Kelly v. Kelly

634 S.W.3d 335

Thomas Gunnar KELLY, Appellant

v.Sherry Marie KELLY, Appellee

NO. 01-19-00580-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued August 26, 2021

Denice Smith, 5535 Memorial Dr., Ste. F-556, Houston, Texas 77007, for Appellant.

Haley K. Burnside, Fullenweider Wilhite, P.C., 515 Post Oak Blvd., Ste., 800, Houston, Texas 77027, for Appellee.

Panel consists of Justices Kelly, Guerra, and Farris.

April L. Farris, Justice

In this divorce case, the trial court dissolved the marriage between appellant, Thomas (Tom) Gunnar Kelly, and appellee, Sherry Marie Kelly. In the divorce decree, the trial court awarded a disproportionate share of the community estate to Sherry, awarded spousal maintenance to Sherry, and ordered Tom to pay Sherry's outstanding attorney's fees.

On appeal, Tom raises several issues primarily relating to characterization of the parties’ assets and division of the marital estate. He argues that the trial court erred by characterizing 100% of his 401(k) account, severance payments, and an investment account as part of the community estate and awarding portions to Sherry. He also argues that the trial court erred by characterizing a car as a gift from Tom to Sherry, making that car her separate property as opposed to community property. He further argues that the trial court erred by awarding spousal maintenance to Sherry because the property awarded to her in the decree can provide for her minimum reasonable needs, and because Sherry presented legally insufficient evidence of a disability justifying maintenance.

In several related sub-issues, Tom argues that the trial court erred by finding that he committed fraud and finding that he concealed the existence of a trust, which he claims does not exist. He also argues that the trial court erred by admitting certain documents, making math errors in the decree and property division, and awarding a disproportionate amount of the marital estate to Sherry. Finally, he argues that Sherry did not present legally sufficient evidence that her attorney's fees were reasonable and necessary.

We affirm in part and reverse and remand in part.

Background

Tom and Sherry married on November 6, 2012. Tom has two adult daughters from a previous marriage, and Sherry has one adult son from a previous marriage. Tom and Sherry do not have children together. Sherry filed a petition for divorce in March 2018, alleging insupportability and cruelty as grounds for divorce. She requested that the trial court award her spousal maintenance following divorce. Tom filed a counterpetition for divorce in August 2018, alleging insupportability and adultery as grounds for divorce. Both parties requested a disproportionate share of the community estate and asserted reimbursement claims for expenditure of community funds to benefit the other spouse's separate estate. Tom also asserted a reimbursement claim for the expenditure of his separate funds for the benefit of the community estate.

The trial court held a bench trial in May 2019. At trial, the parties testified concerning the circumstances surrounding their marriage and separation. The parties also testified concerning their relative financial positions; Tom's employment at AIG and, later, Bank of America; Sherry's medical history and her disability status; both parties’ expenditures during the pendency of the divorce; Tom's potential inheritance; and the characterization of several disputed assets, including Tom's AIG 401(k) account, Tom's severance payments from AIG, bank and investment accounts, and a car. Tom's 401(k) was worth $468,344.55 at the time of trial. The parties also disputed whether Tom was the beneficiary of a currently existing family trust or a testamentary trust that would be created upon the death of his parents. With respect to Tom's AIG pension plan, the parties stipulated that 59% was Tom's separate property and 41% was community property.

At the close of trial, the trial court announced its intention to make a disproportionate division of the community estate in favor of Sherry. The trial court also stated that Tom had attempted to defraud the court "in not disclosing property" and had been dishonest with the court "in submitting the documents that he wants to but making a legal decision for himself that certain things are not subject to production because they are not properly before the Court."

In the final divorce decree, the trial court dissolved the marriage on the grounds of cruelty. The property that the trial court awarded to Sherry included approximately $6,000 worth of furniture, furnishings, clothing, and personal effects in Sherry's possession; 100% of cash, assets, and securities in an E*Trade investment account in Tom's name, worth approximately $172,391.01; $40,549.77 in a Bank of America checking account in Tom's name; 78.65% of Tom's AIG 401(k), worth approximately $368,344.55; 100% of the community property portion of Tom's AIG pension plan; 100% of the assets in an E*Trade IRA Rollover account in Tom's name, worth approximately $41,189.99; 100% of the points, miles, and rewards in a United Airlines account in Tom's name; and 60% "of any interest, whether such interest is in the corpus or income, of any trust in which [Tom] has an interest." The trial court also awarded Sherry a 2014 Ford Mustang, in Tom's name, as her separate property.

The property the trial court awarded to Tom included approximately $30,000 worth of furniture, furnishings, clothing, and personal effects in his possession; 100% of unpaid severance checks from AIG; 100% of AIG units of stock in a UBS account, worth approximately $82,000; 21.35% of the AIG 401(k), worth approximately $100,000; 40% "of any trust in which [Tom] has an interest"; 100% of the reconstituted value of the community estate, worth $39,449.31, which includes five unaccounted-for AIG severance checks, unaccounted-for unemployment benefits, and at least $15,000 in undisclosed cash Tom deposited in a bank account in his brother's name; and the remaining funds in a Bank of America checking account. The trial court awarded to Tom, as his separate property, a house in Katy and 59% of the AIG pension plan.

The trial court also found that Sherry incurred $72,573.60 in reasonable and necessary attorney's fees during the pendency of the divorce, $41,135.97 of which was still outstanding. The trial court ordered Tom to pay Sherry's outstanding trial-level attorney's fees and $15,000 in conditional appellate-level attorney's fees.

Finally, the trial court awarded spousal maintenance to Sherry. The court ordered Tom to pay $1,952 per month to Sherry for a total of twenty-five months.

The trial court filed findings of fact and conclusions of law. This appeal followed.

Standard of Review

In family law cases in which the appellate standard of review is abuse of discretion, legal and factual sufficiency of the evidence are not independent grounds for asserting error, but are instead relevant factors in assessing whether the trial court abused its discretion. Syed v. Masihuddin , 521 S.W.3d 840, 847 (Tex. App.—Houston [1st Dist.] 2017, no pet.). In determining whether an abuse of discretion exists because the evidence is legally or factually insufficient to support the trial court's decision, we consider whether the trial court had sufficient information upon which to exercise its discretion and whether it erred in its application of that discretion. Id.

When conducting a legal sufficiency review, we review the evidence in a light favorable to the finding, crediting favorable evidence if a reasonable factfinder could do so and disregarding contrary evidence unless a reasonable factfinder could not.

City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005) ; Syed , 521 S.W.3d at 847 n.4. If the evidence would enable reasonable and fair-minded people to differ in their conclusions, then the factfinder must be allowed to decide. Syed , 521 S.W.3d at 847 n.4 ; see City of Keller , 168 S.W.3d at 827 ("The final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review."). As long as the evidence falls within the zone of reasonable disagreement, we may not substitute our judgment for that of the factfinder. Syed , 521 S.W.3d at 847 n.4.

The standard of review of a sufficiency of evidence issue is heightened when the burden of proof at trial is clear and convincing evidence. In re J.F.C. , 96 S.W.3d 256, 265–66 (Tex. 2002) ; Watson v. Watson , 286 S.W.3d 519, 523 (Tex. App.—Fort Worth 2009, no pet.). A spouse seeking to establish the separate character of property must prove the property's character by clear and convincing evidence. TEX. FAM. CODE § 3.003(b) ; Watson , 286 S.W.3d at 523. "Clear and convincing evidence" is that 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. Watson , 286 S.W.3d at 523 ; see TEX. FAM. CODE § 101.007.

In a legal sufficiency review of a finding concerning the separate character of property, we review all the evidence in the light most favorable to the finding to determine whether a reasonable trier of fact could have formed a firm belief or conviction that the finding was true. Watson , 286 S.W.3d at 523 ; see Boyd v. Boyd , 131 S.W.3d 605, 611 (Tex. App.—Fort Worth 2004, no pet.) ("While the proof must weigh heavier than merely the greater weight of the credible evidence, there is no requirement that the evidence be unequivocal or undisputed."). In reviewing the evidence for factual sufficiency, we must give due consideration to evidence that the factfinder could reasonably have found to be clear and convincing. Boyd , 131 S.W.3d at 611. We determine whether, based on the entire record, a factfinder could reasonably form a firm belief or conviction that the allegations were proven. Id.

The factfinder is the only judge...