estoppel

Subscribe to estoppel

In In the Estate of Johnson, a child of the decedent accepted over $143,000 from the decedent’s estate and then decided to challenge the will due to mental capacity and undue influence. No. 20-0424, 2021 Tex. LEXIS 426 (Tex. May 28, 2021). The trial court ruled that the child could not accept a benefit under the will and then challenge the will and dismissed the child’s claim. The court of appeals reversed, holding that the child did not receive anything that the child would not also receive if there was no will, and therefore, she was not inconsistent and was not estopped from bringing her will contest. The court held that the executor “failed to satisfy her burden, as the Will’s proponent, by failing to demonstrate that [MacNerland] accepted greater benefits than those to which she was entitled under the Will or intestacy laws.” Id. The Texas Supreme Court accepted the will proponent’s petition for review and reversed the court of appeals.
Continue Reading Texas Supreme Court Holds That A Beneficiary May Not Accept Any Benefit From A Will And Then Later Challenging The Will

A business divorce may mean that the owners need to sell the business or the business’s assets. In the following case, some of the owners/officers took advantage of a sale transaction to benefit from that transaction at the expense of their co-owners. In Rex Performance Prods., LLC v. Tate, a company sued its former officers for breaching fiduciary duties related to the sale of the company’s assets. No. 02-20-00009-CV, 2020 Tex. App. LEXIS 10465 (Tex. App.—Fort Worth December 31, 2020, no pet.). The company alleged that the officers intentionally drove down the price of the sale in order to obtain a separate bonus from the buyer. The defendants alleged that the plaintiff knew of the side bonus agreement and consummated the transaction anyway, thereby establishing a waiver or ratification. The trial court granted summary judgment for the defendants, and the plaintiff appealed.
Continue Reading Business Divorce: Court Found That There Was A Fact Question On Whether Officers Violated Fiduciary Duties By Obtaining A Side Bonus From A Purchaser When Negotiating A Sale Of The Company’s Assets

A. Introduction

It is not uncommon for beneficiaries to sue a trustee for actions that the beneficiaries had knowledge of but where they failed to object to that conduct for a period of time. In this circumstance, the trustee may want to raise certain equitable defenses to those claims, such as laches, ratification, waiver, and estoppel. Equitable defenses are appropriate for breach of fiduciary duty claims as fiduciary relationships originate in equity. At the core of these equitable defenses is the concept that a party should not be allowed to act inconsistently: have knowledge of conduct and fail to object to it for a period of time (thereby tacitly agreeing to the conduct) and then later raising claims against the trustee for the same conduct.
Continue Reading Use Of Equitable Defenses In Breach Of Fiduciary Duty Litigation