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Update: Arbitration Provision in Trust Enforceable

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In Rachal v. Reitz, No. 11-0708, 2013 WL 1859249 (Tex. May 3, 2013), the Texas Supreme Court determined whether an arbitration provision contained in an inter vivos trust was enforceable against the trust beneficiaries. The trust contained a provision requiring all disputes regarding the trust and the trustee to proceed to arbitration. When a trust beneficiary sued the trustee alleging that the trustee …

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Texas Supreme Court to Determine if Arbitration Clause in Trust is Enforceable

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  In Rachal v. Reitz, 347 S.W.3d 305 (Tex. App.–Dallas 2011, pet. filed), a beneficiary of a trust (the “Beneficiary”) sued the trustee (the “Trustee”), alleging failure to provide an accounting and breach of fiduciary duties.  The Trustee filed a motion to compel arbitration and to stay litigation, arguing that the Beneficiary must arbitrate his claims against the Trustee pursuant …

Avoiding Illusory Arbitration Clauses

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     In Carey v. 24 Hour Fitness, USA, Inc., 10-20845, 2012 WL 205851 (5th Cir. Jan. 25, 2012), the United States Court of Appeals for the Fifth Circuit found an arbitration agreement to be illusory because one party to the agreement retained the unilateral right to modify or terminate the arbitration provision at any time.       In …