Wiley B. Courtney Sr. v. Flora Mae Courtney

Affirmed and Opinion filed July 25, 2002

Affirmed and Opinion filed July 25, 2002.

In The

Fourteenth Court of Appeals

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NO. 14-01-01103-CV

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WILEY B. COURTNEY, SR., Appellant

V.

FLORA MAE COURTNEY, Appellee

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On Appeal from the 300th District Court

Brazoria County, Texas

Trial Court Cause No. 7523*RH99

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O P I N I O N

            Appellant Wiley B. Courtney, Sr., appeals the property division in his divorce from appellee Flora Mae Courtney.  In seventeen issues, he contends that the trial court (1) incorrectly calculated his separate property interest in an account, which resulted in an incorrect and unfair division of the community estate; (2) erred in excluding testimony about Wiley’s separate property interest in the account; and (3) erred in dividing this account by dollar amounts, rather than in percentages.  We affirm.

Background

            Wiley and Flora married on August 22, 1992.  Each retired from their respective careers after several years of marriage.  In 1998, after his retirement, Wiley established an American Express account into which he deposited funds from several other accounts, including individual retirement accounts, 401K accounts, and his Dow Chemical, salaried employee savings plan.  In granting the divorce and considering Wiley’s fault, the trial court divided the total community property as follows:  Wiley received forty-five percent and Flora received fifty-five percent.  In the division of property, the trial court valued the American Express account at $215,000.04.  Of this amount, the trial court awarded $78,009.04 to Wiley as his separate property and $909.06 as his community property portion.  The trial court awarded $136,081.94 of the American Express account to Flora as her community property portion.  Wiley appeals, contending primarily that an additional $33,247.00 of the American Express account was his separate property from Woodmen of the World annuities he owned before marriage. 

                                          Exclusion of Wiley’s Evidence

            In his seventeenth issue, which we address first, Wiley contends that the trial court erred in disallowing his testimony about the Woodmen of the World annuities that he claims were his separate property and were “rolled into” the American Express account.  The admission or exclusion of evidence rests within the sound discretion of the trial court. City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995).  “To obtain reversal of a judgment based upon error in the admission or exclusion of evidence, the appellant must show (1) the trial court did in fact commit error and (2) the error was reasonably calculated to cause and probably did cause the rendition of an improper judgment.”  Hunt v. Baldwin, 68 S.W.3d 117, 126 (Tex. App.—Houston [14th Dist.] 2001, no pet.) (citing Tex. R. App. P.  44.1).

            At trial, Flora objected to Wiley’s testimony about the Woodmen of the World annuities because he failed to produce the information in discovery responses. The trial court sustained the objection. Under Rule 193.6 of the Texas Rules of Civil Procedure, a party who fails to timely answer, amend, or supplement discovery responses may not introduce evidence at trial that was not timely disclosed, unless good cause exists or the opposing party will not be unfairly surprised or prejudiced.  The penalty for failure to respond to a discovery request is mandatory exclusion of the evidence sought.  Alvarado v. Farah Mfg. Co., 830 S.W.2d 911, 914 (Tex. 1992). 

            Wiley argues on appeal that although Flora filed a motion to compel responses, she never obtained a ruling on her motion.  However, “a trial objection is sufficient to preserve an objection to testimony of a witness or other evidence not properly identified in discovery.”  F&H Invs., Inc. v. State, 55 S.W.3d 663, 671 (Tex. App.—Waco 2001, no pet.). Additionally, when a party wholly fails to respond to discovery, as Wiley failed to do, a motion to compel is unnecessary; there is no waiver of the right to have the evidence excluded because there is no discovery “dispute.”  Swain v. Southwestern Bell Yellow Pages, Inc., 998 S.W.2d 731, 733 (Tex. App.—Fort Worth 1999, no pet.). 

            Next, Wiley contends that he produced the Woodmen of the World annuities at the office of opposing counsel.  In support, he cites his attorney’s argument before the trial court that such production was made.  However, “an attorney’s unsworn factual allegations at a hearing may not be considered as evidence to support his client’s failure to comply with discovery.” F&H Invs., 55 S.W.3d at 670. There is no evidence in the appellate record that Wiley ever properly responded to the formal discovery requests propounded to him (interrogatories, requests for disclosure, and requests for production).  See Tex. R. Civ. P. 193.1 (stating party must respond to written discovery in writing, with responses preceded by the request to which they apply).

            Lastly, Wiley states that his testimony about the Woodmen of the World annuities should have been admitted under Rule 193.6 of the Texas Rules of Civil Procedure.  Wiley, however, does not specify how his testimony was admissible through Rule 193.6.  Tex. R. App. P. 38.1(h) (brief must contain a clear, concise argument in support of contention, including appropriate citations to authorities and to the record).  Good cause and lack of unfair surprise are exceptions in Rule 193.6, but we note that the burden of establishing these exceptions is on the proponent of the evidence.  See Tex. R. Civ. P. 193.6(b).  Further, a finding of good cause or lack of unfair surprise must be firmly supported by the record.  Id.  Wiley does not argue and did not firmly establish in the record either exception.

            The trial court did not err in excluding Wiley’s testimony about the Woodmen of the World annuities.  Accordingly, we overrule issue seventeen.

                                         The American Express Account

            In fifteen of his remaining sixteen issues, Wiley argues that the trial court incorrectly calculated his separate property interest in the American Express account, resulting in a divestiture of his separate property and an unfair division of the community estate.  Following a bench trial, the trial court filed findings of fact and conclusions of law. In these findings, the trial court calculated a community interest in the American Express account of $136,991.00. It awarded $909.06 of this amount to Wiley and the remainder to Flora.  Further, it calculated Wiley’s separate property interest in the American Express account to be $78,009.04.  Wiley contends that an additional $33,267.00 is his separate property, traceable to pre-marriage Woodmen of the World annuities.  Wiley’s appellate issues are essentially a challenge to the legal and factual sufficiency of the evidence to support the trial court’s findings.

            All property on hand at the dissolution of a marriage is presumed to be community property.  Tex. Fam. Code Ann. § 3.003(a) (Vernon 1998).  To rebut this presumption, a spouse claiming assets as separate property must establish their separate character by clear and convincing evidence.  Tex. Fam. Code Ann. § 3.003(b) (Vernon 1998).  Separate property includes “the property owned or claimed by the spouse before marriage.”  Tex. Fam. Code Ann. § 3.001 (Vernon 1998).  Generally, whether property is separate or community is determined by its character at inception.  Barnett v. Barnett, 67 S.W.3d 107, 111 (Tex. 2001).

            When the party having the burden of proof suffers an unfavorable finding, as here, the proper challenge to the legal sufficiency of the evidence is that the issue was established “as a matter of law.”  Tate v. Tate, 55 S.W.3d 1, 4 (Tex. App.—El Paso 2000, no pet.). Thus, Wiley must, as a matter of law, overcome two hurdles.  First, the record must be examined for evidence that supports the finding, while ignoring all evidence to the contrary.  See Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 940 (Tex. 1991).  Second, if there is no evidence to support the finding, then the entire record must be examined to see if the contrary proposition is established as a matter of law.  Id.; Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989).

            In reviewing a factual sufficiency issue, we conduct a neutral review of all the evidence, both for and against the finding, and will set the finding aside only if proof of the fact is so obviously weak or the finding so contrary to the great weight of the evidence as to be clearly wrong and unjust.  See Leal v. Tex. Dep’t of Protective & Regulatory Servs., 25 S.W.3d 315, 321 (Tex. App.—Austin 2000, no pet.); see also Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).  Our review of factual sufficiency necessarily incorporates the clear and convincing burden of proof Wiley was required to meet at trial.  See In re W.C., 56 S.W.3d 863, 868 (Tex. App.—Houston [14th Dist.] 2001, no pet.); Leal, 25 S.W.3d at 320.

            We conclude that there is legally sufficient evidence to support the trial court’s findings that $136,991.00 of the American Express account was community property and only $78,009.04 was Wiley’s separate property.  The evidence shows that Wiley and Flora married August 22, 1992. They established the American Express account in August 1998.  Thus, under the inception of title rule, the account would be considered community property. See Barnett, 67 S.W.3d at 111.  Just before trial, the account value was $215,046.50.  The evidence also shows that before their marriage, Wiley saved $78,009.00 in his employee’s savings plan with Dow Chemical.  The parties stipulated that this $78,009.00 was deposited in the American Express account.  Thus, there is evidence supporting the trial court’s findings. Accordingly, we do not need to examine evidence to the contrary.  We overrule Wiley’s issues regarding legal sufficiency of the evidence.

            In reviewing the factual sufficiency, we consider all evidence in the record.  Although the American Express account was established after the marriage, it was held in Wiley’s name, and he deposited all funds in it.  As Wiley testified at trial, “I rolled everything I owned into American Express.”  He testified this included his entire employee savings plan with Dow Chemical ($199,880.00, of which $78,009.00 was separate property), Woodman of the World annuities, a Dow Employee Credit Union account, and a 401K account worth $16,000 from Kelly (a post-marriage employer).  The evidence also includes Exhibit 8, an account statement from American Express with a summary page entitled, “Payments into Wiley’s Account.” This page details:

class=Section2>

IRA’s

August 7, 1998          Dow Employee Credit Union          $3,972.63

Sept[.] 21, 1998         Woodmen of the World                 $23,669.08

Sept[.] 21, 1998         Woodmen of the World                   $9,598.57

February 8, 1999       Dow Employer Savings Plan       $199,879.66

October 26, 2000      Kelly Services                                 $16,399.14

                                    Total                                               $253,519.08

Non-IRA

October 1, 1998        Woodmen Annuity                          $11,990.11

                                    Total                                              $265,509.19

class=Section3>

All of these amounts are values six to eight years into Wiley and Flora’s marriage.  Also, although the summary page indicates deposits of $265,509.19 into “Wiley’s account,” the account value a few days before trial was a lesser amount, $215,046.50.  The evidence does not explain whether this lesser amount was because of unrealized losses or withdrawals, or both, from the American Express account since its inception.

            Additionally, the evidence includes Flora’s testimony.  Wiley’s attorney asked her, “[Wiley] deposited or rolled over into his account all of his Woodmen of the World policies, is that true, his annuities?”  Flora answered, “I believe that is true, yes.”  Further, she testified that Wiley owned these Woodmen annuities before their marriage, “except for the one from the credit union.”

            Clearly, the evidence shows that the American Express account was established during marriage and contained community funds along with Wiley’s separate property interest from his Dow employee savings plan.  It is possible that the American Express account also contains other separate monies. However, to overcome the presumption that the remaining funds are community, the spouse claiming separate property must trace and clearly identify the property claimed to be separate. Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975); McElwee v. McElwee, 911 S.W.2d 182, 188 (Tex. App.—Houston [1st Dist.] 1995, writ denied).

            Here, Wiley did not prove clearly and convincingly that an additional dollar amount in the American Express account was his separate property via a pre-marriage rollover from Woodmen of the World annuities.  First, although Exhibit 8 shows three Woodmen of the World accounts, it is unclear which of these accounts is “the one from the credit union” described by Flora as community property.  Further, the dates listed for all three Woodmen of the World accounts in Exhibit 8 are after Wiley and Flora married.  The court is left to guess which of the Woodmen of the World accounts, if any, were established before the marriage.  “When tracing separate property, it is not enough to show that separate funds could have been the source of a subsequent deposit of funds. Such conjecture does not constitute sufficient evidence to sustain appellant’s burden of tracing to overcome the community property presumption.”  Latham v. Allison, 560 S.W.2d 481, 485 (Tex. Civ. App.—Fort Worth 1977, writ ref’d n.r.e.).

            Second, there is no value tracing of the allegedly separate Woodmen of the World monies.  Mortenson v. Trammell, 604 S.W.2d 269, 274 (Tex. Civ. App.—Corpus Christi 1980, writ ref’d n.r.e.) (holding “value tracing is commonly accepted as the means by which cash assets are traced”).  Value tracing necessitates a showing of how one spouse obtained the property and requires evidence which clearly establishes the origin of the asset.  Id.; see Smith v. Smith, 22 S.W.3d 140, 144 (Tex. App.—Houston [14th Dist.] 2000, no pet.) (explaining “[t]racing involves establishing the separate origin of the property through evidence showing the time and means by which the spouse originally obtained possession of the property.”); cf. Osorno v. Osorno, 76 S.W.3d 509, 512 (Tex. App.—Houston [14th Dist.], no pet.) (husband provided no deposit slips or bank records to trace allegedly separate property); Harris v. Ventura, 582 S.W.2d 853, 855 (Tex. Civ. App.—Beaumont 1979, no writ) (evidence presented of each deposit, withdrawal, and interest in account). 

            Third, from the evidence presented, there is no way to determine what principal existed on the allegedly separate accounts at the time of the marriage and what portion was interest income after the marriage.  Interest that accrues on separate funds during marriage constitutes community property.  See Mortenson, 604 S.W.2d at 275. 

            In short, any doubt as to the character of property must be resolved in favor of the community.  Confreres v. Confreres, 590 S.W.2d 218, 221 (Tex. Civ. App.—Tyler 1979, no writ); see also Robles v. Robles, 965 S.W.2d 605, 622 (Tex. App.—Houston [1st Dist.] 1998, pet. denied) (stating “[i]f the evidence shows the parties’ separate and community property have been so commingled as to defy resegregation and identification, the burden is not discharged and the statutory presumption will prevail.”).  Accordingly, we overrule issues one through four and six through sixteen.

          Division by Dollar Amount Versus Division by Percentage

            Lastly, in his fifth issue, Wiley contends that the trial court erred in dividing the American Express account by dollar amounts, rather than by percentages, because the account value fluctuates daily with the stock market. Wiley cites two divorce cases in which retirement pay was divided by percentages instead of by dollar amounts, May v. May, 716 S.W.2d 705 (Tex. App.—Corpus Christi 1986, no writ), and Neely v. Neely, 669 S.W.2d 388 (Tex. App.—Eastland 1984, writ ref’d n.r.e.).  However, neither case stands for the proposition that a trial court abuses its discretion if it divides a savings or money market account by dollar amounts. Further, our research has not uncovered a case directly on point.

            Nonetheless, a “presumption arises on appeal that the trial court correctly exercised its discretion in dividing property in a divorce proceeding, and the burden rests on the appellant to show from the record that the division was so disproportionate, and thus unjust and unfair, as to constitute an abuse of discretion.”  Grossnickle v. Grossnickle, 935 S.W.2d 830, 836 (Tex. App.—Texarkana 1996, writ denied).  We will remand only if we find reversible error in a specific part of the division that materially affects the trial court’s just and right division of the entire community estate.  Jacobs v. Jacobs, 687 S.W.2d 731, 733 (Tex. 1985).  In this case, Wiley has failed to prove that the trial court’s division of the American Express account by dollar amount was so disproportionate as to constitute an abuse of discretion.  Further, even if it is error to divide a stock market-dependent account by dollar amounts rather than percentages, Wiley has failed to show that this materially affects the just and right division of the entire estate. Accordingly, we overrule issue five.

            Having overruled all seventeen issues, we affirm the trial court’s judgment.

                                                                        /s/        Charles W. Seymore

                                                                                    Justice

Judgment rendered and Opinion filed July 25, 2002.

Panel consists of Justices Yates, Seymore, and Guzman.

Do Not Publish — Tex. R. App. P. 47.3(b).