INTERESTING CASES: June 7, 2017
Sallee S. Smyth
1.Roberts v. Roberts., 2017 Tex. App. LEXIS 4246 (Tex. App. – San Antonio May 10, 2017)(Cause No. 04-16-00170-CV)
H and W married in 1997 and had two children. In 2010 the parties divorced after a bench trial which awarded W a disproportionate division of the estate and awarded her spousal maintenance of $1550/month for 3 years and $1000/mo thereafter indefinitely. H appealed from that decree and the COA reversed and remanded both the property division and the spousal support award (which it determined should be reconsidered in light of the property division reversal), concluding that the trial court has mischaracterized $32,000 in value as W’s separate property which mischaracterization had more than a de minimis effect on the overall division. Upon remand, of the $41,000 originally characterized as W’s s/p, the trial court characterized only $9,000 as s/p however the trial court did not “re-divide” the estate to re-allocate the influx of an additional $32,000 in value to the community estate. Instead the trial court on remand found that the balance of the division should remain as is and that it was still just and right. The trial court on remand also maintained its determination that W was disabled, keeping the award of spousal maintenance the same. H appealed a second time. In considering substantive arguments regarding the award of spousal maintenance, the COA determined that although a finding of disability can be supported based solely by the testimony of the spouse claiming the disability (without medical records or experts), in this case the wife testified that she had carbon monoxide poisoning which caused her to have various pains and ailments, all of which cumulatively created a disability. The evidence established that W had never seen a doctor for any of these ailments, had never been diagnosed by an expert, was taking no medications and never established that she was prevented from securing gainful employment because of her condition. As such the COA determined that W’s testimony was insufficient to establish that she had a physical or mental disability which entitled her to spousal support. Regarding the division of property the COA found that the trial court did nothing more than reduce its original $41K s/p award to $9K while maintaining the award of the $32K balance to wife, making the community property division on remand even more disproportionate in W’s favor. In light of the COA’s determination that W was not disabled and thus not entitled to spousal support, the COA reversed and remanded the property division so that these factors could now be considered. Spousal maintenance award reversed and decree modified to delete. Property division reversed and remanded.
2.In the Interest of B.N.L.-B., 2017 Tex. App. LEXIS 4273 (Tex. App. – Dallas May 10, 2017) (Cause No. 05-16-00025-CV)
In 2001, same sex female partners L and B entered into a Donor Agreement with A, a male, to donate sperm for B to conceive a child. The Donor Agreement provided that L and B would not seek c/s from A and A would not demand any rights of conservatorship or possession and would not claim any parental rights until after L and B’s death. A agreed to terminate his parental rights and support adoption of any child by L. Finally the parties agreed that if A did seek any rights to the child contrary to the agreement he would indemnify them for the costs of defense, including attorneys fees. Insemination was successful and the child was born in 2002. L adopted the child in 2003. L and B moved to Virginia with the child and A lived nearby in Washington DC. L and B allowed A to have some limited periods of possession with the child. A brought suit in Virginia to have their visitation agreements reduced to writing and the parties settled the case, entering into a Consent Order in 2007, allowing A one weekend per month. L and B and the child moved back to Dallas but shortly thereafter separated and refused to allow A to exercise his visitation under the Consent Order. A registered the Consent Order in Texas over the objection of L and B and entered temporary orders. Subsequently a clarification order was signed designating a place to exchange possession of the child. In 2008 B filed an original SAPCR seeking primary custody. L filed a counter petition. A intervened seeking to be named primary conservator or alternatively requesting an SPO. L filed a plea to the jurisdiction challenging A’s standing. L and B settled as between themselves to be named JMC with B as primary. They further agreed that if A was awarded possession, they would make sure it was taken from their respective periods equally. The trial court determined that A had standing under TFC 102.004 as a person with past substantial contact with the child and thereafter L and B entered into a settlement with A whereby he received the second weekend in each odd month from Saturday to Sunday and the third such weekend in each even month and A could not remove the child from Dallas county for visits without consent of either L or B. No agreement was reached on fees. The trial court signed a final order in May 2009 approving the parties’ agreements and awarding fees against A in favor of L which he appealed. The fee award was reversed in 2012. In 2014 A filed a suit to modify the May 2009 order, seeking to be named a non-parent conservator, seeking greater access to the child and requested the restrictions on travel be lifted. L again filed a plea to the jurisdiction challenging standing and further asserted that the May 2009 order was void for lack of jurisdiction because A never established his right to intervene in that suit by failing to offer evidence that appointment of L or B would significant impair the child. L also filed a counter petition alleging breach of contract regarding the 2001 Donor Agreement. The trial court found that the 2009 agreed order gave A standing to seek a modification as a person affected by the order. Further, the trial court found that the 2009 agreed order operated as a “novation” of the original Donor Agreement, replacing and superseded the parties’ original contractual terms with new terms. The trial court issued a final order giving A additional periods of access to the child, including summer possession and lifted the travel restrictions. The trial court gave A limited rights during periods of possession as necessary to protect the child and ordered L to pay for A’s attorneys fees. L appealed. The COA agreed that the 2009 order was valid because even if A had not properly established his standing at that time, the parties reached an agreement for A to have possession of the child. Further, although A’s status as a donor did prevent him from asserting standing as a parent under TFC, it did not prevent him from asserting standing under Chapter 156 to modify as a person affected by the order. The COA determines that L and B’s agreement to grant A possession under the 2009 order, implicitly granted A the right to seek a modification of that possession. The COA further affirmed the finding that a novation had occurred and that the 2009 agreed order did in fact replace the original Donor Agreement. Because novation existed, breach of contract based on the original Donor Agreement could not be sustained and the terms obligating A to pay fees found in that agreement were no longer valid and enforceable. Judgment affirmed.
3.Loya v. Loya, 2017 Tex.LEXIS 449(Tex. Supreme Court May 12, 2017) (Case No. 15-0763)
H and W married in 1980. During marriage and after divorce H worked for Vitol and was eligible for, but not entitled to, discretionary bonuses. H earned this bonus regularly during marriage. W filed for divorce in 2008. In June 2010 the parties’ signed an MSA which also served as an immediate partition. The MSA included terms which provided that “All future earnings from each party are partitioned to the person providing the services giving rise to the earnings.” H’s 2010 bonus, awarded shortly before the divorce was finalized, was placed into a bank account awarded to W under the MSA. The trial court rendered judgment on the MSA in June 2010. Almost immediately thereafter W sought to set aside the MSA claiming there was no mutual assent to the document because it failed to divide the parties’ interest in any bonus to be paid to H in 2011 (and attributable to work performed the first six months of 2010 while they were still married). The trial court denied the W’s motion and signed a final decree which incorporated an AID setting out the MSA terms. Both the AID and Decree provided that undivided assets remained subject to future division under Chapter 9. Neither party appealed from the Decree. In March 2011 H received a gross bonus of $4.5 million, netting approximately $2.85 million. In June 2012 W filed for post-divorce division of the bonus. H moved for partial summary judgment on grounds that (1) the bonus was not community property subject to division; (2) the bonus, if divisible, was partitioned in the MSA; and (3) the issue was res judicata because it had already been considered by the trial court as part of W’s motion to set aside the MSA in 2010. The trial court granted H’s motion for partial SJ which left only the issue of attorneys fees. H abandoned his request for fees and the court signed a take-nothing judgment for W in January 2014. W appealed. The COA concluded that the bonus received by H in 2011 had not been considered, divided or partitioned by the MSA, AID or final decree and reversed and remanded for further proceedings. Chief Justice Frost dissented. This decision is reported at 473 S.W.3d 362. H filed a petition for review in the SCt which was granted. The SCt considered the terms of the MSA and determined that under the plain language of the parties MSA contract, “future income and earnings” included any income or earnings to be paid in the future after the MSA regardless of whether such payment was or could be attributable to services that the spouse performed prior to the divorce. The SCt notes that whether that portion of a discretionary bonus attributable to work performed during marriage is community property is an important issue to be decided, it is not necessary for the court to decide it to reach a conclusion in this particular case. The SCt concludes that the MSA in this case partitioned “future income” which includes future bonus payments for work done in the past, noting that the bonus had not been voted on at the time of the MSA and was thus not even in existence. Judgment of COA reversed, judgment rendered for H.
4. In re Marriage of Stegall,2017 Tex. App. LEXIS 4397 (Tex. App. – Amarillo May 12,2017) (Cause No. 07-15-00392-CV)
H and W married in 2004. Prior to marriage H owned and operated a cattle trading business. By his own admission he did not keep good records and he was unsure how many head of cattle he brought into the marriage. Upon trial of the divorce in 2015 H testified that he had owned at least 163 cows at the time of marriage and that he owned 191 cows now. The Court ultimately characterized all existing cattle on the ground and those in gestation as H’s separate property and confirmed them to him along with the majority of supplies and equipment associated with his cattle trading business. The court divided the community estate and W appealed arguing that H had not properly traced his s/p, making the court’s findings and division of property an abuse of discretion. On appeal H argued that the “minimum sum balance” tracing method could be correctly applied to his separate property cattle claims and that at the very least the trial court was correct in confirming a majority of the cattle as his s/p because the total number of cows existing at divorce had never dropped below the number he originally brought into the marriage. The COA notes however that this tracing method cannot apply to cattle in the same way that it can apply to cash because cattle are not fungible, determining that H’s tracing theory failed to acknowledge that there had been a significant number of cattle born during the marriage, all of which were community property, which were then commingled with his s/p cattle, defying segregation. Because H failed to clearly trace which cows were brought into the marriage and distinguish those from the community property cows his tracing failed and the court erred in confirming all cattle as his s/p. Because the cattle comprise the largest portion of the community estate the mischaracterization resulted in an erroneous division, warranting reversal and remand.
5.Aguirre v. Aguirre,2017 Tex. App. LEXIS 4580 (Tex. App. – Corpus Christi May 18, 2017) (mem. opinion) (Cause No. 13-16-00292-CV)
NOTE: This case is included to remind us that if we wrong someone (i.e. shoot them) we should take extra steps to do right by them in the future (even if it means employing a total waste of judicial resources in the process!!)
H and W were divorced in 2005. The parties were given an equal interest in the marital residence and H was ordered to pay for ½ of the property taxes but W was allowed to remain in the residence for the children. H was ordered to pay c/s. Presumably unable to get over his hurt feelings, in 2009 H shot W and eventually pled guilty to aggravated assault and we sentenced to 15 years in prison, during which period of time his c/s obligation fell into arrears and he did not pay his share of the property taxes. W brought an enforcement action in which H participated by phone. W calculated H’s arrearages for c/s and property taxes and asked that in lieu of a cumulative judgment that the court award W 100% interest in the marital residence (previously awarded to them both equally) and then offset the value of H’s interest in that residence against the arrearage amount, giving her a judgment for the $8,000 + differential. The trial court ultimately granted W’s requested relief and H appealed. OK … get ready … wait for it … H’s sole issue on appeal is that the trial court erred in failing to award W 6% interest on the arrearage judgment (which would obviously serve to increase the judgment against him) because the award of interest on child support arrearages under the TFC is mandatory. Letting H down easy, the COA determines that H has waived his right to assert such error because he did not first raise it in the trial court. Judgment affirmed (luckily for H). COMMENT: Yep, H was pro se!
6.Ishee v. Ishee, 2017 Tex. App. LEXIS 4761 (Tex. App. – Beaumont May 25, 2017) (mem. opinion) (Cause No. 09-15-00187-CV)
H and W were divorced in 2012. At the time of divorce H owned a percentage interest in several closely held businesses, one of which was World Environmental (WE). As part of the division of property W was awarded a percentage of H’s interest in the businesses in which he held a membership interest. In 2013 W sued H, WE and a majority owner for breach of fiduciary duty and breach of contract, alleging that H had never paid her the monies she was entitled to receive based on her percentage interest in the businesses. She further sued for declaratory judgment to determine the specific nature of her assigned interest. At trial W testified that H never distributed any funds to her for her percentage interests, despite her claims that H had in fact received distributions from the businesses. H claimed he had never received any income or distributions and further he did not own a controlling interest, thus had no ability to affect the decisions of the business regarding those matters. The business accountant testified that H did receive certain guaranteed payments from WE after the divorce but claimed these were in the nature of compensation. W argued that she was entitled to a % of these payments as well as a % of the value of all fringe benefits H received from the business including the value of a company car, cell phone and health insurance. The jury found that H breached his fiduciary duty by failing to make distributions to W and awarded actual and punitive damages in excess of $350K. The trial court awarded attorneys fees of $25K to W under the dec action with H and WE jointly and severally liable. H appealed. First H argued that the trial court lacked jurisdiction because W’s suit, based in part on remedies under TFC Chp. 9, was not filed in the divorce court. H claimed the divorce court had exclusive jurisdiction. The COA disagreed and held that venue for enforcement actions under Chp. 9 is permissive, not mandatory. Next H argued that he had no fiduciary duty to W as an assignee of his business interests. The COA noted that while there is no statutory fiduciary duty created under the TX Business Organizations Code for assignees, TFC 9.011 creates such a duty when divorce decrees obligate one spouse to remit property to the other spouse upon receipt, such as distributions from the business interest partially assigned to W in this case. Even so, the COA found that the damage award was excessive because the decree did not award W a percentage of all benefits H received and the jury had been wrongfully persuaded by the arguments of W’s attorney to the contrary. In addition, the COA found that W’s recovery effectively double dipped because the jury awarded her identical damages under two separate claims (breach of FD and disgorgement). The COA reversed the damage award and remanded the entire matter for a new trial on both the fiduciary duty and breach of contract claims. The COA modified the fee award against H only and affirmed the declaratory judgment, fees and sanctions.