Richard Leshin, Successor Trustee of the Davila Family Trust, Trust A v. Juan Gerardo Oliva, Rosina Oliva, Individually and as Successor Trustee of the Davila Family Trusts B, C, and D, and Alma Guadalupe Davila ( 2015 )

ACCEPTED
04-14-00657-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
8/13/2015 10:41:48 AM
KEITH HOTTLE
CLERK
NO. 04-14-00657-CV
FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS SAN ANTONIO, TEXAS
FOURTH COURT OF APPEALS DISTRICT OF 08/13/2015 10:41:48 AM
TEXAS
SAN ANTONIO, TEXAS KEITH E. HOTTLE
Clerk
RICHARD LESHIN, SUCCESSOR TRUSTEE
OF THE DAVILA FAMILY TRUST, TRUST A,
APPELLANT
VS.
JUAN GERARDO OLIVA, INDIVIDUALLY, AND
ROSINA OLIVA, INDIVIDUALLY AND AS
SUCCESSOR TRUSTEE OF THE DAVILA FAMILY TRUST,
TRUSTS B, C AND D,
APPELLEES
From the 406th Judicial District Court, Webb County, Texas
Cause No. 2008-CVF-000855-D4
Honorable Oscar J. Hale, Jr., Judge Presiding
APPELLEE ROSINA OLIVA’S
MOTION FOR REHEARING
TO THE HONORABLE JUDGE OF SAID COURT:
Rosina Oliva, Individually and as Trustee of the Davila Family Trust, Trusts B, C
and D, Appellee, moves for rehearing, and shows:
ISSUE NO. ONE
The arbitrator did not exceed his powers by awarding money damages against Mr.
Leshin "individually" because a trustee is personally liable for a breach of trust.
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Argument as to Issue No. One
The following are without dispute:
1. Mr. Leshin was before the arbitrator as the successor trustee of Davila
Family Trust, Trust A;
2. Mr. Oliva is a beneficiary of Trust A;
3. Mr. Oliva's claim against Mr. Leshin was for "breach of trust";
4. Mr. Oliva's claim was clearly within the mandatory arbitration clause;
5. The remedy for breach of trust by a trustee may include "compelling the
trustee to pay money or to restore property;" Tex. Prop. Code §
114.008(a)(3);
6. A trustee is "personally liable for a tort committed by the trustee...in the
course of their employment." Tex. Prop. Code §114.083(d).
Appellee argues that it was sufficient that Mr. Leshin was on notice that he was
charged with breach of trust by a beneficiary. Therefore, the arbitrator was within his
powers to employ the only meaningful remedy which is "personal" liability. To hold
otherwise would put the beneficiary in the position of being compelled to arbitration, but
to have no real remedy other than recovery against the trust estate. In other words, the
beneficiary potentially pays the damages to himself. His beneficial interest in the trust is
diminished by his very own award of damages. Catch 22.
As early as 1897 our Supreme Court addressed the question of the personal
liability of a trustee who has breached his trust. In Silliman v. Gano, 39 S.W. 559 the
Court said:
‘In addition to this claim of the beneficiary upon the trust
estate as long as it exists, the trustee incurs a personal
liability for a breach of trust by way of compensation or
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indemnification which the beneficiary may enforce at his
election, and which becomes his only remedy whenever the
trust property has been lost or put beyond his reach by the
trustee’s wrongful act.’
Certainly Mr. Leshin was on notice that he was charged with a tort (breach of
fiduciary duty) having been committed by him as trustee and in the course of his
employment as such. He is presumed to have known the consequences. In this case, Mr.
Leshin undoubtedly knew the consequences as he is a prominent board certified
practitioner of trust and estate law. Does he argue that the damages occasioned by his
breach of trust must fall upon the beneficiaries of his trust? If such is his argument is
that not itself a breach of his duties? Does this Court's opinion tell the bar that in
arbitration the traditional remedies for breach of trust are not available unless the trustee
has signed the arbitration contract individually or that he/she has otherwise agreed to be
individually bound by the arbitrator's award? Could that be an unintended consequence of
this Court's opinion as written?
The Opinion as written states: "The Olivas also assert the arbitrator's powers to
determine this issue arise from §§ 114.008(a) and 114.083(d) of the Texas Property
Code." More precisely the Olivas assert that the arbitrator had full power to employ the
statutory remedy of "personal liability" to remedy the breach of trust which Mr. Leshin
was found to have committed. It is not so much a question of arbitrability as of the
appropriate remedy for a breach of trust by a trustee.
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ISSUE NO. TWO
The arbitrator did not exceed his powers in awarding money damages against Mr.
Leshin "individually" because even if he may be considered a nonsignatory in his
"individual" capacity, he is nevertheless bound to arbitrate under the doctrine of equitable
estoppel.
Argument and Authorities as to Issue No. Two
This Court has treated Mr. Leshin individually as a nonsignatory of the arbitration
clause. In fact, none of the parties to the present case signed the arbitration clause. That
clause, which appears in the original Davila Family Trust agreement, was only signed by
Mr. and Mrs. Davila. However, Mr. Leshin, as successor trustee of Trust A, stands in the
shoes of Mr. Davila. Rosina Oliva, as successor trustee of Trusts, B, C and D, stands in
the shoes of Mrs. Davila. Mr. Oliva is a beneficiary of Trust A and as such is bound to
arbitrate "any claim between the Trustee and any other parties to this Trust, including
Beneficiaries." While it may be true that Mr. Leshin did not sign the arbitration clause
"individually," it is also true that the Olivas must rely on the terms of the trust agreement
in asserting their claims against Mr. Leshin. Also, the Olivas' claims make reference to or
presume the existence of the trust agreement and arise out of the written agreement. Thus,
under equitable estoppel, Mr. Leshin is bound to arbitrate these claims even if he
personally did not agree to do so; otherwise the arbitration proceedings between those
who stand in the shoes of the signatories would be rendered meaningless and the policy
in favor of arbitration effectively thwarted.
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The question of equitable estoppel binding nonsignatories has been upheld by both
Texas and federal courts. The leading Texas cases include In Re Weekly Homes, L.P., 180
S.W.3d 127 (Tex. 2005) and Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006). In
Meyer the Supreme Court said, "As a rule, arbitration of a claim cannot be compelled
unless it falls within the scope of a valid arbitration agreement. But, sometimes a person
who is not a party to the agreement can compel arbitration with one who is, AND VICE
VERSA." (emphasis added) Meyer goes on to state that the Fifth Circuit decision in
Grigson is a "substantially correct statement of Texas law." The Court in Meyes says:
The court of appeals came to this same conclusion based largely on
Grigson v. Creative Artists Agency, L.L.C., in which the United States
Court of Appeals for the Fifth Circuit quoted the Eleventh Circuit’s
decision in MS Dealer Service Corp. v. Franklin, stating:
Existing case law demonstrates that equitable estoppel allows a
nonsignatory to compel arbitration in two different circumstances. First,
equitable estoppel applies when the signatory to a written agreement
containing an arbitration clause must rely on the terms of the written
agreement in asserting its claims against the nonsignatory. When each of a
signatory's claims against a nonsignatory makes reference to or presumes
the existence of the written agreement, the signatory's claims arise out of
and relate directly to the written agreement, and arbitration is appropriate.
Second, application of equitable estoppel is warranted when the signatory
to the contract containing an arbitration clause raises allegations of
substantially interdependent and concerted misconduct by both the
nonsignatory and one or more of the signatories to the contract. Otherwise
the arbitration proceedings between the two signatories would be rendered
meaningless and the federal policy in favor of arbitration effectively
thwarted.
Equitable estoppel should bar Mr. Leshin from saying he "personally" is not bound
by the arbitration clause.
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ISSUE NO. THREE
The arbitrator did not exceed his powers by making awards against Mr. Leshin
"individually" because Mr. Leshin himself invoked the powers of the arbitrator by
seeking affirmative relief which was denied. Alternatively, the record is incomplete.
Argument as to Issue No. Three
Appellant argues that where the award refers to Mr. Leshin only by name, and
does not specify whether "individually" or "as trustee," the award must be read as
imposing individual liability. If this is true should the Court not look at other places in the
award where the arbitrator denied requests for affirmative relief made by Mr. Leshin
referring to him only by name? For example:
1. At finding "c" of the award the arbitrator finds "Richard Leshin's request
for offset relative to his claim of gifts and loans is denied." (CR 110);
2. At award "g" where the arbitrator states, "Any relief requested by Richard
L. Leshin in his counterclaim against Juan Gerardo Oliva that is not
specifically awarded herein are denied." (CR 116); (Note: the counterclaim
does not appear to be part of the record);
3. At award "s" and "t" where Richard L. Leshin “is awarded no attorney's
fees nor AAA expenses.” (CR 118)
This tells us that requests for affirmative relief were made. It does not tell us in
what capacity such requests were made, but if Appellant argues awards made against him
in his own name mean "individually" then should not awards denied him in his own name
mean the same? Is this not analogous to a defendant who waives "personal jurisdiction"
complaints by seeking affirmative relief?
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A party is considered to have entered a general appearance and therefore
consented to personal jurisdiction when the party ‘(1) invokes the judgment of the court
on any question other than the court’s jurisdiction, (2) recognizes by its acts that an action
is properly pending, or (3) seeks affirmative action from the court.” Exito Elecs. Co. v.
Trejo, 142 S.W.3d 302, 304 (Tex. 2004).
One of two things must be true. Either we have an incomplete record or Mr.
Leshin has individually invoked the arbitrator's powers. In either case the trial court's
judgment must be affirmed. Judge Hale actually found an incomplete record:
I believe that there’s just not enough evidence here before this
court to convince this court that the arbitrator did not have
jurisdiction to include Mr. Leshin as an individual here in
court that it was included inadvertently. So at this point, the
Court will confirm the award and enter judgment as awarded
by the arbitrator. (RR. Vol. 2, p. 38
ISSUE NO. FOUR
In the alternative, there is no reason to read the awards of attorney’s fees and AAA
expenses as imposed against Mr. Leshin individually. There is no disagreement on this
issue between the Olivas.
Argument as to Issue No. Four
In footnote 1 of the Opinion this Court "recognizes there is a disagreement
between the Olivas regarding whether the arbitrator actually issued an award against
Leshin in his individual capacity." Further that "Rosina contends the arbitration award, at
least as to her, is not against Leshin in his individual capacity." Further that "Rosina's
attempted concession has no impact on our holding or judgment."
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While this issue may not have been artfully briefed or argued by Rosina's counsel,
there really is no disagreement. The arbitrator uses the term "individually and as trustee"
one time and one time only in the award. The term is only used in connection with the
conditional award of money damages in the event Mr. Leshin fails to distribute the
personal property. Rosina does not contend that "personal liability" of Mr. Leshin arises
in any other context. The award, when read in context, need not be read as imposing
personal liability for attorney's fees and AAA expenses. If the award only imposes this
liability on Mr. Leshin as trustee there is nothing to be sent back to Judge Hale. What is
he to decide that he has not already decided?
During the hearing on Motion to Vacate/Motion to Confirm the following
exchange occurred before Judge Hale:
MR. CAZIER: Judge, I heard your question a minute ago. It
was, what have we agreed on. I think we've agreed to enter judgment
confirming the award, the only question being whether or not the
judgment confirming the award –
THE COURT: Should be modified?
MR. CAZIER: -- should modify as to this individual liability
of the trustee.
THE COURT: Removing the individual liability language
and inserting or making sure that it says, "As successor trustee" is
what I heard.
MR. CAZIER: Exactly.
THE COURT: So we're in agreement with confirming the
award subject to, at least on your end, the Court's ruling on whether
or not to modify the language as you requested?
MR. CASTILLO: Yes, Judge, but there's only one place in
the award where it awards $79,000 against Richard Leshin,
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successor trustee and individual. It described him up on front as the
named party being the successor trustee. The award for 79 is in both
capacity, individually. But then in other awards, awards for attorney
fees and cost, it just says Richard Leshin.
THE COURT: It doesn't say –
MR. CASTILLO: It doesn't say individually or either one.
THE COURT: So what is the petition on that. I mean –
MR. CAZIER: I agree that, for clarity’s sake, we can add
Richard Leshin as trustee to all of those awards which involve Triple
A expenses and everything else.
THE COURT: Wherever it doesn't mention individually or
successor trustee?
MR. CAZIER: Exactly.
MR. CASTILLO: And, Judge, that's where we disagree
because if the arbitrator specifically references that the award for
79,000 is individually and as successor trustee, then on the other
recitals where it says only Richard Leshin, you can't tell whether he
meant as trustee or individually. We take the position that that's
individually. We cannot assume what he was thinking and --
THE COURT: So you're saying that it should be individually
then? I thought I understood you the other way.
MR. CASTILLO: No, no. It doesn't say anything. It just said
Richard Leshin, whereas the 79,000 --
THE COURT: But on that one, you were asking, I thought, to
remove individually.
MR. CASTILLO: That's right.
THE COURT: Is that what I understood?
MR. CASTILLO: Right, but we don't want those to be
assigned to the trust either. Those costs and attorney fees should not
be --
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THE COURT: So what should it be? It has to read one or the
other.
(RR Vol. 2, pp. 7-10)
The Court is asked to remember that the attorney's fees and AAA expenses were
recoverable under the arbitration clause. There is no argument that Mr. Leshin was not
subject to the arbitration clause in his capacity as trustee.
As Mr. Snell so eloquently put it: "It’s either individual or it’s trustee. It can't be
nothing." (RR Vol. 2, p. 12).
WHEREFORE, PREMISES CONSIDERED, Appellee prays the Court grant
rehearing and affirm the trial court's judgment.
OLIVERO E. CANALES
State Bar No. 03737200
719 Chihuahua St., Suite 102
Laredo, Texas 78040
956/723-5092 (telephone)
956/723-1327 (fax)
ALLEN CAZIER
1250 N.E. Loop 410, Suite 725
San Antonio, Texas 78209
Telephone: 210/824-3278
Telecopier: 210/824-3937
By: /s/ Allen Cazier
ALLEN CAZIER
State Bar No. 04037500
Attorneys for Appellee
Rosina Oliva, Individually and as
Successor Trustee of the Davila
Family Trust, Trusts B, C & D
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Certificate of Compliance
Pursuant to Texas rules of Appellate Procedure 9.4, I certify that there are 2,345
words in this document, exception those portion listed in Rule 9.4(i)(l) as calculated by this
word counts feature of Microsoft Word 2010, which was used to prepare this document.
/s/ Allen Cazier
ALLEN CAZIER
Certificate of Service
I hereby certify that a true and correct copy of the foregoing has been served upon the
following individuals through the Court’s ECF/CM system on this 13th day of August, 2015.
Guadalupe Castillo
Zaffirini and Castillo
1407 Washington
Laredo, Texas 78042
Facsimile: 956/727-4448
Email: gcast@zaffirini.com
David C. “Clay” Snell
Bayne, Snell & Krause
1250 N.E. Loop 410, Suite 725
San Antonio, Texas 78209
Facsimile: 210/824-3937
Email: dsnell@bsklaw.com
Eduardo Romero
Villarreal & Romero, PLLC
210 W. Del Mar Blvd., Suite 15
Laredo, Texas 78041
Facsimile: 956/727-2404
Email: romero@vrlawfirm.com
/s/ Allen Cazier
ALLEN CAZIER
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