Barry Michael Smith, Jr. v. State ( 2011 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00007-CV
Donald Harrell and Shirley Temesgen, Appellants
v.
Kris Hochderffer, as Trustee of the Clark Family Trust, Appellee
FROM PROBATE COURT NO. 1 OF TRAVIS COUNTY
NO. 85,570-C, HONORABLE GUY S. HERMAN, JUDGE PRESIDING
DISSENTING OPINION
I respectfully dissent from the majority opinion. Because I would hold that appellants
established their entitlement to summary judgment as a matter of law based on the appellee’s failure
to raise an issue of material fact rebutting the applicable community-property presumptions, I would
reverse the portions of the trial court’s summary-judgment order partially granting Hochderffer’s
summary-judgment motion and denying the appellants’ summary-judgment motion, and I would
render summary judgment in favor of the appellants.
Within the appellants’ argument regarding the character of the settlement funds
deposited into the Clark Family Trust (“the Trust”), the appellants rely on two presumptions: (1) the
presumption that property possessed during marriage is community property; and (2) the
presumption that a personal-injury settlement that could include both separate and community
property is community property.
Regarding the first presumption, there is no dispute that Rudie and Jessie Mae
received and possessed the settlement proceeds during their marriage. Thus, the first presumption
applies. See Tex. Fam. Code Ann. § 3.003(a) (West 2006). Regarding the second presumption, the
Settlement Agreement indicates that Rudie and Jessie Mae each received a separate amount of
money to dismiss the personal-injury suit but does not indicate the type of damages for which the
settlement proceeds were paid. The record shows that Rudie and Jessie Mae sought at least some
damages that would be considered their community property—for Rudie’s past and future medical
expenses—and at least some that would be considered Rudie’s separate property—for
Rudie’s mental anguish, disfigurement, and pain and suffering. See id. § 3.001(3) (West 2006);
Licata v. Licata, 11 S.W.3d 269, 273 (Tex. App.—Houston [14th Dist.] 1999, pet. denied);
Slaton v. Slaton, 987 S.W.2d 180, 183 (Tex. App.—Houston [14th Dist.] 1999, pet. denied). They
also sought exemplary damages. Accordingly, the settlement could have included both separate and
community property, making the second presumption applicable. Cottone v. Cottone, 122 S.W.3d
211, 213 (Tex. App.—Houston [1st Dist.] 2003, no pet.); Licata, 11 S.W.3d at 273; Slaton,
987 S.W.2d at 183.
The appellants also contend that the settlement proceeds remained community
property at all times after Rudie and Jessie Mae received the money because Rudie and Jessie Mae
did not partition the proceeds. In Hochderffer’s motion for summary judgment, he argued the
opposite, contending that the Schedule of Property constituted a partition agreement. A partition
agreement is used to convert community property to separate property. See Tex. Fam. Code
Ann. § 4.102 (West 2006). Such an agreement must be in writing and signed by both parties. See
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id. § 4.104 (West 2006). It must also contain a specific reference to a partition or other language
indicating that such a division was intended. See Byrnes v. Byrnes, 19 S.W.3d 556, 559
(Tex. App.—Fort Worth 2000, no pet.).
Here, the Schedule of Property meets the first requirement because it is in writing.
It also meets the second requirement because the Trust Agreement, which incorporates the Schedule
of Property by reference, was signed by both parties. However, the Schedule of Property does not
meet the third requirement because it does not contain any language constituting a valid partition.
The Schedule of Property states only that Rudie’s contribution to the Trust—the settlement proceeds
paid on behalf of him plus ten dollars—was his separate property and that Jessie Mae’s contribution
to the Trust—the settlement proceeds paid on behalf of her plus ten dollars—was her separate
property. Merely stating that the property was separate property is not enough; the agreement must
specifically state that the parties meant to partition the property. See Goetz v. Goetz, 130 S.W.3d
359, 361 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (holding that agreement was not
partition agreement where agreement used the word “division” but not “partition”); Byrnes,
19 S.W.3d at 559 (concluding that agreement was not partition agreement where agreement made no
reference to partition of interest); Collins v. Collins, 752 S.W.2d 636, 637 (Tex. App.—Fort Worth
1988, writ ref’d) (holding that joint income tax return identifying income from certain assets as
separate property was not partition agreement where it did not contain specific language indicating
partition). Because the language in the Schedule of Property does not include any reference to a
partition, the document is not a valid partition agreement.
Given the absence of a partition agreement and the applicability of the community-
property presumptions, I would conclude that the appellants proved their right to summary judgment
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as a matter of law. As a result, the burden would shift to Hochderffer to present evidence raising
a genuine issue of material fact that would preclude summary judgment. See Centeq Realty,
Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995); Kyle v. Countrywide Home Loans, Inc.,
232 S.W.3d 355, 358 (Tex. App.—Dallas 2007, pet. denied).
Property is characterized as separate or community at the time of inception of title.
See Tex. Fam. Code Ann. § 3.404(a) (West Supp. 2009); Strong v. Garrett, 224 S.W.2d 471, 474
(Tex. 1949); Wilkerson v. Wilkerson, 992 S.W.2d 719, 722 (Tex. App.—Austin 1999, no pet.). The
inception of title doctrine fixes the character of certain property interests when a party first acquires
a right or claim to the property. See, e.g., Henry S. Miller Co. v. Evans, 452 S.W.2d 426, 430 (Tex.
1970); Pace v. Pace, 160 S.W.3d 706, 711 (Tex. App.—Dallas 2005, pet. denied); Wilkerson,
992 S.W.2d at 722. In order to prove certain assets are separate property, a party must trace and
clearly identify the property claimed to be separate. See McKinley v. McKinley, 496 S.W.2d 540,
543 (Tex. 1973); Zagorski v. Zagorski, 116 S.W.3d 309, 316 (Tex. App.—Houston [14th Dist.]
2003, pet. denied). 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. Zagorski, 116 S.W.3d at 316; Ganesan v. Vallabhaneni, 96 S.W.3d 345, 354
(Tex. App.—Austin 2002, pet. denied). Hochderffer has provided no such tracing evidence.
The evidence presented by Hochderffer includes copies of two checks issued from
an IOLTA account and deposited into the Trust on behalf of Rudie and Jessie Mae and a copy of the
Schedule of Property, in which Rudie and Jessie Mae stated that their contributions to the Trust were
their separate property. Neither the checks nor the Schedule of Property have any bearing on the key
considerations in proving the separate nature of property: the time and means by which the spouse
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originally obtained possession of the property. The most the Schedule of Property shows is that
Rudie and Jessie Mae believed that the amount of the check made out on behalf of Rudie was
Rudie’s separate property. And the two checks deposited into the Trust show only that each of the
checks was deposited on behalf of one of the spouses, not that the checks were meant to compensate
for certain types of damages. Without settlement documents, testimony, or some other item of
evidence explaining the types of damages for which Rudie and Jessie Mae were compensated in the
personal-injury settlement, I would hold that Hochderffer has not raised an issue of fact as to the
separate nature of the property. See, e.g., Licata, 11 S.W.3d at 274 (settlement agreements
specifically pointed out nature of payments as separate property by describing types of damages
compensated by settlement).
The majority partially relies on Hochderffer’s affidavit testimony in which he stated
that he repaid all sums owed to Medicaid and paid all of Rudie’s medical expenses for the remainder
of Rudie’s lifetime from “Rudie Clark’s Trust,”1 leaving no outstanding medical bills at Rudie’s
death. The majority contends that Rudie’s medical expenses were the only community obligation
related to the personal-injury damages and that because the medical expenses were paid in full using
the trust funds, the trust funds that were deposited with the check made out “on behalf of Rudie
Clark” were appropriately characterized as Rudie’s separate property. However, the majority’s
reliance on the payment of Rudie’s medical expenses disregards the decisive point on this issue,
which is that the character of the property was fixed at the time that Rudie and Jessie Mae took title
to it. Evidence showing payments after Rudie and Jessie Mae took title to the funds does not have
1
I presume that Hochderffer’s reference to “Rudie Clark’s Trust” is a reference to the share of
the Clark Family Trust made up of the amount of the check initially deposited into the Clark Family
Trust on behalf of Rudie.
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any bearing on the character of the funds at the inception of title. See Tex. Fam. Code Ann.
§ 3.404(a); Strong, 224 S.W.2d at 474; Wilkerson, 992 S.W.2d at 722. The only way for Hochderffer
to establish the separate nature of the property was to trace and identify the property claimed to be
separate and show the time and means by which Rudie originally obtained possession of the
property. McKinley, 496 S.W.2d at 543; Zagorski, 116 S.W.3d at 316; Ganesan, 96 S.W.3d at 354.
As I previously explained, Hochderffer would have needed to provide settlement documents or some
other evidence showing the types of damages for which Rudie and Jessie Mae were compensated
in the settlement agreement, which he has not done.
Considering that courts must use the inception of title doctrine in characterizing
property, that Hochderffer has not provided any tracing evidence showing that the settlement
proceeds received by Rudie were Rudie’s separate property, and that the record does not contain any
evidence of a partition agreement, I would hold that Hochderffer has not raised a genuine issue of
material fact regarding the characterization of the proceeds and that the trial court therefore erred in
denying the appellants’ motion for summary judgment. I would reverse the portions of the trial
court’s summary-judgment order partially granting Hochderffer’s motion for summary judgment and
denying the appellants’ summary-judgment motion, and I would render summary judgment in favor
of the appellants.
___________________________________________
David Puryear, Justice
Before Chief Justice Jones, Justices Puryear and Henson
Filed: June 10, 2011
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