Bertucci v. Watkins: Appellate Briefing of Derivative Claims, Individual Fiduciary Duties Between Co‑Owners, and the Dead Man’s Rule

Bertucci v. Watkins: Appellate Briefing of Derivative Claims, Individual Fiduciary Duties Between Co‑Owners, and the Dead Man’s Rule

I. Introduction

The Supreme Court of Texas’s decision in Christopher F. Bertucci, as Executor of the Estate of Anthony R. Bertucci, Deceased, and Derivatively on Behalf of [various entities] v. Eugene L. Watkins, Jr. (No. 23‑0329, opinion delivered March 14, 2025) is a dense and consequential opinion at the intersection of:

  • appellate briefing and waiver (especially for derivative claims),
  • fiduciary duties among business co‑owners in complex entity structures,
  • limitations and the discovery rule in fiduciary‑misappropriation disputes,
  • the treatment of court‑appointed auditors’ reports under Texas Rule of Civil Procedure 172, and
  • the scope and operation of the Dead Man’s Rule under Texas Rule of Evidence 601(b).

The dispute arises from a long‑running business relationship between Anthony R. Bertucci and Eugene L. Watkins, Jr., who jointly developed low‑income housing projects through a web of related partnerships and corporations (the “B‑W entities”). Bertucci generally supplied capital for a 60% interest; Watkins supplied expertise and management for a 40% interest.

Watkins managed the money—both for the B‑W entities and his own businesses—through a single bank account in the name of Texas Community Builders, LP (“TCBLP”), an entity owned by Watkins and his wife and unrelated to Bertucci. Only Watkins had signatory authority on this account. Bertucci’s son Christopher, acting under a power of attorney as Bertucci’s health declined, came to suspect that Watkins had misused or diverted funds for personal purposes. That suspicion led to demands for an accounting, removal of Watkins from management roles, and ultimately litigation.

After an interpleader case brought by lawyers and title companies holding approximately $4.5 million in escrow, both sides asserted claims. Watkins sought distribution of funds in accordance with ownership interests. Acting for his father (and later as executor), Christopher asserted:

  • individual claims on Bertucci’s behalf, and
  • derivative claims on behalf of the various B‑W entities

for theft, breach of fiduciary duty, failure to account, equitable disgorgement/forfeiture, and breach of contract.

The probate court (to which the case was transferred after Bertucci’s death) granted summary judgment for Watkins on all claims. The Austin Court of Appeals reversed in part:

  • It held that Bertucci had waived his derivative appeal by inadequate briefing.
  • It revived individual breach‑of‑fiduciary‑duty claims, holding that fact issues existed.
  • It found fact issues on limitations, waiver, and ratification defenses.
  • It affirmed no‑evidence summary judgment on contract claims.

Both sides sought review, and the Supreme Court granted both petitions. The Court’s opinion resolves four principal issues:

  1. Whether Bertucci waived his derivative appeal by inadequate briefing.
  2. Whether Watkins owed fiduciary duties to Bertucci individually (as opposed to duties owed to the entities).
  3. Whether limitations barred the claims as a matter of law.
  4. Two evidentiary matters: (a) the effect of a flawed court‑appointed auditor’s report, and (b) the application of the Dead Man’s Rule to Watkins’s testimony about Bertucci’s alleged approval of disputed transactions.

The decision significantly refines Texas law on appellate briefing waiver in multi‑party/derivative contexts and clarifies the boundaries between individual and derivative fiduciary‑duty claims. It also reinforces a stringent view of the Dead Man’s Rule and hints—without squarely deciding—how improper treatment of a Rule 172 auditor’s report should be corrected.

II. Summary of the Opinion

A. Holdings in Outline

The Supreme Court holds:

  1. No waiver of derivative appeal: The court of appeals erred in holding that Bertucci “waived” appellate review of his derivative claims for inadequate briefing. His briefing, though imperfect, was sufficient to preserve those issues, and any deficiencies should have been addressed through supplemental briefing rather than outright waiver.
  2. No individual fiduciary duty claim survives: The court of appeals erred in reviving Bertucci’s individual breach‑of‑fiduciary‑duty claim. As a matter of law and preservation, Watkins did not owe a separate fiduciary duty to Bertucci individually on the theories actually litigated; what duties Watkins owed ran to the entities, not to Bertucci personally. The Supreme Court reinstates the probate court’s summary judgment on the individual fiduciary‑duty claim.
  3. Limitations not established as a matter of law: The court of appeals correctly held that fact issues preclude summary judgment for Watkins on limitations. In a fiduciary context involving commingled accounts, exclusive control, and alleged concealment or incomplete disclosure, reasonable minds could differ on when Bertucci knew or should have known of his injury.
  4. Evidentiary rulings largely affirmed:
    • Rule 172 auditor’s report: The Supreme Court declines to overturn the court of appeals’ refusal to reach the challenge to a flawed court‑appointed accountant’s report, in light of Watkins’s concession that the report will not be conclusive and may be contested on remand.
    • Dead Man’s Rule: The court of appeals correctly held that the Dead Man’s Rule bars Watkins’s testimony that Bertucci approved the disputed expenditures. The testimony was not adequately corroborated, and Bertucci did not “call” Watkins to testify within the meaning of Rule 601(b).

B. Disposition

  • The Supreme Court reinstates the probate court’s summary judgment on Bertucci’s individual breach‑of‑fiduciary‑duty claims.
  • It remands to the court of appeals to consider, in the first instance, Bertucci’s derivative claims on behalf of the B‑W entities, which the court of appeals had previously held waived.
  • It instructs that the remand should proceed in light of its holdings on limitations, the Rule 172 report, and the Dead Man’s Rule.

III. Detailed Analysis

1. Appellate Briefing and Waiver of Derivative Claims

1.1 The Court of Appeals’ Waiver Holding

Bertucci’s notice of appeal expressly stated that Christopher appealed “as executor of the estate of Anthony R. Bertucci, deceased, and derivatively on behalf of” the named entities. The notice and docketing statement listed each B‑W entity as an appellant. The court of appeals’ own case style and correspondence recognized the derivative posture.

Yet the court of appeals—looking at the opening brief’s cover page and “Identity of Parties” section—concluded that:

  • the brief identified only Christopher (as executor) but not the entities by name; and
  • the arguments made about fiduciary duties were not clearly stated as derivative, entity‑level claims.

On this basis, it declared the derivative appeal “waived” and affirmed the probate court’s summary judgment on those claims, despite reaching and partially reversing on the individual claims.

1.2 Texas Standards on Briefing and “Bona Fide Attempt” to Appeal

The Supreme Court’s correction is grounded in a long line of Texas precedent that disfavors “trapdoor” waiver and emphasizes a liberal construction of procedural rules to preserve appeals:

  • Walker v. Blue Water Garden Apartments, 776 S.W.2d 578 (Tex. 1989), and United Ass’n of Journeymen & Apprentices v. Borden, 328 S.W.2d 739 (Tex. 1959): jurisdiction is conferred if there is a “bona fide attempt” to invoke appellate jurisdiction; defects in form or substance of the instrument (e.g., bond or notice) are not necessarily fatal.
  • State ex rel. Durden v. Shahan, 658 S.W.3d 300 (Tex. 2022): a notice of appeal that referred generally to “all issues and all parties” was sufficient to appeal in both official and individual capacities, even if the latter was not expressly described in the notice, particularly when the briefs made clear that the individual issues were argued and no one was surprised.
  • Lion Copolymer Holdings, LLC v. Lion Polymers, LLC, 614 S.W.3d 729 (Tex. 2020): courts look not only at the “issue” statement but also at the argument under each heading to assess intent; they should hesitate to dispose of appeals on technicalities.
  • Horton v. Stovall, 591 S.W.3d 567 (Tex. 2019): “remediable” briefing defects should not be fatal absent a reasonable opportunity to cure.
  • Briscoe v. Goodmark Corp., 102 S.W.3d 714 (Tex. 2003); Lehmann v. Har‑Con Corp., 39 S.W.3d 191 (Tex. 2001); Verburgt v. Dorner, 959 S.W.2d 615 (Tex. 1997): reiterate the “substance over form” approach to procedural rules.

The Court also acknowledges the countervailing rule that briefs must contain a “clear and concise argument” with “citations to authorities and to the record” (Texas Rule of Appellate Procedure 38.1(i)), and that lack of developed argument or citations can constitute forfeiture of an appellate issue. See:

  • ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 880 (Tex. 2010);
  • Ross v. St. Luke’s Episcopal Hosp., 462 S.W.3d 496, 500 (Tex. 2015);
  • RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 126 (Tex. 2018).

Notably, Justice Boyd uses the term “waiver” but flags the technical distinction between “waiver” (an intentional relinquishment) and “forfeiture” (a failure to assert timely). While keeping with existing usage, the Court hints that “forfeiture” might be more precise in this context (citing Roccaforte v. Jefferson County, 341 S.W.3d 919, 929 n.20 (Tex. 2011) (Willett, J., concurring in part), and United States v. Olano, 507 U.S. 725, 733 (1993)).

1.3 Why the Derivative Appeal Was Not Waived

The Supreme Court concludes that Bertucci’s opening brief did present derivative arguments, even if not elegantly labeled:

  • He expressly argued that he had “standing to assert his derivative claims” and that, as executor, Christopher “stepped into his father’s shoes, with standing to maintain all of Bertucci’s claims.”
  • He argued that Watkins owed fiduciary duties to the entities because Watkins was:
    • an officer and director of some entities,
    • a “control person” of others, and
    • a manager/member/officer of still others.
  • He devoted substantial pages to arguing that Watkins had breached fiduciary duties to “those entities” through diversion of assets—classic derivative content.
  • He cited entity‑level governing documents (bylaws, partnership agreements, regulations, development agreements) as sources of Watkins’s obligations—again, entity‑centric.

Two key points are central to the Court’s reasoning:

  1. Intent and understanding were clear: The notice of appeal, docketing statement, style of the case, and the substance of the arguments all reflected that Bertucci was pursuing derivative claims on behalf of the B‑W entities. Watkins himself understood this and responded on the merits of those derivative claims in his own brief, eliminating any concern about unfair surprise or confusion. See Durden, 658 S.W.3d at 305.
  2. Deficiencies, if any, were not of the kind that justify forfeiture of an entire category of claims: At most, the failure to name each entity on the cover page and to break out entity‑by‑entity arguments was a “minor and technical defect,” not a failure to invoke appellate review. Under Texas Rule of Appellate Procedure 38.9(b), the proper response to inadequate briefing is generally to require supplemental briefing, not to extinguish claims where substantive arguments have actually been made.

The Court underscores its recurring theme:

“Courts should hesitate to resolve cases based on procedural defects and instead endeavor to resolve cases on the merits.” (quoting Lion Copolymer Holdings, 614 S.W.3d at 732; see also First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 221 (Tex. 2017); Fredonia State Bank v. General American Life Insurance Co., 881 S.W.2d 279, 282 (Tex. 1994); Weeks Marine, Inc. v. Garza, 371 S.W.3d 157, 162 (Tex. 2012); Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008)).

Accordingly, the derivative claims are revived, and the case is remanded to the court of appeals to address them on the merits (with the option, if necessary, to require additional briefing under Rule 38.9(b) or 38.7).

1.4 Impact: Appellate Practice and Derivative Claims

This aspect of the opinion reinforces several practical points for appellate practitioners:

  • Substance and context matter: Courts will examine notices of appeal, stylistic indications, and the overall thrust of the arguments—not just headings and “Identity of Parties” sections—to determine whether a category of claims has been preserved.
  • Derivative claims should be labeled clearly, but imperfect labeling is not fatal when the record makes the derivative posture clear and the opposing party has joined issue on those claims.
  • Court of appeals use of Rule 38.9(b): The Supreme Court encourages intermediate courts to cure briefing defects via supplemental briefing rather than dismissing claims wholesale, especially where the defects are “minor and technical.”
  • No free pass to sloppiness: The Court does not relax the requirement for clear, supported arguments. A “token” assertion or bare label may still be insufficient. But when multiple pages of argument plainly concern entity‑level duties and injuries, courts should not pretend those arguments do not exist simply because “derivative” is not repeated at every turn.

2. Individual vs. Derivative Fiduciary Duties Between Business Partners

2.1 Statutory and Common‑Law Framework

Texas law draws a sharp distinction between:

  • general partners, who owe statutory duties of loyalty and care to each other and to the partnership (Texas Business Organizations Code § 152.204); and
  • limited partners, who by law do not assume a general partner’s duties merely by holding a limited partner interest. See § 153.003(c) (“A limited partner shall not have any obligation or duty of a general partner solely by reason of being a limited partner.”).

Similarly, Texas common law recognizes:

  • Corporate officers and directors owe fiduciary duties to the corporation, not to fellow shareholders or officers as such. See Ritchie v. Rupe, 443 S.W.3d 856, 868–69 (Tex. 2014).
  • Members of an LLC do not, by virtue of co‑membership, owe each other formal fiduciary duties. See Suntech Processing Sys., L.L.C. v. Sun Communications, Inc., 2000 WL 1780236, at *6 (Tex. App.—Dallas Dec. 5, 2000, pet. denied); Gadin v. Societe Captrade, 2009 WL 1704049, at *3 (S.D. Tex. June 17, 2009).

The Court recognizes that partners owe “duties in the nature of fiduciary duties” to one another (see M.R. Champion, Inc. v. Mizell, 904 S.W.2d 617, 618 (Tex. 1995), and the statutory codification in § 152.204), but that the specifics can be altered by agreement (Texas Business Organizations Code § 152.002(b)(2)).

2.2 The “Control Test” and Strebel v. Wimberly

The court of appeals relied heavily on Strebel v. Wimberly, 371 S.W.3d 267 (Tex. App.—Houston [1st Dist.] 2012, pet. denied), which held that a limited partner may owe fiduciary duties to another limited partner if he goes beyond a passive role and effectively exercises operational control over the partnership—acting as a de facto general partner.

In Strebel, a limited partner essentially:

  • unilaterally altered another limited partner’s sharing ratio,
  • without board approval as required by the relevant company agreement, and
  • did so while dominating the entity’s operations.

That court applied a “control test” to determine whether the limited partner had crossed the line into general‑partner‑like conduct, thereby incurring fiduciary obligations to his fellow investors.

Watkins urged the Supreme Court to reject this “control test” as inconsistent with the Texas statutes and unused in Supreme Court jurisprudence. The Court, however, sidestepped formally adopting or rejecting the test. Instead, it resolved the individual‑duty claim on a narrower ground: failure to plead, preserve, and substantiate an individual fiduciary duty in the trial court and intermediate court.

2.3 How Bertucci Litigated (and Did Not Litigate) the Individual Fiduciary Duty

At the trial level:

  • Bertucci asserted that Watkins, by calling himself the “managing, operational and accounting partner,” functioned as a managing or general partner in their “venture.”
  • Yet he failed to articulate how that self‑description created a distinct individual fiduciary relationship between Watkins and Bertucci, as opposed to duties owed to the entities.
  • His prayer for relief sought a declaration that Watkins “was a fiduciary” in general terms, not that Watkins owed a personal fiduciary duty to Bertucci separate from entity‑level duties.

Watkins, in his summary‑judgment motion and response:

  • Pointed out that, under Ritchie, corporate officers owe fiduciary duties to the corporation, not to shareholders individually.
  • Invoked the line of cases holding that co‑members in an LLC or limited partners in a partnership do not owe each other fiduciary duties solely by reason of that relationship.
  • Challenged Bertucci to explain why/how an individual fiduciary duty existed.

In response, Bertucci:

  • Effectively sidestepped the challenge, asserting that the distinction between individual and derivative claims was “of no consequence” because he had pleaded both.
  • Expressly argued he “need not prove Watkins owed Bertucci a direct fiduciary duty” since he was suing derivatively on the entities’ behalf.

Thus, as Justice Boyd notes, Bertucci both:

  • offered less than a scintilla of evidence that Watkins owed him an individual fiduciary duty, and
  • affirmatively treated the question as irrelevant given his derivative theory.

In the court of appeals, Bertucci again largely conflated individual and derivative duties, speaking of duties owed to “Appellants” collectively and ignoring the distinct analysis required for duties owed to the entities vs. duties owed to a co‑owner personally.

Critically, only in a reply brief in the court of appeals did Bertucci seriously advance the Strebel-type argument that Watkins owed a fiduciary duty to him individually because of Watkins’s de facto control over the partnerships—a new theory not presented in the trial court.

The Supreme Court correctly points out that appellate courts may not reverse summary judgments on grounds not presented below. Texas Rule of Civil Procedure 166a(c) and cases such as:

  • Clear Creek Basin Auth., 589 S.W.2d 671 (Tex. 1979),
  • McConnell v. Southside ISD, 858 S.W.2d 337 (Tex. 1993), and
  • Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 204 (Tex. 2002)

make clear that a non‑movant cannot, for the first time on appeal, urge a new theory to defeat summary judgment. The court of appeals’ reliance on a newly‑raised Strebel-style theory thus contravened Rule 166a.

2.4 Why the Court Rejects the Individual Duty Claim on the Merits

Even if the argument had been preserved, the Supreme Court finds Bertucci’s individual fiduciary‑duty theory substantively deficient:

  1. Mere control of funds does not automatically create an agency or fiduciary relationship.
    Bertucci argued that Watkins’s “undisputed control over [Bertucci]’s funds” created a principal‑agent relationship, and thus a fiduciary duty.
    The Court rejects this:
    • Simply handing funds to someone does not create an agency.
    • An agent is one who acts on behalf of and subject to the control of the principal. See Community Health Systems Professional Services Corp. v. Hansen, 525 S.W.3d 671, 697 (Tex. 2017).
    • Bertucci’s theory is self‑contradictory: either Watkins was subject to Bertucci’s control (agency) or he wrongfully usurped control (breach of duty as a fiduciary to the entities), but he cannot both be a dominating wrongdoer and simultaneously an agent subject to control in the same capacity.
  2. The “managing partner” label is not self‑executing.
    Watkins’s casual use of “managing partner” in communications with third parties did not make him a managing partner in the legal sense:
    • The Court cites Ingram v. Deere, 288 S.W.3d 886, 900 (Tex. 2009), which cautions that calling someone a “partner” in a colloquial context does not establish a partnership relationship or carry “legal significance.”
    • Watkins explained that he used the phrase descriptively (he “opened the mail, organized payables, etc.”), not to suggest that Bertucci was excluded from decisions or that formal roles had changed.
  3. The actions complained of were taken in Watkins’s existing roles in and on behalf of the entities.
    Bertucci conceded that Watkins’s role as funds manager was given to him in his capacity as a limited partner and officer/director of the B‑W entities. Thus, any misuse involved duties and breaches at the entity level, not the formation of an entirely new, individual fiduciary relationship with Bertucci personally.

The Court also notes—without resolving—that older cases like Huffington v. Upchurch, 532 S.W.2d 576 (Tex. 1976), and Smith v. Bolin, 271 S.W.2d 93 (Tex. 1954) described “managing partners” as having heightened fiduciary obligations. However, the 1993 Revised Partnership Act (now BOC Chapter 152) defines partners’ duties more precisely, and any such special role must be analyzed through the statutory lens and the partnership agreement itself.

2.5 Why Dismissing the Individual Claim Causes No Prejudice Here

A crucial practical point is that, in this case, Bertucci himself had framed the harm such that:

  • “There is only one alleged harm—the alleged theft of [Bertucci]’s money that should have been spent on [the entities’] expenses.”
  • “The individual claims and the derivative claims seek the same remedies for the same alleged conduct by Watkins.”

Given that the alleged harm is entirely tied to the misappropriation or misallocation of entity funds, the Court notes that the vital claims are the derivative ones—now revived on remand. Thus, reinstating summary judgment on the individual fiduciary‑duty claim does not leave the estate remediless.

Justice Boyd is careful to limit the reach of this aspect of the opinion:

“We do not imply that our reasoning here should extend to all cases in which a plaintiff brings both individual and derivative claims. In some circumstances, the claims and resulting harm may differ between the individual and the business entity.”

2.6 Impact: Pleading and Structuring Fiduciary‑Duty Theories

The opinion carries several important implications for business litigation:

  • Sharp separation of individual vs. derivative injury: Plaintiffs must think carefully about whether harm is suffered at the entity level (e.g., misappropriation of entity funds) or individually (e.g., oppression, special injury, separate contracts). Courts will police attempts to characterize entity wrongs as individual claims.
  • No “backdoor” individual claims via control or “managing partner” language alone: Simply being the operational person, or calling oneself “managing partner,” does not create a personal fiduciary duty to a co‑owner absent appropriate legal structure or special relationship.
  • Preservation rules remain strict: New fiduciary theories (e.g., Strebel-style "control" arguments) cannot be raised for the first time in a reply brief on appeal to defeat summary judgment.
  • Contracts and agreements matter: Parties who desire personal fiduciary protections beyond the statutory minimum should consider explicit contractual arrangements (e.g., investment management contracts, side letters, or joint‑venture agreements) that clearly define duties owed personally, not only at the entity level.

3. Limitations and the Discovery Rule in Fiduciary Misappropriation Cases

3.1 Limitations Periods and the Discovery Rule

Texas sets:

  • a four‑year limitation for breach‑of‑fiduciary‑duty claims (TEX. CIV. PRAC. & REM. CODE § 16.004(a)(5)), and
  • a two‑year limitation for theft‑based claims (§ 16.003(a)).

Generally, a cause of action accrues when a wrongful act causes a legal injury. However, in some contexts, the discovery rule defers accrual until the plaintiff knew or, in the exercise of reasonable diligence, should have known of the injury.

In fiduciary settings, Texas law provides a somewhat more lenient standard to the beneficiary, recognizing:

  • a fiduciary’s duty of full disclosure (see Kinzbach Tool Co. v. Corbett‑Wallace Corp., 160 S.W.2d 509, 512–14 (Tex. 1942)); and
  • that a beneficiary’s duty of inquiry is “lessened” where a fiduciary relationship exists (see S.V. v. R.V., 933 S.W.2d 1, 8 (Tex. 1996)).

At the same time, recent cases such as Berry v. Berry, 646 S.W.3d 516 (Tex. 2022), and Marcus & Millichap Real Estate Investment Services of Nevada v. Triex Texas Holdings, LLC, 659 S.W.3d 456 (Tex. 2023), emphasize that fiduciary beneficiaries are not “altogether absolved” of diligence. They still must use reasonable efforts to discover injuries when available information would put them on notice.

3.2 Watkins’s Limitations Argument

Watkins contended that even if he mishandled funds, any claims were time‑barred because:

  • Bertucci was not a passive outsider; he was:
    • the sole investor funding the projects;
    • an officer, director, member, or limited partner in the various B‑W entities; and
    • owed fiduciary duties himself to those entities.
  • Bertucci had access, in principle, to financial information and thus should have discovered any alleged misappropriation long before suit.
  • Watkins claimed that Bertucci actively knew of, consented to, and even directed the challenged expenditures—though, as discussed below, the testimony supporting that assertion is largely barred by the Dead Man’s Rule.

Watkins also argued that even if the discovery rule applied, the evidence conclusively established that Bertucci reasonably should have discovered any misuse by exercising minimal diligence.

3.3 Evidence Supporting a Fact Issue

The Supreme Court agrees with the court of appeals that the record contains substantial evidence generating a fact question about when Bertucci knew or should have known of the alleged misappropriations. This evidence includes:

  • Watkins’s agreement to manage the B‑W entities’ finances and accounting in compliance with the partnership agreements.
  • Watkins’s exclusive signatory authority over the TCBLP account, into which both entity funds and personal funds were commingled.
  • Watkins’s consistent assurances to Bertucci that Watkins was:
    • properly managing the funds, and
    • only taking compensation amounts Bertucci had agreed to.
  • Evidence that Watkins actually used funds invested for B‑W projects for personal benefit.
  • Watkins’s refusal, when Christopher requested, to produce full TCBLP financial records, along with inconsistent explanations regarding:
    • what amounts he was entitled to take, and
    • what amounts he in fact took.

In this fiduciary context, the key point is that Watkins was in a position of special trust and control with a duty to make full and frank disclosure. That duty, together with his refusal to provide records and his reassurances of propriety, can justify a later accrual date or tolling under the discovery rule.

Thus, on summary judgment, the Court concludes that:

  • a reasonable fact‑finder could find that Bertucci did not know, and reasonably could not have known, of the misappropriations earlier; and
  • therefore, Watkins did not carry his burden to conclusively establish the limitations defense as a matter of law.

3.4 Impact: Fiduciaries and Limitations Defenses

The ruling sends a clear signal:

  • Exclusive control + incomplete disclosure = likely fact issue: Where a fiduciary has dominant control over finances, commingles funds, promises compliance, and then stonewalls requests for information, limitations will rarely be resolved in the fiduciary’s favor at the summary‑judgment stage.
  • Mutual roles do not erase fiduciary obligations: Watkins’s argument that Bertucci was also a fiduciary of the entities does not negate Watkins’s own fiduciary obligations. Berry and Marcus & Millichap ensure that the beneficiary must still be diligent, but the fiduciary’s duty of full disclosure and the context of trust can significantly delay accrual.
  • Estate representatives must develop a record of concealment and control: The opinion suggests that demonstrating reassurances, refusal to disclose, and structural opacity (like exclusive control of a commingled account) will often defeat a limitations defense at the summary‑judgment stage.

4. Court‑Appointed Auditor’s Reports Under Rule 172

4.1 Rule 172 Framework

Texas Rule of Civil Procedure 172 allows courts to appoint an auditor (often an accountant) to “state the accounts” between parties when an investigation of accounts appears necessary. Key features:

  • The auditor files a verified report with the court.
  • Exceptions (objections) to the report or its items must be filed within 30 days of filing.
  • If no timely exceptions are filed, the report may be treated as “conclusive” on the accounts stated.

4.2 The Flawed Report in This Case

Here:

  • The probate court appointed a CPA to analyze Watkins’s records and assist in understanding his accounting for the B‑W entities’ funds.
  • The CPA’s initial report:
    • noted that Watkins kept no “general ledger” for the B‑W entities—a departure from normal practice,
    • relied “substantially” on Watkins’s explanations, and
    • concluded that the expenditures, including payments to Watkins, were “properly accounted for.”
  • Bertucci objected, noting multiple errors and the accountant’s heavy reliance on Watkins’s self‑serving descriptions.
  • The CPA later admitted that:
    • his report contained “errors or mistakes,”
    • some assumptions were “wrong,” and
    • he therefore sought to withdraw and replace the report with an amended one retracting his earlier exonerating conclusion.
  • The probate court held that Bertucci’s objections were untimely under Rule 172 and deemed the original report “conclusive” despite the admitted flaws.

Bertucci challenged this ruling on appeal, arguing:

  • The report was not properly verified by affidavit as Rule 172 requires, so the 30‑day exception deadline never began running.
  • Even if considered a Rule 172 report, giving conclusive effect to an admittedly erroneous report is improper.

4.3 Supreme Court’s Non‑Decision, With Strong Signals

The court of appeals declined to reach the Rule 172 issue, reasoning that it was unnecessary to decide in light of its ruling that limitations did not bar the claims.

The Supreme Court, while “inclined to agree” that the unverified and admittedly flawed report was neither admissible nor conclusive under Rule 172, likewise declines to definitively resolve the issue—for a practical reason:

  • Watkins expressly concedes in the Supreme Court that, on remand, the report will not be conclusive as to all matters in dispute, and that any ruling on its future admissibility is premature.
  • The Supreme Court accepts this concession as meaning that the probate court’s previous treatment of the report is not “law of the case” in a way that would bar challenges on remand.

Accordingly, the Court:

  • declines to find an abuse of discretion in the court of appeals’ decision not to address the Rule 172 arguments, and
  • leaves the admissibility and weight of the auditor’s report open for renewed litigation on remand.

4.4 Impact: Practical Takeaways on Rule 172

Although not a binding holding, the Supreme Court’s dicta and tone send clear signals:

  • Verification matters: An unverified “report” likely does not trigger the 30‑day exception requirement of Rule 172. Parties should be alert to whether a purported auditor’s report meets all procedural prerequisites before assuming that failure to object is fatal.
  • Admitted error undercuts conclusiveness: Even apart from timing, a court should be wary of treating as “conclusive” a report the auditor himself has disavowed as containing significant mistakes and incorrect assumptions.
  • Law‑of‑the‑case concerns can be mitigated by concessions: Watkins’s concession that the report is not conclusive and may be challenged on remand solves what could otherwise have been a serious problem for the estate. Parties should be judicious in how they frame concessions on appeal, as they can reshape the effect of prior rulings.
  • Trial strategy: Litigants should:
    • move promptly to challenge questionable auditor reports,
    • highlight any failure to comply with Rule 172’s formal requirements, and
    • develop independent evidence to impeach or contradict an auditor’s conclusions.

5. The Dead Man’s Rule and Summary Judgment

5.1 Rule 601(b): Purpose and Structure

Texas Rule of Evidence 601(b), the so‑called “Dead Man’s Rule,” provides that in a civil case by or against an executor, administrator, or heir of a decedent, an “interested” party may not testify “about an oral statement by the decedent” unless:

  1. the testimony is corroborated (Rule 601(b)(3)(A)), or
  2. the decedent’s representative or heir (the “opposing party”) calls the interested witness to testify at trial about the statement (Rule 601(b)(3)(B)).

The rule’s purpose is to prevent a surviving party from gaining an unfair advantage by testifying to alleged conversations that the deceased cannot refute. See Lewis v. Foster, 621 S.W.2d 400, 404 (Tex. 1981).

5.2 Watkins’s Testimony and the Objection

Watkins’s summary‑judgment presentation relied heavily on his own testimony that:

  • Bertucci knew how the funds were being handled, and
  • Bertucci affirmatively approved or even instructed the challenged distributions and expenditures.

Because these were oral statements allegedly made by the now‑deceased Bertucci, Christopher objected under the Dead Man’s Rule. The probate court overruled the objection; the court of appeals reversed, holding the testimony inadmissible absent corroboration or waiver.

5.3 What Counts as Corroboration?

Corroboration does not require independent proof of every detail, but there must be evidence tending to confirm and strengthen the testimony and indicating the probability of its truth. See:

  • Fraga v. Drake, 276 S.W.3d 55, 61 (Tex. App.—El Paso 2008, no pet.);
  • Black’s Law Dictionary definition of “corroborating evidence” (12th ed. 2024).

Watkins argued that Bertucci’s alleged inaction over many years—i.e., his failure to object to various expenditures—served as corroboration, because such inaction would be consistent with tacit or express approval.

The Supreme Court rejects that argument emphatically:

  • Evidence of “inaction” is “no more consistent with” approval than with lack of knowledge.
  • Where circumstances are equally consistent with two factual inferences, neither can be accepted as a matter of law. See City of Keller v. Wilson, 168 S.W.3d 802, 813 (Tex. 2005).
  • Thus, the alleged inaction cannot corroborate Watkins’s testimony that Bertucci expressly approved the expenditures.

Watkins also pointed to documents indicating that:

  • Bertucci knew that funds were being deposited and expended through the TCBLP account, and
  • Watkins “routinely accounted” to Bertucci for disbursements.

But the Court notes an important distinction: knowledge is not approval. At most, such documents would corroborate that Bertucci knew some transactions occurred—not that he affirmatively endorsed or instructed them. Thus they fall short of corroborating the specific oral statement (“I approve these particular expenditures”) that Watkins seeks to prove.

5.4 Did Bertucci “Call” Watkins as a Witness?

Rule 601(b)(3)(B) creates an exception where the decedent’s representative “calls” the interested party to testify at trial about the decedent’s oral statements. Watkins argued that:

  • Christopher, in his summary‑judgment briefing, cited and relied upon documents containing Watkins’s earlier statements (e.g., deposition excerpts or records referencing discussions with Bertucci); therefore,
  • Christopher had effectively “called” Watkins as a witness, waiving the protection of the Dead Man’s Rule.

The Supreme Court rejects this:

  • Christopher did not “call” Watkins to testify about any specific oral statement by Bertucci.
  • Mere reliance on documents in the record—particularly where the proponent does not seek to prove the truth of Watkins’s recounting of Bertucci’s statements—does not amount to “calling” the interested party as a witness under Rule 601(b)(3)(B).
  • Even if one treated this as a form of “calling,” the documents still do not corroborate approval; they at most show presence or knowledge—not assent.

5.5 Result: Testimony About Approval Is Barred

The Supreme Court therefore agrees with the court of appeals that:

  • Watkins’s testimony that Bertucci “approved” or “instructed” the challenged expenditures is barred by Rule 601(b), and
  • cannot be used to support summary judgment, whether on the merits or on limitations.

5.6 Impact: Estate Litigation and Evidence Strategy

The decision reinforces several practical lessons:

  • Dead Man’s Rule remains robust: Courts will strictly enforce its requirements. Survivors cannot rely on their own uncorroborated recollection of what a decedent said to justify contested transactions with the decedent’s estate.
  • Corroboration must be specific and probative: General patterns of behavior (e.g., failure to object) or possibilities equally consistent with multiple explanations do not suffice.
  • Use of discovery materials is not “calling” the witness: An estate may rely on documents or parts of an adverse party’s testimony for limited purposes without waiving Rule 601(b) protections across the board.
  • Planning and documentation are critical: Parties dealing with elderly or infirm principals should, where appropriate:
    • obtain written authorization for significant transactions,
    • maintain contemporaneous records of approvals, and
    • consider requiring co‑signatures or independent oversight—particularly when one side later faces a strong Dead Man’s Rule barrier in court.

IV. Complex Concepts Simplified

1. Direct vs. Derivative Claims

  • A direct (individual) claim arises when a shareholder, partner, or member is personally injured in a way that is distinct from the injury to the business entity—for example, breach of a personal contract, intentional infliction of emotional distress, or individual fraud.
  • A derivative claim is brought on behalf of the entity (corporation, LLC, partnership). The real injury is to the entity (e.g., misappropriation of company funds, waste of corporate assets); any harm to owners is indirect, via decreased entity value.

In Bertucci v. Watkins, the alleged harm is almost entirely derivative: funds belonging to or earmarked for the entities were allegedly misused or diverted. The Court is careful to funnel those claims through the derivative mechanism.

2. Fiduciary Duty vs. Informal Fiduciary Duty

  • Formal fiduciary relationships arise as a matter of law: trustee‑beneficiary, attorney‑client, partner‑partner, corporate officer‑corporation, etc.
  • Informal (or “confidential”) fiduciary relationships arise from a longstanding relationship of trust and confidence, separate from the transaction at issue—for example, close family members or friends who rely on each other for business advice over many years. See Meyer v. Cathey, 167 S.W.3d 327, 331 (Tex. 2005); Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287–88 (Tex. 1998).

Bertucci expressly disclaimed reliance on an informal fiduciary theory in the Supreme Court, and the Court does not analyze such a claim.

3. Principal–Agent Relationship

An agency exists when:

  • the principal authorizes the agent to act on the principal’s behalf; and
  • the agent is subject to the principal’s control in performing those acts.

Simply turning over funds for management does not automatically make the manager an “agent”; the question is whether the manager was truly under the principal’s practical control. The Court emphasizes this in rejecting Bertucci’s argument that mere possession of and control over funds made Watkins his fiduciary agent.

4. Discovery Rule and Limitations in a Fiduciary Context

  • Discovery rule: Delays the start of the limitations clock until the plaintiff knew or reasonably should have known of the wrong and resulting injury.
  • Fiduciary overlay: When there is a fiduciary relationship, the law often:
    • expects greater disclosure by the fiduciary, and
    • imposes a less demanding duty of inquiry on the beneficiary.

However, as Berry and Marcus & Millichap make clear, a beneficiary cannot ignore obvious red flags or sit indefinitely on rights where information is readily available.

5. Rule 172 Auditor’s Report

Rule 172 allows a trial court to appoint an auditor to investigate complex accounts and report to the court. The report:

  • must be verified by affidavit, and
  • may become conclusive if no timely exceptions are filed.

In this case, questions arose because:

  • the report was unverified, and
  • the auditor later acknowledged multiple errors and sought to amend or withdraw it.

The Supreme Court indicates skepticism that such a report could properly be treated as conclusive but leaves the issue open on remand.

6. Dead Man’s Rule (Rule 601(b))

The Dead Man’s Rule bars interested witnesses in estate litigation from testifying about oral statements of the decedent unless:

  • there is independent corroboration, or
  • the decedent’s representative calls the witness to testify about those statements.

The rule aims to prevent unfairness by eliminating inherently suspect, untestable testimony. In Bertucci, it blocks Watkins’s attempt to rely on his own recollection of Bertucci’s alleged approval of disputed expenditures.

V. Broader Impact and Practical Implications

1. For Appellate Lawyers

  • Brief all parties and all capacities clearly: Always identify in the style and party sections each capacity (individual, representative, derivative) in which the appellant proceeds, and track that consistently in briefing.
  • Substance will rescue some technical defects—but not all: Bertucci shows that where intent is clear, substantive arguments are made, and the opponent is not misled, the Supreme Court is reluctant to find waiver. Yet this is not license for careless briefing; courts will still enforce Rule 38.1 rigorously where arguments are undeveloped or omitted.
  • Use Rule 38.9(b): Both litigants and courts should be willing to use supplemental briefing to clarify confused or incomplete arguments, especially when dismissal would rest on technical grounds alone.

2. For Business Co‑Owners and Real Estate Investors

  • Entity structure shapes remedies: When co‑owners channel projects through separate partnerships, LLCs, and corporations—as here—most mismanagement or misappropriation injuries will be entity‑level, not personal. Parties should not assume a personal fiduciary duty runs between co‑owners absent clear contractual or statutory support.
  • Avoid commingled accounts: Using a personal or unrelated entity’s account (like TCBLP) as a clearinghouse for joint‑venture funds invites allegations of misappropriation, difficulty of tracing, and complex fiduciary disputes.
  • Document approvals and compensation: Regular board or partner approvals of compensation, documented resolutions, and clear tracking of distributions can mitigate Dead Man’s Rule issues and strengthen limitations defenses.

3. For Estate Representatives and Litigators

  • Expect limitations challenges but leverage fiduciary context: When the decedent entrusted funds to a fiduciary, gather evidence of control, reassurances, missing records, and refusals to disclose. These can create fact issues precluding summary judgment on limitations.
  • Plan around the Dead Man’s Rule: Anticipate that the adverse party’s self‑serving testimony about what the decedent “said” may be excluded. Focus on documentary evidence, third‑party witnesses, and objective financial records.
  • Be cautious in using the adverse party’s statements: Use deposition excerpts and documents strategically, but be aware that overreliance might invite arguments (though likely unsuccessful under this opinion) that you have “called” the adverse party to testify about the decedent’s statements.

4. For Trial Courts

  • Use court‑appointed experts carefully: When auditors or special masters admit serious mistakes, it is usually inappropriate to treat their initial reports as conclusive, especially when the report was not verified as Rule 172 requires.
  • Screen Dead Man’s Rule objections early: In estate cases, evidentiary rulings on decedent statements can heavily shape summary‑judgment posture. Resolving those issues thoughtfully may avoid reversible error.
  • Encourage clear delineation of direct vs. derivative theories: Early in complex business cases, trial courts may benefit from requiring parties to clarify which claims are derivative, which are direct, and how alleged harms differ. This can streamline discovery and dispositive motions.

VI. Conclusion

Bertucci v. Watkins is a multi‑faceted opinion that does three especially important things in Texas law:

  1. It reinforces a substance‑over‑form approach to briefing waiver, holding that derivative appeals are not lightly forfeited when the appellant’s intent and arguments are fairly evident and the opposing party suffers no prejudice. Courts should favor supplemental briefing over outright waiver when possible.
  2. It clarifies that entity‑level fiduciary breaches cannot be casually re‑labeled as individual claims against co‑owners, especially when the alleged wrongdoing occurred in the actor’s role as an officer, director, member, or limited partner, and when litigants fail to preserve more nuanced fiduciary theories such as control‑based duties.
  3. It confirms a robust application of the Dead Man’s Rule and sets a high bar for “corroboration” of alleged oral statements by deceased persons, while recognizing that fiduciaries who withhold information and commingle funds will struggle to obtain summary judgment on limitations.

Looking forward, the opinion will likely be cited frequently:

  • in briefing waiver disputes involving multiple capacities and derivative claims,
  • in business divorce and private‑equity disputes over whether alleged harms are individual or derivative,
  • in fiduciary‑misappropriation cases testing limitations under the discovery rule, and
  • in estate litigation involving contested transactions with now‑deceased parties, especially where one side seeks to rely on the decedent’s alleged oral approvals.

By insisting on doctrinal clarity while favoring resolution on the merits over procedural traps, the Supreme Court of Texas continues a line of cases that emphasize fairness, transparency, and careful structuring of business and litigation relationships.

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