Zagorski, Lori v. Zagorski, Anthony ( 2003 )

Motion for Rehearing Overruled, Opinion of May 23, 2002 Withdrawn, Affirmed and Majority and Dissenting Opinions on Rehearing

Motion for Rehearing Overruled, Opinion of May 23, 2002 Withdrawn, Affirmed and Majority and Dissenting Opinions on Rehearing filed August 19, 2003.

In The

Fourteenth Court of Appeals

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NO. 14-99-01044-CV

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LORI ZAGORSKI, Appellant

V.

ANTHONY ZAGORSKI, Appellee

On Appeal from the 246th District Court

Harris County, Texas

Trial Court Cause No. 97-43081

D I S S E N T I N G O P I N I O N   O N   R E H E A R I N G

It is difficult to understand why there are few, if any, documents substantiating Tony=s claim that funds in the Darwin account are his separate property.  Tony failed to offer into evidence one document which directly and unequivocally traces his separate property in or out of the Darwin account _ no promissory note, no financial statement, and no banking statement.

In the majority=s substituted opinion, my colleagues have acknowledged our error and corrected the standard of review; however, the final result is unchanged.  Because the burden of proof at trial was by clear and convincing evidence, we must apply a higher standard for legal and factual sufficiency.  In re J.F.C., 96 S.W.3d 256 (Tex. 2002).  But did we apply a higher standard?

Generally, whether property is separate or community is determined by its character at inception.  Barnett v. Barnett, 67 S.W.3d 107, 111 (Tex. 2001).  Separate property consists of property owned or claimed by a spouse before marriage or acquired by a spouse by gift, devise, or descent during the marriage.  Tex. Fam. Code Ann. ' 3.001 (Vernon 1998).  Property possessed by the spouses upon the dissolution of the marriage is presumed to be community property.  Tex. Fam. Code Ann. '3.003(a) (Vernon 1998).  To overcome the presumption of community property, the spouse claiming certain property as separate property must trace and clearly identify the property claimed to be separate.  Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975); McElwee v. McElwee, 911 S.W.2d 182, 188 (Tex. App.CHouston [1st Dist.] 1995, writ denied).  The burden is on the spouse claiming separate property to trace the asset to prove its separate characterization.  McKinley v. McKinley, 496 S.W.2d 540, 543 (Tex. 1973).  Tony contends that the money originated from repayment of a loan that he made to his business, Rilco.  To which, the majority writes:

While it is true the evidence does not include documents such as a trust agreement for the Account, a Rilco W.A. loan agreement or copies of original wire transfers sending the money overseas, it is not our role to question the absence of such documents.

I respectfully submit that it is our role to question the absence of such documents.  Mere testimony that the property was purchased with separate funds, without any tracing of the funds, is generally insufficient to rebut the presumption that the property belonged to the community.  McElwee, 911 S.W.2d at 188; cf. Smith v. Smith, 22 S.W.3d 140, 144 (Tex. App.CHouston [14th Dist.] 2000, no pet.) (tracing involves establishing the separate origin of the property through evidence showing the time and means by which the spouse originally obtained possession of the property); Hilliard v. Hilliard, 722 S.W.2d 722, 723 (Tex. App.CDallas 1985, no writ).  Without these documents, Tony asks us to believe the two million dollars was his separate property based on the oral testimony of three friends (business associates) and circumstantial documentary evidence to corroborate their testimony.  Why should we believe their testimony when it is clear from the record that the trial court did not?  After Tony=s lawyer called Tony and John Rundell to the witness stand, he called Nick Carbajal; whereupon the judge made the following statement:

I don=t know what he=s said [Carbajal] he has said nothing yet that hasn=t already been said at least twice in this case.  Now if I didn=t believe the first two, am I going to believe him?  I mean, he=s still on the payroll, isn=t he?

The above comment indicates that the trial judge believed these witnesses had the same goal in mind.  Thus, the majority concludes that the trial court had clear and convincing evidence notwithstanding the absence of documents and incredible witness testimony.  I cannot reach the same conclusion.  The evidence at trial indicating that the two million dollars was Tony=s separate property was weak. Therefore, I would hold that Tony failed to overcome, by clear and convincing evidence, the presumption that funds in the Darwin account were part of the community estate.  Accordingly, I respectfully dissent. 

/s/        Charles W. Seymore

Justice

Judgment rendered and Majority and Dissenting Opinions filed August 19, 2003.

Panel consists of Justices Anderson, Hudson, and Seymore.  (Anderson, J. majority.)