Austin Attorneys and Lawyers Blog - Lorenzana Law Firm, P.C.

Tips on tax cheats skyrocket with bigger rewards

2009-10-09T15:32:00.001-05:00

The IRS has implemented a law that allows tipsters to report companies and individuals who they believe are cheating their taxes. The law allows the qualified whistleblower to receive between 15 to 30 percent of the amount the IRS collects. The IRS believes that having a cash incentive will cause more people to report tax evaders. The IRS has enacted a similar law in late 2006.

When the law first started in 2006, the law targeted any company that owed at least $2 million in unpaid taxes, interest, and penalties. The law also targeted any individual with an income of at least $200,000. Today, these are the same qualifications for the whistleblowers to receive their reward.

In 2008, the agency reported receiving 1,246 tips on suspected tax dodgers, each owing more than $2 million. That's up from 116 big-money tips in 2007. A recent report has shown that among the tips received in 2008 included 228 accuse suspected tax dodgers of owing more than $10 million and 64 accuse suspected tax dodgers of owing more than $100 million.

The law states that the informants are promised confidentiality, unless they are required to testify in court. Keep in mind that whistleblowers themselves are not immune from prosecution if they take part in tax scams.

Officials however still do not know how well the tips will pan out. Once a tip is given, there is still a long process of audits and appeals. Many lawmakers have shown support of the law but criticize the pace of the program. The IRS claims that rewards will only be paid once all the taxes, penalties, and interest are collected. Whistleblowers may have to wait a long time for any rewards, possibility several years. Today, no one has been paid under this new law.

However, if you decide to submit information and seek an award you can do so by filling out the IRS Form 211.

Are Lenders Discriminating?

2009-10-09T15:25:00.001-05:00

The government reported on Wednesday, October 1, 2009, that nearly one out of every three loan applications for a mortgage was denied last year. This is partly due to massive changes in the lending industry as a result of the housing market bust. However, what is interesting is that the denial rates for African Americans and Hispanics were nearly twice as much as the white borrower.

Recent records have shown that blacks and Hispanics are borrowing more from FHA-insured loans. This just illustrates that these race groups cannot borrow from any of the private sectors and must look for other available options. Borrowing from a FHA-insured loan means that these two race groups will likely experience high-priced loans. Last year, about 17 percent of blacks and 15 percent of Hispanics got high-priced loans, compared with about 7 percent of whites.

However, the mortgage industry claims that lenders are not being discriminated by race. The industry insists that it is due to the borrower’s credit scores and the size of their down payments. This may be true but the disappearance of “piggyback” mortgages has played a huge role in the lending problem. The “piggyback” mortgage allows borrowers to use a second mortgage to avoid making a 20 percent down payment. Today, they are non-existent. Only 98,000 were made last year, down from 1.3 million annually in 2006. Without these “piggyback” mortgages and with our unstable economy, every race is finding it more difficult to finance their mortgages. It just so happens that blacks and Hispanics are suffering the worst.

To E-file or not to E-file?

2009-10-09T15:22:00.000-05:00

With the growing trend of emails, online banking, and everyone having access to a computer, the Internal Revenue Service (IRS) is encouraging taxpayers to e-file their taxes. Last year over 90 million people used e-file to do their taxes.

From the onset, there seems to be numerous advantages to e-filing. Some of the advantages include:
• a faster refund than using a tradition paper return (as quick as 10 days if you use direct deposit);
• electronic returns have fewer errors than the paper returns;
• you can file your taxes any hour of the day or night; and
• most importantly—you save paper.
As everyone knows or should know, the deadline to e-file a tax return or to e-file a tax extension is April 15. If you e-file a tax extension before April 15, then you are entitled to a tax extension deadline of October 15 for your tax returns. However, after October 15, you can prepare your tax return on efile.com but you must mail in your tax return. Therefore, October 15 is the last day to take advantage of e-file or the “Free File” program.
The “Free File” program is a fast, easy, and free way to prepare and e-file federal taxes online. The “Free File” program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the IRS and the Free File Alliance LLC, a group of private sector tax software companies.
Two free filing tax preparation and e-filing programs are available to individual taxpayers. “Traditional Free File” is available for taxpayers with adjusted gross incomes of $56,000 or less. On the other hand, “Free File Fillable Forms” can be used by people who earned more than $56,000.

Guideline Change for Condo Owners and Developers

2009-09-23T13:29:00.005-05:00

There will be changes coming October 1, 2009 for developers of condo projects and existing condo owners who want to get Federal Housing Administration (FHA) approval for financing. The United States Department of Housing and Urban Development (HUD) has announced changes to their Condo Approval Process and elimination of "spot" approvals.

In the past, you only needed to satisfy one of the following two criteria to finance a condo unit using FHA financing. Either (1) the Condo Project has a FHA warranty, which would require the Homeowners Association of the condominium project to apply and receive a warranty on the project from the HUD; or (2) the unit must pass a questionnaire called a “Spot Check” done on an ad hoc basis.
However, the HUD just released an announcement that they will be changing the guidelines which includes the removal of “Spot Check” approvals. Therefore, you will only be able to get a FHA loan on a condo if the project has a warranty. (Mortgage Letter 2009-19).

WHAT THIS MEANS TO YOU IF YOU’RE A CONDO BUYER

Whether you’re looking to buy a condo using FHA financing or not, this should still affect your buying decision. Keep in mind that you do not want to buy a property that will be more difficult to sell down the road. However, if you find a condo that does not have a FHA warranty and you really want to buy it, know that October 1st is the date the new guidelines go in affect. Also, many lenders have already adopted this policy prior to the date mentioned, so be sure to check your lender before applying. If you do buy using the “Spot Check” approval now, I would recommend you speak to the homeowners association about making the property FHA warrantable immediately after you close on your purchase.

WHAT THIS MEANS TO YOU IF YOU’RE ALREADY A CONDO OWNER

First, check immediately to see if your condo has a FHA warranty. If it has a FHA warranty, then you are good to go. If it is not a FHA warrantable condo, speak to the Homeowners Association immediately about getting the condo FHA warrantable. The key is to get your condo a FHA warranty prior to the October 1st date. Keep in mind that the turnaround time to get a warranty will be based on the amount of submissions the HUD receives. Everybody will likely flood the process after they realize how important this is.

Today, FHA loans now represent about 25% of all home purchases. Therefore, if you are selling a condo in a complex that does not have a FHA warranty; you are eliminating at least 25% of your potential buyers. Evidence of our current real estate market has shown that when the ability to obtain financing for a property becomes more difficult, the values of the property usually drop. Therefore, this will have a great impact on the condo markets, especially in Austin, since it will be more difficult to obtain loans for your condos.

IRS VOLUNTARY DISCLOSURE PROGRAM

2009-09-22T11:06:00.003-05:00

If you own or have authority over a foreign financial account, including a bank account, brokerage account, mutual fund, unit trust, or other types of financial accounts, then most other incomes you may be required to report the account yearly to the Internal Revenue Service (IRS). The IRS has drawn a clear line between those individual taxpayers with offshore accounts who voluntarily come forward to get right with the government and those who continue to fail to meet their tax obligations. People who come in voluntarily will get a fair settlement. The IRS has set up a penalty framework that is believed to help those that voluntarily come forward. However, those that volunteer need to pay back any taxes and interest during the tax periods for years 2003 to 2008. Those that volunteer must also pay either an accuracy or delinquency penalty during the mentioned six year period. On top of those taxes, they will also pay a penalty of 20 percent of the amount in the foreign bank accounts in the year with the highest aggregate account or asset value. Just to be clear, this is 20 percent of the highest asset value of an account anytime in the past six years. By incorporating the penalty framework, it gives the voluntary taxpayers a certainty and consistency in how their case will be handled by the IRS. However, if the taxpayer is currently under examination by the IRS, then the voluntary disclosure program would not apply.

Some of the advantages of voluntarily disclosing with the IRS are that you can avoid substantial civil liability and eliminate the risk of criminal prosecution. However, on the other hand, some of the disadvantages of not reporting your offshore accounts to the IRS include the risk of detection by the IRS through an audit; imposition of substantial penalties; fraud penalties; foreign information return penalties; and the possible risk of criminal prosecution.

If after making a voluntary disclosure, the taxpayer disagrees with the 20 percent offshore penalty, the taxpayer’s case will follow a standard audit process. Then the taxpayer’s case will be subjected to a complete examination. Once the examination is complete, any penalties that apply would be imposed. These penalties could be substantially greater than the 20 percent penalty. However, if the case is still disagreed, then the taxpayer will then have recourse to Appeals.

If a taxpayer is unable to make full payments of all taxes and interest for all years covered, and the Voluntary Disclosure penalty, as well as all other unpaid, previously assessed liabilities, then the taxpayer must also submit a request that includes another payment arrangement that is acceptable to the IRS. The burden will be on the taxpayer to prove his/her inability to pay.

The taxpayer must be truthfully, timely, and completely honest in their voluntary disclosure or they could be subject to greater penalties or even possible criminal prosecution. Keep in mind that there is no guarantee that there will be an extension of the September 23 deadline and there is a possibility that a new program will be initiated with more severe penalties.

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Is the IRS going after the big fish?

2009-09-22T10:43:00.006-05:00

The Internal Revenue Service (IRS) has recently offered a program that will allow tax evaders in offshore accounts to come forward to disclose these accounts for a lesser penalty. The IRS has set October 15, 2009 as their deadline to voluntarily disclose any of their offshore accounts. However, most taxpayers with offshore accounts have been waiting until the last minute to see what happens. The IRS reports that an estimated $14.8 billion dollars of taxes goes underreported due to offshore accounts each year. The UBS estimates that approximately 52,000 foreign accounts go unreported each year. Recently, the UBS has disclosed over 4,500 accounts to the IRS. That means that approximately one out of every ten accounts will be disclosed. This has most taxpayers with offshore accounts worried because if they are within one of those reported accounts, the taxpayer could pay penalties that could amount to more than double what the taxpayer has in their accounts and possible criminal prosecution. Do you have the 10% chance of being discovered? Naturally, people think that the IRS only goes after the “big fishes” or taxpayers with bigger accounts. However, recent reports have indicated that the IRS is going after anyone in order to get their delinquent taxes back.

Recently, a Los Angeles man plead guilty for failing to file a FBAR pursuant to the Bank Secrecy Act 31 USC 5314. The amount of unpaid taxes he owed was between $200,000 and $400,000 over a 5 year period. Assuming he was in a 33% tax bracket rate, the Los Angeles man’s unreported income would have equaled about $120,000 per year. This man eventually agreed to a civil FBAR penalty equal to 50% of his highest year balance and in addition a 75% civil tax fraud penalty. This goes to show that the IRS is targeting anyone, not just the bigger fish. In the end, it’s best to be honest with the IRS and disclose any information necessary. Otherwise, it can catch up to you and become disastrous.

Looking for a Home? Now is the Time to Buy

2009-09-22T10:35:00.002-05:00

According to the IRS, more than 1.4 million Americans have recently claimed the new tax credit for first-time home buyers. The credit allows home buyers to either save up to 10% of the price of the home or the maximum of $8,000. The credit is only available to anyone who has not owned a home for three consecutive years before the purchase and the individual must make less than $75,000. For couples that maximum amount is doubled to $150,000. The best thing about the tax credit is that you receive an automatic $8,000 check by the IRS even if you still owe taxes or not.

In order to claim the tax credit, the home buyer must close on the house by Dec. 1, 2009. However, most people still fear that housing market will turn down again after the credit program expires. They believe the credit program is just a quick stimulus like the recent “cash for clunkers” deal. Recent reports show that Californians have taken advantage of the credit program the most. Florida and Texas rounding out the top three respectively.

The IRS estimates that over 1.8 million people will take advantage of the tax credit and there has been a push to continue the stimulus plan. Currently, there are six bills in Congress to extend the program. Some of the proposals ask for an extension up until the following year December 2010.

However, the White House has shown no signs of supporting any of the bills and the program has already cost $14 billion dollars to fund. Extending the program would cost more, which would be difficult to fund.

However, the National Association of Realtors (NAR) agrees that extending the credit would be costly; however, generating home sales would continue to strengthen the economy because when people buy homes they put a lot of cash into circulation. When people buy homes they usually buy furniture, appliances, or remodel the homes.

As of now, we will just have to wait and see if the government decides to extend the deadline. In the meantime, if you have the funds and are looking for a house, I would strongly suggest you take advantage of the tax credit and buy a home before the December 1 deadline.

Prenuptial Agreements: The Bone of Contention

2009-09-18T11:11:00.005-05:00

Americans are divided on their opinion concerning the morality behind a prenuptial agreement. Around one fourth of Americans think premarital agreements are for the “rich and famous”, while well over a fourth agree they are a must for making smart financial decisions in a marriage. Although pre-nups are often used to protect the assets of a wealthy spouse, many couples of more modest means, such as a middle class income, are turning to prenuptial agreements for their own purposes. Some of these reasons might be to split up property for children from previous marriages, define each spouse’s financial rights, and avoid conflict in case of divorce by splitting up assets in advance.

“San Francisco family law attorney Stephen Ruben sees more Baby Boomers entering such contracts after marriage-known as post-marital agreements- as their parents die. “They want to preserve their inheritances so it doesn't go to their spouse. They want it to remain within the bloodline,” he says. Kathleen Pender, San Francisco Chronicle 05/04/08.

What is a prenuptial and what purpose does it serve?

A prenuptial agreement is a contract written between two prospective spouses on the terms of marriage and property. It is a legally binding agreement between a couple before entering marriage and secures or segregates separate and community property such as rights to certain real property, account, and other assets as well as debts. The contract states all of the property each person owns and how the assets will be divided in the event of a death or divorce.

Is it right or wrong for you?

A prenuptial agreement may be beneficial to you and your spouse for many reasons. If you or your spouse have a substantial amount of wealth, expect to acquire a hefty inheritance, have been married in the past, own a business, have children from a prior marriage, have a high risk job, wish to keep all assets and debts separate, own income producing property, or wish to protect your hard earned existing assets then entering into a prenuptial agreement might be for you.

On the other hand, many people feel a prenuptial agreement takes away from the sanctity of marriage. Some view the prenuptial agreement as a big trust factor between prospective spouses, and say a prenup is never needed when the two people involved really love each other. Some feel the contract can doom a marriage from the start, and the topic can be an uncomfortable one to bring into a relationship.

These contracts only benefit a couple if they are planning ahead of the marriage and are comfortable with segregating property, income, and debts that will be utilized into the marriage or earned and acquired during the marriage. It will also help to segregate acquired or debt and liabilities incurred during the marriage between spouses. For most individuals, a prenuptial may not be necessary. However, if you are a high net worth individual or a person who has a high earning capacity, it is advisable to enter into a prenuptial with your prospective spouse as well as consult with a Texas prenuptial lawyer or family law attorney before entering into the marriage vow.

Ingram v. Deer - Existence of a Business Partnership in Texas

2009-08-18T23:29:00.004-05:00

Last month the Texas Supreme Court heard the case of Ingram vs. Deer in a dispute over the existence of a partnership between two professionals.

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FACTUAL AND PROCEDURAL BACKGROUND

Ingram, a licensed psychologist, and Deere, a board certified psychiatrist, entered into an oral agreement in 1997, which provided that Deere would serve as the medical director for a multidisciplinary pain clinic. Deere contended that they agreed he would receive one-third of the clinic’s revenues, Ingram would receive one-third, and the remaining one-third would be used to pay the clinic’s expenses. Deere also claimed that when he and Ingram began working together, Ingram told him their work “was a joint venture, or [they] were partners, or [they] were doing this together.” Ingram contended that they only agreed Deere would receive one-third of the clinic’s revenues and that there was no agreement as to the other two-thirds.

Fourteen months after Deere began working at the clinic, Ingram prepared a written agreement to memorialize their arrangement. The document was entitled “Physician Contractual Employment Agreement” and stated that Ingram was the “sole owner” of the clinic. Deere refused to sign the document, claiming that it contradicted their initial arrangement. Immediately after Deere received the document, he ceased working at the clinic. Deere later sued Ingram, asserting claims of common law fraud, statutory fraud, fraudulent inducement, breach of contract, breach of fiduciary duty, and declaratory judgment and seeking specific performance, damages, and attorneys’ fees. The jury found that Deere and Ingram entered into a partnership agreement and that Ingram breached the agreement and his fiduciary duty to Deere. The trial court entered judgment on the jury verdict awarding damages of (1) $34,249.68 for compensation owed Deere through March 1999, (2) $2,525,437.00 for Deere’s share of the partnership’s revenue from April 1999 through the time of trial, (3) $2,500,000.00 for Deere’s share of revenue to accrue after trial, and (4) $27,500.00 in attorneys’ fees for the trial stage with additional fees in the event of a motion for new trial and various appeals. Ingram filed a motion for judgment non obstante veredicto (judgment n.o.v.) or judgment notwithstanding the jury's verdict. After a hearing, Judge David Evans signed a new judgment, eliminating a portion of the damages awarded by the jury and reducing the award of attorneys’ fees. Following his decision, Judge Evans recused himself without explanation, and the case was assigned to Judge Merrill Hartman. Ingram then filed a second motion for judgment n.o.v. or, in the alternative, a motion for new trial. Judge Hartman signed a judgment n.o.v. and rendered a take-nothing judgment in Ingram’s favor. The court of appeals reversed the trial court’s take-nothing judgment on the second motion for judgment n.o.v. and reinstated the trial court’s judgment on the first motion for judgment n.o.v. The court held that Ingram waived his right to challenge the existence of a partnership because he failed to raise the issue in his second motion for judgment n.o.v. 198 S.W.3d 96, 100. Without discussing whether Deere and Ingram created a partnership, the court held that there was legally sufficient evidence to support the jury’s finding that the partnership continued to exist through the time of trial. Id. at 101–02. However, the court affirmed the trial court’s ruling that Ingram did not owe Deere a fiduciary duty, as there was no evidence of a confidential relationship between Deere and Ingram that would give rise to an informal fiduciary duty. Id. at 102–03.
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In its legal analysis of Texas partnership law, the Texas high court reasoned as follows, and quote:

Partnership Law.

1. Texas Common Partnership Law.

Under the common law, the Court recognized that a partnership or joint enterprise “presupposes an agreement to that end,” which could be either express or implied. Donald v. Phillips, 13 S.W.2d 74, 76 (Tex. 1929). The Court explained that the “intention of the parties to a contract is a prime element in determining whether or not a partnership or joint venture exists.”2 Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 287 (Tex. 1978) (citing Luling Oil & Gas Co. v. Humble Oil & Ref. Co., 191 S.W.2d 716, 722 (Tex. 1946) (“[A] court would not declare that a partnership existed unless that intention clearly appeared . . . .”)). The common law also considered that profit sharing was the most important factor shedding light on the intention to establish a partnership. See Friedlander v. Hillcoat, 14 S.W. 786, 787 (Tex. 1890) (“A common interest in the profits is an essential element to constitute a partnership.”).

These two elements were incorporated into a five-factor test that developed under the common law for partnership formation:
(1) intent to form a partnership,
(2) a community of interest in the venture,
(3) an agreement to share profits,
(4) an agreement to share losses, and
(5) a mutual right of control or management of the enterprise. Coastal Plains, 572 S.W.2d at 287 (citing Brown v. Cole, 291 S.W.2d 704, 709 (Tex. 1956), and Luling Oil & Gas, 191 S.W.2d at 722). These factors continued to guide the question of partnership formation when Texas promulgated and later amended statutory regimes governing partnerships.

2. Texas Statutory Law

The Texas Uniform Partnership Act (TUPA) was passed in 1961 and substantially adopted the major provisions of the Uniform Partnership Act (UPA), which itself was adopted in every state except Louisiana after it was approved by the National Conference of Commissioners on Uniform State Laws in 1914. See Harry J. Haynsworth, IV et al., Should the Uniform Partnership Act Be Revised?, 43 Bus. Law. 121, 121 (1987); Revised Unif. P’ship Act, 6 U.L.A. 45 (1997). TUPA was replaced by TRPA, effective January 1, 1994,3 the result of a project of the Partnership Law Committee of the State Bar of Texas Section on Business Law and the Texas Business Law Foundation. Act of May 31, 1993, 73rd Leg., R.S., ch. 917, § 1, 1993 Tex. Gen. Laws 3887, 3893. TRPA carried forward some of the common law modifications in ways relevant to this case that were promulgated in TUPA. The partnership in this case was allegedly formed in 1997. It is uncontested that TRPA governs this dispute; rather, the parties contest whether Deere has proven the existence of a partnership under TRPA.

TRPA provides that “an association of two or more persons to carry on a business for profit as owners creates a partnership.” Tex. Rev. Civ. Stat. art. 6132b-2.02(a). Unlike TUPA,5 TRPA articulates five factors, similar to the common law factors, that indicate the creation of a partnership. They are:(1) receipt or right to receive a share of profits of the business;(2) expression of an intent to be partners in the business;(3) participation or right to participate in control of the business;(4) sharing or agreeing to share:(A) losses of the business; or(B) liability for claims by third parties against the business; and(5) contributing or agreeing to contribute money or property to the business.Id. art. 6132b-2.03(a).

The common law required proof of all five factors to establish the existence of a partnership. See Coastal Plains, 572 S.W.2d at 287. However, TRPA contemplates a less formalistic and more practical approach to recognizing the formation of a partnership. First, TRPA does not require direct proof of the parties’ intent to form a partnership. Tex. Rev. Civ. Stat. art. 6132b-2.02 (stating that two or more persons may form a partnership regardless of “whether the persons intend to create a partnership”). Formerly, the intent to be partners was a “prime,” although not controlling, element in the creation of a partnership. Coastal Plains, 572 S.W.2d at 287. Instead, TRPA lists the “expression of intent” to form a partnership as a factor to consider. Tex. Rev. Civ. Stat. art. 6132b-2.03(a)(2). Second, unlike the common law, TRPA does not require proof of all of the listed factors in order for a partnership to exist. Third, sharing of profits—deemed essential for establishing a partnership under the common law—is treated differently under TRPA because sharing of profits is not required. Cf. Friedlander, 14 S.W. at 787 (“A common interest in the profits is an essential element to constitute a partnership.”). Still, TRPA comments note that the traditional import of sharing profits as well as control over the business will probably continue to be the most important factors. Tex. Rev. Civ. Stat. art. 6132b-2.03 Comment of Bar Committee. Additionally, TRPA recognizes that sharing of losses may be indicative of a partnership arrangement but states that such an arrangement is “not necessary to create a partnership.” Id. art. 6132b-2.03(c). TRPA also restates and extends the list of circumstances in TUPA that do not by themselves indicate that a person is a partner.7 Id. art. 6132b-2.03(b).

The question of how many of the TRPA factors are required to form a partnership is a matter of first impression for this Court. The TRPA factors seem to serve as a proxy for the common law requirement of intent to form a partnership by identifying conduct that logically suggests a collaboration of a business’s purpose and resources to make a profit as partners. After examining the statutory language and considering that TRPA abrogated the common law’s requirement of proof of all five factors, we determine that the issue of whether a partnership exists should be decided considering all of the evidence bearing on the TRPA partnership factors. While proof of all five common law factors was a prerequisite to partnership formation under the common law, the totality-of-the-circumstances test was, in some respect, foreshadowed in Texas case law. As Justice Jack Pope wrote for the San Antonio Court of Appeals,No single fact may be stated as a complete and final test of partnership. Each case must rest on its own particular facts and the presence or absence of the usual attributes of a partnership relation. The earlier Texas rule indicated that profit sharing was the controlling test.

The Texas Supreme Court reasoned that it is now generally held that such a test is not all-inclusive and controlling . . . . The absence of an express provision obligating the parties to share in the losses is also important and indicates that no partnership existed. But this feature too is not controlling.Davis v. Gilmore, 244 S.W.2d 671, 673–74 (Tex. Civ. App—San Antonio 1951, writ ref’d) (citations omitted). Many states apply this totality-of-the-circumstances test.

Whether a partnership exists must be determined by an examination of the totality of the circumstances.

Evidence of none of the factors under the Texas Revised Partnership Act will preclude the recognition of a partnership, and even conclusive evidence of only one factor will also normally be insufficient to establish the existence of a partnership under TRPA. However, conclusive evidence of all five factors establishes a partnership as a matter of law. In this case, Deere has not provided legally sufficient evidence of any of the five TRPA factors to prove the existence of a partnership. In this case, after going through its legal analysis of Texas partnership common and statutory law, the Court reversed the court of appeals’ judgment and reinstated the trial court’s take-nothing judgment.

Factors in considering the "totality of circumstances" in determining whether a partnership exists should therefore include the following:

1. Profit sharing;
2. Expression of intent to be partners;
3. Control;
4. Sharing of liability for third party claims; and
5. Contribution of money or property;

If you are a business owner or "partner" in Texas, contact a business litigation and trial attorney in Austin, Texas to evaluate your partnership case.

Validity of Business Contracts in Texas

2009-08-13T00:57:00.003-05:00

Parties form a binding contract when the following elements are present:

(1) an offer,
(2) an acceptance in strict compliance with the terms of the offer,
(3) a meeting of the minds,
(4) each party's consent to the terms, and
(5) execution and delivery of the contract with the intent that it be mutual and binding.

Am. Nat'l Ins. Co. v. Warnock, 114 S.W.2d 1161, 1164 (Tex. 1938); Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.--Houston [1st Dist.] 2002, pet. denied).

To be enforceable, the contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the respective parties. See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992); America's Favorite Chicken v. Samaras, 929 S.W.2d 617, 622 (Tex. App.--San Antonio 1996, writ denied).

Under settled principles of contract interpretation, Texas courts construe a contract as a matter of law to determine whether it can be enforced as written without resorting to parol evidence. What this means is that Texas courts will look to the substance of the contract within the document itself without having to resort to extraneous or outside verbal evidence. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). The court's primary concern is to ascertain the intent of the parties, as expressed in the contract instrument. Id. (citing R.P. Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980)).

Frequently business owners draw up contracts that may be poorly written, or does not incorporate all the necessary terms and elements to make the contract legally enforceable. There are many contract templates available these days on the web or on form templates. However, each transaction is unique, and it is a better practice to for a business owner to hire a contract or business lawyer to draw up a good written contract in order to avoid future disputes or business litigation.

Parent vs. GrandParent Rights to Child Custody in Texas

2009-08-13T00:13:00.003-05:00

A grandparent’s rights are generally subordinate to a parent’s. See Tex. Fam. Code § 153.433(2); see also Troxel, 530 U.S. at 64-65 (plurality opinion) (discussing how statutory rights extended to grandparents and other relatives can create a substantial burden on a parent’s traditional role in a child’s upbringing). As the Troxel plurality stated, “‘[i]t is cardinal . . . that the custody, care and nurture of the child reside first in the parents.’” Troxel, 530 U.S. at 65 (plurality opinion) (quoting Prince v. Massachusetts, 321 U.S. 158, 166 (1944)). Troxel also recognized that “the interest of parents in the care, custody, and control of their children—is perhaps the oldest of the fundamental liberty interests recognized by [the Supreme] Court [of the United States].” Id.

Possession of or access to a child by a grandparent is governed by the standards established by Chapter 153.” Tex. Fam. Code § 102.004(c). As Texas courts recently recognized, "so long as a parent adequately cares for his or her children (i.e., is fit), there will normally be no reason for the State to inject itself into the private realm of the family.” See In re Mays-Hooper, 189 S.W.3d 777, 778 (Tex. 2006) (quoting Troxel, 530 U.S. at 68); see also Troxel, 530 U.S. at 72-73
The Texas Constitution does not permit a State to infringe on the fundamental right of parents to make child rearing decisions simply because a state judge believes a better decision could be made.

Section 153.433(2) of the Texas Family Code requires that a grandparent seeking court-ordered access overcome the presumption that a parent acts in his or her child’s best interest by proving by a preponderance of the evidence that “denial . . . of access to the child would significantly impair the child’s physical health or emotional well‑being.” Tex. Fam. Code § 153.433(2). A trial court abuses its discretion when it grants access to a grandparent who has not met this standard because “‘[a] trial court has no ‘discretion’ in determining what the law is or applying the law to the facts[,]’ even when the law is unsettled.” See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004).

Existence Of A Business Partnership Under Texas Law

2009-07-27T22:21:00.003-05:00

In Texas individuals and entities form partnerships for a myriad of reasons. The typical way of forming a partnership is of course the formation and execution of a partnership agreement pursuant to the Texas Revised Partnership Act.

However, sometimes individuals or entities form business relationships in haste or begin working together without a partnership agreement. On other occasions, individuals shake hands over an agreement to "partner up" together in business. This can however, open the door to future litigation if the partnership terms are somehow misunderstood or changed.

From a legal standpoint it is always better to formulate a binding written partnership agreement, which spells the creation, income, expense and even dissolution of the partnership itself when the time comes.

Texas Revised Partnership Act (TRPA), lists five factors to be considered in determining whether a partnership has been formed. This determination should be made by examining the totality of the circumstances in each case, with no single factor being either necessary or sufficient to prove the existence of a partnership. Whether a partnership exists must be determined by an examination of the totality of the circumstances. Evidence of none of the factors under the Texas Revised Partnership Act will preclude the recognition of a partnership, and even conclusive evidence of only one factor will also normally be insufficient to establish the existence of a partnership under TRPA. However, conclusive evidence of all five factors establishes a partnership as a matter of law.

In other words, the more factors showing a business partnership under the TRPA, the more likely that a court of law would agree that there is or was a partnership. Better to consult with a partnership attorney and business lawyer before entering into such partnerships, joint ventures or any other business relationship.

Maintenance or Alimony in Texas

2009-07-27T14:56:00.002-05:00

In Texas, "Maintenance" means an award in a suit for dissolution of a marriage of periodic payments from the future income of one spouse for the support of the other spouse.

Generally speaking, a spouse in a divorce action or dissolution of marriage can only claim for spousal maintenance or Texas alimony if:

(1) the spouse from whom maintenance is requested was convicted of or received deferred adjudication for a criminal offense that also constitutes an act of family violence under Title 4 and the offense occurred:

(A) within two years before the date on which a suit for dissolution of the marriage is filed; or
(B) while the suit is pending; or

(2) the duration of the marriage was 10 years or longer, the spouse seeking maintenance lacks sufficient property, including property distributed to the spouse under this code, to provide for the spouse's minimum reasonable needs, as limited by Section 8.054, and the spouse seeking maintenance:

(A) is unable to support himself or herself through appropriate employment because of an incapacitating physical or mental disability;
(B) is the custodian of a child of the marriage of any age who requires substantial care and personal supervision because a physical or mental disability makes it necessary, taking into consideration the needs of the child, that the spouse not be employed outside the home; or
(C) clearly lacks earning ability in the labor market adequate to provide support for the spouse's minimum reasonable needs, as limited by Section 8.054.

What factors does the court consider in awarding Texas alimony?

(1) the financial resources of the spouse seeking maintenance, including the community and separate property and liabilities apportioned to that spouse in the dissolution proceeding, and that spouse's ability to meet the spouse's needs independently;

(2) the education and employment skills of the spouses, the time necessary to acquire sufficient education or training to enable the spouse seeking maintenance to find appropriate employment, the availability of that education or training, and the feasibility of that education or training;

(3) the duration of the marriage;

(4) the age, employment history, earning ability, and physical and emotional condition of the spouse seeking maintenance;

(5) the ability of the spouse from whom maintenance is requested to meet that spouse's personal needs and to provide periodic child support payments, if applicable, while meeting the personal needs of the spouse seeking maintenance;

(6) acts by either spouse resulting in excessive or abnormal expenditures or destruction, concealment, or fraudulent disposition of community property, joint tenancy, or other property held in common;

(7) the comparative financial resources of the spouses, including medical, retirement, insurance, or other benefits, and the separate property of each spouse;

(8) the contribution by one spouse to the education, training, or increased earning power of the other spouse;

(9) the property brought to the marriage by either spouse;

(10) the contribution of a spouse as homemaker;

(11) marital misconduct of the spouse seeking maintenance; and

(12) the efforts of the spouse seeking maintenance to pursue available employment counseling as provided by Chapter 304, Labor Code.

Contact an experience high net worth divorce attorney in Austin, Texas at (512) 338-0529.

http://www.lorenzanalegal.com/

http://www.austindivorcelawattorney.com/

Establishing Gross Negligence Claims In Texas

2009-04-18T12:00:00.004-05:00

Negligence claims in Texas relate to some breach or failure of a person or entity such as business to perform its legal duty. We know these claims to typically be negligent actions in tort. Good examples are negligent driving by a drive in an auto accident case, or failure of a store facility to keep the premises safe. There are variations of negligence claims.

General Negligence

To establish a claim for negligence, a plaintiff must prove
(i) the existence of a legal duty,
(ii) a breach of that duty, and
(iii) damages proximately caused by that breach. Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006).

Gross Negligence

To establish gross negligence, a plaintiff must also prove by clear and convincing evidence two additional elements:
(i) that from the actor's standpoint, the act or omission complained of involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others, and
(ii) that the actor had actual subjective awareness of the risk involved but nevertheless proceeded in conscious indifference of the rights and safety or welfare of others. Tex. Civ. Prac. & Rem. Code Ann. § 41.003(a)(3) (Vernon 2005); Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 785 (Tex. 2001).

Duty

Duty is the threshold inquiry in a negligence claim. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). The threshold question or inquiry in a negligence case is whether the defendant owes a legal duty to the plaintiff. If there is no legal duty, liability for negligence cannot exist. See Thapar v. Zezulka, 994 S.W.2d 635, 637 (Tex. 1999).

Standard of Review

The existence of a legal duty is a question of law for the court to decide from the particular facts surrounding the occurrence in question. Military Highway Water Supply Corp. v. Morin, 156 S.W.3d 569, 572 (Tex. 2005). Because the existence of a legal duty is a pure question of law, the standard of revie is a de novo standard of review. Loram Maint. of Way, Inc. v. Ianni, 141 S.W.3d 722, 727 (Tex. App.-El Paso 2004), rev'd on other grounds, 210 S.W.3d 593 (Tex. 2006) (citing El Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex. 1999)).

Applicable Law

To determine whether a defendant is under a legal duty, Texas courts consider several interrelated factors, including the risk, foreseeability, and likelihood of injury, weighed against the social utility of the actor's conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant. Bird v. W.C.W., 868 S.W.2d 767, 769 (Tex. 1994); Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). Of these factors, the foremost consideration is whether the risk is foreseeable. Greater Houston Transp. Co., 801 S.W.2d at 525. Foreseeability means that an actor, as a person of ordinary intelligence, should have anticipated the dangers that his negligent act created for others. Isbell v. Ryan, 983 S.W.2d 335, 339 (Tex. App.-Houston [14th Dist.] 1998, no pet.). In other words, “there is neither a legal nor a moral obligation to guard against that which cannot be foreseen in the light of common or ordinary experience.” J.R. Beadel & Co. v. De La Garza, 690 S.W.2d 71, 73 (Tex. App.-Dallas 1985, writ ref'd n.r.e.) (quoting Hadaway v. Lone Star Gas Co., 355 S.W.2d 590, 592 (Tex. Civ. App.-Fort Worth 1962, no writ)). Foreseeability is not measured by hindsight, but instead by what the actor knew or should have known at the time of the alleged negligence. Timberwalk Apts. v. Cain, 972 S.W.2d 749, 757 (Tex. 1998).

The Texas Supreme Court uses a two-prong test for foreseeability:

(i) that the injury be of such a general character as might reasonably have been anticipated; and (ii) that the injured party should be so situated with relation to the wrongful act that injury to him or one similarly situated might reasonably have been foreseen. Mellon Mortgage Co. v. Holder, 5 S.W.3d 654, 655 (Tex. 1999) (plurality opinion) (citing Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 551, (Tex. 1985)).

2-Year Limitations Period on Auto Injury Claims in Texas

2009-04-18T10:26:00.003-05:00

As a general rule in Texas, a claim for injuries resulting from an auto accident must be filed within two (2) years of the anniversary date of the date of the accident. The two-year anniversary of the collision is significant; after then, this kind of tort claim would be barred under Texas's two-year statute of limitations. See Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a) (Vernon Supp. 2007).

Tolling Exception to the Rule

Although recovery on most tort actions would be barred after the expiration of two years, an exception to that rule provides that a tolling of the statute of limitations takes place if a party has filed a previous suit in a different court and that action was dismissed because of lack of jurisdiction, provided that the party refiled the suit in a court of proper jurisdiction within sixty days after such dismissal. Tex. Civ. Prac. & Rem. Code Ann. § 16.064 (Vernon 1997); Clary Corp. v. Smith, 949 S.W.2d 452, 461 (Tex. App.--Fort Worth 1997, writ denied). The cases also note that the statute is to be liberally construed to effectuate its objective.

The Exception to the Exception

However, the tolling provision of Section 16.064 of the Texas Civil Practice and Remedies Code does not apply if the initial filing was done with intentional disregard of proper jurisdiction. Parker v. Cumming, 216 S.W.3d 905, 909-10 (Tex. App.--Eastland 2007, pet. denied). Under that exception, if the record establishes intentional disregard and that jurisdiction did not lie in the tribunal in which the proceeding was originally filed, the original lawsuit did not, as a matter of law, serve to toll limitations.

Texas PreMarital Agreements

2009-04-11T18:32:00.003-05:00

In Texas pre-marital or pre-nuptial agreements are enforceable so long as it is in writing and is signed by both parties. The agreement is enforceable even though without consideration, unlike a deed where consideration is necessary. Under Section 4.001 of the Texas Family Code, a 'Premarital Agreement" is a written agreement between prospective spouses in contemplation of marriage and is effective upon marriage.

The parties to a premarital agreement may contract with respect to:

(1) the rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;

(2) the right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;

(3) the disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;

(4) the modification or elimination of spousal support;

(5) the making of a will, trust, or other arrangement to carry out the provisions of the agreement;

(6) the ownership rights in and disposition of the death benefit from a life insurance policy;

(7) the choice of law governing the construction of the agreement; and

(8) any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

Representing Yourself Pro Se in a Divorce or Famil Law Case

2009-04-11T17:11:00.005-05:00

There are advantages and disadvantages in representing oneself pro se in a divorce proceeding or family law case such as a custody dispute. Some of the immediate advantages include the following:

1. Not having to pay an attorney for legal fees;
2. Ability to make your own legal arguments; and
3. Some sympathy from the court or jury;

Although as simple as it may seem, the disadvantages may outweigh its advantages. For example, although the process may seem simple, legal procedure is fraught with complex meaning and ramifications. Frequently, the question arises, "do I really need a lawyer...?"
On most cases, the answer is generally yes. Courts are also not easily inclined to have sympathy on pro se litigants. As one court put it, "While we have compassion for the plight of the pro se litigant attempting to follow the rules of legal procedure and substantive laws, and therefore construe pro se pleadings and briefs liberally, we must still hold appellant to the same standard as a licensed attorney, requiring that he follow those same rules and laws." Mansfield State Bank v. Cohn, 573 S.W.2d 181, 184‑85 (Tex. 1978); Cooper v. Circle Ten Council Boy Scouts of Am., 254 S.W.3d 689, 693 (Tex. App.- Dallas 2008, no pet.). To do otherwise would give a pro se litigant an unfair advantage over a litigant represented by counsel. Mansfield State Bank, 573 S.W.2d at 185; Cooper, 254 S.W.3d at 693.

On one occasion, a client indicated that at first they thought that a lawyer was not necessary in handling a simple state tax collection matter. At the end, the matter ended up to be a $250,000 judgment against the client. Although on some cases such as on uncontested matters, representing oneself pro se may be cost effective, however in most situations it behooves a client to get good legal representation to avoid the legal pitfalls of legal procedure and law.

Writ of Mandamus in Family Law Cases

2009-04-11T16:43:00.004-05:00

On occasion a trial court may abuse its discretion with respect to rulings on family law cases so as to warrant an immediate review by a higher court. This process is called a writ of mandamus against the trial court judge making the incorrect ruling or abuse of discretion.

To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court clearly abused its discretion and he has no adequate remedy by appeal. In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) (orig. proceeding). A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). In determining whether the trial court abused its discretion in the resolution of factual matters, the court of appeals may not substitute its judgment for that of the trial court and may not disturb the trial court's decision unless it is shown to be arbitrary and unreasonable. In re Sanders, 153 S.W.3d 54, 56 (Tex. 2004) (orig. proceeding) (per curiam). Therefore, the relator must establish that the trial court could have reached only one decision. Walker, 827 S.W.2d at 840. An abuse of discretion does not exist if the trial court bases its decision on conflicting evidence and some evidence supports the trial court's decision. IKB Indus. (Nigeria) Ltd. v. Pro‑Line Corp., 938 S.W.2d 440, 445 (Tex. 1997); Ruiz v. Conoco, Inc., 868 S.W.2d 752, 758 (Tex. 1993).

Appellate courts do not generally overrule trial court rulings, especially when conflicting evidence are submitted by opposing parties. Such was the case in the recent ruling by the 14th Court of Appeals last February in the case of In Re John W. Small who asked the higher court to compel the presiding judge of County Court at Law No. 1 of Galveston County, to set aside her October 31, 2008 order finding relator in contempt for failing to pay court-ordered temporary spousal support to real party in interest, Murriah S. McMaster, and to to reverse her November 1, 2005 order awarding temporary spousal support to McMaster. Because the trial court did not abuse its discretion, writ of mandamus was denied.

International Family Law: Necessity of Subject Matter Jurisdiction in Texas

2009-04-11T15:43:00.004-05:00

In international family law cases, parents frequently run into jurisdictional issues as to which court, i.e., Texas or an international court has jurisdiction to hear a custody case. Whether in a divorce, modification or enforcement action, in Texas the court hearing the custody case must have subject matter jurisdiction.

Section 152.201 of the Texas Family Code, - INITIAL CHILD CUSTODY JURISDICTION.

states as follows:

(a) Except as otherwise provided in Section 152.204, a court of this state has jurisdiction to make an initial child custody determination only if:

(1) this state is the home state of the child on the date of the commencement of the proceeding, or was the home state of the child within six months before the commencement of the proceeding and the child is absent from this state but a parent or person acting as a parent continues to live in this state;

(2) a court of another state does not have jurisdiction under Subdivision (1), or a court of the home state of the child has declined to exercise jurisdiction on the ground that this state is the more appropriate forum under Section 152.207 or 152.208, and:
(A) the child and the child's parents, or the child and at least one parent or a person acting

as a parent, have a significant connection with this state other than mere physical presence;

and
(B) substantial evidence is available in this state concerning the child's care, protection,

training, and personal relationships;

(3) all courts having jurisdiction under Subdivision (1) or (2) have declined to exercise jurisdiction on the ground that a court of this state is the more appropriate forum to determine the custody of the child under Section 152.207 or 152.208; or

(4) no court of any other state would have jurisdiction under the criteria specified in

Subdivision (1), (2), or (3).

(b) Subsection (a) is the exclusive jurisdictional basis for making a child custody determination by a court of this state.

(c) Physical presence of, or personal jurisdiction over, a party or a child is not necessary or sufficient to make a child custody determination.

In the case of ANA MARIA TARQUIS ALFONSO v. MICHAEL SKADDEN, the courts delt with the issue of whether the Texas court had subject matter jurisdiction in a divorce decree that was sought to be enforced four years after an alleged default.

The fact of the case are as follows:

Michael Skadden and Ana Maria Tarquis Alfonso were married in Houston in 1991. In March 1999, Tarquis filed for divorce in Spain, and one month later Skadden (a Houston lawyer affiliated with a Madrid firm) filed for divorce in Harris County, Texas. Each of the parties claimed they were not served in the other’s suit, although Skadden appeared by attorney in Spain and Tarquis was served by publication. When Tarquis failed to appear in Texas, the trial court granted default, divided the property, named both parents managing conservators of their only child, entered a standard possession order, and ordered Skadden to pay child support. By contrast, the Spanish court granted sole custody to Tarquis, denied visitation to Skadden on the basis he had no relationship with the child (Skadden admits he has not seen their child since 1998), and also ordered Skadden to pay child support.

Four years and three months after the Texas decree was signed, Skadden sought to enforce it. Tarquis answered and argued the 1999 judgment was void due to lack of personal jurisdiction because she had not been served, and lack of subject-matter jurisdiction because Texas was not the child’s home state. The district judge — who had heard the 1999 case as an associate judge and recommended the divorce decree — reviewed the 1999 file, heard evidence, and then denied enforcement, finding the absence of an appointed ad litem or statement of evidence rendered service by publication improper. See Tex. R. Civ. P. 244.

While Skadden argued he never had proper notice or a hearing in Spain, his recognition of those proceedings established that Spanish courts had not declined jurisdiction. The trial court refused to enforce the Harris County decree on the basis of lack of subject matter jurisdiction. On appeal, the Texas Supreme Court agreed with the trial court. Subject-matter jurisdiction cannot be waived, and can be raised at any time. Univ. of Tex. Sw. Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d 351, 358 (Tex. 2004). Because the trial court lacked subject-matter jurisdiction to enter the custody provisions in the 1999 divorce decree, it properly refused to enforce that portion of the decree.

Existence of a Valid Contract

2009-04-01T22:39:00.004-05:00

In determining the existence of a contract, there are certain contract elements which must be present in order to prove the existence of a contract or agreement between two parties.

A valid contract requires:

(1) an offer,

(2) an acceptance,

(3) a meeting of the minds,

(4) each party's consent to the terms, and

(5) execution and delivery of the contract with the intent that it be mutual and binding.

See Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.--Houston [1st Dist.] 2002, pet. denied).

Generally, in Texas parties sue for breach of contract because the other party failed to perform or deliver on a promise or agreement under contract. As a matter of rule, oral or verbal contracts are actionable, however, a contract for real property or involving real property, there must be a written contract or agreement for it to be enforceable. See Texas Statute of Frauds.

To prevail on a breach-of-contract claim, the plaintiff must prove: (1) a valid contract between plaintiff and defendant existed; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff sustained damages as a result of the breach.

To be enforceable, the contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the respective parties. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992); America's Favorite Chicken v. Samaras, 929 S.W.2d 617, 622 (Tex. App.--San Antonio 1996, writ denied).

If a written contract agreement is not present, an injured party can still sue for breach so long as performance was tendered. This falls under the legal theory of "quantum meruit". What this means is that, say you have a business involving landscaping and yard maintenance. If someone hired your business to landscape the yard or maintain the yard or lot, though there may not be a written contract, if you do not get compensated for your work, then you have an action for breach under quantum meruit. In other words, the other party was or is unjustly enriched or benefited from your work, labor and or materials and therefore, under equity, it should only be fair that you get compensated for your legal performance.

Will Interpretation in Texas

2009-03-30T23:36:00.004-05:00

The basic principle in construing or interpreting a will is to ascertain the intent of the testator or the decedent. Hancock v. Krause, 757 S.W.2d 117, 119 (Tex. App.--Houston [1st Dist.] 1988, no writ). In other words, what was the general intent of the decedent person for his or her estate. If the language of the will is unambiguous and plainly expresses that intention, it is unnecessary for the court to apply the technical rules of construction; rather, the court is confined to a mere legal interpretation and enforcement of the testator's intention. Id. (citing Silverthorn v. Jennings, 620 S.W.2d 894, 896 (Tex. Civ. App.--Amarillo 1981, writ ref'd n.r.e.)). If the will is ambiguous then a court may apply rules of contract interpretation such as applying the "four corners" rule in determining the intent of the person who signed the will within the limits of the document signed or within the four corners of the document itself without any outside influence and merely reconciling the words, phrases and sentences within the document.

To determine the testator's intent, courts consider the whole instrument and, if possible, harmonize every provision of the will with all others to give the will its proper effect. Id. at 119-20 (citing Republic Nat'l Bank v. Fredericks, 155 Tex. 79, 283 S.W.2d 39 (1955)).

Moreover, in interpreting a will, a will is not effective until the death of the testator, and a devise will lapse if the devisee dies before the testator, so testators often include alternate dispositions, in case a beneficiary dies before the testator. See Coleman v. Jackson, 126 S.W. 1178, 1179-80 (Tex. Civ. App.--San Antonio 1910, writ ref'd). Reference to death of devisee when coupled with a provision for an alternate beneficiary is usually construed to mean death prior to that of the testator. Austin Presbyterian Theological Seminary v. Moorman, 391 S.W.2d 717, 722 (Tex. 1965). Similarly, a person's heirs are not determined until his or her death. See Tex. Prob. Code Ann. §§ 3, 37 (Vernon 2003 & Vernon Supp. 2007).

Generally, will disputes arise because of poor language in a will or unclear directives within a last will and testament of a testator or testatrix. In Texas, probate courts are given the jurisdiction in handling will disputes. This usually arises when significant property is at stake, and siblings and or will beneficiaries may fight about the proper interpretation of a will.

To avoid such will disputes, it is best to consult with an estate lawyer or probate attorney to draft a properly written will without leaving any room for interpretation, that is the plain meaning and language in the will is clear enough so as reasonable minds do not differ on the proper interpretation or application of a will provision. Especially when dealing with high net worth estates, it is best to leave the drafting of a will or probate legal document to the trained lawyer or attorney experienced in estate planning and or probate laws in Texas.

Contract Interpretation in Texas: Deed Restrictive Covenants

2009-03-26T23:10:00.006-05:00

In, Texas, the law concerning contract interpretation is well-settled. When construing a written contract, the primary concern is to give effect to the true intent of the parties as expressed in the instrument. See Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994). If a written contract is worded in such a way that it can be given a definite legal meaning, then the contract is not ambiguous. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). If the contract is unambiguous, the court must enforce the contract as written. Transcon. Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 665 (Tex. App.--Houston [1st Dist.] 2000, pet. denied).

This general contract interpretation rule applies to covenants under deed. Restrictive covenants are subject to the same general rules of construction as contracts. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). Like a contract, a restrictive covenant is unambiguous if it can be given a certain or definite legal meaning. Id. Whether restrictive covenants are ambiguous is a matter of law for the court to decide. City of Pasadena v. Gennedy, 125 S.W.3d 687, 692 (Tex. App.--Houston [1st Dist.] 2003, pet. denied).

Public Policy on Restrictive Covenants.

At common law, covenants restricting the free use of land are not favored, but will still be enforced when they are confined to a lawful purpose and are clearly worded. Id. at 693. All doubts concerning a restrictive covenant's terms are resolved in favor of the free and unrestricted use of the land, and any ambiguity must be strictly construed against the party seeking to enforce the covenant. Id. The Texas Property Code states that "[a] restrictive covenant shall be liberally construed to give effect to its purposes and intent." Tex. Prop. Code Ann. § 202.003(a) (Vernon 2007).

HOA Declarations and restrictive covenants are a good example. Typically, homeowners, homeowner's associations and vise-a-versa encounter disputes as to deed restrictions. HOA declarations and covenants should be clearly written so as to avoid differing opinions as to its interpretation. When there is a dispute as to an interpretation of a covenant or restriction under a deed or real property right, it is likely that the language in the contract is ambiguous. When this occurs, the proper remedy, or at least one of the legal remedies, is for a declaratory ruling by a court for a proper interpretation under the Texas Declaratory Judgments Act. Consult an attorney if you are a homeowner or homeowner association, should a dispute arise on the proper application of a deed restriction or covenant.

Civil Contempt In Family Law Cases

2009-03-14T21:12:00.006-05:00

Many times in family law cases, the question or issue arises as to the liability of a party to comply with terms of custody, visitation, and or child support. Civil contempt in Texas is the process by which a court exerts its judicial authority to compel obedience to some order of the court. See, Ex parte Padron, 565 S.W.2d at 924 (citing Ex parte Werblud, 536 S.W.2d 542, 545 (Tex. 1976) (orig. proceeding)).

Texas case law dictates that command language is essential to create an order enforceable by contempt. See Ex parte Gorena, 595 S.W.2d 841, 845 (Tex. 1979) (orig. proceeding); Ex parte Padron, 565 S.W.2d at 924; see also Ex parte Duncan, 62 S.W. 758, 760 (Tex. Crim. App. 1901) (orig. proceeding) (stating the order alleged to have been disobeyed “must be in the form of a command”).

So often, parties recite terms in final orders such as a Final Decree of Divorce. However, merely incorporating an agreement into the recitals of a divorce decree, without a mandate from the court, is not sufficient. See, e.g., In re Dupree, 118 S.W.3d at 916 (holding that a party cannot be held in contempt for failure to pay alimony when his agreement to pay was incorporated in the court’s divorce decree without command language); Ex parte Harris, 649 S.W.2d 389, 391 (Tex. App.—Corpus Christi 1983, orig. proceeding) (holding that an agreement to pay child support that is incorporated in the parties’ divorce decree is not enforceable by contempt because the decree did not order the parties to comply with the agreement).

In other words, there must be something more than just an agreement term in the final decree to be enforceable as a contempt charge. True, terms under an agreement such as a final divorce decree is enforceable and valid just as with any other valid written contract. But to enforce a terms as contempt for failure to comply there must be a specific command or "order" from the court to comply, otherwise the term cannot be enforceable under contempt if a court never ordered it in the first place. A contempt arises from an order from a court, thus the term "contempt of court".

In Ex parte Gorena, the court upheld a contempt order for failure to make agreed payments incorporated in a divorce decree. See Ex Parte Gorena, 595 S.W.2d at 843. There, the decree ordered that the payments be made. Id. ( “‘It is decreed that Respondent (Mr. Gorena) shall pay to Petitioner (Ms. Barber) . . . .’”). The key underlying factor is that whether a court ordered the term as set forth in the decree or final order.

Family law parties should request this key ingredient in any final order or final decree of divorce, or order for modification, custody, child support and or order for visitation. This ensures that the sought after terms can be legally enforced under contempt for non-compliance or failure to follow the court's order.

What Constitutes Medical Malpractice in Texas?

2009-03-02T00:50:00.004-06:00

In a medical negligence case, the plaintiff must prove, by competent expert testimony, that the defendant’s breach of duty proximately caused the plaintiff’s injuries. Duff v. Yelin, 751 S.W.2d 175, 176 (Tex. 1988); Hart v. Van Zandt, 399 S.W.2d 791, 792 (Tex. 1966). On the causation element, the plaintiff is required to show evidence of a reasonable medical probability that the injury was proximately caused by the breach of the defendant. Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 511 (Tex. 1995); Duff, 751 S.W.2d at 176.

Through expert testimony, the plaintiff must prove:
(1) A duty by the physician to act according to a certain standard of care;
(2) A breach of that standard of care;
(3) An injury; and
(4) A causal connection between the breach of care and the injury.

Morrell v. Finke, 184 S.W.3d 257, 271 (Tex. App.─Fort Worth 2005, pet. denied).
The threshold question in a medical malpractice case is the standard of care. Jones v. Miller, 966 S.W.2d 851, 854 (Tex. App.─Houston [1st Dist.] 1998, no pet.). The applicable standard must be established so the fact finder can decide if the defendant deviated. Id. In medical malpractice cases, the standard of care must be established by expert testimony unless the mode or form of treatment is a matter of common knowledge or is within the experience of a layman. Jackson v. Axelrad, 221 S.W.3d 650, 655 (Tex. 2007).

To establish proximate cause, a plaintiff must prove both (1) cause-in-fact, and (2) foreseeability. Duff, 751 S.W.2d at 176. Cause-in-fact requires the plaintiff to establish a causal connection between the injuries suffered and the defendant’s breach of duty based upon “reasonable medical probability,” not mere conjecture, speculation, or possibility. See Park Place Hosp., 909 S.W.2d at 511. The ultimate standard of proof on causation is “whether, by a preponderance of the evidence, the negligent act or omission is shown to be a substantial factor in bringing about the harm and without which the harm would not have occurred.” Kramer v. Lewisville Memorial Hosp., 858 S.W.2d 397, 400 (Tex. 1993). Importantly, reasonable probability is determined by the substance and context of an expert’s opinion, and does not turn on semantics or on the use of a particular term or phrase. Arlington Mem’l Hosp. Found., Inc. v. Baird, 991 S.W.2d 918, 922 (Tex. App.─Fort Worth 1999, pet. denied) (citing Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 500 (Tex. 1995)).

What Constitutes Legal Malpractice in Texas?

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To prevail on a legal malpractice claim, a plaintiff must show that:

(1) the attorney owed the plaintiff a duty,

(2) the attorney breached that duty,

(3) the breach proximately caused the plaintiff’s injuries, and

(4) damages occurred.

Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113, 117 (Tex. 2004); Greathouse v. McConnell, 982 S.W.2d 165, 172 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).

If a legal malpractice case arises from prior litigation, a plaintiff must prove that, but for the attorney’s breach of his duty, the plaintiff would have prevailed in the underlying case. Greathouse, 982 S.W.2d at 172. It is the Plaintiff's burden to show that there was a breach of this duty by counsel, which caused the injury. Cases often refer to this causation aspect of the plaintiff’s burden as the “suit-within-a-suit” requirement. See id. at 173.

Generally, one proves causation in a legal malpractice suit by expert testimony. See Alexander, 146 S.W.3d at 119–20. The determination of proximate cause is usually a question of fact. See El Chico Corp. v. Poole, 732 S.W.2d 306, 313–14 (Tex. 1987). This is true in legal malpractice actions as well.

Appellate case differ in the standard of review, in that cases of appellate legal malpractice, however, the determination of causation requires determining whether the appeal in the underlying action would have been successful. Id. The plaintiff must show that but for the attorney’s negligence the client would have prevailed on appeal. See Jackson v. Urban, Coolidge, Pennington & Scott, 516 S.W.2d 948, 949 (Tex. Civ. App.—Houston [1st Dist.] 1974, writ ref’d n.r.e.). The rationale for requiring this determination is that, if the appeal would not have succeeded and the trial court judgment would have been affirmed, the attorney’s negligence could not have caused the plaintiff any damage. Id. On the other hand, if the appeal would have succeeded in reversing the trial court’s judgment and obtaining a more favorable result, then the plaintiff sustained damage because of the attorney’s negligence. Millhouse v. Wiesenthal, 775 S.W.2d 626, 627 (Tex. 1989).

In cases involving appellate legal malpractice, the question of whether an appeal would have been successful depends on an analysis of the law and the procedural rules. As the Millhouse court noted, because this requires a review of the trial record and the briefs in order to determine whether the trial court committed reversible error, “a judge is clearly in a better position” to do this than is a jury. Id. at 628. Therefore, where the issue of causation hinges on the possible outcome of an appeal, the question of causation is to be resolved by the court as a question of law. Id.; Klein v. Reynolds, Cunningham, Peterson & Cordell, 923 S.W.2d 45, 47 (Tex. App.—Houston [1st Dist.] 1995, no writ).