Arnold Leon Schroeder Jr. Response

Case 3:11-cv-00525-B Document 32
Filed 08/05/11
Page 1 of 48 PageID 229
____________________________________________________________________ IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION ARNOLD LEON SCHROEDER, JR., Plaintiff, v. C.A. NO. 3:11cv-00525-B (JURY DEMANDED) KERN WILDENTHAL, EDWARD A. COPLEY, HARRY S. PARKER, III, GEORGE CHARLTON, IRVIN LEVY, and the DALLAS MUSEUM OF ART, Defendants. ___________________________________________________________________ PLAINTIFFS RESPONSE TO DEFENDANTS MOTIONS TO DISMISS ___________________________________________________________________ Gary D. Eisenstat State Bar No. 06503200 Doug K. Butler State Bar No. 03516050 Valeri C. Williams State Bar No. 24058797 FIGARI & DAVENPORT, L.L.P. 3400 Bank of America Plaza 901 Main Street Dallas, Texas 75202-3796 TEL: (214) 939-2000 FAX: (214) 939-2090 ATTORNEYS FOR PLAINTIFF ARNOLD LEON SCHROEDER, JR. __________________________________________________________________________
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TABLE OF CONTENTS (Page) SUMMARY OF THE RESPONSE ......................................................................... 2 ARGUMENT ........................................................................................................... 5 A. B. Motions to Dismiss Are Disfavored. ............................................................. 5 Schroeder Has Stated A Claim for Fraud. ..................................................... 6 1. 2. 3. 4. 5. 6. C. D. Schroeder Was Not Required to But Did Plead This Fraud With Particularity. .................................................................... 6 In Particular, Defendants Committed Legal or Constructive Fraud. ............................................................................ 8 Schroeder Has Standing to Recover for the Fraud that Damaged Him. ................................................................ 19 Attorneys Are Liable for Their Fraud. ............................................. 21 Defendants Fraud Has Caused Schroeder Damages. ...................... 23 Schroeders Fraud Claim Is Not Barred by Limitations. ................. 25
I. II.
Schroeder Has Pled Actionable Claims for Constructive Trust and Accounting. ................................................................................. 30 Schroeder Has an Actionable Claim for Conspiracy. ................................. 33 1. 2. Schroeder Has Stated a Conspiracy Claim With Sufficient Particularity. ..................................................................................... 33 Schroeders Conspiracy Is Not Barred By Limitations. .................. 37
III.
CONCLUSION ...................................................................................................... 39
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TABLE OF AUTHORITIES Page(s) CASES Air Cargo, Inc. Litig. Trust v. i2 Techs., Inc. (In re Air Cargo, Inc.), 401 B.R. 178 (Bankr. D. Md. 2008) .............................................................................. 6 Archer v. Griffith, 390 S.W.2d 735 (Tex. 1964) ............................................................................ 10, 11, 16 Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) ................................................................................................... 5 Baker v. Putnal, 75 F.3d 190 (5th Cir. 1996)............................................................................................. 6 Barcelo v. Elliot, 923 S.W.2d 575 (Tex. 1996) .................................................................................. 22, 23 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ....................................................................................................... 6 Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780 (Tex. 2006) ............................................................................ 22, 23, 27 Bounds v. Caudle, 560 S.W.2d 925 (Tex. 1977) ........................................................................................ 31 Cal Fed Mortgage Co. v. Street, 824 S.W.2d 622 (Tex. App.Austin 1991, writ denied) .............................................. 28 Childs v. Haussecker, 974 S.W.2d 31 (Tex. 1998) .......................................................................................... 26 Chu v. Chong Hui Hong, 249 S.W.3d 441 (Tex. 2008) ........................................................................................ 22 Cinel v. Connick, 15 F.3d 1338 (5th Cir. 1994)........................................................................................... 5 Collings v. Morgan Stanley Dean Witter, 224 F.3d 496 (5th Cir. 2000)........................................................................................... 5
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Collins v. GospoCentric Records, No. 3:00-CV-1813-H, 2001 WL 194988, 2001 U.S. Dist. LEXIS 7357 (N.D. Tex. Feb. 22, 2001) ...................................................................................................... 32 Crain v. Crain, 17 Tex. 80 (Tex. 1856).......................................................................................... passim Cuvillier v. Taylor, 503 F.3d 397 (5th Cir. 2007)........................................................................................... 5 Dyer v. Eckols, 808 S.W.2d 531 (Tex. App.Houston [14th Dist.] 1991, writ dismd) ...................... 28 Ellsworth v. Aldrich, 295 S.W. 206 (Tex. Civ. App. 1927, writ refd) .......................................................... 28 Epperson v. Mills, 19 Tex. 65 (Tex. 1857)..................................................................................... 15, 16, 20 Estate of Stonechipher v. Estate of Butts, 591 S.W.2d 806 (Tex. 1979) ........................................................................................ 29 Etan Indus. v. Lehmann, 308 S.W.3d 489 (Tex. App.Austin 2010, pet. filed) ............................................ 25, 26 GE Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074 (7th Cir. 1997)......................................................................................... 7 Green Intl v. Solis, 951 S.W.2d 384 (Tex. 1997) ........................................................................................ 24 Greenberg Traurig of N.Y., P.C. v. Moody, 161 S.W.3d 56 (Tex. App.Houston [14th Dist.] 2004, no pet.) ................................ 22 Hamilton v. Flinn, 21 Tex. 713 (1858) ..................................................................................... 12, 16, 26, 27 Hawthorne Land Co. v. Occidental Chem. Corp., No. 04-30137, 431 F.3d 221, 2005 U.S. App. LEXIS 25067 (5th Cir. 2005) .............. 39 Hilliard v. Ferguson, 30 F.3d 649 (5th Cir. 1994)........................................................................................... 36 Houston Water Works Co. v. Kennedy, 70 Tex. 233 (Tex. 1888)............................................................................................... 28 iii
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Hunter v. Shell Oil Co., 198 F.2d 485 (5th Cir. Tex. 1952) ................................................................................ 30 In re Estate of Perry, 2007 Tex. App. LEXIS 6465 (Tex. App. San Antonio August 15, 2007), opinion withdrawn due to settlement, 2008 Tex. App. LEXIS 418............................. 10 In re Monnigs Dept. Stores, Inc., 929 F.2d 197 (5th Cir. 1991)........................................................................................... 9 In re Soza, 542 F.3d 1060 (5th Cir. 2008)................................................................................... 9, 10 Indest v. Freeman Decorating, 164 F.3d 258 (5th Cir. 1999)........................................................................................... 5 Intl Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex. 1963), superseded on other grounds as stated in Yeckel v. Abbott, NO. 03-04-00713-CV, 2009 Tex. App. LEXIS 3881 (Tex. App. Austin June 4, 2009, pet. denied) ................................................................................. 33 Jernigan v. Wainer, 12 Tex. 189 (1854) ....................................................................................................... 33 Jones v. Eastham, 36 S.W.2d 538 (Tex. Civ. App. 1931, writ dismd) .................................................... 28 Jones v. Greninger, 188 F.3d 322 (5th Cir. 1999) ......................................................................................... 6 Joslin v. Personal Invs., Inc., No. 03-40200, 2004 U.S. App. LEXIS 4443 (5th Cir. 2004) ......................................... 9 Land v. Marshall, 426 S.W.2d 841 (Tex. 1968) ........................................................................................ 16 Leach v. Conner, No. 13-01-468-CV, 2003 Tex. App. LEXIS 10173 (Tex. App.Corpus Christi Dec. 4, 2003, no writ) .................................................................................................. 31 LED Sign Co., LLC v. Hwee, No. H-08-1463, 2008 U.S. Dist. LEXIS 97851 (S.D. Tex. Dec. 3, 2008) .................. 36 Lewis v. Fresne, 252 F.3d 352 (5th Cir. 2001)..................................................................................... 6, 17 iv
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Lewis v. Xium Corp., NO. 07-08-0219-CV, 2009 Tex. App. LEXIS 5210 (Tex. App.Amarillo July 8, 2009, pet. denied) ..................................................................................................... 32 Likeover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468 (Tex. App.Houston [1st Dist.] 1985, no writ)................................ 22 Lone Star Fund V, LP v. Barclays Bank PLC, 594 F.3d 383 (5th Cir. 2010)........................................................................................... 6 Lormand v. U.S. Unwired, Inc., 565 F.3d 228 (5th Cir. 2009)........................................................................................... 5 Massey v. Armco Steel Co., 652 S.W.2d 932 (Tex. 1983) ........................................................................................ 33 Mayes v. Stewart, 11 S.W.3d 440 (Tex. App.Houston [14th Dist.] 2000, pet. denied. ........................ 38 McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787 (Tex. 1999) ........................................................................................ 22 McCartney v. First City Bank, 970 F.2d 45 (5th Cir. 1992)............................................................................................. 6 McKnight v. Riddle & Brown, P.C., 877 S.W.2d 59 (Tex. App.Tyler 1994, writ denied) ................................................ 22 Michael v. Dyke, 41 S.W.3d 746 (Tex. App.Corpus Christi 2001, no writ) .................................. 32, 33 Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826 (Tex. 1990) ........................................................................................ 26 Navarro v. Thornton, 316 S.W.3d 715 (Tex. App.Houston [14th Dist.] 2010, no pet.) .............................. 37 Northeastern Florida Chapter of the Assoiated. Gen. Contractors of Am. v. City of Jacksonville, Fla., 508 U.S. 656 (1993) ..................................................................................................... 19 ODonnell v. Smith, 234 S.W.3d 135 (Tex. App.San Antonio 2007), affd, 288 S.W.3d 417 (Tex. 2009) ............................................................................................................................ 27
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Palmetto Lumber Co. v. Gibbs, 124 Tex. 615 (Tex. 1935)............................................................................................. 32 Phillips v. E.R. Brick & Masonry, Inc., No. 01-09-0031-CV, 2010 Tex. App. LEXIS 7531 (Tex. App. Houston [1st Dist.], September 10, 2010, no pet.) ............................................................................ 10 Poole v. H. & T. C. Ry. Co., 58 Tex. 134 (Tex. 1882)............................................................................................... 21 Pope v. Garrett, 211 S.W.2d 559 (Tex. 1948) ................................................................................. passim Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) .................................................................................. 25, 26 Querner v. Rindfuss, 966 S.W.2d 661 (Tex. App.San Antonio 1998, pet. denied) ................................... 22 Ritter v. Till, 230 S.W.3d 197 (Tex. App.Houston [14th Dist.] Mar. 15, 2005, no pet.) .............. 35 Rosen v. Matthews Const. Co., Inc., 777 S.W.2d 434 (Tex. App. Houston [14th Dist.] 1989), revd on other grounds, 796 S.W.2d 692 (Tex. 1990)........................................................................... 9 S.V. v. R.V., 933 S.W.2d 1 (Tex. 1996) ............................................................................................ 29 Seaside Indus., Inc. v. Cooper, 766 S.W.2d 566 (Tex. App. Dallas 1989, no writ) ..................................................... 9 Simmons v. Wilson, 216 S.W.2d 847 (Tex. App.Waco 1949, no writ) .............................................. 30, 31 Stone v. Lawyers Title Ins. Co., 554 S.W.2d 183 (Tex. 1987) ........................................................................................ 24 Taylor v. Dam, 244 F. Supp. 2d 747 (S.D. Tex. 2003) ........................................................................... 6 Tennessee Gas Transmission Co. v. Fromme, 269 S.W.2d 336 (Tex. 1954) ........................................................................................ 28 Travis v. Mesquite, 830 S.W.2d 94 (Tex. 1992). ........................................................................................ 25 vi
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Triple Tee Golf, Inc. v. Nike, Inc., 618 F. Supp. 2d 586 (N.D. Tex. 2009) ........................................................................ 32 Twyman v. Twyman, 790 S.W.2d 819 (Tex. App.Austin 1990), revd on other grounds, 855 S.W.2d 619 (Tex. 1993) ............................................................................................... 38 United States v. Ashley, 555 F.2d 462 (5th Cir. 1977) ....................................................................................... 36 Vela v. Marywood, 17 S.W.3d 750 (Tex. App. Austin 2000, pet. denied) .............................................. 10 Vickery v. Vickery, 999 S.W.2d 342 (Tex. 1999) .......................................................................................... 9 Woods v. William M. Mercer, Inc., 769 S.W.2d 515 (Tex. 1988) ........................................................................................ 26 Zidell v. Bird, 692 S.W.2d 550 (Tex. App.Austin 1985, no writ)..................................................... 28 STATUTES Tex. Civ. Prac. & Rem. Code 16.003 ............................................................................. 37 Tex. Civ. Prac. & Rem. Code 16.004 ....................................................................... 25, 37 Tex. Civ. Prac. & Rem. Code 16.051 ............................................................................. 37 Tex. Prob. Code 499(6) .................................................................................................. 35 OTHER AUTHORITIES Fed. R. Civ. P. 8(d)(2)-(3) ................................................................................................. 37 Fed. R. Civ. P. 12(b)(6) ....................................................................................................... 5 Fed. R. Civ. P. Rule 9(b) ................................................................................................. 6, 7 Fifth Circuit Rule 47.5.4 ................................................................................................ 9, 10 French Civil Code (translated) .................................................................................... 17, 18
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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION ARNOLD LEON SCHROEDER, JR., Plaintiff, v. KERN WILDENTHAL, EDWARD A. COPLEY, HARRY S. PARKER, III, GEORGE CHARLTON, IRVIN LEVY, and the DALLAS MUSEUM OF ART, Defendants.
C.A. NO. 3:11cv-00525-B (JURY DEMANDED)
PLAINTIFFS RESPONSE TO DEFENDANTS MOTIONS TO DISMISS Plaintiff Arnold Leon Schroeder, Jr. (Schroeder) files this response to the motions to dismiss of Defendants Harry S. Parker, III (Parker), George Charlton (Charlton), Irvin Levy (Levy), and the Dallas Museum of Art (the DMA) [Dkt. # 19] (Parker, Charlton, Levy and the DMA will be referred to collectively as the DMA Defendants) Edward A. Copley (Copley) [Dkt. # 20], and Kern Wildenthal (Wildenthal) [Dkt # 21], (the DMA Defendants, Wildenthal and Copley will be referred to collectively as the Defendants).1
For brevity and in accordance with the Courts August 4, 2011 order [Dkt. # 31], Schroeder submits this single response to the Defendants motions to dismiss because, although they seem at times to conflict, the motions are largely duplicative of one another. Schroeder will try to point to differences where they matter and make clear where it is responding to arguments peculiar to any one of the motions. Schroeder uses terms such as the Donation Agreement, the Will, etc., as they were used and defined in his First Amended Complaint.
PLAINTIFFS RESPONSE TO DEFENDANTS MOTIONS TO DISMISS
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I. SUMMARY OF THE RESPONSE2 While all of the Defendants pay lip service to the black letter law that motions to dismiss must be based solely upon the face of the pleading, Defendants promptly ignore that rule, each alleging a plethora facts that are well outside the four corners of Schroeders First Amended Complaint (the Complaint). No doubt, Defendants goal is to divert the Courts attention from the substantive issues and law that govern this stage of the proceedings by throwing stones at Schroeder. Schroeder will defer responding to those untrue barbs as they are irrelevant, especially as the Court considers the motions to dismiss. The facts alleged by Schroeder, taken as true, present actionable claims that are not barred by limitations for legal or constructive fraud, conspiracy, constructive trust and an accounting which entitle him to recover actual damages, exemplary damages, and other equitable relief. This is not a case of fraud by misrepresentation. It is a case of legal or
constructive fraud. That is to say, the Defendants worked together and for their own and the DMAs interests tried to accomplish what the law prohibits. Under French law, Schroeder as Wendys only heir is entitled to one half of her estate (the Estate) regardless of Wendy or Defendants wishes. French law did not allow Wendy to deplete her estate by giving it away prior to or upon her death. Rather, immediately upon her death, but not until then, Schroeder was vested as her forced heir, which allows him to
2
Defendants have challenged Schroeders claims for conversion, tortious interference with inheritance rights, and misapplication of fiduciary property on the grounds that Schroeder has failed to state a claim, limitations, and lack of standing. While Schroeder respectfully disagrees with much of the Defendants analysis regarding these claims, Schroeder now believes that further litigation of these claims will likely only detract from the merits of Schroeders other claims. Thus, and in the interests of narrowing the scope of the issues before this Court, Schroeder elects not to pursue these claims further at this time, and hereby moves for their dismissal without prejudice.
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reach back at least 30 years to reconstitute the Estate setting aside any gifts and bequests as necessary to reconstitute the Estate and satisfy his lawful entitlement. Before
Schroeder became Wendys forced heir, the DMA, through the individual Defendants, took property and millions of dollars, doing all they could along the way to avoid the anticipated impact of French law. There was a time when Texas law itself forced heirship. For good reasons or bad, parents tried to avoid that law by purporting to gift or transfer assets during their lifetime intent on directing their estates to others than the law mandated. The Texas Supreme Court set aside the transfers and allowed the forced heirs to recover those assets. The Court simply would not countenance what it called legal fraud. Nor should this Court. Schroeder has also asserted viable claims for constructive trust and accounting. Both theories can themselves be claims for relief or remedies the Court imposes based on other claims. Regardless of whether the Court views them as distinct causes of action or remedies for others, Schroeder has pled sufficient facts to warrant the Courts imposition of a constructive trust and an accounting. In this vein, the Texas Supreme Court has recognized that a person who would have taken under a will but loses that inheritance as a result of untoward conduct that prevented the deceased from signing a will is entitled to equitable relief in the form of a constructive trust not only on the assets received by the complicit heirs but by the innocent heirs as well. The Court concluded wrong had been
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done which justified an equitable remedy to cure.
Defendants actions to deprive
Schroeder of his forced heirship similarly demand a remedy.3 Defendants also confuse the conspiracy issue. Schroeder is more than willing for all of the Defendants to admit that they were agents or representatives of the DMA acting within the scope of their authority for the DMA. If they do, then Schroeder need not prove that the Defendants conspired with one another. The DMA would be liable in respondeat superior for their torts. Of course, the individual Defendants are liable for their tortious conduct. It is only if one or more of the Defendants wants to cut from the herd that the conspiracy claim comes into play. Then, If not an agent or representative of the DMA, that Defendants actions were conspiratorial. And, the facts alleged by Schroeder demonstrate precise actions taken by each Defendant that they committed in furtherance of the fraud and conspiracy that render them liable for their own torts and jointly and severally liable for the damages caused by the torts of the others. Finally, Schroeders claims for legal or constructive fraud and the conspiracy, constructive trust and accounting claims based on that fraud are not barred by limitations. The earliest any of Schroeders claims were actionable was when Wendy died. These claims could not have accrued until that time. Indeed, Schroeder had no standing to take action before Wendys death. Without legal standing, Schroeder cannot possibly be said to have been able to discover the fraud before Wendys death. Defendants concede that the Texas four-year statute of limitations applies to Schroeders fraud claim. Indeed, one
3
The DMA Defendants and Wildenthal have also moved to dismiss Schroeders exemplary damage claim because the claims on which it is based are not viable. As Schroeder demonstrates, he has plead sound fraud and conspiracy claims that support his claim for exemplary damages. As such, that claim should not be dismissed.
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of Texas four-year statutes also applies to Schroeders conspiracy claim based on fraud. As Schroeder filed the action within four years of Wendys death, these claims are not time-barred. The claims actually did not accrue at Wendys death.
II. ARGUMENT A. Motions to Dismiss Are Disfavored. As a general rule, 12(b)(6) motions are viewed with disfavor and rarely granted. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009); Collings v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). A complaint does not need detailed factual allegations, but must provide the plaintiffs grounds for entitlement to relief including factual allegations that, when assumed to be true, raise a right to relief above the speculative level. Lormand, 224 F.3d at 232; Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007)). As such, the Court may only dismiss if the complaint does not contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).A claim has facial plausibility when the plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. See Ashcroft, 129 S. Ct. 1937, 1949 (citing Twombly, 550 U.S. at 555). The motion should not be granted if the allegations in the Complaint support relief on any possible theory. Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir. 1994); Indest v. Freeman Decorating, 164 F.3d 258, 261 (5th Cir. 1999).
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Further, the Courts treatment of the motions to dismiss is limited to the four corners of the Complaint. Taylor v. Dam, 244 F. Supp. 2d 747, 755 (S.D. Tex. 2003) (citing Indest, 164 F.3d at 261; Baker v. Putnal, 75 F.3d 190, 195 (5th Cir. 1996); McCartney v. First City Bank, 970 F.2d 45, 47 (5th Cir. 1992). All facts in the Complaint must be taken as true, and any ambiguities in the controlling substantive law must be resolved in [Schroeders] favor. Lewis v. Fresne, 252 F.3d 352, 357 (5th Cir. 2001). Thus, if Defendants claims in their motions to dismiss contradict the facts in the Complaint, then their motions must be denied. See Baker, 75 F.3d at 196-97. Moreover, the Courts task is limited to deciding whether Schroeder is entitled to offer evidence in support of his claims, not whether he will eventually prevail. See Twombly, 550 U.S. at 563 n.8; see also Lone Star Fund V, LP v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010); Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999). B. Schroeder Has Stated A Claim for Fraud. 1. Schroeder Was Not Required to But Did Plead This Fraud With Particularity.
Rule 9(b) does not apply. Although courts are split on the issue, the majority and better-reasoned authorities distinguish between claims of actual fraud and those, as here, based on constructive fraud that do not involve allegations of actual intent to defraud or specific misrepresentations, See Air Cargo, Inc. Litig. Trust v. i2 Techs., Inc. (In re Air Cargo, Inc.), 401 B.R. 178, 192 (Bankr. D. Md. 2008). Even if Rule 9(b) applies, the Complaint satisfies its standards. This is not a case of specific misrepresentations akin to the cases cited by the Defendants. More analogous
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are cases dealing with statutory fraudulent transfer claims that do not require evidence of actual intent to defraud nor a specific misrepresentation by the defendant. See GE Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1079 (7th Cir. 1997). In this context, Rule 9(b) requires no more than particular allegations of the circumstances surrounding the elements of Schroeders claims. Id. Schroeder alleged and defined in the Complaint, each Defendants involvement in the fraud and conspiracy, including the Donation Agreement, the Will, the codicils, the sham entities and trusts, and the powers of attorney all designed to deprive Schroeder of his forced heirship. These allegations readily satisfy Rule 9(b). Again, the Defendants argue that Schroeder failed to plead fraud with particularity because he did not plead the who, what, when, where, and how of the alleged misrepresentations [DMA Motion at 8-11; Wildenthal Motion at 8-11; Copley Motion at 7-9] or the fiduciary duty which they claim must underlie a constructive fraud claim. [DMA Motion at 11 n. 6; Wildenthal Motion at 11; Copley Motion at 9.] Defendants spill most of their ink arguing that Schroeder has failed to adequately plead a claim for fraud based on misrepresentations. But, Schroeders claim is not based on
misrepresentations. In paragraph 89 of the Complaint, Schroeder makes clear that, under Texas law, Defendants efforts to avoid forced or reserved heirship constitute constructive or legal fraud even without proof or dishonesty of purpose or intent to deceive . [Complaint at 25, 89.] So, about misrepresentations, Schroeder need say nothing more.
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More to the point, Schroeder has alleged extensive details about Defendants constructive fraud. Most importantly, Schroeder has pled the facts which, taken as true, demonstrate that as Wendys forced heir under French law he should have been entitled to at least one-half of her Estate, but through the actions of the Defendants (many of which Schroeder has recounted in detail in the Complaint) substantial property has been removed from the Estate to Schroeders harm. Those actions included the participation in the Donation Agreement, the movement of the Collection from Villa la Pausa to the DMA, the preparation of the Will and codicils, the formation of entities to obtain title to the remainder of Wendys Estate, and the secretion and unlawful retention of those properties following Wendys death. Charlton, Parker, and Levy acted for and on behalf of the DMA in obtaining the Donation Agreement and transport of the Collection from Villa la Pausa to the DMA, and Wildenthal and Copley acted for and on behalf of the DMA in obtaining the Will, codicils and powers of attorney to drain the rest of the Estate. Copley, Wildenthal, and Charlton have acted for the benefit of the DMA following Wendys death as the purported Independent Executors of Wendys Estate and their counsel. All have continued their involvement since Wendys death by operating WERF and purporting to administer assets of under the Will that belong to Schroeders forced heirship. 2. In Particular, Defendants Committed Legal or Constructive Fraud.
The Defendants committed legal or constructive fraud. The Defendants all brush by constructive fraud when they argue that it cannot exist without a fiduciary relationship and that there was no fiduciary relationship between them and Schroeder. [DMA Motion
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at 11-12 n. 6; Wildenthals Motion at 11; Copley Motion at 9.] But, Texas law does not require a fiduciary relationship to underpin a claim for constructive fraud. The DMA Defendants and Wildenthal cite Joslin v. Personal Invs., Inc., No. 0340200, 2004 U.S. App. LEXIS 4443 (5th Cir. 2004). Of course, under Fifth Circuit Rule 47.5.4, the opinion is not precedent. Moreover, the opinion is not even persuasive here. The Fifth Circuit did state that Texas appellate courts frequently intimate that [constructive fraud] occurs only where there is a fiduciary relationship between the parties. But, it upheld the dismissal of the plaintiffs claim only because there was no evidence of a fiduciary relationship and the plaintiff failed to point to anything that would qualify as a commensurate legal or equitable duty. 4 In his concurring opinion in In re Soza, 542 F.3d 1060 (5th Cir. 2008) (Wiener, J., specially concurring), Judge Weiner artfully explained that (1) consistent with Fifth Circuit Rule 47.5.4, Joplin is not binding, and (2) Texas law does not require a fiduciary relationship for constructive fraud. Judge Weiner summarized, citing numerous Texas cases, that constructive fraud has fuzzier edges and is less susceptible of easy definition than actual fraud.5 He noted that no case has neatly staked out the contours of
It is interesting that the Fifth Circuit concluded it was dicta in Vickery v. Vickery, 999 S.W.2d 342 (Tex. 1999), when the court commented that constructive fraud is most frequently found in cases where a fiduciary relationship exists. First, that statement was not actually made by the Texas Supreme Court. The Texas Supreme Court simply denied the petition of review of the court of appeals opinion. The statement was made by the court of appeals in the opinion that was attached as an appendix to the dissent of Justice Hecht. Id. at 377. Second, the Fifth Circuit in Joslin did not rest its decision on the proposition that a fiduciary duty must underlie a constructive fraud claim. The Fifth Circuit ultimately noted that the plaintiff in Joslin could not point to any legal or equitable duty.
5
E.g., Rosen v. Matthews Const. Co., Inc., 777 S.W.2d 434, 437 (Tex. App. Houston [14th Dist.] 1989), revd on other grounds, 796 S.W.2d 692 (Tex. 1990) (constructive fraud has fuzzier edges and is less well-defined but necessary to deal with cases at hand); Seaside Indus., Inc. v. Cooper, 766 S.W.2d 566, 568 (Tex. App. Dallas 1989, no writ) (legal duty is not required as constructive fraud arises when an equitable duty is violated). See also In
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constructive fraud because the need for this doctrine rests on the lack of a well-defined common law tort to cover the conduct before the court in a particular case. Id. at 1072. He reviewed the Texas cases and concluded that consistent with the flexible nature of equity, Texas has not construed constructive fraud so narrowly as to require a confidential or fiduciary relationship. Id. at 1073. He further wrote: A survey of Texas case law reveals that a fiduciary or confidential relationship is not a prerequisite for a finding of constructive fraud; there need only be a violation of a legal or equitable duty, determined according to a flexible and fact specific approach. 542 F.3d at 1074. Indeed, Judge Weiners description is true to the Texas Supreme Courts opinion in Archer v. Griffith, 390 S.W.2d 735, 740 (Tex. 1964), where the Court seemingly coined the term constructive fraud for Texas jurisprudence: Actual fraud usually involves dishonesty of purpose or intent to deceive, whereas constructive fraud is the breach of some legal or equitable duty which, irrespective of moral guilt, the law declares fraudulent because of its tendency to deceive others, to violate confidence, or to injure public interests. 390 S.W.2d at 740.6
re Monnigs Dept. Stores, Inc., 929 F.2d 197, 201 (5th Cir. 1991) (constructive fraud usually involves a breach of trust or confidential relationship).
6
As evident from the cases cited by Judge Weiner and even the Defendants, the doctrine of constructive fraud is much alive in Texas. See also, Phillips v. E.R. Brick & Masonry, Inc., No. 01-09-0031-CV, 2010 Tex. App. LEXIS 7531 (Tex. App. Houston [1st. Dist.], September 10, 2010, no pet.) (actors intent is irrelevant to constructive fraud); In re Estate of Perry, 2007 Tex. App. LEXIS 6465 (Tex. App. San Antonio August 15, 2007), opinion withdrawn due to settlement, 2008 Tex. App. LEXIS 418 (constructive fraud based on defendants actions which tended to deceive the putative recipients in loss of gift and inheritance constitute constructive fraud); Vela v. Marywood, 17 S.W.3d 750, 760-61 (Tex. App. Austin 2000, pet. denied).
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But, the legal or constructive specie of fraud was not first created in Archer. The Texas Supreme Court long ago and when Texas itself recognized a form of forced heirship established the legal grounds upon which Schroeder bases his legal fraud claim here.7 To understand those principles, however, it is best to first recall that: as the right to make a will and transfer property by bequest is not a natural right, but a creation of positive law, it may certainly be so regulated as to harmonize with the institutions and policy of the country, and especially so as to require one who can no longer enjoy his property to so dispose of his acquisitions as to secure a portion for the comfort of those who by his agency were brought into the world, and for whose support he is bound by the dictates of natural duty and the impulses of affection. Crain v. Crain, 17 Tex. 80 (Tex. 1856). Defendants do not in their motions contest that French law proscribed Wendys ability to gift or bequest property. Nor do Defendants dispute that French law renders Schroeder a forced heir to whom is reserved by law onehalf of Wendys Estate (other than perhaps certain real property in Switzerland). What they contest is whether Schroeder can lay claim to property Wendy purported to transfer to the DMA during her life and in her Will to the detriment of Schroeders forced heirship. Study of the opinion in Crain demonstrates why Defendants conduct is actionable here. First, the Court in Crain noted that Spanish law regarding the rights of heirs and restrictions on testamentary power governed until 1840. Under Spanish law: if one attempts by voluntary dispositions to transfer his property, he is under a natural obligation to make some
7
A useful history of forced heirship in the United States and Texas, in particular, is found in Spanish Legitim in the United States Its Survival and Decline, 44 Am. J. Comp. L. 75 (Winter 1996).
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provision for those who, if he had made no will, would have been by law declared exclusively entitled to his property. The share of an estate to which an heir was entitled was called his legitimate portion, and he was denominated a forced heir, having by force of law a paramount right to his share of the succession. Children were forced heirs of their parents, and the latter (unless there were just causes for disinheriting the children) had not the capacity either by donation inter vivos or by will, to dispose of more than one-fifth of their property to strangers. Crain, 17 Tex. at 90. The Court summarized this law as follows: It then appears that by our former laws, and up to 1840, a parent could not, unless for just cause of disinherison, exclude a child by any voluntary donation, in his lifetime, to strangers, or by excessive donations to one or more of his children; nor could he, by dispositions of this character, in his last will, deprive his children of a certain share (fixed by law) in his estate. Neither in his life nor at death could he exclude them from their legitimate portion. Crain, 17 Tex. at 91. See also, Hamilton v. Flinn, 21 Tex. 713 (1858) (under sections 13 and 15 of the act concerning wills of January 28, 1840, parents were prohibited from disinheriting their children without just cause, or from disposing freely by will of more than the one-fourth of their property). Indeed, under this law, donations exceeding the disposable amount of a mans property are prohibited and would be void per se. Crain, 17 Tex. at 92.8 In 1840, however, the great body of Spanish law was repealed, including the provisions on the subject of forced heirship, legitimate portions, etc. Crain, 17 Tex. at 91. In the 1840 statute, it was declared that:
In 1837, the statute was amended such that legitimate descendants alone should be considered as forced heirs, excluding ascendants and siblings. Crain, 17 Tex. at 90-91.
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no father or mother, by last will or testament, shall disinherit his children, except for cause specified in the statute; it being declared by a subsequent section, that the act shall not be so construed as to prevent a parent from the free disposition of the one-fourth of his property by last will and testament, or by donation in last sickness. Crain, 17 Tex. at 91. The Texas Supreme Court explained that the pre-1840 law was retained but in part. In particular, [n]o restrictions were by that law imposed on the power of disposing of property by donation during the life of the owner; or, in other words and more accurately, by donations inter vivos. The restraints on the power of the owner to dispose of his property at pleasure embrace only wills and donations in last sickness. Crain, 17 Tex. at 91. As such, after 1840, the owner could in life, dispose freely of his property by donation, although the property may be thereby so squandered as to leave nothing for his heirs at his death, or to be disposed of by his will. Crain, 17 Tex. at 92. But, the rights secured to the heirs by the 1840 statute were intended to be substantial benefits, not to be evaded by shifts or devices or donations, whether in fact or in form, which are intended and do operate as mere frauds on the law and on the rights of heirs under the law. Crain, 17 Tex. at 92. The Court noted, however, that Spanish law did not help as to the remedy because under Spanish law the transactions would simply be void per se. As such, the Court considered whether the conveyances could be regarded as fraud upon the statute of wills. Crain, 17 Tex. at 92. Against this background, the Court had to decide how to handle the claims at issue. Ambrose Crain died in November 1850 survived by his children, Ambrose H.,
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Emily, and Patience (who were plaintiffs) and Newell and Jowell (who were defendants). The plaintiffs claimed that prior to his death Ambrose owned and possessed a large amount of property, real and personal. Crain, 17 Tex. at 82. Prior to his death, the deceased made only small advancements or gifts to plaintiffs. But, plaintiffs alleged, the deceased fraudulently and unlawfully intending to defraud [them] out of their legal rights as forced heirs to their portions of his estate, confederated with Newell to the end that [plaintiffs], at his death, should be defrauded of their lawful inheritance, and that the said Newell, by means of such fraudulent combination, should, at his death, have and hold the whole property. Crain, 17 Tex. at 82-83. Plaintiffs claimed that the deeds, etc., were drawn with the full understanding and intention between the parties that they should have no effect or operation during the lifetime of the deceased but were to act as wills or of deeds to defraud the rights of the petitioners in contemplation of death and to avoid the laws of the state. Crain, 17 Tex. at 83. They further alleged that the
deceaseds wife, to whom letters of administration were issued, cooperated in the fraudulent design by not enforcing the notes given by the defendants for the property. Crain, 17 Tex. at 84. Defendants demurred that the facts alleged stated no cause of action against them. After considering at length Englands handling of such claims at common law, the Court held that heirs could sue in fraud to recover property purportedly conveyed to avoid this very restriction on the owners right to bequeath. In this particular case under this particular law, the Court found that the lifetime conveyances were not intended to be of any force during the life of the parent, but that he should retain the control and
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enjoyment of the property until his death, and that the property should, by operation of the deeds, then vest in the son. Crain, 17 Tex. at 80. The Court found the conveyances should be held void, and as in fraud of the law securing [plaintiffs] a portion of their fathers estate. Crain, 17 Tex. at 101-02. The next year, the Texas Supreme Court noted that the statute which allowed parents free disposition by will of one-fourth of their property but did not prohibit them as was the case under previous laws from disposing of more by gift inter vivos, had opened: a door for schemes and contrivances to elude the restrictions imposed by the statute, on the testamentary power of parents, by gifts and pretended sales, which, in form and color, evidence a transfer of the property during the life of the parent, but under which, in fact and substance and in actual beneficial enjoyment, the parent retains the use and benefit of the property during his natural life, thus relinquishing in substance his interest only when it would cease by death. Epperson v. Mills, 19 Tex. 65, 68 (Tex. 1857). There, the Court held that a deed to some but not all of the grantors children in which the grantor retained control of the property during his lifetime was a fraudulent effort to avoid the limitation on the parents right to bequeath property. The Court found the deed void as a virtual fraud, and evasion of the act concerning wills. Epperson, 19 Tex. at 69. This legal fraud allowed recovery against those who received the assets that could not be gifted or bequeathed.
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Though the reign of forced heirship ended in Texas in 18569, the principles underlying the Crain decision persist. As discussed more thoroughly below in addressing Schroeders constructive trust claim, the Texas Supreme Court in Pope v. Garrett, 211 S.W.2d 559 (Tex. 1948), used the fuzzy edges of this tort to impose a constructive trust where parties unlawfully interfered with the desires of the deceased to devise her property by will to a neighbor. In Land v. Marshall, 426 S.W.2d 841 (Tex. 1968), the Texas Supreme Court analogized to Crain and Epperson in adopting and applying the concept of illusory trust to set aside a husbands purported conveyance of his and his wifes community property stock to a trust without the wifes knowledge or consent. The beneficiaries were to own the stock after the husband and wife passed and after they enjoyed all the benefits of the stock during their lifetimes. The Court noted that the conveyance to the trust could not be set aside on the basis of actual or constructive fraud because the wife withdrew all allegations that her husband committed fraud. Land, 426 S.W.2d at 846. Nonetheless, the Court usefully noted the difference between actual and constructive fraud by citing to the decision in Archer. Hence, Schroeder has called his claim one for legal or constructive fraud only as shorthand for the wrong done him. What is clear is that Texas recognizes that transfers of property in violation of forced heirship rights are void and to be set aside using fraud upon the law or public interests. The fuzzier construct of constructive fraud fits these facts, but if not then legal fraud, as the Texas Supreme Court called it, does. Of course,
By act of July 24, 1856, the Texas Legislature declared that all persons were thereby authorized and permitted to dispose of their own estate, real and personal, by will or otherwise. Hamilton, 21 Tex. at 713.
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even if this law is ambiguous, the Court should construe it in Schroeders favor at this juncture. Lewis, 252 F.3d at 357. Schroeder has pled more than sufficient facts to support his claim and entitle him to relief. Defendants defrauded Schroeder of his forced heirship rights. In his
Complaint, Schroeder alleges that he is Wendys forced heir entitled to one-half her Estate including any inter vivos gifts made prior to her death. Defendants, of course, do not deny this and, for purposes of these motions, the Court must assume that to be true.10
10
Indeed, the French Civil Code provides, in pertinent part: Art. 720. deceased. Successions are opened by death, at the latest domicile of the
Art. 721. Successions devolve according to legislation where the deceased did not dispose of his property by gratuitous transfers. They may devolve through gratuitous transfers insofar as the latter are consistent with inheritable reserve. *** Art. 724. Heirs designated by legislation are vested by operation of law in possession of the property, rights and actions of the deceased: Universal legatees and donees are vested in possession in the conditions provided for in title II of the Book. Failing them, succession is acquired by the State who needs a court order to take possession. *** Art. 731. Succession devolves by law to the relatives and spouse entitled to inherit on the following terms: *** Art. 734. In the absence of a spouse entitled to inherit, relatives are called to succeed as follows: 1. Children and their descendants;
Each of these four categories constitutes an order of heirs which excludes the following. http://www.legifrance.gouv.fr/html/codes_traduits/code_civil_textA.html. (Mise A Jour Legifrance 21 February 2004, Translation by Geroges Rouhette, Professor of Law, with the assistance of Anne Berton, Research Assistant in English).
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In other words, given that Wendys latest domicile was in France, her succession occurred there (again, except as to certain real property in Switzerland). Defendants knew Schroeder was Wendys only child and that under French law, as she did not have a surviving spouse, he would have forced heirship rights upon Wendys death. Wendy could not transfer more than one-half her Estate either by inter vivos gift or by her will.11 So, Defendants set out to do whatever they could to obtain the Collection, Villa la Pausa and almost all of Wendys other property. Knowing that Wendy was domiciled in
France, that she had one child, and that the Collection constituted by far the largest portion of her estate, the DMA through Charlton, Levy and Parker obtained the Donation Agreement during Wendys life. Even the Donation Agreement, however, said that the Retained Works were not then being transferred to WERF for the benefit of the DMA. Rather, Wendy was to bequeath those works. The DMA claims title to the Retained Works under the Will prepared by Copley at Wildenthals direction when Wildenthal was
11
As to gifts and wills, the French Civil Code states:
TITLE II OF GIFTS INTERVIVOS AND OF WILLS Art. 893. One may dispose of his property gratuitously only by gift inter vivos or by will, in the forms hereinafter laid down. Art. 894. A gift inter vivos is a transaction by which the donor divests himself now and irrevocably of the thing donated, in favour of the donee who accepts it. Art. 895. A will is a transaction by which a testator disposes, for the time when he is no longer alive, of the whole or part of his property and which he may revoke. *** Art. 913. Gratuitous transfers either by inter vivos gifts or by wills, may not exceed half of the property of a disposing person where he leaves only one child at his death; Id.
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acting for the DMA. Not satisfied with just the Collection and the Retained Works, however, the DMA, through its directors and with the services of Wildenthal and Copley, drafted the Will, the codicils and powers of attorney to strip the remainder of Wendys Estate upon her death. Those actions constitute legal or constructive fraud entitling Schroeder to recover that to which he would have been due under French law. Although the entire scheme took decades to complete, its impact on Schroeder after Wendys death is undeniable. 3. Schroeder Has Standing to Recover for the Fraud that Damaged Him.
The DMA Defendants and Copley (but not Wildenthal) argue that Schroeder lacks standing to sue for fraud. The DMA Defendants argue that Schroeder lacks standing because he alleges he incurred damages which were proximately caused by Wendys reliance on promises made to her. [DMA Motion at 7 (emphasis in original).]
Copley similarly contends the Court lacks jurisdiction because Schroeder does not have standing to bring a fraud action for alleged misrepresentations that were not made to him and upon which he did not rely. [Copley Motion at 4.] Again, however, Schroeders fraud claim is not for fraud premised on misrepresentations made to him. It is for the legal or constructive fraud in which the Defendants engaged to deprive Schroeder of his forced heirship. Schroeders rights as a forced heir have been abrogated by the Defendants conduct. By that, he was directly, substantially, and legally harmed. In the words of the Supreme Court in Northeastern Florida Chapter of the Assoiated. Gen. Contractors of Am. v. City of Jacksonville, Fla., 508 U.S. 656, 664-65 (1993), Schroeder has suffered an
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injury in fact. He has lost his forced heirship, his legally protected interest. That interest is concrete, particularized, actual, or imminent and not conjectural or hypothetical. His injury can be fairly traced to the Defendants conduct. The DMA, through the actions of the other Defendants, has property that should be Schroeders and they refuse to give it to him. The Defendants procured the Donation Agreement to remove the Collection from Wendys Estate, obtained the Will, its codicils, and powers of attorney to obtain the rest of the Estate, and persisted in their purported administration of Wendys Estate to deprive Schroeder of his forced heirship. There is no third party whose independent actions resulted in this loss. Though Wendy was involved, the Collection ended up with the DMA, through the actions of Charlton, Parker, and Levy, and the remainder of Wendys Estate is seemingly headed there through the actions of Wildenthal, Charlton, and Copley. Of course, they have all acted since her death to reactivate WERF to manage assets that should be part of Schroeders forced heirship. Finally, relief from this Court is not speculative. That relief will entail either the specific return of property or
compensation for property that cannot be returned. Schroeders injuries can be redressed by a favorable decision. The decisions in Crain, Epperson, and Pope demonstrate each of these points. In Crain and Epperson, the forced heirs were allowed to recover from the parties to whom the deceased had purported to transfer property in violation of the law limiting the deceaseds testamentary powers. In Pope, the Court used a constructive trust to remedy the wrongdoing which interefered with inheritance rights. Schroeder seeks the same remedy here.
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4.
Attorneys Are Liable for Their Fraud.
Copley suggests that, as to him, this is exactly the type of action that the Texas Supreme Court is particularly wary of subject[ing] attorneys to suits by heirs who simply did not receive what they believed to be their due share under the will or trust under the guise of tort actions against the attorney. [Copley Motion at 7, citing Barcelo v. Elliot, 923 S.W.2d 575, 578 (Tex. 1996).] But, that case was not concerned with the issues presented here. The Court there rejected a claim by the deceaseds grandchildren that the lawyer negligently drafted a trust. The Court concluded that the attorneys only client was the deceased and that a lack of privity between the attorney and the grandchildren precluded a malpractice or negligence action. Id. at 578-79. Schroeder, however, is not suing Copley for negligence in drafting Wendys will or the powers of attorney. Rather, Schroeder claims Copley did that at the behest of Wildenthal and, in turn, the DMA to defraud Schroeder of his forced heirship rights. Indeed, even if he was quite specifically following Wendys instructions, he did so in fraud of Schroeders rights. It has long been the law in Texas that an attorney cannot avoid liability for his fraudulent conduct simply by saying he did what the client asked. The Texas Supreme Court has said that an attorney will not be heard to deny his liability by reason of his wrongful acts, under the privileges of an attorney at law, for such acts are entirely foreign to the duties of an attorney. Poole v. H. & T. C. Ry. Co., 58 Tex. 134 , 137 (Tex. 1882). In innumerable cases, Texas courts have found that while an attorney is authorized to practice his profession without making himself liable for damages, where an attorney
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acting for his client participates in fraudulent activities his action is foreign to the duties of an attorney. E.g., Chu v. Chong Hui Hong, 249 S.W.3d 441, 446 (Tex. 2008) (An attorney who personally steals goods or tells lies on a clients behalf may be liable for conversion or fraud in some cases.); McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 793-94 (Tex. 1999) (non-client can sue attorney for negligent misrepresentation as Barcelos privity requirement applies only to malpractice claims); Greenberg Traurig of N.Y., P.C. v. Moody, 161 S.W.3d 56, 82 (Tex. App. Houston [14th Dist.] 2004, no pet.) (attorney can be liable for conspiracy to defraud a third person); McKnight v. Riddle & Brown, P.C., 877 S.W.2d 59, 61-2 (Tex. App. Tyler 1994, writ denied) (non-client can sue attorney for fraud); Querner v. Rindfuss, 966 S.W.2d 661, 666 (Tex. App.San Antonio 1998, pet. denied) (attorney representing a client who commits fraud or enters into a conspiracy to defraud is liable to a third person); Likeover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex. App. Houston [1st Dist.] 1985, no writ) (lawyer liable to third party for fraudulent act or conspiracy to defraud that third party). Indeed, even the attorney who commits malpractice in representing the testator, can be sued by the personal representative of the estate. After Barcelo, the Texas Supreme Court held that there is no legal bar preventing an estates personal representative from maintaining a legal malpractice claim on behalf of the estate against the decedents estate planners. Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780, 782 (Tex. 2006). The Court first noted that in Texas a personal
representative has the capacity to bring a survival action on behalf of a decedents estate.
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Id. at 784. It then noted that claims that are contractual in nature or that affect property rights survive the death of either party. Id. A claim that an estate planners negligence resulted in the improper depletion of a clients estate involves injury to the decedents property. Id. As such, the action survives the death of the client in favor of the estate, and the estate has a justiciable interest sufficient to confer standing. Id. at 786. Recall, here, that Wildenthal and Charlton contend they are the Independent Executors of Wendys Estate under the Will that Copley drafted. That Will has never been probated, as it would be known under Texas law, and Wildenthal has never been appointed the administrator by any court. Rather, Schroeder, as Wendys forced heir, became her successor under French law. He has the right to prosecute a claim on behalf of the Estate. Moreover, because Wildenthal, Charlton, and Copley are in cahoots
between themselves and the DMA adversely to Schroeder, Wildenthal and Charlton will never sue Copley to recover for the Estate (of which Schroeder is the forced heir) the properties Defendants now hold. In Belt, the plaintiff sought to increase the value of the estate. Schroeder analogously seeks to increase the value of his forced heirship. He is a personal representative of the Estate with standing to sue Copley in that capacity. Schroeder, however, is not suing Copley for malpractice. The point here is that the holding in Barcelo was particularly narrow and does not bar Schroeders claim because privity is not required and he has sufficient privity anyway. 5. Defendants Fraud Has Caused Schroeder Damages.
Copley (but not the DMA Defendants or Wildenthal) argues that Schroeder has not pled causation. Indeed, Copley argues the Complaint actually disproves the element
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of causation though he seemingly tempers that remark by stating there may be no injury if the French courts uphold these statutes for Revess estate. [Copley Motion at 7.] Of course, Copley minces facts to his liking. While it is certainly true that Copley tried what he could to avoid the impact of French law on Wendys Estate and, hence, Schroeders forced heirship, that is but some of the evidence of his fraud and other torts. Copley has continued to aid Wildenthal and Charlton (who purport to act as the Independent Executors of Wendys Estate under the Will and codicils) and, in turn, the DMA, by avoiding the impact of French law. The Swiss courts decision in the case before it and over the Defendants objections that French law applied to Wendys Estate, has not stopped the Defendants. The easy answer lies in the fact that the DMA continues to hold the Collection and other assets and has neither returned them nor offered to compensate Schroeder for his forced share. Wildenthal and Charlton, with Copleys assistance and to the ultimate benefit of the DMA, still lay claim to the Villa la Pausa and other properties. In other words, their fraud was not just their effort to avoid French law through the artifice of having other law apply to Wendys Will, but the secreting and withholding of assets that would have been in Wendys Estate and therefore Schroeders forced heirship but for their tortious conduct. Schroeder was, of course, only required to plead that the Defendants actions caused him injury. E.g., Green Intl v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); Stone v. Lawyers Title Ins. Co., 554 S.W.2d 183, 185 (Tex. 1987) (fraud requires that party suffered injury). Proximate cause consists of both cause in fact and foreseeability.
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Travis v. Mesquite, 830 S.W.2d 94, 98 (Tex. 1992). Cause in fact means that the defendants act was a substantial factor in bringing about the injury which would not otherwise have occurred. Id. at 98. Foreseeability means that the actor, as a person of ordinary intelligence, could foresee the result. Id. The Defendants acts, individually and collectively in their conspiracy, has in fact caused Schroeder to lose property to which he should have succeeded under forced heirship. And, the DMA, Wildenthal, Charlton, and Copley, in particular, continue to deal with that property as their own. Schroeder has adequately pled causation. 6. Schroeders Fraud Claim Is Not Barred by Limitations.
Defendants concur that the statute of limitation for fraud is four years. See TEX. CIV. PRAC. & REM. CODE 16.004(a). [DMA Defendants Motion at 12; Wildenthal Motion at 20; Copley Motion at 10.] But, four years starts the day the cause of action accrues. TEX. CIV. PRAC. & REM. CODE 16.004(a). As the movants, Defendants must show that Schroeder has affirmatively pled facts which show that his fraud claim accrued more than four years before he filed this action. E.g., Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 220 (Tex. 2003) (defendants have the burden to prove limitations has run); Etan Indus. v. Lehmann, 308 S.W.3d 489, 500 (Tex. App.Austin 2010, pet. filed) (same). However, Defendants do not address with any precision when Schroeders claim for fraud accrued. The DMA Defendants do not even mention accrual. They simply point out that many of the acts complained of occurred long before Wendys death. [DMAs Motion at 12-13.] Copley says the fraud accrues from the date the defendant makes the false representation. [Copleys Motion at 10-11.] Of course, this
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fraud is not based on misrepresentations. Wildenthal argues that limitations begins to run when the fraud is perpetrated. [Wildenthal Motion at 20.]12 Because the statute does not define accrual, the courts must articulate the rules regarding accrual. Childs v. Haussecker, 974 S.W.2d 31, 40 (Tex. 1998). Generally, a cause of action accrues when facts come into existence which authorize a party to seek a legal remedy. Knott, 128 S.W.3d at 221; Lehmann, 308 S.W.3d at 40. In most cases, that is when the wrongful conduct causes a legal injury. Knott, 128 S.W.3d at 221; Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990) (put another way, when the wrongful act effects an injury). Schroeders fraud claim could not have accrued until Wendy died. Indeed, the Texas Supreme Court explained that the claim of a forced heir does not arise until the death of the testator. In Hamilton v. Flinn, 21 Tex. 723 (Tex. 1858), a mother signed a will in 1855 that would have been invalid to the extent it deprived one of her daughters of the legitimate share of the mothers estate. However, between then and the mothers death in 1857, the Texas Legislature repealed the forced heirship provisions of the Texas statute. As such, the Court faced the question as to whether the law at the time the will was signed applied or the law at the time of death. The Court held that the law at the time of death governed. It noted: The will is not a perfected act, has no force and can give no rights until the death of the testator. The heirs having no rights cannot complain of an approval by the legislature,
12
Wildenthal cites Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988), for this rather unhelpful statement which begs the question of when a fraud is perpetrated. Of course, here, it is easy to say that the fraud was not perpetrated until Wendys death because that is when the planning and scheming first took hold to defraud Schroeder of his forced heirship.
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expressly or by implication, of will previously made but not fixed by the death of the maker. Hamilton, 21 Tex. at 717. The Court noted that, as a general rule, a will has been regarded in this state as speaking from the death of the testators. Hamilton, 21 Tex. at 714. In point, the Court said: It is very clear that the rights of forced heirship, under the law of 1840, were, although inchoate, but a mere expectancy during the life of the ancestor, which did not vest nor have vitality until his death; that the status and rights of forced heirs being the creature of law, must derive their existence and force from the law under which they vest or are brought into existence, viz.: the law at the death of the parent. It is his death which gives life and seizin to the heir of this estate. Hamilton, 21 Tex. at 716. In other words, until Wendys death, Schroeders claim was a mere expectancy on which he could take no legal action. As such, Schroeders fraud claim could not possibly have accrued before Wendys death.13 This is consistent with the legal injury rule which determines when a cause of action accrues in cases where the defendants conduct is separated in time from the harm that it causes the plaintiff. The central idea is that the plaintiffs cause of action accrues when the defendants conduct first becomes unlawful under the law applicable to the
13
See also Belt,192 S.W.3d at 785-86 (though a malpractice claim against an attorney survives the decedents death because the malpractice occurred during the decedents lifetime, the statute of limitations does not begin to run until the claimant discovers or should have discovered through reasonable care the elements of the cause of action but the primary damages do not occur until after the decedents death); ODonnell v. Smith, 234 S.W.3d 135, 145 (Tex. App.San Antonio 2007) (though negligence may have occurred during the decedents lifetime the damages and cause of action did not accrue until the events after death that caused the damages), affd, 288 S.W.3d 417 (Tex. 2009). Of course, this is not a case where Defendants intended to act legally under the laws as they stood at the time. They knew Wendy lived in France when the Donation Agreement was struck, when the Collection was flown from France, when the Will was drafted, when each codicil was signed and when Wendy died. They anticipated that French law would devolve a forced heirship to Wendys only child, and they set out from the start to foil Schroeder. As Wendy lived, however, they continued to spin their web to do whatever they could to make it appear that the law of another nation might pertain and entrench to themselves the property that was destined to pass to Schroeder. Given, however, that his rights were inchoate, Schroeder had no standing to do anything before he became a forced heir by Wendys death.
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case. Zidell v. Bird, 692 S.W.2d 550, 554 (Tex. App.Austin 1985, no writ). See Tennessee Gas Transmission Co. v. Fromme, 269 S.W.2d 336, 354 (Tex. 1954); Houston Water Works Co. v. Kennedy, 70 Tex. 233, 235 (Tex. 1888); Cal Fed Mortgage Co. v. Street, 824 S.W.2d 622, 625 (Tex. App.Austin 1991, writ denied). If the defendants conduct will not form the basis of an immediate suit by the plaintiff for judicial relief because no legally protected interest of the plaintiff has been invaded by the conduct, a cause of action will not accrue until that interest has been invaded or injured. Zidell, 692 S.W.2d at 554. Put another way, if no right of redress exists by reason of the
defendants conduct, because no legally protected interest of the plaintiff has been invaded at the time of the conduct complained of, the defendants conduct is categorized as lawful and any cause of action based thereon does not accrue until some invasion of the legally protected interest does occur. Id. at 555. The Defendants procurement of the Collection and obtaining of the Will, codicils and powers of attorney, etc., did not give Schroeder any right to pursue a legal remedy at that time. They did not have their unlawful impact until Wendy died and there was too little in her Estate to fulfill Schroeders forced heirship. See also, Dyer v. Eckols, 808 S.W.2d 531, 533 (Tex. App.Houston [14th Dist.] 1991, writ dismd) (stating legal title vests in an estate immediately upon death of the donor); Jones v. Eastham, 36 S.W.2d 538, 541 (Tex. Civ. App. 1931, writ dismd) (Even a next of kin or heir apparent has no right or legal interest in the property of a living relative.); Ellsworth v. Aldrich, 295 S.W. 206, 209 (Tex. Civ. App. 1927, writ refd) (One of the distinguishing features of a will is that it is ambulatory, subject to change. A will, as such, speaks from the death of the
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testator. The rights which it is designed to convey do not arise or vest until the testator dies.).14 Further, fraud vitiates whatever it touches. Estate of Stonechipher v. Estate of Butts, 591 S.W.2d 806, 809 (Tex. 1979). As such, limitations on a fraud claim begins to run no earlier than when the fraud is discovered or could have been discovered by the defrauded party by the exercise of reasonable diligence, and reasonable diligence is a question of fact. Estate of Stonecipher, 591 S.W2d at 809. Indeed, fraud in and of itself prevents the running of the statute of limitations. S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996). Put another way, injury to Schroeder was inherently undiscoverable at least until Wendy died even though the evidence of the injury Schroeder has now suffered is objectively verifiable. As such, the discovery rule applies. Because of the Defendants fraud, Schroeder did not know and could not have known these facts until after Wendy died. But, her death alone did not give him knowledge that he had a claim. Schroeder filed suit on March 11, 2011, within four years of his mothers death on March 13, 2007. Before Wendy died, Schroeder could not have pursued a claim for fraud because his interest in Wendys Estate did not vest until Wendys death. Because
Schroeder filed suit within four years after his rights vested in the Estate, there is no statutory bar to his fraud claim.
14
Interestingly, the DMA Defendants argue, based on this very principle, that Schroeder had no right to possession until Wendy passed away. [DMA Defendants Motion at 19, citing First Natl Bank of El Campo v. Gann, 150 S.W.2d 290, 292 (Tex. Civ. App.Galveston 1941, writ refd) (heirs right to possession arose after death).]
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C.
Schroeder Has Pled Actionable Claims for Constructive Trust and Accounting. Defendants contend a constructive trust is merely a remedy. However, as
mentioned above, the Texas Supreme Court in Pope impressed a constructive trust when the equitable predicate for its application was met, independent of any separate cause of action at law. 211 S.W.2d 559, 560-61 (Tex. 1948) (specific instances in which equity impresses a constructive trust are numberlessas numberless as the modes by which property may be obtained through bad faith and unconscientious acts). Pope thus
illustrates the highly flexible nature of a constructive trust claim, confirming that the Courts power sitting in equity is not constrained by the rigid formalities of a separate cause of action at law. Even if it is a remedy for another tort, Schroeder is entitled to just that remedy based on the other torts he has alleged.15 Defendants also argue that a constructive trust requires a preexisting fiduciary relationship between Plaintiff and Defendants. Not so. Again, a constructive trust is solely an invention of equity. As such, it is entirely independent of any actual or presumed agreement or intention of the parties at interest and may be contrary thereto. Simmons v. Wilson, 216 S.W.2d 847, 852 (Tex. App.Waco 1949, no writ). Under Texas law, constructive trusts are not predicated on a preexisting fiduciary relationship between the parties. See Simmons, 216 S.W.2d at 852 (the existence of a fiduciary
15
The DMA Defendants say that it is absolutely absurd that Schroeder might recover the profits and donations the DMA has garnered from the property it unlawfully withholds. But, for example, disgorgement of profits obtained in connection with ill-gotten property is a proper remedy in connection with a constructive trust and an accounting. See Hunter v. Shell Oil Co., 198 F.2d 485, 489 (5th Cir. Tex. 1952). Since equity converted Defendants into trustees of the property to which they were not entitled to retain title, equity likewise supports a claim for constructive trust over, and an accounting of, the ill-gotten gains Defendants have obtained by use of the property.
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relation between appellant and appellees was not a necessary prerequisite to the establishment of a constructive trust); see also Pope, 211 S.W.2d at 560-61. To the contrary, a constructive trust arises as the result of equity converting a Defendant into a trustee to avoid unjust enrichment when he holds legal title, but may not in good conscience retain the beneficial interest. See, e.g., Bounds v. Caudle, 560 S.W.2d 925, 928 (Tex. 1977) (where a killer acquires legal title to a property of his victim, the law imposes a constructive trust thereon for heirs other than the killer); Pope, 211 S.W.2d at 560-61 (where heirs prevented testator from executing will, they held the property they took by inheritance as trustees for the benefit of the unexecuted wills beneficiaries); Leach v. Conner, No. 13-01-468-CV, 2003 Tex. App. LEXIS 10173, *22 (Tex. App. Corpus Christi Dec. 4, 2003, no writ) (constructive trust imposed on advance rents collected from by buyer of foreclosure property in favor of debtor who timely exercised its statutory right of redemption to property); Simmons, 216 S.W.2d at 852 (constructive trust established, in part, to avoid unjust enrichment due to mistake or fraud). Schroeders allegations, taken as true, establish that Defendants are not entitled to retain equitable title to property they obtained through unconscientious means, including by virtue of committing a constructive or legal fraud, as set forth above in detail. Equity converts them to trustees holding title for Schroeders benefit. See Leach, 2003 Tex. App. LEXIS 10173 at *22. It then follows that, even if a fiduciary relationship is a prerequisite to an equitable accounting, equity permits Schroeder to call Defendants to account for the property they are deemed to hold in trust for his benefit. And in any event, to the extent discovery fails
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to adequately identify the property, any distributions and related income, the Court may, in its discretion, order an accounting. See, e.g., Lewis v. Xium Corp., NO. 07-08-0219CV, 2009 Tex. App. LEXIS 5210, *19 (Tex. App.Amarillo July 8, 2009, pet. denied) (accounting was appropriate where regular discovery practices proved inadequate to show expenditures, expenses and income). Defendants also erroneously argue that a request for an accounting is solely a remedy, not an independent claim, citing Triple Tee Golf, Inc. v. Nike, Inc., 618 F. Supp. 2d 586, 599 (N.D. Tex. 2009), and Collins v. GospoCentric Records, No. 3:00-CV-1813H, 2001 WL 194988, at *1, 2001 U.S. Dist. LEXIS 7357, at *4 (N.D. Tex. Feb. 22, 2001). Of course, neither of these cases is controlling. Nor are they persuasive. The opinion in Triple Tee provides no analysis, subordinating the issue to a footnote without discussion. 618 F. Supp. 2d at 599 n. 15. GospoCentric is even less availing, as it expressly relies on and applies California law. 2001 U.S. Dist. LEXIS 7357, at *4. Moreover, these cases do not correctly state Texas law insofar as the Texas Supreme Court has recognized that a suit for an accounting can be an independent proceeding arising in equity. Palmetto Lumber Co. v. Gibbs, 124 Tex. 615, 626 (Tex. 1935). An accounting can, of course, also serve as a remedy for Schroeders other causes of action. See Michael v. Dyke, 41 S.W.3d 746 (Tex. App.Corpus Christi 2001, no writ). Schroeder has adequately pled both.16
16
The Courts ultimate decision whether to order an accounting of course rests within its discretion, based on guiding legal principles and supporting evidence. See, e.g., Lewis, 2009 Tex. App. LEXIS 5210 at *20 n.18. Given the alleged sham transactions and entities, as well as the timeframe involved, the pleaded facts plausibly show the complexity of these transactions will make an accounting necessary. Moreover, the Court will be in a better position
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D.
Schroeder Has an Actionable Claim for Conspiracy. 1. Schroeder Has Stated a Conspiracy Claim With Sufficient Particularity.
Copley (but not Wildenthal or the DMA Defendants) argues that Defendants interference with Schroeders rights as a forced heir cannot lay the foundation for a conspiracy claim because it was not unlawful, citing Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983). Massey involved a dispute between the plaintiff and his employer and the employers carrier over workers compensation benefits. The only overt act he alleged was the rejection of his settlement proposal, which the court rightly concluded was not an unlawful act. Id. at 934. In stark contrast to simply refusing a settlement offer, however, Texas long ago recognized (as discussed above) that retaining property by unconscientious means and defrauding a forced heir are unlawful and therefore actionable. That unlawful end in and of itself is the proper subject of a conspiracy claim. Moreover, the Defendants concerted overt acts over time toward their common goal link them as co-conspirators. Given the nature of conspiracies, Texas has long recognized that conspiracies are usually proved by circumstantial evidence. Jernigan v. Wainer, 12 Tex. 189 (1854). Inferences of concerted action may be drawn from joint participation in the transactions and from enjoyment of the fruits of the transactions. Intl Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 582 (Tex. 1963) (proof showing concert of action or facts and inferences showing unlawful acts were committed as part of
to assess whether discovery has been adequate after discovery has been completed; such an assessment is therefore premature at this stage of the proceeding.
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common design or purpose is sufficient to show conspiracy), superseded on other grounds as stated in Yeckel v. Abbott, NO. 03-04-00713-CV, 2009 Tex. App. LEXIS 3881, *29-30 (Tex. App.Austin June 4, 2009, pet. denied). The link here is evidenced by (among other things) the Donation Agreement procured by Charlton, Levy and Parker for the DMA at the conspiracys inception: Further under the Donation Agreement, the color of title to so-called Retained Works worth several millions of dollars was to remain in Beaux-Arts, with the promise that BeauxArts would donate them to WERF upon Wendys death, or that if Wendy caused the Retained Works to be distributed to her, she would donate the Retained Works to WERF. [Complaint 89; see also 49-59.] The DMA Defendants knew and intended there to be a future will to complete the heist, scooping up the Retained Works upon Wendys death. [Id.] As detailed in the Complaint, Copley, Wildenthal and others then entered the picture later to accomplish precisely that end. [Id. 61-83.] Once they were in the vault, however, they got greedy and grabbed up not only the Retained Works, but the rest of Wendys Estate as well. [Id.; see also 89.] Moreover, that Copley had Wendy execute a codicil purporting to invoke the law of England (which has no forced heirship law and where Wendy had neither lived nor had a substantial connection other than the citizenship she obtained from her late husband) demonstrates the entire charade was aimed at depriving Schroeder of his 50% share of the Estate. [Id. 71.] From the outset and throughout, all roads lead to the DMA.17 The Complaint details the paper trail left by
17
Of course, Copley likewise shared from the largesse by billing Wendy for legal services in connection with these transactions.
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Defendants concerted action, raising an inference of an ongoing conspiracy to deplete Wendys Estate of assets in contravention of French law, defrauding Schroeder as the sole forced heir. In addition, Defendants employed unlawful means to advance the scheme. In particular, Copley instructed Wendy to sign a power of attorney that is invalid under both Texas and French law. [Complaint 74-77.] Nevertheless, based on this invalid power of attorney, Copley set up WERCF as a purported trust, which Defendants intended to use to transfer certain of Wendys assets to the DMA, including most specifically her rights to the Retained Works, further depleting her estate in contravention of French law. [Id. 78-79.] Not only is the power of attorney invalid, but an attorney-in-fact cannot create a trust for his principal [id. 89.] See Ritter v. Till, 230 S.W.3d 197, 203 (Tex. App.Houston [14th Dist.] Mar. 15, 2005, no pet.) (under Texas Probate Code 499(6), an attorney-in-fact has no power to create a trust and transfer property to it). The DMA Defendants and Wildenthal (but not Copley) also argue that no meeting of the minds could have arisen because they did not participate in every component of the ongoing conspiracy from 1983 to the present. In particular, the DMA Defendants generally argue their involvement was limited to procuring the Donation Agreement that began the looting of the Estate, but that they did not participate in the later transactions that finished the job. Of course, Charltons later participation as co-executor under Wendys will undercuts their disparate-acts argument. Charlton, Levy and Parker acted as directors of WERF since Wendys death. Wildenthals argument is the flip-side of the same coin, pointing out that his involvement began only after the Donation Agreement
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was signed. Both arguments run afoul of the rule that a conspirator need not have participated in the conspiracy from inception to fruition to trigger liability: [A] changing cast of characters does nothing to lessen the fact of one conspiracy. Once the existence of a common scheme of conspiracy is shown, slight evidence is all that is required to connect a particular defendant with the conspiracy. And it is axiomatic that it is not necessary for each conspirator to have entered into the unlawful agreement at its inception. United States v. Ashley, 555 F.2d 462, 467 (5th Cir. 1977) (internal citations omitted). In other words, once involved in the conspiracy, a conspirator is always liable for acts committed in its furtherance. By invoking the intracorporate conspiracy doctrine, the DMA is apparently owning up to responsibility for all of the alleged actions by Parker, Levy, and Charlton in the Complaint, as otherwise, the doctrine could not possibly apply: A corporation cannot conspire with itself any more than a private individual can, and it is the general rule that the acts of the agent are the acts of the corporation Hilliard v. Ferguson, 30 F.3d 649, 653 (5th Cir. 1994) (quoting Nelson Radio & Supply Co. v. Motorola, Inc., 200 F.2d 911, 914 (5th Cir.1952), cert. denied, 345 U.S. 925, 73 S. Ct. 783, 97 L. Ed. 1356 (1953)). However, because the intra-corporate conspiracy doctrine applies only to agents acting within the scope of their authority, and the DMA has yet to file an answer and may yet challenge whether Parker, Levy and Charlton acted within that scope, the doctrine does not bar the conspiracy claim here. See LED Sign Co., LLC v. Hwee, No. H-08-1463, 2008 U.S. Dist. LEXIS 97851, at *23-24 (S.D. Tex. Dec. 3, 2008). Rather, as pled, the DMA is liable for the acts of Parker, Levy, and Charlton
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(as well as Wildenthal and Copley), one way or another, and the rules specifically permit Schroeder to plead both agency and conspiracy in the alternative. Fed. R. Civ. P. 8(d)(2)(3). The conspiracy claim therefore cannot be dismissed based on the intracorporate conspiracy doctrine. 2. Schroeders Conspiracy Is Not Barred By Limitations.
Texas two-year and four-year statutes of limitations do not specifically address conspiracy. See, e.g., Tex. Civ. Prac. & Rem. Code 16.003-16.004. Because there is no express limitations period for a conspiracy claim, the default four-year limitations period applies. Tex. Civ. Prac. & Rem. Code 16.051. Moreover, even if the default four-year statute does not apply, the four-year statute of limitations for fraud applies here because it is the underlying substantive tort. As Copley acknowledges, conspiracy is simply a means of sharing liability for the underlying substantive torts among multiple defendants. [Copley Motion at 12 citing Carroll v. Timmers Chevrolet, Inc., 592 S.W.2d 922, 925 (Tex. 1979).] The Texas
Supreme Court has not decided whether the two-year or one of the four-year statutes of limitations applies to conspiracy. See Navarro v. Thornton, 316 S.W.3d 715, 719 (Tex. App.Houston [14th Dist.] 2010, no pet.). Notwithstanding intermediate court cases that apply the two-year statute, logic dictates that as a derivative claim which merely extends joint liability to those who encourage, aid, and participate in the underlying tort, limitations for conspiracy should follow the underlying substantive claim. Since the four-year statute governs the underlying claim of fraud (Tex. Civ. Prac. & Rem. Code
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16.004), a conspiracy to commit that fraud should be subject to the same four-year limitations period. Defendants argue that limitations on a conspiracy claim runs from each overt act. They therefore argue that, since the Donation Agreement etc. were all effected long before Wendys death, limitations bars a conspiracy claim for those acts. Their argument fails for two independent reasons. First, Defendants have misstated the rule. Under Texas law, limitations runs based on each overt act invading the plaintiffs interest and causing him damages: Under civil conspiracy, each continued invasion of the plaintiff's interest causing loss and damage in a conspiracy case is treated as an independent element for limitations purposes and the two year statute of limitations begins to run when each independent element arises Mayes v. Stewart, 11 S.W.3d 440, 453 (Tex. App.Houston [14th Dist.] 2000, pet. denied) (quoting Cathey v. First City Bank, 758 S.W.2d 818, 822 (Tex. App.Corpus Christi 1988, writ denied). Here, the interest invaded (by design) was Schroeders forced heirship under French law. Schroeders forced heirship interest, although anticipated by Defendants, did not arise until Wendys death. In other words, that Defendants planted their ticking time bomb years ago does not change the fact it was set to go off upon Wendys death. Second, the doctrine of continuing tort brings all of these actions forward to within the limitations period, as all were aimed at depleting Wendys Estate and defeating Schroeders forced share upon her death. Because the conduct by its design and nature was continuing (even continuing after Wendys death) and damages continue to occur,
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Schroeders claim is not barred by the statute of limitations.
Twyman v. Twyman, 790
S.W.2d 819, 821 (Tex. App.Austin 1990), revd on other grounds, 855 S.W.2d 619 (Tex. 1993); see also Hawthorne Land Co. v. Occidental Chem. Corp., No. 04-30137, 431 F.3d 221, 2005 U.S. App. LEXIS 25067, *21 (5th Cir. 2005) (recognizing doctrine, but concluding it did not apply). Under either rationale, the conspiracy claim is not timebarred. III. CONCLUSION Schroeder respectfully requests that the Court deny the Defendants Motions to Dismiss . Respectfully submitted, By: /s/ Gary D. Eisenstat Gary D. Eisenstat State Bar No. 06503200 Doug K. Butler State Bar No. 03516050 Valeri C. Williams State Bar No. 24058797
FIGARI & DAVENPORT, L.L.P. 3400 Bank of America Plaza 901 Main Street Dallas, Texas 75202 TEL: 214-939-2000 FAX: 214-939-2090 ATTORNEYS FOR PLAINTIFF ARNOLD LEON SCHROEDER, JR.
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CERTIFICATE OF SERVICE I hereby certify that on August 5, 2011, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to all parties who have appeared and registered with CM/ECF. /s/ Gary D. Eisenstat Gary D. Eisenstat
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