Berry v. Berry, 65 Tex. Sup. Ct. J. 997 (2022).


Breach of Fiduciary Duty

A highly complex serious of transactions and decades of litigation among family members lead to the Supreme Court of Texas engaging in a detailed discussion of limitations for breach of fiduciary duty. The court begin its analysis by stating that the statute of limitations for breach of fiduciary duty is four years which “accrues when the defendant’s wrongful conduct causes the claimant to suffer a legal injury.” However, the accrual time may be extended by the discovery rule, that is, “the statute of limitations does not begin to run until the claimant knew or should have known of facts that in the exercise of reasonable diligence would have led to the discovery of the wrongful act.” The court then explains that the discovery rule is “narrow exception” reserved for “exceptional” cases where the injury is “inherently undiscoverable.”


The court then addressed whether constructive notice from recording in public records would preclude the operation of the discovery rule. The court “recognized that the constructive notice conveyed by deed records does not always bar application of the discovery rule.” The court then confines the exception “to cases where the plaintiff had no ‘reason to monitor’ the deed records because he had ‘no reason’ to ‘believe’ or ‘suspect’ that a leal injury had occurred.


In this case, the court determined that the facts demonstrate that he had actual notice of facts that would have altered him to the wrongful act if he had exercised reasonable diligence. Even though fiduciary duties were owed to the plaintiff, the plaintiff sill had the “responsibility to ascertain when an injury occurs.” This was especially true in this case as the plaintiff was both a beneficiary and co-trustee of the trust and the suit was against the co-trustee who were his brothers.


Moral:  A person seeking recovery for breach of fiduciary duty should take action promptly upon even an inkling of a fact giving rise to the claim.



A trust beneficiary sued the trustees for breach of duty, an accounting and to remove the trustees. Both the trial and lower appellate court agreed that she lacked the ability to bring her claims. The Supreme Court of Texas reversed.


The court explained that because she was not expressly designated by name but only by a class designation (issue of a named beneficiary), she was not automatically an interested person under Trust Code § 111.004(6) who could bring her claims under Trust Code § 115.011. Thus, a court must determine if the unnamed beneficiary is an interested person by using the Code’s standard that the person’s status as an interested person “may vary from time to time and must be determined according to the particular purposes of and matter involved in any proceeding.”


The court then examined the facts to determine that her interest in the trust was sufficient to support her claim that she is an interested person. For example, she has a present financial interest in the trust (the right to withdrawal a proportionate share of any trust contribution) which would be affected by the suit as well as a contingent interest in trust distributions which would occur when the named beneficiary (her father) dies.

Moral: A trust beneficiary designated only by a class designation does not automatically have standing to bring a claim against the trustee for misconduct. Instead, this beneficiary must bring forward evidence showing that the court should grant the beneficiary interested person status.