Aaron Jordan, Michael Jordan, Heather Jordan, Gilbert Jordan, Phyllis Ann Woods and Donna Joyce Curtis v. Cynthia Kay Lyles

ACCEPTED
12-13-00035-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
1/12/2015 4:31:02 PM
CATHY LUSK
CLERK
No. 12-13-00035-CV
FILED IN
12th COURT OF APPEALS
TYLER, TEXAS
1/12/2015 4:31:02 PM
In the CATHY S. LUSK
Clerk
Twelfth Court of Appeals
Aaron Jordan, et al,
Appellants,
v.
Cynthia Kay Lyles,
Appellee.
APPELLEE’S MOTION FOR REHEARING
GREG SMITH J. BRAD MCCAMPBELL
State Bar No. 18600600 State Bar No. 13358000
NOLAN SMITH CURTIS, ALEXANDER
State Bar No. 24075632 MCCAMPBELL & MORRIS, P.C.
RAMEY & FLOCK, P.C. P. O. Box 38
100 E. Ferguson, Suite 500 Emory, TX 75440
Tyler, TX 75702 Telephone: (903) 473-227
Telephone: (903) 597-3301 Facsimile: (903) 473-3069
Facsimile: (903) 597-2413 bmccampbell@cammpclaw.com
gsmith@rameyflock.com
nolans@rameyflock.com
COUNSEL FOR APPELLEE CYNTHIA KAY LYLES
Contents
Page
List of Authorities .............................................................................................................. ii-iii
The Rehearing Grounds ......................................................................................................... 1
The Rehearing Argument ....................................................................................................... 1
The Court has not decided a material issue that requires
affirmance – the absence of probative evidence supporting damages ............................. 1
A. The plaintiffs had the burden to prove that Cyndi’s alleged
breach caused them damage .................................................................................... 2
B. The Plaintiffs failed to meet their damage burden: they elicited
no proof that Cyndi’s alleged breach caused them damages ............................... 4
C. Bud never intended an equal distribution of his non-probate assets ............... 11
D. The evidence establishes that Bud intended Cyndi to
receive the annuity proceeds ................................................................................. 15
E. If there could be evidence of damages, it would be
factually insufficient evidence ............................................................................... 16
Conclusion and Prayer.......................................................................................................... 17
Certificate of Compliance .................................................................................................... 18
Certificate of Service ............................................................................................................. 19
i
Authorities
Page
Cases:
Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227
(Tex. 2004) ........................................................................................................................ 10
Concerned Citizens for Better Ed., Inc. v. Woodley, 623 S.W.2d 488
(Tex.App.—Texarkana 1981, writ disms’d) .................................................................... 2
Estrada v. Dillon, 44 S.W.3d 558 (Tex. 2001) ....................................................................... 17
Fidelity & Cas. Co. of New York v. Central Bank of Houston, 672 S.W.2d
641 (Tex.App.—Houston [14th Dist.] 1984, writ rf’d n.r.e.) ......................................... 2
Haygood v. De Escabedo, 356 S.W.3d 390 (Tex. 2010) ............................................................ 4
Hoover v. Larkin, 196 S.W.3d 227 (Tex. App.—Houston
[1st Dist.] 206, pet. denied) ................................................................................................ 5
In re Estate of Russell, 311 S.W.3d 528 (Tex.App—El Paso
2009, no pet.) ........................................................................................................11, 12, 13
Longaker v. Evans, 32 S.W.3d 725 (Tex. App.-San Antonio 2000,
pet. withdrawn) ....................................................................................................... 4, 5, 6, 7
MacFarlane v. Nelson, 2005 WL 22440949 at *9
(Tex. App.-Austin 2005, pet. denied)........................................................................... 3, 4
Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858
(Tex.App.—San Antonio 1997, no writ) ........................................................................ 2
Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150
(Tex. 2012) ........................................................................................................................ 10
Porras v. Craig, 675 S.W.2d 503 (Tex. 1984)......................................................................... 10
Sanchez v. Johnson & Johnson Med., Inc., 860 S.W.2d 503
(Tex.App.—El Paso 1993) ................................................................................................ 2
State v. $90,235, 390 S.W.3d 289 (Tex. 2013) ........................................................................ 1
ii
Swank v. Cunningham, 258 S.W.3d 647 (Tex.App.—
Eastland 2008, pet. denied) ........................................................................................... 5, 6
Rules, Statutes and Other Authorities:
TEX. R. APP. P. 44.1(b) .......................................................................................................... 17
TEX. R. APP. P. 47.1 ................................................................................................................. 1
iii
The Rehearing Grounds
1. Contrary to Rule 47.1, the Court has failed to decide all issues raised and
necessary to a final decision.
2. There is no evidence (or alternatively factually insufficient evidence) supporting
damages and, thus, the record will not sustain a judgment for the plaintiffs.
The Rehearing Argument
This Court should grant rehearing to address the determinative issue of damages.
And, because there is no evidence of damage, the Court should reinstate a take-nothing
judgment.
The Court has not decided a material issue that
requires affirmance – the absence of probative
evidence supporting damages.
An appellate court must decide all issues that are raised and material to the
appeal. TEX. R. APP. P. 47.1; State v. $90,235, 390 S.W.3d 289, 294 (Tex. 2013). Here,
Cyndi raised three grounds for affirming the trial court’s take-nothing judgment: a
standing issue, the absence of any fiduciary breach or tort, and the lack of evidence of
recoverable damage. See, e.g., Appellee’s Br. at iii, 34 (stating, as the third major issue
briefed: “There is no evidence Bud (or the plaintiffs) sustained any recoverable damage
under either liability theory”). As Cyndi’s appellate brief argued, because there is no
evidence that the plaintiffs sustained a recoverable damage, the jury’s verdict can’t
sustain a recovery. In other words, the absence of damage proof vitiates the jury’s
verdict. This is so even if Cyndi technically breached a fiduciary duty by not
1
“inform[ing] [Bud] of all material facts” respecting his straightforward spousal
continuations of his wife’s annuities. Cf. Slip Op. at 10 (“In sum, the record contains no
evidence that Cyndi or anyone else specifically discussed any of these three transactions
with Bud and informed him of all material facts relating to the transactions.”)
This Court has not addressed Cyndi’s challenge to the damage case. Rehearing
should be granted to afford the necessary, complete analysis of all material appellate
issues. And on rehearing, the judgment below should be affirmed on the basis that the
absence of damage proof vitiates the verdict, requiring a take-nothing judgment.1
A. The plaintiffs had the burden to prove that Cyndi’s alleged breach caused
them damage.
There are essentially two sides to any cause of action seeking money damages: the
liability side and the damage side. A plaintiff must prevail on both if he is to recover.
Here, the plaintiffs obtained a liability-side win virtually by default: they finagled a jury
charge that placed the burden of proof with the defendant as respects liability. On
appeal, represented by skilled appellate counsel, they have all but admitted that a proper
charge – one correctly applying Texas law – would have required that they prove a
1
The Court should treat Cyndi’s appellate challenge to the proof of damages as raising a cross-point.
TEX. R. APP. P. 38.9; See, e.g., Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858, 872 (Tex. App.—San
Antonio 1997, no writ)(motion that was incorporated into Appellee’s brief would be treated as a cross-
point); Concerned Citizens for Better Ed., Inc. v. Woodley, 623 S.W.2d 488, 490 (Tex. App.—Texarkana
1981, writ disms’d)(treating challenge to standing as a cross-point); Fidelity & Cas. Co. of New York v.
Central Bank of Houston, 672 S.W.2d 641, 645-46 (Tex. App.—Houston [14th Dist.] 1984, writ ref’d
n.r.e.)(treating arguments for affirming JNOV upon grounds not sustained by the trial court as de facto
cross-points); Sanchez v. Johnson & Johnson Med., Inc., 860 S.W.2d 503, 512 (Tex. App.—El Paso
1993)(although appellee raised no cross-points, court would “nevertheless liberally construe Appellee’s
reply points . . . as cross-points”), rev’d in part on other grounds, 924 S.W.2d 925.
2
breach of fiduciary duty, not the other way around. This is all the difference. In the
context of this case, the burden shift left Cyndi to make a near impossible showing as
respects liability. In the normal burden-shifting situation (typically, when a fiduciary has
bought for himself one of the ward’s assets), the burden to prove the transaction’s
fairness can be met by showing that the transaction occurred at a market-clearing price.
But because there is no market in beneficiary designations, the “fix” was in on liability
once the plaintiffs secured their jury charge.
Regardless, the plaintiffs retained the burden to prove damages. See MacFarlane v.
Nelson, 2005 WL 22440949 at *9 (Tex. App.-Austin 2005, pet. denied). Specifically, they
retained the burden to elicit probative evidence that the technical failure to fully inform
Bud “of all material facts” actually caused the alleged damages.2 The presumption of
unfairness that the charge invoked on liability does not spill over into this damage-case
inquiry.
To recover for breach of fiduciary duty as a result of a transaction, the plaintiff
must prove the defendant’s breach caused him damages even if the defendant bore
2
In their reply brief, the plaintiffs distinguished between causation and damages. Reply Br. at 31
(“Cyndi contends the jury’s damages award is unsupported. . . . [S]he does not contest the element of
proximate cause . . .”.). While not always so, proof of damage and proximate cause are inseparable
here. In this case, the no-evidence attack upon damages is an argument that the plaintiffs failed to
prove that they sustained a damage resulting from, i.e., caused by the breach. This will not be so in all
cases: in a personal-injury case claiming soft-tissue injury, for example, a defendant might challenge
whether the plaintiff had any soft tissue injury, they might instead challenge whether the injury the
result of their misconduct or a defect in their product (as opposed to some other cause), or they might
raise both such arguments. But here, when Cyndi’s brief argued that “there is no probative evidence
that Bud would ever have designated the plaintiffs as beneficiaries of his financial accounts”
irrespective of the alleged fiduciary breach, see appellee’s brief at 11, Cyndi attacked the entire damage
side of the case, including causation of damage.
3
the burden of proving the transaction’s fairness. Id. at *9; see also Haygood v.
De Escabedo, 356 S.W.3d 390, 399 (Tex. 2010) (“A fundamental rule is that ‘to recover
damages, the burden is on the plaintiff to produce evidence from which the jury may
reasonably infer that the damages claimed resulted from the defendant’s conduct’”). In
MacFarlane, the defendant attorney was sued for failing to obtain the plaintiff’s written
consent before entering into a business transaction with him. MacFarlane, 2005 WL
22440949 at *1. The trial court placed the burden on the defendant attorney to justify
the transaction but recognized that the burden as respects proof of damages remained
on the plaintiff. Id. at *8. When the plaintiff failed to present evidence of damage, the
trial court granted a directed verdict for the attorney, which the appellate court affirmed
because even though the burden had shifted as respects liability, the plaintiff retained
his burden to prove damages. Id. at *9. Like the plaintiff in MacFarlane, the plaintiffs
here have failed in their burden to prove recoverable damages. Here, there is no damage
proof.
B. The plaintiffs failed to meet their damage burden: they elicited no proof
that Cyndi’s alleged breach caused them damages.
Proof of recoverable damage, in the context of this case, requires more than
merely showing that Cyndi breached a fiduciary duty in dealings with Bud relative to the
beneficiary designations. See Longaker v. Evans, 32 S.W.3d 725, 735 (Tex. App.-San
Antonio 2000, pet. withdrawn) (no causal link between defendant’s breach of fiduciary
duty and any alleged loss to decedent’s estate). This is so for the simplest of reasons: If
4
Bud would have made an identical beneficiary designation even absent any fiduciary
breach or tort – that is, if Bud would have named Cyndi his beneficiary no matter how
scrupulously she acted towards him (or even if she would have had no involvement in
the designations at all) – then the breach was without consequence. See id. (no evidence
of damage due to defendant’s breach of fiduciary duty because all indications are
decedent did what she wanted regardless). To sustain a recovery, in contrast, the
plaintiff must prove the defendant’s conduct to be both (a) a violation of duty
(establishing liability) and (b) the but-for cause of injury (establishing damage). E.g.,
Hoover v. Larkin, 196 S.W.3d 227, 233 (Tex. App.—Houston [1st Dist.] 2006, pet.
denied)(breach-of-fiduciary-duty plaintiff must prove causation to recover actual
damages); Longaker, 32 S.W.3d at 735; accord Swank v. Cunningham, 258 S.W.3d 647, 667
(Tex. App.—Eastland, 2008, pet. denied). Otherwise, there is no basis for a recovery. Id.
For the defendant’s conduct to be the but-for cause of injury, the conditions
much be such that in the absence of that conduct the plaintiff would not have been
harmed. See Longaker, 32 S.W.3d at 735-36. In Longaker, the defendant breached his
fiduciary duty to the decedent by precluding the decedent from obtaining financial
advice regarding the termination of a trust. Id. at 735. The advice, if heeded, could have
saved the estate $550,000 in estate taxes. Id. Despite the clear breach of fiduciary duty,
the court held there was no evidence that the breached caused the estate or its
beneficiaries damage because “even if [decedent] acted on bad advice from [defendant]
in terminating the trust, all indications are it was what she wanted and there is no
5
evidence of a contrary intent or that she could have been persuaded to change her
mind.” Id.
Here, given the holding in Longaker and this Court’s holding, which hinges
liability upon Cyndi’s failure to inform, the plaintiffs must prove that but for the failure
to inform, Bud would have designated them to receive the annuity proceeds. There is
no probative evidence of that, direct or otherwise. What is more, the plaintiffs also
needed to contend with the facts that (a) Bud consistently, independent of Cyndi’s
involvement, designated Cyndi as his beneficiary, (b) Bud never designated his estate or
any other living descendant as a beneficiary, and (c) Bud’s longtime lawyer discussed the
annuity designations with Bud when his will was done. These circumstances beg the
question of how it might be that Cyndi, merely by failing to inform Bud of something
he surely already knew, would have caused Bud to act against his own intention. The
plaintiffs have never said. Nor have they denied their burden to prove damage.
Instead, the plaintiffs argued that their burden on damages could be deemed met
because, they claim, the annuity proceeds at issue would have defaulted to Bud’s estate
if Bud would somehow have made no beneficiary designation at all. See Reply Br. at 32
(“Had Bud not designated Cyndi in the change forms, there would have been no
designated beneficiary. Absent Bud’s designation of Cyndi as primary beneficiary, then,
his annuities would have passed under the terms of his will and codicil.”). Plaintiffs
invoked this same dreadful damage analysis at trial. See, e.g., 3RR121 (reasoning that if
the annuity proceeds had not gone to Cyndi but would have gone to the estate, then
6
Phyllis, Cyndi’s half-sister, would have received an eighth). This does not approach a
showing that Cyndi caused the plaintiffs damages. In fact it altogether avoids the
disputed issue.
As exemplified by Longaker, the material question is whether, absent a fiduciary
breach (or interference) Bud would have acted differently as respects the annuity
proceeds. The plaintiffs don’t assert that he would have. Quite cleverly, they instead
assume the disputed issue away, substituting the straw-man observation that if Bud
would have acted differently – if he would have “not designated Cyndi” as his annuity
beneficiary – the annuities then would pass to different beneficiaries. Everyone knows
that.
The question, however – which the plaintiffs’ reply skirts – is whether there is in
fact any evidence that Bud actually would have “not designated Cyndi” his beneficiary if
she had not participated in the paperwork or had she fully informed him of all material
facts (whatever that would have meant). If there is no evidence then there is no proof of
a recoverable damage. See Longaker, 32 S.W.3d at 735 (no evidence of damage to estate
because no evidence defendant’s breach of fiduciary duty altered decedent’s actions).
One problem in the plaintiffs’ damage case arises instantly: In the context of a
simple beneficiary designation of bank accounts and financial assets, what reason is
there to think that by better informing Bud about beneficiary designations, his particular
designations would have been different?
7
Bud had successfully made such beneficiary designations several times in the past,
independent of any assistance from Cyndi. In doing so, he had always appointed
Cyndi as either a primary or contingent beneficiary or afforded her a right of
survivorship. See, e.g., 4RR60-62; PX 11; PX 16; PX 17. He never once appointed
even one of the plaintiffs as any sort of beneficiary on any such assets. Not once.
Nor is there evidence he had ever once appointed his estate as beneficiary of
these assets. Nor is there evidence that he had ever failed to expressly appoint a
beneficiary. But the plaintiffs think the Court can just assume damages because if Bud
would have acted diametrically opposite of his consistent 25-year history of conduct
then there would have been damage. What was it that Cyndi should have said but didn’t
that would have persuaded Bud to take such an about face?
In this case, it isn’t sufficient to say that if the actual designations are voided, then
the estate is beneficiary by default. As even the plaintiffs concede, the issuers of the
annuities – the counterparties in the transactions – required Bud to designate
beneficiaries. See Reply Br. at 4. This of course, is unlike the situation in a typical will
contest, where the decedent was unduly influenced into the discretionary act of making
a successor will that supplanted the prior will that reflected the decedent’s true intent. In
such situations, it is reasonable to infer that but for the undue influence, the successor
will would not have come about. Such an inference is not reasonable here. So the
question is who he would have designated in the absence of any fiduciary breach. There
8
is no direct proof or evidence supporting a reasonable inference that his beneficiary
would have been his estate.
At trial, the only attempted proof that the beneficiary would have been the estate
amounted to a few, purely speculative assertions that the plaintiffs presumed Bud would
have wanted his non-probate assets to pass to the same persons and in the same
proportions as he provided for his probate assets, via his will. As explained in Cyndi’s
Appellee’s brief, none of the plaintiffs testified to personal knowledge of any facts
material to damage. Instead, they confessed that their positions rest on their own,
subjective and self-serving thoughts and beliefs. E.g., 3RR119 (Phyllis)(“I don’t know
any facts. It’s just what I believe as being sisters and knowing the parties.”); 3RR111-12
(Phyllis)( stating she didn’t “believe” the annuity designations were fair to Bud); 3RR46
(Gilbert)(stating he didn’t think the annuity designations were fair because they differed
from the will and testifying he didn’t “feel like” the designations to Cyndi were Bud’s
“whole intention of doing it”); 4RR33-34 (Michael Jordan, Bud’s grandson)(stating he
didn’t “believe” the annuity designations were fair to Bud and he believed Bud instead
wanted everything divided according to the will, but he didn’t have any direct
knowledge of Bud’s intentions when he signed the designations); 4RR152-53 (Aaron
Jordan, Bud’s grandson)(stating he believed Bud had designated Cyndi the beneficiary
thinking she would “do the right thing” and distribute the proceeds per the will).
None of the plaintiffs contend that Bud had ever told them anything about
his wishes regarding his bank accounts or for the proceeds of the annuities – his
9
wife Joy’s annuities. And no one explained any basis for assuming Bud would
have wanted these items distributed according to the residuary clause of his will
rather than according to the specific beneficiary designations and survivorship
rights he issued when setting up the accounts. Rather, they just speculated. This
is not probative.
Just like unreliable expert opinions, lay opinion testimony that is unreliable and
speculative is no evidence (and thus renders no support for a jury’s findings on appeal),
even when the speculation has been admitted without objection. See Natural Gas Pipeline
Co. of Am. v. Justiss, 397 S.W.3d 150, 161 (Tex. 2012) (landowner’s unexplained, bare
conclusions provided no evidence of nuisance damage); see also Porras v. Craig, 675
S.W.2d 503, 504 (Tex. 1984)(failure to object to unreliable lay opinion was immaterial,
because “[i]rrelevant evidence, even when admitted without objection, will not support
a judgment”). Such speculative testimony “is not relevant evidence, because it does not
tend to make the existence of a material fact ‘more probable or less probable.’” Coastal
Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004). “[T]he naked
and unsupported opinion or conclusion of a witness does not constitute evidence of
probative force and will not support a jury finding even when admitted without
objection.”
10
C. Bud never intended an equal distribution of his non-probate assets.
The plaintiffs on appeal all but conceded that their speculations were non-
probative, avoiding them like the Plague. Instead, they latched onto In re Estate of Russell.
311 S.W.3d 528 (Tex. App.-El Paso 2009, no pet.). Based on that case, the plaintiffs
argued that a decedent’s “quality of fairness” could be considered as a basis for inferring
that the decedent’s true intended disposition of assets would have differed from the
disposition being attacked. Respectfully, Russell was a much different case, which does
far more to prove our point than the plaintiffs’.
In Estate of Russell, which litigated a claim of undue influence, the contested will
had disinherited the testatrix’s granddaughters, for no reason that was explicable in the
evidence. The objective proof – prior wills – showed that the testatrix had expressed her
own intent to distribute her estate in equal proportion to each of her children, and then
to their decedents, per stirpes. Id. at 534. The contention in Estate of Russell was that
these prior wills – the objective proof – “established their grandmother’s intent that
they share in her estate.” Id. (“Appellees point out that the prior wills established their
grandmother’s intent that they share in her estate”). Here, the proof is just the opposite.
Bud’s testamentary plan never called for an equal distribution. In fact, Bud had
demonstrated his willingness to write an entire slice of descendants out of his
testamentary plans: Well before Cyndi ever came to be a fiduciary, Bud had written his
son Harold’s descendants entirely out of his will (which explains why Harold’s children
are not parties). Bud’s will had initially provided that his son Melvin, who had many
11
health and personal issues, get 60% of the half going to Bud’s children. And the codicil
executed after Bud’s son Harold died had shifted Harold’s share to Melvin. E.g., PX3;
4RR149-50. Melvin died a few days before Bud’s death. A disposition of the annuity
proceeds per the plan of the will hardly seems consistent with Bud’s intention to care
the most for those in the most need.
In providing for the disposition of his financial assets, Bud had made many
beneficiary designations. But he had never once provided that these assets be distributed
to his estate or according to his will. Nor did anyone testify that Bud had ever told them
he wished to do so or told them that he didn’t wish these bank accounts and annuities
to be distributed as he had provided in the beneficiary designations.
The annuity’s beneficiary designations also were consistent with the source of the
funds (Cyndi’s mom), and continued the same unequal dispositional plan/intent that
Bud and Joy had identified for them from the outset. Moreover, it is undisputed that
Bud’s overall plan was to take care of Melvin, with his problems, and Cyndi. 4RR199,
73. Melvin predeceased Bud. Cyndi practically singlehandedly took care of Bud.
In Russell, in contrast, there was objective proof – prior wills – supporting a
reasonable inference that but for the undue influence, Russell’s testamentary plan would
have provided a per stirpes distribution. The prior, per stirpes wills embodied the “fair
and equal treatment” that the witnesses testified the testatrix had demonstrated in her
lifetime.
12
The objective proof here is that Bud – in all his 90 years – never ever
demonstrated an intent for an equal distribution of his assets. He never ever
demonstrated an intent that the non-probate bank accounts and annuities be
disposed according to his will. And he never ever demonstrated an intent that
any surviving descendant save for Cyndi share in these assets. There is no
evidence, direct, indirect, objective or otherwise, to the contrary. So this case is not like
Estate of Russell.
The designations Cyndi claims under do not afford her so much as a
penny that during Bud’s lifetime was ever earmarked for any of Bud’s other
survivors. Further Bud his other survivors a probate estate including real estate, an
“assortment of personal property,” and some cash. 3RR51-52, 83-84.
The plaintiffs have inveigled a 180 degree change in the plan for Bud’s non-
probate assets, for no reason other than that the record lacked proof that Bud – who
through the years proved that he knew what beneficiary designations were for – wasn’t
specifically informed of what he surely already knew. Maybe this is enough to establish
the liability case, owing to the jury charge’s badly misplaced burden of proof. But it does
not begin to support the damage verdict.
Proof of damages requires actual evidence that Bud, if unimpeded, would have
made the beneficiary designation plaintiffs advocate for. There is no hint of such proof.
To be crystal clear: our case is exactly the opposite of Estate of Russell. There, the legal
outcome restored the testatrix’s prior, objectively expressed dispositional plan for the
13
disputed assets, and that plan actually demonstrated an intention of equal treatment.
Here, in contrast, this Court’s decision redirects the bank funds and annuities to
persons Bud had never ever designated to receive them. Worse, the decision
creates an unnatural disposition: Annuities that originated as the sole property of
Cyndi’s mom, who had earmarked Cyndi to get them after she and Bud died,
have now been redirected away from Cyndi, Bud’s caregiver, and to persons who
resented Joy, disowned Bud for a huge chunk of their adult lives, and who, in at
least Gilbert’s case, the record shows had no need of the money. (Gilbert, a
successful businessman, owned a second home on a lake and had once even owned an
airplane. 3RR30, 33.) Also, three of the plaintiffs are the heirs of Bud’s deceased son
Melvin. To help with Melvin’s health and personal problems, Bud had given Melvin a
house, 3RR34-35, which, presumably, Melvin’s heirs inherited when Melvin died
intestate. 3RR86-87; PX15. There is no indication in the record that Bud wished these
heirs, as opposed to Melvin, to receive an additional, outsized share of Bud’s non-
probate assets. And the remaining plaintiffs, Joy’s daughters Phyllis and Donna, who
didn’t have good relationships with Bud, 4RR9, were defendants in this suit until shortly
before trial.
This Court has impliedly conceded that the disposition of the bank accounts was
not a damage connected to any breach of fiduciary duty. Respectfully, it is inconsistent
to not recognize the similar evidentiary failure with respect to the annuities.
14
D. The evidence establishes that Bud intended Cyndi to receive the annuity
proceeds.
While there is no evidence supporting the plaintiffs’ damage recovery – that is, no
evidence that but for any fiduciary breach Bud would have made different beneficiary
designations – there is solid evidence to the contrary:
One of the accounts at issue, a Bank Texas account identifying Cyndi as the pay-
on-death beneficiary, was opened and Cyndi was named beneficiary entirely without
Cyndi’s knowledge or participation. 4RR60-61; PX11. Cyndi was in a Waco hospital at
time, recuperating from a staph infection. 4RR60, 77. It is uncontested that she didn’t
learn she was the beneficiary of this account until Bud’s son Melvin, who along with
Bud established the account, died. 4RR61. The plaintiffs have no explanation for this
evidence, which also contradicts their speculations about what Bud would have done
with the beneficiary designations acting of his own accord.
The record likewise conclusively negates any speculation about other bank
accounts at issue (two accounts at Wood County National Bank). These accounts were
opened fifteen years before Cyndi obtained any fiduciary rights, when Bud, Cyndi’s
mother, Joy, and Cyndi jointly opened them in 1991 and 1993. 4RR115. They all three
were account owners, with Cyndi holding the right of survivorship. Id.; PX5. These
accounts contained settlement proceeds Cyndi had received as a result of a workplace
accident. 4RR24, 65, 115. So the survivorship rights in Cyndi were both natural and
15
their creation, having preceded Cyndi’s fiduciary status, could not have been a damage
in this suit.
As for the three annuities, they had been Cyndi’s mother’s annuities during her
lifetime. 4RR71. While Joy was alive, Bud was the annuities’ primary beneficiary and
Cyndi alone – to the exclusion of the plaintiffs in this suit – was their contingent
beneficiary. 4RR190; DX7. After Joy died, Bud exercised a spousal continuation
election, choosing to forego lump sum distributions and naming Cyndi as the annuities’
sole beneficiary, thus continuing Joy’s succession plan for these proceeds. That Cyndi
would be the beneficiary of her Mom’s annuities is a natural disposition. For Bud to
have instead designated the plaintiffs – who mostly disdained Cyndi’s mom, and who
were even estranged from Bud for a period spanning decades until his 70 th birthday,
3RR28-29; 4RR125 –would have shocked the conscience. One of the plaintiffs, Phyllis
Woods, who is Cyndi’s half sister, admitted to having had no relationship at all with Bud
until Joy died, in 2005. 3RR104. Of course, Bud had the legal right to make such a
beneficiary designation upon Joy’s death. But there is no evidence he ever would have
done so.
E. If there could be evidence of damages, it would be factually-insufficient
evidence.
The failure to present any evidence at all of damage of course requires affirmance
of the take-nothing judgment. But if there could be some evidence of damage here, it
surely would be factually insufficient evidence. That would require a remand of the
16
entire case, including liability, because Appellate Rule 44.1(b) in that event would
prevent a remand that was limited to the issue of unliquidated damages. TEX. R. APP. P.
44.1(b); Estrada v. Dillon, 44 S.W.3d 558, 562 (Tex. 2001).
Conclusion and Prayer
For the reasons stated in this motion, the Court should grant rehearing and
should affirm the trial court’s take-nothing judgment. Alternatively, if there were
somehow some (albeit factually-insufficient) proof of damages, the Court in that event
should remand the cause, including liability, for a new trial (which could be conducted
with the jury properly charged on the plaintiffs’ liability burden).
Respectfully submitted,
/s/ Greg Smith
GREG SMITH
State Bar No. 18600600
NOLAN SMITH
State Bar No. 24075632
RAMEY & FLOCK, P.C.
100 E. Ferguson, Suite 500
Tyler, TX 75702
Telephone: (903) 597-3301
Facsimile: (903) 597-2413
gsmith@rameyflock.com
nolans@rameyflock.com
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J. BRAD MCCAMPBELL
State Bar No. 13358000
CURTIS, ALEXANDER,
MCCAMPBELL & MORRIS, P.C.
P. O. Box 38
Emory, TX 75440
Telephone: (903) 473-2297
Facsimile: (903) 473-3069
bmccampbell@cammpclaw.com
Counsel for Appellee,
Cynthia Kay Lyles
Certificate of Compliance
1. This motion complies with the type-volume limitation of TEX. R. APP. P.
9.4 because it contains 4,456 words, excluding the parts of the motion exempted by
TEX. R. APP. P. 9.4(i)(2)(B).
2. This motion complies with the typeface requirements of TEX. R. APP. P.
9.4(e) because it has been prepared in the proportionally spaced typeface using Word
2007 in 14 point Garamond font.
Dated: January 12, 2015.
/s/ Greg Smith
GREG SMITH
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Certificate of Service
The undersigned certifies that a copy of the above and foregoing document was
served upon counsel for Appellants in accordance with the applicable Texas Rules of
Civil Procedure on this the 12th day of January, 2015, on the following:
Via email baruchesq@aol.com
Chad Baruch
The Law Office of Chad Baruch
3201 Main Street
Rowlett, TX 75088
Via email prleake@sbcgloball.net
Paul R. Leake
Leake & Blair, P.C.
P. O. Box 1300
Forney, TX 75126
/s/ Greg Smith
GREG SMITH
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