Brian Mark Pribyl v. Kathleen Rae Pribyl ( 2010 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00009-CV
Brian Mark Pribyl, Appellant
v.
Kathleen Rae Pribyl, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
NO. D-1-FM-04-000101, HONORABLE JOHN K. DIETZ, JUDGE PRESIDING
OPINION
Appellee Kathleen Rae Pribyl filed suit in district court against her ex-husband,
appellant Brian Mark Pribyl, asserting a breach of contract claim. She filed this claim post-judgment
in the same cause number as the parties’ previous and final divorce. Kathleen alleged that Brian
breached a collaborative law agreement they had entered into during the course of their divorce
proceedings. The matter was tried to the bench, and the district court entered judgment in favor
of Kathleen. We hold that Kathleen’s breach of contract claim in this case is an attempt to re-
allocate marital property that has already been divided and awarded pursuant to a final divorce
decree, and is an impermissible collateral attack on the divorce decree. Therefore, her breach of
contract claim is barred by res judicata. We reverse and render.
On January 7, 2004, Brian Pribyl filed suit in the 353rd Judicial District Court
for divorce from his wife Kathleen. On January 21, 2004, the Pribyls and their attorneys executed
a Collaborative Law Participation Agreement. See Tex. Fam. Code Ann. § 6.603 (West 2006). The
collaborative law agreement provided, in relevant part, as follows:
The parties and their lawyers agree to make full disclosure of the nature, extent and
value of the parties’ income, and their assets and liabilities, including any factors or
developments which may affect any aspect of these components of the case. . . .
Participation in the Collaborative Law process, and the settlement reached, is based
upon the assumption that both parties have acted in good faith and have provided
complete and accurate information to the best of their abilities.
After pursuing the collaborative process and failing to reach an agreement, the parties participated
in a mediation. See id. § 6.602(a) (West 2006). The mediation resulted in a settlement agreement
and on May 21, 2004, the Pribyls entered into a “Mediated Settlement Agreement” under which
they “settled all issues relating to their divorce.” On September 17, 2004, the district court entered
a final decree of divorce in the divorce proceeding in accordance with the terms of the settlement
agreement. See id. § 6.602(c).
In May or June of 2007, Kathleen learned that Brian had been awarded 2,000 stock
options by his employer at a time when the 2004 divorce case was pending.1 Neither Brian nor his
attorney informed Kathleen or her attorney of the existence of these stock options during either the
collaborative process or the mediation.2 Kathleen and her attorney were aware of other stock options
that had been granted to Brian by his employer on previous occasions. These options were the
1
The stock options were subject to a vesting schedule under which 20 percent would vest
on April 23 of each year from 2007 to 2011.
2
Brian does not dispute that he was aware of the grant of stock options before the parties
negotiated and signed off on the mediated settlement agreement. Brian also does not dispute that
the Collaborative Law Participation Agreement required the parties to disclose the existence of assets
and property.
2
subject of negotiations and were specifically allocated in the settlement agreement and later
specifically awarded in the agreed divorce decree. The settlement agreement did not, of course,
make a specific reference to the additional options granted to Brian during the pendency of the
divorce because these options were not disclosed to Kathleen or her attorney. However, the agreed
divorce decree contained the following provision relating to unspecified stock options:
BRIAN MARK PRIBYL is awarded . . . [a]ll sums, whether matured or unmatured,
accrued or unaccrued, vested or otherwise, together with all increases thereof, the
proceeds therefrom, and any other rights related to any . . . employee stock option
plan . . . or other benefits existing by reason of the husband’s past, present, or future
employment . . . .
Therefore, under the terms of the 2004 agreed divorce decree, Brian was awarded all
unspecified stock options, including the undisclosed 2004 stock options granted during the pendency
of the divorce.
On September 26, 2007, Kathleen filed a petition for “post-divorce division of
property, breach of contract, and fraud” in the same cause number as the 2004 divorce proceeding.3
Kathleen’s claims were based on Brian’s alleged violation of the collaborative law agreement’s
provision requiring full disclosure of assets and property. Following a bench trial, on November 25,
2008, the district court entered a Final Order and Judgment awarding Kathleen 50 percent of
the previously undisclosed stock options, as well as pre- and post-judgment interest, attorneys’ fees,
and costs. The 2008 judgment made no mention of, and did not purport to amend or alter, the
2004 agreed judgment entered in the same cause. Brian appeals the 2008 judgment.
3
In her amended petition—Kathleen’s live pleadings at the time of trial—Kathleen asserted
only a breach of contract claim.
3
Brian contends that this lawsuit is an impermissible attack on a prior judgment. The
doctrine of res judicata applies to a final divorce decree to the same extent that it applies to any
other final judgment. Baxter v. Ruddle, 794 S.W.2d 761, 762 (Tex. 1990). A judgment finalizing
a divorce and partitioning the property is res judicata with respect to any attempt to relitigate
the division of property at a later time. See Day v. Day, 603 S.W.2d 213, 215 (Tex. 1980); Moreno
v. Alejandro, 775 S.W.2d 735, 738 (Tex. App.—San Antonio 1989, writ denied); see also Tex. Fam.
Code Ann. § 9.007(a) (West 2006) (“A court may not amend, modify, alter, or change the division
of property made or approved in the decree of divorce or annulment.”).
The division of the parties’ community property was at issue in the 2004 divorce
proceedings, and at least some portion of the value of the undisclosed 2004 stock options
was community property. The 2004 agreed judgment unambiguously awarded all unspecified
stock options—which would include the 2004 options—to Brian. The petition in this suit was
filed in the same cause number as the 2004 judgment. It does not seek to amend or alter the
2004 judgment. Nonetheless, at issue in this proceeding is whether Kathleen was entitled to
any portion of the value of the 2004 stock options and whether she should recover damages for
failing to have had an opportunity to negotiate for this value during the 2004 divorce. The damages
sought by Kathleen in this suit are the amounts that she claims she would have received had the
2004 judgment divided the 2004 stock options in a manner similar to the other stock options
specifically partitioned instead of in the manner provided by the general provision awarding
100 percent of unspecified options to Brian. Kathleen’s breach of contract claim is, therefore,
an attempt to modify the property division set out in the original agreed divorce decree without
modifying or altering the original decree. Such claims are barred by res judicata. See Brown
4
v. Brown, 236 S.W.3d 343, 348 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (if plaintiff seeks
merely to claim share of asset already divided by divorce decree, post-divorce property division
action is barred by res judicata).
Under certain circumstances, an attack on a prior judgment may be permissible if it
alleges fraud in the opposing party’s obtaining the judgment and seeks to impose a constructive trust
on amounts awarded to the opposing party under the judgment. See State v. Durham, 860 S.W.2d
63, 67 (Tex. 1993). Such an attack on a final judgment may be maintained only if the alleged
fraudulent conduct is “extrinsic” to the judgment. See Browning v. Prostok, 165 S.W.3d 336, 347
(Tex. 2005); see also Henderson v. Chambers, 208 S.W.3d 546, 552-53 (Tex. App.—Austin 2006,
no pet.) (examining allegations of fraud to determine whether intrinsic or extrinsic).4 We need not
address whether Kathleen’s claims in this case involve extrinsic or intrinsic fraud, however, because
Kathleen does not base her claims on fraud.5 Kathleen pleaded and tried only a breach of contract
claim based on an alleged breach of the collaborative law agreement. Kathleen does not allege
that Brian’s actions constituted fraudulent conduct extrinsic to the 2004 judgment, thereby subjecting
4
Extrinsic fraud is fraud that denies a losing party the opportunity to fully litigate at trial
all the rights or defenses that could have been asserted. Browning v. Prostok, 165 S.W.3d 336,
347 (Tex. 2005); see also Montgomery v. Kennedy, 669 S.W.2d 309, 313 (Tex. 1984) (“[T]he
concealment of a material fact by a fiduciary charged with the duty of full disclosure is extrinsic
fraud.”). Intrinsic fraud relates to the merits of the issues that were presented and presumably were
or should have been settled in the former action. Id. at 347-48 (quoting Tice v. City of Pasadena,
767 S.W.2d 700, 702 (Tex. 1989)).
5
We also do not want to be read as condoning the actions of Brian in this case. Whether
intentional or not, the failure to disclose the 2004 options during the divorce negotiations was
significant. Had the stock options been disclosed, there is little doubt at least some portion of their
value would have gone to Kathleen in the settlement. While the finality of a valid judgment and the
passage of time might hamper an effective remedy in a situation like this, they do not change the fact
of the failure to disclose.
5
that judgment to a permissible attack at this point. Consequently, Kathleen’s lawsuit constitutes
an impermissible collateral attack on the 2004 agreed divorce decree.6 See Hagen v. Hagen,
282 S.W.3d 899, 902 (Tex. 2009) (“Attempting to obtain an order that alters or modifies a divorce
decree’s property division is an impermissible collateral attack.”).
We note that once the trial court’s plenary power has expired, the appropriate vehicle
for a direct attack on a judgment is to file a bill of review in the trial court.7 See King Ranch, Inc.
v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003).
On expiration of the time within which the trial court has plenary power, a judgment
cannot be set aside by the trial court except by bill of review for sufficient cause,
filed within the time allowed by law; provided that the court may at any time correct
a clerical error in the record of a judgment and render judgment nunc pro tunc under
Rule 316, and may also sign an order declaring a previous judgment or order to be
void because signed after the court’s plenary power had expired.
Tex. R. Civ. P. 329b(f). A petitioner in a bill of review must ordinarily plead and prove (1) a
meritorious defense to the cause of action alleged to support the judgment, (2) that the petitioner was
prevented from making by the fraud, accident, or wrongful act of his opponent, and (3) that the
petitioner was not negligent. King Ranch, 118 S.W.3d at 751-52.
6
A collateral attack, unlike a direct attack, does not attempt to secure the rendition of a
single, correct judgment in place of the former judgment. Ramsey v. Ramsey, 19 S.W.3d 548, 552
(Tex. App.—Austin 2000, no pet.). Rather, it is an attempt to avoid the effect of a judgment in a
proceeding not instituted for the purpose of correcting, modifying, or vacating the judgment, but in
order to obtain some specific relief against which the judgment currently stands as a bar. Browning,
165 S.W.3d at 346.
7
A litigant does not need to comply with the bill-of-review procedures in order to make a
direct attack on a judgment in which the court did not even possess the “jurisdictional power” to hear
the case and render judgment at all. See McEwen v. Harrison, 345 S.W.2d 706, 710-11 (Tex. 1961).
There is no allegation in this case that the trial court did not have the jurisdictional power to enter
the 2004 agreed divorce decree.
6
However, Kathleen did not elect to pursue a bill of review or any other direct attack
on the 2004 agreed divorce decree. Rather, she alleged a breach of the collaborative law agreement
as a means of altering the effect of the 2004 agreed divorce decree.8 This type of attack on an
otherwise valid judgment is not permitted. The problematic nature of Kathleen’s claims in this
proceeding is illustrated by the fact that, as the record stood after the trial court’s 2008 judgment,
there was a final judgment from 2004 awarding the stock options at issue to Brian and there was a
judgment from 2008 awarding a portion of the same stock options to Kathleen. Neither judgment
mentioned the other or attempted to modify or alter the other. The two judgments simply conflicted.
This is precisely the type of situation that the doctrine of res judicata is designed to prevent.
Consequently, we reverse and vacate the 2008 Final Order and Judgment entered by the district court
in this cause and render judgment that Kathleen take nothing on her claim for breach of the
collaborative law agreement.
__________________________________________
G. Alan Waldrop, Justice
Before Chief Justice Jones, Justices Pemberton and Waldrop
Reversed and Rendered
Filed: March 11, 2010
8
Relief may or may not be available under a bill of review when the information allegedly
concealed was available during the original divorce proceeding through normal discovery
procedures. See Kennell v. Kennell, 743 S.W.2d 299, 300-01 (Tex. App.—Houston [14th Dist.]
1987, no writ). Because Kathleen has not pursued a bill of review in this case, we express no
opinion regarding the effect of the voluntary disclosure provisions in a collaborative law agreement
on a direct attack by bill of review of a judgment obtained after a failure to comply with the
disclosure provisions in such an agreement.
7