Inwood National Bank and Inwood Bancshares, Inc. v. D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust

CourtTexas Supreme Court
DecidedJanuary 31, 2025
Docket24-0055
StatusPublished

This text of Inwood National Bank and Inwood Bancshares, Inc. v. D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust (Inwood National Bank and Inwood Bancshares, Inc. v. D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Inwood National Bank and Inwood Bancshares, Inc. v. D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust, (Tex. 2025).

Opinion

Supreme Court of Texas ══════════ No. 24-0055 ══════════

Inwood National Bank and Inwood Bancshares, Inc., Petitioners,

v.

D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust, Respondent

═══════════════════════════════════════ On Petition for Review from the Court of Appeals for the Fifth District of Texas ═══════════════════════════════════════

PER CURIAM

A trust agreement provided that the grantor intended to transfer to the trust her shares of a bank’s stock “[u]pon approval by” the bank. But before the bank gave that approval, the grantor changed her mind and decided against the transfer. The trust’s beneficiary, who is the grantor’s former husband, sued the bank for tortious interference with a contract—the trust agreement—and other claims. The trial court granted summary judgment for the bank, but the court of appeals reversed as to the tortious interference claim. ___ S.W.3d ___, 2023 WL 6547936, at *7-8 (Tex. App.—Dallas Oct. 9, 2023). We conclude that the tortious interference claim fails as a matter of law because the trust agreement created no contractual right to the shares in the beneficiary’s favor with which the bank could interfere. Accordingly, we reverse that part of the court of appeals’ judgment and reinstate the trial court’s take-nothing judgment. I. Background During her marriage to Kyle Fagin, Christy Fagin owned over two million shares of Inwood Bancshares, Inc. common stock as her separate property. In 2015, the couple discussed creating new entities to hold Christy’s shares, ostensibly for tax benefits and protection from creditors. Inwood National Bank (the issuer of the shares) informed Kyle that Inwood “require[d] prior notice and review of any anticipated change in ownership or transfer of stock.” The terms of Inwood’s shareholder agreement, which it required all shareholders (including Christy) to sign, bear this out. That agreement requires Inwood’s approval before any share transfer and declares that “ANY ATTEMPTED TRANSFER OF SHARES NOT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT SHALL BE NULL AND VOID.” Kyle retained an attorney, and Kyle and Christy ultimately decided to put Christy’s Inwood shares into two trusts—one that named Kyle as sole beneficiary (the Kyle Trust) and one that named Christy as sole beneficiary. The Kyle Trust was governed by a trust agreement titled “D. Kyle Fagin Qualified Subchapter S Trust” (the KTA). The KTA designated Christy and Kyle as trustees of the Kyle Trust and named Kyle as the trust’s sole beneficiary. It contemplated two

2 transfers into the trust’s corpus. The KTA provides that Christy, as grantor, “hereby transfers and delivers to the Trustees the property described in Schedule A attached hereto . . . upon the express terms and conditions . . . hereinafter set forth.” Schedule A, in turn, states: $100.00 cash is the initial property transferred by the Grantor. Upon approval by Inwood Bancshares, Inc., the Grantor intends to transfer 581,658.21 Shares of common stock of Inwood Bancshares, Inc., a Texas corporation[.] The KTA also contains the following irrevocability clause: This Trust shall be irrevocable. The Grantor shall have no right or power, in whatever capacity and whether alone or in conjunction with others, to alter, amend, revoke, or terminate the Trust, or any of the terms of this Trust Agreement, in whole or in part, or to designate the persons who shall possess or enjoy the trust property or the income therefrom. By this instrument the Grantor intends to and does hereby relinquish absolutely and forever all possession and enjoyment of the trust property. Kyle and Christy both signed the KTA in October 2015. Several weeks later, Inwood informed Kyle’s attorney of the steps required to transfer the Inwood shares. Christy and Kyle would need to sign a “Shareholder Consent to Subchapter S Election” and a “Shareholder Subscription Agreement.” In addition, Christy would need to send Inwood her existing stock certificate, indorsed 1 for transfer, along with “her request for transfer and her transfer instructions.”

1 Inwood’s email used the word “endorsed,” which is an alternate spelling for “indorsed.” See Indorse, BLACK’S LAW DICTIONARY (12th ed. 2024). For this opinion, we use the spelling adopted in the Business and Commerce Code.

3 Inwood advised that, once these steps were completed, it would “(i) sign and date the documents requiring its signature, (ii) cancel the endorsed Certificate, and (iii) issue the new Certificate[] in the name of [the Kyle Trust].” Christy and Kyle signed the two documents as requested, but Christy could not find her stock certificate. She therefore had to sign and notarize an “Affidavit of Facts Regarding Lost Share Certificates,” which was delivered to Inwood in February 2016. Inwood then issued a replacement stock certificate in Christy’s name only. Shortly thereafter, Inwood’s attorney informed Kyle’s attorney that he would “complete the transfer[] next week.” But Inwood never completed the transfer. According to Christy, she decided to revoke her consent to the proposed transfer in March 2016 after realizing that transferring her Inwood shares into the Kyle Trust would make those shares Kyle’s separate property by gift, which she could never get back. Christy did not deliver her replacement stock certificate to Inwood. Instead, she asked Inwood not to proceed with the transfer, and Inwood did not countersign the agreement she and Kyle had signed. II. Procedural History Kyle, individually and as trustee and beneficiary of the Kyle Trust, sued Inwood. Kyle alleged that Christy “irrevocably granted” the Inwood shares to the Kyle Trust when he and Christy signed the KTA, and he sought a declaration that the Kyle Trust owns the Inwood shares. Kyle later added a claim for tortious interference, alleging that Inwood “intentionally interfered with the [KTA]” by convincing Christy to

4 “revoke her transfer” of the Inwood shares to the Kyle Trust. Christy intervened, contesting Kyle’s claim of ownership and asserting that the Inwood shares remain her separate property. After Christy intervened, Kyle amended his petition to assert several claims against Christy. Kyle moved for traditional summary judgment on his breach of contract and declaratory judgment claims against Inwood and Christy, arguing that the evidence conclusively established that he owned the shares and Inwood failed to transfer them to the Kyle Trust. Kyle described the KTA as “an enforceable and irrevocable agreement to transfer” the Inwood shares to the Kyle Trust, and he asserted that Christy “irrevocably gifted and transferred” those shares to him when she signed the KTA in October 2015. Inwood moved for traditional and no-evidence summary judgment on all Kyle’s claims. As relevant here, Inwood argued that the KTA did not transfer ownership of the Inwood shares to the Kyle Trust because, when the KTA was executed, “there was absolutely no intention by [Kyle or Christy] to transfer [the Inwood shares] at that time. Schedule A expressly states that on the date of execution, the parties only agreed that there would be a stock transfer at some future date . . . .” Inwood contended that the KTA’s terms required Inwood’s “approval” to transfer the shares, which established that such approval had not been given when the KTA was signed. With respect to Kyle’s tortious interference claim, Inwood argued that the information Christy allegedly received from Inwood—that a transfer to the Kyle Trust would constitute an irrevocable gift of the shares to Kyle—could not give rise to a tortious interference claim

5 because it is “truthful information.” The trial court granted Inwood’s summary judgment motion (as well as Christy’s 2) without specifying the grounds and ordered that Kyle take nothing on his claims.

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Inwood National Bank and Inwood Bancshares, Inc. v. D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust, Counsel Stack Legal Research, https://law.counselstack.com/opinion/inwood-national-bank-and-inwood-bancshares-inc-v-d-kyle-fagin-tex-2025.