Opinion
No. 08-02-00025-CV.
November 20, 2003.
Appeal from the 330th District Court of Dallas County, Texas (TC#96-16958-Y).
Attorney(s) for Appellant: Hon. Charles W. McGarry, Law Office of Charles McGarry, 701 Commerce Street, Suite 400, Dallas, TX 75202.
Attorney(s) for Appellee: Hon. David J. Potter, 901 N. State Line Ave., Texarkana, TX 75501-5202.
Before Panel No. 5: BARAJAS, C.J., LARSEN, and WITTIG, JJ. WITTIG, J., sitting by assignment.
MEMORANDUM OPINION
This is a contract construction case. Elizabeth W. Bufkin appeals the refusal of the trial court to apply terms of her prenuptial contract, thus affecting the property division in her divorce case. She raises two issues related to the interpretation of the antenuptial agreement. In her first issue she argues the trial court erred in granting appellee, Edward O. Bufkin's, partial summary judgment, holding that his interest in the Norgasco stock acquired after their marriage was separate property. In her second issue, she contends the trial court abused its discretion in dividing the community estate by failing to account for the increased value of the Norgasco stock as required by the contract. We reverse and remand.
I
The procedural history is lengthy and complex. We see no necessity for a complete recitation concerning the four years protracted litigation, including the parties various bankruptcies, continuances and multiple motions. The parties were married in 1987 and had no children. Notably, the parties stipulated to both the validity and enforceability of the 1987 prenuptial contract. The trial court, through a series of partial summary judgments, declared substantially all of the property to be appellee's separate property. In particular, the trial court granted a partial summary judgment on appellee's Third Amended Second Motion for Summary Judgment. In that motion, the court was asked to determine "the legal effect of the facts surrounding the purchase of Norgasco stock by Petitioner through the use of his separate property as collateral for the loans." Appellee also argued the effect of the 1987 prenuptial agreement, seeking to establish and maintain all property he acquired in the first five years of marriage as his separate property. By summary judgment, the trial court concluded the 3,320 shares of common stock of Norgasco, Inc. were, at the time of the 1988 purchase, appellee's separate property.
Before trial, the trial judge issued an eight page pretrial order concluding, as a matter of law, that appellant had no claim to any increase in value of the separate property as provided in the prenuptial agreement. The pretrial order was the result of a pretrial conference, undertaken when it was still anticipated that the case would be a jury trial. In this order the trial court also found that the prenuptial contract was not ambiguous, the parties intent was clear, and that under the contract, all income was separate during the first five years of the marriage. The court further found that the parties intended to terminate certain provisions of the contract, and that the law of Texas would apply to any property, including income, acquired after the fifth anniversary of the marriage. The court went on to specifically hold: "The allegations in Paragraph VI of the Respondent's (appellant's) Counter-Petition alleging that, ` increases in kind or value accumulated after the first five years of marriage are community property' is [sic] denied as a matter of law." Texas law, rather than the contract, was to be applied to income, accumulation of property, increases in kind or value, and reimbursement claims after the fifth anniversary, July 26, 1992. Many of these findings or conclusions were brought forward in the divorce decree, where the court specifically stated that the contract was valid and enforceable at the time of the divorce, while still denying the disputed increase in value clause. The court also ruled pretrial, that appellant had no cause of action with a remedy for appellee's failure to provide accountings and disclosures, required under the prenuptial contract. The pretrial order, after due admonishments, allowed appellant to proceed pro se and also allowed withdrawal of appellant's trial counsel.
II
We review the trial court's granting of a motion for summary judgment de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Tex. Commerce Bank-Rio Grande Valley v. Correa, 28 S.W.3d 723, 726 (Tex.App.-Corpus Christi 2000, pet. denied). When reviewing a summary judgment under either the no-evidence standard or the traditional standard, we view the evidence in the light most favorable to the non-movant, disregarding all contrary evidence and inferences. Morgan v. Anthony, 27 S.W.3d 928, 929 (Tex. 2000); Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Flameout Design Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d 830, 834 (Tex.App.-Houston [1st Dist.] 1999, no pet.).
The trial judge has wide discretion in dividing the parties' community estate. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981); Winkle v. Winkle, 951 S.W.2d 80, 87 (Tex.App.-Corpus Christi 1997, pet. denied). The party attacking the property division bears the heavy burden of showing that the trial court's property division was not just and right. Goetz v. Goetz, 567 S.W.2d 892, 896 (Tex.Civ.App.-Dallas 1978, no writ). We must indulge every reasonable presumption in favor of the trial court's proper exercise of its discretion. Vannerson v. Vannerson, 857 S.W.2d 659, 669 (Tex.App.-Houston [1st Dist.] 1993, writ denied). One who complains of the trial court's division of property must be able to demonstrate from evidence in the record that the division was so unjust and unfair as to constitute an abuse of discretion. Finch v. Finch, 825 S.W.2d 218, 221 (Tex.App.-Houston [1st Dist.] 1992, no writ); Wallace v. Wallace, 623 S.W.2d 723, 725 (Tex.Civ.App.-Houston [1st Dist.] 1981, writ dism'd). A trial court's division will not be disturbed on appeal unless it appears from the record that the division was clearly the result of an abuse of discretion. Mogford v. Mogford, 616 S.W.2d 936, 944 (Tex.Civ.App.-San Antonio 1981, writ ref'd n.r.e.). The test for whether the trial court abused its discretion is whether the court acted arbitrarily or unreasonably. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-43 (Tex. 1985); see also Wilson v. Wilson, 44 S.W.3d 597, 600 (Tex.App.-Fort Worth 2001, no pet.). And finally, where the record does not contain findings of fact and conclusions of law, it is implied that the trial court made all necessary findings to support its judgment . Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992).
To the extent appellant contends the trial court improperly disposed of claims or issues at the pretrial hearing that should have been tried, we review such complaints by the same standard used in reviewing a directed verdict. Walden v. Affiliated Computer Services, Inc., 97 S.W.3d 303, 324 (Tex.App.-Houston [14th Dist.] 2003, no pet. h.). A directed verdict is warranted when the evidence is such that no other verdict can be rendered and judgment should be granted as a matter of law. Seymour v. American Engine Grinding Co., 956 S.W.2d 49, 57 (Tex.App.-Houston [14th Dist.] 1996, writ denied). Whether a contract is legally enforceable is a question of law. McCreary v. Bay Area Bank Trust, 68 S.W.3d 727, 733 (Tex.App.-Houston [14th Dist.] 2001, pet. dism'd).
III
Appellant lists two issues. Both challenges essentially deal with the Norgasco stock acquired during the marriage and its increase in value. First, she challenges the trial court's partial summary judgment that appellee's entire interest in the Norgasco stock was his separate property because, under the terms of the prenuptial agreement, the increased value was community property. Secondly, she contends the trial court abused its discretion in dividing the community estate of the parties by failing to account for the increased value of the Norgasco stock.
Turning our attention to the summary judgment issue, we must observe that appellee's Third Amended Second Motion for Summary Judgment, dealt with the legal effect of the facts surrounding the initial 1988 purchase of the stock by the use of his separate property as collateral, and the prenuptial agreement. After a studied and lengthy history of the stock purchase, appellee concluded the common stock owned in the name of appellee was his separate property and should be so declared by the summary judgment. The motion did not address the trial court's pretrial legal conclusion that appellant had no claim for increase in the value of the stock. Issues not raised in the motion for summary judgment, may not be disposed by such a motion. The first sentence of Rule 166a(c), added in 1971, plainly provides that "The motion for summary judgment shall state the specific grounds therefor." Tex.R.Civ.P. 166a(c). The Texas Supreme Court has repeatedly ruled:
The motion for summary judgment must itself state specific grounds on which judgment is sought. . . . The motion for summary judgment must stand or fall on the grounds it specifically and expressly sets forth. . . . There is authority to the effect that a summary judgment cannot be sustained on a ground not specifically set forth in the motion.
McConnell v. Southside Independent School Dist., 858 S.W.2d 337, 339 (Tex. 1993). Accordingly, the summary judgment only addressed and disposed of the bare legal title and initial characterization of the stock. Therefore, we do not believe this issue is dispositive of the increase in value claim, and turn our attention to appellant's second issue.
The parties vigorously dispute whether or not community debt was used to purchase the stock acquired, significantly, after the marriage.
Appellant contends that the real issue is how the prenuptial contract treats the stock's increased value after July 26, 1992. We agree. Appellant argues the trial court was simply wrong to construe the contract to automatically terminate all special characterizations of the property after the fifth wedding anniversary, July 26, 1992. Appellee agrees with us that the trial court addressed this issue in its pretrial order, which we delineated above. Appellee argues that determining a contract to be unambiguous is a question of law. He cites Fox v. Parker, 98 S.W.3d 713, 719 (Tex.App.-Waco 2003, pet. denied) (rights and obligations under the agreement are determined as a matter of law; review is de novo). We agree. He argues an unambiguous contract is construed according to the plain meaning of its express wording. Appellee continues that the following first and second sentences of the pertinent paragraph XVIII support his thesis:
"The parties agree that all of the provisions in this Antenuptial Contract characterizing the property of the parties as separate property in contravention of Texas law in the absence of this agreement shall terminate, be null and void, and of absolutely no force and effect in respect to property acquired from and after five years after the date of the marriage of the parties. All property acquired prior to the date five years from the date of marriage of the parties as separate property of either of the partes under the terms and provisions of this agreement shall remain the separate property of the acquiring party." (Emphasis added.)
Contrary to the trial court's conclusion, we hold the first sentence applies to property acquired after July 26, 1992. On the other hand, the second sentence facially applies to property acquired before July 26, 1992. The center of the storm, however, is found in the last portion of XVIII which provides:
"It is agreed by the parties that from and after the date which is five years from the marriage of the parties . . . and any income or increases in kind or value that are yielded by the separate property of either party shall become the community property of the parties provided that it is acquired or produced from and after such date." (Emphasis added.)
Appellee argues the Norgasco stock was not acquired or produced after the fifth anniversary and therefore there is no increase in kind or value. It seems to us that increases in kind or value of the stock were susceptible of being produced from the separate property both before and after the anniversary. We agree the stock was not acquired after the anniversary, but appellant wholly fails to distinguish the plain language that any increase in kind or value produced after the anniversary is community, under the agreement.
Without citation to authority, appellee continues his argument referring to the inception of title rule and that appellant could only make a claim of reimbursement. However, the parties clearly sought to abrogate these common law and statutory rules by their contract. And, in the unique circumstances of this case, the parties stipulated to both the validity and enforceability of the prenuptial contract. Once a party stipulates to the validity of a contract, he may not then argue its invalidity. The parties' stipulations amount to judicial admissions, which normally are conclusive on the party making them. See Mendoza v. Fidelity Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980); see also Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W.3d 707, 718 (Tex.App.-Austin 2000, pet. dism'd w.o.j.), cert. denied, 535 U.S. 1077 (2002).
Further, appellee obtained his summary judgment characterizing the stock as his separate property, in part based on the same prenuptial contract. Although the stock was purchased one year after the marriage, and arguably with some community credit, it was found to be his separate property. Now appellant would have us apply the portion of the contract contrary to Texas law characterizing property acquired after marriage as separate property and at the same time not allow validity to the corresponding contractual provision which allows the community estate to benefit from any increase in kind or value of the self same stock. Appellee argues against what we believe is the clearly expressed intent of the parties to make all increases in value of the same property, community. Appellee does concede that the parties can agree to create jointly owned property, as opposed to community property. In addition to appellee's stipulation to the validity and enforceability of the contract, he failed to raise any defense to the validity and enforceability of the contract as required under the Family Code. Tex. Fam. Code Ann. § 4.006(c) (Vernon 1998).
Before we address the parties argument about the asserted abuse of discretion in the division of any increase in the Norgasco stock, we consider their contentions on whether there was any evidence of increase in value. Appellee argues there was none. Appellant says yes, there is evidence of increase. According to appellee, the Norgasco stock was purchased in two blocks, the first on September 26, 1988, accounting for 2500 shares at $140 per share. The other block of 1250 shares were purchased at the same price, for a total combined price of $525,000. Appellee claims there was a November 1993 sale of 430 shares at $627. Appellant points out that at appellee's bankruptcy filing that appellee estimated the value of the stock at $619,000 on April 17, 1997. However, in papers filed with Compass Financial Bank, appellee listed the value of the same stock at $2,676,871.90 in November of the same year. The parties 1994 tax return showed a profit of $179,316 on the sale of 430 shares, at a value of $627 per share. The company had rejected the offer to sell the stock at the $627 price. Appellee valued the stock at $750 or $752.74, on October 31, 1994. In 1998 the company purchased apparently the same 430 shares at $500 per share from a shareholder's estate. However, this was a sale apparently not offered to third parties, by the estate. Appellee also testified that at the time of trial the company would pay to a surviving spouse $567 per share. The company was not required to purchase the stock but merely had a right of first refusal.
It appears that appellee erroneously confuses the purported 1993 stock sale with the 1994 sale. Appropriate citation to the record is also lacking. See Tex.R.App.P. 38.1(h).
The record indicated that initial 1988 post-marital purchase of Norgasco shares by appellee was at a price of $134 to $140 per share. Between the 1992 fifth wedding anniversary and the time of trial, the record variously supports a value of between $500 per share to $752.74 per share. Accordingly, with a value difference potentially exceeding over two million dollars, we cannot say that such a difference had a di minimis effect of the trial court's division of property. McElwee v. McElwee, 911 S.W.2d 182, 189 (Tex.App.-Houston [1st Dist.] 1995, writ denied).
Because the trial court denied this entire claim as a matter of law pretrial, we should not be read as performing a complete legal or factual sufficiency review on the amount, if any, due under the contract. We only ascertain that there is evidence that this is not a di minimus claim which in turn could otherwise render the legal error harmless. Tex.R.App.P. 61.1(a). Nor do we address the possible application of Tex.R.App.P. 61.1.
Finally, we address whether or not the misconstruction of the prenuptial contract was an abuse of discretion that affected the property division of the parties. When the trial court mischaracterizes property as separate, then that property is not divided as part of the community or jointly owned estate. See id. And if undivided property has value, that would have effected the just and right division, then such error is harmful and requires the appellate court to remand the entire community estate to the trial court for a just and right division of the properly. Id. We cannot reverse only part of a property division. Jacobs v. Jacobs, 687 S.W.2d 731, 732 (Tex. 1985) (a court of appeals must remand the entire community estate for a new division when it finds reversible error which materially affects the trial court's "just and right" division of the property).
Here, in the pretrial conference, the trial court ruled as a matter of law, that appellant had no claim, under the prenuptial contract, for any increase in value after the fifth wedding anniversary. In our de novo review of the contact language we have determined that the unambiguous language allows for a claim for increases in kind or value yielded after July 26, 1992, provided the increase is produced after that date. See MCI Telecommunications Corporation v. Texas Utilities Electric Company, 995 S.W.2d 647, 650 (Tex. 1999) (construction of unambiguous written instrument is a question of law for the court); see also Tex. Fam. Code Ann. § 4.006(c) (Vernon 1998) (remedies and defenses to enforcement of premarital agreements in this section are exclusive). The parties stipulated to both the validity and enforceability of this agreement and we not look behind this judicial admission. Thus, where the validity of the contract is established, by not honoring the parties express intent in the contract to make certain increases community property, the trial court plainly denied allowable contractual rights of appellant We sustain appellant's second issue and reverse that portion of the trial court's pretrial order and judgment denying appellant's contract claims for increases in kind or value accumulated after the first five years of marriage. We remand for a just and right property division. Jacobs, 687 S.W.2d at 732.