                                                                                                ACCEPTED
                                                                                            14-16-00495-CV
                                                                            FOURTEENTH COURT OF APPEALS
                                                                                         HOUSTON, TEXAS
                                                                                       7/8/2016 11:51:01 AM
                                                                                      CHRISTOPHER PRINE
                                                                                                     CLERK


                              No. 14-16-00495-CV

                                                                            FILED IN
                                                                     14th COURT OF APPEALS
                          In the Court of Appeals                        HOUSTON, TEXAS
                    For the Fourteenth District of Texas             7/8/2016 11:51:01 AM
                                                                     CHRISTOPHER A. PRINE
                                                                              Clerk

In Re Tom Thomas, Dan Sheehan, and Marc Culp, Individually and as Successors
          to the Interest of Thomas, Sheehan & Culp, LLP, Relators



                  From the Probate Court Number Two (2)
                          of Harris County, Texas
                     Honorable Mike Wood, Presiding


Real Party in Interest Legacy's Motion to Reconsider Order Granting Motion
                      for Emergency Stay of Proceedings



                       M A C I N T Y R E , M C C U L L O C H , STANFIELD
                       & YOUNG, L L P


                       By.-   /s/ W. Cameron   McCulloch
                              W. Cameron McCulloch
                              State Bar No. 00788930
                              cameron.mcculloch@mmlawtexas.com
                              Christopher C . Burt
                              State Bar No. 24068339
                              christopher.burt@mmlawtexas.com
                              2900 Weslayan, Suite 150
                              Houston, Texas 11021
                              (713)572-2900

                       Counsel for Real Party in Interest Legacy Trust
                       Company, in its capacity as the court-appointed
                       Receiver for the Article I V Trust created by the Last
                       Will and Testament of Katherine Pillot Barnhart




5631319v2
                        Identity of Parties and Counsel

      Relators and Movants for                  Counsel in Trial Courts and for
          Emergency Stay                     Mandamus Petition and Motion for
                                                       Emergency Stay
  Tom Thomas, Dan Sheehan, and            Marc S. Culp
Marc Culp, as successors to Thomas,       State Bar No. 05212700
Sheehan & Culp L L C ("Relators" or       mculp(S)cdhllp .com
                                          CULP & DYER, L.L.P.
 TSC"), plaintiffs and counterclaim       222 East McKinney Street, Suite 210
            defendants                    Denton, Texas 76201
                                          (940) 484-2236 - Telephone
                                          (940) 484-4436 - Facsimile


Real Party in Interest, Defendant,            Counsel in Trial Courts and for
   and Counterclaim Plaintiff                Mandamus Petition and Motion for
                                                    Emergency Stay

 Legacy Trust Company, N.A., in its       W. Cameron McCulloch
capacity as court-appointed Receiver      State Bar No. 00788930
of the Article I V Trust under the Last   cameron.mcculloch@mmlawtexas .com
  W i l l and Testament ofKatherine       Christopher C. Burt
  Pillot Lee Bamhart ("Legacy" or         State Bar No. 24068339
               "Receiver")                christopher.burt@mmlawtexas.com
                                          M A C I N T Y R E , M C C U L L O C H , STANFIELD
                                          & YOUNG, L L P
                                          2900 Weslayan, Suite 150
                                          Houston, Texas 77027
                                          (713)572-2900

            Respondent

     The Honorable Mike Wood
   Presiding Judge, Harris County
         Probate Court No. 2
   Harris County Civil Courthouse
            201 Caroline
              6^^^ Floor
         Houston, T X 77002
            713-368-6710




5631319v2
                             Procedural       History

        Relators Tom Thomas, Dan Sheehan, and Marc Culp, individually, and as

successors to the interest o f the law firm o f Thomas Sheehan & Culp, LLP ("TSC"

or "Relators") sued Legacy Trust Company, in its capacity as the court-appointed

Receiver for the Article I V Trust created by the Last W i l l and Testament o f

Katherine Pillot Bamhart ("Legacy"), to coUect a contingent fee they claim is due

them under a 1995 attorney fee agreement with their clients Susan Camille Lee and

Susan Campbell Gibson for representation in Lee v. Lee in Harris County Probate

Court Number Two (2) (the "Probate Court"). TSC however filed their Original

Petition in the 162'^'* Judicial District o f Dallas County on April 20, 2016 (the

"Dallas L a w s u i f ) . Legacy was appointed Receiver over the Trust by the Probate

Court. Legacy filed, in the Dallas Lawsuit, a Plea in Abatement and Motion to

Transfer that challenged the venue o f the Dallas court, and subject to those

motions, an Answer and Counterclaim that asserted among other things that TSC

had only a fee agreement with their clients Susan Camille Lee and Susan Campbell

Gibson, and not any trustee o f the Trust, and in any event were barred by the Final

Judgment awarding attorneys' fees entered by the Harris County Probate Court i n

Lee V. Lee. See Tab 1.

        On May 13, 2016, Legacy filed a motion asking the Probate Court to transfer

the Dallas County Lawsuit to the Probate Court under Texas Estates Code § 34.001



5631319v2                                 1
as it was a matter related to a probate proceeding pending i n the Probate Court.

The Probate Court granted Legacy's Motion. Legacy served discovery requests on

TSC regarding their breach o f contract action.^ Relators subsequently filed their

Petition for Writ o f Mandamus pending in the above numbered and styled case. A t

its most basic level, Relators have asserted that the Probate Court does not have

jurisdiction such that it could transfer the litigation to itself from 16T^^ Judicial

District Court i n Dallas County under Texas Estates Code § 34.001. Relators now

have filed a Motion for Emergency Stay o f Proceedings seeking to avoid having to

produce discovery in this matter and the Court subsequently granted the request for

Emergency Stay on July 8, 2016.

        Save for TSC's upcoming deadline to respond to discovery requests from

Legacy, Legacy represents to the Court that there are no other pending deadlines in

place for this case at the present time.

        No matter whether TSC's claims move forward in the Probate Court or

Dallas County District Court, TSC w i l l have to respond to discovery properly

requested by Legacy. TSC is simply seeking to avoid making discovery available

on its own claims for reasons unknown.




 See Tab 1 to Relator's Motion for Emergency Stay of Proceedings.



5631319v2                                    0
                             Argument      and    Authorities

1.          The Emergency Stay Serves Only to Delay Necessary
            Proceedings, Prejudicing Legacy.
        A.        Absent compelling circumstances, a stay is improper.

            The request for an emergency stay is an extraordinary measure provided for

in the Texas Rules o f Appellate Procedure.          See T E X . R . A P P . P. 52.10.   The

Supreme Court o f Texas has provided that "[f]or a court o f appeals to stay

proceedings i n the trial court while it considers an interlocutory appeal increases

delay and expense and should not be done absent compelling circumstances."

Coal, of Cities for Affordable      Util. Rates v. Third Court of Appeals,     1^1 S.W.2d

946, 947 (Tex. 1990) (per curiam). No such compelling circumstances exist here.

            B.    No compelling circumstances exist for a stay.

        Relators' sole basis for requesting a "stay o f the trial court's proceedings" is

to avoid having to respond to Legacy's discovery about their claims against

Legacy.          Relators have shown no "compelling circumstances" for avoiding

discovery. Regardless o f whether TSC's Petition for Writ o f Mandamus is ruled on

by this Court prior to August 15, or i f that petition is granted or denied, it w i l l not

change i n any way the need for TSC to respond to discovery requests from Legacy

about TSC's own claims. The discovery w i l l remain necessary and probative for

the resolution o f this matter either by settlement or trial, regardless o f whether the

lawsuit proceeds in the Probate Court or District Court i n Dallas County. The


5631319v2                                    3
Court's stay o f the proceedings does nothing more than further protract this

litigation and require the further delay and expense that the Texas Supreme Court

warned against in Coal, of Cities. See Coal, of Cities, 1^1 S.W.2d at 947.

        Relators have conceded that Legacy has already agreed to an extension o f

the time period for which TSC may respond to Legacy's discovery requests until

August 15, 2016. A true and correct copy o f the proposed discovery response

extension agreement that counsel for Legacy has sent to counsel for Relators is

attached to this pleading within Tab 2. Relators admitted i n their own Motion for

Emergency Stay that they have tentatively agreed to such relief.^

        Contrary to Relators' bald assertion, they have shown no prejudice by

ongoing discovery in the trial court. They argue, without citing any authority, that

they carmot send discovery to Legacy without "risk o f waiver o f arguments made

in TSC's plea in abatement." Even i f that were true, that is easily avoided by a

Rule 11 agreement as Legacy has offered not to assert such a waiver. A true and

correct copy o f counsel for Legacy's offer to stipulate that responding to discovery

would not waive Relators' plea in abatement is attached to this pleading within

Tab 3.

        On the other hand. Legacy and the beneficiaries o f the Trust over which

Legacy is the Receiver are prejudiced by this stay. Legacy is charged by the order


^ Motion for Emergency Stay at 6.



5631319v2                                4
of the Probate Court appointing Legacy as Receiver for the Article I V Trust under

the Last W i l l and Testament o f Katherine Pillot Lee Bamhart with performing the

functions o f the trustee o f that Trust, which includes the mandatory distribution o f

income o f the Trust. Relators claim they are owed over $ 1 million to be paid from

the Trust based on events that occurred twenty years ago, a disputed liability that

nevertheless affects Legacy's ability to make distributions from the Trust to its

beneficiaries.

                                      Prayer

        For the foregoing reasons, Legacy Trust Company, i n its capacity as the

Receiver for the Article I V Trust created by the Last W i l l and Testament o f

Katherine Pillot Bamhart, respectftilly requests that this Court (1) reconsider the

Realtors' Motion for Emergency Stay o f Proceedings and the Order granting the

same; (2) upon reconsideration, deny Relators' Motion for Emergency Stay o f

Proceedings, and (3) grant such other and further relief as Legacy may show itself

justly entitled to receive.




5631319v2                                 5
            Respectfully submitted,

            M A C I N T Y R E , M C C U L L O C H , STANFIELD
            i& Y O U N G , L L P


            By;    /s/ W. Cameron   McCulloch
                   W. Cameron McCulloch
                   State Bar No. 00788930
                   cameron.mcculloch@mmlawtexas.com
                   Christopher C. Burt
                   State Bar No. 24068339
                   christopher.burt@mmlawtexas.com
                   2900 Weslayan, Suite 150
                   Houston, Texas 77027
                   (713)572-2900
                   (713) 572-2902 (FAX)

            Counsel for Real Party in Interest Legacy Trust
            Company, in its capacity as the court-appointed
            Receiver for the Article I V Trust created by the Last
            Will and Testament of Katherine Pillot Barnhart




5631319v2                      6
                                 Certificate of Service

        I do hereby certify that a copy o f Real Party i n Interest Legacy's Motion to

Reconsider Order Granting Motion for Emergency Stay of Proceedings was served

on the following counsel on this the 8th day o f July, 2016 by U.S. Postal Mail,

facsimile, and electronically.



M r . Marc S. Culp                             The Honorable Mike Wood
Culp & Dyer, L L P                             Presiding Judge, Harris County
222 E. McKinney Street, Suite 210              Probate Court No. 2
Denton, Texas 76201                            Harris County Civil Courthouse
(940) 484-4436                                 201 Caroline Houston, Texas 77002
mculp@cdhllp.com                               713-368-6710
                                               (the "Probate Court")

Neil Kenton Alexander                          John Porter
kalexander@porterhedges .com                   j ohn.porter@bakerbotts .com
Eric M . English                               Keri D . Brown
eenglish@porterhedges.com                      keri .bro wn@bakerbotts .com
Jorma Summers                                  Baker Botts, L L P
j summer@porterhedges.com                       One Shell Plaza
Porter Hedges, L L P                            910 Louisiana Street
 1000 Main St., 36^^ Floor                     Houston, Texas 77002
Houston, Texas 77002                            (713)229-1522
 (713)226-6614

Daniel J. Sheehan                              Thomas Zabel
dsheehan@dsa-law.com                           Zabel Freeman
John M . Phalen, Jr.                           tzabel@zflawfirm.com
jphalen@dsa-law.com                            1135 Heights Blvd.
Daniel Sheehan PLLC                            Houston, Texas 77008
Campbell Center I I , Suite 100                (713)802-9114
8150 N . Central Expressway
Dallas, Texas 75206
(214)468-8803




5631319v2                                  7
            By;   /s/ W. Cameron   McCulloch
                  W. Cameron McCulloch
                  State Bar No. 00788930
                  cameron.mcculloch@mmlawtexas.com
                  Christopher C. Burt
                  State Bar No. 24068339
                  christopher.burt@mmlawtexas.com
                  2900 Weslayan, Suite 150
                  Houston, Texas 77027
                  (713)572-2900
                  (713) 572-2902 (FAX)

            Counsel for Real Party in Interest Legacy Trust
            Company, in its capacity as the court-appointed
            Receiver for the Article I V Trust created by the Last
            Will and Testament of Katherine Pillot Barnhart




5631319v2                  8
            Appendix




5631319v2       9
                            T A B L E OF C O N T E N T S

T A B 1 - Legacy's Motion to Transfer Venue, and Subject to Motion to Transfer
      Venue & Motion to Transfer Lawsuit to Statutory Probate Court,
      Defendant's Original Answer, Plea in Abatement, and Counter Claim filed
      in the 162"^^ Dallas County, Texas                                       1

T A B 2 - July 5, 2016 Proposed Rule 11 Agreement.                              184

T A B 3 - July 1, 2016 CoiTcspondence regarding plea i n abatement stipulation.. 186




5631319v2                                10
TAB   1
                                                                                                  DALLAS COUNT
                                                                                               5/26/2016 3:28:02 PI
                                                                                                     FELICIA PITR
                                                                                                  DISTRICT CLER




                                   CAUSE NUMBER DC-16-04570

 TOM THOMAS, DAN SHEEHAN                      §          IN THE 162nd DISTRICT
 and MARC CULP, individually and              §
 as successors to the interests of            §
 Thomas, Sheehan & Culp, L.L.P.,              §
        Plaintiffs,                           §
                                               §
 V.                                            §         COURT OF
                                               §
 LEGACY TRUST COMPANY,                         §
 N.A., in the capacity as RECEIVER             §
 FOR THE ARTICLE IV TRUST                      §
 created by the Last Will and                  §
 Testament ofKatherine Pillot Lee              §                    •
 Barnhart, Deceased,                           §
        Defendant.                             §         DALLAS COUNTY, TEXAS


                   Defendant Legacy's Motion to Transfer Venue
           Defendant Legacy Trust Company, N.A., in its capacity as the court-appointed Receiver for

the Article TV Trust created by the Last Will and Testament of Katherine Pillot Lee Bamhart,

Deceased (hereinafter referred to as "Legacy"), respectfully moves the Court to transfer this lawsuit

to Probate Coxort No. 2 of Harris County, Texas because it is the only proper venue to hear this

dispute.

                                           Background
           Plaintiffs Tom Thomas, Dan Sheehan, and Marc Culp (hereinafter sometimes collectively

referred to as the "Plaintiff Lawyers"), who allege they are successors to the law firm of Thomas,

Sheehan & Culp, L.L.P., claim they are owed contingent legal fees from the Article IV Trust created

by the Last Will and Testament ofKatherine Pillot Lee Bamhart, Deceased (hereinafter referred to as

the "Article IV Trust"), for which Legacy is the Receiver appointed by Probate Court No. 2 of Harris

County, Texas. Legacy has its principal place of business in Harris County. The Plaintiff Lawyers

base their claim on the March 30, 1995 written fee agreement signed by Dan Sheehan, on behalf of

Thomas, Sheehan & Culp, LLP, and clients Susan Camille Lee (hereinafter referred to as "Ms. Lee"),

                                                   . 1
0050733
individually, and Ms. Lee's daughter Susan Campbell Gibson (hereinafter referred to as "Ms.

Gibson"), individually, under which the law firm agreed to represent these clients for a mixture of

hourly fees and contingent fees in a lawsuit Ms. Lee filed in 1988 in Probate Court No. 2 of Harris

County, In the Estate of Katherine Pillot Lee Barnhart, Deceased — Susan Lee et al v. Ronald E. Lee,

Jr., individually, as Independent Executor of the Estate and as Trustee of the Article IV Trust under

the Last Will and Testament of Katherine Pillot Lee Barnhart, No. 137,506 (hereinafter referred to as

the "Probate Court Lawsuit").'     The Probate Court Lawsuit was tried and a judgment entered in

1996, the judgment was modified on appeal in 2002, and Ms. Lee and Ms. Gibson were awarded

specific attorneys' fees paid from the Article I V Trust. The judgment also ordered defendant Ronald

E. Lee, Jr., a resident of Harris County, to reimburse the Article IV Trust for certain expenses. Per

Plaintiffs' Original Petition which is attached hereto as Exhibit " 1 " , the Plaintiff Lawyers claim they

are entitled to collect a contingent fee based on amounts collected in Harris County 1) in 1997 by the

Trustee of the Article IV Trust on the judgment entered in the Probate Court Lawsuit in 1996, 2) in

2015 by Legacy as court-appointed Receiver for the Article IV Trust in 2015, and 3) in 2016

pursuant to a settlement agreement approved in 2016 by Harris County Probate Court No. 2. The

Plaintiff Lawyers do not seek contingent fees awarded to their clients Ms. Lee and Ms. Gibson, but

rather from the Article IV Trust despite the fact that the Trustee of the Article IV Trust was not a

party to the fee agreement. See Exhibit "A" to Plaintiffs' Original Petition. There is ongoing

litigation in Harris County Probate Court No. 2 conceming the Article IV Trust to which Legacy, Ms.

Lee, and Ms. Gibson are parties. Plaintiff Sheehan in fact is counsel for Ms. Lee and Ms. Gibson in

that litigation.




 ' A copy of the alleged fee agreement between the Plaintiff Lawyers, Ms. Lee and Ms. Gibson is
 attached to Plaintiffs' Original Petition at page 22 as Exhibit "A".


                                                     2
 0050733
                                  Summary of Argument
       A motion to transfer venue is the proper vehicle for a defendant to raise a challenge to the

plaintiffs venue choice. TEX. R. CiV. P. 86; Wichita Cty. v. Hart, 917 S.W.2d 779, 781 (Tex. 1996).

Legacy moves the Court to transfer venue of this lawsuit to Probate Court No. 2 of Harris County for

3 reasons:

        1. Plaintffs'allegations ofvenue in Dallas County are incorrect.

        2. Venue is proper in Harris County, and particularly in Probate Court No. 2 of Harris

             County, because the claims asserted in this lawsuit directly involve prior judgments and

             rulings of Probate Court No. 2 of Harris County, and ongoing litigation on related matters

              in that court.

        3. Dallas County is an inappropriate and inconvenient forum for the adjudication of this

              dispute.

        Legacy has previously filed a motion in Probate Court No. 2 of Harris County requesting

that court to exercise its power conferred under Texas Estates Code §34.001 to order this case

transferred from this Court to Probate Court No. 2 of Harris County. A hearing on that motion is set

for June 7, 2016. If that motion is granted, this motion will be moot.

                                             Argument
 1.        Venue for this Lawsuit is Only Proper in Probate Court No. 2 of Harris
           County.

           Section 15.002(a) of the Texas Civil Practice and Remedies Code provides in relevant part

 that, except where otherwise provided by statute, "all lawsuits shall be brought "(1) in the county in

 which all or a substantial part of the events or omissions giving rise to the claim occurred; ... or (3)

 in the county ofthe defendant's principal office in this state, if the defendant is not a natural person."




                                                     3
 0050733
Only if these provisions do not apply may the plaintiff sue in the county of his or her residence under

Section 15.002(a)(4).

        Harris County is the only county where all or a substantial part of the events or omissions

giving rise to the claim occurred. The Article IV Trust (and the underlying probate of the will that

created the trust), the Receiver, the lawsuit through which the Plaintiff Lawyers claim their

contingency fee was earned, the payments to the Article IV Trust arising out of that lawsuit, Susan

Lee, and Susan Gibson - all ofthe people, acts or omissions giving rise to the cause of action - were

situated or occurred in Harris County.

        1. A plain reading of the fee agreement shows that the Susan Lee was a resident of Harris

                 County at the time that she signed the agreement, and that the agreement pertained to a

                 lawsuit she had already filed in Harris County in 1988.

        2.       Ms. Gibson, Ms. Lee's daughter, was a resident of Harris County with her mother when

                 the agreement was signed in 1995, although she was attending Pine Manor College in

                 Massachusetts during the school year.

         3. The sole basis on which the Plaintiff Lawyers claim they are entitled to collect the

                 additional contingency fee is that the Trustee and the Receiver for the Article IV Trust

                 collected money in Harris County pursuant to a Harris County judgment.

            4.   The situs of that Article IV Trust was maintained in Harris County since the Trust was

                 created by the Last Will and Testament of Katherine Pillot Lee Bamhart, Deceased,

                 probated in Harris County, and under the supervision of Probate Court No. 2 in Harris

                 County.

            5. Legacy, as court-appointed Receiver of the Article IV Trust with all the powers of a

                 trustee, resides in Harris County, and thus the funds from which the Plaintiff Lawyers

                  seek to recover are located in Harris County.



                                                         4
  0050733
          Therefore, venue of this lawsuit is proper only in Harris County, Texas. See TEX. CIV. PRAC.

& REM. CODE     §15.002(a)(1).

          Plaintiffs allege, correctly, that defendant Legacy is a nationally chartered non-depository

trust company with its principal place of business in Houston, Harris County, Texas. Movant is

not a natural person. Given the fact that Legacy's principal office is located in Harris County,

venue of the lawsuit is proper in Harris County, Texas. See TEX. Civ. PRAC. & R E M . CODE

§ 15.002(a)(3).

          The Plaintiff Lawyers claim venue is proper in Dallas County under TEX. C I V . PRAC. &

R E M . CODE   §64.052(b) which provides that "a suit against a receiver may be brought where the

person whose property is in receivership resides." However, §64.052(b) is a basis for proper

venue in Harris County, not Dallas County. Legacy is the Receiver for the Article I V Trust, and

as such, holds title to the assets of the Article IV Trust. Venue is proper in Harris County as

Legacy's principal place of business is in Houston, Harris County, Texas.

          Texas Property Code §115.002(c-l) also provides that " . . . i f the settlor is deceased and an

administration of the settlor's estate is pending in this state, an action involving the interpretation

and administration of ... a testamentary tmst created by the settlor's will may be brought... (2)

in the county in which the administration of the settlor's estate is pending."^ In this case, the

Plaintiff Lawyers seek to have a contingent fee awarded to them from the Article IV Trust, a

testamentary trust created by Settlor Katherine Pillot Lee Bamhart (now deceased).                   The

administration of the Estate of Katherine Lee Pillot Lee Barnhart, Deceased is presently pending




^ Likewise, ESTATES CODE §33.002 provides that venue for a cause of action related to a probate
proceeding pending in a statutory probate court (other than a cause of action against a personal
representative for personal injury, death, or property damage) is proper in the statutory probate
court in which the decedent's estate is pending.


                                                     5
0050733
in Harris County Probate Court Number 2. Venue of the lawsuit is therefore proper in Probate

Court No. 2 of Harris County.

          Even i f venue were proper in Dallas County, there are compelling reasons for this Court

to transfer this case to Probate Court No. 2 in Harris County under TEX. CIV. PRAC. & REM. CODE

§ 15.002(b). Not only is venue unquestionably proper in that court, the following reasons make

transfer to that Court the only reasonable choice in the exercise of this court's power to transfer under

TEX. CIV. PRAC. REM. CODE       §15.002(b:

          1.      Parties to this lawsuit are already parties        to pending    litigation   involving

               overlapping issues in Probate Court No. 2 of Harris County.

          2.      Plaintiffs' claims involve the interpretation of orders and judgments entered by

               Probate Court No. 2 of Harris County. The Honorable Mike Wood, Judge of Probate

               Court No. 2, presided over the trial and entered the very judgment that addressed both

               attorneys' fees and the obligations of the trustee of the Article IV Trust at issue in the

               Plaintiff Lawyers' claims for a contingent fee. Judge Wood is likewise supervising

               Legacy as Receiver for the Article IV Trust.

          3.      Any judgment entered against Legacy as Receiver for the Article IV Trust in this

               court must be referred to Probate Court No. 2, the court that appointed it Receiver, for

               enforcement first under Texas Civil Practice & Remedies Code §64.055. Campbell v.

               Wood, 811 S.W.2d 753, 756 (Tex. App.—Houston [1st Dist] 1991, no writ).

          Under these circumstances, maintenance of the action in Dallas County, rather than in the

court that was and is directly involved in all matters pertinent to this dispute, would work an

injustice to Legacy and the beneficiaries of the Article I V Trust. The balance of interests o f a l l

parties clearly favors proceedings in Probate Court No. 2, and a transfer to that court will not

work any injustice as to any party.

                                                     6
0050733
       A,        Probate Court No, 2 is already adjudicating related issues
                 involving the same parties.

          The Plaintiff Lawyers' claims are but one part of an ongoing dispute entirely presided

over by Probate Court No. 2 since 1988 concerning the management ofthe Article I V Trust. The

most recent chapter of that dispute led to that court removing the Plaintiff Lawyers' client Ms.

Lee as a substitute trustee ofthe Trust, and the appointment of defendant Legacy as Receiver for

the trust. See Exhibit B to Plaintiffs' Original Petition, "Order Removing Trustee and

Appointing Receiver," dated June 18, 2015. Also actively in dispute before Probate Court No. 2

is Ms. Lee's claim that the terms ofthe settlement agreed to by Legacy and Mr. Ronald E. Lee,

Jr., under which Legacy has collected the judgment in favor ofthe Article IV Trust on which the

Plaintiff Lawyers seek to collect contingent fees, should not be approved by that court. See

Exhibit "2" to this Motion, "Defendant Susan Lee's Objections, Opposition, and Response to

Application to Approve Settlement Agreement." Dan Sheehan, a plaintiff here, is counsel for

both Ms. Lee and Ms. Gibson in the ongoing disputes in Probate Court No. 2. He served as lead

counsel for Ms. Lee in Probate Court No. 2 in a previous chapter, which is the basis for the

claims asserted in this lawsuit. It serves no legitimate purpose to involve a different court in a

different venue in the adjudication of this lawsuit.-^


          B.     Plaintiffs' claims require the interpretation and enforcement of
                 the orders and judgments of Probate Court No. 2.

          Why did Sheehan and his former partners sue in Dallas, rather than in Probate Court No.

2? The answer probably lies in the fact that their claims are foreclosed by that court's Final

Judgment, dated October 25, 1996 in the very lawsuit to which the contingent fee agreement


^ The Local Rules of the Dallas District Courts recognize the desirability of transferring cases
"related to another case previously filed in or disposed of by another Court" in Rules 1.06 and
1.07. While these rules are not directly applicable here, the principle is the same.


                                                  fl
0050733
pertains, Susan Lee et al v. Ronald E. Lee, Jr., No 137,506. It is payments toward this same

judgment on which the Plaintiff Lawyers base their attorneys' fee claims. These same lawyers,

Ms. Lee, and Ms. Gibson were parties to a stipulation that was incorporated into that Final

Judgment dated October 25, 1996, which states in relevant part:

                Based upon the stipulation of the counsel for the parties and the
                undisputed or admitted facts, the Court finds that i) Susan C. Lee's
                attomeys were paid reasonable and necessary fees of
                $1,000,000.00 for the prosecution of this action; ii) attomeys
                representing Susan C. Gibson, individually, and Susan C. Lee as
                Trustee of the Article V Trust for Susan C. Gibson, were paid
                reasonable and necessary fees of $500,000.00 for the prosecution
                of this action . . . . The Court further finds that Plaintiffs are
                entitled to judgment directing and authorizing the Executor of the
                Estate and Tmstee of the Article IV Trust to reimburse Susan C.
                Lee, individually and Susan C. Lee as Trustee of the Article Y
                Tmst for Susan C. Gibson for the aforesaid attomeys' fees from the
                assets ofthe Estate and/or the Article I V Trast, and after such
                payment or reimbursement, Plaintiffs are not entitled to any
                additional attorneys'fees for the trial of this action.

Final Judgment, October 25, 1996, Lee v. Lee, No. 137,506, p. 3 (emphasis added), attached as

Exhibit C to Plaintiffs' Original Petition at p. 037. Notwithstanding this order, under which the

Plaintiff Lawyers received their fees, they now claim they are entitled to additional contingent

fees. The proper court for interpreting and applying this order in this lawsuit is the one that

issued it - Probate Court No. 2.      Moreover, it is Probate Court No. 2 that appointed and

supervises Legacy as Receiver for the Article I V Trust, and has power over the administration of

the Article IV Trust created by the Will of Katherine Pillot Lee Barnhart, whose estate was

probated in that court.

          The same fee agreement on which plaintiffs base their claim was also the subject of a

previous jury trial before Judge Wood in Harris County Probate Court No.2, where another

lawyer claiming under it sued Ms. Lee to collect fees. Donna Kline v. Susan Camille Lee, No.



                                                  8
0050733
137,506-403. See Exhibit J to Plaintiffs' Original Petition at p. 143. Plaintiff Sheehan defended

Ms. Lee in that lawsuit. (Neither the then-trustee of the Article IV Trust nor Legacy was a party

to that lawsuit.) The Plaintiff Lawyers now seek to have fees awarded to themselves under the

very same fee agreement that was previously litigated in Harris County Probate Court No. 2.

          C.     Allowing this lawsuit to proceed in Dallas needlessly duplicates
                 proceedings, wasting judicial resources.

          Even i f a judgment were entered against Legacy here, Texas law would require the

Plaintiff Lawyers to go to Harris County Probate Court No. 2 to enforce it. When ajudgment has

been entered by a court against a receiver in its official capacity, the enforcement action must be

referred to the court that appointed the receiver. Campbell, 811 S.W.2d at 756; Tex. Civ. Prac. &

Rem. Code §64.055.

                                         Conclusion
          This Court should transfer venue of the lawsuit to Harris County. Probate Court No. 2.

Defendant Legacy Trust Company, N.A., respectfully requests that this Court (1) grant the Motion to

Transfer Venue in all respects; (2) transfer the above numbered and styled cause to Harris County

Probate Court No. 2, and (3) grant Legacy such other and further relief as it may show itself justly

entitled to receive.



                                [This space intentionally left blank.]




                                                  9
0050733
          R e s p e c t f u l l y submitted,


          MACINTYRE MCCULLOCH^TANFIELD
          & YOUNG, L L P



                     W. Cameron McCuUocI
                     State Bar No. 00788930
                     Adri Graves
                     State Bar No. 24049999
                     2900 Weslayan, Suite 150
                     Houston, TX 77027
                     (713) 572-2900
                     (713) 572-2902 (FAX)
                     Cameron.McCulloch@mmlawtexas.com
                     Adri.Graves@mmlawtexas.com

          Attomeys For Defendant Legacy Trust Company,
          as Court-Appointed Receiver of the Article IV Trust
          under the Last Will and Testament of Katherine
          Pillot Lee Bamhart




               10
0050733
                                CERTIFICATE OF SERVICE

       I hereby certify that a true and correct copy of the foregoing instrument was sent to the
following via United States Certified Mail, return receipt requested, via e-serve, and/or via
facsimile on this the '^{(fX^y

       Mr. Marc S. Culp
       Culp & Dyer, LLP
       222 E. McKinney Street, Suite 210
       Denton, Texas 76201
       (940) 484-4436

       Mr. Thomas A. Zabel
       Zabel Freeman
       1135 Heights Blvd.
       Houston, Texas 77008
       (713) 802-9114 (Fax)

          Mr. Daniel J. Sheehan
          Mr. John M. Phalan, Jr.
          Mr. M . Patrick McShan
          Daniel Sheehan & Associates, LLP
          2501 North Harwood, Suite 1280
          Dallas, Texas 75201
          (214) 468-8803 (Fax)

          Mr. John W. Porter
          Ms. Keri Brown
          Baker Botts, LLP
          One Shell Plaza
          910 Louisiana Street
          Houston, Texas 77002-4995
          (713) 229-1522 (Fax)


                                             W. Cameron McCulloch
                                             Adri A. Graves




                                               11
0050733
EXHIBIT "1
                                                                                                             UALUAa c u u
CiT-ESERVE                                                                                                4/20/2016 1;25:3-
                                                                                                                FELICIA PI
                                                                                                             DISTRICT CL
                                                                                                    f7 David Hernande
                                                             DC-16-04570
                                          CAUSE NO.


      TOM THOMAS, DAN SHEEHAN and                                             IN THE     DISTRICT
      MARC CULP, individually, and
      as successors to the interests
      of Thomas, Sheehan & Culp, L.L.P.,
             Plaintiffs,

      v.
                                                                              COURT OF
      LEGACY TRUST COMPANY, N.A.,
       in its capacity as RECEIVER FOR THE
      ARTICLE IV TRUST created by
      the Last Will and Testament ofKatherine Pillot
      Lee Barnhart, Deceased,
               Defendant.                                                     DALLAS COUNTY, TEXAS


                                     P L A I N T I F F S ' ORIGINAL PETITION

      TO THE HONORABLE COURT:

              Plaintiffs, Tom Thomas, Dan Sheehan, and Marc Culp, individually, and as successors to the

      interests of Thomas, Sheehan & Culp, L.L.P. ("TSC") (collectively, "Plaintiffs"), through its

      undersigned counsel, brings this action primarily for the recovery of Plaintiffs' property in the

      possession of Defendant, Legacy Trust Company, N. A., in its capacity as Receiver for the Article IV

      Trust created by the Last Will and Testament ofKatherine Pillot Lee Bamhart, deceased (hereinafter

      the "Receiver," "Legacy," or "Defendant"), and in addition or in the alternative, for a money

      judgment against Defendant, and in support alleges:

                                               D I S C O V E R Y C O N T R O L PLAN


              1.       The amount in controversy exceeds the minimum jurisdictional limits of this Court!

      Plaintiffs intend to conduct discovery under Level 3 of T.R.C.P. 190.




      PLAINTIFFS' ORIGINAL PETITION - Page 1
                                                  PARTIES AND SERVICE


         2.        Plaintiff, Tom Tliomas, is an individual residing in Dallas, Dallas Count}', Texas.

         3.        Plaintiff, Dan Sheehan, is an individual residing in Dallas, Dallas County, Texas.

         4.        Plaintiff, Marc Culp, is an individual residing at Lake Kiowa, Cooke County, Texas.

         5.        A t all times relevant to the matters placed at issue by this suit, Thomas, Sheehan and

Culp each have been duly Ucensed attorneys authorized to practice law in the State o f Texas.

         6.         At all times during the trial of the Lee v. Lee Litigation (defined below), Thomas,

Sheehan, and Culp were the only three partners in TSC.

         7.         Defendant, Receiver is a National Trust Bank, which is a non-depository trust

company operating under and subject to the control of the Office of the Comptroller of the Currency.

          8.        Receiver has its principal place of business in Houston, Harris County, Texas, and it

may be served with process by serving its registered agent for service of process, CT Corporation

System at 811 Dallas Avenue, Houston, Texas 77002.

                                                 J U R I S D I C T I O N AND V E N U E


Summary of Claim

          9.        By this action, Plaintiffs bring claims and request various relief against the Article IV

Trust created by the Last Will and Testament ofKatherine Pillot Lee Barnhart, deceased ("Article

I V Trust") for failing to deliver money and other property in its possession collected from the

judgment entered in the case styled Susan C. Lee, et al. v. Ronald E. Lee, et a l , which was finally

adjudicated in the Probate Court No. 2 of Harris County, Texas (the "Probate Court"), cause no.

 137506-402. ("Lee v. Lee Litigation").

           10.       As specified more particularly below, this suit is brought against Defendant in the

 capacity noted, because it now serves as the Receiver for the Article IV Trust.



 PLAINTIFFS' O R I G I N A L PETITION - Page 2
        11.      Pursuant to the terms of that certain letter agreement dated March 30, 1995 (the

"Contingent Fee Agreement" or "CFA"), six percent (6%) of the money and other property

collected from the judgment entered in the Lee v. Lee Litigation was assigned to TSC and is now

owned by Plaintiffs.

        12.     Defendant has failed and refused to turn over that property to its true owners.

        13.     Attached as Exhibit " A " is a true and correct copy of the Contingent Fee Agreement.

Control of Article I V Trust

        14.     From inception of the Article IV Trust through approximately February, 2002, Ronald

Lee was. trustee of the Article IV Trust.

        15.      From and after approximately February, 2002 tlirough June 18, 2015, Susan Lee

served as trustee of the Article IV Trust.

        16.      On June 16, 2015, Ronald Lee filed a motion with the Probate Court seeking to

remove Susan Lee as trustee and to appoint a receiver for the Article IV Trust.

         17.     On June 18,2015, the judge ofthe Probate Court signed an order removing Susan Lee

as trustee of the Article IV Trust and appointing Legacy as receiver for the Article I V Trust ("June

 18, 2015 Order").
         18.     Attached as Exhibit "B" is a true and correct copy ofthe June 18, 2015 Order.

         19.     Pursuant to paragraph 3 of the June 18,2015 Order, the Receiver was authorized and

 directed to conduct a variety of business on behalf of the Article IV Trust, including, but not limited

 to: (i) exercising all rights, powers and duties of the Trustee as authorized under the terms ofthe

 Article IV Trust or the Texas Trust Code; (ii) marshalling and taking custody of all trust assets; (iii)

 managing and directing all business and financial affairs; (iv) paying, compromising and settling all

 trust debts; and (v) prosecuting, defending or settling all legal proceedings.



 PLAINTIFFS' ORIGINAL PETITION - Page 3
Summary of Article IV Trust Judgment

       20.      On October 25, 1996, the Probate Court entered a multi million dollar monetary

judgment against Ronald Lee in favor of the Article IV Trust.

       21.      Pursuant to the terms of the CFA, TSC served as lead counsel for Plaintiffs through

entry of a final judgment in the Probate Court.

        22.     But for TSC's efforts, expertise and hard work the favorable Trial Court Judgment

would not have been obtained.

        23.     Attached as Exhibit " C " is a true and correct copy of the final judgment entered by

the Probate Court. ("Trial Court Judgment").

        24.     TSC was the only law firm representing Plaintiffs during the trial of the Lee v. Lee

Litigation and through entry of the Trial Court Judgment.                     ^

        25.     Thomas, Sheehan and Culp also each served in various roles when providing legal

representation through the lengthy appellate process that followed.

        26.     Following completion of an appellate process that began in the Houston Court of

 Appeals, an appellate opinion and mandate was issued increasing the amount of the Trial Court

 Judgment. ("Article IV Trust Judgment").

        27.      Attached as Exhibit "D" is a true and correct copy of the Houston Court of Appeals

 opinion. ("Appellate Opinion in Lee v. Lee").

         28.     Attached as Exhibit " E " is a true and correct copy of the mandate issued in relation

 to that appellate opinion. ("Appellate Mandate").

         29.     At the time Legacy was appointed to serve as receiver for the Article IV Trust in

 2015, the Article IV Trust Judgment was still outstanding.




 PLAIMTIFFS'ORIGINAL PETITION - Page 4                  .       .
Overview of Assets Recovered on Article I V Trust Judgment

       30.      On January 25, 2016, Legacy filed an application seeking approval of the Probate

Court to settle the Article IV Trust Judgment by Ronald Lee.

       31.      Attached as Exhibit "F" is a true and correct copy of Legacy's "Application to

Approve Settiement Agreement" filed with the Probate Court. ("Legacy's Application to Approve

Settlement Agreement").

        32.     Following an evidentiary hearing, the Probate Court entered an order granting

Legacy's Application to Approve Settlement Agreement.

        33.     Attached as Exhibit "G" is a true and correct copy of the order. ("Order Granting

Application to Approve Settlement Agreement").

        34.      Attached as Exhibit "A" to Legacy's Application to Approve Settlement Agreement is

a copy of the settiement agreement approved by that order. ("Legacy Settlement Agreement").

        35.      At pages 2,3, paragraph 7, the Legacy Settlement Agreement recites that the Article

IV Trust Judgment, "constitutes a debt owed to the Trust and an asset of the Article IV Trust."

        36.      At page 3, paragraph 8, the Legacy Settlement Agreement further recites that, "Mr.

Lee has made payment for the benefit ofthe Article IV Trust on the Judgment, including a payment

of $8 million in 2015." ("$8 Million Cash Payment").

         37.     Additionally, under the terms ofthe Legacy Settlement Agreement, paragraphs 15,16,

 and 19, Ronald Lee was obligated to deliver, among other things, a $4 miUion promissory note ("S4

 Million Promissory Note").

         38.     On information and belief, Ronald Lee has delivered and the Article IV Trust has

 accepted the $8 Million Cash Payment, the $4 Million Promissory Note, and other consideration

 recited in the Legacy Settiement Agreement in partial satisfaction of the Article IV Trust Judgment.



 PLAINTIFFS' ORIGINAL PETITION - Page 5
        39..    Despite Plaintiffs' assigned ownership interest in and to 6% of the recoveries under

the Article IV Trust Judgment, the Article IV Trust has failed and refused to deliver to Plaintiffs their

assigned portion of the consideration so received and accepted in payment of the Article IV Trust

Judgment.

Appeal from Probate Court Order Approving Legacy Settlement Agreement

        40.     Following entry of the Order Granting Application to Approve Settlement Agreement,

Legacy, on or about March 28,2016, filed a document in the Probate Court entitled, "Satisfaction of

.Tudgment."

        41.     In that document. Legacy represents that the Article IV Judgment "has been fully

paid, satisfied and discharged" based upon the terms of the Legacy Settlement Agreement.

        42.     Prior to Legacy's filing of the Satisfaction of Judgment, Susan Lee, on March 22,

2016, filed a notice of appeal seeking appellate review of the Probate Court's Order approving the

Legacy Settiement Agreement ("Susan Lee Appeal")

        43.     As ofthe filing of this suit, the Susan Lee Appeal remains pending.

        44.      On information and belief, Plaintiffs anticipate that Susan Lee w i l l contend in her

appeal, among other things, that the Legacy Settiement Agreement did not fully pay and satisfy the

Article IV Trust Judgment.

        45.      This lawsuit only seeks relief as to recoveries received by the Article IV Trust through

the time of the trial of this case, expressly reserving the right to seek further enforcement ofthe CFA

i f subsequent recoveries upon the Article IV Trust Judgment are received including, but not limited

to, any recoveries subsequently obtained as a result of the Susan Lee Appeal.




PLAINTIFFS' ORIGINAL PETITION - Page 6
Jurisdictional Basis for Suit

       46.     This Court has subject matter jurisdiction over this case, because the amount in

controversy exceeds the minimum jurisdictional limits of this Court.

Basis for Venue in Dallas Comity

       47.     Pursuant-to section 64.052(b) ofthe Civil Practices & Remedies Code ("CPRC"),

venue over this case is properly vested in Dallas County, Texas, because Thomas and Sheehan reside

in Dallas County, Texas and this is a suit against a receiver holding property belonging to Thomas

and Sheehan.

        48.     Pursuant to CPRC section 15.002(a)(1), venue over this case also is properly vested in

Dallas County, Texas, because the contractual relationship placed at issue by this suit was formed

and performed in material respects in Dallas County, Texas, and more generally, a substantial part of

the events giving rise to the claims raised by this suit occurred in Dallas County, Texas. More

specifically, the Contingent Fee Agreement was negotiated by means of telephone discussions,

telefax transmittals and mailings to and from Dallas, Texas, the CFA was signed by TSC in Dallas,

Texas, all billings for work performed under the CFA originated from Dallas, Texas, all payments

for such invoiced work were received in Dallas, Texas, much of the communication related to the

performance of the CFA emanated from Dallas, Texas, and a substantial amount of the worked

performed under the terms of the CFA was performed in Dallas, Texas.

        49.     Pursuant to CPRC section 15.003(a), venue over this case also is properly vested in

 Dallas County, Texas, because joinder of one or more of the Plaintiffs is proper under the Texas

 Rules of Civil Procedure ("TRCP"), venue as to each Plaintiff in Dallas County does not unfairly

 prejudice another party to the suit, there is an essential need to have each Plaintiffs claim tried in




 PLAINTIFFS'ORIGINAL PETITION-Page 7        :
Dallas County, and Dallas County is a fair and convenient venue for each Plaintiff and all persons

against whom this suit is brought.

                           FACTUAL A L L E G A T I O N S SUPPORTING C L A I M S


The Contingent Fee Agreement

        50.     In the spring of 1995, TSC took over lead counsel responsibility for handling

litigation brought by a sister, Susan Lee, against her brother, Ronald Lee.

        51.     The dispute arose over Ronald Lee's administration of an estate of their grandmother,

Katherine Pillot Lee Barnhart ("Katherine Barnhart"), and certain related trusts, including the

Article IV Trust.

        52.     At the time of suit filing, Ronald Lee was the executor ofthe estate and the trustee of

the Article IV Trust.

        53.      Ronald Lee and Susan Lee were the only beneficiaries under the terms of the Article

IVTrust.

        54..     Before TSC accepted the engagement, the Contingent Fee Agreement was entered

into by and between TSC, Susan Lee, her daughter, Susan Gibson, and Donna Kline.

         55.     Susan Gibson was a beneficiary of another trust established under the terms of

 Katherine Bamhart's will.

         56.     Donna Kline was a duly licensed attomey authorized to practice law in the State of

 Texas, who had been involved in the representation of Susan Lee and Susan Gibson in the Lee v. Lee

 Litigation before TSC was retained.                    .   '

         57.     Sheehan, Kline, Susan Lee, and Susan Gibson each signed the Contingent Fee

 Agreement on or about March 30, 1995.




 PLAINTIFFS' ORIGINAL PETITION - Page 8
        58.     Pursuant to the terms of the CFA, TSC was to be compensated for handling the Lee v.

Lee Litigation through payment of fees based upon reduced regular hourly rates plus 6% of all

recoveries obtained.

        59.     TSC was fully paid all hourly fees charged under the terms of the CFA.

        60.     The contingent fee agreed to be paid expressly included any recovery obtained on

behalf of the Article IV Trust; however, neither Susan Lee nor Susan Gibson would be personally

liable for any such fee related to any such recovery obtained for such trust.

        61.      Instead, both Susan Lee and Susan Gibson agreed to support TSC's right to its

contingent fee interest in any recovery obtained on behalf of the Article IV Trust.

        62.      Susan Lee and Susan Gibson support the claims brought by this suit.

Outcome of the Lee v. Lee Litigation

        63.      Beginning in March 1995 through the end of that year, TSC expended hundreds of

hours in preparation diligently prosecuting the case and preparing it for trial, including the conduct of

a juiy trial for several days in the fall of 1995 before a mistrial was granted.

         64.     On January 3, 1996, a second jury trial was started in the Lee V. Lee Litigation. .

         65.     Following an aggressive prosecution of the case in a trial lasting well over a week, a

favorable jury verdict was obtained on behalf of Susan Lee, Susan Gibson and the Article IV Trust.

         66.     Following nine more months ofbriefing and argument addressing various post trial

motions, the Trial Court Judgment was entered.

         67.     Under the terms of the Trial Court Judgment, the Article IV Trust was granted a

 monetaiy judgment against Ronald Lee for:

                  a. $840,002.00 for Ronald Lee's breach of fiduciary duty related to the Knollwood

                      Development, the River Bend Farm, and the Cap Rock Ranch;



• PLArNTiFFS'ORIGINAL PETITION - Page 9
               b. $659,506.50 for payment to Ronald Lee of an unreasonable executor fee;

                c. $919,702.12 for prejudgment interest related to the payment of the unreasonable

                    executor fee, plus accruing per diem interest at the rate of $180.69;

                d. $163,550.00 for unreasonable office expenses; and

                e. $157,969.90 for prejudgment interest related to the unreasonable office expenses,

                    plus accruing per diem interest at the rate of 44.81.

        68.     In total, the Article IV Trust was granted a principal monetary judgment recovery

against Ronnie Lee in the amount of $1,663,058.50;plus prejudgment interest atlO% per annum,

bringing the total judgment amount against Ronald Lee to $2,758,770.52. ("Principal Trial Court

Judgment Amount").

        69.     The Trial Court Judgment also provided for postjudgment interest on the Principal

Trial Court Judgment Amount at the rate of 10% per annum, compounded annually.

        70.     The Trial Court Judgment also expressly denied requested relief to remove Ronald

Lee as Trustee of the Article IV Trust.

        71.      But for TS C' s diligent and expert handling of the Lee v. Lee Litigation, the Article IV

Trust would not have obtained the large monetary sum awarded in the Trial Court Judgment.

        72.      A l l parties appealed from the Trial Court Judgment.

        73.      OnMay 17, 2001, the Appellate Opinion in Lee V.Lee was issued and reported at 47

S.W.3d767.

         74.     After the Texas Supreme Court refused petitions for review, the Houston Court of

Appeals issued the Appellate Mandate.

         75.     The appellate process lasted from October, 1996 through issuance ofthe Appellate

 Mandate in February, 2002, a total of approximately 5 years and 4 months.


 PLAINTIFFS'ORlGrNAL PETITION - Page 1 0
       76.        Thomas, Sheehan and Culp provided legal representation in this case throughout the

appellate process.

       77.        Pursuant to the Appellate Mandate, the Article IV Trust's judgment against Ronald

Lee was increased materially. ,

       78.        Under the terms ofthe Article IV Tmst's judgment against Ronald Lee as modified by

the Appellate Mandate, the Article IV Trust was granted an additional principal monetary judgment

against Ronald Lee in the amount of $ 1,53 8,843,50 for claims related to the payment of an excessive

executor's fee.

       79.        The Appellate Mandate also modified the Trial Court Judgment by: (i) rendering an

additional principal monetary judgment against Ronald Lee in the amount of $1,500,000.00 based

upon the conclusion that the Article IV Trust should not have been directed to reimburse Ronald Lee

for attorney's fees incurred when defending the Lee v. Lee Litigation; (ii) removing Ronald Lee as

trustee of the Article IV Trust; (iii) revising the calculation of prejudgment interest awards; and (iv)

directing Ronald Lee to pay all costs of the appeal.

        80.       In sum and as most material to this case, the Appellate Mandate reformed the Trial

Court Judgment to increase the principal amount of the monetary judgment awarded to the Article IV

Trust against Ronald Lee from $1,663,058.50 to $4,701,902.00, it revised calculations of

prejudgment interest, and it confirmed the award of postjudgment interest on all of the foregoing

sums at 10% per annum, compounded annually. ("Final Monetary Sum Awarded the Article IV

Trust").

        81.       But for the diligent and expert handling of the appeal by Thomas, Sheehan and Culp,

the Article IV Trust would not have obtained such a favorable outcome in the appeal.




PLAINTIFFS' ORIGINAL PETITION - Page 1 1
The Donna Kline Litigation

       82.      Before the Lee v. Lee Litigation proceeded to trial, Susan Gibson sent a letter to

Donna Kline demanding that Kline withdraw from her representation in the Lee v. Lee Litigation.

        83.     Kline honored the demand and withdrew from the representation in the fall of 1995.

        84.     Kline subsequently intervened in the Lee v. Lee Litigation to recover unpaid legal fees

arising in connection with work performed on two separate lawsuits, including the Lee v. Lee

Litigation. ("Kline Litigation").

        85.     The bulk of Kline's claim pertained to representation provided in the Lee v. Lee

Litigation under the terms of the Contingent Fee Agreement.

        86.      On June 27, 1996, the Probate Court signed an order severing the Kline Litigation

from the Lee v. Lee Litigation.

        87.      In the Severance Order, the Probate Court directed the Kline Litigation to proceed

forward under Cause No. 137,506-403.

        88. . The Kline Litigation proceeded to ajury tirial beginning on July 15, 1997.

        89.      That trial produced ajury verdict favoring Kline.

        90.      Attached as Exhibit " H " is a true and correct copy ofthejury verdict rendered in the

Kline Litigation. ("Kline Jury Verdicf).

         91.     Following receipt of the Kline Jury Verdict, the Probate Court entered judgment in

 favor of Donna Kline.

         92.      Attached as Exhibit " I " is a true and correct copy of the judgment rendered by the

 Probate Court in favor of Donna Kline and against Susan Lee, individually and as trustee for Susan

 Gibson, and Susan Gibson, individually. ("Kline Judgment").




 PLAINTIFFS' ORIGINAL PETITION - Page 1 2
        93.     Among other things, the Kline Judgment awarded Donna Kline a monetaiy recovery

of $114,207.21 for unpaid hourly fees plus an additional $132,500.00 for attorney's fees incurred in

prosecuting the case.

        94.      The Kline Judgment also granted Donna Kline declaratory relief, as follows: "Based

upon the Jury's answer to Question 2, the Court makes declaratoryjudgment that Donna C. Kline has

a good, valid and subsisting interest in any recovery by Susan Camille Lee, individually and as

trustee for Susan C. Gibson, and Susan C. Gibson individually, pursuant to her contingent fee

contract of March 30, 1995."

        95.      The reference to the contingent fee contract of March 30,1995 is the same Contingent

Fee Agreement placed at issue in this case.

        96.      Susan Lee and Susan Gibson appealed the Kline Judgment to the Houston Court of

Appeals.

        97.      On January 13, 2000, the Houston Court of Appeals issued its final decision on

rehearing.

         98.     Attached as Exhibit" J " is a true and correct copy of the Houston Court of Appeals

Decision in the Kline Litigation. ("Appellate Opinion in Kline Litigation").

         99.     As material to this case, the Appellate Opinion in the Kline Litigation made the

following rulings related to the Contingent Fee Agreement:

                 a. In addition to agreements to pay both Kline and TSC at hourly rates specified,

                      "Defendants also expressly agreed to pay . a 10% contingency fee on any

                      'recovery.'" (Appellate Opinion in Kline Litigation, at *1);




 PLAINTIFFS' ORIGINAL PETITION - Page 1 3
               b.     "It was further agreed that 40% of the 10% contingency fee would be paid to

                      Kline and that the remaining 60% would be paid to Thomas, Sheehan & Culp."

                       (M);

                c. Based upon the jury verdict, the Probate Court in its judgment, "found that Kline

                       possesses 'a good, valid and subsisting interest in any recovery by [Defendants]

                       pursuant to her contingent fee contract. . . .'" {Id. at *2);

                d.     In response to contentions that the Contingent Fee Agreement was unfair and

                       invalid as to Kline, the Houston Court of Appeals reached the following factual

                       conclusions - (i) the CFA provided for the payment of hourly fees plus '"ten

                      . percent (10%) of all Recovery, i/a«7'(emphasis added)."; (ii) the CFA, "further

                       provided that' [cjontingency fees will be divided between us, sixty percent (60%)

                       to Thomas, Sheehan & Culp, L.L.P., andforty percent (40%) to Donna C. Kline.'

                        (emphasis added)."; and (iii) "The record shows that the agreement [CFA] was

                       executed by both Defendants." (Id.);

                e. "The record in this case is replete with competent evidence to rebut the

                       presumption of unfairness concerning the contingent fee agreement [CFA]." (Id.

                       at*3);

                f.     "Indeed, the evidence in the record supports the inference that the agreement was

                       entered into freely and voluntarily by Defendants based upon their full

                       understanding of the affect of the contingent fee agreement [CFA]." (Id.);

                 g.     "Defendants assert that the trial court erred in entering its declaratory judgment

                        which decreed that Kline possesses a 'valid and subsisting' contingent interest in




PLAINTIFFS' ORIGINAL PETITION - Page 1 4
                      any recovery obtained by Defendants in the underlying estate case, pursuant to

                      the contingent fee agreement of March 30, 1995 [CFA]." ( M at 7);

                h. "The trial court's declaratory judgment merely decrees that the parties' contingent

                      fee contract is valid." ( M ) ;

                i.    " ' A trial court may construe a contract in a declaratory judgment suit either

                      before or after a breach occurs.'" ( M ) ;

                j.    "As to the effect of any potential dispute between the parties in this case, a

                      'declaratory judgment may be entered if it serves a useful purpose in resolving a

                      controversy between the parties, even if actual or potential disputes remain.'   ...

                      . [citations omitted](emphasis added)." {Id. at 8);

                k. "We note that the trial court did not enter a monetary award to Kline based upon

                      the contingent fee contract because the amount of Defendants' recovery in the

                      underlying estate has not been finally adjudicated        [footnote omitted noting

                      that Lee v. Lee Litigation is currently on appeal]." (/J.); and

                 1.   "We hold, therefore, that the trial court did not err in granting a declaratory

                      judgment, which decreed that Kline's contingent fee interest in Defendants'

                      monetary recovery is valid." {Id.).

        100.     Following issuance of the Appellate Opinion in the Kline Litigation, the Kline

Judgment became final.

        101.     On information and belief, the monetaiyjudgment awarded to Kline was paid in full.




PLAINTIFFS' ORtcrNAL PETrriON - Page 15
Monetary Recoveries Received and Accepted by the Article I V Trust

       • 102.    On information and belief based upon evidence currently available to Plaintiffs,

Ronald Lee has made or is making three separate sets of monetary payments toward satisfaction of

the Final Monetary Sum Awarded the Article IV Trust.

        103.    Plaintiffs only learned of the first and second payments during the course of

proceedings related to Legacy's Apphcation to Approve Settlement Agreement in 2016.

        104.    As to the first monetary payment. Legacy presented evidence during hearings on

Legacy's application that Ronald Lee paid the Article IV Trust the sum of $2,816,213.60 on January

9, 1997. .("January, 1997 Payment"),

        105.     Sheehan first learned of this payment in February, 2016, and Thomas and Culp only

learned of that payment about six weeks later.

         106.    The January, 1997 Payment was made roughly 2 1/2 months after entry of the Trial

Court Judgment in October of 1996.

         107.    At the time of the January, 1997 Payment, Ronald Lee was the trustee of the Article

IVTrust. •

         108.    Susan Lee did not become the trustee of the Article IV Trust until roughly 5 years

later when the Appellate Mandate was issued.

         109.    As to the second monetary payment. Legacy attached to its Application to Approve

Settlement Agreement a copy of the proposed settlement agreement between Receiver and Ronald

Lee.

         110.    At page 3, paragraph 8 of the recitals, the Legacy Settlement Agreement states, "Mr.

Lee has made payment for the benefit of the Article IV Trust on the Judgment [Final Monetary Sum




 PLAINTIFFS'ORIGINAL PETITION - Page .16
Awarded the Articie IV Trust], including a payment of $8,000,000.00 in 2015." ("S8 Million

Payment").

         111.    This is the first occasion that Sheehan learned of this payment, and Thomas and Culp

only learned of that payment roughly one month before filing this litigation.

         112.    On information and belief, the third and final series of monetary payments are those

currently being made by Ronald Lee to the Article IV Trust pursuant to the terms ofthe $4 Million

Promissory Note.

         113.    Pursuant to the assignment in the CFA, Plaintiffs now own 6% of all such monies

currently in the hands of the Receiver.

Non Monetary Recoveries Received and Accepted by the Article I V Trust

         114.    Above and beyond the additional payments still to be made to the Article IV Tmst by

Ronald Lee pursuant to the terms of the $4 Million Note, the Legacy Settlement Agreement reflects

two other valuable, non monetary considerations received by the Article IV Trust.

         115.    First, at pages 5 and 6, paragraph 19 of the Legacy Settlement Agreement, Ronald Lee

releases specified alleged claims that Ronald Lee has against the Article IV Trust.

         116.    Six percent of the value of these releases constitutes part of the recovery assigned to

and now owned by Plaintiffs under the terms of the CFA. ("Release Value").-

         117.     Second, at page 4, paragraph 15, Lee is obligated to execute a deed conveying his

• interest in the River Bend Farm to the Article IV Trust. ("River Bend Property").

         118.     Six percent of the River Bend Property constitutes part of the recovery assigned to

 and now owned by Plaintiffs under the terms of the CFA.




 PLAINTIFFS' ORIGINAL PETITION - Page 1 7
                                              CLAIMS

Breach of Contract

        119.    Plaintiffs incorporate Paragraphs 1 - 118, as if set forth fully here.

        120.    There is avaUd, enforceable contract by and between TSC, SusanLee, Susan Gibson

and the Article IV Trust to provide legal services under the terms of the Contingent Fee Agreement.

        121.    In addition or in the alternative to the above allegations, the Article IV Trust later

adopted and accepted the CFA when Susan Lee was acting as the trustee for the Article IV Trust.

        122.    In addition or in the alternative to the above allegations, the Article IV Trust ratified

the CFA before and/or after the time that Susan Lee was acting as the trustee for the Article IV Tmst.

        123.     More specifically, Susan Lee entered into the CFA on behalf of the Article IV Trust,

with and/or without authority to do so, and the Article IV Trust approved the CFA after acquiring

full knowledge of the terms and provisions of the CFA with the intention of giving validity to Susan

Lee's agreement to bind the Article IV Trust to the terms of the CFA.

         124.    In addition or in the alternative, the Article IV Trust ratified and is now bound to

honor the CFA, because it received and accepted benefits generated from the performance of the

CFA with full knowledge of TSC's assigned interest and contingent fee rights to monetary and other

recoveries obtained as a result of work performed by TSC under the terms ofthe CFA.

         125.    Under the terms of the CFA, TSC is the owner of 6% of every form of consideration

received and accepted in full, or alternatively, partial satisfaction of the Article IV Trust Judgment.

         126.    Plaintiffs are the successors in interest of TSC and they are the proper parties now

entitled to enforce the terms of the CFA.

         127.    TSC fully and/or substantially performed, tendered performance or was excused from

continued performance under the terms of the CFA.



 PLAINTIFFS'ORIGINAL PETITION - Page 1 8
         128.    In accepting recoveries under the terms ofthe CFA without paying Plaintiffs their 6%

assigned, cbntingent fee interest, the Article IV Trust has dishonored the terms ofthe CFA and is

now wrongfully withholding Plaintiffs' right to full use and enjoyment of property Plaintiffs own.

         129.    More specifically, Plaintiffs seek an order directing the Receiver to turn over 6% of

all cash sums accepted in payment of the Article IV Trust Judgment, including, but not necessarily

limited to, 6%ofthe January, 1997 Payment and the $8 Million Payment, totaling $648,972.81 plus

interest at the highest rate allowed by law from date of receipt of each such payment until delivery of

the wi'ongfuUy possessed funds.

         130.    Additionally, Plaintiffs seek an order directing the Receiver to turn over 6% of all

cash sums accepted in payment of the $4 Million Promissory Note plus interest at the highest rate

allowed by law from date of receipt of each payment until delivery of the wrongfully possessed

funds.

         131.    In the alternative, Plaintiffs seek the recovery of a monetary judgment against the

Article IV Trust for the damage suffered by reason of its breach of the CFA equal to 6% of the

January, 1997 Payment, the $8 Million Payment and the payments received on the $4 Million

Promissory Note plus interest at the highest rate allowed by law from date of receipt of each payment

until delivery of the wrongfully possessed funds..

         132.    Additionally, Plaintiffs seek an order directing the Receiver to turn over 6%

 ownership of the $4 Million Note, or alternatively, a monetary judgment against the Article IV Trast

 for damages suffered by reason of the Article IV Tmst's breach of the CFA equal to 6% of the value

 ofthe$4MillionNote.

          133.    Additionally, Plaintiffs seek an order directing the Receiver to tum over a 6% interest

 in the River Bend Farm, or alternatively, a monetary judgment against the Article I V Trust for



 PLAINTIFFS'ORIGINAL PETITION - Page ! 9
damages suffered by reason of the Article IV Trust's breach ofthe CFA equal to 6% of the value of

the River Bend Farm.

         134.   Additionally, Plaintiffs seek a monetai-y judgment against the Article IV Trust for

damages suffered by reason of the Article IV Trust's breach of the CFA equal to 6% of the Release

Value.

         135.   Plaintiffs also seek and are entitled to recover all reasonable and necessary attomey's

fees arising from work performed to prosecute this suit, including any and all appeals, in an amount

to be determined at trial.

         136.   Plaintiffs further seek and are entitled to the recovery of pre-judgment interest at the

highest rate authorized by law.

         137.   Plaintiffs further seek and are entitled to the recovery of post-judgment interest on all

of the monetary awards obtained from and after entry of this Court's final judgment until paid in full

at the highest rates authorized by law.

         138.   A l l conditions precedent to recovering the relief sought herein have occurred, will

occur or have been waived, including, but not limited to, the giving of all proper notices and

demands.

         139.    Based upon the doctrines of claim and issue preclusion. Defendant is barred from

denying any ofthe facts and/or claims established in the Kline Litigation, including, but not limited

to, those expressly recited in paragraph 99 above. •

                                               PRAYER

         140.    WHEREFORE, Plaintiffs request that, on final trial, they have and recover the relief

sought in Claim 1, whether alleged primary or in the alternative, pre-judgment and post-judgment

interest on all monetary awards to the extent legally permitted at the highest rate allowed by law, and



PLAINTIFFS' ORIGINAL PETITION - Page 2 0
all other and fuilher relief, legal or equitable, general or special, to which Plaintiffs may show

themselves to be justly entitled, including, but not limited to, recovery of all court costs and any

other recoverable costs of this suit.

        141.    Plaintiffs demand trial by jury. Plaintiffs will remit the necessary fees and notices

accordingly.

                                              Respectfully submitted,

                                               CULP & DYER, L.L.P.
                                               222 E. McKinney Street, Suite 210
                                               Denton, Texas 76201
                                               Telephone: (940) 484-2236
                                               Telecopier: (940) 484-4436


                                               By:    I si Marc S. Culp
                                                      Marc S. Culp
                                                      State BarNo. 05212700
                                                      mculp@cdhllp.com


                                               ATTORNEY FOR PLAINTIFFS




PLArNTiFFS' ORIGINAL PETITION - Page 2 1
                   EXHIBIT " A




PLAINTIFFS' ORIGINAL PETITION - Page 0 2 2
                                     o
                                    THOMAS, SaKtoui & CULP, LX.F.
                                            ATTCWHSSfS A«0 COtlMSaOftS
                                                  1891 EiMsraeCT
                                                    (n«) i a i - o o »



. !•»«!».out*-
                                                                                      n u x BOAMO o r U O J K . t i a H O U U Z A K M

                                                   Maidi 30, 1955




           Ms. Soaa C Lcc

           Houston, TX 77019                                               "

           MI; Stmn C Oibsoa
           qfo Pine Minor Oallipte
           P.O. Box 131
           CSwitBnt Hlil, M A 02167

                    Re:   No. 137;SDfr482
                          Sasan C. Lee, ti uL v. Ronald E. Lee, et at.
                          l» (be ProbaU Court No. 2
                          Harrit Conatjr, Teui

           Dear Ml. Loe end Ml. aiiMon:

                 This ieUcr is to set foctli the team \spxL whldi we utd Dooo* C Kline iuve agieed lo
           repnsenc Sunu C Lee and Susan C Oltlaon's ttttecestt in Utipdiqn agaliut Rooald E. Lee, Jr.,
           Steven Oqduin and TMIOUS other lelaicd entities and penons.

                  We wil{ invexticate your dafaos, file mA oa your .betiBlf, {sepore the cme. tcy IIIB case,
           appeal as necoaaty, and take such otiier aalon as is necessair to (xoteet and pursue your
           uMerests. It is ow h«eitt to inppart the Wm of KatheriM

                  ' OPT fee will be tbe sua ofc (a)rauoaabfehotrfyratesincluding Doiuu Kline at the rate
           of S225 pK hour ai^i liiasnbe^                                   L.L.P. w i n work on tbe case with
           Tom Tli6iMH('jMte at $300 per hour and D«ii Sbeefaan's lale at $250 per hoar, pha (b) ten {letceiit
           (10%} ;pf dl Iteo^^ If any. Tix tena "Recoveiy" means all valuereceivedon your beimlf.
           nlirectly or ioiibe^ wfcethetfayseOloneia, trial, or otherwise. It is posibte that you could
           lecover iitaeti. a t ^ ittan auAi and in fllat event, oor ten peioent (lOX) fee shall be payable in
            Uiid.X We wllf ii^^ cash only lo the extmt that our petcenlafe ^iplies to caah which you
           recover. By exectitioa below, yoa l>en*y sell, transfer and astipi tea peicent (lOS) of aB of
           neh jclaina io Thnnu, Sbedm & Ciilp, LLP. and Doom C Kline as part ofihis agrecinenL


                                                       EXHIBIT




         Conndential information may have been redacted from the document in compliance with the Public Information Act.


  A Certified Copy
  Attest: 4/5/2016                                                                                                                            c<>
  Stan Stanart, County Clerk                                                                                   ?o /                     |\   \^^%
  Harris County, Texas                                                                                         | ^       •




                                                    Depot,.                                               .                        ^^'••••-•-''P
                 PLAINTIFFS'DiirG IN A L PETITION - Page 023
           M I , Sos«a C Gibjoo
           Mtrch 30, 1995



                   The Recovery aay include the fcdlowing:

1                  («)      DMn»^e«foclI^^IriesioffecedpcraoosalybyeEtIK^of yo^
                            iJtoiiM kave been distributed andet OK Wffl of KJtiuMine PiM
                            -WiB-) oc lelalBd tmtx ocestmles (the "Tinsts") (Iho 'Clients' Recovecy") and lost
                            income therefroni-,
                   (b)      DraijBSfor ii\}oiicss«freted by the &rtiUe of Katherine 1 ^
                            "Estate') or the Ttwts, such as damages for mismanagement of tlie Estate's assets
                            oc foe excess fees (the "Estjm^Tmst's Recovery^; and

                   (c)      Interest on the above a^nounts.
                 The Becovay afaaU «iot U»:lud6 aiBounts which arc mrady reaUocalcd bctvretm
           and'Dvsts or between the Thists thesnselves.

                   tliB ccodngeat part of the fee shall be computed teptnitcty foe the aienli" Recovery and
           the Estati^T5rosfs Reeorery, and youriiallonly be pcnooally liaMe foe contingent fees comptrted
           on tbo OSmbf Raeov«ty. W« will look to lbs Estate oc Trurt, tet^ecUvely, for payment of any
           ooocinient fet irKint oa the Estate ot Trust's Recovery, and sudi continient fee Intciest shall not
           be dedtKtedfromC31eat^ Recovety. You ajree to support our request for peyment thereof In
           all respects.

                   If •Uomeyx' fees ate awaided by ibe court, vj/hether nndsr Section H9C of the Texas
           Protxu Obde, Section J i«.064 of the Tern Property C!ode, or other cooniiott law or statutoty
           entltlenxoC, sucli Gees AtS. not be included in tlie cotnpuiatioa of Recovery.

                  Oontingeocy fees wiU be divided between us. sixty percent (60%) to 'HKXiias, Sheobsa
            & Cujp. LJL.P., and foity percent (<0*) to Donna C KUne.
                   We bfllmooday for hputiy charges and expenses. In order tofcciliuteour prompt WUhij
            and yoar psompt jjayment, we ie<|aiie tliat you deposit and liieQ maintain a balance In oor trust
            ascouat of iCtSiPPO; atainst «Ueh we wiU bm                                           htaddiflon,^
            yon wfll Wasgcwi^SAi fix ihs paytnent of all oU-of-ppdcst cxpetises and wiE, as leqtKsted by
            us. pay so^ dauvK ditect so that we will have no Kspotistbility or obligatian lo advance ootof-
            pocist txpamt;. bi ooimectioa with the Iiti|;atioa, altiii3U|li we niay do so from time to time and
            bOl you &x thoiM eqmscs.




         Confidential information may have befen redacted from the document in compliance with the Public Information Act.


    A Certified Copy
    Attest; 4/5/2016                                                                                   -v-M-.-.-
    Stan Stanart, Couuty Clerk                                                                                     J
    Harris Count)', Texas                                                                             5 • '




                                                     Deputy

             PLAINTIFFS' ORIGINAL PETITION - Page 024
     Mt. Sursn O Lec
     Mt, Suisn C Gibson
     Utick 30. 1995



             Dcnld Siicehwi' or Tooi Thonus, ml pur election, dall be lead counsel for Susan Lec at
     Irfal and E5oo»ut Kline slull be lead counsel for Susan Gibson, In terms of day^txJiy
     nmnaj«nent of tlie case, counsel sliall be co-counsel in the litigation. The finn of Tlionias,
     Shsclon Sc. Culp, L.LJP., sl«U have pcimsiy responsibilityfiarprcparatio:i of llie case for trial,
     but the attoroeys shall advise and consult wllli each odisr.
            We «riU not agree to a settlerocnt of Ihe case without your consent. Addilbnally, we will
     not malcc any material agreements without your conseni.         (

             Yoa tnay lenninate this agreement at any time, and in the event you, choose lo do so, you
     shall be rcspcaistbte fbr houriy charges and expenses only through the lime of sudi lerminalicBi;
     Itowever, tht assigmnent to us often percent (10*) of the claims shaU survive such tettninalion
     to ihc extent aBowcd by law.
            Wettwyvoluntarily teoninate drfs agreement at any lime but If we do so and withdtaw
     from your lepttaentMiao ptioc lo obtahiing a Recovery, we shall not be entUIcrf Iq 10* of any
     Recxrvecy later lecelyed We will be entitled lo payment for aU lusirly fees and expsnscs
     incuired as of Ihe dale of terminatiott.

            If this letter accurately sets forth our agreement, please sign the original and return it lo
     us.
                                                     Sincerely,




                                                     Donna C Kline
                                                     Donna C Kluie, Auotney at Law




     Conndential information may have been redatted from the document in compliance with the Public Information Act.



A Certified Copy                                                                                    .v^"*
Attest: 4/5/2016                                                                 .                           t     ''•
Stan Stanart, County Clerk                                                                       I'cS'/    J\
Harris County, Texas                                                                             =  : ^'i^^.^Z^'         :-js




        PLAINTIFFS: ORIGINAL PETITION - Page 025
     Wb. Suum C Lec                                                                     641^7-2003
     M I , Susaa C. Gibson
     Msidi 30. 1995
     P»Ee 4

                                                                                          XXX-XX-XXXX
     AGREED:



     Swan Csmlile Lec



      Susan C Olbsoti




     Confidential information m a y have been redacted from the document in compliance with the Public Information Act.
v^
 .     ^       „_                                                  • ——                                    —              '

A Certified Copy                                                                                           O^'   ^^mf%.
Attest: 4/S/2016                                                                                   4'.^.••''""{"'•: O^c-
 Stan Stanart, County Clerk                                                                       j o /      |\     '"•-!?=%
 Harris County, Texas                                                                             =    •                  • H




 —         ^        —     -       ~       —         .                                                 " C * : : : ^
       • PLArNTiFFS' OR-IGINAL PETITION - Page 026                              .
                   EXHIBIT " B "




PLAINTIFFS' ORIGINAL PETITION - Page 027
                                                Cause No. 137506-403

              Estate of Katherine           PiUot Lcc §
      0       Barnhait, Deceased
      o
      a
      m
              Ronald E, Ixo, Jr.,
      m
                     Plaintilf,


      o
      N
      CD       Susan Camille Lcc, individually, and         §
      r-
      ID       as TYustcc of the Article IV TYust           §
      O        created by the last will and testament       §
               of Katherine Pillot Lee Bamhart,             §
               EJcccascd, and as Executor of the
               Estate of Katherine PiUot Lcc
               Barnhart, Deceased,                          §
                                                                    4r'
                      Defendant.

                               Order                                Appointing Recdyer -

                      On this date,           ctl*fi|^pi Rooald B. Lcc, JTr.'s ("Mr. Lcc") Motion to Remove

               Tnwtec Putsoant toT^. iSfctode J113.082, and to Appoint Receiver Pursuant to Tex. Tiust

               Code }114.008 (the "Motion"). The Ctowt, having reviewed the evidence presented, finds as


                                      The Court has jurisdiction over this case and venue is proper in this



                             2.       All necessary parties interested in this matter have aRwared.

                              3.      The Ttust was created und« Article IV of the Last Win and Testament of

                Katherine Pillot Lee Bamhart, which was admitted to probate in this C^ourt under Cause Number

                137.506 ("the WUr).




PLAINTIFFS' ORIGINAL PETITION - Page 028
                               4,    Since 2001, Susaa Camille Lee ("Ms. Leo") BiWtttfttSI the solo trustee
      o
      N        of the Trust,                                                 ^P"*^
      O
      o                        5,    Section 113.082 of the Texas Trust Cq^^K^djs that "a court may
      0.
               remove a trustee" if tbc trustee "violateei or attempted to^^oIateC% terms of the trust," the
      in       trustee "failled] to malcc an accounting roqwrcd by law^•Oie^^^^the trust," or in mstanccs

               where tbe courtfinds"other cause forremoval."Tex. Tflfet^^ffll 13.082.
      o                        6.    Section 114.008 of the Texas Trast Code provides that "[a] court may
      N
      CO
      r-       appoint a receiver to take possession of trust property and administer the trost to icmcdy a breach
      m
      o        of trust that has occurred oc might occur." ThaCtoort is      authorized to appoint a receiver "in

               any case in which a receiver may be appointed uSMCUje rules of equity." Tex. Civ. Ptac. &

               Rem. Code ^,001 (tt)(6),

                               7.    Mr. Leo, as lufenent inoRne beneficiary of the Trust, Is an hitcrcstcd

               person.                                   •^-»

                               8.    Mr. tee r&c a pn»>r demand on Ms. Lee for an accountuig under Tex.

               Trust Code §113,151 on 3aly*y^33flm Despite this demand, Ms. Leo has provided no

               accountmg. in breach of tljjlTi9i|^B4y e Texas Trust Code.

                                9,          is tbe-tmc of Imnuneat lurther harm to tho Trust by reason of the

               failure of Ms, Leo t o * ^ ^ j | ^ ^ assets and liabilities of the Trust or provide an accounltag for

               them, Bxemplifle^y ]hp faihae of Ms, Lec as Trustee timely to pay tbe real estate taxes on

               Trust property;jMTii^i»jto protect the hitcrests of the Tnist In property that has been the

               subject of c ^ e m n ^ ^ proceedings, the absence of any distributions of a portion of the "Rust's

                income taSfj^JXIttmi Katherine hoc Stacy over a period of approximately 14 years despite the

                manda^EBjlMAUion provisions of the Will creating tbe Trost, and the failure to provide tbe




PLAINTIFFS' ORIGINAL PETITION - Page 029
              requested aixwrnting fofm Tixist imder Tex, Trust Code 5113.151. Such actions lod inactions

      N       by Ms, Lcc constitute a t ^ S ^ f fidociary duty, violate tbe terms of the Trust, and violate tbc
      0
      0
      CL
              Texas Tnist Code,               wj..

                             10.    The i^^^s^^val of Ms, Lec as Trustee is necessary fcx-the continued
      tn       administration and managcttBnt of thefiTrust and to avoid the threat of imnunentftirtbcrharm to

               the Trost.                   T^^ffP
      0                       11.    Ms, Lee's breaches offiduciaryduty, her violation of the terms of the
      03
      r-       Trust, and her violation of the Texas Trost Code justifrremovalunder Texas Trust Code
      U3
      0        S113.082(a}(l, 3, and 4), and dictate that IHi fair,reasonable,and equitable for a Receiver to be

               appointed to act on behalf of the TWI.'

                              12.    Legacy Trusiadl^Sny, N.A. ("Legacy") is qualified to serve as and

               should be appointed as Receiver of the Tnist. ^.

                              13.    Mr. Lcc is cn             over hisreasonableattorneys' fees incurred in

               conncc^n with the Motion under Tcxsj Trost Ofdo § 114.064 fkxim the Tnist,

                              It is therefore ordered ''H^ifff^

                              1.     Ms, Lee is 1        las T r a ^ ponuant to Tex, Trust Code 5113.082.

                              2,     Legacy U hereby ^pointed, pursuant to Tex, TVust Code 5 U 4,008, as

               Receiver of the Trost, effective kmnetfiate^aw^ontinumg untilfiirtherOrder of this Court,

                              3.     TheRecciveris                and dhected to:
                                                                  4
                                         a. Exercise all ri              and duties of tbe Trustee of the TVust
                                             created under Arti         at the Will, and all powen granted to

                                             tiustces under tbeltacas 3]f|it Code;




PLAINTIFFS' ORIGINAL PETITION - Page 030
                                   b. Marshal and take custody, control, and possession of all assets of
      N
      U                                the Trust, wherever situated, inchjding tbe income and profit
      0
      0                                theiefrora, to insure such assets against hazards andrisks,and to
      CL
                                       attend to theraahjtcnanceof such assets;
      io
      In                           c. Manage and direct the btainess and fmiweial affairs of tho Trust
      r-

      iri                              and any asset or enrity owned or controlled by the Trust;
      c
       0                           d. Retain otremove,as the Receiver deems necessary or advisable,
       N
       CD
                                       any officer, director, independent contractor, employee, or agent of
      to
      o
                                       tbe TVust (Including retained professionals);

                                   e. Obtain, by pteseotation of this Order, all records pertaining lo the

                                       assets, liabiUties, inoMtje, and expenses pertaining to the Trust



- ' . r %^     uJ            . i       ^ ' - t * .              i       J                    ^4       1 s          m          i
                                   t   Collect a i n n c o n » f i ^ M l ^ u s t i 5 ^ ^ h c S # ^ . ! l * « T r ^ a ^ F? IE" 1

                                       or otherwise;

                                   g. Make sudi ordinary and necessary transfers, payments,

                                       distributions, and disbursements as tlic Receiver deems advisable

                                       or proper for the maintenance and preservation of Trust assets or

                                       con^liance with the obligations of the Trostce for the Trust;

                                   h. Pay, compromise, or settle all debts of the Trustee pertaining lo

                                       TVust property, mcluding but not limited to taxes, penalties, and

                                       intctest owed by the Trustee with respect to Trust property,

                                   i. Collect, comproralso, or settle all debts owed to the Trust;


                                                        -4-
               «»«1S3V1




PLAINTIFFS' ORIGINAL PETITION - Page 031
                                  Pay thereasonableattorneys' fees incurred by Mr. Lee ia
      n                           connection with the Motion and tbc proceedings thereon;
      N
      0
      0                           Employ attorneys, accountants, investigators or other appropriate
      X
                                  agents to assist in the ideotificaJion of Trust assets and the

      in                          collectioo of debts owed to the Trust;

      in                          Prosecute, defend, and/or settle all legal proceedings (including
      o                           lawsuits and arbitrations) brought by or against tbe Trustee of the
      N
      r-                          Trust, including but not limited to lawsuits for the condemnation of
      UD
      O                           real property in which the Tmst has an interest, HISD v. Susan

                                  CamiUe Lee, Executor/Tntsiee of the Estate cf Katherine Pillot Lee

                                  Bamhart, et al. No. 1038351, Harris County Court at Law No. 3,

                                                      n*»t5y OH            priate fw tbe

                                                   iement of Bch 1 ^ {KtjbMh^^,

                                  empJoyment*of anmslf&pert ^^^bs, £ 0 ^ s u .

                                  Institute such legal pioceedings as the Receiver deems necessary

                                  w advisable to obtain constructive ot acwal possession of assets of

                                  tho Trust or lo recover damages suffered by the Trust; provided

                                  however, that the Receiver shall have discretion not to pursue

                                  litigation against Ms. Lee that is undertaken by beneficiaries of the

                                  Trust for the benefit of tbe TnJSt;

                                  Employ ai^iraisas to appraise the value of real property of the

                                   Trust; and




                                                    • 5-
               4WS133Y1




PLAINTIFFS' ORIGINAL PETITION - Page 032
                                 o. Take any and all actionsreasonablynecessary and appropriate to

              -                      exercise tbe powers, duties, and responsibilities set forth herein.
      O

      2                    4. It is further ordered that the Receiver:

      ID                          a. Shall, within sixty days of this Order, provide an inventory of all
      in
                                     Trust property that tbc Receiver has identified to the beneficiaries

                                     of the Trust. If the Receiver subsequently identifies or comes Into
      ^                              possession of additional property, then il shall provide a
      CO
      r-                              supplemental Inventory as soon as practical; and
      to

      ^                           b. Shall have the generalrighttoreimbursementfrom tbe property of

                                      the Trost that a trusloc has under Article IV of the Will and under

                                      §114.063 of the Texas Trost Code;^|Bd shall^ com]

                                                                            sp#«|n

               H(«.^             ^    v^^^Tna^Bts,bU^p»niji^usi5^3SErlySr^

                                      $25tto0 (dqpending on personnel invdved) for work conducted in
                                      the idcntificatlMi and tracing of assets, and the detcrminanon of

                                      amounts due to or due from bcncfldaiies.

                           5. It isfinthcrordered;

                                  a. Receiver, its oBicen, directors and employees shall have the same

                                      rights to exoneration andreimbursementprovided to a Troslee of

                                      the Trust created under Artide fV of the Will and i j l 14.062-63 of

                                      tbe Texas Trast Code.

                                  b. Roceiver shall have no liability for any breach of trost consmittcd

                                      by Ms. Lee unless Receiver becomes aware of tho breach of trust




PLAINTIFFS' ORIGINAL PETITION - Page 033
                              p*     and (a) imptoperly penniu it to cootinuc thereafter, or (b) fails to
      in
                               Ir^^^l^e a reasonable effort to compel Ms. Lee to deliver property of

      0.

                                ^ ^ ^ ^ ^ shall have no liability for tbo loss or devaluing of

                                     ,propetl9l?f the Trust that occurs (1) prior to the date this Order is

                                                 the Court, or (2) prior to the Receiver having actual

      o                              notice of tbe existence of the property as Trust property and tbe
      N
      CD                              ahiJity to exercise control over that property, whichever ia later.
      r-
      CD
      0                    6. Itis totherordere^^atMs.Leesbail:

                                   a. WfBIm scve^^ys of the date of this Onlcr, provide copies of

                                                          ssion, custody, or control sufficient to identily

                                      an real and persc|^al property owned by the Trust or by Ms, Lec as

                                      T r u s t e ^ a ? ^ at any time while she served as Trustee of the

                                      Trust to    Rcceitfc;

                                   b. Within s«|jiyj|y'of the date of this Order, provido records

                                      sufficient l ^ ^ ^ | | j ^ l distributions and expcnditares of Trust

                                      funds and BSlets during the time she served as Trustee of the Trust

                                      tothBRoceivifc %

                                   c. Wifljln seven OJ^^ of the date of this Order, jaovidc all financial

                                      mstitutions a m f ^ J ^ ^ j l parties in the possession of assets or

                                      records of tbe TrugJfJBL Lee as Trastee v(4th a copy of this

                                      Order and p(OVid^rattW;|"fW><»'                    to cooperate with




               4»SS1J5VI
                                                            5^



PLAINTIFFS' ORIGINAL PETITION - Page 034
                                             tbc Receiver and provide noo-privilegcd inforroatioQ requested by

                                             ibc Receiver directly to tbe Receiver,
            O
            O                             d. Within seven days of the date of this Order, provide written
            a.

                                             instnjctioos to all attocncys and accountants employed by her in

             in                              her capacity as Trustee of the Trast to provide non-privileged

             1^                              Information requested by tbc Receiver rcgartiing these roattcis;

   |y        O                            c. Provide copies of tbc mstructioos described In subparagraph (c)
•<r^        CD
                                             and (d) above to tbe Receiver at the same time they arc provided to
                  „   G   '''H^              ttefinancialinstitutions, other third parties, attoaieys, and

                                             accountants; and

                                          CTfCqteeratc with the Receiver's requests for additional informatioa

                                        M    rt^r^|lhe~^te^jmd its assets, liabiUtics, income, expenses, and

                                             tMtions/-



                                  SIGNED this / ? day of 'QvMtt



                                                                   Judge Presiding




       PLAINTIFFS' ORIGINAL PETITION - Page 035
               Agreed u to form and mb«t«ace:
      N
      M        PoKTKH HEDGES I X P
      0
      0
      0.       /s/BricM.Pnglah
               Neil Kenton Alexander
      to       Texas Bar No. 00996600
      in       kalexandet(^poTterticd|re?.pom
               William B. Rasnmssco
               Texas Bar No. 24027765
               WfaamujWQtwrtgitacdgM.ggai
               Eric M. English
      o        Texas Bar No, 24062714
      N
      CD
               pcnfJisbe'potterfaedyes.cpm
               1000 Main Street, 36* Hoor
      to       Houston, Texas 77002
      o        Tciephoao:(713)226-6612
               Focsimile: (713) 228-1331

                            plaintiff Conoid B, Ut, Jr.




               /5/fctoiW,P9mr
               John W, Porter
               Texas Bar No. 16149990
               Keri D, Brown
               Texas Bar No. 24055223
               910 Louisiana Street
               riouston, Texas 77002
               Telephone: a 13) 229-1597
               Facsimile: (713) 229-2797
               John,poftcr@bdccrhott5.9oni

               Altomty3 for Inttrytnor Kathtrint Ltt Stacy




                                                             •9-




PLAINTIFFS' ORIGINAL PETITION - Page 036
                   EXHIBIT " C "




PLAINTIFFS' ORIGINAL PETITION - Page 037
•1'                         as                                                      XXX-XX-XXXX

                                                 N O . 137,506


      FN THE ESTATE OF                                §    I N PROBATE COURTKO. 2
                                                      5
      KATHERIKE PILLOT LEE BARNHART,                  §

      DECEASED                                         §
                                               NO, 137.506-40^
      S U S A N C A M H I V E L E E , ct »l.
                          Plainttffis »nd
                          Counttr-IDcfcndwts           §   OF                                      O

      VS.                                              §                                            cn
                                                       §
      RONALD B. LEE, JR., ct«!.                        §
                  Dcfenduits *rtd
                  Counter-Plaintiffs
                                                       §
      VS.


      KATHERINE LEE,                                   §
           Intetvtnor.                                 §    HARRIS COUKnr, TEXAS




                On&e3jxldayof Jtmwy, 19%,(:«n3eootobebwidfl»?bovc^lcd wdratobo^

      The Plaintiff, Susan Los individually, ("Susaa C, Lcc") anti derivatively oa behalf of the Esfate.of

       Kaaicrine P. Bamtert (the IBstatc") and the Article TV Trust contained in tbc Last WiH and

       Testament of Kathtsrinc P. Banhart (the •*Artide IV TrusfX Susan Lee as Trustee fbr ^ Article V

       Trust wntaincd in tjKJ Last WD and Testament of Katherine

       of Susan C. Gibson (tbe"ArticJt V Tmst") and derivatively oa b<*alfcf fte Estate and the Article IV

       Trust, and Susan C. Gibson, indBvidually and derivatively on bciialf of tbc Estate and tbe Article IV

       Trust, (hereinafter collectively tefwted to astiteTlaintifiBi'') and &e Defcodtot, Ronald E . Lee, Jr.,

       individudly ("Rodald B. Lec, Jr."), as the InAqptajdent Executwr of ^      Estate, as Tiustco for the

       Article rv Trust, atkd as Tnistec for ftw Aitidc V Tnist contained in the WiU fbc flw bcotfit of

        ICatbcrine Lec, aiKl Katherine Lcc, iaUvidually, as intervcQOT,a^                              Ajuiy

                                                                                               "BWIBIT

                                                                                                 "ft*


  PLAINTIFFS' ORIGINAL PETITION - Page 038
                                                                                      645-r3-oru
    having been demanded, a jury o f   12 quaJifi^td jurors was duly a^jm^ltdr   asid ibc Cisc pTQcccdcd

    to trial. At the cooclusioo of ihc cvidctK^ the Court subtisitted qucstiotis offe<iia tbc ctoc to the

    jury. A verdict was returned by the jiiry and accepted by tbc Court Tbe jury "was txcused.

            On the 8th and 9th days of April, 199$, came to be heard the Motion by the PIa3ntifi& for

    Judgment on tbc Verdict and tbc Motion by tbe Defendant for Judgatcnt Non Obstmie Yiredictc

    and to Disregan} Jury Fundings; and came tbe parties personally and by and thtotigh their attorneys

    of record; and the Court, having considered tbe arguments, fouad that each of said Motions sltould

    be granted in part and denied in part

            Based upon the jury's answers to question numbers 1(c) and 4, this Courtfindsthat the

    Article IV Trust isfentillcdto judgment against Ronald E. Lcc, Jr, in the total amotmt(^$S40,055~^

    arisingfinocnhis breach of fiduciary duty related to the Knollwood Devclopnicnt

            Based upon the jury's answers to question numbers 1(c) and 4, this Courtfindstbrt the

    Article IV Trust is entitled to judgment against Ronald E, Lee, Ir, in the total amoun^^^sT^ing

    - 6x)m his breach offiduciaryduty related to the River Bend Fann,

            Based upon the jury's answers to qvicstiotts iiumbcrs 1(d) aiid 4, this Cotnt

     Article IV Tnid is entidcd to judgment against Ronald E. Lee, Jr, in the total aiawmt ^f^^isbng

     fi»m Hs breach of SSdudaiy duty related to the Cap Rock Ranch.

             Based upon the jury's answers to question nmnbm 2(a) and 5(a), this Courtfindsthai the

     Article IV Trust is entitled to jtidgmcnt against Ronald E Lee, Jr, inftic total antoqat olj£9,506,50

     (whieh WMisists of the $2,198,355 of unreaswiable cwxuiorfeesfoundby the jury lessfljetax

     savings rcaliaed by the Estatefionathe deduction of swAfeeson the Estate's estate tax return) phis

     im^ndgmentininnestat^n^of lO%peraimiun,cti^^                                       AsofAogu^fi,




                                                      -2-




PLAINTIFFS' ORIGINAL PETITION - Page 039
                                                                         ®
   1996, lf«: amovnt of prcjydgincat, interest tiat has &wrucd on thcS« daidigcS ii $919,702,12 and   ii

  accruing thereafter at the per ciicm rtitc of   $180.69 as sbown m Exhibit "A" attached hctcto.

          Based upon the jury's anyiVcrs to question numbers 2(b) and 5(b), the Courtfindsthat the

  Article IV Trust is entitled to judgment against Rooald            Jr. for unreasonable ofBcc expenses

   in the amoi    m 5 l63^55D-i»ras prejudgment interest at the rate of 10%
                                                                          i per annum, Computed as

   sTJfXiplc intcrcsL As of August &, 199<5, the ainount of pngudgmcnt interest that has accrued on these

   damages is $157,969.90 and is accruing thereafter at the per diem late of $44.81 as shown in

   Exhibit-B*'attached hereto.

           Based upon the stipulation of fhc counsel for the paities and the undisputed Or admitted fects.

   the Court finds that i) Susan C. Lee's attomeys were p«d reasonable at>d necessary fees of

   $1,000,000.00 for the prosecution of this action; ii) attorneys n^resenthig Susan C. Gibson,

   individually, aiid Susan C. Lcc as Trustee of the Artidc V Trust for Susan C. Gibson, were paid

   reasonable and necessaryftcsof $500,000.00 fortiaeprosecution of this action;         Ronald E. Lec,

  • Jr.'s attomeys were paid reasonable and necessary fees of $1,500,000,00forthe defense of this

   action; and iv) Ronald E. Lee, Jt.'s attorneys' fees of $1,500,000,00 have ahrcady been paid by or

   reimbursedfromthe Estate and/or Artide IV Ttust, as previously emthoiiajcd by the Court, and he

   is therefore not entitled to any additional )!«orncy's fees fo^                      The Court fiirftcr

   fmds that Plaintiffi an? entitled to judgment directing and authori

   Trustee of the Article IV Trost to rcunbwsc Susan C Lee, individually and Stjsan C. Lee as Tmstee

    ofthe Article V Trust for Susan C. Gibson for the aforesaid attwneys"ftcsfromthe a m * of the

    Estate and/or the Article FV Trust, and after such payment OT leimbwcscineirt, PIahiti£& are not

    entitled to any additional attomeys? feesfiwtihetrial of diisartion.




PLAINTIFFS' ORIGINAL PETITION - Page 040
           B ascd upon the stipiil ation of th* fsatics aod ihc undispanai or admittodfects,tbc Court .ficdj

   that rcasortablc and necessary attorneys' fcej for an ^>pc$i by either P]ain{i& or D<jfcndsnt to the

   Cotnt of Ai>pcais are $300,000.00 and that r«ssOii^l<: and r«iiicssary attoni!^ fees for an apjical by

   cither t^lajntjffs or Defendant to the Texas Suptetnc Court are $ 100,000.00. The Court fimbcr finds

   that both Plaintiffs and I>efehdant are entidcd to payment of such additional aBomcy s" feesfiomdie

   A r t j c l c l V Trust in the event that appeals arc takenfix)mthis judgment

           B^scd upon tbcfindingsand cooclusioBs set forth abovCj the Courtfindsthat tbe Article IV

   Trust is entitled to judgment against Ronald E. Lcc, Jr., in the total sum of $1,663,058.50, plus

   prejudgment interest at the rate of 10% per anntnn, computed as simple interest, on each payment

   set forth on Exhibit ''A" attached hereto and incorporated herein for »il purposes, rclatmg to the

   executor's fee,firomthe date of each such payment until the thitc of judgment, pius prejudgment

   interest at tbe rate of 10% per aimtmi, computed as simple interest, on c*«::h paytnent set fortii on

   Exhibit "B" attached hereto and incotpctated herein for all purposes, relating to tbe office expenses,

   •firomthe date of each sxKh payroent mtil the date of judgment Based upon thefiadmgsand

   conclusiotis set forth above, tbe terms offtwLast Will and Testament ofKatherine P. Banahart, the

   Court concluded that the office expenses in the amount of $163,550 arid all jw^udgmeat htterest we

    allocable to income and that die other damages awarded agjuastRgpaldR Lee, Jr. in the amouat of

    $U499,508,50 are allocable to principal.                                        • I tt-v.       .

            A Final Judgment was previously signed b^ Ihis Court on August 21,1996. However,

    becausetihatFinal lodgment contained an error wifii respect to piejud^nent interest, this Court has

    vacated and set aside tho Final Judgnwajtclatcd August 21» 1996.

            IT IS, THEREFORE:




                                                      -4-




PLAINTIFFS' ORIGINAL PETITION - Page 041
                                                                                       XXX-XX-XXXX
          ORDERED^ ADJUDGED and DECREED lhat Plaindffi' Motion for. JwigoKat on tlie

   Verdict Is GRANTED as to the foUovmig Jury Questions: Ic, td, K 2*. 2h, 4, 5d, 5btod9; that

   PlaintiSs' Motion for Judgment on tbc Verdict is DENIED as to tbc foUowitig Jury Qvjestions: la,

   lb, 3a, 3b, and 8; that Defendant's Motion for Judgment Nort Obstante Veredicto is DKflCED; that

   Defendant's Motion to Disregard Jury Findings is GRANTED as to the following Jury Questions;

   la, lb, 3a, 3b, and 8; and that Defendant's Motion to Disregard Jury Ficdings is DENIED as to the

   following Jury Questions: 1 c, 1 d, le, 2a, 2b, 4, 5a, 5b and 9; it is fiirther

           ORDERED, ADJUDGED and DECREED that the Trustee, on behalf of tfac Article fV Ttwt,

   have and recover judgment against Ronald E Lee, Jr,, individually, in the amount of $1,663,058.50

   together with i) prejudgment interest at therateof 10% per annum, computed as shni^e interest, on

   each payment set forth on Exhibit "A" attached hereto and Ltx^rporsted herein fbr all purposes,

   relating to tbc executor's fee, from the dale of each such payment until tbe date ofjudgnxait, plus

   ii) prcjndginent interest at the rate of 10% per annuin, coinputcd as simple interest, on cad^

   set forth on Bthibit "B" attached hereto and incorporated herein fot all purposes, relating to the

   office expenses,fiomthe date of each such payment until the date of jtidgment, phis iii) post-

   judgment interest on such total amount of $2,758,770.52 at d» rate of 10% per amuan, compounded

   annxmQy,acaruingfiomwd after the date of diisjudgmeiitui^paM^                     itisfintixr

           OimERED^, ADJI^DGED aod DECREED that die Executor

   Article rv Tmst are authoriaxd and directed to hamedi^^y pay Susan C, Lee, individually, the

    amount of $1.000,000 in tehnburswnent of attorneys'fees; it is fbtdie*

           ORDERED, ADJIJDGED nod DECREED that the Executor of the Estate and T m ^

    Article rv Trust are au&orized and directed to pay S & n C. Lee as Trustee ofthe Article V Tmst

    for Susan C. Gibson, ^ ainount of $500,000, in leinaburscmcnt of attoincya!'fees;it b fiirflier




PLAINTIFFS' ORIGINAL PETITION - Page 042
                                                                                    XXX-XX-XXXX

            ORDERED. ADJUDGED and DECREED iix^{ the- p^pnctxts hy Ronald E. Lcc, Jr.,

    Executor ofthe Estaic and/or as^ Trustee of the Article lY Tnist, &0m the assets of such Estate and

    Trust of his actomcys' fees in the amount of SI,500,000 for his dcfcoae of this sctiou arc hereby

    authorized; it is further

            ORDERED, ADJUDGED and DECREED that the Trustee of the Article IV Trust is

    authorized and directed to pay $200,000.00 to Susan C. Lcc, individually, and $100,000.00 to

    Susan C, Lec, as Trustee of tbc Article V Trust for Susan C. Gibson, mtivjevent that there is an

    appeal to the Court of Appeals; it is further

            ORDERED, ADJUDGED and DECREED that the Trustee ofthe Article W Trust is

    authorized and directed to pay $300,000,00 to Ronald E. Lec, Jr., individually, m the event that there

    is an appeal to the Court of Appeals; it is fisrthct

            ORDERED. ADJUDGED and DECREED that the Trustee ofthe Article W Tmst is

    authorized and directed to pay $67,000.00 to Susan C, Lec. mdividually, and $33,000.00 to Susan C.

   - Lcc as Trustee of the Article V Tmst fw Sxjsan C. Gibson, in tho event of an ^jpealtothe Texas

    Supreme Cotjrt; it is further

     I      ORDERED, ADJUDGED and DECREED that the Trustee of the Article IV Trost is

    authori2ed attid directed to pay $100,000.00 tn Ronald E. Lec, Jr., hidividually, in the event thwe is

     an appeal to dw Texas Supreme Court; it is fiatha

            ORDERED, ADJUDGED and DECREED that the Plaintiffs' request to remove Ronald E

     I ^ , Jr. as the Ind^jendcnt Executor of dw Estate is D^^IED; it U farther

            ORDERED, ADJUDGED and DECREED that the Plaioti£&' request to Ktmvtt Ronald R

     Lec, Jr., as the Tmstee of the Article rv Ttnst is DE^aED.




PLAINTIFFS' ORIGINAL PETITION - Page 043
                                                                                    S45-r3~ori6
          A!! v.Til5 shall issue-   ihc appropriate umc 85 provided, by law. Costa sit taxed, against

  Rortald E. Lcc, Jr., individually.

          ALL OTHER RELIEF NOT EXPRESSLY GRA>nrED HEREIN IS DENIED.

          SIGNED this ^ S " day of           Q               . 1996.




                                                           JUDGE PRESIDING




                                                     -7-




PLAINTIFFS' ORIGINAL PETITION - Page 044
                  EXHIBITED"




PLAINTIFFS' ORIGINAL PETITION - Page 045
Lee V, Lee, 47 S.W.3d 767 (2001)


                                                                              Evidence was sufficient to support finding that
                                                                              executor earned approximately $600,000 in fees,
                       47S.W.3d767 .
                                                                              but not $2,8 million in fees that executor
                  Court of Appeals of Texas,
                                                                              charged estate, for administering estate valued
                    Houston (14th Dist).
                                                                              at $12.8 million; although one expert testified
    Susan Camille LEE, Individually, and as Trustee                           that executor was not entitled to any fee because
                                                                              he did not give beneficiaries an accounting for
    of the Article V Trust for the Benefit of Susan C.
                                                                              13 years, did not keep proper records, and spent
   Gibson, and Derivatively on Behalf of the Article
                                                                              $750,000 on experts to develop tract of land but
        IV Trust and the Estate of Katherine Pillot Lee
                                                                              did not develop it, and another expert testified
   Barnhart, and Susan C. Gibson, Individually, and
                                                                              that a $2.8 million fee was reasonable due to the
 Derivatively on Behalf of the Article IV Trust and the ,                     size and difficulty of administering estate.
  Estate of Katherine Pillot Lee Barnhart, Appellants,
                               V,                                             Cases that cite this headnote
   Ronald E. LEE, Jr., Individually, as Trustee ofthe
        Article IV Trust, and the Article V Tmst for the               [2]    Executors and Administrators
    Benefit of Katherine Lee, and as Executor ofthe                               Proceedings and order for allowance
   Estate of Katherine Pillot Lee Bamhart, Appellee.                          Applicability     of personal        representative
                                                                              compensation statute to determine executor's
                     No. 14-97-00162-CV.
                                                                              compensation could not be considered on
                                    I   •
                          May 17, 2001.            i                          appeal in beneficiaries' suit against executor for
                                                                              excessive executor fees, where executor had not
                                    I                                         raised issue of applicability of statute as ground
               Rehearing Overruled May 17, 2001.
                                                                              for his motion for judgment notwithstanding the
Beneficiaries brought action against executor of estate who                   verdict at trial level. V.A.T.S. Probate Code, §
also served as trustee of trust for breach of fiduciary                       241.
duty and for charging excessive executor fees. The Probate
                                                                              Cases that cite this headnote
Court, Harris County, Mike Wood, J., granted judgment
for executor. Beneficiaries appealed. The Court of Appeals,
Hudson, J., held that: (1) evidence was sufficient to support          [3]    Executors and Administrators
finding that executor earned approximately $600,000 in fees;                   #= Amount and Computation of Compensation
(2) evidence was insufficient to support finding that executor                 Estate tax deduction of $1.5 million for
failed to diversify the assets of the estate; (3) executor's                   executor fees could not be used to offset jury
alleged misconduct in administering estate was material,                       finding that executor charged estate $2.2 million
warranting his removal; (4) no evidence existed that trustee's                 more than he should have, although Internal
defense of beneficiaries' suit against him was in bad faith; and               Revenue Service (IRS) could no longer assess
(5) executor was entitled to reimbursement of attomey fees                     additional taxes to estate following executor's
in defense of suit.                                                            reimbursement of excess fees; it was more
                                                                               appropriate for estate to obtain benefit of
Affirmed in part, reversed and rendered in part.                               windfall than to let executor keep $1.5 million
                                                                               in fees the jury found were excessive and
                                                                               unreasonable.

 West Headnotes (49)                                                           1 Cases that cite this headnote


  [Ij       Executors and Administrators                                [4]    Executors and Administrators
                Evidence                                                           Forfeiture or deprivation of compensation




  V'i'E'SlLAW •© 2016 rhornson pNeuters No claim to original U.S, Government Works,


   PLAINTIFFS'ORIGINAL PETITION- Page 0 4 6                        .
Lee V. Lee, 47 S.Vv'.Sd 767 (2001)


        Executor fees couid not be forfeited as                    An appellate court may not second-guess the jury
        equitable remedy for executor's alleged breach             unless only one inference may be drawn from the
        of fiduciary duty in administration of estate,             evidence.
        where beneficiaries had not requested forfeiture
        of executor's fee in any pleading.                         Cases that cite this headnote

        5 Cases that cite this headnote
                                                            [TO]   Appeal and Error
                                                                        Extent of Review
 [5]    Appeal and Error                                           When deciding factual sufficiency questions, an
         <s~ Verdict                                               appellate court considers all of the evidence.
        When a "no evidence" challenge is raised, an
        appellate court may only consider the evidence             Cases that cite this headnote
        and inferences supporting the jury's verdict,
        disregarding all contrary evidence.                 [11]   Appeal and Error
                                                                    ©=> Sufficiency of Evidence in Support
        Cases that cite this headnote
                                                                   A court may set aside a factual finding only if the
                                                                   evidence is so weak as to be clearly wrong and
 [6]    Evidence                                                   manifestly unjust.
            Sufficiency to support verdict or finding
        If there is more than a scintilla of evidence to           Cases that cite this headnote
        support the finding, a no evidence challenge
        must fail.                                          [121   Executors and Administrators
                                                                       Evidence
        Cases that cite this headnote
                                                                   Evidence was insufficient to support finding
                                                                   that executor failed to diversify the assets of
 [7]    Evidence                                                   estate by rejecting offers to purchase property
            Sufficiency to support verdict or finding              in beneficiaries' suit against him for breach of
        A "scintilla of evidence" exists when the                  fiduciary duty, although executor received two
        evidence offered to prove a vital fact is so weak          offers to purchase the property, but rejected
        as to do no more than create a mere surmise or             them; unaccepted offers to purchase property
        suspicion of its existence.                                were too uncertain to serve as proof and
                                                                   no testimony was offered to determine if
         Cases that cite this headnote                             prospective purchasers were' willing to meet
                                                                   executor's terms of sale.
 [8]     Appeal and Error
                                                                   6 Cases that cite this headnote
            Total failure of proof
         An appellate court should find there is no
         evidence i f reasonable minds cannot differ        [13]   Executors and Administrators
         from the conclusion that the evidence offered              ^ Appeal and error
         to support the existence of a vital fact laclcs           Executor did not invite or waive error on
         probative force.                                          issue of whether measure of damages for
                                                                   alleged wrongful failxu-e to sell property was
         Cases that cite this headnote
                                                                   sale proceeds plus interest in beneficiaries'
                                                                   suit against him for breach of fiduciary duty,
 [9]     Appeal and Error                                          although executor offered expert testimony that
          1 ^ ^ Conclusiveness in General                          proper measure of damages for alleged wrongful
                                                                   failure to sell property was sale proceeds plus
                                                                   interest, where offer was made to counter


 VVtSTLA'/'/



   PLAINTIFFS' ORIGINAL PETITION - Pase 047
Lee V, Lee, 47 S.W.Sd 767 (2001)


        beneficiaries' proposal for damages to include               reviewing court must review all testimony in a
        potential profits.                                           light most favorable to the finding, considering
                                                                     only the evidence and inferences that support the
        Cases that cite this headnote                                finding and rejecting the evidence and inferences
                                                                     contrary to the finding.
 [14]   Executors and Administrators
                                                                     Cases that cite this headnote
             Appeal and error
        Executor's counsel's response to jury question
        did not invite error in jury's determination          [18]   Appeal and Error
        of damages for executor's alleged breach of                      Extent of Review Dependent on Nature of
        fiduciary duty for failure to optimize profit on             Decision Appealed from
        estate property by failure to sell it when he had            If there is more than a scintilla of competent
        the opportunity to do so, although executor's                evidence to support the jury's finding, then the
        counsel's position was that jury had to determine            judgment notwithstanding the verdict will be
        the day, month, and year of when property should             reversed.
        have been sold, where judge told jury that they
        had to make the less specific determination of               Cases that cite this headnote
        month and year when property should have been
        sold.                                                 [19]   Evidence
                                                                          Amount for which property will sell; offers
        Cases that cite this headnote
                                                                     Unaccepted offers to purchase property are no
                                                                     evidence of market value of property,
 [15]   Executors and Administrators
         'v= Appeal and error                                        8 Cases that cite this headnote
        Executor did not waive error by failing to
        object to question put to jury on ground of           [20]   Executors and Administrators
        insufficient evidence in suit against executor                #=» Grounds in general
        for alleged breach of fiduciary duty for failure
                                                                     Executor's alleged misconduct was material
        to optimize profit on estate property, where
                                                                     in his administration of estate, warranting his
        executor's motion for judgment notwithstanding
                                                                     removal, although damages to estate were only
        the verdict alleged that evidence supporting the
                                                                     $ 1,00 for failure to sell and diversify assets
        jury's findings was legally insufficient. Vernon's
                                                                     and jury did not find that executor's actions
        Ann,Texas Rules Civ.Proc, Rule 279,
                                                                     constituted gross negligence, where executor
        Cases that cite this headnote                                was found to have breached his fiduciary duty
                                                                     in numerous respects and damages associated
                                                                     with executor's breach of duty totaled $3 million,
 [16[   Judgment                                                     V,A.T.S. Probate Code, § 149C.
             Where there is no evidence to sustain
        verdict                                                       Cases that cite this headnote
        A trial court may disregard a jury's finding i f
        there is no evidence to support the jury's finding.   [21]    Appeal and Error
                                                                           Abuse of discretion
        Cases that cite this headnote
                                                                      A trial court abuses its discretion if its decision
                                                                      is arbitrary, unreasonable, and without reference
 [17]   Appeal and Error                                              to any guiding rules and principles,
          #= Judgment
        When reviewing the grant of a motion for                      6 Cases that cite this headnote
        judgment notwithstanding the verdict, the


  WESTLAW       •'•2016 I hotnssr'r, Reutors Mo dairn tn oricj-nal U y Goi/crnment Woi.^s


    PT A m r i F F S ' nRTnrMAT. PKTTTinN - Pao-P n4R
Lee V. Lee, 47 S.W.3d 767 (2001)


                                                                     Trial
 [22j   Executors and Administrators                                  #=• Pleadings and Issues
         ^ Grounds in general
                                                                     Trial
        Although a trial judge is given discretion by                        Facts and Evidence
        executor removal statute to determine whether
                                                                     An instruction is proper if it assists the jury,
        an executor's actions rise to the level of gross
                                                                     is supported by the pleadings or evidence, and
        misconduct, this discretion is not unlimited; an
                                                                     acciuately states the law,
        abuse of discretion occurs when the trial court
        makes a legally unreasonable determination                   Cases that cite this headnote
        given the factual-legal context in which it was
        made. V.A.T.S, Probate Code, § 149C.
                                                              [271   Appeal and Error
        2 Cases that cite this headnote                               'VP' Cases Triable in Appellate Court
                                                                     Whether terms are properly defined or the
 [231   Appeal and Error                                             instruction is property worded in a definition or
         #•» Abuse of discretion                                     instruction submitted to the jury is a question of
                                                                     law reviewable de novo,
        A trial court's determination is legally
        unreasonable if the court failed to consider a fact          3 Cases that cite this headnote
        shown in the evidence that was legally relevant.

        Cases that cite this headnote                         [281   Appeal and Error
                                                                             Failure or refusal to submit issues
 [24|   Appeal and Error                                             Appeal and Error
            Conduct of trial or hearing in general                    #=• Failure or refiisal to charge
        The trial court's decision whether to submit a               Error is reversible only if, when viewed in light
        particular instruction or definition to the jury is          of the totality of the circumstances, the refusal
        reviewed for an abuse of discretion.                         to submit a question or instruction to the jury
                                                                     probably caused the rendition of an improper
        4 Cases that cite this headnote                              judgment.

                                                                     Cases that cite this headnote
 [251   Trial
         #=» Definition or explanation of temis
                                                              [291 Trusts
        Trial
                                                                      #=* Proceedings
         #«» Constmction and Effect of Charge as a
        Whole                                                        Issue of removal of trustee under trustee removal
                                                                     statute was valid theory raised by pleadings and
        To determine whether an alleged error in the
                                                                     evidence in beneficiaries' suit to remove trustee
        charge is reversible, the reviewing court must
                                                                     for breach offiduciaryduty, where beneficiaries
        consider the pleadings, the evidence, and the
                                                                     pled removal of trustee under trustee removal
        charge in its entirety; as to instructions and
                                                                     statute, and presented evidence of conduct that
        definitions, the essential question is whether
                                                                     jury found to be breaches of fiduciary duty.
        the instruction aids the jury in answering the
                                                                     V.T.CA,, Property Code § 113,082,
        questions,
                                                                     1 Cases that cite this headnote
        2 Cases that cite this headnote

                                                              [301   Trusts
 [261   Trial
         •v=' Matters of law                                          • = Mismanagement or misconduct in
                                                                     execution of trust




   PLAINTIFFS' ORIGINAL PETITION - Page 049
Lee V. Lee, 47 S.W.3d 767 (2001)


         Trustee's breach of fiduciary duty and j u r y ' s              beneficiaries an accounting for 13 years, he did
         award of damages for breach of fiduciary duty                   not keep proper records, and he spent 5750,000
         each constituted a basis for removal of trustee                 on experts to develop a tract of land in the estate
         in beneficiaries' suit against trustee for breach               but he did not develop it, V.T,C,A., Property
         of fiduciary duty. V.T.CA., Property Code §                     Code § 114.064; V,A,T,S, Probate Code, § 149C
         113,082.
                                                                         Cases that cite this headnote
         3 Cases that cite this headnote

                                                                 [35|    Executors and Administrators
 {31]    Trusts                                                               Application and proceedings thereon
             Mismanagement or misconduct in                              Executor could recover attomey fees firom estate
         execution of trust                                              in defense of beneficiaries' attempt to remove
         A breach of a fiduciary duty can constitute a                   him, despite evidence regarding executor's
         material violations of a trust for the purpose of               breach of duty, where there was no evidence
         establishing a basis for removal of a trustee.                  showing that executor's defense against removal
         V.T.CA., Property Code § 113,082.                               was made in bad faith,

         Cases that cite this headnote                                   1 Cases that cite this headnote


 [32]    Trusts                                                  [36]    Executors and Administrators
          •i=» Mismanagement or misconduct in                                Custody and Management of Estate
         execution of trust                                              An executor acts in good faith when he or she
         A jury award of damages for breach of a                         subjectively believes his or her defense is viable,
         fiduciary duty can constitute a material financial              if that belief is reasonable in light of existing law,
         loss to the trast for the purpose of establishing
         a basis for the removal of a trastee, V,T,C,A,,                 4 Cases that cite this headnote
         Property Code § 113,082.
                                                                 [371     Trusts
         1 Cases that cite this headnote
                                                                              Proceedings
                                                                          Trusts
 [33]    Trusts                                                                Costs
               Grounds
                                                                          Trastee was required to reimburse trast for
         Alleged conflict arising from trustee's opposition               attomey fees and costs incurred by beneficiaries
         to beneficiaries' motion for judgment and his                    at trial and on appeal in beneficiaries' suit
         attempt to reduce trast's judgment in action for                 against trustee for breach of fiduciary duty and
         breach of fiduciary duty did not require his                     removal, although attomey fees and costs could
         removal; such a conflict could arise any time a                  not be recovered against him under probate
         beneficiary brought suit for damages against a                   code's attomey fee statute for his removal in his
         trastee.                                                         role as trastee, where prosecution of claim to
                                                                          remove trastee was inextricably intertwined with
          Cases that cite this headnote
                                                                          prosecution of beneficiaries' claims against him
                                                                          for breach of fiduciary duty and removal in his
  [34]   Trusts                                                           role as executor. V.A.T.S, Probate Code, § 245.
           f ~ Evidence
          No evidence existed to support jury's finding that              Cases that cite this headnote
          trastee's defense of beneficiaries' suit against him
          for breach of fiduciary duty was in bad faith,
                                                                  [38]    Stipulations
          despite evidence that trastee did not give the




   PLAINTIFFS' ORIGINAL PETITION - Page 050
Lee V. Lee, 47 S.W.Sd 767 (2001)


          •if^ Construction and Operation in General
                                                                       1 Cases that cite this headnote
         Stipulation between parties as to reasonable
         and necessary attomey's fees incurred by
         beneficiaries' in their suit and appeal in action     [42]    Interest
         against executor for breach of fiduciary duty                      Compound interest
         and removal negated .requirement in attomey                   Prejudgment interest was properly computed as
         fee statute in probate code that party seeking                simple interest, not interest compounded daily,
         recovery present evidence to enablejury or court              in beneficiaries' suit against executor for breach
         to determine what fees are recoverable by estate.             of fiduciary duty; claim for prejudgment interest
         V.A.T.S. Probate Code, § 245,                                 was based upon common law since suit did
                                                                       not fall within any of the prejudgment interest
         3 Cases that cite this headnote                               statutes.

                                                                       2 Cases that cite this headnote
 [39]    Costs
          >sf» Form and requisites of application in
         general                                               [43]    Executors and Administrators
         A party is not required to segregate attomey fees              '4^ Appeal and error
         unless the party asserts multiple claims, some of             Neither award of prejudgment interest, nor
         which entitle the party to recovery of attomey                accmal date of that interest, required executor
         fees and some of which do not.                                to make point of error to preserve those issues
                                                                       for appellate review in beneficiaries' suit against
         Cases that cite this headnote                                 executor for breach of fiduciary duty, although
                                                                       executor had not raised those issues either at trial
 [401    Costs                                                         level nor in his brief on appeal, where Court
          'S= Form and requisites of application in                    of Appeals' award of prejudgment interest was
         general                                                       new award of damages and was of automatic
         There is an exception to the duty to segregate                 legal consequence since appellants pled for
         attomey fees when the attomey's fees are                      prejudgment interest,
         rendered in connection with claims arising out
                                                                       2 Cases that cite this headnote
         of the same transaction and when the claims are
         so interrelated that their prosecution or defense
         entails proof or denial of essentially the same        [441    Appeal and Error
         facts,                                                          ^   Effect of Failure to Assign Particular Errors
                                                                        A point of error not preserved is not before the
          1 Cases that cite this headnote
                                                                        appellate court for review.

                                                                        Cases that cite this headnote
  (411    Trusts
              Judgment and relief
          Damages award was required to be paid to              [451    Appeal and Error
          the trust, and not to beneficiary directly, in                 #» Contentions other than those made on the
          beneficiaries' suit against tmstee for breach                 hearing
          of fiduciary duty, where beneficiary was not                  An assignment of error raised for the first time in
          entitled to gross income, and was instead entitled            an appellate motion for rehearing is too late to be
          to "current net income" under will, which meant               considered by an appellate court.
          any tmst income, minus expenses. V,T,C.A,,
          Property Code § 113,111,                                      6 Cases that cite this headnote




  w£STLAW €> 201 r. I nornson Reuters No claim to or-qinal U S 'Government Worki.


    PLAINTIFFS' ORIGINAL PETITION - Page 051
Lee V. Lee, 47 S.W.3d 767 (2001)



 146]   Interest                                               Panel consists of Justices ANDERSON, HUDSON, and
             Prejudgment Interest in General                   Senior Chief Justice MURPHY. *
        "Prejudgment interest" is compensation allowed
        by law as additional damages for lost use ofthe
        money due as damages during the lapse of time                       *773 CORRECTED OPINION
        between the accrual of the claim and the date of
        judgment                                               HUDSON, Justice.

        1 Cases that cite this headnote                        This is an appeal from a judgment in a probate case in
                                                               which appellants sought removal of the executor/trustee
                                                               and sought damages for breaches of fiduciary duty and for
 [47]   Interest
                                                               excessive executor fees. After granting appellee's motion
         ^   Prejudgment Interest in General
                                                               for judgment notwithstanding the verdict and disregarding
        The two legal sources for an award of                  several jury findings, the trial court rendered judgment:
        prejudgment interest are general principles of         (1) refusing to remove appellee as executor and trustee,
        equity, and an enabling statute.                       and (2)awarding $2.8 million in damages and prejudgment
                                                               interest to the Article IV trust. Appellants raise eight issues
        2 Cases that cite this headnote
                                                               and appellee brings three cross-points. In our corrected
                                                               opinion of February 8, 2001, this court affirmed in part and
 [481   Interest                                               reversed and rendered in part.
             Particular cases and issues
        Beneficiaries were entitled to prejudgment             Appellants have filed a third motion for rehearing. We now
        interest from date they filed their petition against   withdraw our corrected opinion of Febmary 8,2001, and issue
        executor for breach of fiduciary duty to date          this corrected opinion, affirming in part and reversing and
        preceding entry of judgment on $1.5 million            rendering in part.
        judgment, not from date of executor's alleged
        breach, where first date executor received notice
         of beneficiaries' claim that executor fees paid to                             Background
         him were excessive and unreasonable was date
         suit was filed.                                       When Katherine Bamhart died in 1975, her will provided
                                                               that the bulk of her estate was to pass to a tmst (the "Article
         I Cases that cite this headnote                       IV Tmst"). Bamhart's two children, appellant Susan Lee,
                                                               and her brother, appellee Ronald Lee, were each entitled
 [49|    Executors and Administrators                          to one-sixth of the income from the Article IV Tmst, and
              Representation of creditors and distributees     so much of the remaining two-thirds as necessary for their
                                                               health, support and maintenance, considering the "availability
         An executor owes a duty to disclose all material
                                                               of funds from other sources." The remaining income was
         facts affecting the beneficiaries' rights.
                                                               to go into separate tmsts for each of the grandchildren (the
         Cases that cite this headnote                         "Article V Tmsts"). The Article V Tmsts were to distribute
                                                                income to the grandchildren to the extent necessary to provide
                                                               for their health, support and maintenance, also considering
                                                                the "availability offimdsfrom other sources."
Attorneys and Law Firms
                                                                As provided in the will, appellee was appointed executor of
  *772 Thomas A. Zabel, Houston, Daniel J. Sheehan, Marc        the will (and tmstee of the tmsts) and began administration
 S. Culp, Dallas, for appellants.                               in 1976. Appellee filed the estate's inventory reflecting a
                                                                date of death value of $12.8 million. After negotiations that
 Adam P.Schiffer, Thomas B. Greene, D. Gibson Walton,           continued until 1992, appellee and the IRS agreed upon a
 Marie R. Yates, R. Glen Rigby, Houston, for appellants.


  WESTLAW          20IB f horrisr-r; Reuters No clatrn to ovyt.nl U S Government Wc^ks.


    PLAINTIFFS' ORIGINAL PETITION - Page 052
Lee V. Lee, 47 S.W.3d 767 (2001)


taxable value of the estate assets of SI2 million. By this time,                 appellee did not respond to this offer because he found it to
federal and state inheritance taxes totaled approximately S7                     be a bad proposal in that the offeror required high-density
million. Because the majority of the estate's assets were raw                    sewer capacity and would not pay for the portion of the
land, the estate was unable to pay the taxes it owed and the                     property within the flood plain. In 1984, appellee had received
trusts could not be funded.                                                      another unsolicited offer to buy the Pasadena property for
                                                                                 $2,3 million, which he did not accept because it was not a
In February 1980, appellee reached an agreement with the                         cash deal. Appellee did not make counteroffers to either of
IRS regarding the estate taxes due. The total amount due was                     these offerors. In 1984, appellee had also received a contract
$2,8 million, and the interest on that amount as of February                     offering $ 12,500 per acre for the Pasadena property. This was
 1980 was approximately $475,000 (for a total debt to the                        not a cash offer and appellee did not make a cormteroffer.
IRS of approximately $3.5 million). The estate also owed
the State of Texas approximately $800,000 in inheritance                         Two family ranches were also in the estate: Cap Rock Ranch
taxes. Because the estate had little available cash, appellee                    and River Bend Ranch, Theseranchesincreased the estate's
continued to request extensions on these debts. Other debts                      debts because they incurred taxes and were unprofitable.
continued to amass, including ad valorem taxes on the various                    In 1990, River Bend Farm was leased for $20,000 per
parcels of real estate.                                                          year, Appellee did not believe he could sell the family
                                                                                 ranch because he and Susan Lee owned it jointly. Appellee
In December 1980, appellee accepted an unsolicited offer                         discussed the possibility of partitioning with Susan Lee's
to purchase 61 acres of a large tract on Westheimer Road                         attomey, but this never occurred.
for $ 19,5 million. The contract provided for payment in four
annual installments. Appellee funded the Article IV Tmst                         During 1990-91, appellee considered developing the
in 1982 with a deposit of $4 million. Appellant, Susan Lee,                      remaining Westheimer property into a residential subdivision
received her first distribution from the Article IV Tmst in                      to be called "Knollwood Trails," The development never
January 1983 in the amount of $ 15,784.                                          received a loan and was ultimately abandoned. By 1991,
                                                                                 appellee had spent more than $700,000 on Knollwood.
Appellee testified that, by the time he ftinded the Article IV
Tmst, he had taken more than $ 1 million in executor fees. By                     In April 1994, K-Mart bought a 21 acre parcel of the
December of 1983, appellee had taken a total of $2,836,000                        Westheimer tract for $8 million. The trial court ordered
in fees. Although the IRS initially disputed the amount of this                   that these sale proceeds along with other estate assets be
fee, they ultimately allowed the deduction of $1.5 million of                     transferred to the Article IV tmst. A year later, appellee
appellee's fee.                                                                   fiinded the Article V tmst.

 *774 In December 1985, appellee received a letter from                           Susan Lee brought suit individually and as tmstee of the
Susan Lee's attomey stating that she had never received an                        Article V Trust for the benefit of her daughter, Susan
accounting and demanding one at the eariiest possible date.                       Gibson, and derivatively on behalf of the Article IV Trast
This letter also asked about appellee's plans and expected                        and the Estate. Her daughter, Susan Gibson, was also a
distributions. Appellee did not produce an accounting in                          named plaintiff Although the original suit was for an
response to this request. In 1988, Susan Lee's attomey sent                       accounting and for removal o f appellee as executor and
appellee a certified letter requesting an accounting from                         tmstee, additional claims included breaches offiduciaryduty,
November 1975 to the present under section 149A of the                            conversion, fraudulent concealment, constractive fraud and/
Probate Code, This letter demanded receipt of the accounting                      or fraud, negligence, and gross negligence.
by December 17, 1988, and requested copies of all income
tax returns filed for the estate and any tmsts. Appellee did not                  The case was tried to ajury and the jury found that appellee
produce the accounting on the deadline and appellants filed                       had breached fiduciary duties, that he charged imreasonable
suit several days later.                                                          fees and expenses to the estate, that his fees and expenses
                                                                                  were unreasonable by approximately $2.2 million, that the
Appellee did not list the remaining Westheimer property                           breaches of fiduciary duty resulted in damages, and that
or the Pasadena property for sale. Although he received                           appellee defended against removal in bad faith. The jury also
an unsolicited offer to sell the remaining Westheimer tract,                      found that the breaches of fiduciary duty were not committed



  WESTLAW 'V 3 ; i ' ; f ) - l l - f M n v j i , Keut<;K Nn ciaim to       rui-jingf   US, Govoinment Woiks


   PI A r N T X T P P Q ' n w r r j r M A T   PCTTTTHM _ P c m a   n';'^
Lee V. Lee, 47 S.W.Sd 767 (2001)


with gross negligence. Appellee filed a motion for judgment        Appellants contend the impact of the court's deduction is to
notwithstanding the verdict and to disregard jury findings.        allow appellee to reap $1.5 million for his wrongful conduct
The trial court granted this motion in part, disregarding the      as long as the fee results in a tax deduction. C\ting Anderson v.
jury's findings of breach of duty and damages for the *77S         Armstrong, 132 Tex. 122, 120 S.W,2d 444 (1938), appellants
 failure to sell the Westheimer and Pasadena property, the bad     contend the remedy for excessive fees is return of the entire
 faith defense finding, and found the following:                   amount with interest at the highest legal amount.

   (1) the Article IV tmst was entitled to judgment against        Appellee responds with three arguments: (1) the Probate Code
   appellee in the amount of $840,000 (amount found by jury)       supports the trial court's exercise of discretion to determine
   for breach of fiduciary duty relating to the Knollwood          the amount of the fee; (2) Burrow v. Arce. 997 S.W.2d
   development;
                                                                   229 (Tex. 1999)' supports a trial court determination of fee
   (2) the Article IV Tmst was entitled to judgment against        forfeiture; and (3) the "tax benefits rule" authorizes the trial
   appellee in the amount of $1,00 (amount found byjury) for       court to deduct the amount of tax savings realized.
   the breach of fiduciary duty relating to River Bend Farm;
                                                                     [2] We tum first to appellee's claim that section 241 of
   (3) the Article IV Tmst was entitled to judgment against        the Probate Code supports the trial court's decision to reduce
   appellee in the amount of $1.00 (amount found by jury) for      the jury's award. Section 241 concems compensation for
   the breach of fiduciary duty relating to Cap Rock Ranch;        personal representatives. This section provides that executors
                                                                   and other representatives are entitled to receive a commission
   (4) the Article IV tmst was entitled to judgment against        of five percent of the gross fair market value of the estate.
   appellee in the amount of $659,506.50 (consisting of the        See TEX. PROB.CODE ANN. § 241 (Vemon Supp.2000).
   $2.2 million of unreasonable executor fees less the tax         This statutory amount has been held to represent a fair and
   savings realized by the Estate from the deduction of such       reasonable compensation, fee *776 In re Roots'Estate, 596
   fees on the Estate's estate tax return) plus prejudgment         S.W.2d 240, 243 (Tex.App.—Amarillo 1980, no writ). The
   interest of 10% per annum, computed as simple interest;          last sentence of section 241 provides that the "court may, on
   and                                                              application of an interested person or on its own motion, deny
                                                                    a commission allowed by this subsection in whole or in part
   (5) the Article IV tmst was entitled to judgment against
                                                                    i f (1) the court finds that the executor or administrator has
   appellee in the amount of $163,550 for unreasonable office
                                                                    not taken care of and managed estate property pmdently,,.,"
    expenses.
                                                                    M at § 241(a)(1).

 The judge also awarded appellants' attomeys reasonable
                                                                    Because the will provides for a reasonable fee for the
 and necessary attomey's fees of $ 1.5 million and awarded
                                                                    executor, both parties agree that section 241 is inapplicable
 appellee's attomeys fees of $1.5 million, all reimbursable,
                                                                    as it concems the amount of compensation appellee may be
 from the Estate (plus additional amounts for appeal).
                                                                    paid for his role as executor. This interpretation is supported
                                                                    by case law. See, e.g., Stanley v. Henderson, 139 Tex. 160,
                                                                    162 S.W.2d 95 (1942). Despite the inapplicability of the
                       Excessive Executor Fee                       subsection setting executor compensation, appellee argues
                                                                    another subsection of this same statute applies, and gives the
   [1] Appellants first challenge the trial court's reduction of    trial court discretion, to reduce an executor's fee where there is
 the excessive executor fee finding. The jury found that the        a finding of impmdent management. Appellants, on the other
 $2.8 million executor fee taken by appellee was unreasonable       hand, claim that where, as here, the will sets compensation,
 and excessive by approximately $2.2 million. The trial court       no part of the staUite applies. In support of this argument,
 reduced the jury's finding by $1.5 million, stating in the         appellants cite Stanley.
 judgment that he was awarding appellee $659,506.50, which
 represented the jury finding of $2.2 million "less the tax          We do not find Stanley dispositive on the question whether
  savings realized by the Estatefi-omthe deduction of such fees      the last sentence of section 241(a) applies to this issue. First,
  on the Estate's estate tax return...."                             when the Stanley opinion issued, the last sentence of the
                                                                     present version of section 241(8) was not yet part of the



   VVESTLA'yV                1 {r«:r,son Routers. No claim to onynai U -.^ Govcrncierjt Wori-s


    PT   AT-MTTPF<;'   ORTpTrKIAT, PFTTTTnN - Paae 054
Lee V. Lee, 47 S.W.3d 767 (2001)


statute. Second, Stanley does not address the issue presented        [3] The trial court also did not reduce the jury's finding
here, whether the last sentence of section 241(a) applies on        because there was no evidence supporting it. Instead, the trial
appeal to support a trial judge's decision to reduce a jury         court specifically stated he was reducing the fees by deducting
finding of damages for charging an excessive fee.                   the amount of tax savings real ized by the estate. Therefore, we
                                                                    must determine whether the trial court properly applied the
Because it provides for a standard fee, section 241 applies         "benefits rule" to reduce the jury's finding. Appellee claims
in situations where the will does not set compensation, and         the trial court properly applied the "benefits rule" under
the executor seeks compensation in the statutory amount             Nelson v. Krusen, 678 S.W.2d 918 (Tex, 1984),
or for a greater amount. See, e.g., Weatherly v. Martin,
754 S.W.2d 790, 793-94 (Tex.App.—Amarillo 1988, writ                Nelson addressed the question whether Texas should
denied). Therefore, this section is available for an executor to    recognize a cause of action for wrongful life, 678 S,W,2d at
seek the statutory five percent or may be used by an opponent,      924, In reaching their decision to follow the majority of courts
or the trial court on its own motion, to deny the executor a fee,   reftjsing to adopt such a cause of action, the Texas Supreme
in whole or in part. These applications of the statute, however,    Court observed that one rationale for not allowing a cause of
are not relevant to this case because the will set compensation.    action for wrongful life is that, in awarding damages, the court
                                                                    must offset any special benefits to the plaintiff resulting from
First, appellee did not raise a section 241 objection to            the negligence, See id. (with citation to RESTATEMENT
the fee questions on the ground that the questions were             (SECOND) OF TORTS § 920 (1979)). Section 920 ofthe
within the trial court's discretion. Appellee also did not base     Restatement of Torts allows considerafion of the value of
his objection to the jury's finding on section 241. Instead,        benefits to the interest of the plaintiff that was harmed, to the
appellee argued in his motion for judgment notwithstanding          extent this is equitable. See RESTATEMENT (SECOND) OF
the verdict that there was no evidence to support the                TORTS § 920 (1979).
jury's finding. Appellee cited to the testimony of his expert
 accountant, Greg Bardnell, who testified that, when tax            Section 920A, however, augments section 920, providing
benefits and interest savings to the estate are considered,         that "[p]ayments made to or benefits conferred on the
 the $2.8 million in fees actually cost the estate only             injured party from other sources are not credited against
 $850,000. Citing In re Garvin's Will, 256 N.Y. 518, 177            the tortfeasor's liability, although they cover all or a part
 N.E. 24 (1931), appellee claimed the amount of tax savings         of the harm for which the tortfeasor is liable." Id. at 920A
 must be considered. Appellee further argued that, even i f         (emphasis added). This section of the Restatement is the
 legally sufficient evidence supported the jury's finding of        basis for the long-recognized "collateral source rule," which
 unreasonableness, appellants could only recover the actual         precludes a tortfeasor from obtaining the benefit of payment
cost to the estate of the excessive fees. ^                         conferred upon the injured party from sources other than
                                                                    the tortfeasor. See Castillo v. American Garment Finishers
In addition to the absence of an objecfion under section 241,        Corp.. 965 S.W.2d 646, 650 n. 2 (Tex,App,—El Paso 1998,
the trial court did not, on its own motion, apply section           no writ), In Texas, the collateral source rule has been held
241 to deny all or part of appellee's fee.. Instead, the issue       to apply in cases where the injured party received insurance
of unreasonableness of the fee was submitted to the jury.           benefits, see Brown v. American Transfer & Storage Co.,
Furthermore, the trial court did not apply section 241 in            601 S.W.2d 931,934 (Tex. 1980), generalfiringebenefits, see
granting the motion for judgment notwithstanding the verdict.        McLemore v. Broussard, 670 S.W.2d 301, 303 (Tex.App.
In its final judgment, *777 the court specifically found that       —Houston [1st Dist.] 1983, no writ), gratuitous services,
"the Article IV Trust is entitled to judgment against Ronald         see Oil Country Haulers. Inc. v. Griffin. 668 S,W.2d 903,
E. Lee, Jr, in the total amount of $659,506,50 (which consists       904 (Tex.App.-Houston [14th Dist.] 1984, no writ), and
of the $2,198,355 of unreasonable executor fees found by             worker's compensation benefits. See Lee-Wright, Inc. v. Hall,
the jury less the tax savings realized by the Estate from the         840 S.W,2d 572, 582 (Tex.App.-Houston [1st Dist.] 1992,
 deduction of such fees on the Estate's estate tax returns)...."     no writ).
Because section 241 was not raised as a ground for appellee's
 motion for judgment notwithstanding the verdict, we may not         Because the estate received a tax deduction from the IRS,
 consider it on appeal.                                              a source other than the tortfeasor in this case, it would
                                                                     initially appear that the collateral source rule should prevent




    PLAINTIFFS' ORIGINAL PETITION - Page 055
Lee V. Lee, 47 S.W.Sd 767 (2001)


appellee from obtaining the benefit of this deduction. More          at 655, 106 S.Ct. 3143 (citing 15 U,S,C, § 77/ (2)), The out-
on point, however, are the cases regarding tax benefits. *778        of-pocket damages included the difference between the fair
Appellants cite LSR Joint Venture No. 2 v. Callewart, 837            value received and the fair value of what the defrauded party
S,W.2d 693, 697 (TeX.App.—Dallas 1992, writ denied), in              would have received had there been no fraudulent conduct.
which the court, in dicta, notes its agreement with a Supreme        Id at 661-62, 106 S.CL 3143 (citing 15 U.S.C. § 78bb(a)),
Court case, Randall v. Loflsgaarden, 478 U.S. 647, 106               Although the court held that rescission adds an additional
S.Ct. 3143, 92 L.Ed.2d 525 (1986). In Randall, the Court             measure of deterrence as compared to a purely compensatory
held that tax benefits may not offset a party's recovery.            measure of damages, much of the reasoning supporting their
Appellee attempts to distinguish Randall on the grounds that         ultimate conclusion is applicable to non-securities cases.
it "(1) dealt with income (not estate) taxes; (2) turned on
construction of securities fraud statutes; and (3) disallowed        Although it involves a breach of contract claim. Powers v.
consideration of income tax benefits because ofthe statutory         Powers. 714 S.W.2d 384 (Tex,App,—Corpus Christi 1986,
intent to punish and deter and because the tax benefit was           no writ), addresses an argument analogous to the one made
speculative." Appellee claims the jury in this case found no         by appellee in this case. In Powers, a woman sued her ex-
culpable mental state calling for punishment or deterrence,          husband for breach of an agreement to pay monthly alimony.
the savings by the estate tax deduction is not speculative,          See id. at 386. The trial court rendered judgment for the ex-
and the IRS can no longer assess additional estate taxes or          wife for payment of the arrearage, costs, attomey's fees, and
disallow the deduction because the time for doing so has             post-judgment interest. See id. On appeal, the ex-husband
passed.                                                              claimed the trial court erred in entering judgment against him
                                                                     because his ex-wife failed to offer any evidence by which to
Randall involved allegations of securities fraud. See 478 U.S.       calculate her alleged damages. See id. at 388, '*779 More
at 650, 106 S.Ct. 3143. Petitioners asserted claims under §          particularly, the ex-husband claimed the measure of damages
10(b) of the Securities Exchange Act of 1934 and § 12(2)             "should have been the amount of unpaid alimony less the tax
of the Securities Act of 1933. See 478 U.S. at 651, 106              savings she realized on her non-alimony income as a result
S.Ct. 3143. Respondents argued petitioners' damages should           of his failure to pay the entire amount of alimony due under
be reduced by the amount of tax benefits received from               the contract." See id. In other words, the ex-husband argued
the security, comparing tax benefits to the section 12(2)            that his ex-wife's tax burden increased proportionately by
deduction for income received. See id. at 652, 106 S.Ct. 3143.       the amount of alimony she received in a year, and the less
The court found that tax deductions or credits are not taxable       alimony he paid, the more of a tax savings she realized. See id.
events and cannot be classified as income. See id. at 657,
 106 S.Ct. 3143. The court fiirther observed that, although          The court presumed the ex-husband's complaint went to
one purpose of the section 12(2) rescission remedy is to             mitigation of damages, in that he sought an offset for any tax
restore plaintiff to his position prior to the fraud, another        savings realized by appellee. See id. at 389, First observing
purpose is to deter fraud and encourage full disclosure. See         that the burden of proving the amount of damages that
id. at 659, 106 S.Ct, 3143, The court obsen'ed it was more           would have been mitigated was on the breaching party, the
appropriate to allow the defrauded party to have the benefit         court concluded that they were "unaware of any principle or
of a windfall than to let the fraudulent party benefit. See id. at   authority which would allow an offset to the party who has
663, 106 S.Ct, 3143 (citing Tawgow v, Taylor, 344 F,2d 781           breached a contract for a 'tax savings' the non-breaching party
(1st Circuit)), cert, denied 382 U.S. 879, 86 S.Ct. 163, 15          'realized' as a result of the breach." Id.
L.Bd.2d 120 (1965). Because any recovery would be taxable
as ordinary income, the court believed arguments about a             Only two other state courts have addressed deductibility of
windfall were greatly overstated. 478 U.S. at 663-64, 106            tax benefits from damages. In DePalma v. Westland Software
S.Ct. 3143.                                                          House. 225 Cal.App.3d 1534, 276 Cal.Rptr. 214 (1990), the
                                                                     appellant challenged the trial court's refusal to admit evidence
Although Randall did involve construction of securities              of tax benefits. Appellant asserted that, by not admitting this
fraud statutes, the damages allowed by the statutes included         evidence, the trial court applied the collateral source mle
rescission and out-of-pocket damages. The rescission                 and may have given the respondent a compensatory award
damages encompassed the consideration paid (with interest)           exceeding statutory limitations. See 225 Cal.App,3d at 1538,
less the amount of income received on the security. 478 U.S.         276 Cal.Rptr, 214. The court first held that the collateral



  WESTLAW           rOlG i hnfT.'jrn I touter;, No claim to crigmaS U S. Government Wo'-ks


   PLAINTIFFS'ORIGINAL PETITION - Page 056
Lee V. Lee, 47 S.W.3d 767 (2001)


source rule has never been extended to breach of contract and       that higher cost by the tax benefits to which the clinic was
it was within the trial court's discretion to deny the appellant    otherwise by law entitled. See id.
collateral source credit Sae id. at 1539, 276 Cal.Rptr. 21.4. In
addition to denying application of the collateral source rule,      In response to these cases, appellee cites to Geeslin v,
the court asserted three reasons for refusing to consider tax       McElhenney, m S,W,2d 683 (Tex.App,—Austin 1990, no
consequences as a mitigating factor in compensatory damage          writ), for the proposition that, in determining the amount
calculations in breach of contract cases. See id. at 1540,          of fee to which the executor is entitled, the trial court
276 Cal.Rptr. 214. First, the court found that the federal tax      should balance the value of the executor's services against
benefits rule would cancel out most windfalls to plaintiffs in      the harm done to the beneficiaries' interests. In Geeslin, the
that the government may recapture past tax benefits awarded         court found the trial court acted within its authority under
to a taxpayer if in a later year an event occurs which changes      section 241 of the Probate Code in reducing Geeslin's fee to
the basis of the premise upon which the deduction was               2.5% ofthe gross estate. See id. at 687.. Although the court
originally based. See id at 1540^1, 276 Cal.Rptr. 214.               stated the reduced amount could reasonably be viewed as
 Second, the court observed that estimating tax consequences         commensurate with the value of Geeslin's services balanced
 is speculative, time consuming, and conflising. See id. at          against the harm done to the interests of the beneficiaries,
 1541-42, 276 Cal.Rptr. 214. Finally, the court determined           Geeslin did not involve a tax benefit offset Accordingly, we
 that public policy was better served if the breaching party was     find Geeslin distinguishable.
 responsible for the full amount of compensatory damages.
 See id. at 1545, 276 Cal.Rptr. 214, The court felt so strongly     In the instant case, there was evidence of the deduction the
 about public policy that it stated it would reject appellant's     estate took for the fee, the interest accrued from the delay
 argument even i f there were no tax benefit rule. See id. The      in filing the return, the reduction in interest based on the
 court cited to the Supreme Court's holding in Randall, in          fee deduction, and the accounting fees incurred during the
 which the court had held it more appropriate to give the           years preceding final settlement of the estate tax debt. The
 defrauded party the benefit of a windfall, and stated that the     jury obviously considered this evidence and decided that,
 court likewise "favors parties who honor their promises, not       regardless of the deduction afforded the estate, $2,2 million
 those who breach them," See id at 1546, 276 CalRptr, 214.          of the total fee taken was excessive and unreasonable.


The Supreme Court of Montana reached a similar result                Based on our review of case law and the record, we find
in a suit by a partnership of doctors against an accounting          the trial court erred in deducting $1,5 million from the jury's
firm for failing to note the adverse impact the recommended          finding. First, no authority supports an offset for tax benefits.
reorganization and liquidation of a corporation would have           We are unpersuaded by appellee's argument that the trial
on the partnership's industrial revenue bond financing. See          court's offset should be upheld because the IRS can no longer
Billings Clinic v. Peat Marwick Main & Co., 244 Mont, 324,           assess additional estate taxes. Our concern is with the parties
797 P,2d 899 (1990), On appeal, the accounting firm claimed          before this court. Furthermore, we agree with the policy
it was entitled to an offset for the tax benefits the individual      discussed in Randall and DePalma. As the Supreme Court
doctors received by proceeding with reorganization. See 797           stated ".., it is more appropriate to give the defrauded party
P,2d at 912, The district court refused to allow evidence of          the benefit even of windfalls than to let the fraudulent party
 tax benefits. See id. at 913, The supreme court found no             keep them." 478 U.S, at 663, 106 S,Ct, 3143, Under the facts
 entitlement *780 to an offset for tax benefits because the           of this case, it is more appropriate for the estate to obtain the
 objective of compensatory damages is to restore the damaged          benefit of a windfall than to let appellee keep $1,5 million in
 party to the position the party would have attained had the          fees the jury found was unreasonable,
 tort or breach not occurred. See id. The court added that,
 had the accounting firm done its job, the clinic would have          [4] We next tum to appellee's argument that the Arce case
 had the benefit both of the tax benefits arising from the           supports the trial court's mling. The Texas Supreme Court
 reorganization, and the lower cost of the favorable tax-exempt      has recently affirmed, in part, this court's opinion in the u4rce
 status of industrial revenue bonds. See id. The failure of this     case, recognizing fee forfeiture as a remedy for breach of
 bond financing resulted in a higher interest cost for the loans     fiduciary duty in the lawyer-client relationship. See Burrow
  required for construction of an addition to the clinic. See id.    V, Arce, 997 S.W.2d 229 (Tex. 1999). Appellants argue that
 Thus, the court reasoned there would be no equity in reducing       Arce is inapplicable because it concems a remedy for breach



   WESTLAW         . 2'.M;. iiu... • • Keni::,: N    :l<ur!< tn O : '       •   Govcpin'^-I'l r / T


    PLAINTIFFS'ORIGINAL PETITION-Page 057                               .
Lee V, Lee, 47 S.W.Sd 767 (2001)


of fiduciary duties other than the duty not to take an excessive           challenge must fail. See General Motors v. Sanchez, 997
fee, but we do not read such a limitation in Arce. Instead,                S,W.2d 584, 588 (Tex, 1999), A scintilla of evidence exists
we find that Arce applies to any breach of fiduciary duty                  when the evidence offered to prove a vital fact is so weak
case where the plaintiff pleads the equitable remedy of fee                as to do no more than create a mere surmise or suspicion
forfeiture. See id. at 246. A review of the petition in this case,         of its existence. See Kindred v. Con/Chem, Inc., 650 S,W,2d
however, reveals no specific pleading of the remedy of fee                 61, 63 (Tex, 1983), In application, we should find there is
forfeiture. Instead, appellants sought actual damages in the               no evidence " i f reasonable minds cannot differ from the
form of excessive fees *781 taken by the executor. Neither                 conclusion that the evidence offered to support the existence
side mentioned forfeiture in the Uial court. Appellee did not              of a vital fact lacks probative force," Id. An appellate court
argue that the claim of excessive fees was one within the                  may not second-guess the jury unless only one inference may
trial court's discretion and did not cite any case law regarding           be drawn from the evidence. See Ross v. Green, 135 Tex, 103,
the equitable remedy of forfeiture either during the charge                 118, 139 S,W,2d 565, 572(1940),
conference or in his motion for judgment notwithstanding the
 verdict. During the charge conference, appellee did not object            Appellants offered expert testimony from James P, Bevans, a
 to the questions conceming the excessive fee arid damages. In             certified property manager for 25 years and former regional
his motion for judgment notwithstanding the verdict, appellee              manager of the Tmst Department at NationsBank, Bevans
 argued the evidence was legally insufficient to support the               testified that, to properly evaluate fees, he considered the
 finding or, alternatively, the estate did not suffer damages in           size of the estate, the diversity of assets, and the complexity
 the amount found by the jury.                                             of administration, including tax considerations, Bevans
                                                                           observed that, based on his experience with comparable
Even a liberal reading of the petition does not reveal a request           estates, an approximate fee of $300,000 would have been
for a partial or total forfeiture of the executor's fee. Appellants        reasonable. Afler reviewing the estate and appellee's actions,
clearly claimed that the taking of an uiueasonable fee was                 Bevans concluded appellee was not entitled to any fee. In
in itself a breach of fiduciary duty. Because there was no                  support of his opinion, Bevans offered the following: (1)
pleading for the equitable remedy of forfeiture, we hold that               appellee did not give the beneficiaries an accounting for 13
Arce does not apply to this case.                                           years; (2) appellee did not keep proper records; (3) 80-90% of
                                                                            the estate's assets were non-productive real estate and *782
 Having found in favor of appellants on their first issue, we               the farms and ranches were operated at a loss for 20 years; (4)
 turn to appellee's first cross-point, claiming that the evidence           appellee did not fransfer property to a tmst for 18-20 years;
 is legally and factually insufficient to support the jury's                (5) appellee took his fee while there was a huge IRS debt with
 finding of $2.2 million in unreasonable executor fees. In                  interest continuing to accme; and (6) appellee spent $750,000
 his argument, appellee considers the evidence relating to the              on experts regarding development of a Westheimer tract when
 factors articulated in Arce for use by the judge in determining            he had no experience in development. The record shows that,
 the amount of fee to be disgorged. Because we have found                    although his 'mother died in 1975, appellee did not fully fund
 Arce inapplicable to the facts of this case, we will not utilize            the Article IV tmst until 1984 and did not fund the Article V
 these factors, but will instead review the record for evidence              tmst until 1995. Bevans stated that the $2,8 million fee was
 supporting the jury's finding that $2.2 million of the fee taken            unbelievable and outrageous.
 by appellee was unreasonable,
                                                                 This testimony is some evidence supporting the jury's finding
  [5]    (61    [71    [81    [91 Because the burden of      pro<tiSat the fees taken were excessive. Accordingly, we find no
 was on appellants to show that the fee was unreasonable         merit to appellee's claim of legally insufficient evidence to
 and excessive, appellee must show either that no evidence       support this finding.
 supports the jury's finding, or that factually insufficient
 evidence supports the jury's finding. When a "no evidence"        [101     111] Appellee also claims the evidence is factually
 challenge is raised, an appellate coiut may only consider       insufficient  to support the jury's finding. In deciding factual
 the evidence and inferences supporting the jury's verdict,      sufficiency   questions, the appellate court considers all of the
 disregarding all contrary evidence, See Leitch v, Hornsby,      evidence. See Lofton v. Texas Brine Corp., 720 S,W,2d 804,
 935 S,W,2d 114, 118 (Tex,1996). I f there is more than a         805 (Tex, 1986). The court may set aside the finding only i f
 scintilla of evidence to support the finding, a no evidence



   WESTLAW                   1 horns.'sr. >-'Dulei« N o c l a i m to o n



     PLAINTIFFS'-ORIGINAL PETITION - Page 058
Lee V. Lee, 47 S.W.3d 767 (2001)


the evidence is so weak as to be clearly wrong and manifestly        evidence of improper and unacceptable actions by appellee as
unjusL See Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986).             executor. We overrule cross-point one.

 In addition to considering the testimony of Bevans, we
 must also consider the evidence presented by appellee.
                                                                       Failure to Sell Westheimer and Pasadena Properties
Appellee testified that, in taking his fee, he considered
 the will language, , which allows him to take a just and             [12] Appellants next challenge the trial court's decision
 reasonable fee, and he considered an unidentified insurance         to disregard the jury findings that appellee breached his
publication showing fees for similar estates in Texas and other      fiduciary duties by failing to sell the Westheimer and
jurisdictions. Appellee testified it was his decision to take a      Pasadena properties. By cross-point, appellee claims the
range of fees, rather than a percentage of the value of the          evidence is legally and factually insufficient to support the
 estate. Appellee took his fee in a series of payments from          jury's findings in questions l(a)-(b) and 3.
 1981-83 ranging in amounts from $5,000-375,000. Appellee
 conceded he did not prepare a written analysis of how he            Question 1 (a) asked the jury whether appellee breached his
 determined his fee and he kept no time records of his efforts.      fiduciary duty by failing to sell the Westheimer property.
Appellee also agreed thai he did not consult an attomey or           Question 1 (b) asked whether appellee breached his fiduciary
conduct legal research about customary fees. Although he             duty by failing to sell the Pasadena property. Question 3 asked
 took the fee in the early 1980s, appellee testified that he knew    the jury the date appellee reasonably should have sold the
 the estate administration would continue for a long time.           properties, the dollar amount of proceeds that would have
                                                                     been received from such a sale, and the dollar amount of
Appellee also produced several witnesses that testified about        proceeds that would be received if the property were sold
the tax and interest savings the estate realized as a result         today. In response to questions 1(a) and (b), the jury found
of appellee's taking the $2.8 million fee. Gregory Edward            that appellee breached his fiduciary duty' by failing to sell the
Bardnell, a CPA, testified that approximately $2 million of the      two properties. In response to quesfion 3, the jury found the
fee was deductible, meaning that the estate effectively paid         Westheimer property should have been sold in May 1981, the
only $850,000 of appellee's fee. Bardnell also testified that,       proceeds from such a sale would have been $42 million, and
had appellee merely paid the estate taxes and not paid himself       the proceeds if sold today would be $24.5 million. As to the
a fee, the estate would have saved only $85,000 in interest on       Pasadena property, the jury found the property should have
the IRS debt. Bardnell had no opinion of the reasonableness          sold in July 1978, the proceeds from such a sale would have
of appellee's fee.                                                   been $1.6 million, and the proceeds, if sold today, would be
                                                                     $2,485,500.
Milton L. Schultz, an accountant who performed work for
the estate, testified that deducting the executor fee and other      In his motion for judgment notwithstanding the verdict,
administration expenses was his idea, Schultz added that he          appellee argued that there was no evidence to support the
believed the fee was reasonable in light of the size of the estate   jury's findings in response to questions 1(a), 1(b), and 3. The
and the difficulties of administration, including the lack of        trial court agreed with appellee's legal insufficiency argument
liquidity. Schultz characterized appellee's administration and       and disregarded the answers to jury question l(a)-(b) and 3.
ability to pay the taxes and preserve the bulk of the estate as
"nothing short of genius."                                            [13] Appellants first assert that appellee invited or waived
                                                                     error because appellee requested question 3, but we find
We find that the evidence supporting the jury's finding is           nothing in the record indicafing that appellee requested this
not so weak that the finding is clearly wrong and manifestly         question. Appellants next argue waiver because appellee's
unjust Based on the evidence presented by Bevans, thejiiry           attomeys objected to the damages measure sought by
could have determined that appellee was entitled to no fee.          appellants. Appellants sought a measure of damages that
Instead, the jury determined that appellee was entitled to           included potential profits had Appellee timely sold the
approximately $600,000, which is approximately 5% of the             properties and invested the sale proceeds in a diversified
estate value at the time of Katherine Bamhart's *783 death.          portfolio of stocks and bonds. Appellee disagreed with this
We refiise to second-guess the jury when there is ample              measure, and argued the proper measure was sales proceeds
                                                                     plus interest.



  WeSTLAVV


    PLAINTIFFS' ORIGINAL PETITION - Page 059
Lee V. Lee, 47 S.W.3d 757 (2001)


                                                                   593(Tex.l986). In reviewing the grant of a motion for
Appellee's disagreement with appellants' measure of damages        judgment notwithstanding the verdict, the reviewing court
did not invite or waive the error complained of here. Appellee     must review all testimony in a light most favorable to the
offered the testimony of Professor Johanson, who rejected           finding, considering only the evidence and inferences that
appellants' proposed measure as improper and testified that         support the finding and rejecting the evidence and inferences
the proper measure was sale proceeds plus interest. Appellee        contrary to the finding. See Navarette v. Temple Indep. Sch.
was not advocating sale proceeds as the proper measure              Dist. 706 S.W.2d 308, 309 (Tex.1986). I f there is more
of damages, but was countering appellants' proposal for             than a scintilla of competent evidence to support the jury's
damages to include lost profits. We do not find appellee's          finding, then the judgment notwithstanding the verdict will be
objection and offer of testimony to constitute invited error.       reversed. See Mancorp v. Culpepper, 802 S.W.2d 226, 228
                                                                    (Tex. 1990).
 [14] Appellants also argue that appellee invited or waived
error by statements made during jury deliberations. The jury       Appellee claims questions 1 and 3 did not, as appellants
sent a question to the trial judge regarding thepart of question   suggest, ask whether he breached a duty to diversify assets,
3 asking the date appellee should have sold the Westheimer         transform nonproductive assets into productive assets, and
and the Pasadena properties. The jury asked whether "date"         generate income, but instead, asked the jury whether appellee
referred to year, or month and year. The trial judge told the      breached a duty to accept two specific offers. Appellee asserts
parties he replied "month and year," and asked the attomeys        there is no evidence supporting a finding that he had a duty to
if they had any objections to this reply. Appellee's attomeys      acceptaMay 1981 offer to purchase the Westheimer property
objected and asked that the reply inform *784 the jury             or a July 1978 offer to purchase the Pasadena property.
that they must give the day, month, and year. Rather than          Appellee fiuther argues there is no evidence that any sales
objecting to "month and year," appellants' attomeys stated:        pursuant to these two offers would have yielded the proceeds
"We can take it from the end of the month if that's going to        found by the jury.
be their problem. 1 think that's narrowing in too specifically."
The court decided to let the jury answer month and year.            Although the evidence reveals a number of unaccepted offers
                                                                    for the Pasadena and Westheimer properties, the jury's finding
The statement of appellants' counsel during this discussion         of breach in May 1981 for the Westheimer property relates
 indicates they acquiesced in the "month and year" reply.           to a May 1981 offer by a Mr. Carothers. The date found by
 Furthermore, this discussion does not show that appellee's         the jury of July 1978 for the Pasadena property relates to
 counsel requested "month and year." Rather, this was the           the July 1978 offer for the Pasadena property made by U.S.
 suggestion of the trial judge. We do not find that appellee's      Homes. By failing to object to the jury question requesting the
 counsel invited error by asking for more specificity than the      month and year appellee should have sold the two properties,
•judge.                                                             appellants acquiesced in the jury finding a date that related to
                                                                    specific offers.
 [15] Likewise, appellee did not waive error by failing to
object to question 3 on the ground of insufficient evidence.    The evidence showed the Westheimer property did not have
A party may challenge legal sufficiency for the first time      high-density sewer capacity and appellee testified that he
after the verdict regardless of whether the submission of       delayed the sale of this property because he knew it would
the question was requested by the complainant. See TEX.R.       be worth more i f it had sewer capacity In May 1981, Mr.
CIV. P. 279. By asserting in its motion for judgment            Carothers offered to purchase part of the Westheimerproperty
notwithstanding the verdict that the evidence supporting the    for more than $40 million. *785 Appellee did not respond
jury's findings was legally insufficient, appellee preserved    to this offer because he believed it was a poor proposal in
this complaint for appellate review. See id.                    that it required high-density sewer capacity and it included no
                                                                payment for the portion of the property that was in the flood
  J16]     (17]     [18] Having found no waiver or invited plain. Appellee conceded that he did not attempt to negotiate
 error, we tum to appellants' challenge to the disregarding     eitheroffer. Neither Carothers nor his principal, Loh, testified
 of the jury answers. A trial court may disregard a jury's      whether they would have accepted a modified arrangement
 finding if there is no evidence to support the jury's finding. regarding the Westheimer property.
 See Aim v. Aluminum Co. of America. Ill S.W.2d 588,



   weSTlA'KV © 2016 1 norrison Routers. No claim to ongmal U.S. Government Works.


     PLAINTIFFS' ORIGINAL PETITION - Page 060
Lee V. Lee, 4-7 S.W.3d 767 (2001)


The evidence further showed that, in Juiy 1978, U.S. Homes          Probate Code as mandatory because the language in these two
offered $1.5 million for the Pasadena property, and later           statutes is similar. Section 149C of the Probate Code states
raised that offer to $1.64 million. Appellee testified he           that a trial court may remove an independent executor on the
rejected this offer because it was not a cash offer. No             following grounds:
representative from U.S. Homes testified. Therefore, there
is no evidence that, had appellee negotiated, U.S. Homes                (1) the independent executor fails to return within ninety
would have accepted a modified arrangement regarding the                days afler qualification, unless such time is extended by
Pasadena property. Appellants' expert, Lucian Morrison,                 order of the court, an inventory of the property of the .
testified that appellee should have responded to the offers and         estate and list of claims that have come to his knowledge;
negotiated for different terms than those in the original offers.
                                                                        (2) sufficient grounds appear to support belief that he
Morrison did not state that appellee should have accepted the
                                                                        has misapplied or embezzled, or that he is about to
original offers from U.S. Homes or Carothers.
                                                                        misapply *786 or embezzle, all or any part of the
                                                                        property committed to his care;
 [19] Texas courts have long held that unaccepted offers
to purchase property are no evidence of market value of                  (3) he fails to make an accounting which is required by
property. See Hanks v. Gvlf, Colorado & Santa Fe Ry. Co.,                law to be made;
159 Tex. 311, 320 S.W.2d 333, 336-37 (1959); Southwestern
Bell Tel. Co. v. Wilson, 768 S.W.2d 755, 762 (Tex.App.-                  (4) he fails to timely file the notice required by Section
Corpus Christi 1988, writ denied). The courts have found this            128 A of this code;
evidence uncertain and speculative. See Hanks, 320 S.W.2d
at 337. Evidence of an unaccepted offer does not establish the           (5) he is proved to have been guilty of gross misconduct
good faith of the person making the offer. See id:                       or gross mismanagement in the performance of his
                                                                         duties; or
If unaccepted offers are too uncertain to serve as proof of the
                                                                         (6) he becomes an incapacitated person, or is sentenced
market value of a parcel of property, they are likewise too
                                                                         to the penitentiary, or from any other cause becomes
uncertain to serve as proof of the dollar amount of proceeds
                                                                         legally incapacitated from property performing his
appellee would have obtained if hehad sold the two properties
                                                                         fiduciary duties.
on the dates found by the jury. Because the jury was advised
to find a month and year when the properties should have            TEX. PROB.CODE ANN. § 149C (Vemon Supp2000).
been sold, the jury necessarily focused on the dates of specific
offers and unaccepted offers are no evidence of the dollar          Section 113.082 of the Property Code govems removal of a
amount of proceeds appellee would have received hadhe sold          tmstee. This section states a court may remove a tmstee and
the properties, Accordingly, we find no error by the trial court    deny part or all of the tmstee's compensation if;
in disregarding thejury's answers to questions 1(a), 1 (b), 3(a),
and 3(b). Having found no error in the trial court's actions, we         (1) the tmstee materially violated or attempted to violate
need not reach appellee's cross-poinL                                    the terms of the tmst and the violation or attempted
                                                                         violation results in a material financial loss to the tmst;

                                                                         (2) the tmstee becomes incompetent or insolvent; or
      Removal of Appellee as Executor and Trustee
                                                                         (3) in the discretion ofthe court, for other cause.
 [20] Appellants next challenge the trial court's refusal to
remove appellee as executor and trustee. Appellants also            TEX. PROP.CODE ANN. § 113.082(a) (Vemon 1995).
complain of the trial court's refusal to submit requested
questions relating to removal.                                      In reviewing a trial court's removal of a tmstee under a
                                                                    prior version of section 113.082, the supreme court held that
Appellants initially raise an issue of statutory construction.      removal was not discretionary with the trial court, despite the
Appellants contend that, because the supreme court has              use ofthe word"may."5'eey4fe«v. Da/)/, 661 S.W.2d9l 1,913
construed section 113.082 of the Trust Code as mandatory            (Tex. 1983). Because the supreme court has found removal
in nature, we should likewise construe section 149C of the           mandatory under section 113.082, ^ appellants argue removal



  WESTLAW © 201G ! hoo'i&.-in Houtors- No ciuirn lo onn:na! U S Govcrninent Works.


   PLAINTIFFS' ORIGINAL PETITION - Page 061
Lee V. Lee, 47 S.W.Sd 767 (2001)



should also be mandatory under section 149C. Absent any              higher and additional duties, some of which might not even
clear directive from the supreme court, however, we decline          exist absent the fiduciary relationship.
appellants' invitation to construe the clear language of section
149C to find that removal of an executor is mandatory.             Id. at 684-85, The court concluded that gross misconduct or
                                                                   mismanagement, at a minimum, includes: "(1) any willful
                                                                   omission to perform a legal duty; (2) any intentional
1. Removal as Executor                                             commission of a wrongfiil act; and (3) any breach of a
 [21]     Appellants contend the trial court's decision not        fiduciary duty that results in actual harm to a beneficiary's
to remove appellee as executor constituted an abuse of             interest." Id. at 685 (emphasis omitted).
discretion because the evidence shows appellee did not timely
file an inventory, misapplied property committed to his care,      In determining whether the trial coirrt abused its discretion,
failed to timely file a proper accounting, and was found to        the Geeslin court held there were seven legally relevant
have breached his fiduciary duty in numerous-respects. A           factors to cons ider:
trial court abuses its discretion if its decision is arbitrary,
unreasonable, and without reference to any guiding rules and            (1) the higher quality of ethical and moral conduct
principles. See Goode v. Shoukfeh. 943 S.W.2d 441, 446                  implicit in Geeslin's fiduciary status;
(Tex. 1997).
                                                                        (2) the degree of harm sustained by the beneficiaries'
                                                                        interest, owing to Geeslin's conduct;
Gross misconduct or gross mismanagement is a ground for
removal of an executor. See TEX. PROB.CODE ANN. §                       (3) the public policy in favor of independent
149C (Vemon Supp.2000). In Geeslin v. McElhenney. 788                   administration, due to the salutary purposes served by
S.W.2d 683 (Tex.App,—Austin 1990, no writ), the court                   that method of administration;
reasoned that the statutory terms "gross mismanagemenf and
"gross misconduct" do not encompass ordinary negligence.                (4) the sufficiency of a bond to protect the beneficiaries'
Nonetheless, the court recognized that an executor owes the             interest i f a bond is given under section 149 of the
duties of a trustee:                                                    Probate Code;

     He holds property interests, not his own, for the benefit          (5) the complexity of the estate;
     of others. He manages those interests under an equitable
     obligation to act for the others' benefit and not his              (6) whether Geeslin's acts and omissions resulted from
     own. He is a "fiduciary" of whom the law requires                  professional advice, or whether they occurred in the face
     an unusually high standard of ethical or moral conduct             of such advice; and
     in reference to the beneficiaries and their interests.
                                                                         (7) the distinction between willful conduct and
     His "duties" are more than the ordinary "duties" of
                                                                         inadvertent acts and omissions generally.
     the marketplace. They connote fair dealing, good faith,
     fidelity, and integrity. He may have additional *787          Id. In applying these factors, the Geeslin court upheld the
     duties that he would not have in an ordinary business         trial court's removal ofthe executor because (1) Geeslin knew
     relation—a duty of full disclosure, for example, and a        about an additional estate tax liability, and did not act to
     duty not to use the fiduciary relationship for personal       limit the interest and penalty, but paid himself commissions
     benefit except with the full knowledge and consent of         and paid other estate obligations; and (2) Geeslin used estate
     the beneficiaries, "It is against public policy to allow      fiinds to pay pension-plan liabilities and used estate fiinds to
     persons occupying fiduciary relations to be placed in         make terminating distributions to pension-plan participants.
     positions in which there will be constant danger of a         Id. at 686-87. The court noted that Geeslin commingled
     betrayal of tmst by the vigorous operation of selfish         funds despite warnings from his attomey and accountant that
     motives,"                                                     commingling might be prohibited. See id. at 687,

   Thus, the statutory criteria ("gross misrhanagement" and
                                                                    Appellee claims appellants misread Geeslin and that it does
   "gross misconduct") are necessarily elastic. They must be
                                                                    not hold the trial court may remove an executor for breach
   sufficiently narrow to exclude ordinary negligence, yet
                                                                    of a fiduciary duty that results in actual harm. Indeed,
   sufficiently broad to include a fiduciary's breach of his
                                                                    appellee argues that, because Geeslin does not so hold, the


  WESTLAW (tV 2016.niofnsur. Routers No olaim tn otiginnl U S Govornment Woiks.


   PLAFNTIFFS'ORIGINAL PETITION - Page 062
Lee V. Lee, 47 S,W-3d 767 (2001)


trial court properly denied appellants' requested questions.        as appellee strongly argues, preclude removal, but we may
Appellee reasons that if a breach of duty resulting in harm         consider it in reviewing the trial court's mling.
were sufficient to support removal, any minor breach could
constitute gross misconduct. We disagree with appellee's            The evidence showed, and appellee admits, he did not file
reasoning. Although Geeslin does state that a breach of             an accounting in a timely manner. The jury found breaches
fiduciary duty resulting in actual harm to a beneficiary's          of fiduciary duty by appellee in the failure to sell the
 interest may be sufficient to constitute gross misconduct, this    Westheimerproperty, failure to sell the Pasadena property, in
holding is tempered by the application of seven factors for the     the mismanagement of the River Bend Farm and Cap Rock
 court to consider in determining whether a breach of fiduciary     Ranch, and in the expenditure of estate fimds on the attempted
 duty resulting in harm should result in removal. See id. at 685.   Knollwood development. Because we have upheld the trial
 We believe appellee's fears *788 about removal for minor           court's decision to disregard the jury's findings relating to
 infractions are unfounded. Consideration of the seven factors      the Westheimer and Pasadena properties, the court could not
 would, in our opinion, allow a trial court to determine whether    consider these breaches of duty in considering whether to
 the breach of fiduciary duty is of sufficient magnitude to merit   remove appellee as executor. As to the findings regarding
 removal of the executor.                                           River Bend Farm and Cap Rock Ranch, the jury only found
                                                                     damages to the estate of SI ,00 for each. As to the expenditure
We also disagree with appellee's statement that the trial            of estate fiinds with respect to Knollwood, the jury found
court denied appellants' requested question 11 because               damages of $840,000. The jury also found unreasonable fees
he disagreed with appellants' interpretation of Geeslin.             of $2.2 million.
Appellants submitted the following question; "Did Ronald
Lee grossly mismanage any part of the property committed to          Because there were findings of breaches of fiduciary duty
his care as executor?" In refusing to submit these questions,        and substantial actual damages, we must determine whether,
the trial judge stated;                                              in light of the seven Geeslin factors, the trial court abused
                                                                     its discretion in refusing to remove appellee as executor. We
                THE COURT: The instructions and                      begin with the overall consideration that appellee's position
                questions submitted as Plaintiffs A                  as executor, being fiduciary in nature, requires that we
                through F are denied. I will say                     hold appellee to a higher ethical and moral standard. This
                on the record what I have said off                   consideration must be tempered, however, by consideration
                the record, and that is that there's                 of the public policy in favor of independent administration
                a finding of either gross negligence                  and the undisputed complexity of this estate. Of equal
                or a breach of fiduciary duty and                     importance, are the substantial damages to the beneficiaries'
                damage. I would find that under                       interest. The damages for excessive fees and for the failed
                the Probate Code to be grounds for                    Knollwood development total more than $3 million. Appellee
                removing the tmstee, anyway. And                    , did not consult professionals with respect to the amount
                so I don't think those questions,                     of fees he took, but he did consult some professionals
                those particular ones, are necessary.                 conceming the Knollwood development Indeed, many of
                                                                      the expenses involved with Knollwood are those *789 of
 When denying appellants' requested question, the trial judge         professionals appellee consulted. Finally, we must consider
 stated the question was unnecessary because the removal              whether appellee's actions were willful or inadvertent. The
 question could be answered from the jury's responses                 jury did not find that appellee's actions constituted gross
 to questions regarding breach of fiduciary duty or gross              negligence. Nonetheless, the evidence does not indicate
 negligence. The trial judge's statement is consistent with our        that appellee's taking of an excessive fee or his excessive
 interpretation of Geeslin.                                            expenditures on the Knollwood development were merely
                                                                       inadvertent acts,
 Based on Geeslin, the trial court could have considered the
 jury's findings regarding breaches of fiduciary duty in making        [22]     [23) Although the trial judge is given discretion by
 his decision regarding removal, either as executor or as             statute to determine whether an executor's actions rise to the
 tmstee. The jury's failure to find gross negligence does not.        level of gross misconduct, this discretion is not unlimited.
                                                                      An abuse of discretion occurs when the trial court makes



   WESTLA'^iV        201G fhojTison Routers. No claim to oriqinal U.S. GSovornmenl Works,


    PLAINTIFFS' ORIGINAL PETITION - Paee 063
Lee V. Lee, 47 S.W,3cj 767 (2001)



a legally unreasonable determination given the facUial-legal           denied). *790 An instmction is proper if it assists the jirry,
context in which it was made. See London v. Jean-Paul                  is supported by the pleadings or evidence, and accurately
Budinger, Inc., 724 S.W.2d 931, 939 (Tex.App.—Austin                   states the law. See Perez v. Weingarten Realty, Investors,
1987, no writ). In other words, the trial court's determination        88! S.W,2d 490, 496 (Tex,App,—San Antonio 1994, writ
is legally unreasonable if the court failed to consider a fact         denied). Whether terms are properly defined or the instmction
shown in the evidence that was legally relevant. See id. at            property worded is a question of law reviewable de novo. See
939--10.                                                               M.N. Dannenbaum, Inc. v, Brummerhop, 840 S,W,2d 624,
                                                                       631 (Tex,App.—Houston [14th Dist] 1992, writ denied).
In this case, we cannot say that the trial court necessarily           Error is reversible only if, when viewed in light of the totality
failed to consider any of the Geeslin factors. While we may            of the circumstances, the refusal to submit a question or
not have reached the conclusion the trial court made in light           instmction probably caused the rendition of an improper
of the factors, this is not the standard. Having considered            judgment See St. James Transp. Co. v. Porter, 840 S,W.2d
the statute, the Geeslin factors, and the evidence, we cannot           658, 664 (Tex.App.-Houston [1st Dist,] 1992, writ denied);
say the trial court abused its discretion in rellising to remove       TEX,R.APP. P. 44.1(a)(1),
appellee as executor.
                                                                         [29] [301 Because appellants pled for removal of appellee
                                                                        as tmstee under section 113,082, and presented evidence
2. Removal as Trustee                                                   of actions the jury found to be breaches of fiduciary duty,
Grounds for removal of a trustee under section 113.082                  we hold that the issue of removal under the statute was a
include a material violation or an attempt to violate the               valid theory raised by the pleadings and evidence. Although
terms of the trust that results in a material financial loss            appellants requested a question regarding a statutory ground
to the trust 5ee TEX. PROP.CODE ANN. § 113,082(a)(l)                    for removal, appellee claims appellants "are not tme to the
(Vemon 1995). Appellants requested a question (question                 record when they tell this Court that they asked the trial court
 13) very similar to the language of the statute: "Did Ronald           to submit a question to the jury in language substantially
Lee grossly mismanage or materially violate the terms of                identical to the specific statutory ground for removal of
the Article IV Tmst resulting in a material financial loss              tmstee under § 113,082,,,." Appellee argues that requested
to that tmst?" The trial judge refiised to submit appellants'           question 13 would have negated the statutory requirement of
requested quesfion because the judge believed he could make             a material violation giving rise to a material financial loss
the determination of mismanagement or material violations               by permitting the jury to answer "yes" if it found any breach
from the submitted questions regarding breaches of fiduciary            of fiduciary duty resulting in harm or a material violation
duty and gross negligence. ^ Appellants claim the refirsal to            resulting in material harm. We disagree.
submit requested question 13 was reversible error.
                                                              Requested question 13 asked the jury to determine whether
 [24]    [25]   [261    [271   PSl Rule 278 provides that   thq)pellee  grossly mismanaged or materially violated the terms
court must submit questions raised by the written pleadings   of the Article IV Tmst resulting in a material financial loss
and evidence. See TEX.R. CIV. P. 278. See also Elbaor         to that tmst The instmction to that question stated: "You are
V. Smith, 845 S.W.2d 240, 243 (Tex.1992) (interprefing        instmcted that 'gross mismanagement' means any breach of
Rule 278 as a nondiscretionary directive). The decision       a fiduciary duty that results in actual harm to a beneficiary's
whether to submit a particular instmction or definition is    interest." Rather than appellee's more tortured constmction of
reviewed for an abuse of discretion. See State Farm Lloyds    this question, we read this question to allow the jury to answer
V. Nicolau, 951 S,W.2d 444, 451 (Tex.1997). To deteranine     "yes" i f the jury found a material financial loss suffered by
whether an alleged error in the charge is reversible, the     the trast as a result of either; (1) a breach of fiduciary duty
reviewing court must consider the pleadings, the evidence,     that resulted in actual harm; or (2) a material violation of
and the charge in its entirety. See Island Recreational        the Article IV Trast, In other words, we believe the question
Dev. Corp. v. Republic of Tex. Sav. Ass'n, 710 S.W.2d          presents "gross mismanagemenf and "material violation of
551, 555 (Tex.1986). As to instmctions and definitions,        the Article IV Trasf as the two types of actions by a trastee
the essential question is whether the instmction aids the      that could result in a material financial loss to the trast.
jury in answering the questions, See Harris v. Harris, 765     Therefore, this question substantially tracks the language of
 S.W.2d798, 801 (Tex.App.—Houston [14th Dist] 1989, writ       section 1 13,082.



   YvfS-lLAVV     r ' - i u i ; : rb!%n.;-.n Hci.ile">   ciaun l o Oitj-^'oi U   Govoi'on'icnt Wo;K:;i


     PLAINTIFFS' ORIGINAL PETITION - Page 064
Lee V. Lee, 47 S.W.3d 767 (2001)



                                                                      In Akin, the trial court had removed the trastee piusuant to
In reviewing appellee's brief, we note that some of appellee's       jury findings that the trastee had developed such hostility
defensive arguments tend to support appellants' claim that the       toward certain beneficiaries that his decisions as trastee in
trial court should have submitted the requested question 13.         administering the tmst funds would probably be influenced
Appellee argues in his brief that "whether a breach of duty is a     adversely to those beneficiaries' interests, 661 S.W,2d at
'material violation' and whether afinancialloss is 'material'        912, There was also a finding that the tmstee had acted
are necessarily fact questions,,.." Appellee continues, "the         improperly with b^st fimds. See id. at 913. The court of
finding that expenditures on BCnollwood were $840,000 too            appeals reversed, holding that removal was not warranted.
much cannot substitute for the missing fact finding that those       See id. at 912. In the supreme court, a beneficiary argued
expenditures constituted a material violation resulting in a          that former section 39 of the Texas Tmst Act (now section
material loss," As to the executor's fee, appellee observed that      113.082)^ allowed removal of a tmstee to be discretionary
fact issues as to materiality of the breach and the loss are not     and that the appropriate standard of review was the "arbitrary
conclusively established. As to the late filing ofthe inventory      and unreasonable" standard. See id.
or the delay in providing an accounting, appellee reasons that,
even if these items were undisputed, they "cannot substitute
                                                                  Although the former statute provided (and the current statute
for the missing fact finding that any such breaches constituted
                                                                  continues to provide) that a tmstee may be removed for
a material violation causing any material loss,"
                                                                  a ground _ specified in the statute (material violation of
                                                                  tmst resulting in material financial loss, incompetence, or
  *791 [31)       [32] Nonetheless, we believe the trial judge's insolvency) or "for other cause, in the discretion of the
reasoning was correct when he stated he could determine           court having jurisdiction," the Akin court found that this
 removal from jury answers regarding breach of fiduciary
                                                                   statute "does not make removal of a trustee a discretionary
 duty or gross negligence. We agree with the trial court that
                                                                  act on the part of the trial court and hence subject upon
breaches of fiduciary duty can constitute material violations
                                                                  review to the 'arbitrary and unreasonable* standard," See id.
 of the trust. Furthermore, we believe that jury awards of
                                                                  The court observed that the portion of the statute allowing
 damages for breaches of fiduciary duty can constitute a
                                                                  removal for other causes "in the discretion ofthe court having
material financial loss to the trust. Accordingly, we find no
                                                                  jurisdiction," was meant to insure that the grounds of removal
error by the trial court in refusing to submit requested question
                                                                  were not expressly limited to those enumerated, but may
 13,
                                                                   include others that the trial court, in its discretion, deems
                                                                  proper. See id.
Even without submission of requested question 13, there are
jury findings of breach of duty that the trial court should have
                                                                  Because no issue was submitted to the jury regarding
found to be material violations of the trast. These include the
                                                                   improper conduct or mismanagement by the tmstee, and such
jury's finding of breach of fiduciary duty with respect to the
                                                                   conduct was not established as a matter of law, the Akin court
expenditures on the Knollwood development and the taking
                                                                   found that removal for mismanagement of tmst funds was not
of an excessive fee. There are also juryfindingsof substantial
                                                                    *792 warranted. See id. As for the jiuy findings regarding
damages, including $840,000 for Knollwood expenditures,
                                                                   trastee hostility, the court first noted that ill will or hostility,
and $2,2 million in excessive fees, that constitute, as a matter
                                                                   standing alone, was an insufficient ground for removal. See
of law, material financial losses to the trast.
                                                                   id. The court then stated:

Appellants argue that removal is mandatory if there is a                             Article 7425b-39 [now section
material violation resulting in a material financial loss to                         113.082] of the Texas Tmst
the trast. Indeed, the supreme court appears to hold that                            Act sets out circumstances which
removal is not discretionary. See Akin v, Dahl, 661 S,W,2d                           warrant the removal of a trastee
911, 913 (Tex,1983). Appellee rejects this interpretation of                         from office. Should the trier of
Akin and claims XhsXAkin merely notes, in dicta, that removal                        fact affirmatively find that one
is mandatory for an enumerated statutory ground. We are                              of the enumerated circumstances
unpersuaded that we may ignore the court's holding as merely                         has occurred, the tmstee will be
dicta.                                                                               removed. Additionally, should the
                                                                                     trier o f fact find that hostility, ill



 VVgSTLA'W
                                                                             vQverru^     nt WO;-


  PLAINTIFFS' ORIGFNAL PETITION - Page 065
Lee V. Lee, 47 S,W.3d 767 (2001)



               w i l l , or other factors have affected
                the trustee so that he cannot properly
                                                                                       Bad Faith Defense
                serve in his capacity, the trustee w///
                be removed.                                         [34] Appellants next claim the trial court erred in not
                                                                   requiring appellee to bear his own attomey's fees and costs
See id. at 914 (emphasis added). We understand this passage
                                                                   because the jury found appellee defended the lawsuit in
to mean that a trustee will be removed if the trier of fact
                                                                   bad faith. Section 149C permits an independent executor to
finds the evidence shows the trustee has committed one of the
                                                                   recover necessary expenses, including attomey's fees, if he
enumerated acts or one of the acts, not enumerated, but which
                                                                   or she defends an action for removal in good faith. TEX.
the trial court, in its discretion, deemed a proper ground for
                                                                   PROB.CODE ANN. § 149C (Vemon 1980). In granting
removal.
                                                                   appellee's motion for judgment notwithstanding the verdict,
                                                                   the trial court disregarded the answer to question 8, finding
Although the jury in Akin had found the tmstee's hostility
                                                                   that appellee defended the suit in bad faith. In a cross-point,
"probably" would affect his performance, the supreme court
                                                                   appellee claims there was legally and factually insufficient
held this finding was insufficient to support removal. See
                                                                    *793 evidence to support thejury's finding that he defended
id. Instead, the court held that there had to be a finding
                                                                   this lawsuit in bad faith.
that the tmstee's hosdlity does or will affect his performance
as a tmstee. See id. Accordingly, the court's discussion of
                                                                   Appellee argues that even i f there is a finding of bad faith
removal for an enumerated ground could be constmed to be
                                                                   defense, an executor is entitled to attomey's fees where
dicta. Nonetheless, the court also states that a tmstee "will be
                                                                   he prevails against attempted removal. In support of this
removed" for hostility, a ground not enumerated, but found
                                                                   argument appellee cites Miller v. Anderson, 651 S.W,2d
by the trial court in its discretion to be a proper ground for
                                                                   726 (Tex, 1983), In Miller, the court was constming secdon
removal. See id.
                                                                   243 of the Probate Code, which allows an executor to
                                                                   recover firom the estate his necessary expenses, including
By saying "will be removed," rather than "may be
                                                                   reasonable attomey's fees, when the executor defends the
removed," the court constmes the statute to be mandatory
                                                                   will in good faith, and "with just cause, for the purpose
and not discretionary. Although the court's statement was
                                                                   of having the will or alleged will admitted to probate,
unnecessary to the holding, we constme this statement to be
                                                                   whether successfiil or not,..," TEX, PROB,CODE ANN, §
judicial dictum deliberately made for guidance of the bench
                                                                   243 (Vemon Supp,2000), The supreme court upheld the
and bar and, therefore, binding on lower courts. See Ex parte
                                                                   trial court's award of attomey's fees to the executor even
Harrison, 741 S,W,2d 607, 609 (Tex,App,—Austin 1987,
                                                                   though there was no affirmative finding of good faith. See
orig, proceeding). Although we disagree with t h e c o u r t ' s
                                                                   651 S.W.2d at 728, The court observed that in prior cases,
constmction because the plain language of the statute is
                                                                   where the wills were denied probate, a showing of good
 discretionary in nature, we are constrained to follow supreme
                                                                   faith and just cause was necessary to show a benefit to the
 court precedent.
                                                                   estate compensable under section 243, See id. (citing Russell
                                                                   V, Moeling, 526 S.W.,2d 533 (Tex. 1975) and Huff v. Huff,
 [33] Appellants also argue appellee has a conflict of interest
                                                                    132 Tex. 540,124 S.W.2d327 (Tex. 1939)). The Miller comt
that requires his removal. The alleged conflict arises from
                                                                   found that a benefit to the estate was proven when the will
appellee's opposition to appellants' motion for judgment and
his attempt to reduce the tmst's judgment. Such a conflict         was admitted to probate. ^ 651 S.W.2d at 728.
could arise anytime a beneficiary brought suit for damages
against a tmstee. Therefore, we decline to find a conflict of      Secfion 243 is phrased similarly to secfion 149C, which
interest under these circumstances. Because we find that the       provides that an executor "who defends an action for his
breaches of duty found by the jury and the total of $3 million     removal in good faith, whether successful or not, shall
in damages consfitute a material violation of the tmst resulting   be allowed out of the estate his necessary expenses and
in a material financial loss, we hold the trial court had a        disbursements, including reasonable attomey's fees,..." TEX.
mandatory duty to remove appellee as trastee. Accordingly,         PROB.CODE ANN, § 149C(c) (Vemon 1980), Although the
the trial court erred in reflising to remove appellee as tmstee.   language of the two statutes is somewhat similar, we are
                                                                   unconvinced that the holding in Miller applies to the facts of
                                                                   this case. In Miller, there was no finding of good faith and the



                                                                                 iTimcnl Works
Lee V, Lee, 47 S.W.Sd 767 (2001)



supreme court held that the lack of this finding did not prevent   of the executor fee taken, the estate's need for cash at
recovery of attomey's fees. 651 S.W.2d at 728. ffolding            the time appellee took the fee, the failure to provide a
that a finding of good faith is unnecessary under certain          proper accounting, the use of estate fiinds to pay personal
circumstances does not inescapably lead to the conclusion          expenses, and the failure to transfer the estate's assets to its
that an affirmative finding of bad faith should be ignored. We     beneficiary until 19 years after his mother's death. Although
cannot say that, based on its holding in Miller, the supreme       this testimony supports liability as to breach of fiduciary
court would disregard an affirmative jury finding of bad faith.    duty, it does not necessarily support a finding that appellee
Although appellee was successfial in avoiding removal as an        defended this lawsuit in bad faith. Rather, to support thejury's
executor, removal was a discretionary determination made           finding, there must be some evidence that appellee's defense
by the trial judge. In addition to finding many breaches of         against removal was in bad faith.
fiduciary duty by appellee, the jury found that appellee had
defended the lawsuit in bad faith.                                 Although the jury charge phrased the "good faith"
                                                                   requirement negatively, we construe the jury's affirmative
  [35] Although a trustee may also be removed under section        finding to be a finding that appellee did not defend against
 113.082 of the Property Code, there is no "good faith"            removal in good faith. The jury charge did not define
requirement in the statute allowing recovery of fees. Section      "bad faith." The statute, which includes the "good faith"
 114.064 provides that the court "may make such award              requirement, also contains no definition of "good faith."
of costs and reasonable and necessary attomey's fees as            Furthermore, we have discovered no case law addressing the
may seem equitable and just." TEX. PROP.CODE ANN. §                meaning of "good faith" under this statutory provision.
 114.064 (Vemon 1995). Thus, the grant or denial of attomey's
fees to a trustee is within the sound discretion of the trial      In different contexts, "good faith" can be a subjective or an
court, and a reviewing court will not reverse the trial court's    objective standard. For example, under the Texas Business
judgment absent a clear showing that the trial court abused its    and Commerce Code, "good faith" is defined as honesty
discretion by acting *794 without reference to any guiding         in facL See TEX. BUS. & COM.CODE ANN. § 1.20(19)
 rules and principles. See Lyco Acquisition 1984 Ltd. v. First     (Vemon Supp.2000). The Texas Supreme Court has held
Nat'lBank. 860 S.W.2d 117,121 (Tex.App.—Amarillo 1993,             that the test for good faith is the actual belief of the party
writ denied). Because removal of a trustee does not require a      and not the reasonableness of that belief See La Sara
 good faith finding, the jury question in the instant case only    Grain v. First Nat'l Bank, 673 S.W.2d 558, 563 (Tex.1984);
 concems appellee's entitlement to recover attomey's fees as       Holeman v. Landmark Chevrolet Corp., 989 S.W.2d 395, 399
 an executor.                                                      (Tex.App.-Houston [14th Dist,] 1999, writ denied). Unlike
                                                                   this subjective standard, the courts have adopted an objective
As stated previously, a trial court may disregard a jury's         standard where official immunity is asserted. See City of
finding if there is no evidence to support thejury's finding.      Lancaster v. Chambers, 883 S.W.2d 650, 656 (Tex. 1994),
See Aim v, Aluminum Co. of America, 111 S,W,2d 588,                 The supreme court observed that this test, like the test under
593 (Tex, 1986), In reviewing the grant of a motion for             federal immunity law, is one of objective reasonableness,
judgment notwithstanding the verdict, the reviewing court           without regard to whether the official acted with subjective
must review all testimony in a light most favorable to the          good faith. See id. This objective standard provides that an
 finding, considering only the evidence and inferences that         officer acts in good faith in a pursuit case i f "a reasonably
support the finding and rejecting the evidence and inferences       pmdent officer, under the same or similar circumstances,
 contrary to the finding. See Navarette v. Temple Indep. Sch.       could have believed that the need to immediately apprehend
Dist., 706 S,W,2d 308, 309 (Tex, 1986). If there is more            the suspect outweighed a clear risk of harm to the public in
 than a scintilla of competent evidence to support the jury's       continuing the pursuit." Id.
 finding, then the judgment notwithstanding the verdict will be
 reversed. See Mancorp v. Culpepper, 802 S.W.2d 226, 228            Under other circumstances, a combination of subjective
 (Tex. 1990).                                                       and objective standards has been found appropriate. In the
                                                                    context *795 of a whistle blower action, the supreme
 In support of the jury finding of bad faith defense against        court considered the public and private concerns involved
 removal, appellants cite generally to the five weeks of            and the subjective and objective standards of "good faith,"
 testimony regarding appellee's conduct, including the amount       and decided on a combination of the two standards. See



  WESTLAW           2016 rhomsoti Routers, No claim lo original U.S. Goverriment '>/Vorks.


    PLAINTIFFS'ORIGINAL PETITION-Page 067                                           •
Lee V. Lee, 47 S.W.3d 767 (2001)



Wichita County v. Hart, 917 S.W.2d 779, 784 (Tex,1996),           must protect the beneficiaries' interest in the estate proceeds.
The court held that "good faith" in the whistle blower context    At the same time, we must preserve an executor's ability to
means that; "(1) the employee believed that the conduct           fulfill the obligations of the position, exercising judgment
reported was a violation of law and (2) the employee's            in handling the often complicated decisions involved in
belief was reasonable in light of the employee's training and     administration of an estate. Accordingly, we believe a fair
experience," Id In reaching this holding the court considered     balancing of these interests is achieved by adopting a standard
the United States Supreme Court's discussion of objective and     of good faith that combines the subjective and objective tests.
subjective standards for "good faith" in Wood v. Strickland,      We hold that an executor acts in good faith when he or she
420 U,S, 308, 95 S.CL 992, 43 L,Ed.2d 214 (1975),                 subjectively believes his or her defense is viable, if that belief
                                                                  is reasonable in light of existing law. This standard should
In Wood, the Court addressed whether an objective or              protect all but the plainly incompetent executors or those who
subjective standard should apply in a section 1983 action         willfully breach their fiduciary duties, ^
where the school official claimed immunity. See id. at 314-
15, 95 S.Ct 992. The court held;
                                                                  The record contains much evidence regarding appellee's
                                                                  breaches of duty, but appellants do not point to, and we
               The disagreement between the
                                                                  have not located, any evidence showing that appellee's *796
               Court of Appeals and the District
                                                                  defense against removal was made in bad faith. We have
               Court over the immunity standard in
                                                                  located no evidence that appellee subjectively believed his
               this case has been put in terms of
                                                                  defense was in bad faith and no evidence that his defense
               an "objective" versus a "subjective"
                                                                  had no reasonable or arguable basis. Accordingly, the trial
               test of good faith. As we see it,
                                                                  court properly disregarded thejury's finding of bad faith and
               the appropriate standard necessarily
                                                                  allowed appellee to recover his attorney's fees.
               contains elements of both. The
               official himself must be acting
               sincerely and with a belief that he
               is doing right, but an act ... can                             Refusal to Require Reimbursement
               be no more justified by ignorance                               for Appellants' Attorney's Fees
               or disregard of settled, indisputable
               law,.. than by the presence of actual               [37] In a separate issue, appellants claim the trial court
               malice.                                            should have required appellee to reimburse the Article IV
                                                                  Tmst for appellants' attomey's fees and costs incurred in the
M a t 321, 95 S.Ct 992.                                           prosecution of this case. Section 245 of the Probate Code
                                                                  provides;
The standards referenced in Rule 13 are particularly
illuminating. Rule 13 provides that an attomey or party's                         When the personal representative
signature on a pleading constitutes a certificate by them                         of an estate or person neglects the
that "to the best of their knowledge, informadon, and                             performance of any duty required
belief formed after reasonable inquiry the instmment is not                       of him, and any costs are incurred
groundless and brought in bad faith or groundless and brought                     thereby, or if he is removed for
for the purpose of harassment" TEX.R. CIV. P. 13. Under                           cause, he and the sureties on his
this mle, courts presume pleadings are filed in good faith and                    bond shall be liable for costs of
will not impose sanctions absent good cause, the particulars                      removal and other additional costs
of which must be set out in the order. See id. "Groundless,"                      incurred that are not authorized
in the context of Rule 13, means "no basis in law or fact                         expenditures, as defined by this
and not warranted by good faith argument for the extension,                       code, and for reasonable attomey's
modification, or reversal of existing law." Id.                                   fees incurred in removing him
                                                                                  and in obtaining his compliance
 [36] In the context of an action to remove an executor, we                       regarding any statutory duty he has
believe we must balance the interests of the beneficiaries with                   neglected.
the public policy in favor of independent administration. We



 weSTLAW          >aiC 1 non-iftor, Hcutds. No claim to otia.Ml U S. Govcriimetit WoiKs.


   PLAINTIFFS' ORIGINAL PETITION - Page 068
Lee V. Lee, 47 S.W.3d 767 (2001)



                                                                   were claims of violations of appellee's statutory duty of care.
TEX, PROB.CODE ANN. § 245 (Vemon Supp.2000), The                   Appellants also sought appellee's removal as executor and as
courts have held that this statute allows the beneficiaries        tmstee. Although fees may not be recovered under section
to recover the attomey's fees they incurred in removing            245 for seeking removal of appellee as tmstee, our review of
an executor in recovering the effects of an executor's             the record shows that this effort and the facts supporting this
neglect of his statutory duties. See Barnett v. Barnett, 985       claim were inextricably intertwined with the facts regarding
S,W,2d 520, 535 (Tex,App.—Houston [1st Dist] 1998, writ            removal as executor and for breaches of duty. There is an
granted); Lawyers Sur. Corp. v. Larson, 869 S,W.2d 649,653         exception to the duty to segregate when the attomey's fees are
(Tex, App,—Austin 1994, writ denied).                              rendered in connection with claims arising out of the same
                                                                   transaction and when the claims are so interrelated that their
 [38] Appellee argues that appellants are not entitled to          prosecution or defense entails proof or denial of essentially
recovery of fees under section 245 because they requested          the same facts. See Stewart Title Guar Co. v. Sterling, 822
no finding by the jury or the trial court as to what amount        S,W,2d 1, 11 (Tex. 1991). Because we find the prosecufion
of attomey's fees were incurred in obtaining appellee's            of the claim to remove appellee as tmstee was inextricably
compliance with any statutory duty he neglected or in              intertwined with the prosecution of appellants' other claims,
removing him as executor. Case law has held that a party           we find this case falls within the recognized exception to
seeking recovery under section 245 must present evidence to        segregation. Therefore, the trial court erred in refusing to
enable the court to determine what fees are recoverable by the     apply section 245 to require appellee to reimburse the estate
estate. See Larson, 869 S,W,2d at 652; Fillion v. Osborne, 585      for the fees incurred by appellants.
S.W,2d 842, 845 (Tex.Civ.App.—Houston [1st Dist] 1979,
no writ). The parties stipulated to reasonable and necessary       On rehearing, both parties ask that we also mle with respect
attomey's fees and thus, no request for a finding by the jury      to appellate attomey's fees. In the judgment the trial court
or trial court was required,                                       awarded both parties $300,000 in fees for appeal to the court
                                                                   of appeals and $100,000 for seeking review in the Texas
 [39[    Appellants respond that neither evidence nor              Supreme Court. These fees were to be paid by the Tmstee for
segregation of fees was required. A party is not required to       the Article IV tmst Appellants ask that we hold that appellee
segregate fees unless the party asserts multiple claims, some      must also reimburse the Article IV trast for the awards of
of which entitle the party to recovery o f fees and some of        appellate attomey's fees to appellants.
which do not See Green Int'l, Inc. v. Solis, 951 S.W.2d 384,
389 (Tex, 1997), Appellants argue that because all of their
                                                                   As discussed above, section 245 of the Probate Code provides
claims concerned alleged mismanagement of the estate and
                                                                   that an estate may recover reasonable attomey's fees incurred
sought removal of appellee as executor and tmstee, there were
                                                                   in removing the executor and in obtaining the executor's
no claims for which appellants were not entitled to recovery
                                                                   compliance regarding any statutory duty he neglected. TEX.
of fees.
                                                                   PROB.CODE ANN. § 245 (Vemon Supp.2000), Regarding
                                                                   appellate attomey's fees, appellee raises the same complaint
The statute allows the estate to recover attomey's fees            he raised regarding trial court fees; Appellee claims that
expended for the following two actions: (1) removing the           appellants did not segregate their fees between claims for
executor, and (2) compelling compliance with statutory             which reimbiusement is available under section 245 and
duties. See TEX, PROP,CODE ANN, § 245 (Vemon                       claims for which reimbursement is not available. We have
Supp,2000), Statutory duties include: (1) giving notices           already held that segregation was not required because the
required by statute; (2) approving, classifying, paying, or
                                                                   claims were intertwined. This holding extends to appellate
rejecting claims against the estate; and (3) delivering to those
                                                                   attomey's fees. Accordingly, we hold that under section
entitled exempt property and allowances for support. See id.
                                                                   245, appellee must reimburse the Article IV tmst, and not
at § 146. An executor is also charged with the duty to use
                                                                   appellants individually, for appellants' stipulated appellate
reasonable care in that he must care for the property of the
                                                                   attomey's fees.
estate as a pmdent man would take of his own property. See
id at § 230.
                                                                   Both parties agree that any award of attomey's fees should
                                                                   bear postjudgment interest at 10% per annum, compounded
 *797 [40] All of appellants claims for damages involved           annually (a) from the date of judgment as to the stipulated
allegations of breach of fiduciary duty and, therefore, these


  WESTU^W €, 2016 Thomson Routers. No claim to •                            Government Work


  PLAINTIFFS' ORIGFNAL PETITION - Page 069
Lee V. Lee, 47 S.W.Sd 767 (2001)



$ 1.5 million in trial court attomey's fees, (b) from the date of    one-third (#) of the current net income of the tmst, and
this courts' judgment as to fees for appeal to this court, and       to the extent such income is insufficient for the following
(c) from the date of the supreme court's ruling on petition for      purpose shall distribute currently such amounts from the
review as to the award for fees on appeal to the supreme court.      remaining two-thirds l-i) of such current net income as
                                                                     may be necessary and required to provide for the health,
                                                                     maintenance and support of [her children, or the survivor],
  Exclusion of Evidence of Appellants' Damages Model                 taking into consideration the availability offimdsfirom other
                                                                     sources." Thus, Susan Lee was entitled to one-half of the one-
Appellants next challenge the trial court's exclusion of             third (one-sixth), of current net income.
evidence of appellants' damage model that was designed
to illustrate what a pmdent executor would have done                 The statutory definition of income is the return derived
with the sale proceeds from the U.S. Home and Carothers              fiom the use of principal. See TEX. PROP.CODE ANN. §
contracts. Because we have held that the evidence regarding          113.102(a) (Vemon 1995). Examples of income are rent on
the unaccepted offers by U.S. Homes and Carothers was                real property and interest on money lent. See id, Section
speculative and constituted no evidence of damages for               113.102 instracts the trastee to charge expenses against
breach of fiduciary duty to sell the properties, we need not         income in accordance with section 113.111. See TEX.
address this issue.                                                  PRORCODE ANN. § 113.102(c) (Vemon 1995). Section
                                                                      113.111 requires the tmstee to charge against income all
                                                                     ordinary expenses incurred in administration, management,
                                                                     or preservation of tmst property, reasonable allowances
 *798 Refusal to Award Damages Directly to Susan Lee
                                                                     for depreciation on improvements, and, unless the court
 [41)      Appellants contend that, because Susan Lee has a          directs otherwise, court costs and fees on periodic judicial
                                                                     accountings and other judicial proceedings conceming the
 ' l(y beneficiary interest in the Article IV trast income,
                                                                      income interest. See TEX. PROP.CODE ANN. § 113.111
she was entitled to a recovery of ' I f , of the judgment             (Vemon Supp.2000).
damages representing tmst income. In support of this
argument, appellants cite Comment H to section 282 ' ofthe           The will gives appellant, Susan Lee, an interest in "current
Restatement of Tmsts;                                                net income," not gross income. Therefore, she was entitled to
                                                                     any Article IV tmst income, minus expenses as described in
                                                                     section 113.111. She was not entitled to tmst income before
        Disposition of the Proceeds Recovered. Where the trast       deduction of expenses. Accordingly, the trial court properly
        is of such a character that i f the trastee had brought an   awarded the damages to the Article IV tmst and not to Susan
        action against the third person, the proceeds would be       Lee directly.
        immediately payable to the beneficiary, the beneficiary
        is entitled to keep whatever he recovers from the third
        person under the mles stated in Subsection (2) and (3).
        RESTATEMENT (SECOND) OF TRUSTS § 282 cmt.                                        Prejudgment Interest
        H (1959). Secfion 282, however, addresses when a
                                                                      1. Simple or Compound Interest
        beneficiary may maintain a suit against a third person.
        It does not concern suits by beneficiaries against the         [42] Appellants next complain that the trial court awarded
        tmstee. Accordingly, we do not find Comment H                 prejudgment interest *799 at the rate of 10% per annum,
        applicable.                                                   computed as simple interest, when the award should be
                                                                      10% per annum, compounded daily. Appellants contend that,
 Unless a trastee is under a duty to pay money immediately and
                                                                      because the claims in this case do not fall within any of the
 unconditionally to the beneficiary, the beneficiary may only
                                                                      prejudgment interest statutes, the case is controlled by Cavnar
 sue to compel the tmstee to restore money to the trust. See
 RESTATEMENT (SECOND) OF TRUSTS § 198 & omts.                         V. Quality Control Parking. Inc., 696S.W.2d549 (Tex.1985),
 B-D (1959). Katherine Bamhart's will provided in Article             which provides for interest compounded daily.
 IV that the tmstee was to distribute equally to her children,
                                                                      Although we agree with appellants that prejudgment interest
 and to the survivor between her children^ "at least quarterly,
                                                                      in this case is not controlled by statute, the case on which


  WESTLAW 5^2016 l i'iomson !?t-i;fe:s No cteirn to onpinai U S. Goyeioncn! Worh-r


    PLAINTIFFS' ORIGINAL PETITION - Page 070
Lee V, Lee, 47 S.W.3d 767 (2001)



appellants rely was overruled after appellants filed their brief.     [461 [47j "Prejudgment interest is 'compensation allowed
In Johnson & Higgins of Texas, Inc. v. Kenneco Energy,               by law as additional damages for lost use of the money
Inc., 962 S.W.2d 507, 532 (Tex. 1998), the supreme court             due as damages during the lapse of time between the
held that prejudgment interest in cases conhoUed by common           accraal of the claim and the date of judgment'." Id. at 528
law is to accrue at the rate for postjudgment interest and it        (quoting Cavnar v. Quality Control Parking, Inc., 696 S.W.2d
is computed as simple interest Accordingly, the trial court          549 (Tex.1985)). The two legal sources for an award of
properly computed the prejudgment interest in this case as           prejudgment interest are general principles of equity, and an
simple interest                                                      enabling statute. See Kenneco, 962 S.W.2d at 528. Statutory
                                                                     provisions for prejudgment interest apply only to cases
                                                                     involving claims *800 of wrongfiil death, personal injury,
2. Accrual Date for Calculation of Prejudgment interest              property damage, and condemnation. See TEX. FIN.CODE
 [431 In his first motion for rehearing, appellee claimed that       ANN. §§304.102,304.201 (Vemon Supp.2000). Because the
prejudgment and postjudgment interest should be awarded on           claims in this case do not fall within the statutory provisions,
the $1.5 million in executor fees required to be reimbursed          an award of prejudgment interest in this case is governed by
by appellee. Although appellee did not contest the imposition        the common law. See Kenneco, 962 S.W.2d at 530.
of prejudgment interest he claimed that it should be awarded
pursuant to Johnson & Higgins of Texas, Inc. v. Kenneco
                                                                  [481 Appellants argue that prejudgment interest accraed
Energy, Inc., 962 S.W.2d 507 (Tex. 1998). The parties
                                                                 from the dates Ronald Lee paid himself executor fees.
disagreed on the date from which prejudgment interest should
                                                                 Because Lee paid himself fees in a number of payments over
accrae. Appellants also complained that appellee had not
                                                                 a two-year period, appellants have provided a chart depicting
preserved this issue for review because he did not raise this
                                                                 the various payments and the amount of interest on each, with
complaint either in the trial court or in his brief in this court.
                                                                 a total amount due of $2,051,311.79. Appellee disagrees with
                                                                 appellants' calculation and contends that appellants' argument
 [44]     [45| We tum first to the preservation issue. A point is based on the approach described in the Cavnar case, in
of error not preserved is not before the appellate court for     contravention to the more recent Kenneco case.
review. Allright, Inc. v. Pearson, 735 S.W.2d 240, 240
(Tex. 1987). An assignment of error raised for the first time
                                                                 In Kenneco, the court held that "under the common law,
in an appellant's motion for rehearing is too late to be
                                                                 prejudgment interest begins to accrae on the earlier of (1) 180
considered. Washington v. Walker County, 708 S.W.2d 493,
                                                                 days after the date a defendant receives written notice of a
497 (Tex.App.—Houston.[ 1st Dist.] 1986, writ refd n.r.e.).
                                                                 claim or (2) the date suit is filed." See id. at 531. A " 'claim'
                                                                 is 'a demand for compensation or an assertion of a right to
The trial court awarded prejudgment interest, according to the
                                                                 be paid'." See id. Appellee contends the first date he received
law in existence at that time, which held that prejudgment
                                                                 notice of a claim with regard to executor fees paid, was the
interest began to accrae six months fi-om the date of the
                                                                 date suit was filed. We have not located in the record an eariier
occurrence giving rise to the cause of action. Cavnar, 696
                                                                 date of notice of a claim with respect to the executor fees.
S,W.2d at 555. The prejudgment interest at issue here,
however, does not concern the prejudgment interest on the
                                                                  [49] Appellants next argue that accraal of prejudgment
trial court awards we have upheld. Instead, the prejudgment
                                                                 interest under Kenneco would nullify appellee's duty of
interest at issue here concems interest on the $1.5 million
                                                                 disclosure as a fiduciary. Appellants base this argument on
this court is rendering in favor of appellants. An award
                                                                 the following premisses: (1) an executor owes a duty to
of prejudgment interest on this new award of damages is
                                                                 disclose all material facts affecting the beneficiaries' rights,
an automatic legal consequence since appellants pled for
                                                                 see Huie v. DeShazo, 922 S.W.2d 920, 923 (Tex.1996); and
prejudgment interest. Neither the award of prejudgment
                                                                 (2) courts have historically required breachingfiduciariesto
interest, nor the accraal date of this interest required a point
                                                                 pay prejudgment interest from the date the breaches occurred.
of error for preservation. Because the date of this new award
                                                                 See, e.g., Ward v. Maryland Cas. Co., 140 Tex. 124, 166
implicates case law that succeeds Cavnar, we must consider
                                                                  S.W.2d 117, 119(1942).
whether the Cavnar rale regarding accraal of prejudgment
interest applies..
                                                                  Despite the previous holdings that breachingfiduciariesmust
                                                                 pay prejudgment interestfi-omthe date of breach, the Kenneco



  ivesfLAw                            Kciue;                                 •oi.ivci



   PLAINTIFFS' ORIGINAL PETITION - Page 071
Lee V, Lee, 47 S.W.3d 757 (2001)


                                                                     in excessive executor fees, in addition to the $659,506,50
court held that the rule it announced applied to all cases that
                                                                     previously awarded by the trial court, for a total award of
do not fall within the statutory guidelines for prejudgment
                                                                     $2,198,355.00 in excessive executor fees; (2) reverse the
interest. See 962 S.W.2d at 531. By making no exception
                                                                     portion of the judgment denying plaintiffs' request to remove
for breach of fiduciary claims, the supreme court impliedly
                                                                     Ronald Lee as the Tmstee of the Article IV tmst and we render
overruled all cases contrary to Kenneco. Therefore, we are not
                                                                     judgment removing Ronald Lee as Tmstee ofthe Article IV
persuaded to create an exception to the Kenneco rule in cases
                                                                     tmst; and (3) we order the following: (a) that Ronald Lee
involving breaching fiduciaries.
                                                                      reimburse the Article IV tmst for appellants' stipulated $1.5
                                                                      million in trial court attorney's fees; (b) that Ronald Lee
We hold that the date of accmal of prejudgment interest on
                                                                      reimburse the Article IV tmst for the appellants' stipulated
the SI.5 million award rendered by this court is July 28,
                                                                      $300,000 in appellate attomey's fees; (c) that, in the event
 1993, the date of filing of Plaintiffs' First Amended Petition.
                                                                      either party appeals to the Texas Supreme Court, Ronald Lee
The prejudgment interest on those trial' court damage awards
                                                                      shall reimburse the Article IV tmst for appellants' stipulated
upheld by this court accmes as the trial court mled, according
                                                                      $100,000 attomey's fees; (d) that the Article IV tmst, on
to Cavnar.
                                                                      behalf of appellants, recover from appellee prejudgment
                                                                      interest on the $1,538,848.50 in excessive executor's fee
The Kenneco court further held that prejudgment interest
                                                                      awarded by this judgment at the rate of 10% per annum,
accmes at the rate for postjudgment interest and it is to be
                                                                      computed as simple interest, from the date of notice ofthe
computed as simple interest. See id. at 532. The rate of interest
                                                                       claim, July 28, 1993, through the date preceding the day of
is 10%. See TEX. FIN.CODE ANN. § 304.003 (Vemon
                                                                       entry of judgment, October 24, 1996; (e) that the Article IV
Supp.2000).
                                                                       tmst, on behalf of appellants, recover postjudgment interest
                                                                       at the rate of 10% per annum, compounded annually, on the
Accordingly, we hold that appellants are entitled to
                                                                       total of (i) the excessive executor fees awarded by this court
prejudgment interest on the $ 1.5 million in excessive executor
                                                                       ($1,538,848,50), (ii) the excessive executor fees awarded
fees required to be reimbursed, at the rate of 10% per annum,
                                                                       by the trial court ($659,506,50), and (iii) the prejudgment
computed as simple interest from the date of notice of the
                                                                       interest awarded on those amounts, from the date of the trial
claim, July 28, 1993, to the day preceding entry of judgment,
                                                                       court's judgment, October 25,1996; and (f) that appellee shall
October 24, 1996. Appellants are entitied to postjudgment
                                                                        reimburse the Article IV tmst for postjudgment interest at
interest on this award calculated from the date of judgment,
                                                                        10% per annum, compounded annually (i) from the date of
October 25, 1996.
                                                                        the trial court's judgment as to appellants' $1,5 million in trial
                                                                        court attomey's fees, (ii) from the date of this court's judgment
                                                                        as to fees for appeal to this court, and (iii) from the date of
                        *801 Conclusion                                 the supreme court's mling on petition for review as to the
                                                                        award for fees on appeal to the supreme court. We affirm the
 We find the trial court erred: (1) in deducting $1.5 million        , remainder of the judgment
 from the jury's finding of excessive fees; (2) in refiising to
 remove appellee as tmstee; and (3) in refiising to require
 appellee to reimburse the estate for appellants' attorney's fees.    All Citations
 Accordingly, we (1) reverse the portion of the judgment
 awarding the Article IV tmst $659,505.50 and render                  47 S.W,3d 767
 judgment that the Article IV tmst recover $1,538,848.50


 Footnotes
 *     Senior Chief Justice Paul C. Murphy sitting by assignment
 1      In his brief, appellee cited to Arce v. Burrow, 958 S,W,2d 239 (Tex.App.-Houston [14th Dist] 1997, writ granted). Since
       submission of this case, the Texas Supreme Court has Issued its opinion affinning in part, and reversing and remanding
       in part. See Burrow V. Arce, 997 S,W.2d 229 (Tex.1999).
 2     This amount represents the estate tax cost of $660,000, less $144,087 the estate would have owed in interest if appellee
       had not paid himself $2.2 million of the total fee.




    PLAINTIFFS'ORIGINAL PETITION - Page 072
L e e V. L e e ,   47   S.W.3d   767   (2001)




3          Appellee also cites Deloitte. & Touche v. Weller, 1997 WL 572530 (Tex.App.—Amarillo 1997), op/n/of7 withdrawn and
           superseded on rehearing, 976 S.W.2d 212 (Tex.App.—Amarillo 1998, writ denied) The We//eropinion to which appellee
           cites was withdrawn on rehearing and the substitute opinion does not address the "benefits rule." See Deloitte & Touche
           V. Weller, 976 S.W.2d 212 (Tex.App.—Amarillo 1998, writ denied). Accordingly, we do not discuss this case.
4          We address the AWn holding in further detail later in this opinion.
5           In his response brief, appellee claims that the trial court "determined that'cause' would exist to remove if the jury had found
            gross negligence." Appellee then states that appellants did not complain below and do not complain on appeal that gross
            negligence is not a legally valid basis for removal. Because the jury refused to find gross negligence, appellee reasons
            the trial court properly declined to remove appellee as trustee. Appellee misrepresents the trial court's determination.
            The trial court actually said he could find grounds for removal if there was a finding of e/Y/rer gross negligence or breach
            of fiduciary duty and damages.
6           The former statute has been rewritten upon codification to set out the grounds in an enumerated fashion; however, the
            language of the statute remains the same. Compare Act of April 14,1993, 48th Leg., R.S., ch. 148, § 39, 1943 Tex. Gen.
            Laws 232, 246 (repealed) wrth TEX. PROP.CODE ANN. § 113.082 (Vernon 1995).
7           This holding seems to fly in the face of the plain language of the statute. The statute allows recovery of attomey's fees
            if the executor defends the will in good faith and with just cause, whether or not he or she is successful in admitting the
            will to probate. See TEX. PROB.CODE ANN. § 243 (Vernon Supp.2000). Although the recovery of fees is expressly not
            tied to success in admitting the will to probate, It is tied to good faith defense. By holding that a finding of good faith was
            inapplicable where the executor was successful in admitting the will to probate, the court ignored the statutory language
            and tied recovery of fees to success in admitting the will.
8           This is somewhat similar to the standard for official Immunity, which has been held to protect "all but the plainly
            incompetent or those who knowingly violate the law." Courson v. McMillian, 939 F.2d 1479,1487 (11th Cir.1991) (quoting
            Ma//ey V. Br/ggs, 475 U.S. 335, 341, 106 S.CL 1092, 89 L.Ed.2d 271 (1986)).
9           Appellants incorrectly cite to section 294, but 294 has no Comment H. Appellants apparently intended Comment H under
            section 282, which concems suits in equity by beneficiaries.


    End of D o c u m e n t                                            © 2016 T h o m s o n R e u t e r s . N o claim to original U.S. G o v e r n m e n t Worlds.




     Vv'ESTLAW (•'.• 2016 1 hom$or> Routers- :^JQ csaim to onginai v.i^ Gcvor^imtni Works.


       PLAINTIFFS'ORIGINAL PETITION - Page 073
PLAINTIFFS' ORIGINAL PETITION - Page 074
                                   0%e jrssi«te«®S% Oasisr* srf
                                                     NO. 14-97-<»l*2-CV

      SUSAN CAMD4JBUES, nSSOTVIDUAl-i-Y, AND
      AS TitUaTKB OF THE ARTJO-B V TRUST TOR Cwwvty. (Tr. C l . No. I
      T H B USNVfTT or SVSAN C . OQISON. AND
      DHRJTVATrVWLV ON »«MAJLF Of THW                              Mtlndly cod   Kwtlw
      A K T K X B I V T W J S T AND T H E ESTATH Of
      X A T H S I U N S F l U X r r u a » A l t N H A » T , AND
      S U S A N C . OtSkSON. IWOrVIOXJAU-Y. A N U
      O W U V A T l V m . Y ON BHHAJW O f THE
      A K T K X « I V TKU*T ANO TVCM HSTATB OF
      K A T H S K m e HUU3T CE«t BAJWHAJtT,
      Aw-<1-«.
      V.
      M7NALD B . UOI, JK., INCTYIOUAX-LV, Aa
      TRuannws or       T H H A R T I C L E rv T R U S T , A N D
      ITiB A K T I C U B V T R U S T F c m THH ftENKJOT
      O F K A T H E W N E UPS, A N D A3 H X E C U T O R or
      T H » J O T A T E or K A T K B U N E PIXXOT tHE
      IBAJIJWART.
      T O T H K r R O A A T X C O t W T NO. 1 O r HAMU8 COUNTV,




PLAINTIFFS' ORIGINAL PETITION - Page 075
                       M O W * WlHl I ! , ) } « , » « «   »   tn »wa»>T«W»W*       (WT^-WJO^I W   <»«jMi%r».ii.i>



                       nvn of 10% )»r OWMM.            iMNUany, on tlw wul «<:
                               (a) tlw nowivn iWMvMr Im owanlMl hy IhMKUrf t*l >)>M^ M);
                              (b) Uw n a m m M<w««r r~> »<nnM by Uw <r>d Murt


                       I HawH             •ttimratn^wMi>w Ar1i«l« rv in^
                                 («) IVwa Mw dakr nfi^ Imt « w n ' H                    «> Mfrvl
                                 Cb)ftMVM <lMa *f tw< «>unfurfvawni u ut «M (br
                                 («) &<M CM « w af 4M iiiprnm MUft-a nri<a« n p«(i*KM ibri
                                 tiMr nww* IWta*M ipiiii»l «* ilM iiyi tmt nurt.

                       W» wfT*w nff^wllM, K«rH4                 .Ir.. in^vi*m1\y, to y y fcit itrgum^ by pwiii wn
                                                                                                                i
                       Ww ordwr Aiim JiiaiMiit MrafWcS b«l9w for obwv^wpg,
             WinrautlWta; M « COMMATO YOU to ofc«rv« Oi^iii^
      |Mn(« l<rra M <»ulyrmtni»d, ab«)««d wi4 AKtHlvd.

           WrmiPB*, «M HCNN, SCOTT MMSTIX, CMwfJy                                            Coxrt     A{>fMad«, «ritl« Ow SwI




PLAINTIFFS' ORIGINAL PETITION - Page 076
                                      t4TH C*mrt •••A|pr««*     l-t^yr-^Kl^rv


                                                        V,



           MIX o r c o * r »                        AMOWKT
                                                                                                           1
           |'Vtu«l>mln A||i|i«aMi<«             S               MMW      rAJtJ
           CtiMt*» »Uwr< y«»                                      AM
           gM|»llit»n«»nit»il CtarH   KlHWini
                                                                                    E                 ,a


           T W A i . coarm


                 1, » \%1UXS, CUUUC wTtM COUXT or A T T V A U »Qlt THX l>OU1RTU


                m T K M T i M o m ' w t n u w o r , irMwM Bv iHHMi                cotmror
          CWy »CW III I m, <M. i » » J o y »<• >b»»»»«7




                                                                          IU» WVXUy CLMKX




                                                                                       RECCWOER'S UEMORANOUW:
                                                                               A ) » w l i r r w (H rK3X(Mion, M > k w t r u n w n t
                                                                              M i n d tob* i n « ( l « q u « t i for l h « b M t p h o k i a m ^
                                                                                rtprodiKthxi bocMM g| MagMMy, cwbon or
                                                                              pholo c o p y , dtooolorvd papar, ate. A l l b i o c t n u t i ,
                                                                              •ddKlgiw WKl c h M t Q M w a n p r a M n I a( ( h « tkrw
                                                                                     t w IrwIrwMnt WW M M m d                     raognM.




                          *«** MX h*r« k««a ridwti* H-MI fk* dMamwM In cMFpRmct wfib Ifc* IWic InlfnmMin Act.




          St«0art,   Coanty Clerk




PLAINTIFFS' ORIGINAL PETITION - Page 077
                    EXHIBIT "




PLAINTIFFS' ORIGINAL PETITION - Page 078
 25, 2 0 1 6    9;33AM       M     V LLP                                         flo, 6 3 1 2   P. - 5 / 4 5




                                           Cause No. 137506-403
    Estate ofKatherine Pillot Lee Bamhart,            §                         In the Probate Court
    Deceased                                          §
                                                                                                No. 2 of
                                                      §
    Susan Carnille Lee, et al,.                       §
                                                      §
               Plaintiffs,                            §
                                                      §
    V.                                                §                        Harris County, Texas
                                                      §
    Ronald E, Lee, Jr„ et al,
                                                      §
               Defendants,                            §



                      APPLICATION TOAPPROVE SETTLEMENT AGREEMENT

     TO THE HONORABLE JUDGE OF SAID COURT;

               COMES NOW Applicant LEGACY TRUST COMPANY, in its capacity as the Court

     appomted Receiver of the Testamentary Trust created under Article IV of the Last Will and

     Testament of Katherine Pillot Lee Barnhart (hereinafter referred to as "Applicant"), and in

     yuppurl Ihtjrcof would respectfully show unto the Court the following;

                                                 BACKGROUND

                1,       The Last Will and Testament of Katherine Pillot Lee Bamhart (hereinafter

     referred to as the "Will") created a Trust under Article IV ofthe Will (hereinafter referred to as

     the "Article IV Trust") for the benefit of Katherine Pillot Lee Bamliart's two children, Ronald

     Ellsworth Lee, Jr. (hereinafter referred to as "Mr. Lcc") and Susan Camille Lee (hereinafter

     referred to as "Ms. Lee"), and Katherine Pillot Lee Bamhart's grandchildren.

                2.       ByordcrofthisCoiutinleev. lee, Case No, 137,506403 dated June 18,2015,

     (hereinafter referred to as the "June 18, 2015 Order"), the Court removed Susan Camille Lee as




PLAINTIFFS'ORIGINAL PETITION - Page 079
n, 25, 2 0 1 6        9;33AM    M        Y LLP                                            Wo, 6 3 1 2 '   P. 6 / 4 5




     Trustee of the Article N Trust and appointed Applicant to serve as a Receiver for the Article TV

     Truiit pursuant to Section 114.038 of the Texas Property Code.

                 3,        The June 18, 2015 Order, among other things, ordered the following with regard

      to the Article IV Trust:

                           "3- The Receiver ia authorized and directed to:
                                  a. Exercise all rights, powers and duties of the Trustee ofthe Trust created
                           Under Article IV of the Will, and all powers granted to trustees Under the Texas
                           Tmst Code;



                                    i.    Collect, compromise, or settle all debts owed to the Trust;



                                  m.      Institute such legal proceedings as the Receiver deems necessary
                           or advisable to obtain constructive or actual possession of assets of the Trust or to
                           recover dawages suffered by the Trust; provided however, that the Receiver shall
                           have discretion not to pursue litigation against Ms, Lee that'is undertaken by
                           beneficiaries of the Trast for the benefit of the Trust;



                                  0.      Take any and all actions reasonably necessary and appropriate to
                           exercise the powers, duties, and responsibilities set forth herein.

                 4.        Ajudgment was entered against Ronald E. Lee in Lee v. Lee (Case No. 137,506,

       Harris County Probate Ct. No. 2), as modified by the decision in Lee v. Lee, No, 14-97-00162-

       CV, 47 S.W,3d 767 (Tex. App. ~ Houston, 2001), and reflected in the Mandate issued by the

       Fourteenth Court of Appeals dated February 8, 2002 and the subsequent Order Granting

       Application for Writ of Scire Faciaa and to Revive Dormant Judgment from this Court under

       Cause No. 137,506-402 which was filed on December 7, 2012 (hereinafter collectively referred

       to as the "Judgmenf), The Judgment included an award to the Article IV Trust of 31,538,848.50

       representing excess executor fees Which were previously collected by Mr. Lee, in his capacity as

       the Independent Executorftorathe Estate of Kathcruie Pillot Lee Bamhart, Deceased (which

       21 P a g e

 PLAINTIFFS'ORIGINAL PETITION - Page 080
n, 2 5 . 2016 9 : 3 3 A M    M      Y LLP                                          ^'o, 6 3 1 2   P. 7 / 4 5




     reduced the amoimt that passed under the Bamhart Will to the Article IV Trust); legal fees of

     $1,900,000, and prejudgment interest of $499,177.16, totaling $3,938,025,66, plus post- .

     judgment interest. The Judgment, together with all rights associated therewith - including but not

     limited TO principal, attorneys' fees, interest, and court, costs, constitutes a debt owed to the

     Article rv Trust, and is therefore an asset of the Article IV Trust.

               5.       A controversy exists between Mr. Lcc and the Article IV Trust regarding the

      amotmt, if any, that remains outstanding on the Judgment after all credits due Mr. Lcc and

      payments made by Mr, Lee are applied.                         ,

               6.       The Article IV Trust and Mr, Lee have each held undivided interests in property

      known as the River Bend Farm, consisting of approximately 640 acres in Wharton County,

      Texas. Mr. Lee acquired a twenty-five percent undivided interest in this propertyfromthe estate

      of his father, Ronald Ellsworth Lcc (Sr.). The Article IV Trust acquired afiftypercent interest

      under the Barnhart Will.

               7.       The Article IV Trust and Mr. Lee have each held undivided interests in property

      known as the Cap Rock Ranch, consisting of approximately 6,431 acres, in Real County, Texas.

      Mr, Lee acquired a twenty-five percent imdlvided interest in this propertyfromthe estate of his

      father, Ronald Ellsworth Leo (Sr.). The Article IV Trust acquired afiftypercent interest under

      the Bamhart Will.

               8.       A controversy exists regarding the ownership, management,. and accounting for

      revenues and expenses of River Bend Farm and Cap Rock Ranch between the Article IV Trust

      and Mr. Lee,

               9.       Mr, Lee and Applicant, as Receiver of the Article IV Trust, desire to settle and

      compromise disputes between them so as to (1) facilitate cooperation between Applicant, as

      Receiver ofthe Article IV Trust, and Mr. Lee with respect to the continued administration ofthe




PLAINTIFFS'ORlGrNAL PETITION - Page 081
n, 2 5 , 2 0 1 6    9:34AM       M I.   Y LLP                                          No. 6 3 1 2   P. 8 / 4 5




      Axticle IV Trast; (2) reduce expenses otherwise Hkely to be incuited by both Applicant and Mr,

       Lee in conjunction with the claims and disputes which presently exist between them; (3) provide

       certainty in the management of the affairs of the Article IV Trust and Mr, Lec; (4) preserve and

       enhance the value of River Bend Farm and Cap Rock Ranch and provide for efficient and

       effective management of these valuable properties; and avoid partition of one or both properties

       which likely would impair the value of the properties to the dehiment of the Article IV Trust and

       Mr, Lee; and (5) resolve any and all issues related to the Judgment.

                   10.   The proposed terms of settlement between Applicant and Mr. Lee arc set forth in

       tiie Settlement Agreement and related settlement documents, all of which are collectively

       attached hereto as Exhibit "A," For reference purposes, the Settlement Agreement and related

       settlement documents (see attached Exhibit "A") will hereinafter be referred to as the

       "Settlement Agreement",

             REQUEST FOR AUTHORITY TO ENTER INTO SETTLEMENT AGREEMENT

                   11.   As set forth throughout Texas case law (and more specifically Section 64.004 of

        the Texas Civil Practice &, Remedies Code), the rules of equity generally govern all matters

        regarding receiverships. See Harrington v. Schuble, 608.S,'W.2d 253 (Tex. Civ, App,—^Houston

        [I4th Dist,] 1980, no writ) (expressing that the mles of equity govern receiverships and to

        conform witli the rules of equity, the receiver should have applied to the court for authority to

        take action on the sale of real property); see also TEX. CFV. PRAC. &. REM. CODE §64,004.

                   12.       Furthermore, Texas case law supports that a receiver obtain court approval prior

        to compromising or scttlmg claims. See Knox v. Damascus Corp., 200 S.W,2d 656, 659-60

        (Tex. Civ. App.—Galveston, 1947, no writ) (although judgment appointing the receiver granted

        the power to "institute such suits as might be necessary to enforce his order, judgment and




 PLAINTIFFS'ORIGINAL PETITION - Page 082.                                   '
n, 2 5 ,     2016     9;34AM        M IA   Y LLP                                             No, 6 3 1 2   P,   9 / 4 5




           decree," the court maintained that the receiver obtain express authority from die court prior to

           •settling claims),

                    13.     As detailed above, the June 18, 2015 Order expressly grants to Applicant, as

           Receiver of the Article IV Trust, the power to "Collect, compromise^ or settle all debts owed to

           the Trust" and - . . "institute such legal proceedings as the Receiver deems necessary or advisable

           to obtain constructive or actual possession of assets of the Trust or to recover damages suffered

           by the Trust; provided however, that the Receiver shall have discretion not to pursue litigation

            against Ms, Lcc that is undertaken by beneficiaries of the Trust for the benefit of the Tmst," .

                      14.   In an attempt to comply with the rules of equity, and in an abundance of caution,

            Applicant is filing this Application for Authority to Enter into Settlement Agreement for the

            purpose of obtaining the Court's approval ofthe Settlement Agreement. By and through the

            filing of this Applicatioti and a corresponding Notice of Hearing, Applicant hereby represents to

            the Court that it has provided appropriate notice regarding the Application to all parties in this

            matter.

                      15.      For all of the reasons which are Stated above. Applicant respectfiilly requests that

            the Court approve the terms of the Settlement Agreement, and authorize Applicant to enter into

            the Settlement Agreement on behalf of the Article IV Tmst. In support of Applicant's request in

            this regard, Applicant alleges and thereon believes that the Settlement Agreement is in the best

            interests of the Article TV Tmst,

                      WHEREFORE, PREMISES CONSIDERED, Applicant respectfully requests (i) that that

            the Court approve the terms of the Settlement Agreement; (ii) that the Court find that the

             Settlement Agreement is in the best interests of the Article IV Trust; (iii) that the Court grant

             AppUcant, in its capacity as the Receiver ofthe Article IV Trust, the authority to enter imo the

             Settlement Agreement on behalf of the Article IV Trust; and (iv) that Applicant have and recover

             5|Page                                             • '

 PLAtNTIFFS'ORIGINAL PETITION - Page 083
n. 25, 20 1 6   9:34AM     M [/,.   i UP                                              No, 6 3 1 2   P, ! 0 . / 4 5




     such other and farther rehef as it may show itself justly entitled to receive.

                                                    Respectfully submitted,

                                                    MACINTYRE MCCyLL0CH S;
                                                    & YOUNG,


                                                             W. CAMERON McCULLOCH
                                                             State Bar Number 00788930
                                                             ABRJ A. GRAVES
                                                             State Bar Number 24049999
                                                             2900 Weslayan, Suite 150
                                                             Houston, Texas 77027
                                                             (713)572-2900
                                                              (713) 572-2902 (FAX)
                                                             Cameron • McCulloch(@,mml awtexas .com
                                                             Adri. Gray cs@mmlawtexas .com

                                             ATTORNEYS FOR APPLICANT LEGACY TRUST
                                             COMPANY, IN ITS CAPACITY AS THE RECEIVER
                                             FOR THE ARTICLE IV TRUST




      6I Pag e

PLAINTIFFS' ORIGINAL PETITION - Page 084
n, 25. 2 0 1 6    9;35AM      M M    V IIP                                             Ilo,. 6 3 1 2   P. 1 1 / 4 5




                                              CERTIFICATE OF SERVICE

                             ify' that a true and correct copy of the foregoing inshument was sent to the
                    /ia"United States Certified Mail, return receipt requested, and/or via facsunile on this
                     day of January, 2016:

                 Mr. Eric M, EngUsh
                 Mr. Neil Kenton Anderson
                 Ms. Amy TcUcgcn
                 Porter Hedges LLP
                 1000 Mam Street, 36* Floor
                 Houston, Texas 77002
                 (713)228-1331 (Fax)

                 Mr. Thomas A. Zabel
                 Zabel Freeman
                 1135 Heights Blvd.
                 Houston, Texas 77008
                 (713) 802-9114 (Fax)

                 Mr. Daniel J. Sheehan
                 Mr. John M, Phelan, Jr,
                 Mr. M, Patrick McShan
                 Daniel Sheehan & Associates, LLP
                 2501 North Hanvood, Suite 1280
                 Dallas, Texas 75201
                 (214) 468-8803 (Fax)

                 Mr. John W. Porter
                 Ms, Keri Brown
                 Baker Botts, LLP
                 One Shell Plaza
                 910 Louisiana Street
                 Houston, Texas 77002-4995
                 (713)229-1522 (Fax)



                                                               W. Cameron McCulloch
                                                               Adri A, Graves




       7| P a g e


 PLAINTIFFS' ORIGINAL PETITION - Page 085
«, 25, 2016   9:35Ali(   M Ur ! H P




                                  E X H I B I T   " A




PLAINTIFFS' ORIGINAL PETITION - Page 086
 25, • 2016 9;35AM ' M k           Y LLP ' ' . • . • ' •                                 '•      „ . • • No. 6 3 1 2   P. 1 3 / 4




 Settlement Agreement Between'Ronald Ellsworth Lee, Jr. and Legacy Trust
. Company as Receiver for the Trust Created under Article IV of the Will of .
 ...    ,          ; ' . Katherine Pillot Lee Barnhart

 Recitals: ' •

         •1.       ' Under the Last Will and Testament of Katherinfi Pillot lee. Bamhart admitted to

 probate inftarrisCounty, Texas under Cause Number 137,506 (the "Barnhart WilP'), trusts were

 created for the benefit of her childiren and grandchildren.', One. of the trusts created was under

 Axticlb.IV of the Bamhart Will (the/*Articlc IV Trust").                          :••

         •2-     . kpnald Ellsworth Lee, Jr.- ("Mr. Lee'') is'the son of Katherine PiUot Lcc Bamhart,

 and a bcneficiary .under the Article TV Trust- As suchj he is entitled to inandatory distributions of

 ashareof the income of the'Article .IVTrust • '

        .,3. •      No distributions, of iucome-of the Axticle IV Trnst have been made'to

 more than, ten years,.notwitbstanding the fact that the Trust had net income and.in many years '

  reported to the Internal.Revenue Service that .^Ir. Lee had tait^ble income, attribntable to the

 Artide IV'Tnast.        „•;'          ......                           ''•:;'' .             '• .'••.••.

         '• 4- '     Mr. Ixe- filed suit against Susan Camille Lee ("Ms, Lee"), Trustee of. the Artide •

  iV. xrust, m Lee v. i.ee,': uasc No.' l37,iU6-403, Hariis.Cbxmty" Probafc Court NoV 2,'.seeking

  removal of Ms. Lee as.Trustce, and damages suffered by Mr.'.Lce and'the Artidc IV Trust,for •

 • which Ms-' Lec was'responsible as Trustee, among 'other thirty. ("Mr.. lie's L^wsuilf'),' ' • '. ;

          ,5.       By order of the- Harris Couiity. Probate Court No. 2 in Lee v. Lee,. Case No.

 .137,506-403 dated'juuc. 18,-2015/0*Jmic'.X8, 2Gl5.0rdeO^^^^^                                       remoybd Ms: Lee as'

  Trustee of the Article.IV .Trast and appointed Legacy Tirast Company'.asi Receiver for the Article

  IV Trust ("Lcga:cy" or the.."Rcceivcr"). The jiine, 18, ioiS Order, among other things, ordered; ,

                    "3. The. RcccivM is authorized'and directed to:" ,.




  '5168145 •           ' -'^ •                  '   •' •.-•;••   ••••      ; •'•


PLAINTIFFS' ORIGINAL PETITION - Page 087
25. 2016           9:35AM    . M M'    , LLP                                            No, 6 3 1 2   P.   14/45-




                      " ' - a. Exercise all rights, powers and dutiesof the-Trustee of the Trust created
                      under Article IV of the 'Wih, and all powers granted to. trustees under theTexa,? ,
                      Trust Code; . '    ' ,- ,      ; • \ • .•                    '              • '



                            - c. • ' Manage and direct the- business and financial affairs of the Trust
                     • and any asset or entity owned or controlled by the .Trust; • •



                              h • • '' Collect^ coihpromise, or settle all debts owed to the. Trust; -



'     ' . -                 . m- , • Institute such legal proceedings 35 the Receiver deems necessary
                     • or advisable to obtain constmctive.or actual possession of assets of the Tmst or to .
                       recover damages suffered by the Trust; provided however, that the Receiver shall -
                      , have discretion not to pursue litigation against Ms. -Lec that; is undertalcen by ' .,
                       beneficiaries of the Trust for the benefit of the Trust; • •'



                    ' • .      0- - Take any and iaU actioifs reasonably necessary aEd..ippropriate to
                      'fcxercisethe powers, duties, arid resporisibilities set forth herein,- , '• ' • „

. .       , 6.      : Mr. Lee, on hi& own behalf and that of hi^i successors and assigns, and Legacy as

•• Receiver ofthe Axticle IV Tfustaiid on behalf of the Article IV Trust, andLegacy's Successors as '

    Receiver and/or Trustee, -are the parties to thia Agreemeaat                 •            ••      '

              7.      A judgment Vi^as entered ag^iiast Mr. L.e6 in Xee.v.Xee (Case No.. 1-37^^^

    County Probate Ct. No. 2), as modified-by tho decision hi Lee v'-Lec, .;No.- 14-97-00162-CV, 47

    S.W.3d 767 (Ic-x.: App. - Houston^ -2001), and refl.ected in the Mandate issued by the Equrteeiith.

. Court .df Appeals dated February. 8, 2002 andthe. Order .Granting Application .for Writ of Scire

    Facias.and.to Revive Bormant Judgment of £b Harris Cpmity-Pjbobatc Court.No.-'2-m Cause No;.

. 137,506-402, filed Decemi7er'7,2J6l2 {th0 "Judgment'-)- thfe. Judgment included an award to the

    •Article IV Trust of $1,33.8,845^0 reprosentiiig excess.'executor' fees collected by Mr,- Lec as




P L A I N T I F F S ' O R l d l N A L PETITION - Page 088
I a n . 25,    2016         9;36Aiv1 - M L          . Y LLP                                                                              No. 6 3 1 2       P. 1 5 / 4 5




     • Independent Executor from. the Estate of ICatherme Pi)lot I-ee Barnhart (which reduced the ,

       amount that passed under the Barnhart Will [o the Article IV'Trust); legal fees of $1,900,000,

       and prejudgment interest of $499,177,16, totaling $3,938,025,66, plus postjudgment .interest. The

   • • Judgment .'and all rights associated therewith, including-hiit'not limited to principal, attorneys''

       fees, interest, and court costs, constitutes a debt owed- to the'Trust and an asset of the Article IV.' ,

     •Trust. •                •• .                                        ••     .                     '• . , -     •-      .- '             '      '           .'

                   8.              Mr. Lee lias made-payment-for the benefit of the Article IV Trust on tlic .

       Judgment, incluclmga'payraent of $8,000,000 ia2015.' '                                                 '                             • ...

                   9.             ' Mr. Ixe disputes-whether any amount remdna outstanding on the Judgment aft^^

       crediting amounts that were due hhn.from the Article IV Trust and his payments to the Article

      .IVTrust. . '                  - ••   ••.                                                        -''•/••                   •'' ••-'    .. . •

                   10.             A controversy exists between Mr. Lee- and the Article IV Tnist regarding the

       amount,' if .any, that rem'aiijS 'outstanding on the Judgment after all credits due "Mr. Lec and

       payments.made by. Mr. Lee are applied.                                                                                '       •

              '• ,' 11.            The Article,rv Trost and Mr.-Lee have each held undivided interests in property'.

       known as the River Bend Farm,:consistingof.apprdxima'tely, 640. acres .in Wharton County,

       Texas. Mr. Lee acqaued-a twenty-five percent-undivi'ded interest-in .this propertyfromthe estate

       of his father, flonaM Ellsworth Lcc (Sr.); The Article IV Tnist acqukcd a fifty percent interest'

       under the Barnhart Will.,'.,•'-•'•••;-.-.'                                    ••'••-..';.•.••••,-,/                            ]•.•••            •• • .-.-

                - 12. - . The-Artick IV Trust and.Mr. tec have each- held undivided' interests in property.

       •known as tbe Cap Rock Ranch, consisting of approximatdly 6,431'aaes, in Real County, Texas.

        Mr. Lee acquired a twenty-fiye percent undivided- interest ia this' property from the estate of his




        51B514.5        ,   '.'    . '•           ,' • . ' , ' • - • ;   "~    • •• •••   ,-'.   -•'     ••   .'. ' ' •"•   •" .      •• .'.• •         .. .   •• .'.'


    PLAINTIFFS'ORIGINAL PETITION - Page 089
an, 2 5 , 2 0 1 6      9:36AM.           Mi,             Y UP                                                             Wo, 6 3 1 2 -        P, 1 6 / 4 5




    father, Ronald EUsworUvLee (Sr!).. The Artide IV Trust acquired a fifty percent interest under • • ,

    the Barnhart Will-                                                                                    • /                       .'        '"

          • • 13V         A controversy exists regarding the ownership, marragcmcut, and accounting for • ,

    revenues and'expenses of River Bend ^arro! and Cap, Rock Ranch between the. Axticle IV Tmst • • .

    and Mr. Lee. •               • •                •      ' , ••      • •, \                     •, •        '   ••' .                  •' . • ,              ' .

                 14.     Mr. Lee and Legacy as Receiver of the Axticle IV Trust- desire to settle and -'

    compromise disputes between them so as . to (1) facilitate cooperation- between-Legacy as •

    Receiver of the Article IV Trust and as a ifidudary. to,Mr. Lee with respect to the Article XV

    Trust, (2) reduce expenses otlicrwise likely to' be iucurrcd by each of thcnri associated with the

 • • clakns and disputes betweeu them, (3) provide certainty iu the management of the affairs of Mr.

    Lee and of the Article IV Trust, (4) preserve and enhance the value of River Bend Farm and Cap ,

   - Rock Ranch and provide for efficient and effective management of these valuable properties, and ,'

   • avoid partition of them which hkely would impah the value; of them to both Mr. Lee and the -

     Article IVTrust;.and (5) resolve any and all issuesrelatedto the Judgment,'. • . - '.^ . ^                                                     •

                ' Aixordmgly, Mr, Lee and Legacy as Receiver agree as fdUowsr ''^                                             •;•                       •      • '

     Agreements: - -
         . ..    15.-. • On the Qosing -Date (defined belov/), Mr.'.Lee will' execute a. deed" to. Legacy-

     Trust Company as Receiver of the Article TV Tnisfto the River Pend Farm m. Wharton 'County;

 . -Texas Substantially in the form attached as.Extobifl.- '. ••-

                • 16. .. .- On the Closing .Date, MrL'Lee will exetnte' a Rrorcdssory Note to Legacy Trust;'

    . Company as Receivcir of the Artidc IV Trust substantially.-m the form attached as Exhibit 2 in-,.

      tlie amount of $4,000,000.; - . - ' • ' ' • ' .                       .-   - .'   • • ' . .. ' • -            •      • ' •'; . • - ' ,-




 , •' 6166.145' ,' •     . "•     '• '         .'       •..;.•'_. •.                        ''• ' ',••,..-,               ' - .' " ' / • - ' , '            ,--.•!•

   PLAINTIFFS'ORIGINAL PETITION - Page 090
 25. 2 0 1 6       9 ; 3 6 A M •••• M W       f LLP\                                    i\'o. 6 3 1 2 -.P,      17/45




          17.         On the Closing Date, Mr. .Lee will execute tlie AgrccmcQt. Respecting Certain .''

Rrospective Real Estate Acquisitions by, Legacy;'Trust Company/subatantiaily in'ih'e' form

attached as Exhibits. •• ,                /      ../,••••.•..'.'..••••••       .••.'•.••.••'.;••,;•

          18.        ' Effective, upon the Closing Date'.and.in cohsidcratibn of the- transactions and

 releases described in Paragraphs 15,16,19, and 20, Legacy as Rcceiver of the Article W. Trust

 and on behalf of the Article IV Trust and Legacy's successors as Receiver and/or Trustee shall.

      • a.          • scU and convey the Judgment, including but not Emited to all principal, attorneys'
                     • fees, interest and court costs thereon and associated with the Judgment to Mr.'
                      Lee, and agrees to file a Satisfa.ction of Judgment iriXee vi iee (Cas6.No-
                 . '• 137,506, Harris County Probate Q. No. 2) substantially in. the form of Exhibit .4, •
                  .: acloiDwledging that the Judgment has been fuUy satisfied; . • '

   . ' . . b. . ' record in the deed records ofajl jurisdictions in which the Judgment has been                    •.
            '.    abstracted a Bill of Sale substantially in the fomx attached.as Exhibit 5; . . ..•

           c.          agrees to ijiderrmify and hold.harmless.Mx: Ixefiromall claims based upon the : •
         '. •'       • Judgment; and • •"'••'••.                    • ; .•          y - \

          d; • ' releasesMr. Lee, his successors, and assignsTrom all liability under or related to •,
                 claims for amounts due from Mr, Lee oh account of his owfiership of an
          . • • undivided 25 per cent interest iti River Bend Farm and an undivided 25 per c^^^
                 interest in Cap Rock Raack         .

           19.       . Effective upon the Closing.Date and'in consideration of the transactions and

, releases, dcscri'bed in Paragraph 18, Mr. Lee op Ms own behalf and' that of his successors and

 assigns releases Legacy as Receiver of'the Article tV Trhst and. its successors, as Receiver, and/or,

. Trustee of the Article IVTrust from the foUowiag claims:            .                                      ' ,        .

       • a.- Claims of Mr. Lee fox his daiuages, inten^st, or other expenses because amounts due .
             to himfromthe Article WTrust for his share of . income of the Artide IV Trust with
   . •       respect to the mandatory distribution of one^third of the Axticle TV Trust's net income
             for all periods prior to December 31,2013, produced from revenue actually collected
             on a cash basis by the Trust prior, to December 31,2013 were oir. will be paid or
            • credited to him untimely,

           b. Claims of Mr. Leo for payments of income pro duced fcomi revenue actually collected
             . on a cash basis by the trust prior tp, December 31,2014 fbir bis health, maintenance,



 5168145         • • ,• •   '   .,        " . • ;..'      . ]              •       '•    ••'•'••.'••'.''' • '

PLAINTIFFS'ORIGINAL PETITION - Page 091
25,     2016     9:37AM      MM,      i LLP                                           LJo. 6 3 1 2 . P, 1 8 , / 4 5




 .,     •. ; • and support in excess of the mandatory distribution of one-third of the Axticle;IV
               Trust's'n.etincome ,' ••      '         • .. •'           ••          .' , . •

 . -. ,' c. Clauns against the Article IV Trost for attorneys'fees kcuired.by Mr. Lee prior to . •
            June 30,2015 not prtviously reimbursed by Legacy as,Receiver.'

          d. Qaims for tmstee's fees and trustee's expenses due Mr. I^e prior to'Jmie 3 0 , ^                 .

          e. Claims against the Article IV Trost for attorney^'' fees mcurrcd by Mr. Lee in •
             cormection with die Judgment or this Settlement Agre'ement. •                    •. • •

         ,t      Claims for expenses'of the Trust incmred tod p'aid by Mr^
               . for which he has not been previously reimbursed.' •

        g. Claha5 against the Artidc IV Tmst related to the accountmg treatmcn^^                  .
          • and the allocation of trust receipts and expenses' between principal and mcora6 prior ;
       . . to December 31,2013; provided that Mir. Lee reserves his right to assert any claim or
      ,     argument regarding'allocation of any proceeds from the sale or disposition otreal •,.
  . ..•     property occurring after such. date.              .;   .'

          h. • Claims that the Judgment is dormant, lapsed, invalid, or unenforceable,        •,      ' '     .

          i. • ClaimS to equitably reform or inodify the Judgment based on the ineq'uitable and'. •
              improper acoual of interest/.                     •                    •      •

          j.      Claims regarding calculation of th:e Judgment and interest thereon, including clainis
               . that interest should have been suspended and. not charged following Mr, L«6's
                • attempts to sctde the .Judjgment and ids request fOr a trust accounting in J^y 2014. .

            k. ''Qalms for damages suffered ph account of his twenty-five p.er cent iiitcresti^^                  ••
       ' . . ' Bend Farm,                   ' ' ' , . , '  ' • •'. •'•

      .• ; 20^ . . For the • avoidance .of • doubt,' the parties agree'"that:- Mr. Lee by the releases •

 dcscri'bed in Paragraph 19 docs wot release aad expressly-retains: ' . '.                             ''

           a»- Any and all claims of Mr. Lee, indivi^aUy, as trustee.df aiiy trust created under the '
               BarnhartWiU, asabencfidary of the Article iV                                            •
               Trust, agamst Susan CaroiUe Lee, individua^^^^^
         . . under the Barnhart 'Will, including but not limited to' Mr. Lee's right to pursue such..
               . (^ainis and to obtain'his share of the benefits thereftom,

              b. Any and all clainis of Mt. .Lee, individually, as trastese of any trust created under the
                 Bamhart Will, and as a beneficiary of the Article IV Trust to a share of any .         . •
               • distribution for any reasonfromthe Axticle IV Trust made oxi or after January 1,
               . •2014.             •                       • ' . •           „'•'..•            .         •




  5159145 .          .'•...,•   ,..'.-..' .   • '.•••

PLAINTIFFS' ORIGINAL PETITION - Page 092
 2 5, 20 1 6    9; 3 7 A M •   M l\   Y LLP                                             •No, 6 3 1 2   ,P,   19/45




          c' Any an.d all claims for )ns share of momss or cdmpeasation received by the Article
            • IV Trust after December 3 1 , 2 0 1 3 jn any manner even if it relates to events or
              obligations prior to Deceinbcr 3 1 , 2 0 1 3 , including but not limited to ( 1 ) any recovery
              obtained by or oh behalf of the Article W Trust after December 31,, 2013 from any ,
              person or entity by reason of events occurring .or, injuries suffered by the Articie IV •
              Trust at any time, and (2) any. claim rcgardmg allocation of any proceeds from the
              sale of real property of the Article IV Tmst occurring after December 3 1 , 2 0 l 3 v .'



          21.       Either party to this Agreement may require,approval of Harris County Probate ''

 Court No. 2 to the terms hereof as a condiEo|i precedent to the obligations of Paragraphs 15-2p

 hereof. Legacy will file a motion seeking' that approval to the terms hereof within fourteen days

 of the Effective Date, of this Agreement, .Mr. Lee'.agrees to support a motion to approve this •

 Agreement




 Ronald E . L<ee, Jr,



 Legacy trust Cornpany as Re<ieiver of the Artide IV Truist under the Last Will and
 Testament ofKatherine Pillot Lee Barnhart /                            ...




           Presideiit & Chief Executive Officer




  616814S-.

PLAINTIFFS' ORIGINAL PETITION - Page 093
 25,   2016      9;38AM      Mk      Y LLP                                  No, 6 3 1 2   P,   20/45




                                          Index of Exhibits            ,,      .


          1. , Deed to River Bend Farm in Wliaxton County, Texas, to Legacy Trust •
          Company as Receiver of,the Article I V Trust • ...••../.'       •. .

           2.'.   Promissory l^ole from Lec to Legacy Trust Company as. Receiver of
         ' the, Article IV Ttust/.                   • ' • "

          3.    Agreerneittt Respecting Certain Prospectiye Keal Estate
          Acquisitions by Legacy Trust Company on Behalf of the Article JV
         •Trust'             . .. •'   .'     • • .• ,   / . •; •

           4. ... .Satisfaction, of Judgnient entered inXee v. Xee, (Case No. 137,506/.
          Harris County Probate C t No. 2), as modified by the decision in Lee v. Lee,
        :. 47 S,W3d'767 (Tex. App. - Houston, 2001)

         . 5.. / Bill of Sale of Judgnient fronr Legacy Tmst Company as Receiver of.
         • the'Article I V Tmst under the tast Will' and Testameiit of Katherine. Piliot
         . Lee 3amhart to Roiiald E. Lee, Jx. .'




 •.' • • • \ \     •..:: •:.,•.' . ;• • •••••'/. \   . '/••-•g^-•..'
 • 6185145..;      •   •

PLAINTIFFS' ORIGINAL PETITION - Page 094
n, 25.   2016 . 9 ; 3 8 A M .          M iVZ- V U P                                                    No. 6 3 1 2       P: 2 1 , / 4 5


  Exhibii. 1                 •         '                     ,           • .•        •          •.                               •



 • '      .     '      •              • •                            'M m       ..   '           '       ;


  NOTICE OF CONFIDENTIAIiTY RIGHTS: I F YOU A R E A NATORAL PERSON,,
  Y O U MAY REMOVE OR STRHCE ANY OF THE FOTLOWING INFORMATION
  F R O M ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY
  B E F O R E I T IS FILED FOR RECOBD IN; THR PUBLIC RECORDS; YOUR SOCL^L
  S E C U R I T Y NUMBER OR YOUR DRIVlER'S LICENSE NUMBER.    ;•


   STATE OF TEXAS •      '§ ' ' '   • ' •.•
                • • . § . ,      KNOW ALL MEN, BY THESE PBESENTS:                                               '             . "•:
   COUNTy,0FWBART0N §          '         •     •••         , ' ' •.                                                  •

     . ' THAT' RONALD ELLSWORTH LEE,' JR:, an individual ("Grantor'') for and -in
   considcratiOn.,of tho sum of Ten arid No/100 Doil.ars ($10.00) cash in haud paid by LEGACY '
   TRUST' COMPANY, as Receiver of the Article IV .Trust .under the Last Will and Testament of •
   KATHERINE PILLOT LEE BARNHART ('Vrantee"), whose address is 600 Jefferson, Suite
   300, Houston, TX'770O2, and other good and valuable consideration,'.the. receipt and sufficieacy '
   of which are hereby acknowledged by Grantor, ElAS QUITCLAIMEb unto Grantee all of
   Grantor's right, title, .interest, claim; and demand iii' and to, arid by tbcse presents, does
   QUITCLAIM that 'certain! tract of real property situated iii Whartou County,. Texas, and
  . described as follows:                      •                          .'     ' - ' ' ..

                             See Exhibit "A" attached .hereto.-.and incorporated herein by
                           . rcjfercncc , . •, '

 - together with all and.singular Grantor'srigh't,title, interest, claim', and demand 'iu and to the
  . rights, privileges,, hereditaments, and appmtenanceg pertaining to sudi rcal property, including
    any aud all improvements andfltstmcscurrently attached to and located thereon (collectively, the
   "Property'),                  •                                                   • ... . .. '..,,. , •

            TO. HAVE AND' TO HQLD the above-releascdi Tights,- .titles,, interests, claims,, and;,
   demands to said Property, to Grantee and'Grantee's heirs, executors, administrators, legal repre-
   sentatives and assigns forever/ Neither Giranto'r nor Grantor's lieirs, executors, administrators,
   leg;al representatives,.or assigns shall have, claim, or deraaud' any right or tide to the Property or
   any part of it. ,'.            • • • ' : . . • , .      . ' ''' .• '•




                                                      [SlGNATUrtE ONFOXjLOyflWO PAGEi .




 ,,. 5157376-       • , : ' . , : -        .. •   '     ' .' '.'',••-.

PLAINTIFFS' ORIGWAL PETITION - Page 095-
J a n , 25. 2 0 1 6       9;38AM                          -MM                                                                                             f ^ o , 6 3 1 2 • P, 2 2 / 4 5




          .       EXECUTBDthe                                          day o f                     "           ' . • • 12016.                 '           .

                                                      :•• , ,                                 •••. GRANTOR •,                                         .



                                                                                                           RQNAl5 ELLSWORTH ISE,, JR.




      THE STATE OF TEXAS                                           '    • ••.•§ •.' ' ' , '
              •   •   •   •    •   •       •    .     •    •   •   •           ^        § .        •       •     ,    •

      COUNTY OF HARRIS                                                 ' •,             §                        ,            ' .    '' '         '                      . •,

             •This inshuincnt was acknowledged before me on, the                                                                     day of                            ^, 2.016,
       by Ronald Ellsworth Lee, Jr;, an individual, •'•    .                                                                         •..


      :|;SEAL]..                               .-•:•               .     ':.            '• ..'                            .    •••      .•.                   ;y'-.


                      •                                   ..' ••                   •                       Notary Public m and for the State of Texas




       After recording please retxim to: .:

       Porter HedgesLlC^?    •.
     . ioOOMainStrcfeti36*^Hoor..
       Houston, Texas 77002
       Attn: Neil Kenton Alexander '




        •5157376              ".       ,            • • '•: .;.'„•       ;         ••         •'       .             '.   '

      PLAINTIFFS'ORIGINAL PETITION - Page 096"                                                                  • '
J a n . 25, 20 1 6 . 9 : 3 9 A M    / M i , - - Y LLP                                       1^0,6312   -P, 23/45




                               . •• .,                     • EXHIBIT " A " ' ; . ' . • •"


      633,46 aqres of land more or less, v/ith inxprovements located tliereon, with 633.460' acres being
      ia. Abstract 62, and 6:'542 acres being'in Abstract 348, for a total land area.of 64O.002 acres,
      'Wharton . County, Texas, being more particularly described by meteg and bounds; also known
      locally as River Bend Farmi. •        ' ':     •.••,••'.            • •'; '             ••.




      3157375 ...              •.   . •'   • '•   ••   .   ,-.

   PLAINTIFFS' ORIGINAL PETITION - Page 097
n , 2 5 , 20 1 6        9;39AM         Vik.        /LLP             ' •.     .•      .               ,           •!\io.6312    P, 2 4 / 4 5




                                   • . • '.        .          /'PromtssoryNote,


      $4,000,000.00                        ,       :• ' , • Houston,Texas,               • ' ' ., A s o f f . ..• '   •• _],20l6


            •'.,1. DefmitioDs                  •              ' • " .,     • '    ' .' •.•' ,                 •• •, • .' '    ' • '•

                  .              a. . Waiter" means Rouald Ellsworth Lee,                Jr.     '                                 ' •

           ' '•         ' . b, "Article IV Trust" raeans the katherine lee Bamhart Trust • Created •
                           . ' under Artide IV of the Last Will and Testament ofKatherine Pillot l^e
                        •     , Barnhart.                           • ,

                        • • • c, Tayee" means Legacy Trust Company, , as Receiver for tire Article IV
                                 •Trust and any successor receiver or trustee of the Article IV Trust,

                 • 2.- In consideration ofthe agreements executed in writing contemporaneously with •
                          this Promissory Note, Maker promises to pay ,to the order of Payee at its offices
                      • •• at 600 Jefferson, Suite 300, Houston, TX 77002, in lawful pro.ney of ,the United .
                          States of America, the principal amount of Four .IvIlUion and No/100 Dollars^
                          $4,000,000.00,,plus, such additional amounts as may be added , to principal
                          pursuant to the tenns of this Promissory Note (this W o f O or any. df the ^
                          Bocumcnts (as defined, bclcrw), together witii interest,on the principal balauco
                          firom time to time remaining mipaid at the rate and iipon the terns provided in
                          this Note.                       •      • .•

                      3. ' Intare^ Rate> The mipaid principal balance of this Note ,from time to time •
                           Qutstandiug shall accrue, interestfromthe- date of this Note until maturity at an.
                         • annual feed rate .of fourperceot (4.0%) per armum. ,

                      4. FaVnij^rit' Td^tlttL^!i.', Payments of principal and accmed interest shall be made .
                          quarterly in the amount of $500,000 principal, plus accrued interest, begiojiiug
                        • 91 .days from the date hereof, with.a.final payment of remaining principal and
                          mterest due two years from the date hereof, ..          • ' •

                  , S. • Calcolatiott of' Interest. Interest will'be calculated on the basis of achial number
                      • ,of days elapsed (deluding the first day but excluding the last day) during a
      ,•        ,        calejjdar year consisting of 3.65 or 366 days, as the case niay be,' . .

            ,         6, .yrepayhlgnt. Maker may prepay this Note in whole or. in part at any tune .
                          vrithout being requhed to pay any peiialty or prendum for such privilege. All
                          prepayments under this Note,, whether designated as payments of principal or
                          interest, shall be applied to the principal or interest of this Note or to .expenses
                          provided herein, or any combmation of the foregoing, as'dnccted by the Payee
                          or the holder of this Note at its option and .in its sole disaetion.             , •




    ,' 5I55684y7^          '•.      V. •               ' .'     '

 PLAINTIFFS' ORIGINAL PETITION - Page 098
n, 2 5 . 201 6      9;39Ali        M ^          Y UP                                      No, 6 3 1 2 -   P, 2 5 , / 4 5




                 7. Msmnm Rat&. • Regardless of any provision in this Note,, all other agreements;
                     . documents, and instruments iii favor of Payee ever delivered in-connection with
                         or under this Note; and all renewals, extensions, amBudmenLs, modifications,
                 ••' • supplements, restatements, and replacements of, or substitutions for, any of the .
                       , foregoing (collectively, the "Loan Docummts"), it is the intention of 'Maker and
                     '. Payee that Payee not (a) contract for, charge, take, reserve, receive, or apply, as.
                    -• • interest on all or any part ofthe principal bf this Note any amount in excess of
                         the Maximum Rate or^ an amount calculated based on the Maximum Rate (the
                         "Maximum Amomf), or (b) receive any unearned interest, in violation of any .•
                     • applicable law. If any acceleration of the matoiity of this Note or any paym,ent •.
                         under this- Note or. any other Loan Document produces a rate in excess of ttie
                        'Maximum Rate or if Payee' shall for .any reason .receive any' such unearned
                         interest or if. any. transacdoh contemplated hereby or, by any other ,Loan
                  •• Document would otherwise be usurious, under applicable law, theA '(i) the. ,,
                         aggregate of,,ail iaterest under applicable,-usury-laws'that is'cohhacted for,,
                         charged, taken,.reserved, received or applied under this Note, .the other Loan •
                     - Dodumente, Or-otherwise shall , under-no circumstances exceed the Maximum
                         Amount, (ii) neither Maker, nor .any .other-mdividual, .partnership, limited
                        .partnership, 'corporation, limited-liability company, business trust, joint stock,
                         company, trust, •'-linincoiporated ' assoeiation, joint ' venture, syndicate, '
                       • governmental authority or other , entity or organization.-Of whatever nature shaU
                     . be obligated to pa.y the amount of'such interest to the extent that il is m excess of
                         the Maximum Anaount, (iii) any excess or unearned interest shall, be deemed to
                         be and shall.be treated as a partial prepayment or repayment of principal and any
                         remaining excess or unearned interest will'be refunded to Maker, and (iv) the
                        • provisions of this Note'and the tain. Documents shall irxunedlately be deemed
                      . reformed,, -without the necessity of the. execution, of any'new document' or
                     . instrument, so as to comply., with .all applicable usury laws: In. determining
                         whether interest .paid-or payable exceeds the Maximum Rate or the Maxiuium
                         Amount, Payee shall,'to the maximum extent pennitted under applicable law (w)
                     • treat aU advances' uiidsr this Note and the other Loan Documents' as' a single
                          extension of credit, (x) chaiacteiiJEe any non-principal payment as an expense,
                          fee or premiuih rather than as interest, (y) , exclude voluiitary prepayments or
                         repayments and their effects, and (z) amortize, prorate, allocate and spread the
                          total amount, of inter^t throughout the entire contemplated term of thijs Note.
                          However, if the Note is paid In fiiil before the end of its full contemplated term,
                          and if the interest received -for its acttial 'period of existence exceeds the
                          Maximum Rate or the Maximum'Amount, Payee shall refund ,any excess (and
                    , Payee may not, to the extent permitted by law, be subject to any penalties
                          provided by .any laws for contraciing', for,'charging, taking, reserving or
                          receiving interest in excess of the Maximum Amount). If the laws of the State
                      ; of Texas are applicable for purposes of detennining the "Maximum Rate" or the
                         ."Maximum Amount," the, "Maximmn Rate" may not exceed the "weekly
                          ceiling" from time to time ia effect nnder Chapter 303 of the Texas Finance
                          Cpde, as amended and In effect from time to.time.



                                                                     2
  '. - ' 5155684V7. .         ~•         ".'.• •, .-   ,   '••.. .

PLAINTIFFS' ORIGINAL PETITION - Page 099
 25, 2 0 1 6      9:40AM           M M       Y UP                                                No, 6 3 1 2 '   P. 2 6 / 4 5




              8. fi^fiuUs: The term "Default' means, the occnrrehcc of any one of more of the •
                , following.events:- , " '  ' .' •.      '•' .     '

                          .a. The failure of Maker to pay any .part'of the principal or interest under
                              this Note when and as requited to he paid. . . • '         •• •' • .

                   • b,-' Maker (i) voluntarily scela;' consents to, or acquiesces in.the.beneJat. of •
                         Tide 11 of the United States Code or any other applicable liquidation,
                         conservatorship, bahkmptcy, fraiudulent transfer, assignment for the
             .• , .      benefit of. . creditors,. .'inoratprium, ' rearrangement,-. receivership,
                         insolvency, reorganization, suspension of payments, ,or similar debtor -,-
                    , rehef laws of the United-States or other applicable jurisdictions from ,
                        -'tinre to .time in e:5ect and affectihg the rights.of-creditors .generally
              . • . ' ' (^'X>ebtor Relief Lixw^'), (ii) becomes a party to or is made the subject of
                     - • any -proceeding provided for by any Debtor Relief Law (other than as a '
                         creditor or claimant), and (A) the petition is not contoovcrted within 10
                         days and is not.diismissed within 60- days, or (B) an order for relief is
                    . • entered under Title 11 of the United.States Code, (iii) makes an-
                      . assignment for. the benefit pf Creditors, ot (iv) fails, (of admits in writing
                         it§ inability) to pay its debts generally as they become due.      -•

                  If a Default occurs,, after the expiration of any .applicable grace or notice and
                   opportunity to cure.periods, the holder p,f this Note shall be entitled to (i) declare
                  the entire unpaid principal, of, and all' accmed and unpaid interest on, this Note
                  immediately due and payable, without notice of intent to accelerate,, notice of •
                . acceleration, any other notice, dcinandi or presentment, all of which are hereby
                  waived, (ii) exercise its offset rights under Section 11, or (iii) proceed to protect,.
                   enforce, and exercise any other right or remedy to which the holder may be'
                 : entitled by agreement, at law, or in equity.                                ,' .'

               9/ -NO-WaiVgr. No delay on 'the part of 'tire holder of this Note'm' the exercise of
                  . any right or remedy available'.to the holder shall operate as a waiver of such'
                 . right or remedy.' No single or 'pardal exercise 'of a particular right or'remedy
                 • shall operate, as a w:aiver of that particular right or remedy, or any other right or'
                    remedy.'•'..'.'''-                     ,    '•. ' • •.'          :.'.- -. ..'.,''

               10. Waiver. Except as provided in this Note, Maker and any party which may be of '
                . become habl'c fof the payment of any. amounts'due under this' Note (including
                     any surety, endorser, or guarantor) jointly and severally waive (to the extent
                     pennitted by law) all • applicable exemption rights (whether arising by
                 . . constitution, , law, or otherwise), all 'valuatiQn and . appraisement rights,
                    .presentment- and demand for payment, protest^ notice of- protest , and
                     noppayment, notice of the intention, to accelerate, and'notice of acceleration and •
                     agree that their liability on this Note shall not be affected by any renewal; or
                     extension in the time of payroent hereof, by any indulgences, or by any release
                     or change in any security for the payment of fhis Note, and hereby consent to




 -• '5j5S(584v7 - , ' -      ..'   '••   ;   ;-• : '. .'•   •. ••'   •.   . -'..' •' '. •• . "

PLAINTIFFS'ORIGINAL PETITION-Page 100                                           .    ' '
Jan, 25, 2 0 1 6 - 9:40AM.               - M ••--4 Y LLP.                                             No. 6 3 1 2 • P, 2 7 / 4 5




                     :•• any and all renewals, extensions,indulgences, releases,-or changes, regardless of
             •           the number of such renewals, extensions, indulgences, releases; or, changes. •. •

                  • 11' ^kr'Q,tt EigllM. While a Defauh exists, Payee.is hereby authorized at any time,
       ;     •          and from titftt to tunc, to the fullest extent permitted hy law, to set off and apply
                        any other debt or income attoy-time owingfayPayee or the Micle'IV.'IV^^
                        or for the .credit or the account of Maker, against the oiitatandmg'principal ,.
                       • amount of this- Note, interest, • and. other amounts due under this ,,Note (the
                        ''Obligation")/tv&n if Payee has not made demand under, this Note and the
                     . Obligation .is unmatured. Payee agrees to promptly notify Maker after any such •
                        setoff and application is m,ade;j?rov/ifedr/^a/the faflure to give such notia shall
                     , not affect the validity of such set off and application;' Therightsof Payee and
                      •the Article IV Trtist under this Section 11 arc in addition to other/rights and
                    • remedies (mcluding other rights of set off) that Payee and the Article .IV Trust
                        may have! ... '                     .•• .   ••    ,•.,•.•            . ..      •. -.

           • • .. -12. WmMs4       Mi^m^^       This Note, and Maker's performance of this Note, is an' ,
                        unsecured obligation of Maker,           •     • • • •

                 • 1.3- AaKlii&MsTSS;- This Note shall be construed, and its pcrforxhance enforced, in
                      . accordance with the laws of . the State of Texas and, as. applicable, tho laws of the
                        United States of America.,'.                   ..           ' . ' " . ' \    ,'. , .

             .' 14-      fetSifeMlg:^. • Payee shall have aU rights, remedies, and recourses granted •..
                       in this Note and the Loan Documents and those available at law or equity and,
                       the satne (a) shall be cumulative'and concurrent, (b) may be pursued sepatately,
               ,. ., siicccssively, or concurreiitly-against Maker or any other liable party .or against''
                   '- any. one or more of them .in such order as Payee, in its sole discretion, shall
                       determme, (c) may be exercised as often as occasion therefor shaU arise, it being •
                     ..agreed by Maker.-and any other' liable party that the exercise or failure to '
            .     . exercise, any .of the same shall .in no event be construed as a waiver or release
              , . thereof or ofany ptherright,remedy, or recomse, and (d) are intm^
                     . shall be, nonexclusive,: ' ''-,                  ' -•                  ' •;

                   15. W A i v m          m.
                                       ! i m y : TRIAL,   VACR VXUTY                        mmxo mmm
                         WAIVES, t o r m FULLEST EXTENT PERMTTTED B Y A F F U C A B L E
                         LAW, ANY BIGHT I T MAY HAVE TO A T R I A L BY JURY IN ANY
                         L E G A L PROCEEDING D I R E C T L Y OR INDIRECTLY ARISING OUT
                         OF OR RELATING TO THUS NOTE, T H E OTHER L<)AN
                         DOCUMENTS OR T H E TRANiSACIIONS CONTEMPLATED H E R E B Y
                         (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
                  ..' •• THEORY)..                                                 .

                   16, ENTIRE AGREEMENT. THIS NOTE (AS AMENDED OR R E P L A C E D
                       FROM TIME TO TIME) AND T H E OTHER W R I T I E N LOAN
                       DOCUMENTS EXECUTED BY MAKiaa AND P A Y E E {OR B Y M A E ^
                       FOR T H E BENEFIT O F PAYEE) REPRESENT TBDE FINAL


 ••   ' 5155(S94v7   .- ,   ..   ;   .        . ; ' . ' . .•   . •   .       •'   ''•   '   • •[   '•' •• .     .        . ''       ,


PLAINTIFFS'ORIGINAL PETITION-Page 101                                    '                            • .           ..          .
J a n , 25, 2 0 1 6. 9 ; 4 1 A M   M I     Y LLP                   No. 6 3 1 2 " .   P, 2 3 , / 4 5




                        AGREEMENT- BETWEEN MAKER AJSDO' PAYEE AND MAY NOT BE
                        CONTRADICTED BY EVIDENCE OF TRIOR, CONTEMPOItANEOXJS,
                        OR SUBSEQUENT ORAL AGREEMENTS BY MAiOER AND PAYEE..
                        I H E R E A R E NO UNWRITTEN ORAL AGREEMENTS BETWEEN
                        MAKER AND PAYEE. THIS PARAGRAPH IS INCLUDED HEREIN
                        PURSUANT TO SECHON 26.02 OF. THE . TEXAS BUSINESS AND
                        COMMERCE CODE, AS AMENDED FROM TIME TO TIME.    :




       •   51556S4Y7          .•         ••. . •-. y   •- •


    PLAINTIFFS' ORIGINAL PETITION - Page 102
Jan. 2 5 ,   2015'   9;41AM-,        VU P                                             Jo, 6 3 1 2 -   P. 2 9 / 4 5


         Exhibii 2


                                                          MAKER::




                                                          Ronald Ellsworth Ixe, Jr,




                 :. ; • . . .   Signature. Page to Unsecured Pxontissory Note

   PLAINTIFFS'ORIGINAL PETITION - Page 103
 25, 2 0 1 6 9 ; 4 1 A M           ,M M o - ( L L P                                •         '                 .               No,'6312     P, 3 0 / 4 5


.Exhibit:3             .    •    . .     ••          '' .'                                  '•• ,      '           '       , , .   ,   ;'


      Agreement Respecting Certain Prospective Real Estate
      Acquisitions by Legacy Trust Company on BehaJI of the
                          Article IV trust
Recitab                                         '                                                '         •           '

 1. Under tHc Last Will and Testament of Katliorine PiUot Lec Bamiiart admitted to probate in •
   . . Harris, County, Texas nnder Cause Number 137,506 (tbfe "Bamliart WilV"), trusts were •
  . created for tbe benefit of her children and grandchildreri. One of the trusts created was under
      Article IV of the Barnhart Will (the "Article IV Trust^O-' . • • '               .', '''' ' •'
 2, Ronald EHsworth Lee,'Jr. ("Mr. Lee") is the.son of Katherine Pillot Lee Bamhart, and'a •
    benefioiary uEider the Article IV Tmst.       • ;•               . •. ,              • .'

 3- Snsan Camille Lee is die daughter of Kathcriiic Pillot Lee Barnhart, and a beneficiary under
   • the Article IV, Trust;, .,v .• ,       ,' '            '                   - . • . ' • • • .

 4. By order of the Harris Gounty Probate'Court No, Z ini^e v. Lee, Case No. 137^506-403
    dated June 18,2015, ("June 18,2015 Order"),'the court appomted Legacy Trust Company as .
    Receiver fbr the Article.W. Trust ("Legacy" or the "iE^i^^^^ • ; '

 5. .The Article IV Tmst and Mr. Lee haye each held, undivided interests' in property, known as
       the River Bend Farm, consisting of approximately 640 acres in Wharton County, Texas. Mi,
   . Lee acquired a twenty-jSve percent undiyided interest in this propertyfromthe estate of his
      . &tbcr, Ronald Ellsworth Lee (Sr,); Susan Camille Lee also acquired a twenty-five percent
     ' undivided interest in this property fi»m the estate of Ron'ald BUsworth Lee (Sr.), The Article •
    : ,1V Trust acquired a'fifty percent hiterest under the Barnhart Will.

 , 6.. The-Article IV Tmst and Mr. Lee hav^ each held undivided interests in property known as
       the Cap Rock Ranch, consisting of approximately 6j431 acres, in Real Comity, Texas. Mr.
' . - Lec acquired a twenty-five percent undivided interest in this property from the estate of his '
       father, Ronald Ellsworth.Lcc. (Sr.):'Susan Camille Lee.also' acquired a twenty-five percent .
       undivided Interest m this propertyfipbm.thc'estateof RonahJ Ellsworth Lee (Sr.).Thc Article.
  ' IV Trust acquired afiftypercent uiterest under the Bainh^

 7. The Article IV Trust owns propetty'known as Rim Rock Ranch, coosisticig of approximately
 ,. . 1,200 aaes ro Real County,.Texasadjoinmg Cap Rock Rarich^ '•

' 8. • The First Codicil to the Last Will and Testament of Katherine PiJlot Lee Bamhart provides in
     'part: • ' ; ' . • . . • . , • ' . '. /••. /• . .• ' ..'•'•; • ' •• • : ' • • • '

                           . "3. Notwithstanding any provision of my WiU and this First •
                             Codicil.to the contrary, or seemingly to the contrary, during the
           .       .         lifetune ofraydaughter Susan Ixe Gibson,-no Executor, TriK
               .             Co-Trustee serving hereunder shall have thcrightor authoril;y to ,
                             sell, dispose or in any manner, partition or rnortgage any of the.



' 5217039'•.''•: ' ...-',•'••:'•         ••,••.,'.••• ..^ . ' • ' ' • ' • , . - " ^ / . .            •-'       .-'     .           •'/•'•.!     . -

PLAINTIFFS'ORIGINAL PETITION- Page'l04
  25.       2016        9;42AM       . M ^, . Y LLP                                               No, 6312.-   -P,   31/45


 Exhibits           •            •         ,     '       '                         •     .


                            5-foUowixjg properties wiihout the; prior written consent
 , •                    •      daughter: [ ' • '.      .         .'      . • . •

                        ... My .interest irrdre'iUvcr Bend Farm, Whartori Courity. •
                    Texas,'same bemg 640 acres of land, more ore less, situated in the • ' •
                  . A, Somerviile Survey, Block 4, Abstract,62, Wharton County,. . "
         • • -. • Texas,'and .the'Caprock Ranch''and the'RitnrockRatich,'said                ' '                     •
               . Ranchesbemg situatcdmRcalCounty, Texas, about twelve miles
               • north of the town of Reagan.'Wells, Texas, containing 7,680 acres, ;
                '. more or less, and bemg situated in T.W.N.G.R.R,Co., Block,No.                 • '•                •
    .'• • ' • •'• 13, Real County Texas.".-.' •"..• '            . ., . ' . • , ' / . . ' •• •

  9. Mr. Lcc' and Legacy as Receiver of the Article FV Trast desire to'preserve and enhance the,
     value of River Bend Farm .and Cap Rock Ranch and provide for efficient and effective • . . .
     pianagement of these valuable properties, and WOid partition of them which likdy would
     impair the value of them.

  10. Mr, Lee has agreed to convey and Legacy as Receiver of the Article W Tmst and on behalf
      of the Article IV Trust has .agreed, to acquhe Mr- Lee's Interest in' River.Bend Farfn, more
      pardcularly described.in a Deed dated"            ';, 2016, as part of a Settlement Agreement
    . between'Mr. Lec and Legacy as Receiver. • •,

.. . I L Accordingly, Mr. Ixe and Legacy as the Receiver agree-as follows: , , • •                     .

 Agreements                          '           ;• ..   .-.,'','        . ' • ' , . .       ••

  12. For andincoBsideradon of the sum ofTBN AND NO/lbo DOLLARS ($10.00) cash and
      other good and valuable consideration Mr. Lefe hereby consents to the pmchasc by Legacy .
      Trust Company as Receiver of the Article IV. Trust and on behalf of the Article IV Tnist of

                  a. Susan Camille Lee's tw-enty-fiV6;percent (25%) itt'Cap Rpck Ranch
            •       . conditioiis and for a gross purchase price not to exceed .$3,400,000-00, provided
                      however,- that Susan Camille Lec also provides irrevocable written consent that any .
                   ' Receiver or. Trustee of the Articie IV Trust may sell, dispose of in any manner,
                . ,, partition or mortgage the properties known as Cap Rock Ranch and Run Rock Ranch,

                   b, Susan Camille Lee's tweuty-jS-ve percent (25^) in. River JBehd Farm under cirstomary
                      conditions and at a price riot greater than the appraised value of Susan CamiUe Lee's
                    • twenty-five percent kitcrest as 'determined by a third party qualified appraiser, provide
                 ... hqwevef, that Susan'CamiUe Lce'also provides, irmv-ocable written .consent that ^ y •
        '       .. . • Receiver or Trustee of the Article IV Trust may sell, dispose of in any manner,
                      partition or'mortgage the property knO'Wn as River Bend Farm;


  13. The Effective Date of thi^ Agreement is.                      .     ' \ ,.2016..   .        .




  52J7039

PLAINTIFFS' ORIGINAL PETITION - Page 105
n, 25, 2 0 1 6    9;42AM • M M             y LLP                                                                 No, 6 3 1 2 • P, 3 2 / 4 5


  Exhibits




 •Ronald E. Lee, Jr.




  THE STATE OF TEXAS                 •;.     /     §••                 . •              •••••,               .

  COUNTY OP HARRIS •„                              I         •        ' . " ' , . •'' ;           "      '
       • Theforegoinginstrument.-Was actoiowledged before me on this_ •' ; day of
  2015,byRonaIdBl]sworthLee,;r.. .."         ..•.••• . . ' . • •         . .;



                                                                       • •:• .NOTARY f UBLIC, m and for
                                                                      • •;.. THE STATE OF TEX^S •


  Legacy Trust Company as Receiver of the Article I V Trust under tie Last WiU and
  Testament of Katherine PiUot Lee Bamhart



  By-.;          1:. •. :
         "• Edward R. Naumes •




  THE STATE OF TEXAS ' - • ' .r'V"':                              .                              •-. "       ' • '.

 .. COUNTY OF.HARRIS             .                     §''       •• •• •       • ,• '        •    •      ' .

          The foregoing instrument was acknowledged before inc on this     day of ^
  '2016, by Edward R Naumes as President of Legacy' Trust Company:' •'. • '      ••



                                                                             NOTARY PUBUC, in and for
                                                                             THE STATE O F TEXAS




  5217039 • ,       ' .


PLAINTIFFS' ORIGINfAL PETITION - Page 106
1, 25, 2 0 1 6    9; 42AM       Uk               '/LLP                                                     io, 6 3 1 2 • P, 3 3 / ^


     Exhibit 4


                                                   Cause No,. 137506;402'

     Estate of Katherine                    Pillot L e e - § -                                   l i t the P r o b a t e C o u r t -
     Barnhart, Deceased                           '•  •'§
 •                '^^   •   •      •       ..•         •••            . ^ • • • § -                              •. No.2.of.,
                                                                    • • • • • §



     Snsan Camille Lee, et al,
                                                                              §
             Plaintiffs,                                                      §         •



     V,                                                                                         Harris County, Texas

     P-Onald E. . 1 , ^ , Jr., et al,                                         §
                                                                              §
             Defendants.                                                      §



              Legacy Trust Conipany, Receiver of, the Aiticle I V Trust under the Last W i l l ' •

     and Testament of Katherine Pillot Lee Bamhart probated iii this Court, notifies the

     Court that fire, original judgment in Lee v.' Xee (Case No. -137,506,. Harris County

     Probate ,Ct. No. 2),.as modified by the-decision in Lee v. l e e , ' No. 14-97-00162^

     CV, 47 S'.W.3d 767 (Tex. App. - Houston, 2001), .and reflected in, the Mandate

     issued by the f^ourteenth Court of Appeals, dated February 8,, 2002 and the Order

     (Granting Application for Writ of Scire Fadas and to Reyiye Dormant Judgment of

     tire Harris County Probate Coiirt No. 2 in Cause No,'137^06-402, filed December

     •7, 2Cil2, a copy of which is attached hereto as Exhibit. A' (the "Judgment"), has

     been M l y paid, satisfied, and is discharged. '.

 '•Dated:; • - , ' ' • ;               "                 ,'                       '••       ^ '• . '           ' -



                                                                                      1
 , 5151537                             ,- :. • ' . •          :.•

PLAINTIFFS' ORIGINAL PETITION - Page 107
J a n , 2 5 , . 20 1 6 -    9:43AM    M k .. Y LLP                                         Mo, 6 3 1 2   P, 3 4 , / 4 5


   . Exhibit 4


                                                               Respectfully sub'mitted,-




                                                                Attorneys for Legacy Trast
                                                                Company as Receiver of the Artide
                                                                IV Trust lUBder the Last Will and
                                                                Testament ofKatherine Pillot Lee
                                                                Bamhart




    ••• 515X537-       ••   ,.   •:    •.     . ,    ;-   •:   ..;   •

    PLAINTIFFS'ORIGINAL PETITION - Page 108
an, 2 5 . 2 0 1 6 -   9:43AM   M M   -cr   V LLP                                                 t^o, 6 3 1 2 -    P. 3 5 , / 4 5


    BxhibU 4


                                             Certificate of Service



       ' •. This-is to certify that.a troc and correct copy of the,foregomg document was served via
   • email upon the following counsel pf record for Defendant on ^                 2016;,

    baniel J. Sheehan •                                                            ......
    ^shcehSn^d^^                  •  .. . • • '•      .-. .'•
    John M. Phalen, Jr.                                                                         ' ,, '
    jpix^dcu'OdBa-)aw..com.   ' ',•                                               . •'. '    • ' . • .\ •
    M. Patrick fvlcShan . ,                                                         ',• .
    pffl(Lshaii@dsa-hiw,<»m ' •'       '      '. • •                                   .                 .'.     .
     Daniel, Sheehan & Associates, LLP '                 •    .• •              .        .. '                  . •
     2501N. Harwood Street,. Suite 1280. •.      '   • • ' ..                             '
    •DaUas,XX75201          , "                                                            '

   .Thomas Zabel                                     '            ' .'•                                    •' ' •
    .ZabelFreeman              '              •, .                        ...
     1135 Heights Boulevard                       • ,. .. .                         ' •      '
     Houston,TX7700?                        '         '                                                        V
     tz^tfaelt^thiwrtrm^com • •            . •; ' • • • ••                           • '•.

    Eric M. English,                 • ' '                   ' •."

     Neil Kenton Alexander .
     Fcrtter Hedges LLP '
     .1000 Main St., 36* Floor
     Houston, TX 77002 "
    .fcalexanderi^porterheds^^eo

    . John W; Porter • . ' -
   . Texas Bar No. 16149990
    ' jc^tf.portKtiio^bidcsrbdttsxom
      ICeri D. Brown         •
      ikKr}-br0wn(^ak6.Tb<^tt8:ebiti,
      910 Louisiana Street ' .
      Houston^ Texas 77002 . •




                                                         .•••;3
      5151537


  PLAINTIFFS' ORIGINAL PETITION - Page 109
an, 25, 2 0 1 6 ' 9 : 4 3 A M •; M . T LLP:                                                         Wo. 6 3 1 2 -   P, 3 6 , / 4 5

       Exhibii 5



             '•• •    '. ' , .        .       ., '..Bill of Sab;.. ••• ;         ..             '        •

      ' THE STATE OF TEXAS       §;.         •.    •.
                 • • • • • • • §     ••. KNOW ALL MEN BY THESE PRESENTS'•
     . COUNTY OF HARRIS '    ' •          •,      , '       •

               That Legacy Trust Company as ReceiVet and on behalf of the .Article IV

       TiTist createa under, the Last Will and Testament of Kjatherine Pillot Lee Barnhart

       admitted to pirobate in Harris County Probate Court No. 2, Cause No. 137,506,

       herein called "Seller", for and i n cojisideration .of the sum of Ten and .No/100 Dollars /

      . (.$10.00) and other valuable consideration to the undersigned pajd by the• Buyer hereta

       nanied, the receipt of whicH is hereby acknowledged, has GRANTED, BARGAINED,

       SOLD .ANP CONVEYED, and by these presents does GRANT, BARGAIN, S E I i : AND

       CONVEY, unto Ronald EUsworth .Lee, Jr.,'of HARRIS County, Texas,, herein called '

     ., "Buycif', all ofthe followmg described property;^                  ' •        •   . •

               The Jnctgmeiit in faior of the Article IV Trust entered in tee v, lee,
               (Case No. 137,506, HaA-ris County Probate C t No. 2)^ . as modified by
               the decision in Lee v. Lee^ No. 14-^97-00162-0?, 47 S.W.3d 767 (Tex,
               App-     Houston, 2001), as reflected in the Mandate Issued by the
               Fourteenth Court of Appeals dated Fcbni^ry S^ 2002 and the Order
               Granting Application for Writ of Scire Fadas and to Reyive Dormajut ,.
               Jadgment of the Harris County Probate Court No, 2, jn Cause No. .
           , 137,506-402,. filed December, 7, 2012, together with ail principal^.
               attorneys' fees, interest, and court costs on or associated with such ;
             • Judgment.         '.•

             , .. TO HAVE AND t o HOLD the above described Jwigmeht, .together w i ^

     • singular the- rights and appurtenances thereto in' anywise belonging unto'the said Seller,

     • and unto Setter's,successors and:assigns foreveirj.and'ScIlcr does hereby bind itself, its

       successors and assigns; to WARRANT AND FOREVER' DiEFEND all and singular the

     .. said preroiscs imto the said Buyer, .Buyer's heirs, eiecutors, administrators and assigns




 PLAINTIFFS' ORIGINAL PETITION - Page 110
J a n , 25, 2 0 1 6 ' 9 : 4 4 A M     , .M         . Y LLP.                      ,           ..             -   Mo, 6 3 1 2     'P,   31/45


           Exhibits         ••        •      •.•


          ' agaifl-vSt every person whomsoever ,lawfully claimLag or to daitn the same or any part

           thereof, by throagli or nnder Seller, but not .otherwise.                         , '   . : '



                      EXECUTEDtMs;                      \ day of                     .   '   „,2016. . • \' '


                                 ••                                    / SELLER:             /       .• •         /;          . '

                                                                             Legacy .Trust Company as Receiver and on.
                                                                         ,   Behalf of the Article IV Trust created mxder
                                                    •         /•             the . Last .Will and Testament of Katherine
                                                                         •   Tillot Lee Bamhart admitted to probate in
                                                        '          • .• .    Harris Gounty Probate Court No. 2, Cause
                            •                                          •     No. 137,506 , .         •  ,' '


                                                                             B y : . • . '           : ' '•• ' • " •
                                                                             Name: Edward R. Naumes
                                                                             Title: President . and. Chief Executive
                                                                             Officer'.




    PLAINTIFFS' ORIGINAL PETITION - Page 1 1 1
11,25, 20 1 6     9;              f y i - ^ Y LLP                                          lo, 5 3 1 2       P, 3 8 / 4

      Exhibits




      THE S T A m OF TEXAS                  §

      COUNTY OF HARRIS . . , §

         .      . Before iDC^      .       , '            on thia       day of                    ^2016,

      personally appeared Edward R. Naumes,'President and Chief.Executive Officer of

      Legacy Trust Cornpany as Receiver and on Behalf of the , Article IV Trast created under

      .die Last    Wiir and     Testament of Katherine, PUlot Lee Barnhart admitted' tq- probate , in

      Harris Comity Probate Court No. 2, Cause No. .137,506, known to nie to be the person

     . whose-name is subscribed to the foregoing instromc'nt and acknowledged to me that he,

      executed the same for the purposes and consideration therein expressed.                       .    '




                                                     Notary Publicin and for the State of Texas
                 [SEAL] •
                                                    ' Printed Name of Notary: ,
                                                    . My Commission Expires:


      BUYER'S ADDRESS;

      Ronald Ellsworth Lee, Jr.'
      3114 Mid Lane , - ;
      Houston, TK'77027 .




       5174445

PLAINTIFFS' ORIGINAL PETITION - Page 1 1 2
n, 25, 20 1 6 • 9 ; 4 4 A M          M M    Y LLP                                            No, 6 3 1 2 -       P, 3

Draft -1/11/2016               , .               ' •


    Agreement Respecting Conduct of the Litigation in Lee v.
                 Lee, Case No. 137,506-403
Recitab                              ' ,.    '          •.                         ,'• ...       ..

1. • Under the Last Will and Testament of KathcrineTillot Lee Bamhart admitted to probate in .
   . Harris County, Texas under Cause Nuinber 137,506 (the ^'Bamhart .Will"), trusts were.'.
  • createdforthe benefit of her children and gi-andchildrea One of the trusts- created was under
    Article IV of the Bamhart WiU (the ".Article IV Trust"). ' ',                        '. . • " '

2'. ...Ronald Ellsworth Lec, Jr. ("Mr. Lee") is the.son of Katherine Pillot Lee Barrihartj and a'
  ' beneficiary under the Article IV Trust.-. ••           .          ' -,       •     •

3.- 'Katherine Lee Stacy ("Ms, Stacy') isttiedaughter'of Mr. Lee and a beneficiary under a Trust
     estabhshed under the Barnhart Will that is a beneficiary of the Article lY Trust, • .

.4., Mr. Lee.filedsuit against Susan Camille l'cc ("Ms. Lee"), Tros'tee ofthe Article IV Trust; in
     Lee y, Lee, Case No. 137,506-403, Harris County Probate.Court No, 2, seeking removal of
  • Ms. Lee as Trustee, and damages suffered by MrJ Lee and the Article IV Trust during the
     trusteeship of Ms. Lec ("Mr. Lee's Lawsuit").-                  ,    .     '      ' • . • .••

5.' By order of the Harris County.Probate Court No. 2 in Lee v, Lee. Case No. 137,506-403 ;
 • • dated June 18,.20l5,:("June 18', 2015 Order"), the court rcnlovcd Ms; Lcc as Trustee ofthe •
     Article I'Y Trust and'appointed Legacy Trust Company as Receiverfor the'Article IV Trust
     ('Tegacy'or the''Rece.iVefO-The June 18, 2015: OrdCT, among'other things, or

                   '"3. The Receiver is authorized and directed to: •
. . •       '• ,    . •• a. Exercise all rights, powers and duties of the Trustee of the Tmst created
                    under Article IV .of the WiU, and all pow;ers granted to. trustees under the. Texas
                    Trust.Code; •- . ' '           •' •      . ':       •.' '       , '• • :.' •



                        . 0. .. Manage and dncct the business andfinanciala-f&irs'of the Trust'
                    and any asset or entity owned or controlled by the Trust; • ,



                           m . 'Institute such legal proceedings as the Receiver deems necessary
               . , or advisable to obtain constructive or actual possession of assets ofthe Trust or to
                    recover damages suffered by the Trust; provided however, that the Receiver shall
                  • have discretion not to pursue htigation against Ms. Lee that, is undertalcen by •
             ' ' beneficiaries. oftheTrust for the benefit of .the Trust;'

 7. Mr.' Lee intends to pursue the claimsfiledin Mr. Lee's,Lawsuit, Ms.' Stacy has intervened as
. ah additional plaiiitiff iti'Mr. Lee's Lawsuit.. •


 52383eOy2 • '         •   .     .' '                  .'.'••   •.•   •''.•'",   ..'         —'.       ,'    '    '. •




PLAINTIFFS'ORIGINAL PETITION- Page 113
n, 2 5 . 20 1 6 . 9 ; 4 5 A M            • M M & t LLP                                                                 h. 6 3 1 2     --P. 4 0 / 4 5

 Draft-1/11/2016,                     '/ ,       '       ,   '               '       ' '. '. '        • •   ''r •      '            ' . /


 Agreements                   • . •'                 .                                           ••             ' /••"•.,                   ' .'
 8. So as to avoid the duplication of expense and effort in connection with the claims asserted' in. '.
     MF, Lee's Lawsuit, at least a portion of which may benefit the Article W Trust, Mr/Lee- and
    •Ms. Stacy consent that Legacy shall have no obhgation to them to file pr proseciite a lawsuit •.
     asserting claims against Ms. Lee for breaches- bf her obUgations while serving as Trustee of •
   , the Article rv Trust •. • - , •', ' • •• .-• '           ' .••/         ,•,'•'/' / / • • ' ,

 9. Legacy as- Receiver agrees £o reimburse Mr. Leo frorh the assets ofthe Article IV Trust for
      his. reasonable and necessary attorneys' fees and htigation expenses (inclnduig but not
    , limited to expert witness fees, expenses of attorneys, and court, costs) incurred in connection
   ' with claims agamst Ms. Lee for breaches of her obligations to the Article IV Trust while she •
   • served as Trastee ofthe Article IV Trtist man aggregate amount np to $500,000. In the
      event Mr. Lee bclicvcfii that additional reasonable and.ncccssary attorneys' fees and htigation' •
  , expen$esshouldheincuiredinexccssof$500,000, ho may request Legacy to approve in
      advance such additional expenditures, which approval Legacy will not unreasonably          ;.
 ' . withhold.' • • • • •. .             '' .      .. .      •            .                  '•''•.
  10. So as to avoid the duplication of expense and effort La connection with the claims asserted in
       Mr,; Lee's Lawsuit, the parties agree that counsel for Mr. Lee shall take the lead work
     . responsibility m pursuing the clainis in Mr, Lee's Lawsuit for which the Article IV Trust.
    •. would be the principal beneficiary. Counsel for Ms, Stacy, while representing her interests
   • professionally, will tdc.c secondary work rcsponsibiUty fbr pursuing these clain^               '
    • duphcating work of Mr. Lee's counsel,                  '••

  U , Legacy ieis Reoeiver agrees to reimburse Ms'. Stacy -from'the assets of the Article IV Trust for
    • her reasonable and necessary.attorneys.' fees and htigation expenses (includmg.but not
      limited to expert witness fees, expenses'of attorneys, and court costs) incuixed iu accordance
   '. with the terms of paragraph 10 hereof m, an aggregate amount up to $100,000. In the event .
      Ms, Stacy believes that additional reasonable and nebessary attorneys' fees and litigation
      ecxpcnses should be incurccd m excess of SIOO.OOO, she may request Legacy to approve in'
      advance such additional expenditures, which approval Legacy will not unreasonably •
      withhold,       '• '. " .            ^      '/;, • / . . .              ,'    • ' . , . •

  .12. Nothuig in this Agreement relieves Legacyfroriiwhatever'obligafions it may have to provide
       iafqimation or otherwise cooperate with the beneficiaries of the Article IV Trust in pursuing.
   . clahns agahist Ms, Lee for the benefit- of the Article IV Trust, to -adjust distributions to Ms;
    : Lee. by.reason of monies Ms, Lee owes to the Article FV Trust, or to. defend claims asserted
       by Ms,'Lee agaiiist Legacy as Receiver, ofthe Article r v Trust.




• , 523B360v2 '   .'   .•   . '   .     , •.•'                   .'".   ..       ;




  PLAINTIFFS' ORIGINAL PETITION - Page 114
J s n , 25. 2 0 1 6 • 9 ; 4 5 A M • M M         ULP                             No, 6 3 1 2 • -P, 4 1 / 4 5

••. Draft~I/lI/20I6             • '         .     ' . '


    13, The Effective D ate of this Agreement is




    Ronald E. Lee, Jr.



    Katherine Lee Stacy               . „

    Legacy Trust Cotopauy as Recetver of the Article IV Trust nnder the Last, WiU and
    Te$taiiicnt of Katherine Pillot Lee Bamhart ,        .



    By -                       ' • • •/'.,./•             .•'         ••'"'./
              Edward R. Naumes




                                                                .•3
     J238360v2.


     PLAINTIFFS' ORIGINAL PETITION - Page 115
                   EXHIBIT " G "




PLAINTIFFS' ORIGINAL PETITION - Page 116
                                                                                                 PROBATE C0URT#2
       m                                             Cause No, 137506-403
       ill       Estate ofKatherine Pillot Lee Bamhart,                                       In the Probate Court
       o         Deceased
       o
       a,                                                                                                   No. 2 of
       ii\       Susan Camille Lee, ct al.,

                         Plaintiffs,

                 V,                                                                          Harris County, Texas

                 Ronald E. Lcc, Jr., et al.

                         Defendants.



                      ORPER GRANTING APPLICATTONTOAPPROVE SETTLEMENT AGREEMENT . .
                                                                                                             4 • '» V   k <a K
                         On this day, cwnc on to be conridcitd the Application^ Appro^ Setticm^t i^lJ^wnif^t \* '^J,*

                 (hereinafter referred to aj,the                       ;*«s ^    in t ! » » ( » | c e e 3 n ^ ^IpUsi't I''.

                       ACY TRUST              ^             capoci^;^ thffrOsakt           inted Receiver of tho

                 Teiinientaty Trust cr^ed     iSfe ArtSe IV of the Last Win and Testament of Katherine Pillot
                        Bamhart (bereinafter refened to as "Legacy" or "Receiver"), After considering tbe

                 Application, the Court finds that the Applicafion is well taken and should be granted, It is

                 therefore,

                          ORDERED, ADJUDGED, and DECREED, that tbe Settlen«nt Agreement and related

                 settlement doctunents, all of which arc attached to the Application collectively as Exhibit "A",

                 are hereby APPROVED, U»«irit)er,

                          QlVOCT,liP| I'lDJUPqCPviriil TroffPnTm, tint till giiUlwumit i'lftHHwunat i» in tha twt

                  interests of tbe Testainentaiy Trust created uixlcr At<IM.. ry pf iiu^innf-wiii .nH •iv.rt»m>^i of

                  Katherine Pillot L«B3BlJM»HBBcwa5w^e^ to as the "Article IV Trust"), and lhat the

                  HSWiveris h c r ^ granted authority to enter into the Settlement Agreement, and to sign all




PLAINTIFFS' ORIGINAL PETITION - Page 117
       01
       U!
       O
       a
       a.
                     SIGNED on this      _ day of
       io


                                                                         JGEPI^IDIKG
       0         APPROVED:
       w
       n         MACINTYRE MCCULLOCH .g?>\NFIELD
       o         & YOUNG, LLP
       n
       o

                                                           -••=>!»
                      State Bar Number 0075S930 m ^ r t v .          '
                      ADRI A. GRAVES
                      State Bar Number 24049999 '^^iT                                  mi
                      2900 Weslayan, Suite 150*;         '1*.                                    r-
                      Houston, Texas 77027 sfn,          „
                      (713)572-2900                                                     ^   3
                      (713) 572-2902 (FAJQi        ..J-'
                      Can;eroaMcCulloc>|^mlawtexa3,coro                                     4?
                      AdriTGrivCT@iBml|t^^?HW.'?W|
                 ATTORNEYS FOR APftlCAOTtTBOACY TRUST COMPANY,
                 IN rrS CAPACITY AiaiW|J?ECEIVER FOR THE ARTICLE IV




PLAINTIFFS' ORIGINAL PETITION - Page 118
                   EXHIBIT " H "




PLAINTIFFS' ORIGINAL PETITION - Page 119
                                                                                       652-^6-201 i.
                                        NO. 137,506-403
        ^-€83482
ESTATE OF KATHERINE PILLOT                          §     IN THE PROBATE COURT NO. 2
BARNHART, DECEASED                                  §
                                                i
DONNA C.KLINE                                       §
                                                    §
V.                                                  §
                                                    §     OF
SUSAN CAMILLE LEE, Individually                     §
and as Trustee for SUSAN C. GIBSON                  §
                                                    §
and                                                 §
                                                    §
SUSAN C. GIBSON                                     §     HARRIS COUNTY, TEXAS

LADIES AND GENTLEMEN OF THE JURY:

        This case is submitted to you by asking questions about the facts, which you mxist decide
from the evidence you have heard in this hial. You are the sole judges of the credibility of the
witnesses and the weight to be given then testimony, but in matters of law you must be govemed by
the insnuctions in this charge. In discharging yom responsibility on this jury, you will observe all
the inshuctions which have been previously given you. I shall now give you additional instructions
which you should carefully and snictly follow dming your deliberations.

1.      Do not let bias, prejudice, or sympathy play any part in your deliberations.

2.       In anivmg at your answers consider only the evidence uitroduced here under oath and such
exhibits, if any, as have been inteoduced for your consideration under the rulings ofthe court, that
is what you have seen and heard m this courtroom, together with the law as given you by the court.
In your deliberations you will not consider or discuss anything that is not represented by the evidence
in this case.

3.     Since every answer that is required by the charge is important, no juror should state or
consider that any required answer is not important.

4.     You must not decide who you think should win, and then hy to answer the questions
accordmgly. Simply answer the questions, and do not discuss or concem yourselves with the effect
of your answers.

 5.     You will not decide the answer to a question by lot or by drawing straws, or by any other
 method of chance. Do not rehim a quotient verdict. A quotient verdict means that the jurors agree
 to abide by the itssult to be reached by adding together each juror'sfiguresand dividing by the


                                                    -1-




PLAINTIFFS' ORIGINAL PETITION - Page 120
number of jurors to get an average. Do not do any trading on your answers; that is, one juror should
not agree to answer a certain question one way if others will agree to answer another question
another way.

6.        You may render your verdict upon the vote of ten or more members of the jury. The same
ten or more of you must agree upon all the answers made and to the entire verdict. You will not,
therefore, enter into an agreement to be bound by a majority or any other vote of less than 10 jurors.
I f the verdict and all the answers therein are reached by unanimous agreement, the Presiding Juror
shall sign the verdict for the entire jury. If any jmor disagrees as to any answer made by the verdict,
those jmors who agree to allfindingsshall each sign the verdict.

         These instructions are given you because your conduct is subject to review the same as that
 of the witnesses, parties, attomeys, and the judge. If it should be found that you have disregarded
 any of these instructions, it will be jury misconduct and it may require another trial by another jury;
 then all of oirr time will have been wasted.

       The presiding juror or any other who observes a violation ofthe court's instructions shall
 immediately warn the one who is violating the same and caution the juror not to do so again.

        When words are used in this charge in a sense which variesfromthe meaning commonly
 understood, you are given a proper legal definition, which you are bound to accept m place of any
 other definition or any other meaning.

         Answer "Yes" or "No" to all questions unless otherwise mstructed,

         A "Yes" answer must be based on a preponderance ofthe evidence, xmless that question
 states specifically that a different standard should be used. In answering a question based on a
 preponderance ofthe evidence, if you do notfindthat a preponderance ofthe evidence supports a
 "Yes" answer, then answer "No."

        The term "preponderance of the evidence" means the greater weight and degree of credible
 testimony or evidence introduced before you and admitted in this case.

         In answering a question based on a preponderance ofthe evidence, a fact may be established
 by direct evidence or by circumstantial evidence or both. Afiictis established by direct evidence
 when proved by documentary evidence or by witaesses who saw the act done or heard the words
 spokert A fact is established by circumstantial evidence \^en it may be fairly and reasonably
 inferred fiom other facts proven.


                                                                                                    U3
                                                                                                   c
                                                                                                   cz
                                                                                                   I —

                                                                                                   no
                                                                                                   CO
                                                   •2-




PLAINTIFFS' ORIGINAL PETITION - Page 121
                                                                                    652-r5-20l3
       In determining the amount ofreasonableand necessary attorney's fees, the following factors
should be considered:

       1.      the time and labor involved, the novelty and difficulty of the questions involved, and
               the skill required to perform the legal services properly;
       2.      the liklihood that the acceptance of the particular employment will preclude other
               employment by the lawyer;
       3.      the fee customarily charged in the locality for similar legal services;
       4.      the amount involved and the results obtained;
       5.      the time limitations imposed by the client or the ckcumstanccs;
       6.      the nature and length of the professional relationship with the client;
       7.      the experience, reputation, and ability of the lawyer or lawyers performing the
               services; and
        8.     whether the fee isfixedor contingent on results obtained or uncertainty of collection
               before the legal services have been rendered.




                                                -3-




PLAINTIFFS' ORIGINAL PETITION - Page 122
                                                                                 652-f6-ZOI4

                                          QUESTION ONE


       What reasonable amount, if any, is owed to Donna Kline for the necessary legal services she
performed for Susan Lee and Susan Gibson on an hourly basis under the contracts?

        Answer in dollars and cents, if any.

        Answer:                ll^,lO?.U




                                      r




                                                -4-




PLAINTIFFS' ORIGINAL PETITION - Page 123
                                                                                 65H6-20I5
                                       QUESTION TWO


       Did Susan Lee and Susan Gibson discharge Donna Kline for good cause?

       Answer "Yes" or "No".

               Answer,             /J Q         •

        You are instructed that a cUent has "good cause" to discharge an attomey if the attomey fails
to perform her duties in the manner that an attomey of ordinary skill and ability would have
performed her duties under the same or similar circumstances.




                                                -5-




PLAINTIFFS' ORIGINAL PETITION - Page 124
                                      QUESTION THREE


        What is a reasonable fee for the necessary services of Donna Kline's attomeys in this case?

        Answer in dollars and cents, if any.

        Answer with an amount for each of the following;

        a.     For preparation and trial.

               Answer:         ^7S"^ooQ.oO              .

        b.     For an appeal to the Court of Appeals.

               Answer:          ^ ^O,QO0-0O             .                        —

        c       For making or responding to a petition for review to the Supreme Court of Texas.

               Answer:           ^7,^OO^oo              .

        d.     If a petition for review is granted by the Supreme Court of Texas.

                Answer:         4       , 0<^   »<0'0   •




                                                -6-




PLAINTIFFS' ORIGINAL PETITION - Page 125
                                       QUESTION FOUR                                B52~r6~Z0 I J

       What is a reasonable fee for the necessary services of Susan Lee's and Susan Gibson's
 attomeys in this case?

        Answer in dollars and cents, if any.

        Answer with an amount for each of the following:

        a.     For preparation and trial.

               Answer:                  -^^^

        b.     For an appeal to the Coxut of Appeals.

               Answer;

        c.     For making or responding to a petition for review to the Supreme Court of Texas.

               Answer:                      JS^"^^

        d.     If a petition for review is granted by the Supreme Court of Texas.

               Answer:




                                                 -7-




PLAINTIFFS' ORIGINAL PETITION - Page 126
         After you retire to tbe jury room, you will select your own presiding juror. Thefirstthing
 the presiding jmor will do is to have this complete charge read aloud and then you will deliberate
 upon yom answers to the questions asked.

         It is the duty of the presiding juror:

                 1.      to preside during your deliberations,

                 2.      to sec that your deliberations are conducted in an orderly manner and in
                         accordance with the instructions in this charge,

                 3.      to write out and hand to the bailiff any communications conceming the case
                         that you deshe to have deUvcrcd to the judge,

                .4.      to vote on the questions,

                 5,      to write your answers to the questions in the spaces provided, and

                 6.      to certify to your verdict in the space provided for the presiding jmor's
                         signatme or to obtain the signatmes of all the jmors who agree with the
                         verdict if your verdict is less than imanimbus.

          You should not discuss the case with anyone, not even with other members of the jury, unless
 all of you are present and assembled in the jury room. Should anyone attempt to talk to you about
 the case before the verdict is retimied, whedier at the courthouse, at yom: home, or elsewhere, please
 inform the judge of this fact

          When you have answered all the questions you arc required to answer undertiieinstructions
 of the judge, and your presiding juror has placed you answers in the spaces provided and signed the
 verdict as presiding juror or obtamed the signatures, you will mform the bailiff at the door of the jury
 room that you have readhed a verdict, andtiienyou will return into court with your verdict




                                                                 Judge Presiding




                                                  -8-




PLAINTIFFS' ORIGINAL PETITION - Pasie 127
                                                                                652-^6-2019
                                        CERTIFICATE


        We, the jury, have answered the above and foregoing questions as herein indicated, and
 herewith return same into court as our verdict.

                                (To be signed by the presiding
                                     juror if unanimous.)




                                                                 Presiding Juror

                                  (To be signed by all jurors
                               in agreement if not unanimous)




                                              -9




PLAINTIFFS' ORIGINAL PETITION - Page 128
                             (1
                                                                                           653-r4-3255


                                                                                     )2-


                                       m. 137,506^


                                                                          __
  ESTATE OP KATHERINE             flUm      § IN THE PROBATE COURT NO. 2
  BARNHART, DECEASED                            j
                                               ±.
  DONNACIOINE

  V.
                                                I OF
  SUSAN CAMILLE LEE, Individually
  isad M TnisSw fbr SUSAN C GIBSON



  SUSAN COtDSON                                 {   HARRIS COUNTY, TEXAS

  LADIES AND GENTLEMEN OF THE JURY:

         This esse is submittedtoyoo by addag questkms sbout tbefocts,wfaidi you must decide
  fitna^svidetiM jroabm heard in This tML Yott antfissdejudges of &e credibility of Oe
  witnesses aad the iveigtAtobe gim tbdr test^^
  the itUOuctiooi in this dUB|^ In discbargisgycvie^MXt^bflityoQ this Jury, you wiUobserwaU
  thetnrtnictioiiswhldibvvebempnwioudyg^myoti. I dbsOiKrw give you additional imtructiou
  >^ch you shmiJd carefully Old itrictiyfoOowd o ^

  L      DoiwtletbUs,pR;}udioe,orsyiitp«thyplByai)9p8rtiiiyourdelibe

  2,       baniviiif atyouraarweisooatsldKoafythsevt^^
  eshibtts, If aay, m hav* \mn kctroducwd fbr yow ocH»id««tica ocdcr the rulingi of the cowt, that
  is «ribat you haYC seen md heerd ia this oourtnxni, together
  lhyo<gd;liberBtio«yott¥>ffli»<cooikfcc<y<ascqsiany^^                             ibc evidcace
  in this CMi.

  3,     Since eveiy asswer that is required by tt» charge is important, no juror should state or
  consider that any required answer is not importsflt

  4,     You onist not decide who yoa ttiiidc should wis, aod thcsi tiy to answer tbe questioss
  feccorcBngly. Sfanply answer the queitioaa^ aod do not <Ssc<» or coac«inyourselv«
  of your answers.

  Sy     Yo« will not dec{<todM! answertoa qtieatioo by krt or by drawing straws, or by any otb^
  mediodofchaoce. Donotretumatpiotieatvadkt A quotleat vertict aieeas that dw jurors agree
  to abide by die resulttobe reached by addingtogetbereach Juror'sfiguresand dividing by the




PLAINTIFFS' ORIGINAL PETITION - Page 129
 Qumbef ofjurors to pt^ftverai^ DoiMdoeajrtrasSagOityiweasvvm', thstU,oneJum8houkj
 oot Kgr^ to aasvm & esrtalii quostkn oi» wqr if o^bers wUl <gr^ to soswer mother question
 snotbii Wa}*.

 i*       YouittiriwJwyot»va(dtot«q»ath«volsoft®tJOf                               TheMane
 tett or tmn of yott nntst agrea upoa aU tbe aaswers awk and to tha entire verdict You will no4,
 dtere&fe,et)^tt)toaQfignem(Mtobefx)u«i!^                                          10 jurors.
 If tfa« verdid atui all tha answm dterein are reac^ Iq^
 shaUrigntevBnMotfbrtheeQtiniJuiy. If as^junvdlssgnss^toany answer tnada by the verdict,
 tfaoia Jurors wim agre«to<dlfiiidlnpd»Q

         Thesg itiMructfcjm ant givea you bec<tu$9 your oooduct k
 oftl»witMS0aa,peeti«a,anocas^BadthsJudts. If itshouidbeAHtQdtbatyouhavedisrefiatdcd
 stqr of      instFUcdkxJB. it witt Ju^r i n ^ ^
 titen aQ of our time will ha;v« b«ai wasted.

      Ihe presiding Juror or any other who observes a vMatioa of the couxfs instmctions dull
 immediately want tbe one w l » is violating dw same and caution the juror nottodo so again.

        When words are u«ad ia this charge in a sense witich v^ieafix>mthe meamng common!
 understood, you «» given a fxoper legal deflnitioa, which you ere boundtoaccept in place of any
 other deflnitioa or toy other meaniiig.

        Answer "Yea" or "No"toall quesdoQs wlesa otherwise instructed.

         A "Yea" answer most be based oo a prepoodentnoe of ih« evidence, unless that question
 statea ipecifloally that a diffiHteM statkbud should ba us^ In oaswering a question based on a
 prqpotKkritMof the              flvideo««;ifyoadoiW(fitdti»taprep        evidence supports a
 "Yes" answer, then answer

        n* teem "pcepoodctaooe ofthe tvldedca" icMaas the greater weight and degree of credible
teatimooQf or avtdenoe introduced befbn you and admittedfaitUs caae.

        In answering • questkw based OQ a pr^xstdanm of dM evidence, a SK^ may be estab
    direct «vidmc« or t^eircusstandalevideoc* or both. Aftctisesti^iishedbydiroctevidetxe
wt>co pnvod by documentary evidence or by ^witntag^ who saw tha set done or beerd the words
ipolcea AfltcttaeatsibUshed by circumstantial svideaos whea It may befitiriyand reasonably
{nfixTcdfiomotherfitctsproven.




PLAINTIFFS' ORIGINAL PETITION - Page 130
                                                                   653-i'4-3Z5r




I,



3.   (he flM CQSUomily d a ^ i ^ k Ih9 {ocaliiy fb^
4.   thefeoiouotfaivoiyed80(1 tba tBSih> olxaioedi
5.   tfie ilaiB HflBtoltaMiBJjwwed l y ibs cSect of the dscotostsoccsi
6.   tbe s a t m aod kogth cf i » ptolbeaic^
7.   die expaflaoce, rsjpotstloo, aad AOky o£fb» bmyw or bnvyers petfixiohif the
     aerrtcea;aod
I.   wh^faer l b fte iafixedor ooedh^^ oQ results obtahied 0^
     befiws tbs legtd exrioes have beta rendered.
                                                        653-74-3Z58




                                       QUESTION CWE .




       Aasvm   ia doQns saai omts, i f say.




                                              -4-




PLAINTIFFS'ORIGINAL PETITION - Page 132
                                                                                 653-f4-3259




                                        QUESHWTWO


             0 y Sum Lee md Sima Oibsoai AKtegs Dmim Klkis

            Amw«r"Yes"ocW,

                   Answer;


      to petfbem hes dodea ia tba nwmer fb«t an attimtejr of ordim^ dd^' a»i aUiity would have




                                               -5-




PLAINTIFFS' ORIGINAL PETITION - Page 133
                                                                                  XXX-XX-XXXX


                                                                             -r&-20ii




      Wii^ k a re^isca^     &r ti» oecmvy MviMis of DossM 1^

      AE@WW ia dotlas sod cmts, if any.

      Aoswvr « ^ «a sntountforeadi of d» folkmifig:

      a.    For prt^wratloo and triaL
            Answer.        1^ 7$"^ o o < ? , o O       .

      h.    Foraos|>pealtotbeCoartofA{^peaIs.



      c.    Fornuddngormqyondingtoapeddoa&rreviewtodiBSi)^^
            Answer:         ^7,^0O        ,<fO     .

      d.    If a petitionfiwreviewiigtantod by tin StqiremeCotat of Texas.

            Answer:        4 %0^O<i^ .oO           .




PLAINTIFFS' ORIGINAL PETITION - Page 134
                                   QUESnoNFOUR


       What is a te&sombk fo- tin K m w y mvioM of Smm Lee's «id Smu Oibscm's
»ttoniQ« la this cese?

      Aiamer in doQan sod oeots, if tay.

      Answer with sa imKxnt fbr e@ch of die fbllowiiif:

      m.     For prqmssioa tad trial.

             Answer.                              .

      Ik     Fbr an aptteal to tha CoQrt (^Appeals.

             Answer:                              .

      c     Forn)ddngorn»^}ondlngto«petitioofi»-reviewtod}eSupren}eCouitofTe:t^

             Answen

            Ifa pctkioo fbr revkw is granted by the Siqjrems <^owt of

            Answer:               -^""''^




                                           -7-




 PLAINTIFFS' ORIGINAL PETITION - Page 135
       Alkr yoa ndie to tfasjutyroom,you wfll sdei(!t yaw owe              TbefdttAing
the preddlog juror will do istoh$V9 this compkto <^m^ tmd skmi sad dtea yoa will deliboste
f^CKm yctirfioswerstoIbe ({oesiioas s^ced.

        It ia the duty     tbe presiding juror.

                L   to      preside dudng your deliberstioni,

               2.    to      see that your deiibeiaiiom sre coiKiacted in en orderly aia^^
                          accordance witb the instntctians in this cbsrge,

               3.   to      write out end bandtothe bailiff any con»inn4c«dom concerning the esse
                          that yoa desiretohave deliveredtothe judge,

               4.    to     vote 09 d» questions,

               5.    to     write your answerstothe questioasia the q»oes provided, and

               6.    to      certiiy to your verdict in the i^Mtce provided for the presiding jmoi's
                          signature or to obtsin the signatoBes of all the juron who agree with dK
                          venfict If your verdict is lea than unsnimoui.

        Yoa should no* (fiscuss tbe case with anyone, not even with odierroonbersof the jury,
all ofyou are present aad asseaoUed in the jury room. Should aaorons attempttotallctoyou about
dsc case bcfoio tho venfict is retiatncd, whether at tla coortboasa, st your home, or elsewhere, plasss
infbtm Ae j w ^ of this fittt.

          When you han« answered aB queadom yoo are reqdxadtoanswer untfer the i ^ ^
of the jixlgek and yotr pRakSogjinr has placed yoa answers b the spaces pro^
venfict as prodding juror or obb^oed tbe sigBstuiea, you win h i f l ^
room that yoo have reached a vercfict, «od then you will return into court with your verdict




                                                              Judge Presiding




   PLAINTIFFS' ORIGINAL PETITION - Page 136
                                                                   m                XXX-XX-XXXX




                                         CERTTFICATB


              We, tbe Juq', Ime mmwmd <^ sborve sodfiKegofaf;qtieftkws ss fwda iadkatoi, and
      besei^HUi retnm saiBs b^ ocmt w onr vc»&t

                                  CTs b« sifoed br tlse i>m{dtag
                                      Jersr if B]i8BlnioB».)




                                                                   Pret^isif Jam*

                                     CTs b« s%Bed by an Jntrers
                                  ia agmmeat if aat Baaaittotts}




                          A                          t




PLAINTIFFS' ORIGINAL PETITION - Page 137
                     EXHIBIT




PLAINTIFFS' ORIGINAL PETITION - Page 138
                                                                                                    80-2973

                                            NO. 137506-403

  E S T A T E OF KATHERINE P I L O T               S           IN THE PRbBATE/fcOURT
  EARNHARDT, DECEASED                              s
                                                   s
  DONNA -C. K L I N E                              s

  VS.                                               ss         NO. 2
                                                   s
  SUSAN CAMILLE L ' E E ,                          s
  I n d i v i d u a l l y and a s TRUSTEE          s
  FOR SUSAN C. GIBSON                              s
                                                   s
  AND                                              s                                       B56-63-2795
                                                   s
  SUSAN C. GIBSON                                  s
                                                   s
  VS.                                              s
                                                   s
  GARY GROTE                                       s           OF HARRIS COUNTY, TEXAS

                                                 JTJgGHENT

          BE    I T REMEMBERED t h a t on t h e 1 5 t h day o f J u l y ,                 1997, came on

  to    be heard       t h e a b o v e - s t y l e d and numbered c a u s e        i n w h i c h Donna C.

  Kline        was     Intervener        and     Plaintiff,            and     Susan      Camille   Lee,

  individually           and a s t r u s t e e f o r Susan             C. G i b s o n ,   and Susan     C.

  G i b s o n were defendemts.                A jury consisting              o f P e t e r Hugo a n d 11

  o t h e r good and l a w f u l men a n d women were s e l e c t e d t o h e a r t h e c a s e

  and    returned a verdict              on J u l y 23, 1997, s i g n e d b y 11 members o f

  the    jury.

          The     Court      having      considered            the   verdict       of the jury,       the

  testimony          of the p a r t i e s ,    and having            considered       t h e argument o f

  counsel,        was     of the opinion                 that    Judgment       should     be   for the

  P l a i n t i f f / I n t e r v e n e r Donna C. K l i n e .

          It    i s t h e r e f o r e , ORDERED, ADJUDGED a n d DECREED t h a t Donna C.

  Kline     shall      r e c o v e r of a n d from t h e D e f e n d a n t s S u s a n C a m i l l e L e e ,

  individually           and a s t r u s t e e f o r Susan             C. G i b s o n ,   and Susan     C.

                                                         -1-




PLAINTIFFS' ORIGINAL PETITION - Page 139
 Gibson,         Jointly         and     severally,           the     sura      of    $114,
                                                                                                                              CT
 interest         thereon        a t t h e r a t e of s i x p e r c e n t            ( 6 % ) p e r annum      from            W
                                                                                                                               I
 October        26, 1995.          I t i s f u r t h e r o r d e r e d t h a t Donna C. K l i n e            shall
                                                                                                                              ~4
 r e c o v e r a t t o r n e y ' s f e e s i n t h e ainount o f $13 2,500.00, w i t h i n t e r e s t                    \       Jh

 thereon        f r o m d a t e o f Judgment a t t e n p e r c e n t               ( 1 0 % ) p e r annum from

 both     L e e and Gibson           j o i n t l y and s e v e r a l l y .      I n t h e event t h e r e i s

 no a p p e a l t o one o f t h e C o u r t s o f A p p e a l s o f T e x a s f o l l o w i n g e n t r y

 of    this      Judgment, t h e amount of t h e Judgment w i l l                            be r e d u c e d     by

 remittitur           i n t h e amount o f $30,000.00.                    I n t h e e v e n t t h e r e i s no

 a p p l i c a t i o n f o r varit aff avrov          f i l e d w i t h t h e Supreme C o u r t o f T e x a s

 by    a n y p a r t y f o l l o w i n g e n t r y o f t h i s Judgment, t h e amount o f t h e

 J u d g m e n t s h a l l be r e d u c e d by r e m i t t i t u r by $7,500.00. I n t h e e v e n t

 no p e t i t i o n     f o r review        i s g r a n t e d by t h e Supreme C o u r t               of    Texas

 following          e n t r y o f t h i s Judgment, t h e amount o f t h e Judgment w i l l

 be    reduced        by r e m i t t i t u r i n t h e amount o f $ 2 0 , 0 0 0 . 0 0 .          656-63-Z796
          Based       o n t h e J u r y ' s answer t o Q u e s t i o n                2, t h e C o u r t     makes

 declaratory            judgment t h a t          Donna      C. K l i n e      h a s a good,         valid      and

 subsisting             interest         in     any      recovery          by        Susan     Camille        Lee,

  individually            and a s t r u s t e e        f o r Susan        C.    Gibson,        and     Susan        C

 Gibson         individually,           pursuant         to her contingent f e e c o n t r a c t of

 M a r c h 3 0, 1995.

           I n t e r v e n o r / P l a i n t i f f Donna C. K l i n e s h a l l r e c o v e r a l l c o s t s o f

  court      and i n t e r e s t    on a l l amounts awarded h e r e i n f r o m t h e d a t e o f

  Judgment u n t i l p a i d a t t h e r a t e o f t e n p e r c e n t                  ( 1 0 % ) p e r annum.

           It     i s     further        ORDERED,          ADJUDGED          AND       DECREED        that       the

  d e f e n d a n t s c o u n t e r - c l a i m a n t s S u s a n C a m i l l e L e e , I n d i v i d u a l l y and a s


                                                          -2-




PLAINTIFFS' ORIGINAL PETITION - Page 140
 T r u s t e e f o r Susan C. G i b s o n ("Lee") and S u s a n C. Glb^gp^^("Gi^gon^)

 t a l c e n o t h i n g on t h e i r c o u n t e r c l a i m s a g a i n s t Donna C.       Kline.

            On J u l y      11,   1997,    came on       for consideration               the Motion f o r

 Summary Judgment                 of T h i r d   Party     Defendant        and     Counter-Plaintiff

 G a r y G r o t e . The c o u r t c o n s i d e r e d t h e Motion, t h e R e p l y , t h e summary

 j u d g m e n t e v i d e n c e and t h e arguments           o f c o x i n s e l and found t h a t t h e

 M o t i o n s h o u l d be g r a n t e d , a s s e t f o r t h i n t h e c o u r t ' s O r d e r o f J u l y

 11,     1997.

            I t i s t h e r e f o r e ORDERED, ADJUDGED AND              DECREED t h a > - ^

 P l a i n t i f f s S u s a n C a m i l l e L e e , I n d i v i d u a l l y and a s T r u s t e e f o r S u s a n

 C.    Gibson           ("Lee") and S u s a n C. G i b s o n        ("Gibson")           take nothing         of

 a n d f r o m T h i r d P a r t y D e f e n d a n t Gary G r o t e i n t h i s          lawsuit.f356""63""2r9r
            It     is   f u r t h e r ORDERED, ADJUDGED AND DECREED t h a t T h i r d                    Party

 P l a i n t i f f G a r y G r o t e h a v e and r e c o v e r o f and from S u s a n C a m i l l e L e e

 the    amount o f T h r e e Thousand               F i v e Hundred D o l l a r s        ($3,500.00), i n

 a d d i t i o n t o a t t o r n e y ' s f e e s o f $2,500.00 t h r o u g h t h e d a t e o f t h i s

 J u d g m e n t ; a n d a d d i t i o n a l a t t o r n e y s f e e s o f $15,000.00 i f t h e c a s e

  is   a p p e a l e d t o t h e Covurt o f A p p e a l s , $15,000.00 i f a P e t i t i o n f o r

 R e v i e w i s f i l e d w i t h t h e T e x a s Supreme Coxirt, a n d $15,000.00 i f t h e

 T e x a s Supreme C o u r t g r a n t s a p e t i t i o n f o r r e v i e w .

            All      other r e l i e f    r e q u e s t e d by any p a r t y    that      i s not granted

 herein           i s s p e c i f i c a l l y denied.                                           z

            RENDERED and SIGNED on                 this                                             1997.
                                                                                     u
            CT,                                               H o n o r a b l e Mike Wood
                                                              P r e s i d i n g Judge




       CD                                               -3-




PLAINTIFFS' ORIGINAL PETITION - Page 141
     A p p r o v e d a a t o form o n l y :




     9 09 F a n n i n
     H o u s t o n , TX 77010-1063
     Telephone:             ( 7 1 3 ) 652-2419
     Fax:         ( 7 1 3 ) 652-2419
     ATTORNEYS FOR DONNA C. K L I N E


     WILSON, C R I B B S , GOREN & FLAUM, P.C.




     S t a t 6 B a r No. 2 0446750
     2200 L y r i c C e n t r e
     440 L o u i s i a n a
     H o u s t o n , T e x a s 77002
     T e l e p h o n e : 713/222-9000
     f a x : 713/229-8824

      Examined p r i o r t o e n t r y but not approved a s t o form o r s u b s t a n c e
^      and without waiver of any objection or request for post-judgment r e l i e f .

      BURNS, WOOLEY & MARSEGLIA, L . L . P .



      M. S u s a n H a r d i e
      S t a t e B a r No. 08957600
      1111 B a g b y , S u i t e 4 900
      H o u s t o n , TX    77002
      T e l e p h o n e : 713/651-0422
      f a x : 713/651-0817



                                                 -4-




    PLAINTIFFS' ORIGINAL PETITION - Page 142
                    EXHIBIT " J "




PLAINTIFFS' ORIGINAL PETITION - Page 143
Lee V. KUne, Not Reported in S.W,3d (2000)



                                                                 that, based upon thejury's findings, Kline possesses a good,
                                                                 valid and subsisting interest in any recovery obtained by
                  2000 WL 19227
                                                                 Defendants in the underlying estate case pursuant to Kline's
   Only the Westlaw citation is currently available.
                                                                 contingent fee contract.'
 NOTICE: NOT DESIGNATED FOR PUBUCATION.
  UNDER TX R RAP RULE 47.7, UNPUBUSHED                           Defendants assign twelve issues on appeal, alleging that
     OPINIONS HAVE NO PRECEDENTIAL                               Kline failed to obtain necessary jury findings, challenging
    VALUE BUT MAY BE CITED W I T H THE                           the sufficiency of the evidence to support the judgment, and
   NOTATION "(not designated for publication)."                  that Grote's motion for summary judgment should have been
                                                                 denied because it was unsupported by competent evidence
   Court of Appeals of Texas, Houston (14th Dist.).
                                                                 and did not dispose of all issues in the case. Defendants also
                                                                 contend that "the trial judge should have been recused firom
         Susan C. Lee, Individually, and Susan
                                                                 the trial of this case." Lastly, Defendants assert that "the
         C. LEE, Trustee for Susan C. Gibson,
                                                                 trial court erred in not conditioning the award of appellate
            and Susan C. Gibson, Appellants,
                                                                 attomey's fees on a successful appeal." We affirm.
                             v.
       Donna KLINE and Gary Grote, Appellees.
                                                                 I. BACKGROUND
                    No. 14-98-00268-CV.                          Defendants retained Kline in July 1994. Kline was retained
                                  I                              to represent Gibson in an action against Gibson's uncle, who
                        Jan. 13, 2000.                           was the executor of the estate of his and Lee's mother (Estate

On Appeal from the Probate Court No. 2, Harris County,           ofKatherine Pillot Bamhart, Deceased). ^ Defendants agreed
Texas, Trial Court Cause No. 137,506-403.                        to pay Kline $225 per hour. Defendants were not satisfied
                                                                 with the executor's management of a trust created pursuant to
Panel consists of Chief Justice MURPHY, Justices HUDSON          the deceased's will, Defendants believed that disbursements
and FOWLER.                                                      into the trust accounts were not being made by the executor
                                                                 pursuant to the terms of the trust.


                OPINION ON REHEARING                             The law firm of Butler & Binion was lead counsel in the action
                                                                 brought by Defendants. Kline was retained by Defendants to
FOWLER.                                                          "help and advise [Defendants] in regard to the handling of
                                                                 the case" and to act as lead counsel on behalf of Gibson. The
 *1 Defendants filed a motion for rehearing in this case.
                                                                 executor was represented by the law firm of Vinson & Elkins.
See TEX.R.APP.P, 49.1. It is denied. However, our original
                                                                 Butler & Binion withdrew from the case sometime in early
opinion is withdrawn and this substituted opinion is issued in
                                                                  1995. Through Kline's efforts; the Dallas law firm of Thomas,
its stead.
                                                                 Sheehan & Culp was retained to become Defendants' lead
                                                                 counsel in March 1995. When this firm became lead counsel,
Donna Kline ("Kline") brought this action against Susan          the fee agreement was modified. Defendants expressly agreed
C. Lee, Individually, and Susan C. Lee, Trustee for Susan        to continue to pay Kline $225 per hour, $250 per hour for Don
C. Gibson, and Susan C. Gibson (individually as "Lee"            Sheehan, and $300 per hour for Tom Thomas. Defendants
and "Gibson" or collectively as "Defendants") to recover          also expressly agreed to pay a 10% contingency fee on any
attomey fees. Defendants filed a counterclaim against Kline       "recovery ." It was fiirther agreed that 40% of the 10%
aiid Gary Grote ("Grote"), alleging legal malpractice. The        contingency fee would be paid to Kline and that the remaining
trial court granted Grote's motion for summary judgment.          60% would be paid to Thomas, Sheehan & Culp.
The remaining claims proceeded to a jury trial. The trial
court instructed a verdict in Kline's favor on Defendants'
                                                                   *2 The relationship between Defendants and Kline was
malpractice action. On Kline's action to recover attorney
fees, the jury found in favor of Kline and awarded her            genuinely affable^ until September 1995, when Kline
$114,207.21. In its final judgment, the trial court found         received correspondence from Gibson wherein the demand
                                                                  was made to Kline to "withdraw from the case immediately."


  WtSTLAW       .         fh.vr->.;-ri Routes No daim toonqsnai U.S tiOvar'-imcn* Wo-k>


   PLAINTIFFS'ORIGINAL PETITION - Page 144
Lee V. Kline, Not Reported in S.W.3d (2000)



Kline obeyed Gibson's demand and withdrew from the case.         Defendants assert that because the contingent fee agreement
I^rior to withdrawing, fCline received approximately 578,000     between Kline and Defendants was made during the existence
in attomey fees from Defendants, These attorney fees were        of their attorney-client relationship, there was a "presumption
incurred between July 1994 and December 1994. Afler Kline        of unfairness" of the agreement. They contend that the
withdrew, she billed Defendants for her time invested in their   only way Kline could defeat that presumption was by
case between December 1994 and July 1995. Kline's attomey        obtaining a jury finding that the agreement was fair and
fees for that period of time totaled $110,388.77. Defendants     reasonable. In making this claim, defendants rely on Archer
refused to pay the bill and Kline intervened in the underlying   V. Griffith, 390 S.W,2d 735 (Tex. 1964).. There, the supreme
estate case to recover her attomey fees.                         court held that where an attomey contracts with his or her
                                                                 client for compensation during the existence of an attorney-
                                                                 client relationship, there "is a presumption of unfairness or
Following a trial, the jury awarded Kline $114,207.21 for
                                                                 invalidity attaching to the contract, and the burden of showing
"legal services she performed for [Defendants] on an hourly
                                                                 its fairness and reasonableness is on the attomey," Id. at 739
basis under the contract." The jury also found that Defendants
                                                                 (citations omitted); see also Robinson v. Garcia, 804 S.W,2d
did not discharge Kline for "good cause." Consequently, in its
                                                                  238, 248 (Tex.App.-Corpus Christi 1991, writ denied).
judgment, the trial court found that Kline possesses "a good,
valid and subsisting interest in any recovery by [Defendants]
pursuant to her contingent fee contract,..."                      *3 Although Defendants did not request a jury instruction
                                                                 conceming the fairness and reasonableness ofthe contingent
                                                                 fee agreement, they did request that the trial court submit
II. DISCUSSION                                                   the following question to the jury: "Do you find from a
                                                                 preponderance of the evidence that the making of the March
                                                                 30, 1995 retainer agreement constituted an unconscionable
  Jury Findings on Fairness of Contingent Fee Agreement
                                                                 action or course of action with respect to the attorney's fees to
In Defendants' first issue, they aver that "Kline failed to      be paid to Donna Kline?" ^ The trial court refused to submit
prove and to secure findings that she dealt fairly with Gibson   Defendants' tendered question to the jury because there was
and Lee...." They contend that the contingent fee agreement      "no evidence to support the elements in the definition of
was unfair and invalid because it was made after Kline was       unconscionable conduct or course of action." The trial court
initially retained by Defendants. ^                              also found no "evidence of taking advantage or lack of
                                                                 knowledge or ability or experience or capacity or grossly
Kline's original fee agreement provided that Defendants          unfair [because] there is [no] evidence on any of those points."
would pay Kline $225 per hour, plus expenses, for legal
services she performed in the underlying estate case. The         Jury instructions and questions are proper only i f they
fee agreement between Defendants and Kline was modified           are raised by the written pleadings and are supported
when Thomas, Sheehan & Culp was retained to join Kline in         by the evidence.'^- ^/^obr v. Smith. 845 S.W.2d 240,
representing Defendants, On March 30,1995, Daniel Sheehan         243 (Tex.1992); Knoll v. Neblett, 966 S.W.2d 622, 633
drafted an agreement which outlined the terms of his firm's       (Tex.App.-Houston [14th Dist.] 1998, no pet.); Bean v. Baxter
representation of Defendants in the underlying estate case.       Healthcare Corp., 965 S.W.2d 656, 661 (Tex.App.-Houston
The agreement provided that "[o]ur fee will be the sum of:        [ 14th Dist.] 1998, no pet.); see also TEX.R.CIV.P. 278 (West
(a) reasonable hourly rates including Donna Kline at the           1999), A trial court may properly refuse to submit an issue to
rate of $225 per hour and members of Thomas, Sheehan &
                                                                  the jury where no evidence exists to warrant its submission.
Culp, L.L.P. who work on the case with Tom Thomas' rate
                                                                  Elbaor, 845 S.W.2d at 243.
at $300 per hour and Dan Sheehan's rate at $250 per hour,
plus (b) ten percent (10%) of all Recovery, if any," (emphasis
                                                                  Further, presumptions that are imposed by law must be
added). The agreement fiarther provided that "[cjontingency
                                                                  supported by the evidence presented during trial in order to
fees will be divided between us, sixty percent (60%) to
                                                                  be considered by the trier of facts. We note the following:
Thomas, Sheehan & Culp, L.L.P., andforty percent (40%) to
Donna C. Kline." (emphasis added). The record shows that                       Courts have frequently remarked that
 the agreement was executed by both Defendants.                                presumptions are only intended to
                                                                               take the place of facts and cannot




   PLAINTIFFS' ORIGINAL PETITION - Page 145
Lee V. Kiine, Not Reported in S.W.Sd (2000)



              be relied upon where the facts are                In issues two, three, four, five and six, Defendants contend
              shown; or that no presumption can                 that the trial court erred by entering its judgment against each
              stand in the face of facts. According             Defendant under "all three contracts." Defendants maintain
              to such authorities a presumption is              that they were not jointly and severally liable on each
              an artificial thing, a mere house of              contract. Defendants also assert that Defendant Susan C. Lee,
              cards, which one moment stands with               Tmstee for Susan C. Gibson was not a proper party to the suit
              sufficient force to determine an issue,           brought by Kline.
              but at the next, by reason of the
              slightest rebutting evidence, topples             Defendants' allegations of trial court error in issues two
              utterly out of consideration of the trier         through six, inclusive, are waived. "Where a defendant does
              of facts.                                         not file a sworn pleading complaining of a defect of parties
                                                                before the case is called to trial, such defect is waived."
Combined American Ins. Co. v. Blanton, 353 S.W.2d847, 849       Sunbelt Const, Corp., Inc. v. S & D Mechanical Contractors,
(Tex.1962).
                                                                Inc., 668 S.W.2d 415, 418 (Tex.App.-Corpus Christi 1983,
                                                                writ refd n.r.e.); Allright, Inc. v. Burgard, 666 S.W.2d 515,
The record in this case is replete with competent evidence to   517 (Tex.App.-Houston [14th Dist.] 1983, writ refd n.r.e.);
rebut the presumption of unfairness conceming the contingent    Butler V. Joseph's Wine Shop, Inc., 633 S.W,2d 926, 929-30
fee agreement. For example, Kline testified that "from the      (Tex.App.-Houston [14th Dist.]' 1982, writ refd n:r.e.); see
time we started talking about contingency arrangements with     also TEX.R.CIV.P. 93(4) (West 1999); Shawell v. Pend
[another law firm], [Defendants] said if someone is going to    Oreille Oil & Gas Co., 823 S.W.2d 336, 338 (Tex.App.-
get a contingency fee, we want you to get part of it, because   Texarkana 1991, writ denied) (a defendant must complain
you have done so much for us...."- Conversely, there was        about a defect in the parties before the case is called to trial).
no evidence presented by Defendants to suggest that Kline's     Thus, nothing is presented for appellate review.
forty percent contingent fee was unfair or unreasonable.
Indeed, the evidence in the record supports the inference
                                                                On rehearing, Susan C. Lee, Trustee, chastises this court
that the agreement was entered into freely and voluntarily by
                                                                for summarily disposing of five points of error; she claims
Defendants based upon their full understanding of the affect
                                                                that she was never a party to the suit in her capacity as
of the contingent fee agreement. See Archer, 390 S.W.2d at
                                                                tmstee. We beg to differ. By her Second Amended petition.
739.
                                                                Donna Kline sued-and served-Susan C. Lee in her capacity as
                                                                Trustee; Kline also sued Lee in that capacity in a supplemental
The presumption upon which Defendants rely "disappeared         petition. Moreover, Susan C. Lee, Tmstee, appeared in the
like chaff in the wind" upon the introduction of Kline's        suit of her own volition in a counterclaim and a third
evidence contradicting the applicable legal presumption.        party petition. That pleading began as follows: "NOW INTO
See Praetorian Mutual Life Ins. Co. v. Humphreys, 484           COURT, Susan Camille Lee, individually and as Tmstee
S.W.2d 413, 417 (Tex.App.-Fort Worth 1972, writ refd            for Susan C. Gibson, and Susan C. Gibson, and files this
n.r.e.). Thereafter, the presumption, previously existent, no   their Third Amended Original Counterclaim combined with
longer constituted evidence. See id.; see also Sudduth v.       Third Amended Original Third Party Petition complaining
Commonwealth County Mutual Ins. Co., 454S.W.2d 196,198          of Donna Kline and Gary Grote.,.." Unquestionably, Susan
(Tex. 1970).                                                     C. Lee, Trustee, was a party to the lawsuit, appeared in the
                                                                 lawsuit, and requested affirmative relief from the trial court.
 *4 Accordingly, there being no evidence of imfaimess or        We overrule issues two through six.
unreasonableness in the record, a specific finding by the
jury that Kline's contingent fee agreement with Defendants
was fair and reasonable was not necessary. See Elbaor, 845
S.W.2d at 243. Defendants' first issue is overmled.                      Separate Jury Findings on "Each Contract"

                                                                 Defendants contend in their seventh issue that Kline "invited
                                                                 reversible error" by failing to obtain jury findings upon which
                             Parties                             an accurate judgment can be entered against them. They
                                                                 contend that the trial court committed reversible error by



  WESTLAW        © 2015 Thomson Heutecs. No claim io ongmal U.S. Government Works.


   PLAINTIFFS' ORIGINAL PETITION - Page 146
Lee V. Kline, Not Reported in S.W.3d (2000)



submitting one, broad question to the jury conceming the            reverse ajudgment based upon error in the charge, Defendants
amount of attomey fees owed under the contracts, rather than        must establish that the error complained of amounted to
submitting separate jury questions conceming the amount of          such a denial of the rights of the Defendants that it was
attomey fees "owed under each contracL"                             reasonably calculated to cause, and probably did cause,
                                                                    rendition of an improper judgment. See Insurance Co. of
 *5 In interpreting Rule 277, our Supreme Court held that           North America v. Morris, 928 S.W.2d 133, 143 (Tex .App.-
broad-form submissions "shall" be used "whenever feasible"          Houston [14th DisL] 1996, no writ). Defendants must also
and that trial courts do not possess any discretion to submit       establish that they "distinctly" and "specifically" objected
separate questions with respect to each element of a case.          to the complained of question so as to have preserved the
Texas Dep't of Human Serv. v. E.B., 802 S.W.2d 647,                  issue for appellate review./(T/rfcv. Stale of Texas, 651 S.W,2d
649 (Tex. 1990). Broad-form submissions must be used "in             840, 844 (Tex.App.-El Paso 1983, no writ). Conceming
any and every instance in which it is capable of being               the former. Defendants do not develop in their argument
accomplished," Id. The court also stated that broad-form             how the trial court's complained of jury question caused the
questions reduce conflicting jury answers, thus reducing             rendition of an improper judgment. See Insurance Co. of
appeals and avoiding retrials. Id. "Rule 277 expedites trials        North America. 928 S.W.2d at 143, As to the latter, contrary
by simplifying the charge conference and making questions            to Defendants' assertion in their brief, the record shows that
easier for the jury to comprehend and answer." Id.                   Defendants failed to distinctly and specifically object to the
                                                                      complained of question submitted by the trial court to the jury.
Here, the trial court submitted the following, broad-form             See Kirk, 651 S.W,2d at 844. Issue seven is overruled.
question to the jury: "What reasonable amount, if any, is
owed to Donna Kline for the necessary legal services she
performed for [Defendants] on an hourly basis under the
                                                                                               Good Cause
contracts?" The jury answered this question by awarding
Kline $114,207.21. The record shows that this amount was              *6 In their eighth issue. Defendants contend that the jury's
entirely consistent with Kline's evidence. Kline testified that      finding that Kline was not discharged by Defendants for
Defendants agreed to pay her $225 per hour, plus expenses,           "good cause" was against the great weight and preponderance
for legal services. Kline testified that the amount of her unpaid    of the evidence.
reasonable and necessary attomey fees and expenses related
to her time spent preparing the underlying estate case totaled       The same standard of review applies in reviewing factual
$110,388.27. Kline also testified that she billed Defendants         sufficiency challenges, regardless of whether the court of
an additional $3,818.94 for reasonableandnecessary attomey           appeals is reviewing a negative or affmnative jury finding and
fees for representing Defendants in a suit involving one of          regardless of which party had the burden of proof. Blonstein
Defendants' neighbors. Kline testified that the total amount         V. Blonstein, 831 S.W.2d468, 473 (Tex.App.-Houston [I4th
 owed to her on an hourly basis for legal services she               Dist] 1992, writ denied). Afler consideration of all ofthe
performed for Defendants totaled $114,207.21.                        evidence, a verdict will be set aside only i f the evidence is
                                                                     so weak or the finding is so against the great weight and
 At trial, the only disputed fact related to Kline's hourly          preponderance of the evidence that it is cleariy wrong and
 attomey fees under the contracts was the amount owed by             unjust. Id.; see also Lofton v. Texas Brine Corp., 720 S.W.2d
 Defendants. The question submitted by the trial coxjrt was          804, 805 (Tex.1986). The trier of fact is the sole judge ofthe
 framed to resolve that disputed fact. Triaf courts possess          credibility of the witnesses and the weight to be accorded their
 "broad discretion in framing questions to be submitted,             testimony. Id. Therefore, in determining the sufficiency ofthe
 'subject only to the requirement that the questions submitted        evidence, appellate courts must recognize from the verdict
 must fairiy submit the disputed issues for the jury's                of the jury what the jury, in its discretion, chose to believe.
 determination,' " Libhart v. Copeland 949 S,W.2d 783, 799            Shafer Plumbing & Heating, Inc. v. Controlled Air, Inc., 742
 (Tex.App.-Waco 1997, no writ). We discern no abuse of trial          S.W,2d 717, 720 (Tex.App.-San Antonio 1987, no writ). In
 court discretion in submitting the complained of question.           doing so, we must accept thejury's resolution of any conflicts
                                                                      or inconsistencies in the evidence and testimony. Id. The jury
 Further, assuming arguendo that the trial court should have          is free to believe or disbelieve any witness' testimony in whole
 submitted separate questions to the jury in this case, to            or in part. Murphy v. Texas Farmers Ins. Co., 982 S.W.2d 79,



   WESTLAW • © 2016 Thomson Reuters. No claim to onginai U.S. Government Works                                                       4



    PLAINTIFFS'ORIGINAL PETITION - Page 147
Lee V. Kline, Not Reported in S.W.3d (2000)



85 (Tex.App.-Houston [1st Dist.] 1998, no pet. h,). The jury         was instmmental in, inter alia, developing the portion of the
is entitled to disbelieve a witness even though that witness is      estate case that resulted in Defendants receiving a verdict
neither impeached nor contradicted. Id.                              for S840,000 on the sale of property located on Westheimer,
                                                                     Further, one of the key expert witnesses in the estate was Dr.
In Question Two, the jury in this case was asked, "Did               Harold Stephen Grace. Dr. Grace is an expert "in litigation
[Defendants] discharge Donna Kline for good cause?" The              consulting on complex business andfinancialmatters ." Kline
jury was instructed that "a client has 'good cause' to discharge     brought Dr. Grace into the estate case in May 1995. Dr.
an attomey i f the attomey fails to perform her duties in            Grace testified that Kline supplied him with all the necessary
 the manner that an attomey of ordinary skill and ability            documents he needed to develop a strategy and his testimony
 would have performed her duties under the same or similar           for the estate case. Dr. Grace testified that Kline possessed a
 circumstances." The jury responded to Question Two in the            cogent grasp of the issues involved in estate case. In preparing
 negative.                                                            his testimony in the underlying estate case. Dr. Grace testified
                                                                      that "my time sheets would reflect that the overwhelming
In their brief. Defendants contend that Kline's performance           majority of my time, over 90 percent would be spent with
deteriorated "dramatically" afler the contingent fee                  Donna Kline." Dr. Grace testified that he and Kline developed
agreement was executed on March 30, 1995. No criticisms               the strategy that he used to testify in the estate case. Defendant
were made of Kline's performance between the time she                 Susan Lee told Dr. Grace after he testified in the underiying
was retained in July 1994 and March 1995. To show that                estate case that his testimony "was the high point ofthe trial."
Kline was discharged for "good cause" in September 1995,
Defendants rely .solely on criticisms of Kline's performance          Reviewing all the evidence in the light of what the verdict
made at trial by Daniel Sheehan. First, Sheehan did not               reveals the jury obviously believed, we cannot conclude that
testify in this case as an expert witness conceming whether           the verdict "is contrary to the overwhelming weight of the
Kline met the appropriate standard of care. See Greathouse            evidence as to be clearly wrong and unjust," See Shafer
V. McConnell, 982 S.W.2d 165, 174 (Tex.App.-Houston                   Plumbing & Heating, Inc., 742 S.W.2d at 721; see also
 [1st Dist.] 1998, no pet.). Indeed, neither Sheehan nor any          Blonstein, 831 S,W.2d at 473-74. Issue eight is overmled.
 other witness in this case was designated as an expert
 witness on legal malpractice,' Second, Sheehan was Kline's
 co-counsel, not her employer, Kline was employed by                                       Declaratory Judgment
 Defendants. Sheehan's criticisms of Kline's performance,
                                                                      In their ninth issue, Defendants assert that the trial court ened
 testifying as only a fact witness,"^ are immaterial as to
                                                                      in entering its declaratory judgment which decreed that Kline
 whether Defendants discharged Kline for "good cause."
                                                                      possesses a "valid and subsisting" contingent interest in any
 Defendants direct this Court to no testimony in the record by
                                                                      recovery obtained by Defendants in the underlying estate
 Defendants to support a finding that Kline was discharged
 by Defendants for good cause, Finally, conceming whether             case, pursuant to the contingent fee agreement of March 30,
 any of Sheehan's criticisms of Kline's performance were ever          1995.
 communicated to Defendants, in their brief, Defendants rely
                                                                      The purpose of the Uniform Declaratory Judgment Act is to
  on Sheehan's testimony wherein he testified that he told
                                                                      settle and afford relief from uncertainty and insecurity about
  Defendants that "Kline was not of any real use to me in getting
                                                                      rights, status, and other legal relations. Hasty, Inc. v. Inwood
  the case ready."
                                                                      Buckhorn Joint Venture, 908 S.W.2d 494, 499 (Tex.App.-
                                                                      Dallas 1995, writ denied); see also TEX,CIV.FRAC,
  *7 On the other hand, the record is replete with testimony
                                                                      & REM.CODE ANN. §§ 37.001-.011 (Vemon 1997).
 and evidence that shows Kline performed in a diligent manner
                                                                      Defendants maintain that the trial court's declaratory
 in preparing the underlying estate case. Kline testified that she
                                                                      judgment in this case "does not terminate the uncertainty
 prepared pleadings and motions, attended hearings, prepared
                                                                      or controversy giving rise to [the] lawsuit." However,
 intenogatories on behalf of Defendants, deposed several
                                                                       Defendants do not identify in their brief what "uncertainty or
 witnesses, secured expert witnesses, assisted in getting
                                                                       controversy" remains. The trial court's declaratory judgment
 Defendants' accounting and tax affairs in order, and prepared
                                                                       merely decrees that the parties' contingent fee contract is
 a portion of the jury charge that was ultimately utilized in
 the trial of the underlying estate case. Kline testified that she


   WESTLAW ® 2016 rhornson Routers. No claim to original U.S. Government Works


    PLAINTIFFS'ORIGINAL PETITION - Page 148
Lee V, Kline, Not Reported in S,W.3d (2000)



valid. "A trial court may construe a contract in a declaratory     issue of material fact exists on one or more of the essentia!
judgment suit either before or afler a breach occurs." Id.         elements of the plaintiffs cause of action, or when the
                                                                   defendant establishes each element of an affirmative defense
 *8 As to the effect of any potential disputes between the         as a matter of law. Id.; see also Black v. Victoria Lloyds Ins.
parties in this case, a "declaratory judgment may be entered if    Co., 797 S.W. 2d 20, 27 (Tex, 1990). A defendant who moves
it serves a useful purpose in resolving a controversy between      for summary judgment has the burden of showing as a matter
the parties, even if actual or potential disputes remain. " Town   of law that no material issue of fact exists on the plaintiffs
of Griffing Park v. City of Port Arthur, 628 S.W.2d 101,           cause of action. Id.; see also Arnold v. National County Mut.
102 (Tex.App.-Beaumont 1981, writ refd n.r.e.) (emphasis           Fire Ins. Co.. 725 S.W.2d 165, 166-67 (Tex.1987).
added). Indeed, "[t]he fact that other issues in the general
controversy remain uiu-esolved by a declaratory judgment            *9 The function of a summary judgment is not to deprive a
does not deprive the court of the power and discretion to          lifigant of its right to a full hearing on the merits of any real
render such a judgment." Id . (citation omitted); see also         issue of fact but to eliminate patently unmeritorious claims
Hawkins v. Texas Oil & Gas Corp.. 724 S.W.2d 878, 891              and untenable defenses. Id.; Dallas Cent. Appraisal Dist. v,
(Tex.App.-Waco 1987, writ refd n.re.).                             G.T.E. Directories Corp. 905 S,W.2d 318, 319 (Tex.App,-
                                                                   Dallas 1995, writ denied). The purpose of the summary
We note that the trial court did not enter a monetary award        judgment mle is not to provide either a trial by deposition
to Kline based upon the contingent fee contract because            or a trial by affidavit, but to provide a method of summarily
the amount of Defendants' recovery in the underlying estate        terminating a case when it clearly appears that only a question
has not been finally adjudicated. See note 1, supra. All that       of law is involved and that no genuine issue of material fact
remains is the calculation of Kline's contingent interest in       remains. Id.
Defendants' recovery, if any. We hold, therefore, that the trial
court did not err in granting a declaratory judgment, which        In a legal malpracdce case, as here, the plaintiff must prove
decreed that Kline's contingent fee interest in Defendants'        a duty owed to him or her by the defendant, a breach of that
monetary recovery is valid. Issue nine is overruled.               duty, injury proximately caused by the breach, and damages,
                                                                   Schlager, 939 S.W.2d at 186; see also Peeler v. Hughes &
                                                                   Luce, 909 S.W.2d 494, 496 (Tex.1995). A lawyer in Texas
                                                                   is held to the standard of care which would be exercised by
        Gary Grote's Motion for Summary Judgment
                                                                   a reasonably pmdent attomey, based on the information the
In their tenth issue. Defendants assert that the trial court       attomey has at the time of the alleged act of negligence. Id. To
erred in granting Gary Grote's mofion for summary judgment         prevail in a legal malpractice action, a plaintiff must prove "a
on ( I ) Defendants' action for malpractice against Grote, and     suit within a suit" by demonstrating that he or she would have
(2) Grote's action to recover attomey fees from Defendants         prevailed in the underlying action but for his or her attomey's
which were incurred when Grote represented Defendants in a         negligence. Id. at 186-87. Although proximate cause in a
lawsuit involving one of Defendants' neighbors.                    legal malpractice action is usually a question of fact, it may
                                                                   be determined as a matter of law if the circumstances are
The standard of review to be followed in a summary judgment        such that reasonable minds could not arrive at a different
is well-established. The movant has the burden of showing          conclusion. Id. I f the attomey demonstrates that his failure to
that there is no genuine issue of material fact and that he         act was not the cause of any damages to the client, a summary
or she is entitled to judgment as a matter of law. Schlager        judgment may be proper. Id.
V. Clements. 939 S.W.2d 183, 186 (Tex.App.-Houston [14th
Dist.] 1996, writ denied). In deciding whether or not there is     Defendants filed legal malpractice actions against Gary Grote
a disputed material fact issue precluding summary judgment,        and Donna Kline. Their action was filed as a counterclaim
proof favorable to the non-movant will be taken as tme. Id.        to Kline's action to recover attomey fees. As to Grote,
Every reasonable inference must be indulged in favor of the        Defendants alleged that he represented Defendants on matters
non-movant and any doubts are resolved in his or her favor.        unrelated to the underlying estate case during 1994-95.
Id.; see also Nixon v. Mr. Property Management Co., 690            Defendants alleged that Grote committed legal malpractice
S.W.2d 546, 548-49 (Tex.1985). Summary judgment for the            because he breached his employment contract, was negligent
defendant is proper when the proof shows that no genuine           in representing Defendants, breached fiduciary duties by



  WESTLAW


   PLAINTIFFS' ORlGrNAL PETITION - Page 149
Lee V. Kline, Not Reported in S.W.Sd (2000)


charging excessive attomey fees and by communicating               action. See Mackie v. McKenzie, 900 S.W.2d 445, 451-52
with a juror in the underlying estate case, was negUgent           (Tex.App.-Texarkana 1995, writ denied); see also Klein v.
and grossly negligent in communicating with a juror in the         Reynolds, Cunningham, Peterson & Cordell. 921, S.W,2d45,
underlying estate case, knowingly violated the Deceptive           49 (Tex.App.-Houston [1st Dist.] 1995, no writ). Further, the
Trade Practices Act (DTPA), relative to his representation of      record shows that Defendants' causes of action against Grote
Defendants, and conspired with Kline to interfere with the         were "patently unmeritorious." See Schlager, 939 S.W.2d at
underlying estate case by obtaining juror information sheets       186. The trial court did not en in granting Grote's motion for
and communicating with a juror in that case for the purpose        summary judgment. Issue ten is overmled.
of causing a mistrial. "

Grote moved for summary judgment, contending that                                              Recusal
he was entitled to a judgment as a matter of law
on Defendants' malpractice action and on his claim for             In their eleventh issue. Defendants aver that the trial court
attomey fees. Defendants contend that Grote's motion for           erred in refusing to recuse Judge Wood from the trial of this
summary judgment should have been denied because it was            case.
unsupported by competent summary judgment proof and did
not dispose of all of the issues in the case. We disagree.         Citing Rule of Civil Procedure 18b(2), Defendants contend
                                                                   that Judge Wood possessed "personal knowledge of the
 * 1 0 Grote asserted in his motion that he was entitied to        evidentiary facts conceming the proceeding" and was a
summary judgment on Defendants' malpractice action and             "material witness to the Kline and Grote matter in the
his attomey fees action because the attomey fees he charged        [underlying estate] litigation." See TEX.R.CIV.P. 18b(2)
were reasonable and customary and that he was competent            (West 1999). Defendant's eleventh issue is without merit. The
in performing the kind of legal services he performed for          gist of Defendants' complaint is that Judge Wood acquired
Defendants. In support of his motion, Grote attached copies        "personal knowledge" and was a "material witness" to the
of Defendants' responses to requests for admissions and a          instant case because during the underlying estate case he
detailed affidavit which outiined his qualifications and which     (1) heard , testimony conceming to Grote's communication
showed that his performance in representing Defendants             with Juror Thomas, (2) made certain in-courtralings,and (3)
was consistent with the standard care of what a reasonable         presided over the underiying estate case.
and pmdent attomey would have exercised based on the
information the attomey had at the time of the alleged act          *11 Judicial mlings alone almost never constitute a valid
of malpractice. ''^ Grote also attached a copy of his billing      basis for a recusal motion because they cannot possibly show
invoice which reflected the amount of attomey fees owed            reliance by a judge upon extrajudicial sources. Ludlow v.
by Defendants. Further, as to Defendants' allegations that         DeBerry. 959 S.W.2d 265, 271 (Tex.App.-Houston [14th
Grote violated the DTPA by failing "to exercise due care and       Dist.] 1997, no writ). None of Judge Wood's knowledge of
diligence in representing Susan C. Gibson and Susan C. Lee         the facts of the instant case, if any, resulted from extrajudicial
in the Estate case," the record clearly refutes this allegation.   sources nor his "personal knowledge." See id. Further, there
Grote's summary judgment unequivocally establishes that            is no provision contained within Rule 18b(2) that would
Grote never represented either Defendant in the underiying         support Defendants' contention that Judge Wood was a
estate case. Finally, as to Defendants' allegations that Grote's   "material witness" in the underlying estate litigation. See
communication with a juror in the underlying estate case           TEX.R,CIV,P. 18b(2) (West 1999),
showed that he was involved in a conspiracy with Kline "to
interfere with or compromise" the underlying estate case, the      There yvas no abuse of trial court discretion in denying
siimmary judgment proof and record shows that this claim           Defendants' motion to recuse. See Hector v. Thaler, 927
                                                                   S.W.2d 95, 99 (Tex.App.-Houston [1st Dist.] 1996, writ
is at best, meritless, and at worst, frivolous,   ^ee note 13,
                                                                   denied); see also TEX.R.CIV.P. 18a(f) (West 1999). Issue
supra.
                                                                   eleven is overmled.

In sum, we hold, contrary to Defendants' contentions, that
Grote's summary judgment proof was not conclusory and
that it responded to all of Defendants' pled causes of


  WESTLAW       t- 20 iB i r-.(;rnson Keuterf;. No clairn to ortotnsi L' S. Government Works


   PLAFNTIFFS'ORIGINAL PETITION - Page 150
Lee V. Kline, Not Reported in S.W.Sd (2000)



                                                                   is proper. See Internationa! Security Life Ins. Co. v. Spray,
                       Ailorney's Fees
                                                                   468 S.W.2d 347, 349-50 (Tex.l97I). Finally, Defendants'
In their twelfth issue, Defendants contend that the trial court    argument that Kline's appellate attomey's fee award should
erred in not conditioning the award of appellate attomey's         have been conditioned upon Defendants' unsuccessful appeal
fees to Kline upon a successful appeal. In response to ajury       is rendered moot by our decision to affirm the trial court's
question, the jury awarded Kline attomey's fees for the trial,     judgment. See Siegler v. Williams, 658 S.W.2d 236, 241
for an appeal to the court of appeals, and for an appeal to        (Tex.App.-Houston [1st DisL] 1983, no writ). Issue twelve is
the Texas Supreme Court. In the trial court's judgment, the        overmled.
respective awards of attomey's fees to Kline were subject
to remittitur if no appeal was taken. In other words, no           The judgment is affirmed.
attomey's fees would be awarded to Kline for appeals if
Defendants chose not to appeal the trial court's judgment. The
trial court's judgment conceming the award of attomey's fees       All Citations
                                                                   Not Reported in S.W.3d, 2000 WL 19227


Footnotes
1       See Lee, et al. v. Lee, et a/., No. 14-97-00162-CV {In re Estate of Katherine Pillot Lee Barnhart, Deceased ). The
        underlying estate case is presently on appeal in this Court, assigned to another panel.
2       The underlying estate action was filed by Defendants in 1988.
3       The record shows that Defendants and Kline vacationed together in the Virgin Islands and exchanged gifts between July
        1994 and July 1995.
4       The law firm of Thomas, Sheehan & Culp remained in the case as lead trial counsel. After the trial of the underlying estate
        case In January 1996, the lawfirm was awarded $1,500,000 for attorney fees.
5       As we understand Defendants' first issue, they are not challenging the award of $114,207.21. This amount was awarded
        to Kline based on her hourly billing rate of $225,
6       "Failure to submit a question shall not be deemed a ground for reversal of the judgment, unless Its submission,.m
        substantially correct wording, has been requested in writing and tendered by the party complaining of the judgment."
        TEX.R.CIV.P. 278 (West 1999) (emphasis added); Mason v. Southern Pacific Transp. Co., 892 S.W.2d 115, 117-18
        (Tex.App.-Houston [1st Dist.] 1994, writ denied) (where party complaining of the judgment on appeal failed to tender a
        written question to the trial court concerning the defendant's duty of care, point of error was waived on appeal); see also
        note 8, infra. Defendants' tendered jury instmction appears to be consistent with their contention that Kline violated the
        Texas Deceptive Trade Practices Act. See TEX.BUS. & COM.CODE ANN. § 17.50(a)(3) (Vemon Supp.1998). However,
        the trial court instructed a verdict in Kline's favor on that issue.
7       We note that the issue regarding the fairness and reasonableness ofthe contingent fee agreement was not raised in any
        of Defendants' pleadings or tendered jury questions in this case. See TEX.R.CIV.P. 278 (West 1999). Further, our review
        of the record, including Defendants' motion for new trial, discloses that the fairness and reasonableness ofthe contingent
        fee agreement was not an issue in this case at the trial level. See A. V.A. Ser/ices, Inc. v. Parts Indus. Corp., 949 S.W.2d
         852, 854 (Tex.App .-Beaumont 1997, no writ); see a/so Steel v. Rhone Poulenc, Inc., 962 S.W.2d 613, 618 (Tex.App.-
         Houston [1 st Dist] 1997, no pet.); Hughes v. Thrash, 832 S.W.2d 779, 788 (Tex.App.-Houston [1 st Dist.] 1992, no writ).
8        "Itiselementarythatundisputed factual issues need notbesubmittedtothejury"Kora//ndt/s., Inc. v. Security Connecticut
         Life Ins. Co., 788 S.W.2d 138, 149 (Tex.App.-Dallas 1990, writ denied). As noted, Defendants' specific complaint on
         appeal does not appear to have been a disputed factual issue at trial.
9        To establish compliance with the appropriate standard of care in a legal malpractice case, expert testimony is required.
        Jatoi V. Decker, Jones, McMackIn, Hall & Bates, 955 S.W.2d 430, 434 (Tex.App.-Fort Worth 1997, pet. denied).
 10     Lay or fact witnesses are subject to the general rule that a witness' testimony must be limited to facts which the witness has
        personal knowledge, and a witness must not give a personal opinion or legal conclusion unless he or she is designated
        as an expert witness. United Way of San Antonio, Inc. v. Helping Hands Lifeline Found., Inc., 949 S.W.2d 707, 713
        (Tex.App.-San Antonio 1997, no writ).
 11     Defendants' allegations stem from the following event: After a jury had been selected in the underiying estate case, Grote,
        an attorney, was playing soccer with a team-mate and friend. Earl Thomas. Thomas mentioned that he was serving Jury
        duty that day in a case involving a will dispute. Grote responded to Thomas by saying, "Oh, it's not the Lee case?" Thomas


    WESTLAW        2016 rhornson HeulCif;. No (Jam to onginai U.S. Governmerii: Works


    PLAINTIFFS' ORIGINAL PETITION - Page 151
Lee V, Kline, Not Reported In S.W.3d (2000)


      responded that indeed it was the Lee case. Grote informed Thomas, Inter alia, that because he was involved in litigation to
      recover attorney fees from Lee that Thomas should report their conversation to the Judge the following moming. Thomas
      followed Grote's instmctions and reported it to the Judge the following moming. The Judge declared a mistrial because of
      Thomas' conversation with Grote, in addition to problems with at least four other Jurors. The judge noted that if Thomas
      was theonly problem he would allow the trial to proceed but he could not allow it to proceed because another Juror stated
      that she was suffering from intolerable pain and could not afford to sen/e, another juror stated that he was schizophrenic,
      and another stated he had to be with his wife who was taken to an emergency room. The Judge concluded, "I have
      reached the conclusion I am very uncomfortable with the Jury. I have never had a Jury that has been more creative with
      excuses. It seems to be pandemic among them, and it's well, if you don't buy this excuse, I've got this excuse."
12    Notably, nowhere in Defendants' pleadings nor in Defendants' responses to Grote's motion for summary judgment, is an
      attempt made to show that Defendants possessed any evidence to show that Defendants could prove the "suit within a
      suit" by demonstrating that they would have prevailed in the action complained of but for Grote's alleged malpractice. See
      Schlager, 939 S.W.2d at 186. Indeed, this Court is left in the dari( as to what it was that Grote did In the complained of
      action that showed he committed legal malpractice or violated the DTPA. See Greathouse, 982 S.W.2d at 174 (summary
      Judgment appropriate where plaintiff fails to raise a fact issue conceming the "suit within a suit" element of a legal
      malpractice cause of action).
13    Attached to Grote's motion for summary Judgment are copies ofthe transcripts from Grote's and Juror Thomas' testimony
      before the trial court concerning their communication.


                                                             © 2016 Thomson Reuters. No claim to original U.S. Government Works.




 weSTtAW      © 2016 f hornsoii Reuters. No clairn to original U.S Government Works.


 PLAINTIFFS'ORIGINAL PETITION - Page 152
EXHIBIT "2
                                  CAUSE NO. 13-7506;.-403
 ESTATE OF KATHERINE PILLOT LEE                                  IN THE PROBATE COURT
 BARNHART,                                    §
                                              §
 RONALD E. LEE JR.,                           §
                                              §
               Plaintiff,                     §
 V,                                                             HARRIS COUNTY, TEXAS

 SUSAN CAMILLE LEE, Individually and
 as Trustee of the Article IV Trust created
 by the Last Will and Testament of
 Katherine Pillot Lee Barnhart, Deceased,
 and as Executor ofthe Estate ofKatherine
 Pillot Lee Bamhart, Deceased,

               Defendant.                                         PROBATE COURT NO. 2

          DEFENDANT'S OBJECTIONS, OPPOSITION, AND RESPONSE TO
            APPLICATION TO APPROVE SETTLEMENT AGREEMENT

       Susan Camille Lee, Individually and formerly Trastee of the Article IV Trust (the

"Trusf) created by the Last Will and Testament ofKatherine Pillot Lee Bamhart, Deceased (the

"Bamhart Will"), and as Executor of the Estate of Katherine Pillot Lee Bamhart, Deceased,

("Defendant") files her Objections, Opposition, and Response to the Application to Approve

Settlement Agreement filed by Applicant Legacy Trust Company ("Legacy") in its capacity as

the court-appointed Receiver ofthe Testamentary Article IV Trust created by the Last Will and

Testament ofKatherine Pillot Lee Bamhart, Deceased, and in support thereof would respectfully

show as follows:

                                       BACKGROUND

       The Bamhart Will created the Trust for the benefit of Ronald Ellsworth Lee Jr. ("Ronald

Lee"), Susan Camille Lee ("Susan Lee"), and Katherine Pillot Lee Bamhart's grandchildren. On

June 18, 2015, the Court removed Susan Lee as Tmstee of the Trust and appointed Legacy to
serve as receiver for the Trust pursuant to TEX. PROP. CODE § 114.038. The Order provided that

Legacy was authorized to collect, compromise, or settle all debts owed to the Trust.

       On January 25, 2016, Legacy fded its Application to Approve Settlement Agreement

("Application"), attaching an executed Settlement Agreement between Ronald Lee and Legacy,

dated as effective January 13, 2016. Among other things, the Settlement Agreement calls for a

settlement of the judgment against Ronald Lee in favor ofthe Trust, entered in 1996, arising out

of Lee V. Lee, Cause No. 137,506, Harris County Probate No. 2. The judgment was modified by

the Fourteenth Court of Appeals in Lee v. Lee, 47 S.W.3d 767 (Tex. App.-Houston [14th Dist.]

2001, pet. denied). The court of appeals rendered its opinion on May 17, 2001, the Texas Supreme

Court denied Ronald Lee's petition in December 2001, and the Fourteenth Court of Appeals issued

its mandate on February 8, 2002. On December 6, 2012, this Court entered an Order Granting

Application for Writ of Scire Facias and to Revive Dormant Judgment in Cause No. 137,506-402

("Judgmenf).

 L     The proposed Settlement Agreement is not in the best
       interest of the Trust and should not be approved.

                      SUMMARY O F OBJECTION AND RESPONSE

       The Court should not approve Legacy's Settlement Agreement with Ronald Lee because:

           1. Settlement ofthe Trust's $26 million Judgment against him for less than
              one-half of its value is not in the best interest of the Trust and violates
              Legacy's fiduciary duties.

           2. The proposed transfer of Ronald Lee's interest in the River Bend Fami
              Property is of no benefit to the Trust because it already owns his interest.




DEFENDANT'S OBJECTIONS, OPPOSITION, AND RESPONSE TO
APPLICATION TO APPROVE SETTLEMENT AGREEMENT                                                  PAGE 2
        A.      The proposed settlement of the Judgment is grossly inadequate.

        The proposed Settlement Agreement between Ronald Lee and Legacy allows Ronald Lee

 to satisfy the Judgment in full, apparently for consideration that includes an alleged payment of

 $8 million in 2015, and a promissory note in the amount of $4 million payable quarterly over a

period of two years at a 4% interest rate. This amount is woefully inadequate, less than one-half

 of what is due under the Judgment.

        Legacy's Application understates the amount of the Judgment against Ronald Lee by a

significant amount. The Application simply references a judgment totaling approximately $3.9

million "plus prejudgment interest." The actual amount of the Judgment is in excess of $4.3

million, and significant portions ofthe Judgment carry post-judgment interest at the rate of 10%

compounded annually back to October 1996, almost 20 years. When post-judgment interest is

calculated in accordance with the Fourteenth Court of Appeals' opinion, the total amount ofthe

Judgment as of February 2016 exceeds $26 million.^ Yet, the proposed Settlement Agreement

discharges the Judgment and sells the Trust's $26 million asset in retum for only $8 million, plus

a $4 million promissory note payable over two years. And, the promissory note carries only 4%

interest, compared to the Judgmenf s rate of 10%.

        Ronald Lee and Legacy have colluded to relieve him of his obligations to the Trust. Legacy

asks the Court to find that the Settlement Agreement is in the best interest of the Trast. Yet, it

allows Ronald Lee to discharge this judgment (unpaid for 20 years) for less than 50 cents on the

dollar. It is not in the best interest of the Trust or its beneficiaries. Rather, it is only in Ronald




     An approximate calculation ofthe Trust's Judgment against Ronald Lee with prejudgment and post-
judgment interest in accordance with the Fourteenth Court of Appeals' opinion is attached hereto as
Exhibit A.


DEFENDANT'S OBJEcnoNs, QpposraoN, AND RESPONSE TO
APPLICATION TO APPROVE SETTLEMENT AGREEMENT                                                   PAGES
Lee's interest, providing a windfall to him in violation of Legacy's duties as Receiver. While

Legacy has the authority to compromise and settle all debts owed to the Trust, it is also charged

with all duties of a trustee under the Trust.'- Legacy owes fiduciary duties to all beneficiaries of

the Trust to exercise good faith in protecting the assets of the Trust and discharging its duties as a

prudent person would ordinarily exercise in the management of his or her own affairs. The

agreement to allow Ronald Lee to satisfy the Judgment is in violation of Legacy's duties.

       Based on the foregoing, Susan Lee requests that the Court deny Legacy's Applicafion to

Approve the Settlement Agreement and deny Legacy authority to enter into the agreement as

presented.

       B.      Ronald Lee's transfer of the River Bend Farm Property
               is of no benefit to the Trust.

       Legacy's Settlement Agreement also calls for the settlement of issues related to Ronald

Lee's interest in property known as the River Bend Farm Property, consisting of approximately

640 acres in Wharton County, Texas. Legacy's Application states that Ronald Lee acquired a 25%

interest in this property from the estate of his father and the Trust acquired a 50% interest under

the Bamhart Will. The agreement calls for Ronald Lee to deed his interest in the River Bend Farm

Property to Legacy. The problem here is that Ronald Lee has no interest in the River Bend Farm

Property. Legacy's Application fails to infonn the Court that Ronald Lee's interest in the River

Bend Farm Property was foreclosed upon for failure to pay taxes. Susan Lee as Trustee of the

Tmst later redeemed that interest. Therefore, the conveyance of Ronald Lee's interest in the River

Bend Farm Property is worthless to the Trust, because it already ovms his interest. Whatever

consideration is given to Ronald Lee for the value of his interest in the property for the transfer




^    Order Removing Trusting and Appointing Receiver f 3.a, June 18,2015.

DEFENDANT'S OBJECTIONS, OPPOSITION, AND RESPONSE TO
APPLICATION TO APPROVE SETTLEMENT AGREEMENT                                                    PAGE 4
should be nullilied. hi this regard, the purported Settlement Agreement is not in the best ofthe

Trust and Legacy's Application to Approve the Settlement Agreement in this regard should also

be denied.

        WHEREFORE, PREMISES CONSIDERED, Susan Lee respectfully request that the

Court: (1) decline to approve the terms ofthe Proposed Settlement Agreement; (2) find that the

proposed settlement agreement is not in the best interest of the Trust; and (3) deny Legacy in its

capacity as receiver the authority to enter into the proposed settlement agreement on behalf of the

Trust. Susan Lee also request such other and further relief as which she may show herself justly

entitled.

                                      Respectfully submitted,

                                               DANIEL SHEEHAN P L L C

                                                /s/Daniel J. Sheehan
                                                DANIEL J. SHEEHAN
                                                StateBarNo. 18174500
                                               dsheehan@dsa-law. com
                                               JOHN M . PHALEN JR.
                                                StateBarNo. 15895300
                                               jphalen@dsa-law.com
                                                Campbell Centre II, Suite 100
                                                8150 N. Central Expressway
                                                Dallas, Texas 75206
                                                (214)468-8899
                                                (214)468-8803 Fax

                                               ATTORNEYSFOR
                                               DEFENDANT SUSAN C A M I L L E L E E

                                C E R T I F I C A T E OF S E R V I C E

        The undersigned hereby certifies that a true and correct copy of the foregoing document
 was served on all counsel of record on February 10, 2016, in accordance with TEX. R. CIV. P.
 21a.

                                                      /s/Daniel J. Sheehan


DEFENDANT'S OBJECTIONS, OPPOSITION, AND RESPONSE TO
APPLICATION TO APPROVE SETTLEMENT AGREEMENT                                                 PAGES
EXHIBIT A
             Lee y. Lee, 47 S.W.Sd 767, 801 (Tex. App.-Houston [14th Dist.] 2001, pet. denied)


             EXCESSIVE EXECUTORS' FEES                                ATTORNEYS' FEES & COURT COSTS

                                                                TRIAL:        :.:$^:500,pp|-^            Pius Post-Judgment lnterest •
                                                                                                "^^'•-.^iy.^'-''-'--'•   •••• •   •• :   ••   '•':':i.-"-'f -..•
      $659,506
                                                               TOTAL:         i$9,173,8635 ^^•$B!\/!@:10%Comp6uncieclAnnlial^
+     $1,538,848                                                                           ;^ 40/25/1996 to;2/26/2016:(19,3:years)

                                                            APPELLATE:
     $2,198,355
                                   10% SIMPLE                  TOTAL:
+    $333,417      —                                                                            :;;::^?2/2|20p2:fe&
                             7/28/1993iTO,10/24/1996:
                                                              SUPREME         : JM.00(3'^ •-            " Plus Post-JudgmentintereBt'/
     $2,531,772-
                           PLUS POST-JODGMENT IhmRESX          COURT:

                                                               ^ TOTAL::      •'•$379,749^:^^ ^$ldO,aQO@lD%OompoutTded;An^
EXCESSIVE FEES TOTAL:
                                                             TRIAL COURT
                                                                                                |:Sf®|Q/2||||i&to::;f/|l/2^
J        i                    >$2,531^772:AT10%
                                                            •|i|ip§p-S::|||

                             i • COivIPOUNDED AHNIIALLY-:
    $15,535,701                                             ||B-GC|iRf^
                                10/26/1996TO 2/26/2016



                                                                    ATTORNEYS' FEES TOTAL                   $10,589,293

                                                                    EXECUTOR'S FEES TOTAL                   $15,535,701

                                                                                    TOTAL                   $26,124,994
                                                                             COSTS TOTAL                    $384,445
                                                                    GRAND JUDGMENT TOTAL                    $26,509,439
                                                                                               DALLAS COUNT^
                                                                                            5/26/2016 4:02:53 PIV
                                                                                                  FELICIA PITRE
                                                                                                DISTRICT CLERH
                                                                                        David Hernandez




                                CAUSE NUMBER DC-16-04570

TOM THOMAS, DAN SHEEHAN                            IN THE 162nd DISTRICT
and MARC CULP, individually and
as successors to the interests of
Thomas, Sheehan & Culp, L.L.P.,
       Plaintiffs,

V.                                                  COURT OF

LEGACY TRUST COMPANY,
N.A., in the capacity as RECEIVER
FOR THE ARTICLE IV TRUST
created by the Last Will and
Testament of Katherine Pillot Lee
Bamhart, Deceased,
       Defendant.                                   DALLAS COUNTY, TEXAS




     Subject to Motion to Transfer Venue & Motion to Transfer
     Lawsuit to Statutory Probate Court, Defendant's Original
          Answer, Plea In Abatement, and Counterclaim
          Defendant Legacy Tmst Company, N.A., in its capacity as Receiver for the Article IV

Trust created by the Last Will and Testament of Katherine Pillot Lee Bamhart, Deceased

appointed by the Probate Court No. 2 of Harris County (hereinafter referred to as "Defendant or

"Legacy"), and, subject to its (1) Motion to Transfer Venue and (2) Motion to Transfer Lawsuit

to Statutory Probate Court, files this its Original Answer and Plea in Abatement, and in support

thereof would respectfully show the Court the following:

          1.     As stated above, Defendant is filing this pleading subject to the following two

pleadings:

                 a. Defendant's Motion to Transfer Venue which is being contemporaneously

                    filed with this Court under the above entitled and nrmibered cause; and




0050812
                                CAUSE NUMBER DC-16-04570

TOM THOMAS, DAN SHEEHAN                     §       IN THE 162nd DISTRICT
and MARC CULP, individually and             §
as successors to the interests of           §
Thomas, Sheehan & Culp, L.L.P.,             §
       Plaintiffs,                          §
                                            §
v.                                          §       COURT OF
                                            §
LEGACY TRUST COMPANY,                       §
N.A., in the capacity as RECEIVER           §
FOR THE ARTICLE IV TRUST                    §
created by the Last Will and
Testament ofKatherine Pillot Lee             §
Barnhart, Deceased,                          §
       Defendant.                            §      DALLAS COUNTY, TEXAS




     Subject to Motion to Transfer Venue & Motion to Transfer
     Lawsuit to Statutory Probate Court, Defendant's Original
          Answer, Plea In Abatement, and Counterclaim
          Defendant Legacy Trust Company, N.A., in its capacity as Receiver for the Article I V

Trust created by the Last Will and Testament of Katherine Pillot Lee Bamhart, Deceased

appointed by the Probate Court No. 2 of Harris County (hereinafter referred to as "Defendant or

"Legacy"), and, subject to its (1) Motion to Transfer Venue and (2) Motion to Transfer Lawsuit

to Statutory Probate Court, files this its Original Answer and Plea in Abatement, and in support

thereof would respectfully show the Court the following:

          1.     As stated above, Defendant is filing this pleading subject to the following two

pleadings:

                 a. Defendant's Motion to Transfer Venue which is being contemporaneously

                     filed with this Court under the above entitled and numbered cause; and




                                                                                              1IP ag e
0050812
               b. Defendant's Motion to Transfer Lawsuit to Statutory Probate Court which was

                   filed in Harris County Probate Court Number Two (2) under Cause Number

                   137,506-403 on May 13, 2016.


                                      Original Answer

                                       General Denial

          2.   Defendant hereby asserts a general denial as to each and every allegation

contained in Tom Thomas, Dan Sheehan, and Marc Culp's (hereinafter sometimes referred to

collectively as the "Plaintiffs") Original Petition as authorized by Rule 92 of the Texas Rules of

Civil Procedure.   Defendant requests that the Court require Plaintiffs to prove their claims,

charges, and allegations as required by the Constitution and the laws of the State of Texas.

          3.   Defendant respectfully reserves the right tq file an amended answer in response to

Plaintiffs Original Petition in the manner which is authorized by the Texas Rules of Civil

Procedure.

                                        Verified Denial

          4.   Without waiving the foregoing general denial, Defendant hereby asserts the

following verified denial:

          a.   Defendant denies the existence of a valid contract (a.k.a. - a written fee

               agreement) between the Plaintiffs and the Trustee of the Article I V Trust that was

               created by the Last Will and Testament of Katherine Pillot Lee Bamhart,

               Deceased (hereinafter referred to as the "Article IV Trusf).




                                                                                               2|P .i g e
0050812
                                     Additional Defenses

          5.   Without waiving the foregoing general denial or verified denial, Defendant

hereby assets the following defenses:

          a.   Defendant asserts that a duly-authorized Trustee for the Article IV Trust did not

               sign the written fee agreement, and, as a result, no Trustee ofthe Article I V Trust

               (nor the assets of the Article IV Trust) are bound by the terms and provisions of

               the agreement.


          b.   Defendant asserts the defense of res judicata;


          c.   Defendant asserts the defense of claim preclusion;


          d.   Defendant asserts the defense of issue preclusion;


          e.   To the extent that Plaintiffs seek to recover a contingent fee from Susan Lee's or

               Susan Gibson's beneficial interest in the Article I V Trust by virtue of the fee

               agreement. Defendant asserts that such a recovery is barred by the spendthrift

               clause which is a part of the Article IV Trust;


          f.   Defendant asserts the defense of estoppel;


          g.   Defendant asserts the defense of quasi-estoppel;


          h.   Defendant asserts the defense of acceptance of benefits;


          i.   Defendant asserts the defense of laches; and


          j.   Defendant asserts the defense of limitations.




                                                                                             3I P aa c
0050812
          k.   Defendant asserts that plaintiffs' claims to entitlement to attorneys' fees are

               barred by Texas Government Code §82.065(a).


                                      Plea I n Abatement

          6.   Without waiving the foregoing general denial, verified denial, or defenses,

Defendant moves to abate these proceedings pending a ruling from Harris Coimty Probate Court

Number Two (2) on Defendant's Motion to Transfer Lawsuit to Statutory Probate Court which

Defendant previously filed with Harris County Probate Court Number Two (2) on May 13, 2016

under Cause Number 137,506-403.

                                         Counterclaim

          7.   Subject to the foregoing Motion to Transfer Venue, Defendant Legacy Trust

Company, N.A., in its capacity as Receiver for the Article IV Trust created by the Last Will and

Testament of Katherine Pillot Lee Bamhart, Deceased appointed by the Probate Court No. 2 of

Harris County asserts the following counterclaims against Plaintiffs Tom Thomas, Dan Sheehan,

and Marc Culp.

          8.   Defendants Tom Thomas, Dan Sheehan, and Marc Culp have asserted claims

against Legacy for legal fees they claim are owed by the trustee of the Article IV Trust. Legacy

is the court-appointed Receiver for the Article IV Trust, invested with all the power of the tmstee

ofthe Article IV Trast.

          9.   The original trastee of the Article I V Trust was Ronald E. Lee, Jr. (hereinafter

referred to as "Mr. Lee"). Under the Last Will and Testament ofKatherine Pillot Lee Bamhart

(hereinafter referred to as the "Bamhart Will"), in the event Mr. Lee failed to serve as trustee, the

Article IV Trast was to be managed by co-trustees (1) Susan Camille Lee and (2) Texas

Commerce Bank, N.A. or any successor to that bank. In the event that Texas Commerce Bank,


                                                                                            ' 4IPag   e
0050812
N.A. or its successors failed to serve, another financial institution with trust powers was required

by the Barnhart Will to be appointed.

          10.   Mr. Lee was removed as trustee of the Article IV Trust on February 8, 2002. The

successor to Texas Commerce Bank, N.A. at that time was JP Morgan Chase Bank. JP Morgan

Chase Bank declined to serve as co-trustee after Susan Camille Lee specifically requested that it

not serve with her as co-trustee. Susan Camille Lee never sought or obtained the appointment of

a substitute co-trustee as required by the Barnhart Will and Texas law.

          11.   No agreement was ever signed by any trustee of the Article I V Trust with Tom

Thomas, Dan Sheehan or Marc Culp, or with the law firm of Thomas, Sheehan & Culp, L.L.P.,

for (1) the provision of legal services to the trustee of the Article I V Trust, (2) the payment of a

contingent fee for legal services to the trustee of the Article IV Trust or on behalf of the Article

IV Trust, or (3) the payment of a debt for legal services of another person. Notwithstanding the

lack of any such agreement, Messrs. Thomas, Sheehan and Culp have asserted claims against

Legacy in its capacity as court-appointed Receiver of the Article IV Trust for a contingent fee

based on collections by Mr. Lee as a former trustee of the Article IV Trust, collections by

Legacy as Receiver of the Article IV Trust, and asserted entitlement to collect a contingent fee

based on future collections by Legacy as Receiver of the Article I V Trust.

          12.   Susan Camille Lee was not a co-tmstee of the Article IV Trust when she signed

the contingency fee agreement in her individual capacity in 1995. In fact, she would not become

even a co-trustee for another seven years. When Susan Camille Lee eventually became a co-

trustee, she never sought or obtained appointment of a co-trustee as required under the Article IV

Trust, a clear violation of the terms of the Trust and the intent of Katherine Pillot Lee Barnhart




                                                                                             5IP   a a e'
0050812
when she executed the Barnhart Will. Susan Camille Lee never had the power to bind the Article

IV Trust to the contingency fee agreement.

          13.       Legacy is placed at jeopardy based on these claims, and pursuant to T E X . CiV.

PRAC. & R E M . CODE       §37.005 asks this Court to declare that, under the terms of the Barnhart

Will, the Article IV Trust, and Texas law, the purported March 30, 1995 contingency fee

agreement among Thomas, Sheehan & Culp, LLP, Susan Lee, and Susan Gibson does not today

bind a lawfully appointed Trustee or Receiver of the Article I V Trust. Legacy seeks this relief to

foreclose current and future claims by Plaintiffs against Legacy under the contingency fee

agreement.

          14.       Legacy further requests that this Court award reasonable and necessary attorney's

fees to Legacy as would be equitable and just and therefore authorized by T E X . CiV.         PRAC. &


R E M . CODE    §37.009.

          15.       Legacy further requests that pursuant to   T E X A S PROPERTY CODE   §114.064, this

Court make such award of costs and attomey's fees to Legacy as may seem equitable and just.

                                                  Prayer

          WHEREFORE, PREMISES CONSIDERED, Defendant and Counterclaim Plaintiff

Legacy Trast Company, N.A., in its capacity as court-appointed Receiver of the Article I V Trust

under the Last Will and Testament of Katherine Pillot Lee Bamhart, respectfully requests that on

final hearing, the Court grant the following relief:


                •   A judgment from the Court that Plaintiffs take nothing by way of their lawsuit;

                •   A judgment from the Court that costs be adjudged against Plaintiffs;

                •   A n order that this matter is to be abated until such time as Harris County Statutory
                    Probate Court Number Two (2) has ruled on Defendant's Motion to Transfer
                    Proceeding to Statutory Probate Court;


                                                                                                 6IPag e
0050812
A declaration that Legacy and any future Receiver or trustees of the Article IV
Trust have no obligation to pay additional fees to Tom Thomas, Dan Sheehan,
Marc Culp, or Thomas, Sheehan & Culp, LLP.;

An award from Tom Thomas, Dan Sheehan, and Marc Culp, jointly and severally
of Legacy's reasonable attorneys' fees incurred in connection with this matter;
And

Such other and further relief as Legacy may show itself justly entitled to receive.


                              Respectfully submitted,

                              M A C I N T Y R E M C C U L L O ^ ^TANFIELJ
                              & Y0DNG, LLP


                                      W. Cameron McCulloch
                                      StateBarNo. 00788930
                                      A d r i Graves
                                      State Bar No. 24049999
                                      2900 Weslayan, Suite 150
                                      Houston, T X 77027
                                      (713)572-2900
                                      (713) 572-2902 (FAX)
                                      Cameron.McCulloch(^mmlawtexas. com
                                      Adri. Graves(a)mmlawtexas. com

                              Attorneys for Legacy Trust Company, N.A. in its
                              capacity as Court-appointed Receiver of the Article
                              I V Tmst under the Last Will and Testament of
                              Katherine Pillot Lee Barnhart
                                    Certificate of Service


       I hereby certify that a t r u e ^ d correct copy of the foregoing instrument was sent to the
following via United Stam'^'Cmified Mail, retum receipt requested, via e-serve, and/or via
facsimile on this the      ^day of May, 2016:


          Mr. Marc S. Culp
          Culp & Dyer, LLP
          222 E. McKinney Street, Suite 210
          Denton, Texas 76201
          (940)484-4436

          Mr. Thomas A. Zabel
          Zabel Freeman
          1135 Heights Blvd.
          Houston, Texas 77008
          (713) 802-9114 (Fax)

          Mr. Daniel J. Sheehan
          Mr. John M . Phalan, Jr.
          Mr. M . Patrick McShan
          Daniel Sheehan & Associates, LLP
          2501 North Harwood, Suite 1280
          Dallas, Texas 75201
          (214) 468-8803 (Fax)

          Mr. John W. Porter
          Ms. Keri Brown
          Baker Botts, LLP
          One Shell Plaza
          910 Louisiana Street
          Houston, Texas 77002-4995
          (713) 229-1522 (Fax)


                                                     "feron McCulloch
                                              Adri A. Graves




                                                                                             I   P ag e
0050812
                                       VERIFICATION

STATE OF TEXAS                §
COUNTY OF HARRIS            . §


          Before me, the undersigned authority, on this day personally appeared Sarah Snook, in

her capacity as a Vice President and Tmst Officer for Legacy Trast Company, N.A,, in its

capacity as the Receiver for the Article IV Trast created by the Last Will and Testament of

Katherine Pillot Lee Bamhart, Deceased, Sarah Snook (hereinafter referred to as the "Affianf')

is a person whose identity is known to me. After I administered an oath to Affiant, Affiant

testified as follows:

          "My name is Sarah Snook. I am a Vice President and Trust Officer for Legacy Trast

Company, N.A,. Legacy Trast Company is the Receiver for the Axticle IV Trast created by the

Last Will and Testament ofKatherine Pillot Lee Bamhart, Deceased appointed by Harris County

Probate Court Number Two (2). I am capable of malcing this verification. I , have read the

foregoing pleading, which is entitled "Subject to Motion to Transfer Venue & Motion to

Transfer Lawsuit to Statutory Probate Court, Defendant's Original Answer, Plea In Abatement

and Counterclaim". With regard to paragraphs 4, 5 and 6 of the pleading, the facts stated in

these paragraphs are within my personal knowledge and are true and correct."




                                             Sarah Snook, Vice President and Trast Officer for
                                             Legacy Trost Company, N,A., ui its capacity as the
                                             Receiver for the Article IV Trast created by the Last
                                             Will and Testament of Katherine Pillot Lee
                                             Bamhart,
                                             Deceased




0050812                                                                                   9|P9g.
          .^Swoin-10 .and.subscribe.d.befQre^mei th© md6i:sigfi6d-authority,/em--this-the 24 -dtty-of -

May, 2016.                                         A


                                                                                   lAJi
                                                Notary Public, State of Texas




0050812                                                                                       101P a g e
TAB   2
w. CAMERON MCCULLOCH, JR.
                                                            MMS&Y
                                                      MACINTYRE • McCULLOCH • STANFIELD YOUNG                                                      ROBERTS. MACINTYRE, JR.
PARTNER                                                                                                                                            W. CAMERON MCCULLOCH, JR.
Cameron.mcculloch@mmlawtexas,com                                                                                                                   ROBERTB. STANFIELD
                                                                                                                                                   JILL WILLARD YOUNG
                                                                                                                                                   ADRIANNE ARCHER GRAVES
                                                                                                                                                   CHRISTOPHER BURT
                                                                                                                                                   THUY THAI GOTTLIEB
                                                                                                                                                   WILLIAM C. MCCULLOCH*

                                                                                                                                                   * OF COUNSEL

                                                                                July 5,2016


          Via E-Mail: amontgomery@cdhllp.com
          Ms. Amanda Montgomery
          Culp & Dyer, L.L.P,
          222 E. McKinney Street, Suite 210
          Denton, Texas 76201

                     Re:         Cause Number 137,506-404; Tom Thomas. Dan Sheehan and Marc Culp,
                                 Individually and as Successors to the Interests of Thomas, Sheehan & Culp,
                                 L.L.P. vs. Legacy Trust Company, N.A., in its capacity as the Receiverfor the
                                 Article IV Trust created by the Last Will and Testament of Katherine Pillot Lee
                                 Barhnhart, Deceased; In Hanis County Probate Court Number Two (2)'

          Dear Amanda:

                    This letter confirms our recent e-mail communications wherein we have agreed, on
          behalf of our respective clients, to extend discovery response deadlines for the lawsuit which is
          referenced above.

                  For purposes of this agreement, the term "Plaintiffs" shall collectively refer to your
          clients, meaning Plaintiffs Tom Thomas, Dan Sheehan and Marc Culp, Individually and as
          Successors to the Interest of Thomas, Sheehan & Culp, L.L.P. In addition, the term "Plaintiff,
          for purpose of this agreement, shall refer to each of the Plaintiffs individually.

                  For purposes of this agreement, the term "Defendant" shall refer to my client, meaning
          Legacy Trust Company, N.A., in its capacity as the Court appointed Receiver for the Article IV
          Trust created under the Will of Katherine Pillot Lee Bamhart, Deceased.

                  Per our agreement, the deadline for the Plaintiffs to respond to Defendant's pending First
          Requests for Disclosure, First Requests for Admission, Interrogatories and Requests for
          Production to TSC shall be extended until August 15, 2016. The purpose ofthe aforementioned
          extension is to provide Plaintiffs with sixty days within which to respond to Defendant's pending
          discovery requests, as identified above.




          ' Prior to the entry of an Order Granting Motion to Transfer Lawsuit to This Statutory Probate Court by Harris
          County Probate Court Number Two (2) on June 7, 2016, this lawsuit was pending in the 162"'^ Judicial District Court
          of Dallas County, Texas under Cause Number DC-16-04570.
          lOlli/   001762 0051436



              MACINTYRE • M c C U L L O C H - STANFIELD. Y O U N G , LLP 2900 W e s l a y a n , Ste ISO H o u s t o n , Texas 7 7 0 2 7 7 1 3 5 7 2 2V00 Fax 713 572 2902
Ms. Amanda Montgomery
Page 2
7/5/2016




        Per our agreement, Defendant shall have sixty days within which to respond to the first
set of any written discovery requests which are propounded to Defendant by Plaintiffs, or by any
Plaintiff, for the lawsuit which is referenced above. Defendant's sixty day discovery response
period will begin to accrue on the date upon which Defendant, by and through my office, is
served with written discovery requests by Plaintiffs, or by any Plaintiff, for the lawsuit which is
referenced above.

           If this letter accurately reflects your understanding of our agreement, please
acknowledge by signing below and returning it to us. Your cooperation in this regard is greatly
appreciated.

          Should you have any questions, please call or e-mail me. My telephone number>a;
work is (713) 572-2900, and my e-mail address is Cameron.McCuUochfglmmlawtexas.com. | j




AGREED ON JULY             , 2016:

CULP & DYER, L.L.P.

By:         ^
       Amanda Montgomery

ATTORNEY FOR PLAINTIFFS TOM THOMAS,
DAN SHEEHAN AND MARC CULP, INDIVIDUALLY
AND AS SUCCESSORS TO THE INTEREST OF
THOMAS, SHEEHAN & CULP, LLP.
TAB   3
Virginia Martinez

From:                                               Cameron McCulloch
Sent:                                               Friday, July 0 1 , 2016 11:54 A M
To:                                                 Amanda Montgomery
Cc:                                                 Marc Culp
Subject:                                            RE: Cause N u m b e r 1 3 7 5 0 6 - 4 0 3 ; Susan Camille Lee, et al., vs. Ronald E, Lee, Jr., el al,; In
                                                    Harris C o u n t y Probate C o u r t N u m b e r T w o (2)




Amanda:


            l e g a c y w i l l a g r e e t o r e s p o n d t o d i s c o v e r y requests f r o m TSC o n t h e same t i m e f r a m e t h a t TSC r e s p o n d s t o
Legacy's p e n d i n g d i s c o v e r y r e q u e s t s . For e x a m p l e , if w e agree t h a t TSC w i l l have 6 0 days t o r e s p o n d t o Legacy's p e n d i n g
d i s c o v e r y r e q u e s t s , Legacy w o u l d likewise have 60 days t o r e s p o n d t o d i s c o v e r y r e q u e s t s f r o m TSC Legacy w o u l d also
a g r e e t o a s t i p u l a t i o n t h a t TSC's p r o p o u n d i n g o t discovery r e q u e s t s t o Legacy d o e s n o t in any w a y c o n s t i t u t e a w a i v e r of
TSC's p e n d i n g piea in a b a t e m e n t a r g u m e n t . Let me k n o w if this p r o p o s e d s o l u t i o n is a c c e p t a b l e t o y o u .


            You are c o r r e c t t h a t m y l e t t e r f r o m e a r l i e r t o d a y s h o u l d be c o n s t r u e d as Legacy being o p p o s e d t o y o u r M o t i o n
            f o r E m e r g e n c y Stay. Thanks,          Cameron


W Cameron McCuiioch
MaclNTYRE • McCULLOCH • STANFIELD • YOUNG, L L P
Please note our new a d d r e s s :
2 9 0 0 W e s l a y a n , S u i t e 150
H o u s t o n , Texas 77027
713-572-2900 (Telephone)
713-572-2902 fFax)
Cameron.iVlcCuiioch@mmlawtexas.com




From: Amanda M o n t g o m e r y              [mailto:amontgomery@cdhllp.com]
S e n t : Friday, July 0 1 , 2 0 1 6 11:22 A M
To: Cameron McCulloch <Cameron.McCulloch(5)mmlawtexas.com>
Cc: M a r c Culp < M C u l p ( 5 ) c d h l l p . c o m >
Subject: FW: Cause N u m b e r 1 3 7 5 0 6 - 4 0 3 ; Susan Camille Lee, et al,, vs, Ronald E. Lee, Jr., ei al,; In Harris C o u n t y P r o b a t e
C o u r t N u m b e r T w o (2)


Cameron,
M a r c and I have r e v i e w e d t h e a t t a c h e d l e t t e r y o u sent t o d a y r e g a r d i n g a p o t e n t i a l BO^day e x t e n s i o n o n d i s c o v e r y
responses u n d e r a Rule 1 1 A g r e e m e n t . W h i l e w e a p p r e c i a t e t h e o f f e r o f a 3 0 - d a y e x t e n s i o n , t h e p r e m i s e o f t h a t a l l o w s
y o u t o receive d i s c o v e r y ( w i t h m o t i o n s still p e n d i n g ) , b u t w e w o u l d risk w a i v i n g o u r plea in a b a t e m e n t a r g u m e n t if w e
w e r e t o serve any d i s c o v e r y o n Legacy T r u s t d u r i n g this i n t e r i m p e r i o d .      T h a t places TSC in an unfair p o s i t i o n , w h i c h is
w h y w e are p u r s u i n g a stay o f t h e p r o c e e d i n g s in the 14*'^ CoA, as I discussed t h i s m o r n i n g w i t h y o u r assistant.                     My hope
is t h a t y o u p r o m p t l y r e c e i v e d t h e message I p r o v i d e d t o h e r this m o r n i n g at a r o u n d 8:45 a.m., please n o t i f y m e if y o u did
n o t receive this message,


W e w i l l be filing this M o t i o n w i t h t h e CoA t o d a y , y o u r l e t t e r indicates t o us t h a t y o u a r e o p p o s e d to t h e IVIotion f o r
E m e r g e n c y Stay u n d e r TRAP 5 2 , 1 0 ,


Best Regards,

                                                                                            1
A m a n d a M o n tg o m e ry


F r o m : Marc Culp
S e n t : Friday, July 0 1 , 2 0 1 6 1 0 : 4 6 AM
T o : Amanda Montgomery
S u b j e c t : FW: Cause N u m b e r 1 3 7 5 0 6 - 4 0 3 ; Susan Camille Lee, e t a l . , vs. Ronald E. Lee, Jr., el a!,; I n Harris County
Probate Court N u m b e r T w o ( 2 )




F r o m : Virginia Martinez [rruailto:virgitiiaTnartinez(5)mmlawtexas.cofri]
S e n t : Friday, July 0 1 , 2 0 1 6 1 0 : 2 7 A'M
T o : Marc Culp
C c : ' s s n o o k @ l e g a c y t r u s t . c o m ' ; Legacy T r u s t C o m p a n y , N.A. (jcrow(a}|eqacytrust.corn); ' k a l e x a n d e r @ p o r t e r h e d g e s . c o m ' ;
C a m e r o n McCulloch
S u b j e c t : Re: Cause N u m b e r 1 3 7 5 0 6 - 4 0 3 ; Susan Camille Lee, e t a l . , vs. Ronald E. Lee, Jr., el a l , ; I n Harris County
Probate Court N u m b e r T w o ( 2 )


Re: Cause N u m b e r 1 3 7 5 0 6 - 4 0 3 ; Susan Camille Lee, e t a l . , vs. Ronald E. Lee, Jr., el al,; In Harris C o u n t y P r o b a t e C o u r t
N u m b e r T w o (2)


M r . Culp:


Please see t h e a t t a c h e d t r a n s m i t t a l l e t t e r in c o n n e c t i o n w i t h t h e above e n t i t l e d m a t t e r . If y o u are u n a b l e t o access t h e
a t t a c h m e n t , please c o n t a c t m e . T h a n k y o u f o r y o u r t i m e .


l!l£SlLH:MLl!ME.,M£ll:,.iiiM                 -




Virginia Martinez
MaclNTYRE • M c C U L L O C H • STANFIELD • YOUNG, L L P
2900 Weslayan, Suite 150
Houston, Texas 77027
(713) 572-2900 Telephone
(713) 572-2902 Fax




                                                                                            2
