In Frank v. Frank, co-trustees filed suit in federal court seeking declarations regarding their authority and potential liabilities. No. 3:22-cv-01757-M, 2023 U.S. Dist. LEXIS 226439 (N.D. Tex. December 20, 2023). There was an earlier dispute, which was settled resulting in a mediated settlement. The co-trustees asserted two general types of requests for relief, one concerning the maintenance and repair of residences owned by the trusts and a second regarding a request to not pay distributions until the beneficiaries provided requested financial information. The defendants filed a Rule 12(b)(1) motion to dismiss, which the federal district court granted.

The court discussed the case or controversy requirement and declaratory relief cases:

 The federal Declaratory Judgment Act, 28 US.C. § 2201, provides: “In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.” Section 2201 does not create an independent cause of action. Instead, “the underlying cause of action which is thus actually litigated is the declaratory defendant’s, not the declaratory plaintiff’s.” For declaratory judgment cases, the Fifth Circuit instructs that district courts must take a three-step inquiry, outlined below: “First, the court must determine whether the declaratory action is justiciable. Typically, this becomes a question of whether an “actual controversy” exists between the parties to the action. A court’s finding that a controversy exists such that it has subject matter jurisdiction is a question of law that we review de novo. Second, if it has jurisdiction, then the district court must resolve whether it has the “authority” to grant declaratory relief in the case presented. Third, the court has to determine how to exercise its broad discretion to decide or dismiss a declaratory judgment action.” The Fifth Circuit has recognized that, “[a] controversy, to be justiciable, must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop.”

Id. (internal citations omitted).

The court reviewed the requests for relief regarding the maintenance and repair of the residences, and held that the plaintiffs did not assert sufficient facts in the pleading to explain the significance of the requested relief. The court also held, importantly, that there was no statement that the defendants disagreed with any of the plaintiffs’ positions on these issues. The plaintiffs had attempted to interject additional facts in their response to the motion to dismiss, but the court was not satisfied by that attempt:

Such additional allegations and arguments do not create an actual controversy capable of conferring jurisdiction. As stated, none these allegations are in the pleadings, and more importantly, there is no indication that Defendants actually agree, disagree, or take any position regarding Plaintiffs’ plans and decisions as to the Exempt Trusts. Plaintiffs’ requested declarations are also contingent on future acts that may not occur, such as taxes not being paid or Defendants not providing adequate documentation for requested repairs. As such, Plaintiffs have not presented a dispute that is not hypothetical, conjectural, or conditional, and thus there is no current actual controversy relating to the San Felipe Residence to be litigated and decided.

Id.

The court then turned to the issue of whether it had jurisdiction to determine issues concerning the right of the trustees to stop distributions until requested financial information was received. The court similarly held that there was not controversy:

The remainder of the Plaintiffs’ requested declarations all purport to arise out of the same factual allegations, namely that Plaintiffs have requested information and documentation from Defendants to determine the Beneficiaries’ current needs, so as to calculate an appropriate distribution amount, but that the information and documentation has not been provided. As a result, Plaintiffs seek a declaration that they are authorized to cease distributions until, in their discretion and using their best business judgment, they receive sufficient information to make a determination about distributions, and shall not be in breach of their fiduciary duties or any terms of the Trust Agreement by refusing to make a distribution. Plaintiffs further seek a declaration that they are entitled to reimburse themselves from the Exempt Trusts for expenses and fees incurred in the Trusts’ administration.

The Second Amended Complaint alleges only that Defendants have not provided information in response to Plaintiffs’ requests; it does not allege that Defendants stated a disagreement with or objection to Plaintiffs’ plans to cease distributions until such information is received. The Trust Agreement provides that the Plaintiffs as Co-Trustees are permitted to make distributions “in the Trustee’s judgment” for the benefit of Beneficiaries. Further, during the hearing, Defendants agreed that Plaintiffs, in exercising their judgment as Co-Trustees, are empowered under the Trust Agreement to cease distribution payments entirely. As such, there is no live dispute that requires Court intervention to resolve; Plaintiffs want to stop making distribution payments until they receive certain information, and Defendants have not raised any disagreement that they are entitled to do so. Similarly, there is no indication that Defendants have disputed that Plaintiffs are permitted under the Trust Agreement to reimburse themselves for expenses for administering the Trusts, and thus issuing a declaration to that effect would be advisory…

In sum, Plaintiffs’ requested declarations all rest on the same doomed assumption: that the Defendants will and do object to Plaintiffs’ decisions regarding the Exempt Trusts, be it payments or non-payments for the Residences, the cessation of payments to Beneficiaries, or Plaintiffs reimbursing themselves for expenses incurred in the Exempt Trusts’ administration. But the Declaratory Judgment Act requires more than assumed disagreement to create a justiciable action; Plaintiffs have the burden to show the existence of an actual and immediate controversy. Here, the lack of any allegations of Defendants’ disagreement is dispositive; the Court concludes that there is no justiciable controversy, and accordingly, no subject matter jurisdiction under the Declaratory Judgment Act.

Id.