in the Matter of the Marriage of Lisa Penafiel and Jose Alejandro Penafiel

Affirmed in Part, Reversed and Remanded in Part, and Opinion filed July 27,
2021.
In The
Fourteenth Court of Appeals
NO. 14-19-00240-CV
IN THE MATTER OF THE MARRIAGE OF LISA PENAFIEL AND JOSE
ALEJANDRO PENAFIEL
On Appeal from the 295th District Court
Harris County, Texas
Trial Court Cause No. 2003-03866
OPINION
Jose Alejandro Penafiel appeals from the trial court’s divorce decree and
final judgment dissolving his marriage to Lisa Penafiel and purporting to enforce
the parties’ mediated settlement agreement (MSA). The judgment also held
Alejandro fraudulently induced Lisa to sign the MSA and awarded her tort
damages. In five issues, Alejandro contends that the trial court erred in (1)
incorrectly stating in its final decree and judgment that he approved it as to form
and substance, (2) improperly adding to and changing terms from the MSA in the
decree, (3) purporting to make a just and right division of the property in the
decree that was different than what was agreed to in the MSA, (4) dividing the
community estate without evidence of what was in the community estate, and (5)
finding Alejandro fraudulently induced Lisa to sign the MSA. We conclude that
the evidence supports the trial court’s finding that Alejandro fraudulently induced
Lisa to sign the MSA and the court’s determination of the value of the community
estate; however, the trial court improperly attempted to enforce the MSA and
award damages in its final decree. Accordingly, we affirm the trial court’s
judgment in part and reverse and remand in part for entry of a new final decree.
Background
Lisa and Alejandro were married on December 19, 1981. It is undisputed
that the parties did not live together for much of the marriage. In January 2003,
Lisa filed the present proceedings for divorce.1 A receiver was appointed
concerning the parties’ marital estate, and the receiver in turn employed an
appraiser, who valued the community estate at approximately $416,600,000 as of
October 2016. On Alejandro’s motion, the trial court ordered the parties to
mediation. The parties thereafter signed an MSA on August 3, 2017.
Key terms of the MSA include:
• The parties agreed to settle all matters in the then-pending lawsuit and
stipulated that the terms of the MSA constituted a fair and just division of
their assets and liabilities. The parties also released each other from any
claims that either may have held against the other unless expressly reserved
in the MSA. Also, all relief requested by either party in the underlying case
not addressed in the MSA was to be denied.
• A divorce was to be granted on the ground of insupportability of the
1
Lisa had previously filed for divorce in Texas but did not pursue the case, and
Alejandro had previously filed for divorce in Ecuador and obtained a judgment, for which the
court below did not grant comity. Neither of these prior proceedings play any role in this appeal.
2
marriage. Each party warranted that they had made a full disclosure of all
property and obligations of the parties (both community and separate) and
that the MSA divided, confirmed, or allocated all such items.
• The parties agreed to submit all drafting disputes and questions concerning
interpretation of the MSA and the intent of the parties to the mediator until
the divorce became a final judgment.
• The provisions were to be incorporated into an agreement incident to divorce
and a final decree of divorce. The MSA was also confirmed as binding
pursuant to Texas Family Code section 6.602.
• Each party agreed to pay their own unpaid attorney’s fees and litigation
expenses; all debts, encumbrances, and taxes due on the property they were
awarded; and all debts they had independently incurred.
• Regarding the marital estate, “[e]ach party [was] to keep their own property
in their possession or in their name.” Alejandro was also to purchase a fully
funded and guaranteed annuity that would pay Lisa “no less than $10,000
per month for her lifetime.” The terms of the annuity and the issuing
financial institution had to be acceptable to both parties, and the final
divorce decree was not to be filed until the annuity was agreed upon and
fully funded. Alejandro was also required to pay Lisa $150,000 at the time
the decree was entered.
• The parties also agreed to pay the receiver out of funds from a lawsuit
settlement, and if he was not paid from the settlement funds, each party was
to pay him 50 percent of his fees not to exceed $10,000 each.
After both parties and their respective attorneys signed the MSA,
communications began about securing and funding the annuity that Alejandro was
to obtain for Lisa. Although these communications will be discussed in greater
detail later in this opinion, suffice it to say at this point that Lisa describes the
communications as a series of excuses and delays by Alejandro and his attorney
that led her to conclude that Alejandro had never intended to fulfill his promises,
and Alejandro describes the efforts as logical steps toward securing a mutually
agreeable annuity. To date, Alejandro has never funded an annuity or paid Lisa the
3
$150,000 as required by the MSA.
Lisa filed a motion to set aside the MSA on the ground that she was
fraudulently induced into signing it. At a hearing on the motion, Lisa’s counsel
urged the court to not rule on the motion at that time but expedite the trial at which
they could present evidence on the issue of fraudulent inducement. The trial court
did not rule on the motion at that time but subsequently overruled it without stating
why. Meanwhile, Lisa also amended her divorce petition to add a tort claim for
fraudulent inducement of the MSA. Alejandro’s two attorneys withdrew before the
trial date—one cited communication issues with Alejandro and one stated
Alejandro requested he withdraw. Alejandro failed to appear for trial.
During the bench trial, the trial court admitted into evidence Lisa’s summary
of the attempts to get Alejandro to fund the annuity, a large number of emails
between counsel representing each party on that same topic, and the appraiser’s
detailed report concluding the community estate was worth approximately
$416,600,000 as of October 2016. The trial court also took judicial notice of
certain things in the court’s files, including the motions to withdraw of Alejandro’s
trial counsel and Alejandro’s pro se motion to enforce the MSA.
Lisa testified at trial regarding the history of the marriage and about the
community estate. She said that Alejandro had no property when they got married
but acquired a 50 percent interest in a company called Tripetrol during the
marriage through his time, toil, and talent. Alejandro acknowledged this ownership
in his deposition. Lisa explained that much time and money was spent obtaining
information on community property in many different countries, including
Ecuador, Spain, Argentina, the United Kingdom, Switzerland, Russia, Canada, and
Guatemala. She identified around 13 different companies and properties that
Alejandro acquired using community funds and put in the names of corporate
4
fronts, other women that he married during his marriage to Lisa, and mistresses.
She also said that he knowingly made false representations concerning community
ownership of property, hid assets, and lied about stock transfer records.
Lisa further asserted that Alejandro has not done anything he promised to do
in the MSA and indeed never did “a single thing to perform under the [MSA].” She
said that she relied on his promises in the MSA in signing the MSA and at the time
thought he intended to perform. The MSA was a “great deal for him,” she said, and
it was reasonable for her to rely on his promises. She explained, however, that she
later changed her mind and believes he never intended to perform because he kept
delaying his performance, saying “[w]e’re getting it done” and “[w]e’re about to
do it,” dragging it out for months while actual performance never occurred. Lisa
also insisted that she was damaged by relying on Alejandro’s promises because she
otherwise could have pursued a share of the $416 million community estate. Lisa
requested that the court set aside the MSA and award her 60 percent of the
community estate.
Lisa’s attorney testified regarding attorney’s fees and litigation costs, and the
trial court admitted records into evidence in support of his testimony. At the
conclusion of the bench trial, the judge announced that she was granting the
divorce, ruling in favor of Lisa on the fraudulent inducement claim, awarding her
“damages” of $249,600,000 along with attorney’s fees and litigation expenses. The
trial court did not issue findings of fact or conclusions of law.
Beyond dissolving the parties’ marriage, the trial court’s Final Decree of
Divorce and Final Judgment includes the following key rulings:
• Regarding the decree itself, the court stated that the parties “entered
into a written agreement . . . by virtue of having approved [the]
5
Decree as to both form and substance.”2
• Regarding the MSA, the court held that “although [Lisa] was
fraudulently induced by [Jose] to enter into the [MSA] such
agreement cannot be revoked under law and the Court therefore finds
it enforceable against both parties and incorporates it by reference as
part of this Decree as if it were recited herein verbatim.” The court
ordered both parties “to do all things necessary to effectuate the
agreement” but also pronounced that terms of the final decree were to
control over terms of the MSA in the event of any conflict.
• The court also stated that the MSA was enforceable and all property
acquired during the marriage was community property and made
findings regarding the division of property that it said were
“consistent” with the MSA. These rulings included awarding Lisa all
personal property in her possession, all real and personal property
acquired by either party during the marriage that was not specifically
awarded to Alejandro in the decree, all cash in her possession or
subject to her sole control, all amounts in various types of accounts
related to her employment and retirement, all life insurance policies
insuring her life, all amounts in various types of financial accounts in
Alejandro’s name, and all motor vehicles in her possession or titled in
her name.
• The court then awarded Alejandro all personal property in his
possession, all cash in his possession or subject to his sole control, all
amounts in various accounts related to his employment and
retirement, all life insurance policies insuring his life, all amounts in
various financial accounts that Alejandro “can prove by clear and
convincing evidence were held or registered in solely” his name, and
all motor vehicles “in [his] possession and titled in his name.”
• Regarding liabilities, the decree made Alejandro responsible for all
debts and liabilities incurred by either party during the marriage
“unless express provision is made in this Decree to the contrary.” The
decree made Lisa responsible for all debts incurred solely by her and
all debts and taxes due on property awarded to her.
2
The parties agree that this statement was clearly incorrect as Alejandro did not approve
the decree. This statement is the basis for Alejandro’s first issue discussed below.
6
• The decree also has lengthy provisions regarding federal income
taxes, including making Alejandro solely responsible for all such tax
liabilities of the parties throughout the marriage but giving each party
equal share of any tax refund.
• Under the heading “Court Costs and Sanctions,” the decree awarded
Lisa a judgment of $134,830.40 “for costs of Court and discovery
costs and expenses” as a sanction under Texas Rules of Civil
Procedure 215.2(b) and 215.3, presumably for discovery issues that
arose during the case.
• Under the heading “Judgment on Petitioner’s Fraud and Fraudulent
Inducement Claims,” the decree states that having considered its own
record, the hearings and briefs since the parties executed the MSA, the
statements made in open court by Alejandro’s attorneys, the evidence
presented at trial, and the arguments of counsel, the court found that
Alejandro induced Lisa into signing the MSA by making false
representations of future performance with no intention of performing
them, Alejandro intended for Lisa to rely on those false
representations in executing the MSA, and Lisa did reasonably rely on
the false representations in executing the agreement. The court further
found, based on the evidence at trial, that had the divorce case
proceeded to trial, the value of the parties’ community estate would
have been found to be $416 million and that a just and right division
would have been to award Lisa 60 percent of the community estate.
• The court also found that Alejandro committed actual and
constructive fraud on the community estate within the meaning of
Family Code section 7.009(b), and that the parties’ reconstituted
community estate, calculated pursuant to section 7.009(b)(l), would be
$416 million. And the Court found that had the case proceeded to trial
without an MSA, the court would have awarded Lisa 60 percent of the
community estate as part of a just and right division. The decree then
states that pursuant to section 7.009(c)(2), “the Court would have
awarded” Lisa a judgment of $249,600,000.
• The decree then states that: “Accordingly, the Court finds that [Lisa]
has been damaged by [Alejandro’s] fraudulent inducement of the
[MSA] in the amount of [$249,600,000] and awards her judgment
against [Alejandro] in that amount.”
7
• The court next discharged the receiver and awarded the receiver a
judgment against Alejandro for $20,825.26. Lastly, the court granted
Lisa’s attorney a judgment against Alejandro for $1,822,808 in
attorney’s fees.
Alejandro filed a pro se motion for new trial in which he pointed out he did
not approve the decree, argued many of the terms in the decree did not comport
with the MSA terms, challenged the fraudulent inducement finding, and urged that
the MSA should control. The trial court did not rule on the motion, which was
denied by operation of law. See Tex. R. Civ. P. 329b(c).
Discussion
The Family Code provides that MSAs meeting certain statutory formalities
are binding on the parties and require the rendition of a divorce decree that adopts
the parties’ agreement. Tex. Fam. Code § 6.602(b)-(c); Milner v. Milner, 361
S.W.3d 615, 618 (Tex. 2012).3 Unlike other family law agreements, a trial court is
not required to determine if the property division in an MSA is “just and right”
before entering a final decree based on the MSA. Milner, 361 S.W.3d at 618. As
numerous courts of appeals have explained, including this court, the statute does
not require enforcement of an MSA that is illegal in nature or procured by fraud,
3
In relevant part, the statute provides:
(b) A mediated settlement agreement is binding on the parties if the
agreement:
(1) provides, in a prominently displayed statement that is in boldfaced type
or capital letters or underlined, that the agreement is not subject to revocation;
(2) is signed by each party to the agreement; and
(3) is signed by the party’s attorney, if any, who is present at the time the
agreement is signed.
(c) If a mediated settlement agreement meets the requirements of this
section, a party is entitled to judgment on the mediated settlement agreement
notwithstanding Rule 11, Texas Rules of Civil Procedure, or another rule of law.
Tex. Fam. Code § 6.602.
8
duress, coercion, or other dishonest means. Id. (collecting cases, including In re
Kasschau, 11 S.W.3d 305, 312 (Tex. App.—Houston [14th Dist.] 1999, orig.
proceeding)); see also Marriage of Atherton, No. 14-17-00601-CV, 2018 WL
6217624, at *4 (Tex. App.—Houston [14th Dist.] Nov. 29, 2018, pet. denied)
(mem. op.); Torres v. Torres, No. 14-12-00436-CV, 2013 WL 776278, at *2 (Tex.
App.—Houston [14th Dist.] Feb. 28, 2013, no pet.) (mem. op.).
Here, Lisa urged the trial court to set aside the parties’ MSA because
Alejandro fraudulently induced her into signing it. Although the trial court agreed
that Alejandro fraudulently induced Lisa into signing the MSA, the court
nonetheless decided to enforce the MSA in the final decree while also awarding
Lisa a money judgment on her fraud claim. We will begin by addressing
Alejandro’s challenge to the fraudulent inducement finding. We will then turn to
the question of whether the trial court properly attempted to enforce the MSA
while also awarding tort damages for the fraudulent inducement of that agreement.
Lastly, we will address Alejandro’s remaining issues and arguments and discuss
the proper disposition of the appeal.
I. Standards of Review
A trial court’s determination of whether to set aside an MSA for reasons
other than conformity with section 6.602 is reviewed under an abuse of discretion
standard. See Atherton, 2018 WL 6217624, at *2; Davis v. Davis, No. 01-12-
00701-CV, 2014 WL 890899, at *4 (Tex. App.—Houston [1st Dist.] Mar. 6, 2014,
no pet.) (mem. op.); Mueller v. Mueller, No. 01–11–00247–CV, 2012 WL 682285,
at *2 (Tex. App.—Houston [1st Dist.] March 1, 2012, pet. denied) (mem. op.). A
trial court abuses its discretion by acting arbitrarily, unreasonably, or without
reference to guiding rules or principles. In re J.R.P., 526 S.W.3d 770, 777 (Tex.
App.—Houston [14th Dist.] 2017, no pet.). The failure to analyze or apply the law
9
correctly also constitutes an abuse of discretion. Id. A trial court does not abuse its
discretion if it correctly follows the law and there is some evidence of a substantive
and probative character to support its decision. See id.When, as here, the trial court did not file findings of fact and conclusions of
law, we imply all findings necessary to support the judgment and will uphold those
findings if sufficient evidence supports them. Chenault v. Banks, 296 S.W.3d 186,
189 (Tex. App.—Houston [14th Dist.] 2009, no pet.). However, to the extent the
trial court included fact findings in its judgment, though erroneously placed, we
will consider these findings as they do not conflict with findings in a separate
document. See Isaac v. Burnside, 616 S.W.3d 609, 614 (Tex. App.—Houston [14th
Dist.] 2020, pet. denied).
When the proper standard of review is abuse of discretion, challenges to the
sufficiency of the evidence are not independent grounds for reversal, but instead
are factors to be considered in determining whether the trial court abused its
discretion. In re J.R.P., 526 S.W.3d at 777. When examining a legal-sufficiency
challenge, 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 factfinder could and disregard contrary evidence unless a reasonable
factfinder could not. Id. at 827. Evidence is legally sufficient if it would enable
reasonable and fair-minded people to reach the conclusion under review. Id.
II. Fraudulent Inducement
Lisa alleged that Alejandro fraudulently induced her into signing the MSA
because he made promises in the MSA that he did not intend to keep at the time
they were made. In Alejandro’s fifth issue, which he styles the “lynchpin issue,” he
challenges the trial court’s finding of fraudulent inducement.
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A. Governing Law
To be successful on a fraud claim, a party must present proof of a material
misrepresentation that (1) was false, (2) was either known to be false when made
or was asserted without knowledge of its truth, (3) was intended to be acted upon,
(4) was relied upon, and (5) caused injury. Zorrilla v. Aypco Constr. II, LLC, 469
S.W.3d 143, 153 (Tex. 2015) (citing Formosa Plastics Corp. USA v. Presidio
Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)). Fraudulent
inducement is a distinct category of common-law fraud that shares the same
elements but involves a promise of future performance made with no intention of
performing at the time it was made. Id.; Adam v. Marcos, 620 S.W.3d 488, 507
(Tex. App.—Houston [14th Dist.] 2021, pet. filed).
A fraud claim can be based on a promise made with no intention of
performing, irrespective of whether the promise is later subsumed within a
contract. Formosa Plastics, 960 S.W.2d at 46. Intent is typically a fact question for
the factfinder as it often turns on witness’s credibility and the weight to be
assigned to their testimony. See Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432,
434 (Tex. 1986); Adam, 620 S.W.3d at 508. Because intent to defraud is not
usually susceptible to direct proof, circumstantial evidence is typically required.
See Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774-75 (Tex.
2009).
In this context, there must be evidence relevant to intent when the promise
was made. See Formosa Plastics, 960 S.W.2d at 48; Adam, 620 S.W.3d at 508;
Anglo-Dutch Petroleum Int’l, Inc. v. Smith, 243 S.W.3d 776, 780 (Tex. App.—
Houston [14th Dist.] 2007, pet. denied). Intent to defraud may be inferred from a
party’s subsequent acts after a promise is made. Aquaplex, 297 S.W.3d at 775;
Spoljaric, 708 S.W.2d at 434. The failure to perform a promise standing alone is
11
not sufficient to establish this intent, but it is a circumstance the factfinder can
consider along with other facts in establishing intent. Spoljaric, 708 S.W.2d at 435;
Adam, 620 S.W.3d at 508-09; SEECO, Inc. v. K.T. Rock, LLC, 416 S.W.3d 664,
671 (Tex. App.—Houston [14th Dist.] 2013, pet. denied); Mueller, 2012 WL
682285, at *3. A breach of the promise plus “slight circumstantial evidence” is
usually sufficient. See Spoljaric, 708 S.W.2d at 435; Adam, 620 S.W.3d at 508-09;
SEECO, 416 S.W.3d at 671.
B. Application of Law to Facts
Alejandro contends that the trial court incorrectly found fraudulent
inducement based solely on evidence of delayed performance, which he insists was
at most a breach of the agreement. The trial court, however, clearly based its
finding on more than just delayed performance.
We begin by reiterating that Alejandro’s failure to perform is a circumstance
the court could consider, along with other facts, to establish intent. See Spoljaric,
708 S.W.2d at 435; Adam, 620 S.W.3d at 508-09; SEECO, 416 S.W.3d at 671;
Mueller, 2012 WL 682285, at *3. Although the MSA did not specify a date by
which Alejandro had to purchase the annuity and pay Lisa the promised $150,000,
these actions had to be accomplished before or at the time the final decree was
entered. It is well settled that when a contract does not specify a deadline for
performance, the law implies that performance must be within a reasonable time.
See, e.g., Yazdani-Beioky v. Sharifan, 550 S.W.3d 808, 827 (Tex. App.—Houston
[14th Dist.] 2018, pet. denied) (citing Moore v. Dilworth, 142 Tex. 538, 179
S.W.2d 940, 942 (1944), et al.). According to statements in the emails admitted at
trial, the parties discussed setting the case for entry of the MSA around 60 days
after it was signed to give Alejandro time to obtain the annuity and cash due by the
entry date. Alejandro’s attorney indicated this was sufficient time, and Lisa’s
12
attorney thought this was more time than needed. Although Alejandro asserts that
obtaining the annuity proved difficult, he does not specifically complain that he did
not have a reasonable time in which to perform his promises under the MSA. The
MSA was signed on August 3, 2017, and the trial occurred on December 5, 2018,
over sixteen months later. Alejandro never paid Lisa the $150,000 or obtained the
annuity as promised.
In addition to Alejandro’s failure to perform, the evidence regarding intent
came from Lisa’s testimony and the emails between counsel. As discussed above,
Lisa testified that she came to believe Alejandro never intended to perform because
he kept delaying performance while saying things like, “We’re getting it done” and
“[w]e’re about to do it,” but never actually doing “a single thing to perform under
the [MSA].” Lisa also testified that Alejandro hid community assets, knowingly
made false representations concerning community ownership of assets, and lied
about stock transfer records. She identified approximately 13 different companies
and properties that Alejandro acquired using community funds and put in the
names of corporate fronts and other women. The expert appraiser’s report
generally supports Lisa’s statements regarding the companies and properties.
The emails between counsel reveal that Lisa’s counsel frequently sent
requests for status updates and explanations from August 2017 to May 2018, to
which Alejandro’s counsel typically responded with statements indicating they
were close to obtaining the annuity and the cash. As time went by, however,
Alejandro’s counsel began to make more and more excuses for nonperformance,
stating it was difficult to get anything done because it was summer vacation time in
Europe, then no bank in Europe offered this type of simple annuity product, then
the Patriot Act was keeping them from getting money transferred from Russia.
Throughout all these communications, Alejandro’s counsel offered cause for hope:
13
in August 2017, Alejandro unilaterally set the case for entry of the final decree; on
September 11, counsel stated the final order was drafted and they just needed to
drop in the details for the annuity; she reiterated this on September 20 and added
that the arrangements for the cash payment had already been made; on September
26, she stated she was putting the details of a New York annuity into the order and
would get it to Lisa’s counsel that week; in mid-October, Alejandro’s counsel sent
three annuity plan descriptions for approval; on December 1, counsel stated that
she would have the annuity plan to Lisa’s counsel that day; on December 20,
counsel wrote that she expected funds for the $150,000 and to pay the receiver the
next week; six days later, she said she expected the funds the following week; on
January 3, 2018, counsel stated that she thought the annuity would be funded on
the 22nd and she had everything drafted and was just waiting on the funding
documents; on January 5, she stated that she was trying to get Alejandro to pay the
cash portion “now”; on January 16, counsel said that a loan had been approved and
funds would be available that month; on January 22, she said that they were trying
to get cash to Lisa before a scheduled hearing and to fund the annuity by the 29th;
on January 26, counsel stated “I have the entire thing put together” and indicated
that they were using a Swiss bank to fund the annuity by February 28 and would
get the first $10,000 to Lisa by that Monday. On February 8, counsel stated that
funding was ahead of schedule and she was going to send Lisa’s counsel
information on yet another annuity option. On February 23, Alejandro’s counsel
stated that they should have funding confirmation by that Monday.
There then follow several emails from Lisa’s counsel and the receiver
requesting updates, but the record does not contain any responses to these requests.
Then, on April 17, Alejandro’s counsel stated that if the judge would let her out,
she was withdrawing from representation of Alejandro. The judge ultimately
14
granted the request to withdraw. As for the basis of her motion to withdraw, which
the trial court took judicial notice of, counsel stated: “Good cause exists for
withdrawal of [counsel] in that she is unable to effectively communicate with
[Alejandro] in a manner consistent with good attorney-client relations.” The record
also reflects that Lisa’s counsel attempted to contact a London solicitor in April
and May 2018 who was supposedly working with Alejandro on fulfilling his
obligations, but counsel’s calls and emails went unanswered.
From this evidence, the trial judge could have reasonably concluded that
Alejandro never intended to fulfill his promises made in the MSA. Alejandro
undisputedly failed to perform. From the context, the judge could have concluded
that Alejandro was feeding his counsel deliberate falsehoods regarding progress on
fulfilling his promises of obtaining an annuity and paying Lisa $150,000. The
emails suggest Alejandro’s counsel was routinely being told that performance was
happening or was on the verge of happening, but it never did. The evidence that
Alejandro had a history of hiding community assets also supports the conclusion
that he intentionally made false promises and further false statements regarding
efforts to fulfill those promises. The court could have reasonably concluded that
Alejandro made the initial promises and then continued to make promises and false
statements as part of a scheme to buy time to further hide and shield assets. It was
reasonable to conclude from this evidence that Alejandro made a promise of future
performance with no intention of performing at the time it was made and with the
intention that Lisa rely on the promise. See Zorrilla, 469 S.W.3d at 153; Adam, 620
S.W.3d at 507; see also Aquaplex, 297 S.W.3d at 775 (explaining that an intent to
defraud may be inferred from a party’s subsequent acts after a promise was made);
Spoljaric, 708 S.W.2d at 434 (same). Lisa also testified regarding the
reasonableness of her reliance on Alejandro’s unfulfilled promises, and her
15
damages were well supported by her own testimony and the appraiser’s valuation
report. See Zorrilla, 469 S.W.3d at 153; Adam, 620 S.W.3d at 507.
C. Alejandro’s Contentions
Alejandro makes several additional arguments regarding fraudulent
inducement. First, Alejandro asserts that his nonperformance of the contract was
excused by Lisa’s “repudiation” of the contract, i.e., her filing of a motion to set
aside the MSA, which was, of course, based on Alejandro’s failure to perform. The
motion, however, clearly was not a repudiation of the MSA—it was a request that
the court set aside the otherwise binding agreement because Alejandro had
fraudulently induced Lisa into signing it. Alejandro cites cases explaining that a
plaintiff in a breach of contract action need not tender performance of the contract
before bringing suit against a party that has repudiated the contract. See, e.g.,
DiGiuseppe v. Lawler, 269 S.W.3d 588, 594 (Tex. 2008). These cases do not
support Alejandro’s position. Moreover, Alejandro does not cite to where he raised
this argument below. See Garcia v. Alvarez, 367 S.W.3d 784, 788 (Tex. App.—
Houston [14th Dist.] 2012, no pet.) (“A party’s argument on appeal must comport
with its complaint in the trial court.”).
Alejandro next points out that Lisa herself raised questions regarding how
the annuities were structured that he says caused delays in his performance. The
record demonstrates, however, that these questions—whether the $10,000 Lisa was
to receive from the annuity each month was to be pre- or post-tax and whether a
trust could own the annuity—were resolved quickly and caused at most very brief
delays.4
4
The dispute regarding whether proceeds were to be pre-tax or post-tax was submitted to
an arbitrator and resolved in less than a month. The dispute regarding whether a trust could own
the annuity was resolved by agreement within two weeks.
16
In his reply brief, Alejandro suggests that the trial court improperly
considered the fraudulent inducement claim at trial because the court had already
denied Lisa’s motion to set aside the MSA, which was based on fraudulent
inducement. Alejandro states that in considering the claim at trial, the court
violated the doctrines of res judicata and the law of the case. However, neither
doctrine applies under these circumstances. See generally Loram Maint. of Way,
Inc. v. Ianni, 210 S.W.3d 593, 596 (Tex. 2006) (“The ‘law of the case’ doctrine is
defined as that principle under which questions of law decided on appeal to a court
of last resort will govern the case throughout its subsequent stages.”); Amstadt v.
U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996) (explaining that application of
res judicata requires proof of a prior final judgment on the merits, identity of
parties or those in privity with them, and a second action based on the same claims
as were raised or could have been raised in the first action). Moreover, the trial
court does not appear to have denied the motion to set aside on the merits of the
fraudulent inducement claim but because Lisa’s counsel asked the court to address
the issue at trial. And, had the court ruled on the merits, the court possessed
authority to reconsider its ruling at trial. See Moring v. Inspectorate Am. Corp.,
529 S.W.3d 145, 150 (Tex. App.—Houston [14th Dist.] 2017, pet. denied) (“The
trial court holds continuing authority to reconsider its interlocutory orders while it
has plenary power over the case.”).
D. Conclusion
The evidence supported the trial court’s determination that Alejandro
fraudulently induced Lisa into signing the MSA. See City of Keller, 168 S.W.3d at
822, 827; In re J.R.P., 526 S.W.3d at 777. Accordingly, we overrule Alejandro’s
fifth issue. We now turn to the parties’ arguments regarding the trial court’s final
judgment.
17
III. Double Recovery
In its Final Decree of Divorce and Final Judgment, the trial court both stated
that it was (1) enforcing the MSA and making further orders consistent with the
agreement and (2) awarding damages to Lisa for fraudulent inducement, which it
calculated based on the value of a just and right division of the community estate
that the court would have entered had there not been an enforceable MSA. Among
other arguments under his fourth issue, Alejandro contends that this amounted to a
double recovery for Lisa and was an abuse of discretion.
In the final decree and judgment, the court stated:
The Court FINDS that, although [Lisa] was fraudulently induced by
[Alejandro] to enter into the MSA such agreement cannot be revoked
under law and the Court therefore finds it enforceable against both
parties and incorporates it by reference as part of this Decree as if it
were recited herein verbatim. [Lisa] and [Jose] are ORDERED to do
all things necessary to effectuate the agreement.
But, as discussed above, this and several other courts of appeals have explained
that trial courts in divorce actions are not required to enforce an MSA procured by
fraud, even if the MSA meets the requirements of Family Code section 6.602. See,
e.g., Milner, 361 S.W.3d at 618; Atherton, 2018 WL 6217624, at *4. The trial court
was therefore incorrect in concluding, as it apparently did, that the MSA had to be
enforced despite the fraud finding.
Typically, when an MSA is determined to be procured by fraud, the proper
remedy would be to set aside the MSA and proceed as though there were no MSA.
See, e.g., In re Hanson, No. 12-14-00015-CV, 2015 WL 898731, at *3 (Tex.
App.—Tyler Feb. 27, 2015, no pet.) (mem. op.) (“[A]n MSA procured by
misrepresentation and fraud should not be enforced.”); Koelm v. Koelm, No. 03-10-
00359-CV, 2011 WL 2162879, at *4 (Tex. App.—Austin June 2, 2011, no pet.)
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(mem. op.) (“[I]f [husband] obtained [wife’s] participation in the mediated
settlement agreement by fraud, we would conclude that it is unenforceable.”); cf.
Boyd v. Boyd, 67 S.W.3d 398, 405 (Tex. App.—Fort Worth 2002, no pet.) (holding
trial court properly concluded that MSA was unenforceable where one spouse
intentionally withheld information about substantial marital assets). Here, however,
the court apparently felt compelled to attempt to enforce the degree but then also
award tort damages to Lisa based on a just and right division of the entire
community estate.
Specifically, the trial court awarded Lisa a money judgment of $249,600,000
for fraudulent inducement damages based on 60 percent of the community estate
valued at $416 million. But, in purporting to enforce the MSA provisions, the court
also awarded Lisa all real property acquired by either party during the marriage, all
personal property in her possession, all personal property acquired by either party
during the marriage that was not in Alejandro’s possession, all cash in her
possession or subject to her sole control, all amounts in various types of accounts
related to her employment and retirement, all life insurance policies insuring her
life, all amounts in various types of financial accounts in Alejandro’s name, and all
motor vehicles in her possession or titled in her name. Presumably, Alejandro
would also still be required under the MSA—which was incorporated into the
decree and which the parties were ordered to effectuate—to provide Lisa with an
annuity and $150,000 cash. The final decree additionally made Alejandro
responsible for more of the parties’ marital debts and liabilities, including taxes.5
5
It should also be noted that—as Alejandro points out in his second and third issues—
even when it comes to enforcing the provisions of the MSA, the final decree does not
consistently follow the terms of the MSA. See, e.g., Diggs v. Diggs, No. 14-11-00854-CV, 2013
WL 3580424, at *10 (Tex. App.—Houston [14th Dist.] July 11, 2013, no pet.) (mem. op.) (“The
Family Code does not authorize a court to modify an MSA, to resolve ambiguities or otherwise,
before incorporating it into a decree.”). As one of many examples, the MSA awarded Alejandro
19
Awarding Lisa a monetary judgment for the value she would have received
from a just and right division of the community estate while also still awarding her
the community estate property and other considerations she would have received
under the MSA resulted in the trial court neither enforcing the MSA under Family
Code section 6.602 nor making a just and right division of the community estate
under section 7.001 but essentially combining the two and awarding Lisa what she
would have received under both statutes. Tex. Fam. Code §§ 6.602, 7.001.
Alejandro contends that this resulted in a double recovery. A double recovery
occurs in tort cases when a party obtains more than one recovery for the same
injury. See Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d
182, 184 (Tex. 1998). It violates the one-satisfaction rule. Sky View at Las Palmas,
LLC v. Mendez, 555 S.W.3d 101, 113 (Tex. 2018). Whether the rule itself applies
to the division of a marital estate (which is not dependent on a finding of an injury)
is unclear, but the rationale behind the rule certainly does apply. See Vickery v.
Vickery, No. 01-94-01004-CV, 1997 WL 751995, at *31-33 (Tex. App.—Houston
[1st Dist.] Dec. 4, 1997, pet. denied) (not designated for publication) (considering
application of one satisfaction rule in divorce case where wife also had a tort claim
and holding that wife forfeited right to monetary award for loss of marital property
by accepting marital property division but wife did not forfeit mental anguish
damages or exemplary damages).6 The trial court’s awarding Lisa what she would
have received under the MSA and what she would have received from a just and
right division of the property, even though based on a tort finding, was an abuse of
all property in his possession or in his name, but the decree awarded Lisa all real property in the
community estate, all personal property not in Alejandro’s possession, and all of various
financial accounts in Alejandro’s name. These awards were clearly not consistent with the MSA.
6
The continuing validity of some of the court of appeals’ specific holdings in Vickery has
been called into question, see Vickery v. Vickery, 999 S.W.2d 342 (Tex. 1999) (Hecht, J.,
dissenting to denial of pet. for review); however, we cite it merely as an example of the
application of the one-satisfaction rule in the divorce context.
20
discretion as it provides her with a double recovery, neither enforces the MSA nor
provides for a just and right division of the property, and is without reference to
guiding rules or principles of family or tort law. See In re J.R.P., 526 S.W.3d at
777; Vickery, 1997 WL 751995, at *31-33. Accordingly, we sustain Alejandro’s
fourth issue in part and remand this case for entry of a new final judgment.
IV. Remaining Issues
In his first issue, Alejandro contends that the trial court erred by stating in
the decree that he had agreed to the decree’s form and substance. Lisa agrees with
this contention. However, because we are reversing and remanding for entry of a
new decree in this case, issue one is moot.
In his second and third issues, Alejandro contends that the trial court erred in
modifying the terms of the MSA. Although Alejandro is clearly correct that the
MSA terms were materially altered in the decree, see supra note 5, these issues are
also rendered moot by the remand in this case.
In his fourth issue, in addition to the double-recovery argument discussed
above, Alejandro also argues that the evidence was legally insufficient to support
the trial court’s determination that the community estate owned the assets
described and valued in the appraiser’s report. Alejandro, however, does not
support this contention with appropriate citations to the record or authority or a
discussion of the evidence admitted at trial. See Tex. R. App. P. 38.1(i) (requiring
that appellate briefs “must contain a clear and concise argument for the contentions
made, with appropriate citations to authorities and to the record”). Moreover, as
discussed above, Lisa testified regarding community property in many different
countries, and she identified approximately 13 different companies and properties
that Alejandro acquired using community funds and put in the names of fronts. The
appraiser’s report also describes the appraiser’s own research and conclusions
21
regarding the community estate. This evidence was sufficient to support the trial
court’s findings. See City of Keller, 168 S.W.3d at 822, 827; In re J.R.P., 526
S.W.3d at 777. Accordingly, we overrule Alejandro’s fourth issue as to the
sufficiency of the evidence challenge.
Disposition
We affirm the portions of the trial court’s judgment granting the divorce and
Lisa’s name change. We further affirm the holdings that Alejandro fraudulently
induced Lisa into signing the MSA and committed fraud against the community
estate and as to the value of the community estate. And we affirm the awards to
Lisa of litigation expenses as sanctions and of attorney’s fees. We reverse the
portions of the judgment that purported to enforce the MSA and otherwise divide
the parties’ marital assets and liabilities and that awarded Lisa a money judgment
for fraudulent inducement.7 We remand for entry of a new final decree in
accordance with this opinion.
/s/ Frances Bourliot
Justice
Panel consists of Justices Bourliot, Hassan, and Poissant.
7
Contrary to some of the briefing in this case, the trial court’s money judgment award
was based only on fraudulent inducement and not the fraud against the community finding.
22