## Facts

- Lanna L. Lee and her company retained Theodore “Ted” Hasson, an insurance broker/financial advisor and family friend, for financial advice.
- During Lee’s divorce and property division, Lee alleged an oral agreement under which Hasson would advise her regarding division and reinvestment of assets and would be compensated through substantial fees and commissions.
- Lee claimed the parties’ preexisting personal and advisory relationship created a relationship of trust and confidence that existed before and apart from the disputed transaction.
- A jury found (1) an oral agreement existed, (2) a relationship of trust and confidence existed, and (3) Hasson complied with fiduciary duties.
- The trial court disregarded the jury’s finding of a confidential relationship and entered judgment for Hasson and related entities.

## Issues

1. Whether legally sufficient evidence supported the jury’s finding of an informal fiduciary (confidential) relationship that existed prior to and apart from the challenged transaction.
2. If a fiduciary relationship existed and Hasson profited from the transaction, whether legally sufficient evidence showed Hasson satisfied fiduciary duties necessary to rebut the presumption of unfairness.
3. Whether the trial court erred by disregarding the jury’s confidential-relationship finding and entering a take-nothing judgment against Lee.

## Decision

- The court of appeals held the trial court erred by disregarding the jury’s confidential-relationship finding.
- The court held there was no evidence that Hasson complied with fiduciary duties required to rebut the presumption that a fiduciary’s self-interested transaction is unfair.
- The court reversed the trial court’s judgment and rendered judgment that Hasson and the related defendants take nothing.

## Legal Principles

- An informal fiduciary relationship may arise from a relationship of trust and confidence that exists prior to and apart from the transaction in dispute.
- On legal-sufficiency review, the court credits evidence supporting the verdict when reasonable jurors could do so and defers to credibility choices within that standard.
- When a fiduciary benefits from a transaction with the beneficiary, equity presumes the transaction unfair; the fiduciary bears the burden to prove fairness and strict fidelity.
- To rebut the presumption, the fiduciary must prove, through evidence, full and fair disclosure of material facts, prioritization of the beneficiary’s interests, avoidance of conflicts, and fair and honest dealing, including that compensation is fair and reasonable.
- Failure to carry the fiduciary’s burden leaves the presumption unrebutted and supports denial of the fiduciary’s claimed contractual benefits.

## Conclusion

The court recognized legally sufficient evidence of an informal fiduciary relationship between Lee and Hasson and held Hasson failed to produce evidence adequate to prove fairness and disclosure for his self-interested compensation arrangement; accordingly, the appellate court reversed and rendered judgment that Hasson and the related defendants take nothing.


Lee v. Hasson, 286 S.W.3d 1 (Tex. App.—Houston [14th Dist.] 2007, pet. denied)