Date: 11-23-2022

Case Style:

In the Estate of: Lynne Vines, a/k/a Doris Lynne Vines, Deceased

Case Number: 01-21-00003-CV

Judge: Honorable Judge Probate Ct #2

Court:

First Court of Appeals Houston, Texas

On appeal from the Probate Court No. 2 Harris County, Texas

Plaintiff's Attorney: Houston, TX - Best Probate Lawyer Directory

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Defendant's Attorney: Melbourne Timothy Berlinger
Debra Donaldson

Description:

Houston, Texas – Probate lawyer represented Appellant with complaining of the probate court’s order appointing a receiver in an underlying will contest.

Lynne Vines’s husband, Larry, started Dial Electrical Controls of Houston,
Inc. (“Dial Electrical”) and its sister company, LV Controls, Inc. (“LV Controls”)
(collectively referred to as the “companies”) decades ago. Lynn’s husband died in
2005.
1
In early February 2020, Lynn was struck by a car while walking in a
parking lot. After getting treated at a hospital, she eventually was transferred to a
rehabilitation center and released.
After the accident, Lynn purportedly signed the following documents that
have been contested below: (1) a power of attorney to her nephew, Kenneth, dated
March 10, 2020; (2) a will dated March 27, 2020, appointing Kenneth as the
executor and giving him all of her estate, and if he did not survive her, all of her
estate to Kenneth’s wife, Twila; and (3) special-meeting minutes dated April 13,
2020, in which Lynne appointed Kenneth as Vice President, CEO, and Director of
the companies and awarded him all shares of the companies upon her death.2
1 During the proceedings below, the parties have assumed that after Larry died,
Lynne became the sole shareholder of the companies.
2 The April 13 minutes also indicate that the companies held a meeting on March
27, 2020 and appointed Kenneth as Financial Officer of the companies.
3
On July 7, 2020, Lynn died at the age of 83. At the time of her death, Lynn
was unmarried and her two children, Donna Pacetti and Steven Hawkins, had
predeceased her. Lynne’s daughter, Donna, had two children, Jason and Melissa
Pacetti. On July 10, 2020, Kenneth moved to probate Lynne’s March 27, 2020
will.
3
Shortly thereafter, Lynne’s grandchildren, the Pacettis, filed a motion for
temporary restraining order against Kenneth and opposed the application for
probate of Lynne’s purported will. The Pacettis requested the appointment of a
temporary administrator4
and alleged that Lynne’s March 27, 2020 will had
multiple defects, including improper execution, fraud, forgery, lack of testamentary
capacity, and undue influence. The Pacettis further alleged that Lynne’s estate had
been sold, liquidated, damaged, and harmed by Kenneth and others working in
concert with him.
After a hearing, the probate court signed a September 29, 2020 order,
appointing Berlinger as temporary administrator, pending the will contest. As part
of the probate court’s order, Berlinger was authorized to oversee and make
necessary decisions regarding operation of the companies, among other powers.
3 On November 17, 2020, Twila McFarland sought to probate Lynne’s May 16,
2020 handwritten will.
4 See TEX. ESTATES CODE § 452.051 (providing that court may appoint temporary
administrator in contest related to probating will).
4
On October 26, 2020, Berlinger sought to enforce the probate court’s order
appointing him temporary administrator, alleging that Kenneth had failed to
provide access to Dial Electrical and that he committed acts of self-dealing,
including “transferring monies out of Dial Electrical . . . that ultimately ended up in
an account in his and his wife, Twila McFarland’s name.” Berlinger attached bank
records, which showed incoming transfers into Kenneth’s bank account from
Lynne in the amounts of $56,500.07, $110,000, and $80,000 occurring in June
2020 and another transfer of $100,000 occurring in July 2020.
On November 2, 2020, Kenneth responded to Berlinger’s motion to enforce,
stating that on April 13, 2020, a special meeting of the companies’ shareholders
occurred, and Lynne appointed Kenneth as Vice President, CEO, and Director.
Kenneth explained that after the probate court appointed Berlinger as temporary
administrator, Kenneth’s counsel “identified written non-testamentary transfer
language signed by [Lynne] which gifted all of [Lynne’s] shares in Dial Electrical
and LV Controls to [Kenneth] immediately upon her death.” Kenneth contended
that the special-meeting minutes conformed with section 111.052 of the Texas
Estates Code
5
and removed any authority of Lynne’s probate estate to control Dial
Electrical or LV Controls. Kenneth asserted that the probate court’s temporary
administrator order did not obligate him to do anything and that it could not be
5 See TEX. ESTATES CODE § 111.052 (“Validity of Certain Nontestamentary
Instruments and Provisions”).
5
enforced against him. Kenneth also explained that “[a]ll transfers of dividend
payments were completed at the request of Lynne Vines by the bookkeeper for
Dial Electrical and LV Controls” and requested the probate court to enter a revised
order to remove any unclear and vague language that implied a right for Berlinger
to control either Dial Electrical or LV Controls.
Kenneth included a declaration with his response, explaining that Lynne
granted him power of attorney, he had Lynne’s blessing to transfer approximately
$346,500 to his account, these funds were “exclusively used . . . to pay Lynne’s
bills and the bills of her deceased son, Steven Hawkins,” and that the funds
transferred “were used solely for the benefit of Ms. Vines and her property.”
On November 3, 2020, the probate court held a hearing on Berlinger’s
motion to enforce and motion to retain counsel. Berlinger requested counsel
because Kenneth was asserting that the probate court’s order appointing Berlinger
as temporary administrator did not apply to Dial Electrical. Berlinger also opined
that the special-meeting minutes did not create a non-testamentary transfer and
therefore Dial Electrical was an asset of the estate. Berlinger repeatedly told the
probate court that it would need to determine whether the special-meeting minutes
constituted a non-testamentary transfer.
Kenneth argued that “Berlinger is incorrect that you have the authority at
this given time to make a decision on that [referring to section 111.052],” the
6
written transfer is an automatic transfer under section 111.052(a), and the “only
way to invalidate that transfer would be through a declaratory judgment which
would take a trial on the merits.” Kenneth continued, “So I’m not saying that at
some point you couldn’t invalidate that if the petition was brought; absolutely, if
the evidence was shown and they met their burden, you could. However, that’s not
before the Court today. That is an automatic transfer, just as much as a beneficiary
designation on an account or anything else. Those are nonprobate assets that the
probate estate does not have any authority to control.”
After stating that it would not make a ruling during the hearing, the probate
court then turned to Berlinger’s motion to enforce the temporary administrator
order. Berlinger informed the probate court that he was only receiving partial
access to Dial Electrical and explained how funds were moving from Dial
Electrical to an account with Lynne and Kenneth as a power of attorney. Berlinger
explained, “it goes from Dial Electric[al] in Lynne’s name to a power-of-attorney
account that [Kenneth] is the agent under. And that’s when he acted as an agent
and transferred it to his wife and his account as the agent.”
The probate court responded that his order speaks for itself, giving Berlinger
authority to oversee Dial Electrical. Kenneth was then given an opportunity to
respond, and he proceeded to question Berlinger about items he requested in a
subpoena duces tecum sent to Berlinger and filed with the court. After Berlinger
7
testified that he did not have any documents, Kenneth began questioning Berlinger
on matters outside the subpoena. The probate court eventually stopped Kenneth’s
attorney and stated that he wanted briefs on the motion to retain counsel and the
positions of the parties relative to the companies.
On November 3, 2020, Berlinger filed a brief in support of his motion to
enforce, stating that the positions taken by Kenneth and the Pacettis have made it
necessary to seek the probate court’s assistance in enforcing, clarifying, and
perhaps expanding its temporary administrator order. Berlinger further stated that
he had not been provided full and complete access to the companies’ books and
records, he was unaware of whether the company maintained organizational or
operational documents such as bylaws, shareholders agreements or similar
controlling documents, and “there has been no production of either company’s
historical records as they pertain to other annual and/or special meetings of the
directors and the shareholders, if any.”
Berlinger listed various documents he wanted to review to determine the
status of the companies and stated, for the first time, that the probate court could
accomplish the same purpose as it originally intended by expanding his
appointment as temporary administrator to that of a receiver.
In his “Bench Brief Regarding Non-Testamentary Transfer of Company
Shares,” Kenneth pointed out that no party had contested the validity of the non-
8
probate transfer of shares. Kenneth thus argued that the special-meeting minutes
that Lynne signed, transferring the shares of the companies to him, constituted a
written instrument and a non-testamentary transfer of property pursuant to section
111.052(a)(1)(A), which removed the companies from Lynne’s estate.
On December 9, 2020, the probate court granted Berlinger’s motion to
enforce, expanding its previous September 29, 2020 order. The expanded order, as
relevant here,
• required Kenneth to produce all books and records for the companies
with an expanded definition of books and records;
• provided that Berlinger had authority to initiate a declaratory
judgment to address the validity of the purported durable power of
attorney and purported special meeting company minutes from March
27, 2020 and April 13, 2020;
• provided that Berlinger had authority to act as the temporary
administrator over the companies notwithstanding Kenneth’s current
non-testamentary transfer theory;
• appointed Berlinger to serve as a receiver with respect to the
companies; and
• denied all other relief requested by Kenneth.
On December 14, 2020, Berlinger filed a motion for appointment of a
receiver with respect to Dial Electrical, acknowledging that the probate court had
appointed him as the receiver but indicating his belief that appointing Jeff
Compton as receiver pursuant to section 64.001(a)(6) would be in the best interest
9
of the estate.
6
Berlinger explained that Kenneth made himself an employee of Dial
Electrical on April 9, 2020 and paid himself a salary of $1,500 a week. Then, on
May 1, 2020, Kenneth increased his salary to $1,600. After Lynne died, he again
increased his salary to $3,846.15. Once Berlinger was appointed temporary
administrator, Kenneth decreased his salary to $1,500 a week. Berlinger further
alleged that Kenneth “possibly unwittingly committed acts of self-dealing some of
which included transferring monies out of [Dial Electrical] that ultimately ended
up in an account in his and his wife, Twila McFarland’s name.”
7

On December 31, 2020, Kenneth filed an interlocutory appeal of the probate
court’s December 9, 2020 order appointing Berlinger as receiver over Dial
Electrical and LV Controls.
8

On January 5, 2021, the probate court held a hearing on Berlinger’s
December 14 motion to appoint a receiver. Berlinger stated that he requested the
6 See TEX. CIV. PRAC. & REM. CODE § 64.001(a)(6) (providing that court may
appoint receiver under rules of equity).
7 The Pacettis also filed a statement in support of a receiver.
8 See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(1). Kenneth also filed a petition
for writ of mandamus in this Court, seeking to vacate the probate court’s
December 9, 2020 order giving Berlinger authority to control the companies. We
denied the mandamus petition without opinion. See In re McFarland, No. 01-21-
00033-CV, 2021 WL 499051, at *1 (Tex. App.—Houston [1st Dist.] Feb. 11,
2021, orig. proceeding).
10
receiver because of equity, that it was in the best interest of the estate to appoint a
receiver, and that he thought it would be better to have a CPA serve as the receiver.
Twila McFarland, who is not a party to this appeal, argued that the company
was a non-probate asset that was transferred by non-testamentary transfer and no
live pleading attacked the non-testamentary nature of the transfer. Twila further
argued that appointing a receiver required an evidentiary proceeding and that no
evidence of imminent harm or imminent threat as required by caselaw had been
presented. She concluded by stating that a receiver should only be appointed until
after the court of appeals had an opportunity to rule on whether “there should be
some management by the temporary administrator or receiver on what is today a
non-testamentary asset.”
After the parties discussed whether the special-meeting minutes constituted a
non-testamentary transfer, the probate court stated that he did not know, and he had
not heard any evidence so he could not address it. Berlinger responded that he
could file a “[declaratory judgment] action and seek a decision as to whether it’s a
non-testamentary transfer.” Kenneth then argued that, at this point in time, the
transfer of the companies to him remained a non-probate transfer and that he was
unaware of any authority that would permit the probate court to appoint someone
to take the non-probate asset.
11
On January 6, 2021, the Pacettis filed their second amended opposition to
probate the will and codicil, contending that the purported will and codicil had
improper formalities, lacked testamentary intent, lack of capacity, and undue
influence. The Pacettis alleged breach of fiduciary duty, conversion, sought
declaratory relief that the special-meeting minutes did not constitute a nontestamentary transfer, and explained why the minutes were not a non-testamentary
transfer.
On January 11, 2021, the probate court signed an order appointing Jeff
Compton as receiver of Dial Electrical pursuant to Chapter 64 of the Texas Civil
Practice and Remedies Code and for other good cause. Kenneth timely filed a
second notice of interlocutory appeal of the order appointing Jeff Compton as
receiver.
Receivership
In four issues, Kenneth argues that Lynne made a non-testamentary transfer
and that the probate court abused its discretion by appointing a receiver.
A. Standard of Review and Applicable Law
A party may bring an interlocutory appeal from an order appointing a
receiver. TEX. CIV. PRAC. & REM. CODE § 51.014(a)(1); see Estate of Hoskins, 501
S.W.3d 295, 301 (Tex. App.—Corpus Christi 2016, no pet.). We review an order
appointing a receiver for an abuse of discretion. Perry v. Perry, 512 S.W.3d 523,
12
526 (Tex. App.—Houston [1st Dist.] 2016, no pet.); Benefield v. State, 266 S.W.3d
25, 31 (Tex. App.—Houston [1st Dist.] 2008, no pet.). “A trial court abuses its
discretion when it rules arbitrarily, unreasonably, without regard to guiding legal
principles, or without supporting evidence.” Bennett v. Baker Broocks & Lange,
LLP, No. 01-13-00674-CV, 2014 WL 3107661, at *1 (Tex. App.—Houston [1st
Dist.] July 8, 2014, no pet.) (mem. op.) (citing Bocquet v. Herring, 972 S.W.2d 19,
21 (Tex. 1998)). Under the abuse-of-discretion standard, legal and factual
sufficiency of the evidence are not independent grounds of error: they are relevant
factors in assessing whether the trial court abused its discretion. See Fannin v.
Fereday, No. 01-13-00951-CV, 2015 WL 4463694, at *3 (Tex. App.—Houston
[1st Dist.] July 21, 2015, no pet.).
The party seeking the appointment of a receiver has the burden of proof to
demonstrate that the circumstances justify the appointment of a receiver.
Benefield, 266 S.W.3d at 31. Texas Civil Practice and Remedies Code section
64.001 provides that a “court of competent jurisdiction” may appoint a receiver in
six specific circumstances, including, as relevant here, “in an action between
partners or others jointly owning or interested in any property or fund” or “in any
other case in which a receiver may be appointed under the rules of equity.” TEX.
CIV. PRAC. & REM. CODE § 64.001(a).
13
B. Non-Testamentary Transfer
In his first issue, Kenneth argues that the April 13, 2020 special-meeting
minutes constituted a non-testamentary transfer of all shares of the companies to
Kenneth upon Lynne’s death. According to Kenneth, this transfer caused the
companies to pass as non-probate assets outside Lynne’s estate, thereby precluding
the probate court from giving control of the non-probate assets to a receiver or
temporary administrator.
To preserve a complaint for appellate review, Kenneth was required to
present his complaint to the probate court and obtain a ruling. See TEX. R. APP. P.
33.1(a). As mentioned many times during the proceedings below and as conceded
in his appellate brief,
9
the probate court has not yet ruled on Kenneth’s nontestamentary transfer theory based on the special-meeting minutes. The issue is
currently pending before the probate court in the Pacettis’ Second Amended
Opposition to Probate of Will and Codicil, in which they sought declaratory
judgment on whether Lynne made a non-testamentary transfer of the shares of the
companies. Likewise, Berlinger has also sought declaratory judgment on the same
issue. Because the probate court has yet to rule on this issue, the issue has not been
preserved, and we decline to address the validity of Kenneth’s non-testamentary
9 Kenneth’s brief states, “Regardless of the substance, it has not been judicially
determined that the transfers were invalid.”
14
transfer theory.10
See TEX. R. APP. P. 33.1(a)(2); see also City of Dallas v. Dixon,
365 S.W.2d 919, 923 (Tex. 1963) (noting that courts of appeals are primarily
courts of review), rev’d on other grounds sub nom., Donovan v. City of Dallas, 377
U.S. 408 (1964).
We overrule Kenneth’s first issue.
C. Section 64.001
In his second issue, Kenneth argues that the probate court abused its
discretion by ignoring the standards found in section 64.001. Specifically,
Kenneth argues that the probate court could not appoint Compton11 as receiver
pursuant to section 64.001(a)(3) because the section did not apply.
10 Within his first issue, Kenneth argues that the “Probate Court has no jurisdiction
over the Companies.” Because Kenneth does not provide appropriate authority
and substantive analysis, we conclude the issue has been waived. See TEX. R.
APP. P. 38.1(i) (stating that brief “must contain a clear and concise argument for
the contentions made, with appropriate citation to authorities”); Guimaraes v.
Brann, 562 S.W.3d 521, 537–38 (Tex. App.—Houston [1st Dist.] 2018, pet.
denied).
11 Although the probate court initially appointed Berlinger as a receiver in its
December 9, 2020 order, Berlinger never qualified to serve and sought to appoint
Jeff Compton as receiver. Subsequent to the filing of Kenneth’s first notice of
appeal, the probate court appointed Jeff Compton as receiver on January 11, 2021
and discharged Berlinger as receiver. Where the complained-of defects of an
initial order are remedied in the issuance of a subsequent order, the initial
complaints become moot. Flamingo Permian Oil & Gas, L.L.C. v. Star Expl.,
L.L.C., 569 S.W.3d 329, 331 (Tex. App.—El Paso 2019, no pet.) (dismissing as
moot three issues rectified by the issuance of subsequent order executed while
appeal was pending); see also Smith v. Smith, 681 S.W.2d 793, 797 (Tex. App.—
Houston [14th Dist.] 1984, no writ). Because the subsequent order appointed Jeff
15
Section 64.001(a) provides that a court may appoint a receiver,
(1) in an action by a vendor to vacate a fraudulent purchase
of property;
(2) in an action by a creditor to subject any property or fund
to his claim;
(3) in an action between partners or others jointly owning or
interested in any property or fund;
(4) in an action by a mortgagee for the foreclosure of the
mortgage and sale of the mortgaged property;
(5) for a corporation that is insolvent, is in imminent danger
of insolvency, has been dissolved, or has forfeited its
corporate rights; or
(6) in any other case in which a receiver may be appointed
under the rules of equity.
TEX. CIV. PRAC. & REM. CODE § 64.001(a)(1)(6).
Berlinger sought the appointment of a receiver based on section
64.001(a)(6). The probate court’s January 11, 2021 order appointing a receiver
stated it was appointing a receiver pursuant to Chapter 64 of the Texas Civil
Practice and Remedies Code, but it did not specify which subsection it was relying
on in granting the appointment of a receiver. Thus, on appeal, it was incumbent on
Kenneth to attack all possible grounds. See Walling v. Metcalfe, 863 S.W.2d 56,
58 (Tex. 1993) (“We have held repeatedly that the courts of appeals may not
Compton and discharged Berlinger as receiver, we confine our analysis to the
January 11, 2021 order.
16
reverse the judgment of a trial court for a reason not raised in a point of error.”);
Britton v. Tex. Dep’t of Criminal Justice, 95 S.W.3d 676, 681 (Tex. App.—
Houston [1st Dist.] 2002, no pet.) (stating that if independent ground fully supports
judgment, but appellant assigns no error to that independent ground, then court of
appeals must accept validity of unchallenged independent ground).
Here, Kenneth does not attack all independent grounds that support the
probate court’s order. Specifically, Kenneth assigns no error to subsection (a)(6),
which generally allows a probate court to appoint a receiver under the rules of
equity. See TEX. CIV. PRAC. & REM. CODE § 64.001(a)(6). By failing to attack this
independent ground, Kenneth has waived error, if any.12
Britton, 95 S.W.3d at
681.
In addition, Kenneth’s appellate arguments in this issue were not raised with
the probate court. At the hearing on the motion to appoint a receiver on January 5,
2021, Kenneth did not assert any argument specific to section 64.001(a)(3). Thus,
the issue was not preserved. See TEX. R. APP. P. 33.1.
We overrule Kenneth’s second issue.
12 By failing to attack this independent ground, it is unnecessary to address any
additional arguments that Kenneth raises concerning section 64.001(b) because the
limitations under (b) only apply if the probate court appointed a receiver pursuant
to subsections (a)(1), (2), or (3). See TEX. CIV. PRAC. & REM. CODE § 64.001(b);
TEX. R. APP. P. 47.1.
17
D. Section 11.404
In his third issue, Kenneth argues that the probate court abused its discretion
by ignoring the standards articulated in section 11.404 of the Texas Business
Organizations Code.13
Kenneth also argues within this issue that the probate court
did not hear evidence to support a receiver under section 11.404(a) and (b).
Specifically, Kenneth argues that “the probate court abused its discretion by failing
to hear any evidence establishing the need for a receiver to conserve the property
and business of the Companies and to avoid damage to interested parties” and
“there is a lack of evidence that a single alternative was considered by the Probate
Court.”
Similar to his second issue, because Kenneth did not attack the independent
ground in section 64.001(a)(6) in support of the probate court’s order, his
additional complaints within this issue are waived. Britton, 95 S.W.3d at 681.
Moreover, the record does not show that Kenneth raised any complaint
about section 11.404 with the probate court, he has not identified anywhere within
the record where he raised these appellate issues with the probate court, and he
cites no authority in support of his argument that the probate court abused its
13 TEX. BUS. ORG. CODE § 11.404 (“Appointment of Receiver to Rehabilitate
Domestic Entity”).
18
discretion. See TEX. R. APP. P. 33.1; 38.1(i). Accordingly, Kenneth’s appellate
complaints within this issue are waived. See TEX. R. APP. P. 33.1, 38.1(i).
We overrule Kenneth’s third issue.
E. Appointing Temporary Administrator Berlinger As Receiver
In his fourth issue, Kenneth complains that before the probate court could
appoint a receiver, the probate court “failed to make the requisite finding of
necessity,” including a finding of probable interest in the company and a finding
that the company was in danger of being lost, removed, or materially injured.
These same complaints were raised in Kenneth’s second and third issues. For the
same reasons we stated in issues two and three, we overrule this portion of
Kenneth’s fourth issue.
In three sub-issues, Kenneth argues that (1) at the time the probate court
entered its December 9, 2020 order, no party had raised an adverse claim against
the purported non-testamentary transfer; and, by authorizing Berlinger to control
the companies, the court “unilaterally shifted the burden to [Kenneth] to prove the
transfers were valid instead of on another party to prove they were invalid. This is
improper;” (2) the probate court appointed Berlinger without additional bond
coverage as receiver; and (3) Berlinger’s actions involved assets outside of the
estate that were not covered by his bond.
19
As stated earlier, the probate court issued a subsequent order appointing
Compton as receiver and discharging Berlinger. Thus, Kenneth’s issues
concerning the December 9, 2020 order appointing Berlinger are moot. See
Flamingo, 569 S.W.3d at 331. Moreover, his second and third sub-issues listed
above were not presented to the probate court and are outside of our interlocutory
jurisdiction to address the January 11, 2021 order appointing a receiver. See TEX.
R. APP. P. 33.1(a); TEX. CIV. PRAC. & REM. Code § 51.014(a)(1) (permitting
interlocutory appeal of order appointing receiver); Walker Sand, Inc. v. Baytown
Asphalt Materials, Ltd., 95 S.W.3d 511, 514 (Tex. App.—Houston [1st Dist.]
2002, no pet.) (stating that Texas courts strictly construe statutes authorizing
interlocutory appeals).
We overrule Kenneth’s fourth issue.
F. Appointment of Jeff Compton as Receiver of Dial Electrical
In his fifth issue, Kenneth argues that the probate court improperly
appointed Compton as receiver of Dial Electrical. In a single paragraph, Kenneth
repeats his earlier arguments from his second, third, and fourth issues that the
probate court did not make findings of “necessity to prevent danger of being lost,
removed or materially injured” or “to conserve the Company and avoid damage to
interested parties is required.” For the same reasons we stated in issues two, three,
and four, we overrule this portion of his fifth issue.
20
In another sub-issue, Kenneth also complains that no evidence was presented
as to Compton’s qualifications before he assumed the role of receiver. Kenneth’s
sub-issue was also not presented to the probate court, and he cites no authority in
support of his argument. See TEX. R. APP. P. 33.1, 38.1(i). Accordingly, the issue
is waived.
We overrule Kenneth’s fifth issue.

Outcome: Because Kenneth has failed to challenge an independent ground supporting
the probate court’s receivership order, we conclude that Kenneth has not shown
that the probate court abused its discretion in appointing a receiver. We overrule
all pending motions as moot.

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