Gilbreath v. Horan

Decision Date14 July 2022
Docket Number01-17-00316-CV
CourtTexas Court of Appeals
PartiesWESLEY GILBREATH, JR., STACEY GILBREATH POWELL, ELLIOT GILBREATH, AND MARK RITTER; SIGNAD, LTD., SIGNAD GP, LLC, BEN NEVIS WEST, LTD., CULCREUCH WEST, LLC, BIG SIGNS & LEASING #1, LTD., BIG SIGNS & LEASING #2, LTD., BIG SIGNS & LEASING #3, LTD., BIG SIGNS & LEASING #4, LTD., BIG SIGNS & LEASING #5, LTD., AND BIG SIGNS & LEASING #6, LTD., BIG EASTEX #1, LTD., REALTY ACQUISITIONS & HOLDINGS, LLC, AND BIG LEASING, LLC Appellants v. LISA R. GILBREATH HORAN, INDIVIDUALLY AND AS TRUSTEE OF THE LISA GILBREATH HORAN 2001 IRREVOCABLE TRUST, Appellee

WESLEY GILBREATH, JR., STACEY GILBREATH POWELL, ELLIOT GILBREATH, AND MARK RITTER; SIGNAD, LTD., SIGNAD GP, LLC, BEN NEVIS WEST, LTD., CULCREUCH WEST, LLC, BIG SIGNS & LEASING #1, LTD., BIG SIGNS & LEASING #2, LTD., BIG SIGNS & LEASING #3, LTD., BIG SIGNS & LEASING #4, LTD., BIG SIGNS & LEASING #5, LTD., AND BIG SIGNS & LEASING #6, LTD., BIG EASTEX #1, LTD., REALTY ACQUISITIONS & HOLDINGS, LLC, AND BIG LEASING, LLC Appellants
v.
LISA R. GILBREATH HORAN, INDIVIDUALLY AND AS TRUSTEE OF THE LISA GILBREATH HORAN 2001 IRREVOCABLE TRUST, Appellee

No. 01-17-00316-CV

Court of Appeals of Texas, First District

July 14, 2022


On Appeal from the 80th District Court Harris County, Texas Trial Court Case No. 2013-74857

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Panel consists of Justices Countiss, Rivas-Molloy, and Guerra.

OPINION

VERONICA RIVAS-MOLLOY JUSTICE

Wesley Gilbreath, Jr., Stacey Gilbreath Powell, Elliot Gilbreath, and Mark Ritter (collectively, "Individual Appellants") and SignAd, Ltd., SignAd GP, LLC, Ben Nevis West, Ltd., Culcreuch West, LLC, Big Signs & Leasing #1, Ltd., Big Signs & Leasing #2, Ltd., Big Signs & Leasing #3, Ltd., Big Signs & Leasing #4, Ltd., Big Signs & Leasing #5, Ltd., Big Signs & Leasing #6, Ltd., Big Leasing, LLC, Big Eastex #1, Ltd., and Realty Acquisitions & Holdings, LLC (collectively, "Company Appellants") appeal the trial court's amended final judgment rendered against them on a jury verdict following a four-week trial. The Individual and Company Appellants collectively raise 25 issues (many with multiple sub-parts) challenging the judgment rendered against them on a host of claims including malicious prosecution, defamation, breach of fiduciary duty, and others.

We affirm in part, reverse in part, and remand in part.

Background

In 1964, Wesley Gilbreath, Sr. ("Wes, Sr."), the patriarch of the Gilbreath family, founded an advertising company focused on constructing, owning, and leasing billboards in prime locations throughout Texas and parts of Louisiana. Although the company was at first a sole proprietorship, it was later incorporated in 1966 as SignAd, Inc., and then converted into a limited partnership known as SignAd, Ltd. In August 2000, SignAd GP, LLC, a Texas limited liability company,

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was formed in connection with this corporate conversion to act as the general partner of SignAd, Ltd.

Over the years, Wes, Sr. transferred his original ownership interests in the business in equal parts to his children-Lisa Gilbreath Horan ("Lisa"), Wesley Gilbreath, Jr. ("Wes, Jr."), Elliott Gilbreath ("Lee"), Stacey Gilbreath Powell ("Stacey"), and Brett Gilbreath ("Brett")-through nearly identical irrevocable trusts. Although he also initially transferred an equal interest in the business to his daughter Sheree Gilbreath ("Sheree"), he repurchased Sheree's interest and placed the proceeds in a trust for her benefit after she was diagnosed with paranoid schizophrenia in her twenties.[1] Wes, Sr. then sold that interest to a separate trust he established for the benefit of his grandchildren ("Grandchildren's Trust"). Wes, Jr., Lee, Brett, and Mark Ritter ("Mark") served as trustees of the Grandchildren's Trust. Lisa's daughter, Noelle, has a one-fourteenth interest in the Grandchildren's Trust.

The Gilbreath family business consists of nine Texas limited partnerships, each with a general partner organized as a Texas limited liability company. The limited partnerships are: SignAd, Ltd., Big Signs & Leasing #1 to #6, Ltd. (six numbered partnerships), Big Eastex #1, Ltd., and Ben Nevis West, Ltd. (collectively,

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"Limited Partnerships").[2] The general partners are: SignAd GP, LLC (general partner for SignAd, Ltd.), Culcreach West, LLC (general partner for Ben Nevis West, Ltd.), Realty Acquisitions & Holdings, LLC (general partner for Big Eastex #1, Ltd.), and Big Leasing, LLC (general partner for the Big Signs & Leasing partnerships) (collectively, "General Partners"). The General Partners are managed by their respective Board of Managers consisting of Wes, Jr., Lee, Lisa, and Stacey, each serving a lifetime appointment.[3] The parties refer to the Limited Partnerships and General Partners collectively in their briefs as "SignAd Outdoor," "SignAd Outdoor Advertising," or the "SignAd Enterprise." For purposes of this opinion, we refer to the entities together as "SignAd Outdoor."

The Grandchildren's Trust and Lisa, Wes, Jr., Stacey, Lee, and Brett, as trustees of their respective irrevocable trusts, are each limited partners in the Limited Partnerships, with each owning an equal one-sixth interest in the partnerships. The Limited Partnerships are all taxed as S-Corporations, meaning the limited partners- Wes, Jr., Lee, Stacey, Lisa, Brett, and the Grandchildren's Trust-are taxed directly for the partnerships' income. Each year, SignAd, Ltd. distributes profits to the

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limited partners in equal shares at an amount determined in advance by SignAd GP, LLC's Board of Managers.

Wes, Sr. expected all his children to be involved with the family business, even at a young age.[4] Wes, Jr. started helping his father at what was then SignAd, Inc. when he was ten years old. After he attended college, Wes, Jr. returned to the family business and by the age of 25, he was the president of the company in 1984 or 1985. Wes, Jr. became the President of SignAd GP, LLC in 2000, when the entity was created, and he has served in that role ever since. Other siblings also served as corporate officers for the Company Appellants, including Lee, who served as SignAd GP, LLC's accountant and controller from the early 1980s until he retired in 2000, and Brett, who served as the Vice President of real estate until 2011.

Unfortunately, the siblings did not always work well together. Wes, Jr. and Brett had a contentious working relationship that Lisa described as "very strained." In 2004, Brett, who had been the Vice President of real estate, resigned because of his conflicts with Wes, Jr. According to Brett, Wes, Jr. "likes to be really involved with every single employee," and had been giving orders to employees who should otherwise have been reporting to Brett on real estate matters.

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Lisa hired a corporate psychologist, Dr. George Dempsey ("Dr. Dempsey"), to consult with the board members, privately and collectively, to mediate their conflicts and develop a more efficient and positive working environment. With Dr. Dempsey's help, Wes, Jr. and Brett were able to resolve some of their disagreements and establish some ground rules that led Brett to return to the company as the Vice President of real estate. The brothers' working relationship, however, began to deteriorate again and, after a major dispute over a real estate issue in 2011, Brett decided to resign from the company. Wes, Jr. accused Brett of stealing business away from the Company Appellants and fired Brett before he could resign. Brett, who was out of town in August 2011 handling a real estate issue for work, learned that he had been fired when Lisa called him and told him that someone was cleaning out his office.

According to Lisa, Wes, Jr. locked Brett out of the building, and at first refused to return some of Brett's belongings. Lisa disagreed with Wes, Jr.'s treatment of Brett and when she tried to intervene to help her younger brother, "things got very volatile." Wes, Jr. not only threatened to fire any employee who talked to Brett but followed through with the threat and fired one of the sales

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managers who had spoken with Brett. Although he eventually recovered his belongings, Brett was never allowed back in the business office.[5]

Although Brett resigned from the Board of Managers of SignAd GP, LLC[6] in September 2011, he remained on the Board of Managers for the real estate entities until he resigned from those boards in February 2014. According to Lisa, Wes, Sr. was "devastated" after Brett resigned from SignAd GP, LLC's Board of Managers. After Wes, Sr.'s health began to fail in 2012, he, too, resigned from the board. Lisa explained the negative impact these developments had with respect to her place in the company:

And as a general rule my father and Brett and I usually agreed and voted on a lot of issues together, and then it was just me. And so I was aligned against Wes, Jr., Lee and Stacey. So I kind of lost my voice somewhat.

According to Lisa,

[B]eginning in about 2010, the real estate meetings had become more abbreviated and they were not discussing specific land purchases and land sales and allowing me to vote on them or letting me know what was going on; and it just seemed kind of strange the lack of information that I was getting in the real estate board meetings. So I started asking more questions and I was met with hostility and anger and, you know, controlling by my brothers; and so I then started asking each meeting for an internal audit, which is a normal course of business, to have a company audited voluntarily internally to make sure that the books and
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records and everything is being run properly. And then I was met with more hostility and more controlling behavior.

The tension between Lisa and the remaining board members continued to escalate and became progressively worse after Brett and Wes, Sr. resigned from SignAd GP, LLC's Board of Managers in 2011 and 2012, respectively.

Wes, Sr. died on January 13, 2013. Within days, Lisa began asking questions about her father's will, the Grandchildren's Trust, and the business overall. For example, in a January 24, 2013 email to Wes, Jr., Lee, and Brett, Lisa expressed concerns that SignAd Outdoor had been paying for personal and nonbusiness expenses, and stated, "I would like to curtail effective immediately any nonbusiness related expenditures." Lisa was concerned particularly about what she considered to be excessive payments to her stepmother and stepsiblings. Lisa further stated, "I am requesting and am entitled to...

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