A Texas appeals court on Wednesday affirmed a lower court’s decision to appoint two temporary receivers to replace Tom Benson as the administrator of a trust set up for the benefit of his now-estranged daughter.
The panel of four judges said in its order that Bexar County Probate Court Judge Tom Rickhoff acted appropriately in ousting Benson because the Saints and Pelicans owner had violated his fiduciary duties as trustee.
Rickhoff, at the conclusion of a two-day trial in February, appointed former San Antonio Mayor Phil Hardberger and San Antonio attorney Arthur Bayern to oversee a trust that was set up by Benson’s first wife, Shirley Benson, for the couple’s daughter, Renee Benson. Shirley Benson died in 1980.
The trust includes shares in Bensco Inc., which owns several car dealerships; a 97 percent interest in Lone Star Capital Bank; about $5 million in cash; and real estate in Louisiana and Texas.
It does not include any shares in Benson’s sports empire, but the trust fight has been part of the bitter dispute pitting the Louisiana billionaire against his daughter and her two children. Benson severed ties with the family members in late December and changed his estate plan to name his third wife, Gayle Benson, as the sole heir of his business empire.
The action has spawned lawsuits in Louisiana and Texas.
Benson appealed the Texas probate court’s order in March. In a 131-page brief, he called Rickhoff’s decision “highly irregular” and asked the appeals court to reverse it. Benson said he had not violated his duties as trustee and that Rickhoff should have taken steps that were less severe than replacing him as steward.
Renee Benson said her father violated the trust agreement when he severed ties with her in December and moved $25 million out of the trust-owned bank and into another financial institution, among other things.
The appeals court decision, written by 4th Court of Appeals Justice Marialyn Barnard, acknowledged that the appointment of a receiver “is considered a harsh, drastic and extraordinary remedy that must be used cautiously.” Still, the court said Rickhoff’s order was sound.
The trustee “owes a duty of full disclosure of all material facts known to him or her which might affect the rights of beneficiaries,” the court said in its decision, citing Benson’s estranged relationship with his daughter and the multimillion-dollar transfer.
“These actions constitute some evidence from which the probate court could have determined, in its discretion, that Tom (Benson) committed a breach of trust,” the court wrote. “As trustee, Tom not only had a duty to exercise the care and judgment that he would exercise when managing his own affairs, but also a duty to fully disclose any material facts that might affect Renee and her children’s rights.”
Benson’s actions, the court said, “constitute evidence of a failure to disclose material facts that might have affected the rights of the beneficiaries.”
In addition to upholding Tom Benson’s ouster, the court’s decision also affirms Rickhoff’s order appointing the co-receivers. Benson’s legal team had tried to get them dismissed on the basis that Benson did not have advance notice that a temporary receiver was being sought for the trusts.
The court, however, did agree with Benson on one point. It reversed and dissolved a temporary injunction the lower court had put in place to bar Benson from taking any action related to the trust. The appeals court said the injunction was void because the request for it did not demonstrate how Renee Benson would “suffer irreparable injury” without it.