DeAnna Ai Lee v. Kevin Duc Nguyen ( 2020 )

AFFIRM and Opinion Filed September 17, 2020
S
Court of Appeals
In The
Fifth District of Texas at Dallas
No. 05-18-01256-CV
DEANNA AI LEE, Appellant
V.
KEVIN DUC NGUYEN, Appellee
On Appeal from the 255th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DF-17-22786
MEMORANDUM OPINION
Before Chief Justice Burns, Justice Richter1, and Justice Rosenberg2
Opinion by Chief Justice Burns
This appeal follows the trial court’s divorce decree dissolving the marriage of
Deanna Ai Lee and Kevin Nguyen. In two issues, Lee asserts the trial court abused
its discretion in failing to reimburse the community estate for over $600,000 in
expenditures on three of Nguyen’s separate properties and by considering, in its
division of property, debt from a home equity line of credit secured by another of
Nguyen’s separate properties. We affirm.
1
The Honorable Martin Richter, Justice of the Court of Appeals for the Fifth District of Texas at Dallas,
Retired, sitting by assignment.
2
The Honorable Barbara Rosenberg, Justice of the Court of Appeals for the Fifth District of Texas at Dallas,
sitting by assignment.
BACKGROUND
Lee, a part-time bank cashier, and Nguyen, a dentist, married in July 2011.
They separated at the end of 2016 and a year later, Nguyen filed this divorce suit and
Lee counterpetitioned.3 Both sought confirmation of certain property as their
separate property and, in addition, Lee sought reconstitution of the community estate
based on fraud and breach of fiduciary duty. She also asserted claims for
reimbursement to the community estate.4
During the course of the marriage, Lee and Nguyen acquired assets valued at
$351,126.47 and incurred $594,793.17 in liabilities. They also each acquired
separate property by gift. Lee’s separate property consisted of real property referred
to as “Swan” and Nguyen’s separate property consisted of real property referred to
as “Flamingo” and “Wales.” In addition, Nguyen was gifted a fifty percent interest
in real property known as “Buckeye.” As relevant to the issues on appeal, Nguyen
owned the other fifty percent interest of the Buckeye property prior to marriage and
also owned a one-hundred percent interest in a property known as “Lake Ridge.” At
the time of marriage, the Lake Ridge property had no mortgage on it, but the
Buckeye property had a mortgage of $413,000. Lee and Nguyen lived together in
3
This divorce suit is the second suit. Nguyen first filed for divorce in 2016. However, he filed in the
wrong county, and the suit was dismissed.
4
Nguyen also asserted claims for reimbursement to the community estate but did not pursue the claims
at trial.
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the Lake Ridge property until they separated, at which time Lee moved to the
Flamingo property.
At trial, Nguyen testified he and Lee purchased the Flamingo, Wales, and
Swan properties during the marriage. However, they agreed that Flamingo and
Wales would be his separate properties and Swan would be Lee’s separate property
and deeded to each other their interests in the properties accordingly. Nguyen
explained that Lee agreed to Flamingo being his separate property in exchange for
“gold bars” and an “upgrade for the wedding ring,” and she agreed to Wales being
his separate property in exchange for Swan being her separate property.
The properties were not purchased outright, and according to Nguyen, the
funds used for the down payments came from different sources. About $270,000 of
community funds were used to pay for Flamingo, which was purchased for about
$830,000 in January 2015 and was rented out for “about $3,000” a month until Lee
moved there in December 2016. As of the date of trial, the Flamingo property was
worth $870,762 and had a remaining balance of just under $500,000 on the
mortgage.5
The Wales property was also paid for with community funds along with funds
from a home equity line of credit secured by the Buckeye property. Nguyen testified
5
No testimony was adduced about the source of funds used to pay the mortgage on Flamingo, but Lee
asserts in her brief that community funds were used. See Zagorski v. Zagorski, 116 S.W.3d 309, 322 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied) (expenditures during marriage are presumed paid with
community funds).
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that at the time he was gifted the fifty percent interest in Buckeye, the balance on the
mortgage was $390,000. The $23,000 reduction in the mortgage came from
payments he made using community funds which he also subsequently used to pay
the balance due. He then obtained a home equity line of credit (HELOC) in the
amount of $398,000. Nguyen did not state how much of the HELOC funds he used
for the Wales property but testified he used about $210,000 in community funds. He
testified further that he later borrowed money from his cousin to pay the balance due
on the mortgage.
The Swan property was purchased with funds from the Buckeye HELOC as
well as funds from a HELOC secured by the Lake Ridge property. Nguyen testified
he obtained the Lake Ridge HELOC for the purpose of buying Swan. He used
$95,000 from the Lake Ridge HELOC and $235,000 from the Buckeye HELOC on
Swan. At the time of trial, the Swan property was worth $848,729 and had a
remaining balance of $220,000 due on the mortgage.
Nguyen testified he wanted the trial court to confirm Buckeye, Flamingo, and
Wales as his separate properties and Swan as Lee’s separate property. He also
wanted the attendant debt on the Buckeye, Flamingo and Swan properties to be
awarded accordingly and wanted the debt from the Lake Ridge HELOC
characterized as a community liability.
Lee testified she did not intend to give her interests in the Flamingo and Wales
properties to Nguyen but felt forced and defrauded by Nguyen to do so. She
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explained that English was not her first language and that, although she received a
degree from the University of California at San Diego, she had difficulty
understanding legal terms. She did not know at the time they purchased Flamingo
that a quitclaim deed was for transferring property, but she trusted that Nguyen was
acting in her best interest. As for the Wales property, she agreed that she deeded her
interest in that property in exchange for Swan, but she testified Nguyen told her he
would pay the mortgage on Swan in full. Lee wanted Flamingo and Wales
characterized as community property and Flamingo awarded to her. She also
thought the fifty percent interest Nguyen received in the Buckeye property should
be characterized as community property in light of his paying the balance of the
mortgage with community funds. In the event the trial court did not characterize the
Flamingo and Wales properties as community property, she asked the trial court “to
use whatever equitable and reimbursement type remedies it ha[d] at its disposal to
make a just and right [property] division.”
The trial court found that Lee was not fraudulently induced to sign any
documents and that Nguyen did not breach his fiduciary duty to Lee. The trial court
granted Nguyen’s requested relief as to the properties and the Lake Ridge HELOC.
The trial court also granted a reimbursement claim to the community estate for the
$23,000 in community property funds used to pay down the mortgage on the
Buckeye property before Nguyen was gifted the remaining fifty percent interest. Of
the assets Lee and Nguyen acquired during the marriage, the trial court awarded
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approximately sixty-five percent to Nguyen and thirty-five percent to Lee. Of the
liabilities incurred during the marriage, the trial court assigned less than one-tenth
of a percent to Lee and the remainder to Nguyen. The trial court also assigned to
Nguyen the entirety of the Lake Ridge HELOC.
APPLICABLE LAW
Division of Marital Property
Upon granting a divorce, a trial court must order a division of the parties’
community estate and determine any claims for reimbursement by any of the martial
estates in a manner it deems “just and right[.]” TEX. FAM. CODE ANN. §§ 7.001,
7.007; see also Vallone v. Vallone, 644 S.W.2d 455, 459 (Tex. 1982); Wilson v.
Wilson, 44 S.W.3d 597, 600 (Tex. App.—Fort Worth 2001, no pet.). A claim for
reimbursement is an equitable claim that the court may, after considering all the
relative circumstances of the spouses, recognize when the assets of one estate are
used to benefit and enhance another estate without itself receiving some benefit. See
TEX. FAM. CODE § 7.007(1); Vallone, 644 S.W.2d at 459. The party claiming the
right of reimbursement bears the burden of pleading and proving the expenditures
were made and are reimbursable. Chavez v. Chavez, 269 S.W.3d 763, 768 (Tex.
App.—Dallas 2008, no pet.).
For purposes of the division of the parties’ community estate, community
property consists of property, other than separate property, acquired by either spouse
during marriage. TEX. FAM. CODE § 3.002. Separate property consists of property
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owned or claimed by either spouse before marriage; property acquired during
marriage by gift, devise, or descent; and, the recovery for personal injuries sustained
by the spouse during marriage, except recovery for any loss of earning capacity
during marriage. See id. § 3.001; Wilson, 44 S.W.3d at 601.
Standard of Review
We review a trial court’s property division for abuse of discretion. Murff v.
Murff, 615 S.W.2d 696, 699 (Tex. 1981). In conducting our review, we presume the
trial court exercised its discretion properly if any reasonable basis to do so exists and
will reverse only if the ruling was arbitrary, unreasonable, or unsupported by the
facts or circumstances of the case. Samlowski v. Wooten, 332 S.W.3d 404, 410
(Tex. 2011); Vallone, 644 S.W.2d at 460.
DISCUSSION
In her first issue, Lee asserts the trial court abused its discretion in reimbursing
the community estate for only $23,000 in expenditures on the Buckeye property and
failing to reimburse the community estate for any of the expenditures on the
Flamingo and Wales properties. She asserts she proved the community was entitled
to reimbursement for an additional $390,000 for the payment of the remaining
balance on the Buckeye mortgage; $61,719.24 for the reduction of the Flamingo
mortgage principal from $560,000 at the time of purchase to approximately
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$500,000 at the time of trial;6 and $210,000 for the purchase of Wales. She
maintains the community “received little if any benefit” from the expenditures and,
given the disparity in incomes between Nguyen and her based on their professions,
“equity demands the award of reimbursement.” In making this argument, however,
Lee ignores other portions of the record that support the trial court’s determination
to not recognize the additional claims for reimbursement.
With respect to the Buckeye and Wales properties, Lee ignores the connection
between each of these properties and Swan, which was confirmed as Lee’s separate
property and had a net equity value in excess of $625,000 at the time of trial. Nguyen
testified Lee agreed to deed to him her interest in Wales in exchange for him deeding
to her his interest in Swan. He further testified Swan was purchased with funds from
the Buckeye HELOC. Although the community itself may not have benefitted from
the expenditures on the Buckeye and Wales properties, Lee herself, who stood to
benefit from the community estate being reimbursed for those expenditures, did.
As to the Flamingo property, evidence was presented that the community
estate received some benefit from the expenditures on the property. Nguyen testified
the property was rented out for “about $3,000” a month from January 2015 until
December 2016, and income produced from separate property generally is
considered community property. Alsenz v. Alsenz, 101 S.W.3d 648, 653 (Tex.
6
Lee does not complain of the $270,000 in community funds used for the down payment.
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App.—Houston [1st Dist.] 2003, pet. denied). Further, evidence was presented that
Lee herself benefitted. Nguyen testified Lee agreed to the property being his
separate property in exchange for “gold bars” and an “upgrade for the wedding ring,”
and Lee lived in the property rent-free from December 2016 until trial in June 2018.
See Gutierrez v. Gutierrez, 791 S.W.2d 659, 663 (Tex. App.—San Antonio 1990,
no writ) (community reaps benefit from living in spouse’s separate property without
paying rent).
Considering the benefit the community estate received from the Flamingo
property and taking into account all the relative circumstances of the spouses as
reflected in the record, we conclude the trial court did not abuse its discretion in
failing to recognize the additional claims for reimbursement to the community estate.
See TEX. FAM. CODE § 7.007(1); Vallone, 644 S.W.2d at 459; see also Sonnier v.
Sonnier, 331 S.W.3d 211, 217 (Tex. App.—Beaumont 2011, no pet.) (trial court may
reasonably conclude that principles of equity do not support granting
reimbursement). We resolve Lee’s first issue against her.
In her second issue, Lee asserts the trial court erred in characterizing the Lake
Ridge HELOC as a community liability and considering the debt in its division of
property. Lee asserts the Lake Ridge HELOC could not be characterized as a
community liability because, under the HELOC security agreement, the lender can
enforce its rights only against the property, not against Nguyen or her. Citing
Cockerham v. Cockerham, 527 S.W.2d 162 (Tex. 1975), she asserts that it is well-
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settled that debts contracted during the marriage are community liabilities unless the
creditor agreed to look solely to separate estate of the contracting spouse for
satisfaction. 527 S.W.2d at 171.
Error in the characterization of property is not reversible unless the party
asserting error demonstrates the mischaracterization caused sufficient harm to
constitute an abuse of discretion. See Lynch v. Lynch, 540 S.W.3d 107, 132-33 (Tex.
App.—Houston [1st Dist.] 2017, pet. denied); Pace v. Pace, 160 S.W.3d 706, 716
(Tex. App.—Dallas 2005, pet. denied). Lee claims consideration of the HELOC
debt in the division of the community estate resulted in an improper division of the
estate because the “balance is a significant liability relative to the overall community
estate.” However, she presents no argument as to how its inclusion impacted the
trial court’s just and right division of the community estate, and we can find none.
The trial court assigned the debt in its entirety to Nguyen, and nothing in the record
reflects that the court’s division of assets was an abuse of discretion or would have
been different had the HELOC debt not been characterized as community debt. We
resolve Lee’s second issue against her.
CONCLUSION
We affirm the trial court’s judgment.
/Robert D. Burns, III/
ROBERT D. BURNS, III
181256F.P05 CHIEF JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
DEANNA AI LEE, Appellant On Appeal from the 255th Judicial
District Court, Dallas County, Texas
No. 05-18-01256-CV V. Trial Court Cause No. DF-17-22786.
Opinion delivered by Chief Justice
KEVIN DUC NGUYEN, Appellee Burns, Justices Richter and
Rosenberg participating.
In accordance with this Court’s opinion of this date, we AFFIRM the trial
court’s judgment.
We ORDER that appellee Kevin Duc Nguyen recover his costs of this appeal
from appellant Deanna Ai Lee.
Judgment entered September 17, 2020.
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