William J. Mitchell, Jr. v. Conrad Mitchell, Individually and as Independent of the Estate of E. L. Mitchell

445 S.W.3d 790, 2014 Tex. App. LEXIS 9727, 2014 WL 4336304
CourtCourt of Appeals of Texas
DecidedAugust 29, 2014
Docket01-13-00306-CV
StatusPublished
Cited by3 cases

This text of 445 S.W.3d 790 (William J. Mitchell, Jr. v. Conrad Mitchell, Individually and as Independent of the Estate of E. L. Mitchell) 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
William J. Mitchell, Jr. v. Conrad Mitchell, Individually and as Independent of the Estate of E. L. Mitchell, 445 S.W.3d 790, 2014 Tex. App. LEXIS 9727, 2014 WL 4336304 (Tex. Ct. App. 2014).

Opinion

OPINION

JIM SHARP, Justice.

William J. Mitchell, Jr. filed suit against his brother, Conrad Mitchell, individually and as independent executor of their mother’s estate, for numerous causes of action relating to Conrad’s handling of the estate, as well as a claim for breach of contract. 1 In three issues, William, Jr. is appealing both the trial court’s denial of his motion for partial summary judgment and the trial court’s granting of Conrad’s motion for summary judgment. We reverse the trial court’s grant of summary judgment in Conrad’s favor, and we overrule William, Jr.’s issues pertaining to the denial of his motion for partial summary judgment on his breach of fiduciary duty claim against Conrad. We remand to the trial court for further proceedings.

Background

William, Jr., Conrad, and Robert Mitchell are the only children of William Mitchell, Sr. and Edna L. Mitchell. William, Sr. died on July 2, 1998; Edna died on May 15, 2006. William, Jr., Conrad and Robert are each one-third residual beneficiaries under Edna’s will. Conrad, who also served as Edna’s attorney-in-fact since 1995, is the executor of Edna’s estate.

This appeal is the most recent round in a costly legal battle among these three brothers that has resulted in multiple legal proceedings over the last decade-and-a-half in various state and federal courts. In the instant suit, William, Jr. is suing his brother Conrad, both individually and as executor of Edna’s estate, for multiple causes of actions stemming from Conrad’s alleged failure to account for or collect rental income allegedly owed to Edna’s estate, Conrad’s breach of a December 2004 letter agreement, in which he agreed to assume William, Jr.’s liability to Edna’s estate for his promissory note, and Conrad’s failure to collect on the three promissory notes payable to Edna, including William, Jr.’s.

A. The Bermuda Properties

On February 18, 1992, Edna and William, Sr. executed deeds conveying ownership of two rental properties in Bermuda (the “Bermuda Properties”) to each of their sons in equal shares. As part of the transaction, William, Jr., Conrad, and Robert leased the Bermuda Properties back to their parents for a period of time not to exceed more than fifteen years (the “Lease Agreement”). 2 Under the terms of the Lease Agreement, Edna and William, Sr. agreed to lease the properties for $600 per year and to pay all “maintenance, taxes, insurance, etc.” owing on the Bermuda Properties. In return, Edna and William, Sr. were entitled to receive any rental income generated by the Bermuda Properties during the leasehold. Edna and William, Sr. also expressly reserved the right to terminate the Lease Agreement at any time during the life of the contract.

William, Jr. contends that the Bermuda Properties generated an average of $141,928.88 in rental income per year be *793 tween 2001 and 2007, and that Conrad faded to account for or collect any rental income belonging to Edna’s estate pursuant to the Lease Agreement. Conrad, however, contends that the Lease Agreement “never went into effect” and that neither William, Sr. nor Edna received any rental income from the Bermuda Properties from 1992 until their respective deaths in 1993 and 2006. Conrad further contends that any rental income generated by the Bermuda Properties was disbursed to all three brothers in equal shares until November 30, 2000 — the date William, Jr. signed the Stipulation, selling his interest in the Bermuda Properties, “including, without limitation, any claim to the income, profits or other thing of value derived from operations of the property.”

B. Mitchell Family Enterprises, Ltd.

Edna also held an ownership interest in a hotel property in New Jersey through a closely held New Jersey corporation named Slumber Inc. On July 31, 2002, a family limited partnership named Mitchell Family Enterprises, Ltd. (the “Family Partnership”) was organized in which Edna and her three sons were limited partners. Certain assets, including Edna’s ownership interest in Slumber Inc., were transferred to the Family Partnership.

On December 5, 2003, Edna transferred her interest in the Family Partnership to William, Jr., Conrad, and Robert in equal shares. Each son executed a promissory note in favor of Edna in the principal amount of $1,143,000, with a maturity date of December 5, 2008. Interest on each note accrued at a rate of 3.5% per annum and became due on the last day of December of each year until maturity. The notes further provided that interest would accrue at a rate of 10% per annum on all unpaid sums following maturity. According to the unobjected-to summary judgment evidence, the transfer of Edna’s ownership interest in Slumber Inc. to her sons by means of the Family Partnership was part of a “sophisticated estate plan,” under the terms of which each son was to receive his own promissory note back after Edna’s death as part of the equitable distribution of her estate, as set forth in her will.

C. Prior Litigation and Relevant Settlement Agreements

Beginning in the late 1990’s, William, Jr. filed multiple lawsuits in New Jersey against Conrad, Edna, Robert, and others regarding the handling of the family businesses, including Conrad’s alleged diversion of funds from Slumber Inc. to another family business, constructive termination of William, Jr.’s employment with Slumber Inc. and Conrad’s failure to account for and release payments of rental income generated by the Bermuda Properties. Those suits eventually culminated in a Stipulation of Settlement entered in the Superior Court of New Jersey Chancery Division, Bergen County, on November 30, 2000 (the “Stipulation”), which, according to William, Jr., “ostensibly resolved the many ... issues of ownership, governance, control and operation of the family businesses.”

1. New Jersey Stipulation of Settlement

The Stipulation, which was entered into on November 30, 2000, states in pertinent part that “[i]t is the intention of the signatories to this agreement [including, inter alia, William, Jr., Conrad, Robert, and Edna] to reach a global settlement on all issues affecting them, including those claims that have been brought in other jurisdictions and those that have been raised as of this time.” Under the terms of the Stipulation, Conrad and Robert agreed to purchase William, Jr.’s one-third interest in the Bermuda Properties for *794 $775,000. “This payment shall be in consideration for all William [Jr.]’s right[,] title[,] and interest in the property, including, without limitation, any claim to the income, profits or other thing of value derived from operations of the property.”

2. New Lawsuits

The Stipulation, however, did not end the litigation, and the following year, William, Jr. filed suit in Brazoria County, Texas, seeking appointment as Edna’s guardian and termination of the general power of attorney that Edna had previously executed appointing Conrad as her agent. William, Jr.

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445 S.W.3d 790, 2014 Tex. App. LEXIS 9727, 2014 WL 4336304, Counsel Stack Legal Research, https://law.counselstack.com/opinion/william-j-mitchell-jr-v-conrad-mitchell-individually-and-as-texapp-2014.