Court Opinion

ID: 3109753
Source: CourtListenerOpinion
Date Created: 2015-10-16 06:38:08.381662+00
Date Added: 2024-06-11T09:46:18.514333
License: Public Domain

Fourth Court of Appeals
                                           San Antonio, Texas
                                                    OPINION
                                               No. 04-13-00452-CV

                 IN RE WILLA PETERS HUBBERD TESTAMENTARY TRUST

                            From the Probate Court No. 2, Bexar County, Texas
                                      Trial Court No. 1986-PC-1440
                                Honorable Tom Rickhoff, Judge Presiding

Opinion by:       Catherine Stone, Chief Justice

Sitting:          Catherine Stone, Chief Justice
                  Marialyn Barnard, Justice
                  Patricia O. Alvarez, Justice

Delivered and Filed: February 12, 2014

AFFIRMED IN PART; REVERSED AND RENDERED IN PART

           This appeal arises from disputes regarding a testamentary trust established by Willa Peters

Hubberd. Willa’s daughter, Mary Dahlman, is a beneficiary under the trust. Dahlman appeals the

probate court’s orders modifying the terms of the testamentary trust based on a mediated settlement

agreement signed by all of the parties to the underlying cause and their attorneys. 1 On appeal,

Dahlman contends: (1) the probate court lacked jurisdiction to enter the order; (2) the

modifications or amendments to the trust were inconsistent with the purposes of the trust; and (3)

the probate court should have awarded sanctions because the petition was groundless and filed in

1
  The probate court signed the first order on June 12, 2013, and the second order on July 19, 2013. The second order
states that it was entered due to a question that was raised with regard to the probate court’s jurisdiction to enter the
first order based on a pending appeal. The second order states that it “ratifies and affirms” the prior order; however,
with regard to the modification to the trust, the second order states that it “amends and supersedes” the prior order.
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bad faith. In addition to asserting that the probate court’s order should be affirmed, one of the

appellees, A. Chris Heinrichs, 2 requests that this court impose sanctions against Dahlman for filing

a frivolous appeal.

                                                   BACKGROUND

         In 1986, Willa established the Peters Family Trust to which she conveyed certain mineral

interests. Under the terms of Willa’s will, the remainder of her estate was devised to the Willa

Peters Hubberd Testamentary Trust. 3 Frost National Bank is the current trustee of the Peters

Family Trust, and Falcon International Bank is the current trustee of the Hubberd Trust.

         Dahlman and Willa’s son, Lantz Hubberd, were named as the income beneficiaries of the

Hubberd Trust. The trustee was directed to pay “the entire net income from the trust estate” to

Dahlman and Lantz in equal shares and in convenient monthly or quarterly installments. The

trustee also had the discretion to distribute trust principal for the health, support, education, and

maintenance of Dahlman, Lantz, or their issue. When Lantz died in October of 2012, his son,

Michael, became the second income beneficiary in Lantz’s stead. Upon Dahlman’s death, the

Hubberd Trust will terminate, and the principal and all undistributed income will be distributed to

the four grandchildren in equal shares. 4 The Peters Family Trust distributes mineral income to the

Hubberd Trust from which a depreciation allowance is deducted before that income is distributed

to the income beneficiaries.

         A dispute between the beneficiaries resulted in litigation regarding the depreciation

allowance applicable to the mineral income distributions. 5 Falcon International Bank was also

2
  Heinrichs was the mediator instrumental in obtaining the mediated settlement agreement and is referred to in this
opinion as the mediator.
3
  This is the title used in the parties’ mediated settlement agreement. Willa’s will actually refers to the trust as the
Hubberd Trust.
4
  The other three grandchildren are Dahlman’s three daughters, Willa Yturri Graff, Frances Yturri, and Mary Sandra
Yturri.
5
  This dispute was on-going at the time of Lantz’s death, and his estate became a party to the litigation upon his death.

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sued as trustee. During the course of the litigation, the probate judge ordered an investigation into

Dahlman’s competence, resulting in a guardianship application being filed and further litigation.

This litigation included an appeal and original proceedings being filed in this court. In February

of 2013, the probate court ordered the parties to mediate their disputes. At the conclusion of a

two-day mediation held in May of 2013, all of the parties and their attorneys signed a mediated

settlement agreement.

         At the request of at least one of the beneficiaries of the Hubberd Trust, the mediator filed

a petition to modify the terms of the trust in accordance with the terms of the mediated settlement

agreement. Falcon International Bank also filed a motion to approve the mediated settlement

agreement. Dahlman filed an answer and counterclaims against the mediator, her daughters, and

their attorneys. Three hearings were held on the petition. At the first and second hearings,

Dahlman’s attorney announced “not ready” and noted Dahlman’s opposition to modifying the

trust. After confirming that all of the parties and their attorneys had signed the mediated settlement

agreement, the probate court approved the agreement and ordered the modifications to the trust

requested in the petition. Dahlman subsequently non-suited her counterclaims.

                                MEDIATOR’S STANDING TO FILE PETITION

         In her first issue on appeal, Dahlman contends the probate court lacked jurisdiction to order

the modifications to the trust because the mediator lacked standing to file the petition. 6 Dahlman

relies on section 112.054(a) of the Texas Trust Code which authorizes a court to order that the

terms of the trust be modified on the petition of a trustee or a beneficiary. TEX. PROP. CODE ANN.

§ 112.054(a) (West 2007).

6
 In the brief filed by the mediator, he makes reference to the probate court’s jurisdiction over the cause; however, the
mediator’s standing is a different issue than the probate court’s jurisdiction over the cause.

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       A.      Waiver and Standard of Review

       In its brief, Falcon International Bank raises the issue of waiver, contending Dahlman had

to plead the mediator’s lack of capacity as an affirmative defense. Standing, however, is a

component of subject matter jurisdiction, may be raised for the first time on appeal, and may not

be waived by the parties. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex.

1993); Martinez v. Estrada, 392 S.W.3d 261, 263 (Tex. App.—San Antonio 2012, pet. filed).

Moreover, in this case, Dahlman asserted that the mediator lacked standing as a plea to the

jurisdiction in her answer.

       Whether a court has subject matter jurisdiction is an issue of law, which is reviewed de

novo. Tex. Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); Martinez,
392 S.W.3d at 263. A party’s standing is determined at the time suit is filed. Tex. Ass’n of Bus.,
852 S.W.2d at 446 n.9; Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 550 (Tex.

App.—San Antonio 2011, no pet.). “In determining standing, we look to the facts alleged in the

petition, but may consider other evidence in the record if necessary to resolve the question of

standing.” Prize Energy Res., L.P., 345 S.W.3d at 550 (citing Bland Indep. Sch. Dist. v. Blue, 34
S.W.3d 547, 555 (Tex. 2000)).

       B.      Mediator as Agent of Beneficiaries

       In his petition, the mediator sought to amend and modify the provisions of the Hubberd

Trust to incorporate the provisions of the mediated settlement agreement based on the following

agreement of the trustee and beneficiaries:

              The parties will have prepared and cooperate in filing and securing a
       judgment modifying the Hubberd Trust in order to reflect the agreements to the
       administration of the Hubberd Trust as set out herein as provided by Texas Trust
       Code Section 112.054.

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Dahlman contends that because the face of the petition did not disclose that the mediator was acting

as a representative of the beneficiaries, the mediator lacked standing. As previously noted,

however, we must consider not only the pleadings, but also other evidence in the record if

necessary to resolve the question of standing. Bland Indep. Sch. Dist., 34 S.W.3d at 555; Prize

Energy Res., L.P., 345 S.W.3d at 550.

         In this case, the reporter’s record from the second hearing on the petition contains the

mediator’s statement that he was asked to prepare and file the petition by the attorneys for various

beneficiaries and the attorney representing Dahlman in the trust litigation. 7 See Banda v. Garcia,

955 S.W.3d 270, 272 (Tex. 1997) (attorney’s statements constitute evidence where statements put

party on notice that attorney is attempting to prove a factual matter). The attorney for one of the

grandchildren, Willa Graff, also stated that the beneficiaries had given the mediator permission to

file the petition on their behalf, and subsequently filed an affidavit confirming that he requested

the mediator to file the petition on behalf of his client. Similarly, the attorney for Falcon

International Bank expressed his shock that Dahlman had filed counterclaims against the mediator

for “doing what the parties asked him to do.”

         Under Rule 7 of the Texas Rules of Civil Procedure, any party to a suit may appear in

person or by an attorney of the court. TEX. R. CIV. P. 7. Because the mediator was an attorney

who was authorized to represent the beneficiaries and the trustee in filing the petition, he had

standing to file the petition. 8

7
  Dahlman was represented in the guardianship litigation by a different attorney than the attorney representing her in
the trust litigation.
8
  Dahlman contends that a conflict of interest arose when the petition was filed over her objection. The alleged conflict
of interest does not affect our standing analysis, and we question whether a conflict of interest could exist when the
evidence in the record established that one of Dahlman’s attorneys also authorized the mediator to file the petition on
Dahlman’s behalf.

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                                        MODIFICATIONS TO THE TRUST

           In her second issue, Dahlman asserts the probate court erred in ordering the modifications

because: (1) the order is inconsistent with a material purpose of the trust and she did not consent

to the modification; (2) the order modifies the trust in a manner that does not conform with Willa’s

probable intention as settlor; and (3) one of the modifications was not contained in the mediated

settlement agreement.

           A.       Modifications in Question

           The mediated settlement agreement requires both Dahlman and Michael to maintain health

and general liability insurance, authorizes the trustee to pay the premiums for such insurance out

of their share of the net income of the trust, and further provides for the withholding of income

distributions to both if they fail to provide proof of their compliance to the trustee’s satisfaction.

With regard to the general liability insurance, the following language in the petition is consistent

with the mediated settlement agreement:

           The Trustee shall pay out of Mary Hubberd Dahlman’s share of the income of the
           Trust the premiums on general liability insurance in a minimum amount of $1
           million. If Mary Hubberd Dahlman, for any reason, does not possess such
           insurance, she or the Trustee shall obtain such insurance as might be available and
           the Trustee shall pay such premiums out of Mary Hubberd Dahlman’s share of the
           income of the Trust. If Mary Hubberd Dahlman does not provide proof to the
           satisfaction of the Trustee that she is in compliance with this provision, trust income
           distributions shall be withheld until she becomes compliant with such provision. 9

With regard to health insurance, the following language in the petition is consistent with the

mediated settlement agreement:

           Michael Hubberd has health insurance through his employer. Michael Hubberd
           shall provide proof of such insurance to the Trustee on an annual basis. If at any
           time Michael Hubberd does not have his own health insurance coverage through
           his employer or otherwise, he shall obtain such other health insurance as might be
           available and the Trustee shall pay such premiums out of Michael Hubberd’s share
           of the income of the Trust. If Michael Hubberd does not provide proof to the

9
    An identical provision is also included for Michael Hubberd.

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       satisfaction of the Trustee that he is in compliance with this provision, trust income
       distributions shall be withheld until he becomes compliant with such provision.

The following language in the petition with regard to Dahlman maintaining health insurance is

consistent with the mediated settlement agreement:

       Mary Hubberd Dahlman shall apply for Medicare and a Medicare Supplemental
       Insurance policy. To the extent that there are premium payments on any such health
       insurance, the Trustee shall pay such premiums out of Mary Hubberd Dahlman’s
       share of the net income of the Trust. If Mary Hubberd Dahlman is unsuccessful,
       for any reason, in obtaining such insurance, she shall obtain such other health
       insurance as might be available and the Trustee shall pay such premiums out of
       Mary Hubberd Dahlman’s share of the income of the Trust. If Mary Hubberd
       Dahlman does not provide proof to the satisfaction of the Trustee that she is in
       compliance with this provision, trust income distributions shall be withheld until
       she becomes compliant with such provision.

Absent from the mediated settlement agreement, however, is the following language which was

included in the petition but only as to Dahlman:

       Provided, however, this provision shall not become applicable until after Mary
       Hubberd Dahlman acquires her Medicare and a Medicare Supplemental Insurance
       policy. Until that time, Mary Hubberd Dahlman shall not request any distribution
       of principal from the Trust for health or medical reasons.

       Arguably, the probate court could modify the terms of the trust even absent the mediated

settlement agreement so long as the modification was in compliance with Section 112.054;

therefore, the absence of the foregoing provision in the mediated settlement agreement did not

preclude the probate court from making the modification if it complied with Section 112.054.

       B.      Permissible Modifications under Section 112.054

       Dahlman focuses on Subsection 112.054(d) of the Trust Code which prohibits a court from

taking the action permitted by Subsection 112.054(a)(5) unless all of the beneficiaries “have

consented to the order or are deemed to have consented to the order.” TEX. PROP. CODE ANN.

§ 112.054(d) (West 2007). Subsection 112.054(a)(5) authorizes a court to order that the terms of

a trust be modified if “the order is not inconsistent with a material purpose of the trust.” Id. at

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§ 112.054(a)(5)(B). Dahlman also cites Subsection 112.054(b) which states, “The court shall

exercise its discretion to order a modification or termination under Subsection (a) in the manner

that conforms as nearly as possible to the probable intention of the settlor.” Id. at § 112.054(b).

       Although Dahlman focuses on Subsection 112.054(d), the petition to modify requested the

modifications pursuant to Subsections 112.054(a)(2) and (a)(3) of the Code.             Under these

subsections, the court is authorized to modify the terms of the trust if: (1) “because of

circumstances not known to or anticipated by the settlor, the order will further the purposes of the

trust;” or (2) “modification of administrative, nondispositive terms of the trust is necessary or

appropriate to prevent waste or avoid impairment of the trust’s administration.”               Id. at

§§ 112.054(a)(2)-(3).

       This court has previously noted that the 2005 amendment to subsection (a)(2) “liberalized

the rules governing” the modification of trusts. In re White Intervivos Trusts, 248 S.W.3d 340,

342 (Tex. App.—San Antonio 2007, no pet.) (internal quotation omitted). The new law authorized

modifications “that enhance the attainment of the settlor’s trust purposes.” Id. As another court

phrased it, “The court is permitted to modify the terms of a trust if, due to circumstances not known

to or anticipated by the settlor, compliance with the terms of the trust would defeat or substantially

impair accomplishment of the purposes of the trust.” Conte v. Ditta, 312 S.W.3d 951, 959 (Tex.

App.—Houston [1st Dist.] 2010, no pet.).

       C.      Standard of Review

       We review a probate court’s order modifying the terms of a trust under an abuse of

discretion standard. See Conte, 312 S.W.3d at 961 (holding trial court abused its discretion in

modifying terms of trust); Swantner-Carter v. Frost Nat’l Bank, No. 13-06-00545-CV, 2008 WL
3521253, at *4 (Tex. App.—Corpus Christi Aug. 7, 2008, no pet.) (stating modification of trust

reviewed for abuse of discretion) (mem. op.); TEX. PROP. CODE ANN. § 112.054(b) (West 2007)
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(stating “court shall exercise its discretion to order a modification of termination under Subsection

(a)). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner, or without

reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d
238, 241-42 (Tex. 1985).

       D.      Purposes of the Trust

       In order to determine whether the modifications of the terms of the trust were permissible

under section 112.054, we must first determine the purpose or purposes of the trust. Dahlman

contends that the purposes of the trust are: (1) to unconditionally distribute all income to the

income beneficiaries; and (2) to distribute principal as necessary to provide adequately for the

health, support, education, or maintenance of Dahlman and the four grandchildren. The appellees

note that the trust contains a spendthrift provision which indicates an intent to protect the principal

of the trust. The appellees further note that Subsection 112.054(b) expressly states, “The court

shall consider spendthrift provisions as a factor in making its decision” regarding whether a

modification “conforms as nearly as possible to the probable intention of the settlor.” TEX. PROP.

CODE ANN. § 112.054(b) (West 2007).

       In Frost Nat’l Bank of San Antonio v. Newton, the court considered a trust which, similar

to the trust in the instant case, appeared to have a dual purpose. 554 S.W.2d 149 (Tex. 1977). In

Newton, the trust arose from a will and was to terminate on the death of the last of the following

three named beneficiaries, Rexford S. Cozby, Karolen Newton, and Louise Purvis; provided,

however, the trustee had “the right, at its option, to sooner terminate said Trust in the event the

income from the trust property [ceased] to be sufficient in amount to justify the continuance of the

trust.” Id. at 151. Because Cozby, the testatrix’s husband, predeceased her, the income of the trust

(plus such portions of the principal as the trustee deemed necessary) was to be used to pay for the

support and education through college of the testatrix’s great-nephew and two great-nieces. Id. In
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the event the net income of the trust was more than was needed to pay for the support and college

education of the foregoing, the excess amount would be paid in equal shares to Purvis and Newton.

Id at 152. Upon the final termination of the trust, the property was to be distributed in equal shares

to Purvis and Newton or, if either was not living, their share would go to their then living children.

Id.

       After the last of the beneficiaries entitled to the educational benefits graduated from college

in 1971, the trustee brought a declaratory judgment action to determine whether the trust should

be terminated or should remain in effect until the last to survive of Purvis or Newton. Id. Purvis,

Newton, and their children entered into an agreement requesting that the trust be terminated

because the primary purposes of the trust had been accomplished. Id. at 153. The trustee and the

guardian ad litem for the unborn and unadopted children of Newton and Purvis asserted that “the

primary purposes of the trust have not been fulfilled because the provision for the payment of

excess income to [Newton and Purvis] is not incidental and is a continuing obligation of the Bank

as trustee.” Id. The trial court found “the trust estate was sufficient in amount to justify its

continuation,” but nonetheless ordered the trust terminated because “its primary purposes had been

accomplished and fulfilled.” Id. The intermediate appellate court affirmed. Id.

       On appeal to the Texas Supreme Court, the court first noted that none of the parties

contended that the will was ambiguous. Id. Therefore, the court asserted the “true meaning of the

will must be determined by construing the language used within the four corners of the

instrument.” Newton, 554 S.W.2d at 153. “No speculation or conjecture regarding the intent of

the testatrix is permissible where, as here, the will is unambiguous, and we must construe the will

based on the express language used therein.” Id.

       With regard to the beneficiaries’ argument that payment of the excess income to Newton

and Purvis was merely an “incidental” purpose of the trust, the court asserted:
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       To accept such a contention would require a determination of what the testatrix
       considered to be the principal purposes of the trust and what she considered only
       incidental. Such a determination would take the court beyond the express language
       of the will into the realm of conjecture and speculation, for it is by no means clear
       that the provision for excess income distribution was merely an incidental purpose
       of the testatrix. … Absent an express declaration of purpose in the instrument, a
       court cannot go beyond the face of the will to make an ad hoc and speculative
       assessment of which purposes the trustor or testator considered ‘primary’ and which
       he considered merely ‘incidental.’

Id. at 154. The court then held that the trust could not be judicially terminated on the ground that

the trust’s primary purpose had been accomplished when the trust expressly provided for its

termination upon a specified event. Id. Finally, with regard to the effect of the beneficiaries’

agreement, the court noted “the better rule of law is that beneficiaries of a trust can consent to its

termination only where all purposes of the trust have been accomplished.” Id.

       Having reviewed the unambiguous language of Willa’s will, we conclude that the trust has

two purposes: (1) to distribute the “entire net income” from the trust to Dahlman and Michael; and

(2) to provide for the health, support, education, and maintenance of Dahlman and the four

grandchildren through distributions of trust principal. The inclusion of the spendthrift provision

is an indication that Willa wanted to preserve the trust assets and prevent actions taken by the

beneficiaries from depleting those assets. Based on the holding in Newton, however, we must

consider both purposes as having equal importance in determining whether compliance with the

terms of the trust would defeat or substantially impair those purposes based on a circumstance not

anticipated by Willa. See Conte, 312 S.W.3d at 959.

       1.      Maintenance of Insurance

       Dahlman argues that Willa could have conditioned the distribution of income and principal

on her maintenance of health and general liability insurance because such insurance existed at the

time Willa created the trust and, thus was a circumstance known to her. This argument ignores

that Willa also would have needed to anticipate that Dahlman would forego the maintenance of
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such insurance. We conclude that Dahlman’s refusal to obtain health and liability insurance is a

circumstance that was not anticipated by Willa, and requiring the maintenance of such insurance

would further or enhance the attainment of the purpose of the trust to provide for the health,

support, education, and maintenance of Dahlman and the grandchildren. See In re White Intervivos

Trusts, 248 S.W.3d at 342. Stated differently, Dahlman’s failure to maintain such insurance would

substantially impair the accomplishment of the purpose to provide for the health, support,

education, and maintenance of Dahlman and the grandchildren. See Conte, 312 S.W.3d at 959.

Accordingly, the probate court did not abuse its discretion in modifying the trust to require the

maintenance of the insurance based on Subsection 112.054(a)(2).

       2.      Payment of Premiums and Withholding of Distributions

       Requiring that the premiums for the insurance be paid from the trust income would further

the purpose of the trust to provide for the health, support, education, and maintenance of the

grandchildren by preserving the trust principal; however, it would not further the purpose of

distributing the “entire net income” from the trust to Dahlman and Michael. Similarly, withholding

principal distributions until the insurance is obtained would further the purpose of the trust to

provide for the health, support, education, and maintenance of the grandchildren by preserving the

trust principal; however, it would not further the purpose of providing for Dahlman’s health,

support, education, and maintenance. Because Newton precludes us from elevating one purpose

over another, the payment of the premiums from the trust income and the withholding of

distributions from principal cannot be upheld under Subsection 112.054(a)(2).          Moreover,

withholding the income distributions would not further any purpose since the distribution of the

income does not affect the principal of the trust and withholding the income would be contrary to

the purpose of distributing the “entire net income” from the trust. Accordingly, neither requiring

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that the premium payments be paid from the trust income nor the withholding of distributions of

income or principal are authorized by Subsection 112.054(a)(2).

       The withholding of income distributions and the restrictions on requesting principal

distributions would prevent waste to the trust principal by imposing penalties for the failure to

obtain the requisite insurance. Similarly, requiring that the premium payments be paid from trust

income would prevent waste of the trust principal. However, the trust provisions pertaining to the

distribution of the “entire net income” and principal are dispositive terms, as opposed to

“administrative, nondispositive” terms. Therefore, these modifications are not authorized by

Subsection 112.054(a)(3).

       Finally, although all of the parties agreed to the modifications as required by Subsection

(d), withholding principal and income distributions and requiring that the premiums be paid from

trust income are “inconsistent with a material purpose of the trust.” Therefore, these modifications

are not authorized by Subsection 112.054(a)(5)(B).

       Because the modifications of the trust requiring premiums to be paid from trust income

and permitting the withholding of distributions of income and principal are not authorized by

Section 112.054, the probate court abused its discretion in granting the portions of the petition

seeking these modifications.

       E.      Estoppel by Benefits Accepted

       The enforcement of the mediated settlement agreement is a separate issue from whether

the probate court had the authority to modify the terms of the trust. Although Dahlman could be

estopped from defending against the enforcement of the mediated settlement agreement based on

her acceptance of benefits thereunder, whether the court was authorized to modify the terms of the

trust to incorporate the parties’ agreement is a separate issue which is governed by section 112.054.

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       The cases cited by Falcon International Bank address a party being precluded from

challenging a judgment if the party accepted benefits under the judgment. See Smith v. Texas

Commerce Bank-Corpus Christi, N.A., 822 S.W.2d 812, 814 (Tex. App.—Corpus Christi 1992,

writ denied); Manville v. Garrison, 538 S.W.2d 819, 820 (Tex. Civ. App.—Houston [14th Dist.]

1976, writ ref’d n.r.e.). In this case, the provisions of the mediated settlement agreement pursuant

to which Dahlman received the payments were not incorporated into the order modifying the terms

of the trust. Therefore, the authority cited by Falcon International Bank is not applicable.

       Even if we were to consider the doctrine of quasi-estoppel, we conclude Dahlman cannot

be estopped from the position she is taking. Quasi-estoppel prevents “a party from asserting, to

another’s disadvantage, a right inconsistent with a position previously taken.” Lopez v. Munoz,

Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). “The doctrine applies when it would

be unconscionable to allow a person to maintain a position inconsistent with one to which he

acquiesced, or from which he accepted a benefit.” Id. Even under this doctrine, Dahlman cannot

be precluded from arguing that the probate court was without authority to order modifications to

the trust that were in violation of section 112.054; in simplest terms, the modifications were either

authorized by section 112.054 or they were not.          We have determined that some of the

modifications were not authorized.

                                SANCTIONS AGAINST MEDIATOR

       Dahlman contends that the probate court should have imposed sanctions against the

mediator because he filed the petition in the absence of standing and requested modifications

contrary to the purposes of the trust and the intention of the settlor. We review a trial court’s

rulings on sanctions under an abuse of discretion standard. Low v. Henry, 221 S.W.3d 609, 614

(Tex. 2007). Because we hold that the mediator had standing and that some of the requested

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modifications were permissible, the probate court did not abuse its discretion in denying the

sanctions.

       Even if we had held to the contrary, however, the probate court still would not have abused

its discretion in denying the sanctions. Sanctions are not appropriate in the absence of a showing

of bad faith. See TEX. R. CIV. P. 13 (allowing sanctions to be imposed for a pleading that is

groundless and brought in bad faith). “Improper motive is an essential element of bad faith.”

Robson v. Gilbreath, 267 S.W.3d 401, 407 (Tex. App.—Austin 2008, pet. denied). “Bad faith is

not simply bad judgment or negligence, but means the conscious doing of a wrong for dishonest,

discriminatory, or malicious purpose.” Id.; see also Harrison v. Harrison, 363 S.W.3d 859, 863

(Tex. App.—Houston [14th Dist.] 2012, no pet.). In this case, no evidence was presented to

support a finding of bad faith. To the contrary, the evidence conclusively established the absence

of bad faith as a matter of law based on the provisions in the mediated settlement agreement and

the authority granted to the mediator by the beneficiaries and the trustee.

                                      APPELLATE SANCTIONS

       The mediator requests that we impose appellate sanctions on Dahlman. This court is

authorized to impose sanctions if it determines that an appeal is frivolous. TEX. R. APP. P. 45.

“Whether to grant sanctions for a frivolous appeal is a matter of discretion that this court exercises

with prudence and caution and only after careful deliberation in truly egregious circumstances.”

Gard v. Bandera County Appraisal Dist., 293 S.W.3d 613, 619 (Tex. App.—San Antonio 2009,

no pet.). “Under Rule 45, recovery is authorized if an appeal is objectively frivolous and injures

an appellee.” Id. “To determine whether an appeal is objectively frivolous, we review the record

from the standpoint of the advocate and decide whether the advocate had reasonable grounds to

believe the case could be reversed.” Glassman v. Goodfriend, 347 S.W.3d 772, 782 (Tex. App.—

Houston [14th Dist.] 2011, pet. denied). “If an appellant’s argument on appeal fails to convince
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us but has a reasonable basis in law and constitutes an informed, good-faith challenge to the trial

court’s judgment, sanctions are not appropriate.” Gard, 293 S.W.3d at 619.

       Although we can sympathize with the mounting frustrations of all involved and agree that

the ongoing barrage of litigation and family discord are not circumstances Willa could have

anticipated, in light of our holdings in this opinion, we conclude the appeal was not frivolous.

                                          CONCLUSION

       The portions of the probate court’s orders adding the provisions in Article VI, Paragraphs

A-3, A-4, A-5, and A-6 to require Dahlman and Michael Hubberd to maintain health and general

liability insurance are affirmed. The portions of the probate court’s orders adding the provisions

in Article VI, Paragraphs A-3, A-4, A-5, and A-6 to require payment of the premiums for such

insurance from the trust income and authorizing the withholding of distributions of income and

principal are reversed, and judgment is rendered that those modifications are not authorized by

section 112.054 of the Code.

                                                  Catherine Stone, Chief Justice

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