In Trinh v. Cent. River Healthcare Group, a brother sued his sister over the management of a PLLC. No. 03-19-00393-CV, 2021 Tex. App. LEXIS 4542 (Tex. App.—Austin June 9, 2021, no pet. history). The brother claimed that the sister promised to pay him a salary, and she did not. The court of appeals affirmed

In Austin v. Mitchell, a wife filed suit alleging her ex-husband fraudulently transferred a portion of his limited partnership interest in a family limited partnership to a trust for the benefit of his children. No. 05-19-01359-CV, 2021 Tex. App. LEXIS 4536 (Tex. App.—Dallas June 8, 2021, no pet. history). The trial court granted summary judgment for the husband and the wife appealed.
Continue Reading Wife’s Fraudulent Transfer Claim Against Husband For Transferring Business Interests To Trust Failed Due To The Statute Of Repose

In In re Estate of Stewart, siblings filed claims regarding the administration of their father’s estate. No. 04-20-00103-CV, 2021 Tex. App. LEXIS 3897 (Tex. App.—San Antonio May 19, 2021, no pet. history). Among other claims, a sister claimed that her brother breached fiduciary duties as executor by distributing real property to three of the siblings, but not to her. The brother claimed that he had the right to do so under the Estates Code. The jury found that the brother breached his fiduciary duties, but found that the sister had not been harmed. The brother appealed. The court of appeals first discussed an executor’s fiduciary duties to the estate’s beneficiaries:

“The relationship between an executor and the estate’s beneficiaries is one that gives rise to a fiduciary duty as a matter of law.” “An executor’s fiduciary duty to the estate’s beneficiaries arises from the executor’s status as trustee of the property of the estate.” “The executor thus holds the estate in trust for the benefit of those who have acquired a vested right to the decedent’s property under the will.” “The fiduciary duties owed to the beneficiaries of an estate by an independent executor include a duty of full disclosure of all material facts known to the executor that might affect the beneficiaries’ rights.” “A fiduciary also ‘owes its principal a high duty of good faith, fair dealing, honest performance, and strict accountability.’” “When an independent executor takes the oath and qualifies in that capacity, he or she assumes all duties of a fiduciary as a matter of law which, in addition to other duties, includes the duty to avoid commingling of funds.”


Continue Reading Court Holds That An Executor May Breach Duties In Making A Non-Pro Rata Distribution Of Assets

In Villareal v. Saenz, two co-owners of a limited liability company sued each other regarding conduct surrounding a business divorce. 5-20-CV-00571-OLG-RBF, 2021 U.S. Dist. LEXIS 94183 (W.D. Tex. May 18, 2021). After the parties asserted allegations against each other, they entered into a release agreement. The parties agreed that “Saenz would assign his entire interest to ZroBlack LLC to Villarreal.” After the release, Saenz refused to return certain property to the company. Villarreal sued for breach of fiduciary duty and other claims.

Saenz filed a motion to dismiss, and the district court magistrate judge recommended that the claims that arose before the release be dismissed, but recommended that the claims that arose after the release continue. Regarding Saenz’s fiduciary duties after the release agreement was executed, the court stated:
Continue Reading Business Divorce: Exiting Member of LLC May Still Owe Fiduciary Duties

In Austin Trust Co. v. Houren, beneficiaries of a trust executed a family settlement agreement with the trustee and the former trustee’s estate. No. 14-19-00387-CV, 2021 Tex. App. LEXIS 1955 (Tex. App.—Houston March 16, 2021, no pet. history). After the settlement agreement was executed, one of the parties sued the former trustee’s estate for over a $37 million debt (or due to over distributions). The estate then filed a motion for summary judgment based on the release in the settlement agreement, which the trial court granted. The court of appeals affirmed, finding that the release’s language was sufficiently broad to cover these claims:
Continue Reading Court Upheld A Release In A Family Settlement Agreement That Protected A Former Trustee’s Estate From Claims

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:
Continue Reading Court Reversed Temporary Injunction Against Co-Trustees

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.
Continue Reading Co-Trustees Who Managed A Texas Trust With A Texas Beneficiary Had Sufficient Contacts With Texas To Be Subject To A Texas Court’s Personal Jurisdiction

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.
Continue Reading Court Properly Admitted A Will To Probate Where The Evidence Did Not Establish Mental Incompetence Or Undue Influence As A Matter Of Law

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