In=20 The
For=20 The
SUSAN C. =
CONTE,=20
Appellant LOUIS M. =
DITTA,=20
GUARDIAN OF THE ESTATE OF DORIS L. CONTE, AN INCAPACITATED PERSON, =
Appellee
On =
Appeal from=20
Probate Court No. 1 Harris =
County,=20
Texas Trial =
Court Cause=20
No. 284,968-407
MEMORANDUM=20
OPINION Appellee, Louis M. Ditta =
("Ditta"),=20
acting in his capacity as the Guardian of the Estate of Doris L. =
Conte=20
("Doris"), an Incapacitated Person, filed suit seeking the removal =
of=20
appellant, Susan C. Conte ("Susan"), as trustee of the Conte =
Family Trust.=20
After a bench trial, the probate court ruled in Ditta's favor and =
issued=20
two orders. The first order removed Susan as trustee, and the =
second order=20
modified the terms of the Conte Family Trust and appointed a =
successor=20
trustee. In three issues, Susan argues that the probate court =
erred in (1)=20
removing her from her position as trustee, (2) modifying the =
trust's=20
prescribed method of appointing successor trustees, and=20
(3) appointing a successor trustee. We reverse and remand for =
orders=20
consistent with this opinion. BackgroundThe Conte=20
Family and Their Trusts In 1987, =
Joseph P.=20
Conte, Sr. ("Joseph, Sr.") and Doris, husband and wife, created an =
inter=20
vivos trust known as the Joseph P. Conte Family Trust (the =
"Trust").=20
Joseph, Sr. was named as the original trustee of the Trust. So =
long as=20
both he and Doris were living, Joseph, Sr. was to "distribute the =
income=20
and principal of the Trust to [himself and his wife] or to such =
other=20
person or persons and in such amounts as [he and his wife =
directed]." Upon=20
the death of either Joseph, Sr. or Doris, the corpus of the Trust =
was to=20
be divided into three separate trusts. First, the separate and =
community=20
property of the surviving spouse was to be funneled into a =
"Management=20
Trust" for the benefit of that spouse. Second, the separate and =
community=20
property of the deceased spouse was to be placed into a "Family =
Trust."=20
Finally, a third trust was to be created, using a portion of the =
Family=20
Trust, to provide for the tax and other expenses accompanying the =
death of=20
one of the spouses. This third trust was called the "Marital =
Deduction=20
Trust." In March 1993, Joseph, Sr. =
died. He was=20
survived by Doris and their two children, Susan and Joseph P. =
Conte, Jr.=20
("Joseph, Jr."). The terms of the Trust provided that, upon the =
death of=20
Joseph, Sr., Doris, Susan, and Joseph, Jr. were to serve as =
co-trustees.=20
The co-trustees were obligated to create and fund the three =
separate=20
trusts for the primary benefit of Doris. The co-trustees were =
further=20
obligated to make quarterly distributions of the Management =
Trust's net=20
income to Doris, as well as "such amounts of principal as . . . =
she may=20
request to provide for . . . her comfort, =
health,=20
support and maintenance, in order to maintain" the lifestyle to =
which she=20
was accustomed at the time of Joseph, Sr.'s death.=20
B. Administration of =
the Trust=20
and Litigation In the initial =
months=20
following Joseph, Sr.'s death, the day-to-day affairs of the Trust =
were=20
handled by Joseph, Jr. The Trust agreement demanded that "all =
financial=20
recommendations made by the Grantors' son, Joseph P. Conte, Jr., =
when he=20
is serving as Co-Trustee, be seriously considered." It was not =
until two=20
years after Joseph, Sr.'s death that Susan and Doris became aware =
that=20
Joseph, Jr. had not administered the Trust in accordance with its =
terms=20
and had not divided the corpus of the original Trust into the =
three=20
separate trusts as was required. What followed this discovery was =
a period=20
of extensive litigation between the members of the Conte family. =
During a=20
period of approximately 18 months, eight lawsuits were filed =
between Susan=20
and Joseph, Jr. One of the eight =
lawsuits=20
filed was an application, from Joseph, Jr., for temporary =
guardianship=20
over the person and estate of Doris. After a hearing, Doris was =
declared=20
to be incapacitated. Susan was appointed guardian of her person, =
and Ditta=20
was appointed guardian of her estate. As a consequence of being =
declared=20
incapacitated, Doris was removed as a trustee, and Susan and =
Joseph, Jr.=20
were left with the joint responsibility of administering and =
managing the=20
Trust. In August of 1998, =
acting in=20
his capacity as Guardian of the Estate of Doris, Ditta filed a =
motion for=20
the appointment of a receiver over the Trust, alleging that Trust =
assets=20
were being lost or materially injured as a result of the discord =
between=20
Susan and Joseph, Jr. Rather than entering a receivership, a court =
order=20
appointing Paula Miller ("Miller") as a temporary successor =
trustee was=20
agreed to by all of the parties. Susan's and Joseph, Jr.'s =
fiduciary=20
powers were suspended during the period of Miller's appointment. =
Miller=20
was charged with funding the three separate trusts and performing =
a trust=20
accounting. All of her actions were supervised and approved by the =
trial=20
court. Miller served in this position for more than six years.=20
Miller's=20
first accounting covered the period of time following the death of =
Joseph,=20
Sr. in March of 1993 through December of 1999. Her second and =
third=20
accountings brought the records up-to-date through September of =
2004.=20
These accountings revealed that both Susan and Joseph, Jr. were =
indebted=20
to the Trust for their use of Trust funds to pay personal =
expenses. It was=20
determined that the total amount owed by Susan was $515,534.32, =
plus=20
accrued interest. Joseph, Jr. was determined to owe $899,529.80. =
In=20
addition, Conte Investments, a company in which Susan and Joseph, =
Jr. each=20
owned a 50 percent interest, was indebted in the amount of =
$702,276.34.=20
Although Susan initially disputed the amount that she owed, she =
later=20
agreed to a final judgment approving the accountings. As a =
condition of=20
the agreed final judgment, the collection of the amounts due from =
Susan=20
and Joseph, Jr. was deferred during Doris's lifetime unless her =
financial=20
needs made it necessary for the trial court to order collection.=20
Around this same =
period of=20
time, Miller successfully sued to remove Joseph, Jr. from his =
position as=20
trustee. Joseph, Jr.'s removal left Susan, her fiduciary powers =
still=20
suspended, as the only remaining trustee. In April of 2004, =
Ditta=20
filed the instant lawsuit, seeking the removal of Susan as trustee =
and the=20
appointment of a successor trustee. Ditta sought removal of Susan =
for=20
three reasons: (1) she had improperly used Trust funds to pay her =
personal=20
expenses, (2) her tenuous relationship with her brother interfered =
with=20
the performance of her duties as trustee, and (3) her personal =
interests=20
were in conflict with her duties as trustee as a result of her=20
indebtedness to the Trust. After a bench =
trial, the=20
probate court ruled in Ditta's favor and ordered =
that (1) Susan=20
be removed from her position as trustee, (2) the terms of the =
trust be=20
modified to allow the trial court to appoint a successor trustee, =
and (3)=20
Frost Bank be appointed as the successor trustee. Pursuant to a =
request=20
from Susan, the trial court issued the following findings of fact: =
1. The Joseph P. =
Conte=20
Family Trust and the various trusts under Trust agreement dated =
December=20
8, 1987 (collectively the "Trust") were created by Joseph P. =
Conte, Sr.=20
and Doris L. Conte, as grantors. 2. Joseph P. =
Conte, Sr.,=20
served as sole trustee of the Trust until his death on March 8, =
1993.=20
3. Doris L. Conte, =
Joseph P.=20
Conte, Jr., and Susan C. Conte were appointed as co-trustees of =
the Trust=20
after Joseph P. Conte, Sr.'s death. 4. Doris L. Conte =
is the=20
primary beneficiary of the Trust. 5. In November =
1997, a=20
temporary guardianship proceeding over Doris L. Conte's person and =
estate=20
was initiated in this Court. 6. Extensive =
litigation=20
between Joseph P. Conte, Jr. and Susan C. Conte arose while they =
served as=20
co-trustees of the Trust. 7. Louis M. Ditta, =
in his=20
capacity as Court appointed temporary guardian of the person and =
estate of=20
Doris L. Conte, filed a motion to appoint a receiver over the =
Trust=20
alleging that Trust assets were in danger of being lost or =
materially=20
injured due to the actions and inactions of Joseph P. Conte, Jr. =
and Susan=20
C. Conte as co-trustees of the Trust. 8. On October 8, =
1998, prior=20
to the conclusion of the hearing on Louis M. Ditta's motion to =
appoint a=20
receiver over the Trust, this Court signed an Agreed Order =
Appointing=20
Successor Temporary Trustee, appointing Paula Miller as Successor=20
Temporary Trustee and releasing and suspending the powers of Doris =
L.=20
Conte, Joseph P. Conte, Jr., and Susan C. Conte as co-trustees of =
the=20
Trust. 9. Paula Miller =
prepared an=20
accounting of the Trust from March 8, 1993 through December 31, =
1999.=20
10. Paula Miller's =
Trust=20
accounting reported that Susan C. Conte and Joseph P. Conte, Jr., =
paid a=20
substantial amount of their personal expenses out of the Trust =
while=20
serving as co-trustees of the Trust. 11. The Trust =
agreement does=20
not authorize payment of personal expenses of a trustee out of the =
trust.=20
12. On January 23, =
2001,=20
this Court signed an agreed judgment approving Paula Miller's =
Trust=20
accounting, and ordered Paula Miller to fund the various trusts =
created in=20
the Trust agreement as a result of Joseph P. Conte, Sr.'s death.=20
13. Pursuant to =
the terms of=20
the Trust agreement, Paula Miller funded the various trusts =
created in the=20
Trust agreement, namely the Joseph P. Conte Family By Pass Trust, =
the=20
Doris L. Conte Management Trust, and the Doris L. Conte Marital =
Deduction=20
Trust. 14. Paula Miller =
allocated=20
the amounts paid by the Trust for personal expenses of Susan C. =
Conte and=20
Joseph P. Conte, Jr., to the Doris L. Conte Management Trust and =
the Doris=20
L. Conte Marital Deduction Trust. 15. The Trusts =
lack=20
sufficient liquidity to meet the financial needs of Doris L.=20
Conte. 16. On March 5, =
2001, this=20
Court declared Doris L. Conte to be totally without the mental =
capacity=20
necessary to care for herself and manage her property and =
financial=20
affairs, and appointed Louis M. Ditta as permanent guardian of =
Doris L.=20
Conte's estate, and Susan C. Conte as permanent guardian of Doris =
L.=20
Conte's person. 17. Doris L. Conte =
was=20
removed as co-trustee of the Trust as a result of her mental =
incapacity.=20
18. On January 24, =
2003,=20
this Court removed Joseph P. Conte, Jr., as co-trustee of the=20
Trust. 19. On April 27, =
2004, and=20
November 3, 2004, Joseph P. Conte, Jr., and Susan C. Conte signed=20
documents re-appointing Susan C. Conte as trustee if she was =
removed by=20
the Court in this proceeding. 20. The Trust =
includes=20
provisions for the appointment of a successor trustee if a vacancy =
is=20
created in the office of trustee. In addition, the =
trial court=20
issued the following conclusions of law. 1. As co-trustee =
of the=20
Trust, Susan C. Conte materially violated the terms of the Trust =
by paying=20
her personal expenses out of the Trust. 2. Susan C. =
Conte's=20
violation of the terms of the Trust resulted in a material =
financial loss=20
to the Trust. 3. Susan C. =
Conte's=20
violation of the terms of the Trust resulting in her removal is a =
breach=20
of trust. 4. Susan C. Conte =
is=20
personally indebted to the Trust, therefore, her personal =
interests are=20
adverse and in conflict with her duties as trustee. 5. Extensive =
litigation and=20
hostility between Susan C. Conte and Joseph P. Conte, Jr. =
adversely=20
affected their ability as co-trustees to administer the Trust =
consistent=20
with its purpose. 6. This Court has =
the=20
equitable power to deviate from the terms of the Trust agreement =
and the=20
statutory power to modify the terms of the Trust agreement due to =
changes=20
in circumstances since the creation of the Trust by the grantors.=20
7. It is in the =
best=20
interests of the Trust and Doris L. Conte to deviate from the =
terms of the=20
Trust agreement and modify the terms of the Trust agreement for =
appointing=20
a successor trustee as a result of Susan C. Conte's removal, due =
to=20
changed circumstances, including the following, (i) improper use =
of funds=20
of the Trust by Susan C. Conte and Joseph P. Conte, Jr. to pay =
their=20
personal expenses while serving as co-trustees, (ii) substantial=20
indebtedness owed to the Trust by Susan C. Conte and Joseph P. =
Conte, Jr.,=20
(iii) lack of sufficient liquidity of the Trust to meet the needs =
of the=20
primary beneficiary of the Trust, Doris L. Conte, and (iv) =
extensive=20
litigation between Susan C. Conte and Joseph P. Conte, Jr., while =
serving=20
as co-trustees which interfered with the proper administration of =
the=20
Trust. 8. Further, under =
the=20
circumstances set forth above, it is impractical, inexpedient, and =
would=20
substantially impair the accomplishment of the purposes of the =
Trust to=20
permit Susan C. Conte and Joseph P. Conte, Jr., to re-appoint =
Susan C.=20
Conte as trustee upon her removal. 9. Further, given =
this=20
Court's familiarity with the administration of the Trust for over =
six and=20
one-half years, and the concurrent jurisdiction of this court with =
the=20
Harris County Texas District Court in matters involving inter =
vivos=20
trusts, it is in the best interest of the Trust for this Court to =
appoint=20
the successor trustee rather than a district judge of Harris =
County,=20
Texas.
In her first =
issue, Susan=20
argues that the trial court erred when it granted Ditta's removal =
action=20
and removed her from her position as the sole remaining trustee of =
the=20
Conte Family Trust. Because it is dispositive of her issue, we =
limit our=20
discussion to Susan's argument that Ditta was barred from bringing =
his=20
removal action by the applicable statute of limitations. Statute of=20
limitations serve to compel the assertion of claims within a =
reasonable=20
period during which the evidence is fresh in the minds of the =
parties and=20
witnesses. Price v. Estate of Anderson, 522 S.W.2d 690, =
692 (Tex.=20
1975). The discovery rule defers accrual of a cause of action =
until the=20
plaintiff knew or, exercising reasonable diligence, should have =
known of=20
the facts giving rise to the cause of action. Trinity River =
Auth. v.=20
URS Consultants, 889 S.W.2d 259, 262 (Tex. 1994). However, =
the=20
discovery rule applies only in certain limited circumstances. =
See=20
Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, =
456=20
(Tex. 1996). Generally, application has been permitted in cases =
where the=20
nature of the injury incurred is inherently undiscoverable and the =
evidence of the injury is objectively verifiable. See id. =
The=20
requirement of inherent undiscoverability recognizes that the =
discovery=20
rule exception should be permitted only where "it is difficult for =
the=20
injured party to learn of the negligent act or omission." =
Willis v.=20
Maverick, 760 S.W.2d 642, 645 (Tex. 1988). This is =
particularly true=20
in the context of a fiduciary. See Altai, 918 S.W.2d at =
456.=20
Fiduciaries are presumed to possess superior knowledge, and the =
injured=20
party is presumed to possess less information than the fiduciary. =
See=20
id. While a person owed a fiduciary duty has some =
responsibility to=20
ascertain when an injury occurs, it may be said that the nature of =
the=20
injury is presumed to be inherently undiscoverable. =
Courseview, Inc.=20
v. Phillips Petroleum Co., 158 Tex. 397, 312 S.W.2d 197, 205 =
(1957).=20
The issue in a breach of fiduciary duty case is, thus, when the =
plaintiff=20
knew or should have known, with the exercise of reasonable =
diligence, of=20
the legal injury giving rise to the right to sue. In re =
Fawcett,=20
55 S.W.3d 214, 219 (Tex. App.--Eastland 2001, pet. denied). =
Ditta filed=20
the instant removal action on April 5, 2004. As previously stated, =
Ditta=20
sought to remove Susan for three reasons: (1) she had improperly =
used=20
Trust funds to pay her personal expenses, (2) her tenuous =
relationship=20
with her brother interfered with the performance of her duties as =
trustee,=20
and (3) her personal interests were in conflict with her duties as =
trustee=20
as a result of her indebtedness to the Trust. Susan argues that =
Ditta's=20
cause of action to remove for his first and third =
reasons--improper=20
payment of personal expenses and the resulting conflict of=20
interest--accrued when he first had notice of her misuse of Trust =
funds.=20
According to Susan, Ditta had notice when he was served with =
Miller's=20
accounting on October 5, 1999, wherein Susan's payment of personal =
expenses with Trust funds was set out. However, Ditta =
argues that=20
his cause of action did not accrue until the final agreed judgment =
on=20
Miller's accounting, signed January 23, 2001, became a final and=20
appealable judgment on February 23, 2001. He contends that it was =
not=20
until that judgment became final that Doris's beneficial interest =
in the=20
Trust was exposed to a specific and concrete risk of harm. Ditta =
relies on=20
the "legal injury rule" to support his argument. The legal injury =
rule has=20
been applied to determine when a cause of action accrues where the =
defendant's conduct is separated in time from the harm which it =
causes.=20
See Zidell v. Bird, 692 S.W.2d 550, 554 (Tex. =
App.--Austin 1985,=20
no writ). "The central idea of the rule is that the plaintiff's =
cause of=20
action accrues when the defendant's conduct first becomes =
'unlawful' as to=20
the plaintiff under the law applicable to the circumstances of the =
case."=20
Id. An act becomes "unlawful" at the time when the law =
affords an=20
immediate remedy to address the harm to the plaintiff's legally =
protected=20
interest. See id. at 555. Ditta's reliance =
on the=20
legal injury rule is misplaced. Even assuming, arguendo, =
that the=20
legal injury rule applies, Susan's conduct was "unlawful" long =
before the=20
final agreed judgment on Miller's accounting became final and =
appealable.=20
That is, Ditta could have brought suit immediately after he =
learned of the=20
wrongful acts. He was not required to wait for the rendition of a =
final=20
and appealable judgment from the trial court. Instead, the record =
evidence=20
shows that, at the time he was served with Miller's original =
accounting in=20
October 1999, Ditta knew or should have known, in the exercise of=20
reasonable diligence, that Susan had improperly used Trust funds =
to pay=20
her personal expenses. The record evidence also shows that, at the =
time=20
the agreed order appointing Miller as temporary successor trustee =
was=20
signed in October 1998, Ditta knew or should have known, in the =
exercise=20
of reasonable diligence, that the hostility between Susan and =
Joseph, Jr.=20
was interfering with Susan's performance of her duties as trustee. =
The=20
four-year statute of limitations that applies here required Ditta =
to bring=20
suit based on (1) Susan's misuse of funds by October 2003 and (2) =
the=20
hostility between siblings by October 2002. Because Ditta did not =
file=20
suit until April 2004, his removal action was barred by the =
statute of=20
limitations. As such, the trial court erred in removing Susan from =
her=20
position as trustee. We sustain Susan's =
first=20
issue. In issues=20
two and three, Susan argues, respectively, that the trial court =
erred in=20
modifying the Trust's prescribed method of appointing successor =
trustees=20
and in appointing Frost Bank as the successor trustee. Ditta =
responds that=20
the trial court's modification of the Trust's terms and =
appointment of=20
Frost Bank may be upheld, despite our holding that his action was =
untimely=20
filed, for two reasons: (1) the statutory provision allowing for =
judicial=20
modification of the terms of a trust affords the trial court broad =
discretion to act and (2) the trial court's equitable powers =
permit the=20
application of the doctrine of deviation. We conclude that our =
disposition=20
of Susan's first issue compels us to also rule in Susan's favor on =
these=20
second and third issues. The provision of =
the Texas=20
Trust Code allowing for judicial modification of the terms of a =
trust=20
provides that: (a) On the =
petition of a=20
trustee or beneficiary, a court may order that the trustee be =
changed, that the terms of the trust be modified, that the trustee =
be=20
directed or permitted to do acts that are not authorized or that =
are=20
forbidden by the terms of the trust, that the trustee be =
prohibited from=20
performing acts required by the terms of the trust, or that the =
trust be=20
terminated in whole or in part, if (1) the purposes =
of the=20
trust have been fulfilled or have become illegal or impossible to =
fulfill;=20
(2) because of =
circumstances=20
not known to or anticipated by the settlor, the order will further =
the=20
purposes of the trust; (3) modification =
of=20
administrative, nondispositive terms of the trust is necessary or=20
appropriate to prevent waste or avoid impairment of the trust's=20
administration; . . . (b) The court =
shall exercise=20
its discretion to order a modification or termination under =
Subsection (a)=20
in the manner that conforms as nearly as possible to the probable=20
intention of the settlor. . . . Tex. Prop. Code =
Ann. =A7=20
112.054(a),(b) (Vernon 2007) (emphasis added). The plain language =
of this=20
statutory provision states that a court may order the terms of a =
trust be=20
modified on the petition of a trustee or beneficiary.=20
Id. =A7 112.054(a). Having held that the petition filed =
by Ditta=20
was barred by the statute of limitations, we further hold that =
there was=20
no petition filed in conformance with section =
112.054(a). We next consider =
Ditta's=20
argument under the equitable doctrine of deviation. Harris County =
Probate=20
Court Number One is a statutory probate court, and, as such, the =
practice=20
and procedure therein is that prescribed by law for county courts. =
See=20
Tex. Gov't Code Ann. =A7=A7 25.1031(c)(1), 25.1034(l) (Vernon =
2004). A=20
county court "may hear and determine any cause in law or equity =
that a=20
court of law or equity recognizes and may grant any relief that =
may be=20
granted by a court of law or equity." See id. =A7 26.050. =
A court=20
of equity possesses authority to apply the doctrine of deviation =
implicit=20
in the law of trusts. Amalgamated Transit Union, Local Div. =
1338 v.=20
Dallas Pub. Transit. Bd., 430 S.W.2d 107, 117 (Tex. Civ. =
App.--Dallas=20
1968, writ ref'd n.r.e.). Thus, a court of equity will order a =
deviation=20
from the terms of the trust if it appears to the court that =
compliance=20
with the terms of the trust is impossible, illegal, impractical, =
or=20
inexpedient, or that owing to circumstances not known to the =
settlor and=20
not anticipated by him, compliance would defeat or substantially =
impair=20
the accomplishment of the purpose of the trust. Id. In =
ordering a=20
deviation, a court is merely exercising its general power over the =
administration of the trust. Id. The =
probate court's=20
sixth through ninth conclusions of law are relevant =
here: 6. This Court has =
the=20
equitable power to deviate from the terms of the Trust agreement =
and the=20
statutory power to modify the terms of the Trust agreement due to =
changes=20
in circumstances since the creation of the Trust by the=20
grantors. 7. It is in the =
best=20
interests of the Trust and Doris L. Conte to deviate from the =
terms of the=20
Trust agreement and modify the terms of the trust agreement for =
appointing=20
a successor trustee as a result of Susan C. Conte's removal, due =
to=20
changed circumstances, including the following, (i) improper use =
of funds=20
of the Trust by Susan C. Conte and Joseph P. Conte, Jr., to pay =
their=20
personal expenses while serving as co-trustees, (ii) substantial=20
indebtedness owed to the Trust by Susan C. Conte and Joseph P. =
Conte, Jr.,=20
(iii) lack of sufficient liquidity of the Trust to meet the nees =
of the=20
primary beneficiary of the Trust, Doris L. Conte, and (iv) =
extensive=20
litigation between Susan C. Conte and Joseph P. Conte, Jr., while =
serving=20
as co-trustees which interfered with the proper administration of =
the=20
Trust. 8. Further, under =
the=20
circumstances set forth above, it is impractical, inexpedient, and =
would=20
substantially impair the accomplishment of the purposes of the =
Trust to=20
permit Susan C. Conte and Joseph P. Conte, Jr., to re-appoint =
Susan C.=20
Conte as trustee upon her removal. 9. Further, given =
this=20
Court's familiarity with the administration of the Trust for over =
six and=20
one-half years, and the concurrent jurisdiction of this court with =
the=20
Harris County Texas District Court in matters involving inter =
vivos=20
trusts, it is in the best interest of the Trust for this Court to =
appoint=20
the successor trustee rather than a district judge of Harris =
County,=20
Texas. Even though the =
probate=20
court justified its modification of the Trust on the grounds that =
it was=20
"impractical, inexpedient, and would substantially impair the=20
accomplishment of the purposes of the Trust" to allow Susan to act =
as=20
trustee, as the doctrine of deviation requires, it did so pursuant =
to=20
Ditta's time-barred petition. As such, the probate court was =
without=20
authority to make the modification. Generally, equitable relief =
may only=20
be granted by a probate court upon the timely pleadings and proof=20
presented by a litigant. See 34 Tex. Jur. 3d =
Equity =A7 41=20
(2002). The only exception to this rule is the equitable doctrine =
of=20
unclean hands, which may be applied sua sponte by a probate court. =
See=20
Thomas v. McNair, 882 S.W.2d 870, 880 (Tex. App.--Corpus =
Christi=20
1994, no writ). There is no evidence that the equitable doctrine =
of=20
unclean hands is applicable in this case. Accordingly, because the =
probate=20
court was without authority to make the modification, it was =
improper to=20
appoint Frost Bank as successor trustee. We sustain Susan's =
second=20
and third issues. We reverse the =
judgment of=20
the trial court and remand for orders consistent with this=20
opinion.
George C. Hanks,=20
Jr. Justice Panel consists of =
Justices=20
Taft, Alcala, and Hanks. 1. Generally=20
described, these suits were as follows: 1. A suit for declaratory =
judgment, filed=20
by Doris and Susan, seeking a declaration that a separate suit, =
filed by=20
both Doris and Susan, to remove Joseph, Jr. as co-trustee would =
not=20
violate the "no contest" clause in the Trust agreement. =
2. A suit filed by Susan =
seeking a=20
protective order against Joseph, Jr. subsequent to an incident of =
family=20
violence and assault. 3. A suit filed by Joseph, Jr., =
against=20
Susan and Doris, alleging that the two women had no authority, in =
their=20
capacities as co-trustees, to direct the affairs of Joe Conte =
Toyota,=20
Inc.
4. A suit filed by Susan =
against Joseph,=20
Jr. for fraud, conversion, and breach of fiduciary =
duty.
5. A suit for declaratory =
judgment, filed=20
by Susan alone, seeking a declaration that a suit by Susan to =
remove=20
Joseph, Jr. as trustee would not violate the "no contest" clause =
of the=20
Trust agreement. 6. A suit filed by Susan =
against Joseph,=20
Jr. and his attorneys for conversion and interference with the =
conduct of=20
the day-to-day administration of the Trust. 7. A suit filed by Joseph, Jr., =
against=20
Susan and Doris, seeking the rescission of a settlement agreement =
entered=20
into by the co-trustees and a trust accounting. 8. An application filed by =
Joseph, Jr.=20
for the appointment of a temporary guardian for Doris and a motion =
contesting that application filed by Susan. 2. a. [Ditta]=20
had actual, personal notice of [Miller's] accounting, which set =
out the=20
use of Trust funds by [Susan] to pay for her personal expenses, on =
October=20
5, 1999. b. [Ditta]=20
was aware of litigation between [Susan] and her brother when he =
sought to=20
have a receiver appointed for the Trust. c. [Ditta]=20
was aware of litigation between [Susan] and her brother when he =
signed the=20
Agreed Order Appointing Successor Temporary Trustee on October 8,=20
1998. d. [Ditta]=20
filed this action to remove [Susan], modify the Trust and have a =
successor=20
trustee appointed on April 5, 2004. a. By the=20
time [Ditta] had filed this action to remove [Susan] as trustee, =
the=20
statute of limitations had run for him to seek removal on the =
bases=20
alleged in his action to remove [Susan]. 3. In =
her report,=20
dated October 5, 1999, Miller indicated that her first accounting =
was=20
complete and that copies were being distributed to the Trust =
beneficiaries=20
and their representative. =