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Gray's Interesting Cases for June, 2009

Updated and presented by Sallee S. Smyth
  1. In re Casey, 2009 Tex. App. LEXIS 2997 (Tex. App. – Houston [1st Dist.] April 30, 2009) (Cause No. 01-08-928-CV) (orig. proceeding) (mem. opinion)

    H was held in contempt and given a suspended sentence for failure to pay child support. At the first compliance hearing the court recessed and ordered H to return one month later and issued orders for H’s compliance until the next hearing. At the second compliance hearing the court reduced the arrearage amounts for child support and medical support to judgment and ordered H to make monthly payments on these judgments as well as pay part of W’s attorney fees from original contempt hearing all prior to a third compliance hearing which was set some four months later. At the third compliance hearing the court heard evidence regarding H’s failure to comply. The trial court did not admonish H of his right to counsel. The court committed H to jail to serve his sentence. H filed a writ of habeas corpus.

    The COA held that when one possible outcome of a compliance hearing is a party’s incarceration, the trial court is obligated to admonish the party of their right to counsel pursuant to TFC§157.163(b) and the failure to do so results in a denial of due process and a party is entitled to their unconditional release from jail.

  2. Watson v. Watson, 2009 Tex. App. LEXIS 3040 (Tex. App. – Fort Worth April 30, 2009) (Cause No. 02-08-365-CV)

    SAME SONG … 10,000TH VERSE …

    H and W married in 1992. H and W both filed for divorce in late 2007 and these cases were consolidated. In January 2008 H failed to appear for a temporary hearing and the AJ issued several interim awards for spousal support and interim attorneys fees. Final trial took place in March 2008 and H again failed to appear. W offered minimal testimony in support of a property division as contained in a final decree which was submitted to the court for signature. Her testimony generally recited that each party should be awarded the property in their possession and that she generally wanted H to pay her attorneys fees. The only exhibit offered by W at trial was a letter and proof of receipt sent to H notifying him of the trial date. The trial court signed W’s proposed decree which included provisions confirming W’s separate property; awarding W all property in her possession as well as a percentage of certain property in H’s possession which included H’s retirement accounts; awarding W a $15,000 judgment; ordering H to pay spousal maintenance; awarding W a judgment for past due maintenance; and awarding W a $5,000 judgment for attorney’s fees and additional fees on appeal. H filed a restricted appeal.

    The COA held that in the absence of any evidence regarding the size or nature of the community estate, the value or extent of W’s separate property, the basis for a disproportionate award, W’s eligibility for post-divorce maintenance and the reasonableness or necessity of attorneys fees, the trial court erred in all respects except the granting of a divorce. The COA affirmed the divorce and remanded all issues back to the trial court with the exception of spousal maintenance on which the COA rendered a take nothing judgment because W offered no evidence to support her eligibility and no evidence to overcome the presumption against such an award.

    COMMENT: Once again an attorney fails to put on sufficient evidence to support a default judgment for the division of property. Shame on all attorneys who continue to treat a default divorce proceeding in the same manner that they handle an uncontested, agreed prove-up! When will we ever learn?

  3. Beck v. The Law Offices of Edwin J. Terry, Jr. et al, 2009 Tex. App. LEXIS 2994 (Tex. App. – Austin May 1, 2009) (Cause No. 03-07-635-CV)

    H initially hired a Dallas family law firm to represent him in a Travis County divorce proceeding. Thereafter he retained Attorney Terry and his associates located in Austin. The primary contested issues involved the characterization and valuation of stock in three Texas corporations formed during marriage which were wholly owned, directly or indirectly, by H. H claimed that when he hired the attorney he directed him to proceed with an appropriate summary judgment motion on his claim that the stock in the companies was his separate property based on a tracing theory devised by one of H’s experts. The motion was filed and W filed a response challenging H’s theory and filed a cross-motion requesting a community property characterization and asserting alter ego. The trial court denied both motions. Prior to mediation W amended her pleadings and joined the corporations as third-party defendants, pleading alter ego, fraud on the community and reimbursement claims.

    Mediation occurred over two days. Attorney Terry attended mediation with H on the first day. Attorney Terry was joined by Attorney Hays on the second day. H and W agreed to a 57/43 split which conceded that the corporations were community property. H agreed to an owelty note of approximately $500,000 to W, secured by a lien on all real property owned by the corporations with a promise to obtain consent from the superior lienholders to the same real property. A mediated settlement agreement was executed by all parties and H signed in both his individual capacity and as president of the third party defendant corporations. The parties proved up a divorce later that same day. H testified that he fully understood the agreement. The court rendered a divorce and approved the agreement.

    Thereafter efforts to finalize the divorce and agree upon all the closing documents became a lengthy and contentious process. H received advice from an independent accountant that the settlement structure was unworkable because of the impact it would have on his corporations. H and his attorney were sanctioned for failing to meet certain deadlines in the MSA relating to entry of a decree. The parties went to arbitration over terms of the decree as required by the MSA but eventually these disputes were resolved by the trial court and a decree was signed in May 2002. After threats of contempt, H signed the closing documents in June 2002. In July 2004 H sued the original Dallas attorneys for professional negligence, breach of fiduciary duty, DTPA claims and breach of contract. These claims were eventually settled.

    In August 2004 H amended and asserted these causes of action against Attorney Terry and his associates. H’s corporations also joined the suit as plaintiffs. H’s primary complaint was that the Terry Defendants advised or permitted him to include his corporate stock and corporate assets in the property division thereby causing injury to the corporations. In the trial court and on appeal, H relied primarily on allegations that Attorney Terry suffered from alcoholism and substance abuse while representing H in the divorce and that this resulted in Attorney Terry’s failure to exercise a reasonable standard of care in providing legal services. H further asserted that Terry’s associates all knew of Terry’s condition and failed to disclose this to H which violated their duty of ordinary care, breached their fiduciary obligations to H and was actionable under the DTPA. H claimed that the Terry Defendant’s failed to advise him that a conflict of interest existed between his personal interests and the corporate interests. Finally, H claimed that there had been a breach of the terms of his employment contract with the Terry Defendants which H claimed required the Terry Defendants to agree to language in a final decree before finalizing any settlement. The Terry Defendants moved for traditional summary judgment on three grounds: (1) that the breach of fiduciary duty, DTPA and breach of contract claims were all components of a “fractured” professional negligence claim and could not stand on their own merit as independent causes of action; (2) that the settlement provision of the employment agreement forming the basis of the breach of contract claim was an unenforceable promise and (3) the professional negligence and DTPA claims were barred by statute of limitations. H responded to the summary judgment motion, including evidence supporting his claim that Attorney Terry had alcohol and substance abuse addictions during the period of time that he represented H. The trial court granted the summary judgment as to the breach of fiduciary duty claim, the DTPA claim and the breach of contract claim. The trial court denied summary judgment as to the professional negligence claim which proceeded to trial before a jury. Prior to trial Attorney Terry died and his estate was substituted as a party. At trial, the court excluded evidence relating to Attorney Terry’s alleged alcohol and drug issues, determining that its probative value was outweighed by the danger of unfair prejudice per TRD 403. The jury answered “No” to the question of liability and therefore they did not reach the damage question. The trial court rendered a take nothing judgment and H appealed.

    The COA affirmed. The rule against “fracturing” professional negligence claims against attorneys prevents cases based on bad advice or improper representation from being split into separate claims for negligence, breach of contract, fraud or any other non-negligence theory because the real issue remains one of whether the professional exercised that degree of care, skill and diligence that professionals or ordinary skill and knowledge commonly possess and exercise. While the rule does not prevent clients from suing the attorney for non-negligence claims, these claims must be separate and distinct from a legal malpractice claim and cannot relate to an overall complaint that the attorney did not provide adequate legal representation. The COA noted that an independent breach of fiduciary claim between lawyer and client would focus on whether the attorney received an improper benefit from representing the client while a negligence claim would focus on whether the attorney represented the client with a requisite level of skill. The COA determined that any misrepresentation or failure to disclose Attorney Terry’s impairment implicated only the lawyer’s duty to exercise ordinary care and was not independently actionable as a tort claim.

    Further, the fact that the Terry Defendants had an expectation of fees for their continued representation of H did not convert the negligence claim into a breach of fiduciary duty claim. The COA also held that H’s complaint about the attorney’s failure to recognize or disclose a potential conflict of interest between H’s individual interests and the interest of the corporations also sounded in negligence and could not be fractured as a separate claim. The COA also held that provisions of the attorney employment contract which favored settlement only after the decree had been prepared and signed was too indefinite to be enforceable as a binding contractual promise. Finally, the COA affirmed the trial court’s decision to exclude evidence of Attorney Terry’s alcohol and substance abuse problems determining that the evidence did not prove that Terry was actually impaired by alcohol or drugs at the time of the mediation which was the pivotal event in the divorce proceeding. The judgment was affirmed.

  4. Chrisman v. Chrisman, 2009 Tex. App. LEXIS 3195 (Tex. App. – El Paso May 6, 2009) (Cause No. 08-06-337-CV)

    H filed for divorce. An answer and counter-petition was filed on W’s behalf by an attorney. Subsequently the court entered a final decree on no-fault grounds, divided the parties’ property, awarded W spousal maintenance for ten months and awarded W attorneys fees. W appealed without a record. Her sole issue on appeal was that she was denied the effective assistance of counsel in the divorce proceeding.

    The COA acknowledged that no Texas court has ever determined that a party to a divorce proceeding has a constitutional right to effective assistance of counsel (unless termination, involuntary commitment or contempt actions are also involved) and the COA declined to do so now. Judgment affirmed.

  5. Mallory v. Mallory, 2009 Tex. App. LEXIS 3216 (Tex. App. – Houston [14th Dist.] May 7, 2009) (Cause No. 14-06-1009-CV) (mem. opinion)

    H and W divorced in 1991. H was ordered to pay child support. In 2006 the AG moved to confirm child support arrearages. H was served and he filed an answer. The AG sent notice to H that a hearing had been scheduled for a date certain. The notice did not contain any detail as to what would occur at the hearing or what motion had been set for hearing, only that a hearing had been scheduled. A hearing was held in the IV-C court on the appointed date and H did not appear. The court signed a default order granting judgment in favor of the AG in the amount of $24,000. H filed a verified motion for new trial and the AG filed no response. The MNT was overruled by operation of law and H appealed.

    The COA held that it is error for the trial court to deny a MNT if all of the Craddock elements (133 S.W.2d 124) have been met. Further the COA held that in a post-answer default judgment, due process requires that the defendant be given notice that the case could be decided on the merits if the defendant failed to appear. Because such notice was lacking in this case, the judgment was reversed and the case was remanded to the trial court for further proceedings.

  6. Blair v. Blair, 2009 Tex. App. LEXIS 3165 (Tex. App. – Houston [1st Dist.] May 7, 2009) (Cause No. 01-08-686-CV) (mem. opinion)

    H and W executed and filed a written agreement for their property division within a pending divorce action. The agreement specified that H would pay W a specified sum for a specified term as alimony. The parties appeared in court on the same date the agreement was filed and the court granted the divorce. Two months later the court signed a final decree however the decree referenced that the monthly payments were characterized as spousal maintenance under Chapter 8 of the Family Code instead of alimony. Over a year later when the error was discovered, H filed a motion for judgment nunc pro tunc asking that the decree be reformed to properly characterize the payments as alimony as provided for in the written agreement adopted and approved by the trial court. The trial court granted the motion and approved the requested change to the decree. The court signed a new decree which changed all spousal maintenance references to alimony. In addition the new decree also included five new paragraphs which addressed the parties’ federal income tax liability with respect to the alimony payments. W appealed.

    The COA determined that there was ample evidence to support the parties’ agreement that the payments were in fact alimony and that the trial court’s nunc pro tunc ruling to substitute this term for spousal maintenance was proper. The COA however determined that inclusion of the paragraphs relating to federal income tax treatment of alimony was a substantive and material modification to the decree which could not properly be accomplished through means of a nunc pro tunc judgment and declared these provisions void.

  7. La Paz v. La Paz, 2009 Tex. App. LEXIS 3120 (Tex. App. – Corpus Christi May 7, 2009) (Cause No. 13-07-297-CV) (mem. opinion)

    W filed an original petition for divorce with request for temporary orders and had H personally served. H filed an answer, counter-petition and his own motion for temporary orders. The court conducted a final trial six months later and H did not appear. The court signed a final decree awarding each party an undivided interest in two pieces of real property located at 1533 and 1537 16th Street and awarded W a full interest in the property located at 1541 16th Street. H filed a MNT claiming he received no notice of the trial setting. His affidavit supporting the MNT suggested that notice mailed to him at W’s residence was likely intercepted by W and that he never received it. The trial court initially denied the MNT but later granted it when the parties agreed that H never received notice of trial.

    W amended her pleadings to claim a common law marriage at a date prior to the ceremonial marriage as asserted in her original petition. The court set the case for trial and reset it several times at W’s request. W moved for a continuance at the final setting because she claimed to need more time to hire counsel. The court denied her motion and proceeded to trial after which the court took the matter under advisement. H filed a proposed decree before the court ruled and W filed her objections to this decree. The court eventually signed a decree that was substantially similar to H’s proposed decree. The decree ordered the 1541 property sold and the proceeds divided. The decree failed to reference the 1533 or 1537 properties. W filed a MNT which was overruled by operation of law and thereafter W appealed.

    The COA concluded that there was no error in denying W’s last motion for continuance because W had ample time to secure counsel and her lack of counsel was in part attributable to her own actions. The COA found that evidence did suggest that the parties may have been married much earlier than the date of their ceremonial marriage and that neither party had offered sufficient evidence to overcome the presumption that the 1533, 1537 and 1541 properties were community property. W’s complaints regarding the division of property included her assumption that H had been awarded the 1533 and 1537 properties, however the COA noted that since the final decree failed to reference either the 1533 and 1537 properties, H and W remained tenants in common and should seek division of this property by partition suit. Judgment affirmed.

  8. In the Interest of F.A.V., 2009 Tex. App. LEXIS 3230 (Tex. App. – Dallas May 13, 2009) (Cause No. 05-07-1734-CV)

    H and W each sought appointment as sole MC of their child in a divorce proceeding. The AJ appointed a parenting coordinator. The AJ ordered each party to pay a portion of the parenting coordinator’s fees. Subsequently the AJ ordered W to pay a specified additional amount to the parenting coordinator by a date certain and advised W that the court would consider sanctions under Rule 215.2(b)(5) [strike pleadings] if she failed to comply. H moved for sanctions when W did not obey and the AJ granted the motion and struck W’s pleadings. W timely requested a de novo hearing before the presiding judge. The parties stipulated that W had finally paid the amounts ordered and the presiding judge reversed the AJ ruling. In findings and conclusions the trial court stated that it did not strike W’s pleadings for failure to pay the coordinator because such sanctions were not appropriate and W’s failure to pay did not hinder H’s ability to prosecute his case. H appealed and his sole issue alleged an abuse of discretion by the trial court in reversing the AJ’s decision to strike W’s pleadings.

    The COA noted that striking a parent’s pleadings in a suit where the best interest of a child is at issue “will rarely, if ever, be appropriate.” Further the COA noted that there is no case where a reviewing court had found an abuse of discretion by a trial court for failing to strike pleadings. Judgment affirmed.

  9. Chavez v. McNeely, 2009 Tex. App. LEXIS 3266 (Tex. App. – Houston [1st Dist.] May 14, 2009) (Cause No. 01-08-202-CV)

    H and W married in 1969 and had three children. Thereafter they divorced and remarried twice. After the second remarriage in 2000 H was paralyzed in a horseback riding accident. H and W were divorced a third time by an agreed decree entered in June 2001. As part of the decree W agreed to “provide as much towards the care and providing for the needs of [h] as possible, limited only by her personal financial situation.” H brought a restricted appeal from the decree which was unsuccessful. In 2003 H sued W in the divorce court for breach of contract but filed a non-suit 4 years later. The next day H re-filed the action in Waller County. W sought but was denied a transfer to Harris County. At a bench trial W testified that after divorce she continued to pay the mortgage, taxes and insurance on the residence where H lived and that she paid for what she could until 2003 when her own business began to fail. H testified that W’s spending habits belied her claims. The trial court rendered judgment for H and awarded him damages in the amount of $950,000 finding that W’s financial resources would have allowed her to contribute in excess of $300,000 per year to H’s care between 2003 and 2007. The court also awarded attorneys fee. W appealed.

    The COA held that Chapter 9 of the Texas Family Code does not grant exclusive jurisdiction to enforce decrees only to the court that rendered the decree and that since the H’s suit was filed as a breach of contract claim, this invoked the general jurisdiction of a district court and that the Waller County District Court specifically had proper jurisdiction over the proceedings. The COA also agreed with W that the terms of the underlying settlement were too ambiguous and incapable of being enforced as a contract. Specifically (1) the contract failed to define how much W was required to pay or how the parties would determine this amount; (2) the contract failed to define what “needs” W was expected to meet; and (3) the contract did not specify what financial circumstances might trigger an excuse for performance. The COA held that the provision was too indefinite to be enforced as a contract and rendered a take nothing judgment in favor of W.

  10. In the Interest of E.H.G., 2009 Tex. App. LEXIS 3431 (Tex. App. – San Antonio May 20, 2009) (Cause No. 04-08-579-CV) (mem. opinion)

    H and W entered into an agreement incident to divorce which obligated H to pay monthly mortgage payments on W’s residence in lieu of child support. The parties stipulated that the mortgage amount was greater than the amount which would be calculated under the guidelines and that W would not file any action seeking to establish child support unless H defaulted in his obligation to pay the mortgage. Subsequently W filed a motion to enforce alleging that H had failed to pay child support, was $7,400+ in arrears and asks that he be held in contempt. H filed a motion to modify under TFC Chapter 156 and asked that his support obligation be decreased. In a January 2005 hearing the court found H in contempt and ordered him jailed until the arrearage amount was paid. Apparently no order was ever signed because H paid the arrearage that same day. (Remember this fact for later!) H filed at least two motions asking for temporary orders reducing his obligations under the decree. H also filed a MNT from the court’s oral ruling on contempt. Thereafter W filed a second motion for enforcement of child support. When H failed to show for the hearing a capias was issued. W also filed a counter petition to modify asking that child support payments be made directly to her instead of the mortgage company because the residence had been sold.

    In May 2005 the trial court granted modification and redirected payment to W but kept the monthly amount the same. A year later the AG filed suit to enforce child support, claiming arrearages dating back two years totaling more than $35,000. H filed a second motion to modify claiming that the support payments were not in line with the guidelines and asking for a decrease. In the AG enforcement action the court found that H had failed to pay child support as ordered in the original decree and subsequent order, found arrearages totaling more than $40,000 and held H in contempt and ordered him confined until he paid almost $20,000. This order was issued on June 15, 2006. H paid the money and shortly thereafter non-suited his pending modification suit. H then filed a bill of review challenging the May 2005 order that redirected his payments to W. This was denied and H appealed. The COA found that H failed to exercise due diligence in pursuing his legal remedies from this order because he failed to file a MNT or appeal challenging the order. While this appeal was pending H filed a motion to vacate the June 2006 order holding him in contempt alleging that this order, as well as the May 2005 order were both void because they were both grounded upon a prior order (the decree) ordering child support when in fact the final decree never ordered H to pay child support. A hearing was held on this motion and the trial court reduced H’s support. Thereafter the court finally signed an order (2 years after the fact) from the original January 2005 hearing finding that H had been ordered to pay child support and that he was in arrears in the amount of $7,400+. H appealed.

    The sole issue addressed by the appellate court was whether or not the trial court erred in finding that the decree ordered child support because this finding was a prerequisite for both contempt findings and the former arrearage judgment to the AG. The COA concluded that the final decree clearly and unambiguously provided that no child support would be paid by H because he was going to pay the mortgage payments instead and the decree clearly required the W to go back to court if she wanted to obtain child support payments. The only motion pending before the trial court in January 2005 which can form the basis of the order signed in 2007 was a motion to enforce filed by W. Although a party can seek clarification in an enforcement action, the court may not substantively modify the decree. The COA concluded that a determination that the decree required the payment of child support amounted to a substantive and impermissible modification of the decree in an enforcement proceeding and was therefore void. W argued that the issue was moot because H paid the arrearages back in 2005. The COA held that H only paid the money to avoid going to jail and therefore the payment did not render his appeal moot. Judgment reversed.

  11. Schmeiding v. Lavender, 2009 Tex. App. LEXIS 3587 (Tex. App. – For Worth May 21, 2009) (Cause No. 02-08-348-CV) (mem. opinion)

    W filed suit for divorce from H after 26 years of marriage. Her petition included form language speculating that the parties would agree to a division of their estate but seeking a just and right division if there was no agreement. H was served in jail and filed a pro se response contesting the petition and asking for a telephone conference with the court to further “state his claims.” Thereafter H filed several documents including a request for a bench warrant, an answer, a request for discovery control plan, a writ of habeas corpus and request to conduct all dispositive hearings by phone or video. In several of these documents H stated that he would not agree to a division of property and he wanted the opportunity to present testimony to the court either in person or by alternative means. The record reflects no rulings on any of these motions. The trial court heard a “prove-up” wherein W testified to the date of marriage and separation, that H was in prison and would be there for quite a while, that she had sold the marital residence with H’s power of attorney, that she had divided their debts and only had a little property remaining in her possession. The court stated that it was taking judicial notice of the contents of the court’s file and pronounced the parties divorce and signed a decree that awarded W a hair salon business, a vehicle, all personal property, all her retirement and a life insurance policy. The decree awarded H everything in his possession, any money in his name in the bank and any retirement account or insurance policy in his name. H appealed.

    The COA concluded that although an inmate does not have the automatic right to appear in court personally, an inmate does not waive his right to participate simply because he is incarcerated and he must be allowed to proceed by affidavit, deposition, telephone or other means. Here the COA concluded that the trial court erred in ignoring all of H’s various requests to participate and further erred in proceeding to finalize the case in a manner which suggested that the suit had been resolved by agreement when H expressly stated his opposition his the documents he filed and which the court took judicial notice of. Judge reversed and remanded.

  12. Bigelow v. Stephens, 2009 Tex. App. LEXIS 3664 (Tex. App. – Beaumont May 28, 2009) (Cause No. 09-08-169-CV)

    In a divorce, W pled for reimbursement. The case was tried to the court. W testified that she deposited sales proceeds from a house she owned before marriage and insurance proceeds from a car she owned before marriage into a bank account solely in the name of H. H then used these funds ($29,000+) to pay down a secured note on his separate property residence. H did not testify. The court divided the estate and awarded W a money judgment for $29,000+ as reimbursement. H appealed, arguing that TFC 3.408(b) permits reimbursement only in circumstances where one estate pays the unsecured liability of another estate and since the note he paid was secured, the statute does not permit recovery.

    The COA notes the decision in Bishop v. Bishop, 2003 Tex. App. LEXIS 4532 (No. 14-02-132-CV) (May 29, 2003, no pet.) which holds that TFC 3.408(b) does not support reimbursement for payment of secured liabilities but declines to follow it, holding instead that TFC 3.408(b) is “simply a non-exhaustive list of two potential reimbursement claims” and the Legislature did not intend to limit the court’s authority by listing only two examples, noting the trial court’s broad equitable powers and holding that the evidence was sufficient to support the reimbursement award.