Opinion
No. 07-15-00461-CV
09-28-2017
KORY DAWN MUSQUIZ, APPELLANT v. DOUGLAS ALAN KEESEE, INDIVIDUALLY AND IN HIS CAPACITY AS INDEPENDENT EXECUTOR OF THE ESTATE OF GEORGE FREDERICK KEESEE, APPELLEE
On Appeal from County Court at Law Hale County, Texas
Trial Court No. 14587; Honorable John A. Hutchison III, Presiding
Sitting by appointment.
MEMORANDUM OPINION
Before QUINN, C.J., CAMPBELL and PIRTLE, JJ.
This appeal arises from the disposition of the estates of Donna Ann Keesee (Ann) and George Frederick Keesee (Fred) among two of their adopted children, Appellant, Kory Dawn Musquiz (Kory), and Appellee, Douglas Alan Keesee (Douglas). Kory contends the trial court erred in denying her efforts to set aside an assignment from her to Fred of the interest she inherited in Ann's estate, while he was acting as independent executor of that estate. By six issues, Kory questions whether (1) the assignment relieved Fred of the fiduciary duties he owed to her as a beneficiary of that estate; (2) Fred breached those duties and failed to prove the assignment was fair and equitable; (3) she is estopped from asserting claims against Fred's estate under principles of equitable or quasi-estoppel; (4) the doctrine of laches bars her claims against Douglas as independent executor of Fred's estate; (5) the trial court erred in sustaining objections based on Rule 601(b) of the Texas Rules of Evidence, known as the Dead Man's Rule, based on conversations between herself and Fred involving his efforts to induce her into assigning to him all of the assets she received under Ann's will; and (6) the trial court erred in granting a partial summary judgment on Douglas's no-evidence motion for summary judgment on the issue of a conspiracy between him and Fred to deprive her of the benefits she received under Ann's will. We affirm in part, reverse and render in part, and remand in part.
BACKGROUND
Fred and Ann had no biological children. In the 1960s, they adopted two children, Beth Ann (Kory's mother) and Douglas. Beth Ann had two biological children, Kory, who was born in 1983, and Christopher Kaiser. In 1997, after Beth Ann had abandoned Kory, Fred and Ann decided to also adopt her. When Kory was adopted, Douglas and Fred had been in the farming business together for more than fifteen years. In terms of their family relationship, Kory was significantly closer to Ann and Douglas was closer to Fred.
Ann, a homemaker, died on November 15, 2010. Prior to that date, she and Fred had executed various wills over the years. Ann's final will, dated June 21, 2007, devised her interest in a half-section of land (approximately 320 acres) to Douglas and the rest and remainder of her real property interests to Kory. Ann's will was admitted to probate on January 19, 2011, and Fred was appointed as the independent executor of her estate. As a beneficiary of Ann's estate, Kory was provided with notice from Fred's attorney, Jared Melton, as required by former section 128A of the Texas Probate Code.
Kory actually received two separate notices, one dated January 27, 2011, and a second dated February 17, 2011. The notices were identical. The notices advised her that Ann's will had been admitted to probate and that she was a beneficiary. As required by the statute, a copy of the will and a copy of the order admitting it to probate were included with the notices. The notices advised Kory that the law firm represented Fred and not her, nor Ann's estate.
Based on his understanding that the family wanted Fred to receive Ann's entire estate, Melton prepared identical assignments for Kory and Douglas to sign that would transfer to Fred everything they would have inherited from Ann. Kory's assignment was mailed to her by Melton. In relevant part, the assignment provided that "in accordance with the provisions of Texas Probate Code Section 37B" Kory assigned to Fred "any interest in any property which [she] may be entitled to receive under the Will of Donna Ann Keesee, Deceased." Douglas assigned his inheritance from Ann to Fred on April 22, 2011. After discussing the matter with both Fred and Douglas, Kory signed the assignment on April 25, 2011. According to Kory, Fred and Douglas convinced her to execute the assignment so Fred could continue to farm the land. While Kory contends the assignment was signed and delivered to Fred based upon express representations he made to her, the trial court did not allow the admission of evidence concerning those representations based on the "Dead Man's Rule." A few weeks later, Fred executed a Distribution Deed transferring all assets from Ann's estate to himself. Thereafter, Fred and Douglas continued to farm the land that was a part of Ann's estate.
See TEX. R. EVID. 601(b). According to Kory's offer of proof, Fred assured her that if she would sign the assignment, he would provide for her in his will and deliver to her the title to a vehicle Ann had previously gifted to her. Shortly after execution of the assignment, Kory was given the title to her vehicle.
After Ann's death, Fred made three new wills. The first will, dated July 25, 2011, left substantial property to Kory, including Fred's residence, a half-section of land, and one-third of the residuary estate. Months later, on September 19, 2011, Fred signed a new will leaving his estate to Douglas and his grandson, Christopher, but specifically excluding Kory as a beneficiary. By his final will dated July 23, 2013, he left his entire estate to Douglas. Fred died on November 5, 2013, and the July 2013 will was admitted to probate on November 12, 2013. The will named Douglas as the independent executor of Fred's estate. Relying on the validity of the earlier assignments, Douglas subsequently executed an Executor's Deed, and later a Correction Executor's Deed, transferring all of Fred's assets to himself effective November 27, 2013. The property transferred to Douglas included the property covered by the disputed assignment from Kory to Fred.
The corrected deed was executed to correct a property description.
On April 24, 2014, Kory brought suit against Douglas, individually and in his capacity as the independent executor of Fred's estate, seeking to set aside her 2011 assignment to Fred of the property she inherited from Ann. By her suit, Kory sought rescission of the assignment and the imposition of a constructive trust as to the assigned interests. Kory also sought damages from Douglas on various other claims including, breach of "informal" fiduciary duties owed to her by Douglas, civil conspiracy between Fred and Douglas, fraud, money had and received, promissory estoppel, and trespass to try title. In addition to damages, Kory sought an accounting of income from the disputed property which she alleged Douglas had wrongfully withheld from her. Douglas responded with a general denial and various affirmative defenses, including estoppel, laches, offset, release, statute of frauds, statute of limitations, res judicata, collateral estoppel, and waiver. Douglas also counter-petitioned for declaratory relief seeking validation of the assignment and recovery of his reasonable and necessary attorney's fees.
Douglas filed a no-evidence motion for summary judgment on July 31, 2015, and Kory filed her response on August 13, 2015. On September 8, 2015, the trial court entered a partial summary judgment in favor of Douglas as to Kory's claims of "conspiracy, money had and received, promissory estoppel, trespass-to-try-title and fraud." The remainder of the case, including her claims for breach of a fiduciary duty, proceeded to a bench trial. Following that trial, the trial court entered a final judgment declaring Kory's assignment to Fred to be valid, denying Kory's request to set aside the assignment, ordering that she "take nothing" on her other claims against Douglas, either individually or in his capacity as independent executor of Fred's estate, and denying Douglas any affirmative relief.
Upon request, the trial court entered Findings of Fact and Conclusions of Law containing 109 "Findings of Fact" and 105 "Conclusions of Law." Included within those findings and conclusions were the following:
• Kory signed the disputed assignment pursuant to Section 37B of the Texas Probate Code.Kory timely filed her Notice of Appeal.
• Kory had "no hidden agenda or agreement to do something different" than sign the assignment.
• Kory's assignment was valid pursuant to Chapter 37 of the Texas Civil Practice and Remedies Code.
• Kory's assignment to Fred was a gift of realty memorialized in writing.
• Fred owed Kory a fiduciary duty; however, he did not breach that duty.
• Section 37B(a) of the Texas Probate Code allows a fiduciary to receive an assignment from a beneficiary.
ANALYSIS
ISSUE FIVE—DEAD MAN'S RULE
For purposes of logical sequence, we will first address Kory's fifth issue pertaining to the exclusion of certain evidence she contends was relevant to a proper disposition of her claims. Specifically, Kory contends the trial court erred in determining that statements and representations made to her by Fred, concerning the circumstances surrounding her assignment to him of her inheritance from Ann, were inadmissible under the "Dead Man's Rule."
Rule 601(b) of the Texas Rules of Evidence, also referred to as the Dead Man's Rule, generally prohibits a party in civil actions by or against executors, administrators, or guardians, in which judgment may be rendered for or against them as such, from testifying regarding oral statements made by a testator unless the statements can be corroborated or are solicited by the opposing party. In re Estate of Wright, 482 S.W.3d 650, 655 (Tex. App.—Houston [14th Dist.] 2015, pet. denied). In other words, the rule does not prohibit testimony concerning statements made by the deceased that are properly corroborated. Lewis v. Foster, 621 S.W.2d 400, 404 (Tex. 1981).
In this case, Kory made an offer of proof of evidence she maintains corroborated her testimony that Fred promised to provide for her as inducement for her to execute the assignment. The offer of proof consisted of her deposition testimony wherein she testified that Fred induced her into executing the assignment, in part, by offering her the title to her vehicle. According to her testimony, Fred told her that Ann was not in her right mind and that he needed title to the land in order to continue his farming operations. He also promised that upon his death, all funds in the bank would be equally divided between her and Douglas. He further mentioned an irrigated plot of land he would leave her with the remaining farmland being left to Douglas for him to continue farming. She contends that the delivery of her car title and the changes in Fred's wills, which at first included her and months later disinherited her, corroborate her story that she was induced into executing the assignment based on these promises.
We review a trial court's decision to exclude evidence for abuse of discretion. Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 918 (Tex. 2004). A trial court commits an abuse of discretion when it acts "without reference to any guiding rules and principles." Quixtar Inc. v. Signature Mgmt. Team, LLC, 315 S.W.3d 28, 31 (Tex. 2010) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985)). An erroneous evidentiary ruling warrants reversal only if the error probably caused the rendition of an improper judgment. Volkswagen, 159 S.W.3d at 918.
Here, Douglas maintains that, even if the trial court erred in excluding the evidence under the Dead Man's Rule, Kory has failed to challenge other grounds relied upon by the trial court to exclude the proffered testimony. Specifically, Douglas refers to Finding of Fact 75 (reciting the statements were "properly excluded," in part, because they were hearsay in violation of Texas Rules of Evidence 801 and 802, and, in part, because they violated applicable statutes of fraud) and Conclusion of Law 71 (reciting the same). "[W]hen an appellee urges several objections to a particular piece of evidence and, on appeal, the appellant complains of its exclusion on only one of those bases, the appellant has waived that issue for appeal because he has not challenged all possible grounds for the trial court's ruling that sustained the objection." Cantu v. Horany, 195 S.W.3d 867, 871 (Tex. App.—Dallas 2006, no pet.). Issue five is overruled.
ISSUES ONE AND TWO—FIDUCIARY DUTY
Because issues one and two are both fiduciary-duty centric, we address them simultaneously. By her first issue, Kory maintains that her assignment to Fred did not extinguish his fiduciary duty to her because such agreements are void and by her second issue, she maintains that, contrary to the trial court's findings, Fred breached that fiduciary duty. We disagree as to her first issue, but agree as to her second issue.
APPLICABLE PROBATE CODE PROVISIONS
Central to the resolution of the first two issues is the validity of Kory's assignment to Fred of the interest she inherited under Ann's will, in accordance with the provisions of former section 37B of the Texas Probate Code. Relevant provisions of that section, in effect at the time, provided as follows:
In 2009, the Texas Legislature repealed the Texas Probate Code with an effective date of January 1, 2014, and recodified the statutes as the Texas Estates Code. See Act of May 26, 2009, 81st Leg., R.S., ch. 680, §§ 1, 10(a), 2009 Tex. Gen. Laws 1512, 1731-32. Because all of the relevant facts of this case occurred before that effective date, we will apply and refer to the law in effect at that time.
Section 37B. ASSIGNMENT OF PROPERTY RECEIVED FROM A DECEDENTSee Act of May 17, 1985, 69th Leg., R.S., ch. 880, § 1, 1985 Tex. Gen. Laws 3003; paragraph (b) amended by Act of May 15, 2007, 80th Leg., R.S., ch. 1170, § 3.02, 2007 Tex. Gen. Laws 4000, 4003. (Emphasis added).
(a) A person entitled to receive property or an interest in property from a decedent under a will, by inheritance, or as a beneficiary under a life insurance contract, and who does not disclaim the property under Section 37A of the code, may assign the property or interest in property to any person.
(b) The assignment may, at the request of the assignor, be filed as provided for the filing of a disclaimer under Section 37A(h) of this code. The filing requires the service of notice under Section 37A(i) of this code.
(c) Failure to comply with the provisions of Section 37A of this code does not affect an assignment under this section.
(d) An assignment under this section is a gift to the assignee and is not a disclaimer or renunciation under Section 37A of this code.
(e) An assignment that would defeat a spendthrift provision imposed in a trust may not be made under this section.
Also relevant to our analysis is Section 128A of the Texas Probate Code, entitled NOTICE TO CERTAIN BENEFICIARIES AFTER PROBATE OF WILL, as amended in 2007, which provided as follows:
(b) Except as provided by Subsection (d) of this section, not later than the 60th day after the date of an order admitting a decedent's will to probate, the personal representative of the decedent's estate, including an
independent executor or independent administrator, shall give notice that complies with Subsection (e) of this section to each beneficiary named in the will whose identity and address are known to the personal representative or, through reasonable diligence, can be ascertained. If, after the 60th day after the date of the order, the personal representative becomes aware of the identity and address of a beneficiary who was not given notice on or before the 60th day, the personal representative shall give the notice as soon as possible after becoming aware of that information.See Act of May 28, 2007, 80th Leg., R.S., ch. 801, § 1, 2007 Tex. Gen. Laws 1657, 1658. Subparagraph (d) provides that notice must be by registered or certified mail, return receipt requested and subparagraph (e) requires the applicant to file a copy of the required notice with the court in which the will was admitted to probate. Id.
APPLICABLE LAW
A fiduciary relationship exists between an executor of an estate and the beneficiaries of that estate. Humane Soc'y of Austin & Travis County v. Austin Nat'l Bank, 531 S.W.2d 574, 577 (Tex. 1975). As such, in the administration of an estate, an executor is held to the same high standards and fiduciary duties as a trustee under the Texas Trust Code. See TEX. PROP. CODE ANN. §§ 111.001-.006 (West 2014) (formerly TEX. REV. CIV. STAT. ANN. articles 7452b-1 through 7452b-48). "As trustee of the property of the estate, the executor is subject to the high fiduciary standards applicable to all trustees." Humane Soc'y of Austin & Travis County, 531 S.W.2d at 577. That includes the fiduciary duties of candor and full disclosure of all material facts known to the executor that might affect the rights of the beneficiaries. Montgomery v. Kennedy, 669 S.W.2d 309, 313 (Tex. 1984); Avary v. Bank of Am., N.A., 72 S.W.3d 779, 792 (Tex. App.—Dallas 2002, pet. denied). Furthermore, a trustee's duty of loyalty prohibits him from using the advantage of his position to gain any benefit for himself at the expense of his trust and from placing himself in any position where his self-interest will or may conflict with his obligations as trustee. Lesikar v. Rappeport, 33 S.W.3d 282, 297 (Tex. App.—Texarkana 2000, pet. denied) (citing Slay v. Burnett Trust, 187 S.W.2d 377, 388 (Tex. 1945)).
Unless granted by a document creating an express trust, transactions between a fiduciary and his principal are presumptively fraudulent and void and the burden lies on the fiduciary to establish the validity of any particular transaction in which he is involved. Id. at 296. In a fiduciary relationship, the burden is on the fiduciary to show that he acted fairly and informed the principal of all material facts relating to the alleged transaction. Id. Even in the case of a gift between parties with a fiduciary relationship, equity indulges the presumption of unfairness and invalidity and requires proof at the hand of the party claiming validity of the transaction that it is fair and reasonable. Estate of Townes v. Townes, 867 S.W.2d 414, 417 (Tex. App.—Houston [14th Dist.] 1993, writ denied). To establish the fairness of a transaction between a fiduciary and his principal, relevant factors include whether (1) there was full disclosure regarding the transaction, (2) the consideration, if any, was adequate, and (3) the beneficiary had the benefit of independent advice. Jordan v. Lyles, 455 S.W.3d 785, 792 (Tex. App.—Tyler 2015, no pet.) (citing Townes, 867 S.W.2d at 417).
The elements of breach of a fiduciary duty claim are (1) a fiduciary relationship between the plaintiff and defendant, (2) the breach of a duty created by that relationship, and (3) an injury to the plaintiff or benefit to the defendant as a result of the defendant's breach. Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999); Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 513-14 (Tex. 1942); Lundy v. Masson, 260 S.W.3d 482, 501 (Tex. App.—Houston [14th Dist.] 2008, pet. denied).
ANALYSIS
By her first issue, Kory contends that an assignment by a beneficiary to an executor, made pursuant to section 37B of the former Texas Probate Code, now codified as section 122.201 of the Texas Estates Code, is essentially void ab initio because it is against public policy in view of an executor's fiduciary duty to a beneficiary. She contends that a gift to an executor by a beneficiary is manifestly unfair and is, therefore, void as a matter of law. Douglas disagrees, contending that Kory's interpretation of section 37B presents a matter of first impression regarding the application of that section to assignments between a beneficiary and an executor.
At the outset, we note that such a draconian interpretation of assignments between executors and beneficiaries is certainly not supported by a reading of section 37B. Section 37B expressly provides that "[a] person entitled to receive property or an interest in property from a decedent under a will . . . may assign the property or interest in property to any person." (Emphasis added). Any person means any person—regardless of the relationship between the assignor and the assignee.
Furthermore, there is an extensive body of law supporting the proposition that Texas has long had a policy favoring alternative methods of estate distribution amicably among beneficiaries in lieu of formal administration or litigation. See Stringfellow v. Early, 15 Tex. Civ. App. 597, 40 S.W. 871, 874 (1897, no writ) (upholding an agreement between the parties to not probate a will). See also In re Estate of Hodges, 725 S.W.2d 265, 267 (Tex. App.—Amarillo 1986, writ ref'd n.r.e.) (concluding that section 37B of the Texas Probate Code leaves the beneficiaries of an estate free to arrange among themselves alternative methods of administration and finding "family settlement agreements" to be "a favorite of the law"). Agreements between family members in lieu of litigation are favored by the law and the courts and such agreements are not deemed to be against public policy. On the contrary, public policy favors them. Therefore, the question is not whether assignments between executors and beneficiaries are valid, for they surely can be, the critical question is whether the questioned transaction violates an executor's fiduciary duty to the beneficiary. Issue one is overruled.
Concerning the second issue, whether Fred breached a fiduciary duty owed to Kory in his dealings with her pertaining to the assignment, Texas case law is clear that such transactions can be conducted in accordance with the law so long as the executor does not breach his fiduciary duty to the beneficiary and the transaction is "fair and reasonable." Stephens County Museum, Inc. v. Swenson, 517 S.W.2d 257, 260 (Tex. 1974) (holding that in transactions between parties in a fiduciary relationship, "equity indulges the presumption of unfairness and invalidity, and requires proof at the hand of the party claiming validity and benefits of the transaction that it is fair and reasonable"). "When a fiduciary receives a gift from the principal of a fiduciary or confidential relationship, the ultimate and controlling issue determining whether receipt of the gift was a breach of the established relationship, should basically inquire whether the gift was ultimately fair and equitable to the principal of the relationship." Moore v. Texas Bank & Trust Co., 576 S.W.2d 691, 695 (Tex. App.—Eastland 1979), rev'd on other grounds, 595 S.W.2d 502 (Tex. 1980).
As the independent executor of Ann's will, a fiduciary relationship existed between Fred, as executor, and Kory, as a beneficiary of Ann's estate. That meant that Fred owed Kory a duty of utmost good faith and fair dealing, including a duty to act with integrity and honesty in all of his dealings with her, as well as a duty of candor and full disclosure. Kinzbach Tool Co., 160 S.W.3d at 512. Furthermore, in the context of an assignment made as a gift, i.e., without the exchange of sufficient monetary consideration, the transaction is subject to particular scrutiny to insure that the assignor entered into the transaction with full disclosure of all material facts. Texas Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980) (holding that "once a fiduciary or confidential relationship is established, a presumption arises that a gift from the principal to the fiduciary is unfair and invalid"); Stephens County Museum, Inc., 517 S.W.2d at 260; Kinzbach Tool Co., 160 S.W.2d at 514. This presumption of unfairness shifted both the burden of producing evidence and the burden of persuasion to Douglas. See Moore, 576 S.W.2d at 695.
In its Findings of Fact and Conclusions of Law, the trial court specifically concluded that Fred was not relieved of his fiduciary duty as the independent executor of Ann's estate merely by virtue of the fact that Kory had assigned her inherited interest to him. Accordingly, the disposition of issue two turns squarely on whether or not a presumption of unfairness arose as a result of the transaction in question and, if so, whether Douglas presented sufficient evidence to overcome the presumption that Fred's conduct in obtaining that assignment constituted a breach of that duty.
We must start our analysis of those questions with the trial court's Findings of Fact and Conclusions of Law. In Finding of Fact No. 51, the trial court found that "the assignment was a gift of realty which was memorialized in writing." Additionally, the trial court made two critical "findings of fact" and "conclusions of law" as follows:
(1) A "presumption of fairness" did not apply to shift the burden of proof from Kory Musquiz to Fred Keesee because the evidence did not establish that Fred Keesee received a benefit by making a direct transfer from the estate to himself. [Finding of Fact No. 70; Conclusion of Law No. 66].
(2) A "presumption of fairness" did not apply to shift the burden of proof from Kory Musquiz to Fred Keesee because Fred Keesee's transfer (the distribution deed) was made only after he received the assignment from Kory Musquiz. [Finding of Fact No. 71; Conclusion of Law No. 67].
In making these findings, the trial court erred. First, it is a presumption of unfairness not a presumption of fairness. Secondly, it is undisputed that Fred owed Kory a fiduciary duty and it is equally undisputed that there was no monetary consideration exchanged in the transaction in question and that the assignment was a gift. Ergo, because a fiduciary or confidential relationship was established wherein the party owing the fiduciary duty (Fred) received substantial property from the person to whom the duty was owed (Kory), without adequate consideration, i.e., as a gift, a presumption of unfairness arose. Texas Bank & Trust Co., 595 S.W.2d at 507.
A presumption of unfairness places the burden of proving a transaction's fairness on the party seeking to enforce or uphold the transaction. Lee v. Hanson, 286 S.W.3d 1, 21 (Tex. App.—Houston [14th Dist.] 2007, pet. denied). As such, Douglas was required to establish that Fred acted in good faith and that the assignment was fair, honest, and equitable and we must review the sufficiency of the evidence presented in that context. Id. In establishing the fairness of a transaction, a non-exhaustive list of some of the most important factors to consider are whether: (1) there was full disclosure regarding the transaction, (2) the consideration (if any) was adequate, (3) the beneficiary had the benefit of independent advice, (4) the party owing the fiduciary duty benefited at the expense of the beneficiary, and (5) the fiduciary significantly benefited from the transaction as viewed in light of the circumstances in existence at the time of the transaction. Id.
Here, in accordance with section 128A of the former Texas Probate Code, Fred provided Kory written notice that Ann's will had been admitted to probate and that she was a named beneficiary. As required by statute, a copy of the will and a copy of the order admitting the will to probate were included with the notice. Additionally, Kory was free to examine the inventory of the estate to determine the extent of the interest she was assigning. Therefore, as to the question of full disclosure, the record weighs in favor of a finding of fairness.
Kory contends she was a victim of non-disclosure based on Fred's alleged fraudulent inducement. Because that evidence was properly excluded (see discussion above regarding the Dead Man's Rule) we consider "full disclosure" as a factor weighing in favor of a finding of fairness.
As to the issue of whether the consideration was adequate, we know from the Inventory, Appraisement and List of Claims, filed by Fred as the executor of Ann's estate, that she owned interests in real property valued at $1,130,645.90 (out of a total estate valued at $1,529,241.40). Those real property interests consisted of seven tracts of land, including improvements. Of those seven tracts, Ann's will left none of her real property interests to Fred, one-half of one section to Douglas, and the rest and remainder to Kory. Because Kory received no monetary consideration for the assignment of her interests to Fred, the inadequacy of consideration factor weighs heavily against a finding of fairness.
As to the third factor, whether the beneficiary had the benefit of independent advice, we know Kory did not receive any legal advice. Fred's attorney specifically advised her that he did not represent her, Fred's advice (if any) was excluded under the Dead Man's Rule (although Douglas could have attempted to offer that evidence), and Douglas advised her that he was going to sign an identical assignment. Because Douglas did not offer any other evidence of advice given to Kory, this factor is, at best, neutral with regards to a finding of fairness.
Merely because Fred is deceased is no reason why the presumption of unfairness should not apply. The Dead Man's Rule is not an absolute prohibition of evidence concerning communications between Fred and Kory on the issue of fairness. Such evidence could be admissible if adequately corroborated; or, the disqualification imposed by the rule may, and well might, be waived by the absence of any objection. See Texas Bank & Trust Co., 595 S.W.2d at 510.
Finally, as to the fourth and fifth factors, whether the party owing the fiduciary duty benefited at the expense of the beneficiary and whether the fiduciary significantly benefited from the transaction as viewed in light of the circumstances in existence at the time of the transaction, it is clear that Fred significantly benefited at Kory's expense. Therefore, these factors also weigh strongly against a finding of fairness.
Douglas made no independent effort to establish the fairness of the transaction between Fred and Kory but instead chose to rely on an incorrect assumption as to his burden of proof. Overall, the factors discussed above did not favor a finding of fairness—to the contrary, they favored a finding of unfairness. As such, Douglas failed to overcome the presumption of unfairness in the transaction between Fred and Kory. Issue two is sustained.
Having determined that Fred breached the fiduciary duty he owed to Kory, we must now determine whether Kory's claims should be barred on equitable grounds.
ISSUES THREE—ESTOPPEL
At the time of trial, Douglas's active pleadings asserted the affirmative defense of estoppel. In its Findings of Fact and Conclusions of Law, the trial court found that Kory had an "undisclosed intention to do something other than her representation set forth on the face of the assignment," and that Fred relied on that representation when he transferred Ann's interest in the real property to himself. The trial court then found that Kory's claims were estopped because Fred and Douglas were "induced" to change their positions based on this misrepresentation. By her third issue, Kory contends the doctrine of estoppel was not applicable to her claims because Fred breached his fiduciary duty to her by engaging in an unfair transaction. We agree.
Equitable estoppel prevents one party from changing its position when that party has misrepresented facts to, or concealed facts from, the other party, knowing the other party would rely on the representation to his detriment. Johnson & Higgins v. Kenneco Energy, Inc., 962 S.W.2d 507, 515-16 (Tex. 1998). To invoke the doctrine of estoppel, all necessary elements must be present. Douglas v. Aztec Petroleum Corp., 695 S.W.2d 312, 317 (Tex. App.—Tyler 1985, no writ). One of the essential elements is a reasonable or justified reliance on the conduct or statements of the person sought to be estopped by the person seeking the benefit of the doctrine. Id. The purpose of estoppel is for the protection of those who have been misled by that which upon its face was fair. Kuehne v. Denson, 219 S.W.2d 1006 (Tex. 1949). In other words, estoppel protects the innocent and only the innocent may invoke it. Because Fred engaged in unfair dealings with respect to Kory, a person to whom he owed a fiduciary duty, the doctrine of estoppel is not available as an affirmative defense to her claims of unfair dealing. Issue three is sustained.
ISSUE FOUR—LACHES
Douglas further maintains that Kory's claims should be barred by the equitable doctrine of laches. In finding that laches prevented Kory from asserting her claims, the trial court found that she had "delayed in asserting her rights from January, 2011 through April 28, 2014." By her fourth issue, Kory maintains that the doctrine of laches is also not available to bar her claims because she did not unreasonably delay in filing suit. Again, we agree.
Laches is an equitable defense that prevents a plaintiff from asserting a claim due to the lapse of time. Bluebonnet Sav. Bank, F.S.B. v. Grayridge Apartment Homes, Inc., 907 S.W.2d 904, 912 (Tex. App.—Houston [1st Dist.] 1995, writ denied). To prevail on the equitable doctrine of laches, the moving party ordinarily must show that his opponent unreasonably delayed in asserting legal or equitable rights and that the delay caused him to, in good faith, change his position. In re Laibe Corp., 307 S.W.3d 314, 318 (Tex. 2010); Caldwell v. Barnes, 975 S.W.2d 535, 538 (Tex. 1998). Whether the alleged delay is unreasonable depends on the facts and circumstances of the particular case. When laches is asserted before the statute of limitations has run, the party asserting laches must also show that allowing the action to proceed, "would work a grave injustice." Caldwell, 975 S.W.2d at 538. The burden of proving the elements of laches is on the party asserting the defense. Ebner v. First State Bank of Smithville, 27 S.W.3d 287, 306 (Tex. App.—Austin 2000, pet. denied). As such, it was Douglas's burden to establish unreasonable delay and a detrimental change in his position.
As stated above, the trial court found that Kory delayed in asserting her claims from January 2011 through April 28, 2014, the date she filed suit. However, she contends that her claim could not have occurred before November 12, 2013, when Fred's will was filed for probate because she was unaware of Fred's fraud and breach of fiduciary duty until that date. Regardless of whichever date you use, Kory's claims were not barred by laches because, like estoppel, laches is an equitable doctrine and because Fred engaged in unfair dealings with respect to a person to whom he owed a fiduciary duty, laches was unavailable as an affirmative defense. Issue four is sustained.
ISSUE SIX—CONSPIRACY CLAIMS
By her sixth and final issue, Kory maintains the trial court erred in granting Douglas a partial no-evidence summary judgment on her claim of conspiracy between Fred and Douglas. We review a no-evidence summary judgment for evidence that would enable reasonable and fair-minded jurors to differ in their conclusions. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). A no-evidence challenge will be sustained when (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact. King Ranch v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003).
A no-evidence summary judgment is essentially a pretrial directed verdict, and we apply the same legal sufficiency standard of review. Id. In a no-evidence motion for summary judgment, the moving party must assert that there is no evidence of one or more essential elements of the claim on which the nonmovant would have the burden of proof at trial. See TEX. R. CIV. P. 166(a)(i); Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008). Once the motion is filed, the burden shifts to the nonmovant to present evidence raising an issue of material fact as to the challenged elements of its cause of action. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). If the nonmovant produces more than a scintilla of evidence raising a genuine issue of material fact on the challenged elements, the trial court must deny the motion. See Hamilton, 249 S.W.3d at 426. The nonmovant is not, however, required to marshal its entire proof, as its response need only raise a fact issue on the challenged elements. TEX. R. CIV. P. 166a(i), Notes and Comments (1997); Hamilton, 249 S.W.3d at 426.
A civil conspiracy requires (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as a proximate result. Chon Tri v. J.T.T., 162 S.W.3d 552, 556 (Tex. 2005); Juhl v. Airington, 936 S.W.2d 640, 644 (Tex. 1996). However, merely proving a joint "intent to engage in the conduct that resulted in the injury" is not sufficient to establish a cause of action for civil conspiracy. Triplex Communications, Inc. v. Riley, 900 S.W.2d 716, 719 (Tex. 1995). Civil conspiracy requires specific intent to agree to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means. Id.
Here, Kory testified that she never intended to relinquish her inheritance under Ann's will and it was not until Fred's will was filed for probate that she discovered she had been disinherited. As to any conspiracy between Fred and Douglas, Kory only offered innuendo based on the close relationship between the two and the fact that Douglas had accompanied Fred to the meetings with his attorney. These innuendos alone are tantamount to "no evidence" of a conspiracy. Issue six is overruled.
CONCLUSION
In summary, issues one, five, and six are overruled and issues two, three, and four are sustained. The trial court's judgment is affirmed as to the take-nothing judgment in favor of Douglas on Kory's conspiracy claims and it is reversed and judgment rendered as to a declaration of invalidity of the assignment of Kory's inheritance from Ann's estate to Fred. We remand the remainder of the cause to the trial court for such other and further proceedings as may be required in law and in equity.
Patrick A. Pirtle
Justice