MALPRACTICE AND LITIGATION INVOLVING TRUSTS AND … · 2011. 3. 2. · MALPRACTICE AND LITIGATION...

MALPRACTICE AND LITIGATION INVOLVINGTRUSTS AND ESTATES

JACK W. LAWTER, JR.Lawter & LawterAttorneys at Law

5615 Kirby, Suite 930Houston, Texas 77005

(713) 522-9400

The San Antonio Estate Planners Council’sDocket Call in Probate Court

Estate Planning, Probate and Guardianship SeminarSan Antonio, Texas

February 10-11, 2011

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I. LEGAL MALPRACTICE GENERALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A. Suits by Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B. Suits by Nonclients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1. Privity Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Privity Not Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

a. Claims against attorneys . . . . . . . . . . . . . . . . . . . . . . . . . . 2b. Sanctions against attorneys . . . . . . . . . . . . . . . . . . . . . . . . 2

C. Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. Negligence Claims By A Client . . . . . . . . . . . . . . . . . . . . . . . . . . . 22. Negligence Claims By A Nonclient. . . . . . . . . . . . . . . . . . . . . . . . 3

a. Failure to perform duties . . . . . . . . . . . . . . . . . . . . . . . . . . 3b. Failure to Inform. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31. No Representation . . . . . . . . . . . . . . . . . . . . . . . . . 32. Scope of representation . . . . . . . . . . . . . . . . . . . . . 4

D. Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41. Breach of Contract Claims By a Client . . . . . . . . . . . . . . . . . . . . . 42. Breach of Contract Claims By a Nonclient . . . . . . . . . . . . . . . . . . 4

a. General rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4b. Nonclient paid for services . . . . . . . . . . . . . . . . . . . . . . . . . 4

E. Breach of Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41. Breach of Fiduciary Duty Claims By a Client . . . . . . . . . . . . . . . . 52. Breach of Fiduciary Duty Claims By a Nonclient . . . . . . . . . . . . . 5

F. Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51. Fraud Claims By a Client. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52. Fraud Claims By a Nonclient . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

G. Violation of DTPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61. DTPA Claims By a Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

a. Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b. Failure to disclose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7c. Unconscionable action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6d. Breach of warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7e. Annuity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2. DTPA Claims By a Nonclient . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7H. Negligent Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1. Negligent Misrepresentation Claims By a Client. . . . . . . . . . . . . . 72. Negligent Misrepresentation Claims By a Nonclient . . . . . . . . . . . 7

I. Collusion Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81. Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

a. Conspiracy claims by a client . . . . . . . . . . . . . . . . . . . . . . . 8b. Conspiracy claims by a nonclient . . . . . . . . . . . . . . . . . . . . 8

2. Aiding & Abetting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8J. Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1. By clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92. By nonclients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

K. Violation of Disciplinary Rules Does Not Create a Cause of Action. . . . . 9

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1. No cause of action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92. Standard of conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

II. ACTIONS TO CONSIDER TO REDUCE THE RISK OF MALPRACTICE . . . . 10A. Select Cases, Clients and Assignments Carefully. . . . . . . . . . . . . . . . . 10B. Use an Engagement Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10C. Consider Conflicts of Interest and Even the Appearance of a Conflict of

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10D. Carefully Consider Joint Representations . . . . . . . . . . . . . . . . . . . . . . . 11E. Get Help If You Need It. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11F. Document a Client’s Wishes When the Client Wants Something Out of

the Ordinary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11G. Avoid Estate Planning for People with Questionable Capacity . . . . . . . 11H. Avoid Circumstances That Could Suggest Undue Influence . . . . . . . . . 11I. Remember Who You Represent and Frequently Remind Others Who You

Represent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11J. Try to Avoid Representations to Nonclients . . . . . . . . . . . . . . . . . . . . . 11K. Do Not Assist a Client in a Breach of Fiduciary Duty . . . . . . . . . . . . . . 11L. Act Professionally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11M. Be Careful What You Say or Write. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11N. Be Careful What You Email . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11O. In Fiduciary Litigation, Privileged Communications May Be Revealed . 11P. In Estate Planning, Any Contest Will Waive All the Privileges Relating to

the Estate Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Q. In Cases Involving Allegations of Financial Misconduct by a Fiduciary

Client, the Attorney Should Exercise Great Care . . . . . . . . . . . . . . . . . 12

III. WARNING SIGNS TO THE ESTATE PLANNER . . . . . . . . . . . . . . . . . . . . . . 12A. Checklist of Situations Which Increase the Risk of Litigation . . . . . . . . 12B. Potential Litigation Warrants Additional Care . . . . . . . . . . . . . . . . . . . . 12

IV. DISCLOSURE OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13A. Communication Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13B. Lawyer-Client Privilege: Rule 503 of the Texas Rules of Civil Evidence 13

1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142. General Rule of Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143. Who May Claim the Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . 144. Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

a. Furtherance of crime or fraud . . . . . . . . . . . . . . . . . . . . . 14b. Claimants through same deceased client . . . . . . . . . . . . 14c. Breach of duty by a lawyer or client . . . . . . . . . . . . . . . . . 15d. Document attested to by a lawyer . . . . . . . . . . . . . . . . . . 15e. Joint clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

C. Work Product Privilege: Rule 192 of the Texas Rules of Civil Procedure 15D. Confidentiality of Information: Rule 1.05 of the Texas Disciplinary Rules of

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Professional Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162. General Rule of Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 163. Revealing Confidential Information . . . . . . . . . . . . . . . . . . . . . . . 164. Revealing Unprivileged Client Information . . . . . . . . . . . . . . . . . 175. A Lawyer Shall Reveal Confidential Information When Required To

Do So by Rule 3.03(a)(2), 3.03(b), or by Rule 4.01(b) . . . . . . . . 17E. Disclosure of Information During Estate Planning . . . . . . . . . . . . . . . . . 17F. Waiver of Attorney-Client Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1. Disclosure of Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . 182. Communication with Third Parties . . . . . . . . . . . . . . . . . . . . . . . 183. Offensive Use Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

G. Production and/or Disclosure of Terms of a Will or Trust Document. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

1. Delivery to the Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202. Delivery to a Ward's Guardian . . . . . . . . . . . . . . . . . . . . . . . . . . 203. Delivery for In Camera Inspection . . . . . . . . . . . . . . . . . . . . . . . 20

H. Disclosure of Information During Estate Administration . . . . . . . . . . . . 211. Checklist of Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212. Attorney-Client Privilege Held by Personal Representative of

Deceased Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213. Trustee's Duty to Disclose Information to Beneficiaries . . . . . . . 21

a. Huie v. Deshazo, 922 S.W.2d 920 (Tex.1996) . . . . . . . . 21b. InterFirst v. Risser, 739 S.W.2d 882 (Tex. App.--Texarkana

1987, no writ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22c. First City Nat'l Bank of Paris v. Haynes, 614 S.W.2d 605

(Tex. Civ. App.-Texarkana 1981, no writ) . . . . . . . . . . . . 224. Executor's Duty to Disclose Information to Beneficiaries . . . . . . 22

a. Ertel v. O'Brien, 852 S.W.2d 17 (Tex. App.--Waco 1993, writdenied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

b. Coble Wall Trust Co., Inc. v. Palmer, 859 S.W.2d 475 (Tex.App.--San Antonio 1993, writ denied) . . . . . . . . . . . . . . . 23

5. Privilege Effective until Waived or Found within an Exception . . 23

V. DOCUMENT REQUEST OR SUBPOENA FOR DOCUMENTS . . . . . . . . . . . 23A. Subpoena to Produce Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23B. Duty to Preserve Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

1. Attorney May be Liable for Disclosing Privileged Information . . . 23C. Preservation of Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

1. Documents Requested of Accountants . . . . . . . . . . . . . . . . . . . 242. Documents Requested of Representatives . . . . . . . . . . . . . . . . 253. Other Document Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254. Engagement Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

D. Burdensome or Expensive Requests . . . . . . . . . . . . . . . . . . . . . . . . . . 251. Independent Insulating Glass v. Street, 722 S.W.2d 798 (Tex.

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App.-- Fort Worth 1987, writ dism'd) . . . . . . . . . . . . . . . . . . . . . . 252. Morris v. Texas Employers Ins. Ass'n, 759 S.W.2d 14 (Tex. App.--

Corpus Christi 1988, writ denied) . . . . . . . . . . . . . . . . . . . . . . . . 253. State Farm Mut. Auto Ins. Co. v. Engelke, 824 S.W.2d 747 (Tex.

App.--Houston [1st Dist.] 1992, no writ) . . . . . . . . . . . . . . . . . . . 26E. Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26F. Waiver of Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

1. Conrad v. Wilson, 873 S.W.2d 467 (Tex. App.--Beaumont 1994, nowrit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

G. Joint Defense Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27H. Involuntary Disclosure - Attorney-Client Privilege . . . . . . . . . . . . . . . . . 27

VI. MAINTAINING CLIENT FILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27A. Estate Planning Files After the Client's Death . . . . . . . . . . . . . . . . . . . . 27B. File Maintenance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28C. Recommendations for File Maintenance . . . . . . . . . . . . . . . . . . . . . . . . 28

1. Institute Either an "All or Nothing" System . . . . . . . . . . . . . . . . . 282. "All" System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283. "Nothing" System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284. Maintain a System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285. Never Mix Estate Planning Files with Other Client Matters . . . . 286. Never Mix the Estate Planning Files of More than One Client . . 28

VII. BILLING AND TIMEKEEPING RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28A. Attorney-Client Privilege May Not Apply to Bills . . . . . . . . . . . . . . . . . . 29B. Production of Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29C. Waived Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29D. Time Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29E. Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

1. If Litigation is Likely, Care Should be Taken With Itemized Bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

2. Use Care to Describe Sensitive Matters . . . . . . . . . . . . . . . . . . . 293. If Litigation is Likely, Use the Bill to Confirm the Client's

Testamentary Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

VIII. HOW TO IMPROVE THE CHANCES THAT A WILL OR TRUST WILL BE VALID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29A. Avoiding Claims of Undue Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

1. Consider Potential Conflicts of Interest . . . . . . . . . . . . . . . . . . . 292. Consider Relationships with Beneficiaries . . . . . . . . . . . . . . . . . 293. Be Cautious About Who Gives You Instructions . . . . . . . . . . . . 304. Remember Who Your Client Is . . . . . . . . . . . . . . . . . . . . . . . . . . 305. Exclude Beneficiaries at Will Execution . . . . . . . . . . . . . . . . . . . 306. Incorporate the Client's Input . . . . . . . . . . . . . . . . . . . . . . . . . . . 307. Think Like a Trial Lawyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

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B. Avoiding Claims of Lack of Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . 301. Make Sure You Are Comfortable that the Client Has Capacity . 302. Create a Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303. Choose Your Witnesses Carefully . . . . . . . . . . . . . . . . . . . . . . . 314. Consider Memos or Affidavits from the Witnesses and the Notary

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315. Consider Videotape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316. Deposition to Perpetuate Testimony . . . . . . . . . . . . . . . . . . . . . 317. Declaratory Judgment Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

C. Formalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

IX. TORTIOUS INTERFERENCE WITH INHERITANCE RIGHTS . . . . . . . . . . . . 31A. Definition of Tortious Interference with Inheritance Rights . . . . . . . . . . 31B. Restatement (Second) of Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32C. Restatement of Torts (Second) § 774B - Definition of Terms . . . . . . . . 32

1. Inheritance or Gift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322. Gift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

D. Tortious Interference v. Will Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . 32E. Jury Charge for Tortious Interference Cause of Action . . . . . . . . . . . . . 32F. Texas Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1. King v. Acker, 725 S.W.2d 750 (Tex. App.--Houston [1st Dist.]1987, no writ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

2. Damages in King v. Acker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333. Implications of King v. Acker for Probate and Trust Litigation . . 344. Possible Cause of Action for Interference with Inheritance

Expectancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345. King and Neill Distinguished . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346. Possible Elements of Tortious Interference in Texas . . . . . . . . . 35

a. Texas cases discussing interference with inheritance . . . 35b. Texas cases discussing tortious interference with contract

rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37G. Safe Harbor for Estate Planning Lawyers . . . . . . . . . . . . . . . . . . . . . . . 37

1. A Safe Harbor Has Not Been Defined in Texas . . . . . . . . . . . . . 372. Clear Outside Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383. Defining a Likely Safe Harbor for Attorneys . . . . . . . . . . . . . . . . 38

X. CONFLICTS OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38A. General Rules - Rule 1.06 of the Texas Disciplinary Rules of Professional

Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38B. Prohibited Transactions - Rule 1.08 of the Texas Disciplinary Rules of

Professional Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39C. Former Client - Rule 1.09 of the Texas Disciplinary Rules of Professional

Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40D. Recommendations Regarding Conflicts of Interest . . . . . . . . . . . . . . . . 41

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XI. ESTATE PLANNER AS WITNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43A. Practical Tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43B. Rule 501 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44C. Rule 3.08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44D. Case Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

1. May v. Crofts, 868 S.W.2d 397 (Tex. App.--Texarkana 1993, nowrit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

2. Anderson Producing Inc. v. Koch Oil Company, 929 S.W.2d 416(Tex. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

XII. REPRESENTING A FIDUCIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47A. Duty of Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47B. Allocation of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47C. Counsel the Fiduciary to Exercise Restraint When Expending Funds Held

in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47D. Sometimes it is a Fiduciary's Job to Make a Decision . . . . . . . . . . . . . . 47E. Resignation is an Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48F. Be Careful What You Write . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48G. Be Careful What You Say . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48H. Settlement Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48I. Correct Mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48J. Use Common Sense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48K. Transactions By A Fiduciary with the Beneficiary . . . . . . . . . . . . . . . . . 47

1. Sorrell v. Elsey, 748 S.W.2d 584 (Tex. App. - San Antonio 1988,writ denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

2. Miller v. Miller, 700 S.W.2d 941 (Tex. App. - Dallas 1985, writ ref’dn.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

3. Texas Pattern Jury Charge Questions . . . . . . . . . . . . . . . . . . . . 514. Third Parties Can Be Held Liable for a Breach of Trust . . . . . . . 53

XIII. RECOVERY OF ATTORNEY'S FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54A. Texas Probate Code Section 243: Allowance for Defending Will . . . . 54B. Texas Probate Code Section 245: When Costs are Adjudged Against

Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54C. Texas Probate Code Section 149C: Removal of Independent Executor 55D. Texas Trust Code Section 114.064: Costs . . . . . . . . . . . . . . . . . . . . . 57E. Texas Trust Code Section 113.018: Employment of Agents . . . . . . . . . 57F. Texas Civil Practice and Remedies Code Section 37.009: Costs. . . . . 57G. Texas Civil Practice and Remedies Code Section 37.005: Declarations

Relating to Trust or Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Malpractice and Litigation Involving Trusts and Estates 1

MALPRACTICE AND LITIGATION INVOLVING TRUSTS AND EST ATESJack W. Lawter, Jr.

I. L E G A L M A L P R A C T I C EGENERALLY

A. Suits by Clients. The attorney-client relationship begins with a contractto provide legal services. The contractmay be express or implied. Span Enters.v. Wood, 274 S.W.3d 854, 857-58(Tex.App.- Houston [1st Dist.] 2008, nopet.). But see In re Bivins, 162 S.W.3d415, 419-20 (Tex.App.- Waco 2005, orig.proceeding) (attorney-client relationshipnot created when attorney hired innonlegal capacity); State v. Delany, 149S.W.3d 655, 662 (Tex.App.- Houston[14th Dist.] 2004) (same), rev'd in part onother grounds, 197 S.W.3d 297(Tex.2006). Once the relationship isestablished, the attorney's obligations toa client are actionable under the laws ofcontract, tort and fiduciary relationship.Thus, attorneys are under threeconcurrent obligations to the client: (1) theduty to perform the contract according toits terms, (2) the duty to perform thecontract as an ordinary, prudent attorneywould perform it, and (3) the duty toperform the contract with the utmost goodfaith and fidelity. Anderson & Steele,Fiduciary Duty, Tort & Contract: A Primeron the Legal Malpractice Puzzle, 47 SMUL.Rev. 235, 245 (1994)

B. Suits by Nonclients.

1. Privity Required. The rule of privitybars suits against attorneys by partieswho are not clients. McCamish, Martin,Brown & Loeffler v. F.E. Appling Interests,991 S.W.2d 787, 792 (Tex.l999);

Thompson v. Vinson & Elkins, 859S.W.2d 617, 621 (Tex.App.- Houston [1stDist.] 1993, writ denied); see, e.g.,Barcelo v. Elliott, 923 S.W.2d 575, 577(Tex.1996) (trust beneficiaries could notsue attorney who drafted trustagreement); Swank v. Cunningham, 258S.W.3d 647, 666 (Tex.App.- Eastland2008, pet. denied) (shareholders couldnot bring derivative suit against attorneyswho represented shareholders asindividuals, not as representatives ofcorporation); Poth v. Small, Craig &Werkenthin, 967 S.W.2d 511, 514(Tex.App.- Austin 1998, pet. denied) (solestockholder who relinquished power tovoting trust could not sue attorneys hiredby trustee); Gamboa v. Shaw, 956 SW.2d662, 665 (Tex.App.--San Antonio 1997,no pet.) (shareholder could not sueattorney who represented corporation);Renfroe v. Jones & Assocs., 947 S.W.2d285, 288 (Tex.App.--Fort Worth 1997, writdenied) (judgment debtor could not sueattorneys who filed writ of garnishment onbehalf of their clients). However, the rulerequiring privity does not prevent apersonal representative of a decedent'sestate from bringing a suit against thedeceden t ' s a t to rney. Be l t v .Oppenheimer, Blend, Harrison & Tate,Inc., 192 S.W.3d 780, 786-87 (Tex.2006);see Smith v. O'Donnell, 288 S.W.3d 417,421 (Tex. 2009). Because a personalrepresentative of an estate stands in theshoes of the decedent, the personalrepresentative is considered to be inprivity with the decedent's attorney. Belt,192 S.W.3d at 787. Thus, any suit thedecedent could have brought against his


or her attorney during the decedent’s lifefor economic damages can be brought bythe personal representative of thedecedent’s estate. Id.; see Smith, 288SW.3d at 422.

In Belt, the Texas Supreme Courtreversed earlier decisions to permit thepersonal representative of the estate of adeceased client to sue an estate planninglawyer for damages to the estate. Belt v.Oppenheimer, Blend, Harrison & Tate,Inc., 192 S.W.3d 780 (Tex. 2006). InBelt, the allegation was that the estateplanners had negligently caused theestate to incur additional estate taxes.The Supreme Court continues to insistupon privity and has not changed the rulethat disappointed heirs of a deceasedclient cannot sue the estate planningattorney. Barcello v. Elliott, 923 S.W.2d575 (Tex. 1996). The Belt decisioncertainly increases the risk of an estateplanning practice and the limits of the Beltdecision will certainly be tested whendisappointed heirs serve as the personalrepresentative of the deceased client’sestate. As of now, the malpracticeactions are limited to harm to the estate(as opposed to a beneficiary) and alldamages must be paid to the estate (asopposed to the disappointed heir).

2. Privity Not Required.

a. Claims against attorneys. Althoughnonclients cannot sue attorneys foractions that are based on anattorney-client relationship, nonclients cansue attorneys for wrongful conductdirected at them. See Likorer v.Sunflower Terrace II, Ltd., 696 SW.2d468, 472 (Tex.App.--Houston [1st Dist.]1985, no writ). When an attorneyparticipates with a client in a wrongful

activity that injures a nonclient, theattorney is liable to the nonclient becausethe attorney's wrongful act is foreign tothe attorney's duties to his or her client.Poole v. Houston & T.C. Ry., 58 Tex. 134,137-38 (1882); Querner v. Rindfuss, 966S.W.2d 661, 666 (Tex.App.--San Antonio1998. pet. denied); McKnight v. Riddle &Brown, P.C., 877 S.W.2d 59, 61(Tex.App.-Tyler 1994, writ denied). Anonclient can sue an attorney fornegligently failing to advise the nonclientthat the attorney is not representing her.Burnap v. Linnartz, 38 S.W.3d 612, 622(Tex.App.– San Antonio 2000, no pet.);Parker v. Carnahan, 772 S.W.2d 151,157 (Tex.App.--Texarkana 1989, writdenied).

b. Sanctions against attorneys. Anonclient can seek sanctions against anattorney for wrongful conduct whilerepresenting a client in a lawsuit. SeeKlein & Assocs. Political Relations v. PortArthur lSD, 92 S.W.3d 889, 901(Tex.App.-Beaumont 2002, pet. denied);Bradt v. West, 892 S.W.2d 56, 72(Tex.App.-Houston [1st Dist.] 1994, writdenied); see also Tex. Civ. Prac. & Rem.Code §9.012 (sanctions for signinggroundless pleading), §10.004 (sanctionsfor frivolous pleadings and motions); Tex.Gov't Code §21.002 (sanctions forcontempt of court); Tex. R. Civ. P. 13(sanctions for filing improper pleadings,motions, and other papers), Tex. R. Civ.P. 215 (sanctions for abusing discovery).

C. Negligence .

1. Negligence Claims By A Client.The focus of a negligence claim by aclient is whether the attorney adequatelyrepresented the client. Duerr v. Brown,


262 S.W.3d 63, 71 (Tex.App.-Houston[14th Dist.] 2008, no pet.); Kimleco Pet.,Inc. v. Morrison & Shelton, P.C., 91S.W.3d 921, 923 (Tex.App.-Fort Worth2002, pet. denied). When the client'sprimary complaint is that the attorney didnot exercise the degree of care, skill, ordiligence that an attorney of ordinary skilland knowledge commonly possesses,then the complaint should be alleged onlyas a negligence claim. Beck v. LawOffices of Edwin J. (Ted) Terry, Jr., P.C.,284 S.W.3d 416, 428 (Tex.App.-Austin2009, no pet.); Trousdale v. Henry, 261S.W.3d 221, 227-28 (Tex.App.-Houston[14th Dist.] 2008, pet. filed 11-13-08).When an attorney represents joint clientsfor purposes of estate planning, one clientcan sue the attorney for negligence inpreparing the other client's will or trust.Estate of Arlitt v. Paterson, 995 S.W.2d713, 721 (Tex.App.-San Antonio 1999,pet. denied), disapproved on othergrounds, Belt v. Oppenheimer, Blend,Harrison & Tate, lnc., 192 S.W.3d 780(Tex.2006). Negligence claims includegiving erroneous legal advice, not givingadvice when legally obligated to do so,disobeying lawful client instructions, anddelaying or not handling a client matteramong others.

2. Negligence Claims By A Nonclient.

a. Failure to perform duties. Anonclient generally cannot sue anattorney for negligence in theperformance of a duty to the client. UnderTexas law, an attorney does not owe aduty of care to nonclients who may bedamaged by the attorney's negligence inrepresenting a client. Barcelo v. Elliott,923 S.W.2d 575, 577 (Tex.1996); Parkerv. Carnahan, 772 S.W.2d 151, 156

(Tex.App.- Texarkana 1989, writ denied);Dickey v. Jansen, 731 S.W.2d 581, 582(Tex.App.-Houston [1st Dist.] 1987, writrefd n.r.e.). By comparison, the majority ofstates that have addressed this issuehave relaxed the privity barrier to permitan intended beneficiary to sue anattorney for negligence as a third-partybeneficiary to the contract. Barcelo, 923S.W.2d at 577-78. In refusing torecognize an attorney's duty to abeneficiary of a will, the Barcelo courtadopted a rule recognized in only fourstates. Id. at 579 (Cornyn & Abbott, JJ.,dissenting). Even the Restatement (3d) ofthe Law Governing Lawyers recognizesan attorney's duty to a beneficiary of awill. See Restatement (3d) of the LawGoverning Lawyers §51 & cmt. f, illus. 2(2000) (attorney has duty to nonclientwhen attorney knows that client intendsfor attorney's services to benefitnonclient, and this duty substantiallypromotes enforcement of attorney'sobligations to client and would not createinconsistent duties). The only nonclientswho can sue an attorney for negligenceare the personal representatives of adeceden t 's es ta te , when therepresentatives sue on behalf of theestate for purely economic injury that theestate suffered before the decedent'sdeath. See Belt v. Oppenheimer, Blend,Harrison & Tate, Inc., 192 S.W.3d 780,786-87 (Tex.2006).

b. Failure to Inform.

1. No Representation. A nonclientcan sue an attorney for negligently failingto advise the nonclient that the attorneydid not represent the client. See Burnapv. Linnartz, 38 S.W.3d 612, 622(Tex.App.-San Antonio 2000, no pet.);Kotzur v. Kelly, 791 S.W.2d 254, 258


(Tex.App.-Corpus Christi 1990, no writ);Parker, 772 S.W.2d at 157.

2. Scope of representation. A clientcan sue an attorney for negligently failingto advise the client that the attorney didnot represent the client on some of theclient’s claims. See Moore v. Yarbrough,Jameson & Gray, 993 S.W.2d 760, 763(Tex.App.-Amarillo 1999, no pet.).

D. Breach of Contract . The focus ofa breach-of-contract claim against anattorney is whether the attorneyperformed the contract according to itsterms

1. Breach of Contract Claims By aClient. A client can bring a suit for breachof contract against his or her attorney.Most breach-of-contract suits against aclient's attorney involve disputes overlegal fees. See, e.g., Lopez v. Muiioz,Hockema & Reed, L.L.P., 22 S.W.3d 857,859 (Tex.2000) (client did not establishbreach-of-contract claim against attorneysfor overcharging on contingent-feecontract); Deutsch v. Hoover, Bax &Slovacek, L.L.P., 97 S.W.3d 179, 184(Tex.App.-Houston [ 14th Dist.] 2002, nopet.) (breach-of-contract claim for billingdispute); Jampole v. Matthews, 857S.W.2d 57, 59 (Tex.App.-Houston [1stD i s t . ] 1 9 9 3 , w r i t d e n i e d )(breach-of-contract claim for excessivelegal fees); see also Judwin Props., Inc.v. Griggs & Harrison, P.C., 911 S.W.2d498, 506 (Tex.App.-Houston [1st Dist.]1995, no writ) (suit over disputed legalfees sounds in contract). Fee contractdisputes involving issues other than legalfees are often characterized asnegligence claims. See, e.g., Rangel v.L a p in , 1 7 7 S . W . 3 d 1 7 , 2 4

(Tex.App.-Houston [1st Dist.] 2005, pet.denied.

2. Breach of Contract Claims By aNonclient.

a. General rule. A person cannotbring a breach-of-contract claim against aparty to the contract if the person is not inprivity with the other party. Therefore, an o n c l i e n t c a n n o t b r i n g abreach-of-contract claim against anattorney if the nonclient is not in privitywith the attorney. See Republic Nat'l Bankv. National Bankers Life Ins. Co., 427S.W.2d 76, 79 (Tex.App.-Dallas 1968,writ ref’d n.r.e.).

b. Nonclient paid for services. Anonclient who contracted with and paidthe attorney to represent the client maybe able to sue the attorney for breach ofcontract. See Van Pollen v. Wish, 23S.W.3d 510, 516 (Tex.App.-Houston [1stDist.] 2000, pet. denied).

E. Breach of Fiduciary Duty . Anattorney owes fiduciary duties to his orher client and is liable for a breach ofthose duties. The focus of a claim forbreach of fiduciary duty against anattorney is whether the attorney obtainedan improper benefit from representing herclient. Beck v. Law Offices of Edwin J.(Ted) Terry, Jr., P.C., 284 S.W.3d 416,429 (Tex.App.-Austin 2009, no pet.);McGuire, Craddock, Strother & Hale, P.C.v. Transcontinental Rlty.Investors, Inc.,251 S.W.3d 890, 894 (Tex.App.-Dallas2008, pet. denied). A plaintiff has aseparate cause of action for breach offiduciary duty if the client’s petitionincludes allegations of self-dealing,deception, or misrepresentations by theattorney that go beyond mere negligence.


Trousdale v. Henry, 261 S.W.3d 221, 228(Tex.App.-Houston [14th Dist.] 2008, pet.filed 11-13-08). An attorney who fails todisclose conflicts of interest, fails todeliver client funds, uses clientconfidences improperly, or engages inself-dealing may breach a fiduciary duty.Beck, 284 S.W.3d at 429; Trousdale, 261S.W.3d at 232; Murphy v. Gruber, 241S.W.3d 689, 693 (Tex. App.-Dallas 2007,pet. denied).

1. Breach of Fiduciary Duty ClaimsBy a Client. A client can bring a claimagainst an attorney for breach of fiduciaryduty. Trousdale, 261 S.W.3d at 228. Anattorney owes a fiduciary duty to his orher client. Willis v. Maverick, 760 S.W.2d642, 645 (Tex.l988); Beck, 284 S.W.3d at428-29. An attorney's fiduciary duty to aclient requires the attorney to act withabundant good faith, perfect candor,openness, and honesty, and withoutconcealment or deception. Beck, 284S.W.3d at 429; Trousdale, 261 S.W.3d at229. The attorney is required to render afull and fair disclosure of facts material tothe client's representation. Willis, 760S.W.2d at 645; Beck, 284 S.W.3d at 429;Trousdale, 261 S.W.3d at 229; see Joe v.Two Thirty Nine Jt. V., 145 S.W.3d 150,160 (Tex.2004). A breach of fiduciary dutycan result in the forfeiture of attorneyfees. Burrow v. Arce, 997 S.W.2d 229,246 (Tex.l999); Swank v. Cunningham,2 5 8 S . W . 3 d 6 4 7 , 6 7 2 - 7 3(Tex.App.-Eastland 2008, pet. denied);

2. Breach of Fiduciary Duty ClaimsBy a Nonclient. A nonclient cannot bringa claim for breach of fiduciary dutyagainst an attorney for breaching afiduciary duty to a client. See Barcelo v.Elliott, 923 S.W.2d 575, 578-79

(Tex.1996) (attorney's professional dutydoes not extend to parties attorney neverrepresented); see, e.g., Span Enters. v.Wood, 274 S.W.3d 854, 858 (Tex.App.-Houston [1st Dist.] 2008, no pet.)(nonclient had no cause of action againstattorney for aiding and abetting breach offiduciary duty based on legal advice toclient); Swank, 258 S.W.3d at 666(corporation could not sue attorneys forbreach of fiduciary duty when attorneysrepresented shareholders as individuals).But see Perez v. Kirk & Carrigan, 822S.W.2d 261, 265-66 (Tex.App.-CorpusChristi 1991, writ denied) (becauseattorneys implied they represented aparty, even though they did not, the partycould sue attorneys for breach of fiduciaryduty).

F. Fraud . A fraud claim ofteninvolves deception about an existing fact.Sullivan v. Bickel & Brewer, 943 S.W.2d477, 481 (Tex.App.–Dallas 1995, writdenied).

1. Fraud Claims By a Client. Theissue in a client's fraud claim against itsattorney is whether the attorney made afraudulent misrepresentation of fact to theclient. See, e.g., Sherwood v. South, 29S.W.2d 805, 809 (Tex.App.-San Antonio1930, writ ref’d) (client alleged thatattorney committed fraud by obtainingconfidential information from client forattorney's own interest); Sullivan, 943S.W.2d at 483 (client alleged thatattorneys fraudulently lengthenedlitigation to increase billings). Sometimesthe issue of fraud by an attorney ariseswhen, after the formation of theattorney-client relationship, the clientexecutes a contract with the attorney.See, e.g., Archer v. Griffith, 390 S.W.2d


735, 738-39 (Tex.l964) (duringattorney-client relationship, clientexecuted a deed to attorney); Holland v.Brown, 66 S.W.2d 1095, 1102 (Tex.App.-Beaumont 1933, writ refd) (duringattorney-client relationship, client andattorney executed contract); Cantu v.Butron, 921 S.W.2d 344, 350-51(Tex.App.-Corpus Christi 1996, writdenied) (attorney defrauded client byobtaining second contingent-feeagreement giving attorney greaterpercentage of client's recovery); Jampolev. Matthews, 857 S.W.2d 57, 63-64(Tex.App.-Houston [1st Dist.jI993, writdenied) (dur ing at torney-cl ientrelationship, attorney renegotiated feeagreement). When an attorney and clientexecute a contract during theattorney-client relationship, there is apresumption of unfairness and invaliditybecause the relationship is a fiduciaryrelationship and the attorney has anadvantage over the client. Archer, 390S.W.2d at 739.

2. Fraud Claims By a Nonclient. Anonclient can bring a fraud claim againstan attorney for knowingly participating infraudulent activities while acting for theclient. Querner v. Rindtuss, 966 S.W.2d661, 666 (Tex.App.-San Antonio 1998,pet. denied); see, e.g., Chandler v.Chandler, 991 S.W.2d 367, 394(Tex.App.-EI Paso 1999, pet. denied)(nonclient alleged that ex-wife and herattorney conspired to fraudulently claimhis retirement benefits); McKnight v.Riddle & Brown, P.C., 877 S.W.2d 59,61-62 (Tex.App.-Tyler 1994, writ denied)(insured alleged that carrier's attorneyconspired with carrier to defraud insured);Likover v. Sunflower Terrace II, Ltd., 696S.W.2d 468, 472 (Tex.App.-Houston [1st

Dist.] 1985, no writ) (nonclient allegedthat attorney conspired with client to exactmoney from nonclient).

G. Violation of DTPA . The focus ofa Deceptive Trade Practice Act suit iswhether the defendant engaged in afalse, misleading, or deceptive act orpractice. Tex. Bus. & Com. Code § 17.46.

1. DTPA Claims By a Client. A clientcan bring a DTPA suit against an attorneyfor a deceptive act or practice. The suitcannot include claims based on therendition of professional servicescharacterized as advice, judgment,opinion, or similar professional skill. Tex.Bus. & Com. Code §17.49( c); Burnap v.Linnartz, 38 S.W.3d 612, 619 n.l(Tex.App.-San Antonio 2000, no pet.);see Underkofler v. Vanasek, 53 S.W.3d343, 346 n.l (Tex. 200l); Beck, LegalMalpractice in Texas, 50 Baylor L.Rev.547, 763 (1998). The exemption in§17.49( c) reserves for a negligence suitall claims based on the attorney's failureto exercise the degree of care, skill, anddiligence an attorney owes a client.James V. Mazuca & Assocs. v.Schumann, 82 S.W.3d 90, 94(Tex.App.-San Antonio 2002, pet.denied). The §17.49© exemption doesnot preclude the following DTPA claimsagainst an attorney:

a. Misrepresentation. A client can filea DTPA suit against an attorney forexpress misrepresentation of materialfacts that cannot be characterized asadvice, judgment, or opinion. Tex. Bus. &Com. Code §17.49(c)(I); Latham v.Castillo, 972 S.W.2d 66, 68 n.2(Tex.l998); see, e.g.,James V. Mazuca &Assocs., 82 S.W.3d at 94-95 (no violation


of DTPA because attorney's conduct infiling motion for nonsuit without client'sconsent, while negligent, was notmisrepresentation).

b. Failure to disclose. A client can filea DTPA suit against an attorney for failureto disclose known information in violationof Texas Business & Commerce Code§17.46(b)(24). Tex. Bus. & Com. Code§17.49( c)(2); Latham, 972 S.W.2d at 68n.2; see also Tex. Bus. & Com. Code§17.46(b)(24).

c. Unconscionable action. A clientcan file a DTPA suit against an attorneyfor an unconscionable action or course ofaction that cannot be characterized asadvice, judgment, or opinion. Tex. Bus. &Com. Code §17.49(c)(3); Latham, 972S.W.2d at 68 n.2; see Ballesteros v.Jones, 985 S.W.2d 485, 498 n.5(Tex.App.-San Antonio 1998, pet.denied).

d. Breach of warranty. A client canfile a DTPA suit against an attorney forbreach of an express warranty if theconduct giving rise to the breach cannotbe characterized as advice, judgment, oropinion. Tex. Bus. & Com. Code§17.49(c)(4); Latham, 972 S.W.2d at 68n.2.

e. Annuity Contracts. A client can filea DTPA suit against an attorney for aviolation of Texas Business & CommerceCode §17.46(b)(26), regarding selling orillegally promoting annuity contracts. Tex.Bus. & Com. Code §17.49(c)(5).

2. DTPA Claims By a Nonclient.Because the DTPA does not requireprivity, a nonclient can sue the client'sattorney if the transaction was undertaken

for the nonclient's benefit. Beck, LegalMalpractice in Texas, 50 Baylor L.Rev. at769; see Burnap, 38 S.W.3d at 620. Anonclient can bring a DTPA suit againstan attorney if the attorney engaged in afalse, misleading, or deceptive act orpractice in the representation of a client.See Tex. Bus. & Com. Code §17.46.

H. Negligent Misrepresentation . T h e f o c u s o f a n e g l i g e n t -misrepresentation suit is whether adefendant, in the course of its business,profession, or employment, supplied falseinformation for the guidance of theplaintiff. Restatement (2d) of Torts §552(1997). The Restatement (2d) of Torts§552 does not require privity even whenapplied to attorneys. McCamish, Martin,Brown & Loeffler v. F.E. Appling Interests,991 S.W.2d 787, 792 (Tex. 1999).

1. Negligent MisrepresentationClaims By a Client. A client can bring asuit for negligent misrepresentationagainst an attorney. See McCamish, 991S.W.2d at 791; cf. Federal Land BankAss'n v. Sloane, 825 S.W.2d 439, 442(Tex. 1991) (adopting §552 of theRestatement (Second) of Torts; bankliable to loan applicant for negligentmisrepresentation); Zipp Indus. v. RangerIns. Co., 39 S.W.3d 658, 668(Tex.App.-Amarillo 2001, no pet.)

2. Negligent MisrepresentationClaims By a Nonclient. A nonclient canb r i n g a s u i t f o r n e g l i g e n tmisrepresentation against an attorney.McCamish, 991 S.W.2d at 791; Kastner v.Jenkens & Gilchrist, P.C., 231 S.W.3d571, 577 (Tex.App.-Dallas 2007, no pet.);see, e.g., Safeway Managing Gen.Agency, Inc. v. Clark & Gamble, 985


S.W.2d 166, 169 (Tex.App.-San Antonio1998, no pet.) (liability insurer hads t a n d i n g t o b r i n gnegligent-misrepresentation claim againstattorneys representing the insured). Anattorney's duty to a nonclient arises when(1) the attorney is aware of the nonclientand intends that the nonclient rely on theattorney's representation of a materialfact, and (2) the nonclient justifiably relieson the attorney's representation.McCamish, 991 S.W.2d at 794; Kastner,231 S.W.3d at 577. For purposes ofdetermining whether there is justifiablereliance, a reviewing court must considerthe nature of the relationship between theattorney, the client, and the nonclient.McCamish, 991 S.W.2d at 794; Kastner,231 S.W.3d at 577-78; Lesikar v.Rappeport, 33 S.W.3d 282, 319(Tex.App.- Texarkana 2000, pet. denied).A nonclient's reliance on an attorney'srepresentation is not justified when therepresentation takes place in anadversarial context. McCamish, 991S.W.2d at 794; Chapman Children’s Trustv. Porter & Hedges, L.L.P., 32 S.W.3d429, 443 (Tex.App.-Houston [14th Dist.]2000, pet. denied). The typicalnegligent-misrepresentation suit broughtby a nonclient involves the nonclient'sreliance on an evaluation (i.e., an opinionletter) prepared by the client's attorney.McCamish, 991 S.W.2d at 793.

I. Collusion Claims .

1. Conspiracy.

a. Conspiracy claims by a client. Aclient can sue his or her attorneys forconspiracy to commit a tort. See, e.g.,Ross v. Arkwright Mut. Ins. Co., 933

S.W.2d 302, 303 (Tex.App.-Houston[14th Dist.] 1996, writ denied).

b. Conspiracy claims by a nonclient.A nonclient can sue an attorney forconspiring with a client to commit a tortagainst the nonclient. Mendoza v.Fleming, 41 S.W.3d 781, 787(Tex.App.-Corpus Christi 2001, no pet.)(conspiracy for wrongful garnishment);Lesikar v. Rappeport, 33 S.W.3d 282,318 (Tex.App.- Texarkana 2000, pet.denied) (conspiracy to defraud); Likoverv. Sunflower Terrace II, Ltd., 696 S.W.2d468, 472 (Tex.App.-Houston [1st Dist.]1985, no writ) (same). Mere knowledgeand silence are not enough to prove anattorney's involvement in a conspiracybecause an attorney has a duty topreserve client confidences. Bernstein v.Portland S&L Ass'n, 850 S.W.2d 694, 706(Tex.App.-Corpus Christi 1993, writdenied), disapproved on other grounds,Crown Life Ins. Co. v. Casteel, 22 S.W.3d378 (Tex.2000). The attorney's conductmust be independent of his or herrepresentation of the client. See Alpert v.Crain, Caton & James, P.C., 178 S.W.3d398, 408 (Tex.App.-Houston [1st Dist.]2005, pet. denied). There must also beindications that the attorney agreed to thefraud. Bernstein, 850 S.W.2d at 706.

2. Aiding & Abetting. A nonclient cansue an attorney for knowingly aiding andabetting a client to breach the client’sfiduciary duty to the nonclient, to commitfraud, or to violate any other duty to thenonclient. See, e.g., Kastner v. Jenkens &Gilchrist, P.C., 231 S.W3d 571, 580(Tex.App.-Dallas 2007, no pet.) (suitagainst attorney for aiding and abettingsecurities fraud and breach of fiduciaryduty); cf. Kinzbach Tool Co. v.


Corbett-Wallace Corp., 160 S.W.2d 509,514 (Tex.l942) (suit against corporationfor aiding and abetting breach of fiduciaryduty committed by employee ofcompetitor); Hendricks v. Thornton, 973S.W.2d 348, 357, 372 (Tex.App.--Beaumont 1998, pet. denied) (suit againstaccounting firm for aiding and abettingfraud and breach of fiduciary duty). Theattorney's conduct must be independentof the attorney’s representation of theclient. Alpert, 178 S.W.3d at 407; seeKastner, 231 S.W.3d at 580.

J. Other Claims .

1. By clients. Other claims clientscan bring against attorneys include thefollowing: (1) Conversion. See Berger v.Lang , 976 S.W .2d 833, 833(Tex.App.-Houston [1st Dist.] 1998, pet.denied); Avila v. Havana Painting Co.,761 S.W.2d 398, 399 (Tex.App.-Houston[14th Dist.] 1988, writ denied). (2)Retention of client's money. See Tex.Gov't Code §82.063; Avila, 761 S.W.2d at400-01. (3) Violation of the DebtCollection Act. Tex. Fin. Code ch. 392.

2. By nonclients. Other claimsnonclients can bring against attorneysinclude the following: (1) Wrongfulgarnishment and conversion. SeeMendoza v. Fleming, 41 S.W.3d 781, 783(Tex.App.-Corpus Christi 2001, no pet.).(2) Abuse of process when the process,such as a writ of garnishment orsequestration, was abused to attain anend other than what it was designed toaccomplish. See Martin v. Trevino, 578S.W.2d 763, 769 (Tex.App.-CorpusChristi 1978, writ ref'd n.r.e.). (3) Violationof the Debt Collection Act. Tex. Fin. Codechapter 392. (4) Duress. See Likover v.

Sunflower Terrace II, Ltd., 696 S.W.2d468, 472-73 (Tex. App.-Houston [1stDist.] 1985, no writ).

K. Violation of Disciplinary RulesDoes Not Create a Cause of Action .

1. No cause of action. Some courtshave held that the Texas DisciplinaryRules of Professional Conduct do notcreate a private cause of action. SeeMcGuire, Craddock, Strother & Hale, P.C.v. Transcontinental Rlty. Investors, Inc.,251 S.W.3d 890, 896 (Tex.App.-Dallas2008, pet. denied); Cuyler v. Minns, 60S.W.3d 209, 214 (Tex.App.-Houston[14th Dist.] 2001, pet. denied); Dyer v.Shafer, Gilliland, Davis, McCollum &Ashley, Inc., 779 S.W.2d 474, 479(Tex.App.-EI Paso 1989, writ denied);Martin v. Trevino, 578 S.W.2d 763, 770(Tex. App.-Corpus Christi 1978, writ ref’dn.r.e.). The preamble to the disciplinaryrules states that the "[v]iolation of a ruledoes not give rise to a private cause ofaction nor does it create any presumptionthat a legal duty to a client has beenbreached." Tex. Disc. R. Prof’l Conductpreamble ¶ 15. The only remedy forviolation of the disciplinary rules is apublic remedy. Renfroe v. Jones &Assocs., 947 S.W.2d 285, 287(Tex.App.-Fort Worth 1997, writ denied).

2. Standard of conduct. Even thoughthe violation of a disciplinary rule does notcreate a cause of action, the courts relyon the disciplinary rules as guidelines forstandards of conduct in negligence suitsagainst attorneys. See, e.g., Keck, Mahin& Cate v. National Un. Fire Ins. Co., 20S.W.3d 692, 699 (Tex.2000) (Rule1.08(g) prohibits attorneys from makingagreement that prospectively limits


malpractice liability to client unless certainconditions are met); McCamish, Martin,Brown & Loeffler v. F.E. Appling Interests,991 S.W.2d 787, 793 (Tex.l999) (Rule2.02 safeguards against attorney'sexposure to conflicting duties betweenclients and nonclients); Arthur Andersen& Co. v. Perry Equip. Corp., 945 S.W.2d812, 818-19 (Tex.l997) (relying on Rule1.04 to decide reasonableness ofattorney-fee claim under DTPA); NationalMed. Enters. v. Godbey, 924 S.W.2d 123,132 (Tex.l996) (disciplinary rules do notdetermine whether counsel is disqualifiedin litigation but do provide guidelines andsuggest relevant considerations); GeneralMotors Corp. v. Bloyed, 916 S.W.2d 949,959 (Tex.l996) (using Rules 1.02 and1.03 to define attorney's fiduciary duty).

II. ACTIONS TO CONSIDER TOREDUCE THE RISK OF MALPRACTICE

The following is a list of actions orconsiderations that an estate planningattorney may want to consider to reducethe risk of malpractice. This is notintended to be a list of actions that arerequired of an attorney and is notintended to define the standard of care foran attorney. Many of the items gobeyond the professional rules and aresimply actions to be considered thatreduce risk.

A. Select Cases, Clients andAssignments Carefully . Representing aperson of bad character is alwaysdangerous. In addition, taking on anassignment or case that does not feel likethe right thing to do will often lead totrouble.

B. Use an Engagement Letter . Acarefully drafted engagement letter canreduce the risk of some areas ofmalpractice exposure. It is important toidentify the client and identify the scope ofthe attorney’s responsibilities in theengagement letter. An engagement letteris also a good time to set forth in writingthe way in which fees will be charged. Anengagement letter can also set forthalternative ways to resolve disputes suchas mandatory mediation or bindingarbitration. If arbitration is included, theclient must be fully informed in writingconcerning the rights he or she is waiving(such as a jury trial) and the process mustbe carefully explained to the client.

C. Consider Conflicts of Interestand Even the Appearance of a Conflictof Interest . Obviously, all attorneysshould avoid a conflict of interest underthe Professional Rules. In addition, it issmart business for an estate planningattorney to avoid even the appearance ofa conflict of interest. Somerepresentations may be perfectlypermissible under the Professional Rulesbut will be likely to result in ugly litigationand the attorney spending a good bit ofhis time defending himself or his estateplanning.

D. Carefully Consider JointRepresentations . While there is nothingwrong with a joint representation by anattorney, joint representations give rise tomore potential conflicts and moreopportunities for misunderstandings bythe clients. Declining a representation orwithdrawing from a representation is oftenwise when the joint clients are in any typeof dispute (even if unrelated to therepresentation).


E. Get Help If You Need It. If a clientasks for representation on a matter that isbeyond the competence of the attorney,the attorney should either decline therepresentation or get the specialized helphe or she needs.

F. Document a Client’s WishesWhen the Client Wants Something Outof the Ordinary . For instance, if theclient does not care about saving estateor gift taxes, the estate planning lawyershould carefully document the client’sdesires and the advice given by theestate planning attorney that was rejectedby the client.

G. Avoid Estate Planning forPeople with Questionable Capacity .Avoid new clients if mental capacity is aquestion. The fees are not worth the risk.If the person with questionable capacity isa existing client and the attorney feels heor she should assist the client, theattorney should carefully document stepstaken to establish that the client hastestamentary capacity before permittingthe person to sign documents. See thediscussions below.

H. Avoid Circumstances That CouldSuggest Undue Influence . See thediscussion below.

I. Remember Who You Representand Frequently Remind Others WhoYou Represent . In discussions with aclient’s family members or thebeneficiaries of estates, the estateplanning attorney should be very carefulto identify his or her client in writing andfrequently remind the beneficiaries thatthe attorney does not represent the

beneficiaries or family members. See thediscussion below.

J. Try to Avoid Representations toNonclients . Rather than representingfacts to third-parties, it is better todescribe the information you havereceived and the source of yourinformation.

K. Do Not Assist a Client in aBreach of Fiduciary Duty. If a clientwho is serving as a fiduciary will not listento your advice about a material matter,quit. If a fiduciary client has breached aduty or is in a position to breach a duty,give advice to the fiduciary designed toprotect the beneficiaries.

L. Act Professionally . An attorneycan avoid many problems if he or shealways acts professionally and does nottake on the client’s emotions concerningthe matter. Attorneys who step beyondthe bounds of zealous representationoften find themselves as targets.

M. Be Careful What You Say orWrite .

N. Be Careful What You Email . Anemail is more permanent than a letter.Many people do not put much thoughtinto their emails before they press send.That is something less than smart.

O. In Fiduciary Lit igation,Privileged Communications May BeRevealed . When an attorney isrepresenting a fiduciary, there is alwaysthe possibility that the successor to thefiduciary client may waive the privilege.Consequently, it is wise to always be


careful about what is written to a fiduciaryclient.

P. In Estate Planning, Any ContestWill Waive All the Privileges Relatingto the Estate Planning . In a matter thatis expected to be contested, the estateplanner is one of the few lawyers whosecommunications with the client will bemade public. If a contest is filed, theentire estate planning file will be revealedto the contestants and other parties.

Q. In Cases Involving Allegations ofFinancial Misconduct by a FiduciaryClient, the Attorney Should ExerciseGreat Care . The attorney should be verycareful to avoid becoming an accompliceor co-conspirator with a client who isaccused of financial misconduct withfiduciary property. The attorney canzealously represent the fiduciary, but atthe same time give the fiduciary advicethat complies with the fiduciary’s duties tothe beneficiaries.

III. WARNING SIGNS TO THEESTATE PLANNER

A. Checklist of Situations WhichIncrease the Risk of Litigation . If any ofthe following situations exist, the estateplanning lawyer should be alert forpotential future litigation:

1. Multiple marriages.

2. Children from prior marriages.

3. Marital problems.

4. Husband and wife substantiallydisagree on the disposition of theirestates.

5. One spouse has substantialseparate property.

6. Substantial gifts or bequests to agirlfriend or boyfriend.

7. Any gift or bequest to ahomosexual partner.

8. Any gift in a litigious family orinvolving a litigious beneficiary.

9. A child or other beneficiary isactively involved in the estate planningprocess.

10. Extremely elderly or extremely illclient.

11. A deathbed will or deathbedtransfers.

12. Almost any unusual gift or bequestinvolving a great deal of money.

13. During an estate or trustadministration, any beneficiary who hiresa lawyer.

14. During an estate or trustadministration, any beneficiary who hiresa trial lawyer (All of your alarms should gooff).

B. Potential Litigation WarrantsAdditional Care . If one or more of thewarning signs are present, additional careshould be exercised by the lawyer toprotect the client and the lawyer. Theestate planning lawyer should be carefulto identify his or her client in anengagement letter and should carefullyavoid giving advice to any other party.The additional risks should be completelydiscussed with the client.


IV. DISCLOSURE OF INFORMATION

A. Communication Problems . Inthe process of handling contestedmatters, the author has found that estateplanning attorneys often have problemswith communications when potentialdisputes arise. The following are someobservations taken from actualexperiences:

1. Some estate planning lawyers tendto talk too much prior to the client's death.The information given to the estateplanner by the client is privileged andshould not be revealed to a third partywithout express authorization from theclient. The privilege is applicable even ifthe third party is a C.P.A., insuranceagent or financial planner in the absenceof a waiver by the client.

2. Some estate planning lawyers tendto decide for themselves whether abeneficiary or other family member has alegitimate complaint and to talk down tothe person. This leads to an angry,frustrated beneficiary.

3. Some estate planning lawyers failto identify exactly who their client is inadvance and do not know to whom theyshould be disclosing information. It ispermissible to represent an entire family,but in that case duties are owed to theentire family and the lawyer should notparticipate in actions which give rise to aconflict of interest.

4. Some estate planning lawyers willtalk openly to any friendly soundingperson who calls about client files.

5. Some estate planning lawyers failto insist that fiduciary clients keep

beneficiaries informed which can lead tosimple problems becoming big problems.If a beneficiary is contentious or difficult,there is a very natural tendency to want toavoid the beneficiary. However, the moredifficult a beneficiary is, the moredisclosure the beneficiary should receive.

6. Some estate planning lawyers failto recognize conflicts when theyrepresent more than one family memberand fail to recognize their duties to keepall of their clients informed.

B. Lawyer-Client Privilege: Rule503 of the Texas Rules of CivilEvidence

1. Definitions. As used in Rule 503:

a. A "client" is a person, public officer,or corporation, association, or otherorganization or entity, either public orprivate, who is rendered professionallegal services by a lawyer, or whoconsults a lawyer with a view to obtainingprofessional legal services from him.

b. A "representative of the client" isone having authority to obtainprofessional legal services, or to act onadvice rendered pursuant thereto, onbehalf of the client.

c. A "lawyer" is a person authorized,or reasonably believed by the client to beauthorized, to engage in the practice oflaw in any state or nation.

d. A "representative of the lawyer" is:(i) one employed by the lawyer to assistthe lawyer in the rendition of professionallegal services; or (ii) an accountant whois reasonably necessary for the lawyer'srendition of professional legal services.


e. A communication is "confidential"if not intended to be disclosed to thirdpersons other than those to whomdisclosure is made in furtherance of therendition of professional legal services tothe client or those reasonably necessaryfo r the t ransmiss ion o f thecommunication.

2. General Rule of Privilege. A clienthas a privilege to refuse to disclose andto prevent any other person fromdisclosing confidential communicationsmade for the purpose of facilitating therendition of professional legal services tothe client and made: (1) between him orhis representative and his lawyer or hislawyer's representative, (2) between hislawyer and the lawyer's representative,(3) by him or his representative or hislawyer or a representative of the lawyer toa lawyer, or a representative of a lawyerrepresenting another party in a pendingaction and concerning a matter ofcommon interest therein, (4) betweenrepresentatives of the client or betweenthe client and a representative of theclient, or (5) among lawyers and theirrepresentatives representing the sameclient.

3. Who May Claim the Privilege. Theprivilege may be claimed by the client, hisguardian or conservator, the personalrepresentative of a deceased client, orthe successor, trustee, or similarrepresentative of a corporation,association, or other organization,whether or not in existence. The personwho was the lawyer or the lawyer'srepresentative at the time of thecommunication is presumed to haveauthority to claim the privilege but only onbehalf of the client.

4. Exceptions. There is no privilegeunder Rule 503:

a. Furtherance of crime or fraud. Ifthe services of the lawyer were sought orobtained to enable or aid anyone tocommit or plan to commit what the clientknew or reasonably should have known tobe a crime or fraud;

(i) Volcanic Gardens ManagementCo., Inc. v. Paxson, 847 S.W.2d 343(Tex. App.--El Paso 1993, no writ)."Fraud" within the meaning of anexception to the attorney-client privilege ismuch broader than common law orcriminal fraud and includes commission orattempted commission of fraud on thecourt or on a third person. Thecrime/fraud exception to the attorney-client privilege comes into play when aprospective client seeks the assistance ofan attorney in order to make a falsestatement or statements of a material factor law to a third person or court forpersonal advantage. See TEX. R. CIV.EVID. 503(d)(1).

b. Claimants through same deceasedclient. As to communication relevant toan issue between parties who claimthrough the same deceased client,regardless of whether the claims are bytestate or intestate succession or byintervivos transaction. TEX. R. CIV. EVID.503(d)(2).

c. Breach of duty by a lawyer orclient. As to a communication relevant toan issue of breach of duty by the lawyerto his client or by the client to his lawyer;

(i) Scrivner v. Hobson, 854 S.W.2d148 (Tex. App.-- Houston [1st Dist.] 1993,no writ). In Scrivner, the exception to the


attorney-client or attorney-work productprivilege regarding the breach of duty bya lawyer permitted clients to discoverdocuments in the attorney's file regardingthe actual basis for calculating theamount due each plaintiff in anenvironmental lawsuit. The clients suedthe attorney for legal malpractice for theattorney's alleged settlement of a groupenvironmental lawsuit without theirauthority. The contents of the documentswere relevant to the clients' claims thatthe proceeds of the aggregate settlementagreement were improperly andfraudulently distributed among the variousplaintiffs in the lawsuit. See TEX. R. CIV.EVID. 503(d)(3).

d. Document attested to by a lawyer.As to a communication relevant to anissue concerning an attested document towhich the lawyer is an attesting witness;

(i) Brown v. Edwards, 640 N.E.2d 401(Ind. App.--1 Dist. 1994). In Brown, thecourt held that the attorney-client privilegebetween testator and attorney in thecreation of a will was waived. Here, ahusband and wife entered into anenforceable contract not to revoke theirmutual, reciprocal wills. The husbandand wife chose their attorney and hisassistant to witness the wills. Bychoosing their attorney and his assistant,the husband and wife implicitly requestedthat the attorney and his assistant defendthe testamentary scheme against attack,regardless of any confidentiality whichpreviously may have attached to theconversations among the four. That is, atthe time the husband and wife intendedthat the attorney and his assistant shouldbe competent to divulge the scope of theirtestamentary intent with regard to thewills if the mutual and reciprocal nature of

the wills were ever questioned. Thus, thehusband and wife waived the attorney-client privilege. See TEX. R. CIV. EVID.503(d)(4).

e. Joint clients. As to acommunication relevant to a matter ofcommon interest between or among twoor more clients if the communication wasmade by any of them to a lawyer retainedor consulted in common, when offered inan action between or among any of theclients.

(i) Scrivner v. Hobson, 854 S.W.2d148 (Tex. App.--Houston [1st Dist.] 1993,no writ). Where parties display mutualtrust in a single attorney by placing theiraffairs in his hands, the attorney mustdisclose all opinions, theories, orconclusions regarding his clients' rights orposition to the other parties representedby the attorney in such matter. See TEX.R. CIV. EVID. 503(d)(5).

C. Work Product Privilege: Rule192 of the Texas Rules of CivilProcedure . Rule 192 sets forth theforms and scope of discovery; protectiveorders; and definitions. TEX. R. CIV. P.192. Rule 192.5 concerns work product.The work product of an attorney, subjectto the exceptions of Texas Rule of CivilEvidence 503(d), which shall govern as towork product as well as to attorney-clientprivilege, is protected from disclosure byprivilege.

D. Confidentiality of Information:Rule 1.05 of the Texas DisciplinaryRules of Professional Conduct . Rule1.05 provides as follows:


1. Definitions. "Confidentialinformation" includes both "privilegedinformation" and "unprivileged clientinformation." "Privileged information"refers to the information of a clientprotected by the lawyer-client privilege ofRule 503 of the Texas Rules of Evidenceor of Rule 503 of the Texas Rules ofCriminal Evidence or by the principles ofattorney-client privilege governed by Rule501 of the Federal Rules of Evidence forUnited States Courts and Magistrates."Unprivileged client information" meansall information relating to a client orfurnished by the client, other thanprivileged information, acquired by thelawyer during the course of or by reasonof the representation of the client.

2. General Rule of Confidentiality.Except as permitted by paragraphs (c)and (d), or as required by paragraphs (e)and (f), a lawyer shall not knowingly:

a. Reveal confidential information ofa client or a former client to:

(i) a person that the client hasinstructed is not to receive theinformation; or

(ii) anyone else, other than the client,the client's representatives, or themembers, associates, or employees ofthe lawyer's law firm.

b. Use confidential information of aclient to the disadvantage of the clientunless the client consents afterconsultation.

c. Use confidential information of aformer client to the disadvantage of theformer client after the representation is

concluded unless the former clientconsents after consultation or theconfidential information has becomegenerally known.

d. Use privileged information of aclient for the advantage of the lawyer or ofa third person, unless the client consentsafter consultation.

3. Revealing Confidential Information.A lawyer may reveal confidentialinformation:

a. When the lawyer has beenexpressly authorized to do so in order tocarry out the representation.

b. When the client consents afterconsultation.

c. To the client, the client'srepresentatives, or the members,associates, and employees of thelawyer's firm, except when otherwiseinstructed by the client.

d. When the lawyer has reason tobelieve it is necessary to do so in order tocomply with a court order, a TexasDisciplinary Rule of Professional Conduct,or other law.

e. To the extent reasonablynecessary to enforce a claim or establisha defense on behalf of the lawyer in acontroversy between the lawyer and theclient.

f. To establish a defense to acriminal charge, civil claim or disciplinarycomplaint against the lawyer or thelawyer's associates based upon conductinvolving the client or the representationof the client.


g. When the lawyer has reason tobelieve it is necessary to do so in order toprevent the client from committing acriminal or fraudulent act.

h. To the extent revelation reasonablyappears necessary to rectify theconsequences of a client's criminal orfraudulent act in the commission of whichthe lawyer's services had been used.

4. Revealing Unprivileged ClientInformation. A lawyer may revealunprivileged client information:

a. When impliedly authorized to do soin order to carry out the representation.

b. When the lawyer has reason tobelieve it is necessary to do so in orderto:

(i) carry out the representationeffectively;

(ii) defend the lawyer or the lawyer'semployees or associates against a claimof wrongful conduct;

(iii) respond to allegations in anyproceeding concerning the lawyer'srepresentation of the client; or

(iv) prove the services rendered to aclient, or the reasonable value thereof, orboth, in an action against another personor organization responsible for thepayment of the fee for services renderedto the client.

c. When a lawyer has confidentialinformation clearly establishing that aclient is likely to commit a criminal orfraudulent act that is likely to result in

death or substantial bodily harm to aperson, the lawyer shall revealconfidential information to the extentrevelation reasonably appears necessaryto prevent the client from committing thecriminal or fraudulent act.

5. A Lawyer Shall Reveal ConfidentialInformation When Required To Do So byRule 3.03(a)(2), 3.03(b), or by Rule4.01(b). SUPREME COURT OF TEXAS, RULESGOVERNING THE STATE BAR OF TEXAS art.X, § 9 (Rules of Professional Conduct)Rule 1.06 (1995) [hereinafter TEXASRULES OF PROFESSIONAL CONDUCT].

E. Disclosure of Information DuringEstate Planning . Any confidentialcommunications made for the purposesof facilitating the rendition of professionallegal services to the client are privileged.The estate planning lawyer should refuseto disclose any confidential informationwithout the consent of the client. Themost common exceptions are claimantsthrough the same deceased client, Rule503(d)(2), and joint clients, Rule503(d)(5).

F. Waiver of Attorney-ClientPrivilege . Texas Rule of Civil Evidence503(b) precludes the discovery ofcommunications between attorney andclient. Under the rule, a client has theprivilege to refuse to disclose and preventany other person from disclosingconfidential communications made for thepurpose of facilitating the rendition oflegal services to the client. However, thisprivilege is not absolute and may bewaived. A client may waive the privilegeeither expressly or implicitly by conduct


that extinguishes an element of theprivilege. U.S. v. Lipshy, 492 F. Supp. 35(N.D. Tex. 1979).

1. Disclosure of Communication.Even though a communication is made inconfidence to an attorney, the attorney-client privilege may be lost if it is impliedlywaived by a disclosure of thecommunication. Freeman v. Bianchi, 820S.W.2d 853 (Tex. App.--Houston [1stDist.] 1991, no writ). If a party disclosesa communication, the attorney-clientprivilege is waived unless the party candisprove the waiver or establish a limitedscope of waiver. Jordan v. Ct. of App. forFourth Sup. Jud. Dist., 701 S.W.2d 644(Tex. 1985); State ex rel. Simmons v.Peca, 799 S.W.2d 426 (Tex. App.--ElPaso 1990, no writ).

2. Communication with Third Parties.A privilege is waived when the partyasserting the privilege divulges theinformation to third parties. Atchison,Topeka and Santa Fe Ry. Co. v. Kirk, 705S.W.2d 829 (Tex. App.--Eastland 1986,no writ). The attorney-client privilege isnot wa ived i f the pr ivi legedcommunication is shared with a thirdperson who has a common legal interestwith respect to the subject matter of thecommunication. Hodges, Grant &Kaufmann v. U.S. Government, Dept. ofthe Treasury, I.R.S., 768 F.2d 719 (5thCir. 1985). Thus, the privilege is notwaived if the confidential communicationhas been made to attorneys for copartiesin order to further a joint or commoninterest. Aiken v. Texas Farm BureauMut. Ins. Co., 151 F.R.D. 621 (E.D. Tex.1993). However, the attorney-clientp r i v i l e g e d o e s n o t p r o t e c tcommunications that an attorney had with

third parties and then forwarded to aclient. TEX. R. CIV. EVID. 503(a). InMethodist Home v. Marshall, 830 S.W.2d220 (Tex. App.--Dallas 1992, no writ), theplaintiffs requested "all writings andcorrespondence between ... [the homeand the law firm which represented thehome] which related to [the plaintiffs] inthis cause." The request coveredcommunications between the law firm andthird parties, such as hospitals or socialworkers, that the law firm forwarded to thehome. The court held that the attorney-client privilege of the home would notprotect these third-party communicationswith the law firm. See Colton v. UnitedStates, 306 F.2d 633, 639-40 (2nd Cir.1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L. Ed. 2d 499 (1963); Jordanv. Ct. of App. for Fourth Sup. Jud. Dist.,701 S.W.2d 644, 648 (Tex. 1985).

3. Offensive Use Waiver. Courtsbalance the conflict between the desirefor openness and the need forconfidentiality in attorney-client relationsby restricting the scope of attorney-clientprivilege. See Duval County Ranch Co.v. Alamo Lumber Co., 663 S.W.2d 627,634 (Tex. App.--Amarillo 1983, writ ref'dn.r.e.); In re LTV Securities Litigation, 89F.R.B. 595, 600 (N.D. Tex. 1981). Thisbalancing has led the court to determinethat a party's need for information canoutweigh the benefits associated with theattorney-client privilege. Such a situationprovides for a waiver by offensive use ofthe attorney-client privilege.

a. In Ginsberg v. Fifth Court ofAppeals, 686 S.W.2d 105 (Tex.1985), theSupreme Court held that the offensivewaiver applied to the attorney-clientprivilege. Ginsberg involved a trespass to


try title action. The plaintiff testified atdeposition that she was unaware that herownership of a building had changed until1981. However, records revealed that theplaintiff told her psychiatrist in 1972 that"the building was sold while [she and herhusband] were in Padre Island." Thus,the records contained information whichvirtually established the defendant'sstatute of limitation defense. The plaintiffresisted disclosure of the records on thebasis of the psychotherapist-patientprivilege. The court rejected the plaintiff'sclaim of privilege. In so doing, the courtrelied on the notion that "[a] plaintiffcannot use one hand to seek affirmativerelief in court and with the other lower aniron curtain of silence against otherwisepertinent and proper questions which mayhave a bearing upon his right to maintainhis action." Id. at 108, quoting Pavlinko v.Yale - New Haven Hosp., 470 A.2d 246,251 (Conn. 1984). The court found thatthe facts in Ginsberg mandated that theplaintiff either waive her claim foraffirmative relief or maintain her privilegeand abandon her cause of action.

b. Six courts of appeals haveconsidered the issue of waiver byoffensive use in the attorney-clientprivilege. Of those six, five held that theoffensive waiver applied to the attorney-client privilege. The sixth held thatoffensive waiver was limited to the factsof Ginsberg and was not applicable to theattorney-client privilege. The only court toconsider the issue and reject theoffensive use of waiver was the Cantrellcourt. Cantrell v. Johnson, 785 S.W.2d185, 190 (Tex. App.--Waco 1990, nowrit). The court noted that the case wasnot one in which proof of a defense mightbe precluded if the discovery was notpermitted. While the court acknowledged

that the documents might reveal theplaintiff's knowledge and state of mind,relevant factors in the litigation, itdetermined these factors could belitigated without undermining the attorney-client privilege. The court went on to findthat the Ginsberg holding must be limitedto the psychotherapist-patient privilege.

c. In Republic Ins. Co. v. Davis, 856S.W.2d 158 (Tex.1993), the SupremeCourt concluded that a better positionwould not be to limit the offensive use ofwaiver as Cantrell did but to apply theGinsberg offensive use waiver to theattorney-client privilege. The Courtreasoned that the following factors shouldguide the trial court in determiningwhether a waiver had occurred. First,before a waiver may be found, the partyasserting the privilege must seekaffirmative relief. Cf. Maryland Am. Gen.Ins. Co. v. Blackmon, 639 S.W.2d 455,457-58 (Tex. 1982). Second, theprivileged information sought must besuch that, if believed by the fact finder, inall probability it would be outcomedeterminative of the cause of actionasserted. Mere relevance is insufficient.The confidential communication must goto the very heart of the affirmative reliefsought. Third, disclosure of theconfidential communication must be theonly means by which an aggrieved partymay obtain the evidence. If any one ofthese requirements is lacking, the trialcourt must uphold the privilege. InRepublic, the Supreme Court held thatthe appellant's declaratory judgment wasnot seeking the type of affirmative reliefthat would result in an offensive waiver ofthe attorney-client privilege.


G. Production and/or Disclosure ofTerms of a Will or Trust Document

1. Delivery to the Court. When aperson is named as executor in a will andafter the testator's death he has that willin his possession, it is his duty to producethe will and it if appears to be a valid willto seek probate of the will. TEX. PROB.CODE ANN. §§75, 76 (Vernon 1980); SeePlummer v. Roberson, 666 S.W.2d 656(Tex. App.--Austin 1984, writ ref'd n.r.e.).It is doubtful that the executor's obligationto deliver the will could be enforced by amere intruder having no possible interestin the estate or in the property whichmight be affected by the probate. On theother hand, anyone alleging a good faithbelief that the will might affect hisinterests should be permitted to compelits discovery. See Ryan v. Texas & P. R.R. Co., 64 Tex. 239 (1885). Under Texaslaw, a personal representative may forcethe surrender of any kind of papersbelonging to the decedent's estate. Thiswould include any estate planningdocuments sent to the decedent. If aperson having possession of any suchpapers refuses to deliver them afterhaving been ordered by the court to doso, he may be imprisoned until such timeas he complies. TEX. PROB. CODE ANN. §232 (Vernon 1980).

2. Delivery to a Ward's Guardian.When a person is named guardian of award's estate, he has no duty to recoverpossession of the ward's will. The TexasProbate Code provides, "The guardian ofan estate, immediately after receivingletters of guardianship, shall collect andtake into possession the personalproperty, record books, title papers, andother business papers of the ward ...."TEX. PROB. CODE ANN. § 771 (Vernon

Supp. 1995). In the case of Baumann v.Willis, 721 S.W.2d 535 (Tex. App.--Corpus Christi 1986, no writ), the courtfound that a "will" was not included in anyof the definitions of "property" within theProperty Code. Furthermore, the courtfound no cases which defined the word"will" as being "property" as defined bythe Probate Code. While the courtrecognized that such definitions are notall-inclusive, it did think such exclusionssignificant. The court found that the willdoes not in and of itself have value to theward such as a note or security, nor is it abusiness paper necessary to conduct thebusiness or affairs of the ward. The courtconcluded that there was no reason forthe guardian of the estate to havepossession of the will. Significantly, thecourt noted there was no allegation, orany evidence before the court, that theappellee had threatened to destroy thedocument in question; nor did the courtperceive or find any pleading or evidenceof how the guardian's possession of thewill could in any way effect theadministration of the guardianship, or wasnecessary to the guardian, or how itsunavailability prevented the guardian fromperforming duties for the ward.

3. Delivery for In Camera Inspection.Section 865A of the Texas Probate Codeprovides that the “guardian of the ward’sestate may apply to the court for an orderto seek an in camera inspection of a truecopy of a will, codicil, trust, or other estateplanning instrument of the ward as ameans of obtaining access to theinstrument for purposes of establishing anestate plan under Section 865 of thisCode.” At the conclusion of a hearing onthe application and on a finding that thereis good cause for an in camerainspection, the court shall direct the


person who has custody of the documentto deliver a copy to the court for incamera inspection only. If good causeexists, the court shall release all or part ofthe instrument to the applicant only forthe purposes described in Subsection (a)of §865A. Subsection (g) of the statutestates that an attorney does not violatethe attorney-client privilege solely bycomplying with a court order to release aninstrument pursuant to §865A.

H. Disclosure of Information DuringEstate Administration

1. Checklist of Considerations. If arequest for information is made to theattorney representing an executor ortestamentary trustee the following shouldbe considered by the attorney:

a. Does the fiduciary owe a duty tothe person making the request forinformation?

b. Is the information privileged?

c. Has any privilege already beenwaived by disclosing the information tosomeone other than the client?

d. If the information may beprivileged, who holds the right to waivesuch privilege?

e. Does the attorney owe duties topeople other than the fiduciary therebycreating a conflict of interest?

f. Has the appropriate person waivedany existing privilege?

g. Will a failure to make fulldisclosure be a breach of fiduciary duty?

h. Are personal feelings or tacticalconsiderations by the client overridingsound judgment and fiduciary duties?

2. Attorney-Client Privilege Held byPersonal Representative of DeceasedClient. Rule 503(c) of the Texas Rules ofCivil Evidence provides as follows:

The [attorney-client] privilege may beclaimed by the client, his guardian orconservator, the personal representativeof a deceased client, or the successor,trustee, or similar representative of acorporation, association, or otherorganization, whether or not in existence.The person who was the lawyers or thelawyer's representative at the time of thecommunication is presumed to haveauthority to claim the privilege but only onbehalf of the client.

3. Trustee's Duty to DiscloseInformation to Beneficiaries. Oneoccupying a fiduciary relationship toanother must measure his conduct byhigh equitable standards and is under aduty to make a full disclosure of all factsand circumstances concerning hisdealings with the trust assets. KinzbachTool Co., Inc. v. Corbett-Wallace Corp.,160 S.W.2d 509 (Tex. 1942). A trusteeowes a duty to give to the beneficiaryupon request complete and accurateinformation as to the administration of thetrust.

a. Huie v. Deshazo, 922 S.W.2d 920(Tex.1996). In Huie the trust beneficiarywas seeking to compel discovery, from anattorney, of communications by a trusteeto the attorney relating to trustadministration in a suit by a beneficiaryalleging that the trustee breached hisfiduciary duty. The Texas Supreme Court


held that the attorney-client privilegeapplied to communications between atrustee and his attorney, notwithstandingthe trustee's fiduciary duties to fullydisclose all material facts to thebeneficiaries of the trust. The Court heldthat only the trustee, not the trustbeneficiary, is the client of the trustee'sattorney and the beneficiaries thereforemay not discover communicationsbetween the trustee and attorneyotherwise protected under Texas Rule ofCivil Evidence 503. The Court noted thatRule 503 contains no exceptionapplicable to fiduciaries and theirattorneys.

b. InterFirst v. Risser, 739 S.W.2d882 (Tex. App.--Texarkana 1987, no writ).In Interfirst, the court held that evidencewas sufficient to sustain a jury verdict thata trustee bank had acted in bad faith andcommitted self-dealing in selling abeneficial owners' stock back to a closelyheld corporation. The court found thatthe trustee bank made little or no effort toget the best price possible for the stock,failed to publicize its sale, did not notifybeneficiaries of the sale, did not obtainoutside appraisals of stock and sold thestock back to the issuing company, whichwas one of the bank's borrowers.

c. First City Nat'l Bank of Paris v.Haynes, 614 S.W.2d 605 (Tex. Civ. App.-Texarkana 1981, no writ). In First City,the court held that evidence was sufficientin an action against a bank for damagesresulting from the bank's mismanagementof properties which it held in a trust for theplaintiffs to support findings that the bankbreached its duty by, among other things,failing to keep the beneficiaries informedof the true condition of the trust.

4. Executor's Duty to DiscloseInformation to Beneficiaries. Thefiduciary standards of an executor of anestate are the same as the fiduciarystandards of a trustee. Humane Societyof Austin and Travis County v. AustinNat'l Bank, 531 S.W.2d 574, 577 (Tex.1975), cert. denied, 425 U.S. 976, 96 S.Ct. 2177, 48 L. Ed. 2d 800. Thus, oneoccupying a fiduciary relationship toanother is under a duty to make a fulldisclosure of all facts and circumstancesconcerning his dealings with the estateassets.

a. Ertel v. O'Brien, 852 S.W.2d 17(Tex. App.--Waco 1993, writ denied). InErtel, a bank was appointed independentexecutor of the decedent's estate, alongwith decedent's wife. The bank kept allthe estate records and actually functionedas the executor. The bank failed to pay adebt of the estate, assuming that acompany in which the decedent was partowner would, and the creditor broughtsuit. The trial court held that the bank didnot breach a fiduciary duty it had to thecreditor. However, the trial court did findthe bank negligent in not obtaining inwriting an agreement which stated thatthe company in which the decedent waspart owner would assume the debt or infailing to set aside a reserve to pay thedebtor's claims in case the company didnot.

The court of appeals, however,found that the trial court erred in findingthat the bank's negligent handling of thedebtor's claim did not constitute a breachof fiduciary duty. The court found atrustee commits a breach of trust not onlywhen he violates a duty in bad faith, orintentionally although in good faith, ornegligently but also where he violates a


duty because of mistake. The court heldthat the bank, while not a trustee, wasliable for a breach of fiduciary dutybecause an executor of an estate is heldto the same high fiduciary duties andstandards in the administration of adecedent's estate as are trustees.Humane Society v. Austin Nat'l Bank, 531S.W.2d 574, 577 (Tex. 1975), cert.denied, 425 U.S. 976, 96 S. Ct. 2177, 48L. Ed. 2d. 800. The court of appealsreversed the trial court's take nothingjudgment granted in favor of the bank andremanded the plaintiff's case against thebank to the trial court.

b. Coble Wall Trust Co., Inc. v.Palmer, 859 S.W.2d 475 (Tex. App.--SanAntonio 1993, writ denied). In Coble, theindependent administrator of an estatebrought suit in probate court against theestate's former temporary administratoralleging, among other claims, breach offiduciary duty based upon the temporaryadministrator's failure to make fulldisclosure to the plaintiffs. The court heldthe temporary administrator made fulldisclosure to the plaintiffs for they wereinformed about the plan for the estate,the plan was revised and correctedaccording to their desires and their fullapproval was given before the plan wasimplemented by the probate court. Thus,the court found no breach of fiduciaryduty.

5. Privilege Effective until Waived orFound within an Exception. Attorney-client privilege remains in effect until theperson who then holds the privilegewaives it or one of the exceptions applies.

V. DOCUMENT REQUEST ORSUBPOENA FOR DOCUMENTS

A. Subpoena to Produce Files . It isalmost a certainty that an active estateplanning lawyer will some day be servedwith a subpoena to produce his or herfiles. This is not cause for panic, but it isa reason to take actions to preserve theattorney-client and work productprivileges.

B. Duty to Preserve Privilege . Theattorney has the duty of preserving theattorney-client and work productprivileges. TEX. R. CIV. EVID. 503; TEX. R.C IV. P. 192; TEXAS RULES OFPROFESSIONAL CONDUCT Rule 1.05.

1. Attorney May be Liable forDisclosing Privileged Information. InPerez v. Kirk & Carrigan, 822 S.W.2d 261(Tex. App.--Corpus Christi 1991, writdenied), the court held that attorneysbreached their fiduciary duty to a clienteither by wrongfully disclosing a privilegedstatement or by wrongfully representingthat an unprivileged statement would bekept confidential. A company truck driverwas involved in a fatal bus accident.Attorneys for the company visited thedriver in the hospital after the accidentand obtained the driver's sworn statementconcerning the accident. The driverclaimed that the attorney's told him thatthey were his lawyers and that anythinghe told them would be kept confidential.After taking the driver's statement, theattorneys made arrangements for acriminal defense attorney to defend thedriver. Without telling either the driver orhis criminal defense attorney, theattorneys turned over the driver'sstatement to the district attorney's office.


Partly on the basis of the statement, thedistrict attorney was able to obtain agrand jury indictment of the driver forinvoluntary manslaughter.

The driver brought action againstthe attorneys for, among other things, abreach of fiduciary duty. The trial courtgranted summary judgment for theattorneys, and the driver appealed. Theattorneys claimed that they did not breachtheir fiduciary duty as the attorney-clientprivilege did not apply since third partieswere present at the time the statementwas given. The court held that regardlessof whether from an evidentiary standpointthe privilege attached, the attorneysobtained the driver's statement basedupon an understanding that it would bekept confidential. Thus, the court foundthat the attorneys breached their duty tothe driver by either wrongfully disclosinga privileged statement or by wrongfullyrepresenting that an unprivilegedstatement would be kept confidential.Either characterization showed a clearlack of honesty toward, and deception of,the driver by his own attorneys regardingthe degree of confidentiality with whichthey intended to treat the statement. Thecourt also found that the driver made avalid claim for emotional distress andmental anguish suffered as a result of thepublicity caused by his indictment,resulting partly by the revelation of hisstatement to the district attorney in breachof confidentiality. The court reversed thetrial court's summary judgment for theattorneys and remanded.

C. Preservation of Privilege . Rule193 of the Texas Rules of Civil Procedureprovides that privilege is an exception tothe general rule that evidence isadmissible and discoverable under our

rules of procedure. Any party who seeksto deny the production of evidence mustclaim a specific privilege against suchproduction. The burden is on the partyasserting a privilege from discovery toproduce evidence concerning theapplicability of a particular privilege. C.G. Giffin v. The Honorable R. L. Smith,688 S.W.2d 112 (Tex. 1985). See TEX.R. CIV. EVID. 501 and TEX. R. CIV. EVID.503. Any party who seeks to excludedocuments, records or other matters fromthe discovery process has the affirmativeduty to specifically plead the particularprivilege or immunity claimed and torequest a hearing on this motion. Thetrial court should then determine whetheran in-camera inspection is necessary. Ifsuch inspection is ordered by the trialcourt, those materials for which theinspection is sought must be segregatedand produced to the court. Failure tofollow the above procedure constitutes awaiver of any complaint of the trial court'saction. Peeples v. Hon. Fourth SupremeJudicial Dist., 701 S.W.2d 635 (Tex.1985).

1. Documents Requested ofAccountants. There is no accountant-client privilege recognized under federallaw. U.S. v. White, 326 F. Supp. 459,aff'd 477 F.2d 757, aff'd 487 F.2d 1335,cert. denied 95 S. Ct. 132, 419 U.S. 872,42 L. Ed. 2d 111. At least arguably underTexas law, communications between aclient and an accountant are notdiscoverable in many instances. Occ.Code § 901.457 (a). An attorney mayemploy an accountant for the client'sbenefit in order for the communicationsfrom the client to the accountant to qualifyfor the attorney-client privilege. Theattorney's employment of an accountantdoes not make the accountant an agent


of the attorney but, rather, agency isdetermined on the basis of the attorney'scontrol of the work done by theaccountant. Parker v. Carnahan, 772S.W.2d 151 (Tex. App.--Texarkana 1989,writ denied).

2. Documents Requested ofRepresentatives. The attorney-clientprivilege does not protect documentswhich are addressed to persons who arenot proven to be representatives of thecorporate client or even employees of thecorporation. TEX. R. CIV. EVID. 501(4),503, 503(a)(1, 2), (c); Cigna Corp. v.Spears, 838 S.W.2d 561 (Tex. App.--SanAntonio 1992, no writ). However, theattorney-client privilege does protectdocuments which appear to have beenwritten by one attorney to another withinthe corporation. Id. TEX. R. CIV. EVID.503(b)(5). For example, a letter from thetax counsel for a subsidiary to the taxcounsel for a parent was protected fromdisclosure by the attorney-client privilegeand work-product privilege. The letterrelated to the tax consequences of certainactions involving activities between theparent and subsidiaries, and the letterwas composed wholly of informationconstituting mental impressions,conclusions, opinion, and legal theories ofthe attorneys representing the subsidiaryin administrative proceedings before aforeign taxing authority. U.S. v. MobileCorp., 149 F.R.D. 533 (N.D. Tex. 1993).

3. Other Document Requests. Alitigant must offer to make tax returnsavailable to the court but is not required topresent them at the time of the hearing.Dyna Span Corp. v. Hoffman, 754 S.W.2d341 (Tex. App.--Dallas 1988, petition forwrit of mandamus 756 S.W.2d 723). InDyna, the defendants did not waive any

claim of privilege for federal and stateincome tax returns by failing to presentthem for in-camera inspection at the timeof the hearing on the motion for protectiveorder.

4. Engagement Letter. It is wise touse engagement letters to define theclient and the client representatives. Aclient representative will fall within theumbrella of the attorney-client privilege.However, in family businesses and estateadministrations the roles may be lessthan clear. It is best to anticipate inadvance who will be involved in the legalrepresentation and include all suchpersons as "client representatives" in theengagement letter so that evidence willexist to support the assertion of aprivilege.

D. Burdensome or ExpensiveRequests

1. Independent Insulating Glass v.Street, 722 S.W.2d 798 (Tex. App.-- FortWorth 1987, writ dism'd). Any party whoseeks to exclude matters from discoveryon grounds that requested information isunduly burdensome, costly or harassingto produce, has the affirmative duty toplead and prove the work necessary tocomply with discovery. Otherwise, thetrial court cannot make an informedjudgment on whether to limit discovery onthis basis or place the cost for complyingwith the discovery. Failure to follow thisprocedure constitutes a waiver of anycomplaint of the trial court's action.

2. Morris v. Texas Employers Ins.Ass'n, 759 S.W.2d 14 (Tex. App.--CorpusChristi 1988, writ denied). In Morris, thecourt of appeals held that the trial court


did not abuse its discretion in sustainingthe appellee's objection to several of theappellant's interrogatories on the groundthat they were unduly burdensome andnot calculated to lead to any discoverableevidence at the time of trial. The appelleeput on ample evidence to support itsclaim of burdensomeness. Appellee'sclaims supervisor testified he would haveto review each of appellee's files, tens ofthousands, to comply with the request.While appellant's attorney proposed analternative method to accomplish thetask, it was one equally burdensome.Furthermore, the court offered tosubpoena the individuals as an easiermeans to acquire the information, whichthe appellant's attorney declined.

3. State Farm Mut. Auto Ins. Co. v.Engelke, 824 S.W.2d 747 (Tex. App.--Houston [1st Dist.] 1992, no writ).Plaintiffs objected to a discovery requeston the grounds that it was burdensomeand did not seek relevant information.Plaintiffs' representative claimed thatplaintiffs had already produced requestedreports for three years but were unable toobtain reports prior to the three yearsbecause the information was notretrievable. The plaintiffs' representativealso testified that she did not knowanything about the system that wasavailable to the plaintiffs for tracing theinformation from the time periodrequested but not previously produced,nor had the representative been asked tofind out this information prior to hertestimony. The representative agreedthat someone more knowledgeable onthe issue would have to be asked suchquestions. Plaintiffs did not produce amore knowledgeable witness to testify.Based upon the failure of the plaintiffs topresent specific evidence that the request

was burdensome, the court of appealscould not say that the trial court abusedits discretion in ordering the production.

E. Objections . Texas Rule of CivilProcedure 193.2, states, in pertinent part,"A party must make any objection towritten discovery in writing...within thetime for response. The party must statespecifically the legal or factual basis forthe objection and the extent to which theparty is refusing to comply with therequest." TEX. R. CIV. P. 193.2(a). "Aparty must comply with as much of therequest to which the party has made noobjection unless it is unreasonable underthe circumstances to do so beforeobtaining a ruling on the objection. If theresponding party objects to the requestedtime or place of production, theresponding party must state a reasonabletime and place for complying with therequest and must comply at that time andplace without further request or order".TEX R. CIV. P. 193.2(b). "The partymaking the objection or asserting theprivilege must present any evidencenecessary to support the objection orprivilege...at the hearing or affidavitsserved at least seven days before thehearing...". TEX. R. CIV. P. 193.4(a).Thus, the attorney-client privilege may berelinquished or lost if privilegedcommunications are admitted withoutobjection. U.S. v. Moody, 923 F.2d 341,cert. denied 112 S. Ct. 80.

F. Waiver of Objections

1. Conrad v. Wilson, 873 S.W.2d 467(Tex. App.--Beaumont 1994, no writ). InConrad, the defendants failed to meettheir evidentiary burden on their motionfor protection, and they waived anyobjections or privileges they had


asserted. Plaintiffs brought a medicalmalpractice action against a medicalcenter and three doctors. The trial courtentered a protective order in the suit, andthe plaintiffs petitioned for mandamus. Atthe trial court hearing on the motion forprotective order, the sole witnessmentioned only the medical privilege andthe peer review privilege. However, themotion for protective order asserted manyprivileges such as overly broad, irrelevant,attorney work product, immaterial, partycommunication exemption, etc. Asidefrom the medical privilege and the peerreview privilege, there was no evidence tosupport assertion of any other privilege,exemption or immunity. Furthermore, thesole witness testified that, "Some of thethings asked for are protected." Thecourt of appeals found this testimony wasnot directed to any specified document orset of documents, and was the equivalentof no evidence. As no evidence waspresented, the court held the trial courtcould only deny the motion. Eli Lilly andCo. v. Marshall, 850 S.W.2d 155, 157(Tex. 1993); Walker v. Packer, 827S.W.2d 833, 843 (Tex. 1992). Thus, thecourt determined that the trial courtabused its discretion by granting themotion for protection and that mandamuswas an appropriate remedy.

G. Joint Defense Privileges . Whenparties believe that there is a mutuality ofinterest in a common defense with regardto current or future litigation, the partiesmay enter into a joint defense andconfidentiality agreement. Thisagreement provides that any sharing byor exchange between the parties to theagreement of confidential information willbe under a standing invocation of a jointdefense privilege of the sortacknowledged in a number of cases,

including Wilson P. Abraham Const.Corp. v. Armco Steel Corp., 559 F.2d250, 258 (5th Cir. 1977), United States v.Melvin, 650 F.2d 641, 645-46 (5th Cir.1981), and Gulf Oil Corp. v. Fuller, 695S.W.2d 769 (Tex. App.--El Paso 1985, nowrit). Such an agreement allows theparties' attorneys and representatives tobe able to communicate freely withoutconcern about a waiver of privilegesand/or exemption protecting confidentialand/or privileged information.

H. Involuntary Disclosure -Attorney-Client Privilege . "A party whoproduces material or information withoutintending to waive a claim of privilegedoes not waive that claim under theserules or the Rules of Evidence if - withinten days or a shorter time ordered by thecourt, after the producing party actuallydiscovers that such production was made- the producing party amends theresponse, identifying the material orinformation produced and stating theprivilege asserted. If the producing partythus amends the response to assert aprivilege, the requesting party mustpromptly return the specified material orinformation and any copies pending anyruling by the court denying the privilege."TEX R. CIV. P. 193.3(d).

VI. MAINTAINING CLIENT FILES

A. Estate Planning Files After theClient's Death . Estate planning files areunique among lawyers' files because theyare all subject to review by third partiesafter the death of the client. Estateplanning files will no longer be privilegedafter the death of the testator if a claim ismade. TEX. R. CIV. EVID. 503(d)(2). Manytimes some of a will contestant's most


useful evidence comes from the files ofthe estate planning lawyer.

B. File Maintenance Policy . Institutea policy concerning the maintenance ofestate planning files. All of the estateplanning files should be treated in thesame way.

C. Recommendations for FileMaintenance

1. Institute Either an "All or Nothing"System.

2. "All" System. This means keepingevery last piece of paper and handwrittennote relating to the engagement. This isprobably the best system if it is followedvery carefully. The attorney needs toconstantly be careful to make sure thatclient instructions and decisions arerecorded in the file and that notes andmemos are accurate. The attorneyshould make sure that the file accuratelyreflects what occurred in discussions withthe client and consideration of anyimportant issues. Some firms even keepinternal drafts so that each step of theprocess can be recreated at a later time.This is the best system if everyone iscareful. If the estate planning attorney (orthe staff) is sloppy or careless, this is theworst system. For example, if theattorney made careful notes of an initialconference with the client, but fails tokeep notes of a subsequent conference inwhich the client changes his or her mind,the file appears to reflect a mistake by theattorney.

3. "Nothing" System. This meansonly retaining the final instruments andany correspondence. This systemincreases the chances that the file will not

contain any contradictions or "evidence"to assist in a will contest (or similar suit).This system also allows for human error.The author would recommend this systemto all but the most disciplined and carefulpractitioners. Another advantage is thattestimony is simpler and more straight-forward if the only documents in the fileare the final documents. For example, "Ido not remember what Mr. Jones said tome twenty years ago, but I always draftmy wills in accordance with my client'sinstructions."

4. Maintain a System. Take the timeto decide upon a file maintenance systemand stick to it.

5. Never Mix Estate Planning Fileswith Other Client Matters. If a lawsuit isfiled claiming through a deceased client,attorney-client privilege may be waived forestate planning documents. The privilegewould normally not be waived for otherlegal work such as advice concerning aclosely-held business. If the files aremixed together or all matters are in onefile, it will make it much more difficult tomaintain the privilege.

6. Never Mix the Estate PlanningFiles of More than One Client. Openseparate files for husband and wife andmaintain them separately. Otherwise, theestate planner is faced with a dilemmawhen an appropriate request is made forinformation relating to one client but suchrequest would require the attorney toreveal information about another client.

VII. BILLING AND TIMEKEEPINGRECORDS


A. Attorney-Client Privilege MayNot Apply to Bills . Much like an estateplanning file, the bills for estate planningmay not be privileged after the death ofthe client if a claim is made through adeceased client.

B. Production of Bills . In caseswhere attorneys' fees are claimed, thebills may have to be produced. A claimfor attorney fees is common in both trustand probate cases.

C. Waived Privilege . If the bills areprivileged, the privilege can be waived.

D. Time Entries . Think before writingdown time entries. With an estateplanning file, you have no way of knowingwho will be reading the bill and what theywill be looking to find.

E. Recommendations

1. If Litigation is Likely, Care Shouldbe Taken With Itemized Bills. Anitemized bill sometimes gives the lawyerwho is challenging the estate plan a roadmap to follow. In some cases, anitemized bill will reveal the estate planninglawyer's thought processes and mayharm the client's interests. An itemizedbill will also reveal potential witnesses. Ifan itemized bill has to be prepared, theestate planning lawyer should be carefulnot to reveal confidential information.

2. Use Care to Describe SensitiveMatters. In all situations, an estateplanning lawyer should remember thatpeople other than the client may bereviewing the entries some day. Careshould be used to describe sensitivematters.

3. If Litigation is Likely, Use the Bill toConfirm the Client's Testamentary Intent.For example, "meeting with client in whichclient confirmed strongly that she wishesto leave nothing to her son and wants totake all steps necessary to avoid a willcontest." Obviously, this type of entryshould only be made if the event actuallyoccurred.

VIII. HOW TO IMPROVE THECHANCES THAT A WILL OR TRUSTWILL BE VALID

All estate planning lawyers knowthe basic rules for the creation of a will ortrust. The following are recommendationsto improve the chances of the estate planbeing confirmed in litigation. Therecommendations are simply ideas toconsider and are not to be consideredrequirements for a valid will or trust ormatters that are required for a carefulattorney. Some of the recommendationsmay not be appropriate in somesituations.

A. Avoiding Claims of UndueInfluence.

1. Consider Potential Conflicts ofInterest. If litigation is likely, try to reviewthe situation objectively to determine if aconflict of interest exists. If the attorneyhas a personal interest in the matter(such as a fiduciary appointment), makesure a written waiver is executed. SeeTEXAS RULES OF PROFESSIONAL CONDUCTRule 1.06. If a bequest is made to theattorney, obtain separate counsel for theclient.

2. Consider Relationships withBeneficiaries. If the estate planning


lawyer has a long, close relationship withone of the beneficiaries named in the will,the objectivity of the attorney may bequestioned. This is a fairly commonproblem because families tend to all usethe same lawyer or law firm. Although itis not unethical to represent more thanone family member on legal matters (withproper disclosure), a close relationshipwith one of the beneficiaries can be usedto show bias on the part of the attorney infavor of such beneficiary.

3. Be Cautious About Who Gives YouInstructions. An estate planning lawyershould take great care to confirm thatinstructions about a will or trust comefrom the client and not another familymember. Sometimes this is difficult if theclient is ill or elderly. If instructions comefrom a family member, the estate plannershould insist on a private meeting with theclient to insure that the document reflectshis or her wishes. This can occur at thetime the instrument is executed or before.At times, the estate planning attorneymay have complete confidence in theinstructions given to him by someoneother than the client, but to avoid theperception that the attorney is takinginstructions from someone other than theclient, the attorney should confirm theinstructions by meeting with the client toexecute the instrument or by letter (orboth).

4. Remember Who Your Client Is. Infamily situations, it is sometimesconfusing about who the attorneyrepresents. This is a mistake, but ithappens. When drafting a will or trust,keep in mind who you are representingand that you are supposed to be lookingout only for their interests. If a conflict

exists, have someone else draft thedocument.

5. Exclude Beneficiaries at WillExecution. Make sure beneficiaries arenot physically present when the will isexecuted.

6. Incorporate the Client's Input.Make sure the comments or changes toany drafts are the client's and not abeneficiary's comments.

7. Think Like a Trial Lawyer. Try tolook at the situation objectively and thinkabout how even "innocent" facts could bemade to look like wrongful or improperconduct.

B. Avoiding Claims of Lack ofCapacity

1. Make Sure You Are Comfortablethat the Client Has Capacity.

a. Consider consulting with theclient's doctor concerning capacity.

b. Consider reviewing hospital ormedical records of client.

2. Create a Record. Have thetestator answer the basic questionsneeded to show capacity in the presenceof witnesses.

a. Who are the natural objects ofhis/her bounty?

b. What property does he or sheown?

c. What instrument is beingexecuted?


d. What does the instrument do?

3. Choose Your Witnesses Carefully.Will this person be an effective witness ata trial? Will you be able to find them?

4. Consider Memos or Affidavits fromthe Witnesses and the Notary. If litigationis a concern, an affidavit or statementfrom the witnesses and the notary willhelp bolster their testimony. Do not putwords in the witnesses' mouths. Let themdescribe what happened in their ownwords.

5. Consider Videotape. Video willexecutions are not always a good idea.Often the videotape is better evidence forthe contestant than the proponent. If youdecide to use a video, do not ask leadingquestions and try to make the client lookas good as possible. If in doubt, do notuse videotape.

6. Deposition to PerpetuateTestimony. If a contest is a virtualcertainty and the client is willing, adeposition of the client can be takenregarding the will and the testator's intent.

7. Declaratory Judgment Action.Some lawyers believe that a declaratoryjudgment action can be brought duringthe testator's lifetime to declare the willvalid. This theory raises some potentialissues which have not been addressed bythe courts.

C. Formalities . If you suspect that awill contest is a possibility, make sure yousupervise the execution of the instrumentand follow the formalities strictly in thepresence of the witnesses. Always saythe same things and follow the sameprocedures when wills are executed so

that you can later testify that you didthese things even if you cannot rememberthe execution ceremony.

IX. TORTIOUS INTERFERENCEWITH INHERITANCE RIGHTS

A. De f i n i t i on o f Tor t iousInterference with Inheritance Rights.Tortious interference with inheritancerights was recognized by the Texasappellate courts in 1987. As discussed inmore detail below, Texas has not yetdefined the scope of the tort, and theelements are unclear. However, thecases from other states support thefollowing elements of the tort:

1. existence of an expectancy ofinheritance or gift;

See Brandes v. Rice Trust, Inc., 966S.W.2d 144 (Tex.App.—Houston [14thDist.] 1998, writ denied). In Brandestestator's sister and her children broughtaction against Rice University, allegingtortious interference with inheritancerights and intentional infliction ofemotional distress arising out of testator'sdeathbed gift to the university of $4million in bonds. The trial court grantedsummary judgment for Rice Trust, Inc.because plaintiffs had no right ofexpectancy from the testator's willbecause by the terms of the will, he didnot leave them the property that was indispute. (The plaintiffs had already lost awill contest).

2. intentional interference with theexpectancy;

3. the interference was tortious, suchas fraud, duress or undue influence;


4. the defendant 's act ionsproximately caused damage to theplaintiff (i.e. plaintiff would have inheritedbut for defendant's actions); and

5. damages.

B. Restatement (Second) of Torts .The Restatement of Torts definesintentional interference with inheritance orgift as the following:

One who by fraud, duress or othertortious means intentionally preventsanother from receiving from a third personan inheritance or gift that he wouldotherwise have received is subject toliability to the other for loss of theinheritance or gift. Restatement of Torts(Second) § 774B.

C. Restatement of Torts (Second)§ 774B - Definition of Terms

1. Inheritance or Gift. "Inheritance" isused to include any devise or bequestthat would otherwise have been madeunder a testamentary instrument or anyproperty that would have passed to theplaintiff by intestate succession. Thus,the tort applies when the testator hasbeen induced by tortious means to makehis will or not make it; and it applies alsowhen he has been induced to change orrevoke his will or not to change or revokeit. It applies also when a will is forged,altered, or suppressed.

2. Gift. "Gift" is used to include in thebroad sense any donation, gratuity, orbenefaction that other would havereceived from the third person. Itincludes, for example, a beneficiarydesignation under an insurance policy

that the actor interferes with by tortiousmeans.

D. Tortious Interference v. WillContest

1. A will contest is an action tocontest the probate of the will, to contestthe validity of a will, or to assert aninterest in the estate because a will isineffective, because another will exists, orbecause the decedent breached acontract to make or revoke a will.

2. A tortious interference action doesnot challenge the probate or validity of awill. Rather, the action seeks damagesfrom a third party because of the plaintiff'sloss of an expectancy. The tort actionaccrues when the wrongful act iscomplete. This may be before thetestator's death, after the testator's death,or even after the probate proceedingshave ended. In cases involving wills,Texas may require that inheritance rightsbe established by winning a will contestbefore the action will be available.

E. Jury Charge for TortiousInterference Cause of Action. Thefollowing is a jury charge that wassubmitted for a tortious interferencecause of action in one of the author'sHarris County cases:

Do you find from a preponderanceof the evidence that the defendanttortiously interfered with the plaintiff's rightto inherit property from the testator?

_______ YES ______ NO

INSTRUCTION


You are instructed that a partytortiously interferes with another'sinheritance rights when he: (1) partici-pates in or receives benefits from awrongful or tortious act; (2) proximatelycauses an event which prevents orinterferes with an inheritance of anotherperson; (3) and this results in damages orloss to that person.

INSTRUCTION

You are instructed that fraud,misconduct, an illegal action andintentional invasion of or interference withproperty or property rights, causing injurywithout just cause or excuse, constitutetortious or wrongful acts.

What sum of money, if any, if paidin cash, do you find from apreponderance of the evidence wouldfairly and reasonably compensate theplaintiff for his losses or injury, if any,proximately caused by the defendant'stortious interference?

$_____________________

F. Texas Cases .

1. King v. Acker, 725 S.W.2d 750(Tex. App.--Houston [1st Dist.] 1987, nowrit). In King, the decedent's wifetransferred stock to herself using a forgedpower of attorney and filed an applicationto probate a forged 1982 will. Theplaintiffs, who were beneficiaries under aprevious will, brought a will contest andprevailed. After prevailing in the willcontest, the plaintiffs brought suit againstthe wife, her attorney, and the "witnesses"to the forged will. The case against theattorney and witnesses was severedbefore trial. At trial, a jury found that the

decedent's wife had maliciously conspiredto tortiously interfere with the inheritancerights of the beneficiaries under the actualwill of the decedent and awarded thebeneficiaries punitive damages.

On appeal, it was initially notedthat Texas courts had never addressedthe issue of whether such a cause ofaction existed. The court held that "acause of action for tortious interferencewith inheritance rights exists in Texas"and affirmed the trial court's award ofactual and punitive damages. The courtbased its decision on:

a. decisions from other jurisdictions;

b. Restatement (Second) of Torts§ 774B (1977);

c. the recognition of a cause of actionfor tortious interference in other contextsby Texas courts; and

d. previous cases implying thatinterference with inheritance rights is anactionable tort.

2. Damages in King v. Acker.

a. The court approved recovery of thetemporary administrator's commission onstock that had to be redeemed becauseof the acts of the defendant.

b. The court did not allow recovery ofthe handwriting expert's fees becausesuch fees were litigation expenses.

c. The jury awarded punitivedamages equal to the plaintiff's attorney'sfees.


3. Implications of King v. Acker forProbate and Trust Litigation. The court'srationale in King provides no reason tobelieve that its holding is limited solely toactions for interference with inheritancerights. In reaching its holding, the courtrecognized:

a. that "equity will not suffer a right tobe without a remedy" [citing Chandler v.Wellborn, 156 Tex. 312, 294 S.W.2d 801,807 (1956)];

b. that an intentional and injuriousinvasion or interference with property orpersonal rights is an actionable tort [citingCooper v. Steen, 318 S.W.2d 750, 757(Tex. Civ. App.--Dallas 1958, no writ)];and

c. that "Texas seems to recognize acause of action for tortious interference"[citing Tippet v. Hart, 497 S.W.2d 606(Tex. Civ. App.--Amarillo 1973, writ ref'dn.r.e.)].

The court's reliance on thesegeneral principles was seemingly appliedto the particular allegation made in thiscase, interference with inheritance rights.However, it seems very possible that suchprinciples could be applied to support theexistence of a cause of action for almostany act, whether by an executor, trustee,beneficiary, or third party, whichconstitutes an intentional interference withor disruption of the proper administrationor distribution of a trust or estate.

4. Possible Cause of Action forInterference with Inheritance Expectancy.In Neill v. Yett, 746 S.W.2d 32 (Tex. App.--Austin 1988, writ denied), the decedentleft a will in which his granddaughter wasnot remembered. The granddaughter

attempted to extend the principles of Kingby pleading that, based on fraud andundue influence committed by thedecedent's wife, a cause of action existedfor tortious interference by the decedent'swife with the granddaughter's inheritanceexpectancy. The trial court grantedsummary judgment against thegranddaughter. The court of appealsheld that the judgment of the probatecourt admitting the will to probate barredthe granddaughter's claim for tortiousinterference with her inheritanceexpectancy; as long as such judgmentremained valid, the granddaughter had noinheritance expectancy. The court thennoted that the granddaughter failed toeither set out the elements of her claimedcause of action for tortious interferencewith her inheritance expectancy or todescribe the basis for such cause ofaction. Apparently, the granddaughtercited King for the first time in herappellate brief in support of her claim.The court recognized the generalconclusion in King that the cause ofaction for tortious interference withinheritance rights exists in Texas, butobserved that the elements of such causeof action were not delineated in the Kingopinion. However, while never statingthat a cause of action for tortiousinterference with an inheritanceexpectancy exists, the court stated that"if, indeed, a cause of action for tortiousinterference with inheritance expectancyexists," the granddaughter's assertion ofsuch cause of action was barred bylimitations.

5. King and Neill Distinguished. Itshould be observed that the facts of Neillare clearly distinguishable from King. InKing, the parties who brought the actionfor tortious interference were named as


beneficiaries in a will that was ultimatelyadmitted to probate. The granddaughterin Neill could make no such claim.Additionally, the defendant in King wasfound to have engaged in fraudulentactivity in connection with the decedent'sdisposition of the property in question. InNeill, no evidence was discussed whichcould be viewed as demonstrating thatthere was anything unusual about thedisposition of the estate in question.These clearly distinguishable facts makethe decision in Neill noteworthy primarilybecause the court refused to preclude thepossible existence of a cause of action fortortious interference with an expectancyof inheritance even though the factssupporting the granddaughter's case wererelatively weak. To the contrary, the courtin Neill gave every indication that with itselements properly pled and its basisproperly described, such a cause ofaction would indeed exist.

6. Possible Elements of TortiousInterference in Texas.

a. Texas cases d iscussinginterference with inheritance.

(i) Pope v. Garrett, 204 S.W.2d 867(Tex. Civ. App.--Galveston 1947), rev'don other grounds, 211 S.W.2d 559 (Tex.1948). The appellee in Pope v. Garret,sought to recover damages caused by theacts of two of the appellants in physicallypreventing the decedent from executing awill under which property would havepassed to appellee. As a result of suchaction, the decedent died intestate, andhis property passed to eight appellantswho would take decedent's propertyunder the laws of descent anddistribution. The trial court imposed atrust on the property received by the eight

appellants which would have passed toappellee under the will. On rehearing ofthe appeal, the court observed that theappellee might have obtained a judgmentagainst the two appellants who by theirwrongful act prevented the execution ofthe will and stated that "[t]he measure ofdamages would have been the value ofthe property which would have passed bythe will except for the wrongful act."However, the court of appeals held thatthe interests of the six appellants who didnot participate in preventing the executionof the will were not subject to the trustimposed by the trial court. Such ruling asto the six non-participating appellants wasreversed by the Texas Supreme Court,and the trial court's judgment wasaffirmed.

(ii) Teague v. Stephens, 564 S.W.2d437 (Tex. Civ. App.--Tyler 1978, no writ).In Teague v. Stephens, the plaintiff suedthe defendant for negligently orintentionally causing the disappearanceor destruction of a will under which theplaintiff was a beneficiary. Thedefendant's motion for summaryjudgment was granted based on hisaffidavit stating that he had never seennor had knowledge of a will executed bythe decedent under which the plaintiffwould receive property and that he hadnever destroyed or lost a will of thedecedent. The plaintiff presentedsummary judgment evidence whichsuggested that the decedent may haveexecuted a will under which the plaintiffwas a beneficiary. Stating that thefocused issue of the case was whetherthe defendant had destroyed or lost thedecedent's will, the court of appealsupheld the summary judgment on theground that the plaintiff's summary


judgment evidence failed to create agenuine issue of material fact.

(iii) Summary. The language in Popecan be interpreted to break the cause ofaction for tortious interference withinheritance rights into the followingelements:

(a) participation in or receipt ofbenefits from,

(b) a wrongful act,

(c) proximately causing an event,

(d) which prevents or interferes withan inheritance,

(e) and results in damages or loss tothe plaintiff.

Such interpretation is supported bythe language in Teague whichstated that the key issue in thatcase was whether the defendanthad negligently lost or intentionallydestroyed the alleged will,preventing the plaintiff fromreceiving his bequests thereunder.

(iv) Clark v. Wells Fargo Bank, N.A.,WL 2306418 (Tex.App.- Houston [1st

Dist.] 2010 not reported). The court reliedupon the definition of tortious interferencefrom the Restatement (second) of Torts§774B and King v. Acker.

(v) Brandas v. Rice Trust, Inc.. 966S.WS2d 144 (Tex.App.- Houston [1st

Dist.] pet. denied. The court used thedefinition from King v. Acker and theRestatement (second) of Torts §774B.

(vi) Tortious interference notaddressed. Several Texas cases havebeen brought asserting tortiousinterference, but for a variety of reasons,the appellate courts have not addressedthe merits of the tort action:

(a) A remainderman brought suitagainst the life tenant's executor forconversion and tortious interference withinheritance rights. The jury found bothconversion and tortious interference withinheritance rights. The plaintiff elected torecover damages on the finding ofconversion. Rice v. Gregory, 780 S.W.2d384 (Tex. App.--Texarkana 1989, writdenied).

(b) Plaintiff, who was the beneficiary ofa specific bequest under a will, sued theexecutor for tortious interference, breachof fiduciary duty, fraud, bad faith, andconversion. The trial court directed averdict for the plaintiff on the conversionaction. On appeal, the court determinedthat the plaintiff had elected theconversion remedy. The opinion can beread to indicate that other remedies mayhave been available if the plaintiff hadpreserved his rights. Matter of Estate ofCrawford, 795 S.W.2d 835 (Tex. App.--Amarillo 1990, no writ).

(c) Remaindermen brought suitagainst the life tenant's executor arisingfrom a sale by the life tenant of certainreal property. The action included acause of action for tortious interferencewith inheritance rights. The defendantsresponded that the life tenant's right tosell the property extinguished anyinheritance rights of the plaintiff. The juryfailed to find that anyone tortiouslyinterfered with plaintiff's inheritance rights.


Hext v. Price, 847 S.W.2d 408 (Tex.App.--Amarillo 1993, no writ).

b. Texas cases discussing tortiousinterference with contract rights. Whendefining the limits of tortious interferencewith inheritance rights, the Texasappellate courts will likely be guided bycases discussing tortious interferencewith contract rights. The following is asurvey of Texas decisions:

(i) American Petrofina, Inc. v. PPGIndustries, Inc., 679 S.W.2d 740 (Tex.App.--Fort Worth 1984, writ dism'd byagr.). The court held that "[i]n maintaininga cause of action for tortious interferencewith contract, it must be established that(1) there was a contract subject tointerference; (2) the act of interferencewas intentional and willful; (3) suchintentional act was a proximate cause ofplaintiff's damage; and (4) actual damageor loss occurred." American Petrofina,Inc. v. PPG Industries, Inc., 679 S.W.2d740 (Tex. App.--Fort Worth 1984, writdism'd by agr.).

(ii) Tippet v. Hart, 497 S.W.2d 606,610-11 (Tex. Civ. App.--Amarillo 1973,writ ref'd n.r.e.). To be actionable, theinterference need not procure a breach ofthe contract. Any invasion which injuresor destroys property and interferes with ormakes more difficult the performance ofthe contract can give rise to the cause ofaction. Tippet v. Hart, 497 S.W.2d 606,610-11 (Tex. Civ. App.--Amarillo 1973,writ ref'd n.r.e.).

(iii) Summary. If the Texas courts lookto the elements of tortious interferencewith contractual relations to determine theelements of tortious interference withinheritance rights, the holding in American

Petrofina seems most applicable. Byanalogy to that holding, the elements oftortious interference with inheritancerights would be:

(a) existence of a will or potentialtestator/beneficiary relationship subject tointerference,

(b) intentional and willful interferencewith such will or relationship,

(c) which proximately causes,

(d) actual damage or loss.

Under the language of Tippet, itseems likely that actionable interferencewould not require complete elimination ofa potential inheritance. Instead, anyinterference which causes the testator'sintent, as set forth in his statements orwill, to be more difficult to carry out wouldbe sufficient to give rise to the cause ofaction.

G. Safe Harbor for Estate PlanningLawyers

1. A Safe Harbor Has Not BeenDefined in Texas. At this time, the casesin Texas have not provided sufficientguidance to know with any certainty whatwould be a safe harbor for an estateplanning attorney relating to a claim oftortious interference with inheritance orgift. However, Probate Code Section 10Cprovides that the filing or contesting ofany pleading relating to a decedent’sestate does not constitute tortiousinterference with inheritance of the estate.All that is known right now is that assistinga client in offering a forged will for probateis tortious interference with inheritance


rights and pleadings related to an estateare not torious interference. In theory, anestate planning lawyer could notaccidentally tortiously interfere withinheritance rights because the cause ofaction requires deliberate wrongfulconduct. However, tort concepts such ascivil conspiracy and joint and severalliability make it conceivable that anattorney could stumble into a tortiousinterference case.

2. Clear Outside Parameters.

a. Knowingly participating in theoffering of a forged will for probate istortious interference.

b. Changing a client's estate plan ingood faith is not tortious interference.

3. Defining a Likely Safe Harbor forAttorneys.

a. Simply creating or changing aclient's estate plan in good faith is safe.

b. Contesting a will or an intervivostransfer in good faith is permissible.

X. CONFLICTS OF INTEREST

A. General Rules - Rule 1.06 of theTexas Discipl inary Rules ofProfessional Conduct.

Rule 1.06. Conflict of Interest: GeneralRule

(a) A lawyer shall not representopposing parties to the same litigation.

(b) In other situations and except tothe extent permitted by paragraph (c), a

lawyer shall not represent a person if therepresentation of that person:

(1) involves a substantially relatedmatter in which that person's interests arematerially and directly adverse to theinterests of another client of the lawyer orthe lawyer's firm; or

(2) reasonably appears to be orbecome adversely limited by the lawyer'sor law firm's responsibilities to anotherclient or to a third person or by thelawyer's or law firm's own interests.

(c) A lawyer may represent a client inthe circumstances described in (b) if:

(1) the lawyer reasonably believes therepresentation of each client will not bematerially affected; and

(2) each affected or potentiallyaffected client consents to suchrepresentation after full disclosure of theexistence, nature, implications, andpossible adverse consequences of thecommon representation and theadvantages involved, if any.

(d) A lawyer who has representedmultiple parties in a matter shall notthereafter represent any of such parties ina dispute among the parties arising out ofthe matter, unless prior consent isobtained from all such parties to thedispute.

(e) If a lawyer has acceptedrepresentation in violation of this Rule, orif multiple representation properlyaccepted becomes improper under thisRule, the lawyer shall promptly withdrawfrom one or more representations to the


extent necessary for any remainingrepresentation not to be in violation ofthese Rules.

(f) If a lawyer would be prohibited bythis Rule from engaging in particularconduct, no other lawyer while a memberor associated with that lawyer's firm mayengage in that conduct. TEXAS RULES OFPROFESSIONAL CONDUCT Rule 1.06.

B. Prohibited Transactions - Rule1.08 of the Texas Disciplinary Rules ofProfessional Conduct.

The Rule provides:

(a) A lawyer shall not enter into abusiness transaction with a client unless:

(1) the transaction and terms on whichthe lawyer acquires the interest are fairand reasonable to the client and are fullydisclosed in a manner which can bereasonably understood by the client;

(2) the client is given a reasonableopportunity to seek the advice ofindependent counsel in the transaction;and

(3) the client consents in writingthereto.

(b) A lawyer shall not prepare aninstrument giving the lawyer or a personrelated to the lawyer as a parent, child,sibling, or spouse any substantial gift froma client, including a testamentary gift,except where the client is related to thedonee.

(c) Prior to the conclusion of allaspects of the matter giving rise to thelawyer's employment, a lawyer shall not

make or negotiate an agreement with aclient, prospective client, or former clientgiving the lawyer literary or media rightsto a portrayal or account based insubstantial part on information relating tothe representation.

(d) A lawyer shall not provide financialassistance to a client in connection withpending or contemplated litigation oradministrative proceedings, except that:

(1) a lawyer may advance orguarantee court costs, expenses oflitigation or administrative proceedings,and reasonably necessary medical andliving expenses, the repayment of whichmay be contingent on the outcome of thematter; and

(2) a lawyer representing an indigentclient may pay court costs and expensesof ligation on behalf of the client.

(e) A lawyer shall not acceptcompensation for representing a clientfrom one other than the client unless:

(1) the client consents;

(2) there is no interference with thelawyer's independence of professionaljudgment or with the client-lawyerrelationship; and

(3) i n f o rm a t i o n r e l a t i n g t orepresentation of a client is protected asrequired by Rule 1.05.

(f) A lawyer who represents two ormore clients shall not participate inmaking an aggregate settlement of theclaims of or against the clients, or in acriminal case an aggregated agreementto guilty or nolo contendere pleas, unless


each client has consented afterconsultation, including disclosure of theexistence and nature of all the claims orpleas involved and of the nature andextent of the participation of each personin the settlement.

(g) A lawyer shall not make anagreement prospectively limiting thelawyer's liability to a client for malpracticeunless permitted by law and the client isindependently represented in making theagreement, or settle a claim for suchliability with an unrepresented client orformer client without first advising thatperson in writing that independentrepresentation is appropriate inconnection therewith.

(h) A lawyer shall not acquire aproprietary interest in the cause of actionor subject matter of litigation the lawyer isconducting for a client, except that thelawyer may:

(1) acquire a lien granted by law tosecure the lawyer's fee or expenses; and

(2) contract in a civil case with a clientfor a contingent fee that is permissibleunder Rule 1.04.

(i) If a lawyer would be prohibited bythis Rule from engaging in particularconduct, no other lawyer while a memberof or associated with that lawyer's firmmay engage in that conduct.

(j) As used in this Rule, "businesstransactions" does not include standardcommercial transactions between thelawyer and the client for products orservices that the client generally marketsto others. TEXAS RULES OF PROFESSIONALCONDUCT Rule 1.08.

C. Former Client - Rule 1.09 of theTexas Disc ipl inary Rules ofProfessional Conduct.

The Rule provides:

(a) Without prior consent, a lawyerwho personally has formerly representeda client in a matter shall not thereafterrepresent another person in a matteradverse to the former client:

(1) in which such other personquestions the validity of the lawyer'sservices or work product for the formerclient;

(2) if the representation in reasonableprobability will involve a violation of Rule1.05; or

(3) if it is the same or a substantiallyrelated matter.

(b) Except to the extent authorized byRule 1.10, when lawyers are or havebecome members of or associated with afirm, none of them shall knowinglyrepresent a client if any one of thempracticing alone would be prohibited fromdoing so by paragraph (a).

(c) When the association of a lawyerwith a firm has terminated, the lawyerswho were then associated with thatlawyer shall not knowingly represent aclient if the lawyer whose association withthat firm has terminated would beprohibited from doing so by paragraph(a)(1) or if the representation inreasonable probability will involve aviolation of Rule 1.05. TEXAS RULES OFPROFESSIONAL CONDUCT Rule 1.09.


D. Recommendations RegardingConflicts of Interest.

1. The estate planning practicepresents more difficult conflict of interestquestions than any other area of practice.The nature of the practice makes it verydifficult to avoid giving the appearance ofrepresenting more than one person.Also, the desire to be helpful to the clientwill often lead to meetings andconsultations with other family members.This problem is made more difficultbecause clients will often not want toinvolve separate counsel for their familymembers for cost reasons.

2. A well-drafted engagement letterwill solve many problems. A well draftedengagement letter will accomplish thefollowing at a minimum:

a. identify the client,

b. define the scope of theengagement,

c. define the fee arrangement, and

d. define future duties of the attorney.

3. The engagement letter will notsolve problems if the attorney ignores theletter and engages in a course of conductwhich would lead others to believe thatthe attorney represents their interests.

4. The estate planning lawyer shouldrecognize that people often havemisconceptions about the duties of anestate planning lawyer. The mostcommon misconceptions are thefollowing:

a. That the lawyer representing atestator owes duties to the natural objectsof the testator's bounty. For example,many people would assume that theattorney for the father owes duties to befair to the children.

b. That the lawyer for the executorowes duties to the beneficiaries of theestate.

5. Because we know that thesemisconceptions exist, steps should betaken to inform family members that theattorney does not represent them. Insome situations a letter may beappropriate outlining the attorney's dutiesand loyalties. Failure to clarify therelationships may result in liability toparties who have a reasonable belief thatthe attorney represents them.

a. Querner v. Rindfuss, 966 S.W.2d661 (Tex.App.—San Antonio 1998, pet.filed). In Querner, beneficiaries of anestate brought an action against theattorney for executrix for fraud, breach offiduciary duty and other assorted acts ofwrongdoing. The trial court grantedsummary judgment for the attorney, whichincluded a finding that the beneficiarieslacked standing to sue. The beneficiariesappealed the granting of the summaryjudgment to the court of appeals.Rindfuss, the attorney, argued that hewas never the attorney for thebeneficiaries and he did not owe thebeneficiaries any fiduciary duties. Thecourt of appeals noted that at least onecourt appears to have recognized thebeneficiaries' right to sue for actionstaken by an attorney hired to advise theexecutors in administering an estate,citing to Vinson & Elkins v. Moran, 946S.W.2d 381 (Tex.App.—Houston [14th


Dist.] 1997, writ dism'd by agr.). One ofbeneficiaries stated in an affidavit thatRindfuss continually represented himselfto be the attorney for the estate. Thesummary judgment evidence alsocontained a letter drafted by Rindfuss toa beneficiaries' attorney stating thatalthough he was employed by theexecutrix, "I am the attorney for theEstate as opposed to the attorney for theIndependent Executrix..." The letterfurther stated that Rindfuss will keep thebeneficiaries fully apprised of both theexecutrix's position and the otherbeneficiary's position on the interpretationof the will. The court stated that whetherthe evidence is sufficient to sustain afinding of privity or fiduciary relationship isnot the issue before us on appeal.However, the Court stated that in light ofRindfuss's own representations regardingthe nature of his relationship to the estateand his execution of accountings inkeeping with that representation, webelieve there is some evidence thatrequires us to permit this issue to besubmitted to a jury for factual solution.

b. Vinson & Elkins v. Moran, 946S.W.2d 381 (Tex.App.—Houston [14thDist.] 1997, writ dism'd by agreement).Beneficiaries of an estate sued thelawyers for the estate allegingprofess iona l negl igence ( lega lmalpractice) breach of fiduciary duty,conspiracy, and violations of the TexasDeceptive Trace Practices Act (DTPA).The claims arose out of Vinson & Elkins'alleged misconduct and mishandling oflegal matters in connection with theadministration of the Estate of W.T.Moran. The trial court entered ajudgment against Vinson & Elkins inexcess of $35 million. The FourteenthCourt of Appeals reversed and rendered

in part and reversed and remanded inpart. In Moran, the jury found anattorney-client relationship betweenVinson & Elkins, the attorneys hired bythe executors, and the beneficiaries. Thebeneficiaries testified that Vinson & Elkinstook the position early in theadministration of the Estate that itrepresented the "Moran interests." Beneficiaries received mailings directlyfrom Vinson & Elkins and had contactwith them at formal beneficiary meetings.Even though the beneficiaries testifiedthat they never hired Vinson & Elkins, andsome beneficiaries had their ownpersonal attorneys, the jury still found anattorney-client relationship. TheFourteenth Court of Appeals found therewas sufficient evidence to support theexistence of an attorney client relationshipbetween Vinson & Elkins and thebeneficiaries. The court however did holdthat the beneficiaries were not consumersand therefore were not entitled to bring anaction under the DTPA.

c. Barcelo v. Elliott, 923 S.W.2d 575(Tex.1996). In Barcelo, Decedent'sgrandchildren, who were intendedbeneficiaries under a trust that wasdeclared invalid, brought a legalmalpractice suit against the attorney whodrafted the trust. The grandchildrenalleged that the lawyer's negligencecaused the trust to be invalid, resulting inforeseeable injury to them. The attorneymoved for summary judgment on the soleground that he owed no professional dutyto the grandchildren because he hadnever represented them. The trial courtgranted summary judgment and theTexas Supreme Court affirmed theholding that an attorney retained by atestator or settlor to draft a will or trustowes no professional duty of care to


persons named as beneficiaries underthe will or trust. But see the dissent ofJustices Cornyn, Abbott and Spector.The dissent states that Texas embracesa rule recognized in only four states. Thedissent would allow a cause of action bya beneficiary if the beneficiary was able toshow that the attorney breached a duty tothe decedent. The dissent notes thatlawyers wishing to protect themselvesfrom liability may document the testator'sintentions.

d. Thompson v. Vinson & Elkins, 859S.W.2d 617 (Tex. App.--Houston [1stDist.] 1993, writ denied) in which theresidual beneficiaries of a testamentarytrust filed suit against the attorneys whorepresented the executor and trustee.The same attorneys also represented thecorporation whose stock made up asubstantial part of the assets of the trust.The attorneys did not check on whetherrepresentation of the trustee would be aconflict of interest with other clientrepresentations by the attorneys.

The trustee and attorneysdiscussed several alternative ideas toredeem the corporation stock held by thetrust. In correspondence, the attorneysdiscussed the redemption in terms ofkeeping stock from passing into thehands of the remainder beneficiaries.The plaintiffs found out about this plan,and sued the attorneys for a number ofcauses of action. The trial court enteredsummary judgment in favor of theattorneys who represented the executorand trustee. The trust beneficiariesappealed asserting several claims. Thecourt of appeals found that with respect toa breach of contract claim, privitybetween the remainder beneficiaries andthe attorneys was lacking, since the

attorneys represented only the trustee,and did not ever take on representation ofthe remainder beneficiaries. The courtcontinued to follow the Texas rule that alawyer is not liable for malpractice to onewho is not a client. With respect to aclaim of fraud, the court held that theplaintiffs failed to show either that theattorneys had made a fraudulentrepresentation to the plaintiffs, or that ifsuch a representation had been made,that the plaintiffs relied on it. Theplaintiffs also claimed a breach of afiduciary duty owed to the remainderbeneficiaries. However, the court did notconsider the representation of a fiduciaryto cause a fiduciary relationship to existbetween the attorney and a beneficiary.The plaintiffs also made a claim based onthe Texas Deceptive Trade Practices Act.The court held that this claim failedprimarily because no "goods or services"were provided by the attorneys to theplaintiffs. But, the court did make thepoint that under different facts, a DTPAaction might be sustainable, since privityis not a requirement in a DTPA action.

e. Belt v. Oppenheimer, Bland,Harrison & Tate, Inc., 192 S.W.3d 780(Tex.2006). The Texas Supreme Courtheld that a claim for legal malpracticeagainst an estate planner for economicdamage to the estate may be brought bythe client’s personal representative.

XI. ESTATE PLANNER AS WITNESS-A. Practical Tips.

1. The estate planning attorney whois called as a witness should have twogoals:

a. assisting the judicial process; and


b. avoiding becoming a defendant.

2. Although the natural inclination ofestate-planning attorney-witness is toteam up with the attorneys who arerepresenting the proponent of theinstrument drafted by the estate planningattorney or the attorneys who arerepresenting the former client of theattorney-witness, the best course ofaction is to keep some distance. If theattorney's actions show that he or she isactively participating in the trial, thetestimony will be less persuasive. Also,the parties on the other side of the casewill be more likely to blame the attorneyfor their problems if the attorney is doingmore than serving as a witness. Finally,in the absence of a privilege, thediscussions with trial counsel arediscoverable and fair game for cross-examination.

3. Protect privileged documents in thefiles.

4. Do not reveal privilegedinformation to anyone without appropriatewaivers or consent by the person whoholds the privilege.

5. Most trial lawyers will cooperate onthe scheduling of a deposition andproduction of documents. Simply call thetrial lawyer and ask for additional time ifyou need it. Also, if there are privilegequestions, a motion for protective orderneeds to be filed before the date of thedeposition or document production. Allagreements among counsel must be inwriting, signed by the attorneys and filedwith the court to be enforceable.

B. Rule 501 . Rule 501 of the TexasRules of Civil Evidence provides asfollows:

Rule 501. Privileges Recognized Only asProvided

Except as otherwise provided byConstitution, by statute, by these rules orby other rules prescribed pursuant tostatutory authority, no person has aprivilege to:

(1) refuse to be a witness;

(2) refuse to disclose any matter;

(3) refuse to produce any object orwriting; or

(4) prevent another from being awitness or disclosing any matter orproducing any object or writing. TEX. R.CIV. EVID. 501.

C. Rule 3.08. Rule 3.08 of the TexasDisciplinary Rules of ProfessionalConduct provides as follows:

(a) A lawyer shall not accept orcontinue employment in a contemplatedor pending adjudicatory proceeding if thelawyer knows or believes that the lawyeris or may be a witness necessary toestablish an essential fact on behalf ofthe lawyer's client, unless:

(1) the testimony relates to anuncontested issue;

(2) the testimony will relate solely to amatter of formality and there is no reasonto believe that substantial evidence will beoffered in opposition to the testimony;


(3) the testimony relates to the natureand value of legal services rendered inthe case;

(4) the lawyer is a party to the actionand is appearing pro se; or

(5) the lawyer has promptly notifiedopposing counsel that the lawyer expectsto testify in the matter and disqualificationof the lawyer would work substantialhardship on the client.

(b) A lawyer shall not continue as anadvocate in a pending adjudicatoryproceeding if the lawyer believes that thelawyer will be compelled to furnishtestimony that will be substantiallyadverse to the lawyer's client, unless theclient consents after full disclosure.

(c) Without the client's informedconsent, a lawyer may not act asadvocate in an adjudicatory proceeding inwhich another lawyer in the lawyer's firmis prohibited by paragraphs (a) or (b) fromserving as advocate. If the lawyer to becalled as a witness could not also serveas an advocate under this Rule, thatlawyer shall not take an active role beforethe tribunal in the presentation of thematter. TEXAS RULES OF PROFESSIONALCONDUCT Rule 3.08.

D. Case Law. Disqualification ofattorneys who are witnesses. Rule 3.08provides that an attorney may be counselfor a client as well as a witness at trial ifthe attorney has promptly notifiedopposing counsel of his dual role anddisqualification would work substantialhardship on the client. TEXAS RULES OFPROFESSIONAL CONDUCT Rule 3.08(a)(5).Comment seven to Rule 3.08 explainsthat this subsection of the rule is based

upon a balancing of the interest of theclient in being represented by the counselof his or her choice with the interests ofthe opposing party. See McElroy v.Gaffney, 529 A.2d 889, 893 (N.H. 1987).For example, the opposing party may beunfairly prejudiced in some situationswhere an attorney for a party testifies asto a contested matter. Comment ten toRule 3.08, however, states that the ruleshould not be used as a tactical weaponto deprive the opposing party of the rightto be represented by the lawyer of his orher choice because reducing the rule tosuch a use would subvert its purpose.See also TEXAS RULES OF PROFESSIONAL

CONDUCT Preamble paragraph 15 (1995).

Although the Rules of ProfessionalConduct may be relevant whendetermining an attorney's disqualificationto serve in a case, the primary function ofthe rules is to define proper conduct forpurposes of professional discipline.TEXAS RULES OF PROFESSIONAL CONDUCTPreamble paragraph 10 (1995); SeeAyres v. Canales, 790 S.W.2d 554, 556n. 2 (Tex. 1990). The advocate-witnessrule is concerned with proper conductwhen an attorney representing a partyalso serves as a witness who testifies asto a controversial or contested matter. Insuch a situation, there exists a potentialdanger that the jury will confuse the rolesof counsel. A witness is required to testifyon the basis of personal knowledge, whilean advocate is expected to explain andcomment on evidence given by others. Itmay not be clear whether a statement byan advocate-witness should be taken asproof or as analysis of the proof. Id. at557 n. 1. In order to prevent misuse ofthe rule, the trial court should require theparty seeking disqualification todemonstrate actual prejudice to itself


resulting from the opposing lawyer'sservice in dual roles. Id. at 558; TEXASRULES OF PROFESSIONAL CONDUCTComment 1a (1995).

1. May v. Crofts, 868 S.W.2d 397(Tex. App.--Texarkana 1993, no writ).Actual prejudice to the party seekingdisqualification was not established inMay. Here, a will opponent made aninsufficient showing that she would beprejudiced by the opposing lawyer servingin dual roles of witness and counsel so asto be entitled to disqualification of theopposing lawyer. The will opponentchallenged the will prepared by theattorney shortly before the testator'sdeath on grounds that the testator lackedtestamentary capacity, that the will wasnot executed with required formalities,and that the will was the result of undueinfluence by the beneficiaries andattorney. The will opponent argued theopposing attorney drafted and supervisedthe execution of the will; that he knew orshould have known that his testimonywould be material in proving the will; andthat he did not come within anyexceptions set out in Rule 3.08. The willopponent planned to call the opposingattorney as a witness and argued as suchopposing attorney would be automaticallydisqualified from acting as an attorney inthe will contest. The court held that thewill opponent did not establish that theopposing a t torney's cont inuedrepresentation of the estate wasprohibited by Rule 3.08. There was noevidence showing that the opposingattorney would testify or that he was awitness who was necessary to establishan essential fact on behalf of his client.At oral argument, the opposing attorneyindicated that he did not intend to callhimself as a witness. Rather, the will

opponent's attorney was the one claiminghe wanted to call the opposing attorneyas a witness. Id. at 399. The mereannouncement by an adversary of hisintention to call the opposing counsel asa witness is insufficient to orchestrate thecounsel's disqualification. United PacificIns. Co. v. Zardenetta, 661 S.W.2d 244,248 (Tex. App.--San Antonio 1983, nowrit).

2. Anderson Producing Inc. v. KochOil Company, 929 S.W.2d 416 (Tex.1996). In Anderson a lawyer who hadrepresented a party during pretrialproceedings testified as an expert andfact witness for that party during the trial.The Beaumont court of appeals foundthat the lawyer violated attorneydisciplinary rule governing lawyer aswitness and should have beendisqualified from representing the party.The Texas Supreme Court held that thetestifying attorney appeared at trial solelyas a witness, and thus did not violateRule 3.08 of the Texas Rules ofProfessional Conduct. The Court heldthat Rule 3.08 only prohibits a testifyingattorney from acting as an advocatebefore a tribunal, not from engaging inpretrial, out-of-court matters such aspreparing and signing pleading, planningtrial strategy and pursuing settlementnegotiations. The Court did not decidewhether Rule 3.08 was violated due to thefact that the testifying attorney sat atcounsel table during the trial because itwas waived because there was noobjection made regarding this matterduring trial. The Court further ruled thatthe testifying attorney’s law firm was notdisqualified from being the lead trialcounsel. The Court cited to comment 8 ofRule 3.08 which states that “[e]ven inthose situations [in which a testifying


lawyer is disqualified], however, anotherlawyer in the testifying lawyer’s firm mayact as an advocate, provided the client’sinformed consent is obtained.” The Courtnoted that the testifying lawyer’s law firmhad a contingency fee in the case andthat it could be argued that the testifyinglawyer and his firm violated TexasDisciplinary Rule of Professional Conduct3.04(b) which forbids a lawyer from“pay[ing], offer[ing] to pay, oracquiesc[ing] in the offer or payment ofcompensation to a witness or other entitycontingent upon the content of thetestimony of the witness or the outcomeof the case.” However, the court declinedto express an opinion regarding whetherRule 3.04(b) had been violated becausethat issue had not been raised at the trialcourt or the appellate court.

XII. REPRESENTING A FIDUCIARY

If litigation is likely, representing afiduciary can be challenging and difficult.The following are some common problemareas:

A. Duty of Disclosure. One of themost difficult tasks for a fiduciary is togive full disclosure to a person who iscurrently bringing or is threatening tobring a lawsuit. The fiduciary has a dutyto provide full disclosure to thebeneficiaries. Of course, the cost ofproviding information should also betaken into account. However, failure toprovide full information about significantevents or transactions almost alwaysmakes matters worse and can give rise toallegations of intentionally wrongfulconduct. Although insisting on fulldisclosure may not make you popular withyour client from time to time, it is the bestway to protect the client.

B. Allocation of Fees . No clientwants to pay attorney fees. However,when a transaction or a lawsuit clearlyinvolves the client's individual interestsrather than the client's fiduciary interests,fees and expenses should be allocated inthe absence of a contractual right orsome other type of authority.

C. Counsel the Fiduciary toExercise Restraint When ExpendingFunds Held in Trust. When emotionsare running high during a dispute, peoplewill have a desire to take aggressiveactions. This is often expensive. Whenrepresenting the fiduciary, the attorneyshould make an effort to make sure theactions taken and the costs incurred areappropriate in the circumstances. A goodtest is whether the client would take thisaction if the client had to pay the bill for itpersonally.

D. Sometimes it is a Fiduciary'sJob to Make a Decision. Manyfiduciaries are paralyzed by fear whenlitigation is threatened. Consequently,they will want to do nothing unless theirlawyers can guarantee that thetransaction or other action is safe. Ofcourse, nothing is absolutely safe, sothese fiduciaries will incur large feesseeking legal opinions or declaratoryjudgments on matters that should bedecided by the fiduciary after carefulconsideration. This does not mean thatthe fiduciary always has to go along withwhatever a beneficiary wants or shouldnever file for a declaratory judgment, butcare should be taken to be sure that theissue involved justifies the expense anddelay.


E. Resignation is an Option. Oftenresignation by a fiduciary is the bestoption. If the fiduciary has no personal orfamily interest in the estate or trust,resignation to avoid litigation is always anoption that should be considered.

F. Be Careful What You Write . Theat torney-c l ien t p r iv i lege whenrepresenting a fiduciary is fragile. Asuccessor fiduciary may attempt to waivethe privilege. If an attorney gets caughtup in the fight and writes a letter or memoabout how to win in a dispute with abeneficiary, such letter or memo may endup in the hands of the beneficiary someday (or the beneficiary's trial counsel).This could harm both the client and thelawyer. Always keep fiduciary duties inmind when writing any memo or letter.

G. Be Careful What You Say.Remember that you represent a fiduciary.Comments like "we will spend every lastdime fighting this", "we will spend you intooblivion" or "we are big and rich and youare small and poor, so we will wipe youout" will all come back to haunt you at atrial.

H. Settlement Negotiations. Keepfiduciary duties in mind when negotiatingsettlements. Although offers ofcompromise are normally inadmissible toprove liability, such offers are admissiblefor other purposes. There are no Texascases on this point, but the author isconcerned that evidence could beadmitted for other purposes particularlywhen one of the parties is a fiduciary.Care should be taken to be sure thatsettlement offers are stated in a way thatwill show that the fiduciary is stillconcerned about his or her duties and

that the settlement transaction will notrequire a breach of these duties. If part ofa settlement is arguably a breach offiduciary duty, all beneficiaries shouldwaive or release the duty in thesettlement documents.

I. Correct Mistakes. If a beneficiaryis complaining about an action by afiduciary, take a hard look at the actionand try to decide if the action was proper.If not, promptly correct the problem.People are often afraid to correctproblems for fear that it will be anadmission of liability. However, if aproblem is quickly corrected, it takes all ofthe punch out of the beneficiary'sargument at trial and shows good faith.

J. Use Common Sense. Often whenrepresenting a fiduciary the attorney willhave many decisions to make.Sometimes the technically correctdecision will not make much economicsense in the circumstances. If that is thecase, try to get the fiduciary andbeneficiaries to agree upon the morereasonable course of action.

K. Transactions By A Fiduciarywith the Beneficiary. From time to time,a fiduciary will want to enter into atransaction with the person who is oweda fiduciary duty. The best advice to thefiduciary is to avoid such transactions. Insome instances, the transactions will bestrictly prohibited by the trust instrumentor applicable law. In all other instances,the transaction will be subject to strictscrutiny making it difficult for the fiduciaryto meet the burden of proof imposed onthe fiduciary to support the transaction.The following are some cases to illustratethe burden imposed on a fiduciary who


benefits from a transaction with a personwho is owed fiduciary duties:

1. Sorrell v. Elsey, 748 S.W.2d 584 (Tex.App. - San Antonio 1988, writ denied). InSorrell, a deed transferring real property to thenephews was signed by the elderly aunt. The auntwas paid $10.00. The court found a fiduciaryrelationship existed between the aunt and hernephews. The aunt sued to set aside the deed.The nephews claimed that a gift was made by theaunt. The aunt contended she was takenadvantage of and was unaware she had signed adeed conveying to her nephews all her interest inthe real property and she sought to set aside thedeed based on lack of consideration andinadequate consideration. A take nothingjudgment was entered by the trial court and afinding of fact was made by the trial court that,“Plaintiff made the gift freely, voluntarily andwith a full understanding of the facts, andDefendants acted in good faith.” The court ofappeals reversed the trial court and held that thenephews had failed to meet their burden to showthat the transaction was fair and equitable to theaunt, that the nephews made reasonable use of theconfidence placed in them and that the nephewsmade a good faith effort to fully inform the auntof the nature and effect of the signing of the deed.

The court of appeals in describing the“much higher standard for measuring conduct” ofa fiduciary quoted the famous words of JusticeCardoza cited with approval by the TexasSupreme Court as follows:

As forcefully and tersely put byMr. Justice Cardoza in Meinhardv. Salmon, 249 N.Y. 458, 164N.E. 545, 546, 62 A.L.R. 1, ‘* ** Not honesty alone, but thepunctilio of an honor the mostsensitive, is then the standard ofbehavior. As to this there hasdeveloped a tradition that isunbending and inveterate.Uncompromising rigidity hasbeen the attitude of courts of

equity when petitioned toundermine the rule of undividedloyalty by the “disintegratingerosion” of particular exceptions.* * *’

When persons enter intofiduciary relations each consents,as a matter of law, to have hisconduct towards the othermeasured by the standards of thefiner loyalties exacted by courtsof equity. That is a sound ruleand should not be whittled downby exceptions. ...[M]ischiefwould result more often fromengrafting exceptions upon thegeneral rule than from a strictadherence thereto. (Emphasisadded).

Johnson v. Peckham, 120 S.W.2d 786,788 (Tex. 1938).

The court of appeals in Sorrellstated that the court’s “review of the lawpertaining to fiduciary transactions doesnot justify liberal interpretations in favor ofthe validity claiming party.” Texas lawrequires that the burden of proof shift tothe fiduciary to prove that the fiduciarymade reasonable use of the confidenceplaced in him and that the transaction isfair and reasonable. The court of appealsin Sorrell stated as follows:

Even in the case of a gift, intransactions involvingparties with a fiduciaryre lat ionship , [E]qui tyindulges the presumption ofunfairness and invalidity,and requires proof at thehand of the party claimingvalidity and benefits of thetransaction that it is fair and


reasonable. Pomeroy,Equity Jurisprudence § 956(5th ed. 1941); Archer v.Griffith, 390 S.W.2d 735(Tex. 1965); Cooper v. Lee,75 Tex. 114, 12 S.W. 483(1889); see also Tippett v.Brooks, 28 Tex. Civ. App.107, 67 S.W. 512, writ ref’d,95 Tex. 335, 67 S.W. 495,512 (1902). StephensCounty Museum, Inc. v.Swenson, 517 S.W.2d 257,260 (Tex. 1974). Underthese circumstances, theburden cast upon the partyclaiming validity of thetransaction not onlyi n c l u d e s p re s e n t i n gevidence but securingfindings of the “materiali s s u e s - - t hose b e in gwhether [the validityclaiming party] had madereasonable use of theconfidence placed in hima n d w h e t h e r t h etransactions were ultimatelyfair and equitable to [thecomp la in ing pa r t y ] . ”Stephen County Museum,Inc. v. Swenson, 517S.W.2d at 261; Cole v.Plummer, 559 S.W.2d 87,90 (Tex. Civ. App.--Eastland 1977, writ ref’dn.r.e.).

The Sorrell case also answersquestions about what type of conduct isrequired of a fiduciary. As mentionedabove, the nephews proved they acted ingood faith and that the aunt had a fullunderstanding of the facts. However, the

court of appeals stated that acting in goodfaith “does not necessarily mean that theymade a good faith effort to fully informSorrell [the aunt] of the consequences,that is the nature and effect of the deedshe signed.”

The Sorrell case is an excellentexample of the rigid requirementsimposed on fiduciaries by Texas law. Thecase was reversed despite a factualfinding that the aunt had a fullunderstanding of the facts and thenephews acted in good faith. The courtrequired the nephews to meet theirburden of proving that the transaction wasfair and equitable to the aunt, that thenephews made reasonable use of theconfidence placed in them and that thenephews made a good faith effort to fullyinform the aunt of the nature and effect ofthe transaction.

2. Miller v. Miller, 700 S.W.2d 941(Tex. App. - Dallas 1985, writ ref’d n.r.e.).The Miller case involved a corporate buy-sell agreement signed by a wife while adivorce petition was pending. Thehusband was a founder, officer anddirector of a company. The company wasabout to receive a large investment byExxon. Exxon insisted that the foundersof the company remain involved and signa buy-sell agreement. The buy-sell wasto be binding on the spouses of thefounders. In the event of a divorce, thebuy-sell required the spouse of a founderto sell the shares to the founder or theother owners of the company. Husbandpresented the agreement to his wife afterthey were separated, but before theywere divorced. The wife read theagreement, signed it and never asked anyquestions about it. The wife later learnedthat the stock was much more valuable


than she thought and sued for fraud andbreach of fiduciary duty. The jury foundthat various representations made by thehusband were false and material, butfound that the husband did not makethem with the intention that the wife relyon them in deciding whether to sign theagreement. In addition, the jury foundthat the husband’s failure to disclosematerial facts was not made with theintention of inducing the wife to sign theagreement. The jury also found that aconfidential relationship existed betweenthe husband and wife at the time theagreement was signed, that the husbandacted in good faith at the time hepresented the agreement to his wife andthat the agreement imposed restrictionson the wife’s ownership. However, thejury found that the agreement was not fairto the wife. Trial court found in favor ofthe husband and ruled that theshareholder’s agreement was valid and infull force and effect.The court of appeals reversed the trialcourt and found that the agreement wassubject to recission because of thehusband’s breach of fiduciary duty. Afiduciary relationship was found based onthe personal relationship between thehusband and wife and also on thehusband’s position as a founder, officerand director of the company. The courtheld that the fiduciary relationshiprequired the husband as a fiduciary todeal fairly with the wife in acquiring anyrights in the stock. The court stated thatproof of good faith is necessary to sustainthe transaction, but good faith does not initself establish fairness. The fiduciarymust also show that the transactions was“fair, honest and equitable.” The courtstated that the ultimate issues were heldto be whether the fiduciary had madereasonable use of the confidence placed

in him and whether the transactions wereultimately fair and equitable.

Some of the important factorsconsidered by the court in reaching itsconclusion of a breach of fiduciary dutyincluded whether the fiduciary made a fulldisclosure, whether the consideration wasadequate and whether the beneficiaryhad the benefit of independent advice.The court noted that another crucialinquiry bearing on the issue of fairness iswhether the fiduciary has benefitted orprofited at the expense of the beneficiary.

The court noted that the juryfindings that the husband did not act inbad faith, that his failure to disclose wasnot done with intent to induce the wife tosign the agreement and that therestrictions imposed on the wife’sownership were reasonably related to thecorporate interests of the company arenot controlling. It is interesting to notethat the wife admitted many facts oncross-examination that would appear toharm her case. These includedstatements indicating she would havesigned the agreement even if all of thefacts had been disclosed. She alsoadmitted that she read the shareholder’sagreement. However, the court statedthat “the rule that a party is presumed toknow what he signs is not applied strictlyin a confidential relationship.”

The court in Miller rescinded theshareholder agreement as it appliedbetween the husband and wife due to thebreach of fiduciary duty on the part of thehusband.

3. Texas Pattern Jury ChargeQuestions.


The following jury charge questionshave been proposed for transactions inwhich the fiduciary benefitted from atransaction with the beneficiary:

PJC 104.1 Question and Instruction -Existence of Relationship of Trust andConfidence

QUESTION Did a relationship of trustand confidence exist between Don Davisand Paul Payne?

A relationship of trust and confidenceexisted if Paul Payne justifiably placedtrust and confidence in Don Davis to actin Paul Payne’s best interest. PaulPayne’s subjective trust and feelingsalone do not justify transforming arm’s-length dealings into a relationship of trustand confidence.

A N S W E R :_____________________________

PJC 104.2 Question and Instruction -Breach of Fiduciary Duty

QUESTION Did Don Davis comply withhis fiduciary duty to Paul Payne?

[Because a relationship of trust andconfidence existed between them,] [AsPaul Payne’s attorney,] [Because theywere partners,] [As Paul Payne’s agent,]Don Davis owed Paul Payne a fiduciaryduty. To prove he complied with his duty,Don Davis must show:

a. The transaction[s] in question[was/were] fair and equitable to PaulPayne.;

b. Don Davis made reasonable use ofthe confidence that Paul Payne placed inhim;

c. Don Davis acted in the utmost goodfaith and exercised the most scrupuloushonesty toward Paul Payne;

d. Don Davis placed the interests of PaulPayne before his own, did not use theadvantage of his position to gain anybenefit for himself in any position wherehis self-interest might conflict with hisobligations as a fiduciary; and

e. Don Davis fully and fairly disclosed allimportant information to Paul Payneconcerning the transaction[s].

A N S W E R :_____________________________

PJC 110.16 Ques t i on on Pro f i tDisgorgement - Amount of Profit

QUESTION What was the amount ofDon Davis’s profit in [describe thetransaction in question, e.g., Don Davis’sleasing of mineral rights to himself]?

Answer in dollars and cents, if any.

A N S W E R :_____________________________

PJC 110.17 Q u e s t i o n o n F e eForfeiture - Amount of Fee

QUESTION What was the amount ofDon Davis’s fees in [describe thetransaction in question, e.g., Don Davis’sbrokerage of the real estate transaction]?

Answer in dollars and cent, if any.


A N S W E R :_____________________________

PJC 110.8 Quest ion on ActualDamages for Breach of Fiduciary Duty

[Insert predicate, PJC 110.1.]

QUESTION What sum of money, if any,if paid now in cash, would fairly andreasonably compensate Paul Payne forhis damages, if any, that wereproximately caused by such conduct?

[Insert appropriate instructions. Seeexamples in PJCs 110.3 and .9.]

Answer in dollars and cents, if any.

A N S W E R :_____________________________

4. Third Parties Can Be Held Liablefor a Breach of Trust. Kinzbach Tool Co. v.Corbett - Wallace Corp. , 160 S.W.2d 509 (Tex.1942). Corbett - Wallace Corp. (“Corbett”)contacted Turner, an employee of Kinzbach ToolCo. (“Kinzbach”) about a whipstock contract hewanted to sell Kinzbach. Turner met with Corbettand Corbett informed him that he wanted $20,000for the whipstock contract and that he would payTurner a commission if the whipstock contractwas sold to Kinzbach.

Corbett instructed Turner to not mentionto Kinzbach what the whipstock contract could bebought for. Turner was told to see what hisemployer, Kinzbach, would pay. Turner met withKinzbach about buying the whipstock contract.Kinzbach instructed Turner to find out whatCorbett would sell for. Kinzbach informedTurner that it would probably be willing to pay$25,000. Turner never told Kinzbach that he wasgoing to get a commission from Corbett and nevertold Kinzbach that Corbett might take $20,000.Kinzbach and Corbett closed a deal by which

Kinzbach agreed to pay Corbett $25,000 for thewhipstock contract. After the deal wasconsummated Kinzbach for the first timediscovered that Turner was to receive acommission of $5,000. Kinzbach filed suitagainst Corbett and Turner seeking to establish atrust against the $5,000 to be paid Turner. Corbettsued Kinzbach to recover under the contract andfor attorneys fees.

The Texas Supreme Court held thatTurner breached his fiduciary duty to Kinzbachand that Corbett knowingly participated in thebreach and became a joint tort-feasor and is liableas such. The Court held that good conscience andfair dealing called on Turner, as a trustedemployee of Kinzbach, when he was told to get aprice from Corbett, to disclose his adverse interestin the deal. Turner’s position as a trustedemployee of Kinzbach, called on him to make fulldisclosure to his employer of all the facts andcircumstances concerning his dealings withCorbett.

The Court held that it is irrelevantwhether or not Kinzbach suffered any damages.A fiduciary cannot say to the one whom he bearssuch relationship: You have sustained no loss bymy misconduct and therefore you are withoutremedy. It would be a dangerous precedent to saythat unless some affirmative loss can be shown,the person who has violated his fiduciaryrelationships with another may hold on to anysecret gain or benefit he may have acquired. It isthe law that in such instances if the fiduciary takesany gift, gratuity, or benefit in violation of hisduty, or acquires any interest adverse to hisprincipal, without a full disclosure, it is a betrayalof his trust and a breach of confidence, and hemust account to his principal for all he hasreceived.

The Texas Supreme Court went on to saythat it is well settled as the law of this State thatwhere a third party knowingly participates in thebreach of duty of a fiduciary, such third partybecomes a joint tort-feasor with the fiduciary andis liable as such. Therefore, Corbett became a


party to the breach of duty committed by Turner,and therefore became a joint tort-feasor withTurner with regard to the rights of Kinzbach.

XIII. RECOVERY OF ATTORNEY'SFEES

A. Texas Probate Code Section243: Allowance for Defending Will.Effective September 1, 1987, Section 243of the Texas Probate Code was amendedto allow a person designated as adevisee, legatee, or beneficiary in a willwho defends such will or prosecutes aproceeding in good faith and with justcause for the purpose of having such willadmitted to probate to recover from theestate his necessary expenses anddisbursements, including reasonableattorney's fees, incurred in suchproceedings. This amendment of Section243 was a significant expansion of theprevious statute which allowed only anamed executor or appointedadministrator to recover such expensesand disbursements from the estate. TEX.PROB. CODE ANN. § 243 (Vernon Supp.1995).

1. The proponent of a will was notentitled to an award of attorney feesincurred in an unsuccessful defense, inthe absence of a jury finding of her goodfaith offering of the will for probate.Alldridge v. Spell, 774 S.W.2d 707 (Tex.App.--Texarkana 1989, no writ).

2. Pleadings which alleged that thewill was filed for probate in good faith andwith just cause and that expenses andattorney fees were incurred in the amountof at least $12,000 were sufficient topermit the award of $11,932.36 to the willproponent, after probate of the purportedwill was successfully contested.

Candelier v. Ringstaff, 786 S.W.2d 41(Tex. App.--Beaumont 1990, writ denied).

3. An independent co-executrixdefending an action involving benefits tothe estate was entitled to have her costspaid by the estate. Lesikar v. Rappeport,809 S.W.2d 246 (Tex. App.--Texarkana1991, no writ).

B. Texas Probate Code Section245: When Costs are AdjudgedAgainst Representative. EffectiveAugust 29, 1983, Section 245 of theTexas Probate Code was amended toallow recovery from an estate ofreasonable attorney's fees incurred inremoving a personal representative of anestate and in obtaining compliance withany statutory duties he had neglected asa personal representative. Previously,the statute did not allow recovery ofattorney's fees for obtaining the removalof a personal representative. TEX. PROB.CODE ANN. § 245 (Vernon Supp. 1995);Lawyers Sur. Corp. v. Larson, 869S.W.2d 649 (Tex. App.--Austin 1994, writdenied).

1. A successor administrator isentitled to recover attorney fees incurredin removing a prior representative and inobtaining statutory compliance of the priorrepresentative if, rather than undertakingto compel the prior representative toperform duties he has neglected, thesuccessor administrator takes steps tocorrect the problem; however, thesuccessor administrator need not pursueboth courses of action before becomingeligible to collect attorney fees. LawyersSur. Corp. v. Larson, 869 S.W.2d 649(Tex. App.--Austin 1994, writ denied).


In Lawyers Sur. Corp., thesuccessor administrator of two estatesfiled suit against the surety for the prioradministrator, seeking attorney fees andcosts incurred in bringing the estates ofthe deceased husband and wife intostatutory compliance following theremoval of the prior administrator. Theprobate court awarded fees and costs ofeach estate. The surety appealed. Inone of its points of error, the suretychallenged the probate court's applicationof Section 245 of the Texas ProbateCode. The surety interpreted Section 245to mean that a personal representativeand his or her surety could only be heldliable for fees that had been incurred by aperson who both removed theadministrator and attempted to obtain thatadministrator's compliance with neglectedstatutory duties. The surety contendedthat because the successor administratorwas not involved in the removal of theoriginal administrator and did not incurany fees associated with such removal,the successor administrator could notrecover under Section 245. In thealternative, the surety asserted that theTexas Probate Code limited recovery toattorney's fees incurred in compelling theformer administrator to perform theneglected duties, as distinguished fromattorney's fees associated with asuccessor administrator performing thoseneglected duties himself.

The court of appeals declined toadopt either reading of the statute offeredby the surety. The court held that Section245 allowed a successor administrator torecover attorney's fees incurred inremoving a prior representative andallowed recovery of any attorney's feesincurred by the successor administrator if,rather than undertaking to compel the

prior administrator to perform the dutieshe had neglected, the successoradministrator took steps to correct theproblem. The court therefore rejected aconstruction of Section 245 that wouldrequire the successor administrator topursue both courses of action beforebecoming eligible to collect attorney'sfees from the prior administrator and thesurety.

Furthermore, the court held thatthe purpose of Section 245 was not toencourage successors to force anunwilling or incompetent administrator tocarry out administrative acts required bythe Texas Probate Code after judicialremoval. Rather, Section 245 wasdesigned to ensure that expensesassociated with, and caused by, theadministrator's neglect of statutory dutieswere charged not against the estate, butagainst the culpable administrator and thesurety. The court held that it would be anunwise and impractical construction of theCode to read Section 245 to allow thesuccessor administrator to recover onlythose expenses incurred in compellingthe administrator to perform the veryduties he had already been foundincapable of performing adequately.

C. Texas Probate Code Section149C: Removal of IndependentExecutor. Section 149C of the TexasProbate Code was also amendedeffective August 31, 1987, by the additionof Subsection (d), under the terms ofwhich a party seeking removal of anindependent executor appointed withoutbond can recover from the estate hiscosts and expenses, including reasonableattorney's fees, incident to the removal.TEX. PROB. CODE ANN. § 149C(d) (VernonSupp. 1995).


1. A former executor may not becharged personally for a challenger'sattorney's fees incurred in his removal,when a former executor fights theremoval action in good faith. However,the estate is required to pay the formerexecutor's attorney fees. Garcia v.Garcia, 878 S.W.2d 678 (Tex. App.--Corpus Christi 1994, no writ).

In Garcia, the appellee served assuccessor executor of his father's estateafter the death of his brother. Theappellee served as executor forapproximately ten years before anapplication was filed for his removal. Theappellee was removed by the court for hisfailure to timely file accurate estate taxand fiduciary income tax returns, to timelypay ad valorem taxes or estate taxes, andto make a final settlement. The court alsofound the executor guilty of grossmisconduct and gross mismanagement inthe performance of his duties. After theexecutor's removal, a successoradministrator was appointed. Then, thecourt heard applications to pay the formerexecutor for his work as executor and topay his attorney for fees incurred indefending and probating the will as wellas in defending his post as executor. Anapplication was also filed to pay theappellant's attorney for fees incurredduring the removal action. The courtfound that the executor had defended theaction for his removal in good faith andgranted his application to pay fees fromthe estate as well as the appellant'sapplication. The appellant then filed anapplication to surcharge certainexpenses, fees, and costs of the estateagainst the former executor. The countycourt rejected the application, and theappellant appealed to the appellate court.The appellant contended, among other

things, that the court failed to surchargethe former executor for attorney's feesunnecessarily incurred by the executor'sfailure to properly manage and timelyclose the estate and for attorney's feesawarded the appellant's attorneysaccrued in the application to remove theexecutor.

The court of appeals held thatunder the Texas Probate Code, theestate had to pay the former executor'sattorney's fees. TEX. PROB. CODE ANN. §149C(c) (Vernon 1980). The court did notremand any issues relating to attorney'sfees incurred in the removal proceeding.However, the court did remand as to allother attorney's fees unnecessarilyincurred by the executor's failure toproperly manage and timely close theestate. The court also denied to remandany issues pertaining to attorney's feesawarded to the appellant's attorney whichaccrued in the application to remove theexecutor. The court of appeals held thatthe Code allowed the estate to pay theattorney's fees of the challenger. TEX.PROB. CODE ANN. § 149C(d) (VernonSupp. 1995). The court's ruling that theexecutor fought the removal action ingood faith defeated any attempt to chargethe executor personally with fees incurredto unseat him. The court stated that thelegislature determined that an estatecould be liable for the attorney's fees ofboth sides of an action to remove anexecutor that was defended in good faith.Surcharging the removed executor withthe challenger's attorney's fees wouldsubvert the legislature's clear support ofexecutors who defended challenges ingood faith. Because the finding of goodfaith was not challenged, the courtoverruled the objection.


D. Texas Trust Code Section114.064: Costs. The Trust Codeprovides that in any proceeding under thiscode the court may make such award ofcosts and reasonable and necessaryattorney's fees as may seem equitableand just. TEX. PROP. CODE ANN. §114.064 (Vernon 1995).

1. Lyco Acquisition 1984 Ltd.Partnership v. First Nat. Bank of Amarillo,860 S.W.2d 117 (Tex. App.--Amarillo1993, writ denied). In Lyco, the court heldthat a bank was entitled to attorney feesfor defending a cause of action broughtagainst it under the Trust Code, eventhough the plaintiff dropped the cause ofaction under the Trust Code before thetrial court ordered summary judgment infavor of the bank on the remaining causeof action. In the remaining cause ofaction, the court found that defending thecase involved substantial time and labor,and the bank derived great benefits fromthe attorney's services.

2. Lyco Acquisition 1984 Ltd.Partnership v. First Nat. Bank of Amarillo,860 S.W.2d 117 (Tex. App.--Amarillo1993, writ denied). The grant or denial ofattorney fees is within the sounddiscretion of the trial court, and thereviewing court will not reverse the trialcourt's judgment unless there is a clearshowing that the trial court abused itsdiscretion by acting without reference toany guiding rules and principles.

E. Texas Trust Code Section113.018: Employment of Agents. TheTrust Code provides that a trustee mayemploy attorneys, accountants, agents,and brokers reasonably necessary in theadministration of the trust estate. TEX.

PROP. CODE ANN. § 113.018 (Vernon1995).

F. Texas Civil Practice andRemedies Code Section 37.009:Costs. The Civil Practice and RemediesCode provides that in any proceedingseeking declaratory judgment the courtmay award costs and reasonable andnecessary attorney's fees as areequitable and just. TEX. CIV. PRAC. &REM. CODE ANN. § 37.009 (Vernon 1986).

1. Canales v. Zapatero, 773 S.W.2d659 (Tex. App.--San Antonio 1989, writdenied). In a suit filed under this chapter,the trial court may award reasonable andnecessary attorney fees that are equitableand just.

2. Fuqua v. Fuqua, 750 S.W.2d 238(Tex. App.--Dallas 1988, writ denied). InFuqua, the court of appeals held that thetrial court did not abuse its discretion inrefusing to award attorneys fees to a son,who prevailed in fewer than one half ofhis declaratory judgment claims inlitigation arising out of the distribution ofthe son's mother's estate.

3. West Texas Rehabilitation Ctr. v.Allen, 810 S.W.2d 870 (Tex. App.--Austin1991, no writ). Here, the court of appealsheld that the probate court acted within itsdiscretion in requiring a specificbeneficiary to pay the residualbeneficiaries' successful challenge to theestate distribution which resulted in thedetermination that the independentexecutor improperly distributed $120,871in stocks, bonds, and mutual funds to thespecific beneficiary under the paragraphsof the will disposing of cash.


G. Texas Civil Practice andRemedies Code Section 37.005:Declarations Relating to Trust orEstate. The Civil Practice andRemedies Code provides that:

A Person interested as or throughan executor or administrator, including anindependent executor or administrator, atrustee, guardian, other fiduciary, creditor,devisee, legatee, heir, next of kin, orcestui que trust in the administration of atrust or of the estate of a decedent, aninfant, mentally incapacitated person, orinsolvent may have a declaration of rightsor legal relations in respect to the trust orestate:

(1) to ascertain any class of creditors,devisees, legatees, heirs, next of kin, orothers;

(2) to direct the executors,administrators, or trustees to do orabstain from doing any particular act intheir fiduciary capacity;

(3) to determine any question arisingin the administration of the trust or estate,including questions of construction of willsand other writings; or

(4) to determine rights or legal relations ofan independent executor or independentadministrator regarding fiduciary fees andthe settling of accounts. TEX. CIV . PRAC. &REM. CODE ANN. § 37.005 (Vernon Supp.1999).

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