Coury v. Prot ( 1996 )

United States Court of Appeals,
Fifth Circuit.
Nos. 94-20084, 94-20694.
David F. COURY, Plaintiff-Appellee, Cross-Appellant,
v.
Alain PROT, Defendant-Appellant, Cross-Appellee.
June 19, 1996.
Appeals from the United States District Court for the Southern
District of Texas.
Before GARWOOD, SMITH and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
In this case David Coury, a citizen of California, sued Alain
Prot, a dual citizen of the United States and France, in a Texas
state court to recover for damages resulting from breach of
contract and fraud. Prot removed the action to the federal
district court pleading that he was a dual citizen of France and
the United States domiciled in France and therefore entitled to
remove this action under the alienage provision of diversity
jurisdiction, 28 U.S.C. § 1332(a)(2). After a jury trial, the
trial court dismissed Coury's fraud claim but submitted the balance
of his case to the jury, which returned a verdict awarding Coury
$164,500 including attorney's fees plus post-judgment interest
based on Prot's breach of contract. Subsequently, the court denied
Prot's post verdict motions and granted Coury's motion for turnover
of two parcels of Prot's Texas property in satisfaction of the
trial court's judgment implementing the jury award.
Prot appealed from the main judgment of the trial court and
from its turnover order contending: (1) the district court lacked
diversity jurisdiction under the alienage provision because when
the suit was commenced and removed Prot was a dual citizen of the
United States and France domiciled in France; (2) the district
court erred in denying Prot's post verdict motion for leave to
amend his answer to add the affirmative defense that the contract
sued upon by Coury was illegal; (3) Prot's Texas parcels of
property were exempt from turnover and forced sale under the state
constitutional and statutory homestead exemptions.
Coury filed a cross appeal seeking pre-judgment interest and,
in the event of reversal of the breach of contract award, to
overturn the trial court's dismissal of his fraud claim.
Upon its initial consideration of the appeals, a different
panel of this court concluded that based on the record presented
for its review it could not determine whether Prot's domicile at
the time the complaint was filed was in France or in Texas. For
purposes of diversity jurisdiction, only the American nationality
of a dual national is recognized. Action S.A. v. Marc Rich & Co.,
Inc., 951 F.2d 504, 507 (2nd Cir.1991) cert. denied, 503 U.S. 1006,
112 S.Ct. 1763, 118 L.Ed.2d 425 (1992); see also Sadat v. Mertes,
615 F.2d 1176 (7th Cir.1980) ("only the American nationality of the
dual citizen should be recognized under 28 U.S.C. § 1332(a)."). An
American national, living abroad, cannot sue or be sued in federal
court under diversity jurisdiction, 28 U.S.C. § 1332, unless that
party is a citizen, i.e. domiciled, in a particular state of the
United States. 1 J. Moore, Moore's Federal Practice § 0.74[4]
(1996). Thus, Prot's initial claim of diversity jurisdiction under
the alienage provision was invalid. Furthermore, if Prot was found
to be domiciled abroad, he would not be a citizen of any state and
diversity of citizenship would also fail. However, if the district
court determined that Prot was domiciled in Texas at the time the
suit was filed and removed, although removal may have been
improper, subject matter jurisdiction would not be lacking. Coury
v. Prot, slip op. at 2, 3, 40 F.3d 385 (5th Cir. Nov. 3, 1994)
(unpublished per curiam) (citing Grubbs v. General Electric Credit
Corp., 405 U.S. 699, 702, 92 S.Ct. 1344, 1347, 31 L.Ed.2d 612(1972)). Accordingly, the panel remanded the case to the district
court for it to determine whether subject matter jurisdiction
existed, with directions to vacate its judgment if jurisdiction was
lacking or to return the case to this court if jurisdiction
existed. Coury v. Prot, slip op., 40 F.3d 385 (5th Cir.1994)
(unpublished per curiam).
On remand, the trial court conducted an evidentiary hearing,
determined that Prot was domiciled in Texas when the suit was filed
in state court in May, and removed in June, of 1992, and that
jurisdiction existed. The trial court returned the case to this
court.
Jurisdiction
The district court correctly determined that subject matter
and diversity of citizenship jurisdiction exists. Prot was
domiciled in Texas when the state court action was commenced and
when he removed the case to federal court. Although in 1992 Prot
had physically moved himself, his family and his business to
France, he had not formed an intention to remain there.
Article III, § 2 of the Constitution provides that the
judicial power of the United States shall extend, inter alia, to
controversies "between Citizens of Different States" and to
controversies "between a State, or the Citizens thereof, and
foreign States, Citizens or Subjects." These provisions constitute
the authority for the grant of "diversity" and "alienage"
jurisdiction, respectively. 1 J. Moore, Moore's Federal Practice
§ 0.71[1] (1996).
It is axiomatic that the federal courts have limited subject
matter jurisdiction and cannot entertain cases unless authorized by
the Constitution and legislation. Id. at 5.-1]. The parties can
never consent to federal subject matter jurisdiction, and lack of
such jurisdiction is a defense which cannot be waived.
Fed.R.Civ.P. 12(h)(3); See City of Indianapolis v. Chase Nat'l
Bank, 314 U.S. 63, 76, 62 S.Ct. 15, 20, 86 L.Ed. 47 (1941).
Accordingly, there is a presumption against subject matter
jurisdiction that must be rebutted by the party bringing an action
to federal court. See, e.g. Strain v. Harrelson Rubber Co., 742
F.2d 888, 889 (5th Cir.1984); 1 J. Moore, Moore's Federal Practice
§ 0.71[5.-1] (1996).
What makes a person a citizen of a state? The fourteenth
amendment to the Constitution provides that: "All persons born or
naturalized in the United States, and subject to the jurisdiction
thereof, are citizens of the United States and of the State wherein
they reside." United States Const. amend. XIV, § 1. However,
"reside" has been interpreted to mean more than to be temporarily
living in the state; it means to be "domiciled" there. Thus, to
be a citizen of a state within the meaning of the diversity
provision, a natural person must be both (1) a citizen of the
United States, and (2) a domiciliary of that state. Federal common
law, not the law of any state, determines whether a person is a
citizen of a particular state for purposes of diversity
jurisdiction. 1 J. Moore, Moore's Federal Practice, § 0.74[1]
(1996); e.g., Mas v. Perry, 489 F.2d 1396, 1399 (5th Cir.) cert.
denied, 419 U.S. 842, 95 S.Ct. 74, 42 L.Ed.2d 70 (1974).
Consistent with general principles for determining federal
jurisdiction, diversity of citizenship must exist at the time the
action is commenced. Newman-Green, Inc. v. Alfonzo-Larrain, 490
U.S. 826, 830, 109 S.Ct. 2218, 2221, 104 L.Ed.2d 893 (1989). In
cases removed from state court, diversity of citizenship must exist
both at the time of filing in state court and at the time of
removal to federal court. See, e.g., Kanzelberger v. Kanzelberger,
782 F.2d 774, 776 (7th Cir.1986). If diversity is established at
the commencement and removal of the suit, it will not be destroyed
by subsequent changes in the citizenship of the extant parties.
Smith v. Sperling, 354 U.S. 91, 93 n. 1, 77 S.Ct. 1112, 1114 n. 1,
1 L.Ed.2d 1205 (1957); Mollan v. Torrance, 22 U.S. (9 Wheat.) 537,
539, 6 L.Ed. 154 (1824); 1 J. Moore, Moore's Federal Practice, §
0.74[1] (1996).
The lack of subject matter jurisdiction may be raised at any
time during pendency of the case by any party or by the court.
Fed.R.Civ.P. 12(h)(3). Moreover, the Supreme Court has held that
a party cannot waive the defense and cannot be estopped from
raising it. E.g., Insurance Corp of Ireland v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492(1982); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 98
S.Ct. 2396, 57 L.Ed.2d 274 (1978). Obviously, these principles can
result in a tremendous waste of judicial and private resources.
The general reaction is that this waste is simply a price that must
be paid for federalism. 1 J. Moore, Moore's Federal Practice §
0.74[1] (1996). Some cases cry out for an exception to the rules,
for example, when a party who invokes federal jurisdiction recants
his original jurisdictional allegations or "discovers" that there
was no diversity after all after suffering a loss on the merits.
Id. So far, however, the traditional rule stands firm despite the
urging of commentators for doctrines of estoppel or waiver to bar
litigants from "playing fast and loose with the judicial machinery"
and using the federal courts' limited subject matter jurisdiction
in bad faith. Id. at n. 29. A few circuits have demonstrated a
willingness to do so only to be repudiated by intervening Supreme
Court decisions. American Fire & Casualty Co. v. Finn, 341 U.S. 6,
16-18, 71 S.Ct. 534, 541-542, 95 L.Ed. 702 (1951); City of Brady,
Texas v. Finklea, 400 F.2d 352, 357-358 (5th Cir.1968); Di
Frischia v. New York Cent. R.R., 279 F.2d 141, 141-144 (3rd
Cir.1960); Klee v. Pittsburgh & W. Va. Ry. Co., 22 F.R.D. 252,
252-255 (W.D.Pa.1958).
Jurisdictional matters are to be decided by the court,
although the court may, in its discretion, submit to the jury
contested factual issues involving the presence of diversity of
citizenship, to be used as an advisory determination. E.g. Har-Pen
Truck Lines, Inc. Mills, 378 F.2d 705 (5th Cir.1967). As long as
the trial court applies the correct standard of law, its findings
as to the citizenship of the parties will be upheld on appeal
unless they are clearly erroneous. Fed.R.Civ.P. 52(a); see, e.g.,
Village Fair Shopping Center Co. v. Sam Broadhead Trust, 588 F.2d
431 (5th Cir.1979) (fact finding regarding principal place of
business of corporation not clearly erroneous); 1 J. Moore,
Moore's Federal Practice § 0.74[1] (1996).
In making a jurisdictional assessment, a federal court is not
limited to the pleadings; it may look to any record evidence, and
may receive affidavits, deposition testimony or live testimony
concerning the facts underlying the citizenship of the parties.
See, e.g. Jones v. Landry, 387 F.2d 102 (5th Cir.1967); 1 J.
Moore, Moore's Federal Practice § 0.74[1] (1996). The court has
wide, but not unfettered, discretion to determine what evidence to
use in making its determination of jurisdiction. See Ray v. Bird
& Son & Asset Realization Co., 519 F.2d 1081 (5th Cir.1975).
A person cannot be a "citizen" of a state unless she is also
a citizen of the United States. See e.g., Newman-Green, Inc. v.
Alfonzo-Larrain, 490 U.S. 826, 109 S.Ct. 2218, 104 L.Ed.2d 893(1989); Mas v. Perry, 489 F.2d 1396 (5th Cir.) cert. denied, 419
U.S. 842, 95 S.Ct. 74, 42 L.Ed.2d 70 (1974). A United States
citizen who is domiciled in a state is a citizen of that state.
See Robertson v. Cease, 97 U.S. 646, 648-650, 24 L.Ed. 1057 (1878).
Thus, with few exceptions, state citizenship for diversity purposes
is regarded as synonymous with domicile. E.g., Rodriguez-Diaz v.
Sierra-Martinez, 853 F.2d 1027 (1st Cir.1988); 1 J. Moore, Moore's
Federal Practice § 0.74[3] n. 3. Accordingly, it has been held
consistently that a diversity suit may not be maintained under 28
U.S.C. § 1332(a)(1) by or against a United States citizen who is
domiciled in a foreign country, for a resident of a foreign country
is not necessarily a citizen thereof. Smith v. Carter, 545 F.2d
909 (5th Cir.) cert. denied, 431 U.S. 955, 97 S.Ct. 2677, 53
L.Ed.2d 272 (1977). Moreover, an American living abroad is not by
virtue of that domicile a citizen or subject of the foreign state
in which he resides so as to permit invocation of the alienage
jurisdiction prescribed in 28 U.S.C. § 1332(a)(2) of the Judicial
Code. 13B Wright-Miller-Cooper, Federal Practice & Procedure §
3621 (1984).
Furthermore, there is an emerging consensus among courts
that, for a dual national citizen, only the American citizenship is
relevant for purposes of diversity under 28 U.S.C. § 1332.
Consequently, diversity jurisdiction may be properly invoked only
when a dual citizen's domicile, and thus his citizenship, is in a
state diverse from that of adverse parties. See Action S.A. v.
Marc Rich & Co., 951 F.2d 504 (2nd Cir.) cert. denied, 503 U.S.
1006, 112 S.Ct. 1763, 118 L.Ed.2d 425 (1992); Mutuelles Unies v.
Kroll & Linstrom, 957 F.2d 707 (9th Cir.1992); Sadat v. Mertes,
615 F.2d 1176 (7th Cir.1980); Las Vistas Villas, S.A. v. Petersen,
778 F.Supp. 1202 (D.C.Fla.1991) (affirmed by 13 F.3d 409 (11th
Cir.1994)); Liakakos v. CIGNA Corp, 704 F.Supp. 583 (E.D.Pa.1988);
See also Maple Island Farm, Inc. v. Bitterling, 196 F.2d 55 (8th
Cir.) cert. denied, 344 U.S. 832, 73 S.Ct. 40, 97 L.Ed. 648 (1952).
Accordingly, the dual citizen should not be allowed to invoke
alienage jurisdiction because this would give him an advantage not
enjoyed by native-born American citizens. Sadat v. Mertes, 615
F.2d 1176 (7th Cir.1980); Soghanalian v. Soghanalian, 693 F.Supp.
1091 (D.C.Fla.1988); Liakakos v. CIGNA Corp., supra. The latter
conclusion is sound according to 1 Moore's Federal Practice §
0.74[4], because the major purpose of alienage jurisdiction is to
promote international relations by assuring other countries that
litigation involving their nationals will be treated at the
national level, and alienage jurisdiction is also intended to allow
foreign subjects to avoid real or perceived bias in the state
courts—a justification that should not be available to the dual
citizen who is an American. See also 13B Wright-Miller-Cooper §
3621 (1984).
A change in domicile typically requires only the concurrence
of: (1) physical presence at the new location and (2) an intention
to remain there indefinitely; 13B Wright-Miller-Cooper, Federal
Practice and Procedure § 3613 (1984), citing, inter alia, Stine v.
Moore, 213 F.2d 446 (5th Cir.1954); Paudler v. Paudler, 185 F.2d
901 (5th Cir.) cert. denied, 341 U.S. 920, 71 S.Ct. 742 (1950);
or, as some courts articulate it, the absence of any intention to
go elsewhere. 13B Wright-Miller-Cooper § 3613 n. 3. Thus, a
person who has the clear intent to change domicile does not
accomplish the change until he is physically present in the new
location with that intent. On the other hand, mere presence in a
new location does not effect a change of domicile; it must be
accompanied with the requisite intent. In most cases, the
difficult issue is not presence but whether the intent to change
domicile can be shown. 1 J. Moore, Moore's Federal Practice §
0.74[3.-1] (1996).
A person's domicile persists until a new one is acquired or
it is clearly abandoned. Lew v. Moss, 797 F.2d 747 (9th Cir.1986);
Mas v. Perry, 489 F.2d 1396 (5th Cir.) cert. denied, 419 U.S. 842,
95 S.Ct. 74, 42 L.Ed.2d 70 (1974). There is a presumption in favor
of the continuing domicile which requires the party seeking to show
a change in domicile to come forward with enough evidence to that
effect to withstand a directed verdict. Lew v. Moss, 797 F.2d at
751. While some opinions seem to imply that the burden of
persuasion rests with the party attempting to show a change of
domicile, this is an overstatement. The proper rule is that the
party attempting to show a change assumes the burden of going
forward on that issue. The ultimate burden on the issue of
jurisdiction rests with the plaintiff or the party invoking federal
jurisdiction. 1 J. Moore, Moore's Federal Practice § 0.74[3.-3],
n. 8, (1996) citing Lew v. Moss, 797 F.2d 747, 751 (9th Cir.1986);
Slaughter v. Toye Bros. Yellow Cab Co., 359 F.2d 954, 956 (5th
Cir.1966); Gregg v. Louisiana Power & Light Co., 626 F.2d 1315(5th Cir.1980).
In determining a litigant's domicile, the court must address
a variety of factors. No single factor is determinative. The
court should look to all evidence shedding light on the litigant's
intention to establish domicile. The factors may include the
places where the litigant exercises civil and political rights,
pays taxes, owns real and personal property, has driver's and other
licenses, maintains bank accounts, belongs to clubs and churches,
has places of business or employment, and maintains a home for his
family. See Lew v. Moss, 797 F.2d 747 (9th Cir.1986); Hendry v.
Masonite Corp., 455 F.2d 955 (5th Cir.) cert. denied, 409 U.S.
1023, 93 S.Ct. 464, 34 L.Ed.2d 315 (1972); 1 J. Moore, Moore's
Federal Practice § 0.74[3.-3] n. 18 (1996) (citing authorities).
A litigant's statement of intent is relevant to the determination
of domicile, but it is entitled to little weight if it conflicts
with the objective facts. Freeman v. Northwest Acceptance Corp.,
754 F.2d 553, 556 (5th Cir.1985); Hendry v. Masonite Corp., 455
F.2d 955, 956 (5th Cir.) cert. denied, 409 U.S. 1023, 93 S.Ct. 464,
34 L.Ed.2d 315 (1972).
Most courts regard domicile as presenting a mixed question of
law and fact. E.g., Village Fair Shopping Center Co. v. Sam
Broadhead Trust, 588 F.2d 431, 433 (5th Cir.1979). Nevertheless,
in practice, the district court's determination of domicile is
reviewed on appeal as a question of fact; it will be upheld unless
"clearly erroneous." 1 J. Moore, Moore's Federal Practice §
0.74[3.-3] n. 29 and authorities cited therein.
Applying these precepts to the case at bar, we conclude that
there was no clear error in the district court's determination that
Prot was domiciled in Texas when the action was initially filed and
when he removed it to federal court. Accordingly, the district
court's conclusion that diversity and subject matter jurisdiction
exist in this case was also correct.
Because Prot twice recanted his statement as to whether he
intended to establish domicile in France the trial court was
entitled to regard his representations as lacking in candor and
credibility. Originally, in Prot's notice of removal filed on June
29, 1992, he represented to the court that he was "a dual-citizen
both of France and the United States however, significantly prior
to the time that suit was filed against him he became domiciled in
France." Later, after Coury obtained judgment against Prot and
moved to have Prot's Texas parcels of real estate turned over, Prot
filed an affidavit in connection with the court's hearing on the
turnover motion on August 8, 1994. In the affidavit, Prot recanted
his pleading that he was domiciled in France, averring that he
never intended to live permanently in France or to abandon his
Texas home; that his intention was always to return to his
homestead in Texas. His affidavit further provided that in late
1990 a bottled water business opportunity in France caused him to
begin commuting between Texas and France; his wife resided full
time in their Bellaire, Texas1 home as late as April 1991; in June
1991 he and his wife moved temporarily to France due to increased
demands of his business; neither he nor his wife ever established
a permanent residence in France; his wife returned to Texas for
over a year from the summer of 1992 until September 1993; in the
meantime he had been leasing the Bellaire house for no longer than
eighteen-month terms; he and his wife intended to return to
Bellaire some day so she could resume work at the Texas Medical
Center; he would not be willing to sell the Bellaire property; he
filed a voluntary designation of homestead on the Bellaire property
in March 1994; he did not know when he would be able to return to
the United States—stating the bottled water business had already
taken a year and a half longer than he planned; because the
1
Bellaire, Texas is a small municipal corporation located in
the center of Houston, Texas.
quarters in which he resided near the natural springs were about
forty miles by mountain roads to the school his children attended,
his wife and children reside in Limoges, France, while he lives on
the property where the business is located—an arrangement he
assured the court was totally unsatisfactory as a permanent home.
Finally, in his first appeal to this court in 1994, Prot
asserted that the district court may have lacked subject matter
jurisdiction, viz., no diversity jurisdiction. On remand from this
court, at the evidentiary hearing held by the district court to
determine whether jurisdiction exists, Prot recanted the testimony
in his sworn affidavits at the hearing on the turnover motion. In
support of the proposition that he was not domiciled in Texas in
May and June of 1992, at the time the suit was filed and removed,
Prot testified that it was "primarily" his wife's wish to return to
the United States, thereby implying he had no such desire; that
their return to Texas was contingent on the success of the bottling
water business; that he had characterized their move to France as
"temporary" in earlier statements only because his wife did not
wish to live in France permanently; and his intention to return to
Texas was nothing more that an indefinite plan for the future. On
cross examination Coury's attorney asked Prot about the "dozen
occasions" Prot testified that it was his "constant intent to
return to Texas some day, throughout the time [Prot] left Texas
until the present." In response, Prot indicated that he had
testified so because that was what he had told his wife. The
record does not indicate that Prot otherwise tried to reconcile the
conflicting testimony.
Based on the evidence of record, much of which consisted of
Prot's conflicting statements and actions, the district court found
that Prot established a domicile in Texas in 1987, that he
physically moved himself and his family to France in 1991 to avoid
transatlantic commuting, but that the evidence failed to show an
essential requisite of a change in domicile, viz., that he formed
an intention in 1991 or 1992, prior to the filing of the complaint
and the removal of this case, to remain in France indefinitely. In
view of Prot's repeated statements that he and his wife did not
intend to stay in France indefinitely and that they always intended
to return to Texas, we conclude that the district court's findings
were not clearly erroneous.
Furthermore, the trial court applied the correct principles
of law to these facts in concluding that diversity jurisdiction
exists. Because Prot's domicile was determined to be Texas at the
time the suit was filed and removed, while Coury's domicile was in
California, diversity of citizenship existed between the two
parties pursuant to 28 U.S.C. § 1332(a)(1). The removal was
improper, however, because a defendant may not remove a state
action to federal court if a defendant is a citizen of the state in
which the action is filed. 28 U.S.C. § 1441(b). Coury waived this
defect, however, by his failure to seek a remand of the action to
state court within 30 days of removal. 28 U.S.C. § 1447(c).
Nevertheless, although removal may have been improper, subject
matter jurisdiction is not lacking. Grubbs v. General Electric
Credit Corp., 405 U.S. 699, 702, 92 S.Ct. 1344, 1347, 31 L.Ed.2d
612 (1972) ("Longstanding decisions of this Court make clear,
however, that where after removal a case is tried on the merits
without objection and the federal court enters judgment, the issue
in subsequent proceedings on appeal is not whether the case was
properly removed, but whether the federal district court would have
had original jurisdiction of the case had it been filed in that
court.").
Homestead Exemption
The district court did not clearly err in determining that at
the time the motion for turnover of Prot's Texas properties was
filed in March 1994, Prot's Bellaire, Texas property was no longer
protected from turnover and forced sale by the Texas homestead
exemption. Prot began commuting to France from Texas in 1991 and
by 1994, he and his family had lived in France continuously for
over two years. He had purchased at least two properties and
established a permanent and primary residence on one of them. It
was plausible for the trial court to conclude that after the
success of his business had been delayed one and one-half years
beyond his original plans, and his wife and children rejoined him
in France in September of 1993, and he established for them a home
near the children's school in Limoges, France, the Prots had
established a new homestead in France and had abandoned their
homestead in Bellaire, Texas prior to the turnover proceedings in
1994.
The question of whether there has been an abandonment of a
homestead is to be determined from all the pertinent facts and
circumstances of each particular case as it arises. Coleman v.
Banks, 349 S.W.2d 737, 739 (Tex.Civ.App.1961) (application for writ
of error refused, no reversible error); Hix v. De Phillipi, 216
S.W.2d 643, 645-646 (Tex.Civ.App.1948) (application for writ of
error refused, no reversible error). A homestead exemption may be
lost or abandoned by a removal from the premises under
circumstances clearly indicating that the removal is not merely
temporary. A homestead claimant is not required to remain on the
premises at all times, and he does not necessarily lose, forfeit or
abandon his homestead rights merely by removing or being absent
from the premises when the absence is temporary. McFarland v.
Rousseau, 667 S.W.2d 929 (Tex.Ct.App.1984). However such absence
is a matter properly to be considered, in connection with other
circumstances, in determining the question of abandonment. Carver
v. Gray, 140 S.W.2d 227 (Tex.Civ.App.1940) (application for writ of
error dismissed, judgment correct).
Generally, in order to constitute an abandonment of a
homestead by a removal from the premises, the removal must be
accompanied by the intent never to return to occupy the premises as
a homestead. See Coyel v. Mortgage Bond Co. of New York, 124
S.W.2d 204 (Tex.Civ.App.1939). A removal from a property
constituting a homestead does not cause an abandonment of the
homestead where the owner has an unqualified, fixed, and abiding
intention to return to the property and occupy it as a homestead,
where such intentions remain at all times, and no other homestead
is acquired. City National Bank of Bryan v. Walker, 111 S.W.2d 350(Tex.Civ.App.1937) (application for writ of error dismissed for
want of jurisdiction) (The court found Walker had not abandoned his
homestead though it had been vacated when he moved to another
state, because Walker had not purchased another homestead, had left
all furnishings in the house, and had retained his lodge, church
and other affiliations in Bryan). Nevertheless, the element of
lapse of time the owner has remained away is a matter to be
considered, and if the absence is prolonged, it may, if there is no
evidence of a fixed intention to return, constitute an abandonment.
Nelson v. Nelson, 134 B.R. 838, 845-846 n. 3 (N.D.Tex.1991) ("If a
homestead claimant has remained away from home a prolonged period
of time, an intention of no interest to return may be inferred.");
see also Tuerpe v. George Saunders Live Stock Commission Co., 245
S.W. 741, 742 (Tex.Civ.App.1922) (writ of error dismissed or
refused) ("while in this case the Tuerpes were vigorous in their
denial of any intention to abandon the ranch homestead, we cannot
say ... that this evidence was not overcome by their admissions and
conduct over a period of several years and we perceive no reason
why we should set aside the ... findings of the trial judge against
[the Tuerpes]").
Although a homesteader who has removed from the premises with
no intention to return may change his intention to resume
possession and thereby reinvest the property with the homestead
character, such resumption of possession has only the effect of
creating a new homestead right from the time of the new occupancy,
or immediately prior to occupancy as long as the claimant has a
fixed time in the near future that he will occupy the homestead.
However, the resurrection of the homestead right in the property
does not affect the rights of third persons acquired in the interim
between the loss of the old and the acquisition of the new. See
Zimmer v. Pauley, 51 Wis. 282, 8 N.W. 219, 221 (1881) (where overt
acts by plaintiff supported redemption of possibly abandoned
homestead just prior to the date of judgment against plaintiff, and
thus the plaintiff's property was protected from the judgment);
Kaes v. Gross, 92 Mo. 647, 3 S.W. 840, 842 (1887) ("If [a homestead
exemption] be once lost, and possession of the homestead be again
resumed, such resumption of possession will only have the effect of
giving origin to a new homestead right, bearing date from the new
occupancy, and having no retroactive validity on the old right lost
by abandonment, and possessing no force against the rights of third
persons acquired in the interim between the loss of the old and the
acquisition of the new right.").
Since no one can own two homesteads at the same time, if the
debtor acquires a new homestead, he thereby abandons and loses his
homestead rights in the former place of residence. Norman v. First
Bank & Trust, Bryan, 557 S.W.2d 797, 801 (Tex.Civ.App.)
(application for writ of error refused, no reversible error, 1978).
The best evidence of the abandonment of a former homestead is the
fact that a new and permanent home has been acquired, and
appropriated as such. Panhandle Const. Co. v. Wiseman, 110 S.W.2d
615, 617 (Tex.Civ.App.1937) (application for writ of error
dismissed for want of jurisdiction) ("[t]here is no rule of law
better established in Texas than that possession and use of real
estate by one who owns it, and who, with his family, resides upon
it, makes it the homestead of the family in law and in fact, and it
has been repeatedly held by the courts of this state that the best
evidence of the abandonment of a former homestead is the fact that
a new and permanent home has been acquired and appropriated as
such."). The removal of the owners from one property to another,
and the occupancy and use of the latter property as a homestead,
unaccompanied by any act evidencing an intention to return to the
former home, silently, but effectively, proclaims the latter
property to be their homestead and constitutes the highest and most
conclusive evidence of abandonment of the former property as a
homestead. Norman v. First National Bank and Trust, Bryan, 557
S.W.2d 797, 800-802 (Tex.Civ.App.) (application for writ of error
refused, no reversible error, 1978) citing, inter alia, Hinton v.
Uvalde Paving Co., 77 S.W.2d 733 (Tex.Civ.App.1934) (application
for writ of error refused).
Whether land claimed for homestead exemption was used
principally for residential purposes or otherwise is a question of
fact for the determination of the jury. Continental Inv. Co. v.
Schmeich, 145 S.W.2d 219, 221 (Tex.Civ.App.1940) (application for
writ of error refused). However, whether a subject property has
been impressed with the character of homestead is based on findings
of fact and conclusions of law. Caulley v. Caulley, 806 S.W.2d 795(Tex.1991). Abandonment of a homestead is a question of fact to be
determined in each case from the entire evidence before the court.
Coleman v. Banks, 349 S.W.2d 737, 741 (Tex.Civ.App.1961)
(application for writ of error refused, no reversible error).
Proof that a new homestead has been acquired establishes
abandonment of the old homestead as a matter of law. Norman v.
First Bank & Trust, Bryan, 557 S.W.2d 797, 800 (Tex.Civ.App.)
(application for writ of error refused, no reversible error, 1978).
This Court accepts a district court's finding of fact unless they
are clearly erroneous—"due regard shall be given to the opportunity
of the trial court to judge of the credibility of the witnesses",
Fed.R.Civ.P. 52(a)—and this court reviews issues of law de novo.
State Savings and Loan Assn. v. Liberty Trust, 863 F.2d 423 (5th
Cir.1989). The burden of showing that the findings of the district
court are clearly erroneous is heavier if the credibility of
witnesses is a factor in the trial court's decision. Village Fair
Shopping Center v. Broadhead, 588 F.2d 431, 434 n. 2 (5th
Cir.1979).
Applying these precepts to the case at bar, we conclude that
the district court did not err in determining that by 1994 Prot had
established a new homestead in France, no longer having the
requisite intent to maintain the Bellaire, Texas property as his
homestead, and in concluding that the Bellaire Boulevard property
was not protected at that time from turnover and forced sale by the
Texas homestead exemption.
The evidence before the court consisted of two depositions of
Prot, taken in 1992 and 1994, and an affidavit submitted by Prot in
lieu of an appearance at the evidentiary hearing on jurisdiction on
remand. When Prot initially moved to France in 1991 to manage his
bottle water company, though he also moved his wife and children
and their residential belongings, he anticipated having the
business up and running in eighteen months. His wife moved back to
San Antonio, Texas in the summer of 1992 and worked there until the
fall of 1993. At that point Prot admits that his business was not
developing as successfully as possible and his wife and children
moved back to France to join him in September 1993. Prot's
intention to return to Texas within eighteen months was no longer
realistic. He remodeled an apartment on the property where the
spring water was located and Prot's family settled into a home 40
miles away in Limoges near the children's school. When the motion
for turnover was filed in 1994, Prot and his family had not lived
at the Bellaire Boulevard property for three years; Prot
discontinued his Texas mailing address in 1993; he had lost his
homestead property tax treatment on the Bellaire, Texas property;
he evidently did not file a homestead declaration for the Bellaire
property until after Coury moved for its turnover; he was unsure
of whether he still maintained an active checking account in Texas,
indicating little if any use of the account if it existed; he had
stated in a 1992 deposition that he did not have any intention of
making his primary residence in the United States at any time in
the future, though later he stated that English was not his primary
language and that he may not have understood the question; and
Prot continuously leased out the Bellaire property after his
initial move to France in 1991. In addition, Prot declared to the
French Consulate that he lived in France "full-time"; he
maintained active checking and savings accounts in French financial
institutions; in additionto operating the bottling business, Prot
is a "French farmer" in the timber and hay businesses; and he
admitted at the evidentiary hearing in 1994 to determine where he
was domiciled that he "purchased land in France and move[d] his
family into a home that was prepared for the use as a home".
We find no clear error in the district court's determination
that prior to 1994 Prot created a new homestead in France and
abandoned his Texas homestead, subsequent to which the Texas
property was not protected by the homestead exemption.
Other Issues
For the reasons assigned by the trial court, we affirm the
trial court's determination that Prot waived by not pleading the
affirmative defense of illegality of the contract and find no abuse
of discretion in the court's denial of Prot's post-verdict motion
for leave to amend his answer to plead the affirmative defense of
illegality of contract. Fed.R.Civ.P. 8(c). Also, it appears that
Coury may be entitled to an award of prejudgment interest. Cavnar
v. Quality Control Parking, 696 S.W.2d 549 (Tex.1985); see also
Concorde Limousines, Inc. v. Moloney Coachbuilders, Inc., 835 F.2d
541, 548-550 (5th Cir.1987) (for discussion of the development of
Texas law concerning prejudgment interest). The district court
failed to rule on this claim. Accordingly, this case will be
remanded to the trial court for adjudication of this issue.
The judgment of the trial court is Affirmed, in part, but the
case is remanded in part to that court for its determination of
Coury's prejudgment interest claim.