Court Opinion

ID: 8406699
Source: CourtListenerOpinion
Date Created: 2022-10-31 00:11:16.41392+00
Date Added: 2024-06-11T16:47:17.248480
License: Public Domain

Supreme Court of Texas
                            ══════════
                             No. 21-0233
                            ══════════

                             Larry Ackers,
                               Petitioner,

                                    v.

    Comerica Bank & Trust, N.A., Trustee of the Larry Ackers
                 Generation Skipping Trust,
                              Respondent

   ═══════════════════════════════════════
               On Petition for Review from the
      Court of Appeals for the Eleventh District of Texas
   ═══════════════════════════════════════

       JUSTICE BUSBY, joined by Justice Young, concurring in the denial
of the petition for review.

      This case involves a dispute over whether certain individuals are
contingent remainder beneficiaries of a trust, and the issue presented is
whether the dispute is ripe for judicial resolution. The plaintiff was the
life beneficiary of the trust, and the court of appeals affirmed the
dismissal of his suit as unripe. The life beneficiary then filed a petition
for review, but he died after we received merits briefing, and the trust
will now be wound up. Under these circumstances, I agree with the
Court’s decision to deny review.    This disposition does not prevent
anyone claiming a remainder interest in the trust from seeking a judicial
declaration regarding who should receive a distribution.
      Nor should our denial of review be interpreted as agreement with
the court of appeals’ ripeness analysis. That court reasoned the suit was
not ripe because the putative remainder beneficiaries might die before
the trust terminated and thus might never receive a future distribution.
But the dispute also included whether the putative beneficiaries had
present rights to receive information about the trust prior to its
termination. That aspect of the dispute, which the court of appeals
overlooked, rendered this suit ripe when filed.
      Petitioner Larry Ackers was the life beneficiary of a testamentary
trust that would terminate upon his death, with any remaining trust
assets being distributed to his “then-living descendants.” Larry had
three biological children: Kimberly, Melissa, and Pepper.             He
relinquished his parental rights to Kimberly and Melissa, each of whom
was later adopted by a new father. Kimberly passed away in 2013, but
Melissa and Pepper—along with Kimberly’s children, Brittany and
James—are still alive. Sometime before Kimberly’s passing, the then-
trustee notified Kimberly and Melissa that they were Larry’s
descendants.
      In 2015, respondent Comerica Bank & Trust, N.A. was appointed
successor trustee.   Comerica began sending account statements to
Melissa, Brittany, and James (collectively, the Heirs).      Larry then
informed Comerica that the Heirs might not be his “descendants” due to
his relinquishment of parental rights. Comerica notified the Heirs that

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it was “suspending its practice of providing account statements” to them
while it investigated whether they were remainder beneficiaries.
       Because Larry relinquished his parental rights to Kimberly and
Melissa, he argued that only Pepper was his “descendant”; the Heirs
were not his “descendants” and could not receive account information or
a distribution after his death. Larry filed suit under the Texas Trust
Code and the Uniform Declaratory Judgments Act, asking the court to
construe the trust instrument and determine this question arising in the
administration of the trust. See TEX. PROP. CODE § 115.001(a)(1), (7); 1
TEX. CIV. PRAC. & REM. CODE §§ 37.004(a), 37.005(1). Larry alleged that
when Comerica’s predecessor trustee notified the Heirs of its
determination that they were beneficiaries, it created an “irreconcilable
conflict of interest between the descendants of the living and non-living
adopted    child   contingent    beneficiaries”   that   required    judicial
intervention.
       Comerica moved for summary judgment, arguing that Larry’s
suit was not ripe because the class of “then-living descendants” could
not be ascertained until Larry’s death. In response, Larry pointed out
that Comerica had already chosen to include the Heirs in the class of
“descendants” by sending them account statements. Without providing
its reasoning, the trial court granted summary judgment in Comerica’s
favor. The court of appeals affirmed, 630 S.W.3d 292, 293 (Tex. App.—
Eastland 2020), and Larry petitioned this Court for review.

       1Because the Trust Code is located within the Property Code, I refer to
the Trust Code while citing to provisions of the Property Code. See In re Troy
S. Poe Tr., 646 S.W.3d 771, 774 n.5 (Tex. 2022).

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       Before any court can determine whether the Heirs are Larry’s
descendants, this controversy must be ripe. See Patterson v. Planned
Parenthood of Hous. & Se. Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998).
Ripeness “is a threshold issue that implicates subject matter
jurisdiction, and like standing, [it] emphasizes the need for a concrete
injury for a justiciable claim to be presented.” Id. (citation omitted).
Specifically, “[a]t the time a lawsuit is filed, ripeness asks whether the
facts have developed sufficiently so that an injury has occurred or is
likely to occur, rather than being contingent or remote.” Id. 2
       According to the court of appeals, Larry’s suit was not ripe. The
court reasoned that because the class gift to Larry’s “descendants” was
contingent on Larry’s death, the Heirs’ interests were “not ripe for
determination because they are based upon an event that ‘[has] not yet
come to pass.’” 630 S.W.3d at 295-96 (alteration in original) (quoting
Sw. Elec. Power Co. v. Lynch, 595 S.W.3d 678, 683 (Tex. 2020)).
       This conclusion is incorrect because it focuses solely on the Heirs’
contingent future interest in a remainder distribution of the “corpus of
the trust” upon Larry’s death, id. at 295, while ignoring their present
rights as putative contingent remainder beneficiaries prior to the trust’s
termination. Because those present rights were also in dispute, the

       2 See also Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex.
1995) (explaining that a justiciable controversy exists when there is a “real and
substantial controversy involving genuine conflict of tangible interests and not
merely a theoretical dispute” (quoting Bexar-Medina-Atascosa Counties Water
Control & Impr. Dist. No. 1 v. Medina Lake Prot. Ass’n, 640 S.W.2d 778, 779-80
(Tex. App.—San Antonio 1982, writ ref’d n.r.e.))).

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contingent nature of the future interests of Larry’s “then-living
descendants” does not render this suit unripe.
      The first step of the court of appeals’ analysis was correct: the
Heirs’ putative remainder interests were contingent. See Guilliams v.
Koonsman, 279 S.W.2d 579, 582-83 (Tex. 1955) (concluding gift subject
to condition precedent of survivorship gave devisees contingent
remainder). But this contingency, standing alone, does not answer the
question whether the case is ripe.
      Although a contingent interest, by definition, is conditioned on
the occurrence of an event that may or may not take place, cf. Jones v.
Hext, 67 S.W.2d 441, 444 (Tex. App.—Amarillo 1933, writ ref’d), this
does not mean that every suit involving a contingent interest is unripe.
Rather, the Trust Code allows “interested person[s]” to sue concerning a
trust, and an interest can be “any interest, whether . . . present or
future, vested or contingent.”           TEX. PROP. CODE §§ 115.011(a),
111.004(6).
      As we recently confirmed in Berry v. Berry, contingent
beneficiaries are sufficiently “interested” to bring a claim concerning a
trust under section 115.001 of the Trust Code. 646 S.W.3d 516, 529-30
(Tex. 2022).   Berry held that an unnamed member of a class of
“descendants” who is a contingent beneficiary can sue trustees for an
alleged breach of fiduciary duty that reduces funds flowing into the
trust. See id. Yet under the court of appeals’ reasoning, the Berry
beneficiary’s claims would be unripe “because they are based upon an
event that ‘[has] not yet come to pass.’” 630 S.W.3d at 296 (alteration in
original) (quoting Lynch, 595 S.W.3d at 683).

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      That is incorrect: as we explained in Berry, the “contingent
status” of an interest cannot render it insufficient because that
conclusion “would essentially undo the [Trust Code’s] express grant of
rights to parties with ‘contingent’ interests.” 646 S.W.3d at 529. It
would make no sense to hold that the Legislature, in enacting the Trust
Code, gave trial courts jurisdiction over suits they can never hear
because the nature of a contingent beneficiary’s interest renders them
categorically unripe. Rather, chapters 111 and 115 of the Trust Code
indicate that the mere involvement of contingent interests does not
necessarily render a case unripe. See id. at 529-30.
      There are good reasons that the Trust Code authorizes contingent
beneficiaries to sue: they have present as well as future rights that may
be affected by a particular dispute. Among these are the right to sue for
an accounting by the trustee, see TEX. PROP. CODE § 115.001(a)(9), and
the right to sue to remove a trustee. See id. § 115.001(a)(3). 3 By sending
account statements to the Heirs, Comerica treated them as beneficiaries
with present rights. The declaration Larry sought would resolve a real
dispute regarding whether the Heirs are in fact beneficiaries with such
rights.
      It was certainly true, as the court of appeals observed, that the
Heirs’ future interest in a distribution of trust corpus after Larry’s death
might never vest. For example, they could have died before Larry. The
fact remains, however, that Comerica provided the Heirs with account
statements and other confidential information typically reserved for

      3 See also Aubrey v. Aubrey, 523 S.W.3d 299, 311-13 (Tex. App.—
Dallas 2017, no pet.).

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beneficiaries.   Cf. RESTATEMENT (THIRD)     OF   TRUSTS §§ 82, 83 cmt. b
(2007) (discussing trustee’s duty to provide reports to beneficiaries).
      A trustee owes fiduciary duties to the trust. See Thigpen v. Locke,
363 S.W.2d 247, 253 (Tex. 1962). One such duty is the duty of loyalty,
which obligates the trustee to preserve the confidentiality of trust
information. See, e.g., RESTATEMENT (THIRD) OF TRUSTS § 78 cmt. i. To
facilitate a trustee’s compliance with its duties of disclosure as well as
confidentiality, it is important that both trustees and beneficiaries have
access to the judicial forum provided by the Legislature for resolving any
disputes regarding present rights. A declaratory judgment regarding
whether Comerica properly treated the Heirs as contingent beneficiaries
would “actually resolve” this dispute. Brooks v. Northglen Ass’n, 141
S.W.3d 158, 163-64 (Tex. 2004).
      In reaching its contrary conclusion, the court of appeals relied
principally on Wilkes v. Wilkes, 488 S.W.2d 398 (Tex. 1972). In that case,
a testamentary trust provided that if the testator’s adopted daughter,
Virginia, had not executed a will by the time of her death, her share of
the trust income and (upon termination of the trust) principal would go
to “her lineal descendants, if any.” Id. at 400. Virginia died without a
will, and her only child—a son, Robert—attempted to convey his future
interests in continued income and in the corpus of the trust to his wife.
Id. at 400-01. Because Robert had two children, we concluded that the
gift to Virginia’s “lineal descendants” was to a class or “group capable of
future changes in number.” Id. at 399. Thus, Robert’s future interests
were contingent on him surviving his children, and an interest beyond
his lifetime could not be conveyed to his wife. Id. at 407.

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      Relying on Wilkes, the court of appeals reasoned that “the time
for ascertaining [Larry’s] descendants who will receive the corpus of the
trust is to be determined at [Larry’s] death and not before.” 630 S.W.3d
at 295. Viewing Larry’s suit as simply an attempt to determine whether
the Heirs would be excluded from the class of descendants when the
trust terminated, the court held it was not ripe. See id. at 295-96.
      Wilkes does not support the court of appeals’ conclusion. The
dispute in Wilkes was not about whether Robert’s wife would be
Virginia’s “descendant” at some future time, but whether Robert
presently had a “transmittable interest.” Wilkes, 488 S.W.2d at 407.
This case does not involve an effort by the Heirs to transmit any future
interests they may have.
      But Wilkes is similar to this case in a different way, and it
supports the conclusion that this suit was ripe. Wilkes addressed, in
part, whether a beneficiary could convey his contingent remainder
interest in the corpus of the trust. Under the court of appeals’ view, that
portion of the suit should have been dismissed as unripe given the
uncertainty about whether the beneficiary would be alive to receive a
transmittable share of the corpus when the trust terminated. Instead,
Wilkes held that we could decide—and we did decide—that the
beneficiary’s wife would not be entitled to a share of the corpus in any
event because the beneficiary did not have the power to appoint a
contingent remainder interest to her. Id. at 406.
      The facts here provide an even stronger case for ripeness: as
explained, there was a dispute regarding whether the Heirs are
contingent remainder beneficiaries with present—not merely future—

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rights. Because the harm alleged by Larry was not “contingent on
uncertain future events,” his suit was ripe. Waco Indep. Sch. Dist. v.
Gibson, 22 S.W.3d 849, 852 (Tex. 2000).
      With these observations, and in light of Larry’s death, I concur in
the denial of review. I express no opinion on the merits issue whether
the Heirs are Larry’s “descendants” and therefore remainder
beneficiaries of the trust.

                                       J. Brett Busby
                                       Justice

OPINION FILED: October 28, 2022

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