Pace v. Pace

• Decision Date: 22 April 2005
• Docket Number: No. 05-03-00520-CV.,05-03-00520-CV.
• Citation: 160 S.W.3d 706
• Parties: Paul Max PACE, Appellant, v. Linda Ruth Thomas PACE, Appellee.
• Court: Texas Supreme Court

160 S.W.3d 706

Paul Max PACE, Appellant, v. Linda Ruth Thomas PACE, Appellee.

No. 05-03-00520-CV.

Court of Appeals of Texas, Dallas.

April 22, 2005.

COPYRIGHT MATERIAL OMITTED

Jimmy L. Verner, Jr., Verner & Brumley, Dallas, for appellant.

Georganna L. Simpson, Law Office of Georganna L. Simpson, Dallas, for appellee.

Suzanne Duvall, Dallas, Attorney-Mediator.

Before Justices FITZGERALD, LANG, and LANG-MIERS.

OPINION

Opinion by Justice LANG-MIERS.

Paul Max Pace appeals the division of property in this divorce case. Pace challenges the trial court's characterization of certain property as his wife's¹ separate property and argues this characterization prevented a just and right division of the couple's property. In eight issues, Pace argues (1) there is no evidence to support the trial court's findings of fact that the couple's Harvest Hill home and the assets in the Linda Ruth Thomas Management Trust (Management Trust) are Thomas's separate property, (2) the trial court erred by granting partial summary judgment in favor of Thomas and holding that the A.G. Edwards investment account (172 account) is Thomas's separate property because Thomas failed to rebut the community property presumption, and (3) the trial court abused its discretion in dividing the community estate because the mischaracterization of the Harvest Hill house and the 172 account as Thomas's separate property prevented a just and right division of the property. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Thomas and Pace were married on March 8, 1997. Both had been married before and both had adult children from their previous marriages, but they had no children together. After four and one-half years of marriage, the parties separated and Thomas filed for divorce. Pace filed a counterpetition for divorce asserting his separate property and equitable interest claims as well as a claim for reimbursement against Thomas's separate property estate.

A. Thomas's Inheritance

Thomas inherited her parents' estates, consisting mostly of bonds and other securities, when they died in the mid-1990s. She invested this inheritance in the 172 account prior to her marriage to Pace. At the time of her marriage to Pace, the inheritance was valued at $2.7 million.

B. No Signed Prenuptial Agreement

Before they were married, Thomas had her attorney prepare a prenuptial agreement to protect her assets and asked Pace to sign it. Pace made revisions to the agreement and, a few days before the wedding, told Thomas that he wanted his nephew, an attorney, to review the agreement before he signed it. Because there was not enough time for the attorney to review the prenuptial agreement before the wedding, Pace told Thomas he would sign it when they returned from their honeymoon. Thomas again asked Pace to sign the prenuptial agreement after the honeymoon, but he refused.

C. Creation of the 204 Account and the Management Trust

Twenty-three days after they were married and after Pace refused to sign the prenuptial agreement, Thomas instructed A.G. Edwards to "sweep" all dividends, interest, and income from the 172 account and place the income in a new account (204 account) so that no community property would accrue in the 172 account.

About three years later, Thomas instructed her attorney to set up the Management Trust with Thomas as the donor, trustee, and sole beneficiary to segregate Thomas's separate property and to protect her from possible third party liability. The 172 account was transferred into the Management Trust and A.G. Edwards continued to "sweep" all dividends, interest, and income from that account into the 204 account.

D. The Harvest Hill House

When they were first married, Thomas and Pace lived in Thomas's house which she owned and lived in before their marriage. Two months after they were married, the Harvest Hill house was purchased. Thomas wrote a check for $1,000 as earnest money for the Harvest Hill house and a check for $200 for an inspection. Both checks were drawn on an account bearing only Thomas's name. Prior to closing, Thomas wired $194,102.53 from the 172 account to the title company in full payment of the Harvest Hill house. No credit or notes were obtained to purchase the house, and Pace did not contribute any money toward the purchase of the house.

A few days before closing, Pace told Thomas that he wanted to be on the deed to the Harvest Hill house because he did not want to feel like a tenant in the house. Thomas agreed to put his name on the deed, and Thomas and Pace both signed the settlement statement and the warranty deed. The settlement statement identified the purchasers as Pace and Thomas. The warranty deed identified the grantees as Pace and Thomas. Thomas and Pace resided in the Harvest Hill house until they separated. During that time, Thomas paid the ad valorem taxes, the fire and extended coverage insurance, and the upkeep of the Harvest Hill house from the 204 account.

At the time she set up the Management Trust, Thomas also signed a power of attorney and prepared her will. The power of attorney gave her daughter the right to make decisions on Thomas's behalf with respect to real property, including the Harvest Hill house, which the power of attorney describes in part as having been "acquired jointly with [her][s]pouse, Paul M. Pace ... as [their] personal residence." Also, Thomas's will provided that Pace would receive the Harvest Hill house if she pre-deceased him. Thomas testified that she left the house to Pace because she did not want the fact that Pace's name is on the warranty deed to tie up the remainder of her estate.

E. Divorce Proceedings

Before trial, Thomas filed a motion for partial summary judgment seeking judgment as a matter of law denying Pace's community property characterization claims against her individually and as trustee of the Management Trust, that she did not commingle community property funds with her separate property assets contained in the Management Trust, and that all purchases of securities during the marriage were made with her separate property funds. Thomas supported her motion with her own affidavit and that of Shelley Turner, an employee of A.G. Edwards who handles the 172 account. Pace responded to the motion and attached four monthly statements for 1997 for the 172 account and three monthly statements for 1997 for the 204 account, along with the affidavit of Barbara Dossett, a bookkeeper and owner of The Taxpayer's Service who had inspected the account statements.

The trial court granted partial summary judgment in favor of Thomas sustaining Thomas's request to deny Pace's community property characterization and commingling claims against the 172 account, but not the other assets contained in the Management Trust. The remaining issues were tried to the court. The trial court granted the divorce and in the decree reaffirmed the prior partial summary judgment. The trial court also issued findings of fact and conclusions of law.

II. THE TRIAL COURT'S FINDINGS ARE SUPPORTED BY THE EVIDENCE

In his first through fourth issues on appeal, Pace argues there is no evidence to support the trial court's findings of fact characterizing the Harvest Hill house and the assets in the Management Trust, including the 172 account, as Thomas's separate property. We disagree.

A. Standard of Review for Legal Sufficiency

Findings of fact in a case tried to the court have the same force and effect as jury findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994); Padilla v. Flying J, Inc., 119 S.W.3d 911, 913 (Tex. App.-Dallas 2003, no pet.). See Gregory v. Sunbelt Sav., F.S.B., 835 S.W.2d 155, 158 (Tex.App.-Dallas 1992, writ denied). An appellate court reviews a trial court's findings of fact by the same standards that it uses to review the sufficiency of the evidence to support a jury's findings. See Zieben v. Platt, 786 S.W.2d 797, 799 (Tex. App.-Houston [14th Dist.] 1990, no writ).

When a party attacks an adverse finding on an issue that he did not have the burden to prove at trial, he must show on appeal that there is insufficient or no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983); Vongontard v. Tippit, 137 S.W.3d 109, 112 (Tex.App.-Houston [1st Dist.] 2004, no pet.). A no evidence challenge to a trial court's finding of fact is a question of law, which challenges the legal sufficiency of the evidence to support the particular finding. Tate v. Tate, 55 S.W.3d 1, 4 (Tex.App.-El Paso 2000, no pet.).

When an appellate court reviews a finding of fact for legal sufficiency, it considers only the evidence and inferences that tend to support that finding, and disregards all of the contrary evidence and inferences. See Latch v. Gratty, Inc., 107 S.W.3d 543, 545 (Tex.2003); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex.1995). An appellate court upholds a finding of fact if it is supported by more than a scintilla of evidence. Burroughs, 907 S.W.2d at 499. The reviewing court does not substitute its judgment for that of the fact-finder, even if it would have reached a different result when reviewing the evidence. FDIC v. F & A Equip. Leasing, 854 S.W.2d 681, 684-85 (Tex. App.-Dallas 1993, no writ).

B. Law of Separate and Community Property

In Texas, all marital property is either separate or community. Hilley v. Hilley, 161 Tex. 569, 573, 342 S.W.2d 565, 567 (Tex.1961). Property possessed by either spouse during or upon the dissolution of their marriage is presumed to be community property. TEX. FAM.CODE ANN. § 3.003(a) (Vernon 1998). Property owned or claimed by a spouse before marriage remains that spouse's separate property during and after the marriage. TEX. CONST. XVI, § 15; TEX. FAM.CODE ANN. § 3.001 (Vernon 1998). Property purchased during the marriage with separate funds is separate property. Hilley, 161 Tex. at 573-74, 342 S.W.2d at 567. Clear and convincing evidence is necessary to establish that property is...