Court Reversed Temporary Injunction Against Co-Trustees

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In Marshall v. Marshall, a beneficiary sued the original trustee and five co-trustees of two trusts regarding claims that they breached fiduciary duties. No. 14-17-00930-CV, 2021 Tex. App. LEXIS 1949 (Tex. App.—Houston [14th Dist.] March 16, 2021, no pet. history). After the original lawsuit was filed in Texas, the original trustee filed a petition for declaratory relief in a Louisiana court, requesting the court declare, among other things, that the co-trustees were properly appointed as co-trustees of the trust. The beneficiary obtained a temporary injunction preventing the co-trustees from receiving compensation, disposing of trust assets, and participating in litigation against the beneficiary in Louisiana. The co-trustees appealed.

The court of appeals first reversed the anti-suit injunction aspect of the temporary injunction order because allowing the suit to continue would not create a miscarriage of justice:

The principle of comity requires that courts exercise the power to enjoin foreign suits “sparingly, and only in very special circumstances.” Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649, 651 (Tex. 1996) (quoting Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986)). An anti-suit injunction may be appropriate to (1) address a threat to the court’s jurisdiction, (2) prevent the evasion of important public policy, (3) prevent a multiplicity of suits, or (4) protect a party from vexatious or harassing litigation. Id. The party seeking the injunction must show that a clear equity demands the injunction. Id. A single parallel proceeding in a foreign forum does not constitute a multiplicity of suits, nor does it by itself create a clear equity justifying an anti-suit injunction. Id.

Here, however, there is no special circumstance or clear equity to prevent a Louisiana court from determining issues related to inter vivos trusts that are governed by Louisiana law and that require the trustee to petition a Louisiana court for instructions regarding any questions that might arise regarding their administrations. Any suit in Louisiana by the co-trustees to determine the effect of the Wyoming court’s rulings would apply only to the Harrier and Falcon trusts. This single parallel proceeding brought by some of the co-trustees in Louisiana, consistent with the trusts’ requirements that the co-trustees file suit in Louisiana, cannot justify issuing an anti-suit injunction. See Golden Rule, 925 S.W.2d at 651-52. Even if there are overlapping or identical issues, the Louisiana suit does not create a miscarriage of justice. See id. Accordingly, the trial court erred to enjoin the co-trustees from litigating matters related to the Harrier and Falcon trusts in any other court.

Id.

The court also reversed the other aspects of the temporary injunction order as there was no evidence to support an irreparable harm finding:

[T]here was no evidence that the co-trustees had taken any action or planned to take any action to transfer, sell, or dispose of any unique and irreplaceable assets of the trust. Elaine testified that the co-trustees had not made any attempt to gain access to the Ribosome certificates. Under these circumstances, a temporary injunction is not proper because the claimed injury to unique assets is merely speculative; fear of injury is not sufficient. … The trial court also found that Preston had no adequate remedy because there was “no evidence that the Co-Trustees can answer in damages.” This finding reverses the burden of proof. To the extent Preston sought to establish that the co-trustees were insolvent and thus could not satisfy a judgment, it was Preston’s burden to adduce some evidence to support the claim. … Here, the only evidence about what the trustees had done with fees was that they had placed the fees into a court’s registry to await a judicial determination. And as discussed above, there is no evidence that unique assets of the trusts are in imminent danger of being dissipated. Accordingly, the trial court erred by enjoining the co-trustees from receiving compensation and taking any actions that could affect the trusts’ assets.

Id.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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