Ward v. Stanford, 443 S.W.3d 334 (Tex. App.—Dallas 2014, pet. denied).


Breach of Fiduciary Duty


Beneficiary sued Trustee alleging that Trustee did not timely attempt to collect on a promissory note which the Settlor executed payable to the trust.  The trial court rendered summary judgment against Beneficiary on a variety of grounds based on the running of the statute of limitations or res judicata.  Beneficiary appealed.


The appellate court first examined whether the promissory note was negotiable because the statute of limitations applicable to the Trustee’s ability to sue on the note would be six years if the note were negotiable but only four years if it were non-negotiable.  After a detailed review of the note and the elements of negotiability, the court held as a matter of law that the note was negotiable and thus the six year statute of limitations applied.  After a further review of the evidence, the court concluded that there were fact issues regarding whether the note’s due date was accelerated and if it was, whether that acceleration was withdrawn, revoked, or abandoned.


The court then addressed the key issue, that is, when did Beneficiary’s cause of action for breach of fiduciary duty accrue.  Beneficiary claims it accrued on the last date the Trustees could have sued on the note without being barred by the statute of limitations.  Trustees claim it accrued on the first date Trustees could have filed suit on the note.  The court rejected both of these claims as they were extreme.  If it accrued immediately, the breach could occur unreasonably soon, but if accrued on the last date, then the breach could occur unreasonably late.  Accordingly, the court held the date on which Trustee’s failure to sue on the note breached a fiduciary duty by causing Beneficiary an injury is a fact question.  Likewise, there remained genuine issues of material fact which need to be resolved to determine when Beneficiary discovered or should have discovered Beneficiary’s injury which may have delayed the running of statute of limitations.


Moral:  Beneficiaries should closely monitor the actions of their trustees, request regular and timely accountings, and bring actions for breach of fiduciary duties promptly.