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stating unless a party's inventory and appraisal has been admitted into evidence, it may not be considered as evidence of a property's value
Summary of this case from J.A.S. v. A.R.D.Opinion
NUMBER 13-16-00064-CV
03-23-2017
RUDY CARDENAS, Appellant, v. CAROLINE CARDENAS, Appellee.
On appeal from the 135th District Court of DeWitt County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Benavides
Memorandum Opinion by Justice Rodriguez
This is an appeal from a divorce decree which divided the marital estate of appellant Rudy Cardenas and appellee Caroline Cardenas. By five issues, Rudy challenges multiple aspects of the divorce decree and the related findings of fact. We affirm in part and reverse and remand in part.
I. BACKGROUND
Rudy and Caroline were married in August 2008. They moved into a house located at 113 Dorothy Street in Cuero, Texas (113 Dorothy) which Rudy had acquired before the marriage. In 2013, Rudy took out a loan of $30,000, and Caroline used the proceeds of this loan to purchase the house at 115 Dorothy Street (115 Dorothy). Caroline testified that she ended the relationship in March of 2014 and moved into 115 Dorothy. She petitioned for divorce in May 2014. A bench trial was held in August 2015. In December 2015, the trial court entered its final decree of divorce, adopting Caroline's unsworn inventory and proposed division of property. Shortly thereafter, the trial court entered findings of fact and conclusions of law.
By his first issue, Rudy contests the trial court's finding that 115 Dorothy was Caroline's separate property. By his remaining issues, he argues that the trial court abused its discretion in characterizing and dividing three other properties: Rudy's IRA account, improvements made to 113 Dorothy using community funds, and a 2010 camper trailer.
II. STANDARD OF REVIEW
We review the trial court's division of property to determine whether the trial court abused its discretion by making a division that was manifestly unjust and unfair. Vandiver v. Vandiver, 4 S.W.3d 300, 303 (Tex. App.—Corpus Christi 1999, pet. denied). The values of individual properties are evidentiary to this issue of a just and right division. LeBlanc v. LeBlanc, 761 S.W.2d 450, 453 (Tex. App.—Corpus Christi 1988), writ denied, 778 S.W.2d 865 (Tex. 1989). A trial court has wide discretion in making such a division. Handley v. Handley, 122 S.W.3d 904, 907 (Tex. App.—Corpus Christi 2003, no pet.). An abuse of discretion occurs when the trial court rules (1) arbitrarily, unreasonably, or without regard to guiding legal principles, or (2) without supporting evidence. Ford Motor Co. v. Chacon, 370 S.W.3d 359, 362 (Tex. 2012) (per curiam). With regard to ruling without supporting evidence, there is no abuse of discretion if some probative record evidence supports the trial court's findings. In re Barber, 982 S.W.2d 364, 366 (Tex. 1998) (orig. proceeding). As the finder of fact for the proceeding, the trial court is the exclusive judge of the credibility of the witnesses, the weight to be given their testimony, and the best means to resolve inconsistencies in the evidence. Handley, 122 S.W.3d at 911.
III. CHARACTERIZATION OF 115 DOROTHY AS SEPARATE PROPERTY
By his first issue, Rudy challenges the trial court's decree that 115 Dorothy was Caroline's separate property. He argues that Caroline failed to prove by clear and convincing evidence that Rudy gave her 115 Dorothy as a gift.
"The Court finds by clear and convincing evidence that the residence situated at 115 Dorothy is the separate property of Caroline Cardenas."
It was undisputed at trial that in September 2013, Rudy took out the $30,000 loan in his name only. Caroline used the proceeds from that loan to purchase the adjacent property from their neighbor. The general warranty deed listed the grantee as "Caroline Cardenas, a married woman dealing with her sole and separate property."
Caroline testified that Rudy had offered to give 115 Dorothy to her as a gift, to do with as she pleased. According to Caroline, the couple jointly consulted a lawyer to arrange for the house to be Caroline's separate property. The couple's pastor also appeared at trial and testified that Rudy had described his plan to give the house to Caroline as a gift.
Rudy recounted events differently. Rudy explained that the pastor had misunderstood him; he had meant that Caroline would receive the house in the future in case anything happened to him, not that he intended to give the property to Caroline as a gift. Instead, according to Rudy, he intended to own the property jointly with Caroline as an investment, to improve it and to possibly rent it out, but not to give it to Caroline as separate property. Rudy testified that he asked Caroline to take the $30,000 from the couple's checking account and purchase the 115 Dorothy property in both their names, and that Caroline solely handled this transaction because Rudy was out of town and there was a narrow window in which he could buy the property from their neighbor, who was tentative about the sale. According to Rudy, he did not discover that Caroline had taken the property in her name only and as "her sole and separate property" until Caroline filed for divorce.
A. Applicable Law
All property possessed by either spouse on dissolution of marriage is presumed to be community property. TEX. FAM. CODE ANN. § 3.003 (West, Westlaw through 2015 R.S.). The burden of overcoming this presumption rests on the party asserting otherwise, and the standard of proof is by clear and convincing evidence. Villalpando v. Villalpando, 480 S.W.3d 801, 806 (Tex. App.—Houston [14th Dist.] 2015, no pet.).
"Although we begin with a community property presumption, 'a presumption of separate property arises where the instrument of conveyance contains a separate property recital.'" In re Marriage of Moncey, 404 S.W.3d 701, 712 (Tex. App.—Texarkana 2013, no pet.) (quoting Roberts v. Roberts, 999 S.W.2d 424, 431 (Tex. App.—El Paso 1999, no pet.)) (editorial marks omitted). A "separate property recital" is a recital in an instrument that the consideration comes from the separate property of a spouse or that the property is transferred to a spouse as the transferee's separate property or for the transferee's separate use. Stearns v. Martens, 476 S.W.3d 541, 547 n.4 (Tex. App.—Houston [14th Dist.] 2015, no pet.); see Henry S. Miller Co. v. Evans, 452 S.W.2d 426, 431 (Tex. 1970). Such a "separate property recital" negates the community-property presumption and creates in its place a rebuttable presumption of separate property. Marriage of Moncey, 404 S.W.3d at 712-13; Magness v. Magness, 241 S.W.3d 910, 912-13 (Tex. App.—Dallas 2007, pet. denied); Roberts, 999 S.W.2d at 432; Kyles v. Kyles, 832 S.W.2d 194, 196 (Tex. App.—Beaumont 1992, no writ).
B. Application
Here, the general warranty deed for 115 Dorothy lists Caroline as the grantee, dealing with "her sole and separate property." This phrase expressly states a purpose to make the property part of Caroline's separate estate, see Henry S. Miller, 452 S.W.2d at 431, and creates a rebuttable presumption that 115 Dorothy was Caroline's separate property. See Marriage of Moncey, 404 S.W.3d at 712-13. Rudy's testimony is insufficient to disturb this presumption. We overrule Rudy's first issue.
IV. Characterization and Division of Other Property
A. Rudy's IRA Account
Rudy's second issue concerns the trial court's division of his IRA account with Texas Dow Employee Credit Union (TDECU).
"The Court finds that the retirement account referred to as the TDECU IRA was acquired during the parties' marriage."
At trial, Caroline testified that all of Rudy's IRA account was acquired during the marriage and that the IRA contained $42,000 at the time of the divorce. Rudy argued that a certain portion of the account was his separate property. He testified that approximately $15,000 had been in the IRA account before he married Caroline. The trial court ultimately found that all $42,000 was community property. Some probative record evidence supports this finding, see Barber, 982 S.W.2d at 366, and we defer to this determination on appeal. See Handley, 122 S.W.3d at 911.
Rudy next argues that the trial court wrongly awarded $39,000 of the IRA to Caroline. However, the trial court did not award this sum to Caroline in isolation; it was awarded pursuant to a broader plan for a just and right division. Under this plan, both parties would receive 50% of the $143,324.15 of net estate assets. Rudy would receive a greater share of tangible personal property but only $3,000 from the IRA, and Caroline would receive a lesser share of personalty as well as $39,000 from the IRA. Rudy does not direct our attention to any rule or record evidence which suggests that a plan to split the net estate assets in half was manifestly unjust and unfair. See Vandiver, 4 S.W.3d at 303. We overrule Rudy's second issue.
B. Reimbursement for Improvements to 113 Dorothy
Rudy's third issue concerns the finding that community funds were used to improve 113 Dorothy, Rudy's separate property. Caroline claimed that she should be entitled to reimbursement for these expenses. The trial court agreed with Caroline and determined that a reimbursement in the amount of $18,000 should be debited against Rudy's share of the estate. On appeal, Rudy contends that Caroline's evidence "as to the value of improvements to Rudy's home at 113 Dorothy is so speculative as to constitute no evidence."
"The Court finds that the residence situated at 113 Dorothy had improvements made to it during the marriage of the parties. The Court finds that the improvements to the residence situated at 113 Dorothy have a fair market value of $18,000.00."
A claim for reimbursement may include capital improvements to property other than by incurring debt. TEX. FAM. CODE ANN. § 3.402(a)(8) (West, Westlaw through 2015 R.S.). Reimbursement for funds expended by a marital estate for improvements to another marital estate shall be measured by the enhancement in value to the benefited marital estate. Id. § 3.402(d). The enhanced value is determined by the difference between the fair market value of the property before and after the improvements. Matter of Marriage of McCoy & Els, 488 S.W.3d 430, 435 (Tex. App.—Houston [14th Dist.] 2016, no pet.). The party claiming the right of reimbursement has the burden of pleading and proving that the expenditures were made and that they are reimbursable. Id. at 434. Evidence of the cost of improvements alone is not sufficient to prove enhanced value. Id. at 435; see Anderson v. Gilliland, 684 S.W.2d 673, 675 (Tex. 1985) (rejecting cost as a measure of reimbursement).
Under the property-owner rule, an owner is qualified to testify to the market value of his property even if she is not an expert. Reid Rd. Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 852-53 (Tex. 2011). To testify on valuation, the owner:
must provide the factual basis on which his opinion rests. This burden is not onerous, particularly in light of the resources available today. Evidence of price paid, nearby sales, tax valuations, appraisals, online resources, and any other relevant factors may be offered to support the claim. But the valuation must be substantiated; a naked assertion of "market value" is not enough.Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 159 (Tex. 2012).
At trial, Caroline's evidence primarily concerned the cost of improvements to 113 Dorothy, not its fair market value. Caroline testified that she and Rudy had spent $22,800 of community funds improving 113 Dorothy. The expenses included $8,000 for a new roof, $3,000 for a carport, and $600 apiece for fencing, landscaping, and a new storage room. She testified that the couple also paid $11,000 to remodel the master bath and bedroom, which included $5,000 for materials and $6,000 paid to Rudy's brother to complete the job.
In her testimony, Caroline made only one statement which could possibly relate to the effect of the improvements to 113 Dorothy's market value. After discussing the cost of the improvements, Caroline agreed that there was "probably about $18,000 worth of improvements" to Rudy's house. This testimony could be interpreted as an assertion that improvements had increased the market value of 113 Dorothy by $18,000. However, even under this interpretation, Caroline did not provide any basis for this assertion except for the cost of the improvements themselves, which is an invalid measure of increased value. See Anderson, 684 S.W.2d at 675; Marriage of McCoy, 488 S.W.3d at 435. As a naked assertion, this aspect of Caroline's testimony is insufficient to support the trial court's finding. See Justiss, 397 S.W.3d at 159. We find no other evidence in the record that supports the trial court's reimbursement finding. See Chacon, 370 S.W.3d at 362. We sustain Rudy's third issue.
C. Valuation of the 2010 Camper Trailer
By his fourth issue, Rudy challenges the trial court's valuation of the 2010 camper trailer which he received in the division. The trial court found the trailer to have a value of $16,000. This figure coincided with the value listed in Caroline's unsworn inventory and proposed division of property, which appears in the record but was not admitted into evidence. Rudy argues that Caroline offered no evidence to substantiate this figure.
"The Court finds that the 2010 Joey Camper motor vehicle, vehicle identification number unknown, has a fair market value of $16,000.00."
At trial, Caroline testified that Rudy sold the trailer to his sister for $7,000, but that this was an unfair price. She testified that she and Rudy had put the trailer "on eBay for $12,000 and nobody—there was no response or anything. Then all the sudden when I left him, he was getting all of these responses, and ended up selling it to his sister for seven." Rudy admitted that he had sold the trailer for $7,000 to his sister, but testified that a "surveyor" had appraised the vehicle and found that he would have been "lucky" to get $3,000 for the trailer on the open market, given the trailer's size and condition.
A property's market value is "the price the property will bring when offered for sale by one who desires to sell, but is not obliged to sell, and is bought by one who desires to buy, but is under no necessity of buying." City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001). In valuing the assets in the estate, if several values are given, the court's determination of the value should be within the ranges in the evidence. Van Heerden v. Van Heerden, 321 S.W.3d 869, 880 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (citing Mata v. Mata, 710 S.W.2d 756, 760 (Tex. App.—Corpus Christi 1986, no writ)). An inventory and appraisement that has not been admitted into evidence is more like a party's pleading. Barnard v. Barnard, 133 S.W.3d 782, 789 (Tex. App.—Fort Worth 2004, pet. denied); see Tschirhart v. Tschirhart, 876 S.W.2d 507, 509 (Tex. App.—Austin 1994, no writ). Unless a party's inventory and appraisal has been admitted into evidence, it may not be considered as evidence of a property's characterization of value. Barnard, 133 S.W.3d at 789.
We agree with Rudy that there was no record evidence to support the finding that the trailer's value was $16,000. The only mention of this figure was in Caroline's inventory, an unsworn document that was not admitted into evidence. See Barnard, 133 S.W.3d at 789; Tschirhart, 876 S.W.2d at 509. Rather, the upper range of values was set by Caroline's testimony, wherein she appeared to state that Rudy had received bids for $12,000. The trial court's finding exceeded the range of the evidence. See Van Heerden, 321 S.W.3d at 880; Mata, 710 S.W.2d at 760. We sustain Rudy's fourth issue.
D. Overall Effect on Just and Right Division
By his fifth issue, Rudy contends that the miscalculations described above contributed to an overall division that was manifestly unjust and unfair. We have concluded that the trial court entered two unsupported rulings: one ruling establishing $18,000 in improvements to 113 Dorothy, which was unsupported by any evidence, see Chacon, 370 S.W.3d at 362; and another ruling setting the valuation of the trailer, which diverged from the range of evidence by at least $4,000. See Van Heerden, 321 S.W.3d at 880; Mata, 710 S.W.2d at 760. Both of these rulings were debited against Rudy's share of the marital estate, causing a substantial departure from the trial court's plan to divide the net estate assets in half. When compared with Rudy's $71,650 share of the marital estate, we must agree with Rudy that this $22,000 deviation renders the division manifestly unjust and unfair. See Vandiver, 4 S.W.3d at 303. This error warrants the receipt of new evidence concerning the value of the trailer and the effect of any improvements on 113 Dorothy's market value. We sustain Rudy's fifth issue.
V. CONCLUSION
We reverse the trial court's division of property and remand this case to the trial court for a new trial as to the value of the camper trailer and Caroline's reimbursement claim regarding 113 Dorothy, in particular, and for a new division of the estate in light of the holdings in this case. We affirm the remainder of the divorce decree.
NELDA V. RODRIGUEZ
Justice Delivered and filed the 23rd day of March, 2017.