Susan England v. Janice Kolbe, as Guardian of the Estate of Edna Moon

ACCEPTED

03-15-00409-CV

8019009

THIRD COURT OF APPEALS

AUSTIN, TEXAS

11/30/2015 4:14:06 PM

JEFFREY D. KYLE

CLERK

No. 03-15-00409-CV

FILED IN

3rd COURT OF APPEALS

AUSTIN, TEXAS

In the Third Court of Appeals 11/30/2015 4:14:06 PM

JEFFREY D. KYLE

Austin, Texas Clerk

SUSAN ENGLAND (LEE)

Appellant

v.

JANICE KOLBE, AS GUARDIAN OF THE ESTATE OF EDNA MOON

Appellee

APPEAL FROM CAUSE NO. 12-0361

207TH JUDICIAL DISTRICT COURT OF HAYS COUNTY, TEXAS

THE HONORABLE JUDGE GARY STEEL, PRESIDING

APPELLANT’S BRIEF

David Junkin

State Bar No. 11058020

Law Office of David Junkin

P.O. Box 2910

Wimberley, TX 78676

512/847-8600

512/847-8604

david@junkinlawoffice.com

Attorney for Appellant

ORAL ARGUMENT (CONDITIONALLY) REQUESTED

STATEMENT REGARDING ORAL ARGUMENT

Appellant believes that the Appellant’s Brief, Appellee’s Brief, Clerk’s

Record, and Reporter’s Record will adequately present the facts and legal

arguments involved in this appeal and that oral argument would not

significantly aid the decisional process of this Court. See Tex. R. App. P.

39.1. However, should the Court conclude that oral argument would be

helpful, Appellant stands ready and requests the opportunity to participate.

i

TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL

The following is a complete list of all parties to the trial court’s final

judgment, as well as the names and addresses of all trial and appellate counsel.

Defendant /Appellant: Counsel for Appellant:

Susan England, now David Junkin

Susan Lee P.O. Box 2910

Wimberley, Texas 78676

Plaintiff /Appellee: Counsel for Appellee:

Janice Kolbe as Jonathan Hull

Guardian of the Estate c/o Reagan Burris PLLC

Of Edna Moon 401 Main Plaza, Suite 200

New Braunfels, TX 78130

ii

TABLE OF CONTENTS

Index of Authorities .................................................................................... vii

Statement of the Case ....................................................................................1

Issues Presented

THE SANCTIONS ORDER

A. Did the Trial Court Err in Entering Death Penalty

Sanctions Against Appellant Because There Was

No Direct Relationship Between the Offensive

Conduct and the Sanction Imposed? ..........................................3

B. Did the Trial Court Err in Entering Death Penalty

Sanctions Against Appellant Because Scope of the

Sanction Order Resulted in an Excessive Penalty? ...................3

C. Did the Trial Court Err in Entering Death Penalty

Sanctions Against Appellant Because the Scope of

The Sanction Order violated Appellant’s Constitutional

Due Process Rights? ...................................................................3

D. In Light of the General Standards for Review of

Death Penalty Sanctions, Did Section 10.001 of

the Texas Civil Practice and Remedies Code Provide

an Additional Appropriate Basis for Death Penalty

Sanctions Against Appellant? ....................................................3

E. In Light of General Standards for Review of Death

Penalty Sanctions, Did Rule 13 TRCP Provide

an Additional Appropriate Basis for Death Penalty

Sanctions Against Appellant? ....................................................3

F. In Light of the General Standards for Review of

Death Penalty Sanctions, Did Rule 215.5 TRCP

Provide an Additional Appropriate Basis for

Death Penalty Sanctions Against Appellant? ............................4

iii

THE FINAL JUDGMENT

G. As to the La Playa, Park Place, RR 12, and

Rest Haven (Lake McQueeney) Properties,

Did the Final Judgment Violate the “One-

Satisfaction” Rule by Granting Appellee a Double

or Even Triple Recovery for Actual Damages,

the Property Itself, and a Constructive Trust? ...........................4

H. Did the Trial Court Err in Imposing a “Constructive

Trust Lien” Against Appellant’s Homestead and

Vehicle Because There Was No Election of Remedies

by Appellee and There is No Evidence or Insufficient

Evidence to Support the Amount of the Constructive

Trusts Set Out in the Final Judgment? .......................................4

I. Does the Final Judgment Improperly Place a Claim

on Appellant’s Homestead? .......................................................4

J. Did the Trial Court Err in Failing to Take Into

Consideration the Specific Allocation of Ownership

in the Joint Account Agreements? .............................................4

K. Did the Trial Court Err in “Setting Aside” and

Declaring “Void and Without Effect” the Gift Deeds

Because There is No or Insufficient Evidence of

Fraudulent Inducement of Those Deeds by Appellant

and the Final Judgment Improperly Clouds Title

of Non-Parties? ...........................................................................4

L. Is the $1,000,000 Punitive Damages Award Excessive

in Light of the Facts and Sanctions Order? ................................4

M. Does the Final Judgment Refer to an Improper

Authority for Assessment of Pre- and Post-

Judgement Interest? ....................................................................4

General Statement of Facts ...........................................................................5

Summary of the Argument ...........................................................................7

iv

Standard of Review ........................................................................................8

Argument

THE SANCTIONS ORDER

A. The Trial Court Erred in Entering Death Penalty

Sanctions Against Appellant Because There is

Not a Direct Relationship Between the Offensive

Conduct and the Sanction Imposed.......................................... 11

B. The Trial Court Erred in Entering Death Penalty

Sanctions Against Appellant Because the Sanction

Order was an Excessive Penalty. ............................................. 16

C. The Trial Court Erred in Entering Death Penalty

Sanctions Against Appellant Because the Scope

of the Sanction Order Violated Appellant’s

Constitutional Due Process Rights........................................... 22

D. In Light of the General Standards for Review

of Death Penalty Sanctions, Section 10.001 of

the Texas Civil Practice and Remedies Code

Does Not Provide an Appropriate Basis for

Death Penalty Sanctions Against Appellant. ........................... 25

E. In Light of the General Standards for Review

of Death Penalty Sanctions, Rule 13 TRCP

Does Not Provide an Appropriate Basis for

Death Penalty Sanctions Against Appellant. ........................... 27

F. In Light of the Foregoing General Standards

for Review of Death Penalty Sanctions,

Rule 215.5 Does Not Provide an Appropriate

Basis for Death Penalty Sanctions Against

Appellant. ................................................................................. 31

v

THE FINAL JUDGMENT

G. The Final Judgment Violated the “One-Satisfaction”

Rule by Granting Appellee a “Double Recovery”

for Actual Damages and the Property Itself. ............................ 32

As to the La Playa and Park Place

Properties....................................................................... 33

As to the RR 12 and Rest Haven

(Lake McQueeney) Properties ..................................... 34

H. The Trial Court Erred in Imposing a “Constructive

Trust Lien” Against Appellant’s Homestead

and Vehicle Because it is Not the Proper

Remedy and There is No Evidence or Insufficient

Evidence to Support the Amount of the

Constructive Trusts Set Out in the Final Judgment. ................ 35

The Constructive Trust on Appellant’s

Homestead for $306,000 is Improper ............................ 37

The Constructive Trust on the Mercedes

Benz for $12,182.36 is Improper .................................. 39

I. The Final Judgment Improperly Places a Claim

on Appellant’s Homestead. ..................................................... 41

J. The Trial Court Erred in Using the Improper

Measure of Damages When the Joint Account

Agreements Specifically Identified the

Allocation of Ownership of Such Joint

Accounts and the Court Did Not Take Into

Consideration the Appellant’s Contractual

Ownership Interest in Those Joint Accounts............................ 42

vi

K. The Trial Court Erred in “Setting Aside” and

Declaring “Void and Without Effect” the

Gift Deeds Because There is No or Insufficient

Evidence of Fraudulent Inducement of Those

Deeds by Appellant and the Final Judgment

Improperly Clouds Title of Non-Parties................................... 44

There is Insufficient Evidence of Fraudulent

Inducement of a Contract .............................................. 44

The Final Judgment Improperly Clouded

Title of Non-Parties ....................................................... 45

L. The $1,000,000 Punitive Damages Award is

Excessive in Light of the Facts and Sanctions Order ............... 47

M. The Final Judgment Refers to an Improper

Authority for Assessment of Pre- and Post-

Judgement Interest .................................................................... 48

Conclusion and Prayer ............................................................................... 48

Certification Regarding Length of Brief .................................................. 49

Certificate of Service .................................................................................. 49

Appendix

Sanctions Order ............................................................................. Tab 1

Final Judgment .............................................................................. Tab 2

Statutes & Rules ............................................................................ Tab 3

Cases .............................................................................................. Tab 4

vii

INDEX OF AUTHORITIES

Authority Page(s)

Case Law

Alejandro v. Robstown ISD,

131 S.W.3d 663 (Tex. App.--Corpus Christi 2004, no pet.) .............. 27

American Flood Research, Inc. v. Jones,

192 S.W.3d 581 (Tex. 2006) .......................................................... 9, 10

Batmanis v. Batmanis,

600 S.W.2d 887 (Tex. Civ. App.—Houston [14th Dist.] 1980,

writ ref’d n.r.e.)................................................................................... 38

Bennett v. Grant,

460 S.W.3d 220 (Tex. App.—Austin 2015, pet. filed) ...................... 47

Birchfield v. Texarkana Memorial Hosp.,

747 S.W.2d 361 (Tex.1987) ............................................................... 32

Brooks v. Northglen Ass’n,

141 S.W.3d 158 (Tex. 2004) .............................................................. 46

Brozynski v. Kerney,

(Tex. App.-Waco Aug. 2, 2006, pet. denied) [unpublished].............. 26

Chrysler Corp. v. Blackmon,

841 S.W.2d 844 (Tex. 1992) ........................................................ 15, 16

Cunningham v. Parkdale Bank,

660 S.W.2d 810 (Tex. 1983) .............................................................. 45

Fairfield Financial Group, Inc. v. Synott,

300 S.W.3d 316 (Tex. App.—Austin 2009, no pet)........................... 41

General Ass'n of Davidian S.D.A. v. General Ass'n, Etc.,

410 S.W.2d 256 (Tex. Civ. App.—Waco 1966,

writ ref’d n.r.e.)................................................................................... 38

viii

GTE Communications Sys. Corp. v. Tanner,

856 S.W.2d 725 (Tex. 1993) ........................................................ 21, 27

Haase v. Glazner,

62 S.W.3d 795 (Tex. 2001) ................................................................ 44

In re Guardianship of Patlan,

350 S.W.2d 189 (Tex. App.—San Antonio 2011, no pet.) ................ 44

Jim Walter Homes, Inc. v. Reed,

711 S.W.2d 617 (Tex. 1986) .............................................................. 42

Karagounis v. Property Co. of Am.,

970 S.W.2d 761 (Tex. App.-Amarillo 1998, pet. denied) .................. 28

Lanfear v. Blackmon,

827 S.W.2d 87 (Tex. Civ. - Corpus Christi 1992,

orig. proceeding)................................................................................. 29

LAN/STV v. Martin K. Eby Constr. Co.,

435 S.W.3d 234 (Tex. 2014) .............................................................. 43

Lone Star Gas Co. v. Childress,

187 S.W.2d 936 (Tex. Civ. App.—Waco 1945, no writ) .................. 46

LTTS Charter School, Inc. v. Palasota,

362 S.W.3d 202 (Tex. App.—Dallas 2012, no pet.) .......................... 35

Mattly v. Spiegel, Inc.,

19 S.W.3d 890 (Tex. App.-Houston [14th Dist.] 2002, no pet.) ......... 26

Mid-South Telecommunications, Co. v. Best,

184 S.W.3d 386 (Tex. App.—Austin 2006, no pet.) ......................... 17

Moody v. Pitts,

708 S.W.2d 930 (Tex. Civ. App.—Corpus Christi 1986,

no writ) ............................................................................................... 37

ix

Moreno v. Sterling Drug, Inc.,

787 S.W.2d 348 (Tex. 1990) .............................................................. 17

Norfolk Southern Railway Co. v. Bailey,

92 S.W.3d 577 (Tex. App.—Austin 2002, no pet.)............................ 14

Overman v. Baker,

26 S.W.3d 506 (Tex. App.--Tyler 2000, no pet.) ............................... 28

R.M. Dudley Constr. Co., Inc. v. Dawson,

258 S.W.3d 694 (Tex. App.—Waco 2008, pet. denied) .................... 26

Saden v. Smith,

415 S.W.3d 450 (Tex. App.--Houston [1st Dist.] 2013,

pet. denied) ......................................................................................... 32

Southern County Mut. Ins. Co. v. First Bank & Trust of Groves,

750 S.W.2d 170 (Tex. 1988) .............................................................. 32

State v. Target Corp.,

194 S.W.3d 46 (Tex. App.—Waco 2006, no pet ) ............................. 31

Stevenson v. Koutzarov,

795 S.W.2d 313 (Tex. App.--Houston [1st Dist.] 1990,

writ denied) ......................................................................................... 32

Sw. Bell Tel. Co. v. DeLanney,

809 S.W.2d 493 (Tex. 1991) ......................................................... 42-43

TransAmerican Natural Gas Corp. v., Powell,

811 S.W.2d 913 (Tex. 1991) ............................................ 10, 22, 23, 31

Wielgosz v. Millard,

679 S.W.2d 163 (Tex. App.—Houston [14th Dist.]

1984, no writ) ..................................................................................... 45

Williams v. Akzo Chemicals,

999 S.W.2d 836 (Tex. App.—Tyler 1999, no pet.)...................... 22, 29

x

Willis v. Donnelly,

118 S.W.3d 10 (Tex. App.—Houston [14th Dist.] 2003),

aff’d in part and rev’d in part on other grounds,

199 S.W.3d 262 (Tex. 2006) ........................................................ 36, 37

W.O. Bankston Nissan v. Walters,

754 S.W.2d 127 (Tex. 1988) .............................................................. 42

Statutes

TEX. BUS. ORG. CODE § 152.101 .................................................................. 30

TEX. CIV. PRAC. & REM. CODE § 10.001 .......................................... 10, 25, 26

TEX. CIV. PRAC. & REM. CODE § 10.005 ................................................ 10, 26

TEX. CIV. PRAC. & REM. CODE § 37.006 ...................................................... 46

TEX. FIN. CODE § 304.003............................................................................. 48

TEX. FIN. CODE § 304.103............................................................................. 48

TEX. PROP. CODE § 41.001 ............................................................................ 41

Other

TEX. R. CIV. P. 13.......................................................................... 8, 10, 27, 28

TEX. R. CIV. P. 39.................................................................................. 4, 6, 47

TEX. R. CIV. P. 56.......................................................................................... 46

TEX. R. CIV. P. 97.......................................................................................... 47

TEX. R. CIV. P. 215.............................................................................. 8, 10, 28

W. Miller, NON-MONETARY RELIEF, EQUITABLE RELIEF ............................. 37

xi

TO THE HONORABLE THIRTEENTH COURT OF APPEALS:

Appellant, Susan England, now Susan Lee, (“Appellant” or “Susan England”)

files this brief asking the Court to reverse the trial court’s entry of death penalty

sanctions against her and reverse the judgment awarding Janice Kolbe, as Guardian

of the Estate of Edna Moon (“Appellee” or “Janice Kolbe”) $1,458,251 in actual

damages and $1,000,000 in punitive damages and imposing constructive trusts.

Appellant respectfully shows:

STATEMENT OF THE CASE

Judgment signed by: The Honorable Gary Steel

Trial Court: 207th Judicial District Court, Hays County, Texas.

The Appellant: Susan England (now Susan Lee)

The Appellee: Janice Kolbe as Guardian of the Estate of Edna Moon

Nature of the Case: Appellant, Susan England (Lee), and Appellee, Janice

Kolbe, are the surviving daughters of Edna and Howard

Moon.1 The underlying nature of the case is the question

of whether or not Appellant misused funds of her mother,

Edna Moon.

Course of Proceedings: The suit was filed on February 23, 2012 by Appellee under

power of attorney. C.R. at 8. On March 12, 2013,

Appellee and Barbara McHale were appointed guardians

1

Another sister, Barbara McHale, died during the course of this proceeding and a

fourth sister, Betty Jane Grossman Bish, died several years before suit was filed and

left a son, Patrick Grossman, who is an heir under Edna Moon’s will.

Appellant’s Brief – Page 1

of the estate and person, respectively, of Edna Moon. On

October 7, 2014, the trial court granted Appellee’s first

motion for sanctions for discovery abuse – primarily for

failing to identify bank account/real property information

– awarding Appellee monetary sanctions of $15,000 plus

an additional $3,000 in attorney’s fees (the “First Sanction

Order”). C.R. at 544 and R.R. Vol. 8 at 54-55. The trial

court also entered an Amended Docket Control Order

setting out various pretrial deadline and setting the matter

for jury trial on January 26, 2015.

In compliance with the Amended Docket Control Order,

on December 19, 2014 the Appellant filed her First

Supplemental Answer and Counterclaim. C.R. at 558.

Appellee sought additional discovery. The trial court was

unable to hear the case on January 26, 2015 and it was

reset for trial on March 9, 2015. C.R. at 846. The trial

court set new deadlines for filing amended pleadings. Id.

Appellant’s expert witness, Michael Turner, was deposed

on January 13, 2015 and Appellant was deposed a second

time on February 4, 2015. C.R. at 928 and 1067.

On February 20, 2015, Appellee filed a second Motion for

Sanctions based primarily on alleged inconsistencies in

Appellant’s testimony and allegations Appellant was

asserting “new” theories or claims. C.R. at 987. This

motion for sanctions was ultimately heard by the trial court

on March 2, 2015.

Trial Court’s Disposition: On March 10, 2015 the trial court signed the Order

Granting Plaintiff’s Motion for Sanctions (the “Sanctions

Order”) entering “death penalty” sanctions against

Appellant including denying the Appellant the right to a

jury trial on the damages issue. C.R. at 1621. The trial

court made it clear the sanctions were entered as a result

of false testimony and not based on Appellee’s allegations

Appellant’s Brief – Page 2

of Appellant asserting a new theory. R.R. Vol. 12 at 116,

lines 14-20.

Also on March 10, 2015, the trial court heard evidence on

Appellee’s claims for damages and entered judgment in

favor of Appellee for, among other things, $1,458,251 in

actual damages, $1,000,000 in punitive damages, and

imposed constructive trusts on accounts, a vehicle, and

Appellant’s homestead (“Final Judgment”). C.R. at 1640.

ISSUES PRESENTED

THE SANCTIONS ORDER

A. Did the Trial Court Err in Entering Death Penalty Sanctions Against

Appellant Because There Was No Direct Relationship Between the

Offensive Conduct and the Sanction Imposed?

B. Did the Trial Court Err in Entering Death Penalty Sanctions Against

Appellant Because Scope of the Sanction Order Resulted in an Excessive

Penalty?

C. Did the Trial Court Err in Entering Death Penalty Sanctions Against

Appellant Because the Scope of the Sanction Order violated Appellant’s

Constitutional Due Process Rights?

D. In Light of the General Standards for Review of Death Penalty Sanctions,

Did Section 10.001 of the Texas Civil Practice and Remedies Code

Provide an Additional Appropriate Basis for Death Penalty Sanctions

Against Appellant?

E. In Light of General Standards for Review of Death Penalty Sanctions,

Did Rule 13 TRCP Provide an Additional Appropriate Basis for Death

Penalty Sanctions Against Appellant?

Appellant’s Brief – Page 3

F. In Light of the General Standards for Review of Death Penalty Sanctions,

Did Rule 215.5 TRCP Provide an Additional Appropriate Basis for Death

Penalty Sanctions Against Appellant?

THE FINAL JUDGMENT

G. As to the La Playa, Park Place, RR 12, and Rest Haven (Lake

McQueeney) Properties, Did the Final Judgment Violate the “One-

Satisfaction” Rule by Granting Appellee a Double or Even Triple

Recovery for Actual Damages, the Property Itself, and a Constructive

Trust?

H. Did the Trial Court Err in Imposing a “Constructive Trust Lien” Against

Appellant’s Homestead and Vehicle Because There Was No Election of

Remedies by Appellee and There is No Evidence or Insufficient Evidence

to Support the Amount of the Constructive Trusts Set Out in the Final

Judgment?

I. Does the Final Judgment Improperly Place a Claim on Appellant’s

Homestead?

J. Did the Trial Court Err in Failing to Take Into Consideration the Specific

Allocation of Ownership in the Joint Account Agreements?

K. Did the Trial Court Err in “Setting Aside” and Declaring “Void and

Without Effect” the Gift Deeds Because There is No or Insufficient

Evidence of Fraudulent Inducement of Those Deeds by Appellant and the

Final Judgment Improperly Clouds Title of Non-Parties?

L. Is the $1,000,000 Punitive Damages Award Excessive in Light of the Facts

and Sanctions Order?

M. Does the Final Judgment Refer to an Improper Authority for Assessment

of Pre- and Post-Judgement Interest?

Appellant’s Brief – Page 4

GENERAL STATEMENT OF FACTS

1. Beginning as early as March of 2000, Howard and Edna Moon gifted

real property to Appellant. By way of a gift deed dated March 3, 2000, Howard and

Edna Moon deeded a lot in the Hunter’s Glen subdivision in Hays County to

Appellant (the “Hunter’s Glen” property). C.R. at 1400. Similarly, by way of a Gift

Deeds dated May 4, 2006, Howard and Edna Moon deeded a property on Ranch

Road 12 in Hays County to Appellant (the “RR 12” property) and property in

Guadalupe County, Texas (the “Rest Haven” property or “Lake McQueeney”

property). Id. at 1434 and 1439 and RR Vol. 15 at 805-12. The RR 12 and Rest

Haven deeds are together referred to herein as the “Gift Deeds.”2 Edna Moon

actively participated in the acquisition of Rest Haven property executing purchase

related documents. Id. at 1409-32. Beginning no later than April 12 of 2000,

Howard Moon, Edna Moon, and Appellant also entered into multi-party bank

accounts with rights of survivorship and allocating ownership of the account in

proportion to net contributions to the account. Id. at 1407; see also id. at 1406

(similar account for Appellant and Edna Moon).

2

The “RR 12” property description is recorded in Vol. 2916, Page 759 of the Official

Public Records of Hays County, Texas and the “Rest Haven” property is described

as Lot 140 and part of 139, Treasure Island Unit 1 in Guadalupe County, Texas.

Appellant’s Brief – Page 5

2. After Howard Moon died, Edna Moon revised her will leaving her

estate to her then living daughters (Appellant, Appellee, and Barbara McHale) and

to the son of her deceased daughter, Patrick Grossman, and acknowledging the debt

owed to her by Appellee. C.R. at 1444 (dated February 27, 2007). Appellant

continued to assisted her mother in the acquisition and disposition of other real

property interests and which have been described in this litigation as the “La Playa”

property and the “Park Place” property. Id. at 1460 and 1475.

3. By September 2008, the Appellee (and Barbara McHale) were making

complaints about the alleged misuse of Edna Moon’s estate to Mr. H.C. Kyle who

was the attorney for Howard and Edna Moon. Id. at 1467. A complaint was made

to Adult Protective Services in the summer of 2009. APS investigated and spoke to,

among others, Edna Moon, Mr. Kyle, and Edna Moon’s caregivers and ruled out

claims of exploitation of Edna Moon by Appellant as “invalid.” Id. at 1488 and R.R.

Vol. 15 at 128. Edna Moon then revised her will which included admonishments

against similar complaints against Appellant by Appellee and Barbara McHale. C.R.

at 1501 (will dated August 12, 2009). Appellee was notified of the change in the

will and the reasons for it by Mr. Kyle. Id. at 1514. Appellee responded to Mr. Kyle

in August 2009 again complaining of Appellant. Id. at 1516.

4. Upon Edna Moon’s return from an extended stay out of state, in

October of 2011 Appellee and Barbara McHale took Edna Moon to another attorney

Appellant’s Brief – Page 6

to “discuss taking over our mother’s financial affairs” and had Edna Moon change

her will and execute a statutory durable power of attorney naming Appellee as the

agent. RR Vol. 15 at 18 and 22. The Appellee then filed this suit in February 2012

alleging assorted causes of action based on alleged misuse of Edna Moon’s funds by

Appellant. In March of 2012, Appellee and Barbara McHale and Edna Moon opened

a multi-party account with rights of survivorship and with ownership in proportion

to net contributions similar to the accounts Edna Moon (and Howard Moon) opened

with Appellant. C.R. at 1521.

5. During the proceeding, the Appellee complained that Appellant would

not provide appropriate information and documents. C.R. at 306, 987. Ultimately,

the trial court agreed and entered the Sanctions Order striking all of Appellant’s

claims and defenses and prohibiting a jury trial. Id. at 1621 [Appendix 1]. The trial

court then held a bench trial solely on the issue of damages without allowing

Appellant to assert any defenses. The trial court then entered the Final Judgment.

Id. at 1640 [Appendix 2]. The trial court also entered its findings of fact and

conclusions of law in support of the Sanctions Order and the Final Judgment. Id. at

1678.

SUMMARY OF THE ARGUMENT

6. The Appellant appeals the Sanctions Order [C.R. at 1621 and

Appendix 1] and Final Judgment [C.R. at 1640 and Appendix 2] arising out of the

Appellant’s Brief – Page 7

Sanctions Order. The Appellant appeals the Sanctions Order as “unjust” because

the Sanctions Order imposed death penalty sanctions against Appellant when there

was no direct relationship between the alleged offensive conduct by the Appellant

and the ultimate scope of the Sanctions Order. The Appellant also appeals the

Sanctions Order because the scope of the Sanctions Order was excessive and

violated Appellant’s constitutional rights in striking all of Appellant’s claims and

defenses. Further, Rules 13 and 215 of the Texas Rules of Civil Procedure and

Chapter 10 of the Civil Practice & Remedies Code do not expand the analysis of

whether the Sanctions Order is “just.”

7_. If this Court upholds the Sanctions Order, the Appellant also appeals

the Final Judgment it is based on the overly broad Sanctions Order and because it

improperly purports to award the Appellee a double or even triple recovery in

violation of the one satisfaction rule. There was no allocation requested or made by

the trial court among multiple causes of action asserted by Appellee and the award

of Appellee’s actual/economic damages. However, with respect to some properties

at issue, the Final Judgment awarded Appellee not only the value of the property,

but also the property itself and, in one case the additional remedy of a constructive

trust against Appellant’s homestead for more than $300,000, resulting in a double or

even triple recovery by Appellee. Further, the damages calculations used for the

constructive trust in the Final Judgment also improperly fail to acknowledge the rule

Appellant’s Brief – Page 8

whereby the first funds taken from a co-mingled accounts are presumed to belong to

the person holding the trust funds.

8. There is insufficient evidence to support setting aside the “Gift Deeds”

from Howard and Edna Moon to Appellant, and by doing so, the Final Judgment

improperly clouds the title of third-parties who were not before the trial court. The

Final Judgment and damages awarded do not take into consideration the contractual

agreement and specific allocation of ownership of funds in, at least some, of the joint

accounts at issue. The punitive damages award in the Final Judgment is also

excessive in light of the facts and the impact of the Sanctions Order.

STANDARD OF REVIEW

9. A trial court’s ruling on a motion for sanctions is reviewed under an

abuse of discretion standard. See e.g., American Flood Research, Inc. v. Jones, 192

S.W.3d 581, 583 (Tex. 2006). The trial court entered findings of fact in support of

the Sanctions Order and Final Judgment. C.R. at 1678. However, in reviewing

sanctions orders, the appellate courts are not bound by a trial court's findings of fact

and conclusions of law and must independently review the entire record to determine

whether the trial court abused its discretion. Id. This Court should review the

appealed portions of the trial court’s judgment under an abuse of discretion standard.

The findings of fact by the trial court should be reviewed on a factual sufficiency

basis – is there sufficient evidence in the record to support the finding.

Appellant’s Brief – Page 9

ARGUMENT

10. Appellant, Susan England (Lee) requests that the Court reverse, reform

and/or render the trial court’s Sanction Order and Final Judgment based on the

following:

THE SANCTIONS ORDER

11. On March 10, 2015 the trial court entered the Order Granting Plaintiff’s

Motion for Sanctions (the “Sanctions Order”). C.R. at 1621 [Appendix 1]. The

Sanctions Order was entered pursuant to Rules 13 and 215 Tex. R. Civ. P., Chapter

10 of the Tex. Civ. Prac. & Rem. Code, and the Court’s inherent power to sanction.

Id. The Court made findings in connection with the Sanctions Order and entered

“death penalty” type sanctions including, striking Appellant’s pleadings, granting a

default judgment on issues of liability to Appellee and on all claims and defenses –

with all facts determined in favor of Appellee, and denying Appellant’s right to a

jury trial. Id. at 1628 [Appendix 1, page 8].

12. While the imposition of sanctions is left to the sound discretion of the

trial court, any sanctions imposed must be "just.” TransAmerican Natural Gas Corp.

v., Powell, 811 S.W.2d 913, 917 (Tex. 1991). There are two general standards for

measuring whether the sanction is “just” -- there must be a direct relationship

between the offensive conduct and the sanction imposed and the sanction must not

be excessive. Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006).

Appellant’s Brief – Page 10

The imposition of very severe sanctions, like the “death penalty” sanctions entered

in this case, is limited, not only by these two overriding standards, but by

constitutional due process. Id. In this case, the trial court erred in entering the death

penalty sanctions against Appellant because: a) there was no direct relationship

between the offensive conduct alleged and the scope of the Sanctions Order, b) the

scope of the Sanctions Order was excessive, and c) the scope of the Sanctions Order

improperly invaded Appellant’s constitutional rights.

A. The Trial Court Erred in Entering Death Penalty Sanctions Against

Appellant Because There is Not a Direct Relationship Between the

Offensive Conduct and the Sanction Imposed.

13. In order to meet her burden of proof in justifying the death penalty

sanctions in this case, the Appellee must show that the conduct of the Appellant is

directly related to the scope of the sanction imposed. In this case, the Appellee

complains primarily of the Appellant’s failure to provide financial information and

her alleged changes in testimony/position. However, the Appellee did not offer any

evidence, and there was no finding by the Court, that anything the Appellant did

effectively prevented the Appellee’s from preparing for trial. On the contrary, the

Appellant, through her expert witness, accountant Mike Turner, accounted for all

expenditures of Edna Moon’s money from 2007 forward until Appellee took over

Edna Moon’s estate. Mr. Turner testified at the sanctions hearing:

Appellant’s Brief – Page 11

Q. (BY MR. JUNKIN) Mr. Turner, were you hired as an

expert witness in this case?

A. Yes.

Q. Approximately when?

A. January or February of 2014.

Q. And did you prepare an initial report in this case on

or about September the 11th of 2014?

A. That is correct.

Q. And is your report primarily responsive to the report

prepared by expert witnesses for the Plaintiff?

A. Yes, that part was primarily responsive.

Q. And that report, as you understand it, was provided

to opposing counsel?

A. I believe so by Mr. Morris and Mr. Wise.

Q. And did you prepare a supplemental report on or about

December 26th of 2014?

A. Yes, I did.

Q. What was the purpose of that supplemental report?

A. It was to go into more depth about the actual use of

the funds. Not just the transfer of the funds but the use.

Q. Was that supplemental report a change of your

original opinion?

A. No, it was just expounding on the information that

had not been provided.

...

Q. (BY MR. JUNKIN) Did your supplemental report

basically expand on your original report?

A. To be as clear as possible, the original report was

not comprehensive from Sol Schwartz, so I took and corrected

and, in fact, added amounts to their report that had been

transferred to Mrs. Moon and then continued forward with the

use and the proceeds of those funds, which I guess could --

could technically be considered supplementing where it went to

a conclusion.

Q. Were you able, in connection with the supplemental

report, to be able to account for the estate of Edna Moon from

back as far as 2007?

A. Yes. I was able to track all of the money that had

come out of the joint account and -- or joint accounts and

Appellant’s Brief – Page 12

where they went into the four categories that I created for

the use of funds and then to ultimately where they were spent.

Q. Are you aware of the implication that that report had

been prepared and was ready as of the date the case was

mediated?

A. Yes, I was.

Q. Are you aware of and participated some in that

mediation; is that correct?

A. Yes, I was there.

Q. And is it true that the report was prepared in

advance of the mediation?

A. No, not at all. I had to work eight-and-a-half hours

Christmas Eve, which was the 24th; I worked about nine hours

on Christmas Day; and then another seven hours to finally

finish it on Friday.

Q. And subsequent to the preparation of that

supplemental report were you deposed?

A. Yes.

Q. And are you aware of any limitations on opposing

counsels' ability to ask you questions?

A. I don't think there was any limitation, no.

Q. And did you explain to them the nature and purpose of

that supplemental report during that deposition?

A. Yes, I did.

RR, Vol. 12, Page 35, line 8 trough Page 36, Line 6; Page 37, Line 11 through Page

38, Line 23. Mr. Turner further testified:

Q. And I think you may have testified to this at the

hearing last week, but have you been able to account for --

going back as far as 2007, have you been able to account for

all of Edna Moon's financial assets as a result of a careful

review of the documentation?

A. Yes. I've been able to ascertain the dollar amounts,

yes.

Appellant’s Brief – Page 13

RR Vol. 14, Page 123, lines 10 – 16.3 In other words, it was Appellant’s expert, Mr.

Turner, who accounted for all of Edna Moon’s estate from approximately 2007

forward and expanded on the scope of the estate described by Appellee’s expert

witness (Sol Schwartz). There was no evidence presented that any record or records

that might identify the scope of Mrs. Moon’s estate was/were not provided.

14. The significance of this is that Appellee never argued or suggested that

she was not able to properly prepare for trial when all of Edna Moon’s estate had

been accounted for as early as September, 2014.4 There was also no evidence of

additional information on the scope of Edna Moon’s estate that Appellee could

produce. As the Texas Supreme Court found:

We do not doubt that a failure to produce documents can prejudice a party's

efforts to assert or defend a claim. But here, there has simply been no showing

that the Garcias are unable to prepare for trial without the additional crash-

test reports they seek. Furthermore, the record fails to demonstrate Chrysler's

ability to produce the missing crash-test reports. There is no evidence in the

record that the missing tests exist or are within Chrysler's possession, custody,

3

See also, R.R. Vol. 15 at 847, 850 -- Defendant’s Exhibit 2 where Mr. Turner

outlined the corrections/changes from his September 11, 2014 report. The trial court

did not exclude this report and relied upon it in determining Appellee’s damages.

See generally, Norfolk Southern Railway Co. v. Bailey, 92 S.W.3d 577, 581 (Tex.

App.—Austin 2002, no pet.) (“In some instances, the change in an expert’s opinion

does not require supplementation. For example, an expert may refine calculations

or perfect a report up until the time of trial. An expert also may change an opinion

without supplementation if the opinion is an ‘expansion of an already disclosed

subject.’”) (citations omitted).

4

Mr. Turner’s initial report was provided to Appellee’s counsel on September 12,

2014 in a supplemental response to request for disclosure. C.R. at 576, 579.

Appellant’s Brief – Page 14

or control, either actual or constructive. A party cannot be penalized for

failure to produce documents under such circumstances.

Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 849-50 (Tex. 1992) (“there was no

direct relationship between the offensive conduct and the sanction imposed, as the

plaintiffs did not show that they were unable to prepare for trial without the test

reports, and the record did not demonstrate Chrysler's ability to produce the test

reports”). There was no showing that all of the available records showing the

expenditures from the accounts at issue were not provided and no argument that the

Appellee could not properly prepare for trial with the information that had been

presented.

15. Further, to the extent that the testimony of Appellee was inconsistent or

even evasive with respect to the use of the funds in the accounts by Appellant vis a

vis Appellee, the Sanctions Order, in striking all of Appellant’s defenses, removed

defenses/claims (limitations, contractual, parol evidence, etc.) that were not

contingent on or did not factually depend on disputes as to the use of the funds. As

discussed in more detail in, for example, paragraphs 17-21, 36 and 37 below, the

scope of the Sanction Order was so broad in striking all of Appellant’s

defenses/claims that there was not a direct relationship between the offensive

conduct alleged and the defenses/claims impacted by the Sanctions Order.

Appellant’s Brief – Page 15

B. The Trial Court Erred in Entering Death Penalty Sanctions Against

Appellant Because the Sanction Order was an Excessive Penalty.

16. “Death penalty sanctions should not be used to deny a trial on the merits

unless the court finds that the sanctioned party's conduct "justifies a presumption

that its claims or defenses lack merit" and that "it would be unjust to permit the party

to present the substance of that position [which is the subject of the withheld

discovery] before the court." Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 850

(Tex. 1992). The trial court found that Appellant was not truthful and changed her

testimony through the course of the proceeding. Rather than exclude Appellant’s

testimony or allow Appellant’s “changes” in testimony to be used for impeachment

or even strike those defenses directly correlated with the changes in testimony, the

trial court entered death penalty sanctions striking all of Appellant’s claims and

defenses.

17. For example, Appellant has a statute of limitations defense. Many of

the allegedly wrongful transactions on which Appellee’s damages were based took

place well over four (4) years before suit was filed in February 23, 2012. C.R. at 8.5

5

For example, the Hunter’s Glen property was gifted to Appellant in March of 2000,

(C.R. at 1400), the Rest Haven property was purchased in April, 2005 (C.R. at 1427),

the RR 12 property was gifted to Appellant in May 2006 (R.R. Vol. 15 at 805), the

Rest Haven Property was gifted to Appellant in May 2006 (R.R. Vol. 15 at 809), the

La Playa property was purchased in October 2007 (C.R. at 1457), and the Hilliard

Road property was purchased in November 2007 (C.R. at 1462). See also, R.R.

Vol. 15 at 862 (timeline in Mr. Turner’s report).

Appellant’s Brief – Page 16

The accrual of Appellee’s causes of action is a question of law, to be determined by

the court and Appellant’s testimony does not turn the question of the accrual of any

asserted claims for limitations purposes into a fact question. See Moreno v. Sterling

Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990) (“[T]he question when a cause of

action accrues is a judicial one . . . .”); Mid-South Telecommunications, Co. v. Best,

184 S.W.3d 386, 390 (Tex. App.—Austin 2006, no pet.) (“When a cause of action

accrues is a question of law. A cause of action generally accrues at the time when

facts come into existence that authorize a claimant to seek a judicial remedy.”)

(citations omitted). There was no evidence that any action or inaction by Appellant

justifies a presumption that her limitations defenses lack merit. There was no

evidence or insufficient evidence of a direct correlation between the conduct of

Appellant resulting in the sanction prohibiting, for example, her limitations defense.6

18. Similarly, there were original contractual agreements with respect to

the use of the “joint accounts.” See C.R. 1403 (deposition on written questions of

Rosemary Petry, Frost Bank representative).7 The Frost Bank accounts ending in

6

The parol evidence rule and statute of frauds would also tend to prohibit testimony

that contradicts evidence in the recorded gift deeds or the purpose for them. Both

the Gift Deeds to Appellant provide for the consideration for those deeds and

describe the nature of those conveyances.

7

See RR, Vol 14 at 47, Line 17 through page 50, line 8 (admitting into evidence the

documents attached to Appellant’s Summary Response to Plaintiff’s Motion for

Sanctions).

Appellant’s Brief – Page 17

8650 and 9898 were created as multi-party accounts with right of survivorship and

provided that:

The parties to the account own the account in proportion to the parties’ net

contributions to the account. The financial institution may pay any sum in the

account to a party at any time. On the death of a party, the party’s ownership

of the account passes to the surviving parties.

Id. at 1406 and 1407. This agreement was signed by Edna Moon and Appellant for

the account ending in 8650 and initialed by Edna Moon, Howard Moon, and

Appellant with respect to the account ending in 9898. Id.8 The agreement governed

the use and ownership of the account and there is insufficient evidence to change

those terms. The Appellee made no specific claim that those agreements were

fraudulently induced.

19. There also was an Adult Protective Services investigation in July-

August of 2009 that contains evidence rebutting any presumption that may have been

raised by the conduct of Appellant. See C.R. 1485 and R.R. Vol. 15 at 125 (the

“APS Report”). In the APS Report, it is alleged that Appellant was “misusing” Edna

Moon’s funds. Id. at 1489. However, the APS investigator interviewed attorney

H.C. Kyle in August 2009 and noted:

Mr. Kyle explained he has been Howard Moon (deceased) and Edna Moon’s

attorney for years. Mr. Kyle is familiar with Deed of Gift of Lake McQueeney

8

It is interesting to note that the Frost Bank accounts ending in 8381 and 4607

naming Edna Moon and/or Appellee or Barbara McHale and Kolbe were created as

the same kind of account with rights of survivorship. C.R. at 1522.

Appellant’s Brief – Page 18

property, Deed of Gift of Ranch Road 12 property, and Edna Moon’s Last

Will and Testament. Mr. Kyle reports that Barbara and Janice have

complained to him about Ms. England’s mis-management of the client’s

money. Mr. Kyle reports Ms. Moon has not complained about Susan

England’s management of her resources or reported financial abuse.

Id. at 1495. There is no evidence or insufficient evidence that Edna Moon9 was not

aware of what she was doing with respect to signing deeds, prepared by her lawyer,

and in gifting the RR 12 and Rest Haven properties to Appellant. C.R. 1434-42.

20. Further, the investigator reported that: “Client [Edna Moon] states that

Cw should stop harassing Susan England. Client states Susan has always managed

the client’s financial affairs fairly and legally.” Id. at 1497. The allegation of

exploitation of Mrs. Moon by Appellant was found to be “invalid.” Shortly,

thereafter, Mrs. Moon amended her will, again naming Susan England as Executor,

and adding a provision:

In the event my situation is ever again investigated by Texas Adult Protective

Services or similar governmental agency, or in the event charges are ever filed

against my daughter, SUSAN K. ENGLAND, in connection with her handling

of my affairs and which charges do not result in a conviction, or in the even a

civil suit is ever brought by either BARBARA JEANNE McHALE or

JANICE LYNN KOLBE against SUSAN KAY ENGLAND for any reason,

then the disposition and administration of my estate shall be as if BARBARA

JEANNE McHALE AND JANIS LYNN KOLBE had both predeceased me

without issue.”

9

Or, for that matter, that Mr. Moon did not intend to gift the RR 12 and Rest Haven

property to Susan England.

Appellant’s Brief – Page 19

Id. at 1502-03 (Last Will and Testament of Edna Brackett Moon dated Aug. 12,

2009). At the request of Edna Moon, Mr. Kyle also notified Appellee of the change

in the will. C.R. at 1514.

21. There is additional evidence that Edna Moon was aware of what was

happening with respect to purchases of real property. For example, Mrs. Moon

signed closing documents for the purchase of the Rest Haven property. See e.g., CR

1418, 1419, and 1421. Even Tom Huth testified that:

Q. When we took your deposition, you mentioned

that you thought that Susan was a nice person but that

she had done some things wrong, that she needed to

correct that. Could you elaborate on what you think it

is that she has done wrong.

A. I -- I feel that she's just taken advantage of

her mother and all her money on there. I think that she

just needs to, you know, fess up and say, "Okay. Let's

settle this all out. Let's give all this money back.

It's all supposed to be split up four ways." And that

was Morn's -- and her dad's plan. And that's the way --

that's the way it should be.

And I think that she's used up a -- these

assets of her morn and her dad, and she used them for her

own personal use or for buying her houses and stuff, or

used them under the guise that Mom is really, you know,

the owner of these things. And without Mom's money or

-- and her dad's money, none of this would have -- could

have occurred. So -- and she needs to -- you know, I

said, "Mom intended" -- whenever Mom gave her any of

this money, she -- Mom -- in fact, Edna always had told

me this too, she said, "All this money that's going into

all this stuff that I've invested in with Susan is

basically for the" -- and it wasn't so much an

investment with -- with Susan, it was an investment for

Appellant’s Brief – Page 20

Edna, and it was supposed to be split up four ways to

all the heirs after Mom's death, if she didn't spend it

first.

CR 1542 at 1544-45.

22. There is no evidence or insufficient evidence that conduct complained

of by the Appellee justified a presumption that Appellant’s claims or defenses

relating to Mrs. Moon’s knowledge of the uses of funds in issue lack merit. At a

minimum, if such a presumption could arise, there is ample evidence outside of

Appellant’s testimony to rebut any such presumption.

23. The Appellant acknowledges that the trial court was not required to

actually impose lesser sanctions10 and that the Sanctions Order includes findings

indicating that the trial court did consider lesser sanctions and imposed a lesser

sanction in the First Sanction Order. However, there is no or insufficient evidence

that the sanction entered in the First Sanction Order was not effective. There was

sufficient information from Appellant to allow for a full accounting of all of the

10

As the Texas Supreme Court explained in GTE Communications Sys. Corp. v.

Tanner, 856 S.W.2d 725 (Tex. 1993):

We reaffirmed our TransAmerican holding in GTE, specifically noting that a

trial court was required to consider the availability of lesser sanctions before

imposing death penalty sanctions. Under this standard, the trial court need not

test the effectiveness of each available lesser sanction by actually imposing

the lesser sanction on the party before issuing the death penalty; rather, the

trial court must analyze the available sanctions and offer a reasoned

explanation as to the appropriateness of the sanction imposed.

Appellant’s Brief – Page 21

accounts in issue by Mr. Turner after the First Sanctions Order. While the Sanctions

Order does make specific findings/references to prior “admonitions” from the trial

court to Appellant and attaches some significance to them in connection with

attempts at lesser sanctions,11 admonitions are not sanctions. Williams v. Akzo

Chemicals, 999 S.W.2d 836, 843 (Tex. App.—Tyler 1999, no pet.) (“Although the

CMO [case management order] included a warning that noncompliance would result

in dismissal, neither a threat to sanction, without more, nor the intent to sanction, is

a sanction. . . . The CMO is not a sanction. It is an order and a threat.”). Any alleged

failure to comply with admonitions from the Court is no evidence or insufficient

evidence of an unwillingness to comply with a sanctions order. There is no or

insufficient evidence that Appellant failed to comply with the First Sanction Order.

C. The Trial Court Erred in Entering Death Penalty Sanctions Against

Appellant Because the Scope of the Sanction Order Violated Appellant’s

Constitutional Due Process Rights.

24. The entry of death penalty sanctions also implicates the sanctioned

party’s constitutional due process rights. As the Texas Supreme Court discussed in

TransAmerican: “When a trial court strikes a party's pleadings and dismisses its

action or renders a default judgment against it for abuse of the discovery process,

the court adjudicates the party's claims without regard to their merits but based

11

See e.g., C.R. at 1621 (paragraph 2) and 1627 (paragraph 48); see also RR Vol.

12, page 116, lines 21-23.

Appellant’s Brief – Page 22

instead upon the parties' conduct of discovery.” TransAmerican Natural Gas Corp.

v. Powell, 811 S.W.2d 913, 918 (Tex. 1991). Because of that, the Texas Supreme

Court noted:

[T]here are constitutional limitations upon the power of courts, even in aid of

their own valid processes, to dismiss an action without affording a party the

opportunity for a hearing on the merits of his cause.

Id. (citations omitted). Because of the underlying due process issues, “[d]iscovery

sanctions cannot be used to adjudicate the merits of a party's claims or defenses

unless a party's hindrance of the discovery process justifies a presumption that its

claims or defenses lack merit.” Id. However, if a party refuses to produce material

evidence, despite the imposition of lesser sanctions, the court may presume that an

asserted claim or defense lacks merit and dispose of it. Id.

25. As discussed above, Appellee did present evidence sufficient to allow

for an accounting of all the accounts in issue from 2007 until the Appellee took over

Edna Moon’s accounts. While punishment and deterrence are legitimate purposes

for sanctions, they do not justify trial by sanctions. TransAmerican, 811 S.W.2d at

918. Sanctions which are so severe as to preclude presentation of the merits of the

case should not be assessed absent a party's flagrant bad faith or counsel's callous

disregard for the responsibilities of discovery under the rules. Id. As further

discussed above, there is ample evidence supporting claims and defenses of the

Appellant and such claims are not meritless.

Appellant’s Brief – Page 23

26. The Appellee did not establish that any evidence with respect to the

accounts was withheld by Appellant sufficient to justify a presumption that all of her

claims and defenses lacked merit. The Appellee did not produce any evidence of

information about the accounts that was withheld after the trial court’s First

Sanctions Order. There is insufficient evidence that the alleged misconduct of the

Appellant justifies a presumption that all of her claims and defenses are without

merit and death penalty sanctions should not have been used to deny the Appellant

a trial on the merits.

27. There are references in the Sanctions Order to selling property and

using money to pay fees and for Appellant’s own purposes. See e.g., CR 1624 and

1626, paragraphs 20, 21, 22, 23, and 36). There are also references to Appellant

providing false deposition testimony. Id. at 1623, paragraph 12. However, there is

no legal basis – no order, statute, rule, etc. – to authorize the trial court’s imposition

of sanctions for this conduct and it should not have been taken into consideration in

connection with entering the Sanctions Order.12 It was a violation of Appellant’s

due process rights for the trial court to have relied on this conduct as a basis for the

Sanctions Order.

12

See e.g., paragraph 23 above.

Appellant’s Brief – Page 24

28. Accordingly, in striking all of the Appellant’s claims and defenses and

prohibiting a jury trial, the scope of the Sanctions Order violates the Appellant’s due

process right to presentation of the merits of her claims and defenses.

D. In Light of the Foregoing General Standards for Review of Death Penalty

Sanctions, Section 10.001 of the Texas Civil Practice and Remedies Code

Does Not Provide an Appropriate Basis for Death Penalty Sanctions

Against Appellant.

29. Section 10.001 of the Texas Civil Practice & Remedies Code provides

for imposition of sanctions in connection with the signing of pleadings and motions.

Section 10.001 provides:

The signing of a pleading or motion as required by the Texas Rules of Civil

Procedure constitutes a certificate by the signatory that to the signatory's best

knowledge, information, and belief, formed after reasonable inquiry:

(1) the pleading or motion is not being presented for any improper

purpose, including to harass or to cause unnecessary delay or needless

increase in the cost of litigation;

(2) each claim, defense, or other legal contention in the pleading or

motion is warranted by existing law or by a nonfrivolous argument for

the extension, modification, or reversal of existing law or the

establishment of new law;

(3) each allegation or other factual contention in the pleading or motion

has evidentiary support or, for a specifically identified allegation or

factual contention, is likely to have evidentiary support after a

reasonable opportunity for further investigation or discovery; and

(4) each denial in the pleading or motion of a factual contention is

warranted on the evidence or, for a specifically identified denial, is

reasonably based on a lack of information or belief.

TEX. CIV. PRAC. & REM. CODE §10.001.

Appellant’s Brief – Page 25

30. In connection with the imposition of sanctions under Chapter 10, the

party moving for sanctions must prove the pleading party's subjective state of mind.

Brozynski v. Kerney, (Tex. App.--Waco Aug. 2, 2006, pet. denied), citing, Mattly v.

Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.--Houston [14th Dist.] 2002, no pet.).

The movant must show, and the court must describe and explain, that the pleading

was filed for the improper purpose of harassment. See TEX. CIV. PRAC. & REM.

CODE ANN. § 10.001(1); § 10.005 ("A court shall describe in an order imposing a

sanction under this chapter the conduct the court has determined violated Section

10.001 and explain the basis for the sanction imposed."). The Appellee, as the

movant for sanctions, had the burden of proving violations of sections 10.001(1) and

10.001(3). R.M. Dudley Constr. Co., Inc. v. Dawson, 258 S.W.3d 694, 709 (Tex.

App.—Waco 2008, pet. denied).

31. Under § 10.001(3), the applicable standard is whether, to the signatory's

best knowledge, information, and belief, formed after reasonable inquiry, each

allegation or other factual contention in a pleading has evidentiary support or, for a

specifically identified allegation or factual contention, is likely to have evidentiary

support after a reasonable opportunity for further investigation or discovery. TEX.

CIV. PRAC. & REM.CODE ANN. § 10.001(3).

32. The Sanctions Order in this case does not identify with particularity the

specific motion or pleading the trial court found violated §10.001 or the Appellant’s

Appellant’s Brief – Page 26

role in the filing of such pleading or motion. There is insufficient evidence that

Appellant caused any pleading or motion to be filed for the purpose of harassment.13

As discussed in detail infra, there is evidence of factual support for Appellant’s

claims and defenses.

E. In Light of the Foregoing General Standards for Review of Death Penalty

Sanctions, Rule 13 TRCP Does Not Provide an Appropriate Basis for

Death Penalty Sanctions Against Appellant.

33. Rule 13 directs a trial court to presume that a pleading was filed in good

faith. TEX. R. CIV. P. 13; GTE Communications Systems Corp. v. Tanner, 856

S.W.2d 725, 731 (Tex. 1993). “Thus, the burden is on the party moving for sanctions

to overcome this presumption." Id. Rule 13 provides:

The signatures of attorneys or parties constitute a certificate by them that they

have read the pleading, motion, or other paper; that to the best of their

knowledge, information, and belief formed after reasonable inquiry the

instrument is not groundless and brought in bad faith or groundless and

brought for the purpose of harassment. Attorneys or parties who shall bring a

fictitious suit as an experiment to get an opinion of the court, or who shall file

any fictitious pleading in a cause for such a purpose, or shall make statements

in pleading which they know to be groundless and false, for the purpose of

securing a delay of the trial of the cause, shall be held guilty of a contempt. If

a pleading, motion or other paper is signed in violation of this rule, the court,

upon motion or upon its own initiative, after notice and hearing, shall impose

13

A trial court must hold an evidentiary hearing to make the necessary factual

determinations about the party's or attorney's motives and credibility. Alejandro v.

Robstown ISD, 131 S.W.3d 663, 670 (Tex. App.--Corpus Christi 2004, no pet.). The

pleading alone cannot establish that the represented party or its attorney brought their

case in bad faith or to harass.

Appellant’s Brief – Page 27

an appropriate sanction available under Rule 215-2b, upon the person who

signed it, a represented party, or both.

Courts shall presume that pleadings, motions, and other papers are filed in

good faith. No sanctions under this rule may be imposed except for good

cause, the particulars of which must be stated in the sanction order.

"Groundless" for purposes of this rule means no basis in law or fact and not

warranted by good faith argument for the extension, modification, or reversal

of existing law. A general denial does not constitute a violation of this rule.

The amount requested for damages does not constitute a violation of this rule.

TEX. R. CIV. P. 13.

34. In determining whether a party conducted a reasonable inquiry, the

facts and evidence available to the party and the circumstances existing when the

party filed the pleading must be examined. See Karagounis v. Property Co. of Am.,

970 S.W.2d 761, 764 (Tex. App.--Amarillo 1998, pet. denied) ("the circumstances

pivotal to the determination of whether sanctions should issue are those in existence

at the time the pleading in question was signed and filed. Sanctions for frivolous or

groundless pleadings do not apply to the pursuit of an action later determined to be

groundless after pleadings were filed. Overman v. Baker, 26 S.W.3d 506, 509 (Tex.

App.--Tyler 2000, no pet.); Karagounis, 970 S.W.2d at 764 (Rule 13 "says nothing

about levying sanctions if one pursues an action or pleading thought legitimate when

filed but subsequently found baseless.").

35. The Sanctions Order in this case does not specifically identify the

motion or pleading the trial court found violated Rule 13 or the Appellant’s role in

Appellant’s Brief – Page 28

the filing of such an improper motion or pleading. As discussed herein, there are

sufficient facts to support Appellant’s claims/defenses. However, the Sanctions

Order refers to discovery responses and an affidavit filed in support of removing a

lis pendens claim as documents signed by Appellant and forming part of the basis of

the Sanctions Order.

36. As to the discovery responses, the trial court found the responses were

unreasonably frivolous, made for the purpose of delay, groundless, brought in bad

faith, and evasive. However, those findings alone are not necessarily sufficient to

support a finding that Appellant’s claims and defenses lacked merit or to justify entry

of death penalty sanctions. See Lanfear v. Blackmon, 827 S.W.2d 87, 90-91 (Tex.

Civ. App.--Corpus Christi 1992, orig. proceeding) (“That the answers were

incomplete or intentionally evasive is not such an obstruction of discovery to justify

the conclusion that the claim or defense lacked merit without more. The ‘crime’ did

not justify the punishment. The trial court abused its discretion by striking Lanfear's

pleadings in its first sanction order.”); see also Williams v. Akzo Chemicals, 999

S.W.2d 836, 843 (Tex. App.—Tyler 1999, no pet.) (“That their original answers

were incomplete or even intentionally evasive is not such an obstruction of discovery

to justify the conclusion that their claims lacked merit without more.”). No specific

discovery responses were identified in the Sanctions Order as lacking merit.

Appellant’s Brief – Page 29

37. As to the affidavit made in connection with lifting the Lis Pendens,

Appellant testified that Edna Moon “has never had any ownership interest” in the La

Playa property or the Hilliard Road property. CR at 58. The Sanctions Order makes

a finding that Appellant lied in making that statement. CR at 1623 (paragraph 11).

Both of these properties were, at one time, held in the name of Appellant. See CR

1457 and 1462. There is no evidence that either of these properties was ever deeded

to, or otherwise titled in the name of, Edna Moon. Additionally, part of Appellee’s

argument for sanctions was that Appellant “changed” her story to allege a “silent

partnership.” While Appellant denies there was a partnership relating to these two

(2) properties, if there was, Appellant would be correct that Appellee (and Appellant)

had no ownership interest in these properties. See TEX. BUS. ORG. CODE §152.101

(“Partnership property is not the property of the partners.”). While Appellant’s

intent behind the statement may differ from its technical legal veracity, it is clear

that the trial court did not rely on that statement in expunging the Lis Pendens. See

CR at 67 (the court struck out two findings relating to Appellee’s claim to the real

property but went ahead and expunged the lis pendens because Appellee did not

provide proper service of the required notice). The intent behind Rule 13 does not

justify the imposition of death penalty sanctions for the statement in the affidavit,

particularly when it was disregarded by the trial court in expunging the lis pendens.

Appellant’s Brief – Page 30

F. In Light of the Foregoing General Standards for Review of Death Penalty

Sanctions, Rule 215.5 Does Not Provide an Appropriate Basis for Death

Penalty Sanctions Against Appellant.

38. Before a court may deprive a party of its right to present the merits of

its case because of discovery abuse, it must determine that a party's hindrance of the

discovery process justifies a presumption that the party’s claims lack merit.

TransAmerican, 811 S.W.2d at 918. As discussed above, there was no direct

correlation made between any conduct by Appellant in connection with responding

to discovery that would lead to a presumption that all of Appellant’s claims and

defenses lacked merit.

39. For all the reasons set out hereinabove, the trial court erred in striking

all of Appellant’s claims and defenses because: a) there was no direct relationship

between the allegedly offensive conduct by Appellant and the scope of the Sanctions

Order, b) the scope of the Sanctions Order was excessive, and c) the scope of the

Sanctions Order improperly invaded Appellant’s constitutional rights. See State v.

Target Corp., 194 S.W.3d 46, 52 n.6 (Tex. App.—Waco 2006, no pet.) (“We do

note, however, that authority supports the State's position that a due process analysis

under TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913 (Tex. 1991), is

appropriate when application of the discovery rules results in merits-preclusive or

death-penalty sanctions”).

Appellant’s Brief – Page 31

THE FINAL JUDGMENT14

G. The Final Judgment Violated the “One-Satisfaction” Rule by Granting

Appellee a “Double Recovery” for Actual Damages and the Property

Itself.

40. It is well-established law that a plaintiff may not recover the same

actual damages twice under alternative causes of action or remedies. See e.g.,

Southern County Mut. Ins. Co. v. First Bank & Trust of Groves, 750 S.W.2d 170,

173-74 (Tex. 1988); Birchfield v. Texarkana Memorial Hosp., 747 S.W.2d 361, 367

(Tex. 1987); Stevenson v. Koutzarov, 795 S.W.2d 313, 322 (Tex. App.--Houston [1st

Dist.] 1990, writ denied). The plaintiff is required to segregate or allocate economic

damages among any of the different causes of action asserted to avoid violation of

the one satisfaction rule. See e.g., Saden v. Smith, 415 S.W.3d 450, 469 (Tex. App.-

-Houston [1st Dist.] 2013, pet. denied) (“In sum, Smith demonstrated his entitlement

to a unified recovery for one broadly described injury with one damages model

sponsored by accountant Shields. Accordingly, Smith failed to justify separate

awards for alternate theories of liability, as the theories as presented at trial did not

depend on separate and distinct injuries resulting in separate and distinct damages.

14

For the reasons set out above, the Appellant also appeals the entry of the Final

Judgment based on the striking of Appellant’s pleadings, claims, and defenses in

the Sanctions Order. However, if this Court finds the Sanctions Order is proper,

the Appellant appeals the Final Judgment for the reasons set out below.

Appellant’s Brief – Page 32

Under such circumstances, allowing the recovery of actual damages for both breach

of contract and breach of fiduciary duty violates the one-satisfaction rule, and is

therefore error.”) (citations omitted).

41. The trial court entered judgment based on calculations and accounting

information primarily presented by Appellant’s expert witness, Michael Turner,

CPA. See C.R. 1699 (the trial court’s actual damages calculations) and R.R., Vol.

15 at 312-17 (portions of Mr. Turner’s revised supplemental report [2/5/15]). Those

actual economic damage calculations do not segregate or allocate economic damages

among any of the different causes of action asserted by Appellee and preclude

Appellee from now allocating damages among her causes of action. Because of that,

those damages calculations also reflect violations of the one satisfaction rule and an

improper double/triple recovery for Appellee.

La Playa and Park Place Properties

42. The first entry on the trial court’s damages calculations (C.R. at 1699)

reflects an amount of $683,394 (less $5,410) as “Funds from Edna spent by

England.” C.R. at 1699. That amount includes the funds for the purchase of the “La

Playa” (“LP”) and “Park Place” (“PP”) properties. See R.R., Vol. 15 at 313 and 315.

However, the next entry on the judgment calculation sheet includes additional actual

damages of sale proceeds from the sale of those two properties – described as the

“Cash Out at Sale” on Mr. Tuner’s report. Id. at 315. Both of these properties sold

Appellant’s Brief – Page 33

at a net loss. So, the Final Judgment awarded the Appellee not only the money used

to purchase the properties, but also the proceeds from the sale of the properties which

necessarily would have included the funds to purchase the properties – especially

when the properties sold at a loss. There was no evidence or insufficient evidence

of the market value of the properties at the time they were sold and no evidence that

more than market value was paid at the time of the purchase of those properties.

Awarding the Appellee all of the fund used to purchase the property and the sale

proceeds, when the properties sold at a loss, is not a proper measure of damages and

amounts to an improper double recovery.

RR 12 and Rest Haven (Lake McQueeney) Properties

43. The Final Judgment also includes an award of actual damages of

$338,631 for the sale proceeds from the RR 12 property and $96,524 for the sale

proceed from the Rest Haven property. C.R. 1699. However, the Final Judgement

went on to award Appellee the properties themselves by declaring the Gift Deeds

“set aside . . . void and without effect.” C.R. 1641. There was no showing by the

Appellee that the sales price for the properties was under or less than market value.

The Final Judgment awards the Appellee not only the market value of the properties,

but also the properties themselves. Accordingly, in awarding both the sales price

and voiding the Gift Deeds, the Final Judgment improperly grants the Plaintiff a

double recovery and violates the one satisfaction rule.

Appellant’s Brief – Page 34

44. Despite the plain language of the Gift Deeds and the statute of frauds

and parol evidence rule that would tend to prohibit testimony that the deeds of these

properties were not “gifts” to Appellant, the Appellee pled that Appellant

represented that she would “hold title in a nominee/agency capacity for the benefit

of . . . [Edna Moon’s] other daughters and grandson Patrick.” C.R. 1588 (page 8 of

Plaintiff’s Fifth Amended Original Petition). However, to the extent that the

Appellant was holding these assets in trust for beneficiaries (including herself) there

was no evidence of any limits placed on Appellant’s management of such trust assets

or that she not would have all rights and powers granted to a trustee under the Texas

Property Code (Texas Trust Code).15 If there was no trust relationship created, but

the transfer was not intended as a gift, the Appellee, in her representative capacity,

lacks standing to bring an action for recovery of property held for the purported

benefit of other persons.

H. The Trial Court Erred in Imposing a “Constructive Trust Lien” Against

Appellant’s Homestead and Vehicle Because it is Not the Proper Remedy

and There is No Evidence or Insufficient Evidence to Support the

Amount of the Constructive Trusts Set Out in the Final Judgment.

45. “Imposition of a constructive trust is not a cause of action, but rather an

equitable remedy.” LTTS Charter School, Inc. v. Palasota, 362 S.W.3d 202, 209

(Tex. App.—Dallas 2012, no pet.). Effectively, the Final Judgment awards the

15

See Chapters 112, 113, 114, and 115 of the Texas Property Code.

Appellant’s Brief – Page 35

Appellee a double recovery for the La Playa property and triple recovery for the RR

12 property – the sales proceeds from the sale of the RR 12 and La Playa properties,

the RR 12 property itself, and a constructive trust for the RR 12 sale proceeds. The

Final Judgment does not allocate actual damages for any particular cause of action

and there was no election of remedies. Appellee is not entitled to a combined

recovery of actual economic damages under each of her alleged claims

46. For example, in Willis v. Donnelly, the 14th Court of Appeals was faced

with the impact of a constructive trust remedy when actual damages were awarded.

The Willis court found:

Lastly, appellants argue that the constructive trust triples Donnelly's

recovery. Donnelly concedes that the constructive trust duplicates the money

judgment and seeks remand for an election of remedies. "A party who seeks

redress under two or more theories of recovery for a single wrong must elect,

before the judgment is rendered, under which remedy he wishes the court to

enter judgment." If the prevailing party fails to elect a remedy, the trial court

should render a judgment affording the greater recovery. If the trial court fails

to do so, generally, we will reform the judgment to effect such an election.

See id.

However, appellate courts sometimes remand a case for an election of

remedies. We remand the constructive trust in this case for two reasons. First,

the portion of the constructive trust imposed upon 50% of URB stock and 10%

of WHE stock duplicates recovery for breach of contract, which we have

reversed and remanded. Thus, the constructive trust on the URB and WHE

stock is also reversed and remanded. Second, we are unable to determine

which remedy for breach of fiduciary duty (the money damages or the

constructive trust on the realty) provides a greater recovery. Accordingly, we

remand for an election of remedies for breach of fiduciary duty.

Appellant’s Brief – Page 36

Willis v. Donnelly, 118 S.W.3d 10, 43-44 (Tex. App.—Houston [14th Dist.] 2003),

aff’d in part and rev’d in part on other grounds, 199 S.W.3d 262 (Tex. 2006)

(citations omitted). In this case the Final Judgment does not reflect an election of

remedies by the Appellee and improperly purports to allow for the recovery of actual

damages in addition to a constructive trust.16

The Constructive Trust on Appellant’s Homestead for $306,000 is Improper

47. If this Court finds a constructive trust is the proper remedy, the Final

Judgement purports to impose a constructive trust in the specific amount of $306,000

on Appellant’s homestead at 4919 West Frances Place in Austin. C.R. 1641 (page

2 of Final Judgment) and C.R. 1685 (findings of fact, paragraph 53). Based on the

evidence before the court, the amount of the constructive trust is incorrect and

therefore there is insufficient evidence to support it.

48. When “trust” funds are commingled with personal funds and funds are

drawn out, it is presumed that the first funds drawn out were personal funds. See

e.g., Moody v. Pitts, 708 S.W.2d 930, 937 (Tex. Civ. App.—Corpus Christi 1986,

16

See generally W. Miller, NON-MONETARY RELIEF, EQUITABLE RELIEF, Article for

State Bar of Texas 7th Annual Damages in Civil Litigation, page 2 (February 26-27,

2015) (“Where multiple causes of action are asserted at trial, if the verdict is returned

favorably to the plaintiff, they must elect their remedy. Often the imposition of the

constructive trust can be a viable option, but the plaintiff will usually have to forgo

any damages that may be awarded. Counsel will have to evaluate both the benefits

and consequences of electing the most favorable remedy.”).

Appellant’s Brief – Page 37

no writ) (“When a trustee has commingled funds and has expended funds, the money

expended is presumed to be the trustee's own.”); Batmanis v. Batmanis, 600 S.W.2d

887, 890 (Tex. Civ. App.—Houston [14th Dist.] 1980, writ ref’d n.r.e.) (“And where,

as here, the trustee comingles trust money with his own and money is expended, it

will be presumed that his own money is expended first”); General Ass'n of Davidian

S.D.A. v. General Ass'n, Etc., 410 S.W.2d 256, 259 (Tex. Civ. App.—Waco 1966,

writ ref’d n.r.e.). The Final Judgment does not take into account this rule of law and

the presumption was not rebutted by Appellee.

49. The evidence from Appellee suggests that $100,452.53 was deposited

into account 8533 from the sale of the La Playa property and then, the next day,

$100,000 was transferred into the 8739 account. R.R. 15 at 748-49. The balance of

the 8533 account just before the transfer was $103,994.76 of which $100,452.53 was

from the sale of the La Playa property and the balance, $3,542.23, were Appellant’s

funds. Because of the foregoing rule, the first $3,542.23 transferred to the 8739

account was Appellant’s and only the balance of $96,457.77 in the $100,000 transfer

could be attributable to the La Playa sale. As to the 8739 account, there is

insufficient evidence to support the trial court’s finding that a “[c]onstructive trust

of $100,000 results [sic] at this time. July 2013.” C.R. at 1685.

50. Several months later, $188,244.59 was transferred into the 8533

account from the sale of Appellant’s former homestead at 331 Hunter’s Glen in San

Appellant’s Brief – Page 38

Marcos, Texas – the Hunter’s Glen property – and the next day, $188,000 was

transferred to the 8739 account. Id. at 752-53. The trial court’s findings

acknowledge that the $188,000 was proceeds from the sale of Appellant’s property.

When the $201,000 was transferred out of the 8739 account for the purchase of

Appellant’s home at 4919 West Frances Place in Austin, the balance in the 8739

account was $278,008.89. Id. at 760 (balance on July 2 was $77,008.89 after the

$201,000 withdrawal). Using the rule referred to above, of the $201,000 paid for

the West Frances Place home, $188,000 was Appellant’s and only $13,000 could be

attributable to the sale of the La Playa property.

51. Even if the court were to find that the RR 12 property was not a gift and

that a constructive trust should be applied to the proceeds from the sale of that

property, the $206,007.09 that could be attributable to the sale of the RR 12 property

taken together with the $13,000 traceable as proceeds from the sale of the La Playa

property – a total of $219,007.09 – does not support a constructive trust in the

amount of $306,007.09.

The Constructive Trust on the Mercedes Benz for $12,182.36 is Improper

52. As discussed in paragraph 48 above, with respect to “commingled”

accounts, it is presumed that the first funds drawn out were personal funds. The trial

court found that in September 2012, a deposit of $55,752.81 was made into account

8533. C.R. at 1685. From the evidence this appears to be a typographical error

Appellant’s Brief – Page 39

because on August 31, 2012 $50,752.81 was deposited into account 8533. RR Vol.

15 at 739. The trial court found this deposit was attributable to the sale of the Park

Place property. Id. The records do reflect a transfer of $55,000 to account 8739 on

September 4, 2012. Id. at 740-41. However, after the transfer of the $55,000 on

September 4, the balance of the 8533 account was $7,567.94, meaning that under

the first out rule, the most of the $50,752.81 proceeds from the sale of the Park Place

property that could have been transferred to the 8739 account was $43,184.8717 and

therefore remaining $11,815.13 out of the $55,000 was attributable to Appellant’s

funds. Id. at 739.

53. The balance in the 8739 account just before the time of the $55,000

deposit was $10,421.53 [Id. at 741 (September 4, 2012 daily balance of $65,421.53

less $55,000 transferred)] and after the deposit the amount in that account

attributable to Appellant was $22,236.66.18 The evidence shows that between the

deposit on September 4, 2012 and the payment made to Mercedes Benz Financial

on September 9, 2012 in the amount of $12,182.36, the balance in the 8739 account

exceeded the amount attributable to the proceeds from the sale of the Park Place

property by more than the payment to Mercedes Benz Financial and, under the first

17

$50,752.81 - $7,567.94.

18

The sum of $11,815.13 and $10,421.53.

Appellant’s Brief – Page 40

out presumption, establishes that funds separately attributable to Appellant were

used to make the payment to Mercedes Benz.

54. There is insufficient evidence to support the trial court’s finding that a

“[c]onstructive trust of $12,182.36 [was] created” or that there was “no evidence by

[Appellant] that funds other than Edna Moon’s funds were used for this payoff.”

C.R. at 1685-86. The record itself establishes that the imposition of such

constructive trust in the Final Judgment is improper under the first out rule.

I. The Final Judgment Improperly Places a Claim on Appellant’s

Homestead.

55. “Constitutional homestead rights protect citizens from losing their

homes, and statutes relating to homestead rights are liberally construed to protect the

homestead.” Fairfield Financial Group, Inc. v. Synott, 300 S.W.3d 316, 320 (Tex.

App.—Austin 2009, no pet). A homestead is exempt from seizure for the claims of

creditors except for encumbrances properly fixed on homestead property. TEX. PROP.

CODE § 41.001(a). As this Court has further noted in Fairfield, the Property Code

lists the types of encumbrances that may be properly fixed upon homestead property,

which includes purchase money liens. Id. § 41.001(b)(1). Based on the foregoing,

even if there is evidence in this case warranting imposition of a constructive trust

based on a purchase money type lien, the scope of the purchase money used for the

Appellant’s homestead has not been properly established and therefore the

Appellant’s Brief – Page 41

“constructive trust lien” imposed on Appellant’s homestead in the Final Judgment is

improper.

56. In addition, the RR 12 property was a gift to Appellant and there is

insufficient proper evidence to set that conveyance aside and to impose a

constructive trust on the proceeds from the sale of that property. Accordingly, for

this additional reason the constructive trust of $206,007.09 against Appellant’s

homestead is improper.

J. The Trial Court Erred in Using the Improper Measure of Damages When

the Joint Account Agreements Specifically Identified the Allocation of

Ownership of Such Joint Accounts and the Court Did Not Take Into

Consideration the Appellant’s Contractual Ownership Interest in Those

Joint Accounts.

57. The Appellee had the burden to establish the proper measure of

damages. See generally, W.O. Bankston Nissan v. Walters, 754 S.W.2d 127, 128

(Tex. 1988) (“Walters' burden of proof in this case was to show either the difference

between the fair market value of the pickup as delivered and the value of the truck

as it was represented; or the difference in value between that with which he parted

and that which he received. He did neither. Walters had the burden of requesting

jury issues on the proper measure of damages. Having failed to do so, his cause of

action must fail.”). Further, “[w]hen the injury is only the economic loss to the

subject of a contract itself, the action sounds in contract alone." Jim Walter Homes,

Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986); see also Sw. Bell Tel. Co. v.

Appellant’s Brief – Page 42

DeLanney, 809 S.W.2d 493, 494 (Tex. 1991) ("When the only loss or damage is to

the subject matter of the contract, the plaintiff's action is ordinarily on the contract.").

The Texas Supreme Court has “repeatedly reaffirmed this rule.” LAN/STV v. Martin

K. Eby Constr. Co., 435 S.W.3d 234, 242 n.35 (Tex. 2014).

58. As discussed above,19 Howard Moon, Edna Moon, and Appellant

entered into contractual joint account agreements governing the use and ownership

of the Frost Bank joint accounts ending in 8650 and 9898. See C.R. 1406 and 1407.

These accounts were created as multi-party accounts with right of survivorship

whereby the parties agreed they owned the accounts in proportion to their

contributions to the account, that Frost Bank could pay any sum in the account to a

party at any time, and on the death of a party, the deceased party’s ownership of the

account passes to the surviving parties. Id. The subject matter of the Appellee’s

claims was, in large part, for economic losses arising out of alleged misuse of funds

in these accounts (in particular the account ending in 9898). Appellee and the Final

Judgment made no attempt to allocate damages based on the parties’ contractual

agreements20 and violated the economic loss rule by attempting to convert such

actual damages arising out of contract into tort damages/claims.

19

See paragraph 18.

20

For example, the Appellee has taken the position that none of the funds in the joint

accounts was Appellant’s. However, even if Appellant made no contributions to the

Appellant’s Brief – Page 43

K. The Trial Court Erred in “Setting Aside” and Declaring “Void and

Without Effect” the Gift Deeds Because There is No or Insufficient

Evidence of Fraudulent Inducement of Those Deeds by Appellant and the

Final Judgment Improperly Clouds Title of Non-Parties.

Insufficient Evidence of Fraudulent Inducement of a Contract

59. The Appellee asserted an untimely claim for fraudulent inducement.

The trial court overruled Appellant’s special exception to the claim seeking to

require Appellee to identify the contractual agreement. See C.R. 1609 (special

exception) and 1638 (order). However, in order to make a claim for fraudulent

inducement, Appellee needed to prove the existence of a contractual agreement. It

has been held that:

In order to bring a claim for fraud in the inducement, a plaintiff must show

the elements of fraud and must show that she has been fraudulently induced

to enter into a binding agreement.

In re Guardianship of Patlan, 350 S.W.2d 189, 198 (Tex. App.—San Antonio 2011,

no pet.), citing, Haase v. Glazner, 62 S.W.3d 795, 798 (Tex. 2001) (“Without a

binding agreement, there is no detrimental reliance, and thus no fraudulent

inducement claim. That is, when a party has not incurred a contractual obligation,

it has not been induced to do anything.”). In this case the trial court should not have

allowed the untimely filing and should not have overruled the Appellant’s special

9898 account, on Howard Moon’s death, his interest in the account would have

passed 50% to Edna Moon and 50% to Appellant.

Appellant’s Brief – Page 44

exception. The only “contracts” referred to by the Appellant as the Gift Deeds.

There was no pleading identifying the joint account agreements as being

fraudulently induced. There was no specific “contract” identified and there is no

evidence or insufficient evidence of any contract that Edna Moon was induced to

sign by Appellant.

60. There also is insufficient evidence of a fiduciary relationship to support

any presumption of fraudulent intent. Further, as noted above, the parol evidence

rule and statute of frauds would also tend to prohibit testimony that contradicts

evidence in the recorded gift deeds or the purpose for them. In this case, both the

Gift Deeds to Appellant provide for the consideration as love and affection for

Appellant and there was no evidence or insufficient evidence to set aside the stated

consideration.

The Final Judgment Improperly Clouded Title of Non-Parties

61. A party should not be granted relief in the absence of pleadings that

support that relief. See Cunningham v. Parkdale Bank, 660 S.W.2d 810, 813 (Tex.

1983). Hence, a judgment after a trial on the merits that is not supported by the

pleadings is improper. See Wielgosz v. Millard, 679 S.W.2d 163, 166 (Tex. App.—

Houston [14th Dist.] 1984, no writ).

Appellant’s Brief – Page 45

62. Despite there being no specific request for such relief,21 the Final

Judgment orders that the Gift Deeds of the RR 12 property and the Rest Haven

property are set aside, void, and without effect. C.R. 1640, 1641. However, the

Plaintiff did not join the current owners of these properties whose rights were are

issue and whose title is now clouded. Rule 39, like the Declaratory Judgment Act,

mandates joinder of persons whose interests would be affected by the judgment. See

Brooks v. Northglen Ass’n, 141 S.W.3d 158, 162 (Tex. 2004), citing, Tex. Civ. Prac.

& Rem. Code § 37.006 ("When declaratory relief is sought, all persons who have or

claim any interest that would be affected by the declaration must be made parties.")

(emphasis added); TEX. R. CIV. P. 39(a) ("A person who is subject to service of

process shall be joined as a party in the action if ... he claims an interest relating to

the subject of the action ....") (emphasis added). Because Plaintiff had not pled for

this specific relief, the trial court should not have rendered the Gift Deeds void. See

Tex. R. Civ. P. 56 (“When items of special damages are claimed, they shall be

specifically stated”); see also, Lone Star Gas Co. v. Childress, 187 S.W.2d 936, 939

(Tex. Civ. App.—Waco 1945, no writ) (“We think the rule in Texas is 'that in order

to warrant a court of equity to grant injunctive relief, the petitioner must specify the

precise relief sought and a court is without jurisdiction to grant relief beyond and in

21

See Plaintiff’s Fifth Amended Petition, at 9 (“Damages and Relief Requested”).

Appellant’s Brief – Page 46

addition to that particularly specified.”) (citations omitted). The Appellee’s prayer

controlled the nature of the relief the trial court could grant and the Final Judgment

cannot properly grant relief not prayed for by Appellee.

63. The Trial Court erred in entering a Final Judgment that exceeded the

scope of relief prayed for by Plaintiff. Based on the relief entered by the trial court,

the current owners of the RR 12 and Rest Haven properties (the Gift Deed properties)

were necessary parties needed for a just adjudication. See generally Bennett v.

Grant, 460 S.W.3d 220, 239 (Tex. App.—Austin 2015, pet. filed) (“Thus, non-

parties must be joined as additional defendants to a counterclaim if in their absence

complete relief cannot be afforded among the parties.”); see also, TEX. R. CIV. P. 39

and 97.

L. The $1,000,000 Punitive Damages Award is Excessive in Light of the

Facts and Sanctions Order.

64. Given the contractual nature of the underlying issues in this case

discussed in paragraphs 18 and 58 above, and the double recovery issues addressed

in paragraphs 40-46 above, there is insufficient evidence to support the imposition

of punitive damages. Because of that, the award of punitive damages is excessive

and an unconstitutional and unreasonable penalty and punishment in light of the facts

of this case, particularly when taken in consideration of the extreme scope of the

sanctions imposed against Appellant by way of the Sanctions Order.

Appellant’s Brief – Page 47

M. The Final Judgment Refers to an Improper Authority for Assessment of

Pre- and Post-Judgement Interest.

65. The Final Judgment incorrectly bases its award of $229.856.82 in pre-

judgment interest based on §304.003 of the Texas Finance Code because which is a

post-judgement interest rate provision and incorrectly bases its award of post-

judgment interest based on §304.103 of the Texas Finance Code which is a pre-

judgement interest provision. C.R. at 1643. However, the similarities in the actual

pre- and post- judgment rates, makes complaint more technical than substantive.

CONCLUSION AND PRAYER

The trial court erred in awarding Appellee the full scope of the death penalty

sanctions and the damages set out in the Final Judgment. Accordingly, this Court

should reverse the Sanctions Order and Final Judgment for the reasons set out above.

Appellant requests all such other and further relief to which she might be entitled.

Respectfully submitted,

_______________________

David Junkin

State Bar No. 11058020

P.O. Box 2910

Wimberley, Texas 78676

512/847-8600

512/847-8604 (fax)

david@junkinlawoffice.com

Attorney for Appellant,

Susan England (Lee)

Appellant’s Brief – Page 48

CERTIFICATION REGARDING LENGTH OF BRIEF

Counsel for Appellant, Susan England (Lee), hereby certifies that the length

of this Brief as indicated by the word processing system used to generate it,

excluding appendices, is 7,439 words. While not required, this word count includes

the caption, table of contents, index of authorities, statement of the case and issues

presented, signature block, this certificate, and the certificate of service.

_______________________

David Junkin

CERTIFICATE OF SERVICE

I hereby certify that a copy of this brief was served on the following counsel

of record and in the manner indicated on November 30, 2015.

ESERVE AND/OR CERTIFIED MAIL, RETURN RECEIPT

REQUESTED #7013 3020 0001 5964 7437

Jonathan Hull

c/o Reagan Burris PLLC

401 Main Plaza, Suite 200

New Braunfels, TX 78130

______________________________

David Junkin

Appellant’s Brief – Page 49

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BUSINESS ORGANIZATIONS CODE

TITLE 4. PARTNERSHIPS

CHAPTER 152. GENERAL PARTNERSHIPS

SUBCHAPTER C. PARTNERSHIP PROPERTY

Sec. 152.101. NATURE OF PARTNERSHIP PROPERTY. Partnership

property is not property of the partners. A partner or a partner's spouse does not

have an interest in partnership property.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

CIVIL PRACTICE AND REMEDIES CODE

TITLE 2. TRIAL, JUDGMENT, AND APPEAL

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 10. SANCTIONS FOR FRIVOLOUS PLEADINGS AND

MOTIONS

Sec. 10.001. SIGNING OF PLEADINGS AND MOTIONS. The signing of

a pleading or motion as required by the Texas Rules of Civil Procedure constitutes

a certificate by the signatory that to the signatory's best knowledge, information, and

belief, formed after reasonable inquiry:

(1) the pleading or motion is not being presented for any improper purpose,

including to harass or to cause unnecessary delay or needless increase in the

cost of litigation;

(2) each claim, defense, or other legal contention in the pleading or motion

is warranted by existing law or by a nonfrivolous argument for the

extension, modification, or reversal of existing law or the establishment of

new law;

(3) each allegation or other factual contention in the pleading or motion has

evidentiary support or, for a specifically identified allegation or factual

contention, is likely to have evidentiary support after a reasonable

opportunity for further investigation or discovery; and

(4) each denial in the pleading or motion of a factual contention is warranted

on the evidence or, for a specifically identified denial, is reasonably based

on a lack of information or belief.

Added by Acts 1995, 74th Leg., ch. 137, Sec. 1, eff. Sept. 1, 1995.

Sec. 10.002. MOTION FOR SANCTIONS. (a) A party may make a motion

for sanctions, describing the specific conduct violating Section 10.001.

(b) The court on its own initiative may enter an order describing the specific

conduct that appears to violate Section 10.001 and direct the alleged violator

to show cause why the conduct has not violated that section.

(c) The court may award to a party prevailing on a motion under this section

the reasonable expenses and attorney's fees incurred in presenting or

opposing the motion, and if no due diligence is shown the court may award

to the prevailing party all costs for inconvenience, harassment, and out-of-

pocket expenses incurred or caused by the subject litigation.

Added by Acts 1995, 74th Leg., ch. 137, Sec. 1, eff. Sept. 1, 1995.

Sec. 10.003. NOTICE AND OPPORTUNITY TO RESPOND. The court

shall provide a party who is the subject of a motion for sanctions under Section

10.002 notice of the allegations and a reasonable opportunity to respond to the

allegations.

Added by Acts 1995, 74th Leg., ch. 137, Sec. 1, eff. Sept. 1, 1995.

Sec. 10.004. VIOLATION; SANCTION. (a) A court that determines that

a person has signed a pleading or motion in violation of Section 10.001 may impose

a sanction on the person, a party represented by the person, or both.

(b) The sanction must be limited to what is sufficient to deter repetition of

the conduct or comparable conduct by others similarly situated.

(c) A sanction may include any of the following:

(1) a directive to the violator to perform, or refrain from performing,

an act;

(2) an order to pay a penalty into court; and

(3) an order to pay to the other party the amount of the reasonable

expenses incurred by the other party because of the filing of the

pleading or motion, including reasonable attorney's fees.

(d) The court may not award monetary sanctions against a represented party

for a violation of Section 10.001(2).

(e) The court may not award monetary sanctions on its own initiative unless

the court issues its order to show cause before a voluntary dismissal or

settlement of the claims made by or against the party or the party's attorney

who is to be sanctioned.

(f) The filing of a general denial under Rule 92, Texas Rules of Civil

Procedure, shall not be deemed a violation of this chapter.

Added by Acts 1995, 74th Leg., ch. 137, Sec. 1, eff. Sept. 1, 1995.

Sec. 10.005. ORDER. A court shall describe in an order imposing a sanction

under this chapter the conduct the court has determined violated Section 10.001 and

explain the basis for the sanction imposed.

Added by Acts 1995, 74th Leg., ch. 137, Sec. 1, eff. Sept. 1, 1995.

Sec. 10.006. CONFLICT. Notwithstanding Section 22.004, Government

Code, the supreme court may not amend or adopt rules in conflict with this chapter.

Added by Acts 1995, 74th Leg., ch. 137, Sec. 1, eff. Sept. 1, 1995.

CIVIL PRACTICE AND REMEDIES CODE

TITLE 2. TRIAL, JUDGMENT, AND APPEAL

SUBTITLE C. JUDGMENTS

CHAPTER 37. DECLARATORY JUDGMENTS

Sec. 37.006. PARTIES. (a) When declaratory relief is sought, all persons

who have or claim any interest that would be affected by the declaration must be

made parties. A declaration does not prejudice the rights of a person not a party to

the proceeding.

(b) In any proceeding that involves the validity of a municipal ordinance or

franchise, the municipality must be made a party and is entitled to be heard, and if

the statute, ordinance, or franchise is alleged to be unconstitutional, the attorney

general of the state must also be served with a copy of the proceeding and is

entitled to be heard.

Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.

FINANCE CODE

TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED

TRANSACTIONS

SUBTITLE A. INTEREST

CHAPTER 304. JUDGMENT INTEREST

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 304.003. JUDGMENT INTEREST RATE: INTEREST RATE OR

TIME PRICE DIFFERENTIAL NOT IN CONTRACT. (a) A money judgment of

a court of this state to which Section 304.002 does not apply, including court costs

awarded in the judgment and prejudgment interest, if any, earns postjudgment

interest at the rate determined under this section.

(b) On the 15th day of each month, the consumer credit commissioner

shall determine the postjudgment interest rate to be applied to a money judgment

rendered during the succeeding calendar month.

(c) The postjudgment interest rate is:

(1) the prime rate as published by the Board of Governors of the

Federal Reserve System on the date of computation;

(2) five percent a year if the prime rate as published by the Board of

Governors of the Federal Reserve System described by

Subdivision (1) is less than five percent; or

(3) 15 percent a year if the prime rate as published by the Board of

Governors of the Federal Reserve System described by

Subdivision (1) is more than 15 percent.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.18(a), eff. Sept. 1, 1999; Acts 2003, 78th Leg.,

ch. 204, Sec. 6.01, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 676, Sec. 1, eff. June 20, 2003.

Amended by:

Acts 2005, 79th Leg., Ch. 387 (S.B. 1450), Sec. 1, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch. 1018 (H.B. 955), Sec. 7.01, eff. September 1, 2005.

Sec. 304.103. PREJUDGMENT INTEREST RATE FOR WRONGFUL

DEATH, PERSONAL INJURY, OR PROPERTY DAMAGE CASE. The

prejudgment interest rate is equal to the postjudgment interest rate applicable at the

time of judgment.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.18(a), eff. Sept. 1, 1999.

PROPERTY CODE

TITLE 5. EXEMPT PROPERTY AND LIENS

SUBTITLE A. PROPERTY EXEMPT FROM CREDITORS' CLAIMS

CHAPTER 41. INTERESTS IN LAND

SUBCHAPTER A. EXEMPTIONS IN LAND DEFINED

Sec. 41.001. INTERESTS IN LAND EXEMPT FROM SEIZURE. (a) A

homestead and one or more lots used for a place of burial of the dead are exempt

from seizure for the claims of creditors except for encumbrances properly fixed on

homestead property.

(b) Encumbrances may be properly fixed on homestead property for:

(1) purchase money;

(2) taxes on the property;

(3) work and material used in constructing improvements on the

property if contracted for in writing as provided by Sections

53.254(a), (b), and (c);

(4) an owelty of partition imposed against the entirety of the property

by a court order or by a written agreement of the parties to the

partition, including a debt of one spouse in favor of the other spouse

resulting from a division or an award of a family homestead in a

divorce proceeding;

(5) the refinance of a lien against a homestead, including a federal tax

lien resulting from the tax debt of both spouses, if the homestead is

a family homestead, or from the tax debt of the owner;

(6) an extension of credit that meets the requirements of Section

50(a)(6), Article XVI, Texas Constitution; or

(7) a reverse mortgage that meets the requirements of Sections 50(k)-

(p), Article XVI, Texas Constitution.

(c) The homestead claimant's proceeds of a sale of a homestead are not

subject to seizure for a creditor's claim for six months after the date of sale.

Amended by Acts 1985, 69th Leg., ch. 840, Sec. 1, eff. June 15, 1985; Acts 1993, 73rd Leg., ch.

48, Sec. 2, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 121, Sec. 1.01, eff. May 17, 1995; Acts

1995, 74th Leg., ch. 121, Sec. 2.01; Acts 1997, 75th Leg., ch. 526, Sec. 1, eff. Sept. 1, 1997; Acts

2001, 77th Leg., ch. 516, Sec. 1, eff. Sept. 1, 2001.

RULE 13. EFFECT OF SIGNING PLEADINGS, MOTIONS AND OTHER

PAPERS; SANCTIONS

The signatures of attorneys or parties constitute a certificate by them that they have

read the pleading, motion, or other paper; that to the best of their knowledge,

information, and belief formed after reasonable inquiry the instrument is not

groundless and brought in bad faith or groundless and brought for the purpose of

harassment. Attorneys or parties who shall bring a fictitious suit as an experiment to

get an opinion of the court, or who shall file any fictitious pleading in a cause for

such a purpose, or shall make statements in pleading which they know to be

groundless and false, for the purpose of securing a delay of the trial of the cause,

shall be held guilty of a contempt. If a pleading, motion or other paper is signed in

violation of this rule, the court, upon motion or upon its own initiative, after notice

and hearing, shall impose an appropriate sanction available under Rule 215-2b, upon

the person who signed it, a represented party, or both.

Courts shall presume that pleadings, motions, and other papers are filed in good

faith. No sanctions under this rule may be imposed except for good cause, the

particulars of which must be stated in the sanction order. "Groundless" for purposes

of this rule means no basis in law or fact and not warranted by good faith argument

for the extension, modification, or reversal of existing law. A general denial does

not constitute a violation of this rule. The amount requested for damages does not

constitute a violation of this rule.

Notes and Comments

Comment to 1990 change: To require notice and hearing before a court determines to impose

sanctions, to specify that any sanction imposed be appropriate, and to eliminate the 90-day “grace"

period provided in the former version of the rule.

RULE 39. JOINDER OF PERSONS NEEDED FOR JUST ADJUDICATION

(a) Persons to Be Joined If Feasible. A person who is subject to service of process

shall be joined as a party in the action if

(1) in his absence complete relief cannot be accorded among those already

parties, or

(2) he claims an interest relating to the subject of the action and is so situated

that the disposition of the action in his absence may

(i) as a practical matter impair or impede his ability to protect that

interest or

(ii) leave any of the persons already parties subject to a substantial risk

of incurring double, multiple, or otherwise inconsistent obligations by

reason of his claimed interest. If he has not been so joined, the court

shall order that he be made a party. If he should join as a plaintiff but

refuses to do so, he may be made a defendant, or, in a proper case, an

involuntary plaintiff.

(b) Determination by Court Whenever Joinder Not Feasible. If a person as

described in subdivision (a)(1)-(2) hereof cannot be made a party, the court shall

determine whether in equity and good conscience the action should proceed among

the parties before it, or should be dismissed, the absent person being thus regarded

as indispensable. The factors to be considered by the court include: first, to what

extent a judgment rendered in the person's absence might be prejudicial to him or

those already parties; second, the extent to which, by protective provisions in the

judgment, by the shaping of relief, or other measures, the prejudice can be lessened

or avoided; third, whether a judgment rendered in the person's absence will be

adequate; fourth, whether the plaintiff will have an adequate remedy if the action is

dismissed for non-joinder.

(c) Pleading Reasons for Nonjoinder. A pleading asserting a claim for relief shall

state the names, if known to the pleader, of any persons as described in subdivision

(a)(1)-(2) hereof who are not joined, and the reasons why they are not joined.

(d) Exception of Class Actions. This rule is subject to the provisions of Rule 42.

RULE 56. SPECIAL DAMAGE

When items of special damage are claimed, they shall be specifically stated.

RULE 97. COUNTERCLAIM AND CROSS-CLAIM

(a) Compulsory Counterclaims. A pleading shall state as a counterclaim any claim

within the jurisdiction of the court, not the subject of a pending action, which at the

time of filing the pleading the pleader has against any opposing party, if it arises out

of the transaction or occurrence that is the subject matter of the opposing party's

claim and does not require for its adjudication the presence of third parties of whom

the court cannot acquire jurisdiction; provided, however, that a judgment based upon

a settlement or compromise of a claim of one party to the transaction or occurrence

prior to a disposition on the merits shall not operate as a bar to the continuation or

assertion of the claims of any other party to the transaction or occurrence unless the

latter has consented in writing that said judgment shall operate as a bar.

(b) Permissive Counterclaims. A pleading may state as a counterclaim any claim

against an opposing party whether or not arising out of the transaction or occurrence

that is the subject matter of the opposing party's claim.

(c) Counterclaim Exceeding Opposing Claim. A counterclaim may or may not

diminish or defeat the recovery sought by the opposing party. It may claim relief

exceeding in amount or different in kind from that sought in the pleading of the

opposing party, so long as the subject matter is within the jurisdiction of the court.

(d) Counterclaim Maturing or Acquired After Pleading. A claim which either

matured or was acquired by the pleader after filing his pleading may be presented as

a counterclaim by amended pleading.

(e) Cross-Claim Against Co-Party. A pleading may state as a cross-claim any

claim by one party against a co-party arising out of the transaction or occurrence that

is the subject matter either of the original action or of a counterclaim therein. Such

cross-claim may include a claim that the party against whom it is asserted is or may

be liable to the cross-claimant for all or part of a claim asserted in the action against

the cross-claimant.

(f) Additional Parties. Persons other than those made parties to the original action

may be made parties to a third party action, counterclaim or cross-claim in

accordance with the provisions of Rules 38, 39 and 40.

(g) Tort shall not be the subject of set-off or counterclaim against a contractual

demand nor a contractual demand against tort unless it arises out of or is incident to

or is connected with same.

(h) Separate Trials; Separate Judgments. If the court orders separate trials as

provided in Rule 174, judgment on a counterclaim or cross-claim may be rendered

when the court has jurisdiction so to do, even if the claims of the opposing party

have been dismissed or otherwise disposed of.

215.1 Motion for Sanctions or Order Compelling Discovery.

A party, upon reasonable notice to other parties and all other persons affected

thereby, may apply for sanctions or an order compelling discovery as follows:

(a) Appropriate court. On matters relating to a deposition, an application for an

order to a party may be made to the court in which the action is pending, or to any

district court in the district where the deposition is being taken. An application for

an order to a deponent who is not a party shall be made to the court in the district

where the deposition is being taken. As to all other discovery matters, an application

for an order will be made to the court in which the action is pending.

(b) Motion.

(1) If a party or other deponent which is a corporation or other entity fails to

make a designation under Rules 199.2(b)(1) or 200.1(b); or

(2) if a party, or other deponent, or a person designated to testify on behalf of

a party or other deponent fails:

(A) to appear before the officer who is to take his deposition, after being

served with a proper notice; or

(B) to answer a question propounded or submitted upon oral

examination or upon written questions; or

(3) if a party fails:

(A) to serve answers or objections to interrogatories submitted under

Rule 197, after proper service of the interrogatories; or

(B) to answer an interrogatory submitted under Rule 197; or

(C) to serve a written response to a request for inspection submitted

under Rule 196, after proper service of the request; or

(D) to respond that discovery will be permitted as requested or fails to

permit discovery as requested in response to a request for inspection

submitted under Rule 196; the discovering party may move for an order

compelling a designation, an appearance, an answer or answers, or

inspection or production in accordance with the request, or apply to the

court in which the action is pending for the imposition of any sanction

authorized by Rule 215.2(b) without the necessity of first having

obtained a court order compelling such discovery.

When taking a deposition on oral examination, the proponent of the

question may complete or adjourn the examination before he applies

for an order. If the court denies the motion in whole or in part, it may

make such protective order as it would have been empowered to make

on a motion pursuant to Rule 192.6.

(c) Evasive or incomplete answer. For purposes of this subdivision an evasive or

incomplete answer is to be treated as a failure to answer.

(d) Disposition of motion to compel: award of expenses. If the motion is granted,

the court shall, after opportunity for hearing, require a party or deponent whose

conduct necessitated the motion or the party or attorney advising such conduct or

both of them to pay, at such time as ordered by the court, the moving party the

reasonable expenses incurred in obtaining the order, including attorney fees, unless

the court finds that the opposition to the motion was substantially justified or that

other circumstances make an award of expenses unjust. Such an order shall be

subject to review on appeal from the final judgment.

If the motion is denied, the court may, after opportunity for hearing, require the

moving party or attorney advising such motion to pay to the party or deponent who

opposed the motion the reasonable expenses incurred in opposing the motion,

including attorney fees, unless the court finds that the making of the motion was

substantially justified or that other circumstances make an award of expenses unjust.

If the motion is granted in part and denied in part, the court may apportion the

reasonable expenses incurred in relation to the motion among the parties and persons

in a just manner.

In determining the amount of reasonable expenses, including attorney fees, to be

awarded in connection with a motion, the trial court shall award expenses which are

reasonable in relation to the amount of work reasonably expended in obtaining an

order compelling compliance or in opposing a motion which is denied.

(e) Providing person's own statement. If a party fails to comply with any person's

written request for the person's own statement as provided in Rule 192.3(h), the

person who made the request may move for an order compelling compliance. If the

motion is granted, the movant may recover the expenses incurred in obtaining the

order, including attorney fees, which are reasonable in relation to the amount of work

reasonably expended in obtaining the order.

215.2 Failure to Comply with Order or with Discovery Request.

(a) Sanctions by court in district where deposition is taken. If a deponent fails to

appear or to be sworn or to answer a question after being directed to do so by a

district court in the district in which the deposition is being taken, the failure may be

considered a contempt of that court.

(b) Sanctions by court in which action is pending. If a party or an officer, director,

or managing agent of a party or a person designated under Rules 199.2(b)(1) or

200.1(b) to testify on behalf of a party fails to comply with proper discovery requests

or to obey an order to provide or permit discovery, including an order made under

Rules 204 or 215.1, the court in which the action is pending may, after notice and

hearing, make such orders in regard to the failure as are just, and among others the

following:

(1) an order disallowing any further discovery of any kind or of a particular

kind by the disobedient party;

(2) an order charging all or any portion of the expenses of discovery or taxable

court costs or both against the disobedient party or the attorney advising him;

(3) an order that the matters regarding which the order was made or any other

designated facts shall be taken to be established for the purposes of the action

in accordance with the claim of the party obtaining the order;

(4) an order refusing to allow the disobedient party to support or oppose

designated claims or defenses, or prohibiting him from introducing designated

matters in evidence;

(5) an order striking out pleadings or parts thereof, or staying further

proceedings until the order is obeyed, or dismissing with or without prejudice

the action or proceedings or any part thereof, or rendering a judgment by

default against the disobedient party;

(6) in lieu of any of the foregoing orders or in addition thereto, an order

treating as a contempt of court the failure to obey any orders except an order

to submit to a physical or mental examination;

(7) when a party has failed to comply with an order under Rule 204 requiring

him to appear or produce another for examination, such orders as are listed in

paragraphs (1), (2), (3), (4) or (5) of this subdivision, unless the person failing

to comply shows that he is unable to appear or to produce such person for

examination.

(8) In lieu of any of the foregoing orders or in addition thereto, the court shall

require the party failing to obey the order or the attorney advising him, or

both, to pay, at such time as ordered by the court, the reasonable expenses,

including attorney fees, caused by the failure, unless the court finds that the

failure was substantially justified or that other circumstances make an award

of expenses unjust. Such an order shall be subject to review on appeal from

the final judgment.

(c) Sanction against nonparty for violation of Rules 196.7 or 205.3. If a nonparty

fails to comply with an order under Rules 196.7 or 205.3, the court which made the

order may treat the failure to obey as contempt of court.

215.3 Abuse of Discovery Process in Seeking, Making, or Resisting Discovery.

If the court finds a party is abusing the discovery process in seeking, making or

resisting discovery or if the court finds that any interrogatory or request for

inspection or production is unreasonably frivolous, oppressive, or harassing, or that

a response or answer is unreasonably frivolous or made for purposes of delay, then

the court in which the action is pending may, after notice and hearing, impose any

appropriate sanction authorized by paragraphs (1), (2), (3), (4), (5), and (8) of Rule

215.2(b). Such order of sanction shall be subject to review on appeal from the final

judgment.

215.4 Failure to Comply with Rule 198

(a) Motion. A party who has requested an admission under Rule 198 may move to

determine the sufficiency of the answer or objection. For purposes of this

subdivision an evasive or incomplete answer may be treated as a failure to answer.

Unless the court determines that an objection is justified, it shall order that an answer

be served. If the court determines that an answer does not comply with the

requirements of Rule 198, it may order either that the matter is admitted or that an

amended answer be served. The provisions of Rule 215.1(d) apply to the award of

expenses incurred in relation to the motion.

(b) Expenses on failure to admit. If a party fails to admit the genuineness of any

document or the truth of any matter as requested under Rule 198 and if the party

requesting the admissions thereafter proves the genuineness of the document or the

truth of the matter, he may apply to the court for an order requiring the other party

to pay him the reasonable expenses incurred in making that proof, including

reasonable attorney fees. The court shall make the order unless it finds that (1) the

request was held objectionable pursuant to Rule 193, or (2) the admission sought

was of no substantial importance, or (3) the party failing to admit had a reasonable

ground to believe that he might prevail on the matter, or (4) there was other good

reason for the failure to admit.

215.5 Failure of Party or Witness to Attend to or Serve Subpoena; Expenses.

(a) Failure of party giving notice to attend. If the party giving the notice of the

taking of an oral deposition fails to attend and proceed therewith and another party

attends in person or by attorney pursuant to the notice, the court may order the party

giving the notice to pay such other party the reasonable expenses incurred by him

and his attorney in attending, including reasonable attorney fees.

(b) Failure of witness to attend. If a party gives notice of the taking of an oral

deposition of a witness and the witness does not attend because of the fault of the

party giving the notice, if another party attends in person or by attorney because he

expects the deposition of that witness to be taken, the court may order the party

giving the notice to pay such other party the reasonable expenses incurred by him

and his attorney in attending, including reasonable attorney fees.

215.6 Exhibits to Motions and Responses.

Motions or responses made under this rule may have exhibits attached including

affidavits, discovery pleadings, or any other documents.

NON-MONETARY RELIEF, EQUITABLE RELIEF

WILLIAM W. MILLER, JR., Texarkana

Greer & Miller

State Bar of Texas

7th ANNUAL

DAMAGES IN CIVIL LITIGATION

February 26-27, 2015

Houston

CHAPTER 10

WILLIAM W. MILLER , JR.

WILLIAM W. MILLER, JR.

Born Dallas, Texas, March 28, 1971

Admitted to Texas Bar in 1996 and the Arkansas Bar in 1997

A 2006, 2007, 2008, 2009 & 2011 Super Lawyer: Rising Star

Practice Areas:

• Business & Commercial Litigation

• Personal Injury Litigation

• Construction Litigation

• Products Litigation

Licensed by:

• Supreme Court of Texas

• Supreme Court of Arkansas

• Admitted to Practice in the United States District Courts for:

– The Eastern District of Texas

– The Northern District of Texas

– The Eastern and Western Districts of Arkansas

Admitted to practice in the Fifth & Eighth Circuit Courts of Appeals

Education:

• Vanderbilt University (B.A. 1993)

• Texas Tech School of Law (J.D.,1996),

Board of Barristers, 1995-96

Super Lawyer: Rising Star

2006, 2007, 2008, 2009 & 2011

Member:

• State Bar of Texas

- Board of Directors (2006-2009)

- SBOT EC (2006-2008)

• Arkansas Bar Association

• Texas Young Lawyers Association

- President (2007-2008)

- President-elect (2006-2007)

- Chair-Elect of the Board of Directors (2004-2005)

- Chair of the Board of Directors (2005-2006)

- District 1 Director (2001-2003, 2003-2005)

• Texarkana Young Lawyers Association

- President 1999-2000

- Vice President, 1998-1999

• Northeast Texas Bar Association

• Texarkana Bar Association

• American Bar Association

• Defense Research Institute

Civic/Other:

• Member, St. James Episcopal Church;

• Texarkana Soccer Association Referee/Coach

• University Interscholastic League (UIL) Soccer Referee

• Arkansas Association of Officials Soccer Referee

• United States Soccer Federation Referee

"Outstanding Director of the Year" 2002-2003 bar year, Texas Young Lawyers Association

"President's Award of Merit" 2001-2002 bar year, Texas Young Lawyers Association.

Non-Monetary Relief, Equitable Relief Chapter 10

TABLE OF CONTENTS

A. CONSTRUCTIVE TRUSTS................................................................................................................................... 1

B. QUANTUM MERUIT/RESTITUTION AND UNJUST ENRICHMENT............................................................. 2

C. RESCISSION AND REFORMATION................................................................................................................... 3

i

Non-Monetary Relief, Equitable Relief Chapter 10

NON-MONETARY RELIEF, 344 (Tex. 19944); Tuck v. Miller, 483 S.W.2d 898, 905

(Tex. 1972).

EQUITABLE RELIEF Because a confidential relationship can arise from

a number of different situations (including informal

A. CONSTRUCTIVE TRUSTS moral, social, or purely personal relationships, see,

Constructive trusts are an equitable remedy that Thigpen v. Locke, supra,) a jury’s determination of

permits a party wronged or damaged by another’s whether the relationship between the parties was a

fraud, duress, mistake, breach of fiduciary duty or confidential one should be raised as a fact issue when

other unconscionable conduct an opportunity to one party seeks a constructive trust. See, also Andrews

recover as against the property acquired by the v. Andrews, 677 S.W.2d 171 (Tex.App. — Austin

wrongdoer as a result of the wrongful conduct. The 1984, no writ) (Cohabitation as confidential

underlying purpose is to “do equity” and impose a relationship); Hatton v. Turner, 622 S.W.2d 450

remedy that redresses wrongs and unjust enrichment. (Tex.App. — Tyler 1981, no writ) (Family relationship

Meadows v. Bierschwale, 515 S.W.2d 125 (Tex. 1974); may support confidential relationship); Holland v.

Bocanegra v. Aetna Life Ins. Co., 605 S.W.2d 848 Lesene, 350 S.W.2d 859 (Tex.App. — San Antonio

(Tex. 1980); Holmes v. Kent, 221 S.W.3d 622, n. 21 1961, writ ref’d n.r.e.) (close personal friendship may

(Tex. 2007); Medford v. Medford, 68 S.W.3d 242, 248 constitute fiduciary relationship). From a defense

(Tex. App. — Fort Worth 2002, no pet.); Hubbard v. perspective, the defeat of the confidential relationship

Shankle, 138 S.W.3d 474, 485 (Tex. App.—Fort Worth precludes the imposition of the trust. On the other

2004, pet. denied); Mowbray v. Avery, 76 S.W.3d 663, hand, simply proving a confidential relationship is only

681 n.27 (Tex. App. — Corpus Christi 2002, pet. the fist step in showing the violation of that

denied). relationship before seeking the imposition of the

It is important to note that a constructive trust is constructive trust.

not a cause of action in itself, but merely a remedy that Constructive trusts can also be imposed on

can be sought for wrongful conduct. Dawson v. fraudulent transfers or when there is an attempt to

Lowrey, 441 S.W. 3d 825, 837, n. 20 (Tex.App. — defraud creditors by selling property for less than

Texarkana 2014, no pet.). Often the underlying cause market value. See, e.g., Wheeler v. Blacklands

of action arises from claims of fraud or constructive Production Credit, 627 S.W.2d 846, Tex.App.—Ft.

fraud. See, e.g., Thigpen v. Locke, 363 S.W.2d 247, Worth, 1983 no writ). Constructive trusts have also

250 (Tex. 1962); Blankenship v. Citizens National been imposed as the result of mistakes, e.g., Cocke v.

Bank of Lubbock, 449 S.W. 2d 77, 79 (Tex.App.— Pacific Gulf Development Corp., 594 S.W.2d 545

Amarillo 1969, writ ref’d, n.r.e); Towne v. Towne, 707 (Tex.App. —Houston [1st Dist.] 1980, no writ);

S.W.2d 745 (Tex.App.—Ft. Worth 1986, no writ). Blankenship v. Citizens, supra., and to prevent unjust

enrichment generally, e.g., Pope v. Garrett, 211 S.W.2d

“To establish that a constructive trust exists, 559 (Tex. 1948); Meadows v. Bierschwale, supra,;

the proponent must prove (1) breach of a Omohundro v. Matthews, 341 S.W.2d 401 (Tex. 1960);

special trust, fiduciary relationship, or actual Bright v. Addison, 171 S.W.3d 588 (Tex.App.— Dallas

fraud; (2) unjust enrichment of the 2005, pet. granted); Ellisor v. Ellisor, 630 s.W.2d 746

wrongdoer; and (3) tracing to an identifiable (Tex.App.— Houston [1st. Dist.] 1982, no writ); Hatton

res.” Hahn v. Love, 321 S.W.3d 517 v. Turner, 622 S.W.2d 450 (Tex.App. — Tyler 1981,

(Tex.App. —Houston[1st Dist.] 2009, pet. no writ).

denied). In order to impose a constructive trust there must

be identifiable property to impose the trust upon and

Quite often the imposition of a constructive trust arises proven that the trust should be imposed on that

from the breach of a fiduciary duty or confidential particular property to remedy the wrong complained

relationship. See, e.g., Fitz-Gerald v. Hull, 237 S.W.2d about. See., e.g., Renfrow v. Lineberry, 271 S.W.2d

256 (1951); Thigpen v. Locke, supra,; International 440 (Tex.App.—El Paso 1954, writ ref’d n.r.e);

Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 Wheeler v. Backlands, supra,; May v. Little, 473 S.W.

(Tex. 1963); Rankin v. Naftalis, 557 S.W.2d 940 (Tex. 2d 632 (Tex.App.—El Paso, 1971, writ ref’d n.r.e.);

1977); Consolidated Bearing v. First Nat. Bank, 720 Sheldon Petroleum Co. v. Peirce, 546 S.W. 2d 954

S.W.2d 647 (Tex.App.—Amarillo 1986, no writ); (Tex.App.— Dallas 1977, no writ). The property over

Stout v. Clayton, 674 S.W.2d 821 (Tex.App.—San which the trust is to be imposed, must be clearly traced

Antonio 1984, writ ref’d n.r.e.). Whether a confidential back to the wrongdoing of the defendant. “The party

relationship exists, that may be the basis for a seeking to impose a constructive trust has the burden of

constructive trust, is often a fact question itself for the tracing funds to the specific property sought to be

jury to decide. See, Macdonald v. Follen, 180 S.W.2d recovered.” Wilz v. Flournoy, 228 S.W.3d 674, 676

1

Non-Monetary Relief, Equitable Relief Chapter 10

(Tex. 2007). Once the fund have been traced to the contractual agreement exists. Generally, “quantum

property, however, the burden shifts to the defendants meruit is an equitable theory of recovery founded in

to show that property was acquired or purchased the principle of unjust enrichment based on an implied

without wrongdoing (typically through separate funds). agreement to pay for benefits received.” Vortt

Id.; Eaton v. Husted 172 S.W.2d 493, 498 (Tex. 1943). Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d

However, even if comingled, a constructive trust 942, 944 (Tex. 1990); Bashara v. Baptist Mem'l Hosp.

can still be imposed on the comingled funds or the Sys., 685 S.W.2d 307, 310 (Tex. 1985). To meet the

proceeds of such. See, Logan v. Logan, 156 S.W.2d requirements for recovery, the pleading party must

507 (Tex. 1941); Peirce v. Sheldon Petroleum Co., 589 generally prove that “(i) valuable services and/or

S.W.2d 849 (Tex.App. — Amarillo 1979, no writ); materials were furnished, (ii) to the party sought to be

General Ass’n of Davidian Seventh Day Adventists v. charged, (iii) which were accepted by the party sought

General Ass’n of Davidian Seventh Day Adventists, to be charged, and (iv) under such circumstances as

410 S.W. 2d 256 (Tex.App.—Waco 1966, writ ref’d reasonably notified the recipient that the plaintiff, in

n.r.e.) and Wilz v. Flournoy, supra. However, if the performing, expected to be paid by the recipient.”

property that would have been subject to the trust is Heldenfels Bros., Inc. v. City of Corpus Christi, 832

sold to a bona fide purchaser by the Defendant, but the S.W.2d 39, 41 (Tex. 1992).

funds can be traced, the property itself may no longer Likewise, unjust enrichment is a theory applicable

be the subject of the trust, but the proceeds of the sale, where a party has obtained some advantage or benefit,

including any profits, can be. See, Meadows v. often by fraud, duress, or some other unfair advantage,

Bierschwale, 516 S.W.2d 125 (Tex. 1974). See, also, but in circumstances that give rise to an implied or

Marineau v. General American Life Insurance Co., quasi-contractual obligation to reimburse the proposing

898 S.W.2d 397 (Tex.App. — Ft. Worth, writ denied) party for the benefit incurred by the defendant. See,

where the constructive trust was impose on not only e.g., Sherer v. Sherer, 393 S.W.3d 480, n. 22

the amount of the traced funds, but the also the (Tex.App. — Texarkana 2013, pet. denied); Christus

increase in value. There, the premiums of a policy had Health v. Quality Infusion Care, 359 S.W.3d 719

been paid with funds wrongfully obtained, but the (Tex.App. — Houston [1st Dist.] 2011, no pet.);

court imposed the trust on the proceeds of the policy Walker v. Cotter Props, Inc. 181 S.W.3d 895

itself, which were greater than the original wrongfully (Tex.App. — Dallas 2006, no pet.).

obtained funds. Normally, where a contract has been executed

Where a third party is has knowledge of the between the parties that covers the subject matter of the

plaintiff’s wrongful conduct or is on notice of the dispute, claims for unjust enrichment are defeated.

plaintiff’s claimed right, the purchaser of the property See, e.g., Fortune Production, Co. v. Conoco, Inc., 52

can also be declared a constructive trustee for the S.W.3d 671 (Tex. 2000); Raven Res. V. Legacy

benefit of the plaintiff. See, Ginther v. Taub, 675 Reserves Operating, 363 S.W.3d 865 (Tex.App. —

S.W.2d 724 (Tex. 1984); Duncan v. Woolf, 380 S.W.2d Eastland 2012, pet. denied); Transamerican Natural

862 (Tex.App.—Ft. Worth, writ ref’d n.r.e.). Gas v. Finkelstein, 933 S.W. 2d 591 (Tex.App. — San

However, the question will usually turn on whether the Antonio 1996, writ denied). However, if the contract

new owner of the property is unjustly enriched either is void, not fully performed or otherwise

because of the reduced value in acquiring the property unenforceable, the theory may still be applicable. See,

or because of the use of the knowledge of the City of Harker Heights v. Sun Meadows Land, Ltd.,

wrongdoing. See, Ginther, supra.; Hahn v. Love, 830 S.W.2d 313 (Tex.App. — Austin 1992, no writ);

supra. McCullough v. Scarbrough, Medlin & Assocs., 435

Where multiple causes of action are asserted at S.W.3d 871 (Tex.App. — Dallas 2014, pet. denied);

trial, if the verdict is returned favorably to the plaintiff, Sherer v. Sherer, supra.

they must elect their remedy. Often the imposition of Likewise, under quantum meruit, where an

the constructive trust can be a viable option, but the express agreement has been executed between the

plaintiff will usually have to forgo any damages that parties on the subject matter, recovery under the theory

may be awarded. Counsel will have to evaluate both is denied. See, Truly v. Austin, 744 S.W.2d 934 (Tex.

the benefits and consequences of electing the most 1988); Woodard v. Southwest States, Inc., 384 S.W.2d

favorable remedy. 674 (Tex. 1964); concept Gen. Contr. V. Asbestos

Maintenance, 346 S.W.3d 172 (Tex.App. — Amarillo

B. QUANTUM MERUIT/RESTITUTION AND 2011, pet. denied). However, exceptions to this rule

UNJUST ENRICHMENT exist as well. For example, a contractor may recover

Often combined in a plaintiff’s pleadings, under quantum meruit despite breach or failure to fully

quantum meruit, restitution and unjust enrichment perform under an express contract, for the reasonable

claims seek enforcement of equity when no written value of services or materials. See, e.g., Murray v.

2

Non-Monetary Relief, Equitable Relief Chapter 10

Crest Const., Inc., 900 S.W.2d 342 (Tex. 1995); wrongful retention of the property. See, MGA Ins. Co.

Chilton Ins. v. Pate & Pate Enterprises, 930 S.W.2d v. Chesnutt, supra; Doss v. Homecomings Fin.

877 (Tex.App. — San Antonio 1996, writ denied). Network, Inc. 201 S.W.3d 706 (Tex.App. — Corpus

Also, when the contract is a unilateral contract, the Christi, 2006 pet. denied); Everett v. TK-Taito, L.L.C.,

plaintiff who has partially performed may still recover 178 S.W.3d 844 (Tex.App. — Fort Worth 2005, no

under quantum meruit as no duty is imposed on the pet.). In other words, contrary to a conversion claim,

other party to the agreement. See., e.g., Colbert v. all the plaintiff must show is that the defendant ended

Dallas Joint Stock Land Bank of Dallas, 102 S.W.2d up with the money that belonged to the plaintiff,

1031 (Tex. 1937); Truly v. Austin, supra; Benson v. regardless of whether the defendant’s acquisition of the

Harrell, 324 S.W.2d 620 (Tex.App. — Fort Worth money was fraudulent, by mistake or otherwise

1959, writ ref’d n.r.e.) wrongfully procured. See, e.g., H.E.B., LLC v.

Under both quantum meruit and unjust Ardinger, 369 S.W.3d 496 (Tex.App — Fort Worth

enrichment, the party can plead alternative claims 2012, no pet.); Edwards v. Mid-Continent Office, 252

compared to the contract and seek recovery under both S.W.3d 833 (Tex.App. — Dallas, pet. denied).

contractual and equitable theories. See, Fortune Of course, where the plaintiff can show the

Production Co. v. Conoco, Inc., supra; Fraud-Tech, wrongful acquisition of the funds, the law should find

Inc. v. Choicepoint, Inc., 102 S.W.3d 366 (Tex.App. — for the plaintiff. See, e.g., Briggs v. Rodriguez, 236

Ft. Worth 2003, pet denied). S.W.2d 510 (Tex.App — Dallas 1951, writ dism’d);

Quantum meruit is governed by the four year Wichita County v. Title, 27 S.W.2d 649 (Tex.App. —

statute of limitations, Pepsi Corp. v. Galliford, 254 Amarillo 1930), aff’d, 41 S.W.2d 11 (Tex.Comm.App

S.W.3d 457 (Tex.App. — Houston [1st. Dist.] 2007, no 1931, jdgmt adopted); Orgain v. Butler, 478 S.W.2d

pet); Quigley v. Bennett, 256 S.W.3d 356 (Tex.App. — 610 (Tex.App. — 1972, no writ); Barrett v. Ferrell,

San Antonio 2008, no pet.); while claims for unjust 550 S.W.2d 138 (Tex.App. — Tyler 1977, writ ref’d

enrichment appear to be governed by a two-year statute n.r.e.). Nonetheless, wrongdoing is not an element of

of limitations, Elledge v. Friberg-Cooper Water Supply the equitable claim and, if wrongdoing is asserted,

Corp., 240 S.W.3d 869 (Tex. 2007); Wagner & Brown, alternative claims based on the wrongdoing (such as

Ltd. v. Horwood, 58 S.W.3d 732, 737 (Tex. 2001); conversion or fraud) should also be alleged.

HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex.

1988); Sherer v. Sherer, supra.; Mobil Producing

Texas & N.M. v. Cantor, 93 S.W.3d 916 (Tex.App. — C. RESCISSION AND REFORMATION

Corpus Christi 2002, no pet.). Rescission and reformation are equitable remedies

available when the party has a contract action, but seek

“Money had and received” is quite often to either avoid the contractual remedies or modify the

claimed under the theory of unjust agreement to conform to the actual agreement of the

enrichment. To assert such a claim, the parties. Both remedies are most often applicable when

plaintiff need only show that the defendant there has been either a provable mutual or unilateral

holds money or the equivalent of money that mistake in the making of the agreement.

“in equity and good conscious” belongs to When a party seeks rescission of the contract, the

the plaintiff. Best Buy v. Berrera, 248 proponent of the remedy must generally show that “ (1)

S.W.3d 160 (Tex. 2007); Stonebridge Life the mistake is of so great a consequence that to enforce

Ins. Co. v. Pitts, 236 S.W.3d 201 (Tex. the contract as made would be unconscionable; (2) the

2007); Staats v. Miller, 243 S.W.2d 686 mistake relates to a material feature of the contract; (3)

(Tex. 1951); See, also, Stewart Title Guar. the mistake must have been made regardless of the

Co. v. Mims, 405 S.W.3d 319 (Tex.App. — exercise of ordinary care; and (4) the parties can be

Dallas, 2013, no pet.); MGA Ins. Co. v. placed in status quo in the equity sense, i.e., rescission

Charles R. Chesnutt, P.C., 358 S.W.3d 808 must not result in prejudice to the other party except

(Tex.App — Dallas 2012, no pet.); Tri-State for the loss of his bargain.” James T. Taylor & son,

Chemicals v. Western Organics, 83 S.W.3d Inc. v. Arlington Independent School Dist., 335 S.W.2d

189 (Tex.App. — Amarillo 2002, pet 371, 373 (Tex. 1960); Monarch Marking System Co. v.

denied). Reed’s Photo Mart, Inc., 485 S.W.2d 905 (Tex. 1972).

Often, the contract is set aside because of fraud,

Money had and received is distinguished from a mistake or some other reason to prevent unjust

conversion claim in that the property need not still be enrichment and is often plead in response to a claim for

in the possession of the defendant. Moreover, the breach of contract. See, e.g., Koral Industries v.

plaintiff does not have to prove wrongdoing, in Security-Connecticut Life Ins. Co., 802 S.W.2d 650

particular, the wrongful taking of the property or the (Tex. 1990); Isaacs v. Bishop, 249 S.W.3d 100

3

Non-Monetary Relief, Equitable Relief Chapter 10

(Tex.App. — Texarkana 2008, pet. denied); Scott v. S.W.2d 939 (Tex. 1980). The successful application of

Commercial services of Perry, Inc., 121 S.W.3d 26 the remedy often includes claims of fraud or other

(Tex.App. — Tyler 2003, pet. denied); Nelson v. Najm, inequitable conduct. See., e.g., Cherokee Water Co.

127 S.W. 3d 170 (Tex.App. — Houston [1st Dist.] Forderhause, 741 S.W.2d 377 (Tex. 1977); Gail v.

2003, pet. denied); Barker v. Roelke, 105 S.W.3d 75 Berry, 343 S.W.3d 520 (Tex.App. — Eastland 2011,

(Tex.App. — Eastland 2003, pet. denied). no pet.); Veterans Land Bd. v. Lesley, 281 S.W.3d 602

Under the theory that one who seeks equity must (Tex.App. — Eastland 2009, pet. denied); Givens v.

do equity, in order to successfully seek the rescission Ward, 272 S.W.3d 63 (Tex.App. — Waco 2008, no

of a contract, a party seeking to rescind a contract must pet.). Likewise, if the other party took advantage of

generally give the other party notice that the contract is the unilateral mistake, even absent fraud, reformation

being rescinded and tender, or offer to tender, any may be appropriate. See, Hill v. Spencer & Son, 973

property received under the contract or the value of any S.W.2d 772 (Tex.App. — Texarkana 1998, no pet.).

benefit it obtained by the contract back to the other However, if the reformation sought is the reformation

party. See, e.g., Carrow v. Bayliner Marine Corp., 781 of a deed, transfer of the property to a bona fide

S.W. 2d 691 (Tex.App. — Austin 1989, no writ); purchaser may defeat the proposed reformation. See.,

David McDavid Pontiac, Inc. v. Nix, 681 S.W.2d 831 e.g., Richmond v. Wells, 395 S.W.3d 262 (Tex.App. —

(Tex. App. —Dallas 1984, writ ref’d n.r.e). However, Eastland 2012, no pet.).

see, e.g., Cruz v. Andrews Restoration, Inc. 364

S.W.3d 817 (Tex. 2012) and Morton v. Hung Nguyen,

412 S.W.3d 506 (Tex. 2013) where the Supreme Court

held that under certain statutes, i.e., the DTPA and

Chapter 5, Subchapter D of the Texas Property Code,

the tender of the benefits many not be necessary “as

long as the affirmative relief to the consumer can be

reduced by (or made subject to) the consumer's

reciprocal obligation of restitution.” Cruz, at 827

Morton, at 512. Presumably, the Supreme Court would

extend this requirement to other codes that may appear

to codify the common law remedy of rescission.

Likewise, the inability to place the parties back in their

original positions could be considered as a basis for

denying rescission. See, e.g., Isaacs v. Bishop, 249

S.W.3d 100 (Tex.App. — Texarkana 2008, ).

A party may also lose the right to rescission if the

party sits on their rights or is contributorily responsible

for the fraud or mistake. See, Barker v. Roekle, supra;

Nelson v. Najm, supra, Isaacs v. Bishop, supra.

Like other equitable remedies, the plaintiff must

elect their remedy before judgment. Accordingly, if a

verdict for damages and rescission are rendered, if

rescission is selected as the remedy for judgment, a

party may not

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