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Gray's Interesting Cases for May, 2008

Updated and presented by Sallee S. Smyth
  1. Chu v. Hong, 2008 Tex. LEXIS 225, 51 Tex. Sup. J 636 (Tex., March 28, 2008) (Cause No. 06-0127)

    Husband and Wife met and married in Korea but returned to live in Texas. In 1997 they bought a donut shop. A year later, in the midst of marital difficulties which included a criminal assault by husband against wife, they both signed a contract to sell the donut shop for $180,000 to the Kims. The closing date came and went with no action and the Kims stopped payment on their downpayment check. Wife drafted a demand letter that husband signed and the Kims hired attorney Chu who countered with a demand for performance under the contract for sale. Husband agreed to close and represented that he was the lawful owner and had full authority to sell. The Kims paid husband $180,000 for the donut shop which he later wired to his parents in Korea. He then filed for divorce. Wife counterclaimed for fraud and joined the Kims and their attorney Chu, suing them for conversion and conspiracy. Husband was eventually deported upon conviction for criminal assault. Five years later the divorce and fraud case was tried. Chu represented himself and the Kims. A jury found in favor of Wife and the trial court declared the shop sale void, order the Kims to surrender the premises to Wife, assessed fees against husband, assessed lost profits of about $250,000 against Chu and the Kims, punitive damages against the Kims for $20,000 and against Chu, their attorney, for $1.5 million. The Kims filed for bankruptcy and only Chu appealed. Chu was found liable for converting Wife’s property but the only property he received were the legal fee for the services he had provided to his own clients the Kims which they had paid.

    The Supreme Court noted that conspiracy is a derivative tort, but no one objected when the issue was submitted to the jury without conditioning it on any other tort finding. As such, the court held that the verdict can support a judgment if there is some evidence of a conspiracy to commit any of the three other torts in the case: fraudulent transfer, conversion or breach of fiduciary duty. Although the jury found the husband guilty of these torts, no judgment was entered against him because the torts do not exist under the decision of Schlueter v. Schlueter. The Wife argued that torts against the community can be lodged against third parties however the question presented here was whether a third party can be held liable in tort when the community property is taken by one of the spouses instead of the third party. The court questioned under what theory a co-conspirator could be held liable for tort and punitive damages if the spouse could not be held liable, determining that if the husband could only be required to return the property or the division of community property adjusted, the liability of the co-conspirator should be the same. The court refused to carve out an exception making the decision in Schlueter subject to the Uniform Fraudulent Transfer Act. Because wife had no tort claim against her former husband under Texas community property laws, she likewise has no claim against Chu, the attorney, for conspiring in such a tort.

  2. In re Samford, 2008 Tex. LEXIS 2278 (Tex. App. – Texarkana, March 28, 2008) (Cause No. 06-08-24-CV) (original proceeding)

    This opinion results from the third appeal involving the parents in this case. In the previous case, mom appealed from a default judgment granting dad custody. Mom’s pleadings had been struck for bad behavior yet mom maintained that she nevertheless was entitled to a jury trial on the issue of custody. The Texarkana court agreed in In re A.S., 241 S.W.3d 661 (Tex. App. – Texarkana 2007, no pet.) (reported in January 2008 interesting case summaries), determining that dad had to prove his case to a jury and remanded the case for further proceedings. On remand, the dad amended his pleadings and sought a change in certain rights and a modification of periods of possession, asking that the child be with him during the school week. The trial court took the case off the jury docket over mom’s objection. Mom filed this mandamus.

    The court concluded the substance of the pleadings was determinative of a parties’ right to trial by jury and because dad’s pleading did not seek a change of joint managing conservatorship or a change in the right to establish or the location of domicile, mom was not entitled to a jury.

  3. In re Sartain, 2008 Tex. LEXIS 2459 (Tex. App. – Houston [1st Dist.], April 3, 2008) (Cause No. 01-07-920-CV) (original proceeding)

    Mom filed a motion to modify and dad sought temporary orders including interim attorneys fees. The associate judge awarded fees and mom appealed to the presiding judge. The trial court held a non-evidentiary hearing at which dad’s attorney argued in support of a request for interim fees between $35,000 and $40,000. The trial court issued temporary orders awarding $20,000 in fees, stating that they were necessary for dad’s attorney to conduct discovery and prepare for trial to protect the best interest of the child. Mom sought mandamus. The court noted that while TFC §105.001(a)(5) permits the award of fees for the safety and welfare of the child but that fees awarded for any other reason were not authorized, citing a prior decision in Saxton v. Daggett, 864 S.W.2d 729 (Tex. App. – Houston [1st Dist.] 1993, no writ).

    Ultimately the COA determined that because the court did not conduct an evidentiary hearing, the court could not have heard any evidence that the fees were necessary for the safety and welfare of the child. Further, the court noted that awarding interim fees in a case is not authorized based on a claim that one party is in a better position to afford and pay for them.

  4. Caro v. Lewis-Caro, 2008 Tex. LEXIS 2500 (Tex. App. – San Antonio, April 9, 2008) (Cause No. 04-07-759-CV)

    David and Vivien married. Prior to the marriage, David owned a 59+ acre tract of land. During the marriage, David and Vivien obtained a community property loan secured by the land. When David died, Vivien and David’s parents, the Caros, each inherited a 50% interest in the land which was David’s separate property. Vivien was solely responsible for the community property debt. Vivien used her separate property to pay off the loan and the lien against the property was released. Vivien sued the Caros for reimbursement and the trial could found she was entitled to it. On appeal the Caros contend that economic contribution, not reimbursement, was the property remedy because TFC §3.408 (reimbursement statute) permits recovery for the payment of unsecured liabilities by one marital estate for another and since the loan was secured, reimbursement did not apply.

    The COA found that because payment of secured claims was not excluded from the list in Section 3.408, Vivien’s claim for reimbursement was appropriate. The court further noted that these claims under the Family Code also applied to cases which settled the estate of a deceased spouse. (214 S.W.3d 196) Nevertheless, the COA found that Vivien had failed to establish the elements of reimbursement, noting that Vivien used her s/p to contribute to the community estate by paying a community debt, that her s/p interest in the land received a quid pro quo from a release of the lien and further that the Caros had not been unjustly enriched because payment of the community debt was always Vivien’s sole liability. Finally, even if she had proven the required elements, the court awarded reimbursement based on the dollar amount of the loan that was repaid instead of enhancement value which was also error. Reversed and rendered.

  5. In re Burk, 2008 Tex. LEXIS 2538 (Tex. App. – Houston [14th Dist.], April 10, 2008) (Cause No. 14-08-65-CV) (original proceeding)

    Husband and wife married in Colorado and lived there for almost 2 years before moving to Waco, Texas where their first child was born on April 30, 2007. The child resided with both parents in Waco until mid July when dad moved to Houston for employment and mom relocated with the child to her parents home in Colorado. Mom filed a custody suit in Colorado on September 29, 2007. Dad filed for divorce in Harris County, Texas on October 12, 2008 which included a SAPCR. Mom filed a plea to the jurisdiction in the Texas action claiming that the child, who was less than six months old, had no home state under the statutory definition and based on significant connection jurisdiction in Colorado where suit was first filed, Texas had no subject matter jurisdiction. The Texas court disagreed and found Texas to be the child’s home state. Mom sought mandamus relief. Mom argued that because the definition of home state for a child less than 6 months old is “the state in which the child has lived with a parent or parents from birth,” the baby had no home state because from birth, she had not lived in one single state (“the state”), but had lived in Texas for 3 months with a parent and Colorado for 3 months with a parent. Dad argued that because she had lived in Texas first and that this residence occurred within 6 months of the date suit was filed on October 12, 2007 and Dad remained in Texas, Texas could exercise home state jurisdiction under TFC §152.201(a)(1) which provides that Texas has jurisdiction to make an initial child custody determination if it was the home state within six months before commencement of the proceeding and the child is absent from Texas but a parent continues to live in Texas.

    Recognizing that there were no other appellate decisions on this point, the COA agreed with Dad and avoided construction of the “home state” definition for a child under 6 months as provided in TFC §152.102(7).

    Comment: This was my case and I represented the mom. Although I still believe I am on the right side of the issue, I ended upon on the wrong side of the decision. Mandamus was also filed in the Texas Supreme Court but that has already been denied so this opinion currently stands at the law.

  6. Llorance v. Sohi, 2008 Tex. LEXIS 2797 (Tex. App. – Houston [1st Dist.], April 17, 2008) (Cause No. 01-07-840-CV) (Memorandum Opinion)

    By agreed order in 2004, Dad was adjudicated as father, Mom was appointed SMC and Dad as PC. Dad received supervised possession until the child’s 5th birthday and was scheduled to begin an SPO in summer 2008. In March 2006 Dad filed for modification to an SPO and a decrease in child support. Mom countered with a request for more support. The case was tried before an arbitrator in August 2007. Dad appeared with counsel. Mom did not appear. In a default order the parties were appointed JMC, Mom retained rights of domicile, Dad received and SPO and his support was increased. Mom did not file a motion for new trial but instead filed a pro se notice of appeal. In the notice she admitted that she had received notice of the arbitration hearing but could not come because she was attending to a medical situation involving the child. She claimed to have called the arbitrator about the situation but received no response from him. She wrote the arbitrator and provided proof of the hospital visit.

    Despite her valid excuse, the COA noted that when extrinsic evidence is necessary to challenge a default judgment, a motion for new trial is a prerequisite to a complaint on appeal that it should be set aside. While the notice of appeal (filed within 30 days of the judgment) contained come of the required elements of Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939) it did not contain all of them and therefore it could not be construed as a proper motion for new trial. Judgment was affirmed.

  7. In re Skero, 2008 Tex. App. LEXIS 3181 (Tex. App. – Beaumont, May 1, 2008) (orig. proceeding) (Cause No. 09-08-171-CV)

    Skero seeks habeas corpus relief from an order of contempt which found that he had violated the terms of a family violence protective order requiring him to file an affidavit proving he had started anger management classes and to pay attorneys fees. Skero challenged the portion of the contempt order incarcerating him for failure to pay attorneys fees, claiming the order constituted imprisonment for debt.

    The COA analyzed TFC Chapter 81 authority for awarding and enforcing attorneys fees in protective order cases. The COA found that the legislature intended for attorneys fees to be assessed as costs and further that they should be enforceable. In examining the constitutional implications, the COA noted that a family violence protective order, including the assessment of attorneys fees, enforces a legal duty not a private agreement or contract between parties. In this situation, the fees are incidental to and in the same nature as the protective order itself which is necessary to protect a spouse or children and therefore does not violate Art. 1, section 18 of the Texas Constitution.