Richard Nugent & Cao, Inc. v. Estate
Decision Date | 08 March 2018 |
Docket Number | NO. 14-16-00839-CV,14-16-00839-CV |
Citation | 543 S.W.3d 243 |
Parties | RICHARD NUGENT AND CAO, INC., Appellants v. The ESTATE OF Janie Baker ELLICKSON, Appellee |
Court | Texas Court of Appeals |
Michelle Elaine Robberson, Diana L. Faust, Dallas, TX, Marshall T. Gaspard, Fred L. Shuchart, Houston, TX, for Appellants.
Garabet K. Dakarmandjian, Albert L. Giddens, Pasadena, TX, for Appellee.
Panel consists of Justices Boyce, Donovan, and Jewell.
William J. Boyce, JusticeWe grant Richard Nugent’s and CAO, Inc.’s motion for rehearing in part and render a take nothing judgment in favor of CAO, Inc.; we overrule the remainder of appellants' motion. We withdraw our opinion dated November 30, 2017, and issue the following substitute opinion.
The Estate of Janie Baker Ellickson sued Nugent and CAO, Inc. asserting claims for breach of contract, breach of fiduciary duty, and promissory estoppel in connection with the sale of Ellickson’s house. The trial court assessed liability for breach of fiduciary duty and awarded damages against Nugent and CAO, Inc. following a bench trial. We affirm the trial court’s judgment in part; reverse and render in part; and reverse and remand in part for further proceedings consistent with this opinion.
Nugent and CAO, Inc., a company he owned and controlled, participated in real estate transactions involving 71-year-old Janie Ellickson and a house she owned in Galveston County, Texas. Central to this appeal is the fiduciary relationship created when Ellickson signed a power of attorney in favor of Nugent. The power of attorney permitted Nugent to sell the Galveston County house on Ellickson’s behalf and execute documents related to the sale.
Nugent sold the house to Michael Womack on January 21, 2008. Nugent negotiated for a trust he controlled to receive $137,004.40 from the sale; Ellickson was to receive $115,926.80. Ellickson died on June 9, 2008. Womack ceased to make the required payments within a year of the sale, and the house was sold for $20,000 at a foreclosure sale on January 6, 2009.
The trial court concluded that CAO, Inc. was liable as Nugent’s alter ego. It signed a final judgment awarding $163,843.64 in damages against Nugent and CAO, Inc. based on Nugent’s breaches of fiduciary duty.
On appeal, Nugent and CAO, Inc. challenge the (1) legal viability of the fiduciary duty breaches identified by the trial court; (2) sufficiency of the evidence supporting fiduciary duty breaches arising from the failures to insure and give notice of the foreclosure sale; (3) sufficiency of the estate’s pleadings addressing CAO, Inc.’s liability as Nugent’s alter ego; (4) sufficiency of the evidence supporting the trial court’s conclusion that CAO, Inc. is liable as Nugent’s alter ego; and (5) trial court’s damages award.
A chronology of relevant events will set the stage.
The estate sued Nugent on July 10, 2012, and asserted claims for breach of contract, promissory estoppel, and breach of fiduciary duty.
The estate named Nugent and CAO, Inc. as defendants in its first amended petition. The estate asserted that Nugent acted "as agent for his corporation, CAO, Inc."
The parties proceeded to a bench trial in July 2016. At trial, the evidence and testimony primarily focused on (1) the structure of the real estate transactions at issue; (2) the responsibility to insure the house; and (3) whether Nugent failed to provide notice of the foreclosure sale to the estate. Estate attorney Giddens testified that Nugent never provided notice of the foreclosure sale to the estate. Nugent testified that he informed executor Yeiter of the foreclosure sale before it occurred. Challenging Nugent’s credibility, the estate questioned Nugent regarding his 2004 criminal conviction for theft in an amount greater than $200,000, which arose from Nugent’s earlier involvement in separate real estate transactions.
In its findings of fact and conclusions of law, the trial court determined that the estate failed to prove its breach of contract and promissory estoppel claims. Addressing the estate’s only remaining claim, the trial court concluded that Nugent committed four breaches of fiduciary duty by (1) failing to have Womack’s payments under the January 2008 real estate lien note made payable to Ellickson; (2) negotiating for the Property Trust controlled by Nugent to receive $137,004.40 from the house sale while Ellickson was to receive only $115,926.80; (3) failing to make sure the house was insured as required under the deed of trust; and (4) failing to notify the estate of the foreclosure sale, thereby chilling the sale and subjecting the estate to excessive losses.
The trial court also found that Nugent and CAO, Inc. "acted together, their roles and entities being indistinguishable throughout the sale of the proceeds." The trial court concluded that the estate was entitled to recover from Nugent and CAO, Inc. It awarded $163,843.64 in damages to the estate plus pre- and post-judgment interest. The trial court signed its final judgment on August 5, 2016. Nugent and CAO, Inc. timely appealed.
Nugent and CAO, Inc. challenge the legal viability of the four fiduciary duty breaches. They assert that two breaches arising from the terms of the January 2008 sale to Womack—payments to a recipient other than Ellickson, and Nugent’s negotiation for his trust to receive a disproportionate share of the sale proceeds—are barred by the applicable statute of limitations. They assert that Texas Property Code section 51.0074 bars the two remaining fiduciary duty breaches—failures to maintain insurance and to give notice of the foreclosure sale—because this statute forecloses a fiduciary relationship...
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...such as mistake and accident are admissible in rebuttal of a defensive theory."). Richard Nugent and CAO, Inc. v. Estate of Ellickson, 543 S.W.3d 243, 261 (Tex. App.—Houston [14th Dist.] 2018, no pet.) ("The impeachment value of crimes involving deception is greater than that for crimes inv......