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Defendant's Attorney: Robin Scott
V. Wayne Ward

Description:

Fort Worth, TX - Divorce lawyer represented defendant with appealing and challenging portions of the property division.

George and Susan married in December 1993 and primarily lived in
Connecticut. Susan moved to Texas in April 2018 to take a job at a Fort Worth
private school. George, who had founded and operated several home-construction
businesses in Connecticut during the marriage, stayed in Connecticut. George told
Susan that he wanted to leave Connecticut and that he would move to Texas in 12 to
18 months after he sold “things, properties.” George never moved and eventually
stopped sending Susan money.
On January 14, 2019, Susan filed a petition for divorce in Texas, seeking a justand-right division of the community estate; George answered but did not challenge
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the trial court’s personal jurisdiction over him. See Tex. Fam. Code Ann. §§ 6.301,
6.305; Tex. R. Civ. P. 120a.1, 121; see also Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 703 (1982) (recognizing personal-jurisdiction requirement is a
waivable right). On October 28, the trial court set the case for a December 11 trial.
Mediation was unsuccessful.
On December 3—eight days before trial—George’s father and his company,
GGT Properties Inc., filed a lawsuit in Connecticut against three of George’s
businesses: Long Horizon Development, LLC; Bella Vista Associates, LLC; and
Touponse Enterprises, Inc. In the suit, George’s father and GGT alleged that,
“[b]etween June of 2011 and 2019,” GGT leased equipment to Long Horizon, Bella
Vista, and Touponse Enterprises, with the understanding that the rents would be paid
“on a running account.” They alleged that the three companies owed, in total,
$770,644 in unpaid rent.1

Two days later on December 5, George filed a counterpetition for divorce,
asking for a just-and-right division of the community estate if a division agreement
could not be reached. See Tex. Fam. Code Ann. § 7.006. On December 6, George
moved to continue the December 11 trial on the basis of the Connecticut lawsuit.
The trial court denied the continuance motion on December 9. On December 10,
1George’s father and GGT averred that Bella Vista owed $40,000; Touponse
Enterprises owed $582,011; and Long Horizon owed $148,633. But when giving a
bottom-line, total amount of the unpaid rents, they stated they were owed $590,000.
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Susan amended her petition, continuing to request a just-and-right division but asking
that the Connecticut lawsuit “be the sole responsibility” of George because the suit
had been “filed very late in this action.”
At the December 2019 bench trial, the main issues between the parties were
property related. Susan’s financial expert, Thomas Stewart, calculated the fair-market
value for the community-ownership interest in six entities: (1) Long Horizon;
(2) Touponse Enterprises; (3) Ashford Woods, LLC; (4) Bella Vista; (5) T4 Holdings,
LLC; and (6) Twin Farms, LLC. Stewart testified that the unpaid-rents claim in the
Connecticut suit was “unusual” because (1) George had never mentioned that
equipment rentals were overdue when George had led Stewart in an on-site
observation of the entities and their assets and (2) the rentals were not reflected in the
entities’ corporate tax returns even though the rental payments “alleged to be owed go
back several years.” Susan proffered as an exhibit the equipment lease between GGT
and Touponse Enterprises, which George and George’s father had signed on January
10, 2019—four days before Susan had filed for divorce.
George’s expert, Robert Bailes, reviewed Stewart’s report and several business
documents and testified to a different valuation for Long Horizon, Touponse
Enterprises, and Twin Farms.
In George’s court-ordered inventory and appraisement, which was admitted as
a trial exhibit, George indicated that the Connecticut lawsuit involved a $582,211
“liability owed” to GGT and George’s father. He valued his interest in T4 Holdings
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at $22,000 and in Ashford Woods at $48,000. George’s valuations of T4 Holdings
and Ashford Woods seemed to include two properties: 486 South Main Street owned
by T4 Holdings and 0 Bunker Hill Road owned by Ashford Woods.
In a January 17, 2020 letter “rendition,” the trial court detailed its property
division. The trial court also expressed skepticism about the Connecticut lawsuit:
I am skeptical as to the lawsuit that has been filed by Husband’s father’s
company against the entities owned by the community and by
Husband’s father. In the lawsuit, Husband’s father’s company is
attempting to recover lease payments on equipment with those payments
going back as far as 2011. The lease upon which the lawsuit is
apparently based was signed on January 10, 2019, and the divorce was
filed four days later on January 14, 2019. Husband and his father could
not even get the names straight on the lease as, on the lease, Husband’s
company has leased the equipment to his father’s company.[2]
This, in
my opinion, is a blatant attempt on the part of Husband to defraud Wife
and the community estate. Husband is ordered to indemnify and hold
Wife and the community estate harmless from all costs, losses, damages,
or any recovery of any kind by Husband’s father’s company including
any attorney’s fees reasonably and necessarily incurred by Wife in the
defense of that lawsuit.
The trial court signed a final decree of divorce on June 26, 2020, dividing the
marital estate. As relevant to George’s appellate complaints, the trial court awarded to
George as his separate property (1) the South Main Street property and the Bunker
Hill property; (2) a 50% interest in Long Horizon, Twin Farms, and T4 Holdings; and
(3) a 33% interest in Ashford Woods. George’s separate-property award as to Long
2The lease agreement between GGT and Touponse Enterprises named GGT as
the lessee and Touponse Enterprises as the lessor; however, George signed the
agreement as lessee and George’s father signed as lessor.
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Horizon and Twin Farms was awarded “subject to [Susan’s] equitable interest.” To
that end, the trial court ordered George to pay Susan $700,000 partially due to “her
equitable interest in the businesses.” Finally, the trial court ordered George to
indemnify Susan and the community estate from any liability arising from the
Connecticut lawsuit.
George filed a motion for new trial attacking the trial court’s valuation of
Touponse Enterprises. Although the trial court held a hearing on the motion, it was
overruled by operation of law. See Tex. R. Civ. P. 329b(c). At George’s request, the
trial court made findings of fact and conclusions of law that tracked the prior letter
rendition, including the trial court’s skepticism of the timing and purpose of George’s
father’s Connecticut lawsuit. See Tex. Fam. Code Ann. § 6.711. In its findings, the
trial court characterized the South Main Street and Bunker Hill properties as part of
the community estate, valued South Main Street at $209,400, and valued Bunker Hill
at $122,600. The trial court also explained that it had considered Stewart’s and
Bailes’s testimony and the fact that “Stewart [had] made an on site observation in
Connecticut and was directed by [George] on that visit.”
3

3At the new-trial hearing, the trial court stated that it had found Stewart more
credible than Bailes.
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II. REVIEW OF PROPERTY DIVISION
In his appellate issue, George contends that the trial court’s property division
was an abuse of discretion. He points to the trial court’s “compound of errors,”
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including awarding the South Main Street and Bunker Hill properties even though
they were owned by limited-liability companies.
A. STANDARDS
In dividing a marital estate, the trial court is to do so in a manner that it deems
“just and right, having due regard for the rights of each party.” Tex. Fam. Code Ann.
§ 7.001. We review the trial court’s property division for an abuse of discretion, and
presume that it exercised its discretion properly. See Murff v. Murff, 615 S.W.2d 696,
698–99 (Tex. 1981). A trial court abuses its discretion if the division is manifestly
unfair. Mann v. Mann, 607 S.W.2d 243, 245 (Tex. 1980).
Although the trial court is not required to divide the marital estate equally, its
division must be equitable and supported by a reasonable basis in the record. See
Halleman v. Halleman, 379 S.W.3d 443, 452 (Tex. App.—Fort Worth 2012, no pet.);
O’Carolan v. Hopper, 71 S.W.3d 529, 532 (Tex. App.—Austin 2002, no pet.). See
generally Cameron v. Cameron, 641 S.W.2d 210, 223 (Tex. 1982) (“[W]e continue the
4George asserts that his specified and “other errors” resulted in a manifestly
unjust property division. We will only address alleged errors that George identifies
and decline his invitation to independently hunt for unassigned errors. See Tex. R.
App. P. 38.1(f), (i); Pat Baker Co. v. Wilson, 971 S.W.2d 447, 450 (Tex. 1998) (per
curiam).
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national trend endorsing the use of marital property as the means of settling the
equities between divorcing spouses.”). To the extent George argues that the evidence
does not support the trial court’s property division, we are still guided by the abuseof-discretion standard but consider the evidentiary support (or lack thereof) as a
factor relevant to our assessment of the trial court’s exercise of discretion. See Hinton
v. Burns, 433 S.W.3d 189, 193–94 (Tex. App.—Dallas 2014, no pet.); Zeptner v. Zeptner,
111 S.W.3d 727, 734 (Tex. App.—Fort Worth 2003, no pet.) (op. on reh’g).
B. REAL PROPERTIES AWARDED TO GEORGE
George contends that the trial court’s separate-property award regarding the
South Main Street and Bunker Hill properties was an abuse of discretion because the
properties were owned by business entities, not the parties; because the valuation
failed to account for any debts attached to the properties; and because the properties
had already been included in the valuations of T4 Holdings and Ashford Woods.
Although not clearly stated, George seems to argue that because the real properties
were improperly characterized as part of the community estate, were included as part
of his separate-property award, and were overvalued, the property division as a whole
was rendered manifestly unjust.
1. Specific Facts Regarding Award
In his inventory and appraisement, George stated that he owned 50% of T4
Holdings and that its value, which included the South Main Street property, was
$22,000. Regarding Ashford Woods, George stated that his percentage of ownership
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was 33%, that Ashford Woods owned the Bunker Hill property, and that the 33%
interest had been valued by Stewart at $48,000. He listed no debts or liabilities against
T4 Holdings, Ashford Woods, or the real properties.
5

Susan stated in her inventory and appraisement that Ashford Woods’ Bunker
Hill property, which was a vacant lot, had been appraised at $122,600 and had been
bought “to develop into a subdivision of 10 single family homes.” She described T4
Holdings’ South Main Street property as a “.35 acre commercial real estate office
building” that had a total valuation of $209,400. She averred that George owned
100% of Ashford Woods and 50% of T4 Holdings
Stewart testified that, based on the parties’ discovery responses, George owned
33% of Ashford Woods because George had “two silent partners” in that business.
Stewart valued a 33% community interest in Ashford Woods at $60,000 and a 50%
community interest in T4 Holdings at $24,500. Although Bailes reviewed Stewart’s
report, T4 Holdings’ and Ashford Woods’ formation documents, T4 Holdings’ and
Ashford Woods’ bank statements, T4 Holdings’ “QuickBooks files,” T4 Holdings’
recent tax returns, and real-estate appraisals for the South Main Street and Bunker Hill
5Because both T4 Holdings and Ashford Woods were formed during the
marriage, the ownership percentages were presumptively part of George and Susan’s
community estate. See Tex. Fam. Code Ann. §§ 3.002–3.003. Indeed, George does
not contend that the 50% portion of T4 Holdings or the 33% portion of Ashford
Woods had been his separate property before the trial court’s award and, certainly,
does not do so by clear and convincing evidence. See id. § 3.003(b).
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properties, he did not proffer an explicit valuation or ownership-percentage opinion
regarding those two companies or their real properties.
In the final divorce decree, the trial court awarded to George as his separate
property the South Main Street property, the Bunker Hill property, a 50% interest in
T4 Holdings, and a 33% interest in Ashford Woods.
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In its findings and conclusions,
the trial court characterized the South Main Street and Bunker Hill properties as part
of the community estate. Further, the trial court found that the value of a 50%
interest in T4 Holdings was $22,000 but that T4 Holdings’ South Main Street property
was worth $209,400. The trial court valued a 33% interest in Ashford Woods at
$40,000 and Ashford Woods’ Bunker Hill property at $122,600.
2. Abuse of Discretion
It is uncontradicted that both T4 Holdings and Ashford Woods are limitedliability companies founded during George and Susan’s marriage,
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that T4 Holdings
owned the South Main Street property, and that Ashford Woods owned the Bunker
6George asserts that the trial court actually awarded him only 50% of the
community’s interest in T4 Holdings and 33% of the community’s interest in Ashford
Woods, not the entirety of the community’s interest. Because we ultimately conclude
that this case must be remanded for a new division of the community estate, we need
not decide the import of the trial court’s percentage language in the final divorce
decree. See Tex. R. App. P. 47.1.
7The parties repeatedly assert, with no record support, that the entities are
partnerships and that their assets should be divided based on Texas partnership law.
There is no evidence that T4 Holdings and Ashford Woods, both named as LLCs,
were instead partnerships.
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Hill property. It is also uncontradicted that both properties are located in
Connecticut. That raises a preliminary conflict-of-laws question. George’s and
Susan’s rights to the Connecticut properties are to be determined under the law of the
state in which the land is situated—Connecticut law. See Colden v. Alexander,
171 S.W.2d 328, 335–36 (Tex. 1943); 38 Aloysius A. Leopold & Gerry W. Beyer,
Texas Practice Series: Marital Property and Homesteads § 8.20 (2020). But no party pleaded
and proved the substance of Connecticut law regarding the divisibility of corporateowned property or that Connecticut law differs from Texas law; and no party
requested the trial court to take judicial notice of Connecticut’s corporate or maritalestate law. See Tex. R. Evid. 202; Gevinson v. Manhattan Constr. Co. of Okla., 449 S.W.2d
458, 465 n.2 (Tex. 1969). In fact, it appears the parties never mentioned the issue at
all. Accordingly, we presume that Connecticut law is the same as Texas law regarding
the divisibility of a business entity’s real property.
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See Gevinson, 449 S.W.2d at 465 n.2;
Burlington N. & Santa Fe Ry. Co. v. Gunderson, Inc., 235 S.W.3d 287, 291 (Tex. App.—
Fort Worth 2007, pet. withdrawn); Leopold & Beyer, supra § 8.20.
A limited-liability company is a separate legal entity, and property owned by
such a company is neither the community property nor the separate property of its
members. Tex. Bus. Org. Code Ann. § 101.106(a)–(a-1); Mandell v. Mandell,
310 S.W.3d 531, 539 (Tex. App.—Fort Worth 2010, pet. denied); cf. McKnight v.
8
Indeed, the parties’ briefing discusses the effect of the Texas Business
Organization Code on the transfer of a business entity’s property.
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McKnight, 543 S.W.2d 863, 867 (Tex. 1976) (holding same for specific assets owned by
partnership). The business property that is subject to division is the interest in the
limited-liability company itself, not the company’s specific assets. Tex. Bus. Org.
Code Ann. § 101.106(b); In re Marriage of Collier, 419 S.W.3d 390, 403 (Tex. App.—
Amarillo 2011, no pet.). And a trial court is authorized to divide only the parties’
community estate. Pearson v. Fillingim, 332 S.W.3d 361, 363 (Tex. 2011) (per curiam)
(citing Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139 (Tex. 1977)); see also Tex. Fam. Code
Ann. § 7.001. Thus, the trial court clearly abused its discretion by characterizing the
real properties owned by T4 Holdings and Ashford Woods as part of the community
estate and, thereafter, awarding them to George as his separate property.
3. Effect on Just-and-Right Division
Our conclusion that the characterization of the real properties as part of the
community estate was an abuse of discretion does not end our inquiry, however.
Because we indulge every reasonable presumption in favor of the trial court’s
discretionary division, we must also determine whether that error materially affected
the just-and-right division of the community estate. See Jacobs v. Jacobs, 687 S.W.2d
731, 732 (Tex. 1985); Mandell, 310 S.W.3d at 539; Boyd v. Boyd, 131 S.W.3d 605, 610
(Tex. App.—Fort Worth 2004, no pet.); see also Tex. R. App. P. 44.1(a)(1). If a
mischaracterization has only a slight effect on the trial court’s division of the
community estate, the error does not require reversal; but if the mischaracterization is
of such magnitude that it affects the just-and-right division of the community estate,
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we must remand the entire case to the trial court for another division based on the
correct characterization of the property. Boyd, 131 S.W.3d at 617 (citing Zeptner,
111 S.W.3d at 740).
George points out that the trial court’s inclusion of the two properties, which
the trial court had collectively valued at $332,000, increased the value of his separateproperty award by that amount in a community estate valued at approximately $2.6
million.9 Mischaracterizing the real properties as part of the community estate and
awarding them to George resulted in an improper $332,000 increase in George’s
separate-property award, which is not an insignificant portion of the value of the
community estate or of the value of George’s separate-property award. In short, the
improper characterization of the real properties resulted in an overvaluation of the
community estate and of George’s separate-property award, thereby materially
affecting the trial court’s property division. See Lewis v. Lewis, 944 S.W.2d 630, 630–31
(Tex. 1997) (per curiam); Hopf v. Hopf, 841 S.W.2d 898, 902 (Tex. App.—Houston
[14th Dist.] 1992, no pet.); see also In re Marriage of Hardin, 572 S.W.3d 310, 314–15
(Tex. App.—Amarillo 2019, no pet.); Attaguile v. Attaguile, 584 S.W.3d 163, 177–79
(Tex. App.—El Paso 2018, no pet.); Zeptner, 111 S.W.3d at 740–41; In re Marriage of
Taylor, 992 S.W.2d 616, 621 (Tex. App.—Texarkana 1999, no pet.).
9The parties agree that this was the trial court’s valuation of the community
estate.
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4. Appropriate Disposition
Because we have found an abuse of discretion in the characterization of the
community estate that materially affected the trial court’s property division, we must
“remand the entire community estate for a new division.” Jacobs, 687 S.W.2d at 733;
see also Lewis, 944 S.W.2d at 631; McKnight, 543 S.W.2d at 868. George challenges
other aspects of the trial court’s property division; however, we decline to address
those arguments because we have already found reversible error in the division. See
Chi Hua Lee v. Linh Hoang Lee, No. 02-18-00006-CV, 2019 WL 3024478, at *11 n.1
(Tex. App.—Fort Worth July 11, 2019, no pet.) (mem. op.). Because the error could
affect whether the trial court deems the remaining awards to be just and right, we
leave those issues to the trial court’s consideration in its new division on remand. See
id. at *11 & n.1, *12.

Outcome: The real properties that the trial court awarded to George as his separate
property were not part of the community estate and, thus, were not subject to
division. The inclusion of the real properties in the community estate and in George’s separate-property award materially affected the trial court’s division. Thus, we reverse the trial court’s final divorce decree regarding the community-property division and remand the entire community estate for a new division.
43.3(a). We affirm that portion of the final divorce decree granting the parties a
divorce. S

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