In re Guerra

1

IN THE MATTER OF THE MARRIAGE OF ROGELIO GUERRA AND SUSAN RABEL GUERRA

No. 13-21-00377-CV

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

August 18, 2022

On appeal from the 197th District Court of Cameron County Texas.

Before Justices Benavides, Hinojosa, and Silva

MEMORANDUM OPINION

GINA M. BENAVIDES, JUSTICE

Appellant Rogelio "Rocky" Guerra (Rocky) appeals from a final decree of divorce that dissolved his marriage to appellee Susan Rabel Guerra (Susan). By five multifarious issues Rocky argues that the trial court erred by: (1) mischaracterizing certain items of separate property as community property, and vice versa; (2) dividing the community estate in a manner that was not just and right; (3) incorrectly determining Rocky's claims for reimbursement (4) failing to award him reasonable attorney's fees; and (5) incorrectly determining post-judgment motions. We affirm.

I. Background

Rocky and Susan married on August 26, 2017. On May 2, 2019, Rocky filed for divorce. After Rocky filed for divorce, Susan withdrew $24,000 from their joint bank account and deposited it into a separate bank account. Rocky later amended his petition to include multiple claims for reimbursement.

A final hearing was held on April 6, 2021, and the trial court signed its initial final decree of divorce on June 2, 2021. In its original decree, the trial court granted, inter alia, a $24,000 reimbursement award solely to Rocky. On June 23, 2021, Susan filed a motion for reconsideration and clarification of the final decree of divorce. In her motion, Susan asked the Court to modify its reimbursement $24,000 to $12,000.

The trial court held a hearing on Susan's post-judgment motion on August 9, 2021. At the hearing, over Rocky's objection, the trial court granted Susan's oral motion for leave to modify her post-judgment motion to also include a request that the court confirm Susan's retirement accounts as her separate property.

On August 16, 2021, the trial court signed a "Corrected Amended Final Decree of Divorce." In this decree, the trial court divided the financial assets of the community estate as follows:

Awarded to Susan: Awarded to Rocky:

• $54,812.36 from Susan's • $54,812.39 from Susan's Nationwide retirement account; Nationwide retirement account;

• $2,751.00 from Susan's Charles • $2,750.00 from Susan's Charles Schwab account; Schwab account;

• $2,666.41 from Susan's Slavic • $2,666.42 from Susan's Slavic retirement account; retirement account; • $233,717.50 from Rocky's Dell • $919,946.76 from Rocky's Dell 401(k) accounts; and 401(k) retirement account; and

• $40,563.45 from Rocky's bank • $40,563.45 from Rocky's bank accounts. accounts.

The trial court also awarded the community estate a reimbursement credit of $24,000, from which each party was entitled to $12,000. Thus, the total value of the community estate was $1,376,849.74. Susan received a total of $346,510.72, or approximately 25% of the community estate. Rocky received a total of $1,030,339.02, or approximately 75% of the community estate. The trial court also confirmed Susan's LPL retirement account and her Follett retirement account as her separate property.

On September 15, 2021, Rocky filed a motion to correct, reform, or modify the judgment. The court held a hearing on Rocky's motion on October 18, 2021, but it was overruled by operation of law on November 1, 2021.

This appeal followed.

II. Characterization of Property

Rocky argues that the trial court incorrectly characterized certain items of his separate property as belonging to the community estate and incorrectly confirmed certain items of property as being Susan's sole and separate property.

A. Applicable Law & Standard of Review

Separate property includes "property owned or claimed by the spouse before marriage." Tex. Fam. Code Ann. § 3.001(1). Separate property is not subject to division in a divorce. Cameron v. Cameron, 641 S.W.2d 210, 215 (Tex. 1982). However, "[p]roperty possessed by either spouse during or on dissolution of marriage is presumed to be community property." Tex. Fam. Code Ann. § 3.003(a). To rebut this presumption, the party asserting an item of property is their separate property must prove this assertion by "clear and convincing evidence." Id. § 3.003(b). "'Clear and convincing evidence' means the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." Id. § 101.007; see Boyd v. Boyd, 131 S.W.3d 605, 611 (Tex. App.-Fort Worth 2004, no pet.). "[C]onclusory or uncorroborated testimony that funds are separate property is insufficient to rebut the community presumption, unless there is also evidence that traces the funds." In re Marriage of Nash, 644 S.W.3d 683, 697 (Tex. App.-Texarkana 2022, no pet.) (quoting In re Marriage of Born, No. 06-08-00066-CV, 2009 WL 1010876, at *5 (Tex. App.-Texarkana Apr. 16, 2009, no pet.) (mem. op.)) (alteration in original); see Zagorski v. Zagorski, 116 S.W.3d 309, 316 (Tex. App.-Houston [14th Dist.] 2003, pet. denied). "Tracing involves establishing the separate origin of the property through evidence showing the time and means by which the spouse originally obtained possession of the property." Smith v. Smith, 22 S.W.3d 140, 144 (Tex. App.-Houston [14th Dist.] 2000, no pet.).

We review a trial court's ruling on the property division in a final decree of divorce for an abuse of discretion. Kelly v. Kelly, 634 S.W.3d 335, 348 (Tex. App.-Houston [1st Dist.] 2021, no pet.). "We must indulge every reasonable presumption in favor of the trial court's proper exercise of its discretion." Wilson v. Wilson, 44 S.W.3d 597, 600 (Tex. App.-Fort Worth 2001, no pet.). If a trial court mischaracterizes a spouse's separate property as community property, then the trial court abuses its discretion and reversibly errs. Kelly, 634 S.W.3d at 348 (citing Sharma v. Routh, 302 S.W.3d 355, 360 (Tex. App.- Houston [14th Dist.] 2009, no pet.)). However, "[i]f the trial court mischaracterizes community property as separate property, that property does not get divided as part of the community estate." Id. at 349. "If the mischaracterized property has value that would have affected the just and right division of the community estate, then the mischaracterization is harmful, and we must remand the entire community estate for a just and right division based upon the correct characterization of the property." Id. "If the mischaracterization of the property had only a de minimis effect on the just and right division, then we need not remand the case to the trial court." Id.

B. Analysis

1. Rocky's Dell 401(k) Account

The trial court characterized the entirety of Rocky's Dell 401(k) as community property. On appeal, Rocky asserts that the "community's total interest in the Dell 401(k) account" consists solely of the "$124,493.76 in employee contributions, $33,381.67 in employer contributions, and $67.72 in dividends and interest, for an aggregate total of $157,943.15."

Prior to 2005, Texas common law ignored tracing principles when the asset at issue was a defined contribution retirement account, like Rocky's Dell 401(k). See, e.g., Pelzig v. Berkebile, 931 S.W.2d 398 (Tex. App.-Corpus Christi-Edinburg 1996, no writ); Hatteberg v. Hatteberg, 933 S.W.2d 522 (Tex. App.-Houston [1st Dist.] 1994, no writ). Instead, Texas appellate courts looked solely to the increase in value of the retirement account during the marriage, regardless of whether that increase could be linked to separate property. See, e.g., Pelzig, 931 S.W.2d at 402; Hatteberg, 933 S.W.2d at 531. In 2005, however, the Legislature enacted § 3.007 of the Texas Family Code, and defined contribution plans became subject to the same tracing rules that apply to nonretirement assets. See Act of Sept. 1, 2005, 79th Leg., R.S., ch. 490, § 1, 2005 Tex. Gen. Laws 1353-54 (amended 2009) (current version at Tex. Fam. Code Ann. § 3.007(c)); see also Goyal v. Hora, No. 03-19-00868-CV, 2021 WL 2149628, at *12 (Tex. App.-Austin May 27, 2021, no pet.) (mem. op.).

Thus, like any other asset, if Rocky failed to adequately trace the portions of the Dell 401(k) that he claimed were his separate property and "the evidence shows separate and community property have been so commingled as to defy resegregation and identification," then Rocky failed to rebut the presumption that the entirety of the Dell 401(k) was community property. See Zagorski, 116 S.W.3d at 316. "The only requirement for tracing . . . is that the party attempting to overcome the community presumption produce clear evidence of the transactions affecting the commingled account." Welder v. Welder, 794 S.W.2d 420, 434 (Tex. App.-Corpus Christi-Edinburg 1990, no writ). To adequately trace the assets in his retirement account, Rocky was required to provide clear evidence of the amount and character of each transaction affecting his Dell 401(k), as well as show whether the balance in his account dipped below the value of his separate property balance. See Smith, 22 S.W.3d at 146 ("Generally, when separate property and community property are commingled in a single bank account, . . . and where there are sufficient funds at all times to cover the separate property balance in the account at the time of divorce, we presume that the balance remains separate property."); Snider v. Snider, 613 S.W.2d 8,10 (Tex. App.-Dallas 1981, no writ); see also Goyal, 2021 WL 2149628, at *16.

The record shows that Rocky's Dell 401(k) had a balance of $686,229.27 at the time of marriage and that it had a balance of $1,214,778.81 at the time of the final hearing. However, a statement for the month of March 2020 shows that Rocky withdrew...