INTERESTING CASES: August 1, 2018

/INTERESTING CASES: August 1, 2018

INTERESTING CASES: August 1, 2018

INTERESTING CASES:  August 1, 2018

Sallee S. Smyth

 

  1. Williams v. Finn, 2018 Tex. App. LEXIS 5154 (Tex. App. – Houston [1st Dist.] July 10, 2018) (mem. op.) (01-17-00476-CV)

 

H & W divorced in 2009.  W filed a MTM in 2011 and the parties reached agreements on these issues in late 2014.  Both parties sought to have judgment entered on the agreement and both parties filed proposed orders.  The trial court signed H’s proposed judgment on March 6, 2015.  W filed a MNT on March 30, complaining that the judgment as entered did not comply with the terms of settlement.  While the MNT was pending H & W attended mediation and reached a new settlement, signed on May 14, 2015.  Within the new MSA the parties agreed it was not subject to revocation and further provided that future disputes would be decided in arbitration.  The MSA further provided that W’s motion for new trial would be granted and the March 6 order set aside. to allow for entry of the new judgment.  The next day W filed a notice of settlement and a proposed order granting a new trial and providing for the newly agreed terms was filed on March 29.  The trial court never signed the proposed order.  Thereafter, in September 2015 W filed another MTM seeking to enforce the terms of the May 2015 MSA.  H filed a notice revoking the MSA.  W further sought to compel arbitration.  The trial court ordered the parties to arbitration, the arbitrator issued an award in compliance with the May 2015 MSA and the trial court signed a final judgment.  H appealed.  H challenged the validity of the May 2015 MSA, asserting that it expired by its own terms when the trial court’s plenary power over the prior modification suit expired without an order being signed.  H argued that the MSA was effectively an MSA which was overruled by operation of law and W was required to appeal from the March 6 judgment before she could seek to enforce the May 2015 MSA.  H argued that since W did not appeal, she forfeited her rights under that agreement.  H also argued that the trial court erred in compelling arbitration because that agreement was contained in the 2015 MSA which he claimed was no longer valid.  The COA noted that the May 2015 MSA could not be considered an amended MNT because it was not timely filed as such and could not have preserved error upon which W could have appealed.  Amended MNT’s are due within the same initial 30 day deadline as an original MNT if intended to preserve error.  The MSA in this case as filed after the initial 30 days after judgment expired and thus W could not have appealed from the trial court’s failure to include it within its judgment.  The COA further held that the MSA was fully valid because it was signed while the trial court still retained plenary power over the March 6 judgment, effectively determining that the MSA was signed while the first modification suit was pending.  The COA held that the MSA was valid at the time it was executed and nothing in the terms of the MSA would have caused it to expire and nothing in the governing statutes dictate that it becomes invalid once the trial court’s plenary power expires.  As such, when the trial court failed to enter an order on the MSA during its plenary power over the original suit, nothing prevented W from seeking to enter a judgment on that same MSA in a future proceeding, i.e. the September 2015 modification.  As such the trial court did not err in compelling arbitration nor in signing a judgment based on the parties’ MSA.  Judgment affirmed. 

 

  1. In re D.Y., 2018 Tex. App. LEXIS 5352 (Tex. App. – Dallas July 16, 2018) (mem. op.) (Cause No. 05-16-01412-CV)

 

H & W married in December 2010.  The parties executed a pre-nup which included terms providing that property acquired solely in the name of one party would be their separate property regardless of the source for purchase.  W had two adopted daughters.  Together H & W had twin boys in 2012.  W filed for divorce in May 2015.  In October 2016 W amended her pleadings and sought an annulment and further raised claims of fraud and theft against H.  At trial W testified that prior to marriage, H had misrepresented various things to her regarding his background, claiming he was only married once before (actually twice), he had been a career marine (only served a few months because he was underage), he had not served in the army (he actually had but was discharged for admitted homosexuality), he had two college degrees (he had none), he taught math at a local college (he did not) and his average annual earnings were always between $100K and $225K (SS wage info showed only one year over $100K).  W testified that had she known of all these misrepresentations she never would have married H.  Evidence further established that during marriage W’s company issued a check to purchase a trust for $45K and H titled the truck solely in his name and thereafter sold it and kept the proceeds.  The trial court annulled the marriage and awarded W damages against H for the $45K.  H appealed.  The COA found that there was sufficient evidence to support W’s claim that H fraudulently induced the marriage.  H and W both testified and the trial court was allowed to determine their credibility.  In addition, a psychologist who performed a custody evaluation testified and his report was admitted in evidence.  Through the psychologist H admitted to many of the false facts and the psychologist felt that had there been more honesty the marriage likely would not have occurred.  The COA found that the evidence was sufficient to grant an annulment based on fraud and affirmed the judgment.  As to the damage award, H claimed that because the truck was titled in his name it was his separate property under the pre-nup and he had an absolute right to sell it.  However the COA found that because the pre-nup became valid upon marriage, and further because the marriage was annulled, there was in effect no marriage and the terms of the pre-nup were unenforceable.  Further, W testified that her company provided the funds, it was to be company truck and she did not consent to title in H’s name, so she wanted to be reimbursed for the purchase price.  The COA affirmed the damage award.

 

  1. Land v. Land, 2018 Tex. App. LEXIS 5511 (Tex. App. – Houston [14th Dist.] July 19, 2018) (Cause No. 14-17-00013-CV)

 

H and W divorced in 2014.  As part of an AID and thereafter a final decree, W was awarded 53% of H’s net 2013 end of year bonus as paid to H in 2014, if and when paid.  H was awarded 47% of the net 2013 bonus award.  In addition, H was ordered to return to W her diamond engagement and wedding ring.  In February 2014 H received his 2013 year end bonus.  The pay stub reflected that the total amount of the bonus was $460K and identified two pre-tax deductions, one for $75,000 as a deferred annual bonus award and $6,000 for a personal savings contribution.  Thereafter approximately $108K was deduced for taxes leaving a net bonus of $270,289 of which H paid 53% to W.  In 2015 W filed a petition to enforce and thereafter amended to seek her share of $81,000 in undivided property.  The trial court granted a no evidence MSJ on the enforcement claims but did not address the undivided property claim.  W amended and asserted breach of contract claims for failure to pay her share of the $81,000 deducted from the bonus as well as H’s failure to deliver the rings.  After trial the court ordered H to pay over W’s 53% of the $81,000, awarded W any insurance proceeds recovered by H for the rings and awarded fees to W for $30,500.  H appealed arguing that any award of further amounts from his bonus was an impermissible modification of the property division.  The COA determined that the AID was not ambiguous and that the AID divided only the “net amount” of the year end bonus paid but did not divide the pre-tax amounts deducted totaling $81,000 and those remained subject to division.  Because the parties decree intended to effect a 53/47 split of property, the trial court did not err in awarding this amount to W.  There was disputed testimony regarding the rings and who was the last to possess them, however the COA found that the trial court was allowed to believe W and that the evidence supported her breach of K claim.  The COA reversed the award of attorneys fees because the amount awarded included charges by non-attorney staff and those amounts were not supported by evidence regarding the staff’s qualifications or supervision.  That issue was remanded for a new calculation of attorneys fees only.

 

  1. Guimaraes v. Brann, 2018 Tex. App. LEXIS 5587 (Tex. App. – Houston [14th Dist.] July 24, 2018) (Cause No. 01-16-00093-CV)

 

H and W married and had one child, born in Houston in 2009.  In 2012 W filed for divorce in Harris County.  H filed a countersuit.  In December, W sought temporary orders.  The parties executed agreed temporary orders in January 2013 naming them JMC, awarding periods of possession and designating the child’s primary place of residence as Harris County with W having the right to designate his residence within that area.  In May 2013 the parties signed a Rule 11 agreement allowing W to take the child to Brazil for a period of about 3 weeks with H to have possession for a period of time immediately upon W’s return.  W traveled to Brazil with the child but did not return.  W initiated suit in Brazil and the court there issued a temporary order giving W custody.  H filed an emergency motion in the TX court and W appeared only by counsel.  The TX court issued orders appointing H as sole MC and disallowing W all physical access to the child until further order of the court.  Thereafter H initiated a proceeding under the Hague Convention and sought an injunction and the return of the child to the US.  The petition was transmitted through the Central Authority to Brazil and H’s request was denied later that month.  The Brazilian court found that although W’s removal was wrongful, the child was already settled in Brazil and thus there was an applicable exception that precluded orders for his return.  In April 2014 a Brazilian appellate court found that the child must be returned to the US but noted that under the circumstances it was not advisable for the child to return to the US without his mother because the evidence showed that the child would be cared for by a babysitter and not the father who worked many hours as a physician.  The appellate court recommended that the status quo be maintained until there was better evidence of how the child would be taken care of upon return to the US.  In July 2014 another Brazilian court upheld this appellate decision.  In the fall of 2014 W filed a plea to the jurisdiction and motion to abate or dismiss in the TX court arguing that TX lost subject matter jurisdiction over the child based upon the Brazilian court rulings.  W appeared by counsel only.  The court received evidence of all the Brazilian pleadings and heard testimony that H traveled to Brazil to visit the child about every two months.  The trial court denied the W’s motions and W’s petition for mandamus was denied.  H asserted claims for interference with child custody under TFC Chapter 42.  The case went to trial in February2015.  W filed a motion to appear by Skype or by phone, which H opposed.  The basis of W’s motion was simply that she could not return for trial in person because she feared she would be arrested when she arrived in the US.  The trial court denied her motions and so she appeared through counsel only at trial.  The court granted a divorce, named the parties JMC, gave H primary custody, issued orders for possession and support and awarded H $2MM in damages under Chp. 42, $425K fees under Chp. 42, $250K in exemplary damages under Chp. 42, $160K in fees for the divorce proceedings and ordered W to pay $70K to the amicus.  The court signed a final decree and W filed a motion to reform the judgment which was granted.  Thereafter the court signed a reformed decree.  In July 2015, before the reform decree was signed, the Brazilian courts issued a final order denying H’s Hague petition, finding two exceptions existed to the child’s return (the “well-settled” defense and the “grave harm” defense).  W filed a post-judgment motion claiming newly discovered evidence based on this Brazilian court award.  The TX court refused to grant comity to the Brazilian decision and W appealed.  As to W’s subject matter jurisdiction claims the COA determined that because a Hague action is merely utilized to remedy issues regarding abduction and not to determine the merits of custody, none of the Hague rulings worked to deny the TX court of its subject matter jurisdiction over the custody proceedings.  Further, the COA found that the Brazilian courts misapplied the two Hague proceeding “exceptions” and as such the TX court was not required to grant comity or full faith and credit to the Brazilian rulings.  First, as to the “well-settled” exception, the COA noted that it only applies if the party bringing the Hague action waits more than a year after the removal to file it.  In this case H filed his Hague suit well within the first year.  Further, as to the grave harm exception the COA noted that the evidence must truly establish that the child will suffer some extreme harm, whether physical or psychological, if returned and that evidence demonstrating that the child is very emotionally attached to his mother is not sufficient to meet the level of harm required.  The COA likewise found that there was no abuse of discretion in denying W’s motion to appear at trial by Skype and that she made a choice not to appear to avoid the consequence of her own actions and this was not a sufficient reason.  Further the COA found that overall the evidence was sufficient to support all the damage awards.  Evidence at trial showed that W convinced H to agree to her travel to Brazil for a wedding but that W had actually enrolled the child in school and obtained employment there without telling the H of her plans to stay.  Further, W made various outrageous claims against H in Brazil.  A psychologist for H testified as to his emotional devastation when his son was taken and thereafter which he anticipated would continue until the child was returned and the child had not been returned.  The COA further found sufficient evidence supporting the division of property, child support and attorney fee award related to the divorce.  Judgment affirmed.

 

  1. Cantu v. Cantu, 2018 Tex. App. LEXIS 5596 (Tex. App. – Houston [14th Dist.] July 24, 2018) (Cause No. 14-17-00175-CV)

 

H and W married in 1979 and were both working pharmacists.  H encouraged W to attend medical school which she did and then opened her own ophthalmology practice.  Over the course of the marriage H acquired five pharmacies and two clinics which he managed and the parties accumulated substantial wealth.  In 1985 W learned that H had an affair but she forgave him.  In 2000 W filed for divorce but thereafter the parties reconciled.  In 2013 W suspected H was cheating and hired a PI to confirm her suspicions.  W again filed for divorce.  Within the divorce proceeding W sought discovery, she sought an accounting from H’s businesses, she secured orders for a forensic examiner to review H’s business computers and learned that H ran scrubbing programs even after being requested to preserve evidence for the divorce.  H hired an expert to review more than 30,000 pages of discovery.  The expert issued a report claiming more than $7MM in fraud in a variety of categories which included deficiencies in pharmacy and clinic sales, money spent on girlfriends, unaccounted for withdrawals, business credit card expenditures deemed fraudulent for personal use and extramarital entertainment.  Because many records were missing, the expert used an “extrapolation” methodology for several of these claims.  For example, she determined a monthly average of discrepancies between pharmacy sales and pharmacy deposits and then she would use this average to add to the pharmacy fraud claim for each month in which she did not have records.  The experts report was admitted at trial without objection.  H testified to refute many of the claims and one of his employees testified likewise trying to explain how the pharmacy and clinic businesses operated.  H also had his own expert who was critical of the W’s expert, her methodologies and her conclusions.  Ultimately, the trial court found that the community estate should be reconstituted in the amount of $3.9 MM and thereafter awarded H the entirety of that claim along with some additional property determining that the award was a 55/45 split with the reconstitution claim.  H appealed challenging the legal and factual sufficiency of the evidence supporting the fraud claims.  The COA reviewed each of the 11 categories and determined that although some of the expert’s calculations were erroneous (i.e. the expert included W’s credit card charges and charges for the benefit of the parties’ adult children as part of H’s fraud), the COA assumed that the trial court did not include these in its conclusions.  Overall, the COA determined that the evidence actually supported over $4.2MM in fraud and thus the trial court’s reconstitution award of $3.9 MM was in the proper range.  As to H’s challenge to the methodology and reliability of W’s expert, the COA found the error waived because H did not object to the methodologies in the trial court and did not object to the experts report when admitted into evidence.  As to the overall division, H complained that the division was an 88/12 split when the reconstitution was not included.  The COA found that there was more than sufficient evidence permitting a disproportionate division of property, including H’s own admission that he had affairs over the life of the 30 year marriage and his failure to account for many of the wasting claims asserted against him.  Judgment affirmed.

 

  1. Maldanado v. Maldanado, 2018 Tex. App. LEXIS 5582 (Tex. App. – Houston [1st Dist.] July 24, 2018) (Cause No. 01-16-00747-CV)

 

H and W married in 1988.  In 1990 the parties formed Document Services of Texas, Inc. (DST) and W was named as the sole owner of all the stock.  The company provided litigation support services such as copying documents and retrieving medical records.  H began working for the company in the 1990s and from 2005 to 2013 H handled the finances.  In 2008 the parties formed ESBEC LLC which purchased a building where DST did business.  W spent long hours working for the business but H complained consistently that they had no money and he claimed it was because people were not paying their invoices.  W became suspicious and begin searching for information on the business finances and discovered that large sums of money had been withdrawn from both business and personal accounts.  W confronted H and he told her she would never find the money.  The parties continued to argue over the funds and after one particularly heated argument witnessed by employees, H wrote a letter to W and stated in the letter that he was giving her all of the savings and checking accounts they held together and giving her both businesses DST and ESBEC.  W filed for divorce.  W filed a MSJ claiming both DST and ESBEC as her separate property based on the gifts from H.  Regarding DST, W offered evidence of their incorporation, stock certificates held solely in her name and H’s letter.  Regarding ESBEC she relied solely on H’s letter.  H responded and claimed that he was under duress when he signed the letter and that he did not intend to make a gift.  The trial court granted the MSJ and found both to be W’s separate property.  At trial, H asked the court to reconsider the MSJ but this was denied.  However at trial the court did permit some evidence regarding the disputed facts surrounding H’s claim that he did not intend to make a gift.  The trial court however concluded that both businesses were W’s separate property.  H appealed.  The COA found that the summary judgment evidence was sufficient to establish that DST was W’s separate property.  (See comment/concern below)  H argued that he never delivered the property to W which was an element of gift because he continued to work there and manage the finances after he wrote the letter.  The COA found however that all of the stock was always in W’s sole name and that H only owned his community interest in the stock held in her name and thus no actual transfer and delivery of the stock was required.  Further, H’s continued use and authority over the accounts did not affect his delivery of the gift.  As to the duress claim, the COA found that H did not suffer from extreme pressure in writing the letter because there was no evidence that W threatened him in any manner.  As to ESBEC, the COA found that W’s reliance solely on H’s letter, without more, was insufficient to establish that H delivered the gift of his interest to her.  Because the mischaracterization of ESBEC affected the overall division, it was necessary for the COA to reverse and remand the entire property division.  Comment:  The opinion clearly indicates that DST was incorporated during marriage and that all stock was simply placed in W’s name.  The opinion further recognizes that the H’s letter only gifted the H’s community property interest in the stock.  Although there is no discussion or facts within the opinion which establish why or how W’s interest in the stock (of a company established during marriage) could be her separate property, the trial court found all of DST to be W’s separate property (her own interest and the H’s interest as gifted to her) and the COA affirmed that ruling.  It is curious how the COA determined that H’s interest in DST was community property prior to his gift but W’s was interest in the same stock was not.  Perhaps this will be further considered on remand. 

2018-08-02T08:25:49+00:00 August 2nd, 2018|SideFeatured-Home|