Valdez v. Hollenbeck
No. 13-0709
Case summary written by Ashleigh Hammer, Staff Member.
JUSTICE GUZMAN delivered the Court’s unanimous opinion.
A number of civil suits arose in Bexar County after the county discovered that a former probate clerk had been stealing money from county residents that had died intestate. This suit, in which the deceased’s heirs were defrauded of nearly half a million dollars, was among those cases.
The underlying case came about when the appellant, Robert A. Valdez, was appointed as administrator of the deceased’s estate. As estate administrator, Valdez filed an inventory and appraisement of the estate with the probate court. Valdez’s inventory valued the deceased’s personal property, dispersed between five separate banking accounts, at $261,000.
Two months later, a certified public accountant filed a tax return on behalf of the deceased. The tax return indicated that the deceased actually had open accounts with ten different financial institutions rather than only five. The discrepancy went unnoticed and the probate court approved final settlement of the account in May 1996.
Years later, after the probate clerk’s criminal activity was uncovered, another certified public accountant, Rishebarger, was tasked with determining the amount of money stolen from the deceased’s estate. In April 2003, Rishebarger sent a letter to the deceased’s heirs estimating the value of the deceased’s personal property at $698,000, considerably more than the $260,000 that Valdez had initially reported. Rishebarger also recommended retaining an attorney to pursue legal remedies. In August 2003, the deceased’s heirs were served with Rishearger’s final report, which concluded that the probate clerk had stolen approximately $522,000 from the deceased’s estate.
The heirs ultimately applied to re-open administration of the estate in 2005. At this time, Rishebarger sent the heirs a copy of the tax return. In December 2006, the heirs filed a petition for a bill of review to set aside the probate orders. The probate court granted the heirs request and ultimately rendered judgment against Valdez and the surety, Fidelity. The court of appeals affirmed.
The only issue before the Supreme Court of Texas on appeal was whether the equitable bill of review was timely. Both the probate court and the court of appeals concluded, in relevant part, that the equitable bill of review was timely because the limitations period was tolled until the heirs discovered or should have discovered extrinsic fraud in March or April 2003, which was within four years of the date the heirs filed their petition for a bill of review. The Supreme Court of Texas disagreed.
The Court first resolved the issue regarding the applicable limitations period for a bill of review; specifically, whether it was two or four years. The Court held that regardless of whether the bill of review was statutory or equitable, § 31 of the Texas Probate Code proscribes a two-year limitations period for bills of review. The Court recognized that the shorter limitations period is consistent with legislative intent to afford finality to probate judgments.
Applying the two-year statute of limitations, the Court held that the heirs’ petition for a bill of review was untimely. It determined that even assuming the limitations period was tolled, the heirs filed their petition more than two years after they were placed on inquiry notice of wrongdoing in March or August 2003. The heirs’ contended that the limitations should have been tolled until they were provided a copy of the tax return; however, the Court held that Rishebarger’s letters adequately informed the heirs of the wrongdoing. Moreover, the Court stated that the tax return itself elicited no more information than Rishebarger’s letters. Thus, because the heirs failed to act reasonably and make further inquiry within the two-year limitations period, the Court reversed the court of appeals’ decision and held that the petition for a bill of review was untimely.