Summary
affirming two trial court orders appealed from the same ancillary probate proceeding from which the instant proceeding arises
Summary of this case from In re BrittinghamOpinion
No. 04-05-00213-CV
Delivered and Filed: February 22, 2006.
Appeal From the County Court at Law No. 1, Webb County, Texas, Trial Court No. 2000-PB7-000049-L1, Honorable Alvino Morales, Judge Presiding.
Affirmed.
Sitting: Sarah B. DUNCAN, Justice, Phylis J. SPEEDLIN, Justice, Rebecca SIMMONS, Justice.
MEMORANDUM OPINION
Roberto Tijerina, in his capacity as successor independent executor of the primary estate of Juan Roberto Brittingham-McLean, deceased, appeals from two probate court orders signed March 10, 2005. We affirm the probate court's orders.
Background
The case at hand is the fourth appeal to this court from an ancillary probate proceeding filed in Texas involving the assets of a Mexican decedent. This time, Roberto Tijerina, successor independent executor of the estate in the Mexican probate proceeding, appeals from the probate court's orders (1) appointing Kevin Michael Mackie as the successor administrator of the Texas ancillary probate proceeding and setting his bond at $1,000.00, and (2) approving a contingency fee agreement in favor of lawyers representing Mackie as successor administrator for purposes of pursuing tort claims against certain beneficiaries in the Mexican probate proceeding. Both orders were entered by the probate court following our remand in Brittingham III. See Ayala v. Mackie, 158 S.W.3d 568 (Tex.App.-San Antonio 2005, pet. filed) (referred to herein as Brittingham III). To understand where we are today, a brief review of the history of this case is necessary.
The underlying case is an ancillary probate matter initiated in Webb County, Texas by Mr. Brittingham-McLean's widow, Ana Maria Brittingham. A probate proceeding is also pending in Mexico. In Brittingham I, a panel of this court determined the Texas probate court had subject matter jurisdiction, but reversed the court's order appointing Ana Maria Brittingham as executrix and remanded the cause. See Ayala v. Brittingham, 131 S.W.3d 3 (Tex.App.-San Antonio 2003, pet. granted) (referred to herein as Brittingham I). On remand from Brittingham I, Tijerina applied for the position of successor executor in the Texas ancillary proceeding. The probate court denied Tijerina's application and appointed Mackie as successor administrator. Tijerina appealed and a panel of this court affirmed the order denying Tijerina's application to be named successor executor, but reversed the order appointing Mackie as successor administrator because the court failed to set a bond as required by the Texas Probate Code. Ayala, 158 S.W.3d at 573 ( Brittingham III).
In Brittingham II, a panel of this court determined the Texas probate court's exercise of personal jurisdiction over some of the Mexican defendants was unreasonable and did not comport with fair play and substantial justice. See Brittingham — Sada de Powers v. Ancillary Estate of Brittingham-McLean, 158 S.W.3d 518 (Tex.App.-San Antonio 2004, pet. filed). That opinion is not relevant to the issues raised in this appeal.
On remand from Brittingham III, the probate court confirmed its prior appointment of Mackie as successor administrator, set his bond at $1,000.00, and approved a contingency fee contract between Mackie in his capacity as successor administrator and the law firm of Pulman, Bresnahan Pullen, L.L.P. The instant appeal resulted. Tijerina now asks this court to determine the effect of Brittingham III on the continuing jurisdiction of the probate court, to once again review the propriety of the court's order appointing Mackie as successor administrator of the ancillary estate and setting his bond, and to review the order approving the contingency fee contract.
Jurisdiction
As an initial matter, we must first address Mackie's pending motion to dismiss. Mackie argues the instant appeal should be dismissed because Tijerina, as the sole appellant, has no "claim" against the estate and therefore has no standing to appeal. We disagree. The Probate Code defines an "interested person" as not only one with a "claim" against the estate, but also one "having a property right in" the estate. Tex. Prob. Code Ann. § 3(r) (Vernon 2003). It is undisputed that Tijerina is the successor independent executor of the decedent's primary estate in the Mexican probate proceeding. As independent executor, Tijerina is a trustee of that estate. Tex. Prob. Code Ann. § 37 (Vernon 2003); Bailey v. Cherokee County Appraisal Dist., 862 S.W.2d 581, 584 (Tex. 1993) (characterizing an administrator or executor as "an active trustee of a trust estate"). As a trustee of the primary Mexican estate, Tijerina has a property right in the ancillary Texas estate. As a matter of law, Tijerina is an interested person who is entitled to participate in the ancillary Texas proceeding. Accordingly, Mackie's motion to dismiss is denied.
Analysis
On appeal, Tijerina argues the probate court abused its discretion by: (1) proceeding to confirm its prior appointment of Mackie as successor administrator of the ancillary proceeding during the pendency of his appeal to the Texas Supreme Court; (2) confirming Mackie's appointment as the successor administrator of the ancillary probate proceeding because he is "clearly unsuitable;" (3) approving the contingency fee contract; and (4) setting bond for Mackie in the amount of $1,000.00. We will review each claim, in turn, under an abuse of discretion standard of review. Ayala, 158 S.W.3d at 571; see also Olguin v. Jungman, 931 S.W.2d 607, 610 (Tex.App.-San Antonio 1996, no writ) (trial court has broad discretion in determining whether individual is "suitable" to serve as executor or administrator). To prove the probate court abused its discretion, Tijerina must show the court "acted without reference to any guiding rules and principles." Olguin, 931 S.W.2d at 610 (quoting Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985)).
In his first issue, Tijerina maintains the court erred in confirming its prior appointment of Mackie as successor administrator of the ancillary proceeding because the Texas Supreme Court has "exclusive jurisdiction" over the parties, the original appointment of Mackie, and the requested appointment of Tijerina while his petition for review is pending in Brittingham III. We disagree. Section 28 of the Probate Code provides that, "[p]ending appeals from orders or judgments appointing administrators or temporary administrators, the appointees shall continue to act as such. . . ." Tex. Prob. Code Ann. § 28 (Vernon 2003). The Supreme Court has held that the clear legislative intent of section 28 is that the appointment of an original, or successor, administrator is not superseded during an appeal of that order. Ex parte Lindley, 163 Tex. 301, 354 S.W.2d 364, 365-66 (1962) (orig. proceeding) (noting the policy behind the statute is to prevent the estate from being without an administrator during the appeal). The appointed administrator is authorized to continue to act on behalf of the estate, and the probate court is authorized to continue to supervise the administrator, during the pendency of the appeal. Id. at 366; see also Bywaters v. Joyce, 399 S.W.2d 832, 835 (Tex.Civ.App.-Dallas 1966, no writ); Brown v. Perkins, 608 S.W.2d 325, 326 (Tex.Civ.App.-Dallas 1980, orig. proceeding). Furthermore, we have previously upheld the probate court's determination that there is a continuing need for administration of the Brittingham-McLean estate and the need for immediate appointment of a successor representative. Ayala, 158 S.W.3d at 571. Tijerina's first issue is overruled.
In his next two issues, Tijerina argues that Mackie has a conflict of interest with the estate and lacks the necessary background, education and experience to be its administrator; therefore, he fails to qualify as a successor administrator. Tijerina also asserts that the court's approval of the contingency fee contract must be vacated. Again, we disagree. The Probate Code lists the following persons who are not qualified to serve as an executor or administrator: ". . . (a) [a]n incapacitated person; (b) [a] convicted felon . . .; (c) a non-resident (natural person or corporation) of this State who has not appointed a resident agent to accept service of process . . .; (d) [a] corporation not authorized to act as a fiduciary in this State; or (e) [a] person whom the court finds unsuitable." Tex. Prob. Code Ann. § 78 (Vernon 2003). The Probate Code does not define the term "unsuitable," and we have previously recognized in Brittingham III that case law has provided "no comprehensive, discrete explanation delineating attributes that make someone unsuitable under the Probate Code." Ayala, 158 S.W.3d at 572; see also Olguin, 931 S.W.2d at 610 (noting that the common theme gleaned from the cases is that a person asserting a claim against property, claiming it as their own to the exclusion of the estate, is deemed unsuitable because of the conflict of interest, but an individual making a claim within the probate process, i.e., claiming under the will or attempting to collect a debt from the estate, is not). The probate court has broad discretion in determining who is "suitable" for appointment as an executor or administrator in a particular case. Ayala, 158 S.W.3d at 572; Olguin, 931 S.W.2d at 610. Tijerina must show the court acted arbitrarily or unreasonably to prove that it abused its discretion in appointing Mackie. Olguin, 931 S.W.2d at 610.
With respect to Mackie's qualifications to serve, Tijerina argues he lacks the experience and education necessary to administer such a sizeable estate. At the March 9, 2005 hearing, Mackie testified that he meets all the statutory criteria listed in section 78 of the Probate Code; he did not know the deceased; he does not know any members of the Brittingham family; he resides in Laredo and runs his own business there; and he is not an accountant or lawyer. Mackie conceded he had no prior experience as an executor or administrator of an estate, but stated he had retained counsel to advise him. Based on this record, we can not say the court abused its discretion in finding that Mackie qualified to serve as successor administrator under § 78 of the Probate Code. See Olguin, 931 S.W.2d at 610 (that a record might allow a different conclusion than that reached by the trial court does not render the court's decision an abuse of discretion).
We note that in Brittingham III the appellants specifically stated they were not challenging Mackie's qualifications to serve as administrator of the estate, only the procedure by which he was appointed. See Ayala, 158 S.W.3d at 572 n. 2, 573 (noting the appellants did not object to Mackie's request for letters of administration). Tijerina in his capacity as executor of the Mexican estate was one of the appellants in Brittingham III.
With respect to whether Mackie is "unsuitable" due to a conflict of interest, Tijerina argues that because the only ancillary estate assets are the claims against the beneficiaries in the Mexican probate proceeding, Mackie has a conflict of interest with the estate and its beneficiaries. He contends the only way Mackie will be compensated for his services as administrator is through successful litigation of the ancillary estate's claims against the beneficiaries. Tijerina asserts Mackie is in the same position as the former executrix Ana Maria Brittingham was in Brittingham I, and is similarly disqualified. We disagree. In Brittingham I, Ana Maria brought a claim against the estate as a personal beneficiary and was thus unsuitable to continue serving as executrix; here, Mackie is pursuing claims on behalf of the estate he represents, not making a personal claim against it. See Ayala, 131 S.W.3d at 9-10 ( Brittingham I) (holding Ana Maria Brittingham's action in filing suit to set aside her marital agreement and to claim part of the estate as her community property, and her involvement in the on-going family discord and litigation, warranted her removal as executrix). We agree with Mackie's assertion that the conflict arising from pursuit of the ancillary estate's claims, if any conflict exists, is inherent in the role of any administrator of the ancillary estate, not just Mackie. In addition, Mackie testified that with respect to compensation for his services, there was no compensation agreement or established hourly rate at this time, and that he would not expect to receive higher compensation if the estate recovered on its claims. The probate court, as trier of fact, heard the testimony and argument regarding the alleged conflict of interest arising from the claims and contingent fee contract and the suitability of Mackie to be an administrator. The court then re-appointed Mackie as successor administrator, concluding, by inference, that Mackie is not unsuitable. See Olguin, 931 S.W.2d at 610. Tijerina has failed to demonstrate that the court's finding was an abuse of discretion.
Tijerina also argues Mackie is "unsuitable" to serve as administrator of the ancillary estate because he has disavowed any duty to the Mexican estate and Mexican beneficiaries. The record shows, however, that Mackie also stated that he would follow the Texas probate court's instructions with respect to sharing information with the executor of the Mexican estate, and would deliver any ancillary estate assets into the registry of the Texas probate court for it to distribute to the Mexican estate or otherwise as it determines is appropriate.
Finally, Tijerina also complains that the claims being pursued by Mackie under the terms of the contingent fee contract are for the benefit of a single creditor, John Aguirre, which creates a conflict with the other creditors and beneficiaries of the estate. Tijerina also asserts, without citing any authority, that the contingent fee contract, which will pay attorneys a 40% contingency fee on any recovery over $4 million for the benefit of a single creditor, i.e., Aguirre, is improper. First, the record does not support Tijerina's contention that it is only Aguirre's claim that is being pursued by Mackie. During the hearing, various estimates of the value of the ancillary estate's claims were made, ranging from $12 million (the amount represented to be Aguirre's claim) to $90 million (the total amount of assets claimed to have been wrongfully removed from the estate); there was no evidence presented that the only claim being pursued by Mackie is Aguirre's claim. Second, contingent fee contracts do not violate Texas public policy. Mandell Wright v. Thomas, 441 S.W.2d 841, 847 (Tex. 1969); Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (discussing purposes of contingent fee contracts). Third, section 665C of the Probate Code specifically authorizes contingent fee contracts in probate proceedings, and authorizes a contingent fee of more than one-third upon the probate court's approval. Tex. Prob. Code Ann. § 665C (Vernon 2003). Tijerina has provided no citations to the record or legal authority to support his claim that this contingency fee contract is unconscionable, or that approval of the contract was an abuse of discretion. Tijerina's second and third issues are overruled.
Finally, in his last issue, Tijerina challenges the amount of the bond as insufficient. The court was required to comply with § 194 of the Probate Code when setting Mackie's bond. Tex. Prob. Code Ann. § 194 (Vernon 2003). The court was required by § 194(3) to hear evidence and determine the amount of cash on hand and where deposited, the amount of cash estimated as needed for administrative purposes, the revenue anticipated to be received in the succeeding 12 months from dividends, interest, rentals or use of real or personal property of the estate, the estimated value of any securities of the estate, and the estimated amount of debts owed by the estate. Tex. Prob. Code Ann. § 194(3). The uncontradicted evidence presented at the hearing showed there was only $912.29 cash on hand in the estate, and no other assets of any kind except for the claims against the Mexican beneficiaries. The value of those future claims is speculative and was disputed by the parties; in addition, that type of "asset" is not one of the factors listed in § 194(3). Tex. Prob. Code Ann. § 194(3). The purpose of a personal representative's bond is to protect the estate and its beneficiaries from potential costs and damages arising from an administrator's mismanagement. Lawyers Sur. Corp. v. Larson, 869 S.W.2d 649, 651 (Tex.App.-Austin 1994, writ denied). Based on the evidence of the estate's minimal assets, we hold the court did not abuse its discretion in setting Mackie's bond at $1,000.00.
Based on the foregoing reasons, we overrule Tijerina's issues on appeal, and affirm the trial court's orders.