Leggio v. Florian

• Docket Number: 14-21-00168-CV
• Decision Date: 04 August 2022
• Parties: RICHARD LEGGIO, Appellant v. MARY RACHEL LEGGIO FLORIAN, Appellee
• Court: Texas Court of Appeals

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RICHARD LEGGIO, Appellant v. MARY RACHEL LEGGIO FLORIAN, Appellee

No. 14-21-00168-CV

Court of Appeals of Texas, Fourteenth District

August 4, 2022

On Appeal from the 311th District Court Harris County, Texas Trial Court Cause No. 2017-14886

Panel consists of Chief Justice Christopher and Justices Bourliot and Spain.

MEMORANDUM OPINION

Tracy Christopher Chief Justice.

In this appeal from a final decree of divorce, the question presented is whether the trial court abused its discretion when it awarded three real estate properties (the "Three Properties") to the wife ("Rachel") over a claim by the husband ("Richard") that all of the properties were his separate property. For the reasons given below, we conclude that the trial court did not abuse its discretion.

BACKGROUND

During their marriage, Richard and Rachel acquired multiple real estate properties. Some properties were acquired in the names of both spouses, whereas others, including the Three Properties, were acquired solely in the name of Richard (or in the case of one of the Three Properties, in the name of Richard and his brother).

At the time of divorce, the Three Properties were still held by Richard, but Rachel claimed that they belonged to the community, and she requested Richard's interests in them in the trial court's division of the marital estate. Richard opposed Rachel's request on the ground that the Three Properties were his separate property, and the case proceeded to a nonjury trial.

Richard testified during the trial that he purchased the Three Properties with cash. He also testified that the cash came from the corpus of a personal asset trust and that the trust was established when his parents died, which occurred before he married Rachel.

Rachel did not contest that the Three Properties were purchased with cash from Richard's trust, but for at least two reasons she still urged the trial court to find that the Three Properties were community property. First, Rachel argued that the trust corpus converted to community property because Richard, as the trustee, had access and control over the corpus. Second, Rachel argued that Richard violated the terms of the trust when he deposited community monies into it which resulted in a commingling of funds.

In the final decree of divorce, the trial court found that Richard did not carry his burden of proving that the Three Properties were purchased with his separate property. The trial court found that the Three Properties were purchased with community property, and the court awarded Rachel all of Richard's interests in them in the division of the marital estate.

Richard now brings this appeal from the decree of divorce. Rachel has not filed a brief.

ANALYSIS

In a decree of divorce, the trial court must order a division of the marital estate in a manner that is just and right, having due regard for the rights of each party. See Tex Fam. Code § 7.001. The trial court is afforded wide discretion when making this just and right division, but that discretion does not extend to taking the separate property of one spouse and awarding it to the other spouse. See Tex. Const. art. XVI, § 15; Eggemeyer v Eggemeyer, 554 S.W.2d 137, 142 (Tex. 1977). If the trial court mischaracterizes a spouse's separate property as community property and erroneously awards some of that property to the other spouse, then the trial court's decree of divorce must normally be reversed in part and the case remanded for a new division of the marital estate, unless no harm has been shown from the erroneous division. See In re Marriage of Harrison, 557 S.W.3d 99, 140-42 (Tex. App.- Houston [14th Dist.] 2018, pet. denied); Sharma v. Routh, 302 S.W.3d 355, 360 (Tex. App.-Houston [14th Dist.] 2009, no pet.).

In this case, Richard argues that the trial court reversibly erred by mischaracterizing the Three Properties as community property and by awarding his interests in them to Rachel. Our analysis of this argument begins with the statutory presumption that the Three Properties were community property because they were "possessed by either spouse during or on dissolution of marriage." See Tex. Fam. Code § 3.003(a). As the party claiming that the Three Properties were actually his separate property, Richard had the burden of rebutting this community-property presumption. See Pearson v. Fillingim, 332 S.W.3d 361, 363 (Tex. 2011) (per curiam).

Rebutting the community-property presumption requires an application of the inception-of-title rule. See Zagorski v. Zagorski, 116 S.W.3d 309, 316 (Tex. App.- Houston [14th Dist.] 2003, pet. denied). This rule provides that the character of property as either community or separate is determined by the time or circumstances in which a person first acquires an ownership interest in the property. See, e.g., Lindsay v. Clayman, 151 Tex. 593, 598, 254 S.W.2d 777, 780 (1952); Carter v. Carter, 736 S.W.2d 775, 780 (Tex. App.-Houston [14th Dist.] 1987, no writ). Under this rule, if a person acquires property before marriage, then the property is considered to be separate, regardless of how it was acquired. See Tex. Fam. Code § 3.001(1). But if the person acquires property during marriage, then the property is considered to be community, unless, for example, the person acquires the property by gift, devise, or descent, because those are all circumstances in which our law recognizes that the character of the property is separate. See Tex. Fam. Code § 3.001(2).

There was no dispute in this case that the Three Properties were acquired during Richard's marriage to Rachel. Thus, the timing of their acquisition provides no basis for treating the Three Properties as separate. Nevertheless, Richard argued that the Three Properties were still his separate property because of the circumstances in which they were acquired. More specifically, Richard argued that the Three Properties were his separate property because they were purchased with funds from his personal asset trust, and the title to those funds vested in him before his marriage to Rachel.

Richard's argument invokes the longstanding rule that separate property does not lose its character when it takes on new form-i.e that separate property begets separate property. See Dixon v. Sanderson, 72 Tex. 359, 362, 10 S.W. 535, 536 (1888) ("Property purchased with money, the separate property of husband or wife, or taken in exchange for the separate property of either, becomes the separate property of the person whose money purchases or whose property is given in exchange, in the absence of some agreement, express or implied, to the contrary."); Barras v. Barras, 396 S.W.3d 154, 167 (Tex. App.-Houston [14th Dist.] 2013, pet. denied) ("Property established to be separate remains separate property regardless of the fact that it may undergo mutations or changes in form; its separate character is not altered by the sale, exchange, or substitution of the...