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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 discretionary authority in a different manner than an appellate judge in a similar circumstance does not demonstrate an abuse of discretion has occurred. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex. 1985).

2. Applicable Law

If an independent executor named in the will comes forward within the statutory period for probating a will, offers it for probate, and applies for letters testamentary, the court has no discretionary power to refuse to issue letters to the named executor unless he is a minor, an incompetent, or otherwise disqualified under the provisions of section 78 of the Texas Probate Code. Alford v. Alford, 601 S.W.2d 408, 410 (Tex. Civ. App.--Houston [14th Dist.] 1980, no writ); see Tex. Prob. Code Ann. § 77 (Vernon 2003) ("Letters testamentary or of administration shall be granted to persons who are qualified to act, in the following order: (a) To the person named as executor in the will of the deceased . . . .") (emphasis added). However, under section 78 the court may disqualify a person from serving as an executor if the court finds that person "unsuitable." Tex. Prob. Code Ann. § 78(e) (Vernon 2003); see Olguin, 931 S.W.2d at 609 (holding the provision disqualifying unsuitable persons from serving as executor applies to the appointment of an independent executor); Alford, 601 S.W.2d at 410 (applying section 78 to qualification of an independent executor). No comprehensive, discrete explanation exists delineating the attributes which make someone unsuitable. Olguin, 931 S.W.2d at 610; see Boyles v. Gresham, 158 Tex. 158, 161-63, 309 S.W.2d 50, 53-54 (1958) ("Neither the Model Code nor the Texas Probate Code purports to define >unsuitable,' and we shall not attempt here to define it."). The trial court has broad discretion in determining whether an individual is "suitable" to serve as an executor. Kay v. Sandler, 704 S.W.2d 430, 433 (Tex. App.--Houston [14th Dist.] 1985, writ ref'd n.r.e.).

3. Analysis

Appellants' primary argument is the trial court lacked the authority to disqualify Davis on the basis of a sua sponte verbal motion by Green's attorney. According to appellants, this lack of pleading constituted an unfair surprise and denial of due process. However, the trial court heard evidence bearing on Davis's qualifications without objection. Therefore, appellants cannot complain of the insufficiency of the pleadings for the first time on appeal. See Form-by v. Bradley, 695 S.W.2d 782, 785 (Tex. App.--Tyler 1985, writ ref'd n.r.e.). When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Tex. R. Civ. P. 67. The doctrine of implied consent applies only where it appears from the record the issue was actually tried, although not pleaded. Johnston v. McKinney Am., Inc., 9 S.W.3d 271, 281 (Tex. App.--Houston [14th Dist.] 1999, pet. denied). After the trial court heard evidence regarding the Motion to Quash and Motion to Compel / Motion for Contempt and ruled on those motions, it stated "[t]he court is now moving to the Amended Application to Probate Will and for Issuance of Letters Testamentary filed by Veronica Davis on October 16th, 2006. In that connection, let the record reflect that Ms. Davis is before the Court as well as Mr. Greg Donnell." Davis then gave her direct examination testimony. After Davis finished, the trial court allowed Gregory Donnell, Green's attorney, to cross-examine Davis. During this cross-examination, the trial court heard evidence bearing on Davis's qualifications; however, Davis did not object at any point during the hearing regarding Green's failure to file a written motion. We conclude the issue of Davis's qualification to serve as the independent executor of the Estate was tried by consent when Davis engaged in cross-examination and discussions with the trial court regarding her qualifications without ever raising an objection.

Even if appellants had properly objected, we do not agree the trial court lacked the authority to disqualify Davis without a filed motion or opposition. Section 178 of the Probate Code requires the court to grant letters testamentary to the executor appointed in the will if she is not disqualified. See Tex. Prob. Code Ann. § 178(a) (Vernon 2003). Also, section 78 provides a person is disqualified to serve as an executor if the court finds her unsuitable. Id. § 78. Nothing in these two sections requires the filing of a motion or opposition to disqualify an applicant before the court can find a person unsuitable.*fn2 See id. §§ 78, 178(a). Essentially, the Probate Code requires a court to issue letters testamentary to qualified applicants, but it does not require the court to issue letters testamentary to people it determines are disqualified. In this case, the trial court was not required to appoint Davis as the independent executor because, under its broad discretion, it found Davis unsuitable. To the extent appellants challenge the sufficiency of the evidence supporting the trial court's decision, we conclude the evidence is sufficient. Davis's testimony at the hearing showed Davis failed to probate the will for over three years, which the court stated potentially cost the Estate money;*fn3 Davis sought a subpoena on behalf of the Estate before seeking appointment as the independent executor; Davis collected and distributed money from the Estate without proper authority; and Davis considered the interests of one beneficiary over the interests of the Estate.*fn4 Considering this evidence, we conclude the trial court did not abuse its discretion in finding Davis unsuitable to serve as the independent executor of the Estate. See Spies v. Milner, 928 S.W.2d 317, 319 (Tex. App.--Fort Worth 1996, no writ) (finding the trial court did not abuse its discretion in finding appellant unsuitable to serve as executor because the evidence showed appellant had difficulty dealing with professionals, she was a difficult witness and changed her answers when pressured, she admitted taking money out of the decedent's account while the decedent was still alive, and she did not get along with the other relatives involved in the probate proceeding). We overrule appellants' first two issues.

B. Did the Trial Court Err in Requiring Davis to Turn Over Funds to the Court's Registry?

In their third issue, appellants argue the trial court, which is a county court, lacked jurisdiction to make rulings regarding any trust matters. According to appellants, the trial court erred in ordering Davis to place the funds in the registry of the county court because all matters pertaining ...


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