Alwazzan v. Alwazzan

• Decision Date: 06 December 2018
• Docket Number: NO. 01-16-00589-CV,01-16-00589-CV
• Citation: 596 S.W.3d 789
• Parties: Winnie Stacey ALWAZZAN, Appellant v. Isa Ali ALWAZZAN and International Agencies Co., Ltd., Appellees
• Court: Texas Court of Appeals

596 S.W.3d 789

Winnie Stacey ALWAZZAN, Appellant

v.Isa Ali ALWAZZAN and International Agencies Co., Ltd., Appellees

NO. 01-16-00589-CV

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

Opinion issued December 6, 2018

Rehearing En Banc Denied March 26, 2020

Laura Carter Higley, Justice

Winnie Stacey Alwazzan ("Winnie") petitioned the Galveston district court for a divorce from her husband, Isa Ali Alwazzan ("Isa"). However, this was not the first divorce suit Winnie had initiated against Isa. She had previously filed divorce actions in Montgomery County and Harris County, which she had nonsuited at varying stages. The Galveston petition also named International Agencies Co., Ltd. ("IACL")—a corporation in which Winnie alleged Isa has an ownership interest—as a party to the suit.¹ Winnie claimed that Isa had fraudulently transferred community funds to IACL.

The trial court granted Winnie’s request to serve Isa by publication. Winnie claimed that IACL, a company formed under the laws of the Kingdom of Bahrain, could be served through the Texas Secretary of State. Neither Isa nor IACL responded to the suit. The Galveston trial court rendered a divorce decree, dissolving the marriage between Winnie and Isa. Among its provisions, the decree also awarded Winnie a money judgment against Isa and IACL, jointly and severally, for $416,532,514.56.

After Winnie began the process to execute on the money judgment, Isa filed a motion for new trial and a plea to the jurisdiction, raising issues of subject matter and personal jurisdiction. Isa also asserted that Winnie had never satisfied the 90-day residency requirement of Family Code Section 6.301. See TEX. FAM. CODE § 6.301. IACL filed a special appearance and a bill of review, asserting that the trial court lacked personal jurisdiction over it. The trial court signed a judgment, granting Isa’s plea to the jurisdiction, resulting in vacatur of the default divorce decree and dismissal of the suit. The judgment also stated that the trial court lacked personal jurisdiction over Isa and IACL. The trial court later granted a motion for sanctions against Winnie, ordering that she pay IACL’s and Isa’s trial and appellate attorneys' fees as sanctions.

On appeal, Winnie raises three issues. She contends that the record does not support dismissal of the suit based on either lack of subject-matter or personal jurisdiction, and she challenges the sanctions awarded against her.

Because we hold that Winnie did not meet the 90-day residency requirement of Family Code Section 6.301, we affirm the vacatur of the default divorce decree and dismissal of the suit; however, we modify the judgment to conform to our holding regarding the basis for vacatur and dismissal. We affirm the sanctions award but modify it to reflect that the award of appellate attorneys' fees as sanctions is contingent on the outcome of the appeals process. Accordingly, the judgment is affirmed as modified.

Background

Isa, a citizen of the Kingdom of Bahrain, attended college in Texas. There, he met Winnie, a native Texan. In 1985, Winnie and Isa were married. Isa became an American citizen in 2003 but also maintained his Bahraini citizenship. Isa and Winnie had three children: a daughter born in 1985, a son born in 1995, and another son born in 1997. The family lived in Montgomery County, Texas.

Isa and Winnie separated, and Winnie filed for divorce in Montgomery County in July 2011. Four months later, Winnie and Isa signed a mediated settlement agreement ("MSA"). The agreement covered issues relating to conservatorship, child support, and property division. On the signature page, the MSA cautioned that it was "not subject to revocation."

The MSA stated that Winnie’s attorney would prepare a "Final Decree" by December 1, 2011. However, a decree was never signed in the Montgomery County action. Winnie retained new counsel, who on February 7, 2012, filed a nonsuit of the Montgomery County action. That same day, Winnie filed a petition for divorce in Harris County district court. The petition did not mention the Montgomery County divorce action.

In April 2012, Isa returned to his native Bahrain; he would later attest that he has never returned to the United States since then. Despite his absence, Isa was represented in the Harris County action by retained counsel. Isa appeared in the action, filing a counter-petition against Winnie. Winnie also added IACL to the divorce suit, claiming there was a community-property interest in the company.

The Harris County court signed temporary orders on March 6, 2012, appointing Isa and Winnie as joint managing conservators of their minor children, K.A. and E.A. The orders provided, "These Temporary Orders shall continue in force until the signing of the Final Decree of Divorce or until further order of this Court."

In December 2012, the Harris County case was tried to the district court’s associate judge. IACL had not answered the suit and was not represented by counsel at trial. Winnie averred that IACL had been served through the Texas Secretary of State’s Office. Isa did not personally appear, but he was represented, at trial, by his retained counsel.

During trial, counsel for both parties informed the associate judge that they had agreed to waive a de novo hearing to the referring district court judge. Winnie’s counsel stated that "everybody is waiving appeal to the referring Court ... so that we're trying it once."

Following trial, the associate judge issued his written report, addressing, inter alia, the divorce, conservatorship of the children, child support, and division of the community estate. In the report, the associate judge awarded IACL’s "assets and liabilities" to Isa. Winnie was awarded $3.5 million against Isa but was awarded no monetary award against IACL.

Winnie filed a motion "for additional findings." She requested that, "in addition to the relief granted in his recommendation to the trial court," the associate judge reconsider his finding of no liability against IACL. She asked that a money judgment be awarded against IACL and Isa, jointly and severally. Winnie asserted that she had shown that Isa "hides his money within [IACL] and withdraws it at his whim." She claimed that IACL "is a sham to protect [Isa] from his creditors."

Addressing the motion, the associate judge issued a hand-written report on February 21, 2013. The report clarified portions of associate judge’s earlier report and denied the additional relief requested by Winnie.

On April 10, 2013, Winnie filed a notice of non-suit in the Harris County action. The notice was served on Isa’s retained counsel. That same day, Winnie filed an original petition for divorce in Galveston County district court. Winnie named Isa and IACL as respondents. She represented that she was "a resident of [Galveston County] or will have resided in [Galveston County] by final trial for the preceding 90-day period." Winnie stated that she and Isa were the parents of K.A. and E.A., "who are not under the continuing jurisdiction of any other court."

On April 12, 2013, the presiding judge of the Harris County district court signed an "Order on Notice of Non-Suit." The order stated that "the case is dismissed."

On June 3, 2013, Winnie filed an amended petition in the Galveston action. Winnie continued to seek relief from IACL. Among her allegations, Winnie claimed as follows:

16. Relief from [IACL] for Fraudulent Transfer

[IACL] is a corporation established under the laws and customs of the Kingdom of Bahrain. It is alleged to be the recipient of community funds, interests, and/or property that was fraudulently transferred by [Isa], without consideration and/or for less than reasonably equivalent value. The purpose of the transfer was to defraud [Winnie’s] property rights in that property and/or [Winnie’s] separate property rights in that property, and [IACL] had notice of [Isa’s] intent to injure [Winnie’s] rights. [Isa] has transferred and/or delivered and/or given to [IACL] interests in the community estate.

[IACL] has further subjected itself to the jurisdiction of Texas and furthered the villainous aims of the fraud, waste, and emotional distress of [Winnie] by attempting to form INTERCOL USA, LTD CO, a whol[ly] owned subsidiary of [IACL] formed by [Isa] to further perpetrate scams on [Winnie’s] property rights through transfers of property and structuring of the businesses.

17. Sham corporation

[Isa] has disregarded the formalities of the corporation and treats the assets and income of [IACL] as his own. By doing so, [Isa] has ignored and disavowed the corporate veil. The assets of [IACL] should be treated as community assests.

18. Fraud

[IACL] is alleged to have engaged in a pattern of conduct that demonstrates a conspiracy to defraud [Winnie] of her interest in the community estate. [IACL] has assisted and permitted [Isa] to open businesses such as Innovative Design Concepts, Ltd., a British Corporation ... under the auspices of [IACL]. EXIT LONE STAR RELITY is a Texas corporation that was created as a subsidiary of [IACL] in Texas to avoid the participation of [Winnie] and the community.

Winnie filed a motion to serve Isa by publication. She supported her motion with her affidavit in which she testified,

I have not seen my husband Isa Ali Alwazzan, since April 24, 2012. I have no idea where he is at present.... [Isa] is a transient person. I have exercised due diligence to locate the whereabouts of [Isa] and have been unable to do so. I have attempted to contact [Isa] at his old addresses, old phone numbers, old friends, and hangouts. I have been unsuccessful in finding him. [Isa] can be contacted through his company [IACL]. Although they will not tell me where he is, they can always get him a message or money. Serving him through [IACL] would be as likely as any other method of service to provide actual notice of this suit.

The trial court granted Winnie’s motion, ordering that service "be effected by publishing notice in the Galveston County...