In re Shultz
| Decision Date | 08 September 2022 |
| Docket Number | 11-21-00177-CV |
| Parties | IN THE ESTATE OF SOLEDAD BANEGAS SHULTZ, DECEASED |
| Court | Court of Appeals of Texas |
On Appeal from the County Court at Law No. 2 Ector County, Texas Trial Court Cause No. 24121-CCL2
Panel consists of: Bailey, C.J., Trotter, J., and Williams, J.
This accelerated appeal arises from the trial court's grant of an application for a temporary injunction filed by Appellees Richard Banegas and Jesus Banegas Jr.[1]In four issues, Appellant Sandra Banegas Burke, contends that the trial court abused its discretion when it: (1) issued an order for temporary injunction (a) that was not supported by a verified application and a supporting affidavit and (b) upon which the trial court did not hold a full evidentiary hearing on the application; (2) imposed a constructive trust (a) that was beyond the scope of the temporary injunction hearing and (b) in an interlocutory, non-final order, upon assets that are not traceable and upon other property belonging to non-parties; (3) issued a temporary injunction order that does not strictly comply with the requirements of Rule 683 of the Texas Rules of Civil Procedure and does not conform with the applicants' pleadings; and (4) ordered that the executrix (Appellant) post a bond without the necessity of filing a sworn written complaint or motion, without the issuance of a citation, and without the proper hearing and necessary findings required by the Texas Estates Code. We modify and affirm the trial court's order.
Soledad Shultz passed away in September of 2019. Soledad's will bequeathed her estate in three equal shares to her niece (Appellant) and her nephews (Appellees). The will named Appellant as executrix. Appellant also held Soledad's power of attorney because four years before her death, Soledad signed a statutory durable power of attorney designating Appellant as such. After her passing, Soledad's will was admitted to probate and Appellant was appointed as independent executrix of Soledad's estate without the necessity of posting a bond.
Several months after Soledad's passing, Appellant informed Appellees that the entire estate was only worth $1,500. Appellees thereafter sued Appellant for breach of fiduciary duty and sought to remove her as executrix. In an amended petition, Appellees alleged that Appellant used the power of attorney and her status as a payable-upon-death (POD) beneficiary on Soledad's bank accounts to abscond with and squander almost the entire estate in violation of her fiduciary duties. They asserted claims against Appellant for breach of fiduciary duty, fraud, conversion, embezzlement, and undue influence; they also requested the imposition of a constructive trust, temporary injunctive relief, and the appointment of a new executor. Appellees' amended petition was not verified. Further, Appellant did not file an answer to or specially except to the allegations in the amended petition.
The trial court conducted an evidentiary hearing on Appellees' application for injunctive relief. At the hearing, Appellant testified that when Soledad's will was prepared, her estate was comprised principally of a house (with an estimated value of approximately one million dollars) and two bank accounts that listed Appellant as the POD beneficiary. Appellant confirmed that Soledad sold her house in 2016 and deposited the sale proceeds-totaling over $900,000-into one of the POD bank accounts. Appellant assisted Soledad with the sale, which included her filling out the deposit slip to deposit the proceeds of the sale into one of the POD bank accounts, and stated that Soledad "depended on her" during the transaction. Appellant also sold Soledad's car for $15,700 and deposited those sale proceeds into one of the POD accounts. Apparently, Appellant never discussed with Soledad the implications of depositing any of these sales proceeds into the POD bank accounts.
While Soledad was still alive, Appellant gained online access to the POD bank accounts without Soledad's permission. Appellant later transferred $135,000 from these accounts to herself to make a down payment on a new house. Although she had previously stated in an interrogatory answer that she received no gifts from Soledad other than a sewing machine, Appellant claimed that the $135,000 was a gift from Soledad. Appellant also transferred to herself an additional $7,850 from Soledad's bank accounts; she claimed that this amount was also a gift from Soledad as a reward for Appellant assisting Soledad with the sale of the car. Appellant claimed that she had forgotten about each of these cash gifts when she answered the interrogatory.
Appellant admitted that she knew that Soledad intended to leave her entire estate to Appellant, Richard, and Jesus in equal shares. But when Soledad died, Appellant decided to keep all of the money for herself because, she believed, her brothers did not deserve anything as they "had no compassion for [Soledad and] never visited her, never called her."
Upon Soledad's death, Appellant opened two bank accounts in her name and funded them with deposits from Soledad's bank accounts, in the amount of $250,000 and $684,237.64, respectively. Appellant then withdrew $450,000 and used a portion of those funds to pay the remaining balance on her mortgage-$270,987.18.
Appellant testified regarding other expenditures and gifts she made with the funds from Soledad's estate, including: (1) $150,000 in payments to her Chase Bank credit cards; (2) $50,000 to her daughter, Blanca Smith; (3) $24,000 to her son, Ernie Marquez, and another $20,000 toward his student loan; (4) $10,000 to her nephew, Ben Banegas; (5) $5,000 to her cousin, Ida Sanchez; (6) more than $15,000 to purchase a Chevrolet Cruze automobile for her mother to drive (although Appellant possesses title to the vehicle); (7) an unspecified amount to purchase a 2018 Toyota Highlander for herself; (8) $21,000 to remodel her house; and (9) several cash withdrawals of hundreds and thousands of dollars. All told, Appellant spent more than one million dollars of Soledad's money in less than a year.
Appellant's former employer, Dr. Paul Holmes, testified that Appellant spoke to him numerous times about Soledad's estate. In these conversations, Appellant stated to Dr. Holmes that "upon death, moving the money over to her own account from [Soledad's] account, that would circumvent her having to be responsible for the one-third" owed to her brothers. Dr. Holmes described Appellant as "extremely elated" about this. He stated that Appellant told him of this plan two years before Soledad's death. Dr. Holmes also testified that Appellant told him Soledad had refused her request to financially assist Appellant with a down payment on her new house. Dr. Holmes was present at the nursing home with Appellant just before Soledad passed. He testified that, in reaction to knowing that her aunt was dying, Appellant was
After this evidence was presented, Appellees rested their case-in-chief. The trial court then asked Appellant's trial counsel if he intended to present any witnesses. Counsel declined, stating: "I'm going to defer to the court's time and pass on calling the Banegas brothers, just to be efficient on time." At this, the trial court commented:
Well, the Court will note for the record that I understand that you might or might not have wanted to call them, but I don't -- the Court's position is that, for the limited purposes of why we're here today, their testimony wouldn't matter to the Court's decision one way or the other.
Following the hearing, the trial court signed an order granting Appellees' request for a temporary injunction. The order enjoins Appellant from disposing of any assets "claimed by the Estate" and from paying herself any fees. The order also imposes a constructive trust over (1) Appellant's house; (2) all bank accounts in her name; (3) the three vehicles owned by Appellant and her husband; (4) the cash gifts Appellant made to her husband Warren Burke, daughter Blanca Smith, son Ernie Marquez, cousin Ida Sanchez, and Mason Smith; and (5) all cash in Appellant's possession, custody, or control. The trial court ordered that Appellant was required to post a $500,000 bond to continue as executrix. Appellant did not request additional findings of fact. This appeal followed.
A temporary injunction is an extraordinary remedy that does not issue unless the party seeking relief pleads and proves three specific elements: (1) a cause of action; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). A trial court at a temporary injunction hearing determines whether the applicant is entitled to injunctive relief to preserve the status quo pending a trial on the merits. Id.; Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978). The status quo is defined as the last, actual, peaceable, non-contested status that preceded the pending controversy. In re Newton, 146 S.W.3d 648, 651 (Tex. 2004).
On appeal, the scope of our review is limited to the validity of the temporary injunction order. See Walling v Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993). We do not review the merits of the underlying case. Davis, 571 S.W.2d at 861. Instead, we determine whether there has been an abuse of discretion by the trial court in granting or denying the requested relief. Id. at 862. In making this determination, we may not substitute our judgment for that of the trial court unless its decision was so arbitrary that it exceeded the bounds of...
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