Opinion
No. 04-07-00759-CV
Delivered and Filed: April 9, 2008.
Appeal from the 229th Judicial District Court, Jim Hogg County, Texas Trial Court No. CC-07-18 Honorable Alex W. Gabert, Judge Presiding.
REVERSED AND RENDERED
Sitting: ALMA L. LÓPEZ, Chief Justice PHYLIS J. SPEEDLIN, Justice STEVEN C. HILBIG, Justice.
Dionicio and Delfina Caro appeal the trial court's judgment declaring that Vivien Lewis-Caro is entitled to reimbursement from the Caros for one-half of a community debt that Lewis-Caro repaid from her separate property estate. We reverse the trial court's judgment awarding Lewis-Caro reimbursement and render judgment that Lewis-Caro take nothing on her claim for reimbursement.
Background
David Caro was the son of the Caros and the spouse of Lewis-Caro. David owned a 59.310 acre tract of real property prior to his marriage to Lewis-Caro. During the marriage, David and Lewis-Caro obtained a loan that was secured by the 59.310 acre tract. The loan was a community debt.
Upon David's death, the Caros and Lewis-Caro each inherited fifty percent of David's separate property, including the 59.310 acre tract. Lewis-Caro inherited all of the community property owned by David and Lewis-Caro, and Lewis-Caro was solely responsible for paying the community debt, including the loan secured by the 59.310 acre tract. Lewis-Caro used her separate property to pay off the loan, and the lien against the 59.310 acre tract was released. The trial court concluded that Lewis-Caro was entitled to reimbursement from the Caros for one-half of the loan balance that she repaid.
Discussion
Reimbursement is an equitable remedy. Nelson v. Nelson, 193 S.W.3d 624, 632 (Tex.App.-Eastland 2006, no pet.). Great latitude must be given to a trial court in applying equitable principles to value a claim for reimbursement. Penick v. Penick, 783 S.W.2d 194, 197 (Tex. 1998). Accordingly, we review a trial court's resolution of a claim for reimbursement under an abuse of discretion standard. See Penick, 783 S.W.2d at 197; Nelson, 193 S.W.3d at 632.
The Caros contend that the trial court abused its discretion because economic contribution, not reimbursement, was the proper remedy. The Caros rely on section 3.408 of the Texas Family Code which states that a claim for reimbursement includes payment by one marital estate of the unsecured liabilities of another marital estate.
"Although found in the Family Code, the provisions prescribing claims for [reimbursement] apply to cases settling the estate of a deceased spouse." Rogers v. Foxworth, 214 S.W.3d 196, 198 n. 1 (Tex.App.-Tyler 2007, no pet.). We note, however, that the underlying lawsuit was filed as a declaratory judgment action and was not part of a probate proceeding. The record contains no reference to any probate proceeding, and this opinion does not consider the effect a probate proceeding might have had on the claims asserted or the rights that might have been asserted by a creditor of the estate.
Tex. Fam. Code Ann. § 3.408(b)(1) (Vernon Supp. 2007). Because the loan in question in this case was a secured liability, the Caros contend that Lewis-Caro did not have a claim for reimbursement. The Caros, however, read section 3.408 too narrowly. See Nelson, 193 S.W.3d at 632. The definition of reimbursement in section 3.408 is simply a non-exhaustive list of two potential reimbursement claims. Id. A reimbursement claim is generally described as having three elements: (1) an estate has contributed to another estate; (2) the contributing estate has not received a quid pro quo; and (3) the benefited estate has thereby been unjustly enriched. Penick, 783 S.W.2d at 198. Reimbursement is comparable to the equitable doctrine of quantum meruit and is based on the principle that one receiving benefits which are unjust for him to retain ought to make restitution or pay the value of the benefit to the party contributing the benefit. Id. Because a claim for payment by one marital estate of the secured liability of another marital estate is not excluded as a claim for reimbursement, the trial court in this case did not abuse its discretion in concluding that Lewis-Caro had properly asserted a claim for reimbursement as opposed to a claim for economic contribution.
The Caros also contend that the trial court abused its discretion in finding that Lewis-Caro was entitled to reimbursement because the loan was a community debt. We agree that the trial court abused its discretion in awarding reimbursement because Lewis-Caro failed to establish the three elements necessary for a reimbursement claim. First, Lewis-Caro contends that she contributed to David's separate property estate because her repayment of the community debt resulted in a release of the lien against David's separate property estate. Although the lien was incidentally released, the estate to which Lewis-Caro contributed was the community property estate because she used her separate property estate to repay a community debt. Furthermore, Lewis-Caro's separate property estate received a quid pro quo because the release of the lien against the 59.310 acre tract equally benefited the portion of David's separate property estate that Lewis-Caro inherited. Finally, the portion of David's separate property estate that the Caros inherited had not been unjustly enriched because Lewis-Caro was responsible for paying the community debt and the lien would have been released upon repayment of that debt by Lewis-Caro however she chose to repay it. Lewis-Caro's decision to use her separate property estate as opposed to a portion of the community estate she inherited to repay the debt did not result in an unjust benefit to the Caros.
The effect of the trial court's judgment would be to make the Caros personally liable for a debt they would not be personally liable for as heirs simply because Lewis-Caro chose to pay a community debt from her separate property. See Perkins v. Cain's Coffee Co., 466 S.W.2d 801, 802-03 (Tex.Civ.App.-Corpus Christi 1971, no writ) (noting heirs are not personally liable to a creditor of the estate for the value of the property received by them unless they have disposed of it or changed its form so as to render it impossible of identification); Elkin v. Sanders, 397 S.W.3d 309, 312 (Tex.Civ.App.-Amarillo 1965, writ ref'd n.r.e.) (noting devisees are not personally liable for a testatrix' debts).
Moreover, even if Lewis-Caro had established a right to reimbursement, the trial court erroneously awarded Lewis-Caro reimbursement based on the dollar amount of the loan that was repaid. The proper measure for reimbursement is the enhancement in value to the benefited estate. Gutierrez v. Gutierrez, 791 S.W.2d 659, 662-3 (Tex.App.-San Antonio 1990, no pet.). In this case, Lewis-Caro offered no evidence to show the value by which the property inherited by the Caros was enhanced by the release of the lien. By relying on an erroneous measure for reimbursement, Lewis-Caro failed to present any evidence to support her reimbursement claim.
Conclusion
The trial court's judgment awarding Lewis-Caro reimbursement is reversed, and judgment is rendered that Lewis-Caro take nothing on her reimbursement claim.