Court Opinion

ID: 9414609
Source: CourtListenerOpinion
Date Created: 2023-08-02 06:12:04.460284+00
Date Added: 2024-06-11T17:17:53.281840
License: Public Domain

REVERSE and REMAND and Opinion Filed July 18, 2023

                                  S  In The
                           Court of Appeals
                    Fifth District of Texas at Dallas
                              No. 05-22-00513-CV

                   MARLENE ESTHER BLINK, Appellant
                                V.
                    RUSSELL PETER BLINK, Appellee

              On Appeal from the 302nd Judicial District Court
                           Dallas County, Texas
                   Trial Court Cause No. DF-19-23159

                       MEMORANDUM OPINION
              Before Justices Partida-Kipness, Reichek, and Miskel
                           Opinion by Justice Reichek
      Marlene Esther Blink appeals the portion of the trial court’s final decree of

divorce awarding her former husband, Russell Peter Blink, one million shares of

stock in Exos Aerospace Systems & Technologies, Inc. In a single issue, Marlene

contends the trial court erred in failing to characterize the stock as community

property. Because we agree the stock is community property, we reverse the trial

court’s judgment and remand the case for further proceedings consistent with this

opinion.
                                    Background

      Marlene and Russell were married on December 20, 2006. In February 2015,

Russell began working with Exos and, one year later, he was issued one million

shares of Exos stock. Nothing on the stock certificates indicates the reason for their

issuance. Although Russell stated he entered into an agreement with Exos at the

time the stock was distributed, he could not find a copy of the agreement, and Exos

refused to produce a copy.

      On June 24, 2016, Russell signed an employment contract with Exos that

contained the following relevant provisions:

                    D. Blink IP. Any software, utilities, solutions, designs,
      techniques, methods, methodologies, tools, processes, templates, data
      or other intellectual property used or referenced by Blink in the
      performance of Services that was created or developed prior to the
      performance of any work or services for EXOS prior to Feb 26th 2015,
      when Blink began the performance of work or services for EXOS, and
      any additions, enhancements or modifications thereto (whether or not
      made during the performance of the Services), and all patent, copyright,
      trademark, trade secret and other intellectual property rights related to
      any of the foregoing (collectively, “Blink IP”), shall remain the sole
      and exclusive property of Blink (or its licensor). EXOS shall not obtain,
      whether pursuant to this Agreement, by estoppel, implication or
      otherwise, any license, right, or other interest in or to any Blink IP
      except as otherwise expressly provided below in this paragraph. Blink
      hereby grants to EXOS a paid up, royalty free, non-exclusive, non-
      transferable (except to commonly-controlled affiliates of EXOS) right
      and license to use for its and its affiliates’ own internal business
      purposes in connection with any deliverable or the Services, and not
      otherwise, those portions of the Blink IP that are actually embedded
      into the deliverables furnished to EXOS as part of the Services, if any,
      but only to the extent so incorporated and excluding any third party
      software, hardware, tools or other products that are licensed by EXOS
      or commercially available.

                                         –2–
Exhibit A to the employment contract states that Russel would be paid a salary of

$100,000 per year for his services to Exos. In addition, as compensation for the

“assets, access to ‘Blink IP,’ and inventory” Russell provided, Russell would be paid

a signing fee of $40,000, an additional $47,600 upon the next fund raising event, and

an annual payment of $39,500 for the next four years. Exos also agreed to take over

various debts and liabilities owed by Russell. The contract stated this represented

“a total compensation of over $750,000” for use of Russell’s assets and intellectual

property. The contract makes no reference to the one million shares of Exos stock.

      Russell filed a petition for divorce on December 10, 2019. Marlene filed a

counter-petition on April 13, 2022. The parties agreed on all issues regarding the

division of their property with the exception of the characterization of the one million

shares in Exos stock. Russell contended he received the stock as payment for his

separate intellectual property and, therefore, the stock was also his separate property.

Marlene’s position was that Russell did not have sufficient evidence to overcome

the presumption that the stock was a community asset.

      In support of his assertion that the stock was his separate property, Russell

submitted a letter from Exos CEO John Quinn. Quinn’s letter stated that Exos gave

Russell the stock in exchange for “a paid, royalty free, non-exclusive, non-

transferable right and license” to use Russell’s intellectual property. Quinn testified

the intellectual property referenced in the letter was Russell’s “experience

                                          –3–
developing rocket technologies from the year 2000 until we commenced working

with [him].”

      In contrast, Russell testified his intellectual property constituted “core

technologies” he developed between 2000 and 2005, before he married Marlene.

According to Russell, the intellectual property he created after 2005 was “derivative

of the original” and “nothing really new.” He acknowledged he had no patents,

copyrights, or trademarks for any of the technologies he created.           He also

acknowledged he did not submit any documentation showing what the “core

technologies” were or that they were created before the marriage. Instead, Russell

stated the intellectual property was “in [his] head” and could be found embedded in

the “deliverables” he provided Exos. When asked to identify what intellectual

property of his was imbedded in the deliverables, Russell stated it would be

“virtually impossible” to do so. Russell agreed his employment contract gave Exos

only a license to use the technologies he developed, and he retained full ownership

of all his purported intellectual property.

      Based on this evidence, the trial court concluded the one million shares of

Exos stock were Russell’s separate property because they were granted in exchange

for property he possessed before marriage. Marlene brought this appeal.

                                          –4–
                                      Analysis

      Whether property is separate or community property is determined by facts

that, according to the rules of law, give character to the property. Moroch v. Collins,

174 S.W.3d 849, 855 (Tex. App.—Dallas 2005, pet. denied). All property possessed

by either spouse during or on dissolution of the marriage is presumed to be

community property. TEX. FAM. CODE ANN. § 3.003. The degree of proof necessary

to establish that property is separate property is clear and convincing evidence. Id.

Clear and convincing evidence means that measure of proof that will produce in the

mind of the factfinder a firm belief or conviction as to the truth of the allegations

sought to be established. Id. § 101.007. This standard is not met by testimony that

is contradicted, imprecise, and unsupported. Graves v. Tomlinson, 329 S.W.3d 128,

140 (Tex. App.—Houston [14th Dist.] 2010, pet. denied); In re Marriage of

Santopadre, No. 05-07-0027-CV, 2008 WL 3844517, at *3 (Tex. App.—Dallas

Aug. 19, 2008, no pet.) (mem. op.); Pace v. Pace, 160 S.W.3d 706, 714 (Tex. App.—

Dallas 2005, pet. denied); Rogers v. Rogers, No. 14-00-00077-CV, 2001 WL

1013405, at *3 (Tex. App.—Houston [14th Dist.] Sept. 6, 2001, pet. denied) (mem.

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

community estate. Moroch, 174 S.W.3d. at 856.

      The basis of Russell’s claim that the Exos stock is his separate property is that

the stock could be traced to intellectual property he created and possessed before his

marriage to Marlene. But Russell’s evidence was both vague and unsupported by

                                         –5–
the documentary evidence. His employment contract stated he was given over

$750,000 in monetary compensation for access to his intellectual property. There is

no mention in the contract of Exos stock. Although Exos’s CEO, Quinn, testified

the stock was granted to Russell in exchange for Exos’s ability to use his intellectual

property, he also testified that Russell’s intellectual property was his “experience

developing technologies” up until 2015 when he began working for Exos. The time

period specified by Quinn in which Russell’s intellectual property was developed

includes almost a decade of Russell’s marriage to Marlene.

      Russell conceded at trial that he continued to create intellectual property after

he married Marlene, but dismissed his work after 2005 as “derivative.” Russell had

no patents, copyrights, trademarks, or other documentation, however, to demonstrate

the content of his purported intellectual property, when it was developed, or when

any rights or title to it could have arisen. Indeed, he testified it would be impossible

for him to identify exactly what intellectual property of his Exos used. In short,

Russell’s evidence that he received the shares of Exos stock at issue solely in

exchange for intellectual property he created before his marriage falls far short of

the clear and convincing standard necessary to overcome the presumption that the

shares are community property. See Graves, 329 S.W.3d at 140.

      Furthermore, even if we assume Russell sufficiently demonstrated the Exos

stock was granted in exchange for a right to use intellectual property he created

before his marriage, the stock still cannot be classified as separate property. Revenue

                                          –6–
generated during marriage from intellectual property created before marriage is

community property. Alsenz v. Alsenz, 101 S.W.3d 648, 654 (Tex. App.—Houston

[1st Dist.] 2003, pet. denied). Russell argues this rule is not applicable here because

he exchanged his intellectual property for Exos stock and the proceeds from the sale

of separate property remain separate property. Pace, 160 S.W.3d at 715. This

argument is defeated by Russell’s own evidence which clearly shows he did not sell

his intellectual property to Exos, but only granted Exos a non-exclusive license to

use it.

          Russell’s employment agreement states his intellectual property remains his

“sole and exclusive property.” Russell confirmed this at trial, testifying he retained

full ownership of the intellectual property he allowed Exos to use. Exos’s grant of

stock in exchange for a non-exclusive right to use Russel’s intellectual property is,

therefore, revenue generated by the property and not one asset exchanged for

another. See Alsenz, 101 S.W.3d at 653. Because the revenue was generated during

the marriage, it is community property. Id. at 654.

          Based on the foregoing, we conclude the trial court abused its discretion in

characterizing the one million shares of Exos stock as Russell’s separate property.

                                          –7–
     We reverse the trial court’s judgment and remand the case for a re-division of

the marital estate in accordance with this opinion and the parties’ previous

agreements.

                                         /Amanda L. Reichek/
                                         AMANDA L. REICHEK
                                         JUSTICE

220513F.P05

                                      –8–
                                    S
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                   JUDGMENT

MARLENE ESTHER BLINK,                          On Appeal from the 302nd Judicial
Appellant                                      District Court, Dallas County, Texas
                                               Trial Court Cause No. DF-19-23159.
No. 05-22-00513-CV           V.                Opinion delivered by Justice
                                               Reichek. Justices Partida-Kipness
RUSSELL PETER BLINK, Appellee                  and Miskel participating.

       In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for a re-
division of the marital estate in accordance with this opinion and the parties’
previous agreements.
       It is ORDERED that appellant MARLENE ESTHER BLINK recover her
costs of this appeal from appellee RUSSELL PETER BLINK.

Judgment entered July 18, 2023

                                         –9–