Palmer v. Coble Wall Trust Co., Inc.

• Decision Date: 28 October 1992
• Docket Number: No. D-1971,D-1971
• Citation: 851 S.W.2d 178
• Parties: William PALMER, as Independent Administrator of the Estate of Booney M. Moore, Deceased, et al., Petitioners, v. The COBLE WALL TRUST COMPANY, INC., and Elwood Cluck, Respondents.
• Court: Texas Supreme Court

Page 178

851 S.W.2d 178

William PALMER, as Independent Administrator of the Estate

of Booney M. Moore, Deceased, et al., Petitioners, v. The COBLE WALL TRUST COMPANY, INC., and Elwood Cluck, Respondents.

No. D-1971.

Supreme Court of Texas.

Oct. 28, 1992.

Rehearing Overruled Jan. 20, 1993.

Thomas C. Hall, San Antonio, for petitioners.

Tony L. Schaffer, Barry A. McClenahan, San Antonio, for respondents.

OPINION

GONZALEZ, Justice.

This case addresses the scope of a statutory probate court's jurisdiction under § 5A(b) of the Texas Probate Code as it existed in 1985. ¹ William Palmer, the independent administrator of an estate, brought this suit in statutory probate court against Coble Wall Trust Company, Inc., the estate's former temporary administrator, and Elwood Cluck, president of Coble Wall. The suit alleged negligence, gross negligence, and violations of the DTPA, ² which included breach of fiduciary duty and misrepresentations of the estate plan's characteristics. Based on favorable jury findings for the plaintiff, the probate court rendered judgment for Palmer. The court of appeals reversed and rendered for Coble Wall and Cluck on the basis that the probate court lacked subject matter jurisdiction over the suit. 848 S.W.2d 696. Because the probate court did not exceed its subject matter jurisdiction, we reverse the judgment of the court of appeals and remand the cause to that court for consideration of the unaddressed points of error.

I.

In April 1985, the statutory probate court appointed Coble Wall as guardian of the estate of Booney M. Moore, an adjudicated incompetent. In November 1985, Cluck, an attorney and the sole stockholder and president of Coble Wall, applied for an order to authorize the establishment of an administrative plan for Moore's estate. The probate court issued an order approving the estate plan, and Moore's properties were then either sold or conveyed to her beneficiaries, pledged as collateral for bonds, or converted into various types of corporate shares. The probate court subsequently approved an order that Coble Wall be paid the greater of either $75,000 or 10% of the reduction in federal taxes achieved by the plan, plus 5% of the gross value of various property and stocks when sold.

Upon Moore's death in December 1985, Coble Wall was appointed temporary administrator of the estate with the power to complete the previously approved estate plan. Coble Wall continued as temporary administrator until March 1986, when the probate court removed it and appointed Palmer as independent administrator of Moore's estate.

In 1987, Palmer filed suit against Coble Wall and Cluck in the probate court alleging the aforementioned causes of action. Palmer also alleged that the estate plan had been ineffective, exorbitant, and needlessly complex, all of which forced the estate to pay useless and excessive fees. The jury found that Coble Wall and Cluck were guilty of negligence, gross negligence, breach of fiduciary duties, and breach of the DTPA; the jury also found that Coble Wall was the alter ego of Cluck. Based upon these findings, the probate court rendered judgment for Palmer and awarded damages of $1,757,600 against Coble Wall and $1,757,600 against Cluck.

II.

Texas Probate Code § 5A(b) sets forth the subject matter jurisdiction of statutory probate courts. ³ The court of appeals determined that the 1985 version of the Code applied to this cause of action. This version stated that:

In proceedings in the statutory probate courts and district courts, the phrases "appertaining to estates" and "incident to an estate" in this Code include the probate of wills, the issuance of letters testamentary and of administration, and the determination of heirship, and also include, but are not limited to, all claims by or against an estate, all actions for trial of title to land and for the enforcement of liens thereon, all actions for trial of the right of property, all actions to construe wills, the interpretation and administration of testamentary trusts and the applying of constructive trusts, and generally all matters relating to the settlement, partition, and distribution of estates of wards and deceased persons. All statutory probate courts may, in the exercise of their jurisdiction, notwithstanding any other provisions of this Code, hear all suits, actions, and applications filed against or on behalf of any guardianship, heirship proceeding, or decedent's estate, including estates administered by an independent executor.... In situations where the jurisdiction of a statutory probate court is concurrent with that of a district court, any cause of action appertaining to estates or incident to an estate shall be brought in a statutory probate court rather than in the district court. In actions by or against a personal representative, the statutory probate courts have concurrent jurisdiction with the district courts.

TEX.PROB.CODE § 5A(b) (1985) (emphasis added). ⁴

The court of appeals held that the probate court lacked subject matter jurisdiction over the suit, because it was not a suit "appertaining to" or "incident to" the estate. 848 S.W.2d at 701-02. In making this determination, the court relied heavily on our decision in Seay v. Hall, 677 S.W.2d 19 (Tex.1984), in which this Court held that probate courts did not have jurisdiction over wrongful death and survival claims. In Seay, we stated that the "appertaining to an estate and incident to an estate" language was designed to limit probate court jurisdiction to matters in which the controlling issue was the settlement, partition, or distribution of an estate. Id. at 24. Thus, the court of appeals reasoned that the outcome of Palmer's claims failed to meet this test and was "not necessary to the resolution of the estate." 848 S.W.2d at 703. In 1985, the legislature responded to Seay by amending the Texas Probate Code to broaden statutory probate court jurisdiction. The 1985 amendment added the last sentence to § 5A which provided that "[i]n actions by or against a personal representative, the statutory probate courts have concurrent jurisdiction with the district court." TEX.PROB.CODE § 5A(b) (1985). We agree with the court of appeals' assessment in Pearson v. K-Mart, 755 S.W.2d 217, 219 (Tex.App.--Houston [1st Dist.] 1988 no writ) that "it is readily apparent that the purpose of [House Bill 479] was to overrule Seay v. Hall." Nevertheless, many courts of appeals have continued to apply the "controlling issue" test set out in Seay in their determination of whether a claim is "appertaining to" or "incident to" an estate. See, e.g., Bruflat v. Rodeheaver, 830 S.W.2d 821, 823 (Tex.App.--Houston [1st Dist.] 1992, no writ); Carlisle v. Bennett, 801 S.W.2d 589, 591 (Tex.App.--Corpus Christi 1990, no writ); Crawford v. Williams, 797 S.W.2d 184, 185 (Tex.App.--Corpus Christi 1990, no writ); Qwest Microwave, Inc. v. Bedard, 756 S.W.2d 426, 436 (Tex.App.--Dallas 1988, no writ). However, continued application of this test in the context of the 1985 amendment is inconsistent with that amendment's purpose. The controlling issue in wrongful death and survival actions is not the settlement, partition, and distribution of the estate. A wrongful death recovery is a means of providing the statutory beneficiaries a remedy for the loss of their loved one because of another's wrongful conduct; the estate does not benefit from this recovery. ⁵ While a survival recovery may impact the assets of the estate to be distributed, this is obviously not the controlling issue. Therefore, to apply the "controlling issue" test in the context of the 1985 amendment would be to deny probate courts jurisdiction over wrongful death and survival actions, in direct contravention of the purpose of the amendment. The court of appeals, in denying the probate court jurisdiction over Palmer's claims, relied on Qwest Microwave, Inc. v. Bedard, supra. We agree with the holding in Qwest that the 1985 amendment to § 5A(b) "conferred jurisdiction upon the probate courts to hear claims that might not be fully liquidated but that nonetheless are brought by a personal representative in his capacity of personal representative administering an estate." 756 S.W.2d at 436-37. However, as previously discussed, we disagree with Qwest insofar as it states that by amending the statute in 1985, "the legislature did not intend to expand probate jurisdiction to matters other than those in which the controlling issue was the settlement, partition, or distribution of an estate." Id. at 436.

When the 1985 amendment is not implicated, the "controlling issue" test has useful application in determining whether a claim is "appertaining to" or "incident to" an estate. In 1989, the legislature again amended § 5A and gave probate courts jurisdiction over claims by or against personal representatives "whether or not the matter is appertaining to or incident to an estate." TEX.PROB.CODE § 5A(e). ⁶ This amendment dispensed with the need to make this inquiry in suits involving a personal representative. However, the need for an ascertainable meaning of "appertaining to or incident to" an estate still exists in certain circumstances. Therefore, we confirm our reasoning in Seay that a suit is "appertaining to or incident to" an estate when the controlling issue is the settlement, partition, or distribution of an estate insofar as it does not apply to suits by or against a personal representative. ⁷

While it is true that the 1985 amendment was enacted in order to give probate courts jurisdiction over wrongful death and survival actions, the wording of this amendment and the legislative history behind its enactment contemplates a broader application. In fact, as noted in the House Research Organization report on the amendment, the original HB 479 stated specifically that statutory probate courts would have jurisdiction over survival and wrongful death actions, but it was changed to the more expansive...