Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Harvey R. Sorenson, a partner at Foulston Siefkin LLP (Foulston) in Wichita, Kan., created and drafted the Eleanor Pierce Stevens Trust in 1989. Sorenson was the first trustee. Stevens, then 85 years old, signed the trust in Dallas. She was the designated primary beneficiary for 10 years, to be followed by her son, J. Howard Marshall III. Sorenson remained the trustee until resigning in 1996. That year, Marshall III sued Sorenson and Foulston in Texas state court, raising various breach-of-fiduciary duty/mismanagement claims regarding the trust, as well as other claims regarding his father’s (Marshall II) estate. Sorenson and Foulston retained a law firm in Texas to represent them in the Texas action. A partial summary judgment was awarded Sorenson and Foulston in 1999, dismissing all claims relating to the trust and Stevens’ estate. In 2001, Sorenson and Foulston prevailed on the remaining claims. Sorenson and Foulston had approximately $1.5 million in charged fees and expenses from the Texas action. Foulston’s liability insurance paid all of them beyond the deductible ($250,000), which Foulston paid. In turn, Sorenson and Foulston requested payment from Wells Fargo, the current trustee of the trust, for those fees and expenses. Wells Fargo refused and filed this action in Texas state court, seeking a declaration under Texas Civil Practice & Remedies Code �37.001 that trust assets could not be used to pay those fees and expenses. Invoking diversity jurisdiction, Sorenson and Foulston removed the suit to federal court, and counterclaimed for negligence and breach of contract or violation of the trust. They requested approximately $1.3 million from Wells Fargo for the fees and expenses from the Texas action. The district court realigned the parties, making Sorenson and Foulston the plaintiffs and Wells Fargo the defendant. After cross-motions for summary judgment were filed, the district court held: 1. Sorenson was entitled to reimbursement of fees and expenses he incurred before he received the partial summary judgment in 1999 in the Texas action; 2. The collateral-source rule, which bars reduction of an award merely because a third party pays an incurred liability, applied to this action; 3. Sorenson was not entitled to recover any fees or expenses incurred after the 1999 partial summary judgment, absent showing special circumstances warranting recovery, because that ruling extinguished all claims relating to the trust; and 4. Foulston had no right to subrogation because it was jointly and severally liable for Sorenson’s fees and expenses. Wells Fargo claimed the district court erred by granting Sorenson, and denying it, summary judgment on Sorenson’s reimbursement claim; and by applying the collateral source rule. Sorenson and Foulston maintain the court erred by denying recovery for fees and expenses incurred after the partial summary judgment. Foulston also contends it is entitled to equitable subrogation for fees and expenses incurred by Sorenson but paid by Foulston. HOLDING:The judgment was vacated and rendered for Wells Fargo. The court recited the applicable trust language: “if the trustee is sued on Trust-related issues and is adjudicated or is otherwise demonstrated, to the satisfaction of the court in which such suit is instituted, to be free from liability . . . [the] Trustee shall be entitled to reimbursement out of the trust estate for all reasonable costs and expenses, including attorneys’ fees, incurred in resisting such suit.” Sorenson was sued in his capacity as trustee and adjudicated not liable. The court stated that the linchpin of the appeal was the fact that Sorenson did not have to pay anything “in resisting” the Texas action (other than minimal expenses, mostly related to travel, for which he was reimbursed by Siefkin). The court looked at several authorities, including Black’s Law Dictionary, and concluded: “Because Sorenson is not out any money, and never will be, there is nothing”to pay [him] back or compensate [him] for,’ even if he did incur expenses at some point. “To hold otherwise would be to allow Sorenson, a lawyer, to claim he drafted the Trust’s”reimbursement’ clause with the understanding it might allow him, in effect, to receive a windfall if he prevailed in an action against him in his capacity as trustee. That cannot be the law.” OPINION:Barksdale, J.; Smith, Barksdale, and Dennis, J.J.

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?

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


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.