Court Opinion

ID: 4076703
Source: CourtListenerOpinion
Date Created: 2016-09-30 18:19:04.37184+00
Date Added: 2024-06-11T14:06:14.219276
License: Public Domain

ACCEPTED
                                                                                                  04-14-00657-CV
                                                                                      FOURTH COURT OF APPEALS
                                                                                           SAN ANTONIO, TEXAS
                                                                                            8/13/2015 10:41:48 AM
                                                                                                   KEITH HOTTLE
                                                                                                           CLERK

                                   NO. 04-14-00657-CV

                                                                              FILED IN
                                                                       4th COURT OF APPEALS
                       IN THE COURT OF APPEALS                          SAN ANTONIO, TEXAS
               FOURTH COURT OF APPEALS DISTRICT OF                    08/13/2015 10:41:48 AM
                                                                     TEXAS
                          SAN ANTONIO, TEXAS                             KEITH E. HOTTLE
                                                                               Clerk

                    RICHARD LESHIN, SUCCESSOR TRUSTEE
                    OF THE DAVILA FAMILY TRUST, TRUST A,
                                            APPELLANT

                                             VS.

                JUAN GERARDO OLIVA, INDIVIDUALLY, AND
                  ROSINA OLIVA, INDIVIDUALLY AND AS
            SUCCESSOR TRUSTEE OF THE DAVILA FAMILY TRUST,
                          TRUSTS B, C AND D,
                                           APPELLEES

                From the 406th Judicial District Court, Webb County, Texas
                            Cause No. 2008-CVF-000855-D4
                      Honorable Oscar J. Hale, Jr., Judge Presiding

                             APPELLEE ROSINA OLIVA’S
                              MOTION FOR REHEARING

TO THE HONORABLE JUDGE OF SAID COURT:

       Rosina Oliva, Individually and as Trustee of the Davila Family Trust, Trusts B, C

and D, Appellee, moves for rehearing, and shows:

                                     ISSUE NO. ONE

       The arbitrator did not exceed his powers by awarding money damages against Mr.

Leshin "individually" because a trustee is personally liable for a breach of trust.

                                              1
                             Argument as to Issue No. One

       The following are without dispute:

       1.     Mr. Leshin was before the arbitrator as the successor trustee of Davila
              Family Trust, Trust A;

       2.     Mr. Oliva is a beneficiary of Trust A;

       3.     Mr. Oliva's claim against Mr. Leshin was for "breach of trust";

       4.     Mr. Oliva's claim was clearly within the mandatory arbitration clause;

       5.     The remedy for breach of trust by a trustee may include "compelling the
              trustee to pay money or to restore property;" Tex. Prop. Code §
              114.008(a)(3);

       6.     A trustee is "personally liable for a tort committed by the trustee...in the
              course of their employment." Tex. Prop. Code §114.083(d).

       Appellee argues that it was sufficient that Mr. Leshin was on notice that he was

charged with breach of trust by a beneficiary. Therefore, the arbitrator was within his

powers to employ the only meaningful remedy which is "personal" liability. To hold

otherwise would put the beneficiary in the position of being compelled to arbitration, but

to have no real remedy other than recovery against the trust estate. In other words, the

beneficiary potentially pays the damages to himself. His beneficial interest in the trust is

diminished by his very own award of damages. Catch 22.

       As early as 1897 our Supreme Court addressed the question of the personal

liability of a trustee who has breached his trust. In Silliman v. Gano, 39 S.W. 559 the

Court said:

              ‘In addition to this claim of the beneficiary upon the trust
              estate as long as it exists, the trustee incurs a personal
              liability for a breach of trust by way of compensation or

                                             2
              indemnification which the beneficiary may enforce at his
              election, and which becomes his only remedy whenever the
              trust property has been lost or put beyond his reach by the
              trustee’s wrongful act.’

       Certainly Mr. Leshin was on notice that he was charged with a tort (breach of

fiduciary duty) having been committed by him as trustee and in the course of his

employment as such. He is presumed to have known the consequences. In this case, Mr.

Leshin undoubtedly knew the consequences as he is a prominent board certified

practitioner of trust and estate law. Does he argue that the damages occasioned by his

breach of trust must fall upon the beneficiaries of his trust?    If such is his argument is

that not itself a breach of his duties? Does this Court's opinion tell the bar that in

arbitration the traditional remedies for breach of trust are not available unless the trustee

has signed the arbitration contract individually or that he/she has otherwise agreed to be

individually bound by the arbitrator's award? Could that be an unintended consequence of

this Court's opinion as written?

       The Opinion as written states: "The Olivas also assert the arbitrator's powers to

determine this issue arise from §§ 114.008(a) and 114.083(d) of the Texas Property

Code." More precisely the Olivas assert that the arbitrator had full power to employ the

statutory remedy of "personal liability" to remedy the breach of trust which Mr. Leshin

was found to have committed. It is not so much a question of arbitrability as of the

appropriate remedy for a breach of trust by a trustee.

                                             3
                                     ISSUE NO. TWO

       The arbitrator did not exceed his powers in awarding money damages against Mr.

Leshin "individually" because even if he may be considered a nonsignatory in his

"individual" capacity, he is nevertheless bound to arbitrate under the doctrine of equitable

estoppel.

                     Argument and Authorities as to Issue No. Two

       This Court has treated Mr. Leshin individually as a nonsignatory of the arbitration

clause. In fact, none of the parties to the present case signed the arbitration clause. That

clause, which appears in the original Davila Family Trust agreement, was only signed by

Mr. and Mrs. Davila. However, Mr. Leshin, as successor trustee of Trust A, stands in the

shoes of Mr. Davila. Rosina Oliva, as successor trustee of Trusts, B, C and D, stands in

the shoes of Mrs. Davila. Mr. Oliva is a beneficiary of Trust A and as such is bound to

arbitrate "any claim between the Trustee and any other parties to this Trust, including

Beneficiaries." While it may be true that Mr. Leshin did not sign the arbitration clause

"individually," it is also true that the Olivas must rely on the terms of the trust agreement

in asserting their claims against Mr. Leshin. Also, the Olivas' claims make reference to or

presume the existence of the trust agreement and arise out of the written agreement. Thus,

under equitable estoppel, Mr. Leshin is bound to arbitrate these claims even if he

personally did not agree to do so; otherwise the arbitration proceedings between those

who stand in the shoes of the signatories would be rendered meaningless and the policy

in favor of arbitration effectively thwarted.

                                                4
       The question of equitable estoppel binding nonsignatories has been upheld by both

Texas and federal courts. The leading Texas cases include In Re Weekly Homes, L.P., 180
S.W.3d 127 (Tex. 2005) and Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006). In

Meyer the Supreme Court said, "As a rule, arbitration of a claim cannot be compelled

unless it falls within the scope of a valid arbitration agreement. But, sometimes a person

who is not a party to the agreement can compel arbitration with one who is, AND VICE

VERSA." (emphasis added) Meyer goes on to state that the Fifth Circuit decision in

Grigson is a "substantially correct statement of Texas law." The Court in Meyes says:

       The court of appeals came to this same conclusion based largely on
       Grigson v. Creative Artists Agency, L.L.C., in which the United States
       Court of Appeals for the Fifth Circuit quoted the Eleventh Circuit’s
       decision in MS Dealer Service Corp. v. Franklin, stating:

       Existing case law demonstrates that equitable estoppel allows a
       nonsignatory to compel arbitration in two different circumstances. First,
       equitable estoppel applies when the signatory to a written agreement
       containing an arbitration clause must rely on the terms of the written
       agreement in asserting its claims against the nonsignatory. When each of a
       signatory's claims against a nonsignatory makes reference to or presumes
       the existence of the written agreement, the signatory's claims arise out of
       and relate directly to the written agreement, and arbitration is appropriate.
       Second, application of equitable estoppel is warranted when the signatory
       to the contract containing an arbitration clause raises allegations of
       substantially interdependent and concerted misconduct by both the
       nonsignatory and one or more of the signatories to the contract. Otherwise
       the arbitration proceedings between the two signatories would be rendered
       meaningless and the federal policy in favor of arbitration effectively
       thwarted.

       Equitable estoppel should bar Mr. Leshin from saying he "personally" is not bound

by the arbitration clause.

                                            5
                                    ISSUE NO. THREE

       The arbitrator did not exceed his powers by making awards against Mr. Leshin

"individually" because Mr. Leshin himself invoked the powers of the arbitrator by

seeking affirmative relief which was denied. Alternatively, the record is incomplete.

                             Argument as to Issue No. Three

       Appellant argues that where the award refers to Mr. Leshin only by name, and

does not specify whether "individually" or "as trustee," the award must be read as

imposing individual liability. If this is true should the Court not look at other places in the

award where the arbitrator denied requests for affirmative relief made by Mr. Leshin

referring to him only by name? For example:

       1.     At finding "c" of the award the arbitrator finds "Richard Leshin's request
              for offset relative to his claim of gifts and loans is denied." (CR 110);

       2.     At award "g" where the arbitrator states, "Any relief requested by Richard
              L. Leshin in his counterclaim against Juan Gerardo Oliva that is not
              specifically awarded herein are denied." (CR 116); (Note: the counterclaim
              does not appear to be part of the record);

       3.     At award "s" and "t" where Richard L. Leshin “is awarded no attorney's
              fees nor AAA expenses.” (CR 118)

       This tells us that requests for affirmative relief were made. It does not tell us in

what capacity such requests were made, but if Appellant argues awards made against him

in his own name mean "individually" then should not awards denied him in his own name

mean the same? Is this not analogous to a defendant who waives "personal jurisdiction"

complaints by seeking affirmative relief?

                                              6
       A party is considered to have entered a general appearance and therefore

consented to personal jurisdiction when the party ‘(1) invokes the judgment of the court

on any question other than the court’s jurisdiction, (2) recognizes by its acts that an action

is properly pending, or (3) seeks affirmative action from the court.” Exito Elecs. Co. v.

Trejo, 142 S.W.3d 302, 304 (Tex. 2004).

       One of two things must be true. Either we have an incomplete record or Mr.

Leshin has individually invoked the arbitrator's powers. In either case the trial court's

judgment must be affirmed. Judge Hale actually found an incomplete record:

              I believe that there’s just not enough evidence here before this
              court to convince this court that the arbitrator did not have
              jurisdiction to include Mr. Leshin as an individual here in
              court that it was included inadvertently. So at this point, the
              Court will confirm the award and enter judgment as awarded
              by the arbitrator. (RR. Vol. 2, p. 38

                                    ISSUE NO. FOUR

       In the alternative, there is no reason to read the awards of attorney’s fees and AAA

expenses as imposed against Mr. Leshin individually. There is no disagreement on this

issue between the Olivas.

                             Argument as to Issue No. Four

       In footnote 1 of the Opinion this Court "recognizes there is a disagreement

between the Olivas regarding whether the arbitrator actually issued an award against

Leshin in his individual capacity." Further that "Rosina contends the arbitration award, at

least as to her, is not against Leshin in his individual capacity." Further that "Rosina's

attempted concession has no impact on our holding or judgment."

                                              7
       While this issue may not have been artfully briefed or argued by Rosina's counsel,

there really is no disagreement. The arbitrator uses the term "individually and as trustee"

one time and one time only in the award. The term is only used in connection with the

conditional award of money damages in the event Mr. Leshin fails to distribute the

personal property. Rosina does not contend that "personal liability" of Mr. Leshin arises

in any other context. The award, when read in context, need not be read as imposing

personal liability for attorney's fees and AAA expenses. If the award only imposes this

liability on Mr. Leshin as trustee there is nothing to be sent back to Judge Hale. What is

he to decide that he has not already decided?

       During the hearing on Motion to Vacate/Motion to Confirm the following

exchange occurred before Judge Hale:

                    MR. CAZIER: Judge, I heard your question a minute ago. It
              was, what have we agreed on. I think we've agreed to enter judgment
              confirming the award, the only question being whether or not the
              judgment confirming the award –

                     THE COURT: Should be modified?

                      MR. CAZIER: -- should modify as to this individual liability
              of the trustee.

                     THE COURT: Removing the individual liability language
              and inserting or making sure that it says, "As successor trustee" is
              what I heard.

                      MR. CAZIER: Exactly.
                      THE COURT: So we're in agreement with confirming the
              award subject to, at least on your end, the Court's ruling on whether
              or not to modify the language as you requested?

                    MR. CASTILLO: Yes, Judge, but there's only one place in
              the award where it awards $79,000 against Richard Leshin,

                                            8
successor trustee and individual. It described him up on front as the
named party being the successor trustee. The award for 79 is in both
capacity, individually. But then in other awards, awards for attorney
fees and cost, it just says Richard Leshin.

       THE COURT: It doesn't say –

       MR. CASTILLO: It doesn't say individually or either one.

       THE COURT: So what is the petition on that. I mean –

      MR. CAZIER: I agree that, for clarity’s sake, we can add
Richard Leshin as trustee to all of those awards which involve Triple
A expenses and everything else.

      THE COURT: Wherever it doesn't mention individually or
successor trustee?

       MR. CAZIER: Exactly.

        MR. CASTILLO: And, Judge, that's where we disagree
because if the arbitrator specifically references that the award for
79,000 is individually and as successor trustee, then on the other
recitals where it says only Richard Leshin, you can't tell whether he
meant as trustee or individually. We take the position that that's
individually. We cannot assume what he was thinking and --

       THE COURT: So you're saying that it should be individually
then? I thought I understood you the other way.

      MR. CASTILLO: No, no. It doesn't say anything. It just said
Richard Leshin, whereas the 79,000 --

     THE COURT: But on that one, you were asking, I thought, to
remove individually.

       MR. CASTILLO: That's right.

       THE COURT: Is that what I understood?

       MR. CASTILLO: Right, but we don't want those to be
assigned to the trust either. Those costs and attorney fees should not
be --

                              9
                       THE COURT: So what should it be? It has to read one or the
              other.

              (RR Vol. 2, pp. 7-10)

       The Court is asked to remember that the attorney's fees and AAA expenses were

recoverable under the arbitration clause. There is no argument that Mr. Leshin was not

subject to the arbitration clause in his capacity as trustee.

       As Mr. Snell so eloquently put it: "It’s either individual or it’s trustee. It can't be

nothing." (RR Vol. 2, p. 12).

       WHEREFORE, PREMISES CONSIDERED, Appellee prays the Court grant

rehearing and affirm the trial court's judgment.

                                                   OLIVERO E. CANALES
                                                   State Bar No. 03737200
                                                   719 Chihuahua St., Suite 102
                                                   Laredo, Texas 78040
                                                   956/723-5092 (telephone)
                                                   956/723-1327 (fax)

                                                   ALLEN CAZIER
                                                   1250 N.E. Loop 410, Suite 725
                                                   San Antonio, Texas 78209
                                                   Telephone: 210/824-3278
                                                   Telecopier: 210/824-3937

                                             By:    /s/ Allen Cazier
                                                   ALLEN CAZIER
                                                   State Bar No. 04037500
                                                   Attorneys for Appellee
                                                   Rosina Oliva, Individually and as
                                                   Successor Trustee of the Davila
                                                   Family Trust, Trusts B, C & D

                                              10
                                 Certificate of Compliance

      Pursuant to Texas rules of Appellate Procedure 9.4, I certify that there are 2,345
words in this document, exception those portion listed in Rule 9.4(i)(l) as calculated by this
word counts feature of Microsoft Word 2010, which was used to prepare this document.

                                                   /s/ Allen Cazier
                                                  ALLEN CAZIER

                                   Certificate of Service

       I hereby certify that a true and correct copy of the foregoing has been served upon the
following individuals through the Court’s ECF/CM system on this 13th day of August, 2015.

       Guadalupe Castillo
       Zaffirini and Castillo
       1407 Washington
       Laredo, Texas 78042
       Facsimile: 956/727-4448
       Email: gcast@zaffirini.com

       David C. “Clay” Snell
       Bayne, Snell & Krause
       1250 N.E. Loop 410, Suite 725
       San Antonio, Texas 78209
       Facsimile: 210/824-3937
       Email: dsnell@bsklaw.com

       Eduardo Romero
       Villarreal & Romero, PLLC
       210 W. Del Mar Blvd., Suite 15
       Laredo, Texas 78041
       Facsimile: 956/727-2404
       Email: romero@vrlawfirm.com

                                                          /s/ Allen Cazier
                                                         ALLEN CAZIER

                                             11