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The Fiduciary Litigator

An Estate Had No Breach of Contract Claim Against A Bank Arising From A Joint Account Where The Estate Was Not Damaged

By David Fowler Johnson on October 30, 2015
Posted in Cases Decided, Texas Supreme Court

In Bank of America, N.A. v. Eisenhauer, a husband and wife set up a certificate of deposit account with a bank where the account was a survivorship account and also had payable on death beneficiaries. No 14-0486-CV, 2015 Tex. LEXIS 1005 (Tex. October 30, 2015). So, after one spouse died, all of the funds would belong to the other spouse. When the second spouse died, any funds remaining in the account would go to the named beneficiaries. The bank paid proceeds from the account after the husband’s death to the beneficiaries but before his wife’s death. The wife later died, and her estate sued the bank for breaching the account agreement in making the early distribution. The jury returned a verdict for the bank, but the trial court directed verdict for the estate. The court of appeals affirmed the trial court’s judgment.

 The Texas Supreme Court held that whether the funds stayed in the account until the surviving spouse died or were distributed before then, the estate received exactly the same from the account: nothing. The Court reversed the lower courts and rendered judgment on the jury’s verdict holding that there was no evidence of any damages.

 Interesting Note: The Court noted that there was no evidence that the wife ever attempted to withdraw any funds from the account after her husband’s death.  Funds in an account belong to the person that deposited them. After the husband died, all of the funds belonged to the wife due to the survivorship language. Accordingly, the wife could have withdrawn all of the funds in the account at any point up to her death. If she had, and the funds were not present, then she or her estate could have been be harmed by the bank’s error in distributing the funds early. But, funds in a survivorship account pass non-probate.  So, because those funds do not go into an estate, an estate generally has no standing to assert claims based thereon. Because the estate had no evidence of any attempt to withdraw the funds and because it otherwise did not have any claim to the funds, it was not harmed by the bank’s unintentional breach of the account agreement.

Tags: account agreement, estate's claim to bank account, joint account, payable on death, right of survivorship
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Photo of David Fowler Johnson David Fowler Johnson

[email protected]
817.420.8223

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]
817.420.8223

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law Review, St. Mary’s Law Journal, South Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law
Read more about David Fowler JohnsonDavid's Linkedin Profile
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