IN THE SUPREME COURT OF TEXAS
════════&#=
9552;═══
No. 05-0580
════════λ=
2;═══
A.G. Edwards & =
Sons=20
Inc., Petitioner,
v.
Maria Alicia =
Beyer,=20
Respondent
════════λ=
2;══════════&=
#9552;═════════_=
52;══════════=
══════════ =
552;═
On Petition for Review from =
the
Court of Appeals for the Eighth =
District of=20
Texas
════════&#=
9552;═════════λ=
2;══════════&=
#9552;═════════_=
52;══════════=
══
Argued March 22,=20
2007
Justice Wainwright delivered =
the=20
opinion of the Court.
=20
A.G. Edwards & Sons, Inc. appeals from a jury verdict in =
favor of=20
Maria Alicia Beyer. The jury found that A.G. Edwards breached its =
contract with=20
Alicia when it failed to create a joint account with the right of =
survivorship=20
in the name of her and her father, Federico Beyer. The trial court =
awarded=20
Alicia damages, pre- and postjudgment =
interest, and=20
attorney=92s fees. We affirm the court of appeals=92 judgment upholding =
the verdict,=20
reverse in part the court of appeals judgment on attorney=92s fees, and =
remand to=20
the trial court for a new trial on attorney=92s fees.
I. Background
=20
In 1985, Federico Beyer and his daughter, Alicia Beyer, both =
Mexican=20
citizens, opened an investment account as joint tenants with right of=20
survivorship (JTWROS) at an A.G. Edwards office in El Paso. =
Although Alicia=20
had five siblings, all of them were estranged from her and her father. =
When=20
Alicia became a resident alien in 1997, she was removed from the account =
because=20
she believed she would be required to pay taxes on the investment =
income. After=20
Frederico regained the ability to speak =
following a=20
stroke he suffered in October 2000, he and Alicia contacted A.G. Edwards =
broker=20
James Niemeier to return Alicia to the =
account. Niemeier recommended they transfer the old account =
into a=20
new account as joint tenants with right of survivorship. The purpose of =
the=20
change was to allow Alicia to access the funds to pay Federico=92s =
medical=20
expenses. Niemeier prepared three documents =
for Alicia=20
and Federico to sign: (1) a letter authorizing the transfer of funds to =
a new=20
account, (2) an authorization allowing both Alicia and Federico to write =
checks=20
on the account, and (3) the joint account agreement containing language =
setting=20
up the JTWROS account. Alicia testified that she and her father signed =
all three=20
documents on December 8, 2000, witnessed by his housekeeper, who does =
not read=20
English. She testified that later that day she drove to A.G. Edwards=92s =
office=20
with her father=92s housekeeper, who delivered the documents in an =
envelope to the=20
reception desk at A.G. Edwards because Niemeier was=20
not available. Alicia did not copy the documents.
=20
A week later, Alicia went to the A.G. Edwards office and =
discovered that=20
the account had not been approved. At first, Niemeier=20
claimed not to have received the documents, but then verified with the=20
receptionists that the envelope had been left at the front desk and that =
at=20
least one of the three documents was being entered into their document=20
management system. Niemeier assured Alicia =
that the=20
account would be ready in a few days. On December 27, 2000, A.G. =
Edwards=92s=20
St. =
Louis office=20
wired Niemeier that the joint account =
agreement was=20
missing. Niemeier never read the wire. Two =
days later,=20
the St. Louis office issued a =
delinquent document=20
report for the missing agreement, but before it could be delivered to =
El Paso, =
Federico lapsed=20
into a coma. No one from A.G. Edwards contacted Alicia about the missing =
joint=20
account agreement. The only contact was a December 27, 2000 letter sent =
to=20
Federico stating that the account was being processed.
=20
On January 9, 2001, Federico died intestate. When Alicia tried to =
access=20
the account, A.G. Edwards was unable to locate the joint account =
agreement and=20
froze the account. Alicia sued A.G. Edwards and Niemeier in state court for conversion, =
negligence, fraud,=20
negligent misrepresentation, breach of contract, and breach of a =
fiduciary duty.=20
She sought over $1 million in damages, including the portion of the =
account=20
distributed to her five siblings.
=20
On January 23, 2003, A.G. Edwards brought an interpleader action in federal district court, =
arguing that=20
Alicia=92s suit created competing claims to the funds. On September 18, =
2003, the=20
federal district court dismissed the interpleader,=20
concluding that there were no competing claims because Alicia admitted =
that,=20
without the executed joint account agreement, under Texas law the =
account was=20
not a JTWROS account. The federal district court ordered the =
interpleaded funds=20
delivered to the estate administrator and distributed in accordance with =
the=20
probate court=92s administration of the estate. The September 18th order =
also=20
awarded Alicia attorney=92s fees against A.G. Edwards for improperly =
filing the=20
interpleader action.
=20
In the meantime, Alicia tried her case in state district court. A =
jury=20
returned a verdict for Alicia on all six claims, found that A.G. Edwards =
agreed=20
with Alicia and Federico to open a joint account with right of =
survivorship, and=20
awarded attorney=92s fees for breach of contract. Alicia elected to =
recover on the=20
breach of contract claim and the trial court entered judgment for =
$791,200, an=20
amount equal to five-sixths of the investment account balance multiplied =
by the=20
percentage of fault the jury assigned to A.G. Edwards; $225,000 in =
attorney=92s=20
fees for trial; $48,000 in appellate attorney=92s fees, if necessary; =
and postjudgment interest on the $225,000 in =
attorney=92s fees for=20
trial preparation. The court awarded attorney=92s fees for all the =
claims Alicia=20
pursued in state court and her defense of the interpleader suit brought by A.G. Edwards in =
federal court.=20
Although the federal district court initially awarded Alicia reasonable=20
attorney=92s fees, the court later withdrew its award of fees to Alicia =
because=20
she had already received attorney=92s fees from the state district =
court.
=20
A.G. Edwards appealed and the court of appeals affirmed, concluding section 439(a) of =
the Texas=20
Probate Code does not apply to bar Alicia from seeking ownership of =
joint=20
account funds against the estate of the decedent. The court of appeals =
also held=20
that Alicia was not required to segregate fees between her contract and =
tort=20
claims because all arose from the same transaction and were inextricably =
intertwined. The court of appeals finally concluded that the trial court =
did not=20
err in its award of fees even though some of the fees were for defending =
the=20
federal interpleader action. A.G. Edwards =
then=20
petitioned this Court for review, appealing the applicability of Section =
439(a)=20
and the segregation of attorney=92s fees.
II. Analysis
A. Texas Probate Code Section 439(a)
=20
A.G. Edwards and Alicia agree that section 439(a) of the Texas =
Probate=20
Code governs beneficial ownership of funds in a joint account at =
financial=20
institutions upon the death of an owner of the account. They disagree =
over=20
whether Section 439(a) applies to financial institutions outside of the =
context=20
of a dispute over the surviving joint tenant=92s right to funds from the =
JTWROS=20
account or bars the admission of extrinsic evidence of the existence of =
a joint=20
tenancy with right of survivorship. Section 439(a) provides:
class=3DSection2> =
Sums=20
remaining on deposit at the death of a party to a joint account belong =
to the=20
surviving party or parties against the estate of the decedent if, by a =
written=20
agreement signed by the party who dies, the interest of such deceased =
party is=20
made to survive to the surviving party or parties.
class=3DSection3> =
Tex. Prob. Code =
=A7 439(a). A.G. =
Edwards argues=20
that Section 439(a) imposes an absolute requirement, applicable to =
financial=20
institutions in all circumstances, that any right of a survivor to =
recover=20
damages involving funds in the JTWROS account or the opening of the =
account must=20
be premised on the existence of a written agreement saying so. A.G. =
Edwards=20
asserts that the court of appeals erroneously rewrote the statute by =
holding=20
Section 439(a) inapplicable in this case. Alicia counters that Section =
439(a)=20
protects financial institutions only in multiple party disputes as to =
ownership=20
of the JTWROS account, not in disputes alleging a financial =
institution=92s=20
malfeasance in failing to properly set up the account.
=20
Section 439(a) governs controversies over the beneficial =
ownership of the=20
sums in an account between parties, defined as persons with a present =
right to=20
payment from a multiple party account, including a guardian, personal=20
representative, assignee, or attaching creditor. Id. =A7=A7 436(7), 437; see also Stegall v. Oadra, =
868 S.W.2d=20
290, 291 n.3 (Tex. 1993). For a party to have a =
right of=20
survivorship in a joint account upon the death of the other joint owner, =
the=20
right must be included in a written agreement signed by the decedent. =
Without=20
the statutorily required written agreement, the joint owner has no =
cognizable=20
claim to the sums in a JTWROS account. If Section 439(a) governs, =
extrinsic=20
evidence to attempt to prove a right of survivorship is immaterial and, =
thus, is=20
precluded. Stauffer v. Henderson, 801 S.W.2d 858, 863 (Tex. =
1990).
=20
Here, however, the dispute is not over whether A.G. Edwards =
incorrectly=20
paid the funds to Alicia=92s siblings. Alicia concedes that without the =
joint=20
account agreement, A.G. Edwards had no other choice. See Stegall, 868 S.W.2d at =
291=9693;=20
Stauffer, 801 S.W.2d at 865=9666. Without an executed joint =
account=20
agreement, A.G. Edwards had no duty to pay the funds from the JTWROS =
account to=20
her. No agreement could be found. In the absence of the required =
writing, the=20
statute compelled A.G. Edwards to pay the account funds in shares to all =
six=20
siblings. Alicia concedes this point, but claims that but for A.G. =
Edwards=92s=20
breach of its contract with her and negligent failure to create the =
JTWROS=20
account, she would have been entitled to sole ownership of the account =
funds=20
after her father died. The issue is whether Alicia could introduce =
evidence=20
other than the missing written agreement to establish A.G. Edwards=92s =
tort and=20
breach of contract in failing to set up the JTWROS account. Alicia =
argues that=20
this claim for damages against A.G. Edwards is not barred by Section =
439(a).=20
=20
We conclude that Section 439(a) does not govern Alicia=92s claim =
against=20
A.G. Edwards. A.G. Edwards=92s failure to take sufficient steps to =
create the=20
JTWROS account necessary to establish Alicia=92s right of survivorship =
is a breach=20
of a separate duty owed to Alicia. The evidence showed that Alicia and =
her=20
father performed the steps necessary to set up a JTWROS account, but =
A.G.=20
Edwards did not perform as agreed. The evidence before the jury included =
Niemeier=92s testimony that he recommended =
creating the JTWROS=20
account and promised to do so. Alicia and her housekeeper testified that =
they=20
delivered the necessary documents to A.G. Edwards, and Niemeier testified that he confirmed receipt of at =
least one=20
of the documents by the A.G. Edwards receptionists. Both Niemeier=92s phone conversations with Alicia and =
the=20
correspondence from St.=20
Louis alerted him to the absence of the joint =
account=20
agreement. Niemeier also testified that the =
A.G.=20
Edwards El Paso office did not react to the notices from its St. Louis =
headquarters=20
regarding the absence of the joint account agreement and that A.G. =
Edwards did=20
not contact Alicia either to notify her of the missing agreement or to =
request=20
that she complete a new one. Based on this evidence, the jury found that =
A.G.=20
Edwards agreed to open a joint account with enforceable rights of =
survivorship=20
for Alicia and her father but failed to do so. Because Section 439(a) =
does not=20
apply to her claim, Alicia was not barred from providing such evidence =
to prove=20
her case against A.G. Edwards.
=20
In interpreting Section 439(a), both sides rely on =
Stauffer. The=20
facts of Stauffer represent the classic ownership dispute over a =
joint=20
account. Two sisters, Henderson and Stauffer, opened a joint account.=20
Stauffer, 801 S.W.2d at 859. When =
Henderson =
died, Stauffer=20
withdrew the remaining funds from the account. Henderson=92s husband sued Stauffer claiming that =
the money=20
belonged to Henderson=92s estate. Stauffer =
claimed that she=20
was entitled to the funds by right of survivorship. Id. =
The=20
account agreement stated merely that the survivor of the parties could =
withdraw=20
the account funds. Id. Interpreting the statute, =
we=20
explained that =93[n]ot only=20
has the Legislature made a written agreement both necessary and =
sufficient for a=20
right of survivorship in a joint account, it has undertaken to specify =
language=20
that will meet its requirements.=94 Id. at 863, 866. We held that the account =
agreement=92s language=20
was insufficient to create a right of survivorship because it did not =
contain=20
the statutory language. We recognized a bright-line rule in Section =
439(a)=20
requiring specific language in a writing signed by the decedent to =
create a=20
right of survivorship. Id.=20
at 863. Furthermore, =93[i]f such =
agreement=20
is complete and unambiguous, then parol =
evidence is=20
inadmissible, as with written agreements generally, to vary, add to or=20
contradict its terms.=94 Id. Stauffer holds =
that Section=20
439(a) requires a writing to establish a JTWROS account but does not =
dispose of=20
the issue posed in this case, which is whether Section 439(a) applies to =
alleged negligence and breach of contract by the =
financial=20
institution in setting up the JTWROS account.
=20
A.G. Edwards also relies on two cases to argue that the court of =
appeals=92=20
opinion conflicts with prior law. These cases are distinguishable. In =
Parker=20
v. JPMorgan Chase Bank, the court of =
appeals held=20
that no payable on death account had been created because the decedent =
had not=20
signed the agreement. 95 S.W.3d 428, 431 (Tex. App.=97Houston [1st Dist.] 2002, no =
pet.).=20
Alicia=92s argument is different because she asserts that A.G. Edwards =
breached a=20
contract to create a joint account with right of survivorship by losing =
the=20
critical document and failing to take the steps necessary to remedy this =
loss.=20
Parker, like Stauffer, was a classic ownership =
dispute.
=20
A.G. Edwards also argues that the court of appeals=92 opinion =
conflicts=20
with Magee v. Westmoreland and that this suit is a failed attempt =
to make=20
an =93end run=94 around Section 439(a) by suing the financial =
institution for breach=20
of contract. 693 S.W.2d 612 (Tex. App.=97San Antonio =
1985, writ=20
ref=92d n.r.e.). In=20
Magee, Haag purchased a certificate of deposit (CD) and named =
herself and=20
Magee as joint beneficiaries. Id. at=20
613. The CD, although made payable to the =
survivor of=20
Haag and Magee, was not signed by either of them. Id. =
Haag died, and=20
Magee sued the bank and Haag=92s executrix to establish that he was =
entitled to=20
the CD as the survivor. Id. at=20
614. A.G. Edwards characterizes Magee=92s suit as an end run =
around Section=20
439(a) because Magee claimed that he was a third party beneficiary of =
the CD.=20
Even though Magee asserted his claim to the funds as a third party =
beneficiary,=20
it was clearly an attempt to give effect to the survivorship language on =
the=20
CD. Like the plaintiffs in =
Stauffer=20
and Parker, Magee was unsuccessful in his attempt to establish =
beneficial=20
ownership of the account because there was no signed writing that =
complied with=20
Section 439(a) to establish a right of survivorship. Id. at=20
616. Thus, neither of these cases apply to the=20
instant dispute.
B. Attorney=92s Fees
=20
The second issue presented in this petition for review is whether =
Alicia=20
was required to segregate attorney=92s fees between her breach of =
contract and=20
tort causes of action. In Tony Gullo =
Motors v.=20
Chapa, we recently re-affirmed the rule that =93if any attorney=92s =
fees relate=20
solely to a claim for which such fees are unrecoverable, a claimant must =
segregate recoverable from unrecoverable fees.=94 212 S.W.3d=20
299, 313 (Tex.=20
2006). It is only when legal services advance both recoverable =
and=20
unrecoverable claims that the services are so intertwined that the =
associated=20
fees need not be segregated. Id. at=20
313=9614. We reverse the judgment of the court of appeals in part =
and=20
remand the case for a new trial on attorney=92s fees. Id. at =
314 (=93Unsegregated attorney=92s fees for the entire case =
are some=20
evidence of what the segregated amount should be.=94).
III. Conclusion
=20
We affirm in part and reverse in part the judgment of the court =
of=20
appeals and remand the case to the trial court for a new trial on =
attorney=92s=20
fees.
&nbs=
p; =20
________________________________________
&nbs=
p; =
; =
&=
nbsp; &n=
bsp; =20
J. Dale Wainwright
&nbs=
p; =
; =
&=
nbsp; &n=
bsp; =20
Justice
OPINION DELIVERED: =
September 28,=20
2007