Paige Trotter Holloway and Barbara Trotter Collins v. Richard Monroe, Kathy Kyle and Dawn Rigby ( 2014 )

Reversed and Remanded and Memorandum Opinion filed March 6, 2014.
In The
Fourteenth Court of Appeals
NO. 14-12-01087-CV
PAIGE TROTTER HOLLOWAY AND BARBARA TROTTER COLLINS,
INDIVIDUALLY, AS CO-ADMINISTRATORS OF THE ESTATE OF J. T.
TROTTER, DECEASED, AS CO-TRUSTEES OF TROTTER
GRANDCHILDREN’S 1993 TRUSTS, J. T. TROTTER 2004 GRANTOR
TRUST, TROTTER GGC 2004 TRUST, TROTTER 1993 TRUST FOR
PAIGE HOLLOWAY, TROTTER 1993 TRUST FOR BARBARA COLLINS
AND ALL OTHER TRUSTS CREATED UNDER DECEDENT’S WILL,
AND AS CO-TRUSTEES OF THE JACK TROTTER FOUNDATION AND
TROTTER EDUCATION FOUNDATION, AND WILLIAM COLLINS,
TRUSTEE OF THE TROTTER FRIENDS 2005 TRUST, Appellants
V.
RICHARD MONROE, KATHY KYLE AND DAWN RIGBY, Appellees
On Appeal from Probate Court No. 3
Harris County, Texas
Trial Court Cause No. 392,875
MEMORANDUM OPINION
This is an appeal from a summary judgment in favor of the Appellees,
Richard Monroe, Kathy Kyle, and Dawn Rigby. The Appellants, Paige Trotter
Holloway and Barbara Trotter Collins, Individually, as Co-Administrators of the
Estate of J. T. Trotter, Deceased, as Co-Trustees of Trotter Grandchildren’s 1993
Trusts, J. T. Trotter 2004 Grantor Trust, Trotter GGC 2004 Trust, Trotter 1993
Trust for Paige Holloway, Trotter 1993 Trust for Barbara Collins and all other
trusts created under Decedent’s Will, and as Co-Trustees of the Jack Trotter
Foundation and Trotter Education Foundation, and William Collins, Trustee of the
Trotter Friends 2005 Trust, contend that the trial court erred in granting summary
judgment on limitations grounds because the Appellees failed to (1) conclusively
prove that the discovery rule does not apply to extend limitations; (2) address their
claims for fraudulent transfer and the applicability of the discovery rule to this
claim; and (3) affirmatively establish that all their claims fell outside the statute of
limitations and that the discovery rule did not apply to them. The Appellants
further assert that the trial court erred in granting final summary judgment on
limitations grounds for claims that occurred within the limitations period. We
reverse and remand for proceedings consistent with this opinion.
BACKGROUND
The Appellants Paige Trotter Holloway, Barbara Trotter Collins, and
William Collins are the daughters and son-in-law of Jack T. Trotter, who died on
November 26, 2009. This dispute arose because, at the time of Trotter’s death, his
estate was unable to pay Paige and Barbara $2,700,000, an amount that he had
agreed to pay them upon his death as part of his divorce agreement with their
mother. The Appellants filed suit against the Appellees on November 28, 2011.
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The Appellees were employees of Trotter before his death and were aware
of this agreement. Monroe was Trotter’s longtime CPA in charge of bookkeeping
for all of Trotter’s businesses and other charitable and investment entities. Monroe
was an officer in many of Trotter’s businesses and a signatory on several accounts
for various entities in which Trotter had an interest. Kyle was Trotter’s assistant
who oversaw the running of his office and handled Trotter’s checkbook. Rigby
was Trotter’s secretary.
Toward the end of Trotter’s life, he was extremely ill, both physically and
mentally. His death certificate states that he had severe dementia for fifteen years
and advanced Parkinson’s disease for seventeen years. During this time, the
Appellants allege that the Appellees took advantage of Trotter by self-dealing or
taking assets from him. In their live pleading at the time summary judgment was
granted, they alleged the following facts:
• Monroe was the grantor on the Trotter Friends 1995 Trust, which was funded
with assets diverted from Trotter’s estate.
• Monroe was “intimately involved” in the J.T. Trotter 1997 Trust, which also
“improperly diverted” assets from Trotter’s estate.
• Monroe participated in the creation of and was a material beneficiary of the J.T.
Trotter 2002 Trust. This trust also divested assets from Trotter’s estate.
• Monroe purchased Tiltex Co. from Trotter at “a huge and undisclosed discount”
from Trotter.
• Monroe “claims” that several valuable paintings were given to him by Trotter
before Trotter’s death.
• Monroe made improper payments to himself and his companies by creating
false or inflated invoices and billing to be paid by Trotter’s companies.
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• Monroe charged Trotter and his companies excessive overhead payments.
• Kyle purchased paintings owned by Trotter for a very low amount and then sold
them back to him for a “great deal more.” Kyle knew the “sham sale” was
improper and that Trotter had lost capacity at the time of these sales.
• Kyle was in possession of Trotter’s checkbook and made improper payments to
herself and her family from it.
• Kyle participated in and benefited from the J.T. Trotter 2002 Trust and the J.T.
Trotter 1997 Trust.
• Rigby was aware of most, if not all, of the above actions taken by Monroe and
Kyle. Rigby also benefited from the “fraudulent” J.T. Trotter 2002 Trust and
the J.T. Trotter 1997 Trust.
• At the time that the Trotter Friends 2005 Trust “and some other trusts,” as well
as the sale of Tiltex Co. to Monroe, were executed or completed, Trotter lacked
capacity.
Based on these facts, the Appellants alleged causes of action for: (1) breach
of fiduciary duty; (2) fraud; (3) money had and received; (4) unjust enrichment;
(5) lack of capacity; (6) undue influence; (7) fraud by nondisclosure;
(8) intentional interference with inheritance rights; (9) conversion; (10) conspiracy;
and (11) fraudulent transfers. The Appellants also asserted the application of the
discovery rule to delay the accrual date of their causes of action until they “knew
or should have known” of the facts giving rise to their claims because of the
Appellees’ fraudulent acts and the inherently undiscoverable nature of many of the
facts. The Appellants alleged that most of the facts were not discovered until after
Trotter’s death. They sought actual, consequential, and exemplary damages, as
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well as a constructive trust for the sale proceeds of Tiltex Co. and funds improperly
dispersed to the Appellees, attorney’s fees, and costs.
Monroe moved for summary judgment on April 30, 2012. According to this
motion, the Appellants’ causes of action included breach of fiduciary duty, fraud,
money had and received, unjust enrichment, lack of capacity, undue influence,
fraud by nondisclosure, conversion, intentional interference with inheritance rights,
and conspiracy. Kyle and Rigby filed motions for summary judgment by which
they joined Monroe’s motion. Monroe’s grounds for summary judgment were:
(1) the Appellants’ acquiescence in accepting numerous cash benefits from Trotter
when they had disclosure of numerous material facts about which they now
complained; (2) limitations prevented the Appellants’ claims related to Tiltex Co.
and the J.T. Trotter 1997 Trust because the Appellants were frequently provided
disclosures regarding the actions Trotter took concerning these entities; and (3) the
Appellants judicially admitted to Trotter’s capacity and that he was of sound mind
by stepping into the shoes of the executors of his estate.
The Appellants responded to the motions, asserting that the Appellees
improperly moved for final summary judgment because the Appellees failed to
properly address their affirmative defenses regarding each cause of action raised in
the Appellants’ pleadings. The Appellants further asserted that the doctrine of
acquiescence does not apply to this case because Monroe, Kyle, and Rigby cannot
use an equitable doctrine to shield themselves from their own tortious acts. They
further asserted that the discovery rule operated to defer the accrual of their causes
of action for fraud and breach of fiduciary duty and that the Appellees failed to
address this rule in their motions. Finally, the Appellants claimed that they had not
judicially admitted that their father, Trotter, had capacity by stepping into the shoes
of the prior executors of his estate. They asserted that there were times that Trotter
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had capacity followed by instances when he did not have capacity. They attached
numerous copies of Trotter’s medical records to support his waxing and waning
capacity over the latter years of his life.
On June 26, 2012, the trial court signed an order “partially” granting
Monroe’s traditional motion for final summary judgment “as to the Statute of
Limitations” only. In this order, the Court stated,
[T]he Court finds that no genuine issue of material fact exists as to
Plaintiffs’ claims against [Monroe] as alleged in their Second
Amended Petition as to the Statute of Limitations ONLY and
therefore summary judgment in favor of [Monroe] is proper as to the
Statute of Limitations. The summary judgment as to the issue of
Doctrine of Acquiescence and Judicial Admissions are denied.
The trial court signed identical orders granting Kyle’s and Rigby’s motions on July
17, 2012.
The Appellants filed a motion for new trial and rehearing or clarification on
July 27, seeking clarification regarding whether the trial court’s summary
judgment orders were intended to be final or, if the orders were final, seeking a
new trial. At a hearing on this order held on August 28, 2012, the Appellants
asserted that several of their claims were within the statute of limitations. At this
hearing, the trial court stated to appellants, “Okay. Then amend your pleading to
show if, in fact, you are showing something within an applicable statute of
limitations.” The court then continued the hearing on the motion until October 11.
This hearing was delayed until October 30, and the Appellants filed an
amended petition with leave of court on October 29. At the hearing on October 30,
2012, the trial court signed an order denying the Appellant’s motion for new trial
and rehearing or clarification. In this order, however, the trial court included the
following language:
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ORDERED, ADJUDGED and DECREED that the Orders signed on
June 26, 2012 and July 17, 2012, Partially Granting Richard Monroe,
Kathy Kyle, and Dawn Rigby’s Traditional Motion for Final
Summary Judgment on the defense of limitations disposed of all
claims alleged by Plaintiffs in their Second Third Amended Petition. 1
From this order, the Appellants noticed their appeal.
JURISDICTION
Because Monroe, joined by Kyle and Rigby, has challenged our appellate
jurisdiction in their briefs, we address that issue first. They assert that the
Appellants’ notice of appeal is untimely under our rules of appellate procedure,
contending that the July 17, 2012 orders on Kyle’s and Rigby’s motions for
summary judgment control the appellate deadlines.
First, we conclude that the July 17, 2012 orders constituted a final judgment
because, coupled with the earlier order disposing of all claims against Monroe,
they disposed of all parties and all claims in this case. See, e.g., McLernon v.
Dynegy, Inc., 347 S.W.3d 315, 322 (Tex. App.—Houston [14th Dist.] 2011, no
pet.) (citing Webb v. Jorns, 488 S.W.2d 407, 409 (Tex. 1972) and Hyundai Motor
Co. v. Alvarado, 892 S.W.2d 853, 855 (Tex. 1995) for the proposition that
interlocutory judgments or partial summary judgments become final upon
disposition of other issues in case). A trial court retains jurisdiction over a case for
a minimum of thirty days after signing a final judgment. Tex. R. Civ. P. 329b(d).
During this time, the trial court’s plenary jurisdiction may be extended by the
timely filing of an appropriate post-judgment motion, such as a motion for new
trial or a motion to modify, correct, or reform the judgment. See Tex. R. Civ. P.
329b(e), (g); Lane Bank Equip. Co. v. Smith S. Equip. Co., 10 S.W.3d 308, 310
1
The trial court interlineated “Second” and handwrote “Third.” Additionally, there is
more language following this portion of the order, but it is interlineated and has handwritten
language beside it. It is difficult to discern what the trial court intended the order to state.
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(Tex. 2000). Here, the Appellants timely filed a motion for new trial on July 27,
2012.
“In the event an original or amended motion for new trial . . . is not
determined by written order signed within seventy-five days after the judgment
was signed, it shall be considered overruled by operation of law on expiration of
that period.” Tex. R. Civ. P. 329b(c). Because the trial court did not rule on the
Appellants’ motion for new trial, it was overruled by operation of law seventy-five
days later, on October 1, 2012. 2 But the trial court retained plenary jurisdiction to
“vacate, modify, correct, or reform the judgment” for thirty days after the motion
for new trial was overruled by operation of law. See Tex. R. Civ. P. 329b(e).
Thus, the trial court retained plenary jurisdiction to modify, correct, or reform the
judgment for 105 days from the date the final judgment was signed, or until
October 30, 2012. Here, the trial court signed a new judgment on October 30, the
last day of its plenary jurisdiction.
The Appellees assert, however, that the October 30 order described above
served to simply affirm a former judgment in an effort to improperly enlarge the
period for perfecting an appeal. See Anderson v. Casebolt, 493 S.W.2d 509, 510
(Tex. 1973) (per curiam). But “[i]f a judgment is modified, corrected or reformed
in any respect, the time for appeal shall run from the time the modified, corrected,
or reformed judgment is signed.” Tex. R. Civ. P. 329b(h) (emphasis added); see
also In re J.L., 163 S.W.3d 79, 83 (Tex. 2005) (citing Check v. Mitchell, 758
2
September 30, 2012, which was the seventy-fifth day after Appellants filed their motion
for new trial, was a Sunday. Thus, the motion was overruled by operation of law on October 1,
2012. See Tex. R. Civ. P. 4 (in computing time periods under the rules of civil procedure, “[t]he
last day of the period so computed is to be included, unless it is a Saturday, Sunday or legal
holiday, in which event the period runs until the end of the next day which is not a Saturday,
Sunday or legal holiday”); see also Sims v. Fitzpatrick, 288 S.W.3d 93, 105 (Tex. App.—
Houston [1st Dist.] 2009, no pet.) (applying rule 4 to computation of rule 329b(c) seventy-five-
day period for ruling on motion for new trial).
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S.W.2d 755, 756 (Tex. 1988) (per curiam)); Naaman v. Grider, 126 S.W.3d 73, 74
(Tex. 2003). The October 30 order modified the prior judgment because it
purported to dispose of all claims alleged by the Appellants in their third amended
petition. The earlier summary judgment orders were based on the Appellants’
second amended petition. “[A]ny change, whether or not material or substantial,
made in a judgment while the trial court retains plenary power, operates to delay
the commencement of the appellate timetable until the date of the modified,
corrected or reformed judgment is signed.” Check, 758 S.W.2d at 755.
Thus, we conclude that the time for appeal in this case ran from the October
30, 2012 order, which modified and replaced the earlier final judgment signed by
the trial court. See Quanaim v. Frasco Rest. & Catering, 17 S.W.3d 30, 39–40
(Tex. App.—Houston [14th Dist.] 2000, pet. denied). Appellants’ notice of appeal
was timely filed, and we have jurisdiction over this appeal.
SUMMARY JUDGMENT
A. Standard of Review
We review the trial court’s granting of a summary judgment de novo.
Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009) (per
curiam). To be entitled to summary judgment under Rule 166a(c), a movant must
establish that there is no genuine issue of material fact so that the movant is
entitled to judgment as a matter of law. Mann Frankfort Stein & Lipp Advisors,
Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). A defendant moving for
summary judgment on a statute of limitations defense must (1) conclusively prove
when the cause of action accrued, and (2) negate the discovery rule if it applies and
has been otherwise pleaded or raised. KPMG Peat Marwick v. Harrison Cnty. Fin.
Corp., 988 S.W.2d 746, 748 (Tex. 1999). We take as true all evidence favorable to
the nonmovant and resolve any doubt in the nonmovant’s favor. 20801, Inc. v.
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Parker, 249 S.W.3d 392, 399 (Tex. 2008). We consider the evidence presented in
the light most favorable to the nonmovant, crediting evidence favorable to the
nonmovant if reasonable fact finders could, and disregarding evidence contrary to
the nonmovant unless reasonable fact finders could not. Mann Frankfort, 289
S.W.3d at 848.
B. Application
The Appellants, both in their summary judgment response and on appeal,
raise numerous complaints about the trial court’s grant of summary judgment on
limitations grounds. As is relevant here, the Appellants assert in their first and
third issues that the trial court erred by signing a final summary judgment because
(1) the Appellees did not meet their burden to (a) conclusively prove when the
Appellants’ causes of action accrued and (b) negate the discovery rule as a matter
of law and (2) the summary judgment motion filed by the Appellees did not
conclusively establish that the statute of limitations applied to all the “claims,
transactions and/or causes of action” pleaded by the Appellants. We agree.
We begin our analysis by reviewing Monroe’s summary judgment motion,
which Kyle and Rigby joined. In the part of his motion in which he asserts the
affirmative defense of acquiescence, Monroe alleges that Paige and Barbara were
made aware of the sale of Tiltex Co., LLC through financial statements of another
company in which they were partners. Monroe contends that these financial
statements were mailed to Paige and Barbara in April 2006 and included the
following disclosure:
As permitted under the Partnership agreement, effective April 1, 2005,
Tiltex Co., the General Partner, was reorganized from a “C”
Corporation into a Limited Liability Company, with J.T. Trotter as the
sole member. On August 1, 2005, Richard E. Monroe, Jr., and
Benjamin K. Kinney purchased J.T. Trotter’s ownership of Tiltex Co.
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LLC. This change in the structure of the General Partner has no
impact on the Partnership’s operation.
Monroe further asserts that in May 2007, Paige and Barbara were made fully aware
of the “mechanics” of the 1997 Trust via letters sent to them by Andrew J. Clark,
Trotter’s attorney. In these letters, Clark disclosed to Paige and Barbara that
Trotter was both the trustee and beneficiary of the 1997 Trust and “had the power
to reduce the amount of assets remaining in that Trust.” Copies of the letters sent
to Paige and Barbara,3 along with an affidavit from Clark, were attached to the
motion.
The entirety of the portion of his motion regarding his statute of limitations
affirmative defense reads as follows:
C. Limitations prevents Plaintiffs’ claims against Monroe
related to Tiltex Co. and the 1997 Trust
All of the claims asserted by Plaintiffs have two (2) or four (4)
year limitations periods, and accordingly, such claims are barred with
respect [to] the Plaintiffs[’] knowledge in 2005, with respect to
Plaintiffs’ claims regarding Tiltex Co. and Plaintiffs’ claims which
concern the 1997 Trust.
The Plaintiffs cannot assert that they had no knowledge of the
facts because they frequently received disclosures of such actions. In
Lindley, the Court held that a stockholder whose shares were
redeemed by the corporation did have knowledge of the material facts
when she had gained information of the transaction through letters and
signed agreements. Lindley v. McKnight 349 S.W.3d [113,] 131
[(Tex. App.—Fort Worth 2011, no pet.)]. The same holds true for
Plaintiffs in this case. They had notice and disclosure regarding Tiltex
Co. and the 1997 Trust as early as 2004 and 2005 through receipt of
various information. Accordingly, limitations prohibits any claims
against Monroe related to these two entities.
3
These letters were actually dated May 19, 2004.
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In summary, the Plaintiffs were well aware of the actions the
Decedent was taking and even participated in those actions
themselves. Plaintiffs discussed Decedent’s actions with Monroe.
Limitations bars any claims against Monroe related to Tiltex Co. and
the 1997 Trust. This Court should dismiss all claims against Monroe
related to Tiltex Co. and the 1997 Trust.
(footnotes omitted).
As the movant for summary judgment on limitations grounds, the Appellees
had the burden of conclusively proving when the Appellants’ causes of action
accrued and negating the discovery rule because the Appellants pleaded the
discovery rule and its application to their causes of action. See KPMG Peat
Marwick, 988 S.W.2d at 748. To meet this burden, the Appellees had to prove as a
matter of law either that the discovery rule did not apply or that there was no
genuine issue of material fact about when the Appellants discovered, or in the
exercise of reasonable diligence should have discovered, the nature of their injury.
See id. If the Appellees established that limitations barred the Appellants’ actions,
then the Appellants were required to adduce summary judgment proof raising a
fact issue in avoidance of the statute of limitations. See id.
It appears that Monroe’s motion and evidence only established the accrual
date of the Appellants’ “claims against Monroe related to Tiltex Co. and the 1997
trust.” 4 But Monroe makes no effort in his motion to detail which specific causes
of action are barred by these facts.5 Moreover, Monroe does not discuss whether
or how the discovery rule applies to any of the Appellants’ causes of action,
4
As noted above, Monroe filed his own motion, and Kyle and Rigby filed motions
joining Monroe’s motion.
5
Monroe provides a footnote in the statute of limitations section of his motion listing the
various limitations periods according to statute or case authority for many of the Appellants’
causes of action. But these bare references to the limitations periods for these causes of actions
do not establish the accrual date for each of them. Furthermore, he provides no limitations
period for the Appellants’ causes of action for unjust enrichment or fraudulent transfer.
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although he does state that the Appellants had “notice and disclosure regarding
Tiltex Co. and the 1997 Trust as early as 2004 and 2005 through receipt of various
information.” Cf. Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 228 (Tex.
App.—Houston [14th Dist.] 2008, no pet.) (stating that if the plaintiff pleads the
discovery rule as an exception to limitations, the defendant moving for summary
judgment must negate it by demonstrating the rule does not apply or proving as a
matter of law that there is no genuine issue of material fact as to when the plaintiff
discovered or should have discovered the nature of her injury).
In their summary judgment response, the Appellants assert, “Movants make
no attempt to break down the[] causes of action and address them individually. . . .
Respondents would contend[] that until Movants specifically state which causes of
action they are seeking to have this Court rule upon, the Court should not rule upon
any of the claims, but rather simply deny the Movants’ Motion.” The Appellants
further explain the application of the discovery rule to many of the claims,
including their fraud and breach of fiduciary duty causes of action. Regarding the
Tiltex sale, they argue that the appropriate question is not whether they knew that
the company had been sold, but whether they knew that the transaction was unfair
and that the sale was for significantly less than the company was worth—an issue
that they did not discover until after Trotter’s death. They attached affidavits in
support of this allegation.
Finally, our review of the Appellants’ petition reveals that neither Tiltex nor
the 1997 Trust are mentioned specifically in the Appellants’ claims for breach of
fiduciary duty, money had and received, unjust enrichment, intentional interference
with inheritance rights, and conversion. Additionally, other facts are alleged in
their claims for fraud, lack of capacity, undue influence, fraud by nondisclosure,
conspiracy, and fraudulent transfer.
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It is well-settled that a motion for summary judgment must stand or fall on
the grounds presented in the motion. See Sci. Spectrum, Inc. v. Martinez, 941
S.W.2d 910, 912 (Tex. 1997); Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d
796, 805 (Tex. 1994); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337,
341 (Tex. 1993). Summary judgment movants must establish their entitlement to
summary judgment on the “issues expressly presented to the trial court by
conclusively proving all essential elements in [their] cause of action or defense as a
matter of law.” City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677
(Tex. 1979). A trial court may not grant summary judgment as a matter of law on
a cause of action not addressed in the summary judgment motion. See id. To do so
is error. See Guest v. Cochran, 993 S.W.2d 397, 402 (Tex. App.—Houston [14th
Dist.] 1999, no pet.).
Regardless of the merits of Monroe’s, Kyle’s, and Rigby’s limitations
defenses, they failed to move for summary judgment on limitations on all of the
Appellants’ claims. See id. Moreover, as to the Tiltex Co. and 1997 Trust claims
on which they did move for summary judgment, they failed to adequately address
their statute of limitations affirmative defense. See Seureau, 274 S.W.3d at 228.
For the foregoing reasons, we conclude that the trial court erred by granting
summary judgment in favor of Monroe, Kyle, and Rigby. See id.; Guest, 993
S.W.2d at 402. We therefore sustain the Appellants’ first and third issues. Having
sustained these issues, we need not address their other issues. See Tex. R. App. P.
47.1; Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996).
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CONCLUSION
Having sustained the Appellants’ first and third issues, we reverse and
remand this cause for proceedings consistent with this opinion.
/s/ Sharon McCally
Justice
Panel consists of Justices McCally, Busby, and Wise.
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