Schlueter v. Schlueter

• Decision Date: 28 August 1996
• Docket Number: No. 03-95-00294-CV,03-95-00294-CV
• Parties: J.H. SCHLUETER and Richard Stephen Schlueter, Appellants, v. Karen Sue SCHLUETER, Appellee.
• Court: Texas Court of Appeals

Page 94

929 S.W.2d 94

J.H. SCHLUETER and Richard Stephen Schlueter, Appellants, v. Karen Sue SCHLUETER, Appellee.

No. 03-95-00294-CV.

Court of Appeals of Texas,

Austin.

Aug. 28, 1996.

John L. Foster, Minton, Burton, Foster & Collins, P.C., Austin, for J. H. Schlueter.

Philip C. Friday, Jr., Austin, for Richard Stephen Schlueter.

John F. Campbell, Campbell & Morgan, P.C., Austin, for Appellee.

Before CARROLL,C.J., and ABOUSSIE and KIDD, JJ.

CARROLL, Chief Justice.

This is an appeal by appellant Richard Schlueter from a divorce action he filed against appellee Karen Schlueter as well as an appeal by appellant Hudson Schlueter who was joined in a third party action brought by Karen for conspiracy and fraud. Judgment was granted on a jury verdict against Richard and Hudson for actual and punitive damages. The court awarded $12,850 to the community estate for the fraud against the community to be assessed against Richard and Hudson, jointly and severally. The court also granted judgment to Karen for punitive damages in the amount of $30,000 against Richard and $15,000 against

Hudson. Richard appeals in seven points of error; Hudson appeals in a single point of error. We will affirm the judgment of the trial court.

BACKGROUND

Richard and Karen Schlueter were married on June 7, 1969, and had two children. For most of the marriage, Richard worked for IBM and, at the time of his retirement, was earning $42,000 per year. Karen was employed by the state and earned around $29,000 per year.

In December 1992, Richard and a co-worker, Charlie King, agreed to invest as equal partners in emus. Richard and King each paid $2,750 towards the first pair of emus. Then, after agreeing to purchase a second pair of birds for $3,600, Richard and King each paid $500 as a down payment. Richard testified that, because of the probable expenses and possible losses involved, he decided that he could not be involved in the business due to his impending retirement from IBM. So, after investing at least $3,250 in the emus and without receiving any profits from the business, Richard decided on May 3, 1983 to sell his interest in the business to Hudson for $1000.

Although Karen knew that Richard had invested in emus, she did not know the details. In fact, Karen did not discover that Richard had sold his interest in the emus to Hudson until after Richard filed for divorce. Testimony indicated that the emu business, which Richard sold to Hudson for $1,000 shortly before he filed for divorce, was worth at least $10,000.

Then, as a result of IBM's downsizing, Richard agreed to accept an incentive bonus in exchange for his early retirement. Richard received an incentive check from IBM of $30,360.41 on May 28, 1993, his last day of work. At Richard's request, Hudson picked up the check from Richard while he was still at work and deposited it in his own account.

When Richard returned home after his last day of work, Karen told him that she wanted a divorce. Richard and Karen's marriage had serious problems over a period of a couple of years, and according to Karen, they had grown apart. In fact, one night in April 1993, while engaged in sexual intercourse, Richard asked Karen if she loved him and she answered no. Richard testified that many people have problems and that he believes that his marriage "healed" after this incident and "kept going for a long time." That night, Richard went to his parents' house and, according to Richard, told them for the first time about the couple's problems and the impending divorce. Although claiming to be shocked when Karen gave him the news, Richard was the one who actually filed for divorce on June 24, 1993.

Richard told Hudson to hold the IBM incentive check in his own account, until he "figured out what was going to happen here." Then, on June 17, 1993, one week before Richard filed for divorce, Hudson wrote himself a check from the account in the amount of $12,565. Richard and Hudson testified that this amount represented money borrowed by Richard over the last thirty years, both before and after his marriage to Karen. Hudson testified that he kept a log book in which he recorded most of the financial transactions that he had with his four children, including Richard. In conjunction with the book, Hudson had notes signed by Richard representing all of the individual debts recorded in the log book. In their deposition testimony, Richard, Hudson, and Richard's mother, Betty, agreed that each of these notes was created and signed by Richard at the actual time he borrowed money from his parents. At trial, however, all three changed their testimony to indicate that, on the advice of an estate planning attorney, Hudson created the notes in the late seventies to provide evidence of the debts in addition to the log book.

Karen testified to having no knowledge of any unpaid debts that she or Richard owed to Hudson or Betty. In fact, on several occasions, Richard bragged that he was very proud of the fact that he was the only one of four children who did not owe his father any money. Richard, however, attempts to clarify this in his testimony, claiming that what he actually meant was that he and Karen had paid back all of the obligations that they had borrowed for specific purposes during their Evidence at trial showed that, in 1984, a divorce action was filed against Hudson's oldest son, John. At the end of the trial, John was ordered to pay an attorney ad litem who represented John's children in this action. The court found that John transferred some property to Hudson in an attempt to avoid paying the attorney ad litem. The court further found that Hudson had notice of his son John's intent to delay or defraud the attorney ad litem in the collection of her fee.

marriage and that he only owed Hudson money that he had borrowed years before.

In this case, Richard filed for divorce on June 24, 1993. Karen answered the action and filed a counterclaim seeking appointment as managing conservator of the children, reimbursement to the community estate of assets expended on behalf of Richard's separate estate, and attorneys' fees. Karen also brought a tort action and a third-party claim against Richard and Hudson, alleging that they were guilty of fraud, breach of fiduciary duty, and conspiracy.

DISCUSSION

Appellant Hudson Schlueter, in his sole point of error, and appellant Richard Schlueter, in his first point of error, contend that the trial court erred in admitting evidence concerning Hudson Schlueter's "other acts" during his son John's 1984 divorce in violation of the Texas Rules of Civil Evidence. Specifically, Hudson and Richard objected on three grounds: (1) the evidence was irrelevant; (2) the probative value of this evidence was substantially outweighed by the danger of unfair prejudice and misleading of the jury; and (3) the evidence was not properly admitted under any exception to Rule 404(b) of the Texas Rules of Civil Evidence. The trial court overruled appellants' objections and allowed them a running objection to all such evidence. Further, as requested, the trial court instructed the jury that this evidence was only applicable to Hudson and should not be considered against Richard.

In order to obtain a reversal of a judgment based upon error of the trial court in admission or exclusion of evidence, an appellant must show: (1) that the trial court did in fact commit error; and (2) that the error was reasonably calculated to cause and probably did cause rendition of an improper judgment. Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989). The admission or exclusion of evidence rests with the sound discretion of the trial court. New Braunfels Factory Outlet v. IHOP, 872 S.W.2d 303, 310 (Tex.App.--Austin 1994, no writ). The trial court commits error only when it acts in an unreasonable and arbitrary manner, or acts without reference to any guiding principles. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex.1991).

Evidence is relevant if it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Tex.R. Civ. Evid. 401. All relevant evidence is admissible unless it is shown that the evidence should be excluded for some other reason. Tex.R. Civ. Evid. 402. In this case, the question is whether the evidence that Hudson aided his son, John, in an illegal act during John's 1984 divorce would make it more or less probable that Hudson would participate with his other son, Richard, in fraudulent behavior during Richard's divorce. On both occasions, Hudson was involved with his sons who were each going through a divorce and engaged in actions which apparently served to benefit them financially. There is a direct and logical connection between Hudson's 1984 actions and his alleged fraudulent behavior in this case which serves to make Hudson's alleged acts more probable. Thus, the contested evidence is clearly relevant. See Service Lloyds Ins. Co. v. Martin, 855 S.W.2d 816, 822 (Tex.App.1993).

Evidence of other wrongs or acts is generally not admissible to prove the character of a person to show that he acted in conformity with that character on a particular occasion. Tex.R. Civ. Evid. 404(b). Such evidence may be admissible, however, to show motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. Id. Karen concedes that evidence of Hudson's 1984 actions cannot be used to show that he acted in conformity with those actions. She does The evidence shows that Hudson paid Richard $1,000 for the emu business which had supposedly become a financial problem for Richard. This is despite the fact that Richard had already invested $3,250 into the business and that Charles King, Richard's partner, claimed the business to be worth at least $10,000. Then, shortly after helping Richard with his financial problem, Hudson...