Court Holds That There Was Insufficient Evidence To Establish That Account Beneficiary Designations Were Executed As A Result Of Undue Influence

In Fielding v. Tullos, an administrator of a decedent’s estate brought claims against the decedent’s housekeeper for undue influence and other related claims arising from the execution of new account beneficiary designations for certain accounts holding around $1.7 million dollars. No. 09-17-00203-CV, 2018 Tex. App. LEXIS 7136 (Tex. App.—Beaumont August 30, 2018). The defendant filed a motion for summary judgment, which the trial court granted. The plaintiff appealed. The court of appeals first discussed the general concept of undue influence:

The party contesting a will or payable-on-death provision or beneficiary designation based on a claim of undue influence bears the burden of proving undue influence. Undue influence is a form of fraud, and the term describes the wrongful use of influence, such as through force, intimidation, duress, or deception, to cause the execution of a will that is contrary to the testator’s desire for the distribution of his or her property after death. In an undue influence claim, the evidence must show not only the presence of the opportunity to influence, but also that improper influence was exerted on the decedent at the time the beneficiary designation or will was made. Simply because the beneficiary had a close relationship with the decedent or otherwise was present for the execution of an instrument, it does not establish proof of undue influence. A person may request or entreat another person to create a favorable dispositive instrument, but unless the entreaties are shown to be so excessive as to subvert the maker’s will, they do not constitute undue influence that invalidates the will. The contestant must prove the existence and exertion of an influence that subverted or overpowered the testator’s mind when the testator executed the document so that the testator executed the document in a manner that he otherwise would not have executed but for such influence.

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In Texas, the rules guiding a determination of the existence of undue influence apply substantially alike to wills, deeds, and other instruments. To set aside an instrument based on undue influence, the party claiming undue influence must prove (1) the existence and exertion of an influence; (2) the effective operation of such influence so as to subvert or overpower the mind of the property owner at the time the instrument was executed; and (3) the execution of an instrument that the property owner would not have executed but for such influence.

To satisfy the first element, the party contesting an instrument must show that an undue influence existed and was exerted. The contesting party focuses on facts showing the opportunities for the exertion of the alleged influence, the circumstances of the drafting and execution of the instrument, the existence of a fraudulent motive, and whether the person executing the instrument was habitually under the control of another. The exertion of influence, however, cannot be inferred from opportunity alone, such as might result from taking care of the property owner or seeing to his needs. There must be proof showing both that the influence existed and that it was exerted.

To satisfy the second element, the contesting party must show that the exertion of the influence subverted or overpowered the mind of the property owner at the time he signed the instrument. The focus of this element is on the property owner’s state of mind and evidence relating to his ability to resist or susceptibility to the influence of another, such as mental or physical infirmity. But evidence that a property owner was susceptible to influence or incapable of resisting it does not prove that his free will was in fact overcome when the instrument or act of the owner was made. Likewise, a close relationship or the fact the other party was a caretaker would not be sufficient to show undue influence. Influence is “undue” when the property owner’s volition is destroyed and the resulting instrument expresses the wishes of the one exerting the influence. Undue influence may include force, intimidation, duress, persistent requests or demands, or deceit.

To meet the third element, the contesting party must show that the property owner would not have executed the challenged instrument but for the undue influence. In general, this element focuses on whether the instrument makes an unnatural disposition of property. A disposition may be unnatural, for example, if it excludes a property owner’s natural heirs or favors one heir at the expense of others who ordinarily would receive equal treatment. Even so, the disinheritance of close relatives or loved ones is not necessarily unnatural. A property owner’s preference for one beneficiary over others may be unnatural if the record does not disclose a reasonable basis for the preference or contains proof that calls the preference into question or discredits it.

Id. The plaintiff contended that there was either a formal or informal fiduciary relationship between the decedent and the defendant such that there was a presumption of undue influence that shifted the burden of proof onto the defendant to prove she did not engage in undue influence. The court of appeals discussed the shifting burdens associated with this presumption:

Fielding had the burden of establishing that a fiduciary relationship existed between Tullos and Charles. Once a contestant presents evidence of a fiduciary relationship, a presumption of undue influence may arise and the other party then bears the burden to come forward with evidence to rebut the presumption. Such a rebuttable presumption shifts the burden of producing evidence to the party against which it operates. Once evidence contradicting the presumption has been offered, the presumption is extinguished. The case then proceeds as if no presumption ever existed…. Assuming without deciding that Tullos owed Charles a fiduciary duty, it would not shift the ultimate burden of proof in the case to Tullos, but it would invoke the application of a rebuttable presumption. Tullos could rebut the presumption by coming forward with evidence showing the fairness of the transaction. If Tullos’s summary judgment evidence contradicted the presumption, the presumption was extinguished. Plaintiff retained the ultimate burden of proof on her claims.

Id.

The court of appeals held that the evidence supported the trial court’s granting of summary judgment for the defendant:

Both Hargroder and Ridley testified that they observed Charles to be in control of his finances and accounts. By contrast, the heirs could not provide any personal knowledge of Tullos’s alleged undue influence over Charles. Although an opportunity for influence may have existed because of the close relationship between Tullos and Charles and because of the degree of care provided by Tullos, opportunity alone is not sufficient to prove undue influence without evidence of exertion of influence. The record gives no indication of force, intimidation, duress, persistent requests or demands, or deceit by Tullos. Consequently, the trial court would not have erred in concluding that summary judgment evidence offered by Tullos rebutted any presumption of undue influence.

There also was no evidence that Charles would not have designated Tullos as his beneficiary but for the alleged undue influence. Hargroder testified that Charles wished to designate Tullos as his beneficiary in recognition of the care she had provided, and Ridley testified that Charles assured him that he wished to designate Tullos as the beneficiary. The heirs testified that they had little contact with Charles and provided little care for him, including a lack of involvement with Charles during Hurricanes Rita and Ike. As a result, we cannot say that material issues of fact exist on Plaintiff’s claims for undue influence. Even assuming without deciding that a fiduciary relationship existed between Charles and Tullos, and after considering the evidence in the light most favorable to the nonmovant, we conclude that Tullos was entitled to a summary judgment on the undue influence claim. Tullos established the fairness of the designations and rebutted any presumption of undue influence.

Id. The court of appeals affirmed the trial court’s judgment for the defendant.