Opinion=20
issued August 31, 2006
=
In The
Court of Appeals
For The
First District of =
Texas
NO. 01-05-00418-CV
__________
ROMAN =
MERKER=20
ALPERT AND RENEE PICAZO, NEXT FRIEND OF DANIEL ALPERT,=20
Appellants
V.
KAREN =
S. GERSTNER,=20
INDIVIDUALLY AND AS RECEIVER FOR THE ROMAN MERKER ALPERT TRUST, =
THE DANIEL=20
JAMES ALPERT TRUST, AND THE ROBERT ALPERT 1996 CHILDREN=E2=80=99S =
TRUST, AND DAVIS=20
RIDOUT JONES & GERSTNER, L.L.P., Appellees
On =
Appeal from=20
the Probate Court No. 2
Harris =
County,=20
Texas
Trial =
Court Cause=20
No. 305,232-404
O P I =
N I O=20
N
<=
/SPAN>Appellants,=20
Roman Merker Alpert and Renee Picazo, next friend of Daniel Alpert =
(collectively, =E2=80=9Cthe beneficiaries=E2=80=9D), challenge the =
trial court=E2=80=99s rendition=20
of summary judgment in favor of appellees, Karen S. Gerstner=20
(=E2=80=9CGerstner=E2=80=9D), individually and as=20
receiver for the Roman Merker Alpert Trust, the Daniel James =
Alpert Trust,=20
and the Robert Alpert 1996 Children=E2=80=99s Trust (the =
=E2=80=9CTrusts=E2=80=9D), and Davis=20
Ridout Jones & Gerstner, L.L.P. (=E2=80=9CDavis =
Ridout=E2=80=9D), in the=20
beneficiaries=E2=80=99 suit against Gerstner and Davis Ridout for =
breach of=20
fiduciary duty. In three =
issues, the=20
beneficiaries contend that the district court erred in ordering =
the case=20
transferred to the statutory probate court and that the probate =
court=20
erred in granting appellees=E2=80=99 summary judgment motion on =
the grounds that=20
their claims against Gerstner are barred by judicial immunity and =
that=20
Davis Ridout did not owe them a fiduciary duty.
<=
/SPAN>We=20
reverse and remand the case for proceedings consistent with this=20
opinion.
&=
nbsp; &n=
bsp; &nb=
sp;Factual and Procedural=20
Background
&nbs=
p;The=20
Alperts and Picazo are beneficiaries of three Trusts: the Roman =
Merker=20
Alpert Trust, the Daniel James Alpert Trust, and the Robert Alpert =
1996=20
Children=E2=80=99s Trust. Prior to the filing of the instant suit, =
a dispute arose=20
regarding who was the proper trustee of the Trusts. Mark Riley, a=20
non-party to this appeal, filed suit in Harris County Statutory =
Probate=20
Court Number 2 (referred to hereafter as =E2=80=9Cthe underlying=20
suit=E2=80=9D), asserting that he was the trustee of =
the=20
Trusts. ![3DFootnote](3D"")
The=20
beneficiaries intervened in the underlying suit, seeking either a=20
declaration that Riley was not the trustee of the Trusts or an =
order=20
removing Riley as trustee.
<=
/SPAN>On=20
January 14, 2000, pursuant to section 64.001 of the Texas Civil =
Practice=20
and Remedies Code,
the=20
probate court, on its own motion, appointed Gerstner as receiver =
for each=20
of the Trusts =E2=80=9Cso that there will be no loss or material =
injury to the=20
Trust[s] pending the determination of the proper trustee of the =
Trust[s]=20
and the resolution of this suit.=E2=80=9D
The orders appointing Gerstner =
provided:
. . . .=20
&nbs=
p;(iii) that=20
[the Receiver] shall take charge and keep possession of all =
property of=20
the Trust[s] in compliance with section 64.031 of the Texas Civil =
Practice=20
& Remedies Code;
&nbs=
p;(iv) that,=20
pursuant to section 64.031(5), the Receiver shall have the same =
powers and=20
duties as a trustee appointed pursuant to the terms of the =
Indenture of=20
Trust creating the Trust[s], specifically including, but not =
limited to,=20
the power to invest the properties of the Trust[s], to sell =
properties of=20
the Trust[s], to pay debts and expenses attributable to the =
Trust[s], to=20
file income tax returns and, as appropriate, amended income tax =
returns=20
for the Trust[s], to pay any and all taxes due with respect to the =
Trust[s], and to receive any and all tax refunds due the=20
Trust[s];
&nbs=
p;(v) that=20
the Receiver shall be entitled to exercise the powers of a trustee =
granted=20
above without prior approval by this Court or any party to this=20
litigation;
&nbs=
p;(vi) that=20
the Receiver shall maintain appropriate books and records for the =
Trust[s]=20
and shall provide periodic reports . . . ;
&nbs=
p;(vii) that=20
the Receiver shall, immediately upon qualification, have the right =
and=20
power to take charge and keep possession of any property of the =
Trust[s],=20
including, but not limited to, any property of the Trust[s] held =
in an=20
account at any bank, brokerage firm, or other financial =
institution . . .=20
;
&nbs=
p;.=20
. . .
Shortly=20
after appointing Gerstner, the probate court approved =
Gerstner=E2=80=99s=20
application to retain her law firm, Davis Ridout, =E2=80=9Cto =
assist the Receiver=20
in the administration of her duties, and as a means to minimize =
the cost=20
of [the Receiver=E2=80=99s] services to the Trusts.=E2=80=9D =
&nbs=
p;On=20
July 25, 2003 and November 7, 2003, the probate court entered =
orders=20
accepting Gerstner=E2=80=99s resignation as receiver of the =
Trusts, subject to the=20
court=E2=80=99s approval of Gerstner=E2=80=99s final accountings. =
Gerstner also requested=20
a judicial discharge. The beneficiaries opposed Gerstner=E2=80=99s =
requests on the=20
grounds that the probate court did not have jurisdiction to rule =
on=20
Gerstner=E2=80=99s liability and that Gerstner acted in direct =
violation of the=20
probate court=E2=80=99s directives. The beneficiaries also =
objected to the fees=20
sought by Gerstner and =E2=80=9Cthe other professionals.=E2=80=9D =
&nbs=
p;In=20
May 2004, the beneficiaries filed in district court the instant =
suit=20
against Gerstner and Davis Ridout for breach of fiduciary duty, =
alleging=20
that =E2=80=9C[d]uring the more than three years that Gerstner was =
receiver=E2=80=9D for=20
the Trusts and that =E2=80=9Cas a result of Gerstner=E2=80=99s =
failure to take any action=20
to protect the stock portfolio assets of the Trusts, including, =
but not=20
limited to, her failure to seek and/or take advice regarding=20
diversification of, purchasing and selling the stock portfolios or =
otherwise make any prudent changes in stock investments of the =
Trusts,=E2=80=9D=20
the stock portfolios of the Trusts declined in value from =
approximately=20
$600,000 to $13,000. They also alleged that Gerstner =
=E2=80=9Cbreached her=20
fiduciary duties resulting from her acceptance of her position as =
Receiver=20
by failing to preserve and protect the assets of the =
Trusts=E2=80=9D and =E2=80=9Cby=20
failing to exercise the powers of a trustee as required by the =
order.=E2=80=9D=20
Specifically, the beneficiaries alleged that Gerstner =
=E2=80=9Cfailed to act=20
prudently with respect to decisions regarding the merger of one of =
the=20
companies owned by the Trusts,=E2=80=9D =E2=80=9Cfailed to collect =
monies owed to the=20
Trusts,=E2=80=9D and failed to provide the beneficiaries with =
quarterly reports.=20
&nbs=
p;In=20
regard to Davis Ridout, the beneficiaries alleged that Davis =
Ridout=20
=E2=80=9Cperformed Receivership duties in conjunction with =
Gerstner=E2=80=9D and failed to=20
monitor Gerstner=E2=80=99s activities. They also alleged that =
Davis Ridout, =E2=80=9Cas=20
attorney for the Trusts, breached its fiduciary duties=E2=80=9D to =
the=20
beneficiaries =E2=80=9Cby failing to act with the utmost fairness =
and in good=20
faith, failing to inform [the beneficiaries] of all material facts =
and=20
provide full disclosure, charging the Trusts for unnecessary legal =
fees=20
and failing to act with loyalty and good faith in controlling and=20
monitoring the activities as Gerstner as =
Receiver.=E2=80=9D
&nbs=
p;In=20
response to the petition filed in district court, appellees filed =
a motion=20
to transfer venue, a plea in abatement, and an answer. In their =
motion to=20
transfer venue, appellees stated that they reserved the right to =
seek=20
transfer of the case to the statutory probate court based on local =
rules,=20
Chapter 15 of the Texas Civil Practice & Remedies =
Code,=20
and=20
=E2=80=9Cother rules.=E2=80=9D In an amended plea in abatement, =
appellees=20
requested that the district court =E2=80=9Cabate and dismiss [the =
beneficiaries=E2=80=99]=20
suit against them because these claims should only be asserted =
within [the=20
probate court].=E2=80=9D Appellees asserted that abatement was =
mandatory because=20
(1) the beneficiaries had not fulfilled a condition precedent in =
bringing=20
their suit in that they had not obtained permission from the =
probate court=20
to sue Gerstner in her individual capacity in the district court, =
and (2)=20
the probate court had dominant jurisdiction over the claims =
asserted in=20
the district court. Alternatively, appellees asserted that =
permissive=20
abatement was appropriate based on concerns of =E2=80=9Ccomity, =
convenience, and=20
the necessity for orderly procedure in the trial of contested =
issues.=E2=80=9D=20
<=
/SPAN>In=20
their response to appellees=E2=80=99 plea, the beneficiaries =
asserted that it was=20
not necessary to obtain the permission of the probate court to sue =
Gerstner in district court and that the district court had =
dominant=20
jurisdiction over the breach of fiduciary claim because it was =
filed first=20
in that court. The district court never ruled on =
appellees=E2=80=99 plea in=20
abatement. Instead, on August 20, 2004, the district court entered =
an=20
order transferring the case to the probate court. The district =
court=E2=80=99s=20
order did not explain the basis or the authority for the transfer =
and did=20
not discuss any of the arguments presented in appellees=E2=80=99 =
plea in abatement=20
or in the beneficiaries=E2=80=99 responses to the plea in =
abatement.=20
<=
/SPAN>Following=20
transfer, the lawsuit originally filed in district court appears =
to have=20
proceeded on a =E2=80=9Csub-docket=E2=80=9D of the probate court. =
The record indicates=20
that the probate court subsequently created a new cause number and =
assigned to that number =E2=80=9Call claims brought by or against =
the receiver=20
relating to the performance of her duties as the receiver or for =
fees and=20
expenses of the receiver as well as any professional fees incurred =
on=20
behalf of the receiver.=E2=80=9D
<=
/SPAN>After=20
the district court transferred the suit to the probate court, =
appellees=20
filed a summary judgment motion in the probate court suit, =
contending that=20
any claims asserted against Gerstner for actions taken by her as =
receiver=20
for the Trusts were barred by judicial immunity. Appellees further =
contended that, to the extent the beneficiaries asserted that =
Davis Ridout=20
acted as a receiver, judicial immunity also applied to bar those =
claims.=20
Finally, appellees argued that any claims against Davis Ridout for =
breach=20
of fiduciary duty failed as a matter of law because =E2=80=9Cno =
fiduciary duty=20
existed.=E2=80=9D Appellees attached to their summary judgment =
motion the=20
affidavit of Gerstner, in which she testified that the probate =
court=20
appointed her as the receiver for the Trusts, that she served as =
the=20
receiver until late 2003, that during this time =E2=80=9Cthe =
[c]ourt, through=20
[her], controlled the Trusts,=E2=80=9D that she =E2=80=9Cwas =
granted authority by [the]=20
[c]ourt to hire [her] former law firm, [Davis Ridout], as [her] =
attorneys=20
related to [her] activities as Receiver,=E2=80=9D and that in 2003 =
she and Davis=20
Ridout resigned from their =E2=80=9Crespective roles . . . subject =
to the approval=20
of the final accountings and discharge=E2=80=9D by the probate =
court.=E2=80=9D=20
<=
/SPAN>The=20
beneficiaries filed two responses to appellees=E2=80=99 summary =
judgment motion.=20
They argued that Gerstner was not protected by judicial immunity =
because=20
the claims against Gerstner were based on her failure to perform =
her=20
duties and obligations as a trustee for the Trusts, not on her =E2=80=9Cjudicial =
functions.=E2=80=9D The=20
beneficiaries also argued that Davis Ridout owed them fiduciary =
duties.=20
After a hearing, the trial court granted appellees=E2=80=99 =
summary judgment=20
motion and struck certain evidence presented by the beneficiaries. =
The=20
trial court also severed the breach of fiduciary duty claims, =
making the=20
trial court=E2=80=99s order as to those claims final and=20
appealable.
Transfer
<=
/SPAN>In=20
their first issue, the beneficiaries contend that the district =
court erred=20
in ordering the case transferred to the probate court, the =
transfer order=20
should be vacated, and this case should be returned to the =
district court=20
for consideration of the plea in abatement or, as necessary, the =
merits.=20
The beneficiaries note that transfer of a case is not a proper =
remedy for=20
a plea in abatement and that there is no authority supporting the =
district=20
court=E2=80=99s transfer of the case.
They assert that the statutes and rules =
cited in=20
appellees=E2=80=99 motion to transfer venue do not authorize the =
district court=E2=80=99s=20
transfer of the case to the probate court.
<=
/SPAN>Appellees=20
argue that the beneficiaries =E2=80=9Cwaived any issues related to =
the transfer of=20
this case from the district court to the probate court because =
they failed=20
to make an objection, request, or motion to the district court or =
probate=20
court stating the grounds of their complaint.=E2=80=9D =
In response, the beneficiaries emphasize =
our=20
sister court=E2=80=99s pronouncement in Polk v. =
Southwest Crossing=20
Homeowners Ass=E2=80=99n, that =E2=80=9C[i]f a=20
district court transfers a case that substantively does not =
qualify for=20
transfer, the court that receives the improperly transferred case =
lacks=20
jurisdiction and the error is reversible on appeal.=E2=80=9D 165 =
S.W.3d 89, 94=20
(Tex. App.=E2=80=94Houston [14th Dist.] 2005, pet. =
denied). <=
/SPAN>We=20
agree that an order transferring a case that falls outside the=20
jurisdictional limits of the receiving court would be reversible =
error,=20
regardless of whether a party made a timely complaint concerning =
the=20
transfer. Aternatively, =
appellees=20
argue that the district court did not err in transferring the case =
because=20
=E2=80=9Ctransfer was proper under the district court=E2=80=99s =
broad discretion,=E2=80=9D that=20
transfers between district courts and statutory county courts are=20
permissible, and that, under the pertinent local rule, any case =
may be=20
transferred from one court to another. =
<=
/SPAN>The Texas Constitution and the Texas =
Rules of=20
Civil Procedure expressly provide for the transfer of cases from =
one=20
district court to another district court. Section 11 of article V =
of the=20
Texas Constitution provides that =E2=80=9C[d]istrict judges may =
exchange=20
districts, or hold courts for each other.=E2=80=9D Tex. Const. art. V, =
=C2=A7 11. Texas=20
Rule of Civil Procedure 330(e) states that =E2=80=9C[w]here in =
such county there=20
are two or more district courts having civil jurisdiction, the =
judges of=20
such courts may, in their discretion, exchange benches or =
districts from=20
time to time, and may transfer cases and other proceedings from =
one court=20
to another.=E2=80=9D Tex. =
R. Civ. P.=20
330(e). Accordingly, Texas courts have concluded that =
=E2=80=9C[t]rial=20
courts have broad discretion to exchange benches or transfer =
cases.=E2=80=9D In=20
re Houston Lighting & Power Co., 976 S.W.2d 671, 672 (Tex. =
1998)=20
(citing European Crossroads=E2=80=99 Shopping Ctr., Ltd. v. =
Criswell, 910=20
S.W.2d 45, 52 (Tex. App.=E2=80=94Dallas 1995, writ denied)). =
Moreover, a party=20
does not have a protected proprietary interest in having its case =
resolved=20
by a particular district judge or court within the county of =
filing.=20
See Polk, 165 S.W.3d at 93; In re Rio Grande Valley Gas =
Co.,=20
987 S.W.2d 167, 173 (Tex. App.=E2=80=94Corpus Christi 1999, no =
pet.);=20
Criswell, 910 S.W.2d at 51. However, a trial court=E2=80=99s =
discretion to transfer=20
cases is not unlimited. In re=20
Rio Grande Valley Gas Co., 987 S.W.2d at=20
176. =20
<=
/SPAN>Section 74.093 of the Texas Government =
Code=20
provides that district and =
statutory=20
county court judges shall adopt local rules of administration =
providing=20
for, among other things, the assignment, docketing, and transfer =
of cases,=20
subject to the jurisdictional limitations of the district courts =
and=20
statutory county courts.
Tex.
Gov=E2=80=99t Code Ann. =
=C2=A7 74.093 (Vernon=20
2005); see also =
Polk,=20
165 S.W.3d at 93 (=E2=80=9CCounties may adopt local rules to =
further govern the=20
transfer of cases from one district court to another if they are =
not=20
inconsistent=E2=80=9D with the rules.);=20
In re Stark, =
126 S.W.3d=20
635, 639 (Tex. App.=E2=80=94Beaumont 2004, orig. proceeding [mand. =
denied]) (=E2=80=9CDistrict and statutory county =
court judges in=20
each county of this state may adopt local rules of administration =
that=20
provide for the transfer of all cases, subject to jurisdictional=20
limitations of those courts.=E2=80=9D); In=20
re Rio Grande Valley Gas Co., 987 S.W.2d at 176 =
(=E2=80=9CDistrict courts are=20
statutorily mandated to adopt local rules of administration which =
provide=20
for rules governing transfer of =
cases.=E2=80=9D). =
Section=20
74.093 further provides that =E2=80=9C[r]ules relating to the =
transfer of cases or=20
proceedings shall not allow the transfer of cases from one court =
to=20
another unless the cases are within the jurisdiction of the court =
to which=20
it is transferred.=E2=80=9D Tex. Gov=E2=80=99t Code Ann.=20
=C2=A7 =
74.093.=20
=
=
Based=20
on these provisions of the Government Code, courts have held that=20
a district court, =
where=20
authorized by a local rule, may transfer a case to a statutory =
county=20
court when that court has jurisdiction over the subject matter of =
the=20
dispute. In re Siemens Corp., 153 S.W.3d 694, 697 (Tex. =
App.=E2=80=94Dallas=20
2005, no pet.) (=E2=80=9CSection 74.093 authorizes the adoption of =
local rules of=20
administration providing for the transfer of cases from district =
courts in=20
Dallas County to statutory county courts in Dallas =
County.=E2=80=9D); see also=20
In re Stark, 126 S.W.3d at 639 (holding that section 74.093 =
authorizes=20
transfers between district court and statutory county courts of =
county=20
when authorized by local rules).=20
<=
/SPAN>Local rule 3.2.5 of the Harris County =
District=20
Courts further provides:
Agreement: Any case may be transferred =
from one=20
court to another court by written order of the Administrative =
Judge of the=20
Civil Trial Division or by written order of the judge of the court =
from=20
which the case is transferred; provided, however, that in the =
latter=20
instance the transfer must be with the written consent of the =
court to=20
which the case is transferred.
Harris=20
(Tex.) Civ. Dist. Ct. Loc. R. 3.2.5.
The beneficiaries assert that =
this rule=20
does not expressly authorize a transfer of a case from a district =
court to=20
a statutory probate court. They also note that local rule 3.1 =
requires=20
that a case filed in the civil trial division =E2=80=9Cshall be =
assigned randomly=20
to the docket of one of the courts in that Division=E2=80=9D and =
that the case=20
remains on that court=E2=80=99s docket unless transferred =
=E2=80=9Cto another court by=20
written order of the Administrative Judge of the Civil Trial =
Division or=20
by written order of the judge of the court from which the case is=20
transferred.=E2=80=9D See id.; Harris (Tex.) Civ. Dist. Ct. =
Loc. R.=20
3.1. The =
beneficiaries=20
argue that, because rule 3.1 limits the assignment of cases filed =
in the=20
civil trial division to a civil district court, rather than a =
statutory=20
county court or a statutory probate court, transfers to =
=E2=80=9Canother court=E2=80=9D=20
pursuant to rule 3.2.5 are similarly limited to a district court =
rather=20
than to a statutory county court.=20
<=
/SPAN>That=20
interpretation of rule 3.2.5, however, would impose an unstated =
limitation=20
on the scope of a district court=E2=80=99s authority to transfer a =
case when=20
appropriate. Rule 3.2.5 expressly provides for the transfer of any =
case=20
=E2=80=9Cfrom one court to another court,=E2=80=9D either by =
written order of the=20
administrative judge or by written order of the judge of the court =
from=20
which the case is transferred. The local rule=E2=80=99s only =
express requirements=20
are that a district court must enter a written order transferring =
the=20
case, and it must obtain the written consent of the court to which =
the=20
case is being transferred.
<=
/SPAN>Although the district court here entered =
a written=20
order transferring the lawsuit to the probate court, the record =
does not=20
contain the probate court=E2=80=99s written consent to the =
transfer. However, as=20
noted by our sister court in Polk, the requirement for written consent is =
procedural,=20
not substantive, and =E2=80=9Ca failure to comply with [a] local =
rule=E2=80=99s=20
procedural requirement does not deprive a court of its=20
jurisdiction.=E2=80=9D 165 S.W.3d at 94. Accordingly, we hold that the district =
court did=20
not err in ordering the case transferred to the probate court and =
deny the=20
beneficiaries=E2=80=99 request to vacate the transfer =
order.
<=
/SPAN>We overrule the beneficiaries=E2=80=99 =
first=20
issue.
Judicial=20
Immunity
<=
/SPAN>In=20
their second issue, the beneficiaries contend that, as a receiver =
with all=20
the powers and benefits of a trustee, Gerstner is not judicially =
immune=20
from their breach of fiduciary duty claim. The beneficiaries =
assert that a=20
receiver appointed to act as a fiduciary is not performing a =
normal=20
judicial function and that providing Gerstner with immunity is not =
justified by overriding policy considerations. The beneficiaries =
also=20
reject, as too simplistic, a rule that would render all =
court-appointed=20
receivers absolutely immune from all liability for conduct taken =
during=20
the course of their receivership appointment.
<=
/SPAN>To=20
prevail on a summary judgment motion, a movant has the burden of =
proving=20
that it is entitled to judgment as a matter of law and that there =
is no=20
genuine issue of material fact. Tex. R. Civ. P. 166a(c); =
Cathey=20
v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). We may affirm a =
summary=20
judgment only when the record shows that a movant has disproved at =
least=20
one element of each of the plaintiff=E2=80=99s claims or has =
established all of=20
the elements of an affirmative defense as to each claim. Am. =
Tobacco=20
Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). We must =
accept as=20
true evidence in favor of the nonmovant and indulge every =
reasonable=20
inference and resolve all doubts in favor of the nonmovant. =
Cathey,=20
900 S.W.2d at 341. When, as in this case, a defendant moves for =
summary=20
judgment based on its own affirmative defense, the defendant has =
the=20
burden of proving each element of its defense as a matter of law. =
See=20
Montgomery v. Kennedy, 669 S.W.2d 309, 310=E2=80=9311 (Tex. =
1984). A summary=20
judgment must stand or fall on the grounds expressly presented in =
the=20
motion. McConnell v. Southside Indep. Sch. Dist., 858 =
S.W.2d 337,=20
339=E2=80=9341 (Tex. 1993).
<=
/SPAN>An=20
officer of a court who is =
entitled to=20
the protection of derived judicial immunity =E2=80=9Creceives the =
same immunity as=20
a judge acting in his or her official judicial =
capacity=E2=80=94absolute immunity=20
from liability for judicial acts performed within the scope of=20
jurisdiction.=E2=80=9D Dallas County v. Halsey, 87 S.W.3d =
552, 554 (Tex.=20
2002). The policy reasons for judicial immunity, to protect both =
the=20
individual judge as well as the public=E2=80=99s interest in an =
independent=20
judiciary, =E2=80=9Care =
also implicated when=20
a judge delegates or appoints another person to perform services =
for the=20
court or when a person otherwise serves as an officer of the =
court.=E2=80=9D=20
Id. In such a case, =E2=80=9Cthe immunity attaching to the =
judge follows=20
the delegation, appointment, or court employment,=E2=80=9D and the =
person=20
appointed to perform services for the court or serving as an =
officer of=20
the court =E2=80=9Calso =
enjoys absolute=20
immunity, known as derived judicial immunity.=E2=80=9D =
Id. The=20
policy underlying derived judicial immunity =E2=80=9Cguarantee[s] =
an independent,=20
disinterested decision-making process=E2=80=9D and =
=E2=80=9Cprevent[s] the harassment and=20
intimidation that might otherwise result if disgruntled litigants =
could=20
vent their anger by suing either the person who presented the =
decision=20
maker with adverse information, or the person or persons who =
rendered an=20
adverse opinion.=E2=80=9D Delcourt v. Silverman, 919 S.W.2d =
777, 782 (Tex.=20
App.=E2=80=94Houston [14th Dist.] 1996, writ denied).
<=
/SPAN>Texas=20
courts use a functional approach in determining whether a person =
is=20
entitled to the protection of derived judicial immunity. See=20
Halsey, 87 S.W.3d at 554=E2=80=9357;=20
B.K. v. Cox, 116 S.W.3d 351, 357 (Tex. App.=E2=80=94Houston =
[14th Dist.]=20
2003, no pet.); Delcourt, 919 S.W.2d at 782; Ramirez v. =
Burnside=20
& Rishebarger, L.L.C., No. 04-04-00160-CV, 2005 WL 1812595 =
(Tex.=20
App.=E2=80=94San Antonio Aug. 3, 2005, no pet.) (memo =
op.). This approach focuses on whether the =
person=20
seeking immunity is =E2=80=9Cintimately associated with the =
judicial process and=20
if that person exercises discretionary judgment comparable to that =
of the=20
judge.=E2=80=9D Halsey, 87 S.W.3d at 554 (citing Delcourt, 919 S.W.2d at =
782).=20
Officers of the court who are integral parts of the judicial =
process,=20
=E2=80=9Csuch as court clerks, law clerks, bailiffs, constables =
issuing writs, and=20
court-appointed receivers and trustees are entitled to judicial =
immunity=20
if they actually function as an arm of the court.=E2=80=9D =
Delcourt,=20
919 S.W.2d at 781 (emphasis added); see also Byrd v. =
Woodruff, 891=20
S.W.2d 689, 708 (Tex. App.=E2=80=94Dallas 1994, writ =
dism=E2=80=99d by agrm.) (stating=20
that =E2=80=9Cjudicial officers granted absolute immunity, such as =
court clerks,=20
law clerks, bailiffs, constables issuing writs, and =
court-appointed=20
receivers and trustees,=E2=80=9D are accountable to appointing =
court and act at=20
discretion of appointing court).=20
In short, we look at the =
nature of=20
the function performed, not the identity of the actor, and =
consider=20
=E2=80=9Cwhether the court officer=E2=80=99s conduct is like that =
of the delegating or=20
appointing judge.=E2=80=9D Halsey, 87 S.W.3d at 555. =
Whether a court-appointed receiver with =
powers=20
similar to those of Gerstner is entitled to derived judicial =
immunity for=20
the performance of those powers is one of first impression. =
Accordingly,=20
we consider how Texas courts have applied the functional approach =
in a=20
number of contexts.
<=
/SPAN>In=20
Halsey, the supreme court addressed whether a court =
reporter was=20
absolutely immune from liability for errors committed in the =
preparation=20
of a court reporter=E2=80=99s record. 87 S.W.3d at 553. The county =
sued the=20
reporter seeking to recover its payment to her. Id. The =
supreme=20
court held that =E2=80=9Cbecause court reporters do not engage in =
a discretionary=20
function or exercise judgment comparable to that of a judge while=20
preparing a reporter=E2=80=99s record, they are not entitled to =
derived judicial=20
immunity for that function.=E2=80=9D Id. The court noted =
that preparation=20
of the record did =E2=80=9Cnot necessitate the use of discretion, =
but is more in=20
the nature of a ministerial or administrative task.=E2=80=9D =
Id. at 557.=20
<=
/SPAN>In=20
Clements v. Barnes, the supreme court recognized that a=20
court-appointed interim bankruptcy trustee was entitled to derived judicial =
immunity. 834=20
S.W.2d 45, 46 (Tex. 1992). =
The=20
trustee, who had been appointed by a bankruptcy court, was alleged =
to have=20
wrongfully claimed ownership of some property and tortiously =
interfered=20
with the sale the property. Id. Noting that other courts =
had held=20
that bankruptcy trustees function as =E2=80=9Carms of the =
court=E2=80=9D and are immune=20
from liability for actions grounded in their conduct as trustees, =
the=20
court held that the trustee was protected from liability by =
derived=20
judicial immunity. Id. The court further stated that a =
trustee=20
loses derived judicial immunity only when the trustee acts in =
=E2=80=9Cthe clear=20
absence of all her jurisdiction=E2=80=9D and =E2=80=9Coutside the =
scope of her authority.=E2=80=9D=20
Id.; see also City of Houston v. West Capital Fin. =
Servs.=20
Corp., 961 S.W.2d 687, 689 (Tex. App.=E2=80=94Houston [1st =
Dist.] 1998, pet.=20
dism=E2=80=99d w.o.j.) (=E2=80=9CJudges enjoy absolute judicial =
immunity from liability=20
for judicial acts, no matter how erroneous the act or how evil the =
motive,=20
unless the act is performed in the clear absence of all=20
=
jurisdiction.=E2=80=9D). &nbs=
p; In B.K., our sister court =
considered=20
whether a hospital and a doctor were entitled to derived judicial =
immunity=20
for claims based on their alleged failure to report suspected =
child abuse=20
discovered during the performance of psychological examinations =
ordered by=20
the trial court. 116 S.W.3d at 355=E2=80=9356. The court =
determined that the=20
doctor and hospital assisted the court in performing =E2=80=9Ca =
judicial function=20
of evaluating this family in an effort to determine custody =
issues=E2=80=9D and=20
that they were acting =E2=80=9Cwithin the scope of the [trial =
court=E2=80=99s] order=20
because their acts=E2=80=94 whether negligent or =
not=E2=80=93related to the family=E2=80=99s=20
evaluation.=E2=80=9D Id. at 358. The court concluded that =
the hospital and=20
doctor were entitled to derived judicial immunity. Id.=20
=
=
Similarly,=20
in Delcourt, the same court held that a psychologist =
appointed by a=20
court to meet with family members in a custody dispute was =
entitled to the=20
protection of derived judicial immunity for tort claims arising =
out of her=20
participation in the case. 919 S.W.2d at 782=E2=80=9383. The court =
noted that,=20
without such immunity, mental health professionals would be =
reluctant to=20
accept such appointments and judges would be inhibited from =
performing=20
their duties. Id. at 783. The court also held, in the same =
case,=20
that a guardian ad litem appointed under the Family Code to =
represent the=20
best interests of the child and provide the court with impartial=20
recommendations was entitled to derived judicial immunity for =
actions=20
taken within the scope of his appointment, provided that the =
appointment=20
contemplated the ad litem=E2=80=99s acting as an =
=E2=80=9Cextension of the court.=E2=80=9D=20
Id. at 783=E2=80=9386.
<=
/SPAN>In=20
Ramirez, a memorandum opinion, the San Antonio Court of =
Appeals=20
held that a court-appointed receiver was immune from liability for =
claims=20
that she falsely represented the condition of a house purchased =
from the=20
receivership estate. 2005 WL 1812595, at *1. In support of its =
holding,=20
the Ramirez court stated that a =E2=80=9Creceiver is an =
agent of the=20
court.=E2=80=9D Id. (citing Spigner v. Wallis, 80 =
S.W.3d 174, 183=20
(Tex. App.=E2=80=94Waco 2002, no pet.). The order appointing the =
receiver=20
empowered the receiver =E2=80=9Cto determine actual or potential =
claimants and to=20
maintain and preserve the property=E2=80=9D and, in his sole =
discretion, to =E2=80=9Csell,=20
negotiate, transfer, or redeem=E2=80=9D property. Id. at =
*1=E2=80=932. The court=20
concluded that =E2=80=9C[t]he receiver=E2=80=99s role in selling =
the property was to=20
assist the receivership court in performing its duties,=E2=80=9D =
that the trial=20
court granted the receiver broad discretion, and that, under the=20
functional approach, the receiver was entitled to derived judicial =
immunity. Id.=20
The court rejected the =
argument that=20
the receiver was not empowered to =E2=80=9Cmake false =
promises=E2=80=9D concerning the=20
condition of property by noting that
[o]nce an individual is cloaked with =
derived=20
judicial immunity because of a particular function being performed =
for a=20
court, every action taken with regard to that =
function=E2=80=94whether good or=20
bad, honest or dishonest, well-intentioned or not=E2=80=94is =
immune from suit. . .=20
. Once applied to the function, the cloak of immunity covers all =
acts,=20
both good and bad.
Id. at *2 (citing B.K., =
116 S.W.3d=20
at 357).
<=
/SPAN>The=20
beneficiaries agree with the general principles of the functional =
approach=20
applied in the above cases, but assert that the facts presented in =
this=20
case are distinguishable and that Gerstner was not acting =
=E2=80=9Cas an arm of=20
the court=E2=80=9D when performing her duties. They refer us to Byrd, in which =
the=20
Dallas Court of Appeals concluded that a guardian ad litem =
appointed under=20
Texas Rule of Civil Procedure 173 to represent a minor during =
settlement=20
proceedings served as a personal representative for the minor. 891 =
S.W.2d=20
at 707=E2=80=9308. Because the ad litem=20
represented the minor=E2=80=99s interests, the ad litem was not =
entitled to=20
derived judicial immunity for breach of his duty to the minor. =
Id.=20
In support of its holding, the court noted that the ad litem was =
not an=20
agent of court, had no delegated authority to act in the name of =
the=20
court, and, aside from removing the ad litem, the court had no =
discretion=20
to control the ad litem=E2=80=99s actions. Id. at =
708.
<=
/SPAN>In=20
support of their argument that Gerstner is not entitled to derived =
judicial immunity in her =
capacity as=20
a trustee in this case, the =
beneficiaries rely on =
Southwest=20
Guaranty Trust Co. v. Providence Trust Co., 970 S.W.2d 777 =
(Tex.=20
App.=E2=80=94Austin 1998, pet. denied), and Edwards v. =
Pena, 38 S.W.3d 191,=20
196 (Tex. App.=E2=80=94Corpus Christi 2001, no pet.). These cases =
more narrowly=20
apply the concept of derived judicial immunity and suggest that a =
receiver=20
or trustee, like Gerstner, would not be absolutely immune from =
liability=20
for her failure to properly manage or invest trust property =
subject to the=20
receivership.
<=
/SPAN>In=20
Southwest Guaranty, =
a trial=20
court appointed a trustee and authorized that trustee to exercise =
its=20
discretion in purchasing a type of annuity =E2=80=9Cthat would =
best serve the=20
minor plaintiffs according to the terms of the =
trust.=E2=80=9D 970 S.W.2d at 780. A successor trustee brought suit against =
the=20
court-appointed trustee, alleging that the trustee had breached =
its=20
fiduciary duty to the beneficiaries of the trusts and committed =
negligence=20
in =E2=80=9Cfailing to properly exercise its investment and =
disbursement=20
discretion=E2=80=9D and =E2=80=9Cfailing to properly invest, =
manage, and diversify the=20
trusts=E2=80=99 assets.=E2=80=9D Id. at 781. The Austin =
Court of Appeals agreed=20
that the trustee =E2=80=9Cwas acting at the discretion=E2=80=9D of =
the court, but noted=20
that the order appointing the trustee afforded the trustee =
considerable=20
discretion in purchasing the appropriate type of annuity based on =
a number=20
of factors, including the age of the beneficiaries. Id. at =
782=E2=80=9383.=20
Although the trustee argued that it had acted reasonably and in =
good faith=20
in purchasing the annuities, the court noted that questions of=20
reasonableness or negligence are generally for the jury to decide. =
Id. Thus, the court refused to hold, as a matter of law, =
that the=20
trustee was entitled to derived judicial immunity. Id. at =
783.=20
<=
/SPAN>In=20
Edwards, a guardian appointed by the court alleged that all =
of his=20
actions taken as guardian were protected by judicial immunity. 38 =
S.W.3d=20
at 196. The Corpus Christi Court of Appeals rejected this claim, =
stating=20
that =E2=80=9C[i]n the case of a guardian, the activities =
undertaken are not=20
functions of the court.=E2=80=9D Id. The court further =
noted that a=20
=E2=80=9Cguardian takes possession of a ward=E2=80=99s property =
and manages the estate of=20
the ward as a prudent person would manage=E2=80=9D his own =
property, and that=20
=E2=80=9C[p]ossessing and managing property are not activities =
generally=20
undertaken by courts.=E2=80=9D Id. Thus, the court held =
that the guardian=20
was not entitled to the protection of absolute judicial =
immunity.=E2=80=9D=20
Id.
<=
/SPAN>Two=20
older cases from the Texas Courts of Civil Appeals also suggest =
that a=20
receiver, like Gerstner, may be liable for losses or damage =
arising out of=20
a failure to exercise good faith or ordinary care in managing the =
assets=20
of a receivership and would =
not be=20
entitled, as a matter of law, to absolute derived judicial =
immunity for=20
actions taken as receiver. For example, in Harrison v. =
Coutret,=20
suit was brought against a court-appointed receiver for damages =
=E2=80=9Calleged=20
to have resulted from the acts and omissions of [the receiver] =
while=20
serving as receiver of the estates.=E2=80=9D 157 S.W.2d 454, 455 =
(Tex. Civ.=20
App.=E2=80=94San Antonio 1941, writ ref=E2=80=99d w.o.m). =
The jury found for the plaintiffs, and =
the=20
receiver contended on appeal that the trial court erred in denying =
his=20
motion for instructed verdict. Id. In reversing the trial =
court=E2=80=99s=20
judgment against the receiver, the court noted that the order =
appointing=20
the receiver provided the receiver with very broad powers in =
conducting=20
the businesses belonging to the estate and that the order =
authorized the=20
receiver to do everything he did. Id. at 455=E2=80=9356. =
However, the court=20
concluded that =E2=80=9Chaving acted within the authority given =
him in the order=20
appointing him, he is not responsible for any loss which may have =
accrued,=20
unless he acted in bad faith or failed to use ordinary care and =
discretion in the management of the business.=E2=80=9D =
Id. at 456=20
(emphasis added).
<=
/SPAN>Similarly, in Groesbeck Cotton Oil =
Gin &=20
Compress Co. v. Oliver, suit was brought against a =
court-appointed=20
receiver alleging that the receiver was grossly negligent in =
allowing=20
money to remain in banks that failed. 97 S.W. 1092, 1093 (Tex. =
Civ.=20
App.=E2=80=941906, writ ref=E2=80=99d). The jury=20
found that the receiver discharged his duties with ordinary care.=20
Id. at 1094=E2=80=9395. The plaintiffs complained about the =
jury charge,=20
which stated that =E2=80=9Camong the duties the receiver is bound =
to discharge is=20
to use ordinary care and diligence to safely keep the funds that =
come into=20
his possession, and the only question for you to determine under =
the=20
testimony is whether or not he used such care and diligence in =
placing and=20
keeping said money in said banks.=E2=80=9D Id. In =
determining whether this=20
charge was proper, the court considered the statute that empowered receivers to =
=E2=80=9Ctake charge=20
and keep possession of the property, to receive rents, collect, =
compound=20
for, compromise demands, etc.=E2=80=9D Id.=20
at 1094. The court=20
stated
The statute in reference to receivers =
seems to=20
contemplate that the receiver shall be the custodian of the fund =
and=20
handle it in connection with the administration[] and nowhere =
specifies=20
how money shall be kept by him, other than that he shall be =
subject to the=20
orders of the court. The condition of his bond, as prescribed by =
statute,=20
is that =E2=80=9Che will faithfully discharge all of the duties of =
receiver in the=20
action . . . and obey the orders of the court therein.=E2=80=9D No =
order was made=20
by the court with reference to the fund. The receiver is not an =
insurer of=20
the safety of the property, but the measure of his responsibility =
is=20
analogous to that of guardian and administrator, and, when he =
uses=20
ordinary care in his duties=E2=80=94that is, such care as an =
ordinarily prudent=20
person would use in the handling of his own property=E2=80=94he =
has fulfilled the=20
measure of his duty as such.
Id. (emphasis added).
<=
/SPAN>The=20
parties have referred us to a number of federal cases that address =
derived=20
judicial immunity. However, =
the cited=20
federal cases do not provide any guidance on the scope of derived =
judicial=20
immunity afforded to receivers with powers and duties similar to =
those=20
held by Gerstner.
<=
/SPAN>Moreover,=20
none of the above Texas cases squarely addresses how derived =
judicial=20
immunity interplays with any duty a receiver owes to conduct a receivership in good faith =
or use=20
ordinary care and discretion in the management of trust assets =
subject to=20
the receivership. Gerstner argues that, as long as she was acting =
within=20
the scope of her authority, she is entitled to immunity, =
apparently=20
regardless of whether she exercised good faith and ordinary care =
in the=20
performance of her duties. The beneficiaries, of course, dispute =
this=20
proposed application of derived judicial immunity. Because our focus is on the functions =
actually=20
performed by Gerstner, not her title, see Halsey, 87 S.W.3d =
at 55,=20
a review of her powers and duties as a receiver for the Trusts is =
in=20
order.
<=
/SPAN>The=20
Texas Civil Practice and Remedies Code provides that a court may =
appoint a=20
receiver in =
=E2=80=9Can action by a=20
creditor to subject any property or fund to his claim,=E2=80=9D =
=E2=80=9Can action between=20
partners or others jointly owning or interested in any property or =
fund,=E2=80=9D=20
and =E2=80=9Cin any other case in which a receiver may be =
appointed under the=20
rules of equity.=E2=80=9D =
Tex. Civ. Prac.=20
& Rem. Code Ann. =C2=A7 64.001(2), (3), (6) (Vernon =
Supp. 2005). The=20
code further provides, =E2=80=9C[s]ubject to the control of the =
court, a receiver=20
may: (1) take charge and keep possession of the property; (2) =
receive=20
rents; (3) collect and compromise demands; (4) make transfers; and =
(5)=20
perform other acts in regard to the property as authorized by the =
court.=E2=80=9D=20
Tex. Civ. Prac. & =
Rem. Code=20
Ann. =C2=A7 64.031 (Vernon 1997). Here, the=20
probate court was presented with a dispute concerning the proper =
trustee=20
of the Trusts. The court, on its own motion, found that it would =
be =E2=80=9Cin=20
the best interest of the beneficiaries=E2=80=9D to appoint a =
receiver to=20
administer the properties of the Trusts and, as authorized by the Texas =
Civil=20
Practice and Remedies Code, appointed Gerstner as receiver for =
each of the=20
Trusts in order to prevent =E2=80=9Closs or material injury to the =
Trust[s]=20
pending the determination of the proper trustee of the Trust[s] =
and the=20
resolution of thus suit.=E2=80=9D The parties agreed to =
Gerstner=E2=80=99s appointment,=20
and the court authorized her to, among other things =E2=80=9Ctake =
charge and keep=20
possession of all property of the Trust[s]=E2=80=9D and further =
provided that=20
Gerstner =E2=80=9Cshall have the same powers and duties as a =
trustee appointed=20
pursuant to the terms of the Indenture of Trust creating the =
Trust[s],=20
specifically including, but not limited to, =E2=80=9Cthe power to =
invest the=20
properties of the Trust[s].=E2=80=9D The order also authorized =
Gerstner to=20
exercise her powers =E2=80=9Cwithout prior approval by this Court =
or any party to=20
this litigation.=E2=80=9D
&nbs=
p;The=20
trial court afforded Gerstner broad discretion, =
but the=20
primary focus of our inquiry is on whether the functions performed =
by=20
Gerstner were =E2=80=9Cintimately associated with the judicial =
process=E2=80=9D and=20
whether her discretion was =E2=80=9Ccomparable to that of a =
judge.=E2=80=9D Halsey,=20
87 S.W.3d at 554. Under the =
functional approach, we hold that Gerstner is entitled to derived =
judicial=20
immunity to the =
extent that=20
she was authorized, as a receiver of the property in the Trusts, =
to take=20
charge and keep possession of the Trust property in accordance =
with=20
section 64.031 of the Texas Civil Practice & Remedies Code, =
and to the=20
extent that she was appointed to assist the court in determining =
the=20
proper trustee of the Trusts and to make an inventory of the =
property=20
subject to the receivership. These functions are intimately =
associated=20
with the judicial process and involve the exercise of =
discretionary=20
judgment comparable to that of a judge. See Halsey, 87 S.W.3d at 554.=20
<=
/SPAN>However,=20
we further hold that =
Gerstner is=20
not entitled to derived judicial immunity to the=20
extent that she may have breached any fiduciary duties to the=20
beneficiaries in failing to exercise good faith or ordinary care =
in=20
protecting the stock portfolio assets of the Trusts. In this =
latter=20
capacity, Gerstner was acting as a representative of the interests =
of the=20
beneficiaries and not as an agent of the Court. See Byrd, =
891=20
S.W.2d at 707; see also See Ins. Co. of N. =
Am. v.=20
Morris, 981 S.W.2d 667, 674 (Tex. 1998) (fiduciary duties =
arise in=20
trustee relationships); Hoenig v. Tex. Commerce Bank, 939 =
S.W.2d=20
656, 661 (Tex. App.=E2=80=94San Antonio 1996, no writ) (noting =
duty to properly=20
manage, supervise, and safeguard trust property); Herschbach v. =
City of=20
Corpus Christi, 883 S.W.2d 720, 735 (Tex. App.=E2=80=94Corpus =
Christi 1994,=20
writ denied) (noting duty of good faith, fair dealing, loyalty, =
and=20
fidelity over trust=E2=80=99s affairs and its principal); Tex. Prop. Code Ann. =
=C2=A7 113.051=20
(Vernon Supp. 2005) (stating that [t]he trustee shall administer =
the trust=20
in good faith according to its terms and this subtitle=E2=80=9D). =
<=
/SPAN>We=20
recognize that, according to the terms of the appointing orders =
and the=20
Texas Civil Practice & Remedies Code, Gerstner =
was =E2=80=9Csubject to the control of =
the court=E2=80=9D and was=20
accountable to the court, and we presume that the court could have =
removed=20
Gerstner at any time. We cannot say, however, that her functions=20
concerning the investment and management of a stock portfolio are=20
intimately associated with the judicial process or that, when =
performing=20
these functions, Gerstner was acting as the functional equivalent =
of a=20
judge. See Halsey, 87 S.W.3d at 557 (noting that in =
preparing=20
record, court reporter does not participate in judicial decision =
making=20
process and thus court reporter =E2=80=9Ccannot be construed as =
the functional=20
equivalent of a judge=E2=80=9D); Edwards, 38 S.W.3d at 196 =
(=E2=80=9C[p]ossessing=20
and managing property are not activities generally undertaken by =
courts=E2=80=9D);=20
City of Houston, 961 =
S.W.2d at=20
690 (=E2=80=9Ckey consideration in determining whether an officer =
is entitled to=20
judicial immunity is whether the officer=E2=80=99s conduct is a =
normal function of=20
the delegating or appointing judge=E2=80=9D). Thus, even though Gerstner was appointed =
by the=20
court and was acting pursuant to a court order, these facts alone =
do not=20
conclusively establish her entitlement to derived judicial =
immunity for=20
all of her functions as receiver.
See Sw. Guar., 970 S.W.2d =
at 782=E2=80=9383.=20
<=
/SPAN>Accordingly,=20
we hold that the trial court erred in granting summary judgment in =
favor=20
of Gerstner on the beneficiaries=E2=80=99 claim related to her =
fiduciary duties to=20
properly manage and invest trust property.
<=
/SPAN>We=20
sustain the beneficiaries=E2=80=99 second issue.
Fiduciary Duty of=20
Attorney for Receiver
<=
/SPAN>In=20
their third issue, the beneficiaries contend that the trial court =
erred in=20
granting Davis Ridout summary judgment on the ground that it did =
not owe=20
the beneficiaries a fiduciary duty. Davis Ridout, citing =
Thompson v.=20
Vinson & Elkins, =
argues that=20
it owed no fiduciary duty to the beneficiaries. See 859 =
S.W.2d 617,=20
624 (Tex. App.=E2=80=94Houston [1st Dist.] 1993, writ denied) =
(=E2=80=9CAlthough a=20
fiduciary relationship may exist between the beneficiary of a =
trust and a=20
trustee, under the facts presented here, no fiduciary relationship =
exists=20
between the beneficiary of the trust and the attorney =
representing the=20
trustee.=E2=80=9D).
<=
/SPAN>In their petition, the =
beneficiaries=20
alleged that Davis Ridout =E2=80=9Cperformed receivership duties =
in conjunction=20
with Gerstner=E2=80=9D and failed to monitor her activities. The =
beneficiaries=20
further alleged that Davis Ridout, =E2=80=9Cas attorney for the =
Trusts, breached=20
its fiduciary duties=E2=80=9D to the beneficiaries =E2=80=9Cby =
failing to act with the=20
utmost fairness and in good faith, failing to inform [the =
beneficiaries]=20
of all material facts and provide full disclosure, charging the =
Trusts for=20
unnecessary legal fees and failing to act with loyalty and good =
faith in=20
controlling and monitoring the activities of Gerstner as=20
receiver.=E2=80=9D
<=
/SPAN>Davis=20
Ridout=E2=80=99s sole ground in its summary judgment motion was =
that it was=20
retained =E2=80=9Csolely to represent Gerstner in her capacity as =
receiver,=E2=80=9D and=20
therefore =E2=80=9Cdid not owe the beneficiaries any =
duty.=E2=80=9D Davis Ridout attached to its summary =
judgment=20
motion testimony of Gerstner that she =E2=80=9Cwas granted =
authority by [the=20
probate court] to hire [her] former law firm, Davis Ridout, as =
[her]=20
attorneys related to her activities as Receiver.=E2=80=9D =
<=
/SPAN>However,=20
the order approving Gerstner=E2=80=99s application to retain =
counsel also states=20
that Gerstner was authorized to retain Davis Ridout =E2=80=9Cto =
assist in the=20
administration of the Trusts.=E2=80=9D In their response to Davis =
Ridout=E2=80=99s summary=20
judgment motion, the beneficiaries asserted that Gerstner and =
Davis Ridout=20
blurred any distinction between their roles. They also presented =
evidence=20
that Gerstner had filed applications for fees with the probate =
court that=20
stated that such fees were =E2=80=9Cfor services performed by me =
and members of my=20
firm in the administration of my duties as Receiver=E2=80=9D of =
the Trusts.=20
<=
/SPAN>In=20
contrast to the plaintiffs in Thompson, the beneficiaries have presented summary =
judgment=20
evidence raising a fact issue as to whether Davis Ridout was retained to work on =
behalf of the=20
beneficiaries, providing =
receivership=20
services, or legal services on behalf of Gerstner. Davis Ridout =
failed to=20
conclusively establish as a matter of law that it owed no =
fiduciary duties=20
to the beneficiaries. 859 S.W.2d at 624. Accordingly, we hold that =
the=20
trial court erred in granting summary judgment on the =
beneficiaries=E2=80=99=20
breach of fiduciary duty claims against Davis Ridout.
<=
/SPAN>We=20
sustain the beneficiaries=E2=80=99 third issue.
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; Conclusion
<=
/SPAN>We=20
reverse the case and remand for proceedings consistent with this=20
opinion.
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; =
Terry=20
Jennings
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; =
Justice
Panel consists of Justices Jennings, =
Alcala, and=20
Price.
|