Wells Fargo v. Clower

• Decision Date: 16 September 2021
• Docket Number: 02-20-00058-CV
• Parties: Wells Fargo, N.A., Appellant v. Lawrence C. Clower, Elizabeth Ann Clower, John Lawrence Clower, J.C. (A Minor Child), Jo Emily Thornton, James C. Brocchini, Julia A. Bernal, Mary C. Richter, Audrey L. Bernal, Gina C. Dejarnette, Samantha J. Richter, John C. Clower, Tina M. Clower, as Independent Executor of the Estate of John C. Clower, Elizabeth LaRue Ullman, Susan Marie Daniels, Jeffrey Clarkson Clower, Brenton Ullman, Julie Christine Clower, J.C. (a Minor Child), J.C. (a Minor Child), C.C. (a Minor Child), Appellees
• Court: Texas Court of Appeals

Wells Fargo, N.A., Appellant v. Lawrence C. Clower, Elizabeth Ann Clower, John Lawrence Clower, J.C. (A Minor Child), Jo Emily Thornton, James C. Brocchini, Julia A. Bernal, Mary C. Richter, Audrey L. Bernal, Gina C. Dejarnette, Samantha J. Richter, John C. Clower, Tina M. Clower, as Independent Executor of the Estate of John C. Clower, Elizabeth LaRue Ullman, Susan Marie Daniels, Jeffrey Clarkson Clower, Brenton Ullman, Julie Christine Clower, J.C. (a Minor Child), J.C. (a Minor Child), C.C. (a Minor Child), Appellees

No. 02-20-00058-CV

Court of Appeals of Texas, Second District, Fort Worth

September 16, 2021

On Appeal from the 89th District Court Wichita County, Texas Trial Court No. 161, 100-C

Before Sudderth, C.J.; Kerr and Birdwell, JJ.

MEMORANDUM OPINION

Bonnie Sudderth Chief Justice.

I. Introduction

This case involves the interpretation of a trust agreement entered into in 1969 by J.C. and Oneda Clower. The trial court interpreted the trust agreement in favor of Appellee Tina M Clower, Independent Executor of the Estate of John C. Clower and Appellees Lawrence C. Clower, Elizabeth Ann Clower, John L. Clower, and J.C., a minor child (collectively, the LC Trust Beneficiaries).^[1] The trial court accordingly granted summary judgment for Appellees, concluding that the language of the trust agreement required Appellant Wells Fargo, N.A., as trustee, to distribute all of the trust's net income to the beneficiaries, and it awarded attorney's fees to Tina and the LC Trust Beneficiaries.

In the first of its five issues, Wells Fargo contends that the trust agreement gave it the sole discretion to make distributions as it saw fit and that the distributions were therefore not mandatory. We agree. Because Wells Fargo's first issue is dispositive, we reverse the trial court's judgment and remand the case for further proceedings without reaching Wells Fargo's remaining issues. See Tex. R. App. P. 47.1 (requiring the appellate court to hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to the appeal's final disposition).

II. Factual and Procedural Background

J.C. Clower married Audrey Lazette Clarkson. Before Audrey died, they had two children, Edith and John. J.C. later married Oneda Gats, and they had two more children, Lawrence and Kelly.

In 1969, J.C. and Oneda entered into a trust agreement and appointed First Wichita National Bank of Wichita Falls as trustee. The trust agreement provided for the creation of four sub-trusts, one for each of J.C.'s children. Only the John C. Clower Trust (JCC Trust) and the Lawrence Clower Trust (LC Trust) are at issue in this case, ^[2] which focuses primarily on two passages in the trust agreement.^[3]

The trust was made revocable until the death of either J.C. or Oneda, and it became irrevocable in 1970, when J.C. died. At the time, Lawrence was 20 years old, and John was 41 years old. The first distributions under the trust were made in 1974 or 1975. Oneda died in 1993. John's wife of 44 years-the mother of his three children-died the year after Oneda's death, and John married Tina at some point thereafter.

John and Lawrence received periodic trust statements that showed the name of the administering bank, the account number, and the amount of the investments. John acknowledged that from the day he was first involved with the trust, he had been told that the trustee "had absolute discretion." After a series of bank mergers and consolidations, Wells Fargo became trustee in 2000, and according to Wells Fargo, John eventually demanded all the trust income without regard for his issue and descendants.^[4]

In 2004, Wells Fargo filed a declaratory judgment action against all of the trust beneficiaries, seeking construction of Paragraphs V and IX of the trust and the recovery of its attorney's fees incurred in the lawsuit. Wells Fargo maintained that these paragraphs gave it sole discretion to make distributions as it saw fit and did not require it to make mandatory distributions as John had claimed. John and the LC Trust beneficiaries counterclaimed, challenging-among other things-Wells Fargo's standing and capacity as trustee, and seeking a declaratory judgment in their favor on the construction of the trust's terms.^[5] After a three-day bench trial on the issue of standing, the trial court concluded in 2011 that Wells Fargo had standing as trustee.^[6]

John died on November 30, 2012, leaving Tina, three children, and five grandchildren. In 2017, Tina, as John's executor and the primary beneficiary under his will, amended John's claims against Wells Fargo, seeking a declaration that he had been entitled to "all of the income earned" from the JCC Trust without "trustee discretion," and asserting a breach-of-fiduciary-duty claim for Wells Fargo's failure to make mandatory distributions of income in 1992-1993, 1996-2004, 2010, and 2012, in an aggregate amount of $288, 741, plus interest, and attorney's fees under Civil Practice and Remedies Code Sections 37.009 and 38.001.^[7] The LC Trust Beneficiaries incorporated Tina's allegations by reference, sought damages for conversion and constructive fraud, and sought attorney's fees.

Tina moved for summary judgment on the grounds that (1) the trust agreement required the trustee to distribute all of the net income of the JCC Trust to John or his descendants, (2) John's estate was entitled to recover undistributed trust income in the amount of $288, 741, plus prejudgment interest for each year of undistributed income, and (3) John's estate was entitled to recover attorney's fees from the trust or from Wells Fargo under Civil Practice and Remedies Code Section 37.009 and Property Code Section 114.064. To her motion, Tina attached a copy of the trust agreement, Wells Fargo's discovery responses, ^[8] letters testamentary, and affidavits from counsel in support of the attorney's fees claim.

Wells Fargo responded that (1) there were no genuine issues of material fact as to whether it had sole discretion in making distributions, (2) distributing all of the net income to John's estate would deprive his issue and descendants of income distributions from the trust, and (3) there was no basis for awarding attorney's fees to John's estate from the trust or from Wells Fargo.

Wells Fargo also filed a motion for summary judgment, arguing that it was entitled as a matter of law to declaratory judgment on the claims by Tina and the LC Trust Beneficiaries. With regard to the LC Trust Beneficiaries' attorney's fees claim, Wells Fargo argued, among other things, that because the LC Trust Beneficiaries had taken a position without any legal basis as to Wells Fargo's standing, there was no basis for them to recover attorney's fees. As to both Tina and the LC Trust Beneficiaries' arguments about trust construction, Wells Fargo relied on its interpretation of the trust to assert that Tina's breach-of-fiduciary-duty claim was baseless. And it relied on its argument that Tina and the LC Trust Beneficiaries' claims were meritless to support its argument that it was entitled to be reimbursed for its attorney's fees out of trust funds because they were incurred in discharging its obligations as trustee. Wells Fargo sought the return of funds that it had been ordered to deposit into the trial court's registry^[9] and requested that the remaining balance of its attorney's fees be paid by the trust because "they were properly paid to defend [against] the ridiculous position taken by" Tina and the LC Trust Beneficiaries.

To its motion, Wells Fargo attached, among other things, a copy of the trust agreement and John's will; the live pleadings; the trial court's interlocutory judgment on standing; discovery responses from Tina and the LC Trust Beneficiaries; copies of statutes, case law, and treatises; and affidavits and other documents in support of its claim for attorney's fees.

Tina filed special exceptions, in which she complained that Wells Fargo had failed to state any specific summary judgment grounds, and she responded to Wells Fargo's motion based on how she "decipher[ed]" it, particularly with regard to Paragraphs V and IX of the trust agreement. The LC Trust Beneficiaries filed special exceptions and a response to Wells Fargo's motion^[10] in which they adopted Tina's arguments.

The trial court granted Tina's motion on the first two grounds and denied it on the third (attorney's fees) ground, denied Wells Fargo's motion, and declared that the trust agreement required mandatory distributions of all net income from the trust.

The trial court subsequently held a trial on the parties' requests for attorney's fees to determine who was entitled to them and who was responsible for paying them, and to dispose of the funds in the trial court's registry. In the final judgment, the trial court ordered Wells Fargo to pay to Tina $288, 741.37 in undistributed trust income, ^[11]as well as $224, 756.84 in prejudgment interest; ordered that the $261, 099.32 that had been deposited into the registry (along with any interest thereon) be distributed in equal amounts to the JCC Trust, the EAB Trust, the LC Trust, and the JC Trust; awarded to Tina $162, 066.73 in attorney's fees through entry of the judgment, as well as appellate attorney's fees, to be recovered from Wells Fargo; and awarded to the LC Trust Beneficiaries $145, 016.52, as well as appellate attorney's fees, to be recovered from Wells Fargo. The trial court also incorporated its earlier orders on standing and summary judgment into the final judgment.

Upon Wells Fargo's timely request, the trial court made findings of fact and conclusions of law, noting in a footnote that because summary judgments did not require findings, the terms of the summary...