David Rice v. Melinda Rice ( 2023 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-21-00413-CV
___________________________
DAVID RICE, Appellant
V.
MELINDA RICE, Appellee
On Appeal from the 360th District Court
Tarrant County, Texas
Trial Court No. 360-643350-18
Before Bassel, Womack, and Walker, JJ.
Memorandum Opinion by Justice Bassel
MEMORANDUM OPINION
I. Introduction
In four issues, Appellant David Rice (Husband) challenges the corrected final
decree entered in the divorce proceeding between himself and Appellee Melinda Rice
(Wife). The issues break down into challenges to various pretrial and post-trial
procedural matters, a host of attacks on the trial court’s exercise of its discretion in
dividing the estate of the parties, and an attack on an attorney’s fee award. As to each
of the issues and subissues that are raised, the following summarizes our specific
holdings:
• We overrule Husband’s first issue because the trial court did not abuse its
discretion by denying his motion for continuance predicated on a claimed
need for additional discovery.
• We overrule Husband’s second issue because the trial court’s division of the
community estate was not manifestly unjust. Specifically:
o the trial court did not err in the treatment of Husband’s potential
personal-injury recovery because it was an expectancy;
o assuming without deciding that the trial court abused its discretion by
awarding Husband an account that Wife had “drained,” that error did
not skew the division of the estate to the point that it became
manifestly unjust;
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o the trial court did not err in its valuation of Husband’s interest in an
investment firm that he partially owns;
o the trial court did not err by failing to value and consider Husband’s
medical debt and potential tax liability;
o the trial court did not commit harmful error by refusing to permit
questions of Wife’s former counsel about attorney–client
communications; and
o the trial court was within its power to make credibility determinations
when it decided that Husband had a greater earning potential than
Wife.
o Because we overrule most of Husband’s claims of error, and,
assuming error, determine that any error is harmless, we also overrule
his claim that the cumulative effect of those alleged errors makes the
division manifestly unjust.
• The trial court did not abuse its discretion by denying Husband’s motion for
new trial grounded on a claim of newly discovered evidence.
• The trial court erred by awarding Wife appellate attorney’s fees because
there was insufficient evidence to support that award.
Thus, we affirm the trial court’s corrected final decree of divorce except for the
award of appellate attorney’s fees to Wife, we reverse the trial court’s corrected final
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decree of divorce as to the award of appellate attorney’s fees to Wife, and we remand
for a new trial solely on that issue.
II. Background
Husband and Wife separated after seventeen years of marriage. No children
were born of the marriage; thus, the issues before the trial court centered on the
division of the parties’ approximately $750,000 estate of the parties.
Husband and Wife argued for dispositions of the estate favorable to themselves
based on various factors—many of which were based on alleged misconduct by the
other. At this point, we will summarize only the broad issues that the trial court had
to reconcile in dividing the estate of the parties and reserve a more detailed discussion
to the analysis section below.
Though we do not necessarily agree with Wife’s characterizations, her brief
summarizes the primary factors that she argues support the disposition of the estate in
her favor as follows:
• Husband’s higher earning potential;
• Husband’s incurring attorney’s fees unnecessarily in his attempts to prove
that Wife had “stole[n]” money from the community, and such expenditures
far exceeded any benefit to the community;
• Husband’s significantly higher (six times higher than Wife’s) cash
withdrawals from the community estate during the divorce;
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• Husband’s expenditure in this case of incurring over $140,000 in attorney’s
fees, a “significant portion” of which were wasted trying to obtain erased
text messages in an attempt to prove what he could have proven with
documentation that he already had access to;
• Husband’s troublesome dealings with the community estate “far
exceed[ing]” those of Wife;
• Husband’s expenditure of a large sum of cash—over $37,000—on medical
treatments that he had found through Groupon and that are likely not
reimbursable in his Uber lawsuit due to his actions;
• Husband’s behavior that could result in Wife’s teaching contract not being
renewed; and
• Husband’s actions that increased Wife’s attorney’s fees.
Many of the issues raised by Husband at trial—and now on appeal—sought to
undercut the potency of the factors that Wife and the trial court relied on for an
unequal division of the estate in Wife’s favor and to argue that the trial court failed to
give appropriate weight to Wife’s alleged misdeeds:
• Husband emphasized that he had been injured in a motor-vehicle accident
involving Uber. He contended that the injuries from that accident had left
him disabled and would cause him to lose the income that he had been
receiving from his investment firm once the divorce was over. Once the
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divorce was over, he claimed that he would have to live on Social Security
Disability Income payments.
• Somewhat associated with the prior issue, Husband challenged Wife’s
expert’s valuation of his interest in the investment firm.
• He contended that Wife had compulsively hoarded cash, with that behavior
manifesting itself through a years-long habit of purchasing small items at
stores or purchasing gift cards and receiving cash back as part of the
transaction. He further contended that this type of behavior had also
allegedly manifested itself in misconduct by Wife in her job as a teacher and
that the school district that Wife worked for was investigating her for
misappropriating school funds.
• Husband also vigorously pursued allegations that Wife had used a friend to
act as a straw purchaser of a house, which was purchased shortly after the
filing of the suit for divorce and which Wife had claimed that she rented.
The controversy involving the house spawned a number of other issues that
Husband argued should have impacted the trial court’s view of Wife’s
credibility and the division of the estate. Husband contended that Wife had
fabricated a lease for the house. Other issues that spun off from the house
issue included (1) whether Wife had been forthcoming in discovery,
(2) whether the trial court should have delayed the trial to permit additional
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discovery on the issue, (3) whether Wife had perjured herself, and
(4) whether the trial court’s conclusion that Wife had wasted $90,000 of
community assets by her actions with respect to the house was a proper
disposition of the issue.
After hearing the evidence, the trial court ultimately divided the estate of the
parties unequally in favor of Wife.
Though the clerk’s record is voluminous, most of that volume resulted from
the inclusion of various discovery documents and pleadings not referenced by the
parties in their briefs. The salient procedural steps in this matter are as follows:
(1) the case was tried to the court; (2) before the trial commenced, Husband sought
and was denied a continuance to obtain additional discovery of primarily text
messages related to the alleged straw purchase of the house that Wife claimed that she
had rented; (3) the trial court signed a decree (and later a corrected final decree)
specifying how it had divided the estate of the parties and then issued findings of fact
and conclusions of law; and (4) Husband filed a motion for new trial—which was
denied by the trial court—based on a claim that after trial, Husband had obtained
documents from Wife’s employer showing her dishonesty and her concealment of
materials that should have been produced in discovery and augmenting his claims that
she had been stealing and secreting community assets. This appeal followed.
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III. Analysis
A. The trial court did not abuse its discretion by denying Husband’s
motion for continuance.
In his first issue, Husband contends that the trial court erred by denying a
continuance (that was raised in a motion to compel) in order to seek additional
discovery. The trial court did not abuse its discretion by denying the motion for a
host of reasons, including that there was testimony that the documents sought did not
exist, that Husband’s counsel had failed to pursue available avenues to obtain the
documents, and that Husband’s argument ignores how the trial court had given him
an opportunity to determine if the documents existed and his failure to challenge that
opportunity as ineffectual.
1. We set forth the status of the case when Husband sought the
continuance, the record on the need for the continuance,
and how the trial court attempted to accommodate
Husband’s continuance request.
The original petition in this matter was filed in June 2018. The continuance at
issue sought to delay a trial that had been set almost three years after the filing of the
case. This continuance was sought after at least three prior continuances had already
been granted.
Husband filed a motion to compel about three weeks before the case went to
trial, and in that motion, he claimed that he needed a continuance. The ground for
the motion was the alleged inability to obtain documents from Wife in response to
Husband’s requests for production. In the motion, Husband claimed that Wife’s
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responses to his requests for production were inadequate because they failed to
include the following:
1. Phone Records - We have requested detailed phone records [that
include Wife’s] text messages sent and received.
2. Full records from . . . Groupon, Amazon, Kohl’s[,] and Dick’s
Sporting Goods accounts - we have previously requested full compliance
and have provided detailed instructions on how to accomplish this
request.
3. Lowe’s charge account statements - such statements are
responsive to Request 21 on [Husband’s] Request for Production and
Inspection and have not been produced.
The motion asserted that Wife’s counsel had failed to cooperate in the entry of
an order compelling production and focused on the fact that Wife “ha[d] provided
526 pages of text messages between herself and [Husband] but ha[d] refused to
produce any text messages between herself and others, which she clearly ha[d] access
to, because they would show the fraud and perjury she has committed against
[Husband] and this [c]ourt.” As part of the relief sought, Husband requested that
“[t]his case should be continued until such time as the required or ordered records be
produced.”
The trial court conducted a hearing on the motion. The focus of the motion
was the text messages that Wife had allegedly not produced. Husband’s counsel
explained that the text messages related to a claim that Wife had engaged in a straw-
man transaction for the purchase of a house—a transaction that served as one of the
primary controversies in the division of the estate of the parties:
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The first one is phone records. . . . [W]e have been seeking text
messages that [Wife] has had between herself and a real estate agent and
herself and her best friend, [the alleged straw purchaser]. We’ve been
seeking these for over a year.
There’s been a claim [that] she didn’t have access to these text
messages. But in January, she provided us with 526 pages of text
messages between herself and [Husband], which she allegedly believes is
an official -- but she has consistently refused to provide us with these
text messages of other important witnesses.
And we believe that she has the phone, she has the ability to load
that program just like she did to provide us the other messages and
provide that to us.
The reason why this is important is that we have provided -- the
[c]ourt may remember -- we had to get letters of interrogatory because
we were taking the deposition of a witness in Kansas City, who’s her
best friend.
We believe that the house that she is in is actually -- that she’s
allegedly renting from her best friend in Kansas City who allegedly
bought this house in Texas[;] we believe it’s a straw transaction. We
believe that the substantial monies that were put down on this house and
[that] the alleged rent that she is paying, is actually -- we believe it’s her
own property.
We believe that the testimony all taken together will reflect that,
but it will be proven specifically by these text messages because I’ve
taken the deposition of [Wife], I’ve taken the deposition of [the alleged
straw purchaser], and I’ve taken the deposition of the real estate [agent].
And we know there’s been significant communications between them
related to this, and we believe the text messages will show that there’s
actually been a fraud committed on this [c]ourt. And by her testimony
and their testimony[,] it’s significant . . . .
Wife testified during the hearing about why she did not have copies of the
sought-after texts and her prior production of the texts between her and Husband. At
the time of the purchase of the house that Husband claimed was a straw purchase,
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Wife had been “on [her] friend’s [phone] line.” Wife had provided Husband’s counsel
with “a release to get anything from [her] friend that he needs.” Wife claimed that she
had deleted all the texts from this phone, except for the ones that she had exchanged
with Husband. The cell phone that she had used during the relevant period was
returned to the cell-service provider. The cell-service provider had produced several
hundred pages of documents showing the phone numbers between which texts had
been exchanged but did not have any details of the messages themselves. The 500-
plus pages of actual texts that were produced were text messages between herself and
Husband that Wife had screenshotted and saved.
After hearing this testimony, the trial court asked Husband’s counsel how he
expected Wife to produce documents that she did not have, what he had done to
obtain the documents after being given the release to obtain them, and how the
technology would permit him to obtain the documents that he sought. Counsel
responded that he assumed the documents were available from the phone and had
not pursued other avenues to obtain the documents:
THE COURT: Okay. [Husband’s counsel], I can’t make her give
something she doesn’t have. How long have you had that release,
[Husband’s counsel]?
[Husband’s counsel]: Just a couple of months, I believe.
THE COURT: Okay. And during the couple months, have you
taken the opportunity to get everything you can from that friend? Have
you checked the cloud? Have you done all those things?
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[Husband’s counsel]: I’m not an expert at all, Judge, in this
regard. It was our belief she had the phone, and she could provide that
information to us and that’s what we’ve been trying to do.
In addition --
THE COURT: Okay. And I’m sorry that you don’t understand
how text messages work, but when you have the phone, the phone itself
doesn’t give you that information. So I don’t know what else to tell you.
After additional discussion, the trial court again asked and counsel confirmed
that he had received a release to obtain the phone records from the cell-service
provider. Husband’s counsel again raised Wife’s dilatory discovery tactics and noted
delays in obtaining the deposition of the alleged straw purchaser. Husband’s counsel
claimed that he had “attempted to do as much as [he] could as reasonably as [he]
could, been trying to save as much money as [he] could by doing this.” The trial court
then clarified that Husband had taken the deposition of the alleged straw purchaser,
but Husband contended that the alleged straw purchaser had perjured himself. The
trial court then asked why Husband had delayed in filing his motion to compel, and
another discussion ensued regarding that Wife had not produced all the records that
she had in her possession when previously ordered to do so.
The trial court then noted that it did not know how to help Husband’s counsel
because he had not pursued the discovery from the available sources:
THE COURT: [N]ow, if the messages aren’t there, they’re not there. I
don’t know what to tell you, [Husband’s counsel]. What you have are
from Sprint and what she’s screenshotted on her phone. You can’t get
those records if they’re deleted from the phone unless they’re in an
iPhone Cloud on the phone[,] but that would have to be the cloud that
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was owned by whoever owned it. And I’m sorry you don’t know
enough about that to ask for it, but I’m not going to continue this trial.
Counsel did not respond to the court’s statement other than to offer the
testimony of his client. Husband testified that Wife had a program called “Decipher”
on her computer to extract text messages. Wife acknowledged that she had such a
program but stated that the program would not pull texts that had been deleted. The
trial court ordered Wife to immediately produce the computer with the Decipher
program so that it could be examined by an expert for Husband. If the examination
produced additional evidence, the trial court stated that it would consider a
continuance for a few weeks. Husband’s counsel claimed that it was impossible to
have the examination done quickly, but the trial court disagreed.
With respect to the documents from the various vendors that the motion to
compel referenced, Husband’s counsel briefly described them but also stated that the
most important issue was the text messages. After the discussion that we have
detailed above about the text messages, the trial court asked Husband’s counsel
whether there was “[a]nything other than the phone messages” that he wanted to
discuss, and he replied, “That’s it for us.”
The trial began as scheduled. Husband sought a continuance at the beginning
of the trial but made no reference to the documents discussed at the motion-to-
compel hearing, his inability to obtain an expert to inspect Wife’s computer, or
(assuming an expert had inspected Wife’s computer) the documents that were
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uncovered by such an inspection. Husband limited his request for a continuance on
the following grounds:
As we placed in our notice to the [c]ourt, we are not ready to proceed.
We still have not been able to go to mediation in this case. The main
reason is because of the fact that it took so long on the discovery that we
have not had an opportunity to accomplish that. We think that
mediation would be a better source of resolving this case rather than
litigating it.
In addition to that, . . . [Wife’s counsel] just gave me his exhibit
list, and he includes in that a third amended inventory and appraisement
of [Wife], which I’ve seen now for the first time today, which was
signed, looks like at least a week ago, and so I haven’t had an
opportunity to review that.
But we would request that the [c]ourt continue the case and allow
us to go to mediation and help get it resolved.
No mention of the continuance to obtain the texts was made again until hearings on
post-trial motions, and then there was no mention of any effort that Husband had
made to inspect Wife’s computer.
2. We set forth the standards governing a continuance request
based on the need for additional discovery.
The Fourteenth Court of Appeals recently provided a succinct summary of the
standard of review and elements of proof that govern a motion for continuance
predicated on the need for additional discovery:
We review the denial of a motion for continuance under the abuse-of-
discretion standard. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150,
161 (Tex. 2004). In determining whether the trial court abused its
discretion in denying a request for a continuance to conduct further
discovery, courts consider the following nonexclusive factors: (1) the
length of time the case has been on file, (2) the materiality of the
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discovery sought, and (3) the movant’s diligence in obtaining the
discovery. Tri-Stem, Ltd. v. City of Houston, 566 S.W.3d 789, 799 (Tex.
App.—Houston [14th Dist.] 2018, pet. denied).
Matter of Marriage of Moncur, 640 S.W.3d 309, 321 (Tex. App.—Houston [14th Dist.]
2022, no pet.).
3. We conclude that the trial court did not abuse its discretion
by denying Husband’s motion for continuance.
Husband marshals the following arguments to support his claim that the trial
court abused its discretion by denying his motion for continuance, but as we explain,
none of these arguments are persuasive:
• Husband first argues that the discovery sought was material because it
impacted the division of the estate of the parties. With respect to the
documents from the vendors, Husband did not press this argument at the
continuance hearing and described them as of secondary importance and
did not press the need for their production when asked if there were any
other matters to be discussed. With respect to the text messages, Husband
simply ignores Wife’s testimony that the records he sought did not exist
because she had deleted the body of the texts. Thus, Husband ignores the
question of why the case should have been continued if the documents did
not exist. Nor does he contend that the remedy that the trial court
fashioned was inadequate. The trial court ordered the production of Wife’s
computer to be examined by an expert employed by Husband to determine
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whether the text messages existed. When the case came to trial, no mention
was made of any inability of Husband to have the computer examined or—
assuming an expert had inspected Wife’s computer—of any documents that
were obtained from the examination. This, again, leaves Husband in the
position of claiming documents were material without proof that they even
existed.
• Next, Husband argues that delays in the trial setting could not be attributed
to him because discovery was delayed by Wife’s obstructive tactics and by
the alleged straw purchaser of the house. This argument begs the question
in two ways. First, it ignores the question regarding whether the text
messages that Husband sought from Wife were in her possession and why
further delay was warranted when Husband could offer no proof that the
documents he sought existed. Second, Husband turns a blind eye to his
counsel’s silence in response to the trial court’s inquiry on why he did not
pursue the documents from the cell-service provider. In other words, there
is no explanation why the trial should have been further delayed because
Husband had an avenue to obtain the discovery and because his counsel
offered no reason why that avenue was not pursued.
• Further, Husband argues that he acted with diligence to obtain the records.
There are two flaws in this argument. The claim of diligence is rebutted by
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the fact that counsel could offer no explanation for why he did not pursue
the document from the cell-service provider even though he had received a
release “a couple of months” prior to the hearing to obtain whatever
documents existed. Nor did he explain why he did not pursue examination
of Wife’s computer to determine what the Decipher program held until the
eve of trial.
• Finally, in his reply brief, Husband argues that the continuance should have
been granted because certain “school records” were not produced. No
school records were mentioned in Husband’s motion to compel or at the
continuance request at trial. Those documents were mentioned in a post-
trial hearing. Husband does not explain how the trial court abused its
discretion by denying a continuance based on grounds not presented to it at
the time of these hearings.
At bottom, the trial court did not abuse its discretion by denying Husband a
continuance to obtain documents when (1) Wife testified that the primary documents
that Husband wanted no longer existed, and his lawyer offered no reason why the
failure to obtain the other documents referenced in the motion to compel were vital
to Husband’s case; (2) Husband’s counsel offered no explanation for why he did not
pursue the documents from the cell-service provider even though he had the means
to do so; and (3) there is no explanation for why the remedy fashioned by the trial
court to permit examination of Wife’s computer was inadequate, especially when no
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suggestion was later made that Husband had lacked the time or ability to conduct the
examination or that the examination had not born fruit.
Accordingly, we overrule Husband’s first issue.
B. The trial court made a “just and right” division of the estate of the
parties.
1. We set forth (1) the principles that govern the “just and
right” division of the estate of the parties, (2) the standard of
review to test the trial court’s exercise of its discretion in
dividing the estate, and (3) what level of error must be
present in the division to warrant a reversal.
a. We set forth the authority obligating the trial court to
make a “just and right” division of the estate of the
parties and the factors to be considered in making that
division.
The Family Code mandates that “[i]n a decree of divorce or annulment, the
[trial] court shall order a division of the estate of the parties in a manner that the court
deems just and right, having due regard for the rights of each party.” Tex. Fam. Code
Ann. § 7.001. To carry out the mandate of Section 7.001, the division need not be
equal, but it must be equitable. Halleman v. Halleman, 379 S.W.3d 443, 452 (Tex.
App.—Fort Worth 2012, no pet.). “Although the court need not divide the
community estate equally, a disproportionate division must be supported by some
reasonable basis.” Smith v. Smith, 143 S.W.3d 206, 214 (Tex. App.—Waco 2004, no
pet.).
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This court has previously cataloged the factors that a trial court may consider in
making its division:
Nonexclusive factors that the trial court may consider include “the
spouses’ capacities and abilities, benefits [that] the party not at fault
would have derived from continuation of the marriage, business
opportunities, education, relative physical conditions, relative financial
condition and obligations, disparity of ages, size of separate estates, and
the nature of the property.” Murff v. Murff, 615 S.W.2d 696, 699 (Tex.
1981). The trial court may also consider one spouse’s dissipating,
misusing, and defrauding the community estate. Schlueter v. Schlueter, 975
S.W.2d 584, 589–90 (Tex. 1998); Vannerson v. Vannerson, 857 S.W.2d 659,
669 (Tex. App.—Houston [1st Dist.] 1993, writ denied). Finally, the trial
court may consider fault in the breakup of the marriage, but the trial
court should not use fault to punish the guilty party when dividing the
community estate. Bradshaw v. Bradshaw, 555 S.W.3d 539, 543 (Tex.
2018) (citing Young[ v. Young], 609 S.W.2d [758,] 761–62 [(Tex. 1980)]).
No single factor controls. Felix-Forbes v. Forbes, No. 02-15-00121-CV,
2016 WL 3021829, at *2 (Tex. App.—Fort Worth May 26, 2016, no pet.)
(mem. op.); see, e.g., Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex. 1987),
overruled on other grounds by Price v. Price, 732 S.W.2d 316, 319–20 (Tex.
1987).
Hamilton v. Hamilton, No. 02-19-00211-CV, 2020 WL 6498528, at *5 (Tex. App.—Fort
Worth Nov. 5, 2020, no pet.) (mem. op.).
b. We set forth the standard of review that we apply to
test the propriety of the trial court’s division of the
estate of the parties.
Though the overall standard of review in making a “just and right” division is
an abuse of discretion, the application of that standard requires a layered analysis that
tests both the level of information that the trial court had to act on and then how it
implemented its decision using that information. See Logsdon v. Logsdon, No. 02-14-
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00045-CV, 2015 WL 7690034, at *3 (Tex. App.—Fort Worth Nov. 25, 2015, no pet.)
(mem. op.). Again, a prior opinion from this court succinctly describes the approach:
In family-law cases, the traditional sufficiency standards of review
overlap with the abuse-of-discretion standard of review; therefore, legal
and factual insufficiency are not independent grounds of error but are
relevant factors in our assessment of whether the trial court abused its
discretion. Neyland v. Raymond, 324 S.W.3d 646, 649 (Tex. App.—Fort
Worth 2010, no pet.). To determine whether there has been an abuse of
discretion because the evidence is legally or factually insufficient to
support the trial court’s decision, we must determine (1) whether the trial
court had sufficient evidence upon which to exercise its discretion and
(2) whether the trial court erred in its application of that discretion. Id.The applicable sufficiency review comes into play with regard to the first
question. Id.The sufficiency standards of review we apply are the same for a
trial court’s findings of fact as for a jury’s answers to questions in the
court’s charge; the findings are reviewable for legal and factual
sufficiency of the evidence to support them. Catalina v. Blasdel, 881
S.W.2d 295, 297 (Tex. 1994); Anderson v. City of Seven Points, 806 S.W.2d
791, 794 (Tex. 1991); see also MBM Fin. Corp. v. Woodlands Operating Co.,
292 S.W.3d 660, 663 n.3 (Tex. 2009). Evidence is legally insufficient to
support a trial court’s finding of fact only when (1) the record discloses a
complete absence of evidence of a vital fact, (2) the court is barred by
rules of law or of evidence from giving weight to the only evidence
offered to prove a vital fact, (3) the evidence offered to prove a vital fact
is no more than a mere scintilla, or (4) the evidence establishes
conclusively the opposite of a vital fact. Uniroyal Goodrich Tire Co. v.
Martinez, 977 S.W.2d 328, 334 (Tex. 1998) [(op. on reh’g)] . . . . In
determining whether there is legally sufficient evidence to support the
finding under review, we must consider evidence favorable to the finding
if a reasonable factfinder could and disregard evidence contrary to the
finding unless a reasonable factfinder could not. Cent. Ready Mix Concrete
Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson, 168
S.W.3d 802, 807, 827 (Tex. 2005). When reviewing an assertion that the
evidence is factually insufficient to support a finding, we set aside the
finding only if, after considering and weighing all of the evidence in the
record pertinent to that finding, we determine that the credible evidence
supporting the finding is so weak, or so contrary to the overwhelming
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weight of all the evidence, that the answer should be set aside and a new
trial ordered. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986) (op.
on reh’g); Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Garza v. Alviar,
395 S.W.2d 821, 823 (Tex. 1965).
Id.1
c. A trial court’s errors in valuing the estate of the parties
do not constitute an abuse of discretion unless they
render the division of the estate manifestly unjust.
Simply because the trial court makes an error in valuing the estate of the
parties, that error does not produce an automatic remand for a new trial because
[v]aluation errors, standing alone, do not constitute an abuse of
discretion. Thomas v. Thomas, 603 S.W.2d 356, 358 (Tex. . . . App.—
Houston [14th Dist.] 1980, writ dism’d . . . ) (op. on remittitur). Like
errors affecting the just and right division, errors in valuation of property
do not require reversal unless the valuation errors render the trial court’s
division manifestly unjust. Von Hohn[ v. Von Hohn], 260 S.W.3d [631,]
Husband contends that the trial court erred by failing to make findings about
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the values and amounts of various assets and liabilities. Wife responds,
On a related note, Husband incorrectly asserts in his brief that the trial
court erroneously failed to make findings of value related to certain
credit[-]card accounts[;] debts incurred after June 1, 2018[;] and the
amount of Husband’s attorney’s fees the court characterized as waste.
He has failed to support his argument with references to the record
showing that the amounts were disputed. The amounts and values were
not disputed, so findings were not required. Regarding the amount of
attorney’s fees he wasted, Husband has failed to show that the trial court
was required to make a finding of that value. [Brief references omitted.]
Husband never tells us how the failure to make the findings that he claims
should have been made has negatively impacted his ability to present his appeal, and it
does not appear that it has. See Isaac v. Burnside, 616 S.W.3d 609, 614–15 (Tex. App.—
Houston [14th Dist.] 2020, pet. denied) (“We conclude that the trial court’s failure to
issue findings of fact and conclusions of law did not leave [appellant] to guess the
basis for the trial court’s rulings and did not prevent him from making a proper
presentation of his case to this court.”).
21
641[ (Tex. App.—Tyler 2008, no pet.)]. However, “a trial court abuses
its discretion in dividing the community estate without knowledge of its
extent and proof of its value.” Bradshaw . . . , 555 S.W.3d [at] 549 . . .
(Devine, J., concurring); Finn v. Finn, 658 S.W.2d 735, 746 (Tex. App.—
Dallas 1983, [writ ref’d n.r.e.]).
In re Marriage of Hardin, 572 S.W.3d 310, 313–14 (Tex. App.—Amarillo 2019, no pet.);
see also Touponse v. Touponse, No. 02-20-00285-CV, 2021 WL 2753504, at *5 (Tex.
App.—Fort Worth July 1, 2021, no pet.) (mem. op.) (stating that “[i]f a
mischaracterization has only a slight effect on the trial court’s division of the
community estate, the error does not require reversal” but that “if the
mischaracterization is of such magnitude that it affects the just and right division of
the community estate, we must remand the entire case to the trial court for another
division based on the correct characterization of the property”). For example, errors
that have a de minimis effect on the division, such as in the range of two to three
percent, do not require reversal and remand. Monroe v. Monroe, 358 S.W.3d 711, 718
(Tex. App.—San Antonio 2011, pet. denied) (op. on reh’g) (construing as de minimis
the trial court’s mischaracterization of separate property as community property—
where the value of the mischaracterized separate property was less than two percent
of the community estate); Grossnickle v. Grossnickle, 935 S.W.2d 830, 851 (Tex. App.—
Texarkana 1996, writ denied) (op. on reh’g) (holding that error of three percent in
division of estate did not warrant remand).
22
2. We conclude that the trial court did not abuse its discretion
by considering a potential recovery in Husband’s personal-
injury suit.
In subsection B of his second issue,2 Husband argues that the trial court abused
its discretion because it allocated certain medical debt to Husband in reliance on his
expectancy of a recovery in the personal-injury suit that he was pursuing against Uber.
To support this argument, Husband relies on cases holding that unearned future
income is separate property, which may not be divested in a divorce. The trial court
did not violate this rule. Instead, it considered the potential recovery in assigning
liability as a factor in its division of the community estate. Thus, the rule that
Husband cites establishes a rule that the trial court did not violate.
Briefly, Husband testified that he was seriously injured while riding in an Uber.
At the time of the divorce trial, Husband’s counsel in the personal-injury suit had
made a settlement demand of $680,000, which the defendant had countered at
$15,000, but the suit had not been set for trial.
The decree awarded Husband “[t]he portion of any proceeds arising out of [his]
lawsuit with Uber which would be reimbursement for medical bills or lost earnings.”
The decree provided that Husband shall pay “[a]ll of [his] medical liabilities.”
The trial court’s findings deal with the Uber suit as follows:
49. The [c]ourt finds by clear and convincing evidence that the
following is Husband’s separate property:
Husband uses subsection A of his second issue to set forth the standard of
2
review; his substantive arguments appear in subsections B through H.
23
....
b) The portion of the lawsuit against Uber that is not
reimbursement for medical bills or lost earnings.
The findings also explained the type of consideration that the trial court had
given the Uber suit and how that consideration had impacted the trial court’s
resolution:
35. The [c]ourt did not place the Uber lawsuit on the [property-division]
spreadsheet as a line item; however, the [c]ourt considered the potential
settlement, [and] the potential settlement was a small part of the [c]ourt’s
decision regarding equities.
36. The [c]ourt finds that . . . Husband spent a large sum of cash
on what he characterized as medical expenses relating to the injury from
the Uber accident on treatments [that] he [had] found through Groupon.
37. . . . Husband’s actions will likely make it impossible for the
community to be reimbursed from . . . [H]usband’s mostly separate
property lawsuit for those portions of the medical expenses.
38. The [c]ourt considered the medical bills and cash spent on
treatments for injuries resulting from that lawsuit in the division of
property.
39. Husband has a potential to have the non-cash expenditures
. . . reimbursed from the lawsuit.
40. The [c]ourt’s consideration of the Uber lawsuit was part of
the totality of the circumstances and not an independent cause for the
disproportionate share of the community.
As an initial matter, Husband does not attack the trial court’s characterization
of the Uber suit. Characterizing the suit overall as separate property—with certain
discrete recoveries being community property—is a correct characterization of the
24
suit. Specifically, “a recovery for personal injuries sustained by the spouse during
marriage is that spouse’s separate property, except any recovery for loss of earning
capacity, medical expenses, and lost wages during the marriage.” Farmers Tex. Cnty.
Mut. Ins. Co. v. Okelberry, 525 S.W.3d 786, 793 (Tex. App.—Houston [14th Dist.] 2017,
pet. denied); see also Tex. Fam. Code Ann. § 3.001(3) (“A spouse’s separate property
consists of . . . the recovery for personal injuries sustained by the spouse during
marriage, except any recovery for loss of earning capacity during marriage.”).
Instead, Husband argues that the trial court could not rely on a potential
recovery in the Uber lawsuit because a recovery in that suit was speculative, i.e., it was
merely an expectancy. Specifically, Husband argues that
[t]he pending lawsuit was not part of the marital estate because any
future value is unknown and unguaranteed. . . . Husband was harmed by
the trial court’s consideration of the lawsuit because Husband was
assigned all of the existing medical liabilities with no guarantee that he
will receive any value from the lawsuit to balance out that debt. Instead,
the court should not have considered the lawsuit[] and should have
equitably divided the medical liabilities. This is especially true
considering that if Husband does receive a future award or settlement,
any potential community interest in that award could be properly divided
in the future when the actual value would be known.
Therefore, it was improper for the trial court to consider the
pending lawsuit when dividing the marital estate because it was a mere
expectancy interest. . . . The court’s error resulted in an unjust division
because Husband was assigned all of the existing medical debt based on
his potential to recover medical expenses in the future. Accordingly, this
[c]ourt should remand for a new trial. [Record reference omitted.]
But the cases that Husband cites for the principle that a trial court cannot
consider an expectancy establish that rule in a context untethered to his argument:
25
the cases hold that a trial court cannot characterize future income as community
property. One of the primary opinions that Husband relies on is Murray v. Murray,
276 S.W.3d 138 (Tex. App.—Fort Worth 2008, pet. dism’d). Murray dealt with a
challenge to a divorce decree because it granted one spouse a portion of the other
spouse’s future income, which was not community property. Id. at 146.
The question in Murray turned on whether the award gave the receiving spouse
income resulting from a hoped for but not yet occurring contingency, which was the
addition of new customers and brokers to the earning spouse’s business. Id. at 148.
Thus, the funds received in the event that such a contingency occurred was future
income, which was separate property. As Murray explained,
Because the addition of new members and brokers is not a guarantee,
the growth in income resulting from new members and brokers is merely
an expectancy. Furthermore, although [the spouse who might earn the
income] has significant rights as to the income stream earned during
marriage, he does not and cannot have any rights in something he has
yet to acquire. Therefore, any growth in income resulting from new
members and brokers being added after the divorce is [the earning
spouse’s] separate property.
Id. Murray relied on cases with holdings that stand for the proposition that the mere
expectation of future income is not a community asset because it has not yet been
earned. See Loaiza v. Loaiza, 130 S.W.3d 894, 906–07 (Tex. App.—Fort Worth 2004,
no pet.) (holding the fact that ballplayer signed contract to play in future year during
marriage did not make future income community property because the income was
not earned until the post-divorce services were performed); see also Von Hohn, 260
26
S.W.3d at 641 (holding that because no money had been received by husband’s law
firm from pending but unsettled cases, revenue from those cases was no more than an
expectancy interest, and any money to be received constituted future earnings to
which wife was not entitled because they were separate property).
At bottom, the trial court did not violate the rule of Murray or the other cases
cited because the trial court did not mischaracterize future income. Instead, the trial
court considered the Uber lawsuit to the extent that “Husband has a potential to have
the non-cash expenditures . . . reimbursed from the lawsuit.” To challenge this
consideration, Husband attempts to transmute a rule about the characterization of
future income into one that makes it a per se abuse of discretion to consider future
events as a factor in determining a just and right division. So broad a rule is contrary
to the Murff factors, several of which look to what may but is not guaranteed to
happen in the future, such as the spouses’ business opportunities and earning capacity.
615 S.W.2d at 699 (stating that trial court may consider spouses’ earning capacities
and abilities, benefits that the party not at fault would have derived from continuation
of the marriage, business opportunities, education, relative physical conditions,
relative financial condition, and obligations).
Admittedly, the cases cited by Wife provide no bright-line guidance on the
issue. The one opinion offering a bit of guidance is Osborn v. Osborn, 961 S.W.2d 408(Tex. App.—Houston [1st Dist.] 1997, pet. denied). Osborn dealt with a “personal[-]
injury lawsuit [that] had not yet been tried and had not settled.” Id. at 413. One
27
spouse challenged the sufficiency of the evidence supporting a finding “that
characterized his personal[-]injury lawsuit as community property.” Id. Osborn
devoted most of its discussion to issues that we have already discussed about which
portions of a personal-injury recovery are community and which are separate. Id. at
414–15. At the end of the day, Osborn concluded that the trial court’s characterization
of the potential personal-injury recovery was incorrect. Id. To correct the trial court’s
error, the Houston First Court of Appeals remanded for the trial court to perform the
following task:
[T]he trial court is required to properly characterize the damages sought
by the personal[-]injury lawsuit. The damages for [the injured spouse’s]
personal injury are his separate property; the damages for [the other
spouse’s] claim for loss of consortium are her separate property; the
damages for [the injured spouse’s] lost wages, medical costs, and other
expenses are community property. Because we cannot determine if the
mischaracterization affected the trial court’s just and right division, we
remand the entire community estate for a just and right division based
on properly characterized property.
Id. at 415. The most we can glean from Osborn is that the First Court of Appeals saw
no impediment in characterizing the suit and considering it in its division of the estate
of the parties, even though it viewed a recovery in the suit as being speculative. Id.The trial court here went no further than Osborn in its consideration of the Uber suit.
And here, there was an additional factor because the trial court found that
Husband’s method of payment for a large portion of his medical bills made it unlikely
that they could be recovered in the Uber suit. Again, the trial court found that
28
36. . . . Husband spent a large sum of cash on what he characterized as
medical expenses relating to the injury from the Uber accident on
treatments [that] he [had] found through Groupon.
37. . . . Husband’s actions will likely make it impossible for the
community to be reimbursed from . . . [H]usband’s mostly separate
property lawsuit for those portions of the medical expenses.
These are factors beyond a potential recovery in the Uber suit for the trial
court’s actions; Husband placed the community in a position where it could
potentially not recover a large portion of the medical debt that he claims Wife should
share. As Wife points out, Husband does not attack these findings.3
We overrule subsection B of Husband’s second issue.
3
In his reply brief, Husband challenges Wife’s statement that he did not attack
these findings, apparently because his opening brief made the general statement that
“Husband challenges findings 7 through 52, as discussed more specifically in each
subsection below.” Husband’s opening brief does not even mention findings 36 and
37. We are under no obligation to test an unchallenged finding for evidentiary
support. See Sister Initiative, LLC v. Broughton Maint. Ass’n, Inc., No. 02-19-00102-CV,
2020 WL 726785, at *4–5 (Tex. App.—Fort Worth Feb. 13, 2020, pet. denied) (mem.
op.). Husband’s fourteen-word challenge to forty-five findings is not a viable
method to claim that he has challenged a specific finding simply because it fell within
the number range of the findings that his general statement lists.
29
3. We conclude that the trial court potentially abused its
discretion by awarding Husband an account that Wife
testified had been “drained.”
In subsection C of his second issue, Husband argues that the trial court abused
its discretion because it awarded an account to him that Wife later testified had been
drained. We agree that this act is a potential abuse of discretion but hold that even if
it was error, it did not render the division of the estate manifestly unjust.
Husband’s contention focuses on a Merrill Edge account that was awarded to
him and that the trial court found to contain $25,187. 4 However, Wife testified at a
post-trial hearing that the following had occurred with respect to the account:
Q. Was a Merrill [Edge] account awarded to you [in an earlier
rendition]?
A. Yes, but it’s been drained.
Q. When was that drained?
A. It’s been drained for a while as far as paying all my lawyer
costs.
Q. Was that from before the divorce or as of the divorce?
A. It was in the process of. It’s been drained for a while.
Q. So it’s at a zero balance now?
A. Well, I put some of the loan that I got in there but, yes.
4
Appellant’s brief points out that the trial court referred to the account as a
Merrill Lynch account instead of as a Merrill Edge account.
30
Wife argues that property should be valued at the time of divorce and that the
fact that the asset is now worthless is a nonevent. Husband argues that although
assets are usually valued at the time of divorce, that principle is not immutable.
Husband cites to a prior opinion of this court to establish the principle that the date
of valuation is a matter of the trial court’s discretion:
The value of community assets is generally determined as of the date of
divorce or as close to that date as possible. Quijano v. Quijano, 347
S.W.3d 345, 349 (Tex. App.—Houston [14th Dist.] 2011, no pet.).
However, we have held that the facts of a particular case may necessitate
some other basis for the property division and that this decision should
be left to the discretion of the trial judge to avoid the inequities that
could result by establishing a bright-line rule. See Parker[ v. Parker], 897
S.W.2d [918,] 932 [(Tex. App.—Fort Worth 1995, writ denied), overruled
on other grounds by Formosa Plastics Corp. USA v. Presidio Eng’rs &
Contractors, Inc., 960 S.W.2d 41 (Tex. 1998).]
Finley v. Finley, No. 02-11-00045-CV, 2015 WL 294012, at *10 (Tex. App.—Fort
Worth Jan. 22, 2015, no pet.) (per curiam) (mem. op.). A valid argument may be
made that a trial court abuses its discretion when it divides an estate based on the
value of an account at the time of the filing of the divorce, but the evidence shows
that the asset had disappeared before the final decree was entered because of the
actions of one of the spouses. But we need not reach that question because, as we
explain below, we conclude that even if an error in the award of the account occurred,
such error did not make the division otherwise manifestly unjust.
We overrule subsection C of Husband’s second issue.
31
4. We conclude that the trial court did not abuse its discretion
in its valuation of Husband’s interest in an investment firm.
In subsection D of his second issue, Husband attacks the trial court’s findings
that value his interest in the investment firm—Helix Financial Group—of which he
was a part owner. The attack takes two approaches: (1) Wife’s expert’s opinion about
the value of Helix was unreliable because of a failure by the expert to recognize that
Helix did not have any accounts receivable; and (2) the trial court’s valuation of the
firm was based on its own view of the goodwill that existed in the firm, and its own
view contradicted the opinions of the experts who testified. We reject both
contentions.
a. We set forth the accounts-receivable error that
Husband claims made Wife’s expert’s opinion
unreliable.
In the first portion of Husband’s argument in subsection D of his second issue,
Husband argues that Wife’s expert’s opinion of the value of Helix was unreliable
because the expert made an error about whether the company had accounts
receivable. Husband waived his reliability challenge by not making it at trial and by
making no argument regarding how the expert’s opinion remained unreliable after he
corrected the error regarding accounts receivable.
Wife’s expert originally valued Husband’s interest in Helix at $104,900. Wife’s
expert used an asset approach to value Husband’s interest in Helix. One of the assets
the expert included in his asset valuation was accounts receivable, which had a value
32
of $30,400. 5 On cross-examination, Husband’s counsel pointed out that Helix did not
carry any accounts receivable, and the expert immediately reduced his value of
Husband’s interest to $82,000 to account for the fact that there were no accounts
receivable.
As a result of this error, Husband argues that “Wife’s expert admitted that his
calculations contained error and were based on assumptions about the business’[s]
assets. As such, his testimony was not reliable evidence of Helix’s value, and the trial
court erred by relying on Wife’s expert’s value when valuing Husband’s business.”
[Record reference omitted.] But Husband does not cite to any objection that he
lodged in the trial court regarding the reliability of the expert’s opinions. Such an
objection is required when a challenge is made to the reliability of an expert’s
methodology; one of the reasons for requiring an objection is that it gives the expert
an opportunity to correct computational errors. Pike v. Tex. EMC Mgmt., LLC, 610
S.W.3d 763, 786 (Tex. 2020) (stating that “[r]equiring an admissibility objection to the
reliability of expert testimony gives the proponent a fair opportunity to cure any
deficiencies and prevents trial and appeal by ambush” and that “when an expert
opinion ‘is admitted in evidence without objection, it may be considered probative
evidence even if the basis of the opinion is unreliable’”).
The record uses $30,200 one time, but the rest of the time the value was
5
placed at $30,400. We therefore use the latter value.
33
Further, Husband’s argument focuses on the expert’s error and not its
correction. Here, Husband’s counsel pointed out the flaw, and Wife’s expert changed
his calculation to address it. The matter dropped. Husband’s counsel then discussed
the issue with Husband’s expert, who testified that the error would result in a $22,000
to $23,000 correction—the correction that Wife’s expert made. So the question is not
whether Wife’s expert’s opinion was unreliable because it contained a flaw but
whether the opinion was unreliable after the flaw was corrected. Husband’s brief
leaves this question unanswered, presumably because the record would not support
the argument.
b. Husband claims that the trial court’s findings show
that its determination of Husband’s interest in Helix
is not supported by the evidence.
In the second portion of Husband’s argument in subsection D of his second
issue, Husband argues that the trial court made findings that indicated that it disagreed
with both Husband’s and Wife’s experts’ opinions and made an adjustment to the
value of Helix attributable to Husband when there was no evidence that supported
the adjustment. The record does not support his argument. The trial court made a
finding that it disagreed with the percentage of goodwill assigned to Husband by both
experts, but the value that the trial court placed on the interest was that assigned by
Wife’s expert. Although the findings indicate that it might have been the trial court’s
impulse to assign a higher value, it did not act on that impulse and instead placed the
value within the range of values offered by the experts.
34
The trial court found the value of Husband’s interest in Helix to be $82,000.
The trial court’s findings with respect to Husband’s interest in Helix are as follows:
44. The [c]ourt finds that due to . . . Husband’s lack of involvement in
the business, . . . [Wife’s expert’s] estimation of his imputed salary was
more accurate.
45. This [c]ourt finds that neither expert was aware that the
partner was engaged in the primary day-to-day contact with clients and
that they both were in error to assign 50% of the goodwill to Husband.
This finding is made based upon the testimony of both experts and
Husband’s testimony on the level of his day-to-day involvement.
With respect to the value of Husband’s interest in Helix, Husband’s and Wife’s
experts disagreed about the value of Husband’s interest in Helix; Husband’s expert
placed the value at $37,000, and Wife’s placed it at $82,000—the value found by the
trial court. The delta between the two values was largely attributable to the
compensation adjustment made by the experts about what income figure would be
attributed to each of the owners.
Husband’s expert described the process of using compensation to make an
adjustment to an income-based approach that he used: “As part of the valuation
process, you always need to make normalizing adjustments to the income statements
for a variety of reasons. In this case, the primary adjustment that was required was to
adjust the officer compensation paid to the two owner operators of the business.”
Husband’s expert opined that $175,000 annual compensation to each partner was
reasonable market compensation. Wife’s expert opined that a lower figure of
approximately $62,000 was reasonable.
35
Wife’s expert described how the differing compensation figures impacted the
value determination:
So, essentially, we both -- in our first appraisals, we both pretty much
use the same unadjusted data. And I made an adjustment to salary for
about $124,000, so I reduced the unadjusted income by $124,000. So
that causes my after[-]tax income to be [$]219,000. And [Husband’s
expert’s] adjustment was substantially higher[,] and their after[-]tax
income that they capitalize was about $21,000.
So we’re both capitalizing or, I guess to simplify, we’re both, kind
of, multiplying our adjusted net income by about 5 to get to -- about 4 to
5 to get to our overall appraised value. And so I end up with a much
higher appraised value than [Husband’s expert] does.
Both experts then addressed a distinction between the goodwill attributable to
the firm and that attributable to the individual owners. Wife’s expert described the
process in the following way:
And then we simply both compare our appraised value to the unadjusted
net asset value of the firm and come up with an amount for goodwill.
And then I ultimately reduced the goodwill by 75 percent to account for
potential personal goodwill of the two working owners.
And [Husband’s expert] used -- they made a note that they
thought there couldn’t be any divisible goodwill in the business, but they
did arrive at a divisible value, allowing for some un-divisible goodwill.
They ended up -- they ended up with a value of about -- let’s see
-- $75,000. And just that, we don’t really know, kind of, what the
goodwill is, but we’re going to allow for $75,000 of value and then 50
percent of it is attributable to [Husband].
Wife’s expert apparently opined that the firm had its own goodwill because it received
recurring income, such as recurring monthly fees.
36
The process of segregating between the goodwill of the firm and that of the
owners is necessary because the former is a community asset, while the latter is not.
As we have explained,
In terms of valuation, there is a distinction between the goodwill that
attaches to a professional person because of confidence in that
individual’s skill and ability and the commercial goodwill of a business
that arises from its location, its well-established and well-recognized
name, or something that otherwise separates it “from the skills or
attributes of an individual member.” Salinas v. Rafati, 948 S.W.2d 286,
290–91 (Tex. 1997); Hill v. Hill, No. 02-12-00332-CV, 2014 WL 92795,
at *5 (Tex. App.—Fort Worth Jan. 9, 2014, no pet.) (mem. op.). Only
“[g]ood[]will that exists separate and apart from a professional’s personal
skills, ability, and reputation is divisible upon divorce.” Hill, 2014 WL
92795, at *5; Keith v. Keith, 763 S.W.2d 950, 952 (Tex. App.—Fort Worth
1989, no writ). To determine whether goodwill that is subject to division
upon divorce attaches to a professional practice, goodwill first must be
determined to exist independently of the personal ability of the
professional spouse, and then if such goodwill is found to exist, the
court must determine whether that goodwill has a commercial value in
which the community estate is entitled to share. Hill, 2014 WL 92795, at
*6; Von Hohn . . . , 260 S.W.3d [at] 638[.]
K.T. v. M.T., No. 02-14-00044-CV, 2015 WL 4910097, at *8 (Tex. App.—Fort Worth
Aug. 13, 2015, no pet.) (mem. op.).
We have gone through the process of describing the methodologies used by the
experts and their reasons for making the goodwill distinctions that they did in order to
demonstrate that the trial court had before it two qualified experts testifying about
their respective valuation methodologies. In this situation, the trial judge became the
referee in a classic battle of the experts. The case that we have just cited about the
goodwill distinction described the trial court’s role in that battle as follows:
37
The litigation of this issue involved a classic battle of the experts. In a
battle of competing expert testimony, it is the sole prerogative of the
fact[]finder to determine the weight and credibility of the witnesses, the
obligation of the respective advocates to persuade them, and “our
obligation to see that the process was fair and carried out according to
the rules.”
Id. at *9. And when a factfinder is presented with a viable range of values (such as
when a trial court is refereeing a battle of the experts), the factfinder may choose a
value within that range. Van Heerden v. Van Heerden, 321 S.W.3d 869, 880 (Tex.
App.—Houston [14th Dist.] 2010, no pet.) (explaining that when valuing assets of the
estate of the parties, “if several values are given, or if a witness testifies that the value
may be higher or lower than his estimate, the court’s determination of the value
should be within the ranges in the evidence”).
Here, the trial court properly performed its job of referee. It reconciled what it
had heard from the parties’ experts and selected a value falling within the experts’
opinions. In this case, it chose the opinion of value offered by Wife’s expert.
Admittedly, the trial court also offered its own view that neither expert had
properly assessed Husband’s goodwill: “This [c]ourt finds that neither expert was
aware that the partner was engaged in the primary day-to-day contact with clients and
that they both were in error to assign 50% of the goodwill to Husband.” We do not
know why the trial court made this finding, perhaps to bolster why it went with Wife’s
expert’s opinion. And Husband attempts to capitalize on the finding by arguing that
[h]ere, the trial court erred by finding that “both [experts] were in error
to assign 50% of the goodwill to Husband.” Because both experts had
38
reduced their final valuations to account for personal goodwill, the trial
court’s finding indicates that the court increased the final value it assigned
to Helix. Any increase in the value of Helix based on the commercial
goodwill of the firm or the personal goodwill attributable to Husband’s
partner was improper because there was no evidence to establish that the
community estate was entitled to share in such goodwill. [Emphasis
added.] [Record references omitted.]
But this argument misses the mark because no matter what the trial court said in the
cited finding, the trial court did not increase the value that it found beyond a value
that was in the range of the testimony before it. So no matter its expression of
disagreement with the experts, the trial court stayed within the boundaries set by the
evidence.
We overrule subsection D of Husband’s second issue.
5. The trial court did not abuse its discretion by failing to
consider Husband’s medical debt and tax liability.
In subsection E of his second issue, Husband makes two challenges to the trial
court’s division of debt. First, he claims that the trial court failed to consider his
medical debt in making its division; however, the findings show otherwise. Second,
Husband contends that the trial court committed an abuse of discretion because it
understated Husband’s 2018 and 2019 tax liability by $19,000, claiming that the trial
court found it to be $37,000 when it was instead north of $56,000. We are
unconvinced of the gravity of the miscalculation, even if it occurred. The trial court
assigned each party his or her tax liability resulting from his or her earnings and
expressed the view that its rulings on tax liability would have little impact on the IRS’s
39
ultimate determinations. Nor was the trial court under an obligation to calculate the
amount of tax liability. These factors show the limited impact that an error in the
calculation of tax liability has on the division of the community estate.
a. The medical debt
To address the first portion of Husband’s argument under subsection E of his
second issue, the trial court initially noted in its findings that (1) it had “examined the
record regarding debt” and (2) “[t]he parties had less than $1,000 in debt other than
medical debt and taxes.” Husband’s inventory shows medical debt of $56,228.68.
Husband testified that he had incurred medical bills for the Uber accident and that
those were listed in the inventory and appraisement. There was no dispute at trial
about the amount of the expenses. The decree provided that Husband would pay all
of his medical expenses. When referencing the Uber suit, the trial court’s findings
stated that it had “considered the medical bills and cash spent on treatment for
injuries resulting from that lawsuit in the division of property.”
First, Husband noted that the trial court did not place a value on the medical
debt in the decree or in its findings. But the trial court was not required to make
findings on facts not in dispute. See Tex. Fam. Code Ann. § 6.711(a) (“In a suit for
dissolution of a marriage in which the court has rendered a judgment dividing the
estate of the parties, on request by a party, the court shall state in writing its findings
of fact . . . on which disputed evidence has been presented.” (emphasis added)).
40
The focus of Husband’s argument is that it was an abuse of discretion for the
trial court not to consider the medical debt in its division. Specifically, Husband
argues that
[b]ecause the only evidence regarding Husband’s medical liability
established the value as $56,228.68, the court could not have drawn a
different inference regarding the existence and value of the liability. . . .
As such, the court’s failure to consider the extent of Husband’s medical
liability when dividing the estate further shows that the court’s division
was manifestly unjust. [Emphasis added.]
The implication of this criticism is that the trial court in some way ignored the medical
expenses in the property division because the trial court did not reference the amount
of the debt in making its division. That criticism is unfounded. It appears that the
medical expenses that Husband listed in his inventory were those related to the Uber
accident, there was no dispute as to the amount of the medical expenses, and the trial
court explicitly stated that it had considered those expenses in making its division.
b. The tax liability
As noted above, in the second portion of his argument under subsection E of
his second issue, Husband argues that the trial court erred in its division of the estate
of the parties because it made a $19,000 computational error in the amount that he
owed for the 2018 and 2019 income taxes.
In its decree, the trial court specified that Husband and Wife would each pay
taxes due and owing on their respective earnings. Husband and Wife had filed
separate tax returns in 2018 and 2019 while the divorce was pending. The trial court’s
41
findings with respect to tax liability were rather vague with the intent appearing to be
that the question of what was due was a matter between the parties and the IRS:
27. There was contradictory evidence as to whether there was
$48,625.00 in IRS debt; however, it appeared from the evidence, that had
been paid.
28. In addition, there was money owed to [Wife’s expert] and
attorney’s fees to [Wife’s counsel]. [Husband’s] Inventory indicated that
there was $37,000 in unpaid IRS debt that . . . Wife may or may not have
paid.[6]
29. The parties will be joint and severally liable on joint tax debt,
unless a party can convince the IRS otherwise.
30. The IRS has little interest in the division this [c]ourt will
determine regarding IRS debt.
31. The [c]ourt finds that Husband testified that he has deducted
more than $37,000 in cash medical expenses that cannot be documented
for IRS purposes. As such, asking . . . Wife to sign off on a tax return
with him would not be fair, just, and equitable under the circumstances.
Husband’s attack centers on finding 28 and contends that the trial court
misread his inventory to mean that the amount of taxes listed in the inventory was the
balance due before he made the payments that were referenced in the inventory when
what it actually showed was the balance due after the payments had been made.
Because of this error, the trial court miscalculated the tax liability to be $37,000 when
it was actually $19,000 higher.
6
It appears that the reference to Wife in this finding is a typo and should be a
reference to Husband.
42
As a general proposition, “[w]hile a tax liability is not technically a ‘debt,’ a
court may take tax liability into consideration in the division of property upon
divorce[] and may even require one party to assume the other’s tax liability.” Mullins v.
Mullins, 785 S.W.2d 5, 7 (Tex. App.—Fort Worth 1990, no writ).
Husband’s claim of error appears to be predicated on the proposition that a
trial court must calculate tax liability as part of the division of the estate of the
parties. 7 The proposition is incorrect; the trial court may assign tax liability to one
spouse, even if it is uncertain of the amount of the tax:
[T]here are Texas cases in which courts appropriately assigned tax
liability to one party or the other without knowing the exact amount of
that liability. See Kimsey v. Kimsey, 965 S.W.2d 690, 695–96 (Tex. App.—
El Paso 1998, pet. denied) (finding no manifest abuse of discretion
where trial court divided tax liability equally between parties despite no
evidence of amount of potential tax liability[] but remanding in part
because court failed to specify whether parties were to file jointly or
separately); Mullins . . . , 785 S.W.2d [at] 7–8 . . . (holding trial court acted
within its discretion in holding husband responsible for potential
income[-]tax liability incurred during marriage); see also Young v. Young,
168 S.W.3d 276, 286 (Tex. App.—Dallas 2005, no pet.) (holding trial
court did not err in assigning responsibility of couples’ income[-]tax
liability to husband where evidence indicated he had failed to report
certain income); Benedict v. Benedict, 542 S.W.2d 692, 698 (Tex. App.—
Fort Worth 1976, writ dism’d) (finding trial court acted within its
authority in ordering husband responsible for entire estimated tax
liability where he had failed to file tax returns for several years).
7
The evidence of the amount of Husband’s tax liability is not clear. His 2018
tax return showed $17,450 in taxes due. He introduced another document from the
IRS allegedly showing $27,587.48 due for 2018. His 2019 return showed $23,909 due.
He “believed” that the 2019 taxes were $33,000 or $35,000 at the time of trial.
43
Quijano, 347 S.W.3d at 352; see also Markey v. Markey, 634 S.W.3d 293, 296 (Tex.
App.—Amarillo 2021, no pet.) (mem. op.) (“[A] court does not abuse its discretion in
dividing the community estate simply because it did not first calculate income[-]tax
liability. It may divide the estate without first undertaking same.”).
And, as noted, the trial court basically decided that the IRS would be the one to
determine the tax liability. We recently discussed that this is an approximate
disposition of the tax-liability issue:
[T]he trial court left it up to the IRS to determine whether any taxes
were owed, who owed them, and who would pay them. In short, the
trial court left that matter for later clarification. Courts may enter orders
of enforcement and clarification to enforce or specify more precisely a
decree’s property division. Hagen[ v. Hagen], 282 S.W.3d [899,] 902 [(Tex.
2009)] (citing Tex. Fam. Code Ann. § 9.006(a)). If a decree is
ambiguous, a court can clarify it. Pearson[ v. Fillingim], 332 S.W.3d [361,]
363 [(Tex. 2011)] (citing Tex. Fam. Code Ann. § 9.006). Assuming that
the liability, if any, was joint, and assuming that either [husband] or
[wife] had paid it in full, neither one would be without recourse because
“[i]t has long been the law in this State that one who involuntarily pays a
joint debt in full is entitled to contribution from other joint debtors of
their proportionate share of the joint debt . . . .” Strange v. Rubin, 456
S.W.2d 416, 419 (Tex. . . . App.—Dallas 1970, writ ref’d n.r.e.).
Hamilton, 2020 WL 6498528, at *10.
And to show error in a property division, a party must show more than merely
a computational error occurred. It remains Husband’s burden to show that the
computational error in the tax-liability amount made the division of the estate of the
parties manifestly unfair and unjust. See Markey, 634 S.W.3d at 297.
44
As the trial court noted, tax liability is a matter beyond its control, and so it left
each of the parties to bear the tax liability for his or her own earnings. Because it is
difficult to quantify a couple’s tax liability, the trial court has no obligation to do so.
And once the tax liability is quantified, there are avenues to address an imbalance in
the division of the estate of the parties. Further, though the parties apparently hoped
that the IRS could be convinced that no tax was owed, the IRS claimed that Wife
owed taxes on approximately $48,000 in stock transactions, and Wife asked that if any
taxes were owed on that amount, Husband be ordered to contribute to their payment.
With a muddled record as to what was owed in taxes and who would owe it, the lack
of an obligation on the trial court to calculate what might be due, and avenues to
address payments made by one spouse for income attributable to the other, we
conclude that even if the trial court misread Husband’s inventory, the trial court’s
actions in assigning each spouse the tax for his or her respective income did not make
the division of the estate of the parties manifestly unjust.
We overrule subsection E of Husband’s second issue.
6. The record does not establish that harmful error occurred
because of the trial court’s refusal to permit Husband to
question Wife’s former counsel about attorney–client
communications.
In subsection F of his second issue, Husband argues that he was harmed by the
trial court’s refusal to require Wife’s former attorney to testify about attorney–client
communications and to admit into evidence a recording made by Husband of a
45
conversation between Wife and her attorney. Husband sets the stage for his
argument with the following introduction:
A prominent issue at trial was whether Wife was engaging in a sham
real[-]estate transaction, in which she claimed to be renting the Shady
House from her best friend but was actually using community funds to
purchase the house. Wife blatantly misrepresented about having a lease
for the Shady House[,] and the trial court improperly excluded evidence
that would establish Wife’s perjury. Moreover, the evidence that was
admitted established that Wife wasted far more than $90,152.72.[8]
Husband’s brief then describes the exclusion of the testimony as harmful. But
Husband never carries through in fleshing out two of the signals sent by his brief. He
never explains how Wife wasted far more than $90,000. And more importantly, he
never tells us in the context of the trial court’s findings and the other evidence in this
case how the trial court’s rulings, even if they were error, caused harmful error.
To begin, the trial court made the following findings about Wife and the house
that was the focus of Husband’s charges that Wife was dishonest:
19. The [c]ourt finds that . . . Wife wasted $90,152.72. The [c]ourt finds
that Wife spent funds on the home that she is renting from a male
friend.
20. The [c]ourt finds that Husband spent in excess of $140,000 in
attorney’s fees in this case.
21. A large portion of this was to attempt to obtain
communications to prove a claim when . . . Wife admitted to the actual
transactions[] although[] she did not admit to the characterization of the
transactions as “waste.”
8
The house is located on Shady Brook. As a rhetorical device, Husband terms
it the “Shady House.”
46
22. The expenditures on the house . . . Wife was renting were
well-documented and blatant and did not require excessive discovery to
prove.
The trial court then made the following conclusions with respect to the house
that was in controversy:
2. The [c]ourt concludes Husband’s allegation that Wife owned an
interest in the real property at . . . Shady Brook was not supported by the
evidence.
3. The [c]ourt concludes that . . . [W]ife did waste substantial
community funds, enumerated herein, on the property commonly
known as . . . Shady Brook.
Much of the trial was consumed with Husband’s ongoing efforts to prove that
the purchaser of the Shady Brook house acted as a straw man for Wife and that the
house was actually hers. We quote from Husband’s brief to catalog those efforts:
Here, Husband made a prima facie showing that Wife was
contemplating the commission of a fraud[] or that it had been ongoing,
regarding the Shady House. First, Wife claimed that a written lease was
created around when she moved into the Shady House, which was
November 2018. However, Wife did not produce any lease until
January 27, 2020, and Wife’s discovery response sent on June 18, 2019[,]
even denied the existence of any written lease, stating, “As previously
discussed, no written lease exists. Producing a written lease would
require creating a document.”
Second, when Wife eventually produced a lease, she produced
multiple versions showing different signatures, and the date of the
signatures pre-dated when the house was purchased.
Third, Wife’s cash transactions suggested fraudulent activity.
Wife withdrew $3,000 in cash on October 4, 2018, and [the alleged straw
purchaser] paid the $3,000 earnest money on the house on October 5,
2018. Additionally, despite having no obligation under her “lease,” Wife
was making improvements to the Shady House using large cash
47
payments. Wife had her sister use a credit card to pay for a new fence
for the house, and then Wife repaid her with approximately $3,500 in
cash.
Finally, Wife’s own testimony established that she was heavily
involved in selecting the Shady House and was the primary contact with
the realtor; [the alleged straw purchaser] never personally saw the house
before it was purchased. Wife had numerous phone calls and exchanged
many text messages with [the alleged straw purchaser] and with the
realtor[] but conveniently deleted all of her text messages with [the
alleged straw purchaser] and the realtor, despite being under temporary
orders prohibiting her from destroying or disposing of any text
messages. [Record references omitted.]
Husband deposed the alleged straw purchaser and the realtor representing him and
introduced portions of those depositions into evidence. Husband’s lawyer also asked
Wife’s former lawyer, when that lawyer testified at trial, if he had ever described the
lease that Wife produced as looking “fishy,” and the lawyer denied making that
statement. The lawyer was also asked and denied that he was aware from people
other than Wife that a lease did not exist as early as she claimed.
Even with the evidence that he marshalled and the questions that his counsel
was able to ask Wife’s former lawyer, Husband claims the trial court erred when it
would not permit questions that Husband describes as “focused on whether Wife
falsified a lease for the Shady House[] and included questions such as [the following:]
‘Did [Wife] ever tell you that her previous attorney said she did not need a lease?’”
He argues that the crime–fraud exception to the attorney–client privilege permitted
the questions to be asked. See Tex. R. Evid. 503(d)(1). He also argues that Wife’s
counsel had opened the door to the question by virtue of questions that he had asked
48
Wife. Finally, Husband claims that the trial court erred when it would not admit a
recording that he had made of a discussion between Wife and her former lawyer
during a break in a deposition in which Wife “admitted that she [had] created the lease
between herself and [the alleged straw purchaser] for the purposes of this litigation.” 9
To briefly address the question of the recording, the trial court would not
admit it because it was not produced in the parties’ discovery. 10 Husband does not
challenge this ruling.
Husband switches gears in his reply brief and raises an argument that appears
9
to be a factual-sufficiency argument in which he marshals all the bad acts that he
claims that Wife committed with respect to the alleged straw purchase. After doing
so, he argues that “Wife repeatedly perjured herself and the falsity of her testimony
was established by the evidence at trial. Therefore, it was unreasonable for the court
to render a division so disproportionately in Wife’s favor.” We can analyze legal
arguments put to us but do not have a metric to analyze whether the trial court made
an improper decision about who was the worse spouse when each spouse claims that
the other’s conduct is questionable.
The following discussion about the recording occurred in a hearing on a
10
motion for new trial:
THE COURT: Okay. Was it an on-the-record, or was it between -- tell
me a little bit about this recording.
[Husband’s counsel]: So what you’ll read in the offer of proof
was that during a break in the deposition, you know how people go use
the restroom, things like that. The door was open. [Wife’s former
counsel] stayed in the room with his client. [Husband] was just outside
the room, and they were talking loud enough that they could be heard
outside the room with the door open so there’s no privacy issues there
that would fall under attorney–client privilege.
So he heard them talking about the lease and started recording
that and that’s how we have that information.
49
And we will not reach the question regarding whether the trial court erred by
not permitting Wife’s former lawyer to ask the questions put to him. To show harm
from the exclusion of evidence is a strenuous standard:
To obtain reversal of a judgment based on the erroneous . . . exclusion
of evidence, an appellant must show that the trial court’s ruling was in
error and that the error probably caused the rendition of an improper
judgment. See Tex. R. App. P. 44.1(a)(1); McCraw v. Maris, 828 S.W.2d
756, 757 (Tex. 1992). To successfully challenge an evidentiary ruling, an
appellant must usually show that the judgment turns on the particular
excluded evidence. See City of Brownsville[ v. Alvarado], 897 S.W.2d [750,]
753–54 [(Tex. 1995)]. An appellate court must review the entire record
[Wife’s counsel]: And my response at the time was also, Judge, he
had this recording, was never produced to me in response to discovery.
Didn’t offer it at trial. Obviously, we had the conversation, but that
didn’t change the fact that my client had an expectation of privacy sitting
in an office with her lawyer, whether the door’s open or closed.
[Husband] is standing in the corner somehow with his phone out?
Again, that’s --
THE COURT: Yeah, I’m going to -- okay. I’m going to continue
to sustain the objection part because it wasn’t -- for the two reasons at
trial: One was that -- and probably the more important one is the
discovery issue, that if it wasn’t produced --
Do you deny it wasn’t produced in discovery?
[Husband’s counsel]: I don’t believe it was produced.
THE COURT: Okay. So that’s independent grounds.
And then I -- you know, standing around the corner recording
someone talking to their client when they think they’re in a room by
themselves, if he was -- you know, that’s another issue.
But independently of that, it’s a discovery issue, and so -- okay.
So I’m going to continue to exclude the recording between [Wife’s
former counsel] and his client.
50
to determine whether the case turns on the excluded evidence. Id. at
754.
Ledbetter v. Mo. Pac. R.R. Co., 12 S.W.3d 139, 142 (Tex. App.—Tyler 1999, pet. denied);
see also Emami v. Emami, No. 02-21-00319-CV, 2022 WL 3273603, at *2 (Tex. App.—
Fort Worth Aug. 11, 2022, no pet.) (mem. op.) (quoting Ledbetter for harm standard).
As we noted when we began the discussion of this issue, Husband claims that
the trial court’s rulings were “harmful.” Yet, he never cites the harmful-error standard
or tells us how the rulings caused reversible error.
We conclude that the rulings did not produce harmful error. We have quoted
Husband’s brief in which he cataloged the numerous items of evidence that he had
introduced to establish that Wife was not being truthful about the true nature of the
acquisition of the Shady Brook house or the creation of a lease. Indeed, Husband
argues in his reply brief that the weight of this evidence as it stands made it “irrational
for the trial court in this case to believe Wife.” And he never explains why the
question that the trial court did not permit—that Wife thought that she did not need a
lease but when told that she did, she fabricated one—would have been the icing on
the cake that convinced the trial court to change its mind on whether the house was a
straw purchase, to conclude that a greater amount of funds was wasted, or to
determine that the Shady Brook house involved a straw purchase. Thus, we conclude
that based on the evidence that Husband introduced, the judgment in this case did not
turn on the excluded evidence.
51
And to a final point, as noted, the trial court found that payments made on the
lease were waste. Thus, Husband prevailed on the only claim that he made attacking
Wife’s expenditure of funds on the Shady Brook house, which was a waste claim. In
his brief, Husband mentions no other type of claim that he made to challenge Wife’s
use of funds on the Shady Brook house other than for waste. Specifically, he states
that “[b]ased on this evidence, and the additional evidence presented at the trial, the
trial court should have found that all of the funds spent on the Shady House were
wasted by Wife.” [Emphasis added.] But again, Husband never tells us how much
more he thinks the trial court should have found Wife wasted with respect to the
Shady Brook house. Nor do we understand how the trial court could have given
Husband any further relief, such as divesting the alleged straw purchaser of title and
making the house a community asset. The purchaser was not a party, and thus, the
trial court had no jurisdiction to divest him of title. See Walsh v. Walsh, 255 S.W.2d
240, 242–43 (Tex. App.—Amarillo 1952, no writ) (concluding that third party holding
title had to be joined in divorce proceeding if judgment divested him of title).
We overrule subsection F of Husband’s second issue.
7. The trial court did not abuse its discretion by finding that
Husband had a greater earning potential than Wife.
In subsection G of his second issue, Husband claims that the trial court erred
by finding that he “has a greater earning[] potential than . . . Wife.” He argues that he
was disabled as a result of the auto accident involving Uber. He also relies on his
52
testimony that although he had been receiving compensation of more than $10,000
per month from Helix, those payments were largess from his partner and that the
payments would end when the divorce was finalized. The premise of Husband’s
argument is that the trial court was bound to accept his testimony at face value. To
the contrary, Husband’s testimony presented a fact issue, which the trial court in its
role as factfinder resolved against him, as it was entitled to do.
Husband testified that during the course of the divorce, the parties had the
following differential in their earnings: Wife brought home about $4,000 per month
in income, and he received between $14,000 to $16,000 per month from Helix.
Husband initially told the court that he was not working because of the injuries
that he had sustained in the Uber accident:
Q. What’s your occupation?
A. I’m a financial advisor, but I’m not working right now.
Q. And how long have you not been working?
A. A couple years.
Q. And what’s the reason why you’ve not been working?
A. I was in a car accident, and I’ve got substantial cervical
vertebrae, lumbar vertebrae, left knee, and a problem with my right arm.
[Emphasis added.]
However, later in this testimony, Husband retracted his statement that he was
not working:
53
Q. . . . If you had been not working in the business for two years, your
partner’s been doing all the work; would that be a fair statement?
A. No, sir.
Q. You said you made a call to some older women. Are they
generating revenue from those calls?
A. That’s not what I said.
Q. All right. So if you’re not in the office meeting clients and
making investments, is your partner doing all that work?
A. No, sir.
Q. Who’s doing it?
A. We both are.
Q. But you testified you’re not going into the office and doing it.
A. I can make phone calls from home, and that’s what I’m doing.
Whether he was “working” or not, Husband testified that his income stream
from his investment firm would end when the divorce concluded. He described the
situation as follows:
Q. [Husband], do you anticipate continuing to receive distributions
from Helix the way you’ve been receiving it --
A. No.
Q. -- over the past two years?
A. No, sir.
Q. When does it end?
A. When this thing is over, it ends.
54
Q. When the divorce ends?
A. Yes, sir.
Q. Why is it tied to the divorce?
A. Because my business partner realized what was involved in
this and he knew I didn’t have the money to do it, and that’s what we’re
doing.
Q. So your business partner funded you [$]14[,000] to $15,000 a
month to litigate with your wife?
A. No, sir. He didn’t fund me. We made an agreement to it.
Q. Okay. So you made an agreement that you received
[$]14[,000] to $15,000 a month to do what?
A. We made an agreement that I would receive half of the
income from the firm.
Q. Until when?
A. Until my divorce is done because of the cost associated with
this.
The other owner of the business did not testify. No documents establishing
the above financial arrangement were introduced.
Also, Husband’s expert who appraised the business stated that part of the
process of preparing the appraisal included a “[s]ite visit and interview with [Husband]
performed January 22, 2020, as well as various follow[-]up phone conversations.”
The report makes no mention that Husband’s compensation would end when the
divorce suit concluded. With respect to any discussion on the question of Husband’s
disability, the expert testified as follows:
55
Q. You’re aware, for example, that [Husband] is currently on [S]ocial
[S]ecurity [D]isability?
A. I am aware of that, yes.
Q. And so do you think that affects his participation [in] business
if he’s totally disabled and unable to work?
A. I’m not sure. We haven’t spoken in detail about that.
Q. So, again, if he was to continue to draw money and he’s totally
disabled, his contribution would seem fairly limited in that capacity
relying more on his partner’s management and activity; would that be
true?
A. I don’t know.
In a bench trial, the trial court is the sole judge of the credibility of the
witnesses. See Smith v. Smith, No. 02-20-00370-CV, 2022 WL 1682427, at *14 (Tex.
App.—Fort Worth May 26, 2022, no pet.) (mem. op.). “A factfinder ‘may disbelieve
an interested witness even if uncontradicted.’” Berry v. New Gainesville Livestock Auction,
LLC, No. 02-19-00476-CV, 2022 WL 123214, at *6 (Tex. App.—Fort Worth Jan. 13,
2022, no pet.) (mem. op.) (quoting McGuffin v. Terrell, 732 S.W.2d 425, 428 (Tex.
App.—Fort Worth 1987, no writ)).
Husband asked the trial court to accept his testimony that the other owner of
the investment firm allowed him to draw up to $16,000 from the business each month
to help him through the divorce. Husband initially testified that he could not work
but then testified that he and his partner were doing the work of the firm. And a fact
that seems so central to the valuation of Husband’s interest in the firm—that his
56
income from it would cease when the divorce was over—was apparently not shared
with the expert appraising the business. These facts left it up to the trial court to
determine the credibility of Husband’s claim that his income stream from his business
or as an investment advisor would end with the divorce. The trial court did not view
Husband’s claim as credible. It is not within our province to second-guess that
decision.
We overrule subsection G of Husband’s second issue.
8. We conclude that there is no cumulative error in the trial
court’s rulings that renders the division of the estate of the
parties manifestly unjust.
In subsection H of Husband’s second issue, Husband contends that “even if
this court concludes that the individual errors alone do not necessitate reversal, the
trial court’s cumulative errors have skewed the net value awarded to each party so
drastically that the trial court’s division of property was a clear abuse of discretion.”
We have overruled most of Husband’s contentions of error. We will, however, make
some adjustments to the values found by the trial court to address some of Husband’s
contentions.
57
To illustrate the division of the estate of the parties, we reproduce the chart
contained in Husband’s reply brief and modify it using italics to reflect the changes
that result from our holdings in the prior portions of this opinion. 11
NO. ASSETS VALUE HUSBAND WIFE
[1] Prosperity XXXX $243.20 $243.20
2 Bank of America XXXX $1,925.34 $1,925.34
3 Bank of America XXXX $2,718.19 $2,718.19
4 Prosperity XXXX $12,800.00 $6,400.00 $6,400.00
5 Legacy Bank XXXX
6 Merrill Edge Bank XXXX $25,187.00 $25,187.00[12
]
7 Teachers Retirement System XXX $109,267.00 $27,316.75 $81,950.25
8 American United Life Insurance $19,463.96 $19,463.96
XXX
9 Great American Insurance Group $7,437.23 $7,437.23
No. XXXX
10 Orion Portfolio Solutions (403B) $136,156.95 $136,156.95
XXXX
11 John Hancock Life $0.00 x
12 TD Ameritrade XXX $62,289.70 $21,552.24 $40,737.46
13 WWE Stock $112.00 $112.00
14 2014 Lexus $15,000.00 $15,000.00
15 2015 Lexus $21,000.00 $21,000.00
16 2013 Genuine Buddy Scooter $1,575.00 $1,575.00
17 American Airlines XXXX Minimal x
18 American Airlines XXXX Minimal x
11
Wife also provided a chart in her brief. Husband’s reply brief points to errors
contained in that chart. Because Husband is the one challenging the trial court’s
rulings, we utilize the numbers contained in his chart.
We agree with Husband that the Merrill Edge account should be an asset
12
attributable to Wife because she had obtained the funds in the account and had used
them during the divorce.
58
House” transaction, and (3) the higher diversions of cash made by Husband during
the course of the divorce. Again, most of the attacks that Husband has made against
the trial court’s exercise of its discretion have failed.
A prior opinion of this court concluded that the award of 72.9% of the
community estate’s assets was equitable and considered the following factors, which
are analogous to those relied on by the trial court in this case:
[T]he trial court took several considerations into account. A key factor
was [husband’s] abusive and violent nature, which ultimately contributed
to the divorce. In addition, [husband] earned a steady income and
retirement benefits; [wife] never worked outside the home. [Husband]
also received a large portion of the personal property acquired during the
marriage. Further, the trial court found that [husband had] committed
waste of the community estate by acquiring property, incurring debt, and
escalating attorneys’ fees after the couple’s separation.
Faram v. Gervitz–Faram, 895 S.W.2d 839, 844 (Tex. App.—Fort Worth 1995, no writ).
Due to Husband’s failure to prevail on most of his challenges to discrete
portions of the trial court’s decisional process and due to authority upholding a
similarly disproportionate division of the estate of the parties based on factors not
dissimilar to those used in this case, we cannot conclude that the trial court’s division
of the estate of the parties was not “just and right.”
We overrule subsection H of Husband’s second issue and overrule his second
issue in total.
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C. The trial court did not abuse its discretion by denying Husband’s
motion for new trial.
In his third issue, Husband challenges the denial of his motion for new trial.
He contended in the motion that there was newly discovered evidence of an
investigation by the school district that employed Wife as a teacher. Husband made
the following contention regarding why evidence of the investigation warranted a new
trial:
As discussed above, the trial court rendered a division that was extremely
favorable to Wife. The new evidence, however, showed that for many
years, Wife had been hiding community funds from Husband, had been
found to have misappropriated funds at school, had withheld evidence
of her misdeeds, and had blatantly misrepresented such activities at trial.
In addition, these misdeeds align with Wife’s use of gift cards and cash[-]
back transactions to hide money from Husband, which were not at all
ordinary when viewing the totality of the circumstances in light of the
new evidence. Given that the court is responsible for dividing the
community estate in a manner that is “just and right,” the new evidence
of Wife’s fraudulent activity was material and probably would produce a
different result at a new trial.
Husband acknowledges that he knew of the school district’s investigation
before trial. What he claims that he did not know about until after trial was that the
school district’s investigation had concluded that Wife had mishandled school funds
and that the school district had placed her on probation. He claimed that he had
learned of the documents related to the investigation when an investigative reporter
gave him copies of documents from the school district. Husband also contends that
his document requests to Wife were broad enough to cover the school-district
documents, but she did not produce them. Husband, however, does not contend that
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he sought documents regarding the investigation from the school district itself before
trial.
The fact of an investigation by the school district was known to Husband
before trial. When the trial court asked Husband’s lawyer, who was representing him
on the new-trial matter, why Husband’s prior counsel could not have obtained the
documents, new counsel referenced no effort to obtain the documents from the
school district before trial and only speculated about whether prior counsel might not
have been able to obtain the documents. This speculation is not sufficient to show
that if pursued with diligence, the documents would not have been obtained. The
trial court did not abuse its discretion by denying the motion for new trial.
“We review a trial court’s refusal to grant a motion for new trial for abuse of
discretion.” Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009). A party
may predicate a motion for new trial on the existence of newly discovered evidence,
but the party must introduce evidence to support the motion’s contentions. Tex. R.
Civ. P. 324(b)(1) (“A point in a motion for new trial is a prerequisite to the following
complaints on appeal: (1) A complaint on which evidence must be heard such as one
of . . . newly discovered evidence . . . .”). A party seeking a new trial based on newly
discovered evidence
must demonstrate to the trial court that (1) the evidence has come to its
knowledge since the trial, (2) its failure to discover the evidence sooner
was not due to lack of diligence, (3) the evidence is not cumulative, and
(4) the evidence is so material [that] it would probably produce a
different result if a new trial were granted.
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Waffle House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010). On the question of
diligence in obtaining the evidence that the movant claims is newly discovered, “[t]he
due[-]diligence requirement has not been met if the same diligence used to obtain the
evidence after trial would have had the same result if exercised before trial.” Neyland,
324 S.W.3d at 652. “Every reasonable presumption will be made on review in favor
of orders of the trial court refusing new trials.” Jackson v. Van Winkle, 660 S.W.2d
807, 809–10 (Tex. 1983), overruled on other grounds by Moritz v. Preiss, 121 S.W.3d 715,
721 (Tex. 2003); Hinkle v. Hinkle, 223 S.W.3d 773, 783 (Tex. App.—Dallas 2007, no
pet.).
To reemphasize a point, the evidence is not that Husband did not know of the
investigation by the school district but that he did not know of the documents
concluding the investigation. The trial court pointedly asked Husband’s new trial
counsel if Husband’s prior counsel could not have obtained the documents during the
following exchange:
THE COURT: Okay. Now, let me ask you this. Two things that are
important to me.
One is: Was there anything that prevented [Husband’s trial
counsel] --
Trial counsel, right?
[Husband’s post-trial counsel]: Yes.
[Wife’s counsel]: Yes.
THE COURT: Whoever trial counsel may have been.
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-- to have gone -- to have known an investigation had occurred
and to have gone to [the school district] and gotten a copy of this.
[Husband’s post-trial counsel]: So two things: They knew an
investigation was happening through the deposition testimony that
[Husband] just testified about.
But two, even when I requested these records, you have to be
very specific because I gave them records that [Husband] had received
through the reporter. I gave them those records, and I said, “I wanted
these,” and they didn’t even present all of those to me. So you have to
be very specific, apparently in that request to them. If they didn’t know that
these records even existed, I don’t know if they could’ve gotten them. [Emphasis
added.]
See generally Anderson v. Safeway Tom Thumb, No. 02-18-00113-CV, 2019 WL 2223582, at
*11–12 (Tex. App.—Fort Worth May 23, 2019, pet. denied) (per curiam) (mem. op.)
(stating that trial court is free to depend on counsel’s unobjected-to statements as
evidence).
This statement—in which counsel expresses his uncertainty regarding whether
the documents could have been obtained before the trial without providing the school
district with copies of the documents that were wanted—morphs into certainty when
Husband’s brief claims that the documents could not have been obtained before trial
without being able to describe the documents sought with extreme specificity, such as
knowing their titles:
Moreover, Husband satisfies the due[-]diligence requirement because the
actions he took after the trial to obtain the authenticated records would
not have had the same result if exercised before trial. As explained at the
hearing, the record requests required extreme specificity when seeking
documents. Husband was only able to obtain the records from the school
district because he already had copies of them[] and thus knew precisely
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which documents to request. [Emphasis added.] [Citations and
footnotes omitted.]
The testimony cited above does not support Husband’s argument. Husband does not
argue that reasonable diligence did not require him to seek the documents from the
school district (especially when he claims that he knew that Wife had not been
forthcoming in discovery), and he did not establish that requesting the documents
from the school district before trial would not have caused their production. He
never made that effort, and his counsel could not answer the specific question
regarding whether efforts before trial might have caused the school district to produce
them. Accordingly, the trial court did not abuse its discretion by denying Husband’s
motion for new trial.
We overrule Husband’s third issue.
D. There is insufficient evidence to support the trial court’s award of
conditional attorney’s fees to Wife.
In his fourth issue, Husband challenges the proof supporting the trial court’s
award of conditional appellate attorney’s fees to Wife. We agree that the proof was
conclusory and does not support the award. We therefore remand this matter for a
new trial solely on the issue of appellate attorney’s fees.
The decree provides “that if an appeal is filed, [Wife] is awarded $40,000.00 in
attorney’s fees should . . . she prevail.” The decree awarded Wife an additional
$20,000 in fees “in the event an appeal is filed to the Texas Supreme Court.” The trial
court entered a finding that provides “that Wife should be awarded reasonable and
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necessary attorney’s fees of $40,000.00 if Husband appeals to the Court of Appeals
and his appeal is unsuccessful, and $20,000.00 additional reasonable and necessary
attorney’s fees if Husband appeals to the Texas Supreme Court and the appeal is
unsuccessful.”
The sole extent of Wife’s counsel’s testimony on appellate fees follows:
[Wife’s counsel]: We have my client, Your Honor, I’d like to at least put
on some evidence of what I believe reasonable costs would be for
appeal.
It would be my testimony that through the appeal of the Court of
Appeals, which I think is going to happen, $20,000 would be a fair and
reasonable fee for her. If he has an unsuccessful petition for review, I
think my client would incur cost of $15,000.
If he has unsuccessful brief on the merits before the Supreme
Court, there would be an additional $15,000. [In] terms of oral
arguments before the Supreme Court, if they have to travel there and
present those, I believe a reasonable fee would be $7,500 minimum for
that oral argument.
Those are all conditioned upon unsuccessful events, Your Honor.
THE COURT: Okay. Anything further?
[Husband’s post-trial counsel]: Briefly.
What’s the expected rate, billable rate?
[Wife’s counsel]: I believe . . . [one partner] charges [$]495 an
hour, Your Honor. I was basing that on my experience of $400 an hour.
[Husband’s post-trial counsel]: And is the petition for review, is
that if the [c]ourt requests a response to it?
[Wife’s counsel]: No, if there’s . . . responses requested, we have
to file some response to, that’s [$]15,000.
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[Husband’s post-trial counsel]: Okay.
[Wife’s counsel]: If they kick it out summarily, there would not be
any cost.
[Husband’s post-trial counsel]: Nothing further, Judge.
The Texas Supreme Court recently dealt with the proof necessary to prove
conditional appellate attorney’s fees. See Yowell v. Granite Operating Co., 620 S.W.3d
335, 354 (Tex. 2020). After noting its recent elaboration of the proof necessary to
establish trial fees, the court delved into the question of how that ruling impacted the
proof of appellate fees. Id. at 354–55. Yowell highlighted the practical distinction
between the proof of trial fees—where the service has already been rendered—and
appellate fees where the details of who will render the services and what those
services will be remain hypothetical. Id. at 355. Though what fees will be incurred on
appeal are hypothetical, the supreme court nevertheless held that “uncertainty does
not excuse a party seeking to recover contingent appellate fees from the need to
provide opinion testimony about the services it reasonably believes will be necessary
to defend the appeal and a reasonable hourly rate for those services.” Id.
In Wells Fargo Bank, N.A. v. Rodriguez, we recently applied Yowell’s standard that
the proof of appellate fees must include information on what services will be
necessary to defend the appeal. No. 02-21-00155-CV, 2022 WL 803839, at *5 (Tex.
App.—Fort Worth Mar. 17, 2022, no pet.) (mem. op.). We held that the standard was
not met by an attorney’s bare opinion that “an additional $5,000.00 is reasonable and
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necessary in the event of an appeal to the Court of Appeals[] and that the sum of an
additional $5,000.00 is reasonable and necessary in the event a petition for review is
sought in the Supreme Court of Texas.” Id.Wife’s counsel’s opinion is similarly bare; it is not adequate to support the trial
court’s award of conditional appellate fees. We conclude that because Wife’s
counsel’s testimony lacks the proper detail of the services to be rendered, the
determination of appellate fees should be remanded to the trial court. See Rohrmoos
Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 506 (Tex. 2019) (remanding
to trial court when “the record does not provide the requisite details to support a fee
award”).
Husband also contends that “[b]ecause [his] appellate fees were properly
proved up for prosecuting this appeal, should [he] prevail, the [c]ourt should remand
the issue of appellate fees for prosecuting this appeal so that the trial court can award
those to Husband.” Upon remand, the trial court may consider whether anything in
our disposition of this appeal warrants a recalibration of the appellate fee award.
We sustain Husband’s fourth issue.
IV. Conclusion
Having sustained Husband’s fourth issue, we reverse the trial court’s corrected
final decree of divorce to the extent that it awards appellate attorney’s fees and
remand this case to the trial court for a new trial solely to determine appropriate
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appellate attorney’s fees. Having overruled Husband’s other issues, we affirm the
remainder of the trial court’s corrected final decree of divorce.
/s/ Dabney Bassel
Dabney Bassel
Justice
Delivered: January 5, 2023
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