INTERESTING CASES: September 5, 2018
Sallee S. Smyth
- In the Interest of L.M., 2018 Tex. App. LEXIS 5841 (Tex. App. – Dallas July 27, 2018) (mem. op.) (Cause No. 05-17-00601-CV)
H and W were married for 18 years and had 3 children. In the early years of marriage the parties lived in CA. While there, H was involved in an auto accident and suffered significant injuries. As a result, H was permanently disabled and recovered disability payments. H further settled his personal injury claims and received about $915K in damages which he deposited into a separate account solely in his name. W recovered about $190K for loss of consortium damages and she placed these in an account in her sole name. Thereafter, H and W purchased a condo for $57K ($50K of H’s $$ and $7K from W). In 2011 they moved to TX and bought a house. H put $203K of his PI funds into the down payment. At trial H testified to the use of his separate funds. The PI settlement document was not offered into evidence. The trial court ultimately ordered the TX house sold with the proceeds divided 50/50 after H was reimbursed for his $203K downpayment. The CA condo had been sold with the money placed in trust. As to these funds the court awarded each party 50% after H was given $50K and W was given $7K to reimburse their original contributions. W appealed. The COA acknowledged that H carried the burden of establishing what portion of his PI recovery might constitute separate property. Because H did not offer the PI settlement document into evidence or provide any other clear and convincing evidence as to what amount of the $915K payment might have been for pain and suffering as differentiated from what might have related to lost earnings, etc., he did not adequately carry his burden to prove that the funds contributed to the CA condo or TX house were separate property. As such, the COA concluded that it was error for the trial court to characterize these funds as H’s separate property. However, the COA notes that to prevail on appeal, W must not only establish error in the division, she must likewise establish harm. In this case, W did not attempt to show harm in the division and further there were no FFCL which established the value of all the property divided by the trial court. As such, the COA had no way of knowing how the estate was divided in terms of valuation and thus the court could not conduct a harm analysis of the division. Judgment affirmed. COMMENT: As other previously summarized cases have provided, FFCL are essential in an appeal from a bench trial dividing the marital estate. If there is even the slightest chance that a client is considering an appeal, it is imperative that the lawyer timely seek findings, specifically those mandated under TFC 6.711 when the issues involve the characterization, valuation and division of property upon divorce.
- In re Marriage of Russell, 2018 Tex. App. LEXIS 5874 (Tex. App. – Houston [14th Dist.] July 31, 2018) (14-17-00618-CV)
Within their divorce proceedings, H and W signed an MSA which included terms for the division of property. The MSA was filed within the trial court. The MSA provided in part that W was to receive $201K from the H’s 401K plan and further that he was to make 12 consecutive monthly payments of $750 to W beginning in October 2015. In November 2015 W appeared in court with her counsel to “prove-up” the divorce. H and his counsel did not appear. W testified that she and H had reached an agreement through an MSA filed with the court. The only specific terms of the MSA that were mentioned in the prove-up reflected that H was to receive the house. W asked the court to approve her divorce and the court stated it was granting the divorce and the name change. The docket sheet reflected that the divorce was proved up and set an entry date. Thereafter the trial court signed a final decree (which was approved as to both form and substance by both parties). The final decree’s only reference to the MSA was a provision which stated that if the decree differed from the MSA, the decree controlled. The decree awarded H all of his 401K and failed to segregate the $201K specified to W in the MSA. Further the decree awarded W only one $750 payment due in October 2015 and made no mention of the additional eleven monthly payments referenced in the MSA. Neither party filed a post judgment motion and neither party appealed. Plenary power expired in December 2015. In April 2016 W filed a motion for judgment nunc pro tunc (NPT), arguing that the decree was incorrect because it did not comply with the MSA. The trial court granted W’s motion and entered a nunc pro tunc decree which awarded W $201K from H’s 401K and the additional $750 payments. H filed a motion to set aside the NPT judgment as void arguing that the trial court did not render judgment on the MSA at prove up, but instead rendered judgment on the property division when it signed the final decree. The trial court denied H’s motion and H appealed. The COA Opinion offers a clear discussion of the difference between clerical errors (which may be corrected by NPT) versus judicial errors (which may not be corrected by NPT) and these examples are specifically directed to matters involve divorce settlement agreements and MSA’s. The COA looked to the specific circumstances occurring at the divorce prove-up and noted that never did the W request the court to render judgment on the MSA and the court’s words of rendition (or its docket notations) likewise did not render judgment on the MSA. Instead they only rendered a divorce and a name change. The COA notes that even if the trial court renders an “incorrect” judgment, it cannot then correct it by NPT because this would be a correction of a judicial error which cannot be accomplished by NPT. The COA cites to various other opinions wherein the court renders judgments on a decree which contains drafting mistakes by counsel and these mistakes effectively become the judgment of the trial court which can only be corrected during the trial court’s plenary power. In effect, the trial court rendered judgment on the property division at the time it signed the incorrect final decree and thus these mistakes in the division could not be corrected by NPT. Reversed and original final decree (with mistakes) reinstated. COMMENT: This case highlights the importance of lawyers being particular in requesting a specific rendition and for judges to be particular in pronouncing them. Consider the following: If you obtain an MSA and then begin the process of drafting your final judgment without obtaining a specific rendition on the MSA, it is possible that when you do the prove-up at the time you seek entry of the decree, rendition will occur at the time the decree is signed and operate as to the terms within that decree, even if those terms are incorrect. In other words, the terms of the decree (even if different from the MSA) will be the terms upon which the trial court rendered judgment. If however you specifically prove up your divorce and seek a specific rendition on the MSA before the decree is presented and signed, mistakes in the decree that do not comply with the MSA can still potentially be cured by NPT because there is a discrepancy between the decree entered of record and the decree as rendered by the court. This would be a clerical error, not a judicial one. To avoid the consequences that W’s lawyer is likely facing in this case, be sure during prove-up of divorce and MSA that you offer the MSA in evidence, ask the party if they are requesting not only a divorce (which is a cause of action separate and apart from a property division) but that they are also requesting the court to approve the MSA and to render judgment upon the MSA terms as reflecting the agreement regarding division of property as well as any child related issues it may contain. In doing so, you will insure that if discrepancies are found between the decree and the MSA, they can be rectified.
- In the Interest of C.M.F., 2018 Tex. App. LEXIS 6327 (Tex. App. –Dallas August 13, 2018) (mem. op.) (Cause No. 05-16-01385-CV)
H and W entered into an AID which was thereafter incorporated into their final decree of divorce. The terms of the AID awarded W 50% of H’s then existing shares in a medical limited partnership referred to as THH. H owned 56 shares so effectively W was awarded 28. Because W could not own actually own the shares in accordance with the terms of the partnership agreement, the AID provided that W would offer to sell 10 of her shares in THH to THH and H and if THH chose to repurchase them, H would purchase the remaining 18 shares from W at FMV which was determined to be $31K per share. Payoff of amounts owing in these events were to be made in specified annual installments. The offer of sale to the partnership was required under the terms of the partnership agreement. The AID made no mention of what would happen if THH chose not to buy the 10 shares but instead allowed H to do so. W offered the 10 shares to THH and to H and H opted to buy them. Calculating what he owed her for these 10 shares ($310K), H made the initial installment payment. H did not however pay W for the other 18 shares. In addition to these terms the AID also provided that W was to receive a share of H’s 2015 partnership distribution if the distribution was based on H’s ownership of all 56 shares. In that event H was to pay W a percentage of the distribution. If the distribution was based only on his ownership of 46 shares (presumably because 10 shares had been reclaimed by the partnership) then W was owed nothing. Ultimately H was awarded his 2015 distribution based on his ownership of all 56 shares but he did not pay W as the AID required. W brought a Chapter 9 enforcement claim. The trial court construed the terms of the AID and determined that there was a latent ambiguity discovered only when the circumstances finally played out (that being when TTH did not buy the 10 shares offered by W because the AID was silent as to what would occur in this event). The trial court determined that it was the parties’ intent for W to receive full FMV for all of her 28 shares. The trial court granted enforcement and ordered H to pay the additional amounts due and owing to W under the AID, both for the additional 18 shares and for the 2015 partnership distribution. H appealed. On appeal, H argued that the AID was not ambiguous and that it obligated him to pay W for the additional 18 shares based solely on the value paid by TTH for the other 10 shares, which in this case was zero because TTH did not buy those shares. H argued that the trial court’s action amounted to an impermissible modification of the property division. The COA reviewed the terms of the AID and agreed with W that there was an ambiguity which the trial court was authorized to construe and further which the trial court was permitted to clarify and enter further orders to implement the division which the parties had genuinely intended. The COA agreed with W that the trial court’s orders were authorized under Chapter 9 as a clarification and implementation of the property division, not a modification, finding that H’s interpretation of the AID was inconsistent with the parties’ intent that the W receive value for all of her 28 shares. Further, the COA found that the evidence supported payment of a share of the 2015 partnership distribution to W because at the time of the distribution, H was a record owner of all 56 shares in the partnership and thus the AID was clear that he was obligated to pay her in these circumstances. Judgment affirmed.
- In the Interest of T.A.L., 2018 Tex. App. LEXIS 6365 (Tex. App. – Amarillo August 14, 2018) (mem. op.) (Cause No. 07-17-00274-CV and Cause No. 07-17-00275-CV as consolidated)
M and F were biological parents of two children TAL and CEL. Further, during their marriage, CPS had placed a third child, TS, with M and F when her parent’s rights were terminated and M and F were named as non-parent JMC’s of TS along with the DFPS. Neither M nor F were obligated to pay support for TS as joint conservators. Thereafter M and F divorced and in that case were appointed JMC of their biological children with M having primary rights. Sometime later TAL decided to go live with F and M did not oppose her wishes. Thereafter M remarried and transferred CEL to a new school. F subsequently filed an MTM and sought SMC of both biological children and child support from W. W filed a MTM in the cause number affecting TS, asking that she be named SMC of TS and F filed a counter petition seeking the same relief. The two modification cases were tried together. The trial court split custody of TAL and CEL (the bio children) between M and F and ordered M and F to pay child support to the other parent for the support of the child in their primary custody. DFPS was dismissed from the suit before final trial and the court appointed M and F as JMC of TS with M named as her primary conservator. H was ordered to pay child support for the benefit of TS. H appealed from the final judgments in both modification suits and these were consolidated by the COA. Regarding the bio children, F complained that the trial court erred in splitting custody without finding clear and compelling reasons to do so. The COA notes that although TFC 153.251(c) states that it is preferable for the court to keep all siblings together for period of possession, this is only a factor to be considered in the courts overall obligation to determine what is in the best interest of the children. The COA held that there is nothing in the Code that requires a court to find clear and compelling reasons to split custody and the trial court’s failure to do so does not indicate that an abuse of discretion occurred. In this case the COA notes that F did not demonstrate how split custody was not in the children’s best interest. In a second point, H argued that the trial court erred in refusing to interview TAL who was over the age of 12. The COA noted that while the statute is mandatory when an interview is requested, in this case there was no dispute that TAL would be living with F because she had already transitioned to F’s residence before suit was filed and M never opposed that move. Further, the COA found it could not determine if the failure to interview was harmful to F because no offer of proof was made of what the child might have said. Finally, F argued that there were no pleadings from M seeking child support for TS and the issue was not tried by consent. The COA reviewed the record and determined that while M did not plead for such relief, it was clear throughout trial that M was seeking c/s for TS and F never objected so his consent to try this issue was implied. Judgments affirmed. COMMENT: This is the first time I can recall seeing a COA mention the absence of an offer of proof in connection with a trial court’s failure to interview a child under TFC 153.009. There are cases which address whether or not these interviews are really “evidence” if the child is not placed under oath. If the interview however is considered evidentiary, an offer of proof would be required to preserve error so the COA could examine whether or not exclusion of such evidence was harmful. It places the parent and counsel desiring the interview in an unusual position if the request is denied and an OOP becomes necessary. Do they attempt to bring the child to court regardless and allow them to testify in an OOP? Do they have the child write out a statement of their thoughts and desires and offer the child’s written statement as the OOP? Does the parent or lawyer simply summarize what they think the child would have said? In doing so, does this lend support to the idea that this parent has coached the child or pressured the child by discussing the case and the outcome? What is the most appropriate way to protect your record while simultaneously protecting the child? The answers don’t seem all that easy to me.
- Kellsall v. Haisten, 2018 Tex. App. LEXIS 7207 (Tex. App. – Houston [1st Dist.] August 30, 2018) (Cause No. 01-17-00389-CV)
M and F divorced in 2010. Thereafter F filed a suit to modify which was pending for 1.5 years before a settlement was reached. In that modification order, M remained as primary parent, F received expanded possession and orders provided that the child would remain in counseling and M would consult with the counselor to work on coming up with an appropriate title for the child to call M’s new husband other than “daddy.” Within 9 months after this suit was resolved, F filed a second modification and sought sole conservatorship. His pleading did not include the required affidavit. Immediately upon filing F began sending discovery requests to M and subpoenas to the counseling service. M filed a general denial and a request for fees along with a claim that the suit was a frivolous modification under TFC 156.005. M also filed motions for protection seeking to prevent F from obtaining the 6 year old child’s psychological records. The trial court granted the protective orders and two days later F non-suited his modification claims effective January 2017. Thereafter M sought a trial date on her request for fees which was set in May 2017. F argued that the trial court lost plenary power because his nonsuit was a final judgment. The trial court disagreed and held a hearing on M’s request for fees. At the conclusion of the evidence the trial court awarded M $11,800 in fees and costs based on a finding that the F’s modification suit was frivolously filed. The court’s order included language that all other relief was denied. F appealed. The COA initially determines that a claim for attorneys fees is a claim for affirmative relief, even when it is included within a general denial and that the pursuit of such claim is not foreclosed based on a non-suit pursuant to TRCP 162, determining that it was in effect a counter-claim. F argued that such a claim could not be a counter claim because M failed to pay the required filing fee for a counter claim. The COA says that the failure to pay a filing fee is not fatal and the trial court has discretion to hear and consider such claims even when required fees have not been paid. Finally the COA determines that the evidence sufficiently supported the trial courts finding that F’s suit was frivolous. H admitted that he filed suit primarily as a means to obtain the child’s medical records. The COA further noted that although F made various allegations against M (including abuse by spanking) which justified his request for SMC, F nevertheless non-suited these claims within 2 days after being denied access to the child’s records. The COA further examined the evidence which supported a continuing course of conduct by F to harass M, justifying the fee award. Judgment affirmed.