IN THE PROBATE COURT NO. 2
EL PASO COUNTY, TEXAS
REIDA STEWART,
Plaintiff/Counter-Defendant,
v.
CAROLYN STEWART, INDEPENDENT
EXECUTOR OF THE ESTATE OF FRANK
STEWART, II, DECEASED,
Defendant/Counter-Claimant,
v.
JAMES G. STEWART,
Third-Party Defendant,
CAUSE NO. 2020-CPR01624
DEFENDANT’S ORIGINAL COUNTERCLAIM AND
THIRD-PARTY PETITION AGAINST JAMES G. STEWART
To the Honorable Eduardo Gamboa:
Comes now Carolyn Stewart, Independent Executor of The Estate of Frank Stewart, II, Deceased (“Defendant” or “Counter-Claimant”), subject to and without waiving her May 13, 2022 Rule 91a Statute of Limitations Motion to Dismiss under Texas Civil Practice & Remedies Code §§ 16.003 and 16.004, and pursuant to Texas Civil Practice & Remedies Code § 16.069 files this counterclaim against Reida Stewart (“Plaintiff”) and third-party petition against James G. Stewart (“JGS”), and in support thereof pleads as follows:
I. DISCOVERY CONTROL PLAN & CLAIM FOR RELIEF
1. Carolyn Stewart will conduct discovery under Level 3 of the Texas Rules of Civil Procedure.
2. This dispute arises out of the Estate of Frank D. Stewart, I, deceased (“Frank Sr.”). and Frank D. Stewart, II, deceased (“Frank Jr.”). Reida Stewart alleges that during his lifetime, Frank Jr. committed various acts of fraud and breached certain fiduciary obligations owed to Reida Stewart. Carolyn Stewart disputes Reida Stewart’s allegations and denies that Reida Stewart is entitled to any recovery.
3. Carolyn Stewart seeks monetary relief over $200,000, but not more than $1,000,000, including all attorneys’ fees and costs, for all damages attributable to any of the following:
- Breach of fiduciary duties by Reida Stewart in her capacity as Trustee of the Testamentary Trust Established Under the Last Will and Testament of Frank Sr. (the “Trust”), including but not limited to,
- the duties of good faith, fair dealing, loyalty, and fidelity over the Trust’s affairs and its corpus, as well as
- the duty of maintain a complete and accurate accounting of the administration of the Trust.
- Mismanagement of Trust property by Reida Stewart
- Misappropriation of Trust property by Reida Stewart
- Aiding and abetting of said breaches by James G Stewart
- Conspiracy between Reida Stewart and James G Stewart to breach Reida Stewart’s fiduciary duties to the Trust beneficiaries
- Conspiracy between Reida Stewart and James G Stewart to interfere with business
- Conspiracy between Reida Stewart and James G Stewart to interfere with contract
II. JURISDICTION & VENUE
4. The Court has subject-matter jurisdiction because Defendant’s counterclaims and thirdparty claims arise out of the same transactions and/or occurrences alleged by the Reida Stewart in her live petition.
5. Venue is proper in El Paso County, Texas, because Defendant’s counterclaims and thirdparty claims arise out of the same transactions and/or occurrences alleged by Reida Stewart and/or the subject
matter of Reida Stewart’s claims against Carolyn Stewart. TEX. CIV. PRAC. & REM. CODE § 15.062 (a), (b).
III. PARTIES
6. Carolyn Stewart has appeared and answered.
7. Reida Stewart is an individual who filed this lawsuit and has otherwise appeared.
8. James G Stewart is an individual who resides at 312 Rainbow Circle, El Paso, TX 79912.
IV. FACTUAL BACKGROUND
9. Reida Stewart is the Trustee of the Testamentary Trust established under the Last Will and Testament of Frank Sr.
10. All of Frank Sr’s estate was transferred either to Reida Stewart, individually, or to Reida Stewart, as Trustee, under the terms of Frank Sr.’s Will.
11. Frank Sr.’s Will effectively disinherited James G Stewart, providing that Frank Sr.’s estate was eventually to pass to Frank Jr., Carolyn Stewart, and/or Frank Sr.’s grandchildren.
12. Under the terms of the Trust, Reida Stewart has the discretion to make distributions from the net annual income of the Trust in order to provide for her health, education, support or maintenance. Reida Stewart, as Trustee of the Trust, also has the discretion to consider herself the primary beneficiary thereof.
13. Upon Reida Stewart’s death, the Successor Trustee is to wind up the affairs of the trust estate and then distribute all remaining assets to Carolyn Stewart. In the event Carolyn Stewart predeceases Reida Stewart, the Successor Trustee is to distribute the remaining Trust assets to one-half (1/2) to the children of Frank Jr., and one-half (1/2) to the children of James G Stewart.
14. Reida Stewart, individually and as Trustee, has transferred portions of the corpus of the Trust and portions of her separate property to the beneficiaries of the Trust, including Frank Jr. Reida Stewart claims these transfers are void due to fraud on the part of Frank Jr.
15. Frank Jr. died in November of 2020.
16. Reida Stewart filed this lawsuit in January of 2022, alleging that she, in her individual capacity, is the rightful owner of the Trust corpus and any transfers that she previously made as Trustee are invalid. In support of this theory, Reida Stewart makes various allegations of fraud, supposedly committed by Frank Jr. prior to his death.
17. Upon information and belief and to the extent applicable, Reida Stewart has failed to account for the monies received and expended on behalf of the Trust.
18. Upon information and belief and to the extent applicable, Reida Stewart has failed to invest and manage the Trust assets in accordance with the Prudent Investor Rule as required by the Texas Uniform Prudent Investor Act and Section 117.004 of the Texas Property Code.
19. Upon information and belief and to the extent applicable, Reida Stewart has failed to diversify the Trust assets as required by the Texas Uniform Prudent Investor Act and Section 117.005 of the Texas Property Code.
20. Upon information and belief and to the extent applicable, James G Stewart has aided an abetted Reida Stewart in these breaches by advising her generally in these matters and in her dealings with the Trust beneficiaries.
21. Upon information and belief and to the extent applicable, James G Stewart has prohibited Reida Stewart from speaking or dealing directly with the Trust beneficiaries and caused all communications to be made through him and subject to his approval.
22. Upon information and belief and to the extent applicable, Reida Stewart has sought to partition certain real property interests which are subject to certain contracts and commingled with certain business interests of the Trust beneficiaries in such a manner as to hinder the transferability of those contracts and interests and impair their economic benefit to those beneficiaries. James G Stewart has advised Reida Stewart to do so.
V. CAUSES OF ACTION
23. Subject to and without waiving her May 13, 2022 Rule 91a State of limitations Motion to Dismiss under Texas Civil Practice & Remedies Code §§ 16.003 and 16.004, and pursuant to Texas Civil Practice & Remedies Code § 16.069, Carolyn Stewart pleads the following causes of action
Count I. Counterclaim Against Plaintiff: Breach of Fiduciary Duty
24. Carolyn Stewart alleges and incorporates by reference the allegations set forth in the paragraphs above.
25. Reida Stewart is the Trustee of the Trust and owes certain duties to the beneficiaries thereof, including Frank Jr. prior to his death.
26. To the extent applicable and as supported by the law and evidence, Reida Stewart breached those duties, damaging the Trust’s beneficiaries, including Frank Jr.
Count II. Counterclaim Against Plaintiff, Third-Party Claim Against JGS: Conspiracy
27. Carolyn Stewart alleges and incorporates by reference the allegations set forth in the paragraphs above.
28. To the extent applicable and as supported by the law and evidence, Reida Stewart and James G Stewart have engaged in a concerted effort to convert the corpus of the Trust into the separate property and estate of Reida Stewart.
29. In furtherance of this object, Reida Stewart has breached her duties as Trustee, including Reida Stewart’s duty to refrain from self-dealing, and has intentionally interfered with certain business interests of the Trust beneficiaries, and with certain contracts.
30. Carolyn Stewart has suffered injury as a proximate result of these unlawful, overt acts.
VI. CONDITIONS PRECEDENT
31. All conditions precedent to Carolyn Stewart’ right to recovery have been performed, have occurred, and/or have been waived.
VI. PRAYER
For the foregoing reasons, Carolyn Stewart asks that the Court grant the following relief:
a. All damages to which Carolyn Stewart is entitled;
b. Pre- and post-judgment interest;
c. An award to Carolyn Stewart of its costs and reasonable and necessary attorneys’ fees as may seem equitable and just; and
d. Judgment granting all such other relief at law or in equity as to which the Carolyn Stewart may show itself entitled.