FCLT
Loans, L.P. v. Estate of Bracher,
No. 14-00-00577-CV (Tex.App.
Dist.14 02/28/2002)
In
The Fourteenth Court of Appeals In
the State of Texas
No.
14-00-00577-CV
2002.TX.0001248
February
28, 2002
FCLT
LOANS, L.P., SUCCESSOR IN INTEREST TO
FIRST CITY BANK - INWOOD FOREST, N.A.,
APPELLANT
v.
THE
ESTATE OF LOUISE P. BRACHER;
ANTOINETTE BRACHER LAWRENCE,
INDIVIDUALLY AND AS CO-EXECUTRIX OF
THE ESTATE OF LOUISE BRACHER; BARBARA
K. OLSON, INDIVIDUALLY AND AS CO-
EXECUTRIX OF THE ESTATE OF LOUISE
BRACHER; JAMES V. BRACHER,
INDIVIDUALLY
AND AS CO-TRUSTEE OF THE DAVID A.
BRACHER FAMILY TRUST; VICTORIA BRACHER-NOYES,
INDIVIDUALLY AND AS CO-TRUSTEE OF THE
DAVID A. BRACHER FAMILY TRUST; AND
DAVID A. BRACHER, APPELLEES
On
Appeal from the 11th District Court
Harris County, Texas Trial Court Cause
No. 98-07448
Panel
consists of Justices Edelman and Frost
and Senior Chief Justice Murphy.*fn1
The
opinion of the court was delivered by:
Paul C. Murphy Senior Chief Justice
AFFIRMED
IN PART, REVERSED AND RENDERED IN
PART, REVERSED AND REMANDED IN PART,
AND OPINION FILED FEBRUARY 28, 2002.
OPINION
This
appeal comes before us on competing
motions for summary judgment in a suit
brought by appellant, FCLT Loans,
L.P., to recover a debt allegedly owed
to FCLT by Louise Bracher's
estate. The trial court granted appellees'
motions, denied FCLT's
motion, and entered judgment that FCLT
take nothing. We reverse the judgment
in part and affirm in part, and we
remand for further proceedings
consistent with this opinion.
FACTUAL
BACKGROUND
In
1980, Victor Bracher
executed a note with First City Bank -
Inwood
Forest, N.A., secured by a Deed of
Trust covering eight tracts of land in
Harris County. Two years later, Victor
and his wife, Louise, established
three trusts, each named for one of
the couple's three children: the
Antoinette Bracher
Lawrence Trust, the Barbara K. Bracher
Trust, and the David A. Bracher
Family Trust. These trusts were each
initially funded with several
properties, although none of the
properties used to secure Victor's
1980 note were included.
Each
trust named Victor and Louise as both
grantors and trustees, and each
permitted them to direct the
distribution of the income and
principal of the trust. Each trust
also contained a
"spendthrift" clause,
providing that before actual receipt
by a beneficiary of any income or
property from the trust, the property
could not be attached by any of the
beneficiary's creditors.
Victor
died in 1987, and Louise Bracher
was appointed independent executor of
his estate. In 1988, Louise signed a
Modification, Renewal and Extension of
Real Estate Note and Liens and Deed of
Trust ("Renewal Note") with
First City, in the amount of
$388,822.37. Louise signed the note
both individually and in her capacity
as independent executor of Victor's
estate. By its terms, the Renewal Note
came due on February 18, 1991.
After
a series of mergers and name changes,
First City was placed into
receivership. The Renewal Note was
eventually assigned to FCLT in 1995.
In 1997, FCLT sent Louise a notice of
default and demand for payment on the
Renewal Note.
Shortly
after FCLT sent the default notice,
however, Louise died. Louise's
daughters, Antoinette Bracher
Lawrence and Barbara Olson,*fn2 were
appointed co- independent executors of
her estate. By their terms, both the
Antoinette Bracher
Lawrence Trust and the Barbara K. Bracher
Trust were distributed to Lawrence and
Olson, respectively. The David A. Bracher
Family Trust ("Family
Trust"), however, remained
intact, with two of Victor and
Louise's grandchildren--James Bracher
and Victoria Bracher-
Noyes--later appointed co-trustees.
PROCEDURAL
BACKGROUND
In
February 1998, unaware that Louise Bracher
had died, FCLT filed the present
lawsuit against her, seeking the
amount due under the Renewal Note plus
attorney's fees. A year later, FCLT
amended its petition to name as
defendants (1) the Estate of Louise Bracher;
(2) Lawrence, both individually and as
co-executor of Louise's estate; (3)
Olson, both individually and as
co-executor of Louise's estate; and
(4) David Bracher.
In addition to seeking payment under
the Renewal Note, FCLT further alleged
that the defendants
"dissipated" the assets in
Louise's estate and that Lawrence and
Olson breached their fiduciary duties
by allowing this dissipation of estate
assets. In June 1999, FCLT again
amended its petition, adding three new
defendants: (1) the Family Trust; (2) Bracher-Noyes,
both individually and as co-trustee of
the Family Trust; and (3) James Bracher,
both individually and as co-trustee of
the Family Trust. FCLT's
second amended petition also added a
claim, under the heading
"Fraud," alleging the
defendants acted knowingly and
intentionally.
David
Bracher
filed a motion for summary judgment in
December 1999. In February 2000, three
of the other defendants--Bracher-Noyes
and James Bracher
(both individually and as co-trustees)
and Lawrence (in her individual
capacity only)--filed a separate
summary judgment motion (the
"First Joint Motion").*fn3
FCLT responded by again amending its
petition. Ultimately, FCLT's
petition encompassed the following
five causes of action:
(1)
A claim against Lawrence and Olson*fn4
for their refusal to pay the amount
due under the Renewal Note.
(2)
Claims against Lawrence and Olson, as
co-executors of Louise Bracher's
estate, and against Lawrence, Olson,
James Bracher,
and Bracher-Noyes
for "dissipation of assets."
(3)
Claims against Lawrence, Olson, James Bracher,
and Bracher-Noyes
for breach of fiduciary duty.
(4)
Claims against Lawrence, Olson, James Bracher,
and Bracher-Noyes,
both as individuals and as executors
or trustees, for conversion.
(5)
A claim against Lawrence and Olson for
engaging in fraudulent acts.
FCLT
sought a judgment in the amount of the
debt plus interest and attorney's
fees, a turnover order for all assets
currently in or received from Louise's
estate or the trusts to pay FCLT's
debt, an accounting from the
co-executors of Louise's estate and
the co-trustees of the Family Trust,
and an injunction against further
distributions from Louise's estate or
the Family Trust.
After
FCLT amended its petition, David Bracher
filed an amended motion for summary
judgment, while the remaining
defendants filed a new motion for
summary judgment (the "Second
Joint Motion").*fn5 FCLT also
filed its own motion for summary
judgment.
The
trial court granted all defendants'
motions and ordered that FCLT take
nothing. In twelve points of error,
FCLT complains the trial court erred
by (1) granting summary judgment based
on limitations; (2) granting summary
judgment based on the statute of
frauds; (3) granting defendants'
summary judgment motions based on
"no evidence"; and (4)
denying FCLT's
motion for summary judgment (a)
against Louise's estate on the debt;
(b) against Lawrence and Olson
individually for breach of fiduciary
duty and for holding and dissipating
assets subject to FCLT's
debt claim; (c) against James Bracher
and Bracher-
Noyes, as co-trustees, for holding
assets in the Family Trust subject to FCLT's
debt claim; (d)
against James Bracher
and Bracher-Noyes
individually for breach of fiduciary
duties and for receiving and
dissipating assets subject to FCLT's
debt claim; (e) against David Bracher
for receiving assets subject to FCLT's
debt claim; (f) for an accounting; (g)
for foreclosure and/or garnishment of
assets subject to FCLT's
debt claim and for an injunction
against further dissipation of such
assets; and (h) for FCLT's
attorney's fees.
STANDARD
OF REVIEW
The
following standard for reviewing a
traditional motion for summary
judgment is well-established: (1) the movant
must show that no genuine issue of
material fact exists and that it is
entitled to summary judgment as a
matter of law; (2) in deciding whether
there is a disputed material fact
issue precluding summary judgment,
proof favorable to the non-movant
will be taken as true; and (3) every
reasonable inference must be resolved
in the non-movant's
favor. Nixon v.
Mr. Prop. Mgmt.
Co., 690 S.W.2d 546, 548-49 (Tex.
1985).
On
a "no evidence" summary
judgment, we review the proof in the
light most favorable to the non-movant
and disregard all proof and inferences
to the contrary. Lampasas
v. Spring Ctr., Inc., 988 S.W.2d 428,
432 (Tex. App.--Houston [14th Dist.]
1999, no pet.). A no- evidence
summary judgment is improperly granted
if the non-movant
counters with more than a scintilla of
probative proof to raise a genuine
issue of material fact. Id. More than
a scintilla of proof exists when the
proof "rises to a level that
would enable reasonable and
fair-minded people to differ in their
conclusions." See Merrell Dow Pharms.,
Inc. v. Havner,
953 S.W.2d 706, 711 (Tex. 1997)
(quoting Transportation Ins. Co. v. Moriel,
879 S.W.2d 10, 25 (Tex. 1994)).
Where,
as here, both sides move for summary
judgment, and one motion is granted
while the other is denied, we must
review the summary judgment proof and
determine all questions presented,
rendering such judgment as the trial
court should have rendered. Commissioners
Court v. Agan,
940 S.W.2d 77, 81 (Tex. 1997).
Because the trial court's order does
not specify the grounds upon which
summary judgment was granted, we may
affirm the judgment on any theory
advanced in the motions that is
meritorious. Carr
v. Brasher, 776 S.W.2d 567, 569 (Tex.
1989).
APPELLEES'
MOTIONS FOR SUMMARY JUDGMENT
In
its first three points of error, FCLT
contends the trial court erred by
granting appellees'
motions for summary judgment based on
(1) limitations, (2) the statute of
frauds, and (3) "no
evidence" of one or more
essential elements of FCLT's
claims. Because we may affirm the
court's judgment on any meritorious
ground asserted, we will review each
cause of action alleged by FCLT and
determine whether appellees
have established their entitlement to
summary judgment on any ground.
Debt
FCLT
first alleges "Defendants
Lawrence and Olson have refused and
continue to refuse to pay the
legitimate debt of the estate." FCLT's
debt claim is based on Louise Bracher's
failure (and the subsequent failure of
her estate) to pay money allegedly due
under the Renewal Note. FCLT does not
assert that Bracher-Noyes,
James Bracher,
or David Bracher
are
personally liable on the Renewal Note.
Thus, any grounds for summary judgment
asserted by these three appellees
on FCLT's
debt claim are moot.
In
the First Joint Motion, Lawrence (in
her individual capacity) asserted she
is entitled to summary judgment
because there is no proof that she
signed the Renewal Note, as required
under section 3.401 of the Uniform
Commercial Code.*fn6 In the Second
Joint Motion, Lawrence and Olson argue
FCLT's
claim is barred by the "statute
of frauds" set forth in section
3.401, as well as section 26.01 of the
Business and Commerce Code.*fn7 FCLT
does not contend that Lawrence or
Olson signed the Renewal Note, nor
does it allege they made any promise
or agreement in writing to answer for
Louise's alleged debt to FCLT.
Accordingly, as to both Lawrence and
Olson in their individual capacities,
we conclude summary judgment was
appropriate.
In
their capacities as co-executors,
however, Lawrence and Olson have not
demonstrated their entitlement to
summary judgment. Under the Probate
Code, a person having a debt against
an estate "may enforce the
payment of the same by suit against
the independent executor." TEX. PROB.
CODE ANN. § 147 (Vernon 1980).
There is no dispute Louise Bracher
signed the Renewal Note. Lawrence and
Olson asserted no summary judgment
ground on FCLT's
debt claim other than the statute of
frauds. Accordingly, we find the trial
court erred in granting summary
judgment on this claim in favor of
Lawrence and Olson, in their
capacities as co-executors of Louise's
estate. "Dissipation of
Assets"
Under
the heading "Dissipation of
Assets," FCLT's
petition raises four separate claims.
First, FCLT alleges Lawrence and
Olson, in their capacities as
co-executors of Louise's estate,
fraudulently transferred assets from
the estate to themselves and the
Family Trust. Second, FCLT claims
Louise Bracher
fraudulently transferred assets into
the three trusts.*fn8 In the Second
Joint Motion, Lawrence and Olson, in
their capacities as co-executors of
the estate, assert that FCLT's
fraudulent transfer claims are barred
by limitations. Under the Uniform
Fraudulent Transfer Act ("UFTA"),
a cause of action for fraudulent
transfer must be brought either (1) in
most cases, "within four years
after the transfer was made"; (2)
in cases where the alleged transfer
was made to an insider for an
antecedent debt, "within one year
after the transfer was made"; or
(3) in cases where the plaintiff
alleges actual intent to defraud,
"within one year after the
transfer or obligation was or could
reasonably have been discovered by the
claimant." TEX. BUS. &
COM. CODE ANN. § 24.010 (Vernon Supp.
2002).
With
respect to any transfers allegedly
made by Lawrence and Olson from Louise
Bracher's
estate, no such transfers could have
been made until after Lawrence and
Olson were appointed co-executors.
This appointment did not occur until
after Louise's death in 1997. FCLT's
lawsuit was filed well within the
limitations period. Accordingly,
summary judgment on this particular
claim was inappropriate.
Regarding
FCLT's
claim that Louise Bracher
fraudulently transferred assets into
the trusts, Lawrence and Olson argue
the allegedly fraudulent transfers
occurred, if at all, when the three
trusts were funded. Because Louise Bracher's
last affirmative act placing assets
into the trusts occurred in 1988,
Lawrence and Olson assert FCLT's
cause of action accrued no later than
1988, and thus is barred by the UFTA's
four-year statute of limitations. We
disagree.
Under
the UFTA, a "transfer" of
real property is made when the
transfer is so far perfected that a
good faith purchaser of the asset from
the debtor against whom applicable law
permits the transfer to be perfected
cannot acquire an interest in the
asset that is superior to the interest
of the transferee. Id. § 24.007(1)(A)
(Vernon 1987).
By
the express terms of the trusts,
Louise Bracher
retained full control over the right
to sell or otherwise dispose of the
property in those trusts during her
lifetime. Therefore, none of the
property held in the trusts could have
been transferred, for UFTA purposes,
until Louise's death in 1997. Only
then was the transfer of property
"so far perfected" that a
potential purchaser could no longer
acquire a superior interest in the
property from Louise Bracher.
Accordingly, we conclude FCLT's
cause of action based on alleged
fraudulent transfers from Louise Bracher
to the trusts was brought within four
years after the alleged transfers were
made.
Because
limitations was the only summary
judgment ground asserted by Lawrence
and Olson, in their capacities as
co-executors of Louise's estate, the
trial court erred in granting summary
judgment in their favor on FCLT's
claim for "dissipation of
assets."
FCLT's
third and fourth claims under the
"dissipation" heading are
that the refusal of Lawrence, Olson,
James Bracher,
and Bracher-Noyes
to pay FCLT's
debt claim from trust assets is a
fraudulent transfer,*fn9 and that any
transfer of assets from the three
trusts to the individual
defendants*fn10 constitutes a
fraudulent transfer. Essentially, FCLT
alleges that in addition to the
transfers from Louise into the trusts,
any subsequent transfers from the
trusts, as well as the refusal to pay FCLT's
debt claim from the trust assets, are
themselves fraudulent transfers under
the UFTA. In the First Joint Motion,
Lawrence, Bracher-Noyes,
and James Bracher
argued (1) FCLT's
claim is excluded as a
"debt" under the UFTA, and
(2) there is no evidence to support
several essential elements of FCLT's
claim.
Lawrence,
Bracher-Noyes,
and James Bracher
first argue any property that was
subject to FCLT's
Deed of Trust lien could not have been
fraudulently transferred because such
property was not an "asset"
under the UFTA. See TEX. BUS. &
COM. CODE ANN. § 24.002(2)(A)
(Vernon Supp. 2002) (defining
"asset" to exclude
"property to the extent it is
encumbered by a valid lien"); see
also id. § 24.002(12) (defining
"transfer" as any mode of
disposing of or parting with "an
asset or an interest in an
asset"). It appears from the
record, however, that FCLT's
fraudulent transfer claim does not
include the specific properties named
in the Deed of Trust accompanying
Victor Bracher's
1980 note. Accordingly, this portion
of the First Joint Motion is moot.
In
the "no evidence" portion of
their argument, Lawrence, Bracher-Noyes,
and James Bracher
asserted there was no evidence that
any alleged transfer of assets met any
of the tests for a fraudulent transfer
set forth in the UFTA.*fn11 With
respect to alleged transfers of trust
assets, we agree FCLT presented no
summary judgment proof that such
transfers met any of the grounds for
fraudulent transfers under the UFTA.
At most, FCLT presented proof that
assets were transferred from the
trusts, but FCLT failed to point to
any summary judgment proof that these
transfers met the requirements set
forth in section 24.006. For example,
FCLT failed to provide any proof that
the trusts were insolvent at the time
of an alleged transfer, or that they
became insolvent as a result of a
transfer. We conclude that, to the
extent FCLT alleges that Lawrence, Bracher-Noyes,
or James Bracher
transferred assets from the three
trusts to themselves or others, FCLT
failed to present summary judgment
proof that those transfers were
fraudulent, and therefore summary
judgment was appropriate on that
portion of FCLT's
claim.
Because
Olson was not a party to the First
Joint Motion, her only asserted ground
for summary judgment on FCLT's
fraudulent transfer claims against her
individually is limitations. As noted
above, the UFTA has a four-year
statute of limitations on most claims.
TEX. BUS. &
COM. CODE ANN. § 24.010. Any
claim against Olson for fraudulent
transfer of trust assets could not
have accrued until after she took
possession of the trust assets on
Louise's death in 1997. Accordingly,
the trial court erred in granting
summary judgment on this claim to
Olson individually.
FCLT
also alleges appellees
received assets from Louise Bracher
or her estate that were fraudulently
transferred. FCLT has no cause of
action against a party that accepts an
allegedly fraudulent transfer. See
Bado
Equip. Co. v. Bethlehem Steel Corp.,
814 S.W.2d 464, 474 (Tex.
App.--Houston [14th Dist.] 1991, no
writ). We note, however, that a
person who allegedly receives a
fraudulent transfer, as an adverse
claimant to the transferred property,
is both a proper and necessary party
to the fraudulent transfer claim. Looney
v. Simpson, 87 Tex. 109, 26 S.W. 1065,
1065 (1894).
transfer
was made if the transfer was made to
an insider for an antecedent debt, the
debtor was insolvent at that time, and
the insider had reasonable cause to
believe that the debtor was insolvent.
Id. § 24.006.
Finally,
David Bracher
asserts he was entitled to summary
judgment because FCLT failed to
produce any proof of the amount or
value of assets allegedly transferred
or received by him. In response, FCLT
refers to James Bracher's
deposition, during which he identified
at least two checks, totaling over
$20,000, that were made out to David Bracher
from the Family Trust. FCLT alleges
this trust is comprised of funds that
were fraudulently transferred from
Louise's estate. We cannot say that
FCLT has presented no proof of the
value of assets transferred to David Bracher.
Therefore,
with respect to FCLT's
claim for dissipation of assets, we
conclude: (1) the trial court erred in
granting summary judgment in favor of
Lawrence and Olson, as co- executors
of Louise's estate; (2) the trial
court erred in granting summary
judgment in favor of Olson,
individually, based on any alleged
transfer she made; and (3) the trial
court did not err in granting summary
judgment in favor of Lawrence,
individually, and Bracher-Noyes
and James Bracher,
individually and as co-trustees of the
Family Trust, based on any alleged
transfers they made.*fn12 To the
extent that the individual appellees
each received assets that were alleged
to have been fraudulently transferred
by Louise or the executors of her
estate, however, they should not be
dismissed from the lawsuit as
defendants with respect to FCLT's
fraudulent transfer claims.
Breach
of Fiduciary Duty
Next,
FCLT alleges Lawrence and Olson
breached fiduciary duties by allowing
the assets in Louise's estate to be
dissipated before paying FCLT's
alleged debt. FCLT also claims Bracher-Noyes
and James Bracher
breached fiduciary duties by allowing
the Family Trust's assets to be
dissipated as well.
In
the First Joint Motion, Lawrence, Bracher-Noyes,
and James Bracher
moved for summary judgment on the
ground that there is no evidence by
which FCLT established the existence
of a fiduciary duty. Fiduciary duties
arise either from certain formal
relationships that are recognized as
fiduciary as a matter of law, or from
the existence of an informal,
"confidential" relationship
between the parties. Insurance
Co. of N. Am. v. Morris, 981 S.W.2d
667, 674 (Tex. 1998). The
existence of a confidential or
fiduciary relationship is ordinarily a
question of fact, and the issue only
becomes a question of law when it is
one of no evidence. Crim
Truck & Tractor Co. v. Navistar
Int'l Transp.
Corp., 823 S.W.2d 591, 594 (Tex.
1992). A party asserting breach
of a fiduciary duty must establish the
existence of a confidential or similar
relationship giving rise to a
fiduciary duty. See Bado
Equip., 814 S.W.2d
at 475. FCLT has provided no
proof of any relationship between FCLT
and Bracher-Noyes
or James Bracher
that may give rise to a fiduciary
duty. Accordingly, Bracher-Noyes
and James Bracher
are entitled to summary judgment on FCLT's
breach of fiduciary duty claim.
With
respect to Lawrence, however, FCLT
asserts a fiduciary duty arose by
virtue of Lawrence's duties as an
independent executor. The relationship
between an executor and the estate's
beneficiaries is one that gives rise
to a fiduciary duty as a matter of
law. Huie v. DeShazo,
922 S.W.2d 920, 923 (Tex. 1996).
However, no such formal recognition
exists for the relationship between an
independent executor and the estate's
creditors. An executor's fiduciary
duty to the estate's beneficiaries
arises from the executor's status as
trustee of the property of the estate.
Humane Soc'y
v. Austin Nat'l Bank, 531 S.W.2d 574,
577 (Tex. 1975). Under the
Probate Code, a decedent's estate
immediately vests in the devisees,
legatees, and heirs at law of the
estate, subject to payment of the
decedent's debts. TEX. PROB.
CODE ANN. § 37 (Vernon Supp. 2002).
The
executor thus holds the estate in
trust for the benefit of those who
have acquired a vested right to the
decedent's property under the will.
See id. FCLT points to no provision in
the Probate Code or elsewhere that an
independent executor also holds the
estate property in trust for those
with claims against the estate. FCLT
cites only section 146 of the Probate
Code, which imposes certain duties on
an independent executor, including a
duty to approve and pay proper claims
against the estate. TEX. PROB.
CODE ANN. § 146(a) (Vernon Supp.
2002). This statutory duty does
not support a claim that an
independent executor holds estate
assets in trust for the benefit of
creditors, nor does it otherwise give
rise to a fiduciary duty.
Our
research has revealed two cases in
which Texas courts, with minimal
analysis, have described the
relationship between an independent
executor and a creditor of the estate
as "fiduciary." In Ertel
v. O'Brien, 852 S.W.2d 17 (Tex.
App.--Waco 1993, writ denied), the
appellate court held a bank acting as
independent executor of an estate
"breached its statutory and
fiduciary duties" and was
individually liable to a creditor for
the bank's failure to pay a valid
claim against the estate. Id.
at 21. The authorities cited in
Ertel,
however, provide support for two
distinct propositions: (1) by statute,
an executor is subject to individual
liability for failing to pay a proper
claim against the estate; and (2) the
executor of an estate is held to the
same fiduciary standards as a trustee.
See id. at
20-21. The court provides no analysis
or explanation why an independent
executor's fiduciary duty to the
estate should be expanded to include a
duty to the estate's creditors.
In
Ex parte Buller,
834 S.W.2d 622 (Tex. App.--Beaumont
1992, orig. proceeding), a habeas
corpus proceeding, the court notes an
independent executor "stands in a
fiduciary relationship" with the
estate's creditors. Id.
at 626. In support of this
proposition, the court cites two Texas
Supreme Court cases: Pearce v. Stokes,
155 Tex. 564, 291 S.W.2d 309 (1956),
and Cochran's Adm'rs
v. Thompson, 18 Tex. 652 (1857). Both
cases are distinguishable because each
deals with court-appointed (as opposed
to independent) administrations. In
Pearce, the issue was whether an
estate administrator could set aside
the forced sale of the decedent's
property by one holding a mortgage on
that property, where the sale occurred
after the decedent's death, but before
administration of the estate began.
The court held the administrator could
set aside the sale, stating the
administration of an estate "is
for the benefit of all creditors, not
just those who have secured claims or
other claims of high priority." 291
S.W.2d at 312. Thus, the court
in Pearce was concerned not with the
relationship between the executor and
the estate's creditors, but rather the
relationship among the various
creditors. We do not read Pearce to
say the executor in that case owed a
fiduciary duty to the estate's
creditors. In Thompson, the court
notes the appointment of an
administrator in that case was
"merely a trust to pay the claims
of creditors, and then to restore the
remainder of the assets to the
heirs." 18
Tex. at 656. The appointment of
an executor or administrator may,
depending on the language in the
court's order, create a trust on
behalf of the estate's creditors and,
therefore, a fiduciary duty to the
creditors. Under the present statutory
scheme, however, we cannot say an
independent executor automatically
holds the estate assets in trust for
the benefit of estate creditors.
We
conclude that the relationship between
FCLT and Lawrence, as independent
executor of Louise Bracher's
estate, does not give rise to a
fiduciary duty as a matter of law.
Furthermore, FCLT failed to provide
any proof supporting the existence of
a confidential or similar relationship
between Lawrence and FCLT.
Accordingly, summary judgment was
properly granted in favor of Lawrence.
In
the Second Joint Motion, Olson
asserted she was entitled to summary
judgment based on the statute of
limitations. Breach of fiduciary duty
claims are governed by the four- year
statute. TEX. CIV. PRAC. & REM.
CODE ANN. § 16.004(a)(5)
(Vernon Supp. 2002). Any fiduciary
duties that Olson allegedly owed to
FCLT would not have come into
existence until after Louise Bracher's
death in 1997, when she became
co-executor of Louise's estate.
Because her alleged duty could not
have arisen before 1997, any claim
against Olson for breach of this
purported duty likewise could not have
accrued before that time. Therefore,
Olson is not entitled to summary
judgment on limitations.
Accordingly,
on FCLT's
breach of fiduciary duty claim, we
conclude the trial court erred in
granting summary judgment in favor of
Olson, but the court did not err in
granting summary judgment in favor of
Lawrence, Bracher-Noyes,
and James Bracher.
Conversion
FCLT
next alleges that by refusing to use
assets in their possession to pay FCLT's
debt claim, Lawrence, Olson, Bracher-Noyes,
and James Bracher
have converted those assets to the
detriment of FCLT. In their Second
Joint Motion, appellees
asserted this claim fails because FCLT
never had title to or the right to
possess the assets that were allegedly
converted. We agree. To bring a
conversion claim, the aggrieved party
must have either ownership,
possession, or the right to immediate
possession of the property. Crutcher
v. Continental Nat'l Bank, 884 S.W.2d
884, 888 (Tex. App.--El Paso 1994,
writ denied). A lien on
property does not provide title to
that property, but rather the right to
have satisfaction out of the property
to secure the payment of a debt. Id.
Because the plaintiffs in Crutcher
had only a right to obtain
satisfaction of a debt (i.e., a lien),
the court held they had no cause of
action for conversion. Id.
at 889. Similarly, FCLT does
not claim title to, possession of, or
a right to immediate possession of the
property in question. FCLT claims only
a lien on certain property for payment
of its alleged debt. We conclude that
summary judgment was properly granted
against FCLT on its conversion claim.
Fraud
Finally,
FCLT alleges Lawrence and Olson
engaged in fraudulent behavior by
knowingly and intentionally engaging
in the acts complained of elsewhere in
the petition. Lawrence and Olson
contend they are entitled to summary
judgment on FCLT's
fraud claim because FCLT has presented
no evidence to support the essential
elements of common-law fraud.
Specifically, FCLT failed to provide
summary judgment proof showing the
existence of (1) a false, material
misrepresentation (2) that was
knowingly or recklessly made (3) with
the intent that the statement be
relied upon by FCLT. See
Sears, Roebuck & Co. v. Meadows,
877 S.W.2d 281, 282 (Tex. 1994) (per curiam).
To the extent FCLT's
petition may be read as raising an
independent cause of action for
common-law fraud, summary judgment for
Lawrence and Olson is proper.
FCLT'S
MOTION FOR SUMMARY JUDGMENT
FCLT's
nine remaining points of error are all
directed at the trial court's denial
of FCLT's
motion for summary judgment. Where a
party moves for summary judgment on
its own claim for affirmative relief,
the moving party must conclusively
establish each essential element of
that claim. See
MMP, Ltd. v. Jones, 710 S.W.2d 59, 60
(Tex. 1986) (per curiam).
If
the party opposing the summary
judgment relies on an affirmative
defense, that party must then come
forward with summary judgment proof
sufficient to raise an issue of fact
on each element of the defense to
avoid summary judgment. Brownlee
v. Brownlee, 665 S.W.2d 111, 112 (Tex.
1984).
Louise
Bracher's
Estate
In
its fourth point of error, FCLT argues
the trial court erred in denying its
motion for summary judgment against
"the Estate of Louise Bracher"*fn13
based on FCLT's
debt claim. This point of error also
asserts "trust assets and estate
assets were subject to the debt and
should have been used to pay the
debt." Thus, FCLT's
fourth point of error refers not only
to whether it is entitled to judgment
on the debt claim, but also to the
separate question of which assets FCLT
can reach to collect such a judgment.
Despite the multifarious nature of FCLT's
point of error, we address it because
we can ascertain with reasonable
certainty the alleged errors raised by
FCLT. See Zeolla
v. Zeolla,
15 S.W.3d 239, 241 n.2 (Tex.
App.--Houston [14th Dist.] 2000, pet.
denied).
With
respect to its debt claim, FCLT
presented summary judgment proof of
the following:
(1)
Louise Bracher
executed the Renewal Note, payable to
First City Bank - Inwood
Forest, N.A.;
(2)
the Renewal
Note became due on February 18, 1991;
(3)
the Renewal
Note was assigned to FCLT, the current
owner and holder of the Renewal Note;
(4)
Louise defaulted on the Renewal Note
and, despite demands, she and the
executors of her estate have failed to
pay the amount owing; and
(5)
as of
January 10, 2000, the amount owed on
the Renewal Note is $701,017.84 in
principal and interest, with interest
accumulating at $106.77 per day.
This
proof is sufficient to establish FCLT's
claim for a debt. See Loomis v.
Republic Nat'l Bank of Dallas, 653
S.W.2d 75, 78 (Tex. App.--Dallas 1983,
writ ref'd
n.r.e.).
Lawrence and Olson responded to FCLT's
summary judgment motion only by
asserting the statute of frauds as a
defense. As discussed above, the
statute of frauds does not preclude
FCLT from asserting this claim against
Lawrence and Olson in their capacities
as co-executors of Louise's estate. We
conclude FCLT has shown its
entitlement to summary judgment on its
debt claim against Lawrence and Olson,
in their capacities as co-executors of
Louise's estate.
FCLT
next contends it conclusively
established that all assets in the
three trusts are subject to FCLT's
debt claim because the spendthrift
clauses in the trusts are void with
respect to claims by Louise Bracher's
creditors. FCLT relies on section
112.035 of the Texas Property Code,
titled "Spendthrift Trusts,"
which provides:
If
the settlor
is also a beneficiary of the trust, a
provision restraining the voluntary or
involuntary transfer of his beneficial
interest does not prevent his
creditors from satisfying claims from
his interest in the trust estate. TEX.
PROP. CODE ANN. §
112.035(d)
(Vernon Supp. 2002).
FCLT
asserts this section creates a
statutory lien in its favor on all
assets placed in the three trusts.
However, none of the cases cited by
FCLT involve the situation presented
here, in which the creditor seeks to
satisfy its claim from assets in which
the debtor no longer has a beneficial
interest. In other words, whether or
not section 112.035 would have
permitted FCLT to satisfy its debt
claim from the trust assets while
Louise was alive, FCLT has not
conclusively established its right to
recovery from the trusts after her
death. The trial court did not err in
denying summary judgment based on FCLT's
alleged statutory lien on the trust
assets.
FCLT
also argues assets distributed from
Louise's estate prior to paying FCLT's
claim were subject to the debt. Under
section 37 of the Probate Code,
property of a decedent received by the
estate's beneficiaries is subject to
payment of the decedent's debts. TEX. PROB.
CODE ANN. § 37 (Vernon Supp. 2002).
To enforce a claim against the
beneficiaries, however, the creditor
must show, specifically, what property
came into their hands from the estate.
Perkins v. Cain's
Coffee Co., 466 S.W.2d 801, 802-03
(Tex. Civ.
App.--Corpus Christi 1971, no writ).
FCLT's
summary judgment proof consists solely
of Lawrence's testimony that she and
others received "a few pieces of
furniture," "some
artwork," "a little bit of
jewelry," and "a couple
pieces of clothes" from Louise's
estate. This testimony alone is
insufficient to establish the
distributed assets with enough
specificity to enable the court to
properly decree FCLT's
lien. See id. at
803. Furthermore, FCLT has not shown
conclusively that this property was
subsequently sold, commingled, or lost
its character so as to impose personal
liability on the recipients. Id.
We
sustain FCLT's
fourth point of error with respect to
the trial court's denial of FCLT's
motion for summary judgment on its
debt claim against Lawrence and Olson,
as co- executors of Louise's estate. FCLT's
fourth point of error is otherwise
overruled.
Lawrence
and Olson, Individually
In
points of error five and six, FCLT
contends the trial court erroneously
denied summary judgment against
Lawrence and Olson, individually,
based on FCLT's
claims they (1) breached their
fiduciary duties, (2) hold trust
assets subject to FCLT's
debt claim, and (3) dissipated assets
subject to FCLT's
debt claim. We already have determined
FCLT failed to establish as a matter
of law that after Louise Bracher's
death, the trust assets were subject
to FCLT's
debt claim. Thus, summary judgment was
properly denied as to claims based on
holding or dissipating trust assets.
FCLT
contends it is entitled to summary
judgment on its claim for breach of
fiduciary duty. For reasons discussed
above with respect to appellees'
motions for summary judgment on this
claim, we disagree. FCLT has not
conclusively established the existence
of a confidential relationship between
itself and the executors of Louise's
estate. FCLT's
fifth and sixth points of error are
overruled.
Bracher-Noyes,
James Bracher,
and David Bracher
In
its seventh, eighth, and ninth points
of error, FCLT asserts the trial court
erred in denying FCLT summary judgment
against Bracher-Noyes
and James Bracher,
both individually and as co-trustees
of the Family Trust, and against David
Bracher
individually.
FCLT's
claims against these appellees
rest on the proposition that all of
the assets in the trusts were subject
to FCLT's
debt claim. Because FCLT has not
established this proposition as a
matter of law, summary judgment is
inappropriate on its claims that
assets in the Family Trust were
improperly held, received, or
dissipated by Bracher-Noyes,
James Bracher,
or David Bracher.
Furthermore,
FCLT moved for summary judgment
against Bracher-Noyes
and James Bracher
on its claim for breach of fiduciary
duty. As discussed above with respect
to appellees'
motions for summary judgment, FCLT
failed to present any summary judgment
proof of a relationship between FCLT
and the trustees of the Family Trust
that would give rise to a fiduciary
duty. Accordingly, summary judgment on
this claim was properly denied. FCLT's
points of error seven through nine are
overruled.
Accounting
In
its tenth point of error, FCLT claims
the trial court erred in denying its
motion for summary judgment to compel
an accounting from Lawrence and Olson,
as co-executors of Louise's estate,
and from Bracher-Noyes
and James Bracher,
as co-trustees of the Family Trust.
FCLT does not cite a single authority
nor set forth any legal argument to
support its contention that it is
entitled to an accounting. A point of
error not supported by authority is
waived. Wright v.
Greenberg, 2 S.W.3d 666, 673 (Tex.
App.--Houston [14th Dist.] 1999, pet.
denied). We overrule FCLT's
tenth point of error.
Foreclosure,
Garnishment, and Injunctive Relief
FCLT
next complains the trial court erred
in denying its summary judgment motion
for (1) foreclosure and/or garnishment
of assets, and (2) an injunction
against further dissipation of assets.
Although FCLT refers to both trust and
estate assets in the statement of its
point of error, FCLT identifies only
trust assets to which it claims an
entitlement to foreclose or garnish.
Because FCLT has not shown as a matter
of law that the trust assets were
subject to its debt claim, the trial
court did not err in denying summary
judgment on FCLT's
request to foreclose or garnish those
assets.
FCLT
also claims it was entitled to an
injunction preventing appellees
from further dissipating or otherwise
disposing assets from the trusts or
estate. FCLT's
brief points to no authority for its
alleged entitlement to such injunctive
relief. Accordingly, FCLT's
complaint that the trial court erred
in denying the injunction by summary
disposition is waived. See Wright, 2
S.W.3d at 673. FCLT's
eleventh point of error is overruled.
Attorney's
Fees
Finally,
in its twelfth point of error, FCLT
complains the trial court erred by not
awarding FCLT its reasonable
attorney's fees. Because the trial
court granted summary judgment to appellees
on all of FCLT's
claims, it did not address FCLT's
request for attorney's fees. However,
because we conclude FCLT was entitled
to judgment as a matter of law on its
debt claim against Lawrence and Olson
as co-executors of Louise Bracher's
estate, we will consider whether FCLT
has also established its entitlement
to attorney's fees on that claim.
Attorney's
fees may not be recovered from an
opposing party unless such recovery is
provided for by statute or by
contract. Travelers
Indem.
Co. of Conn. v.
Mayfield, 923 S.W.2d 590, 593 (Tex.
1996). In this case, the
Renewal Note provides for the recovery
of FCLT's
attorney's fees through the
incorporation of a fee provision in
Victor Bracher's
original 1980 note. Paragraph 4 of the
Renewal Note provides that Louise Bracher
"agrees to be bound by and to
abide by all of the terms and
conditions contained in the [1980]
Note and the Deed of Trust." The
1980 note states that if suit is filed
to collect on a default, the debtor is
liable for "a reasonable amount
as attorney's or collection
fees." Thus, FCLT is entitled to
recover a reasonable fee from the
representatives of Louise Bracher's
estate in their capacities as
co-executors of the estate.
As
part of its summary judgment proof,
FCLT submitted the affidavit of Mynde
S. Eisen, FCLT's
attorney, in support of FCLT's
request for attorney's fees. In her
affidavit, Eisen
attested the following fees were
reasonable: (1) $39,000.00 for
services performed on behalf of FCLT
to collect on the claims against appellees;
(2) $29,900.00 in out-of-pocket costs
and expert fees; (3) $10,000.00 to
defend or prosecute an appeal; (4)
$5,000.00 to prepare or respond to a
request for review by the Texas
Supreme Court; and (5) $5,000.00 to
defend or prosecute an appeal in the
supreme court. This affidavit is
uncontested by appellees.
We therefore sustain FCLT's
twelfth point of error and render
judgment for FCLT against Olson and
Lawrence, in their capacities as
co-executors, in the amounts of
$68,900.00 in attorney's fees and
costs for trial, $10,000.00 for appeal
to this court, and $10,000.00 in
conditional fees in the event of a
petition for review and subsequent
grant by the Texas Supreme Court.
CONCLUSION
Based
on the foregoing, we conclude as
follows:
(1)
Because the statute of frauds does not
preclude FCLT's
debt claim against Antoinette Lawrence
and Barbara Olson in their capacities
as co-executors of Louise Bracher's
estate, and because FCLT has
conclusively established its
entitlement to judgment on this claim,
we reverse the summary judgment
granted in favor of Lawrence and Olson
as co-executors and render judgment in
favor of FCLT. We also render judgment
against Lawrence and Olson, as
co-executors of Louise's estate, for
$78,900.00 as reasonable attorney's
and collection fees, plus $5,000.00 in
conditional fees for any petition for
review to the Texas Supreme Court and
$5,000.00 in conditional fees for any
subsequent grant of review by the supreme
court.
(2)
FCLT's
fraudulent transfer claims are not
barred by limitations; therefore, we
reverse the summary judgments in favor
of Lawrence and Olson as co- executors
of Louise's estate and Olson
individually and remand these claims
to the trial court for further
proceedings.
(3)
Because limitations does not bar FCLT's
claim for breach of fiduciary duty
against Olson, we reverse the grant of
summary judgment in her favor on this
claim and remand for further
proceedings.
(4)
We affirm the trial court's judgment
in all other respects.
Publish
-- TEX. R. APP. P.
47.3(b).
Opinion
Footnotes
*fn1
Senior Chief Justice Paul C. Murphy
sitting by assignment.
*fn2
Some time
after the trusts were created, Barbara
Bracher
married and changed her name to
Barbara Olson.
*fn3
Olson had not yet appeared in the
lawsuit at the time the First Joint
Motion was filed.
*fn4
On this and
some other claims in FCLT's
petition, FCLT does not specify the
capacity in which the named defendants
are being sued. For purposes of our
review, we will treat these claims as
having been raised against each such
defendant in both the defendant's
individual and representative
capacity.
*fn5
The Second Joint Motion was filed on
behalf of Lawrence and Olson, both
individually and as co- executors of
Louise's estate, and James Bracher
and Bracher-Noyes,
both individually and as co-trustees
of the Family Trust. In contrast to
David Bracher's
motion, the Second Joint Motion was
not captioned as an amended motion.
Thus, the First Joint Motion remained
pending.
*fn6
Section 3.401 provides, "A person
is not liable on an instrument unless
the person . . . signed the instrument
. . . ." TEX. BUS. &
COM. CODE ANN. § 3.401(a) (Vernon
Supp. 2002).
*fn7
The
relevant portion of section 26.01
states: (a) A promise or agreement
described in Subsection (b) of this
section is not enforceable unless the
promise or agreement, or a memorandum
of it, is (1) in writing; and (2)
signed by the person to be charged
with the promise or agreement or by
someone lawfully authorized to sign
for him. (b) Subsection (a) of this
section applies to: (1) a promise by
an executor or administrator to answer
out of his own estate for any debt or
damage due from his testator or
intestate; [and] (2) a promise by one
person to answer for the debt,
default, or miscarriage of another
person . . . . TEX. BUS. &
COM. CODE ANN. § 26.01 (Vernon 1987).
*fn8
This claim
is properly brought against Lawrence
and Olson in their capacities as
co-executors. See TEX. PROB.
CODE ANN. § 147.
*fn9
FCLT does not specify in which
capacity it alleges the defendants
acted. Because this claim focuses on
the use of trust assets, however, we
will assume the claim is directed to
Olson and Lawrence as individuals and
James Bracher
and Bracher-Noyes
in their capacities as co-trustees of
the Family Trust.
*fn10
At Louise's death, Lawrence and Olson
each received the assets in their
respective trusts outright, while the
Family Trust remained intact, with Bracher-Noyes
and James Bracher
eventually named as co- trustees. FCLT
claims that Bracher-Noyes,
James Bracher,
and David Bracher
have each received disbursements from
the Family Trust.
*fn11
The UFTA provides at least four
different grounds for finding a
transfer to be fraudulent. See TEX.
BUS. & COM. CODE ANN. §§
24.005(a)(1),
24.005(a)(2), 24.006(a), &
24.006(b) (Vernon 1987 & Supp.
2002). Although FCLT refers to both
sections 24.005 and 24.006 in its
petition, it cites only section 24.006
in response to the various summary
judgment motions. Furthermore, FCLT
conceded during oral argument that it
was not asserting an actual intent to
defraud, a required element for a
claim arising under section 24.005(a)(1).
We therefore assume that FCLT's
fraudulent transfer claim is limited
to the grounds set forth in section
24.006. Section 24.006 provides: (a) A
transfer made or obligation incurred
by a debtor is fraudulent as to a
creditor whose claim arose before the
transfer was made or the obligation
was incurred if the debtor made the
transfer or incurred the obligation
without receiving a reasonably
equivalent value in exchange for the
transfer or obligation and the debtor
was insolvent at that time or the
debtor became insolvent as a result of
the transfer or obligation. (b) A
transfer made by a debtor is
fraudulent as to a creditor whose
claim arose before the
*fn12
This
includes any alleged
"transfer" consisting of the
refusal to pay FCLT's
debt claim.
*fn13
It is well-settled that the estate of
a decedent is not a legal entity and
may not sue or be sued as such. Price
v. Estate of Anderson, 522 S.W.2d 690,
691 (Tex. 1975). However, a
judgment involving a decedent's estate
may still be valid if the estate's
personal representative "had
notice of and participated
sufficiently in the case to make the
judgment binding against the
representative." Bernstein
v. Portland Sav.
& Loan Ass'n,
850 S.W.2d 694, 700 (Tex. App.--Corpus
Christi 1993, writ denied); see also Embrey
v. Royal Ins. Co. of Am., 22 S.W.3d
414, 415 n.2 (Tex. 2000). Lawrence and
Olson, the co-executors of Louise's
estate, both appeared and participated
in this case in their capacities as
executors of the estate. We therefore
treat FCLT's
fourth point of error as requesting
judgment against Lawrence and Olson as
personal representatives of the
estate.
Texas
Driver Detail
