Pettit v. Tabor, 06-19-00002-CV
| Decision Date | 15 January 2020 |
| Docket Number | No. 06-19-00002-CV,06-19-00002-CV |
| Parties | ROBERT YORK PETTIT, JEFFREY YORK PETTIT, INDIVIDUALLY AND AS TRUSTEE OF THE BIG HORN PHALANX TRUST, JOSEPH AUSTIN PETTIT AND EMILY ANNE PETTIT COVEY, Appellants v. MARILYN EILEEN PETTIT TABOR, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 8th District Court Delta County, Texas
Before Morriss, C.J., Burgess and Stevens, JJ.
Marilyn Eileen Pettit Tabor (Lyn) conveyed her undivided one-half interest in a family farm and a joint bank account to her brother, Robert York Pettit (Bob), based on his promise to protect the property and to reconvey it to her. When Bob refused to reconvey the property and instead conveyed it to his children, who later conveyed it to The Big Horn Phalanx Trust (the Trust), Lyn sued Bob, his children, and the trustee of the Trust (collectively Appellants) for a return of the property. The trial court found that Bob had breached an informal fiduciary relationship and had committed common law and statutory fraud, voided all of the conveyances of Lyn's one-half interest, imposed a constructive trust on the property, ordered Appellants to reconvey the property to Lyn, and awarded Lyn damages, exemplary damages, and attorney fees.
In this appeal, Appellants assert that the trial court erred in imposing a constructive trust because any recovery by Lyn was barred by the affirmative defense of illegality and because the evidence was legally and factually insufficient to support the trial court's finding of an informal fiduciary relationship, that the award of exemplary damages was not supported by clear and convincing evidence, that Lyn was not entitled to attorney fees, and that the evidence was legally and factually insufficient to support the trial court's findings that the conveyances to Bob were not gifts. Because (1) no illegality bars a constructive trust, (2) Bob's actual fraud supports a constructive trust, (3) exemplary damages are supported by the evidence, (4) attorney fees are supported by the evidence, and (5) Appellants' challenge to the no-gift conclusion was forfeited, we affirm the judgment of the trial court.
The family of Margaret Eileen Pettit (Margaret), Lyn and Bob's mother, had owned a 280-acre tract and a 34.5-acre tract of land in Hunt County (the Hunt Tracts) since 1903. Margaret had owned them since 1947. At some point, Margaret also acquired a 70-acre tract in Delta County (the Delta Tract).1 In 1951, Margaret and her husband built a house on the Hunt Tracts, where the family lived for some time. Around 1960, the family moved to Waco, where Lyn and Bob graduated high school. A few years later, Lyn got married to her first husband and moved to New Mexico, where she eventually began a mortgage brokerage business, Pettit Mortgage. Bob became an ordained minister, but has worked as a petroleum landman for the last forty years
In 2001, Lyn moved back to Waco. There, her relationship with both Margaret and Bob became closer, their families began spending holidays together, and Bob performed the wedding of Lyn and her current husband, Johnny. She also started going to the Family Farm with Margaret and began spending weekends there. Eventually, Bob and his family also began using the Family Farm. In 2003, the house on the Family Farm was in disrepair, and Lyn's husband, Johnny, did some repairs to get it in shape for family functions. Sometime later, they began having family functions with Bob's family on holidays and extended weekends. Bob and his sons helped Johnny with the maintenance and improvements on the Family Farm. Both families engaged in hunts for deer and hogs and other outdoor activities at the Farm.
As Margaret aged, Lyn and Bob worked closely together to deal with her and the issues that arose. In 2006, Margaret conveyed the Family Farm to Lyn and Bob by warranty deeds and reserved a life estate to herself. Because of his forty years of experience and knowledge regarding the transfer of property interests, Bob drafted those warranty deeds, as well as other deeds for the family. When they became owners of the property, if something needed to be done, either Lyn or Bob would take care of it.
Lyn testified that she loved Bob, that she had trusted him implicitly, and that there was nothing she could not trust him with. When Margaret died in 2009 and her life estate terminated, she left Lyn $60,000.00 to $80,000.00 in a pay-on-death account. Lyn used some of that money to rehabilitate Margaret's residence, and Bob, the executor of Margaret's estate, told her she would be reimbursed from the estate. Bob wanted to put a stock pond on the Farm, so another $25,000.00 of that money was spent to do so. Lyn also agreed to put the rest of the money in a joint bank account to be used for the management of the Farm, taxes, utilities, and repairs. Bob and Lyn were both authorized signatories on the account.
Bob acknowledged that Lyn trusted him enough to make him a signatory on the account and that they worked together to do the things that needed to be done at the Family Farm. He also agreed that the Family Farm was important to him, Lyn, and their families and that he and Lyn had talked about wanting to pass it down to their respective heirs. Bob acknowledged that he knew that this was important to Lyn.
Bob's wife, Sharon, testified that, based on Bob and Lyn's relationship, Lyn trusted Bob implicitly. She believed that, based on their relationship and Bob's dealings with Lyn, Lynbelieved as truth anything Bob told her and trusted him to do what he promised. She also agreed that Bob took the lead in the management and running of the Farm, but also testified that it was "kind of mutual.
In late March 2013, Lyn called Bob to ask for his help in conveying her interest in the Family Farm to her children, Darrin and Casey. The substance of that conversation was disputed at trial. According to Lyn, she had had two heart surgeries, including one in January 2013 to replace her pacemaker. This made her consider her mortality and accelerated her timeline for transferring the Farm to her children. In early 2013, she received notice that a hearing was scheduled in a New Mexico lawsuit against Pettit Mortgage, although she thought it had been settled several years before. This prompted her to hire an attorney to help resolve the lawsuit and to feel more urgency in conveying the Farm to her children. Lyn testified that she was a little concerned about the lawsuit because she was not familiar with legal matters but that she did not think she had any liability.2 She also testified that, at the time, she did not have any creditors or any outstanding judgments and that she had about $150,000.00 in liquid assets.
When she called Bob to let him know she wanted to transfer her interest to her children, she also mentioned the lawsuit and the upcoming hearing. Bob proceeded to tell her about a lawsuit he was in at the time, about how horrible the depositions and discovery were and about the attorney fees, the time, the stress, and all the things involved in a lawsuit. He told her that he didnot think her children could handle a lawsuit and that she should transfer her interest to him instead. Bob also promised her that he would transfer the property back as soon as the lawsuit in New Mexico was settled, and he told her, "[R]ight now we have to protect the farm and circle the wagons." Lyn testified that, though she had originally intended to transfer her interest to her children, Bob convinced her that that would trouble her children, unless she transferred it to Bob instead. He also made it clear that it would only be temporary and that he would transfer it back.
Lyn also testified that, since Bob was her big brother and she had always trusted his judgment, he scared her with the possibility that the New Mexico legal issue might be bigger than she had thought. Based on their relationship, she felt she could trust him at his word, and she became convinced that his way was a better way to go. She testified that she never intended to make a gift of her interest to Bob and that she would never have conveyed it to him outright.
According to Bob, Lyn told him that her attorney had recommended that she get all her assets out of her name and that there had been a judgment against her. She told him that she was going to convey her interest in the Family Farm to her children, but that he "educated" her about a different option. He told her that he had been in lawsuits, that lawsuits were terrible, and that her children did not need this property. He also told her that the lawsuit in New Mexico might end up being a big deal, that it would drag her children into it, and that they would not be able to handle it. He then told her that she would be much better off transferring it to him because he would be able to handle it better. Bob testified to telling Lyn that he was far more capable of mounting a robust defense, that he already had a legal team in mind, and that Lyn agreed. He also testified that he told Lyn that a New Mexico judgment could jeopardize the Farm and that Lyn understoodthe threat. He maintained that Lyn told him that she had a judgment against her3 and that she was afraid the property interest would be seized.
Bob denied that he told her he would convey the property back to her; in fact, he affirmed that, at the time of this transaction, he had no intent to convey it back to her. He also denied that Lyn had ever proposed that it would be a temporary conveyance. Rather, he maintained that he had made it very clear that he would not be returning her interest. Nevertheless, tellingly, Bob admitted that, by the end of their conversation, he had left Lyn with the impression and understanding that her children would end up...
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