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

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

In In re Estate of Pandozy, a woman attempted to intervene in a probate proceeding claiming that she was the informal spouse of the decedent. No. 05-19-00755-CV, 2021 Tex. App. LEXIS 1265 (Tex. App.—Dallas February 22, 2021, no pet. history). The trial court heard evidence and ruled that she was not an informal spouse, and the woman appealed. The court of appeals first discussed the standards for proving an informal marriage:

As the proponent of the marriage, Gonzalez bore the burden to prove by a preponderance of the evidence that she and Pandozy were informally married. Specifically, Gonzalez was required to prove: (1) she and Pandozy agreed to be married; (2) after the agreement, they lived together in Texas as spouses; and (3) and there represented to others that they were married. The existence of a common law marriage is a question of fact to be resolved by the fact finder.

Id. The court of appeals then reviewed the evidence and held that although the decedent’s girlfriend presented some evidence relevant to the elements of an informal marriage, the evidence was contradicted and not sufficient to conclusively prove as a matter of law all vital facts in support of the existence of an informal marriage. Importantly, the court noted:

Although Gonzalez alleged that she and Pandozy discussed marriage in around 2009, she offered no evidence that the discussion ever culminated in an agreement to be married. At most, Gonzalez’s testimony describes an agreement to get married at some point in the future, not an agreement to be married. This distinction is significant. The agreement-to-be-married element requires proof of an intent to create an immediate and permanent marital relationship and that the couple did in fact agree to be husband and wife. There is no such evidence here.

Id. The appellate court affirmed the trial court’s order.

Parties often begin a business together without thinking through all of the legal details that define their rights. When they eventually divorce, they need to resort to the language in agreements that they entered into and also rely on statutory and common-law principles. In one recent case, the court held that the parties’ agreement’s language on the requirements for the formation of a partnership will trump other legal theories. In Anubis Pictures, LLC v. Selig, entities sued a defendant for choosing not to proceed with them and working with directly with a film company. No. 05-19-00817-CV, 2021 Tex. App. LEXIS 1580 (Tex. App.—Dallas March 3, 2021, no pet. history). The plaintiffs asserted a claim that they formed a partnership with the defendant, and that the defendant breached fiduciary duties by cutting the plaintiffs out of business deals. The trial court granted summary judgment for the defendant, and the plaintiffs appealed. Regarding the plaintiffs’ breach of fiduciary duty claim, the court of appeals held:

Anubis contends it presented evidence of the factors indicating the creation of a partnership under section 152.052(a) of the Texas Business Organizations Code. These factors are irrelevant, however, where the parties have agreed that no binding or enforceable obligations will be created unless certain conditions are met. Such an agreement to not be bound absent the specified conditions is ordinarily conclusive on the issue of partnership formation. In this case, Selig and Anubis agreed they were not obligated to work together on any transaction unless both parties signed a formal, written transactional contract. It is undisputed that this did not occur. Although performance of a condition precedent to forming a partnership can be waived, in determining whether such waiver has occurred, we consider only evidence directly tied to the condition precedent, and not the factors relevant to partnership creation set out in section 152.052(a). As discussed above, the evidence conclusively shows Selig did not waive her right to require a signed contract before being obligated to work with Anubis. Accordingly, Selig negated the creation of a partnership as a matter of law.

Id.

One of the most difficult areas for probate litigation is determining when a party has an order that is appealable. There have been several recent cases that discuss this important area of probate litigation. In In re Estate of Mims, a party attempted to appeal an order denying his motion to remove an executor. No. 06-21-00005-CV, 2021 Tex. App. LEXIS 1650 (Tex. App.—Texarkana March 4, 2021, no pet. history). The court of appeals dismissed the appeal for lack of jurisdiction. Regarding general principals of finality, the court stated:

“It is well settled that appellate courts have jurisdiction over final judgments and interlocutory orders made appealable by statute.” “A judgment is final for purposes of appeal if it disposes of all pending parties and claims.” “Only one final judgment shall be rendered in any cause except where it is otherwise specially provided by law.” “Probate proceedings are an exception to the ‘one final judgment’ rule.” “A final order issued by a probate court is appealable to the court of appeals.” The Texas Supreme Court has adopted the following test to determine when a court order in a decedent’s estate is final and appealable: “If there is an express statute, such as the one for the complete heirship judgment, declaring the phase of the probate proceedings to be final and appealable, that statute controls. Otherwise, if there is a proceeding of which the order in question may logically be considered a part, but one or more pleadings also part of that proceeding raise issues or parties not disposed of, then the probate order is interlocutory.” There is no statute that declares an order refusing to remove an executor to be final and appealable.

Continue Reading Courts Rule On Jurisdictional Issues Involving Probate Orders

Parties often begin a business together without thinking through all of the legal details that define their rights. When they eventually divorce, they need to resort to the language in agreements that they entered into and also rely on statutory and common-law principles. In one recent case, the court held that the parties’ agreement’s language on the requirements for the formation of a partnership will trump other legal theories. Continue Reading Business Divorce: Court Held That Parties Did Not Form A Partnership Where Certain Express Conditions Precedent Were Not Met