Court Opinion

ID: 7803807
Source: CourtListenerOpinion
Date Created: 2022-08-26 09:11:14.098834+00
Date Added: 2024-06-11T16:29:43.652873
License: Public Domain

IN THE
                          TENTH COURT OF APPEALS

                                 No. 10-21-00296-CV

            IN THE MATTER OF THE MARRIAGE OF
    VICKI LYNN MATTHEWS AND JACKIE WAYNE MATTHEWS

                           From the 220th District Court
                              Bosque County, Texas
                             Trial Court No. CV19316

                           MEMORANDUM OPINION

      In this appeal, the parties disagree over the trial court’s division of the community

estate. In two issues, appellant, Jackie Matthews (“Husband”), contends that: (1) the trial

court abused its discretion by awarding appellee, Vickie Matthews (“Wife”), a business

entity and its bank account; and (2) the trial court erred by not admitting his business

entities’ 2020 tax returns after the scheduling order deadline. We affirm.

                                       Background
       Husband and Wife were married on February 17, 2002. Wife filed for divorce in

October 2019. It is undisputed that the parties accumulated community assets totaling

approximately $10.5 million during the marriage.

       This matter was tried to the bench. At trial, several witnesses testified, including

both Husband and Wife. At the conclusion of the testimony, the trial court orally granted

the divorce, but took the matter of the division of the estate under advisement.

Thereafter, the trial court sent the parties a letter ruling regarding division of the

community estate. Later, the trial court signed a final divorce decree granting the

divorce, which included the property division set forth in the letter ruling. Husband filed

a motion for new trial and a request for findings of fact and conclusions of law. The trial

court did not make any findings of fact and conclusions of law, and Husband’s motion

for new trial was overruled by operation of law. See TEX. R. CIV. P. 329b(c). This appeal

followed.

STANDARD OF REVIEW

       In a divorce proceeding, the Family Code requires the trial court to “order a

division of the estate of the parties in a manner that the court deems just and right, having

due regard for the rights of each party and any children of the marriage.” TEX. FAM. CODE

ANN. § 7.001.       We review a trial court's division of property for an abuse of

discretion. Bradshaw v. Bradshaw, 555 S.W.3d 539, 543 (Tex. 2018); Murff v. Murff, 615

S.W.2d 696, 698 (Tex. 1981). A trial court has wide latitude in the exercise of its discretion

In the Matter of the Marriage of Matthews                                               Page 2
in dividing the marital property in a divorce proceeding, and that division will not be

overturned on appeal unless the trial court has abused its discretion. Murff, 615 S.W.2d

at 698. A trial court abuses its discretion when it acts arbitrarily or unreasonably or

without reference to any guiding rules or principles. Downer v. Aquamarine Operators,

Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).

                               Ownership of the Business Entity

        In his first issue, Husband contends that the trial court abused its discretion by

awarding Wife 100% of the ownership interests in an entity called “Newco Matthews,

LLC” and a checking account in the name of Newco Matthews, LLC. Specifically,

Husband argues that no evidence exists to establish Newco Matthews, LLC and its bank

account as community property that was subject to division under the Texas Family

Code.

APPLICABLE LAW

        In order to determine whether the trial court abused its discretion because the

evidence was insufficient to support its decision, we consider: (1) whether the trial court

had sufficient evidence upon which to exercise its discretion; and (2) whether it erred in

its application of that discretion. Bush v. Bush, 336 S.W.3d 722, 729 (Tex. App.—Houston

[1st Dist.] 2010, no pet.). We conduct the sufficiency review using the appropriate

standards for legal and factual sufficiency when considering the first prong of the test.

Id. We then determine whether, based on the evidence presented at trial, the trial court

In the Matter of the Marriage of Matthews                                            Page 3
made a reasonable decision. In re S.T., 508 S.W.3d 482, 489 (Tex. App.—Fort Worth 2015,

no pet.).

        In reviewing for legal sufficiency of the evidence, we consider the evidence in the

light most favorable to the trial court’s ruling. See AutoZone, Inc. v. Reyes, 272 S.W.3d 588,

592 (Tex. 2008). The test for legal sufficiency “must always be whether the evidence at

trial would enable [a] reasonable and fair-minded [factfinder] to reach the [conclusion]

under review.” City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We must credit

favorable evidence if a reasonable factfinder could, and disregard contrary evidence

unless a reasonable factfinder could not. Id. The factfinder is the sole judge of the

credibility of the witnesses and the weight to be assigned to their testimony. Id. at 819.

FACTS

        At trial, Husband and Wife testified on the valuation of their marital estate. Wife

provided a sworn inventory and appraisement, as well as a proposed division of

property. In her inventory and appraisement, Wife listed a bank account titled, “Newco

Matthews LLC” as one of the assets within the community estate of the parties. Husband

did not provide a sworn inventory and appraisement, although he had been ordered to

do so by the trial court. Husband also did not respond to interrogatories regarding the

value of the marital estate. Furthermore, at trial, both parties spoke about the business

entity Newco Matthews, LLC and a bank account with the same name that had a cash

value of $2,021,330 at the time of trial. Wife testified that Husband told her that Newco

In the Matter of the Marriage of Matthews                                               Page 4
Matthews, LLC was created for tax purposes, and that a bank account existed with the

same name of that business entity. Husband testified that the Newco Matthews, LLC

bank account transferred $740,000 to another account for the sale of a company, and that

he did not receive anything in return for the money going through his bank account.

ANALYSIS

       Only community property is subject to the trial court’s just and right division.

Barnard v. Barnard, 133 S.W.3d 782, 789 (Tex. App.—Fort Worth 2004, pet. denied). All

property on hand at the time of the divorce is presumed to be community property. TEX.

FAM. CODE ANN. § 3.003(a). This is a rebuttable presumption and a spouse who claims

any asset as separate property must rebut this presumption by clear and convincing

evidence. Id. § 3.003(b). “A party seeking to rebut the community presumption must

trace assets on hand during the marriage back to the property that is separate in

character.” In re Marriage of Nash, 644 S.W.3d 683, 696-97 (Tex. App.—Texarkana 2022,

no pet.) (citations & quotations omitted). “Tracing involves establishing the separate

origin of the property through evidence showing the time and means by which the

spouse originally obtained possession of the property.” Id. (citations & quotations

omitted). Any doubt as to the character of the property should be resolved in favor of

the community estate. Akin v. Akin, 649 S.W.2d 700, 703 (Tex. App.—Fort Worth 1983,

writ ref’d n.r.e.).

In the Matter of the Marriage of Matthews                                         Page 5
       In the instant case, Husband asserts that no evidence substantiates Newco

Matthews, LLC as community property. Instead, Husband claims that neither spouse

owned or acquired any interest in Newco Matthews, LLC or its bank account. However,

contrary to his assertions above, Husband produced the Newco Matthews, LLC bank

account statements during discovery in this divorce proceeding; Husband represented to

Wife that Newco Matthews, LLC was created for tax purposes; Husband told Wife that

she would not find all his assets; and Husband acknowledged the Newco Matthews, LLC

bank account as his account. This evidence corroborated Wife’s sworn inventory listing

the bank account as community property. Warriner v. Warriner, 394 S.W.3d 240, 248 (Tex.

App.—El Paso 2012, no pet.) (“A sworn inventory is simply another form of testimony.

Such testimony must be supported by other evidence.” (internal citations omitted)). And

while he acknowledged that the Newco Matthews bank account was his, Husband did

not trace the separate origin of the bank account or business entity through evidence

showing the time and means by which he originally obtained possession of the property.

See In re Marriage of Nash, 644 S.W.3d at 696; Boyd v. Boyd, 131 S.W.3d 605, 612 (Tex. App.—

Fort Worth 2004, no pet.) (“Moreover, as a general rule, mere testimony that property

was purchased with separate funds, without any tracing of the funds, is insufficient to

rebut the community presumption.”); see also TEX. FAM. CODE ANN. § 3.003(b). In fact,

Husband failed to produce an inventory and appraisement during discovery and did not

respond to interrogatories regarding the value of the marital estate.

In the Matter of the Marriage of Matthews                                             Page 6
        Based on our review of the record, we conclude that there is legally sufficient

evidence to support the trial court’s division of the marital estate. See Reyes, 272 S.W.3d

at 592; City of Keller, 168 S.W.3d at 827; see also Bush, 336 S.W.3d at 729. Moreover, we

further conclude that Husband has not demonstrated that the property division was so

unjust that the trial court abused its discretion. See Bradshaw, 555 S.W.3d at 543; Murff,

615 S.W.2d at 698; see also Warriner, 394 S.W.3d at 248 (concluding that assets were

appropriately subject to equitable distribution as community property absent evidence

offered to trace assets back as separate property of a spouse). We overrule Husband’s

first issue.

                                            2020 Tax Returns

        In his second issue, Husband argues that the trial court abused its discretion by

not admitting the 2020 tax returns for his business entities after Husband missed the

scheduling order deadline. Specifically, Husband asserts that the 2020 tax returns should

have been admitted under Rule 193.6 or Rule 270 of the Texas Rules of Civil Procedure.

See TEX. R. CIV. P. 193.6(a), 270.

FACTS

        Husband produced business entity tax returns the day before trial and attempted

to admit the returns during cross examination of Wife’s business valuation witness,

Michael Benaglio. Wife objected to the admission of the 2020 tax returns and any

solicitation of testimony regarding those returns because they had not been produced

In the Matter of the Marriage of Matthews                                            Page 7
until June 10, 2021, the day before trial, and after the scheduling order deadline. The

pertinent scheduling order allowed discovery to be amended or supplemented without

leave of court on or before May 11, 2021, but required leave of court after that date.

Husband did not request leave of court before trial. Husband’s attorney responded that

he had only received the returns two days before trial and that he sent Wife’s attorney

the documents early the next morning, June 10, 2021. The trial court held a hearing on

the admissibility of the 2020 business entity tax returns, sustained Wife’s objections, and

did not admit the tax returns.

TEXAS RULE OF CIVIL PROCEDURE 193.6

       Texas Rule of Civil Procedure 193.6(a) provides the following:

        A party who fails to make, amend, or supplement a discovery response,
       including a required disclosure, in a timely manner may not introduce in
       evidence the material or information that was not timely disclosed, or offer
       the testimony of a witness (other than a named party) who was not timely
       identified, unless the court finds that:

           (1) There was good cause for the failure to make, amend, or supplement
               the discovery response; or

           (2) The failure to timely make, amend, or supplement the discovery
               response will not unfairly surprise or unfairly prejudice the other
               parties.

TEX. R. CIV. P. 193.6(a); see Alvarado v. Farah Mfg. Co., 830 S.W.2d 911, 914 (Tex. 1992); In re

D.W.G.K., 558 S.W.3d 671, 679 (Tex. App.—Texarkana 2019, pet. denied). Exclusion is

mandatory and automatic unless the court finds that there was good cause for the failure

to amend or supplement, or the failure will not unfairly surprise or prejudice the other
In the Matter of the Marriage of Matthews                                                Page 8
party. In re D.W.G.K, 558 S.W.3d, at 679 (citing TEX. R. CIV. P. 193.6(a); Morrow v. H.E.B.,

Inc., 714 S.W.2d 297, 297–98 (Tex. 1986) (per curiam); Good v. Baker, 339 S.W.3d 260, 271

(Tex. App.—Texarkana 2011, pet denied)). The party seeking to introduce evidence bears

the burden of establishing good cause or the lack of unfair surprise or prejudice. TEX. R.

CIV. P. 193.6(b). Moreover, the trial court has discretion in determining if the offering

party met its burden to show good cause or lack of unfair surprise or prejudice, and the

record must support the trial court’s finding. In re D.W.G.K, 558 S.W.3d at 679 (citing

TEX. R. CIV. P. 193.6(b); Baker, 339 S.W.3d at 271).

       In In re D.W.G.K., the Texarkana Court of Appeals noted:

       The purposes of Rule 193.6 are threefold: (1) to promote responsible
       assessment of settlement, (2) to prevent trial by ambush, and (3) to give the
       other party the opportunity to prepare rebuttal to expert testimony. See In
       re Kings Ridge Homeowners Assoc., Inc., 303 S.W.3d 773, 783 (Tex. App.—Fort
       Worth 2009, orig. proceeding) (first two purposes) (citing Alvarado, 830
       S.W.2d at 913-14); Norfolk S. Railway Co. v. Bailey, 92 S.W.3d 577, 581 (Tex.
       App.—Austin 2002, no pet.) (third purpose) (citing Exxon Corp. v. W. Tex.
       Gathering Co., 868 S.W.2d 299, 305 (Tex. 1993)).

In re D.W.G.K., 558 S.W.3d at 680. Thus, to establish the absence of unfair prejudice, “the

party seeking to call an untimely disclosed witness or introduce untimely disclosed

evidence must establish that, notwithstanding the late disclosure, the other party had

enough evidence to reasonably assess settlement, to avoid trial by ambush, and to

prepare rebuttal to expert testimony.”       Id.   However, even if the party seeking to

introduce the evidence or call the witness fails to carry the burden, the court may grant a

continuance or temporarily postpone the trial to allow a response to be made, amended,
In the Matter of the Marriage of Matthews                                              Page 9
or supplemented, and to allow opposing parties to conduct discovery regarding any new

information presented by that response. TEX. R. CIV. P. 193.6(c).

        In the instant case, Husband contends that the trial court should have admitted

the 2020 tax returns under Rule 193.6. Husband argues he had good cause because the

2020 tax returns had not been prepared prior to May 11, 2021, and were not provided to

Husband until June 9, 2021. Husband also argues a lack of unfair surprise or prejudice

because Wife received the 2020 tax returns prior to trial and was aware of them.

        As stated earlier, Husband produced the tax returns on June 10, 2021, the day

before trial, and after the deadline of May 11, 2021, imposed in the scheduling order. See

TEX. R. CIV. P. 193.5(b) (providing that it is presumed that an amended or supplemental

response made less than thirty days before trial was not made reasonably promptly).

Prior to that, Husband had repeatedly been sanctioned by the trial court for not

complying with discovery orders. Additionally, Husband did not provide Wife with

other financial information that the 2020 tax returns were based on, nor did he request a

continuance or leave of court to produce the tax returns outside of the discovery

deadlines. Instead, Husband waited until the day before trial to provide any notice to

Wife or the trial court about the need for the 2020 tax returns. Husband also made no

attempt to establish good cause or lack of unfair prejudice other than informing the trial

court that he had just received the 2020 tax returns the day before they were produced to

Wife.

In the Matter of the Marriage of Matthews                                          Page 10
       Given that Husband: (1) had a history of causing delays and failing to comply

with discovery orders, (2) failed to request a continuance or leave of court prior to trial,

in accordance with the scheduling order provisions, and (3) did not establish good cause

or lack of unfair prejudice, we cannot say that the trial court abused its discretion by

excluding the 2020 tax returns and finding a potential for unfair surprise or prejudice and

a lack of good cause. See Mid Continent Lift & Equip., LLC v. J. McNeill Pilot Car Serv., 537

S.W.3d 660, 672 (Tex. App.—Austin 2017, no pet.) (noting that the purposes of Rule 193.6

include ensuring that parties receive notice of the witnesses and evidence their opponents

intend to present at trial, thereby promoting realistic assessment of settlement prospects

and preventing “trial by ambush.”); see also White v. Perez, No. 2-09-251-CV, 2010 Tex.

App. LEXIS 150, at **2-4 (Tex. App.—Fort Worth Jan. 7, 2010, pet. denied) (mem. op.)

(finding no abuse of discretion when the trial court excluded evidence after husband

failed to answer interrogatories, provided unsigned and untimely answers to the

interrogatories three days before trial, and did not establish good cause).

TEXAS RULE OF CIVIL PROCEDURE 270

       Texas Rule of Civil Procedure 270 provides, as applicable here, that when it clearly

appears to be necessary to the due administration of justice, the court may permit

additional evidence to be offered at any time. TEX. R. CIV. P. 270. However, the rule does

not require a court to permit additional evidence. Rollins v. Tex. Coll., 515 S.W.3d 364, 371

(Tex. App.—Tyler 2016, pet. denied) (citing Poag v. Flories, 317 S.W.3d 820, 828 (Tex.

In the Matter of the Marriage of Matthews                                             Page 11
App.—Fort Worth 2010, pet. denied)); Hernandez v. Lautensack, 201 S.W.3d 771, 779 (Tex.

App.—Fort Worth 2006, pet. denied) (citation omitted).

       In determining whether to permit additional evidence under Rule 270, a court

should consider: (1) the movant's diligence in obtaining the additional evidence; (2) the

decisiveness of this evidence; (3) whether the reception of the evidence could cause any

undue delay; and (4) whether the granting of the motion could cause any injustice.

Rollins, 515 S.W.3d at 371; see McCuen v. Huey, 255 S.W.3d 716, 738 (Tex. App. —Waco

2008, no pet.) (citations omitted). These are just factors to be considered, and even if all

of the factors are not satisfied, a trial court's decision to permit the presentation of

additional evidence should not be disturbed absent an abuse of discretion. See Naguib v.

Naguib, 137 S.W.3d 367, 372-73 (Tex. App.–Dallas 2004, pet. denied).

       Furthermore, “[i]t is well established that in considering appeals based on rule 270

that the question of reopening a case for the purpose of admitting additional evidence is

within the sound discretion of the trial judge, and his action refusing to permit a party to

reopen for such purpose should not be disturbed by an appellate court unless it clearly

appears that such discretion has been abused.” Word of Faith World Outreach Ctr. Church

v. Oechsner, 669 S.W.2d 364, 366 (Tex. App.—Dallas 1984, no writ).

       Here, the record does not demonstrate that Husband exercised due diligence in

procuring or producing financial information for 2020 or informing the trial court or the

parties of the impending production of the 2020 tax returns until the day before trial.

In the Matter of the Marriage of Matthews                                            Page 12
Furthermore, nothing in the record shows that Husband proffered any counter-witnesses

or counter-evidence regarding the valuations contained in the 2020 tax returns, despite

knowing that the valuations in said returns may have been relevant to the just and right

division of the community estate. Furthermore, as stated earlier, Husband, on several

occasions, caused delays in the trial by failing to comply with discovery orders.

Moreover, the admission of the 2020 tax returns would have caused an additional undue

delay to a proceeding that began on October 16, 2019, and had already been delayed

several times. To further delay this proceeding would have caused an injustice to Wife.

Under these circumstances, we cannot say that the trial court abused its discretion by

refusing to admit the untimely-produced 2020 tax returns under Texas Rule of Civil

Procedure 270. See TEX. R. CIV. P. 270; Oechsner, 669 S.W.2d at 366. We overrule

Husband’s second issue.

                                            Conclusion

       We affirm the trial court's judgment.

                                              MATT JOHNSON
                                              Justice

Before Chief Justice Gray,
       Justice Johnson,
       and Justice Smith
Affirmed
Opinion delivered and filed August 24, 2022
[CV06]
In the Matter of the Marriage of Matthews                                        Page 13
In the Matter of the Marriage of Matthews   Page 14