1 NO. 04

- 14

- 00110

- CV

IN THE COURT OF APPEALS FOR THE FOURTH COURT OF APPEALS DISTRICT SAN ANTONIO, TEXAS

__________________________________________________________________ MARY MOCZYGEMBA, Appellant,

v.
THOMAS J. MOCZYGEMBA and HARRY LEE MOCZYGEMBA, Appellees.

__________________________________________________________________ APPELLANT’S MOTION FOR EN BANC RECONSIDERATION

TO THE HONORABLE JUSTICES OF THE FOURTH COURT OF APPEALS :
MARY MOCZYGEMBA, Appellant, files this Motion under Rule 49 Tex. R.

App. P.
Appellant’s Motion for Rehearing was denied on May 4, 2015. Th e opinion

in this case holds that deeds to a fiduciary by a beneficiary of the fiduciary
relationship are not evidence of an objectively verifiable injury

. Appellant

believes that en banc reconsideration is vital here because the opinion : 1) impairs

well

- established Texas fiduciary law; 2) creates confusion in the law because it

contradict s previous opinions of this Court without explanation; and 3) creates a
dangerous pre cedent in the jurisprudence of elder abuse. ACCEPTED 04-14-00110-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 5/19/2015 8:06:08 PM KEITH HOTTLE CLERK2 This Court Erred By Repudiating the Cardinal Rule That Transactions between a Fiduciary and a Beneficiary Are Presumptively Fraudulent and Tortious
Unquestionably, the three deeds at issue in this ca se constituted transactions
between Appellant and her fiduciaries. Unquestionably, the three transactions
were objectively verifiable, because they are themselves specific documents. 1

Transactions between a fiduciary and the beneficiary of the fiduciary relationship

are “ presumptively fraudulent .” Jordan v. Lyles
, -- S.W.3d

-- , 2015 WL 393791

*4 (Tex.App.

- Tyler 2015, no pet.); Lesikar v. Rappeport , 33 S.W.3d 282, 298

(Tex.App.

- Texarkana 2000, pet. denied); Chien v. Chen
, 759 S.W.2d 484, 495

(Tex.App.

- Aus tin 1988, no writ).

However, t his Court repudiated the well

- settled rule that the deeds are
presumptively fraudulent when it erroneously held the following:
While the deeds are evidence that Mary’s mineral interests passed to her sons, they are not evidenc e that the mineral interests were wrongfully transferred to her sons

.... we cannot conclude that the mere transfer of mineral interests necessarily equates to Mary having suffered from a wrongful transfer of her property.

[Op., at 11]

.
This Court’s errone ous holding above also repudiated the well

- established
“presumption of u n fairness” of “transactions between a fiduciary and a party to
whom the fiduciary owes its duties .” Porter v. Denas
, 2006 WL 1686515 *5

1 Polk Mechanical Co., LLC v. Jones , 2009 WL 1900414 *4 (Tex.App.

- San Antonio 2009, pet.

denied) (not for publication).3 (Tex.App.

- San Antonio, pet. denied) (not for pu blication); Lee v. Hasson , 286

S.W.3d 1, 21 (Tex.App.

- Houston [14th Dist.] 2007, pet. denied); Miller v. Miller
, 700 S.W.2d 941, 946 (Tex.App.

- Dallas 1985, writ ref'd n.r.e.)

.
Th e common law deems the deeds to be injuriou s to Appellant , in and of
themselves, subject to rebuttal proof by Appellees of “the fairness of the

transaction. ” Porter at *5. Because this Court made no mention of any evidence
showing the fairness of the deeds to Appellant (and, in fact, did not even mention
the legal concept of “fairness”), the effect of the above presumption s stand , and the
deeds are fraudulent and tortious by default. The only way this Court could
conclude that these deeds do not provide objectively verifiable evidence of the
inju ry, is to repudiate these long

- standing presumption s

.
This Court Erred by Focusing on the Beneficiary’s Intent While Ignoring The Fairness of the Transactions to the Beneficiary

This Court ignor ed the issue of the fairness of the transactions and bas ed it s
opinion solely on the allegedly unexpressed intent of A ppellant:
Mary herself testified that she wanted to transfer her property to her sons at a price lower than market value because they were her sons and they were helping her. ... Mary agrees that at t he time of the transfer of the property, there were no discussions about the mineral interests because she never thought about the mineral interests.

[Op., at 11]. Texas case law, however, is clear that the determination of injury
resulting from a tran saction between a fiduciary and the beneficiary of the
fiduciary relationship focuses solely on the fairness of the transaction, and the4 beneficiary’s intent in the transaction is not determinative ( and generally not even
relevant). In Kirkpatrick v. Cusi ck
, 2013 WL 6730049 *6 (Tex.App.

- Corpus
Christi 2013, pet. denied), the court of appeals held that the fiduciaries had failed

to meet their burden of proving the fairness of their survivorship account
transaction with the beneficiary of their fiduciary dut ies, and further that:
even if [the beneficiary] knowingly and voluntarily named [the fiduciary] as a joint tenant with right of survivorship on the bank accounts, that fact by itself does not conclusively demonstrate that [plaintiff] could not prove her p leaded allegations that [the fiduciary] breached a fiduciary duty to [the beneficiary ].

Id. (emphasis added). Likewise, this Court in Sorrell v Elsey, 748 S.W.2d 584

(Tex.App.

- San Antonio 1988, writ denied), held that:
Whether the complaining party in a fiduciary transaction understood the transaction in question is not the critical issue. ... Under fiduciary circumstances, a claim that a transaction was adopted by the execution of a document in conjunction therewith does not preclude an inquiry into the f airness of the entire transaction and the imposition of the fiduciary burdens. Archer v. Griffith, 390 S.W.2d at 739, 740

.
Id. at 586 (emphasis added).

The Court in Miller held that the fact tha t the beneficiary of the fiduciary
relationship 1) read the contract with her fiduciary; 2) signed it; 3) asked no
questions about it; and 4) intended to be bound by the contract w as not relevant to

the determination of the fairness of the transaction. Mi ller , 700 S.W.2d at 943.5 The Court held that the beneficiary’s intent was immaterial, and that the sole issue

was the fairness of the transaction:
Under the charge as submitted by the court, materiality of the nondisclosed facts did not depend on Judy's s tate of mind. The court defined “material fact” as a “fact which a reasonable person, under the same or similar circumstances, would attach importance to in determining his course of conduct or action.” If the facts known to Howard were “material” in thi s sense, he had a fiduciary duty to disclose them, and his breach of this duty cannot be excused on the ground that Judy has failed to establish her reliance on Howard's duty to disclose them.

Id. at 948. This Court erred by doing the converse of the abo ve three cases

– ignoring the fairness of the transactions and determining the lack of a documented
injury to Appellant based only on her unexpressed intent.
This Court Erred By Contradicting Its Own Opinions Tolling Limitations in Breach of Fiduciary Duti es Cases

A. Appellant cited Sorrell v Elsey, 748 S.W.2d 584 (Tex.App.

- San

Antonio 1988, writ denied), a deed rescission case very similar to this one, for the
following proposition s : 1) the fact that Appellant may have understood that she
was making a gift o f some sort and consented to the gifts by signing the deeds w as
irrelevant to the determination of her injury; and 2) a gift deed from the beneficiary
of the fiduciary relationship to the fiduciary is prima facie injury to the beneficiary

.
Th is Court comp letely ignored Sorrell and , in fact, held the opposite

-- that the
intent of the beneficiary determines whether she was injured, and that a gift deed to
a fiduciary is not a prima facie injury.6 B. Similarly, Appellant cited Camp Mystic, Inc. v. Eastland , 390 S.W.3d

444 (Tex. App.

- San Antonio 2012, pet. granted, remanded by agr.) , a lease case,
for the propositions that 1) the discovery rule applies to transactions between a
fiduciary and the beneficiary of the fiduciary relationship; and 2) the signing by a

be neficiary of a contract with a fiduciary does not preclude an attack by the
beneficiary on the contract for unfairness. This Court completely ignored Camp

Mystic , and held the opposite, that the discovery rule does not necessarily apply to

transactions be tween a fiduciary and a beneficiary; and that a beneficiary’s
unexpressed intent precludes an attack on a written transaction with a fiduciary.

This Court Erred In Applying the S.V. Opinion to This Case
Appellant pled that Appellees breached their “fiduc iary duty of full
disclosure” by failing to disclose to Appellant “the ramifications of signing these
deeds, in particular that [Appellant] would be giving up her mineral interests.”
(CR1455). As shown below, the failure of a fiduciary to disclose materia l facts to
the beneficiary has been characterized as both fraud and fraudulent concealment.
Although S.V. v. R.V., 933 S.W.2d 1 (Tex. 1996) was a repressed memory
case and not a fiduciary transaction case, this Court cited it twenty times in its
opinion. Clearly
, S.V. provided the fundamental underpinning for its holding that
Appellant’s injury was not objectively verifiable. The Supreme Court in S.V.
, however, acknowledged that the typical discovery rule analysis, including the7 requirement of an objectiv ely verifiable injury, does not apply to cases “ involving ”

fraud or fraudulent concealment:
Strictly speaking, the cases in which we have deferred accrual of causes of action for limitations purposes fall into two categories: those involving fraud and frau d ulent concealment, and all others. The deferral of accrual in the latter cases is properly r e ferred to as the discovery rule. We observe the di s tinction between the two categories because each is characterized by di f ferent substantive and procedural rul es. ... Fraud, we have said, in and of itself prevents running of the statute of lim i tations

... Restated, the general principle is this: accrual of a cause of action is deferred in cases of fraud or in which the wrongd o ing is fraudulently concealed , and in discovery rule cases in which the alleged wrongful act and resulting injury were inherently undiscoverable at the time they o c curred but m ay be objectively verified.

Id. at 4 (emphasis added). Because this case involves fraud and fraudulent

concealment, limitations was automatically tolled, the discovery rule does not
apply, and there is no requirement of an objectively verifiable injury . Thus, the
entire foundation for, and analysis in, this Court’s opinion is fundamentally

erroneous. By requiring an o bjectively verifiable injury in a case involving fraud

and fraudulent concealment, t his Court’s opinion turns S.V . on its head, and holds

the opposite of S.V.
A fiduciary’s transactions with a beneficiary and failure to disclose material

facts to a bene ficiary are presumptively fraud :
All transactions between a fiduciary and his principal are presumptively fraudulent and void ; therefore, the burden lies on the fiduciary to establish the validity of any particular transaction in which he is involved. ... S ilence is equivalent to a false8 representation where circumstances impose a duty to speak and one deliberately remains silent. Spoljaric v. Percival Tours, Inc
., 708 S.W.2d 432, 435 (Tex.1986) . So , for there to be actionable nondisclosure fraud , there must be a duty to disclose. Bradford v. Ven to , 997 S.W.2d 713, 725 (Tex.App.

- Corpus Christi 1999, pet. granted) ; Hoggett v. Brown
, 971 S.W.2d at 487

– 88. Whether such a duty exists is a question of law. Bradford v. Vento, 997 S.W.2d at 725. A duty to disclose may arise in four si tuations: (1) where there is a special or fiduciary relationship; ...

Lesikar v. Rappeport , 33 S.W.3d 282, 298

- 99 (Tex.App.

- Texarkana 2000, pet.

denied) (emphasis added). See also, Bright v. Addison , 171 S.W.3d 588, 599

(Tex.App

- Dallas 2005, pet. denied) (“The failure [of a fiduciary] to disclose

constitutes fraud.”).
A fiduciary’s failure to disclose material facts to a beneficiary of the
fiduciary relationship is also fraudulent concealment:
A breach of a fiduciary duty of disclosure is tantamount to

co ncealment for limitations purposes. Id. at 645 ; see Seureau , 274 S.W.3d at 228 (including as additional element of fraudulent concealment doctrine “a duty to disclose the wrong”). Thus, the statute of limitations for a breach of fiduciary duty claim does not begin to run until th e claimant “knew or should have known of facts that in the exercise of reasonable diligence would have led to the discovery of the wrongful act.” Little v. Smith , 943 S.W.2d 414, 420 (Tex.1997)

Dernick Resources, Inc. v. Wilstein, 312 S.W.3 d 864, 878 (Tex.App.

– Houston [1 st

Dist.] 2009, no pet.) (emphasis added)

.
A breach of a [fiduciary’s] duty to disclose is tantamount to concealment. Id. Failure to disclose in such situations constitutes fraudulent concealment which will prevent the wrongdoer from perpetrating further fraud by using limitations as a shield.9 Haas v. George, 71 S.W.3d 904, 913 (Tex.App.

– Texarkana 2002, no pet. )
(emphasis added)

. By S.V.’s express holding, the type of breach of fiduciary duty case
presented here tolls limitations
, regardless of the objectively verifiable prong of the
discovery rule.

By Ruling That Appellant’s Injury Cann ot Be Objectively Verif ied , T he Court Has E ffectively Creat ed a New Shield for Defalcating Fiduciaries
This Court’s opinion is a classic example of “bad facts make bad law.”

C ollateral damage from the Court’s o pinion will likely be significant . Essentially,

the Court has rejected all of the burdens placed on fiduciaries to prove fairness and
prove full disclosure

- burdens that this C ourt has frequ ently recognized and

enforced
, and which satisfy the objectively verifiable prong . Instead, the Court has
effectively classified Mary’s claim a s just a n unverifiable swearing match
, because
Mary had to document her intention to ke ep the minerals. This Court’s o pinion

turns the law o f fiduciary duty on its head and switches the burden away from the
fiduciary and back to the beneficiary , as in any arms

- length case

. More
importantly, this Court negated its own holding in Sorrell that “whether the

complaining party in a fiduciary transa ction understood the transaction in
question is not the critical issue.” Id . at 586. Here, the Court has determined that

the critical issue is whether Mary understood the transaction: that is, she had to10 understand that the minerals were being taken and objectively express that she
wanted to keep her minerals.
Essentially, th is Court held that Mary cou ld not objectively show that she

intended to retain the minerals in order to satisfy the objectively verifiable prong

. The Court specifically held that d eposition testimony is not objectively verifiable :

The evidence in this case consists of deposition testimony, which is not objectively verifiable evidence , and copies of the actual deeds showing a transfer of the mineral estate from Mary to Tommy and Harr y, respectively. While the deeds are evidence that Mary’s mineral interests passed to her sons, they are not evidence that the mineral interests were wrongfully transferred to her sons.
This statement by the Court effectively holds that no abusive gift, loan, sale
,

or transfer between a beneficiary and her fiduciary will ever be subject to the
discovery rule. Apply this Court’s holding above to a deed given by an elderly
beneficiary to her lawyer, to a check given to a close confida nt e , or to the signing
of a survivorship account agreement at the request of a fiduciary

. T o trigger the
discovery rule in those situations
, the beneficiary would be forced by this Court to
objectively prove that the transaction was not intended to be a gift, or not intended

t o be compensation, or not made for some other legitimate reason. And, the Court

has effectively opined that one cannot show that the injury is objectively verifiable
via the long recognized presumptions of fraud and unfairness or through testimony.

How c ould any beneficiary ever meet that prong under this Court’s erroneous
interpretation?11 This Court’s opinion is potentially devastating to beneficiaries of fiduciary
duty
, especially to the elderly who are more apt to execute transaction s without
fully gra sping what they are. A ny time a fiduciary slips a piece of paper in front of
his beneficiary, the clock will now run
, even though the beneficiary may n ot know
what he or she signed
, or the true effect of signing the document and regardless of

whether the transaction is unfair

. Because of this Court’s opinion, “sharp
bargains,” like the one here , will become the new elder abuse game in town

.
WHEREFORE , Appellant prays that the Court consider this Motion, grant

a re consideration en banc , and grant general relief.
Respectfully submitted,

THE HARTNETT LAW FIRM

By: /s/ Jim Hartnett, Jr. Jim Hartnett, Jr. Texas Bar Card No. 09169200 jim@hartnettlawfirm.com Will Hartnett Texas Bar Card No. 09170200 wi ll@hartnettlawfirm.com Fred Hartnett Texas Bar Card No. 00790833 fred@hartnettlawfirm.com Melinda J. Hartnett Texas Bar Card No. 24032403

2920 N. Pearl Street Dallas, Texas 75201 Telephone (214) 74 2

- 4655 Facsimile (214) 855

- 785712 ATTORNEYS FOR MARY MOCZYGEMBA
, APPELLANT

CERTIFICATE OF COMPLIANCE
I hereby certify that the above document complies with the word count limits set forth in the amendments to the Texas Rules of Appella te Procedure. The document has a word count of 2, 7 6 8

.

/s/ Jim Hartnett, Jr. Jim Hartnett, Jr.

C ERTIFICATE OF SERVIC E
I hereby certify that on the 1 9 th day of Ma y , 2015 , a copy of the above and foregoing response was sent pursuant to T.R.A.P. Rule 9.5 to the following parties and counsel of record:

Joyce W. Moore Langley & Banack, Inc. 745 East Mulberry, Suite 900 San Antonio, Texas 78212 Telephone (210) 736

- 6600 Facsimile (210) 735

- 6889 jwmoore@langleybanack.com Attorney s for Thomas J. Moczygemba And Harry Lee Moczygemba

/s/ Jim Hartnett, Jr. Jim Hartnett, Jr.