Jessen v. John P. Duvall & Bluewater Fin. Servs., LLP

JON JESSEN, Appellant v. JOHN P. DUVALL AND BLUEWATER FINANCIAL SERVICES, LLP, Appellees

NO. 14-16-00869-CV

State of Texas in the Fourteenth Court of Appeals

February 22, 2018

On Appeal from the 61st District Court Harris County, Texas

Trial Court Cause No. 2013-58328

MEMORANDUM OPINION

Appellant Jon Jessen, who had established trusts to purchase life insurance policies, brought an action against insurance agent John P. Duvall and Bluewater Financial Services for fraud, aiding and abetting and conspiracy to breach a fiduciary duty, Texas Insurance Code violations, unjust enrichment and money had and received. The trial court granted summary judgment against Jessen. We affirm.

I. BACKGROUND

Jessen was told by his long-time tax attorney and financial advisor, Joseph Bond, that insurance investments on Jessen's life would provide specified tax benefits and estate planning protections in the event of Jessen's premature death. Jessen maintains that Bond told him the investments were a safe place to deposit substantial sums for a few years and that the policies could be sold, allegedly for a "considerable profit," on a secondary or "viatical" market.

Jessen established and funded several life insurance trusts¹ that purchased $70,000,000 worth of life insurance policies² between May 2008 and September 2008. Two life insurance agents, appellee Duvall and Ladd Tanner, were involved in procuring the life policies for Jessen.³ Tanner communicated with Jessen directly. Duvall, on the other hand, did not have oral or written communications with Jessen.⁴

After the trusts purchased the life insurance policies, Duvall received commissions paid by the life insurance companies in the amount of 40% of the first year premiums. Also, after the policies were purchased, Duvall paid a referral fee to Bond's son, Bond, Jr., a licensed insurance agent.

The financial markets collapsed in September 2008.

The trusts resold the policies in 2010 and 2011. Jessen did not make a return on his investment. Rather, Jessen lost more than $3,200,000 by the time the last policy was sold in late 2011.

Jessen asserts that in 2012 he realized that he had been taken advantage of. Jessen filed suit on September 30, 2013, against Bond and his law firm, every insurance company that sold the policies, as well as Tanner and Duvall, claiming a conspiracy was involved. In his sixth amended petition, Jessen asserted the following claims against Duvall: fraud, fraudulent inducement, and fraudulent concealment (Count I); aiding and abetting and conspiracy to breach fiduciary duty (Count II); violation of Texas Insurance Code (Count III); and equitable theories of unjust enrichment and money had and received (Count IV).

On February 26, 2015, Duvall filed a traditional and no-evidence motion for summary judgment, which was granted by order of the trial court on July 10, 2015. The trial court did not state the grounds on which it relied. At the time, the trial court's order granting summary judgment to Duvall was interlocutory. On May 26, 2016, Jessen filed a motion for rehearing of the earlier ruling, which was denied by the trial court by Order dated August 18, 2016.⁵

The only remaining claims in the case against other defendants were dismissed with prejudice by Orders dated September 23, 2016, making the trial court's July 10, 2015 Order with respect to Duvall and Bluewater Financial Services, LLP,⁶ a final summary judgment. Jessen timely filed this notice of appeal.

II. ANALYSIS

Jessen claims the trial court erred in granting Duvall's motion for summary judgment. Jessen argues that the trial court erred because none of his claims require direct communication between Duvall and Jessen.⁷ He further argues that Duvall did not conclusively establish any right to judgment based on the statutes of limitation, arguing that the applicable statutes of limitation did not expire.

A. Standard of Review

We review de novo the trial court's order granting summary judgment. Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009) (per curiam); Wyly v. Integrity Ins. Sols., 502 S.W.3d 901, 904 (Tex. App. (Tex. App.—Houston [14th Dist.] 2016, no pet.). Where a trial court's order granting summary judgment does not specify the grounds relied upon, summary judgment will be affirmed if any of the grounds are meritorious. FM Props. Operating Co., v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).

We consider the evidence in the light most favorable to the non-movant, and indulge reasonable inferences and resolve all doubts in its favor. See City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005); Wyly, 502 S.W.3d at 904. "We credit evidence favorable to the non-movant if reasonable fact finders could and disregard contrary evidence unless reasonable fact finders could not." Wyly, 502 S.W.3d at 904.

When both no-evidence and traditional grounds for summary judgment are asserted, we first review the trial court's order under the no-evidence standard. PAS, Inc. v. Engel, 350 S.W.3d 602, 607 (Tex. App.—Houston [14th Dist.] 2011, no pet.). To prevail on a no-evidence summary judgment, the movant must allege that no evidence exists to support one or more essential elements of a claim for which the non-movant bears the burden of proof at trial. Tex. R. Civ. P. 166a(i); Kane v. Cameron Int'l Corp., 331 S.W.3d 145, 147 (Tex. App.—Houston [14th Dist.] 2011, no pet.). A no-evidence motion may not be conclusory, but must instead give fair notice to the non-movant as to the specific element of the non-movant's claim that is being challenged. See Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310-11 (Tex. 2009). The non-movant must then present evidence raising a genuine issue of material fact on the challenged elements. Kane, 331 S.W.3d at 147. A fact issue exists where there is more than a scintilla of probative evidence. See Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012) (per curiam). More than a scintilla of evidence exists if the evidence rises to a level that would allow reasonable and fair-minded people to differ in their conclusions as to the existence of a vital fact.

Under the traditional summary-judgment standard, the movant has the initial burden of conclusively negating at least one essential element of a claim or defense on which the non-movant has the burden of proof or conclusively establishing each element of a claim or defense on which the movants have the burden of proof. See Tex. R. Civ. P. 166a(c); Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Once the movant has done so, and only if it does, the burden shifts to the non-movant to produce evidence creating a genuine issue of material fact as to the challenged element or elements in order to defeat the summary judgment. See Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996).

B. Standing

Because standing is a component of the court's subject matter jurisdiction, we will review Jessen's standing first—i.e., whether summary judgment was proper because Jessen lacked standing to bring this suit. Duvall maintains that the trusts purchased, owned and later sold the policies; hence, only the trustees are authorized to bring claims affecting the trusts' property. Duvall further contends that Jessen's lack of standing was not rectified by the trustees' assignment of any legal claims of the trusts to Jessen.

Subject matter jurisdiction can be raised at any time, including for the first time on appeal. See Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993). A party's standing is determined at the time suit is filed. Id. at 446. Whether subject matter jurisdiction exists is a question of law subject to de novo review. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).

To have standing a party must have a "sufficient relationship with the lawsuit so as to have a justiciable interest in its outcome." Austin Nursing Ctr. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005) (quotation omitted). A plaintiff must affirmatively show, through pleadings and other evidence pertinent to the jurisdictional inquiry, a distinct interest in the asserted conflict, such that the defendant's actions have caused the plaintiff some particular injury. Hunt v. Bass, 664 S.W.2d 323, 324 (Tex. 1984); see County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).

Here, while it is undisputed that the trustees purchased and sold the insurance policies, Jessen does not pursue claims based on duties created by the policies (contractual claims). Rather, Jessen asserts claims arising under state law (extra-contractual claims). Specifically, Jessen's claims for fraud, aiding and abetting and conspiracy to breach a fiduciary duty, and equitable theories remain viable becausehe seeks redress for misrepresentations made to him prior to the trusts being created and policies purchased. There is no indication here that Jessen assigned or relinquished the extra-contractual causes of action to the trustees. As such, Jessen has standing to assert them in this litigation. See Lee v. Rogers Agency, 517 S.W.3d 137, 144-153 (Tex. App.—Texarkana 2016, pet. filed) (op. on rehearing).

C. Summary Judgment

Duvall sought a no-evidence motion for summary judgment with respect to fraud and fraudulent concealment on the element that defendant made an actionable misrepresentation of material fact. Duval contends there is no evidence that he made any misrepresentation as to the resale value of the policies. With respect to aiding and abetting and conspiracy to breach fiduciary duty, Duvall attacked the element of breach by the defendant of a fiduciary duty to the plaintiff. Duvall argues he had no duty to disclose the referral fee made to Bond's son. Duvall also moved for no-evidence summary judgment on the equitable claims of unjust enrichment and money had and received, attacking the damages element. Duvall argues that the amount Jessen paid for the policies did not vary on commissions; thus, there was no evidence...