Brown v. Arenson, 571 S.W.3d 324 (Tex. App.—Houston [1st Dist.] 2018, no pet. h.).

Estate Administration

Breach of Fiduciary Duty

 

The decedent died in 1982. In 2014, the decedent’s children sued the independent executor for breach of fiduciary duty. The trial court granted summary judgment in favor of the executor on the ground that the statute of limitations had run because the children were on inquiry notice of the alleged breaches in the early 1990s. The children appealed.

The appellate court affirmed. The children claimed that the statute of limitations period should be tolled because of the executor’s alleged fraud and the application of the discovery rule. The court explained that there are “two distinct doctrines that may delay accrual of a claim or toll limitations: the discovery rule and fraudulent concealment.” Brown at 332-33. The court examined the evidence and agreed with the trial court that the children should have discovered the potential claims by the exercise of reasonable diligence decades before bringing suit. The court was unimpressed with arguments that the children lacked the knowledge and skills to understand their potential claims because they were raised in foster homes and that it would be unfair to deem them having constructive notice of probate records. Likewise, the court determined that the alleged fraudulent concealment could not bar the limitations period because the alleged wrongs could have been discovered by the children exercising reasonable diligence.

Moral:  Lawsuits alleging breach of fiduciary duty need to be timely filed. Potential plaintiffs must recognize that they are “charged with notice of the contents of the probate records” and that “[c]onstructive notice in law creates an irrebutttable presumption of actual notice.” Brown at 334.

 

 



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