Paddy Argovitz v. Jerry Argovitz

Dismissed and Memorandum Opinion filed October 25, 2005

Dismissed and Memorandum Opinion filed October 25, 2005.

In The

Fourteenth Court of Appeals

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NO. 14-04-00885-CV

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PADDY ARGOVITZ, Appellant

V.

JERRY ARGOVITZ, Appellee

On Appeal from the 309th District Court

Harris County, Texas

Trial Court Cause No. 02-58210

M E M O R A N D U M   O P I N I O N

Paddy Argovitz appeals from a final judgment dissolving her marriage to Jerry Argovitz.  She contends that before entry of judgment, she withdrew her consent to the settlement agreement on which the judgment was based.  She further contends that her initial consent was fraudulently induced. Meanwhile, Jerry has filed a motion that was taken with the appeal, arguing that Paddy=s appeal should be dismissed because she has accepted benefits awarded to her in the judgment.  We dismiss the appeal.

I. Background

Paddy Argovitz filed for divorce from Jerry Argovitz in November 2002.  Paddy and Jerry signed a settlement agreement, which purports to be a mediated settlement agreement, on January 9, 2004. The agreement was then filed with the district court clerk.  Subsequently, Paddy filed a ANotice of Rescission and Withdrawal of Consent@ on March 24, and Jerry filed a AMotion to Enter Judgment on Mediated Settlement Agreement@ on April 2.  The trial court held a hearing and granted a judgment of divorce, dividing the marital property pursuant to the settlement agreement.

Paddy subsequently filed this appeal, and Jerry filed a motion to dismiss the appeal. In his motion to dismiss, Jerry contends that because Paddy voluntarily accepted benefits under the judgment of divorce, she is estopped from appealing from that judgment.  The motion, supplemental motion, and attached affidavits by Jerry assert that Paddy voluntarily received numerous benefits under the judgment, including real property valued at $1 million, cash from various accounts totaling over $460,000, payment of her debts totaling over $61,000, an undivided fifty percent interest in other real property, an undivided fifty percent interest in certain corporate stock, frequent flyer miles, and an automobile.^[1]  Also attached to the motions were various cancelled checks, statements, deeds, letters, and stock certificates purportedly evidencing Paddy=s receipt of these items.

In her response to the motion, Paddy contends that (1) Jerry=s dismissal argument was waived because the motion was untimely filed; (2) the motion impermissibly relies on evidence that is outside the record; (3) the conflicting affidavits of Paddy and Jerry raise fact issues that should not be resolved by an appellate court; (4) the cash benefits received by Paddy can simply be taken into account by the trial court on remand and do not necessitate dismissal; and (5) the benefits received by Paddy were involuntary due to economic necessity.  Paddy also attached an affidavit to her response, in which she acknowledged having received monetary benefits in keeping with the judgment but states that she did not request that Jerry pay the third-party creditors and that she received the benefits based on economic necessity.

II. The Acceptance of Benefits Doctrine

Generally, a party who accepts the benefits of a judgment is estopped from challenging the judgment by appeal.  See Tex. State Bank v. Amaro, 87 S.W.3d 538, 544 (Tex. 2002); Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002, 1004 (1950); Waite v. Waite, 150 S.W.3d 797, 803 (Tex. App.CHouston [14th Dist.] 2004, pet. denied).  In other words, A[a] litigant cannot treat a judgment as both right and wrong, and if he has voluntarily accepted the benefits of a judgment, he cannot afterward prosecute an appeal therefrom.@  Carle, 234 S.W.2d at 1004.  The doctrine often arises in divorce cases when one spouse accepts certain benefits of the judgment and then tries to appeal the remainder of the judgment.  Waite, 150 S.W.3d at 803.  The burden is on the appellee to prove that the appellant is estopped by the acceptance of benefits doctrine.  Id. There are exceptions to the doctrine, including (1) when a reversal of the judgment could not possibly affect an appellant=s right to the benefit accepted, and (2) when the acceptance of benefits is not voluntary because of financial duress or other economic circumstances.  Id. at 803-04.  These exceptions are very narrow.  Id. at 804.

On their face, Jerry=s motion to dismiss, supplemental motion, and attached affidavits present a strong case that Paddy voluntarily accepted benefits under the judgment, thus estopping her from appealing that judgment.  We now examine Paddy=s counter arguments.

III. Paddy=s Responsive Arguments

A. Timeliness

Paddy first contends that the motion to dismiss was untimely filed under Texas Rule of Appellate Procedure 10.5, citing Trevino v. Trevino, 555 S.W.2d 792, 795 (Tex. App.CCorpus Christi 1977, no writ).  Tex. R. App. P. 10.5. We have previously rejected this same argumentCholding that Rule 10.5 does not apply in this contextCas have other courts of appeals.  Waite, 150 S.W.3d at 802-03; Bloom v. Bloom, 935 S.W.2d 942, 946 (Tex. App.CSan Antonio 1996, no writ); Aycock v. Pannill, 853 S.W.2d 161, 163-64 (Tex. App.CEastland 1993, writ denied).  Accordingly, we find that Jerry=s motion was not untimely filed.

B. Evidentiary Issues

Paddy next contends that the motion impermissibly relies on evidence that is outside the record, and t the conflicting affidavits of Jerry and Paddy raise fact issues that should not be resolved by an appellate court.  We disagree with both contentions.

Under the first argument, Paddy asserts that the attachments to Jerry=s affidavits are not properly authenticated and thus do not support the contention that Paddy received benefits.  However, even if the attached documents are disregarded, Jerry=s affidavits make statements of fact in support of the motions. Paddy does not directly attack the propriety of Jerry=s affidavits.^[2]  Indeed, she admits in her own affidavit that she received monetary benefits in keeping with the judgment, and she does not deny that she received the real property, the stock, the frequent flyer miles, and the vehicle.  Thus, there was substantial evidence to support the contentions in the motions, even disregarding the attachments to Jerry=s affidavit.  See, e.g., Bloom, 935 S.W.2d 942 (applying acceptance of benefits doctrine based solely on appellee=s affidavit).

Paddy additionally contends that the conflicting affidavits create fact issues that an appellate court is not in a position to resolve.  However, the only alleged conflict identified by Paddy, or apparent from the affidavits themselves, is the dispute as to whether Jerry paid the third-party creditors unilaterally or at Paddy=s request. However, this single conflict is not a bar to finding that Paddy voluntarily accepted benefits of the judgment. The payments to creditors amounted to a little over $61,000, out of alleged benefits received of well over $1.5 million.  Even if we disregard the payment to third-party creditors, the uncontroverted portions of Jerry=s affidavits and the admissions in Paddy=s affidavit are sufficient to demonstrate that Paddy voluntarily received benefits under the judgment.  Thus, the apparent conflict regarding third-party creditors need not be resolved in order to rule on the motion to dismiss.

C.  Exceptions to the Doctrine

Paddy additionally asserts that she meets two exceptions to the acceptance of benefits doctrine, contending: (1) the reversal of the judgment could not possibly affect her right to the benefits she accepted, and (2) the acceptance of benefits was not voluntary but was due to economic necessity.  See Waite, 150 S.W.3d at 803-04.  We discuss each in turn.

1. Reversal of the Judgment

In Carle, the supreme court recognized an exception to the acceptance of benefits doctrine for when a reversal of the judgment could not possibly affect the appellant=s right to the benefit accepted under the judgment.  149 Tex. at 472, 234 S.W.2d at 1004.  The court explained:  A[w]here an appellant accepts only that which appellee concedes, or is bound to concede, to be due him under the judgment he is not estopped to prosecute an appeal which involves only his right to a further recovery.@  Id. This exception is a narrow one.  Id.  Its resolution turns on the answer to two questions:  (1) could a reversal of the judgment possibly affect appellant=s right to the benefits secured by her under the judgment? and (2) would appellee be compelled to concede in a new trial that appellant has a right to retain the benefits regardless of the outcome of the litigation? Id.; Waite, 150 S.W.3d at 807.

Paddy specifically argues that in a retrial, the trial court could simply take into account the cash benefits that she received when the court makes a new Ajust and right division@ of the marital estate, citing Demler v. Demler, 836 S.W.2d 696, 697 (Tex. App.CDallas 1992, no writ).  In Demler, the court indeed stated that the acceptance of cash benefits was a form of Carle exception, because the trial court on remand could redivide the property while taking into account the previously accepted cash benefit.  836 S.W.2d at 698.  However, the court clearly emphasized that this form of the Carle exception applied only when cash benefits were accepted.  Id.; see also Trevino v. Trevino, 555 S.W.2d 792, 795-96 (Tex. App.CCorpus Christi 1977, no writ) (applying cash benefits exception and emphasizing that only cash benefits were accepted).  Paddy=s argument completely ignores the fact that she did not simply accept a cash benefit under the judgment; she additionally accepted real property valued at $1 million, corporate stock, frequent flyer miles, and an automobile.  Paddy asks this court to reverse the judgment based on the settlement agreement; whereupon, the entire marital estate would be subject to a new just and right division. See Tex. Fam. Code Ann. ' 7.001 (Vernon 1998) (mandating a Ajust and right@ division of marital property in a divorce decree); Carle, 234 S.W.2d at 1004 (stating that on remand trial court would have mandatory duty to divide marital estate).  It is extremely unlikely that Jerry would concede, or would be required to concede, Paddy=s entitlement to any of the items she has accepted under the original judgment.  See Waite, 150 S.W.3d at 808.  Indeed, Paddy offers no reason why Jerry could not request, and the trial court could not award to him, the real property, the stock, the frequent flyer miles, and the vehicle.  It is, therefore, clear that (1) a reversal of the judgment could very possibly affect Paddy=s right to the benefits secured by her under the judgment, and (2) Jerry would not be compelled to concede that Paddy has a right to retain the benefits she has accepted.^[3]  The facts of this case do not fit within the narrow Carle exception to the acceptance of benefits doctrine.

2. Economic Necessity

The economic necessity exception applies when the acceptance of benefits was not voluntary but was necessary because of financial distress or other economic circumstances.  Waite, 150 S.W.3d at 803.  Paddy contends that her acceptance of benefits Aarose from sheer economic necessity.@  She states that without accepting certain benefits, she had no way to meet her monetary obligations, including paying property taxes of approximately $28,000, homeowners= association dues of approximately $1,850, homeowner=s insurance of approximately $3,000, outstanding fees for an accounting expert of $43,000, and outstanding legal fees of $100,000.  She further alleges that she had no ability to meet everyday living expenses or to maintain any semblance of the lifestyle to which she was accustomed.

Paddy=s economic necessity argument fails for several reasons. To begin with, she makes no such argument regarding her acceptance of the real property, the corporate stock, the frequent flyer miles, or the automobile.  Even if we were to assume that the entire amount of the cash benefits she accepted was due to economic necessity, her failure to explain her acceptance of over $1 million in non-cash benefits would prevent her from falling into this exception.  See Waite, 150 S.W.3d at 805-06 (finding exception did not apply where husband=s affidavit failed to identify any economic necessity requiring him to demand that wife execute a warranty deed transferring real property to him).

Further, the expense items identified by Paddy total $175,850.  Even if we ignore the benefits listed in the previous paragraph (the real property, stock, miles, and vehicle) and the disputed payments to third-party creditors (over $61,000), Jerry established that Paddy accepted over $460,000 in cash benefits.  This leaves over $285,000 in additional benefits accepted but unaccounted for by Paddy in her response to the motion.  She states that she had no ability to meet everyday living expenses or to maintain her lifestyle, but she offers no specifics regarding what these items entailed.  See Waite, 150 S.W.3d at 805-06 (finding exception did not apply where husband=s affidavit failed to provide any specifics regarding claimed inability to meet daily living expenses).^[4]  She has therefore failed to show that economic necessity required that she accept these benefits.

We additionally note that Paddy does not contend that she has no other sources of income or that she has no ability to borrow money to meet her expenses; likewise, she fails to explain why she could not have obtained money during the pendency of the appeal by requesting temporary support payments.  See Tex. Fam. Code Ann. ' 6.709 (Vernon 1998); Waite, 150 S.W.3d at 807 n.13; McAlister v. McAlister, 75 S.W.3d 481, 483 (Tex. App.CSan Antonio 2002, pet. denied).  For the foregoing reasons, Paddy falls short of establishing that she accepted the benefits of the judgment involuntarily out of economic necessity.

IV. Conclusion

In summary, we find that Jerry has established that Paddy voluntarily accepted benefits under the trial court=s judgment of divorce.  We further find that Paddy has failed to demonstrate that she falls under any exception to the doctrine of acceptance of benefits.  Consequently, Paddy is estopped from appealing the judgment.

We grant Jerry=s motion to dismiss.  Accordingly, we dismiss Paddy=s appeal from the judgment of divorce.

/s/      Adele Hedges

Chief Justice

Judgment rendered and Memorandum Opinion/Opinion filed October 25, 2005.

Panel consists of Chief Justice Hedges and Justices Yates and Anderson.

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^[1]  Jerry=s affidavit did not provide monetary values for the additional real property, stock, frequent flyer miles, or automobile.

^[2]  In his affidavits, Jerry averred that the facts stated therein were based on his personal knowledge.  A typical entry in the affidavits reads as follows:

Paddy demanded from me and voluntarily accepted my payment of her portion of the Southwest Bank of Texas Account [account number omitted] in the amount of $44,165.92 awarded her under the Final Decree of Divorce, Section B, Item W-6-a (p. 8), as evidenced by the Southwest Bank of Texas account statement and canceled check attached as Exhibit B.

^[3]  At oral argument, Paddy=s counsel emphasized that the marital estate in this case, estimated at $22 million, could easily absorb the over $1.5 million in allegedly accepted benefits; thus, counsel contended, the trial court could simply take these benefits into account when redividing the property on remand.  However, even under the Demler and Trevino cases, while this capacity to absorb might be a necessary predicate for application of the Carle exception, it is not a sufficient predicate to mandate application of the exception.  See Demler, 836 S.W.2d at 698; Trevino, 555 S.W.2d at 795-96.  The key factor here is that a large percentage of the accepted benefits were non-cash benefits; thus, Jerry would not have to concede Paddy was entitled to them in the event of a remand.  See Waite, 150 S.W.3d at 808; Demler, 836 S.W.2d at 698; Trevino, 555 S.W.2d at 795-96.

^[4]  Paddy offers no authority for the contention that wanting to maintain a certain lifestyle can be a source of economic necessity, and caselaw does not suggest that such a notion is anything short of highly dubious. See Herschberg v. Herschberg, 994 S.W.2d 273, 278-79 (Tex. App.CCorpus Christi 1999, no pet.) (holding that temporary spousal support pending redivision of property on remand should only be granted for necessities and not to maintain a spouse at a particular standard of living).