Court Opinion

ID: 4062339
Source: CourtListenerOpinion
Date Created: 2016-09-29 20:26:53.09833+00
Date Added: 2024-06-11T14:01:01.552188
License: Public Domain

ACCEPTED
                                                                    03-14-00479-CV
                                                                           4670942
                                                          THIRD COURT OF APPEALS
                                                                     AUSTIN, TEXAS
                                                              3/27/2015 11:39:36 AM
                                                                   JEFFREY D. KYLE
                                                                             CLERK
        Case No. 03-14-00479-CV

                                                   FILED IN
                                            3rd COURT OF APPEALS
                                                 AUSTIN, TEXAS
                                            3/27/2015 11:39:36 AM
 IN THE THIRD COURT OF APPEALS                  JEFFREY D. KYLE
                                                     Clerk

KIM BLACKSTON CLOGSTON, Appellant

                    vs.

   CURTIS P. CLOGSTON, Appellee

     Appeal from Cause No. 05-D-540
   From the 421st Judicial District Court
       ofCaldwell County, Texas

      APPELLANT'S BRIEF
            AND
  REQUESTFORORALARGUMENT

                              David K. Sergi
                              Texas Bar No. 18036000
                              DAVID K. SERGI &
                              ASSOCIATES
                              329 S Guadalupe
                              San Marcos, TX 78666
                              Tel: 512.392.5010
                              Fax: 512.392.5042
                              E-Mail: david@sergilaw.com
                              Attorney for Appellant

                     1
                     IDENTITY OF PARTIES AND COUNSEL

APPELLANT
Kim Blackston Clogston

APPELLEE
Curtis P. Clogston

PETITIONER'S COUNSEL AT TRIAL
David K. Sergi
State Bar No. 18036000
P.O. Box 887, San Marcos, Texas 78666
Tel: (512)-392-50 10
Fax: (512) 392-5042
E-Mail: david@sergilaw.com

RESPONDENT'S ATTORNEY AT TRIAL
Henry Newton Bell, III
State Bar No. 02095000
6000 N. Lamar Blvd, Ste. 210
Austin, Texas 78752
Tel: (512) 458-2233
Fax: (512) 458-2354

APPELLANT'S ATTORNEY ON APPEAL
David K. Sergi
State Bar No. 18036000
P.O. Box 887, San Marcos, Texas 78666
Tel: (512)-392-5010
Fax: (512) 392-5042
david@sergilaw.com

APPELLEE'S ATTORNEY ON APPEAL
Henry Newton Bell, III
State Bar No. 02095000
6000 N. Lamar Blvd, Ste. 210
Austin, Texas 78752
Tel: (512) 458-2233
Fax: (512) 458-2354

                                        2
                                  TABLE OF CONTENTS

 Identity of Parties ..............................................................................2

 Table of Contents ................·.............................................................. 3

Index of Authorities .............................................................................. 4

Statement of the Case ........................................................................ 5

Statement Regarding Oral Arguments.            00 0 0 . 0 0 . 0 0 . 0 0 . 0 0 • • • • 0 0 • • • • 0 0 • • 0 0 . . . . . . 0 0 • • 0 0 0 0 . 0 0 . . . .   6

Issues Presented .................................................................................. 6

Statement of the Facts ........................................................................ 7

Summary of the Argument .................................................................. 8

Stan.dard of Review .......................................................................... 9

Argument and Authorities .................................................................... 9

       Point of Error Number One

       Whether the Trial Court Erred in Dismissing Petitioner's Motion to Enforce

       based on Respondent's assertion the Motion was barred by limitations of

       TEX.FAMCODE ANN Sec. 9.003(a) or Sec. 9.003 (b) ........................ .. oo.9

Conclusion .................................................................................... 12

Prayer.......................................................................................... 12

Certificate of Service ........................................................................ 13

Certificate of Compliance .................................................................. 14

APPENDIX:         1. International Accounting Standards Board (IASB) Number 32

                                                  3
                               INDEX OF AUTHORITIES

Cases

Ford v. Ford, 2000 WL 1262469 (not reported in S.W.3d (2000) .................... 11

Statutes

Texas Family Code Section 9.003 ................................................. 5,8,10,12

Texas Family Code Sec. 9.003(a) ............................................... 6,8,9,11,12

Texas Family Code Sec. 9.003(b) .............................................. ... 6, 8,9,12

Texas Tax Code Ann. Section 151.009 ................................................... 10

Black's Law Dictionary (lOth ed.2014) .................... . .............................. 10

                                              4
                         STATEMENT OF THE CASE

      This is a direct appeal from civil cause number 05-D-540 in the 42lst

Judicial District of Caldwell County. The Appellant, Kim Blackston Clogston's

Motion to Enforce was denied based on Appellee's argument that Appellant's

Motion was to recover tangible property past the two-year statute of limitations.

Appellant denies that her motion was barred by limitations on the grounds that the

property sought to be enforced was intangible property and not subject to the two-

year statute of limitations imposed by Texas Family Code Section 9.003.

                                         5
                 STATEMENT REGARDING ORAL ARGUMENT

      Appellant requests oral argument in this case because he believes it will aid

the Court in making its detennination as to the issues presented herein.

                                    Issues Presented

      Point of Error Number One
      Whether the Trial Court Erred in Dismissing Petitioner's Motion to Enforce

      based on Respondent's assertion the Motion was barred by limitations of

      TEX.FAMCODE ANN Sec. 9.003(a) or Sec. 9.003 (b).

                                         6
                             STATEMENT OF FACTS

        The Appellant and Appellee entered into an Agreed Final Decree of Divorce

on October 18, 2006. 1 Appellant was awarded a website known as

www.Qfg.com. 2 Appellant was further awarded the business known as Physicians

for Quality (PFQ) and the corporation entity known as PFQ, Inc. 3 Per the Agreed

Final Decree of Divorce, the parties were both entitled to utilize any unused
                                                                           4
domain name variation or unused e-mail address associated with the site.

Appellee is listed as the administrator to the domain ofpfq.com. 5

        Appellant attempted to make changes to the website www.pfg.com, but was

denied the ability based on the fact that Appellee is the administrator and has

denied Appellant the ability to make the necessary changes. Appeiiant then filed a

Motion for Enforcement of Property Division and Application for Temporary

Restraining Order, based W-13 Property to Wife regarding the website known as

www.p_fg.com wherein Appellee failed to execute all relevant documents necessary

to transfer the World Wide Web domain www.Rfg.com to Petitioner at a date and

place certain. 6

1 R.R Vol. I at 152-203
2 R.R. Vol. I at 176:13-14
3 R.R Vol. I at 176: 5-12
4 RR Vol. I at 176:13-14

s R.R Vol. I at 212:12-17
6 RR Vol. I at 212:25-27

                                         7
          Appellee argues that Appellant was not seeking an action to enforce, but

    rather requesting a substantial change from the decree originally entered in 2006. 7

Appellee further argues that Appellant's motion is untimely based on Texas Family

Code Section 9.003(a) regarding enforcement of tangible property and Tex. Fam.

Code Section 9.003(b) regarding the enforcement of division of future property not

in existence at the time of the original decree. 8 Appellant denies this argument, as

Appellant is seeking the right to control the intangible property that was awarded

to her in 2006. Further, Appellant is not seeking the enforcement of tangible

property, rather, she is seeking the enforcement of intangible property. Therefore,

the trial court erred in dismissing Appellant's motion based on a flawed argument

by Appellee.

                               Summary of the Argument

         The trial court abused its discretion in determining that the Appellant's

motion was barred by Section 9.003       of the Texas Family Code because the website
awarded to Appellant is not "tangible personal property" and Appellant was

unaware of her inability to make changes to the website until2012 when Appellee

refused to remove himself as Administrator.

7   R.R Vol. I at 242:11-24
a R.R Vol. I at 243-244

                                             8
                                     Standard of Review

       As to the first point of error, review by the appellate courts on an adverse

ruling on a de novo basis.

       On appeal, the appellate courts do not engage in their own factual review,

but rather decide whether the trial court's conclusions were supported by the

record. If the trial court's findings are supported by the record, appellate courts are

not at liberty to disturb them, and on review, address only the question of whether

the trial court improperly applied the law to the facts.

       When the posture of a case does not present issues of pure fact, or of mixed

questions of law and fact that tum on credibility or dem~anor, and presents only

questions of the validity of the trial court's legal rulings (as in the instant case), an

appellate court's review is de novo.

                       ARGUMENT AND AUTHORITIES

      Point of Error Number One
      Whether the Trial Court Erred in Dismissing Petitioner's Motion to Enforce

      based on Respondent's assertion the Motion was barred by limitations of

      TEX.FAM CODE ANN Sec. 9. 003 (a) or Sec. 9. 003 (b).

      I. The website awarded to Appellant is not "tangible personal property"

      This appeals raises a fundamental question whose answer is obvious, is a

website tangible personal property or not. The answer is that it is intangible as one

cannot touch, feel or hold a website.

                                            9
          This case arises from an Agreed Final Decree of Divorce in the case below.

    The Appellant was awarded "W-13. The website known as www.pfq.com, except

    that both parties shall be entitled to utilize any unused domain name variation or

    unused e-mail address associated with the site." 9 Neither party has attempted to

    utilize an unused domain name variation or unused e-mail address with the site

    since the decree was granted. However, Appellant's attempt to control the website

www.P-fq.com that was awarded to her has been denied by Appellee who remains

administrator of the domain, despite the award of that intangible property to the

Appellant.

          The trial court abused its discretion in determining that the Appellant's

motion was barred by Section 9.003 of the Texas Family Code because the website

awarded to Appellant is not "tangible personal property" and Appellant was

unaware of her inability to make changes to the website until 2013 when Appellee

refused to remove himself as Administrator.

           "Tangible personal property" is not defined in the Family Code. The Tax

Code defines it as "personal property that can be seen, weighed, measured, felt, or

touched or that is perceptible to the senses in any other manner... " TEX.TAX

CODE ANN. Section 151.009. Further, Black's Law Dictionary (lOth ed.2014)

defines "tangible property" as "Corporeal personal property of any kind; personal

9   R.R Vol. I at 176:13-14

                                          10
 property that can be seen, weighed, measured, felt, touched, or in any other way

 perceived by the senses, examples being furniture, cooking utensils, and books" "

 and defines "intangible property" as "Property that lacks a physical existence. •

Examples include stock options and business goodwill." In addition even

accountants agree that a web site is in tangible. See Standard Interpretations

Committee (SIC), and were subsequently endorsed by the International Accounting

Standards Board (IASB) Number 32 addressing the proper tax treatment of web

site costs.

          In Ford v. Ford, Appellant was awarded cash from a specific account in the

decree but did not award Appellant any interest in the account itself. 2000 WL
1262469, (Not Reported in S.W.3d (2000)).             However, cash is not tangible

personal property, but rather, intangible property, and therefore the award was not

subject to the two-year limitations period in Section 9.003(a). !d. Just like cash,

an award of a website is not tangible property and therefore not subject to the two-

year limitations period in Section 9.003(a).

          Appellant acknowledges that the petition for Enforcement was filed after the

second anniversary ofthe date the decree was signed. 10 However, the award of the

website to Appellant was not tangible property.          Because the website is not

tangible personal property, but rather, intangible property, the enforcement of the

10   R.R. Vol. I at 211-214

                                           11
property was not subject to the two year limitations period in section 9.003(a) or

(b).   As a result, given that a website simply cannot be tangible property as

contemplated by section 9.003 prong (a) or (b) simply do not apply and therefore

this must be reversed and remanded for a hearing on appellant's motion to enforce.

                                      CONCLUSION

       In light of the aforementioned discussion and analysis, it is clear that

reversible error occurred and that reversal must be granted and the case rendered,

or, the alternative that the case be remanded for a new trial.

                                 PRAYER FOR RELIEF

       Appellant request that this Honorable Court grant a reversal and rendering of

the verdict in Appellants favor as well as reversal and rendering of attorneys' fees

awarded to Appellee, or in the alternative that the case be remanded.

       Appellant further requests any other relief to which he may be legally

entitled.

                                        Respectfully submitted,

                                        SERGI AND ASSOCIATES P.C.
                                        329 South Guadalupe Street
                                        San Marcos, Texas 78666
                                        Tel: 512 392 5010
                                        Fax: 512 392 5042
                                        Email: David@Sergilaw.com

                                          12
                                       By: Is/ David K. Sergi
                                         David K. Sergi
                                          State Bar No. 18036000
                                         E-Mail: david~gilaw.com
                                         Attorney for Kim Blackston Clogston

                         CERTIFICATE OF SERVICE

      I hereby certify that on the 27th day ofMarch, 2015, a true and correct copy

of the foregoing brief was served via electronic filing on Henry Newton Bell, III.

                                              Is/ David K. Sergi
                                                 David K. Sergi

                                        13
                CERTIFICATE OF COMPLIANCE

I.   This brief complies with the type-volume limitation of the Texas
     Rules of Appellate Procedure 9.4(i)(2)(A) because:

         1.   This brief contains 1794 words, excluding the parts of
              the brief exempted by TEX.R.AP.P. 9.4(1)(1)

2.   This brief complies with the typeface requirements of
     TEX.R.APP.P. 9.4(e) because:

         i. This brief has been prepared in a proportionally spaced
            typeface using Microsoft Work in 14 pt. Times New Roman.

                             14
                                                                                                                                                                             .             ,.

 Deloitte.                                                                                                                                                              lAS PItt\
 SIC·32 - lntang;ble Assets - Web S1te Costs

   Quick Miele Unlcl ..

 References
         lAS 3< Intangible Assets

 History
 Date            Development                                            Comments
 9 Juli 2001   SIC·D321ntangible Assets - ~ Site Costs publishedComment de:~d:lne 10 September 2001
 25 Mll :h 200251C·32 Intangible Assets - Web St/e Costs Issued Effective 25 Matt:h 2002
Summary of SIC-32
SIC-32 concludes that a website developed by an entity using lntemal expenditure, whether for internal or external access, is an internally generated intangible asset that is subject to
the requirements oi iAS 36 /ntangib/e Assets.

SIC-32 identifies the following stages of website development.

         Planning
        Appl~tion and infrastructure development

        Grnphical design development
        Content development
        Operuting

SIC-32 addresses the appropriate accounting treatment for internal expenditure on each of those stages of development and operation:
 a. A website arising from development should be recognised as an intangible asset if, and only If, in addition to complying with the general requirements described in lAS 38.21 for
    recognition and Initial measurement , an enterprise can satisfy the requirements in lAS 36.57. In panicular, an enterprise may be able to satisfy the requirement to demonstmte
    how its website will generute probable future economic benefits under lAS 36.57(d) when, for ex:unple, the website is capable ol generating revenues, including direct revenues
    from enabling orders to be pl:~ced. An enterprise is not able to demonstrate how a website developed solely or prirrorily for promoting and advertising its own products and
    services will generate probable future economic benefits, and consequently all expenditure on developing such a website should be recognised as an expense when Incurred.
b. Any internal expenditure on the development and opera~on of an enterprise's own website should be accounted for in accordance with lAS 38. The nature or each activity for
    which expenditure is incurred {eg training employees and maintaining the website) and the website's stage of development or post-development should be EMlluated to
    determine the appropriate accounting treatment. For example:
            Planning. The planning stage is simil:~r in nature to the reseatt:h phase In lAS 38.54·.56. Expenditure Incurred in this stage should be rocognised as an expense when it Is
            incurred.
            Application ond Infrastructure development, graphical design and content development stages. To the extent that content is developed for purposes other than to
            advertise and promote an enterprise's own products and selVices, are similar in nature to the development phase in lAS 36.57 ·.64 . Expenditure incurred in these stages
            should be Included in the cost of a website recognised as an intangible asset in accordance with this Interpretation when the expenditure can be directly attributed, or
            allocated on a reasonable and consistent basis, to preparing the website for its intended use. For example. expenditure on purchasing or creating content {other than
            content that advenises and promotes an enterprise's own products and services) specifically for a website, or expenditure to enable use ol the content (such as a fee for
            acquiring a licence to reproduce) on the website, should be included in the cost of development when this condition is met. However, in accordance with lAS 38.71, ex·
            penditure on an Intangible item that was initially recognised as an expense in previous financial statements should not be recognised as part of the cost of an intangible
           asset at a later date (for instance, when the costs of a copyright have been fully amortised, and the content is subsequently provided on a website).
           Content development. Expenditure incurred in the content development stage, to the extent that content is developed to advertise and promote an enterprise's own
           products and services (such as digital photographs of products), should be recognised as an expense when incurred in accordance with lAS 38 S9(c). For example, when
           accounting for expernllture on professional services for taking digital photographs of an enterprise's own products and for enhancing their display, expenditure should be
           recognised as an expense as the professional services are received during the process, not when the digital photographs are displayed on the website.
           Operating. The operating stage begins once development of a website is complete. Expenditure Incurred in this stage should be recognised as an expense when It is
                                                          e.
           incurred unless it meets the criteria in lAS 38.1
:. A website th:lt Is recognised as an intangible asset under SIC·32 should be measured after Initial recognition by applying the requirements of lAS 38.72·.87. The best estimate of
   a website's useful life should be shon.

f/www.lasplus.com/en/standards/slc/slc·32                                                                                                                                  Page 1 of 2
'/www.Jasplus.com/en/standaroslsfc/slc-32   Paga2 of2