In re Moncrief

699 S.W.3d 315

ESTATE OF William Alvin MONCRIEF, Jr., Deceased

Estate of William Alvin Moncrief, Jr. Deceased

No. 02-23-00021-CV, No. 02-23-00058-CV

Court of Appeals of Texas, Fort Worth.

Delivered: October 10, 2024

Rehearing Denied October 10, 2024

On Appeal from Probate Court No. 2, Tarrant County, Texas, Trial Court No. 2021-PR004259-2-B, HON. BROOKE ALLEN, Judge

ATTORNEYS FOR APPELLANT RICHARD W. MONCRIEF: ANDREW D. SIMS, RUSSELL R. BARTON, MICHAEL V. FITZPATRICK, J. NATHANIEL JAMES, HARRIS, FINLEY & BOGLE, P.C., FORT WORTH, TEXAS, WILLIAM L. KIRKMAN, PRESTON B. SAWYER, KIRKMAN LAW FIRM, PLLC, FORT WORTH, TEXAS, D. PATRICK LONG, SQUIRE PATTON BOGGS (US) LLP, DALLAS, TEXAS.

ATTORNEYS FOR APPELANT MARSHALL M. SEARCY: ROBERT J. MYERS, JOHN J. SHAW, MYERS SHAW, FORT WORTH, TEXAS, STEVEN K. HAYES, LAW OFFICE OF STEVEN K. HAYES, FORT WORTH, TEXAS.

ATTORNEYS FOR APPELLEES GLORIA MARIE MONCRIEF, TOM OIL MONCRIEF, GARY R. ALLEN: RALPH H. DUGGINS, PHILIP VICKERS, KATE HANCOCK, CANTEY HANGER, LLP, FORT WORTH, TEXAS, ALEXANDRA WILSON ALBRIGHT, ALEXANDER DUBOSE & JEFFERSON LLP, AUSTIN, TEXAS, WILLIAM J. BOYCE, ALEXANDER DUBOSE & JEFFERSON LLP, HOUSTON, TEXAS, R. DYANN MCCULLY, THE BLUM FIRM, P.C., FORT WORTH, TEXAS, WALKER C. FRIEDMAN, CHRISTIAN D. TUCKER, JACK E. PRICE, JR., FRIEDMAN, SUDER, & COOKE, FORT WORTH, TEXAS.

ATTORNEYS FOR APPELLEE GLORIA MARIE MONCRIEF: SARAH PATEL PACHECO, LEN A. WADE, JACKSON WALKER LLP, FORT WORTH, TEXAS.

ATTORNEYS FOR APPELLEE TOM OIL MONCRIEF: TIMOTHY D. HOWELL, SHAYNE D. MOSES, MOSES, PALMER & HOWELL, L.L.P., FORT WORTH, TEXAS.

Before Sudderth, C.J.; Birdwell and Wallach, JJ.

OPINION ON REHEARING¹

Opinion on Rehearing by Justice Wallach

To arbitrate or not to arbitrate—that is the ongoing question in this internecine dispute between factions of the Moncrief family and their allies.² The two interlocutory appeals before us, involving three arbitrations, arise from proceedings in the Estate of William Alvin Moncrief, Jr. (Tex) in Tarrant County Probate Court Number 2 (trial court). The underlying issue in both appeals is whether Appellants’ alleged fraudulent inducement of Tex, Tex’s lack of mental capacity, or Tex being unduly influenced by Appellants to execute certain documents (Tex’s capacity issues) should be decided by the trial court or by arbitration. In each instance the trial court held that the capacity issues should be resolved by the trial court, and the arbitrations were stayed and Appellants were enjoined from pursuing the arbitrations. For the reasons set forth below, we will reverse the orders of the trial court staying the arbitrations and enjoining Appellants from proceeding with the arbitrations, and we will order that all proceedings involving the capacity issues in these cases be stayed pending resolution of the arbitrations.

I. Factual Background

a. Case 00021

Appellants are Richard W. Moncrief (Dick), individually and as alleged Co-Trustee of the W.A. Moncrief, Jr. Management Trust (Management Trust) and Marshall M. Searcy (Marshall), individually and as alleged Co-Trustee of Management Trust (collectively Appellants). Appellees are Gloria Marie Moncrief (Gloria), Tom Oil Moncrief (Tom), and Gary R. Allen (Gary) (collectively Appellees).³

We will start with an overview of the Moncrief family tree:

699 S.W.3d 322.bmp

Moncrief Partners, L.P. was formed in 1995. Tex owned ninety percent of the partnership, and his son Charlie owned the other ten percent. The partnership was managed through two general partners, each of which was a corporation created for each partner. In 1998, Tex and Charlie executed a First Amended and Restated Limited Partnership Agreement of Moncrief Partners, L.P. (MPA). As a result, the partnership became a Delaware limited partnership. The general partners were CBM GenPar, Inc. (CBM), Charlie’s company, and WAMJR GenPar, Inc. (WAMJR), Tex’s company. Each general partner held one percent interest in the limited partnership. The limited partners were Tex (89% interest) and Charlie (9% interest). In 2002, WAMJR merged into CBM, making CBM the sole general partner.

The MPA provided for substituting general and limited partners with the consent of the remaining partners. It also provided that the terms of the agreement applied to all substituted partners. In the MPA, when the term "partners" was used without specifying "general" or "limited," it was defined to include both general and limited partners. This definition tied into the arbitration provision of the MPA, which provided for arbitration of "any dispute, difference[,] or question, as to any matter whatsoever … between any of the Partners or Assignees, or between any of the Partners or Assignees and the Partnership and/or the General Partners." MPA Section 11.06, the "Governing Laws" section, provided that "THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTNERS HEREUNDER SHALL BE INTERPRETED, CONSTRUED[,] AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE."

MPA Exhibit G specifically dealt with arbitration of claims like the ones here. Paragraph (A) set forth a detailed process for arbitration through the American Arbitration Association (AAA), addressing matters such as payment of fees, giving of notice, selection of arbitrators, and location of arbitration sessions. Paragraph (B) provided that all arbitration proceedings were to be conducted in accordance with the Commercial Arbitration Rules of the AAA, that "such rules shall be interpreted and applied, and [that] questions regarding the arbitration process not resolved under such rules shall be determined in accordance with Delaware law, to the extent required by applicable Delaware law (i.e., the Act), or if not so required then in accordance with Texas law." The "Act" was defined in the definitions section of the MPA as the "Delaware Revised Uniform Limited Partnership Act, Del. Code Ann., tit. 6, ch. 17" as amended, revised, or supplemented from time to time.

In 2010, Tex created Management Trust to hold the significant share of his property during his life and to distribute it upon his death. In December 2010, the MPA was amended to admit Management Trust and the Estate of Deborah B. Moncrief (Tex’s deceased spouse) as substituted limited partners. Thus, the limited partner interests in MPA became (1) Management Trust (44.5%), (2) the Estate of Deborah B. Moncrief (44.5%), and (3) Charlie (9%). The general partner, CBM, held the remaining 2% interest. In this amendment, Management Trust, through Tex as its Trustee, agreed to be bound by all the terms of the MPA.

Tex had the sole power to appoint successor Trustees for Management Trust, In June 2019, Tex signed a Sixteenth Amendment and Complete Restatement of Management Trust naming Charlie, Gary, and Tom as successor Co-Trustees. He also provided that if Charlie failed to qualify or act as successor Co-Trustee, Gloria would become successor Co-Trustee in his place. In May 2020, Tex signed a Twenty-Second Amendment of Management Trust, appointing Dick as successor Co-Trustee with Charlie, Tom, and Gary. In August 2020, Tex signed a Twenty-Third Amendment which left substantial property to Gloria. And in October 2020, Tex signed the Thirty-Second Amendment to Management Trust, which restated a series of amendments he made earlier in October, including naming Dick and Marshall as the sole successor Co-Trustees of Management Trust. Tex signed further amendments to Management Trust in the latter part of 2020 and into 2021, including Amendments and Restatements in March, April, July, and September of 2021—all of which named Dick and Marshall as the sole successor Co-Trustees of Management Trust.⁴ No version of Management Trust contained an arbitration provision.

[1] On April 6, 2022, Appellants, as the named Independent Executors under Tex’s Last Will and Testament and as alleged Co-Trustees of Management Trust, filed a declaratory judgment suit against Gloria in the trial court seeking declarations that they are the sole Trustees of Management Trust and that Gloria is not a Trustee.⁵ On April 14, 2022, Gloria filed her "Original Answer," pleading a general denial and a verified denial that Marshall and Dick have no legal capacity to sue or recover in the capacities alleged by them, i.e., as Co-Trustees of Management Trust. Gloria and Gary, as alleged Co-Trustees of Management Trust, simultaneously filed a counterclaim, petition in intervention, and third-party petition in the trial court challenging Appellants status as Trustees of Management Trust. Their allegations were based, in large part, on Tex’s capacity issues regarding signing of the amendments to Management Trust that designated Appellants as successor Co-Trustees, which capacity issues they claimed rendered those amendments unenforceable.

On June 30, 2022, Appellants, as alleged Co-Trustees of Management Trust, filed an arbitration demand with AAA against Moncrief Partners, L.P. (nominally) and its general partner, CBM (MPA arbitration). Appellants asserted their rights to proceed as Co-Trustees of Management Trust and sought (1) a determination of the rightful partnership interests of Moncrief Partners, (2) an audit or accounting of the flow of funds in and out of Moncrief Partners, (3) a determination of the breaches of fiduciary duties, waste of assets, self-dealing, and financial wrongs of CBM, and (4) damages.

On July 11, 2022, Moncrief Partners and CBM responded to the MPA arbitration demand contending that Appellants were not signatories to the Management Trust agreement and had no authority or standing to pursue arbitration since they were not signatories. They also contended that the issue of Appellants’ status as successor Trustees was being contested as a "gateway issue" in the trial court and in the trial court proceedings in Moncrief 1 and that the MPA arbitration should be suspended pending judicial resolution of this issue by the trial court. Of course, the basis for contesting Appellants’...