Garcia v. Fabela
1984 Tex. App. LEXIS 5630, 673 S.W.2d 933 (1984)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An oral agreement to reconvey real property, though normally barred by the Statute of Frauds, can be enforced through the imposition of a constructive trust if the initial conveyance was induced by a confidential relationship between the parties and the grantee subsequently breaches that trust by refusing to reconvey.
Facts:
- The Garcias owned a home but fell into default on their promissory note and faced foreclosure.
- After being denied refinancing by a bank, the Fabelas, who had been close friends with the Garcias for approximately twenty years, offered to help.
- The parties made an oral agreement whereby the Garcias would deed their home to the Fabelas, who would use their superior credit to obtain a new loan to pay off the existing debt.
- The Fabelas agreed to hold the legal title in trust for the Garcias and reconvey the property to them once the new note was fully paid.
- In reliance on this agreement and their long-standing friendship, the Garcias executed a general warranty deed transferring the property to the Fabelas.
- The Fabelas then executed a new deed of trust to refinance the property.
- Approximately one year later, the Fabelas informed the Garcias that they no longer owned any interest in the property and denied the existence of any trust agreement.
Procedural Posture:
- The Garcias filed suit against the Fabelas in a Texas trial court, seeking to impress a constructive trust upon their former home or, alternatively, for damages.
- The Fabelas moved for summary judgment, arguing the Garcias' claim was barred by the Statute of Frauds because the alleged agreement to reconvey the property was not in writing.
- The trial court granted the Fabelas' motion and entered a take-nothing summary judgment against the Garcias.
- The Garcias, as appellants, appealed the trial court's judgment to the Texas Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the Statute of Frauds bar the enforcement of an oral agreement to reconvey real property when the conveyance was induced by a pre-existing confidential relationship between the grantor and grantee?
Opinions:
Majority - Tijerina, Justice
No, the Statute of Frauds does not bar enforcement where a confidential relationship exists. A constructive trust may be imposed to prevent unjust enrichment when a grantee breaches an oral promise to reconvey property that was transferred in reliance upon a confidential relationship. While an oral agreement to hold property in trust is typically an unenforceable express trust under the Statute of Frauds, an exception exists where the transfer was procured through the abuse of a confidential relationship. A confidential relationship is not limited to formal fiduciary roles but extends to informal relationships—moral, social, domestic, or personal—where one person trusts in and relies upon another. The breach of the promise to reconvey is itself an abuse of that confidence, constituting constructive fraud, and it is not necessary to prove the grantee had fraudulent intent at the time of the transfer. Because the Garcias alleged a 20-year friendship of trust and confidence, they raised a genuine issue of material fact as to whether such a relationship existed, making summary judgment improper.
Analysis:
This decision reinforces a significant equitable exception to the Statute of Frauds, preventing its use as an instrument of fraud. The case broadens the application of the constructive trust doctrine by liberally defining a 'confidential relationship' to include informal, long-standing friendships built on personal trust. By classifying the existence of such a relationship as a question of fact for a jury, the court makes it more difficult for defendants to obtain summary judgment in cases involving alleged breaches of oral promises between trusted parties. This holding protects vulnerable grantors who rely on informal agreements and underscores the principle that equity can intervene to prevent injustice when a relationship of trust is abused.
