Virginia O. Kinsel, as Attorney-In-Fact for J. Frank Kinsel, J. Frank Kinsel, Jr., Carole K. Edwards, and Catherine K. Collins v. Jane O. Lindsey, Individually and as Co-Trustee of the Lesey B. Kinsel Trust, Robert N. Oliver, Keith Branyon and Jackson Walker, Llp, 526 S.W.3d 411

Background

Lesey Kinsel (owned 60% of family ranch) placed her share in an intervivos trust; a 2004 amendment devised her ranch interests to certain step-children (the Kinsels) but was silent about proceeds if the ranch were sold during her lifetime, making Jane Lindsey the residual beneficiary.
In 2008 the ranch was sold during Lesey’s lifetime; proceeds ($3,056,120.65) were paid to Lesey’s trust (ultimately benefiting Jane), and some co-owners received cash for their interests.
The Kinsels sued Jane Lindsey, Bob Oliver, attorney Keith Branyon, and Jackson Walker LLP alleging undue influence, lack of capacity, fraud (statutory and common-law), conspiracy, and tortious interference with inheritances; they sought damages and a constructive trust on proceeds received by Jane.
A jury found for the Kinsels on all claims and awarded roughly $3.056 million; the trial court voided the contested trust amendments and imposed a constructive trust on Jane’s interest; the court of appeals reversed fraud and tortious-interference damages but affirmed lack-of-capacity findings and a narrowed constructive trust.
The Texas Supreme Court affirmed the court of appeals: it (1) declined to recognize a new common-law tort of tortious interference with an inheritance because an adequate remedy (constructive trust) existed; (2) affirmed the sufficiency of evidence that Lesey lacked capacity; (3) held the fraud damages instruction was legally incorrect and unsupported by evidence; and (4) affirmed remand on attorneys’ fees segregation.

Issues

Issue	Kinsels' Argument	Jane/Bob/Other Defendants' Argument	Held
Whether Texas recognizes tortious interference with an inheritance	Court should recognize the tort (or Court already did in Pope) and allow recovery for lost inheritance expectancies	Texas has not recognized the tort; new causes of action should be created by Legislature or Supreme Court only	Court declined to recognize the tort; adequate remedy (constructive trust) exists so no expansion of tort law
Validity of fraud damages awarded	Fraud caused relinquishment of inheritance expectancy; award should equal lost expectancy (ranch proceeds)	Fraud damages must be measured by out-of-pocket rule at transaction time; Kinsels received sale proceeds for their interests	Fraud instruction used wrong measure (applied expectancy); correct out-of-pocket measure yields no recoverable fraud damages on this record; judgment for fraud reversed
Whether evidence supports finding Lesey lacked mental capacity and was unduly influenced	Evidence of confusion, dementia, deteriorating handwriting, caregiver notes, and witness testimony showed incapacity and undue influence	Defendants (esp. Jane) argued Lesey remained competent; attorney Keith’s careful procedures rebut incapacity	Sufficient evidence supports jury’s finding Lesey lacked capacity; undue-influence finding supported (Keith, however, lacked evidence of undue influence)
Appropriateness and scope of constructive trust	Constructive trust necessary to prevent unjust enrichment and to redress the Kinsels’ loss of expectancy; should attach to proceeds (possibly more)	Jane/Bob argued adeemption on sale, insufficient grounds for constructive trust, and unclean hands by Kinsels	Trial court acted within its discretion to impose a constructive trust; court of appeals properly narrowed it to the ranch and proceeds; constructive trust is an adequate remedy here
Attorneys’ fees recovery and segregation	Kinsels sought $800,000 trial fees and appellate fees; argued claims intertwined so segregation unnecessary	Defendants argued fees unsupported and not segregated for non-recoverable claims	Court affirmed remand: Kinsels may recover fees only for claims permitting them (e.g., declaratory relief); fee evidence was marginal but sufficient to remand for segregation/recalculation; appellate-fee award properly denied on the record

Key Cases Cited

In re Morgan Stanley & Co., 293 S.W.3d 182 (Tex. 2009) (capacity/court avoidance of documents lacking mental capacity)
Mandell & Wright v. Thomas, 441 S.W.2d 841 (Tex. 1969) (test for testamentary/capacity to transact business)
Lee v. Lee, 424 S.W.2d 609 (Tex. 1968) (capacity judged at time of execution; other evidence may be relevant)
Baylor Univ. v. Sonnichsen, 221 S.W.3d 632 (Tex. 2007) (measure of out-of-pocket damages)
Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) (timing and measure of fraud damages)
Pope v. Garrett, 211 S.W.2d 559 (Tex. 1948) (constructive trust imposed where wrongful acts prevented testation; equity remedy, not creation of new tort)
KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70 (Tex. 2015) (constructive trust as equitable remedy to prevent unjust enrichment)
Meadows v. Bierschwale, 516 S.W.2d 125 (Tex. 1974) (equitable grounds for constructive trust)
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (requirement to segregate attorney’s fees between recoverable and nonrecoverable claims)
Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014) (factors for recognizing new causes of action)
Roberts v. Williamson, 111 S.W.3d 113 (Tex. 2003) (cost-benefit analysis when recognizing new duties/causes of action)
Smith v. Patrick W.Y. Tam Tr., 296 S.W.3d 545 (Tex. 2009) (factfinder’s role in attorney-fee determinations)
Garcia v. Gomez, 319 S.W.3d 638 (Tex. 2010) (evidentiary sufficiency for attorney-fee testimony)
Long v. Griffin, 442 S.W.3d 253 (Tex. 2014) (remand for attorney-fee reconsideration when segregation issues exist)