In re Estate of Stegall
| Decision Date | 21 November 2019 |
| Docket Number | No. 02-17-00410-CV,02-17-00410-CV |
| Parties | ESTATE OF RANDALL CROSS STEGALL, DECEASED |
| Court | Texas Court of Appeals |
On Appeal from Probate Court No. 1 Tarrant County, Texas
Before Kerr, J., and Gonzalez, J.1
When Priscilla Stegall's husband died in 2013, she was appointed independent executor of his estate. In that capacity, she sold her late husband's law firm, which included a title company, to the two attorneys who had been working at the firm when he died. After the sale, Priscilla continued to work at the law firm as its office manager and as an escrow officer. The firm's new owners fired her several months later, and she sued them, the law firm, and the attorneys who had represented her and the estate in the sale of her late husband's firm. The probate court granted summary judgment against her on all claims and entered a take-nothing judgment. In five issues, Priscilla challenges the probate court's subject-matter jurisdiction and the propriety of its summary-judgment rulings. We will reverse and remand in part and affirm in part.
Priscilla was married to Randall Cross "Randy" Stegall, an attorney and the sole manager and member of The Stegall Firm, PLLC. The Stegall Firm had offices in Southlake and Flower Mound and operated both a law firm and a fee office for a title company. Priscilla, a nonlawyer, worked for the Stegall Firm as its office manager and as an escrow officer. According to her, most of the Stegall Firm's revenue came from the its title business. Attorneys Matthew Schultz and Dustin Kellar started working for the Stegall Firm shortly before they became licensed in November 2012.
On February 27, 2013, Randy died unexpectedly. His will named Priscilla as the estate's executor and sole beneficiary. Tarrant County Probate Court Number Two appointed Priscilla as the independent executor of Randy's estate.
On Randy's death, his estate became the Stegall Firm's sole member. But because Priscilla is not an attorney, no ownership interest in the firm could pass to her. In her independent-executor capacity, she approached Schultz and Kellar about buying the Stegall Firm; they expressed interest, and the parties began discussing sale terms and how the business would operate moving forward.
The parties agreed on a purchase price of $50,000, plus all proceeds from the planned sale of the firm's Flower Mound office, in exchange for the estate's ownership interest in the Stegall Firm. But according to Priscilla, the firm was actually valued at about $1,000,000 because of her pending closings, book of business, experience, skill, and contacts. She claimed that an accountant advised her that it would save her and the firm significant tax liability if part of the purchase price was paid to her as salary for her continued employment. She thus intended to use an employment agreement to "capture the value of the title business and firm."
During the sale negotiations, the parties discussed an employment agreement to be entered into between Priscilla and the firm. Priscilla claims that in March 2013, everyone agreed to a ten-year employment agreement, with Priscilla being a "silent partner" receiving an annual salary of $150,000 plus a percentage of the monthly title premiums and escrow fees.
In early May 2013, Priscilla hired Dustin Sparks, an attorney with Geary, Porter, and Donovan, P.C., to represent her individually and as executor of Randy's estate in the sale of the Stegall Firm to Schultz and Kellar. Schultz and Kellar retained their own counsel, Phil Ruais.
Sparks and Ruais worked together to prepare the sale documents, and they discussed a possible employment agreement for Priscilla. But as the May 28, 2013 closing date approached,2 the employment agreement's terms remained in flux, and Priscilla claims that on closing day, the parties agreed to reduce the employment agreement's duration to a five-year term. The sale closed as scheduled, but Priscilla and the firm—now known as Schultz and Kellar, PLLC (the SK Firm)—never signed an employment agreement. Even so, Priscilla continued to work there.
By September 2013, Priscilla was unhappy with the way Schultz and Kellar were running the firm. Worried that she could be fired, Priscilla met with Sparks that month regarding the employment agreement. Sparks advised her that because there was no written employment agreement, she was free to work elsewhere, but Priscilla decided to stay at the SK Firm.
Six months later, in March 2014, the SK Firm fired Priscilla. A little over a year later, Priscilla—in her individual capacity only—sued Schultz, Kellar, and the SK Firm (collectively, the SK Defendants) in Tarrant County District Court for claims arising from her termination and from the sale of the Stegall Firm to Schultz and Kellar.
The SK Defendants' answer included a verified denial challenging Priscilla's ability to recover in her individual capacity and an affirmative defense challenging her standing to sue. The SK Defendants also specially excepted to Priscilla's pleadings, and the district court ordered her to amend her petition to "set forth distinctively the claims and damages [she was] asserting against Defendants in her individual capacity and the claims and damages [she was] asserting against [them] as the Execut[or] of the Estate of Randall Stegall." In response, Priscilla amended her pleadings to assert claims against the SK Defendants also in her capacity as executor of Randy's estate: breach of contract, fraudulent inducement, fraud, negligent misrepresentation, and breach of informal fiduciary duty. Specifically, Priscilla-as-executor alleged that Schultz and Kellar used the promise of an employment agreement to induce her to sell the Stegall Firm to them for less than its fair market value and that the estate was thus injured.
The SK Firm then counterclaimed against Priscilla in her capacity as executor for breach of contract and conversion, claiming that the estate had failed to deliver all the assets that the SK Firm had purchased from the Stegall Firm. In June 2016, the SK Defendants successfully moved to transfer the case to Tarrant County Probate Court Number Two, the court in which Randy's will was probated.
Meanwhile, in March 2016, Priscilla, individually, sued Sparks and the Geary Porter firm (collectively, the GPD Defendants) in Dallas County District Court for legal malpractice in representing her in the sale of the Stegall Firm. In July 2016, Priscilla amended her petition to also sue the GPD Defendants in her estate-executor capacity, claiming that they were also negligent in representing the estate in the sale. Priscilla then successfully moved to transfer the legal-malpractice case from Dallas County District Court to Tarrant County Probate Court Number Two and to consolidate it with the case against the SK Defendants. Soon after, the presiding judge of Tarrant County Probate Court Number Two recused herself on her own motion, and the consolidated case was assigned to Tarrant County Probate Court Number One.
In December 2016, the SK Firm filed an amended pleading abandoning its counterclaims against Priscilla in her capacity as executor. See Tex. R. Civ. P. 62, 65. The following month, Priscilla amended her petition for the eighth time. Individually and in her capacity as executor, she alleged (1) a breach-of-contract claim against the SK Defendants; (2) claims against Schultz and Kellar for fraudulent inducement, fraud by nondisclosure, fraud by partial disclosure, negligent misrepresentation, and breach of informal fiduciary duty; and (3) a legal-malpractice claim against the GPD Defendants.
The GPD Defendants and the SK Defendants all moved for summary judgment. The GPD Defendants moved for summary judgment on limitations, arguing that the two-year statute of limitations barred Priscilla's legal-malpractice claim because that claim accrued in either May or September 2013 but Priscilla did not sue until March 2016, well after limitations had run. The SK Defendants moved for summary judgment only on Priscilla's breach-of-contract claim, arguing that there was no valid and enforceable employment agreement because the parties never had a meeting of the minds on its material terms and, alternatively, the alleged agreement was unenforceable under the statute of frauds. The probate court granted both motions without stating the grounds on which it relied for its rulings.
Priscilla then amended her petition for the ninth time to seek a declaration that she rather than the estate owned "all claims, property, assets[,] and anything of value that was formerly owned by Randy Stegall or his Estate" and that "she individually is the proper party to assert any and all claims that could have ever belonged to the estate or Randy Stegall as the sole devisee of his Last Will and Testament."
After that last amendment, Schultz and Kellar moved for summary judgment on Priscilla's remaining claims: fraudulent inducement, fraud by nondisclosure, fraud by partial disclosure, negligent misrepresentation, and breach of informal fiduciary duty. With respect to the fraud-based and negligent-misrepresentation claims, Schultz and Kellar argued that Priscilla unjustifiably relied on their representations. They also argued that no informal fiduciary relationship existed. The trial court granted the motion, found that Priscilla's declaratory-judgment action was thereby moot, and signed a final take-nothing judgment against her.
Priscilla has appealed and raises five issues: (1) the probate court lacked jurisdiction over the case when it transferred the case from district court; (2) even if the probate court had jurisdiction at the time of transfer, it lost jurisdiction when the SK Firm nonsuited its claims against the estate; (3) the trial court erred by granting the GPD Defendants' summary-judgment motion on their...
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