jackson-walker-llp-and-m-keith-branyon-and-jane-o-lindsey-individually ( 2015 )

In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-13-00130-CV
JACKSON WALKER, LLP AND M. KEITH BRANYON AND JANE O. LINDSEY,
INDIVIDUALLY AND AS THE FORMER CO-TRUSTEE OF THE LESEY B. KINSEL
TRUST, AND ROBERT N. OLIVER, APPELLANTS
V.
VIRGINIA O. KINSEL, AS ATTORNEY-IN-FACT FOR J. FRANK KINSEL, SR., J. FRANK
KINSEL, JR. , INDIVIDUALLY, CAROLE K. EDWARDS, INDIVIDUALLY, AND
CATHERINE K. COLLINS, INDIVIDUALLY, APPELLEES
On Appeal from the 153rd District Court
Tarrant County, Texas
Trial Court No. 153-232668-08, Ken Curry, Presiding
April 10, 2015
On Motions for Rehearing
Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
Pending before the court are three motions for rehearing. After considering
each, we withdraw our February 13, 2015 opinion and judgment, and substitute the
following in its place. To the extent those motions seek relief not reflected in the
following opinion, they are denied.
Memorandum Opinion
We have before us an appeal from a final judgment awarding damages to
Virginia O. Kinsel, as attorney-in-fact for J. Frank Kinsel, Sr., J. Frank Kinsel, Jr., Carole
K. Edwards, and Catherine K. Collins (collectively referred to as the Kinsels) against
Jackson Walker, L.L.P., M. Keith Branyon, Jane O. Lindsey, individually and as the
former co-trustee of the Lesey B. Kinsel Trust (Lindsey), and Robert N. Oliver (Oliver).
The Kinsels sued Jackson Walker, Branyon (a partner in Jackson Walker), Lindsey and
Oliver for fraud, tortious interference with prospective inheritance rights, and civil
conspiracy, among other things. Their claims arose from the sale of a ranch owned in
part by them, their predecessors, and Lesey B. Kinsel (Lesey). Allegedly, they were
defrauded into selling their interests to help Lesey provide for herself, when the
purportedly true motive was to secure a greater inheritance for Lindsey and Oliver.
Numerous issues pend for our review, but we need not address all of them. And upon
considering those which are dispositive, we reverse the trial court’s judgment in part,
and affirm in part as modified.
Background
Lesey and her husband, E.A. Kinsel, bought a ranch in Atascosa County in 1943.
Though they never had children together, E.A. had four from a prior marriage. The four
were J. Frank Kinsel, Sr., Joe Bob Kinsel, Alex Kinsel, and Maxine Prince. Upon his
death, E.A. divided equally his one-half community interest in the ranch between Lesey
and his offspring. Upon receiving the bequest from E.A., Lesey owned 60% of the
ranch, and that interest was placed in her intervivos trust. According to the terms of the
trust instrument, the interest would pass to E.A.’s children or heirs upon her death. The
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plaintiffs at bar fell within that category of beneficiaries, and receiving that interest would
compliment interests they or their predecessors already owned in it.
As she grew older and more frail, Lesey moved from Beaumont to Fort Worth,
the latter being a locale nearer to family members. Two such family members were
Lindsey and Oliver, Lesey’s niece and nephew, respectively. Furthermore, Lindsey
began handling some of her aunt’s financial affairs upon Lesey’s arrival in Fort Worth.
So too did she instigate the modification of Lesey’s will and intervivos trust, according to
the Kinsels, to benefit herself.
The trust held substantial portions of Lesey’s property, including the
aforementioned interest in the ranch. Under its terms, various descendants or heirs of
E.A. were to receive the ranch property upon Lesey’s death. Included within that group
were J. Frank, Sr., Virginia, J. Frank, Jr. (referred to as Jeff), Carole and Catherine.
Lindsey was a residual beneficiary under the instrument.
Once Lesey was under the care or supervision of her niece, there arose
discussions concerning the sale of the ranch. Around the same time, Lindsey began
investigating the need to hire an attorney for Lesey. Oliver referred her to his son-in-law
who was employed by the law firm of Jackson Walker in Austin, Texas. That individual
referred her to Branyon who was located in Fort Worth. Lindsey contacted Branyon,
who then met Lesey in February 2007. Their first meeting encompassed the
modification of Lesey’s 2004 last will and testament. By this time, Lesey was ninety-
four years old and legally blind. She was also suffering loss of her mental acumen.
Evidence indicates that Lindsey or Oliver began estimating the value of the
ranch. Eventually, Lindsey contacted the Kinsels and told them that Lesey needed
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money and suggested that the ranch be sold. Branyon followed these communications
with letters stating that Lesey’s living expenses had increased and that “we have
investigated the various possibilities available to her in raising some additional
cash . . . .” He also said that “the ranch would clearly bring more money for everyone if
it were sold intact rather than sold in pieces.” What the Kinsels were not told was that
Lesey already had approximately $1.4 million dollars in assets available for her care.
Upon hearing of the supposed needs of Lesey, each person owning an interest in the
ranch agreed to join in the transaction. Though Lindsey testified that Lesey also wanted
to sell the property, at least one witness testified that she did not. This same witness
testified that Lesey too was being told that she was running short of assets, which
information, according to the witness, caused Lesey distress.
Once a buyer was found, Branyon drafted the requisite paperwork for execution
by Lesey. Ultimately, the sale was consummated in the summer of 2008. Upon its
completion, Branyon sent an email to Lindsey and Oliver saying that they should now
open the champagne. Apparently, Oliver also planned a celebration in honor of the
transaction.
Proceeds from the sale were divided among the ranch owners. Lesey’s share
exceeded $3 million and was placed in her trust. As residual beneficiary of the trust,
most would pass to Lindsey upon Lesey’s death. And, within about a month of the sale,
Lesey died. Yet, several days before she did, Branyon presented Lesey with an
amendment to the trust effectively deleting any reference as to how her ranch interest
was to be distributed upon her death. Lindsey emailed Branyon about the execution of
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this amendment and hoped “all went well” so she “can quit worrying about a possible
lawsuit from the Kinsel grandchildren.” Branyon replied with:
The latest amendment doesn't affect you and I think it might be a good
idea for me to keep it in my file and not send anyone (including you) a
copy of it at this point. I can't guarantee that someone won't try and
contest it after Lesey dies. In fact, I expect it to happen. However, I wlll be
able to keep you out of it, and I don't anticipate any problems in defeating
any contest that may be filed.
In short, there was no ranch which the Kinsels would inherit. And, believing
themselves defrauded and denied their prospective inheritance by Lindsey, Oliver and
Branyon, the Kinsels sued for damages. So too did they seek findings that Lesey not
only was of unsound mind when she sold the ranch and executed the amendments to
her will and intervivos trust but also fell prey to the undue influence of Lindsey, Oliver
and Branyon. Though they did not seek to rescind the ranch sale by suing the buyer,
they did seek to set aside the sales documents Lesey had signed, along with the 2007
and 2008 amendments to Lesey’s will and trust. Also sought was a constructive trust
on the sales proceeds.
Trial was to a jury. It found, among other things, that 1) Lesey lacked the
requisite mental capacity when executing the ranch sales documents and trust
amendments, 2) the Kinsels had been defrauded into selling their interests in the ranch,
and 3) Lindsey, Oliver, and Branyon tortiuously interfered with the Kinsels’ prospective
inheritance. These findings were incorporated into the trial court’s final judgment. As a
result of them, the trial court, among other things, 1) awarded the Kinsels damages
against Lindsey, Oliver, Branyon, and Jackson Walker (jointly and severally), 2)
“declared void and of no effect” the Fourth and Fifth Amendments to the Lesey B. Kinsel
Trust, 3) declared that the Kinsel Ranch sales contract executed on or about April 15,
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2008 and the deed of conveyance executed on or about July 22, 2008 were procured as
a result of undue influence or the lack of capacity of Lesey B. Kinsel to execute them, 4)
declared that the Kinsels were “entitled to the damage amounts listed above [in the
judgment] as a result” of the sales contract and deed being procured by undue influence
or while Lesey lacked mental capacity to execute them, 5) declared void “any prior deed
or document to convey any interest in the oil, gas and minerals from the Trust to Jane
O. Lindsey or Robert N. Oliver,” 6) imposed a constructive trust “on Jane O. Lindsey's
interest in the Trust and any monies that Jane O. Lindsey would be legally entitled to
from the Trust . . .” for the purpose of satisfying, “in whole or in part, Plaintiffs' judgment
in this lawsuit . . . ,” and 7) awarded the Kinsels their attorney’s fees of $800,000 per
§ 27.01 of the Texas Business and Commerce Code, § 37.009 of the Texas Civil
Practice & Remedies Code, and § 114.064 of the Texas Trust Code.
All parties timely appealed, and numerous issues pend before us. Yet, several
are dispositive of the outcome and we consider them.
Tortious Interference With Inheritance Rights
Lindsey, Oliver and Branyon contend that the trial court erred in awarding
damages for their purportedly tortious interference with the Kinsels’ inheritance.
Allegedly, the issue should not have been submitted to the jury because neither the
Texas Supreme Court nor the Court of Appeals for the Second District of Texas (that is,
Fort Worth Court of Appeals) has recognized such a cause of action. We agree.
The tort of interference with inheritance rights is described in the Restatement of
Torts. We are told therein that someone who “by fraud, duress or other tortious means
intentionally prevents another from receiving from a third person an inheritance or gift
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that he would otherwise have received is subject to liability to the other for loss of the
inheritance or gift." Restatement (Second) of Torts, § 774B (1979); see also Urbanczyk
v. Urbanczyk, 278 S.W.3d 829, 835 (Tex. App.—Amarillo 2009, no pet.) (so defining the
cause of action while assuming arguendo that it was recognized in Texas).
Furthermore, various intermediate courts of appeals consider it a recognized cause of
action in Texas. See e.g. In re Estate of Valdez, 406 S.W.3d 228, 233 (Tex. App.—San
Antonio 2013, pet. denied) (stating that “Texas law recognizes a cause of action for
tortious interference with inheritance rights”); Clark v. Wells Fargo Bank, N.A., No. 01-
08-00887-CV, 2010 Tex. App. LEXIS 4376 (Tex. App.—Houston [1st Dist.] June 10,
2010, no pet.) (mem. op.) (stating the same); In re Estate of Russell, 311 S.W.3d 528,
535 (Tex. App.—El Paso 2009, no pet.) (stating the same). Nonetheless, neither our
Texas Legislature nor Texas Supreme Court has recognized it. To that category of
bodies we also add the Fort Worth Court of Appeals. The latter circumstance is of
particular concern since the appeal was transferred from that court to this one by the
Supreme Court via a docket equalization order. Given that, we are obligated to abide
by and apply precedent of the Fort Worth appellate court (as well as the Supreme
Court) when disposing of the appeal. TEX. R. APP. P. 41.3; Lubbock County v.
Trammel's Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002). Since the Fort Worth
Court of Appeals has not recognized the claim, it could be argued that our decision
could bind it in future matters. To avoid standing the policy underlying Rule 41.3 on its
head by making precedent for the Fort Worth Court of Appeals when we are to follow its
precedent, we heed a long standing principle related to the authority of courts of
appeals.
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It is not for intermediate appellate courts to create new causes of action.
Burroughs v. APS Int’l, Ltd., 93 S.W.3d 155, 161 (Tex. App.—Houston [14th Dist.] 2002,
pet. denied); Bernard Johnson, Inc. v. Continental Constructors, Inc., 630 S.W.2d 365,
375 (Tex. Civ. App.—Austin 1982, writ ref'd n.r.e.); accord, Simmons Airlines v.
Lagrotte, 50 S.W.3d 748, 752 (Tex. App.—Dallas 2001, pet. denied) (stating that “[i]t is
not for an intermediate appellate court to undertake to enlarge or extend the grounds for
wrongful discharge under the employment-at-will doctrine. If such an exception is to be
created, the Texas Supreme Court should do it.”). Creating a new cause of action is
tantamount to creating a new law. Yet, “our State Constitution makes clear that it is the
Legislature that promulgates laws and ‘the power conferred upon the legislature to
make the laws cannot be delegated by that department to any other body or authority.’"
In re City of Georgetown, 53 S.W.3d 328, 339 (Tex. 2001). Thus, neither this court, the
courts in Valdez, Clark, and Russell, nor the trial court below can legitimately recognize,
in the first instance, a cause of action for tortiuously interfering with one’s inheritance.
Doing so lies within the province of the Texas Supreme Court or the Texas Legislature.
And, because the trial court failed to heed that principle, it erred. That the error was
harmful is clear because the jury not only found in favor of the Kinsels on that claim but
also awarded them damages under it.
In so concluding, we do not ignore the dissent’s analysis but rather simply
disagree with it. Undoubtedly, other intermediate courts of appeals have recognized the
existence of the cause of action. Yet, the Seventh Court of Appeals is not one of them,
as exemplified in Urbanczyk v. Urbanczyk, 278 S.W.3d 829 (Tex. App.—Amarillo 2009,
no pet.). In footnote six of that opinion, we wrote:
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The summary judgment motion of Marvin and Janet also asserted that the
claim failed as a matter of law because the Texas Supreme Court has not
recognized a cause of action for tortious interference with inheritance
rights. Disposition of this appeal does not require us to consider whether
such a cause of action exists in Texas, and we do not consider that
question. Delmer cites our opinion in Nordyke v. Nordyke, No. 07-96-406-
CV, 1998 Tex. App. LEXIS 55, 1998 WL 4508 (Tex.App.--Amarillo,
January 7, 1998, pet. denied) (mem. op.) as recognizing a cause of action
for tortious interference with inheritance rights. As our opinion made clear,
the existence of the cause of action was not addressed, but only the
appellant's contention that limitations barred its assertion. 1998 Tex. App.
LEXIS 55, [WL] at *3 n.1.
Id. at 835 n.6. The verbiage of that footnote (which happens to be our most recent
writing on the subject) does not permit one to logically conclude that tortious
interference with inheritance rights has been recognized as a viable cause of action by
a majority of this court.
As for reference to our opinion in In re Estate of Crawford, 795 S.W.2d 835 (Tex.
App.—Amarillo 1990 no writ), we did mention the claim. The passage consisted of our
saying that: “By his six cross-points, Bill charges the trial court with abuse of discretion
in directing a verdict against him on his causes of action for tortious interference with
inheritance rights, breach of fiduciary duty, fraud, bad faith, conspiracy, and imposition
of a constructive trust.” Id. at 841 (emphasis added). Nothing else was said about the
matter, though, and we ultimately affirmed the trial court’s directed verdict on it and the
other itemized causes.
To the extent that the dissent suggests that the Fort Worth Court of Appeals
somehow recognized the claim in Swearingin v. Estate of Swearingin, No. 02-05-00132-
CV, 2006 Tex. App. LEXIS 5187 (Tex. App.—Fort Worth June 15, 2006, no pet.) (mem.
op.), In re Bledsoe, 41 S.W.3d 807 (Tex. App.—Fort Worth 2011, orig. proceeding), and
Allen v. Havens, No. 02-05-00318-CV, 2007 Tex. App. LEXIS 2088, at *27 (Tex. App.—
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Fort Worth March 15, 2007, no pet.) (mem. op.), the suggestion fails to withstand
scrutiny. In Swearingin, the cause of action was mentioned along with a number of
others. Yet, the opinion said nothing of its merits or availability under Texas law. Nor
did the claim serve as any basis for recovery. Indeed, the only chose-in-action
addressed on the merits was that sounding in breached contract, and the Fort Worth
Court of Appeals affirmed summary judgment against the complainant because there
was no breach of contract. Swearingin, 2006 Tex. App. LEXIS 5187, at *10-16.
Nor were the merits of the claim addressed in Bledsoe. There, the court dealt
with whether striking Bledsoe’s defensive pleadings constituted the levy of
impermissible death penalty sanctions. Admittedly, it itemized the various causes of
action for which Bledsoe had been sued, and among them was the purported tort at
issue here. Yet, the reviewing court said nothing about the viability of any cause-of-
action pled. It simply addressed the presence of error in prohibiting Bledsoe from
pursuing his affirmative defenses and held “that the probate court abused its discretion
in striking [his] fact witnesses, trial exhibits, and proposed jury instructions, definitions,
and questions . . . .” In re Bledsoe, 41 S.W.3d at 815.
As for Allen, the court again mentioned the various causes of action alleged
against defendant, and, again, one consisted of tortious interference with an
inheritance. Allen v. Havens, 2007 Tex. App. LEXIS 2088, at *2. But, the disputes
before it dealt not with their viability but with the existence of either subject matter or
personal jurisdiction. And, in the end, the reviewing court simply affirmed Haven’s
special appearance and the dismissal for want of personal jurisdiction over him.
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Finally, we note that denying a petition for discretionary review carries no
precedential weight. That is, the decision to forego such a review cannot be deemed as
indicating that the Supreme Court approved of what the intermediate court did. Loram
Maint. of Way, Inc. v. Ianni, 210 S.W.3d 593, 596 (Tex. 2006). So, contrary to the
dissent’s insinuation, the Supreme Court’s decision to forego discretionary review in In
re Estate of Valdez, 406 S.W.3d at 233, is no evidence that the Supreme Court has
implicitly recognized tortious interference with inheritance rights.
Merely saying the words “tortious interference with inheritance rights” somewhere
in an opinion is not tantamount to acknowledging its viability under Texas jurisprudence.
This is not to say that the claim at issue should not be recognized. We simply forego
the opportunity to create law for another intermediate appellate court via a transfer
case, especially when this appellate court has yet to itself adopt that law for disputes
arising within its own district. The matter is instead left to the governmental bodies
authorized to expand Texas jurisprudence . . . the Texas Supreme Court and the Texas
Legislature.
Fraud and Damages
Next, we address the issues concerning fraud. According to Branyon, Lindsey
and Oliver, the verdict lacked legally and factually sufficient evidentiary support. So too
was the instruction on damages allegedly defective. We sustain the issue in part.
After directing the jury to decide whether fraud occurred, the trial court submitted
the following:
What sum of money, if any, do you find from a preponderance of
the evidence, if paid now in cash, would fairly and reasonably compensate
[the Kinsels] for the damages, if any, proximately caused by the conduct
[committed by the defendants]?
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*****
Answer separately in dollars and cents for damages, if any.
a. The value of their present and future interest, if any, in the Kinsel
Ranch, excluding minerals.
Instructing the jury to consider only the Kinsels’ “present and future interest” in the ranch
allegedly was an inaccurate measure. We agree.
One falling victim of fraud may recover direct damages and consequential
damages. Arthur Andersen v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997).
Direct damages are those that necessarily and usually arise from the misconduct, and
they can be measured as either out-of-pocket loss or the lost benefit-of-the-bargain.
Aquaplex, Inc. v. Rancho La Valencia, Inc. 297 S.W.3d 768, 775 (Tex. 2009) (per
curiam); Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007). The former is
restitutionary in nature and measures the difference between the value of that given and
that received. Baylor Univ. v. Sonnichsen, 221 S.W.3d at 636; Formosa Plastics Corp.
USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 49 (Tex.1998). The latter
measures one’s expectancy and assesses difference between the value of the property
as represented and its actual value. Baylor Univ. v. Sonnichsen, 221 S.W.3d at 636.
And, both are determined at the time of the sale or transaction induced by the fraud.
Arthur Andersen v. Perry Equip. Corp., 945 S.W.2d at 817.
Consequential damages are damages that result naturally but not necessarily
from the wrongful act. Id. at 816. Though not the usual result of the wrong, they
nonetheless must be foreseeable and directly traceable to and result from the
misconduct. Id.; see Formosa Plastics, 960 S.W.2d at 49 n.1 (stating that “[w]hen
properly pleaded and proved, consequential damages that are foreseeable and directly
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traceable to the fraud and result from it might be recoverable”). And, unlike direct
damages, consequential damages may include subsequent losses if those losses were
reasonably foreseeable and have the requisite nexus to the wrong. Arthur Andersen v.
Perry Equip. Corp., 945 S.W.2d at 817.
Finally, an instruction failing to inform the jury of the proper measure is defective
and subject to reversal. Id. (stating that “[b]ecause the charge failed to instruct the jury
on the proper measure of direct damages, the submission was reversible error”). With
this said, we turn to the circumstances before us.
First, the instruction directed the jury to begin its calculation by considering the
“present” and “future” value of the Kinsels’ interest in the ranch. Omitted from it was
any restriction obligating the jury to focus on values at the time of the fraud. Instead,
the jury was told to assess damages based upon values at the time of trial and in the
future. So, the directive failed to comport with the Supreme Court’s admonishment in
Authur Anderson; that is, it failed to restrict the calculations to the values applicable at
the time of the sale or transaction induced by the fraud.
Second, the Kinsels sought their out-of-pocket loss. To realize this, one need
only read the passage in their brief wherein they argued that “[a]warding [them] the
‘present and future interest’ value in the Ranch proceeds is an appropriate out-of-pocket
measure of damages.” (Emphasis added). As previously stated, out-of-pocket
damages constitute the difference between the value of what they relinquished due to
the fraud and what they received. And, again, the purported fraud here consisted of
being induced to join Lesey in selling their respective interests in the ranch based upon
the falsehood that she needed money to subsist. Given this framework, their out-of-
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pocket damages would be the difference between the value of their interest in the land
and the value of what they received from the sale at the time of the fraud. Yet, that is
not what the jury was asked to measure. Instead, the trial court told it to measure
damages by calculating the difference between the value of their respective present and
future interests in the ranch. That this was also the same instruction and measure of
damages submitted in relation to the claim for tortuously interfering with their inheritance
rights is most telling. Via the latter claim, the Kinsels sought to recover their alleged
share of Lesey’s interest in the ranch (or its sales proceeds) had it remained in trust at
the time of her death in the future. That is not the difference between the value of what
they relinquished and received at the time of the fraud.
Again, the jury was not measuring damages based on the fraud perpetrated on
the Kinsels, i.e. their being induced to sell their respective interests in the ranch via a
misrepresentation. It was measuring damages in relation to the loss each experienced
due to Lesey amending the terms of her trust. That was improper, and the trial court
erred in telling the jury to do so.
The Kinsels attempted to justify the instruction by arguing that “[t]he Defendants
also promised . . . as part of their pitch to sell the Ranch, that the proceeds from the
sale of the Ranch would be put in a trust and then distributed to [the] Kinsels in shares
proportionate with the distribution of the Ranch. Despite those representations, the
Defendants neither arranged for that, nor intended to. As a result of the Defendants’
actions, they cost the Kinsels that value.” Yet, the specific act of fraud or
misrepresentation alleged in the Kinsels’ live pleading (i.e. the eighth amended
pleading) and upon which trial was conducted and recovery was sought said nothing of
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that purported misrepresentation. Nor did the jury charge itself encompass that
particular allegation. It simply alluded to a misrepresentation about Lesey’s financial
needs. We cannot now use some instance of fraud outside the scope of the pleadings
and omitted from the charge to supplement or otherwise expand the damages
recoverable by the Kinsels. This is especially so when the Kinsels failed to illustrate
that the matter was tried with the consent of all involved. See Hampden Corp. v.
Remark, Inc., 331 S.W.3d 489, 495 (Tex. App.—Dallas 2010, pet. denied) (stating that
matters outside the scope of the pleadings may be deemed as tried by consent when it
appears from the record that the issue was actually tried).
As previously mentioned, an instruction submitting the wrong measure of
damages is error. And, because it is clear that the damages awarded were founded
upon the wrong measure, the error was harmful.
Sufficiency of the Evidence
Next, we address the sufficiency issues urged by Lindsey, Oliver and Branyon.
They contend that either no evidence or factually insufficient evidence supports the
jury’s verdict.1 The first aspect of the argument we discuss pertains to injury or damage,
the second to conspiracy and the third to undue influence and mental capacity.
Fraud Damages
To recover for fraud, one must prove that 1) a material representation was made;
2) the representation was false; 3) when the representation was made, the speaker
knew it was false or made it recklessly without any knowledge of the truth and as a
positive assertion; 4) the speaker made the representation with the intent that the other
1
The pertinent standards of review are discussed in City of Keller v. Wilson, 168 S.W.3d 801
(Tex. 2005) (legal sufficiency) and Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998)
(factual sufficiency). We will apply them here.
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party should act upon it; (5) the party acted in reliance on the representation; and 6) “the
party thereby suffered injury.” Italian Cowboy Partners, Ltd. v. Prudential Ins. Co., 341
S.W.3d 323, 337 (Tex. 2011). We focus on the last element, that pertaining to injury or
damage.
Given that the Kinsels sought to recover their out-of-pocket loss, we searched
the record for evidence illustrating the difference between the value of what they
relinquished and the value of what they received at the time of the fraud. What each
Kinsel relinquished due to the representations in question was the interest each owned
in the ranch at the time of the fraud. However, no one cited us to evidence illustrating
what the value of that interest was at that time. Nor did we find such evidence of
record. Similarly missing was evidence illustrating that the percentage of the sales
proceeds each received was less than the value of the interest each sold. One may
account for the absence of such evidence by considering what the Kinsels actually
sought to recover, that being a share of ranch sales proceeds held in trust for Lesey.
But, again, that was an improper measure for out-of-pocket loss.
Because the record contains no evidence of the Kinsels suffering out-of-pocket
loss, the verdicts awarding each Kinsel damages for fraud cannot stand. This
deficiency of evidence has one other effect. It vitiates the need to remand the fraud
claim for a new trial due to the aforementioned inaccurate damage instruction. We so
conclude in view of the writings in St. Joseph Hosp. v. Wolff, 94 S.W.3d 513 (Tex.
2002).
In St. Joseph, the dispute involved the theory of joint enterprise, and our
Supreme Court was asked to determine whether an aspect of the jury charge was
16
inaccurate. It eventually held that the instruction improperly defined an element of the
theory, that element being a community of pecuniary interest in the common purpose
among the members of the group. Id. at 529. Thereafter, the court was asked to
assess whether the verdict encompassing on that particular element enjoyed legally
sufficient evidentiary support. The court answered in the negative. Id. at 534. This
absence of evidence then led the Supreme Court to state: “rather than remand this
theory of recovery to the trial court to be retried using the appropriate jury instructions,
we render judgment that the Wolffs take nothing against St. Joseph under a joint
enterprise theory.” Id. In other words, the need for a new trial due to the improper jury
charge was vitiated by the absence of evidence on that particular element.
So, like the court in St. Joseph, we too have found an improperly worded element
of the claim defined in the jury charge which normally would require a new trial. Yet,
because the record contained no evidence establishing the element (as properly
defined), there is no need to remand. Instead, we render judgment denying the Kinsels
recovery for fraud.
Conspiracy
As for the claim of conspiracy, civil conspiracy is akin to a derivative tort. Tilton
v. Marshall, 925 S.W.2d 672, 680-81 (Tex. 1996); accord, Chu v. Hong, 249 S.W.3d
441, 444 (Tex. 2008) (stating that “[c]onspiracy is a derivative tort requiring an unlawful
means or purpose, which may include an underlying tort”); see also, In re Lipsky, 411
S.W.3d 530, 549 (Tex. App.—Fort Worth 2013, orig. proceeding) (stating that
“[r]ecovery for civil conspiracy is not based on the conspiracy but on the underlying
tort”). That is, “a defendant's liability . . . depends on participation in some underlying
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tort for which the plaintiff seeks to hold at least one of the named defendants liable.”
Tilton v. Marshall, 925 S.W.2d at 680-81. Our having rejected the claim of tortious
interference with inheritance rights and having found no evidence to support recovery
for fraud, neither tort may support the jury’s finding that Lindsey and the others engaged
in a civil conspiracy against the Kinsels. In other words, neither tort provides evidence
of a wrong prerequisite to a valid conspiracy finding.
Undue Influence and Lack of Mental Capacity
As for the allegations of undue influence and lack of mental capacity, they relate
to Lesey’s mindset when she sold the ranch and executed the fourth and fifth
amendments to her trust. The two amendments were signed on February 23, 2007 and
August 12, 2008, while she executed the sales contract and deed on April 15, 2008 and
July 22, 2008. Lesey died on August 22, 2008, at the age of ninety-five. The jury found
that Lesey lacked legal capacity when each of those documents was signed. It also
concluded that Lindsey, Oliver and Branyon exercised undue influence over her when
she made those decisions. According to Lindsey, Oliver and Branyon, the findings
lacked sufficient legal and factual evidentiary support. We first address the topic of
legal capacity.
Documents executed by one who lacks sufficient legal or mental capacity may be
avoided. In re Morgan Stanley & Co., Inc., 293 S.W.3d 182, 193 (Tex. 2009). To have
mental capacity, the person executing the instrument must have had sufficient mind
and memory to understand the nature and effect of his act at the time of the document’s
execution. Decker v. Decker, 192 S.W.3d 648, 652 (Tex. App.—Fort Worth 2006, no
pet.); accord, Sanders v. Sanders, No. 02-08-00201-CV, 2010 Tex. App. LEXIS 8308,
18
at *5 (Tex. App.—Fort Worth October 14, 2010, no pet.) (mem. op.) (stating that “[t]o
show mental incapacity, a person seeking to set aside an agreement must show that
she did not understand the nature and consequences of her act at the time the
agreement was made”). Capacity may be assessed by considering such factors as 1)
the person’s outward conduct demonstrating an “inward and causing condition,” 2)
preexisting external circumstances tending to produce a special mental condition, and
3) the person’s mental condition before or after the relevant point in time from which her
mental capacity or incapacity may be inferred. Sanders v. Sanders, 2010 Tex. App.
LEXIS 8308, at *5-6; accord, Decker v. Decker, 192 S.W.3d at 652 (stating that
evidence of a person’s capacity before and after the event in question may be relevant
when establishing capacity at the time of the event). Finally, expert testimony on the
matter is not required since the requisite proof regarding mental capacity may reside
within the common knowledge and experience of laypersons. Decker v. Decker, 192
S.W.3d at 652.
Here, evidence of record illustrates that as of 2006, Lesey underwent twenty-four
hour care. She was ninety-three years old at the time, and while undergoing such care,
she 1) grew more infirm, 2) experienced macular degeneration, 3) became legally blind,
4) had to have others give her the pills she had to take, 5) had to have others manage
her doctors' care and her finances, 6) became extremely frail, 7) required assistance in
walking, bathing, dressing, and eating, 8) became incontinent of urine or urinated on
herself, 9) experienced continual confusion and forgetfulness, 10) experienced
agitation, and 11) experienced depression. So too did she begin to experience
congestive heart failure in 2007 and grow less responsive to the medications
19
administered to ameliorate that condition. The condition resulted in her having renal
insufficiency or a precursor to renal failure. Consequently, fluid was pooling in her body,
and her heart was unable “to clear it out.” That, according to a physician who testified,
could affect a person's mental state “[w]hen it gets that significant . . . .”
One witness testified that in “late 2006, [Lesey] was clearly becoming more and
more confused and forgetful, and she would forget things that she had recently done or
did. And that continued into 2007. And I was over there in February of 2007. And we
got there and she was very, very agitated and confused.” The February date alluded to
was the 27th, and the witness recalled Lesey saying that she thought she “‘signed
something,’” and “‘I don't know what I've signed.’" When asked whether she had a copy
of the document, Lesey said “no.” When asked if she knew “‘what it is that you signed,’"
Lesey answered "No." The same reply was made when asked if she knew when she
signed the document. As previously mentioned, the fourth amendment to Lesey’s trust
had been signed four days earlier. It was that amendment that separated the surface
and mineral estate of Lesey’s ranch interest and granted the minerals to Lindsey and
Oliver upon termination of the trust.
Other evidence illustrated that Lesey suffered from dementia in 2007. The
aforementioned physician opined that by the end of February 2007, Lesey “had mild to
moderate dementia and cognitive impairment.” She was “losing brain cells and if you
keep losing so many, some days your brain cells that you have left function better than
other days.” Nonetheless, Lesey “still ha[d] a significant limitation.” The doctor, further,
testified that because of her dementia and cognitive impairment, Lesey “didn't have the
mental capacity to understand what -- even to call up an attorney and say she wanted to
20
contract -- or transact any business, follow through, all that. She didn't have the
executive functioning nor the overall mental capacity to do that.” And, when asked
“when you have good and bad days, does that mean you spike up high enough that you
then could execute some sort of contract . . . ,” the doctor answered: “[n]o, not with
someone with dementia. It may be that you have a day where you can kind of scribble
out your signature if someone is telling you to do it, but as far as to overall comprehend
and understand, if you think about – no . . . .” Other evidence appears of record
describing Lesey’s bouts of confusion, dementia, and physical limitations before, during
and after the execution of the instruments attacked here.
One can also look at the appearance of her signature over time as evidence of
her infirmity. It had degraded to little more than a scribble of three letters when she
signed the fifth-amendment days before her death.
The foregoing constitutes some evidence upon which reasonable minds could
conclude that Lesey lacked sufficient mind and memory to understand the nature and
effect of her acts at the time she executed the trust amendments and sales instruments
at issue. And, upon considering the record as a whole, we cannot say that a jury’s
decision so concluding was overwhelmed by contrary evidence which rendered the
finding manifestly unjust or wrong. So, we overrule the sufficiency complaints levied
against the jury’s verdict finding Lesey mentally incapacitated.2
2
Having so upheld that finding, we need not also determine whether the finding that Lesey fell
prey to undue influence also had sufficient evidentiary support. This is so because implicit in the concept
of undue influence lies the existence of mental or testamentary capacity. See Rothermel v. Duncan, 369
S.W.2d 917, 922 (Tex. 1963) (stating that “while testamentary incapacity implies the want of intelligent
mental power, undue influence implies the existence of a testamentary capacity subjected to and
controlled by a dominant influence or power”). If a person lacks mental capacity to execute a document,
it is difficult to say that the exertion of influence by another overcame that person’s mental capacity. In
either situation, the document is avoidable.
21
Admission of Evidence
Next, we address complaints regarding the decision to admit certain evidence at
trial. The evidence consisted of the testimony from doctors Cole and Clayton and from
a probate proceeding. While all appellants raise issues regarding the latter evidence,
only Lindsey and Oliver question the former. We address each in turn.
Dr. Cole
According to Lindsey and Oliver, the trial court abused its discretion in allowing
Dr. Cole to testify because the physician “never produced a written report.” They also
cite Dennis v. Haden, 867 S.W.2d 48 (Tex. App.—Texarkana 1993, writ denied) to
support their position. In Dennis, the trial court ordered the defendants to provide
expert reports for all experts they expected to call as witnesses. Id. at 50. That was not
done for one of the experts, and Dennis objected. The trial court overruled the objection
and allowed the expert to testify. On appeal, the reviewing court agreed that it was
error because “[t]he trial court’s action appears to have occurred in disregard of its own
directives.” Id. at 51. Consequently, it abused its discretion “in allowing [the expert] to
testify after [the defendant] failed to obey the court order by not providing a report . . . .”
Id.
Here, too, the Kinsels were ordered to provide expert reports, which directive
encompassed Dr. Cole. They did not. When Lindsey and Oliver objected, though, the
trial court refused to permit the doctor to testify as an expert due to the prior order.
Instead, it ruled that “the doctor is confined just to his observations that were reflected in
his records.” It continued by saying: “[a]s far as opinions and so forth that are not
22
reflected in the record, he cannot go there.” Lindsey and Oliver, nonetheless, contend
at bar that:
Dr. Cole testified at length regarding Lesey’s physical condition, mental
state, and medications she was taking at various times—all of which are
necessarily the subject of expert testimony and not mere lay witness
testimony . . . . Judge Curry’s ruling allowed Dr. Cole to testify as to his
observations, which were without question shaped by his training as an
expert, and were expert opinions.
Other than proffering that conclusory averment, neither attempted to explain why the
substance of the doctor’s comments caused him to crossover from a fact witness to an
expert witness. So too did they fail to cite us to the specific testimony they deemed
objectionable. Instead, we were merely referred to forty pages of record and left to
parse through it. Lindsey and Oliver apparently forgot that the burden to prove error on
appeal was theirs, not ours. We have no obligation to parse through the record in
search of tidbits of evidence supporting their argument or otherwise flesh out their
skeletal complaint. This is especially so when, as here, the trial court actually sustained
objections to aspects of Dr. Cole’s testimony that could be considered the rendition of
medical or expert opinion.
So too was it their obligation to explain why the evidence they were supposed to
cite us to was “necessarily the subject of expert testimony and not mere lay witness
testimony.” The latter is mere ipse dixcit and ipse dixcit fails to comply with the
mandate of Texas Rule of Appellate Procedure 38.1(i). Per Rule 38.1(i), an appellant
must provide clear and concise argument for the contentions made, with appropriate
citations to authority and the record. Watson v. Tipton, 274 S.W.3d 791, 801 n.31 (Tex.
App.—Fort Worth 2008, pet. denied). Because of the inadequate briefing, this aspect of
the issue was waived.
23
Dr. Clayton
Next, we consider the complaint of Lindsey and Oliver about the expert testimony
of Dr. Clayton. They argue on appeal that the trial court erred in admitting her testimony
because 1) “[h]er opinions were not based on knowledge, observation, or opinion as to
the mental condition of her own patient,” 2) “[a]ll she did was read Lesey’s medical
records,” 3) “[h]er opinions were legal conclusions and invaded both the province of the
jury (on the determination of the ultimate fact issue of Lesey’s mental condition at the
times in question and the weight) and the credibility of the testimony of other witnesses
on such matter,” 4) “[h]er testimony also directly contradicted the medical records she
said she read,” and 5) the trial court improperly allowed “Dr. Clayton to testify as to
Lesey’s susceptibility to undue influence.” We overrule the issue.
First we start with the “opinions” that were purportedly “legal conclusions.” No
specific opinion is mentioned. Nor do Linsdey and Oliver attempt to explain why the
unmentioned opinions are legal conclusions. Instead, we are left to delve into the
record and choose for ourselves what they may be talking about and then develop our
own rationale for why they may be legal conclusions. As previously mentioned, that is
not our obligation, but rather the burden of an appellant attempting to comply with
appellate rule of procedure 38.1(i). Simply put, this aspect of the issue was waived due
to inadequate briefing.
Regarding the complaint about the doctor’s opinions not being based on
“knowledge, observation or opinion,” we again are left to guess at the particular opinions
being attacked. While we may be able to offer conjecture about what they may be,
Lindsey and Oliver could have easily specified what they were and then explained (as
24
opposed to simply concluding) how they were inadmissible. They did not, and
consequently waived this aspect of the issue as well.
As for the opinions invading the “province” of the jury, again . . . which ones;
neither litigant specifically mentioned them. Nor did either attempt to explain or illustrate
how or why they improperly invaded the “province of the jury.” Indeed, experts often
opine about matters that arguably invade the jury’s province. That tends to be the
purpose of expert testimony . . . to opine on matters requiring expertise (that is, to opine
on scientific, technical or other matters outside common understanding). E.g. TEX. R.
EVID. 702 (stating that if scientific, technical, or other specialized knowledge will assist
the trier of fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or education may testify
thereto in the form of an opinion or otherwise). Furthermore, the rules of evidence
provide that “testimony in the form of an opinion or inference otherwise admissible is not
objectionable because it embraces an ultimate issue to be decided by the trier of fact.”
TEX. R. EVID. 704. So, it is not enough to merely conclude that the expert opinions
(whatever they may be) are inadmissible because they invade the jury’s province
(whatever that may be). Again, this aspect of the issue was waived.
As for the opinions being inadmissible because they were based on the expert’s
reading of medical records, why an expert cannot develop an opinion based on records
goes unexplained. The void seems particularly frustrating because experts may
develop opinions based on reading documents provided to them. E.g. TEX. R. EVID.
703 (stating that facts or data in the particular case upon which an expert bases an
opinion or inference include “those reviewed by” or made known to the expert). So,
25
again, it is not enough to merely conclude that the expert opinions (whatever they may
be) are inadmissible because they were based on medical records reviewed by the
expert. Thus, this aspect of the issue was waived.
As for the trial court allegedly erring by “allowing Dr. Clayton to testify as to
Lesey’s susceptibility to undue influence,” the complaint is unaccompanied by citation to
authority or explanation. Thus, it too is conclusory, inadequately briefed, and waived.
As for the complaint about the testimony being inadmissible because it was
contradictory or contradicted by other testimony, we know of no authority holding that
only un-contradicted expert opinions are admissible evidence. Nor do we know of
authority holding that if others contradict an expert’s testimony the contradiction
somehow renders the expert’s opinion as unreliable and, therefore, inadmissible. And,
interestingly, neither Lindsey nor Oliver cited us to any such authority. Indeed, seldom
do expert opinions go un-contradicted in a lawsuit. If that were not true then there
would be little need for half the experts in the world. This last aspect of the argument is
waived as well.
Probate Proceeding
Finally, Branyon, Lindsey and Oliver contend that the trial court erred in admitting
evidence of conduct undertaken by Branyon while attempting to probate Lesey’s estate.
The conduct consisted of his submitting Lesey’s 2004 will for probate and
misrepresenting to the probate court that it was her last will and testament. Purportedly,
“[t]he evidence had no probative value, and any value it may have had was substantially
outweighed by its potential to prejudice [the defendants], and to confuse and mislead
the jury.” We overrule the issue.
26
Generally, relevant evidence is admissible. TEX. R. EVID. 402. Evidence is
relevant if it has any tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable than it would be
without the evidence. TEX. R. EVID. 401. Yet, even relevant evidence may be excluded
if its probative value is substantially outweighed by the danger of unfair prejudice,
confusion of the issues, or misleading the jury, among other things. TEX. R. EVID. 403.
While invoking the principles encompassed by Rules 401, 402 and 403, Branyon,
Lindsey and Oliver say little if anything about why Branyon’s conduct via the probate of
Lesey’s will was irrelevant or unfairly prejudicial. Nevertheless, we cannot ignore the
fact that Lindsey, Oliver and Branyon were being sued for engaging in a conspiracy,
among other things. The conspiracy allegedly encompassed a scheme to manipulate
an aging and mentally infirm person (Lesey) into divesting the Kinsels of their beneficial
interest in Lesey’s trust, converting that interest into liquid proceeds, and ultimately
giving the several million dollars involved to Lindsey and Oliver. To effectuate that
scheme, Lesey had to execute documents changing the way she previously opted to
dispose of her estate and so execute them at a time when her health and mental
acumen were failing her (or so the Kinsels sought to establish). One of the documents
executed during that time was her 2007 last will and testament. Its execution occurred
in Branyon’s office, and Branyon allegedly spoke with Lesey the day of its execution.
Yet, upon Lesey’s death, Branyon opted to probate a last will and testament she
executed in 2004. In so filing that item for probate, he represented to the probate court
that it was never revoked. And, at the trial of this cause, he testified that he “believe[d]
that it [the 2004 will] was her last will that had not been revoked,” despite assisting
27
Lesey execute the 2007 will three years later. When asked if “one of the reasons you
couldn't revoke a will is if you didn't have any capacity . . . ,” Branyon admitted: “[y]es,
that's one reason.” When asked if “one of the reasons you [Branyon] could have filed it
[the 2004 will] in this particular manner is because Lesey didn't have the capacity to
execute the will or any other document on February 23rd, 2007,” Branyon admitted that
“[t]hat’s a possible explanation.” These admissions implicate an issue incremental to
the validity of claims asserted by the Kinsels. The issue of which we speak is Lesey’s
mental capacity (or lack thereof) to do what Lindsey and the others were having her do.
Given this, the trial court had reasonable basis to conclude that Branyon’s conduct
before the probate court was relevant because it had a “tendency to make the existence
of [a] fact that is of consequence to the determination of the action more probable. . . .”
So too could it have reasonably concluded that any risk of unfair prejudice arising from
that evidence did not substantially outweigh its relevance or probative value. Branyon’s
decision to represent in a court of law and to a judge that the 2004 testament was
Lesey’s last will, could reasonably be interpreted by a fact-finder that he questioned
Lesey’s competence in 2007, irrespective of his later testimony.
Constructive Trust
Next, Lindsey and Oliver attack the imposition of a constructive trust on Lindsey’s
“residuary interest” in Lesey’s intervivos trust. They contend that 1) no evidence
supports the imposition of the constructive trust, 2) the scope of that trust was overly
broad, and 3) the Kinsels had unclean hands due to their participating in the ranch sale
while knowing (or while they reasonably should have known) that Lesey lacked
testamentary capacity. We sustain the issue in part and overrule it in part.
28
Whether to impose a constructive trust lies within the trial court’s discretion.
Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 859 (Tex. App.—Fort Worth 2005, no pet.)
citing, Wheeler v. Blacklands Prod. Credit Ass’n., 627 S.W.2d 846, 849 (Tex. App.—
Fort Worth 1982, no writ) (stating that the scope and application of a constructive trust is
generally left to the discretion of the court imposing it); accord, Baker Botts, L.L.P. v.
Cailloux, 224 S.W.3d 723, 736 (Tex. App.—San Antonio 2007, pet. denied) (stating the
same). Thus, we review the decision under the standard of abused discretion. Baker
Botts, L.L.P. v. Cailloux, 224 S.W.3d at 736. Under that standard, a decision is wrong
when it is arbitrary, unreasonable, or made without regard to guiding legal principles.
Id.; Menefee v. Ohman, 323 S.W.3d 509, 512 (Tex. App.—Fort Worth 2010, no pet.).
That a constructive trust constitutes an equitable remedy and exists to prevent
unjust enrichment is clear. Everett v. TK-Taito, L.L.C., 178 S.W.3d at 859. Its
availability is generally dependent upon proof of 1) a breach of a special trust, fiduciary
relationship or fraud, 2) the wrongdoer being unjustly enriched, and 3) “tracing to an
identifiable res.” Id. Yet, much is dependent on the equities of the circumstances. Id.
And, those circumstances may serve to broaden the situation in which the relief may be
granted.
As our Supreme Court stated in Meadows v. Bierschwale, 516 S.W.2d 125 (Tex.
1974), constructive trusts “have the very broad function of redressing wrong or unjust
enrichment in keeping with basic principles of equity and justice.” Id. at 131. Depending
on the circumstances, a transaction “may . . . provide the basis for a constructive trust
where one party to that transaction holds funds which in equity and good conscience
should be possessed by another.” Id. So too did it state that “there is no unyielding
29
formula to which a court of equity is bound in decreeing a constructive trust, since the
equity of the transaction will shape the measure of relief granted.” Id. The remedy is so
flexible that it allows the trial court to “‘indulge in presumptions and even pure fiction’” to
“‘satisfy the demands of justice.’” Id.
The rather broad nature of the remedy at issue was further explained by the Fort
Worth Court of Appeals in Wheeler v. Blacklands Prod. Credit Ass’n. There, we were
told that:
“whenever the legal title to property, real or personal, has been obtained
through actual fraud, misrepresentations, concealments, or through undue
influence, duress, taking advantage of one's weakness or necessities, or
through any other similar means, or under any other similar circumstances
which render it unconscientious for the holder of the legal title to retain and
enjoy the beneficial interest, equity impresses a constructive trust on the
property thus acquired in favor of the one who is truly and equitably
entitled to the same, although he may never perhaps have had any legal
estate therein. . . .”
Wheeler v. Blacklands Prod. Credit Ass’n, 627 S.W.2d 846, 849, (Tex. App.—Fort
Worth 1982, no writ) (quoting, 4 Pomeroy’s Equity, § 1053 (5th Ed)). The court further
observed that the form and variety of these types of trusts are “’practically without limit’”
and their principle is “‘applied wherever it is necessary for the obtaining of complete
justice’” even though “‘the law may also give the remedy of damages against the wrong-
doer.’” Id.
Appearing of record here are circumstances that fit within the parameters of
Wheeler and Meadows. Lesey intended to leave her interest in the ranch to the
children of her late husband. Her intervivos trust encompassed such an intent. Under
it, J. Frank Kinsel, Sr., J. Frank Kinsel Jr., Joe Bob Kinsel, Sr., Catherine Collins, and
Carole Edwards were to receive a 10% interest in the realty. The remaining 10%
30
owned by Lesey was to go to other heirs of E.A. Kinsel. The residuary of the trust was
to go to Lindsey. Shortly after Lesey’s arrival in Fort Worth, though, Oliver began
calculating the value of the ranch. Thereafter, Lindsey engaged an attorney (Branyon)
to assist in the sale of that property. To maximize the sale price, Lindsey and Branyon
endeavored to have all those owning an undivided interest in the entire acreage to join
in the sale. Other evidence appears of record illustrating that in effectuating their
purpose, Lindsey and Branyon led the Kinsels to believe that Lesey needed the money.
Withheld by Lindsey and Branyon, according to the record, was Lesey’s ownership of
over a million dollars in liquid, non-ranch related assets available for her care. See
Miller v. Recovery Sys., No. 02-12-00468-CV, 2013 Tex. App. LEXIS 11851, at *17
(Tex. App.—Fort Worth September 19, 2013, pet. denied) (mem. op.) (stating that
“[s]everal courts of appeals, including this one, have held that a duty to disclose may
also arise when a party makes a partial disclosure that, although true, conveys a false
impression”); Anderson, Greenwood & Co. v. Martin, 44 S.W.3d 200, 212-13 (Tex.
App.—Houston 2001, pet. denied) (recognizing that fraud may arise from the failure to
disclose material information when the information actually disclosed conveys a false
impression). Believing what they were told, the other ranch owners agreed to sell.
Before the ranch was sold, Lindsey, under the auspices of pursuing Lesey’s
wishes, arranged for the surface and mineral estates of Lesey’s portion of the land to be
severed. About this same time, Lesey also happened to decide that the aforementioned
mineral interest should go to Lindsey and Oliver, and Lindsey arranged for the
amendment of Lesey’s trust to effectuate that supposed intent. Once the land was sold,
Lindsey and Branyon discussed another modification of the trust to remove reference to
31
E.A.’s heirs as being the ultimate beneficiaries of the land. Once the trust was
amended to reflect that change (which happened to be days before Lesey died),
Branyon informed Lindsey that he would withhold disclosure of the amendment from
others. 3
That Lesey lacked the requisite mental capacity to effectuate the foregoing
transactions and amendments pursued by Lindsey is established by the evidence. That
those transactions and amendments resulted in both Lindsey and Oliver reaping much
more from their aunt than they would have before she fell under their supervision is also
illustrated by the evidence. That those transactions and changes also resulted in the
Kinsels receiving much less than what Lesey had written into her trust before being
subjected to the care of Lindsey and succumbing to the effects of age, is also beyond
reasonable dispute.4
As previously mentioned, a constructive trust may be imposed to redress wrong
doing and unjust enrichment in accord with principles of equity and justice. Meadows
v. Bierschwale, supra. Included within its parameters are circumstances wherein title or
ownership of realty or personalty is obtained through actual fraud, misrepresentations,
concealments, undue influence, the “‘taking advantage of one's weakness or
necessities,’” or “‘under any other similar circumstances which render it unconscientious
3
One Kinsel also testified he wanted to meet with Lesey and Branyon regarding the disposition of
the sales proceeds. Lesey allegedly told him that the proceeds were to go to various Kinsel members
upon termination of the trust. This testimony may put into context why Lindsey and Branyon endeavored
to 1) have Lesey sign the fifth-amendment to the trust that effectively removed reference to the Kinsels’
interest in the ranch and 2) withhold the disclosure of that amendment.
4
Nor can we escape the irony inherent in Lindsey and Oliver arguing here that because the
Kinsels knew or should have known about Lesey’s incapacity, they should be unable to recover. No
doubt Lindsey and Oliver would fall within the same category; after all they purportedly were interacting
with their aunt on a rather regular basis. Yet, neither suggest that they should be denied the largesse
they happened to reap after Lesey lost her mental capacity to act for herself.
32
for the holder of the legal title to retain and enjoy the beneficial interest.’” Wheeler v.
Blacklands Prod. Credit Ass’n, 627 S.W.2d at 846. Those wrongs afford a trial court
opportunity to use a constructive trust to divest the legal owner of the property in favor
of “‘the one who is truly and equitably entitled to the same. . . .’” Id. at 849. That said,
we conclude that the trial court had before it evidence of record from which it could
reasonably deduce that Lindsey and Oliver uttered misrepresentations to the Kinsels
and took advantage of Lesey’s incapacity for the purpose of reaping personal gain to
the detriment of the Kinsels. The trial court did not abuse its discretion by impressing a
constructive trust upon those gains in favor of the people who would have received the
ranch had the invalid sale and amendments not occurred.
As for the allegation that the constructive trust was overly broad, we agree.
Lesey designated Lindsey as the residual beneficiary of her intervivos trust before
losing her mental capacity to act. No one denied that. Furthermore, the impropriety at
issue encompassed the ranch and its sales proceeds, not the entire trust corpus. Yet,
the trial court impressed the constructive trust on “Jane O. Lindsey's interest in the Trust
and any monies that Jane O. Lindsey would be legally entitled to from the Trust. . . .”
Reading those words as written, one cannot escape the conclusion that they snare
more than merely the ranch and its proceeds. That is, the constructive trust
encompasses all interests Lindsey had in the intervivos trust, not simply any interest
she may have obtained in the ranch and its proceeds.
Again, a constructive trust serves to give property to those equitably entitled to it.
To abide by that purpose, the trial court had to fashion a constructive trust
encompassing only the property to which the Kinsels were equitably entitled, that is, the
33
ranch and its sales proceeds. In creating a constructive trust exceeding that scope and
encompassing all interests Lindsey had in the intervivos trust, the trial court’s decision
failed to comport with controlling principles of law and constituted an abuse of
discretion. We will modify the judgment to correct the error and limit the constructive
trust simply to the ranch and its sales proceeds. By “ranch,” we mean as it existed
before the execution of those trust amendments which Lesey lacked the capacity to
execute, and they include the fourth amendment severing the mineral and surface
estates.
As for the matter of unclean hands, the Kinsels suggest that it should be rejected
since the theory was not affirmatively pled. Yet, it need not have been pled as an
affirmative defense according to our Supreme Court. Through Best Buy Co. v. Barrera,
248 S.W.3d 160 (Tex. 2007) (per curiam), we were told that the concept is not a matter
of avoidance but rather “relates to the equities necessary to determine liability in the first
instance.” Id. at 163. Moreover, knowledge of the improprieties involved is relevant
when weighing the equities and determining in whose favor they fall. See id. (wherein
the equitable claim of money had and received was being pursued and stating that “the
defendant was entitled to inquire into individual class members' knowledge and
understanding about the disputed charge in order to demonstrate in whose favor the
equities weighed”). Apparently, the defendant is free to present any facts and raise any
defenses that would deny the claimant’s right or show that in equity and good
conscience, the claimant should not recover. Id.
As for the doctrine of unclean hands itself, it requires one who seeks equity to
come with “‘clean hands.’” Grohn v. Marquardt, 657 S.W.2d 851, 855 (Tex. App—San
34
Antonio 1983, writ ref’d). In other words, a court “acting in equity will refuse to grant
relief to a plaintiff who has been guilty of unlawful or inequitable conduct with regard to
the issue in dispute.” Id. And, the decision of whether a party has unclean hands lies
within the trial court’s discretion. Id. Yet, the rule is not absolute. Omohundro v.
Matthews, 161 Tex. 367, 341 S.W.2d 401, 410 (Tex. 1960); Dunnagan v. Watson, 204
S.W.3d 30, 41 (Tex. App.—Fort Worth 2006, pet. denied). Nor can it “be used . . . if the
unlawful or inequitable conduct of the plaintiff is merely collateral to the plaintiff's cause
of action.” Grohn v. Marquardt, 657 S.W.2d at 855; accord, Davis v. Grammer, 750
S.W.2d 766, 768 (Tex. 1988) (stating that “[t]he ‘unclean hands’ doctrine cannot be
used as a defense [where the plaintiff’s] unlawful or inequitable conduct is merely
collateral to her cause of action”).
Moreover, the party invoking the doctrine “‘must show that he himself has been
injured by such conduct . . . .’” Omohundro v. Matthews, 341 S.W.2d at 410, quoting, 2
Pomeroy’s Equity Jurisprudence p. 99 (4th ed.); Dunnagan v. Watson, 204 S.W.3d at
41; Grohn v. Marquardt, 657 S.W.2d at 855. “‘The wrong must have been done to the
defendant himself and not to some third party.’” Omohundro v. Matthews, 341 S.W.2d
at 410. And, such injury does not exist where the purported wrong actually aided the
one invoking the doctrine. Id. (rejecting application of the doctrine invoked by
Omohundro and concluding that “[a]ny improper use of information obtained from their
employers by Matthews or Thompson aided rather than injured Omohundro and will not
prevent recovery here”).
Again, the unclean hands broached by Lindsey and Oliver concerned the Kinsels’
knowledge of Lesey’s mental incapacity when agreeing to join in the sale of the ranch.
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Assuming arguendo that such constituted a wrong, neither Lindsey nor Oliver discuss
how they suffered any injury from it. Rather, the trial court could have concluded, quite
reasonably, that the two benefitted from the Kinsels having such knowledge. It was
because they joined the sale that Lindsey succeeded in obtaining the large bonanza
she sought to keep. So, as in Omohundro, the purported wrong committed by the
Kinsels “will not prevent recovery here.”
Attorney’s Fees
Next, we address the issue of attorney’s fees awarded the Kinsels. The jury
awarded the Kinsels an attorney’s fee of $800,000 for work through trial. No award was
made for work through appeal to an intermediate appellate court or a petition to the
Supreme Court. According to Lindsey, Oliver and Branyon, the trial court purportedly
erred in awarding the $800,000 sum because the Kinsels failed to produce written fee
agreements when requested through discovery, the evidence was both legally and
factually insufficient to support the award, and the Kinsels failed to segregate those fees
recoverable by statute from those that were not. We sustain the issue in part.
Regarding the disclosure of fee agreements, it appears from the record that two
firms represented the Kinsels or various members of them. One firm had no written fee
agreement with its clients, and cannot be faulted for not producing it. The other firm had
a short letter agreement with one of the Kinsels, and though the testifying attorney
represented that he was “sorry if it wasn't produced,” he also said that “we produced all
our fee agreements.” (Emphasis added). The trial court eventually overruled the
objection. Though the basis for overruling the objection went unmentioned, the trial
court had evidence before it upon which to reject the contention that the agreement was
36
not produced. Given that, we cannot say that the court abused its discretion in
permitting the Kinsels to proffer evidence on the issue of attorney’s fees.
As for the sufficiency of the evidence supporting the award, we note that the
Kinsels prayed for attorney’s fees under § 27.01 of the Texas Business and Commerce
Code and § 37.009 of the Texas Civil Practice and Remedies Code. The former
provides that anyone who commits fraud in a real estate transaction “shall be liable to
the person defrauded for reasonable and necessary attorney's fees, expert witness
fees, costs for copies of depositions, and costs of court.” TEX. BUS. & COMM. CODE ANN.
§ 27.01(e) (West 2009). The latter statute involves declaratory actions and permits the
trial court to “award costs and reasonable and necessary attorney's fees as are
equitable and just.” TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (West 2015). At trial,
mention was also made about the recovery of fees under the Property Code. Arguably,
the provision alluded to was § 114.064(a) of that Code, which allows the trial court to
“make such award of costs and reasonable and necessary attorney's fees as may seem
equitable and just.” TEX. PROP. CODE ANN. § 114.064(a) (West 2014). Because we
concluded that the trial court erred in granting recovery upon the fraud claim, the scope
and application of § 27.01 of the Business and Commerce Code need not be
considered here. Instead, we limit our review to the application of § 37.009 of the Civil
Practice and Remedies Code, and because the analysis is the same for § 114.064(a)
we incorporate it into our discussion of § 37.009.
Whether fees are reasonable and necessary constitutes a question of fact, and
their reasonableness and necessity are subject to review “for sufficiency of the
evidence.” Sundance Minerals, L.P. v. Moore, 354 S.W.3d 507, 513 (Tex. App.—Fort
37
Worth pet. denied). Moreover, various factors are considered when analyzing whether
a fee is reasonable and necessary. State & County Mut. Fire Ins. Co. v. Walker, 228
S.W.3d 404, 408 (Tex. App.—Fort Worth 2007, no pet.). They include such things as:
1) the time and labor required; 2) the novelty and difficulty of the questions involved; 3)
the skill required to perform the legal service properly; 4) the likelihood that the
acceptance of the employment precludes other employment by the lawyer; 5) the fee
customarily charged in the locality for similar legal services; 6) the amount involved and
the results obtained; 7) the time limitations imposed by the client or by the
circumstances; 8) the nature and length of the professional relationship with the client;
9) the experience, reputation, and ability of the lawyer or lawyers performing the
services; and 10) whether the fee is fixed or contingent on results obtained or
uncertainty of collection before the legal services have been rendered. Id.
Each of the foregoing indicia, though, need not be established by evidence. Id.
Indeed, it seems as though minimal evidence is sufficient to support an attorney’s fee
award. Our Supreme Court’s opinion in Garcia v. Gomez, 319 S.W.3d 638 (Tex. 2010)
tends to exemplify that. The evidence there consisted of an attorney testifying “about
his experience” and opining that particular sums for trial and appeal were reasonable
and necessary fees. Though acknowledging that the proffered evidence “lacked
specifics,” the court, nonetheless, concluded that “it was not, under these
circumstances, merely conclusory.” Id. at 641. More importantly, it sufficed to support
the award, or as stated by the court, “[i]t was some evidence of what a reasonable
attorney's fee might be in this case.” Id. This was so, in the court’s estimation, because
an attorney's testimony about the reasonableness of his own fees is unlike other expert
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witness testimony. Id. “Although rooted in the attorney's experience and expertise, it
also consists of the attorney's personal knowledge about the underlying work and its
particular value to the client.” Id. The court further noted that the less than specific
evidence was not “objectionable as merely conclusory because the opposing party, or
that party's attorney, likewise has some knowledge of the time and effort involved and if
the matter is truly in dispute, may effectively question the attorney regarding the
reasonableness of his fee.” Id.
Appearing of record here is testimony from legal counsel 1) about their
respective experience, 2) generally describing the work performed by each, 3) alluding
to the hours expended in preparing, 4) alluding to fees of either $920,000 or $950,000
being reasonable through trial of the cause, a fee of $75,000 being a reasonable fee if
the judgment were appealed to an intermediate court of appeals, a fee of $50,000 being
a reasonable fee if a petition for review were filed with the Supreme Court, and a fee of
$25,000 being reasonable if oral argument before the Supreme Court occurred, 5)
mentioning their respective hourly rates, 6) describing in broad terms the factors
considered in concluding that the aforementioned fees were reasonable, and 7) opining
that they loss opportunity to work on other matters. Though lacking in specifics too, the
foregoing equated, at the very least, the quantum of evidence found sufficient by the
Supreme Court in Garcia. Consequently, we cannot find it insufficient here. Nor can
we say that the sum awarded is manifestly unjust when tested against the entire
evidence.
As for the matter of segregation of recoverable from unrecoverable fees, that
normally is required. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex.
39
2006); AMX Enters., L.L.P. v. Master Realty Corp., 283 S.W.3d 506, 521 (Tex. App.—
Fort Worth 2009, no pet.). An exception exits, however. It arises when discrete legal
services advance both recoverable and unrecoverable claims that are so intertwined
that the fees need not be segregated. Tony Gullo Motors I. L.P. v. Chapa, 212 S.W.3d
at 313-14. The burden to illustrate that the exception applies lies with the fee claimant.
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 11 (Tex. 1991). And, it is not satisfied
by simply suggesting that the causes of action for which fees are and are not
recoverable required proof of the same set of facts and circumstances. Allan v.
Nersesova, 307 S.W.3d 564, 573 (Tex. App.—Dallas 2010, no pet.). In other words,
intertwined facts alone do not make unrecoverable fees recoverable. Tony Gullo
Motors I, L.P. v. Chapa, 212 S.W.3d at 313-14.
At bar, no one denies that attorney’s fees are generally unrecoverable for
pursuing common law fraud or the purported claim of tortious interference with
inheritance rights. That the Kinsels failed to prove a statutory fraud involving realty (as
we alluded to above) also vitiated their ability to recover fees incurred in prosecuting
that claim.
Yet, no one denies that fees were recoverable for claims encompassed by the
demand for declaratory relief. Within the latter category, fell the validity of the trust
amendments and sale of trust property once Lesey became legally incapacitated. See
TEX. CIV. PRAC. & REM. CODE ANN. § 37.005 (West 2015) (stating that a “person
interested as . . . a . . . devisee, legatee, heir, next of kin, or cestui que trust in the
administration of a trust or of the estate of a decedent, an infant, [or] mentally
incapacitated person . . . may have a declaration of rights or legal relations in respect to
40
the trust or estate . . . to determine any question arising in the administration of the trust
or estate, including questions of construction of wills and other writings”).
So, what we have before us are circumstances that would normally trigger the
duty to segregate. That is, the Kinsels pursued claims for which fees could and could
not be awarded. But, to avoid the duty to segregate, their legal counsel described the
claims as “inextricably intertwined.” In explaining what they meant, one testified that
“whatever cause of action the plaintiffs have in this case, the facts basically relate to
each of the causes of action. There's not a whole lot of difference between them as far
as the facts go. It's the different aspects of the law that apply to the facts that are
different, but the facts and basically everything is intertwined and you can't separate
those things as between the causes of action.” The explanation rings false, however.
Attacking the validity of the trust amendments and Lesey’s effort to sell her ranch
interest depended upon establishing the status of her own mental abilities. In turn,
proving the fraud claims depended upon illustrating not only that Lindsey, Oliver and
Branyon uttered false statements to the Kinsels but also that the Kinsels relied on those
utterances to their detriment. It mattered not to Lesey’s legal capacity whether Lindsey,
Oliver and Branyon defrauded the Kinsels. It mattered not to the claim of fraud that
Lesey lost her mental ability to act. Simply put, the causes of action were distinct, and
facts necessary to prove each did not overlap. In other words, the time and effort
expended to prove fraud did not advance the claim regarding Lesey’s loss of legal
capacity, and vice-versa. And, while the claims may have arisen within a common time
period and involved a ranch owned by both Lesey and the Kinsels, that was not enough
to render the causes of action inextricably intertwined.
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The same is also true of the allegation pertaining to tortious interference with
inheritance rights. Assuming arguendo that it was a recognized chose-in-action,
proving it here was not dependent upon or necessarily affected by Lesey’s incapacity.
So, the record at bar failed to establish that discrete legal services provided by
those representing the Kinsels advanced both claims for which fees were recoverable
and claims for which they were not. Segregation was necessary, and the failure to do
so obligates us to remand the issue of segregation for new trial. See AMX Enters.,
L.L.P. v. Master Realty Corp., 283 S.W.3d at 522 (holding that when segregation is
required but not done then remand to calculate the segregated award is necessary).
Cross Appeal - Denial of Appellate Attorney’s Fees
There exists one last issue necessitating our attention. It encompasses the jury’s
failure to award attorney’s fees to the Kinsels should they have to participate in appeals
to an intermediate appellate court and the Supreme Court. Allegedly, they had proved
entitlement to same as a matter of law, and the trial court erred in failing to award the
fees despite the verdict. We overrule the issue.
As previously mentioned, legal counsel for the Kinsels opined about what the
reasonable fees would be after trial and through appeal to the Supreme Court. Yet,
neither attorney testified about the amount of time that would be expended in those
endeavors. Nor did either attorney describe 1) their experience in handling appellate
matters, their familiarity with appellate matters, 2) the factors they considered in deriving
their opinions about the appellate fees, 3) the appellate fee customarily charged in the
locality, or 4) the loss of other work they may encounter due to defending or prosecuting
an appeal. Nor did either attempt to describe for the jury what was involved in handling
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an appeal. To say the least, their opinions on the matter were lacking in specifics to a
much greater degree than their opinions pertaining to fees incurred through trial.
To support “an award of appellate attorneys' fees, there must be evidence of the
reasonableness of the fees pertaining to the appellate work.” Jones v. Am. Airlines,
Inc., 131 S.W.3d 261, 271 (Tex. App.—Fort Worth 2004, no pet.). Assuming arguendo
that the factually unsubstantiated utterances by legal counsel constitute some evidence
of what a reasonable appellate fee could be, it hardly proved what such a fee was, as a
matter of law. Given the sparse record before it, the jury could well have decided that it
was not afforded sufficient basis upon which to calculate reasonable attorney’s fees
related to subsequent appeals. And, we cannot fault that decision or the trial court’s
refusal to ignore it. Accordingly, the cross-issue is overruled.
We reverse the judgment of the trial court to the extent it 1) recited that Lindsey,
Oliver, Branyon, and Jackson Walker committed or were part of a conspiracy to commit
fraud, statutory fraud, and tortious interference with inheritance rights, 2) awarded
damages to the Kinsels against Lindsey, Oliver, Branyon and Jackson Walker, jointly
and severally, for committing or conspiring to commit fraud, statutory fraud, and tortious
interference with inheritance rights, and 3) awarded attorney’s fees of $800,000 in favor
of the Kinsels. We render judgment ordering that the Kinsels take nothing against
Lindsey, Oliver, Branyon, and Jackson Walker for committing or conspiring to commit
fraud, statutory fraud, and tortious interference with inheritance rights. We modify
Paragraph 4(f) of the judgment to state that the “damage amounts” to which the
“Plaintiffs are entitled” are not awarded against Lindsey, Oliver, Branyon or Jackson
Walker personally, individually, or jointly and severally, but are payable from the corpus
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upon which the constructive trust was imposed.5 We modify that portion of the
judgment imposing a constructive trust to limit imposition of the constructive trust solely
to any interest Lindsey may have in the proceeds from the sale of the ranch and held in
the Lesey B. Kinsel Trust at the time of Lesey B. Kinsel’s death. The issue of attorney’s
fees is remanded to the trial court for further consideration in conformance with this
opinion. In all other things, the judgment is affirmed as modified.
Brian Quinn
Chief Justice
Pirtle, J., dissenting.
5
Paragraph 4(f) of the judgment states:
The Kinsel Ranch sales contract on or about April 15, 2008 and the deed of conveyance
on or about July 22, 2008 were procured as a result of undue influence or the lack of
capacity of Lesey B. Kinsel to execute such documents, and the Plaintiffs are entitled to
the damage amounts listed above in Paragraph 4 and its subparts a through d as a
result. (Emphasis added).
The italicized language is somewhat confusing. In utilizing the phrase “damage amounts,” the trial court
simply may have been referring to the sums awarded as the amount each “plaintiff” is to recover due to
the avoidance of the instruments procured as a result of the lack of mental capacity or undue influence.
Or, the trial court may have meant the “damage amount” represented the damages recoverable from
Lindsey, Oliver, Branyon and Jackson Walker because Lesey executed the documents in question due to
undue influence or while incapacitated. The former construction is more reasonable, since claims of
undue influence and deficient mental incapacity serve to vitiate the documents touched by those
circumstances. See e.g., Long v. Long, 133 Tex. 96, 125 S.W.2d 1034, 1036 (Tex. 1939) (stating that
undue influence and mental incapacity are two distinct grounds for avoiding a will); accord, Truitt v. Byars,
No. 07-11-00348-CV, 2013 Tex. App. LEXIS 6705, at *23 (Tex. App.—Amarillo May 30, 2013, pet.
denied) (stating that the two theories are distinct grounds for avoiding an instrument or contract). We
found no cases indicating that they somehow constitute an independent tort for which monetary damages
are recoverable. So too do we note that the trial court said nothing about assessing the “damage
amounts” against Lindsey, Oliver and the others individually or jointly or severally. So, the “damage
amounts” alluded to do not impose liability on Lindsey, Oliver, Branyon or Jackson Walker but instead
represent each “Plaintiffs’” respective share of the corpus upon which a constructive trust was imposed.
44