Court Opinion

ID: 3119850
Source: CourtListenerOpinion
Date Created: 2015-10-16 08:32:47.27425+00
Date Added: 2024-06-11T11:52:40.699372
License: Public Domain

Opinion issued December 28, 2012

                                      In The

                               Court of Appeals
                                     For The

                          First District of Texas
                            ————————————
                              NO. 01-11-00635-CV
                            ———————————
                    CYNTHIA ANN FLEMING, Appellant
                                        V.
                    DAVIS HAYS FLEMING, JR., Appellee

                    On Appeal from the 312th District Court
                             Harris County, Texas
                       Trial Court Case No. 2007-09643

                          MEMORANDUM OPINION

      In this post-divorce division of marital property case, appellant, Cynthia

Fleming (“Cindy”), petitioned the trial court to divide alleged community assets

that the court did not divide in the original divorce decree dissolving her marriage
to appellee, Davis Fleming (“Davis”). The trial court denied this petition and

refused to divide the alleged marital assets. In two issues, Cindy contends that the

trial court erred in failing to divide (1) Davis’s alleged ownership interest, or the

proceeds from the sale of his ownership interest, in Con-Dive, L.L.C. (“Con-

Dive”), a company in which he had previously been a member; and (2) Davis’s

alleged outstanding stock options, or proceeds from the exercise of these options,

granted to him by his former employer, Stolt Offshore, S.A. (“Stolt”).

      We affirm.

                                   Background

      During the pendency of Cindy and Davis’s divorce, the trial court signed an

agreed temporary order, which provided, among other things:

      Sale of Stock Options. IT IS ORDERED that DAVIS HAYS
      FLEMING, JR. shall, on or before September 1, 2005, pay to
      CYNTHIA ANN FLEMING 50% of the net proceeds from the sale of
      all stock options issued by [Stolt], which amount shall be applied to
      any attorney’s fees incurred by [Cindy] in this proceeding.

      IT IS FURTHER ORDERED that [Davis] shall not exercise any other
      stock options granted to him by [Stolt] without the express written
      consent of [Cindy].

The trial court signed the final divorce decree on July 27, 2006. This decree

divided Cindy and Davis’s community property, including Davis’s retirement

benefits “in the Stolt Offshore Inc., 401k Profit Sharing Plan and Trust

                                         2
(administered by Charles Schwab) arising out of [Davis’s] employment with Stolt

Offshore.” The decree did not include a specific division of stock options.

      On February 19, 2007, Cindy filed an “Original Petition for Post-Divorce

Division of Property,” and she named both Davis and Con-Dive, a Louisiana

limited liability company, as respondents. Cindy alleged that the divorce decree

“failed to dispose of the parties’ marital interest in Con-Dive,” and she requested

that the court divide the ownership interest in a just and right manner.1 Cindy also

requested the award of exemplary damages against Con-Dive, which, she alleged,

was “actively assisting” Davis in concealing his ownership interest in the company

and was perpetuating an “ongoing fraud” against her. Cindy later nonsuited her

claims against Con-Dive.

      At trial, Cindy testified that she brought the post-divorce proceeding because

“at the time of divorce [she] could not prove that [Davis] had the ownership in

[Con-Dive] that he was denying that he owned.” She stated that, around October

2005, Davis left his employment at Stolt, and he “tried to get rid of [Stolt] stock

options without [her] knowing about it.” Cindy alleged that Davis had stock

options from Stolt, and she knew that he exercised some options and then sold

1
      Cindy’s amended petition, which is not included in the clerk’s record, additionally
      requested that the trial court divide Davis’s Stolt stock options that remained
      outstanding and unexercised on the date of divorce.
                                           3
those shares in 2005 and 2006. She believed that Davis had an additional 2,250

shares of Stolt stock that were not divided in the divorce decree.

      Cindy also testified that Con-Dive was a company formed in September

2005 “to buy boats and do diving offshore to repair pipes” and owned by Davis,

Duane Smith, and Kevin Lorio. Cindy testified that Davis had signed Con-Dive’s

Operating Agreement on November 11, 2005, which reflected that he owned 5% of

the company and that his initial capital contribution was $25,000.                     Cindy

introduced, and the trial court admitted, a document entitled “Action by Requisite

Vote of Membership Interests of Con-Dive, L.L.C.” that attempted to remove

Davis and Lorio as Con-Dive members because they had failed to pay their initial

capital contribution.2 This document was executed July 28, 2006, the day after the

trial court signed the final divorce decree. Cindy testified that she derived no

benefit from Davis’s interest in Con-Dive and that she never received any share of

Davis’s ownership interest or his salary or bonuses.

      Davis testified that he had shares in Stolt, but only as part of his 401(k). He

believed that the last time that he had sold any Stolt shares was in November

2
      Although this document refers to deleting the interests of “Messrs. Davis and
      Lorio,” the document also states that the Con-Dive Operating Agreement provided
      that “Davis H. Fleming, Jr.” had contributed $25,000 for a membership interest,
      but that “Davis H. Fleming, Jr.” had, in fact, failed to contribute his required initial
      capital contribution.
                                             4
2005.3 He stated that the divorce decree did not award stock to either him or

Cindy, other than what was included in his 401(k), but all of his Stolt stock options

had been exercised and the resulting stock sold prior to that date. Davis testified

that he believed that he had to exercise the stock options before he left his

employment at Stolt or he would lose them. He also testified that, pursuant to the

trial court’s agreed temporary order, he paid Cindy 50% of the proceeds from the

options that he had exercised and that he did not exercise any options after

agreeing to the temporary order.       Davis unequivocally testified that he never

concealed from Cindy any Stolt stock options, or proceeds from the exercise of

Stolt stock options, and that he had no stock options available to him on the date of

the final divorce decree.

      Davis also repeatedly testified that he never had an ownership interest in

Con-Dive and that he was formally removed from Con-Dive records as a member

on July 28, 2006. He stated that he was removed because he had never paid his

required capital contribution to the company. In March 2007, Davis received

3
      In his deposition, Davis testified that he exercised some of his Stolt stock options
      to purchase 250 shares of stock, which he then sold for $10,721.11, in February
      2006. At trial, Davis testified that he believed his deposition testimony was
      incorrect.

                                           5
$550,000 in bonuses from Con-Dive.4 He testified that he received this bonus

because of the “work [he] performed” for Con-Dive, not as a result of cashing out

an ownership interest in Con-Dive.

      The trial court also admitted the deposition testimony of several individuals

associated with Con-Dive, including Wesley Freeman, Lorio, Greg Ruiz, and

Smith, who testified concerning whether Davis had an ownership interest in Con-

Dive. Freeman, a managing director and former CEO of Con-Dive, testified that

he and Smith formed Con-Dive and that “there was [the] opportunity for two other

minor interest partners that had the opportunity to—to be part of [Con-Dive] that

never fulfilled it,” referring to Lorio and Davis. According to Freeman, Smith was

the only other person who “actually had any money in [Con-Dive],” and Davis

never owned an interest in Con-Dive because he never made his capital

contribution. Freeman also testified that, in 2007, the Con-Dive leadership decided

to pay bonuses to all Con-Dive employees, regardless of whether they had an

ownership interest in the company, and they “rated [the employees’] value to the

company and what they’d done” for the company to determine the bonus amounts.

      Lorio characterized both himself and Davis as 25% owners of Con-Dive, but

he testified that their ownership percentages decreased to 5% several months after

4
      Davis acknowledged that an unrelated company called Patty-Cam, which held a
      5% ownership interest in Con-Dive, like Cindy alleged that Davis himself owned,
      later sold its interest in the company for around $600,000.
                                         6
Con-Dive formed. He testified that he “believed” that Davis made his initial

contribution in cash, but he also stated that it was possible to become an owner

through “sweat equity” by bringing in accounts for the company. He stated that he

and Davis were both “under the impression” that they were owners of Con-Dive.

      Ruiz previously worked as a civil engineer with a company called W&T,

which did business with Con-Dive. He testified that he personally knew the

“forming partners” of Con-Dive: Kevin Lorio, Davis Fleming, and Duane Smith.

To his understanding, these three men were the owners of Con-Dive at the time

that W&T contracted with Con-Dive.           Ruiz testified that, during contract

negotiations, Davis represented that he owned an interest in Con-Dive.

      Smith testified that he was not sure who the original owners of Con-Dive

were, and, although he thought that he was the original owner of the company, he

stated that the owners “could have been a combination of [another company called

Conmaco], [himself], Davis Fleming, and Kevin Lorio.” He acknowledged that, at

one point, he, Davis, and Lorio were involved in “the process of negotiating . . . an

ownership structure” for Con-Dive. He also acknowledged that it “could be true”

that Davis’s work on behalf of Con-Dive “was what was performing some of his

capital contributions,” but he did not know for sure. He stated that “if [Davis] put

in $25,000, it was probably sweat equity.”

                                         7
      At the end of the trial, the trial court stated that it would read the deposition

testimony and take the case under advisement. On March 16, 2011, the trial court

sent the parties a letter rendering judgment.5

      After the trial court’s rendition letter, Cindy filed a “Motion for Clarification

of Rendition,” in which she argued that the rendition letter did not address the fact

that she demonstrated at trial that Davis “had sole control and management over

his negotiated relationship with Con-Dive LLC, and if the court found that [Davis]

did not tender or otherwise fund his initial capital requirement . . . his failure was a

breach of his obligation to the community.” She argued that Davis should be

disgorged of the “windfall” he received from Con-Dive and that that amount

should be split between them. She also argued that 2,250 Stolt shares were not

sold in 2006 and were not represented in Davis’s 2005 Form 1099. She stated that

at least 2,000 shares remained outstanding and were not divided in the divorce

decree. She requested that the trial court address these “omitted issues.”

      On May 13, 2011, the trial court signed an “Order on Petition for Post-

Divorce Division of Property and on Motion for Clarification of Rendition.” In

this order, the trial court issued the following findings relevant to Cindy’s petition

for post-divorce division of property:

      1.     The Court finds that the evidence does not support a finding
             that [Davis], held an ownership interest in Con-Dive, L.L.C.,

5
      This letter is not included in the clerk’s record.
                                             8
             that remained undivided from the original judgment of divorce
             rendered on July 27, 2006. The Court therefore denies relief as
             requested in Paragraph 3(a) of the First Amended Petition for
             Post-Divorce Division of Property.
      2.     The Court further finds that the evidence does not support a
             finding that [Davis] concealed the proceeds of the sale of stock
             options received from Stolt Offshore, Inc., that remained
             undivided from the original judgment of divorce rendered on
             July 27, 2006. The Court therefore denies relief as requested in
             Paragraph 3(b) of the First Amended Petition for Post-Divorce
             Division of Property.

The trial court also denied Cindy’s requests for clarification of rendition

concerning Davis’s alleged Con-Dive ownership interest and his alleged

outstanding Stolt stock options. Cindy moved for a new trial, which was overruled

by operation of law. This appeal followed.

                       Post-Divorce Division of Property

      In her first and second issues, Cindy contends that the trial court erred in

failing to divide (1) the alleged community interest in Con-Dive or the proceeds

from Davis’s disposition of his ownership interest and (2) the alleged outstanding

Stolt stock options or the proceeds from Davis’s exercise of these options. Cindy

contends that the trial court’s findings that Davis did not have an ownership

interest in Con-Dive and that Davis did not have outstanding Stolt stock options

that remained undivided in the final divorce decree are not supported by legally

sufficient evidence.

                                         9
      A.       Standard of Review

      Texas Family Code section 9.201 provides that, after a divorce proceeding,

“[e]ither former spouse may file a suit . . . to divide property not divided or

awarded to a spouse in a final decree of divorce or annulment.” TEX. FAM. CODE

ANN. § 9.201(a) (Vernon 2006); Brown v. Brown, 236 S.W.3d 343, 347 (Tex.

App.—Houston [1st Dist.] 2007, no pet.). “If a court of this state failed to dispose

of property subject to division in a final decree of divorce . . . the court shall divide

the property in a manner that the court deems just and right, having due regard for

the rights of each party . . . .” TEX. FAM. CODE ANN. § 9.203(a) (Vernon 2006).

Here, Cindy, as the post-divorce petitioner, bears the burden to prove that the trial

court did not consider or dispose of Davis’s alleged ownership interest in Con-

Dive and Davis’s alleged outstanding Stolt stock options in the final divorce

decree. See Brown, 236 S.W.3d at 349 (“[A]s the petitioner in this statutory post-

divorce action, George has the burden to prove that the divorce court did not

consider or dispose of the 401(k) plan or the accrued bonuses in the final decree.”);

Stephens v. Marlowe, 20 S.W.3d 250, 254 (Tex. App.—Texarkana 2000, no pet.)

(“Marlowe, as the party requesting partition, had the burden to prove in the

partition action that the divorce court did not consider or dispose of the settlement

proceeds.”).

                                           10
      In a bench trial, findings of fact carry the same weight as a jury’s verdict.

OAIC Commercial Assets L.L.C. v. Stonegate Vill., L.P., 234 S.W.3d 726, 736

(Tex. App.—Dallas 2007, pet. denied). When a party attacks the legal sufficiency

of an adverse finding on an issue on which she had the burden of proof at trial, she

must demonstrate on appeal that the evidence establishes, as a matter of law, all

vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241

(Tex. 2001) (per curiam) (citing Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690

(Tex. 1989)); Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C.,

336 S.W.3d 764, 781 (Tex. App.—Houston [1st Dist.] 2011, no pet.). In reviewing

a “matter of law” challenge, we must first examine the record for evidence that

supports the finding, while ignoring all evidence to the contrary. Francis, 46
S.W.3d at 241; see also Brown, 236 S.W.3d at 348 (“In determining whether

legally sufficient evidence supports the finding under review, we must consider

evidence favorable to the finding if a reasonable fact finder could consider it, and

disregard evidence contrary to the finding unless a reasonable fact finder could not

disregard it.”) (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).

If there is no evidence supporting the finding, we will then examine the entire

record to determine if the contrary position is established as a matter of law.

Francis, 46 S.W.3d at 241. We will sustain this challenge only if the contrary

                                        11
proposition is conclusively established. Id. (citing Croucher v. Croucher, 660
S.W.2d 55, 58 (Tex. 1983)).

      The ultimate test for legal sufficiency is whether the evidence would enable

a reasonable and fair-minded fact finder to reach the verdict under review. City of

Keller, 168 S.W.3d at 827. The fact finder is the sole judge of witness credibility

and the weight to give their testimony. See id. at 819. “Consequently, we may not

replace a finding simply because we would reach a different answer on the

evidence.” Brown, 236 S.W.3d at 348 (citing Maritime Overseas Corp. v. Ellis,

971 S.W.2d 402, 407 (Tex. 1998)).

      B.    Alleged Ownership Interest in Con-Dive

      In Finding of Fact One, the trial court found “that the evidence does not

support a finding that [Davis], held an ownership interest in Con-Dive, L.L.C., that

remained undivided from the original judgment of divorce rendered on July 27,

2006.”

      At trial, Davis repeatedly testified that he never had an ownership interest in

Con-Dive. Davis stated that he was given the opportunity to invest in Con-Dive

and become a member, but he never did so because he could not pay the $25,000

initial capital contribution. Con-Dive’s Operating Agreement, which originally

stated that Davis had paid his capital contribution and listed Davis as a member,

was later amended to remove both Davis and Lorio as members explicitly because

                                         12
neither of them actually paid their capital contributions. Davis also testified that,

although he later received $550,000 from Con-Dive, this payment was a bonus for

the services that he had performed for Con-Dive and it was not a payment for

cashing out an ownership interest in the company. Wesley Freeman, a managing

director and former CEO of Con-Dive, corroborated all of Davis’s testimony

concerning an alleged ownership interest in Con-Dive in his deposition.

      Viewing the evidence in the light most favorable to the finding under

review, as we must in a legal sufficiency review, we conclude that a reasonable

and fair-minded fact finder could have credited Davis’s and Freeman’s testimony

that Davis never held an ownership interest in Con-Dive. See Francis, 46 S.W.3d

at 241; Brown, 236 S.W.3d at 348; see also City of Keller, 168 S.W.3d at 827

(providing standard for legal sufficiency review). We therefore hold that the trial

court’s finding that Davis never had an ownership interest in Con-Dive was

supported by legally sufficient evidence.

      In her first issue, Cindy states that she “specifically challenges findings of

fact 1 and 4.” In Finding of Fact Four, the trial court found “that the evidence does

not support a finding that [Davis] concealed cash assets of the community prior to

the divorce and that remained undivided from the original judgment of divorce

rendered on July 27, 2006.” Cindy provides no indication of which cash asset she

refers to when she “specifically challenges” Finding Four, and she provides no

                                            13
argument specifically addressing this finding.       Thus, to the extent that she

challenges this fact finding, she has waived this issue due to inadequate briefing.

See TEX. R. APP. P. 38.1(i).

      Cindy also argues that “[a]lthough the court did not make a specific finding

as to fraudulent concealment and unjust enrichment, no recovery was granted on

these theories. The trial court’s denial of relief on these issues is also challenged

here for all the same reasons.” Texas Rule of Civil Procedure 299 governs omitted

findings of fact and conclusions of law and provides,

      When findings of fact are filed by the trial court they shall form the
      basis of the judgment upon all grounds of recovery and of defense
      embraced therein. The judgment may not be supported upon appeal
      by a presumed finding upon any ground of recovery or defense, no
      element of which has been included in the findings of fact . . . .

TEX. R. CIV. P. 299. When none of the findings address a ground of recovery or a

defense and the appellant does not file a request for additional or amended findings

of fact, the appellant waives her ground of recovery or defense. See Pinnacle

Homes, Inc. v. R.C.L. Offshore Eng’g Co., 640 S.W.2d 629, 630 (Tex. App.—

Houston [14th Dist.] 1982, writ ref’d n.r.e.); see also Stanley Works v. Wichita

Falls Indep. Sch. Dist., 366 S.W.3d 816, 824 (Tex. App.—El Paso 2012, pet. filed)

(“A party asserting an affirmative defense in a trial before the court must request

findings in support of the defense to avoid waiver. If the trial court’s findings do

not include any of the elements of the defense asserted, the party must specifically

                                         14
request additional findings relevant to the defense.”) (internal citations omitted).

Here, the trial court made no findings or conclusions concerning Cindy’s claim of

unjust enrichment, but she did not request additional findings or conclusions on

this claim. Thus, we conclude that she has waived her claim for unjust enrichment.

      We overrule Cindy’s first issue.

      C.    Alleged Outstanding Stolt Stock Options

      In Finding of Fact Two, the trial court found “that the evidence does not

support a finding that [Davis] concealed the proceeds of the sale of stock options

received from Stolt Offshore, Inc., that remained undivided from the original

judgment of divorce rendered on July 27, 2006.”

      Both Cindy and Davis testified that, as part of his compensation, Davis

received stock options from Stolt. Davis testified that he exercised Stolt stock

options throughout 2005 and early 2006 and then sold the stock that he received

from exercising the options. Davis acknowledged that, during the pendency of the

divorce, the trial court entered an agreed temporary order requiring him to pay

Cindy 50% of the net proceeds from the sale of all Stolt stock options and

prohibiting him from exercising any further Stolt stock options without Cindy’s

express written consent. Davis testified that, pursuant to this order, he paid Cindy

50% of the proceeds from his exercise of the stock options. Davis also testified

that he left Stolt around September 2005 and that he believed that he had to

                                         15
exercise all of his stock options before he ended his employment or else the

options would be lost. He further stated that the only outstanding shares of Stolt

that he possessed were part of his Stolt 401(k) plan, which the trial court divided

equally between him and Cindy in the final divorce decree. He unequivocally

testified that he never concealed any Stolt stock options or proceeds from Stolt

stock options from Cindy and that he did not own any unexercised Stolt stock

options on the date of the final divorce decree.

      Again, viewing the evidence in the light most favorable to the finding under

review, as we must, we conclude that Davis’s testimony is some evidence that he

did not possess any unexercised Stolt stock options or undivided proceeds from the

exercise of Stolt stock options on the date of the final divorce decree. See Francis,
46 S.W.3d at 241; Brown, 236 S.W.3d at 348; see also City of Keller, 168 S.W.3d

at 827 (providing standard for legal sufficiency review). We therefore hold that

the trial court’s finding that Davis did not conceal proceeds from the sale of Stolt

stock options that remained undivided on the date of the final divorce decree was

supported by legally sufficient evidence.

      We overrule Cindy’s second issue.

                                            16
                                   Conclusion

      We affirm the judgment of the trial court.

                                             Evelyn V. Keyes
                                             Justice

Panel consists of Justices Keyes, Massengale, and Brown.

                                        17