Opinions, March 29, 2016: What Makes a Division Just & Right?

The Fourteenth Court of Appeals released its memorandum opinion in Marin v. Marin, No. 14-13-00749-CV this morning. The key issue is the trial court’s division of a business owned by the parties.

Joel Marin petitioned for divorce, claiming insupportability and adultery on the part of Janell Marin. Janell counter-petitioned, alleging insupportability, cruel treatment, and adultery against Joel. Both filed an Inventory and Appraisement listing stock in Ameriwaste. Together they owned a controlling interest in Ameriwaste; Janell owned 51% and Joel owned 31%. Janell valued the entire 82% stock of Ameriwaste at $940,000 but Joel valued it at $2,096,000.

In her inventory, Janell also listed a loan for $380,000 from Ameriwaste as community debt. The loan was a portion of the total amount necessary to discharge a judgment of $502,000 against Janell personally. Because the judgment against Janell is in favor of IESI TX Corp., the parties and Court refer to it as the IESI judgment. IESI had sued Janell for breach of fiduciary duty, fraud, conversion, and forgery. Joel paid $122,000 towards satisfaction of the judgment while Janell borrowed the $380,000 from Ameriwaste to satisfy the balance. Janell executed two promissory notes to Ameriwaste.

In his inventory, Joel listed the IESI judgment as part of a waste claim against Janell and assigned a value of $502,000. He did not mention the $380,000 loan in his inventory.

The parties agreed to a trial by a special judge (“SJ”). The agreed order of referral did not include any limitation on the SJ’s authority of the divorce trial. After a four day trial, the SJ sent the parties an email detailing his division of the marital estate which included a spreadsheet, and several months later signed a final decree of divorce. On the spreadsheet, the SJ evidently wrote in the $380,000 loan and then crossed it out. He also adjusted the value of the Ameriwaste stock, finding the value was $1,770,000. He awarded all of the stock to Janell and granted Joel a money judgment against Janell.

At the hearing prior to the entry of the final decree, the SJ stated that he couldn’t specifically recall why he had written and then scratched out the $380,000 loan but figured it was because that loan was “subsumed within the values” he gave to Ameriwaste.

Janell filed a motion for new trial, alleging that the division of property “inadvertently omitted” the debt of $380,000 to Ameriwaste. The SJ denied the MNT, issued findings of fact and conclusions of law, and Janell appealed.

In her first issue, Janell challenged whether the SJ had authority to issue a final decree of divorce. This is actually the Marins’ second trip to the Court of Appeals. On the previous trip this issue was resolved.

In her second issue, Janell argued the trial court erred by not granting her motion for new trial because, according to her, the SJ did not timely submit the verdict within sixty days of the adjournment of trial as required by the TCPRC. Section 151.012 of the TCPRC states that if the SJ fails to submit the verdict within that 60 day window:

the trial court may grant a new trial if: (1) a party files a motion requesting the new trial; (2) notice is given to all parties stating the time and place that a hearing will be held on the motion; and (3) the hearing is held.

See Tex. Civ. P. & Rem. Code Ann.  § 151.012 (emphasis added). Janell argued that the statute mandates or requires the trial court to grant a new trial if the three elements of §151.012 are met. The Court of Appeals disagreed, finding the discretionary language permitted the trial court to decline to grant a new trial. “Janell cites no authority for her position that section 151.012 mandates a new trial, and we find none.”

Furthermore, the Court of Appeals noted the record did not establish that she met the three elements anyway.

Janell also argued that the motion for new trial could only have been denied by the presiding judge of the court, not the SJ. The order denying the MNT was signed by Thomas Stansbury as the “presiding judge.” The Court of Appeals found that Janell waived this complaint when she did not present it to the presiding judge. And even if Judge Stansbury lacked authority to sign the order, the MNT was denied by operation of law.

In her third and fourth issues, Janell challenged the property division. Specifically, she argued the trial court abused its discretion by “failing to award and account for” the $380,000 debt and requiring her to pay the $380,000 twice, as debt service to Ameriwaste and in the waste claim to Joel. Janell argues that after the trial concluded, the SJ sent the parties an email with his conclusions and a spreadsheet and after adjustments for waste claims, determined that a “50/50” division was appropriate. Janell argued that this spreadsheet assigning the division of property did not include the $380,000 loan to Janell from Ameriwaste.

Joel did not dispute the characterization or existence of the loan but he did dispute that Ameriwaste had a business purpose in loaning the money to Janell and whether Janell would be required to repay Ameriwaste (as she was the majority shareholder and could forgive the loan). Joel also argued that the SJ did not abuse his discretion by not specifically awarding the $380,000 loan because there was evidence to support the division. He also argued the finding of value of the 82% of the shares of Ameriwaste stock and the assignment to Janell of all of it demonstrated the court’s consideration of the debt.

The decree awarded all of the Ameriwaste stock but awarded Joel a money judgment of $341,297 against Janell as part of the division of community property. The Court of Appeals then excerpted a significant portion of the SJ’s findings, including:  Janell’s adultery and fault in the break up of the marriage; Janell’s fraud on the community and wasting of assets; reimbursement claims owed by Janell to the community, etc. It’s a pretty damning list against Janell.

Janell complained on appeal that the SJ had insufficient evidence on which to make his division but did not complain that the court failed to give due consideration to the Murff factors. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981) (The name Murff appears in the opinion 9 times; I’d like to think Justice Donovan just enjoys saying Murff). The Court of Appeals then listed a veritable laundry list of evidence in the record the SJ heard which supported the disproportionate division. The final decree and findings incorporated this evidence in making its disproportionate division of the parties’ estate.

The Court of Appeals noted that the SJ adjusted the value of the Ameriwaste stock by giving it a value of $1,770,000 (Janell had valued it at $940,000; Joel, at $2,096,000) and awarded it all to Janell, despite the fact Joel requested it be awarded to him. The COA also held that Janell did not complain that the debt was mischaracterized and that the mischaracterization was harmful “which would require us to remand the entire community estate for a just and right division.”

 

Finally, though the SJ expressed uncertainty at the hearing on the motion to enter judgment as to why he wrote in and then crossed out the $380,000 loan on the spreadsheet attached to his email rulings, the Court of Appeals found that “his subsequent actions indicate[d] that he considered the $380,000 debt and decided not to modify his rulings.” Because Janell’s argument  the $380,000 loan was “inadvertently omitted” was considered prior to final judgment, the court did not abuse its discretion by denying the MNT.

In conclusion, the Court of Appeals found there was sufficient evidence to support the findings of fact and division of property and that Janell did not meet her burden of demonstrating the division was so unjust and unfair as to constitute an abuse of discretion. The decree was affirmed.

 

 

 

 

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