Sandra Saks, Lee Nick McFadin and Margaret Landen Saks v. Lauren Saks A/K/A Gloria Lauren Nicole Saks ( 2015 )

ACCEPTED
04-13-00875-cv
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
3/16/2015 1:17:57 PM
KEITH HOTTLE
CLERK
04-13-00518-CV
FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS FOR SAN ANTONIO, TEXAS
THE FOURTH DISTRICT OF TEXAS 03/16/2015 1:17:57 PM
SITTING AT SAN ANTONIO KEITH E. HOTTLE
Clerk
SANDRA GARZA DAVIS f/k/a SANDRA C. SAKS and LANDEN SAKS,
Appellants,
v.
LAUREN SAKS MERRIMAN and MARCUS P. ROGERS,
Interim Trustee,
Appellees.
__________________________________________________________________
04-13-00875-CV
SANDRA GARZA DAVIS f/k/a SANDRA C. SAKS, LEE NICK MCFADIN, III
and LANDEN SAKS,
Appellants,
v.
LAUREN SAKS MERRIMAN and MARCUS P. ROGERS,
Interim Trustee,
Appellees.
On appeal from Probate Court No. 1, Bexar County, Texas
Honorable Polly Jackson Spencer, presiding
APPELLANTS' MOTION FOR EN BANC RECONSIDERATION
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TO THE HONORABLE JUSTICES OF THE FOURTH COURT OF APPEALS:
Now come, Sandra C. Saks (“Sandy”), Lee Nick McFadin, III ("McFadin")
and Landen Saks (“Landen”) and file this motion for en banc reconsideration, and
they would show:
BACKGROUND
On January 2, 1991, Sandy Saks (“Sandy”) acting in her capacity as settlor
created the Saks Children Family Trust a/k/a ATFL&L a/k/a A Trust for Lauren &
Landen (“ATFL&L”) and appointed her sister Diane Flores (“Diana”) Trustee of
the ATFL&L for the benefit of her children including daughters Gloria Lauren
Nicole Saks (“Lauren”), Margaret Landen Corina Saks (“Landen”), and any other
children later born to or legally adopted through court proceedings by Sandra
Saks. (Appendix Tab 4)
Twenty years later, on August 17, 2011, Lauren sued Sandy and Diana in
Cause No. 2011-PC-3466 alleging mismanagement of the Trust and other claims
and seeking to remove Diana as Trustee. (CR pages 5-13) Landen and McFadin
were not parties to Lauren's lawsuit. Although ATFL&L was an irrevocable trust,
it provided for termination by the trustee. A true and correct copy of the Trust
Agreement is contained in the Record. (CR pages 193-233) Four months later,
ATFL&L was terminated according to its terms (CR page 216 ¶ 4.5), and title to
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the property interests then-owned was transferred to the beneficiaries on
December 21, 2011. A true and correct copy of the Notice of Termination is
contained in the Record. (CR pages 198-199) These conveyances including
recorded deeds and assignments were not set aside or voided.
In construing the provisions of a trust, the settlor's intent is to be ascertained
by looking to the provisions of the instrument as a whole, as set forth within the
four corners of the instrument. Perfect Union Lodge No. 10 v. Interfirst Bank of
San Antonio, 748 S.W.2d 218, 220 (Tex. 1988) (citing Stewart v. Selder, 473
S.W.2d 3, 7 (Tex. 1971); Sellers v. Powers, 426 S.W.2d 533, 536 (Tex. 1968)).
Courts interpret trust instruments the same way as wills, contracts, and other legal
documents. Alpert v. Riley, 274 S.W.3d 277, 286 (Tex.App.-Houston [1 Dist.]
2008), citing Lesikar v. Moon, 237 S.W.3d 361, 366 (Tex.App.-Houston [14th
Dist.] 2007, pet. denied). The meaning of the trust instrument is a question of law
when no ambiguity exists. Nowlin v. Frost Nat'l Bank, 908 S.W.2d 283, 286
(Tex.App.-Houston [1st Dist.] 1995, no writ). If the court can give a definite legal
meaning or interpretation to an instrument's words, it is unambiguous, and the
court may construe the instrument as a matter of law. Coker v. Coker, 650 S.W.2d
391, 393 (Tex.1983). If the language is uncertain or reasonably susceptible to
more than one meaning, however, it is ambiguous, and its interpretation presents a
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fact issue precluding summary judgment. Id. At 394.
Landen and Sandy submit that ATFL&L language was unambiguous. The
ATFL&L authorized the Trustee to terminate ATFL&L if the Trustee in her sole
discretion determined that continuation of ATFL&L was contrary to the best
interests of the beneficiaries because the value of ATFL&L's assets were at such a
level, in the judgment of the Trustee, to make continued administration financially
burdensome and uneconomical. Upon such determination, ATFL&L authorized
the Trustee to terminate ATFL&L pursuant to ¶ 4.5 of the trust agreement and
mandated that the Trustee shall distribute ATFL&L assets to the income
beneficiaries. Landen did not contest the termination of ATFL&L, and she agrees
with the decision of the Trustee that it was in the best interests of the beneficiaries
to terminate ATFL&L before it incurred any liability to pay hundreds of thousands
of dollars of legal fees due to pending litigation.
A few months after ATFL&L was terminated, the lawsuit filed by Lauren
was resolved by a mediated settlement agreement (“MSA”) on April 2, 2012. (CR
pages 16-20) The parties to the MSA were Lauren, Sandy and Diana. (CR page
16) Although Landen was not a party to the MSA, her approval was signed by
Lauren's attorney A. Chris Heinrichs under apparent authority if a power of
attorney, prepared by Heinrichs and executed by Landen. Landen disputed her
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approval or agreement to the MSA, and revoked her agreement. (CR pages 23-29)
Nevertheless, the MSA did not require Landen to convey any of her property that
had been transferred to her, when ATFL&L was terminated.
MEDIATED SETTLEMENT AGREEMENT
The MSA was approved by an Order of the trial court signed on May 8,
2012. (CR pages 21-22) Landen and Sandy submit that the Order approving the
MSA resolved all issues among the parties pursuant to the terms of the MSA
because the MSA expressly provided that all future disputes among the parties
would be submitted to arbitration pursuant the USA&M Rules of Arbitration.
Therefore, Appellants submit that the final Order approving the MSA was a final
appealable order in a probate case because it resolved all issues among the parties
and referred future disputes, if any, arbitration pursuant to the jurisdiction of the
USA&M. Distinguish Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192-93 (Tex.
2001) (“We consider only cases in which one final and appealable judgment can
be rendered and not cases, like some probate and receivership proceedings, in
which multiple judgments final for purposes of appeal can be rendered on certain
discrete issues.”).
The final Order approving the MSA did not contain any finding that: (1)
ATFL&L had not been properly terminated or that ATFL&L even existed at the
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time the MSA was signed, (2) Landen had any obligation to convey her property
pursuant to the MSA, or (3) that the probate court had any jurisdiction to resolve
any dispute related to the MSA. Therefore, even if the MSA created an implied
trust, Landen submits that she had no obligation to convey her property to any
trust.
Where a settlement agreement indicates that an issue was not determined,
the court's judgment based upon the settlement agreement cannot include an
adjudication of that issue. In re Kimberly Calderon, 88 S.W.3d 395 (Tex.App. —
Tyler 2002), citing Avila v. St. Luke's Lutheran Hospital, 948 S.W.2d 841, 847
(Tex.App.San Antonio 1997, writ denied).
Because the trial court case was settled, the court lacked subject matter
jurisdiction as to ancillary claims related to Landen's property including the Order
on September 5, 2012 compelling attendance at mediation and arbitration.
Jacquelyn Goodman, et al., v. the Summit at West Rim, Ltd., et al., 952 S.W.2d 930
(Tex. App. 1997). In this case, enforcement of the MSA in the district courts (or
the probate court) was precluded by agreement of the parties that enforcement
would be by arbitration pursuant to the USA&M Rules of Arbitration.
PANEL OPINION
However, the panel opinion stated at page 6 of the Memorandum Opinion
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that the MSA and arbitration award were premised on the notion that ATFL&L
was not terminated, and even if ATFL&L was terminated, the probate court would
not have been deprived of jurisdiction. Nevertheless, neither the MSA nor the
order of approval made any express finding that ATFL&L was not terminated, and
even if there was an implied trust, the MSA deprived the probate court of
jurisdiction to resolve any disputes among the parties, when it referred all matters
to arbitration pursuant to the USA&M.
The panel opinion also stated at page 6 of the Memorandum Opinion that
even if ATFL&L was terminated the probate court would have retained subject
matter jurisdiction. However, the MSA expressly removed the jurisdiction from
the probate court, and it required the parties to file a petition pursuant to the
USA&M if there was any dispute among them related to the MSA. Distinguish
Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192-93 (Tex. 2001).
UNITED STATES ARBITRATION & MEDIATION
The MSA provided at ¶7 that if one or more disputes arose, the parties
agreed that the dispute would be referred to arbitration in accordance with the
applicable USA&M. According to the USA&M rules “The parties to a dispute
shall be deemed to have made these Consolidated Arbitration Rules a part of their
arbitration agreement and shall be legally bound to comply with these Rules
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whenever they have provided for arbitration by United States Arbitration &
Mediation Midwest, Inc. (hereafter “USA&M”). These Rules and any
amendments or modifications thereof shall apply in the form existing at the time
arbitration is initiated, and shall be considered in conjunction with, and not in lieu
of, any applicable statutory arbitration provisions.” …
“3. Initiating Arbitration With an Arbitration Agreement”
a. “A party wishing to initiate arbitration pursuant to an arbitration agreement
(hereafter the “Claimant”) must file an original of the Claim with the
USA&M, together with the appropriate filing fee required by the then
prevailing USA&M Arbitration Fee Schedule. The Claim must include a
description of the dispute, the specific relief sought, the address, telephone
number, fax number, and e-mail address of the Claimant or representative,
and a copy of all supporting documents, including the underlying arbitration
agreement. Parties may stipulate to the use of USA&M and its Arbitration
Rules even if other arbitration services or rules are referenced in their
contract.”
b. “USA&M will confirm receipt of the Claim to the Claimant after assigning
a case number to the Claim. The claimant must then serve notice and a copy
of the Claim, as required by contract and/or these Rules, to the other
party(ies) (hereafter “Respondent”) USA&M is not responsible for
providing legal notice of a claim to the parties involved in arbitration.”
(CR pages 202-209)
However, instead of referring the disputed issues for arbitration in
accordance with the applicable USA&M rules, Lauren invoked the trial court's
jurisdiction. Even if the trial court had jurisdiction to issue an order compelling
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the parties to attend mediation and arbitration, it did not confer jurisdiction to the
USA&M. Appellants submit that the proper procedure would have been to file a
petition in accordance with the applicable USA&M Rules of Arbitration. Such a
procedure would have provided due process pursuant to the MSA and the
applicable USA&M Rules. Therefore, Appellants submit that the void Order
Compelling Attendance at Mediation and Arbitration did not confer jurisdiction to
the USA&M. The Order was signed on September 5, 2012 and filed on September
10, 2012. The MSA did not authorize continuing judicial jurisdiction, but
mandated extra-judicial jurisdiction pursuant to its terms and the applicable
USA&M Rules of Arbitration.
The panel opinion cites S & A Rest. Corp. v. Leal, 892 S.W.2d 855, 858
(Tex. 1995) for the proposition that “[M]ere approval of a settlement agreement
does not constitute rendition of a judgment.” However, this case is distinguished
from S & A Rest. Corp., which involved an oral approval of a settlement
agreement, and there is no indication that the settlement agreement provided for
arbitration as the exclusive remedy to resolve any future disputes among the
parties related to the MSA. Appellants submit that the trial court signed an order
approving the MSA, which provided for arbitration as the exclusive remedy to
resolve any future disputes among the parties related to the MSA. Thus, the order
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approving the MSA resolved all claims and parties before the probate court, and it
had the effect of a final judgment pursuant to the terms of the MSA, which
expressly stated that it was final and irrevocable.
Appellants request the Court to determine whether the trial court's Order
compelling attendance at mediation and arbitration was void due to lack of
jurisdiction. Alternatively, if the Court finds that the trial court had jurisdiction,
Appellants request the Court to determine whether the arbitration was conducted
without due process pursuant to the MSA and the applicable United States
Arbitration and Mediation Rules of Arbitration.
JURISDICTION OVER APPELLANTS' PROPERTY
Landen submits that the trial court lacked subject matter jurisdiction as to
her interests in properties, which were conveyed or transferred to her at the time
ATFL&L was terminated, when it signed the Order on September 5, 2012
compelling attendance at mediation and arbitration. Landen was not a party to any
lawsuit, and there was no term of the MSA that required her to transfer or convey
any interest in property. Therefore, the trial court lacked jurisdiction to order her
to do anything including attend mediation or arbitration. Furthermore, the
arbitrator could not order Landen to convey her property pursuant to the MSA,
because Landen had no obligation to convey her property pursuant to the MSA.
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Sandy respectfully submits that the trial court lacked subject matter
jurisdiction as to the interests in properties, which she conveyed or transferred to
McFadin after ATFL&L was terminated, when it signed the Order on September
5, 2012 compelling attendance at mediation and arbitration. Although Sandy
agreed to the MSA, which required her to sign deeds and other conveyance
documents that were to be prepared within two weeks, the conveyance documents
were not timely presented to her, and she did not sign them. Instead, after she
discovered that Landen's purported agreement had been procured by deception by
Lauren's attorneys, she conveyed her property to McFadin. Therefore, the trial
court lacked jurisdiction to order Sandy to convey property because she no longer
owned the property. Furthermore, the arbitrator could not order Sandy to convey
her property pursuant to the MSA, because she had already conveyed her property
to McFadin, and he was not a party to the arbitration.
McFadin respectfully submits that the trial court lacked subject matter
jurisdiction as to his interests in properties, which were conveyed or transferred to
him by Sandy after ATFL&L was terminated, when it signed the Order on
September 5, 2012 compelling attendance at mediation and arbitration. McFadin
was not a party to any lawsuit, and there was no term of the MSA that required
him to transfer or convey any interest in property. Therefore, the trial court lacked
11
jurisdiction to order him to do anything including attend mediation or arbitration.
Furthermore, the arbitrator could not order McFadin to convey his property
pursuant to the MSA, because there was no agreement that McFadin would convey
property.
Appellants submit that the arbitration award ordering Sandy and Landen to
signed the deeds and conveyance documents attached thereto did not transfer title
or ownership of any property to ATFL&L because the conveyance documents (1)
contained false and misleading statements such that Sandy and Landen could not
lawfully sign them, and (2) were not executed or recorded. For the same reasons,
neither the Judgment affirming the arbitration award and Order in aid of
enforcement did not transfer title or ownership of any property to ATFL&L.
The MSA provided for enforcement pursuant to the United States
Arbitration and Mediation (“USA&M”) Rules of Arbitration, not further action in
the trial court. Therefore, Appellants submit that the trial court's order approving
the MSA disposed of all claims and parties because the MSA expressly stated that
it resolved all issues, and any further disputes arising from the MSA would be
arbitrated. The trial court's order compelling the parties to attend further
mediation and arbitration did not establish jurisdiction for the purpose of
arbitration pursuant to the USA&M. Nevertheless, an arbitration hearing was
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conducted due process and without Appellants' attendance or participation on
October 18, 2012 pursuant to the trial court's order, but not according to a petition
filed according to the USA&M Rules. Therefore, Landen and McFadin submit
that the arbitrator lacked jurisdiction over them or their property, and Sandy no
longer owned any property that could be the subject of arbitration.
Landen and McFadin respectfully submit that even if the trial court had
jurisdiction to order Lauren, Diana and Sandy to attend mediation and arbitration,
it did not have jurisdiction over Landen and McFadin or their property.
Furthermore, no court order conferred jurisdiction on the arbitrator, who could
only obtain jurisdiction pursuant to a petition filed under the USA&M.
Consequently, the arbitration pursuant to a court order but not pursuant to the
USA&M was void, and the arbitrator's award and the judgment approving the
arbitrator's award were also void.
CONCLUSION AND PRAYER
WHEREFORE, Sandy, McFadin and Landen respectfully request the Court
of Appeals to grant their motion for reconsideration en banc. Upon
reconsideration, Appellants request the Court to reverse the trial court's Judgment
affirming the arbitration award. Sandy, McFadin and Landen also request such
further relief to which they may be justly entitled.
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Respectfully submitted,
/s/ Philip M. Ross
Philip M. Ross
State Bar No. 17304200
1006 Holbrook Road
San Antonio, Texas 78218
Phone: 210/326-2100
Email: ross_law@hotmail.com
ATTORNEY FOR APPELLANTS
SANDY SAKS, LEE NICK MCFADIN, III
AND LANDEN SAKS
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document has
been e-filed and served on March 16, 2015 by email pursuant to agreement to
Susan A. Kidwell, and Royal B. Lea, III.
/s/ Philip M. Ross
Philip M. Ross
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