Minor Briefing Defects Do Not Forfeit Derivative Appeals; Courts Should Favor Merits Review and Use Supplemental Briefing

Supreme Court of Texas — CHRISTOPHER F. BERTUCCI, AS OF THE ESTATE OF ANTHONY R. BERTUCCI, AND DERIVATIVELY ON BEHALF OF AMERICAN AFFORDABLE HOMES & PROPERTIES, INC.; AMERICAN AFFORDABLE HOMES, LP; TOWN VISTA DEVELOPMENT, LLC; TOWN VISTA TERRACE, INC.; AND MIDCROWNE SENIOR SLP, LLC v. EUGENE L. WATKINS, JR.
Opinion by Justice Boyd (delivered March 14, 2025)

I. Introduction

This dispute arises from a long-running low-income-housing venture between two business partners: Anthony Bertucci (primarily the funding source, typically holding a 60% interest) and Eugene Watkins (operations and management, typically holding 40%). Rather than operate under a single umbrella entity, the partners created separate project-specific entities (the “B-W entities”), often structured as a limited partnership with a corporate general partner.

The conflict escalated after Bertucci’s health declined and his son, Christopher (acting under power of attorney and later as executor), reviewed records and suspected Watkins had diverted entity-related funds for personal use. After interpleaded escrow funds and cross-claims, the probate court granted summary judgment for Watkins on all claims. The court of appeals reversed in part, but also held that Bertucci waived appellate review of the derivative claims due to inadequate briefing.

The Supreme Court of Texas addressed four clusters of issues:

• Appellate waiver: whether briefing defects forfeited the derivative appeal;
• Individual fiduciary duty: whether Watkins owed fiduciary duties to Bertucci personally (as distinct from duties owed to entities);
• Limitations: whether fact issues precluded summary judgment on limitations;
• Evidentiary disputes: the effect of a court-appointed accountant’s report (Rule 172) and application of the Dead Man’s Rule (Rule of Evidence 601(b)).

II. Summary of the Opinion

The Court held:

• No waiver of derivative appeal: the court of appeals erred by finding waiver based on purportedly inadequate briefing; the case is remanded for the court of appeals to address the derivative-claim arguments in the first instance.
• Individual fiduciary-duty claim fails: the court of appeals erred by reversing summary judgment on Bertucci’s individual breach-of-fiduciary-duty claim; the Supreme Court reinstated summary judgment against that individual claim.
• Limitations fact issues exist: the court of appeals correctly found fact issues precluding limitations-based summary judgment.
• Evidentiary rulings affirmed: the court of appeals did not err (i) in declining to decide the accountant-report issue because it was unnecessary at that stage and could be addressed on remand, and (ii) in holding that the Dead Man’s Rule barred uncorroborated testimony about the decedent’s oral approvals.

The result is a mixed disposition: individual fiduciary-duty claims are out; derivative claims return to the court of appeals for merits review, with limitations and evidentiary guidance provided by the Supreme Court.

III. Analysis

A. Precedents Cited

1. Appellate waiver, merits preference, and curing defects

• ERI Consulting Eng'rs, Inc. v. Swinnea and Ross v. St. Luke's Episcopal Hosp. and RSL Funding, LLC v. Newsome
  Used for the baseline that appellate rules require adequate briefing and that failure to supply argument/citations can forfeit issues. The Court accepted this principle but refused to extend it to a scenario where the derivative issues were, in substance, argued.
• Lion Copolymer Holdings, LLC v. Lion Polymers, LLC (with Holley v. Watts)
  Supported the method for evaluating waiver: courts look beyond headings to the argument under each section to discern intent. This undercut a hyper-technical “no derivative arguments” conclusion.
• Dudley Constr., Ltd. v. Act Pipe & Supply, Inc.
  Reinforced the anti–form-over-substance approach: courts should avoid procedural machinations that impede reaching the merits.
• Weeks Marine, Inc. v. Garza (quoting Perry v. Cohen), First United Pentecostal Church of Beaumont v. Parker, and Fredonia State Bank v. Gen. Am. Life Ins. Co.
  These cases framed a consistent jurisprudential theme: reach the merits whenever reasonably possible; avoid reading procedural rules to defeat appeal rights unless absolutely necessary.
• Horton v. Stovall (and TEX. R. APP. P. 38.7, 38.9(b))
  Supported the Court’s suggestion that “remediable” briefing problems should not be fatal without reasonable opportunity to cure—highlighting supplemental briefing as the preferred tool.
• Briscoe v. Goodmark Corp. (citing Lehmann v. Har-Con Corp. and Verburgt v. Dorner)
  Reaffirmed that overly technical application should not cost a party the right to appeal.
• State ex rel. Durden v. Shahan, Walker v. Blue Water Garden Apartments, and United Ass'n of Journeymen & Apprentices v. Borden
  These cases anchored the Court’s jurisdictional/notice-of-appeal framing: the key is a bona fide attempt to invoke appellate jurisdiction and whether parties were fairly apprised—also undermining claims of surprise or confusion.
• Roccaforte v. Jefferson County (and United States v. Olano)
  Used to note conceptual clarity: “waiver” versus “forfeiture.” The Court flagged the distinction but deferred deciding its significance.

2. Fiduciary duty in entity settings; preservation limits on summary-judgment reversal

• M.R. Champion, Inc. v. Mizell
  Cited for the proposition that general partners owe duties “in the nature of a fiduciary duty,” contrasted against limited-partner rules.
• Ritchie v. Rupe
  Used to frame the central doctrinal boundary: corporate officers/directors typically owe duties to the corporation, not to each other individually—relevant to rejecting a presumed individual duty.
• Suntech Processing Sys., L.L.C. v. Sun Commc'ns, Inc. and Gadin v. Societe Captrade
  Cited to reflect the unsettled/limited nature of “member-to-member” fiduciary duties in LLCs as a matter of law under Texas decisions.
• Strebel v. Wimberly
  The court of appeals relied on this “control test” concept (a limited partner may assume duties if acting like a general partner). The Supreme Court did not squarely accept or reject Strebel’s broader theory, instead holding that (i) the argument was not properly presented/preserved in the summary-judgment record as a reversal ground, and (ii) even as reframed (agency/control over funds), it did not establish an individual fiduciary duty here.
• Ingram v. Deere
  Used to reject a simplistic “labeling” approach: calling oneself a “partner” (or “managing partner”) to third parties does not necessarily create legal status or duties.
• Cmty. Health Sys. Prof'l Servs. Corp. v. Hansen (citing Grissom v. Watson)
  Supported the agency-law point: agency requires the agent to act on the principal’s behalf and subject to the principal’s control; Bertucci’s argument simultaneously alleging Watkins’ exclusive control and an agency relationship was internally inconsistent.
• Johnson v. Brewer & Pritchard, P.C., Sci. Spectrum, Inc. v. Martinez, McConnell v. Southside Indep. Sch. Dist., and City of Houston v. Clear Creek Basin Auth.
  These cases reinforced the strictures of summary-judgment practice: a court cannot grant or reverse summary judgment on grounds not presented to the trial court. The Court applied this through TEX. R. CIV. P. 166a(c).
• Meyer v. Cathey and Associated Indem. Corp. v. CAT Contracting, Inc.
  Cited to define informal fiduciary duties; importantly, Bertucci disclaimed reliance on an informal fiduciary theory, narrowing what the Court would consider.
• Huffington v. Upchurch and Smith v. Bolin
  Noted historically heightened language about “managing partners,” but the Court emphasized modern statutory framing under the Revised Partnership Act and that the record did not show Watkins actually occupied a legal managing-partner role.

3. Limitations and the effect of fiduciary relationships on diligence

• Berry v. Berry and Marcus & Millichap Real Est. Inv. Servs. of Nev. v. Triex Tex. Holdings, LLC
  These cases warn that a fiduciary relationship does not eliminate the injured party’s duty of reasonable diligence. The Court used them to frame Watkins’s argument but held factual disputes prevented summary judgment.
• Kinzbach Tool Co. v. Corbett-Wallace Corp. and S.V. v. R.V.
  These cases supported the counterweight: fiduciaries have affirmative disclosure obligations, and the duty of inquiry may be “lessened” in fiduciary contexts—helping explain why fact issues existed.

4. Evidence: auditor report and Dead Man’s Rule

• In re Bertucci
  Background: mandamus was denied earlier because there was an adequate remedy by appeal, contextualizing why the issue resurfaced post-judgment.
• Lewis v. Foster
  Provided the policy rationale for the Dead Man’s Rule: preventing unfair advantage when one side’s testimony cannot be contradicted by the deceased.
• Fraga v. Drake
  Supplied the corroboration standard: corroboration must “tend to confirm and strengthen” and show probability of truth—not merely be “generally consistent.”
• City of Keller v. Wilson
  Applied to reject inferential leaps: if circumstances are equally consistent with two competing inferences (approval vs. lack of knowledge), neither may be inferred.

B. Legal Reasoning

1. Derivative-appeal “briefing waiver” is disfavored where intent and arguments are fairly presented

The Court treated “waiver” as a severe remedy inconsistent with Texas’s preference for merits adjudication. Even though the opening brief did not list the entities on the cover page/Identity of Parties section, the Court characterized this as a minor, technical defect—especially where:

• the notice of appeal expressly included the executor and derivative capacity on behalf of the named entities;
• the court of appeals itself styled and noticed the appeal as including the entities;
• the appellant brief explicitly discussed derivative standing and fiduciary duties owed to the entities and devoted substantial argument to entity-level breach; and
• the appellee (Watkins) demonstrated understanding by fully responding on the merits, eliminating any plausible “unfair surprise” narrative.

Critically, the Court reframed the proper response to imperfect briefing: if an appellate court believes briefing is insufficient to assist review, TEX. R. APP. P. 38.9(b) authorizes additional briefing. It does not require it, but it provides a less-drastic mechanism than forfeiture.

2. Individual fiduciary duty: distinct from entity duties; cannot be revived by new appellate theories

The Court reinstated summary judgment against Bertucci’s individual-capacity fiduciary-duty claim for two reinforcing reasons:

• Preservation/problem presentation: the specific “control test” theory accepted by the court of appeals (via Strebel v. Wimberly) was not properly presented to the trial court as a basis to defeat summary judgment and was raised only in a reply brief in the court of appeals. Under TEX. R. CIV. P. 166a(c), reversal cannot rest on grounds not expressly presented below.
• Substantive mismatch: even as reframed at the Supreme Court (control over funds implying agency), the theory did not establish an individual fiduciary duty. Control over funds within the role assigned in the venture did not transform Watkins into a fiduciary personally to Bertucci, and the agency claim failed because agency requires the principal’s control over the agent—contradicted by the very premise of Watkins’ supposed unilateral control.

The Court also stressed a practical, remedial point: because the alleged injury and remedies overlapped with the derivative claims, dismissal of the individual fiduciary claim did not, on this record and party framing, cause cognizable harm if derivative claims proceed.

3. Limitations: fiduciary-context evidence created fact issues on accrual/discovery

The Court accepted that diligence remains relevant even in fiduciary contexts, but it held the record was not one-sided. Evidence supporting fact issues included:

• Watkins’ exclusive signature authority and refusal to provide bank records on demand;
• assurances that he was properly managing funds and taking only agreed compensation;
• evidence of personal benefit from invested funds; and
• inconsistent statements about entitlement and amounts taken.

That constellation, combined with fiduciary disclosure principles (Kinzbach Tool Co. v. Corbett-Wallace Corp.) and reduced inquiry burdens in fiduciary settings (S.V. v. R.V.), supported the court of appeals’ conclusion: limitations could not be resolved as a matter of law on summary judgment.

4. Evidence: the accountant’s report deferred; Dead Man’s Rule applied strictly

On the Rule 172 accountant report, the Court did not decide admissibility/conclusiveness. It relied on Watkins’s concessions that admissibility at a future trial was premature and that the report was not conclusive of all disputed matters—thus preserving the ability to contest it on remand.

On Rule of Evidence 601(b), the Court held Watkins’s testimony that Bertucci “approved” expenditures was barred because:

• purported corroboration (Bertucci’s “inaction”) was equally consistent with lack of knowledge, so it did not “confirm and strengthen” the testimony;
• the record did not otherwise corroborate the oral-approval statements; and
• Christopher’s reliance on documents did not amount to “calling” Watkins to testify about decedent statements within the Rule 601(b) exception, and in any event those materials went more to knowledge than approval.

C. Impact

1. Appellate practice: a meaningful curb on “briefing waiver” in multi-capacity/derivative appeals

The opinion strengthens a predictable, appellant-friendly principle: where an appeal is clearly perfected for derivative claims and the appellant brief substantively advances entity-based arguments, courts should not find forfeiture merely because the brief is imperfectly captioned or fails to subdivide arguments by each entity. The Court’s repeated invocation of merits preference and Rule 38.9(b) is likely to be cited in:

• appeals involving multiple parties/capacities (individual vs. representative vs. derivative);
• disputes over whether an issue is “adequately briefed” when argument is present but not neatly labeled; and
• requests for leave to file amended/supplemental briefs to cure defects.

2. Entity litigation: reinforcing the need to separate entity duties from personal duties

The decision underscores careful pleading and summary-judgment proof: fiduciary duties to an entity do not automatically become duties to co-owners personally. Plaintiffs who want individual fiduciary claims must articulate the duty’s source (formal status, special relationship, agency, or other doctrine) and preserve those theories in the trial court’s summary-judgment record—not introduce them later on appeal.

3. Evidence and probate/business disputes: corroboration under Dead Man’s Rule remains a real barrier

The Court’s analysis is a reminder that “corroboration” requires more than plausibility or consistency. If the same fact (e.g., silence/inaction) supports competing inferences equally, it will not corroborate decedent-statement testimony for Rule 601(b) purposes—particularly at the summary-judgment stage.

IV. Complex Concepts Simplified

• Derivative claims: claims brought by an owner (shareholder/member/partner) on behalf of the entity to redress injuries to the entity. Any recovery typically belongs to the entity, not directly to the individual owner.
• Briefing “waiver” / “forfeiture”: losing an appellate issue due to inadequate briefing. The Court emphasized a reluctance to apply this harsh result when intent and argument are reasonably discernible and defects are curable.
• Traditional vs. no-evidence summary judgment: a traditional motion argues the movant is entitled to judgment as a matter of law based on undisputed facts; a no-evidence motion argues there is no evidence of an essential element. Either way, the nonmovant must expressly present responsive grounds and proof in the trial court.
• Formal vs. informal fiduciary duty: formal duties arise by law from defined relationships (e.g., general partners to each other; officers to the corporation). Informal duties arise from a pre-existing relationship of trust and confidence independent of the transaction—harder to prove, and here expressly disclaimed by Bertucci.
• Dead Man’s Rule (Tex. R. Evid. 601(b)): limits testimony about what a deceased person said, unless corroborated or the opponent calls the witness to testify about it—aimed at preventing one-sided, unchallengeable accounts.
• Limitations and discovery in fiduciary settings: time bars still apply, and diligence is still expected, but fiduciary duties of disclosure and the realities of control over information can create fact disputes about when a claim should have been discovered.

V. Conclusion

The Court’s most broadly reusable contribution is its appellate-procedure instruction: derivative appeals should not be lost to technical briefing defects when the appellant’s intent is clear and the brief substantively advances entity-based arguments; appellate courts should prefer merits resolution and can require supplemental briefing under TEX. R. APP. P. 38.9(b).

Substantively, the Court reaffirmed that fiduciary-duty analysis must respect entity boundaries: duties owed to a corporation, LLC, or partnership do not automatically become duties owed personally to a co-owner, and new duty theories cannot be used to reverse summary judgment unless preserved under TEX. R. CIV. P. 166a(c).

Finally, the opinion signals continued rigor on evidentiary safeguards common in probate-adjacent business disputes: limitations issues often remain fact-intensive in fiduciary contexts, and the Dead Man’s Rule will bar uncorroborated testimony of a decedent’s oral approvals where “corroboration” rests on ambiguous inaction.