Preview
Filed: 5/7/2021 3:43 PM
JOHN D. KINARD - District Clerk
Galveston County, Texas
Envelope No. 53237562
By: Shailja Dixit
20-CV-1564 5/7/2021 4:08 PM
CAUSE NO. 2020-31023
ROBERT L. MOODY, JR. § IN THE DISTRICT COURT OF
§
§
§
v. § GALVESTON COUNTY, TEXAS
§
GREER, HERZ, & ADAMS, LLP, §
IRWIN “BUDDY” HERZ, JR. and §
ROSS RANKIN MOODY § 122nd JUDICIAL DISTRICT
DEFENDANT TRUSTEE IRWIN W. HERZ, JR.’S REPLY IN SUPPORT OF HIS
TRADITIONAL MOTION FOR SUMMARY JUDGMENT
Defendant Trustee Irwin W. Herz, Jr. (“Trustee Herz” or “Herz”) files this Reply in
Support of his Traditional Motion for Summary Judgment (the “Motion”) and shows as follows.
I. INTRODUCTION
Plaintiff Robert L. Moody, Jr.’s (“Robert Jr.”) skeletal response to Trustee Herz’s Motion
for Summary Judgment fails to offer a scintilla of evidence capable of raising a genuine question
of fact. Rather, the Response confirms that, more than a year after filing this lawsuit and after
issuing hundreds of document requests, multiple third-party subpoenas and conducting nine
depositions, Robert Jr. cannot point to a single document, communication, or competent
allegation supporting his claims that Herz violated any duty as Trustee of the Three R Trusts.
Instead, Robert Jr. relies exclusively on a self-interested Declaration, cut-and-pasted from
his Petition, attempting to resurrect a series of grievances regarding his treatment at the hands of
third-party charitable institutions and Moody-affiliated commercial entities, none of whom are
parties to this case. See generally Resp. Ex. E. These “Third Party Claims” have no basis in law
or fact and, contrary to Robert Jr.’s conclusory assertions, were dismissed on the pleadings by
Harris County Judge Latosha Payne prior to the change of venue in this case from Harris to
1
Galveston County. Now, with no evidence of any breach of Herz’s fiduciary duties as Trustee,
the Court should issue summary judgment against Robert Jr.’s remaining claims.
II. ARGUMENTS & AUTHORITIES
A. Having Served for 50 years as Trustee for the Three R Trusts, Herz can
Authenticate Documents Related to the Trusts
Robert Jr.’s attack on Trustee Herz’s authentication of the Trust Agreement 1 and other
trust-related documents is frivolous. Robert Jr. contends that Herz failed to prove up his
foundation to authenticate the Trust Agreement (Exs. 2 & 3); Robert L. Moody, Sr.’s (“Robert
Sr.”) durable power of attorney (Ex. 15); and six annual financial statements for the Trusts,
including transmittal letters forwarding them to Robert Jr. and his co-beneficiaries. Resp. at 2-3.
Robert Jr. does not suggest (because he cannot) that the exhibits are not precisely what
they purport to be. Instead, he urges the Court to disregard them because Trustee Herz allegedly
failed to “show[] how he became personally familiar with the documents and how his position
put him in a position to gain such knowledge.” Resp. at 3. These objections are meritless. In
addition to affirmatively declaring that he has personal knowledge of every matter discussed in
the Declaration and that his statements are true and correct, see Ex. 9 ¶ 1, Trustee Herz offers
unrebutted declarations, under penalty of perjury, that:
• He has been Trustee of the Three R Trusts for almost 50 years, see id. ¶ 2;
• Robert Sr. appointed him to that role under the same Trust Agreement that he
authenticates in his declaration, id. at ¶ 4;
• He is personally familiar with the Trusts’ assets, their nature, their past and present values
and their performance over time, id. at ¶ 5;
1
See Exhibit 2 (Indenture of Trust dated June 13, 1960, referred to herein as the “Trust Agreement”); Exhibit 3
(May 16, 1971 Supplement modifying Article II of the Trust Agreement regarding Duties and Powers of the
Trustee). Unless otherwise stated, allexhibits referenced herein are attached to Defendant Herz’s Traditional
Motion for Summary Judgment.
2
• He has personal knowledge of the circumstances of Robert Sr.’s execution of his durable
power of attorney, the relevant terms of that document, and his proactive efforts to
provide Robert Jr. and his co-beneficiaries with complete transparency into the Trusts’
management, id. at ¶ 7;
• He has personal knowledge of the preparation of the Trusts’ financial statements and the
Trust Agreement provisions requiring their preparation, and he provided copies of the
statements to each of the trust beneficiaries for more than 20 years, id. at ¶¶ 8-9.
Trustee Herz’s ability to authenticate these documents is further supported by the
Declaration of CPA Kevin Walsh, who testified that he prepared financial statements for the
Trusts and forwarded them to Herz, who then provided copies to Robert Jr. and his co-
beneficiaries. See Ex. 13 (Decl. of Kevin Walsh) at ¶¶ 4, 7-8. Indeed, Herz’s foundation to
testify is apparent from the faces of the documents themselves. Herz, in his capacity as Trustee,
has documented connections to each of the challenged exhibits. His notarized signature appears
no fewer than ten times in the Trust Agreement itself. 2 Each of the financial statements was
addressed to Herz as Trustee, and Exhibits 16, 17, and 20 each include transmittal letters from
Herz to the Trusts’ four beneficiaries. 3
Robert Jr. cites no authorities excluding exhibits that were authenticated by a person with
a comparable foundation, and he provides no analysis of relevant Texas legal standards. To be
sufficient, an affidavit need only show how the affiant became familiar with the facts. See Fair
Woman, Inc. v. Transland Mgmt. Corp., 766 S.W.2d 323, 323 (Tex. App.—Dallas 1989, no
writ). “The affidavit cannot merely state that the affiant is competent to testify as to the matters
stated therein, but there must be something in the affidavit to show affirmatively how the affiant
is competent to testify on those matters.” Id. In particular, a “person’s position or job
2
See Exhibits 2 & 3, at Herz0001175, Herz0001182, Herz0001186, Herz0001198, Herz0001204,
Herz0001211, Herz0001218, Herz0001222, Herz0001226, and Herz0001228.
3
See Ex. 16 at Herz0000029-32 & Herz0000034; Ex. 17 at Herz0000060-63 & Herz0000066; Ex. 18 at
Herz0000082; Ex. 19 at Herz0000097; Ex. 20 at Herz0000109-110 & Herz0000113; Ex. 21 at
Herz022105.
3
responsibilities can ‘peculiarly qualif[y] him to have personal knowledge concerning each of
the facts in the supporting affidavit.’ ” Johnson v. Burger King Corp., 09-99-548 CV, 2000
WL 1160490, at *3 (Tex. App.—Beaumont Aug. 17, 2000, pet. denied) (emphasis added,
quoting Barham v. Sugar Creek National Bank, 612 S.W.2d 78, 81 (Tex. Civ. App.—Houston
[14th Dist.] 1981, no writ).
As numerous Texas cases confirm, Herz’s position as Trustee for the Three R Trusts over
a period of 50 years, standing alone, provides him with ample foundation to authenticate these
exhibits. See, e.g., Sparks v. Cameron Employees Credit Union, 678 S.W.2d 600, 603 (Tex.
App.—Houston [14th Dist.] 1984, no writ) (“Lowrey’s position as an officer and authorized
agent of appellee peculiarly qualifies him to have personal knowledge of these facts.”); Jackson
T. Fulgham Co., Inc. v. Stewart Title Guar. Co., 649 S.W.2d 128, 130 (Tex. App.—Dallas 1983,
writ ref’d n.r.e.) (“The unchallenged averment that Kirkland is the vice-president and agent of
Stewart Title Guaranty shows how affiant learned or knew of the facts and thus satisfies the
requirement.”) (emphasis in original); Barham, 612 S.W.2d at 80 (affiant’s “position as Vice
President and Cashier of the Bank peculiarly qualified him to have personal knowledge
concerning each of the facts in the supporting affidavit”); MJS & Associates, L.L.C. v. Master,
501 S.W.3d 751, 758 (Tex. App.—Tyler 2016, pet. denied) (affiant “explained that as Chief
Compliance Officer, … [h]is position qualified him to have personal knowledge concerning facts
leading to LHC’s decision to terminate its contract”). 4 Herz’s declarations go far beyond relying
4
See also, e.g., Price v. Hibernia Nat. Bank in Tex., 05-92-02406-CV, 1993 WL 319461, at *2 (Tex.
App.—Dallas Aug. 18, 1993, no writ) (“Bakken was an Assistant Vice-President of BancTexas, the
original payee of the note, and is currently an Assistant Vice President of Hibernia, the purchaser of the
note. As such, he is competent to testify as to matters stated therein.”); Liberty Lending Services, Inc. v.
Musselwhite, 14-98-01372-CV, 1999 WL 649131, at *2–3 (Tex. App.—Houston [14th Dist.] Aug. 26,
1999, no pet.) (“Appellate courts have held that an affidavit is sufficient if the affiant states that he is an
agent for one of the parties to the suit and avers that he had personal knowledge of the facts contained in
the petition.”) (quotations and alterations omitted); Burch v. Fed. Deposit Ins. Corp., 05-91-00285-CV,
4
on his position as Trustee, however, and affirmatively show his knowledge of and connection to
each exhibit, their purpose, and the circumstances of each document’s preparation. The faces of
the exhibits themselves likewise confirm Herz’s personal knowledge. Robert Jr.’s objections
should therefore be overruled.
B. The Harris County Court Dismissed the Overwhelming Majority of
Plaintiffs’ Claims against Trustee Herz
Robert Jr.’s assertion that Herz’s Motion “ignores” many of his claims is a transparent
attempt to revive claims that were dismissed on the pleadings by the Harris County Court. As
discussed in the Motion, Judge Payne dismissed all claims against defendants Ross Moody and
Greer Herz & Adams, L.P. (GHA) pursuant to Rule 91a, along with the “Third Party Claims”
alleged against Trustee Herz. Specifically, Robert Jr.’s Third Party Claims alleged that Herz
breached his fiduciary duties by somehow interfering with his appointment to leadership
positions and his enjoyment of financial and contractual perks from several non-profit charitable
foundations, Moody National Bank, National Western Life Group, Inc. (“National Western”),
and American National Insurance Company (n/k/a American National Group, Inc., or “American
National”). 5 Robert Jr. also claimed that Ross Moody and GHA conspired with Trustee Herz
and aided and abetted him in his alleged breaches. Each defendant moved to dismiss all claims
against them on the grounds that Trustee Herz owed no duties to secure preferential treatment for
1991 WL 268456, at *2 (Tex. App.—Dallas Dec. 18, 1991, no writ) (“Bullard’s affidavit states that he is
the Senior Vice President for First National and is the custodian of itsrecords. These statements are
sufficient to establish Bullard’s personal knowledge concerning each of the facts stated in the affidavit.”);
Patel v. Whiteco Indus., Inc., 05-90-01419-CV, 1991 WL 134576, at *2 (Tex. App.—Dallas July 23,
1991, no writ) (“The unchallenged averment that Plumb has been employed as assistant vice-president of
Whiteco since February 21, 1972 shows how she learned or knew of the facts stated.”); Cottrell v.
Carrillon Associates, Ltd., 646 S.W.2d 491, 494 (Tex. App.—Houston [1st Dist.] 1982, no writ)
(overruling objection to affidavit where affiant represented that he was “ ‘an employee and officer and a
duly authorized agent’ for appellee and that he has ‘personal knowledge of the facts stated herein, and that
they are true and correct”).
5
See, e.g., Mot. at pp. 4-5.
5
Robert Jr. from any of these entities, and that the proper defendant (if any) in such cases is the
entity alleged to have disappointed his expectations. Defendants also explained that Robert Jr.
has no standing to bring claims based on alleged acts or omissions taken by Herz in his capacity
as a director for entities other than the Trusts, including because any such claims would belong
to the relevant entity and not to Robert Jr. 6 For example, Herz’ co-Defendant Ross Moody
argued:
• “[A]s a matter of law, neither Herz nor GHA had any duty as Junior’s trustee or
attorney to elevate him to board positions or to assist him to perpetually maintain
contractual relationships with other perks from third parties[;]”
• “[Robert Jr.] has not pleaded any facts suggesting Herz or GHA violated any duty of
disclosure or confidentiality as [Robert Jr.’s] trustee or former attorney, or that Ross
played any role in such a breach[;]”
• “[Robert Jr.’s] claims against Ross fail because [Robert Jr.] has failed to allege any
injury suffered in his capacity as client of GHA or as a beneficiary of the Three R
Trusts, much less any injury as a client or beneficiary primarily resulting from Ross’s
alleged conduct[;]”
• “[Robert Jr.] has no standing to complain of alleged injuries to third parties or to
recoup “disgorgement” of legal fees paid by third parties who have not sued and are
presumably satisfied with GHA’s services.” 7
The Harris County Court agreed and dismissed Robert Jr.’s claims against Ross and GHA
in their entirety. See Exs. 4 and 6. The Court granted an order of partial dismissal of all claims
against Herz, “except as to claims against Herz as Trustee[.]” See Ex. 5. The Court’s dismissal
adopted the distinction recognized in Herz’s Rule 91a Motion between “Third Party Claims”—
all of which were dismissed against GHA, Ross Moody and Herz—and “claims that actually do
relate to Herz’s duties and obligations as trustee[,]”—specifically the “Trust Management
6
See First. Am. Pet. at ¶¶ 53-54; Ex. 10 at pp. 27-28 (GHA motion to dismiss claim that GHA conspired with Herz
to violate his duties as Trustee); Ex. 11 at 1-2 and 21-25 (seeking dismissal on grounds that Robert Jr. failed to
allege any colorable breaches of fiduciary duty by Herz as Trustee).
7
See Ex. 11at 2 (emphasis added).
6
Claims” that are the subject of Herz’s present motion for summary judgment. See Ex. 7 at pp.
25-29. On this record, the only reasonable construction of the Harris County Court’s order is
that it was intended to, and did, dismiss all of the Third Party Claims, leaving only the few, bare-
bones Trust Management Claims pleaded solely “against Herz as Trustee.” Ex. 5.
Robert Jr.’s Response misconstrues that Order and ignores settled Texas law that courts
must “look at the record and not the language of [an] order” to determine its meaning. Karen
Corp. v. Burlington N. & Santa F Ry., 107 S.W.3d 118, 125 (Tex. App.—Fort Worth 2003, pet.
denied) (citing Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200 (Tex. 2003)). Moreover, where,
as here, a Court dismisses a claim premised on the same alleged conduct underlying a related
claim, the Court by implication dismisses both such claims. See, e.g., Ernst & Young, L.L.P. v.
Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 583 (Tex. 2001) (dismissal of claim for fraud
“necessarily disposes” of related claims for “aiding and abetting” and “conspiring” in the fraud);
Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 862 (Tex. 2000) (holding that when a
“breach of fiduciary duty claim” and a “breach of contract claim” rely on the same conduct,
dismissal of one “necessarily disposes” of the other); AFE Oil & Gas, L.L.C. v. Hess, 05-07-
01564-CV, 2009 WL 294828, at *4 (Tex. App.—Dallas Feb. 9, 2009, no pet.) (dismissals of
fraud claims “necessarily dispose of the conspiracy to commit fraud claims as well”).
The Harris County Court’s rulings are supported by the extensive authorities cited by
each defendant demonstrating that Herz’s duties as Trustee do not extend to procuring the third-
party board seats, preferential contract rights and other entitlements that Robert Jr. demanded “as
Robert L. Moody, Sr.’s oldest son and namesake[,]” and hence that they cannot be liable for
7
conspiring in or aiding and abetting any such breaches 8 It follow axiomatically that Herz
himself cannot be liable for “violating” duties that do not exist.
In sum, the Third Party Claims were alleged and dismissed against all Defendants. What
remains are the “Trust Management Claims,” asserted only against Trustee Herz.
C. The Trust Management Claims Fail as A Matter of Law
1. Robert Jr.’s Claims Are Negated by the Plain Language of the Trust
Agreement
As was extensively briefed in the Motion, the Trust Agreement specifically authorized all
of Herz’s actions with respect to the Three R Trusts, including those underlying Robert Jr.’s
Trust Management Claims. See, e.g., Ex. 3 at Art. II(a) (authorizing the Trustee “to make any
investments which the Trustee may deem advisable … without regard to whether any such
property is productive property”); id. at Art. II(c) (“To organize or cause to be organized any
corporation or corporations … for any purpose that the Trustee may deem advisable [and] to …
manage, operate, administer or absolve … any business interest which becomes part of the Trust
Estate[.]”); id. at Art. II(e) (“To delegate authority to agents, with full power of
substitution[.]”); id. at Art. II(g) (“The trustee shall not be under a duty to reinvest
immediately the funds which may come into the Trustee’s hands, but may withhold such funds
from reinvestment until such time as the Trustee may deem itadvisable ….”); id. at Art II(v)
(“The Trustee may consult with counsel and shall be fully protected in any action or non action
taken, permitted, or suffered by it in good faith and in accordance with the opinion of Counsel
selected or provided by the Trustee.”) (emphasis added throughout).
8
See, e.g., Ex. 7 at pp. 10-20 (Trustee Herz’s Rule 91a Motion to Dismiss); Ex. 10 at pp. 27-28; Ex. 11 at 1-2 and
21-25.
8
In addition, the Trust Agreement broadly exculpates Trustee Herz from the Trust
Management Claims, providing in relevant part:
The Trustee is expressly relieved of all liability to any beneficiary under the
trust . . . because of any loss or losses that may develop as a result of the Trustee
complying with the direction that it use its own discretion and judgment rather
than be governed by any certain rule or rules of law with respect to investment of
trust funds, and Trustee, having acted in good faith, shall not be liable for
losses resulting from errors of judgment or from the exercise of its own
discretion with respect to the kind and character of investment that it may
hold from time to time.
Robert Jr. does not, because he cannot, challenge the enforceability of either of the
exculpation cause or these specific grants of authority to manage the Trusts. See, e.g, Tex.
Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 249 (Tex. 2002) (holding that the Texas Trust
Code “allows an exculpatory clause to relieve a corporate trustee from liability for self-dealing
defined as misapplying or mishandling trust funds, including failing to promptly reinvest trust
monies[.]”); Shands v. Texas State Bank,. No. 04-00-00133-CV, 2001 2001 WL 21490 (Tex.
App.—San Antonio January 10, 2001, no pet.) (affirming judgment against claim that Trustee
failed to invest Trusts’ assets based on exculpatory clause providing that “no Trustee shall be
liable for any act or omission except in case of gross negligence, bad faith, or fraud….”). Clifton
v. Hopkins, 107 S.W.3d 755, 761 (Tex. App.—Waco 2003, no pet.) (no breach of fiduciary duty
on basis of modification of Trustee liability in Trust Agreement); Kohlhausen v. Baxendale, 01-
15-00901-CV, 2018 WL 1278132, at *3 (Tex. App.—Houston [1st Dist.] Mar. 13, 2018, no pet.)
(similar).
2. Robert Jr. Fails to Identify a Scintilla of Competent Evidence to
Support his Allegations of Bad Faith
Instead, Robert Jr. seizes on the Trust Agreement’s requirement that Herz act in “good
faith” and attempts to cast doubt on that good faith with a series of conclusory, self-serving, and
9
largely irrelevant allegations in his Declaration. Resp. at 11. As a preliminary matter, none of
these allegations can support claims that accrued prior to December 31, 2019, the date of the
most recent financial statement distributed to each of the Trusts’ beneficiaries and to the Moody
Bank Trust Department as Robert Sr.’s proxy. 9 All such claims are barred by the Trust
Agreement, and Robert Jr. has not alleged—much less provided any evidence—that any of his
claims accrued after that date. That alone is fatal to Robert Jr.’s remaining causes of action.
Even if any claims arising after December 31, 2019 had been shown to exist, Robert Jr.
fails to meet his burden to raise a genuine question of material fact with respect to bad faith. 10
Robert Jr. attempts to meet that burden through rote accusations that Herz (1) took “specific
steps” to appoint himself to boards of entities owned by the Trusts; (2) told Robert Jr. he would
“ruin him” and “make his life miserable”; (3) “act[ed] to further one beneficiary over another”;
(4) “work[ed] to cancel [Robert Jr.’s] lucrative contracts and benefits”; and (5) “ignored his
duties as Trustee, all while furthering his own interests and directly attempting to harm Bobby
Moody Jr.” Resp. at 12. Most of these assertions simply re-hash the same Third Party Claims
that Judge Payne previously dismissed. See Part II.B, supra.; Ex. 7 at 10-20. Even so, nowhere
does Robert Jr. allege facts to support these conclusory accusations, such as what “specific
steps” Herz took to “appoint himself” to boards of directors, or how Herz allegedly “worked to
cancel” Robert Jr.’s “lucrative contracts and benefits.”
9
See Ex. 3 at Art II(w) (“If the annual statement is accepted by acquiescence or otherwise by the Donor, it
constitutes a full acquittance and discharge of the Trustee for all matters concerning the trust up to the time of the
rendering of the annual statement[.]”).
10
The burden of proof to establish that a trustee acted in bad faith lays with the party challenging an exculpation
clause. See, e.g., Kohlhausen v. Baxendale, 01-15-00901-CV, 2018 WL 1278132, at *3 (Tex. App.—Houston [1st
Dist.] Mar. 13, 2018, no pet.) (“Because [defendant] established that he was entitled to summary judgment as a
matter of law on all of [plaintiff’s] claims based on the plain language of the Will, [plaintiff] was required to bring
forth more than a scintilla of . . . evidence that Kelley’s acts or omissions were done in bad faith or with gross
negligence.”).
10
To be clear, except for Trustee Herz’s entirely appropriate service as a director of entities
owned in whole or in part by the Trusts, none of these allegations have any basis in fact. Even
taking his accusations at face value however, however, none of them raises a scintilla of
evidence capable of undermining the Trust Agreement’s exculpation clause. Robert Jr.’s
complaints that Herz acted in bad faith through “self dealing,” or that he “took advantage of his
position of Trustee” by serving on boards of directors, see, e.g., Resp. Ex. E at ¶¶ 7, 9, 10, 11,
14, fail because the Trust Agreement expressly authorizes Herz to “manage, operate, [or]
administer … any business interest which becomes part of the Trust Estate[.]” Ex. 3 at Art.
II(c) (emphasis added). Merely exercising authority that is expressly granted to the Trustee by
the Trust Agreement in fulfilment of his duty of oversight cannot support an inference of bad
faith. To the extent that Robert Jr. complains about Herz’s actions in his capacity as a director
for those entities, Herz’s fiduciary duties in that role flowed to the entity itself and not to the
Trusts’ beneficiaries. See Adams v. Harris, 564 S.W.2d 152, 156 (Tex. Civ. App.—Houston
[14th Dist.] 1978, writ ref’d n.r.e.) (“[W]hatever breach of fiduciary duty [the trustee] committed
was in his capacity as director of the [company], not in his capacity as trustee.”).
Nor can Trustee Herz’s alleged reliance on his own legal analyses, or that of a GHA
colleague, constitute bad faith. As Herz stated in his own Declaration:
For decades the Trusts have obtained legal services at a reduced rate from GHA,
among other law firms. Moody National Bank and the Regent Care Entities have
also used GHA, among other law firms, for legal services for decades, with the
knowledge and approval of Robert Sr. and each of the beneficiaries of the
Trusts. Prior to this litigation, the total fees paid by the trust for all administration
and legal services, of which GHA’s fees are only a part, are remarkably low for a
trust of this size, ranging by one estimate of .007 to .032 of the Trusts’ net equity
between 2004 and 2018.
Ex. 9 at ¶5 (emphasis added).
11
Herz’s unrebutted Declaration establishes that Robert Sr., as Settlor, and Robert Jr. as a
beneficiary, knew of and consented to GHA’s representation of the Trust “for decades” prior to
filing suit. Id. Indeed, all parties concerned knowingly accepted the benefits of this
arrangement, receiving services from attorneys with knowledge and a long-lasting relationship
with the Trusts and other Moody-related entities at a discount to GHA’s customary rates. 11
Moreover, the Trust Agreement grants Herz complete discretion to select his own legal counsel
or to provide such counsel himself. See id. at Art II(v) (“The Trustee may consult with counsel
and shall be fully protected in any action or non action taken . . . in good faith and in accordance
with the opinion of Counsel selected or provided by the Trustee.”). These unrebutted facts
show no departure whatsoever from standards of good faith and fair dealing.
Robert Jr.’s remaining bad faith allegations are equally meritless. For example, nowhere
in his Response or his Declaration does Robert Jr. even allege—much less provide evidence—
that Herz “act[ed] to further one beneficiary over another” in connection with the
administration of the Trusts’ estate, which defines the entire scope of Herz’s duties as Trustee.
See Alpert v. Riley, 274 S.W.3d 277, 291 (Tex. App.—Houston [1st Dist.] 2008, pet. denied)
(“[A] trustee, as a fiduciary, has equitable duties to hold and manage the [trust] property for the
benefit of the beneficiaries.” (emphasis added, citing TEX. PROP. CODE §§ 113.051, 113.056(a));
The Moody Foundation v. Estate of Moody, No. 03-99-00034-CV, 1999 WL 1041541, at *2
(Tex. App.—Austin Nov. 18, 1999, pet. denied) (defining a trust as “a fiduciary relationship with
11
GHA or its predecessor firms have represented American National for approximately 90 years; Moody National
Bank for approximately 94 years; National Western for approximately 67 years, The Moody Foundation for
approximately 76 years (since inception except for a few years during the 1970s), The Transitional Learning Center
(n/k/a The Moody Neurorehabilitation Institute and referred to herein as “TLC”) and The Moody Endowment each
for approximately 41 years (since their inceptions); and the Three R Trusts for 56 years. See, Ex. 9 at ¶ 5; see also
Decl. of Herz dated July 10, 2020 at ¶¶ 25-27 & 30-31 (attached as Ex. 7 to Herz’s Motion to Transfer Venue, filed
July 13, 2020). Robert Sr. approved hourly legal fees charged by GHA to American National for 32 years, National
Western for 60 years, The Moody Foundation for 35 years, TLC and The Moody Endowment for 34 years and Three
R Trusts for 50 years. Id. Since 2013, there have been no increases in the hourly rates charged to any of these
entities, with a single exception in 2015 that was approved by the entity’s CEO.
12
respect to property which arises as a manifestation by the settlor of an intention to create the
relationship and which subjects the person holding title to the property to equitable duties to deal
with the property for the benefit of another person”) (emphasis added).
Instead, Robert Jr.’s declaration complains of the loss of various contractual
relationships, board positions or other benefits from outside the Trusts’ estate, demanded from
various unrelated and separately managed charitable foundations, ANICO, National Western,
Moody National Bank, and Regent Care. See, e.g., Resp. Ex. E at ¶¶7, 23-27. These allegations
fail because they were previously dismissed by the Harris County Court. 12 Even if not, however,
the Trusts’ ownership interests in these entities (if any) 13 are limited to holding shares or
ownership interests in the entities; they do not include rights to the award director seats, contracts
or executive perquisites to beneficiaries of the Trusts. Those powers belong to the entities
themselves, not to shareholders like the Trusts, and much less to the Trusts’ beneficiaries. See
Guerra v. Guerra, No. 04-10-00271-CV, 2011 WL 3715051, at *3 (Tex. App.—San Antonio
Aug. 24, 2011, no pet.) (holding that executor had no duty to liquidate stock of company 37%
owned by estate because the company “was not an estate asset”; rather, the “estate owned
company stock”) (emphasis added).
Robert Jr.’s accusation that Herz threatened to “ruin [him] financially and make [his] life
miserable”, see Resp. Ex. E at ¶ 22, also provides no evidence of bad faith. Contrary to his
repeated assertions in his Response, Robert Jr. has not identified a single act or omission by
Trustee Herz that resulted in Robert Jr. being treated differently than any of his co-
12
See Section II.B, supra; Mot. at pp. 10-20.
13
Cf. Mot. at pp. 4-5 (outlining the specific lists of perks denied to Robert Jr. and the entities alleged to have denied
them). Of the Third Party entities listed in Robert Jr.’s petition, Trusts hold only small minority interests in ANICO
and National Western, and it holds no interestswhatsoever in The Moody Foundation, The Robert L. Moody
Foundation, The Moody Endowment, The Transitional Learning Center/Neurorehabilitation Institute,Moody
Gardens, or the Moody Research Institute.
13
beneficiaries in connection with the Trusts. See generally Resp. Ex. E. Even if he could,
“differences in treatment between beneficiaries of different trusts does not … show[] a breach of
fiduciary duty,” unless the trusts’ terms require equal treatment. Marshall v. Ribosome L.P., 01-18-
00108-CV, 2019 WL 2041062, at *7 (Tex. App.—Houston [1st Dist.] May 9, 2019, no pet.). No
such requirement appears anywhere in the Trust Agreement. See generally Ex. 2.
Robert Jr. is therefore left to complain about his disappointed expectations regarding
benefits that he hoped to receive from third-party entities, some of whose stock is partially
owned by the Trusts. Trustee Herz had neither the power to control the day-to-day decisions of
those entities to provide special benefits Robert Jr., however, nor any fiduciary duty to do so.
Even if Herz did have such power, any actions taken by Trustee Herz as an attorney or director
of those entities categorically cannot form the basis of a claim that he breached any fiduciary
duties as Trustee, as a matter of law. 14 Adams, 564 S.W.2d at 156–57 (“A clear line exists
between actions of a trustee and those of an officer of a corporation owned wholly or in part by
the trust, even where the same person ‘wears both hats.”). This too, then, is a dead end for
Robert Jr.
3. Robert Jr.’s Summary Judgment Evidence is Conclusory, Inadmissible,
and Irrelevant
Robert Jr.’s final allegation of bad faith—that Herz “ignored his duties as Trustee, all
while furthering his own interests and directly attempting to harm Bobby Moody Jr.” is
14
Hornbook law recognizes that a plaintiff cannot prevail on a breach of fiduciary duty claim if the alleged breach
falls outside the scope of the fiduciary relationship.
See, e.g, Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150,
159-160 (Tex. 2004) (fiduciary duties to a beneficiary “extend[] only to dealings within the scope of the underlying
relationship of the parties”); Rankin v. Naftalis, 557 S.W.2d 940, 944-45 (Tex. 1977) (“While we recognize that the
relationship between the parties … was fiduciary in character, the fiduciary duties extended only to dealings within
the scope of the underlying relationship of the RESTATEMENT (THIRD) OF TRUSTS
parties[.]”); § 2 (2003) (“[A]
person in a fiduciary relationship to another is under a duty to act for the benefit of the other as to matters within the
scope of the relationship.”); TEXAS PROP. CODE § 113.051 (“[I]n administering the trust, the trustee shall perform
all of the duties imposed on trustees by the common law.”) (emphasis added).
14
duplicative of his prior incompetent allegations. To the extent that it asserts something different,
it—like most other assertions in Robert Jr.’s Declaration—is conclusory and hence incompetent.
“Conclusory testimony or affidavits are not competent summary judgment evidence and
are insufficient to create a question of fact to defeat summary judgment.” Montoya v. Nichirin-
Flex, U.S.A., Inc., 417 S.W.3d 507, 513 (Tex. App.—El Paso 2013, no pet.); see also Anderson
v. Snider, 808 S.W.2d 54, 55 (Tex. 1991) (per curiam, op. on rehearing); James L. Gang &
Assocs., Inc. v. Abbott Labs., 198 S.W.3d 434, 439 (Tex. App.—Dallas 2006, no pet.). An
affidavit is conclusory when it expresses “a factual inference without stating the underlying facts
on which the inference is based.” E.I. du Pont de Nemours & Co. v. Shell Oil Co., 259 S.W.3d
800, 809 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (quoting BLACK’S LAW
DICTIONARY 284 (7th ed. 2001)); see also, e.g., Montoya, 417 S.W.3d at 513 (“A statement is
conclusory if it does not provide the underlying facts to support the conclusion.”). “An
unsupported legal conclusion is likewise conclusory.” Montoya, 417 S.W.3d at 513; accord S & I
Mgmt., Inc. v. Sungju Choi, 331 S.W.3d 849, 856 (Tex. App.—Dallas 2011, no pet.).
“Conclusory statements in affidavits are not competent evidence because they do not raise fact
issues, nor are they credible or susceptible to being readily controverted.” Stephens, 2013 WL
1928797, at *7 (citing Ryland Grp., Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per
curiam)). Robert Jr.’s Declaration is constructed almost entirely of such unsupported
conclusions, including for example that:
• “Buddy Herz continues his failure by intentionally ignoring his responsibilities and
delegating his authority to preserve and protect Trust assets to third parties.” Resp. Ex. E
at ¶ 18.
15
• “Buddy Herz failed to properly and accurately account for Trust expenses, for how he
was paid by the Trust or Trust assets.” Id. ¶ 19.
• “Buddy Herz secured incidental benefits for members of his family, and charitable
interests he personally supports, by virtue of his position of Trustee of the Trust, which
virtually allows him to control most Moody Interests and boards of such interests. Id. at ¶
21.
Preview
Filed: 5/7/2021 3:43 PM JOHN D. KINARD - District Clerk Galveston County, Texas Envelope No. 53237562 By: Shailja Dixit 20-CV-1564 5/7/2021 4:08 PM CAUSE NO. 2020-31023 ROBERT L. MOODY, JR. § IN THE DISTRICT COURT OF § § § v. § GALVESTON COUNTY, TEXAS § GREER, HERZ, & ADAMS, LLP, § IRWIN “BUDDY” HERZ, JR. and § ROSS RANKIN MOODY § 122nd JUDICIAL DISTRICT DEFENDANT TRUSTEE IRWIN W. HERZ, JR.’S REPLY IN SUPPORT OF HIS TRADITIONAL MOTION FOR SUMMARY JUDGMENT Defendant Trustee Irwin W. Herz, Jr. (“Trustee Herz” or “Herz”) files this Reply in Support of his Traditional Motion for Summary Judgment (the “Motion”) and shows as follows. I. INTRODUCTION Plaintiff Robert L. Moody, Jr.’s (“Robert Jr.”) skeletal response to Trustee Herz’s Motion for Summary Judgment fails to offer a scintilla of evidence capable of raising a genuine question of fact. Rather, the Response confirms that, more than a year after filing this lawsuit and after issuing hundreds of document requests, multiple third-party subpoenas and conducting nine depositions, Robert Jr. cannot point to a single document, communication, or competent allegation supporting his claims that Herz violated any duty as Trustee of the Three R Trusts. Instead, Robert Jr. relies exclusively on a self-interested Declaration, cut-and-pasted from his Petition, attempting to resurrect a series of grievances regarding his treatment at the hands of third-party charitable institutions and Moody-affiliated commercial entities, none of whom are parties to this case. See generally Resp. Ex. E. These “Third Party Claims” have no basis in law or fact and, contrary to Robert Jr.’s conclusory assertions, were dismissed on the pleadings by Harris County Judge Latosha Payne prior to the change of venue in this case from Harris to 1 Galveston County. Now, with no evidence of any breach of Herz’s fiduciary duties as Trustee, the Court should issue summary judgment against Robert Jr.’s remaining claims. II. ARGUMENTS & AUTHORITIES A. Having Served for 50 years as Trustee for the Three R Trusts, Herz can Authenticate Documents Related to the Trusts Robert Jr.’s attack on Trustee Herz’s authentication of the Trust Agreement 1 and other trust-related documents is frivolous. Robert Jr. contends that Herz failed to prove up his foundation to authenticate the Trust Agreement (Exs. 2 & 3); Robert L. Moody, Sr.’s (“Robert Sr.”) durable power of attorney (Ex. 15); and six annual financial statements for the Trusts, including transmittal letters forwarding them to Robert Jr. and his co-beneficiaries. Resp. at 2-3. Robert Jr. does not suggest (because he cannot) that the exhibits are not precisely what they purport to be. Instead, he urges the Court to disregard them because Trustee Herz allegedly failed to “show[] how he became personally familiar with the documents and how his position put him in a position to gain such knowledge.” Resp. at 3. These objections are meritless. In addition to affirmatively declaring that he has personal knowledge of every matter discussed in the Declaration and that his statements are true and correct, see Ex. 9 ¶ 1, Trustee Herz offers unrebutted declarations, under penalty of perjury, that: • He has been Trustee of the Three R Trusts for almost 50 years, see id. ¶ 2; • Robert Sr. appointed him to that role under the same Trust Agreement that he authenticates in his declaration, id. at ¶ 4; • He is personally familiar with the Trusts’ assets, their nature, their past and present values and their performance over time, id. at ¶ 5; 1 See Exhibit 2 (Indenture of Trust dated June 13, 1960, referred to herein as the “Trust Agreement”); Exhibit 3 (May 16, 1971 Supplement modifying Article II of the Trust Agreement regarding Duties and Powers of the Trustee). Unless otherwise stated, allexhibits referenced herein are attached to Defendant Herz’s Traditional Motion for Summary Judgment. 2 • He has personal knowledge of the circumstances of Robert Sr.’s execution of his durable power of attorney, the relevant terms of that document, and his proactive efforts to provide Robert Jr. and his co-beneficiaries with complete transparency into the Trusts’ management, id. at ¶ 7; • He has personal knowledge of the preparation of the Trusts’ financial statements and the Trust Agreement provisions requiring their preparation, and he provided copies of the statements to each of the trust beneficiaries for more than 20 years, id. at ¶¶ 8-9. Trustee Herz’s ability to authenticate these documents is further supported by the Declaration of CPA Kevin Walsh, who testified that he prepared financial statements for the Trusts and forwarded them to Herz, who then provided copies to Robert Jr. and his co- beneficiaries. See Ex. 13 (Decl. of Kevin Walsh) at ¶¶ 4, 7-8. Indeed, Herz’s foundation to testify is apparent from the faces of the documents themselves. Herz, in his capacity as Trustee, has documented connections to each of the challenged exhibits. His notarized signature appears no fewer than ten times in the Trust Agreement itself. 2 Each of the financial statements was addressed to Herz as Trustee, and Exhibits 16, 17, and 20 each include transmittal letters from Herz to the Trusts’ four beneficiaries. 3 Robert Jr. cites no authorities excluding exhibits that were authenticated by a person with a comparable foundation, and he provides no analysis of relevant Texas legal standards. To be sufficient, an affidavit need only show how the affiant became familiar with the facts. See Fair Woman, Inc. v. Transland Mgmt. Corp., 766 S.W.2d 323, 323 (Tex. App.—Dallas 1989, no writ). “The affidavit cannot merely state that the affiant is competent to testify as to the matters stated therein, but there must be something in the affidavit to show affirmatively how the affiant is competent to testify on those matters.” Id. In particular, a “person’s position or job 2 See Exhibits 2 & 3, at Herz0001175, Herz0001182, Herz0001186, Herz0001198, Herz0001204, Herz0001211, Herz0001218, Herz0001222, Herz0001226, and Herz0001228. 3 See Ex. 16 at Herz0000029-32 & Herz0000034; Ex. 17 at Herz0000060-63 & Herz0000066; Ex. 18 at Herz0000082; Ex. 19 at Herz0000097; Ex. 20 at Herz0000109-110 & Herz0000113; Ex. 21 at Herz022105. 3 responsibilities can ‘peculiarly qualif[y] him to have personal knowledge concerning each of the facts in the supporting affidavit.’ ” Johnson v. Burger King Corp., 09-99-548 CV, 2000 WL 1160490, at *3 (Tex. App.—Beaumont Aug. 17, 2000, pet. denied) (emphasis added, quoting Barham v. Sugar Creek National Bank, 612 S.W.2d 78, 81 (Tex. Civ. App.—Houston [14th Dist.] 1981, no writ). As numerous Texas cases confirm, Herz’s position as Trustee for the Three R Trusts over a period of 50 years, standing alone, provides him with ample foundation to authenticate these exhibits. See, e.g., Sparks v. Cameron Employees Credit Union, 678 S.W.2d 600, 603 (Tex. App.—Houston [14th Dist.] 1984, no writ) (“Lowrey’s position as an officer and authorized agent of appellee peculiarly qualifies him to have personal knowledge of these facts.”); Jackson T. Fulgham Co., Inc. v. Stewart Title Guar. Co., 649 S.W.2d 128, 130 (Tex. App.—Dallas 1983, writ ref’d n.r.e.) (“The unchallenged averment that Kirkland is the vice-president and agent of Stewart Title Guaranty shows how affiant learned or knew of the facts and thus satisfies the requirement.”) (emphasis in original); Barham, 612 S.W.2d at 80 (affiant’s “position as Vice President and Cashier of the Bank peculiarly qualified him to have personal knowledge concerning each of the facts in the supporting affidavit”); MJS & Associates, L.L.C. v. Master, 501 S.W.3d 751, 758 (Tex. App.—Tyler 2016, pet. denied) (affiant “explained that as Chief Compliance Officer, … [h]is position qualified him to have personal knowledge concerning facts leading to LHC’s decision to terminate its contract”). 4 Herz’s declarations go far beyond relying 4 See also, e.g., Price v. Hibernia Nat. Bank in Tex., 05-92-02406-CV, 1993 WL 319461, at *2 (Tex. App.—Dallas Aug. 18, 1993, no writ) (“Bakken was an Assistant Vice-President of BancTexas, the original payee of the note, and is currently an Assistant Vice President of Hibernia, the purchaser of the note. As such, he is competent to testify as to matters stated therein.”); Liberty Lending Services, Inc. v. Musselwhite, 14-98-01372-CV, 1999 WL 649131, at *2–3 (Tex. App.—Houston [14th Dist.] Aug. 26, 1999, no pet.) (“Appellate courts have held that an affidavit is sufficient if the affiant states that he is an agent for one of the parties to the suit and avers that he had personal knowledge of the facts contained in the petition.”) (quotations and alterations omitted); Burch v. Fed. Deposit Ins. Corp., 05-91-00285-CV, 4 on his position as Trustee, however, and affirmatively show his knowledge of and connection to each exhibit, their purpose, and the circumstances of each document’s preparation. The faces of the exhibits themselves likewise confirm Herz’s personal knowledge. Robert Jr.’s objections should therefore be overruled. B. The Harris County Court Dismissed the Overwhelming Majority of Plaintiffs’ Claims against Trustee Herz Robert Jr.’s assertion that Herz’s Motion “ignores” many of his claims is a transparent attempt to revive claims that were dismissed on the pleadings by the Harris County Court. As discussed in the Motion, Judge Payne dismissed all claims against defendants Ross Moody and Greer Herz & Adams, L.P. (GHA) pursuant to Rule 91a, along with the “Third Party Claims” alleged against Trustee Herz. Specifically, Robert Jr.’s Third Party Claims alleged that Herz breached his fiduciary duties by somehow interfering with his appointment to leadership positions and his enjoyment of financial and contractual perks from several non-profit charitable foundations, Moody National Bank, National Western Life Group, Inc. (“National Western”), and American National Insurance Company (n/k/a American National Group, Inc., or “American National”). 5 Robert Jr. also claimed that Ross Moody and GHA conspired with Trustee Herz and aided and abetted him in his alleged breaches. Each defendant moved to dismiss all claims against them on the grounds that Trustee Herz owed no duties to secure preferential treatment for 1991 WL 268456, at *2 (Tex. App.—Dallas Dec. 18, 1991, no writ) (“Bullard’s affidavit states that he is the Senior Vice President for First National and is the custodian of itsrecords. These statements are sufficient to establish Bullard’s personal knowledge concerning each of the facts stated in the affidavit.”); Patel v. Whiteco Indus., Inc., 05-90-01419-CV, 1991 WL 134576, at *2 (Tex. App.—Dallas July 23, 1991, no writ) (“The unchallenged averment that Plumb has been employed as assistant vice-president of Whiteco since February 21, 1972 shows how she learned or knew of the facts stated.”); Cottrell v. Carrillon Associates, Ltd., 646 S.W.2d 491, 494 (Tex. App.—Houston [1st Dist.] 1982, no writ) (overruling objection to affidavit where affiant represented that he was “ ‘an employee and officer and a duly authorized agent’ for appellee and that he has ‘personal knowledge of the facts stated herein, and that they are true and correct”). 5 See, e.g., Mot. at pp. 4-5. 5 Robert Jr. from any of these entities, and that the proper defendant (if any) in such cases is the entity alleged to have disappointed his expectations. Defendants also explained that Robert Jr. has no standing to bring claims based on alleged acts or omissions taken by Herz in his capacity as a director for entities other than the Trusts, including because any such claims would belong to the relevant entity and not to Robert Jr. 6 For example, Herz’ co-Defendant Ross Moody argued: • “[A]s a matter of law, neither Herz nor GHA had any duty as Junior’s trustee or attorney to elevate him to board positions or to assist him to perpetually maintain contractual relationships with other perks from third parties[;]” • “[Robert Jr.] has not pleaded any facts suggesting Herz or GHA violated any duty of disclosure or confidentiality as [Robert Jr.’s] trustee or former attorney, or that Ross played any role in such a breach[;]” • “[Robert Jr.’s] claims against Ross fail because [Robert Jr.] has failed to allege any injury suffered in his capacity as client of GHA or as a beneficiary of the Three R Trusts, much less any injury as a client or beneficiary primarily resulting from Ross’s alleged conduct[;]” • “[Robert Jr.] has no standing to complain of alleged injuries to third parties or to recoup “disgorgement” of legal fees paid by third parties who have not sued and are presumably satisfied with GHA’s services.” 7 The Harris County Court agreed and dismissed Robert Jr.’s claims against Ross and GHA in their entirety. See Exs. 4 and 6. The Court granted an order of partial dismissal of all claims against Herz, “except as to claims against Herz as Trustee[.]” See Ex. 5. The Court’s dismissal adopted the distinction recognized in Herz’s Rule 91a Motion between “Third Party Claims”— all of which were dismissed against GHA, Ross Moody and Herz—and “claims that actually do relate to Herz’s duties and obligations as trustee[,]”—specifically the “Trust Management 6 See First. Am. Pet. at ¶¶ 53-54; Ex. 10 at pp. 27-28 (GHA motion to dismiss claim that GHA conspired with Herz to violate his duties as Trustee); Ex. 11 at 1-2 and 21-25 (seeking dismissal on grounds that Robert Jr. failed to allege any colorable breaches of fiduciary duty by Herz as Trustee). 7 See Ex. 11at 2 (emphasis added). 6 Claims” that are the subject of Herz’s present motion for summary judgment. See Ex. 7 at pp. 25-29. On this record, the only reasonable construction of the Harris County Court’s order is that it was intended to, and did, dismiss all of the Third Party Claims, leaving only the few, bare- bones Trust Management Claims pleaded solely “against Herz as Trustee.” Ex. 5. Robert Jr.’s Response misconstrues that Order and ignores settled Texas law that courts must “look at the record and not the language of [an] order” to determine its meaning. Karen Corp. v. Burlington N. & Santa F Ry., 107 S.W.3d 118, 125 (Tex. App.—Fort Worth 2003, pet. denied) (citing Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200 (Tex. 2003)). Moreover, where, as here, a Court dismisses a claim premised on the same alleged conduct underlying a related claim, the Court by implication dismisses both such claims. See, e.g., Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 583 (Tex. 2001) (dismissal of claim for fraud “necessarily disposes” of related claims for “aiding and abetting” and “conspiring” in the fraud); Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 862 (Tex. 2000) (holding that when a “breach of fiduciary duty claim” and a “breach of contract claim” rely on the same conduct, dismissal of one “necessarily disposes” of the other); AFE Oil & Gas, L.L.C. v. Hess, 05-07- 01564-CV, 2009 WL 294828, at *4 (Tex. App.—Dallas Feb. 9, 2009, no pet.) (dismissals of fraud claims “necessarily dispose of the conspiracy to commit fraud claims as well”). The Harris County Court’s rulings are supported by the extensive authorities cited by each defendant demonstrating that Herz’s duties as Trustee do not extend to procuring the third- party board seats, preferential contract rights and other entitlements that Robert Jr. demanded “as Robert L. Moody, Sr.’s oldest son and namesake[,]” and hence that they cannot be liable for 7 conspiring in or aiding and abetting any such breaches 8 It follow axiomatically that Herz himself cannot be liable for “violating” duties that do not exist. In sum, the Third Party Claims were alleged and dismissed against all Defendants. What remains are the “Trust Management Claims,” asserted only against Trustee Herz. C. The Trust Management Claims Fail as A Matter of Law 1. Robert Jr.’s Claims Are Negated by the Plain Language of the Trust Agreement As was extensively briefed in the Motion, the Trust Agreement specifically authorized all of Herz’s actions with respect to the Three R Trusts, including those underlying Robert Jr.’s Trust Management Claims. See, e.g., Ex. 3 at Art. II(a) (authorizing the Trustee “to make any investments which the Trustee may deem advisable … without regard to whether any such property is productive property”); id. at Art. II(c) (“To organize or cause to be organized any corporation or corporations … for any purpose that the Trustee may deem advisable [and] to … manage, operate, administer or absolve … any business interest which becomes part of the Trust Estate[.]”); id. at Art. II(e) (“To delegate authority to agents, with full power of substitution[.]”); id. at Art. II(g) (“The trustee shall not be under a duty to reinvest immediately the funds which may come into the Trustee’s hands, but may withhold such funds from reinvestment until such time as the Trustee may deem itadvisable ….”); id. at Art II(v) (“The Trustee may consult with counsel and shall be fully protected in any action or non action taken, permitted, or suffered by it in good faith and in accordance with the opinion of Counsel selected or provided by the Trustee.”) (emphasis added throughout). 8 See, e.g., Ex. 7 at pp. 10-20 (Trustee Herz’s Rule 91a Motion to Dismiss); Ex. 10 at pp. 27-28; Ex. 11 at 1-2 and 21-25. 8 In addition, the Trust Agreement broadly exculpates Trustee Herz from the Trust Management Claims, providing in relevant part: The Trustee is expressly relieved of all liability to any beneficiary under the trust . . . because of any loss or losses that may develop as a result of the Trustee complying with the direction that it use its own discretion and judgment rather than be governed by any certain rule or rules of law with respect to investment of trust funds, and Trustee, having acted in good faith, shall not be liable for losses resulting from errors of judgment or from the exercise of its own discretion with respect to the kind and character of investment that it may hold from time to time. Robert Jr. does not, because he cannot, challenge the enforceability of either of the exculpation cause or these specific grants of authority to manage the Trusts. See, e.g, Tex. Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 249 (Tex. 2002) (holding that the Texas Trust Code “allows an exculpatory clause to relieve a corporate trustee from liability for self-dealing defined as misapplying or mishandling trust funds, including failing to promptly reinvest trust monies[.]”); Shands v. Texas State Bank,. No. 04-00-00133-CV, 2001 2001 WL 21490 (Tex. App.—San Antonio January 10, 2001, no pet.) (affirming judgment against claim that Trustee failed to invest Trusts’ assets based on exculpatory clause providing that “no Trustee shall be liable for any act or omission except in case of gross negligence, bad faith, or fraud….”). Clifton v. Hopkins, 107 S.W.3d 755, 761 (Tex. App.—Waco 2003, no pet.) (no breach of fiduciary duty on basis of modification of Trustee liability in Trust Agreement); Kohlhausen v. Baxendale, 01- 15-00901-CV, 2018 WL 1278132, at *3 (Tex. App.—Houston [1st Dist.] Mar. 13, 2018, no pet.) (similar). 2. Robert Jr. Fails to Identify a Scintilla of Competent Evidence to Support his Allegations of Bad Faith Instead, Robert Jr. seizes on the Trust Agreement’s requirement that Herz act in “good faith” and attempts to cast doubt on that good faith with a series of conclusory, self-serving, and 9 largely irrelevant allegations in his Declaration. Resp. at 11. As a preliminary matter, none of these allegations can support claims that accrued prior to December 31, 2019, the date of the most recent financial statement distributed to each of the Trusts’ beneficiaries and to the Moody Bank Trust Department as Robert Sr.’s proxy. 9 All such claims are barred by the Trust Agreement, and Robert Jr. has not alleged—much less provided any evidence—that any of his claims accrued after that date. That alone is fatal to Robert Jr.’s remaining causes of action. Even if any claims arising after December 31, 2019 had been shown to exist, Robert Jr. fails to meet his burden to raise a genuine question of material fact with respect to bad faith. 10 Robert Jr. attempts to meet that burden through rote accusations that Herz (1) took “specific steps” to appoint himself to boards of entities owned by the Trusts; (2) told Robert Jr. he would “ruin him” and “make his life miserable”; (3) “act[ed] to further one beneficiary over another”; (4) “work[ed] to cancel [Robert Jr.’s] lucrative contracts and benefits”; and (5) “ignored his duties as Trustee, all while furthering his own interests and directly attempting to harm Bobby Moody Jr.” Resp. at 12. Most of these assertions simply re-hash the same Third Party Claims that Judge Payne previously dismissed. See Part II.B, supra.; Ex. 7 at 10-20. Even so, nowhere does Robert Jr. allege facts to support these conclusory accusations, such as what “specific steps” Herz took to “appoint himself” to boards of directors, or how Herz allegedly “worked to cancel” Robert Jr.’s “lucrative contracts and benefits.” 9 See Ex. 3 at Art II(w) (“If the annual statement is accepted by acquiescence or otherwise by the Donor, it constitutes a full acquittance and discharge of the Trustee for all matters concerning the trust up to the time of the rendering of the annual statement[.]”). 10 The burden of proof to establish that a trustee acted in bad faith lays with the party challenging an exculpation clause. See, e.g., Kohlhausen v. Baxendale, 01-15-00901-CV, 2018 WL 1278132, at *3 (Tex. App.—Houston [1st Dist.] Mar. 13, 2018, no pet.) (“Because [defendant] established that he was entitled to summary judgment as a matter of law on all of [plaintiff’s] claims based on the plain language of the Will, [plaintiff] was required to bring forth more than a scintilla of . . . evidence that Kelley’s acts or omissions were done in bad faith or with gross negligence.”). 10 To be clear, except for Trustee Herz’s entirely appropriate service as a director of entities owned in whole or in part by the Trusts, none of these allegations have any basis in fact. Even taking his accusations at face value however, however, none of them raises a scintilla of evidence capable of undermining the Trust Agreement’s exculpation clause. Robert Jr.’s complaints that Herz acted in bad faith through “self dealing,” or that he “took advantage of his position of Trustee” by serving on boards of directors, see, e.g., Resp. Ex. E at ¶¶ 7, 9, 10, 11, 14, fail because the Trust Agreement expressly authorizes Herz to “manage, operate, [or] administer … any business interest which becomes part of the Trust Estate[.]” Ex. 3 at Art. II(c) (emphasis added). Merely exercising authority that is expressly granted to the Trustee by the Trust Agreement in fulfilment of his duty of oversight cannot support an inference of bad faith. To the extent that Robert Jr. complains about Herz’s actions in his capacity as a director for those entities, Herz’s fiduciary duties in that role flowed to the entity itself and not to the Trusts’ beneficiaries. See Adams v. Harris, 564 S.W.2d 152, 156 (Tex. Civ. App.—Houston [14th Dist.] 1978, writ ref’d n.r.e.) (“[W]hatever breach of fiduciary duty [the trustee] committed was in his capacity as director of the [company], not in his capacity as trustee.”). Nor can Trustee Herz’s alleged reliance on his own legal analyses, or that of a GHA colleague, constitute bad faith. As Herz stated in his own Declaration: For decades the Trusts have obtained legal services at a reduced rate from GHA, among other law firms. Moody National Bank and the Regent Care Entities have also used GHA, among other law firms, for legal services for decades, with the knowledge and approval of Robert Sr. and each of the beneficiaries of the Trusts. Prior to this litigation, the total fees paid by the trust for all administration and legal services, of which GHA’s fees are only a part, are remarkably low for a trust of this size, ranging by one estimate of .007 to .032 of the Trusts’ net equity between 2004 and 2018. Ex. 9 at ¶5 (emphasis added). 11 Herz’s unrebutted Declaration establishes that Robert Sr., as Settlor, and Robert Jr. as a beneficiary, knew of and consented to GHA’s representation of the Trust “for decades” prior to filing suit. Id. Indeed, all parties concerned knowingly accepted the benefits of this arrangement, receiving services from attorneys with knowledge and a long-lasting relationship with the Trusts and other Moody-related entities at a discount to GHA’s customary rates. 11 Moreover, the Trust Agreement grants Herz complete discretion to select his own legal counsel or to provide such counsel himself. See id. at Art II(v) (“The Trustee may consult with counsel and shall be fully protected in any action or non action taken . . . in good faith and in accordance with the opinion of Counsel selected or provided by the Trustee.”). These unrebutted facts show no departure whatsoever from standards of good faith and fair dealing. Robert Jr.’s remaining bad faith allegations are equally meritless. For example, nowhere in his Response or his Declaration does Robert Jr. even allege—much less provide evidence— that Herz “act[ed] to further one beneficiary over another” in connection with the administration of the Trusts’ estate, which defines the entire scope of Herz’s duties as Trustee. See Alpert v. Riley, 274 S.W.3d 277, 291 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (“[A] trustee, as a fiduciary, has equitable duties to hold and manage the [trust] property for the benefit of the beneficiaries.” (emphasis added, citing TEX. PROP. CODE §§ 113.051, 113.056(a)); The Moody Foundation v. Estate of Moody, No. 03-99-00034-CV, 1999 WL 1041541, at *2 (Tex. App.—Austin Nov. 18, 1999, pet. denied) (defining a trust as “a fiduciary relationship with 11 GHA or its predecessor firms have represented American National for approximately 90 years; Moody National Bank for approximately 94 years; National Western for approximately 67 years, The Moody Foundation for approximately 76 years (since inception except for a few years during the 1970s), The Transitional Learning Center (n/k/a The Moody Neurorehabilitation Institute and referred to herein as “TLC”) and The Moody Endowment each for approximately 41 years (since their inceptions); and the Three R Trusts for 56 years. See, Ex. 9 at ¶ 5; see also Decl. of Herz dated July 10, 2020 at ¶¶ 25-27 & 30-31 (attached as Ex. 7 to Herz’s Motion to Transfer Venue, filed July 13, 2020). Robert Sr. approved hourly legal fees charged by GHA to American National for 32 years, National Western for 60 years, The Moody Foundation for 35 years, TLC and The Moody Endowment for 34 years and Three R Trusts for 50 years. Id. Since 2013, there have been no increases in the hourly rates charged to any of these entities, with a single exception in 2015 that was approved by the entity’s CEO. 12 respect to property which arises as a manifestation by the settlor of an intention to create the relationship and which subjects the person holding title to the property to equitable duties to deal with the property for the benefit of another person”) (emphasis added). Instead, Robert Jr.’s declaration complains of the loss of various contractual relationships, board positions or other benefits from outside the Trusts’ estate, demanded from various unrelated and separately managed charitable foundations, ANICO, National Western, Moody National Bank, and Regent Care. See, e.g., Resp. Ex. E at ¶¶7, 23-27. These allegations fail because they were previously dismissed by the Harris County Court. 12 Even if not, however, the Trusts’ ownership interests in these entities (if any) 13 are limited to holding shares or ownership interests in the entities; they do not include rights to the award director seats, contracts or executive perquisites to beneficiaries of the Trusts. Those powers belong to the entities themselves, not to shareholders like the Trusts, and much less to the Trusts’ beneficiaries. See Guerra v. Guerra, No. 04-10-00271-CV, 2011 WL 3715051, at *3 (Tex. App.—San Antonio Aug. 24, 2011, no pet.) (holding that executor had no duty to liquidate stock of company 37% owned by estate because the company “was not an estate asset”; rather, the “estate owned company stock”) (emphasis added). Robert Jr.’s accusation that Herz threatened to “ruin [him] financially and make [his] life miserable”, see Resp. Ex. E at ¶ 22, also provides no evidence of bad faith. Contrary to his repeated assertions in his Response, Robert Jr. has not identified a single act or omission by Trustee Herz that resulted in Robert Jr. being treated differently than any of his co- 12 See Section II.B, supra; Mot. at pp. 10-20. 13 Cf. Mot. at pp. 4-5 (outlining the specific lists of perks denied to Robert Jr. and the entities alleged to have denied them). Of the Third Party entities listed in Robert Jr.’s petition, Trusts hold only small minority interests in ANICO and National Western, and it holds no interestswhatsoever in The Moody Foundation, The Robert L. Moody Foundation, The Moody Endowment, The Transitional Learning Center/Neurorehabilitation Institute,Moody Gardens, or the Moody Research Institute. 13 beneficiaries in connection with the Trusts. See generally Resp. Ex. E. Even if he could, “differences in treatment between beneficiaries of different trusts does not … show[] a breach of fiduciary duty,” unless the trusts’ terms require equal treatment. Marshall v. Ribosome L.P., 01-18- 00108-CV, 2019 WL 2041062, at *7 (Tex. App.—Houston [1st Dist.] May 9, 2019, no pet.). No such requirement appears anywhere in the Trust Agreement. See generally Ex. 2. Robert Jr. is therefore left to complain about his disappointed expectations regarding benefits that he hoped to receive from third-party entities, some of whose stock is partially owned by the Trusts. Trustee Herz had neither the power to control the day-to-day decisions of those entities to provide special benefits Robert Jr., however, nor any fiduciary duty to do so. Even if Herz did have such power, any actions taken by Trustee Herz as an attorney or director of those entities categorically cannot form the basis of a claim that he breached any fiduciary duties as Trustee, as a matter of law. 14 Adams, 564 S.W.2d at 156–57 (“A clear line exists between actions of a trustee and those of an officer of a corporation owned wholly or in part by the trust, even where the same person ‘wears both hats.”). This too, then, is a dead end for Robert Jr. 3. Robert Jr.’s Summary Judgment Evidence is Conclusory, Inadmissible, and Irrelevant Robert Jr.’s final allegation of bad faith—that Herz “ignored his duties as Trustee, all while furthering his own interests and directly attempting to harm Bobby Moody Jr.” is 14 Hornbook law recognizes that a plaintiff cannot prevail on a breach of fiduciary duty claim if the alleged breach falls outside the scope of the fiduciary relationship. See, e.g, Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 159-160 (Tex. 2004) (fiduciary duties to a beneficiary “extend[] only to dealings within the scope of the underlying relationship of the parties”); Rankin v. Naftalis, 557 S.W.2d 940, 944-45 (Tex. 1977) (“While we recognize that the relationship between the parties … was fiduciary in character, the fiduciary duties extended only to dealings within the scope of the underlying relationship of the RESTATEMENT (THIRD) OF TRUSTS parties[.]”); § 2 (2003) (“[A] person in a fiduciary relationship to another is under a duty to act for the benefit of the other as to matters within the scope of the relationship.”); TEXAS PROP. CODE § 113.051 (“[I]n administering the trust, the trustee shall perform all of the duties imposed on trustees by the common law.”) (emphasis added). 14 duplicative of his prior incompetent allegations. To the extent that it asserts something different, it—like most other assertions in Robert Jr.’s Declaration—is conclusory and hence incompetent. “Conclusory testimony or affidavits are not competent summary judgment evidence and are insufficient to create a question of fact to defeat summary judgment.” Montoya v. Nichirin- Flex, U.S.A., Inc., 417 S.W.3d 507, 513 (Tex. App.—El Paso 2013, no pet.); see also Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991) (per curiam, op. on rehearing); James L. Gang & Assocs., Inc. v. Abbott Labs., 198 S.W.3d 434, 439 (Tex. App.—Dallas 2006, no pet.). An affidavit is conclusory when it expresses “a factual inference without stating the underlying facts on which the inference is based.” E.I. du Pont de Nemours & Co. v. Shell Oil Co., 259 S.W.3d 800, 809 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (quoting BLACK’S LAW DICTIONARY 284 (7th ed. 2001)); see also, e.g., Montoya, 417 S.W.3d at 513 (“A statement is conclusory if it does not provide the underlying facts to support the conclusion.”). “An unsupported legal conclusion is likewise conclusory.” Montoya, 417 S.W.3d at 513; accord S & I Mgmt., Inc. v. Sungju Choi, 331 S.W.3d 849, 856 (Tex. App.—Dallas 2011, no pet.). “Conclusory statements in affidavits are not competent evidence because they do not raise fact issues, nor are they credible or susceptible to being readily controverted.” Stephens, 2013 WL 1928797, at *7 (citing Ryland Grp., Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam)). Robert Jr.’s Declaration is constructed almost entirely of such unsupported conclusions, including for example that: • “Buddy Herz continues his failure by intentionally ignoring his responsibilities and delegating his authority to preserve and protect Trust assets to third parties.” Resp. Ex. E at ¶ 18. 15 • “Buddy Herz failed to properly and accurately account for Trust expenses, for how he was paid by the Trust or Trust assets.” Id. ¶ 19. • “Buddy Herz secured incidental benefits for members of his family, and charitable interests he personally supports, by virtue of his position of Trustee of the Trust, which virtually allows him to control most Moody Interests and boards of such interests. Id. at ¶ 21.