Full Opinion (html_with_citations)

       TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                              BEFORE THE COURT EN BANC



                                      NO. 03-20-00058-CV


  Appellant, Christopher F. Bertucci, as Executor of The Estate of Anthony R. Bertucci,
 Deceased, and derivatively on behalf of American Affordable Homes & Properties, Inc.;
 American Affordable Homes, LP; Town Vista Development, LLC; Town Vista Terrace,
   Inc.; and MidCrowne Senior SLP, LLC // Cross-Appellant, Eugene L. Watkins, Jr.

                                                 v.

Appellee, Eugene L. Watkins, Jr. // Cross-Appellee, Christopher F. Bertucci, as Executor of
  The Estate of Anthony R. Bertucci, Deceased, and derivatively on behalf of American
  Affordable Homes & Properties, Inc.; American Affordable Homes, LP; Town Vista
    Development, LLC; Town Vista Terrace, Inc.; and MidCrowne Senior SLP, LLC


                FROM THE PROBATE COURT NO. 1 OF TRAVIS COUNTY
      NO. C-1-PB-17-000937, THE HONORABLE GUY S. HERMAN, JUDGE PRESIDING



             CONCURRING AND DISSENTING OPINION

               I agree with the Court’s conclusions and join in both the opinion and the judgment

on all issues, except for one—that Christopher Bertucci failed to properly brief the Court on the

challenges to the trial court’s disposition of the derivative claims he brought on behalf of the B-W

Companies and thus waived those challenges. 1 Because I disagree with the Court’s analysis of the




       1Because they share the same last name, I refer to Christopher Bertucci as “Christopher”
and Anthony Bertucci as “Anthony.”
waiver issue for the reasons explained below and would address the merits of the derivative claims,

I respectfully dissent on this issue.

                While it is true that failure to provide argument and analysis in support of an appeal

may result in waiver, see RSL Funding, LLC v. Newsome,
569 S.W.3d 116, 126
 (Tex. 2018), I

would conclude that Christopher raised arguments in support of the derivative claims and that we

should construe his briefing “reasonably, yet liberally, so that the right to appellate review is not

lost by waiver,” Perry v. Cohen,
272 S.W.3d 585, 587
 (Tex. 2008). As the Texas Supreme Court

has instructed many times, “appellate courts should reach the merits of an appeal whenever

reasonably possible.”
Id.

                As the Court notes, Christopher maintained the distinction between Anthony’s

claims brought in an individual capacity and the derivative claims brought in a representative

capacity (all of which Christopher pursued as executor of Anthony’s estate) when the notice of

appeal was filed, titling it “Defendants’ Notice of Appeal,” and identifying the five B-W

Companies on behalf of which he brought the appeal of the derivative claims. See Sneed v. Webre,
465 S.W.3d 169, 188-89
 (Tex. 2015) (explaining that shareholder of a closely held corporation has

standing to pursue corporation’s claim in representative capacity in derivative proceeding but that

shareholder must prove personal cause of action and personal injury to recover in his individual

capacity for non-derivative claims). Thus, Christopher invoked our jurisdiction over the derivative

claims. He also attached to the docketing statement for the appeal an “Additional Appellants”

page to “identify the following organizations that are additional Appellants” and listed the five

B-W Companies again.          The opening brief was titled “Appellants’ Brief” and refers to

“Appellants” throughout, and the signature blocks for counsel on every document they filed

identifies them as “Counsel for Appellants,” which is consistent with the reference in the notice of

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appeal to the plural “Defendants.” While the use of the word “appellants” is not dispositive of this

issue, it at least indicates Christopher’s intent to brief both Anthony’s individual claims and the

derivative claims. The Identity of Parties and Counsel page lists “Appellants: Christopher

Bertucci, Executor, Estate of Anthony R. Bertucci,” which is consistent with the naming

convention followed in the briefing in the trial court that consistently referred to Christopher as

“Executor” or “Christopher” when discussing the derivative claims as well as the individual

claims. Technically, Christopher, as Executor, is the only appellant but brought the appeal in two

capacities, one asserting Anthony’s individual claims and one asserting derivative claims initially

brought by Anthony in a representative capacity on behalf of the B-W Companies, and the Court

has styled the case accordingly. I would conclude that Christopher’s failure to identify the B-W

Companies by name in the Identity of Parties section is the sort of “harmless procedural defect”

that the Texas Supreme Court has counseled against as a basis for disposing of appeals. See
id.

(“[D]isposing of appeals for harmless procedural defects is disfavored.”); see also St. John

Missionary Baptist Church v. Flakes,
595 S.W.3d 211
, 213 (Tex. 2020) (“We construe the Rules

of Appellate Procedure liberally, so that decisions turn on substance rather than procedural

technicality.” (quoting Garza v. Garcia,
137 S.W.3d 36, 38
 (Tex. 2004)).

               In the Sixth Amended Counterclaim, Christopher, acting as Executor, brought

Anthony’s individual claims and derivative claims on behalf of the B-W Companies against

Watkins for (1) civil theft under the Texas Theft Liability Act; (2) breach of fiduciary duty;

(3) breach of the duty to account; (4) equitable disgorgement and forfeiture; and (5) breach of

contract. These claims are based on Watkins’s alleged conduct and do not differentiate between

actions that allegedly harmed the estate and actions that allegedly harmed the B-W Companies.

Similarly, for the most part, the parties’ arguments in the summary-judgment briefing do not

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distinguish between arguments applicable to Anthony’s individual claims and arguments

applicable to the derivative claims. 2

               In the reply brief, Christopher contested Watkins’s argument, raised in his

appellee’s brief, that Christopher did not file an opening brief in a representative capacity on behalf

of the B-W Companies and thus did not pursue the derivative claims on appeal. Christopher argued

that he had not abandoned the derivative claims and that we should liberally construe the opening

brief, asserting that it discusses each derivative claim and the leading cases and providing page

cites to the opening brief.     Although the Court concludes that the specific pages cited by

Christopher reflect an absence of arguments specific to the derivative claims and this absence

constitutes a waiver of the appeal of those claims, I would conclude otherwise.

               Christopher’s first cited reference to argument in the opening brief about the

derivative claims concerns Texas Rule of Evidence 601(b), the “Dead Man’s Rule,” which applies

only in a civil case by or against a party in the party’s capacity as executor to exclude testimony

about an oral statement by the testator. In a subsection titled “The Dead Man’s Rule applies to all

of [Anthony] Bertucci’s claims,” Christopher sought to preempt Watkins’s argument made in the

trial court—which Watkins made again on appeal—that the Dead Man’s Rule does not apply to

exclude Watkins’s testimony. Watkins argued that because Watkins did not owe Anthony, in his

individual capacity, fiduciary or contractual duties, any claims that could be asserted about

Company deposits into and disbursements from TCB’s account had to be brought by Christopher

in a derivative capacity, not his capacity as Executor, and thus the Dead Man’s Rule would not


       2  The only exceptions appear to be Watkins’s arguments about Christopher’s standing to
bring the derivative claims, whether Watkins owed fiduciary duties to Anthony individually, and
whether Watkins and Anthony had an enforceable contract based on the Companies’
governing documents.
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apply. While Christopher’s rebuttal argument perhaps could have been more artfully articulated,

a close reading indicates that Christopher argues that the Dead Man’s Rule should apply to exclude

Watkins’s testimony about Anthony’s knowledge of the disputed transactions as it relates to both

the individual claims and the derivative claims. Christopher argues that because Anthony initially

had asserted individual claims and also had asserted derivative claims on behalf of the B-W

Companies, which he had standing to assert because they were closely held corporations, as

Executor, Christopher stepped into his father’s shoes and had “standing to maintain all of

[Anthony’s] claims.” In other words, Christopher argues that it is his role as executor that enables

him to maintain the derivative claims originally brought by Anthony on behalf of the Companies.

               Christopher also refers the Court to the subsection of the opening brief titled

“Watkins owed fiduciary duties to Appellants and breached them,” which supports his argument

that the trial court erred by granting Watkins’s no-evidence motion and dismissing Anthony’s

claims. In that subsection, Christopher argues that the evidence, including Watkins’s own

admissions, supports a finding that the various positions that Watkins held at the companies while

managing the venture imposed fiduciary duties. Christopher then lists those positions at the

various companies and cites case law to support that Watkins had fiduciary duties to both the

corporations and the partnerships. See, e.g., Ritchie v. Rupe,
443 S.W.3d 856, 868, 887
 (Tex.

2014) (holding that corporate officers and directors owe fiduciary duties to entities that prohibit

them from misapplying corporate assets for their personal gain); In re Jones,
445 B.R. 677, 713

(Bankr. N.D. Tex. 2011) (concluding that under Texas law managing partners owe fiduciary duties

to partnerships and their limited partners “and this concept applies even in a two-tiered structure

where an individual is acting as the manager of the managing general partner”). In my opinion,



                                                 5
this portion of the briefing expressly addresses the derivative claim for breach of fiduciary duty. 3

See First United Pentecostal Church of Beaumont v. Parker,
514 S.W.3d 214, 222
 (Tex. 2017)

(explaining that when we review briefs, Rule 38.1 requires us “to treat the statement of an issue

‘as covering every subsidiary question that is fairly included’” (quoting Tex. R. App. P. 38.1(f))).

               Christopher also refers to his citation of the statement in Ritchie v. Rupe that the

law affords a remedy for a corporate officer’s breach of fiduciary duty to the corporation to

demonstrate that he argued the derivative claims in the opening brief. He quoted that statement in

support of his argument that an exculpatory clause is against public policy, which the Court

concludes is not so plainly an argument related to the derivative claims to support an implication

that Christopher made the argument to advance the derivative claims. Accordingly, the Court

concludes that Christopher has waived the appeal of the derivative claims based on “[t]he absence

of arguments specific to the derivative claims.”        However, this conclusion rests upon an

assumption that is not borne out by a review of the parties’ briefing in the trial court—that there

are other arguments to be made that apply only to the derivative claims. As I noted earlier, for the

most part, the individual claims and the derivative claims seek the same remedies for the same

alleged conduct by Watkins. The Court does not identify any arguments specific to the derivative

claims that Christopher could have made but did not.

               I agree with the Court that it was not Watkins’s responsibility to correct

Christopher’s failure to list the B-W Companies in the Identity of Parties section of the opening

brief, which Christopher describes as an “oversight” and an “inadvertent omission.” Ideally,




       3  For this reason, I also disagree with the Court’s conclusion that Christopher’s argument
in the reply brief that Watkins owed fiduciary duties to the Companies in addition to the duties
Watkins owed to Anthony is a new issue raised in the reply brief and therefore waived.
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Christopher would have sought to amend the opening brief after Watkins brought the matter to his

attention. See Tex. R. App. P. 38.7 (allowing amendment or supplementation of brief “whenever

justice requires, on whatever reasonable terms the court may prescribe”); see also
id.
 R. 38.9

(allowing court to require amendment or supplementation for formal defects in briefing). But

Christopher expressly stated in the reply brief that he had not abandoned the derivative claims and

identified the arguments in the opening brief that addressed arguments that implicate only the

derivative claims—in my view, that express statement and identification of arguments sufficed to

avoid waiver of those claims.

               In sum, I dissent from the Court’s conclusions that (1) the B-W Companies are

parties who were not named in the brief and thus they have not filed a brief and (2) Christopher

did not present arguments and claims on their behalf. Christopher’s brief addressed the merits of

the trial court’s orders dismissing the derivative claims, including the specific question of whether

Watkins owed fiduciary duties to the B-W Companies, and “we liberally construe issues presented

to obtain a just, fair, and equitable adjudication of the rights of the litigants.” Perry,
272 S.W.3d at 588
 (quoting El Paso Nat. Gas v. Minco Oil & Gas, Inc.,
8 S.W.3d 309, 316
 (Tex. 1999)); see

also St. John Missionary Baptist Church, 595 S.W.3d at 214 (“We have often held that a party

sufficiently preserves an issue for review by arguing the issue’s substance, even if the party does

not call the issue by name.”). Because I would reach the merits of the issues related to the trial

court’s dismissal of the derivative claims brought by Christopher on behalf of the B-W Companies,

I respectfully dissent on this issue only.



                                              __________________________________________
                                              Gisela D. Triana, Justice


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Concurring and Dissenting Opinion by Justice Triana, joined by Justice Kelly

Filed: December 30, 2022




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