Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:The trial court entered and the court of appeals affirmed a judgment for $351,352 against The Ray Malooly Trust. The latter appeals, pointing out that a trust is not a legal entity. The Juhls sued the trust in May 1999, alleging a breach of lease. More than three years later, on the day trial began, the trust filed a verified answer stating for the first time that “Defendant, The Ray Malooly Trust does not have capacity to be sued.” The trial court denied leave to file the amended pleading on grounds of surprise. HOLDING:The petition for review is denied. The court of appeals stated that “a number of Texas cases indicate a trust may be named as a party without inclusion of a trustee.” The general rule in Texas (and elsewhere) has long been that suits against a trust must be brought against its legal representative, the trustee. The court of appeals noted that the Code Construction Act specifies that “person” includes a “. . . business trust, estate, trust, partnership, association, and any other legal entity.” But the Code Construction Act addresses the construction of state codes, not the capacity to sue or be sued. The court of appeals pointed to a Texas Trust Code provision stating that in contract cases, “the plaintiff may sue the trustee in his representative capacity, and a judgment rendered in favor of the plaintiff is collectible by execution against the trust property.” �114.084(a). From the use of “may,” the court implied that plaintiffs could sue trusts in other ways too. But the word “may” (unless context or other statutes indicate otherwise) “creates discretionary authority or grants permission or a power.” Texas Government Code �311.016(1). In the context of the Trust Code as a whole, the court states, this provision grants contract claimants permission or power to sue the trustee, not to sue someone else. While the court of appeals incorrectly reasoned that a trust can sue or be sued directly, it reached the right result here because the trust waived any objection to capacity by filing its verified pleading too late, the court decides. The trust answered discovery “by and through its trustee, Raymond Malooly.” Malooly was deposed, and he testified at trial. By failing to raise a timely objection to capacity, he waived any objection that judgment had to be rendered against the trust, rather than himself as trustee. OPINION:Per curiam.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.