Source: https://www.texascommerciallitigator.blog/page/2
Timestamp: 2019-04-21 13:09:01+00:00

Document:
In 2011, the Texas Legislature passed the Texas Citizens Participation Act (TCPA) also characterized as an anti-SLAPP statute (Strategic Lawsuit Against Public Participation). “The purpose of this [Act] is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.” Tex. Civ. Prac. & Rem. Code Ann. § 27.002 (West). However, as can be seen from one recent case, due to the broad language within the statute, the TCPA is now being applied to lawsuits arising out of business disputes that appear to exceed the TCPA’s expressed purpose.
In the case of Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 865–71 (Tex. App.—Austin 2018, no pet. h.), the Plaintiff Purchaser Entities sued the Defendant Seller Entity and its principals for breach of contract, tortious interference, breach of fiduciary duty, fraud, misappropriation of trade secrets, civil conspiracy and violations of non-compete agreements. The dispute arose out of an asset purchase agreement entered into between one of the Defendant Purchaser Entities and the Defendant Seller Entity. The Defendant Seller Entity was a technology solutions provider certified by the State of Texas as a Historically Underutilized Business (HUB) allowing it to compete for government contracts that give preferential treatment to HUBs. There was a series of transfers and modifications made in connection with the asset purchase agreement in order to preserve the HUB status of the Defendant Seller Entity.
In the years following the execution of the asset purchase agreeement, the business relationship between the Defendant Seller Entity and Plaintiff Purchaser Entities deteriorated and the underlying lawsuit ensued. The Defendants filed a motion to dismiss under the TCPA. The trial court denied the motion in its entirety and the appeal followed.
The Austin Court of Appeals found that the trial court erred in denying the motion in its entirety because the allegations in the Plaintiffs’ lawsuit fell within the purview of the TCPA. According to the appellate court, the statute applied to Plaintiffs’ lawsuit in that the underlying transactions between the buyer and seller companies and allegations against Defendants were related to the Defendant Seller Entity’s HUB status. The TCPA applies to the “exercise of the right of free speech.” The HUB issues relate to “government”and to “economic well-being.” This is sufficient to make the best TCPA applicable. Grant v. Pivot Technology Solutions, supra, pp. 877–878.
Further, the appellate court found that the TCPA applied because the allegations in Plaintiffs’ lawsuit involved the “exercise of the right of association.” The court stated that many of the Plaintiffs claims were based upon the Defendants’ acting together to share and use Plaintiff’s confidential information. “Consequently, these claims (which are almost identical to those brought by the plaintiffs in Elite Auto ) are “based on, relate[d] to, or [are] in response to” communications “between [the Defendants] who had joined together to pursue a common interest in employment with [the Defendant Seller Entities] and ensuring [Defendant Seller Entity] was able to operate as a HUB,” protected as an “exercise of the right of association.”” Grant v. Pivot Tech. Sols., Ltd., supra, p. 881.The court even seemed to place importance upon the allegations that the Defendants conspired to commit illegal acts.
The appellate court held that the trial court erred by denying the Defendants’ TCPA motion to dismiss “because the [Plaintiffs] failed to present clear and specific evidence of a prima facie case for every essential element of each and every claim for relief.” Grant v. Pivot Tech. Sols., Ltd., supra, p. 884. The only claims of the Plaintiffs that survived were those based upon improper solicitation and competition which are excluded from the TCPA under the commercial-speech exemption.
In conclusion, this opinion seems to be a far reaching opinion in applying the TCPA. Moreover, there seems to be a growing body of Texas case law applying the Act in ways that one would never have imagined when it was first enacted. Thus, business plaintiffs and their attorneys in many types of corporate disputes will have to be prepared at the early stages of litigation to defend against a possible motion to dismiss under the TCPA. Otherwise, they may find their otherwise meritorious cases being dismissed under the Act. This will no doubt increase the costs of litigation in the early stages for business plaintiffs.
Family estate planning issues arise far too often when a child takes financial advantage of a parent who is mentally incompetent because of dementia or other mental infirmities. This is why it is so important to plan our estates while we still have our mental faculties and to put trustworthy people in charge who have the necessary skills to manage our estates after we are gone.This can be seen from a recent 2018 opinion by the Dallas Court of Appeals.
In Anderton v. Green, 555 S.W.3d 361 (Tex. App.—Dallas 2018, no pet. h.), James sued his niece, Jennifer, who was raised by James’s mother, Frances, Jennifer’s grandmother. During her lifetime, Frances set up a trust for the benefit of James and his brother which later held about $1 million in assets. Frances provided for Jennifer by naming her as the beneficiary of several annuities. Frances also made Jennifer joint owner on some of Frances’s bank accounts.
In 2009, James bought his mother’s grass farm business. James later became incarcerated. After his release, James and his wife lived on the grass farm. Whereas, Jennifer became a registered nurse and helped care for Frances in the remaining years before Frances’s death.
By 2011, Frances suffered from dementia. On October 15, 2012, Frances’s second husband, Clarence, along with Frances’s son James drove Frances to the banks where her accounts were held and had Frances complete paperwork to remove Jennifer from the accounts. The next day Clarence took Frances to a lawyer’s office and Frances signed documents revoking powers of attorney previously granted to Jennifer and granting a new power of attorney to James. Jennifer took immediate action to have Frances reverse the account changes.
On October 19, 2012, only four days after Clarence and James had Frances change her accounts, James filed an application for guardianship of Frances, based upon Frances’s mental incapacity. During the guardianship proceedings, James testified that Frances was competent to undertake banking transactions on Monday and Tuesday but not on Wednesday and Thursday. After the completion of the hearing, the court later appointed individuals other than James to serve as Frances’s guardians.
Unfortunately, Frances died shortly afterwards on November 26, 2012. James then sued Jennifer alleging conversion of $750,000 in annuity benefits she received upon Frances’s death. Jennifer counter-sued James and asked the Court to declare that Frances’s bank accounts now belonged to Jennifer, and the October 16, 2012 power of attorney Frances signed in favor of James and any related transactions were invalid.
The court heard the testimony of 15 witnesses at the over seven-day trial. At the conclusion of the trial, the court rendered judgment in favor of Jennifer declaring that Frances lost her mental capacity prior to October 15, 2012; and all actions taken by Frances after that date, at any financial institution or attorney’s office, lacked any legal effect and were void. The court also awarded Jennifer $223,364 in attorney fees. James appealed. The Court of Appeals affirmed the trial court’s decision, except the court remanded the case back to the trial court for further consideration of attorney fees.
In its holding, the Court of Appeal’s stated: “We conclude the evidence supports the trial court’s declarations that Frances “lost her mental capacity to manage all aspects of her property sometime prior to October 15, 2012, and her loss of mental capacity to manage all aspects of her property continued uninterrupted until her death on November 26, 2012,” and that Frances’s actions on or after October 15, 2012 “at any financial institution or attorney’s office, lacked any legal effect and are invalid, null, and void.” The Court of Appeals also held that the award of some of the attorney fees was authorized by law. However, not all of the attorney fees were recoverable, and Jennifer failed to present evidence segregating recoverable and unrecoverable fees. Therefore, the court reversed the portion of the trial court’s judgment awarding attorney fees and the case for further proceedings on that issue.
Lessons learned from this case are that it is important to do comprehensive estate planning while we are still mentally capable of managing our finances. Further, if one family member takes financial advantage of another family member who is not mentally competent, all is not lost. Any transactions by the mentally competent family member are subject to being declared void and set aside. To prove this, evidence will need to be presented from witnesses who knew the mentally incompetent family member and can testify that the family member was forgetful, confused or mentally incapable of managing his finances when the transactions in question were completed. Also, medical evidence should be presented of the medical conditions in issue. Of course, it is unfortunate that our surviving family members should have to go through the stress and expense of litigation to right the wrong. That is why we should make sure that while we are still mentally capable that we get our estates in order. This is a true gift of love we can give to our children and close family members.
Contingent trust beneficiary. A contingent trust beneficiary is one who does not have the right to receive benefits under a specific trust until the occurrence of a future event. Typically, a contingent beneficiary’s right to receive benefits under the trust would vest upon the death of one or more named beneficiaries. The question often arises as to what rights a contingent beneficiary has to protect his or her contingent rights.
Rights against trustee. In the recent case of Mayfield v. Peek, 446 S.W.3d 253 (Tex. App.—El Paso 2017, no pet. h.), the court held that the contingent beneficiary had standing to sue the Trustee of the trust.
Facts of case. This case arose out of a sister and brother—Mayfield and Bruce—fighting over an inheritance from their parents. The parents had created and placed several real properties and other assets into a revocable trust. Apparently, the parents became the vested beneficiaries of the trust upon its creation. Upon their death, the trust became irrevocable and Mayfield and Bruce would become the vested beneficiaries. Ten years after the creation of the trust, Bruce became the Trustee.
After the parents died, Mayfield sued Bruce sued one another. Mayfield sued Bruce for breaching his fiduciary duties as Trustee. The factual allegations included that, prior to the death of their parents, Mayfield and her brother Bruce had not spoken for 30 years. Bruce had managed to restrict his father’s access to Mayfield and others. Further, Bruce convinced the mentally impaired parents to transfer assets out of the trust for Bruce’s benefit and to terminate the trust.
This apparently resulted in Mayfield receiving nothing from the trust after her parents died.
Jurisdictional issue. Bruce contended that Mayfield was only a contingent beneficiary of the revocable trust and as a contingent beneficiary she did not have standing to sue him. Thus, her claim should be dismissed.
Court’s holding. The appellate court held that under the Texas Trust Code both vested and contingent beneficiaries may have the right to sue a Trustee. Under the facts of this case, the contingent beneficiary—Mayfield—had standing to sue the Trustee—Bruce—and was allowed to go forward with her claim.
In 2011, the Texas legislature passed a bill that provides an expedited dismissal remedy to citizens who are wrongfully sued for speaking out about matters of public concern regarding the government or a business. Testimony in support of the bill showed that SLAPP suits — strategic lawsuits against public participation — were often filed against these citizens to chill public debate. Apparently, this was becoming more pervasive in the age of the internet. The bill that was passed is now Texas Civil Practice & Remedies Code Chapter 27, known as the Texas Citizens Participation Act. Defendants who are successful under the Act are not only entitled to a dismissal of the claim for defamation but they are also entitled to recover costs and attorney fees.

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