In the Matter of the Estate of Joann Austin v. the State of Texas ( 2023 )

NO. 12-22-00013-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
§ APPEAL FROM THE
IN THE MATTER OF THE ESTATE
§ COUNTY COURT
OF JOANN AUSTIN, DECEASED
§ WOOD COUNTY, TEXAS
MEMORANDUM OPINION
Karen Dodd-Schorlemer (K.D.S.) appeals the trial court’s order granting Appellee
Shirley Ivy’s application for determination of ownership and disposition of funds in favor of the
residual heirs. 1 In two issues, K.D.S. argues that (1) the trial court erred in conducting a final
evidentiary hearing without proper notice in violation of her due process rights, and (2) its
determination of ownership and disposition of funds was improper. We reverse and remand.
BACKGROUND
On May 5, 2017, Joann Austin purchased Wood County National Bank Certificate of
Deposit number 43651 (CD43651) with an initial deposit of $95,000. CD43651, which Austin
purchased in her name, was payable on death to K.D.S. Several months later, Austin purchased
Certificate of Deposit number 43755 (CD43755), which was payable on death in equal shares to
K.D.S. and one of her sons, Appellee Scott Atteberry.
On July 25, 2018, when Austin was very ill, she executed a power of attorney in which
she named her son, Bruce Atteberry, as her agent. On July 27, Bruce cashed in both CDs and
deposited the $95,711.32 in funds from CD43651 into a newly-opened savings account (Account
1
The Appellees are Paul Atteberry, Margaret Atteberry, Scott Atteberry, Troy Atteberry, and Shirley Ivy.
1
604069245) in Austin’s name and payable on death to himself. 2 Bruce deposited the funds from
CD43755 into a separate savings account (Account 60406925) in Austin’s name and payable on
death to K.D.S. and Scott.
Austin died on August 3, 2018. Sometime thereafter, Ivy produced Austin’s will to the
trial court and was named executrix of Austin’s estate.
Counsel for the estate filed an “inventory, appraisement, and list of claims,” which noted
K.D.S.’s claim to the savings account, which contained funds yielded from the CDs that either
partially or completely were payable on death to K.D.S. The residual heirs to the estate reached
an interim family settlement agreement by which (1) uncontested estate assets would be
distributed, (2) funds from Account 604069252 would be assigned to K.D.S. and Scott as a
nontestamentary asset, and (3) the disputed funds in Account 604069245 would remain
undistributed. The trial court approved the interim family settlement agreement.
On February 11, 2020, Ivy, as executrix, filed an “application for determination of
ownership and disposition of funds” to distribute the $95,821.21 from the “Certificate of Deposit
Dispute,” either to K.D.S. or as a residuary estate asset to be distributed evenly to the residual
heirs. K.D.S. filed an application for review of Bruce’s conduct as agent for Austin, pursuant to
Texas Estates Code, Section 751.251, asserting self-dealing. K.D.S. also filed a motion to direct
the executrix to distribute the disputed funds to her or, alternatively, to place the funds in the
registry of the court. In her motion, K.D.S. argued that Austin’s power of attorney did not
provide Bruce with authority to change the payable-on-death beneficiary of the funds from
K.D.S. to Bruce. On August 19, 2021, Ivy filed a request for hearing on her application. On
August 24, the County Court Administrator notified all legal counsel that the court would
conduct an in-person hearing on the matter for September 17, at 1:00 p.m. On September 15,
K.D.S. retained new counsel, who filed motions with the court, which resulted in the September
17 hearing’s being canceled.
On October 1, counsel for Appellee Paul Atteberry 3 sent the court administrator a letter,
which reads as follows:
2
Bruce later disclaimed his payable on death right to these funds, which became part of the residuary of
Austin’s estate.
3
On February 7, 2023, Paul’s counsel filed a Suggestion of Death, which states that Paul died on February
1, 2023.
2
I write to you regarding resetting the hearing that was set for September 17, 2021[,] and
was removed from the docket after [K.D.S.] filed (1) an Application for Review of Agent Conduct
under section 751.251 of the Texas Estates Code[] and (2) a Motion to Direct Executrix to
Distribute Funds to [K.D.S.], and had a citation issued in regard to these pleadings.
The Dispute which requires a hearing before the Court involves the right of ownership of
a savings account owned by Jo Ann Austin at the date of her death. The savings account in the
amount of $95,711.32 was held at Wood County National Bank in Quitman under the account
ending in 9245 (the “9245 Account”). The funds that were held in the 9245 Account are now on
deposit in the Estate of Jo Ann Austin under the control of Shirley Wheeler Ivy, Executor of the
Estate of Jo Ann Austin, Deceased.
The essence of the dispute over the 9245 Account is that the residual heirs (excluding
[K.D.S.)] want the funds from the 9245 Account distributed to all six children of Jo Ann Austin
who are the residual heirs, while [K.D.S.] wants the funds from the 9245 Account distributed to
her alone by reason of a prior pay on death designation to her on a certificate of deposit that was
cancelled by Bruce Atteberry, acting under a Power of Attorney for Jo Ann Austin.
The parties may agree to mediate, but if no settlement is reached, we may need to [have]
a hearing. I request that the Court set this dispute for a half day hearing on Friday, November 12,
2021[,] at 1:00 p.m.
Please advise me as soon as possible concerning this request for hearing. Thank you.
On October 28, Paul filed an application for an order to distribute the funds at issue to the
residual heirs.
On November 4, the court administrator emailed the parties to remind them that “an in-
person hearing” was set for 1:00 p.m. on November 12. 4 The subject line of this email read,
“Hearing set for Case 13358 - Austin set for November 12[.]” In response, on November 10,
K.D.S.’s counsel emailed the court administrator along with the other parties to request
clarification about the nature of the hearing. Specifically, he inquired, “Is this a hearing on
multiple motions/applications? Only specific motions/applications? Is this an informal trial?”
On the afternoon of November 10, the court administrator sent an email to all parties, in which
she clarified that the November 12 hearing was to be a “status hearing on what are the next steps
for this matter.” In her email, the court administrator noted, “This is not a trial.” That same day,
at 5:18 p.m., Paul sent an email to the court administrator and all parties in which he stated that
4
In his brief, Paul states that on October 4, 2021, the court administrator emailed the parties that the
hearing reset requested by Ivy was set for hearing on November 12, 2021, at 1:00 p.m. For this proposition, Paul
cites to the appendix to his brief. We have reviewed the record and cannot locate this email. Therefore, because this
email is outside the appellate record, we cannot consider it. See Hogg v. Lynch, Chappell & Alsup, P.C., 480
S.W.3d 767, 773 (Tex. App.–El Paso 2015, no pet.) (with limited exceptions not material here, appellate court may
not consider matters outside appellate record).
3
he “would appear at the November 12, 2021, hearing ready to proceed, and that he would urge
the Judge to make rulings on ‘dispositive matters’ at the hearing.” 5
On the morning of the November 12th hearing, K.D.S. filed a written objection to the
extent the trial court would be conducting anything other than a “status hearing” on that day.
K.D.S.’s objection noted that (1) Paul’s October 1 letter merely was a “request” that a hearing be
held on November 12 and did not state that a hearing had been set for that date, (2) his letter did
not specify which of the motions/pleadings/applications on file, several of which involved the
right of ownership of the funds in question, he was seeking to have heard on November 12,
(3) conducting a hearing on any of the pending motions/pleadings/applications without being
served with adequate written notice at least three days in advance would violate Texas Rule of
Civil Procedure 21(b), and (4) without K.D.S.’s being given adequate notice of what is being
heard at the hearing, the hearing would be tantamount to a prohibited “trial by ambush.”
At the hearing, the trial court indicated that it planned to “allow some testimony.” 6 In
response, K.D.S.’s counsel objected to the conduct of anything other than a status hearing.
Nevertheless, the trial court conducted an extensive evidentiary hearing regarding the ownership
of the disputed funds. During the hearing, the trial court heard the testimony of five witnesses.
At the conclusion of the hearing, the trial court took the matter under advisement.
On December 3, the trial court signed an order granting Paul’s application to distribute
funds among all residual heirs. 7 Paul filed a motion for judgment nunc pro tunc, in which he
argued that the December 3 order should have stated that the relief granted was pursuant to Ivy’s
application rather than his. On April 12, 2022, the trial court signed a judgment nunc pro tunc in
5
As K.D.S. notes in her reply, while a copy of this email is attached as an Appendix to Paul’s brief, it does
not appear to be part of the record on appeal. See Hogg, 480 S.W.3d at 773. However, we note that the quoted
language is taken directly from K.D.S.’s brief. See TEX. R. APP. P. 38.1(g) (in civil case, court will accept as true
facts stated in appellant’s brief unless another party contradicts them; statement must be supported by record
references). We further note that a reference to this email and its substance, i.e., that Paul “seemingly [would] be
seeking to go forward on dispositive or evidentiary matters” at the hearing, appears in the Clerk’s Record in
K.D.S.’s “Supplement to Objection to Hearing.”
6
K.D.S.’s counsel appeared at the hearing. K.D.S. was not present.
The order sets forth that it was based on the consideration of evidence and testimony given at the
7
November 12, 2021 hearing.
4
accord with Paul’s motion. 8 K.D.S. filed a motion for new trial, which was overruled.
Thereafter, the trial court made written findings of fact and conclusions of law. This appeal
followed.
NOTICE OF HEARING
In her first issue, K.D.S. argues that the trial court abused its discretion in conducting the
evidentiary hearing on Ivy’s application over her objection and in violation of her due process
rights because she did not receive proper notice of that hearing. A trial court’s action in
conducting a hearing on a motion without proper notice will not be disturbed on appeal absent an
abuse of discretion. See Buruato v. Mercy Hosp. of Laredo, 2 S.W.3d 385, 287 (Tex. App.–San
Antonio 1999, pet. denied). A trial court abuses its discretion by failing to adhere to guiding
rules and principles. Nath v. Texas Children’s Hosp., 446 S.W.3d 355, 371 (Tex. 2014).
The Fourteenth Amendment of the United States Constitution protects against deprivation
of life, liberty, or property by the State “without due process of law.” U.S. CONST. amend. XIV,
§ 1. The Texas Constitution states that no citizen of this state shall be deprived of life, liberty,
property, privileges or immunities, or in any manner disfranchised, except by the “due course of
law of the land.” TEX. CONST. art. I, § 9. An elementary and fundamental requirement of due
process in any proceeding which is to be accorded finality is notice reasonably calculated, under
the circumstances, to apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections. Campbell v. Stucki, 220 S.W.3d 562, 570 (Tex. App.–
Tyler 2007, no pet.). At a minimum, due process requires notice and an opportunity to be heard
at a meaningful time and in a meaningful manner. See id.; see also Tex. Integrated Conveyor
Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 363 (Tex. App.–Dallas 2009,
pet. denied). Some Texas courts also have defined this “minimum” as requiring the presence of
the “rudiments of fair play.” Campbell, 220 S.W.3d at 570.
An application to the court for an order and notice of any hearing thereon must be served
upon all other parties not less than three days before the time specified for the court proceeding,
8
K.D.S. has appealed the trial court’s order granting Paul’s application and the judgment nunc pro tunc
together. We will refer to these two orders collectively as the trial court’s “Order Granting Application to Distribute
Estate Funds to Residual Heirs.”
5
unless otherwise provided by these rules or shortened by the court. See TEX. R. CIV. P. 21(b). 9
The notice must be of such nature as reasonably to convey the required information, and it must
afford a reasonable time for those interested to make their appearance. Retzlaff v. GoAmerica
Communications Corp., 356 S.W.3d 689, 695 (Tex. App.–El Paso 2011, no pet.) (citing
Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657, 94 L. Ed.
865 (1950)). Because Rule 21a’s notice of hearing requirement is set forth as being part and
parcel to an application to the court for an order, it is logical that, unless the notice of hearing is
part of or attached to such an application, it must reference the application or motion which will
be the subject of the hearing. See TEX. R. CIV. P. 21(b).
Discussion
In the instant case, Ivy filed a request for hearing on her application on August 19, 2021.
On August 24, the court administrator notified all legal counsel that the court would conduct an
in-person hearing on Ivy’s application on September 17, 2021, at 1:00 p.m. But that hearing was
canceled.
On October 1, 2021, Paul sent the court administrator a letter requesting that the
cancelled September 17 hearing be reset for a half-day hearing on Friday, November 12, 2021, at
1:00 p.m. On November 4, the court administrator emailed the parties to remind them that “the
hearing” in the case was set for 1:00 p.m. on November 12. In response, on November 10,
K.D.S.’s counsel emailed the court coordinator along with the other parties to request
clarification about the nature of the hearing referenced in the reminder email. Specifically, he
inquired, “Is this a hearing on multiple motions/applications? Only specific
motions/applications? Is this an informal trial?” On the afternoon of November 10, the court
administrator sent an email to all parties, in which she clarified that the November 12 hearing
was to be a “status hearing on what are the next steps for this matter.” In her email, the court
administrator noted, “This is not a trial.”
Based on the information in the record before us, K.D.S.’s counsel’s confusion expressed
in his email to the court coordinator is understandable. Nonetheless, we note that when a
9
The Texas Rules of Civil Procedure apply to probate proceedings only to the extent they do not differ
from the procedure established by the Probate Code (now Estates Code). See Wojcik v. Wesolick, 97 S.W.3d 335,
338 (Tex. App.–Houston [14th Dist.] 2003, no pet.). The parties do not argue the existence of any provision of the
Estates Code, nor is this Court aware of any such provision, which negates the application of Texas Code of Civil
Procedure 21 to the hearing in the instant case.
6
previously-noticed hearing is reset, Rule 21’s three-day notice rule does not apply. See, e.g.,
Magnuson v. Mullen, 65 S.W.3d 815, 824 (Tex. App.–Fort Worth 2002, pet. denied). In a
similar vein, an argument could be made that Paul’s request that the hearing on Ivy’s application
be reset for a specific date and time combined with the court administrator’s reminder email that
a hearing was scheduled for that same date and time, amounted to ample notice of the subject
matter of the hearing, but for one inescapable fact––the court administrator responded to Ivy’s
counsel’s request for clarification, stating that the hearing would be a “status hearing on what are
the next steps for this matter” and emphasized, “This is not a trial.”
We conclude that the court administrator’s November 10 email conveyed “necessary
information” for notice purposes, upon which K.D.S.’s counsel was entitled to rely. See TEX. R.
CIV. P. 21(b); Retzlaff, 356 S.W.3d at 695; cf., e.g., Hanks v. Rosser, 378 S.W.2d 31, 34 (Tex.
1964) (court considered appellant’s reliance on erroneous information conveyed by clerk in his
official capacity in holding that appellant failure to file answer neither was intentional nor result
of conscious indifference under Craddock standard). And to the extent any prior notice of
hearing may have served to relate to the parties that the November 12 hearing would concern a
specific application or motion, the court administrator’s November 10 email operated effectively
to amend any such notice. In light of the court administrator’s statement in her official capacity,
we cannot conclude that the trial court’s decision to proceed with an evidentiary hearing over
K.D.S.’s objection served to uphold the “rudiments of fair play.” See Campbell, 220 S.W.3d at
570. Therefore, we hold that the trial court abused its discretion when it, over K.D.S.’s
objection, conducted an evidentiary hearing on Ivy’s application without sufficient notice of such
a hearing in violation of K.D.S.’s due process rights. 10 See TEX. R. CIV. P. 21(b); Retzlaff, 356
S.W.3d at 695; Campbell, 220 S.W.3d at 570. K.D.S.’s first issue is sustained. 11
10
Harm analysis is not required for reversal in a case where a party was deprived of property in a manner
contrary to the most basic tenets of due process. See Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 86, 108 S. Ct.
896, 900, 99 L.Ed.2d 75 (1988); Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300
S.W.3d 348, 364–65 (Tex. App.–Dallas 2009, pet. denied) (trial court signed motion granting summary judgment
prior to scheduled date of submission). In the event a harm analysis were required, the outcome would not differ.
The record feflects that K.D.S.’s counsel, in reliance on the court administrator’s assurance that the hearing was
merely a “status hearing” and “not a trial[,]” attended the hearing without his client, who resides in Dallas. We
conclude that K.D.S. was harmed when she was prevented from offering live testimony or otherwise participating in
the hearing regarding the determination of how the disputed funds at issue would be distributed.
11
Having sustained K.D.S.’s first issue, we do not consider her second issue regarding the propriety of the
trial court’s determination or ownership and disposition of funds at issue. See TEX. R. APP. P. 47.1.
7
DISPOSITION
Having sustained K.D.S.’s first issue, we reverse the trial court’s Order Granting
Application to Distribute Estate Funds to Residual Heirs and remand the cause to the trial court
for further consideration consistent with this opinion.
GREG NEELEY
Justice
Opinion delivered February 28, 2023.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
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COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
FEBRUARY 28, 2023
NO. 12-22-00013-CV
IN THE MATTER OF THE ESTATE OF
JOANN AUSTIN, DECEASED,
Appeal from the County Court
of Wood County, Texas (Tr.Ct.No. 13-358)
THIS CAUSE came to be heard on the appellate record and briefs filed
herein, and the same being considered, it is the opinion of this Court that the trial court’s Order
Granting Application to Distribute Estate Funds to Residual Heirs resulted from an abuse of its
discretion. It is ORDERED, ADJUDGED and DECREED by this Court that the Order Granting
Application to Distribute Estate Funds to Residual Heirs be reversed and the cause remanded to
the trial court for further consideration in accordance with the opinion of this Court; and that
this decision be certified to the court below for observance.
Greg Neeley, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
9