Court Opinion

ID: 9718553
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:27:05.03434+00
Date Added: 2024-06-11T18:24:00.348945
License: Public Domain

DAVID GAULTNEY, Justice,
dissenting.
The divorce judgment ordered Lawrence to pay Monica her share of the retirement funds. The judgment also made Lawrence a trustee of her funds. The trustee designation provided Monica additional protection in the event Lawrence ignored or simply forgot the order to pay her share. When he received her share, Lawrence held Monica’s property as trustee under the terms of the divorce judgment. The discovery rule applies when a trustee asserts that a claim against him is barred by limitations. Courseview, Inc. v. Phillips Petroleum Co., 158 Tex. 397, 312 S.W.2d 197, 204-05 (1957).
I respectfully disagree with the majority opinion on three grounds: the proper application of the legal sufficiency standard of review to the record in this case; the nature of a trust; and the proper application of the discovery rule to a trustee. Because Monica’s claim is not barred by the four year statute of limitations, we should affirm the trial court’s judgment.
The Legal Sufficiency Standard Of Review
We are governed in our review of this case by the specific challenge Lawrence makes on appeal. The majority construes Lawrence’s argument as challenging the legal insufficiency of the evidence. I agree that is the substance of his challenge. See City of Keller v. Wilson, 168 S.W.3d 802 (Tex.2005).
Monica testified she discovered in 2007 that her money had been withdrawn in a lump sum. She asked Exxon-Mobil if an account had been established in her name, and was told “no.” The record reflects she filed this lawsuit in 2007 within the four year statute of limitations. See Peek v. Berry, 143 Tex. 294, 184 S.W.2d 272, 275 (1944) (four year statute of limitations).
Lawrence testified differently and stated he informed Monica he was going to retire and use his retirement money to open a business. Amber, the daughter, testified that in a conversation with Amber and her husband, Monica was told Lawrence retired in 2002. Amber did not recall how or if Monica reacted at the time.
As the fact-finder in this bench trial, the trial judge was responsible for assessing the credibility of the witnesses and for resolving conflicts in the evidence. City of Keller, 168 S.W.3d at 819-20. As an appellate court, we must presume that, in a case in which a fact-finder has conflicting *126evidence to resolve, the fact-finder resolved all conflicts in favor of the prevailing party. As a reviewing court, we are not free to resolve the conflicts in testimony differently from the fact-finder. We disregard the conflicting evidence in reviewing the legal sufficiency of the evidence. See id. at 821. As trier of fact, the trial judge may “disregard even un-contradicted and unimpeached testimony from disinterested witnesses.” Id. at 820 (footnote omitted). To the extent Monica’s testimony conflicts with Amber’s or Lawrence’s, the trial court accepted the testimony of Monica and rejected theirs. So must this Court under the applicable standard of review. The evidence is legally sufficient to support the trial court’s judgment.
The NatuRE of a Trust
Even if this Court had the ability to decide Lawrence and Amber testified truthfully and Monica did not, that determination would not change the result in this case, because of the nature of a trust and the duty of full disclosure. Lawrence took control of Monica’s property in 2002. His role then was as trustee of the money; any money he did not immediately pay Monica was held in trust for her. A trustee has a duty to administer the trust solely in the interest of the beneficiary for as long as the trustee remains trustee. See Ames v. Ames, 757 S.W.2d 468, 476 (TexApp.-Beaumont 1988), ajfd as modified, 776 S.W.2d 154 (Tex.1989). Lawrence did not notify Monica of a repudiation of the trust. Even if the trial court had to accept his testimony as true — an assumption the majority rejects, as do I— Lawrence’s statement to Monica that he intended to use his retirement funds to start a business did not tell her what he intended to do with her money. A trustee must fully disclose all material facts known to him that might affect the beneficiary’s rights. See Montgomery v. Kennedy, 669 S.W.2d 309, 318 (Tex.1984). Lawrence may have intended to leave Monica’s funds in the account. Generally then, the termination of the trustee relationship required a mutual abandonment or agreement between the parties, also with full disclosure. See generally Omohundro v. Matthews, 317 S.W.2d 771, 777 (Tex.Civ.App.-Beaumont 1958), aff'd, 161 Tex. 367, 341 S.W.2d 401 (1960). Without a termination of the trust relationship, Lawrence continued as trustee until he lost all of her money. Lawrence testified the money was not exhausted from the account in which he initially deposited the funds until 2003. By that year, he had invested all Monica’s funds in his business. The business in which he invested the funds was not closed until 2004, after he moved to the Virgin Islands. When a trustee commingles trust property with his own, as happened here, the commingled funds become the property of the trust, unless the trustee is able to distinguish and separate that which is his own. See generally Eaton v. Husted, 141 Tex. 349, 172 S.W.2d 493, 497-98 (1943). Essentially, trust funds can be traced and recovered. See id. Until 2004, Lawrence held Monica’s property. This lawsuit was filed in 2007, -within four years of the date all of her property held in trust finally disappeared. Therefore, even if the trial court was bound by the testimony of Lawrence or Amber, a suggestion I do not accept, this lawsuit would not be barred by limitations, because of the nature of a trust.
The Application Of The Discovery Rule
Finally, the discovery rule requires a repudiation of the trust by the trustee. See Collins v. Griffith, 125 S.W.2d 419, 425 (Tex.Civ.App.-Amarillo 1938, writ ref'd). A trustee owes a duty of full disclosure to the beneficiary. Montgomery, 669 S.W.2d *127at 313-14. Because of the trustee’s duty to fully disclose, the discovery rule is applied differently in a claim against a trustee. A beneficiary has no duty to investigate for wrong-doing by the trustee until she has actual notice of sufficient facts to cause further inquiry. See id,.; Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377, 394 (1945). The actual notice requirement is applied strictly because the trustee is not allowed to benefit from his failure to fully disclose. It matters not that the trustee and beneficiary have a strained relationship. See Montgomery, 669 S.W.2d at 313. It matters not that the trustee retains or exercises control over the beneficiary’s property, because that is generally what a trustee does. Regardless of the circumstances, the law provides that the beneficiary is entitled to rely on a trustee to fully disclose all relevant information. See generally Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 788 (1938) (fiduciary and absolute duty to disclose). Because of the legal responsibilities the law imposes on a trustee, the beneficiary is entitled to presume that a trustee holding trust property does so as a trustee, “and the trust relation continues unless plainly repudiated.... ” Gibbons v. Bell, 1876 WL 9218, at *4, 45 Tex. 417 (1876); see also Collins, 125 S.W.2d at 425.
Under the common law, the statute of limitations generally does not begin to run on a claim against the trustee until the trustee repudiates the trust and notifies the beneficiary. See Langford v. Shamburger, 417 S.W.2d 438, 445 (Tex.Civ.App.-Fort Worth 1967, writ ref'd n.r.e.), disapproved of on other grounds by Tex. Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 249-50 (Tex.2002); Collins, 125 S.W.2d at 425-26. The repudiation must be “plain, strong, and unequivocal ... open[,]” and “to be sufficient and effective must have been brought home to the beneficiary.” Langford, 417 S.W.2d at 445.
The date a beneficiary learns the trustee has taken possession of trust property is not the date a claim against the trustee accrues, nor is it the date limitations begins to run. Only in exceptional circumstances should limitations run in favor of a silent trustee. Based on the evidence presented, the trial court could reasonably conclude Lawrence never gave “plain, strong and unequivocal” notice to Monica that he was repudiating the trust. See id. The statute of limitations does not bar her claim.
Based on the applicable standard of review, we should affirm the trial court’s judgment. Because the majority does not, I respectfully dissent.