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Mason v. Mason

Court of Appeals of Texas, Third District, Austin

May 3, 2019

Jeffrey Benjamin Mason, Appellant
v.
Keri Cotterman Mason, Appellee

          FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT NO. D-1-FM-16-001306, HONORABLE LORA LIVINGSTON, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Goodwin and Kelly

          MEMORANDUM OPINION

          CHARI L. KELLY, JUSTICE.

         Appellant Jeffrey Benjamin Mason appeals from the trial court's divorce decree awarding his former wife, Keri Cotterman Mason, a majority of the couple's community estate.[1] In ten issues, Jeff challenges the trial court's decision to reconstitute the community estate for certain "wasteful" expenditures and to reimburse the community estate for funds transferred to a limited liability company owned and operated by Jeff. For the reasons set forth below, we will affirm the trial court's judgment.

         BACKGROUND

         Jeff and Keri were married in 2010, and Keri filed an original petition for divorce in 2016. Keri subsequently amended her petition to assert claims for "waste and/or constructive fraud" and for reimbursement. The couple did not have children, and it is undisputed that before and during the marriage, Jeff was the sole member and manager of a limited liability company, 338 Industries, LLC. The final hearing before the trial court centered on property issues related to certain expenditures made by Jeff and on payments made by and to 338 Industries.

         At the conclusion of the hearing, the trial court signed a divorce decree that granted the divorce and awarded Keri a larger share of the community estate, 55% to Keri and 45% to Jeff. In dividing the estate, the trial court first granted Keri's constructive-fraud claim based on certain "wasteful" expenditures made by Jeff and, accordingly, reconstituted the community estate by adding $752, 324 to the community estate. The trial court also characterized 338 Industries, LLC as Jeff's separate property and reimbursed $283, 051 to the community estate from Jeff's separate estate for outstanding loans made to 338 Industries. Finally, the trial court awarded Keri her attorney's fees.

         Upon Jeff's request, the trial court issued findings of fact and conclusions of law. See Tex. R. Civ. P. 296. In five related and overlapping issues on appeal, Jeff challenges the trial court's findings of fact and conclusions of law related to Keri's constructive-fraud claim. In five additional issues, Jeff asserts that the evidence is insufficient to support the trial court's findings of fact and conclusions of law supporting Keri's reimbursement claim.

         STANDARD OF REVIEW

         A trial court in a divorce proceeding is charged with ordering a division of the community estate in a manner that the court deems "just and right, having due regard for the rights of each party." See Tex. Fam. Code § 7.001. The trial court does not have to divide the community property equally, but the division must be equitable and the record must reflect a reasonable basis for an unequal division of the property. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981); O'Carolan v. Hopper, 71 S.W.3d 529, 532 (Tex. App.-Austin 2002, no pet.). On appeal, we review the trial court's division of marital property for an abuse of discretion. Murff, 615 S.W.2d at 698. Because trial courts have wide latitude in evaluating claims for reimbursement, we also review a trial court's decision concerning a claim for reimbursement for an abuse of discretion. Penick v. Penick, 783 S.W.2d 194, 198 (Tex. 1998). A trial court abuses its discretion if it "'act[s] without reference to any guiding rules or principles,' such that its ruling [is] arbitrary or unreasonable." American Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006) (per curiam).

         In family-law cases, the abuse-of-discretion standard overlaps with traditional standards for reviewing the sufficiency of the evidence. See Zeifman v. Michels, 212 S.W.3d 582, 587 (Tex. App.-Austin 2006, pet. denied). Consequently, legal and factual insufficiency are not independent grounds of error but are relevant factors in assessing whether the trial court abused its discretion. Id. at 588. To determine whether there has been an abuse of discretion, we engage in a two-pronged inquiry, determining whether (1) the trial court had sufficient evidence upon which to exercise its discretion and (2) the trial court erred in its application of that discretion. Id. Traditional standards for legal- and factual-sufficiency review come into play with regard to the first question.[2] Id.

         In an appeal from a bench trial in which the trial court entered findings of fact, the trial court's findings have the same weight as a jury verdict. Hailey v. Hailey, 176 S.W.3d 374, 383 (Tex. App.-Houston [1st Dist.] 2004, no pet.). Because the trial court acts as the factfinder in a bench trial, the trial court is the "sole judge of the credibility of the witnesses and the weight to be given their testimony." McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986). The trial court may consider all the facts and circumstances in connection with the testimony of each witness and accept or reject all or part of that testimony; an appellate court may not substitute its judgment for the trial court's assessment of witnesses' testimony in a bench trial. Hailey, 176 S.W.3d at 383. The trial court does not abuse its discretion if it bases its decision on conflicting evidence or when evidence of a probative or substantive character exists to support the decision. Zeifman, 212 S.W.3d at 587. "The mere fact that a trial court decided an issue in a manner differently than an appellate court would under similar circumstances does not establish an abuse of discretion." Id.

         ANALYSIS

         Constructive Fraud

         We turn first to Jeff's issues concerning the trial court's determination that he wasted $752, 324 in "community resources" and its decision to reconstitute the community estate by this amount.

         "A fiduciary duty exists between a husband and a wife as to the community property controlled by each spouse." Zieba v. Martin, 928 S.W.2d 782, 789 (Tex. App.-Houston [14th Dist.] 1996, no writ); see Dyer v. Dyer, No 03-16-00753-CV, 2018 Tex.App. LEXIS 4380, at *18 (Tex. App.-Austin June 15, 2018, no pet.) (mem. op.) (quoting same). "Waste occurs when one spouse, dishonestly or purposefully with the intent to deceive, deprives the community estate of assets to the detriment of the other spouse." Giesler v. Giesler, No. 03-08-00734-CV, 2010 Tex.App. LEXIS 4401, at *10-11 (Tex. App.-Austin June 10, 2010, no pet.) (mem. op.) (citing Schlueter v. Schlueter, 975 S.W.2d 584, 588 (Tex. 1998)). "A presumption of 'constructive fraud,' i.e., waste, arises when one spouse disposes of the other spouse's interest in community property without the other's knowledge or consent." Puntarelli v. Peterson, 405 S.W.3d 131, 137-38 (Tex. App.-Houston [1st Dist.] 2013, no pet.); see Cantu v. Cantu, 556 S.W.3d 420, 427 (Tex. App.-Houston [14th Dist.] 2018, no pet.) (explaining that fraud is presumed whenever one spouse disposes of community property without other spouse's knowledge or consent). Once this presumption of fraud arises, the burden shifts to the disposing spouse to prove that the disposition of the community property was fair. Cantu, 556 S.W.3d at 427. When the trial court makes a finding of constructive fraud, it must perform two calculations: the first is the "value by which the community estate was ...


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