In White v. White, an income beneficiary of a trust was retained to manage ranch property. 704 S.W.3d 250 (Tex. App.—El Paso 2024, no pet.). He later became trustee of the trust and ratified his employment and the employment of several of his family members. Two of his brothers, who were also income beneficiaries, sued him for breach of fiduciary duty and sought damages, removal and other relief. Primarily, the brothers alleged that the trustee breached his fiduciary duty by: failing to act as a prudent investor, failing to make any income distributions, engaging in self-dealing by employing himself and his family, and paying himself and his family excessive compensation. After a jury trial, the trial court awarded relief against the trustee:

[T]he trial court entered a “Final Judgment Nunc Pro Tunc,” awarding a million dollars in damages to “the trustee of the [White] Trust” for the “loss or depreciation in value” of the White Trust estate. In addition, the trial court awarded Mac and Beau $1.5 million each in exemplary damages, in their capacity as income beneficiaries of the White Trust. The trial court removed Jim as trustee due to the breach of fiduciary duties and made several modifications to the White Trust, including dividing it into four separate “Division Trusts” to be administered by each of the siblings, giving them each an undivided interest in the Ranch and the ability to partition and sell their interests in the same.

Id. The trustee appealed.

The court reviewed the trustee’s complaint that the jury charge improperly placed the burden on him to establish that he complied with virtually all of his fiduciary duties when he only shouldered the burden to establish that he did not engage in any self-dealing transactions that resulted in a profit to him at the expense of the trust beneficiaries. The court reviewed the law on the burdens of proof for breach of fiduciary duty claims:

The elements of a breach of a fiduciary duty claim are: (1) a fiduciary relationship between the plaintiff and defendant; (2) a breach by the defendant of his fiduciary duty to the plaintiff; and (3) an injury to the plaintiff or benefit to the defendant as a result of the defendant’s breach. In general, to recover for a breach of fiduciary duty, a plaintiff has the burden of proving each element. A claim of self-dealing is essentially a subset of a claim for breach of fiduciary duty, but with the additional requirement that the fiduciary used the advantage of his position to gain a benefit or profit at the expense of those to whom he owes a fiduciary duty. Thus, there can be no finding of self-dealing in the absence of evidence that a fiduciary profited from his actions. It is well-established that “when a plaintiff alleges self-dealing by the fiduciary as part of a breach-of-fiduciary-duty claim, a presumption of unfairness automatically arises, which the fiduciary bears the burden to rebut.” Courts have explained that this burden requires the “fiduciary to prove (a) that the questioned transaction was made in good faith, (b) for a fair consideration, and (c) after full and complete disclosure of all material information to the principal.” Thus, in cases of self-dealing, a jury charge properly places the burden on the defendant that a transaction in which he made a profit was “fair and equitable” to plaintiff, that the defendant acted in good faith and did not use the advantage of his position to gain a benefit at the plaintiff’s expense, and that defendant “fully and fairly disclosed all important information” to the plaintiff concerning the transaction.

Id. The court held that the trustee preserved error in the charge question submitting globally both the self-dealing claims with the other non-self-dealing breach claims: “Jim acknowledged that Mac and Beau alleged he had engaged in self-dealing with respect to the employment agreements, making Question One appropriate with respect to those transactions. However, Jim pointed out that Mac and Beau had also alleged that he breached his fiduciary duties in other respects, which did not involve self-dealing—such as his duty to act as a prudent investor—and that Mac and Beau had the burden of establishing those breaches.” Id. The court held that the jury charge question was in error by improperly shifting the burden of proof to the trustee on non-self-dealing claims:

Question One, however, did not limit the jury to the self-dealing claim. Instead, as Jim points out, it instructed the jury that Jim had the burden to establish that “he complied with his duty in connection with his transactions as trustee,” without specifying what those transactions were. While Mac and Beau alleged Jim engaged in other “transactions” in violation of his fiduciary duties (such as taking a loan from their father to invest in the ranching operations and purchasing over a million dollars in ranch equipment, which arguably violated Jim’s duty to act as a prudent investor and to act in the beneficiaries’ best interest) those transactions did not involve self-dealing. It was Mac and Beau’s burden to establish that those transactions violated Jim’s fiduciary duties to them. Accordingly, we conclude that Question One improperly shifted the burden to Jim to establish the propriety of virtually every transaction in which he had engaged during his tenure as trustee.

Id. The court also held that this error was harmful and required a reversal of the judgment and a new trial:

Applying this harm standard to Question One, we reach a different result. Question One would have been proper had it applied only to Mac and Beau’s claim of self-dealing. And we might be persuaded that Jim was not harmed by the broad form nature of Question One if Mac and Beau’s focus at trial had been primarily on their claim of self-dealing and there had been substantial evidence to support that claim. But Mac and Beau neither focused on the self-dealing claim at trial, nor did they present substantial evidence to support that claim.

To the contrary, their expert witnesses focused almost exclusively on the claim that Jim did not act as a prudent investor when he continued to invest in the cattle business despite its failure to make a sufficient profit to make income distributions. Moreover, Mac and Beau’s expert witnesses expressly declined to opine on whether Jim had engaged in self-dealing by paying himself and his family excessive compensation. And Mac and Beau did not present any evidence to rebut Jim’s experts who testified that Jim’s compensation package was reasonable under the circumstances.

We can be reasonably certain that the jury’s finding in response to Question One regarding Jim violating his fiduciary duties was not based on Mac and Beau’s claim of self-dealing because the jury expressly found that Jim did not profit from any of his transactions (in Question Four). While a claim of self-dealing requires a finding that the trustee gained a benefit or profit from the transaction, when assessing “the damages, if any, that were proximately caused by the conduct inquired about in Question [One],” the jury expressly found that Jim did not make any profit “for his own benefit.” The jury’s only finding of damages was based on its finding that there was a “loss or depreciation in value of the [] White Trust estate.” As Mac and Beau argued at trial, this loss stemmed from Jim’s decision to continue investing money in the ranching operations, which they repeatedly characterized at trial as a violation of the prudent investor rule.

Because Question One improperly shifted the burden to Jim to establish that he complied with his fiduciary duties to act as a prudent investor, we conclude that this jury-charge error probably resulted in an improper verdict and Jim is therefore entitled to a new trial on Mac and Beau’s claims that he breached his fiduciary duties to them.

Id.

The court then addressed whether the trial court’s removal and modification relief should be reversed. The noted that “although a party is entitled to a jury trial on a tort claim for breach of fiduciary duty, there is no right to a jury trial on an equitable claim to remove a trustee or to modify a trust.” Id. The court of appeals held, however, that the parties submitted these equitable claims to the jury and that the relief should be reversed for the same reasons as described above:

But Mac and Beau did not request a separate bench trial on their equitable claims for Jim’s removal or for the modification of the White Trust. Instead, they requested and received a jury trial for all of their claims. And although the jury was not asked to resolve Mac and Beau’s equitable claims to remove Jim as trustee and to modify the White Trust, those claims were based on the same evidence and arguments they presented to the jury to support their tort claim, i.e., that Jim breached his fiduciary duties to them, and more particularly, his duty to generate income for their benefit. In its Final Judgment Nunc Pro Tunc, the court specifically stated that its judgment was based not only on the evidence admitted at the jury trial, but on “the jury’s verdict in this case” and the arguments of counsel. Accordingly, because we have already concluded that the jury’s verdict that Jim breached his fiduciary duties cannot stand, we similarly conclude that the trial court’s decision to grant Mac and Beau’s equitable claims—which was based on that verdict—cannot stand. We therefore conclude that Jim is entitled to a new trial on Mac and Beau’s equitable claims to remove him as trustee and modify the trust.

Id. The court concluded: “Because the jury charge error probably resulted in an improper verdict on the issue of whether Jim breached his fiduciary duties to Mac and Beau and the improper granting of equitable relief, we reverse the trial court’s final judgment and remand this matter to the trial court to hold a new trial on Mac and Beau’s legal claims as well as a new trial on their equitable claims.” Id.