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In re Estate of Lee

Court of Appeals of Texas, Sixth District, Texarkana

May 25, 2018

IN THE ESTATE OF LUCY ELIZABETH LEE, DECEASED

          Date Submitted: April 4, 2018

          On Appeal from the County Court at Law No. 2 Gregg County, Texas Trial Court No. 2016-0243-E

          Before Morriss, C.J., Moseley and Burgess, JJ.

          OPINION

          RALPH K. BURGESS JUSTICE

         Michael Lee filed a petition contesting the probate of the second codicil to the will of Lucy Elizabeth Lee. The trial court dismissed Lee's petition based on lack of standing. We affirm the trial court's judgment.

         I. Background

         A. The Will

         Following the death of Lucy Elizabeth Lee (Lucy) on July 14, 2016, the trial court issued an order admitting three instruments to probate: (1) Lucy's October 10, 2013, will (the Will), (2) Lucy's March 30, 2015, first codicil to the will (First Codicil) and (3) Lucy's July 6, 2016, second codicil to the will (Second Codicil). In the Will, Lucy left her residuary estate to the Lucy E. Lee Family Trust (the Trust). Lucy's son, Jack O'Guinn (O'Guinn), was named as the lifetime income beneficiary of the Trust and as beneficiary of the Trust principal for medical expenses not covered by insurance. The Trust's remainder beneficiaries were Lucy's step-grandson, Lee, and Lucy's grandson, Jack Lindsay O'Guinn (Jack).

         B. The First Codicil

         The First Codicil kept O'Guinn as the lifetime income beneficiary of the Trust. It also removed the restriction on O'Guinn's access to the Trust principal for medical expenses not covered by insurance. However, it removed Lee and Jack as remainder beneficiaries. Instead, it substituted Lucy's niece, Mary Elizabeth Whitten, or Whitten's surviving issue, as the Trust's sole remainder beneficiary.

         C. The Second Codicil

         In the Second Codicil-which was signed eight days before Lucy's death-Lucy eliminated the Trust altogether and left the entirety of her estate to O'Guinn free and clear of the Trust. The Second Codicil reads, "I hereby bequeath and give to my son, Jack Robert O'Guinn, all of my personal property, household goods, jewelry, stocks and bonds and all of the money I have at Texas Bank and Trust and the Bank of Albuquerque."

         D. The Agreement Between Lee And Whitten

         In November 2016, Lee and Whitten entered into a written agreement (the Agreement). Under the terms of the Agreement, Lee agreed to contest the admission to probate of the Second Codicil, and Whitten agreed to give Lee forty percent of anything she recovered under the Will and First Codicil. The Agreement also stated that it was being made in consideration of the parties' mutual release and settlement of

any and all claims and causes of action between themselves or claims and causes of action which can, have been or could have been made in Cause No. 2016-0243E in the County Court at Law No. 2 of Gregg County, Texas, or any other court of competent jurisdiction that in any way relate to the probate and non-probate assets of Lucy E. Lee and her estate.[1]

         E. The Litigation

         Following the execution of the Agreement, Lee filed the present action contesting probate of the Second Codicil. In his petition, Lee claimed, among other things, that the statutory requirements for probating the Second Codicil had not been satisfied.[2] He also alleged that Lucy was incapacitated and unduly influenced by O'Guinn at the time the Second Codicil was executed. O'Guinn responded to Lee's petition contesting probate of the Second Codicil by filing a motion in limine to dismiss Lee's petition. In his motion in limine, O'Guinn argued that Lee does not have standing to contest the probate of the Second Codicil.

         O'Guinn raised two arguments challenging Lee's standing. First, he argued that Lee is not an "interested person" under Texas law. Second, O'Guinn argued that, because the Trust is a spendthrift trust, and because the Agreement constitutes an alienation of an interest in a spendthrift trust, the Agreement is invalid as a matter of law. Lee responded with his own motion in limine, claiming that O'Guinn did not have standing to challenge the Agreement because he was not a party to it. The trial court ultimately agreed with O'Guinn and dismissed Lee's petition.

         II. Appellate Issues

         On appeal, Lee maintains (1) that he was not required to contest the First Codicil in order to have standing to contest the Second Codicil because he was a beneficiary under the original Will and, therefore, an interested person under Texas law, (2) that O'Guinn does not have standing to allege that the Agreement is invalid or unenforceable, and (3) that, even if O'Guinn did have standing to challenge the Agreement, the trial court erred in finding the Agreement invalid because the Trust was not an active spendthrift trust.

         III. Standard of Review

         Standing is implicit in the concept of subject-matter jurisdiction. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444-45 (Tex. 1993). "The issue of standing focuses on whether a party has a sufficient relationship with the lawsuit so as to have a 'justiciable interest' in its outcome . . . ." Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). To have standing, the plaintiff "must have suffered a 'concrete injury' and a 'real controversy' must exist between the parties such that it can be resolved by the court." In re Estate of Forister, 421 S.W.3d 175, 177 (Tex. App.-San Antonio 2013, pet. denied) (quoting Heckman v. Williamson Cty., 369 S.W.3d 137, 154 (Tex. 2012)). A court must dismiss a claim if the plaintiff lacks standing to assert it, and it must dismiss the entire action for want of jurisdiction if the plaintiff lacks standing to assert any of its claims. Heckman v. Williamson Cty., 369 S.W.3d 137, 150-51 (Tex. 2012).

         We consider the trial court's order on a motion to dismiss for lack of standing in the same manner as a plea to the jurisdiction. Forister, 421 S.W.3d at 178. "If the evidence creates a fact question regarding the jurisdictional issue, then the trial court cannot grant the plea to the jurisdiction, and the fact issue will be resolved by the fact[-]finder." Tex. Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227-28 (Tex. 2004). Conversely, "if the relevant evidence is undisputed or fails to raise a fact [issue] on the jurisdictional issue, the trial court rules on the plea to the jurisdiction as a matter of law." Id. at 228. Whether a plaintiff has standing is a legal question we review de novo. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). The facts here are undisputed.

         IV. Analysis

         A. Lee Does Not Have Standing to Contest Only the Second Codicil

         1. Introduction

         Because Lee's interest as a remainder beneficiary was terminated by the First Codicil, Lee would need to successfully challenge both the Second and the First Codicils to recover under the Will. In other words, even if Lee successfully contests the Second Codicil, he will still not recover anything from Lucy's Estate because the First Codicil would still be in place and that Codicil removed him as a remainder beneficiary. Yet, Lee did not challenge the First Codicil.[3]Consequently, the trial court ruled that Lee did not have standing to contest only the Second Codicil. Nevertheless, Lee asserts that he has standing to challenge only the Second Codicil because he is an interested person in the Will-as that term is defined by Texas law-and an interested person has standing to contest any later will or codicil. Thus, we must first address whether Lee is, in fact, an "interested person" in the Will under Texas law.

         2. Lee's Standing as a Former Remainder Beneficiary Does Not Make Him An Interested Party

         Lee first points to Section 256.204 of the Texas Estates Code in support of his argument. See Tex. Estates Code Ann. § 256.204(a) (West 2014). That statute provides:

After a will is admitted to probate, an interested person may commence a suit to contest the validity thereof not later than the second anniversary of the date the will was admitted to probate, except that an interested person may commence a suit to cancel a will for forgery or other fraud not later than the second anniversary of the date the forgery or fraud was discovered.

Id. Lee then asserts that the term "interested person" is defined by statute as "an heir, devisee, spouse, creditor, or any other having a property right in or claim against an estate being administered." Tex. Estates Code Ann. § 22.018(1) (West 2014). Finally, he points to caselaw that holds, "A 'person interested in the estate' is one who has a legally ascertained pecuniary interest, real or prospective, absolute or contingent, which will be impaired, benefitted, or in some matter materially affected by the probate of the will." Abbott v. Foy, 662 S.W.2d 629, 631 (Tex. App.-Houston [14th Dist.] 1983, writ ref'd n.r.e.).

         Lee asserts that he satisfies both definitions of an interested person. First, he notes that he satisfies the statutory definition because he is named as a devisee in the Will and has "a property right in or claim against" Lucy's estate. Tex. Estates Code Ann. § 22.018(1). Then, he proposes two arguments that he claims satisfy the caselaw definition, i.e., that he has a pecuniary interest in the Will that "will be . . . materially affected by the probate of the [Second Codicil]." Abbott, 662 S.W.2d at 631. First, he argues that, if the Agreement is determined to be invalid, unenforceable, or breached, he would have the right to file subsequent litigation to challenge the First Codicil, and if that subsequent challenge is successful, he would recover fifty percent of "what remains after the termination of O'Guinn's $5.5 million dollar lifetime trust." Second, he argues that, under the Agreement, he is entitled to recover a forty percent share of what Whitten recovers if the Second Codicil is invalidated, even if the First Codicil remains in force, and that his forty percent interest under the Agreement will be impaired if the Second Codicil remains in force. Consequently, Lee argues that he has standing to contest the Second Codicil. See Muse, Currie & Kohen v. Drake, 535 S.W.2d 343, 344 (Tex. 1976) (per curiam) (standing requires pecuniary interest which will be affected by the probate or defeat of the will). Lee fails under both definitions.

         First, Lee fails under the statutory definition because he does not have "a property right or a claim against" Lucy's estate. Tex. Estates Code Ann. § 22.018(1). Rather, he has only a potential right or claim against her estate. Specifically, even if Lee successfully challenges the Second Codicil, he still would not recover anything from Lucy's estate because his former remainder interest was terminated by the First Codicil. Stated another way, even if Lee gains all he seeks in this litigation, he would still be unable to demand anything from the administrator of Lucy's estate or the trustee of the Trust. To reach that point, Lee would have to successfully challenge the First Codicil as well. Thus, at best, Lee has "a [potential] property right or claim against" Lucy's estate, but he does not have an actual one against it. See id.

         Likewise, Lee fails under the caselaw definition because his alleged pecuniary interest is too far removed from Lucy's estate. Although Lee relies on Abbott and Muse to support his arguments, those cases actually support the opposite conclusion.

         In Abbott, Foy filed an application to probate a will executed by Abbott, which named Foy as the sole beneficiary. Abbott, 662 S.W.2d at 630. Abbott's stepson filed a will contest claiming that Abbott lacked testamentary capacity when she executed the will. After Foy filed a motion to dismiss, alleging that the stepson had no interest in the estate, the stepson offered for probate Abbott's earlier will and codicil, which named him as a beneficiary. Id. at 630-31.

         In reversing the trial court's dismissal of the will contest in Abbott, the court of appeals recognized that, "[i]n showing an interest by reason of a prior will, it is not necessary to develop facts necessary to entitle the will to probate." Id. at 632 (citing Hamilton v. Gregory, 482 S.W.2d 287 (Tex. Civ. App.-Houston [1st Dist.] 1972, no writ)). The court went on to say that, if the earlier "will is indeed the valid last will of the testatrix, appellant, as beneficiary, has a pecuniary interest in the estate. However, these matters need not be proved in a preliminary ...


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