Opinion
No. 01-09-00992-CV
Opinion issued April 21, 2011.
On Appeal from the County Court at Law No. 3 Galveston County, Texas, Trial Court Case No. 08FD2248.
MEMORANDUM OPINION
Appellant, Therese Cornwell Zoller, appeals from a decree of divorce dissolving the marriage between appellee, Joseph John Zoller, and herself. In four issues, appellant argues the trial court abused its discretion by (1) characterizing two vehicles as Joseph's separate property; (2) denying her claims for economic contribution; and (3) unequally dividing the community estate between the parties.
Therese includes a fifth section in her brief disputing certain findings of facts and conclusions of law filed by the trial court. With the exception of citing one memorandum opinion for the proposition that we can reverse a judgment on the basis of erroneous findings of fact and conclusions of law, the section does not include any citation to legal authority. See TEX. R. APP. P. 38.1(i) (requiring briefs to include citations to legal authorities). Additionally, Therese provides no explanation of how these claimed erroneous findings and conclusions harmed her or in any way led to error in the judgment. Accordingly, we do not treat this section as an independent issue for consideration. Instead, we consider these challenges to the findings of fact and conclusions of law to the degree it is apparent that the challenges relate to Therese's other issues on appeal.
We affirm in part and reverse and remand in part.
Background
Therese and Joseph were married on June 28, 2003. Joseph owned a home prior to the marriage that became their residence during the marriage. Two weeks before the wedding, Joseph obtained a new $160,000 mortgage to make some improvements to the property. Therese contributed $2,551.34 to the improvement of the property. After the improvements were completed, the value of the home went from $200,000 to $249,000. All payments on the mortgage during the marriage were paid out of Joseph's and Therese's salaries either jointly or individually.
During the marriage, Joseph obtained another new mortgage on the property for $170,000. With this new mortgage, Joseph paid off his old mortgage and had $22,000 to $23,000 remaining. The amount of principal remaining on the mortgage at the time of the divorce was $165,000.
Also during the marriage, Joseph's parents gave him a 1997 Oldsmobile and a 2001 Mercury Marquis. Joseph did not pay anything for the Oldsmobile. Joseph testified at trial that the Mercury "was partially a gift." He explained that he agreed to pay his father $1,000 for the car and one of Joseph's sons agreed to pay another $1,000. Joseph valued the car at $4,500.
In the judgment, the trial court determined that the Oldsmobile and Mercury were Joseph's separate property. The trial court also denied Therese's claims for economic contribution.
Characterization of Vehicles
In her first issue, Therese argues that the trial court erred in characterizing vehicles that Joseph obtained from his parents as his separate property.
A. Standard of Review and Applicable Law
Separate property consists, in part, of property owned or claimed by the spouse before marriage. TEX. CONST. art. XVI, § 15; TEX. FAM. CODE ANN. § 3.001(1) (Vernon 2006). "Community property consists of the property, other than separate property, acquired by either spouse during marriage." TEX. FAM. CODE ANN. § 3.002 (Vernon 2006). "Property possessed by either spouse during or on dissolution of marriage is presumed to be community property." Id. § 3.003(a) (Vernon 2006).
To defeat the community property presumption, a spouse must establish by clear and convincing evidence that property is separate property. Id. § 3.003(b). Clear and convincing evidence is defined as "the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." TEX. FAM. CODE ANN. § 101.007 (Vernon 2008). "The presumption, which is not evidence, ceases to exist upon introduction of positive evidence to the contrary and is not then to be weighed or treated as evidence." Harris v. Harris, 765 S.W.2d 798, 802 (Tex. App.-Houston [14th Dist.] 1989, writ denied).
When conducting a legal-sufficiency review under the heightened burden of proof for establishing separate property, we must "look at all the evidence in the light most favorable to the finding to determine whether a reasonable trier of fact could have formed a firm belief or conviction that its finding was true." In re J.F.C., 96 S.W.3d 256, 266 (Tex. 2002); see also Stavinoha v. Stavinoha, 126 S.W.3d 604, 608 (Tex. App.-Houston [14th Dist.] 2004, no pet.) (applying standard to determination of separate property). We must "assume that the factfinder resolved disputed facts in favor of its finding if a reasonable factfinder could do so," and "disregard all evidence that a reasonable factfinder could have disbelieved or found to have been incredible." J.F.C., 96 S.W.3d at 266.
B. Analysis
This dispute concerns a 1997 Oldsmobile and a 2001 Mercury Marquis that Joseph received from his parents. Joseph testified that the Oldsmobile was a gift from his parents. No other evidence regarding the Oldsmobile was offered. Joseph testified at trial that the Mercury "was partially a gift." He explained that he agreed to pay his father $1,000 for the car and one of Joseph's sons agreed to pay another $1,000. Joseph valued the car at $4,500.
A gift is a "voluntary transfer of property to another made gratuitously and without consideration." Magness v. Magness, 241 S.W.3d 910, 912 (Tex. App.-Dallas 2007, pet. denied) (citing Hilley v. Hilley, 342 S.W.2d 565, 569 (Tex. 1961)); see also In re L.R.P., 98 S.W.3d 312, 314 (Tex. App.-Houston [1st Dist.] 2003, pet. dism'd) (holding "[b]y definition, a gift is the voluntary transfer of property without consideration or compensation"). To establish the existence of a gift, the party must prove three elements: (1) intent to make a gift; (2) delivery of the property; and (3) acceptance of the property. Magness, 241 S.W.3d at 912.
The only testimony regarding the Oldsmobile was Joseph's testimony that it was a gift from his parents. We hold that this is sufficient to establish that the car was a gift.
The very fact that Joseph's father agreed to and received consideration in exchange for the Mercury, however, establishes that it was not given as a gift. See Magness, 241 S.W.3d at 912. We hold Joseph failed to establish by clear and convincing evidence that the Mercury was a gift.
We sustain Therese's first issue as it applies to the Mercury and overrule the remainder of her issue.
Claims for Economic Contribution
In her third and fourth issues, Therese argues the trial court abused its discretion by denying her claims for economic contribution by the community estate and her separate estate.
A. Standard of Review and Applicable Law
The standard of review for property division issues in family law cases is abuse of discretion. See Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998); Raymond v. Raymond, 190 S.W.3d 77, 82 (Tex. App.-Houston [1st Dist.] 2005, no pet.). If a court of appeals finds reversible error that materially affects the trial court's "just and right" division of property, then it must remand the entire community estate for a new division of the property. Jacobs v. Jacobs, 687 S.W.2d 731, 733 (Tex. 1985). In reviewing the factual sufficiency of Therese's affirmative claims, for which she has the burden of proof, we examine all the evidence in the record, including any evidence contrary to the judgment, to determine if the challenged finding is so weak as to be clearly wrong and manifestly unjust. See Raymond, 190 S.W.3d 77, 82-83. If the division of marital property lacks sufficient evidence in the record to support it, then the trial court's division is an abuse of discretion. Id. at 83.
The law applicable at the time of this case provided that a marital estate that makes an economic contribution to property owned by another marital estate has a claim for economic contribution against the benefited estate. Act of May 28, 2003, 78th Leg., R.S., ch. 230, § 1, 2003 Tex. Gen. Laws 1056, 1056, repealed by Act of May 19, 2009, 81st Leg., R.S., ch. 768, § 11(3), 2009 Tex. Gen. Laws 1950, 1953 (former Family Code section 3.403(a)). In a decree of divorce, the court shall determine the rights of both spouses in a claim for economic contribution and — in a manner that the court considers just and right, having due regard for the rights of each party — shall order the benefitted estate to reimburse the contributing estate or estates. Act of May 18, 2001, 77th Leg., R.S., ch. 838, § 5, 2001 Tex. Gen. Laws 1679, 1683-84, amended by Act of May 19, 2009, 81st Leg., R.S., ch. 768, § 7, 2009 Tex. Gen. Laws 1950, 1952-53 (former Family Code section 7.007(a)). A spouse seeking economic contribution must bring forth sufficient evidence for the factfinder to determine the enhancement value to the benefited estate. Hailey v. Hailey, 176 S.W.3d 374, 388 (Tex. App.-Houston [1st Dist.] 2004, no pet.).
When, as here, the appellate record contains a complete reporter's record, we review the trial court's findings of fact under the same standards for legal and factual sufficiency that govern review of jury findings. Id. at 383. The trial court acts as factfinder and is the sole judge of the credibility of witnesses in a bench trial. Id. Accordingly, the trial court may consider all the facts and circumstances in connection with the testimony of each witness and accept or reject all or part of that testimony. Id. An appellate court may not substitute its judgment for the trial court's assessment of witnesses' testimony in a bench trial. Id.
We review a trial court's conclusions of law as legal questions, de novo, and will uphold them on appeal if the judgment can be sustained on any legal theory supported by the evidence. BMC Software Belgium v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Hailey, 176 S.W.3d at 383. An appellant may not challenge a trial court's conclusions of law for factual sufficiency, but we may review the legal conclusions drawn from the facts to determine their correctness. BMC Software, 83 S.W.3d at 794. If we determine that a conclusion of law is erroneous, but that the trial court nevertheless rendered the proper judgment, the error does not require reversal. Id.
B. Analysis
Because the benefitted estate is the husband's separate property, the amount of the claim based on economic contribution is equal to the product of the equity in the husband's separate property on the date of divorce ("Equity 2") multiplied by a fraction in which the numerator is the economic contribution to the husband's separate property by the other estates ("Other Estates' Contributions") and the denominator is an amount equal to the sum of the Other Estates' Contributions, the equity in the husband's separate property as of the date of the first contribution by the community estate ("Equity 1"), and the economic contribution by the husband's separate estate ("Husband's Separate Contribution"). See Act of May 28, 2003, 78th Leg., R.S., ch. 230, § 1, 2003 Tex. Gen. Laws 1056, 1056 (repealed 2009) (former Family Code section 3.403(b), (b-1)(2)). This is mathematically represented as: Economic Contribution = Equity 2 x (Other Estates' Contributions / (Other Estates' Contributions + Equity 1 + Husband's Separate Contribution)). See id.
The trial court did not require Joseph's separate estate to repay any claims for economic contribution. The trial court made specific findings determining the net equity in Joseph's separate property home at the time of the marriage and at the time of the divorce. In her brief, Therese challenges the sufficiency of these findings.
The trial court did not make any findings regarding any contributions either by the community estate or by Joseph's separate estate. Because the trial court did not award any economic contribution to the community estate, the implicit finding regarding any such contributions are either (1) the trial court determined that no economic contributions were made by the community estate or (2) while there was evidence that contributions were made, there was insufficient evidence to determine the amounts of those contributions or the source of those contributions. We consider each of the economic contribution factors in turn.
1. Equity in the home as of the date of the first contribution by the community estate (Equity 1).
The trial court found that the value of the house at the time of the marriage was $200,000. While evidence of other amounts was presented as well, both parties asserted at various points during the trial that the house was worth $200,000 at the time of the marriage. This finding, then, is both legally and factually sufficient.
The trial court also found that the amount of the mortgage on the home at the time of the marriage was $125,000. Therese disputes this finding, claiming that the evidence established that the amount of the mortgage on the home at the time of the marriage was $160,000. We agree. Joseph testified that, at some point prior to the marriage, there was a mortgage on the home in the amount of roughly $115,000. Both parties agreed, however, that — two weeks before the marriage — Joseph pulled equity out of the home by obtaining a new mortgage on the home for $160,000. There was no evidence presented that the mortgage was ever $125,000.
The mortgage for $160,000 was introduced into evidence. It showed that the mortgage was entered into two weeks before the marriage and that the payments on the mortgage were monthly. Accordingly, the evidence establishes that the value of the home and the amount of the mortgage at the time of the marriage was the same as the value of the home and of the mortgage as of the date of the first contribution by the community estate. The difference between the value of the home ($200,000) and the amount of the mortgage ($160,000) establishes that the equity in the home at that time was $40,000. Equity 1, therefore, is $40,000.
2. Economic contributions to the home by the other estates (Other Estates' Contributions)
Therese claimed economic contribution for both the community estate and her separate estate. In her third issue, Therese argues the trial court erred in denying her claim for economic contribution by her separate estate. Therese presented evidence that she wrote a check in the amount $2,551.34 for the purchase of tile that was added to Joseph's house. Therese testified that the money came from the proceeds of the sale of a home she owned prior to the marriage. The money was deposited into a bank account that only contained her separate property funds, and the check was written from that account. Joseph agreed that Therese had sold a home she owned prior to the marriage and that she wrote a check in the amount claimed to purchase for tile for his home. No other evidence regarding the purchase and use of the tile was presented.
Therese frames the issue as a claim for reimbursement. Because the claim involves a capital improvement to property, however, this is more accurately described as a claim for economic contribution. Act of May 18, 2001, 77th Leg., R.S., ch. 838, § 2, sec. 3.402, 2001 Tex. Gen. Laws 1679, 1680, amended by Act of May 19, 2009, 81st Leg., R.S., ch. 768, § 3, 2009 Tex. Gen. Laws 1950, 1951-52 (former Family Code section 3.402(a)(6)).
As it applies to this case, economic contribution is defined to include the dollar amount of "capital improvements to property other than by incurring debt." Act of May 18, 2001, 77th Leg., R.S., ch. 838, § 2, sec. 3.402, 2001 Tex. Gen. Laws 1679, 1680, amended by Act of May 19, 2009, 81st Leg., R.S., ch. 768, § 3, 2009 Tex. Gen. Laws 1950, 1951-52 (former Family Code section 3.402(a)(6)). Addition of tile to the home is a capital improvement.
In her fourth issue, Therese argues the trial court erred in denying her claim for economic contribution by the community estate. As an initial matter, Therese argues that the trial court improperly excluded one of her exhibits, which provided a list of the monthly payments on the mortgage during the marriage. This exhibit, which is a part of our appellate record, shows the total amount of the monthly payments on the mortgage. Economic contribution for mortgage payments, as defined by the statute, includes only "the reduction of the principal amount of a debt secured by a lien on property owned before marriage." Id. (former Family Code section 3.402(a)(1)). It explicitly excludes expenditures for interest paid. Id. (former Family Code section 3.402(b)(1)). Because Therese's excluded exhibit only showed the total amount of the monthly payments and did not separate what portions applied to principal and what portions applied to interest, the trial court did not err in excluding the exhibit.
Nevertheless, there is evidence in the record of the amount of principal reduction on the mortgage during the marriage. The evidence established that, two weeks before the marriage, Joseph obtained a new mortgage on the property for the amount of $160,000. Joseph also testified that, in 2007, he obtained another new mortgage on the property for $170,000. With this new mortgage, Joseph paid off his prior mortgage and had $22,000 to $23,000 remaining. Accordingly, $12,000 to $13,000 in principal had been paid before this new mortgage was obtained.
Joseph also testified that, at the time of the trial, $165,000 remained on the most recent mortgage. Accordingly, $5,000 in principal had been paid after the new mortgage was obtained.
Both parties testified that, during their marriage, family finances were paid out of Joseph's and Therese's salaries either jointly or individually. This included payments on the mortgage. Salaries received during the marriage are community property. See Bell v. Moores, 832 S.W.2d 749, 752 (Tex. App.-Houston [14th Dist.] 1992, writ denied) (holding personal earnings are community property if earned during marriage). The evidence establishes, then, that between $17,000 and $18,000 was paid as an economic contribution by the community estate to Joseph's separate estate.
The Other Estate's Contributions, then, are $17,000 to $18,000 by the community estate and $2,551.34 by Therese's separate estate.
3. Contributions to the equity in the home by Joseph's separate estate (Husband's Separate Contribution)
The parties agreed that, two weeks prior to the marriage, Joseph obtained a new mortgage on his home. Joseph obtained some money from the then-existing equity in his home with this new mortgage. The money obtained was his separate property. See TEX. FAM. CODE ANN. § 3.001(1) (providing property possessed or claimed prior to the marriage is separate property). Joseph used the money to construct an addition to the home as well as make other improvements on the property. At trial, Joseph introduced into evidence a retrospective appraisal determining the value of the property subsequent to these improvements to be $249,000. Therese presented no evidence to contradict this evidence.
Given that the trial court determined the value of the property at the time of the marriage to be $200,000, this evidence establishes that the money spent by Joseph's separate estate to improve the equity of the property during the marriage (the Husband's Separate Contribution) was $49,000.
4. Equity in the property at the time of divorce (Equity 2)
The trial court found that that the amount remaining on the mortgage at the time of the parties' divorce was $175,000 and that the value of the home at the time of the divorce was $245,000. Therese does not contest the trial court's determination of the value of the home at the time of the divorce. She does contest, however, the trial court's determination of the amount remaining on the mortgage. Therese argues there is no evidence to support this finding. We agree.
The uncontradicted evidence at trial established that the amount remaining on the mortgage at the time of the trial was $165,000. The uncontradicted evidence also established that the amount of the mortgage was never above $170,000. Subtracting the amount remaining on the mortgage ($165,000) from the value of the home ($245,000) establishes that the equity in the property at the time of the divorce (Equity 2) was $80,000.
5. Calculations
The evidence at trial established that Equity 1 is $40,000; Equity 2 is $80,000; and the Husband's Separate Contribution is $49,000. There is an unresolved fact issue about the amount for the Other Estates' Contributions because there is an unresolved fact issue about how much principal was paid on the mortgage existing at the beginning of the marriage. Regardless of how this issue is resolved, however, the evidence at trial established that a claim for economic contribution existed. Taking the most conservative amount presented at trial for principal paid on the initial mortgage ($12,000), the Other Estates' Contributions equals $19,551.34 ($2,551.34 + 12,000 + 5,000). Following the statutory formula for calculating the amount owed under a claim for economic contribution, these facts establish that the amount owed is $14,408.92 (that is, economic contribution = 80,000 x ($19,551.34 / ($19,551.34 + 40,000 + 49,000))). Of that amount, $1,880.28 is the proportionate amount owed to Therese's separate estate and $12,528.64 is the proportionate amount owed to the community estate.
If, however, the amount for principal paid on the initial mortgage is $13,000, then the Other Estates' Contributions equals $20,551.34 ($2,551.34 + 13,000 + 5,000). The amount owed for economic contribution, then, is $15,007.64 (that is, economic contribution = 80,000 x ($20,551.34 / ($20,551.34 + 40,000 + 49,000))). Of that amount, $1,863.12 is the proportionate amount owed to Therese's separate estate and $13,144.52 is the proportionate amount owed to the community estate.
Regardless of how this fact issue is resolved, the evidence establishes that both the community estate and Therese's separate estate are entitled to claims for economic contribution from Joseph's separate estate. A trial court has the discretion to order the benefitted estate to reimburse the contributing estate or estates in a manner that the court considers just and right, having due regard for the rights of each party. Act of May 18, 2001, 77th Leg., R.S., ch. 838, § 5, 2001 Tex. Gen. Laws 1679, 1683-84 (amended 2009) (former Family Code section 7.007(a)). We find nothing in the record, the judgment, or in the trial court's findings of fact and conclusions of law, however, suggesting that the community estate and Therese's separate estate would not be entitled to at least some, if not all, of the amount claimed for economic contribution.
We sustain Therese's third and fourth issues.
Division of the Community Estate
In her second issue, Therese argues the trial court abused its discretion by unequally dividing the community estate between the parties.
A. Standard of Review
Pursuant to the Texas Family Code, the trial court "shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." TEX. FAM. CODE ANN. § 7.001 (Vernon 2006); See also Alsenz v. Alsenz, 101 S.W.3d 648, 654 (Tex. App.-Houston [1st Dist.] 2003, pet. denied). The trial court has broad discretion in dividing the marital property and its division will not be disturbed on appeal unless the complaining party shows that the trial court clearly abused its discretion. Alsenz, 101 S.W.3d at 654-55 (citing Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981)). While the trial court has broad discretion in dividing the community estate, it must confine itself to the community property. Jacobs, 687 S.W.2d at 733. When the court of appeals concludes that the trial court has mischaracterized property and thus abused its discretion in dividing the community estate, the reviewing court may not substitute its discretion for that of the trial court but must remand for a "just and right" division of the community estate, a matter lying solely within the discretion of the trial court. Id. at 732-33.
B. Analysis
We note initially that, while Therese challenges the trial court's division of the community estate, she does not challenge the trial court's characterization of what is separate property (other than in her first issue, above) or the trial court's determination of the values for the items considered part of the community estate. Accordingly, these findings are binding on this court. See Merry Homes, Inc. v. Luu, 312 S.W.3d 938, 950 (Tex. App.-Houston [1st Dist.] 2010, no pet.) (holding unchallenged findings are binding on appellate courts).
The trial court determined that the following items were part of the community estate: a portion of Joseph's retirement savings plan; a washer, a dryer; living room furniture; a printer; a bunk bed set; two computers; two trampolines; some cows; a horse; a Ford F350; a Toyota 4 Runner; and a Polaris 4-Wheeler. Based on the trial court's determination of the values of the items and how they were divided between the parties, the trial court awarded Joseph 53% of the community estate and Therese 47% of the estate.
While the Polaris was not listed in the trial court's findings of facts and conclusions of law, the judgment awarded it to Therese. The parties agreed at trial that it was valued at $2,500.
Therese argues that certain items belonging to the community estate were excluded from the judgment and the trial court's findings of fact and conclusions of law. The tile added to the home has already been addressed as an economic contribution and will not be included here. Other items, such as the swimming pool, deck, shed, and skateboard half pipe, are fixtures to Joseph's separate property. Fixtures become a part of the realty and are not considered individually as part of the community estate. See Act of May 18, 2001, 77th Leg., R.S., ch. 838, § 2, sec. 3.402, 2001 Tex. Gen. Laws 1679, 1680 (amended 2009) (former Family Code section 3.402(a)(6)) (requiring claim for improvements to real property to be brought as claim for economic contribution); Reames v. Hawthorne-Seving, Inc., 949 S.W.2d 758, 761 (Tex. App.-Dallas 1997, pet. denied) (holding fixtures, unless they are trade fixtures, are improvements that are permanent parts of the realty).
The other items Therese claims are missing are a refrigerator, a lawn mower, and a weed eater. These items are in Joseph's possession. The judgment does not require Joseph to turn them over to Therese. Accordingly, they have effectively been awarded to Joseph. Adding these items to the trial court's division of the community estate, the trial court awarded 54% of the community estate to Joseph and 46% of the estate to Therese.
The trial court has broad discretion in dividing the marital property and its division will not be disturbed on appeal unless the complaining party shows that the trial court clearly abused its discretion. Alsenz, 101 S.W.3d at 654-55. Therese has not presented any argument in her brief for why a 54/46 split of the community estate constitutes an abuse of discretion by the trial court.
We overrule Therese's second issue. Nevertheless, because our disposition of Therese's other issues require including other items to the community estate, we must remand this case to the trial court for a new assessment of how to divide the community estate. See Jacobs, 687 S.W.2d at 732-33 (holding if appellate court finds reversible error materially affecting trial court's property division, we must remand for new division of community estate).
Conclusion
We reverse the trial court's judgment as far as it characterizes the 2001 Mercury Marquis as Joseph's separate property and it fails to account for the claims for economic contribution by the community estate and Therese's separate estate. Because these actions affect the division of the community estate, we reverse the portion of the judgment dividing the community estate. In all other respects, we affirm the judgment of the trial court. We remand for the trial court to resolve the fact issue regarding economic contribution, to assess the claims for economic contribution pursuant to the former section 3.403 of the Texas Family Code, and to reassess the division of the community estate.