Court Opinion

ID: 3130758
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:52:30.189725+00
Date Added: 2024-06-11T11:53:50.114251
License: Public Domain

COURT OF APPEALS
                          SECOND DISTRICT OF TEXAS
                               FORT WORTH

                               NO. 2-08-358-CV

GORDON WAYNE PORTER                                                APPELLANT

                                        V.

KIMBERLY ANN PORTER                                                  APPELLEE

                                    ------------

            FROM THE 16TH DISTRICT COURT OF DENTON COUNTY

                                    ------------

                         MEMORANDUM OPINION 1

                                    ------------

      After a bench trial, the trial court granted a divorce to Appellant Gordon

Wayne Porter and Appellee Kimberly Ann Porter.         In two issues, Gordon

contends that the trial court erred by mischaracterizing separate property as

community property and abused its discretion by failing to make a just and right

      1
           See Tex. R. App. P. 47.4.
division of the marital estate. Because we cannot conclude that the trial court

erred or abused its discretion, we affirm the trial court’s judgment.

I. Relevant Findings of Fact and Conclusions of Law

      In the case before us, the trial court found that

      •     [Gordon] alleged that he had a separate property interest in
            several equity accounts[;]

      •     [Gordon] failed to show by clear and convincing evidence the
            value of these assets on the date of the marriage[;]

      •     [Gordon] commingled community assets with his alleged
            separate assets[; and]

      •     [Gordon] failed to provide clear and convincing tracing
            evidence to segregate community and alleged separate
            assets.

The trial court concluded that Gordon failed to prove by clear and convincing

evidence what portion, if any, of the equity accounts were separate property.

II. Characterization of Accounts

      In his first issue, Gordon argues that the trial court erred by refusing to

recognize his separate claim in and to each of the following accounts:

•     Capital Appreciation;

•     Select Gold;

•     Fidelity Traditional IRA;

•     Informix stock options rolled into Fidelity Account Number X36–17xxxx;

                                       2
•    Informix 401(k) rolled into Fidelity IRA Account Number 13x–2xxxxx;

•    American Funds Account Number 88xxxxxxxx; and

•    DWS Scudder Account.

A. Substantive Law

     As this court has previously explained,

            Under Texas law, 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.
     The characterization of property as either community or separate
     is determined by the inception of title to the property. Inception of
     title occurs when a party first has a right of claim to the property
     by virtue of which title is finally vested. . . .

            In order to overcome the community presumption, the burden
     is on the spouse claiming certain property as separate to trace and
     clearly identify the property claimed to be separate. The burden of
     tracing is a difficult, but not impossible, burden to sustain. 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.

           . . . Separate property will retain its character through a
     series of exchanges so long as the party asserting separate
     ownership can overcome the presumption of community property
     by tracing the assets on hand during the marriage back to property
     that, because of its time and manner of acquisition, is separate in
     character. However, if the evidence shows that separate and
     community property have been so commingled as to defy
     resegregation and identification, the community presumption
     prevails.

           When tracing separate property, it is not enough to show that
     separate funds could have been the source of a subsequent deposit
     of funds. Moreover, as a general rule, mere testimony that

                                       3
      property was purchased with separate funds, without any tracing
      of the funds, is insufficient to rebut the community presumption.
      Any doubt as to the character of property should be resolved in
      favor of the community estate. 2

      When findings of fact are filed and are unchallenged, they occupy the

same position and are entitled to the same weight as the verdict of a jury; they

are binding on an appellate court unless the contrary is established as a matter

of law or there is no evidence to support the finding. 3

B. Evidence and Analysis

      Gordon relies on his own testimony about the accounts, the exhibits he

introduced, and Kimberly’s testimony that he would be the person to ask about

the challenged accounts, but he does not directly challenge the trial court’s

findings of commingling and insufficient tracing.

      Kimberly testified that she did not know how much money was in the

accounts when they married and that she did not think that “[they] had maybe

all of these [accounts]” but that Gordon “would be able to tell you.” When

questioned whether Gordon “[w]ould . . . be the only one that would know that

information or have access to that information, “ she answered, “I would think

      2
        Boyd v. Boyd, 131 S.W.3d 605, 612 (Tex. App.—Fort Worth 2004,
no pet.) (citations omitted).
      3
       McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986); Raman
Chandler Props., L.C. v. Caldwell’s Creek Homeowners Ass’n, Inc., 178 S.W.3d
384, 390 (Tex. App.—Fort Worth 2005, pet. denied).

                                       4
so.” When questioned on cross-examination whether the investments occurred

both before and during the marriage, she replied, “I wouldn’t think very much

pre[-] because he started that job right out of college, so there was no pre

jobs,” and she answered, “Correct,” to the question, “He would be the best one

to testify as to the origin of those funds, correct?”

1. Capital Appreciation, Select Gold, and Fidelity Traditional IRA

      The evidence shows that the Fidelity Traditional IRA is made up of

holdings in three separate funds: Capital Appreciation, Magellan, and Select

Gold. The Magellan fund is not at issue in this appeal. Kimberly testified that

she believed that the Fidelity Traditional IRA originated from Gordon’s

employment at Informix. Gordon testified that he began working with Informix

in September 1988 but that he put $1,000 in the Capital Appreciation fund

while he was at TI. He testified that after the marriage, he put $1,000 into

another Capital Appreciation fund. He testified that the two Capital

Appreciation funds were merged about two years after the marriage. As of

October 31, 2007, the Capital Appreciation fund had a value of $14,733.47.

Gordon believed that the Capital Appreciation fund was one-half his separate

property and one-half community property based on his two equal but

separately timed deposits.

                                       5
      Gordon also testified that in 1988, he put $500 into the Select Gold fund,

which he testified is or was also known as the Precious Metals fund; that

“nothing else ha[d] been added to that”; and that “[t]he Gold is 100 percent

prior to marriage.” 4 But our review of the record shows that the Select Gold

fund has more shares now than it did before the marriage, and there is no

explanation in the record for why the number of shares increased. While stock

splits and stock dividends retain the character of the original stock, 5 shares

acquired after the marriage with community funds would be community

property. 6

      Similarly, the Fidelity Traditional IRA contained earned, tax-deferred

income. It is unclear from the record how this income is apportioned among the

three funds, much less between the community and separate estates. Interest

income and cash dividends earned during the marriage on separate property are

community property. 7

      4
       We note that Gordon’s Exhibits Nos. 3 and 4, which according to the
testimony were records of investments at Fidelity with regard to the Capital
Appreciation and the Select Gold fund, were offered but not admitted into
evidence.
      5
       Tirado v. Tirado, 357 S.W.2d 468, 473 (Tex. Civ. App.—Texarkana
1962, writ dism’d).
      6
           See Tex. Fam. Code Ann. § 3.002 (Vernon 2006).
      7
           Id.; see also Fischer-Stoker v. Stoker, 174 S.W.3d 272, 279 (Tex.

                                       6
2. Stock Option Rollover

       Gordon testified that he spent about $22,000, including community

monies and money borrowed from his father, to exercise 10,000 of 15,000

Informix stock options (losing 5,000 for his failure to exercise within thirty days

of termination) and “after that, they rolled right into the Fidelity [Account

Number X36–17xxxx].”        Gordon believed that this account had a one-third

separate, two-thirds community property split. He testified that he based this

belief on the contention that he had exercised options awarded prior to marriage

under a FIFO system, but the record does not contain computations or evidence

explaining his conclusions. The record does show, however, that the Fidelity

Account Number X36–17xxxx contains earned cash dividends. Cash dividends

on separate property are community property.8

3. 401(k) Rollover

App.—Houston [1st Dist.] 2005, pet. denied) (“[D]ividends paid on
investments, whether the investments are separate property or not, are income
under Texas law and are generally community property.”); McClary v.
Thompson, 65 S.W.3d 829, 834 (Tex. App.—Fort Worth 2002, pet. denied);
Perez v. Perez, No. 09-06-00521-CV, 2007 WL 5187895, at *3 (Tex.
App.—Beaumont May 22, 2008, pet. denied) (mem. op.) (“Interest earned on
separate bank accounts is community property.”).
       8
            See Tex. Fam. Code Ann. § 3.002; Fischer-Stoker, 174 S.W.3d at
279.

                                        7
       Gordon testified that he “invested the maximum amount [he] could” into

his 401(k) each pay period at Informix. When he left Informix, he rolled his

401(k) into a Fidelity IRA.    At trial, he claimed that 70% of the fund was

community property and that 30% of the fund was his separate property,

apportioned according to his length of employment before and after marriage.

The record shows that Gordon had worked at Informix about ten years and had

worked there for about two and a half years before their marriage. But the

record contains no computations of how Gordon arrived at these percentages.

Further, the record shows that the Fidelity IRA into which he rolled over his

Informix 401(k) balance has received cash dividends. Again, cash dividends on

separate property are community property. 9

4. American Funds and DWS Scudder Fund

       Kimberly testified that she thought both the American Funds account and

the DWS Scudder account originated from Gordon’s employment at Informix.

Gordon testified that the American Funds account was begun before he was

married and that he had not put any money into it after the marriage.         He

believed that the value at the time of the divorce was all his separate property.

       9
            See Tex. Fam. Code Ann. § 3.002; Fischer-Stoker, 174 S.W.3d at
279.

                                       8
      Gordon testified that he established the DWS Scudder account before the

marriage and put in an additional $500 after the marriage, so of the value at the

time of divorce, he “attributed $2,500 more or less to be [his] separate property

and $500 to be the community’s share.”        Our review of Gordon’s exhibits

shows, however, that both the American Funds account and the DWS Scudder

account contain earned “income dividends,” that is, community property. 10

C. Resolution

      Because evidence in the record supports the trial court’s findings that

Gordon commingled funds and did not provide sufficient tracing evidence to

show exactly how much, if any, of the property in the various accounts was his

separate property, those unchallenged findings are binding. 11     We therefore

conclude that the trial court did not abuse its discretion by upholding the

community presumption. Further, in the interest of justice, to the extent that

Gordon’s global challenge somehow includes a complaint about the findings of

commingling and inadequate tracing, we nevertheless cannot conclude, based

on our review of the law and the record, that the trial court abused its

      10
        See Tex. Fam. Code Ann. § 3.002; Fischer-Stoker, 174 S.W.3d at
279; see also Perez, 2007 WL 5187895, at *3.
      11
       See McGalliard, 722 S.W.2d at 696; Raman Chandler Props., L.C.,
178 S.W.3d at 390.

                                       9
discretion in upholding the community presumption.   We therefore overrule

Gordon’s first issue.

                                   10
III. Division of Property

         In his second issue, Gordon contends that because of the alleged errors

set forth in his first issue, the trial court failed to make a just and right division

of property. Because we overruled Gordon’s first issue, we also overrule this

issue.

IV. Conclusion

         Having overruled both of Gordon’s issues, we affirm the trial court’s

judgment.

                                                     PER CURIAM

PANEL: DAUPHINOT, MCCOY, and MEIER, JJ.

DELIVERED: February 4, 2010

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