Court Opinion

ID: 2984777
Source: CourtListenerOpinion
Date Created: 2015-09-22 22:08:26.575955+00
Date Added: 2024-06-11T11:44:39.560798
License: Public Domain

Affirmed and Memorandum Opinion filed February 11, 2014.

                                     In The

                    Fourteenth Court of Appeals

                              NO. 14-12-01114-CV

                         JULIA ALMANZA, Appellant
                                        V.

JOHNNY SALAS, RICARDO HINOJOSA AND ISABELLE M. HINOJOSA,
                        Appellees

                    On Appeal from the 80th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2009-49728

                 MEMORANDUM OPINION
      An ex-wife appeals the trial court’s judgment notwithstanding the verdict,
asserting that residential property was not the ex-husband’s homestead and that the
property was, consequently, subject to her claims against the ex-husband for
fraudulent conveyance of the property under the Uniform Fraudulent Transfer Act.
We affirm.
                      FACTUAL AND PROCEDURAL BACKGROUND

        Julia Almanza and Johnny Salas were married and lived together in a
residential property on May Street in Houston (the property). They divorced in
August 2006. In the divorce decree, the property was awarded in fee simple to
Johnny. About two months after the divorce, Johnny allegedly assaulted Julia.
Johnny was indicted for aggravated assault of a family member and incarcerated in
the Harris County Jail.

        In November 2006, Julia filed a civil suit against Johnny for damages arising
from the assault. Johnny was served with the civil suit while in jail. About two
weeks after he was served with the lawsuit, Johnny signed a handwritten, notarized
document agreeing to sell the property to his sister and brother-in-law, Isabelle and
Ricardo Hinojosa, for $30,000. Over the next several months, Isabelle retained a
lawyer to defend Johnny in the criminal case and paid Johnny’s bond to secure his
release from jail. On February 7, 2007, Johnny executed a general warranty deed
conveying the property to the Hinojosas. In 2008, Johnny pleaded guilty to the
criminal offense and was sentenced to eight years’ imprisonment.

        On June 30, 2009, the trial court in Julia’s civil suit signed a judgment
conforming to a jury verdict in Julia’s favor, awarding Julia over $800,000.00 in
damages against Johnny.1 It is undisputed that the judgment remains an unsatisfied
debt.

        In August 2009, Julia filed a petition for declaratory judgment against
Johnny and the Hinojosas, seeking declarations that (1) the February 7, 2007 deed
transferring the property from Johnny to the Hinojosas is void and ineffective as to
        1
        The trial court’s judgment reflected that Julia was entitled to recover from Johnny actual
damages of $525,000.00 plus prejudgment interest of $58,333.33, and punitive damages of
$250,000.00. The trial court also awarded post-judgment interest on all damages at a rate of 5%
per annum from the date of judgment until paid, and taxed all court costs against Johnny.

                                                2
Julia, (2) the deed reflects a fraudulent conveyance between Johnny and the
Hinojosas, (3) the property may be used to satisfy the judgment in the civil suit, (4)
the property is not exempt from execution, and (5) the property may be levied upon
to enforce the judgment in the civil suit. Along with a general denial, Johnny
asserted an affirmative defense that the property was his homestead, and the
Hinojosas sought reimbursement and contribution for expenses paid on the
property.

      A jury returned a verdict in favor of Julia, finding the following:

             Johnny transferred the property to the Hinojosas with actual
              intent to hinder, delay, or defraud Julia;
             Johnny transferred the property without receiving a reasonably
              equivalent value in exchange for the transfer while intending to
              incur, or believing he would incur, or while he reasonably
              should have believed that he would incur, debts beyond his
              ability to pay as they became due;
             the property was not Johnny’s homestead; and
             the Hinojosas were not entitled to a credit for money they paid
              for the property or for expenses in maintaining the property.
Johnny and the Hinojosas moved for judgment notwithstanding the verdict
(JNOV), asserting that a homestead exemption on the property precluded Julia’s
claims for fraudulent conveyance. In the final judgment, signed December 19,
2012, the trial court granted the JNOV motion, ruling that the property was exempt
from creditors and fraudulent transfer claims because it was Johnny’s homestead
and Julia “did not offer more than a scintilla of evidence at trial to dispute the
homestead characteristic of the property.” Accordingly, the trial court rendered a
take-nothing judgment in the defendants’ favor.

                                          3
                              ISSUES AND ANALYSIS

      In three issues, Julia challenges the trial court’s JNOV, asserting that the
trial court improperly disregarded the jury’s finding that the property was not
Johnny’s homestead. She argues that there was no evidence that the property was
Johnny’s homestead before or after the couple divorced. Julia also argues that no
legal presumption exists of a continuing homestead after divorce so as to relieve
Johnny from presenting evidence of the homestead character of the property.

      I.    Did the Trial Court Err in Granting the JNOV?

      In her first issue, Julia contends the trial court’s grant of the motion for
JNOV is proper only if it was shown as a matter of law that (1) the property was
Julia and Johnny’s family homestead before the divorce, and (2) the family
homestead automatically converted into Johnny’s single person homestead after
the divorce. A trial court may grant a motion for JNOV if a directed verdict would
have been proper, and it may disregard any jury finding on a question that has no
support in the evidence. Tex. R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d 709,
713 (Tex. 2003). We review a trial court’s ruling on a motion for JNOV under a
legal-sufficiency standard. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex.
2005). A no-evidence point will be sustained when (a) there is a complete absence
of evidence of a vital fact, (b) the court is barred by rules of law or of evidence
from giving weight to the only evidence offered to prove a vital fact, (c) the
evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the
evidence conclusively establishes the opposite of the vital fact. Volkswagen of Am.,
Inc. v. Ramirez, 159 S.W.3d 897, 903 (Tex. 2004); Wilson, 168 S.W.3d at 810.

      Julia alleged that Johnny fraudulently transferred the property to the
Hinojosas to prevent Julia from using the property to satisfy the judgment she
obtained against him in her civil suit and that she was entitled to relief under the
                                         4
Uniform Fraudulent Transfer Act (UFTA). See Tex. Bus. & Com. Code
§§ 24.001–.013. The UFTA is intended to prevent a debtor from defrauding his
creditors by moving assets out of reach. Arriaga v. Cartmill, 407 S.W.3d 927, 931
(Tex. App.—Houston [14th Dist.] 2013, no pet.). Julia, as the judgment creditor,
has the burden to prove the fraudulent transfer of an asset by a preponderance of
the evidence. See Mladenka v. Mladenka, 130 S.W.3d 397, 405 (Tex. App.—
Houston [14th Dist.] 2004, no pet.). A “transfer” is defined as any means of
“disposing of or parting with an asset or an interest in an asset . . . .” Tex. Bus. &
Com. Code § 24.002(12). An “asset” is “property of a debtor,” but excludes
“property to the extent it is generally exempt under nonbankruptcy law[.]” Id.
§ 24.002(2)(B).

      Relevant here, real property qualifying as a homestead is property generally
exempt under nonbankruptcy law. See Tex. Const. art. XVI, § 50; Tex. Prop. Code
§ 41.001(a). Therefore, judgment liens, even if properly abstracted, cannot attach
to a homestead while that property remains a homestead. Fairfield Fin. Group, Inc.
v. Synnott, 300 S.W.3d 316, 320 (Tex. App.—Austin 2009, no pet.). A judgment
debtor may sell property claimed as homestead and pass title free of any judgment
lien, and the purchaser may assert that title against the judgment creditor. Id.;
Cadle Co. v. Harvey, 46 S.W.3d 282, 285 (Tex. App.—Fort Worth 2001, pet.
denied); see also Chandler v. Welborn, 294 S.W.2d 801, 805 (Tex. 1956) (“It is
well settled that a conveyance of exempt property may not be attacked on the
ground that it was made in fraud of creditors.”). The rationale for this rule is that,
because the law already has removed the homestead property from the reach of
creditors, the conveyance of the property, whether fraudulent or not, does not
deprive the creditors of any right they had against the property. Duran v.
Henderson, 71 S.W.3d 833, 843 (Tex. App.—Texarkana 2002, pet. denied).

                                          5
      The parties agree that Johnny, as the party claiming the homestead
exemption, has the initial burden of proving a homestead. See Burk Royalty Co. v.
Riley, 475 S.W.2d 566, 568 (Tex. 1972). To establish a property as a homestead,
the proof must show a combination of both overt acts of homestead usage and the
intention on the part of the owner to claim the land as a homestead. Lifemark Corp.
v. Merritt, 655 S.W.2d 310, 314 (Tex. App.—Houston [14th Dist.] 1983, writ ref’d
n.r.e.). No specific writing or document is required to claim a homestead, and the
act of using and enjoying the property as a home qualifies a person for the
constitutional protections of homestead property. Salomon v. Lesay, 369 S.W.3d
540, 554 (Tex. App.—Houston [1st Dist.] 2012, no pet.); Merritt, 655 S.W.2d at
314; see also Garrard v. Henderson, 209 S.W.2d 225, 230 (Tex. Civ. App.—
Dallas 1948, no writ) (stating that “the possession and use of real estate by one
who owns it, and who, with his family, resides upon it, makes it the homestead of
the family in law and in fact”). If the homestead character is established, the
burden shifts to the creditor to disprove the continued existence of a homestead.
Duran, 71 S.W.3d 842; Merritt, 655 S.W.2d at 314. Further, a former spouse not
in possession has no homestead rights in the property. See Laster v. First
Huntsville Props. Co., 826 S.W.2d 125, 130 (Tex. 1991).

      II.   Evidence that the Property was Johnny and Julia’s Homestead
            Before the Divorce.
      Julia first argues that Johnny presented no evidence that the property was his
homestead before their divorce. To support the claim that the property was a
homestead, Johnny and the Hinojosas offered county property tax records and
appraisal district valuations of the Property for the years 2005, 2006, and 2007.
These exhibits reflect that in 2005 and 2006, Johnny and Julia claimed a
homestead exemption on the property, and in 2007, the Hinojosas claimed a
homestead exemption on the property. According to Julia, these documents are no
                                         6
evidence that Johnny properly claimed a homestead exemption as contemplated by
the property and tax codes, and even if they are, they are not dispositive and at
most merely raise a fact issue concerning whether the property was a homestead,
particularly in light of the divorce, the assault, Johnny’s incarceration, and the
timing of the sale to the Hinojosas.

      Contrary to Julia’s assertion, the county tax documents reflecting that
Johnny and Julia claimed a homestead exemption on the property in 2005 and 2006
are some evidence that she and Johnny considered the property as their homestead.
See Salomon, 369 S.W.3d at 550 (stating that “filing an official designation of a
homestead with the county clerk provides prima facie evidence of intent to claim
property as a homestead and puts the world on notice to that effect”). Moreover,
the tax documents were not the only evidence presented at trial concerning the
homestead character of the property. Although the majority of the trial focused on
the timing of the sale of the property and its value, Julia also testified that she and
Johnny were married for nine years, they had children together, they purchased the
property while they were married, they made extensive renovations to the property,
and she lived there with Johnny until sometime in 2005. The act of using and
enjoying property as a home qualifies a person for the constitutional protections of
homestead property. See id. at 554; Merritt, 655 S.W.2d at 314. Moreover, the
courts have always given a liberal construction to the Texas Constitution and
statutes to protect homestead rights. Merritt, 655 S.W.2d at 314. Taken together,
Julia’s testimony that she and Johnny lived in the property together and the
evidence that they formally claimed it as their homestead establishes that the
property was Julia and Johnny’s homestead before the divorce, and the record
reveals no contrary evidence.

                                          7
      III.   A Homestead is Presumed to Continue Absent Contrary
             Evidence.
      Next, Julia argues that even if she and Johnny had a family homestead
before the divorce, to affirm the trial court’s grant of the motion for JNOV, this
court must conclude that a legal presumption exists that the property
“automatically converted into Johnny’s single person homestead after the divorce,”
because Johnny offered no evidence that the property continued to be his
homestead post-divorce. According to Julia, no such legal presumption exists, and
therefore the burden never shifted to her to disprove a homestead.

      Constitutional homestead rights protect citizens from losing their homes and
have historically enjoyed great protection in our jurisprudence. Kendall Builders,
Inc. v. Chesson, 149 S.W.3d 796, 807 (Tex. App.—Austin 2004, pet. denied).
Once homestead rights are shown to exist in a property, they are presumed to
continue in the absence of evidence to the contrary. Sullivan v. Barnett, 471
S.W.2d 39, 43 (Tex. 1971); Merritt, 655 S.W.2d at 314. Property may lose its
homestead character only by the claimant’s death, abandonment, or alienation.
Synnott, 300 S.W.3d at 321; Garrard, 209 S.W.2d at 229. Moreover, a claimant’s
homestead rights may continue following divorce if the claimant initially proves
the existence of the homestead. See Burk Royalty Co., 475 S.W.2d at 568;
McFarland v. Rousseau, 667 S.W.2d 929, 932 (Tex. App.—Corpus Christi 1984,
no writ); see also Tex. Const. art. XVI, § 50(a) (providing that “[t]he homestead of
a family, or of a single adult person, shall be, and is hereby protected from forced
sale, for the payment of all debts” not specifically enumerated) (emphasis added).

      Julia testified that, shortly before the divorce in 2006, she executed a
quitclaim deed to Johnny disclaiming any right or title to the property, explaining
that she did so because she “didn’t want the house.” The divorce decree also

                                         8
awarded the property to Johnny as his sole and separate property. Thus, the
undisputed evidence shows that Julia relinquished any claim she had to the
homestead while Johnny retained his homestead interest both before and after the
divorce. See Salomon, 369 S.W.3d at 555; Synnott, 300 S.W.3d at 321. Therefore,
the initial homestead presumption coupled with the undisputed evidence that
Johnny was awarded all right, title, and interest in the property, shifted the burden
to Julia to prove Johnny intended to abandon it. See Burk Royalty Co., 475 S.W.2d
at 568.2

       To establish the abandonment of a homestead, the evidence relied on must
make it “undeniably clear” that there has been “a total abandonment with an
intention not to return and claim the exemption.” McFarland v. Rousseau, 667
S.W.2d at 932. Further, the abandonment must be voluntary. Driver v. Conley, 320
S.W.3d 516, 519 (Tex. App.—Texarkana 2010, pet. denied). Julia relies on the
following evidence to show that a homestead did not continue after the divorce:
Johnny assaulted Julia two months after the divorce; Johnny and Isabelle discussed
using the house as collateral to pay legal bills after the assault; Johnny gave
Isabelle a general power of attorney while in jail and shortly thereafter was served
with Julia’s civil suit; after being served, Johnny executed a handwritten, notarized
document indicating his desire to sell the property to Isabelle for $30,000; Johnny
filed a pro se answer in the civil suit; on February 7, 2007, Johnny signed a deed
conveying the property to the Hinojosas; Johnny and Isabelle gave “inconsistent
and amorphous” explanations at trial about the timing and details of the
conveyance; and Johnny testified that he currently resided in prison.

       Although the facts Julia recites may be relevant to her allegation that
       2
         We therefore distinguish Julia’s reliance on Day v. Day, 610 S.W.2d 195, 198 (Tex.
App.—Tyler 1980, writ ref’d n.r.e.), because in that case, the claimant failed to meet the initial
burden of establishing the existence of a homestead before the divorce.

                                                9
Johnny’s transfer of the property to the Hinojosas was fraudulent as to her, they are
no evidence that Johnny intended to abandon or otherwise alienate his homestead
before the transfer. See Tex. Bus. & Com. Code § 24.005(a); Synnott, 300 S.W.3d
at 320; see also Driver, 320 S.W.3d at 519–20 (noting that a homestead claimant’s
transfer of nonexempt property had “no bearing on the issue of abandonment of
homestead”). Further, Johnny’s incarceration while serving his prison sentence is
not evidence of a voluntary abandonment of the homestead. See Driver, 320
S.W.3d at 519; Florey v. Estate of McConnell, 212 S.W.3d 439, 447 (Tex. App.—
Austin 2006, pet. denied).

                                   CONCLUSION

      On these facts, we conclude that the trial court did not err in granting the
defendants’ motion for JNOV. We therefore overrule Julia’s three issues on appeal
and affirm the trial court’s judgment.

                                         /s/    Ken Wise
                                                Justice

Panel consists of Justices McCally, Busby, and Wise.

                                           10