Edna Cortez F/K/A Edna Chapa v. David Chapa ( 2021 )

NUMBER 13-19-00193-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
EDNA CORTEZ F/K/A EDNA CHAPA, Appellant,
v.
DAVID CHAPA, Appellee.
On appeal from the 444th District Court
of Cameron County, Texas.
MEMORANDUM OPINION
Before Justices Benavides, Longoria, and Tijerina
Memorandum Opinion by Justice Benavides
This appeal arises from a post-divorce proceeding to enforce the division of
property. Appellant Edna Cortez f/k/a Edna Chapa contends the trial court abused its
discretion in denying her motion to enforce because: (1) the evidence was factually and
legally insufficient to show that Edna and appellee David Chapa were jointly and severally
liable for $3.3 million in federal tax liabilities; (2) the trial court misinterpreted the decree’s
division of tax liabilities; (3) the trial court impermissibly altered the division of property;
and (4) the trial court awarded David additional affirmative relief not requested in his
pleading. Because we agree the trial court misinterpreted the decree, we reverse and
remand.
I. BACKGROUND
A. Introduction
Edna and David were divorced in December 2009. The trial court awarded David
the primary asset of the marital estate, Chapita’s Restaurant, as his sole and separate
property. However, David was required to pay Edna $928,408 for her 50% interest in the
restaurant. The decree included a payment schedule that required David to make an initial
payment of $50,000, monthly payments of $7,065 for seven years, and a final balloon
payment of $547,916.
David made the initial payment and monthly payments in accordance with the
decree for a total of $643,460, but he did not make the final balloon payment of $547,916
when it became due.1 Edna filed a suit to enforce the property division, seeking a money
judgment for the balance owed. During the pendency of the case, David continued to
make monthly payments in the amount of $10,000 from January 2017 until September
2017, bringing his total payments up to $733,460.
1 Under the decree, the balance remaining after the initial payment was “to be paid on a 15 year
amortization schedule earning interest at the New York prime rate plus 2%.” Thus, the total owed under the
payment schedule, if all payments were made timely, was nearly $1.2 million.
2
In response to the enforcement action, David acknowledged his unsatisfied
obligation to Edna under the decree but filed a “crossclaim” asking the trial court to award
him “credit” for half of any amount he has paid to the Internal Revenue Service (IRS) on
behalf of the parties. According to David, approximately six months after the divorce, the
IRS audited the business and determined that Edna and David were jointly and severally
liable for federal taxes in the total amount of $3.3 million for the years 2007, 2008, and
2009.
B. The Divorce Decree
The parties dispute the significance of the following provisions in the decree:
Debts to Husband
IT IS ORDERED AND DECREED that the husband, David Chapa, shall
pay, as part of the division of the estate of the parties, and shall indemnify
and hold the wife and her property harmless from any failure to so
discharge, these items:
....
H-6. All encumbrances, ad valorem taxes, liens, assessments, or other
charges to become due on the real property and personal property awarded
to the husband in this decree unless express provision is made in this
decree to the contrary.
....
Taxes
IT IS ORDERED AND DECREED that [$]116,000.00 is to be paid
immediately to the [IRS] for outstanding taxes due for the 2008 tax year.
The [$]116,000.00 is to be paid out of the IBC CD in the amount of
[$]170,000.00.
Treatment/Allocation of Community Income for Year of Divorce
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IT IS ORDERED AND DECREED that, for the calendar year 2009; each
party shall file an individual income tax return in accordance with the Internal
Revenue Code.
C. The Hearing
Both parties testified during the final hearing on March 6, 2019. David testified that
approximately six months after the divorce, the IRS audited the restaurant for the years
2007 through 2009 and ultimately determined that he and Edna jointly owed
approximately $3 million in federal income taxes and approximately $300,000 in
“employee back tax.” David estimated that he had already paid the IRS approximately
$650,000 in the form of cash payments, and the IRS seized property worth $250,000:
[COUNSEL]: Okay. And out of the $3,300,000.00, how much have
you paid back to the IRS so far?
[DAVID]: Approximately $650,000.00.
[COUNSEL]: Okay. And out of that $650,000.00, was it all direct
money paid? Or did the IRS take properties from you?
[DAVID]: They did seize property due to the fact that some of the
[$]300,000 that was owed, were for 940, 941 back
taxes for employees. And those, they do require
immediate payment. So what they did was they seized
a property that I was awarded during the divorce.
[COUNSEL]: Okay. And that property, what would you say it was
worth?
[DAVID]: I believe it was worth $250,000.00.
[COUNSEL]: So they took that property from you?
[DAVID]: Yes. Plus another $80,000.00, I believe, in cash in payment.
He further testified that all his properties, including the restaurant, are encumbered
by IRS liens. According to David, “the IRS notified me, well, go ahead and make the
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payments that you’re making to her, go ahead and start sending them to us. So that’s
why, I couldn’t pay her and the IRS at the same time. So I started paying the IRS.”
Edna acknowledged that she received correspondence from the IRS stating that
she and David were jointly liable for approximately $1.6 million in taxes for the years 2007
and 2008. When asked whether she was liable for the 2007 and 2008 taxes, Edna
responded, “Yes.” She agreed that she was unaware of those liabilities at the time of the
divorce. She also acknowledged that she had hired someone to represent her concerning
her tax liabilities and that she had not paid any amount toward the $1.6 million owed from
2007 and 2008. Edna had no knowledge of whether the IRS considered her jointly liable
for 2009, saying she was only aware of the 2007 and 2008 tax liabilities.
During closing arguments, David’s counsel asked the trial court to credit half the
payments his client made to the IRS towards his unpaid obligation under the decree.
Edna’s counsel responded that David may be entitled to a 50% contribution for his IRS
payments, but he did not believe the trial court could address any such relief in this
proceeding: “And if he files a Chapter C proceeding, which this is not, as Section 9.004
clearly says, if he wants to litigate that, he’s free to do it. He can’t do it here. And if you
do it, your order would be void.”
The trial court asked Edna’s counsel whether he was inviting David to sue his client
in a separate proceeding, and he responded, “Go ahead.” When the court asked why that
would be advisable for his client, he explained, “Well, because it is the only form in which
they can do it.” He added, “they cannot raise this in this Chapter 9 proceeding.”
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D. David’s Motion to Enforce
Five days later, David filed a combined “Motion to Enforce Property Divisions
and/or for Reimbursement to the Separate Estate of David Chapa for Payment of
Community Property Debt and/or Motion to Divide Debt of the Community Property and/or
Motion for Clarification.” In the motion to enforce portion, he argued that the decree
divided equally all tax liabilities for the years prior to 2009, and he requested “that he be
awarded and/or given credit in an amount of 1/2 of any amounts that he has paid toward
the IRS lien/assessment against both parties for taxes on the restaurant prior to 2009
toward the $547,916 and for credit in the amount of 1/2 of any future payments made to
the IRS in this regard.”
Alternatively, in his motion for a division of undivided assets/liabilities, he argued
that the decree did not dispose of the unknown tax liabilities for 2007 and 2008, and he
asked the court to “divide this debt in a just and equitable manner, pursuant to Tex. Fam.
Code section 9.203.” Pleading further in the alternative, David also alleged that Edna “has
been unjustly enriched by the payments made by David Chapa to the IRS.”
E. The Judgment
On March 29, 2019, the trial court signed an “Order on Motion for Enforcement of
Property Division.” Based on a finding that David had paid $980,000 from his separate
estate toward Edna and David’s joint federal tax liabilities, the court awarded David a
$499,000 “credit” toward the $546,916 he owed Edna. The trial court further ordered the
$48,916 balance withheld from Edna and that David “shall be given credit against that
balance for 1/2 of any future payments.” Finally, after the balance is satisfied, the court
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ordered Edna to reimburse David for half of all future payments he makes to the IRS “for
taxes on the restaurant known as Chapita’s for all years during the marriage.”
F. FOF & COL
Upon Edna’s request, the trial court entered, among others, the following findings
of fact and conclusions of law:
Findings of Fact
....
7. [Edna] was ordered to pay for 1/2 of any and all taxes due for the
years during the marriage, which included taxes on the restaurant known
as Chapita’s.
8. After the date of the divorce, pursuant to an audit initiated by [Edna],
the IRS levied taxes in the amount of Three Million Three Hundred
Thousand Dollars ($3,300,00.00) for taxes on the restaurant known as
Chapita’s for years during the marriage.
9. As of 3/21/19, [David] has paid the amount of Nine Hundred Eighty
Thousand Dollars ($980,000.00), from his separate estate for taxes on the
restaurant known as Chapita’s for years during the marriage.
....
Conclusions of Law
....
14. The Final Decree of Divorce decreed that all taxes for any years
during the marriage were to be divided equally between the parties.
....
16. [David] and [Edna] are jointly and severally liable for the IRS taxes
due on the restaurant known as Chapita’s for years during the marriage.
17. [Edna] is liable to [David] for 1/2 of any amounts that he has paid the
IRS for taxes due on the restaurant known as Chapita’s for years during the
marriage.
7
18. [David] is entitled to an offset of 1/2 of any amounts that he has paid
the IRS for taxes due on the restaurant known as Chapita’s for years during
the marriage in the sum of Four Hundred Ninety Thousand Dollars
($499,000.00) [sic] against the $547,916.00 awarded to [Edna] for her 1/2
interest in the restaurant known as Chapita’s.
Edna filed a post-judgment motion complaining that (1) the trial court substantively
altered the decree by re-dividing the parties’ tax liabilities, and (2) the judgment exceeded
the pleadings because David never requested that Edna reimburse him for half of any
future payments made to the IRS. The motion was denied by operation of law, and this
appeal ensued.
II. SUFFICIENCY OF THE EVIDENCE
By her first issue, Edna complains that the evidence was legally and factually
insufficient to support the trial court’s findings and conclusions that Edna and David were
jointly and severally liable for the federal tax liabilities from 2007 to 2009. Edna reasons
that if David failed to prove her joint liability, then no basis exists to offset her claim, and
we should reverse and render a judgment in her favor.
A. Standard of Review
We review the trial court’s ruling on a post-divorce motion for enforcement for an
abuse of discretion. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990) (per curiam);
Beshears v. Beshears, 423 S.W.3d 493, 499 (Tex. App.—Dallas 2014, no pet.); Thomas
v. Piorkowski, 286 S.W.3d 662, 665 (Tex. App.—Corpus Christi–Edinburg 2009, no pet.).
A trial court abuses its discretion when it acts without reference to any guiding rules or
principles. McAllen Hosps., L.P. v. Gonzalez, 566 S.W.3d 451, 455–56 (Tex. App.—
8
Corpus Christi–Edinburg 2018, no pet.) (citing Crawford v. XTO Energy, Inc., 509 S.W.3d
906, 911 (Tex. 2017)).
Under the abuse of discretion standard, sufficiency of the evidence is not an
independent ground of error but rather is a relevant factor in assessing whether the trial
court abused its discretion. Woody v. Woody, 429 S.W.3d 792, 797 (Tex. App.—Houston
[14th Dist.] 2014, no pet.); Scoggins v. Trevino, 200 S.W.3d 832, 836 (Tex. App.—Corpus
Christi–Edinburg 2006, no pet.). In an appeal from a bench trial, the trial court’s findings
of fact have the same force and dignity as a jury’s answers to jury questions. Anderson
v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991); Fulgham v. Fischer, 349
S.W.3d 153, 157 (Tex. App.—Dallas 2011, no pet.); Taiwan Shrimp Farm Village Ass’n
v. U.S.A. Shrimp Farm Dev., Inc., 915 S.W.2d 61, 70 (Tex. App.—Corpus Christi–
Edinburg 1996, writ denied). Thus, we review a trial court’s findings of fact under the same
legal and factual sufficiency of the evidence standards used to determine if sufficient
evidence exists to support an answer to a jury question. Fulgham, 349 S.W.3d at 157;
Taiwan Shrimp Farm, 915 S.W.2d at 70.
A no-evidence challenge to the legal sufficiency of the evidence will be sustained
only if: (a) there is a complete absence of evidence of a vital fact; (b) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to prove a
vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or
(d) the evidence establishes conclusively the opposite of the vital fact. Dall. Nat’l Ins. Co.
v. De Law Cruz, 470 S.W.3d 56, 57 (Tex. 2015) (citing City of Keller v. Wilson, 168 S.W.3d
802, 810 (Tex. 2005)). In reviewing the evidence for legal sufficiency, “we credit evidence
9
that supports the verdict if [a reasonable factfinder] could have done so and disregard
contrary evidence unless [a reasonable factfinder] could not have done so.” Graham
Cent. Station, Inc. v. Peña, 442 S.W.3d 261, 263 (Tex. 2014) (quoting Akin, Gump,
Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 115 (Tex.
2009)). If there is more than a scintilla of evidence to support the finding, the no-evidence
challenge fails. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.
2002); see also King Ranch, Inc. v. Chapman,118 S.W.3d 742, 751 (Tex. 2003)
(explaining that more than a scintilla of evidence exists when the evidence “rises to a level
that would enable reasonable and fair-minded people to differ in their conclusions”). If
there is some evidence to support the challenged finding, then the appellate court will
review the claim of factual insufficiency by weighing all the evidence in the record to
determine whether the evidence supporting the finding is so contrary to the overwhelming
weight of the evidence that the finding is clearly wrong and should be set aside as
manifestly unjust. Fulgham, 349 S.W.3d at 157.
A trial court’s conclusions of law are reviewed de novo. BMC Software, 83 S.W.3d
at 794. A trial court’s conclusions of law may not be challenged for factual insufficiency;
only the trial court’s conclusions drawn from the facts may be reviewed for correctness.
Id. Further, a trial court’s conclusions of law are not reviewable on the basis that there is
legally insufficient evidence to support them. Aldrich v. State ex rel. Cox, 658 S.W.2d 323,
327 (Tex. App.—Tyler 1983, no writ); see also Farkas v. Aurora Loan Servs., L.L.C., No.
05-15-01225-CV, 2017 WL 2334235, at *4 (Tex. App.—Dallas May 30, 2017, pet. denied)
(mem. op.). “If the reviewing court determines a conclusion of law is erroneous, but the
10
trial court rendered the proper judgment, the erroneous conclusion of law does not require
reversal.” BMC Software, 83 S.W.3d at 794.
B. Analysis
Edna complains there was no evidence and factually insufficient evidence to
support the trial court’s finding that “[a]fter the date of divorce, pursuant to an audit
initiated by Edna Chapa, the IRS levied taxes in the amount of Three Million Three
Hundred Thousand Dollars ($3,300,000.00) for taxes on the restaurant known as
Chapita’s for years during the marriage.” Although Edna acknowledges that David
testified to these very facts, she nonetheless describes his testimony as an “unqualified,
rank conclusion.”
Edna mischaracterizes David’s testimony. He did not opine about the audit based
on his specialized knowledge, skill, experience, training, or education. See TEX. R. EVID.
702. Instead, he merely described, without objection, the results of the audit based on his
personal knowledge:
[COUNSEL]: It wasn’t until after the divorce that an audit of Chapita’s
Restaurant came to fruition and caused a tax bill,
correct?
[DAVID]: Yes.
[COUNSEL]: And when was the audit done, more or less?
[DAVID]: I believe it was like six months after the divorce was
finalized.
[COUNSEL]: And as a result of that audit, how much—what years
were audited?
[DAVID]: They [sic] IRS went in and advised me and [Edna] that
they were going to audit 2007, 2008[,] and 2009, and
11
we could both be present during the audit. Which she
chose not to be there.
....
[COUNSEL]: And as a result of that audit, what did the IRS
determine?
[DAVID]: The final amount that they figured that we owed was in
federal income, it was close to $3 million. And I believe
employee tax back tax was close to $300,000.
See Niche Oilfield Servs., LLC v. Carter, 331 S.W.3d 563, 571 (Tex. App.—Houston [14th
Dist.] 2011, no pet.) (explaining that unobjected-to hearsay may be considered in
analyzing the sufficiency of the evidence supporting a jury verdict (citing City of Keller,
168 S.W.3d at 812 n.29)). Thus, it was the IRS, not David, that determined that Edna was
jointly and severally liable.
Moreover, Edna largely corroborated David’s testimony. She testified that she and
David filed joint tax returns for the years 2007 and 2008 and that the IRS notified her that
she was jointly liable for $1.6 million in federal taxes for those years. When directly asked
whether she was liable for these taxes, she responded, “Yes.”2 The only part of David’s
testimony she did not explicitly agree with concerned the 2009 tax year, saying she was
“not aware” of any joint liability for that year. David testified otherwise, and as the trier of
2 Attached to one of David’s filings in the trial court is a copy of an agreed decision from a United
States Tax Court in which Edna agreed that she was “not entitled to relief under I.R.C. § 6015 (b), (c), or
(f) with respect to her income tax liabilities for tax years 2007 and 2008” as an innocent spouse signing a
joint tax return. However, the decision was not entered into evidence, and David did not ask the trial court
to take judicial notice of the decision. Therefore, we do not consider it in our analysis. See Shah v. Star
Anesthesia, P.A., 580 S.W.3d 260, 266 (Tex. App.—San Antonio 2019, no pet.) (“Our duty, as an appellate
court, is to consider only the testimony adduced and the evidence tendered and/or admitted at the time of
trial.” (quoting Vanscot Concrete Co. v. Bailey, 862 S.W.2d 781, 783 (Tex. App.—Fort Worth 1993), aff'd,
894 S.W.2d 757 (Tex. 1995))).
12
fact, the trial court was free to credit David’s testimony over Edna’s testimony regarding
the outcome of the audit. See George Joseph Assets, LLC v. Chenevert, 557 S.W.3d
755, 765 (Tex. App.—Houston [14th Dist.] 2018, pet. denied); Rich v. Olah, 274 S.W.3d
878, 884 (Tex. App.—Dallas 2008, no pet.). Edna’s first sub-issue is overruled.
Edna also complains about the factual and legal sufficiency of the evidence
supporting the trial court’s conclusion that “[David] and [Edna] are jointly liable for the IRS
taxes due on the restaurant known as Chapita’s for years during the marriage.” However,
conclusions of law are not reviewable for factual or legal sufficiency; only the trial court’s
conclusions drawn from the facts may be reviewed for correctness. BMC Software, 83
S.W.3d at 794; Aldrich, 658 S.W.2d at 327. We can draw a straight line from the evidence
cited above to the trial court’s conclusion concerning the parties’ joint federal tax liabilities.
See BMC Software, 83 S.W.3d at 794. Further, a decree’s division of joint obligations
does not diminish or limit the right of creditors to proceed against either or both ex-
spouses. See, e.g., Blake v. Amoco Fed. Credit Union, 900 S.W.2d 108, 111 (Tex. App.—
Houston [14th Dist.] 1995, no writ). Rather, the decree merely divides the responsibility
for repayment as between the parties and affects only their rights to seek contribution
from each other in satisfaction of their joint obligation. Id. We overrule Edna’s first issue.
III. THE DIVISION OF TAX LIABILITIES
By her second issue, Edna argues that the trial court misinterpreted the decree’s
division of tax liabilities. She contends that under the decree, David is “liable for all taxes
associated with the restaurant.” The trial court reached a different conclusion: “The Final
Decree of Divorce decreed that all taxes for any years during the marriage were to be
13
divided equally between the parties.” We find that neither interpretation is correct.
A. Standard of Review & Applicable of Law
“The same rules of interpretation apply in ascertaining the meaning of judgments
as in ascertaining the meaning of other written instruments.”3 Treadway v. Shanks, 110
S.W.3d 1, 6 (Tex. App.—Dallas 2000, pet. granted), aff’d, 110 S.W.3d 444 (Tex. 2003)
(citing Lone Star Cement Corp. v. Fair, 467 S.W.2d 402, 404–05 (Tex. 1971)). Whether
a written instrument is ambiguous is a question of law. Pathfinder Oil & Gas, Inc. v. Great
Western Drilling, Ltd., 574 S.W.3d 882, 889 (Tex. 2019. ). “A document is ambiguous only
when the application of pertinent rules of interpretation results in genuine uncertainty as
to which one of two or more meanings is proper.” Treadway, 110 S.W.3d at 6 (citing
Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951)). A written
instrument “is not ambiguous simply because the parties disagree over its meaning.”
Dynegy Midstream Servs., Ltd. P’shp v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009)
(citing Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589
(Tex. 1996)).
If the written instrument can be given a certain or definite legal meaning or
interpretation, then there is no ambiguity, and the court will construe the instrument as a
matter of law. Pathfinder, 574 S.W.3d at 889; Coker v. Coker, 605 S.W.2d 391, 393 (Tex.
1983). Our primary objective is to give effect to the instrument’s written expression. URI,
3 Contrary to Edna’s repeated assertion in her brief, there is nothing in the decree to indicate that
it represents an agreement between the parties. Rather, the divorce decree contains a provision stating
that the final hearing was contested before a jury. Further, the parties signed the decree with the disclaimer
that they were approving the form of the decree but not its substance. Nevertheless, whether the parties
agreed to the decree has no bearing on our interpretation of the instrument; agreed judgments are subject
to the same well-known rules of construction as other written instruments. See Gulf Ins. Co. v. Burns Motors,
Inc., 22 S.W.3d 417, 422 (Tex. 2020).
14
Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018) (citing Valence Operating Co.
v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005)). “[T]he parties’ intent is governed by what
they said, not by what they intended to say but did not.” Fiess v. State Farm Lloyds, 202
S.W.3d 744, 746 (Tex. 2006) (citing Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d
738, 741 (Tex. 1998)). We interpret the language of a written instrument “according to its
‘plain, ordinary, and generally accepted meaning’ unless the instrument directs
otherwise.” URI, Inc., 543 S.W.3d at 764 (quoting Heritage Res., Inc. v. NationsBank, 939
S.W.2d 118, 121 (Tex. 1996)).
B. Interpreting the Decree
Under the decree, each party was ordered to pay “[a]ll encumbrances, ad valorem
taxes, liens, assessment, or other charges to become due on the real and personal
property awarded to [the party] in this decree unless express provision is made in this
decree to the contrary.” (Emphasis added). The decree, rendered on December 18, 2009,
also required each party to file a separate tax return for the year 2009. Federal income
taxes for a particular year become due at the time the taxpayer is required to file their tax
return, typically on April 15 of the following year. 26 U.S.C. § 6151(a); In re Vines, 200
B.R. 940, 947 (M.D. Fla. 1996); United States v. Thomassen, 610 F. Supp. 386, 391–92
(D. Neb. 1985); United States v. Ressler, 433 F. Supp. 459, 463 (S.D. Fla. 1977), aff’d
576 F.2d 650 (5th Cir. 1978). Thus, under the plain language of the decree, David was
required to pay any federal income tax liabilities arising out of the operation of the
restaurant in 2009 because they became due after the divorce. Moreover, the decree
required him to indemnify and hold Edna and her property harmless from any failure to
15
discharge those liabilities. Accordingly, under the plain language of the decree, any
payments David made towards their 2009 joint tax liabilities cannot be credited toward
his unpaid obligation to Edna.
Conversely, the 2007 and 2008 tax liabilities had already become due before the
decree was rendered on December 18, 2009, regardless of whether the parties knew the
full extent of those liabilities at the time of the divorce. See 26 U.S.C. § 6151(a).
Therefore, under the same plain language, David is not “liable for all taxes associated
with the restaurant,” as Edna suggests.
David argues—and the trial court agreed—that because the decree specifically
provides for the payment of $116,000 in known tax liabilities for the year 2008 from
community funds, all tax liabilities incurred during the marriage, both known and unknown,
were necessarily divided evenly between the parties. The provision in question provides
that: “[$]116,000.00 is to be paid immediately to the [IRS] for outstanding taxes due for
the 2008 tax year. The [$]116,000.00 is to be paid out of the IBC CD in the amount of
[$]170,000.00.” We fail to see how this narrow language divides $3.3 million in unknown
tax liabilities for the years 2007, 2008, and 2009.
If these liabilities had been known at the time of the divorce, it stands to reason
that the marital estate would have been divided differently. See Bush v. Bush, 336 S.W.3d
722, 740 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (“Debts and liabilities incurred
jointly by the spouses, such as federal income tax liabilities, must be considered by the
trial court in determining a just and right division of the community estate and must be
apportioned to one or both of the spouses.” (citing In re S.A.A., 279 S.W.3d 853, 857
16
(Tex. App.—Dallas 2009, no pet.))). However, it would be improper for us to speculate
about how the estate would have been divided; we can only interpret the existing
language in the decree, and the language David relies on does not provide for the division
of any unknown tax liabilities. See Fiess, 202 S.W.3d at 746 (“[T]he parties’ intent is
governed by what they said, not by what they intended to say but did not.” (citing
Balandran, 972 S.W.2d at 741)). Our interpretation gives effect to every provision in the
division of the marital estate without adding terms that do not exist. See Gulf Ins. Co. v.
Burns Motors, Inc., 22 S.W.3d 417, 422 (Tex. 2020). Simply put, the unknown tax
liabilities for 2007 and 2008 are undivided liabilities of the marital estate.
While we agree with Edna that the trial court’s interpretation of the decree was
erroneous, and thus constitutes an abuse of discretion, we also reject Edna’s alternative
interpretation. Accordingly, we sustain Edna’s second issue in part.
IV. DAVID’S RIGHT TO AN OFFSET
By her third issue, Edna argues that providing David with any offset impermissibly
alters the division of the marital estate. See TEX. FAM. CODE ANN. § 9.007(a) (explaining
that, in an enforcement suit, “[a] court may not amend, modify, alter, or change the division
of property made or approved in the decree of divorce”). We disagree. As we have already
concluded, the unknown 2007 and 2008 tax liabilities were not divided by the decree in
the first instance and therefore are not subject to this limitation. Indeed, the family code
specifically provides for a post-decree procedure “to divide property not divided or
awarded to a spouse in a final decree.” Id. § 9.201(a). It is unclear whether this post-
divorce procedure for undivided “property” also includes undivided liabilities. See id. At
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least one of our sister courts has concluded that a court has authority under the statute
to apportion undivided liabilities overlooked by the decree. Lajzerowicz v. Lajzerowicz,
No. 04-16-00491-CV, 2018 WL 626593, at *5 (Tex. App.—San Antonio Jan. 31, 2018,
pet. denied) (mem. op.). We note that this is the same position Edna took in the trial court,
telling the trial court at the final hearing that David had this specific right to relief, which
had not been pleaded at the time but was raised in a post-hearing amendment before the
final judgment. Now, on appeal, David argues those proceedings are limited to undivided
property.
We need not decide the issue here. David has consistently maintained throughout
the course of the proceedings that he was entitled to a “credit” for half of any payments
he made to the IRS on behalf of the parties’ joint liability. In fact, his right to offset Edna’s
enforcement claim was the primary issue throughout the course of the proceeding. Edna
has not pointed us to any authority that would prohibit David from raising this affirmative
defense, and we have found none. See Tenet Health Sys. Hosps. Dall., Inc. v. N. Tex.
Hosp. Physicians Group, P.A., 438 S.W.3d 190, 204 (Tex. App.—Dallas 2014, no pet.)
(explaining that the right of offset is an affirmative defense (citing Brown v. Am. Transfer
& Storage Co., 601 S.W.2d 931, 936 (Tex.1980))). Rather, enforcement suits are
generally “governed by the Texas Rules of Civil Procedure applicable to the filing of an
original lawsuit,” see TEX. FAM. CODE ANN. § 9.001(b), including a respondent’s right to
raise an affirmative defense. See, e.g., Moore v. Moore, 568 S.W.3d 725, 730–32 (Tex.
App.—Eastland 2019, no pet.) (affirming trial court’s enforcement order because ex-
husband failed to prove his affirmative defenses of waiver, estoppel, and laches). We
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have already concluded that David provided sufficient evidence that he made significant
payments to the IRS on behalf of the parties’ joint tax liability; therefore, we overrule
Edna’s third issue.
What is unclear, however, is how those payments were applied by the IRS.
Although Edna testified that the 2007 and 2008 joint tax liabilities totaled $1.6 million, only
payments made on the 2007 and 2008 tax liabilities are eligible to offset Edna’s claim,
and we cannot determine from the record whether David’s payments were made toward
the 2007 and 2008 tax liabilities, the 2009 tax liabilities, or some combination thereof. We
also cannot determine from the record what portion, if any, of the $1.6 million in tax
liabilities for 2007 and 2008 include penalties and interest and whether those portions
became due before or after the divorce. Thus, we cannot affirm a modified judgment on
the record before us. Instead, we must reverse the judgment and remand the case to the
trial court to determine these factual issues and any others it deems appropriate, keeping
in mind that the key inquiry is whether the tax liabilities became due before or after the
divorce was rendered.
V. SUMMARY
The trial court abused its discretion when it erroneously concluded that “[t]he Final
Decree of Divorce decreed that all taxes for any years during the marriage were to be
divided equally between the parties.” Any payments David made towards their 2009 joint
tax liabilities cannot be credited toward his unpaid obligation to Edna because those
liabilities were assigned to David under the decree. The unknown 2007 and 2008 tax
liabilities were not divided by the decree, but David may seek an offset for half of any
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payments he made towards those liabilities that became due before the decree was
rendered.
VI. CONCLUSION
The judgment is reversed, and the case is remanded to the trial court for
proceedings consistent with this memorandum opinion.4
GINA M. BENAVIDES
Justice
Delivered and filed the
14th day of January, 2021.
4Because we are reversing the judgement, we do not reach Edna’s fourth issue that the trial court
granted David additional affirmative relief not requested in his pleading. See TEX. R. APP. P. 47.1.
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