In re Nash

644 S.W.3d 683

In the MATTER OF the MARRIAGE OF Michael NASH and Texie Nash

No. 06-21-00013-CV

Court of Appeals of Texas, Texarkana.

Date Submitted: October 27, 2021

Date Decided: March 4, 2022

Rehearing Denied: March 29, 2022

Troy A. Hornsby, Miller, James, Miller & Hornsby, LLP, Texarkana, for Appellant.

M. Keith Dollahite, Lead Counsel, M. Keith Dollahite, PC, Tyler, Melissa A. Charles, Law Office of Melissa A. Charles, PLLC, Longview, for Appellee.

Before Morriss, C.J., Stevens and Carter,^* JJ.

OPINION

Opinion by Justice Stevens

Michael Nash appeals the trial court's final divorce decree dissolving his marriage to Texie Nash. On appeal, Michael challenges the trial court's characterization of fourteen pieces of property as community assets. We find that the trial court properly characterized thirteen of the disputed properties as community property but sustain Michael's point of error relating to the characterization of a property known as the "Loop and 59 tract." Because the Loop and 59 tract should have been characterized as Michael's separate property, we reverse the portion of the trial court's order setting forth its property division and remand the matter to the trial court for further proceedings consistent with this opinion. We sever the portion of the trial court's decree granting the parties’ divorce and affirm that portion of the trial court's judgment.

I. Factual Background

Michael and Texie were married on August 6, 1997. Because Texie had inherited and acquired a sizeable estate prior to the marriage, the couple executed a premarital agreement (PMA).¹ The PMA, further discussed in detail below, included a list of Michael's and Texie's separate property assets at the time of the marriage and contained a provision stating that wages earned during marriage would remain separate property. The PMA also contemplated the creation of community property and included a provision establishing joint bank accounts.

The evidence at trial established that the couple's assets were a source of some marital discord. Michael had incorporated a business just prior to the marriage, which struggled financially for the first few years. Texie loaned substantial sums of money to the company, and an expert witness testified that most of the couple's income during the first several years of marriage, as reported on their income tax returns, came from Texie's separate property. In the early 2000s, Michael purchased several properties during a time when Texie believed he did not have sufficient income to do so. Texie said that she gave her separate property to Michael because she believed he had insufficient income.

The couple had separated and filed for divorce several times before this divorce. Michael first filed for divorce in 2002, but the couple reconciled at the beginning of 2003. Texie filed for divorce in 2006, but it was dismissed that same year after reconciliation. Texie testified that Michael agreed to give her a fifty-percent interest in his business to demonstrate his renewed commitment to the marriage, and Michael's company was converted into a limited partnership, Nash Trucking & Construction, Ltd., naming Texie a fifty-percent limited partner. The business grew, and the couple acquired additional assets.

Michael purchased several properties between 2000 and 2011 that were deeded only to him. According to Texie, Michael told her that her name was not required on documents attached to real property acquisitions unless they sold the property. Texie believed that she had an interest in those properties because funds other than Michael's separate property had been used to acquire them. The record showed that evidence of tracing, as detailed below, was largely lacking. The couple had numerous checking accounts, and Texie testified, "Money's been tossed back and forth so many times, it's hard to keep up with what went where." Expert testimony indicated that several of the couple's bank accounts had been commingled.

Another separation occurred in 2012 that undisputedly impacted the couple's financial relationship. Michael said that, after 2012, he and Texie discussed their assets, including commingled accounts and the business, "more collectively because ... [they] had kind of gotten past that mine and yours and his and her stuff, and that's how [they] were getting along." He continued, "We were buying property together, so that ... actually became and [was] going to be our property rather than how it had always been." Michael admitted that he and Texie had commingled some accounts in 2012, but Chad Maddux, a certified public accountant, testified that he believed the parties had commingled funds before then.

The trial court granted the divorce and characterized the parties’ numerous assets. In a section labeled "Division of the Marital Estate ," the trial court awarded to Michael the following community property: (1) six tracts of real property; (2) five personal vehicles; (3) three closely held businesses; (4) three business trucks; (5) a motor home; (6) three all-terrain vehicles; (7) a moped; (8) a golf cart; (9) two boats; (10) two Wave Runners; (11) five four-wheelers; (12) a wagon; (13) nineteen tractors or trailers; (14) twenty-one items in the category of equipment and tools; (15) three hundred head of cattle; (16) six horses; (17) two life insurance policies; (18) a one-percent community interest in a promissory note obtained after the sale of Nash Trucking & Construction, Ltd.; (19) fifty percent of twenty-six gas, oil, and mineral interests; and (20) 2,500 shares of stocks, bonds, and securities, among other things. Michael was also ordered to pay all debts incurred solely by him. Texie received the following community property: (1) eleven tracts of real property; (2) three items labeled as equipment and tools; (3) one vehicle; (4) a 7230 tractor and John Deere tractor; (5) a pontoon boat; (6) any life insurance policy insuring her life; (7) fifty percent of twenty-six gas, oil, and mineral interests; (8) 2,500 shares of stocks, bonds, and securities; and (9) $52,800.00 pursuant to an order holding Michael in contempt for violating court orders during the pendency of the divorce. To equalize the division of community property, the trial court ordered Michael to pay Texie $198,725.69.

No findings of fact or conclusions of law were requested or filed. On appeal, Michael argues that the trial court erred by failing to find that the following property was his separate property: (1) the Grubb Pottery Warehouse tract; (2) Homestead I; (3) Homestead II; (4) Homestead III; (5) the Loop and 59 tract; (6) the Post Ranch tract I; (7) the Post Ranch tract II; (8) the Caddo Lake lots; (9) the Nash Trucking and Construction note; (10) the Brown tract; (11) the T&P FCU savings account; (12) the John Deere 6150R tractor; (13) the 7230 cab tractor and loader; and (14) the 1996 Caterpillar 416 backhoe.

II. Thirteen of the Fourteen Items of Property at Issue Were Properly Characterized

A. Standard of Review

"The Texas Family Code requires the trial court to divide a marital estate in a ‘just and right’ manner, considering the rights of the parties." In re Marriage of Moncey , 404 S.W.3d 701, 706 (Tex. App.—Texarkana 2013, no pet.) (quoting TEX. FAM. CODE ANN. § 7.001 ). "Trial courts can only divide community property, and the phrase ‘estate of the parties’ encompasses the community property of a marriage, but does not reach separate property." Id. (quoting Pearson v. Fillingim , 332 S.W.3d 361, 363 (Tex. 2011) (per curiam) ).

"Property 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 person seeking to prove the separate character of the property must do so by clear and convincing evidence. TEX. FAM. CODE ANN. § 3.003(b). Separate property is the property owned before marriage as well as "property acquired ... during marriage through gift, devise, or descent." TEX. FAM. CODE ANN. § 3.001. All other property that is not separate property is community property. TEX. FAM. CODE ANN. § 3.002. " ‘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." TEX. FAM. CODE ANN. § 101.007. "Any doubt as to the character of property should be resolved in favor of the community estate." In re Marriage of Moncey , 404 S.W.3d at 706 (citing Garza v. Garza , 217 S.W.3d 538, 548 (Tex. App.—San Antonio 2006, no pet.) ). "Reversible error exists as a matter of law only if the trial court characterizes property as community property and awards it to one spouse when it is established as the separate property of the other spouse." Id. (citing Eggemeyer v. Eggemeyer , 554 S.W.2d 137, 140 (Tex. 1977) ).

That said, characterization of marital property often involves questions of fact. Maldonado v. Maldonado , 556 S.W.3d 407, 414 (Tex. App.—Houston [1st Dist.] 2018, no pet.) ("Whether property is separate or community in nature is a mixed question of law and fact."); Irvin v. Parker , 139 S.W.3d 703, 708 (Tex. App.—Fort Worth 2004, no pet.) ("Whether the presumption as to the community character of marital property is overcome is a question for the jury." (quoting Smith v. Lanier , 998 S.W.2d 324, 332 (Tex. App.—Austin 1999, pet. denied) (citing Orrill v. Orrill , 271 S.W.2d 173, 175–76 (Tex. App.—Texarkana 1954, no writ) ))); Callaway v. Clark , 200 S.W.2d 447, 449 (Tex. App.—Texarkana 1947, writ ref'd) ("[T]estimony raised a question of fact as to whether the property was paid for with separate or community funds, and was properly submitted to the jury by the trial court."). Because no findings of fact and conclusions of law were requested or filed, " ‘we imply all findings of fact necessary to support the judgment’ of the trial court." Bouknight v. Bouknight , No. 06-14-00034-CV, 2014 WL...