Alpert v. Riley (Tex.App.- Houston [1st Dist.] June 5, 2008)(Bland)
(
probate law, trust administration dispute)
REVERSE TC JUDGMENT AND REMAND CASE TO TC FOR FURTHER PROCEEDINGS:
Opinion by Justice
Jane Bland
Before Chief Justice Radack, Justices Jennings and Bland
01-06-00605-CV Roman Alpert and Renee Picazo, Guardian of the Estate of Daniel Alpert, a Minor v. Mark
Riley, Robert Alpert
Appeal from Probate Court No 2 of Harris County
Trial Court Judge: Hon. Mike Wood  

O P I N I O N

In this trust management dispute involving three separate trusts, Roman Alpert and Renee Picazo, Guardian
of the Estate of Daniel Alpert, a minor (collectively, the beneficiaries), appeal the trial court’s judgment.  
Specifically, they contend that the trial court erred in granting summary judgment that Mark Riley, appellee,
was trustee of the three trusts as a matter of law, and in denying their motion urging the opposite
conclusion—that, as a matter of law, he was not.  The beneficiaries also ask that we reverse the judgment for
other reasons, asserting that the trial court erred in (1) disregarding the jury’s finding that Riley breached his
fiduciary duty; (2) confirming Riley’s payment of attorney’s fees and refusing to enter judgment against Riley
for their attorney’s fees; and (3) reappointing Riley as his own successor trustee.  

Robert Alpert, the trusts’ settlor and father of the trust beneficiaries, also appeals the trial court’s judgment,
which finds him liable for breach of fiduciary duty and awards over $4 million in damages and attorney’s fees
to Riley on behalf of the trusts, pursuant to the trial court and jury findings that Alpert breached his fiduciary
duty to the beneficiaries.  Alpert contends that, as settlor of the trusts, (1) he had no fiduciary duty to the
trusts, and (2) Riley has no standing to sue him absent such a duty.  

We conclude that (1) the trial court erred in declaring Riley to be trustee of the three trusts as a matter of law
because fact issues exist as to his status as trustee for two of the trusts, and he is not a trustee of the third
trust pursuant to the express terms of the trust instrument; (2) the judgment against Alpert for breach of
fiduciary duty must be reversed because, under the terms of these trusts, the settlor owes no fiduciary
obligation to the trust’s beneficiaries and Riley, as trustee, has no standing to sue the parent of a trust
beneficiary for breach of a parent’s fiduciary duty to a minor child; (3) the trial court erred in disregarding the
jury’s verdict as to Riley’s breach of fiduciary duty but, as the jury awarded no damages, the beneficiaries
recover nothing on the jury verdict; (4) while a remand is appropriate after reinstatement of the verdict as to
Riley’s breach of fiduciary duty to consider the remedy of equitable disgorgement of trustee compensation, a
remand is unnecessary here because Riley is not entitled to trustee compensation as a matter of law; and (5)
the trial court’s award of attorney’s fees, and the denial of the beneficiaries’ claim for fees, must be reversed
and remanded for further proceedings, given our resolution of the merits.  

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

Facts

    In 1990, Alpert, as settlor, created the Roman Merker Alpert Trust (RAT) and the Daniel James Alpert
Trust (DAT), to benefit each of his sons.  Both trusts name Lisa D. Santos, M.D., as the original trustee, and,
in identical language, empower Santos to appoint a successor trustee, who in turn would have  

the power and authority to appoint a successor or successors to himself, to take office as Trustee
hereunder, and if more than one, singly, in the order named, upon such Trustee’s ceasing to act hereunder.



The trusts further provide that, if Santos ceased to act as trustee and no trustee is appointed as provided,
“the successor Trustee shall be Sandra Shulak,” Robert’s sister.    

    In 1996, Alpert created another trust for his children’s benefit.  That trust holds a minority interest in a
company which in turn holds restricted shares of a public company that Alpert co-founded.  The 1996 trust
names Anna DiLieto as the original trustee.  If the trustee position becomes vacant, “and a successor
Trustee who is willing and able to serve” is not “otherwise provided for,” the 1996 trust reserves to the
grantor the power to appoint a successor trustee within thirty days.  If the grantor fails to appoint a successor
within the thirty-day period, the appointment power shifts to the trust beneficiaries or their guardian.  The
1996 trust further provides that, “[a]ny successor Trustee, on executing an acknowledged acceptance of the
trusteeship and upon receipt of those assets which are actually delivered to each successor Trustee by the
prior Trustee, shall be vested without further act on the part of anyone with all of the estates, titles, rights,
powers, duties, immunities and discretion granted to the prior Trustee.”  

    Mark Riley is Alpert’s former attorney, having assisted him from 1994 through 1998 in the administration
of his business and legal affairs. Among other duties, Riley acted as legal counsel to the three trusts, as well
as to various businesses in which Alpert had an interest.

    The parties vigorously contest whether Riley was properly appointed as trustee of the RAT and DAT.  
Among other evidence, the record contains

·        Letters from successor trustee Barbara Nussbaum Carmichael to Alpert dated August 1, 1997,
tendering her resignation as trustee of the RAT and DAT and appointing Riley as trustee[2] of those trusts;

·        Testimony from Alpert and an affidavit from Carmichael stating that Carmichael’s employer informed
them that Carmichael had to stop acting as trustee of the RAT and DAT as of September 9, 1996; and

·        A July 1997 wire transfer request signed by Carmichael as trustee of the RAT and DAT.

The parties likewise clash over whether Riley was properly appointed trustee of the 1996 trust.  Salient
evidence concerning this dispute includes

·        An April 3, 1997 letter from DiLieto resigning as trustee of 1996 Trust effective immediately, without
naming a successor; and  

·        A letter dated April 3, 1997 from Riley to Alpert purporting to accept designation as trustee to the 1996
Children’s Trust.[3]

The relationship between Alpert and Riley soured in 1998, and Riley’s professional dealings with Alpert
ended.  By that time, Riley came to believe that Alpert had sold his own stocks to trigger a tax loss, and then
caused the RAT and DAT to buy those same stocks, which allegedly resulted in the overpayment of taxes by
the trusts.  Without Alpert’s knowledge and without notifying the beneficiaries, Riley approached the Internal
Revenue Service with information and records relating to those transactions and became an informant
against Alpert and the trusts.

The IRS did not pursue charges against Alpert, but Riley, purporting to be trustee of the RAT and DAT, sued
Alpert to recover the tax overpayments, based on the theory that Alpert had breached fiduciary duties he
owed to the beneficiaries.  The beneficiaries intervened in the suit, seeking a declaration that Riley was not
trustee of the RAT or DAT or, alternatively, an order removing him as trustee for breach of fiduciary duties.  

After Riley allegedly intercepted a tax refund check issued to the 1996 trust, its putative trustee initiated a
separate suit, seeking a declaration that Riley was not trustee of the 1996 trust.  The trial court consolidated
that suit with the previously filed suit involving the RAT and DAT.  

On April 11, 2003, the beneficiaries moved to dismiss with prejudice all claims brought by Riley on their
behalf against Alpert in this suit.  The beneficiaries renewed this request in September 2003 and again in
March 2005, and reiterated their wish that Riley discontinue this lawsuit.  

Trial Court Proceedings

The parties filed cross-motions for summary judgment addressing whether Riley was the properly appointed
trustee of the three trusts.  The trial court granted Riley’s motion for summary judgment against the
beneficiaries as to the RAT and DAT, determining as a matter of law that Riley had been properly appointed,
and had served as trustee of those trusts since August 1, 1997.  With respect to the 1996 trust, the trial
court initially denied summary judgment, but reconsidered that decision at the pretrial hearing and ruled that
Riley also had been properly appointed trustee of the 1996 trust as a matter of law.  The trial court
incorporated its rulings on all three trusts into its charge to the jury.  The jury found that Riley breached his
fiduciary duty to the trusts, but awarded nothing to the beneficiaries in damages.

As to Riley’s claims against Alpert, the trial court also granted Riley’s motion for summary judgment,
establishing as a matter of law Alpert’s liability for breach of fiduciary duty and the amount of damages
suffered by the three trusts as a result of Alpert’s stock transactions.  On those issues, the charge instructed
the jury that Alpert owed fiduciary duties to the beneficiaries, which included a duty of loyalty to the
beneficiaries, and that he had breached those duties by engaging in acts of self‑dealing with trust assets.  
The trial court also incorporated into the charge synopses of its summary judgment rulings as to each of five
stock transactions that, according to the trial court, Alpert had undertaken in violation of his fiduciary duties.  
The trial court informed the jury of its rulings concerning the dollar value that had accrued to Alpert’s benefit
as a result of the breach of his duties, which it determined by tallying the losses to the trust and the profit to
Alpert resulting from each of those transactions.  These amounts, according to the trial court, totaled about
$2 million in tax losses to the trusts and profits enjoyed by Alpert.  The court’s charge did not ask the jury for
liability findings on these matters, but did inquire whether Alpert breached his fiduciary duty with respect to
certain other transactions, with the jury concluding that he did, but awarding nothing in damages.  The jury
also awarded Riley’s attorneys $1,517,348 in attorney’s fees for the work done on behalf of the RAT and
DAT trusts, and $57,038 for the 1996 trust.

On March 28, 2006, following post-trial hearings, the trial court entered judgment on the jury’s findings
against Alpert.  The trial court awarded $1,234,445.50 to Riley, for each of the RAT and DAT trusts, attorney’
s fees of $656,200.78, prejudgment interest, additional attorney’s fees of $208,688.03 incurred for each trust
and appellate fees against Alpert in connection with its summary judgment findings on the stock transactions
granted in favor of Riley.  Finally, the trial court disregarded the jury’s breach finding against Riley and its
award of attorney’s fees to the beneficiaries.

The trial court’s judgment confirms the trial court’s interim orders that Riley was properly appointed as trustee
of the RAT, the DAT, and the 1996 trust, and that he is trustee of those trusts.  The judgment also
terminates Riley’s trusteeship, but then reappoints Riley to serve as trustee of the three trusts until this
appeal is final.  The trial court reconfirmed its approval of Riley’s accountings for the trusts and requests for
attorney’s fees and reimbursement of expenses incurred in connection with the litigation on behalf of the
trusts, as well as an earlier distribution of $40,000 in trustee compensation.  None of the appellants
challenges the propriety or adequacy of those accountings on appeal, and so they remain undisturbed,
except to the extent that they are affected by reversal of certain of the trial court’s other rulings.  

On April 21, 2006, the beneficiaries asked the trial court to vacate the judgment based on their renewed
request that Riley stop prosecuting the claims against Alpert in exchange for a release.  The trial court
denied this request, and Alpert and the beneficiaries gave timely notice of their appeal.



Discussion

I.       Trustee Status

The beneficiaries challenge the trial court’s pretrial rulings declaring Riley to be trustee of the RAT, the DAT,
and the 1996 trust as a matter of law, contending that the plain language of the trust instruments require the
opposite conclusion.  Alternatively, the beneficiaries contend, the summary judgments should be reversed
because fact issues exist concerning whether Riley is trustee.  We address the trust instruments in turn.

A.      Standard of review

To prevail on summary judgment, the movant has the burden of proving that there is no genuine issue of
material fact and the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Cathey v.
Booth, 900 S.W.2d 339, 341 (Tex. 1995).  A defendant moving for summary judgment must either (1)
disprove at least one element of the plaintiff’s cause of action or (2) plead and conclusively establish each
essential element of an affirmative defense to rebut plaintiff’s cause.  Cathey, 900 S.W.3d at 341.  In
deciding whether there is a disputed material fact precluding summary judgment, we take as true evidence
favorable to the non-movant, indulging every reasonable inference and resolving any doubts in its favor.  
Provident Life & Accid. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003).  A matter is conclusively
established if reasonable people could not differ as to the conclusion to be drawn from the evidence.  City of
Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).  When, as here, both sides move for summary judgment
and the trial court grants one motion and denies the other, we review the summary judgment proof presented
by both sides and determine all questions presented.  See CenterPoint Energy Houston Elec., L.L.P. v. Old
TJC Co., 177 S.W.3d 425, 430 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).

B.      Waiver

    Riley claims that the beneficiaries waived any objection they may have had to Riley’s status as trustee by
failing to object to the trial court’s inclusion in the jury charge of its summary judgment decisions.  Riley cites
Uro-Tech, Ltd. v. Somerset Partners, Corp., No. 05-96-01455-CV, 1999 WL 153130 (Tex. App.—Dallas Mar.
23, 1999, no pet.) (mem. op.), for the proposition that an appellant waives any error by failing to object to
inclusion in the jury charge of issues previously decided on partial summary judgment.  See 1999 WL
153130 at *2–4.  Without deciding whether we agree with Uro-Tech’s holding, we find it distinguishable.  In
that case, the parties contested whether a new statute applied to calculate royalty payments under their
contract.  Id. at *1.  The trial court decided that it did not apply.  Id. at *1–2.  In accordance with that decision,
the charge instructed the jury to decide the amount of damages based on the legal standard stated in the
older version of the statute.  Id. at *3.  The Dallas Court of Appeals held that the appellant waived its
challenge to the summary judgment ruling by failing to object to that jury instruction.  Id.

    In contrast to Uro-Tech, the jury charge in this case did not instruct the jury to apply any law or make any
fact finding that the trial court decided in the summary judgments.  Although the issue of Riley’s trustee
status was strenuously litigated both before and after trial, it was not placed at issue during the trial, and the
jury was not asked to decide the issue because the trial court already had done so.  The charge does not
submit the issue to the jury; rather, in asking the jury to make other findings, it merely reiterates the trial court’
s summary judgment rulings.[4]  When a trial court grants a partial summary judgment, the issue is ripe for
appeal on final judgment if no contested issue of fact on this matter is presented to the jury.  Because the
issue of whether Riley was trustee was never presented to the jury for resolution, Alpert and the beneficiaries
were not required to object to the charge in order to preserve their complaints concerning the trial court’s
summary judgment rulings on appeal.[5]  

C.      Principles of Trust Construction

We interpret trust instruments the same way as wills, contracts, and other legal documents.  Lesikar v. Moon,
237 S.W.3d 361, 366 (Tex. App.—Houston [14th Dist.] 2007, pet. denied).  The meaning of the trust
instrument is a question of law when no ambiguity exists. Nowlin v. Frost Nat’l Bank, 908 S.W.2d 283, 286
(Tex. App.—Houston [1st Dist.] 1995, no writ).  If the court can give a definite legal meaning or interpretation
to an instrument’s words, it is unambiguous, and the court may construe the instrument as a matter of law.
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).  If the language is uncertain or reasonably susceptible to
more than one meaning, however, it is ambiguous, and its interpretation presents a fact issue precluding
summary judgment.  Id. at 394.

A trust instrument need not contain any particular language to be effective.  For an express trust to be
shown, however, “(1) the words of the settlor ought to be construed as imperative and thus imposing an
obligation on the trustee, (2) the subject to which the obligation relates must be certain, and (3) the person
intended to be the beneficiary must be certain.”  Brelsford v. Scheltz, 564 S.W.2d 404, 406 (Tex. Civ. App.—
Houston [1st Dist.] 1978, writ ref’d n.r.e.), quoted in Pickelner v. Adler, 229 S.W.3d 516, 526 (Tex. App.—
Houston [1st Dist.] 2007, pet. denied).

D.      RAT and DAT



    With respect to the trusteeship of the RAT and DAT, the beneficiaries assert that the trial court’s summary
judgment rulings must be reversed and rendered in their favor because they conclusively proved that Riley
was never properly appointed trustee.  The beneficiaries’ assertion rests on their interpretation of the
interplay between the trustee appointment and default trusteeship provisions in the DAT and RAT.  They
observe that the trustee appointment provision confers on the trustee the authority “to appoint a successor
Trustee . . . upon her ceasing to act as a trustee hereunder,”  and then states that the appointed successor
is to take office “upon such Trustee’s ceasing to act hereunder.”  The default trusteeship provision states
that, if the trustee “shall cease to act as Trustee and there shall be no Trustee appointed as provided . . . still
able to qualify, the successor Trustee shall be Sandra Shulak.”

According to the beneficiaries, these provisions, as applied to the facts, require the conclusion that
Carmichael “ceased to act” as trustee on September 9, 1996, without appointing a successor.  The failure to
appoint a successor at that time, the beneficiaries contend, triggered the default trusteeship provision,
making Sandra Shulak the successor trustee, and thus, any subsequent act by Carmichael—namely, her
August 1997 letter appointing Riley as trustee—was ineffective as a matter of law.  

    While we agree that the beneficiaries’ interpretation is a reasonable one, it is not the only reasonable
interpretation of the trust language as applied to these facts.  The problem lies in the trusts’ use of the term
“ceasing to act” without temporal constraint or other definite limitation.  In some instances, it may be obvious
when a trustee ceases to act, such as when the trustee resigns or dies.  At other times, however, it may not
be clear whether the trustee’s lack of action is temporary because of a lull in trust activity, or whether the
trustee has abandoned the position.  Carmichael’s actions and testimony concerning whether she was still
trustee when she signed the letter appointing Riley are equivocal, giving rise to a material dispute about
when Carmichael “ceased to act” as trustee, and therefore, whether Shulak or Riley was the proper trustee
of the RAT and DAT.

    That evidence falls into three categories.  The first category consists of communications relating to
Carmichael’s employer’s notice that Carmichael could not serve as trustee of the RAT and DAT after
September 9, 1996.  They include (1) an August 1996 letter from Carmichael’s employer to a financial
institution in possession of trust assets, notifying the institution that Carmichael was permitted to serve as
trustee only for an additional 30 days, and that a successor trustee was being appointed; (2) a September
1996 letter from Alpert to a brokerage firm notifying it that Carmichael was no longer serving as trustee; and
(3) evidence that Riley and another individual engaged in activities relating to management of the trusts
between September 1996 and August 1997.  

The second category of evidence consists of documents identifying Carmichael as trustee on behalf of the
RAT and DAT during the summer of 1997.  The record reveals that (1) Carmichael’s name still appeared on
some trust accounts; (2) Carmichael signed a wire transfer request for one of the trusts, on which she hand
wrote “Trustee” following her signature; and (3) Carmichael signed and sent a letter to Alpert notifying him
that she was resigning as trustee of the RAT and DAT and appointing Mark Riley as her successor.

    The third category of evidence consists of sworn statements made during this litigation.  They include (1)
Carmichael’s deposition testimony that she told Riley and Alpert that she could no longer serve as trustee of
the RAT and DAT during a discussion in the summer of 1997; (2) Carmichael’s affidavit in which she attests
that she resigned as trustee on September 9, 1996; and (3) Carmichael’s second affidavit in which she
attests that she either resigned or ceased to act as trustee on September 9, 1996.         

    The contemporaneous recorded evidence and Carmichael’s testimony cannot be reconciled without
determining the credibility and weight that should be attributed to each piece, a job that belongs to the fact
finder.  Accordingly, the trial court erred in granting summary judgment declaring Riley as the properly
appointed trustee of the RAT and DAT.

E.      1996 trust



    In complaining that the trial court erred in declaring Riley as trustee of the 1996 trust, the beneficiaries
contend that the undisputed evidence conclusively shows that Riley did not accept trusteeship of the 1996
trust in accordance with the trust’s terms.  We agree.

According to the plain language of the 1996 trust instrument, before a named successor can become vested
with the authority to act as trustee, the named successor must execute “an acknowledged acceptance of the
trusteeship . . . .”  The only evidence of Riley’s written acceptance of trusteeship of the 1996 trust is his
letter, dated April 3, 1997, and addressed to Alpert, stating that Riley accepted designation as trustee
“effective immediately.”  This letter contains Riley’s signature, but does not contain a formal acknowledgment,
such as one that a notary would execute.  In considering whether Riley’s acceptance of the trusteeship was
effective, the trial court stated

I think it all comes down to an interpretation of the trust agreement as to what 4.3 requires.  And I don’t think
acknowledged means acknowledgment.  It means acknowledge.  If there’s not acceptance at all, then it’s
never acknowledged, and the trustee can’t be blamed for taking over because he never took over.   



Thus, the trial court viewed “acknowledged” and “accepted” as more or less synonymous with respect to the
express language of the 1996 trust.  As a result, the trial court construed the term “acknowledged
acceptance” as if “acknowledged” did not modify “acceptance” in any meaningful way and was merely
redundant.  This view is contrary to the applicable rules of construction.  

      In interpreting a contract, courts must, if possible, give effect to all its terms so none will be rendered
meaningless.  Kelley-Coppedge, Inc v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998).  Courts must
read all provisions together, interpreting the instrument so as to give each provision its intended effect.  
Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994).  In ascertaining the parties’ intent, we must
be particularly wary of isolating individual words, phrases, or clauses and reading them out of the context of
the document as a whole.  State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995).   For
example, courts should presume that words that follow one another are not intended to be redundant.  See
Gulf Metals Indus., Inc. v. Chicago Ins. Co., 993 S.W.2d 800, 805 (Tex. App.—Austin 1999, pet. denied)
(interpreting “sudden,” in phrase “sudden and accidental,” as having temporal meaning because “accidental”
describes unforeseen or unexpected event and ascribing same meaning to “sudden” would render terms
redundant and violate rule that each word in contract be given effect); see also McCreary v. Bay Area Bank
& Trust, 68 S.W.3d 727, 731 (Tex. App.—Houston [14th Dist.] 2001, pet. dism’d) (refusing to construe
addendum to IRA deposit contract as merely promise to pay interest on interest-bearing savings account
until date of its maturity because such construction would render the addendum redundant and reduce it to
superfluous agreement to abide by agreement).  Accordingly, we reject the trial court’s construction of the
1996 trust’s “execute[] an acknowledged acceptance,” to mean mere written acceptance, and consider the
definition of “acknowledged” as it might reasonably apply in the context of the trust instrument.  
Acknowledgments commonly appear in documents effecting property transfers, such as car titles and deeds.  
“The general purpose of a [formal] acknowledgment is to authenticate an instrument as being the act of the
person executing the instrument.”  Onwuteaka v. Cohen, 846 S.W.2d 889, 894 (Tex. App.—Houston [1st
Dist.] 1993, writ denied).  In the case of a person acknowledging her acts as a trustee, executor, or
administrator of an estate, a Texas statute expressly provides that “acknowledged” means that “the person
personally appeared before the officer taking the acknowledgment and acknowledged executing the
instrument by proper authority in the capacity stated and for the purposes and consideration expressed in
it.”  Tex. Civ. Prac. & Rem. Code Ann. § 121.006(b)(5) (Vernon 2005).   

The term “acknowledged acceptance”—set forth in a legal instrument drafted by lawyers and documenting a
conveyance of property rights conditioned on the execution of fiduciary duties—can only be reasonably
interpreted as requiring the prospective trustee to personally appear before a notary public or other
authorized officer to accept the appointment and acknowledge executing the instrument.  Riley concedes that
he did not do this, but contends that the Texas Trust Code[6] requires only that the trustee execute a
“separate written acceptance”; consequently, Riley claims, his acceptance of the trusteeship was effective
without an acknowledgment.  See Tex. Prop. Code Ann. § 112.009(a) (Vernon 2007).  The Trust Code,
however, recognizes the primacy of the settlor’s intent as manifested in the trust language.  See Tex. Prop.
Code Ann. § 111.0035(b) (Vernon 2007) (declaring that “[t]he terms of a trust prevail over any provision of
this subtitle,” save certain unrelated exceptions).  The Trust Code thus requires adherence to the 1996 trust’
s requirement that a trustee’s acceptance be acknowledged.  

    Because Riley did not accept the trusteeship in accordance with the plain terms of the trust’s
requirements, we hold that he was not, as a matter of law, properly appointed trustee of the 1996 trust.  

    F.      Equitable defenses

As alternative grounds for his claim to trustee status, Riley asserted in the trial court that the appellants’
acquiescence in, and ratification of, Riley’s assumption of trustee duties for the three trusts bars them from
obtaining a declaration that Riley is not trustee.  The summary judgment rulings, however, cannot be
sustained on those grounds.

We have not located, and Riley does not identify, any authority that recognizes a trustee by estoppel in the
presence of express trust language outlining the procedure for appointment of a successor trustee.  Riley
first points to Coffee v. William Marsh Rice University, which was decided before the Legislature enacted the
Texas Trust Code and involved a charitable trust.  408 S.W.2d 269, 284 (Tex. Civ. App.—Houston 1966, writ
ref’d n.r.e.).  In charitable trusts, “there is greater occasion for the exercise of the power of the court to permit
or direct a deviation from the terms of the trust” because of the cy pres doctrine.  Id. at 285.  This doctrine
does not apply to private express trusts like those at issue here, and “goes quite beyond anything which is
permitted in the case of private trusts.”  Id. (internal quotation omitted); see Amalgamated Transit Union, Loc.
Div. 1338 v. Dallas Public Transit Bd., 430 S.W.2d 107, 117 n.6 (Tex. Civ. App.—Dallas 1968, writ ref’d n.r.
e.).  Riley’s reliance on Brault v. Bigham, 493 S.W.2d 576 (Tex. Civ. App.—Waco 1973, writ ref’d n.r.e.), is
also misplaced. In Brault, the trial court imposed a constructive trust on life insurance proceeds held by the
named beneficiary under an insurance policy for the benefit of four children and removed the beneficiary as
trustee.  Id. at 578–79.  In contrast to Brault, this case involves express trusts, not constructive trusts.

Further, Brault, like Coffee, predates the enactment of the Texas Trust Code, which governs express trusts
such as those at issue here.  See Tex. Prop. Code Ann. § 111.005 (Vernon 2007) (“If the law codified in this
subtitle repealed a statute that abrogated or restated a common law rule, that common law rule is
reestablished, except as the contents of the rule are changed by this subtitle.”).  A court’s authority to modify
a trust’s terms is subject to section 112.054(a) of the Texas Trust Code, which provides that

(a) On the petition of a trustee or beneficiary, a court may order that the trustee be changed, that the terms
of the trust be modified, that the trustee be directed or permitted to do acts that are not authorized or that
are forbidden by the terms of the trust, that the trustee be prohibited from performing acts required by the
terms of the trust, or that the trust be terminated in whole or in part, if



(1) the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill;



(2) because of circumstances not known to or anticipated by the settlor, the order will further the purposes of
the trust;



(3) modification of administrative, nondispositive terms of the trust is necessary or appropriate to prevent
waste or avoid impairment of the trust’s administration . . . .



Tex. Prop. Code Ann. § 112.054(a) (Vernon 2007).  Under this provision’s plain language, a court may order
modification of trust terms only on the petition of a trustee or beneficiary.  Id.  Because Riley is not trustee of
the 1996 trust as a matter of law, he lacks the authority to petition for a modification of that trust.  Further,
with respect to the RAT and DAT, the only reason Riley advances for deviating from the trust terms concerns
Alpert’s mishandling of trust property, but the RAT and DAT do not contain any provisions authorizing Alpert,
the settlor, to conduct transactions on behalf of the trusts, and thus his conduct should not subvert the
express language of the trust instrument.  

Riley has not identified any of the factors under section 112.054(a) as grounds for his request that the trial
court authorize a deviation from the trusts’ terms.  Without basis in one of the statutory grounds, the trial
court lacked the power to deviate from the trusts’ terms.  

Texas law prohibits the equitable rule proposed by Riley for other reasons as well.  The Texas Trust Code
requires adherence to the trustee selection method prescribed in the trust instrument, which necessarily
forecloses the exercise of equitable discretion unless that method fails.  See Tex. Prop. Code Ann. § 113.083
(a) (Vernon 2007).  The record does not reveal that the trial court ever attempted to apply the trustee
selection method prescribed by any of the trusts before appointing Riley.  As the Supreme Court has
observed, “[w]hen a valid [instrument] already addresses the matter, recovery under an equitable theory is
generally inconsistent with the express [instrument].”  Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684
(Tex. 2000); see also Ledig v. Duke Energy Corp., 193 S.W.3d 167, 176 (Tex. App.—Houston [1st Dist.]
2006, no pet.) (affirming summary judgment that rejected claim for unjust enrichment, noting that, “when a
valid, express contract covers the subject matter of the parties’ dispute, there can be no recovery under a
quasi-contract theory . . .”).  Consequently, Riley’s claim to trusteeship cannot be upheld on any equitable
ground.

II.      Breach of Fiduciary Duty Claims against Alpert

Alpert and the beneficiaries contend that the trial court erred in entering judgment on Riley’s breach of
fiduciary duty claims against Alpert because, among other reasons, Riley lacks standing to bring the claims.  
We agree that Riley has no standing.  

A.      Standing

Standing is a necessary component of a court’s subject matter jurisdiction. Tex. Ass’n of Bus. v. Tex. Air
Control Bd., 852 S.W.2d 440, 444–45 (Tex. 1993).  To have standing a party must have a “sufficient
relationship with the lawsuit so as to have a ‘justiciable interest’ in its outcome.”  Austin Nursing Ctr. v.
Lovato, 171 S.W.3d 845, 848 (Tex. 2005) (quoting 6A Charles Alan Wright, Arthur R. Miller, and Mary Kay
Kane, Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 1559, 441 (2d ed. 1990)).  A plaintiff
must affirmatively show, through pleadings and other evidence pertinent to the jurisdictional inquiry, a distinct
interest in the asserted conflict, such that the defendant’s actions have caused the plaintiff some particular
injury.  Hunt v. Bass, 664 S.W.2d 323, 324 (Tex. 1984); see County of Cameron v. Brown, 80 S.W.3d 549,
555 (Tex. 2002).  Whether a plaintiff has standing is a legal question we determine de novo.  See Mayhew v.
Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).   

To determine whether Riley has standing to assert the breach of fiduciary duty claims against Alpert, we  
consider (1) the scope of Riley’s duties as a trustee, which dictates the bounds of his interest, and (2) the
nature of Alpert’s alleged wrongs.  To create an irrevocable trust, the settlor—in this case, Alpert—transfers
legal title to specific property along with the obligation to administer the trust for the benefit of the named
beneficiaries in accordance with the terms of the trust instrument.  See Texas Prop. Code Ann. § 111.004(4)
(Vernon 2007) (defining “express trust”); Restatement (Third) of Trusts §§ 70, 76–79, 82–84 (2003)
(defining the duties of a trustee).  Once a settlor completes a transfer of assets to a trust, the beneficiaries
gain beneficial title and the trustee gains sole legal title in, and exclusive control over, the trust property,
subject to the trust instrument.  Black’s Law Dictionary 1546 (8th ed. 2004) (explaining characteristics of
various trusts); see also Pickelner, 229 S.W.3d at 526.  At the same time, the trustee, as a fiduciary, has
equitable duties to hold and manage the property for the benefit of the beneficiaries.  Tex. Prop. Code Ann.
§§ 113.051, 113.056(a) (Vernon 2007).  Certain of those fiduciary duties are nondelegable.  See Tex.
Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 249 (Tex. 2002); Slay v. Burnett Trust, 187 S.W.2d 377,
387–88 (Tex. 1945); see also Transamerican Leasing Co. v. Three Bears, Inc., 586 S.W.2d 472, 476 (Tex.
1979) (“The general rule is that a trustee may not delegate his discretionary power to another.  A trustee
may, however, . . . give authority to another to carry out ministerial or mechanical acts . . . .”); see generally
Tex. Prop. Code Ann. § 113.018 (Vernon 2007) (allowing trustee to employ investment agents and brokers
“as reasonably necessary in the administration of the trust estate”).  Unless the trust instrument expressly
provides otherwise, a settlor has no duty to manage trust property, and the trustee alone is responsible as a
fiduciary if he allows the settlor to mismanage trust property to the detriment of the trust.[7]   

None of the three trusts assigned any duty to Alpert, and thus Alpert could not otherwise owe any fiduciary
duty.  Absent some assignment of duty to the settlor in the trust instrument, a trustee has no cause of action
to sue the settlor of a trust for a breach of fiduciary duty to the trust beneficiaries.  Cf. Ray Malooly Trust v.
Juhl, 186 S.W.3d 568, 570 (Tex. 2006) (noting that under Texas law, a trust refers to “the fiduciary
relationship governing the trustee with respect to the trust property”) (emphasis added) (quoting Huie v.
DeShazo, 922 S.W.2d 920, 926 (Tex. 1996) (per curiam).  A trust settlor has no fiduciary obligation to a trust
beneficiary once that trust is created, and control of the trust assets is vested with the trustee.  See id.; see
also Tex. Prop. Code Ann. § 111.004(4) (Vernon 2007 & Supp.) (defining “express trust”).  

Acknowledging that Alpert, in his capacity as settlor, has no fiduciary duty to the trust, Riley contends that “[t]
he basis of [his] assertion was not the settlor-beneficiary relationship, but rather the parent-minor child
relationship.”  But Riley has no standing to sue Alpert for such a claim—it  belongs to Alpert’s children as his
children, not to Riley as holder of the legal interest in trust property held for its beneficial owners.  Riley does
not stand in loco parentis to Alpert’s children.  Any legal interest in the trust property or fiduciary duty to the
beneficiaries does not provide Riley with standing to assert claims against Alpert based on the alleged
breach of a father’s fiduciary duty to his sons.

The cases Riley cites, S.V. v. R.V., 933 S.W.2d 1 (Tex. 1996), and Thigpen v. Locke, 363 S.W.2d 247 (Tex.
1962), recognize that a parent owes a fiduciary duty to his child, but in neither case does the Texas Supreme
Court commit the prosecution for a breach of that duty to a trustee who has no guardianship over the child.  
On the contrary, the Court has made it clear that a child, who fundamentally holds the justiciable interest in
the outcome of a suit for breach of a parent’s fiduciary duty, may appear in court only “through a legal
guardian, a ‘next friend,’ or a guardian ad litem.”  See Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845,
849 (Tex. 2005).  We hold that Riley, as trustee, lacks standing to sue Alpert, as a father for breach of his
parental duties to his children and thus the trial court lacked subject matter jurisdiction over this claim.  



B.      Other theories

In his brief, Riley advances two other bases for affirming the trial court’s judgment against Alpert: violation of
federal tax law and constructive trust.  To the extent Riley attempts to sue Alpert for violation of federal
income tax regulations through a breach of fiduciary duty theory, that theory is also unavailing.  No private
cause of action lies for violation of regulations promulgated under Internal Revenue Code except against the
U.S. Government.  See Tax Analysts v. I.R.S., 214 F.3d 179, 185 (D.C. Cir. 2000) (finding no private right of
action under section 6104 of the Internal Revenue Code); Sigmon v. Sw. Airlines Co., 110 F.3d 1200, 1203–
05 (5th Cir. 1997); see also 26 U.S.C.S. § 7422(a) (LEXIS 2008) (“No suit or proceeding shall be maintained
in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally
assessed or collected . . . until a claim for refund or credit has been duly filed with the Secretary. . . .”); 26 U.
S.C.S. § 7422(f)(1) (LEXIS 2008) (“A suit [for erroneously or illegally assessed or collected taxes] may be
maintained only against the United States . . . .”  ).

The federal income tax law’s pervasive “administrative scheme of enforcement is strong evidence that
Congress intended the administrative remedy to be exclusive.”  Sigmon, 110 F.3d at 1206 (quoting Till v.
Unifirst Fed. Sav. & Loan Ass’n, 653 F.2d 152, 160 (5th Cir. 1981)).  A recently enacted provision to the
Internal Revenue Code underscores this conclusion.  The new section provides the Treasury Secretary with
the authority to reward whistleblowers who aid the Internal Revenue Service in “(1) detecting underpayments
of tax, or (2) detecting and bringing to trial and punishment persons guilty of violating internal revenue laws
or conniving at the same . . . .”  26 U.S.C.S. § 7623(a) (LEXIS 2008) (eff. Dec. 20, 2006).  “When Congress
acts to amend a statute, we presume it intends its amendment to have real and substantial effect.”  Stone v. I.
N.S., 514 U.S. 386, 397, 115 S. Ct. 1537, 1545 (1995), quoted in Peavy v. WFAA-TV, Inc., 221 F.3d 158,
169 (5th Cir. 2000).  The enactment of the new whistleblower reward statute suggests that Congress
intended both to provide a financial incentive where none existed before and to make such a reward
available exclusively through an administrative route.  See 26 U.S.C.S. § 7263(b)(1), (3), (4) (LEXIS 2008)
(empowering IRS Whistleblower Office with broad discretion to determine amount, if any, of award, and
providing for appeal of award determination to Tax Court).  Consequently, the judgment against Alpert
cannot be sustained under federal tax law.

Riley also urges that the judgment can be sustained under either a constructive trust theory, or the theory
that Alpert knowingly participated in a breach of trust, as recognized by the Texas Supreme Court in
Kinzbach Tool Co. v. Corbett-Wallace Group.  160 S.W.2d 509, 514 (Tex. 1942).  Here, however, the
questions posed to the jury asked only whether Alpert’s conduct in certain specified transactions constituted
a breach of Alpert’s duty to the trusts.  None asked the jury to find whether Alpert knowingly participated in or
aided or abetted a breach fiduciary duty, or asked the jury to make any findings that would furnish grounds
to impose a constructive trust on the trust assets.  Consequently, Riley waived any claim under those
theories.  See Tex. R. Civ. P. 279; Yellow Cab & Baggage Co. v. Green, 277 S.W.2d 92, 93 (Tex. 1955);
Jarrin v. Sam White Oldsmobile Co., 929 S.W.2d 21, 25 (Tex. App.—Houston [1st Dist.] 1996, writ denied).  

We conclude that Riley lacked standing to pursue the only claim presented to the jury.  Accordingly, we
reverse the trial court’s judgment on the breach of fiduciary duty claims against Alpert and dismiss them for
lack of subject matter jurisdiction.

III.    Breach of Trust Claim Against Riley

The beneficiaries challenge the trial court’s decision to disregard the jury’s finding of liability on their breach
of trust claim against Riley.  They contend that the trial court erred in concluding that the evidence was not
legally sufficient to support that finding.  As support for their contention that the evidence is legally sufficient
to sustain the finding, the beneficiaries point to (1) testimony from witnesses including Larry St. Martin, the
Alpert Companies’ former controller, that Riley had general knowledge about and assisted in executing many
of Alpert’s stock sales to the trusts; (2) evidence that Riley intercepted a tax refund check to the trust and
used it to pay his trustee fees and the lawyers; (3) the fact that Riley pursued the claims against Alpert in this
litigation despite the beneficiaries’ protest; (4) multiple instances in which Riley failed to communicate with the
beneficiaries, including regarding the filing of this lawsuit and his discussions with the IRS; and (5) Riley’s
representation of both Alpert and the trusts, which potentially posed a conflict of interest.  

The charge instructed the jury that Riley, as trustee, owed the beneficiaries, among other duties, (1) the duty
of loyalty to the beneficiaries to administer the affairs of the trust in their interest alone, and (2) a duty to
disclose all material facts known to the trustee that affect the beneficiaries’ rights.  The express language of
the RAT and DAT trusts requires the trustee to notify each of the beneficiaries annually of their right to
withdraw an amount equal to the aggregate amount contributed by each donor for that calendar year, or
$20,000, whichever is less.  Roman Alpert, one of the beneficiaries, testified that he received no
communications from Riley concerning that annual right of withdrawal, and Riley admitted that he did not
communicate with the beneficiaries concerning that matter, this suit, or his dealings with the IRS on behalf of
the trust.  Based on this evidence and the express terms of the trust, we conclude that a rational trier of fact
could conclude that Riley breached his fiduciary duty to the trusts by failing to communicate material
information.  The trial court therefore erred in granting the judgment notwithstanding the verdict on the
beneficiaries’ breach of fiduciary duty claim, and we restore the jury’s verdict.  

      The jury, however, also found zero damages in connection with its finding against Riley for breach of
fiduciary duty.  The beneficiaries do not appeal the no damages finding, but instead ask that we remand the
case for the court to consider equitable disgorgement based on the finding of breach.  See Tex. Prop. Code
Ann. § 114.061(b) (Vernon 2007) (“If the trustee commits a breach of trust, the court may in its discretion
deny him all or part of his compensation.”); Burrow v. Arce, 997 S.W.2d 229, 238–41 (Tex. 1999).  Given the
jury’s conclusion that no damages obtained, any breach might not amount to the kind of “clear and serious”
breach of fiduciary duty that would lead a court, acting in equity, to require the fiduciary to disgorge his fees.  
See Arce, 997 S.W.2d at 241.  The beneficiaries were apprised of trust expenses through service with Riley’s
court filings, they do not challenge the trial court’s approval of Riley’s accountings for the trusts, and the
failures to communicate happened, in the main, after the beneficiaries and Riley became adversaries in this
suit.  While the absence of actual damages is not determinative, we hold that we need not remand for
consideration of equitable disgorgement, because, as we discuss in part VI of the opinion, we reverse the
award of trustee compensation on other legal grounds.  Our reversal of the trial court’s award of trustee
compensation obviates the need for consideration of the equitable remedy of disgorgement.  
V.      Attorney’s Fees and Trustee Compensation

The beneficiaries assert that the trial court abused its discretion in refusing to order Riley to pay their
attorney’s fees.  Section 114.064 of the Trust Code, which furnishes the authority for the beneficiaries’
request, provides that “[i]n any proceeding under this code the court may make such award of costs and
reasonable and necessary attorney’s fees as may seem equitable and just.”  Tex. Prop. Code Ann. §
114.064 (Vernon 2007).  The charge asked the jury to determine “the reasonable fee for the necessary
services of the Beneficiaries [sic] attorneys in this case . . . .”  The jury made affirmative findings, based on
uncontroverted evidence, that (1) $162,288 for preparation and trial, (2) $35,000 for appeal to the court of
appeals, and (3) $15,000 for appeal to the Texas Supreme Court were reasonable fees for those necessary
services.  The trial court, in the exercise of its discretion, declined to award fees.
“[O]nce the jury has found the value of reasonable and necessary services, the court must decide whether
the award would be equitable and just.”  Arce, 997 S.W.2d at 245–46.  Given our disposition of other legal
issues in the case, the issue of whether any award would be equitable and just warrants reconsideration.  
Accordingly, we reverse the trial court’s denial of the beneficiaries’ request for attorney’s fees and remand
for further proceedings on that issue.    
The beneficiaries also challenge the trial court’s award of attorney’s fees and trustee compensation to Riley.  
Our reversal of the trial court’s judgment as it pertains to Riley’s trustee status and the breach of trust issue
requires us to reverse the confirmation of Riley’s payment of attorney’s fees and remand for further
proceedings on that issue as well.  

We further observe that, if Riley is found to have been properly appointed trustee of the RAT and DAT, he
was statutorily prohibited from prosecuting the damages claims against Alpert on behalf of the trusts after
April 21, 2006.  Section 113.028 of the Texas Trust Code became effective in 2005.  See Tex. Prop. Code
Ann. § 113.028 (Vernon 2007).  That section provides  

A trustee may not prosecute or assert a claim for damages in a cause of action against a party who is not a
beneficiary of a trust if each beneficiary of the trust provides written notice to the trustee of the beneficiary’s
opposition to the trustee’s prosecuting or asserting the claim in the cause of action.  

Id. § 113.028(a).  The beneficiaries had previously expressed their opposition to Riley’s prosecution of the
claims against Alpert, but those expressions occurred before section 113.028’s effective date, when Riley
retained discretion to continue the prosecution.  The Legislature removed that discretion before the
beneficiaries filed their April 21, 2006 written notice of opposition.  Accordingly, when Riley received that
opposition, he had no choice but to heed their wishes and stop prosecuting the claims against Alpert.  

Any attorney’s fees or legal expenses incurred in prosecuting the damages claims against Alpert after the
beneficiaries’ written notice of opposition are not authorized by the Trust Code, and are not reasonable or
necessary as a matter of law.  As a result, we hold that Riley is not entitled to reimbursement for any attorney’
s fees or expenses incurred after April 21, 2006 in connection with his prosecution of the claims against
Alpert.    

Nor is Riley entitled to recover compensation.  Both the RAT and DAT specify that “[n]either the original
Trustee nor any successor named herein or appointed pursuant hereto shall be entitled to commissions or
other compensation for acting as Trustee hereunder.”  The plain language of these instruments thus
precludes any recovery of trustee compensation regardless of whether Riley was an authorized trustee of
those trusts.  And our holding that Riley is not the authorized trustee under the 1996 trust precludes any
recovery of compensation as a matter of law for actions taken in connection with that trust.  We therefore
reverse the trial court’s award and render judgment that Riley take nothing on his claim for trustee
compensation.

VI.     Riley’s Appointment as Successor Trustee  



The beneficiaries assert that the trial court’s appointment of Riley as successor trustee of the three trusts
violates the Texas Trust Code and the trusts themselves.  We agree.  The Code provides that

a successor trustee shall be selected according to the method, if any, prescribed in the trust instrument.  If
for any reason a successor is not selected under the terms of the trust instrument, a court may and on
petition of any interested person shall appoint a successor in whom the trust shall vest.

Tex. Prop. Code Ann. § 113.083(a).  Each of the three trust instruments expressly provides a method for
appointing a successor trustee.  Nothing in the record indicates that those methods have been tried and
failed.  The trial court abused its discretion by resorting to its equitable appointment power without first
attempting to follow the trustee selection methods prescribed by the trust instruments.  Consequently, we
reverse the portion of the judgment appointing Riley as successor trustee of the trusts.  

Because the both RAT and DAT expressly preclude any compensation for acting as trustee, the trial court
also abused its discretion in ordering that Riley receive “reasonable compensation to be approved by the
Court” for his service as successor trustee of the RAT and DAT.  Riley may not recover compensation as a
successor trustee in equity that he would not be entitled to receive under the valid express contract.  See
Woodward v. Sw. States, Inc., 384 S.W.2d 674 (Tex. 1964); Allen v. Berrey, 645 S.W.2d 550, 553 (Tex. App.
—San Antonio 1982, writ ref’d n.r.e.); see also Tex. Prop. Code Ann. § 111.0035(b) (terms of trust
instrument prevail over provisions of Trust Code); Sorrell v. Sorrell, 1 S.W.3d 867, 870 (Tex. App.—Corpus
Christi 1999, no pet.) (holding that when language of trust instrument is unambiguous, that language
controls; neither trustee nor courts can modify trustee’s powers, but must adhere to settlor’s intent).  
Because the RAT and DAT expressly foreclose the possibility that the original or any successor trustee be
compensated for his service, Riley is not entitled to recover any compensation as successor trustee of those
trusts under the judgment.



VII.   Request for Security Bond

Alpert and the beneficiaries filed a separate appeal challenging the trial court’s denial of their request that
Riley post security pending appeal.  The general rule is that an appeal may be taken only from a final
judgment.  Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2000).  This rule has exceptions, but none
applies here.  See Tex. Civ. Prac. & Rem. Code Ann. § 15.003 (Vernon 2002 & Supp. 2007), § 51.012
(Vernon 1997), § 51.014 (Vernon Supp. 2007).  The appellants cannot appeal the trial court’s denial of
security bond because that decision does not constitute a final judgment.  See Lehmann, 39 S.W.3d at 195
(“A judgment is final for purposes of appeal if it disposes of all pending parties and claims in the record,
except as necessary to carry out the decree.”).  The proper avenue for seeking the requested relief is to
challenge that decision in the cause in which the appeal is pending pursuant to Texas Rule of Appellate
Procedure 24.  Tex. R. App. P. 24.4(a).  We therefore dismiss appellate cause number 01-06-00505-CV for
want of jurisdiction.  See New York Underwriters Ins. Co. v. Sanchez, 799 S.W.2d 677, 679 (Tex. 1990)
(holding that appellate court’s assumption of jurisdiction over interlocutory order when not expressly
authorized by statute is fundamental jurisdictional error).



    We consider the substance of appellants’ request for relief as a motion ancillary to their appeal on the
merits.  See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 242 (Tex. 2004) (“It has long been
our practice to consider the substance of motions rather than their form.”); Doctor v. Pardue, 186 S.W.3d 4,
16 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (“[W]e look to an instrument’s substance rather than its
form.”).   

Alpert and the beneficiaries’ request arises out of the trial court’s denial of their motion pursuant to Texas
Rule of Appellate Procedure 24.2(a)(3) that the trial court set an amount of security to supersede Riley’s
appointment pending this appeal after the trial court reappointed Riley as trustee of the three trusts.  Alpert
and the beneficiaries contend that the trial court erroneously disregarded the mandatory language of the
rule in failing to set an amount of security sufficient to supersede Riley’s reappointment.

Rule 24.2(a)(3) provides

When the judgment is for something other than money or an interest in property, the trial court must set the
amount and type of security that the debtor must post.  

Tex. R. App. P. 24.2(a)(3).  We agree that this language is mandatory, but disagree that it applies to the
reappointment of Riley as trustee.  The provision refers to the security that the judgment debtor must post.  
The record demonstrates that Riley urged the court to reappoint him as trustee pending this appeal, and that
the reappointment is adverse to the appellants’ position, not his.  Further, as the appellants acknowledge,
the judgment awards Riley, as trustee, a money judgment.  Riley is the judgment creditor, not a judgment
debtor.  Thus, Rule 24.2(a)(3) does not apply.  We conclude that the trial court did not err in denying the
appellants’ request to set security and likewise decline to do so.

Conclusion

    Based on the holdings set forth in this opinion, we rule as follows:

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

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

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

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

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

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

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

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

(9)     We affirm part XIII of the judgment only to the extent it recognizes the release of Riley as trustee and
termination of his trusteeship as pertains to any trusteeship that may later be found to be valid.  We reverse
the remainder of part XIII and render judgment that any successor trustees for the RAT, DAT, and 1996 trust
are to be selected in accordance with the terms of the applicable trust instrument, after identification of the
valid trustee for each trust.  

(10)    We deny the appellants’ request that Riley post a security bond pending appeal.

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

    



                                                    Jane Bland

                                                    Justice



Panel consists of Chief Justice Radack and Justices Jennings and Bland.











--------------------------------------------------------------------------------

[1] The appeal is filed in our court under cause number 01-06-00505-CV.

[2] Computer word processing records and testimony in evidence demonstrate that these letters were
created on September 12 and 30, 1997, not on August 1.

[3] Riley’s paralegal admitted that she did not prepare the April 3, 1997 letter until November 18, 1997, which
is consistent with the computer’s word processing records.  Alpert testified that he did not see that letter until
1999.  

[4] In Bennett v. Coghlan, No. 01-04-00104-CV, 2007 WL 2332969 (Tex. App.—Houston [1st Dist.] Aug. 16,
2007, pet. denied) (mem. op.), this Court decided that any error in granting a partial summary judgment
determining an attorney’s hourly rate was rendered harmless by having that issue fully litigated at trial and
submitted to the jury without objection.  That decision primarily relied on the principle underlying the Texas
Supreme Court’s holding in Progressive County Mutual Insurance Co. v. Boyd, 177 S.W.3d 919 (Tex. 2005),
that subsequent events at trial can render harmless an erroneous grant of partial summary judgment.  2007
WL 2332969 at *2 (citing Progressive County Mut. Ins. Co., 177 S.W.3d at 921).  Here, in contrast, none of
the parties requested the jury to determine trustee status; and such determination would have contravened
the trial court’s legal decisions.

[5] Nevertheless, we observe that, during the charge conference, Alpert objected to the jury instruction that
Riley was trustee and offered jury questions on trusteeship issues, thus informing the trial court that the
issue was contested.

[6] The Texas Trust Code appears in Title 9 of the Property Code.  See Tex. Prop. Code Ann. §§ 101.001 –
123.005 (Vernon 2007).

[7] Riley also sued Alpert for conversion of trust assets, but the trial court granted a directed verdict on that
theory in favor of Alpert, and Riley does not appeal it.  We therefore do not consider a trustee’s standing to
sue a settlor for losses to a trust under that theory.

[8] These parts concern issues not raised on appeal.