law-constructive-trust
What is a Constructive Trust?
A constructive trust is an equitable remedy used to prevent unjust enrichment. Medford v. Medford, 68
S.W.3d 242, 248 (Tex.App.-Fort Worth 2002, no pet.); Teve Holdings, Ltd. v. Jackson, 763 S.W.2d 905,
908 (Tex.App.-Houston [1st Dist.] 1988, no writ). To establish that a constructive trust exists, the
proponent must prove (1) breach of a special trust, fiduciary relationship, or actual fraud; (2) unjust
enrichment of the wrongdoer; and (3) tracing to an identifiable res. Mowbray v. Avery, 76 S.W.3d 663,
681 n. 27 (Tex.App.-Corpus Christi 2002, pet. denied). The proponent of a constructive trust must
strictly prove the elements necessary for the imposition of the trust. See, e.g., Ginther v. Taub, 675
S.W.2d 724, 725 (Tex.1984) (requiring strict proof of unfair conduct or unjust enrichment on the part of
the wrongdoer). Whether a constructive trust should be imposed must be determined by a court based
on the equity of the circumstances. Burrow v. Arce, 997 S.W.2d 229, 245 (Tex.1999). Its scope and
application, within some limitations, is generally left to the discretion of the court imposing it. Wheeler v.
Blacklands Prod. Credit Ass'n, 627 S.W.2d 846, 849 (Tex. App.-Fort Worth 1982, no writ).
CONSTRUCTIVE TRUST
A constructive trust is an equitable remedy imposed to prevent unjust enrichment. Troxel v.
Bishop, 201 S.W.3d 290, 297 (Tex.App.-Dallas 2006, no pet.). To obtain a constructive trust,
the proponent must prove (1) actual fraud or breach of a special trust or fiduciary relationship,
(2) unjust enrichment of the wrongdoer, and (3) tracing to an identifiable res. Id. D
A constructive trust is an equitable remedy created by the courts to prevent unjust enrichment. Young v.
Fontenot, 888 S.W.2d 238, 242 (Tex.App.-El Paso 1994, writ denied); Newman v. Link, 866 S.W.2d 721,
725 (Tex.App.-Houston [14th Dist.] 1993), writ denied, 889 S.W.2d 288 (Tex.1994) (per curiam). The
imposition of a constructive trust may be based on a fiduciary or confidential relationship or when there
has been actual fraud. Meadows v. Bierschwale, 516 S.W.2d 125, 128 (Tex.1974); Hoggett v. Brown,
971 S.W.2d 472, 494 (Tex.App.-Houston [14th Dist.] 1997, pet. denied); Grace v. Zimmerman, 853
S.W.2d 92, 97 (Tex.App.-Houston [14th Dist.] 1993, no writ).
There are two types of fiduciary relationships. The first is a formal fiduciary relationship, which arises as
a matter of law, and includes the relationships between attorney and client, principal and agent,
partners, and joint venturers. Insurance Co. of N. Am. v. Morris, 879*879 981 S.W.2d 667, 674
(Tex.1998); Texas Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex.1980); Hoggett, 971 S.W.2d at
487; Miller-Rogaska, Inc. v. Bank One, Tex., N.A., 931 S.W.2d 655, 663 (Tex. App.-Dallas 1996, no writ).
The second is an informal fiduciary relationship, which may arise from "a moral, social, domestic or
purely personal relationship of trust and confidence, generally called a confidential relationship."
Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex.1998). A confidential
relationship exists in cases in which "`influence has been acquired and abused, in which confidence has
been reposed and betrayed.'" Id. (quoting Crim. Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823
S.W.2d 591, 594 (1992)); Querner v. Rindfuss, 966 S.W.2d 661, 667 (Tex. App.-San Antonio 1998, pet.
denied).
A formal fiduciary relationship arises as a matter of law in certain situations, for example between
attorney and client. See Swinehart v. Stubbeman, McRae, Sealy, Laughlin, & Browder, Inc., 48 S.W.3d
865, 878 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). An informal relationship may give rise to a
fiduciary duty when one person trusts in and relies on another, whether the relationship is a moral,
social, domestic, or purely personal one. See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171,
176 (Tex.1997). However, not every relationship involving a high degree of trust and confidence rises to
the stature of a fiduciary relationship. See id. at 176-77. Texas courts do not create such a duty lightly.
See id.
09-0066 BERTRAND R. LOVE v. ALLON R. HAHN, INDIVIDUALLY AND D/B/A HAHN'S GULF SERVICE;
from Harris County; 1st district (01-07-00096-CV, 273 SW3d 712, 11-06-08)
(UFTA fraudulent transfer claim, constructive trust bona fide purchaser defense,