Alpert v. Gerstner, 232 S.W.3d 117 (Tex. App.—Houston [1st Dist.] 2006, pet. denied).
The probate court appointed Receiver to take possession of all trust
property and to manage it under the terms of the trust. Later,
Beneficiaries sued Receiver alleging that she breached her fiduciary
duties. For example, they asserted that she did not manage the property
prudently which caused a stock portfolio to decline in value from
$600,000 to $13,000. The trial court agreed with Receiver that
Beneficiaries’ claims were barred by judicial immunity. Beneficiaries
appealed.
The appellate court reversed. The court recognized that whether a
court-appointed receiver is entitled to judicial immunity is an issue of
first impression in Texas. The court then engaged in a comprehensive
discussion of when “derived” judicial immunity is proper, that is, when
the judge’s immunity passes along to a person, like Receiver, to whom
the court delegates duties. The court explained that immunity is proper
if the person is intimately associated with the judicial process and is
exercising discretionary judgment comparable to that of a judge.
After reviewing analogous Texas cases, the court held that Receiver was
entitled to derived judicial immunity to the extent that she was
authorized to take charge and keep possession of the trust property,
prepare an inventory of trust property, and assist the court in
determining who should be the trust of the trusts. “These functions are
intimately associated with the judicial process and involve the exercise
of discretionary judgment comparable to that of a judge.” Alpert at 130.
However, Receiver is not entitled to derived judicial immunity for the
alleged breaches of fiduciary duties to the beneficiaries in failing to
exercise good faith or ordinary care in managing trust property. At this
point, Receiver was acting as a representative of the interests of the
beneficiaries, not as an agent of the court.
Moral: A trust receiver should comply with all the normal duties of a
trustee and cannot rely on derived judicial immunity for protection.