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Lancashire v. Lancashire

Court of Appeals of Texas, Fifth District, Dallas

July 11, 2017

LORRI ANNETTE LANCASHIRE, Appellant
v.
DAVID ANTHONY LANCASHIRE, Appellee

         On Appeal from the 256th Judicial District Court Dallas County, Texas Trial Court Cause No. DF-10-14320-Z

          Before Justices Bridges, Lang-Miers, and Evans

          MEMORANDUM OPINION

          ELIZABETH LANG-MIERS, JUSTICE

         This appeal arises out of a dispute over a provision in an agreed decree of divorce naming David Anthony Lancashire constructive trustee of property decreed to Lorri Annette Lancashire.[1]That property consisted of a "[f]ifty [p]ercent (50%) undivided interest in all units or shares in the business entity known as Bold Ventures, LLC[2] in [David's] name." The dispute centered on whether David, as constructive trustee, had to provide Lorri documentation showing the status of the shares, Bold's tax returns and financial statements, and "any Schedule K-1 forms" he received. The trial court granted a declaratory judgment that David owed a duty to provide an annual written summary of the status of the shares. The trial court also granted summary judgment in David's favor. We vacate the declaratory judgment and affirm the summary judgment.

         BACKGROUND

         The parties divorced in April 2012. The divorce decree incorporated a mediated settlement agreement and provided, with respect to the Bold shares awarded Lorri, that the shares would be managed by David, who had "the exclusive right to possess, control, manage, and exercise all rights associated with" all the Bold shares held in his name. The decree further provided David would be

a constructive trustee for the benefit of [Lorri] with regard to the Bold [shares] to the extent of his payment obligations set forth in this paragraph, and that [David] is ORDERED to pay to [Lorri], within five business days of receipt, one-half of the sum of any and all monies he receives for any sale or transfer of any Bold units or shares.

         Seeking "some assurance" that the value of the Bold shares was "being properly maintained" and not having received the information she requested about Bold, Lorri filed suit against David and moved for the appointment of a "Rule 172 auditor."[3] By the suit, a combined motion for enforcement under the Texas Family Code and suit to compel under section 113.151 of the Texas Property Code, Lorri sought an accounting of Bold's financial affairs from January 1, 2011 "through the present." She also sought production of tax returns and "related K-1 forms attributable to Lorri's ownership interest in Bold" as well as "the other previously requested business records."[4] In support of her claims, she alleged that David, as constructive trustee, "owe[d her] statutory and common law duties . . . including the duty to provide an accounting."

         David filed an answer, asserting a general denial and the affirmative defenses of res judicata and limitations. He also filed a counterclaim for a declaratory judgment that Lorri "is not entitled to any additional rights other than what is clearly stated in the Final Decree, including but not limited to an accounting or production of Bold financial documents."

         About a year after Lorri filed suit, David moved for traditional and no-evidence summary judgment on Lorri's claims. David claimed he was entitled to judgment as a matter of law based on his affirmative defenses. He further claimed no evidence existed that the decree contained a provision allowing the relief Lorri sought or that David had failed to comply with any provision of the decree.

         The trial court heard the summary judgment motions the day of trial, took them under advisement, and proceeded with trial. Prior to calling Lorri as a witness, Lorri's counsel clarified that Lorri was seeking only "four categories of information:" (1) Bold's tax returns; (2) any Schedule K-1 forms issued to David; (3) Bold's financial statements; and (4) documentation showing whether any of Bold's shares had been transferred or sold. Lorri then testified as to why she was seeking those documents.

         David did not testify or call any witness, but orally agreed to provide documentation showing any transfers or sales of the shares. Eight months later, in accordance with the verbal agreement, the trial court rendered a declaratory judgment that David "will provide an annual written summary of the status of the shares or units in Bold . . . to include: whether or not there has been any transfer of any Bold shares . . . and whether [Lorri's] 50% interest in Bold remains intact." The trial court also granted summary judgment in favor of David, without specifying a basis.

         DISCUSSION

         Lorri raises two issues in this appeal. In her first issue, she argues that David, as constructive trustee, owes her the same duties an express trustee owes his beneficiary and, because nothing in the decree limits his duties, "the trial court erred in declaring [she] was not entitled to the information she sought from David about Bold, namely its tax returns, its financial statements, [and] any K-1s it issued to David." In her second issue, she argues the trial court erred in granting summary judgment because her summary judgment evidence established both that the divorce decree imposed a duty of full disclosure on ...


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