Moon v. Lesikar

Click here for the full text of this decision FACTS:Carolyn Ann Lesikar Moon and Woody Lesikar were brother and sister. In January 1990, their father Woodrow V. Lesikar established the Woodrow V. Lesikar Family Trust, naming himself and Woody co-trustees. Woodrow placed in the family trust 10,000 shares of stock in West Houston Airport Corp. The family trust provided that Woodrow would receive all net income from the trust assets during his lifetime. Upon Woodrow’s death, the trust would become irrevocable, and separate special trusts would be created for Woody, Carolyn, Margie Pugh Morgan (Woodrow’s wife) and Woodrow’s grandchildren. Woody’s special trust would receive all of the airport stock, the grandchildren’s trusts would receive certain real property, and Margie’s trust would receive certain stock holdings, while the remainder would be divided between Woody’s special trust and Carolyn’s special trust. Woodrow reserved the right to revoke the trust agreement or amend the trust by written notice to the trustee. In keeping with his right to revoke, in 1991, Woodrow revoked, in writing, part of the family trust, removing Margie as a beneficiary. In 1997, Woodrow decided to transfer the 10,000 shares of airport stock to the S&S Trust, a trust established for Woody’s children, Shelly Ann Lesikar and Stacy Jayne Lesikar Martin. On Sept. 5, 1997, Woodrow wrote Carolyn explaining his decision. Woodrow also stated in that letter he was going to revise his will to provide for Margie, he would ask Woody to have his will redrafted with input from Carolyn and Margie, and he might make other changes. On March 16, 1998, Woodrow signed a new trust agreement that stated it “modifies, amends and supersedes the Trust Agreement and any modifications and amendments previous to the date of the signing hereof.” The amended family trust was effective as of Dec. 31, 1997. The amended family trust reinstated Margie as a beneficiary. Upon Woodrow’s death, $250,000 would be placed into a trust with the income payable to Margie for her lifetime. Woodrow’s grandchildren would each receive $10,000; Shriner Children’s Hospital would receive $50,000; and the remainder would be divided equally between Woody and Carolyn and distributed to their respective special trusts. The amended family trust did not mention the distribution of the airport stock to Woody as the original trust had. Woodrow sold the airport stock to Woody for $2,000 for the benefit of the S&S Trust. On his 1997 federal income tax return, Woodrow claimed a $191,228 loss from the sale, which he used to offset a $1,674,203 gain from the sale of other stock. Although the tax return, which is dated Feb. 24, 1998, stated that the sale of the stock took place on Dec. 30, 1997, Woodrow did not receive the $2,000 until December 1998. The assignment of the airport stock to the S&S Trust is dated Dec. 30, 1998. On Jan. 28, 2001, Woodrow died, thereby making the amended family trust irrevocable. On Aug. 19, 2003, Carolyn filed a petition for construction of trust, declaratory judgment, accounting, appointment of a receiver and injunctive relief against “Woody K Lesikar, Individually, as Trustee of the Woodrow V. Lesikar Special Trust, and Independent Executor of the Estate of Woodrow V. Lesikar; West Houston Airport Corporation; Shelly Ann Lesikar, Individually and as Trustee of the S&S Trust; Stacy Jayne Lesikar Martin, Individually and as Trustee of the S&S Trust; and the S&S Trust” (collectively, the airport defendants). Complaining of the sale of the airport stock to Woody for $2,000 as an inadequate price, Carolyn brought claims for negligence, breach of fiduciary duty, conversion and civil conspiracy against Woody, and civil conspiracy against the S&S Trust. Carolyn, Woody and the airport defendants moved for summary judgment on the issue of the sale of the airport stock to Woody. The trial court denied Carolyn’s motion for summary judgment, and granted Woody’s and the airport defendants’ motions for summary judgment. The trial court ordered the portion of the case relating to the sale of the airport stock severed from the remainder of the case. Carolyn appealed the denial of her motion for summary judgment and the granting of the airport defendants’ motions for summary judgment. HOLDING:Affirmed. In her 10th issue, Carolyn claimed that the trial court erred in granting summary judgment in favor of the airport defendants on the ground that she lacked standing to complain about the sale of the airport stock, because she had no interest in it at the time of the sale. Carolyn asserted that the 1997 version of the family trust was in effect at the time of the sale of airport stock. Carolyn contended that because the 1997 trust made no mention of the airport stock, it was part of the residuary to be divided between her and Woody. Clearly, the court stated, if the 1990 version of the family trust was in effect at the time of the sale, Carolyn had no interest in the airport stock because the trust specifically provided Woody’s special trust was to receive the stock. Moreover, the court held that even if the 1997 trust was in effect at the time of the sale, Carolyn had no standing to challenge the sale of the Airport Stock. Explaining its holding, the court noted that any interested person may bring an action under Texas Property Code �115.001. Section 111.004(7) of that code defines an interested person as “a trustee, beneficiary, or any other person having an interest in or a claim against the trust or any person who is affected by the administration of the trust.” Carolyn, as a contingent beneficiary, appeared to meet the definition of an interested person with standing to bring suit against a trustee for breach of fiduciary duty. The court stated, however that Woodrow as settlor retained the power to revoke or amend the 1997 amended family trust. Until the death of Woodrow, he was also the sole beneficiary of the 1997 amended family trust. The question presented, the court stated, “is whether a contingent beneficiary can complain of a transaction by the settlor of a revocable trust, prior to the vesting of her interest upon the death of the settlor.” Finding no Texas case on point and citing other jurisdictions, the court concluded that “the vesting of the contingent benficiaries’ [sic] interests was subject to [Woodrow] Lesikar’s discretion before his death.” Carolyn also complained that the conveyance of the airport stock was not in writing, in accordance with Texas Property Code �112.105(c), which provides that “[i]f a trust was created by a written instrument, a revocation, modification, or amendment of the trust must be in writing.” The court noted a 1996 opinion by the 3rd Court of Appeals, Starcrest Trust v. Berry, in which the trial court found the settlor’s execution of a deed of trust pledging certain trust property to secure a loan manifested the settlor’s intention to revoke the trust. The court found that the reasoning of Starcrest Trust applied equally to cases including the Lesikor case where the settlor conveyed only part of the trust corpus to a third party. The court concluded that Woodrow showed his intent to revoke the family trust with respect to the airport stock by his conveyance of that stock to the S&S Trust. Carolyn further complained that Woodrow did not provide written notification of revocation to himself or Woody, as trustees, as required by the 1997 amended family trust. But the court stated that when the trustee is also the settlor of the revocable trust, the settlor is not required to serve written notice on himself, which would be “absurd.” Moreover, the court saw “no reason to impose this technical requirement when [Woodrow] was both settlor and trustee and he effectuated the sale of the Airport Stock in his capacity as trustee of the 1997 Amended Family Trust.” The court concluded that because Woodrow was the settlor of the trust with the power to revoke the trust, the sole beneficiary of the trust while alive, and co-trustee of the trust, Carolyn had no standing to complain of Woodrow’s disposition of family trust assets, including the airport stock. The court held that the trial court did not err in granting Woody’s and the airport defendants’ motion for summary judgment and denying Carolyn’s motion for summary judgment. OPINION:Hudson, J.; Anderson and Hudson, JJ. CONCURRENCE:Guzman, J. “I agree with much of the reasoning of the cases on which the majority relies, but those cases are more suited to an analysis of standing under the common law rather than a determination of standing conferred by statute. Here, we need not look outside the Texas Trust Code to determine whether Carolyn has statutory standing. Thus, although I agree with the majority’s disposition of the case, as a threshold matter I would hold that Carolyn has standing to bring her claims under the Texas Trust Code. I would therefore reach the same result as that stated by the majority only after considering Carolyn’s claims on the merits.”