Successful Defense of Large Estate Against Claims of Disinherited Daughter

After a contentious hearing on February 25, 2022, Harris County’s Probate Court Number One granted summary judgment in favor of a Hayes Hunter client who, with her late husband, had been very successful in business and real estate ventures and creating wealth estimated in value in excess of $20 million.

Hayes Hunter assisted the client in defending various estate planning devices created by the client and the deceased against the claims of a daughter from a previous marriage. The daughter had settled a previous estate dispute in exchange, in part, for a promise by the daughter never again to sue her father or his estate or to contest his will. Despite this promise, the daughter filed a will contest in the year 2020 and challenged real property transfers made during her father’s life to a living trust and the trust’s ownership of a substantial investment trading account.

The Court ordered the parties to mediation where a second settlement occurred. However, that relief was short-lived. The daughter filed additional lawsuits to undo the settlement, claiming that she had been induced to settle by fraud.

However, the written mediated settlement agreement executed by the client and daughter in the year 2020 unequivocally stated that the daughter “[had] not been induced to sign or execute [the] Settlement Agreement by promises, agreements, or representations” other than those in the contract.

“Reliance on a material representation” is one of the elements of fraud necessary to prove a claim, like the daughter’s, of fraudulent inducement. See Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam). In two cases, Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 54 (Tex. 2008) and Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 180 (Tex. 1997), the Texas Supreme Court has found that fraudulent inducement claims do not defeat clear and unequivocal language expressly disclaiming reliance on representations made outside of the settlement agreement.

If the clarity requirement is satisfied, Texas courts consider four extrinsic factors to determine whether the disclaimer is enforceable: whether (1) the terms of the contract were negotiated rather than boilerplate, and during negotiations the parties specifically discussed the issue that has become the topic of the subsequent dispute; (2) the complaining party was represented by counsel; (3) the parties dealt with each other at arms’ length; and (4) the parties were knowledgeable in business matters. Int’l Bus. Mach. Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224, 229 (Tex. 2019) (citing, inter alia, Forest Oil Corp, 268 S.W.3d at 60).

Here, the probate court agreed with the arguments of Hayes Hunter that the 2020 settlement agreement satisfied these extrinsic factors. The court entered an order dismissing all the claims of the daughter based on her fraudulent inducement claim.

Posted in

Charles Hunter