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Click here for the full text of this decision FACTS:Theodore Hasson was an insurance broker and financial advisor, and Lanna Lee was his wealthy friend and client. Lee discovered that her husband, Lou Pai, was unfaithful and had a child outside of their marriage. Lee sought a divorce, but Pai was suspicious of attorneys. Rather than hire an attorney, however, Lee turned to Hasson for advice and help in negotiating the property settlement. Hasson contends that in September 1999, Lee offered to hire him to work for her full time. Hasson contended that he began working for Lee in October 1999 and reached an oral agreement with her regarding his compensation on Jan. 18, 2000. According to Hasson, he presented three different compensation plans to Lee, and she selected the option in which she agreed to place her entire share of the marital estate into a limited partnership with Hasson, give him 10 percent of the partnership, and pay him an annual salary equal to 1 percent of the share of the marital estate she received in the divorce. Hasson further testified that Lee agreed to build a multimillion dollar home for the Hasson family and lease it to the Hassons for an annual rent equal to 10 percent of the home’s value, deducting the rent from Hasson’s salary. Lou Pai filed for divorce on March 3, 2000 in the 245th District Court of Harris County, Judge Annette Galik presiding. Pai and Lee mediated their divorce in April and May 2000. Lee discussed the offers and counteroffers of the divorce mediation with Hasson, including specific figures and percentages of the proposed marital property division. Hasson claims that on May 3, 2000, Lee told him that she wanted to modify her oral agreement with him to eliminate the contemplated partnership and instead pay Hasson 10 percent of the value of her marital estate at the time of her divorce in exchange for services he had rendered in the past and was expected to render in the future. Eventually, Lee hired attorney Warren Cole, who delivered a message to Hasson that he was fired and that the agreement was terminated. Hasson sued Lee on July 10, 2000, alleging that Lee’s share of the marital estate totaled approximately $140 million, and that Lee owed him 10 percent of this amount in payment for his services under the terms of the May 3, 2000, modification of their oral agreement. At trial, Lee denied that she had an agreement with Hasson and contended that he was instead just a helpful friend. In the alternative, she argued that the agreement described by Hasson was unenforceable. Lee also countersued for recovery of funds Hasson and his companies received from Lee, alleging that Hasson converted Lee’s funds, committed fraud or breached his duty as a bailee. The jury found that Lee agreed to pay Hasson a fixed percentage of the value of her share of the marital estate at the time of her divorce in exchange for Hasson’s agreement to provide services. The jury also found that Lee had failed to comply with the agreement and that her failure was not excused on the grounds that Hasson’s services constituted the unauthorized practice of law, the agreement was unconscionable, or Hasson was equitably estopped from enforcing the agreement. The jury further found that Lee owed Hasson $10 million and that the reasonable fees for the necessary services of Hasson’s attorneys totaled $4 million. In response to Question 16 of the charge, the jury found that a relationship of trust and confidence existed between Lee and Hasson at the time they entered into the oral agreement. The jury also answered Question 17 affirmatively, finding that Hasson had complied with his fiduciary duty to Lee. Hasson and his companies asked the trial court to disregard the finding that Hasson and Lee shared a confidential relationship, as determined by the jury’s answer to Question 16. The trial court entered a final judgment disregarding the jury’s answer to Question 16 as requested by Hasson. HOLDING:Reversed and rendered. All transactions between the fiduciary and his principal, the court stated, are presumptively fraudulent and void. Texas courts, the court stated, apply a presumption of unfairness to transactions between a fiduciary and a party to whom he owes a duty of disclosure. The court reviewed the record and first held that legally and factually sufficient evidence supported the finding that Lee and Hasson had a fiduciary relationship. A profiting fiduciary, the court stated, bears the burden of showing the fairness of transactions between the fiduciary and principal. Such fiduciaries, the court stated, must prove they acted in good faith and that the transactions were fair, honest and equitable. In establishing the fairness of a transaction involving a fiduciary, the court stated, some of the most important factors are: whether there was full disclosure regarding the transaction; whether the consideration (if any) was adequate; whether the beneficiary had the benefit of independent advice; whether the fiduciary benefited at the expense of the beneficiary; and whether the fiduciary significantly benefited from the transaction as viewed in light of circumstances existing at the time of the transaction. Applying this test to Hasson’s actions, the court found legally insufficient evidence that: the transactions at issue were fair to Lee; Hasson made a reasonable use of the confidence Lee placed in him; Hasson acted with the utmost good faith and exercised the most scrupulous honesty toward Lee; Hasson placed Lee’s interests before his own, did not use the advantage of his position to gain any benefit for himself at Lee’s expense, and did not place himself in a position in which his self-interest might conflict with his obligations as a fiduciary; and Hasson fully and fairly disclosed all important information to Lee concerning the transactions. Consequently, the court held that Hasson failed to overcome the presumption that his contract with Lee was void. The court reversed the trial court’s judgment and rendered judgment that Hasson and his related companies take nothing. OPINION:Guzman, J.; Hedges, C.J., and Yates and Guzman, J.J.

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