a trial by jury, and (2) the modifications were improper because they contravened Dick's intent. The court of appeals reversed without addressing the propriety of the modifications because it concluded that the trial court's refusal to grant a jury trial amounted to harmful error. 591 S.W.3d 168, 182 (Tex. App.—El Paso 2019). The court of appeals noted, without analysis, that Article V, Section 10 of the Texas Constitution provides a jury right in "causes" and that the Legislature is authorized by Article I, Section 15 to regulate jury trials. Id. at 177. It then "look[ed] to the statutory framework to determine whether parties possess a right to a jury trial." Id. It reasoned that Trust Code Section 115.012 "generally provides for jury trials" in actions brought under the Trust Code. Id. at 178 ; see TEX. PROP. CODE...