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Bennett v. Bennett

Court of Appeals of Texas, Ninth District

May 2, 2019


          Submitted on February 19, 2019

          On Appeal from the 418th District Court Montgomery County, Texas Trial Cause No. 15-05-04918-CV

          Before McKeithen, C.J., Kreger and Johnson, JJ.



         Bobby G. Bennett Jr. (Bobby) and Laura Merryman Bennett (Laura) were married in 1991. In 2015, Laura filed a petition for divorce, and Bobby filed a counter petition for divorce. A jury trial was conducted on the conservatorship of their children, and a bench trial was held on the terms of visitation, child support, and the division of the marital estate. The trial court signed a final decree of divorce and issued findings of fact and conclusions of law. The final decree of divorce stated that, in accordance with the jury verdict and the evidence, the trial court appointed Laura as sole managing conservator and Bobby as possessory conservator of the two children, ordered child support to be paid by Bobby, and made a division of the marital estate. On appeal, Bobby raises four issues challenging only the division of the marital estate. Bobby (1) contends the trial court abused its discretion in not excluding certain testimony from Laura's expert witness about fraud and waste of the community estate; (2) challenges the factual sufficiency of the evidence supporting the trial court's findings of fraud, breach of fiduciary duty, constructive fraud, and waste; (3) asserts the trial court abused its discretion in failing to make a just and right division of the community estate; and (4) argues the trial court abused its discretion by ordering Bobby to pay all attorney's fees.[1]

         Evidence from Bench Trial[2]

         Buddy Smith, an investigator with Child Protective Services (the "Department"), testified that after the docket call for the jury trial but the week prior to the jury trial beginning, Bobby called in a report to the Department, alleging neglectful supervision by Laura of their two children and Bobby said that Laura had suicidal tendencies. Smith testified that he met with Laura and the two children, the children made no outcries of abuse or neglect against Laura or their home environment, the children did not voice any concerns related to allegations of suicidal tendencies of Laura, Laura denied having suicidal tendencies, and Smith learned that Laura and Bobby were involved in a highly contested divorce and custody dispute that would soon go to trial. Smith's report and his testimony included statements that one of the children reported that Bobby had hit Laura in the past and that the police had twice been to the residence for welfare checks. According to Smith, he found no concerns with respect to the children. Smith, on behalf of the Department, notified Laura that the Department had investigated the allegations and concluded the alleged abuse or neglect did not occur, and the Department closed the investigation.

         Laura testified that she and Bobby were married in 1991 and separated in 2015. According to Laura, she petitioned for a divorce on the grounds of Bobby's cruel treatment toward her and because the marriage had become insupportable. According to Laura, during the pendency of the divorce she and the children were living in Tyler, Texas with her parents. At the time of trial, Laura had access to about $15, 000 in her bank account and all other assets were under Bobby's sole management and control. A spreadsheet of Laura's monthly expenses was admitted into evidence. Laura testified that she has a "business degree" from Baylor University, but she has not worked outside the home in over twenty years. Laura testified that at the time of trial she was unemployed and had not applied for a job, but she explained that she was trying to look for employment and was getting certified as a substitute teacher. According to Laura, she would like to buy or rent a home and she estimated that monthly rent or a mortgage payment would cost $2, 500 per month.

         Laura hired Mike Stocker as her attorney in May of 2015 to represent her in the divorce proceeding. She testified that she was requesting the trial court order the payment of the balance of Stocker's attorney's fees as part of the division of the marital estate. According to Laura, she recently learned that Bobby had prepaid some taxes on The Woodlands residence that Bobby lived in without consulting her. Laura requested that she be awarded The Woodlands residence so that she could sell it and buy a home in Tyler. Laura also testified that she wanted the trial court to award her their vacant lot in Tyler that they own free and clear so that she could sell it and apply the proceeds to a new home. Laura testified that sometime after the jury verdict in the custody case she learned about a Renasant Bank account ending in 7668 on which her husband was a signatory along with his father. Laura also testified that Bobby did not consult with her before he decided to liquidate the children's 529 education accounts and that now the children do not have those funds available for college.

         Bobby testified that he is an anesthesiologist and he has been in private practice since 1992. According to Bobby, the family moved to Tyler in 1994 mainly because Laura wanted to live there. Bobby testified that he worked at a hospital in Tyler until 2005, when his physician group was replaced by the hospital. Bobby testified that because the family had just built a million-dollar home in Tyler and Laura would not leave Tyler, Bobby commuted to work in Longview. After six years of commuting, and because of Bobby's strained relationship with administration at the Longview hospital and his desire to work closer to home, Bobby accepted a job in "pain work" in Tyler. Bobby testified that he eventually believed working in Tyler was no longer in his family's best interest and the family moved to The Woodlands where Bobby found employment. According to Bobby, The Woodlands job provided a good income and was a "semiretirement position[]" because he was not required to be on call, and although the job limited his ability to make a lateral transfer to jobs in other cities, he thought he would have more time for his family.

         Bobby testified that he knew Laura did not want to move from Tyler, that after the move to The Woodlands Laura became hostile, and that they separated in 2015. Bobby's counter-petition sought a divorce on grounds of irreconcilable differences and Laura's cruel treatment towards Bobby. According to Bobby, he alleged cruel treatment by Laura as grounds for divorce based on Laura's being "very demeaning to [Bobby] [and] very demanding upon [Bobby]" and "discontent, . . . entitled, . . . [and] insulting."

         Bobby testified that, as of the time of trial, he was "[d]evasted" financially and the divorce "has cost total nearly $2 million." According to Bobby,

[a]ll of my kids' college education money is gone except that money which I've given to Laura's mother that's being used for high school that came from me, not from her mother, and then all of most of my retirement, a good portion of my retirement is gone. All of my emergency savings is gone.

         According to Bobby, despite his attempts during the divorce, he has been unable to find comparable employment in Tyler.

         Bobby testified that his lawyers instructed him that he could use investment money for case expenses. Bobby believed liquidating the 529 education accounts had the least tax consequences over other investments, and that is why he chose to liquidate the $184, 000 in one account in October 2015 and the $157, 000 in the other account in April or May of 2016 to pay his attorney's fees and expenses for the case. Bobby testified that in October 2015 he also cashed out a combined $44, 000 out of two Uniform Gift to Minors Act accounts that were savings accounts for his children because he wanted "[t]o prevent Laura from potentially getting access to those funds." According to Bobby, he initially kept the funds in the form of a check "for emergency in [his] safe" but later deposited the check into his operating account to pay bills once the trial court ordered all assets frozen and "all [Bobby's] expenses were three and four times" his monthly income. Bobby testified that during the pendency of the divorce he was making $14, 865 per month after taxes and paying $6, 137 for spouse and child support and court fees, and that his monthly expenses were close to $23, 000 per month. According to Bobby, the only way he could pay the $1.2 million in attorney's fees and expenses for the case without liquidating other retirement sources was to liquidate the 529 accounts, which had the least tax consequence, and withdraw $350, 000 out of his IRA, which was profit from the sale of the Tyler home and a non-taxable amount. Bobby testified that he did not try to hide money from Laura and that he believes his spending has been fair and it was allowed by the standing orders. Bobby agreed that on the day of the temporary order hearing, he took out a $200, 000 line of credit on the Tyler home and he sent the money in the form of a cashier's check to his mother in Tupelo, Mississippi. He later had his mother mail him the check that he then deposited into his own bank account, and when the Tyler home sold per the court's order, Bobby paid the line of credit off with the proceeds from the sale of the Tyler home. Bobby also testified that he spent money to pay "Vidoc Razor" to try to get access to his wife's phone because the passwords he had would not work.

         Stewart Gagnon testified that he is a lawyer and of counsel to the law firm of Norton Rose Fulbright, U.S., L.L.P. and a former partner of the firm. According to Gagnon he has been a licensed practicing attorney since 1974, and he is certified with the Texas Board of Legal Specialization in family law. Gagnon testified he has "written extensively" on "the characterization of marital property in the state of Texas, reimbursement as it relates to marital property in the state of Texas and various elements of reimbursement [such as] reconstitution of the estate that has since become part of our family code[.]" According to Gagnon, he has "written extensively both [for][] the Advanced Family Law Course, the Marriage Dissolution Course, New Frontiers of Marital Property, which [he] ha[s] spoken at several times, as well as several programs at the American Academy of Matrimonial Lawyers." Gagnon testified that he was the chair of the Family Law Section Legislative Committee for eighteen years and appeared before the legislature and lobbied on behalf of the Family Law Section for and against legislation. Gagnon testified that "[o]ne of those legislations was Section 7.009 of the Family Code, which allows the Court, upon a finding of waste, to reconstitute the marital estate in order to divide it appropriately." Gagnon explained he has lectured and written about matters related to breach of fiduciary duty and to various aspects of actual and constructive fraud in family law cases. According to Gagnon, he and two other attorneys wrote a three-volume treatise on Texas marital property law that is published by Reuters and West Publication.

         Gagnon testified that the legal definition of "waste" in a family law case is "the unreasonable use by a spouse in a harmful or destructive manner of a marital estate so that it changes or diminishes the value of that estate at a point in time." According to Gagnon, Bobby produced documents after the jury verdict in the custody case that revealed Bobby had an out-of-state Renasant bank account with his father. Bobby had deposited funds from a line of credit into this account and obtained a cashier's check, and the account had not been listed on any of Bobby's prior inventories that Bobby had submitted in the divorce. Gagnon testified that a temporary order agreed to by the parties had been entered on August 20, 2015, and that in the agreed temporary order Bobby agreed to the appointment of Laura as sole managing conservator and that Bobby would have supervised visits with their children. According to Gagnon, for purposes of his testimony regarding Laura's waste claim, Gagnon focused on the time of August 2015 until shortly before trial and that $988, 602.86 of Bobby's own litigation-related expenses were paid by Bobby from the community estate during that period. Gagnon testified that he reviewed the trial judge's order in which the judge ordered the parties not to receive or pay any additional fees or pay any additional legal expenses from the community estate. Gagnon testified that based on his review of Bobby's inventories, he concluded that even after the judge's order telling Bobby not to do so, Bobby liquidated the children's 529 accounts and used the funds to pay his own legal fees in violation of the order. Gagnon testified that these actions by Bobby "required additional work on behalf of both parties and additional fees on behalf of both parties [that] led to a subsequent fallback of those funds back into the marital estate at least for a time period[.]"According to Gagnon, the money in the 529 accounts was not Bobby's but was instead money solely in the children's names that was gifted to them. Gagnon also testified that Bobby violated the court's order when he made an August 18, 2016 payment of $10, 045 to Dr. Seth Silverman, Bobby's retained expert witness who did not testify at trial.

         Gagnon testified that he reviewed documents related to the litigation expenses and Petitioner's Exhibit 81, which he described as an accounting of the litigation and litigation-related expenses involved in the divorce case. Gagnon explained that Petitioner's Exhibit 81 was prepared by Stewart & Hurst, a forensic accounting firm retained by Laura that, among other things, does marital property forensic accounting and tracing for divorce cases. Petitioner's Exhibit 81 listed the total divorce-related payments at $1, 226, 455.97, as of October 25, 2016. Gagnon testified that, based on his review of Petitioner's Exhibit 81, Bobby had retained and paid more than $5, 000 to an ad litem or amicus attorney for the children in the custody case. According to Gagnon, this relates to Laura's waste claim because Bobby had no legal authority to retain and pay an ad litem because (1) under the temporary orders he was not sole managing conservator of the children and lacked the authority to contract or employ people on their behalf and (2) it is only the trial court who can appoint someone to act on behalf of the children as an attorney or ad litem. On direct examination, Gagnon also testified:

Q. Are you aware of the witnesses and the cost associated with witnesses subpoenaed by Dr. Bennett for purposes of the jury trial, just the child custody issues?
A. Well, my understanding is he subpoenaed a significant number of witnesses including a lot of witnesses well outside the subpoena range of this court and then withdrew those subpoenas.
Q. Are you aware of the cost, the expenditure by the community estate for the issuing of those subpoenas?
A. I have seen those subpoenas.
Q. . . . [L]ook at Petitioner's Exhibit 81[.]
A. Okay. I have it.
Q. . . . Items 1 through 39 . . . what if anything is waste and/or attorney fees issues, in your opinion?
A. Again, after August -- end of August of 2015, Dr. Bennet's continued insistence regarding the custody of his children caused additional fees to be incurred on behalf of both Ms. Bennett and the marital estate. For example, Kit Harrison was paid $8, 000.00 on September 9th. If Dr. Bennett had not pursued unreasonably that custody determination all the way through a jury trial where he didn't testify, those expenses for Dr. Harrison would not have been necessary.
Q. . . . Line items 40 through and including 79.
A. . . . There is $10, 000 to Ruth Vernier. $10, 000 to Seth Silverman, who was engaged by Dr. Bennett as an expert witness but then never until on the eve of trial provided any disclosure under Rule 194 as to his opinions or conclusions or what he had considered and then never testified.
Q. Was Dr. Seth Silverman a retained expert?
A. Yes. In fact, it was noted as such.
Q. All right. The disclosure you just mentioned, that came literally, like, within a few days of the . . . jury selection, didn't it?
A. That's correct.
Q. Well after the August 18th[] discovery cutoff for purposes of the trial?
A. That is exactly right.
Q. So did Dr. Seth Silverman add anything to this case?
A. No. But again, that was a habit of Dr. Bennett of designating expert witnesses and then never even using them or engaging in a lot of money and never using them, and there ...

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