Award of Separate Property to the Other Spouse Reversed

Bradley Jay Gana v. Susan Ruth Gana No. 14-05-00601-CV (Tex.App. - Houston [14th Dist.] Apr. 24, 2007)(Fowler)(divorce, property division reversed)
REVERSED AND REMANDED: Opinion by Justice Fowler
Appeal from 310th District Court of Harris County (Judge Lisa A. Millard)

MEMORANDUM OPINION BY JUSTICE FOWLER

Appellant, Bradley Jay Gana, appeals from the trial court's judgment of divorce and its division of the parties' property. In his first issue, Bradley contends the judgment is a nullity because the attorney for appellee, Susan Ruth Gana, was disbarred when the judgment was signed. In his remaining three issues, Bradley contends the trial court reversibly erred when it mischaracterized his separate real property as community and ordered it sold and the proceeds split evenly. Because we agree the trial court reversibly erred in its property division, we reverse and remand in part and affirm in part.

Factual and Procedural Background

Bradley and Susan were married in 1988 and had two children. Susan filed for divorce in 2004, and was represented by attorney Richard A. Tindall. Bradley apparently filed no answer or affirmative pleadings before the trial. However, Bradley did make a general appearance with counsel and the parties entered into an agreement for temporary orders concerning their children and their marital estate while the case was pending.

Apparently unbeknownst to either party, Susan=s attorney, Tindall, was a party to a disbarment proceeding brought against him by the Commission for Lawyer Discipline. The judgment of the evidentiary panel reflects that the disciplinary proceeding was heard on February 10B11, 2005. The judgment ordering Tindall disbarred was signed March 10, 2005. The evidentiary panel=s Findings of Fact and Conclusions of Law were also signed March 10, 2005. Nothing in the record indicates that the judgment disbarring Tindall was rendered at the close of the disciplinary proceeding or at any other time before March 10, 2005.

The trial of the divorce proceeded on February 15, 2005. The decree recites that the divorce was Ajudicially PRONOUNCED AND RENDERED in court at Houston, Harris County, Texas, on February 17, 2005, and further noted on the court=s docket sheet on the same date.@ It also recited that the divorce decree was not signed until March 14, 2005. Also relevant here, the decree included an order that a piece of real property located at 12327 Rampart Street be sold and the proceeds split evenly between Bradley and Susan.

Bradley subsequently discovered Tindall=s disbarment, and on April 13, 2005, he filed a motion for new trial challenging, among other things, the entire divorce decree based on Tindall=s disbarment as a result of the proceedings on February 10B11, 2005. Bradley also moved for a new trial on the grounds that the Rampart Street property was his separate property because he had purchased it in 1982, some six years before the parties were married. The trial court denied Bradley=s motion for new trial.

At Bradley=s request, the trial court filed findings of fact and conclusions of law. Among other things, the trial court found that Bradley and Susan had acquired the property with the values shown on Susan=s last inventory and appraisement. Susan=s inventory included the Rampart Street property, and Bradley contends this constitutes an implied finding by the trial court that it was community property. The trial court also found that no evidence was tendered by either party as to the character of any property before the Court. The trial court also issued the following conclusion of law:

The division of the property of Petitioner and Respondent effected by the final judgment is just and right, having due regard for the rights of each party and the children of the marriage, irrespective of the characterization of any item of property as either community or separate. This includes the order of sale of property known as 12327 Rampart Street, Houston, Texas and division of interim rents and proceeds of sale.

This appeal followed.

Analysis of Appellant=s Issues

I. Issue One: Is the divorce judgment a nullity because Susan=s attorney was disbarred when it was signed?

In his first issue, Bradley contends he is entitled to a reversal of the trial court=s judgment because it was obtained with the assistance of a disbarred attorney. Bradley maintains that reversal is required because Tindall=s failure to disclose his disbarment deceived the trial court and the parties, and contaminated the entire case. Because the facts of Tindall=s representation are undisputed, Bradley asserts, we may determine as a matter of law whether his conduct amounted to the practice of law, citing Unauthorized Practice Comm., State Bar of Tex. v. Cortez, 692 S.W.2d 47, 51 (Tex. 1985).

Bradley contends that Tindall was disbarred as of the hearing on February 10B11, 2005, which was prior to his and Susan=s divorce trial on February 15, 2005. Consequently, he asserts that the trial court was without authority to rely on Tindall, as an unlicensed individual, to provide legal representation to Susan. See Ex parte Engle, 418 S.W.2d 671, 673 (Tex. Crim. App. 1967) (holding trial court had no authority to appoint unlicensed law school graduate to represent relator in habeas corpus proceeding). Further, Bradley contends the divorce decree is a nullity because Tindall filed the decree for signing after the judgment disbarring him was signed, and therefore it is not to be considered by the court. See Magaha v. Holmes, 886 S.W.2d 447, 448B49 (Tex. App.CHouston [1st Dist.] 1994, no writ) (refusing to consider motion for leave to file petition for writ of mandamus filed by defendant=s mother because she was not a member of the bar and did not fit within the categories of persons who can practice law on a limited basis).

In response, Susan contends that rendition and entry of the trial court=s judgment of divorce occurred prior to the date on which Susan=s trial counsel was effectively disbarred, and any delay by the trial court in signing the judgment does not operate to invalidate it. On these facts, we agree with Susan.

A judgment routinely goes through three states: (1) rendition, (2) signing, and (3) entry. Wittau v. Storie, 145 S.W.3d 732, 735 (Tex. App.CFt. Worth 2004, no pet.). Generally, a judgment is Arendered@ when the trial court=s decision upon the matter submitted to it for resolution is officially announced either orally in open court or by memorandum filed with the clerk. Garza v. Tex. Alcoholic Beverage Comm=n, 89 S.W.3d 1, 6 (Tex. 2002). An order pronounced in open court is considered Arendered@ when it is officially announced, and it is valid from that time forward, so that formal entry is only a ministerial act. Dunn v. Dunn, 439 S.W.2d 830, 832 (Tex. 1969). But if a trial judge signs a judgment without first making an oral announcement in open court, the act of signing the judgment is the official act of rendering the judgment. Wittau, 145 S.W.3d at 735.

Here, nothing in the record reflects that the judgment disbarring Tindall was rendered at any time before it was signed on March 10, 2005, and Bradley cites no authority to support a contrary conclusion. Moreover, Bradley=s counsel conceded at the hearing on his motion for new trial that the judgment disbarring Tindall does not reflect that it was rendered at the close of the February disbarment proceeding; he merely speculated that rendition could have occurred at that time. Therefore, in the absence of any other information, we have no evidence to support the contention that Tindall was engaged in the unauthorized practice of law when he represented Susan at the parties= divorce trial on February 15, 2005. See Wittau, 145 S.W.3d at 745.

Bradley also represents that Tindall prepared and tendered to the trial court the final decree of divorce for signing, and the trial court did not sign the decree, until after Tindall was disbarred. However, our review of the record shows that the final decree of divorce was signed and submitted by both parties= counsel on March 4, 2005, before the date of Tindall=s disbarment. Turning to the date the decree was signed, the record does not reveal why it was not signed until March 14, 2005, but in this instance the date the judgment was signed is not the dispositive factor.

The span of time between the date the record fixes Tindall=s disbarment and the divorce decree was signed is four days. Nothing in the record reflects that, during those four days, Tindall filed any motions, requested any relief, or otherwise engaged in any activities that would constitute the practice of law. Bradley=s cases in support of his position are therefore distinguishable. See Jimison v. Mann, 957 S.W.2d 860, 861 (Tex. App.CAmarillo 1997, no writ) (striking appellate brief and motion filed by unlicensed individual acting as next friend); Magaha, 886 S.W.2d at 448B49 (refusing to consider petition for leave to file mandamus by unlicensed individual). The divorce trial had taken place, and Tindall, along with Bradley=s counsel, submitted the final decree of divorce for the trial court=s signature before he was disbarred. Further, nothing in the record indicates that the parties or the trial court were harmed or prejudiced in any way during that four-day period between the date Tindall was disbarred and the trial court signed the decree.

We therefore overrule Bradley=s first issue.

II. Issues Two, Three, and Four: Did the trial court reversibly err by mischaracterizing Bradley=s separate property as community and concluding it made a just and right division regardless of its characterization of the property?

In his remaining three issues, Bradley contends the trial court erred by (1) characterizing his separate real property as community property when the evidence was legally and factually insufficient to support the finding and Susan judicially admitted it was Bradley=s separate property, (2) ordering the property sold and the sale proceeds partitioned between the parties, and (3) concluding that the division was just and right regardless of the characterization of the parties= property.

A. The applicable law and standards of review.

The Family Code requires that the trial court divide the estate of the parties in a manner that is just and right having due regard for the rights of each party. Tex. Fam. Code ' 7.001. The trial court has broad discretion in dividing the marital estate at divorce. See Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981). Upon appeal, we presume the trial court used its discretion and will reverse the cause only where the trial court clearly abused that discretion. See id. Under this abuse of discretion standard, the legal and factual sufficiency of the evidence are not independent grounds of error, but are merely relevant factors in assessing whether the trial court abused its discretion. Zieba v. Martin, 928 S.W.2d 782, 786 (Tex. App.CHouston [14th Dist.] 1996, no writ). We must remand the entire community estate for a new division when we find reversible error that materially affects the trial court=s Ajust and right@ division of the property. See Jacobs v. Jacobs, 687 S.W.2d 731, 732 (Tex. 1985).

We review the trial court=s conclusions of law de novo. Smith v. Smith, 22 S.W.3d 140, 143B44 (Tex. App.CHouston [14th Dist.] 2000, no pet.). Conclusions of law may not be challenged for factual insufficiency. Zieba, 928 S.W.2d at 786 n.3. The standard of review is whether the conclusions of law drawn from the facts are correct. Zieben v. Platt, 786 S.W.2d 797, 802 (Tex. App.CHouston [14th Dist.] 1990, no writ).

A statutory presumption exists that property possessed by a spouse at the time of the dissolution of a marriage is community property. Tex. Fam. Code ' 3.003(a); Licata v. Licata, 11 S.W.3d 269, 272 (Tex. App.CHouston [14th Dist.] 1999, pet. denied). A spouse seeking to rebut the presumption of community property must do so by clear and convincing evidence. Tex. Fam. Code ' 3.003(b); Licata, 11 S.W.3d at 272. Clear and convincing evidence is the degree of proof that produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established. Slaton v. Slaton, 987 S.W.2d 180, 182 (Tex. App.CHouston [14th Dist.] 1999, pet. denied). A spouse seeking to rebut the presumption bears the burden of tracing and clearly identifying the property claimed as separate. See id.
Separate property is afforded constitutional protection. AAll 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. See Tex. Fam. Code ' 3.001. A trial court may not divest a spouse of his or her separate property. Cameron v. Cameron, 641 S.W.2d 210, 215 (Tex. 1982); Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 142 (Tex. 1977).

B. Bradley demonstrates reversible error.

Bradley contends he satisfied his burden to show that the Rampart Street property was his separate property, and therefore the evidence is legally and factually insufficient to support the trial court=s related findings of fact. Bradley points to his testimony that he purchased the property before he and Susan married, he identified it as his separate property in a proposed property division that was admitted into evidence without objection, and most significantly, because Susan testified on direct examination that Bradley owned the property when they married. Bradley contends Susan=s testimony qualifies as a judicial admission. See Mendoza v. Fid. and Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980) (stating that five conditions must occur before a party=s quasi-admission will be treated as a judicial admission: (1) the declaration relied upon was made in the course of a judicial proceeding; (2) the declaration is contrary to an essential fact embraced in the theory of recovery or defense asserted by the party; (3) the statement is deliberate, clear, and unequivocal; (4) giving conclusive effect to the declaration would not run contrary to public policy; and (5) the statement is not also destructive of the opposing party=s theory of recovery).[1] Thus, Bradley claims the trial court committed reversible error when it divested him of his separate property and ordered it sold and the proceeds split between him and Susan.

Susan does not challenge Bradley=s evidence, but argues that (1) the trial court=s characterization of the property is supported by the community property presumption, (2) the trial court did not err in characterizing the property as community, and (3) as a matter of law, the trial court=s conclusion of law that its division of the property is just and right, irrespective of the characterization of any item of property as either community or separate, including the Rampart Street property, is not erroneous.[2] Susan also contends that, because Bradley conducted no harm analysis and has not attempted to demonstrate how a mischaracterization of the property caused an improper division, he is not entitled to a reversal and remand of the property division.

1. Bradley demonstrated the Rampart Street property is his separate property by clear and convincing evidence.

As noted above, at the divorce hearing, Bradley submitted a proposed property division reflecting the Rampart Street property as his separate property. He also testified that he purchased the property before he married Susan. We conclude that this evidence, coupled with Susan=s admission that Bradley owned the property before they were married, is sufficient to overcome the community property presumption and to demonstrate Bradley=s separate ownership by clear and convincing evidence.

During Susan=s direct examination, the following exchange occurred concerning the Rampart Street property:

Q. (Tindall) And with respect to this property at 12327 Rampart Street, this is the rental property, correct?
A. (Susan) Yes.
Q. Okay. And when did you and your husband acquire that property?
A. He owned that property when we got married.

We agree with Bradley that Susan=s testimony constitutes a judicial admission, because it was made in the course of a judicial proceeding; it was contrary to an essential fact embraced in Susan=s theory of recovery; it was deliberate, clear, and unequivocal; giving conclusive effect to the declaration would not run contrary to public policy; and it is not also destructive of Bradley=s theory of recovery. See Mendoza, 606 S.W.2d at 694. Moreover, there is no evidence the Rampart Street property was anything other than Bradley=s separate property.
Therefore, the trial court=s findings of fact that, during their marriage, Susan and Bradley Aacquired the property with the values shown in the last Inventory and Appraisement fine by Susan Gana@ (which included the Rampart Street property), and that A[n]o evidence was tendered by either party as to the character of any property before the Court@ are not supported by the evidence. Bradley sufficiently demonstrated that the Rampart Street property was his separate property.

2. The trial court had no discretion to divest Bradley of his separate property.

The Aestate of the parties@ has been construed to mean only the community property of the parties. Cameron, 641 S.W.2d at 213; Eggemeyer, 554 S.W.2d at 139. As noted above, the trial court may not divest one party of his separate property as part of a property division incident to a divorce. Cameron, 641 S.W.2d at 215; Eggemeyer, 554 S.W.2d at 142. Consequently, Bradley contends, the following conclusion of law entered by the trial court is Aclearly erroneous@:
The division of the property of Petitioner and Respondent effected by the final judgment is just and right, having due regard for the rights of each party and the children of the marriage, irrespective of the characterization of any item of property as either community or separate. This includes the order of sale of property known as 12327 Rampart Street, Houston, Texas and division of interim rents and proceeds of sale.

Bradley contends that this conclusion of law Aflies in the face of well-established precedent@ that a trial court lacks the authority under the Texas Constitution to divest a spouse of his or her separate property and award it to another party upon divorce.

In response, Susan urges us to follow the reasoning in Pace v. Pace, 160 S.W.3d 706 (Tex. App.CDallas 2005, pet. denied), in which the appellate court considered a ruling similar to the conclusion of law here. The Pace court interpreted the language to mean that Athe court would have divided the property the same way regardless of whether the property is separate or community.@ Id. at 715 (citing Vandiver v. Vandiver, 4 S.W.3d 300, 303 (Tex. App.CCorpus Christi 1999, pet. denied)). The Pace court explained that, when the trial court finds that its property division is just and right regardless of any mischaracterization of the property, even though the value of the property mischaracterized is great, the mischaracterization does not affect the trial court=s just and right division of the property. Id. at 716. Additionally, the Pace court held that the appellant must not only demonstrate the trial court mischaracterized the property at issue, but must also conduct a harm analysis to demonstrate Ahow the purported mischaracterization caused the trial court to abuse its discretion or that it had more than a de minimus impact on a just and right division of the community estate.@ Id. (citing Vandiver, 4 S.W.3d at 302; Tate v. Tate, 55 S.W.3d 1, 7 (Tex. App.CEl Paso, pet. denied)).

However, both Pace and the case it relies on, Vandiver v. Vandiver, are distinguishable, because those cases involved contentions that the trial court erroneously characterized community property as separate property. See Pace, 160 S.W.3d at 710; Vandiver, 4 S.W.3d at 301B02.[3] Here, in contrast, Bradley contends the trial court erroneously characterized his separate property as community property. This distinction is significant, because a trial court has no discretion to divest a spouse of his or her separate property. See Barnard v. Barnard, 133 S.W.3d 782, 789 (Tex. App.CFort Worth 2004, pet. denied); Smith, 22 S.W.3d at 147. When a court mischaracterizes separate property as community property, the error requires reversal. See, e.g., Shestawy v. Shestawy, 150 S.W.3d 772, 780 (Tex. App.CSan Antonio 2004, pet. denied); Barnard v. Barnard, 133 S.W.3d at 790; Smith, 22 S.W.3d at 147.

Therefore, the trial court=s conclusion of law that its division of property was just and right Airrespective of the characterization of any item of property as either community or separate@ is erroneous to the extent that the trial court included Bradley=s separate property, because the trial court has no discretion to divest a spouse of his separate property. Additionally, Susan valued the Rampart Street property at $94,800, and, assuming it sold for that amount, each party would receive approximately $47,400. We cannot say that the value of this property had no more than a de minimus impact on a just and right division of the community estate. We therefore sustain Bradley=s second, third, and fourth issues.

Conclusion

Having found that the trial court committed reversible error by mischaracterizing Bradley Gana=s separate property as community property and by divesting him of his separate property, we reverse that portion of the trial court=s judgment relating to the division of the community estate and remand further proceedings consistent with this opinion. We affirm and sever the remainder of the trial court=s judgment.

/s/ Wanda McKee Fowler
Justice

Judgment rendered and Memorandum Opinion filed April 24, 2007.

Panel consists of Chief Justice Hedges and Justices Fowler and Edelman.

[1] In anticipation of Susan=s arguments in response, Bradley also claims that his lack of affirmative pleadings do not foreclose his separate property claim because Susan's pleadings sufficiently put his separate property at issue and the characterization of the Rampart Street property was tried by consent. However, Susan does not respond to these claims.

[2] Susan does not contend the trial court ordered the Rampart Street property sold and the proceeds split to satisfy a claim for reimbursement, and there is nothing in the record to demonstrate that is what the trial court intended by its order.

[3] Moreover, in Tate, which is also cited with approval in Pace, the appellate court noted that when the trial court characterizes one spouse's separate property as community and awards it to the other spouse, it is unnecessary to show harm because divestiture of separate property is reversible error. See Tate, 55 S.W.3d at 7 (citing Eggemeyer, 554 S.W.2d at 140).
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