INTERESTING CASES: September 2, 2020

Sallee S. Smyth

  1. In re Marriage of Lopez, 2020 Tex. App. LEXIS 6175 (Tex. App. – Houston [14th ] August 6, 2020) (mem. op.) (Cause No. 14-18-00797-CV)

H and W married in 1994. W asked H for a divorce and they separated in early 2017. At the time of separation, the parties agreed that W would receive the marital residence in exchange for releasing H from any future child support obligations. The agreement was not reduced to writing and H changed his mind because he found out that W had cheated on him. H moved out and W filed for divorce. Shortly after the filing, W claimed that H came to the residence, kicked the door and threatened to kill her, her boyfriend and her grandmother. H denied threats to kill anyone but admitted he said he would beat up the boyfriend. The police were called and W and her boyfriend pursued criminal charges against H. H was arrested several days later and released on bond. W advised H that if he signed an affidavit assuming all fault for the divorce and signed a deed giving her the residence, they would drop all charges. Shortly thereafter H signed the affidavit drafted by W and a Quitclaim deed to the house. That same day evidence showed W contacted the district attorney. At trial H claimed he signed the Deed only because he was afraid of the charges and that W took advantage of the situation. H argued the Deed should be voided because it was executed under duress. The trial court agreed and declared the Deed void, ordered the house sold and divided the proceeds equally between the parties. W appealed. The COA reasoned that the threat of criminal prosecution to pressure someone into executing a contract is a wrongful use of the criminal justice process that may constitute duress sufficient to void the agreement. In this case the evidence suggested that the timing of the situation, the execution of the documents and the dismissal of the charges all indicated their connection within days of one another, further noting that H received no compensation whatsoever for deeding his interest in the property to W (despite the earlier negotiation to forego child support). W’s entire separate property claim in the residence relied on H’s execution of the Quitclaim Deed. When the trial court voided the deed, the court could presume it was community property absent any other evidence and thus did not abuse its discretion in dividing that asset. Judgment affirmed.

  1. In the Interest of M.G.G., 2020 Tex. App. LEXIS 6291 (Tex. App. – Dallas August 10, 2020) (mem. op.) (Cause No. 05-19-00777-CV)

H and W divorced in 2011. At that time, H held stock shares through his employer’s performance-based incentive plan. The decree awarded W a portion of those shares, called the “Assigned Shares.” Because the plan did not allow H to transfer these shares to W, the decree had him hold the shares as a constructive trustee. The decree obligated H to send W 100% of any distribution attributable to her Assigned Shares, including dividends, and further to send W a 1099 on the gross distributions made to her. The decree further made each party solely responsible for federal income tax on their respective distributions. Finally the decree required H to give W notice of his termination from employment and for H to pay over to W her portion of any shares or cash he received in accordance with the plan due to his separation from employment. H decided to leave his employment in 2015 and there is no evidence he gave W timely notice. When W did learn about his plans, W requested that he sell her Assigned Shares in two separate batches. H wanted them all sold at one time. H offered to pay W’s share of the taxes if she agreed to sell the shares all at once and further agreed that the payment to her would be considered alimony. The parties could not agree so W instructed H to sell ‘A of her shares. H did so and his employer withheld $45K from the $109K in proceeds and H withheld an additional $1586 in taxes before paying W the balance of $61K. W objected to the withholding and instructed H to sell the other A shares several months later specifically requesting the gross sales proceeds. H sold these additional shares and his employer withheld $63K from the $146K sale. The total withheld was $110K paid over to the IRS. W amended her pleadings in a pending modification suit between the parties re: child issues and asserted a claim for breach of fiduciary duty against H as constructive trustee. Her theory was that the withholding was calculated at H’s tax rate, which was higher than hers, causing damages, however W failed to put on any evidence of her tax rate or make the calculation of what she would have paid in taxes if allowed to do so on her own. After trial the court denied both parties SAPCR modification requests, awarded W damages for $110K and assessed attorneys fees against H for $50K. H appealed. H argued that the evidence was legally insufficient to support actual damages in any amount. W testified only that she would have paid taxes on the gross amount when paid over to her but she offered no evidence of her tax rate or the differential between the $110K paid on her behalf and what she might have owed at her tax rate. The COA agreed that W’s damage evidence was speculative only and reversed and rendered the damage award. Regarding fees, the trial court stated that the fees were awarded in connection with the modification suit and H’s counsel did not cross examine the evidence supporting them or demand segregation of those amounts recoverable in a SAPCR versus those amounts which would not have been recoverable in a tort claim for breach of fiduciary duty. The judgment for fees was affirmed.

  1. In re Fischer, 2020 Tex. App. LEXIS 6461 (Tex. App. – Dallas August 11, 2020, orig. proceeding) (mem. op.) (Cause No. 05-20-00278-CV)

H and W owned Company during marriage. Upon divorce in the 254th District Court, they were each awarded 50% of the 10,000 shares of stock in the October 2019 final decree. The Company was also a party to the divorce. W is pursuing an appeal from that decree. Five days after the decree was signed, H (on behalf of the Company) filed suit in the 254th Court alleging that W had misappropriated funds and breached her fiduciary duty. He sought injunctive relief and damages on behalf of the Company. That same day, W filed suit in the 68th District Court against H individually and two directors of the Company, alleging breach of fiduciary duty. The Company intervened in that suit in December. Also, in December H filed a motion to enforce the Decree in the 254th Court, alleging W had misappropriated funds, removed property from the residence and refused to sign documents, all in violation of the final decree. The Company also filed a motion for contempt against W in the 254th Court. (Does someone wonder why the trial court divided the shares equally between these parties and ever thought it could work?) The parties agreed to injunctions pending appeal and W moved to abate the Company’s suit pending appeal, filed a plea to the 254th Court’s jurisdiction over the Company’s claims against her and sought to have the Company’s suit transferred and consolidated with her claims in the 68th Court as the court of dominant jurisdiction. The Company filed emergency motions in the 68th Court. The 254th Court heard all motions pending in both courts and denied W’s motion to abate, plea to the jurisdiction and motion to transfer. Instead, the 254th Court transferred the W’s suit in the 68th to the 254th and consolidated with the actions filed there by H and the Company. W sought mandamus relief. W first argued that the 254th lacked jurisdiction over the Company’s claims against her but the COA determined that under Chapter 9, the court responsible for the decree had full authority to enforce that decree under Family Code chapter 9. As such, the COA ruled that all determinations by the 254th Court with respect to the enforcement claims of H and the Company were fully authorized. W also challenged the transfer and consolidate of her claim against H and the Company directors from the 68th Court to the 254th. On this matter, the COA considered that although Family Courts are granted broad discretion, Chapter 9 of the Family Code only permits litigation regarding matters related to the division of property. The COA found that although the Company filed suit first in the 254th, dominant jurisdiction does not control when the first court does not have the full matter before it. In this case, the COA found that the 254th Court did not have all matters before it in light of W’s pending claims in the 68th Court. Further, the COA holds that Chapter 9 of the Family Code does not to issues “other than those related to a division of the marital estate.” As such, the trial court erred in addressing any matters beyond enforcement of the decree. This included any claims by H or the Company claims against Gail which did not relate to the divorce decree as well as Gail’s claims against H and the two directors. Those matters should have been transferred to the 68th Court. Mandamus partially granted.

  1. In the Interest of L.M.D., 2020 Tex. App. LEXIS 6325 (Tex. App. – San Antonio August 12, 2020) (mem. op.) (Cause No. 04-19-00728-CV)

F and M divorced in 2016. The decree gave M the right to designate the residence in Bexar County. In February 2017 M filed a motion to modify asking that the geo restriction be expanded to include New York. F filed a counter suit seeking equal rights and equal time. In July 2017, the parties entered into a Rule 11 Agreement lifting the geo restriction and allowing M and kids to relocate to NY. The Rule 11 eliminated F’s child support obligation and gave him equal time with the kids if he moved to NY. In August 2017 F, M and the children moved to NY. M did not comply with the agreement for equal possession so F moved back to TX in September. F filed a revocation of the Rule 11 Agreement and a motion to modify possession and to compel the children’s return to Bexar County. The trial court denied F’s motion. The parties pursued discovery and the court appointed a custody evaluator and ordered F to pay the entire cost. The evaluator traveled to NY and thereafter filed a report with the court. The case was set for a jury trial in November 2018 but was continued to April 2019. M filed an unsworn motion to transfer “venue” asserting that she and the children now lived in NY and that NY was a more appropriate forum. M attached no affidavits. F objected to the motion but filed no controverting affidavits. At the hearing the attorneys for both parties offered argument. M’s counsel argued that the children had lived in NY for 2 years and all their teachers, doctors, etc. were located there and M could not afford to bring these witnesses to TX. F’s counsel did not disagree with these allegations but suggested that it would be extremely prejudicial to stop the TX litigation now in favor of NY as F had gone to tremendous expense. F requested attorneys fees for the TX litigation. There were no witnesses and no evidence admitted. The trial court granted the motion and dismissed the TX suit in favor of a more convenient forum in NY. The trial court noted that F could seek the recovery of his fees before the NY courts. F appealed, claiming the decision was not based on sufficient evidence. The COA notes that a hearing which addresses whether TX is a convenient forum under the UCCJEA need not be “evidentiary” and holds that the lawyers for the parties “adduced competent evidence” upon which the trial court could have based its decision. The COA also held that F did not preserve error because he never complained before, during or after the hearing that he had been denied the right to offer evidence. The COA rejected F’s argument that he was prejudiced by the dismissal in light of the amounts of money he had expended on the TX suit. The COA held that any prejudice did not relate to the factors considered in an “inconvenient” forum argument, noting that the TX trial court had left open F’s ability to recover those expenses in the NY litigation. Dismissal judgment affirmed. COMMENT: I have really never understood the abrupt cessation of SAPCR cases that are well underway in favor of moving them to other jurisdictions. I feel like the statute should have a time limit on such a request. In any event, I would be genuinely interested in understanding how a NY court could award fees and expenses incurred in TX litigation, particularly when the TX litigation was resolved by a final order that denied an affirmative request for fees in that proceeding. Wouldn’t res judicata apply? And if not, would those fees and expenses be judged under NY standards?

  1. In the Interest of C.L.G., 2020 Tex. App. LEXIS 6314 (Tex. App. – San Antonio August 12, 2020) (mem. op.) (Cause No. 04-19-00498-CV)

In 2010, F was adjudicated as F of the child and ordered to pay support of $351/month. In 2014 F’s child support was increased to $946/month. In 2018 the OAG filed a motion to modify support and F filed a counter suit seeking a decrease. The trial court denied both requests. Four months later, F filed another motion to decrease support and M filed an answer. In 2019 the court held a bench trial and F testified that he had left his employment as an event planner, earning $10K per month to open his own company. F testified that his income had substantially declined, justifying a decrease in support and further he had 3 other children to whom he owed support. M had no evidence regarding F’s income. The trial court denied F’s motion and F appealed. The COA noted that not ever change in circumstances is material and substantial. The COA found that F offered no evidence as to his earnings at the date of the prior order and thus there was nothing to compare to determine if circumstances had really changed. Further, the COA held that the evidence must show a “marked decrease” or a “steady decline” in resources without “offsetting circumstances” before modification is warranted. Here, the COA said that the trial court could have inferred that F’s decrease in income was only temporary while he started a new company because F testified to new accounts he was securing and income that was starting to come in. Even though F’s current child support was not in compliance with the guidelines, the COA said that this alone did not warrant modification. Judgment affirmed.