In the Matter of the Estate of Edward R. Portillo v. the State of Texas

• Court: Court of Appeals of Texas
• Decided: April 15, 2024
• Docket: 08-23-00167-CV
• Status: Published

Opinion

COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS

IN THE MATTER OF THE ESTATE § No. 08-23-00167-CV

OF EDWARD R. PORTILLO § Appeal from the

Statutory Probate Court No. 2 DECEASED. § of El Paso County, Texas § (TC# 2018CPR00773) §

MEMORANDUM OPINION

This appeal arises from the dispute between the heirs of Edward R. Portillo over how his

estate should be divided. Edward was survived by his wife, Appellee Leandra Portillo, their

daughter, Rebecca Portillo, and his daughter from a previous marriage, Appellant Amanda Portillo.

Following years of litigation, Amanda and Leandra reached a mediated settlement agreement. But

before the final distribution of the estate, the parties disputed the meaning of a key term in the

settlement agreement.

While this case involves protracted litigation and numerous hearings, the appeal before us

boils down to one question: did the probate court change the agreement of the parties when it

interpreted the term “estate property” to exclude Leandra’s half of the community property. We

hold that it did not, and we affirm the judgment below. FACTUAL AND PROCEDURAL BACKGROUND

This case began as a suit by Leandra to probate Edward’s will. Because Leandra and

Amanda were both subscribing witnesses and devisees under the will, Leandra sought to probate

the will using the notary as the subscribing witness. See Tex. Estates Code Ann. § 254.002(c)

(setting out how a disinterested and credible person can corroborate a subscribing witness and

devisee). Leandra later filed an affidavit by the notary in which the notary attested that she

witnessed Edward, Amanda, and Leandra all sign the will.

But Amanda denied signing the will in the presence of the notary and contested the will,

asking the court to instead determine heirship and appoint an administrator. In a deposition, the

notary admitted that her affidavit was untrue and that the will had already been signed by Amanda

and Leandra when Edward brought it to her; the notary did not observe the subscribing witnesses

sign the will and the subscribing witnesses did not actually observe Edward sign the will. Amanda

moved to strike the notary’s affidavit and the probate court granted her request.

The probate court appointed Karen Colon as a third-party dependent administrator. Colon

filed an inventory of the property, approved and disapproved creditor’s claims, and filed

accountings. The administrator valued Edward’s estate at $463,953.10, which included half the

value of Edward and Leandra’s community property in the amount of $17,917.50. 1

After almost three years of litigation, the parties settled their dispute in mediation. They

first agreed who should receive certain property: Leandra was to receive Amanda’s interest in the

marital home, and five weapons of her choosing; Amanda was to receive a Trans Am, five specific

firearms, personal documents, and family heirlooms; Rebecca was to receive a Rolex, five

1 Community property is property “acquired by either spouse during marriage” except for property “acquired . . . by gift, devise, or descent” and “recovery for personal injuries . . . except any recovery for loss of earning capacity during marriage.” Tex. Fam. Code Ann. §§ 3.001, .002.

2 weapons of her choosing and her grandfather’s service uniform. The remainder of the estate

property was to be divided 35% to Amanda and 32.5% each to Leandra and Rebecca. As the

administration of the estate continued, the probate court approved three partial distributions to the

parties in accordance with the percentages in the settlement agreement.

After the mediation, but while the case was still pending, Amanda filed a suit against the

notary and her surety for fraud and breach of notary duties based on the notary’s untrue statements

in her affidavit. The surety filed third-party claims against Leandra and her attorneys. The notary

fraud case eventually settled, but before it did, Amanda filed a motion to disqualify Leandra’s

attorneys based on their alleged conflict of interest with their own client (Leandra) and their role

as fact witnesses to the fraud. The court denied the motion.

When approximately $65,000 was left to be distributed, the parties disagreed over whether

the entire amount was estate property that must be divided as specified by the settlement agreement

or whether half of the value of the community property in the estate must be given to Leandra

before the remainder was divided. The court entered orders finding that the “estate property” did

not include Leandra’s half of the community property.

Amanda filed a motion for new trial. She later supplemented it, attaching as an exhibit, an

email between her attorney and Leandra’s attorney discussing possible settlement options. The

probate court struck the supplemental motion because it attached inadmissible settlement

discussions between the attorneys. The court then denied Amanda’s motion for new trial.

This appeal followed in which Amanda raises five issues. Issues one, two, and three argue

that the trial court modified or re-wrote the terms of the settlement agreement. In issue four,

Amanda argues that the probate court erred striking her supplemental motion for new trial. In issue

five, Amanda challenges the probate court’s denial of the motion to disqualify Leandra’s attorneys.

3 INTERPRETATION OF THE SETTLEMENT AGREEMENT

Because Amanda’s first three issues all contest the interpretation of the settlement

agreement, we address them as one. The settlement agreement provided that, aside from awards

of specific property, Amanda would receive “35% of the estate property” and Leandra and Rebecca

would each receive 32.5% of “the estate property.” The meaning of term “estate property” is the

crux of this dispute. Amanda argues that it includes all community property and Leandra argues

that it does not include her one-half undivided interest in the community property. In other words,

under Leandra’s interpretation, half of the amount attributed to community property should be

removed before the remainder is divided. Under Amanda’s interpretation, it is not. 2

The trial court agreed with Leandra. Its order enforces the mediated settlement agreement

as follows:

1. In probate cases, the estate of the decedent only includes his or her property. The portion of the community estate that belongs to the surviving spouse is not part of the decedent’s estate.

2. Decedent’s surviving spouse will receive her one half (1/2) community property share of all community property assets and a thirty-two-and one-half percent (32.5%) share of Decedent’s estate assets.

3. The remaining assets of the Decedent’s estate shall be distributed thirty-five percent (35%) to AMANDA PORTILLO and a thirty-two and one-half percent (32.5%) to REBECCA PORTILLO, in accordance with the parties [sic] Mediated Settlement Agreement.

2 According to our record, the only community property was household furniture, a 2014 Harley Davidson, a 2008 Chevy Impala, and two 2012 Buick Lacrosses. The administrator’s inventory does not contain a value for the household furniture. The motorcycle and vehicles were all sold for a total of $18,700. Under Amanda’s interpretation, she is entitled to 35% of that amount, or $6,545. Under Leandra’s interpretation, half of that amount is her part of the community and only the remaining half would be divided among the heirs. Using that interpretation, Amanda would receive $3,272.50.

4 A settlement agreement is construed according to contract principles. Tex. Civ. Prac. &

Rem. Code Ann. § 154.071(a); Loya v. Loya, 526 S.W.3d 448, 451 (Tex. 2017); Bergenholtz v.

Eskenazi, 521 S.W.3d 397, 401 (Tex. App.—El Paso 2017, pet. denied). A court must give effect

to the parties’ intent, but that intent is determined by the words used. URI, Inc. v. Kleberg Cnty.,

543 S.W.3d 755, 763 (Tex. 2018). If the words of the agreement have a “certain and definite”

meaning, they are not ambiguous, and the court cannot consider parole evidence to interpret the

agreement. Milner v. Milner, 361 S.W.3d 615, 619 (Tex. 2012); Alicea v. Curie Bldg., L.L.C., 632

S.W.3d 142, 153 (Tex. App.—El Paso 2021, no pet.). We review decisions about whether a

contract is ambiguous and how to interpret an unambiguous contract de novo. URI, Inc., 543

S.W.3d at 763.

A. The meaning of “estate property” is unambiguous.

Interpretation of the settlement agreement in this case turns on the term “estate property”

and whether it has a definite and certain meaning. Although not defined in the settlement

agreement, the Texas Estates Code defines “estate” as “a decedent’s property.” Tex. Estates Code

Ann. § 22.012. Over a century of caselaw establishes that the decedent’s property does not include

the surviving spouse’s one-half interest in community property. See Carnes v. Meador, 533

S.W.2d 365, 368 (Tex. App.—Dallas 1975, writ ref’d n.r.e.) (surviving spouse “owned one-half

of the community property in her own right and not as heir.”); Aguirre v. Bosquez, No. 04-06-

00068-CV, 2006 WL 2871339, at *3 (Tex. App.—San Antonio Oct. 11, 2006, no pet.) (mem. op.)

(“Upon a spouse’s death, the surviving spouse does not take their own one-half interest in the

community estate as an heir; rather, the surviving spouse is the owner of the one-half interest of

the property due to the dissolution of the marriage.”); Kreis v. Kreis, 36 S.W.2d 821, 827

(Tex. App.—Amarillo 1931, writ dism’d w.o.j.) (same); Jones v. State, 5 S.W.2d 973, 975

5 (Tex. Comm’n App. 1928) (same); Slavin v. Greever, 209 S.W. 479, 485 (Tex. App.—Amarillo

1919, no writ) (same). This Court too has noted that only half the amount of community property

makes up a decedent’s estate. Wassmer v. Hopper, 463 S.W.3d 513, 517 (Tex. App.—El Paso

2014, no pet.). Any other rule would mean that a surviving spouse could be divested of community

property.

We hold that the term “estate property” in the settlement agreement is unambiguous and

means only Edward’s property, which is comprised of his separate property and his one-half

interest in the community property. Leandra remained the owner of an undivided one-half interest

in the community property.

B. Amanda’s arguments to the contrary are unavailing.

Amanda puts forward several arguments for interpreting the settlement agreement as

dividing all property, including the share of community property that Leandra owns. None,

however, address the heart of the issue: the interpretation of “estate property.” And all require us

to look past the unambiguous language of the agreement.

First, Amanda argues that the parties expressly “agree[d] to compromise and settle all

claims and controversies between them.” She says that Leandra knew that the “claims” that were

being settled included her claims for community property because Leandra had filed an

authenticated claim with the administrator. Leandra’s authenticated claim, however, was not for a

share of community property, as Amanda says; instead, it was a claim for reimbursement. Leandra

and Edward each owned a one-half separate property interest in the home. Leandra’s authenticated

claim alleged that community property funds were used to reduce the debt on separate property,

and that the community estate was therefore entitled to reimbursement. Tex. Fam. Code Ann.

§ 3.402. Leandra’s claim was that of a creditor, not as one seeking her community property share.

6 Leandra’s pre-mediation dispute about whether she was entitled to reimbursement for mortgage

payments was not a claim for property and is irrelevant to the interpretation of the unambiguous

term “estate property.” Consequently, the settlement agreement may have resolved the

reimbursement claim but did not affect Leandra’s continued ownership interest in the community

Amanda also contends that the probate court erred in interpreting the settlement agreement

based on attorney argument alone, without any evidence. But, it would have been error to consider

evidence outside of the four corners of an unambiguous agreement. When the terms of an

agreement are unambiguous, as “estate property” is here, courts must construe settlement

agreements as a matter of law without extraneous evidence. Coker v. Coker, 650 S.W.2d 391, 393

(Tex. 1983); Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520

(Tex. 1995).

Next, Amanda claims that the settlement agreement addresses community property

because Amanda agreed that Leandra could have her interest in the home. Yet the home was not

community property. 3 The fact that Amanda bargained away her one-quarter interest does not

change the unambiguous meaning of “estate property,” nor are we permitted to speculate about

why she did so. “The parties’ intent is governed by what they said in the [] contract, not by what

one side or the other alleges they intended to say but did not.” Gilbert Tex. Const., L.P. v.

Underwriters at Lloyd’s London, 327 S.W.3d 118, 127 (Tex. 2010).

Amanda argues that the inventory that she relied on in mediation showed that only two

vehicles were community property. But an annual accounting filed on February 2, 2021, more than

3 If passed by intestacy, Amanda would have received half of Edward’s one-half separate property interest (a 25% interest in the home), with Leandra retaining her one-half separate property interest and a one-third life estate. Tex. Estates Code Ann. § 201.002(b)(3).

7 a month before mediation, reflected changes to the inventory, specifically adding a motorcycle and

2008 Chevrolet Impala to the community property portion of the estate. The inventory and

accounting also show that the estate value of this property is half the total of the community

property value. So it could be equally said that at mediation, the inventory listed not only what

property was community property, but also that only one-half the amount was estate property.

Finally, Amanda argues that Leandra is estopped from claiming that a portion of the

remaining funds are not estate property because she already accepted three partial distributions.

“The [quasi-estoppel] doctrine applies when it would be unconscionable to allow a person to

maintain a position inconsistent with one to which he acquiesced, or from which he accepted a

benefit.” Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). But receiving

partial distributions is not inconsistent with the position that a portion of the remaining funds are

not subject to distribution as estate property. Nor has Amanda shown a benefit to Leandra from

the partial distribution that she would not have otherwise received. Had Leandra requested her

community property share earlier, her previous partial distributions would have been more not

less.

We overrule issues one, two, and three.

ATTORNEY EMAIL EXCHANGE STRUCK UNDER RULE OF EVIDENCE 408.

In her fourth issue, Amanda argues that the trial court erred in striking her supplemental

motion for new trial. The supplemental motion attached as an exhibit an email exchange between

the attorneys but otherwise makes the same arguments as the initial motion for new trial. In the

email, Leandra’s attorney suggests dividing the remaining funds pursuant to the intestacy rules

since the parties could not agree on the interpretation of the settlement agreement. Leandra moved

8 to strike the motion on the grounds that settlement discussions are inadmissible. The probate court

granted her motion.

Texas Rule of Evidence 408 prohibits the use of not just settlement offers, but also “conduct

or statements made during compromise negotiation” to “prove or disprove the validity or amount

of a disputed claim.” Tex. R. Evid. 408(a)(2). Amanda contends that the email was admissible

because it is used for a permissible purpose, namely, to show Leandra’s attorney’s bias. Id. Rule

408 provides that settlement discussions are permissible for other purposes, “such as proving a

party’ or witness’s bias, prejudice, or interest. . . .” Tex. R. Evid. 408 (emphasis added). But

Amanda does not explain how an attorney’s bias has any relevance whatsoever.

The material issue in this case is the meaning of the term “estate property” in the settlement

agreement. And, as we have held, that term is unambiguous. Because neither the probate court nor

this Court can consider extraneous evidence to construe an unambiguous agreement, the attorney’s

proposal to resolve the dispute is not controlling on this issue and would not have affected the

outcome of this case. We overrule Appellant’s issue 4.

DENIAL OF MOTION TO DISQUALIFY

Finally, Amanda argues that the probate court erred in denying her motion to disqualify

Leandra’s attorneys. Leandra and her attorneys were named as third-party defendants in the notary

fraud lawsuit. Amanda claims Leandra’s attorneys should have been disqualified for having a

conflict of interest with their own client—Leandra—and because they were fact witnesses to the

fraud.

One party can raise the issue of an opposing counsel’s conflict of interest with the opposing

party’s client “[w]here the conflict is such as clearly to call in question the fair or efficient

administration of justice. . . .” Tex. Disciplinary R. Prof’l Conduct 1.06, cmt. 17. “Such an

9 objection should be viewed with great caution, however, for it can be misused as a technique of

harassment.” Id.; In re Robinson, 90 S.W.3d 921, 925 (Tex. App.—San Antonio 2002, no pet.). In

addition to showing a violation of the rules, the movant must also show that it will suffer prejudice

if the attorney is not disqualified. In re Murrin Bros. 1885, Ltd., 603 S.W.3d 53, 57 (Tex. 2019).

Even if we assume that Leandra’ attorneys had a conflict of interest with Leandra or that

they may have been fact witnesses in the fraud suit against the notary, Amanda fails to demonstrate

reversible error. The suit against the notary was filed on October 4, 2022, more than a year and a

half after Leandra and Amanda mediated and entered into a settlement agreement. It was settled

and dismissed before the hearing on the motion to disqualify. Amanda fails to show how any

disqualification of Leandra’s attorneys would void the settlement agreement that she signed. Even

if there was error in denying the motion to disqualify (an issue which we do not reach), it would

not amount to error that “probably caused the rendition of an improper judgment” and so was not

reversible. Tex. R. App. P. 44.1 (a)(1).

We overrule issue five.

CONCLUSION

“Estate property” has a clear, unambiguous meaning in Texas law and does not include a

surviving spouse’s half interest in community property. The probate court properly interpreted the

parties’ settlement agreement to divide the estate after Leandra’s portion of the community

property is removed. Neither the attorneys’ emails discussing settlement nor their role as

defendants in the dismissed fraud suit affect the interpretation of the unambiguous settlement

agreement. We affirm the probate court’s order.

10 JEFF ALLEY, Chief Justice

April 15, 2024

Before Alley, C.J., Palafox and Soto, JJ.