Preston Hollow Capital v. Truist Bank, 2026 Tex. Bus. 59 (1st Div.)

2026 Tex. Bus. 59
The Business Court of Texas,
1st Division
PRESTON HOLLOW CAPITAL,
LLC; and PHCC LLC, Plaintiffs
v.
TRUIST BANK FORMERLY
KNOWN AS BRANCH BANK &
TRUST, Defendants
§
§
§
§
§
§
Cause No. 25-BC01B-0030
═══════════════════════════════════════
O PINION AND ORDER
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Syllabus1
This opinion addresses (i) whether Title 9 of the Texas Property
Code (Trust Code) applies to the parties’ trust indenture created in
connection with a bond offering and, depending on the outcome,
(ii) the nature of defendant trustee’s duties (contractual, common
law, and statutory).
1 This syllabus is for the reader’s convenience; it is not part of the court’s opinion; and it is not
legal authority.
FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
8/14/2026

O PINION AND ORDER, Page 2
Opinion
[¶ 1] 	The primary issue here is whether indenture documents executed
as part of a bond financing arrangement created an express trust imposing
formal fiduciary duties on the bond trustee. Creation of an express trust (other
than by a declaration of trust) requires the grantor to completely transfer legal
title to the trust property to the trustee to hold for a beneficiary’s benefit.
Because the bond documents here do not transfer legal title, (i) the bond
documents did not create an express trust and (ii) the documents’ terms define
the bond trustee’s duties to the bond holders.
[¶ 2] 	In January 2017, Branch Bank & Trust Company (BB&T), now
Truist Bank, agreed to act as trustee in a bond offering issued to raise money
to develop a senior living facility. 	Preston Hollow Capital, LLC and PHCC
LLC (collectively, Preston Hollow) purchased more than $21 million in senior
bonds. Preston Hollow first sued Truist in Dallas District Court in May 2023
before the parties agreed in July 2025 to refile the suit here.
[¶ 3] 	In October 2025, the parties briefed issues concerning (i) the
scope of Truist’s applicable legal duties as bond trustee to Preston Hollow as
a bond purchaser, (ii) the validity of the trust agreement’s punitive damage

O PINION AND ORDER, Page 3
waiver, and (iii) Truist’s post-resignation duties to Preston Hollow after new
trustees were appointed.
[¶ 4] 	The court previously ruled on the latter two issues. 	See Preston
Hollow Cap., LLC v. Truist Bank, 2025 Tex. Bus. 55, 729 S.W.3d 46 (1st Div.).
This opinion addresses the first issue. 	The court also asked the parties to
address whether Preston Hollow could assert separate claims for breach of
fiduciary duty and breach of trust given their similar elements.
[¶ 5] 	Having considered the pleadings; the applicable law; and the
parties’ briefings, submissions, and oral arguments, the court concludes that
the Trust Code does not govern Truist’s duties as trustee in the bond offering.
[¶ 6] 	Accordingly, Truist did not owe Preston Hollow statutory Trust
Code duties. Instead, Truist’s duties were generally limited to those defined
by the contracts governing the parties’ relationship. 	Therefore, whether a
party may separately plead breach of fiduciary duty and breach of trust is moot
because a claim for breach of trust arises from only a relationship governed by
the Trust Code.

O PINION AND ORDER, Page 4
I. 	B ACKGROUND
A. The Bond Offering
[¶ 7] 	Unless otherwise indicated, the court assumes these facts from
Preston Hollow’s pleadings are true.
[¶ 8] 	Senior Care Living VI, LLC was created to develop and operate a
senior living center called Inspired Living at Sugar Land (the Project).2 Senior
Care financed the Project with public bond financing.3
[¶ 9] 	BB&T was the initial trustee under (i) the Master Indenture
between BB&T and Senior Care and (ii) the Bond Indenture between BB&T
and the conduit bond issuer, Woodloch Healthcare Facilities Development
Corporation 	(collectively, 	the 	Bond 	Documents).4 Defendant 	Truist 	is
BB&T’s successor.5 For convenience, the court refers to BB&T as Truist.
2 Plaintiff’s First Amended Petition (FAP) ¶ 9(a). Preston Hollow filed a Second Amened
Petition (SAP) on August 13, 2026. The SAP added new factual allegations but did not add
any new causes of action. Because this Opinion and Order address only legal issues, the
SAP does not change the court’s analysis at this time.
3 See FAP ¶s 1, 10(a)-(c).
4 FAP ¶ 11(b); Truist’s October 27, 2026, 166(g) Motion (Truist’s 166(g) Mot.), Exhibit A
(Master Indenture) and Exhibit B (Trust Indenture).
5 FAP ¶ 11(a).

O PINION AND ORDER, Page 5
[¶ 10] 	Although Woodloch issued the bonds pursuant to the Bond
Indenture,6 Senior Care was the ultimate bond Obligor.7
[¶ 11] 	Woodloch loaned the bond proceeds to Senior Care under a loan
secured by most of Senior Care’s assets.8 Woodloch also assigned its rights
and interests under the Bond Documents and loan proceeds to Truist.9
[¶ 12] 	To protect the gross revenue collateral pledge, Senior Care and
Truist executed an Account Control Agreements (ACA) whereby Truist held
all ACA-created bank accounts into which Senior Care was to deposit its gross
receipts and gross revenue.10
[¶ 13] 	Pursuant to its rights, Preston Hollow controlled the bond funds
during the facility’s construction.11
[¶ 14] 	The Project was substantially completed by late 2017, and
Senior Care started leasing by early 2018.12
6 FAP ¶ 11(b).
7 FAP ¶ 12(a).
8 FAP ¶ 12(c).
9 FAP ¶ 12(d).
10 FAP ¶s 12(e)-(f).
11 FAP ¶s 16-17.
12 FAP ¶ 18.

O PINION AND ORDER, Page 6
[¶ 15] 	Beginning in 2019, Preston Hollow learned of multiple alleged
Senior Care defaults.13 Specifically, Senior Care failed to pay (i) the Project’s
general contractor, resulting in a lien against the property and (ii) the Project’s
property taxes.14 So, Preston Hollow directed Truist to send default notices to
Senior Care.15
[¶ 16] 	On March 18, 2019, Preston Hollow issued a Letter of Direction
to Truist stating that (i) Truist was not to act under the loan or Bond
Documents unless Preston Hollow expressly directed Truist to do so and (ii) in
return Preston Hollow would indemnify Truist.16
[¶ 17] 	A week later, Preston Hollow issued a Directions to Trustee and
Indemnification Letter (D&I Letter) to Truist that similarly instructed Truist
to not act unless directed and included an indemnifier provision.17
[¶ 18] 	Truist 	alleges 	it 	acted 	consistently 	with 	both 	letters’
directives.18
13 FAP ¶s 19-21.
14 FAP ¶s 20-21.
15 FAP ¶ 22.
16 Defendant’s Answer and Counterclaims (DAAC) ¶s 25-28.
17 DAAC ¶s 29-33.
18 DAAC ¶ 34.

O PINION AND ORDER, Page 7
[¶ 19] 	When Senior Care refused to cure its defaults, Preston Hollow
directed Truist to accelerate the bonds and loan, which Truist did on May 31,
2019.19
[¶ 20] 	Preston Hollow then sued Senior Care and Bouldin.20
[¶ 21] 	On July 12, 2019, Truist appointed two successor trustees, and
resigned five days later.21
[¶ 22] 	After Truist resigned, Preston Hollow asked Truist if Senior
Care had deposited its gross revenues into the account required by the Bond
Documents and ACA (Blocked Account).22 Truist disclosed that Senior Care
never did so.23 Preston Hollow later learned that Truist’s representative
approved Senior Care’s deviation from the Bond Documents’ and ACA’s strict
requirements.24
B. Preston Hollow’s Claims
[¶ 23] 	Preston Hollow alleges (i) breach of fiduciary duty, (ii) breach of
trust, 	(iii) 	breach 	of 	contract, 	(iv) 	fraudulent 	transfer 	(TUFTA), 	and
19 FAP ¶ 23.
20 DAAC ¶ 36.
21 FAP ¶ 25.
22 FAP ¶ 27.
23 FAP ¶ 28.
24 FAP ¶ 29.

O PINION AND ORDER, Page 8
(v) conspiracy claims against Truist.25 This Opinion and Order addresses only
the first three claims.26
[¶ 24] 	Preston Hollow asserts that Truist, as trustee, owed fiduciary
duties to “Preston Hollow and other bondholders as the beneficiaries of the
Project.”27 Preston Hollow further alleges that:
The Bond Documents spell out specific duties [Truist] owed as
trustee and specify that there are no limits on these duties once
an Event of Default occurred, regardless of whether [Truist]
received written notice of default.28
The Bond Documents also stipulate that they do not immunize
[Truist] from its own negligence, negligent failure to act, or
willful misconduct.29
Texas law also imposes duties on trustees like [Truist], several of
which are applicable here and not subject to contractual waiver.
While 	provisions 	in 	the 	Bond 	Documents 	purport 	to 	limit
[Truist]’s duties in certain circumstances, these limitations are
unenforceable. 	Texas law prohibits waiver of certain duties,
including the duty to act in good faith and in accordance with the
purpose of the trust. 	And the limitations set out in the Bond
Documents are inapplicable when an Event of Default has
occurred and is continuing. 	[Truist] owed Plaintiffs fiduciary
duties that could not be, and were not, waived.30
25 See generally FAP § VII (Causes of Action and Remedies).
26 The court previously issued an April 28, 2026, Order addressing the viability of Preston
Hollow’s TUFTA and conspiracy claims considering B USINESS & COMMERCE C ODE Chapter
24’s statue of repose.
27 FAP ¶ 34(f).
28 FAP ¶ 35 (citing Master Indenture § 8 et seq.).
29 FAP ¶ 36 (citing Master Indenture § 8.01(c)).
30 FAP ¶ 37.

O PINION AND ORDER, Page 9
[¶ 25] 	Preston Hollow does not assert an independent negligence claim
but asserts that Truist’s “breaches of fiduciary duty, trust, and contract [] were
the result of [Truist]’s negligence, negligent failure to act, and/or willful
misconduct toward Preston Hollow.”31
C. The Parties’ Arguments
[¶ 26] 	Truist moved pursuant to Rule 166(g) seeking three rulings:
i. 	[Truist] 	had 	no 	obligation 	to 	monitor 	Senior 	Care’s
compliance 	with 	Senior 	Care’s 	separate 	contractual
obligations and is not liable for Senior Care’s breaches,
ii. 	[Truist] had no obligation to advise Preston Hollow of
defaults by Senior Care in the absence of a written notice in
the form described in the Bond Documents, and
iii. 	Actions by [Truist]’s officer Greg Yanok, as pled, did not
violate [Truist]’s fiduciary or contractual obligations.32
[¶ 27] 	In particular, Truist argues that the Bond Documents’ terms
limited its duties—including duties to monitor Senior Care or advise Preston
Hollow of defaults—absent written notice of an Event of Default.33 The
parties agree that the Bond Documents demand higher duties once an Event of
Default has occurred. However, because the parties negotiated for a written
31 FAP ¶ 46.
32 Truist’s 166(g) Mot. at 3. The court previous address the other issued raised by Truist in
its October motion. See Preston Hollow, 2025 Tex. Bus. 55.
33 Truist’s 166(g) Mot. at 13-19.

O PINION AND ORDER, Page 10
notice standard, Truist argues that its alleged actual knowledge of Senior
Care’s failure to deposit funds in the Blocked Account did not trigger those
higher duties of care.34 Finally, Preston Hollow argues that Senior Care could
not justifiably rely on Truist’s officer Greg Yanok’s alleged approval of Senior
Care’s deviation from the Bond Documents.35
[¶ 28] 	Preston Hollow argues that (i) the Bond Documents could not
disclaim Trust Code § 111.0035(b)’s minimum standard that a trustee must
act in good faith and in furtherance of the trust’s purpose and (ii) issues of good
faith are 	inherently 	factual, 	precluding 	resolution under 	Rule 	166(g).36
Additionally, Preston Hollow argues that the Bond Documents’ terms make
Truist always liable for its own negligence or willful misconduct.37
[¶ 29] 	So, Preston Hollow argues it may assert claims that Truist’s
failures to monitor Senior Care or advise Preston Hollow of Senior Care’s
defaults were either done (i) in bad faith or (ii) negligently/willfully, regardless
of whether Truist received any written notice.38
34 Truist’s 166(g) Mot. at 17-20.
35 Truist’s 166(g) Mot. at 23-24.
36 Preston Hollow’s November 17, 2025, Response to Truist’s 166(g) Motion (Preston
Hollow’s 166(g) Resp.) at 16-17. For the avoidance of doubt, the court is not deciding any
fact issues in this Opinion and Order.
37 Preston Hollow’s 166(g) Resp. at 18-19.
38 See, e.g., FAP ¶s 36, 46, 57, 60, 63, 66.

O PINION AND ORDER, Page 11
[¶ 30] 	During a hearing on the Rule 166(g) motion, Truist suggested
that the Trust Code might not apply because this financing arrangement was
akin to a security arrangement, not an express trust. 	The court invited
briefing.
[¶ 31] 	Truist argues that the Trust Code does not apply here because
the Bond Documents (i) operate as a security instrument, and therefore are not
“an express trust only,” and (ii) do not convey legal title to Truist.39
[¶ 32] 	Preston Hollow responds that the Bond Documents are multi-
purpose documents, including acting as a security instrument, and they
manifest the required intent to create a fiduciary relationship.40 Preston
Hollow further argues that it is not fatal to an express trust for legal title to be
vested in both Senior Care and Truist.41
39 Truist’s January 14, 2026, Motion Regarding the Trust Code (Truist’s Trust Code Mot.)
at 13, 19; Truist’s March 20, 2026, Reply in Support of Trust Code Motion at 7, 13, 16.
40 Preston Hollow’s February 13, 2026, Response to Truist’s Trust Code Motion (Preston
Hollow’s Trust Code Resp.) at 15-20, 26-30.
41 Preston Hollow’s Trust Code Resp. at 15-16.

O PINION AND ORDER, Page 12
II. 	LEGAL S TANDARDS
A. Texas Rule of Civil Procedure 166(g)
[¶ 33] 	The trial court “may in its discretion” direct the parties to
appear before it for a pretrial conference to consider, among other things,
“[t]he identification of legal matters to be ruled on or decided by the court.”
TEX . R. CIV. P. 166(g). Rule 166’s purpose is to “assist in the disposition of
the case without undue expense or burden to the parties.” Id.
[¶ 34] 	Rule 166(g) thus “authorizes trial courts to decide matters that
though ordinarily facts questions, have become questions of law because
ʻreasonable minds cannot differ on the outcome.’” 	JPMorgan Chase Bank,
N.A. v. Orca Assets G.P., LLC, 546 S.W.3d 648, 653 (Tex. 2018) (quoting
Walden v. Affiliated Comput. Servs., Inc., 97 S.W.3d 303, 322 (Tex. App.—
14th Dist. 2003, pet. denied)). When a Rule 166(g) order disposes of claims
in this fashion, the order is akin to a summary judgment order, and [appellate
courts] review the order de novo. Id. If the non-movant has raised a fact issue
on the claim, dismissal under Rule 166(g) is not proper. See McCreight v. City
of Cleburne, 940 S.W.2d 285, 288 (Tex. App.—10th Dist. 1997, writ denied).

O PINION AND ORDER, Page 13
B. Contract Construction
[¶ 35] 	A court’s primary objective when construing contracts “is to
ascertain and give effect to the parties’ intent as expressed in the instrument.”
U.S. Polyco, Inc. v. Tex. Cent. Bus. Lines Corp., 681 S.W.3d 383, 387 (Tex.
2023) (quoting URI, Inc. v. Kleberg Cnty., 543 S.W.3d 755, 763 (Tex. 2018));
see also Equinor Energy LP v. Lindale Pipeline, LLC, 731 S.W.3d 324, 327
(Tex. 2026).
[¶ 36] 	Usually, courts deem the contract alone to express the parties’
intent because it is objective, not subjective, intent that controls. Polyco, 681
S.W.3d at 387. 	To that end, courts will examine and consider the entire
writing, seeking as best they can to harmonize and give effect to all its
provisions so that none will be rendered meaningless. Universal C.I.T. Credit
Corp. v. Daniel, 243 S.W.2d 154, 157-58 (Tex. 1951).
[¶ 37] 	With unambiguous contracts, courts “can determine the parties’
rights and obligations under the agreement as a matter of law.” Inwood Nat’l
Bank v. Fagin, 706 S.W.3d 342, 347 (Tex. 2025) (per curiam) (quoting ACS
Invs., Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997)); see also Equinor
Energy, 731 S.W.3d at 327.

O PINION AND ORDER, Page 14
[¶ 38] 	A written contract is unambiguous if it is so worded that it can
be given a definite or certain meaning when considered in context of the
circumstances surrounding its execution and as applied to the matter in
dispute. 	URI, 543 S.W.3d at 765. 	Context is a permissible indicator of
meaning, and courts are to harmonize and give effect to all contract terms by
analyzing them regarding the whole contract. 	Polyco, 681 S.W.3d at 390.
Context “is not [] confined to the two-dimensional contractual environs” of
the document itself but also includes the business context and realities the
words are meant to address. Board of Regents of the Univ. of Tex. Sys. v. IDEXX
Labs., Inc., 691 S.W.3d 438, 443-45 (Tex. 2024) (per curiam).
C. Statutory Construction
[¶ 39] 	A 	court’s 	primary 	purpose 	in 	statutory 	construction 	is 	to
implement the Legislature’s intent by giving effect to every word, clause, and
sentence. Sunstate Equip. Co. v. Hegar, 601 S.W.3d 685, 689-90 (Tex. 2020)
(citation omitted). Indeed, statutory text is the “first and foremost” indication
of legislative intent. Greater Hous. P’ship v. Paxton, 468 S.W.3d 51, 58 (Tex.
2015). 	Thus, courts apply the words’ common, ordinary meaning unless
(i) the text supplies a different meaning or (ii) the common meaning produces

O PINION AND ORDER, Page 15
absurd results. Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d 830, 838
(Tex. 2018).
[¶ 40] 	Further, courts derive statutory meaning from the entire statute.
TEX . GOV’T CODE § 311.021(2); Janvey v. Gold Channel, Inc., 487 S.W.3d 560,
572 (Tex. 2016). 	So, courts “presume the Legislature chose statutory
language deliberately and purposefully,” Crosstex Energy Servs. L.P., v. Pro
Plus, Inc., 439 S.W.3d 384, 390 (Tex. 2014), and that it likewise excluded
language deliberately and purposefully, Cameron v. Terrell & Garrett, Inc., 618
S.W.2d 535, 540 (Tex. 1981).
III. 	D ISCUSSION
[¶ 41] 	The court first addresses whether the Trust Code governs the
parties’ legal relationship. 	Concluding it does not, the court next addresses
the scope of Truist’s legal duties. Finally, because the Trust Codes does not
apply, whether a plaintiff may simultaneously plead breach of fiduciary duties
and breach of trust is moot.

O PINION AND ORDER, Page 16
A. Issue One – Does the Trust Code Apply
1. Agreements to which the Trust Code Applies
[¶ 42] 	Texas law governs the Bond Documents.42 The Texas Trust
Code states:
For the purposes of this subtitle, a “trust” is an express trust only
and does not include: (1) a resulting trust; (2) a constructive
trust; (3) a business trust; or (4) a security instrument such as
a deed of trust, mortgage, or security interest as defined by the
Business & Commerce Code.
TEX . PROP. CODE (Trust Code) § 111.003.
[¶ 43] 	Preston Hollow admits that the Bond Documents operate at
least as a security instrument, as well as an express trust in its view.43 Truist
argues the documents therefore do not establish “an express trust only,” and
thus the Texas Trust Code does not apply.44 That is, according to Truist, a true
express trust cannot also serve any other purpose and still be an express trust.
The court disagrees with Truist.
[¶ 44] 	By putting “trust” in quotes, § 111.003 distinguishes the type of
“trusts” the Trust Code applies to from other types of equitable trusts or
42 Master Indenture § 11.02; Bond Indenture § 1208; Truist’s Trust Code Mot. App’x. at 5.
43 Preston Hollow’s Trust Code Resp. at 26-28.
44 Truist’s Trust Code Mot. at 13-14 (emphasis original); see also Truist’s March 20, 2026,
Reply in support of Trust Code Mot. at 7.

O PINION AND ORDER, Page 17
arrangements that also use the word “trust,” like a deed of trust, or collateral
“trustee.” 	See, e.g., TEX . P ROP. CODE § 51.0001(8) (“Trustee” is a person
“authorized to exercise the power of sale under the terms of a security
instrument” for purposes of liens under the Property Code). Thus, the word
“trust” in Trust Code § 111.003 means only “an express trust,” and “does not
include” in its definition other concepts that also use the word “trust” or
“trustee.”
[¶ 45] 	But an express trust may include the settlor’s ownership rights
to a mortgage or security interest as part of the trust’s 	property. 	See
RESTATEMENT (THIRD) OF TRUSTS § 40 cmt. b (2003) (“The basic rule: any
property may be trust property. … [Thus,] legal or equitable present interests
in real or personal property for life or for a term of years, and presently existing
future interests, whether legal or equitable, whether reversionary interests,
executory interests, or remainders (contingent, vested, or vested subject to
being divested), may be held in trust.”); see also Trust Code § 111.004(12)
(“ʻProperty’ means any type of property, whether real, tangible or intangible,
legal, or equitable[.] … The term also includes choses in action, claims, and
contract rights[.]”); Hill v. Wolfe, 184 S.W.2d 489, 491 (Tex. App.—8th Dist.

O PINION AND ORDER, Page 18
1944, writ refused w.o.m.) (“It is elementary that a chattel mortgage lien on
tangible personal property is a property right.”).
[¶ 46] 	Accordingly, the Bond Documents do not fail to create an
express trust because they might also include a security instrument. But there
still must be an express trust separate and apart from the security instrument
for the Trust Code to apply.
2. Requirements of an Express Trust
[¶ 47] 	“A[n express] trust is created only if the settlor manifests an
intention to create a trust.” Trust Code § 112.002. Accordingly, “[a]bsent a
clear intent to create a trust,” courts will not create one. Chapman Childs. Tr.
v. Porter & Hedges, L.L.P., 32 S.W.3d 429, 438 (Tex. App.—14th Dist. 2000,
pet. denied).
[¶ 48] 	An “express trust” means:
a fiduciary relationship with respect to property which arises as
a manifestation by the settlor of an intention to create the
relationship and which subjects the person holding title to the
property to equitable duties to deal with the property: (A) for the
benefit of another person; or (B) for a particular purpose, in the
case of a trust subject to Subchapter F.
Trust Code § 111.004(4).

O PINION AND ORDER, Page 19
[¶ 49] 	Although “[t]echnical words of expression” are not essential,
“the beneficiary, the res, and the trust purpose must be identified.” 	Perfect
Union Lodge No. 10, A.F. & A.M., of San Antonio v. Interfirst Bank of San
Antonio, N.A., 748 S.W.2d 218, 220 (Tex. 1988); see also id. (“It is not
absolutely necessary that legal title be granted to the trustee in specific
terms.”).
a. Transfer of Title Required
[¶ 50] 	A fundamental element of an express trust is that the “trustee
holds legal title to the trust property, and the beneficiary holds equitable or
beneficial title.” 	Inwood, 706 S.W.3d at 348; Miller v. Donald, 235 S.W.2d
201, 205 (Tex. App.—2d Dist., 1950, writ. denied) (“It is elemental that to
create an express trust the legal and equitable titles must be separate, the
former being vested in a trustee and the latter in a beneficiary.”).
[¶ 51] 	The parties disagree whether legal title must be entirely vested
in the trustee for an express trust to be created, or whether the settlor can
retain a measure of legal title.45 Preston Hollow argues that it is permissible
for both Senior Care and Truist to hold legal title to the Trust Estate46 and that
45 See Truist’s Trust Code Mot. at 19; Preston Hollow’s Trust Code Resp. at 15-16.
46 See Preston Hollow’s Trust Code Resp. at 18 (claiming the Bond Documents “established
a structure where Senior Care and Truist jointly hold legal title to the trust estate”); see

O PINION AND ORDER, Page 20
the Bond Documents satisfy the required separation of legal and equitable title
because they “creat[e] a split trust estate where Senior Care and Truist hold
legal title to the Project trust estate, with bondholders holding equitable
title.”47 However, as explained below, the court concludes that for an express
trust to form (other than a declaration of trust), legal and equitable title must
be divested from the settlor (Senior Care), with legal titled vested in the
trustee (Truist) and equitable title vested in the beneficiary (bondholders).
[¶ 52] 	One way to create a trust is by “a property owner’s inter vivos
transfer of the property to another person as trustee for the transferor or a third
person.” Trust Code § 112.001(2) (emphasis added); see Inwood, 706 S.W.3d
at 348 (“A party can transfer property through an inter vivos trust.” (emphasis
added)); see also Trust Code § 111.004(17) (“ʻTrust property’ means property
placed in trust by one of the methods specified in Section 112.001 or property
otherwise transferred to or acquired or retained by the trustee for the trust.”
(emphasis added)). To “transfer” means “[a] conveyance of property or title
also id. at 15-16 (noting this is “an usual arrangement because trustees typically take sole
legal title to trust property when a trust is created”).
47 Preston Hollow’s Trust Code Resp. at 19.

O PINION AND ORDER, Page 21
from one person to another.” 	Transfer, B LACK’S LAW DICTIONARY (12th ed.
2024).
[¶ 53] 	Indeed, “[i]t is basic trust law that ʻfor a trust to be a trust, the
legal title of the [trust property] must immediately pass to the trustee, and
beneficial or equitable interest to the beneficiaries.’” Shearrer v. Holley, 952
S.W.2d 74, 78 (Tex. App.—4th Dist. 1997, no writ.) (quoting Cutrer v. Cutrer,
334 S.W.2d 599, 605 (Tex. App.—4th Dist. 1960), aff’d, 162 Tex. 166, 345
S.W.2d 513 (1961));48 see also Long v. Long, 252 S.W.2d 235, 247 (Tex. App.—
6th Dist. 1952, writ ref’d n.r.e.) (“In any active trust the legal title and right
of possession are vested in the trustee, and the beneficiary has the equitable
title only, without possession or right of possession.”).
[¶ 54] 	Bogert provides the following in a section titled “Transfer of
property interest to trustee”:
If the settlor intends to make one other [than] the settlor trustee,
he must transfer to that person the property interest to be held in
trust before the trust administration can begin and before the
person named as trustee can be trustee. If A, a fee-simple owner,
desires to make B trustee of the land for C, B cannot begin the
trusteeship until the fee simple is vested in her, nor can anyone
else begin the performance of the trust duties without acquiring
48 Notably, the supreme court cited Cutrer in Perfect Union for the point that “it is well
established that the legal and equitable estates must be separated; the former being vested
in the trustee and the latter in the beneficiary.” 748 S.W.2d at 220.

O PINION AND ORDER, Page 22
such a property interest. If the settlor has manifested an intent
that B and B alone is to be trustee, and that he does not desire the
trust to exist unless B is trustee, then the transfer of the legal
interest to B is necessary to the commencement of the trust.
Bogert’s The Law of Trusts and Trustees § 141 (May 2026 Update) (emphasis
added).
[¶ 55] 	Here, there is no notion that Senior Care acted as trustee of the
trust estate, i.e., through a declaration of trust. 	See Trust Code § 112.001(1)
(a second way to create a trust is a property owner’s declaration that they hold
property as trustee for another person). So, for the trust to form, the fee simple
of the trust estate had to transfer from Senior Care to Truist. See Fee Simple,
BLACK’S LAW DICTIONARY (12th ed. 2024) (“the broadest property interest
allowed by law”).
[¶ 56] 	The necessary transfer of legal title usually also includes a
transfer of possession of the trust property. See Bogert’s The Law of Trusts and
Trustees § 148 (May 2026 Update) (“[T]he transfer of possession to the trustee
is [] the natural and usual thing, in order to give the trustee power to protect,
manage, and to secure the income from the transferred property. But transfer
of possession is not vital to the origin of the trust under the law of trusts.”).
Bogert explains:

O PINION AND ORDER, Page 23
Transfer of possession of the trust property to the trustee is []
seen to be a vital element in trust creation only in those cases
where the trust creation requires a conveyance to the trustee and
the rules of conveyancing or property transfer demand that there
be a change of possession to effectuate the particular transfer.
Id.
[¶ 57] 	For example, in gifts of tangible property there must be either a
delivery of the property to the donee or a delivered deed of gift. Id.; see Inwood,
706 S.W.3d at 348 (effective inter vivos gift requires delivery of possession).
Conversely, “[t]he modern law of real estate … does not require that the
transferee of the land be put into possession in order to become the holder of a
property interest in the land” as long as “the settlor has executed and
delivered his deed.” Bogert’s The Law of Trusts and Trustees § 148 (May 2026
Update) (emphasis added). However, while possession of the trust res may not
be vital, it has “some probative effect i n establishing the fact that the settlor
intended a completed trust.” Id.
[¶ 58] 	Preston Hollow cites the supreme court’s opinion in Perfect
Union for the proposition that “it is not absolutely necessary that legal title be
granted to the trustee in specific terms” tocreate an express trust. 748 S.W.2d

O PINION AND ORDER, Page 24
at 220.49 However, while it may be true that no “specific terms” are required,
the court finds no law supporting the notion that legal title does not need to
leave the settlor and transfer to the trustee one way or another (other than in
a declaration of trust).
b. “Trusts” to Secure Payment Distinguished
[¶ 59] 	As Trust Code § 111.003 acknowledges, the word “trust” can be
used in a variety of contexts that do not implicate the Trust Code. 	That is,
§ 111.003(4) lists several “security instrument[s]” that are not considered
“trusts” for Trust Code purposes: a deed of trust, mortgage, or security
interest as defined by the Business & Commerce Code.
[¶ 60] 	“A deed of trust is a deed conveying title to real property to a
trustee as security until the grantor repays a loan” and confers a “power to sell
on default.” 	Woodhaven Dr. 1401 Land Tr. v. Citibank, N.A., No. 05-17-
01393-CV, 2018 WL 6629586, at *4 (Tex. App.—5th Dist., Dec. 19, 2018,
no pet.). 	A mortgage is a “lien against property that is granted to secure an
obligation (such as a 	debt) and 	that is extinguished upon payment or
49 Preston Hollow’s Trust Code Resp. at 16 n.30.

O PINION AND ORDER, Page 25
performance according to stipulated terms.” 	Id. (citing Mortgage, B LACK’S
LAW DICTIONARY (10th ed. 2014)).
[¶ 61] 	But as Bogert explains, “characterizing mortgagees as trustees
… is inaccurate” because “[u]nlike a trustee, a mortgagee holds an interest in
identified property for his or her benefit 	—not for the benefit of another.”
Bogert’s The Law of Trusts and Trustees § 29 (May 2026 Update). 	Also, “a
mortgagee has no proprietary interest, such as the right to dispose of the
property, and no right of possession unless and until he acquires them by
foreclosure of his lien.” State v. First Interstate Bank of Tex., N.A., 880 S.W.2d
427, 429 (Tex. App.—3d Dist. 1994, writ denied); see also Taylor v. Brennan,
621 	S.W.2d 	592, 593 	(Tex. 	1981) 	(“Texas 	follows 	the 	lien 	theory 	of
mortgages. Under this theory the mortgagee is not the owner of the property
and is not entitled to its possession, rentals or profits.”).
[¶ 62] 	And a “security interest as defined by the Business & Commerce
Code” means “an interest in personal property or fixtures which secures
payment 	or 	performance 	of 	an 	obligation.” 	TEX . 	BUS . 	& 	COM. 	CODE
§ 1.201(b)(35).
[¶ 63] 	Accordingly, each “security instrument” excluded from the
Trust Code by § 111.003 shares the essential feature that it is granted to secure

O PINION AND ORDER, Page 26
an obligation (such as a debt). See Woodhaven, 2018 WL 6629586, at *4. In
comparison, an express trust is a fiduciary relationship regarding property
which relationship subjects the person holding legal title to the property to
equitable duties to deal with the property for another’s benefit. See Trust Code
§ 111.004(4).
[¶ 64] 	Notably, neither party cites a Texas case addressing whether
(i) a trust indenture established to hold a security interest for the benefit of
bondholders in connection with a bond offering is an “express trust” under the
Trust Code or (ii) an indenture trustee has fiduciary duties like a trustee of a
true express trust. Accordingly, this is a matter of first impression.
[¶ 65] 	However, there is a line of cases distinguishing an “assignment
for the benefit of creditors”—in which a trustee is transferred property as an
intermediary for the purpose of reducing a debtor’s property to cash to pay
creditors—from a mortgage or deed of trust. 	The court concludes that the
commentary and case law concerning assignments for the benefit of creditors
provides helpful guidance here.
[¶ 66] 	The common law assignment for the benefit of creditors is a true
(i.e., express) trust of the assigned property, with the creditors as the
beneficiaries and with a resulting trust to the settlor of any surplus. 	See

O PINION AND ORDER, Page 27
Bogert’s The Law of Trusts and Trustees § 250 (May 2026 Update).50 Bogert
explains:
“The assignment in trust for creditors is to be distinguished from
a mere power of attorney to sell and from a mortgage, in that
these transactions retain for the debtor some control of and
interest in the property, while the true general assignment means
an absolute and unlimited transfer of the property for the benefit
of the creditors.”
Id.
[¶ 67] 	An important aspect of an assignment for the benefit of creditors
is that “[t]he settlor has no interest in the trust property, except that the
grantor is a resulting beneficiary if the res proves larger than necessary to
satisfy the purposes of the trust.” Id.
[¶ 68] 	Texas cases dating back over 150 years agree with Bogert. The
Amarillo Court of Appeals provided the following summary of the differences:
Over 	the 	years, the 	phrase “assignment for 	the 	benefit of
creditors” has come to refer to or mean a particular type of
conveyance. 	More importantly, it differs from a conveyance
reflected in a mortgage or deed of trust. 	The latter generally
describes a conveyance of an estate or property by way of pledge
for the security of a debt and which estate ends upon payment of
the debt. Dwight v. Overton, 35 Tex. 390, 408 (Tex. 1872). The
50 Notably, § 250 is titled “Trusts used primarily for business purposes—Trusts to secure
or pay creditors” and discusses bond trust indentures and assignments for the benefit of
creditors. That Bogert discusses these two “trusts” in the same section supports the notion
that the court should look to case law concerning assignments for the benefit of creditors
to address this matter of first impression.

O PINION AND ORDER, Page 28
former denotes a conveyance of all interest in and control over
property by an insolvent debtor to its creditors in payment or
discharge of debts. 	Id. at 408–09 (first observing that the deed
conferred full and absolute power on the trustees, to sell and
dispose of the lands, make deeds to purchasers, receive purchase
money, and apply it to the uses expressed in the instrument, and
do and perform every act which the grantor himself could have
done had he never executed the deed and then noting that mere
mortgages lack such powers)[.]
Poole v. Poole, No. 07-18-00415-CV, 2019 WL 3952834, at *2 (Tex. App.—
7th Dist. Aug. 21, 2019, no pet) (mem. op.).
[¶ 69] 	A key difference between mortgage 	s or deeds of trust and
assignments 	for 	the benefit 	of 	creditors 	is 	that 	the lat 	ter 	“involve[s]
conveyances where the property conveyed is, in virtue of such conveyance,
placed beyond the control of those making such assignment and where no
equity of redemption remains.” Id. (citing Nat’l Debenture Corp. v. Adams, 115
S.W.2d 757, 760 (Tex. Civ. App.—1st Dist. (Galveston) 1938, no writ.))
(emphasis added); cf. Bogert’s The Law of Trusts and Trustees § 250 (May 2026
Update) (a defeasance clause is a standard term of trust indentures); see also
Defeasance, BLACK’S LAW DICTIONARY (12th ed. 2024) (“A condition upon the
fulfillment of which a deed or other instrument is defeated or made void; a
contractual provision containing such a condition.”).

O PINION AND ORDER, Page 29
[¶ 70] 	Poole analyzes seven factors courts use to distinguish between a
deed of trust or mortgage and an assignment for the benefit for creditors (which
is a true trust). An arrangement is a deed of trust or mortgage if:
1) it does not provide that the trustee shall take possession of the
property; 2) it impliedly provide[s] that possession shall remain
in the grantor since the grantor retain[s] the duty of caring for,
paying taxes upon, and keeping the premises in good condition;
3) it d[oes] not convey all of the grantor’s property; 4) it
authorize[s] the trustee to sell the property only in the event the
grantor fail[s] to pay the creditors named in it; 5) the grantor
retain[s] the ability to reclaim the property by paying the debt; 6)
it provide[s] that any surplus be paid the grantor; and 7) the
grantor [i]s not wholly insolvent when he execute[s] it.
2019 WL 3952834, at *2 (citing O’Brien v. Perkins, 276 S.W. 308, 311 (Tex.
Civ. App.—7th Dist. 1925), aff’d, 285 S.W. 260 (Tex. Comm’n App. 1926,
judgment adopted)).
[¶ 71] 	Because it is a matter of first impression 	whether a corporate
trust indenture such as the Bond Documents is an express trust, the court
concludes that the Poole factors help distinguish an express trust from a
security instrument. 	The court applies the relevant factors to the Bond
Documents in Part III(A)(3)(b)(ii), below.
[¶ 72] 	Finally, Preston Hollow argues that a “corporate indenture
trust” is not on the list of things that a “ʻtrust’ … does not include” under

O PINION AND ORDER, Page 30
Trust Code § 111.003, and if the Legislature had intended to categorically
exclude the Trust Code’s application to indenture trusts, they would have said
so.51 See Cameron, 618 S.W.2d at 540 (word are presumed to be excluded from
a statute on purpose). 	The court rejects that argument for the following
reasons:
[¶ 73] 	For starters, the § 111.003 list of things that an express trust
does not “include” is not exclusive. 	See TEX. GOV’T CODE § 311.005(13)
(“ʻIncludes’ and ʻincluding’ are terms of enlargement and not of limitation or
exclusive enumeration, and use of the terms does not create a presumption that
components not expressed are excluded.”). 	Further, the court does not
conclude that a corporate indenture trust can never be, or include, an express
trust, and its ruling is confined to the Bond Documents.
3. The Bond Documents do not create an express trust.
a. Introduction
[¶ 74] 	The court concludes that the Bond Documents do not create an
express trust for two independent reasons: they do not (i) transfer the entire
legal title of the Trust Estate to Truist nor (ii) demonstrate a manifest intent
51 Preston Hollow’s Trust Code Resp. at 30-31.

O PINION AND ORDER, Page 31
to create a fiduciary relationship concerning the Trust Estate between Truist
and the bondholders.
b. The Bond Documents do not transfer full legal title to Truist.
i. 	The Bond Documents describe the Trust Estate as only a
collection of security instruments/interests.
[¶ 75] 	The Master Indenture provides that “to secure payment of the
Outstanding Obligations,” and “in consideration of,” inter alia, “One Dollar
($1.00) to the Obligor in hand paid by the Master Trustee,” Obligor (i.e.,
Senior Care) did thereby “grant, bargain, sell, alienate, remise, release,
convey, assign, transfer, mortgage, hypothecate, pledge, set over, and confirm
to the Master Trustee, forever, all and singular the following described
properties, and grant a security interest therein”:52
GRANTING CLAUSE FIRST: All revenue, Accounts (including
any Blocked Accounts), accounts receivable, and Gross Revenues
of the Obligor …
GRANTING CLAUSE SECOND: The real property described on
Exhibit A hereto (the “Premises”) and incorporated herein for all
purposes, including, without limitation, all buildings, structures,
fixtures, additions, enlargements, extensions, improvements,
modifications or repairs now or hereafter located thereon …
GRANTING CLAUSE THIRD: All of the rights, titles, interests
and estates, now owned or hereafter acquired by the Obligor in
and to any and all accounts, chattel paper, goods, documents,
52 Truist’s Trust Code Mot. App’x. at 461.

O PINION AND ORDER, Page 32
instruments, general intangibles, deposit accounts, investment
property, equipment, inventory, fixtures, and any and all other
personal property of any kind or character … arising out of the
operation and use of the improvements located on the Premises
…
GRANTING CLAUSE FOURTH: Any amounts on deposit from
time to time in any fund or account created hereunder …
GRANTING CLAUSE FIFTH: Any and all property that may,
from time to time now or hereinafter, … be subjected to the lien
and security interest hereof by the Obligor or by anyone in its
behalf …53
[¶ 76] 	Collectively referred to as the “Trust Estate,” the above were
granted to the Master Trustee “TO HAVE AND TO HOLD, IN TRUST, WITH
THE POWER OF SALE” subject to the condition that if Obligor “paid[] the
Outstanding Obligations … the rights, titles, liens, security interests, and
assignments herein granted shall cease, determine, and be void and this grant
shall be released by the Master Trustee.”54
[¶ 77] 	Additionally, the Master Indenture defines “Mortgage Property”
to mean “the real property and personal property of the Obligor which is
subject to the Lien and security interest of this Indenture pursuant to Granting
Clause Second, Third or Fifth of this Indenture and the Deed of Trust.”55
53 Truist’s Trust Code Mot. App’x. at 461-63.
54 Truist’s Trust Code Mot. App’x. at 463.
55 Truist’s Trust Code Mot. App’x. at 475.

O PINION AND ORDER, Page 33
[¶ 78] 	As Truist argues,56 “to have and to hold, in trust, with power of
sale,” is language routinely employed in security instruments, such as a deed
of trust. 	See Kimmons v. Hirsch, No. 01-08-00646-CV, 2010 WL 3448043,
at *3 (Tex. App.—1st Dist. Aug. 31, 2010, no pet.) (mem. op.) (“deed of trust
creates only a lien on the mortgaged property and does not operate as a transfer
of legal title,” and thus only conveys an interest in the property that is secured
by deeding the property to a trustee, who received it “in trust, with power of
sale”); see also 14 WEST’S TEX. FORMS , R EAL P ROPERTY § 10.140 (2d ed.)
(February 	2026 	Update) 	(deed 	of 	trust 	template 	including: 	“Borrower
irrevocably grants and conveys to Trustee, in trust, with power of sale … ”).
[¶ 79] 	The Bond Indenture’s Granting Clauses likewise state that “as
security for payment of the principal of, and premium, if any, and interest on
the Bonds when due,” the Issuer (i.e., Woodloch) “pledge[d] and assign[ed] to,
and grant[ed] a security interest to the Bond Trustee in” the following (also
collectively defined as the “Trust Estate”):
(i) All rights, title and interest of the Issuer under, in and to the
Loan Agreement, the Notes, and 	all revenues and 	receipts
receivable by the Issuer therefrom …
56 Truist’s Trust Code Mot. at 10-11.

O PINION AND ORDER, Page 34
(ii) All funds … including moneys, investment income and
investments therein held by the Bond Trustee pursuant to the
terms of this Bond Indenture, and any other moneys payable to
the Bond Trustee by or for the account of the Issuer pursuant to
the Notes and this Bond Indenture …
(iii) Any and all other interests in real or personal property … of
any kind specifically mortgaged, pledged or hypothecated, as and
for additional security hereunder by the Issuer … in favor of the
Bond Trustee ….57
[¶ 80] 	Like the Master Indenture, the Bond Indenture states that the
Trust Estate is conveyed “for the equal and proportionate benefit and security
of the Holders from time to time of the Bonds issued under and secured by this
Bond Indenture.”58
[¶ 81] 	The Bond Indenture further states that “if the Issuer … shall
well and truly pay … the principal of the Bonds and the premium … then this
Bond Indenture and the rights hereby granted shall cease, terminate, and be
void.”59
[¶ 82] 	Finally, the same day that the Master Indenture and Bond
Indenture were executed, Senior Care executed a “Multiple Indebtedness
Deed of Trust, and Assignment of Leases and Rents, Security Agreement and
57 Truist’s Trust Code Mot. App’x. at 357-58.
58 Truist’s Trust Code Mot. App’x. at 358.
59 Truist’s Trust Code Mot. App’x. at 358.

O PINION AND ORDER, Page 35
Fixture Filing” for Truist’s benefit for the same property described in the
Master Indenture’s granting clauses.60
[¶ 83] 	Accordingly, by their terms, the Bond Documents refer to
Truist’s interest in the “Trust Estate” as a collection of security interests.61
Master Indenture § 4.01, titled “Title to Trust Estate and Mortgaged Property
and Lien of this Instrument and Deed of Trust” further states:
The Obligor has good and indefeasible title to the Trust Estate
free and clear of any liens, charges, encumbrances, security
interests 	and 	adverse 	claims 	whatsoever 	except 	Permitted
Exceptions. 	The Obligor represents that it has the right to
mortgage and otherwise pledge the Trust Estate, including the
Mortgaged Property, and will warrant and defend to the Master
Trustee, the title and the lien of this Indenture and the Deed of
Trust as a valid and enforceable mortgage thereon and pledge
thereof, 	subject 	to 	Permitted 	Exceptions. 	This 	Indenture
constitutes a valid and subsisting mortgage of and lien on the Trust
Estate, all in accordance with the terms hereof, subject to
Permitted Exceptions.62
[¶ 84] 	However, 	the 	clearest 	expression 	of 	the 	parties’ 	intent 	is
contained in the bond offering’s “Official Statement,” which states:
“[The 	notes] 	will 	be 	secured 	by 	a 	mortgage 	lien 	on 	the
Community (the ʻMortgaged Property’) granted to the Master
60 Truist’s Trust Code Mot. App’x. at 622-26.
61 See, e.g., Truist’s Trust Code Mot. App’x. at 475 (“ʻMortgaged Property’ means the real
property and personal property of the Obligor which is subject to the Lien and security
interest of this Indenture pursuant to Granting Clause Second, Third or Fifth of this
Indenture and the Deed of Trust.”).
62 Truist’s Trust Code Mot. App’x. at 498.

O PINION AND ORDER, Page 36
Trustee pursuant to a Multiple Indebtedness Deed of Trust … and
a security interest in the Gross Revenues of the Obligor and the
Funds established under the Master Indenture, to the extent and
in the manner provided in the Master Indenture.”63
[¶ 85] 	In express terms, the Official Statement referred to the “Trust
Estate” conveyed by the Master Indenture as a series of security interests:
Pursuant to the Master Indenture, the Obligor has pledged and
granted to the Master Trustee (a) a security interest in all revenue,
accounts receivable, and Gross Revenues of the Obligor, with
certain limited exceptions, (b) a security interest in all personal
property owned or hereafter acquired by the Obligor, (c) 	a
security interest in the real property described in the Master
Indenture, (d) a security interest in the amounts on deposit in any
fund or account established under the Master Indenture, and (e)
a security interest 	in any other property from time to time
subjected 	to 	the 	lien of the 	Master 	Indenture 	(the 	“Trust
Estate”).64
[¶ 86] 	The five items listed abovealign with the Master Indenture’s five
granting clauses.65
[¶ 87] 	Finally, the Bond Documents and related documents show that
Truist was not taking outright title or ownership of the property included in
the Trust Estate. 	For instance, Master Indenture § 7.16 states that “[a]ny
provision of this Indenture to the contrary notwithstanding, the Master
63 Truist’s Trust Code Mot. App’x. at 24; see also id. (referring to the “lien and security
interests created by the Master Indenture”), id. at 40 (same).
64 Truist’s Trust Code Mot. App’x. at 40 (emphasis added).
65 See ¶ 75 above.

O PINION AND ORDER, Page 37
Trustee shall not be obligated to take title to any real property included in the
Trust Estate.”66 Furthermore, the Official Statement states in clear terms that
“[t]he Obligor will own and operate the Community.”67
ii. The Poole Factors
[¶ 88] 	Five of the seven Poole factors are relevant to this analysis:
(i) Senior Care kept possession of the property, (ii) Senior Care retained a duty
to take care of, pay taxes for, and maintain the property, (iii) Truist had the
power to sell the property only upon default, (iv) Senior Care retained the
ability to reclaim the property by paying the debt, and (v) and surplus from a
sale of the property would be paid to Senior Care. See 2019 WL 3952834, at
*2. 	Together these factors identify the Bond Documents as a security
instrument only, and not a true express trust.
[¶ 89] 	Possession: 	The Bond Documents establish that Senior Care
was going to keep possession of and manage the Trust Estate. As noted above,
the Official Statement states that Senior Care will “operate the Community.”68
Section 7.04 	further 	states 	that 	Master 	Trustee 	shall 	“enter 	and 	take
66 Truist’s Trust Code Mot. App’x. at 535.
67 Truist’s Trust Code Mot. App’x. at 25.
68 Truist’s Trust Code Mot. App’x. at 25.

O PINION AND ORDER, Page 38
possession of[] the Trust Estate … to hold, operate, and manage” only upon an
Event of Default.69
[¶ 90] 	Maintenance: 	Senior Care was also responsible for developing
and managing the property. 	The Official Statement details who would serve
as the Project’s contractor, architect, construction monitor, developer, and
manager.70 None of whom were Truist, and all of whom were under Senior
Care’s direct or indirect control.71 Master Indenture § 4.06 requires Senior
Care to cause the Property “to be maintained and kept in good condition.”
Senior 	Care 	further 	covenanted 	that 	it 	“shall 	exercise 	operational 	and
management control, including day-to day business decisions, with respect to
the Property” and “shall not abandon the Property, or [] close or otherwise
cease to operate the Property.”72 And Senior Care was required to pay taxes
for the Project.73
69 Truist’s Trust Code Mot. App’x. at 529.
70 Truist’s Trust Code Mot. App’x. at 26-28.
71 Truist’s Trust Code Mot. App’x. at 26-28.
72 Truist’s Trust Code Mot. App’x. at 569-60 (included in a schedule to the Master
Indenture titled “Other Covenants”), see id. at 570-71 (stating Obligor shall complete
within a reasonable time any facilities on the property, keep the same in good condition or
repair or rebuild where necessary, pay all operating costs, operate the property, etc.).
73 Truist’s Trust Code Mot. App’x. at 499-500 (Master Indenture § 4.05).

O PINION AND ORDER, Page 39
[¶ 91] 	Power of Sale: Master Trustee had the power to sell the property
only upon an Event of Default.74
[¶ 92] 	Defeasance: 	Senior Care could reclaim the property by paying
the debt.75
[¶ 93] 	Surplus: 	Upon an Event of Default and property sale, after all
other persons are paid, Senior Care was entitled to the surplus of the sale.76
[¶ 94] 	Accordingly, the Bond Documents meet all the relevant Poole
factors distinguishing a security instrument from a true trust. See Poole, 2019
WL 3952834, at *2.
iii. The First Court of Appeals
[¶ 95] 	Finally, Preston Hollow argues that the First Court of Appeals
has “already examined the Bond Documents, summarizing the nature and
effect of the Bond Documents, and Truist’s trustee role thereunder” and
concluded that Truist held legal title to funds generated by the Project in trust
for the benefit of the bondholders.77
74 Truist’s Trust Code Mot. App’x. at 529-31 (Master Indenture § 7.05).
75 Truist’s Trust Code Mot. App’x. at 463 (Master Indenture Granting Clauses).
76 Truist’s Trust Code Mot. App’x. at 537-38 (Master Indenture § 7.21).
77 Preston Hollow’s Trust Code Resp. at 6-7, 27 (citing Senior Care Living VI, LLC v.
Preston Hollow Cap., LLC, 695 S.W.3d 778, 817 n.24 (Tex. App.—1st Dist. 2024, pet.
denied).

O PINION AND ORDER, Page 40
[¶ 96] 	The court disagrees because (i) the First Court of Appeals never
determined whether the Trust Code applies to the parties’ arrangement nor
examined the nature of Truist’s duties under the Bond Documents and
(ii) while the court concluded that Senior Care could not sue for conversion of
funds held by Truist because Senior Care did not own, possess, or have an
entitlement to possess those funds, the court did not conclude that Truist
owned the funds. 	See Senior Care Living VI, 695 S.W.3d at 817. 	The court
was silent on who the owner was, but it might have reasonably concluded that
the bondholders were the owners. 	See id. 	And Senior Care was not in
possession, or entitled to possession, of the funds under the Bond Documents.
iv. Conclusion
[¶ 97] 	The 	Bond 	Documents 	have 	key 	aspects 	of 	a 	security
arrangement: (i) their purpose is to secure a debt, (ii) the power to sell is only
upon 	default, 	(iii) Senior 	Care 	could 	extinguish 	the 	instrument 	upon
repayment of the debt, and (iv) Senior Care was entitled to any surplus upon a
sale of the property. 	See Poole, 2019 WL 3952834, at *2; Woodhaven, 2018
WL 6629586, at *4; First Interstate Bank of Tex., 880 S.W.2d at 429; Taylor,
621 S.W.2d at 593. 	And the Bond Documents and related documents

O PINION AND ORDER, Page 41
expressly state that Senior Care will “own” the property and refer to the Trust
Estate as a collection of security interests.78
[¶ 98] 	Accordingly, the court concludes the entire “Trust Estate”
consists of only a collection of security interests, which under Texas law do
not transfer full legal title, and so no express trust was formed. 	See Taylor,
621 S.W.2d at 593.
[¶ 99] 	Further, while the court concluded above that a trust is not
excluded from the Trust Code because it “includes” a security instrument,
there must be some trust res other than a security instrument.79 Because that
is not so here, the Trust Code does not govern the Bond Documents.
c. The Bond Documents do not reflect an intent to create a fiduciary
relationship.
i. 	The Intent Requirement
[¶ 100] 	A second basis exists to conclude that the Bond Documents do
not comprise an express trust; the Bond Documents do not demonstrate an
intent to create a fiduciary relationship between Truist and the bondholders
regarding the Trust Estate.
78 Truist’s Trust Code Mot. App’x. at 25.
79 See Part III(A)(1) above.

O PINION AND ORDER, Page 42
[¶ 101] 	To create an express trust, there must be a manifested intent to
create a fiduciary relationship between the trustee and beneficiary regarding
some property.80
[¶ 102] 	Generally, a fiduciary relationship “applies to any person who
occupies a position of peculiar confidence towards another,” and because of
that position is expected to (i) act with integrity and fidelity and (ii) deal fairly
and in good faith with the intended beneficiary. 	Kinzbach Tool Co. v. Corbett-
Wallace Corp., 160 S.W.2d 509, 512 (Tex. 1942); see also Herschbach v. City
of Corpus Christi, 883 S.W.2d 720, 735 (Tex. App.—13th Dist. 1994, writ
denied) (“A trustee’s fundamental duties include the use of the skill and
prudence which an ordinary, capable, and careful person will use in the
conduct of his own affairs as well as loyalty to the trust’s beneficiaries.”).
[¶ 103] 	Truist argues that the Bond Documents do not manifest an
intent to create a fiduciary relationship because corporate indenture trustee
relationships generally lack such an intent.81 Instead, the Bond Documents’
purpose was to secure a debt.82 Truist further argues that the various
80 See ¶ 47 above.
81 Truist’s Trust Code Mot. at 20-21, 24-30.
82 Truist’s Trust Code Mot. at 20-21.

O PINION AND ORDER, Page 43
contractual limits on Truist’s duties under the Bond Documents demonstrate
that the parties did not intend to create a traditional trustee/beneficiary
relationship.83
[¶ 104] 	Preston Hollow responds that the Bond Documents’ “repeated
use of terms like ʻTrustee,’ ʻTrust Estate,’ and ʻin trust,’ along with Truist’s
formal acceptance of the trusts,[] manifests clear intent to form a fiduciary
relationship.”84 Further, Preston Hollow highlights Master Indenture §§ 7.07
and 7.09, which specifically state that upon an Event of Default the Master
Trustee may bring suit “in its own name as trustee of an express trust.”85
Finally, Preston Hollow highlights that upon an Event of Default, Truist has
heightened duties to exercise its rights and powers “using the same degree of
care and skill as a reasonably prudent man under the same circumstances,”
which “mirror[s] trustee fiduciary duties.”86
83 Truist’s Trust Code Mot. at 21-23. Truist also argued that the Bond Documents’ lack of
a specific reference to and incorporation of the Trust Code further confirms a lack of
intention to create an express trust. Id. at 23-24. However, the court is unpersuaded by
this argument because there is no such requirement.
84 Preston Hollow’s Trust Code Resp. at 20 (citing Truist’s Trust Code Mot. App’x. at 160–
61, 224, 357–58, 396, 461–64, 622–26).
85 Preston Hollow’s Trust Code Resp. at 23-24 (citing Truist’s Trust Code Mot. App’x. at
196, 532-33) (emphasis added).
86 Preston Hollow’s Trust Code Resp. at 24 (citing Truist’s Trust Code Mot. App’x. at 199,
244, 396, 538).

O PINION AND ORDER, Page 44
ii. Pre-Default Analysis
[¶ 105] 	The 	court 	agrees 	with 	Preston 	Hollow 	that 	the 	Bond
Documents’ stated intent was to secure assets for the bondholders’ benefit so
that those assets could be available to repay a loan.87 In its capacity as Master
Trustee, the Bond Documents defined Truist’s duties.88 And—before an Event
of Default—Truist had to “perform such duties and only such duties as are
specifically set forth in this Indenture” and had no implied obligations beyond
the Master Indenture’s express terms.89 Those duties excluded a duty to
monitor others’ compliance with the Bond Documents.90 And as discussed
above, Truist had no responsibility to maintain the Property.91
[¶ 106] 	Preston Hollow argues that Truist “indisputably retained
significant power and control over the Trust Estate” and therefore was “[f]ar
87 See Truist’s Trust Code Mot. App’x. at 358, 461 (Master Indenture is “to secure the
payment of the Outstanding Obligations and the performance of the covenants therein”);
see also Preston Hollow’s 166(g) Resp. at 20 (stating that “the purpose of the trust … was
[at a minimum] to secure borrower’s assets for the benefit of the bondholders, so that those
assets would be used to repay the loan”).
88 See Part III(B)(2) below.
89 See Truist’s Trust Code Mot. App’x. at 538 (emphasis added).
90 See Part III(B)(2)(a) below.
91 See Part III(A)(3)(b)(ii) above.

O PINION AND ORDER, Page 45
from being a ʻpassive’ or ʻdry’ trustee.”92 For example, the Bond Documents
grant Truist the power to:
(1) appoint co-trustees; (2) establish and manage multiple trust
funds 	in 	accordance 	with 	their 	prescribed 	purposes;
(3) distribute incoming payments according to detailed priority
waterfall 	provisions; 	(4) 	accelerate 	payments 	upon 	default;
(5) exercise 	remedies 	on 	behalf 	of 	bondholders, 	including
foreclosure on property; and (6) institute trust-related legal
proceedings in its own name as the “trustee of an express
trust.”93
[¶ 107] 	However, taking for example Truist’s duties to “manage” and
“distribute” Project funds, Truist lacked any discretion and instead its duties
were tightly prescribed and ministerial. For instance, Master Indenture § 3.01
states that Truist “shall” distribute funds from the Revenue Fund according
to fifteen detailed steps, ending with any remaining amounts deposited in the
Surplus Fund “to be applied as provided in Section 3.04.”94 Section 3.04 in
turn 	details 	nine 	payment 	priorities 	that 	“shall 	be 	applied 	by 	Master
Trustee.”95 Pending disbursement of funds, “the Master Trustee shall
promptly invest … such amounts in accordance with Section 3.07,” which
92 Preston Hollow’s Trust Code Resp. at 17 (citing Nolana Dev. Ass’n v. Corsi, 682 S.W.2d
246, 249 (Tex. 1984); Tex. Petroleum Land Mgmt., LLC v. McMillan, 641 S.W.3d 831, 841
n.3 (Tex. App.—11th Dist. 2022, no pet. h.)).
93 Preston Hollow’s Trust Code Resp. at 17-18.
94 Truist’s Trust Code Mot. App’x. at 491-92.
95 Truist’s Trust Code Mot. App’x. at 494-95.

O PINION AND ORDER, Page 46
states the money may be invested only in “Permitted Investments” upon
Obligor’s request.96 And § 3.01 reiterates that funds held by Truist “shall be
held in trust and applied solely as provided” by these sections.97 Therefore, the
“control” Truist had was purely ministerial.98 Cf. Dipprey v. Double Diamond,
637 S.W.3d 784, 805 (Tex. App.—11th Dist. 2021, no pet.) (“[C]ontrol over
funds belonging to others is the classic situation in which a fiduciary duty
arises.” (citation omitted)).
iii. Post-Default Analysis
[¶ 108] 	After an Event of Default (and assuming Truist received
written notice of the same99), Truist had heightened duties to act akin to a
traditional 	fiduciary. 	It 	also 	acquired 	heightened 	powers, 	such 	as 	to
(i) accelerate debt payment; (ii) enter, take possession of, operate, and manage
the Property; and (iii) instigate lawsuits in its own name and as trustee of an
express trust.100 However, the court concludes that—even post-Event of
Default—the Bond Documents do not evidence an intent to give Truist the
96 Truist’s Trust Code Mot. App’x. at 492-93, 497.
97 Truist’s Trust Code Mot. App’x. at 492 (emphasis added).
98 Truist’s Trust Code Mot. App’x. at 490 (stating “all deposit accounts of the Obligor shall
at all times be controlled by the Master Trustee”).
99 See Part III(B)(4) below.
100 See Truist’s Trust Code Mot. App’x. at 529 (Master Indenture § 7.04), 532 (Master
Indenture § 7.07), 533 (Master Indenture § 7.09).

O PINION AND ORDER, Page 47
type of control that is emblematic of creating fiduciary duty. 	Dipprey, 637
S.W.3d at 805.
[¶ 109] 	For instance, while Master Indenture § 7.02 states the Master
Trustee may accelerate the debt, it is only “upon direction of the Noteholder
Representative” and “subject to Section 7.16 and Section 7.20.”101 Section
7.20 allows the Noteholder Representative (Preston Hollow) to exercise in its
own right any powers conferred to the Master Trustee by Master Indenture
Article VII.102
[¶ 110] 	Section 7.16 is titled “Control by Holders of Obligations” and
states that “Noteholder Representative … shall have the right to direct the
time, method, and place of conducting any proceeding for any remedy available
to the Master Trustee or exercising any trust or power conferred on the Master
Trustee.”103
[¶ 111] 	And while § 7.16(b) states that “the Master Trustee may take
any other action deemed proper” by it, it may only do so to the extent “not
inconsistent with [Noteholder Representative’s] direction.”104
101 Truist’s Trust Code Mot. App’x. at 527.
102 Truist’s Trust Code Mot. App’x. at 536.
103 Truist’s Trust Code Mot. App’x. at 535.
104 Truist’s Trust Code Mot. App’x. at 535.

O PINION AND ORDER, Page 48
[¶ 112] 	Accordingly, even post-default, Truist’s powers were curtailed
and subject to Preston Hollow’s ongoing control, which is inconsistent with
an express trust. 	See Trust Code § 112.034 (no trust is created if legal and
equitable title merge into one individual); Rife v. Kerr, 513 S.W.3d 601, 614
(Tex. App.—4th Dist. 2016, pet. denied) (same). 	Accordingly, an Event of
Default does not alter the court’s conclusions.
iv. References to “Trust” and “Trustee”
[¶ 113] 	Regarding the Bond Documents repeated use of “trust” and
“trustee,” the supreme court examined a similar issue concerning the creation
of an escrow in Boozer v. Fischer:
To determine whether these parties created an escrow, we look to
the parties’ intent as expressed by the terms of their agreement.
As usual when construing agreements, no magic words are
necessary, but the words the parties used in their agreement—
especially the word “escrow” itself—are the clearest indicators
of that shared intent. While not dispositive or sufficient, the use
of the word “escrow” indicates more clearly than any other their
actual intention. This principle is merely a manifestation of our
general approach to contracts. 	We also look to whether the
agreement fits the basic elements of an escrow. 	As with other
contracts, we may look to the objective circumstances of the
escrow agreement’s execution and the property’s deposit as
appropriate to help elucidate (but not to inject ambiguity into)
the agreement’s text.

O PINION AND ORDER, Page 49
674 S.W.3d 314, 324 (Tex. 2023) (internal quotes and cites omitted); see also
Nolana, 682 S.W.2d at 249 (Tex. 1984) (“[T]he mere designation of a party
as ʻtrustee’ does not create a trust.”); Goldbaum v. Blum, 15 S.W. 564, 565
(Tex. 1891) (“[T]he law looks not to the form but to the substance of a
contract[.]”).
[¶ 114] 	Furthermore, Trust Code § 111.003 acknowledges that the
word “trust” is sometimes used in a variety of contexts that are distinct from
the fiduciary relationship created by an express trust. 	Cf. TEX . P ROP. CODE
§ 51.0001(8) (defining “Trustee” 	for purposes 	of defining 	persons with
authority to exercise a power of sale in a real estate lien situation as one
“authorized to exercise the power of sale under the terms of a security
instrument”).
[¶ 115] 	The Bond Documents twice state that Truist could bring suit
“as trustee of an express trust.”105 However, two references to an “express
trust” across hundreds of pages of contracts does not alter the intent expressed
in the documents as a whole.106 See Myers-Woodward, LLC v. Underground
105 Truist’s Trust Code Mot. App’x. at 196, 532-33).
106 Truist’s Trust Code Mot. App’x. at 532-33.

O PINION AND ORDER, Page 50
Servs. Markham, LLC, 716 S.W.3d 461, 472 (Tex. 2025) (we “discern th[e]
intent” of the parties by “exam[ing] the entire document”).107
[¶ 116] 	Therefore, the court concludes that the Bond Documents do not
manifest an intent to create a fiduciary relationship between Truist and the
bondholders with respect to the Trust Estate and therefore do not comprise an
express trust.
4. Conclusion
[¶ 117] 	Accordingly, the court concludes that the Bond Documents did
not 	create 	an 	express 	trust, 	and 	therefore 	Trust 	Code 	§ 111.0035(b)’s
minimum standard that a trustee must act in good faith and in furtherance of
the trust’s purpose does not apply in this case.
B. Issue Two – The Scope of Truist’s Duties
1. Introduction
[¶ 118] 	The next step is to determine the scope of Truist’s contract
duties. Given that the Trust Code’s unwaivable duties do not apply to the Bond
Documents, the court is to give effect to the “written expression of the parties’
107 Moreover, this language in the Master Indenture appears to mirror provisions of the
Trust Indenture Act of 1939. See 15 U.S.C.A. § 77qqq (indenture trustee is authorized in
the case of a default to file claims “in its own name and as trustee of an express trust”).

O PINION AND ORDER, Page 51
intent” and enforce the deal the parties struck. Sundown Energy LP v. HJSA
No. 3, Ltd. P’ship, 622 S.W.3d 884, 888 (Tex. 2021) (per curiam).
[¶ 119] 	The court’s discussion begins with Truist’s pre-default duties,
including the Bond Documents’ related limits. 	The court then discusses
Truist’s heightened, post-default duties. 	Finally, the court will discuss the
notice Truist needed to receive to trigger its post-default duties.
2. Pre-Default Duties
a. Truist’s Duties
[¶ 120] 	The parties’ intent, as expressed by the Bond Documents’ plain
language, was that before an Event of Default Truist’s duties were only those
expressed in the documents.
[¶ 121] 	Specifically, Master Indenture § 8.01(a) states that, “Except
during the continuance of an Event of Default, the Master Trustee undertakes
to perform such duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Master Trustee.” See Bond Indenture § 901(a) (similar).
[¶ 122] 	This is a typical bond trustee indenture arrangement. 	See
Elliott Assocs. v. J. Henry Schroder Bank & Tr. Co., 838 F.2d 66, 68 (2d Cir.
1988) (“[A] trustee’s pre-default duties are limited to those duties expressly

O PINION AND ORDER, Page 52
provided in the indenture”); Steven L. Schwarcz, Indenture Trustee Duties:
The Pre-Default Puzzle, 88 U. Cin. L. Rev. 659, 663 (2019) (“By far the
dominant view … is that trustees have no fiduciary duties to investors prior to
an Event of Default. 	Rather, their duties are ministerial and limited to the
specific terms of the indenture.” (citations omitted)).
[¶ 123] 	And, pre-default, Truist was not required to monitor Senior
Care’s compliance with the Bond Documents or investigate to discover any
Events of Default: For example,
Bond Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions, or
agreements on the part of the Issuer or on the part of the Obligor
under the Loan Agreement or the Master Indenture or any other
Bond Documents.
Bond Indenture § 901(c). Further,
The Bond Trustee shall not be obligated to monitor or confirm,
on a continuing basis or otherwise, the Obligor’s or any other
Person’s compliance with the covenants described herein or the
other Bond Documents or with respect to any reports or other
documents filed hereunder or under any other Bond Document
Bond Indenture § 901(h). Similarly,
It shall not be the duty of the Master Trustee, except as herein
provided, to see that any duties or obligations herein imposed
upon the Obligor or any other Person are performed.
Master Indenture § 8.03(i); see also id., § 8.03(f) (similar).

O PINION AND ORDER, Page 53
[¶ 124] 	Finally, although Truist had a duty to notify the bondholders of
“defaults” that “the Master Trustee [wa]s deemed to have knowledge as
provided in Section 8.03(h)” (Master Indenture § 8.02), § 8.03(h) in turn
states “[t]he Master Trustee shall not be deemed to have knowledge of any
default … unless a Responsible Officer has actually received notice of such
default in writing.” 	Accordingly, at least pre-Event of Default, Truist was
required to give notice to bondholders of only defaults for which it was itself
was given written notice.
[¶ 125] 	Nonetheless, 	Preston 	Hollow 	argues 	that 	“[w]here 	Truist
knows of a default … it would be illogical for another party lacking such
knowledge (e.g., Preston Hollow) … to be required to provide Truist with
notice of the same as a condition precedent for Truist to be held liable for such
misconduct.”108 But that is what the parties agreed to and “we do not protect
parties from the consequences” of their own agreements. 	See James Constr.
Grp., LLC v. Westlake Chem. Corp., 650 S.W.3d 392, 403-04 (Tex. 2022)
(internal 	quotation 	omitted); 	see 	also 	id. 	at 	408 	(“The 	bargained-for
108 Preston Hollow’s 166(g) Resp. at 26.

O PINION AND ORDER, Page 54
requirement of written notice necessarily serves a purpose beyond actual
notice; otherwise, its inclusion is useless.”).
[¶ 126] 	Accordingly, the court concludes that Truist had no duty to
monitor Senior Care/Bouldin’s compliance with the Bond Documents or
advise bondholders of defaults absent a written notice in the form described in
the Bond Documents. See Nat’l Plan Adm’rs, Inc. v Nat’l Health Ins. Co., 235
S.W.3d 695, 703 (Tex. 2007) (a party is not in breach when taking actions
expressly permitted by contract).
[¶ 127] 	However, those conclusions apply only before Truist receiving
written notice of an Event of Default.
b. Truist’s Own Negligence
[¶ 128] 	Finally, the parties debate this clause:
No provision of this Indenture shall be construed to relieve the
Master Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct[.]
Master Indenture § 8.01(c).
[¶ 129] 	Preston Hollow argues that § 8.01(c) means Truist could not be
negligent 	in 	failing 	to 	investigate 	or 	notify 	the 	bondholders 	of 	Senior
Care/Bouldin’s defaults.109 But Preston Hollow ignores § 8.01(c)(1), which
109 Preston Hollow’s 166(g) Resp. at 17-18.

O PINION AND ORDER, Page 55
states that “[§ 8.01(c)] shall not be construed to limit the effect of Subsection
(a) of this Section.” Section 8.01(a) is the provision discussed at ¶ 121 above
that provides that pre-Event of Default Truist has only the duties specifically
set forth in the Master Indenture.
[¶ 130] 	Construing the various provisions together as a whole, the
court concludes that § 8.01(c) is a general standard of care Truist must comply
with, but § 8.01(c) does not impose new duties or revive duties that the Bond
Documents’ other terms exclude. 	Myers-Woodward, 716 S.W.3d at 472
(construe contracts’ provisions as a whole).
[¶ 131] 	Accordingly, because the Bond Documents state that Truist had
no 	duty 	to 	monitor 	Senior 	Care/Bouldin’s 	compliance 	with 	the 	Bond
Documents or advise bondholders of defaults prior to receiving written notice
of an Event of Default, Truist may not be found negligent/in breach under
§ 8.01(c) for failing to do the same. Nat’l Plan Adm’rs, 235 S.W.3d at 703 (no
breach of duty when contract permits such actions).
3. Post-Default Duties
[¶ 132] 	The Bond Documents dictate that Truist has this post-Event of
Default standard of care:

O PINION AND ORDER, Page 56
In case any Event of Default has occurred and is continuing, the
Master Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a reasonably prudent man would
exercise or use under the circumstances in the conduct of his own
affairs
Master Indenture § 8.01(b); Bond Indenture § 901(a) (similar).
[¶ 133] 	There is a dearth of law concerning this standard in the context
of a trust indenture and whether it rises to the fiduciary duties of a common
law trustee. Some sources say it does not. See Meckel v. Cont’l Res. Co., 758
F.2d 811, 816 (2d Cir. 1985) (“Unlike the ordinary trustee, who has historic
common-law 	duties 	imposed 	beyond 	those 	in 	the 	trust 	agreement, 	an
indenture trustee is more like a stakeholder whose duties and obligations are
exclusively defined by the terms of the indenture agreement.”); see also Steven
L. Schwarcz, Indenture Trustee Duties: The Pre-Default Puzzle, 88 U. Cin. L.
Rev. 659, 660 (2019) (“This Article hereinafter refers to indenture trustees
performing that role as ʻtrustees,’ without suggesting that they have, or should
have, the fiduciary duties of a common law trustee 	.”); Bogert’s The Law of
Trusts and Trustees § 250 (May 2026 Update) (“Several authors have assumed
that the corporate trust mortgage creates some special trustee relationship
which is different from the ordinary trustee relation.”).

O PINION AND ORDER, Page 57
[¶ 134] 	Regardless, the parties agree that post-Event of Default, Truist
owed the bondholders a higher standard of care than pre-Event of Default.110
[¶ 135] 	The 	court 	concludes 	that 	this 	party-defined 	contractual
standard is akin to a traditional trustee’s fiduciary standard of care to exercise
its powers as an ordinary or reasonably prudent person would in Truist’s
circumstances. See Herschbach v. City of Corpus Christi, 883 S.W.2d 720, 735
(Tex. App.—13th Dist. 1994, writ denied) (“A trustee’s fundamental duties
include the use of the skill and prudence which an ordinary, capable, and
careful person will use in the conduct of his own affairs.”); see also Trust Code
§ 117.012 (the “prudent investor rule” may be invoked through language
directing a trustee to “use[] the judgment and care under the circumstances
then prevailing that persons of prudence, discretion, and intelligence exercise
in the management of their own affairs”]).
4. Was written notice to Truist required to trigger its heightened duties?
[¶ 136] 	Preston Hollow argues that 	any limits on Truist’s duties
became inapplicable when Senior Care did not deposit Project revenues into
110 See Truist Trust Code Mot. at 24 (referring to “enhanced” post-default duties); Preston
Hollow’s Trust Code Resp. at 37 (arguing the “reasonably prudent man” standard “mirrors
traditional fiduciary duties”).

O PINION AND ORDER, Page 58
the Blocked Account—regardless of whether Truist received written notice of
this default—because Master Indenture § 8.01(b)’s heightened duties omit a
notice requirement.111
[¶ 137] 	Truist relies on Master Indenture § 8.03(h) to argue that it had
knowledge of an Event of Default—thereby triggering its heightened duties
under § 8.01(b)—only if it received written notice of any Event of Default.112
[¶ 138] 	The court agrees with Truist.
a. Master Indenture § 8.01(b)
[¶ 139] 	To begin, Preston Hollow is correct that Master Indenture
§ 8.01(b)’s plain terms do not explicitly require notice of an Event of Default
to trigger Truist’s heightened duties:
In case any Event of Default has occurred and is continuing, the
Master Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a reasonably prudent man would
exercise or use under the circumstances in the conduct of his own
affairs.
Master Indenture § 8.01(b); Bond Indenture § 901(a) (similar).
[¶ 140] 	However, the court concludes that Truist still had to have
knowledge of an Event of Default to trigger its heightened duties.
111 FAP ¶ 39; see also Bond Indenture § 901(a) (similar).
112 Truist’s 166(g) Mot. at 18.

O PINION AND ORDER, Page 59
[¶ 141] 	While the parties did not squarely address whether a trustee
under the Bond Documents may be subject to heightened duties without any
knowledge of an Event of Default (whether actual, constructive, by notice, or
otherwise), courts in other jurisdictions have required the trustee to have that
knowledge, even if not expressly stated in the contract. See Phoenix Light SF
Ltd. v. Bank of New York Mellon, No. 14-CV-10104 (VEC), 2017 WL 3973951,
at *3 (S.D.N.Y. Sept. 7, 2017) (“Although the GAs do not specifically provide
that the Trustee must have knowledge of an Event of Default before it is
subject to a prudent person duty, the parties do not dispute, and the Court
previously held, that the Trustee’s prudent-person duty arises after the
Trustee has knowledge of an Event of Default.”). Ultimately, a party cannot
be expected to comply with a duty of care it does not know it has.
[¶ 142] 	Regardless, here, Preston Hollow is alleging Truist had actual
knowledge of the Event of Default, so the court assumes for now that some
knowledge was required to impose heightened duties.113

O PINION AND ORDER, Page 60
b. Master Indenture § 8.03(h)
[¶ 143] 	Knowledge of an Event of Default is required to trigger Truist’s
heightened duties under § 8.01(b) (see directly above), and Truist relies on
Master Indenture § 8.03(h) to argue it has that knowledge only if it received
written notice of an Event of Default.114 Section 8.03(h) provides that:
The Master Trustee shall not be deemed to have knowledge of
any default (as defined in Section 8.02 hereof) hereunder, except
an Event of Default under Section 7.01(a), (b), (u) or (v) hereof,
unless a Responsible Officer has actually received notice of such
default in writing from the Obligor, the Holder of any Obligation
or the Noteholder Representative, referencing the Obligations
and describing such default and stating in the notice that a
default has occurred.115
[¶ 144] 	Black’s 	gives 	two 	definitions 	for 	“deem”: 	(1) 	“To 	treat
(something) as if (a) it were really something else, or (b) it has qualities that it
does not have,” and (2) “[t]o consider, think, or judge.” Deem, B LACK’S LAW
DICTIONARY (12th ed. 2024). Black’s states that the first definition is preferred
and the later should be avoided. See id.
[¶ 145] 	Under the first definition, Master Indenture § 8.03(h) can be
paraphrased as saying “the Master Trustee shall not be treated as having
114 Truist’s 166(g) Mot. at 18.
115 The primary Event of Default Preston Hollow relies on relevant to this Opinion and
Order is § 7.01(c) (“the Obligor fails to make any deposit required pursuant to Article III”),
so the exceptions do not apply. See FAP ¶ 39.

O PINION AND ORDER, Page 61
knowledge of any default that it does not have unless it or its agents receive
written notice of such default” (emphasis added). 	Thus, that definition
protects Truist from a finding of constructive knowledge, but would not
prevent it from having actual knowledge of a default (i.e., the provision does
not apply to knowledge it does have). 	Compare Knowledge, B LACK’S LAW
DICTIONARY (12th ed. 2024) (constructive knowledge, “[k]nowledge that one
using reasonable care or diligence should have, and therefore that is attributed
by law to a given person”) with id. (actual knowledge, “[d]irect and clear
knowledge, as distinguished from constructive knowledge”).
[¶ 146] 	However, 	under 	the 	second 	definition, 	Master 	Indenture
§ 8.03(h) would prevent Truist from being “considered” to have knowledge of
any default unless it received written notice of such default. That is, even if
Truist had actual knowledge, we will not consider a fact as known until it has
written notice. This is the construction Truist argues for.116 It is consistent
with other, non-legal dictionary definitions of “deem.” 	See Deem, MERRIAM-
WEBSTER. COM117 (“to come to think or judge : consider”); Deem, CAMBRIDGE
116 Truist’s 166(g) Mot. at 16-17.
117 https://www.merriam-webster.com/dictionary/deem (last visited Aug. 8, 2026).

O PINION AND ORDER, Page 62
D ICTIONARY. COM118 (“to consider or judge”); Deem, D ICTIONARY . COM119 (“to
judge or consider”).
[¶ 147] 	Preston Hollow argues that “it would be illogical for another
party lacking [] knowledge [of an Event of Default] (e.g., Preston Hollow) …
to be required to provide Truist with notice of the same as a condition
precedent for Truist to be held liable.”120 But written notice can serve an
important purpose—it removes uncertainty as to what level of duties Truist
owed at any point in time. Cf. Worsdale v. City of Killeen, 578 S.W.3d 57, 76
(Tex. 2019) (“[A] determination of actual notice, albeit a question of law,
always turns on the particular facts of a case. … Certainty can be achieved
simply by giving formal notice[.]”). That § 8.03(h) might excuse Truist from
heightened duties for Events of Default it actually knew of but did not receive
written notice for is a foreseeable result if Truist’s construction of the
provision is correct. James Constr. Grp., 650 S.W.3d at 403 (Texas courts do
not protect parties from the consequences of their own agreements).
118 https://dictionary.cambridge.org/us/dictionary/english/deem (last visited Aug. 8,
2026).
119 https://www.dictionary.com/browse/deem (last visited Aug. 8, 2026).
120 Preston Hollow’s 166(g) Resp. at 26.

O PINION AND ORDER, Page 63
[¶ 148] 	Preston Hollow further argues that it would be futile to give
Truist written notice of that which it has actual knowledge of.121 But the
parties contracted for written notice and “when a contract requires written
notice as a condition precedent to the right to enforce an obligation under the
contract, substantial compliance with that requirement may not be achieved
in the absence of a writing.” James Constr. Grp., 650 S.W.3d at 409.
[¶ 149] 	Normally, futility of notice arises when there has been a breach
that is impossible to cure, thereby making notice of said breach futile. 	See
Duncan v. Woodlawn Mfg., Ltd., 479 S.W.3d 886, 898 (Tex. App.—8th Dist.
2015, no pet.). 	That is not the situation here and the court concludes the
futility doctrine does not apply.
c. Analysis
[¶ 150] 	Neither party argued that the provision is ambiguous. Section
8.03(h) could have been written more clearly by not using “deem,” but a
contract is not ambiguous because a provision, “through the lens of hindsight,
could have been more clearly stated.” RSUI Indem. Co. v. The Lynd Co., 466
S.W.3d 113, 130 (Tex. 2015). Where contract language is not ambiguous the
121 Preston Hollow’s 166(g) Resp. at 27.

O PINION AND ORDER, Page 64
court is obligated to interpret it as a matter of law. DeWitt Cnty. Elec. Co-op.,
Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).
[¶ 151] 	So, 	the 	court 	concludes 	that 	Master 	Indenture 	§ 8.03(h)
requires Truist to receive written notice even when it might have actual
knowledge of an Event of Default to trigger its heightened duties under
§ 8.01(b). 	See Phoenix Light SF Ltd. v. Bank of New York Mellon, No. 14-CV-
10104 (VEC), 2017 WL 3973951 (S.D.N.Y. Sept. 7, 2017).
[¶ 152] 	In Phoenix Light, the court addressed similar language in a
series of Pooling and Service Agreement (PSA) trusts: “the Trustee shall not
be deemed to have knowledge of an Event of Default until a Responsible
Officer of the Trustee shall have received written notice thereof.” 	Id. at *16
(citing PSA § 8.02(viii)). 	The court rejected the plaintiffs’ argument that
“deemed to have knowledge” meant only constructive knowledge, not actual
knowledge, because in another PSA part discussing the trustee’s duties, the
trustee had to act if it had written notice or actual knowledge. Id. at *17 (citing
Shaw Grp. Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 124 (2d Cir. 2003)
(“[A]n interpretation of a contract that has the effect of rendering at least one
clause superfluous or meaningless ... is not preferred and will be avoided if
possible.”)).

O PINION AND ORDER, Page 65
[¶ 153] 	The court explained that, “If the Trustee’s prudent person duty
were to arise upon the Trustee’s actual knowledge, or if Section 8.02(viii)
intended to include ʻactual knowledge,’ then the PSA could have used the
phrase ʻactual knowledge’ in Section 8.02(viii), as it did elsewhere.” Id.
[¶ 154] 	Likewise, here the Bond Indenture provides that:122
For purposes hereof, the Issuer shall not be deemed to have
knowledge of any fact or the occurrence of any event unless and
until its Authorized Officer has written notice thereof or actual
knowledge thereof.
Bond Indenture § 102(m) (emphasis added).
[¶ 155] 	Bond Indenture § 102(m) refers to a different party (Issuer, i.e.,
Woodloch), 	but 	the 	analysis 	is 	the 	same; 	when 	the 	parties 	wanted
“knowledge” to include written notice or actual knowledge, they said so.
PopCap Games, 350 S.W.3d at 708 (“The use of different language in different
parts of a contract generally means that the parties intended different
things.”).
[¶ 156] 	So, 	the 	court 	concludes 	that 	the 	absence 	of 	an 	“actual
knowledge” provision in Master Indenture § 8.03(h) was intentional. City of
122 The court has previously concluded that the Master Indenture and Bond Indenture
should be construed together. Preston Hollow, 2025 Tex. Bus. 55, ¶ 65.

O PINION AND ORDER, Page 66
Hous. v. Williams, 353 S.W.3d 128, 145 (Tex. 2011) (the “purposeful inclusion
of specific terms in a writing implies the purposeful exclusion of terms that do
not appear”).
[¶ 157] 	Although the Bond Indenture’s language is slightly different, it
reaches the same result: “The Bond Trustee shall not be required to take notice
or be deemed to have notice of any failure hereunder or any other Bond
Documents … unless the Bond Trustee shall be notified of such failure by the
Issuer or by the Series 2017A Majority Representative.” 	Bond Indenture
§ 901(h).
[¶ 158] 	The phrase “required to take notice” is akin to constructive
knowledge. 	See 	Notice, 	B LACK’S 	LAW 	DICTIONARY 	(12th 	ed. 	2024)
(constructive notice, “Notice arising by presumption of law from the existence
of facts and circumstances that a party had a duty to take notice of[.]”
(emphasis added)). However, because the court concludes that “shall not be
… deemed to have notice” applies even where Truist had actual notice, Bond
Indenture § 901(h)’s additional language does not change the result.
[¶ 159] 	Accordingly, the court concludes that the Bond Documents
afforded Truist protections insofar that it would (i) not be considered to have
knowledge of an Event of Default, thereby triggering its “reasonably prudent

O PINION AND ORDER, Page 67
man” duties, or (ii) be required to give notice of defaults (as defined by Master
Indenture § 8.02) without first receiving written notice of the same.
5. Conclusion
[¶ 160] 	The 	court 	grants-in-part 	Truist’s 	requests 	for 	rulings 	as
follows:
(i) 	Truist had no duty to monitor Senior Care’s compliance with
Senior Care’s separate contractual obligations absent a
written notice of an Event of Default in the form described
in the Bond Documents and
(ii) 	Truist had no duty to advise Preston Hollow of Senior Care’s
defaults absent a written notice of an Event of Default in the
form described in the Bond Documents.
[¶ 161] 	The court makes no factual determinations when or whether
any Events of Default occurred or notice was given.
[¶ 162] 	The court denies without prejudice Truist’s request for a ruling
as a matter of law that Greg Yanok’s actions, as pled, did not violate Truist’s
duties to Preston Hollow. The court is not convinced at this time that there
are no fact issues that preclude the court from making that determination and
the parties paid the issue minor attention in their briefs.

O PINION AND ORDER, Page 68
C. Issue Three – Breach of Fiduciary Duties v. Breach of Trust
[¶ 163] 	Breach of fiduciary duty and breach of trust have the same
elements: (i) a fiduciary/trust relationship; (ii) the defendant’s breach of a
fiduciary/trust duty to the plaintiff; and (iii) some resulting injury to the
plaintiff or benefit to the defendant. 	Primexx Energy Opportunity Fund, L.P.
v. Primexx Energy Corp., 2025 Tex. Bus. 9, 709 S.W.3d 619, 649 (1st Div.)
(breach of fiduciary duty); Quion Inv’rs, Inc. v. Gribble, No. 14-21-00369-CV,
2023 WL 370493, at *5 n.2 (Tex. App.— 14th Dist. Jan. 24, 2023, no pet.)
(breach of trust). In this case, Preston Hollow’s claims are based on the same
conduct.123
[¶ 164] 	Both parties agreed that breach of trust is a statutory claim
arising out of the Trust Code. See Trust Code § 111.004(25).124 Accordingly,
this issue is mooted by the court’s conclusion that the Trust Code does not
apply to Preston Hollow’s claims.
123 Compare FAP ¶ 58(a)-(i) with FAP ¶ 67(a)-(i).
124 See Preston Hollow’s January 14, 2026, Breach of Trust Brief at 2, 5; Truist’s February
4, 2026, Response to Breach of Trust Brief at 6-7.

O PINION AND ORDER, Page 69
IV. 	C ONCLUSION
[¶ 165] 	The court grants-in-part and denies-in-part Truist’s requests
for legal rulings pursuant to TEX . R. CIV. P. 166(g) contained in its October 27,
2025, motion. See supra ¶s 160-62.
[¶ 166] 	The court dismisses Preston Hollow’s Breach of Trust claim
with prejudice.
[¶ 167] 	These conclusions apply during this case unless the court later
modifies them based on new information.

O PINION AND ORDER, Page 70
It is so ORDERED.
BILL WHITEHILL
Judge of the Texas Business Court,
First Division
SIGNED: August 14, 2026

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