in the Matter of the Marriage of Randy Gene Donathan and Margaret Mary Donathan ( 2017 )

IN THE
TENTH COURT OF APPEALS
No. 10-16-00014-CV
IN THE MATTER OF THE MARRIAGE OF RANDY GENE
DONATHAN AND MARGARET MARY DONATHAN
From the 378th District Court
Ellis County, Texas
Trial Court No. 89670D
MEMORANDUM OPINION
This appeal is about one facet of the trial court's division of property upon the
dissolution of the marriage of Randy and Margaret. Specifically, the trial court had to
determine three potential reimbursement claims regarding real estate which was owned
by Randy prior to their marriage. Under the inception of title doctrine it was Randy's
separate property. During the marriage both Randy and Margaret had separate property
funds that were either brought into the marriage or obtained during the marriage from
the estates of deceased parents. Community property funds and some of the separate
funds of both Randy and Margaret were spent on the subject property.
The trial court computed the increase in value of the property based on the
improvements which were made to the property, including the construction of a house,
several barns, and other improvements. The trial court determined that the value of the
enhancement to the property and the community expenditures for the mortgage
payments was reimbursable to the community estate from Randy's separate estate and
that amount was divided equally between Randy and Margaret. The trial court also
awarded Margaret reimbursement for the amount the trial court determined had resulted
from the expenditure of separate property monies by Margaret. The trial court
determined Randy was not entitled to reimbursement from the community estate for his
separate property funds spent on the property in constructing the house.
Randy does not challenge the trial court's methodology in calculating the amounts
awarded. In his first issue, Randy asserts only that the trial court erred in awarding the
reimbursement claim to Margaret's separate estate in its entirety. In his second issue,
Randy complains that the trial court erred by not awarding his separate property estate
any reimbursement from the community estate before the balance of that amount was
divided between them. We find that the judgment should be modified regarding the
award to Margaret, but should be otherwise affirmed.
RELEVANT FACTS
The parties were married in June of 2001. Margaret moved to Texas from
California to reside with Randy. It is undisputed that Randy owned 105 acres of land at
the time of the marriage, hereinafter referred to as "the property." When Margaret moved
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to Texas, a dilapidated mobile home was on the property. Margaret cashed in her
retirement from her previous employment and received $7,218 which she gave to Randy
to be used for the property. Randy sold her separate property truck shortly thereafter to
his father and kept the proceeds, which the trial court found to be $9,000. Randy testified
that the proceeds of the truck were used to pay off his debt on the mobile home. At all
times during the marriage, Randy and Margaret each maintained bank accounts to which
the other did not have access.
Over the course of the next few years, the parties spent substantial sums and effort
to improve the mobile home, including adding rooms and remodeling the inside and
outside extensively. Additionally, the parties built several storage barns, a chicken coop,
and an aviary on the property. The parties did a lot of the work themselves but hired
contractors for the jobs they were unable to complete themselves. The property was
refinanced in 2004 and both parties signed as debtors on the mortgage. The payments on
the property were made with community property funds both before and after the
refinancing.
In 2010, Randy's father passed away and Randy received an inheritance from his
father's estate. Shortly thereafter, a house was constructed on the property. Randy
introduced copies of cancelled checks from his bank account showing that he had paid
$52,482.30 towards the construction of the house. At some point after the completion of
the house, the mobile home was demolished entirely and the remains were burned.
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In 2013 and 2014, Margaret received an inheritance from her mother's estate of
approximately $52,000. Margaret testified that she spent all but approximately $4,000 of
the inheritance on improvements to the property, which included planting many trees,
the purchase of a rainwater collection system, gutters, a trailer, and vegetable gardens.
Margaret also testified that she had also reimbursed Randy for $3,000 he had given her
from his father's estate. Margaret further testified that she had purchased groceries and
other things for the house with her inheritance money. Randy agreed that Margaret had
spent funds on the trees and gardens but claimed that they were all dead when the
property was sold.1
The amount of the trial court's reimbursement award to the community estate was
based on the increase in value of the property due to the improvements to the property,
closing costs paid by the community for the 2004 mortgage refinance, and payments
made on the property from the community estate which totaled the amount of
$157,847.80. This is the amount that was then divided equally between Randy and
Margaret. Randy does not dispute the calculation of the total amount of the
reimbursement to the community awarded by the trial court or the equal division of the
reimbursement award in this appeal. Randy's only complaint regarding the
reimbursement claim to the community estate is that his separate property
1The property had been sold prior to the final hearing in this proceeding and the balance of the proceeds
in the amount of $364,000 were held in escrow pending the trial court's resolution of the property division.
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reimbursement claim of $52,482.30 should have been offset from the total amount
awarded to the community prior to the balance being divided equally between them.
The trial court also awarded reimbursement to Margaret's separate estate for the
retirement proceeds, the proceeds from the sale of the truck, and the full $52,000 Margaret
received from her mother's inheritance. The trial court did not specifically reference
Randy's reimbursement claim against the community for the $52,482.30 of his separate
property funds he expended for the construction of the house.
In his first issue, Randy complains that the trial court abused its discretion by
awarding Margaret's separate estate reimbursement claim in its entirety. In his second
issue, Randy complains that the trial court abused its discretion by denying his offset
reimbursement claim against the community estate for the funds he expended for the
construction of the residence on his separate property.
STANDARD OF REVIEW
We review the trial court's evaluation of a claim for reimbursement for an abuse
of discretion. Barras v. Barras, 396 S.W.3d 154, 174 (Tex. App.—Houston [14th Dist.] 2013,
pet. denied). An abuse of discretion occurs when the trial court rules (1) arbitrarily,
unreasonably, or without regard to guiding legal principles, or (2) without supporting
evidence. Ford Motor Co. v. Chacon, 370 S.W.3d 359, 362 (Tex. 2012) (per curiam). With
regard to ruling without supporting evidence, there is no abuse of discretion if some
probative evidence in the record supports the trial court's findings. In re Barber, 982
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S.W.2d 364, 366 (Tex. 1998) (orig. proceeding). As the finder of fact for the proceeding,
the trial court is the exclusive judge of the credibility of the witnesses, the weight to be
given their testimony, and the best means to resolve inconsistencies in the evidence.
Handley v. Handley, 122 S.W.3d 904, 911 (Tex. App.—Corpus Christi 2003, no pet.).
REIMBURSEMENT
When one marital estate improves another without receiving a benefit, a claim for
reimbursement may arise. See TEX. FAM. CODE ANN. § 3.402 (West 2014). A trial court
applies equitable principles in deciding whether to recognize a claim for reimbursement.
Vallone v. Vallone, 644 S.W.2d 455, 458 (Tex. 1982); TEX. FAM. CODE ANN. § 3.402(d). A trial
court's discretion in evaluating a claim for reimbursement is equally as broad as that
discretion exercised by a trial court in making a just and right division of the community
estate. Penick v. Penick, 783 S.W.2d 194, 198 (Tex. 1988) ("In the final analysis, great
latitude must be given to the trial court in applying equitable principles to value a claim
for reimbursement.").
MARGARET'S SEPARATE PROPERTY REIMBURSEMENT
In his first issue, Randy complains that the trial court abused its discretion by
awarding Margaret a judgment on her claim for reimbursement to her separate estate for
monies that were spent to improve Randy's separate real property. Part of Randy's issue
complains that Margaret's reimbursement claims should fail because she did not meet
the requirements of Texas Family Code Section 3.402(d) which provides:
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"Reimbursement for funds expended by a marital estate for improvements to another
marital estate shall be measured by the enhancement in value to the benefitted marital
estate." TEX. FAM. CODE ANN. § 3.402(d) (emphasis added). Randy argues that the trial
court abused its discretion in ordering reimbursement to Margaret's separate estate
because there was insufficient evidence that the value of the property was enhanced by
the amount of the award.
Although Section 3.402(a) includes nine categories of reimbursement, Section
3.402(d) does not establish that all claims for reimbursement must be measured by the
enhancement in value to the benefited estate. Rather, Section 3.402(d) provides that
"[r]eimbursement for funds expended by a marital estate for improvements to another
marital estate shall be measured by the enhancement in value to the benefited marital
estate." TEX. FAM. CODE ANN. § 3.402(d) (emphasis added).
Randy testified that the $9,000 which constituted the proceeds from the sale of
Margaret's separate property vehicle was used to pay on the debt owed on the original
mobile home on the property. This would support a proper claim for reimbursement
pursuant to Section 3.402(a)(3), applicable to "the reduction of the principal amount of a
debt secured by a lien on property owned before marriage, to the extent the debt existed
at the time of marriage." See TEX. FAM. CODE ANN. § 3.402(a)(3). Section 3.402(d) does not
apply to this type of claim. See Barras v. Barras, 396 S.W.3d 154, 176-77 (Tex. App.—
Houston [14th Dist.] 2013, pet. denied). The trial court did not abuse its discretion in
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granting Margaret's reimbursement claim regarding the separate property proceeds
resulting from the sale of her vehicle.
The other amounts awarded to Margaret are not so clear, however. Margaret
testified generally that she gave the money from her retirement to Randy to use on the
mobile home. The funds she spent from her mother's inheritance were spent on
improvements to the property, which included trees, a rainwater catch system, gutters,
and a trailer as well as groceries and things for the house. It is clear that not all of these
expenditures would have been improvements to the property.
However, even if we assume that Margaret spent her separate property funds on
improvements, the right to reimbursement is not automatic. It was Margaret's burden to
prove that the renovations or other improvements paid for with her separate funds
enhanced the value of the property in order to establish the proper amount of a
reimbursement claim. Evidence of the cost of improvements alone is not sufficient to
prove enhanced value. See Rogers v. Rogers, 754 S.W.2d 236, 240 (Tex. App.—Houston
[1st Dist.] 1988, no writ). Margaret did not present any evidence of an amount that the
expenditures for the improvements enhanced Randy's property, either as it related to
disbursements of her retirement funds or her inheritance. No expert testimony was
presented. The only evidence as to value of the improvements on the property was a tax
appraisal offered by Randy which showed that a substantial increase in the value of the
improvements took place when the house was built. Further, any enhancement in value
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regarding improvements to the property was awarded in full to the community estate,
and that valuation is not at issue in this proceeding.
We find that there was no probative evidence in the record regarding the
enhancement in value to the property stemming from Margaret's expenditure of her
separate property funds of $7,218 and $52,000. Therefore, there was insufficient evidence
to support her reimbursement claim, and the trial court abused its discretion in awarding
her the full reimbursement claim to her separate estate. We sustain issue one in part, and
modify the trial court's award to $87,923.90, which includes only $9,000 of Margaret's
reimbursement claim.2
RANDY'S SEPARATE PROPERTY REIMBURSEMENT
In his second issue, Randy complains that the trial court abused its discretion by
not offsetting the separate property funds of $52,482.30 that he expended in the
construction of the house against the community's reimbursement claim. Because a trial
court resolves claims for reimbursement under equitable principles, claims for
reimbursement may be offset against each other where appropriate. Id. § 3.402(b). The
party claiming the right of reimbursement has the burden of pleading and proving that
the expenditures were made and that they are reimbursable. Vallone, 644 S.W.2d at 458-
59. Randy did not plead for the right of reimbursement, nor did he seek it in his written
2The Final Decree of Divorce does not reference the reimbursement claim but awards Margaret an amount
from the proceeds of the sale of the real estate that includes her separate property reimbursement claim
and her half of the community's reimbursement claim.
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argument to the trial court submitted after the final hearing; however, in this appeal he
complains that the trial court abused its discretion by failing to acknowledge his claim in
the division of property.
Randy did not request findings of fact and conclusions of law from the trial court,
nor did he complain to the trial court for failing to address his reimbursement claim.
When, as here, the trial court does not sign findings of fact, we presume the trial court
made all necessary findings to support its judgment if those findings are supported by
the evidence. See Garcia v. Garcia, 170 S.W.3d 644, 652 (Tex. App.—El Paso 2005, no pet.).
Additionally, the decree contains a Mother Hubbard clause, which further demonstrates
that the trial court denied his requested relief to the degree that it may have been properly
requested.
When a reimbursement award does not appear to be unjust, there is no abuse of
discretion. Bigelow v. Stephens, 286 S.W.3d 619, 623 (Tex. App.—Beaumont 2009, no pet.).
This would include the determination of whether an offset is appropriate. Margaret had
claimed that Randy had committed fraud against her by misleading her as to the
ownership of the property during the course of their marriage, and Randy admitted at a
minimum to "skirting the issue" with her regarding having put or then putting the
property in both their names. There was evidence that Randy had led Margaret to believe
that they were equal owners in the property and she had expended substantial time and
toil to improve the property as well as using her separate property funds on
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improvements to the property. Further, Randy testified that he believed that an
appropriate amount of reimbursement to the community estate was $120,000 to $130,000,
and that amount took his expenditures into account. We do not find that the trial court's
implied finding that Randy's reimbursement claim should not be offset against the
community's reimbursement claim was outside of the trial court's broad discretion. We
overrule issue two.
CONCLUSION
Having found that the trial court abused its discretion in part of the
reimbursement claim of Margaret's separate estate, we modify the portion of the
judgment that awarded Margaret the sum of $147,141.90 for both reimbursement claims
to reflect an award of the sum of $87,923.90 for both reimbursement claims from the sale
of the proceeds of the property. Except as modified, we affirm the judgment of the trial
court.
TOM GRAY
Chief Justice
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Modified, and Affirmed as Modified
Opinion delivered and filed August 2, 2017
[CV06]
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