Marilu Ellis (Formerly Zieben) v. Herbert J. Zieben ( 2005 )

Opinion issued June 2, 2005

  In The

Court of Appeals

For The

First District of Texas

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  NO. 01-04-00436-CV

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MARILU ELLIS, Appellant

V.

HERBERT J. ZIEBEN, Appellee

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On Appeal from the 309th District Court

Harris County, Texas

Trial Court Cause No. 2003-13857

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MEMORANDUM OPINION

          Marilu Ellis, appellant and plaintiff in the trial court, appeals the trial court’s order awarding her the sum of $500 in a post-divorce partition action regarding undivided community property, consisting of shares in H.J.Z., Inc., a corporation formed by her husband a few months before she petitioned for divorce. Appellant presents the following three issues on appeal: (1) that the evidence was legally and factually insufficient to support two of the trial court’s findings of fact, (2) that appellee Zieben failed to present clear and convincing evidence tracing the separate property that he contributed to H.J.Z., Inc. after the divorce, and (3) that the trial court’s “wrongful characterization and valuation” of appellant’s interest in H.J.Z., Inc. rendered the partition award “something other than just and right.” We affirm.

BACKGROUND

          The facts of this case are uncontested. On December 20, 1989, appellant and appellee, Herbert J. Zieben were divorced by a decree that granted Zieben a 100% interest in the general partnerships known as Kitty Hawk Landing Apartments II (“Kitty Hawk II”) and Kitty Hawk Landing Apartments III (“Kitty Hawk III”) and in two Texas corporations named Haverstock Hill II, Inc. (“Haverstock II”) and Haverstock Hill III, Inc. (“Haverstock III”) (jointly, “the Haverstock corporations”). The divorce decree did not partition the community interest in H.J.Z., Inc., which was formed by Zieben during the marriage on March 21, 1989, but had no assets of any value until after the divorce decree was granted.

          On December 21, 1990, after the divorce decree was granted, Zieben transferred the real property assets of Kitty Hawk II to Haverstock II, and the real property assets of Kitty Hawk III to Haverstock III. All of these entities, and through these entities the real property assets conveyed, were the separate property of Zieben pursuant to the divorce decree and were solely owned by him. However, in September 1992, although he had no recorded interest in the real property assets of these corporations, Zieben executed deeds purporting to transfer these real property assets from himself, and not from the Haverstock corporations, as grantor to H.J.Z., Inc. At the time of this transfer, H.J.Z., Inc., which had been community property during the marriage, remained unpartitioned property.

          On March 10, 1998, Zieben filed affidavits in the real property records of the Harris County Clerk’s office. In these affidavits, he swore that articles of dissolution formally dissolving the Haverstock corporations had been filed on June 21, 1991 with the Texas Secretary of State. Zieben also swore that he was the “sole owner of the corporation[s] on the date of dissolution” and that he, individually, was the owner of the real property assets beginning June 21, 1991.

          On April 26, 2000, Zieben sold the real property assets to Commonwealth Texas (Haverstock and Coolwood), L.L.C. (“Commonwealth”). At the closing on these conveyances, Zieben, Commonwealth, and the U.S. Department of Housing and Urban Development (“HUD”) entered into an agreement to hold $1.95 million of the sale proceeds in escrow. The escrow agreement recited that Zieben and H.J.Z., Inc. were the sellers “as their interest may appear.” The recited purpose of the escrow agreement was to establish a fund that would be sufficient to satisfy a “dispute between Zieben and HUD that is capped at no greater an amount than $1,950,000.00.”

          On March 17, 2003, appellant filed suit against Zieben, claiming damages “in excess of $1,950,000.00” and seeking a division of the shares of H.J.Z., Inc. The trial court awarded Zieben all 1,000 shares of H.J.Z., Inc. and awarded appellant $500 for her equitable interest in H.J.Z., Inc.

DISCUSSION

          In her first issue, appellant challenges the legal and factual sufficiency of the evidence to support the following findings of fact made by the trial court:

8.       Except for the post-divorce efforts of Herbert Zeiben [sic] and the post-divorce addition of property awarded to Herbert Zieben under the final decree, the 1000 shares of HJZ, Inc. stock never had a fair market value in excess of $1,000.

9.       Any post-divorce increase in the value of the 1000 shares of HJZ, Inc. stock owned by Herbert Zeiben [sic] at the time of the divorce was solely attributable to his post-divorce efforts and his post-divorce transfer to HJZ, Inc. of property awarded to him in the divorce decree.

          The appellant must challenge the sufficiency of the trial court’s findings in its issues on appeal, or the findings will be binding on the appellate court. IKB Indus. (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440, 445 (Tex. 1997). If the appellant challenges the findings in its issues, the appellate court will review the legal and factual sufficiency of the evidence to support the findings in the same manner it reviews a jury’s findings in a jury trial. Tierra Sol Joint Venture v. City of El Paso, 155 S.W.3d 503, 507 (Tex. App.—El Paso 2004, pet. denied.); State Bar of Texas v. Roberts, 723 S.W.2d 233, 235 (Tex. App.—Houston [1st Dist.] 1986, no writ). In reviewing the legal sufficiency of the evidence, the court can consider only the evidence and inferences that tend to support the finding and must disregard all evidence and inferences to the contrary. Weirich v. Weirich, 833 S.W.2d 942, 945 (Tex. 1992). In reviewing the factual sufficiency of the evidence, the court must consider all evidence in the record, both in support of, and contrary to, the finding. Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex. 1986).

          The assets transferred to H.J.Z., Inc. were awarded in the divorce decree to Zieben as his separate property. H.J.Z., Inc. had no assets prior to the divorce, and appellant contributed nothing to H.J.Z., Inc. either before or after the divorce. Because these facts are uncontested, they are legally and factually sufficient to support the trial court’s findings of fact Nos. 8 and 9. We overrule appellant’s first issue.  In her second issue, appellant argues that Zieben did not meet his burden of tracing the assets as Zieben’s separate property by clear and convincing evidence. Appellant does not cite any authority to support her contention that such tracing or evidentiary standard is required in a post-divorce division of property. In a post-divorce partition suit, the court has the power to divide the undivided property in a manner that it deems just and right. Tex. Fam. Code Ann. § 9.203(a) (Vernon 1998); see also Bishop v. Bishop, 74 S.W.3d 877, 879 (Tex. App.—San Antonio 2002, no pet.). The trial court was required only to consider “the rights of the parties and any children of the marriage” in making a division of the jointly-owned property that it deemed just and right. Tex. Fam. Code Ann. § 9.203(a); see also Bishop, 74 S.W.3d at 879. We overrule appellant’s second issue.

          In her third issue, appellant argues that the trial court abused its discretion by dividing the property in a manner not just and right because the trial court mischaracterized H.J.Z., Inc. as something other than a community asset and under-valued appellant’s interest in H.J.Z., Inc.

          After entry of a divorce decree, if the trial court did not dispose of all community property, the former spouses become co-tenants or joint owners of the property. Busby v. Busby, 457 S.W.2d 551, 554 (Tex. 1970); Burgess v. Easley, 893 S.W.2d 87, 90 (Tex. App.—Dallas 1994, no writ). In this circumstance, the trial court has the power to make a just and right division and is not bound by a presumption that it is to make an equal division. In re Marriage of Moore, 890 S.W.2d 821, 840 (Tex. App.—Amarillo 1994, no pet.).   

          In a post-divorce partition suit, an unequal division should not be disturbed absent a showing that the division was so disproportionate, unjust, and unfair, that it was a clear abuse of discretion. In re Marriage of Notash, 118 S.W.3d 868, 874 (Tex. App.—Texarkana 2003, no pet.). The test for abuse of discretion is whether the trial court acted without reference to any guiding rules or principles; in other words, whether the act was arbitrary or unreasonable. Mai v. Mai, 853 S.W.2d 615, 618 (Tex. App.—Houston [1st Dist.] 1993, no pet.).   

          Contrary to appellant’s assertion, the trial court did not mischaracterize the undivided property; rather, it correctly concluded that, after the divorce, appellant and Zieben “owned the 1000 shares of HJZ, Inc. as joint owners.” See Busby, 457 S.W.2d at 554; Bishop, 74 S.W.3d at 879. Because the record supports the trial court’s finding that any increase in the value of H.J.Z., Inc. in excess of $1,000 was attributable entirely to the post-divorce efforts of Zieben, it follows that an award to appellant of one-half of what was the community value of H.J.Z., Inc. as it existed at the time of the divorce is just and right.

          We hold that the trial court did not abuse its discretion in finding (1) that the value of H.J.Z., Inc. as community property did not exceed $1,000, (2) that the post-divorce increase in value was due entirely to the post-divorce efforts of Zieben, and (3) that award of the 1000 shares of H.J.Z., Inc. stock to Zieben and the award of $500 to appellant was a just and right division of the asset. We further hold that the trial court correctly concluded that the property division was just and right. We overrule appellant’s third issue.

                                                     CONCLUSION

          We affirm the trial court’s judgment.

                                                             Sam Nuchia

Justice

Panel consists of Justices Nuchia, Keyes, and Bland.