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Fuentes v. Guzman Zaragoza

Court of Appeals of Texas, First District

May 31, 2018

MIGUEL ZARAGOZA FUENTES, DADE AVIATION, INC., ABBINGDON MARINE, INC., EZAR MANAGEMENT, L.L.C., EZAR PROPERTIES, L.P., EAGLE RIDGE PROPERTIES LLC, AND ELSA ESTHER CARRILLO ANCHONDO, Appellants
v.
EVANGELINA LOPEZ GUZMAN ZARAGOZA, Appellee

          On Appeal from the 245th District Court Harris County, Texas Trial Court Case No. 2014-30215

          Panel consists of Justices Jennings, Bland, and Brown.

          OPINION

          Jane Bland Justice

         In this appeal from a decree of divorce, we determine whether the trial court had jurisdiction to divorce a husband and wife who are Mexican citizens, and the procedural effect pending Mexican litigation has on this suit. We further determine whether (1) legally sufficient evidence supports the division of community assets following the husband's failure to appear for trial; (2) the trial court erred in rendering judgments against parties who were nonsuited before trial on an alter-ego theory of liability; and (3) the trial court abused its discretion in declining to award sanctions against the wife's counsel.

         Miguel Zaragoza Fuentes appeals from a divorce decree obtained by Evangelina Guzman Zaragoza. Miguel contested personal jurisdiction. After the trial court denied Miguel's special appearance, he did not appear for trial. In its default decree of divorce, the trial court awarded Evangelina: (1) half of the community estate, including "[a]ll shares and all interest" in 89 business entities, on the basis that these entities and others were Miguel's alter egos; (2) $537 million in damages for fraud against the community estate; (3) injunctive relief; (4) spousal support; and (5) attorney's fees. On appeal, Miguel challenges the trial court's subject matter and personal jurisdiction and the relief awarded.

         Before the trial court signed its final judgment, Dade Aviation, Inc.; Abbingdon Marine, Inc.; Ezar Management, LLC; Ezar Properties, L.P.; Eagle Ridge Properties, LLC; Elsa Esther Anchondo Carrillo; Ernesto Carrillo; and Texas LPG Storage Company intervened in the case. These third parties contend that the trial court erred in including their property interests as part of the community estate and in awarding these interests in the division of the estate, without notice to them.

         Myrna Alicia Zaragoza Lopez, daughter of Miguel and Evangelina, also appeals, contending that her property interests were improperly included in the community estate as well and further that the trial court erred in denying her request for sanctions against Evangelina's counsel.[1]

         We conclude that the trial court had jurisdiction to hear the petition for divorce between Miguel and Evangelina. We further conclude that the trial court's disposition of the community assets, as well as the other amounts and relief awarded, are not supported by legally sufficient evidence. The trial court erred in awarding interests in the assets of third parties based on an alter-ego theory without notice to these parties. It acted within its discretion in declining to impose sanctions. Accordingly, we reverse the trial court's decree of divorce and disposition of assets, and we remand the case for further proceedings. On remand, the trial court must consider whether to defer to pending litigation in the Mexican courts for reasons of comity. We affirm the denial of Myrna Alicia Zaragoza Lopez's motion for sanctions.

         Background

         Miguel and Evangelina are Mexican citizens. They were married in the United States on October 14, 1953, in a civil ceremony in the state of New Mexico. They held a ceremonial wedding in Mexico three days later. The couple lived together as husband and wife until 2009. During that time, Miguel headed business enterprises in Texas and around the world.

         Although Miguel claims Ciudad Juarez in Chihuahua, Mexico as his place of residence, and has a home there, he also has maintained residences and close ties with Texas, particularly in the City of El Paso, located approximately four miles from Juarez. During the course of their marriage, Miguel regularly lived with Evangelina at their residence in El Paso. All eleven of the couple's children were born in El Paso, Texas. The couple also lived at their residence in Juarez.

         After the couple stopped living together, Miguel regularly lived at another residence in El Paso with Elsa Esther Carrillo Anchondo (Esther), one of the intervenors in this case. In 2004, Esther gave birth to a daughter in El Paso. Miguel acknowledges Esther's daughter as his child.

         Evangelina files for divorce in Harris County.

         Shortly after Christmas in 2013, Evangelina moved from El Paso to Houston and began to live at a home owned by one of Miguel and Evangelina's daughters. In May 2014, Evangelina petitioned for divorce against Miguel in Harris County, Texas.

         Initially, Evangelina named several individuals and business entities as corespondents, including Esther; Robert Dale Baucom; Ernesto Carrillo; Raoul Gisler; Abbingdon Marine, Inc.; Cadogan Properties, Inc.; Dade Aviation, Inc.; Ezar Management, L.L.C.; Ezar Properties, L.P.; Texas LPG Storage Company; and Texas Overseas Gas Corp. Evangelina alleged that these co-respondents were Miguel's corporate alter egos or persons to whom Miguel improperly had diverted community funds.

         Miguel avoided service by regularly crossing back and forth over the border between Juarez and El Paso. The trial court granted Evangelina's request for substituted service, and ordered that Miguel could be served by leaving a copy of the citation and pleadings at his known residence in El Paso, and another at Miguel's office of over twenty years in El Paso. Service was effected accordingly.

         Miguel challenges personal jurisdiction.

         Miguel filed a special appearance and supporting declaration, in which he averred that he is not a United States citizen of a Texas resident, and that he lacks sufficient minimum contacts with Texas to establish personal jurisdiction over him in this suit. Miguel also denied that he was the alter ego of any entities doing business in Texas. At the special appearance hearing, Evangelina offered testimony from Alejandra Zaragoza Sterling, the youngest of the eleven children born to Miguel and Evangelina, about Miguel's Texas contacts.

         Miguel did not offer testimony or evidence in support of his special appearance. The trial court took judicial notice of a case file offered by Evangelina with documents and photographs showing a home that Miguel was building in El Paso, described as a "mansion." The architect that Miguel employed to build the home accepted service on Miguel's behalf in this suit.

         The trial court denied Miguel's special appearance. Miguel did not file an interlocutory appeal, and our court later denied Miguel's petition for writ of mandamus challenging the denial of his special appearance. See In re Fuentes, No. 01-14-00624-CV, 2014 WL 4251152, at *1 (Tex. App.-Houston [1st Dist.] Aug. 28, 2014, orig. proceeding [mand. denied]) (mem. op) (per curiam).

         Miguel did not participate in further trial court proceedings. Evangelina ultimately moved for a default judgment against Miguel, which the trial court granted.

         The third parties contest subject-matter jurisdiction.

         In February 2015, Ernesto Carrillo and Texas LPG Storage Company filed a plea to the trial court's jurisdiction, contending that it lacked subject-matter jurisdiction to entertain the suit for divorce. As part of their plea, the third parties alleged that Miguel and Evangelina had already divorced in a legal proceeding in Mexico in 1959.

         Ernesto Carrillo and Texas LPG requested that the trial court take judicial notice of (1) a divorce decree from the Mexican Civil Registry stating that the couple divorced in May 1959, (2) a Mexican divorce certificate, (3) Miguel's Mexican birth certificate (containing a notation regarding the divorce), and (4) Evangelina's Mexican birth certificate (containing a notation regarding the divorce).

         Evangelina denied that she and Miguel were divorced in Mexico. She disputed the authenticity of the records purporting to show a 1959 Mexican divorce. Evangelina introduced testimony that the records were irregular on their face and had been fraudulently created or altered. The validity of the purported Mexican divorce is the subject of litigation in Mexico.

         The trial court denied the plea to the jurisdiction. It declined the request to take judicial notice of the Mexican court records and declined to recognize the validity of the purported 1959 divorce, but allowed the documents to become part of the court record. Our court denied Ernesto Carrillo and Texas LPG Storage Company's subsequent mandamus petition challenging the trial court's denial of their plea to the jurisdiction. See In re Carrillo, No. 01-15-00322-CV, 2015 WL 2228067, at *1 (Tex. App.-Houston [1st Dist.] May 12, 2015, orig. proceeding [mand. denied]) (mem. op) (per curiam).

         Litigation regarding the validity of the purported 1959 Mexican divorce has continued in Mexico during the pendency of this appeal.

         Evangelina nonsuits the third-party defendants (twice).

         Beginning in February 2015 and continuing through October 2015, Evangelina non-suited the co-respondents named in her petition. See Fuentes v. Zaragoza, 2017 WL 976079, at *1. Approximately a week before trial, however, Evangelina filed a supplemental petition, again naming Esther, Dade Aviation, Abbingdon Marine, Ezar Management, and Ezar Properties as co-respondents. The supplement did not name Ernesto Carrillo or Texas LPG Storage Company. At a pre-trial conference, co-respondents' counsel objected that Evangelina's supplemental petition sought affirmative relief against them. Evangelina pledged that she would not seek relief from the co-respondents, and she again nonsuited them.

         The trial court signs a divorce decree and divides the community estate.

         The case proceeded to trial without Miguel's participation. Having been nonsuited, the former co-respondents also did not appear.

         At the close of evidence, the trial court stated that, subject to the later submission of attorney's fees, it was "going to grant a divorce" in favor of Evangelina. The trial court orally announced that it would accept Evangelina's proposed property division.

         Before the trial court signed the final decree, the former co-respondents, including Esther, Dade Aviation, Abbingdon Marine, Ezar Management, Ezar Properties, Eagle Ridge Properties, Ernesto Carrillo, and Texas LPG Storage Company, intervened in the case. These third parties alleged that Evangelina improperly sought to include assets they owned as part of the community estate and have these assets awarded in the division of community property. Eagle Ridge, which was never previously named as a party, also intervened.

         In the final divorce decree, the trial court declared 133 business entities-124 in Mexico and elsewhere outside of the United States-to be Miguel's alter egos, and deemed the assets of these entities to be "personal assets of the community estate." The court then divided the community estate by adopting Evangelina's proposed division. It awarded Evangelina (1) half of the estate, including "[a]ll shares and all interest of any kind in and to" 89 of the 133 business entities that the trial court found to be Miguel's alter egos; (2) $537 million in fraud-on-the-community damages; (3) spousal maintenance of $5, 000 per month; (4) attorney's fees; and (5) various forms of injunctive relief.

         Miguel moved for judgment as a matter of law, a new trial, and modification of the divorce decree. Miguel and several of the intervenors requested findings of fact and conclusions of law. The trial court adopted Evangelina's proposed findings and conclusions. It denied Miguel's motions to modify the judgment and for new trial.

         Interim appellate proceedings abound.

         Miguel appealed. Myrna Alicia Zaragoza Lopez filed a separate notice of appeal. Ernesto Carrillo and Texas LPG Storage filed a joint notice of appeal. Dade Aviation, Abbingdon Marine, Ezar Management, Ezar Properties, Eagle Ridge Properties, and Esther also jointly filed a notice of appeal.

         The trial court set the amount required to supersede the judgment during the appeal at $278.3 million. We granted Miguel's motion challenging the amount of the supersedeas bond and reduced the amount to $25 million. See Fuentes v. Zaragoza, No. 01-16-00251-CV, 2016 WL 3023811, at *4 (Tex. App.-Houston [1st Dist.] May 26, 2016, order). Miguel posted the $25 million supersedeas bond. We later granted mandamus relief to enforce the supersedeas bond. See In re Fuentes, 530 S.W.3d 244, 250-52 (Tex. App.-Houston [1st Dist.] 2017, orig. proceeding).

         During the supersedeas bond dispute, Evangelina sought temporary relief in the trial court, including spousal support and payment of her attorney's fees. See Tex. Fam. Code § 6.709. The trial court ordered Miguel to pay Evangelina $300, 000 in monthly support and $50, 000 in monthly attorney's fees during the pendency of the appeal.

         Miguel petitioned this court for a writ of mandamus, challenging the temporary orders as (1) untimely and outside of the trial court's jurisdiction; and (2) lacking sufficient evidence to support them. See In re Fuentes, 506 S.W.3d 586, 590 (Tex. App.-Houston [1st Dist.] 2016, orig. proceeding [mand. denied]). We rejected Miguel's argument that the temporary orders were untimely, but we conditionally granted relief on the basis that the trial court abused its discretion by awarding spousal support and attorney's fees in the absence of legally sufficient supporting evidence. Id. at 594. We directed the trial court to "modify its order of temporary support and attorney's fees consistent with this opinion within 30 days." Id.

         On remand, the trial court reconsidered Evangelina's request for temporary orders. It overruled Miguel's objections and again awarded Evangelina $350, 000 in monthly support and attorney's fees. The new order awarded the same total amount, but this time apportioned $250, 000 in monthly support and $100, 000 in monthly attorney's fees. The trial court added a separate award of $6.4 million in "past attorney's fees" to Evangelina and granted her the exclusive use of certain properties, including the El Paso residence. The trial court also appointed a receiver to "monitor and report on all real and personal property awarded."

         Miguel again petitioned for writ of mandamus, challenging each aspect of the modified temporary orders. See In re Fuentes, No. 01-16-00951-CV, 2017 WL 3184760, at *1 (Tex. App.-Houston [1st Dist.] July 27, 2017, orig. proceeding) (mem. op.). Miguel also appealed the trial court's order appointing a receiver. See Fuentes v. Zaragoza, 534 S.W.3d 658, 660 (Tex. App.-Houston [1st Dist.] 2017, no pet.).

         Concluding that the modified awards, like the original ones, lacked evidentiary support, we conditionally granted mandamus relief directing the trial court to vacate its temporary orders. In re Fuentes, 2017 WL 3184760, at *5-9. In the appeal from the order appointing the receiver, we reversed, holding that the trial court lacked jurisdiction to make that appointment. Fuentes, 534 S.W.3d at 666.

         The parties have completed briefing on the merits in this appeal, and thus we turn to the issues they raise.

         Discussion

         I. Jurisdiction

         In his appeal, Miguel challenges the trial court's subject-matter and personal jurisdiction. Alternatively, he contends that the trial court should have declined to exercise its jurisdiction as a matter of comity, in deference to the ongoing Mexican litigation. We address Miguel's jurisdictional and comity arguments separately. See Acain v. Int'l Plant Servs., LLC, 449 S.W.3d 655, 659 (Tex. App.-Houston [1st Dist.] 2014, pet. denied) (whether subject-matter jurisdiction exists presents legal question subject to de novo review; declining jurisdiction on basis of comity is discretionary and subject to abuse-of-discretion standard).

         A. Subject-Matter Jurisdiction

         Miguel contends that he and Evangelina were no longer married when she petitioned for divorce in Harris County, and thus the trial court lacked subject-matter jurisdiction over Evangelina's petition.

         1. Standard of review

         Subject-matter jurisdiction concerns the court's "power to hear and determine cases of the general class to which the particular one belongs." Middleton v. Murff, 689 S.W.2d 212, 213 (Tex. 1985) (per curiam). Subject-matter jurisdiction is essential for a court to have authority to decide a case; it is not presumed and cannot be waived or conferred by consent. See Dubai Petrol. Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000); Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex. 1993); see also Alfonso v. Skadden, 251 S.W.3d 52, 55 (Tex. 2008) (per curiam) (subject-matter jurisdiction cannot be waived and can be raised at any time). Whether a trial court has subject-matter jurisdiction is a question of law subject to de novo review. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998); In re G.S.G., 145 S.W.3d 351, 353 (Tex. App.-Houston [14th Dist.] 2004, no pet.).

          2. Jurisdiction to hear a divorce

         Texas law presumes that every marriage is valid. See Tex. Fam. Code § 1.101 ("[E]very marriage entered into in this state is presumed to be valid unless expressly made void by Chapter 6 or unless expressly made voidable by Chapter 6 and annulled as provided by that chapter."). The presumption applies to persons who were married outside the state of Texas, like Miguel and Evangelina. See Tex. Fam. Code § 1.103 ("The law of this state applies to persons married elsewhere who are domiciled in this state.").

         A valid marriage must exist for a trial court to have subject-matter jurisdiction over a suit for the spouses' divorce. Gray v. Gray, 354 S.W.2d 948, 949 (Tex. Civ. App.-Houston 1962, writ dism'd) ("A suit for divorce presumes a valid marriage."). If a marriage previously was legally dissolved, then the court lacks subject-matter jurisdiction to again dissolve that marriage. See Ashfaq v. Ashfaq, 467 S.W.3d 539, 544 (Tex. App.-Houston [1st Dist.] 2015, no pet.) (trial court properly dismissed for lack of jurisdiction where parties had divorced before filing for divorce in Texas); Fidalgo v. Galan, No. 13-01-469-CV, 2003 WL 21982186, at *3 (Tex. App.-Corpus Christi Aug. 21, 2003, no pet.) (not designated for publication) (affirming dismissal of divorce action, holding that "subject matter jurisdiction was lacking because there was no live controversy, " where trial court found that "a previous divorce action had been filed by [appellant] in Mexico that resulted in the issuance of a divorce decree and orders and relief identical to the relief sought in the Texas divorce action").

         3. Recognition of the Mexican decree

         Miguel's argument that the trial court lacked subject-matter jurisdiction rests on his contention that the trial court was bound to recognize the 1959 Mexican divorce. Evangelina responds that the trial court reasonably refused to recognize the Mexican divorce based on evidence that the documents offered to establish that divorce were fraudulent or obtained without due process, including lack of notice to her of the proceedings.

         A trial court may decline to recognize a foreign judgment obtained without due process. Recognition of a foreign judgment in the absence of due process constitutes an abuse of discretion. Ashfaq, 467 S.W.3d at 541. "[D]ue process requires that no other jurisdiction shall give effect, even as a matter of comity, to a judgment elsewhere acquired without due process." Id. at 542-43 (quoting Griffin v. Griffin, 327 U.S. 220, 229 (1946)); accord In re E.H., 450 S.W.3d 166, 172 (Tex. App.-Houston [14th Dist.] 2014, pet. denied). The Full Faith and Credit Clause of the United States Constitution does not require a domestic court to give binding effect to a foreign country judgment when the validity of the judgment is disputed. See Reading & Bates Constr. Co. v. Baker Energy Res. Corp., 976 S.W.2d 702, 714- 15 (Tex. App.-Houston [1st Dist.] 1998, pet. denied) ("Texas, like its sister states, is not constitutionally required to give full faith and credit to the judgments of foreign countries.") (emphasis in original); Schacht v. Schacht, 435 S.W.2d 197, 202 (Tex. Civ. App.-Dallas 1968, no writ) (holding that Texas court was not required to recognize Mexican divorce decree because Full Faith and Credit Clause of U.S. Constitution "does not require that binding effect and validity be given a judgment of a foreign country such as Mexico, more especially where such judgments are shown to be invalid"); see also In re E.H., 450 S.W.3d at 170.

         In this case, the trial court heard testimony that the parties have been continuously married from 1953 until Evangelina filed for divorce in Harris County. Miguel and Evangelina's 1953 marriage certificate, issued by the State of New Mexico, was introduced into evidence. Evangelina testified that she had never filed for divorce from Miguel until filing for divorce in Harris County.

         The trial court also heard testimony disputing the validity of the purported 1959 divorce in Mexico. Evangelina introduced testimony from Ignacio Morales Lechuga, a licensed lawyer in Mexico who teaches contract law and practices family law as a district attorney and notary public in Mexico. He reviewed the disputed divorce documents and testified as to their irregularities, including:

• The stamp on Evangelina's Original Petition for Divorce does not match the stamps used and required in 1959, when the petition was alleged to have been filed.
• In 1959, witnesses could not be used to prove a marriage or a child's parentage, but no marriage certificate or birth certificates of the children were included in the alleged divorce as would be expected at that time.
• Evangelina and Miguel had four children in 1959, but the petition mentions only three.
• Despite the legal requirement existing in 1959 that a divorce decree contain provisions for the support of minor children, none was made in the decree.
• After the divorce decree was signed and not appealed, an executory declaration rendering the divorce final and unappealable should have issued in a matter of days; however, no final judgment was entered in the case until 2014 and, in his 40 years of practicing family law, Morales Lechuga has never seen a 55-year delay between the entry of a decree and the entry of a final unappealable judgment.
• Notations of the divorce on Evangelina and Miguel's birth certificates were not made until October 7, 2014.
• In 1959, Mexican law required that a divorce be published in a newspaper or periodical but no evidence was found of any publication.

         Morales Lechuga reasoned that the irregularities in the documents could be explained by either of two things: (1) the documents are authentic but were false when filed or (2) they were never filed and the whole divorce is false. Morales Lechuga opined that the records reflected a process that did not comply with Mexican law and was "null."

         Evangelina also provided testimony from Miguel Alessio Robles, a professor of family and real estate law in Mexico who had served as chief legal counsel to the President of Mexico. Robles testified as to various irregularities in the divorce documents and concluded that "All these irregularities are against the law. The procedure is a fraud . . . ." Luis Alfonso Cervantes Munoz, a family law lawyer in Mexico, further testified that he believed the divorce proceeding to be fraudulent.

         Several of Miguel and Evangelina's children testified that they had no knowledge that their parents had been divorced in 1959; they had only known them to be married. Evangelina and Miguel lived together until 2009 and celebrated wedding anniversaries for about 50 years after the alleged divorce in 1959. The trial court heard testimony from Father Jose Maria Rubin, a Catholic priest who was invited to celebrate the mass at the Zaragozas' 50th wedding anniversary.

         Based on the record, the trial court acted within its discretion in declining to recognize the 1959 Mexican divorce decree as invalidating the New Mexico marriage. Legally sufficient evidence supports its determination that the parties were married at the time Evangelina initiated divorce proceedings in Harris County. Accordingly, we hold that the trial court had subject-matter jurisdiction over the divorce proceeding.

         4. Allegation of subsequent marriage

         For the first time on appeal, Miguel claims that, after he and Evangelina divorced in 1959, he married another woman, Alma Margarita Rodriguez Gutierrez (Margarita), on June 11, 1959 in Mexico. Miguel argues that his subsequent marriage to Margarita is presumed valid under the laws of both Texas and Mexico, and the existence of that subsequent marriage refutes Evangelina's presumption that the parties were married when she filed for divorce. See Tex. Emp'rs' Ins. Ass'n v. Gomez, 313 S.W.2d 956, 958 (Tex. Civ. App.-Eastland 1958, writ ref'd n.r.e.) ("A subsequent marriage is presumed to be valid and the burden of proving the contrary rests upon the party who questions the validity of the subsequent marriage.").

         Miguel did not raise or proffer evidence of a subsequent marriage in the trial court, either in his special appearance or during trial. Maria Laura Zaragoza Rodriguez de Reyes, Miguel and Margarita's daughter who intervened in the case, attached a 1959 marriage certificate to her pleading in response to Evangelina's motion to strike her intervention. The trial court struck Maria's intervention, and Maria did not participate at trial. Although Maria filed a notice of appeal, she voluntarily dismissed her appeal. Myrna Alicia Zaragoza Lopez's motion for sanctions against Evangelina's ...


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