The Texas Supreme Court has passed up a chance to decide whether truth is an affirmative defense to a claim for tortious interference with a contract.
Inwood National Bank and Inwood Bancshares, Inc. v. D. Kyle Fagin, Individually and as Trustee and Beneficiary of the D. Kyle Fagin Qualified Subchapter S Trust (No. 24-0055; January 31, 2025) arose in 2015, when D. Kyle and Christy Fagin decided to put Christy’s two million shares of Inwood Bancshares, Inc. common stock into two trusts, each naming the other person as the sole beneficiary. Kyle Fagin’s Trust was governed by an “irrevocable” trust agreement providing that $100 would be the initial property in the trust and that Christy, upon approval by Inwood Bancshares, Inc., would transfer a significant number of shares into it. The trust agreement, however, made no mention of when this transfer would take place.
Christy and Kyle then completed the necessary documents to perform the transfer. At this point Christy revoked her consent to the transfer after realizing that the transfer would make the shares Kyle’s property by gift. As a result, she asked Inwood not to proceed with the transfer, and Inwood did not countersign the agreement to transfer. Kyle then sued Inwood, alleging that the shares had been “irrevocably granted” under the trust agreement and that Inwood committed tortious interference by convincing Christy to revoke her transfer. Inwood replied that there was no intention of transferring the shares at that time under the trust agreement, only on some future date. Inwood also claimed truth as a defense against the tortious interference claims.
The trial court granted Inwood’s summary judgment without specified grounds and ordered that Kyle take nothing. Kyle and Christy then settled, and Kyle appealed only with regard to Inwood. The Dallas Court of Appeals affirmed except with regard to the tortious interference claim. Here the court observed that SCOTX had not previously recognized truth as an affirmative defense in this instance. Inwood appealed that issue to SCOTX.
In a per curiam opinion, SCOTX determined that the trust agreement specified that the initial $100 was intended to be immediately transferred to the trust, but that the agreement did not similarly specify immediate transfer of shares, which depended on the approval of Inwood. Thus, the trust agreement referring to the transfer of shares did not constitute a gift, as Kyle claimed.. Since Kyle had no legal rights to retain the shares at that time, his claim of tortious interference failed. Additionally, the irrevocability clause did not preclude Christy from deciding against transferring the shares because she still retained the rights to them up until the point of transfer. Once again, the claim of tortious interference failed.
The court reversed the court of appeals’ judgment in part and reinstated the trial court’s judgment that Kyle Fagin take nothing. Since the court’s decision rested on the trust agreement, the court did not reach the issue of whether truth is an affirmative defense to a claim for tortious interference with a contract.
TCJL Research Intern Geneva Cline researched and substantially drafted this article.
