Post-Divorce Division of Year-End Bonus & Fees for Non-Attorney Staff: Opinions, July 19, 2018

The Fourteenth Court of Appeals released a published opinion in Land v. Land, No. 14-17-00013-CV, this morning on post-divorce division of assets, specifically the division of a year-end bonus. Additionally, practitioners may want to pay special attention to the COA’s reversal of an entire fee award (subject to recalculation on remand) because there was insufficient evidence in support of the non-attorney staff fees.

Husband and wife divorced in March 2014. The decree incorporated the parties’ Agreement Incident to Divorce (the “AID”) which was also signed in March 2014. The AID includes a detailed division of the marital estate based on an informal settlement agreement (the “ISA”) signed by the parties at an earlier settlement conference.  The ISA provides that “[a]ll assets” are to be divided 53/47 in favor of wife, including specifically husband’s 2013 year-end bonus: “[Wife] shall receive [a] 53% portion of the 2013 year[-]bonus paid to [husband] in February  2014, if and when paid.” The AID says husband is entitled to receive “[a] 47% interest in the net amount of the 2013 year[-]end bonus from Occidental Petroleum undistributed as of the date of divorce” and the wife is entitled to receive “[a] 53% interest in the net amount after taxes and deductions of the 2013 year[-]end bonus from Occidental Petroleum undistributed as of the date of the divorce.”

Husband’s 2013 year-end bonus was $460,000, gross. The paystub reflected two pre-tax deductions: $75,000 for a deferred annual bonus and $6,000 for personal savings account contribution, leaving $379,000.00. After taxes ($108,711.10), the net amount paid to husband was $270,288.90, of which husband paid wife 53% ($143,253.12).

At issue is whether or not the $81,000 in pre-tax deductions was an undivided asset.  Wife sought an order directing husband to pay 53% of the $81,000 to her. After much procedural wrangling, the trial court granted the relief and awarded wife $30,480.10 in attorney’s fees and costs. Husband filed an MNT and when that was overruled by operation of law, he appealed.

Regarding the division of the bonus, husband argued that the $81,000 was not an undivided asset because the trial court’s judgment impermissibly modified the unambiguous distribution in the AID. That is, he argues the ISA and AID only required him to pay 53% of the “net amount” of the bonus and the AID clearly excepted deductions from the amount to be awarded to wife. The COA found that the $81,000 was excepted but it was not divided by the decree. The trial court was affirmed.

There was also an issue of a ring. Wife asserted a breach of contract claim against husband for holding or converting the ring. The trial court sided with wife and husband challenged the sufficiency of the evidence. The COA reviewed the evidence in support of the trial court’s judgment and affirmed.

But it wasn’t a clean sweep for wife by any means. Husband challenged the award of attorney’s fees awarded to wife because wife “offered no evidence on the qualifications or supervision of the non-attorneys for whom fees were awarded.” Wife’s attorney testified as follows:

“My hourly rate is $350.00 an hour. That is an amount that is customary for a lawyer with my skill and my experience.”

“[M]y associate …. who has been licensed for five years, has charged $250.00 an hour. Additionally, [paralegal] has been a paralegal at $100.00 an hour. Those are both customary rates for [a] paralegal and associate attorney with their skill and experience.”

“My total firm’s attorney’s fees in this matter, with the billable expenses that we’ve had to incur, are $36,080.10.”

The COA sustained husband’s challenge and found that there was “[n]o evidence presented to show the non-attorney staff members’ qualifications to perform the substantive legal work for which they billed” or that the non-attorney staff member performed the substantive legal work under the direction and supervision of an attorney.

Because the COA could not determine how much of the attorney’s fees award was based on work performed by non-attorney staff, they reversed the entire award of $30,480.10 and remanded to trial court with instructions to delete from the award “any amount based on the work of a person who is not an attorney and to make a new award… not based on the work of any such person because the proof regarding this work is legally insufficient.”

Accordingly, the trial court was affirmed on the division of the bonus and the breach of contract finding, but was reversed and remanded based on the attorney fee award.



Challenging a Finding of Fraud on the Community: Opinions, June 28, 2018

This morning the Fourteenth Court of Appeals released two memorandum opinions, In re Lehman, No. 14-17-00042-CV, on premarital agreements, and Miller v. Miller, No. 14-17-00293-CV, on fraud on the community.

In In re Lehman, wife appealed the trial court’s granting of summary judgment as to whether she voluntarily signed the premarital agreement. The day before their wedding in 2005, the parties executed a PMA which provided no CP would accumulate during the marriage. Attached to the agreement were schedules of their SP prior to marriage. Ten years later, wife filed for divorce. Husband sought summary judgment on the enforceability of the PMA. After a hearing, the trial court granted summary judgment. Wife’s sole issue on appeal is whether the trial court erred in holding wife failed to raise a genuine issue of material fact as to whether she voluntarily signed the PMA. The wife stated in her affidavit that she lived with the husband prior to marriage and that the husband provided the majority of the financial support for her and her two daughters and that she was unable to support herself at the time the PMA was signed. She could not afford her own lawyer when the PMA was signed so the husband paid for her lawyer to advise her on the PMA. She claimed in an affidavit that when she was presented with the PMA, she was not able to opt out of signing it because she had been unable to improve her situation and “just could not make the grade.” She claimed the husband would not have married her but for the PMA being signed and that she was concerned about her children and did not want to “be out on the street.” The court found she did not meet her burden of establishing a fact issue on voluntariness.

In Miller v. Miller, husband appealed the trial court’s reconstitution of the marital estate. Husband and wife married in 1969 and had three children (who were all adults at the time of the divorce). Husband is a doctor and wife worked at his clinic, which had five locations throughout Texas.  In 2007, the parties undertook a business plan to increase their real estate property, accumulating significant property and debt. In addition to their large medical business, husband was responsible for creating a warren of business entities which primarily dealt in real estate. Unfortunately, in 2010, husband suffered a stroke which resulted in him being unable to work for a lengthy period. Wife became his sole caregiver but it was exhausting and trying for her. During his recovery, Husband was abusive to the wife. Their marriage began to deteriorate. Meanwhile, wife sold some of their real estate to cover expenses. In 2012, wife attempted suicide and then shortly thereafter filed for divorce. At some point before trial, one of the Millers’ business partners was indicted for misappropriating funds from a former employer. Despite the indictment, husband continued to trust the partner with the management of one of their development companies.

The bench trial was held over twelve days spanning nearly a year (!), from June 3, 2015 to May 18, 2016, during which time the community estate changed which resulted in updated proposed property divisions. A final decree was signed on December 20, 2016. Husband’s MNT was denied. The trial court’s FF/CL included findings that the wife had little to no future earnings capacity, that she suffers from severe depression, husband was obstructionist during the divorce, he failed to pay court-ordered support, he had the ability to earn substantial income after the divorce, wife was awarded property with little risk, such as cash and retirement accounts, husband was awarded most of his medical practice, and that husband committed fraud on the community to the tune of $189,672.34. The court awarded 49.28% of the community to wife and 50.72% to husband.

For some reason, the case was transferred from the Austin Court of Appeals to the 14th, meaning the 14th would use Austin’s precedents.

Husband’s issues on appeal included the trial court erred by finding the fraud on the community estate, arbitrarily reconstituting the estate absent evidence of damages, ordering a business not party to the divorce to pay wife, and making an unequal property division in a no-fault divorce.

In his first issue, husband made a number of complaints as to the trial court’s fraud finding:

(1) the presumption of fraud on the community never arose because the community character of the property never changed; (2) the disposition of community property was fair to Linda; (3) no fiduciary duty existed between Terry and Linda during the divorce; (4) Linda was uninformed by personal choice in the matters of the community estate; and (5) the community estate remained monetarily whole.

Husband alleged no presumption of constructive fraud arose because community funds were merely transferred to various entities within the community estate for the purpose of maintaining and preserving the community estate and thus the evidence was legally and factually insufficient. At trial, wife presented evidence of a lot of transactions among the various real estate and clinic entities, some of which were in the six figures. The trial court determined that the amount owed to the community estate was $189,672.34, but did not specify the basis for this amount. The COA found that husband’s testimony did not provide clear and compelling explanations for a number of sizable transactions. Also, husband continued to allow the indicted business partner to manage one of their companies, which was valued at over $1 million. The COA also cited other evidence at trial before finding that the trial court, as trier of fact, had sufficient evidence before it to make the determination it did.

Husband also argued that he rebutted the presumption of constructive fraud because most, if not all, of the community estate (worth about $7.6m) was his special community property and that gave him the right to control and dispose of it subject to his sole management. But the COA noted that the spouse’s disposition of his special CP must still be fair to the other spouse and the disposing spouse has the burden of showing the fairness of the dispositions. Husband testified that after his stroke he, inter alia, relied on the advice of professionals and business partners. However, the credibility of his testimony was subject to the trial court’s determination and the trial court could reasonably give husband’s testimony on this point less weight.

Husband also argued that during the divorce, which spanned four years, he did not owe wife a fiduciary duty and thus did not commit fraud on the community. The COA countered that fraud on the community is not an independent tort, but is part of the division of the estate. Courts have recognized fraud on the community when the wrongful disposition of CP occurs during the divorce.

Husband argued that wife testified at trial that she stayed out of the financial affairs even though she had access and means to learn about and participate in the management of property and thus she was “uninformed by personal choice” in matters of the community estate and therefore the trial court erred in finding constructive fraud. The COA noted husband failed to cite any authorities to support this argument. Additionally, there was conflicting evidence concerning the level of wife’s desire to be involved in their business affairs and thus the issue was a matter for the trial court to resolve. But even so, “We are aware of no Texas case holding that the law imposes a requirement of diligence on the non-managing spouse, particularly when a relationship of trust and confidence exists between spouses as to that portion of the community property controlled by the managing spouse.”

Finally, husband argued the trial court abused its discretion in reconstituting a community estate based on assets that were not lost and a community estate that remained “monetarily whole.” Husband argued that during the marriage, he reduced the community’s indebtedness and increased the value of retirement funds. He argued wife did not present evidence that husband engaged in any action that was fraudulent or in breach of his fiduciary duty. The COA found the trial court was within its discretion to not accept husband’s “self-serving testimony” at trial. Husband’s first issue was overruled.

In his second issue, husband argued the trial court erred in finding actual fraud, but as the trial court found only that husband had committed “actual or constructive fraud” and the COA affirmed the constructive fraud finding, it did not need to reach husband’s second issue.

In his third issue, husband alleged wife failed to establish any damages caused by his fraud on the community. This argument, the COA held, is essentially the same as his argument that the community remained monetarily whole and rejected it.

In his fourth issue, husband argued that the trial court erred by including an order in the decree requiring the clinic, which was not a party to the divorce, to pay wife $100,000. The COA found he did not raise this issue at the trial court level and it was thus waived. But even on the merits, the COA noted that the decree does not order the clinic to do anything; it requires husband to make a payment of $100,000 from a bank account in the name of the parties for clinic business (which was a community asset).

In his fifth issue, husband argued the trial court abused its discretion in making a “grossly disproportionate division” in wife’s favor when no fault grounds were proven or found in the trial court’s ruling. As you recall, wife was awarded 49.28% of the community estate and husband was awarded 50.72%. For some reason, husband argued that the values adopted by the court actually result in a 59/41 division but, the COA said, he “does not explain the basis of his conclusion that the trial court’s division actually resulted in a 59-41 division.” The issue was overruled and the trial court was affirmed in full.

Are Court-Appointment Lists Unconstitutional?: Opinions, June 21, 2018

Today the First District Court of Appeals released a memorandum opinion on child support modification, Amudo v. Amudo, No. 01-17-00318-CV, and the Fourteenth released a memorandum opinion on the denial of a protective order, Hassan v. Hassan, No. 14-17-00179-CV, and a really unique published opinion on the constitutionality of the appointments of attorneys ad litem, guardians ad litem, mediators, and guardians under Government Code chapter 37, In re K.L., No. 14-16-01022-CV.

In Amudo v. Amudo, father petitioned to decrease his child support and health insurance obligations. Mother answered. Mother eventually served father with discovery requests which father objected to as being untimely because it was too close to trial. But the trial was continued a couple of times thereafter and father did not amend and answer the requests. At trial, mother objected to father’s evidence on the ground that he did not answer her discovery requests. Father argued mother did not respond to his discovery requests either. But father was the party seeking affirmative relief and, upon mother’s objection, he was not able to testify to his employment, income, and resources because that testimony would have been responsive to mother’s interrogatories. The trial court denied his petition and the COA affirmed.

In Hassan v. Hassan, Elaine filed for a protective order against Tamer. After trial, Tamer moved for directed verdict, which the trial court granted and the COA affirmed. Here is the relevant factual recitation:

The parties proceeded to a bench trial on February 6, 2017. Elaine testified at trial regarding the incidents included in her affidavit. The trial court admitted as an exhibit a photograph of Elaine taken in April 2016; Elaine is pictured wearing a neck brace and has three visible bruises on her right arm.

Elaine testified that Tamer had visited her twice in the three weeks preceding trial. Elaine stated that Tamer did not threaten her with violence during these visits. On cross-examination, Elaine acknowledged that she and Tamer were married twice. Elaine stated that she and Tamer were married in 2005 and divorced in November 2006. Elaine testified that she and Tamer were “common-law married” in December 2006 and “legally” married in 2008.

In response to questioning, Elaine acknowledged that “[a]t any point [she’s] free to go where [she] want[s] when [she] want[s] during the day.” Elaine also stated that she never reported Tamer’s abuse to the police. Elaine testified that she and Tamer currently live about 12-13 miles apart from each other.

Elaine responded “yes” when asked if she was “still afraid of family violence from [Tamer] today?” When asked why she was afraid, Elaine stated “I don’t know. I always go back.”

Elaine rested her case and counsel for Tamer moved for a directed verdict on the grounds that Elaine “has not proved . . . that [Tamer] is, in fact, a threat of future violence, nor is conclusive as to any specific incidents of violence.” The trial court stated that it did “find that the evidence of family violence has been presented” but did not “have any basis for future” violence. The trial court granted Tamer’s motion for a directed verdict.

Perhaps the most interesting decision today is In re K.L., in which the Court of Appeals reversed the trial court’s determination that chapter 37 of the Government Code was unconstitutional. But the COA’s ruling is based on standing, not the merits of the dispute.

In this case, the maternal grandparents of two minor children petitioned to be named primary conservators for the children. The children’s parents were named as respondents though at the time they did not know the identity of one of the fathers. Under Chapter 37 of the Government Code, the trial court appointed an attorney ad litem for the unknown father. Chapter 37 requires courts in certain counties to create and maintain lists of qualified people who are registered to serve as attorneys ad litem, guardians ad litem, mediators, and guardians. Courts are then generally required to make such appointments on a rotating basis from the lists, but may disregard the lists and appoint someone agreed to by the parties or of the court’s own choosing, so long as there is a finding of good cause and an explanation is provided.

After the AAL was appointed, the grandparents filed a motion to reconsider, arguing chapter 37 violated the separation of powers doctrine in the Texas Constitution both because it infringes on core judicial powers and its vague and undefined use of the word “qualified” requires the judiciary to legislate in the guise of interpreting the statute. The grandparents requested the trial court find the statute unconstitutional, rescind the appointment of the AAL, and appoint an AAL without using the chapter 37 procedures.  The State of Texas was notified of the Constitutional challenge.

Before the motion could be heard, the mother filed a counterpetition identifying the child’s father as an “alleged father.” At the hearing on the motion, the father appeared pro se and the appointed AAL appeared as AAL. The State did not appear or respond to the motion. After the hearing, the trial court granted the motion, held that chapter 37 was unconstitutional because it violated the separation of powers doctrine and vacated the appointment of the AAL. The father’s paternity was subsequently established.

Several months later, the OAG intervened and filed a motion to reconsider the order and declaration that chapter 37 procedures are unconstitutional. The trial court denied the motion. The case proceeded to trial. The grandparents were named primary conservators and the parents were named possessory conservators. The State appealed.

The State argues that the grandparents lacked standing to challenge the constitutionality of chapter 37 because the grandparents had no “concrete and particularized,” “actual or imminent” injury from the appointment of a AAL for one of the fathers. The Court of Appeals agreed. The grandparents responded that they had a justiciable interest in the appointment process because 1) they could potentially be ordered to pay the ad litem’s fees and 2) the ad litem would be involved in a case to determine the best interests of their grandchildren.

With regard to the first argument, the COA ruled that the grandparents could still be on the hook for fees whether or not the father or an AAL appeared in his place. That is, there is nothing about the AAL’s appointment that caused that potential injury.

As to the second argument, the grandparents argued that the chapter 37 procedures unnecessarily hamper the trial court’s ability to match an appropriate AAL with the circumstances in a particular case and that, as the child’s grandparents, they have an interest in assuring that an appropriate ad litem is appointed to represent the unknown father. The COA ruled that these arguments do not present a sufficient interest in the representation of an opposing party to give them standing to contest how that representation is accomplished.

As such, the Court of Appeals ruled the  grandparents lacked standing to challenge the constitutionality of chapter 37 and thus the trial court lacked subject matter jurisdiction to consider the issue. The COA modified the judgment to vacate the trial court’s ruling that chapter 37 is unconstitutional and affirmed the judgment in all other respects.

One can’t help but wonder who could have standing to challenge the constitutionality of the chapter. If the grandparents can’t challenge the provision, then who can? The father? Once the father appears in the suit, wouldn’t the AAL be dismissed and the issue moot? Or would the likelihood of future recurrence allow the issue to be heard? Even then, what injury would the father have to seek relief on? Would he have to show that the judge wanted to appoint a particular AAL that was better suited to represent his capacity but was barred from doing so by the appointment list? But in that circumstance, the trial court can deviate from the list for good cause. The head, it reels. We may have to wait until the trial court in this case (the 257th) gets another case and a party whose capacity was previously represented by an AAL or GAL to challenge the provision. It could be a while before we get an answer… if ever.


Overcoming a Premarital Agreement: Opinions, June 7, 2018

The Fourteenth Court of Appeals released a memorandum opinion in In re Veldekens, No. 14-16-00770-CV, primarily regarding a premarital agreement and the evidence necessary to overcome its separate property provisions.

The day before the parties married in 2007, they executed a premarital agreement which precluded the accumulation of community property during the marriage. Seven years later, wife filed for divorce. After a bench trial, the marital residence was confirmed as wife’s separate property. The husband appealed.

In his first issue, husband argued the trial court erred in ruling the marital property was wife’s separate property because he presented evidence that wife sold a one-half interest in the property to him, including a sales contract and a hand-written note acknowledging husband’s one-half interest. However, it appears from the opinion that either the husband did not provide or admit into evidence a copy of the purported sales contract or the sales contract itself failed to convey a one-half interest in the property to wife. Wife evidently testified that she did not intend to sell a one-half interest in the property to husband and the trial court could have determined her testimony was credible. And the trial court reasonably could have determined that the $50,000 paid by husband to wife was a gift. The Court of Appeals affirmed the trial court’s finding that the property was wife’s separate property and overruled the husband’s first issue.

This also led the COA to overrule the husband’s second issue. Under the terms of the premarital agreement, the parties were barred from making a claim for any property designated as separate property and making such a claim could entitle the other party to attorney’s fees for defending the claim. The Court of Appeals affirmed the trial court’s finding of attorney’s fees for wife in defending against husband’s claim for the marital property.

Finally, in his third issue, the husband alleged the trial court abused its discretion in not awarding him a full SPO. He made the novel argument that “[i]t is well past the time for Texas courts to discard the undefined legal vernacular of ‘best interest’ in resolving conservatorship issues and set forth viable guidelines for determining when a trial court can strip a parent of its alienable right to statutorily mandated periods of possession with his or her children.” The COA cited the Holley factors and then recited the trial court’s findings of fact that the husband uses abusive language around the children, calls the mother inappropriate and extremely vulgar names in the presence of the children, he becomes more frustrated and abusive toward the mother the longer his visitation period lasts, he is stressed by getting the children ready for school in the morning, the children are often stressed when the father participates in the morning routine, husband tended to exercise his possession at his parents’ house which was forty miles from the school, and for these reasons the children should not have overnights on Sunday or Thursday nights. The COA affirmed.



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.










Arbitrating an MSA Drafting Dispute: Opinions, May 17, 2018

The Fourteenth Court of Appeals released a memorandum opinion in Farmer v. Farmer, No. 14-17-00077-CV yesterday, which primarily concerns the effect of an arbitrator’s ruling on a MSA drafting dispute.

Wife filed for divorce in March 2015 and husband counterpetitioned. After a number of continuances, the trial court denied wife’s last motion for continuance and set trial for good on September 19, 2016.

On the date of trial, the court excluded wife’s expert, Robert Adams. After that, the parties entered into an MSA which was proved up that same day. The trial court orally rendered the divorce on September 19 and, on October 26, 2016, the trial court entered a final decree of divorce. (If I’m reading this opinion correctly, the timeline here is impressive: On the date of trial, the parties held a Daubert hearing on wife’s expert; then they rushed to mediation, settled the case, and signed the MSA. Then they rushed back to the courthouse and proved up the MSA before the ink was dry. Quite a day.)  Wife filed a motion for new trial, complaining the trial court improperly incorporated a property division into the decree. The property division included in the decree evidently was the ruling of the mediator, serving as arbitrator of drafting disputes. The MNT was denied by operation of law.

On appeal, wife asserted three issues: 1) the decree should be set aside because it departs from the MSA on the property division; 2) wife’s expert was improperly excluded; and 3) wife’s motion for continuance was denied.

On the first issue, wife argued the property division from the MSA should have been used in the decree, not the one signed by the mediator/arbitrator. First, the Court of Appeals noted that the divorce decree and the property division were attached to her notice of appeal and to her opening brief in an appendix, but were not in the appellate record. Because the documents were not included in the record, the Court of Appeals could not consider them.

But even if they had been in the appellate record, the Court of Appeals held the trial court did not err. First, the trial court could have reasonably relied on the property division as being the result of arbitration (as was provided for in the MSA). Secondly, wife did not include a sufficient record of the arbitration. The first issue was overruled.

As for her second and third issues, husband argued these issues were moot because the parties settled. The Court of Appeals agreed, finding the issues became moot once the parties signed the MSA. The trial court was affirmed.

Evidence, Predicates, & Rule 408: Opinions, May 1, 2018

This morning, the Fourteenth District Court of Appeals released a memorandum opinion in In re J.C.K., No. 14-17-00082-CV, an appeal from a modification in which the father was ordered to pay attorney’s fees in the amount of $252,996.55. But most of the father’s issues on appeal and much of the twelve-page opinion revolve around evidentiary rulings and a packet of documents–a MacGuffin–that was never entered into evidence.*

In April, 2010, the trial court entered a divorce decree which named the parents JMCs of the child. In December, 2010, mother’s attorney sent a letter to father’s attorney which included a proposed modification order, a packet of other documents, and an affidavit by the mother which alleged the father had assaulted her as well as several other women and had drug and alcohol problems. At the time, the father was on deferred adjudication for a previous assault of the mother that had occurred prior to the divorce. In the letter, the mother’s attorney expressed a desire that the parties could reach an agreement regarding the modification based on the attached documents or the mother would have to file the mod with the affidavit attached. According to the father, the proposed modification order would have effectively ended his right to see his son as the proposed order made visitation at the mother’s sole discretion and would have required him to pay exorbitant sums in child support. As mentioned above, the packet of documents which accompanied the letter from mother’s lawyer was also at issue at trial and the appeal. In his brief, father calls this letter from mother’s lawyer an extortion attempt.

Mother filed the modification (without the affidavit attached), seeking to be named SMC, limiting the father’s possession and access, and requesting an increase in child support and payment of the mother’s attorney’s fees. The father counterpetitioned. At the conclusion of the trial, the court named mother SMC and ordered father’s visitation be reduced, supervised, and contingent on him meeting certain requirements, such as him attending drug therapy, and avoiding conviction for domestic violence. The court also ordered him to pay $252,996.55 in attorney’s fees. The court’s findings of fact and conclusions of law found mother had presented credible evidence of father’s drug abuse and violence against women and that it was in the child’s best interests to modify the order.

During the trial, father offered the attorney’s letter which preceded the suit and the mother’s affidavit into evidence. They were admitted. He also evidently “indicated a desire” to enter into the record the entire packet of documents that accompanied the letter and affidavit, but evidently did not offer them. Then, after trial, he attempted to enter into the record a formal bill of exception containing the document packet, but the trial court sustained mother’s objection and refused to accept or sign the bill. Specifically, the trial court found father failed to lay the proper predicate or mark and offer the packet into evidence. Also, he failed to timely comply with all requirements to obtain a completed formal bill of exception.

The father’s first seven issues on appeal assert the trial court erred by not admitting into evidence or considering the packet of documents. Father submitted a bench brief in which he argued the packet of documents was admissible. Mother argued the documents constituted part of a settlement offer and thus were inadmissible. The trial court found that, at that point during the trial, the documents were part of a settlement offer, but did state that the court had not yet heard testimony which would support admitting the documents into evidence under one of the other purposes Rule 408 allows for settlement-related material. On appeal, father argued this was a final ruling regarding the admissibility of the documents; mother argued the trial court did no more than offer a preliminary indication of its ruling which could  change subject to later testimony and potential predicate-laying.  The Court of Appeals found father failed to actually offer the packet of documents into evidence, failed to lay a predicate, and thus failed to preserve the issue of the admissibility of the packet. The issues were overruled.

In his eighth issue, the father challenged the legal and factual sufficiency of the evidence to support the award of attorney’s fees. The trial court found mother had incurred $414,809.80 in reasonable attorney’s fees and ordered father to pay $252,996.55 to mother’s attorney. The Court of Appeals found that though the evidence supporting the reasonableness of the fees “[was] quite succinct,” it was sufficient to support the award.

The trial court was affirmed.

*Because the packet of documents was not entered into evidence and was not part of the record, the court’s opinion does not indicate what the packet contains.