Sandra Garza Davis F/K/A Sandra C. Saks and Landen Saks v. Lauren Saks Merriman and Marcus P. Rogers, Interim Trustee, 04-13-00518-CV

Background

In 1991 Sandra (Sandy) Saks created the irrevocable Saks Children Family Trust (ATFL&L) naming Diana Flores trustee for beneficiaries including daughters Lauren and Landen; the trust authorized termination by the trustee under ¶4.5 if administration became uneconomical.
In August 2011 Lauren sued Sandy and Diana alleging trust mismanagement and seeking removal of the trustee; Landen and McFadin were not parties to that suit.
The trustee terminated ATFL&L in December 2011 and distributed assets to beneficiaries; deeds/assignments were recorded and not set aside.
Lauren, Sandy, and Diana executed a mediated settlement agreement (MSA) resolving Lauren’s suit in April 2012; the MSA provided that future disputes would be submitted to arbitration under USA&M rules. Landen did not sign the MSA and later revoked an alleged approval signed by her attorney.
The probate court signed an order approving the MSA (May 2012) and later signed an order compelling attendance at mediation and arbitration (Sept. 2012). An arbitration hearing occurred Oct. 18, 2012; appellants claim arbitration was conducted without due process and that the tribunal lacked jurisdiction over Landen, McFadin, and property previously conveyed.
Appellants moved for en banc reconsideration asking the court to reverse the trial court’s judgment affirming the arbitration award, arguing lack of subject-matter jurisdiction, improper delegation to USA&M, and that the MSA did not obligate transfer of property owned by nonparties or after termination of the trust.

Issues

Issue	Plaintiff's Argument (Appellants)	Defendant's Argument (per panel)	Held (panel/opinion cited)
Whether the probate court had subject-matter jurisdiction to compel arbitration/enforce MSA as to Landen, McFadin, and properties conveyed after trust termination	Court lacked jurisdiction over nonparties and properties already transferred; MSA did not require those transfers	Probate court retained jurisdiction; MSA and arbitration could be enforced	Panel held the MSA/arbitration proceeded on the premise the trust had not been terminated and concluded probate court jurisdiction existed (panel disagreed with appellants’ lack-of-jurisdiction claim)
Whether the MSA and the trial-court Order deprived arbitration forum (USA&M) of required procedural steps and thus rendered arbitration void	Arbitration under USA&M required a petition and proper initiation; court order alone did not satisfy USA&M rules, so arbitration was void and award unenforceable	MSA approval and court orders provided sufficient basis to proceed; arbitration award was enforceable	Panel treated arbitration and its approval as operative despite appellants’ procedural objections (panel rejected appellants’ challenge to arbitration jurisdiction)
Whether the MSA/order required appellants to transfer property or submit previously transferred property to arbitration	MSA did not and could not bind nonparties or property already conveyed; conveyance documents were false/unauthorized and not effective	The settlement and subsequent orders required performance and conveyed obligations to resolve disputes, including deeds as contemplated by MSA	Panel concluded the settlement/arbitration framework supported enforcement against appellants (panel did not accept appellants’ argument that transfers insulated property)
Whether the trial court’s approval of the MSA constituted a final, appealable order disposing of all claims and divesting further probate jurisdiction	The probate-court approval was final and removed future disputes to arbitration, depriving court of jurisdiction to compel arbitration or USA&M jurisdiction	Approval did not eliminate the court’s continuing jurisdiction to enforce settlement and supervise ancillary matters	Panel found the probate court retained authority and that approval did not bar further court action (panel cited that probate jurisdiction remained)

Key Cases Cited

Perfect Union Lodge No. 10 v. Interfirst Bank of San Antonio, 748 S.W.2d 218 (Tex. 1988) (settlor intent governed trust construction; read instrument as a whole)
Stewart v. Selder, 473 S.W.2d 3 (Tex. 1971) (trust instrument interpretation principles)
Sellers v. Powers, 426 S.W.2d 533 (Tex. 1968) (trust construction authority)
Alpert v. Riley, 274 S.W.3d 277 (Tex. App.—Houston [1st Dist.] 2008) (trusts interpreted like wills and contracts)
Lesikar v. Moon, 237 S.W.3d 361 (Tex. App.—Houston [14th Dist.] 2007) (instrument interpretation principles)
Nowlin v. Frost Nat'l Bank, 908 S.W.2d 283 (Tex. App.—Houston [1st Dist.] 1995) (unambiguous instrument is a question of law)
Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (ambiguity doctrine; ambiguous instruments create fact issues)
Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001) (final-judgment rule and multiple final judgments in certain proceedings)
S & A Rest. Corp. v. Leal, 892 S.W.2d 855 (Tex. 1995) (oral settlement approval does not equal rendition of judgment)
In re Kimberly Calderon, 88 S.W.3d 395 (Tex. App.—Tyler 2002) (judgment based on settlement cannot adjudicate issues the settlement left unresolved)
Avila v. St. Luke's Lutheran Hospital, 948 S.W.2d 841 (Tex. App.—San Antonio 1997) (settlement-related judgment limits)
Jacquelyn Goodman v. The Summit at West Rim, Ltd., 952 S.W.2d 930 (Tex. App. 1997) (jurisdictional limits in settled cases)