How do Texas courts determine what an equitable distribution of property between divorcing spouses is?

§ 7.001. General Rule Of Property Division

In a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage.

“[T]he estate of the parties” was to be divided as stated in the divorce decree's two schedules. Trial courts can only divide community property, and the phrase “estate of the parties” encompasses the community property of a marriage, but does not reach separate property. Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139 (Tex. 1977) (citations omitted). Thus, “estate of the parties” in the Fillingim's divorce decree refers to community property only.

Property owned or claimed by a spouse before marriage shall be that spouse's separate property. TEX. CONST. art. XVI § 15; TEX. FAM.CODE ANN. § 3.001(1) (Vernon 2006); Love v. Bailey-Love, 217 S.W.3d 33, 35 (Tex.App.-Houston 1st Dist. 2006, no pet.). "A court may not decree that separate property of one spouse becomes the separate property of the other spouse because `the nature of separate property is determined by the Texas Constitution, rather than by what is just and right.'" Love, 217 S.W.3d at 35 (quoting Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 140 (Tex. 1977)). Generally, whether property is separate or community property is determined by its character at inception. McClary v. Thompson, 65 S.W.3d 829, 834 (Tex.App.-Fort Worth 2002, pet. denied). However, contributions with earned income to 401(k)'s and retirement plans during marriage are community property. See id. at 834-35 & n. 2 (discussing methods for determining community portion of defined contribution plans and defined benefit plans).

§ 15. SEPARATE AND COMMUNITY PROPERTY

All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse; and laws shall be passed more clearly defining the rights of the spouses, in relation to separate and community property; provided that persons about to marry and spouses, without the intention to defraud pre-existing creditors, may by written instrument from time to time partition between themselves all or part of their property, then existing or to be acquired, or exchange between themselves the community interest of one spouse or future spouse in any property for the community interest of the other spouse or future spouse in other community property then existing or to be acquired, whereupon the portion or interest set aside to each spouse shall be and constitute a part of the separate property and estate of such spouse or future spouse; spouses also may from time to time, by written instrument, agree between themselves that the income or property from all or part of the separate property then owned or which thereafter might be acquired by only one of them, shall be the separate property of that spouse; if one spouse makes a gift of property to the other that gift is presumed to include all the income or property which might arise from that gift of property; spouses may agree in writing that all or part of their community property becomes the property of the surviving spouse on the death of a spouse; and spouses may agree in writing that all or part of the separate property owned by either or both of them shall be the spouses' community property.

Certainly, a court cannot divest an owner of separate property. Eggemeyer, 554 S.W.2d at 140–41 (concluding that taking separate property from one spouse and giving it to the other violates Article I, section 19 of the Texas Constitution). But whether the mineral deeds were originally Dan's separate property or not, they were properly deemed community property when he failed to rebut the Family Code's presumption of community property in the original hearing. See Tarver, 394 S.W.2d at 783. This is not a divestiture of separate property, but a necessary classification of property as set by the community presumption. Even further, as this Court stressed in Reiss v. Reiss, “a court has jurisdiction to characterize community property—even if it does so incorrectly.” 118 S.W.3d at 443. Dan did nothing to prove that the mineral rights were gifts in the original hearing, and there is no presumption they were his separate property. To hold otherwise would undermine the finality of divorce decrees by opening them up to collateral attacks (notwithstanding the state of the record in the original divorce proceeding), undermine the Family Code's presumption that all property in the parties' possession is community, and turn residuary clauses in existing decrees into invitations to relitigate property divisions that former spouses now dislike.

A final, unambiguous divorce decree that disposes of all marital property bars relitigation. Shanks v. Treadway, 110 S.W.3d 444, 449 (Tex. 2003). All property acquired during a marriage is presumed to be community property, and the burden is placed on the party claiming separate property to prove otherwise, which Dan failed to do in the original proceeding. Because the mineral rights were not divided elsewhere in the decree and were treated as community property for the reasons discussed above, the residuary clauses in the decree clearly and unambiguously included and divided the mineral rights between Dan and Rita. Therefore, the deeds were divided by the original decree, and there is no jurisdiction to modify that division.

The trial court lacked jurisdiction to alter the original divorce decree, and the court of appeals erred in affirming the trial court's declaration that the deeds were Dan's separate property. Accordingly, and without hearing oral argument, Tex.R.App. P. 59.1, we reverse the court of appeals' judgment and render judgment dismissing Dan's claims for want of jurisdiction.

§ 3.003. Presumption Of Community Property

(a) Property possessed by either spouse during or on dissolution of marriage is presumed to be community property.

(b) The degree of proof necessary to establish that property is separate property is clear and convincing evidence.

In a decree of divorce or annulment, the trial court is required to "order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of

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each party and any children of the marriage." TEX. FAM.CODE ANN. § 7.001 (Vernon 2006); Murff v. Murff, 615 S.W.2d 696, 698-99 (Tex.1981). The trial court has broad discretion in making a "just and right" division of the community estate, and its discretion will not be disturbed on appeal unless a clear abuse of discretion is shown. McElwee v. McElwee, 911 S.W.2d 182, 189 (Tex.App.-Houston 1st Dist. 1995, writ denied). A trial court may consider many factors when exercising its broad discretion to divide marital property, and it is presumed it exercised its discretion properly. Murff, 615 S.W.2d at 699. Such factors include the nature of the marital property, the relative earning capacity and business experience of the spouses; their relative financial condition and obligations; their education; the size of separate estates; the age, health, and physical conditions of the parties; fault in breaking up the marriage, the benefit the innocent spouse would have received had the marriage continued; and the probable need for future support. See id.; Smith v. Smith, 836 S.W.2d 688, 692-93 (Tex.App.-Houston 1st Dist. 1992, no writ).

When the circumstances demonstrate a reasonable basis for it, a trial court may order an unequal division of community property. See Murff, 615 S.W.2d at 698-99 & n. 1; Hailey v. Hailey, 176 S.W.3d 374, 380 (Tex.App.-Houston 1st Dist. 2004, no pet.); see also Nowzaradan v. Nowzaradan, No. 01-05-00094-CV, 2007 WL 441709, at *6 (Tex.App.-Houston 1st Dist. Feb. 8, 2007, no pet.) (not designated for publication). The test of whether the trial court abused its discretion is whether it acted arbitrarily or unreasonably and without reference to any guiding principles in dividing the estate. Downer, 701 S.W.2d at 241-42; Hailey, 176 S.W.3d at 380. A reviewing court may not reverse a trial court's judgment on property division unless the trial court has clearly abused its discretion or has made an inequitable division. Smith, 836 S.W.2d at 692.

To the extent that the trial court's disposition of the parties' estate did favor Robert, the trial court acted within its discretion. See Murff, 615 S.W.2d at 698-99 & n. 1; Hailey, 176 S.W.3d at 380. Although the record does support Elaine's argument that she has a lower potential for future earning than Robert due to her disability, the trial court was also entitled to consider Elaine's fraud at the time of her marriage to Robert and her fault in ending the marriage. The trial court also could have considered the evidence that Elaine had a separate estate worth more than $200,000.00 at the time that she separated from Robert and the nature of the property that each party brought into this relatively short-lived marriage.³ See Murff, 615 S.W.2d at 699; Smith, 836 S.W.2d at 692-93. We cannot conclude that the trial court acted arbitrarily or unreasonably and without reference to any guiding principles in dividing the estate. See Downer, 701 S.W.2d at 241-42; Hailey, 176 S.W.3d at 380. Therefore, we hold that the trial court did not abuse its discretion. Smith, 836 S.W.2d at 692 (holding that reviewing court may not reverse trial court's judgment on property division unless trial court has clearly abused its discretion or has made inequitable division).⁴

The court of civil appeals concluded that fault is an unsatisfactory consideration in making the property division for two reasons. The first is that it would automatically result in an unjust division, in all circumstances, reasoning that it denies consideration of the future needs of the spouse on the short end of the property division. We do not agree. In Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21 (1923), we stated:

While the court, in ordering the divorce, should not be unmindful of the benefits which the spouse not at fault would have derived from a continuance of the marriage, through the estate of the other spouse, its power is not limited to providing compensation for such benefits. Instead the court is to do complete equity as between the husband and wife and the children, having due regard to all obligations of the spouses and the probable future necessities of all concerned.

248 S.W. at 22. Thus we recognized that it is possible for the trial court to make a "fair and just" division by considering fault as well as other considerations. Likewise, in Duncan v. Duncan, 374 S.W.2d 800 (Tex.Civ.App.-Eastland 1964, no writ), an unequal division of property was justified based on probable future need for support, fault in breaking up the marriage and the benefits the innocent spouse would have received from a continuation of the marriage. ¹ The circumstances of each marriage dictate what factors should be considered in the property division upon divorce. In the present case, the trial court expressly stated

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three considerations in the property division: James' conduct, the disparity of earning power of the spouses, and the rights of the parties' adult disabled son.

The second reason given by the court of civil appeals in concluding that fault should not be considered is that fault does not ever lie totally with one spouse, and that consideration of fault would "require a trial judge to assess each and every bicker, nag and pout, as well as greater faults, of each spouse." 594 S.W.2d at 545. Again, we do not agree. We are not here concerned just with bickers, nags and pouts. Here, we have unchallenged findings of cruelty, adultery, and desertion. Both the Legislature and the courts have traditionally considered these to be "fault." In this situation, we agree with the trial court that fault may be a consideration to be weighed in the division of property. This does not mean that fault must be considered in all cases where a divorce is granted on fault grounds. Our holding is that it may be considered.

In considering fault, along with other factors, the trial court is directed by section 3.63 to make a property division which is "just and fair." The division should not be a punishment for the spouse at fault. That would be an abuse of the trial court's discretion. There is a difference between making a just and right division of the property with due regard for the children of the marriage, as approved in Hedtke almost sixty years ago, and punishing the errant spouse. In general, the trial courts in Texas have perceived this distinction. The trial court has broad discretion in determining the disposition of property in divorce actions and this discretion will not be disturbed unless an abuse of discretion is shown. McKnight v. McKnight, 543 S.W.2d at 866; Cockerham v. Cockerham, 527 S.W.2d 162, 173 (Tex. 1975); Bell v. Bell, 513 S.W.2d 20, 22 (Tex. 1974). Considering the record before us, we are unable to say that the trial court abused its discretion.

The division of a community estate in divorce must be "just and right, having due regard for the rights of each party and any children of the marriage."¹⁵ "Just" and "right" are broad terms. Black's Law Dictionary defines "just" as "[l]egally right; lawful; equitable",¹⁶ and "right" as "[t]hat which is proper under law, morality, or ethics".¹⁷ And "due regard" simply means the "[a]ttention, care, or consideration"¹⁸ that is "[j]ust, proper, regular, and reasonable".¹⁹ A trial court should consider many factors, including "the spouses' capacities and abilities ... and the nature of the property."²⁰ The court may consider the "fault in breaking up the marriage", though the community-property division "should not be a punishment for the spouse at fault."²¹ In the end, "the court is to do complete equity as between the husband and wife and the children, having due regard to all obligations of the spouses and to the probable future necessities of all concerned."²²

Thus, the issue before us is this: In the circumstances presented, can it be just and right, as a matter of law, in dividing a community estate in divorce, to award an interest in the family home to a spouse convicted of using the home to sexually abuse his stepdaughter? The issue is not whether Barney's conviction for sexual abuse of his stepdaughter contributed to the breakup of his marriage and for that reason could be considered in dividing the community estate. The trial court appears to have done just that. Nor is the issue whether awarding Amanda 100% of the home "could operate to punish Barney for his fault in the dissolution of the marriage,"

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as the court of appeals worried.²⁷ It can certainly be argued that Barney's punishment was his 60–year prison sentence, not the unequal division of the home (though as JUSTICE BOYD observes, "[a] sixty-year prison sentence hardly seems sufficient").²⁸ Wholly apart from whether Barney's crime contributed to the breakup of the marriage, the question is whether it can be just and right to award him an interest in the home he repeatedly used to sexually abuse multiple victims, including his stepdaughters.

We have little difficulty answering no. As broad as the terms "just" and "right" are, they are not meaningless. They express values fundamental to our society, values we hold precious. Our society is diverse, and perceptions of what is "just" and "right" can differ with perspective. But we think it virtually beyond argument that awarding Barney an interest in the very home he used to sexually abuse his stepdaughter, for which he was convicted, and others is unjust and wrong, not as a matter of fact, but as a matter of law. Such an award was thus an abuse of discretion.

To be clear, we limit our opinion today to narrow circumstances where the behavior involves the use of community property, is as egregious as Barney's, and results in a criminal conviction. Family violence is, deplorably, all too common. We do not hold that its occurrence alone deprives the guilty spouse of an interest in all or even a specific part of the community estate. The elements that compel our decision are that Barney sexually abused his stepdaughters and others repeatedly over a protracted period, that he used the family home to commit the abuse, and that he was convicted and severely sentenced for the continuous sexual abuse of a child under the age of 14. One can hypothesize a harder case than this one—a single incident, weak evidence, an enormous home, no criminal conviction. A division of community property can be just and right despite violence directed against the family. The award of an interest in the home to Barney cannot be. JUSTICE BOYD complains that this is "unworkable as a legal principle."³⁸ We fail to see why it is more unworkable than reasonableness, a standard that pervades the law.

"Amanda presents a forceful argument", JUSTICE BOYD begrudges.³⁹ We agree.

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The judgment of the court of appeals is reversed and the case is remanded to the trial court for further proceedings.