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Poole v. Poole

Court of Appeals of Texas, Seventh District, Amarillo

August 21, 2019


          On Appeal from the 251st District Court Potter County, Texas Trial Court Nos. 106, 839-C, 107, 650-C, Honorable Ana Estevez, Presiding

          Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.



         Karen Poole appealed from the trial court's judgment denying her recovery upon her counterclaims against her two children, Danny Poole and Jayme Poole Rittenberry, removing her as trustee of her children's trusts, ordering her to return monies taken from a partnership, and assessing attorney's fees against her. Apparently, mother and children had a difficult relationship. The underlying dispute generally concerned a family limited partnership known as Entrania Springs L.P. Its general partner was Poole IV, Inc., whose management consisted of Danny and Jayme. In turn, 99.5% of the limited partnership was owned or controlled by Karen, through various means. For reasons superfluous to this opinion, Poole IV and Entrania secured a loan from AXA Equitable Life Insurance Company for approximately $9.9 million. Repayment of that debt was secured by realty of the limited partnership. Karen purportedly did not know of the loan and objected upon discovering it. She also undertook various actions in response, including the removal of funds from various family entities or businesses. Danny, Jayme, and various family businesses sued her alleging causes of action sounding in breached fiduciary duties, trespass, theft, civil conspiracy, and unjust enrichment. So too did they seek declaratory relief. Karen counterclaimed, alleging among other things claims of breached fiduciary duty against her children. The facts underlying these claims were tried to a jury which ultimately found in favor of Danny and Jayme. Judgment was entered upon the verdict, and Karen appealed.

         Six issues pend for our review. We affirm.

         Issues One and Two

         Through the first two issues, Karen avers that the "trial evidence unequivocally prove[d] that Danny Poole and Poole IV breached their duties to Entrania Springs and failed to comply with the Entrania Springs partnership agreement." Each is based upon the belief that the borrowers were obligated under the limited partnership agreement to obtain her consent to the loan and security agreement, which consent she never gave. We overrule the issues.

         Two specific provisions of the limited partnership agreement allegedly establish the accuracy of her contentions. The provisions in question state as follows:

Partnership Interest Pledge or Encumbrance. No Partner may grant a security interest in or otherwise pledge, hypothecate, or encumber his interest in this Partnership or such Partner's distributions without 70 Percent in Interest of Limited Partners. It is understood that the Partners are under no obligation to give consent nor are they subject to liability for withholding consent. [XIII.C. of the Entrania Springs Partnership Agreement]
Restrictions on General Partner. The General Partner will not have the authority to enter into any of the following transactions without the consent of 70 Percent in Interest of the Limited Partners/Unanimous Consent: . . . (5) make, execute, or deliver any assignments for the benefit of creditors, or on the Assignee's promise to pay the debts of the Partnership. [VII.F.5. of the Entrania Springs Limited Partnership Agreement]

         Addressing these issues requires us to construe the meaning of each provision. In construing them, our primary goal "is to ascertain and effectuate the intent of the parties to the agreement" by reading "the instrument as a whole and accord[ing] its language its plain grammatical meaning unless doing so defeats the parties' intent," Renda v. Erikson, 547 S.W.3d 901, 913 (Tex. App.-Amarillo 2018, pet. granted), or the contract itself shows that the words were used in a technical or different sense. Whittington v. Green, No. 07-15-00102-CV, 2016 Tex.App. LEXIS 13533, at *15 (Tex. App.-Amarillo Dec. 20, 2016, pet. denied) (mem. op.).

         Regarding the first provision, we see that it refers to "partners" granting security interests or encumbrances. The subject of those encumbrances is the partner's or his interest in this Partnership or such Partner's distributions (Emphasis added). "[H]is" interest in and his distributions from the partnership refer to the property rights or interests which the partner may have in the partnership itself. Indeed, our jurisprudence has long recognized that a partner does not own a specific interest in particular chattel or property of a partnership. Sherk v. First Nat'l Bank of Hereford, 206 S.W. 507, 509 (Tex. Comm'n App. 1918, judgm't adopted). What is owned is a right to receive distributive shares of the partnership's profits and surpluses. Stanley v. Reef Sec, Inc., 314 S.W.3d 659, 664 (Tex. App.-Dallas 2010, no pet.). The aforementioned section of the limited partnership agreement reflects that right by prohibiting a partner from encumbering his interest in his distributive shares of partnership profits or surpluses without approval.

         Neither Danny nor Poole IV pledged or otherwise encumbered his or its own respective interest in any partnership, that is, in their own respective right to receive distributive shares of partnership profits or surpluses. The property being pledged or encumbered was not a partnership interest as we know that term to mean. It consisted of realty apparently owned by Entrania, the limited partnership. Consequently, neither Poole IV nor Danny had ...

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