Opinion by Justice FILLMORE.
Appellant Gaylia E. Kirkland appeals the probate court's orders removing her as
Prentiss Kirkland (decedent) died intestate on November 1, 2009. He was survived by his wife (appellant) and three adult children from prior marriages (appellees). On September 21, 2010, appellant filed an application for letters of administration of decedent's estate in probate court. On October 3, 2010, appellees sued appellant in district court asserting claims for declaratory relief based upon appellant's alleged wrongful denial and deprivation of appellees' interests in the real and personal property in decedent's estate, including sums of cash, the home in which decedent lived with appellant before his death and improvements to that home, and the inventory, equipment, and accounts receivable of decedent's barrel cleaning and recycling business (barrel business). As heirs,
Appellants filed a bill of review and motion to remove appellant as administrator of decedent's estate. A bench trial was conducted on appellants' bill of review and motion to remove appellant as administrator. On April 4, 2011, the probate court judge signed an order removing appellant as administrator of decedent's estate and appointing a successor administrator of the estate. On May 12, 2011, appellees filed their motion for leave to amend their pleadings to include a specific request for an award of attorney's fees and costs pursuant to section 245 of the probate code. On June 14, 2011, the probate court signed an order granting appellees' motion for leave to amend their pleadings and granting appellees' request for attorney's fees, awarding appellees attorney's fees and costs in the amount of $15,000 against appellant, individually.
Appellant filed this appeal. She contests the order of the probate court granting appellees' motion for a trial amendment and awarding appellees attorney's fees and the order of the probate court removing appellant as the administrator of decedent's estate.
In her first issue, appellant contends the probate court abused its discretion by
Generally, we review a trial court's decision on the award of attorney's fees for an abuse of discretion. Sharifi v. Steen Automotive, LLC, 370 S.W.3d 126, 152 (Tex.App.-Dallas 2012, no pet.); Paul v. Merrill Lynch Trust Co. of Tex., 183 S.W.3d 805, 812 (Tex.App.-Waco 2005, no pet.) (op. on reh'g). Likewise, the standard of review applicable to a trial court's decision to allow or deny a trial amendment is whether the court abused its discretion. Miller v. Wal-Mart Stores, Inc., 918 S.W.2d 658, 666 (Tex.App.-Amarillo 1996, writ denied). The test for abuse of discretion is whether the court acted without reference to any guiding rules and principles, or, stated another way, whether its decision was arbitrary or unreasonable. City of San Benito v. Rio Grande Valley Gas Co., 109 S.W.3d 750, 757 (Tex.2003) (quoting Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex.1985)).
Section 245 of the probate code provides for recovery of reasonable attorney's fees incurred in obtaining compliance regarding any statutory duty that the personal representative has neglected or if a personal representative is removed for cause. See TEX. PROB.CODE ANN. § 245 (West Supp. 2012).
The probate court conducted a bench trial of appellees' First Amended Bill of Review and Motion to Remove Administrator, in which appellees sought a bill of review under section 31 of the probate code
On May 12, 2011, appellees filed their motion for leave to amend their pleading to include a specific request for an award of attorney's fees and costs pursuant to section 245 of the probate code. Although appellees stated in that motion that their request for attorney's fees "was implicit in the pleading," they requested leave to amend their pleading pursuant to rule of civil procedure 63 to include a specific request for an award of attorney's fees under section 245 of the probate code. On May 20, 2011, appellees filed a letter brief with the probate court in support of their motion for leave to amend their pleading, asserting appellant's removal as estate administrator was for cause due to her mismanagement of decedent's estate, her breach of fiduciary duty, and her exposure of the estate to potential liability to the Internal Revenue Service (the IRS). Despite the statement of appellees' counsel, in response to appellant's objection at the bench trial of appellees' bill of review and motion to remove appellant as administrator, that he would make a record regarding attorney's fees and "we can argue about the legality later," in their letter brief, appellees asserted the issue of attorney's fees under probate code section 245 was tried by consent.
On May 23, 2011, appellant filed a letter brief responding to appellees' arguments concerning recovery of attorney's fees under probate code section 245 and for a trial amendment under rule of civil procedure 63. Appellant contested appellees' entitlement to attorney's fees because the probate code sections pleaded by appellees in their First Amended Bill of Review and Motion to Remove Administrator — sections 31 and 222 — do not provide for award of attorney's fees. Appellant noted appellees' pleading contained no prayer for attorney's fees. See Swate v. Medina Cmty. Hosp., 966 S.W.2d 693, 702 (Tex.App.-San Antonio 1998, pet. denied) (hospital did not specifically request attorney's fees in its prayer for relief and prayer for general relief will not support such an award). Appellant disagreed with any assertion she had waived her objection or tried the matter of appellees' attorney's fees by consent when appellees' counsel proposed and obtained agreement from appellant's counsel and the probate court to appellees' making a record regarding attorney's fees, with the "legality" of the issue to be determined
On June 14, 2011, the probate court signed an order granting appellees' motion for leave to amend their pleading and granting appellees' request for attorney's fees.
The Texas Rules of Civil Procedure recognize the right to file an amended pleading.
In probate proceedings, "multiple judgments final for purposes of appeal can be rendered on certain discrete issues." Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192 (Tex.2001). Courts, including this Court, have allowed appeals from orders removing an executor or estate administrator. See In re Estate of Miller, 243 S.W.3d 831 (Tex.App.-Dallas 2008, no pet.); In re Estate of Washington, 262 S.W.3d 903, 905 (Tex.App.-Texarkana 2008, no pet.); Geeslin v. McElhenney, 788 S.W.2d 683 (Tex.App.-Austin 1990, no writ). Appeal of an order removing an estate administrator is proper because the order brings to a conclusion a discrete phase of the probate proceeding. In re Estate of Washington, 262 S.W.3d at 905-06. Here, appellees sought a trial amendment to plead for attorney's fees pursuant to section 245 of the probate code after the probate court's final order removing appellant as administrator of the estate. Their request for a trial amendment after the final order was signed was untimely. We conclude the probate court abused its discretion by granting the trial amendment and awarding appellees attorney's fees after the probate court's final order removing appellant as administrator was signed.
We resolve appellant's first issue in her favor.
In her second issue, appellant contends the probate court abused its discretion in removing her as administrator of decedent's estate, asserting that the evidence is legally and factually insufficient to support her removal.
A trial court's order removing an administrator is reviewed under an abuse of discretion standard. In re Estate of Miller, 243 S.W.3d at 839. A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles. Downer, 701 S.W.2d at 241-42. "Under an abuse of discretion standard of review, we must make an independent inquiry of the entire record to determine if the trial court abused its discretion and are not limited to reviewing the sufficiency of the evidence to support the findings of fact made." In re Estate of Clark, 198 S.W.3d 273, 275 (Tex. App.-Dallas 2006, pet. denied) (citing Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 853 (Tex.1992) (orig. proceeding)). Therefore, we will not analyze the trial court's fact findings separately from our analysis of whether the trial court abused its discretion in removing appellant as estate administrator. See In re Estate of Clark, 198 S.W.3d at 275.
A probate court's findings are reviewable for legal and factual sufficiency by the same standards applied in reviewing evidence supporting a jury's answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994). When confronted by both a legal and factual sufficiency challenge, an appellate court must first review the legal sufficiency of the evidence. Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex. 1981).
An appellant attacking the legal sufficiency of an adverse finding on an issue on which it did not have the burden of proof must demonstrate there is no evidence to support the trial court's adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983); Affordable Power, L.P. v. Buckeye Ventures, Inc., 347 S.W.3d 825, 830 (Tex.App.-Dallas 2011, no pet.). When examining a legal sufficiency
In a factual sufficiency review of a finding, we consider and weigh all the evidence, both in support of and contrary to the challenged finding. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996) (per curiam). When a party challenges the factual sufficiency of the evidence supporting an adverse finding on which it did not have the burden of proof, we set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (per curiam); Figueroa v. Davis, 318 S.W.3d 53, 59 (Tex.App.-Houston [1st Dist.] 2010, no pet.). We may not substitute our judgment for that of the trier of fact or pass on the credibility of the witnesses. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex.1998).
Section 77 of the probate code provides in pertinent part that letters testamentary or of administration shall be granted to persons who are qualified to act, first to a person named as executor in the will of the deceased and second to the surviving husband or wife. TEX. PROB.CODE ANN. § 77(a), (b) (West 2003). Although appellant has priority of appointment under section 77, she may be removed under section 222 of the probate code. Section 222 permits the removal of the personal representative if "[t]he personal representative is proved to have been guilty of gross misconduct, or mismanagement in the performance of the personal representative's duties." TEX. PROB.CODE ANN. § 222(b)(4) (West Supp.2012). Thus, the probate court did not abuse its discretion in this case if the record, when reviewed in its entirety, supports one or more grounds for removal of a personal representative specified in section 222.
As grounds for removal of appellant as administrator, appellees asserted appellant misappropriated community and separate funds of decedent as her separate property and failed to properly account for the value of decedent's barrel business and the income from that business, classified and liquidated assets that were community or separate property of decedent without granting the estate its proper interest in those assets, undervalued decedent's barrel business and under-reported income from that business to the IRS, failed to properly account for cash and other assets of decedent's separate property, and unilaterally closed decedent's barrel business. At the conclusion of the bench trial of appellees' bill of review and motion for removal of appellant as estate administrator, the probate court denied the bill of review but concluded appellant should be removed as administrator based on appellant's
The probate court thereafter signed its final order removing appellant as administrator of decedent's estate and appointing a successor administrator. In that order, the probate court stated it appeared appellant had "neglected her duties and should be removed" as administrator of decedent's estate.
The probate court signed findings of fact and conclusions of law in support of removal of appellant as administrator, including findings that: the income tax returns filed with the IRS by appellant on behalf of decedent indicated income of $21,251.00 and $26,336.00 in 2008 and 2009, respectively, an understatement which fails to account for checks received by the barrel business and cashed by decedent or appellant; appellant has shown a clear disregard for the proper accounting of the income of the barrel business; and appellant exposed decedent's estate to potential tax liability to the IRS due to her actions. On appeal, appellant contends the evidence is legally and factually insufficient to support the probate court's findings.
We begin our analysis by considering the legal sufficiency of the evidence supporting the probate court's findings regarding the understatement of income of decedent's barrel business. Appellant does not contend that exposure of the estate to federal income tax liability as a result of an administrator's acts or omissions is an improper ground for removal. Rather, appellant contends there is no evidence appellant "did anything wrong in preparing the 2009 tax return." We disagree.
Appellant testified she was aware decedent served many customers other than Royal Custom Products. Appellant sent a letter to customers of the barrel business after her husband's death in which she expressed her appreciation for their business "over the past year." That letter was sent by appellant not only to Royal Custom Products, but also to Auto Wax Company, Complete Supply Inc., and others. However, appellant made no attempt to determine the amount of income received by the barrel business from any customer to which she sent the letter. For example, appellant testified she was aware that Auto Wax Company was a customer of the barrel business and that she had prepared invoices sent to Auto Wax Company prior to her husband's death. However, she did not include any business income from Auto Wax Company on the 2009 income tax return because Auto Wax Company did not send a Form 1099 to the barrel business. Appellant made no attempt to determine the gross amount of business income the barrel business received from its customers in 2009 before she signed the income tax return relating to that year. According to appellant's testimony, she telephoned the IRS and spoke to an individual who advised her she only had to declare business income that had been reported to the IRS on Form 1099.
Appellant's handwritten notes were admitted as evidence showing that checks from barrel business customers Martek, Aramsco, Quaddrant Chemical Corporation, and Hawk Solutions were deposited in a joint checking account in November 2009 before her husband's death, and checks from barrel business customers Royal Custom Products and Auto Wax Company were to be deposited in November 2009 after her husband's death. Evidence at the bench trial demonstrated that appellant made bank deposits in December 2009 for barrel business income from Auto Wax Company, Royal Custom Products, and Complete Supply. Appellant testified that, with the exception of Royal Custom Products, she did not include that business income on the 2009 federal income tax return. Indeed, appellant testified that the majority of the receipts from barrel business customers was not included on the 2009 federal income tax return.
Through depositions upon written questions, appellees obtained copies of checks written by certain customers to decedent's barrel business. An attorney representing appellees testified regarding a spreadsheet showing payments to the barrel business in the years 2008, 2009, and 2010. That spreadsheet shows that in 2009, the barrel business received $36,991.50 from Auto Wax Company, $23,581.00 from Royal Custom Products, $2,898.00 from Sovereign Industries, Inc., $24,009.00 from Quadrant Chemical Corp., $2,970.00 from Service Sales Company, $4,536.00 from Dal-Den Corporation, $2,645.00 from Orison Marketing, LLC, and $1,429.50 from Hawk Solutions. The spreadsheet indicates the barrel business received over $90,000 in income from these customers in 2009, while $20,336 was declared as business income on the 2009 federal tax return prepared and signed by appellant.
Evidence at the bench trial supported the probate court's finding that the 2009 tax return filed with the IRS on behalf of
The only evidence appellant raises contrary to the probate court's findings is appellant's testimony that she spoke with an individual at the IRS who told her the only business income the barrel business had to declare was what was reported to the IRS on 1099 forms. After reviewing the entire record, we conclude the probate court's findings that appellant failed to account for checks received by the barrel business on the 2009 tax return filed with the IRS on behalf of decedent, appellant disregarded the proper accounting for the barrel business income, and appellants actions expose decedent's estate to potential federal tax liability are not so against the great weight and preponderance of the evidence as to be manifestly unjust. See Cain, 709 S.W.2d at 176. Therefore, we conclude the evidence was factually sufficient to support these findings by the probate court.
The record contains legally and factually sufficient evidence to support the removal of appellant as administrator of decedent's estate.
We reverse the probate court's order granting appellees a trial amendment and awarding appellees attorney's fees, and we render judgment that appellees take nothing on their claim for attorney's fees. We affirm the probate court's order removing appellant as administrator of the estate of Prentiss Kirkland.
TEX. PROB.CODE ANN. § 245.
TEX. PROB.CODE ANN. § 31 (West 2003).
TEX. PROB.CODE ANN. § 222 (West Supp.2012).
TEX.R. CIV. P. 63.