May 24, 2022

Volume XII, Number 144

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May 23, 2022

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Court Reversed Breach Of Fiduciary Duty Judgment Due To A Lack Of Damages

In In the Interest of M.G.G., an ex-husband was made a constructive trustee of stocks that he held in his retirement account for his ex-wife. No. 05-19-00777-CV, 2020 Tex. App. LEXIS 6291 (Tex. App.—Dallas August 10, 2020, no pet. history). The divorce order stated that upon sale of the stock, the ex-husband should send the gross receipts from the sale to the ex-wife. When the ex-husband sold the stock, he paid taxes and sent the net receipts to his ex-wife. She sued the ex-husband for breach of fiduciary duty, and the trial court found for her and awarded her damages after a bench trial.

On appeal, the court of appeals described her claim as follows:

The only theory of harm Ms. Gatewood advanced in the trial court is that, by withholding and paying taxes based on his own tax rate instead of hers, Mr. Gustafson forced her to pay taxes at a higher rate. The proper measure of damages for that harm, however, is the difference between the taxes she would have paid at her purportedly lower tax rate and the amount Mr. Gustafson paid the IRS. To prove Mr. Gustafson harmed her in that manner, Ms. Gatewood had to prove there was a disparity between their tax rates.

Id. The court held that there was no evidence in the record as to what the ex-wife’s tax rate was and no evidence that it was lower than the rate paid by the ex-husband. Accordingly, the court reversed and rendered for the ex-husband.

© 2022 Winstead PC.National Law Review, Volume X, Number 237
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About this Author

David Johnson Financial Institution lLtigation Winstead Law Firm Fort Worth Texas
Managing Shareholder - Fort Worth

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the Texas Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. 

David's financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class...

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