Monday, June 15, 2009
The probate court removed Trustee from office. Trustee appealed claiming that the removal action was barred by the four-year statute of limitations governing breach of fiduciary duty claims because the underlying reason for the removal was for an alleged breach of duty. The Houston First District Court of Appeals agreed that the removal action was barred because it was brought more than four years after the accrual of the removal action.
In Ditta v. Conte, 52 Tex. S. Ct. J. 823 (2009), the Texas Supreme Court reversed holding that “no statutory limitations period restricts a court’s discretion to remove a trustee. A limitations period, while applicable to suits seeking damages for breach of fiduciary duty, has no place in suits that seek removal rather than recovery.” Ditta at 824.
The court studied Trust Code § 113.082(a) which grants the court broad discretion to remove a trustee for certain enumerated conduct as well for any “other cause” which the court finds sufficient to justify removal. The court stressed that a decision to remove “turns on the special status of the trustee as a fiduciary and the ongoing relationship between trustee and beneficiary, not on any particular or discrete act of the trustee.” Ditta at 826.
Moral: A person dissatisfied with the conduct of a trustee may bring suit for removal no matter how long in the past the alleged improper conduct occurred.