FRAUD - suing personal representative - Texas Probate, Estate and Trust Administration litigation guide

Texas Probate, Estate and Trust Administration
Copyright 2005, Matthew Bender & Company, Inc., a member of the LexisNexis Group.
PART 5 CONTESTS AND LITIGATION
CHAPTER 47 FIDUCIARY LITIGATION

3-47 Texas Probate, Estate and Trust Administration § 47.02

§ 47.02 Fraud

A person suing a personal representative for breach of a fiduciary duty may also have a cause of action for common-law fraud.

The elements of a fraud cause of action are
(1) a material misrepresentation
(2) that was false and
(3) that was either known to be false when made or was asserted without knowledge of the truth,
(4) that was intended to be acted on,
(5) that was relied on, and
(6) that caused injury.n1

Although statements of law, statements of opinion, and predictions as to future events are not generally actionable as fraudulent, they may be actionable if made by a personal representative to an estate beneficiary because of the fiduciary nature of the relationship or the representative's possession of superior information.n2 Similarly, although a mere failure to disclose information does not generally amount to fraud,n3 a personal representative's failure to disclose facts will constitute fraud if the facts are among those the representative has a fiduciary duty to disclose.n4
A plaintiff who prevails on a fraud cause of action is entitled to actual damages and may be entitled to exemplary damages. Actual damages are traditionally measured by the ''out-of-pocket'' method (the difference between the value of the thing given and the value of the thing obtained).n5 Special or consequential damages that proximately resulted from the fraud may also be recovered,n6 as may damages for mental anguish.n7 Exemplary damages are recoverable in some cases.n8 For a discussion of the situations that may justify an award of exemplary damages, see § 47.01[4][c].
The statute of limitation for a fraud cause of action is four years.n9
For a full discussion of fraud causes of action, see TEXAS LITIGATION GUIDE, ch. 336, Fraud , and TEXAS TORTS AND REMEDIES, ch. 44, Fraud and Misrepresentation.
Legal Topics:

For related research and practice materials, see the following legal topics:
Estate, Gift & Trust LawProbateProcedures in ProbateGovernmentsLegislationStatutes of LimitationsTime
LimitationsEstate, Gift & Trust LawEstate AdministrationGeneral OverviewTortsBusiness TortsFraud &
MisrepresentationNondisclosureElementsEstate, Gift & Trust LawProbatePersonal RepresentativesClaims By &
Against


FOOTNOTES:
(n1)Footnote 1. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990) , cert. denied , 498 U.S. 1048, 112 L. Ed. 2d 775 (1991) .
(n2)Footnote 2. See Moreau v. Oppenheim, 663 F.2d 1300, 1310 (5th Cir. [Tex.] 1981), cert. denied, 458 U.S.
Page 200 3-47 Texas Probate, Estate and Trust Administration § 47.02 1891 Tex. LEXIS 1161, ***16
1107 (1982) -president of corporation that managed joint venture liable to joint venturers and shareholders based on misrepresentation of law regarding business and corporate powers; Sawyer v. Pierce, 580 S.W.2d 117-126 (Civ. App.-Corpus Christi 1979, ref. n.r.e.)-buyers entitled to rescind sale of trailer park based on sellers' statement that there was room for 30 trailers in park, because sellers knew and failed to mention that county regulations permitted only 15 spaces to be rented on property; Wright v. Carpenter, 579 S.W.2d 575, 580 (Civ. App.-Corpus Christi 1979, ref. n.r.e.)­sellers of house liable based on prediction as to how long roof would last, because they had superior knowledge of roof's condition; Squyres v. Christian, 242 S.W.2d 786-790 (Civ. App.-Texarkana 1951, dis.)-accountant liable based on statement of opinion to clients with whom accountant had fiduciary relationship.
(n3)Footnote 3. See Moore & Moore Drilling Company v. White, 14 O.&G.R. 847, 345 S.W.2d 550, 555 (Civ. App.-Dallas 1961, ref. n.r.e.) .
(n4)Footnote 4. See Anderson v. Anderson, 620 S.W.2d 815, 819 (Civ. App.-Tyler 1981, no writ)-granddaughter to whom property was deeded by grandmother and who occupied position of trust and confidence in relationship with grandmother had duty to tell grandmother that representation in deed that granddaughter would take care of grandmother for rest of her life was false; § 47.01[3][c]-fiduciary duty of disclosure.
(n5)Footnote 5. See Sobel v. Jenkins, 15 Tex. Sup. Ct. J. 241, 477 S.W.2d 863, 868 (Tex. 1972) .
(n6)Footnote 6. See Wright v. Carpenter, 579 S.W.2d 575, 578 (Civ. App.-Corpus Christi 1979, ref. n.r.e.) .
(n7)Footnote 7. Kneip v. Unitedbank-Victoria, 734 S.W.2d 130, 136 (Tex. App.-Corpus Christi 1987, no writ) .
(n8)Footnote 8. See Trenholm v. Ratcliff, 646 S.W.2d 927, 933 (Tex. 1983)-finding of intent to harm or conscious indifference to rights of others sufficient to uphold award of exemplary damages.
(n9)Footnote 9. Williams v. Khalaf, 34 Tex. Sup. Ct. J. 133, 802 S.W.2d 651, 658 (Tex. 1990) ; see C.P.R.C. § 16.004(a)(3)-four-year statute of limitation for action on debt; C.P.R.C. § 16.051-four-year residual statute of limitation.
56 of 100 DOCUMENTS
Texas Probate, Estate and Trust Administration
Copyright 2005, Matthew Bender & Company, Inc., a member of the LexisNexis Group.
PART 4 ADMINISTRATIVE MATTERS
CHAPTER 32 CREDITORS' CLAIMS
B NOTICE TO CREDITORS AND FILING OF CLAIMS

2-32 Texas Probate, Estate and Trust Administration § 32.16
§ 32.16 Exceptions to Claim Requirement
[1] In General
[a] Effect of Exemption on Limitations Period
Probate Code Section 298 requires presentment of claims ''for money,'' which has been held to include all existing debts of an estate.n1 However, it has been held that contingent or unliquidated claims for money, such as those that require the intervention of a jury to ascertain the amount, need not be presented to the representative as a prerequisite to suit on those claims.n2 Even if a claim is specifically exempted from the presentment requirement, the creditor is free to submit it to the representative in authenticated form. However, before doing so, the creditor should be aware that an unnecessary presentment may provide some basis for the representative to argue that the limitations period and authentication requirements of Section 298 and 301 apply to the claim.n3
The question of whether an unnecessary presentment will subject the claimant to the requirement that suit be instituted within 90 days after the representative's rejection of the claim has not been clearly resolved by the courts.n4 Prior to the adoption of the Probate Code, the statute governing suits on rejected claims referred only to ''claims for money.'' Accordingly, it was held that an unnecessary presentment did not bind the claimant to the 90-day limitations period.n5
Under the present wording of Probate Code Section 313, suits must be brought within 90 days following the rejection of a ''claim.''n6 The phrase ''for money'' no longer appears. Although it could be argued that the change in statutory wording obligates any one who presents a claim that is rejected to sue within 90 days, the weight of authority indicates a trend against the imposition of the 90-day limitations period to unnecessary presentments. For example, in Lusk v. Mintz, n7 a creditor holding a vendor's lien on real property filed a claim against the guardian and estate of an incompetent as a preferred debt and lien against the land.n8 Although the claim was rejected and suit was filed after the applicable limitations period,n9 the court of appeals held that since the unnecessary presentation and rejection of a claim does not invoke the limitations provision of Section 313 and since the creditor's claim was based on superior legal title and thus did not need to be presented, compliance with the limitation provision was unnecessary.n10 Similarly, in Ullrich v. Estate of Anderson,n11 a court of appeals held that the 90-day limitations period did not apply to a claim by an accountant against an estate, even though the claim had originally been presented to the estate, because the claim was one to which the procedures for presenting claims did not apply.n12 However, in Andrews v. Aldine Independent School District,n12.1 the school district, held a governmental taxing agency by the appellate court, unnecessarily filed a claim with the dependent representative of an estate (rather than simply seek foreclosure) and, when no action was taken within 30 days by the representative, found its claim barred ninety days thereafter. The court also held that the school district's claims for payment of delinquent ad valorem taxes was a claim for money, not a claim in rem.
Page 202 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
If a claim is one that is not required to be presented, such as an unliquidated claim,n13 a contingent claim,n14 or one against the representative arising after the issuance of letters,n15 it must be established by judgment.n16 The claimant must bring suit against the representative in his or her capacity as representative.n17 The suit must be filed before the applicable statute of limitation has barred its prosecution. However, death tolls the limitations period for 12 months or until qualification of a personal representative of the estate, whichever occurs first.n18
[b] Jurisdiction
If an estate is being administered in, or letters testamentary were issued from, a statutory probate court, the suit must be brought in that court rather than a district court, even though the jurisdiction of the two courts is concurrent.n19 If the probate matter was initiated in a court other than a statutory probate court,n20 the claimant may bring suit in that court regardless of the amount in controversy.n21 However, constitutional county courts and county courts at law, when exercising probate jurisdiction, do not have exclusive jurisdiction over suits to establish claims against the estate; the claimant has a choice of forum and may sue in a district or county-level court, depending on the amount in controversy.n22
If the claimant reduces an unliquidated claim to a judgment for money, the judgment must state that it is to be paid in due course of administration.n23 If judgment is rendered by a court other than the one in which the administration is pending, the court should certify the judgment to the court having probate jurisdiction over the estate.n24 The court that exercises probate jurisdiction over the estate would then be empowered to enforce the judgment,n25 which would include (1) entering the claim on the claim docket;n26(2) classifying the claim;n27 and (3) subject to the availability of funds, ensuring payment by the representative.n28
If a claim is established by judgment against an independent executor or administrator, the judgment creditor may pursue execution of the judgment against the decedent's property held by the representative.n29 However, the representative may enjoin execution if the judgment creditor, due to the insolvency of the estate, would gain an unfair advantage over creditors of the same or higher classification.n30
For a discussion of the effect on probate jurisdiction of a claim other than a ''claim for money,'' see [4], below.
[2] Unliquidated Claims
Claims must be presented only if they are sufficiently fixed and definite as to be susceptible to verification by affidavit.n31 Presentment to the personal representative is not required when the claim against the decedent is for uncertain or unliquidated damages.n32
In light of the requirement that the amount of a claim be fixed with some certainty, several classes of claims have been permitted to be established by suit without prior presentment. For example, tort claims do not require presentment.n33 Likewise, damages resulting from the breach of a contract to devise property do not constitute a ''claim for money'' and need not be presented prior to suit.n34 Also, unliquidated damages claims based on warranties made by the deceased need not be presented under Section 298.n35
The difficulty in applying the rule exempting unliquidated claims from the presentment requirement appears primarily in contract cases. The Texas Supreme Court has held that presentment is required if the claim may be reduced to a definite sum on proper data, as opposed to one in which the jury must determine the amount.n36 In Anderson, the Texas Supreme Court held that a claim for services rendered by a physician pursuant to an express or implied contract was a claim for money that must be presented to the representative. The Texas Supreme Court noted that similar claims, such as a those for attorney's services rendered to the decedent without prior agreement as to the amount and any other claims that may be reduced to a specific sum at the time of presentation, must be presented.n37 On the other hand, the court
Page 203 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
noted that a claim that cannot be verified with a reasonable degree of certainty, such as a mere demand for unliquidated damages, damages for breach of contract, for trespass, or for wrongful levy of attachment, need not be presented prior to suit.n38
Decisions involving claims for personal services rendered to a decedent have reached inconsistent results. Some have held that a claim for the care of a decedent must be presented, regardless of whether or not the person providing the care was a professional.n39 One court held that an attorney's claim based on services rendered during the decedent's lifetime could properly have been presented to the representative.n41-42
If the claim is one that could be brought under Rule 185 of the Texas Rules of Civil Procedure, governing suits on accounts,n43 it would be prudent practice also to comply with the requirements of Probate Code Section 298 by presenting the claim to the personal representative.n44 If the claim is rejected, suit on that rejected claim must be filed within 90 days.n45 If a creditor is able to invoke an alternative theory of recovery, his or her claim will still be deemed one ''for money'' that requires presentment since the primary cause of action fixes the status of the demand.n46
[3] Contingent Claims
When a decedent's liability is contingent on the liability of another person, the person to whom the liability is owed need not present his or her claim pursuant to Probate Code Section 298.n47 This exemption from the presentation requirement was developed in cases involving conditional guarantors who could not be sued without the joinder of the principal obligor.n48 If the claimant were required to proceed to judgment against the primary obligor and then present an unsatisfied judgment to the representative of the guarantor's estate, numerous suits and needless delay would result. Thus, the payee is allowed to proceed against the primary obligor and the representative of a deceased guarantor in a court having subject matter jurisdiction of the obligation without first presenting the claim to the representative.n49 When the primary obligor is insolvent, the exemption does not apply and a creditor must present the claim to the representative and follow the procedures set forth in the Probate Code.n50
Although the decisions exempting contingent claims from the presentation requirement have been based on the fact that the guarantor could not be sued without the joinder of the principal, the joinder statutes provide for exceptions to that general rule.n51 A party who is not primarily liable on an instrument may be sued without joinder of the principal obligor when the principal obligor is (1) notoriously insolvent, (2) dead, (3) not a resident of Texas, (4) outside the reach of ordinary process of law, or (5) resident at a location that is unknown and cannot be ascertained by the use of reasonable diligence.n52
If the decedent executed an absolute and unconditional guaranty of payment, the claim against the estate is not contingent and must be presented to the representative for payment and, if rejected, sued on within 90 days after rejection.n53 The joinder statute applies only if the surety or guarantor is not primarily liable.n54 If the guarantor or surety guarantees payment of the obligation in a manner so as to become an absolute guarantor and thus primarily obligated to pay, the holder of the indebtedness may enforce payment against the guarantor without first proceeding against, joining, or showing an excuse for nonjoinder of the maker.n55
Other types of claims may be deemed contingent and not within the presentment requirement. For example, in one case it was held that a claim for indemnity resulting from a breach of warranty by deed was contingent on the warrantee's eviction by one claiming superior title to the property covered by the deed. Thus, the representative of the warrantor's estate could be joined in suit without prior presentation and rejection of the claim.n56
[4] Claims for Property
Since the statutes governing the presentment of claims against a decedent's estate apply to ''claims for money,'' they are generally deemed inapplicable to causes of action for title to, or interests in, real or personal property.n57 For example,
Page 204 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
the Probate Code presentment requirements do not apply to (1) actions for specific performance of a contract to convey property or (2) actions to impose a resulting trust on realty held for the claimant by the decedent.n58
When a claim for property is made against an estate, a court exercising probate jurisdiction will not be deprived of jurisdiction merely because that claim is not a ''claim for money'' governed by the Probate Code.n59 For example, an assertion that a claimant is the true or beneficial owner of specific property included in the inventory of an estate would fall within the probate court's jurisdiction under Probate Code Section 5A as a matter incident to an estate, as either an action for trial of title to land, an action for trial of the right of property, or a matter relating to the settlement, partition, and distribution of estates.n60
One court of appeals has held that a district court had no jurisdiction to hear a suit for equitable title to real property held by the administrator of a decedent's estate since the claim was not one for money and could not form basis for suit on rejected claim.n61 However, that court of appeals did not discuss concurrent jurisdiction under Probate Code Section 5A.n62
[5] Claims Arising After Issuance of Letters
[a] Types of Claims Exempt From Presentment Requirement
Probate Code Section 317(c) exempts from the presentment requirement of Probate Code Section 298 any claim that accrues after the issuance of letters and that is based on some matter for which the representative of the estate contracted.n63 When a representative contracts for anything necessary to an administration of the estate, he or she does so as an agent for the estate and, in that capacity, the representative is totally free to contract for necessary services.n64 Most claims arising after the issuance of letters are for expenses incurred and contracted for by the estate's representative, such as claims for attorney's and accountant's fees.n65 However, Section 317 has been applied to exempt a claim for rentals collected by the representative from property jointly owned by the claimant and the decedent's estate from the presentment requirement of Section 298.n66
For a general discussion of services contracted for in the course of administration, see Ch. 30, Estate Administration.
[b] Satisfaction of Claims
There are two ways to obtain payment of expenses such as attorney's fees for services rendered to a decedent's estate. First, the attorney may follow the general presentment procedures of the Probate Code.n67 Alternatively, the personal representative may include a request for reimbursement in his or her final account.n68
Ordinarily, the person contracting with a representative may proceed against the estate, against the representative in his or her individual capacity, or both. However, a contractual provision limiting the creditor's recourse to the estate will be given effect.n69 If the creditor elects to proceed against the estate, he or she may follow several different procedures, the selection of which will depend on the representative's opinion of the claim. He or she may treat the claim as an administrative expense in a definite sum and file a verified claim for the amount due. That claim will be acted on by the court in the same manner as other claims against the estate.n70 However, a court's action on an expense claim, unlike other claims, may not be a final judgment.n71 The court may retain the power to review the allowance of the expense during its examination of the representative's final account.n72 Alternatively, the representative may include the claim in the final account and seek approval and authority for payment in the order approving that account.n73 In either event, the representative should not pay the claim until it has been approved by the court or established by judgment.n74
Generally, the representative may proceed directly against the estate for the reimbursement of amounts for which he or she contracts.n75 Moreover, if a contract for services does not limit the creditor's right of recovery to the estate, the claimant may proceed against the representative individually.n76 A representative against whom a creditor obtains a
Page 205 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
judgment individually may seek reimbursement for the judgment as an expense of administration under Probate Code Sections 242-244.n77 However, the amount of the reimbursement will not necessarily be measured by the amount agreed on by the representative and creditor in their contract. The representative may bind the estate only for the cost of reasonable and necessary services.n78 Accordingly, the representative may be held personally liable for amounts in excess of those seemed to be reasonable and necessary.n79
The claimant may file suit in any court having jurisdiction over the amount in controversy. However, if the matter is pending in a statutory probate court, the claim should be filed in that court.n80
[6] Claims by Personal Representative
Representatives of decedents' estates who are also creditors of the estates are exempt from the presentment requirements of Probate Code Section 298.n81 If a representative is also a creditor, he or she must file a verified claim with the clerk of the court for entry on the claim docket.n82 The representative must file the claim within six months after he or she qualifies as representative or be barred.n83 However, if the representative is a secured creditor, the failure to file the claim within six months after qualifying will result in treatment of the claim as a preferred lien against property rather than as a bar to the claim.n84
After the representative's claim is entered on the claim docket, it will be acted on by the court in the same manner as other claims.n85 Any interested person who is dissatisfied by the order of the court approving or disapproving the representative's claim may seek review of the order by appeal to a court of civil appeals.n86
For a further discussion of claims involving representatives, see § 32.15.
[7] Claims by Heirs
Anyone with a claim against an estate in his or her capacity as an heir, devisee, or legatee of that estate is exempt from the presentment requirements of Probate Code Section 298.n87 Heirs are those persons, including the surviving spouse, who are entitled under the statutes of descent and distribution to the estate of a decedent who dies intestate.n88 A legatee is any person entitled under a will to receive any gift or devise of real or personal property.n89
For a discussion of the manner in which devisees and heirs obtain payment of their claims on estate property, see Ch. 11, Intestate Succession; Ch. 30, Estate Administration; Ch. 31, Collection, Management, and Distribution of Assets; and Ch. 40, Will Construction.
[8] Set-Off for Financial Institution
A financial institution in which the decedent has deposits at the time of death and to which the decedent owes money is not required to present its claim to the personal representative. Rather, the institution can simply set off its claim against the money in the decedent's accounts. This is true regardless of whether the institution's claim is mature or whether the estate is solvent.n90
Legal Topics:
For related research and practice materials, see the following legal topics: Estate, Gift & Trust LawEstate AdministrationClaims Against EstatesNotice to CreditorsEstate, Gift & Trust LawEstate AdministrationClaims Against EstatesPriority of ClaimsEstate, Gift & Trust LawEstate AdministrationClaims Against EstatesGeneral OverviewEstate, Gift & Trust LawEstate AdministrationClaims Against EstatesTime LimitationsEstate, Gift & Trust LawProbatePersonal RepresentativesClaims By & Against
FOOTNOTES:
Page 206 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
(n1)Footnote 1. See Prob. C. § 298; Anderson v. First Nat. Bank of El Paso, 120 Tex. 313, 38 S.W.2d 768, 769 (1931) . (n2)Footnote 2. Allen v. Denk, 87 S.W.2d 303, 307 (Civ. App.-Austin 1935, no writ) ; see Cross v. Old Republic
Surety Co., 983 S.W.2d 771 (Tex. App.-San Antonio 1998, no pet. h.) ; [2], [3], below.
(n3)Footnote 3. See Prob. C. §§ 298, 301.
(n4)Footnote 4. See, e.g., Pirkle v. Cassity, 104 F. Supp. 318, 321 (E.D. Tex. 1952)-unnecessary presentation to foreign executor was nullity and did not trigger 90-day statute of limitation for suit on rejected claims; Wilder v. Mossler, 583 S.W.2d 664, 667 (Civ. App.-Houston [1st Dist.] 1979, no writ)-though presentment by tort claimant was unnecessary, joining administrator as party to suit within 90 days after administrator's rejection of tort claim was held sufficient to preserve claim, if necessary that claimant do so.
(n5)Footnote 5. See Goldman v. Ramsay, 62 S.W.2d 176, 178 (Civ. App.-Texarkana 1933, dis.) .
(n6)Footnote 6. Prob. C. § 313; Edwards v. Estate of Jones, 1998 Tex. App. LEXIS 6533 (Tex. App.-Dallas 1998) , rev'd and remanded, 1999 Tex. App. LEXIS 1418 (Tex. App.-Dallas 1999) ; In re Estate of Ayala, 19 S.W.3d 477 (Tex. App.-Corpus Christi [13th Dist.] 2000, n.w.h.)-Section 313 of the Texas Probate Code (requiring claimant to institute
suit on rejected claim within 90 days of such rejection) does not bar claim that was filed prematurely.
(n7)Footnote 7. 625 S.W.2d 774, 775-776 (Tex. App.-Houston [14th Dist.] 1981, no writ) .
(n8)Footnote 8. See Prob. C. § 306; see also §§ 32.13[1][b], 32.52.
(n9)Footnote 9. See Prob. C. § 313.
(n10)Footnote 10. Lusk v. Mintz, 625 S.W.2d 774, 775-776 (Tex. App.-Houston [14th Dist.] 1981, no writ) .
(n11)Footnote 11. 740 S.W.2d 481, 485-486 (Tex. App.-Houston [1st Dist.] 1987, no writ) .
(n12)Footnote 12. 740 S.W.2d at 485-486 ; see also In reEstate of Glenn, 2001 Tex. App. LEXIS 2637 (Tex. App.-Corpus Christi [13th Dist.] 2001, petition for review denied July 26, 2001)(unpublished opinion)-Section 313 of the Texas Probate Code (requiring a claimant to file suit within ninety days of the rejection of his claim) does not apply to an independent executor.
(n13)Footnote 12.1. 116 S.W.3d 407 (Tex. App.-Houston [14th Dist.] 2003, pet. denied) .
(n14)Footnote 13. See [2], below.
(n15)Footnote 14. See [3], below.
(n16)Footnote 15. See [5], below.
(n17)Footnote 16. Dumitrov v. Hitt, 601 S.W.2d 472, 473 (Civ. App.-Houston [14th Dist.] 1980, ref. n.r.e.)-court's
order on claim has effect of full and final judgment.
(n18)Footnote 17. See Price v. Estate of Anderson, 18 Tex. Sup. Ct. J. 322, 522 S.W.2d 690, 691 (Tex. 1975) .
(n19)Footnote 18. See C.P.R.C. Art. 16.062.
(n20)Footnote 19. Prob. C. § 5A(b); Beall v. Cooke, 2001 Tex. App. LEXIS 4141 (Tex. App.-Houston [1st Dist.] 2001, no pet. h.) (not designated for publication)-District court in a county also containing statutory probate courts properly denied appellant's motion to appoint a temporary administrator of her husband's estate because the court lacked jurisdiction over probate matters under section 5 of the Texas Probate Code; but see McPherson v. Judge, 592 S.W.2d
Page 207 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
406, 409 n. 4 (Civ. App.-Amarillo 1979, no writ)-noting argument that deprivation of district court's jurisdiction may violate Texas Constitution.
(n21)Footnote 20. See Prob. C. § 3(ii).
(n22)Footnote 21. See English v. Cobb, 593 S.W.2d 674, 675 (Tex. 1979)-allowing representative's suit in county court at law in which estate pending, even though suit was for recovery of money in excess of that court's jurisdictional limit.
(n23)Footnote 22. See Prob. C. § 5A(a); see also McPherson v. Judge, 592 S.W.2d 406, 409-410 (Civ. App.-Amarillo 1979, no writ) .
(n24)Footnote 23. T.R.C.P. 313.
(n25)Footnote 24. See T.R.C.P. 313; see also Baten v. Thornhill, 145 S.W.2d 608, 610 (Civ. App.-Beaumont 1940, ref.)-certifying judgment as to any deficit on indebtedness guaranteed by decedent.
(n26)Footnote 25. T.R.C.P. 313.
(n27)Footnote 26. See Prob. C. § 14; see also § 32.31.
(n28)Footnote 27. See Prob. C. § 322; see also § 32.41[1][b].
(n29)Footnote 28. See Prob. C. § 320; see also Manning v. Mayes, 79 Tex. 653, 15 S.W. 638, 638 (1891)­judgment for costs certified to county court for classification; § 32.43.
(n30)Footnote 29. Prob. C. § 147; T.R.C.P. 313.
(n31)Footnote 30. See Farmers' & Merchants' Nat'l Bank v. Bell, 71 S.W. 570, 572 (Civ. App. 1902, ref.) .
(n32)Footnote 31. See Prob. C. § 298; Hume v. Perry, 136 S.W. 594, 596 (Civ. App. 1911, dis.)-presentment not required when decedent was co-guarantor with surviving spouse on series of promissory notes that were due in seven installments and as to which primary obligor had defaulted; see also Anderson v. First Nat'l Bank of El Paso, 120 Tex. 313, 38 S.W.2d 768, 769-770 (1931)-presentment required of claim for cost of medical services.
(n33)Footnote 32. Connelly v. Paul, 731 S.W.2d 657, 660 (Tex. App.-Houston [1st Dist.] 1987, ref. n.r.e.)-no presentment requirement if damages become liquidated only after suit has been filed; see Cross v. Old Republic Surety Co., 983 S.W.2d 771 (Tex. App.-San Antonio 1998, no pet. h.) .
(n34)Footnote 33. Allen v. Denk, 87 S.W.2d 303, 307 (Civ. App.-Austin 1935, no writ) ; Wilder v. Mossler, 583 S.W.2d 664, 667 (Civ. App.-Houston [1st Dist.] 1979, no writ) .
(n35)Footnote 34. See Moore v. Rice, 80 S.W.2d 451, 452 (Civ. App.-Eastland 1935) , dis. 110 S.W.2d 973 ).
(n36)Footnote 35. Donaldson v. Taylor, 713 S.W.2d 716, 718 (Tex. App.-Beaumont 1986, no writ) .
(n37)Footnote 36. Anderson v. First Nat'l Bank of El Paso, 120 Tex. 313, 38 S.W.2d 768, 769-770 (1931) .
(n38)Footnote 37. 38 S.W.2d at 770 .
(n39)Footnote 38. 38 S.W.2d at 770 .
(n40)Footnote 39. See, e.g., Poole v. Rutherford, 199 S.W.2d 665, 667 (Civ. App.-Fort Worth 1947, ref. n.r.e.)­daughter of decedent required to present claim for services rendered in caring for deceased mother; Jaye v. Wheat, 130
Page 208 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
S.W.2d 1081, 1084 (Civ. App.-Eastland 1939, no writ)-in action against siblings, daughter of decedent required to allege facts showing presentment of claim for care services rendered during decedent's life.
(n41)Footnote 41-42. [Reserved].
(n42)Footnote 43. See T.R.C.P. 185; see also § 32.12C.
(n43)Footnote 44. See Prob. C. § 298(a).
(n44)Footnote 45. See Prob. C. § 313; In re Estate of Ayala, 19 S.W.3d 477 (Tex. App.-Corpus Christi [13th Dist.] 2000, n.w.h.)-Section 313 of the Texas Probate Code (requiring claimant to institute suit on rejected claim within 90 days of such rejection) does not bar claim that was filed prematurely; see also § 32.33.
(n45)Footnote 46. Anderson v. First Nat'l Bank of El Paso, 120 Tex. 313, 38 S.W.2d 768, 769 (1931)-quantum meruit theory of recovery asserted in alternative did not relieve creditor from presentment requirement.
(n46)Footnote 47. Baten v. Thornhill, 145 S.W.2d 608, 610-611 (Civ. App.-Beaumont 1940, ref.) ; see Prob. C. §
298. (n47)Footnote 48. See, e.g., Baten v. Thornhill, 145 S.W.2d 608, 610-611 (Civ. App.-Beaumont 1940, ref.) ; Johnson v. First Mortg. Loan Co. of San Angelo, 135 S.W.2d 806, 808-811 (Civ. App.-Austin 1939, no writ) ; Hume v.
Perry, 136 S.W. 594, 597-599 (Civ. App. 1911, dis.) .
(n48)Footnote 49. Baten v. Thornhill, 145 S.W.2d 608, 610-611 (Civ. App.-Beaumont 1940, ref.) .
(n49)Footnote 50. Jones v. Wynne, 133 Tex. 436, 129 S.W.2d 279, 285 (Comm. App., Section B 1939, opinion
adopted) .
(n50)Footnote 51. See C.P.R.C. § 17.001; T.R.C.P. 31.
(n51)Footnote 52. C.P.R.C. § 17.001; see TEXAS LITIGATION GUIDE, ch. 80, Joinder of Third Parties .
(n52)Footnote 53. See Prob. C. § 323; see also Prob. C. § 313; In re Estate of Ayala, 19 S.W.3d 477 (Tex.
App.-Corpus Christi [13th Dist.] 2000, n.w.h.)-Section 313 of the Texas Probate Code (requiring claimant to institute suit on rejected claim within 90 days of such rejection) does not bar claim that was filed prematurely.
(n53)Footnote 54. C.P.R.C. § 17.001; T.R.C.P. 31.
(n54)Footnote 55. Ferguson v. McCarrell, 582 S.W.2d 539, 542 (Civ. App.-Austin 1979) , ref. n.r.e. 588 S.W.2d 895 (1979) ; see National Guaranty Loan & Trust Co. v. Fly, 29 Tex. Civ. App. 533, 69 S.W. 231, 232 (Civ. App. 1902, no writ) .
(n55)Footnote 56. See Moses v. Chapman, 280 S.W. 911, 914 (Civ. App. 1926, no writ) . (n56)Footnote 57. See Prob. C. § 298(a); but see Prob. C. § 306-secured claimant required to present claims as either matured secured claims or preferred liens against specific property; see also § 32.13. (n57)Footnote 58. See Whitehead v. Teague, 483 S.W.2d 378, 379-380 (Civ. App.-Tyler 1972, no writ) ; cf. Hays
v. Nabours, 193 S.W.2d 893, 895-896 (Civ. App.-Eastland 1946, ref. n.r.e.) . (n58)Footnote 59. See Prob. C. § 298. (n59)Footnote 60. Prob. C. § 5A; see English v. Cobb, 593 S.W.2d 674, 675-676 (Tex. 1979)-determination of
decedent's right to probate assets falls within scope of being action incident to estate so that county court at law had
Page 209 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
jurisdiction to determine ownership of bank account in excess of its jurisdictional limit.
(n60)Footnote 61. Whitehead v. Teague, 483 S.W.2d 378, 379-380 (Civ. App.-Tyler 1972, no writ) .
(n61)Footnote 62. See Prob. C. § 5A.
(n62)Footnote 63. Prob. C. § 317; see Prob. C. § 298.
(n63)Footnote 64. Corpus Christi Bank & Trust v. Cross, 586 S.W.2d 664, 669 (Civ. App.-Corpus Christi 1979,
ref. n.r.e.)-accountant's services and fees held reasonable and necessary. (n64)Footnote 65. See, e.g., El Paso Nat. Bank v. Leeper, 538 S.W.2d 803, 806-807 (Civ. App.-El Paso 1976, ref.
n.r.e.) ; Kitchens v. Culhane, 398 S.W.2d 165, 166 (Civ. App.-San Antonio 1965, ref. n.r.e.) .
(n65)Footnote 66. See Hunter v. Cook, 375 S.W.2d 574, 576 (Civ. App.-Houston 1964, dis.) .
(n66)Footnote 67. Prob. C. § 294 et seq.; Weathersby v. Makris, No. 01-98-00145-CV, 1998 Tex. App. LEXIS 7452 (Tex. App.-Houston [1st Dist.] 1998 no pet. h.)-attorney for the estate making a request for payment from the estate under Section 242 of the Texas Probate Codeis not required to make a demand against the personal representative first before filing the claim with the court.
(n67)Footnote 68. Dumitrov. v. Hitt, 601 S.W.2d 472, 473 (Civ. App.-Houston [14th Dist.] 1980, ref. n.r.e.) ; see Armstrong v. Stallworth, 613 S.W.2d 1, 2-3 (Civ. App.-El Paso 1979, no writ)-attorney's fees are representative's expenses of administration.
(n68)Footnote 69. See Corpus Christi Bank & Trust v. Cross, 586 S.W.2d 664, 669-670 (Civ. App.-Corpus Christi 1979, ref. n.r.e.)-unless otherwise stipulated, it is assumed that personal representative in contracting with third party for professional services did so in his or her individual capacity.
(n69)Footnote 70. Prob. C. § 244; see § 32.40.
(n70)Footnote 71. See Prob. C. § 312(d); Richardson v. Kennedy, 74 Tex. 507, 12 S.W. 219, 220 (1889) .
(n71)Footnote 72. See Richardson v. Kennedy, 74 Tex. 507, 12 S.W. 219, 220 (1889) .
(n72)Footnote 73. See Thomas' Estate v. Fullen, 172 S.W.2d 118, 119 (Civ. App.-Beaumont 1943, ref. w.o.m.) .
(n73)Footnote 74. Prob. C. § 319; see § 32.40-approval required before payment.
(n74)Footnote 75. See Prob. C. § 317(c); see also El Paso Nat. Bank v. Leeper, 538 S.W.2d 803, 806-807 (Civ.
App.-El Paso 1976, ref. n.r.e.)-attorney's submission of unverified statement for services with clerk of court held sufficient to support allowance of fees.
(n75)Footnote 76. See Kitchens v. Culhane, 398 S.W.2d 165, 166 (Civ. App.-San Antonio 1965, ref. n.r.e.) .
(n76)Footnote 77. Prob. C. §§ 242-244. Note that under § 244 expense charges should be made in writing, showing each item of expense, date of expense, and must be verified by affidavit and entered on claim docket; see Ch. 31, Collection, Management, and Distribution of Assets.
(n77)Footnote 78. See Corpus Christi Bank & Trust v. Cross, 586 S.W.2d 664, 669 (Civ. App.-Corpus Christi 1979, ref. n.r.e.) .
(n78)Footnote 79. Corpus Christi Bank & Trust v. Cross, 586 S.W.2d 664, 669-670 (Civ. App.-Corpus Christi 1979, ref. n.r.e.) .
Page 210 2-32 Texas Probate, Estate and Trust Administration § 32.16 1891 Tex. LEXIS 1161, ***16
(n79)Footnote 80. See Prob. C. § 5A(b).
(n80)Footnote 81. Prob. C. § 317(a); see Prob. C. § 298.
(n81)Footnote 82. Prob. C. § 317(a).
(n82)Footnote 83. Prob. C. § 317(a).
(n83)Footnote 84. See Prob. C. § 306(b); see also § 32.13.
(n84)Footnote 85. Prob. C. §§ 312, 317(b); see § 32.40.
(n85)Footnote 86. Prob. C. §§ 312(e), 317(b); see Ch. 62, Appeals of Probate Proceedings.
(n86)Footnote 87. Prob. C. § 317(c); see Prob. C. § 298; but see Furr v. Young, 578 S.W.2d 532, 536 (Civ.
App.-Fort Worth 1979, no writ)-claim by heir for value of property wrongfully conveyed by representative held to have been barred and to have required presentment.
(n87)Footnote 88. Prob. C. § 3(o); see Ch. 11, Intestate Succession.
(n88)Footnote 89. Prob. C. § 3(s); see also Prob. C. § 3(h), (i)-term ''devisee'' includes legatees.
(n89)Footnote 90. Bandy v. First State Bank, Overton, Tex., 35 Tex. Sup. Ct. J. 843, 835 S.W.2d 609, 617-622 (Tex. 1992) .

Hughes v St. David's Support Corporation - Texas COA case - Partnership, Trustee, Beneficiary, Breach of Fiduciary Duty

944 S.W.2d 423, *; 1997 Tex. App. LEXIS 1053, **

Alfred D. Hughes; J. Scott Gregson; L. Michael O'Neal; Brenda Hughes Nelson, as Trustee for the Lance R. Hughes Management Trust; and Lance R. Hughes, as Trustee for the Brenda Hughes Nelson Management Trust, Appellants
v.
St. David's Support Corporation, Appellee

NO. 03-96-00197-CV
COURT OF APPEALS OF TEXAS, THIRD DISTRICT, AUSTIN
944 S.W.2d 423; 1997 Tex. App. LEXIS 1053
March 6, 1997, Filed
SUBSEQUENT HISTORY: [**1] As Corrected March 20, 1997. Appellee's Motion for Rehearing Overruled May 22, 1997, Reported at: 1997 Tex. App. LEXIS 2882. Motion for Rehearing of
Application for Writ of Error Overruled February 26, 1998.
PRIOR HISTORY: FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT. NO. 94-05560, HONORABLE MARY PEARL WILLIAMS, JUDGE PRESIDING.
DISPOSITION: Reversed and Remanded.



PROCEDURAL POSTURE: Appellants, individuals and trustees, sought review of a summary judgment of the District Court of Travis County, 98th Judicial District (Texas), granted in favor of
appellee corporation that held that appellee as a general partner did not have to give notice to appellants before the sale of operating partnerships' assets. Appellants owned a small part of the
operating partnerships, and appellants had a royalty interest in the partnerships.

OVERVIEW: Appellee corporation was a general partner of operating partnerships in a psychiatric center and a rehabilitation center. Physicians were limited partners of these partnerships and the main owners. Appellants, individuals and trustees, owned a very small part of the operating partnerships and had a royalty interest in them. Appellee sold the operating partnerships' assets and dissolved the partnerships. Appellee did not give appellants any notice of the sale. Appellants sued for breach of fiduciary duty, and the trial court granted summary judgment to appellee. Appellants sought review. The court reversed and remanded for a trial. The standard for reviewing a summary judgment was whether or not the moving party met its burden of showing that no genuine issue of material fact existed and that it was entitled to judgment as a matter of law. The court held that a general partner owed a fiduciary duty of notice and full disclosure to its limited partners when it sold assets under its control. The court held further that a limited partner that held a royalty interest was entitled to notice before the general partner sold the underlying assets that produced the royalty interest.

OUTCOME: The court reversed the trial court's summary judgment and remanded the case for a trial on the merits. The court found that appellee corporation owed appellants, individuals and
trustees, a fiduciary partnership duty. The court found further that appellee breached that duty by failing to give appellants prior notice of the sale of the operating partnerships' assets.

CORE TERMS: partnership, partner, general partner, fiduciary duty, summary judgment, owe, partnership assets, royalty, writ denied, owed, dissolution, notice, material fact, full disclosure,
beneficiaries', partnership interests, prior notice, entitled to notice, fiduciary, ref'd, duty to notify, oral argument, fraud claim, ownership interest, rehabilitation, infinitesimal, psychiatric,
nonprofit, financing, affiliates

LexisNexis® Headnotes
Civil Procedure > Summary Judgment > Appellate Review > General Overview
Civil Procedure > Summary Judgment > Motions for Summary Judgment > General Overview
Civil Procedure > Summary Judgment > Standards > General Overview
HN1 In reviewing the trial court's granting of a motion for summary judgment, an appellate court must determine whether or not the moving party met its burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. In deciding whether or not a moving party met this burden, an appellate court accepts as true all evidence favorable to the nonmoving a party and indulges every reasonable inference and resolves every doubt in its favor. A sued party moving for summary judgment has the burden of disproving at least one essential element of each of the suing party's causes of action. More Like This Headnote

Business & Corporate Law > Limited Partnerships > Management Duties & Liabilities
Estate, Gift & Trust Law > Trusts > Trustees > General Overview
Governments > Fiduciary Responsibilities
HN2 Partners are charged with a fiduciary duty. Managing partners owe their copartners the highest fiduciary duty recognized in the law. Furthermore, in a limited partnership, the
general partner stands in the same fiduciary capacity to the limited partners as a trustee stands to the beneficiaries of a trust.

More Like This Headnote
Business & Corporate Law > Limited Partnerships > Management Duties & Liabilities
Estate, Gift & Trust Law > Trusts > Trustees > General Overview
Governments > Fiduciary Responsibilities
HN3 Among the duties that a partner owes its co-partners is the duty of full disclosure of all matters affecting the partnership. In a limited partnership, the general partner owes the
same duty of full disclosure to the limited partners. More Like This Headnote

Business & Corporate Law > Limited Partnerships > General Overview
HN4 A limited partner holding a royalty interest is certainly entitled to notice before the general partner sells the underlying assets that generate the royalty interest. More Like This Headnote




COUNSEL: For APPELLANT: Charles M. Craig, Gray & Becker, P.C., Austin, TX.
For APPELLEE: Mr. Scott R. Kidd, Brown, McCarroll & Oaks Hartline, Austin, TX.

JUDGES: Before Justices Powers, Kidd and B. A. Smith

OPINION BY: Mack Kidd

OPINION
[*424] This appeal presents us with the question of whether a general partner owes a fiduciary duty of notice to its limited partners when it sells assets under its control. Because we
conclude that such a duty exists, we will reverse the trial court's summary judgment and remand the cause for a trial on the merits.

BACKGROUND
The St. David's Health Care System, Inc., (the "System") is a nonprofit corporation that operates St. David's Medical Center in Austin, a complex that includes St. David's Hospital. The System is the sole shareholder of appellee, St. David's [**2] Support Corporation ("St. David's"), another nonprofit corporation. In the early 1980's, the Board of Trustees of the System began considering an expansion of the hospital's facilities and services , known as the East Campus Project. Included in this project were plans for the construction of two new hospitals--a psychiatric hospital and a nursing and rehabilitation hospital.

Upon learning of the East Campus project, Alfred Hughes approached the St. David's System proposing to arrange financing for the construction and operation of the new East Campus facilities.

Under his proposal, Hughes and his affiliates would form (1) a master limited partnership, interests of which would be sold to the public, and (2) operating partnerships, interests of which would be sold to physicians. The master partnership would fund the construction of the East Campus facilities and then lease them to the operating partnerships, which would actually operate the two East Campus hospitals.

In 1986, the System's Board of Trustees accepted Hughes's proposal, and Hughes began implementing it. By September of 1987, however, the System had become dissatisfied with Hughes's financing efforts. Therefore, it decided [**3] to take over the development of the East Campus Project. Although the System retained Hughes's proposed organizational structure of master and operating partnerships, it financed the construction of the East Campus facilities through the sale of bonds. To compensate Hughes for his endeavors, the System paid Hughes $ 425,000. As additional compensation, it gave Hughes and his affiliates (the "Hughes appellants") what it described at oral argument as a "royalty interest" in the operating partnerships of the two new East
Campus hospitals. We find this description fitting.

The Hughes appellants obtained this "royalty interest" through the creation of an intricate series of interlocking partnerships. The main controlling partnership was called St. David's East Campus,
Ltd. ("East Campus, Ltd."). The Hughes appellants owned forty-nine percent of this partnership and were limited partners; conversely, St. David's owned fifty-one percent of the partnership
and served as its general partner.

The two East Campus hospitals were each, in turn, operated by limited partnerships--St. David's Psychiatric Center, Ltd., and St. David's Rehabilitation and Nursing Center, Ltd. (collectively the
"operating [**4] partnerships"). Physicians were to be the limited partners of both of these partnerships. 1 East Campus, Ltd., served as general partner of the operating partnerships and
retained a one percent interest in each of them. Thus, the Hughes appellants owned an infinitesimal part--less than one-half of one percent--but a part nonetheless, of the operating partnerships.

FOOTNOTES
1 St. David's could not raise enough capital to operate the hospitals by selling to physicians; therefore, the System also purchased limited partnership interests in the operating partnerships.

In 1991, a problem arose concerning the operation of the two East Campus hospitals. New Medicare regulations restricted physicians' ability to participate in entities that own hospital facilities to which those physicians refer patients. St. David's, as general partner of East Campus, Ltd., determined [*425] that the operating partnerships were potentially in violation of these regulations 2 and devised a solution to this problem: it would sell [**5] all operating partnership assets and then dissolve both operating partnerships.

FOOTNOTES
2 Any controversy as to whether this conclusion was correct plays no part of this appeal, and no party contends St. David's reached its conclusion out of ulterior motives.

St. David's discussed this solution in a series of meetings with the physician limited partners of the operating partnerships and decided to follow this course of action. It is undisputed in the record, however, that St. David's did not give the Hughes appellants notice of the impending sale or dissolutions. St. David's candidly admitted at oral argument that the reason it did not give the Hughes appellants prior notice was because it was concerned they might impede or possibly stop the sale and dissolution of operating partnerships. St. David's did not want anything to interfere with this sale because it was convinced that continuing to operate the hospitals with physician partners was a violation of Medicare regulations.

From the record, it appears St. David's [**6] did not hold the assets out for public bid; instead, it bought the assets itself through private sale. Following the sale, St. David's dissolved the
operating partnerships. It then dissolved the master partnership, East Campus, Ltd., and paid the Hughes appellants $ 19,765, which comprised their approximate one-half of one percent share
of the sale proceeds.

The Hughes appellants were of the opinion that St. David's should have notified them of the sale and dissolution and given them an opportunity to participate in the sale. Accordingly, they sued
St. David's for breach of fiduciary duty. 3 St. David's claimed it was not required to give notice and, therefore, breached no duty. Both parties moved for summary judgment, and the trial court's
final judgment granted St. David's motion. The Hughes appellants bring this appeal, challenging the trial court's summary judgment in seven points of error.

FOOTNOTES
3 The Hughes appellants also brought claims against St. David's for fraud, breach of contract, conversion, negligence, and declaratory relief. All of these claims except the fraud claim were
non-suited pursuant to a Rule 11 agreement and are not part of this appeal. We do not address the Hughes appellants' fraud claim because the fiduciary duty issue is dispositive.

[**7] STANDARD OF REVIEW

HN1 In reviewing the trial court's grant of St. David's motion for summary judgment, we must determine whether St. David's met its burden of showing that no genuine issue of material fact
exists and that it is entitled to judgment as a matter of law. In deciding whether St. David's met this burden, we accept as true all evidence favorable to the Hughes appellants and indulge every
reasonable inference and resolve every doubt in their favor. See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). St. David's, as a defendant moving for summary
judgment, has the burden of disproving at least one essential element of each of the Hughes appellants' causes of action. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991); Texas
Dep't of Transp. v. Shaw, 847 S.W.2d 618, 620 (Tex. App.--San Antonio 1992, writ denied); see also Rose v. Odiorne, 795 S.W.2d 210, 213 (Tex. App.--Austin 1990, writ denied).

DISCUSSION
The touchstone issue in this appeal is whether St. David's owed the Hughes appellants a fiduciary duty that would have included a duty to notify them of the proposed sale of the operating
partnerships' [**8] assets. We conclude it did.

HN2 It is well established that partners are charged with a fiduciary duty. See Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 264-65 (Tex. 1951); Bohatch v. Butler & Binion, 905 S.W.2d 597, 602 (Tex. App.--Houston [14th Dist.] 1995, writ denied). Managing partners owe their copartners the highest fiduciary duty recognized in the law. Huffington v. Upchurch, 532 S.W.2d 576, 579 (Tex. 1976); Crenshaw v. Swenson, 611 S.W.2d 886, 890 (Tex. Civ. App.--Austin 1980, writ ref'd n.r.e.). Furthermore, in a limited partnership, the general partner stands in the same fiduciary capacity to the limited [*426] partners as a trustee stands to the beneficiaries of a trust. Crenshaw, 611 S.W.2d at 890 (citing Watson v. Limited Partners of WCKT, Ltd., 570 S.W.2d 179 (Tex. Civ. App.--Austin 1978, writ ref'd n.r.e)). Based on this authority, it is clear St. David's, the general partner of East Campus, Ltd., owed the Hughes appellants, limited partners of East Campus, Ltd., a fiduciary duty.

St. David's contends, however, that even if it owed the Hughes appellants a fiduciary duty, it had no duty to notify them of the asset sale because [**9] they were limited partners in East
Campus, Ltd., and their ownership interest in the operating partnerships was infinitesimal. While we agree that the Hughes appellants' ownership interest was small, we conclude that they were
at least entitled to notice before the operating partnership assets were sold.

HN3 Among the duties that a partner owes its co-partners is the duty of "full disclosure of all matters affecting the partnership." Hawthorne v. Guenther, 917 S.W.2d 924, 934 (Tex. App.--Beaumont 1996, writ denied); Bohatch, 905 S.W.2d at 602. In a limited partnership, the general partner owes the same duty of full disclosure to the limited partners. Cf. Huie v. DeShazo, 922 S.W.2d 920, 923 (Tex. 1996) ("Trustees and executors owe beneficiaries 'a fiduciary duty of full disclosure of all material facts known to them that might affect (the beneficiaries') rights.'")(quoting Montgomery v. Kennedy, 669 S.W.2d 309, 313 (Tex. 1984)). Accordingly, St. David's as general partner was required to disclose all material facts affecting East Campus, Ltd., to itslimited partners, the Hughes appellants.

As noted above, the Hughes appellants' interest in the operating partnerships [**10] was similar to a royalty interest. We believe this analogy is significant because HN4 a limited partner
holding a royalty interest is certainly entitled to notice before the general partner sells the underlying assets that generate the royalty interest.

We also believe that it is highly significant that the Hughes appellants were the only party involved in the sale and dissolutions that did not receive prior notice. Even the limited partners of the
operating partnerships were given such notice. Further, all partnerships involved in the sale of operating partnership assets, including East Campus, Ltd., executed the sale documents. The
Hughes appellants, however, did not sign any of these documents. St. David's argues that, as general partner, it was empowered to execute these documents on behalf of East Campus, Ltd.

Unquestionably, St. David's did have this power. However, based upon the foregoing authority and discussion, we hold that the Hughes appellants were entitled to notice before St. David's
exercised this power.

CONCLUSION
Because St. David's owed the Hughes appellants a fiduciary duty and because it breached that duty by failing to give them prior notice of the [**11] sale of the operating partnerships' assets,
we reverse the trial court's summary judgment and remand the cause to the district court for a trial on the merits.
Mack Kidd, Justice
Before Justices Powers, Kidd and B. A. Smith
Reversed and Remanded
Filed: March 6, 1997

COTTEN v. COTTEN - Texas Case - ( Undue Influence, Family Limited Partnership, Forged Deed)

CLICK HERE for HTML version

In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-04-01177-CV
............................

CAUSE NO. 68-2694-P2(B)

NEEL COTTEN, INDIVIDUALLY AND AS BENEFICIARY OF THE

DENNIS M. COTTEN TRUST CREATED UNDER THE LAST WILL AND

TESTAMENT OF DENNIS M. COTTEN, DECEASED, 

IN DALLAS COUNTY, TEXAS, Appellant

V.

GEORGE F. COTTEN, INDIVIDUALLY AND AS GENERAL PARTNER IN THE COTTEN FAMILY LIMITED PARTNERSHIP, AND GEORGE F. COTTEN, INDEPENDENTLY, EXECUTOR OF THE ESTATE OF FRANCES M. COTTEN, DECEASED, CAUSE NO. 01-4441-P, Appellee

.............................................................

On Appeal from the County Probate Court
Dallas County, Texas
Trial Court Cause No. 01-4441-P(A)
.............................................................

OPINION

Before Justices Morris, Lang, and Mazzant

Opinion By Justice Morris

This case involves a dispute between two brothers over family assets. Neel Cotten brought this suit against his brother George F. Cotten, alleging George applied undue influence over their late mother Frances Cotton when she executed her final will and living trust, created the Cotten Family Limited Partnership, and conveyed substantial family assets into the partnership. He also alleged his mother conveyed properties to the partnership based on a forged warranty deed from her late husband. The trial court granted summary judgment in favor of George dismissing Neel's claims. We affirm the trial court's judgment.
I.
Dennis Cotten, the father of Neel and George and the husband of Frances, died on October 17, 1968. Approximately one month earlier, a law firm had prepared a warranty deed in Dennis's name, making an inter vivos gift to Frances of his one-half community-property interest in three tracts of land. The deed was notarized and filed of record on October 24, 1968.
Before her death in 2001, Frances Cotten met with an attorney in 1994 to draft a living trust, her final will, and the Cotten Family Limited Partnership. After Frances's death, Neel filed suit contesting the validity of her will. George filed a motion for summary judgment in the case. He requested that the probate court grant summary judgment on the issues of whether Frances was of sound mind, had testamentary capacity, and was free from undue influence and fraud, and that the will was properly attested to and executed. On July 10, 2002, granting George's motion in part, the probate court concluded that Frances was of sound mind at the time of the execution of her will and there was no fraud with respect to the execution of the will. In September 2002, Neel and George settled the case and agreed to the probate of the will. In 2004, Neel filed this suit, alleging George exercised undue influence over their mother when she executed the family limited partnership and her will and trust. He further alleged his mother had conveyed property to the limited partnership based on a void, forged warranty deed from his father. George responded by filing a traditional summary judgment motion. The trial court granted George's motion for summary judgment. Neel then brought this appeal.
II.
In Neel's first issue on appeal, he contends the trial court erred in granting George's motion for summary judgment. He contends there were genuine issues of material fact about whether George exerted undue influence over Frances at the time she executed her will and created the trust and family limited partnership. We conduct a de novo review of a trial court's summary judgment. Foreness v. Hexamer, 971 S.W.2d 525, 527 (Tex. App.-Dallas 1997, pet denied). To obtain summary judgment, George had the burden to show no genuine issue of material fact existed and he was entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex. 1972).
A will may be set aside for undue influence if a contestant proves: (1) the existence and exertion of an influence; (2) the effective operation of such an influence that the mind of the testator was subverted or overpowered at the time of the will's execution; and (3) the execution of a will that the testator would not have executed but for that influence. Holcomb v. Holcomb, 803 S.W.2d 411, 414 (Tex. App.-Dallas 1991, writ denied) (citing Rothermel v. Duncan, 369 S.W.2d 917 (Tex.1963)). The exertion of undue influence cannot be inferred by opportunity alone. There must be some evidence to show that the influence was not only present, but in fact exerted with respect to the making of the testament itself. Although evidence of age and the common maladies of age may be considered as establishing the testator's physical incapacity to resist or the susceptibility of her mind to an influence exerted, such evidence does not establish that her mind was in fact subverted or overpowered at the time of the execution of the instrument in question. See Rothermel, 369 S.W.2d at 923.
In support of his motion for summary judgment, George presented deposition testimony of the attorney who helped Frances draft the Cotten Family Limited Partnership and her will and trust. The attorney testified that when he met with her in 1994 to set up the transactions, she was an active eighty-four-year-old woman who had survived a stroke well and had just returned from a trip to Alaska. The attorney noted that Frances was "very engaged" during the several hours he was involved with her. The attorney stated she had the capacity to understand the general nature and extent of her property and what she was doing in the various transactions.
Frances's treating physician also testified by deposition that, in 1994, she had the ability to understand her business and finances, had full custody of her mental facilities, had the ability to understand her acts for the making of a will, had the capacity to understand the general nature and extent of her various holdings and property, and had memory sufficient to recollect the elements of the business of execution of wills and trusts and to hold that memory long enough to apply the elements to the creation of her will and trust. See Footnote 1 In 2002, the probate court in this case concluded that Frances was of sound mind at the time of the execution of the will. At the same time, the probate court concluded there was no fraud with respect to the will's execution.
Neel argues on appeal that George had a "fiduciary relationship" with his mother and that relationship created a fact issue on undue influence. More specifically, he contends that because George's adult daughter lived with Frances and attended to her needs, there was a fiduciary relationship between George and the mother. Appellant cites no authority, and we have found none, for the proposition that an adult granddaughter's living with and caring for her grandmother creates a fiduciary relationship between the grandmother and the granddaughter's father. Because Neel failed to show the existence of a fiduciary relationship, he failed to raise a fact issue based on such a relationship.
Neel also argues that because a "greatly disproportionate disposition of the Cotten family properties favor[ed]" George over him, the "unnatural disposition" of the family properties created a fact issue about whether George had exercised undue influence over his mother when she executed the complained-of documents. But a person of sound mind has a legal right to dispose of her property as she wishes. Only where "all reasonable explanation in affection for the devise is lacking" can it be said that the disposition was unnatural. Id. at 923-24. In this case, the evidence showed that Neel's relationship with his mother had been strained for years before the execution of her will and the execution of the trust and family partnership. Thus, the disproportionate disposition of the property did not create a fact issue about whether George had exercised undue influence over Frances. We conclude George established, as a matter of law, that Frances's execution of her will and her creation of the trust and family partnership was not the result of undue influence. The trial court did not err in granting summary judgment on this matter. We resolve Neel's first issue against him.
In Neel's next issue, he contends the trial court erred in granting George's motion for summary judgment on the issue of the allegedly forged deed. Neel argues that his father's signature on the 1968 warranty deed is a forgery. He contends that, due to the forgery, his mother's attempt to convey the property that was the subject of the deed to the family limited partnership is void. He further contends that he and George, therefore, are equal owners of the property in question, as equal beneficiaries of the Dennis M. Cotten Trust.
Neel filed an affidavit in support of his response to George's motion for summary judgment in this case. In the affidavit, he stated that his mother had forged his father's signature on the deed and the forgery had been confirmed by a qualified handwriting expert. Neel admitted in his affidavit, however, that he was not present at the execution of the deed. And we note that the record before us does not reveal the expert referred to by Neel testified by affidavit or otherwise. At the hearing on the motion for summary judgment, George moved to strike Neel's statements about the forgery, and the trial court granted George's motion. At that point there was no evidence showing the deed was forged, and the trial court did not err in granting summary judgment on the forgery issue. We resolve Neel's second issue against him.
In a related issue, Neel complains the trial court erred by hearing and granting George's motion to strike Neel's affidavit. Neel contends the trial court abused its discretion because it did not require George to serve him with a "motion and notice of hearing on the motion" at least three days before the hearing on George's summary judgment motion, when the motion to strike was filed, as required by the Texas Rules of Civil Procedure. See Tex. R. Civ. P. 21. Neel's statements in his affidavit that his mother had forged his father's signature and an unidentified "expert" had confirmed the forgery were conclusory and therefore not proper summary judgment evidence. See Thompson v. Curtis, 127 S.W.3d 446, 450-51 (Tex. App.-Dallas 2004, no pet.). We conclude the trial court did not abuse its discretion in granting the motion to strike. Furthermore, our record reveals no complaint or objection was lodged with the trial court about hearing the motion to strike. Neel merely argues in his appellate brief that the "untimely notice was called to the trial court's attention." Absent an objection and an adverse ruling in our record, any error for failing to follow rule 21 is not preserved for our review. See Tex. R. App. P. 33.1(a). We resolve Neel's third issue against him.
Neel complains in his fourth issue about the evidence George used to support his motion for summary judgment. He argues, in part, that the trial court erroneously considered the affidavit of his mother's physician. Neel asserts the affidavit should not have been considered as summary judgment evidence because "the doctor's treatment reports . . . are not complete." This complaint was not raised in the trial court. Because he failed to object, the claimed error is not preserved for our review. See id.
Neel also has not preserved his complaint that the trial court erred "in considering as summary judgment proof the copies of unsworn and uncertified excerpts from depositions" attached to George's motion for summary judgment. He alleges on appeal that the excerpts were not properly authenticated. But in his opposition to George's motion for summary judgment, Neel objected only on the basis that George had failed to show the deponents were unavailable for testimony in the case. His appellate complaint does not comport with his objection to the trial court. The claimed error is not preserved for our review. See id.
Finally, Neel argues that "the other exhibits attached to the motion are not competent summary judgment evidence, since the exhibits are not self-proving and are not attached to an affidavit that proves the exhibits to be true." First, Neel's argument ignores the effect of Texas Rule of Civil Procedure 166a(d), which states,

[d]iscovery products not on file with the clerk may be used as summary judgment evidence if copies of the material, appendices containing the evidence, or a notice containing specific references to the discovery or specific references to other instruments, are filed and served on all parties together with a statement of intent to use the specified discovery as summary judgment proofs . . . at least twenty-one days before the hearing if such proofs are to be used to support the summary judgment . . . .

Tex. R. Civ. P. 166a(d). The supreme court has held that this rule "supercedes any authentication requirement." McConathy v. McConathy, 869 S.W.2d 341, 342 (Tex. 1994). To the extent the "exhibits" are discovery products, Neel's argument is not well taken, and Neel makes no argument that the exhibits are not subject to rule 166a(d).
Second, George attached thirteen exhibits, totaling 263 pages, to his motion for summary judgment. The exhibits include an eighty-six page letter from Neel to Frances, the 2002 settlement agreement signed by both parties and notarized, a 2002 court order in a related proceeding between the two parties, a certified copy of the 1968 deed, and all the family planning instruments executed by the mother in 1994, which contain notarized acknowledgments of all the parties to the instruments. Neel fails to point out how any particular exhibit is flawed but instead makes a general claim that the evidence is not authenticated. We have no duty to conduct an independent search of the record to determine whether Neel's general claim is true. See Most Worshipful Prince Hall Grand Lodge v. Jackson, 732 S.W.2d 407, 412 (Tex. App.-Dallas, writ ref'd n.r.e.). Instead, it is Neel's burden to point us to the place in the record where matters complained of are established. Id. Neel has failed to do so. Based on the forgoing, we conclude Neel's fourth issue is without merit. We resolve it against him.
We affirm the trial court's judgment.



JOSEPH B. MORRIS
JUSTICE

041177F.P05

Footnote 1 In his reply brief on appeal, Neel attempts to refute this evidence with deposition excerpts attached to his opposition to George's motion for summary judgment in a previous proceeding. This evidence was not in the summary judgment evidence before the trial court in this case and is not properly before us.
File Date[08/24/2005]
File Name[041177F]
File Locator[08/24/2005-041177F]

CALIFORNIA ELDER ABUSE CASE - undue influence and fraud

Filed 5/18/05

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

SUSAN DAVID, Plaintiff and Respondent, v. WENDY ALTER HERMANN, Individually and as Successor Trustee, etc., Defendant and Appellant.

A101681, A104110, A104111, and A104693 (Marin County Super. Ct. No. PR000851)

This is an appeal from a judgment adjudicating a trust to be invalid on the ground of undue influence and fraud and from post-judgment orders concerning attorney fees. We reverse the portions of the judgment and the orders relating to attorney fees and otherwise affirm.

FACTUAL AND PROCEDURAL BACKGROUND

The litigation arises from a history of disputes between the daughters of Zal and Jane Alter, both now deceased. The petitioner, Susan David (hereafter Susan), is the older daughter; the defendant, Wendy Alter Herman (hereafter Wendy), is the younger. The property at issue consists primarily of the family business, the 300 Company, which owns and manages a commercial building at 300 Brannan and an apartment building at Hayes and Divisidero both in San Francisco. In recounting the factual background, we will rely on the trial court’s lengthy and detailed statement of decision.

On January 31, 1989, Zal and Jane Alter created a revocable living trust, called the Alter Family Trust, as part of an estate plan recommended by their attorney. The complex trust provisions effectively called for equal distribution of the trust assets between their daughters on their death. Zal Alter was the sole trustee, but he was then experiencing declining health and mental ability.  Sometime in 1989, Susan began to assist Zal in writing checks, paying taxes, balancing accounts, and managing the 300 Company. Later in 1990, she began to sign checks with her father’s approval and to assume control of the trust estate. On September 17, 1990, Zal suffered a fall and became entirely incapacitated.

The year 1990 brought changes in the lives of other members of the family. Recently divorced, Wendy moved from Fresno to Marin County where she still resides. Jane separated from Zal after 50 years of marriage and began to live alone in a condominium in San Francisco. While undertaking this difficult transition, Jane was experiencing declining health and failing eyesight. Wendy began to see her mother frequently and assisted her in the tasks of daily living.

In August 1990, the strained relations between the two daughters experienced a serious rift. As advised earlier by his estate planning attorney, Zal decided to make a series of gifts to his family in the amount of the gift tax exemption. Susan wrote the checks on his behalf. Zal gave $20,000 to each of his daughters and $10,000 to each of his four grandchildren and, in addition, gave $10,000 to Susan’s husband. The effect was a $10,000 imbalance in favor of Susan’s side of the family. Wendy complained to Jane and contacted her parents’ attorneys. She scheduled a meeting with the firm on October 4, 1990, a day before Susan was scheduled to leave for a three-week vacation in Europe. When Susan returned from the vacation, she learned from her father’s business partner that Wendy was accusing her of dereliction in the management of the family’s financial affairs.

On March 5, 1991, Jane revoked her interest in the Alter Family Trust. The same day, she executed a will by which she disposed of her separate property and her share of the community property, “including all [her] former trust property,” which she held with her husband. She gave half the residue of her estate in equal shares to Wendy and the other half to the “then-living issue” of Susan. The will explicitly omitted to provide directly for Susan and appointed Wendy as executor of her estate.

In April 1991, Wendy and Jane filed a petition in San Francisco Superior Court for an accounting and for removal of the trustee of the Alter Family Trust and appointment of a successor trustee.  The petition alleged that Zal suffered from senile dementia and that the trust instrument provided that Jane, Susan, and Wendy would serve as co-trustees in the event of his incapacity. It alleged that Susan had unilaterally taken control of trust affairs, made unauthorized gifts of trust assets, improperly paid herself compensation for her duties as trustee, and failed to pay for Zal’s necessary expenses.

Concurrently with filing the petition, the parties stipulated to appointment of a trust company as the successor trustee. When the trust company declined the appointment, the parties stipulated to the appointment of an independent fiduciary, Debra Dolch, as successor trustee by an order filed July 17, 1991. The order provided for the equalization of gifts by an additional $10,000 gift to Wendy.

In further probate proceedings on the same petition, Susan filed two accounts and reports covering the period of September 17, 1990, to September 11, 1991. By a stipulation and order filed August 11, 1992, the court approved the accounting “as filed and all of her actions in connection with [The Alter Family Trust] as reported therein, . . . are confirmed and approved.”

In an order filed January 4, 1993, the court approved the first account and report as amended of the successor trustee, Debra Dolch, and directed her to petition for the establishment of a conservatorship for Zal and to seek instructions as to the transmutation of Zal and Jane’s shares in the Alter Family Trust into their separate property. Dolch petitioned for instructions as directed and the matter came up for a hearing on April 27, 1993, in which Zal, Jane, and the trustee were separately represented by counsel. With the agreement of the attorneys present, the court adopted an order filed June 17, 1993, that went well beyond the objective of the original petition and directed inter alia that Zal’s share of the trust assets would remain in the existing trust and Jane’s equal share would be transferred to a new trust designated the Jane Alter Living Trust.

The Jane Alter Living Trust, which was executed on June 8, 1993, named Wendy as trustee. It provided that if Zal predeceased Jane, the trust assets would be distributed one-half to Wendy and one-half in equal shares to her four grandchildren. The effect was to restrict the distribution to Susan’s children to one-fourth of the estate. In the event Zal was still living on Jane’s death, the trust provided that half of the assets would be held in a terminable interest trust (Q-TIP trust) for the benefit of Zal during his life.

Concurrently with creation of the Jane Alter Living Trust, Jane made a will disposing of all property that might not have been transferred to the trust and seeking to exercise a power of appointment in the Alter Family Trust, conditional upon a determination that the power of appointment was still effective. On November 20, 1996, she executed a first codicil to her will that again sought to exercise the power of appointment in the Alter Family Trust.

Zal died on June 9, 1995. Since separating from Zal, Jane had also suffered a progressive decline in her physical and mental condition. She walked with difficulty and was slowly going deaf and blind. The trial court found that she began to suffer from a degree of cognitive impairment that impeded her ability to review records, reason abstractly, or make sound judgments. With her declining physical and mental capacities, Jane became increasingly dependent on Wendy. The trial court found, “for example, that Wendy drove Jane to attorneys’ offices, banks and medical appointments, among other things. . . . Wendy was trustee of the Jane Alter Trust and, as such, had control of all her assets, handled all her financial affairs and, at least at some point between 1990 and 1995, started paying all of her bills as well.” Jane’s dependence on Wendy was accompanied by the growth of an intense and irrational anger toward Susan. As the trial court found, “[s]he had it in her mind that Susan had stolen money from the Alter Family Trust, and she would not let this notion go.”

In early November 1995, Wendy took Jane to her attorney, Sterling Ross, to have an amendment prepared for the Jane Alter Living Trust. Ross referred her to independent counsel, Marila Marshall, who drafted the document. In the trial court’s words, she was then “blind, hard of hearing, in a wheelchair and had been weakened mentally by a series of strokes. Her cognitive abilities were diminished.” On November 2, 1995, she executed a Second Amendment to the Jane Alter Living Trust, which largely excluded Susan and her family from receiving trust assets. The amended trust gave each of the four grandchildren the sum of $10,000 and provided that, if Wendy were living at the time of her death, the remaining trust estate would be distributed to her. If Wendy were not living, 75 percent of the estate would go to Wendy’s family and 25 percent to Susan’s family.

Jane died on October 23, 1997. On December 4, 1997, Wendy filed a petition for probate of Jane’s will in San Francisco Superior Court. In response, Susan filed a petition for declaratory relief seeking a determination that a contest to the admission of Jane’s will into probate would not constitute a challenge to Zal’s will or the Alter Family Trust and succeeded in obtaining a declaratory judgment to that effect. About two months later, Susan filed a contest to probate of Jane’s will. Wendy filed an answer to the contest, but the record discloses no further proceedings on the petition for probate or the will contest.

On February 22, 2000, Susan filed a petition in the Marin County Superior Court that led to the judgment here on appeal. The petition seeks an order adjudicating the Jane Alter Living Trust and the Second Amendment to the trust to be invalid on the ground of Jane’s incapacity or Wendy’s undue influence over Jane. In its statement of decision, the trial court found that, despite Jane’s declining health, the evidence did not show that she lacked competence to execute the Jane Alter Living Trust. Turning to the issue of undue influence, the court declined to apply a presumption of undue influence on the ground that the evidence was insufficient to support a finding that Wendy procured the documents, but, in a very thorough review of the evidence, the court still found that the allegation of undue influence had been proven. The court proceeded to also find that the dispository provisions were caused by misrepresentations of Wendy that were intended to alienate Jane from her oldest daughter. The decision declared the Jane Alter Living Trust and the Second Amendment to the trust to be void, and ordered Wendy to pay the attorney fees that Susan had incurred in the action. The court entered a judgment in the action on December 10, 2002, including attorney fees in an amount to be determined.

Susan moved for a determination of attorney fees in accordance with the judgment. On May 12, 2003, the court awarded her attorney’s fees in the sum of $180,187.50, and on July 30, 2003, the court entered an amended judgment incorporating this award of attorney fees.

Susan next took steps to enforce the judgment for attorney fees by recording an abstract of judgment and obtaining an order for a debtor’s examination. On October 8, 2003, Wendy moved for a protective order to expunge the abstract of judgment and vacate the order for a debtor’s examination. The trial court denied the motion in an order filed November 14, 2003.

Wendy has filed notices of appeal from the judgment entered on December 10, 2002; the order filed May 12, 2003, awarding attorney fees; the amended judgment filed July 30, 2003; and the order filed November 14, 2003, denying Wendy’s motion for a protective order.

A. Subject Matter Jurisdiction

As a first assignment of error, Wendy argues that the Marin County Superior Court lacked subject matter jurisdiction over Susan’s petition challenging the Jane Alter Living Trust and the Second Amendment to the trust. Susan filed the petition in reliance on Probate Code section 17005, subdivision (a)(1), which authorizes the filing of proceedings affecting a living trust to be filed in “the county where the principal place of administration of the trust is located.” It is undisputed that Wendy lives in Marin County and is the trustee of the Jane Alter Living Trust. Wendy nevertheless contends that the San Francisco Probate Court had previously assumed jurisdiction over “Jane’s property subject to her testamentary disposition, either by will or a testamentary trust, . . .” The contention requires us to examine closely two previous orders of the San Francisco Probate Court.

As noted above, in an order filed January 4, 1993, approving the first account of the successor trustee of the Alter Family Trust, the San Francisco Probate Court directed the trustee to seek instructions with respect to the transmutation of community property of Zal and Jane into their separate property. With the stipulation of counsel for Zal, Jane and the trustee, the court entered an order on June 17, 1993, that addressed not only this issue but other related issues concerning the division of the spouses’ property. In response to the original petition, the order directed that the property placed in the Alter Family Trust would remain community property and would not be transmuted into the separate property of Zal and Jane. In addition, it ordered the establishment of two separate trusts with provisions assuring fair treatment of each spouse by the other.

Specifically, the order directed Jane to establish “a fully-funded Q-TIP Trust for the benefit of [Zal] during his lifetime” in the form of an attached trust document designated the Jane Alter Living Trust. If Jane should fail to establish this trust before her death, the court would have the power to order the representative or trustee of her estate to “establish from her assets or the assets of her estate or trust the Q-TIP Trust.” Similarly, if at the time of Zal’s death, “his existing estate plan [did] not provide for [Jane] in the form and amounts set forth in the Alter Family Trust,” the court would have the power to order the representative or trustee of his estate to establish a trust “for the benefit of [Jane] during her remaining life, in an amount equivalent to the amount of the Q-TIP Trust which appears in the Alter Family Trust.” The court allowed Jane’s revocation of the Alter Family Trust conditional upon her execution of the Jane Alter Living Trust and directed that one-half of the trust assets be transferred to Zal’s conservator and one-half to the Jane Alter Living Trust.

Lastly, the order provided: “This Court shall retain jurisdiction over [Zal] and [Jane] and the assets of the Alter Family Trust to enforce this order.”

Wendy argues that her 1997 petition to probate Jane’s will “revested” the San Francisco Probate Court with jurisdiction over Jane and her assets. The peculiarity of this petition is that it solely concerned the exercise of a power of appointment in the presumably revoked Alter Family Trust. Wendy’s petition to probate Jane’s will filed December 4, 1997, stated that the estimated value of property of the estate was zero. Attachment 3c to the petition stated: “All of the decedent’s assets were held in trust or will be transferred by other means. There will be no assets in the probate estate.” The fourth paragraph of the Will of Jane Alter attached to the petition specifically referred to the power of appointment and sought to exercise it in the event the revocation of the Alter Family Trust should be determined to be legally ineffective. The First Codicil to Will of Jane Alter, which was also attached to the petition, sought solely to “confirm the exercise in my Will of the power of appointment.”

Susan contested the probate of the will on the grounds of incapacity and undue influence and on the further ground that the Alter Family Trust, which contained the power of appointment, had been revoked both by Jane and an order of the court. “Therefore, at the time of the execution of the purported will [of Jane Alter], the Trust was revoked and thus there was no document extant granting [her] said power.”

We see nothing in the order filed June 17, 1993, that would affect the jurisdiction of the Marin County Court to consider Susan’s petition challenging the Jane Alter Living Trust. The San Francisco court acted on a petition by Debra J. Dolch requesting instructions on the transmutation of community property of Zal and Jane into separate property, and with the stipulation of the parties, approved a broad settlement regulating the division of property between the spouses following Jane’s revocation of the Alter Family Trust. The court retained jurisdiction for the limited purpose of assuring that the settlement was carried out as directed. This limited reservation of jurisdiction did not conflict in any way with Susan’s petition challenging the validity of the Jane Alter Living Trust.

We also see no basis for holding that the petition to probate Jane’s will gave the San Francisco Probate Court prior exclusive jurisdiction over Jane’s trust assets that precluded later filings in another county. Such prior exclusive jurisdiction cannot be predicated on in rem jurisdiction over Jane’s estate since the petition stated that there were no assets subject to probate. The precedents cited in Wendy’s brief regarding in rem jurisdiction of the probate court over a decedent’s assets have no application in the absence of a probate estate. (Estate of Wise (1949) 34 Cal.2d 376, 382; Prob. Code, § 7051.) Similarly, the cited authority regarding the continuing and exclusive jurisdiction of the probate court presupposes an estate subject to administration. (Dungan v. Superior Court (1906) 149 Cal. 98, 100; Marsh v. Edelstein (1970) 9 Cal.App.3d 132, 142; Estate of White (1945) 69 Cal.App.2d 749, 757-758; Estate of Evans (1944) 62 Cal.App.2d 249, 256.) Again, the petition has no relevance to the court’s jurisdiction over the Jane Alter Living Trust since it was filed to exercise a power of appointment in a distinct trust, the Alter Family Trust. In the absence of the same subject matter, Wendy cannot rely on the rule that “the tribunal in which jurisdiction first attaches retains it exclusively.” (Slinack v. Superior Court (1932) 216 Cal. 99, 106; Jordan v. Clausen (1936) 13 Cal.App.2d 16, 19-20.) Finally, we see no relevance to Wendy’s discussion of testamentary trusts since the judgment at issue in this appeal concerned the validity of a living trust. (Estate of Cox (1970) 8 Cal.App.3d 168, 180; Prob. Code, § 17005, subd. (a)(2).)

We construe Susan’s petition challenging the dispository provisions of the Jane Alter Living Trust as a proceeding to determine the validity of a trust provision that came within the category of proceedings concerning the internal affairs of a trust under Probate Code section 17200, subdivision (b)(3). (Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 429.) Under Probate Code section 17000, “the superior court having jurisdiction over the trust” had exclusive jurisdiction over the proceedings. The Marin County Superior Court possessed such jurisdiction because the trustee resided in that county.

B. Res Judicata

Wendy next maintains that the trial court was barred by the principle of collateral estoppel from finding that “the charges against Susan in the April 1991 petition were . . . unfortunate and irresponsible allegations of wrongdoing that never occurred.” The defense of res judicata, however, was not pleaded or otherwise raised in the trial court. “Res judicata is not a jurisdictional defense, and may be waived by failure to raise it in the trial court.” (7 Witkin, Cal. Procedure (4th ed. 1997) Judgment § 281, p. 821.) Moreover, the allegations in the April 1991 petition were never adjudicated in the San Francisco Probate Court. Instead, the proceeding was terminated by a stipulated order appointing a successor trustee. While a stipulated judgment may have collateral estoppel effect in California (California State Auto. Assn. Inter-Ins. Bureau v. Superior Court (1990) 50 Cal.3d 658, 665), probate orders are conclusive only as to matters “actually passed upon by the probate court.” (Estate of de Laveaga (1958) 50 Cal.2d 480, 487; Lazzarone v. Bank of America (1986) 181 Cal.App.3d 581, 591.)

C. Substantial Evidence

Contending that the court “misapplied the applicable legal standards to invalidate a testamentary document based on undue influence or fraud,” Wendy advances two arguments involving issues of law and substantial evidence. With respect to the court’s finding of undue influence, she argues that the invalidation of a testamentary document on this ground requires evidence of procurement, which is lacking in the present record. In the case of fraud, she argues that a finding of fraud requires evidence of intent to deceive, which cannot be found in the present record.

1. Undue influence

California courts have long held that a testamentary document may be set aside if procured by undue influence. (Estate of Ricks (1911) 160 Cal. 467, 480; Prob. Code, § 6104.) As authoritatively defined in Rice v. Clark (2002) 28 Cal.4th 89, 96 “[u]ndue influence is pressure brought to bear directly on the testamentary act, sufficient to overcome the testator’s free will, amounting in effect to coercion destroying the testator’s free agency.” (See also Estate of Shay (1925) 196 Cal. 355, 363; Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, 182; Estate of Sarabia (1990) 221 Cal.App.3d 599, 604; Estate of Truckenmiller (1979) 97 Cal.App.3d 326, 334; Civ. Code, § 1575.)

“The proof of undue influence by circumstantial evidence usually requires a showing of a number of factors which, in combination, justify the inference, but which taken individually and alone are not sufficient.” (12 Witkin, Summary of Cal. Law (9th ed. 1990) Wills and Probate, § 189, p. 218.) Among the indicia of undue influence is evidence that “the chief beneficiaries under the will were active in procuring the instrument to be executed.” (Estate of Lingenfelter (1952) 38 Cal.2d 571, 585; Estate of Franco (1975) 50 Cal.App.3d 374, 382-383.) While the person challenging the testamentary instrument ordinarily has the burden of proving undue influence, “under certain narrow circumstances, a presumption of undue influence may arise, shifting to the proponent of the disposition the burden of proving by a preponderance of the evidence that the donative instrument was not procured by undue influence.” (Conservatorship of Davidson (2003) 113 Cal.App.4th 1035, 1059.) Evidence that the beneficiary procured the testamentary instrument is one of three circumstances required to create this presumption. A presumption of undue influence “arises upon the challenger’s showing that (1) the person alleged to have exerted undue influence had a confidential relationship with the testator; (2) the person actively participated in procuring the instrument’s preparation or execution; and (3) the person would benefit unduly by the testamentary instrument.” (Rice v. Clark, supra, 28 Cal.4th 89, 97; Estate of Fritschi (1963) 60 Cal.2d 367, 376.)

Thus, while evidence of procurement is highly probative of undue influence and figures repeatedly in judicial discussions of the principle, it is essential to proof of undue influence only if the court relies on the presumption of undue influence to shift the burden of proof to the proponent of the testamentary instruction. In the case at bar, the court did not rely on the presumption, but rather applied the general principle of undue influence to a review of all the evidence. Appellant cannot challenge the court’s finding of undue influence by showing only the weakness or absence of evidence of procurement; other factors in combination can also support this finding. To challenge the finding, she must show that the evidence as a whole does not satisfy the general standard for proof of undue influence. We consider that, as a matter of law, her arguments relying exclusively on the one factor of procurement necessarily fail to show a lack of substantial evidence supporting the finding of undue influence.

Our conclusion requires affirmance of the judgment invalidating the dispository provisions of the Jane Alter Living Trust and the Second Amendment to the Trust. It is immaterial whether or not the trial court erred in applying the alternative principles of fraud. “If the decision of a lower court is correct on any theory of law applicable to the case, the judgment or order will be affirmed regardless of the correctness of the grounds upon which the lower court reached its conclusion.” (Estate of Beard (1999) 71 Cal.App.4th 753, 776.) “No rule of decision is better or more firmly established by authority, nor one resting upon a sounder basis of reason and propriety, than that a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason. If right upon any theory of the law applicable to the case, it must be sustained regardless of the considerations which may have moved the trial court to its conclusion.” (Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329.) Nevertheless, we will examine briefly the finding of fraud.

2. Fraud

The theories of undue influence and fraud commonly rest on a similar factual basis since contestants relying on a theory of undue influence may claim that the beneficiary employed misrepresentations to pressure the testator. They are, however, distinct grounds for contest. In Estate of Newhall (1923) 190 Cal. 709, the court held that the issue of fraud should have been submitted to the jury even though the evidence was insufficient to support a finding of undue influence. The court explained, “In cases where fraud alone is relied upon as a ground of contest it is the theory of the law that the testator, even though acting, in a manner of speaking, of his own free will, was, nevertheless, deceived by false data into doing that which he would not have done had he not been fraudulently imposed upon. . . . [¶] [F]alse representations . . . have been held to constitute fraud if it can be shown that they were designed to and did deceive the testator into making a will different in its terms from that which he would have made had he not been misled.” (Id. at p. 718.)

The elements of fraud in the procurement of a testamentary instrument are the same as those required to vitiate a contract. “One of the necessary elements is an intent to deceive the decedent or an intent to induce decedent to execute his will.” (Estate of Newhall, supra, 190 Cal. 709, 719; Civ. Code, § 1572.) Reversing a judgment of fraud, the court in Estate of Benton (1901) 131 Cal. 472, 478, found that “the all-important element is lacking, to wit: That Herbert A. Benton made these representations with intent to deceive the decedent, or with intent to induce decedent to execute his will. An intent to do one of these things is always an element and a necessary element in any given state of facts, in order that those facts may constitute actual fraud.”

The proof of intent to deceive, “[f]rom the very nature of the inquiry . . . must necessarily be largely or wholly circumstantial. . . . The contestant is not confined to the bare facts but is entitled to the benefit of all inferences which may legitimately be drawn from the facts established.” (Estate of Newhall, supra, 190 Cal. 709, 721.)

In the case at bar, the court found: “There is no rational explanation for this sudden shift in attitude by Jane toward and break with Susan in September 1990 other than Wendy’s falsely poisoning Jane’s mind against Susan because of her (Wendy’s) anger over the perceived slight in the August 1990 gifts. In other words, there is compelling circumstantial evidence that Wendy made continuing misrepresentations about Susan to their mother for the purpose of alienating Susan from her mother and effecting Susan’s and her family’s disinheritance. Proof that a testator/settlor is induced by misrepresentations into making dispositions that would not have been made absent those misrepresentations constitutes fraud.”

The statement of decision provides a detailed narrative supporting these conclusions. The court traced the change in Jane’s attitude toward Susan to a period beginning in August 1990 and extending into the first months of 1991. It was during this critical period, the court found, that Wendy became enraged at Susan for the perceived slight in Zal’s gifts to her family and sought representation of legal counsel. When Susan returned from a trip to Europe, she was confronted with accusations of Wendy and Jane that were later reflected in the petition filed April 1991 to remove her as trustee. This period also marked the beginning of a close and dependent relationship between Jane, who had recently separated from Zal, and Wendy, who had moved from Fresno to Marin County.

The court found that none of the allegations in the April 1991 petition had any basis in fact but Jane’s alienation from Susan still hardened and intensified over time, displaying elements of the “siege mentality” described by Susan’s expert witness, psychologist Abraham Nievod. The court inferred that Wendy induced this alienation by the misrepresentations reflected in the petition: “there is no basis that the Court can find in the record for any of the claims that were made against Susan in the petition. . . . Absent an effort wrongfully to discredit Susan and turn her mother against her, there is no reasonable explanation as to how the situation could have progressed to the point it did, with Wendy and Jane treating Susan like something short of a criminal in spite of all the work she had done for the benefit of the family.”

Wendy points to a mass of evidence that might justify her distrust of Susan and argues that the court erred in finding that she intended to deceive Jane about Susan’s conduct. But “in examining the sufficiency of the evidence to support a questioned finding, an appellate court must accept as true all evidence tending to establish the correctness of the finding as made, taking into account, as well, all inferences which might reasonably have been thought by the trial court to lead to the same conclusion. Every substantial conflict in the testimony is, under the rule which has always prevailed in this court, to be resolved in favor of the finding.” (Bancroft-Whitney Co. v. McHugh (1913) 166 Cal. 140, 142.) For the purpose of this appeal it is relevant only that the trial court found Susan’s testimony to be most credible and drew reasonable inferences from the facts recounted in its statement of decision. The facts themselves find support in the record. We therefore are compelled to uphold the finding of fraud.

D. Attorney’s Fees

In its statement of decision, the trial court ruled that Susan could recover attorney fees on equitable principles or, alternatively as an element of damages under Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 618, 620. The judgment entered concurrently with the statement of decision ordered that Susan could recover “her reasonable attorney’s fees and costs of suit incurred” from “Wendy’s share of the estate of Jane Alter.” Susan subsequently moved for a “determination of attorneys fees in accordance with judgment.” In an order filed May 12, 2003, the court set the judgment for attorney fees at $180,187.50, and filed an amended judgment ordering Wendy to pay Susan attorney fees in this amount.

In this appeal, Wendy attacks the judgment for attorney fees both on procedural and substantive grounds. Since we agree that Susan was not entitled to the judgment under substantive law, we do not reach her procedural objections. We turn first to the justification for awarding attorney fees as damages under Prentice and its progeny.

In Prentice, an escrow holder was negligent in closing the sale of property. As a consequence, the sellers were forced to bring a quiet title action against the purchaser and the holder of a first deed of trust. The sellers secured a judgment of damages against the escrow holder, which included the cost of the quiet title action. Affirming the judgment, the court held: “A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney’s fees, and other expenditures thereby suffered or incurred.” (Prentice v. North Amer. Title Guar. Corp., supra, 59 Cal.2d 618, 620.)

The court explained that the judgment was not concerned “ ‘with the measure and mode of compensation of attorneys’ but with damages wrongfully caused by defendant’s improper actions. [¶] When a paid escrow holder has, as in this case, negligently made it necessary for the vendor of land to file a quiet title action against a third person, attorney’s fees incurred by the vendor in prosecuting such action are recoverable as an item of the vendor’s damages in an action against the escrow holder. [¶] Here the natural and proximate consequence of defendant’s negligence was to require plaintiffs to file an action seeking to quiet their title against claims by either the [purchaser] or [lender].” (Prentice v. North Amer. Title Guar. Corp., supra, 59 Cal.2d 618, 621.)

Decisions applying Prentice recognize that it represents an application of the usual measure of tort damages in circumstances where the defendant’s tortious conduct has made it necessary for a plaintiff to incur legal expenses to protect his interests. The court in Heckert v. MacDonald (1989) 208 Cal.App.3d 832, 838, observed, “ ‘In such cases there is no recovery of attorney fees qua attorney fees.’ ” Upholding a judgment for damages against an insurance broker, the court in Saunders v. Cariss (1990) 224 Cal.App.3d 905, 910, held that the damages properly included the cost of suit against the insurer. “[Plaintiff] is not seeking the fees paid to his attorney for prosecuting this action against [the insurance broker]. Rather he is claiming as damages those attorneys fees he incurred in attempting to mitigate the damages caused by [the broker’s] alleged malpractice.”

As noted in Sooy v. Peter (1990) 220 Cal.App.3d 1305, 1310, “nearly all of the cases which have applied the [Prentice] doctrine involve a clear violation of a traditional tort duty between the tortfeasor who is required to pay the attorney fees and the person seeking compensation for those fees.” Thus, the rule has been applied to cases involving breach of an escrow holder’s duty of due care to the seller (Bruckman v. Parliament Escrow Corp. (1987) 190 Cal.App.3d 1051, 1060; Ruth v. Lytton Sav. & Loan Assn. (1968) 266 Cal.App.2d 831, 844-845), the breach of a real estate broker’s fiduciary duty to his client (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 507-508; Heckert v. MacDonald, supra, 208 Cal.App.3d 832, 836-838), the fraudulent misrepresentation of a process server (Slaughter v. Legal Process & Courier Service (1984) 162 Cal.App.3d 1236, 1251-1252), and intentional interference with use of an easement (Manning v. Sifford (1980) 111 Cal.App.3d 7, 11) and with an exclusive recording contract. (Vanguard Recording Society, Inc. v. Fantasy Records, Inc. (1972) 24 Cal.App.3d 410, 413-414.)

Prentice made clear that Code of Civil Procedure section 1021 “prohibits the allowance of attorney fees against a defendant in an ordinary two-party lawsuit.” (Prentice v. North Amer. Title Guar. Corp., supra, 59 Cal.2d 618, 620-621.) The courts have refrained from expanding the rule in a way that would undermine the general rule that a party bears his own attorney fees. (Pederson v. Kennedy (1982) 128 Cal.App.3d 976, 980.) Reversing a judgment for attorney fees against one of three joint tortfeasors in Vacco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 57, the court stated, “There is nothing about their relationship or their conduct that justifies singling out Van Den Berg as the one whose conduct caused Vacco to have to prosecute a legal action against the other two. . . . The rule of Prentice was not intended to apply to one of several joint tortfeasors in order to justify additional attorney fee damages. If that were the rule there is no reason why it could not be applied in every multiple tortfeasor case with the plaintiff simply choosing the one with the deepest pocket as the ‘Prentice target.’ Such a result would be a total emasculation of Code of Civil Procedure section 1021 in tort cases.”

It is clear that Prentice has no application to the present case. Susan did not bring an action against Wendy for damages on a tort theory of liability but rather petitioned the court for an order declaring the testamentary documents invalid. Moreover, the petition was essentially a two-party lawsuit, though Wendy was sued both individually and as trustee. Unlike Prentice, the judgment for attorney fees did not represent “an application of the usual measure of tort damages” (Sooy v. Peter, supra, 220 Cal.App.3d 1305, 1310), but rather was a device to award attorney fees in probate proceedings. To this extent, it served to supplant Code of Civil Procedure section 1021 and the ordinary rules and practices of probate court regarding the award of attorney fees. If Prentice authorized the court to award attorney fees in this case, it would allow the recovery of attorney fees in all proceedings before the probate court to invalidate a testamentary document based on some alleged tortious conduct.

3. Equitable Award of Attorney Fees

In her briefs, Susan does not argue that the judgment for attorney fees can be justified by the equitable powers of the probate court, as suggested in the statement of decision. Indeed, we are unable to formulate any rationale to uphold the judgment for attorney fees on this ground. The probate court, it is true, possesses the power to order an allowance out of a trust estate as reimbursement for expenses, including attorney fees. (7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 151, pp. 670-671, (2005 supp.) Judgment, § 151, p. 156.) But it cannot be argued that Susan rendered such a service to the trust. The effect of her petition was to secure a decree adjudicating the trust to be “invalid and void.” For her part, Wendy held the assets of the trust as “constructive trustee for the benefit of [all] persons entitled to distribution [thereof].” As constructive trustee, her sole duties were to account for her administration of the trust and to transfer the assets to the proper parties. We see no basis for implying a further duty to reimburse Susan for bringing a petition to invalidate the former trust. In any event, the amended judgment did not relate in any manner to trust administration under the supervision of the probate court but rather ordered that Susan recover attorney fees directly from Wendy. The judgment, in short, imposed a personal judgment in favor of Susan and against Wendy.

We see no relevance to the cases cited by the trial court. Estate of Whitney (1932) 124 Cal.App. 109, 121, concerned an allowance from a trust estate to pay for an internal audit. Wells Fargo Bank v. Marshall (1993) 20 Cal.App.4th 447, 458, which concerned a proceeding to construe the dispository provisions of a trust, awarded attorney fees to a successful contestant on the ground that it was consistent with “the evident intent of the trustor” as expressed in the trust instrument.

Since we find no basis in substantive law for the award of attorney fees to Susan, we do not reach the procedural objections that Wendy raises to the recovery of attorney fees. Our conclusion necessarily calls for reversal of the post-judgment order filed November 14, 2003, relating to enforcement of the judgment for attorney fees.

We reverse the portion of the amended judgment filed July 30, 2003, awarding $180,187.50 in attorney fees to the petitioner Susan David, as well as the portion of the judgment entered December 10, 2002, awarding attorney fees, and the order filed May 12, 2003, and the order filed November 14, 2003, denying inter alia Wendy’s motion for a protective order. In all other respects, the judgment is affirmed.

Each party shall bear her own costs on appeal.

	__________________________________ Swager, J.
We concur: __________________________________ Marchiano, P. J. __________________________________ Stein, J.

Trial Court:	Marin County Superior Court
Trial Judge:	Hon. John A. Sutro, Jr.
Attorney for Defendant and Appellant:	John A. Hartog, Inc. John A. Hartog Four Orinda Way, Suite 200-D Orinda, CA 94563 McInerney & Dillon, P.C. Jewell J. Hargleroad One Kaiser Plaza, Suite 1850 Oakland, CA 94612-3610
Attorneys for Plaintiff and Respondent:	Law Offices of Catherine Duggan Catherine Duggan One Kaiser Plaza, Suite 480 Oakland, CA 94612 Law Offices of Robert E. White Robert E. White Susan C. Rushakoff 177 Post Street, Suite 890 San Francisco, CA 94108

David v. Hermann, A101681, A104110, A104111, and A104693