Monday, March 1, 2010

What is a constructive trust? When may a court impose it as a remedy?


A constructive trust is a legal fiction, a creation of equity to prevent a wrongdoer from profiting from her wrongful acts. Procom Energy, L.L.A. v. Roach, 16 S.W.3d 377, 381 (Tex. App.-Tyler 2000, pet. denied). Such trusts are remedial in character and have the broad function of redressing wrong or unjust enrichment in keeping with basic principles of equity and justice. Id.; see also Hubbard v. Shankle, 138 S.W.3d 474, 485 (Tex. App.-Fort Worth 2004, pet. denied).


To obtain a constructive trust, the proponent must prove (1) the breach of a special trust, fiduciary relationship, or actual fraud; (2) unjust enrichment of the wrongdoer; and (3) tracing to an identifiable res. Troxel v. Bishop, 201 S.W.3d 290, 297 (Tex. App.-Dallas 2006, no pet.); Hubbard, 138 S.W.3d at 485.
A constructive trust is a relationship with respect to property, subjecting the person by whom the title to the property is held to an equitable duty to convey it to another on the ground that her acquisition or retention of the property is wrongful and that she would be unjustly enriched if she were permitted to retain the property. Baker Botts, L.L.P. v. Cailloux, 224 S.W.3d 723, 736 (Tex. App.-San Antonio 2007, pet. denied) (quoting Talley v. Howsley, 142 Tex. 81, 86, 176 S.W.2d 158, 160 (1943)).


Whether a constructive trust should be imposed at all is within the discretion of the trial court. Troxel, 201 S.W.3d at 297; Hubbard, 138 S.W.3d at 485. The proponent of a constructive trust must strictly prove the elements necessary for the imposition of the trust. Troxel, 201 S.W.3d at 297; Hubbard, 138 S.W.3d at 485.
SOURCE: 12-07-00022-CV (Tyler Court of Appeals) (2/26/10)

1 comment:

  1. have you ever encountered a constructive trust case where the proponent was able to force the sale of the asset?