Court Opinion

ID: 9471802
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:41:30.813895+00
Date Added: 2024-06-11T17:42:35.233077
License: Public Domain

WILL, District Judge,
dissenting:
In its September 26, 1983 opinion in this matter, the majority of this panel accepted the unchallenged finding of the District Court below that the business dealings between Travis Ward and Alan Whatley began months before those two had any discussion about acquiring the so-called Dyck-man property, the subject-matter of this lawsuit. 715 F.2d at 948. The majority necessarily also accepted the District Court’s additional, unchallenged finding of fact, see Smith v. Bolin, 153 Tex. 486, 271 S.W.2d 93, 97 (1954), that those earlier business dealings created a fiduciary relationship between Ward and Whatley. 715 F.2d at 949.
The majority held, however, that the pri- or fiduciary relationship between Ward and Whatley was not of sufficient long standing to justify the imposition of a constructive trust:
To show a constructive trust, a plaintiff must first show, by a preponderance of the evidence, ... that the parties had a long-standing fiduciary or confidential trusting relationship unrelated to the subject transaction ... whether or not a fiduciary relationship exists is a question of fact, ... but whether a relationship is sufficiently longstanding to support imposition of a constructive trust is a question of law.... We find as a matter of law that the dealings between Ward and Whatley in this case were not sufficiently longstanding to support the district court’s application of a constructive trust. [Emphasis added.]
715 F.2d at 948.
And again, the majority said:
Even if one were to count the additional time during which Whatley’s companies held the tract, it would be difficult on the facts of this case to find a lon-glasting independent relationship between Ward and Whatley or his companies.” [Emphasis added.]
Ibid. at 949.
Finally, the majority re-emphasized its position later in its opinion:
The business dealings between Ward and Whatley, whatever their nature, were not of sufficient duration or intensity to justify the imposition of a constructive trust. The first of the two requirements to establish a constructive trust was not met. [Emphasis added.]
Ibid. at 949.
I would not have dissented on September 26, 1983 had it not been the case (1) that *1372Ward and Whatley, as a matter of undisputed fact, had a fiduciary relationship pri- or to their decision to acquire the Dyckman property and (2) that, considering this fact, Texas law would permit, the imposition of a constructive trust without, as the majority’s original opinion clearly held, an absolute first requirement that the prior relationship have been “long-standing,” “long-lasting,” or of “sufficient duration.”
The majority appears now to concede that its earlier view of the Texas law was incorrect:
A careful reading of our opinion reveals that we did not rely upon a requirement of long duration of prior relationship of trust and confidence. To the contrary at the beginning of our discussion of the issue and at the end of our discussion of the issue, we did not refer to the long duration of the relationship at all.
Per Curiam Opinion at 1369. With all due respect, the majority opinion stated categorically as quoted above that a “longstanding” or “long-lasting” fiduciary relationship is, under Texas law, the first requirement of a constructive trust.
Moreover, the headnotes for the original published opinion, 716 F.2d 941, indicate that the majority so held.
Headnote No. 1 reads:
1. Trusts 91
“Constructive trust” is equitable remedy that can infer fiduciary-like relationship within transaction for purpose of promoting justice and that can be imposed on parties whose course of conduct over long, preexisting period suggests that relationship of confidence and trust was assumed by parties to subject action. [Emphasis added.]
Headnote No. 17 reads:
17. Trusts 110
To show constructive trust under Texas law, plaintiff must first show, by preponderance of evidence, that parties had longstanding fiduciary or confidential, trusting relationship unrelated to subject transaction. [Emphasis added.]
Headnote No. 18 reads:
18. Trusts 103
Under Texas law, whether or not fiduciary relationship exists is question of fact, but whether relationship is sufficiently longstanding to support imposition of constructive trust is question of law. [Emphasis added.]
Now, however, the majority finds, contrary to the undisputed fact, that there was no prior fiduciary or confidential relationship between these parties:
We recognize that the Texas law, in the absence of fraud, places almost controlling emphasis upon the requirement that there must be a pre-existing confidential relationship of trust and confidence between the parties before the dealings which give rise to a constructive trust. There was no such pre-existing relationship in this case.
Per Curiam Opinion at 1370.
The district court found as a fact which was not disputed on appeal that a confidential or fiduciary relationship existed between Ward and Whatley prior to and apart from their Dyckman property dealings. On what basis the majority now can reverse that undisputed fact finding, I do not understand.
The majority also suggests that, because the Dyckman acquisition was “directly related” to the parties’ prior dealings and was “not separate and independent” from those prior dealings, somehow, the pre-existing fiduciary relationship will not, under Texas law, support a constructive trust. Ibid. I can find no Texas case so holding. In addition, this ignores the critical, undisputed fact that Ward and Whatley did not discuss or contemplate acquiring Dyckman until months after their fiduciary relationship had been established. Moreover, the majority’s current insistence that, in order to impose a constructive trust, the prior dealings must have been “separate” from the subject transaction is ironic in light of the requirement of Texas law that a constructive trust may only be imposed where the subject transaction is within the scope of the parties’ prior dealings. Rankin v. Naf-talis, 557 S.W.2d 940, 944 (Tex.1977).
*1373I am in agreement with the partial grant of appellee Ward’s motion to recall the mandate since it reflects recognition of another of the errors in the original opinion to which I referred in my dissent. But the basic error of the majority holding remains uncorrected. A man who admittedly breached his fiduciary duty is still to be rewarded by receiving what now appears to be in excess of $400,000 when neither the uncontested facts nor the Texas law justify, much less require, such an unjust and inequitable result.
Having apparently abandoned its earlier effort to rewrite the Texas law, the majority now seeks to rewrite the undisputed facts of this case. For the reasons stated in my original dissenting opinion and herein, I deplore both efforts and, accordingly, again dissent.