in the Matter of the Guardianship Kathryn Houseworth Gibbs, as an Incapacitated Person

CourtCourt of Appeals of Texas
DecidedApril 3, 2008
Docket02-05-00143-CV
StatusPublished

This text of in the Matter of the Guardianship Kathryn Houseworth Gibbs, as an Incapacitated Person (in the Matter of the Guardianship Kathryn Houseworth Gibbs, as an Incapacitated Person) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
in the Matter of the Guardianship Kathryn Houseworth Gibbs, as an Incapacitated Person, (Tex. Ct. App. 2008).

Opinion

IN RE GUARDIANSHIP OF GIBBS

COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 2-05-143-CV

IN THE MATTER OF

THE GUARDIANSHIP OF

KATHRYN HOUSEWORTH GIBBS,

AS AN INCAPACITATED PERSON

------------

FROM PROBATE COURT OF DENTON COUNTY

OPINION ON REHEARING

We withdraw our opinion of October 5, 2006 and substitute the following.  We deny Appellee’s Motion for Rehearing.

I.  Introduction

Howard Kirk Gibbs, Candace Gibbs Watson, and Kenneth Vernon Gibbs (collectively, appellants) appeal from an adverse judgment for Kip H. Gibbs, as Next Friend for Kathryn Houseworth Gibbs and Co-Guardian of the Estate of Kathryn Houseworth Gibbs.  In ten issues, appellants contend that (1) the trial court, which is a statutory probate court, lacked subject matter jurisdiction over Kip’s claims, (2) the trial court committed harmful error by failing to timely file findings of fact and conclusions of law, (3)-(4) the trial court erred in holding appellants liable for tax penalties because that claim was never pleaded, (5)-(8) the evidence is legally and factually insufficient to support Kip’s claims for breach of fiduciary duty and restitution and to support the damages awards for those claims, (9) the trial court erred by removing appellants as trust beneficiaries, and (10) the court’s award of attorney’s fees is improper because it lacks a statutory or contractual basis.  We reverse the trial court’s judgment and render judgment dismissing the case.

II.  Background Facts and Procedural History

The Mary L. Houseworth Revocable Trust (Houseworth Trust) was established by Mary L. Houseworth on July 17, 1990.   The Houseworth Trust provided for monthly distributions to Mary’s daughter, Kathryn Houseworth Gibbs.  Upon Kathryn’s death, Kathryn’s four children, the appellants and appellee herein, were to be the final trust beneficiaries.  Mary Houseworth died in 1991, her will was probated, and the revocable trust became irrevocable.   The Kathryn Houseworth Gibbs Irrevocable Trust (Gibbs Trust) was also established in 1990.  The beneficiaries of the Gibbs Trust were Mary Houseworth, Kathryn Gibbs, and Kathryn’s four children.  The Gibbs Trust provided for distributions to any of the beneficiaries for health emergencies and provided for coordination of maintenance distributions to Kathryn for her living expenses.  As with the Houseworth Trust, Kathryn’s children were the ultimate trust beneficiaries.

The Gibbs Trust also provided that, if Kathryn and any three of her four children agreed in writing, additional trust funds could be removed from the Trust for Kathryn’s benefit.  In 1998, allegedly fearing the circumstances surrounding the impending Y2K scare, Kathryn and three of her four children—appellants—signed written authorizations to withdraw $1,015,000 from the Gibbs Trust.  Appellants used approximately $701,000 of the money to purchase gold coins.  They also purchased food and other items in preparation for Y2K.

Kip Gibbs was not consulted regarding the funds withdrawal.  Consequently, in September 2000, Kip filed suit as next friend of Kathryn against appellants in Denton County Probate Court.  In the suit, Kip asserted claims against appellants for restitution/money had and received and breach of fiduciary duties related to removal of the trust funds.  Kip asked that a constructive trust be declared over all of Kathryn’s property and assets under appellants’ control; asked the trial court to “terminat[e] . . . any right, power, or authority by any of the [appellants] over the Trust assets or the interference with the duly appointed and acting Trustee”; and sought punitive damages and attorney’s fees.

Thereafter, on May 7, 2001, Kip and his wife Sandra filed an application for a temporary guardianship over Kathryn’s estate.  That same day, the probate court issued an order approving the guardianship.  On May 15, 2001, the trial court entered an order extending the temporary guardianship until July 6, 2001. (footnote: 1)  On July 6, the court entered an order purporting to extend the temporary guardianship until August 3, 2001.

Meanwhile, on June 29, 2001, Kip filed an application to convert the temporary guardianship of Kathryn’s estate to a permanent guardianship.  Appellants never contested the application for a temporary guardianship; however, on July 13, 2001, they contested the application for conversion of the temporary guardianship into a permanent one.

On October 5, 2001, the trial court again issued an order purporting to extend the temporary guardianship of Kathryn’s estate “until further order of this court.”  Also in the October 5 order, the trial court “transferred as an ancillary action to this guardianship action” Kip’s restitution and breach of fiduciary duty claims against appellants.  On April 27, 2004, the trial court entered an order purporting to convert the temporary guardianship over Kathryn’s estate into a permanent guardianship.

On September 13, 2004, the trial court called the underlying suit to trial, but appellants did not attend.  The trial court rendered a final judgment against appellants on Kip’s restitution and breach of fiduciary duty claims and awarded Kip a total of $1,060,799.21 in actual and punitive damages and prejudgment interest.  The trial court also modified the trusts to remove appellants as trust beneficiaries.

III.  The Statutory Probate Court’s Jurisdiction

In their first issue, appellants assert that the trial court, a statutory probate court, had no subject matter jurisdiction over Kip’s claims against them for restitution and breach of fiduciary duty.  Appellants contend that the district court had exclusive jurisdiction over these claims and that the guardianship provided no basis for the trial court’s jurisdiction because it expired by operation of law on July 6, 2001.  Kip contends that the trial court had subject matter jurisdiction over his restitution and breach of fiduciary duty claims by virtue of former probate code sections 5(d) and 5A(c)– (d) and section 115.001(d) of the Texas Trust Code.

A.  Probate and Trust Codes

A statutory probate court may exercise only that jurisdiction accorded it by statute. (footnote: 2)  Former section 5(e) provides that “[a] statutory probate court has concurrent jurisdiction with the district court . . . in all actions involving an inter vivos trust . . . and in all actions involving a testamentary trust.” (footnote: 3)  Likewise, former section 5A(c) provides that “[a] statutory probate court has concurrent jurisdiction with the district court in all actions . . . (2)  involving an inter vivos trust; . . . and (4) involving a testamentary trust.” (footnote: 4)  Former section 5A(d) provides that “[a] statutory probate court may exercise the pendent and ancillary jurisdiction necessary to promote judicial efficiency and economy.” (footnote: 5)  

Because a statutory probate court’s jurisdiction over actions involving trusts is concurrent with that of the district court, (footnote: 6) the district court’s jurisdiction over actions involving trusts determines the extent of a statutory probate court’s jurisdiction over such actions.

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