Patrick J. Combe-Ovadia v. Amarit Gonzalez Combe-Ovadia

Affirmed and Memorandum Opinion filed August 3, 2006

Affirmed and Memorandum Opinion filed August 3, 2006.

In The

Fourteenth Court of Appeals

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NO. 14-04-01028-CV

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PATRICK J. COMBE-OVADIA, Appellant

V.

AMARIT GONZALEZ COMBE-OVADIA, Appellee

On Appeal from the 245th District Court

Harris County, Texas

Trial Court Cause No. 2003-07057

M E M O R A N D U M   O P I N I O N

Appellant, Patrick J. Combe-Ovadia, appeals the portion of the divorce decree entered by the trial court dividing the marital estate.  We affirm. 

                                                  Background

Amarit and Patrick were married on May 27, 1989.  Two children were born during the marriage.  On February 11, 2003, Amarit filed for divorce, and on July 16, 2004, the trial court granted a divorce on the ground of insupportability.  The trial court awarded Amarit community assets in the amount of $82,474.85 and community debts in the amount of $1,600.00, for a total net amount of $80,874.85.  The trial court awarded Patrick community assets in the amount of $107,801.91 and community debts in the amount of $114,074.41, for a total net amount of minus $6,272.80.  The trial court ordered that each party was responsible for his or her own attorney fees and costs.  Among other personal and real property, the trial court found the Somerset Place property to be Amarit=s separate property.

On appeal, Patrick asserts the trial court abused its discretion by failing to divide the community estate in a just and right manner.  Specifically, Patrick complains he was awarded most of the community debtCan amount which exceeded the total amount of community assets awarded to himCresulting in a negative award.  Patrick=s other complaints are centered on the trial court=s characterization of the Somerset Place property as Amarit=s entire separate property because the community estate made monthly mortgage payments on that property and the community was entitled to economic contribution for those mortgage payments. 

                                         Just and Right Division

In his first issue, Patrick claims the trial court abused its discretion by failing to divide the community estate in a just and right manner.  In dividing the community estate, the trial court shall order a division of the estate of the parties in a manner the court deems just and right, having due regard for the rights of each party.  Tex. Fam. Code Ann. ' 7.001 (Vernon 2006).  A trial court has broad discretion in dividing the community estate upon dissolution of marriage.  Vallone v. Vallone, 644 S.W.2d 455, 460 (Tex. 1982).  We will presume the trial court exercised its discretion and not disturb the trial court=s division unless an abuse of discretion has been shown.  Id.  To prove that the trial court abused its discretion, the appellant must demonstrate from the evidence in the record that the division was manifestly unjust and unfair.  Barnard v. Barnard, 133 S.W.3d 782, 787 (Tex. App.CFort Worth 2004, pet. denied); Zieba v. Martin, 928 S.W.2d 782, 790 (Tex. App.CHouston [14th Dist.) 1996, no writ) (op. on reh=g). 

Under the abuse of discretion standard, the legal and factual sufficiency of the evidence are not independent grounds of error, but are merely relevant factors in assessing whether the trial court abused its discretion.  Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991).  We review the trial court=s findings of fact for legal and factual sufficiency of the evidence by the same standards in reviewing the evidence supporting a jury=s finding.  Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). 

When reviewing the legal sufficiency of the evidence, we review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it.  City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005).  We credit favorable evidence if a reasonable fact finder could, and disregard contrary evidence unless a reasonable fact finder could not.  Id. at 827.  The evidence is legally sufficient if it would enable fair-minded people to reach the verdict under review.  Id.  In conducting a factual sufficiency review, we must examine the entire record, considering both the evidence in favor of, and contrary to, the challenged finding, and set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust.  Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam).

We review a trial court=s conclusions of law as legal questions.  BMC Software Belguim, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).  Conclusions of law may not be challenged for factual sufficiency, but we may review the trial court=s legal conclusions drawn from the facts to determine their correctness.  Id. If we determine a conclusion of law is erroneous, but the trial court rendered the proper judgment, then reversal is not required.  Id. 

The trial court awarded Amarit community assets in the amount of $82,474.85 and community debts in the amount of $1,600.00, for a total net amount of $80,874.85.  The trial court awarded Patrick community assets in the amount of $107,801.91 and community debts in the amount of $114,074.41, for a total net amount of minus $6,272.80.  While the division of the community estate need not be equal, it should be equitable.  Zieba v. Martin, 928 S.W.2d 782, 790 (Tex. App.CHouston [14th Dist.] 1996, no writ).  Therefore, the trial court must have some reasonable basis for an unequal division of the property.  Id. 

When exercising its discretion in making a just and right division, the trial court may consider the following factors:  (1) the spouses= capacities and abilities; (2) benefits that the party not at fault would have derived from the continuation of the marriage; (3) business opportunities; (4) education; (5) physical conditions of the parties; (6) the relative financial conditions and obligations of the parties; (7) size of the separate estates; (8) the nature of the property; (9) disparities in earning capacities and income; and (10) the fault of the breakup of the marriage.  Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981).  The trial court may also consider the wasting of community assets.  Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998). 

In making a just and right division, the trial court took into consideration Athe evidence and the issues in this case.@  The evidence shows that Amarit last worked full-time in 1993, when their first child was born, after which time, she helped Patrick with his business, KCO Management, Inc., a general contracting company.  Amarit is a certified public accountant. At the time of trial, Amarit was working part-time for an agency interpreting Spanish and her then current monthly income of $800 was not sufficient to pay her bills.  Amarit believes she will be able to work more when the divorce proceedings are over.  Patrick is paying $900 a month in child support and is responsible for providing the children=s health insurance.  Amarit anticipates that she will have a mortgage. 

Amarit testified that she has no assets, cash, or retirement fund.  Amarit testified she does not have the ability to borrow from anyone.  However, she has a friend in Mexico who deposits money in an account at a bank in Mexico for her, but Amarit states her friend expects her to repay that money.  Amarit inherited $15,000 from her father in 1996, and he gave her $150,000 during her marriage, but all of that money has been spent.  Amarit inherited real property in Mexico from her father, which is her separate property.  Amarit=s trial inventory shows she has $100,000 equity in the Mexico property.  Amarit claims that although people are residing on the property, she is not collecting rent.  Patrick, on the other hand, asserts Amarit is collecting rent.

Amarit also testified that her car was stolen and destroyed the day before the hearing on her motion to enforce the temporary orders.  The car was driven to a place where it was destroyed.  Amarit testified that Patrick had a key and there were distinctive marks on the car that linked its destruction to Patrick.  Since her car was destroyed, Amarit has had to borrow a car.  Amarit claims she used the $5,000 in insurance proceeds on the car to pay for mediation in this case. 

Amarit complains Patrick received 100 percent of the proceeds ($52,000) from the sale of a condominium that occurred while the divorce was pending.  Amarit testified that the sale violated the temporary order entered in this case prohibiting the sale of assets.  Amarit admitted the proceeds of the sale of the condominium would have gone into the account of KCO Management.  Patrick testified that KCO Management, which is a general contracting company, buys houses and condominiums to fix up and resell. Patrick stated the proceeds of the sale of the condominium were used to pay off the balance of the loan.  Prior to selling this condominium, KCO Management had sold seven or eight condominiums in the same project during the marriage. Patrick testified the sale did not violate the temporary order because it did not prohibit Patrick from continuing to run KCO Management=s business.  The trial court awarded Patrick the $52,000 in proceeds from the sale of the condominium. 

Patrick and Amarit owned two condominiums in France. Amarit complained that Patrick violated the temporary order by failing to pay the mortgages on both condominiums.  Patrick testified that he did not have the money to pay the mortgages on the two condominiums.  The trial court awarded Patrick and Amarit each one of the two condominiums. 

In its findings of fact, the trial court found Patrick Adeposited hundreds of thousands of dollars during the operation of his business@ and A[w]hile this case was pending, [Patrick] spent more money that [sic] he alleged he had income.@  Patrick does not challenge these findings.  Patrick testified that in 2001, 2002, and 2003, he deposited over $800,000 in his business account, not his personal account. Patrick explained that he had Atwo big contracts.  One was for over $300,000, and the other one was 200,000.  So it=s 500,000.  Then the small business, the small jobs.@  Amarit also testified that since the divorce has been pending, Patrick has taken $300,000 in cash from the bank through his business.  Patrick stated that he cashed a large number of checks Abecause most of the guys, my subcontractors, besides the big company, are paid in cash.@ 

Patrick testified, at trial in 2004, that his income as a general contractor is $3,500 to $4,000 per month.  However, on his application to purchase a car at CarMax, Patrick stated that his income was $5,000 per month.  And on his income tax return for 2003, Patrick stated his annual income was $13,000.  Patrick explained that while some months he makes $5,000, he also makes less during other months.  Patrick testified that A2003 was very bad year@ and his income dramatically decreased with the divorce.  For 2001 and 2002, Patrick reported annual incomes of $25,000 and $27,000, respectively. 

Patrick=s primary complaint is that the trial court ordered him to pay most the community estate=s debt, including $36,068.71 in retail debt, while ordering Amarit to pay only $1,600 in retail debt, and ordering him to pay $38,000 for a vehicle that was repossessed by the lender, particularly when she was awarded the Somerset Place property with $155,000 in equity and the property in Mexico with $100,000 in equity as her separate property, and the community estate=s fifty-percent interest in Chateau Memorial, L.L.C., which owns a commercial building providing rental income. 

The evidence shows that Patrick deposited $800,000 into his business account over a period of three years and that he also took $300,000 out of his business account.  During this same period, Patrick=s income, as stated on his tax returns, was as low as $13,000 and as high as $27,000.  The trial court apparently did not believe Patrick=s explanation for the expenditure of $300,000 through KCO=s Management while reporting such a comparatively small amount of income.  See Murff, 615 S.W.2d at 700 (stating the trial court has the opportunity to observe the parties= testimony and determine their credibility).

The evidence is legally and factually sufficient to support the trial court=s finding that Patrick had deposited a large sum of money in his business account and had spent more than he alleged as income.  The wasting of community assets is a factor the trial court may consider in making a just and right division.  Schlueter, 975 S.W.2d at 589.  The trial court has authority to order the payment or disposition of the community debts in its consideration and determination of the division of the community estate.  Taylor v. Taylor, 680 S.W.2d 645, 648 (Tex. App.CBeaumont 1984, writ ref=d n.r.e.).  We observe that the trial court awarded Patrick more than half of the community estate=s assets, including KCO Management.  Thus, we cannot say the trial court abused its discretion in awarding Patrick most of the community debt in light of its finding that he had spent more than what his income was purported to be.  Patrick=s first issue is overruled.^[1]

                        Characterization of Separate Property

In his second issue, Patrick claims the evidence is legally and factually insufficient to support the trial court=s characterization of the Somerset Place property as Amarit=s entire separate property.  Patrick admits there is evidence in the record supporting Amarit=s having a separate property interest in the Somerset Place property, but claims there is insufficient evidence to support an award of the property as her entire separate property interest because, with the exception of the down payment and several monthly mortgage payments made by Amarit=s father, Patrick paid the monthly mortgage from his salary. 

All property possessed by either spouse during or on dissolution of marriage is presumed to be community property.  Tex. Fam. Code Ann. ' 3.003(a) (Vernon 2006); McKinley v. McKinley, 496 S.W.2d 540, 543 (Tex. 1973).  The burden of overcoming the presumption of community property is on the party asserting otherwise by clear and convincing evidence.  Licata v. Licata, 11 S.W.3d 269, 272B73 (Tex. App.CHouston [14th Dist.] 1999, pet. denied).  As relevant here, separate property includes property acquired by a spouse by gift during the marriage.  Tex. Fam. Code Ann. ' 3.001(2) (Vernon 2006). 

The settlement statement shows Amarit as the purchaser of the Somerset Place property.  Documents from the mortgage company also show Amarit as the borrower.  Amarit testified that in 1990, her father gave her $40,000 for the down payment on the Somerset Place house, which had a contract sales price of $125,500.  Bank documents show two payments from Amarit=s father, Carlos Gonzalez, totaling $41,924.14 payable to Houston Title Company.  There are also 11 payments by Amarit=s father directly to the mortgage company or to the seller of the house, totaling $13,106.96.  Amarit also introduced into evidence 14 checks, totaling $10,950.00, that were drawn on her father=s bank account, but made payable to her, which she claimed she paid the mortgage company. 

On appeal, Patrick does not challenge Amarit=s separate property status with regard to her father=s gift to her of the down payment and a number of mortgage payments, but asserts the community estate owns a pro rata portion of the property because the community estate made mortgage payments and, therefore, Amarit=s separate estate and the community estate own the property as tenants in common.  Whether property, including real estate, is separate or community is determined by its character at the inception of the party=s title.  Barnett v. Barnett, 67 S.W.3d 107, 111 (Tex. 2001); In re Marriage of Morris, 123 S.W.3d 864, 871 (Tex. App.CTexarkana 2003, no pet.).  Inception of title is when a party first has a claim of right to the property by virtue of which title is ultimately vested.  Wilkerson v. Wilkerson, 992 S.W.2d 719, 722 (Tex. App.CAustin 1999, no pet.).  In the absence of any challenge by Patrick on appeal to Amarit=s claim that the down payment and certain mortgage payments were a gift to her from her father, the Somerset Place property is Amarit=s separate property by virtue of the inception of title rule. 

Moreover, contrary to Patrick=s position that the community estate owns a pro rata share of the property by virtue of having made mortgage payments, the community estate=s mortgage payments on Amarit=s separate property does not change the property=s separate property status.  AOnce the character of the property is fixed, the use of funds of another estate to complete the purchase does not alter the character of the property, although the other estate may be entitled to reimbursement for the funds contributed.@  Wilkerson, 992 S.W.2d at 722B23; see also Moroch v. Collins, 174 S.W.3d 849, 856 (Tex. App.CDallas 2005, pet. denied) (stating a claim for economic contribution does not affect the inception of title under which the character of property is determined at the time the right to own or claim the property arises); Bradley v. Bradley, 540 S.W.2d 504, 512 (Tex. Civ. App.CFort Worth 1976, no writ) (stating that where a community obligation for the purchase of land is given to purchase such land and its status is fixed as community property, its status is not later changed into separate property by the fact that the community debt is paid with separate funds); cf. In re Marriage of Morris, 123 S.W.3d at 871 (stating separate property=s character does not change despite use of community funds to improve property).  Patrick=s second issue is overruled.

                                        Economic Contribution

In his third and fourth issues, Patrick claims the trial court erred when it failed to order a division of his claims for economic contribution of the community estate to the separate estate of Amarit for mortgage reduction and capital improvements.  AA marital estate that makes an economic contribution to property owned by another marital estate has a claim for economic contribution with respect to the benefited estate.@  Tex. Fam. Code Ann. ' 3.403 (Vernon 2006).  A claim of economic contribution allows a marital estate that has contributed to the reduction of the principal amount of a debt owned by another marital estate to recover from the benefited estate.  Id. ' 3.402(a)(2) (Vernon 2006).  Economic contribution is also defined as the dollar amount of Acapital improvements other than by incurring debt.@  Id. ' 3.402(a)(6). 

The amount of a claim for economic contribution is determined by multiplying the equity in the benefited property on the date of divorce by a fraction.  Id. ' 3.403(b).  The fraction=s numerator is the amount of economic contribution by the contributing estate and its denominator is equal to the sum of that same economic contribution by the contributing estate and the economic contribution by the benefited estate to the equity in the property.  Id.  As here, if the benefited estate is the separate property of a spouse and the contributing estate is the community estate, the amount of contribution is measured by determining (1) the net equity of the separate property estate in the property as of the date of the first economic contribution to the property by the community estate, and (2) any additional contribution to the equity in the property made by the separate property estate after the date of the first economic contribution to the property by the community estate.  Id. ' 3.403(b-1)(2).  Thus, three Aitems@ generally will be needed to calculate a claim for economic contribution: (1) the equity value at the date of marriage, or the value on the date the contribution was started or made, if later; (2) the equity value of the property at the date of divorce; and (3) the dollar amount of the economic contribution.  Avila v. Avila, No. 04-04-00196-CV, 2005 WL 708431, at *2 (Tex. App.CSan Antonio Mar. 30, 2005, no pet.) (mem. op.). 

Patrick did not provide the trial court or this court with the equity of the Somerset Place house on the date the community estate made its first contribution by either mortgage reduction or capital improvements. Without that value, the community=s estate=s claim for economic contribution cannot be calculated in accordance with Section 3.403 of the Family Code.  See Hamlin v. Featherston, No. 2-03-078-CV, 2005 WL 792686, at *4 (Tex. App.CFort Worth Apr. 7, 2005, no pet.) (mem. op.) (holding that because there was no evidence in the record of the net equity in the home as of the date the community estate made its first payment on the wife=s separate property, the trial court used incorrect figures in calculating the amount of the community estate=s claim for economic contribution); Avila, 2005 WL 70831, at *2 (stating that because wife failed to present evidence to the trial court regarding the equity values as of the date of the first contribution to separate properties, the appellate court could not make the calculations required by law without speculating as to the pertinent values).  Accordingly, we have no basis to conclude the trial court abused its discretion in denying Patrick=s claim for economic contribution.   Patrick=s third and fourth issues are overruled.

          Thee judgment of the trial court is affirmed. 

/s/      J. Harvey Hudson

Justice

Judgment rendered and Memorandum Opinion filed August 3, 2006.

Panel consists of Justices Hudson, Frost, and Seymore.

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^[1]  In post-submission briefing, Patrick complains the trial court based the division of the community debt by looking at the party=s name on the debt.  Patrick asserts there was no finding by clear and convincing evidence that the creditors agreed to look solely to his separate estate for the majority of the community debt.  We need not address any arguments raised in Patrick=s post-submission letter that were not raised in his original brief.  See Romero v. State, 927 S.W.2d 632, 634 n.2 (Tex. 1996) (stating petitioner failed to preserve issue for review by raising it for first time post-submission).