Court Opinion

ID: 2852616
Source: CourtListenerOpinion
Date Created: 2015-09-04 16:40:39.512475+00
Date Added: 2024-06-11T12:46:03.232075
License: Public Domain

COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                             NO. 02-08-031-CV

BRADLEY S. MURRAY                                                  APPELLANT

                                      V.

KAREN K. MURRAY                                                     APPELLEE

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

         FROM THE 16TH DISTRICT COURT OF DENTON COUNTY

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

                                 OPINION

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

                               I. Introduction

      In two issues, Appellant Bradley S. Murray (“Brad”) challenges the trial

court’s order clarifying the 2003 decree of divorce from his ex-wife, Karen K.

Murray (“Karen”). We affirm the trial court’s order as modified.
                        II. Factual and Procedural History

          On August 4, 2003, the trial court signed an agreed decree of divorce

ending the marriage of Brad and Karen. Post-divorce litigation began in 2007.

We discuss only the details of the 2003 and 2007 proceedings that are

necessary to the disposition of this appeal.

A. Background Facts

      Brad is an independent broker for Ameriplan. Ameriplan is a multiple-level

marketing company that provides discounted rates on health services. As an

independent broker, Brad sells monthly memberships in Ameriplan’s discounted

health plans and recruits other brokers to do the same. The members and

brokers recruited by Brad, as well as members and brokers recruited by them,

and so on, are Brad’s “downline.”      At the time of the divorce, there were

thousands of members and brokers in Brad’s downline. His gross income was

approximately $27,000 per month.1

      1
       … Unfortunately, the exhibits used during trial, detailing exactly how an
independent broker with Ameriplan earns commissions, were destroyed by the
county records management division. It is our understanding, based on the
record and the briefs, that an independent broker’s commission consists of a
percentage of the income generated by the brokers he recruits in addition to a
percentage of the income that the brokers in his downline receive from the
various levels of their downlines.

                                        2
B. Divorce Proceedings

      The sole issue before the trial court during the divorce proceedings was

the division of the residual income generated by the downline that existed as

of the date of divorce, August 4, 2003. During trial, Karen introduced evidence

that she and Brad had jointly built the business and that the downline was the

product of both her and Brad’s contributions to the business. Karen argued that

the downline, as of the date of divorce, should be treated as a book of business

and therefore, the residual income generated by that downline should be divided

monthly based on the agreed upon 60/40 split.2 Brad, however, urged the trial

court to value the business and to allow him the opportunity to buy Karen out;

or, in the alternative, to sell the business and split the proceeds 60/40. The

trial court ruled in favor of Karen and signed an agreed decree of divorce that

had been proposed by Brad’s counsel. Neither party appealed the decree. The

divorce decree provides in pertinent part:

      The Court finds that Bradley S. Murray is an independent contractor
      for Ameriplan USA and therefore entitled to receive residual income
      based on business generated prior to August 4, 2003. IT IS
      ORDERED AND DECREED that Bradley S. Murray is awarded forty
      percent (40%) of said residual income and Karen K. Murray is
      awarded sixty (60%) of said residual income. . . . IT IS ORDERED

      2
       … Brad and Karen agreed before trial to a 60/40 split of the marital
assets and liabilities, with sixty percent going to Karen and forty percent to
Brad.

                                       3
      AND DECREED that Bradley S. Murray will issue to Karen K. Murray
      a check equal to Sixty percent of the monthly Residual Income
      based upon the book of business as of August 4, 2003.

C. Clarification Proceedings

      After the divorce, the amount Karen received monthly began to steadily

decline.   Consequently, in July 2007, she filed a petition for enforcement

alleging that Brad had violated the terms of the decree or, in the alternative,

that the decree was ambiguous and required clarification. The trial court held

two hearings on the matter, found that there was an ambiguity, and entered a

clarifying order.

      In the order, the trial court recognized that “[a] ‘book of business’ is an

identified group of persons or entities who are brokers in the AmeriPlan USA

business, and all of the commissions (current and future) earned by the brokers

in that group.” The clarification also defined “residual income” as:

      [T]he stream of continuing payments that are earned by Brad
      and/or Karen from the commissions (current and future) earned by
      the brokers within a book of business. Residual income arises from
      all sources of income relating to or derived from an identified book
      of business, including commissions earned by the brokers within
      that identified book of business from any source whatsoever.

      The order then divided Brad’s sources of commissions into three

categories:

                                       4
      [Group A: This] category represents the specific persons or entities
      that are identified as the base and down-line brokers of Brad and
      Karen existing on the date of August 4, 2003.
      [Group B: This] category represents the new persons or entities
      that Brad alone has developed as brokers after the date of August
      4, 2003.

      [Group C: This] category represents those new persons or entities
      that were developed as brokers by the brokers within the Group A
      category after the date of August 4, 2003.

      Finally, the order awarded Karen sixty percent of the residual income

earned as a result of the income and commissions that may be payable to, or

received by, the brokers within Group A from any source whatsoever, from and

after the date of August 4, 2003; however, the order also stated that Karen

was not entitled to receive a share of the residual income earned as a result of

Group B or C’s income.

      Subsequently, Brad filed a request for findings of fact and conclusions of

law in addition to a motion for new trial. When the court did not file findings

or conclusions, Brad filed a notice of past due findings of fact and conclusions

of law. The trial court denied Brad’s motion for a new trial and ultimately held

that findings of fact and conclusions of law were not appropriate. This appeal

followed.

                           III. Standard of Review

                                       5
      We review the trial court’s ruling on a motion for enforcement or

clarification of a divorce decree under an abuse of discretion standard. In re

Marriage of McDonald, 118 S.W.3d 829, 832 (Tex. App—Texarkana 2003,

pet. denied). The trial court abuses its discretion when it (1) acts unreasonably,

arbitrarily, or without reference to any guiding rules or principles or (2)

erroneously exercises its power by making a choice outside the range of

choices permitted the court by law. Id. When, as here, the trial court makes

no separate findings of fact or conclusions of law, we draw every reasonable

inference supported by the record in favor of the trial court’s judgment.

Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). We must then affirm

the judgment of the trial court on any legal theory that finds support in the

evidence.   In re W.E.R., 669 S.W.2d 716, 717 (Tex. 1984).              We review

questions of law, including implied legal conclusions, de novo. See State v.

Heal, 917 S.W.2d 6, 9 (Tex. 1996).

   IV. Trial Court’s Duty to File Findings of Fact and Conclusions of Law

      In his first issue, Brad asserts that the trial court erred by failing to file

findings of fact and conclusions of law with respect to the clarification order.

Specifically, he argues that the trial court should have filed findings of fact and

conclusions of law because: (1) filing is required by statute, (2) the trial court

relied upon evidence presented at trial to make the findings contained in the

                                         6
order, and (3) findings and conclusions would aid the parties and this court.

We disagree.

A. Applicable Law

      Under rule 296, upon proper request, the trial court has a mandatory duty

to file findings of fact and conclusions of law. Tex. R. Civ. P. 296; Tenery v.

Tenery, 932 S.W.2d 29, 30 (Tex. 1996); Cherne Indus., Inc. v. Magallanes,

763 S.W.2d 768, 772 (Tex. 1989). The purpose of rule 296 is to give a party

a right to findings and conclusions finally adjudicated after a conventional trial

on the merits before the court. IKB Indus., Ltd. v. Pro-Line Corp., 938 S.W.2d
440, 442 (Tex. 1997). However, findings and conclusions are not required in

every case.    See id. (explaining that findings and conclusions are often

unnecessary and requiring them in every case would unduly burden the trial

courts). In fact, we previously held that a trial court’s duty to file findings of

fact and conclusions of law does not extend to post-judgment hearings.

Johnson v. J.W. Constr. Co., 717 S.W.2d 464, 468 (Tex. App.—Fort Worth

1986, no writ) (reasoning that because a post-judgment hearing is not a trial,

and because rule 296 specifically states that findings of fact and conclusions

of law are mandatory in “any case tried in the district or county court without

a jury,” rule 296 is inapplicable to post-judgment hearings).

                                        7
B. Analysis

      Here, Karen filed a petition for enforcement and a motion to clarify. After

holding two hearings on the matter, the trial court found that the original decree

was not specific enough to be enforceable by contempt and entered a clarifying

order. See Gainous v. Gainous, 219 S.W.3d 97, 108 (Tex. App.—Houston [1st

Dist.] 2006, pet. denied) (holding that under section 9.008 of the Texas Family

Code, a court that renders a divorce decree retains limited, post-judgment

jurisdiction).   Consequently, because the hearings in this case were post-

judgment hearings, and because a trial court’s duty to make findings of fact and

conclusions of law does not extend to post-judgment hearings, we hold that the

trial court did not abuse its discretion by denying Brad’s request for findings of

fact and conclusions of law. See Johnson, 717 S.W.2d at 468. Accordingly,

we overrule Brad’s first issue.

            V. Trial Court’s Authority to Clarify the Divorce Decree

      In his second issue, Brad contends that the trial court lacked authority to

enter the clarification order because the decree was not ambiguous. In the

alternative, Brad argues that the trial court erred by entering the clarifying order

and by awarding Brad’s post-divorce income to Karen. We agree in part.

A. Applicable Law

                                         8
      Generally, a court that renders a divorce decree retains continuing

subject-matter jurisdiction to clarify and to enforce the decree’s property

division. Tex. Fam. Code Ann. §§ 9.002, 9.008 (Vernon 2006). Specifically,

the court has continuing jurisdiction to “render further orders to enforce the

division of property made in the decree of divorce . . . and to assist in the

implementation of or to clarify the prior order.” Id. § 9.006(a).

      However, there are limitations on the enforcement and clarification

powers of the trial court that rendered the divorce decree. For example, a trial

court may not “amend, modify, alter, or change the division of property made

or approved in the decree of divorce or annulment.” Tex. Fam. Code Ann. §

9.007(a).      Thus, clarification orders cannot be used to make a substantive

change in a divorce decree after it becomes final even if it contains substantive

legal error.    See Shanks v. Treadway, 110 S.W.3d 444, 449 (Tex. 2003)

(declaring that party’s “remedy for a substantive error of law by the trial court

was by direct appeal, and he cannot now collaterally attack the judgment”).

More simply put, res judicata applies to the property division in a final divorce

decree, just as it does to any other final judgment, barring subsequent collateral

attack even if the divorce decree improperly divided the property. Baxter v.

Ruddle, 794 S.W.2d 761, 762 (Tex. 1990); Cook v. Cameron, 733 S.W .2d

137, 140 (Tex. 1987).

                                        9
      A subsequent order may, however, clarify a decree to correct an

ambiguity so that the parties to that decree are able to comply with its terms.

See Tex. Fam. Code Ann. §§ 9.008(b) (declaring that the court may enter a

“clarifying order” to enforce compliance with an insufficiently specific decree),

9.006(a), (b); Shanks, 110 S.W.3d at 447.            To determine whether a

subsequent order clarifies or modifies a decree, “we must interpret the decree

to determine not what the trial court should have done but, if possible, what

the trial court actually did.” Shanks, 110 S.W.3d at 447.

      Agreed judgments are interpreted in accordance with contract law.

McKnight v. Trogdon-McKnight, 132 S.W.3d 126, 130 (Tex. App.—Houston

[14th Dist.] 2004, no pet.). We construe divorce decrees, like judgments, as

a whole to harmonize and give effect to the entire decree.         Shanks, 110
S.W.3d at 447.     If, when read as a whole, the divorce decree’s terms are

unambiguous, we must effectuate the order in light of the actual language

used. Id. On the other hand, if the divorce decree’s terms are ambiguous, that

is, subject to more than one reasonable interpretation, we must review the

record along with the decree to aid in interpreting the judgment.             Id.

Furthermore, if the decree is ambiguous, we adopt the construction that

correctly applies the law. Id. Whether a divorce decree is ambiguous is a

question of law subject to de novo review. Id.

                                       10
B. Analysis

      We must first determine whether the divorce decree’s award of Karen’s

share of the residual income is reasonably susceptible to more than one

meaning. Shanks, 110 S.W.3d at 447.

      The decree awards Karen sixty percent of Brad’s residual income based

(1) “on business generated prior to August 4, 2003” and (2) “upon the book of

business as of August 4, 2003.” Brad, argues that the decree is unambiguous

because “business generated” and “book of business” can only mean

“payments made.”

      However, contrary to Brad’s assertion, the trial court did not limit the

award in the divorce decree to “commissions on payments made prior to

August 4, 2003,” but instead, used broader terms such as “business

generated” and “book of business.” Therefore, based on the decree’s failure

to ascribe meanings to the terms “business generated” and “book of business”

regarding residual income, we find that the decree is subject to more than one

reasonable interpretation and thus, is ambiguous. Accordingly, we hold that the

trial court correctly exercised its authority to enter a clarifying order.   See

Guerrero v. Guerra, 165 S.W.3d 778, 784 (Tex. App.—San Antonio 2005, no

pet.) (holding that the trial court properly entered a clarifying order where

provision of property settlement in divorce decree failed to define “after-

                                      11
acquired property,” making provision susceptible to two meanings and thus,

ambiguous).

      Having determined that the decree’s valuation of Karen’s share of the

residual income is ambiguous, we must next consider whether the trial court’s

interpretation of the provision is supported by the record and in compliance with

the law. Shanks, 110 S.W.3d at 447.

      During the clarification hearings, the trial court focused on two particular

phrases in the original divorce decree that, depending on the parties’

interpretations, would result in an increase or decrease in the amount of money

Karen received monthly. The phrases at issue were: “residual income based on

business generated prior to August 4, 2003“ and “[r]esidual [i]ncome based

upon the book of business as of August 4, 2003.”

      At the hearings, Brad argued that the trial court intended for the decree

to provide that Karen is to receive sixty percent of the “business generated” by

the downline as of the date of divorce.      More simply put, not only was a

snapshot taken of the downline but also of the income generated by that

downline; therefore, neither the downline nor the income will ever increase.

Consequently, the amount Karen receives on a monthly basis, as a percentage

of the residual income, also will never increase. Brad supported his argument

                                       12
by pointing out that any income outside the snapshot is a mere expectancy and

therefore would be his separate property.

      Karen, on the other hand, argued that the trial court intended for her to

receive future income generated from the “book of business” as of August 4,

2003. In other words, the phrase “book of business” referred to the downline

that existed as of August 4, 2003 and not to the actual income generated by

that downline; therefore, although the number of members and brokers in the

downline will never increase, the income generated by that existing downline

can and, as a result, the amount Karen receives as her share of the residual

income will also increase.

      Karen supported her argument by pointing out that at the close of trial in

2003, the trial court noted the lack of legal authority presented on the issue,

but went on to state that it would take into consideration Alsenz, a case

presented by Karen’s counsel during trial. Alsenz v. Alsenz, 101 S.W.3d 648

(Tex. App.—Houston [1st Dist.] 2003, pet. denied). 3 Karen asserted that the

      3
       … In Alsenz, the issue was whether royalties during the marriage on a
patent owned by the husband prior to the marriage were community or separate
property. Id. The Alsenz court stated that “the income stream generated
during the marriage from [the husband’s] inventions patented before the
marriage was a ‘revenue’ and a ‘fruit’ of his separate property; therefore, we
hold that it was community property.” Id.

                                      13
trial court relied on this case in rendering its ruling awarding her sixty percent

of the residual income.

      After hearing arguments from both sides, the trial court agreed with

Karen’s interpretation and entered an order to clarify the ambiguity.          As

previously mentioned, the clarification order (1) defined “book of business” and

“residual income,” (2) divided Brad’s sources of commissions into three

categories, and (3) awarded Karen sixty percent of the residual income earned

within the Group A category, including any growth in the income resulting from

brokers and members being added after the divorce.

      On appeal, Brad argues that the trial court erred in adopting Karen’s

interpretation of the decree because it does not comply with the law in that it

awards Karen a portion of his future earnings which are not community

property. Karen however, responds that there was sufficient evidence from

which the trial court could rule that the “residual income,” including any

growth, was community property.

      To support his argument, Brad directs our attention to two cases

Cunningham and Loaiza. Loaiza v. Loaiza, 130 S.W.3d 894 (Tex. App.—Fort

Worth 2004, no pet.); Cunningham v. Cunningham, 183 S.W.2d 985 (Tex.

App.—Dallas 1944, no writ). In Cunningham, the appellate court held that the

wife was not entitled to the husband’s future commissions on insurance policies

                                       14
because the right to receive commissions was contingent on the customers

renewing their policies and the husband’s continued employment by the

agency.   Cunningham, 183 S.W.2d at 985.         Brad argues that the facts in

Cunningham are analogous to the facts in this case because any future

commissions he earns are contingent upon the members and brokers within his

downline paying their monthly dues and on him remaining an active broker for

Ameriplan.

      In Loaiza, a major league pitcher signed a lucrative contract during his

marriage that required him to perform services after the marriage ended.

Loaiza, 130 S.W.3d at 906–07. This court held that despite the fact that the

contract was signed during marriage, the income was not earned until the

services were performed post-divorce. Id. at 909–10. Brad claims that Loaiza

is also analogous to this case because he works on contract with Ameriplan and

is required to sell at least one membership per month to maintain his right to

commissions.

      In response to Brad’s argument, Karen distinguishes the facts in this case

from those in Cunningham and directs our attention to cases involving stock

options and employment benefits. Karen emphasizes that Texas courts have

regularly held that stock options earned but not exercisable during the course

of the marriage are community property, even if contingent upon future

                                      15
employment. See Boyd v. Boyd, 67 S.W.3d 398, 410 (Tex. App.—Fort Worth

2002, no pet.) (recognizing that the ability to sell the options was limited);

Charriere v. Charriere, 7 S.W.3d 217, 220 (Tex. App.—Dallas 1999, no pet.)

(holding that the community nature was not affected by the fact that

termination of the relationship with the employer would end the right to

exercise the option); Kline v. Kline, 17 S.W.3d 445, 446 (Tex. App.—Houston

[1st Dist.] 2000, pet. denied) (holding that the stock options were community

property even if not vested).      Furthermore, under established Texas law,

unaccrued and unmatured retirement benefits, earned wholly or partially during

marriage, are community property subject to division. See Shanks, 110 S.W.3d

at 446; Busby v. Busby, 457 S.W.2d 551, 553 (Tex. 1970); Boyd, 67 S.W.3d

at 407.    Karen argues that the income stream at issue here is not a mere

expectancy but involves significant rights 4 that existed and could be exercised

during the course of the marriage, thereby creating a community interest

analogous to stock options or employment benefits.

       Interpreting the decree as Karen suggests, however, is contrary to Texas

law.   It is well settled that a person’s earnings after divorce are separate

       4
       … These rights include: (1) the right to sell, (2) the right to give it to
another, (3) the right to transfer by will, (3) the right to use as collateral, and
(4) the right to income after qualified retirement.

                                        16
property and therefore not subject to division. See Von Hohn v. Von Hohn,

260 S.W.3d 631, 641 (Tex. App.—Tyler 2008, no pet.); Loazia, 130 S.W.3d

at 908; Smith v. Smith, 836 S.W.2d 688, 692 (Tex. App.—Houston [1st Dist.]

1992, no writ). Karen asks us to interpret the decree in a way that would grant

her a percentage of Brad’s future income. We cannot.

      Although we agree with Karen’s statement that the income stream earned

during marriage is not a mere expectancy and, therefore, is community property

subject to division, we disagree with her conclusion that the same can be said

of the income stream’s growth after divorce. See Smith, 836 S.W.2d at 692

(holding that a spouse is only entitled to a division of property that the

community owns at the time of divorce).         Whereas, the monthly income

received from the downline in existence at the time of divorce is already earned,

the income resulting from new members and brokers being added after divorce

is not. See Eliz v. Eliz, No. 05-01-00085-CV, 2002 WL 1895090, at 3 (Tex.

App.—Dallas Aug. 19, 2002, no pet.) (not designated for publication) (holding

that evidence of husband’s estimated income after divorce could not be used

to determine value of community property).

      To clarify, the members and brokers in the downline choose whether or

not to pay their monthly dues, renewal is unnecessary. Once recruited, the

income is earned and no further effort on Brad’s part is necessary. The fact

                                       17
that Brad is required to recruit one new member or broker each month in order

to receive the income does not change the fact that the income has already

been earned. Therefore, we hold that the trial court did not abuse its discretion

in issuing an order clarifying that the decree awards Karen sixty percent of the

income stream that results from members and brokers in the downline as of the

date of divorce.

      On the other hand, the addition of new members and brokers is

contingent on Brad, or someone within his downline, successfully selling the

product, whether that be a membership with Ameriplan or future employment

as an independent broker of Ameriplan. Therefore, new members and brokers

have yet to be earned. See Loazia, 130 S.W.3d at 906–07 (holding husband’s

post-divorce income was his separate property even though the contract

contained a “guarantee clause” because husband’s right to payment under

contract did not accrue until he performed his services).

      Because the addition of new members and brokers is not a guarantee, the

growth in income resulting from new members and brokers is merely an

expectancy. See Von Hohn, 260 S.W.3d at 642 (holding that because no

money had been received by husband’s law firm from pending but unsettled

cases, revenue from those cases was no more than an expectancy interest, and

any money to be received constituted future earnings to which wife was not

                                       18
entitled). Furthermore, although Brad has significant rights as to the income

stream earned during marriage, he does not and cannot have any rights in

something he has yet to acquire. Therefore, any growth in income resulting

from new members and brokers being added after the divorce is Brad’s separate

property.

      In summary, the trial court’s order awarding Karen a percentage of the

income stream’s future growth is contrary to the law. We hold, therefore, that

the trial court abused its discretion in rendering the order and, accordingly,

sustain Brad’s second issue in part. We modify the order to delete the language

awarding Karen “sixty percent of the commissions earned from the income and

commissions that may be payable to, or received by, the brokers within the

Group A category from any source whatsoever, from and after the date of

August 4, 2003.” In its place, we insert the language: “sixty percent of the

commissions earned as a result of the income and commissions that may be

payable to, or received by, the brokers within the Group A category from

brokers within the Group A category.       Karen is not entitled to any income

generated by the Group A category that is the result of brokers and members

added after August 4, 2003.”

                                      19
                                 VI. Conclusion

      Having overruled Brad’s first issue and sustained his second issue in part,

we affirm the trial court’s clarification order as modified.

                                            BOB MCCOY
                                            JUSTICE

PANEL: LIVINGSTON, DAUPHINOT, and MCCOY, JJ.

DELIVERED: December 18, 2008

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