Kenneth L. Berry, Individually Kenneth L. Berry, as Trustee of the Berry Dynasty Trust Kenneth L. Berry, Trustee in a Derivative Capacity for Flying Bull Ranch, Ltd. And Chelsea Nichole Briers v. Dennis W. Berry Marvin G. Berry Allen L. Berry FB Ranch, LLC Berry GP, Inc. D/B/A Berry Contracting, Inc., Berry Contracting, LP D/B/A Bay, Ltd., and Berry Ranches, LLC.
13-18-00169-CV
Tex. App.Mar 5, 2020Background
- Marvin and Laura Berry owned Flying Bull Ranch; the Trust was a limited partner and FB Ranch (general partner) managed the ranch under a 1967 partnership agreement restricting long leases without partnership approval.
- In March 2007 a written lease between FB Ranch and Berry Contracting (backdated to Jan 1, 2000 through Dec 31, 2024) was signed and a memorandum of lease was recorded in Real County in May 2007; lease payments had been made historically.
- Kenneth (co-trustee and beneficiary) repeatedly requested partnership and trust records from 2006–2015; Laura and other co-trustees did not provide full records and told Kenneth the ranch was leased to Berry Contracting.
- Kenneth and his daughter Chelsea sued in 2016 alleging breach of fiduciary duty, conspiracy, partnership breaches, and seeking accounting, removal of co-trustees, and declaratory relief; Chelsea is an unnamed contingent/demand beneficiary.
- Other beneficiaries (excluding Kenneth and Chelsea) and the Berry entities executed a 2016 consent and release resolving certain accounting/lease issues, transferred $440,000 to the Ranch, and revised the lease to a three-year term; defendants moved to dismiss for lack of standing and for summary judgment on limitations based on the recorded memorandum.
- The trial court dismissed Chelsea for lack of standing, denied Kenneth derivative standing for partnership claims against third parties, granted summary judgment on limitations based on the recorded memorandum, held a bench trial on fees awarding multiple attorneys’ fee judgments, and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Chelsea (beneficiary) | Chelsea, as an unnamed contingent/demand beneficiary, has an "interest" under the Trust Code and may sue trustees. | Contingent unnamed beneficiaries are not necessary parties and lack a present interest to bring §115.001 actions. | Chelsea lacks standing; plea to jurisdiction properly granted. |
| Kenneth's derivative standing to sue third parties on behalf of the partnership | As co-trustee and limited partner, Kenneth may bring derivative claims when trustees/limited partners fail to act. | Limited partners generally may not maintain derivative suits; co-trustees acted by majority rule and releases bar derivative claims. | Kenneth has standing to sue co-trustees under the Trust Code but not to maintain derivative claims on behalf of the limited partnership against third parties; trial court correctly dismissed those derivative claims. |
| Limitations on breach-of-fiduciary-duty claims (effect of recorded memorandum of lease) | Tolling doctrines apply (discovery rule, fraudulent concealment, continuing tort); Kenneth lacked notice and was not required to search records. | Recording the memorandum gave constructive notice in 2007 and started limitations. | Reversed summary judgment on limitations: recording alone does not conclusively start limitations where plaintiff was not charged with a duty to search public records (Archer governs); genuine fact issues remain. |
| Attorneys’ fees and denied discovery | Trial-court awards and discovery denials were erroneous. | Fees awarded to prevailing parties; discovery rulings supported trial process. | Appellate court remanded unresolved fee and discovery issues for further consideration; awarded 50% of conditional appellate fees and 50% of costs to appellees. |
Key Cases Cited
- Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (standing is a component of subject-matter jurisdiction)
- Austin Nursing Ctr. v. Lovato, 171 S.W.3d 845 (Tex. 2005) (standing requires a justiciable interest)
- Archer v. Tregallas, 566 S.W.3d 281 (Tex. 2018) (recorded instruments do not necessarily impose a duty on owners to search public records; discovery rule may apply)
- Hooks v. Samson Lone Star, L.P., 457 S.W.3d 52 (Tex. 2015) (discusses constructive notice from recordings)
- In re XTO Energy Inc., 471 S.W.3d 126 (Tex. App.—Dallas 2015) (beneficiary may only sue derivatively when trustee's refusal to sue is wrongful)
- KPMG Peat Marwick v. Harrison Cty. Housing Fin. Corp., 988 S.W.2d 746 (Tex. 1999) (burden on defendant to conclusively establish limitations in summary judgment)
- Leonard v. Benford Lumber Co., 216 S.W. 382 (Tex. 1919) (recording provides constructive notice only to those who must search it)
- Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) (summary-judgment standard for reviewing evidence)