Opinion issued July 26, 2012.
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-11-00430-CV ——————————— MARK R. RILEY, Appellant V. DANIEL ALPERT, ROMAN ALPERT, AND LINDA STANLEY, AS SUCCESSOR TRUSTEE OF THE ROMAN MERKER ALPERT TRUST AND THE DANIEL JAMES ALPERT TRUST, Appellees
On Appeal from Probate Court No. 2 Harris County, Texas Trial Court Case No. 305232401
MEMORANDUM OPINION
In this appeal after an earlier remand to the trial court, Mark Riley seeks
reversal of the trial court’s summary judgment (1) recognizing Linda Stanley as a
successor trustee over the Roman Merker Alpert Trust (RAT) and the Daniel James Alpert Trust (DAT) and (2) ordering that Riley pay restitution to the trusts
for the amounts expended on attorney’s fees in prosecuting claims against Robert
Alpert, the settlor and father of Daniel and Roman Alpert. 1 We hold that the
summary judgment record does not support the trial court’s judgment against
Riley, and that the trial court erred in failing to resolve the fact issue as to the
validity of Riley’s appointment as successor trustee for the periods during which
the fees were incurred. We therefore reverse the judgment and remand the case for
further proceedings.
Background
This case arises out of disputes over the alleged depletion of trust funds. In
1998, Riley, acting as trustee of the RAT, the DAT, and the 1996 Children’s Trust
(the 1996 trust), sued Robert Alpert, the trusts’ settlor and the trust beneficiaries’
father, alleging that he had sold stocks to trigger a tax loss, and then caused the
RAT and DAT to buy those stocks, resulting in the overpayment of taxes by the
trusts. Riley alleged that Alpert breached fiduciary duties he owed to the trust
beneficiaries. The beneficiaries intervened and countersued Riley for breach of
fiduciary duty and for a declaration that Riley was not the trustee of the RAT or
DAT, or alternatively, for an order removing Riley as. For nearly fifteen years, the
parties have called on both state and federal courts to labor toward the resolution of
1 Both sons are now of legal age and appear as appellees here. 2 their multitudinous disputes. See, e.g., Alpert v. Riley, 274 S.W.3d 277 (Tex.
App.—Houston [1st Dist.] 2008, pet. denied); In re Alpert, 276 S.W.3d 592 (Tex.
App.—Houston [1st Dist.] 2008, orig. proceeding [mand. denied]); Alpert v. Riley,
No. H-04-CV-3774, 2011 WL 3325884 (S.D. Tex. Aug. 2, 2011); Alpert v. Riley,
No. H-04-3774, 2011 WL 801978 (S.D. Tex. Feb. 10, 2011); see also Alpert v.
Gerstner, 232 S.W.3d 117 (Tex. App.—Houston [1st Dist.] 2006, pet. denied);
Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398 (Tex. App.—Houston [1st
Dist.] 2005, pet. denied). This chapter deals with the proceedings on the issues
remanded to the probate court pursuant to our 2008 opinion and judgment. 2
The proceedings on remand addressed the scope of our 2008 opinion, which
reversed the trial court’s orders authorizing payment of legal fees and expenses to
the trustee’s counsel for work performed in prosecuting claims against Robert
Alpert on behalf of the trusts and for defending the suit brought against Riley.
With respect to the 1996 trust, on remand, the Alperts sought restitution from Riley
for amounts paid from the 1996 trust to him as trustee compensation while Riley
2 In the federal case, settlor Robert Alpert and his sons sued Riley and his former legal assistant based on allegedly wrongful actions taken in connection with the three trusts and Riley’s involvement in providing confidential information to the Internal Revenue Service. Alpert v. Riley, No. H-04-CV-3774, 2011 WL 3325884 (S.D. Tex. Aug. 2, 2011). In the jury trial on that suit, the district court incorporated relevant holdings from our 2008 opinion and judgment into the jury charge. 2011 WL 3325884, at *8. The federal case adjudicated only claims involving Riley’s actions as purported trustee taken after the probate court entered its 2006 judgment. Id. at *9. 3 claimed to be trustee. Riley did not respond to the Alperts’ motion for summary
judgment with respect to the 1996 trust. In the fall of 2010, the trial court signed a
judgment declaring that fees awarded during underlying proceeding were not
necessary for the preservation, safekeeping, or management of the 1996 trust and
ordered Riley to return the funds to the trust. The trial court signed a judgment
severing its rulings relating to the 1996 trust from the remaining claims, all of
which related to the RAT and DAT. Riley moved for a new trial, but he did not
file a notice of appeal from that judgment. Thus, that judgment is not before us.
The Alperts next moved for summary judgment and asked the trial court to
order Riley to pay to the RAT and DAT all of the amounts disbursed from the
RAT and DAT in payment of attorney’s fees during the course of the litigation.
Riley did not timely respond to the motions, but he appeared at the hearing. The
trial court granted the Alperts’ motions and ordered that the legal fees and
expenses that the probate court had ordered disbursed pursuant to its June 21,
2004, September 30, 2004, October 20, 2004, December 21, 2004, January 31,
2005, April 4, 2005, April 20, 2005, and March 28 2006 orders “were not
necessary for the preservation, safekeeping, or management of the trusts; were
neither just nor equitable; and should be restored to the Roman Alpert Trust and
the Daniel Alpert Trust.” The trial court entered judgment against Riley
4 individually in the amount of these disbursed funds. Finally, it ordered Riley to
pay the beneficiaries’ legal fees incurred during the course of this litigation.
Discussion
I. Summary judgment standard of review
We review a trial court’s summary judgment de novo. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accid. Ins. Co.
v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Under the traditional standard for
summary judgment, the movant has the burden to show that no genuine issue of
material fact exists and that the trial court should grant judgment as a matter of
law. TEX. R. CIV. P. 166a(c); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin.
Corp., 988 S.W.2d 746, 748 (Tex. 1999). When reviewing a summary judgment
motion, we take as true all evidence favorable to the nonmovant and indulge every
reasonable inference and resolve any doubts in the nonmovant’s favor. Dorsett,
164 S.W.3d at 661; Knott, 128 S.W.3d at 215; Sci. Spectrum, Inc. v. Martinez, 941
S.W.2d 910, 911 (Tex. 1997).
Traditional summary judgment is proper only if the movant establishes that
there is no genuine issue of material fact and that the movant is entitled to
judgment as a matter of law. TEX. R. CIV. P. 166a(c). A defendant moving for
traditional summary judgment must conclusively negate at least one essential
element of each of the plaintiff’s causes of action or conclusively establish each
5 element of an affirmative defense. Sci. Spectrum, Inc., 941 S.W.2d at 911.
“Summary judgments must stand on their own merits, and the non-movant’s
failure to answer or respond cannot supply by default the summary judgment proof
necessary to establish the movant’s right.” City of Houston v. Clear Creek Basin
Auth., 589 S.W.2d 671, 678 (Tex. 1979).
Because the party moving for traditional summary judgment carries the
burden to establish that no material fact issue exists and that it is entitled to
judgment as a matter of law, “[t]he nonmovant has no burden to respond to a
summary judgment motion unless the movant conclusively establishes its cause of
action or defense.” M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d
22, 23 (Tex. 2000), quoted in Grace v. Titanium Electrode Prods., Inc., 227
S.W.3d 293, 297 (Tex. App.—Houston [1st Dist.] 2007, no pet.). But, “a party
who fails to expressly present to the trial court any written response in opposition
to a motion for summary judgment waives the right to raise any arguments or
issues post-judgment.” Unifund CCR Partners v. Weaver, 262 S.W.3d 796, 797
(Tex. 2008). Because a motion for summary judgment must stand on its own
merit, the nonmovant—even without filing a response in the trial court—still may
argue on appeal that the movant’s summary judgment proof is insufficient as a
matter of law. Grace, 227 S.W.3d at 297; see Willrich, 28 S.W.3d at 23; Rizkallah
6 v. Conner, 952 S.W.2d 580, 582–83 (Tex. App.—Houston [1st Dist.] 1997, no
writ).
II. Stanley’s appearance as successor trustee
As a preliminary matter, Riley challenges the legitimacy of Stanley’s
appointment as the current and successor trustee of the RAT and DAT, claiming
that her appointment does not comply with our rulings in the first appeal.
Specifically, Riley claims that Stanley’s appointment violates the law of the case
and, as a result, she lacks standing and capacity to appear on behalf of the trusts in
the proceedings.
A. Law of the case
“The ‘law of the case’ doctrine is defined as that principle under which
questions of law decided on appeal to a court of last resort will govern the case
throughout its subsequent stages.” Hudson v. Wakefield, 711 S.W.2d 628, 630
(Tex. 1986); see also Saudi v. Brieven, 176 S.W.3d 108, 118 (Tex. App.—Houston
[1st Dist.] 2004, pet. denied). Accordingly, we consider the meaning and effect of
our 2008 opinion and judgment in determining whether the trial court erred in
acknowledging Linda Stanley as trustee of the RAT and DAT and awarding
restitution to her in that capacity, as well as in declaring that Riley “was not, under
any circumstance trustee of those trusts at any time after the 2005 trial,” and “ha[d]
no authority to appoint successor trustees for the [RAT] and [DAT].”
7 Our 2008 judgment reversed the trial court’s March 28, 2006 appointment of
Riley as successor trustee of the three trusts. We held that the appointment failed
to comply with the Texas Trust Code and the appointment procedure set forth in
the trusts themselves. 274 S.W.3d at 296. This aspect of the 2008 appellate
judgment bore directly on paragraph XIII of the trial court’s 2006 judgment, as
shown below:
2006 TRIAL COURT JUDGMENT 2008 APPELLATE JUDGMENT XIII. The Court recognizes that the We affirm part XIII of the judgment release of Mark Riley as former Trustee only to the extent it recognizes the of the [RAT], the [DAT], and the Robert release of Riley as trustee and Alpert 1996 Children’s Trust terminates termination of his trusteeship as pertains that trusteeship and requires the to any trusteeship that may later be appointment of a new trustee. found to be valid. We reverse the It is therefore ORDERED, remainder of part XIII and render ADJUDGED and DECREED by the judgment that any successor trustees for Court that Mark Riley is appointed as the RAT, DAT, and 1996 trust are to be Trustee of the [RAT], the [DAT], and selected in accordance with the terms of the Robert Alpert 1996 Children’s the applicable trust instrument, after Trust, effective the date of this identification of the valid trustee for judgment, to serve with reasonable each trust. 274 S.W.3d at 299 compensation to be approved by the (emphasis added). Court, until the final mandate is issued by the highest appellate court to consider this cause, with all the powers and duties of a Trustee under the Texas Trust Code and the Trust Indentures.
Riley contends that Stanley’s appointment as successor trustee should be
voided because she accepted the appointment before “a judicial determination of
8 the identity of the valid trustee for each of the trusts” and before this Court issued
its mandate. We disagree with both contentions.
Selection of a new trustee going forward was an issue to be determined on
remand. The 2008 judgment reversed the trial court’s summary judgment
declaring Riley the properly appointed trustee. 274 S.W.3d at 286–88. We held
that that the appointment of a successor trustee must comply with the Trust Code,
which requires compliance with any trust provisions that prescribe the method for
appointment. See TEX. PROP. CODE ANN. § 113.083(a) (West 2007); 274 S.W.3d
at 296.
Riley claims that the trial court violated our mandate by failing to identify a
valid trustee for the RAT and DAT before selecting the successor trustee. On
remand, the Alperts contended that it was unnecessary to make this identification
because the 2008 appellate judgment—which reversed Riley’s appointment as
interim trustee, pending appeal—created a vacancy in the trusteeship, and the trust
instruments specifically provide for appointment of a successor trustee when the
position is vacant. Riley does not contend that Stanley’s appointment fails to
comply with the pertinent trust provisions. We agree with the Alperts that the
2008 appellate judgment required the selection of a successor trustee.
9 B. Timing of Stanley’s appointment
Riley also complains that Stanley’s appointment was premature. That
Stanley’s appointment predates the issuance of our mandate does not affect its
validity. An appellate mandate is a directive to the lower court. Saudi, 176
S.W.3d at 116–17. The trial court need not wait for the mandate to take action in
the case; it can voluntarily comply with the appellate judgment before the mandate
issues, as long as the parties have exhausted their appellate remedies and the
decision becomes final. Id. at 117. Nor does the lack of a mandate constrain the
parties’ extrajudicial activities. See Lewelling v. Bosworth, 840 S.W.2d 640, 642
(Tex. App.—Dallas 1992, orig. proceeding) (“A mandate is the official notice of
the action of the appellate court, directed to the court below, advising it of the
action of the appellate court and directing it to have its judgment duly recognized,
obeyed, and executed.”), quoted in Saudi, 176 S.W.3d at 116; see also Harris
Cnty. Children’s Protective Servs. v. Olvera, 971 S.W.2d 172, 175 (Tex. App.—
Houston [14th Dist.] 1998, pet. denied) (observing that when appellate court issues
its mandate, trial court’s duty is to “give effect” to the judgment by issuing proper
orders). Stanley did not appear in the proceedings until after the mandate issued.
In the post-mandate world, the trusteeships had been vacant since at least March
28, 2006. See also Alpert, 2011 WL 801978, at *1 (granting summary judgment
that “Riley did not properly reappoint himself trustee of the Three Trusts on
10 January 10, 2010”). The document appointing Stanley as successor was executed
well after that date. We therefore hold that the trial court properly recognized
Stanley as the current trustee for the RAT and DAT.
C. Standing and capacity
“A plaintiff must have both standing and capacity to bring a lawsuit.”
Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). “A plaintiff
has standing when it is personally aggrieved, regardless of whether it is acting with
legal authority; a plaintiff has capacity when it has the legal authority to act,
regardless of whether it has a justiciable interest in the controversy.” Nootsie, Ltd.
v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996) (emphasis
omitted). Riley did challenge either Stanley’s standing or her capacity in the trial
court. As a necessary component of a court’s subject-matter jurisdiction, standing
cannot be waived and can be raised for the first time on appeal. Tex. Ass’n of Bus.
v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex.1993). Stanley’s standing,
however, is not at issue. She is named solely in a representative capacity on behalf
of the RAT and DAT, and Riley does not question that the trusts have a stake in
the proceeding.3
3 Stanley, as the representative for existing parties to the suit, properly appeared in the proceeding; contrary to Riley’s contention, she need not have petitioned to intervene in the suit before her appearance. 11 Our holding that Stanley’s appointment is valid makes it unnecessary to
reach Riley’s challenge to Stanley’s capacity. In any event, Riley waived that
challenge by failing to first file a verified pleading challenging Stanley’s capacity
on this ground in the trial court. See Ray Malooly Trust v. Juhl, 186 S.W.3d 568,
571 (Tex. 2006) (citing TEX. R. CIV. P. 93(1)); Lovato, 171 S.W.3d at 849.
III. Propriety of restitution award
Riley next challenges the trial court’s order requiring him to restore to the
RAT and DAT the attorney’s fees paid pursuant to orders dated June 21, 2004;
September 30, 2004; October 30, 2004; December 14, 2004; December 21, 2004;
January 31, 2005; April 4, 2005; and March 28, 2006; and ratified in the 2006 trial
court judgment. Riley contends that the trial court lacked subject-matter
jurisdiction over the attorney’s fees issue and that the law of the case doctrine
precluded the trial court from re-opening the attorney’s fees issue on remand.
A. Meaning and effect of appellate mandate on prior payments of attorney’s fees The trial court orders at issue approved accountings that identified trust
assets and expenses and reported the amounts received and disbursed under the
trusts. In addition, the orders authorized payment of legal fees and expenses
incurred in Riley’s litigation against Robert Alpert on behalf of the trusts as well as
trustee compensation for Riley. We look to both the mandate and the appellate
opinion to interpret the mandate. Hudson, 711 S.W.2d at 630. To support his
12 contention that that the attorney’s fee issues could not be re-opened on remand,
Riley relies on the following portion of the mandate: 4
2006 TRIAL COURT JUDGMENT APPELLATE MANDATE XI. It is further ORDERED, Part XI of the judgment that approves ADJUDGED, and DECREED that the any award of trustee compensation for Court approves the accountings filed by Riley is reversed and judgment is Riley as trustee of the RAT, the DAT, rendered that Riley take nothing on his and the Children’s Trust, and thereby requests for trustee compensation. The approves distributions, fees, costs, and remainder of part XI is affirmed. expenses therefrom by Riley as Trustee; and Riley, as Trustee of the RAT, the DAT, and the Children’s Trust, is discharged as to the accountings from the inception of these trusts until the jury’s verdict on June 8, 2005.
According to Riley, this paragraph precluded the trial court from addressing
the attorney’s fee issue on remand. Riley improperly isolates this paragraph from
other portions of the 2008 opinion and judgment and its mandate that require the
contrary conclusion. “A judgment should be construed as a whole toward the end
of harmonizing and giving effect to all the court has written.” Point Lookout W.,
Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987). The following paragraphs
address attorney’s fees:
4 Each paragraph in the mandate expressly addresses a specific paragraph in the trial court’s judgment. We therefore include the corresponding paragraphs of the trial court’s judgment to aid in interpreting the mandate. 13 2006 TRIAL COURT JUDGMENT APPELLATE MANDATE II. It is further ORDERED, Part II of the judgment ratifying and ADJUDGED, and DECREED that the confirming the trial court’s June 21, Court ratifies and confirms the previous 2004, September 30, 2004, December orders of the Court dated June 21, 2004, 14, 2004, December 21, 2004, January September 30, 2004, December 14, 31, 2004, and April 4, 2005 orders 2004, December 21, 2004, January 31, authorizing payments of expenses to 2005, April 4, 2005, and a second order Riley and fees to his counsel is dated April 4, 2005, which authorized reversed, and the matter is remanded the payment of fees and expenses to for further proceedings consistent with counsel for Riley and to Riley in the this opinion. Part II of the judgment total amount of [$617,319.97]. granting Riley’s claims for trustee compensation is also reversed and judgment is rendered that Riley take nothing on his claims for trustee compensation.
VI. It is further ORDERED, Part VI of the judgment, in which the ADJUDGED, and DECREED that the trial court ratifies and confirms prior Court ratifies and confirms the previous payments of attorney’s fees and order of the Court dated June 21, 2004, expenses to Riley, is reversed, and the authorizing payment to Mark Riley of matter is remanded for further [$77,965.42]. proceedings consistent with this opinion.
The earlier appeal did not challenge the accountings themselves. The 2008
appellate judgment left the accountings intact—but it reversed the trial court’s
approval of Riley’s use of trust funds to pay trustee compensation and attorney’s
fees in those amounts. We rendered a take-nothing judgment on the trustee
compensation issue, but remanded the attorney’s fee issue for further proceedings.
Our opinion explained:
14 The trial court reconfirmed its approval of Riley’s accountings for the trusts and requests for the attorney’s fees and reimbursement of expenses incurred in connection with the litigation on behalf of the trusts, as well as an earlier distribution of . . . trustee compensation. None of the appellants challenges the propriety or adequacy of those accountings on appeal, and so they remain undisturbed, except to the extent that they are affected by reversal of certain of the trial court’s other rulings. 274 S.W.3d at 284. The portion of the appellate mandate affirming “the remainder
of part XI,” does not render meaningless the portion reversing the trial court’s
judgment on attorney’s fees.
Riley contends that his discharge “as to the accountings” also discharges him
from liability in connection with the attorney’s fees. Texas State Bank v. Amaro
suggests otherwise. See 87 S.W.3d 538, 543 (Tex. 2002). There, the Texas
Supreme Court rejected a trustee’s contention that “‘[a]pproval of an accounting
involves more than merely approval of the math involved in expenditure and
disbursement: approval of an accounting disposes of all claims that might be made
in regard to matters relating thereto.’” Id. at 544–45 (internal quotation omitted).
The Court distinguished between Chapter 113 of the Trust Code, entitled
“Administration,” which “establishes the contents of an accounting and requires
the trustee to list trust property, transactions, property, cash, and all known
liabilities owed by the trust,” and the trustee’s potential liability under Chapter
114, which concerns the “liabilities, rights, and remedies of trustees, beneficiaries,
and third persons.” Id. (citing TEX. PROP. CODE ANN. § 113.152). An
15 administrative discharge does not adjudicate a trustee’s obligations or potential
liability. Id. The trial court thus had jurisdiction to consider the Alperts’ motion
on the remanded attorney’s fee issues.
B. Standard for awarding attorney’s fees under Probate Code
The trial court’s attorney’s-fee awards and the Alperts’ motion for restitution
on remand rely on section 114.064 of the Texas Property Code, which provides
that, “[i]n any proceeding under this code the court may make such award of costs
and reasonable and necessary attorney’s fees as may seem equitable and just.” The
question of whether attorney’s fees are equitable and just is one of law for the trial
court to decide. Ridge Oil Co., Inc. v. Guinn Invs., Inc., 148 S.W.3d 143, 161
(Tex. 2004). Whether it is equitable and just to award attorney’s fees depends on
the concept of fairness, in light of all the surrounding circumstances. Id. at 162;
see also Barshop v. Medina Cnty. Underground Water Conserv. Dist., 925 S.W.2d
618, 637 (Tex. 1996) (“The conclusion that an award of fees is equitable and just is
not dependent on a finding that a party ‘substantially prevailed.’”). We review a
decision to award or deny attorney’s fees under section 114.064 for an abuse of
discretion. See Hachar v. Hachar, 153 S.W.3d 138, 142 (Tex. App.—San Antonio
2004, no pet.); Lyco Acquisition 1984 Ltd. P’ship v. First Nat’l Bank of Amarillo,
860 S.W.2d 117, 121–22 (Tex. App.—Amarillo 1993, writ denied); see also
Barshop, 925 S.W.2d at 637 (discussing review of “equitable and just” fee awards
16 under Declaratory Judgment Act). “A trial court abuses its discretion when it
reaches a decision so arbitrary and unreasonable as to amount to a clear and
prejudicial error of law.” Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150,
161 (Tex. 2004). There is no abuse, however, simply because a trial court may
decide a matter within its discretion differently than an appellate court. Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex. 1985).
1. Determination of valid trustee
Riley contends that the trial court erred in failing to resolve the question of
whether he was properly appointed trustee over the RAT and DAT, because
resolution of these issues in his favor would support the trial court’s approval of
his requests to use trust funds to pay the attorney’s fees. In our 2008 opinion, we
held that the trial court erred in granting summary judgment on Riley’s status as
trustee over the RAT and DAT. Our reversal of that ruling left open the question
of who held the trusteeship during the period that Riley acted as trustee. The
determination of Riley’s actual or de facto trustee status was a fact issue to be
decided on remand to the trial court. The 2008 appellate judgment orders that “any
successor trustees for the RAT, DAT, and 1996 trust are to be selected in
accordance with the terms of the applicable trust instrument, after identification of
the valid trustee for each trust.” 274 S.W.3d at 299. The federal district court also
noted that—although the issues before it did not involve the issue of whether Riley
17 was authorized to act as trustee of the RAT and DAT before June 8, 2005 (the date
of the jury verdict in state trial court)—“[t]he state probate court was tasked on
remand to determine whether Riley was properly authorized to act as trustee of the
RAT and DAT at any time before” that date. 2011 WL 3325884, at *9.
Riley contends that the trial court’s failure to have a fact finder resolve the
trustee identity question is error. See Madeshko v. Abraham, Watkins, Nichols, &
Friend, 112 S.W.3d 679, 685 (Tex. App—Houston [14th Dist.] 2003, no pet.) (en
banc plurality op.) (“Clearly, trial courts must obey appellate mandates, and they
abuse their discretion if they do not.”). We agree.
We first consider whether the trial court could properly grant summary
judgment on the Alperts’ motion without ascertaining whether Riley ever served as
the valid trustee. The Alperts contend that the issue of Riley’s trustee status is
moot, because identification of the valid trustee was unnecessary to decide the
remanded attorney’s fees issues. “The mootness doctrine limits courts to deciding
cases in which an actual controversy exists” between the parties. FDIC v. Nueces
Cnty., 886 S.W.2d 766, 767 (Tex. 1994).
Relying on the 2008 appellate judgment, the Alperts claim that, whether
trustee or not, Riley’s claims against Robert Alpert lacked merit, and thus, the trial
court should not have approved the disbursement of trust funds to pay the
attorney’s fees incurred in prosecuting the case. The Alperts also rely on the 2008
18 appellate judgment’s reinstatement of the jury’s breach of trust finding against
Riley, contending that, whether trustee or not, the breach finding means that the fee
expenditures were neither equitable nor just and, as a result, should not be borne by
the trusts. Neither ground supports the conclusion that the issue of whether Riley
had trustee status is moot—an issue expressly remanded to the trial court, based on
our determination that fact issues existed.
First, certain provisions in the trust instruments arguably shield the trustee
from a beneficiary’s efforts to second-guess the wisdom of “making any
discretionary application or payment from principal” by making those decisions
“final and binding upon all persons then or thereafter interested in the trust estate.”
The trusts also provide that “[n]o Trustee acting hereunder shall incur any liability
for any act done or omitted in the exercise of his duties as Trustee in good faith.”
Whether Riley can invoke these protections depends on his trusteeship and his
status. Second, the Alperts do not address the matter that Riley incurred attorney’s
fees for claims brought against him by Alpert and the beneficiaries in his capacity
as trustee. Beyond the express provisions of the trusts themselves, the
determination of whether the fee payments were just and equitable depends on the
circumstances surrounding each fee request when it was made. Finally, our 2008
opinion also rejected any equitable recovery based on a breach of fiduciary duty
claim against Riley and judgment. The jury awarded no damages, and the trial
19 court had found no breach of duty. In light of this, we concluded that the
beneficiaries could not recover for breach of fiduciary duty.
The 2008 appellate reversal of the judgment against Robert Alpert on the
basis that Riley lacked standing to pursue the breach of fiduciary duty claim
against him is an after-the-fact legal assessment; it does not support summary
reversal of the fee awards. See Ridge Oil Co., 148 S.W.3d at 162. The reversal
does not consider any good-faith reliance on legal advice in pursuing the claim, or
the fact that Riley had employed other legal theories against Robert Alpert that
were not raised in the 2008 appeal. Whether Riley was the valid or de facto trustee
when he prosecuted the claims and made the requests for payment is relevant to
whether he requested payment of attorney’s fees in good faith. We hold that the
Alperts failed to show their entitlement to summary judgment as a matter of law on
their claim seeking reversal of the attorney’s fees awarded under section 114.064.
2. Restitution as basis for judgment against Riley
Riley also contends that the trial court erred in relying on a restitution theory
to order Riley to reimburse the trusts for the attorney’s fee disbursements. The
probate court’s original orders granting Riley authority to pay attorney’s fees and
expenses uniformly provide:
20 It is therefore ORDERED that the above fees and expenses are approved and that Karen Gerstner, Receiver of RAT and DAT shall pay the sum of $[amount] to Crain, Caton & James from the assets of each trust subject to the receivership for an aggregate amount of $[amount] to Crain, Caton & James, P.C. In arguing for wholesale reimbursement to the trusts, the Alperts rely on
Drake v. Trinity Universal Insurance Co., 600 S.W.2d 768 (Tex. 1980), and
Outdoor Systems, Inc. v. BBE, L.L.C., 105 S.W.3d 66 (Tex. App.—Eastland 2003,
pet. denied). Drake addressed “the question whether an attorney who is paid for
legal services pursuant to a claim against an estate is liable to the estate for
reimbursement when the court order requiring payment of his claim is reversed on
appeal.” 600 S.W.2d at 769. There, the attorney, Currie, made a claim against the
estate for legal fees he earned in representing the estate’s administratrix in resisting
the application to probate the will and in defending efforts to remove her from her
position. The trial court awarded the fees. The court of appeals held that the fees
were not properly charged to the estate and reversed. Id. at 770. In holding that
the attorney was required to reimburse the estate, the Supreme Court likened the
situation to cases in which a judgment that is executed is later reversed on appeal,
which uniformly hold that the prevailing party is entitled to restitution. See id. at
771. Outdoor Systems stands for the same principle. See 105 S.W.3d at 74–75
(“Texas courts have long held that a party obtaining any advantage or benefit
through a trial court’s judgment that is later reversed must return the benefit to the
21 other party.”). These cases do not support summary recovery against Riley. Riley
received no benefit from the trial court’s approval of his requests to pay the
attorneys’ fees; the receiver disbursed the payments directly to the law firm
representing the trustee, pursuant to an accounting approved by the trial court.
The trial court’s judgment relies on the same flawed grounds in ordering that
Riley, individually, pay the beneficiaries’ legal fees. Riley cannot be held
individually accountable for the beneficiaries’ attorney’s fees as damages resulting
from breach of trust, because the jury found that no damages resulted from the
breach. See generally TEX. PROP. CODE ANN. § 114.001(c) (explaining that trustee
who commits breach of trust “is chargeable with any damages resulting from such
breach of trust”) (emphasis added). We conclude that the trial court erred in
relying on these grounds to order Riley, in his individual capacity, to pay the
beneficiaries’ legal fees.
Conclusion
We hold that the trial court erred in granting the Alperts’ motion for
summary judgment and restitution on the remanded attorney’s fees issues incurred
in connection with claims involving the RAT and DAT because the trial court
failed to resolve the fact issue as to the trustee status of those trusts for the periods
during which the fees were incurred. We therefore reverse the judgment and
22 remand the case for further proceedings consistent with this opinion. All pending
motions are denied as moot.
Jane Bland Justice
Panel consists of Justices Bland, Massengale, and Brown.