Zagorski v. Zagorski, 14-99-01044-CV.

Citation116 S.W.3d 309
Decision Date19 August 2003
Docket NumberNo. 14-99-01044-CV.,14-99-01044-CV.
PartiesLori ZAGORSKI, Appellant, v. Anthony ZAGORSKI, Appellee.
CourtCourt of Appeals of Texas

Gerald P. DeNisco, Houston, Gordon E. Davenport, Jr., Alvin, for appellant.

Shawn Russel Casey, Houston, for appellee.

Panel consists of Justices ANDERSON, HUDSON, and SEYMORE.

OPINION ON REHEARING

JOHN S. ANDERSON, Justice.

The opinion of May 23, 2002 is withdrawn, the following is substituted in its place and appellant's motion for rehearing is overruled.

This is an appeal from the property division in a divorce case. Lori Zagorski and Anthony Zagorski were married on December 30, 1993. No children were born or adopted during the marriage. Lori petitioned for divorce on August 18, 1997, and Tony counterclaimed.1 After a nine day bench trial, the trial court entered a divorce decree and filed findings of fact and conclusions of law. In three issues on appeal, Lori complains (1) there is insufficient evidence to support the trial court's finding that the money Tony received during the marriage from a foreign bank account was his separate property; (2) the trial court's erroneous characterization of the money Tony received from the foreign bank account resulted in an unfair and unjust division of property; and (3) the trial court erred in evaluating Lori's claim for reimbursement. We affirm.

I. Standards of Review

The trial court has broad discretion in dividing the marital estate at divorce. Murff v. Murff, 615 S.W.2d 696, 698 (Tex.1981). Upon appeal, we presume the trial court properly used its discretion, and will reverse the cause only where the trial court clearly abused that discretion, and only if the error materially affects the court's just and right division of the property. Id.; Jacobs v. Jacobs, 687 S.W.2d 731, 732-33 (Tex.1985). The test for abuse of discretion is whether the court acted without reference to any guiding rules or principles; the appropriate inquiry is whether the trial court's ruling was arbitrary or unreasonable. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990). We may not substitute our judgment for the trial court's judgment unless the trial court's action was so arbitrary that it exceeded the bounds of reasonable discretion. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.2002). Under an abuse of discretion standard, legal and factual sufficiency challenges are not independent reversible grounds of error but are relevant factors in assessing whether the trial court abused its discretion. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex.1991).

In her first issue, Lori challenges the legal and factual sufficiency of the evidence to support one of the trial court's findings of fact, and two of its conclusions of law. Findings of fact in a bench trial have the same force and dignity as a jury verdict; an appellate court reviews sufficiency challenges to findings of fact by the same standards we apply in reviewing a jury's findings. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996).

Property possessed by either spouse on dissolution of the marriage is presumed to be community property, and to overcome this presumption, a party must establish by clear and convincing evidence that the disputed property is separate property. Tex. Fam.Code Ann. § 3.003 (Vernon 1998). When the burden of proof at trial is by clear and convincing evidence, we apply a higher standard of legal and factual sufficiency review. In re J.F.C., 96 S.W.3d 256 (Tex.2002); In re C.H., 89 S.W.3d 17 (Tex.2002). In a legal sufficiency review, we look at all the evidence in the light most favorable to the finding to determine whether a reasonable trier of fact could have formed a firm belief or conviction that its finding was true. In re J.F.C., 96 S.W.3d at 265-66; In re C.H., 89 S.W.3d at 25-26. In a factual sufficiency review, we consider all of the evidence and must determine not whether the trier of fact could reasonably conclude that the existence of a fact is more probable than not, as in ordinary civil cases, but whether the trier of fact could reasonably conclude that the existence of the fact is highly probable. In re the interests of JFC, ABC and MBC, 96 S.W.3d 256 (Tex.2003); In re C.H., 89 S.W.3d 17, 25 (Tex.2002).

Even applying this heightened standard of review, a factual sufficiency point requires the appellate court to examine all of the evidence in determining whether the finding in question is so against the great weight and preponderance of the evidence as to be manifestly unjust. Tate v. Tate, 55 S.W.3d 1, 5 (Tex.App.-El Paso 2000, no pet.).

Conclusions of law are reviewed de novo as legal questions. Hitzelberger v. Samedan Oil Corp., 948 S.W.2d 497, 503 (Tex.App.-Waco 1997, writ denied). We review conclusions of law to determine whether the conclusions drawn from the facts are correct. Zieben v. Platt, 786 S.W.2d 797, 802 (Tex.App.-Houston [14th Dist.] 1990, no writ). We will follow a trial court's conclusions of law unless they are erroneous as a matter of law. Hitzelberger, 948 S.W.2d at 503. Even an incorrect conclusion of law will be followed if the controlling findings of fact support a correct legal theory. Id. A trial court's conclusions of law may not be challenged for factual insufficiency. Zieba v. Martin, 928 S.W.2d 782, 786 n. 3 (Tex. App-Houston [14th Dist.] 1996, no writ). As a result, we will sustain the first point of error, an insufficient evidence issue, only if the fact finder could not have reasonably found the fact was established by clear and convincing evidence. Id. To this end, we must first determine whether the evidence was such that the trial judge could reasonably form a firm belief or conviction about the truth of Tony's claim that the funds in the foreign bank account were his separate property, and second, whether the trial judge could reasonably conclude that the fact that Tony had accumulated personal savings of at least $2,057,524.20 prior to the date of the parties' marriage was highly probable.

II. Does The Evidence Support Characterizing The Funds in The Darwin Ltd. Account as Tony's Property?

In her first issue, Lori argues the trial court erred in characterizing funds in the Darwin Ltd. bank account (the "Account"), and the mutations therefrom, as Tony's separate property. Lori contends the evidence was legally and factually insufficient to support both the trial court's finding Tony had in excess of $2 million in the Account prior to the date he and Lori were married, and the concomitant conclusion of law that assets purchased with those funds were also separate property.2 The gravamen of Lori's argument is that Tony failed to establish the funds in the Account at the time of the marriage were his funds, and therefore all assets purchased with those funds were community property. We address first the question of whether Tony properly established the funds in the Account prior to the marriage were his.

In this first issue, Lori challenges only the following trial court finding and conclusions:

Findings of Fact

* * * * * *

7. Prior to the date of the parties' marriage, which was December 30, 1993, ANTHONY J. ZAGORSKI had accumulated savings of at least $2,057,524.20.

Conclusions of Law

* * * * * *

5. The amount of $2, 057,524.20 was the separate property of ANTHONY J. ZAGORSKI prior to the marriage to LORI ZAGORSKI on December 30, 1993.

6. Assets purchased from the $2,057,524.20, and mutations therefrom, were traced by clear and convincing evidence and are the separate property of ANTHONY J. ZAGORSKI.

Before the Zagorski's marriage, the funds in the Account totaled over two million dollars. During the marriage, Tony made withdrawals from the Account. The money was sent to him or, at his request, directly to others. A summary of the telegraphic transfers from the Account introduced at trial shows that Darwin Ltd. distributed a total of $2,057,524.20 to Tony during the time he and Lori were married.3

Lori makes two arguments that the Account disbursements were community property. First, their receipt during the marriage represented community income. Second, the interest and res of the Account were so commingled they defied tracing and segregation. The essence of her complaint is credibility. Specifically, she complains Tony's inception of title evidence isn't believable due to incomplete documentation, inconsistent documents and biased testimony. As evidence the Account was separate, Tony submitted oral testimony and circumstantial documentary evidence. His evidence traced the origin of funds in the Account to the repayment of savings prior to their marriage.

Separate property commands constitutional stature. "All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse...." Tex. Const. art. XVI, § 15. The Texas Family Code defines separate property as that property owned by a spouse before marriage, acquired during the marriage by gift, devise, or descent, and the recovery for personal injuries sustained during the marriage. Tex. Fam.Code Ann. § 3.001 (Vernon 1998). Community property consists of the property, other than separate property, acquired by either spouse during marriage. Id. at § 3.002. In Texas, property possessed by either spouse during or on dissolution of the marriage is presumed to be community property, absent clear and convincing evidence to the contrary. Id. at § 3.003. The characterization of property as either community or separate is determined by the inception of title to the property. Smith v. Smith, 22 S.W.3d 140, 145 (Tex.App.-Houston [14th Dist.] 2000, no pet.). Inception of title occurs when a party first has a right of claim to the property by virtue of which title is finally vested. Id. (citing Strong v. Garrett, 148 Tex. 265, 224 S.W.2d 471, 474 (1949)). The major consideration in determining the characterization of...

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