Spouses Dennis White and Karen Hamlett appeal a judgment awarding Larry Baugh, Hamlett's ex-husband, title to and possession of real property located in Travis County. Baugh had sued to enforce the property division in the 1991 divorce decree that had ended his marriage with Hamlett, which had included a residuary clause that awarded all undisclosed property to the party not in possession of it. Baugh's central theory at trial was that the decree had awarded him the real property because the property had been purchased with community funds while they were still married. In six points of error, White and Hamlett challenge the legal and factual sufficiency of the evidence supporting two of the jury findings; assert that the district court erred in denying their motion for new trial, motion to disregard jury findings, and motion for judgment notwithstanding the verdict; and contend that the district court abused its discretion in awarding Baugh $55,000 in attorney's fees. In a cross-appeal point of error, Baugh asserts that the district court abused its discretion by assessing the attorney's fees award against Hamlett but not White. We will affirm the judgment.
AFFIRMED: Opinion by Justice Pemberton (Before Justices Patterson, Pemberton and Waldrop)
03-05-00704-CV (Tex.App. - Austin, May 28, 2008)(Pemberton) (family law, domestic relations, divorce, community property, separate property, jury trial)
Appellants, Dennis White and Karen Hamlett f/k/a Karen Baugh// Cross-Appellant, Larry Baugh v. Appellee, Larry Baugh// Cross-Appellees, Dennis White and Karen Hamlett f/k/a Karen Baugh--Appeal from 167th District Court of Travis County
BACKGROUND
The jury heard evidence that, in 1981, Baugh and Hamlett married. During their marriage, they acquired substantial community property, including a home valued at over $500,000 located in Austin's West Lake Hills area, a ranch in Manor where they bred race horses, and a vacation home in New Mexico. The couple had two daughters.
Baugh's and Hamlett's lives changed dramatically beginning in February 1988, when Baugh was arrested and later pleaded guilty to income tax evasion and possession of marihuana with intent to deliver, resulting in his incarceration from 1988 until 1994. Following Baugh's arrest, Hamlett took control of the family's financial affairs. While some of the couple's assets were seized or forfeited during the criminal proceedings, Hamlett retained control over, and liquidated, most of their other assets, including at least one bank account that had "[p]robably a few thousand dollars" in it, at least 50 race horses valued at approximately $5,000 each, and all of the ranch equipment, vehicles and accounts receivable from the family's business. (1) Hamlett's parents, Gladys V. Hamlett and Martin Leon Hamlett, moved from El Paso to Austin to assist their daughter during this time. Gladys moved in with Hamlett and Hamlett's daughters. Also in 1988, Hamlett began dating Dennis White, a former employee at the horse ranch. (2)
By October 1988, Hamlett had filed for bankruptcy and could no longer afford payments on the house. (3) The lender instituted foreclosure proceedings. Hamlett testified that she contacted a realtor to help her find a new place to live. One day, while Hamlett and her mother were driving around the area looking for a place to rent, they came across a townhouse for sale at 6405 Weatherwood Cove. Hamlett contacted the realtor for information about the property.
In February 1989, Hamlett's parents signed an earnest money contract to purchase the townhouse for $74,000.00, to be paid, in part, from the proceeds of a $52,000 loan. In April 1989, the parents, under their names, executed a promissory note and mortgage with Homestead Savings for $52,000, with monthly payments of $437.50 per month for thirty years. In the loan application, the parents specified that their income at the time was $1,177 per month. They also claimed additional income of $365 per month from Hamlett's leasing of their El Paso property. However, Hamlett admitted that she never actually rented her parents' El Paso house--to the contrary, she moved directly from the house in Westlake to the house on Weatherwood Cove. Hamlett provided the following testimony about the purported lease agreement:
Q: In 1989 you signed a lease that was fictitious about moving to El Paso in order to make sure that you could get the Weatherwood Cove home; is that correct?
A: I signed it in order for my parents to be able to buy that home.
. . . .
Q: And you were willing to lie to have that happen?
A: I don't recall the rationale behind it, but it was a necessary thing in order for my parents to get the loan.
Appellants also acknowledge in their brief that the lease of the El Paso property was "phony."
In 1990, while Baugh remained incarcerated, White moved in with Hamlett and her daughters at their Weatherwood Cove residence. In February 1991, Baugh and Hamlett divorced. In June of that same year, Hamlett's parents signed a contract to sell the Weatherwood Cove property to White. The sales contract provided that the purchase price was $57,000, with financing by the sellers, on a note with principal and interest payments of $437.25 per month for 28 years. These terms corresponded with the amount and term of payments remaining on the parents' mortgage. The contract also provided that closing and title transfer would occur upon full payment of the note.
In 1993, approximately one year after White and Hamlett purported to be married under common law, the parents transferred title to White. According to the 1993 closing statement, the sales price was $74,000, with a portion of the price financed through a mortgage in White's name. The mortgage loan application specified that title would be held in the name of "Dennis Dale White," a "single male." The warranty deed conveyed title to "Dennis Dale White, a single person." At trial, White was unable to explain why these documents referred to him as single when, in fact, he was married to Hamlett at the time the documents were executed.
Hamlett's parents received $21,401.41 in cash at closing. However, there was evidence presented at trial that, three weeks after closing, this same amount was deposited back into White and Hamlett's joint bank account. When confronted with a deposit slip for the exact amount of the sellers' proceeds, showing that the funds were deposited into this bank account, White testified that he was "a little confused." However, when asked if the matching amounts were "just a coincidence," White responded, "No." White also claimed that he and Hamlett did not own a joint bank account at the time of the closing. However, after he was shown an account statement for the month in which the closing occurred and the deposit was made, he acknowledged that both his and Hamlett's names appeared on the statement. Hamlett testified that the money deposited into the account belonged to both her and White, and she agreed with Baugh's characterization of her "as sort of a silent partner" in White's purchase of the home.
In January 2001, Baugh learned for the first time about the Weatherwood Cove property. Baugh testified that Gladys, Hamlett's mother, told him that "the truth about that home purchase in Austin" was that "it was Karen's purchase all along." According to Baugh, Gladys added, "We were nothing more than her trustee."
In March 2001, Baugh filed suit against Hamlett to enforce the property division in the divorce decree. Baugh alleged in his petition that the decree failed to specifically award the property located at 6405 Weatherwood Cove and that, under the terms of the decree's residuary clause, the property belonged to him. (4)
In 2002, Baugh amended his petition to add White as a defendant. Baugh alleged that White conspired with Hamlett's parents to convey title in the subject property to White.
During discovery, Hamlett's mother executed a sworn statement describing the circumstances surrounding the purchase:
TO WHOM IT MAY CONCERN:
Narrative of events relating to purchase of home at 6405 Weatherwood Cove, Austin, Texas 78746, by Gladys Hamlett, covering the time period from 1988 to 1992.
In the summer of 1988, my daughter, Karen Baugh (nee Hamlett), was separated and intending to divorce her husband Larry Baugh. She asked if I and Mr. Hamlett (her parents) would purchase a home for her, in our name. She found the home, gave me the purchase money (in cash), and I and Mr. Hamlett did purchase the home FOR HER. We had no funds or interest in the home at all. Karen was always responsible for and made the mortgage payments, taxes, etc.
A fire occurred in Nov. 1990, for which an insurance check for about $30 thousand was issued, and I signed over to Karen. She used it for repairs. Not me.
In the summer of 1991, Karen asked me to leave the home where I had been residing with she and her two children. I moved away since it was her home, and had always been in her control.
Later that summer or fall, she asked me and Mr. Hamlett to sign the house into her name. We agreed and did sign and transfer title to Karen (Hamlett), since she was now divorced.
This statement is from memory, and is substantially accurate.
Given this 23rd day of Feb. 2001
//s// Gladys Hamlett
(Emphasis added). This affidavit was admitted into evidence, along with Gladys's deposition testimony from 2001. In the deposition, Gladys provided additional details about the purchase. Among other details, Gladys testified that she and Leon did not have the financial ability to purchase the house. Gladys also testified that she did not remember how much money Hamlett gave her to purchase the house, but she thought it could have been $10,000 in cash that Hamlett had previously set aside "in her closet in a boot." Gladys further testified in her deposition that every statement in her affidavit was true and correct. Later at trial, however, Gladys recanted her prior statements, testifying that her statements in the affidavit were not true and that she had lied during her deposition.
At the conclusion of trial, the district court submitted jury issues regarding the extent to which the townhouse had been purchased with Baugh and Hamlett's community funds, whether Baugh was estopped from asserting or had waived his claim to the property, whether White was a bona fide purchaser for value when he bought the property, and the amount of each parties' attorney's fees. The jury found that the property had been purchased entirely with community funds, that Baugh was not estopped from and had not waived his claim to the property, that White was not a bona fide purchaser for value, and that Baugh had incurred $55,000 in trial-level attorney's fees, plus $5,000 for an appeal to this Court, and another $5,000 each if a petition for review was filed in or granted by the supreme court. The district court rendered judgment on the jury's verdict, awarding Baugh title to and possession of the property, and that he recover from Hamlett the amount of attorney's fees found by the jury. This appeal followed.
DISCUSSION
Community funds
Appellants' first five points of error concern the jury's findings related to community funds. Question 1 of the charge asked, "Was all or a portion of the property located at 6504 Weatherwood Cove Austin, Texas purchased with the community funds of Larry Baugh and Karen Baugh in 1989?" Conditioned on an affirmative answer to Question 1, Question 2 inquired as to the amount of community funds that were used for the purchase. The jury was instructed not to answer Question 2, however, if it found that all of the funds used to purchase the property were community funds. The charge defined "community property" as "the property, other than separate property, acquired by either spouse during marriage" and "separate property" as "property owned or claimed by a spouse prior to marriage, or acquired by gift, devise, or descent." The jury found in the affirmative on Question 1, but did not answer Question 2. By this, the parties agree that the jury necessarily found that the Weatherwood Cove property had been purchased entirely with community funds. In appellants' first and second points of error, they contend there is either legally or factually insufficient evidence to support the jury's findings that the property was purchased entirely with community funds. In their third point of error, appellants assert that there is factually insufficient evidence to support the jury's finding in Question 1 that a portion of the property was purchased with community funds. (5) In their fourth and fifth points of error, appellants argue that the district court abused its discretion in overruling their motion for new trial and erred by denying their motion to disregard jury findings and motion for judgment notwithstanding the verdict. In these points, they assert the same arguments they raise in their sufficiency points.
We will sustain a legal-sufficiency complaint if the record reveals: (a) the complete absence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence establishes conclusively the opposite of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). We review the evidence in the light favorable to the verdict, crediting favorable evidence if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not. Id. at 807. The ultimate test for legal sufficiency is whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review. See id. at 827.
When reviewing a challenge to the factual sufficiency of the evidence supporting a vital fact, we must consider, weigh, and examine all of the evidence in the record, both supporting and against the finding, to decide whether the verdict should be set aside. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989); Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). We should set aside the verdict only if the evidence that supports the jury finding is so weak as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). But we may not merely substitute our judgment for that of the jury. Pool, 715 S.W.2d at 635. The jury remains the sole judge of witnesses' credibility and the weight to be given their testimony. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).
With both legal and factual sufficiency challenges, the starting point of our analysis--barring a preserved and valid complaint of charge error, and there is none here--is the charge actually submitted to the jury. Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000) (legal sufficiency); Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 762 (Tex. 2003) (factual sufficiency); Ancira Enters., Inc. v. Fischer, 178 S.W.3d 82, 93 (Tex. App.--Austin 2005, no pet.).
In their challenges to the findings that all of the funds used to purchase the property were community funds, appellants rely entirely on the fact Hamlett's parents took out a $52,000 loan under their names in connection with the purchase of the property. Appellants urge that this fact conclusively establishes that Hamlett's parents, not Hamlett, acquired the property and paid at least this portion of the purchase price. We disagree.
Under the broad form questions submitted to the jury, the jury was asked simply to determine whether all or a portion of the property was purchased in 1989 with the community funds of Hamlett and Baugh. The form of these questions enabled the jury to find that the property was purchased using only community funds under any legal theory supported by the evidence. See Hyundai Motor Co. v. Rodriguez, 995 S.W.2d 661, 664 (Tex. 1999) ("When feasible, jury questions should be in broad form, accompanied by appropriate instructions and definitions. A single question may relate to multiple legal theories.") (citing Tex. R. Civ. P. 277). Further, under the definitions provided by the district court, the jury was to presume that property acquired during marriage by either spouse was community property unless it was shown to be separate property. Appellants have preserved no complaint of error in these questions, definitions or instructions, nor regarding the omission of any questions, definitions or instructions.
The evidence enabled the jury to find that the property had been purchased exclusively with community funds based on legal theories that included resulting trust, (6) agency, and that Hamlett and her parents engaged in a scheme to conceal her ownership and defraud Baugh of his community property rights. (7) Among other evidence, the jury considered Gladys's statements that Hamlett "found the home, gave me the purchase money (in cash), and I and Mr. Hamlett did purchase the home FOR HER," and that she and her husband "had no funds or interest in the home at all." Gladys also stated that Hamlett "was always responsible for and made the mortgage payments, taxes, etc.," (8) and appellants point to no evidence, other than Gladys's subsequent recantations, that anyone else ever made such payments. When asked during her deposition who was going to pay for the purchase price of the house, Gladys answered, "Not us."
The jury also heard evidence indicating that the parents did not have the financial resources to assume the note obligations and purchase the property. In addition to Gladys's statements, the parents' 1988 and 1989 tax returns were admitted into evidence, which reported total income of $14,591.23 in 1988 and $20,946.60 in 1989. Moreover, the parents' residential loan application stated that their income at the time of the loan application was $1,177 per month, while their existing mortgage and utilities payments on their house in El Paso totaled $446.00 per month. The mortgage on the Weatherwood Cove property was $437.25 per month. Adding other costs, such as property taxes, to that amount results in total housing costs of $551.83 per month for the Weatherwood Cove property. Thus, when the two house payments are added together, the parents would have owed over $997 per month on housing costs alone. Subtracting this amount from the parents' monthly income of $1,177 would have left them less than $200 per month for other living expenses, such as food, clothing, and transportation.
The jury also considered other evidence that Hamlett acted as the owner of the property, including the application for utility service submitted to the Municipal Utility District in 1989, which was made on behalf of "Karen Baugh by Gladys Hamlett" and directed that billing be sent to Karen Hamlett. There was also evidence that even though Hamlett's parents supposedly owned the property, Leon never lived there and Gladys did so only so long as Hamlett permitted. Similarly, a 1993 statement from the Valley of Lost Creek Homeowners Association predating the title transfer to White identifies Hamlett as an owner and states that "Dennis White and Karen Hamlett are members in good standing of the Valley of Lost Creek Homeowners Association and owe no fees or dues." Finally, the circumstances of the eventual sale of the property to White, the jury could have concluded, were consistent with both an ongoing strategy to conceal Hamlett's interest in the property (e.g., the false description of White as single) and a recognition by the participants that Hamlett had been the beneficial owner all along. These circumstances include evidence that three weeks after the parents transferred title to White, $21,401.41 was deposited into a joint bank account belonging to White and Hamlett. This amount precisely matched the amount of cash that the parents had received at closing. The jury could have inferred from this evidence that Hamlett's parents were returning the proceeds they had received in the sale, including the value of what would have been any accumulated equity in the property. We conclude that when viewed in the light favorable to the verdict, the above evidence is legally sufficient to support the jury's findings. We overrule appellants' first issue.
Regarding their factual sufficiency challenge, appellants argue that the only evidence supporting the jury findings is Gladys's statement in her affidavit, which she later disclaimed at trial, that she and her husband "had no funds or interest in the home at all." This statement, according to White and Hamlett, "is absolutely overwhelmed by the single but altogether sufficient fact that the Hamletts, and the Hamletts alone, obtained $52,000.00 dedicated to the purchase of the property from the proceeds of a loan for [which] they, and they alone, were liable."
We have already discussed the evidence relating to the $52,000 loan, and it is not limited to the single statement that appellants emphasize. It is true that Gladys later recanted both her affidavit and her deposition testimony at trial. However, it was within the jury's province to credit Gladys's prior statements and disbelieve her trial testimony. The jury heard evidence that Gladys and her daughter Hamlett had a strained relationship. Hamlett testified that, in 1994, she asked Gladys to move out of their house. Gladys testified that this made her angry, hurt, and scared. Furthermore, Gladys testified that when her husband died in 1999, Gladys had a legal dispute with her daughters over the disposition of her husband's estate. There was also acrimony involving Hamlett's daughter and Gladys's granddaughter, Tara. Tara testified that she had a good relationship with her grandmother, and that they talked "everyday, several times a day." By contrast, Tara did not have "much of a relationship" with her mother. Tara, who was 25 at the time of trial, testified that she moved out of her mother's house when she was 15 and moved in with Gladys. However, Tara also testified that, "a few years ago," she and her mother "started talking again and trying to work through some of the things that we didn't like about each other." In fact, there was evidence presented that Hamlett came to Tara's aid during the weeks immediately prior to trial and provided Tara with money to prevent Tara's house from being foreclosed. Appellants assert that these issues between Gladys and her daughter prompted Gladys to lie in 2001 about the circumstances surrounding the purchase of the property. However, the jury was entitled to believe the contrary proposition--that the mother-daughter acrimony during the '90s prompted Gladys in 2001 to come forward with the truth about her daughter's deception, and that Hamlett's assistance to Tara prior to trial had prompted Gladys--whom the jury could have concluded had periodically engaged in other deceptive acts to help Hamlett--to resume that pattern at trial.
Hamlett denied that any community funds had been used in the purchase of the property, and she claimed that the money deposited into the joint bank account was a gift from her parents, not a repayment of money that she had originally contributed toward the purchase of the house. However, the jury was entitled to disbelieve this testimony, especially in light of the other evidence tending to bring Hamlett's credibility into question. Appellants also emphasized evidence concerning Baugh's criminal problems. This evidence, at most, goes to the credibility of Baugh as a witness.
Appellants also presented evidence that White spent between $150,000 and $200,000 in improving the property after he purchased it. Thus, according to White and Hamlett, it is "unfair" for Baugh to benefit from these improvements. To the extent appellants are claiming an entitlement to reimbursement, or offset, for these improvements, they have waived it. "The right to an offset is an affirmative defense. The burden of pleading and proving facts necessary to support an affirmative defense of offset rests on the party making the assertion." Mays v. Bank One, N.A., 150 S.W.3d 897, 899 (Tex. App.--Dallas 2004, no pet.) (citing Brown v. American Transfer and Storage Co., 601 S.W.2d 931, 936 (Tex. 1980)). Appellants did not plead any affirmative defenses at trial, nor did they request any jury instructions on this issue. They cannot raise it for the first time on appeal. See Columbia Med. Ctr. of Las Colinas v. Bush, 122 S.W.3d 835, 862 (Tex. App.--Fort Worth 2003, pet. denied) ("Regardless of the merits of Appellants' argument that they are entitled to an offset, because they did not plead an affirmative defense of offset, this issue is waived.").
After considering all of the evidence in the record, we conclude that the evidence supporting the jury's findings that the property was purchased entirely with community funds is not so weak as to be clearly wrong and manifestly unjust. We overrule appellants' second point of error. Further, as our disposition of appellants' first two points of error are dispositive of their third, fourth, and fifth ones, we overrule them as well.
Attorney's fees
In their sixth point of error, appellants urge that if we reverse the judgment, we should remand the issue of attorney's fees to the district court for redetermination. Because we have overruled appellants' points challenging the merits of the judgment, we overrule their attorney's fees point as well.
In his cross-point of error, Baugh asserts that it was an abuse of discretion for the district court to assess his attorney's fees solely against Hamlett and not against White. He contends that because the jury found that White was not a bona fide purchaser for value, the jury also necessarily found that White was not acting in good faith. Thus, according to Baugh, White should necessarily be liable for attorney's fees. On this record, we find no abuse of discretion in the district court's decision to order Hamlett, but not White, to pay the attorney's fees. We overrule Baugh's cross-point.
CONCLUSION
Having overruled White and Hamlett's points of error and Baugh's cross-appeal point of error, we affirm the judgment of the district court.
__________________________________________
Bob Pemberton, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed
Filed: May 28, 2008
1. Hamlett testified that she used some of the funds from the sale of the assets to attend nursing school in 1989.
2. White testified that he worked as a carpenter at the ranch for approximately six months in 1984, also performing various duties like feeding the horses.
3. According to Hamlett, the bankruptcy was never completed.
4. The residuary clause provides the following:
Division of Assets and Liabilities Not Provided for In Decree.
IT IS FURTHER ORDERED AND DECREED, as a part of the division of the estate of the parties, that any community property or its value not otherwise awarded by this decree is awarded to the party not in possession or control of the property. IT IS FURTHER ORDERED AND DECREED that the party in possession and control of such property is designated a constructive trustee of the property for the benefit of the other party.
IT IS FURTHER ORDERED AND DECREED, as a part of the division of the estate of the parties, that any community liability not expressly assumed by a party under this decree is to be paid by the party incurring the liability.
5. Appellants concede that there is legally sufficient evidence to support the jury's finding that at least a portion of the property was purchased with community funds.
6. See Sahagun v. Ibarra, 90 S.W.2d 860, 863-64 (Tex. App.--San Antonio 2002, no pet.).
7. Appellants argue that it was Baugh who had the burden to obtain jury findings on each of these theories. As these theories were subsumed within the unobjected-to broad-form questions actually submitted to the jury, we reject that contention. See Tex. R. Civ. P. 278, 279.
8. See Dalton v. George B. Hatley Co., 634 S.W.2d 374, 379 (Tex. App.--Austin 1982, no writ) ("[P]ayment or satisfaction [of an instrument] may be made with the consent of the holder by any person including a stranger to the instrument.").
Showing posts with label community property. Show all posts
Showing posts with label community property. Show all posts
Sunday, June 8, 2008
Wednesday, November 14, 2007
Texas Divorce Case Law: Marital property division affirmed in opinion by Hon. Ken Law, Chief Justice
Austin Court of Appeals, in a memo op. authored by Chief Justice Kenneth Law affirms division of marital estate in second appeal involving the same parties; finding no abuse of discretion in light of factors relevant to disproportionate division and the evidence before the trial court. Allocation of costs for first appeal also affirmed.
Ronald J. Hewelt v. Virgina M. Hewelt, No. 03-04-00221-CV (Tex.App.- Nov. 14, 2007)(Opinion by Chief Justice Law)(property division affirmed, multiple appeals, scope of mandate, alloction of costs incurred in first appeal)(Before Chief Justice Law, Justices Patterson and Puryear)
Appeal from 53rd District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. 98-11567, HONORABLE PATRICK O. KEEL, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This appeal arises from the second of two trials on the question of the proper division of the Hewelts' marital estate upon divorce. In the second trial, the district court reconsidered the division of the marital estate on remand from this Court. Appellant Ronald J. Hewelt brings this appeal, again challenging the property division. In eight points of error, he complains of the trial court's characterization of certain stock options granted to Virginia M. Hewelt through her employment as separate property, the trial court's division of the community estate, and the disposition of Virginia M. Hewelt's obligation to pay a portion of the costs of the prior appeal. Because we conclude that there was no abuse of discretion by the trial court in its division of the couple's property or its disposition of costs, we affirm the judgment of the trial court.
Factual and Procedural Background
This divorce proceeding was originally tried to a jury in 1999. The parties were divorced on September 10, 1999, and the divorce decree was signed on December 10, 1999. One of the primary issues at trial was how to properly characterize and divide unvested stock options granted through Virginia's employment. Both parties relied on evidence presented through the testimony of a single expert, Larry Bradford, a C.P.A. certified in business valuations. (1)
Finding that Virginia had failed to overcome the community presumption, the first trial court determined that all of the stock options were community property. Based on Bradford's testimony, the court valued the options according to a time-rule formula derived from California case law. See In re Marriage of Hug, 154 Cal. App. 3d 780, 201 Cal. Rptr. 676 (Cal. App. 1984). Rather than assigning a dollar value to the stock options, the first trial court used the term "value" to describe the percentage of the stock options that was either attributable to the community contribution during marriage or to Virginia's separate contribution after divorce. (2) The court then divided the options based on the percentage of the value that was attributable to either the community effort or to Virginia's separate effort. Because some of the value was attributable solely to Virginia's separate efforts, she was awarded a greater percentage or value of the community stock options. (3)
In the first of his two appeals to this Court, Ronald appealed the trial court's original property division. See Hewelt v. Hewelt, No. 03-00-00166-CV, 2001 Tex. App. LEXIS 5930 (Tex. App.--Austin 2001, pet. filed) (mem. op.). Ronald's primary complaint in the first appeal related to the trial court's valuation and division of the stock options.
Reviewing the trial court's property division in the first appeal, we determined that the trial court's findings were not supported by the evidence. We concluded that the trial court misapplied the formula admitted through the testimony of Bradford and relied on by both parties. Because the stock options were a significant part of the marital estate, the trial court's misapplication of the formula for valuing the stock options could have materially affected the community property division. Thus, it was unnecessary for us to address the remaining issues before us on the first appeal. (4) We remanded the case for the trial court to reconsider the division of the entire community estate in light of a correct application of the method for valuing the stock options. We affirmed the divorce decree in all other respects.
On remand, the parties tried the question of the property division of the community estate to the bench. To achieve a just and right division of the property, the second trial court characterized a portion of the community stock options as Virginia's separate property based on the formula presented by the parties' expert, Bradford, in the first trial. (5) In addition to characterizing some of the stock options as separate property, the second trial court reexamined and divided the community estate. Viewed in its entirety, the community estate, as determined by the trial court, was divided equally between the parties. Dissatisfied with the trial court's division of property, Ronald again appeals to this Court.
In the present appeal, Ronald challenges the trial court's property division. In eight points of error, Ronald contends that the trial court erred in (1) characterizing the stock options as both separate and community property, (2) dividing the community estate, and (3) offsetting Virginia's obligation to pay a portion of the costs of the prior appeal.
Characterization of the Stock Options
Ronald contends that the trial court erred in characterizing the stock options as part community property and part Virginia's separate property on remand. He argues that neither party appealed the issue of the first trial court's characterization of the marital property in the original proceeding and that our mandate from the first appeal allowed the trial court to reconsider only its division of the community estate, not to characterize as separate property any of the property that had already been determined to be part of the community estate. (6)
The general rule is that when an appellate court reverses and remands a case for further proceedings and the mandate is not limited by special instructions, the effect is to remand the case to the lower court for a new trial on all issues of fact and the case is re-opened in its entirety. Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986). In interpreting a mandate, courts should look not only to the mandate itself, but also to the opinion. Id. For the scope of remand to be limited, the appellate court's intent must clearly appear from the decision. Garcia v. Martinez, 988 S.W.2d 219, 221 (Tex. 1999).
Our opinion in the prior appeal of this case remanded "the property division in order for the trial court to exercise its discretion in determining a new division of the property." Our mandate, broader still, provided that the case was remanded for reconsideration of the "part of the judgment disposing of the marital property." Thus, our opinion and mandate on remand of the first appeal was broad enough to allow the district court to reconsider the disposition of all of the marital estate. This mandate allowed the district court to reconsider both the division and characterization of marital property for the purpose of arriving at a just and right division of marital property as a whole.
To achieve a just and right division of the property on remand, the second trial court used Bradford's formula to characterize a portion of the stock options as Virginia's separate property. Rather than using the term "value" to describe the percentage of the stock options that was either attributable to the community contribution during marriage or to Virginia's separate contribution after the divorce, the second trial court simply characterized as Virginia's separate property the portion of the stock options attributable to Virginia's separate contribution after divorce, as was initially contemplated by the time-rule formula that both parties relied on as part of Bradford's expert testimony. (7)
Based on the evidence presented at trial, we conclude that the trial court's characterization of a portion of the stock options as part Virginia's separate property on remand was necessary to achieve a just and right division of the property. We decline to read our mandate from the first appeal so narrowly as to preclude reconsideration of the characterization of community and separate property when reconsideration of such characterization was necessary for a just and right division of the stock options. Indeed, characterization of the marital property was the only means by which the trial court could correctly divide the stock options based on the evidence presented. We conclude that the trial court acted within the scope of our mandate in characterizing the stock options as part separate and part community property.
Division of the Community Estate
Ronald also contends that the trial court erred in its division of the community estate. He argues that the estate was divided unequally in favor of Virginia. According to Ronald, the evidence supports an unequal division in his, not Virginia's, favor.
A trial court must make a just and right division of the community estate. Tex. Fam. Code Ann. § 7.001 (West 2006). The division need not be equal, but must be equitable. O'Carolan v. Hopper, 71 S.W.3d 529, 532 (Tex. App.--Austin 2002, no pet.). The trial court has wide discretion in determining a just and right division. Id. In making this determination, the trial court may consider many factors, including the parties' earning capacities, abilities, education, business opportunities, physical condition, financial condition, age, size of separate estates, nature of the property, and the benefits which the spouse, who did not cause the breakup of the marriage, would have enjoyed had the marriage continued. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981). Because the trial court has broad discretion in determining an equitable division, the division will be overturned only if the division is manifestly unfair. Id. at 698; O'Carolan, 71 S.W.3d at 532. On appeal, the presumption is that the trial court correctly exercised its discretion, and the appellant has the burden of showing that the division was unsupported by the evidence and, therefore, manifestly unfair. Vallone v. Vallone, 644 S.W.2d 455, 460 (Tex. 1982). In reviewing a property division under this standard, the reviewing court must consider the entire community estate. Murff, 615 S.W.2d at 698. If the trial court's division was not manifestly unfair, it was not an abuse of discretion.
In the second trial, each party was awarded the personal property in his or her possession and the funds in each savings or checking account in his or her name. The items in storage, the 401K plans, and the deferred compensation plans were divided equally. Each party was awarded two vehicles. Although Virginia was awarded the house and, therefore, received the proceeds from the sale of the house, she incurred significant post-divorce expenses in improvements, maintenance, taxes, and insurance. (8) Finally, the stock options were awarded to the parties based on the formula set out above. Virginia retained her separate property percentage of the stock options, and the community portion of the stock options was divided equally between the parties. All of the evidence shows that the community estate was divided equally between the parties. (9) No evidence supports Ronald's contention that the community estate was divided disproportionately in Virginia's favor.
Ronald asserts, however, that the marital property should have been divided disproportionately in his favor. Factors that may be considered in determining a property division are the parties' earning capacities, education, business opportunities, physical condition, financial condition, age, size of separate estates, nature of the property, and the benefits that the spouse who did not cause the breakup of the marriage would have enjoyed had the marriage continued. Id. at 699.
Ronald addresses each factor set out in Murff, arguing that, considering those factors, the marital estate should be divided disproportionately in his favor. See id. According to Murff, however, the trial court "may consider many factors" in exercising its discretion. Id. The factors set out in Murff are factors that "may" be considered, not factors that "must" be considered. See id. at 698-99; see also Young v. Young, 609 S.W.2d 758, 761 (Tex. 1980) ("The circumstances of each marriage dictate what factors should be considered in the property division upon divorce.").
In the present case, the trial court specifically enumerated the factors it considered in dividing the community estate:
a. The parties' earning capacities are relatively equal.
b. The parties each had primary responsibility for the care of the children for periods of time post-divorce.
c. Virginia Hewelt had sole responsibility post-divorce for management of the child support trust on behalf of the children, for which she received no compensation.
d. Virginia Hewelt had sole responsibility post-divorce for disposition of the parties' personal property items, and she incurred expenses in connection with fulfilling that responsibility.
e. Virginia Hewelt's post-divorce employment was required for both parties to obtain any benefit from the stock options which were unvested at the time of the parties' divorce.
Because Ronald disputes only the findings regarding the parties' earning capacities and the stock options, we will limit our discussion to those factors. We have already addressed the division of the stock options and have found the trial court's characterization and division to be supported by the evidence and a proper exercise of its discretion. We now turn to the parties' earning capacities.
Ronald argues that there is no evidence to support the trial court's finding that the parties have relatively equal earning capacities. (10) The evidence presented shows that, at various times throughout these trials and appeals, both Ronald and Virginia have been unemployed. When they were employed, Virginia's salary ranged from $120,000 per year to $162,000 per year. Ronald's salary was $84,000. Virginia has earned both bachelor and master degrees while Ronald has earned a technical degree. While, taken together, the evidence shows that Ronald never earned as much as Virginia during the marriage, it is not conclusive as to their relative earning capacities. The trial court could have determined that both parties had the ability to earn substantial incomes, whether that income was $84,000 or $120,000 or even $162,000.
In addition, Ronald was a self-proclaimed "Mr. Mom" and may, therefore, have opted for a lower-paying, less-time consuming job during the marriage. In addition, the security of both parties' jobs was subject to market fluctuations, and both Ronald and Virginia had been laid off at least once due to market conditions. Finally, even if the parties' earning capacities are not comparable, earning capacity is only one of the factors on which the trial court based its division, and the court could have found that other factors weighed more heavily in arriving at a just and right division.
The trial court's role is to weigh the evidence, determine credibility, and divide the estate based on the court's findings. See Murff, 615 S.W.2d at 700. Having reviewed the evidence, indulging every reasonable presumption in favor of the proper exercise of discretion by the trial court in dividing community assets, we cannot say that the trial court abused its discretion in dividing the community property equally between the parties. See id. at 699. Ronald has failed to demonstrate that the trial court's substantially equal division of the property was manifestly unfair. See Mann v. Mann, 607 S.W.2d 243, 245 (Tex. 1980). Accordingly, we conclude that the trial court's division of the marital estate was a proper exercise of its discretion.
Costs of Appeal
Lastly, Ronald contends that the trial court acted outside its authority by offsetting Virginia's obligation to pay half of the cost of the prior appeal with her post-divorce expenses. He argues that the appeal costs were never a part of the community obligation and should not have been considered as a part of or as an offset to the property division.
When an appellate court issues a mandate, the trial court's duty is to "give effect" to the judgment by issuing proper orders. Harris County Children's Protective Servs. v. Olvera, 971 S.W.2d 172, 175-76 (Tex. App.--Houston [14th Dist.] 1998, pet. denied). In enforcing mandates, trial courts retain jurisdiction to perform duties collateral to and consistent with the mandate. Madeksho v. Abraham, 112 S.W.3d 679, 685 (Tex. App.--Houston [14th Dist.] 2003, pet. denied). The trial court is given reasonable discretion in enforcing the mandate. Austin Transp. Study Policy Advisory Comm. v. Sierra Club, 843 S.W.2d 683, 690 (Tex. App.--Austin 1992, writ denied).
After the first appeal, we required Virginia to pay half of the costs of the first appeal. However, the evidence shows, and the trial court found, that Virginia incurred significant post-divorce expenses after the first appeal, including expenses for storage and sale of the parties' personal property, child-related expenses in excess of funds available in the child support trust, costs associated with post-divorce modifications and appeals, and income taxes associated with the marital estate. Total expenses incurred were $176,370.80. These expenses more than offset half the costs of the prior appeal, which totaled $8,426.97. Thus, we conclude that the trial court acted within its authority in finding that Virginia's obligation to pay appeal costs was offset by post-divorce expenses.
Conclusion
The trial court's division of the marital estate is supported by the evidence and does not constitute an abuse of discretion.
We affirm the judgment of the trial court.
__________________________________________
W. Kenneth Law, Chief Justice
Before Chief Justice Law, Justices Patterson and Puryear
Affirmed
Filed: November 14, 2007
1. Although Mr. Bradford was initially contacted by Ronald's attorney, he was the sole expert at trial, and both parties relied on his testimony.
2. To determine the percentage of the value attributable to the community contribution for each option, the total number of shares is multiplied by a fraction of which the numerator is the period in months from the date the spouse's employment began to the date the parties separated, and the denominator is the period in months from the date the spouse's employment began to the date when each option can be exercised. For example, for shares that vested March 9, 2001, the percentage or value of the shares that is attributable to the community effort is determined as follows: the numerator is 18, which is the period in months from the date of employment (March 1998) to the date of separation (September 1999); the denominator is 36, which is the period in months from the date of employment (March 1998) to the date each option can be exercised (March 2001). The resulting fraction is ½ or 50 percent. Thus, 50 percent of the value of these options is attributable to the community effort. Applying the formula to the other vesting dates, the value attributable to the community effort for options vesting March 9, 2000, is 18/24 or 75 percent, and the value attributable to the community effort for options vesting March 9, 1999, is 18/12 or 100 percent.
3. We note that the court's valuation of the community stock options during the first trial resulted, in effect, in assigning a portion of the value of the stock options as separate property and a portion as community property using the time-rule formula.
4. When reversible error occurs that materially affects the trial court's division of property, an appellate court is not permitted either to render a different division or to remand only certain portions of the marital property for a new division; rather it must remand the entire community estate for a new division. See Jacobs v. Jacobs, 687 S.W.2d 731, 732-33 (Tex. 1985).
5. After taking judicial notice of Bradford's testimony from the first trial and the methodology used in making the valuation of the stock options in the first trial, the second trial court correctly applied the methodology to effectively characterize portions of the stock option value as separate property and community property and then divided the community property portion. Thus, for options vesting March 9, 2001, 50 percent were community property, for options vesting March 9, 2000, 75 percent were community property, and for options vesting March 9, 1999, 100 percent were community property.
6. We note that, as an alternate ground for affirmance in the first appeal, Virginia argued that the trial court in the first trial erred in characterizing all the options as community property.
7. At the time of the trials, Texas law did not specifically provide a method for valuing and dividing stock options. After the conclusion of the second trial, the legislature amended the family code to provide for the characterization and division of stock options. See Tex. Fam. Code Ann. §§ 3.007(d)-(f) (West 2006). The statute outlines a time-rule formula to establish the percentage of each stock option that is separate property based on the portion attributable to the spouse's separate contribution after divorce. The numerator is the period in months from the date of termination of the marriage and the date the option can be exercised. The denominator is the period in months from the date the option is granted to the date the option can be exercised. This fraction is applied to each option to determine the separate property interest. Applying this statutory formula to the remaining stock options results in exactly the same division as that adjudged by both trial courts in this litigation. For example, for options vesting March 9, 2001, the separate property interest is the following: the numerator is 18, which is the period in months from the date of termination of the marriage (September 1999) to the date the option can be exercised (March 2001); the denominator is 36, which is the period in months from the date the option is granted (March 1998) to the date the option can be exercised (March 2001). The resulting fraction is ½ or 50 percent. Thus, 50 percent of these options are separate property. Applying the formula to the other vesting dates, Virginia's separate portion of the options vesting March 9, 2000, is 6/24 or 25 percent, and Virginia's separate portion of the options vesting March 9, 1999, is 0/1 or 0 percent. Thus, the Texas legislature has adopted a time-rule formula methodology for valuing stock options that is similar to that used by both of the trial courts in this case.
8. The value of the house at the time of divorce on September 10, 1999, was $490,000, and the debt secured by the residence was $436,797. After the divorce, Virginia improved the residence, which had initially been awarded to her in the 1999 Decree of Divorce. The evidence shows that, after the divorce, Virginia spent $94,180.64 in improvements, $38,586.00 for taxes and insurance, and $7,800.00 for maintenance. In May 2001, she sold the house for $650,000.
9. We note two significant discrepancies between the calculations in Ronald's briefing to this Court and the trial court's property division. First, the separate property portion of Virginia's stock options must not be included in the community estate. Second, the proceeds of the sale of the house must be offset with the post-divorce expenses incurred by Virginia to maintain and improve the house. Once these calculations are corrected, the resulting division is substantially equal.
10. Ronald also challenges the trial court's finding that, at the time of the second trial, Ronald earned $150,000 per year; however, this finding was made for the sole purpose of determining child support and was not the basis for the trial court's property division.
Ronald J. Hewelt v. Virgina M. Hewelt, No. 03-04-00221-CV (Tex.App.- Nov. 14, 2007)(Opinion by Chief Justice Law)(property division affirmed, multiple appeals, scope of mandate, alloction of costs incurred in first appeal)(Before Chief Justice Law, Justices Patterson and Puryear)
Appeal from 53rd District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. 98-11567, HONORABLE PATRICK O. KEEL, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This appeal arises from the second of two trials on the question of the proper division of the Hewelts' marital estate upon divorce. In the second trial, the district court reconsidered the division of the marital estate on remand from this Court. Appellant Ronald J. Hewelt brings this appeal, again challenging the property division. In eight points of error, he complains of the trial court's characterization of certain stock options granted to Virginia M. Hewelt through her employment as separate property, the trial court's division of the community estate, and the disposition of Virginia M. Hewelt's obligation to pay a portion of the costs of the prior appeal. Because we conclude that there was no abuse of discretion by the trial court in its division of the couple's property or its disposition of costs, we affirm the judgment of the trial court.
Factual and Procedural Background
This divorce proceeding was originally tried to a jury in 1999. The parties were divorced on September 10, 1999, and the divorce decree was signed on December 10, 1999. One of the primary issues at trial was how to properly characterize and divide unvested stock options granted through Virginia's employment. Both parties relied on evidence presented through the testimony of a single expert, Larry Bradford, a C.P.A. certified in business valuations. (1)
Finding that Virginia had failed to overcome the community presumption, the first trial court determined that all of the stock options were community property. Based on Bradford's testimony, the court valued the options according to a time-rule formula derived from California case law. See In re Marriage of Hug, 154 Cal. App. 3d 780, 201 Cal. Rptr. 676 (Cal. App. 1984). Rather than assigning a dollar value to the stock options, the first trial court used the term "value" to describe the percentage of the stock options that was either attributable to the community contribution during marriage or to Virginia's separate contribution after divorce. (2) The court then divided the options based on the percentage of the value that was attributable to either the community effort or to Virginia's separate effort. Because some of the value was attributable solely to Virginia's separate efforts, she was awarded a greater percentage or value of the community stock options. (3)
In the first of his two appeals to this Court, Ronald appealed the trial court's original property division. See Hewelt v. Hewelt, No. 03-00-00166-CV, 2001 Tex. App. LEXIS 5930 (Tex. App.--Austin 2001, pet. filed) (mem. op.). Ronald's primary complaint in the first appeal related to the trial court's valuation and division of the stock options.
Reviewing the trial court's property division in the first appeal, we determined that the trial court's findings were not supported by the evidence. We concluded that the trial court misapplied the formula admitted through the testimony of Bradford and relied on by both parties. Because the stock options were a significant part of the marital estate, the trial court's misapplication of the formula for valuing the stock options could have materially affected the community property division. Thus, it was unnecessary for us to address the remaining issues before us on the first appeal. (4) We remanded the case for the trial court to reconsider the division of the entire community estate in light of a correct application of the method for valuing the stock options. We affirmed the divorce decree in all other respects.
On remand, the parties tried the question of the property division of the community estate to the bench. To achieve a just and right division of the property, the second trial court characterized a portion of the community stock options as Virginia's separate property based on the formula presented by the parties' expert, Bradford, in the first trial. (5) In addition to characterizing some of the stock options as separate property, the second trial court reexamined and divided the community estate. Viewed in its entirety, the community estate, as determined by the trial court, was divided equally between the parties. Dissatisfied with the trial court's division of property, Ronald again appeals to this Court.
In the present appeal, Ronald challenges the trial court's property division. In eight points of error, Ronald contends that the trial court erred in (1) characterizing the stock options as both separate and community property, (2) dividing the community estate, and (3) offsetting Virginia's obligation to pay a portion of the costs of the prior appeal.
Characterization of the Stock Options
Ronald contends that the trial court erred in characterizing the stock options as part community property and part Virginia's separate property on remand. He argues that neither party appealed the issue of the first trial court's characterization of the marital property in the original proceeding and that our mandate from the first appeal allowed the trial court to reconsider only its division of the community estate, not to characterize as separate property any of the property that had already been determined to be part of the community estate. (6)
The general rule is that when an appellate court reverses and remands a case for further proceedings and the mandate is not limited by special instructions, the effect is to remand the case to the lower court for a new trial on all issues of fact and the case is re-opened in its entirety. Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986). In interpreting a mandate, courts should look not only to the mandate itself, but also to the opinion. Id. For the scope of remand to be limited, the appellate court's intent must clearly appear from the decision. Garcia v. Martinez, 988 S.W.2d 219, 221 (Tex. 1999).
Our opinion in the prior appeal of this case remanded "the property division in order for the trial court to exercise its discretion in determining a new division of the property." Our mandate, broader still, provided that the case was remanded for reconsideration of the "part of the judgment disposing of the marital property." Thus, our opinion and mandate on remand of the first appeal was broad enough to allow the district court to reconsider the disposition of all of the marital estate. This mandate allowed the district court to reconsider both the division and characterization of marital property for the purpose of arriving at a just and right division of marital property as a whole.
To achieve a just and right division of the property on remand, the second trial court used Bradford's formula to characterize a portion of the stock options as Virginia's separate property. Rather than using the term "value" to describe the percentage of the stock options that was either attributable to the community contribution during marriage or to Virginia's separate contribution after the divorce, the second trial court simply characterized as Virginia's separate property the portion of the stock options attributable to Virginia's separate contribution after divorce, as was initially contemplated by the time-rule formula that both parties relied on as part of Bradford's expert testimony. (7)
Based on the evidence presented at trial, we conclude that the trial court's characterization of a portion of the stock options as part Virginia's separate property on remand was necessary to achieve a just and right division of the property. We decline to read our mandate from the first appeal so narrowly as to preclude reconsideration of the characterization of community and separate property when reconsideration of such characterization was necessary for a just and right division of the stock options. Indeed, characterization of the marital property was the only means by which the trial court could correctly divide the stock options based on the evidence presented. We conclude that the trial court acted within the scope of our mandate in characterizing the stock options as part separate and part community property.
Division of the Community Estate
Ronald also contends that the trial court erred in its division of the community estate. He argues that the estate was divided unequally in favor of Virginia. According to Ronald, the evidence supports an unequal division in his, not Virginia's, favor.
A trial court must make a just and right division of the community estate. Tex. Fam. Code Ann. § 7.001 (West 2006). The division need not be equal, but must be equitable. O'Carolan v. Hopper, 71 S.W.3d 529, 532 (Tex. App.--Austin 2002, no pet.). The trial court has wide discretion in determining a just and right division. Id. In making this determination, the trial court may consider many factors, including the parties' earning capacities, abilities, education, business opportunities, physical condition, financial condition, age, size of separate estates, nature of the property, and the benefits which the spouse, who did not cause the breakup of the marriage, would have enjoyed had the marriage continued. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981). Because the trial court has broad discretion in determining an equitable division, the division will be overturned only if the division is manifestly unfair. Id. at 698; O'Carolan, 71 S.W.3d at 532. On appeal, the presumption is that the trial court correctly exercised its discretion, and the appellant has the burden of showing that the division was unsupported by the evidence and, therefore, manifestly unfair. Vallone v. Vallone, 644 S.W.2d 455, 460 (Tex. 1982). In reviewing a property division under this standard, the reviewing court must consider the entire community estate. Murff, 615 S.W.2d at 698. If the trial court's division was not manifestly unfair, it was not an abuse of discretion.
In the second trial, each party was awarded the personal property in his or her possession and the funds in each savings or checking account in his or her name. The items in storage, the 401K plans, and the deferred compensation plans were divided equally. Each party was awarded two vehicles. Although Virginia was awarded the house and, therefore, received the proceeds from the sale of the house, she incurred significant post-divorce expenses in improvements, maintenance, taxes, and insurance. (8) Finally, the stock options were awarded to the parties based on the formula set out above. Virginia retained her separate property percentage of the stock options, and the community portion of the stock options was divided equally between the parties. All of the evidence shows that the community estate was divided equally between the parties. (9) No evidence supports Ronald's contention that the community estate was divided disproportionately in Virginia's favor.
Ronald asserts, however, that the marital property should have been divided disproportionately in his favor. Factors that may be considered in determining a property division are the parties' earning capacities, education, business opportunities, physical condition, financial condition, age, size of separate estates, nature of the property, and the benefits that the spouse who did not cause the breakup of the marriage would have enjoyed had the marriage continued. Id. at 699.
Ronald addresses each factor set out in Murff, arguing that, considering those factors, the marital estate should be divided disproportionately in his favor. See id. According to Murff, however, the trial court "may consider many factors" in exercising its discretion. Id. The factors set out in Murff are factors that "may" be considered, not factors that "must" be considered. See id. at 698-99; see also Young v. Young, 609 S.W.2d 758, 761 (Tex. 1980) ("The circumstances of each marriage dictate what factors should be considered in the property division upon divorce.").
In the present case, the trial court specifically enumerated the factors it considered in dividing the community estate:
a. The parties' earning capacities are relatively equal.
b. The parties each had primary responsibility for the care of the children for periods of time post-divorce.
c. Virginia Hewelt had sole responsibility post-divorce for management of the child support trust on behalf of the children, for which she received no compensation.
d. Virginia Hewelt had sole responsibility post-divorce for disposition of the parties' personal property items, and she incurred expenses in connection with fulfilling that responsibility.
e. Virginia Hewelt's post-divorce employment was required for both parties to obtain any benefit from the stock options which were unvested at the time of the parties' divorce.
Because Ronald disputes only the findings regarding the parties' earning capacities and the stock options, we will limit our discussion to those factors. We have already addressed the division of the stock options and have found the trial court's characterization and division to be supported by the evidence and a proper exercise of its discretion. We now turn to the parties' earning capacities.
Ronald argues that there is no evidence to support the trial court's finding that the parties have relatively equal earning capacities. (10) The evidence presented shows that, at various times throughout these trials and appeals, both Ronald and Virginia have been unemployed. When they were employed, Virginia's salary ranged from $120,000 per year to $162,000 per year. Ronald's salary was $84,000. Virginia has earned both bachelor and master degrees while Ronald has earned a technical degree. While, taken together, the evidence shows that Ronald never earned as much as Virginia during the marriage, it is not conclusive as to their relative earning capacities. The trial court could have determined that both parties had the ability to earn substantial incomes, whether that income was $84,000 or $120,000 or even $162,000.
In addition, Ronald was a self-proclaimed "Mr. Mom" and may, therefore, have opted for a lower-paying, less-time consuming job during the marriage. In addition, the security of both parties' jobs was subject to market fluctuations, and both Ronald and Virginia had been laid off at least once due to market conditions. Finally, even if the parties' earning capacities are not comparable, earning capacity is only one of the factors on which the trial court based its division, and the court could have found that other factors weighed more heavily in arriving at a just and right division.
The trial court's role is to weigh the evidence, determine credibility, and divide the estate based on the court's findings. See Murff, 615 S.W.2d at 700. Having reviewed the evidence, indulging every reasonable presumption in favor of the proper exercise of discretion by the trial court in dividing community assets, we cannot say that the trial court abused its discretion in dividing the community property equally between the parties. See id. at 699. Ronald has failed to demonstrate that the trial court's substantially equal division of the property was manifestly unfair. See Mann v. Mann, 607 S.W.2d 243, 245 (Tex. 1980). Accordingly, we conclude that the trial court's division of the marital estate was a proper exercise of its discretion.
Costs of Appeal
Lastly, Ronald contends that the trial court acted outside its authority by offsetting Virginia's obligation to pay half of the cost of the prior appeal with her post-divorce expenses. He argues that the appeal costs were never a part of the community obligation and should not have been considered as a part of or as an offset to the property division.
When an appellate court issues a mandate, the trial court's duty is to "give effect" to the judgment by issuing proper orders. Harris County Children's Protective Servs. v. Olvera, 971 S.W.2d 172, 175-76 (Tex. App.--Houston [14th Dist.] 1998, pet. denied). In enforcing mandates, trial courts retain jurisdiction to perform duties collateral to and consistent with the mandate. Madeksho v. Abraham, 112 S.W.3d 679, 685 (Tex. App.--Houston [14th Dist.] 2003, pet. denied). The trial court is given reasonable discretion in enforcing the mandate. Austin Transp. Study Policy Advisory Comm. v. Sierra Club, 843 S.W.2d 683, 690 (Tex. App.--Austin 1992, writ denied).
After the first appeal, we required Virginia to pay half of the costs of the first appeal. However, the evidence shows, and the trial court found, that Virginia incurred significant post-divorce expenses after the first appeal, including expenses for storage and sale of the parties' personal property, child-related expenses in excess of funds available in the child support trust, costs associated with post-divorce modifications and appeals, and income taxes associated with the marital estate. Total expenses incurred were $176,370.80. These expenses more than offset half the costs of the prior appeal, which totaled $8,426.97. Thus, we conclude that the trial court acted within its authority in finding that Virginia's obligation to pay appeal costs was offset by post-divorce expenses.
Conclusion
The trial court's division of the marital estate is supported by the evidence and does not constitute an abuse of discretion.
We affirm the judgment of the trial court.
__________________________________________
W. Kenneth Law, Chief Justice
Before Chief Justice Law, Justices Patterson and Puryear
Affirmed
Filed: November 14, 2007
1. Although Mr. Bradford was initially contacted by Ronald's attorney, he was the sole expert at trial, and both parties relied on his testimony.
2. To determine the percentage of the value attributable to the community contribution for each option, the total number of shares is multiplied by a fraction of which the numerator is the period in months from the date the spouse's employment began to the date the parties separated, and the denominator is the period in months from the date the spouse's employment began to the date when each option can be exercised. For example, for shares that vested March 9, 2001, the percentage or value of the shares that is attributable to the community effort is determined as follows: the numerator is 18, which is the period in months from the date of employment (March 1998) to the date of separation (September 1999); the denominator is 36, which is the period in months from the date of employment (March 1998) to the date each option can be exercised (March 2001). The resulting fraction is ½ or 50 percent. Thus, 50 percent of the value of these options is attributable to the community effort. Applying the formula to the other vesting dates, the value attributable to the community effort for options vesting March 9, 2000, is 18/24 or 75 percent, and the value attributable to the community effort for options vesting March 9, 1999, is 18/12 or 100 percent.
3. We note that the court's valuation of the community stock options during the first trial resulted, in effect, in assigning a portion of the value of the stock options as separate property and a portion as community property using the time-rule formula.
4. When reversible error occurs that materially affects the trial court's division of property, an appellate court is not permitted either to render a different division or to remand only certain portions of the marital property for a new division; rather it must remand the entire community estate for a new division. See Jacobs v. Jacobs, 687 S.W.2d 731, 732-33 (Tex. 1985).
5. After taking judicial notice of Bradford's testimony from the first trial and the methodology used in making the valuation of the stock options in the first trial, the second trial court correctly applied the methodology to effectively characterize portions of the stock option value as separate property and community property and then divided the community property portion. Thus, for options vesting March 9, 2001, 50 percent were community property, for options vesting March 9, 2000, 75 percent were community property, and for options vesting March 9, 1999, 100 percent were community property.
6. We note that, as an alternate ground for affirmance in the first appeal, Virginia argued that the trial court in the first trial erred in characterizing all the options as community property.
7. At the time of the trials, Texas law did not specifically provide a method for valuing and dividing stock options. After the conclusion of the second trial, the legislature amended the family code to provide for the characterization and division of stock options. See Tex. Fam. Code Ann. §§ 3.007(d)-(f) (West 2006). The statute outlines a time-rule formula to establish the percentage of each stock option that is separate property based on the portion attributable to the spouse's separate contribution after divorce. The numerator is the period in months from the date of termination of the marriage and the date the option can be exercised. The denominator is the period in months from the date the option is granted to the date the option can be exercised. This fraction is applied to each option to determine the separate property interest. Applying this statutory formula to the remaining stock options results in exactly the same division as that adjudged by both trial courts in this litigation. For example, for options vesting March 9, 2001, the separate property interest is the following: the numerator is 18, which is the period in months from the date of termination of the marriage (September 1999) to the date the option can be exercised (March 2001); the denominator is 36, which is the period in months from the date the option is granted (March 1998) to the date the option can be exercised (March 2001). The resulting fraction is ½ or 50 percent. Thus, 50 percent of these options are separate property. Applying the formula to the other vesting dates, Virginia's separate portion of the options vesting March 9, 2000, is 6/24 or 25 percent, and Virginia's separate portion of the options vesting March 9, 1999, is 0/1 or 0 percent. Thus, the Texas legislature has adopted a time-rule formula methodology for valuing stock options that is similar to that used by both of the trial courts in this case.
8. The value of the house at the time of divorce on September 10, 1999, was $490,000, and the debt secured by the residence was $436,797. After the divorce, Virginia improved the residence, which had initially been awarded to her in the 1999 Decree of Divorce. The evidence shows that, after the divorce, Virginia spent $94,180.64 in improvements, $38,586.00 for taxes and insurance, and $7,800.00 for maintenance. In May 2001, she sold the house for $650,000.
9. We note two significant discrepancies between the calculations in Ronald's briefing to this Court and the trial court's property division. First, the separate property portion of Virginia's stock options must not be included in the community estate. Second, the proceeds of the sale of the house must be offset with the post-divorce expenses incurred by Virginia to maintain and improve the house. Once these calculations are corrected, the resulting division is substantially equal.
10. Ronald also challenges the trial court's finding that, at the time of the second trial, Ronald earned $150,000 per year; however, this finding was made for the sole purpose of determining child support and was not the basis for the trial court's property division.
Thursday, July 12, 2007
Failure to Issue Findings of Facts and Conclusions of Law Held Harmless Error; Did Not Require Reversal of Divorce Decree
Pope v. Pope, No. 03-06-00550-CV (Tex.App.- Austin, Jul. 12, 2007)(Opinion by Justice Patterson on rehearing)
Before Justices Patterson, Pemberton and Waldrop
Brian Lee Pope v. Nancy Pope
Appeal from 207th District Court of Comal County
FROM THE DISTRICT COURT OF COMAL COUNTY, 207TH JUDICIAL DISTRICT
NO. C2004-503B, HONORABLE CHARLES A. STEPHENS II, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE PATTERSON
Upon consideration of appellant's motion for rehearing and motion for rehearing en banc, we overrule the motions; however, we withdraw our opinion and judgment dated May 30, 2007, and substitute the following.
Brian Lee Pope appeals two issues pertaining to the final decree of divorce from his marriage to appellee Nancy Pope. Brian contends that the district court (i) erred in failing to issue findings of fact and conclusions of law and that he was harmed by this failure, and (ii) improperly divested him of his separate property by awarding an RV park entirely to Nancy. Because we hold that Brian was not harmed by the district court's failure to issue findings of fact and conclusions of law and that the district court did not abuse its discretion in its property division, we affirm the judgment.
BACKGROUND
Brian and Nancy were married in 1995 and had one child born to the marriage. After Nancy sued for divorce in May 2004, she and the child moved out of the marital residence and lived at Bryan's Country RV Park, a business located in Guadalupe County that the parties had purchased in January 2004 from Nancy's stepfather, E. K. Bryan. This property consisted of an 11.65-acre tract of land on which the RV park was built and an additional adjoining 92-acre tract. Nancy had lived on this property since she was twelve years old. She lived in a trailer home located on the park and operated the park during the pendency of the divorce. Brian resided in the marital residence on Bobolink Street in Comal County that he had bought prior to the marriage and from which he operated a business, Laser Graphics.
The parties agreed to temporary orders, but Nancy thereafter obtained a protective order against Brian due to various harassing acts directed at Nancy and her tenants. After Nancy filed for divorce, Brian's work history became sporadic, and he spent January 25 until April 11, 2006 in jail serving a sentence for assaulting a tenant at the RV park. Brian also violated and pleaded guilty to violation of the protective order. The parties accused each other of various acts of misconduct and reported each other to various authorities.
Nancy paid Brian's mortgage payment from October 2005 until April 2006 to avoid foreclosure of the house even though Brian was ordered to make the house payments under the temporary orders. While Brian was in jail, Nancy did some work for Laser Graphics and received payments which she gave Brian upon his release. Brian acknowledged at trial that Nancy had paid the mortgage on the Bobolink residence beginning in October 2005 and that he had been held in contempt for failure to pay child support. He claimed to work in 2004 but made no income.
The trial of the divorce proceeded on May 15, 2006. The decree recites that the divorce was
"judicially pronounced and rendered in court at New Braunfels, Comal County, Texas, on May 15, 2006 and further noted on the court's docket sheet on the same date, but signed on June 19, 2006." In a motion for new trial, Brian complained that the division of the marital property was manifestly unjust and that the value assigned to the realty awarded to Nancy, evidently the RV park, was incorrect. A judgment in favor of an appraiser-intervenor was signed on July 19 and filed on August 15, 2006. Although Brian timely requested findings of fact and conclusions of law and filed a notice of past due findings, the district court failed to file them. This appeal followed.
DISCUSSION
Findings of fact and conclusions of law
Brian first complains that the district court erred by failing to file findings of fact and conclusions of law in response to his timely request. Under the Texas Family Code, in a suit for dissolution of marriage in which the trial court has rendered a judgment dividing the estate of the parties and upon a request by a party, the trial court shall state in writing its findings of fact and conclusions of law. Tex. Fam. Code Ann. § 6.711(a) (West 2006). A request for findings and conclusions under section 6.711 must conform to the Texas Rules of Civil Procedure. Id. § 6.711(b). The trial court's duty to make such findings is mandatory, and the failure to respond when requests have been properly made is presumed harmful unless the record demonstrates that the complaining party has suffered no injury. See Tex. R. Civ. P. 296; Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996); Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex. 1989); Zeifman v. Michels, 212 S.W.3d 582, 588 (Tex. App.--Austin 2006, pet. denied); Glass v. Williamson, 137 S.W.3d 114, 117-18 (Tex. App.--Houston [1st Dist.] 2004, no pet.). Error is harmful if it prevents an appellant from properly presenting a case on appeal. Tenery, 932 S.W.2d at 30.
In Tenery, the supreme court found the trial court's failure to file findings of fact and conclusions of law to be harmless as it related to the division of property because there was ample evidence in the record to support the judgment. Id.; see also Goggins v. Leo, 849 S.W.2d 373, 379 (Tex. App.--Houston [14th Dist.] 1993, no pet.) (only one theory of recovery and the implied findings necessary for recovery were supported by the evidence).
Because Brian's request was timely, we must determine whether he was harmed by the lack of findings and conclusions. Nancy argues that Brian does not have to guess the reasons behind the district court's order pertaining to its property division, that he raises the issue now raised on appeal for the first time and failed to raise it in the court below, and that there is ample evidence in the record to dispose of the issue he now raises. Moreover, the district judge announced his rulings and stated his reasons at the hearing. We agree.
Although we discourage trial judges from failing to respond to timely requests for findings, in this case the record clearly establishes the reasons underlying the district court's decisions, and there is ample evidence to support the court's determination. (1) The record affirmatively shows that Brian suffered no harm from the trial court's failure to issue findings of fact and conclusions of law.
Property division
Although the court awarded Brian the Bobolink home and the Laser Graphics business, the RV park was awarded to Nancy. Brian's sole complaint about the division of property pertains to the RV park which, he claims, was purchased partially with funds that were his separate property and partially with "community credit." That this property was either separate property or a "mixed character asset" is raised for the first time on appeal.
The family code requires the trial court to divide the estate of the parties in a manner that is just and right, having due regard for the rights of each party and their children, if any. Tex. Fam. Code Ann. § 7.001 (West 2006); see Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139 (Tex. 1977). We review property division issues for abuse of discretion. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998). The trial court has broad discretion in dividing the marital estate at divorce. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981). We must presume that the trial court exercised it properly and may not alter the division unless the complaining party establishes a clear abuse of the trial court's discretion. Id. A trial court abuses its discretion when it acts arbitrarily or unreasonably and without reference to any guiding rules or principles. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). Because a trial court has no discretion in determining what the law is, which law governs, or how to apply the law, we review this category of discretionary rulings de novo. Id. at 840. When we review a ruling that results from the trial court's having resolved underlying facts, however, we must defer to the trial court's factual resolutions and any credibility determinations that may have affected those resolutions, and we may not substitute our judgment for that of the trial court in those matters. See id. at 839-40 (requiring deference to fact-based determinations).
All property on hand at the dissolution of marriage is presumed to be community property. Tex. Fam. Code Ann. § 3.003(a) (West 2006). This is a rebuttable presumption, requiring a spouse claiming assets as separate property to establish their separate character by clear and convincing evidence. Id. § 3.003(a)-(b). Property owned before marriage, or acquired during marriage by gift, devise or descent, is separate property. Id. § 3.001 (West 2006). Where an asset is purchased during marriage with monies traceable to a spouse's separate estate, the asset may appropriately be characterized as separate property. Pace v. Pace, 160 S.W.3d 706, 711 (Tex. App.--Dallas 2005, pet. denied).
The only evidence at trial showed that the RV park was part of the community estate of the parties. The only inventory admitted into evidence showed the RV park as part of the community estate; Brian did not object to the exhibit or challenge its characterization. The parties agree that the property was purchased from Nancy's stepfather in 2004 for $420,000, and that they still owe $365,843. Nancy operated the RV park, and Brian testified that he did some work of an unidentified nature on the property. Both parties sought award of the RV park. Brian objected to the award of the RV park to Nancy not because it was separate or "mixed character" property but on the ground that his daughter "ought to live in a real house" such as the Bobolink residence.
On rehearing, Brian urges that the trial court and this Court in its original opinion erred in denying him his separate property "when the parties stipulated that the property was Appellant's separate property." (2) The parties agree--and Nancy testified--that the Bobolink home was acquired by Brian shortly before their marriage, the debt on the Bobolink house was paid with community funds, and that, after their marriage, a home equity loan of $91,000 was made against the home with $50,000 from the loan used as a down payment on the RV park purchased by the parties and the remainder used for operating expenses of the park. At the time of trial, the parties owed $88,000 on the home equity note. Because the original loan on the house was paid for during the marriage with community funds, Nancy sought an economic contribution to the community estate of $109,000. (3) In addition to awarding Nancy the RV park, the court ordered Nancy to pay off the $88,000 home equity note that had funded the initial purchase of the park. The court then awarded the Bobolink house free of the home equity debt. The court concluded that two loans incurred by Brian after the couple's separation would be Brian's liabilities.
That the Bobolink house was acquired before their marriage does not convert the RV park into his separate property. Based on the evidence (i) that the couple acquired community debt on the house to then acquire the RV park with community credit, (ii) that community property was used to make payments on Brian's separate property, and (iii) that Brian failed to adduce any proof that any portion of the RV park was paid for with funds that can be traced to his separate property rather than the couple's community credit or that there was any intent to repay the park note with his separate property, we conclude that the trial court did not err or abuse its discretion in finding that the park was community property, and awarding the park and notes on the park and Bobolink house to Nancy and the Bobolink house free of home equity debt to Brian.
CONCLUSION
We hold that Brian was not harmed by the district court's failure to issue findings of fact and conclusions of law and that the district court did not abuse its discretion in awarding the RV park to Nancy. Having overruled Brian's issues, we affirm the judgment.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed on Motion for Rehearing
Filed: July 12, 2007
1. We emphasize that oral determinations from the bench are not substitutes for written findings of fact and conclusions of law. See In re Doe, 78 S.W.3d 338, 340 n.2 (Tex. 2002); Narvaez v. Maldonado, 127 S.W.3d 313, 316 n.1 (Tex. App.--Austin 2004, no pet.). We rely on these oral pronouncements solely for the purpose of conducting our harm analysis.
2. Because Brian's citations to the record are to testimony and there are no formal stipulations concerning the subject of this testimony, we assume the reference to stipulations is to the parties' uncontroverted testimony that the Bobolink house was acquired by Brian before the marriage. Likewise, Brian does not dispute that the original debt on the Bobolink house was paid with community funds.
3. Payments made out of the community estate for the benefit of a separate estate, either to pay off a debt of the separate estate or to make improvements, give rise to a claim for reimbursement. Penick v. Penick, 783 S.W.2d 194, 196 (Tex. 1988).
Before Justices Patterson, Pemberton and Waldrop
Brian Lee Pope v. Nancy Pope
Appeal from 207th District Court of Comal County
FROM THE DISTRICT COURT OF COMAL COUNTY, 207TH JUDICIAL DISTRICT
NO. C2004-503B, HONORABLE CHARLES A. STEPHENS II, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE PATTERSON
Upon consideration of appellant's motion for rehearing and motion for rehearing en banc, we overrule the motions; however, we withdraw our opinion and judgment dated May 30, 2007, and substitute the following.
Brian Lee Pope appeals two issues pertaining to the final decree of divorce from his marriage to appellee Nancy Pope. Brian contends that the district court (i) erred in failing to issue findings of fact and conclusions of law and that he was harmed by this failure, and (ii) improperly divested him of his separate property by awarding an RV park entirely to Nancy. Because we hold that Brian was not harmed by the district court's failure to issue findings of fact and conclusions of law and that the district court did not abuse its discretion in its property division, we affirm the judgment.
BACKGROUND
Brian and Nancy were married in 1995 and had one child born to the marriage. After Nancy sued for divorce in May 2004, she and the child moved out of the marital residence and lived at Bryan's Country RV Park, a business located in Guadalupe County that the parties had purchased in January 2004 from Nancy's stepfather, E. K. Bryan. This property consisted of an 11.65-acre tract of land on which the RV park was built and an additional adjoining 92-acre tract. Nancy had lived on this property since she was twelve years old. She lived in a trailer home located on the park and operated the park during the pendency of the divorce. Brian resided in the marital residence on Bobolink Street in Comal County that he had bought prior to the marriage and from which he operated a business, Laser Graphics.
The parties agreed to temporary orders, but Nancy thereafter obtained a protective order against Brian due to various harassing acts directed at Nancy and her tenants. After Nancy filed for divorce, Brian's work history became sporadic, and he spent January 25 until April 11, 2006 in jail serving a sentence for assaulting a tenant at the RV park. Brian also violated and pleaded guilty to violation of the protective order. The parties accused each other of various acts of misconduct and reported each other to various authorities.
Nancy paid Brian's mortgage payment from October 2005 until April 2006 to avoid foreclosure of the house even though Brian was ordered to make the house payments under the temporary orders. While Brian was in jail, Nancy did some work for Laser Graphics and received payments which she gave Brian upon his release. Brian acknowledged at trial that Nancy had paid the mortgage on the Bobolink residence beginning in October 2005 and that he had been held in contempt for failure to pay child support. He claimed to work in 2004 but made no income.
The trial of the divorce proceeded on May 15, 2006. The decree recites that the divorce was
"judicially pronounced and rendered in court at New Braunfels, Comal County, Texas, on May 15, 2006 and further noted on the court's docket sheet on the same date, but signed on June 19, 2006." In a motion for new trial, Brian complained that the division of the marital property was manifestly unjust and that the value assigned to the realty awarded to Nancy, evidently the RV park, was incorrect. A judgment in favor of an appraiser-intervenor was signed on July 19 and filed on August 15, 2006. Although Brian timely requested findings of fact and conclusions of law and filed a notice of past due findings, the district court failed to file them. This appeal followed.
DISCUSSION
Findings of fact and conclusions of law
Brian first complains that the district court erred by failing to file findings of fact and conclusions of law in response to his timely request. Under the Texas Family Code, in a suit for dissolution of marriage in which the trial court has rendered a judgment dividing the estate of the parties and upon a request by a party, the trial court shall state in writing its findings of fact and conclusions of law. Tex. Fam. Code Ann. § 6.711(a) (West 2006). A request for findings and conclusions under section 6.711 must conform to the Texas Rules of Civil Procedure. Id. § 6.711(b). The trial court's duty to make such findings is mandatory, and the failure to respond when requests have been properly made is presumed harmful unless the record demonstrates that the complaining party has suffered no injury. See Tex. R. Civ. P. 296; Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996); Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex. 1989); Zeifman v. Michels, 212 S.W.3d 582, 588 (Tex. App.--Austin 2006, pet. denied); Glass v. Williamson, 137 S.W.3d 114, 117-18 (Tex. App.--Houston [1st Dist.] 2004, no pet.). Error is harmful if it prevents an appellant from properly presenting a case on appeal. Tenery, 932 S.W.2d at 30.
In Tenery, the supreme court found the trial court's failure to file findings of fact and conclusions of law to be harmless as it related to the division of property because there was ample evidence in the record to support the judgment. Id.; see also Goggins v. Leo, 849 S.W.2d 373, 379 (Tex. App.--Houston [14th Dist.] 1993, no pet.) (only one theory of recovery and the implied findings necessary for recovery were supported by the evidence).
Because Brian's request was timely, we must determine whether he was harmed by the lack of findings and conclusions. Nancy argues that Brian does not have to guess the reasons behind the district court's order pertaining to its property division, that he raises the issue now raised on appeal for the first time and failed to raise it in the court below, and that there is ample evidence in the record to dispose of the issue he now raises. Moreover, the district judge announced his rulings and stated his reasons at the hearing. We agree.
Although we discourage trial judges from failing to respond to timely requests for findings, in this case the record clearly establishes the reasons underlying the district court's decisions, and there is ample evidence to support the court's determination. (1) The record affirmatively shows that Brian suffered no harm from the trial court's failure to issue findings of fact and conclusions of law.
Property division
Although the court awarded Brian the Bobolink home and the Laser Graphics business, the RV park was awarded to Nancy. Brian's sole complaint about the division of property pertains to the RV park which, he claims, was purchased partially with funds that were his separate property and partially with "community credit." That this property was either separate property or a "mixed character asset" is raised for the first time on appeal.
The family code requires the trial court to divide the estate of the parties in a manner that is just and right, having due regard for the rights of each party and their children, if any. Tex. Fam. Code Ann. § 7.001 (West 2006); see Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139 (Tex. 1977). We review property division issues for abuse of discretion. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998). The trial court has broad discretion in dividing the marital estate at divorce. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981). We must presume that the trial court exercised it properly and may not alter the division unless the complaining party establishes a clear abuse of the trial court's discretion. Id. A trial court abuses its discretion when it acts arbitrarily or unreasonably and without reference to any guiding rules or principles. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). Because a trial court has no discretion in determining what the law is, which law governs, or how to apply the law, we review this category of discretionary rulings de novo. Id. at 840. When we review a ruling that results from the trial court's having resolved underlying facts, however, we must defer to the trial court's factual resolutions and any credibility determinations that may have affected those resolutions, and we may not substitute our judgment for that of the trial court in those matters. See id. at 839-40 (requiring deference to fact-based determinations).
All property on hand at the dissolution of marriage is presumed to be community property. Tex. Fam. Code Ann. § 3.003(a) (West 2006). This is a rebuttable presumption, requiring a spouse claiming assets as separate property to establish their separate character by clear and convincing evidence. Id. § 3.003(a)-(b). Property owned before marriage, or acquired during marriage by gift, devise or descent, is separate property. Id. § 3.001 (West 2006). Where an asset is purchased during marriage with monies traceable to a spouse's separate estate, the asset may appropriately be characterized as separate property. Pace v. Pace, 160 S.W.3d 706, 711 (Tex. App.--Dallas 2005, pet. denied).
The only evidence at trial showed that the RV park was part of the community estate of the parties. The only inventory admitted into evidence showed the RV park as part of the community estate; Brian did not object to the exhibit or challenge its characterization. The parties agree that the property was purchased from Nancy's stepfather in 2004 for $420,000, and that they still owe $365,843. Nancy operated the RV park, and Brian testified that he did some work of an unidentified nature on the property. Both parties sought award of the RV park. Brian objected to the award of the RV park to Nancy not because it was separate or "mixed character" property but on the ground that his daughter "ought to live in a real house" such as the Bobolink residence.
On rehearing, Brian urges that the trial court and this Court in its original opinion erred in denying him his separate property "when the parties stipulated that the property was Appellant's separate property." (2) The parties agree--and Nancy testified--that the Bobolink home was acquired by Brian shortly before their marriage, the debt on the Bobolink house was paid with community funds, and that, after their marriage, a home equity loan of $91,000 was made against the home with $50,000 from the loan used as a down payment on the RV park purchased by the parties and the remainder used for operating expenses of the park. At the time of trial, the parties owed $88,000 on the home equity note. Because the original loan on the house was paid for during the marriage with community funds, Nancy sought an economic contribution to the community estate of $109,000. (3) In addition to awarding Nancy the RV park, the court ordered Nancy to pay off the $88,000 home equity note that had funded the initial purchase of the park. The court then awarded the Bobolink house free of the home equity debt. The court concluded that two loans incurred by Brian after the couple's separation would be Brian's liabilities.
That the Bobolink house was acquired before their marriage does not convert the RV park into his separate property. Based on the evidence (i) that the couple acquired community debt on the house to then acquire the RV park with community credit, (ii) that community property was used to make payments on Brian's separate property, and (iii) that Brian failed to adduce any proof that any portion of the RV park was paid for with funds that can be traced to his separate property rather than the couple's community credit or that there was any intent to repay the park note with his separate property, we conclude that the trial court did not err or abuse its discretion in finding that the park was community property, and awarding the park and notes on the park and Bobolink house to Nancy and the Bobolink house free of home equity debt to Brian.
CONCLUSION
We hold that Brian was not harmed by the district court's failure to issue findings of fact and conclusions of law and that the district court did not abuse its discretion in awarding the RV park to Nancy. Having overruled Brian's issues, we affirm the judgment.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed on Motion for Rehearing
Filed: July 12, 2007
1. We emphasize that oral determinations from the bench are not substitutes for written findings of fact and conclusions of law. See In re Doe, 78 S.W.3d 338, 340 n.2 (Tex. 2002); Narvaez v. Maldonado, 127 S.W.3d 313, 316 n.1 (Tex. App.--Austin 2004, no pet.). We rely on these oral pronouncements solely for the purpose of conducting our harm analysis.
2. Because Brian's citations to the record are to testimony and there are no formal stipulations concerning the subject of this testimony, we assume the reference to stipulations is to the parties' uncontroverted testimony that the Bobolink house was acquired by Brian before the marriage. Likewise, Brian does not dispute that the original debt on the Bobolink house was paid with community funds.
3. Payments made out of the community estate for the benefit of a separate estate, either to pay off a debt of the separate estate or to make improvements, give rise to a claim for reimbursement. Penick v. Penick, 783 S.W.2d 194, 196 (Tex. 1988).
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