in the Matter of the Estate of Mary Marshall Holley ( 2017 )

Opinion filed February 10, 2017
In The
Eleventh Court of Appeals
__________
No. 11-15-00173-CV
__________
IN THE MATTER OF THE ESTATE OF
MARY MARSHALL HOLLEY, DECEASED
On Appeal from the County Court at Law
Brown County, Texas
Trial Court Cause No. 13,631
MEMORANDUM OPINION
John Robert Holley, the brother of Pamela Holley, appeals from an order in
which the trial court, sitting in probate, granted Pamela’s motion to dismiss his will
contest of his mother’s will and codicil. The trial court held that John’s interest in
his mother’s estate had been extinguished and that, under Section 22.018 of the
Texas Estates Code,1 he was not a “person interested” in the estate because his
indebtedness to her estate exceeded his share in her estate. As a result, the trial court
1
TEX. EST. CODE ANN. § 22.018(1) (West 2014).
held that John lacked standing to contest his mother’s will and codicil. We disagree
with the trial court’s holding because, as a matter of law, John, who is a devisee in
his mother’s will and an heir at law, is an “interested person.” As we explain below,
Pamela’s motion is akin to a plea to the jurisdiction,2 and where disputed facts exist
on what distribution, if any, John may receive from his mother’s estate, that dispute
is related to the merits, not standing. Accordingly, we reverse.
I. Background Information
A. Procedural History
On February 14, 2013, after the death of her mother, Mary Marshall Holley,
Pamela filed her mother’s will and first codicil to the will and asked the probate
court to admit both documents and appoint her independent executrix. A little more
than a month later, John objected to Pamela’s appointment and advocated for a third-
party administrator. In his motion, he alleged that Pamela was unsuitable to serve
because of material conflicts of interest. On April 17, 2014, the court coordinator
for the trial court sent notice to John’s attorneys that a hearing was set for April 25,
2014. The notice provided that the purpose of the hearing was to hear two motions:
a motion to deposit estate funds into the registry of the court and a motion to occupy
a residence. No notice was given that the trial court would hear John’s objection to
Pamela’s appointment as independent executrix. In addition, because John did not
file his motion to contest the will and codicil until May 6, 2014, no notice was given
that the trial court would hear that motion on April 25, 2014. As part of his response
to Pamela’s motions to dismiss, John filed affidavits from his attorneys, which stated
that they were unaware that the trial court would hear John’s objection to Pamela’s
appointment and admit the will and codicil to probate at the April 25, 2014 hearing.
At that hearing, the trial court required John to put on evidence of his objections to
2
See Brown v. Todd, 53 S.W.3d 297, 305 n.3 (Tex. 2001).
2
Pamela’s appointment and then indicated that it would admit the will and codicil and
appoint Pamela as independent executrix.
After the April 25, 2014 hearing, John moved to contest his mother’s will and
codicil and claimed that the will and codicil (1) unfairly favored one child; (2)
provided funds to Pamela, an already dependent child; (3) was inconsistent with his
mother’s wishes; (4) was signed during a period of mental confusion; and (5) was
signed during a period following multiple strokes. The trial court did not hold a
hearing on this motion and, a few days later, signed an order that admitted the will
and codicil to probate and appointed Pamela as independent executrix.
John later filed an amended will contest that added allegations of tortious
interference and fraud, breach of fiduciary duty, and defalcation committed by
Pamela. In a separate motion, John also moved to remove Pamela as independent
executrix. John claimed that, among other misdeeds, Pamela, as independent
executrix, fraudulently signed checks for herself and received cash advances from
her mother’s credit card. In response, Pamela moved to dismiss John’s motions and
asserted that he lacked standing to contest the will and codicil and seek her removal
as independent executrix.
B. Evidence at April 20, 2015 Hearing on Pamela’s Motion to Dismiss
The trial court heard Pamela’s motion to dismiss on April 20, 2015. John
testified at that hearing that he had borrowed $480,000 from his mother and that he
had not repaid her estate. A judgment was entered against John for the debt, plus
interest, which totaled approximately $670,000. Pamela asserts that John’s one-third
interest under their mother’s will was approximately $499,409.69 but that John’s
judgment debt exceeded that amount. She argues, therefore, that John is not an
“interested person” under Section 22.018 of the Texas Estates Code. Pamela filed
an inventory and appraisement that listed total assets and claims of the estate at
$2,468,877.81. The trial court entered an order that approved that inventory and
3
appraisement on October 27, 2014. Pamela indicated in the inventory and
appraisement and in her motion to dismiss that a $970,648.73 payment was made by
Holley and Taylor, Inc. to Citizens National Bank to pay off a loan that was secured
by real property owned by Holley and Taylor, Inc. John and his wife had mortgaged
the property for a personal loan; as a result, Holley and Taylor, Inc. had claimed
equitable subrogation for the payment to the bank to avoid foreclosure.3
John filed a response to Pamela’s motions, and his lawyers averred that they
were not aware of and had not received notice that John’s objection to Pamela’s
appointment and his yet-to-be-filed motion to contest the will and codicil would be
adjudicated on April 25, 2014. John also testified at the April 20, 2015 hearing on
Pamela’s motion to dismiss. John testified that Pamela had misappropriated funds
and that her malfeasance had affected the estate; he also argued that he had provided
money to his mother that was not accounted for by Pamela. John also argued that
he was not required to have a property right to be an interested person under Section
22.018 of the Texas Estates Code because he was an “heir” or “devisee” of his
mother’s estate.
After the hearing, the trial court found that John’s indebtedness to his mother’s
estate was greater than his potential inheritance, concluded that John was not a
“person interested” in the estate, and held that John lacked standing. The trial court
entered an order on April 28, 2015, granting Pamela’s motion to dismiss John’s will
contest and his motion to remove her as independent executrix. John requested that
the trial court issue findings of fact and conclusions of law, which the trial court did;
John then filed this appeal.
3
We note that an appeal involving the equitable subrogation claim is also before this court. On this
same day, we have issued an opinion in that appeal, Cause No. 11-15-00046-CV. In that cause, we affirmed
the trial court’s judgment in the amount of $970,648.73 plus interest and attorneys’ fees. However, the
time for a discretionary appeal has not expired, and the mandate has not issued.
4
II. Analysis
John presents three issues on appeal. John first contends that the trial court
erred when it held that he lacked standing to contest his mother’s will and codicil.
In his second issue, he claims that the trial court erred when it held that, under
Section 22.018, he had to have a property right in his mother’s estate to be a “person
interested” in her estate. Finally, in his third issue, he challenges the factual
sufficiency of the trial court’s finding that his indebtedness to his mother’s estate
exceeded the share devised to him in her will. We will address whether John had
standing to contest the will and codicil, and in light of that resolution, we need not
address his third issue.
A. Issue One and Two: As a devisee under his mother’s will or, if the
will is invalid, as an heir at law, John has standing to contest the
will and codicil.
Pamela asserts that the trial court did not err when it held that John lacked
standing to contest the will and codicil.4 John argues that he established that he had
standing. Standing is a requirement for subject-matter jurisdiction, and we review a
challenge to a trial court’s subject-matter jurisdiction de novo. Frost Nat’l Bank v.
Fernandez, 315 S.W.3d 494, 502 (Tex. 2010) (subject-matter jurisdiction includes
the issue of standing); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217,
227–28 (Tex. 2004) (subject-matter jurisdiction is a question of law reviewed
de novo); Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex.
1993) (standing is an element of subject-matter jurisdiction, which may be raised for
the first time on appeal); accord Carroll v. Carroll, 304 S.W.3d 366, 367 (Tex.
2010); Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005)
4
We note that Pamela also asserts in her brief that the trial court did not err when it dismissed John’s
will contest because his contest was barred by res judicata. However, because Pamela did not go forward
at the hearing with proof related to her affirmative defense of res judicata and because the trial court did
not make any findings or rulings with respect to res judicata, we will not address it in this opinion.
5
(standing may be raised at any time). The trial court granted Pamela’s motion and
dismissed John’s motion and will contest because it held that John was not a “person
interested” in the estate. As we explain below, we hold that, as a matter of law, John
was an “interested person” in his mother’s estate.
1. Section 22.018 defines interested person, and John has the
burden of proof to show that he has standing.
In a probate proceeding, a party whose standing has been challenged must
prove that he has an interest in the estate. In re Estate of Forister, 421 S.W.3d 175,
177 (Tex. App.—San Antonio 2013, pet. denied). As the Texas Supreme Court
noted in Logan v. Thomason:
[T]he burden is on every person contesting a will, and on every person
offering one for probate, to allege, and, if required, to prove, that he has
some legally ascertained pecuniary interest, real or prospective,
absolute or contingent, which will be impaired or benefited, or in some
manner materially affected, by the probate of the will.
202 S.W.2d 212, 215 (Tex. 1947). Subsequent to the Logan decision, the Texas
legislature statutorily defined the term “interested person.” The current statutory
definition of “interested person” includes any “heir, devisee, spouse, creditor, or any
other having a property right in or claim against an estate being administered.” EST.
§ 22.018(1). Under Section 22.018, if one is not an heir, devisee, spouse, or creditor,
then one must have a property right in or a claim against the estate to be an interested
person. Id.; In re Estate of Forister, 421 S.W.3d at 177. Section 22.018 defines an
“interested person” in the disjunctive; it requires that the person be an “heir, devisee,
spouse, [or] creditor” or that the person have a “property right in” or a “claim
against” an estate being administered. EST. § 22.018(1); see Aguirre v. Bosquez, No.
04-06-00068-CV, 2006 WL 2871339, at *3 (Tex. App.—San Antonio Oct. 11, 2006,
no pet.) (mem. op.); Jones v. LaFargue, 758 S.W.2d 320, 323 (Tex. App.—Houston
[14th Dist.] 1988, writ denied). Section 22.018 does not require a person to be both
6
(1) an heir, devisee, spouse, or creditor and (2) a person with a property right in or
claim against the estate. See EST. § 22.018(1); see also Aguirre, 2006 WL 2871339,
at *3; LaFargue, 758 S.W.2d at 323.
2. Several courts have interpreted Section 22.018 plainly,
although a few courts, in certain cases, have adopted a
broader meaning.
Several courts have interpreted the plain language of the statute to mean that
one has standing if one is an “heir, devisee, spouse, [or] creditor.” In re Estate of
Bendtsen, 230 S.W.3d 832, 834 (Tex. App.—Dallas 2007, no pet.) (holding that an
executrix who did not fall within any of the statutory categories and did not “have
any pecuniary interest in the estate” was not an interested person); Aguirre, 2006
WL 2871339, at *2 (emphasizing the disjunctive nature of the statute and holding
that the appellant had standing to demand an accounting of the will because she was
the decedent’s spouse); In re Estate of Davis, 870 S.W.2d 320, 322 (Tex. App.—
Eastland 1994, no writ.) (“strictly” applying the statutory definition to mean that
appellant had standing to contest the will because he was both an heir at law and a
named beneficiary). In addition, a couple of our sister courts have adopted a broader
interpretation of “interested person” and held that certain persons had standing even
though they were was not specifically enumerated in the statute. In re Estate of York,
951 S.W.2d 122, 126 (Tex. App.—Corpus Christi 1997, no writ) (“Moreover,
interested persons properly include grantees, assignees, beneficiaries, or devisees of
an heir.”); Maurer v. Sayre, 833 S.W.2d 680, 681-82 (Tex. App.—Fort Worth 1992,
no writ) (interpreting an “interested” party broadly enough to give standing to a party
designated as an alternate beneficiary on three life insurance policies). But see In re
Davidson, 485 S.W.3d 927, 931 (Tex. App.—Tyler 2016, orig. proceeding) (holding
that promissory note maker who filed a DTPA counterclaim against independent
executor of estate of deceased promissory note payee was not “interested person”
7
because counterclaim was not a pre-death liability of decedent); Allison v. Fed.
Deposit Ins. Corp., 861 S.W.2d 7, 9 (Tex. App.—El Paso 1993, writ dism’d by agr.)
(holding that Logan does not include FDIC or judgment creditors of devisees).
Under Mary’s will and subsequent codicil, John is a devisee because his
mother bequeathed a share of her estate to him. See EST. §§ 22.008–.009; see also
Davis, 870 S.W.2d at 321–22; LaFargue, 758 S.W.2d at 323; Abbott v. Foy, 662
S.W.2d 629, 631 (Tex. App.—Houston [14th Dist.] 1983, writ ref’d n.r.e.). John
also is her son and an heir at law, and because his “ascertained pecuniary interest,
real or prospective, absolute or contingent, . . . will be impaired or benefited, or in
some manner materially affected” by the admission or the denial of the will to
probate, he is an interested person with standing to contest the will and codicil and
to seek his sister’s removal as independent executrix. Logan, 202 S.W.2d at 215;
See EST. §§ 22.008–.009; see also Davis, 870 S.W.2d at 321–22; LaFargue, 758
S.W.2d at 323; Abbott, 662 S.W.2d at 631.
3. Additionally, because John presented evidence that disputed
Pamela’s accounting of what distribution he would receive,
an issue that goes to the merits of the case, the trial court
should have denied Pamela’s motion to dismiss.
Texas courts have long recognized a distinction between the issues addressed
in an in-limine hearing to determine standing and the issues decided at a trial on the
merits. As the court explained in Abbott, whether one is indeed entitled to a share
of the estate depends upon the validity of the wills in question, which is a matter to
be decided by trial on the merits of the will contest. 662 S.W.2d at 632. Similarly,
in Baptist Foundation of Texas v. Buchanan, the Dallas court held that, when a
contestant’s standing is challenged, the in-limine hearing is limited to a
determination of the contestant’s justiciable interest in the litigation and that
standing is distinct from the ultimate substantive issues. 291 S.W.2d 464, 469 (Tex.
Civ. App.—Dallas 1956, writ ref’d n.r.e.). The Dallas court held that issues such as
8
the validity of an earlier will or its subsequent revocation were beyond the scope of
the in-limine hearing. Id. at 470; see Abbott, 662 S.W.2d at 632 (contestant’s
entitlement to a share of the estate, which depended upon the validity of the wills in
question, was to be decided at a trial on the merits and not at an in-limine hearing on
standing).
Pamela’s motion is akin to a plea to the jurisdiction. See Brown v. Todd, 53
S.W.3d 297, 305 n.3 (Tex. 2001). If a plea to the jurisdiction challenges
jurisdictional facts, the appellate court considers relevant evidence submitted by the
parties when necessary to resolve the jurisdictional issues raised, as the trial court is
required to do. In re Estate of Forister, 421 S.W.3d at 178 (citing Miranda, 133
S.W.3d at 227). If the evidence creates a fact question regarding the jurisdictional
issue, then the trial court cannot grant the plea to the jurisdiction, and the factfinder
must resolve the disputed fact issue. Miranda, 133 S.W.3d at 227–28; see In re
Estate of Redus, 321 S.W.3d 160, 163–64 (Tex. App.—Eastland 2010, no pet.). On
the other hand, if the relevant evidence is undisputed or fails to raise a fact issue on
the jurisdictional issue, the trial court rules on the plea to the jurisdiction as a matter
of law. Miranda, 133 S.W.3d at 228. We review the trial court’s ruling de novo.
Id. at 226.
Two cases, In re Estate of Adams and In re Estate of Redus, help illustrate
how disputed facts over the merits of a case may preclude a dismissal based on a
lack of standing. See In re Estate of Adams, No. 14-12-00064-CV, 2013 WL 84925,
at *4 (Tex. App.—Houston [14th Dist.] Jan. 8, 2013, no pet.) (mem. op.); In re Estate
of Redus, 321 S.W.3d at 163–64. In Adams, four separate wills and a codicil were
presented for admittance to probate. 2013 WL 84925, at *4. Three wills were
attested, but two of those were not self-proved. Id. In addition, a holographic codicil
and will that were signed, but not self-proved, were submitted. Id. The Adams court
held that, where the person challenging the wills was an heir at law, the dispute over
9
which will, if any, to admit to probate was a factual one that precluded a dismissal
based on standing. Id. In the second case, In re Estate of Redus, this court held that
a person who claimed that he was a beneficiary under a will had standing, even
though he had not introduced the will at the in-limine hearing, had not met the
requisites to probate the will, and had not refuted revocation of the will. In re Estate
of Redus, 321 S.W.3d at 163–64. This court also held that to require the above
elements at the in-limine hearing left nothing to prove at the trial, which effectively
eliminated the distinction between standing and right to recover. Id. at 164.
Because John is a named beneficiary of the will that is being challenged in
probate and is an heir at law, he is an interested person. In addition, although John
acknowledged that he owed money to the estate and had a judgment taken against
him, he testified that he had paid money to the estate and that Pamela had not
accounted for his payments. He also accused Pamela of mismanagement and
malfeasance. In addition, the inventory indicates that the total assets and claims are
nearly 2.5 million dollars. Whether John takes under the will due to his indebtedness
to the estate is a disputed fact that necessarily involves the merits of the case. As in
In re Estate of Redus, to require John to prove at the in-limine hearing that he gets a
distribution obviates the need for a merits hearing. See In re Estate of Redus, 321
S.W.3d at 164; see also In re Estate of Adams, 2013 WL 84925, at *4. We sustain
the first and second issues on appeal.
B. Issue Three: Because John has standing, we need not address his
factual sufficiency challenge.
In his final issue, John asserted that Pamela presented factually insufficient
evidence to support the trial court’s finding that the total amount of his indebtedness
to the estate was in excess of his share of the estate. Because we sustain John’s first
two issues on appeal and hold that he has standing, we need not reach his final issue
because the amount of his indebtedness is not material to the issue of standing.
10
Rather, it should be part of a merits hearing, which has not occurred. “The ‘law of
the case’ doctrine is defined as that principle under which questions of law decided
on appeal to a court of last resort will govern the case throughout its subsequent
stages.” Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986). In this situation,
the doctrine of the law of the case is inapplicable with respect to the amount of John’s
indebtedness to the estate. Id.
III. This Court’s Ruling
We reverse the order of the trial court, render judgment that John has standing,
and remand the cause for further proceedings consistent with this opinion.
MIKE WILLSON
JUSTICE
February 10, 2017
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
11