Contempt & Inability to Comply: Opinions, May 22, 2018

Three new memorandum opinions to discuss this morning! The First District Court of Appeals released its opinion in In re White, No. 01-18-00073-CV on contempt and the Fourteenth Court of Appeals released two memorandum opinions which primarily concern the division of the marital estate: Slagle v. Slagle, No. 14-16-00113-CV, and a barnstorming 32-page opinion in In re Mugford, No. 14-16-00436-CV.

In In re White, father filed an enforcement alleging four violations of a previously entered modification order against mother. That modification order incorporated an MSA signed by the parties. The trial court found two violations: 1) the mother canceled a counseling session; and 2) the mother violated the MSA requiring her to transport the child to and from each counseling session because the MSA required her to take the child to counseling at least once a month but she had taken the child to only four sessions in the six months following the agreement. Mother was held in contempt and placed on community supervision.

Mother filed a habeas corpus proceeding arguing the contempt order must be set aside because: 1) the underlying order was not specific enough to support contempt; 2) she did not violate the underlying order; and 3) the evidence showed an inability to comply with the requirements that the trial court imposed.

Regarding the mother’s cancellation of the counseling session, the Court of Appeals sustained the mother’s objection to this contempt finding because the provision in the underlying order required her to “follow the counselor’s recommendations regarding the frequency of the sessions.” Because mother’s actions in canceling a counseling session did not violate the terms of the order, the contempt finding was set aside.

The order did require her to bring the child for reunification counseling “a minimum of once a month.” The Court of Appeals found the evidence supported the trial court’s finding of a violation because the evidence showed that mother admitted that between March 2017 and December 2017 she took the child to a total of four sessions. Mother’s challenge to the violation finding was overruled.

But Mother also argued that she established a defense by proving an involuntary inability to comply with the underlying order. Specifically, she argued her son is a six-foot-tall, 17-year-old football player and she is unable to force him to attend counseling if he refuses. Both the mother and her son testified that the son refused to attend the canceled session, despite mother’s admonitions that he do so. The son further testified that after telling his mother he would not go to the session, he took the car and left the house. The Court of Appeals held that the mother and the son were interested witnesses and that the trial court was free to disbelieve their testimony and thus determine mother had the ability to comply and that the mother had not conclusively established her involuntary inability to comply. (While the holding of the Court of Appeals makes sense, one must wonder if mother could have established this defense and if so, how.)

In summary, the first violation was set aside, but the second was affirmed.

In Slagle v. Slagle, the husband challenged the division of the marital estate. Specifically, he argued: 1) the trial court erred in finding a business was his separate property and that the community estate was entitled to reimbursement for community funds used to benefit the SP business; and 2) the trial court violated his due process rights in several ways. The Court of Appeals affirmed the trial court.

Husband and wife married in 2000. Wife filed for divorce in 2014. At the time the divorce was filed, wife was employed full time, but husband (who had an MBA in accounting and finance) was not. He admitted that he was devoting more than sixty hours a week to “spending money” on a lawsuit involving his separate business. Husband also spent all of his free time day-trading, which he evidently was not successful at, losing $130,000 in 2013 alone.

Husband’s separate property business, Graphic Creations, existed at the time of the marriage, with two locations in amusement parks operated by Six Flags. During the marriage, Graphic Creations grew to six locations. Under its agreement with Six Flags, Graphic Creations paid 30% of its earnings to Six Flags. Wife testified that the business was profitable and husband had used it to pay his way through college. But the business hit hard times when Six Flags did in 2007. Six Flags increased the fee to Graphic Creations to 40% of earnings. Graphic Creations sued Six Flags over the increase. Wife testified that husband did not earn an income after 2007. Husband maintained an office for Graphic Creations until he shut down the business in 2013.

Wife testified that husband spent all of his time on the Six Flags lawsuit, leaving the house at 6 am and sometimes not returning until 2 am and that during this time he began taking Adderall. Husband returned the salary he paid himself from Graphic Creations which totaled $164,502. Wife testified that loans to Graphic Creations from her salary totaled $681,042.

The trial court found the community estate was entitled to a reimbursement from husband’s separate estate for $681,042 and that wife was entitled to a judgment of $340,521.00. To “pay” this judgment, wife was awarded the house, the entire 401(k), and the entire IRA, which still left a debt of $65,391. To offset this debt, husband was awarded the AMEX and Chase Visa credit card debts (which totaled only $42,000).

Husband challenged the division because, according to him, it awarded 100% of the community’s assets to wife and 100% of the community’s debts to him. The Court of Appeals overruled the issue because the evidence admitted supported the judgment.

In his second issue, the trial court violated his due process rights by 1) allowing wife to file amended pleadings days before the final trial; 2) wife failed to serve her trial exhibits and her inventory on him prior to trial; and 3) the trial court failed to adhere to various local procedural rules and the Texas Rules of Civil Procedure. But he failed to preserve error during trial and the issue was overruled. The trial court was affirmed.

Finally, in Mugford v. Mugford, wife challenged various portions of the divorce judgment including property and custody issues. Mother and father are Canadian citizens who moved to Friendswood for husband’s work. The parties separated in 2015 and a jury trial was held in December 2015. The jury named the parties as JMCs with mother as primary. The jury also found that grounds for divorce existed on the basis of cruel treatment by both parties and adultery by father. The jury also determined the characterization of eight items of property, six of which are challenged on appeal. Remaining issues, such as terms of possession and access and division of the marital estate, were decided by the trial court. A final decree was entered on March 16, 2016 and mother timely appealed.

In her first issue, mother claimed the trial court erred by employing a smaller geographic restriction in its judgment than the jury provided. That is, the judgment allowed her to designate the child’s primary residence within 30 miles of the city limits of Calgary, Alberta, Canada, but the jury’s answer allowed a radius of 50 miles. The Court of Appeals found that mother was misinterpreting the jury’s answer which gave a geographic area as “Calgary, Canada & 50 mi outward radius–or–Galveston County & contiguous counties.” Thus, the jury did not give her a 50 mile radius from the city limits of Calgary,  but 50 miles from the center of Calgary. Because the record did not reflect how far the city limits of Calgary are from its center, it also did not show that the geographic restriction in the judgment was smaller than that awarded by the jury. Nonetheless, the Court of Appeals found that the trial court did not enter the jury’s verdict in its decree and that the trial court was not permitted to “clarify” the jury’s answer. The issue was sustained and, in its conclusion, the COA modified the decree to reflect a fifty-mile outward radius of Calgary as the geographic restriction.

In her second issue, mother argued the trial court erred by granting father a SPO incorporating the “alternate beginning and ending possession time” found in section 153.317 of the TFC.  The decree stated that the minor variations in the possession order from the SPO were in the best interest of the child under TFC §153.253. (Only in her reply brief did mother assert the evidence in support of the variation was legally and factually insufficient, which the COA said was too late.) Because section 153.253 allows variation from the SPO and the evidence in the record of father’s work schedule, the child’s school schedule, and father’s frequent travel to Canada supported a variation, the issue was overruled.

Issues three through fifteen concerned the division of the marital estate. First, issues three through six concerned the admission of expert testimony. Mother’s third issue is that the trial court erred by allowing father’s expert to testify about the terms of the lines of credit used to purchase the Friendswood house because the expert had never read those notes and/or contracts and they were not produced prior to trial pursuant to requests for discovery. The fourth issue was overruled because it was inadequately briefed. In issue five, mother argued the trial court erred in admitting the same expert’s testimony and report (except for the reimbursement claims) because he erroneously characterized the bank debt as father’s separate liability and the resulting loan proceeds as father’s separate property. In issue six, mother argued the trial court abused its discretion by admitting the expert’s testimony because his misstatements of law rendered his opinions concerning the character of the marital property incorrect and unreliable. Mother had filed a Daubert motion before trial, a hearing was held, and the motion was overruled. Mother does not challenge the expert’s qualifications or the relevance of his testimony, but whether his testimony was based on a reliable foundation.  The trial court’s job is not to determine whether the expert’s conclusions are correct, but whether the analysis used by the expert is reliable. The bulk of mother’s complaint is that the expert mischaracterized the debt from three lines of credit as father’s separate property and the distributions from a funding entity as father’s separate property. As it was not the trial court’s job to determine the accuracy of the expert’s conclusion, issues three, five, and six were overruled.

In issues seven through nine, mother argued the trial court erred by admitting a loan document, Petitioner’s Exhibit 130. Mother objected to the admission of PE 130 on the grounds it had not been produced in response to her third supplemental request for production. She also claimed unfair surprise, denial of due process, failure to authenticate, and hearsay. Father acknowledged the document was not produced in discovery, but stated the requests for production were limited in time to the start of the marriage and the document was dated well before then. While mother’s brief included a footnote reciting the RFP (and father did not dispute that the recitation was correct) mother did not refer the Court of Appeals to the location of the requests in the record and the requests themselves fail to indicate whether or not they are limited to a specific time period. The COA held that mother’s “failure to cite to the relevant portion of the trial court record prevents this court from resolving this claim on its merits and therefore waives appellate review.” Issue seven was overruled (ouch).

Mother also argued the exhibit was not properly authenticated but father’s uncontroverted testimony was that the document was scanned and emailed to him from the Royal Bank of Canada and thus the record contained evidence that the document was what father claimed it was and thus the trial court did not abuse its discretion by overruling mother’s authentication objection. Issue eight was overruled.

Mother also objected to the document on hearsay grounds and the COA agreed that the the trial court erred in admitting the document over mother’s hearsay objection. But then the inquiry turned to whether the error probably caused the rendition of an improper judgment. Mother did not explain how the admission of PE 130 probably caused the rendition of an improper judgment. Issue nine was overruled.

In her tenth issue, mother complained she was not allowed to bring in her own expert after PE 130 was admitted. The COA found this point was inadequately briefed and thus overruled.

Issues eleven through thirteen related to the characterization of marital property and fourteen concerned mother’s reimbursement claims. The Court of Appeals went into great detail on the amounts and percentages of various accounts found to be father’s separate property, overruling issue eleven as to four out of five accounts. For one  account (“Account 1418”), the COA found that no witness testified about the account and that the exhibits did not corroborate father’s claim that the account was entirely his separate account and mother’s issue was sustained as to that account.

Regarding the real property in Friendswood, the jury found 78% of the house was father’s separate property and 22% was community property. The COA held that a reasonable fact finder could find there was clear and convincing evidence sufficient to overcome the community property presumption. Issue twelve was overruled.

In her thirteenth issue, mother argued the trial court erred in sustaining father’s objection to mother’s attempted explanation of Texas law on partition or exchange of community property during opening argument. The COA found the trial court did not err in sustaining the objection because P&E agreements were not relevant in this case.

Mother’s fourteenth issue argued the evidence was legally and factually insufficient to support the jury’s answer to the question concerning the community estate’s claim for reimbursement from father’s separate estate. The jury awarded $12,020 as reimbursement owed by father to the community estate. Mother asserted she was entitled to additional reimbursement, but the COA found she failed to establish as much and the issue was overruled.

Finally, in her fifteenth issue, mother claimed the trial court abused its discretion in dividing the community estate because the division was “grossly” disproportionate and awarded “the majority” of the community estate to father. First, mother’s argument that the community was entitled to $24,821 of Account 1418 was not evidence of an unfair and unjust division. But beyond that, to determine whether the assets of the community were divided in a just and right manner, the COA requires the court’s findings on the value of those assets and without those findings, the COA cannot know the basis for division, the values assigned to the community, or the percentage of the marital estate each party received. Neither the judgment nor the findings of fact or conclusions of law reflected the value the court assigned to each asset or liability or the value of the community property. The parties’ respective inventories do not substitute for the court’s findings and the issue was overruled.

In conclusion, the decree was modified to reflect the jury’s response concerning the geographic restriction, but the record did not reflect the trial court abused its discretion in the overall division, nor did the trial court abuse its discretion in ordering minor variations from the SPO. As modified, the decree was affirmed.

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