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In re Alexander

Court of Appeals of Texas, Fourteenth District

July 30, 2019

IN RE EDWARD ALEXANDER, ADAM JOHNSON, WAYNE THOMPSON, JR., LILYNN CUTRER, AND KAREN AUCOIN, INDIVIDUALLY AND AS CO-TRUSTEES, Relators

          ORIGINAL PROCEEDING WRIT OF MANDAMUS Probate Court No. 4 Harris County, Texas Trial Court Cause Nos. 365, 053 & 365, 053-404

          Panel consists of Justices Wise, Jewell, and Bourliot.

          OPINION

          FRANCES BOURLIOT JUSTICE

         Relators Edward Alexander, Adam Johnson, Wayne Thompson, Jr., Lilynn Cutrer, and Karen Aucoin, Individually and as Co-Trustees filed a petition for writ of mandamus in this court. See Tex. Gov't Code Ann. § 22.221; see also Tex. R. App. P. 52. By a separate filing, relator Elaine T. Marshall joined in the petition. In the petition, relators ask this court to compel the Honorable James Horowitz, presiding judge of Probate Court No. 4 of Harris County, to vacate his May 2, 2019 order granting the motion to compel production filed by real party in interest Preston Marshall.[1] We conditionally grant the petition.

         I. Background

         E. Pierce Marshall, Sr. created the Harrier Trust, of which Preston Marshall is the income and principal beneficiary, and the Falcon Trust, of which Preston is the initial income beneficiary and his children are the successor income and principal beneficiaries. Elaine T. Marshall was named the original trustee for both the Harrier Trust and Falcon Trust (the "Trusts"). Elaine appointed relators Alexander, Johnson, Thompson, Cutrer, and Aucoin as Co-Trustees of the Trusts in December 2016 (the "Co-Trustees"). On January 11, 2017, Elaine sought a declaratory judgment in the Fourteenth District Court, Calcasieu Parish, Louisiana ("Louisiana Court") to approve the appointment of the Co-Trustees of the Harrier Trust (the "Louisiana Action").

         On September 29, 2017, Preston filed suit against Elaine and the Co-Trustees in Probate Court No. 4 of Harris County, alleging that they had breached their fiduciary duties (the "Texas Action"). In short, Preston alleged that Elaine violated her fiduciary duties as trustee by executing documents appointing the Co-Trustees when those documents violated the Trusts' terms. Further, Preston alleged that the Co-Trustees violated fiduciary duties because they agreed with Elaine to withhold distributions from Preston, which increased the trustees' compensation.

         Preston subsequently took the deposition of Co-Trustee Adam Johnson in the Louisiana Action. In his deposition, Johnson testified that he understood that Elaine had sole discretion on some issues for a certain period of time, though he could not recall which issues or the time period. He thought one of the issues may have been accumulation of income. He believed he came to that understanding from a document he believed he and others signed. Specifically, he stated the following:

Q. Was it your understanding subsequent to the acceptances that all of you did in Exhibit 2, was it your understanding that Mrs. Marshall could no longer act alone as a trustee?
A. No, I don't think that was my understanding.
Q. So you thought she could go ahead and act as a trustee on her own without any concurrence from the other co-trustees?
* * *
A. My understanding is that she could - she had sole discretion on - on some issues.
* * *
Q. What issues?
A. I recall there being some understanding that there was going to be a period of time where we were going to be essentially, you know, learning so that we weren't . . . . I don't know whether or not she could - "discretion" and "act" are two different things, I guess. Could she act alone? I believe - I recall thinking that we were - trustees as a group, that decisions would be made as a group.
Q. Well, you said there were certain areas that you understood in which she would have sole discretion. What were those areas?
A. I can't specifically recall the areas. I think one of them might have been accumulation.
Q. Whether to accumulate or distribute income?
A. Right.
Q. And how did you come by that understanding that for a period of time she would have sole discretion on that issue?
A. It was in a - I believe it was in a document.
Q. And so when you met for the first quarterly meeting of the trustees after you had been appointed, it was your belief that Mrs. Marshall had sole discretion over whether to make distributions to Preston Marshall?
A. Yes, for a period of time.
Q. What was the period of ...

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