Bobby G. Bennett Jr. v. Laura Merryman Bennett ( 2019 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
______________________
NO. 09-17-00162-CV
______________________
BOBBY G. BENNETT JR., Appellant
V.
LAURA MERRYMAN BENNETT, Appellee
On Appeal from the 418th District Court
Montgomery County, Texas
Trial Cause No. 15-05-04918-CV
MEMORANDUM OPINION
Bobby G. Bennett Jr. (Bobby) and Laura Merryman Bennett (Laura) were
married in 1991. In 2015, Laura filed a petition for divorce, and Bobby filed a
counter petition for divorce. A jury trial was conducted on the conservatorship of
their children, and a bench trial was held on the terms of visitation, child support,
and the division of the marital estate. The trial court signed a final decree of divorce
and issued findings of fact and conclusions of law. The final decree of divorce stated
1
that, in accordance with the jury verdict and the evidence, the trial court appointed
Laura as sole managing conservator and Bobby as possessory conservator of the two
children, ordered child support to be paid by Bobby, and made a division of the
marital estate. On appeal, Bobby raises four issues challenging only the division of
the marital estate. Bobby (1) contends the trial court abused its discretion in not
excluding certain testimony from Laura’s expert witness about fraud and waste of
the community estate; (2) challenges the factual sufficiency of the evidence
supporting the trial court’s findings of fraud, breach of fiduciary duty, constructive
fraud, and waste; (3) asserts the trial court abused its discretion in failing to make a
just and right division of the community estate; and (4) argues the trial court abused
its discretion by ordering Bobby to pay all attorney’s fees. 1
1
After Bobby’s initial appellate attorney filed his appellate brief, and after the
Appellee had already filed her brief, on March 6, 2018, Bobby filed a motion for
substitution of appellate counsel, and this Court granted the motion. This Court
denied Bobby’s motion to strike his original brief and to file an amended brief.
However, this Court granted Bobby’s motion for extension of time to file a
supplemental brief and allowed Bobby to raise “one additional issue . . . if new
appellant counsel deems [it] necessary.” See Tex. R. App. P. 38.7. In “Appellant’s
Supplemental Brief and Reply to Appellee’s Brief[,]” Bobby raises a fourth issue as
his “new issue” that we address as issue four in this Memorandum Opinion. To the
extent Bobby’s supplemental brief and reply raises any other “new issues,” we do
not consider them as those arguments were not raised in his original brief, and the
presentation of those new arguments are not on the terms prescribed by this Court’s
letter. See Tex. R. App. P. 38.3; see also ERC Midstream LLC v. Am. Midstream
Partners, LP, 497 S.W.3d 99, 108 (Tex. App.—Houston [14th Dist.] 2016, no pet.)
(refusing to consider appellants’ issue because it was a new issue raised in a
2
Evidence from Bench Trial 2
Buddy Smith, an investigator with Child Protective Services (the
“Department”), testified that after the docket call for the jury trial but the week prior
to the jury trial beginning, Bobby called in a report to the Department, alleging
neglectful supervision by Laura of their two children and Bobby said that Laura had
suicidal tendencies. Smith testified that he met with Laura and the two children, the
children made no outcries of abuse or neglect against Laura or their home
environment, the children did not voice any concerns related to allegations of
suicidal tendencies of Laura, Laura denied having suicidal tendencies, and Smith
learned that Laura and Bobby were involved in a highly contested divorce and
custody dispute that would soon go to trial. Smith’s report and his testimony
included statements that one of the children reported that Bobby had hit Laura in the
supplemental brief after appellee had filed response); Myan Mgmt. Grp., L.L.C. v.
Adam Sparks Family Revocable Trust, 292 S.W.3d 750, 754 n.1 (Tex. App.—Dallas
2009, no pet.) (reply brief may not be used to raise new issues even to refute a matter
raised in an appellee’s response).
2
We restrict our discussion of evidence from the trial to the testimony related
to the court’s division of the marital estate because all of the complaints articulated
by Bobby pertain thereto. The trial court heard the evidence regarding the division
of the marital estate during a bench trial and the reporter’s record for the bench trial
notes that “[t]his record does not include jury trial testimony from 9/12/16 through
9/20/16, per Appellant’s Designation of Reporter’s Record.”
3
past and that the police had twice been to the residence for welfare checks.
According to Smith, he found no concerns with respect to the children. Smith, on
behalf of the Department, notified Laura that the Department had investigated the
allegations and concluded the alleged abuse or neglect did not occur, and the
Department closed the investigation.
Laura testified that she and Bobby were married in 1991 and separated in
2015. According to Laura, she petitioned for a divorce on the grounds of Bobby’s
cruel treatment toward her and because the marriage had become insupportable.
According to Laura, during the pendency of the divorce she and the children were
living in Tyler, Texas with her parents. At the time of trial, Laura had access to about
$15,000 in her bank account and all other assets were under Bobby’s sole
management and control. A spreadsheet of Laura’s monthly expenses was admitted
into evidence. Laura testified that she has a “business degree” from Baylor
University, but she has not worked outside the home in over twenty years. Laura
testified that at the time of trial she was unemployed and had not applied for a job,
but she explained that she was trying to look for employment and was getting
certified as a substitute teacher. According to Laura, she would like to buy or rent a
home and she estimated that monthly rent or a mortgage payment would cost $2,500
per month.
4
Laura hired Mike Stocker as her attorney in May of 2015 to represent her in
the divorce proceeding. She testified that she was requesting the trial court order the
payment of the balance of Stocker’s attorney’s fees as part of the division of the
marital estate. According to Laura, she recently learned that Bobby had prepaid some
taxes on The Woodlands residence that Bobby lived in without consulting her. Laura
requested that she be awarded The Woodlands residence so that she could sell it and
buy a home in Tyler. Laura also testified that she wanted the trial court to award her
their vacant lot in Tyler that they own free and clear so that she could sell it and
apply the proceeds to a new home. Laura testified that sometime after the jury verdict
in the custody case she learned about a Renasant Bank account ending in 7668 on
which her husband was a signatory along with his father. Laura also testified that
Bobby did not consult with her before he decided to liquidate the children’s 529
education accounts and that now the children do not have those funds available for
college.
Bobby testified that he is an anesthesiologist and he has been in private
practice since 1992. According to Bobby, the family moved to Tyler in 1994 mainly
because Laura wanted to live there. Bobby testified that he worked at a hospital in
Tyler until 2005, when his physician group was replaced by the hospital. Bobby
testified that because the family had just built a million-dollar home in Tyler and
5
Laura would not leave Tyler, Bobby commuted to work in Longview. After six years
of commuting, and because of Bobby’s strained relationship with administration at
the Longview hospital and his desire to work closer to home, Bobby accepted a job
in “pain work” in Tyler. Bobby testified that he eventually believed working in Tyler
was no longer in his family’s best interest and the family moved to The Woodlands
where Bobby found employment. According to Bobby, The Woodlands job provided
a good income and was a “semiretirement position[]” because he was not required
to be on call, and although the job limited his ability to make a lateral transfer to jobs
in other cities, he thought he would have more time for his family.
Bobby testified that he knew Laura did not want to move from Tyler, that after
the move to The Woodlands Laura became hostile, and that they separated in 2015.
Bobby’s counter-petition sought a divorce on grounds of irreconcilable differences
and Laura’s cruel treatment towards Bobby. According to Bobby, he alleged cruel
treatment by Laura as grounds for divorce based on Laura’s being “very demeaning
to [Bobby] [and] very demanding upon [Bobby]” and “discontent, . . . entitled, . . .
[and] insulting.”
Bobby testified that, as of the time of trial, he was “[d]evasted” financially
and the divorce “has cost total nearly $2 million.” According to Bobby,
6
[a]ll of my kids’ college education money is gone except that money
which I’ve given to Laura’s mother that’s being used for high school
that came from me, not from her mother, and then all of most of my
retirement, a good portion of my retirement is gone. All of my
emergency savings is gone.
According to Bobby, despite his attempts during the divorce, he has been unable to
find comparable employment in Tyler.
Bobby testified that his lawyers instructed him that he could use investment
money for case expenses. Bobby believed liquidating the 529 education accounts
had the least tax consequences over other investments, and that is why he chose to
liquidate the $184,000 in one account in October 2015 and the $157,000 in the other
account in April or May of 2016 to pay his attorney’s fees and expenses for the case.
Bobby testified that in October 2015 he also cashed out a combined $44,000 out of
two Uniform Gift to Minors Act accounts that were savings accounts for his children
because he wanted “[t]o prevent Laura from potentially getting access to those
funds.” According to Bobby, he initially kept the funds in the form of a check “for
emergency in [his] safe” but later deposited the check into his operating account to
pay bills once the trial court ordered all assets frozen and “all [Bobby’s] expenses
were three and four times” his monthly income. Bobby testified that during the
pendency of the divorce he was making $14,865 per month after taxes and paying
$6,137 for spouse and child support and court fees, and that his monthly expenses
7
were close to $23,000 per month. According to Bobby, the only way he could pay
the $1.2 million in attorney’s fees and expenses for the case without liquidating other
retirement sources was to liquidate the 529 accounts, which had the least tax
consequence, and withdraw $350,000 out of his IRA, which was profit from the sale
of the Tyler home and a non-taxable amount. Bobby testified that he did not try to
hide money from Laura and that he believes his spending has been fair and it was
allowed by the standing orders. Bobby agreed that on the day of the temporary order
hearing, he took out a $200,000 line of credit on the Tyler home and he sent the
money in the form of a cashier’s check to his mother in Tupelo, Mississippi. He later
had his mother mail him the check that he then deposited into his own bank account,
and when the Tyler home sold per the court’s order, Bobby paid the line of credit off
with the proceeds from the sale of the Tyler home. Bobby also testified that he spent
money to pay “Vidoc Razor” to try to get access to his wife’s phone because the
passwords he had would not work.
Stewart Gagnon testified that he is a lawyer and of counsel to the law firm of
Norton Rose Fulbright, U.S., L.L.P. and a former partner of the firm. According to
Gagnon he has been a licensed practicing attorney since 1974, and he is certified
with the Texas Board of Legal Specialization in family law. Gagnon testified he has
“written extensively” on “the characterization of marital property in the state of
8
Texas, reimbursement as it relates to marital property in the state of Texas and
various elements of reimbursement [such as] reconstitution of the estate that has
since become part of our family code[.]” According to Gagnon, he has “written
extensively both [for][] the Advanced Family Law Course, the Marriage Dissolution
Course, New Frontiers of Marital Property, which [he] ha[s] spoken at several times,
as well as several programs at the American Academy of Matrimonial Lawyers.”
Gagnon testified that he was the chair of the Family Law Section Legislative
Committee for eighteen years and appeared before the legislature and lobbied on
behalf of the Family Law Section for and against legislation. Gagnon testified that
“[o]ne of those legislations was Section 7.009 of the Family Code, which allows the
Court, upon a finding of waste, to reconstitute the marital estate in order to divide it
appropriately.” Gagnon explained he has lectured and written about matters related
to breach of fiduciary duty and to various aspects of actual and constructive fraud in
family law cases. According to Gagnon, he and two other attorneys wrote a three-
volume treatise on Texas marital property law that is published by Reuters and West
Publication.
Gagnon testified that the legal definition of “waste” in a family law case is
“the unreasonable use by a spouse in a harmful or destructive manner of a marital
estate so that it changes or diminishes the value of that estate at a point in time.”
9
According to Gagnon, Bobby produced documents after the jury verdict in the
custody case that revealed Bobby had an out-of-state Renasant bank account with
his father. Bobby had deposited funds from a line of credit into this account and
obtained a cashier’s check, and the account had not been listed on any of Bobby’s
prior inventories that Bobby had submitted in the divorce. Gagnon testified that a
temporary order agreed to by the parties had been entered on August 20, 2015, and
that in the agreed temporary order Bobby agreed to the appointment of Laura as sole
managing conservator and that Bobby would have supervised visits with their
children. According to Gagnon, for purposes of his testimony regarding Laura’s
waste claim, Gagnon focused on the time of August 2015 until shortly before trial
and that $988,602.86 of Bobby’s own litigation-related expenses were paid by
Bobby from the community estate during that period. Gagnon testified that he
reviewed the trial judge’s order in which the judge ordered the parties not to receive
or pay any additional fees or pay any additional legal expenses from the community
estate. Gagnon testified that based on his review of Bobby’s inventories, he
concluded that even after the judge’s order telling Bobby not to do so, Bobby
liquidated the children’s 529 accounts and used the funds to pay his own legal fees
in violation of the order. Gagnon testified that these actions by Bobby “required
additional work on behalf of both parties and additional fees on behalf of both parties
10
[that] led to a subsequent fallback of those funds back into the marital estate at least
for a time period[.]”According to Gagnon, the money in the 529 accounts was not
Bobby’s but was instead money solely in the children’s names that was gifted to
them. Gagnon also testified that Bobby violated the court’s order when he made an
August 18, 2016 payment of $10,045 to Dr. Seth Silverman, Bobby’s retained expert
witness who did not testify at trial.
Gagnon testified that he reviewed documents related to the litigation expenses
and Petitioner’s Exhibit 81, which he described as an accounting of the litigation and
litigation-related expenses involved in the divorce case. Gagnon explained that
Petitioner’s Exhibit 81 was prepared by Stewart & Hurst, a forensic accounting firm
retained by Laura that, among other things, does marital property forensic
accounting and tracing for divorce cases. Petitioner’s Exhibit 81 listed the total
divorce-related payments at $1,226,455.97, as of October 25, 2016. Gagnon testified
that, based on his review of Petitioner’s Exhibit 81, Bobby had retained and paid
more than $5,000 to an ad litem or amicus attorney for the children in the custody
case. According to Gagnon, this relates to Laura’s waste claim because Bobby had
no legal authority to retain and pay an ad litem because (1) under the temporary
orders he was not sole managing conservator of the children and lacked the authority
to contract or employ people on their behalf and (2) it is only the trial court who can
11
appoint someone to act on behalf of the children as an attorney or ad litem. On direct
examination, Gagnon also testified:
Q. Are you aware of the witnesses and the cost associated with
witnesses subpoenaed by Dr. Bennett for purposes of the jury trial, just
the child custody issues?
A. Well, my understanding is he subpoenaed a significant number of
witnesses including a lot of witnesses well outside the subpoena range
of this court and then withdrew those subpoenas.
Q. Are you aware of the cost, the expenditure by the community estate
for the issuing of those subpoenas?
A. I have seen those subpoenas.
....
Q. . . . [L]ook at Petitioner’s Exhibit 81[.]
A. Okay. I have it.
Q. . . . Items 1 through 39 . . . what if anything is waste and/or attorney
fees issues, in your opinion?
....
A. Again, after August -- end of August of 2015, Dr. Bennet’s
continued insistence regarding the custody of his children caused
additional fees to be incurred on behalf of both Ms. Bennett and the
marital estate. For example, Kit Harrison was paid $8,000.00 on
September 9th. If Dr. Bennett had not pursued unreasonably that
custody determination all the way through a jury trial where he didn’t
testify, those expenses for Dr. Harrison would not have been necessary.
Q. . . . Line items 40 through and including 79.
12
A. . . . There is $10,000 to Ruth Vernier. $10,000 to Seth Silverman,
who was engaged by Dr. Bennett as an expert witness but then never
until on the eve of trial provided any disclosure under Rule 194 as to
his opinions or conclusions or what he had considered and then never
testified.
Q. Was Dr. Seth Silverman a retained expert?
A. Yes. In fact, it was noted as such.
Q. All right. The disclosure you just mentioned, that came literally, like,
within a few days of the . . . jury selection, didn’t it?
A. That’s correct.
Q. Well after the August 18th[] discovery cutoff for purposes of the
trial?
A. That is exactly right.
Q. So did Dr. Seth Silverman add anything to this case?
A. No. But again, that was a habit of Dr. Bennett of designating expert
witnesses and then never even using them or engaging in a lot of money
and never using them, and there was no benefit to the community estate
for that.
For example, Dr. Bennett designated somebody to do tracing and
testify as to characterization of separate property, which the only
separate property ever listed on any of the documents he provided was
a few items of personal property that were not contested and a
$200,000.00 cashier check that was apparently in the possession of his
mother at one time and all of a sudden dropped off his inventory. There
was no need to designate an expert witness with that type of testimony
and engage -- incur the expenses for that type of testimony when that
person -- there is no issue regarding separate property.
....
13
Q. Line 66. Would you look at that?
A. There [are] Claudia Canales expenses, which is Line 55. Obviously,
her expenses after August 31st wouldn’t be necessary if Dr. Bennett
wasn’t unreasonably pursuing a sole managing conservatorship custody
case. You asked me about 66? --
Q. Yes.
A. -- Laura Marburger, that’s $5,000.00 we talked about earlier.
Q. All right.
A. Additional Claudia Canales expenses. There is Pathway Forensics.
There was Jed Moffett’s fee of $20,000.00 where Dr. Bennett
apparently -- and it’s obvious from the record that he changed lawyers
several times, from Mr. Jackson to Ms. Vernier to Mr. Moffett to Mr.
Jackson to Ms. Vernier to Mr. Jackson again. I mean, all of that
behavior, all of that action unreasonably cost without any benefit to this
community estate, diminishes that estate.
Gagnon stated that several payments by Bobby were made to his lawyers, and
according to Gagnon, changing lawyers as often as Bobby did drastically increased
the legal fees as each new attorney had to “recreate the wheel and that’s an
unreasonable expense, especially when you are bouncing between the same lawyers
back and forth.” According to Gagnon, Bobby also paid $10,000 to a private
investigator to record Laura’s actions and activities. Gagnon also testified about line
155 on Petitioner’s Exhibit 81 which reflected a payment made to “Vidoc Razor,
L.L.C.” which is a computer forensics company. According to Gagnon, the person
associated with the Vidoc Razor company was not designated to testify and the
14
payment was made in violation of the court’s order. Gagnon also opined that these
payments along with other litigation-related expenses constituted waste.
Gagnon reviewed Bennett’s 2013, 2014, and 2015 tax returns that
cumulatively resulted in a tax overpayment of $62,250 which Gagnon stated should
be a refund available to the taxpayer, but Bobby did not list the refund on Bobby’s
inventory. Gagnon noted in his testimony that Bobby prepaid with community funds
the 2016 property and school taxes on The Woodlands residence, and the amount
that he prepaid was also never disclosed on Bobby’s inventories. Gagnon explained
that “any of these prepayments to the IRS[,] to the tax appraisal districts or anything
like that of anything that is not due right now is a prepayment for his benefit and
should have been reflected as an asset on his inventory and not doing that caused
[Laura’s counsel] to do additional work and . . . hides assets that are not disclosed
by him.”
Raymond Blevins, a certified public accountant and the Bennetts’ CPA prior
to the divorce, testified that the income tax liability for the Bennetts was $26,873 in
2013, $3,397 in 2014, and $41,421 for 2015. According to Blevins, approximately
$20,000 of the $41,421 tax liability was attributable to the sale of the $184,000 529
plan. Blevins testified that there was an overpayment of $37,841 from 2015 to 2016
and that approximately $62,500, in addition to the $37,841 had been prepaid by
15
Bobby to the IRS for 2016. Blevins testified that there will be at least a $15,000 to
$18,000 tax liability for the $157,000 529 plan that was cashed out by Bobby, and
that the approximate total tax liability for 2016 will be $35,000 to $40,000 including
the penalty for the 529 plan. According to Blevins, based on estimated tax liability
for 2016 and amounts already paid, the Bennetts should have an overpayment and
refund of approximately $60,000. Blevins also testified that Bobby always wanted
the least money going out for taxes so he could keep the bills paid, and that if he had
wanted to try to harm the community estate then he could have taken other accounts
that could have created a greater tax burden.
Trial Court’s Findings
In dividing the marital estate, the trial court awarded the following assets to
Bobby and Laura, respectively, and listed values for the assets in the trial court’s
written Findings of Facts and Conclusions of Law3:
Property Awarded to Bobby Value
Residential house in The Woodlands $890,560.00
Bank account ending in 932 $1,897.23
Bank account ending in 4772 $49,825.89
Retirement account ending in 8619 $0.04
Retirement account ending in 0706 $325,949.54
2012 Honda Ridgeline $27,396.00
3
The parties stipulated that all other personal property would be divided in
arbitration and would not be a part of the marital estate divided by the trial court.
16
Tyler Anesthesia Services d/b/a $25,595.45
Bennett Enterprises, PA, which
includes Bank account ending
in 8696
BGB Management Company, LLC, $5,620.17
which includes the BankCorp
South money market account
ending in 4883
Family Partnership $0.00
Property Awarded to Laura Value
Vacant lot in Tyler, Smith County, Texas $125,000.00
Bank account ending in 3384 in Petitioner’s name $12,000.00
Portion of bank account ending in 4772 in name $50,000.00
of Respondent
Retirement account ending in 8934 $190,892.89
Retirement account ending in 8933 $55,168.65
Retirement account ending in 7267 $192,428.39
Retirement account ending in 0996 $434,391.31
Annuity $106,983.46
Annuity $59,083.25
2008 Toyota Sequoia $11,340.00
2007 Honda Ridgeline $4,345.00
The trial court also included the following findings of fact, in pertinent part:
[] The Court finds that Respondent, Bobby G. Bennett, Jr., is guilty of
cruel treatment toward Petitioner, Laura Merryman Bennett, of a nature
that renders further living together insupportable.
...
[] The Court finds that Bobby G. Bennett, Jr. is awarded any and all
claims against his mother, which would include, but not be limited to
the two distributions he made to her in the amounts of $97,507.48 and
$20,346.19. The Court further finds that Bobby G. Bennett, Jr. wasted
community assets in the total amount of $19,045.00 (See Petitioner’s
Exhibit 81, lines 155 and 173).
17
...
[] The Court finds that Laura Merryman Bennett and Bobby G. Bennett,
Jr. are each awarded the Holly Tree Country Club courtesy membership
in his or her own name.
[] The Court finds that Laura Merryman Bennett and Bobby G. Bennett,
Jr. should be ordered to file a joint married return for the tax year 2016.
[] The Court finds that the parties shall not be allowed to carry forward
or rollover any 2016 prepaid taxes to 2017.
[] The Court finds that Bobby G. Bennett, Jr. shall be responsible for
all the costs of Ray Blevins, CPA to prepare the parties’ 2016 tax return.
[] The Court finds that Laura Merryman Bennett shall be awarded 62%
of the parties’ 2016 tax refund and Bobby G. Bennett, Jr. shall be
awarded 38% of that refund.
[] The Court finds that should there be any tax liability for tax year
2016, Bobby G. Bennett, Jr. shall be 100% responsible for that liability.
....
[] The Court finds that attorney’s fees as a judgment in the amount of
$350,000.00 should be awarded to Petitioner as part of the just and right
division of the marital estate.
....
[] The Court finds that there is an outstanding balance owed to Claudia
Canales, the Amicus attorney, in the amount of $8,974.31, which
amount is ordered to be paid by Bobby G. Bennett, Jr. at or before entry
of the Final Decree of Divorce. . . .
....
18
[] The Court finds that the following are liabilities of the community
estate and are ordered to be paid by Bobby G. Bennett, Jr.
(a) Mortgage owed on [The Woodlands residence]: $706,888.24.
....
[] The Court took into consideration the following factors in making a
determination of a disproportionate division, which is a just and right
division of the parties’ marital estate:
(a) fault in the breakup of the marriage by Bobby G. Bennett[, Jr.];
(b) ages of the spouses;
(c) the length of the marriage of the parties;
(d) breach of fiduciary duty by Bobby G. Bennett, Jr.;
(e) fraud on the community by Bobby G. Bennett, Jr.;
(f) constructive fraud by Bobby G. Bennett, Jr.;
(g) benefits the innocent spouse may have derived from the
continuation of the marriage;
(h) disparity of earning power of the spouses and their ability to support
themselves;
(i) education and future employability of the spouses:
(j) community indebtedness and liabilities;
(k) the spouse to whom conservatorship of the children is granted;
(l) needs of the children of the marriage;
(m) tax consequences of the division of property;
(n) earning power, business opportunities, capacities, and abilities of
the spouses;
(o) need for future support for Laura Merryman Bennett;
(p) nature of the property involved in the division;
(q) wasting of community assets by Bobby G. Bennett, Jr.;
(r) attorney’s and expert fees and expenses paid and to be paid; and
(s) the size and nature of the separate estates of the spouses.
The trial court also stated in its conclusions of law that it granted the divorce in favor
of Laura “on the ground of cruelty by Bobby G. Bennett, Jr. toward Laura Merryman
Bennett that renders further living together insupportable.”
19
Expert Testimony
In his first issue, Bobby argues the trial court erred in admitting the expert
testimony of Stewart Gagnon on waste, fraud, and reconstitution of the community.
According to Bobby, Gagnon was not qualified to give the opinion, his opinion was
not reliable, and “the pleading relied up[]on w[as] filed out[]side of time permitted
by the scheduling order.”
We first address Bobby’s complaint about the alleged untimely-filed pleading.
In his statement of facts in his initial appellate brief, Bobby mentions that Laura’s
Second Amended Petition for Divorce filed August 18, 2016 was filed “less than
thirty days before trial and clearly outside the Court Ordered Deadline[,]” and he
argues the Second Amended Petition was the first time Laura had included fraud,
waste, and a request for reconstitution. According to Bobby’s statement of facts, the
trial court sua sponte granted leave for the amended pleadings “with no discussion
about harm or surprise.” However, Bobby provides no argument, authority, or
discussion as to why Gagnon’s testimony should have been excluded as it relates to
the amended pleading being untimely filed. Bobby has waived that point of error
due to inadequate briefing. See Tex. R. App. P. 38.1(i); Fredonia State Bank v. Gen.
Am. Life Ins. Co., 881 S.W.2d 279, 284-85 (Tex. 1994) (“error may be waived by
inadequate briefing[]”).
20
As to Gagnon’s testimony, on appeal Bobby argues that Gagnon is not a
forensic accountant, his opinions are not reliable under the Robinson factors, his
opinions were nothing more than a personal subjective interpretation of litigation
strategy and expenses, and he did not state a methodology or standard criteria in
determining his opinion. If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to determine a fact in issue, a
witness qualified as an expert by knowledge, skill, experience, training, or education
may testify thereto in the form of an opinion or otherwise. Tex. R. Evid. 702.
Testimony, in the form of an opinion or inference otherwise admissible, is not
objectionable because it embraces an ultimate issue to be decided by the trier of fact.
Tex. R. Evid. 704. “Expert testimony is admissible if (1) the expert is qualified, and
(2) the testimony is relevant and based on a reliable foundation.” Cooper Tire &
Rubber Co. v. Mendez, 204 S.W.3d 797, 800 (Tex. 2006).
A trial court’s decision to accept or exclude expert testimony is reviewed
under an abuse-of-discretion standard. Gammill v. Jack Williams Chevrolet, Inc.,
972 S.W.2d 713, 718-19, 727 (Tex. 1998). To testify as an expert, a witness must be
qualified in a particular area or field of expertise. Id. at 718 & n.9. The determination
of whether a witness is qualified as an expert is a preliminary question to be decided
21
by the trial court. Id. at 718. The party offering the expert testimony bears the burden
to prove the witness is qualified under Rule 702. Id.
In E.I. du Pont de Nemours and Company v. Robinson, the Texas Supreme
Court established that an expert’s “underlying scientific technique or principle must
be reliable.” 923 S.W.2d 549, 557 (Tex. 1995). It identified six factors that courts
may consider when determining whether an expert’s scientific testimony is reliable
and thus admissible. See id. The factors are: (1) the extent to which the theory has
been or can be tested; (2) the extent to which the technique relies upon the subjective
interpretation of the expert; (3) whether the theory has been subjected to peer review
and/or publication; (4) the technique’s potential rate of error; (5) whether the
underlying theory or technique has been generally accepted as valid by the relevant
scientific community; and (6) the non-judicial uses which have been made of the
theory or technique. Id. The Texas Supreme Court has clarified that the six factors
are nonexclusive and “do not fit every scenario.” TXI Transp. Co. v. Hughes, 306
S.W.3d 230, 235 (Tex. 2010); see Gammill, 972 S.W.2d at 726. Where, as here, an
expert relies on principles and analysis rather than on a particular methodology to
reach a conclusion, we must assess reliability by determining whether there is
“simply too great an analytical gap between the data and the opinion proffered[]” for
the opinion to be reliable. Gammill, 972 S.W.2d at 726 (quoting Gen. Elec. Co. v.
22
Joiner, 522 U.S. 136, 146 (1997)). In determining whether there is too great an
analytical gap, we look to the facts the expert relied on, the facts in the record, and
the expert’s ultimate opinion. Gharda USA, Inc. v. Control Sols., Inc., 464 S.W.3d
338, 349 (Tex. 2015). The Texas Supreme Court has elaborated that analytical gaps
“may include circumstances in which the expert unreliably applies otherwise sound
principles and methodologies, the expert’s opinion is based on assumed facts that
vary materially from the facts in the record, or the expert’s opinion is based on tests
or data that do not support the conclusions reached.” Id. (internal citations omitted).
At trial, Bobby’s counsel made a Daubert challenge, and objected to
Gagnon’s opinion testimony under Rules 702, 703, and 705 of the Texas Rules of
Evidence on the basis that Gagnon is not a forensic accountant and, therefore, not an
expert witness who can opine as to fraud and waste by reviewing financial
documents. Bobby did not argue that whether waste or fraud or reconstitution existed
would be ultimately a legal question for the trial judge to decide, nor did he argue
that Gagnon was attempting to testify on pure legal questions. 4 Prior to denying the
4
An expert may state an opinion on a mixed question of law and fact if the
opinion is limited to the relevant issues and is based on proper legal concepts. GTE
Southwest, Inc. v. Bruce, 998 S.W.2d 605, 619-20 (Tex. 1999). An issue involves a
mixed question of law and fact when a standard or measure has been fixed by law
and the question is whether the person or conduct measures up to that standard.
Mega Child Care, Inc. v. Texas Dep’t of Protective & Regulatory Servs., 29 S.W.3d
303, 309 (Tex. App.—Houston [14th Dist.] 2000, no pet.). Expert testimony on a
23
Daubert challenge, the trial court responded to Bobby’s counsel by stating, “I’ll let
you explore that with him on your cross and if you convince me, then I will not
consider his opinions.”
Regarding his qualifications to give an expert opinion on fraud, waste, and
reconstitution, Gagnon testified that he has written extensively on the
characterization of marital property in the state of Texas, lectured and written for
family law courses on matters such as breach of fiduciary duty and fraud in family
mixed question of law and fact must meet the requirements applicable to expert
testimony generally which means it must be helpful to the trier of fact as required by
Texas Rule of Evidence 702. Louder v. De Leon, 754 S.W.2d 148, 149 (Tex. 1988)
(per curiam); Lyondell Petrochemical Co. v. Fluor Daniel, Inc., 888 S.W.2d 547,
554 (Tex. App.—Houston [1st Dist.] 1994, writ denied). An expert, however, may
not testify on pure questions of law. Mega Child Care, Inc., 29 S.W.3d at 309. An
expert is not allowed to testify directly as to his understanding of the law but may
apply legal terms to his understanding of the factual matters in issue. Welder v.
Welder, 794 S.W.2d 420, 433 (Tex. App.—Corpus Christi 1990, no writ). Based
upon the record before us, the trial court could have reasonably concluded that the
challenged testimony included mixed questions of facts and no more than the
expert’s understanding of the law as applied to such facts. Even if we had found that
it was error for the trial court to admit the testimony of Gagnon, to reverse a
judgment based on error in the admission or exclusion of evidence, we must then
also determine the error probably caused the rendition of an improper judgment.
Tex. R. App. P. 44.1; Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.
1989). Error regarding evidentiary rulings is usually not reversible unless the
judgment turns on the particular excluded or admitted evidence. Port Terminal R.R.
Ass’n v. Richardson, 808 S.W.2d 501, 510 (Tex. App.—Houston [14th Dist.] 1991,
writ denied).
24
law cases, assisted with writing a treatise on Texas marital property law, was the
chair of the Family Law Section Legislative Committee for eighteen years, and
testified before the legislature and lobbied regarding legislation such as section 7.009
of the Family Code that allows for reconstitution of the marital estate upon a finding
of waste. Based on the evidence in the record, we cannot say the trial court abused
its discretion in allowing Gagnon to testify or in considering his testimony as an
expert.
Gagnon provided his opinion on whether and to what degree Bobby
committed waste of the marital estate, and his analysis was based on evidence in the
record, including documents formulated by a forensic accounting firm and other
documents admitted as exhibits at trial. See Tex. R. Evid. 401, 402, 702; Marathon
Corp. v. Pitzner, 106 S.W.3d 724, 729 (Tex. 2003) (expert opinion must be
supported by the facts in record). Bobby did not call an expert to contradict Gagnon’s
testimony or conclusions, nor did Bobby dispute the accuracy of the underlying
documents. Having reviewed the entire record, we conclude there is not too great of
an analytical gap between the data and the opinion proffered, nor do we see any
indication that Gagnon’s opinions were based on an unreliable application of
otherwise sound principles and methodologies, on assumed facts that varied
25
materially from the facts in the record, or on data that did not support the conclusions
reached. See Gharda USA, Inc., 464 S.W.3d at 349. We overrule issue one. 5
Fraud, Constructive Fraud, and Waste, Attorney’s Fees, and Division of the
Community Estate
In issue two, Bobby challenges the factual sufficiency of the evidence
supporting the trial court’s findings “on fraud, constructive fraud[,] and waste to
justify reconstitution division of assets” resulting in a disproportionate distribution
of the community estate in favor of Laura. 6 In issue three, Bobby argues the trial
court abused its discretion in not making a “just and right” division of the marital
property because the division was disproportionate. 7 In issue four, Bobby argues the
5
Although we have concluded that the trial court did not err in overruling
Bobby’s objections and in admitting the Gagnon testimony, even if the trial court
erred in the admission of such testimony, we cannot say that the admission of such
testimony probably resulted in an improper judgment. See Tex. R. App. P.
44.1(a)(1).
6
As to Bobby’s statement in the summary of his argument for issue two that
the trial court could not find fraud, breach of fiduciary duty, and constructive fraud
as a matter of law “because the activity occurred during the l[iti]gation and spouses
do not owe a fiduciary duty to the other spouse once divorce action begins[,]” Bobby
provides no argument or authority in support of his contention. See Tex. R. App. P.
38.1(i).
7
Bobby asserts in his supplemental brief that the trial court awarded Laura
80.86 percent of the community property estate and Bobby was awarded 19.14
percent. He states that these percentages are a correction to his prior assertion in his
initial brief that Laura was awarded more than 99 percent of the community property
26
trial court, by ordering Bobby to pay all attorney’s fees, created a division of the
community estate that was so disproportionate that it constituted an abuse of
discretion. We address issues two, three, and four together as all three issues relate
to the trial court’s division of the marital estate and Bobby’s contention that the trial
court erred in failing to make a “just and right” division.
Under section 7.001 of the Texas Family Code, in a divorce case, the trial
court must divide the estate of the parties in a “just and right[]” manner. Tex. Fam.
Code Ann. § 7.001 (West 2006). Trial courts may exercise wide discretion in
ordering a property division. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex.
1998); Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981); Ohendalski v. Ohendalski,
203 S.W.3d 910, 914 (Tex. App.—Beaumont 2006, no pet.). Thus, we review
property-division issues for abuse of discretion. Murff, 615 S.W.2d at 698. A trial
court abuses its discretion when it acts arbitrarily or unreasonably, and without
reference to any guiding rules or principles. Worford v. Stamper, 801 S.W.2d 108,
109 (Tex. 1990).
In Bradshaw v. Bradshaw, the Texas Supreme Court explained “just and
right” as follows:
and he was awarded less than 1 percent. For purposes of the resolution of the appeal
we need not determine the percentages.
27
The division of a community estate in divorce must be “just and right,
having due regard for the rights of each party and any children of the
marriage.” “Just” and “right” are broad terms. Black’s Law Dictionary
defines “just” as “[l]egally right; lawful; equitable”, and “right” as
“[t]hat which is proper under law, morality, or ethics”. And “due
regard” simply means the “[a]ttention, care, or consideration” that is
“[j]ust, proper, regular, and reasonable”. A trial court should consider
many factors, including “the spouses’ capacities and abilities . . . and
the nature of the property.” The court may consider the “fault in
breaking up the marriage”, though the community-property division
“should not be a punishment for the spouse at fault.” In the end, “the
court is to do complete equity as between the husband and wife and the
children, having due regard to all obligations of the spouses and to the
probable future necessities of all concerned.”
Because the standards for dividing a community estate involve the
exercise of sound judgment, a trial court must be accorded much
discretion in its decision. The division “should be corrected on appeal
only where an abuse of discretion is shown in that the disposition made
of some property is manifestly unjust and unfair.” The appellate court
cannot merely reweigh the evidence. Rather, “[a] determination of
whether the property division decreed in a divorce constitutes an abuse
of discretion presents a legal rather than a factual question for appellate
review.” And in deciding that legal question, the trial court is entitled
to no deference. “[A] trial court has no discretion in determining what
the law is or applying the law to the facts, even when the law is
unsettled.”
555 S.W.3d 539, 543 (Tex. 2018) (internal citations omitted).
A trial court’s division of property need not be equal, and we presume the trial
court properly exercised discretion in determining the value and division of marital
property. Bell v. Bell, 513 S.W.2d 20, 22 (Tex. 1974). A trial court may award an
unequal division of marital property when a reasonable basis exists for doing so.
28
Loaiza v. Loaiza, 130 S.W.3d 894, 899 (Tex. App.—Fort Worth 2004, no pet.).
“Legal and factual sufficiency are relevant factors, rather than independent bases for
reversal, in determining whether the trial court abused its discretion.” Aduli v. Aduli,
368 S.W.3d 805, 819 (Tex. App.—Houston [14th Dist.] 2012, no pet.). “The party
attacking the property division bears the heavy burden of showing that the trial
court’s property division was not just and right.” Pletcher v. Goetz, 9 S.W.3d 442,
446 (Tex. App.—Fort Worth 1999, pet. denied). In reviewing the division of a
marital estate, the appellate court should not substitute its own discretion for that of
the trial court. See McKnight v. McKnight, 543 S.W.2d 863, 866 (Tex. 1976). An
abuse of discretion requires something more than an appellate court determining that
the trial court should have reached a different result. Nath v. Tex. Children’s Hosp.,
446 S.W.3d 355, 371 (Tex. 2014). We engage in a two-pronged analysis in deciding
whether the trial court abused its discretion: first, we consider whether the trial court
had sufficient evidence upon which to exercise its discretion; and, second, we
consider whether the trial court erred in its application of that discretion. Cantu v.
Cantu, 556 S.W.3d 420, 426 (Tex. App.—Houston [14th Dist.] 2018, no pet.).
In exercising its discretion to divide the marital estate, the trial court may
consider several factors, including each party’s earning capacity, abilities, education,
business opportunities, physical health, financial condition, age, and size of separate
29
estates, as well as any future needs for support, custody of any children,
reimbursements, gifts to a spouse during marriage, fault in the breakup of the
marriage, length of the marriage, and a spouse’s dissipation of the estate. Murff, 615
S.W.2d at 699; Hailey v. Hailey, 176 S.W.3d 374, 380 (Tex. App.—Houston [1st
Dist.] 2004, no pet.); Vannerson v. Vannerson, 857 S.W.2d 659, 669 (Tex. App.—
Houston [1st Dist.] 1993, writ denied); Baccus v. Baccus, 808 S.W.2d 694, 700 (Tex.
App.—Beaumont 1991, no writ) When one spouse not only deprives the other of
community assets but does so with dishonesty and an intent to deceive, the trial court
may consider such heightened culpability in its division. Schleuter, 975 S.W.2d at
589-90.
The circumstances of each marriage dictate what factors should be considered
in division of the marital estate. Young v. Young, 609 S.W.2d 758, 761 (Tex. 1980).
Because the trial court has “the opportunity to observe the parties on the witness
stand, determine their credibility, evaluate their needs and potentials, both social and
economic[,]” we defer to the trial court on factual resolutions and credibility
determinations. See Murff, 615 S.W.2d at 700; Allen v. Allen, 475 S.W.3d 453, 458
(Tex. App.—Houston [14th Dist.] 2015, no pet.). Although the trial court may
consider fault in the breakup of the marriage, a just and right division should not be
punitive against the errant spouse. Young, 609 S.W.2d at 762.
30
Appellant complains that the percentage awarded to the wife amounts to 80.86
percent. As noted by the concurring opinion in Bradshaw, there is no set threshold
of percentages allowed or disallowed under either the Texas Family Code or under
our jurisprudence. 555 S.W.3d at 546 (Devine, J., concurring). Accordingly, even if
the percentage of the marital estate awarded to the Appellee may have been 80.86
percent as alleged by Appellant, this Court and other appellate courts have
previously affirmed divisions where one spouse received more than 80 percent of
the property. See, e.g., Ohendalski, 203 S.W.3d at 912 (affirming award of 81
percent of the community estate to wife); Wright v. Wright, 65 S.W.3d 715, 716
(Tex. App. — Eastland 2001, no pet.) (affirming award of 88 percent of the
community estate to wife). The Family Code “simply instructs that the property
division be just and right . . . [and] [i]f the evidence supports a disproportionate
division of the marital estate, a trial court must order a division that is just and right,
guided by that evidence.” Bradshaw, 555 S.W.3d at 547 (Devine, J., concurring).
A fiduciary duty exists between a husband and wife regarding the community
property controlled by each spouse. Zieba v. Martin, 928 S.W.2d 782, 789 (Tex.
App.—Houston [14th Dist.] 1996, no writ) (op. on reh’g); In re Marriage of Moore,
890 S.W.2d 821, 827 (Tex. App.—Amarillo 1994, no writ). “Fraud on the
community” is a judicially created concept based on the theory of constructive fraud
31
and is applied when there is a breach of legal or equitable duty, which violates this
fiduciary relationship existing between spouses. Zieba, 928 S.W.2d at 789; Moore,
890 S.W.2d at 827. Such conduct in the marital relationship is termed fraud on the
community because it has all the consequences and legal effects of actual fraud since
the conduct tends to deceive the other spouse or violates marital confidences.
Wheeling v. Wheeling, 546 S.W.3d 216, 225 (Tex. App.—El Paso 2017, no pet.)
(citing Zieba, 928 S.W.2d at 789); Moore, 890 S.W.2d at 827. A presumption of
constructive fraud arises where one spouse breaches the fiduciary duty owed to the
other spouse and disposes of the other spouse’s one-half interest in community
property without the other’s knowledge or consent. Zieba, 928 S.W.2d at 789;
Jackson v. Smith, 703 S.W.2d 791, 795 (Tex. App.—Dallas 1985, no writ). When
that occurs, the burden of proof is on the disposing spouse to show fairness in
disposing of the community assets. Zieba, 928 S.W.2d at 789.
Attorney’s fee awards in divorce cases are also reviewed for an abuse of
discretion. Murff, 615 S.W.2d at 699 (citing Carle v. Carle, 234 S.W.2d 1002, 1005
(Tex. 1950)). A trial court may apportion attorney’s fees in a divorce action as part
of a “just and right” division of the community estate. See Ayala v. Ayala, 387
S.W.3d 721, 733 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing Vazquez v.
Vazquez, 292 S.W.3d 80, 86 (Tex. App.—Houston [14th Dist.] 2007, no pet.)). “The
32
reasonableness of the fee awarded is a question of fact that must be supported by the
evidence.” Id. (citing Vazquez, 292 S.W.3d at 86). A trial court abuses its discretion
in awarding attorney’s fees if the resulting division is “manifestly unfair.” Mann v.
Mann, 607 S.W.2d 243, 245 (Tex. 1980).
In his second issue, Bobby argues that, once Gagnon’s expert opinion is
excluded, the remaining evidence is insufficient to support findings of breach of
fiduciary duty, fraud on the community, and wasting of community assets. The trial
court specifically found that Bobby wasted community assets in the total amount of
$19,045. The trial court could have concluded, even without the testimony of
Gagnon, and simply from the exhibits and testimony provided by Laura and
developed on cross-examination of Bobby, that Bobby made payments in violation
of the trial court’s order and made tax overpayments on The Woodlands home and
on his income taxes that constituted waste. The amount of those transactions alone,
without consideration of the other hundreds of thousands of dollars of alleged waste
testified to by Gagnon, exceeds the amount of $19,045 found by the trial court. See
Wheeling, 546 S.W.3d at 225 (stating that a waste finding can be supported by
evidence that spouse used excessive funds without the other spouse’s consent).
Furthermore, the trial court could have concluded, even without the testimony of
Gagnon, and solely from exhibits and Bobby’s and Laura’s testimony, that Bobby’s
33
actions during the pendency of the divorce resulted in excessive attorney’s fees
constituting waste in an amount exceeding $19,045. See id. We conclude the trial
court did not err in finding that Bobby breached his fiduciary duty, perpetrated fraud
on the community, and wasted community assets. Even if we were to have reached
a different conclusion with respect to the admission of Gagnon’s testimony or as to
the sufficiency of the remainder of the evidence, Bobby has the burden to also
demonstrate that the alleged error caused the trial court to abuse its discretion in the
overall division of the community estate, essentially showing that the error was
harmful. See id. at 227. Bobby has failed to meet his burden.
In this appeal, Bobby does not challenge the trial court’s findings or
conclusions that Bobby was guilty of cruel treatment towards Laura of a nature that
rendered living together insupportable. Grounds for a fault-based divorce include
cruelty. See Tex. Fam. Code Ann. § 6.002 (West 2006) (“The court may grant a
divorce in favor of one spouse if the other spouse is guilty of cruel treatment toward
the complaining spouse of a nature that renders further living together
insupportable.”). We note that the trial court may have also considered that factor,
along with others, in making a disproportionate division of property. See Ohendalski,
203 S.W.3d at 914-15.
34
Furthermore, the jury determined that Laura should be appointed sole
managing conservator of the children and in its findings the trial court listed one of
the factors it considered in making a just and right division of the community
property as “the spouse to whom conservatorship of the children is granted[]” and
the needs of the children. The trial court also stated it considered the length of the
marriage as a factor in dividing the community estate. The trial court heard evidence
of Laura’s and Bobby’s education, income, and earning power, and the trial court in
its findings listed disparity of earning power of the spouses, Laura’s and Bobby’s
ability to support themselves, a need for future support for Laura, and future
employability of the spouses as factors the court considered in making a just and
right division of the community property. The trial court heard testimony and
received evidence of waste by Bobby, and the trial court listed waste as a factor it
considered in dividing the community estate. The trial court also heard evidence that
Bobby made overpayments of property and income tax without Laura’s knowledge,
failed to list certain assets on his inventories, and made payments after entry of the
trial court’s orders instructing the parties not to do so. Therefore, on the record before
us, we conclude that the trial court could have reasonably determined that Bobby
committed waste, fraud, constructive fraud, or a breach of fiduciary duty as to the
community estate. The trial court also stated in its findings that in dividing the
35
community estate it considered the attorney’s fee paid and to be paid. The record
shows the parties presented evidence of fees incurred and paid, and the trial court
could have also considered whether those fees were reasonable and necessary, and
whether the conduct of the parties unnecessarily increased such fees.
We cannot conclude that the trial court acted arbitrarily or unreasonably and
without reference to any guiding principles in dividing the estate. Worford, 801
S.W.2d at 109; Hailey, 176 S.W.3d at 380. We cannot say the resulting distribution
was manifestly unfair. After considering the entire record and giving deference to
the trial court’s factual and credibility determinations, we conclude that the trial
court had sufficient evidence upon which to exercise its discretion and that the trial
court did not err in its application of that discretion. The trial court had a reasonable
basis for awarding a disproportionate distribution and the trial court’s division was
not so unjust and unfair as to be an abuse of discretion. We overrule issues two,
three, and four. We affirm the trial court’s judgment.
AFFIRMED.
_________________________
LEANNE JOHNSON
Justice
36
Submitted on February 19, 2019
Opinion Delivered May 2, 2019
Before McKeithen, C.J., Kreger and Johnson, JJ.
37