Schlueter v. Schlueter

• Decision Date: 15 October 1998
• Docket Number: No. 96-1091,96-1091
• Citation: 975 S.W.2d 584
• Parties: 41 Tex. Sup. Ct. J. 1064 J. Hudson SCHLUETER and Richard Stephen Schlueter, Petitioners, v. Karen Sue SCHLUETER, Respondent.
• Court: Texas Supreme Court

Page 584

975 S.W.2d 584

41 Tex. Sup. Ct. J. 1064

J. Hudson SCHLUETER and Richard Stephen Schlueter, Petitioners, v. Karen Sue SCHLUETER, Respondent.

No. 96-1091.

Supreme Court of Texas.

Argued Oct. 7, 1997.

Decided July 3, 1998.

Rehearing Overruled Oct. 15, 1998.

Thomas M. Alvis, Philip C. Friday, Jr., Kristen A. Algert, Austin, for Petitioners.

John F. Campbell, Mark W. Clemens, Austin, for Respondent.

GONZALEZ, Justice, delivered the opinion of the Court, in which ENOCH, OWEN, BAKER, ABBOTT and HANKINSON, Justices, joined.

This divorce case answers the question of what remedies are available to a spouse alleging fraud on the community committed by the other spouse. The husband transferred various community assets to his father shortly before he filed for divorce. The wife counterclaimed for divorce and brought independent tort claims against her husband and father-in-law, seeking damages for fraud, breach of fiduciary duty, and conspiracy. Based on favorable jury findings, the trial court ordered a disproportionate division of the community estate favoring the wife, and rendered judgment for the wife against the husband and his father for actual and exemplary damages. Holding that a tort cause of action for fraud on the community exists independent of a divorce proceeding, the court of appeals affirmed. 929 S.W.2d 94. We granted writ to resolve a conflict among courts of appeals. Because a wronged spouse has an adequate remedy for fraud on the community through the "just and right" property division upon divorce, we hold that there is no independent tort cause of action between spouses for damages to the community estate. Accordingly, we reverse the judgment against the husband and remand for a new division of the marital estate. We affirm the remainder of the court of appeals' judgment.

I

Richard and Karen Schlueter married in 1969. In December 1992, Mr. Schlueter began investing in emus. He contributed $3250 of community funds toward two pairs of the birds, but eventually sold his interest to his father, Hudson Schlueter, for $1,000. The emu business was worth at least $10,000 when the sale occurred. Mrs. Schlueter did not know the details of the business and did not find out that her husband had sold his interest to her father-in-law until after Mr. Schlueter filed for divorce.

Shortly before he filed for divorce, Mr. Schlueter accepted a $30,360.41 check from his employer as an incentive for early retirement. Mr. Schlueter turned the check over to his father for deposit in his father's account. His father then wrote himself a check for $12,565, allegedly to reimburse past loans to Mr. Schlueter. About a week later, Mr. Schlueter filed for divorce.

Mrs. Schlueter counterclaimed for divorce and added independent tort claims against her husband and father-in-law for fraud, breach of fiduciary duty, and conspiracy. All of Mrs. Schlueter's claims against her husband and father-in-law involve their depriving the Schlueters' community estate of assets. Mrs. Schlueter makes no claim that she was deprived of her separate property.

The jury heard the fraud and conspiracy claims in a bifurcated trial. The jury found that Mr. Schlueter committed actual and constructive fraud in dealing with the community assets, that he and his father had fraudulently transferred assets between them, and that they had engaged in a civil conspiracy to injure Mrs. Schlueter. The jury found that $12,850 would compensate the community for Mr. Schlueter's and his father's actions. It found that $35,000 would compensate the community for damage caused by the conspiracy. Finally, the jury found that Mr. Schlueter should pay $50,000 and his father $15,000 in exemplary damages.

At a later date, the trial court heard the divorce action without a jury, divided the marital assets, and rendered judgment on the jury verdict against Mr. Schlueter and his father jointly and severally for $12,850. In its Findings of Fact, the trial court determined that the joint and several judgment was part of the community estate. The court also awarded Mrs. Schlueter $30,000 in exemplary damages against her husband and $15,000 in exemplary damages against her father-in-law, and awarded Mrs. Schlueter $18,500 from her husband for attorney's fees on appeal.

The court of appeals affirmed. The court held that a spouse may bring an independent tort claim against the other spouse for fraud for which exemplary damages may be awarded, even when the fraud resulted only in a depletion of community assets and not the wronged spouse's separate estate. 929 S.W.2d at 99-100. The court of appeals based its holding on this Court's abrogation of the doctrine of interspousal immunity in the Bounds, Price, and Twyman decisions, and concluded that a person may bring any cause of action against his or her spouse. 929 S.W.2d at 99-100 (construing Twyman v. Twyman, 855 S.W.2d 619, 624 (Tex.1993); Price v. Price, 732 S.W.2d 316, 319 (Tex.1987); and Bounds v. Caudle, 560 S.W.2d 925, 927 (Tex.1977)). The court of appeals also affirmed the judgment against the father-in-law, holding that the trial court had not abused its discretion in admitting into evidence a copy of a divorce decree involving Mr. Schlueter's brother.

Relying on Belz v. Belz, 667 S.W.2d 240, 247 (Tex.App.--Dallas 1984, writ ref'd n.r.e.), and In re Marriage of Moore, 890 S.W.2d 821, 829 (Tex.App.--Amarillo 1994, no writ), Mr. Schlueter alleges that the court of appeals committed reversible error in recognizing a separate cause of action for fraud on the community. Mr. Schlueter and his father, in the father's only point of error, also assert that the court of appeals erred in holding that the trial court did not abuse its discretion in admitting into evidence a copy of the decree from Mr. Schlueter's brother's divorce.

II

The court of appeals reads the Twyman, Price, and Bounds decisions too broadly; these decisions do not control this case. In Bounds, we dealt with whether the interspousal immunity doctrine prevented a deceased woman's children from suing their stepfather for their mother's wrongful death. Bounds, 560 S.W.2d at 925. The stepfather had allegedly shot and killed his wife. We concluded that interspousal immunity should be abolished for willful or intentional torts. Id. at 926-27. From a policy perspective, we stated that suits for willful and intentional torts such as the physical attack in that case would not disrupt domestic tranquility in "a home which has already been strained to the point where an intentional physical attack could take place." Id. at 927.

We re-examined the doctrine in Price v. Price, 732 S.W.2d 316 (Tex.1987). A wife sued her husband for negligence in causing her injuries in a motorcycle accident. Again this Court considered and rejected the argument that "peace and harmony" in the home would be damaged by suits between spouses, commenting that "[i]t is difficult to fathom how denying a forum for the redress of any wrong could be said to encourage domestic tranquility." Id. at 318. We followed up on our holding in Bounds by stating, "We now abolish [the interspousal immunity doctrine] completely as to any cause of action. We do not limit our holding to suits involving vehicular accidents only." Id. at 319.

Finally, in Twyman, we expressly adopted the tort of intentional infliction of emotional distress, and a plurality held that such a claim could be brought in a divorce proceeding. Twyman, 855 S.W.2d at 622, 624-26. The plurality noted that under Bounds and Price, there was no legal impediment to bringing a tort claim in a divorce action "based on either negligence or an intentional act such as assault or battery." Twyman, 855 S.W.2d at 624. Of course, by its facts, Twyman expanded that statement by allowing an intentional tort claim for emotional distress, which does not necessarily involve the physical aspects of assault or battery.

The salient characteristic distinguishing Bounds, Price, and Twyman from the case before us is that all three involved personal injury tort claims. Twyman, 855 S.W.2d at 621 (intentional infliction of emotional distress); Price, 732 S.W.2d at 316 (negligence claim for personal injuries); Bounds, 560 S.W.2d at 926 (wrongful death). Cf. Cleaver v. George Staton Co., Inc., 908 S.W.2d 468, 471 n. 2 (Tex.App.--Tyler 1995, writ denied) (distinguishing Twyman, which involved outrageous spousal conduct, and noting that the trial court could sort out the husband's claims against wife for breach of fiduciary duty and fraud on community estate in the property division, not by a separate cause of action). In discussing the potential for double recovery in Twyman, the Court pointed out that recovery for personal injuries of a spouse, including pain and suffering, is the separate property of the injured spouse, and therefore does not add to the marital estate. Twyman, 855 S.W.2d at 625 n. 20 (citing TEX. FAM.CODE § 5.01(a)(3) (Act of May 31, 1969, 61 st Leg., R.S., ch. 888, 1969 Tex. Gen. Laws 2707, 2726, repealed by Act of April 3, 1997, 75 th Leg., R.S., ch. 7, § 3, 1997 Tex. Gen. Laws 8, 43)) (current version at TEX. FAM.CODE ANN. § 3.001(3)).

Likewise, in response to the concern that interspousal suits would result in fraud and collusion between the participants, the Price court stated, "we are unable to distinguish interspousal suits from other actions for personal injury." Price, 732 S.W.2d at 318. Therefore, despite its broad language stating that the Court was abolishing the interspousal immunity doctrine "completely as to any cause of action," id. at 319, the action in Price was one for personal injury, for which any recovery would be separate property of the injured spouse.

Moreover, a factor in Price that weighed heavily toward abolishing interspousal immunity "as to any cause of action" was the need to remedy the problem of denying a litigant a forum for the redress of a wrong. Id. at 318-19. The Court summed up the holding by...