1. Lipsey v. Lipsey, No. 2-98-090-CV, not yet published (CA, Fort Worth, 1998)
H retired in '92 at which time he "rolled-over" his pension plan into his employee 401K plan which provided that he couldn't withdraw anything until he became 70 ½ yrs old. He didn't make any further contributions into the plan. (This opinion never tells how old H was in '92 but presumably he was a lot less than 70 ½. H was married to W1 in '92 but she died in '94) In Oct '95 H married W2 but she filed for divorce shortly thereafter. At time of divorce H's 401K plan had increased its value $238,000 since his marriage to W2. T/C found that the am't on deposit in H's 401K plan at time of marriage was H's sep. prop. but the $238,000 increase was community & divided it upon divorce. H appealed. CA reversed.
There was no claim that H made the '92 rollover in fraud of W2's spousal rights (A brilliant finding considering that H was married to W1 at the time). 401K plans are governed by ERISA (29 U.S.C. § 1001, et. seq.). W claimed she was a beneficiary under the plan as H's wife thus any increased value in the plan during marriage was community property. CA said No! (Remember there was no contributions of community $ into the plan during marriage) ERISA doesn't make a non-participating spouse a beneficiary under a 401K plan except if (a) the participant dies (§ 1055) which is not our case or (b) the plan contains community property which is subject to division in a divorce per a QDRO (§ 1056). However, the characterization of community property is determined by Texas state law. Since H had no right to compel withdraws from the 401K plan (trust), the undistributed income (value increase) accumulated in the 401K plan (trust) or "earned during the marriage" belonged to the trust and was not subject to divorce division per Lemke (929/662).
Comment - Does this mean that if H participates in 401K plan at time of marriage, all of the 401K, plus increases, are H's sep. prop. on divorce? No! The key to Lipsey is H's inability to compel distributions from the plan and most 401K plans don't prohibit a participant from making withdrawals. If H makes contributions post marriage, such are community property. So why is this case important? Pelzig (931/398) said that you treat a defined contribution plan (401K) like a savings acct., the value at marriage is sep. prop. which is subtracted from the divorce value of the plan & the balance is community. Lipsey says if H can't withdraw $, its sep. prop. Many 401K plans provide that the employer will match the employee's contributions at some rate - 1 for 1, 2 for 1, etc. but the employee can't withdraw the employer's contributions until H is "vested," i.e. he's been with the company for 3-7 yrs. If H marries with an existing 401K which prohibits withdrawing all or a part of his 401K for a period of time and H divorces during the prohibitory period (excluding post-divorce contributions, and income and increases attributable thereto) the am't in the plan at marriage which H can't withdraw, plus the income and increases attributable thereto, are not community property. H may have a big accounting proof problem but in high income cases, the CPA cost of tracking may well be worth the $. Lipsey is a big step back from Pelzig and comparing the two cases shows that a simplistic approach to dividing 401K plans won't suffice if a smart atty and his/her CPA properly prepares the 401K participant's case for a divorce trial.
2. In re: Scariati, No. 07-98-0317-CV, not yet published (CA, Amarillo).
H & W divorce with H ordered to pay c/s, provide medical ins. & pay 50% of the kids' uninsured medical expenses. Supposedly H failed to pay any of these c/s obligations so W filed contempt. H was found in contempt for: (a) failure to pay c/s; (b) failure to provide medical ins. for the kids; and (c) failure to reimburse W for 50% of the uninsured medical expenses for the kids. The T/C assessed punishment at 6 mos. per act of contempt, all to run concurrently, plus remain in jail until the flesh rots from H's bones or H pays the back c/s, etc., which ever occurs first. H filed H/C primarily attacking the W's pleadings supporting the civil contempt sentence. Unfortunately for H he failed to challenge one of the criminal contempt findings (failure to maintain the kids' medical ins.) thus the C/A denied the H/C. If just one of the criminal contempt grounds goes unchallenged and the sentences for each contempt ground are the same and run concurrently, the appellate court will not review any of the other criminal contempt challenges. As to the civil contempt dispute, the appellate court will not consider such until H has served the criminal contempt sentence as to do otherwise would be to issue an advisory opinion.
Comment - If you're representing a person in jail for contempt (criminal), you have to attack everything or your client stays in jail. By the way, Amarillo is not at the end of the world but you can see it from its city limits.
3. Standard Fruit & Vegetable Co., Inc. v. Johnson, 42 Tex.Sup.Ct.J. 12B.
J was part of a protest march walking along Highway 59 between Cleveland and Houston. A truck driver apparently fell asleep at the wheel and ran his truck through the marchers & police escort. A policeman was killed and several people were injured. J was not physically hurt but he allegedly suffered psychological damage as a result of his witnessing all the carnage. J filed suit against the truck driver and his employer for intentional infliction of emotional distress. T/C granted Defs' motion for S/J which the 1st CA reversed. The Supremes reversed and rendered judgment that J recover zero as "intentional infliction of emotional distress is not available as an independent cause of action unless the actor intends to cause emotional distress or several emotional distress is the primary risk created by the actor's reckless conduct."
Comment - Why is this case significant to divorce law? Many attys include IIED in their divorce pleadings. IIED's elements have always been difficult to prove; however, with the addition of the factors of "intent" or "primary risk created by reckless conduct," hopefully the final nail has been put in the divorce IIED coffin.
4. In re: Luebe, No. 01-98-01371-CV, not yet published (CA, Houston-1st).
H failed to pay the ct. ordered c/s so W filed contempt. H appeared at the contempt hearing pro se and advised the Ct. that he couldn't afford to hire an atty. The T/C conducted an indigence hearing where it was shown that although H had no appreciable assets & earned less than his reasonable living expenses, H's parents were wealthy. H testified that his parents would probably lend him the dough to hire an atty. but he wouldn't make the request or accept money from his parents. The T/C found that H was not "indigent" and declined to appoint him an atty. H was held in contempt and sent to jail. H/C filed and granted. The CA correctly stated that the "inability to borrow" factor as a defense to a c/s contempt charge [§ 157.008(c)(3) & (4)] is not relevant to a determination of "indigence" under § 157.163 which does not define "indigence." The CA went on to hold that a T/C is to look at the person's financial status and not that of relatives or others, i.e. a "indigent" doesn't have to show a lack of borrowing power before he's entitled to appointed counsel in a c/s contempt case.
