Luc J. Messier v. Katy Shuk Chi Lau Messier

458 S.W.3d 155, 2015 Tex. App. LEXIS 680, 2015 WL 452171
Court of Appeals of Texas·Decided January 27, 2015·No. NO. 14-13-00572-CV·Published·Cited by 28 cases

Opinion

OPINION

Martha Hill Jamison, Justice

Luc J. Messier appeals from the trial court’s order purporting to enforce and clarify portions of the final decree of divorce between Luc and his ex-wife, Katy Shuk Chi Lau Messier. The issues below and on appeal revolve around community property stock options held in Luc’s name. A portion of these options were awarded to Katy in the decree, and the principal dispute concerns whether Luc was required to exercise the options upon Katy’s demand or, instead, was entitled or required to use his own discretion in deciding when to execute them. The trial court determined that the options had to be exercised on Katy’s demand and issued an order providing for enforcement mechanisms. The trial court further found that, in failing to exercise the options on Katy’s demand, Luc breached his fiduciary duty to *159 Katy, and the court awarded Katy attorney’s fees.

In four issues, Luc contends that the trial court erred in (1) construing the decree as requiring Luc to exercise the options on Katy’s demand, (2) “clarifying” the decree by adding detailed orders for Luc to perform and consequences for failure to do so, (3) holding Luc breached his fiduciary duty, and (4) awarding Katy her attorney’s fees. Because certain claims and issues have become moot during the pendency of the appeal, we vacate the portions of the trial court’s order that purport to clarify the divorce decree and that hold Luc breached his fiduciary duty to Katy, and we dismiss those claims. Additionally, we modify the award of Katy’s attorney’s fees. We affirm the trial court’s order as modified.

I. Background

The final decree was signed on February 11, 2011. Among other things, the decree divided the marital estate and determined issues relating to the custody of the children of the marriage. 1 As part of the division of property, Katy was awarded a 60% interest and Luc a 40% interest in a number of stock options that Luc had earned through his employment during the marriage as a senior executive for Conoco-Phillips. 2 Specifically, as to Luc’s share, the decree awarded him “[t]he following ConocoPhillips Stock Option Awards, representing 40% of the community portions from [Luc’s] employment, subject to all related tax liabilities and withhold-ings .... ” The decree then listed specific numbers of options from among nine sets of options earned on particular days, for example: “16,320 options of the vested options attributable to the 40,800 options from the 02/08/07 award with an exercise price of $66.37.” In the portion of the decree awarding property to Katy, it awarded her “[a] portion of the benefits, if any, received by Luc ... upon exercise of the following ConocoPhillips Stock Option Awards, representing 60% of the community portions from [Luc’s] employment, subject to all related actual tax liabilities and withholdings.... ” It then listed nine sets of options corresponding to the nine sets listed for Luc, for example, “24,480 options of the vested options attributable to the 40,800 options from the 02/08/07 award with an exercise price of $66.37.”

A subsequent section of the decree contained “Special Provisions Regarding Stock Options.” This section stated in part:

The award to [Katy] of a portion of the community stock options is subject to all of the terms, conditions and restrictions of the Company’s Stock Incentive Plan ... as well as other restrictions that may be imposed by the Company, such as those designated in the Company’s insider trading policy.
Pursuant to the terms of the Plans, the stock options awarded to [Katy] cannot be assigned and/or transferred from [Luc] to [Katy] by the Company. The parties acknowledge that (i) the stock options awarded to [Katy] may be exercisable only by [Luc] (or [Luc’s] legal representative or estate) and (ii) the exercise of the stock options may be sub *160 ject to restrictions by reason of [Luc’s] employment, including but not limited to the applicable insider trading rules and regulations. However, [Katy] shall have equitable ownership of the stock options awarded to [Katy].
[Katy’s] stock options are subject to a constructive trust. [Katy’s] rights in and to the stock options awarded to [Katy] herein, and all benefits appurtenant thereto, shall inure to the benefit of [Katy’s] heirs, executors and assigns. Similarly, [Luc’s] obligations as set forth herein shall be binding on [Luc] and on [Luc’s] heirs, executors, administrators and assigns. Upon the death of [Luc], any stock options awarded to [Katy] which are still exercisable shall be exercised by [Luc’s] executor or administrator, or by the person who acquires such stock options by will or the laws of descent and distribution, or otherwise by reason of the death of [Luc], as directed by [Katy].
[Luc] shall account for taxes assessed on the exercised stock options and shall cause the proceeds from the stock option exercise, net of taxes assessed, to be transferred to [Katy]. [Katy] shall pay all taxes related to any portion of benefits awarded to her herein by either reporting the income and related with-holdings on her return(s), or reimbursing [Luc] for any taxes he is required to pay on amounts awarded to her that are in excess of the related withholdings on her portion. •
When [Luc] exercises any option in which [Katy] has an interest ..., he will account to her by delivering the net proceeds. The division of the options will be proportionate between [Luc’s] separate property and the community property portions henceforth owned jointly between [Luc] and [Katy], and the division of the community property portions of the options shall be 60% to [Katy] and 40% to [Luc],

In April 2012, Katy filed suit in the court of continuing jurisdiction after Luc declined to exercise the stock options on her demand. 3 In her Third Amended Motion, her live pleading at the time of trial, Katy essentially contended that the final decree unambiguously established rights and duties that Luc had failed to follow. On that basis, she sought enforcement of the decree, damages for breach of fiduciary duty, imposition of a fine among other relief for contempt, an accounting, and declaratory judgment setting forth Luc’s obligations relating to the options. In the alternative, she sought clarification of the decree.

During a hearing on December 19, 2012, Luc testified that he believed that under the final decree, he had a duty as the constructive trustee to use his discretion in deciding when to exercise the options so as to maximize the benefit for Katy. Luc introduced evidence that the options had increased significantly in value from the time of Katy’s demand to the time of trial. Luc acknowledged, however, that at least a part of his motivation in refusing to exercise the options upon Katy’s demand was to prevent Katy from leaving the country with the children in violation of travel restrictions placed upon her in the final decree. Katy presented a financial expert who emphasized the significant differences between the financial situations of Luc and Katy and suggested Katy had a more immediate need for access to the options proceeds than did Luc.

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Luc J. Messier v. Katy Shuk Chi Lau Messier, 458 S.W.3d 155, 2015 Tex. App. LEXIS 680, 2015 WL 452171 (Tex. Ct. App. 2015).

458 S.W.3d 155 (Luc J. Messier v. Katy Shuk Chi Lau Messier) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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