In American Bank, N.A. v. Moorehead Oil & Gas, Inc., plaintiffs (trustees and beneficiaries) filed suit to determine the value of ownership interests in corporate stock under section 10.361 of the Texas Business Organizations Code. No-13-17-00641-CV, 2018 Tex. App. LEXIS 9703 (Tex. App—Corpus Christi November 29, 2018, no pet. history). The trial court granted summary judgment for the defendant on two grounds: the statute of limitations and standing. The plaintiffs appealed. The court of appeals first reversed as to the statute of limitations ground, and then addressed the standing issue. In its summary judgment motion, the defendant argued that the plaintiffs lacked standing in their capacity as beneficiaries because of the general rule that only trustees have the power to bring suit on behalf of a trust. The defendant argued that, although there are exceptions to this general rule, they did not apply because the plaintiffs did not plead that the trustee wrongfully refused to bring suit. Id. (citing Interfirst Bank-Hous., N.A. v. Quintana Petrol. Corp., 699 S.W.2d 864, 874 (Tex. App.—Houston [1st Dist.] 1985, writ ref’d n.r.e.) (“It is only when the trustee cannot or will not enforce the cause of action that he has against the third person that the beneficiary is allowed to enforce it.”); In re XTO Energy Inc., 471 S.W.3d 126, 131 (Tex. App.—Dallas 2015, orig. proceeding) (noting that a “trustee’s refusal to bring suit must be wrongful for [the beneficiary] to be allowed to step into the trustee’s shoes and maintain a suit on the Trust’s behalf”)). The court of appeals held:

Here, the live petition named the following as plaintiffs: (1) the Bank as trustee or co-trustee of all three trusts; (2) John J. Buckley Jr. and Kelly Rose Kinard in their capacity as co-trustees of their respective trusts; and (3) the Buckleys in their capacity as beneficiaries of their respective trusts. Moorehead is correct that the Buckleys lacked standing in their capacity as beneficiaries because they did not assert in their petition that the trustee wrongfully refused to bring suit. See In re XTO Energy Inc., 471 S.W.3d at 131. Additionally, Moorehead is correct that the Buckleys lacked standing as “beneficial owners” of the stock under section 10.361(g) because the shares were not held “in a voting trust” or “by a nominee.” See Tex. Bus. Orgs. Code Ann. § 10.361(g).

However, Moorehead does not dispute that the Bank had capacity as trustee or co-trustee, or that John J. Buckley Jr. and Kelly Rose Kinard had capacity as co-trustees of their respective trusts, to sue under business organizations code section 10.361. We conclude that they did have such capacity, and the trial court erred in granting summary judgment against them. See Tex. Prop. Code Ann. § 113.019; Ray Malooly Tr., 186 S.W.3d at 570. On the other hand, Lisa Marie Buckley, who is not a co-trustee of her trust and therefore brought suit only in her capacity as beneficiary, does not have standing for the reasons stated above, and the trial court did not err in granting summary judgment against her.

Id. Therefore, the court reversed as to the co-trustees but affirmed the summary judgment as against the beneficiary.

Photo of David Fowler Johnson David Fowler Johnson

dfjohnson@winstead.com
817.420.8223

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

dfjohnson@winstead.com
817.420.8223

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law