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supreme | IN THE ESTATE OF MYRTLE DELL BROWN, DECEASED; from Fort Bend County; 1st Court of Appeals District (01-19-00953-CV, 703 SW3d 52, 12-20-22) (Corrected) | 2025 | 0 | https://law.justia.com/cases/texas/supreme-court/2025/23-0258.html | No text found |
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supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 0 | Inwood National Bank and Inwood Bancshares, Inc., Petitioners,
v.
D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust, Respondent.
No. 24-0055.
Supreme Court of Texas.
Opinion delivered: January 31, 2025.
On Petition for Review from the Court of Appeals for the Fifth District of Texas.
PER CURIAM.
A trust agreement provided that the grantor intended to transfer to the trust her shares of a bank's stock "[u]pon approval by" the bank. But before the bank gave that approval, the grantor changed her mind and decided against the transfer. The trust's beneficiary, who is the grantor's former husband, sued the bank for tortious interference with a contract—the trust agreement—and other claims. The trial court granted summary judgment for the bank, but the court of appeals reversed as to the tortious interference claim. ___ S.W.3d ___, 2023 WL 6547936, at *7-8 (Tex. App.-Dallas Oct. 9, 2023). We conclude that the tortious interference claim fails as a matter of law because the trust agreement created no contractual right to the shares in the beneficiary's favor with which the bank could interfere. Accordingly, we reverse that part of the court of appeals' judgment and reinstate the trial court's take-nothing judgment.
I. Background
During her marriage to Kyle Fagin, Christy Fagin owned over two million shares of Inwood Bancshares, Inc. common stock as her separate property. In 2015, the couple discussed creating new e | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 1 | ntities to hold Christy's shares, ostensibly for tax benefits and protection from creditors. Inwood National Bank (the issuer of the shares) informed Kyle that Inwood "require[d] prior notice and review of any anticipated change in ownership or transfer of stock." The terms of Inwood's shareholder agreement, which it required all shareholders (including Christy) to sign, bear this out. That agreement requires Inwood's approval before any share transfer and declares that "ANY ATTEMPTED TRANSFER OF SHARES NOT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT SHALL BE NULL AND VOID."
Kyle retained an attorney, and Kyle and Christy ultimately decided to put Christy's Inwood shares into two trusts—one that named Kyle as sole beneficiary (the Kyle Trust) and one that named Christy as sole beneficiary. The Kyle Trust was governed by a trust agreement titled "D. Kyle Fagin Qualified Subchapter S Trust" (the KTA). The KTA designated Christy and Kyle as trustees of the Kyle Trust and named Kyle as the trust's sole beneficiary. It contemplated two transfers into the trust's corpus. The KTA provides that Christy, as grantor, "hereby transfers and delivers to the Trustees the property described in Schedule A attached hereto . . . upon the express terms and conditions . . . hereinafter set forth." Schedule A, in turn, states:
$100.00 cash is the initial property transferred by the Grantor.
Upon approval by Inwood Bancshares, Inc., the Grantor intends to transfer 581,658.21 Shares of c | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 2 | ommon stock of Inwood Bancshares, Inc., a Texas corporation[.]
The KTA also contains the following irrevocability clause:
This Trust shall be irrevocable. The Grantor shall have no right or power, in whatever capacity and whether alone or in conjunction with others, to alter, amend, revoke, or terminate the Trust, or any of the terms of this Trust Agreement, in whole or in part, or to designate the persons who shall possess or enjoy the trust property or the income therefrom. By this instrument the Grantor intends to and does hereby relinquish absolutely and forever all possession and enjoyment of the trust property.
Kyle and Christy both signed the KTA in October 2015.
Several weeks later, Inwood informed Kyle's attorney of the steps required to transfer the Inwood shares. Christy and Kyle would need to sign a "Shareholder Consent to Subchapter S Election" and a "Shareholder Subscription Agreement." In addition, Christy would need to send Inwood her existing stock certificate, indorsed
[1]
for transfer, along with "her request for transfer and her transfer instructions." Inwood advised that, once these steps were completed, it would "(i) sign and date the documents requiring its signature, (ii) cancel the endorsed Certificate, and (iii) issue the new Certificate[] in the name of [the Kyle Trust]."
Christy and Kyle signed the two documents as requested, but Christy could not find her stock certificate. She therefore had to sign and notarize an "Affidavit of Facts Regar | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 3 | ding Lost Share Certificates," which was delivered to Inwood in February 2016. Inwood then issued a replacement stock certificate in Christy's name only. Shortly thereafter, Inwood's attorney informed Kyle's attorney that he would "complete the transfer[] next week."
But Inwood never completed the transfer. According to Christy, she decided to revoke her consent to the proposed transfer in March 2016 after realizing that transferring her Inwood shares into the Kyle Trust would make those shares Kyle's separate property by gift, which she could never get back. Christy did not deliver her replacement stock certificate to Inwood. Instead, she asked Inwood not to proceed with the transfer, and Inwood did not countersign the agreement she and Kyle had signed.
II. Procedural History
Kyle, individually and as trustee and beneficiary of the Kyle Trust, sued Inwood. Kyle alleged that Christy "irrevocably granted" the Inwood shares to the Kyle Trust when he and Christy signed the KTA, and he sought a declaration that the Kyle Trust owns the Inwood shares. Kyle later added a claim for tortious interference, alleging that Inwood "intentionally interfered with the [KTA]" by convincing Christy to "revoke her transfer" of the Inwood shares to the Kyle Trust. Christy intervened, contesting Kyle's claim of ownership and asserting that the Inwood shares remain her separate property. After Christy intervened, Kyle amended his petition to assert several claims against Christy.
Kyle moved for | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 4 | traditional summary judgment on his breach of contract and declaratory judgment claims against Inwood and Christy, arguing that the evidence conclusively established that he owned the shares and Inwood failed to transfer them to the Kyle Trust. Kyle described the KTA as "an enforceable and irrevocable agreement to transfer" the Inwood shares to the Kyle Trust, and he asserted that Christy "irrevocably gifted and transferred" those shares to him when she signed the KTA in October 2015.
Inwood moved for traditional and no-evidence summary judgment on all Kyle's claims. As relevant here, Inwood argued that the KTA did not transfer ownership of the Inwood shares to the Kyle Trust because, when the KTA was executed, "there was absolutely no intention by [Kyle or Christy] to transfer [the Inwood shares]
at that time.
Schedule A expressly states that on the date of execution, the parties only agreed that there would be a stock transfer
at some future date
. . . ." Inwood contended that the KTA's terms required Inwood's "approval" to transfer the shares, which established that such approval had not been given when the KTA was signed.
With respect to Kyle's tortious interference claim, Inwood argued that the information Christy allegedly received from Inwood—that a transfer to the Kyle Trust would constitute an irrevocable gift of the shares to Kyle—could not give rise to a tortious interference claim because it is "truthful information." The trial court granted Inwood's summar | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 5 | y judgment motion (as well as Christy's
[2]
) without specifying the grounds and ordered that Kyle take nothing on his claims. After judgment was rendered, Kyle and Christy settled, and Kyle appealed only as to his claims against Inwood.
The court of appeals affirmed on all claims except tortious interference. In reversing the summary judgment on that claim, the court reasoned that the Texas Supreme Court had not recognized truth as an affirmative defense to tortious interference with an existing contract, so neither it nor the trial court could "legitimately recognize, in the first instance," that defense. 2023 WL 6547936, at *7. Inwood petitioned this Court for review.
III. Relevant Law
A. Standard of Review
We review summary judgments de novo.
Exxon Mobil Corp. v. Rincones,
520 S.W.3d 572, 579 (Tex. 2017)
. When the trial court "does not specify the grounds it relied upon in making its determination, reviewing courts must affirm summary judgment if any of the grounds asserted are meritorious."
Lightning Oil Co. v. Anadarko E&P Onshore, LLC,
520 S.W.3d 39, 45 (Tex. 2017)
.
Traditional summary judgment is proper if there is no genuine issue of material fact as to at least one essential element of the cause of action being asserted and the movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c);
Lightning Oil,
520 S.W.3d at 45
. When reviewing summary judgment motions, we review the evidence "in the light most favorable to the non-movant, in | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 6 | dulge every reasonable inference in favor of the non-movant, and resolve any doubts against the motion."
Lightning Oil,
520 S.W.3d at 45
.
Courts ordinarily rule only on the grounds expressly presented in the summary judgment motion.
See
TEX. R. CIV. P. 166a(c). Yet we have said that, while "a trial court errs in granting a summary judgment on a cause of action not expressly presented by written motion, . . . the error is harmless when the omitted cause of action is precluded as a matter of law by other grounds raised in the case."
G & H Towing Co. v. Magee,
347 S.W.3d 293, 297-98 (Tex. 2011)
;
see also, e.g.,
Endeavor Energy Res., L.P. v. Cuevas,
593 S.W.3d 307, 312 (Tex. 2019)
(holding trial court's grant of summary judgment on an unaddressed claim was harmless error when the ground on which summary judgment was sought "applie[d] equally" to the unaddressed claim);
Withrow v. State Farm Lloyds,
990 S.W.2d 432, 437-38 (Tex. App.-Texarkana 1999, pet. denied)
(holding that reversal would be meaningless because the claim not specifically addressed in the summary judgment motion was precluded as a matter of law).
B. Tortious Interference with an Existing Contract
The elements of a claim for tortious interference with an existing contract are "(1) the existence of a contract subject to interference; (2) willful and intentional interference; (3) the willful and intentional interference caused damage; and (4) actual damage or loss occurred."
Rincones,
520 S.W.3d | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 7 | at 588
. With respect to the first element—the existence of a contract subject to interference—a party cannot recover for tortious interference unless it possesses "legal rights under the . . . contract" with which the defendant could have interfered.
Associated Indem. Corp. v. CAT Contracting, Inc.,
964 S.W.2d 276, 288 (Tex. 1998)
;
see
N. Shore Energy, L.L.C. v. Harkins,
501 S.W.3d 598, 604-05 (Tex. 2016)
(concluding that the defendant was not liable for tortious interference with an option agreement for land when the plaintiff had no contractual right to the land);
Hurlbut v. Gulf Atl. Life Ins. Co.,
749 S.W.2d 762, 767 (Tex. 1987)
(noting a tortious interference claim requires proof that the claimant had a "specific contract right[]" subject to interference);
Anderson v. Archer,
490 S.W.3d 175, 179 (Tex. App.-Austin 2016)
(explaining that a successful claim for tortious interference with an existing contract "requires evidence of an enforceable contract right"),
aff'd,
556 S.W.3d 228 (Tex. 2018)
. If the evidence does not support a finding that the defendant interfered with the plaintiff's "legal rights under [an] existing agreement," then the plaintiff's "tortious-interference claim must fail."
El Paso Healthcare Sys., Ltd. v. Murphy,
518 S.W.3d 412, 422 (Tex. 2017)
. In addition, we have said that "inducing a contract obligor to do what it has a right to do is not actionable interference."
ACS Invs., Inc. v. McLaughlin,
943 S.W.2d 426, 430 (Tex. 1 | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 8 | 997)
.
C. Contracts
If a written instrument is unambiguous, "we can determine the parties' rights and obligations under the agreement as a matter of law."
Id.
"In doing so, we look not for the parties' actual intent but for their intent as expressed in the written document."
Piranha Partners v. Neuhoff,
596 S.W.3d 740, 744 (Tex. 2020)
;
see
Coker v. Coker,
650 S.W.2d 391, 393 (Tex. 1983)
. These same principles of construction apply to a trust agreement—when no ambiguity exists, "[c]onstruction of a trust instrument is a question of law for the trial court."
Nowlin v. Frost Nat'l Bank,
908 S.W.2d 283, 286 (Tex. App.-Houston [1st Dist.] 1995, no writ)
;
see
Eckels v. Davis,
111 S.W.3d 687, 694 (Tex. App.-Fort Worth 2003, pet. denied)
. Whether a contract or other written instrument is ambiguous is a question of law for the court.
Rosetta Res. Operating, LP v. Martin,
645 S.W.3d 212, 219 (Tex. 2022)
.
D. Inter vivos trusts
A party can transfer property through an inter vivos trust.
Sarah v. Primarily Primates, Inc.,
255 S.W.3d 132, 145 (Tex. App.-San Antonio 2008, pet. denied)
. One way to create an express trust is by "a property owner's inter vivos transfer of the property to another person as trustee for the transferor or a third person." TEX. PROP. CODE § 112.001(2). The trustee holds legal title to the trust property, and the beneficiary holds equitable or beneficial title.
See
Perfect Union Lodge No. 10 v. Interfirst Bank of San Antonio, N.A., | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 9 |
748 S.W.2d 218, 220 (Tex. 1988)
. We aim to "enforce the settlor's intent as expressed in an unambiguous trust over the objections of beneficiaries that disagree with a trust's terms."
Rachal v. Reitz,
403 S.W.3d 840, 844 (Tex. 2013)
. The grantor can make the transfer of property to an inter vivos trust subject to a condition precedent that must occur before the transfer is effective.
See
Blardone's Est. v. McConnico,
608 S.W.2d 618, 618 (Tex. 1980)
.
E. Requirements of common-law gift and transfer of securities
To constitute an effective inter vivos gift under the common law, we have said that "there must be a delivery of possession of the subject matter of the gift by the donor to the donee, and a purpose on the part of the donor to vest in the donee, unconditionally and immediately, the ownership of the property delivered."
Wells v. Sansing,
245 S.W.2d 964, 965 (Tex. 1952)
;
see
Maldonado v. Maldonado,
556 S.W.3d 407, 414-15 (Tex. App.-Houston [1st Dist.] 2018, no pet.)
("To establish the existence of a gift, the party must prove: (1) intent to make a gift; (2) delivery of the property; and (3) acceptance of the property."). The burden of proving an effective gift is on the alleged recipient.
Maldonado,
556 S.W.3d at 415
. Importantly, we have said that "[a] gift cannot be made to take effect in the future."
Fleck v. Baldwin,
172 S.W.2d 975, 978 (Tex. 1943)
. Rather, to make a valid gift, "the donor must,
at the time [she] makes it,
intend an im | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 10 | mediate divestiture of the rights of ownership out of [herself] and a consequent immediate vesting of such rights in the donee."
In re Est. of Wright,
482 S.W.3d 650, 657 (Tex. App.-Houston [14th Dist.] 2015, pet. denied)
(emphasis added);
see
Walker v. Walker,
No. 14-16-00357-CV, 2017 WL 1181359, at *5 (Tex. App.-Houston [14th Dist.] Mar. 30, 2017, no pet.)
("Statements to the effect that a donor is `going to give,' or will give the gift at some later date, do not show an intent to make a present gift.").
The Texas Business and Commerce Code also addresses certain requirements for effecting a transfer of securities. Section 8.104(a)(1) provides that "[a] person acquires a security or an interest therein" if "the person is a purchaser to whom a security is delivered." TEX. BUS. & COM. CODE § 8.104(a)(1). A "purchaser" takes by any "voluntary transaction creating an interest in property," including by gift.
Id.
§ 1.201(29), (30). A certificated security is "delivered," effectuating a transfer, when "the purchaser acquires possession of the security certificate" or when the certificate is indorsed and delivered to a securities intermediary.
Id.
§ 8.301(a);
see id.
§ 8.304 (describing indorsement).
IV. Analysis
To recover on his claim for tortious interference with an existing contract, Kyle must establish that he possessed "legal rights" under the KTA with which Inwood interfered.
Associated Indem. Corp.,
964 S.W.2d at 288
. He argues that, by signing the KTA | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 11 | , Christy "irrevocably gifted [the Inwood shares] to" him. Inwood argued in its summary judgment motion that the KTA unambiguously establishes that Christy had no present intent to transfer the shares upon signing but rather expressed an intent to transfer the shares at some future date, and only if approved by Inwood. We agree with Inwood.
The KTA's granting clause provides that Christy "hereby transfers and delivers" to the Kyle Trust "the property described in Schedule A attached hereto . . . upon the express terms and conditions . . . hereinafter set forth." Schedule A contemplates two transfers to the Kyle Trust. First, it states that "$100.00 cash is the
initial property transferred
by [Christy]." (Emphasis added.) Next, it provides that "[u]pon approval by [Inwood], [Christy]
intends to transfer
581,658.21 Shares of [Inwood] common stock." (Emphasis added.) The text—in particular, the different verb tenses used to describe each transfer—demonstrates that the KTA operated to
immediately
transfer $100 to the Kyle Trust, while the share transfer would take effect in the future, and only if approved by Inwood. Similarly, describing only the $100 as the "initial property" indicates that the $100 would be transferred first and the Inwood shares would be transferred at a later time if Inwood approved.
This distinction compels the conclusion that the KTA did not effect a transfer of the Inwood shares to the Kyle Trust. In contrast to Christy's unconditional transfer of | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 12 | the initial trust property of $100, the KTA unambiguously expressed Christy's intent to condition her transfer of the Inwood shares on Inwood's approval. Because that condition was never satisfied, the shares were never transferred to the Kyle Trust.
See
Blardone's Est.,
608 S.W.2d at 618
.
Nor can Kyle claim that he or the Kyle Trust acquired the Inwood shares by gift. The KTA's plain language contemplates only a future intention to transfer the shares, not a present gift.
See
Fleck,
172 S.W.2d at 978
("A gift cannot be made to take effect in the future . . . .");
see, e.g.,
Walker,
2017 WL 1181359, at *6
(finding no present gift because statements from alleged donor to donee that "he
would
give him the property (as opposed to he
immediately
gives) and that he
would
transfer the property" in the future "are not statements of an immediate gift but rather reflect an intent to give the [property] at some point in the future");
Flores v. Flores,
225 S.W.3d 651, 657 (Tex. App.-El Paso 2006, pet. denied)
(finding no present gift when parents offered to give property to their son when he finished his enlistment in the military because "the evidence showed at most an intent to make a gift at some future date");
Thompson v. Dart,
746 S.W.2d 821, 826-27 (Tex. App.-San Antonio 1988, no writ)
(finding no present gift when alleged donor merely stated that she "was going to give" the property at some future date). As the share transfer was contemplated to take ef | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 13 | fect in the future and conditioned on Inwood's approval, it lacks the "immediate[] and unconditional[]" characteristics of a valid gift.
Fleck,
172 S.W.2d at 978
;
cf.
Powell v. Powell,
822 S.W.2d 181, 183 (Tex. App.-Houston [1st Dist.] 1991, writ denied)
(finding effective gift of stock where the certificate conveying the shares was signed by the donor and "it `sells, assigns, and transfers unto [the donee]' the shares without any conditions stated" and the donee possessed stock certificates in her name, signed and delivered by the donor).
Kyle contends that the KTA transferred title of the shares to him under the common-law rule that "parties can transfer securities without observing [Section 8.104] formalities if they clearly intend that the transfer take place."
Dutcher v. Dutcher-Phipps Crane & Rigging, Inc.,
510 S.W.3d 592, 598 (Tex. App.-El Paso 2016, pet. denied)
. In support of this argument, Kyle cites
Dutcher
for this proposition:
As between transferor and transferee, it seems to be the rule that transfer of title may take place though there is no delivery of the certificates themselves, nor endorsement of them, nor transfer of them on the books of the corporation, and even though the sale be by parol. In each case the inquiry is [1]
whether the minds of transferor and transferee
met,
[2]
whether there was an intention that the stock should then and there be vested in the transferee,
and [3]
whether there were acts in the nature of a symbolical | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 14 | delivery of the property.
Id.
at 596 (emphases added) (quoting
Greenspun v. Greenspun,
194 S.W.2d 134, 137 (Tex. App.-Fort Worth),
aff'd,
198 S.W.2d 82 (Tex. 1946)
). Kyle argues that all three requirements have been met via Christy's signatures on the KTA. We disagree.
The case on which
Dutcher
relies,
Greenspun,
was decided before the enactment of Business and Commerce Code Section 8.104. Regardless, neither
Dutcher
nor
Greenspun
can alter Section 8.104's unambiguous requirements, which Kyle concedes were not met in this case.
See
TEX. BUS. & COM. CODE § 8.104(a). If anything, one could argue (as Inwood did in the trial court) that the passage of Section 8.104(a) made it the exclusive mechanism by which parties may transfer securities, to the exclusion of the common-law principles governing gifts. But we need not and do not reach that question today because Kyle cannot succeed under either the common law or Section 8.104(a).
Because the KTA did not immediately and unconditionally vest Kyle with any "legal rights" to retain the shares under either the common law or Section 8.104(a), his claim that Inwood tortiously interfered with his rights to the shares under the KTA must fail.
Associated Indem. Corp.,
964 S.W.2d at 288
;
see
El Paso Healthcare Sys.,
518 S.W.3d at 421-22
;
N. Shore Energy,
501 S.W.3d at 605
;
Hurlbut,
749 S.W.2d at 767
;
see also
Stroud Prod., L.L.C. v. Hosford,
405 S.W.3d 794, 812 (Tex. App.-Houston [1st Dist.] 2013, pet | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 15 | . denied)
(holding that parties asserting a tortious interference claim over rights to receive overriding royalty interests could not recover because they were "not legally entitled to" those royalties).
[3]
Kyle argues that even if a transfer was not effected upon Christy's signing the KTA, the KTA's irrevocability clause operates to render her intended transfer of the shares an irrevocable gift to the Kyle Trust. We disagree. The irrevocability clause provides that "[b]y this instrument [Christy] intends to and does hereby relinquish absolutely and forever all possession and enjoyment of the trust property." But whereas the KTA immediately transferred $100 to the Kyle Trust, making that "trust property," the KTA's terms provide that the Inwood shares would not become trust property unless and until they were later transferred "[u]pon approval by" Inwood. Nothing in this irrevocability clause diminished Christy's power to decide against transferring the Inwood shares before they actually were transferred. As Christy retained the right not to transfer the shares up until the transfer was effected, Inwood cannot be liable for tortious interference because, even assuming Inwood suggested to Christy that she should not approve the transfer, "merely inducing a contract obligor to do what it has a right to do is not actionable interference."
ACS Invs.,
943 S.W.2d at 430
.
Our conclusion would not change if we viewed the KTA as a bilateral contract rather than a gift. As we | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 16 | explained, the Inwood shares would not become trust property unless and until Inwood approved the transfer. Indeed, Christy was contractually prohibited via the shareholder agreement from consummating the transfer without Inwood's approval.
See
Allstate Ins. Co. v. Irwin,
627 S.W.3d 263, 270 (Tex. 2021)
(explaining that "an obligation to perform an existing agreement" can be subject to a condition precedent (quoting
Dillon v. Lintz,
582 S.W.2d 394, 395 (Tex. 1979)
));
Sun Expl. & Prod. Co. v. Benton,
728 S.W.2d 35, 37 (Tex. 1987)
(concluding that the phrase "15 days after sight and upon approval of title" imposed a condition precedent to the formation of the contract and, therefore, "title does not pass . . . until fulfillment of such conditions");
Hohenberg Bros. Co. v. George E. Gibbons & Co.,
537 S.W.2d 1, 3 (Tex. 1976)
(explaining that a condition precedent can relate to formation of a contract or liability under it and providing that "[c]onditions precedent to an obligation to perform are those acts or events, which occur subsequently to the making of a contract, that must occur before there is a right to immediate performance").
We conclude that Kyle acquired no contractual right to the Inwood shares because Inwood never approved their transfer. The sole evidence Kyle references to support his contention that Inwood approved the transfer is an email from Inwood's attorney indicating that he "will complete the transfer[] next week." But this is insufficient | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 17 | to create a fact issue. Indeed, it demonstrates that Inwood had not given its approval when Christy and Kyle signed the KTA because the email was sent months after the KTA's execution. The summary judgment evidence demonstrates that Christy never delivered her certificate for transfer to Inwood. It is further undisputed that Inwood did not countersign the shareholder subscription agreement authorizing the transfer. As Inwood did not approve, Christy's obligation to transfer did not arise, and Kyle never acquired a contractual right to the Inwood shares.
Kyle's failure to demonstrate a "specific contract right[]" to the Inwood shares means that his tortious interference claim must fail.
Hurlbut,
749 S.W.2d at 767
.
[4]
Though Inwood did not specifically assert this absence of a contractual right in the portion of its summary judgment motion addressing Kyle's tortious interference claim, any alleged error in granting summary judgment on that claim would be harmless because Inwood otherwise moved for summary judgment based on Kyle's lack of a contractual right to the shares, so the grounds asserted elsewhere in Inwood's summary judgment motion "appl[y] equally" to the tortious interference claim.
Endeavor Energy Res.,
593 S.W.3d at 312
.
V. Conclusion
Accordingly, without hearing oral argument, the Court grants Inwood's petition for review, reverses the court of appeals' judgment in part, and reinstates the trial court's judgment that Kyle take nothing.
See
TEX. R. | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 18 | APP. P. 59.1.
[1]
Inwood's email used the word "endorsed," which is an alternate spelling for "indorsed."
See Indorse,
BLACK'S LAW DICTIONARY (12th ed. 2024). For this opinion, we use the spelling adopted in the Business and Commerce Code.
[2]
As relevant here, Christy argued that she was entitled to summary judgment on Kyle's breach of contract claim because her alleged promise to transfer the Inwood shares was unsupported by consideration, so she was not contractually obligated to give Kyle any property that she had not already unconditionally and unequivocally delivered as a gift. Similarly, Christy argued that she was entitled to summary judgment on Kyle's declaratory judgment claim because she never made a completed gift of the shares to Kyle and she did not intend to give Kyle the Inwood shares when she signed the KTA.
[3]
Our conclusion is further buttressed by Kyle's failure to appeal the trial court's grant of summary judgment in favor of Inwood and Christy on Kyle's claim seeking a declaration that he owns the shares. 2023 WL 6547936, at *3. This failure waives any challenges associated with Christy's present ownership of the Inwood shares.
[4]
Because we conclude that Inwood was entitled to summary judgment on the tortious interference claim, we need not and do not decide whether providing truthful information operates as an independent affirmative defense to a claim for tortious interference with a contract.
Save trees - read court opinions online on G | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | INWOOD NATIONAL BANK AND INWOOD BANCSHARES, INC. v. D. KYLE FAGIN, INDIVIDUALLY AND AS TRUSTEE AND BENEFICIARY OF THE D. KYLE FAGIN QUALIFIED SUBCHAPTER S TRUST; from Dallas County; 5th Court of Appeals District (05-21-00878-CV, ___ SW3d ___, 10-09-23) (Per Curiam) | 2025 | 19 | oogle Scholar. | https://law.justia.com/cases/texas/supreme-court/2025/24-0055.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 0 | The City of Austin, Petitioner,
v.
Noel Powell, Respondent.
No. 22-0662.
Supreme Court of Texas.
Argued September 10, 2024.
Opinion delivered: December 31, 2024.
On Petition for Review from the Court of Appeals for the Third District of Texas.
JUSTICE, YOUNG delivered the opinion of the Court.
JUSTICE, EVAN A. YOUNG delivered the opinion of the Court.
A fugitive led police officers on a high-speed chase through the streets of Austin. While in pursuit, an officer lost control of his vehicle and collided with a minivan stopped at an intersection. The collision injured Noel Powell, the minivan's driver. Powell, who was not at fault, sued the City of Austin to recover damages for his injuries.
We must decide whether his claim may proceed. The legislature has waived governmental immunity to suit for many torts, but it carved out an exception when a governmental employee, like the officer who collided with Powell, is "responding to an emergency call or reacting to an emergency situation." Tex. Civ. Prac. & Rem. Code § 101.055(2). This emergency exception applies so long as the officer's "action [was] in compliance with the laws and ordinances applicable to emergency action, or in the absence of such a law or ordinance, if the action [was] not taken with conscious indifference or reckless disregard for the safety of others."
Id.
We hold that the officer's conduct was not in violation of "a law or ordinance" that governed emergency action and that Powell has raised no fa | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 1 | ct question about whether the officer's conduct was reckless. The Tort Claims Act, therefore, does not waive the City's immunity. We reverse the court of appeals' judgment and render judgment dismissing the case for lack of jurisdiction.
I
Officer Brandon Bender was responding to a check-welfare call when he heard "six or seven" gunshots ring out in the neighborhood. Four additional shots followed within about fifteen minutes, and they "sounded even closer than the first shots." Three minutes after that, Officer Michael Bullock spotted a Toyota FJ Cruiser coming from the same direction as the gunshots. Officer Bullock told the vehicle's driver to stop. Instead of stopping, the car "took off." Officer Bender received authorization to pursue the FJ Cruiser with his lights and siren on. Officer Bullock also received authorization to participate in the chase and was assigned to back up other officers.
During the chase, Officer Bender decided to make a right turn onto Brandt Road to "get in front of the pursuit . . . or to close the distance to enter the pursuit." Officer Bullock was following Officer Bender. As Officer Bender slowed to make the turn, Officer Bullock hit the brakes. Unable to slow down in time, Officer Bullock struck the passenger side of Officer Bender's car, causing the two cars to be "semi-stuck together."
Both officers lost control of their vehicles. Officer Bender's vehicle slid through the intersection, running over a stop sign and coming to rest against | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 2 | a fence post. Officer Bullock's vehicle collided with Powell's minivan, which was stopped at the intersection. The impact caused Powell's vehicle to spin 180 degrees before coming to rest, while Officer Bullock's car came to rest against a tree. The post-crash report opined that Officer Bullock's inattention and failure to control his speed contributed to the accident.
Powell sued the City, seeking recovery for his damages. The City filed a plea to the jurisdiction based on the Tort Claims Act's emergency exception and Officer Bullock's official immunity. The trial court denied the City's plea without explanation. The City appealed, raising only the emergency exception. The court of appeals affirmed. 684 S.W.3d 455 (Tex. App.-Austin 2022). It held that there was a fact issue about whether Officer Bullock's actions were reckless, requiring further proceedings in the trial court.
Id.
at 465.
We granted the City's petition for review.
II
More than twenty years ago, we described the process for resolving a plea to the jurisdiction asserting immunity from suit as one that "generally mirrors that of a summary judgment."
Tex. Dep't of Parks & Wildlife v. Miranda,
133 S.W.3d 217, 228 (Tex. 2004)
. We reaffirm this description but acknowledge that dispositive-pleading practice has evolved in the interim. The conceptual similarity largely reflects that the parties' burdens will depend on the nature of the plaintiff's claim and how the government poses its jurisdictional chall | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 3 | enge. Just as the Texas rules now include not only traditional summary judgment but also no-evidence summary judgment and dismissal under Rule 91a, for example, pleas to the jurisdiction may involve competing evidence, the denial of any probative evidence, or the assertion that the law compels a result regardless of the evidence.
The foundational rule in all cases is that "[a] party suing the governmental unit bears the burden of affirmatively showing waiver of immunity."
City of San Antonio v. Maspero,
640 S.W.3d 523, 528 (Tex. 2022)
(citing
Univ. of Tex. M.D. Anderson Cancer Ctr. v. McKenzie,
578 S.W.3d 506, 512 (Tex. 2019)
). There is "a presumption against any waiver until the plaintiff establishes otherwise."
Rattray v. City of Brownsville,
662 S.W.3d 860, 866 (Tex. 2023)
. The plaintiff—the nonmovant— survives the plea to the jurisdiction only by showing that the statute "clearly and affirmatively waive[s] immunity" and by also "negating any provisions that create exceptions to, and thus withdraw, that waiver."
Id.
at 867. Though a plaintiff need not anticipate and defeat every defense the government could conceivably raise,
see, e.g., id.
at 867-68, a plea to the jurisdiction may obviously rely on the plaintiff's own pleadings in arguing that they fail to "affirmatively demonstrate the court's jurisdiction to hear the case."
Mission Consol. Indep. Sch. Dist. v. Garcia,
372 S.W.3d 629, 635 (Tex. 2012)
. Where those pleadings indicate, for example, that | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 4 | the emergency exception applies, the government need not produce
additional
affirmative evidence to invoke the exception.
Whether the plaintiff bears an
evidentiary
burden depends on how the government responds to the purported waiver. In
Miranda,
we divided pleas to the jurisdiction into two broad categories.
First,
the government may "challenge[] the pleadings."
Miranda,
133 S.W.3d at 226
. In such a plea, the government does not dispute the plaintiff's factual allegations, and evidence is irrelevant. The question is whether the alleged facts "affirmatively demonstrate a trial court's subject matter jurisdiction."
Id.
That is "a question of law reviewed
de novo.
"
Id.
If the plaintiff's allegations neither establish jurisdiction nor negate it, the plaintiff is given an opportunity to amend its pleadings, but if the allegations negate jurisdiction, the plaintiff as a matter of law cannot establish jurisdiction, so the court must grant the plea.
Id.
at 226-27. This type of plea is thus similar—though not identical—to a motion to dismiss under Rule 91a in that it asserts that the plaintiff's allegations, taken as true, do not show a waiver of immunity.
See
Tex. R. Civ. P. 91a.1. In that event, the plaintiff needs to respond not with evidence but with legal argument showing the court that, as a matter of law, its allegations demonstrate an immunity waiver despite the government's contrary arguments.
Second,
the government's plea to the jurisdiction may i | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 5 | nstead "challenge[] the existence of jurisdictional facts," requiring the trial court to "consider relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised."
Miranda,
133 S.W.3d at 227
. The plea to the jurisdiction may, for example, be like a no-evidence motion for summary judgment by asserting that the plaintiff has produced no evidence of an element required for the immunity waiver to apply.
See
Tex. R. Civ. P. 166a(i). In that event, the plaintiff may respond with additional evidence establishing that element of the waiver. The plea may mirror a traditional motion for summary judgment by attaching evidence in an effort to conclusively negate jurisdiction.
See id.
R. 166a(c). In such a case, the plaintiff must produce enough evidence to raise a genuine issue of material fact to survive the plea.
Miranda,
133 S.W.3d at 227-28
. Or the plea may be like a hybrid motion for summary judgment where both parties attach evidence. The "ultimate issue" in that instance is likewise "whether the nonmovant raised a fact issue to preclude summary judgment."
Fossil Grp., Inc. v. Harris,
691 S.W.3d 874, 882 (Tex. 2024)
.
Thus, when we stated in
Mission Consolidated Independent School District v. Garcia
that "[i]nitially, the defendant carries the burden to meet the summary judgment proof standard for its assertion that the trial court lacks jurisdiction,"
372 S.W.3d at 635,
we were referring to cases in which the plea to the j | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 6 | urisdiction mirrors a traditional or hybrid motion for summary judgment. After all, if the government wants to truly negate the plaintiff's evidence, then it must present evidence of its own.
See id.
at 637 ("While a plaintiff must plead the elements of her statutory cause of action . . .
she will only be required to submit evidence if the defendant presents evidence negating one of those basic facts.
" (emphasis added)). We did not, of course, contradict the bedrock principle that the plaintiff bears the burden to establish a waiver of immunity. When there is a dispute over jurisdictional facts, the plaintiff must raise a genuine issue of material fact as to the immunity waiver's applicability.
See
Miranda,
133 S.W.3d at 227
;
see also
Tex. Health & Hum. Servs. Comm'n v. Pope,
674 S.W.3d 273, 281 (Tex. 2023)
. When that happens, "we take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant's favor."
Maspero,
640 S.W.3d at 528-29
. If the evidence raises a fact question as to the court's jurisdiction, then the trial court may not grant the plea.
Univ. of Tex. at Austin v. Hayes,
327 S.W.3d 113, 116 (Tex. 2010)
. But the court must grant the plea if the evidence fails to raise a question as to the existence of a jurisdictional fact.
Maspero,
640 S.W.3d at 529
.
A party's characterization of its pleadings does not control how the courts review them. Whatever the government may call i | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 7 | ts jurisdictional challenge—a plea to the jurisdiction, a motion to dismiss, or a motion for summary judgment—we look to its substance.
See, e.g.,
Oscar Renda Contracting, Inc. v. Bruce,
689 S.W.3d 305, 311 (Tex. 2024)
(noting that "our Court has consistently held that we examine the substance of a motion or pleading rather than requiring the formality of a title");
Thomas v. Long,
207 S.W.3d 334, 339 (Tex. 2006)
(treating a summary-judgment motion as a plea to the jurisdiction for purposes of appellate jurisdiction).
Here, the City's plea to the jurisdiction most closely mirrors a no-evidence motion for summary judgment. It argues that Powell failed to establish jurisdictional facts after adequate time for discovery. We therefore review Powell's allegations and evidence (considering the City's undisputed evidence only for context), and we determine whether Powell has raised a fact issue regarding the Tort Claims Act's immunity waiver.
III
A
As a political subdivision of the state, the City is "immune from suit unless [its] immunity is waived by state law."
Maspero,
640 S.W.3d at 528
. The Tort Claims Act waives immunity for certain torts, but it "withdraws" the waiver in various circumstances.
Rattray,
662 S.W.3d at 866
. As relevant here, if an injury arises from an officer's response to an emergency call or reaction to an emergency situation, the Act withdraws the waiver of immunity
unless
(1) the officer did not comply with "the laws and ordinances appl | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 8 | icable to emergency action," or (2) in the absence of such laws, the officer acted "with conscious indifference or reckless disregard for the safety of others." Tex. Civ. Prac. & Rem. Code § 101.055(2);
see
Maspero,
640 S.W.3d at 529
. The court of appeals held that Officer Bullock was responding to an emergency situation. 684 S.W.3d at 462. The parties do not dispute this holding, and it is one with which we agree.
This case therefore turns on the applicability of the emergency exception. The issue reduces to whether Officer Bullock (1) "compli[ed] with the laws and ordinances applicable to emergency action," or (2) "in the absence of such a law or ordinance," acted "with conscious indifference or reckless disregard for the safety of others." Tex. Civ. Prac. & Rem. Code § 101.055(2). No party before us argues that this latter inquiry is distinct from showing recklessness, and our cases generally have proceeded by regarding recklessness as what the latter inquiry requires.
See, e.g.,
Maspero,
640 S.W.3d at 529
;
City of Amarillo v. Martin,
971 S.W.2d 426, 430 (Tex. 1998)
. We therefore again assume for purposes of this case that there is no difference between "conscious indifference or reckless disregard" and "recklessness."
The court of appeals, in reliance on
Maspero,
held that
both
components of the emergency exception's jurisdictional inquiry—the law-or-ordinance prong
and
the recklessness prong—"`collapse[]' into one inquiry concerning [Officer Bullock | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 9 | 's] recklessness." 684 S.W.3d at 463 n.3 (quoting
Maspero,
640 S.W.3d at 529
).
Maspero
did not hold that the two distinct inquiries are in fact only one. It said that "the distinction between these inquiries largely collapses
in this case.
"
Maspero,
640 S.W.3d at 529
(emphasis added). Such a result may often occur, as in
Maspero,
and will depend on the content of an applicable statute or ordinance.
The plain language of the emergency exception, however, contemplates two distinct inquiries to be undertaken in a particular order. First, the court must assess whether any laws or ordinances apply to the emergency action at issue in the case. Such a law or ordinance may apply to some aspect of the emergency action (hypothetically, for example, by controlling maximum speed) or to the entire action. If there is an applicable law or ordinance that governs the emergency action or governs the only parts of that action that allegedly justify the imposition of liability, the jurisdictional inquiry turns on whether the officer's action complied with the relevant law or ordinance.
See
Martin,
971 S.W.2d at 428
("Because [a statute] controls Clark's action as an emergency vehicle operator in an emergency situation, we look to see if Clark complied with that [statute]."). The second inquiry is triggered only if no law or ordinance governs the emergency action at issue or any part of it. The jurisdictional inquiry would then become whether there is a fact issue as to that o | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 10 | fficer's recklessness in undertaking the action that led to the injury; any conduct that complied with an applicable law or ordinance would not be subject to that analysis.
It was not always this way. The first version of the Tort Claims Act, enacted in 1969, contained an emergency exception that was nearly identical in wording to today's version except that it lacked the recklessness prong.
See
Texas Tort Claims Act, 61st Leg., R.S., ch. 292, § 14(8), 1969 Tex. Gen. Laws 874, 878 (codified at Tex. Civ. Prac. & Rem. Code § 101.055(2) by Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 1, 1985 Tex. Gen. Laws 3242, 3304). Thus, under the old version, the waiver of immunity did not apply if the officer acted "in compliance with the laws and ordinances applicable to emergency action."
Id.
In
Black v. Nueces County Rural Fire Prevention District No. 2,
we read that language to require a specific "law[] or ordinance[] pertaining to
this
emergency situation." 695 S.W.2d 562, 563 (Tex. 1985) (emphasis added).
In
Black,
a volunteer firefighter sued the department after he was struck by an engine reversing from the scene of a fire.
Id.
Because neither the plaintiff nor the government defendant pointed to any law or ordinance applicable to that particular action, we held that the exception did not apply, and immunity was therefore waived.
Id.
Importantly,
Black
treated the "laws and ordinances" prong of that version of the emergency exception as a potential shield for | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 11 | the government. That is, if the officer's allegedly tortious action was undertaken in compliance with an applicable law or ordinance, then his employer would enjoy governmental immunity. With this defensive view in mind, it made sense for the set of laws applicable to emergency action to be narrow. If the general rules of the road were the laws and ordinances applicable to emergency action, then the government could always show compliance with
some
law, and the emergency exception would swallow the Act's immunity waiver. Instead, the Court understood the statute to address only laws or ordinances that
target
emergency action.
But as
Black
construed it, the emergency exception generated less protection for emergency responders than the legislature may have anticipated. In the legislative session following our decision in
Black,
the legislature added the recklessness prong to the emergency exception. When no specific law or ordinance applied, therefore, the emergency exception could still cover the government defendant if its actions were not "taken with conscious indifference or reckless disregard for the safety of others." Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 3.05, 1987 Tex. Gen. Laws 37, 49 (amending Tex. Civ. Prac. & Rem. Code § 101.055(2)). Notably, the legislature left the first part of the emergency exception intact. Accordingly,
Black
's holding that laws and ordinances must specifically address emergency action to qualify as "applicable to emer | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 12 | gency action" remains good law. The legislature supplemented that provision by adding the recklessness prong, which provides additional protection for government defendants.
Thus, where a case arises from "emergency calls or [a] react[ion] to emergency situations," official "compliance with [] laws and ordinances" will be relevant only if the law or ordinance expressly "pertain[s] to th[e] emergency situation."
Black,
695 S.W.2d at 563. Both parties may find it useful to identify such a provision. If the plaintiff can point to a law or ordinance that directly and specifically governs emergency responses and can show that the government defendant did not comply, then immunity is waived. On the other hand, if the government defendant can point to an applicable law or ordinance, and can establish compliance, then at least that aspect of the claim is off the table. Imagine, for example, a hypothetical statute providing a safe harbor such that it is always acceptable to exceed the posted speed limit by twenty miles per hour during an authorized police pursuit. Under such a regime,
speed
would often be unavailable to a plaintiff seeking to negate the emergency exception, and if elevated speed was the only basis for the claim, then the plea would be granted without proceeding to the recklessness prong.
Where
neither
party can point to such a law, however, the first prong of § 101.055(2) is irrelevant to dislodging governmental immunity. After all, an officer cannot comply wi | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 13 | th (or violate) a law that does not exist.
See id.
The legislature's apparent response to
Black
was to shift the consequence of the absence of a law or ordinance. Under
Black,
such an absence confirmed the waiver of immunity and the case would proceed in the trial court. But after the 1987 amendment, which created the emergency exception essentially in its current form, the case must then proceed through an additional recklessness analysis.
All of this is reflected in the approach we took in
Maspero.
True, in that case we framed the question as whether the plaintiff could prove the "pursuit
violated
the laws and ordinances applicable to emergency response," rather than whether the government could prove
compliance.
Maspero,
640 S.W.3d at 529
(emphasis added). But that is really just another way of expressing the same idea: under the first prong of § 101.055(2), official compliance with a relevant statute may foreclose liability, while a violation (obviously) will not. Compliance and violation are two sides of the same coin. Either way, the
kind
of statute at issue is what matters.
Maspero
and
Black
both rejected the plaintiff's broad reading of "laws and ordinances applicable to emergency action."
Id.
at 529-31;
Black,
695 S.W.2d at 563.
We reaffirm this sound reasoning today. Where a plaintiff seeks to raise a fact issue as to official compliance with "laws and ordinances applicable to emergency action," but points to no law or ordinance that specif | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 14 | ically applies to that action, the first prong of § 101.055(2) has no role to play. By the same token, generally applicable rules of the road that do not specifically address or reference emergencies are not applicable to emergency action for purposes of the emergency exception. After all, if every rule of the road applied to emergency action unless a statute expressly says otherwise, officers would routinely violate § 101.055(2). For instance, it is likely that an officer in a high-speed chase will fail to "signal continuously for not less than the last 100 feet" before turning. Tex. Transp. Code § 545.104(b). And the Court in
Black
could not have concluded that "there were no laws or ordinances pertaining to [the] emergency situation" if nearly
every
traffic law pertained to the emergency.
Black,
695 S.W.2d at 563. Nor, by common sense, should the emergency exception's shield apply automatically whenever a government employee happens to
comply
with one of the thousands of traffic regulations that govern our state's highways but have nothing particular to do with the special context of emergency responses. Neither extreme result is defensible under, much less required by, the text of § 101.055(2).
It is of course true that, under Transportation Code § 542.002, the general rules of the road are "applicable to . . . a vehicle owned or operated by . . . this state[] or a political subdivision of this state." State employees are not, as a class, above the traffic laws, | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 15 | and government-owned vehicles of every variety must coexist with the public on the roads. To say that the rules of the road apply to the class of public servants and vehicles owned by the government, however, is not to say that such rules are automatically "applicable to [the] emergency action[s]" that Texans rely on public servants to perform. Tex. Civ. Prac. & Rem. Code § 101.055(2). Nor does § 542.002's caveat—that it applies "except as specifically provided otherwise . . . for an authorized emergency vehicle"—change the analysis. It confirms it by acknowledging that there
are
provisions of the law that
do
specifically address emergency contexts. Notably, "authorized emergency vehicle" is broadly defined in § 541.201 to include even vehicles owned by
private
entities, such as a blood bank or a private ambulance company. Tex. Transp. Code § 541.201(B), (I).
In short, while statutes that
specifically
govern emergency action are relevant where a plaintiff attacks governmental immunity in the emergency context, generally applicable traffic rules are not.
B
Accordingly, we must first resolve whether Officer Bullock's actions were governed by any applicable law or ordinance. If so, the jurisdictional question is only whether there is a fact issue as to his compliance with those laws.
1
Powell first argues that Officer Bullock did not comply with laws governing emergency responses because he violated § 545.062(a) of the Transportation Code. That statute requires an o | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 16 | perator of a motor vehicle following another motor vehicle to "maintain an assured clear distance between the two vehicles so that . . . the operator can safely stop without colliding with the preceding vehicle or veering into another vehicle, object, or person on or near the highway."
Id.
§ 545.062(a). Officer Bullock admitted that he was following so closely behind Officer Bender's car that he "was unable to slow in time" to avoid colliding with it. We agree that such behavior would likely constitute a violation of § 545.062(a)—in other words, non-officers could not drive so closely without violating the statute, and if the statute applies to police in emergency situations, then there would at the least be a fact question.
The key legal question, then, is whether § 545.062(a) is a law or ordinance
applicable to emergency action
for purposes of § 101.055(2). We conclude that it is not. Section 545.062(a) does not purport to regulate emergency personnel; it is a statute of
general
applicability. Following
Black
and the legislature's reenactment of § 101.055(2)'s first prong, we expect something more to indicate that a law "pertain[s] to this emergency situation."
Black,
695 S.W.2d at 563. Chapter 546, by contrast, fits the bill: it is a
specific
body of rules and regulations that govern the operation of emergency vehicles. It lists a few specific actions that, outside the emergency context, would violate the laws governing drivers, but that are permissible for of | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 17 | ficers responding to emergencies.
See
Tex. Transp. Code § 546.001. For example, an officer may "proceed past a red or stop signal or stop sign, after slowing as necessary for safe operation."
Id.
§ 546.001(2). Chapter 546 then sets a baseline standard for
all
emergency responses: emergency responders retain "the duty to operate the vehicle with appropriate regard for the safety of all persons" and must bear "the consequences of reckless disregard for the safety of others."
Id.
§ 546.005.
Laws that specifically regulate emergency responses further indicate that generally applicable traffic laws are inapplicable to emergency responses. Our precedent, the statutory text, and longstanding principles of statutory interpretation make this plain. The Transportation Code provides that the generally applicable rules-of-the-road provisions (such as Chapter 545) apply "to the operator of a vehicle owned or operated by . . . a political subdivision of this state, except as specifically provided otherwise by this subtitle for an authorized emergency vehicle."
Id.
§ 542.002. Put another way, "where in one section a general rule is prescribed, which without qualification would embrace an entire class of subjects, and in another section a different rule is prescribed for individual subjects of the same class, the latter must be construed as exceptions to the general rule, and be governed by the section which is applicable to them alone."
Lufkin v. City of Galveston,
63 Tex. 437, | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 18 | 439 (1885)
;
see also
Perez v. Perez,
59 Tex. 322, 324 (1883)
(noting that "when the law makes a general provision, apparently for all cases, and a special provision for a particular class, the general must yield to the special clause, so far as the particular class is concerned"). General rules for safe driving do not constitute specific rules to govern emergencies.
Chapter 545, moreover, confirms this reading because it contains two provisions that
expressly
apply to emergency-response situations.
See
Tex. Transp. Code §§ 545.365(a)(1) (authorizing emergency vehicles to exceed the speed limit when responding to emergency calls), 545.204(b) (noting that emergency-vehicle operators are not exempt "from the duty to drive with due regard for the safety of all persons"). These are exceptions that prove the rule: unless otherwise specified, Chapter 545's provisions do
not
regulate emergency responses.
See
Dolan v. Walker,
49 S.W.2d 695, 697 (Tex. 1932)
(explaining that "when there are words in a statute expressive of a particular intent, and other words indicating a general intent inconsistent therewith, the particular intent must be taken as an exception to the general rule").
We thus conclude that § 545.062(a) is a law of general applicability that is not specifically "applicable to emergency action" under § 101.055(2) of the Tort Claims Act.
2
Powell next argues that Officer Bullock violated Chapter 546 of the Transportation Code because his actions did not | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 19 | fall within § 546.001's four expressly authorized responses to emergency situations. As noted above, at least some of § 546.001's provisions are specifically applicable to emergency situations: § 546.002(b)(1) specifies that subsections (2), (3), and (4) of § 546.001 apply when "responding to an emergency call." Tex. Transp. Code § 546.002(b)(1). Each of § 546.001's relevant provisions, however, is phrased in the affirmative. They do not forbid any official action but instead permit the enumerated actions under certain conditions. Powell's argument thus relies on the
expressio unius
canon of statutory interpretation: "expressing one item of a commonly associated group or series excludes another left unmentioned."
United States v. Vonn,
535 U.S. 55, 65 (2002)
. Because the legislature expressly identified four departures from the ordinary rules, the argument goes, it must have intended to make all the rest of the ordinary rules binding even in emergency contexts.
We reject this argument. The
expressio unius
canon does not apply unless the statutory context makes it "fair to suppose that the legislature considered the unnamed possibility and meant to say no to it."
Forest Oil Corp. v. El Rucio Land & Cattle Co.,
518 S.W.3d 422, 429 (Tex. 2017)
(brackets omitted) (quoting
Marx v. Gen. Revenue Corp.,
568 U.S. 371, 381 (2013)
). Nothing suggests that this condition is satisfied here.
For one thing, as we noted above, Chapter 545 refers several times to emergency co | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 20 | nduct, which would be pointless if the standards for emergency driving and for ordinary driving were the same except for the four situations enumerated in § 546.001. Indeed, the express references to emergency contexts in some Chapter 545 provisions could present a competing
expressio unius
argument—one that is consistent with our decision in
Black,
which indicated that the laws and ordinances "applicable to emergency action" are those that specifically say so. 695 S.W.2d at 563.
This larger context is consistent with the very nature of emergency action, which calls for split-second, fact-specific decisions in unpredictable situations. The legislature's attention to emergency contexts without greater specificity reflects a recognition that it cannot—and, perhaps more to the point, that the police cannot—predict and plan in advance for every possible emergency. Likewise fruitless would be any attempt to delineate every way an officer might permissibly react in an emergency situation. The statute as a whole therefore confirms § 546.001's role as identifying some particularly important and common examples of permissible emergency-response actions, which does not convey that those examples constitute an exclusive list. To the contrary, it is reasonable to read the enumerated authorizations in § 546.001 as constituting safe harbors. They remove any doubt that undertaking those actions is categorically permissible, which makes it especially hard to pin liability on an officer | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 21 | who undertakes them. What is more, where an officer
does
undertake one of the enumerated actions, the legislature has provided standards with which a court can judge the officer's "compliance" with § 546.001. For example, an officer who accepts the authority to "proceed past a red or stop signal" also accepts the responsibility to "slow[] as necessary for safe operation." Tex. Transp. Code § 546.001(2).
We reject Powell's construction for a third reason, as well: it would require us, by invocation of a canon of construction that does not readily fit here, to ascribe to the legislature the intent to hamstring officers in the performance of especially dangerous duties. If Powell's construction were correct, officers would be severely limited in their ability to respond to emergencies—they would have discretion to disregard only four rules of the road. As we have acknowledged, the legislature has determined "that the public good will be better served by encouraging public employees to take immediate action in emergency situations."
City of San Antonio v. Hartman,
201 S.W.3d 667, 673 (Tex. 2006)
.
The facts here illustrate the point. If § 546.001 plays the role that Powell alleges, officers could never closely follow behind another vehicle during a police chase. But officers often must do so. The Austin Police Department policy manual, for example, authorizes officers to perform Precision Immobilization Technique maneuvers. The whole point of a PIT maneuver is for an offic | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 22 | er to closely follow a fleeing vehicle—and then to make contact with the rear quarter panel of that vehicle, causing it to spin out. Other officers then surround the suspect's vehicle, preventing the car from driving away. The policy manual refers to this (and other similar measures) as a "tactical vehicle containment procedure."
Other
officers must then physically restrain the suspect, preventing him from fleeing on foot. For these reasons, it generally takes at least three police officers to perform a successful PIT maneuver. This is likely one reason why the APD manual requires at least three police units to be involved in a car chase before attempting such a maneuver. The maneuver
requires
closely following a suspect, who is far less likely than a fellow police officer to act predictably.
Beyond pursuing a suspect at close range, officers must sometimes closely follow each other. If the other officers are far behind the action, risking increased separation and the insertion of the general public within an action, they cannot successfully surround the suspect's vehicle once the lead officer begins the maneuver. Detaining the suspect would take longer and become riskier. Such a result would expose not just the officers but other members of our society to a fugitive who has demonstrated a willingness to do whatever it takes to avoid capture. In such emergency scenarios, time is of the essence and inches matter. But under Powell's theory, officers could never undertake m | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 23 | aneuvers like these—or anything else that is forbidden to ordinary motorists and not exempted by § 546.001. If the statute commanded such a result, we would have no choice but to follow it. But the text of the statute does not compel or justify Powell's reading, and for the reasons we have articulated, it is easy to see why the statute instead bears the meaning that we have ascribed to it.
3
We next address the invocation of § 546.005's refusal to "relieve" an officer either of "the duty to operate the vehicle with appropriate regard for the safety of all persons" or of "the consequences of reckless disregard for the safety of others." Tex. Transp. Code § 546.005. This provision largely corresponds to the second prong in the Tort Claims Act's emergency exception.
See
Tex. Civ. Prac. & Rem. Code § 101.055(2) (providing that the emergency exception does not apply if the officer acted "with conscious indifference or reckless disregard for the safety of others"). We thus explained in
Maspero
that the statutory "structure and language" often collapse into an inquiry into whether the officer acted recklessly.
640 S.W.3d at 529
. Put another way, whether the emergency exception's applicability turns on § 546.005 of the Transportation Code (a law applicable to emergency responses) rather than some other emergency-specific law, or § 101.055(2) of the Tort Claims Act (which imposes a recklessness standard in the
absence
of laws applicable to emergency responses), the inquiry | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 24 | will
often
reduce to whether the officer acted recklessly.
As we have explained, however, that does not mean that the inquiry will
always
be one into the officer's recklessness. Beyond § 545.062(a) and Chapter 546, the parties do not identify any other statutes (or ordinances) that expressly regulate emergency action. We thus confine our analysis in this opinion to the provisions the parties have raised. Advocates, however, should present to the courts
all
statutes that may be "laws and ordinances applicable to emergency action" for purposes of § 101.055(2), looking in every instance for an express and specific indication that the statute is so applicable.
4
Finally, Powell argues that Officer Bullock did not comply with laws and ordinances applicable to emergency action because he violated Austin Police Department policy by (1) not using his best judgment in starting the chase, (2) not terminating the chase when the suspect vehicle's whereabouts were unknown, and (3) following Officer Bender's car too closely.
Solely for argument's sake, we will assume that these assertions reflect violations of departmental policy. But even indulging that assumption, § 101.055(2) expressly conditions its reach on compliance with "laws and ordinances"—not internal police-department policies.
See
Maspero,
640 S.W.3d at 530
. We certainly do not contend that violations of departmental policy are of no consequence—but the consequences, whether from internal discipline or otherwise | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 25 | , are immaterial to the legal question before us.
* * *
In short, § 545.062(a) is not a law or ordinance applicable to emergency action for purposes of the Tort Claims Act. Officer Bullock did not violate Chapter 546 simply by doing something that was not expressly enumerated in § 546.001. And even assuming a violation of the police department's policy manual, such a violation would not inherently violate any laws or ordinances under § 101.055(2).
C
Because no other law or ordinance governed his emergency actions, the jurisdictional question instead becomes whether there is a fact issue as to Officer Bullock's recklessness. The Transportation Code defines "reckless driving" as driving "a vehicle in wilful or wanton disregard for the safety of persons or property." Tex. Transp. Code § 545.401(a). Chapter 546 adopts a comparable tone. It requires officers "to operate the vehicle with appropriate regard for the safety of all persons,"
id.
§ 546.005(1), and refuses to excuse officers for "the consequences of reckless disregard for the safety of others,"
id.
§ 546.005(2). The Tort Claims Act imposes a similar duty. The emergency exception does not apply if the officer acts "with conscious indifference or reckless disregard for the safety of others." Tex. Civ. Prac. & Rem. Code § 101.055(2).
As we have noted, no party has contended that there is any distinction between this standard and simple "recklessness," and we have previously assumed as much.
See supra
Part III.A. | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 26 | We accordingly assume as much again, reserving for a future case, if one ever comes, the possibility that the statutory standard is more nuanced. For present purposes, it is enough to apply our precedents concerning recklessness.
To do so in
Maspero,
we asked whether the officer "knew or should have known" that her act posed an unacceptable risk of injury, separating out subjective actual knowledge from imputed knowledge.
640 S.W.3d at 531
. We also highlighted the officer's use of her lights and siren and communication with a commanding officer as evidence that she "engaged in some degree of risk assessment" and "intend[ed] to minimize potential harm."
Id.
at 532. Likewise, in
City of San Antonio v. Hartman
,
we said that conscious indifference or reckless disregard "require[s] proof that a party
knew
the relevant facts but did not care about the result."
201 S.W.3d at 672 n.19
(emphasis added). Our case law thus seems to read § 101.055(2) as bifurcated between the officer-specific subjective awareness (what the officer knew) and the hypothetical objective (what the officer should have known). It seems unlikely that this distinction would often or perhaps ever make a difference; only a rare defendant would testify that he was consciously indifferent to a risk of harm. In nearly every case, the officer's state of mind will be inferred from the circumstances of his actions. The question seems to reduce to asking whether, under the circumstances, the officer's act | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 27 | ion was reckless. Answering that question may mean asking whether a given officer "engaged in some degree of risk assessment," as well as whether his actions simply "generated [an] `extreme risk' beyond that which is inherent in high-speed pursuits."
Maspero,
640 S.W.3d at 532
(quoting
Tarrant County v. Bonner,
574 S.W.3d 893, 902 (Tex. 2019)
).
Today we also decide
City of Houston v. Rodriguez,
another challenge to police action, on official-immunity grounds. ___ S.W.3d ___, ___ (Tex. Dec. 31, 2024) (No. 23-0094). This Court has seemingly never noted any links between the Tort Claims Act's recklessness prong and our "good faith" inquiry in the official-immunity context. The affirmative defense of official immunity "inures to all governmental employees who perform discretionary functions in good faith and within their authority."
City of San Antonio v. Riojas,
640 S.W.3d 534, 538 (Tex. 2022)
(quoting
DeWitt v. Harris County,
904 S.W.2d 650, 652 (Tex. 1995)
). To claim official immunity, an officer's actions "must be justified with reference to what a reasonably prudent officer, possessed of the same information and under the same or similar circumstances, could have believed."
City of Houston v. Sauls,
690 S.W.3d 60, 75 (Tex. 2024)
. This language should sound familiar:
Maspero
also treated official "risk assessment" based on factual circumstances as a key indicator that an officer was not reckless under the Tort Claims Act.
640 S.W.3d at 532
. Because r | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 28 | isk assessment must be "based on the officer's perception of the facts at the time of the event," both inquiries necessarily require careful consideration of those facts by a reviewing court.
Riojas,
640 S.W.3d at 539
(quoting
Wadewitz v. Montgomery,
951 S.W.2d 467 (Tex. 1997)
). Put simply, the factual context of the action will be relevant either way.
At the same time, official immunity and the Act's emergency exception remain importantly distinct. Official immunity is a "common law defense," the purpose of which "is to insulate the functioning of government from the harassment of litigation."
Kassen v. Hatley,
887 S.W.2d 4, 8 (Tex. 1994)
. But the emergency exception is a creature of statute, an exercise of the legislative prerogative "to determine how and when to allow tax resources to be shifted away from their intended purposes toward defending lawsuits and paying judgments."
Hughes v. Tom Green County,
573 S.W.3d 212, 218 (Tex. 2019)
(quotation marks omitted). Additionally, the scope of official immunity, extending to all "discretionary functions . . . within [an officer's] authority,"
Riojas,
640 S.W.3d at 538,
exceeds that of the emergency exception, which is expressly limited to "responding to an emergency call or reacting to an emergency situation," Tex. Civ. Prac. & Rem. Code § 101.055(2).
The official-immunity doctrine and the emergency exception accordingly have significant substantive and procedural differences. Both may apply in some cases; ne | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 29 | ither will apply in others; and in yet others one but not the other will apply. We have no occasion here to decide how these differences in purpose and scope may affect how each of the related inquiries is conducted. Rather, we merely note that deciding whether an officer's action implicates official immunity or the emergency exception will involve reasoned consideration of the action's
context.
Considering the context of Officer Bullock's actions, it was Powell's burden to raise a fact issue as to Officer Bullock's recklessness as understood in our precedents. The facts advanced, moreover, must show "more than a `momentary judgment lapse' and instead `[] that the driver committed an act he knew or should have known posed a high degree of risk of serious injury.'"
Maspero,
640 S.W.3d at 531
(quoting
Perez v. Webb County,
511 S.W.3d 233, 236 (Tex. App.-San Antonio 2015, pet. denied)
).
The court of appeals listed several considerations that, in its view, created a fact issue as to Officer Bullock's recklessness: Officer Bullock's failure to control his speed, his inattentiveness, his failure to maintain a safe following distance, and the seriousness of the accident. 684 S.W.3d at 464-66. It also ignored context suggesting that Officer Bullock was
not
reckless. We address each point in turn and then consider them jointly.
Failure to control speed.
Officer Bullock's failure to control his speed does not create a fact issue as to recklessness. Officers are expressly | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 30 | authorized to exceed the speed limit when responding to emergency situations as long as they do not endanger life or property. Tex. Transp. Code § 546.001(3). In part, this is because "[e]xceeding the speed limit is part and parcel of a police chase."
Maspero,
640 S.W.3d at 532
.
Notably, Powell agrees in his brief that "speed is not the issue in this case." And in the very next sentence, he argues that the main issue is Officer Bullock's failure to maintain a safe distance from Officer Bender's car. In other words, Powell does not meaningfully argue that Officer Bullock's failure to control speed was reckless. Instead, he focuses on Officer Bullock's failure to comply with § 545.062(a).
In any event, Officer Bullock's failure to control his speed does not create a fact issue as to recklessness. The accident report notes that Officer Bullock's failure to control his speed was a contributing factor to the accident. True, going more slowly may have prevented the accident, but vague descriptions of a high rate of speed "lack specificity" and by themselves do not "support a finding of reckless disregard."
City of Houston v. Green,
672 S.W.3d 27, 31 (Tex. 2023)
. Moreover, even if
some
exceedingly high rate of speed could amount to recklessness, evidence of the actual speeds involved would be necessary to make such a showing. Yet the record is devoid of any such evidence: neither officer's speed before the accident is known. Having failed to put on any evidence of the cr | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 31 | uisers' speeds, such as expert reconstruction, GPS data, dashcam footage, bodycam footage, or surveillance footage, Powell cannot rely on the crash report's vague statement that speed contributed to the collision to raise a fact question as to that speed's
recklessness. Id.
We do not hold that excessive speed is categorically a matter of only negligence that never could be relevant to recklessness. Adverse weather conditions, roadworks, or the presence of pedestrians could make some speeds reasonable or negligent in one chase but inordinately risky and reckless in another. As
Maspero
observed, speeding is
ordinarily
"part and parcel of a police chase,"
640 S.W.3d at 532,
so deeming speed in and of itself to raise a fact question about recklessness in such cases would be exceptional. Absent
any
evidence as to Officer Bullock's speed in the context of this chase, we decline to hold that this is one of the exceptional cases. At most, in the context of a pursuit, there could be a question only of negligence—a momentary lapse in judgment within a chase that inherently would involve high speed. Momentary lapses in judgment are not grounds for finding recklessness.
Id.
at 531;
see also
4Front Engineered Sols., Inc. v. Rosales,
505 S.W.3d 905, 911 (Tex. 2016)
(stating that to establish recklessness, it was "not enough to show that 4Front knew or should have known that Reyes would have a momentary lapse in judgment or otherwise act negligently"). There is simply no evi | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 32 | dence in the record that under any test for recklessness the alleged "failure to control speed" would qualify. Nothing, for example, raises a fact question that Officer Bullock
consciously disregarded
others' safety by driving quickly (or even that he was violating the speed limit
at all
).
Failure to maintain a safe following distance.
Powell asserts that Officer Bullock violated § 545.062(a) of the Transportation Code by failing to maintain a safe following distance from Officer Bender's vehicle. He also asserts that Officer Bullock failed to comply with police-department policy, which requires officers to space themselves from other vehicles so that they can safely react to other vehicles' movements. Officer Bullock's alleged failure to comply with either requirement, Powell argues, creates a fact issue as to his recklessness.
The City argues that this point is simply a restatement of the "failure to control speed" category. We disagree. The two are conceptually distinct; two cars traveling even at low rates of speed can still be too close, such that the second car cannot stop in time to avoid rear-ending the first. Rush-hour traffic jams on urban interstate highways supply ample evidence. More importantly, the Transportation Code itself distinguishes between the two concepts by imposing separate requirements for each.
Compare
Tex. Transp. Code § 545.351 (forbidding operators from driving at a speed "greater than is reasonable and prudent under the circumstances t | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 33 | hen existing"),
with id.
§ 545.062 (requiring operators to maintain a safe following distance between other vehicles "considering the speed of the vehicles, traffic, and the conditions of the highway").
But this point does not affect the outcome here. Either way, Officer Bullock's alleged failure to maintain a safe following distance does not create a fact issue as to his recklessness. Perhaps most important is the absence of evidence that would be essential to Powell's theory—in particular, some evidence of the actual distance between the two cruisers preceding the crash, which is not in the record. Rather than showing Bullock's supposedly reckless proximity to Bender, Powell relies on the very fact that Bullock hit Bender to reverse-engineer the conclusion that he must have been following too closely—and doing so recklessly.
This approach gets the matter backwards by supposing the cause based on the result, which is insufficient even to establish negligence: "[N]egligence is never presumed, and [] the mere happening of an accident is no evidence at all of negligence."
Wells v. Tex. Pac. Coal & Oil Co.,
164 S.W.2d 660, 662 (Tex. 1942)
. Far less, then, can the "happening of an accident" supply any evidence of
recklessness.
And even assuming that the conduct
was
negligent, "[e]vidence of negligence does not establish recklessness."
4Front Engineered Sols.,
505 S.W.3d at 911
. Said differently, we cannot accept as legally sufficient a rationale that starts with a | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 34 | n accident, reasons that the accident's occurrence creates evidence of negligence, and then leaps to the conclusion that evidence of negligence must also entail evidence of recklessness.
Most significant is the leap from negligence to recklessness. Logically, failing to maintain a safe distance generally sounds in negligence. Absent some evidence of the actual proximity, proving that Officer Bullock was following too closely would
at most
show negligence— but standing alone, that is not enough to trigger a fact question about recklessness.
See id.
Spacing between vehicles obviously helps prevent collisions. Bullock's testimony that he tried but failed to slow in time to avoid hitting Bender allows an inference that, in the heat of the chase, he may not have complied with the general departmental policy that Powell invokes. But none of that provides any evidence that the officer was reckless—wholly indifferent to the risks to others (and to himself). Violating the policy in a chase would require some showing that the distance between the two vehicles was
far less
than even the policy minimum, but no party testified as to the exact (or even approximate) distance between the two vehicles. As Powell's counsel conceded at oral argument, the policy violation alone obviously cannot raise a fact question as to recklessness.
Holding otherwise would belie our law's mandate that officers "retain discretion" to balance needs and risks when responding to emergency situations.
Mas | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 35 | pero,
640 S.W.3d at 532
. As part of this discretion, officers are expressly permitted to violate provisions of the Transportation Code when responding to emergency situations.
See, e.g.,
Tex. Transp. Code § 546.001. Having authorized deviation from traffic laws, the law's command would border on absurdity by then treating
any
deviation from mere department policy as evidence of recklessness. Moreover, as we noted above, perfect compliance with the Transportation Code and departmental policy may be impossible: the Austin Police Department's General Orders themselves, after all, instruct officers on procedures (like the PIT maneuver) that require officers to follow both the suspect
and one another
extremely closely. On Powell's quasi-strict-liability approach to the safe-distance requirement, nearly every step of any such tactic would automatically constitute evidence of reckless disregard. Instead, the law provides that as long as officers do not act recklessly in maintaining close proximity during a chase, they are within the bounds of their discretion and satisfy the duty of care expected of them.
Powell has not directed us to any evidence that Officer Bender "did not care about the result" that could be caused by his following too closely.
Hartman,
201 S.W.3d at 672 n.19
. Nor could he, without making a prerequisite showing of what the following distance was. We thus conclude that Officer Bullock's alleged failure to maintain a safe distance does not create a f | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 36 | act issue as to his recklessness.
Inattentiveness and the severity of the accident.
The accident report listed Officer Bullock's inattentiveness as a contributing factor to the crash.
Even if
Officer Bullock was inattentive, however, that evidence by itself would amount only to ordinary negligence. Failure to pay attention is a paradigmatic example of
negligence
and does not by itself constitute
reckless
conduct. As we recently held, "[a]n act or omission that is merely thoughtless, careless, or not inordinately risky" is nothing more than ordinary negligence.
Medina v. Zuniga,
593 S.W.3d 238, 249 (Tex. 2019)
(quoting
Transp. Ins. Co. v. Moriel,
879 S.W.2d 10, 22 (Tex. 1994)
). Recklessness requires more: in this case, "conscious indifference or reckless disregard for the safety of others." Tex. Civ. Prac. & Rem. Code § 101.055(2). As with Officer Bullock's speeding and proximity to Officer Bender, Powell again does not offer evidence of Bullock's inattention sufficient to create a fact issue as to recklessness. Neither the crash report, nor Officer Bullock's testimony, nor any other evidence indicates how long Bullock was supposedly inattentive or whether the inattentiveness is merely the conclusory summary of the fact that the accident happened. The crash report's bare statement that inattention contributed to the collision "lacks specificity" and does not establish the type of inattention "that, by itself, could support a finding of reckless disregard."
Gree | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 37 | n,
672 S.W.3d at 31
.
The court of appeals also noted the seriousness of the accident and subsequent injuries when discussing the evidence that Officer Bullock recklessly caused it. 684 S.W.3d at 466. As we have explained, it is error to reason from result to cause in finding negligence.
Wells,
164 S.W.2d at 662
. Perhaps unsurprisingly, we appear never to have clarified that the same rule applies for the
higher
showing of recklessness, but that result is logically inescapable. We agree with the observation made by the Fifth Court of Appeals that "[m]ere involvement in a collision does not create an inference or conclusion that a driver is incompetent or reckless."
Monroe v. Grider,
884 S.W.2d 811, 818 (Tex. App.-Dallas 1994, writ denied)
. Therefore, neither Officer Bullock's alleged inattentiveness nor the fact that a serious accident resulted create a fact issue as to Officer Bullock's recklessness.
The combination of these allegations.
Powell argues that, even if the above acts would be merely negligent in isolation, their combination in one collision raises a fact issue as to recklessness. We take Powell to assert that a set of simultaneous negligent acts may in some circumstances be stacked so as to create a question of recklessness—that is, that being negligent on
multiple
fronts actually constitutes
recklessness.
For purposes of our decision, we will assume without deciding that such a scenario is possible. Even so, the burden of establishing the nece | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 38 | ssary predicates of negligence was on Powell, the party challenging governmental immunity.
See
McKenzie,
578 S.W.3d at 512
. Absent any showing of Bullock's speed or his proximity to Bender, and given that speeding and proximity to others are "part and parcel" of high-speed chases, it is doubtful that Powell even raised a fact issue as to negligence on those points.
See
Maspero,
640 S.W.3d at 532
. The only allegation that sounds in traditional negligence—Bullock's inattention— finds similarly slim support in the record, and in any event stands alone. On this thin evidence, even if we were inclined to craft a novel "negligence plus negligence" rule of recklessness, it would not suffice to show recklessness here.
As we did in
Maspero,
we also consider evidence suggesting that Officer Bullock was
not
reckless.
See id.
(discussing evidence showing that the officer "engaged in some degree of risk assessment" and thus was not reckless);
see also
Alamo Heights Indep. Sch. Dist. v. Clark,
544 S.W.3d 755, 771 (Tex. 2018)
(explaining that although we take as true all evidence favorable to the plaintiff, "we cannot disregard evidence necessary to show context"). Officer Bullock was expressly assigned to the chase, authorized to pursue it, and stayed in contact with his supervisors throughout it. He also drove with his lights and siren activated during the chase. These actions affirmatively demonstrate Officer Bullock's "intent to minimize potential harm," not his int | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 39 | ent to ignore or exacerbate the possible risks posed by a car chase.
Maspero,
640 S.W.3d at 532
. The court of appeals erred in not considering evidence that contextualizes the circumstances and suggests that Officer Bullock was
not
reckless.
See id.
(holding that the officer was not reckless during the chase because, among other things, she stayed in constant communication with her sergeant).
To be clear, as we noted at the outset, the City was not required to affirmatively marshal evidence of Officer Bullock's non-recklessness. It was, and remains, Powell's burden to raise a fact issue. So long as the City did not "challenge the existence of [the] very [] facts" Powell relied on to do so (by alleging that a different entity's employee struck Powell, for instance), it was under no burden to provide evidence, including evidence of Officer Bullock's good behavior.
Garcia,
372 S.W.3d at 635
. Evidence of risk assessment is still relevant to the recklessness inquiry, however, as it undermines Powell's contention that Officer Bullock "did not care about the result" of his action.
Hartman,
201 S.W.3d at 672 n.19
. Officer Bullock's receipt of permission to begin pursuit, his frequent contact with his superiors, as well as his use of lights and siren are all useful evidence supporting the conclusion that he did not act recklessly.
The City then argues that the court of appeals erred in ignoring evidence that Powell did not move out of the way as the officers approach | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 40 | ed the intersection. We disagree with the City and conclude that the court of appeals correctly disregarded this contention. The Transportation Code provides that when the operator of a vehicle sees an emergency vehicle approaching, the operator must "stop and remain standing until the authorized emergency vehicle has passed." Tex. Transp. Code § 545.156(3).
Powell complied with this law and, based on this record, is without fault. He "stopped at the stop sign" behind the intersection and did not move as the officers approached Brandt Road. To avoid a collision, particularly in light of fast-moving vehicles, it is often better to stay still rather than to try to move
out
of the way, which risks getting
in
the way. Two people walking down a hallway might try to move out of each other's way, only to collide because each has mirrored the other (like-minded) person. From an officer's point of view, it is oftentimes easier to avoid a stationary object than a moving target. Counting Powell's inaction against him, however, would incentivize more moving targets and cause
more
crashes. The court of appeals thus correctly decided not to consider how Powell's actions (or inaction) may have contributed to the crash.
Powell's lack of culpability illustrates the consequences of the law of immunity. The legislature has determined that under circumstances like those before us—where an officer was at most negligent but not reckless—the governmental unit must be immune because the law | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | THE CITY OF AUSTIN v. POWELL (Opinion) | 2024 | 41 | would otherwise unduly deter conduct that is necessary to protect the public as a whole. On the other hand, innocent individuals like Powell are left bearing the costs of actions that benefit us all. Any of us might find ourself in Powell's shoes; the very nature of emergency responses is that they are unpredictable. Perhaps the current rules best serve the interests of the State as a whole. Or perhaps some other system allowing recovery—even if only to a highly circumscribed degree—for those without fault who are injured as a result of emergency responses would be better. Such an inquiry and any resulting decision are proper undertakings for the legislature, not this Court.
IV
The City of Austin's immunity to suit is not waived. Its plea to the jurisdiction should have been granted. We reverse the judgment of the court of appeals and render judgment dismissing the case for lack of jurisdiction.
Save trees - read court opinions online on Google Scholar. | https://law.justia.com/cases/texas/supreme-court/2024/22-0662.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 0 | In re J.Y.O., a Child.
No. 22-0787.
Supreme Court of Texas.
Argued September 10, 2024.
Opinion delivered: December 31, 2024.
On Petition for Review from the Court of Appeals for the Fifth District of Texas.
CHIEF JUSTICE HECHT delivered the opinion of the Court.
NATHAN L. HECHT, Chief Justice.
The principal issue here is whether a discretionary bonus paid to a spouse after divorce for work performed during marriage is community property. Consistent with
Cearley v. Cearley
,
[1]
we hold that it is. Because the court of appeals ruled otherwise,
[2]
we reverse that part of its judgment.
We agree with the court of appeals that because the refinancing deed on the marital home naming wife as a grantee gave rise to the gift presumption, which was not rebutted, the trial court should have awarded husband and wife each an undivided one-half interest in the home as tenants in common.
[3]
We affirm that part of the court of appeals' judgment.
Finally, we agree with the court of appeals that the trial court erred in its characterization and calculation of the 401(k) account.
[4]
We affirm that part of its judgment and remand to the trial court.
I
Hakan and Lauren Oksuzler married in 2010. After a bench trial, the trial court granted them a divorce on December 9, 2019. But litigation continued relating to the division of the marital estate.
Hakan worked for Bank of America during the marriage. His compensation included an annual bonus of cash and stock, paid around | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 1 | February 15 each year, contingent on his and the Bank's performance during the previous calendar year.
Shortly after the divorce, Lauren filed a motion to have Hakan's 2019 bonus tendered to the registry of the court. The trial court held a hearing on February 12, 2020, a few days before the bonus was expected to be paid. Lauren called the hearing's sole witness, Andrea Laporta, the compensation executive for the Bank's consumer and small business department. He confirmed that Hakan would receive a bonus of $140,000—split between cash and equity—on February 15. Laporta further testified that:
• the bonus was based on Hakan's performance in 2019;
• the bonus amount was recommended by Hakan's manager in November 2019 and approved by the board of directors in January 2020;
• the bonus is completely discretionary on the Bank's part—no employee is entitled to a bonus—as made "clear within all of the [Bank's performance] incentive [plan] documents"; and
• an employee is not entitled to receive a bonus if he is not employed by the Bank on the date of its distribution, regardless of whether the employee resigned or was fired.
In the decree, the trial court found that the bonus is Hakan's separate property.
The court of appeals agreed,
[5]
relying on our decision in
Loya v. Loya.
[6]
The "central issue" in
Loya
was whether the performance bonus husband received in 2011 was partitioned by the parties' mediated settlement agreement in 2010.
[7]
Like Hakan, the husband in | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 2 |
Loya
"was eligible for, but not entitled to, an annual discretionary bonus."
[8]
During the marriage, husband received a bonus each spring for work performed during the previous calendar year. After wife filed for divorce, the parties agreed to a division of some assets, but disputes remained. The trial court ordered mediation, which resulted in a June 2010 agreement. The MSA expressly partitioned certain enumerated assets and then stated that "[a]ll future income of a party and/or from any property herein awarded to a party is partitioned to the person to whom the property is awarded".
[9]
The trial court rendered judgment on the MSA in June 2010, the day after it was executed.
Later, the parties disputed whether the MSA partitioned a $4.5 million bonus that husband received in March 2011 for work performed in 2010. The trial court granted summary judgment for husband on wife's petition for a post-divorce division of the bonus, but the court of appeals reversed and remanded.
We reversed the court of appeals' judgment and rendered judgment for husband.
[10]
We began by noting wife's reliance on "well-settled law"—specifically, our decision in
Cearley v. Cearley
—for her "argu[ment] that the bonus was community property because it compensated [husband] in part for services performed during the marriage."
[11]
We then said that "[w]hether the portion of a purely discretionary bonus based on services performed during the marriage constitutes community property is | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 3 | an important issue" but one we did not need to reach.
[12]
That was because the parties' dispute turned entirely on the language of the MSA, which awarded all of husband's "future income" to him. And to clarify the scope of our analysis, we added that "[w]hether the bonus qualifies as community property [did] not affect" our decision that the MSA resolved the parties' dispute.
[13]
We then examined the meaning of "future income", which the MSA did not define. After surveying dictionary definitions, we concluded that "[t]he plain meaning of these terms clearly encompasses the 2011 bonus" because it was "an amount of money received by [husband] months into the future, after the divorce was final."
[14]
"[W]hether part of the bonus compensated for work done during marriage" was "irrelevant", we said, because we were interpreting the "broad" phrase specifically used in the MSA, "future income", rather than applying the default rules of community-property law.
[15]
Even though the bonus' purpose was "irrelevant", we commented that "[t]he known terms of [husband's] employment . . . len[t] further context to our interpretation of the MSA."
[16]
We pointed to the evidence that payment of a bonus was at the discretion of husband's employer; that the board of husband's company decided on the bonus at a March 2011 meeting; and that, "[q]uite simply, when the parties signed the MSA in June 2010, no 2011 bonus existed."
[17]
"As such," we reasoned, "the purely discretionary bo | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 4 | nus constitute[d] future income."
[18]
II
A
The court of appeals here acknowledged our statements in
Loya
that "whether the bonus qualified as community property did not affect [our] determination"; that our decision was "based on the MSA"; and that we were leaving open the question "whether the portion of a purely discretionary bonus based on services performed during the marriage constitute[s] community property".
[19]
Nonetheless, the court pointed to our commentary on the discretionary nature and post-MSA timing of the bonus and said that it found this "dicta instructive."
[20]
Because Hakan's bonuses are "completely discretionary", "typically paid in February", and "contingent on the [Bank] board's approval and [Hakan's] continued employment", the court concluded that Lauren is not entitled to any part of the 2019 bonus.
[21]
The court declined to apply our decision in
Cearley
—the case we identified in
Loya
as "well-settled law" bearing on the "important issue" we left open there.
[22]
In
Cearley,
the question was whether husband's military retirement benefits, which had not matured at the time of divorce, were part of the community estate.
[23]
The court of appeals here did "not find . . . [
Cearley
] to be of assistance to the facts of this case".
[24]
We disagree.
Cearley
is controlling.
In
Cearley,
husband served in the Air Force for nineteen years before divorce and all eighteen years of marriage. At the time of the June 1975 divorce, | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 5 | husband was on track to complete the twenty years' service necessary for receipt of retirement benefits in May 1976—about eleven months later. The trial court ruled that wife would receive half the retirement benefits attributable to eighteen years' service if and when husband retired. The court of civil appeals reversed. We reversed its judgment and reinstated the judgment of the trial court.
[25]
We started with the "firmly established" law
[26]
"that matured private retirement, annuity, and pension benefits earned by either spouse during the marital relationship are part of the community estate and thus subject to division upon dissolution."
[27]
We had extended this rule to military retirement benefits in
Busby v. Busby.
[28]
There, husband became eligible for retirement before the divorce and then retired shortly after the divorce. We "held that the retirement benefits . . . were community property at the time of the divorce" and should have been partitioned in the divorce decree.
[29]
In
Cearley,
we observed that "the decisions in [Texas] and other community property States have differed as to whether the pension payments must have vested or matured before they are subject to apportionment by a divorce court".
[30]
Husband argued—backed by the decision below—that the
Busby
rule should not be extended to retirement benefits that are not "acquired or vested during the marriage."
[31]
After assessing the caselaw from Texas and elsewhere, we rejected hus | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 6 | band's approach.
"[M]ost of the objections to the[] treatment [of unaccrued and unmatured retirement benefits earned wholly or partially during marriage] as a contingent property interest were anticipated and answered . . . in [
Busby
]", we explained.
[32]
"[T]he husband there argued that he never possessed a property right in his disability retirement benefits during the marriage"; that the benefits "were a mere expectancy[] because he had not retired prior to the divorce"; and that his right to the benefits was "subject to forfeiture by death or dishonorable discharge prior to his retirement."
[33]
We "overruled" those arguments and "held [instead] that the benefits were community property at the time of the divorce even though they had not matured and were not at that time subject to possession and enjoyment."
[34]
Further, "the fact that the benefits were subject to divestment under certain conditions did not reduce [them] to a mere expectancy."
[35]
Cearley
also pointed to our decision in
Herring v. Blakely,
[36]
where we "held that profit sharing and retirement plans may be classed as community property even though none of the funds [are] available or subject to possession at the time of the divorce."
[37]
The takeaway from these authorities, we established in
Cearley,
is that a serviceman's military pension is not "earned" on the date of its maturity.
[38]
"Rather it is a form of deferred compensation which is 37 earned during each month of his mi | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 7 | litary service", and the portion earned during marriage becomes "contingent earnings of the community which may or may not bloom into full maturity at some future date."
[39]
Accordingly, we held that a serviceman's pension "rights, prior to accrual and maturity, constitute a contingent interest in property and a community asset subject to consideration along with other property in the division of the [marital] estate".
[40]
B
Hakan contends that the
Loya
MSA divided the community estate as of the date of the agreement and so our classification of husband's bonus as future income equates to deeming it separate property. Hakan misreads
Loya.
The MSA did not purport to partition, as a broad category, everything that would be considered community property under Texas law. Rather, as our opinion recounts, "[t]he MSA explicitly partitioned numerous bank accounts, retirement plans, motor vehicles, furnishings, jewelry, antiques, household items, and liabilities" to one spouse or the other.
[41]
Indeed, as the parties stipulated, the last bonus husband received during the marriage was deposited into a bank account partitioned to wife.
[42]
Hakan further argues that
Cearley
and
Busby
do not apply because "retirement benefits are completely different than a discretionary bonus." To the contrary, we see no meaningful distinction in this context. Both are forms of compensation.
[43]
Cearley
teaches that the key question is when the compensation is earned, not when al | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 8 | l contingencies for payment have been met.
[44]
And the record establishes that the bonus Hakan received in February 2020 was compensation for his performance in 2019, when he was still married. At the hearing, Bank representative Laporta answered "yes" when asked whether the bonus is "based on work that [Hakan] performed during the 2019 fiscal year". Laporta also testified that the amount of the bonus "is essentially a decision made by Hakan's manager during the enterprise year-end compensation process." Hakan's continued employment on the date of payment was merely a contingency that had to be met before the payment was made.
In
Loya,
we did not make it a point to expressly reserve "an important issue"
[45]
and nonetheless go on to implicitly decide it.
Loya
is inconsequential to this case because it addressed a different question. Consistent with
Cearley
and
Busby,
we hold that the characterization of a bonus—like any compensation—depends on when it was earned and that a discretionary bonus paid after divorce for work performed during marriage is community property. The opposite rule would promote gamesmanship by a bonus-earning spouse who can orchestrate deferring the bonus' payment until after divorce. The trial court erred by characterizing the bonus paid in February 2020 as Hakan's separate property, and the court of appeals erred in its judgment that this was not an abuse of discretion.
[46]
III
Hakan challenges the court of appeals' decision reversing | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 9 | the trial court's award to Hakan of 100% of the marital residence as his separate property.
A
Five years before marrying Lauren, Hakan purchased the home the parties lived in throughout their marriage. Hakan refinanced the home during marriage in 2016. The general warranty deed lists both Hakan and Lauren as the grantors and the grantees:
Hakan Oksuzler, joined herein by his wife, Lauren M Oksuzler[,] hereinafter called `Grantor,' . . . for and in consideration of the sum of zero dollars ($0.00) cash, and other good and valuable consideration . . . paid to Grantor by Hakan A Oksuzler and Lauren M Oksuzler, Husband and Wife, hereinafter called Grantee, . . . does hereby grant, sell, and convey unto Grantee, the real property described as follows . . . .
The parties simultaneously executed a deed of trust that defined "borrower" as "Hakan Oksuzler and Lauren Oksuzler, Husband and Wife", and made them jointly obligated to pay the mortgage.
Lauren testified at trial that she and Hakan had conversations about ownership of the home. Lauren said that because Hakan owned the home prior to marriage, she "just never felt like it was [their] home and [she] expressed those concerns to Hakan." Lauren preferred that they buy another home together, but Hakan did not want to move. But, Lauren testified, Hakan "assured [her] that he was going to take care of it and make sure that [she] knew that it was [her] home." According to Lauren, Hakan "said he was going to gift [her] part of the | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 10 | house and put [her] name on the deed and just give [her] that security." Then, to make the house jointly owned, they "put the home under both of [their] names and refinanced." When asked whether she paid Hakan money "for the interest he gave [her] in the house", Lauren responded: "No. It was a gift."
Hakan testified that he noticed Lauren's name listed as both a grantor and a grantee on the deed but that she never owned the property. He said that the inclusion of her name was "strange" to him, and he answered "yes" when asked whether he was "concern[ed] that there may have been some confusion down at the title office". But Hakan never testified that he did not intend to gift Lauren an interest in the home.
The trial court characterized the home as Hakan's separate property. The court of appeals reversed and rendered judgment that Hakan and Lauren each own as separate property an undivided one-half interest in the home.
[47]
The court began with the principle recognized in Texas caselaw that when one spouse conveys real property to the other, there is a presumption that the conveyance is a gift to the grantee spouse.
[48]
The court then explained that Hakan simply "failed to present any evidence rebutting the presumption he gifted one half of the marital residence to [Lauren]."
[49]
Specifically, Hakan "never asserted his lack of intent to gift her the property, only that it was `strange' she was on the deed."
[50]
The court thus held that "the trial court had insuff | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 11 | icient evidence upon which to exercise its discretion", and "it erred in its application of that discretion."
[51]
B
Texas caselaw has recognized multiple fact patterns involving a real property deed that result in what courts have termed a "gift presumption".
[52]
The most basic scenario is when a married couple lives in a home purchased by one spouse before marriage, and the owner spouse executes a deed conveying an undivided one-half interest in the property to the other spouse.
[53]
A variation is when the couple refinances the marital home acquired by one spouse before marriage, and the new deed lists both spouses as grantees.
[54]
In each of these scenarios, a "presumption is raised that the [owner] spouse intended to give the other spouse an undivided one-half interest in the property as a gift."
[55]
The leading case from this Court is
Cockerham v. Cockerham.
[56]
There, before marriage, husband and his brother each owned an undivided one-half interest in a 320-acre tract of land on which they conducted farming operations.
[57]
After he married, husband wanted to buy out his brother but needed a loan. Husband and brother consulted a lawyer, who filed a partition suit on husband's behalf. The trial court appointed a receiver, who sold the tract to husband and his wife. The receiver's deed listed both husband and wife as grantees.
[58]
The deed also reflected a total consideration of $22,700, about half of which was said to have been paid by husband an | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 12 | d wife in cash, with the remainder paid in cash by a bank that received a vendor's lien.
[59]
"It was undisputed, however, that [husband and wife] actually made no cash payment at all" and that the amount they were said to have paid was the value of husband's undivided one-half interest in the property.
[60]
When the parties later sued each other for divorce, wife's bankruptcy trustee intervened, seeking to require the payment of debts from the community estate before its division.
[61]
The lower courts concluded that there was a tenancy in common between husband's one-half separate property interest that he owned before marriage and the remaining one-half interest purchased by the community.
[62]
We affirmed.
[63]
The trustee first argued that the entire 320-acre tract was community property.
[64]
We rejected that contention, reasoning that the facts surrounding the transaction were sufficient to justify the trial court's findings that husband "put up the interest he owned prior to marriage as partial consideration for the purchase" and that the "undivided one-half interest remained his separate property."
[65]
The trustee argued in the alternative that even if husband retained a separate property interest in the tract, the partition transaction resulted in a gift from husband to wife of an undivided one-half interest in his separate property—making the gifted interest eligible to pay wife's debts.
[66]
The trustee relied on the "well established" rule that " | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 13 | when a husband uses separate property consideration to pay for land acquired during the marriage and takes title to the land in the name of husband and wife, it is presumed he intended the interest placed in his wife to be a gift."
[67]
We acknowledged the presumption but said that it "can be rebutted by evidence clearly establishing there was no intention to make a gift."
[68]
And that is what happened in
Cockerham.
Wife testified that "she never paid any attention to the purchase of the 320 acres" and that "she never even saw the deed to the property until the preparation for . . . litigation."
[69]
There was evidence that wife's "attitude toward the 320-acre tract ha[d], until [then], been largely one of complete disinterest".
[70]
Furthermore, wife "offered no testimony in support of the presumption that her husband meant to make a gift to her of part of his interest in the 320-acre tract", and there was "nothing in her testimony which would indicate any understanding that a gift had been made to her."
[71]
Husband's testimony "also tend[ed] to negate any idea that he intended a gift [of his separate property] to his wife."
[72]
Husband testified that "[t]he structure of the transaction whereby he bought his brother's interest . . . was of no concern to him" and that "he left the transaction entirely to his lawyer."
[73]
Brother "corroborated the testimony that the purchase was structured as it was solely to enable the husband to buy the property."
[74]
| https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 14 | Based on this evidence and the findings issued by the trial court, we said the court had "impliedly found that the presumption the husband intended a gift to the wife was sufficiently rebutted and that, in fact, there was no such intention."
[75]
"Considering the record before us," we were "unable to say there [was] no evidence to uphold [this] implied finding".
[76]
We thus held that husband had "sufficiently rebutted the presumption which arises from the fact that title was taken in the name of himself and his wife".
[77]
C
Hakan argues that under
Cockerham,
the gift presumption can be rebutted by evidence that a gift was not intended. Hakan points to a court of appeals decision,
Raymond v. Raymond
,
which distinguished between a case like
Cockerham
—where one party uses separate property to purchase real estate during marriage, and both spouses' names appear as grantees on the deed from that sale—and a case where one party owned the property before marriage and then executes a deed during marriage conveying the property to the other spouse as the sole grantee.
[78]
The
Raymond
court observed that in the former case, the gift presumption can be rebutted by evidence that a gift was not intended,
[79]
but it held that in the latter case, parol evidence is not admissible unless the spouse challenging the deed "first tender[s] evidence of fraud, accident, or mistake" or the court finds "a latent or patent ambiguity."
[80]
Some courts have declined to follo | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 15 | w
Raymond.
[81]
The distinction drawn by the
Raymond
court is incorrect.
Raymond
relied in part on our opinion in
Henry S. Miller Co. v. Evans
.
[82]
At issue there was the characterization of property conveyed by a deed containing separate-property recitals. We stated our agreement with the court of civil appeals "that the extrinsic evidence offered to contradict the
express recitals
in the deed that the property was to be the separate property of [wife] was inadmissible."
[83]
We said that husband's creditor "was unable to introduce extrinsic evidence", such as evidence about the "subjective intention of the parties", to "contradict the
express recitals
in the deed . . . without first tendering competent evidence that there had been fraud, accident and mistake
in the insertion of the recitals in the deed.
"
[84]
And we held that based on the record, "[t]here was no fraud, accident or mistake
in the insertion of these recitals in the deed.
"
[85]
We went on to define fraud, accident, and mistake and to discuss what kind of evidence is necessary to meet those standards.
[86]
Cockerham
was decided five years after
Henry S. Miller. Cockerham
did not involve a separate-property recital but rather a deed naming both husband and wife as grantees.
[87]
In
Cockerham,
we did not cite
Henry S. Miller.
We cited many other authorities for the rule that when the gift presumption arises because "title to the land [is taken] in the name of husband and wi | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 16 | fe", the presumption can be rebutted by evidence that no gift was intended.
[88]
Taken together, these cases establish that the rule against parol evidence we applied in
Henry S. Miller
is limited to cases where there is an express separate-property recital in the deed.
D
We turn to the issue whether Hakan presented clear-and-convincing evidence to rebut the presumption that he intended to gift Lauren an undivided one-half interest in the marital home as her separate property. Consistent with
Cockerham,
the court of appeals considered all the evidence that Hakan presented and held that he had not presented "any evidence rebutting the presumption".
[89]
We agree that Hakan did not rebut the gift presumption and that, therefore, the trial court abused its discretion by awarding 100% of the marital residence to Hakan as his separate property.
Hakan argues that the following facts and evidence are sufficient to support the trial court's property characterization:
• his testimony that he thought it was "strange" that the deed names Lauren as a grantee;
• the deed's incorrectly naming Lauren as a grantor, when it is undisputed she had no interest to grant before the refinancing;
• the deed's arising from a refinancing; and
• "the fact that neither party was an attorney with knowledge of gift presumptions".
We disagree. To overcome the gift presumption, Hakan was required to put on evidence "
clearly establishing
there was no intention to make a gift."
[90]
Cocke | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 17 | rham
shows what kind of evidence can meet this standard.
[91]
Hakan's evidence falls far short.
[92]
Consistent with the presumption, Lauren testified that Hakan "said he was going to gift [her] part of the house and put [her] name on the deed" to give her financial and emotional security and that the purpose of the refinance transaction was to accomplish that gift. Hakan did not address, much less dispute, Lauren's testimony in any way—even during the colloquy in which he described the deed as "strange". In fact, Hakan did not testify about his intentions for refinancing at all. Further, we agree with Lauren that the deed's error naming her as a grantor is not evidence rebutting Hakan's subjective intent to gift her half the home as a
grantee.
We thus affirm the part of the court of appeals' judgment that awards Hakan and Lauren each as tenants in common an undivided one-half interest in the home.
IV
Hakan also challenges the court of appeals' judgment reversing the trial court's characterization of the majority of funds in a 401(k) account as Hakan's separate property.
A
Hakan began working at the Bank in 2002. As part of his compensation, Hakan participated in a defined-contribution retirement plan. Both Hakan and the Bank made contributions to a 401(k) account beginning before Hakan's 2010 marriage to Lauren. At trial, Lauren introduced evidence that Hakan contributed $20,648.23 between 2005 and 2010 to an account held by Fidelity, but there is no evidence what | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 18 | the balance of this account was at the time of marriage or what contributions were made between 2002 and 2005.
In 2015, during marriage, and while still employed by the Bank, Hakan opened a new 401(k) account with Merrill Lynch with an initial deposit of $124,323.36. This is the account at issue here. Hakan introduced pay stubs from 2012 to 2018 reflecting that he had made contributions totaling $62,042.77 to the two consecutive 401(k) accounts during marriage.
[93]
At the time of divorce, the balance of Hakan's Merrill Lynch 401(k), including employer contributions and investment returns, had increased to $353,091.43.
The trial court found that "[p]rior to the marriage, total contributions made by [Hakan] to his Bank of America 401(k), plus any gains and losses on those contributions, totaled approximately $311,778.24 as of December 9, 2019." The court did not explain the calculation used to arrive at that number.
The court of appeals rejected the trial court's math and methodology. The court explained that Hakan did not meet his burden to "trac[e] the character of the funds deposited in 2015."
[94]
"It was not enough to show that the $124,323.36 deposit could have been separate funds and could have included the $20,648.23 from the retirement account [Hakan] had prior to marriage", the court explained.
[95]
The court 94 thus held that Hakan "failed to overcome the community property presumption with legally sufficient evidence" and that "[t]o the extent that the tr | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 19 | ial court simply took the value of the account on the date of divorce, subtracted [Hakan's] contributions during marriage and then awarded the remaining $311,778.24 as his separate property, the trial court abused its discretion in its characterization and division of the property."
[96]
The court further concluded that this "abuse of discretion affected the just and right division of the community estate".
[97]
The court reversed and remanded "for the trial court to reconsider division of the community estate."
[98]
B
A 401(k),
[99]
a type of defined-contribution plan, allows an employee to elect to defer a portion of earned wages by placing them into a retirement account, which in turn can hold investments of those earnings.
[100]
The account is held by the employee.
[101]
With a traditional account, as here, the deferral and any gains on investment are not subject to federal income tax until they are distributed and 100% vested.
[102]
Employers may also contribute to these accounts on behalf of their employees or match employees' elective deferrals.
[103]
The IRS limits the amount of compensation that may be deferred each year.
[104]
A 401(k) account possessed during marriage is presumed community property incident to employment during marriage.
[105]
However, the Family Code provides that "[t]he separate property interest of a spouse in a defined contribution retirement plan may be traced using the tracing and characterization principles that apply to | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 20 | a nonretirement asset."
[106]
Any contributions made to the 401(k) before marriage, along with any investment return attributable to the separate contribution, is separate property if proved by clear-and-convincing evidence.
[107]
Litigants may trace separate property through documentary evidence, including bank or business records
[108]
or, as here, may prove contribution amounts with pay stubs. Expert testimony, including summaries or models, may establish account balances and allocate gains on invested contributions made before and during marriage.
[109]
The employee spouse is competent to testify regarding the details of his employment and any history of contributions.
[110]
C
Hakan's 401(k) includes contributions from his wages earned during marriage and, thus, the account is presumptively community property. Any separate property within the account must be traced to contributions made before marriage. A transfer of $124,323.36 from the existing Fidelity 401(k) to open the Merrill Lynch 401(k) in 2015 is insufficient to establish that the entire amount was his separate property. To the extent that the trial court deemed the $62,042.77 contributed during marriage community property and awarded the remaining $311,778.24 to Hakan as separate property, it lacked legally sufficient evidence to do so. The only separate property Hakan can trace is $20,648.23 contributed to the Fidelity 401(k) before marriage. Hakan did not prove that $311,778.24 came from contributi | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 21 | ons before marriage; nor did he separate the earnings on his premarriage contributions from investment gains on contributions made during marriage.
The trial court's calculation is infirm for two reasons. First, account funds not traced to either separate or community contributions are presumed to be community property. Hakan did not account for the funds contributed before marriage in accounts that held both separate and community contributions. Second, the trial court did not account for earnings on these contributions. Had Hakan proved contributions made during marriage and the earnings attributable to those contributions, the remainder of the 401(k) could be reasonably traced to Hakan's separate contributions as funds originating from employment before marriage. Hakan did not, however, provide a basis to divide 401(k) contributions made before and during marriage in 401(k) accounts that held both.
Accordingly, we affirm the part of the court of appeals' judgment remanding this issue to the trial court.
* * * * *
We reverse the court of appeals' judgment with respect to the bonus, affirm its judgment with respect to the marital home and Hakan's 401(k), and remand the case to the trial court for further proceedings consistent with this opinion.
[1]
544 S.W.2d 661 (Tex. 1976).
[2]
684 S.W.3d 796, 806 (Tex. App.-Dallas 2022).
[3]
See id.
at 803, 810.
[4]
See id.
at 807.
[5]
Id.
at 805-806.
[6]
526 S.W.3d 448 (Tex. 2017).
[7]
Id.
at 449-450.
[8]
Id.
at | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 22 | 449.
[9]
Id.
[10]
Id.
at 453.
[11]
Id.
at 451.
[12]
Id.
[13]
Id.
[14]
Id.
at 452.
[15]
Id.
[16]
Id.
[17]
Id.
at 452-453.
[18]
Id.
at 453.
[19]
684 S.W.3d at 805.
[20]
Id.
[21]
Id.
[22]
Loya,
526 S.W.3d at 451
.
[23]
See
544 S.W.2d at 661-662
.
[24]
684 S.W.3d at 806.
[25]
Cearley,
544 S.W.2d at 666
.
[26]
Id.
at 663.
[27]
Id.
at 662 (collecting cases). In
Lee v. Lee,
247 S.W. 828 (Tex. [Comm'n Op.] 1923),
we jettisoned the "earlier view that retirement and pension plans [are] gifts bestowed by benevolent employers on retiring employees" and adopted the modern view "regard[ing] [these benefits] as a mode of employee compensation earned during a given period of employment."
Cearley,
544 S.W.2d at 662
(discussing
Lee,
247 S.W. at 833
).
[28]
457 S.W.2d 551 (Tex. 1970).
[29]
Id.
at 554.
[30]
544 S.W.2d at 663
.
[31]
Id.
(quotation marks omitted).
[32]
Id.
at 665.
[33]
Id.
(quotation marks omitted).
[34]
Id.
[35]
Id.
(quotation marks omitted).
[36]
385 S.W.2d 843 (Tex. 1965).
[37]
Cearley,
544 S.W.2d at 665
.
[38]
Id.
[39]
Id.
at 665-666.
[40]
Id.
at 666.
[41]
Loya,
526 S.W.3d at 449
.
[42]
Id.
[43]
See
TEX. FAM. CODE § 7.003 ("In a decree of divorce or annulment, the court shall determine the rights of both spouses in a pension, retirement plan, annuity, individual retirement account, employee stock option plan, stock option, or . . . bonus . . . .").
[44]
See
544 S.W.2d a | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 23 | t 665-666
.
[45]
526 S.W.3d at 451
.
[46]
Hakan relies on
Cunningham v. Cunningham,
183 S.W.2d 985 (Tex. Civ. App.-Dallas 1944, no writ),
and
Loaiza v. Loaiza,
130 S.W.3d 894 (Tex. App.-Fort Worth 2004, no pet.)
. The latter was cited by the court of appeals below. 684 S.W.3d at 805. In
Cunningham,
wife argued that husband's expected commissions for insurance policies sold by husband during the marriage should be characterized as community property. The court of civil appeals disagreed, reasoning that because the commissions were contingent on future events, including husband's "remain[ing] in the active service of the company", "the right of the community estate . . . to these renewal commissions is not a vested right, but a mere expectancy."
Cunningham,
183 S.W.2d at 986
. In
Loaiza,
the court relied on
Cunningham
to hold that husband's post-divorce payments under a "guaranteed" Major League Baseball contract signed during marriage "constitute[d] future earnings" and thus were husband's separate property.
Loaiza,
130 S.W.3d at 906, 909
.
Cunningham
was decided three decades before
Busby
and
Cearley
and appears to be inconsistent with those cases and with our holding here.
Loaiza
may also be distinguishable because husband's "guaranteed" contract provided that the club was not obligated to continue payments if husband refused to render services,
id.
at 906, and the court of appeals held that he "was required to perform his services as a skil | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 24 | led baseball player before he was entitled to payment under the contract",
id.
at 908-909. In that way, specifically, the contract payments may have been functionally similar to the paycheck received by any ordinary employee.
[47]
684 S.W.3d at 800, 803.
[48]
See id.
at 802 ("[R]eal property gifted by one spouse to another during marriage is the recipient spouse's separate property." (citing TEX. CONST. art. XVI, § 15)).
[49]
Id.
at 803.
[50]
Id.
[51]
Id.
[52]
Some caselaw also discusses a "separate property presumption" that "arises when the conveying instrument contains a separate property recital."
In re Marriage of Crist,
661 S.W.3d 623, 627 (Tex. App.-El Paso 2023, no pet.)
;
see also
Roberts v. Roberts,
999 S.W.2d 424, 432 (Tex. App.-El Paso 1999, no pet.)
("Presumptions of separate property also arise where . . . the instrument of conveyance contains a `separate property recital.'").
The leading case is our decision in
Henry S. Miller Co. v. Evans,
452 S.W.2d 426 (Tex. 1970)
. During marriage, wife purchased property on Amanda Street with a mortgage. The deed recited that the consideration was "paid out of [wife's] `sole and separate estate[]' and that [the] property was conveyed to her as her `sole and separate estate.'"
Id.
at 429. Later, husband defaulted on a note to Henry S. Miller Co., which eventually sued the sheriff for failing to levy execution on the Amanda Street property. The question before us was whether that property was wif | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 25 | e's separate property or, because it was purchased during marriage, part of the community estate and therefore subject to community debts.
See id.
at 430. We explained that "[a]s a result of the recitals in the deed, no presumption of community property existed."
Id.
Rather, the recitals were prima facie evidence that the Amanda Street property became wife's separate property, even against creditors of husband or the community.
See id.
at 431 (discussing
Kahn v. Kahn,
58 S.W. 825, 826 (Tex. 1900)
). We went on to examine when parol evidence is admissible to contradict an express separate property recital in a deed.
See id.
at 431-433.
Hakan argues that the 2016 refinance deed does not create any presumption of a separate-property gift to Lauren because it fails to contain a separate-property recital. But
Henry S. Miller
does not apply here. The rule established there is that a separate-property recital can overcome the community-property presumption that would otherwise apply when one spouse purchases property during marriage. The absence of a separate-property recital does not affect the presumption that property conveyed from one spouse to another during marriage is a gift that becomes the recipient's separate property.
[53]
See
Raymond v. Raymond,
190 S.W.3d 77, 79 (Tex. App.-Houston [1st Dist.] 2005, no pet.)
;
see also
Roberts,
999 S.W.2d at 431
.
[54]
See
Marriage of Crist,
661 S.W.3d at 625-626
.
[55]
Raymond,
190 S.W.3d at 81
.
[56]
5 | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 26 | 27 S.W.2d 162 (Tex. 1975).
[57]
Id.
at 166-167.
[58]
Id.
at 167.
[59]
Id.
[60]
Id.
[61]
Id.
at 164.
[62]
Id.
at 167.
[63]
See id.
at 168. The
Cockerham
transaction differs from the conveyance and refinance scenarios described above because its net effect was that the Cockerhams purchased a new property interest (brother's one-half interest) during marriage. Thus, brother's one-half interest became part of the Cockerhams' community estate.
[64]
Id.
at 166.
[65]
Id.
at 167.
[66]
Id.
at 167-168.
[67]
Id.
at 168 (collecting cases).
[68]
Id.
(collecting cases).
[69]
Id.
[70]
Id.
[71]
Id.
[72]
Id.
[73]
Id.
[74]
Id.
[75]
Id.
[76]
Id.
[77]
Id.
[78]
See
Raymond,
190 S.W.3d at 81
.
[79]
See id.
[80]
Id.
[81]
See
Stearns v. Martens,
476 S.W.3d 541, 548 (Tex. App.-Houston [14th Dist.] 2015, no pet.)
("[W]e agree with the body of cases in which courts of appeals hold that, if the instrument contains no separate-property recitals, then parol evidence is admissible regarding the marital-property issue." (citing
Raymond
as going the other way)).
But see
Magness v. Magness,
241 S.W.3d 910, 912-913 (Tex. App.-Dallas 2007, pet. denied)
(citing
Raymond
for the rule that the gift "presumption may be rebutted by proof the deed was procured by fraud, accident, or mistake" and affirming the trial court's conclusion that wife "did not establish fraud, accident, or mistake in the execution of the [refinancing] deed").
[82]
R | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 27 | aymond,
190 S.W.3d at 81
(citing, among other authorities,
Henry S. Miller,
452 S.W.2d at 431-432
).
[83]
Henry S. Miller,
452 S.W.2d at 431
(emphasis added).
[84]
Id.
(emphases added).
[85]
Id.
(emphasis added).
[86]
See id.
at 431-432.
[87]
See
527 S.W.2d at 167
.
[88]
Id.
at 168.
[89]
684 S.W.3d at 803.
[90]
Cockerham,
527 S.W.2d at 168
(emphasis added).
[91]
See id.
;
see also
Marriage of Crist,
661 S.W.3d at 629
(affirming the trial court's finding that wife overcame the gift presumption by testifying that she never intended to gift an interest in her home to husband and that she only intended to refinance the home to pay off debts, despite husband's conflicting testimony).
[92]
Hakan argues that the abuse-of-discretion standard mirrors the legal-sufficiency standard and that, therefore, a trial court's property characterization can be reversed on appeal only if there is legally insufficient evidence to support it. Hakan cites
Bradshaw v. Bradshaw,
which is inapposite.
See
555 S.W.3d 539, 543 (Tex. 2018) (stating merely that whether the trial court abused its discretion in dividing the community estate is a "legal question" for the appellate court). As the court of appeals recognized: "In family law cases, the traditional sufficiency standard of review overlaps with the abuse of discretion standard of review; therefore, legal and factual insufficiency are not independent grounds of error but are relevant factors in [an appellat | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 28 | e court's] assessment of whether the trial court abused its discretion." 684 S.W.3d at 802 (citing
Sink v. Sink,
364 S.W.3d 340, 343 (Tex. App.-Dallas 2012, no pet.)
). Furthermore, the standard Hakan proposes would make no difference in this case because the court of appeals found Hakan's evidence to be legally insufficient, not factually insufficient.
See id.
at 803.
[93]
Pay stubs for the first two years of marriage, 2010 to 2012, were not offered into evidence.
[94]
684 S.W.3d at 807.
[95]
Id.
[96]
Id.
[97]
Id.
[98]
Id.
[99]
See
26 U.S.C. § 401(k).
[100]
See
Shanks v. Treadway,
110 S.W.3d 444, 445 n.1 (Tex. 2003)
("A defined contribution plan . . . is funded by contributions of a specified amount that are invested or placed in a trust fund, and the employee is entitled upon retirement to those contributions plus the earnings thereon.").
[101]
26 U.S.C. § 401(k)(2).
[102]
401(k) Plan Overview,
IRS (Aug. 2, 2024), https://www.irs.gov/retirement-plans/plan-participant-employee/401k-resource-guide-plan-participants-401k-plan-overview. There are also Roth 401(k) plans, which do not defer taxes on the amount contributed, but under current law, gains on those amounts are not subject to taxation upon withdrawal.
Id.
More than one third of working-age Americans had retirement savings in a 401(k), 403(b), or 503(b) account in 2020. Maria G. Hoffman, et al.,
Who Has Retirement Accounts?,
U.S. CENSUS BUREAU (Aug. 31, 2022), https://www.census.gov/lib | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 29 | rary/stories/2022/08/who-has-retirement-accounts.html.
[103]
401(k) Plan Overview, supra,
note 102.
[104]
26 U.S.C. § 402(g).
[105]
See
TEX. FAM. CODE § 3.003(a);
see also
Cearley,
544 S.W.2d at 662
.
[106]
TEX. FAM. CODE § 3.007(c). This treatment is in keeping with the distribution of defined-contribution plans in other community-property states. In Louisiana, defined-contribution plans are distributed during divorce in proportion to the contributions made during the marriage.
Sims v. Sims,
358 So. 2d 919, 923 n.5 (La. 1978)
. In Idaho, a defined-contribution plan is similarly distributed in accordance with evidence showing contributions and accrual during the marriage.
Maslen v. Maslen,
822 P.2d 982, 986-988 (Idaho 1991)
.
[107]
See
TEX. FAM. CODE § 3.003(b);
see also
BRETT R. TURNER, Equitable Distribution of Property § 6:24 (4th ed. 2024) ("The marital interest includes contributions from marital funds and contributions made by the employer as compensation for marital efforts, plus passive investment return. The separate interest includes contributions from separate funds, as well as contribution made by the employer as consideration for premarital or postdivorce efforts, plus passive investment return.").
[108]
See
McKinley v. McKinley,
496 S.W.2d 540, 543 (Tex. 1973)
(referring to bank records to determine the character of particular assets including savings certificates);
see also
Vallone v. Vallone,
644 S.W.2d 455, 464 & n.8 (Tex. 198 | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | IN RE J.Y.O. (Opinion) | 2024 | 30 | 2) (Sondock, J., dissenting)
(citing cases in which accurate bookkeeping or detailed business records facilitated tracing of separate property).
[109]
See
Kelly v. Kelly,
634 S.W.3d 335, 351-352 (Tex. App.-Houston [1st Dist.] 2021, no pet.)
(holding that a spouse could trace separate property in a 401(k) with expert witness testimony demonstrating the balance of the account at marriage, even though original account statements were no longer available).
[110]
See id.
at 351.
Save trees - read court opinions online on Google Scholar. | https://law.justia.com/cases/texas/supreme-court/2024/22-0787.html | null |
supreme | TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER-EL PASO v. LORETTA K. FLORES; from El Paso County; 8th Court of Appeals District (08-20-00202-CV, 657 SW3d 502, 08-30-22) (Concurring) | 2024 | 0 | Texas Tech University Health Sciences Center-El Paso, Petitioner,
v.
Loretta K. Flores, Respondent.
No. 22-0940.
Supreme Court of Texas.
Argued September 11, 2024.
Opinion delivered: December 31, 2024.
On Petition for Review from the Court of Appeals for the Eighth District of Texas.
JUSTICE LEHRMANN delivered the opinion of the Court.
JUSTICE BLACKLOCK filed a concurring opinion, in which Justice Young joined.
JUSTICE YOUNG filed a concurring opinion.
DEBRA H. LEHRMANN, Justice.
In this case, we consider whether a state university's immunity from suit has been waived with respect to an employee's age-discrimination claim. The employee applied to be the university president's chief of staff, and a significantly younger candidate was chosen for the position. The employee alleges she was not selected because of her age, in violation of Chapter 21 of the Texas Labor Code, while the university maintains the president simply hired the more qualified candidate. The question presented is whether a genuine issue of material fact exists as to whether the university's stated reasons for not giving the employee the chief-of-staff position were a mere pretext for discrimination. The university contends that the employee adduced no evidence of pretext and that Chapter 21 therefore does not waive the university's immunity from suit. We agree and hold that the court of appeals erred in affirming the trial court's denial of the university's plea to the jurisdiction with respect t | https://law.justia.com/cases/texas/supreme-court/2024/22-0940-0.html | null |
supreme | TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER-EL PASO v. LORETTA K. FLORES; from El Paso County; 8th Court of Appeals District (08-20-00202-CV, 657 SW3d 502, 08-30-22) (Concurring) | 2024 | 1 | o the employee's age-discrimination claim. Accordingly, we reverse the court of appeals' judgment as to that claim and render judgment dismissing the case.
I. Background
This is Loretta Flores's second age-discrimination suit against her employer, Texas Tech University Health Sciences Center-El Paso. We begin with an abbreviated account of the facts underlying the first suit, which provide important context and are described in more detail in our opinion in
Texas Tech University Health Sciences Center-El Paso v. Flores,
612 S.W.3d 299 (Tex. 2020) (
Flores I
)
.
A.
Flores I
Flores has worked for the University since 1993. Until 2013, the University operated as a regional campus of the Texas Tech University School of Medicine. At that time, Flores served as director in charge of operations in the office of the regional dean, Dr. Jose Manuel de la Rosa. The school transitioned to a separate university within the Texas Tech University System, to be led by a president rather than a regional dean. Initially, Flores continued in her director position and supported both the interim president and Dr. de la Rosa.
The University hired Dr. Richard Lange as its first president in July 2014 and subsequently appointed Dr. de la Rosa as the University's provost and vice president of academic affairs. President Lange restructured the president's office to eliminate the director position and create an "assistant to the president" position that would involve more clerical, administra | https://law.justia.com/cases/texas/supreme-court/2024/22-0940-0.html | null |
supreme | TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER-EL PASO v. LORETTA K. FLORES; from El Paso County; 8th Court of Appeals District (08-20-00202-CV, 657 SW3d 502, 08-30-22) (Concurring) | 2024 | 2 | tive duties. In March 2015, President Lange appointed Vanessa Solis, who had worked in the dean's office since 2010, to the assistant position. He informed Flores that she would be reassigned to the provost's office to continue working with Dr. de la Rosa. Based on her job duties after the transition, in August 2015 Flores was reclassified as an "executive associate," a position that commanded a lower salary than she had been receiving as director.
[1]
She was fifty-nine years old.
Flores filed a charge of discrimination with the Equal Employment Opportunity Commission. In August 2016, she sued the University for age discrimination under Chapter 21 of the Labor Code,
[2]
alleging that she was "replaced" as director by the younger Solis, who was in her mid-thirties.
Id.
at 303-04. The trial court denied the University's plea to the jurisdiction, and the court of appeals affirmed.
Id.
at 304. We reversed and dismissed the case, holding that "a reasonable juror could not conclude that Solis took or was placed in Flores's former position as director in the president's office."
Id.
at 308. Rather, "the evidence establishe[d] only that President Lange restructured and reorganized the president's office, resulting in the elimination of Flores's director position and the creation of a new and different assistant-to-the-president position."
Id.
at 310. Further, Flores presented no evidence that she was treated less favorably than younger, similarly situated employees.
Id | https://law.justia.com/cases/texas/supreme-court/2024/22-0940-0.html | null |
supreme | TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER-EL PASO v. LORETTA K. FLORES; from El Paso County; 8th Court of Appeals District (08-20-00202-CV, 657 SW3d 502, 08-30-22) (Concurring) | 2024 | 3 | .
at 312.
B.
Flores II
Meanwhile, in July 2016—almost a year after Flores submitted her EEOC complaint and shortly before she filed suit in
Flores I
— President Lange created a new "chief of staff" position in the president's office. The "essential functions" of the new position included:
• oversee presidential initiatives and special projects as directed by the president;
• serve as a liaison for the president to a variety of internal and external constituencies;
• gather, investigate, research, analyze, and study information affecting University-wide, intradepartmental, or interdepartmental operations;
• advise the president on issues related to University policy, process, and practice;
• handle questions, concerns, and requests on behalf of the president to solve problems and mediate disputes;
• oversee the president's office scholarships and administer their budgets;
• develop sustainability plans for scholarship funds;
• administer budget for special projects and onetime financial commitments of the president's funds;
• report on financial viability of commitments; and
• mentor the administrative staff in the president's office.
The position's "required qualifications" included a graduate degree and ten years of experience "in positions of increasing management responsibility in complex organizations."
Before the position was officially posted, President Lange learned that Amy Sanchez, the director of the University's office of auditing services, was co | https://law.justia.com/cases/texas/supreme-court/2024/22-0940-0.html | null |
supreme | TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER-EL PASO v. LORETTA K. FLORES; from El Paso County; 8th Court of Appeals District (08-20-00202-CV, 657 SW3d 502, 08-30-22) (Concurring) | 2024 | 4 | nsidering leaving the University to pursue other opportunities. President Lange informed Sanchez about the upcoming position and encouraged her to apply.
Flores, Sanchez, and five external candidates applied for the chief-of-staff position.
[3]
President Lange interviewed only Flores and Sanchez. At the time, he was aware of Flores's EEOC complaint regarding her reassignment and knew her age. Nevertheless, during Flores's interview, he asked her how old she was. According to President Lange, the question was a rhetorical one intended to address the "elephant in the room"—Flores's EEOC complaint. Flores did not answer the question.
After interviewing Flores and Sanchez, President Lange hired Sanchez for the position. At the time, Flores was sixty years old, and Sanchez was thirty-seven. Flores submitted a second charge of discrimination to the EEOC and, after being issued a right-to-sue letter, filed her second lawsuit against the University under Chapter 21. Flores alleges that the failure to select her for the chief-of-staff position constitutes both age discrimination and retaliation for her earlier complaints about her reassignment.
As in
Flores I,
the University filed a plea to the jurisdiction, which the trial court denied. The court of appeals reversed in part and dismissed the retaliation claim,
657 S.W.3d 502, 517-18 (Tex. App.-El Paso 2022),
and Flores does not challenge that portion of the court of appeals' judgment here. The court of appeals affirmed as to | https://law.justia.com/cases/texas/supreme-court/2024/22-0940-0.html | null |
supreme | TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER-EL PASO v. LORETTA K. FLORES; from El Paso County; 8th Court of Appeals District (08-20-00202-CV, 657 SW3d 502, 08-30-22) (Concurring) | 2024 | 5 | the discrimination claim, holding that Flores raised a genuine issue of material fact as to whether age was a motivating factor in the University's decision not to select her for the chief-of-staff position.
Id.
at 512-15. We granted the University's petition for review.
II. Discussion
As a state university, the University is immune from suit absent an express legislative waiver.
Flores I,
612 S.W.3d at 305
. Chapter 21 waives that immunity, "but only if the plaintiff alleges facts that would establish that the state agency violated the Act and, when challenged with contrary evidence, provides evidence that is at least sufficient to create a genuine fact issue material to that allegation."
Id.
(citing
Alamo Heights Indep. Sch. Dist. v. Clark,
544 S.W.3d 755, 770-71 (Tex. 2018)
). In evaluating the University's jurisdictional plea, we assume the evidence supporting the plaintiff's allegations is true, resolving all doubts and indulging reasonable inferences in the plaintiff's favor.
Id.
However, "we cannot disregard evidence necessary to show context, and we cannot disregard evidence and inferences unfavorable to the plaintiff if reasonable jurors could not."
Alamo Heights,
544 S.W.3d at 771
.
A. Legal Framework
Under Chapter 21 of the Labor Code, an employer may not discriminate against an individual "because of" certain characteristics, including age. TEX. LAB. CODE § 21.051(1). An employment practice is unlawful "if discrimination `was a motivating facto | https://law.justia.com/cases/texas/supreme-court/2024/22-0940-0.html | null |
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