Opinions, August 30, 2016: Challenging Decrees & Marital Property Divisions

The First District Court of Appeals released its memorandum opinion in Maher v. Maher, No. 01-14-00106-CV today, in which the trial court’s division of the marital estate was affirmed.

Cynthia’s petition for divorce from Henry included a reimbursement claim. In his counterpetition, Henry also alleged a reimbursement claim and requested a disproportionate division of the estate in his favor.

In 1995, Cynthia’s parents began giving her monetary gifts which started at $5,000 per year and increased over time. After her mother’s death in 2001, Cynthia became a beneficiary of a bypass trust created by her mother. Cynthia received distributions from the trust, plus the annual gifts of money. After her father passed in 2007, Cynthia received further distributions. She testified that all of these gifts and distributions added up to more than $1.2m in separate property. She also testified that her parents had also given monetary gifts to Henry as well, totaling $68,000, which was his separate property.

At trial, Cynthia and Henry provided conflicting testimony over how much of their separate property and community property was used to purchase and develop their real property.

Cynthia testified that she had a dating relationship with another man after she and Henry had been separated and were headed for divorce.

In his first issue, Henry argued that the trial court erred in characterizing the assets of the marital estate and that Cynthia failed to establish by clear and convincing evidence the separate character of the property she claimed was separate. In addition to her testimony, Cynthia introduced into evidence a spreadsheet which showed the date and the amount of each monetary gift, trust disbursement, or estate distribution that Cynthia received during the marriage and the account or entity into which the money was funneled. Cynthia testified that she created the spreadsheet by using bank statements, canceled checks, and information from the trust’s executor. The opinion does not mention any other evidence in support of Cynthia’s separate property claim besides her testimony and the spreadsheet she created which was admitted into evidence.  The Court of Appeals found that this was sufficient to overcome the community property presumption to establish by clear and convincing evidence the $1.2m value of her separate property. Henry’s first issue was overruled.

In his second issue, Henry argued the trial court erred in its valuation of the real property. But the value used by the trial court came from an appraisal admitted into evidence before the issuance of the decree (it was the lowest value of the three appraisals admitted into evidence). The record was unclear, but it appeared the trial court ordered the third appraisal sua sponte after trial, which was within its discretion.  The Court of Appeals stated Henry’s brief failed to provide any explanation “as to how or why the trial court’s consideration of the third appraisal constituted an abuse of discretion.” Because the issue was not adequately briefed, Henry’s second issue was overruled.

In his third issue, Henry argued the trial court erred in granting Cynthia’s reimbursement claim to the tune of $800,000 because, according to Henry, she failed to adequately trace her separate property and establish the enhancement in value of the real property. To uphold the trial court’s judgment, the Court of Appeals had to determine whether Cynthia proved by clear and convincing evidence that she contributed $800,000 from her separate property funds to the community estate. Cynthia testified that she contributed $871,000 of her separate property funds to the purchase and development of the real property, a figure also found on her spreadsheet. The Court of Appeals found Cynthia’s testimony and the spreadsheet were sufficient evidence to support the reimbursement judgment of $800,000.

Additionally, Henry argued Cynthia failed to establish that an American Express payment of almost $300,000 was a reimburseable expenditure. The problem with this argument, said the Court of Appeals, is that Cynthia alleged a reimbursement claim for $1.27m and the trial court granted the claim for only $800,000. But Henry didn’t challenge the other reimbursement expenditures that added up to more than $800,000, so even if he was correct that Cynthia failed to establish the $300,000 Amex payment was not a reimburseable claim, he failed to challenge the other expenses adding up to more than the $800,000 reimbursement judgment.

Henry also argued Cynthia failed to establish the real property’s value was enhanced by $921,457.28 as she claimed. But the trial court’s reimbursement judgment was for about $800,000, a figure it did not break down in its judgment or the findings of fact and conclusions of law. Without such a break down, the Court of Appeals was compelled to assume the trial court’s determination was appropriate.

In his fourth issue, Henry argues the trial court erred in not granting him a disproportionate division based on Cynthia’s relationship with another man before the divorce was granted. The Court of Appeals affirmed the trial court’s decision to grant the divorce on insupportability grounds because there was a evidence admitted that the marriage had become insupportable due to discord and conflict. In other words, just because another ground for divorce is established, doesn’t mean the trial court has to grant the divorce on that ground.

In his fifth issue, Henry argued the trial court denied him due process of law because it: “failed to ensure the final disposition of the case within 6 months from the appearance date”; allowed his counsel to withdraw four days before the entry of the final decree; failed to timely file the FF&CL; signed Cynthia’s proposed FF&CL; failed to timely cause the FF&CL to be mailed to him; and failed to set a hearing on his motion for new trial. The Court of Appeals found these purported trial errors were inadequately briefed and thus denied.

The trial court’s decree and division was affirmed.




Opinions, August 25, 2016: You Can’t Represent the Husband AND the Wife in Divorce

Today the Fourteenth Court of Appeals released one published opinion, In re L.T.H., Cause No. 14-15-00366-CV, and one memorandum opinion in a mandamus proceeding, In re Quintanilla, Cause No. 14-16-00473-CV.

First, the memorandum opinion because it is amusing. On November 8, 2015, Relator Jose Quintanilla retained attorney Michael G. Busby Jr. of Busby & Associates, P.C. to represent him in his divorce. Three days later, Jose’s wife Silva Garcia hired Busby. Busby eventually returned Silva’s retainer and declined to represent her because he already represented Jose.

Busby filed an original petition for divorce on behalf of Jose. Silva answered and filed a motion to disqualify Busby. The associate judge granted the motion, as did the presiding judge after a de novo hearing.  Busby filed a mandamus on June 14, 2016.

Evidence was presented at the disqualification hearing that Silva had met with a legal assistant in Busby’s office, filled out an “extensive” application, and provided documents regarding the marital estate. Busby never personally met Silva. Silva paid a $2,500 retainer and the legal assistant informed her the firm would start to work on the case in 2-3 days. Silva signed an employment agreement, but no attorney in Busby’s office signed it.

A few days later the firm discovered the conflict and informed Silva her retainer would be returned to her because of the conflict. Her documents were not returned to her and she was informed that her personal information had been destroyed. Silva testified that she had no way of knowing if her personal information had actually been destroyed. Busby asserted he did not have the documents she claims created a conflict.

Busby argued at the hearing that Silva had not retained his firm because no one in the firm signed the contract. The Court of Appeals held that the trial court had sufficient evidence to support a finding of an intention to create an attorney-client relationship (Silva paid the $2,500 retainer, she was told the case would start working on her case).

Busby also argued there was no genuine threat that Busby could divulge confidential information he may have obtained in his brief representation of Silva. In support of this, Busby submitted affidavits from attorneys, paralegals, and legal assistants at his firm, all testifying that they had no access to any of Silva’s confidential information. He also argued that Silva had not given him confidential information. The Court of Appeals held that there is a “conclusive presumption” that the existence of an attorney-client relationship establishes as a matter of law that confidences were imparted to the attorney. The trial court did not abuse its discretion in settling this fact issue (whether Silva gave Busby’s firm confidential information) in Silva’s favor. Silva met her burden to disqualify Busby from the case.

Busby also argued the trial court abused its discretion in not considering alternatives to disqualification such as questioning Silva about the alleged information she provided to the firm or inspecting the firm’s files. But an attorney’s former client is not required to disclose confidential communications with former counsel to show actual prejudice to support disqualification. Because Silva met her burden, the trial court did not have to consider alternatives to disqualification.

Finally, Busby made a laches argument, contending Silva waived her complaint by not moving to disqualify his firm for five months after discovering the conflict. But Silva testified that she didn’t know the divorce had been filed until March 2016 because of service issues and she filed her motion to disqualify on April 29. As this was only a four-week difference and still in the beginning stages of the case, the Court of Appeals overruled the issue.

The petition for writ of mandamus was denied.

The published opinion released by the Fourteenth, In re L.T.H., concerns ambiguities in a mediated settlement agreement in a modification case. The Court of Appeals held those ambiguities should have been submitted to the mediator/arbitrator per the MSA.

In June 2014, the father filed a petition to modify , seeking to expand his possession. The trial court signed temporary orders which expanded his possession rights.

The trial court referred the parties to mediation. On February 6, 2015, they signed an MSA which included possession provisions. The MSA also provided that the parties would submit drafting disputes, interpretation issues, and issues regarding the parties’ intent to binding arbitration with the mediator.

On February 27, in a hearing not attended by the mother, the trial court orally granted the relief agreed to in the MSA. Less than a month later, the trial court held another hearing to address a dispute concerning the language of the proposed order on the MSA drafted by the father’s attorney. The mother argued the proposed order was contrary to their agreement but the trial court disagreed. On March 20, 2015, the trial court signed an Agreed Order based on the MSA.

In her sole issue on appeal, the mother contended the trial court abused its discretion by granting judgment on an order inconsistent with the MSA. Specifically, she argued the trial court’s final order substantially differed from the MSA because it awarded the father additional time with the child that he did not have under the temporary orders and changed the pick-up and return times, to the father’s advantage.

The Court of Appeals detailed the dispute concerning interpretations, but the bottom line is that, under the MSA, these disputes concerning interpretation and intent were to be submitted to the mediator/arbitrator, not the trial court. As such, the trial court erred in resolving the dispute at all. The Court of Appeals ordered the trial court to reverse the relevant provisions of the agreed order and remanded the case for further proceedings.


Opinions, August 9, 2016: Think Your Spousal Support is Too High? Try $350,000 Per Month

The First District Court of Appeals released a published opinion in In re Fuentes, No. 01-16-00366-CV, a mandamus proceeding notable for setting aside an order for $350,000 monthly payments for post-judgment temporary spousal support and attorney’s fees. Also, the Fourteenth Court of Appeals released a memorandum opinion in In re Fajardo, No. 14-15-00653-CV.

Taking the First first, in In re Fuentes, Evangelina Lopez Guzman Zaragoza filed for divorce from Miguel Zaragoza Fuentes. Her petition for divorce listed several companies as co-respondents. She alleged these companies were Miguel’s alter egos and requested the trial court appoint a receiver to oversee them.

In a verified motion for continuance for a hearing on Evangelina’s request for appointment of a receiver, Miguel’s counsel claimed he (Miguel) had assets worth more than a billion dollars and had dozens of companies in many different countries.

Miguel did not participate in the eventual trial and the trial court entered a default judgment against him. The final decree was signed December 21, 2015, awarding Evangelina one-half of the marital estate and $537 million in fraud-on-the-community damages, including cash in the amount of $537,680,823, real and personal property, and all shares and all interest of any kind in any business entities worldwide that the trial court found to be Miguel’s alter egos.

Miguel moved for a new trial and, on January 20, 2016, several intervenor companies filed notices of appeal (the “Intervenors”). The trial court denied the MNT on March 4, 2016 and Miguel filed his notice of appeal on March 18, 2016. Ten days later, Evangelina moved for temporary orders pending appeal under Tex. Fam. Code §6.709, seeking spousal support and payment of her attorney’s fees during the appeal.

Miguel moved to dismiss the motion for post-judgment temporary orders, arguing the request was untimely as 6.709 says a request must be filed “[n]ot later than the 30th day after the date an appeal is perfected.” As the Intervenors perfected their appeal on January 20, 2016, Miguel argued the deadline for the request was February 20, 2016, because any notice of appeal–including that of the Intervenors’–was sufficient to trigger the 30-day clock. The trial court denied Miguel’s motion to dismiss and heard Evangelina’s request for temporary orders. The trial court ordered Miguel to pay Evangelina $300,000 in spousal support per month and $50,000 in attorney’s fees per month.

Miguel filed a petition for writ of mandamus, arguing the temporary orders are void because Evangelina’s request was untimely and, alternatively, the order for $350,000 in monthly payments was not supported by the evidence.

The Court of Appeals overruled Miguel’s first issue, finding that it was his perfection of appeal that was the trigger for the 30-day deadline under 6.709, not the Intervenors’. The Court of Appeals found persuasive Evangelina’s argument that she is not entitled to temporary support without a pending appeal of the divorce. None of the Intervenors could be or were ordered to pay spousal support to Evangelina. In other words, because the provisions of 6.709 are effective only against the ex-spouse, it is the perfection of appeal of the ex-spouse which starts the 30-day clock.

Having found that the temporary orders were timely, the Court of Appeals turned to the issue of whether the trial court abused its discretion in making the orders because they lacked evidentiary support.

In her FIS filed with the trial court, Evangelina claimed she was entitled to $600,000 per month in spousal support and $100,000 in legal fees. How on earth could one person not named Bill Gates or Warren Buffet have monthly expenses of $600,000? Well, it adds up:

$200,000 per month for travel; $120,000 for security guards and drivers; $50,000 for clothing; $20,000 for medical expenses; $6,000 for water; $6,000 for energy; $4,000 for telephone; $14,000 for groceries; $3,000 for flowers; $10,000 for payments on her Neiman Marcus credit card; and $50,000 for loan repayments.

But when testifying about these alleged expenses, Evangelina admitted she didn’t feel threatened enough to need security guards; she doesn’t personally pay for utilities or groceries; had no documentation to support the clothing or travel expenses; had no idea how much she owed on her Neiman Marcus credit card; and she does not owe loan repayments. She also testified that her adult children have deposited money into her bank account to pay these expenses.

I have found that if you read enough appellate opinions, you can often identify the exact tipping point when someone is about to get poured out, the fulcrum where the decision pivots to its conclusion. In this case, it is immediately after the above laundry list of evidentiary deficiencies where the opinion then states, “Temporary spousal support is intended to provide for the parties’ necessary expenses.” The Court of Appeals found Evangelina “did not provide any evidence” to the trial court to establish which expenses were actually incurred by her and were necessary for her maintenance.

Evangelina also argued that though the evidence of her actual expenses may have been skimpy, the trial court was entitled to rely on its familiarity with the parties, the scope of the marital estate and the parties’ needs. The Court of Appeals disagreed, finding the trial court’s supposed familiarity with the case “does not cure the lack of explanation or evidentiary support for awarding $300,000 per month in spousal support.” Similarly, the Court of Appeals also found the monthly award of $50,000 for attorney’s fees was not supported by the evidence.

In conclusion, the Court of Appeals ordered the trial court to vacate its temporary orders and conduct a hearing and enter new temporary orders.

Taking the Fourteenth next, In re Fajardo concerned a plea to the jurisdiction. Maria and Guillermo met in 2000 and had four children together (born in 2001, 2003, 2008 and 2013). Guillermo has a total of 11 children by seven different women.*

In July, 2013, Maria filed a petition for divorce and a SAPCR. A hearing on whether a common-law marriage existed was held in front of the Associate Judge. The AJ found there was a common-law marriage. That ruling was appealed and a de novo hearing was granted. At the de novo hearing, Guillermo’s counsel urged the court to grant a plea to the jurisdiction and motion to dismiss for lack of standing, arguing Maria lacked standing to bring the divorce suit because there was no common-law marriage. The presiding judge took judicial notice of the transcript from the AJ hearing, but refused to take judicial notice of the exhibits from that hearing.

At the de novo hearing, the facts were disputed. Maria testified she believed Guillermo agreed to marry her and they lived together from 2000 until December 2012. She testified Guillermo introduced her as his wife “many times” from 2000-2003. They had a joint bank account. In several tax returns, Maria is listed as Guillermo’s wife but the returns are signed only by the preparer and not Maria or Guillermo.

Guillermo admitted he filed tax returns with Maria but disputed that he ever agreed to marry her, never lived with her, and never told people she was his wife. He also produced evidence that he was ceremonially married to another woman on August 16, 2005.

Other witnesses testified for both Maria and Guillermo.

The presiding judge found Maria had failed to rebut the presumption of Tex. Fam. Code §2.401 regarding informal marriages, granted Guillermo’s plea to the jurisdiction, and dismissed the divorce portion of Maria’s suit for lack of jurisdiction and standing. The presiding judge did retain the SAPCR though and a final order in the SAPCR was signed on February 16, 2015.

The Court of Appeals’ analysis begins with the observation that Guillermo filed a plea to the jurisdiction arguing Maria did not prove the elements of informal marriage under section 2.401, but he did not provide any authority for the proposition that such a failure deprives the trial court of subject-matter jurisdiction. But even assuming that a plea to the jurisdiction is a proper vehicle to make that argument (as the parties evidently did) the Court of Appeals concluded the plea failed because Maria presented more than a scintilla of evidence of each element.

When a jurisdictional challenge implicates the merits of a case, the trial court may review the evidence to determine if a fact issue exists. If the evidence creates a question of fact, the trial court cannot grant the plea to the jurisdiction. The standard resembles that of the summary judgment standard, in that a dismissal for lack of jurisdiction on a contested factual issue is only appropriate if the issue is proven as a matter of law. In other words, when Guillermo filed a plea to the jurisdiction premised on lack of standing, his motion implicated a summary judgment standard.

On appeal, Maria presented four issues: 1) the trial court erred by granting the plea to the jurisdiction; 2) the trial court erred by finding no genuine issue of material fact of common-law marriage; 3) the trial court erred by finding Maria failed to overcome the presumption of section 2.401; and 4) the trial court erred by refusing to allow Maria to make an offer of proof. The Court of Appeals did not reach the fourth issue, but addressed the first three concurrently as it regarded them as intertwined.

Essentially, no evidence was presented which disproved a common-law marriage as a matter of law. Maria produced more than a scintilla of evidence as to each element of her claim of a common-law marriage. Maria produced enough evidence to have standing to bring her divorce petition. Because the common-law marriage was not disproven as a matter of law, the trial court erred by granting the plea to the jurisdiction.

Because the order granting the plea to the jurisdiction was vacated, the Court of Appeals remanded the divorce for a determination on the merits.


* Another thing about reading and summarizing appellate opinions: Sometimes in its factual recitation, the opinion will include a fact which seems either out of place or vaguely incongruous. Frequently, that fact later proves to be relevant and important to the outcome of the case. Other times (like here), it just appears to be added for factual ambience, as if to not-so-subtly say to the reader, sotto voce, “This is the type of person we’re dealing with.”