Probate Judge Mike Wood Reversed: Alpert v. Riley (Tex.App. - Houston 2008)

Alpert v. Riley No. 01-06-00505-CV (Tex.App.- Houston [1st Dist.] June 5, 2008)(Bland) (probate law, trust administration dispute)
Full case style: Roman Alpert and Renee Picazo, Guardian of the Estate of Daniel Alpert, a Minor v. Mark Riley, Robert Alpert
Opinion by Justice Jane Nenninger Bland
Appeal from Probate Court No 2 of Harris County
Trial Court Judge: Mike Wood
Disposition: Reversed and remanded

O P I N I O N

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.[1] Because the trial court’s decision on the bond does not constitute a final
judgment, we lack jurisdiction over that appeal and dismiss it for that reason, but consider its substance as a request for relief under the main appeal pursuant to Texas Rule of Appellate Procedure 24. Tex. R. App. P. 24.4(a). As to the merits, we conclude that the trial court properly denied the request for a security bond and deny the requested relief.

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Conclusion

Based on the holdings set forth in this opinion [click to read omitted opinion], we rule as follows:

(1) We reverse part I of the judgment in which the trial court disregarded the jury’s answer to Juror Question No. 8, i.e., the affirmative answer to whether Riley breached his fiduciary duty to the trusts or the beneficiaries, but render judgment that the beneficiaries take nothing on this claim because the jury awarded nothing in damages, and our other rulings obviate the claim for equitable disgorgement of trustee compensation. We remand the beneficiaries’ claim for attorney’s fees to the trial court for further proceedings.

(2) We reverse part II of the judgment ratifying and confirming the trial court’s June 21, 2004, September 30, 2004, December 14, 2004, December 21, 2004, January 31, 2004, and April 4, 2005 orders authorizing payments of expenses to Riley and fees to his counsel, and remand for further proceedings consistent with this opinion. We reverse and render judgment that Riley take nothing on his claims for trustee compensation.

(3) We reverse parts III and IV of the judgment, in which the trial court orders that Riley, as trustee of the RAT and DAT, and on behalf of the RAT and DAT, have judgment against Alpert and awards him attorney’s fees and interest relating to those claims, and render judgment that Riley on behalf of the trusts take nothing on the claims against Alpert.

(4) We reverse part VI of the judgment, in which the trial court ratifies and confirms prior payments of attorney’s fees and expenses to Riley, and remand for further proceedings consistent with this opinion.

(5) We affirm parts VII, VIII, and IX of the judgment.[8]

(6) We reverse part X of the judgment, in which the trial court ratifies its prior declarations that Riley was properly appointed Trustee of the RAT, the DAT, and the 1996 trust, and that Riley is the trustee of those trusts and has all the powers conferred by the Texas Trust Code and the trust instruments, and (a) with respect to the findings relating to the RAT and DAT, remand for further proceedings consistent with this opinion, and (b) with respect to the findings relating to the 1996 trust, render a declaration that Riley was not properly appointed trustee of the 1996 trust, is not and has not been trustee of the 1996 trust, and does not hold any of the powers conferred on trustees by the 1996 trust instrument and applicable statute.

(7) We reverse the portion of part XI of the judgment that approves any award of trustee compensation for Riley and render judgment on Riley’s requests for trustee compensation that Riley take nothing. We affirm the remainder of part XI.

(8) We reverse part XII of the judgment concerning attorney’s fees and remand for further proceedings consistent with this opinion.

(9) We affirm part XIII of the judgment only to the extent it recognizes the release of Riley as trustee and termination of his trusteeship as pertains to any trusteeship that may later be found to be valid. We reverse the remainder of part XIII and render judgment 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.

(10) We deny the appellants’ request that Riley post a security bond pending appeal.We dismiss the security bond appeal filed under number 01-06‑00505‑CV for lack of jurisdiction. We grant appellants’ agreed motion to substitute counsel and to designate lead counsel. All other pending motions are dismissed as moot. All stays granted are lifted upon the issuance of this opinion and judgment.

Jane Bland, Justice