INTERESTING CASES: March 4, 2015

Sallee S. Smyth

1. Babbit v. Below,2015 Tex. App. LEXIS 1024 (Tex. App. – San Antonio February 4, 2015) (mem. opinion) (Cause No. 04-13-000759CV)

H and W divorced in 1971 and H was ordered to pay c/s in the amount of $120 per month payable directly to W. In April 2013 (42 years later) W filed an application for judicial writ of withholding claiming arrearages with interest in the amount of $97,555. H filed a timely motion challenging the arrearage amount and asserting the affirmative defense of equitable estoppel. At the hearing W testified that H paid only $1,000 of his total c/s obligation. H testified that her paid all but $2,820 and that he completely stopped paying in 1984 because W remarried, moved away and provided no forwarding address. The trial court issued a letter ruling expressly stating that the case presented the most classic case of “he said/she said” he had seen in 26 years on the bench. The court concluded that W’s 42 year delay in pursuing enforcement reflected on her credibility because it implied that some child support payments were being made during that time, otherwise she would have stepped forward to enforce much sooner. The trial court found that H’s testimony was more plausible and thus concluded that c/s arrearages were $2,820. The court awarded W a judgment for that amount with interest accruing from 1991 when the legislature first mandated the award of interest on child support. The court further awarded W $3,000 in fees. W appealed contending that the trial court abused its discretion in considering her delay as a contributing factor to her lack of credibility. The COA found that because the trial court is the sole judge of credibility, the COA cannot interfere with that core function and it was not unreasonable for the trial court to conclude that W would have come forward sooner to enforce had c/s truly been withheld. As a result the COA affirmed the arrearage finding of $2,820. W further asserted error by the trial court in failing to award interest on the arrearage back to 1984 when H admitted he stopped paying c/s. The COA agreed finding that pre-judgment interest would have accrued even prior to the legislative mandate in 1991. Further the only defense offered by H was equitable estoppel and the COA found that a trial court has no authority to equitably reduce the amount of interest on c/s arrearages.. Because W was entitled to a recalculation of interest, increasing her overall recovery, the COA reversed the judgment amount as well as the award of attorneys fees instructing the trial court to recalculate with proper interest and consider whether this increased recovery overall justified a modified award of fees.

2. Warren v. Weiner,2015 Tex. App. LEXIS 1158 (Tex. App. – Houston [1st Dist.] February 5, 2015) (Cause No.01-13-01077-CV)

H and W created a trust in 2000 for the benefit of their third child, MHW, born in 1999, naming themselves as co-trustees. The parties divorced in 2012 and the final decree addressed this trust as well as similar trusts previously established for their other two children providing that they would continue as irrevocable trust and that the co-trustees were to take all steps to insure co-ownership and management of the trust funds as well as their obligations for deposits, withdrawals and disbursements. After the divorce the parties disagreed over various aspects of trust management, each accusing the other of violating trust terms. In 2013 H filed an action in family court to modify certain child related terms affecting the two remaining minor children. W filed an action in probate court seeking to terminate the MHW 2000 Trust with the funds to be converted to a UTMA account and designating W as the sole custodian. In the alternative W asked that the parties be removed as co-trustees and that an independent trustee be appointed. W originally filed her probate suit as a co-trustees but later amended only in the capacity as next friend of MHW. H amended his pleading in the family court action asking that he be named as the exclusive manager of the children’s estates. H filed a plea to the jurisdiction in probate court (alternatively plea in abatement) asserting that the family court had continuing, exclusive jurisdiction over W’s claims. The probate court granted the plea and dismissed the W’s suit. W appealed. Referencing Estate Code Section 32.006 the COA noted that the probate court has jurisdiction over matters brought by or against a trustee in counties where there is a statutory probate court and in some cases the jurisdiction of the probate court and a district court might also be concurrent. The COA determined that although the family court would retain exclusive jurisdiction over matters regarding child support, the trust as established in this case did not administer c/s as amounts were not payable to the child beneficiary before he turned 30. Further the parties’ decree specified that the trust would continue to be administered under the existing trust terms and as such the trust agreement governed, not the decree. The COA noted that in cases of concurrent jurisdiction, dominant jurisdiction is acquired by the court resolving the issues and where subsequent proceedings are filed in a different court involving the same parties and same controversy, the subsequent suit should be abated in favor of a former court having jurisdiction over those issues. H argued that the trust issues now raised relate back to issues involved in the divorce proceeding under CPRC 16.068 however the COA noted that the neither the Trust nor the child appeared as parties’ in the divorce proceeding which would have been required if Trust had truly come within the family court’s jurisdiction during the divorce proceedings. The COA found that the current trust issues were not so interrelated to issues in the preceding divorce as to give the family court dominant jurisdiction over those claims and that it was error for the probate court to dismiss W’s pending trust issues for lack of subject matter jurisdiction in favor of the family court.

3. In re D.B.J.,2015 Tex. App. LEXIS 1710 (Tex. App. – Houston [14th Dist.] February 24, 2015) (Cause No. 14-14-00285-CV)

At the time of the parties’ divorce in 2011 their child was 17 years of age. Even so, H and W entered into an agreed decree obligating H to pay c/s through May 2016 at which time the child would have been 22 years old. Both parties were also ordered to provide medical support for so long as the court could order c/s and H was obligated to secure a life insurance policy naming the child as beneficiary and maintain it for 25 years after the date of divorce. Ten months after the divorce the child turned 18 and three months later graduated high school. In 2013, when the child was almost 20, W filed a motion for enforcement of c/s, medical support and the life insurance obligations. W’s motion sought to enforce obligations accruing after the child had turned 18 and sought only the remedy of contempt, asserting no claims for breach of contract or any other legal theory. The trial court denied the W’s motion and W appealed. W urged that the agreed decree was enforceable pursuant to TFC 154.124(c) which provides that terms of an agreement which provide for c/s may be enforce by all remedies including contempt. Under W’s theory, the fact that c/s would continue past the child’s 18th birthday did not preclude the court’s authority to enforce the payments by contempt because the parties agreed that the c/s would continue after that date. The COA, considering a similar argument addressed by the TXSCt regarding spousal support (In re Green, 221 SW3645), determined that only c/s which may be ordered under the Family Code is enforceable by contempt, noting that any agreements to extend c/s beyond that amounts to a voluntary obligation which is merely a contractual debt. The COA stopped short of addressing whether other enforcement remedies under the TFC (i.e. obtaining a lien against real or personal property) would be available. Order denying enforcement affirmed.

4. In re Hanson, 2015 Tex. App. LEXIS 1927 (Tex. App. – Tyler February 27, 2015) (orig. proceeding) (Cause No. 12-14-00015-CV)

In December 2012, during the pendency of their divorce proceeding, H and W executed an MSA dividing the marital estate. The MSA included terms which obligated the parties to exchange certain information regarding federal income tax filings for 2010, 2011 and 2012 and specified that W was to prepare the returns. Further H agreed to pay W $62,500 over the ensuing six month period. During early 2013 counsel for the parties exchanged communications on these matters. In July 2013 W filed a motion to set aside the MSA on grounds of “willful non-disclosure, misrepresentation and fraud.” By the fall of 2013 W had still not prepared the 2011 and 2012 returns. H filed a motion for entry of judgment on the MSA. The trial court held an evidentiary hearing and granted W’s motion to set aside the MSA. H sought mandamus relief. H initially argued that a trial court has no authority to set aside a compliant MSA under the strict authority of In re Leeand TFC 6.602. The COA opinion reviews other intermediate appellate decisions which permit an MSA to be set aside as a contract if procured by fraud, noting that In re Lee recognizes a trial court’s right to forego enforcement of terms within an MSA which might otherwise be illegal. Noting that the TX SCt has not yet addressed the fraud issue directly, the Tyler court adopted the holdings of its sister courts which provide that an MSA may be set aside on the basis of fraud. Thereafter the COA considered the evidence offered to support the W’s claims of fraud, determining that although H did make some misrepresentations regarding the nature and ownership of a particular asset there was no evidence that W relied upon these misrepresentations before deciding to sign the MSA. Because W failed to provide evidence on this single element of her fraud claim, it was error for the trial court to set aside the MSA. Mandamus granted and trial court ordered to enter judgment within 10 days.

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