Don’t Waste Your Time and $$ in the Wrong Court
Every Texas County has at least two categories or courts. The first is the County Court system. The second is the District Court system. In the event of a lawsuit involving a Texas Living Trust what court is proper to decide the case? What happens if you go to the wrong court?
Background
Letha and Ray Carroll were the parents of Johnny and Donald. Ray Carroll died in 1987, leaving an irrevocable testamentary trust called the Johnny Carroll Trust. Ray named Johnny as the trustee and Letha as the beneficiary of the trust. In November 2005, Donald and Letha sued Johnny, individually and as trustee, in the 66th District Court of Hill County. They alleged that Johnny failed to provide an accounting, engaged in self-dealing, wasted trust assets, and failed to file income tax returns. Donald and Letha requested that the court order an accounting, remove Johnny as trustee, and award damages for his alleged misconduct.
In February 2006, the case was transferred to the Hill County Court at Law. By partial summary judgment that court removed Johnny as trustee, ordered him to provide an accounting, and ordered the trust records to be turned over to Donald, the successor trustee. In a final default judgment signed October 3, 2006, the county court awarded Donald and Letha $1 million for breach of fiduciary duty, $2.8 million in exemplary damages, and $15,000 in attorney’s fees.
The Supreme Court
The case was ultimately appealed to the Texas Supreme Court. The court noted that Johnny and Letha sought removal of a trustee, an accounting by a trustee, and appointment of a successor trustee, together with money damages and attorney’s fees. Removal of a trustee, an accounting by a trustee, and appointment of a successor trustee are all “proceedings concerning a trust” expressly governed by the statute and fall under the exclusive jurisdiction of the district court. As such, transfer to the Hill County Court at Law was improper because it was apparent from the pleadings that the county court lacked jurisdiction over the claims. Because the Hill County Court at Law had no jurisdiction over the claims, its judgment was void.
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