In re Portillo

1

IN THE MATTER OF THE ESTATE OF EDWARD R. PORTILLO DECEASED.

No. 08-23-00167-CV

Court of Appeals of Texas, Eighth District, El Paso

April 15, 2024

Appeal from the Statutory Probate Court No. 2 of El Paso County Texas (TC# 2018CPR00773)

Before Alley, C.J., Palafox and Soto, JJ.

MEMORANDUM OPINION

JEFF ALLEY, Chief Justice

This appeal arises from the dispute between the heirs of Edward R Portillo over how his estate should be divided. Edward was survived by his wife, Appellee Leandra Portillo, their daughter, Rebecca Portillo, and his daughter from a previous marriage, Appellant Amanda Portillo. Following years of litigation, Amanda and Leandra reached a mediated settlement agreement. But before the final distribution of the estate the parties disputed the meaning of a key term in the settlement agreement.

While this case involves protracted litigation and numerous hearings, the appeal before us boils down to one question did the probate court change the agreement of the parties when it interpreted the term "estate property" to exclude Leandra's half of the community property. We hold that it did not, and we affirm the judgment below.

Factual and Procedural Background

This case began as a suit by Leandra to probate Edward's will. Because Leandra and Amanda were both subscribing witnesses and devisees under the will, Leandra sought to probate the will using the notary as the subscribing witness. See Tex. Estates Code Ann. § 254.002(c) (setting out how a disinterested and credible person can corroborate a subscribing witness and devisee). Leandra later filed an affidavit by the notary in which the notary attested that she witnessed Edward, Amanda, and Leandra all sign the will.

But Amanda denied signing the will in the presence of the notary and contested the will, asking the court to instead determine heirship and appoint an administrator. In a deposition, the notary admitted that her affidavit was untrue and that the will had already been signed by Amanda and Leandra when Edward brought it to her; the notary did not observe the subscribing witnesses sign the will and the subscribing witnesses did not actually observe Edward sign the will. Amanda moved to strike the notary's affidavit and the probate court granted her request.

The probate court appointed Karen Colon as a third-party dependent administrator. Colon filed an inventory of the property, approved and disapproved creditor's claims, and filed accountings. The administrator valued Edward's estate at $463,953.10, which included half the value of Edward and Leandra's community property in the amount of $17,917.50.^[1]

After almost three years of litigation, the parties settled their dispute in mediation. They first agreed who should receive certain property: Leandra was to receive Amanda's interest in the marital home, and five weapons of her choosing; Amanda was to receive a Trans Am, five specific firearms, personal documents, and family heirlooms; Rebecca was to receive a Rolex, five weapons of her choosing and her grandfather's service uniform. The remainder of the estate property was to be divided 35% to Amanda and 32.5% each to Leandra and Rebecca. As the administration of the estate continued, the probate court approved three partial distributions to the parties in accordance with the percentages in the settlement agreement.

After the mediation, but while the case was still pending, Amanda filed a suit against the notary and her surety for fraud and breach of notary duties based on the notary's untrue statements in her affidavit. The surety filed third-party claims against Leandra and her attorneys. The notary fraud case eventually settled, but before it did, Amanda filed a motion to disqualify Leandra's attorneys based on their alleged conflict of interest with their own client (Leandra) and their role as fact witnesses to the fraud. The court denied the motion.

When approximately $65,000 was left to be distributed, the parties disagreed over whether the entire amount was estate property that must be divided as specified by the settlement agreement or whether half of the value of the community property in the estate must be given to Leandra before the remainder was divided. The court entered orders finding that the "estate property" did not include Leandra's half of the community property.

Amanda filed a motion for new trial. She later supplemented it, attaching as an exhibit, an email between her attorney and Leandra's attorney discussing possible settlement options. The probate court struck the supplemental motion because it attached inadmissible settlement discussions between the attorneys. The court then denied Amanda's motion for new trial.

This appeal followed in which Amanda raises five issues. Issues one, two, and three argue that the trial court modified or re-wrote the terms of the settlement agreement. In issue four, Amanda argues that the probate court erred striking her supplemental motion for new trial. In issue five, Amanda challenges the probate court's denial of the motion to disqualify Leandra's attorneys.

Interpretation of the Settlement Agreement

Because Amanda's first three issues all contest the interpretation of the settlement agreement, we address them as one. The settlement agreement provided that, aside from awards of specific property, Amanda would receive "35% of the estate property" and Leandra and Rebecca would each receive 32.5% of "the estate property." The meaning of term "estate property" is the crux of this dispute. Amanda argues that it includes all community property and Leandra argues that it does not include her one-half undivided interest in the community property. In other words, under Leandra's interpretation, half of the amount attributed to community property should be removed before the remainder is divided. Under Amanda's interpretation, it is not.^[2]

The trial court agreed with Leandra. Its order enforces the mediated settlement agreement as follows:

1. In probate cases, the estate of the decedent only includes his or her property. The portion of the community estate that belongs to the surviving spouse is not part of the decedent's estate.

2. Decedent's surviving spouse will receive her one half (1/2) community property share of all community property assets and a thirty-two-and one-half percent (32.5%) share of Decedent's estate assets.

3. The remaining assets of the Decedent's estate shall be distributed thirty-five percent (35%) to AMANDA PORTILLO and a thirty-two and one-half percent (32.5%) to REBECCA PORTILLO, in accordance with the parties [sic] Mediated Settlement Agreement.

A settlement agreement is construed according to contract principles. Tex. Civ. Prac. & Rem. Code Ann. § 154.071(a); Loya v. Loya, 526 S.W.3d 448, 451 (Tex. 2017); Bergenholtz v. Eskenazi, 521 S.W.3d 397, 401 (Tex. App.-El Paso 2017, pet. denied). A court must give effect to the parties' intent, but that intent is determined by the words used. URI, Inc. v. Kleberg Cnty., 543 S.W.3d 755, 763 (Tex. 2018). If the words of the agreement have a "certain and definite" meaning, they are not ambiguous, and the court cannot consider parole evidence to interpret the agreement. Milner v. Milner, 361 S.W.3d 615, 619 (Tex. 2012); Alicea v. Curie Bldg., L.L.C., 632 S.W.3d 142, 153 (Tex. App.-El Paso 2021, no pet.). We review decisions about whether a contract is ambiguous and how to interpret an unambiguous contract de novo. URI, Inc., 543 S.W.3d at 763.

A. The meaning of "estate property" is unambiguous.

Interpretation of the settlement agreement in this case turns on the term "estate property" and whether it has a definite and certain meaning. Although not defined in the settlement agreement, the Texas Estates Code defines "estate" as "a decedent's property." Tex. Estates Code Ann. § 22.012. Over a century of caselaw establishes that the decedent's property does not include the surviving spouse's one-half interest in community property. See Carnes v. Meador, 533 S.W.2d 365, 368 (Tex. App.-Dallas 1975, writ ref'd n.r.e.) (surviving spouse "owned one-half of the community property in her own right and not as heir."); Aguirre v. Bosquez, No. 04-06-00068-CV, 2006 WL 2871339, at *3 (Tex. App.-San Antonio Oct. 11, 2006, no pet.) (mem. op.) ("Upon a spouse's death, the surviving spouse does not take their own one-half interest in the community estate as an heir; rather, the surviving spouse is the owner of the one-half interest of the property due to the dissolution of the marriage."); Kreis v. Kreis, 36 S.W.2d 821, 827 (Tex. App.-Amarillo 1931, writ dism'd w.o.j.) (same); Jones v. State, 5 S.W.2d 973, 975 (Tex. Comm'n App. 1928) (same); Slavin v. Greever, 209 S.W. 479, 485 (Tex. App.-Amarillo 1919, no writ) (same). This Court too has noted that only half the amount of community property makes up a decedent's estate. Wassmer v. Hopper, 463 S.W.3d 513, 517 (Tex. App.-El Paso 2014, no pet.). Any other rule would mean that a surviving spouse could be divested of community property.

We hold that the term "estate property" in the settlement agreement is unambiguous and means only Edward's property, which is comprised of his separate property and his one-half interest in the community property. Leandra remained the owner of an undivided one-half interest in the community property.

B. Amanda's arguments to the contrary are unavailing.

Amanda puts forward several arguments for interpreting the settlement agreement as dividing all property, including the share of community property that Leandra owns. None, however, address the heart of the issue: the interpretation of "estate property." And all require us to look past the unambiguous language of the agreement.

First Amanda argues that the parties expressly "agree[d] to...