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Markl v. Leake

Court of Appeals of Texas, Fifth District, Dallas

May 14, 2018


          On Appeal from the 397th Judicial District Court Grayson County, Texas Trial Court Cause No. CV-15-0126

          Before Justices Francis, Brown, and Stoddart



         After Ethel Maudette Leake ended a ten-year affair with John Leonard Markl, John and his wife, Debra, sued her for various causes of action, including breach of fiduciary duty. At the close of the Markls' evidence in the ensuing jury trial, the trial court granted Ethel's motion for directed verdict on the claim. On appeal, the Markls contend the ruling was error. We affirm.

         John had been married to Debra for several years when he met Ethel in 2004 at the restaurant where she worked. The two became friends. John helped her repair the windshield on her car and then began doing work on her house. While working on her house, the two began an affair.

         Shortly after, Ethel quit her job at the restaurant for a lower-paying job, and John put her on his company's payroll so she could "make ends meet." During the course of their ten-year relationship, they tried to conceive a child, discussed buying property together, traveled together, and shared intimate details of their lives. Ethel made him the beneficiary in her will, and both took out life insurance policies for the benefit of the other.

         By 2008, John had made significant repairs and upgrades to Ethel's house and a second house she inherited from her mother. John testified he spent about $50, 000 making repairs to both houses. As they planned a "more permanent relationship, " he said they began referring to Ethel's house as "our house" and planned to live there together. According to John, Ethel knew she was not paying for his work because he had an interest in the property and said more than a dozen times that if they ended their relationship, he would get back his investment. He explained that Ethel kept the property in her name only so Debra could not "attach herself to it in any way" once the marriage ended.

         Although John agreed he would leave Debra at some point and marry Ethel, John was reluctant to end his marriage because Debra "hadn't done anything wrong" and Ethel "was just too much drama." In July 2011, John left Debra and moved in with Ethel after Ethel gave him an ultimatum but because he was so upset and distraught and felt guilty, he went back to his wife after three days. John said he realized at that point, Ethel wanted money and security and the "satisfaction . . . of getting a married man to leave his wife for her."

         While John testified he and Ethel's relationship was based on "trust, " he also said Ethel threatened to tell Debra about their relationship "if she didn't get what she wanted." John said they "fought a lot" and often talked about ending their relationship, but they made up because of "this stalemate" dating back to early in the relationship: "If I wanted out, she was going to tell my wife everything and I was going to lose her, and lose my wife, and my wife was going to take me for everything I had. And if she wanted out, I'd tell her, okay, fine, but we've got to settle up on the property." He said their threats to each other "pretty much put a - - blanket on the fire."

          In 2013, John was renting the house Ethel inherited from her mother to store some of his belongings. John's nephew needed help, and John arranged for him to move into the house. John paid the rent, which he gave to Ethel. In May 2014, Ethel began an affair with John's nephew (whom she subsequently married). John became suspicious, but Ethel denied his accusations. John and Ethel's relationship came to an end in October 2014 when Ethel accused John of assault. She told police he broke down her door and attacked her. John said he broke in to prevent her from committing suicide, which he said she had attempted on many other occasions. Ethel's sister-in-law arrived during the incident, and Ethel left with her and called the police. John went home and told his wife and "briefly explained what happened." John was ultimately charged with four felonies. He pleaded guilty to burglary with intent to commit assault, and the remaining charges were dismissed.

         Two months after the breakup, the Markls sued Ethel for breach of fiduciary duty, arguing that Ethel's breach deprived them of the community funds invested in Ethel's property. They also alleged fraud, conversion, and promissory estoppel. Ethel denied the allegations, raised affirmative defenses, and counterclaimed for assault, negligence, and intentional infliction of emotional distress.

         At trial, the Markls wanted the return of the investment on the two houses that John made improvements on. After they presented their case, Ethel moved for a directed verdict on their claims. The trial court granted the motion as to the breach of fiduciary duty claim, saying there was "no authority that somebody in an extramarital relationship" in Texas has a valid claim for breach of fiduciary duty. The jury subsequently found against the Markls on their claims for fraud, promissory estoppel, and conversion. In addition, the jury found John assaulted Ethel but awarded zero damages. The Markls appealed, challenging only the trial court's ruling to direct a verdict on their breach of fiduciary duty claim.

          A court may direct a verdict if no evidence of probative force raises a fact issue on the material questions in the suit. See Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994) (per curiam). We review a trial court's decision to grant a motion for a directed verdict under the legal sufficiency standard of review. Helping Hands Home Care, Inc. v. Home Health of Tarrant Cnty., Inc., 393 S.W.3d 492, 515 (Tex. App.-Dallas 2013, pet. denied); see City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). We credit evidence favoring the non-movant if reasonable jurors could and disregard contrary evidence unless reasonable jurors could not. City of Keller, 168 S.W.3d at 827. We consider all the evidence in a light most favorable to the nonmovant, and we resolve all reasonable inferences that arise from the evidence admitted at the trial in the nonmovant's favor. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003).

         A viable breach of fiduciary duty claim requires the following proof: (1) a fiduciary relationship between the plaintiff and the defendant, (2) a breach of the fiduciary duty to the plaintiff, and (3) injury to the plaintiff (or benefit to the defendant) as a result of the breach. Flagstar Bank, FSB v. Walker, 451 S.W.3d 490, 499 (Tex. App.-Dallas 2014, ...

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