In Re Estate of Johnson
2011 WL 535104, 340 S.W.3d 769 (2011)
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Rule of Law:
Undue influence invalidates a will or trust when a dominant influence subverts the testator's mind, causing them to execute a document they would not have otherwise. Attorneys' fees in will and trust contests are recoverable if incurred in good faith and with just cause (wills) or if equitable and just (trusts), and segregation of fees is not required when discrete legal services advance both recoverable and unrecoverable claims due to intertwined facts.
Facts:
- Belton Kleberg Johnson ("B"), a descendent of King Ranch heritage, had three children from his first marriage: Cecilia McMurrey ("Ceci"), Sarah Pitt ("Sarah"), and Kley Johnson (deceased 1991).
- B divorced his first wife, Patsy, in 1987, and his second wife, Lynne, died of cancer in January 1994.
- B met Laura Johnson in Hong Kong in January 1994, within days of Lynne's death; Laura divorced her first husband in early 1996 and married B on November 8, 1996.
- Over four decades, B engaged in extensive estate planning, with his 1991, 1993, and 1995 wills largely providing for his children/grandchildren and specific charities.
- After marrying Laura, B's 1997 will changed his estate plan, giving his grandchildren $1 million each, a life estate to Laura, and the remainder to five specific charities.
- In 1998, Johnson Properties, a partnership in which B and his children's trusts were partners, was dissolved, and B formed BKJ Interests, to which he transferred King Ranch royalties and other assets, with this change intentionally kept secret from Ceci and Sarah.
- B's 1998 will and Management Trust (amended in 1999) further altered his estate plan, providing an aggregate of $7 million for grandchildren (offset by other trust assets), a life estate for Laura, and the remainder to the Belton Kleberg Johnson Foundation, where the trustee had complete control over distributions and which included causes favored by Laura but excluded one of B's long-favored charities; the 1999 amendment removed grandchildren's distributions entirely.
- Evidence established B was an alcoholic, had organic brain syndrome/memory dysfunction, feared abandonment, and was susceptible to influence, particularly while drinking; Laura denied B's drinking problem, attended estate planning meetings, made negative remarks about B's children, and allegedly influenced B's decisions regarding family assets and personal matters like hunting and having a child.
Procedural Posture:
- Following Belton Kleberg Johnson's death in 2001, his 1999 will and 2000 Codicil were admitted to probate in a trial court, and Ed Copley was named independent executor.
- B's children and grandchildren (Appellees) challenged the probate order in the trial court, seeking to deny probate of the 1999 will and 2000 Codicil, admit B's 1997 will to probate, invalidate certain trust documents, and recover damages for breach of fiduciary duty and tortious interference.
- A jury trial was held in the trial court where the jury found that B executed certain wills and trusts as a result of undue influence and determined the reasonable and necessary attorneys' fees.
- The trial court entered judgment on the jury's verdict, denying probate of the contested wills and admitting B's 1997 will to probate, invalidating certain trust documents, and awarding over $6.1 million in attorneys' fees to the Appellees.
- The independent executor of B's estate (Ed Copley), B's widow (Laura Johnson), and a co-trustee of a trust created by B (Appellants) appealed the trial court's judgment to the Texas Court of Appeals, challenging the sufficiency of the evidence for undue influence and various aspects of the attorneys' fee award.
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Issue:
1. Is the evidence legally and factually sufficient to support a jury's finding that Belton Kleberg Johnson executed certain wills and trusts as a result of undue influence? 2. Did the trial court abuse its discretion or err in its jury charge and award of attorneys' fees, including the claim that fees were not personally incurred, that they were not properly segregated, or that they constituted double recovery, for both will and trust contests?
Opinions:
Majority - Catherine Stone, Chief Justice
Yes, the evidence is legally and factually sufficient to support the jury's finding that Belton Kleberg Johnson executed certain wills and trusts as a result of undue influence. No, the trial court did not abuse its discretion or err in its jury charge and award of attorneys' fees. The court applied the three-part test for undue influence established in Rothermel v. Duncan, which requires proving (1) the existence and exertion of influence, (2) the effective operation of such influence to subvert the testator's mind, and (3) the execution of a testament that would not have been made but for such influence. The court found ample evidence for each element: B's susceptibility due to alcoholism, organic brain syndrome, and fear of abandonment by Laura; Laura's exertion of influence through her presence in estate planning, negative remarks about B's children, and interference with his relationships and desires; and an unnatural disposition in the later wills and trusts that favored Laura and her interests over B's prior stated wishes for his children, grandchildren, and favored charities. The jury was entitled to weigh conflicting expert testimony and the credibility of witnesses regarding B's mental state and Laura's actions, and to disbelieve any "reasonable explanation" for the unnatural disposition. Regarding attorneys' fees, the court affirmed the trial court's award. It ruled that the jury charge on attorneys' fees under Texas Probate Code § 243 (will contests) and Texas Trust Code § 114.064 (trust contests) was not erroneous. Recovery was not precluded merely because trusts, rather than individual plaintiffs, paid or advanced fees, as proof of fees actually incurred or paid is not a prerequisite in Texas. The jury charge implicitly limited fees to eligible plaintiffs. The court further found that the testimony provided sufficient evidence for the jury to find the fees reasonable and necessary. Segregation of fees was not strictly required because the will and trust contest claims were based on "intertwined facts," meaning discrete legal services advanced both recoverable and unrecoverable claims, thus falling under the exception articulated in Tony Gullo Motors I, L.P. v. Chapa. Finally, the court found no double recovery of attorneys' fees and held that awarding trust contest fees against the Estate was equitable and just given that all claims were jointly tried and defense of the will necessarily required defense of the trust.
Analysis:
This case serves as a crucial reaffirmation of the Rothermel v. Duncan undue influence test in Texas, particularly highlighting the persuasive power of circumstantial evidence when proving a subtle and extended course of influence. It underscores that a jury's determination of credibility and its weighing of a "reasonable explanation" for an unnatural disposition is paramount. Furthermore, the opinion provides important guidance on attorneys' fees in complex probate and trust litigation, solidifying the principle that fees paid by third-party trusts can be recovered and clarifying the Chapa exception for fee segregation when claims are factually intertwined, which is frequently the case in such disputes. This approach prevents plaintiffs from being unfairly burdened by an overly strict segregation requirement, thus ensuring access to justice in complex, intertwined legal battles over estates.
