Opinion
03-22-00193-CV
11-17-2023
Buck Allan, Appellant v. Laurie Ann Allan, Appellee
FROM THE 53RD DISTRICT COURT OF TRAVIS COUNTY NO. D-1-FM-20-005049, THE HONORABLE JAN SOIFER, JUDGE PRESIDING
Before Chief Justice Byrne, Justices Triana and Theofanis
MEMORANDUM OPINION
GISELA D. TRIANA, JUSTICE
Appellant Buck Allan appeals from the trial court's final decree of divorce dissolving his marriage to Laurie Ann Allan. In three issues on appeal, Buck asserts that the trial court: (1) erred by ordering that Buck be solely responsible for the parties' federal income tax liability from 2010 through 2021; (2) erred by ordering Buck to pay Laurie one-half of the tax overpayment for 2019; and (3) erred by awarding attorney's fees to Laurie because, as Buck contends, there was not sufficient evidence presented to support the award of attorney's fees.For reasons that we explain below, we sustain Buck's third issue and reverse the trial court's order awarding attorney's fees to Laurie and remand to the trial court for a redetermination of fees. We also reverse in part and render judgment on the issue of the parties' tax liability for the 2021 tax year. Otherwise, we affirm the divorce decree.
Because the parties share the same last name, we will refer to them by their first names.
BACKGROUND
Buck and Laurie were married on August 9, 2010. The parties had one child together, who was seven years old at the time of trial. The parties submitted multiple issues to the trial court. The trial court granted and rendered the divorce on November 17, 2021. As relevant to this appeal, the trial court ordered that Buck shall be solely responsible for all tax liability during the marriage through the end of 2021, ordered Buck to pay Laurie $13,000.00, and awarded her $25,480.00 in attorney's fees.
During trial, the parties presented very different estimates of the community property. Laurie estimated the marriage estate to be worth $1,043,372.58. Buck estimated that the parties' community debt outweighed the community property value by $65,666.85.
The parties agreed regarding the status of their tax filings during the marriage. Laurie filed a tax return in 2010. The parties did not file tax returns for the years 2011 through 2016. The parties filed a joint return in 2017. Laurie filed separate tax returns for the years 2018 through 2020. The trial court's divorce decree ordered Buck to be solely responsible for all tax liability during the marriage through the end of 2021.
Before the trial court entered a temporary order, which ordered "that the parties may file taxes separately for tax year 2019 and Laurie Ann Al[l]an may use up to fifty percent (50%) of the Twenty-Six Thousand and 00/100 Dollars ($26,000.00) pre-paid by the parties to the Internal Revenue [Service] toward any liability owed in her name." During opening statements at trial, Laurie's counsel stipulated that the overpayment was not a community asset. Laurie's proposed property division filed with the trial court proposed that Laurie be awarded $13,000.00 for "2017 Tax refund Owed to W." The final divorce decree did not include any mention of the 2017 tax refund or a tax overpayment. Rather, it ordered Buck to pay Laurie $13,000.00 "by cash, cashier's check, or money order."
Laurie presented evidence of her attorney's fees including a declaration by her trial attorney that included testimony regarding the reasonableness of the fees, with invoices attached to the declaration from both the trial attorney's office and Laurie's former counsel. The invoices from the trial attorney were not redacted and reflected incurred fees in the amount of $9,262.50. The invoices from the former counsel included heavy redactions to every entry for each service performed and totaled $112,743.94. Trial counsel's declaration stated that there was an additional $4,355.00 that was "work in progress" and that the invoices did not include the fees incurred on the day the declaration was submitted and noted that it needed to be updated. At trial, Laurie's trial counsel expressed that she had additional costs to submit that would be offered through submission as a supplement to her attorney's fees exhibit. Both the trial court and Buck's counsel expressed that they had no objection to Laurie's trial counsel supplementing the exhibit. The supplemental declaration stated that $13,910.00 was incurred in attorney's fees throughout trial, however no additional invoices or breakdown of services performed were included. Buck's trial counsel testified that his hourly rate was $300.00 an hour and that he worked nine hours over each of the three days of trial. Laurie's trial counsel did not enter similar testimony. However, Laurie's trial counsel did testify in her written declaration that her hourly rate of $325.00 was reasonable. The trial court awarded Laurie $25,480.00 in attorney's fees.
STANDARD OF REVIEW
We review a trial court's division of community property for an abuse of discretion. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981). A trial court abuses its discretion if it rules arbitrarily, unreasonably, without regard for guiding rules or principles, or without supporting evidence. Transcor Astra Group S.A. v. Petrobras Am. Inc., 650 S.W.3d 462, 482 (Tex. 2022). In family-law cases, challenges to the "legal and factual sufficiency of the evidence are not independent grounds of error but instead are factors used to determine whether the trial court abused its discretion." A.S. v. Texas Dep't of Fam. & Protective Servs., 665 S.W.3d 786, 795 (Tex. App.-Austin 2023, no pet.). The reviewing court considers first whether the trial court had sufficient information on which to exercise its discretion and, if so, whether the trial court erred in its application of discretion. Id. "The traditional sufficiency review comes into play with regard to the first question." T.E. v. Texas Dep't of Fam. & Protective Servs., No. 03-22-00067-CV, 2022 WL 3092885, at *8 (Tex. App.-Austin Aug. 4, 2022, no pet.) (mem. op.). The court then determines whether the trial court's decision was reasonable. A.S., 665 S.W.3d at 795.
In reviewing for legal sufficiency, "we view the evidence in the light most favorable to the verdict, crediting favorable evidence when reasonable jurors could do so and disregarding contrary evidence unless reasonable jurors could not." Pike v. Texas EMC Mgmt., LLC, 610 S.W.3d 763, 794 (Tex. 2020). A party challenging the legal sufficiency of an adverse finding on which it did not bear the burden of proof at trial "must demonstrate on appeal that no evidence supports the adverse finding." Graham Cent. Station, Inc. v. Pena, 442 S.W.3d 261, 263 (Tex. 2014) (per curiam). We will sustain a no-evidence challenge when (1) evidence of a vital fact is absent, (2) rules of law or evidence bar us from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence conclusively establishes the opposite of the vital fact. Bos v. Smith, 556 S.W.3d 293, 299-300 (Tex. 2018).
In reviewing for factual sufficiency, "we examine the entire record and consider and weigh all the evidence, both in support of and contrary to the challenged finding." Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). When a party attacks the factual sufficiency of an adverse finding on which it did not bear the burden of proof, we will set aside the finding "only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust." Republic Petroleum LLC v. Dynamic Offshore Res. NS LLC, 474 S.W.3d 424, 433 (Tex. App.-Houston [1st Dist.] 2015, pet. denied). Further, in reviewing for factual sufficiency we must not merely substitute our judgment for that of the trier of fact. Zeifman v. Michels, 212 S.W.3d 582, 589 (Tex. App.-Austin 2006, pet. denied).
Under both standards, the trier of fact "is the sole judge of the credibility of witnesses and the weight to be given their testimony." Altice v. Hernandez, 668 S.W.3d 399, 410 (Tex. App.-Houston [1st Dist.] 2022, no pet.). We therefore "may not pass upon the witnesses' credibility or substitute our judgment for that of the fact finder." 4922 Holdings, LLC v. Rivera, 625 S.W.3d 316, 325 (Tex. App.-Houston [14th Dist.] 2021, pet. denied). Further, the trial court has wide discretion in dividing the marital estate of the parties "in a manner that the court deems just and right." Tex. Fam. Code § 7.001; see also Jacobs v. Jacobs, 687 S.W.2d 731, 733 (Tex.1985).
We also review a trial court's order awarding attorney's fees for a clear abuse of discretion. Sparks v. Rutkowski, No. 03-17-00452-CV, 2018 WL 3799940, at *2 (Tex. App.- Austin Aug. 3, 2018, no pet.) (mem. op.).
DISCUSSION
Federal income tax liability
In his first issue on appeal, Buck contends that the trial court erred by ordering that he be responsible for the parties' federal income tax liability from 2010 to 2021.
As an initial matter, Buck does not contend that it was improper for the trial court to consider and apportion the parties' federal income tax liabilities. See In re S.A.A., 279 S.W.3d 853, 857 (Tex. App.-Dallas 2009, no pet.) ("The parties' liabilities are factors to be considered in making a just and right division of property."). Buck also recognizes the trial courts' "authority and discretion to impose the entire tax liability of the parties on one spouse." Id. Rather, Buck divides his first issue into three complaints.
In Buck's first complaint regarding the tax liability issue, he contends that the trial court should have specified whether he should file joint or separate returns for the years he is responsible for. He cites Kimsey v. Kimsey, 965 S.W.2d 690 (Tex. App.-El Paso 1998, pet. denied) in support of his contention. In Kimsey, our sister court remanded the case to the trial court for a determination of whether the parties should file jointly or separately for tax years prior to their divorce, because the trial court's order was unclear regarding how the tax liability should be split between the parties. Id. at 696. Here, Laurie contends that unlike in Kimsey, the trial court's order in this case is clear that Buck is to file separately because that is the option that complies with the trial court's order that Buck be solely responsible for the tax liability during the parties' years of marriage. "Generally, both spouses are jointly and severally liable for the tax due on a joint return. . . . If a husband and wife file as married filing separately, each is liable only for the tax due on his or her own return." Id. Thus, the joint versus separate tax return clarification in Kimsey served to clarify the split of tax liability ordered by the trial court. Here, the trial court ordered:
IT IS ORDERED AND DECREED that Petitioner, BUCK ALLAN, shall pay, as a part of the division of the estate of the parties, and shall indemnify and hold Respondent, LAURIE ANN ALLAN, and her property harmless from any failure to so discharge, these items:
P-1. The following debts, charges, liabilities, and obligations:
a. IRS Tax Liability owed for Tax Year 2010:
Balance: ($10,717.72)
IRS Tax Liability of the Parties from Date of Marriage through Tax Year 2021, as further detailed below . . .Unlike in Kimsey, here the trial court made clear that Buck was solely responsible for the tax liability and thus, further detail is not required to clarify the split of liability as was required in Kimsey. See id.
In Buck's second complaint regarding the tax liability issue, he contends that the trial court erred by ordering him to be liable for the tax liability incurred during 2021 because the parties' divorce was final November 17, 2021, and as he contends, he cannot be held liable for Laurie's tax liability accrued at any point during the tax year that they divorced. While Buck is correct that for federal tax purposes, he and Laurie are not considered married for the 2021 tax year because their divorce was final within that year, see 26 U.S.C. § 7703, he provides no support or argument for why the trial court's decision of how to divide the community tax liability for the portion of 2021 in which the parties were married was not a just and right division. As discussed above, the trial court had the authority to consider tax liability in its just and right division of the community property. See In re S.A.A., 279 S.W.3d at 857. Thus, we conclude that the trial court did not abuse its discretion by ordering Buck liable for Laurie's 2021 tax liability for the portion of 2021 that the parties were married.
Laurie concedes however, that the trial court abused its discretion by including the portion of the 2021 tax year that the parties were divorced-from November 18, 2021, to December 31, 2021-in its division of community property. See In Matter of Marriage of Allen, No. 07-96-0195-CV, 1996 WL 686895, at *3 (Tex. App.-Amarillo Nov. 27, 1996, no writ) (holding that inclusion of separate property in award in divorce case constitutes abuse of discretion). When an abuse of discretion in the division of community property materially affects the division, an appellate court must remand the entire community estate for a new division. Jacobs, 687 S.W.2d at 733. However, compared to the entire community property estate in this case, including ten years of tax liability, the roughly six weeks of post-divorce 2021 that was included is not material to the division of the property in this instance. See In Matter of Marriage of Allen, 1996 WL 686895, at *3 (concluding that included separate property, which amounted to less than one percent of value of marital estate, was not material to division of property). Thus, we will reverse the trial court's judgment in part to the extent that Buck was ordered liable for Laurie's post-divorce tax liability and render judgment otherwise consistent with the trial court's order minus the post-marriage 2021 tax liability division.
In Buck's third complaint regarding the tax liability issue, he contends that the trial court erred by ordering him to be responsible for Laurie's tax liability for the years that she filed separately. He contends that because when spouses file "as married filing separately, each is liable only for the tax due on his or her own return." See Kimsey, 965 S.W.2d 696. However, "in dividing property between spouses a court may take the tax liability into consideration and may even require one party to assume the other's liability or require reimbursement for taxes paid." Able v. Able, 725 S.W.2d 778, 780 (Tex. App.-Houston [14th Dist.] 1987, writ ref'd n.r.e.). Thus, the trial court had the authority to consider reimbursement of the paid tax liability for the years Laurie filed separately and transfer that liability as part of dividing the marital estate in a just and right manner. Buck does not argue how the trial court's allocation created a division that constitutes an abuse of discretion.
We conclude that with the exception of the post-marriage 2021 tax liability division, Buck has not shown that the trial court's challenged findings were "so against the great weight and preponderance of the evidence as to be manifestly wrong." Kimsey, 965 S.W.2d at 700. We sustain Buck's first issue in part, reverse the trial court's award of post-marriage tax liability, and render judgment deleting that award from the decree.
2019 tax overpayment
In his second issue on appeal, Buck contends that the trial court erred by ordering him to pay Laurie half of the 2019 tax overpayment. See Adwan v. Adwan, 538 S.W.2d 192, 197 (Tex. App.-Dallas 1976, no writ) (holding that tax overpayment is not asset to be split by trial court in division of marital estate). The section of the trial court's order that Buck challenges states:
It is ordered and decreed that Respondent, Laurie Ann Allan, is awarded the following as her sole and separate property, and Petitioner, BUCK ALLAN, is divested of all right, title, interest, and claim in and to that property:
. . . .
Thirteen thousand dollars ($13,000.00), payable by Buck Allan to Laurie Ann Allan on or before February 5, 2022, by cash, cashier's check, or money order.The trial court's order did not include division of a tax overpayment. Rather, it orders Buck to pay $13,000.00 in cash, cashier's check, or money order. Buck contends that because the earlier temporary order included an even split of a $26,000.00 tax overpayment, the $13,000.00 cash payment in the final order is the court effectuating the improper temporary order. Buck does not, however, argue that a $13,000.00 cash payment to Laurie was not a just and right split of the overall community property. On this record, we cannot find that the trial court abused its discretion in awarding a $13,000.00 cash payment to Laurie in dividing the marital estate. See Jacobs, 687 S.W.2d at 733 (noting trial court has wide discretion in dividing community property).
Attorney's fees
In his third issue on appeal, Buck contends that the trial court erred in awarding Laurie attorney's fees that, as he contends, were not supported by sufficient evidence.
"In a suit for dissolution of a marriage, the court may award reasonable attorney's fees and expenses." Tex. Fam. Code § 6.708. "[A] claimant seeking an award of attorney's fees must prove the attorney's reasonable hours worked and reasonable rate by presenting sufficient evidence to support the fee award sought." Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 501-02 (Tex. 2019). "Sufficient evidence includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services." Id. at 502. "Expert testimony is required to support an award of attorney's fees." Woollett v. Matyastik, 23 S.W.3d 48, 52 (Tex. App.-Austin 2000, pet. denied).
Here, in support of his attorney's fee issue, Buck focuses on the first Rohrmoos factor-the particular services performed. Specifically, Buck contends that the invoices Laurie provided from her previous attorney were so heavily redacted that they did not include the particular services provided to support the full amount awarded. See Person v. MC-Simpsonville, SC-1-UT, LLC, No. 03-20-00560-CV, 2021 WL 3816332, at *8 (Tex. App.-Austin Aug. 27, 2021, no pet.) (mem. op.) ("[R]edacted billing records do contain some important information . . . . But it is essentially impossible for a finder of fact to determine whether the work done was reasonable and necessary without knowing what the specific tasks were."). Buck contends that the unredacted invoices from Laurie's trial attorney support an award of only $9,262.50. On appeal, Laurie does not contend that the redacted records provided sufficient evidence. Rather, she argues that the combination of the invoices from her trial counsel (totaling $9,262.50) and trial counsel's amended declaration that states that an additional $13,910.00 was accrued through trial (for a combined total of $23,172.50) supports the trial court's award of $25,480.00 in attorney's fees to Laurie.
However, the conclusory statement in the declaration that $13,910.00 was accrued through trial does not state the particular services provided, by whom, or at what hourly rate. The previous invoices included work performed by a second attorney at a different hourly rate. Because "generalities such as these are not sufficient to support a fee-shifting award," Rohrmoos Venture, 578 S.W.3d at 496, we conclude that the trial court abused its discretion when it awarded Laurie $25,480.00 in attorney's fees, see Sparks, 2018 WL 3799940, at *2. Rather, only $9,262.50 is supported by sufficient evidence. Because Laurie presented some evidence of fees incurred, but the record does not provide the requisite details to support the amount awarded, we reverse the trial court's judgment as to attorney's fees and remand for a redetermination of attorney's fees. See Rohrmoos Venture, 578 S.W.3d at 497, 506 (remanding for redetermination of attorney's fees when some evidence, although legally insufficient, was presented to trial court); cf. Lively v. Lively, No. 03-21-00317-CV, 2022 WL 3567722, at *10 (Tex. App.-Austin Aug. 19, 2022, no pet.) (mem. op.) (rendering judgment against recipient of attorney's fees rather than remanding for redetermination of fees when party failed to present any evidence of reasonable expenses or attorneys' fees incurred). We sustain Buck's third issue.
CONCLUSION
Because we sustained Buck's attorney's fee issue, we reverse the trial court's judgment regarding the award of attorney's fees and remand for a redetermination of fees consistent with this opinion. We reverse the trial court's judgment of the division of the marital estate in part to the extent that Buck was ordered liable for Laurie's post-divorce tax liability. Because it did not materially affect the division, we render judgment regarding tax liability for tax year 2021 requiring Buck to be solely liable for all of the tax liability of the parties from the date of marriage through November 17, 2021. We affirm the remainder of the trial court's judgment.
Affirmed in Part, Reversed and Rendered in Part, Reversed and Remanded in Part