1. Sanchez v. Wales, 2022 Tex. App. LEXIS 2304 (Tex. App. – Dallas April 8, 2022) (mem.opinion) (Cause No. 05-20-00485-CV)
W, from Columbia, married H in 2007. H worked for American Airlines and participated in two of their retirement programs both before and after marriage. Before marriage, H owned a residence and winery in Texas. During marriage, the parties purchased an apartment where W’s mother lives and a farm, both in Columbia. The parties lived at the Texas residence until they separated in 2018. H filed for divorce and W filed a counter petition. The parties attended mediation and executed an MSA. The MSA provided that W would appear in Columbia to sign certain documents effectuating a transfer of ownership of the Columbian farm to H and H would pay her airfare to make that happen. The MSA further provided that execution of these documents was a “condition precedent” to the entry of a final decree and that if the condition failed, the MSA was “null and void.” Although W did not comply with the terms of the MSA regarding execution of the documents in Columbia, W filed a motion to enter judgment on the MSA. H opposed entry and after a hearing the trial court declared the MSA null and void in its entirety. Thereafter the case was tried. The court found that the farm in Columbia was H’s separate property based on evidence demonstrating that he used funds inherited from his father, funds gifted from his mother and funds mortgaged on his separate property residence to purchase the farm. The trial court characterized an IRA as 80% H’s separate property and 20% community property, relying upon an analysis done by H’s expert. In dividing the estate, the court did not consider W’s claim for reimbursement on behalf of the community estate for the c/p funds used to pay H’s s/p mortgage obligation. W appealed. Initially, W argued that the court improperly set aside the MSA. On this point the COA found that the terms of the MSA were clear that her execution of the documents regarding the Columbia property was required for the MSA to be enforceable and because there was no dispute that W had not appeared in Columbia to take care of those issues, the MSA was completely void. W next argued that therewas insufficient evidence supporting the s/p characterization of the Columbian farm as H’s s/p. The COA examined the evidence demonstrating that H’s mother had given H funds from his father’s inheritance as well as additional funds and that the balance of the purchase came from a loan taken against H’s s/p. The COA found the testimony of H and his mother as well as the admitted documentation to be sufficient to establish when and from what source the money was derived to purchase the farm, affirming the trial court’s characterization. As to the IRA account, the COA examined the analysis of both H and W’s experts. H participated in a defined contribution plan called Plan B in which AA contributed 11% of a pilot’s salary into the plan each year.
Plan B was an investment trust and each pilot’s interest was represented by a specified number of units. Because the Plan paid retired pilots an annuity from the trust, each year the Plan increased the participant pilot’s units by 6%. This increased a pilot’s units each year but not the value of their holdings. H began acquiring units before he married and at the date of marriage he owned 3,615.12 units but there was no evidence as to the value of these units at date of marriage. AA continued contributions through October 2012 when the Plan was frozen due to AA’s bankruptcy and the funds credited to H were rolled over into the IRA the subject of the parties’ dispute. The only evidence in the record regarding the IRA was a November 2019 statement reflecting a value of approximately $680,000, apportioned between cash, equities, mutual funds and traded products. No evidence showed how the assets in the IRA were originally purchased or the value of the original rollover funds into the IRA. H’s expert was a certified financial planner and former AA pilot. He characterized 80% of the IRA as H’s s/p based on his calculation that using the 6% increase in units each year, H’s original s/p units had increased to 4,847 units by 2012 and then he subtracted this amount from the total units in 2012 (6,055) to determine that the balance of 1,218 units were c/p. This resulted in a ratio of 80/20 (s/p/c/p) at the time of the IRA rollover so he claimed 80% of the IRA value was H’s s/p. W’s expert, a CPA, testified that this analysis was absurd because it failed to take into account the amounts earned on the holding in the IRA from 2012 to 2020, whether on s/p or c/p holdings, all of which would have been c/p. He further argued that valuing the units at the time of marriage was critical to determining character and no such evidence existed, therefore the c/p presumption applied. The COA agreed with W’s expert determining that without the value of H’s s/p at the time of marriage, there was no way to determine what portion of the present IRA could potentially be his s/p. Further the COA rejected the ratio theory because H’s expert attributed all growth in the units after marriage to H which ignored earnings generated by those units during marriage which were c/p. Further, even if the ratio theory at the time of the rollover had been correct, there was absolutely no evidence offered as to the growth or changes in the IRA from 2012 when it started to 2020 when the case was tried, completely undermining any clear and convincing evidence as to what occurred within the account during that time. The COA determined that characterizing the IRA 80% as H’s s/p was error. As to W’s reimbursement claim the evidence established that the community estate had paid down H’s s/p mortgage debt by more than $82,000 and the record did not demonstrate that the trial court had considered this in any way as part of the division. The COA affirmed the divorce but reversed and remanded the property division.
2. In the Interest of L.M.R., 2022 Tex. App. LEXIS 2402 (Tex. App. – Corpus Christi April 14, 2022) (Cause No. 13-21-00279-CV)
H and W were married when the child, Lucy, was born in May 2014. In October 2014, H and W separated. W began cohabitating with F in August 2015. H and W sought a divorce in October 2015 and a decree was signed in August 2016. The decree named 4 children born during the marriage, including Lucy, and named W as their primary conservator. Thereafter, W and F married. In September 2019 F filed a petition to adjudicate his parentage to Lucy and offered DNA testing establishing his paternity. H conceded that F was Lucy’s biological father but claimed that his suit was untimely under TFC 160.607(a) which provides that a suit for parentage of a child with a presumed father must be filed before the child’s 4th birthday. In this case, the child turned 4 in May 2018 and F’s suit was not filed until more than a year later. After a trial on the merits the trial court adjudicated F to be Lucy’s father and H appealed. H argued on appeal that the only 2 exceptions available to the SOL did not apply in this case. As to the first exception, H argued there was no evidence that H and W were not living together or not having intercourse at the likely time of conception. As to the second exception, nothing indicated that H, as the presumed father (married to mom at time of birth) was prevented from asserting his rights due to a misrepresentation about his paternity. F argued that the second exception applied because W went through a divorce with H and misrepresented to the court that H was the child’s father when this was not true. F argued in the alternative that the 4-year SOL was unconstitutional. The COA determined that H was clearly a presumed father because he and W were married when Lucy was born. The COA agreed that in this situation the statute required F to file his suit before the child’s 4th birthday unless an exception applied.
Agreeing that there was no evidence concerning H and W’s lack of contact around conception, exception 1 did not apply. As to the second exception the COA recognized that in order for it to apply, the COA would have to determine that someone other than the presumed father could allege the existence of a misrepresentation. However, the COA noted that this finding was not required because there was no evidence in the record establishing that W made any misrepresentations about H’s paternity, that she suspected F to be the father or that H was even misled. Further the COA notes that F was the only one who questioned Lucy’s parentage and he failed to secure DNA testing until a month after the child turned 4. Considering F’s constitutional issues, the COA found that the SOL was constitutional following precedent by the Dallas and FW COA’s relying upon the US Supreme Court decision in Michael H. v. Gerald D, 491 U.S. 110 (1989) which found that a natural father did not have a fundamental right to assert parental rights over a child born into a woman’s existing marriage with another man. The COA further notes that the TX statute does not completely bar a natural father’s rights but gives a natural father 4 years in which to question or assert issues regarding paternity, which F did not take advantage of. F argued that the 4-year
period was arbitrary and that parentage cases should be allowed at any time even when a child has a presumed father. The COA notes that this is a legislative issue and that because the statute is constitutional the 4-year SOL must be applied here. Judgment reversed and rendered that F’s suit for parentage be dismissed.
3. In the Interest of B.N.L., 2022 Tex. App. LEXIS 2590 (Tex. App. – Dallas April 20, 2022)(mem. op.) (Cause No. 05-20-00575-CV)
H and W married in 2003 and had 3 children. During marriage the parties purchased a house using H’s s/p as a down payment. H’s parents also provided gifts to remodel the house and landscape and gave gifts of cash and stock during marriage. W filed for divorce in 2017 and H failed to answer so a default was taken. The court granted H’s MNT and H filed a counter petition. After W filed for divorce H transferred some of the stock gifted by his parents into separate custodial accounts for the parties 3 children. The case went to trial and the parties were named JMC , W as primary and H ordered to pay c/s. As to the property issues, H filed a motion to exclude W’s expert identified to offer opinions on the character and value of property. H claimed that W failed to timely provide his information under the rules for identifying experts and supplementing discovery. The trial court determined that there was no good cause under TRCP 196.3 and excluded W’s expert. At the conclusion of trial, the court characterized a portion of the residence as H’s s/p and awarded H the entire residence as part of his share of the community estate. The court characterized the gifts from H’s parents as gift’s only to H and found various investment accounts to be H’s s/p and further determined that the stock transferred to the children by H was also H’s s/p.. W appealed the property division. As to the exclusion of W’s expert, the COA examined the timeline and determined that although W timely provided certain 194 disclosure information regarding her expert, she failed to timely supplement regarding his mental impressions and opinions until well after the deadlines.
Further, although the expert was deposed, his report was not provided until the day before his deposition which occurred less than 30 days prior to trial. The COA agreed that W failed to establish good cause or lack of surprise for being late and the COA found no error in the trial court’s decision to exclude. As to characterization, the COA held that H’s evidence established that the gifts made by H’s parents were made exclusively to H and not to both H and W. H’s expert traced two Schwab accounts in which these funds were deposited and he testified that the parties had a habit of sweeping all income from these accounts each month so that the holdings in the account were always H’s s/p. However, H’s expert admitted that there were statements missing for several months (he claimed 4, W claimed 17) and he simply assumed that the parties’ operated under the same pattern during the period for which he had no statements. Taking this testimony into account the COA determined that whether there were statements missing for 4 months or 17 months, there was no evidence supporting what occurred in the account during this period, which occurred just more than year before trial and in the absence of such evidence the accounts were not clearly traced. The COA rejected the idea that the expert could simply assume that the parties operated under the same pattern during this gap period by sweeping income and there was no evidence as to what other changes may have occurred in the accounts during that time. W also challenged the trial court’s determination that H’s loans on margin in the Schwab accounts were presumptively c/p. As these were incurred during marriage the COA found them to be presumptively c/p particularly since there was no evidence establishing that Schwab agreed to look solely to H’s s/p estate for repayment. Further the COA noted that any investments purchased on margin would have benefitted the community estate, rejecting W’s argument on this issue. Ultimately determining that the mischaracterization of the Schwab accounts substantially impacted the division of c/p, the divorce was affirmed and the division was reversed and remanded for further proceedings.
