Sunday, May 17, 2020
Texas Attorney Ernest Cannon is Suing His Estate-Planning Lawyer Over His Ranch's $8.78 Million Loss
Ernest Cannon, a legal legend and longtime rancher, has filed a legal malpractice suit claiming his ranching operation lost $8.78 million over seven years. The "beef" is with Cannon's estate-planning attorney, Crady Jewett McCulley & Houren partner Jay Houren of Houston, Houren's firm, plus two accountants and an accounting firm. Cannon alleges that they made a mistake in his estate plan that that caused an $8.78 million ranching operation loss to come out of a trust he established for his son.
Cannon has represented legendary Houston litigator John O'Quinn as well as Art Brines, former Baylor University Football head coach, and also litigated against BP over the Deepwater Horizon disaster.
According to the petition in Cannon v. Crady Jewett McCulley & Houren, Cannon hired Houren and accountants Gary Sult and Elizabeth Ann Minze in 2011 to set up his son's trust. Cannon alleged that Houren and the accountants set up an estate plan that structured the trust to own a principal asset of a 96% limited partnership in J Bar F Investments Ltd., which was allegedly worth millions of dollars.
J Bar F held a portfolio of securities and also controlled affiliated companies in Cannon's ranching operations. One of these companies was the operating company of the ranching properties and equipment. This affiliated company had been losing money and J Bar F was covering for these expenses ($8.78 million) from 2013 to 2018.
The petition in Cannon claimed, “This financial situation was inadequately brought to the attention of the trustees by its lawyers and accountants … even thought its lawyers provided legal advice, and its accountants handled the fiscal oversight of all related operations,” The plaintiffs in the case claim that it was professional negligence to include the ranching operations company in the trust.
Houren advised Cannon to purchase the company in order to maximize the trust's assets, so Cannon purchased the company for $8.78 million in 2019 in order to restore the funds the company drained from the trust.
The trust was set up to accumulate cash for the son's future needs, but instead the trust incurred expenses worth $8.78 million. The ranching operations company should not have been part of the trust and if the defendants had properly advised Cannon in the beginning, J Bar F would have never owned the company and Cannon wouldn't have had to buy the company, depriving the trust of earnings.
See Angela Morris, Texas Attorney Ernest Cannon is Suing His Estate-Planning Lawyer Over His Ranch's $8.78 Million Loss, Law.com, May 15, 2020.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.