Court Reverses Receivership In Trust Dispute Where It Failed To Require The Applicant To Post A Bond
In Peek v. Mayfield, a beneficiary sued a trustee for breach of fiduciary duty. No. 02-20-00107-CV, 2021 Tex. App. LEXIS 6080 (Tex. App.—Fort Worth July 29, 2021, no pet.). After a bench trial, the district court found that the trustee breached his fiduciary duties, removed him, and entered an order appointing a receiver and awarding other relief. The district’s court’s order did not require the receiver applicant to file a bond payable to the heir, nor did it indicate an appropriate amount for such a bond. The trustee appealed, and the court of appeals reversed:
Rule 695a provides that no receiver shall be appointed with authority to take charge of property until the party requesting the appointment has filed “a good and sufficient bond . . . payable to the defendant in the amount fixed by the court.” “The purpose of the bond is to ensure that the defendant can be reimbursed for any damages caused by the appointment of the receiver in the event that the receiver was wrongfully appointed.” The applicant’s bond is a prerequisite to the appointment of a receiver, and the trial court’s failure to require the bond necessitates reversal. “The filing of a bond by the receiver pursuant to Texas Civil Practice and Remedies Code section 64.023 will not satisfy this requirement.” In this case, the district court’s order does not require Linda to file a bond payable to Bruce, nor does it indicate an appropriate amount for such a bond. Bruce brought this deficiency to the district court’s attention in his motion to vacate appointment of the receiver, but the district court took no action to correct the error, and the record does not show that Linda posted such a bond. Therefore, the requirements of Rule 695a have not been met, and the receivership must be dissolved.