Martin v. Martin
363 S.W.3d 221
Tex. App.2012Background
- Dynasty Trust created for Courtney and Robin; Scott as trustee and MRMC director; MRMC stock largely funds the trust and MRMC is a major asset; Harris County derivative lawsuit filed by Scott in 2008 against MRMC; financing and credit deals were jeopardized, equity offering cancelled, and liquidity impacted; jury awards to beneficiaries included compensatory, mental anguish, and exemplary damages later reduced; court reversed and rendered take-nothing judgment determining damages evidence insufficient to support the verdicts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do nonwaivable fiduciary duties exist despite the exculpatory clause? | Martin argues duties cannot be waived by the trust. | Martin contends the exculpatory clause relieves duties. | Yes; nonwaivable duties exist under statute. |
| Does Section R reach acts like filing a lawsuit, thereby triggering potential liability? | Martin maintains Section R covers such acts. | Martin argues Section R applies only to specific transactions. | Section R broad, but duties still nonwaivable under statute. |
| Do the 2005 statutory changes (111.0035, 114.007) prohibit waiving fiduciary duties? | Martin relies on waived duties under Grizzle being superseded. | Martin argues waivers are permissible. | Statutes prohibit waivers of nonwaivable duties. |
| Is the award for ‘other damages’ legally/factually sufficient? | Courts allowed damages tied to corporate value loss. | Damages tied to corporate losses not recoverable by beneficiaries. | Evidence insufficient to support compensatory ‘other damages’. |
| Are mental anguish and exemplary damages recoverable given the evidence? | Mental anguish showed substantial disruption; exemplary damages warranted. | Evidence does not show high-degree mental anguish; exemplary damages depend on compensatory. | Mental anguish damages insufficient; exemplary damages barred. |
Key Cases Cited
- Commerce Bank v. Grizzle, 96 S.W.3d 240 (Tex. 2002) (Trust Code waivers limited by statutory exceptions)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (no-evidence standards for legal sufficiency)
- Parkway Co. v. Woodruff, 901 S.W.2d 434 (Tex. 1995) (mental anguish standards; evidence required for damages)
- Guerra v. Service Corp. Int'l, 348 S.W.3d 221 (Tex. 2011) (reversal of mental anguish damages in cemetery case)
- Murphy v. Campbell, 964 S.W.2d 265 (Tex. 1997) (stockholder damages rule; recovery limits)
- Jochec v. Clayburne, 863 S.W.2d 516 (Tex.App.-Austin 1993) (strict construction of exculpatory provisions in trusts)
- Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565 (Tex. 1996) (contract interpretation; read whole instrument)