The Texas Supreme Court has the opportunity to accept a petition for review in an important case dealing with a spendthrift trust, trustee capacity, and trustee due process rights. In Allison v. Borunda, P.C., siblings Caroline and Richard Allison (“Siblings”) hired attorneys on contingent fee agreements to investigate their father’s 2013 estate plan. No. 14-24-00753-CV, 2025 Tex. App. LEXIS 9388 (Tex. App.—Houston [14th Dist.] December 9, 2025, no pet. history). The attorneys were Borunda, P.C., Jorge Borunda, Nicholas Abaza, Law Offices of Nicholas Abaza, P.C., Michael Trevino, and Law Office Of Michael A. Trevino, PLLC. The contingent fee agreements were signed with the siblings in their individual capacities and both contingent fee agreements called for a thirty-five percent payment on any recovery achieved as a result of the lawyers’ handling of the dispute with the opposing party. The fee agreements also had a broad arbitration clause.
The attorneys negotiated a settlement giving the siblings control of approximately half the estate (there is a dispute as to whether this was a successful settlement or not). The father’s estate would be divided into two trusts: the marital trust and the family trust. Once the settlement was completed, the opposing party would retain approximately half of the estate through her control of the marital trust. The siblings would gain control over the other half through the family trust. Among the assets included in the family trust was a separate entity, Minaki, L.P., whose account had a balance of at least $9,500,000.00 on the date of the mediation.
The Siblings then refused to pay the attorneys’ fees pursuant to the contingent fee agreement (but offered to pay a fair value), terminated the attorneys, and filed suit against them for malpractice. The attorneys compelled arbitration based on clauses in the fee agreements. The arbitrator ruled in favor of the attorneys.
The arbitrator held that the brother was individually liable for $1,416,915.68 to all the lawyers, and owed $421,133.32 in pre-judgment interest on that award; the sister was individually liable for $1,352,149.80 to all of the lawyers, and owed $401,883.72 in pre-judgment interest on that award; the siblings were individually liable for attorneys’ fees of $454,470.20 incurred by the lawyers in the arbitration; and the siblings were each liable for administrative fees of the AAA totaling $56,225.00 and arbitrator’s fees totaling $133,318.81. Importantly, the arbitrator also ordered the siblings to each “direct the trustee(s) of the Allison Family Trust to liquidate sufficient trust assets to pay the Final Award and all accrued interest in full.” The arbitrator also ordered a “freeze” on Minaki, L.P.’s account until the final award and all accrued interest had been paid in full. The siblings appealed.
The court of appeals first affirmed the trial court’s order compelling the arbitration under the fee agreement. Where contingent fee agreements required that ”any and all disputes” be resolved by binding arbitration in accordance with the Commercial Arbitration Rules then in effect with the AAA, and those rules gave arbitrators power to rule on their own jurisdiction, the court of appeals held that the trial court did not abuse its discretion in compelling arbitration.
The court then turned to the issue of the siblings’ challenges to the arbitration award:
Review of an arbitration award is “extraordinarily narrow” and “exceedingly deferential.” Consistent with the deferential and narrow scope of review of an arbitration award, we indulge every reasonable presumption in favor of the Award and none against it. We review appellants’ challenges to the arbitration awards under a “heavy presumption” in favor of confirming the awards…
Under the FAA, an arbitration award must be confirmed unless it is vacated, modified, or corrected under specifically enumerated statutory grounds. Under the FAA, courts may vacate an arbitrator’s decision “only in very unusual circumstances.” Significantly, the grounds on which a trial court may vacate an arbitration award under the FAA are limited to those expressly identified in section 10 of the FAA, to the exclusion of all other potential grounds. Section 10(a) of the FAA provides that a trial court may vacate an arbitration award for any of the following reasons: (1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
Id.
The court addressed the Siblings’ argument that the arbitrator exceeded her authority by ordering nonparties to pay fees and freezing accounts:
Appellants both argue that the arbitrator exceeded her powers by freezing an account of Minaki, L.P., a non-party to the litigation and also by ordering non-parties to the litigation to liquidate trust assets. As summarized above, the dispute underlying this appeal was between appellants and Robin. Appellants believed Robin had improperly obtained control over Dr. Allison’s estate and they retained the Lawyers to reduce Robin’s control and gain for themselves immediate access to significant portions of Dr. Allison’s estate. Appellants signed contingent fee agreements with the Lawyers to accomplish their goal. The Lawyers eventually achieved appellants’ goal as reflected in the MSA between Robin and appellants. Pursuant to the MSA, appellants gained immediate control over approximately half of Dr. Allison’s estate through their appointment as co-trustees of the Family Trust. As co-trustees, appellants had the right to access all principal and income from the Family Trust. As mentioned above, among the assets included in the Family Trust was Minaki, LP, which Robin represented had an account with a balance of at least $9,500,000.00 on the date of the mediation. These funds were held in an account with Fidelity Investments and the value of the account grew to almost $11,000,000.00. After completion of the settlement, appellants, while refusing to pay the Lawyers the fees required under the contingent fee agreements, withdrew $10,831,473.02 from the Fidelity account and moved the funds to an account at Charles Schwab. It was from this fund that the arbitrator prohibited appellants from withdrawing or transferring any funds pending further order by the arbitrator.
The arbitration agreements contain very broad arbitration clauses requiring that “[a]ny and all disputes, controversies, claims or demands arising out of or relating to [the contingent fee agreements] or any provision hereof, the providing of services by Attorney to Client, or in any way relating to the relationship between Attorney and Client, whether in contract, tort, or otherwise, at law or in equity, for damages or other relief shall be resolved by binding arbitration . . . .” Because the dispute over the payment of the Lawyers’ contingent fee fits squarely within the language of the arbitration agreement, we conclude that the arbitrator did not exceed her powers by resolving each of the Lawyers’ claims against appellants. The fact the arbitrator may have misinterpreted or misapplied the law in its award does not empower this court to vacate it.
Id.
The court then held that even if the arbitrator violated Texas public policy by enforcing contingent fee agreements, this was not a valid ground for vacating the arbitration award under the FAA. The court held that the arbitrator did not exceed her powers by ordering appellants to pay attorneys from settlement proceeds or by awarding attorneys’ fees, as these remedies were rationally inferable from the broad arbitration agreements.
This opinion is very important to the jurisprudence of Texas, and the Texas Supreme Court should grant the petition and reverse the lower courts’ judgments. First, the lower courts and the arbitrator erode spendthrift trust creditor protection. The arbitrator ordered co-trustees of a spendthrift trust to pay the debts of the beneficiaries, not the trust. That is not correct. The enforcement of spendthrift trusts is critically important to Texas’s estate-planning and banking sectors because settlors carefully and intentionally create these trusts to provide creditor protection. Arbitrators and courts should not be permitted to erode the settlors’ intent. Therefore, clear judicial guidance enforcing spendthrift trust protections is essential.
Second, the lower courts’ and the arbitrator’s decisions inject confusion into an area of law that will only become more important in the coming years. As baby boomers increasingly transfer wealth through trusts, courts, beneficiaries, and fiduciaries will need clear and consistent guidance for administering these vehicles. Texas courts are likely to stand at the forefront of this growing wave of wills-and-trusts litigation driven by the great transfer of wealth from the baby-boomer generation. One publication reports:
America stands at the edge of the most dramatic shift in personal finance ever measured—a generational transfer of nearly $124 trillion in assets over just 25 years. According to a wealth transfer report from Boston wealth management firm Cerulli Associates, published in June 2025, a combination of demographic and economic forces will see a record amount of wealth move from baby boomers and older Americans to heirs, widows, and charities by 2048. This transformation has profound implications for families, advisors, businesses, and every segment of the financial industry.
The use of trusts will be an increasingly important aspect of estate planning for the baby-boomer generation. See Harry S. Margolis, The Baby Boomers’ Guide to Trs.: Your All-Purpose Estate Planning Tool (2021) (found on Amazon); Ronald Farrington Sharp, Living Trusts for Everyone: Why a Will Is Not the Way to Avoid Probate, Protect Heirs, and Settle Estates (2017) (same). If courts follow the lower courts’ decision in this case, future courts will not have the same level of respect for spendthrift trust protection they have historically had.
Third, the lower courts’ and the arbitrator’s decision ignores the settlor’s intent in creating the Trust. The cardinal principle in construing a trust is the settlor’s intent. Parrish v. Mills, 101 Tex. 276, 106 S.W. 882, 883 (Tex. 1908); Soefje v. Jones, 270 S.W.3d 617, 628-631 (Tex. App.—San Antonio 2008, no pet.). Indeed, the Texas Legislature has expressly stated that the words used by a settlor in creating a trust generally control over or trump other statutory provisions. Tex. Prop. Code Ann. § 111.0035(b). To modify a trust, a court must do so in a “manner that conforms as nearly as possible to the probable intention of the settlor.” Id. § 112.054(b). Here, the settlor created an irrevocable spendthrift trust for the Siblings benefit to shield the Trust’s assets from the Siblings’ creditors, including the attorneys in this case. The lower courts set a dangerous precedent by effectively writing the spendthrift trust provisions out of the Trust, disregarding its creditor-protection purpose, and ordering non-part trustees and a non-party entity to satisfy the Siblings’ personal debts as beneficiaries. Courts and arbitrators should give greater respect to the settlors’ intent.
Fourth, this case is important because it revolves around the enforceability of a contingency fee agreement against non-parties. For a contingent fee agreement to be enforceable in Texas, it must satisfy strict statutory and professional conduct rules, must be in writing, and must be signed by the client. Tex. R. Prof. Conduct 1.04, Tex. Gov’t Code § 82.065. “Because a lawyer’s fiduciary duty to a client covers contract negotiations between them, such contracts are closely scrutinized.” Anglo-Dutch Petroleum International, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 445 (Tex. 2011). A lawyer has a duty to “appreciate the importance of words” and “detect and repair omissions in client-lawyer contracts.” Id. at 450; see also In re Davenport, 522 S.W.3d 452, 457-58 (Tex. 2017). Where the attorney contract in this case did not include the trustees, who never signed it in those capacities, the lower courts and the arbitrator violated the Texas statute and the Texas Rules of Professional Conduct by taking trust assets to satisfy the Siblings’ obligations to the attorneys.
Fifth, this case is important because it raises common issues in trust litigation regarding the importance of capacity in determining whether a trustee is a party to a suit or arbitration proceeding. These issues are raised often in trust disputes, and the lower court’s opinion in this case will certainly muddy the waters as to when a court can replace the non-party trustee’s discretion with its own and order a non-party trustee to do a discretionary act. The arbitration clause bound only the “Client,” explicitly defined as the Siblings in their individual capacities. As trustees, the Siblings occupied a legally distinct role. An arbitration clause does not automatically extend to parties in different legal capacities unless explicitly stated. The arbitrator, therefore, impermissibly expanded the scope of the arbitration clause to include non-signatory trustees.
The Texas Supreme Court should grant the petition in this case because the lower courts issued a dangerous precedent that contradicts Texas statutes, common law, and the public policy that settlors’ intent should be followed regarding spendthrift trust protection.
The author filed an amicus brief in this case advocating for the Texas Supreme Court to grant the petition. The amicus is attached here.