In re Tuttle

602 S.W.3d 9

In the MATTER OF the MARRIAGE OF Jeffery R. TUTTLE and Lissa Renee Tuttle

In the Interest of B.W.T., a Minor Child

No. 07-19-00016-CV

Court of Appeals of Texas, Amarillo.

May 4, 2020

Rehearing Denied July 28, 2020

Jeffery R. Tuttle, pro se.

Mary Claire Fischer, for Appellee.

Before QUINN, C.J., and PIRTLE and DOSS, JJ.

Brian Quinn, Chief Justice

This appeal arises from the divorce of Jeffery R. Tuttle and Lissa Rene Tuttle.¹ As part of its final divorce decree, the trial court "confirmed" that Lissa owned as her separate property a half interest in the Bexar County home. The home was bought during the marriage with Jeffery's separate property (i.e., inheritance), but its deed was placed in the names of both Jeffery and Lissa. The trial court also ordered Jeffery to pay child support. In calculating the sum payable, the trial court considered as part of his net resources, retained earnings held by a Subchapter S corporation that he owned. The two issues before us concern whether the trial court accurately determined that Jeffery gave Lissa a gift of a half interest in the Bexar County home and permissibly included retained earnings in calculating his child support obligation. Jeffery contends that it erred in both respects. We affirm in part and reverse in part.²

Issue One – Gift

Through his first issue, Jeffery asserts that the evidence is legally and factually insufficient to support the trial court's ruling that he "intended to make an inter vivos gift to [Lissa] of a fifty percent (50%) interest in the Bexar County Residence" and "[a]t most, ... intended a gift cause [sic] mortis." We overrule the issue.

The applicable standard of review is abused discretion. Knowlton v. Knowlton , No. 04-17-00257-CV, 2018 WL 2222621, at *2, 2018 Tex. App. LEXIS 3408, at *5 (Tex. App.—San Antonio May 16, 2018, no pet.) (mem. op.). The standard overlaps with the traditional sufficiency of evidence standards in family law cases. Id. Thus, the legal and factual sufficiency of the evidence are not independent grounds of review but, rather, part of the abused discretion analysis. Id. at *2, 2018 Tex. App. LEXIS 3408, at *5–6. And when the burden of proof at trial is by clear and convincing evidence, as it was here, we employ a higher standard in performing our legal and factual sufficiency analysis. Id. at *2, 2018 Tex. App. LEXIS 3408, at *6. Evidence is clear and convincing evidence when it produces 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. Yet, it need not be clear and unequivocal. Id. at *2–3, 2018 Tex. App. LEXIS 3408, at *7. Finally, per the standard of review, we construe the evidence in a light most favorable to the trial court's judgment. Id.

Next, a gift involves a voluntary transfer of property to another made gratuitously and without consideration. Id. at *2–3, 2018 Tex. App. LEXIS 3408, at *7–8. It is established by the donee proving 1) the intent to make a gift, 2) delivery of the property, and 3) its acceptance. Id. at *3, 2018 Tex. App. LEXIS 3408, at *8. The principle issue is the donor's intent. Id. With that said, we turn to the record at bar.

No one denies that the Bexar County home was acquired during the community. Nor do they question that Jeffery 1) used inheritance or separate property from his deceased parents to buy it and 2) placed title to the home in both his and Lissa's name. Placing title to the realty in joint names under that circumstance created a rebuttable presumption that he intended to give Lissa an undivided half interest in the home. See Office of the AG v. Kalenkosky , No. 04-09-00762-CV, 2011 WL 1499419, at *3–4, 2011 Tex. App. LEXIS 2939, at *9 (Tex. App.—San Antonio Apr. 20, 2011, no pet.) (mem. op.) (stating that "[w]hen a spouse uses separate property to pay for property acquired during the marriage and takes title to it in the names of both spouses, it is presumed that the purchasing spouse intended to give the other spouse an undivided one-half interest in the property"). The presumption can be rebutted, though, by evidence clearly establishing no intention to make a gift. Id.

Though Jeffery denied intending to give Lissa half ownership of the home, the trial court had before it other evidence. It included testimony that: 1) the two were reuniting at the time the property was acquired; 2) Jeffery also bought Lissa a vehicle and titled it in her name; 3) Jeffery wanted to "make things right" and said "[w]e were going to have a home"; 4) Jeffery added Lissa to "accounts" from which she was previously excluded; 5) Jeffery said he was "not going to leave you guys [i.e., Lissa and their son] without a home"; 6) Lissa "deserved this home and that he was happy that finally we were going to be a family"; 7) Jeffery was "very emotional"; 8) Lissa selected the house, undertook the repairs needed, and moved into it with their son; and 9) Jeffery had Lissa named as one of the grantees.

Given that intent lies within one's mind and same is not readily susceptible to reading, our law has long recognized that it may be established through both direct or circumstantial evidence. See Consol. Reinforcement, L.P. v. Cheraif , No. 04-18-00443-CV, 2019 WL 2272890, at *2–3, 2019 Tex. App. LEXIS 4371, at *5 (Tex. App.—San Antonio May 29, 2019, no pet.) (mem. op.) (observing that intent, in that case fraudulent intent, may be inferred from direct and circumstantial evidence). Even if we were to ignore the rebuttable presumption erected by placing Lissa's name on the deed, Jeffery's act of placing it on the deed may be considered circumstantial evidence of Jeffery's intent. See Harrison v. Harrison , 321 S.W.3d 899, 903–04 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (wherein the fact that husband placed wife's name on deed to one parcel while omitting it from another was considered as evidence to support a finding of gift). That he had a donative mindset while reuniting with Lissa is further circumstantially exemplified by his acquiring a car for her and placing it in her name and naming her on "accounts" from which she was previously omitted. Coupling that with the other bits of evidence itemized above provided the trial court with basis to form a firm conviction and belief not only that he had the requisite intent to make a gift but also that he delivered and she accepted the gift. So, upon construing the evidence in a light most favorable to the trial court's finding of a gift, we conclude that its decision was not an instance of abused discretion.

Issue Two – Retained Earnings

Via the last issue before us, Jeffery contends that the trial court abused its discretion when including "undistributed retained earnings from [his] Subchapter S corporation in the calculations of [his] child support obligation." In other words, he attacks the amount of support the trial court ordered him to pay because it utilized an improper criterion in arriving at the sum. The improper criterion was the inclusion of the aforementioned retained earnings in the support equation. We sustain the issue.

The pertinent standard of review again is one of abused discretion. Smith v. Hickman , No. 04-19-00182-CV, 2020 WL 1442663, at *1–2, 2020 Tex. App. LEXIS 2457, at *3–4 (Tex. App.—San Antonio Mar. 25, 2020, no pet. h.) (mem. op.) (stating that most of the appealable issues in a family law case are evaluated under the abuse of discretion standard, be it the issue of property division incident to divorce or partition, conservatorship, visitation, or child support). That discretion may be abused when the trial court lacks sufficient evidence upon which to exercise it. See id. at *2, 2020 Tex. App. LEXIS 2457, at *5–6 (finding that "the trial court abused its discretion on the issues of conservatorship, child support, and property division because it did not have sufficient evidence upon which to exercise its discretion").

Next, the Family Code requires a trial court to calculate "net resources" to determine an obligor's child support liability. TEX. FAM. CODE ANN. § 154.062(a) (West Supp. 2019). The term "resources" is quite expansive. It includes 1) 100 percent of all wage and salary income and other compensation for personal services, 2) interest, dividends, and royalty income, 3) self-employment income, 4) net rental income, and 5) all other income actually being received. Id. § 154.062(b)(1)–(5). Excluded, though, are 1) return of principal or capital, 2) accounts receivable, 3) benefits paid in accordance with the Temporary Assistance for Needy Families program or another federal public assistance program, and 4) payments for foster care of a child. Id. § 154.062(c)(1)–(4). And to arrive at "net resources," the trial court deducts 1) social security taxes, 2) federal income tax, 3) state income tax, 4) union dues, 5) expenses for the cost of health insurance, dental insurance, or cash medical support for the obligor's child ordered by the court, and 6) nondiscretionary retirement plan contributions, if the obligor pays no social security taxes. Id. § 154.062(d)(1)–(6).

Missing from the itemizations above is mention of retained earnings of a Subchapter S corporation. This may be because corporate retained earnings, though taxable as personal income, remain corporate assets owned by the corporation, not the corporate shareholder. Dyer v. Dyer , No. 03-16-00753-CV, 2018 WL 2994439, at *4–5 n.6, 2018 Tex. App. LEXIS 4380, at *15 n.6 (Tex. App.—Austin June 15, 2018, no pet.). They are not subject to division between spouses upon divorce. Id. ; Thomas v. Thomas , 738 S.W.2d 342, 344 (Tex. App.—Houston [1st Dist.] 1987, writ denied) (stating that "[c]ourts in community property states have unanimously held that corporate earnings remained corporate property until distributed and, therefore, were not divisible on divorce"). And, though dividends paid a shareholder may be income for purposes of a § 154.062(b) calculation, a corporation's...