Hermès History In 1837, Thierry Hermès established the fabled marque in Paris. Originally a saddle-making workshop when horse-drawn transportation was common, Hermès continues to utilize the equine theme in the luxury goods made today. Such goods include scarves, handbags, small leather goods, ready-to-wear, shoes, and home goods, including the Avalon blanket. The Hermès “marque” is […]
Insights on Mendell v. Scott
Mendell v. Scott, No. 01-20-00578-CV, 2023 WL 4712050 (Tex. App.—Houston [1st Dist.] July 25, 2023, no pet.)(mem.op.). Mendell was the trustee of various Trusts left for her nephew and niece, which were created at their Uncle Mutt’s death in August 2017. After numerous requests for information and distributions, the beneficiaries sued Mendell as Trustee and […]
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Mendell v. Scott, No. 01-20-00578-CV, 2023 WL 4712050 (Tex. App.—Houston [1st Dist.] July 25, 2023, no pet.)(mem.op.).
Mendell was the trustee of various Trusts left for her nephew and niece, which were created at their Uncle Mutt’s death in August 2017.
After numerous requests for information and distributions, the beneficiaries sued Mendell as Trustee and in her individual capacity in April 2019. The suit included allegations of breach of fiduciary duty, a request to declare the Trusts terminated, and that the nephew and niece were the beneficiaries entitled to the Trusts’ assets. The beneficiaries sought a Court order compelling Mendell to wind up the Trusts and distribute the remaining assets to the beneficiaries, outright and free of trust.
Mendell responded with a counter suit against the beneficiaries seeking to enforce the Trusts’ terms and request that her attorney’s fees and expenses be reimbursed from the Trust.
The beneficiaries sought summary judgment on various issues and won. Whether Mendell had breached her fiduciary duty went to trial before a jury. The jury “came to a unanimous verdict that found Mendell breached her fiduciary duty in five different ways and awarded damages and attorney’s fees” to the beneficiaries. The jury awarded $715,792.21 in damages and attorney’s fees against Mendell in her individual capacity. Not only did the jury award the beneficiaries their attorney’s fees to be paid out of Mendell’s personal funds, but Mendell was also ordered to pay back the fees she paid out of the Trust to her own attorneys in the amount of $200,000.
On appeal, Mendell argued that the Trust should pay the attorney’s fees award, not Mendell personally. The Court of Appeals rejected this argument and “concluded that the terms of the Trust do not prevail over the statutorily authorized attorney’s fees in light of the evidence supporting the jury’s findings that Mendall breached her fiduciary duties and acted with malice.”
Section 111.0035 of the Property Code provides: “The terms of a trust
prevail over any provision of this subtitle, except that the terms of a
trust may not limit … a trustee’s duty … to act in good faith and in
accordance with the purposes of the trust[.]” TEX. PROP. CODE §
111.0035(b)(4)(B)(emphasis added).
MORAL OF THE STORY:
When a Trustee acts with malice, the Trust language can’t exonerate them, and the Trustee can
be held personally liable for its acts.