In re W.L.W.

• Decision Date: 19 July 2012
• Docket Number: No. 02–12–00138–CV.,02–12–00138–CV.
• Citation: 370 S.W.3d 799
• Parties: In re W.L.W., Relator.
• Court: Texas Court of Appeals

370 S.W.3d 799

In re W.L.W., Relator.

No. 02–12–00138–CV.

Court of Appeals of Texas, Fort Worth.

June 21, 2012.

Rehearing Overruled July 19, 2012.

John H. Cayce, Jr., Jason C. Nash, Matthew D. Stayton, Kelly Hart & Hallman, LLP, Fort Worth, for Relator.

Lindy D. Jones, TY J. Jones, Jones, Allen, & Fuquay, L.L.P., Dallas, Heather L. King, Koons Fuller, Southlake, for Real Party in Interest.

Panel: LIVINGSTON, C.J.; GARDNER and MEIER, JJ.

OPINION

BILL MEIER, Justice.

I. Introduction

Relator Wade White seeks mandamus relief from the trial court's February 7, 2012 order denying his motion to reconsider a prior order denying his plea to the jurisdiction and permitting Real Party in Interest Deborah White to conduct discovery in furtherance of her post-judgment action to clarify or enforce a divorce decree. We will conditionally grant the petition.

II. Background

Wade was a greater–than–50% shareholder of Republic Intelligent Transportation Services, Inc. (Republic ITS) when in December 2007, in his capacities as president of Republic ITS, a shareholder of Republic ITS, and the shareholder representative, he executed an “Agreement and Plan of Merger” in which Republic ITS merged with an affiliate of Alinda Capital Partners. Under the terms of the merger agreement, Wade's shares of Republic ITS were “converted into the right to receive” (1) shares of the post-merger Republic ITS entity (“newly issued Republic ITS shares”); (2) cash calculated according to the merger agreement; (3) funds under promissory notes; and (4) earn-in payments. According to Wade and Deborah's 2007 income tax return, Wade received over $13 million in pre-tax cash as a result of the merger.

Wade and Deborah entered into an agreed decree of divorce on May 13, 2008, approximately five months after Wade executed the merger agreement. In his inventory and appraisement, Wade had listed as an asset “Republic ITS Stock” valued at $2,000,000. Deborah filed an identical inventory and appraisement, except that she listed “UNKNOWN” for the value of the “Republic ITS Stock.” At her 2009 deposition, Deborah acknowledged that she had relied upon and “accepted” the $2 million valuation that Wade attributed to the “Republic ITS Stock,” and she agreed that she could have hired an expert to evaluate the Republic ITS stock but that she never did so. As part of the division of the marital estate, pursuant to section 18.a of the decree, the trial court awarded Wade, among other things, (1) the balance of the funds held by the Bank of the West money market account ending in 6936—$10,104,501—less $7,500,000 to be paid to Deborah, and (2) “The Republic ITS stock, together with all dividends, splits, and other rights and privileges in connection with it.” Pursuant to section 18.b of the divorce decree, the trial court awarded Deborah, among other things, $7,500,000 to be paid by Wade from the Bank of the West account ending in 6936. The divorce decree contains a provision that the parties refer to as a “residuary clause”:

IT IS ORDERED AND DECREED that any asset of the parties that was not disclosed or undervalued in the spreadsheet attached to each party's Inventory and Appraisement as Exhibit “A” is awarded to the party not in possession or control of the asset.

No post-judgment motions were filed, and the trial court's plenary power expired on June 12, 2008. SeeTex.R. Civ. P. 329b(d).

Approximately six months later, in December 2008, Deborah filed a “Motion for Clarification Order and to Enforce Property Division.” In her amended motion, Deborah alleged (1) that Wade had failed to disclose or had undervalued on his inventory and appraisement cash and contractual rights consisting of “purchase price consideration” as set forth in the merger agreement; (2) that Wade had failed to disclose or had undervalued on his inventory and appraisement approximately $9,500,000 in cash; (3) that Wade had undervalued on his inventory and appraisement the newly issued Republic ITS shares; and (4) that Wade had failed to disclose on his inventory and appraisement a 401(k) plan held by John Hancock Funds. Deborah identified the “residuary clause” contained in the divorce decree and requested “delivery” of each of the undisclosed and undervalued assets to her.

Wade filed a plea to the jurisdiction, arguing that the trial court lacked subject-matter jurisdiction to substantively alter the divorce decree's property divisions. The trial court denied the plea to the jurisdiction and Wade's subsequent motion for reconsideration of the plea to the jurisdiction. The trial court also denied Wade's motion to quash numerous subpoenas and notices of depositions that Deborah filed seeking discovery regarding the alleged undisclosed and undervalued assets. The trial court stayed all matters related to the case pending our resolution of this original proceeding.

III. Standard of Review

Mandamus relief is proper only to correct a clear abuse of discretion when there is no adequate remedy by appeal. In re Columbia Med. Ctr. of Las Colinas, 290 S.W.3d 204, 207 (Tex.2009) (orig. proceeding). A trial court clearly abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law. In re Olshan Found. Repair Co., 328 S.W.3d 883, 888 (Tex.2010) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig. proceeding).

IV. Section 18.a v. The “Residuary Clause ”

In his only issue, Wade argues that the divorce decree unambiguously awarded to him all of the alleged undisclosed or undervalued assets of which Deborah complains and, therefore, that Deborah is seeking a post-divorce redivision of previously divided community property, not a clarification and enforcement of the divorce decree. Because the trial court has no subject-matter jurisdiction to alter or redivide the previously divided community property, Wade contends that the trial court clearly abused its discretion by denying his plea to the jurisdiction.

Deborah contends that Wade (1) failed to disclose a promissory note in the amount of approximately $4.3 million and contractual rights to cash payments (one of the payments being approximately $1.1 million) and (2) undervalued the newly issued Republic ITS shares by at least $2,490,000. In response to Wade's argument that she seeks a redivision of previously divided property, Deborah argues that the undisclosed and undervalued assets were never awarded to Wade under section 18.a of the divorce decree but, instead, were awarded to her at the time of the divorce pursuant to the “residuary clause.” She advocates the following construction of the divorce decree and “residuary clause”:

• All of the property awards expressly made pursuant to the divorce decree are contingent upon a proper valuation of each asset.

• If a party failed to disclose or undervalued an asset in his or her inventory and appraisement, then that asset was “concurrently” awarded to the other party pursuant to the “residuary clause” when the divorce decree was executed.

• But if an asset was both disclosed and properly valued in the party's inventory and appraisement, then the “conditions precedent” contained in the “residuary clause”—undervaluation and nondisclosure—were not triggered, and the asset was not awarded pursuant to the “residuary clause” but pursuant to section 18 of the divorce decree.

Deborah therefore contends that by filing her “Amended Motion for Clarification Order and to Enforce Property Division,” she merely seeks (1) to determine whether assets were undisclosed or undervalued and, if so, (2) to enforce the division of undisclosed and undervalued assets that already occurred via the “residuary clause.”

It is well settled that a judgment finalizing a divorce and dividing marital property bars relitigation of the property division. Pearson v. Fillingim, 332 S.W.3d 361, 363 (Tex.2011). Attempting to obtain an order that alters or modifies a divorce decree's property division is an impermissible collateral attack. Hagen v. Hagen, 282 S.W.3d 899, 902 (Tex.2009). The legislature even says so in family code section 9.007:

(a) A court may not amend, modify, alter, or change the division of property made or approved in the decree of divorce or annulment. An order to enforce the division is limited to an order to assist in the implementation of or to clarify the prior order and may not alter or change the substantive division of property.

(b) An order under this section that amends, modifies, alters, or changes the actual, substantive division of property made or approved in a final decree of divorce or annulment is beyond the power of the divorce court and is unenforceable.

Tex. Fam.Code Ann. § 9.007(a), (b) (West 2006).

A trial court does, however, retain continuing subject-matter jurisdiction to clarify and to enforce the decree's property division. Id.§§ 9.002, 9.008(a) (West 2006); see also id.§ 9.006(a) (West 2006) (providing that trial court has continuing jurisdiction to “render further orders to enforce the division of property made in the decree of divorce ... to assist in the implementation of or to clarify the prior order”). But a clarification order cannot be used to make a substantive change in a divorce decree after it becomes final, even if it contains substantive legal error. See Shanks v. Treadway, 110 S.W.3d 444, 449 (Tex.2003). Further, parties cannot confer or waive jurisdiction by consent or agreement. Claxton v. (Upper) Lake Fork Water Control, 220 S.W.3d 537, 541 (Tex.App.-Texarkana 2006, no pet.).

We agree with Wade that section 18.a of the divorce decree expressly and unambiguously awarded all of the alleged undisclosed or undervalued assets to him. The divorce decree awarded Wade the “Republic ITS stock,” which included the newly issued Republic ITS shares, and all other “rights and privileges in connection with it.” The “rights and privileges...