Juan Carlos Diaz and Ana C. Fudge v. Rose Marie Elkin , 434 S.W.3d 260 ( 2014 )

Opinion issued April 22, 2014.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00500-CV
———————————
JUAN CARLOS DIAZ AND ANA C. FUDGE, Appellants
V.
ROSE MARIE ELKIN, Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2013-08033
OPINION
Brother and sister Juan Carlos Diaz and Ana C. Fudge appeal the dismissal
of their claim that their niece, Rose Marie Elkin, breached her fiduciary duties as
co-executrix of her grandmother’s estate. Elkin filed a plea to the jurisdiction,
arguing that the trial court lacked subject matter jurisdiction or, alternatively,
should be dismissed on the basis of forum non conveniens. The trial court granted
the plea to the jurisdiction and dismissed the case without specifying its reasoning.
Diaz and Fudge argue that the trial court erred by dismissing the case. We affirm.
Background
Ana Clack Bergacker de Diaz, a citizen of both the United States and Peru,
died in Lima, Peru, where she lived for the last 70 years of her life. Though
Bergacker de Diaz’s husband had predeceased her, three children, each of whom
has dual citizenship as well, survived her: Roberto Diaz, Juan Carlos Diaz, and
Ana Fudge. Roberto lives in Peru, while Juan Diaz lives in Collin County, Texas,
and Ana Fudge lives in Ohio. Elkin is one of Roberto’s children and lives in
Houston.
Two years before her death, Bergacker de Diaz executed her last will and
testament in Spanish, with the help of a Peruvian attorney and a Peruvian notary.
The will named Elkin co-executrix of Bergacker de Diaz’s estate, along with a
banker who lives in Lima. As beneficiaries, it named each of Bergacker de Diaz’s
children, each of her grandchildren, and her maid.
After Bergacker de Diaz died, the will was offered and admitted to probate
in Peru. The estate consisted of Bergacker de Diaz’s apartment, furnishings of the
apartment, the contents of a safe, personal belongings, proceeds from the sale of
2
shares of a closely-held hospital in Peru, and the corpus of a trust settled in Peru.
The estate contained no assets outside of Peru.
During the administration of the estate, various disputes arose between the
parties to this suit regarding property in the estate, particularly the proceeds of the
stock sale and a proposed sale of the apartment. Diaz and Fudge claim that they
have incurred unreimbursed expenses in connection with the apartment and that
Elkin has improperly refused to sell the apartment. Elkin, in turn, claims that Diaz
and Fudge have already recovered more than their fair share of the estate’s assets.
These disputes led to the current suit, in which Diaz and Fudge assert that “Elkin,
as a co-executor of Sra. [Bergacker de] Diaz’s estate, stands in a fiduciary
relationship with the beneficiaries of [the] estate” and that she breached a variety
of fiduciary duties that she owed to them as beneficiaries. They seek the value of
property not yet distributed by the estate, the amount that they allege they have
spent on upkeep of the apartment, damages for the loss of use of the estate’s
proceeds, and punitive damages. In addition, they asked the trial court to
permanently enjoin Elkin from acting as an executrix of the estate, to order her to
take all necessary steps under Peruvian law to remove herself as co-executrix, and
to order her to render an accounting of all actions taken by her as co-executrix of
the estate.
3
Diaz and Fudge appeal from the trial court’s order dismissing their claims
and granting Elkin’s plea to the jurisdiction.
Standard of Review
“Whether a court has subject matter jurisdiction is a question of law.” Tex.
Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004) (citing
Tex. Natural Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d 849, 855 (Tex.
2002)). We review questions of jurisdiction de novo unless they implicate the
merits of the case to the extent that they require resolution by the finder of fact. Id.
A party seeking affirmative relief must allege facts in her pleading that
“affirmatively demonstrate the court’s jurisdiction to hear the cause.” Tex. Ass’n
of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). Courts must
consider evidence relevant to jurisdiction, however, when doing so is necessary to
resolve a challenge to the trial court’s jurisdiction. Miranda, 133 S.W.3d at 223;
Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000).
A plea to the jurisdiction asks the trial court to dismiss a proceeding for lack
of subject matter jurisdiction. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638
(Tex. 1999). In considering such a plea, a court must accept as true the
uncontroverted allegations of the petition upon which jurisdiction depends. See
City of Balch Springs v. Austin, 315 S.W.3d 219, 223 (Tex. App.—Dallas 2010, no
pet.); Sweeney v. Jefferson, 212 S.W.3d 556, 561–62 (Tex. App.—Austin 2006, no
4
pet.). Diaz and Fudge had the burden of alleging facts that affirmatively show that
the trial court has subject matter jurisdiction over their claims. Sweeney, 212
S.W.3d at 561–62; Burgess v. Gallery Model Homes, Inc., 101 S.W.3d 550, 552
(Tex. App.—Houston [1st Dist.] 2003, pet. denied); Harris Cnty. v. Progressive
Nat’l Bank, 93 S.W.3d 381, 383 (Tex. App.—Houston [14th Dist.] 2002, pet.
denied). To the extent that they make jurisdictional allegations, we construe those
allegations in favor of Diaz and Fudge. See Sweeney, 212 S.W.3d at 561–62.
Dismissal of Diaz and Fudge’s Claims
A. Texas courts lack jurisdiction over suits involving foreign estates
As a general rule, Texas courts have no jurisdiction over a representative of
an estate who holds that status by virtue of an appointment in another state or
nation. In Faulkner v. Reed, 241 S.W. 1002 (Tex. Comm’n App. 1922, judgm’t
adopted), the commission of appeals explained:
An administrator, appointed by the courts of Ohio, could not, by
virtue of said appointment sue or be sued in the courts of Texas, or in
any way act as legal representative of said estate in Texas. An
administrator is the agent solely of the court appointing him, clothed
with authority to administer only such assets as are within the
jurisdiction of the court making such appointment. In other words, an
administrator has no extraterritorial authority.
241 S.W. at 1007 (emphasis added). As Diaz and Fudge concede, it is well-settled
that Texas courts lack jurisdiction over suits brought by or against the
administrator or executor of an estate appointed by a foreign jurisdiction. Id.; see
5
also Strawder v. Thomas, 846 S.W.2d 51, 63–64 (Tex. App.—Corpus Christi 1992,
no writ); Minga v. Perales, 603 S.W.2d 240, 242 (Tex. Civ. App.—Corpus Christi
1980, no writ); Eikel v. Burton, 530 S.W.2d 907, 908–09 (Tex. Civ. App.—
Houston [1st Dist.] 1975, writ ref’d n.r.e.).
As we explained in Eikel, this rule
is based upon the principle that one state should not have extra-
territorial jurisdiction over assets of a deceased person; otherwise
these assets might be exhausted or withdrawn to the detriment of
domestic creditors, who have the right to have them administered
under the laws of their own state, and to whose jurisdiction they are
naturally subjected.
530 S.W.2d at 909 (citing Terrell v. Crane, 55 Tex. 81 (1881)).
B. Diaz and Fudge’s claims arise solely out of Elkin’s role as a fiduciary
Diaz and Fudge argue that Faulkner and its progeny are inapplicable here
because they are suing Elkin solely in her individual capacity, not in her capacity
as co-executrix of the estate. They argue that they seek to recover money damages
from Elkin personally, not from the estate, and the current suit in no way threatens
to interfere with the probate proceedings in Peru or affects the administration of the
estate’s assets. The record does not support these arguments.
The bases for all of the claims brought by Diaz and Fudge are Elkin’s
alleged breaches of various fiduciary duties; the petition specifically alleges
breaches of the duty of loyalty and utmost good faith, the duty of candor, the duty
to refrain from self-dealing, the duty to “act with integrity of the strictest kind,” the
6
duty of fair and honest dealing, and the duty of full disclosure. Under Texas law, 1
fiduciary duties arise only out of certain, special relationships. See, e.g., Nat’l Plan
Adm’rs, Inc. v. Nat’l Health Ins. Co., 235 S.W.3d 695, 700 (Tex. 2007); J.P.
Morgan Chase Bank, N.A. v. Tex. Contract Carpet, Inc., 302 S.W.3d 515, 536
(Tex. App.—Austin 2009, no pet.). “Whether a fiduciary duty exists is a question
of law,” and it is the “special nature of the relationship[]” involved that determines
that question. Nat’l Plan Adm’rs, 235 S.W.3d at 700.
We therefore must consider whether the fiduciary duties alleged by Diaz and
Fudge arise from their relationship with Elkin personally or solely from their
relationship with her in her role as co-executrix of the Bergacker de Diaz estate.
See, e.g., Adam v. Harris, 564 S.W.2d 152, 156–57 (Tex. Civ. App.—Houston
[14th Dist.] 1978, writ ref’d n.r.e.) (examining specific assets administered to
determine in which capacity individual acted with respect to alleged breach of
fiduciary duty to refrain from self-dealing). Diaz and Fudge base their petition on
claims that “Elkin, as a co-executor of Sra. [Bergacker de] Diaz’s estate, stands in
a fiduciary relationship with the beneficiaries of [the] estate.”
The claims for declaratory relief that Diaz and Fudge seek further confirm
that their lawsuit seeks to affect the administration of the estate. They have asked
a Texas court for an injunction barring Elkin from acting as co-executrix of a
1
We apply Texas law because none of the parties suggested in the trial court
or in this court that the law of any other jurisdiction applies.
7
Peruvian estate and ordering her to remove herself from that capacity. They also
demand an accounting of all of Elkin’s actions and transactions as co-executrix.
Such claims inherently seek to affect the administration of the estate. E.g., Minga,
603 S.W.2d at 242 (“[The] power of a Texas court over an estate which is
represented only by a foreign administrator concerns much more than mere
jurisdiction over the person of the administrator; it concerns jurisdiction over the
assets of the estate itself.”); see also Becknal v. Becknal, 296 S.W. 917, 919 (Tex.
Civ. App.—Dallas 1927, no writ) (court in one Texas county lacked jurisdiction to
enjoin acts by administrator appointed by probate court of another Texas county, as
such injunction “interfere[s] with, or prevent[s] by its process, the administration
of the estate”).
Moreover, the damages that Diaz and Fudge seek relate to administration of
the estate and particularly either to assets held by the estate or to sums of money
that Diaz and Fudge allege that they have paid on the estate’s behalf. Although
Diaz and Fudge seek to recover these amounts from Elkin personally, these
amounts are inextricably tied to the estate’s assets and the administration of the
same, not to money or assets held by Elkin personally. Minga, 603 S.W.2d at 241
(title to estate’s assets is not in administrator of estate). Thus, none of the claims
brought by Diaz and Fudge relate to any alleged fiduciary duty arising out of their
relationship with Elkin personally. Rather, the claims all arise out of the
8
relationship that Diaz and Fudge have with Elkin as co-executrix of the Bergacker
de Diaz estate, bringing them within the rule articulated by Faulkner and its
progeny and depriving Texas courts of jurisdiction over this matter.
Diaz and Fudge argue that the nature of the relief sought is not dispositive,
in that Texas courts may sometimes enter injunctions affecting foreign
proceedings. None of the cases to which they cite, however, involved the
administration of a foreign estate or an administrator or executor appointed under
the laws of a foreign jurisdiction. See Jacobsen v. Jacobsen, 695 S.W.2d 44, 45–
48 (Tex. App.—Corpus Christi 1985, no writ) (trial court could enjoin Canadian
litigation in order to protect best interests of children of parents who divorced in
Texas); Roberts v. Stewart Farm Mortg. Co., 226 S.W. 1108, 1108–09 (Tex. Civ.
App.—San Antonio 1921, no writ) (trial court, having obtained personal
jurisdiction over the parties, had power to enjoin foreign corporation from selling
notes for purchase money of land in court’s geographical jurisdiction in Texas);
Nelson v. Lamm, 147 S.W. 664, 667 (Tex. Civ. App.—San Antonio 1912, writ
ref’d) (trial court with jurisdiction over individual defendants could enjoin them
from engaging in litigation on same subject matter in Mexico).
Further, we base our holding not on the relief sought but on the nature of the
claims themselves, which turn on Elkin’s discharge of her fiduciary duties as a
representative of the estate and thus can only be brought against her in a
9
representative capacity. Minga, 603 S.W.2d at 241 (title to estate’s assets is not in
administrator of estate); see also Faulkner, 241 S.W. at 1007 (“An administrator is
the agent solely of the court appointing him . . . .”); Killgore v. Estate of Killgore,
568 S.W.2d 182, 187 (Tex. Civ. App.—San Antonio 1978, no writ) (removal of
executor for mismanagement necessarily involves “meddling in matters relating to
the settlement of the estate”); Becknal, 296 S.W. at 919.
We hold that the trial court did not have subject-matter jurisdiction to decide
the claims brought by Diaz and Fudge. The trial court therefore properly
dismissed the case for lack of jurisdiction. 2
Conclusion
We affirm the trial court’s order of dismissal.
Harvey Brown
Justice
Panel consists of Justices Keyes, Bland, and Brown.
2
Because our holding regarding jurisdiction is dispositive of this appeal, we
do not reach the arguments that Diaz and Fudge raise regarding forum non
conveniens. E.g., Cont’l Cas. Co. v. Baker, 355 S.W.3d 375, 387 (Tex.
App.—Houston [1st Dist.] 2011, no pet.); MET-Rx USA, Inc. v. Shipman, 62
S.W.3d 807, 808 (Tex. App.—Waco 2001, pet. denied).
10