In re Estate of Paxton

1

IN THE MATTER OF THE ESTATE OF HELENE PAXTON, Deceased

No. 08-22-00148-CV

Court of Appeals of Texas, Eighth District, El Paso

August 23, 2023

Appeal from the Probate Court No. 2 of El Paso County, Texas Cause No. 2009-P00743-C

Before Palafox, J., Soto, J., and Marion C.J. (Ret.)

Marion, C.J. (Ret.) (Sitting by Assignment)

MEMORANDUM OPINION

GINA M. PALAFOX, JUSTICE

Appellees Andrew V. Barber and C. Frederick Barber, are the adult sons of Helene Paxton, Deceased. Together, the Barber brothers sued several parties to include George Paxton, their mother's surviving spouse, Miriam Lundy, George's adult daughter from a previous marriage, and Appellants Lorri Lister Burnett and David Burnett, the Paxtons' caregivers.^[1] The Barbers' suit alleged claims of conversion and mismanagement of community and estate assets. Following the entry of a severance order, Appellants challenge the probate court's granting of a traditional motion for summary judgment against them, contending the Master in Chancery's Report and Financial Analysis (the Master's Report) that formed the basis of the judgment did not conclusively establish the elements of the Barbers' claims as a matter of law. We reverse the probate court's summary judgment and remand the matter for proceedings consistent with this opinion.

I. BACKGROUND

The Barbers are Helene Paxton's sons from a prior marriage.^[2] At the time of her death in 2009, Helene was married to George Paxton. In 2002, at Frederick Barber's request, Lorri Burnett moved into the Paxtons' home to help care for Helene.^[3] From 2002 through 2006, Lorri lived in the Paxton's home, serving as Helene's primary caregiver during that time.

In 2006, the Paxtons moved to an adult living center. David Burnett soon purchased the Paxtons' home from George, and he and Lorri married the following year.^[4] The Burnetts began renovating the home, primarily to accommodate their caregiving of family, including Andrew Barber's mother-in-law, whom they expected to soon move in, along with George's adult daughter, who had severe disabilities. The Burnetts reviewed their renovation plans with the Barbers, and they approved of the work. In February 2008, the Burnetts completed renovations and the Paxtons moved back into the home with the Burnetts.

On June 18, 2009, Helene died at the age of 86. In July 2009, Andrew applied to probate her will and for letters testamentary, claiming that George was not qualified to serve although he had been named as executor in Helene's will. Andrew alleged George had a conflict of interest, claiming there were disputes over the characterization of certain assets as community or separate property, Helene's name had been removed from various accounts shortly before her death, and transfers of property to third persons constituted fraud on the community.

In Helene's will, she devised all of her property to the H & G Paxton Trust. George and Helene established the trust in 1999 and they both were named as Trustees. The Trust was to expend the net income and corpus, if necessary, for "the proper health care, support and maintenance" of George and Helene. A portion of the Trust assets were listed on two exhibits attached as Exhibits G and H to the Trust Indenture. The Trust Indenture provided that Exhibit H assets were to be distributed to Helene's adult sons, the Barbers, upon her death. The remaining Trust assets were to be divided into two new trusts, Trust G and Trust H. Upon George's death, Trust G and Trust H terminate. The Trust Indenture provided that remaining assets in Trust G, if any, were to be distributed to George's daughter; and any remaining assets in Trust H were to be distributed to the Barbers.

In December 2009, the Barbers sued George and the Burnetts.^[5] The suit alleged that George dissipated the Paxtons' community estate in violation of the H & G Paxton Trust Indenture and Helene's will, and it sought imposition of a constructive trust. The Barbers alleged the Burnetts aided and abetted George and knowingly participated in his breaches of fiduciary duty. The Barbers claimed the Burnetts conspired with George by engaging in self-dealing by making inappropriate distributions of Trust assets and community assets to themselves and others. The Barbers also alleged the Burnetts conspired with George to remove assets from the Trust and the community estate and assign ownership and co-ownership designations to those assets, such as Pay on Death designations, to disinterested parties. As pleaded, all the Barbers' causes of actions against the Burnetts were dependent on George's activities. There were no allegations of the Burnetts directly transferring Estate or Trust funds, only that they conspired with or aided and abetted George in his wrongful activities.

During the course of almost a year of proceedings, the probate court ordered George to undergo an independent medical examination and appointed an ad litem for him. Based on the results of the examination, the Barbers moved to disqualify George from serving as executor of Helene's estate and remove him as a Trustee of the H & G Paxton Trust. The probate court granted the motion and Andrew was appointed as executor of Helene's estate in 2010.

George's ad litem moved for the appointment of a Master in Chancery to "conduct an analysis of financial records" of Helene's estate, urging that the "trier of fact would be greatly aided in having an independent financial analysis or audit of all financial transactions at issue" and that the analysis "would also have the possible benefit of narrowing the scope and reducing the potential cost of the litigation." The probate court granted this motion and appointed a CPA as a Master in Chancery, authorizing him to conduct "an analysis of all financial records" in the case, ordering all parties to produce all documents to him within a reasonable period, but granting no additional powers to the Master and ordering no additional actions from him.

The Master in Chancery sent his financial analysis to the parties in September 2012 and filed it in January 2013. An income statement attached to the Master's Report showed that the Estates of Helene and George Paxton had spent $221,635.04 on repairs to the Burnetts' residence between June 2008 and April 2012. The statement also showed the Estates had made payments to David Burnett totaling $63,370.60 and to Lori Burnett totaling $105,089.00. The Burnetts did not object to the Master's Report; and, in March 2015, the probate court ordered the Master in Chancery's Report and Financial Analysis is "ACCEPTED and CONFIRMED, and deemed CONCLUSIVE."

In December 2015, the Barbers moved for traditional summary judgment based solely on the Master's Report. The Barbers argued there was no genuine issue of material fact with respect to the distributions for home repairs after Helene's death, nor genuine issue of material fact as to the distributions to the Burnetts, as the Report conclusively established such distributions were made. The Barbers alleged it was undisputed that the amounts paid to the Burnetts after Helene's death could not have been made for her care, well-being, and benefit. The motion further averred it was undisputed that the payments for the home repairs benefitted the Burnetts and not Helene.

In response, the Burnetts challenged the probative weight of the Master's Report, contending it failed to conclusively establish there were no genuine issues of material fact. Specifically, the Burnetts asserted the Master's Report merely established that certain payments had been made either to the Burnetts directly or for their possible benefit. Fundamentally, they argue the Report did not characterize the funds the Barbers had sought to recover from the Burnetts as either community property, assets of the Trust, or assets of Helene's Estate. With their response, the Burnetts included an affidavit of Lorri Burnett. The affidavit averred that: "Each of the accounts [the Master] has identified from which checks were written to me, to my husband and to the persons who provided services and materials in connection with the work on our residence were Mr. Paxton's separate property and were not contributed to the Trust."

The probate court granted the Barbers' motion in March 2018, ordering that the Barbers recover from the Burnetts, jointly and severally, $221,560.04 for the home repairs; $54,954.30 for the funds paid to David after Helene's death; and $42,700.00 for the funds paid to Lorri after Helene's death; for a total of $319,214.34 in actual damages; plus, pre-judgment interest in the amount of $131,675.90. After the Barbers severed certain remaining claims in September 2021, the summary judgment became final and appealable. From this final summary judgment, the Burnetts appeal.

II. ISSUES ON APPEAL

The Burnetts raise two issues on appeal. First, they argue the probate court erred in granting the Barbers' motion for summary judgment. Second, they urge the Master's Report failed to conclusively establish every element of the Barbers' cause of action against the Burnetts.

In response, the Barbers first contend the Burnetts bring an improper collateral attack on the Master's Report and the order confirming it. They contend the confirmation order was a final and appealable order as of 2015. Second, on the merits of the summary judgment, the Barbers contend the Master's Report conclusively established the payments at issue were made from Helene Paxton's Estate, and the probate court did not err in granting their motion for summary judgment.

We first consider and dispose of the jurisdictional question raised by the parties' arguments.

III. JURISDICTION

Before reaching the merits of the summary judgment, we first...