Dividing Post-Divorce Bonuses: Loya v. Loya Reverses the 14th Court of Appeals

On Friday, the Supreme Court of Texas issued its opinion in Loya v. Loya, No. 15-0763, which reverses the Fourteenth Court of Appeals’ opinion on dividing post-divorce discretionary bonuses which I blogged about previously.

The case concerned a 2.85m bonus (after taxes and retirement) received by the husband after the divorce. The bonus was received by the husband in 2011, after the divorce was final, for work done in 2010 when, for at least part of the year, he was still married. The dispute turned on whether the MSA partitioned the bonus in its entirety. The trial court (the 257th in Harris County) found the MSA partitioned the bonus completely in favor of the husband and granted summary judgment in his favor. The wife appealed.

The key language from the MSA examined by both the Court of Appeals and the Supreme Court is:

All future income of a party and/or from any property herein awarded to a party is portioned to the person to whom the property is awarded. All future earnings from each party are partitioned to the person providing the services giving rise to the earnings.

The Court of Appeals majority italicized and focused on the second sentence of this language. Specifically, it found an ambiguity between the phrase “future earnings” and the “person providing the services giving rise to the earnings.” The Court of Appeals reasoned that the husband had provided the “services giving rise to the earnings” partially while married and partially after the divorce and thus the bonus should be divided accordingly.

But the Supreme Court agreed with the dissent authored by the Fourteenth’s Chief Justice Kem Frost that the majority was overthinking it. The MSA partitioned “future income and earnings” to the husband. After consulting a couple of dictionaries, the Supreme Court found “the plain meaning of these terms clearly encompasses” the bonus. (Incidentally, Chief Justice Frost’s dissent also relied on several dictionaries, but the Court of Appeals majority relied on none)

When it had decided the MSA did not partition the bonus, the Fourteenth majority engaged in trying to craft a rule for dividing discretionary, post-divorce bonuses. The Supreme Court acknowledged this is an important issue but it need not be reached in this case because the MSA effectively partitioned the bonus. Thus it would appear the question remains unanswered for now.

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