In Marshall v. Marshall, a beneficiary sued the original trustee and five co-trustees of two trusts regarding claims that they breached fiduciary duties. No. 14-17-00930-CV, 2021 Tex. App. LEXIS 1949 (Tex. App.—Houston [14th Dist.] March 16, 2021, no pet. history). After the original lawsuit was filed in Texas, the original trustee filed a petition for declaratory relief in a Louisiana court, requesting the court declare, among other things, that the co-trustees were properly appointed as co-trustees of the trust. The beneficiary obtained a temporary injunction preventing the co-trustees from receiving compensation, disposing of trust assets, and participating in litigation against the beneficiary in Louisiana. The co-trustees appealed.

The court of appeals first reversed the anti-suit injunction aspect of the temporary injunction order because allowing the suit to continue would not create a miscarriage of justice:

The principle of comity requires that courts exercise the power to enjoin foreign suits “sparingly, and only in very special circumstances.” Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649, 651 (Tex. 1996) (quoting Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986)). An anti-suit injunction may be appropriate to (1) address a threat to the court’s jurisdiction, (2) prevent the evasion of important public policy, (3) prevent a multiplicity of suits, or (4) protect a party from vexatious or harassing litigation. Id. The party seeking the injunction must show that a clear equity demands the injunction. Id. A single parallel proceeding in a foreign forum does not constitute a multiplicity of suits, nor does it by itself create a clear equity justifying an anti-suit injunction. Id.

Here, however, there is no special circumstance or clear equity to prevent a Louisiana court from determining issues related to inter vivos trusts that are governed by Louisiana law and that require the trustee to petition a Louisiana court for instructions regarding any questions that might arise regarding their administrations. Any suit in Louisiana by the co-trustees to determine the effect of the Wyoming court’s rulings would apply only to the Harrier and Falcon trusts. This single parallel proceeding brought by some of the co-trustees in Louisiana, consistent with the trusts’ requirements that the co-trustees file suit in Louisiana, cannot justify issuing an anti-suit injunction. See Golden Rule, 925 S.W.2d at 651-52. Even if there are overlapping or identical issues, the Louisiana suit does not create a miscarriage of justice. See id. Accordingly, the trial court erred to enjoin the co-trustees from litigating matters related to the Harrier and Falcon trusts in any other court.

Id.

The court also reversed the other aspects of the temporary injunction order as there was no evidence to support an irreparable harm finding:

[T]here was no evidence that the co-trustees had taken any action or planned to take any action to transfer, sell, or dispose of any unique and irreplaceable assets of the trust. Elaine testified that the co-trustees had not made any attempt to gain access to the Ribosome certificates. Under these circumstances, a temporary injunction is not proper because the claimed injury to unique assets is merely speculative; fear of injury is not sufficient. … The trial court also found that Preston had no adequate remedy because there was “no evidence that the Co-Trustees can answer in damages.” This finding reverses the burden of proof. To the extent Preston sought to establish that the co-trustees were insolvent and thus could not satisfy a judgment, it was Preston’s burden to adduce some evidence to support the claim. … Here, the only evidence about what the trustees had done with fees was that they had placed the fees into a court’s registry to await a judicial determination. And as discussed above, there is no evidence that unique assets of the trusts are in imminent danger of being dissipated. Accordingly, the trial court erred by enjoining the co-trustees from receiving compensation and taking any actions that could affect the trusts’ assets.

Id.

In In the Estate of Johnson, a child of the decedent accepted over $143,000 from the decedent’s estate and then decided to challenge the will due to mental capacity and undue influence. No. 20-0424, 2021 Tex. LEXIS 426 (Tex. May 28, 2021). The trial court ruled that the child could not accept a benefit under the will and then challenge the will and dismissed the child’s claim. The court of appeals reversed, holding that the child did not receive anything that the child would not also receive if there was no will, and therefore, she was not inconsistent and was not estopped from bringing her will contest. The court held that the executor “failed to satisfy her burden, as the Will’s proponent, by failing to demonstrate that [MacNerland] accepted greater benefits than those to which she was entitled under the Will or intestacy laws.” Id. The Texas Supreme Court accepted the will proponent’s petition for review and reversed the court of appeals.

The Supreme Court held that the contestant first had the burden to prove that he or she had a sufficient interest in the estate. Once the contestant meets that burden, the burden shifts to the will’s proponent to provide evidence of an affirmative defense to preclude the contestant from proceeding with his or her claim. An affirmative defense that the will’s proponent can raise is the acceptance-of-benefits doctrine. The Court describes that defense as follows:

The acceptance-of-benefits doctrine bars a party from contesting the validity of a will while enjoying its benefits. It arises out of equity’s aversion to a claimant who seeks to exploit irreconcilable positions. Equity does not permit the beneficiary of a will to grasp benefits under the will with one hand while attempting to nullify it with the other. A contestant may rebut the doctrine’s applicability by showing that she did not accept the benefit through the will. The law does not deprive a contestant of standing when she otherwise has a present legal right to the benefit. That is, if the contestant is otherwise presently entitled to the accepted benefit, then her acceptance of it is not inconsistent with suing to set aside the will. For example, a contestant who accepts a bank account payable to the contestant upon the decedent’s death or as an assertion of her interest in a community estate does not act inconsistently with a will contest because she does so through means other than the will. In such a case, there is no inconsistent position justifying estoppel because the contestant does not seek to nullify the will while she simultaneously enjoys its benefits.

Id. The Court then rejected the theory that “a will contestant may presently accept benefits under the will based on a hypothetical claim to greater benefits should a court declare it invalid.” Id. The Court stated:

We rejected the idea more than sixty years ago in Wright v. Wright. As we explained in that case, the test for determining whether a contestant’s acceptance of benefits estops her from bringing a will contest “does not depend upon the value of the benefits,” “[n]or is it to be determined by comparing them with what the statutes of descent and distribution would afford the beneficiary in the absence of a will.” Rather, the doctrine asks whether the contestant has an existing legal entitlement to these benefits other than under the will. If there is no existing entitlement save for the testator’s bequest, then the contestant’s acceptance of it is inconsistent with a claim that the will is invalid.

Id. The Court also stated that this bright-line test would not harm a beneficiary that accepts a benefit without sufficient knowledge of the facts:

MacNerland argues that an opportunistic executor could offensively deny a would-be will contestant’s claim by partially distributing the estate to an unwitting beneficiary to avoid a will contest. The doctrine sufficiently accounts for this concern, however, by requiring that a beneficiary voluntarily accept the benefit. If a beneficiary or devisee lacks knowledge of some material fact at the time of acceptance, she may take steps to reject the benefit. MacNerland did not attempt to return the mutual fund account to the estate or assert in this case that her acceptance of the account was involuntary.

Id. The Court, thus, reversed the court of appeals and affirmed the trial court’s dismissal of the suit.

Interesting Note: This case highlights the danger that an estate beneficiary has when offered assets from the estate. If the beneficiary has any notion that he or she may want to contest the will, the beneficiary should not accept the asset. Otherwise, the beneficiary will face an acceptance-of-the-benefits defense by the will’s proponent. There are exceptions to the defense, primarily when the beneficiary accepts the asset without knowing material facts and the beneficiary later attempts to return the asset. There may be other defenses as well, such as duress. In any event, the acceptance-of-the-benefits defense only precludes a beneficiary from challenging the will, the beneficiary can still sue the executor for breaching duties and/or seeking to remove the executor.

The Texas Legislatures recently passed a bill that takes effect on September 1, 2021 that extends the rule against perpetuities to 300 years for trusts. The Legislature forwarded the bill (HB 654) to the governor on May 20, 2021, but he has not yet signed the bill into law. But unless he vetoes the bill, it will become law after ten days.

The Texas Constitution prohibits perpetuities: “Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed . . . .” Tex. Const. art. I, § 26. A perpetuity is a restriction on the power of alienation that lasts longer than a prescribed period. ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 866-67 (Tex. 2018). The rule against perpetuities “should be a check on vain, capricious action by wealthy empire builders. But it should not be a constantly present threat to reasonable dispositions which slightly overstep a technical line.” Rekdahl v. Long, Tex., 417 S.W.2d 387 (1967) (Steakley, J., dissenting) (citing W. B. Leach & O. Tudor, The Rule Against Perpetuities § 24.11 at 43 (1957)).

Historically, the rule against perpetuities renders invalid any will or trust that “attempts to create any estate or future interest which by any possibility may not become vested within a life or lives in being at the time of the testator’s death and twenty-one years thereafter, and when necessary the period of gestation.” Foshee v. Republic Nat’l Bank of Dallas, 617 S.W.2d 675, 677 (Tex. 1981) (citing Kettler v. Atkinson, 383 S.W.2d 557, 560 (Tex.1964)). The rule against perpetuities also applies to non-charitable trusts, and a perpetual trust of indefinite duration is void. See Tex. Prop. Code § 112.036.

The Texas Legislature recently amended Texas Trust Code Section 112.036, and that section now provides that an interest in a trust must vest, if at all: (1) not later than 300 years after the effective date of the trust, if the effective date of the trust is on or after September 1, 2021; or (2) except as provided by Subsection (d), not later than 21 years after some life in being at the time of the creation of the interest, plus a period of gestation, if the effective date of the trust is before September 1, 2021. Tex. Prop. Code 112.036(c). The effective date of the trust is the date that the trust becomes irrevocable. Id. at 112.036(b).

A trust that has an effective date before September 1, 2021 may still have the 300 year period apply to it if the trust instrument provides that an interest in the trust vests under the provisions of Section 112.036 applicable to trusts on the date that the interest vests. Tex. Prop. Code 112.036(d). The new Section 112.036 does not address its interplay with Texas Trust Code Section 112.054(b-1), which was added in 2017. Acts 2017, 85th Leg., ch. 62 (S.B. 617), §§ 4, 5, effective September 1, 2017. Texas Trust Code Section 112.054(b-1) states:

On the petition of a trustee or a beneficiary, a court may order that the terms of the trust be reformed if: (1) reformation of administrative, nondispositive terms of the trust is necessary or appropriate to prevent waste or impairment of the trust’s administration; (2) reformation is necessary or appropriate to achieve the settlor’s tax objectives or to qualify a distributee for governmental benefits and is not contrary to the settlor’s intentions; or (3) reformation is necessary to correct a scrivener’s error in the governing document, even if unambiguous, to conform the terms to the settlor’s intent.

Tex. Prop. Code 112.054(b-1). Further, “the reformation of a trust under an order described by Subsection (b-1) is effective as of the creation of the trust.” Id. at 112.054(c). A trustee or beneficiary who wants to continue a trust that predates September 1, 2021 and is about to terminate due to the rule against perpetuities could seek to reform the trust instrument to state that an interest in the trust vests under the provisions of Section 112.036. If a court were to grant that relief, then the trust would be reformed to its creation to comply with Section 112.036(d)’s exception that allows trusts that predate September 1, 2021 to have a 300 year rule against perpetuities period. Courts in other jurisdictions have reformed trusts to alleviate a rule against perpetuities violation. See, e.g., In re Estate of Chun Quan Yee Hop, 52 Haw. 40, 469 P.2d 183 (1970) (reformation of will to comply with common law rule against perpetuities by using equitable approximation); In re Foster’s Estate, 190 Kan. 498, 376 P.2d 784 (Kan. 1962) (excision of part of will which would invalidate gift); Carter v. Berry, 243 Miss. 356, 140 So.2d 843 (Miss. 1962) (reduction of the age contingency); Estate of Grove (1977), 70 Cal.App.3d 355, 138 Cal. Rptr. 684; In Re Ghiglia’s Estate (1974), 42 Cal.App.3d 433, 116 Cal.Rptr. 827; Scott v. South Trust Asset Management Co., 274 Ga. 523, 555 SE2d 732 (2001) (use of statute to reform trust to comply with rule against perpetuities); May v. Hunt (1981), Miss., 404 So.2d 1373; Estate of Sophie D. Githens, 1991 NYLJ LEXIS 7347 (N.Y. Sur. Ct. April 11, 1991) (reformed will under statute to comply with rule against perpetuities); Edgerly v. Barker (1891), 66 N.H. 434, 31 A. 900; Berry v. Union National Bank (1980), 164 W. Va. 258, 262 S.E.2d 766. Hoover v. Jolley, 45 Va. Cir. 309, 1998 Va. Cir. LEXIS 83 (Va. C.C. April 7, 1998) (used statute to reform will to comply with rule against perpetuities). These cases deal with courts reforming trusts to comply with the rule against perpetuities so that they do not fail. They do not deal with trusts that are in compliance with the rule and where the parties wish to reform trusts to extend them after a change in the rule against perpetuities. There are good arguments both for and against allowing such a reformation (certainly, the statutory change would not be anticipated by most settlors at the time that they created their trusts). However, there should be thought given to whether such a reformation, even if possible, may have negative tax implications.

Further, Section 112.036(e) provides that a trust may be reformed or construed to the extent and as provided by Section 5.043. Tex. Prop. Code 112.036(e). Section 5.043 deals with real and personal property interests and provides:

(a) Within the limits of the rule against perpetuities, a court shall reform or construe an interest in real or personal property that violates the rule to effect the ascertainable general intent of the creator of the interest. A court shall liberally construe and apply this provision to validate an interest to the fullest extent consistent with the creator’s intent.

(b) The court may reform or construe an interest under Subsection (a) of this section according to the doctrine of cy pres by giving effect to the general intent and specific directives of the creator within the limits of the rule against perpetuities.

(c) If an instrument that violates the rule against perpetuities may be reformed or construed under this section, a court shall enforce the provisions of the instrument that do not violate the rule and shall reform or construe under this section a provision that violates or might violate the rule.

(d) This section applies to legal and equitable interests, including noncharitable gifts and trusts, conveyed by an inter vivos instrument or a will that takes effect on or after September 1, 1969, and this section applies to an appointment made on or after that date regardless of when the power was created.

Tex. Prop. Code § 5.043. See also Yowell v. Granite Operating Co., No. 18-0841, 2020 Tex. LEXIS 425 (Tex. May 15, 2020) (discussing reformation of document to comply with rule against perpetuities); Marsh v. Frost Nat’l Bank, 129 S.W.3d 174, 177(Tex. App.—Corpus Christi 2004, pet. denied)(remanding trust case to trial court to consider reformation to alleviate rule against perpetuities issues). “Before the reformation as stated in [Section] 5.043 can occur, there must be an attempt to convey an interest in real or personal property that violates the rule against perpetuities.” Ball v. Knox, 768 S.W.2d 829, 831–832 (Tex. App.—Houston [14th Dist.] 1989, no writ).

The statute does clarify that a settlor of a trust may not direct that a real property asset be retained or refuse that a real property asset may be sold for a period of longer than 100 years. Tex. Prop. Code 112.036(f). Accordingly, a party cannot use a trust to tie up real property for longer than 100 years.

Accordingly, this statutory change will have a drastic effect on the operation and termination of trusts in Texas as it changes Texas’s historical treatment of trusts and the rule against perpetuities. Attorneys who draft wills and trusts need to be aware of this statutory change and discuss with settlors how long the settlors want a trust to last and when it should terminate. For those settlors that want long-term trusts, they now have the power to have them last 300 years after the effective date of the trust. Though not perpetual, 300 years is still a very long time.

In Alexander v. Marshall, the original trustee was the beneficiary’s mother and the wife of the beneficiary’s father, who was the settlor. No. 14-18-00425-CV, 2021 Tex. App. LEXIS 1952 (Tex. App.—Houston [14th Dist.] March 16, 2021, no pet. history). In December 2016, the original trustee appointed Louisiana residents as co-trustees of the trusts and signed appointment documents in Texas. The Louisiana co-trustees each signed acceptance documents in Louisiana. All of the co-trustees testified that they knew, at or around the time of their appointments, that the beneficiary was a Texas resident. The trust beneficiary sued the co-trustees for a declaratory judgment that the appointment of the co-trustees and their compensation scheme violated the terms of the trust instruments and that they aided and abetted the original trustee in breaches of duties. The Louisiana co-trustees objected to the Texas court’s personal jurisdiction over them and filed special appearances. The trial court overruled those objections, and they appealed.

The court of appeals affirmed the trial court’s order. The Louisiana co-trustees first argued that the trial court erred in overruling their objections regarding their personal capacities. The court of appeals disagreed, holding: “a person is always liable for their own torts in an individual capacity, and Preston has alleged that the co-trustees aided and abetted a tort—breach of fiduciary duty. The trial court did not err by not dismissing the co-trustees in their individual capacities.” Id.

The court of appeals next discussed the law regarding personal jurisdiction:

Texas’s exercise of personal jurisdiction over a nonresident defendant comports with due process if a nonresident defendant has “minimum contacts” with Texas and the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. A defendant’s minimum contacts with a forum, i.e., Texas, are established when the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. Id. Three principles govern this analysis: (1) only the defendant’s contacts with the forum are relevant, not the unilateral activity of another party or third person; (2) the defendant’s acts must be purposeful and not random, isolated, or fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction such that it impliedly consents to suit there.

A nonresident defendant’s minimum contacts will give rise to specific personal jurisdiction if the plaintiff’s cause of action arises from or relates to those contacts. For a nonresident defendant’s contacts with Texas to support an exercise of specific jurisdiction, “there must be a substantial connection between those contacts and the operative facts of the litigation.” A nonresident’s “directing a tort at Texas from afar is insufficient to confer specific jurisdiction.” The proper focus is on the extent of the defendant’s activities in the forum, not the residence of the plaintiff.

However, the absence of physical contacts with Texas does not defeat personal jurisdiction so long as the defendant’s efforts are purposefully directed towards residents of Texas. A defendant who reaches out beyond one state and creates continuing relationships and obligations with a citizen of another state is subject to the jurisdiction of the latter state in suits based on those activities.

Id. The court held that the Louisiana co-trustees had sufficient contacts with Texas so that the Texas court’s exercise of jurisdiction over them was fair:

The co-trustees contend that this court should not follow Dugas because it is not binding and distinguishable based on the fact that the trusts in this case are governed by Louisiana law and require the trustees to submit issues regarding trust administration to a Louisiana court. But there are additional facts in this case that indicate the co-trustees purposefully availed themselves of the benefits of a Texas forum. While the trust in Dugas was settled in Florida and had administrative functions performed in Tennessee, here the trust was settled in Texas, has all of its property in Texas, and is run administratively in Texas. The former sole trustee, a Texan, appointed the co-trustees in Texas. Moreover, the co-trustees have received payments from Texas as a result of their appointments as co-trustees, and the appointments and future payments have an indefinite duration. These additional facts support a conclusion that the co-trustees have reached out beyond their state and created continuing relationships and obligations with citizens of another state… The co-trustees have not merely directed a tort at Texas, but they have reached out beyond Louisiana to create continuing relationships and obligations with citizens of Texas. Preston’s claim for breach of fiduciary duty arises out of those relationships and obligations… In sum, the trial court did not err by denying the special appearance. The co-trustees’ issues are overruled. The trial court’s order is affirmed.

Id.

In Neal v. Neal, the decedent died leaving three sons. No. 01-19-00427-CV, 2021 Tex. App. LEXIS 2051 (Tex. App.—Houston [1st Dist.] March 18, 2021, no pet. history). She had several wills in the last five years of her life, but her final will left all of her estate to one son. The other sons alleged that the last will was invalid due to mental incompetence and due to undue influence. The trial court found against the contestants and admitted the will to probate, and the contestants appealed.

The court of appeals first reviewed the law regarding mental competence to execute a will:

A testator has testamentary capacity when, at the time of the execution of the will, she possesses sufficient mental ability to (1) understand the business in which she was engaged, the effect of making the will, and the general nature and extent of her property; (2) know her next of kin and the natural objects of her bounty; and (3) have sufficient memory to assimilate the elements of executing a will, to hold those elements long enough to perceive their obvious relation to each other, and to form a reasonable judgment as to them. The key to this inquiry is whether the testator had testamentary capacity on the day the will was executed. This may be inferred from the testimony of lay and expert witnesses concerning their observations of the testator’s conduct prior or subsequent to the execution of the will. Evidence that the testator was incompetent at other times can be used to establish a lack of testamentary capacity on the day the will was executed if the evidence “demonstrates that the condition persists and ‘has some probability of being the same condition which obtained at the time of the will’s making.’”

Id. The court reviewed the evidence and noted that the decedent had been diagnosed with dementia: “These records demonstrate that Florene had a stroke in July 2011, and she was subsequently diagnosed with cerebrovascular disease and dementia. The records, from both her primary care physician and a home healthcare agency, reflect that Florene had cognitive deficits, including hallucinations, confusion, and problems with her short-term memory.” Id. However, the records also indicated that the decedent had some improvement: “The records also reflect that Florene’s condition improved throughout August and September 2011, that she practiced journaling and used calendar aids to help with her short-term memory problems, and that, by September 2011, she was no longer considered ‘homebound.’ A notation on a record from September 23, 2011, states, ‘vascular dementia stable at this time.’” Id. The new will was executed in January of 2012. Medical records from mid-2012 indicated that the decedent’s condition worsened and that she was having hallucinations. Multiple witnesses testified that during this entire time period that the decedent did not have mental competence to understand the complexities of a will. However, the applicant son testified that she did have competence in January of 2012. He admitted that she had mental competence issues before that time, but that she had improved and was making her own decisions at the time of the will. The attorney that drafted the will also testified that the decedent had capacity. The court of appeals held that the evidence was sufficiently contradictory such that it could not overrule the trial court’s decision to admit the will.

The court of appeals then discussed the undue influence ground. The court described the law thusly:

The party contesting the execution of a will generally bears the burden of proving undue influence. “The contestant must prove the existence and exertion of an influence that subverted or overpowered the testator’s mind at the time she executed the testament such that the testator executed a will that she otherwise would not have executed but for such influence.” Not every influence exerted by a person onto the will of another is undue. An influence is not considered undue “unless the free agency of the testator is destroyed and a testament is produced that expresses the will of the one exerting the influence rather than the will of the testator.”

Id. However, the court noted that a fiduciary relationship between the applicant and the decedent created a presumption of undue influence:

A will contestant may raise a presumption of undue influence by introducing evidence that a fiduciary relationship existed between the testator and the will proponent. If the contestant’s challenge to the will is based on a purported confidential or fiduciary relationship between the testator and the will proponent, the contestant bears the burden to establish such a relationship. “A power of attorney creates an agency relationship, which is a fiduciary relationship as a matter of law.” Once the contestant presents evidence of a fiduciary relationship, a presumption of undue influence arises and the will proponent bears the burden to produce evidence showing an absence of undue influence. This presumption is rebuttable and shifts only the burden of production; it does not shift the ultimate burden of proof. Once evidence contradicting the presumption has been introduced, the presumption is extinguished, and the case proceeds as if no presumption ever existed.

Id.

The court noted that the decedent executed a power of attorney document at the same time as the new will. The court questioned whether this simultaneous execution would be sufficient to create a presumption of undue influence. In any event, the court held that the applicant had sufficient evidence of no undue influence so as to shift the burden on that issue back to the contestants:

David presented both his testimony and Ferringer’s testimony that Florene was the one who contacted Ferringer about revising her will in January 2012. Ferringer testified that Florene called her and discussed the changes that she wanted made to her will. She also testified that Florene told her that she did not “want any of her family to be involved with her decisions on what she was doing with her estate.” The record contains no evidence that David requested that Florene change her will, or that he was otherwise involved in the drafting and preparation of the January 2012 will. Ferringer’s testimony is evidence rebutting any presumption of undue influence. This evidence therefore extinguishes the presumption of undue influence arising out of any fiduciary relationship existing between Florene and David. We conclude that Randall, as the will contestant, retained the ultimate burden of proof to demonstrate undue influence.

Id. The court then concluded that the contestants did not meet their burden to prove that the decedent executed a will that she otherwise would not have executed but for the undue influence of the applicant. The court noted that evidence that the decedent was not in good physical or mental health and that she changed her will to cut out two of her three children was not sufficient to prove undue influence. The court held:

At most, Randall presented evidence that due to Florene’s mental and physical condition, David, as the person primarily responsible for Florene’s care, had the opportunity to exercise undue influence over Florene. Mere opportunity to exercise undue influence is not enough; there must be evidence that that influence was actually exerted upon the testator with respect to the testamentary document in question. The record contains no evidence—beyond speculation on the part of Randall, Lorraine, and Louise—that David actually exercised undue influence over Florene in order to procure execution of the January 2012 will. There is no evidence in the record that David ever requested that Florene change her will from the April 2011 will—which included specific bequests for David but did not leave any portion of the residuary estate to him due to his obtaining full ownership of the Pflugerville property—to the January 2012 will, which left the entirety of Florene’s estate to David. Furthermore, there is no evidence that David played any role in Florene’s decision to change her will or in preparation of the January 2012 will. As stated above, both David and Ferringer testified that Florene was the one who contacted Ferringer about changing her will. David was not present at the time or at the time of the new will’s execution. Considering all the evidence in a neutral light, we conclude that the probate court’s implied finding that no undue influence occurred in connection with execution of the January 2012 will was not against the great weight and preponderance of the evidence.

Id. The court of appeals affirmed the trial court’s judgment admitting the contested will to probate.

In Adam v. Marcos, an attorney and his client agreed to a joint venture/partnership. No. 14-18-00450-CV, 2021 Tex. App. LEXIS 2060 (Tex. App.—Houston March 18, 2021, no pet. history). The attorney sued the client for breaching the agreement. The trial court ruled for the client on the attorney’s breach of the partnership agreement claim and a breach of fiduciary duty claim. The court of appeals affirmed. The court of appeals first held that the partnership agreement was presumptively invalid because the attorney owed fiduciary duties to the client when it was entered into:

Contracts between attorneys and their clients negotiated during the existence of the attorney-client relationship are closely scrutinized. Because the relationship is fiduciary in nature, there is a presumption of unfairness or invalidity attaching to such contracts. The burden is on the attorney to prove the fairness and reasonableness of the agreement. Moreover, as a fiduciary, Marcos had the burden to establish that Adam was informed of all material facts relating to the agreement. Additional important factors in determining the fairness of a transaction involving a fiduciary include whether the consideration was adequate and whether the beneficiary obtained independent advice.

Id. The court of appeals held that the jury’s finding of breach of duty by the attorney supported invalidating the partnership agreement: “Because the jury found that Marcos failed to fulfill his fiduciary duties to Adam in regard to the alleged partnership agreement, and the evidence supports that finding, the presumption that the contract was invalid applies. Thus, the trial court did not err in holding the agreement was invalid and unenforceable.” Id. Continue Reading Business Divorce: Partnership Agreement Was Invalid Where It Was Entered Into Between A Fiduciary And Principal And Was Otherwise Unfair And The Principal Did Not Owe Fiduciary Duties As A Partner Where There Was No Enforceable Partnership

In Estate of Tillotson, an administrator of a decedent’s estate filed a turn over motion to have the decedent’s husband turn over the decedent’s community property interest in certain accounts. No. 05-20-00258-CV, 2021 Tex. App. LEXIS 2097 (Tex. App.—Dallas March 18, 2021, no pet. history). After the trial court granted the motion, the surviving spouse appealed. The court of appeals first held that the administrator had the power to file a motion to seek the partition of community property:

The Estates Code provides that at any time after the first anniversary of the date original letters testamentary or of administration are granted, an executor, administrator, heir, or devisee of a decedent’s estate, by written application filed in the court in which the estate is pending, may request the partition and distribution of the estate. See Est. § 360.001(a). The Estates Code further provides that if an intestate deceased spouse is survived by a child, the deceased spouse’s undivided one-half interest in the community estate passes to the deceased spouse’s children. See id. § 201.003… Accordingly, we conclude Hoyl in her capacity as administratrix could request partition of the community property and that the trial court did not err by granting Hoyl’s request to partition community property.

Id. The court discussed that Estates Code section 360.253(a) allows a surviving spouse to seek a partition, but holds that it does not make that right an exclusive one to the surviving spouse. Continue Reading Administrator Of An Estate Has The Power To Seek The Partition Of Community Property

In Hitchcock Indep. Sch. Dist. v. Arthur J. Gallagher & Co., a school district sued it insurance broker for failing to obtain insurance policies that did not have arbitration and choice-of-law clauses that favored New York. No. 3:20-CV-00125, 2021 U.S. Dist. LEXIS 57452 (S. D. Tex. February 26, 2021). According to the school district, the insurance broker “knowingly failed to disclose the burdensome and onerous arbitration provisions and choice of law clause[s] to [the school district]”; “misrepresented to [the school district] the nature, quality, and coverage(s) afforded under the Policies”; and “knowingly provided false and fraudulent information concerning the coverages under the Policies and the endorsements, exclusions[,] and provisions of the Policies.” The school district alleged six causes of action against the broker, including breach of fiduciary duty, and sought more than $ 14 million in actual and punitive damages, plus an undetermined amount of attorney’s fees, interest, and costs. The broker moved to dismiss the claims.

A magistrate judge recommended that the motion be granted on the breach of fiduciary duty claim:

To put the fiduciary duty claim into context, Texas law views the fiduciary relationship as “an extraordinary one [that] will not be lightly created.” There are two types of fiduciary relationships: (1) a “formal” relationship in which a duty arises as a matter of law (such as attorney-client, principal-agent, trustee-beneficiary, or between partners in a partnership); and (2) an “informal” relationship arising from a moral, social, domestic, or personal relationship called a “confidential” relationship. It is widely recognized that the relationship between an insurance agent and an insured does not give rise to a formal fiduciary duty. An informal fiduciary relationship “may arise where one person trusts in and relies upon another, whether the relationship is a moral, social, domestic, or purely personal one.” To impose an informal fiduciary duty in a business transaction, however, “the special relationship of trust and confidence must exist prior to, and apart from, the agreement made the basis of the suit.” … The First Amended Complaint sets forth bare assertions, and nothing more, that a fiduciary relationship existed between HISD and Gallagher. The fact that Gallagher assisted HISD in procuring insurance in the past is insufficient, by itself, to give rise to a fiduciary relationship. There is nothing in the First Amended Complaint to suggest that the Gallagher-HISD relationship was anything more than a routine, arms-length business transaction. Gallagher’s motion to dismiss this claim should be granted.

Id.

In TSA-Tex. Surgical Assocs., L.L.P. v. Vargas, one partner sued his other partners for various claims regarding the defendants attempt to squeeze the plaintiff out of the partnership. No. 14-19-00135-CV, 2021 Tex. App. LEXIS 1330 (Tex. App.—Houston [14th Dist.] February 25, 2021, no pet. history). The defendants filed a motion to dismiss under the Texas Citizens Participation Act (TCPA), and the trial court denied the motion. The defendants appealed.

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The TCPA was enacted “to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.” Id. (citing Tex. Civ. Prac. & Rem. Code § 27.002). It does so by authorizing a party to file a motion to dismiss a legal action that “is based on, relates to, or is in response to a party’s exercise of the right of free speech, right to petition, or right of association.” Id.

The court of appeals affirmed the denial of the motion to dismiss under the TCPA. The defendants argued that the plaintiff’s claims were based on, related to, or in response to the exercise of free speech because the claims purportedly involve communications regarding the provision of medical services. The court of appeals disagreed: Continue Reading Business Divorce: Court Affirms Denial Of SLAPP Motion Regarding Partnership Divorce Suit