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Miller v. Miller

Court of Appeals of Texas, Fourteenth District

June 28, 2018


          On Appeal from the 169th District Court Bell County, Texas Trial Court Cause No. 258, 387-C.

          Panel consists of Justices Boyce, Donovan, and Wise.



Linda Hill Miller (Linda) and Dr. Brian Terry Miller (Terry) had been married for forty-three years when Linda filed for divorce. After a bench trial, the court granted the divorce on the ground of insupportability and divided the couple's property and debts. The court also found that Terry committed fraud on the community and that the value owed to the community estate was $189, 672.34. After reconstituting the community estate, the court valued the community estate at $7, 621, 044.80. The court awarded 49.28% of the community estate to Linda and 50.72% to Terry. On appeal, Terry contends that the trial court abused its discretion by recognizing a fraud on the community claim, arbitrarily reconstituting the community estate absent evidence of damages, ordering a business not a party to the divorce to pay Linda, and making a grossly disproportionate property division in a no-fault divorce. We affirm.

         I. Factual Background

         Terry and Linda Miller were married in 1969 and had three children, all of whom were adults at the time of the divorce. Terry is a licensed and practicing physician. Beginning in 2005 or 2006, Linda worked at Terry's medical practice, the Central Texas Allergy & Asthma Clinic (the Clinic).

         In 2007, the Millers embarked on a business plan to increase the size of their real estate holdings. In so doing, the Millers accumulated a significant amount of community property and debt associated with that property. The Millers maintained a bank account for their real estate investments known as the "real estate account" that was separate from their personal checking account and the Clinic account. Most of the Millers' income, however, came from the Clinic.

         The Clinic had locations in several Texas cities, at times including Killeen, Georgetown, Cedar Park, Round Rock, and South Austin. Some of the Clinic's locations leased their buildings from BTM Medical Properties, LLC, a company owned by Terry and Linda. Another clinic leased its location from 103-109 Bell Blvd, LLC, a company in which Terry owned a 50% interest. The other members in 103-109 Bell Blvd were Kota and Uday Reddy, who together owned a 40% interest, and Terry's close personal friend and long-time neighbor, Hubert "Bud" Kott, who owned a 10% interest. Terry made all decisions and handled all business dealings with Kott and the Reddys; Linda had no business dealings with either Kott or the Reddys.

         Terry also invested in real estate unrelated to clinic business. Terry and Kott formed MK Developers, LC, which invested in several commercial properties and land. Terry and Kott each owned a 50% interest in MK Developers, but Kott managed its daily operations. Terry and Kott also participated with several other individuals in Bar Seven Partners LP, a partnership that owned a tract of land divided into residential lots for resale and development. Kott was the managing partner of Bar Seven. Through BTM Medical Properties, Terry and Linda also purchased a commercial building located at 2014 W. Pecan Street in Pflugerville for rental to business tenants.

         In July 2010, Terry suffered a massive stroke that left him unable to work for a substantial period of time. Terry was hospitalized for eight days before being transferred to a rehabilitation facility and later a nursing home. In May 2011, Terry returned to the marital residence. Because Terry was still unable to care for himself, Linda became his full-time caregiver. Linda found caring for Terry to be physically demanding and exhausting. In addition, the relationship between Linda and Terry began to deteriorate after Terry returned home. According to Linda, Terry became withdrawn and verbally abusive, frequently making critical or demeaning comments to her.

         Linda was not actively involved in Clinic operations at the time of Terry's stroke. With the assistance of family members, Linda made the decision to sell a condominium the Millers owned in South Padre Island for $275, 000.00 to cover their expenses. Linda also decided to suspend the Clinic's payment of salaries to the Millers and other family members who were on the Clinic's payroll because the Clinic's income decreased during Terry's absence.

         The Clinic's long-time office manager, Geralyn Hall, made the primary decisions concerning the daily management of the Clinic's five locations while Terry was recovering. At some point, Terry gave Hall a financial power of attorney that authorized Hall to access the Millers' real estate account and to conduct financial transactions relating to the Millers' real estate holdings. Terry also instructed Hall to not pay the rental obligations of clinics that were leasing property from BTM Medical Properties, which was solely owned by the Millers, but to continue paying the rental obligations of clinics that were leasing property that was independently owned or jointly owned with others.

         Linda, overwhelmed by the demands of caring for Terry and their increasingly deteriorating relationship, attempted suicide. Shortly after that, in July 2012, Linda filed for divorce.

         Prior to trial, Kott was indicted for misappropriating funds from a former employer. Bar Seven was then reorganized as Cactus Creek, LLC, and Kott was removed as manager. Despite the indictment, Terry continued to trust Kott with the management of MK Developers.

         A non-jury trial was held over twelve days spanning nearly year-from June 3, 2015, to May 18, 2016-during which time changes in the community estate required that valuations be updated and proposed property divisions be revised. On December 20, 2016, the trial court signed the final decree of divorce. Terry filed a motion for new trial. After a hearing, the motion was denied by written order.

         At Terry's request, the trial court filed findings of fact and conclusions of law. In its findings, the trial court took into consideration the following factors in making its determination of a just and right division of the community estate:

A.[Linda] has little or no future earning capacity. When she did work during the marriage, she worked in the office of [Terry].
B. [Linda] suffers from severe depression. Shortly before filing the divorce, [Linda] purposely overdosed on pills and then called for medical assistance.
C.[Linda] appeared frail and meek throughout the trial.
D.[Linda] was age 69 at the time of [sic] the divorce was granted.
E.[Terry] was an obstructionist during the discovery process. He failed to follow Court orders and his conduct delayed and prolonged the trial of this case.
F. At times during the divorce, [Terry] failed to pay Court ordered temporary support to [Linda]. For a period during the pendency of the divorce, [Terry] permitted his office to discontinue health insurance on [Linda].
G.During the pendency of the divorce, [Terry] gifted airline miles to his children and employees without the knowledge or consent of [Linda].
H. [Terry] is a licensed and practicing physician. He has the ability to continue to earn a substantial income post[-]divorce. During the divorce, even when [Terry] did not work full time, his clinics generated substantial income, and they should continue to do so in the future.
I. The property was divided in a manner so as to keep [Terry's] medical practice intact. [Terry] was awarded the real estate where his clinics operate so as not to disturb his practice or to require him to either negotiate leases with [Linda] or move his clinics to new locations.
J. The property was divided in a manner so that [Terry] was awarded the property that was jointly owned with others.
* * *
P. [Linda] was reluctant to enter into business deals where large sums of money were owed and felt pressured by [Terry] to sign personal guarantees.
Q. [Linda] was primarily awarded property with little risk, such as cash and retirement accounts.
R. [Terry] was awarded the property with mortgages. [Terry] has the income and earning potential to service the debt associated with the property awarded to him without having to deplete his assets.
S. [Terry] has the business experience to actively participate in decisions regarding property jointly owned with others.

         The trial court also found that Terry committed fraud on the community and reconstituted the community estate based on the following considerations:

[Terry] committed actual or constructive fraud on the community. The Court further finds that the community estate should be reconstituted to the value that would exist if an actual or constructive fraud had not occurred. The Court further finds that value owed to the community estate is $189, 672.34. The Court reduced the value of the reconstituted estate to $189, 672.34. [Terry] had use and control of $476, 016.59 in cash during the pendency of the divorce. This cash, which was generated by community assets, was acquired and spent by [Terry] without the knowledge or consent of [Linda]. In reducing the value of the reconstituted estate, the Court considered payments by [Terry] for his medical bills, the cost of his care by Visiting Angels, preservation of the community estate, and remodeling of community property.

         The court determined that the value of the community estate was $7, 621, 044.80. The court awarded 49.28% ($3, 755, 571.40) of the community estate to Linda, and 50.72% ($3, 865, 473.40) to Terry.

         Terry appealed the trial court's judgment to the Austin Court of Appeals, and the case was transferred to this court.[1]

         II. Standard of Review

         In a divorce, the trial court divides the estate of the parties "in a manner that the court deems just and right." Tex. Fam. Code § 7.001. On appeal, we review the trial court's division of community property for an abuse of discretion. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981); Iliff v. Iliff, 339 S.W.3d 126, 133 (Tex. App.-Austin 2009), aff'd, 339 S.W.3d 74 (Tex. 2011); Knight v. Knight, 301 S.W.3d 723, 728 (Tex. App.-Houston [14th Dist.] 2009, no pet.). Legal and factual sufficiency are relevant factors, rather than independent bases for reversal, in determining whether the trial court abused its discretion. Iliff, 339 S.W.3d at 134.

         A trial court's division may take into consideration a variety of factors in making a just and right division of property. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998); Murff, 615 S.W.2d at 799. Every reasonable presumption should be resolved in favor of the trial court's proper exercise of its discretion in dividing the parties' property. Zieba v. Martin, 928 S.W.2d 782, 791 (Tex. App.-Houston [14th Dist.] 1996, no writ). In making the determination of a just and right division, the trial court is the sole judge of the witnesses' credibility and the weight to be given their testimony. Iliff, 339 S.W.3d at 138 (citing McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986)). The trial court is free to accept or reject the testimony of each witness in whole or in part and to resolve any inconsistencies in the testimony. Id.

         To disturb a trial court's division of property, the appellant must show that the trial court clearly abused its discretion by making a division that is manifestly unfair. See, e.g., O'Carolan v. Hopper, 414 S.W.3d 288, 311 (Tex. App.-Austin 2013, no pet.); Evans v. Evans, 14 S.W.3d 343, 345-46 (Tex. App.-Houston [14th Dist.] 2000, no pet.). The trial court's ultimate division need not be equal as long as it is equitable. O'Carolan, 414 S.W.3d at 311. The trial court does not abuse its discretion when it bases its decision on conflicting ...

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