Donald Edmund Dyer v. Estela Trevino Dyer ( 2018 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-16-00753-CV
Donald Edmund Dyer, Appellant
v.
Estela Trevino Dyer, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. D-1-FM-14-005909, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING
MEMORANDUM OPINION
Following an agreement between the parties to bifurcate the case between jury and
bench trial, the trial court signed a divorce decree dividing the community estate of appellant
Donald Edmund Dyer and appellee Estela Trevino Dyer, giving Estela a majority of the community
estate and ordering Donald to reimburse the community estate for certain expenditures.1 On appeal,
Donald argues that the evidence does not support the disproportionate division of the estate or some
of the grounds for reimbursement. We reverse the portions of the decree dividing the estate and
remand the case to the trial court to make a new division of property pursuant to this opinion.
1
For the sake of clarity, we will refer to the parties by their first names.
Standard of Review
A trial court must “order a division of the estate of the parties in a manner that the
court deems just and right,” Tex. Fam. Code § 7.001, and has broad discretion in making that
division, Penick v. Penick, 783 S.W.2d 194, 198 (Tex. 1988); O’Carolan v. Hopper, 71 S.W.3d 529,
532 (Tex. App.—Austin 2002, no pet.). The trial court does not have to divide the community
property equally, but the division must be equitable and the record must reflect a reasonable
basis for an unequal division of the property. O’Carolan, 71 S.W.3d at 532. “To constitute an
abuse of discretion, the property division must be manifestly unfair.” Id. (citing Mann v. Mann,
607 S.W.2d 243, 245 (Tex. 1980)).
In exercising its discretion, the court may consider factors such as the parties’
“earning capacities, education, business opportunities, physical condition, financial condition, age,
size of separate estates, nature of the property, and the benefits that the spouse who did not cause the
breakup of the marriage would have enjoyed had the marriage continued.” Id. The trial court has
the opportunity to observe the parties and other witnesses, determine credibility, and evaluate the
parties’ needs and potentials. Murff v. Murff, 615 S.W.2d 696, 700 (Tex. 1981). “Mathematical
precision in dividing property in a divorce is usually not possible. Wide latitude and discretion rests
in these trial courts and that discretion should only be disturbed in the case of clear abuse.” Id.
Although challenges to the legal and factual sufficiency of the evidence are not independent grounds
of error, they are relevant factors when determining whether the trial court abused its discretion.
O’Carolan, 71 S.W.3d at 532.
2
We also review a trial court’s determination of a claim for reimbursement for an
abuse of discretion. Penick, 783 S.W.2d at 198. We begin our review by presuming that the trial
court exercised its “wide latitude and discretion” properly. See Vallone v. Vallone, 644 S.W.2d 455,
459-60 (Tex. 1982). Reimbursement claims are governed by equitable principles, Tex. Fam. Code
§ 7.007, and the trial court may not order reimbursement from a spouse’s separate property solely
to secure a just and right division of the community estate, Heggen v. Pemelton, 836 S.W.2d 145,
146 (Tex. 1992). The party seeking reimbursement has the burden of establishing the community
estate’s right to it. Jensen v. Jensen, 665 S.W.2d 107, 110 (Tex. 1984). However, the “payment by
one marital estate of the debt of another creates a prima facie right of reimbursement,” which is
considered in light of offsetting benefits to the contributing estate. Penick, 783 S.W.2d at 196-98.
“[I]t is well settled that a trial court may award a money judgment to one spouse against the other
in order to achieve an equitable division of the community estate,” but only “as a means for the
wronged spouse to recoup the value of his or her share of the community estate lost through the
wrongdoer spouse’s actions.” Schlueter v. Schlueter, 975 S.W.2d 584, 588 (Tex. 1998).
Factual Summary2
Estela and Donald started dating in August 2007, married in June 2010, and separated
in September 2014. Estela filed for divorce in October 2014. At the time the parties started dating,
2
The parties are familiar with the testimony and evidence presented to the jury and the trial
court over the course of the eight-day trial. We thus only summarize the facts as necessary to explain
our reasoning and will not provide a detailed recitation of the evidence. See Tex. R. App. P. 47.1.
3
Donald had already built several successful companies and was wealthy.3 Estela was a single mother
of three sons, was working two jobs, owned a house, and had a small retirement account. Her sons
were attending a private high school, relying on financial aid and relatives to pay the tuition. Donald
and his first wife divorced in 2008, and they shared custody of their youngest son, J.D., who was
about nine. Donald bought Estela a car in 2008, encouraged her to quit her job, and started giving
her about $4,000 per month. Donald testified that he did so because he wanted her to be able to
spend more time helping her aging parents and so that he and Estela could spend more time together.
Estela testified that he wanted her to quit her job so that she could travel with him, spend more time
with him and J.D., and help entertain his business clients and their wives.
After the parties married, Donald initially gave Estela some credit cards but about a
year later “decided that was not going to work,” and started giving her a $10,000 monthly allowance.
Estela testified that “the longer we were married, the more controlling he became” and that midway
into the marriage, “it almost seemed like he would give me money depending on my behavior. If
I was good and behaved, he would give me money. If not, if I displeased him, he wouldn’t.”
Estela’s sons lost their financial aid when Estela and Donald married, and although
Donald paid “some tuition” for her sons’ private school, he did not pay for all of it, and Estela
testified that Donald got angry when she used her allowance to pay for her sons’ school tuition.
Instead, Estela testified that with Donald’s encouragement, she cashed in her retirement account and
sold her house, although not for a large sum, and used those funds to pay her sons’ tuition. Estela
3
Estela introduced into evidence Donald’s sworn inventory, in which he stated that one of
the community’s liabilities was a pledge he had made to a group called Texans First, that his pledge
was for $298,500, and that the pledge represented “0.1% of net worth.”
4
testified that her ex-husband paid some of the boys’ educational expenses but not all that he had
agreed to pay; she explained that her ex-husband, the father of her three sons, had several ailments
and was not reliable. She also testified that one of her sons received a scholarship for some of his
expenses and took out a student loan for the rest. Another son took a year off from school to work
and save money “so as not to create any more stress between” Donald and Estela’s ex-husband.
Donald testified that he and Estela’s ex-husband originally agreed that they would
each pay half of the boys’ educational expenses but that the ex-husband did not follow through on
his obligations, meaning that Donald had to pay for all of Estela’s youngest son’s high school
education. He testified that he agreed to pay for a state-school college education but that Estela
wanted her sons to go to private universities. Donald said he refused to pay more for their
educations than he had for his own children and told them he would “not pay a penny more than
whatever it says you can get an education at” the University of Texas. Donald agreed that he had
refused to allow Estela to use her allowance to pay for her sons’ tuition but testified that during the
marriage, he paid approximately $300,000 toward Estela’s sons’ educations.
Estela testified that in late 2013, after many fights in which Donald “kept saying it
was his money and saying [she] married him for his money,” she took a part-time job to help pay for
her sons’ tuition, and that she quit when Donald threatened to divorce her, telling her by text that she
was locked out of their bedroom and that she should sleep in another room that night. Donald stated
that he was upset when she took the job only because it disrupted the family’s holiday vacation plans
and that he would have been fine with her working otherwise. Estela also testified that Donald once
5
got angry at her while they were in Colorado and locked her out of the house, leaving her to sleep
in the cold on the front porch; Donald denied that the incident had taken place.
Donald testified that he controlled the bank accounts and credit cards and never added
Estela to the accounts or opened any joint accounts. Both Estela and Donald called certified public
accountants to testify. Estela’s expert, William Bradley, explained that Donald’s companies were
“flow-through entities, meaning they don’t pay any income taxes. They go on to the individual
shareholder or partners’ tax returns, and so the tax liability is paid at the individual level. So these
entities don’t pay taxes; the individual does.” Companies with this tax structure are called
“S corporations.” See 26 U.S.C. § 1361 (“S corporation defined”). As explained by a federal tax
court, “An S corporation is not subject to Federal income tax at the entity level. Instead, an
S corporation’s items of income, gain, loss, deduction, and credit—whether or not distributed—flow
through to the shareholders, who must report their pro rata shares of such items on their
individual income tax returns for the shareholder taxable year within which the S corporation’s
taxable year ends.” Kumar v. Commissioner of Internal Revenue, 106 T.C.M. 109, at *2,
2013 WL 4080998 (U.S.T.C. 2013). Thus, the tax liability of such a company is a liability of a
married shareholder’s community estate, regardless of whether the company’s earnings are
distributed to the shareholder or retained in the company—referred to as “retained earnings.”
Donald testified that he earned approximately $21 million pre-tax, about $13.5
million after tax, during his marriage to Estela. However, he said that although he paid taxes on the
full amount, not all of that money went “into my personal checking account,” and that the $21
million was “income that was from my tax estate. That was not income I actually received.” Donald
6
testified that he decided how much to distribute to the community estate and how much to retain in
the company and agreed when asked whether he had “started leaving more and more money in” his
separate businesses since Estela filed for divorce. Although Donald did not provide any detail about
how much he had increased his retained earnings after Estela filed for divorce, he introduced into
evidence an expert report prepared by his CPA witness, Steve Pena. In that report, Pena stated that
from 2011 through 2013, Donald’s adjusted gross income ranged from about $3 million to $3.4
million, his “non-distributed income” ranged from about $112,000 to $184,000, and his taxes ranged
from about $1 million to $1.3 million, resulting in almost $2 million in cash each year coming into
the community estate. In 2014, Donald’s adjusted gross income was more than $3.5 million, the
“non-distributed income” was more than $1.7 million, and the taxes were almost $1.4 million,
resulting in about $479,000 in cash to the community estate.
Estela testified that she had no control over or input into the couple’s finances; that
she never saw their full tax returns, only the signature page that Donald would give her to sign; and
that she thought he earned “probably a couple of million” a year. Estela also testified that throughout
their marriage, she and Donald had conflicts over his political contributions, particularly in light of
him “giving me such a hard issue on what I use my allowance for, more specifically my children’s
education.” She knew he actively contributed to a number of political causes but “did not realize
the extent of the amount” donated during their marriage. Estela produced evidence showing that
from August 2011 through December 2015, Donald contributed $776,729 to various political
campaigns and causes and that about forty percent of that, $305,200, was donated in the year after
7
Estela filed for divorce. Donald testified that his political contributions benefitted his businesses,
which, he asserted, in turn benefitted the community estate.
Donald testified about an investment he made in Motion Insight during the marriage,
explaining that it was a technology company he helped start to develop equipment to track workers’
movements and that he had invested about $150,000 in the company from community funds after
he and Estela married. He said that the company had a patent and was still working on making
functioning equipment but that it was “basically worthless at this point.” He also agreed that the
$150,000 loan was something that “the community company owes back to [Donald and Estela] as
individuals.” Estela testified that she had not been able “to obtain any information concerning that
investment” other than Donald’s testimony. She was asked whether she trusted Donald “that it
might actually have some value at some point,” and she answered, “No, I do not trust Don.”
In Question 1, the jury was asked how much of the community estate was expended
to benefit Donald’s separate property, and with respect to income taxes paid by the community
relating to Donald’s four separate companies, it answered $841,108. In Questions 2 and 3, it
answered that Donald’s political contributions were unfair to the community estate and depleted the
community estate in the amount of $305,200.4 In the divorce decree, the trial court stated that a
money judgment in favor of Estela was “necessary to reimburse the community estate for the
amounts that the community estate benefitted the listed property of [Donald’s] separate estate and
for the amount of waste of the community estate by [Donald] and to make a just and right partition
4
The jury was asked whether certain other expenditures by Donald were unfair to the
community estate, but those items are not relevant to the appeal.
8
of the reconstituted community estate” and awarded her a $2,200,000 judgment.5 Donald requested
findings of fact and conclusions of law, as well as additional findings and conclusions after the trial
court’s first filing. The trial court filed amended findings and conclusions, in which it found that the
community estate was valued at $3,129,066, that the community paid $123,362 in insurance
premiums for Donald’s separate life insurance policies, and that the loans receivable for Motion
Insight should be valued at $150,000. The court did not make findings of fact or conclusions of law
related to income taxes or charitable contributions. The trial court concluded that the community’s
payment of the insurance premiums was a reimbursable expense and that Estela was entitled to a
disproportionate percentage of the community estate because of Donald’s fault in the parties’ break-
up, his superior resources and earning capacity, her loss of ongoing financial benefits that she would
have received had the marriage continued, the fact that Donald’s separate estate was significantly
larger than the community estate and Estela’s separate estate, and Donald’s favoring his separate
businesses over the community estate throughout the marriage. In its Characterization & Valuation
of Property, the court left blank a value for Motion Insight but valued the Motion Insight loans
receivable at $150,000. In the section labeled “Equitable Claims—reimbursement, wasting, breach
of fiduciary duty, fraud, reconstituted,” the trial court included $841,108 for income taxes paid for
Donald’s separate companies.
5
The divorce decree recites that the parties agreed “to bifurcate the presentation issues
between the jury and” the trial court, that “some questions of fact were submitted to the jury,” that
the parties “waived a jury on all questions of fact not presented to the jury, and all remaining
questions of fact and of law were submitted to the [trial court] for determination.”
9
Income Taxes
Estela alleged in her petition that Donald had arranged for his companies to retain
some of the pay he should have received from his separate companies and sought reimbursement for
those undistributed funds and for income taxes paid by the community on the income of Donald’s
separate companies, stating that, “to the extent the Schedule E income on which these taxes were
paid was undistributed, Estela Dyer requests reimbursement to the community estate for inadequate
compensation for Donald Dyer’s time, toil, talent, and effort by these business entities under the
control and direction of Donald Dyer.” Bradley, Estela’s expert, calculated that the community
estate had paid $1,000,742 in taxes for Donald’s companies and asserted that the community estate
was entitled to reimbursement for that amount. Pena, Donald’s expert, said he did not agree that
Estela was asserting a “recognized reimbursement claim” in seeking reimbursement for the taxes due
from and paid by the community. Even if the claim was a cognizable one, Pena further disputed
Bradley’s calculations, testifying:
I found the correct number to be $841,108 . . . . The premise for this, if you
remember Mr. Bradley’s testimony was that there was an amount of income that
while the community had to pick it up, it stayed within those corporations. It didn’t
benefit his separate corporation by building up the value. Obviously, if you take it
out, you have a lower value. So it stayed in there, but the community had to pay
taxes on it. That’s fine. But what Mr. Bradley’s report failed to calculate was the
fact that during this period of time there was a number of distributions made out of
those companies that he did not pick up on his report. And those distributions, when
you reduce the amount of so-called income left in the corporation and recalculate the
tax, the tax is 841,000, not $1,000,742.
10
The jury was asked how much of the community estate was expended to benefit Donald’s separate
property, and in the portion of the question asking about “[i]ncome taxes paid by the community
estate” for Donald’s four separate companies, it answered $841,108. In its characterization and
valuation of property, the trial court included that $841,108 in its valuation of the reconstituted
community estate under the heading of “Equitable Claims—reimbursement, wasting, breach of
fiduciary duty, fraud, reconstituted.”
Donald argues that there was no evidence that the tax payments benefitted his
separate estate because: Donald’s separate entities do not have corporate tax burdens; the tax burden
instead passes through to Donald as an individual and, during the marriage, to the community estate;
any consequences of a failure to pay taxes lies with Donald and, during the marriage, the community
estate; and, therefore, the use of community funds to pay the taxes provided no benefit to the
companies themselves.
It is true that the tax burden in this case was properly the community estate’s burden,
regardless of whether Donald opted to retain or disburse the companies’ earnings.6 Thus, the only
question is whether the trial court could properly have determined that the separate estate was
6
Donald admitted that toward the end of the marriage, he retained more earnings rather than
distributing the funds to the community estate. Although the tax liability associated with those
retained earnings was owed and paid by the community, the retained earnings remained the property
of the entities that are Donald’s separate property. See Thomas v. Thomas, 738 S.W.2d 342, 344
(Tex. App.—Houston [1st Dist.] 1987, writ denied) (“Subchapter S status does not determine who
owns the corporation’s earnings. It merely provides an alternate method to tax the corporation’s
income. A Subchapter S corporation may distribute its income, but, like any other corporation, it
is not required to do so. . . . [W]hile the corporation retained some earnings as ‘previously taxed
income’ of the shareholders, the earnings remained the corporation’s exclusive property and never
belonged to the appellant or the marital estate.”).
11
enriched by the community estate so as to permit reimbursement. In general, where the community
funds are used to pay a community debt, no right to reimbursement can be asserted. See In re
Marriage of Gill, 41 S.W.3d 255, 258-59 (Tex. App.—Waco 2001, no pet.) (reimbursement award
improper where “community funds were used to pay a community obligation”); see also Vallone,
644 S.W.2d at 459 (“A right to reimbursement arises when the funds or assets of one estate are used
to benefit or enhance another estate without itself receiving some benefit.”); Cockerham
v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975) (“debts contracted during marriage are presumed
to be on the credit of the community and thus are joint community obligations, unless it is shown
the creditor agreed to look solely to the separate estate of the contracting spouse for satisfaction”).
It is undisputed that the tax liability in question was a community debt. Cf. Thomas v. Thomas,
738 S.W.2d 342, 344 (Tex. App.—Houston [1st Dist. 1987, writ denied) (declining to adopt wife’s
argument that S corporation’s retained earnings should be treated as community property because
community estate paid income tax on earnings).
The family code provides for a reimbursement claim for “inadequate compensation
for the time, toil, talent, and effort of a spouse by a business entity under the control and direction
of that spouse,” Tex. Fam. Code § 3.402(a)(2), and Estela referred to such a claim in her petition.
However, the jury charge asked only whether the “income taxes” benefitted Donald’s separate
property, with no question or instruction pertaining to retained earnings or inadequate compensation.
Courts have determined that the mislabeling of an award, for instance as reimbursement instead of
economic contribution, does not require reversal if the pleadings, evidence, and implied findings
support the proper award. See Sikes v. Sikes, No. 11-08-00296-CV, 2010 WL 2112809, at *4 (Tex.
12
App.—Eastland May 27, 2010, no pet.) (mem. op.); Garcia v. Garcia, 170 S.W.3d 644, 652 (Tex.
App.—El Paso 2005, no pet.). However, in this case, the trial court included the jury’s exact finding
in its valuation of the reconstituted community estate under the heading of “Income taxes paid on
[Donald’s] Sch E income 2010-2014—jury VERDICT.” We therefore can only conclude that the
trial court based its $841,108 reimbursement award on the community’s income tax payments, not
on any wrongfully retained earnings or inadequate compensation.
This case presents a difficult question, one that appears not to have been addressed
before. However, the law guides us to the conclusion that a claim for reimbursement cannot be made
when the debt paid by community funds was a community debt, see In re Marriage of Gill,
41 S.W.3d at 258-59, in this case, income taxes owed by the community. The trial court erred in
ordering the community estate reimbursed for the community’s payment of income taxes it rightfully
owed. See Thomas, 738 S.W.2d at 344-45 (observing “that the marital community benefits from the
Subchapter S election” because “the community avoids having dividends taxed twice, first as
corporate income, and then, upon receipt, as personal income,” “the corporation has more money to
distribute as dividends,” corporate tax credits and losses reduce community’s taxable income, and
shareholders are protected from personal liability).
Political Contributions
We next consider whether the court properly ordered the community reimbursed for
the political contributions Donald made during 2015. The jury found that Donald’s political
contributions were not “fair to the community estate” after being instructed that it should consider
the relationship between Donald and the recipients, any special circumstances justifying the
13
donations, and whether the amounts of the donations were reasonable in proportion to the overall
community estate. The jury found that the community estate was unfairly depleted by $305,200 as
a result of those contributions.
“A fiduciary duty exists between a husband and a wife as to the community property
controlled by each spouse.” Zieba v. Martin, 928 S.W.2d 782, 789 (Tex. App.—Houston [14th
Dist.] 1996, no pet.). As long as he does not work a fraud on the rights of the other spouse, a spouse
has the right to control and dispose of community property subject to his sole management.
Massey v. Massey, 807 S.W.2d 391, 401 (Tex. App.—Houston [1st Dist.] 1991), writ denied,
867 S.W.2d 766 (Tex. 1993). A spouse’s disposition of the community property must be fair to the
other spouse, and “[t]he managing spouse has the burden to show that his disposition of the property
was fair.” Id. at 402; see Jean v. Tyson-Jean, 118 S.W.3d 1, 9 (Tex. App.—Houston [14th Dist.]
2003, pet. denied). “A presumption of ‘constructive fraud,’ i.e., waste, arises when one spouse
disposes of the other spouse’s interest in community property without the other’s knowledge or
consent.” Puntarelli v. Peterson, 405 S.W.3d 131, 137-38 (Tex. App.—Houston [1st Dist.] 2013,
no pet.). “The presumption may arise even when the other spouse has knowledge of the disposition,
so long as she did not also consent to the disposition.” Everitt v. Everitt, No. 01-11-00031-CV,
2012 WL 3776343, at *3 (Tex. App.—Houston [1st Dist.] Aug. 31, 2012, no pet.) (mem. op.). Once
the presumption arises, the disposing spouse must prove that his disposition of the community
property was not unfair. Puntarelli, 405 S.W.3d at 138. A claim of constructive fraud is evaluated
by looking to several factors, “including the size of the gift in relation to the total size of the
community estate; the adequacy of the estate remaining to support the wife, the gift notwithstanding;
14
the relationship of the donor to the donee; and whether special circumstances existed to justify the
gift.” Barnett v. Barnett, 67 S.W.3d 107, 126 (Tex. 2001); see Everitt, 2012 WL 3776343, at *3.
Donald argues that political contributions are a form of civic engagement and the
exercise of his first amendment rights, that his businesses profited by his contributions, and that the
$305,200 was reasonable in light of the overall $3 million community estate. He further contends
that because he made political contributions throughout the marriage and Estela was involved with
some aspects of his political activities, his contributions were simply a continuation of his
“established political involvement” and “embraced political organizations in which both Estela and
[Donald] participated.” Thus, he asserts, the jury could not reasonably have found that those
contributions were unfair to the community estate.
However, Estela testified that throughout the marriage, she and Donald fought about
his political donations, saying, “I could not fathom how he could give—I knew he was giving a lot
of money and—but then he would give me such a hard time about using my allowance to pay for my
boys’ tuition, education. And we’d have fights about that, that his political connections and political
organizations are more important than his love for me or than his wife.” She also said she did not
know how much Donald had contributed to political causes and was “appalled” when during the
divorce she learned of the extent of his donations.
Donald argues that because his political contributions led to legislation and other
political action favorable to his companies, those contributions benefitted the community estate.
However, this does not take into account that the jury only found fault with his donations made in
2015, after Estela filed for divorce. Thus, assuming that the record supports a conclusion that the
15
donations led to political action benefitting Donald’s companies, the jury could have determined that
his increased post-divorce-filing donations made from the community estate would primarily have
benefitted his separate estate. Giving great deference to the jury’s role in determining the credibility
of the witnesses and the weight to give their testimony and in resolving evidentiary conflicts, the
record reflects that there was sufficient evidence to support the jury’s determination that Donald’s
most recent $302,500 in political donations were unfair to the community estate. See Haining
v. Haining, No. 01-08-00091-CV, 2010 WL 1240752, at *13 (Tex. App.—Houston [1st Dist.]
Mar. 25, 2010, pet. denied) (mem. op.) (trial court as factfinder chose to credit wife’s testimony
related to reimbursement).
Alternatively, Donald contends that even if some of his contributions could be
considered waste, it was improper for the jury to find that all of his contributions made after Estela
filed for divorce were waste. Instead, he insists, the most the jury could have found as waste was
$186,818: $305,200 less $118,382, which was the average of the annual sums donated in the
preceding four years. He asserts that although Estela may not have known the exact amount Donald
was giving before the divorce proceeding began, her “knowledge and actions necessarily constitute
implicit consent to this level of giving.” However, the evidence is undisputed that Estela had no
control over any of the couple’s finances, and she testified to ongoing conflict related to the political
spending. The jury could have determined that Estela did not implicitly consent to Donald’s
pre-divorce spending.
In our review of the legal and factual sufficiency of the evidence, we must bear in
mind that the jury was the sole judge of the credibility of the witnesses and the weight to be given
16
their testimony, and we may not substitute our judgment for the jury’s, even if we might reach a
different answer on the evidence. See In re P.A.C., 498 S.W.3d 210, 214 (Tex. App.—Houston
[14th Dist.] 2016, pet. denied); Halleman v. Halleman, 379 S.W.3d 443, 447 (Tex. App.—Fort
Worth 2012, no pet.). Under the applicable standards of review, the jury had sufficient evidence on
which to base its determination. Further, Donald has not shown that the trial court abused its
discretion in incorporating the jury’s findings related to Donald’s 2015 charitable contributions in
its calculation of the community estate. See Penick, 783 S.W.2d at 197-98 (appellate court should
give great latitude to trial court’s application of equitable principles to reimbursement claims);
In re Marriage of Donathan, No. 10-16-00014-CV, 2017 WL 3298943, at *4 (Tex. App.—Waco
Aug. 2, 2017, no pet.) (mem. op.) (“When a reimbursement award does not appear to be unjust, there
is no abuse of discretion.”); Nelson v. Nelson, 193 S.W.3d 624, 632 (Tex. App.—Eastland 2006, no
pet.) (“The discretion to be exercised in evaluating a claim for reimbursement is equally as broad as
the discretion exercised by a trial court in making a just and proper division of the community
estate.”); Raulston v. Raulston, 531 S.W.2d 683, 684-85 (Tex. Civ. App.—Texarkana 1975, no writ)
(trial court has broad discretion to award reimbursement for fraud); see also Fanning v. Fanning,
828 S.W.2d 135, 148 (Tex. App.—Waco 1992), rev’d in part on other grounds, 847 S.W.2d 225
(Tex. 1993) (husband admitted that he donated $40,000 to charity shortly before trial; court held that
“trial court rightfully could have considered the circumstances and timing of the charitable
contributions in finding that such a disposition of community funds was unfair to the rights of” wife).
17
Motion Insight Loan
Donald testified that he helped start Motion Insight, investing about $150,000.
Although he testified that it was “basically worthless at this point,” the evidence was that the
company held a patent and was still working on the equipment, and Estela testified that she had not
been able to get information about Motion Insight from Donald and did not trust his assertion about
the company’s value. Based on this scant evidence, which allows for the possibility that the
company’s efforts might yet be worth something in the future, we cannot hold that the trial court
abused its discretion in determining both that the community’s interest in the company should be
awarded to Donald and that the accounts receivable should be valued at $150,000.
Insurance Premiums
Donald next complains that the trial court erred in ordering the community estate
reimbursed for $123,362 paid for insurance premiums owned by Donald as separate property,
arguing that the evidence showed that the community was already reimbursed for $75,325 in
premiums paid on “key man” premiums.7 We agree.
Donald testified, “I pay the premiums personally. And then the company reimburses
me after I pay the premium.” He was asked more specifically about evidence showing that the
community estate paid his key-man premiums, and he said, “They were reimbursed for all
those—premiums.” Donald’s business partner echoed that testimony, stating that it was the
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“Key man” policies provide “protection to the company for the loss of a key man” and can
provide funds for the purchase of a key man’s interest in a business in the event of his death. See
Seymour v. American Engine & Grinding Co., 956 S.W.2d 49, 53, 58 (Tex. App.—Houston [14th
Dist.] 1996, writ denied).
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companies’ “general policy” to reimburse for such premiums. Estela argues that the trial court could
have determined that Donald was not credible and thus disregarded that testimony. However,
Donald’s testimony was unequivocal, clear, direct, and positive, it was not opinion testimony, and
there were “no circumstances in evidence tending to discredit or impeach” Donald’s testimony.
McGalliard v. Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986). Because there was no evidence raising
a conflict on the issue, the trial court erred in determining that the community estate was entitled to
reimbursement for the $75,325 in premiums paid for Donald’s key-man policies. Instead, as Donald
concedes, the community was only entitled to reimbursement for $48,037 in premiums.
Disproportionate Division of the Community Estate
The trial court awarded Estela $2,200,000—seventy percent of the $3,129,066
community estate. Donald argues that because Estela did not allege that Donald had physically
abused her, concealed assets, or committed other egregious acts, the trial court’s division of the
community estate was an abuse of discretion.
The law provides the trial court with broad discretion to determine a just and right
division of the community estate. Halleman, 379 S.W.3d at 452; O’Carolan, 71 S.W.3d at 532.
However, because the errors in the trial court’s reconstitution calculations may have affected its just
and right division of the community estate, we will remand the matter to the trial court for new
determinations of how the estate should be divided. See Jacobs v. Jacobs, 687 S.W.2d 731, (Tex.
1985) (“a court of appeals must remand the entire community estate for a new division when it finds
reversible error which materially affects the trial court's ‘just and right’ division of the
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property”); Delancey v. Delancey, No. 03-10-00240-CV, 2011 WL 677401, at *7 (Tex.
App.—Austin Feb. 24, 2011, no pet.) (mem. op.) (same).
Conclusion
The trial court erred in including the jury’s finding as to income tax payments made
by the community in its valuation of the reconstituted community estate and in its calculation of
reimbursement due to the community estate for its payment of Donald’s separate insurance policies.
We therefore reverse the portions of the divorce decree related to the division of property; we affirm
the remaining uncontested portions of the decree. We remand the cause to the trial court for a new
determination and division of the community estate.
__________________________________________
Cindy Olson Bourland, Justice
Before Justices Puryear, Field, and Bourland
Affirmed in Part; Reversed and Remanded in Part
Filed: June 15, 2018
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