Court of Appeals of Texas, Third District, Austin
THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
NO. D-1-FM-16-001306, HONORABLE LORA LIVINGSTON, JUDGE
Chief Justice Rose, Justices Goodwin and Kelly
L. KELLY, JUSTICE.
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. 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
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.
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
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
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).
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. Id.
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
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.
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 ...