In Estate of Sloan, a wife died leaving her home, and her husband was the executor of her estate. No. 02-15-00198-CV, 2016 Tex. App. LEXIS 6465 (Tex. App.—Fort Worth June 16, 2016, no pet. history). The wife’s will left all of her assets to three trusts, but provided that her husband could buy assets for fair market value. The husband traded rental properties for the wife’s home for half of its value (asserting that she only owned have due to community property rules). After the husband died and this transaction came to light, the trustee sued his estate for breach of fiduciary duty, claiming that the property was the wife’s separate property and that the husband underpaid for the house by only paying for half. The husband’s estate argued that even if the property was the wife’s separate property, the consideration was fair considering the fact that the husband’s homestead right decreased the value of the home. The trial court ruled for the trustee, and the husband’s estate appealed.

The court of appeals reversed the trial court’s judgment. The court noted that a “property’s fair market value is what a willing buyer would pay a willing seller, neither acting under any compulsion.” “In the willing seller-willing buyer test of market value it is frequently said that all factors should be considered which would reasonably be given weight in negotiations between a seller and a buyer.” Texas Constitution article XVI, section 52 provides that a surviving spouse may occupy the homestead during the spouse’s lifetime without it being partitioned to the heirs of the deceased spouse until the survivor’s death. Because this probate homestead right belongs to a surviving spouse regardless of its community or separate property character, its characterization by the decedent is irrelevant. The homestead right therefore “reduc[es]” underlying ownership rights “in a homestead property to something akin to remainder interests and vest[s] in each spouse an interest akin to an undivided life estate in the property.” The court of appeals concluded that “as a matter of both logic and law,” the husband’s surviving homestead right, which entitled him to live in the property for the rest of his life and made the interest held by the wife’s estate akin to a vested remainder that would entitle a buyer to possession only upon the husband’s death, necessarily affected what such a buyer would pay a willing seller for the property and therefore reduced the property’s market value. Because the parties stipulated that if the husband’s interest decreased the value of the property, his estate would not owe anything, the court of appeals reversed and rendered for his estate.

The court then addressed the trustee’s argument that the husband violated his fiduciary duties by self-dealing when he, individually, purchased property from himself as executor of the estate. The trustee alleged that the husband had a duty of full disclosure, a duty of fair dealing, a duty of acting as a prudent man, and a duty of loyalty to the beneficiaries of the estate and the trusts. The court disagreed, holding: “In light of our holding above that Hollis’s homestead right decreased the fair market value of the estate’s interest in the property, of the trial court’s uncontested finding that Hollis was entitled to $25,000 in community reimbursement when he bought the property, and of the explicit authorization in Barbara’s will for Hollis to purchase assets from her estate at fair market value, we cannot conclude that Hollis violated fiduciary duties when buying the Winton Terrace Property.”

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Photo of David Fowler Johnson David Fowler Johnson

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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]

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 ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law