Smith v. Grayson
| Decision Date | 12 October 2011 |
| Docket Number | NO. 03-10-00238-CV,03-10-00238-CV |
| Court | Texas Court of Appeals |
| Parties | Mary Laverne Smith, Appellant v. David Dillard Grayson, Appellee |
NO. D-1-FM-09-004132, HONORABLE JEFF L. ROSE, JUDGE PRESIDING
Appellant Mary Laverne Smith appeals the trial court's final decree of divorce, which incorporated the court's prior partial summary judgment. In eight issues, Smith contends that the trial court erred in granting partial summary judgment that appellee David Dillard Grayson's partnership interest was his separate property, abused its discretion in awarding reimbursement claims and attorney's fees, and erroneously valued property awarded to her. For the reasons that follow, we affirm the final decree of divorce.
FACTUAL AND PROCEDURAL BACKGROUND
Mary Smith and David Grayson were married in 2005. Approximately one year before the marriage, Smith moved from Hawaii to Austin to live with Grayson. Grayson opened a bank account for Smith and provided her financial assistance for bills and activities in the year prior to the marriage. Both parties brought property into the marriage. Grayson's property included alimited partnership interest and a residence. Smith's property included three real properties. The parties also acquired property after the marriage. There were no children of the marriage.
The Parties' Property
In 2003, Grayson acquired an interest of 48,400 units in Emergency Service Partners, L.P., a limited partnership (ESP). During the marriage, although Grayson did not purchase any additional units, his proportional percentage interest in ESP increased as a result of the partnership's purchase of interests from withdrawing partners. In accordance with the terms of the partnership agreement, Grayson's share of each year's partnership profits was added to his capital account balance. While Grayson received distributions from his capital account during the marriage, ESP retained a portion of his share of income in his capital account to use as operating expenses.
At the time of the marriage, Grayson also owned a residence in Austin in which he and Smith lived during their marriage. In addition to living expenses, the parties expended community funds to pay for maintenance, insurance, and ad valorem taxes on the residence during the marriage and received federal income tax deductions for payment of ad valorem taxes.
Smith's property included three real properties in Virginia. During the marriage, Smith and Grayson used community funds to pay for operating expenses, mortgage payments, and capital improvements on the properties. The properties generated rental income. Smith and Grayson also received federal income tax benefits for depreciation and deductions for interest payments on the properties.
Soon after they were married, Smith and Grayson purchased a duplex in Austin (the Valley Hill property), which Smith managed as a rental property. Also after they were married, theiraccountant discovered that Grayson had underpaid his pre-marriage federal income taxes. Grayson and Smith paid this tax liability from community funds.
The Divorce Proceedings
Grayson filed for divorce in August 2009, seeking a disproportionate share of the community estate based on claims that included Smith's fault in the breakup of the marriage, fraud on the community, reimbursement to the community estate for expenditures on Smith's Virginia properties, and attorney's fees. Smith filed a counterclaim seeking reimbursement to the community estate for expenditures on Grayson's separate property residence and payment of Grayson's pre-marriage federal income tax liability. During the divorce proceedings, the parties jointly retained their accountant to categorize sources of income and expenses from the date of the marriage through 2009. The parties also entered into several stipulations, narrowing the issues presented at trial. The stipulations included agreements that the residence Grayson brought into the marriage was his separate property, the fair rental value of the residence was $2,300 per month, and the Virginia properties were Smith's separate property. The parties also stipulated that the community estate expended $8,458 in payment of Grayson's pre-marriage federal income tax liabilities.
Partial Summary Judgment
Grayson filed a motion for partial summary judgment that the limited partnership interest in ESP was his separate property. The summary judgment evidence included documentation of Grayson's purchase and ownership of his partnership units and the partnership agreement, with authenticating affidavits from Grayson and his attorney; excerpts from the deposition of ESP chieffinancial officer Lucinda Lopez; and a summary of partnership income allocations and distributions to Grayson from 2005 through 2008, with estimates for 2009, prepared by Lopez.
Smith filed a response and cross-motion for summary judgment arguing that all of the partnership income allocated to Grayson, not just the funds actually distributed, was income on separate property after marriage and therefore was community property. Smith further contended that the partnership's retention of a portion of Grayson's allocation of profits constituted contributions to the partnership of community funds and resulted in commingling, creating a fact issue as to the characterization of Grayson's partnership interest as separate or community property.
At a hearing immediately prior to trial, the trial court granted Grayson's motion for partial summary judgment. 1 Although Smith had filed a cross-motion for summary judgment addressing the issues raised in Grayson's motion as well as additional issues, the record shows that Smith's motion was not addressed at the hearing, the trial court made no express ruling on Smith's motion, and Smith did not request one. Smith appeals only the trial court's grant of Grayson's motion for partial summary judgment, as incorporated into the final divorce decree.
Trial
Smith demanded a jury, and the case proceeded to trial before a jury for two days, at which point Smith requested the jury be dismissed, Grayson agreed, and the trial concluded as a trial to the bench. The trial court heard testimony from eight witnesses, including Grayson, Smith, theparties' accountant Rita Brantner, real estate appraiser Charles Gray, and the parties' attorneys. Grayson and Smith testified generally regarding their relationship, assets, and finances. The primary factual disputes concerned income and expenditures from the Virginia properties, on which Brantner testified; the value of the Valley Hill property, to which Gray attested; and the reasonableness of the parties' attorney's fees, on which the parties' attorneys offered conflicting testimony.
Grayson's Testimony
Grayson testified that Smith was at fault for the breakup of the marriage, they did not spend much time together, and their relationship soon became adversarial. He further testified that during the divorce proceedings he learned that Smith had had an affair.
In connection with his claim for attorney's fees, Grayson testified that he filed for divorce without an attorney and suggested to Smith that they negotiate a property division by agreement before hiring counsel to draft final documents, but after she obtained an attorney, they were not able to work collaboratively. In support of his claim of fraud on the community, Grayson testified that Smith kept the rental income from her Virginia properties in her separate checking account and paid expenses on the properties from community funds without his knowledge. He also testified that until the divorce proceedings, he had no access to any of her banking or credit card account information.
Smith's Testimony
Smith admitted having an affair and said she was very ashamed of it. Regarding the Virginia rental properties, Smith testified she initially deposited the rental income into a jointaccount but that, although she did not recall requesting it, at some point Grayson's name was removed from the account. She also testified that she never deposited income from the rental properties into the joint account where they deposited their earnings. She stated that at times she told Grayson that she could not afford the expenses on the Virginia properties and needed to use community funds but that she may have taken money from the joint account to pay her credit card bills without telling him.
Attorneys' Testimony
Grayson's attorney Richel Rivers testified generally regarding the nature and value of the legal services performed in the case. She testified that she has been practicing since 1976 and is board certified in civil trial, civil appellate, and family law and stated her opinion that the conduct of Smith and her attorney during the divorce proceeding unreasonably increased the costs of the case. She identified several factors which she believed contributed to the increased costs. Rivers stated that one factor was that Smith's attorney made unreasonable claims on her behalf, including claims that Grayson's partnership interest acquired before marriage was community property and that Grayson had breached a marriage contract. Another factor, according to Rivers, was the "abuse of process" and lack of familiarity with Travis County local rules of Smith's attorney. Rivers testified that opposing counsel made "blatantly false statements" in pleadings, sought ex parte relief, set unnecessary hearings, made repeated requests for information he already had, deposed Rivers only to question her primarily about the substantive law of the case, sent inflammatory and provocative correspondence, and caused delays. She further testified that in her opinion, the cost to her clientshould have reasonably been between $15,000 and $30,000, but that as a result of these factors, Grayson would end up owing approximately $130,000 through trial.
Smith's attorney, Robert Hardy,...
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