There are a number of deadlines that apply in probate disputes. These deadlines are strict given the policy for having finality with probate matters. The recent Watson v. Schrader, No. 11-18-00064-CV (Tex. App. [11th Dist.]–2020) case provides an example.
Facts & Procedural History
The dispute involved wills executed in 1995 and a family trust created in 1995. The husband and wife who executed the wills and trust died in 2004 and 2006, respectively.
The trustee took over as trustee in 1995 and as executor named in the husband’s will in 2006. The estates were probated timely. However, there was a question as to whether the trustee/executor was actually named in the 1995 documents (the wife’s will and the trust). The appellants in this case argued that the husband’s will and the trust must have been altered after they were executed.
In 2013, the appellants obtained affidavits from the witnesses who signed the wills. The affidavits confirm that the executor was not named as executor in the husband’s will. The affidavits did not mention the wife’s will or say that the trust was altered.
In 2016, the appellants brought suit against the trustee/executor for common law fraud, negligent misrepresentation, fraud by nondisclosure, and conversion.
The probate court granted summary judgment in favor of the trustee/executor, which led to this appeal.
The Statute of Limitations Issue
The probate court granted summary judgment based on the statute of limitations having expired for the appellants claims.
The appellants argued that:
The statute of limitations does not apply in this case due to Appellee’s false representations, passive conduct and silence or failure to disclose and makes Appellee liable in his individual capacity because he knew of this fraud prior to becoming the Independent Executor of the Will, and Trustee of The Watson Family Trust, and continued to conceal the truth from Appellant[ ]’s after he was no longer the Independent Executor, and Trustee of The Watson Family Trust through passive silence.
Thus, appellants argued that the husband’s will and the trust must have been altered and that they did not learn of this until 2013, when they obtained affidavits from the witnesses to the wills.
The Discovery Rule
On appeal, the court cites the discovery rule. The appeals court summarizes the discovery rule as follows:
The discovery rule defers accrual of a claim until the injured party learned of, or in the exercise or reasonable diligence should have learned of, the wrongful act causing the injury. Cosgrove v. Cade, 468 S.W.3d 32, 36 (Tex. 2015). The discovery rule is limited to “circumstances where `the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable.'” Id. (quoting Comput. Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 456 (Tex. 1996)). “An injury is inherently undiscoverable if it is by nature unlikely to be discovered within the prescribed limitations period despite due diligence.” S.V. v. R.V., 933 S.W.2d 1, 7 (Tex. 1996).
In applying this rule, the appeals court concluded that the appellants should have discovered the wrongful act in 2006. This is the year that the wife died and the trustee/executor was appointed as executor under the wife’s will. The appeals court’s decision was based on a policy argument:
As stated by the Texas Supreme Court in Little v. Smith, “Texas courts have refused to apply the discovery rule to claims arising out of probate proceedings in most instances, however, even in the face of allegations of fraud.” 943 S.W.2d 414, 420 (Tex. 1997). The court noted that this policy is based on the “strong public interest in according finality to probate proceedings.” Id. at 421. Accordingly, Appellants’ reliance on the discovery rule and their allegations of fraud are unavailing to defer the accrual of limitations for their claims against Appellee with respect to him being named as the executor of the estates.
This decided the case given the statutes of limitations on the appellants claims.
The appeals court noted that there is a two year statue of limitations to bring claims for conversion and negligent misrepresentation. There is a four year statute for fraud and breach of fiduciary duties.
If both the two and four year statutes started to run in 2006, they would have been long expired by the time suit was brought in 2016.
This case shows why it is important to act timely in probate litigation cases. The failure to bring a timely claim can bar legitimate claims.