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In re Estate of Gaines

July 1, 2008

IN THE ESTATE OF MARGARET LYNN GAINES, DECEASED


On Appeal from the County Court of Law No. 1 Brazoria County, Texas Trial Court Cause No. PR029188.

The opinion of the court was delivered by: John S. Anderson Justice

Affirmed in Part, Reversed and Rendered in Part, and Dismissed in Part, and Opinion filed July 1, 2008.

OPINION

Appellants, Veronica Davis and Gelene Gaines, appeal from the trial court's orders (1) disqualifying Davis from serving as the independent executor of Margaret Lynn Gaines's estate ("the Estate"), (2) requiring Davis to turn over estate funds to the court's registry, (3) denying Davis's Motion to Compel / Motion for Contempt, (4) granting Prosperity Bank ("the Bank") attorney's fees, and (5) denying Davis's claims for money against the Estate.

In eight issues, appellants argue (1) the trial court improperly disqualified Davis from serving as the independent executor because no motion to disqualify or opposition was filed, (2) the trial court erred in requiring Davis to turn over funds, (3) the trial court erred in denying Davis's Motion to Compel / Motion for Contempt, (4) the trial court erred in awarding the Bank attorney's fees, and (5) the trial court erred in denying Davis'sclaims for money against the Estate. We affirm in part, reverse and render in part, and dismiss in part.

FACTUAL AND PROCEDURAL BACKGROUND

Margaret Lynn Gaines died on July 28, 2003. Gaines left a valid, written will which named Veronica Davis the independent executor of the Estate and Darrell Green, Gaines's brother, the trustee of a testamentary trust. The will also named Green and his wife the guardians of Gaines's children. Davis did not submit an application to probate Gaines's will for over three years after Gaines's death.

On October 11, 2006, two of Gaines's children attempted to access bank account records at the Bank because they believed Green was misappropriating their money. The Bank advised the children the information could not be disclosed without a subpoena. In response, Davis submitted an application to probate Gaines's will on October 13, 2006. On November 9, 2006, before the will was probated, Davis obtained a subpoena duces tecum on behalf of the Estate ordering the custodian of records at the Bank to produce bank statements and records to the trial court by November 30, 2006. The records requested were for bank accounts held in the name of Green and his wife for the benefit of the three Gaines children. The subpoena was served on the Bank on November 17, 2006.

The Bank did not produce the records by November 30; however, on December 7, 2006, Green filed a Motion to Quash the Subpoena Duces Tecum and Motion for Protection. Green, as the account holder, argued Davis failed to comply with section 59.006 of the Texas Finance Code, which is the exclusive method for compelling discovery of records of a financial institution. See Tex. Fin. Code Ann. § 59.006 (Vernon Supp. 2007). The following day, on December 8, 2006, Davis filed a Motion to Compel / Motion for Contempt arguing the Bank failed to comply with the subpoena by the compliance date. In her motion, Davis requested that the trial court compel the production of the documents, hold the Bank in contempt for disobeying the subpoena, demand production of the records for in camera inspection, sanction the Bank, and award costs, attorney fees, and any other equitable relief. The Bank responded to the motion arguing the subpoena failed to comply with the requirements of section 59.006 of the Finance Code. See id. According to the Bank, the subpoena required production of the records prior to the expiration of twenty-four days from the date of service, the requesting party failed to pay the reasonable costs for producing the records, and the requesting party failed to obtain written consent to release the records from the account owner. See id. § 59.006(b)(1)-(2), (c)(1)-(3).

On December 19, 2006, the trial court held a hearing on Green's Motion to Quash Subpoena Duces Tecum and Motion for Protection, Davis's Motion to Compel / Motion for Contempt, and Davis's application to probate Gaines's will. Ultimately, the trial court granted Green's Motion to Quash and denied Davis's Motion to Compel / Motion for Contempt because the trial court determined Davis issued the subpoena without first being qualified as the independent executor of the Estate and because Davis failed to comply with section 59.006 of the Finance Code. The trial court also ordered Davis to pay the Bank its reasonable and necessary attorney's fees and research charges. In addition, the trial court ordered Gaines's will admitted to probate, but it determined Davis was not suitable to serve as the independent executor. Instead, the trial court determined it was advisable and in the best interest of the Estate to appoint Mary Peter Cudd to serve as the independent administrator. The trial court also ordered Davis to turn over to the court's registry all of the funds Davis collected on behalf of the Estate and its beneficiaries.

In response to the trial court's orders, Davis filed a Motion for Rehearing, which she amended twice. The motion was overruled by operation of law. On March 22, 2007, Davis filed a supersedeas bond to stay further proceedings. However, on that same day, Davis also filed two authenticated unsecured claims for money with the representative of the Estate, one for $7,500.00 and one for $1,931.59. Cudd, as the independent administrator of the Estate, rejected both of Davis's claims, and on April 24, 2007, the trial court signed orders recognizing Cudd's rejection of the claims. This appeal followed.

A. Did the Trial Court Err in Disqualifying Davis from Serving as the Independent Executor?

In appellants' first two issues, they argue the trial court erred in disqualifying Davis from serving as the independent executor because no motion to disqualify or opposition to her appointment was pending before the trial court.*fn1 Appellants argue Green's attorney sought to have Davis disqualified by a sua sponte oral motion during the hearing instead of filing a written motion with the trial court. According to appellants, the trial court lacked the authority to disqualify Davis on the basis of a sua sponte oral motion. Appellants argue these actions constituted an unfair surprise and a denial of due process. Appellants then assert that because the judgment is not supported by the pleadings, it is void.

1. Standard of Review

A court's ruling on a probate application is generally reviewed under an abuse of discretion standard. See In re Guardianship of Bayne, 171 S.W.3d 232, 235 (Tex. App.--Dallas 2005, pet. denied); see, e.g., In re Estate of Robinson, 140 S.W.3d 801, 807 (Tex. App.--Corpus Christi 2004, pet. dism'd) (reviewing order finding person unsuitable to serve as executor under an abuse of discretion standard); Olguin v. Jungman, 931 S.W.2d 607, 610 (Tex. App.--San Antonio 1996, no writ) (reviewing order finding person unsuitable to serve as executor under an abuse of discretion standard). The trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles. Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004). The mere fact a trial judge may decide a matter within his ...


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