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Hughes v. Hughes

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

April 20, 2017

BRENDA W. HUGHES, Appellant,
v.
DAN A. HUGHES, Appellee.

         On appeal from the 36th District Court of Bee County, Texas.

          Before Chief Justice Valdez and Justices Rodriguez and Benavides

          MEMORANDUM OPINION

          GINA M. BENAVIDES, Justice

         This is an appeal from a final divorce decree of the marriage of appellant Brenda W. Hughes (Brenda) and appellee Dan A. Hughes, Sr. (Dan).[1] By four issues, Brenda asserts that: (1) the trial court erred in granting Dan's motion for partial summary judgment; (2) the trial court erred in partially granting Dan's motion for directed verdict; (3) the trial court erred in its submission of the jury charge; and (4) the evidence is legally insufficient to support the jury's verdict. We affirm in part and reverse and render in part.

         I. Background

         Dan and Brenda wed in 2003-his and her third marriage. Dan was a well-known and affluent member of the Beeville community, having made his wealth in the oil and gas business beginning in the early 1960s. Brenda is a San Antonio-native who met Dan socially in Beeville through a mutual acquaintance. At the time of trial, Dan was eighty-six years old, and Brenda was fifty-seven.

         A. Pre-Marital Agreement

         Shortly before their marriage, Dan and Brenda executed a twenty-eight-page premarital agreement. Among the stipulations in this agreement was that "no community property will be created during their marriage." Furthermore, the agreement stated that the parties would have the option to "acquire assets together in their joint names" and if such joint acquisition takes place, "they will each own an undivided interest in the jointly acquired assets as their respective sole and separate property in an amount equal to the percentage of their respective contributions toward the purchase of the assets." Lastly, the agreement stated the following:

Any property that is held by title, as in a deed, in a certificate, or by account name, may not be effectively transferred to the party claiming it as a gift unless, in fact, the deed, certificate, or account is transferred by name to the party claiming the gift.

         Slightly more than three years into their marriage, Dan and Brenda signed a "Ratification and Amendment of Premarital Agreement." (collectively "the premarital agreement" unless otherwise stated). In this new agreement, Dan and Brenda confirmed and ratified the original premarital agreement and agreed to amend the original premarital agreement, so that in the event that their marriage is dissolved, Brenda would be entitled to receive and own in fee simple, as her sole and separate property: (1) the couple's homestead located on Business Highway 181 North in Beeville; (2) all "tangible personal property" located inside of the homestead; (3) approximately 1, 711 acres of land in Bee County, commonly known as Charco Ranch; (4) cash or property having a value of $10 million as of the date of the dissolution of marriage; and (5) "such assets and property interests, if any, which Dan might give to Brenda by gifts, inter vivos transfers, testamentary transfers, non-testamentary transfers, survivorship agreements, or other written agreements in addition to those amounts" of the aforementioned property.

         B. The Divorce Proceedings

         In the months leading up to the filing of their divorce, Dan attempted to conduct some estate planning on his vast estate in preparation for his death. According to Dan, this required Brenda's consent to make some of those plans regarding his property. The couple was unable to reach an agreement regarding Dan's separate property, so Dan filed a declaratory judgment action to interpret the premarital agreement. In his pleading, Dan alleged that Brenda "improperly claim[ed] full or partial ownership interests in assets purchased entirely with [Dan's] separate funds . . . in excess of $30, 000, 000.00." On January 8, 2015-after Brenda unsuccessfully attempted to file for divorce in Bexar County-Dan filed for divorce in Bee County. The declaratory action and the divorce action were consolidated.

         Before trial, the trial court granted Dan's motion for partial summary judgment and held that pursuant to the premarital agreement, Dan owned "an undivided interest in jointly acquired assets, including, but not limited to, jointly titled real property and joint brokerage accounts, as his sole and separate property in an amount equal to the percentage of his contribution toward the purchase of said assets." A jury was asked to determine the remaining issues of the divorce proceeding, including: (1) the characterization of the marital estate; (2) any money owed to Brenda pursuant to the premarital agreement; (3) whether Brenda committed fraud with respect to Dan's separate property; and (4) whether Brenda breached her fiduciary duty to Dan.

         Dan hired certified booking account and forensic accounting expert Scott Turner to investigate Dan's finances and trace the character of all of the property at issue in this case. Turner prepared various tracing reports regarding Dan and Brenda's assets, reports which were admitted into evidence during the trial. Turner testified that the first asset he analyzed was Danville, LLC (Danville). Danville is a limited liability company that owned various condominium units in Beeville. Dan and Brenda were member-managers of Danville. According to Turner, Dan was credited with contributing more than $7 million in capital contributions to Danville while Brenda contributed nothing. Turner's next report concerned an analysis of the source of funds used to buy jointly-titled property. These jointly-titled assets included: (1) various pieces of real estate located in Texas, Colorado, and Montana; (2) Danville; (3) various accounts known as JM Texas Land Funds; (4) four bank accounts from First National Bank; and (5) four brokerage accounts. With the exception of real estate in Colorado, Aransas County, one land fund account, and three bank accounts, Turner concluded that all of these assets were Dan's separate property.

         Turner testified that he also analyzed bank records, deeds, and other documents to prepare a report supporting Dan's allegation that Brenda committed fraud. According to Turner, from April of 2012 through June of 2013, Brenda made more than thirty money transfers ranging from $50, 000 to $150, 000 from Dan and Brenda's joint account to Brenda's personal account at Prosperity Bank or to an account belonging to Dog & Bee, LLC.[2] Turner testified that Dan had zero interest in Dog & Bee, LLC and that Brenda was the sole member of that company. Turner also discovered that Brenda transferred money from the joint bank account to Kel-Lee Properties, a company owned by Brenda and Kelly, Brenda's daughter from a previous marriage. During her testimony, Brenda confirmed Turner's conclusions by testifying that she would transfer money from the joint account to either her personal account, the Dog & Bee, LLC account, or the Kel-Lee Properties account "depending on what the situation was."

         After the conclusion of evidence, the trial court granted a directed verdict on several pieces of property, deeming those properties to be Dan's separate property, including: (1) Farish I Ranch in Bee County; (2) Stringfellow Ranch in Edwards County; (3) 29 Albatross in Aransas County; (4) mineral interests in Bee County, less the 1, 711.01 acres of property known as Charco Ranch; (5) Danville; (6) fifty-percent of the Charco Ranch First National Bank account; (7) fifty-percent of the Trail Creek First National Bank account; (8) fifty-percent of the Real Estate First National Bank account; (9) the Herndon Plant Oakley account ending in 3538; (10) the JP Morgan account ending in 4394; (11) the Morgan Stanley account ending in 325; (12) the Goldman Sachs account ending in 671-0; and (13) one fifty-two carat diamond necklace valued at $160, 000.

         The jury made the following findings with regard to the value and characterization of the remainder of the marital estate:

Property

Gift to Brenda (yes or no)

Husband's Separate Property

Wife's Separate Property

1. Trail Creek Ranch, Montana

No

100%

0%

2. 170 Village Walk, Avondale, Colorado

No

100%

0%

3. 115 Dickerson Road, Bee County

No

100%

0%

4. JM Texas Land Fund No. 1

No

100%

0%

5. JM Texas Land Fund No. 2

No

100%

0%

6. JM Texas Land Fund No. 3

No

100%

0%

7. JM Texas Land Fund No. 4

No

70%

30%

8. JM Texas Land Fund No. 6

No

100%

0%

9. JM Texas Land Fund No. 7

No

100%

0%

10. FNB 9557 Joint Acct.

No

50%

50%

11. Brenda W. Hughes' interest in Kel-Lee Properties, LLC

No

50%

50%

12. Note receivable from Kel-Lee Properties LLC

No

50%

50%

13. The parties' interest in 105 Marion Drive, Rockport

No

50%

50%

14. Prosperity Bank acct. #5073

No

50%

50%

15. Herndon Plant Oakley acct. #577

Yes

0%

100%

16. Herndon Plant Oakley acct. #9290

Yes

0%

100%

17. Herndon Plant Oakley acct. #6943

Yes

0%

100%

18. Note Receivable from sale of 3138 N. Airport Rd.

No

50%

50%

19. Dog & Bee LLC

No.

50%

50%

         The jury also found that among the cash and assets owned by Brenda in the jury's answers to the value and characterization of the marital estate, $1, 536, 053.85 should be considered "as part of the $10, 000, 000.00 described in [the premarital agreement]." Furthermore, the jury found that Brenda committed fraud with regard to Dan's separate property and that Dan was entitled to compensation of $2, 393, 206.90 in damages. Lastly, the jury found that Brenda failed to comply with her fiduciary duty owed to Dan and that Dan was entitled to $2, 393, 206.90 in damages. This appeal followed.

         II. Summary Judgment

         By her first issue, Brenda asserts that the trial court erred by granting Dan's motion for partial summary judgment.

         A. Standard of Review

         We review a grant of summary judgment de novo. Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). A party moving for traditional summary judgment has the burden to prove that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id.

         B. Discussion

         Dan sought partial summary judgment on his declaratory judgment claim regarding the interpretation of language in the premarital agreement. Specifically, Dan sought a declaration as a matter of law that: (1) Dan and Brenda own an undivided interest in jointly acquired assets as their respective sole and separate property in an amount equal to the percentage of their respective contributions toward the purchase of said assets; and (2) Brenda was estopped and barred from making any claim "of any kind at any time to any of [Dan's] separate property or to any property designated as belonging to [Dan's] separate estate."

         In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To achieve this objective, courts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Id. (emphasis in original). No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id. Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered. Id. A contract, however, is ambiguous when its meaning is uncertain and doubtful or it is reasonably susceptible to more than one meaning. Id. Only where a contract is first determined to be ambiguous may the courts consider the parties' interpretations and admit extraneous evidence to determine the true meaning of the instrument. Kelley-Coppedge, Inc. v. Highlands Ins. Co., 908 S.W.2d 462, 464 (Tex. 1998). Finally, when a contract contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument becomes a fact issue. Coker, 650 S.W.2d at 394.

         In support of his argument in favor of partial summary judgment, Dan argues that the unambiguous language of paragraphs 7.1 and 18.4 of the original premarital agreement controls. The relevant language of each paragraph is as follows:

7.1 Joint Acquisition of Assets
The parties will have the option, but not the obligation, to acquire assets together in their joint names. If the parties jointly acquire assets following their marriage, they will each own an undivided interest in the jointly acquired assets as their respective sole and separate property in an amount equal to the percentage of their respective contributions toward the purchase of the assets. If the parties jointly acquire assets, and to the extent legal title to any or all of the assets can be perfected in their joint names, such as title to an automobile, boat, or real property, they will obtain title in their joint names. However, even though title to an asset acquired by the parties is held in their joint names, the percentage of ownership of such an asset will be controlled by the provisions of this article, and the taking of title in their joint names may not be interpreted to mean that each party has an undivided 50 percent ownership interest in jointly acquired assets. . . . Jointly acquired property may not be deemed to be community property but instead will constitute each party's separate property in proportion to that party's contribution to the purchase price; provided, however, that if there are no records verifying the amount of each party's contribution toward the purchase of an asset, each party will own an undivided 50 percent interest in that asset. If the evidence of title reflects both parties' names, the parties will own that property as joint tenants with right of survivorship.
. . . .
18.4 Enforceability
This agreement may be enforced by suit in law or equity by either of the parties . . . . Each party agrees that, by signing this agreement and accepting any benefit whatsoever under it, he or she is estopped and barred from making any claim of any kind at any time to any separate property or the separate estate of the other party or to any property described in this agreement as being the separate property of the other party. Each party waives his or her right to make claims to any separate property of the other party or to any property designated as belonging to the separate estate of the other party, whether the property is acquired before or after this agreement is signed.

         In her defense, Brenda asserts that Article III, paragraph B.5 of the amended premarital agreement amended the two paragraphs quoted above from the original premarital agreement. That paragraph states as follows:

B. Obligations of Dan Upon Dissolution of Marriage. Any provision of the Premarital Agreement or this Ratification and Amendment Agreement to the contrary notwithstanding, in the event of the dissolution of the marriage by court order or by the death of Dan, Dan hereby agrees that in either event, Brenda shall be entitled to receive and to own, in fee simple, as her sole and separate property, either by reason of transfer incident to the dissolution of the marriage by court order or by testamentary, non-testamentary or survivorship agreements by reason of Dan's death, the following:
. . . .
5. Such assets and property interests, if any, which Dan might give to Brenda by gifts, inter vivos transfers, testamentary transfers, non-testamentary transfers, survivorship agreements, or other written agreements in addition to those amounts provided in Paragraphs B.1 through B.4 of this Article III; provided, however, it is expressly agreed by the parties that Dan is under no obligation to make any provisions for Brenda other than those provided for in Paragraphs B.1 through B.4 of this Article III.

         In reading the relevant portions of the premarital agreement together, we hold that the language of the premarital agreements unambiguously state as a matter of law that: (1) any jointly acquired assets by Dan and Brenda would be "own[ed in] an undivided interest . . . as their respective sole and separate property in an amount equal to the percentage of their respective contributions toward the purchase of the assets"; (2) "the taking of title in their joint names may not be interpreted to mean that each party has an undivided 50 percent ownership interest in jointly acquired assets"; and (3) jointly acquired property may not be deemed to be community property but instead will constitute each party's separate property in proportion to that party's contribution to the purchase price, and if there are no records verifying the amount of each party's contribution toward the purchase of an asset, each party will own an undivided 50 percent interest in that asset. Furthermore, Brenda is entitled to own as her sole and separate property any assets and property interests that Dan gives to Brenda by "gifts, inter vivos transfers, testamentary transfers, non-testamentary transfers, survivorship agreements, or other written agreements." Nothing in this language amends or contradicts the unambiguous provisions of Paragraph 7.1 of the original premarital agreement. Lastly, because we hold that the language of the premarital agreement is unambiguous, the trial court did not abuse its discretion is sustaining Dan's objections to consider any evidence outside of the agreement in construing the agreement. See Kelley-Coppedge, Inc., 908 S.W.2d at 464. Accordingly, we disagree with Brenda, agree with Dan's interpretation, and conclude the trial court's non-dispositive, pre-trial ruling was not erroneous.

         We overrule Brenda's first issue.

         III. Directed Verdict

         By her second issue, Brenda asserts that the trial court erred by granting Dan's motion to direct a verdict regarding the characterization of various marital assets.

         A. Standard of Review

         We review a trial court's decision to grant a directed verdict under the legal sufficiency standard of review. See Mikob Props. Inc. v. Joachim, 468 S.W.3d 587, 594 (Tex. App.-Dallas 2015, pet. denied). When reviewing a directed verdict, we consider all the evidence in a light most favorable to the nonmovant, and we resolve all reasonable inferences that arise from the evidence admitted at the trial in the nonmovant's favor. Id. In conducting a legal sufficiency review, we will sustain a legal sufficiency point if the record reveals the following: (a) the complete absence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence establishes conclusively the opposite of the vital fact. Playboy Enters., Inc. v. Editorial Caballero, S.A. de C.V., 202 S.W.3d 250, 263-64 (Tex. App.-Corpus Christi 2006, pet. denied) (citing City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005).

         B. Discussion

         Brenda challenges the trial court's directed verdict on the following pieces of property:

         1. Real Property

         First, Brenda asserts that the evidence is legally insufficient to establish that Farish I Ranch is one-hundred percent Dan's property because the evidence offered to prove that fact "is no more than a mere scintilla and that the evidence conclusively establishes that the Farish I Ranch is, at a minimum, fifty percent Brenda's separate property" based on Brenda's own testimony.

         The record shows that Farish I Ranch was purchased by two payments out of Dan's separate property. On October 2, 2009, Dan A. Hughes Company made a $300, 000 earnest money contract deposit for the Farish I Ranch. Next, on November 3, 2009, Dan Hughes directed that $6, 552, 323.67 from his Morgan Stanley account ending in 5703 be wired to Bedgood Title Company for the purchase of the Farish I Ranch. Under Paragraph 7.1 of the premarital agreement, Dan conclusively established that one-hundred percent of the consideration paid on Farish I Ranch came out of his separate property, and no contributions were made out of Brenda's separate property. The only evidence put forth by Brenda is her own testimony stating that Dan orally told her after purchasing the Farish I Ranch that it would "make [her] ranch bigger, " which, according to Brenda, makes it a transfer of separate property by gift from Dan to Brenda under Article III B.5 of the premarital agreement. Three elements are necessary to establish the existence of a gift: (1) intent to make a gift; (2) delivery of the property, and (3) acceptance of the property. Grimsley v. Grimsley, 632 S.W.2d 174, 177 (Tex. App.-Corpus Christi 1982, no writ). Based on these elements, Brenda's testimony regarding an ambiguous and fleeting comment by Dan is legally insufficient to create a genuine issue of material fact that Farish I Ranch was a gift under Article III B.5 because such testimony is no more than a mere scintilla to prove-up the existence of a gift. See Grimsley, 632 S.W.2d at 177.

         Second, Brenda asserts that the evidence is legally insufficient to support the trial court's directed verdict that Stringfellow Ranch was one-hundred percent Dan's separate property. The record shows that an earnest money check totaling $25, 000 was issued out of Dan's separate bank account from First National Bank for Stringfellow Ranch, followed by a wire transfer from Dan's separate account at First National Bank totaling $1, 273, 317.72. Scott Turner, Dan's expert, testified that he could not clearly identify a .97 percent interest of the Stringfellow Ranch, and allocated that percentage of ownership to Brenda. However, Turner testified that his conclusion was not based on evidence that Brenda contributed .97 percent of her separate property to Stringfellow Ranch, but rather it was based on an absence of evidence. In support of her argument, Brenda directs us to her own conclusory testimony that she understood the Stringfellow Ranch to be a gift from Dan as well. Examining all of the evidence in the light most favorable to Brenda, we nonetheless conclude that the evidence is legally sufficient to support the trial court's directed verdict that the Stringfellow Ranch was one-hundred percent Dan's separate property, or that Dan did not gift the property to Brenda.

         Next, Brenda challenges the trial court's directed verdict on the characterization of the 29 Albatross home in Aransas County. The record shows that a $786, 759.10 check was issued from the Dan A. Hughes Company toward the purchase of the 29 Albatross property. Turner testified that 99.67 percent of the 29 Albatross property was acquired with Dan's separate property, but could not identify the source of the remaining .33 percent of the purchase. The record shows, however, that nothing in his analysis indicated that any of the funds used to purchase the 29 Albatross property came from Brenda's separate property. Furthermore, Brenda testified that all jointly-held real estate was paid for by Dan's separate property, but argues that this property was at least fifty percent her separate property because Dan told her after purchasing the Albatross property that it would be hers because she "picked it out without [him]." After ...


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