Sandra Garza Davis F/K/A Sandra C. Saks and Landen Saks v. Lauren Saks Merriman and Marcus P. Rogers, Interim Trustee

• Court: Court of Appeals of Texas
• Decided: March 16, 2015
• Docket: 04-13-00518-CV
• Status: Published

Opinion

ACCEPTED 04-13-00875-cv FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 3/16/2015 1:17:57 PM KEITH HOTTLE CLERK

04-13-00518-CV

FILED IN 4th COURT OF APPEALS IN THE COURT OF APPEALS FOR SAN ANTONIO, TEXAS THE FOURTH DISTRICT OF TEXAS 03/16/2015 1:17:57 PM SITTING AT SAN ANTONIO KEITH E. HOTTLE Clerk

SANDRA GARZA DAVIS f/k/a SANDRA C. SAKS and LANDEN SAKS, Appellants, v.

LAUREN SAKS MERRIMAN and MARCUS P. ROGERS, Interim Trustee, Appellees. __________________________________________________________________

04-13-00875-CV

SANDRA GARZA DAVIS f/k/a SANDRA C. SAKS, LEE NICK MCFADIN, III and LANDEN SAKS, Appellants, v.

LAUREN SAKS MERRIMAN and MARCUS P. ROGERS, Interim Trustee, Appellees.

On appeal from Probate Court No. 1, Bexar County, Texas Honorable Polly Jackson Spencer, presiding

APPELLANTS' MOTION FOR EN BANC RECONSIDERATION

1 TO THE HONORABLE JUSTICES OF THE FOURTH COURT OF APPEALS:

Now come, Sandra C. Saks (“Sandy”), Lee Nick McFadin, III ("McFadin")

and Landen Saks (“Landen”) and file this motion for en banc reconsideration, and

they would show:

BACKGROUND

On January 2, 1991, Sandy Saks (“Sandy”) acting in her capacity as settlor

created the Saks Children Family Trust a/k/a ATFL&L a/k/a A Trust for Lauren &

Landen (“ATFL&L”) and appointed her sister Diane Flores (“Diana”) Trustee of

the ATFL&L for the benefit of her children including daughters Gloria Lauren

Nicole Saks (“Lauren”), Margaret Landen Corina Saks (“Landen”), and any other

children later born to or legally adopted through court proceedings by Sandra

Saks. (Appendix Tab 4)

Twenty years later, on August 17, 2011, Lauren sued Sandy and Diana in

Cause No. 2011-PC-3466 alleging mismanagement of the Trust and other claims

and seeking to remove Diana as Trustee. (CR pages 5-13) Landen and McFadin

were not parties to Lauren's lawsuit. Although ATFL&L was an irrevocable trust,

it provided for termination by the trustee. A true and correct copy of the Trust

Agreement is contained in the Record. (CR pages 193-233) Four months later,

ATFL&L was terminated according to its terms (CR page 216 ¶ 4.5), and title to 2 the property interests then-owned was transferred to the beneficiaries on

December 21, 2011. A true and correct copy of the Notice of Termination is

contained in the Record. (CR pages 198-199) These conveyances including

recorded deeds and assignments were not set aside or voided.

In construing the provisions of a trust, the settlor's intent is to be ascertained

by looking to the provisions of the instrument as a whole, as set forth within the

four corners of the instrument. Perfect Union Lodge No. 10 v. Interfirst Bank of

San Antonio, 748 S.W.2d 218, 220 (Tex. 1988) (citing Stewart v. Selder, 473

S.W.2d 3, 7 (Tex. 1971); Sellers v. Powers, 426 S.W.2d 533, 536 (Tex. 1968)).

Courts interpret trust instruments the same way as wills, contracts, and other legal

documents. Alpert v. Riley, 274 S.W.3d 277, 286 (Tex.App.-Houston [1 Dist.]

2008), citing Lesikar v. Moon, 237 S.W.3d 361, 366 (Tex.App.-Houston [14th

Dist.] 2007, pet. denied). The meaning of the trust instrument is a question of law

when no ambiguity exists. Nowlin v. Frost Nat'l Bank, 908 S.W.2d 283, 286

(Tex.App.-Houston [1st Dist.] 1995, no writ). If the court can give a definite legal

meaning or interpretation to an instrument's words, it is unambiguous, and the

court may construe the instrument as a matter of law. Coker v. Coker, 650 S.W.2d

391, 393 (Tex.1983). If the language is uncertain or reasonably susceptible to

more than one meaning, however, it is ambiguous, and its interpretation presents a 3 fact issue precluding summary judgment. Id. At 394.

Landen and Sandy submit that ATFL&L language was unambiguous. The

ATFL&L authorized the Trustee to terminate ATFL&L if the Trustee in her sole

discretion determined that continuation of ATFL&L was contrary to the best

interests of the beneficiaries because the value of ATFL&L's assets were at such a

level, in the judgment of the Trustee, to make continued administration financially

burdensome and uneconomical. Upon such determination, ATFL&L authorized

the Trustee to terminate ATFL&L pursuant to ¶ 4.5 of the trust agreement and

mandated that the Trustee shall distribute ATFL&L assets to the income

beneficiaries. Landen did not contest the termination of ATFL&L, and she agrees

with the decision of the Trustee that it was in the best interests of the beneficiaries

to terminate ATFL&L before it incurred any liability to pay hundreds of thousands

of dollars of legal fees due to pending litigation.

A few months after ATFL&L was terminated, the lawsuit filed by Lauren

was resolved by a mediated settlement agreement (“MSA”) on April 2, 2012. (CR

pages 16-20) The parties to the MSA were Lauren, Sandy and Diana. (CR page

16) Although Landen was not a party to the MSA, her approval was signed by

Lauren's attorney A. Chris Heinrichs under apparent authority if a power of

attorney, prepared by Heinrichs and executed by Landen. Landen disputed her 4 approval or agreement to the MSA, and revoked her agreement. (CR pages 23-29)

Nevertheless, the MSA did not require Landen to convey any of her property that

had been transferred to her, when ATFL&L was terminated.

MEDIATED SETTLEMENT AGREEMENT

The MSA was approved by an Order of the trial court signed on May 8,

2012. (CR pages 21-22) Landen and Sandy submit that the Order approving the

MSA resolved all issues among the parties pursuant to the terms of the MSA

because the MSA expressly provided that all future disputes among the parties

would be submitted to arbitration pursuant the USA&M Rules of Arbitration.

Therefore, Appellants submit that the final Order approving the MSA was a final

appealable order in a probate case because it resolved all issues among the parties

and referred future disputes, if any, arbitration pursuant to the jurisdiction of the

USA&M. Distinguish Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192-93 (Tex.

2001) (“We consider only cases in which one final and appealable judgment can

be rendered and not cases, like some probate and receivership proceedings, in

which multiple judgments final for purposes of appeal can be rendered on certain

discrete issues.”).

The final Order approving the MSA did not contain any finding that: (1)

ATFL&L had not been properly terminated or that ATFL&L even existed at the 5 time the MSA was signed, (2) Landen had any obligation to convey her property

pursuant to the MSA, or (3) that the probate court had any jurisdiction to resolve

any dispute related to the MSA. Therefore, even if the MSA created an implied

trust, Landen submits that she had no obligation to convey her property to any

trust.

Where a settlement agreement indicates that an issue was not determined,

the court's judgment based upon the settlement agreement cannot include an

adjudication of that issue. In re Kimberly Calderon, 88 S.W.3d 395 (Tex.App. —

Tyler 2002), citing Avila v. St. Luke's Lutheran Hospital, 948 S.W.2d 841, 847

(Tex.App.San Antonio 1997, writ denied).

Because the trial court case was settled, the court lacked subject matter

jurisdiction as to ancillary claims related to Landen's property including the Order

on September 5, 2012 compelling attendance at mediation and arbitration.

Jacquelyn Goodman, et al., v. the Summit at West Rim, Ltd., et al., 952 S.W.2d 930

(Tex. App. 1997). In this case, enforcement of the MSA in the district courts (or

the probate court) was precluded by agreement of the parties that enforcement

would be by arbitration pursuant to the USA&M Rules of Arbitration.

PANEL OPINION

However, the panel opinion stated at page 6 of the Memorandum Opinion 6 that the MSA and arbitration award were premised on the notion that ATFL&L

was not terminated, and even if ATFL&L was terminated, the probate court would

not have been deprived of jurisdiction. Nevertheless, neither the MSA nor the

order of approval made any express finding that ATFL&L was not terminated, and

even if there was an implied trust, the MSA deprived the probate court of

jurisdiction to resolve any disputes among the parties, when it referred all matters

to arbitration pursuant to the USA&M.

The panel opinion also stated at page 6 of the Memorandum Opinion that

even if ATFL&L was terminated the probate court would have retained subject

matter jurisdiction. However, the MSA expressly removed the jurisdiction from

the probate court, and it required the parties to file a petition pursuant to the

USA&M if there was any dispute among them related to the MSA. Distinguish

Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192-93 (Tex. 2001).

UNITED STATES ARBITRATION & MEDIATION

The MSA provided at ¶7 that if one or more disputes arose, the parties

agreed that the dispute would be referred to arbitration in accordance with the

applicable USA&M. According to the USA&M rules “The parties to a dispute

shall be deemed to have made these Consolidated Arbitration Rules a part of their

arbitration agreement and shall be legally bound to comply with these Rules 7 whenever they have provided for arbitration by United States Arbitration &

Mediation Midwest, Inc. (hereafter “USA&M”). These Rules and any

amendments or modifications thereof shall apply in the form existing at the time

arbitration is initiated, and shall be considered in conjunction with, and not in lieu

of, any applicable statutory arbitration provisions.” …

“3. Initiating Arbitration With an Arbitration Agreement”

a. “A party wishing to initiate arbitration pursuant to an arbitration agreement (hereafter the “Claimant”) must file an original of the Claim with the USA&M, together with the appropriate filing fee required by the then prevailing USA&M Arbitration Fee Schedule. The Claim must include a description of the dispute, the specific relief sought, the address, telephone number, fax number, and e-mail address of the Claimant or representative, and a copy of all supporting documents, including the underlying arbitration agreement. Parties may stipulate to the use of USA&M and its Arbitration Rules even if other arbitration services or rules are referenced in their contract.”

b. “USA&M will confirm receipt of the Claim to the Claimant after assigning a case number to the Claim. The claimant must then serve notice and a copy of the Claim, as required by contract and/or these Rules, to the other party(ies) (hereafter “Respondent”) USA&M is not responsible for providing legal notice of a claim to the parties involved in arbitration.”

(CR pages 202-209)

However, instead of referring the disputed issues for arbitration in

accordance with the applicable USA&M rules, Lauren invoked the trial court's

jurisdiction. Even if the trial court had jurisdiction to issue an order compelling

8 the parties to attend mediation and arbitration, it did not confer jurisdiction to the

USA&M. Appellants submit that the proper procedure would have been to file a

petition in accordance with the applicable USA&M Rules of Arbitration. Such a

procedure would have provided due process pursuant to the MSA and the

applicable USA&M Rules. Therefore, Appellants submit that the void Order

Compelling Attendance at Mediation and Arbitration did not confer jurisdiction to

the USA&M. The Order was signed on September 5, 2012 and filed on September

10, 2012. The MSA did not authorize continuing judicial jurisdiction, but

mandated extra-judicial jurisdiction pursuant to its terms and the applicable

USA&M Rules of Arbitration.

The panel opinion cites S & A Rest. Corp. v. Leal, 892 S.W.2d 855, 858

(Tex. 1995) for the proposition that “[M]ere approval of a settlement agreement

does not constitute rendition of a judgment.” However, this case is distinguished

from S & A Rest. Corp., which involved an oral approval of a settlement

agreement, and there is no indication that the settlement agreement provided for

arbitration as the exclusive remedy to resolve any future disputes among the

parties related to the MSA. Appellants submit that the trial court signed an order

approving the MSA, which provided for arbitration as the exclusive remedy to

resolve any future disputes among the parties related to the MSA. Thus, the order 9 approving the MSA resolved all claims and parties before the probate court, and it

had the effect of a final judgment pursuant to the terms of the MSA, which

expressly stated that it was final and irrevocable.

Appellants request the Court to determine whether the trial court's Order

compelling attendance at mediation and arbitration was void due to lack of

jurisdiction. Alternatively, if the Court finds that the trial court had jurisdiction,

Appellants request the Court to determine whether the arbitration was conducted

without due process pursuant to the MSA and the applicable United States

Arbitration and Mediation Rules of Arbitration.

JURISDICTION OVER APPELLANTS' PROPERTY

Landen submits that the trial court lacked subject matter jurisdiction as to

her interests in properties, which were conveyed or transferred to her at the time

ATFL&L was terminated, when it signed the Order on September 5, 2012

compelling attendance at mediation and arbitration. Landen was not a party to any

lawsuit, and there was no term of the MSA that required her to transfer or convey

any interest in property. Therefore, the trial court lacked jurisdiction to order her

to do anything including attend mediation or arbitration. Furthermore, the

arbitrator could not order Landen to convey her property pursuant to the MSA,

because Landen had no obligation to convey her property pursuant to the MSA. 10 Sandy respectfully submits that the trial court lacked subject matter

jurisdiction as to the interests in properties, which she conveyed or transferred to

McFadin after ATFL&L was terminated, when it signed the Order on September

5, 2012 compelling attendance at mediation and arbitration. Although Sandy

agreed to the MSA, which required her to sign deeds and other conveyance

documents that were to be prepared within two weeks, the conveyance documents

were not timely presented to her, and she did not sign them. Instead, after she

discovered that Landen's purported agreement had been procured by deception by

Lauren's attorneys, she conveyed her property to McFadin. Therefore, the trial

court lacked jurisdiction to order Sandy to convey property because she no longer

owned the property. Furthermore, the arbitrator could not order Sandy to convey

her property pursuant to the MSA, because she had already conveyed her property

to McFadin, and he was not a party to the arbitration.

McFadin respectfully submits that the trial court lacked subject matter

jurisdiction as to his interests in properties, which were conveyed or transferred to

him by Sandy after ATFL&L was terminated, when it signed the Order on

September 5, 2012 compelling attendance at mediation and arbitration. McFadin

was not a party to any lawsuit, and there was no term of the MSA that required

him to transfer or convey any interest in property. Therefore, the trial court lacked 11 jurisdiction to order him to do anything including attend mediation or arbitration.

Furthermore, the arbitrator could not order McFadin to convey his property

pursuant to the MSA, because there was no agreement that McFadin would convey

property.

Appellants submit that the arbitration award ordering Sandy and Landen to

signed the deeds and conveyance documents attached thereto did not transfer title

or ownership of any property to ATFL&L because the conveyance documents (1)

contained false and misleading statements such that Sandy and Landen could not

lawfully sign them, and (2) were not executed or recorded. For the same reasons,

neither the Judgment affirming the arbitration award and Order in aid of

enforcement did not transfer title or ownership of any property to ATFL&L.

The MSA provided for enforcement pursuant to the United States

Arbitration and Mediation (“USA&M”) Rules of Arbitration, not further action in

the trial court. Therefore, Appellants submit that the trial court's order approving

the MSA disposed of all claims and parties because the MSA expressly stated that

it resolved all issues, and any further disputes arising from the MSA would be

arbitrated. The trial court's order compelling the parties to attend further

mediation and arbitration did not establish jurisdiction for the purpose of

arbitration pursuant to the USA&M. Nevertheless, an arbitration hearing was 12 conducted due process and without Appellants' attendance or participation on

October 18, 2012 pursuant to the trial court's order, but not according to a petition

filed according to the USA&M Rules. Therefore, Landen and McFadin submit

that the arbitrator lacked jurisdiction over them or their property, and Sandy no

longer owned any property that could be the subject of arbitration.

Landen and McFadin respectfully submit that even if the trial court had

jurisdiction to order Lauren, Diana and Sandy to attend mediation and arbitration,

it did not have jurisdiction over Landen and McFadin or their property.

Furthermore, no court order conferred jurisdiction on the arbitrator, who could

only obtain jurisdiction pursuant to a petition filed under the USA&M.

Consequently, the arbitration pursuant to a court order but not pursuant to the

USA&M was void, and the arbitrator's award and the judgment approving the

arbitrator's award were also void.

CONCLUSION AND PRAYER

WHEREFORE, Sandy, McFadin and Landen respectfully request the Court

of Appeals to grant their motion for reconsideration en banc. Upon

reconsideration, Appellants request the Court to reverse the trial court's Judgment

affirming the arbitration award. Sandy, McFadin and Landen also request such

further relief to which they may be justly entitled. 13 Respectfully submitted,

/s/ Philip M. Ross Philip M. Ross State Bar No. 17304200 1006 Holbrook Road San Antonio, Texas 78218 Phone: 210/326-2100 Email: ross_law@hotmail.com ATTORNEY FOR APPELLANTS SANDY SAKS, LEE NICK MCFADIN, III AND LANDEN SAKS

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document has been e-filed and served on March 16, 2015 by email pursuant to agreement to Susan A. Kidwell, and Royal B. Lea, III.

/s/ Philip M. Ross Philip M. Ross