Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, August 18, 2008

Did Texas probate judge approve too much compensation?

Texas According to Rick Casey, Judge Wood slapped again, Houston Chronicle, June 5, 2008,

[A] Houston appeals court ruled that probate Judge Mike Wood improperly awarded what may turn out to be more than $2 million in fees to a trustee and his lawyers over the objections of a wealthy father who set up three trusts for his sons.

The trustee, lawyer Mark Riley, had sued the father, Robert Alpert, accusing him of stock dealings that cost the trust money.

The appeals court decision may be most painful for the prominent law firm of Crain Caton & James, which represented Riley in the suit and may have to pay back more than $1 million in fees that Wood authorized.

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Alpert v. Riley, No. 01-06-00605-CV (Tex.App.- Houston [1st Dist.] June 5, 2008, motion for en banc reconsideration filed)(Bland)(probate law, trust administration dispute)
Opinion by Justice Jane N. Bland
Panel Members: Chief Justice Sherry Radack, Justices Terry Jennings and Jane Bland
Full case style: Roman Alpert and Renee Picazo, Guardian of the Estate of Daniel Alpert, a Minor vs. Mark Riley, Robert Alpert
Appeal from Probate Court No 2 of Harris County
Trial Court Judge: Hon. Mike Wood
Disposition: Reverse Trial Court Judgment and Remand Case to Trial Court for Further Proceedings
Link to opinion in pdf:
http://www.1stcoa.courts.state.tx.us/opinions/pdfOpinion.asp?OpinionID=85501
Link to opinion in html:
http://www.1stcoa.courts.state.tx.us/opinions/HTMLOpinion.asp?OpinionID=85501
Link to appellate docket sheet:
http://www.1stcoa.courts.state.tx.us/opinions/case.asp?FilingID=89238

Excerpt from the panel opinion:

In this trust management dispute involving three separate trusts, Roman Alpert and Renee Picazo, Guardian of the Estate of Daniel Alpert, a minor (collectively, the beneficiaries), appeal the trial court’s judgment. Specifically, they contend that the trial court erred in granting summary judgment that Mark Riley, appellee, was trustee of the three trusts as a matter of law, and in denying their motion urging the opposite conclusion—that, as a matter of law, he was not.

The beneficiaries also ask that we reverse the judgment for other reasons, asserting that the trial court erred in (1) disregarding the jury’s finding that Riley breached his fiduciary duty; (2) confirming Riley’s payment of attorney’s fees and refusing to enter judgment against Riley for their attorney’s fees; and (3) reappointing Riley as his own successor trustee.

Robert Alpert, the trusts’ settlor and father of the trust beneficiaries, also appeals the trial court’s judgment, which finds him liable for breach of fiduciary duty and awards over $4 million in damages and attorney’s fees to Riley on behalf of the trusts, pursuant to the trial court and jury findings that Alpert breached his fiduciary duty to the beneficiaries. Alpert contends that, as settlor of the trusts, (1) he had no fiduciary duty to the trusts, and (2) Riley has no standing to sue him absent such a duty.

We conclude that (1) the trial court erred in declaring Riley to be trustee of the three trusts as a matter of law because fact issues exist as to his status as trustee for two of the trusts, and he is not a trustee of the third trust pursuant to the express terms of the trust instrument; (2) the judgment against Alpert for breach of fiduciary duty must be reversed because, under the terms of these trusts, the settlor owes no fiduciary obligation to the trust’s beneficiaries and Riley, as trustee, has no standing to sue the parent of a trust beneficiary for breach of a parent’s fiduciary duty to a minor child; (3) the trial court erred in disregarding the jury’s verdict as to Riley’s breach of fiduciary duty but, as the jury awarded no damages, the beneficiaries recover nothing on the jury verdict; (4) while a remand is appropriate after reinstatement of the verdict as to Riley’s breach of fiduciary duty to consider the remedy of equitable disgorgement of trustee compensation, a remand is unnecessary here because Riley is not entitled to trustee compensation as a matter of law; and (5) the trial court’s award of attorney’s fees, and the denial of the beneficiaries’ claim for fees, must be reversed and remanded for further proceedings, given our resolution of the merits.

Alpert and the beneficiaries also filed a separate appeal challenging the trial court’s denial of their request that Riley post a security bond pending appeal.

Posted by: HOUSTON OPINIONS | Aug 18, 2008 2:52:00 PM

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