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. (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.

Default divorce decree provisions must be supported by evidence

In order to grant divorce by default, trial court must still receive sufficient evidence to substantiate the allegations in the petition; i.e. prove-up is required. A default judgment in a divorce suit is subject to attack for insufficient evidence on appeal. In this restricted appeal, the Austin Court of Appeals finds error on the face of the record and concludes that the judgment should be reversed for lack of evidence on the value of the community property. Award of child support for disabled child is also reversed because no evidence on the relevant factors was presented at the final hearing, and because the amount ordered might have been affected by the property division. Finally, the court reversed the award of attorneys fees, for the same reason.

Magdalena Rodriguez Wolk v. Robert E. Wolk, No. (Tex.App.- Austin, Sep. Mar. 12, 2007)(Opinion by Justice Patterson)(default divorce)(Before Justices Patterson, Pemberton and Waldrop)

Magdalena Rodriguez Wolk v. Robert E. Wolk--Appeal from 261st District Court of Travis County

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-FM-05-006965, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

This is an appeal from a default judgment granting a final divorce decree. In four issues, appellant Magdalena Rodriguez Wolk contends that (i) she meets the requirements of a restricted appeal; (ii) there is no evidence in the record to support the trial court's setting of the amount of child support; (iii) there is no evidence in the record to support the trial court's division of the marital estate; and (iv) there is no evidence to support the trial court's assessment of attorney's fees and court costs. For the reasons that follow, we affirm the decree in part, and reverse and remand as to the issues raised by appellant.

PROCEDURAL AND FACTUAL BACKGROUND

On October 20, 2005, appellee Robert Wolk filed for divorce from appellant. Appellant did not answer or otherwise appear. A brief hearing was held on April 5, 2006. The record shows that Mr. Wolk was the only witness to testify. He testified that he and appellant have a nineteen-year-old child with Down syndrome, that appellant has always been the primary caretaker for the child, and that appellant had taken care of the child for many years. He presented evidence of his income and asked the court to award appellant child support in the amount of $632 per month. Mr. Wolk testified that he had paid at least $700 to $1,500 per month for the last fifteen years in mortgage payments for the home where appellant and their child reside and asked the court not to grant retroactive child support. Mr. Wolk also testified that he paid $408 per month to provide health insurance for the child.

With regard to the division of property, Mr. Wolk testified that he was asking the trial court to award each of the parties "any and all personal effects in their possession" and "any cash, bank accounts, retirement accounts in their possession . . . in their name"; to require each party "to keep and pay any and all debts in their name"; and to divest Mr. Wolk of his interest in the community homestead and award it to appellant with appellant being responsible for "the mortgage and all other matters relating to the property." He testified to the location and legal description of the community homestead and stated that it was the only real estate that he and appellant both owned, but he did not provide testimony on the property's value or the outstanding debt on the property. The trial court signed a default divorce decree granting the relief sought on the same day as the hearing. The decree specified that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred them. On October 4, 2006, appellant filed a notice of appeal.

ANALYSIS

In her first issue, appellant argues that she is entitled to a restricted appeal. A party filing a restricted appeal must demonstrate he filed the appeal within six months of the date the judgment was rendered; he was a party to the suit; he did not participate at the hearing that resulted in the judgment complained of or file any post-judgment motions or appeals; and error is apparent on the face of the record. Tex. R. App. P. 26.1(c), 30; Alexander v. Lynda's Boutique, 134 S.W.3d 845, 848 (Tex. 2004). The "face of the record" consists of all the papers on file in the appeal, including the reporter's record. Vazquez v. Vazquez, ___ S.W.3d ___, No. 14-05-01257-CV, 2007 Tex. App. LEXIS 4713, at *4 (Tex. App.--Houston [14th Dist.] June 19, 2007, no pet.); see also Norman Commc'ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).
Mr. Wolk concedes that appellant has established the first three requirements of a restricted appeal and that only the fourth requirement, error on the face of the record, is at issue. In her second, third and fourth issues, appellant argues that error is apparent on the face of the record as to the trial court's determinations regarding the division of the marital estate, the amount of child support, and the allocation of attorney's fees and court costs. As to the trial court's determinations on these issues, we agree that error is apparent on the face of the record.

Standard of Review

"In a suit for divorce, the petition may not be taken as confessed if the respondent does not file an answer." Tex. Fam. Code Ann. § 6.701 (West 2006). When a respondent in a divorce case fails to answer, the petitioner must still present proof to support the material allegations in the petition. Vazquez, 2007 Tex. App. LEXIS 4713, at *5-6; see also Barry v. Barry, 193 S.W.3d 72, 75 (Tex. App.--Houston [1st Dist.] 2006, no pet.). Because appellant failed to answer or appear, Mr. Wolk was required to present proof at trial to support the material allegations in his petition.

Most appealable issues in family law cases are subject to evaluation under the abuse of discretion standard, including the division of property and the assessment of child support. Sandone v. Miller-Sandone, 116 S.W.3d 204, 205 (Tex. App.--El Paso 2003, no pet.). The test for abuse of discretion is whether the court acted without reference to any guiding principles and rules. Id. at 206. A default judgment of divorce also is subject to an evidentiary attack on appeal. Vazquez, 2007 Tex. App. LEXIS 4713, at *6. When sufficiency review overlaps the abuse of discretion standard, the inquiry on appeal is two-fold: did the trial court have sufficient information upon which to exercise its discretion and did the trial court err in its application of its discretion. Sandone, 116 S.W.3d at 206. Evidentiary sufficiency review comes into play as to the first question. Id. (1)

Division of Marital Estate

In her third issue, appellant contends that the trial court erred in its division of the marital estate. The trial court awarded the community homestead to appellant, but ordered her to pay the "balance due, including principal, interest, tax, and insurance escrow, on the promissory note executed by [Mr. Wolk and appellant] on the [homestead]." The trial court also awarded all personal effects, cash, bank accounts and retirement accounts to the party in possession and ordered both parties to pay "any and all debt" in his or her name.

The Texas Family Code provides that "[i]n a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Tex. Fam. Code Ann. § 7.001 (West 2006). Courts have broad discretion in suits for divorce when dividing the property; but the division must be "just and right." Sandone, 116 S.W.3d at 207.
This case is similar to O'Neal v. O'Neal, 69 S.W.3d 347 (Tex. App.--Eastland 2002, no pet.), also a restricted appeal of a default divorce judgment. In O'Neal, the petitioner was the only witness at the hearing and provided scant testimony. Id. at 348-50. The trial court divided the community property, including real property, cash, bank accounts, retirement accounts, IRA accounts, stocks, bonds and securities between the parties, without evidence of the value of the property. Id. at 348-50. The court of appeals concluded that the trial court had abused its discretion in the division of the estate based on lack of evidence. Id. at 350.

The El Paso court of appeals reached the same conclusion in another case involving a restricted appeal of a default divorce decree. Sandone, 116 S.W.3d at 205. The court reversed the trial court's division of property because there was no evidence of the value of the assets or the amount of the liabilities. Id. at 207-08. Stating that "[w]ithout the ability to determine the size of the community pie, we can make no determination that the slices awarded to each spouse were just and right," the court held "a division of community property cannot be upheld where the record is absolutely devoid of any testimony concerning the value of the property divided by the court." Id. at 205, 207-08; see also Wilson v. Wilson, 132 S.W.3d 533, 538 (Tex. App.--Houston [1st Dist.] 2004, no pet.) (reversing property division due to the "dearth of evidence identifying, describing, and valuing the community estate").

Similarly, this record lacks evidence identifying, describing, and valuing the community estate. Although Mr. Wolk testified as to the location and legal description of the community homestead, and stated that he had made mortgage payments on the home of at least $700 to $1,500 per month for fifteen years, no other evidence was presented as to the value of the property or the outstanding debt on the property. Likewise, no evidence was presented to identify, describe, or value the other assets and liabilities divided in the decree. Instead, Mr. Wolk merely asked that the court allow each party to "keep any cash, bank accounts, retirement accounts in their possession . . . in their name" and that "each party be able to keep and pay any and all debts in their name." Accordingly, we conclude error is apparent on the face of the record and that the trial court abused its discretion in the division of the marital estate based on the lack of evidence. See Sandone, 116 S.W.3d at 208. We sustain appellant's third issue.

Amount of Child Support

In her second issue, appellant contends the trial court erred in its determination of the amount of child support. The trial court applied the child support guidelines, based upon evidence of Mr. Wolk's income, and awarded appellant $632 per month in child support. See Tex. Fam. Code Ann. § 154.130 (West 2002). Because we have remanded the division of the community estate to the trial court, we also remand the determination of child support as such an award may be "materially influenced" by the property division, and we should not substitute our discretion for that of the trial court. See Vazquez, 2007 Tex. App. LEXIS 4713, at *12; see also Wilson, 132 S.W.3d at 539.

The Texas Family Code also specifies four factors that a court "shall determine and give special consideration to" when setting the amount of child support for a disabled child after his eighteenth birthday. Tex. Fam. Code Ann. § 154.306 (West 2002). The factors are:

(1) any existing or future needs of the adult child directly related to the adult child's mental or physical disability and the substantial care and personal supervision directly required by or related to that disability;
(2) whether the parent pays for or will pay for the care or supervision of the adult child or provides or will provide substantial care or personal supervision of the adult child;
(3) the financial resources available to both parents for the support, care, and supervision of the adult child; and
(4) any other financial resources or other resources or programs available for the support, care, and supervision of the adult child. Id.

Though evidence was presented that the child has Down syndrome, that appellant has always been the primary caretaker, and that she has been taking care of the child for years, there was no evidence showing the child's current or future medical needs relating to his disability, the substantial care and supervision required relating to the child's disability, whether appellant pays or will pay for the care or supervision of the child or will provide substantial care, or financial or other resources or programs available for the support and care of the child. We conclude that on the face of the record, the trial court did not have sufficient information "to determine and give special consideration" to the statutorily required factors. See id.; see also Sandone, 116 S.W.3d at 208. We sustain appellant's second issue.

Attorney's fees and court costs

In her fourth issue, appellant contends the trial court erred in its assessment of attorney's fees and court costs. The trial court ordered in the divorce decree that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred the costs. A court may apportion attorney's fees in a divorce action as part of a just and right division of the property. Sandone, 116 S.W.3d at 208. Mr. Wolk, however, did not present any evidence of incurred attorney's fees. Because we have reversed and remanded the division of the marital estate, and because no evidence was presented on the amount of incurred attorney's fees, we sustain appellant's fourth issue and remand the assessment of fees and costs for further consideration by the trial court in connection with the other remanded issues. See Barry, 193 S.W.3d at 76.

CONCLUSION

We affirm the trial court decree in part, and having sustained appellant's issues, reverse and remand for a new trial on the issues raised by appellant.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed in part; Reversed and Remanded in part
Filed: September 12, 2007

1. Because we conclude that the trial court did not have sufficient information to exercise its discretion in the division of the marital estate, the assessment of child support, or the award of attorney's fees, we only address the first inquiry as to each issue appellant raises.

Micklethwait v. Micklethwait (Tex.App.- Austin, Jun. 27, 2007

Jon Scott Micklethwait v. Marina Micklethwait (Tex.App.- Austin, Jun. 27, 2007)(Patterson)(divorce, SAPCR, child custody, international travel restrictions)

AFFIRMED: Opinion by Justice Patterson
Before Justices Patterson, Pemberton and Waldrop

Jonathan Scott Micklethwait v. Marina Karitznova Micklethwait
Appeal from 98th District Court of Travis County


FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. D-1-FM-05-006484, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING


MEMORANDUM OPINION BY PATTERSON

In this appeal from a final divorce decree, Jonathan S. Micklethwait challenges the trial court's discretion in determining the amount of child support payment and the division of marital property, and its failure to prohibit Jonathan's former spouse, Marina Karitznova Micklethwait, from driving with their child in the car or from international travel with the child. We affirm the judgment.

After Jonathan and Marina met over the Internet in October 2002 and Jonathan visited Marina's home in Russia, Marina moved to Texas in January 2004 with her then six-year-old son to live with Jonathan. The couple married on March 28, 2004, and a child was born of the marriage on September 28, 2004. After Marina traveled to Russia with both children to visit her family during the summer of 2005 and returned to Texas on September 27, Jonathan filed for divorce on September 29, 2005.

A bench trial was held on June 19-20, 2006. The trial court signed the final divorce decree on July 20, 2006, naming Jonathan and Marina joint managing conservators. The court ordered, among other things, that Jonathan have the exclusive right to designate the primary residence of the child born of the marriage within Travis County; that Marina receive child support; that Jonathan have the exclusive right to make and consent to medical and dental decisions and treatments; that Marina be entitled to a visitation schedule; that Marina be required to participate in an intensive alcohol treatment program and to attend aftercare as recommended; and that the parties would provide written notice as specified for international travel. At the request of the parties, the court made findings of fact and conclusions of law, which included the following findings of fact:

That it is in the best interest of the child that both parents be appointed joint managing conservators and that Jonathan have the exclusive right to designate the child's primary residence within Travis County;

That it is in the best interest of the child for Jonathan to have the right to make medical decisions involving invasive procedures and that Marina failed to provide and seek proper dental care for their child and her other child;

That Marina suffers from alcoholism and has demonstrated an inability to adequately provide care for and protect the child during extended periods of possession;

That Marina has completed a substance abuse evaluation concluding that no treatment or counseling was recommended, but that a more comprehensive evaluation and participation in an alcohol treatment program, and completion of a parenting program, will enable her to more adequately care for the child;

That the child's visitation with Marina be limited until completion of alcohol treatment and parenting programs when it will be in the child's best interest to visit with Marina in accordance with the schedule set forth in the standard possession order.

The court made additional extensive findings regarding travel and child support. Marina's notice of appeal was dismissed as untimely; (1) Jonathan now timely brings this appeal.

DISCUSSION

Child Support

In his first issue, Jonathan complains that the court abused its discretion in awarding child support payments to Marina even though Jonathan was named the joint managing conservator with the exclusive right to establish the primary residence of the child. He contends that he should not have to pay child support in the amount of $848 per month. The trial court found Jonathan's net monthly income to be $1,736.97 and ordered a monthly child support payment equivalent to 49%, computed using the percentage guidelines of the family code. Jonathan challenges the court's award of child support because he is the joint managing conservator with the exclusive right to establish the child's residence and Marina's visitation is limited until she completes her alcohol and parenting programs.

A trial court's support order will not be disturbed on appeal unless the complaining party shows that the order constituted a clear abuse of the court's discretion. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). A court abuses its discretion when it acts in an arbitrary or unreasonable manner or without reference to guiding rules and principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). The fact that a trial court may decide a matter within its discretionary authority differently than an appellate court does not demonstrate an abuse of discretion, and we may not substitute our judgment for that of the trial court. Id.; see also Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002).

To determine whether an abuse of discretion occurred, we engage in a two-pronged inquiry: whether the trial court had sufficient information upon which to exercise its discretion and whether the trial court erred in its application of discretion. Zeifman v. Michels, 212 S.W.3d 582, 588 (Tex. App.--Austin 2006, pet. denied). The traditional sufficiency review comes into play with regard to the first question; we then proceed to determine whether the trial court made a reasonable decision based on the evidence. Id.

The best interest of the child is the primary consideration in determining questions of child support. Tex. Fam. Code Ann. § 156.402(b) (West 2002); Hollifield v. Hollifield, 925 S.W.2d 153, 155 (Tex. App.--Austin 1996, no writ). For purposes of our analysis, "net resources" include all wages and salary income, self-employment income, and all other income actually being received. See Tex. Fam. Code Ann. § 154.062(b) (West 2002). The court may order support above or below the guideline amount if the evidence rebuts the presumption that application of the guidelines is in the best interest of the child and justifies a variance from the guidelines. Id. § 154.123(a) (West 2002).

Based upon the evidence presented, the trial court found that the application of the percentage guidelines in this case would be unjust or inappropriate; that requiring Marina to pay child support to Jonathan would be unjust or inappropriate; that Marina has no income or resources available; that Jonathan's monthly net resources were $1,736.97; and the amount of child support payments computed under the percentage guidelines in section 154.125 of the family code was $347.39. (2) In light of these findings, the trial court ordered Jonathan to pay child support in the amount of $848 per month, which was 49% of his net resources. The trial court found that even though this allocation varied from the percentage guidelines in section 154.125, it was justified because it was in the best interest of the child; Marina is unemployed and unable to speak English and her employment opportunities are limited by her language skills; Jonathan has a greater ability to contribute to the child's support; Marina has custody of another child for whom she received no child support; Marina will incur expenses for the alcohol program she is required to attend; and Marina has immigration status concerns that may adversely affect her ability to live and work in the United States.

Although Jonathan's income is limited, the court found that Marina has no income and her employment opportunities are limited. Due to her limited language skills, Marina had worked as a housekeeper. It is not clear from the testimony that Marina will be able to provide adequately for her children after the divorce and when she is permitted visitation with the child at issue in this divorce. Jonathan's parents, who are divorced, testified to substantial contributions they had made to both Jonathan and Marina. Mrs. Micklethwait, Jonathan's mother, returned to Texas from Oregon to assist Jonathan and his family; after she left Jonathan, Marina resided with Mr. Micklethwait in New Braunfels, and he assisted her with medical expenses, food, transportation, and living expenses. Based on the record before this Court, we find that the trial court had sufficient evidence upon which to exercise its discretion. Based on the testimony in a difficult case, we find the trial court's decision does not demonstrate an abuse of discretion. We overrule Jonathan's first issue.

Travel

In his second and third issues, Jonathan complains that the trial court failed (i) to enter restrictions on Marina driving a vehicle with the child in it because of her abuse of alcohol and
(ii) to restrict international travel of the child.

With respect to the use-of-alcohol issue, Jonathan testified that, after the birth of their child, Marina abused alcohol. On one occasion, he found her passed out and, on other occasions, he suspected use and testified that he believed she concealed her use of alcohol. Jonathan's father testified that he believed that Marina had used alcohol. A friend of Marina's testified that Marina was an excellent mother and that she had never seen Marina use alcohol. The employer of another friend testified that Marina had visited his house many times to visit her friend, that he had served alcohol, but he had never seen Marina take a drink. Marina also testified that she did not use alcohol. Despite her denials and an evaluation by county health authorities that demonstrated Marina had no problems with alcohol, the trial court ordered that she undergo an intensive alcohol treatment program.

In this case, there was conflicting evidence regarding Marina's use of alcohol. Jonathan sought to show that she abused alcohol; Marina denied its use or abuse. Based upon its evaluation of the conflicting testimony, the trial court struck an appropriate balance by ordering Marina to undergo alcohol treatment and parenting programs. In any event, at trial Jonathan did not seek to prohibit Marina from driving with the child, and he may not raise this issue for the first time on appeal. Tex. R. App. P. 33.1; see also In re B.L.D., 113 S.W.3d 340, 349 (Tex. 2003) (failure to raise complaint at trial waives review of that complaint on appeal).

In his third issue, Jonathan urges that, despite findings on the risk of international abduction of the child by Marina, the trial court failed to prohibit international travel of the child or specify any other limitations on travel except for standard notice provisions. The family code provides that if the court finds credible evidence of a risk of abduction of the child by a parent, the court may impose abduction prevention measures. See Tex. Fam. Code Ann. § 153.503 (West Supp. 2006). For the court to find a credible risk of abduction, section 153.502 of the family code provides that the court may consider various factors, including evidence that the parent:

(1) has taken, enticed away, kept, withheld, or concealed a child in violation of another person's right of possession of or access to the child, unless the parent presents evidence that the parent believed in good faith that the parent's conduct was necessary to avoid imminent harm to the child;

(2) has previously threatened to take, entice away, keep, withhold, or conceal a child in violation of another person's right of possession of or access to the child;

(3) lacks financial reason to stay in the United States, including evidence that the parent is financially independent, is able to work outside of the United States, or is unemployed;

(4) has recently engaged in planning activities that could facilitate the removal of the child from the United States by the parent, including:

(A) quitting a job;
(B) selling a primary residence;
(C) terminating a lease;
(D) closing bank accounts;
(E) liquidating other assets;
(F) hiding or destroying documents;
(G) applying for a passport or visa for the parent or the child; or
(H) applying to obtain the child's birth certificate or school or medical records.

Id. § 153.502(a) (West Supp. 2006). The court may also consider evidence of a parent's strong ties to another country or lack of ties to the United States. Id. § 153.502(b). If the court finds, based on credible evidence, that a risk of abduction exists, it may fashion an appropriate order, including ordering passport and travel controls. Id. § 153.503.

The court made the following findings of fact with regard to the risk of international abduction: the child's residence is in the United States; credible evidence was presented that there is a potential risk of international abduction of the child by Marina; Marina has strong ties to Russia and lacks strong ties to the United States; Marina is undergoing a change in status with the United States Immigration and Naturalization Service that may adversely affect Marina's ability to legally remain in the United States; Jonathan has limited financial resources to pursue the recovery and return of a child abducted to Russia; Marina is unemployed and lacks financial reasons to stay in the United States; Marina has previously threatened to take, entice away, keep, withhold, or conceal the child in violation of Jonathan's right of possession or access to the child; and Marina traveled with the child to Russia during the months of July, August, and September 2005 and returned to the United States on September 28, 2005, with the child as scheduled.

In open court, after ordering Marina not to remove the child from the United States except upon written agreement with Jonathan or after the child has reached the age of six years, the court stated:

I am very sympathetic to the predicament that Ms. Micklethwait is in. I believe that it must be extraordinarily hard to move to a new country, to find yourself in an unhappy marriage, to have two young children, to be worried about money and worried about your ability to work.
However, these were your choices. You weren't brought here. You chose to come here. And it's not true that you can't survive; you can. And I hope that you will not only survive, but thrive; and at the same time, be a better mother to [the child] so that he can have a more normal relationship sharing his time between the two of you.

In its order, the court fashioned a directive allowing either parent with the consent of the other parent to apply for a passport for the child and to have the right to maintain passports; requiring either parent to deliver to the other parent the child's passport upon notice of intent by the parent to have the child travel outside the United States during the period of possession of the parent; allowing extended summer possession by Marina; and requiring various other types of notice as with other domestic travel requirements.

The record supports the balance struck by the trial court in its order. Both parents' testimony revealed a contentious relationship with each other that at times focused on the child. But the evidence demonstrated that, although Jonathan claimed Marina threatened to take the child to Russia and not return, in the only instance when she visited her family with the child in the summer of 2005, Jonathan encouraged her, he bought the tickets, and she returned as scheduled. Two days later, Jonathan filed for divorce. The trial court did not abuse its discretion in refusing to impose limitations on international travel apart from the notice provisions. We overrule Jonathan's second and third issues.

Separate Property

Jonathan also challenges the trial court's award of a portion of Jonathan's retirement account, claiming that the portion he had the right to receive as of the date of his marriage was his separate property and that the community property portion should have been determined based upon his participation in the program from the date of marriage until the date of divorce. Thus, he argues, the portion attributable to the first nineteen months prior to the marriage should be considered his separate property.

A trial court has no discretion to divest title to separate property and award that property to the other spouse in a divorce. Cameron v. Cameron, 641 S.W.2d 210, 219-20 (Tex. 1982). However, under the family code, a presumption exists that property possessed by either spouse during or on the dissolution of the marriage is community property. Tex. Fam. Code Ann. § 3.003 (West 2006). A spouse seeking to overcome this presumption must prove the separate character of the disputed property by clear and convincing evidence. Id. The spouse must trace and clearly identify the property claimed as separate property. In re Estate of Hanau v. Hanau, 730 S.W.2d 663, 667 (Tex. 1987). Separate property retains its character through a series of exchanges so long as the spouse asserting separate ownership overcomes the community property presumption by tracing the assets on hand during the marriage back to property that, because of its time and manner of acquisition, is separate in character. Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975).

The trial court acts as fact finder in a bench trial and is the sole judge of the credibility of witnesses. Murff v. Murff, 615 S.W.2d 696, 700 (Tex. 1981). As fact finder, the trial court may consider all the facts and circumstances surrounding each witness and accept or reject all or part of that testimony; an appellate court may not substitute its judgment for the trial court's assessment of testimony in a bench trial. See In re W.E.R., 669 S.W.2d 716, 716-17 (Tex. 1984); Hailey v. Hailey, 176 S.W.3d 374, 383 (Tex. App.--Houston [1st Dist.] 2004, no pet.).

Jonathan testified that he was employed as an assistant manager at a Mr. Gatti's Restaurant. At the time of trial, he had been working at the restaurant for four years and had a 401(K) plan with $10,800 in it. From April 2002, when he started working at Mr. Gatti's, until March 2004, when he married, any contribution would be considered separate property. But when asked when he began contributing to the retirement plan, he responded, "I would say maybe four or five months after starting with them." Our review of the record does not show any other evidence concerning the retirement plan, and Jonathan does not cite us to any relevant record references.

The court expressed doubt that Jonathan had carried his burden to establish his separate property interest in the plan. The court then concluded that "given the disparity in their resources and [that] she is flat destitute," it would be fair and equitable to consider the retirement account as community property and split equally between the parties. Jonathan did
not object at trial to this allocation.

Based upon the evidence before it, the trial court concluded that Jonathan failed to carry his burden to establish that any portion of the retirement account was separate property. Given the paucity of testimony and Jonathan's failure to present clear and convincing evidence showing any portion of the retirement account to be his separate property, the trial court's allocation is supported by the evidence. We find no error or abuse of discretion in the trial court's award of the retirement account.

CONCLUSION

Based on the record before us, Jonathan has not demonstrated that the trial court erred or abused its discretion in awarding child support, dividing the marital estate, or failing to further restrict Marina in driving or international travel with the child. Having overruled Jonathan's four issues, we affirm the judgment of the trial court.

Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed
Filed: June 27, 2007

1. See Order, Micklethwait v. Micklethwait, No. 03-06-00500-CV (Tex. App.--Austin Dec. 20, 2006), available at http://www.3rdcoa.courts.state.tx.us/opinions/HTMLOpinion.asp?Opinion ID=15499.

2. Section 154.125 specifies the presumptive schedule to be followed if the obligor's monthly net resources are $6,000 or less, as they are here. See Tex. Fam. Code Ann. § 154.125 (West 2002).