Originally published by David Fowler Johnson.
In In re Ignacio G. & Myra A. Gonzales Trust, a couple formed a trust and named their daughter as the trustee. No. 06-19-00014-CV, 2019 Tex. App. LEXIS 4648 (Tex. App.—Texarkana June 6, 2019, no pet. history). The trust identified the settlors’ children as the two children that they had together. However, the trust then used the undefined term “descendants” in discussing beneficiaries. After the settlors’ death, the trustee filed suit to declare that the wife’s child from a prior relationship was not a beneficiary of the trust. The trial court granted summary judgment for the trustee, and the defendant appealed.
The court of appeals held as follows regarding the rules for construing a trust:
“When we construe a will, we focus on the testator’s intent.” “We interpret trust instruments the same way as we interpret wills, contracts, and other legal documents.” We “ascertain a trust grantor’s intent from the language contained in the trust’s four corners and focus on the meaning of the words actually used, not what the grantor intended to write.” “In this light, courts must not redraft [trust documents] to vary or add provisions ‘under the guise of construction of the language of the [trust documents]’ to reach a presumed intent.” “We must interpret a trust to give meaning to all its provisions and to enact the intent of the grantor.” “The meaning of a trust instrument is a question of law when there is no ambiguity as to its terms.” “If the court is capable of giving a definite legal meaning or interpretation to an instrument’s words, it is unambiguous, and the court may construe the instrument as a matter of law.” “Only when the trust instrument’s language is uncertain or reasonably susceptible to more than one meaning will it be considered ambiguous so that its interpretation presents a fact issue precluding summary judgment.” In interpreting a trust document, we “(1) [c]onstrue the agreement as a whole; (2) give each word and phrase its plain, grammatical meaning unless it definitely appears that such meaning would defeat the parties’ intent; (3) construe the agreement, if possible, so as to give each provision meaning and purpose so that no provision is rendered meaningless or moot; (4) [ensure that] express terms are favored over implied terms or subsequent conduct; and (5) [note that] surrounding circumstances may be considered—not to determine a party’s subjective intent—but to determine the appropriate meaning to ascribe to the language chosen by the parties.” Also, we “must be particularly wary of isolating individual words, phrases, or clauses and reading them out of the context of the document as a whole.” “[A]n ambiguity does not arise merely because the parties advance conflicting interpretations.” “When a [document] contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument becomes a fact issue.”
Id. (internal citations omitted).
The court noted that Section 112.054 of the Texas Property Code provides that a court may order the terms of a trust modified if “reformation is necessary to correct a scrivener’s error in the governing document, even if unambiguous, to conform the terms to the settlor’s intent” and such intent is established by clear and convincing evidence. Id. (citing Tex. Prop. Code Ann. § 112.054(b-1)(3), (e)). That provision was not effective at the time the trust was created. In any event, the court noted that this provision was grounded in common law and the Restatement (Third) of Trusts and Restatement (Third) of Property. Specifically, the Restatement (Third) of Property provides, “A donative document, though unambiguous, may be reformed to conform the text to the donor’s intention if it is established by clear and convincing evidence (1) that a mistake of fact or law, whether in expression or inducement, affected specific terms of the document; and (2) what the donor’s intention was. In determining whether these elements have been established by clear and convincing evidence, direct evidence of intention contradicting the plain meaning of the text as well as other evidence of intention may be considered.” Id. (citing Restatement (Third) of Prop.: Wills & Donative Transfers § 12.1). Reformation may occur “even after the death of the donor.” Id. (citing Restatement (Third) of Prop. § 12.1 cmt. c). The court held that the fact that a written instrument is couched in unambiguous language, or that the parties knew what words were used and were aware of their ordinary meaning, or that they were negligent in failing to discover the mistake before signing the instrument, will not preclude relief by reformation. Id. The court held:
“Reformation requires two elements: (1) an original agreement and (2) a mutual mistake made after the original agreement in reducing the original agreement to writing.” “A court is without power to make a contract that the parties did not make; an actual agreement reached prior to the drafting of the instrument involved is a requisite to an action for reformation.” “The mistake may be shown by parol evidence.” “[A]lthough a mutual mistake of the parties is required in most instances, if a settlor of a trust receives no consideration for the creation of the trust, a unilateral mistake . . . is sufficient.” “Any mistake of the scrivener which could defeat the true intention may be corrected in equity by reformation, whether the mistake is one of fact or law.”
Id.
In this case, the court held that there was a fact question. The court first stated that the petitioners had to meet a high burden of proof, and that the petitioners’ summary judgment evidence failed to carry their burden to establish their entitlement to judgment as a matter of law:
The Trust clearly contained scrivener’s errors. However, the question of Ignacio’s and Myra’s intent was not shown by clear and convincing evidence as a matter of law. Derer did not remember meeting with Ignacio and Myra, had “no direct memory of them,” and could not recall whether they informed him of Edna’s existence. Based on this testimony, which we view in the light most favorable to Edna, it is quite possible that the scrivener’s error occurred in the identification article and should have included Edna. The identification article stated Ignacio and Myra only had two children. This was a scrivener’s mistake of fact. It is undisputed that Edna is Myra’s natural child and that she was adopted by Ignacio. Further, Derer made clear that his opinions were based on his assumption that Ignacio and Myra intended to disinherit Edna from his reading of the Summary and Identification article. An assumption is not proof. Thus, in light of the evidence in this case, Ignacio’s and Myra’s intent is a question of fact for a jury.
Id.
Interesting Note: One issue that arises is what fact finder determines the appropriateness or amount of a remedy. Is a plaintiff or defendant entitled to submit a requested remedy, or any aspect of it, to a jury or may a trial court alone determine the availability of the remedy?
If requested, a jury should determine the amount of damages at law that should be awarded to a plaintiff where there is a fact issue. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 367 (Tex. 2000); Ogu v. C.I.A. Servs., No. 01-07-00933-CV, 2009 Tex. App. LEXIS 78 (Tex. App.—Houston [1st Dist.] Jan. 8, 2009, no pet.). In Texas, a jury’s verdict has a “special, significant sacredness and inviolability.” Crawford v. Standard Fire Ins. Co., 779 S.W.2d 935, 941 (Tex. App.—Beaumont 1989, no writ). The Texas Constitution requires that the right to trial by jury remain inviolate. Tex. Const., art. I, § 15; Crawford, 779 S.W.2d at 941. Denial of the constitutional right to trial by jury amounts to an abuse of discretion for which a new trial is the only remedy. McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex. 1995).
Of course, a party must appropriately request a jury and object to any failure to provide one. Duenas v. Duenas, No. 13-07-089-CV, 2007 Tex. App. LEXIS 5622 (Tex. App.—Corpus Christi July 12, 2007, no pet.) (Because a party did not timely object regarding his right to a jury trial, the matter was waived.). Further, where there is no fact issue, then a trial court does not err in refusing to submit an issue to a jury. See Willms v. Americas Tire Co., 190 S.W.3d 796 (Tex. App.—Dallas 2006, pet. denied) (the granting of summary judgment did not violate a constitutional right to a jury trial because no material issues of fact existed to submit to a jury.).
However, a court, in its equitable jurisdiction, should determine whether an equitable remedy should be granted. See Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 428-29 (Tex. 2008) (“As with other equitable actions, a jury may have to settle disputed issues about what happened, but “the expediency, necessity, or propriety of equitable relief’ is for the trial court … .”). The Texas Supreme Court stated: “Although a litigant has the right to a trial by jury in an equitable action, only ultimate issues of fact are submitted for jury determination. The jury does not determine the expediency, necessity, or propriety of equitable relief. The determination of whether to grant an injunction based upon ultimate issues of fact found by the jury is for the trial court, exercising chancery powers, not the jury.” State v. Texas Pet. Foods, Inc., 591 S.W.2d 800, 803 (Tex. 1979); Bostow v. Bank of Am., No. 14-04-00256-CV, 2006 Tex. App. LEXIS 377 (Tex. App.—Houston [14th Dist.] Jan. 17, 2006, no pet.); Shields v. State, 27 S.W.3d 267, 272 (Tex. App.—Austin 2000, no pet.). The jury’s findings on issues of fact are binding; however, equitable principles and the appropriate relief to be afforded by equity are only to be applied by the court itself. Shields, 27 S.W.3d at 272. Because the court alone fashions equitable relief, it is not always confined to the literal findings of the jury in designing the injunction. Id.
For example, the Texas Supreme Court held: “A jury does not determine the expediency, necessity, or propriety of equitable relief such as disgorgement or constructive trust.” Longview Energy Co. v. Huff Energy Fund LP, No. 15-0968, 2017 Tex. LEXIS 525, 2017 WL 2492004 (Tex. June 9, 2017) (citing Burrow v. Arce, 997 S.W.2d 229, 245 (Tex. 1999)). “Whether ‘a constructive trust should be imposed must be determined by a court based on the equity of the circumstances.’” Id. “The scope and application of equitable relief such as a constructive trust ‘within some limitations, is generally left to the discretion of the court imposing it.’” Id. (citing Baker Botts, L.L.P. v. Cailloux, 224 S.W.3d 723, 736 (Tex. App.—San Antonio 2007, pet. denied).
“If ‘contested fact issues must be resolved before a court can determine the expediency, necessity, or propriety of equitable relief, a party is entitled to have a jury resolve the disputed fact issues.’” Id. (citing DiGiuseppe v. Lawler, 269 S.W.3d 588, 596 (Tex. 2008). “But uncontroverted issues do not need to be submitted to a jury.” Id. (citing City of Keller v. Wilson, 168 S.W.3d 802, 815 (Tex. 2005)). See also Wilz v. Flournoy, 228 S.W.3d 674, 676-77 (Tex. 2007) (noting that in the underlying trial, the jury found that no personal funds were used to purchase the farm, which justified the award of a constructive trust on the farm.); Paschal v. Great W. Drilling, Ltd., 215 S.W.3d 437, 445 (Tex. App.—Eastland 2006, pet. denied) (“The jury found that all of the premiums on the four policies were paid with funds that Alan stole from Great Western. Accordingly, the trial court imposed a constructive trust on all of the funds remaining in existence from the life insurance proceeds.”).
So, if properly requested and preserved, a party is entitled to submit a fact issue on legal damages to a jury. However, if a party seeks an equitable remedy, the trial court normally has the sole right to resolve that request. If there is some underlying fact issue that must be resolved with regard to the equitable remedy, then that fact issue should be submitted to a jury. Parties should be very careful to evaluate all requested remedies before trial and determine what should be submitted to the court and what should be submitted to a jury. Otherwise, after trial, a court may determine that a party waived the right to a jury on a fact issue, and either refuse to award the remedy or grant the remedy and supporting findings may be found in support of a trial court’s judgment. Tex. R. Civ. P. 279; Bostow v. Bank of Am., No. 14-04-00256-CV, 2006 Tex. App. LEXIS 377 (Tex. App.—Houston [14th Dist.] Jan. 17, 2006, no pet.) (“[T]he jury’s finding as to Bostow’s harassing conduct is a sufficient finding on the ultimate issues of fact to support the trial court’s exercise of discretion in granting a permanent injunction. Thus, the Bank did not abandon its claim for injunctive relief by failing to submit fact questions to the jury that would support its entitlement to injunctive relief.”). See also Valenzuela v. Aquino, 853 S.W.2d 512, 513 (Tex. 1993) (suggesting permanent injunction could be based on jury finding liability for invasion of privacy); Memon v. Shaikh, 401 S.W.3d 407, 423 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (holding jury’s defamation finding supported permanent injunction).
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Grant Bux, Big Daddy Bux’s nephew, owns Sparkle-Plenty Electrical Manufacturing in Dallas, and has a branch office in San Antonio. The Dallas office employs 13 family members and four non-family employees. San Antonio has 16 non-family employees. Grant learned that both the Cities of Dallas and San Antonio have mandatory sick leave ordinances becoming effective on August 1st. As a family business, will they impact Grant and Sparkle-Plenty?
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