Moody v. Greer, Herz & Adams LLP

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ROBERT L. MOODY, JR., Appellant v. GREER, HERZ &ADAMS LLP AND ROSS RANKIN MOODY, Appellees

No. 01-21-00575-CV

Court of Appeals of Texas, First District

March 30, 2023

On Appeal from the 122nd District Court Galveston County, Texas Trial Court Case No. 20-CV-1564-A

MEMORANDUM OPINION

Panel consists of Justices Goodman, Hightower, and Guerra.

Gordon Goodman Justice

Greer Herz &Adams LLP and Ross Rankin Moody both filed motions to dismiss Robert L. Moody, Jr.'s lawsuit under Rule 91a of the Texas Rules of Civil Procedure. The trial court granted the motions to dismiss and dismissed the suit.

We affirm.

BACKGROUND

Plaintiff's Allegations Against the Law Firm and His Brother

In his first amended petition, which is his live pleading, Robert L Moody, Jr., who goes by the name of Bobby, sued three defendants. He sued the law firm of Greer, Herz &Adams LLP and one of its partners, Irwin Herz, Jr., for breach of fiduciary duty. Bobby's fiduciary-duty claim against Herz was severed from this case in the trial court and is not at issue in this appeal. Bobby also sued his brother Ross Rankin Moody for participating, aiding and abetting, and conspiring with the other two defendants-Herz and the firm-in breaching their fiduciary duty.

For more than 30 years, Herz and the law firm represented Bobby and businesses that he owned or controlled: Moody Insurance Group, Inc. and three urgent care clinics. Herz and the law firm also represented Bobby with respect to various real-estate investments or ventures. In October 2017, Herz and the law firm declined to continue representing Bobby and his businesses. Bobby alleges that, several months later at a board meeting for Moody National Bank, Herz said he would financially ruin Bobby and make Bobby's life miserable.

During the same period that Herz and the law firm represented Bobby and his businesses and also after they stopped doing so, Herz and the law firm represented a host of businesses and organizations affiliated with the Moody family or members of the family. These businesses and organizations include but are not limited to the American National Insurance Company, National Western Life Insurance Company, Moody Foundation, Moody Endowment, Moody National Bank and its indirect parent company Moody Bancshares, Moody Neurorehabilitation Institute (formerly known as Transitional Learning Center), and Regent Care.

Herz also is the trustee of the Three R Trusts. Robert L. Moody Sr. created these trusts in 1960. The Three R Trusts are governed by a single trust agreement, but the Internal Revenue Service treats them as individual trusts for each of its four beneficiaries, who are Moody, Sr.'s children. Moody Sr. initially served as trustee, but Herz has occupied the role of trustee for more than 50 years. These trusts include hundreds of millions of dollars in assets, including the controlling shares in a number of significant businesses like Moody National Bank.

Herz and the law firm for many years-more than 35 years apparently-also represented Bobby and Ross's father, Moody, Sr. After being diagnosed with Alzheimer's disease in 2015, Moody, Sr. executed a power of attorney giving control of his Moody-related organizations to Moody National Bank's trust department. Through this power of attorney, the Bank's trust department now manages Moody, Sr.'s assets. And because Moody National Bank itself is an asset within the Three R Trusts, Herz, in his role as trustee of these trusts, controls Moody, Sr.'s assets.

In general, Bobby alleges that Herz, the law firm, and Ross acted together to push him out of the Moody business empire, take charge of it for themselves, and enrich themselves at his expense. For example, Bobby alleges Ross was put on the board of American National Insurance Company in November 2016 and became that board's chairman in April 2017, while Bobby was removed from its board in July 2017. Similarly, Bobby alleges he was removed as chairman of the board of Moody Bancshares in July 2018. Meanwhile, Ross now sits on the board of numerous other Moody-related organizations, including the National Western Life Insurance Company, Moody National Bank, Moody Foundation, and Moody Endowment.

Bobby alleges that Herz and the law firm owed him a fiduciary duty arising from their former attorney-client relationship. This fiduciary duty included corresponding duties of loyalty and to make full disclosure. Bobby further alleges that Herz and the law firm breached these duties in numerous ways-with his petition specifying a lengthy laundry list of breaches.

Bobby's breach-of-fiduciary-duty allegations fall into several general categories. First, Bobby alleges breaches of fiduciary duty based on the placement of persons other than himself-specifically, Ross or his preferred candidates-on the boards of Moody-related organizations and based on other acts that diminished Bobby's role in these organizations. Bobby alleges Herz and the law firm:

• successfully worked to have Ross placed on the boards of Moody National Bank and Moody Bancshares;

• successfully worked with Ross to have Ross's daughter placed on the board of the Moody Foundation instead of Bobby; • conspired to prevent Bobby from being placed on the board of the Moody-related foundation-the Robert L. Moody Foundation-that will choose the next trustee of the Three R Trusts;

• conspired with Ross to put Ross and Herz on American National Insurance Company's board and make Ross chairman, while removing Bobby;

• conspired with Ross to put Ross on Moody National Bank's board in return for Herz and the firm becoming National Western Life Insurance Company's general counsel;

• conspired with Ross to eliminate Bobby from all board positions in Moody-related organizations and to end all contracts Bobby or his businesses had with these organizations;

• worked with Ross to eliminate the board fees that Bobby received from the Moody Endowment; • repeatedly lied to Bobby about board meetings and elections;

• failed to disclose to Bobby the board meeting at which current board members of the Robert L. Moody Foundation were chosen; and

• successfully worked with Ross to demote and replace the head of Moody National Bank's trust department.

Second, Bobby alleges breaches of fiduciary duty based on conflicts of interest arising both from the failure to disclose these conflicts and taking actions adverse to him based on these conflicts. Bobby alleges Herz and the law firm:

• repeatedly placed the interests of its other clients-including American National Insurance Company, Moody National Bank, and National Western Life Insurance-ahead of Bobby's interests;

• repeatedly placed their own interests-specifically their financial interests in representing Moody-related organizations that generated greater fees than Bobby's business interests-ahead of Bobby's interests; • repeatedly placed their own interests in being appointed as board members of Moody-related organizations ahead of Bobby's interests;

• repeatedly failed to disclose conflicts of interest inherent in their legal representation of the various Moody-related organizations, including conflicts arising from the simultaneous representation of Bobby, American National Insurance Company, National Western Life Insurance, and Regent Care;

• failed to address conflicts of interest resulting from their legal representation of Bobby and various Moody-related organizations, including the use of information gained from representing the former while representing the latter;

• failed to disclose and eliminate conflicts of interest inherent in the representation of two competing insurance companies, American National Insurance Company and National Western Life Insurance Company;

• failed to treat beneficiaries of the Three R Trusts equally and worked to advance Ross's interests ahead of Bobby's interests; and

• failed to disclose and eliminate conflicts of interest inherent in representing multiple beneficiaries of the trust as well as entities within the trust.

Third, Bobby alleges breaches of fiduciary duty based on the use of confidential and nonconfidential information, including financial information, that Herz and the law firm gained while representing him and his business interests for 30-plus years. Bobby alleges that Herz and the law firm used this information to:

• have Bobby removed from the board of American National Insurance Company; • have Bobby removed from being chairman of Moody Bancshares;

• remove Bobby's ability to vote Moody Bancshares' interest in the stock of another business-Hometown Bank;

• prevent Bobby from being named chairman of Moody National Bank; • work to end various contracts and agreements Bobby had with multiple Moody-related organizations, including American National Insurance Company, Regent Care, and Transitional Learning Center;

• assist and conspire in the cancelation of the marketing agreement between Bobby and American National Insurance Company;

• assist and conspire in the cancelation of the consulting agreement between Bobby and American National Insurance Company;

• end a significant line of business Bobby had with Regent Care;

• work to reduce and ultimately eliminate Bobby's commissions earned as a result of his work with Regent Care;

• work to remove Bobby as agent of record for the Transitional Learning Center; and

• work to harm Bobby financially with the goal of assisting Ross to gain control and leadership of all Moody-related organizations.

Fourth, Bobby alleges several breaches of fiduciary duty that do not fit into the preceding categories or form a coherent category of their own. In particular, Bobby alleges that Herz and the law firm breached their fiduciary duty by:

• repeatedly failing to deal

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