Opinion
No. 04-15-00688-CV
04-12-2017
IN THE ESTATE OF CARLOS AGUILAR, Deceased
DISSENTING OPINION
From the County Court at Law No. 2, Webb County, Texas
Trial Court No. 2012-PB4-000048 L2
Honorable Jesus Garza, Judge Presiding Opinion by: Marialyn Barnard, Justice
Dissenting Opinion by: Rebeca C. Martinez, Justice Sitting: Karen Angelini, Justice Marialyn Barnard, Justice Rebeca C. Martinez, Justice
Because I do not agree that the trial court abused its discretion in denying the Estate's motion to withdraw funds from the registry of the court, I dissent.
On August 15, 2012, at the initial hearing granting a dependent administration of the Estate of Carlos Aguilar, the trial court sitting in probate appointed Carlos's mother Eudelia Aguilar and his purported common law wife Vanessa Arce as co-administrators of the Estate. After a favorable verdict in a separately filed wrongful death suit in Dimmit County, Vanessa and Carlos's parents, Eudelia and Jose Luis Aguilar, and their attorneys participated in a post-trial mediation and settled the claims of the Estate. The Dimmit County district court presiding over the lawsuit required the parties to seek probate court approval of the settlement award proposed for the Estate before entering an Amended Final Judgment. Carlos's first wife Clarissa Aguilar, with whom he had his first five children, contested (1) the co-administrators' authority to settle on behalf of the Estate and its heirs, and (2) their attorneys' claim to attorney fees from the deposited funds. On July 7, 2014, the probate court signed its Order Authorizing Settlement of Estate Claims allowing the Estate's representatives to sign the mediated settlement agreement settling the Estate's claim for $656,002.49 and ordering the funds deposited into the court's registry. The co-administrators' attorneys appeal the order denying their motion to withdraw from the registry $253,400.99 as contingent attorney fees in favor of Gene Hagood.
FACTUAL AND PROCEDURAL BACKGROUND
On June 1, 2012, attorney Jose Luis Castillo filed an Application for Letters of Administration on behalf of Carlos's parents, Eudelia and Jose Luis Aguilar. The applicants sought appointment as co-administrators of the Estate, alleging Carlos was unmarried when he died on May 29, 2012, and an administration was necessary because they needed to pursue a wrongful death/survival claim. On the same day, Vanessa Arce, individually, executed a contingency fee contract with Castillo seeking to pursue damages for the death of her common law husband, Carlos (hereinafter "Castillo Contract"). On June 21, 2012, Castillo filed a First Amended Application on behalf of applicants Vanessa Arce and Eudelia Aguilar, alleging Carlos and Vanessa were married at the time of Carlos's death, and that he was divorced from Clarissa Vergara (a/k/a Aguilar) on March 25, 2010. The pleading does not refer to a contingency fee contract. The record does not contain an attorney contract signed between applicants Eudelia or Jose Luis Aguilar and Castillo. No citation was issued. The court appointed Jesus Dominguez to represent Clarissa's five children, and on July 11, 2012, Dominguez filed an Answer and General Denial on behalf of Clarissa's children. The court also appointed Rosaura Tijerina as attorney ad litem for Carlos's two other minor children and sent notice to Castillo and the two attorneys ad litem scheduling an initial administration hearing on Vanessa's and Eudelia's First Amended Application. On or before July 13, 2012, Eudelia and Jose Luis Aguilar signed an undated contingency fee contract with attorney John Solis (hereinafter "Solis Contract").
The docket sheet indicates citation for posting was issued but "lapses on 6/18/12." The citation and return are not included in the record before us.
The record includes an undated contract signed by Carlos's parents with John Solis. A fax transmittal imprint along the top of each page indicates the contract was faxed on July 13, 2012.
At the court's initial hearing on August 15, 2012, only Castillo and the ad litems appeared. Castillo called two witnesses, the applicants Vanessa and Eudelia, and each testified briefly in support of their application for letters of administration. Neither testifies to having signed an attorney contingency contract or the terms agreed to therein. Tijerina performed a very brief cross-examination of the two applicants, and each ad litem recommended the court grant Vanessa's and Eudelia's application with a $500 bond. The majority acknowledges that the applicants and Castillo failed to present a contingency fee contract or related referral agreement to the court for review. At the hearing, Castillo asked, "Your Honor, one last thing, we're also asking that the Court gratify [sic] the contingency of the contract that we have." The court asked, "Any objection?" Dominguez, acting on behalf of Clarissa's children, responded, "Your Honor, I have spoken with Mr. Castillo this morning and he said he will be generating that contract to Ms. Tijerina and myself. As soon as we see it and we sign off on it, if we sign off on it, we ask that the Court approve the contract." The court then concluded, "The court will approve that." The court then noted its ruling for the record: "The Court has just signed off on the order granting the administration. The case will be rescheduled for November 4 at 8:30 in the morning." The court verbally reiterated its ruling specifically, as it did throughout the proceedings. The court granted the application for a dependent administration, i.e., the First Amended Application, and approved Dominguez's request to first review and sign any contract Castillo had agreed to provide him for review after the hearing. The court did not pronounce a ruling authorizing the applicants to sign a contingency fee contract, or approving or ratifying a specific contingency contract. The record also reflects a consistent docket sheet entry on August 15, 2012: "Case called. . . . Application for Letters of Administration, granted by the court. Bond set at $500 (surety), granted by court. Proof of death and other facts, oath executed in open court. Ratify any contracts pending ad litems signature (Pending). Inventory due 11/14/12." The record clearly reflects that the court definitely granted the application for a dependent administration and approved the recommended $500 bond. The court's ratification of "any contracts", however, was unmistakably pending.
The record includes an undated Consent to Refer agreement signed by Vanessa and her attorney Castillo, and a separate undated Consent to Refer signed by Eudelia and Jose Luis Aguilar and their attorney Solis. Each Consent to Refer grants the Hagood law firm an equal share of the attorney fees that Vanessa and the Aguilars conveyed to Castillo and Solis, respectively. Neither Consent was admitted into evidence before the court.
The docket sheet reflects the trial court set November 14, 2012 as the due date for filing the Estate's inventory; on that date, Castillo filed the required inventory and "no further court date [was] given."
At a subsequent hearing, Dominguez testified, "We had talked about the contract, she was getting it ready, the contract, for us to sign off on it." When asked if it had been generated, Dominguez replied, "I don't know if it was generated or not." When asked if he presented the contract in writing to the judge before asking him to approve it during the hearing, Dominguez replied, "I don't remember if I did or not." He was then asked, "Have you ever signed a contract approving the estate's claim or a contingency contract signed and approving the claim as you told the Judge you would; did you ever do that?" Dominguez responded affirmatively, yet did not provide a copy of a contract signed by him as ad litem. Regardless, the record indicates the parties had agreed to cancel any contingency fee contract signed by Dominguez as ad litem on behalf of the children. The court eventually replaced Dominguez with Sergio Lozano as ad litem for Clarissa's children. Solis and Castillo also both testified that an ad litem never signed the Solis Contract and Castillo Contract as required by the court.
Dominguez testified at a hearing on October 22, 2014 on Clarissa's motion to disqualify Dominguez as ad litem. According to Clarissa, Balmer faxed two contracts referenced as "the only contracts . . . signed on behalf of the estate." Clarissa claimed it was the first time the court was presented with "these contracts."
The probate court also replaced ad litem Tijerina with attorney Jesus Guillen to represent the interests of Carlos's two youngest children. On June 3, 2014, several of the parties and their counsel entered into a Mediation Agreement with the defendants in the Dimmit County lawsuit, including the Aguilars, Vanessa, "the Estate of Carlos Aguilar," and Elsa Quinones as next friend of Carla Aguilar and Karmine Aguilar. Clarissa, on behalf of her five children, and her counsel did not participate. The Mediation Agreement states, "The settlement of the Estate's claims is contingent upon County Court at Law No. 2, Webb County, Texas, authorization of the dependent administrators to enter into this settlement. On July 3, 2014, the court heard the Dependent Administrators' Motion for Approval/Ratification of Settlement of Estate Claims. Clarissa objected, arguing that the attorneys pursued the mediated settlement agreement impermissibly in aggregate; that the same attorneys represented both the Estate and Vanessa's individual interests and, hence, Vanessa had breached her fiduciary duties in settling conflicting claims taken together and without notice to the Estate's heirs; and that, consequently, the proposed distribution to the Estate's heirs was prejudiced. Throughout the length of the underlying proceedings that followed, Clarissa requested to review any related attorney fee contract involving the Estate and an unredacted version of the second aggregate mediated settlement agreement (distinct from the settlement of the Estate's claim), which Clarissa claimed would reflect the distribution negotiated by the attorneys for each individual plaintiff in the Dimmit County lawsuit. The trial court initially denied the request but ordered attorney ad litem Guillen to review the disputed attorney fee contract and settlement agreement involving the Estate and to attempt to settle the attorneys' disputes during a court recess. Unsuccessful, the court ordered the documents turned over to ad litem Guillen, who would then provide the documents to Clarissa. "Everything is going to be transparent as far as I'm concerned. Those documents, I would expect you to give it to Mr. Guillen. Mr. Guillen will give it to you, if he refuses to give it to you for whatever reason, then I will order them to put it as part of the record. But it will be on the record." The court ordered the documents provided no later than August 1, 2014.
On July 2, 2014, Guillen filed an answer and general denial to the First Amended Application for Letters of Administration, with service of citation to Castillo as attorney for Applicants and David Balmer as attorney for the co-administrators.
Clarissa further argued for Vanessa's removal as co-administrator because of her conflict of interest.
By order dated July 7, 2014, the court, over Clarissa's objection, authorized the dependent administrators to settle the Estate's claims in the wrongful death suit for $656.002.48 and to execute settlement documents on behalf of the Estate for said amount, and ordered the funds deposited into the registry of the court (hereinafter "July 2014 Order"). The order required the deposited funds "to remain until further order of this Court authorizing payment of attorneys' fees, Estate expenses, creditor claims, administration costs and final distribution of the Estate to the heirs." The court stated it "would imagine how the distribution would happen" and determine what attorneys' fees "if any" would be approved on August 13, 2014. The co-administrators did not object. Clarissa reiterated her protests against Vanessa and her alleged abuses as fiduciary to the Estate in settlement negotiations, and lodged recurrent objections to the continued non-disclosure of attorney fee agreements and the negotiated distribution of the Estate's settlement by the co-administrators.
What followed were various contested motions to quash the noticed depositions of Dominguez, Vanessa, and David Balmer, the co-administrators' attorney, along with formal requests for production of documents from Vanessa and Clarissa. Clarissa's counsel, now joined by the ad litems on behalf of all the minor children, repetitively made efforts to review an unredacted version of the mediated settlement agreement and any contingency fee contracts involving the Estate or co-administrators. In October 2012, the court heard the ad litems' motion to compel Balmer to produce all unredacted mediated settlement agreements for review "in order to recommend to the Court whether or not it was a fair and equitable settlement for the kids." Clarissa urged her pending motion to remove the co-administrators, in part because of gross mismanagement, conflict of interest, and continued failure to obey the court's orders. The record reflects that the trial court frequently ordered the co-administrators to produce the various contracts and agreements to the court in camera and/or to the ad litems for review, as late as November 12, 2014. By February 13, 2015, the court ordered the co-administrators to produce directly to Clarissa an unredacted copy of the mediated settlement agreement; the settlement documents related to the purported settlement of the Estate's claim and recovery, including a detailed accounting of the gross settlement, breakdown and net settlement to the heirs of the Estate; all contingent attorney fee contracts concerning the claims of the Estate; and all agreements concerning or affecting the claims of the Estate. Balmer, on behalf of the Estate, filed an appeal, which this court dismissed for want of jurisdiction. A hearing held on May 26, 2015 revealed that the co-administrators had still failed to comply with the court's orders to produce all related documents concerning or affecting the settlement of the Estate's claims and related contingency fee agreements. By order dated June 10, 2015, the court awarded Clarissa $10,000.00 in attorney fees against Balmer "unless he provides such information no later than June 15, 2015."
The docket sheet reflects that on November 13, 2014, the court received a "letter from Ryan G. Anderson in regards to the unredacted mediated settlement agreement for in camera [inspection] without the enclosure was e-filed by attorney Ryan Anderson." The clerk contacted Mr. Anderson to advise the agreement "must be brought into our office since it was not attached to the letter. Mr. Anderson stated he was going to send the settlement agreement to county court at law no. 2 directly to Judge Garza." The docket sheet, however, contains no further entry indicating receipt by the court.
On June 24, 2015, the co-administrators filed a Motion for Withdrawal of Funds for the benefit of attorney Gene Hagood from the deposited funds in the court's registry. In support of their motion, the co-administrators attached only two orders: the court's August 2012 Order Granting Letters of Administration, and the July 2014 Order Authorizing Settlement of Estate Claims. Clarissa's counsel and ad litem Guillen filed objections to the motion for withdrawal, arguing the court had not previously authorized payment of attorneys' fees from the settlement proceeds as required. The record includes a transcript of a subsequent hearing held on September 16, 2015, during which the court set for hearing Clarissa's motion to remove administrators and disqualify counsel; objections to motion to withdrawal of funds; motion for contempt and sanctions; motion for continuance and motion to compel; and her own motion to withdraw funds. The court first considered Clarissa's motion for continuance and for sanctions against Balmer because of the co-administrators failure to comply with the court's June 10, 2015 order requiring disclosure of all contingency contracts and documents reflecting any settlement agreement involving the Estate. In support of her argument for contempt sanctions, Clarissa admitted into evidence a non-disclosed split-fee agreement she entered into with attorney Raul Vasquez during a mediation held prior to trial in Dimmit County. Clarissa claimed that she had entered into the agreement with Vasquez while acting on behalf of the Estate and that, since Vasquez represented the parties in their individual capacity, there must exist other undisclosed split-fee agreements between counsel in writing. By her motion to compel, Clarissa sought to depose the Estate's administrators and attorneys to clarify any agreements between all counsel acting on behalf of Vanessa, Carlos's parents and the Estate, and to determine the still-unknown disbursement of the mediated settlement among the heirs derived from the wrongful death suit.
Addressing the motion to withdraw, Clarissa argued the court had not approved nor ratified any agreement related to the claims of the Estate or affecting the distribution of the various mediated settlement agreements pursuant to Section 351.152 of the Texas Estates Code. The co-administrators' attorneys responded, urging the court to instead approve their motion to release attorney fees to Hagood since he was hired by the co-administrators to pursue a claim on behalf of the Estate. "He did that and he made a recovery. And thanks to his good work, he's entitled to be paid for that . . . That's the only thing that we're asking for." The co-administrators contended the two orders attached to their motion conclusively established Hagood's right to 40% of the deposited funds. The motion does not refer to any specific contingency fee contract or fee percentage, and does not present facts establishing compliance with section 351.152. The co-administrators did not admit into evidence any contract or offer the testimony of an Estate representative expressing the terms of the contract. Responding to Clarissa's earlier charges against the co-administrators in having pursued an improper aggregate settlement against the Estate's interests, the co-administrators presented the court with the Mediation Agreement they argue established as a matter of law that "it's not an improper aggregate settlement agreement." Solis then testified, affirming he was not present at the initial administration hearing on August 15 and had no knowledge of whether the Solis Contract was approved prior to any attorney services rendered on behalf of the Aguilars. When asked about the August 2012 order, Solis testifies, "I just don't think this order is an order saying that it is approved." Lastly, Castillo reviewed the same August 15 order and testified that the anticipated contracts with the ad litems "were not done." No other witness testified in support of the motion to withdraw.
For the first time on appeal, the co-administrators argue that Clarissa lacked standing to challenge the contingency contracts under which they seek attorney fees, and that Clarissa failed to appeal or seek a bill of review from the August 2012 order. The co-administrators' untimely argument regarding standing is inapposite. Nevertheless, it appears to invite the "standing" analysis by the majority, as well as its swift and tenuous determination that Clarissa waived any challenge to the August 2012 order by not filing an appeal or bill of review. Clarissa, however, does not challenge the validity of the August 2012 order or the dependent administration of the Estate. Indeed, Clarissa repeatedly challenged Vanessa's appointment and service as co-administrator. With respect to the relevant motion to withdraw and order on appeal, Clarissa disputed that the co-administrators sought and obtained ratification of any contingency fee contract authorizing a 40% contingency fee against the Estate's recovery from the Dimmit County lawsuit and that the August 2012 and July 2015 orders conclusively established Hagood's right to $253,400.99 from the court's registry. I disagree with the majority's declaration that "it is undisputed the co-administrators requested approval of a contingency contract entered by and between the co-administrators." The majority's faulty premise avoids an initial determination whether the August 2012 order effectively ratified any contract authorizing the movants' claim to fees. The majority opinion acknowledges that which contract the court apparently approved "is unclear from the record" and that the issue "becomes a contested matter throughout the record." The parties clearly dispute whether the co-administrators obtained approval of a contingency fee contract and whether the deposited funds are subject to that contract. In my opinion, appellants have failed to show the trial court abused its discretion in finding they had not and denying their motion to release funds from the court's registry.
DISCUSSION
Although Clarissa implored the probate court to consider certain alleged circumstances surrounding the co-administrators' and their attorneys' settlement of the Estate's claims, our review is properly limited to whether the court abused its discretion in denying the motion to withdraw funds from its registry. Clarissa possessed no initial burden. Appellants must show the court abused its discretion in managing the Estate's assets maintained in the court's registry where it denied the release of attorney fees for services rendered on behalf of the Estate pursuant to a ratified contingency fee contract. To meet their burden, the co-administrators' attorneys offered only two exhibits in support of the motion for withdrawal of funds: the August 15, 2012 order granting the dependent administration, and the July 7, 2014 order authorizing settlement of estate claims. At the hearing, attorney Ryan Anderson argued that both orders conclusively established attorney Gene Hagood was entitled to 40% of the deposited funds, or $253.400.99 as a court-approved contingency fee from the Estate's mediated settlement award. The co-administrators did not testify. When asked if his evidence on the motion to withdraw was "closed," Anderson indicated, "it may be closed but I would add two more just so the Court has everything it needs to approve it as an abundance of caution." Over Clarissa's objections, the movants offered to admit the Solis Contract. Solis testified his contract was not dated, and was not signed by him or an ad litem. He did not know with certainty when the Aguilars had signed it. He further testified he had signed a written consent to refer the case to Hagood. Castillo also testified he had entered into a contract with Vanessa signed on June 1, 2012, as well as a consent to refer, both of which were unsigned by an ad litem. Only the Solis Contract and related consent to refer was admitted, although the court indicated it would consider only those documents that were filed with the motion to withdraw.
Even assuming the court considered the Solis Contract admitted into evidence, the co-administrators' motion and argument rely heavily on the premise that the August 2012 order ratified a contingency contract with the Estate. The motion asserts the August 2012 order approved a 40% contingency fee from the Estate's recovery now deposited in the court's registry. In denying the motion to withdraw, the court implicitly found that on August 15, 2012, it did not approve or ratify a contingency fee contract in favor of Hagood. The plain language of the court's August order states:
The Court hereby approves and ratifies the contingency fee contract signed by the parties in pursuit of any wrongful death litigation on behalf of Decedent. The Court FURTHER ORDERS AND AUTHORIZES Jesus "Chuy" Dominguez and Rosaura "Wawi" Tijerina Ad Litems for the Minor Children to approve, sign, ratify and/or enter into contingency fee contracts with Jose Luis Castillo and/or Gene Hagood on behalf of the minor children.This language is consistent with the reporter's record of the proceedings. The first sentence refers to "the contingency contract signed by the parties." The parties are the applicants Vanessa and Eudelia. Castillo represented Vanessa as a party applicant. Solis did not make an appearance nor present the Solis Contract for approval or ratification. At most, Castillo made an equivocal reference to the Castillo Contract, and the August 2012 order "approves and ratifies the contingency fee contract (i.e., the Castillo Contract) signed by a party (i.e., Vanessa) in pursuit of any wrongful death litigation on behalf of Decedent. Although the majority acknowledges Castillo's vague reference to the contingency fee contract, it ignores the fact that Castillo did not represent the Estate; and that Vanessa signed the Castillo Contract only in her individual capacity. More importantly, it was not attached to the motion to withdraw or admitted into evidence.
In August 2012, ad litem Dominguez represented Clarissa's children. When the court invited objections to Castillo's request for ratification of a contingency fee contract, Dominguez asked the court to await his review and signature on "it" before approving the contract. Consequently, the court's August 15 order specifically authorized the newly appointed attorneys ad litem "to approve, sign, ratify and/or enter into contingency fee contracts with" Castillo and Hagood "on behalf of the minor children." The docket entry consistently reflects that court approval was pending. Vanessa waived any interest to the Estate as Carlos's common law wife, leaving only the minor children as heirs to the Estate to lay claim over the deposited funds. In support of their motion to release funds, the co-administrators did not present and the record does not contain a contingency fee contract signed by an ad litem. Although Dominguez may have signed one, the record indicates the court subsequently removed Dominguez as attorney ad litem and thereafter approved an agreement between all counsel to cancel "the Ad Litem Contract entered into by Solis, Castillo and Attorney Ad Litem Jesus Dominguez." The co-administrators did not object. Castillo and Solis testified they had not seen a contract signed by an ad litem.
The co-administrators waived reimbursement of litigation costs and expenses from the deposited funds.
After consideration of the record, the relevant motion for withdrawal of funds and the evidence supporting it, I cannot conclude the trial court abused its discretion in denying the co-administrators' request to release $253.400.99 from the court's registry to Hagood. The trial court made no findings in relation to the order denying the co-administrators' motion to withdraw. Funds deposited in the court's registry are always subject to the control and order of the trial court. See Broesche v. Jacobson, 218 S.W.3d 267, 278-79 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (trial court enjoys great latitude in dealing with funds deposited into court registry); Burns v. Bishop, 48 S.W.3d 459, 467 (Tex. App.—Houston [14th Dist.] 2001, no pet.) (same). The majority would restrict the probate court's great latitude in resolving conflicting claims over funds in the registry of the court and would ignore the mandate under TEX. PROB. CODE § 233(c) (current version at TEX. EST. CODE. ANN. § 351.152 (West 2014)). In August 2012, the probate court did nothing more than approve a dependent administration, appoint co-administrators, set a bond, and authorize the ad litems to approve any contingency fee contracts affecting the Estate. The majority acknowledges that Vanessa's attorney Castillo simply referred to "a" contingency contract during the initial administration hearing and that "[i]t is unclear from the record which contingency fee contract is being referenced." The majority ignores the fact that neither Castillo, Solis, nor Hagood represented the Estate in probate court. Even if we construed the August 2012 order as having ratified the Castillo Contract, it was not attached to the motion or admitted into evidence. The Castillo Contract and Solis Contract, without the required ad litem signatures, do not evidence a discernible interest in the minors' share of the deposited funds. Since Vanessa abandoned her claim as common law wife against the Estate, it follows that any contingent fee interest under the Castillo Contract would also terminate.
Appellants also relied on the court's order entered on July 7, 2014. After consulting with the Dimmit County district court, the probate court approved the post-mediated settlement award to the Estate and ordered the funds deposited into the court's registry without objection from appellants. The July order also does not evidence the court's ratification of a discernible contingency fee against the deposited funds. The court's control of the deposited funds is unchallenged, and its liberty to manage those funds is undisputed. The majority's conclusion that the trial court abused its discretion by refusing the release of funds disregards both the movants' lack of evidence and the court's unlimited authority over its registry. The majority would constrain the court's discretion to deny any ambiguous claim to funds belonging to the Estate and managed by the court. Appellants did not object to the deposit.
Viewing the evidence in the light most favorable to the court's ruling and indulging every presumption in its favor, the trial court did not abuse its discretion in denying the co-administrators' request to release $262,400.99 to Gene Hagood from the court's registry.
Rebeca C. Martinez, Justice