Nancy W. Richard v. Charles David Towery

• Court: Court of Appeals of Texas
• Decided: April 18, 2013
• Docket: 01-11-00132-CV
• Status: Published

Opinion

Opinion issued April 18, 2013.

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-11-00132-CV ——————————— NANCY W. RICHARD, Appellant V. CHARLES DAVID TOWERY, Appellee

On Appeal from the County Court at Law No. 2 Galveston County, Texas Trial Court Case No. 06-FD-2307

MEMORANDUM OPINION

Nancy Richard challenges the trial court’s judgment after a bench trial on

her divorce from Charles Towery and the division of their community estate. In six

issues, Richard contests the trial court’s denial of her motion to strike certain evidence as a discovery sanction; the trial court’s characterization, valuation, and

division of various assets; and the procedures employed by the trial court to handle

a delay in finalizing the community-estate division due to an outstanding tax

matter. We affirm.

Background

Towery and Richard married in March 2003. Just over three years later,

Towery filed a petition for divorce; Richard countersued for divorce. The trial

court held a bench trial in 2008 but later set aside its rendition and ordered a new

trial. The second bench trial began in April 2009 but was continued pending the

resolution of certain tax matters. The trial court entered a final judgment in late

2010, after a two-day rendition hearing.

In the final judgment, the trial court awarded Towery the following property:

certain real property; all household furnishings and goods, clothing, jewelry, and

personal affects within his sole control; all cash or funds in certain checking,

savings, and money market accounts; all stocks, bonds, mutual funds, and

securities in certain brokerage and investment accounts; benefits associated with

his retirement accounts; various motor vehicles; fifty percent of each of three

limited partnership interests; one hundred percent of two limited partnership

interests; the Towery Associates and Towery Law Firm business entities; and

various season tickets and seat licenses.

2 The trial court awarded Richard the following property: certain real

property; all household furnishings and goods, clothing, jewelry, and personal

affects within her sole control; all cash or funds in certain checking and savings

accounts; all stocks, bonds, mutual funds, and securities in certain brokerage and

investment accounts; benefits associated with her retirement, pension, and 401(k)

plans; her life insurance policy; certain motor vehicles; fifty percent of each of

three limited partnership interests; an eight percent interest in Towery’s partnership

interest in “the partnership of Southshore/Hwy. 96, Ltd.”; the contents of her safety

deposit boxes; unclaimed property in the amount of $2,167.96; and all of her

interest in any trusts created under the will of Thomas Glenn Richard, including a

Morgan Stanley account. The trial court further awarded Richard a judgment of

$61,473.68 against Towery for the purpose of a just and right division of the

community property.

At Richard’s request, the trial court entered the following findings of fact

and conclusions of law:

Findings of Fact

1. [Towery] and [Richard] were married on March 8, 2003.

2. At the time of the filing of this suit, [Towery] had been a domiciliary of Texas for six months and a resident of Galveston County for ninety days.

3. The marriage of [Towery] and [Richard] has become insupportable because of discord or conflict of personalities that

3 destroys the legitimate ends of the marital relationship and prevents any reasonable expectation of reconciliation.

4. [Towery] and [Richard] own separate and community property as reflected in the attached Exhibit 1, with the value reflected in Exhibit 1.

5. The liabilities of the parties are reflected in the attached Exhibit 1. All liabilities are community liabilities.

6. The tax considerations for each asset to which tax considerations apply are set out in Exhibit 1.

7. Any finding of fact that is a conclusion of law shall be deemed a conclusion of law.

Conclusions of Law

1. The Original Petition for Divorce filed by [Towery] and the counterclaim for divorce filed by [Richard] are in due form and contain all the allegations required by law.

2. This Court has jurisdiction of the parties and of the subject matter of this case.

3. All legal prerequisites to granting a divorce have been met.

4. The divorce is granted on the ground of insupportability.

5. In making the determination of a just and right division, the Court took into consideration the factors described in Murff v. Murff, 615 S. W.2d 696 (Tex. 1981). The Court also considered taxes as specified in Tex. Fam. Code § 7.008.

6. The division of the property of [Towery] and [Richard] effected by the final judgment is just and right, having due regard for the rights of each party.

4 Exhibit 1, referenced in and attached to the trial court’s findings of fact and

conclusions of law, is a joint exhibit filed by the parties in which they stipulate as

to the character, value, and award of their community assets, except as to certain

items they specifically disputed.

Richard appealed from the trial court’s judgment, challenging the trial

court’s (1) admission of certain documents, (2) determination of Towery’s separate

assets, (3) assessment of the value of Towery & Associates, (4) “decision to

‘freeze’ the marital estate and delay rendition of the divorce” for more than

nineteen months, and (5) division of assets acquired after April 1, 2009.

Admission of Documents

In her first issue on appeal, Richard contends that the trial court abused its

discretion in denying her motion to exclude certain evidence that, according to

Richard, Towery did not timely disclose in discovery. She asserts that Towery’s

supplemental production of documents twenty-seven days before trial was

presumptively untimely under Rule 193.5(b) of the Texas Rules of Civil Procedure

and therefore the documents should have been excluded unless Towery

demonstrated good cause for the late production or lack of unfair surprise, which

Towery did not do. She further asserts that the documents were not cumulative of

other evidence and the admission of the documents caused the rendition of an

5 improper judgment by causing the trial court to mischaracterize certain property as

Towery’s separate property rather than community property.

Towery responds that his production was not untimely because Richard did

not request that the documents be produced in discovery; he produced the

documents under Rule 1006 of the Texas Rules of Evidence—governing disclosure

of documents underlying summaries—as the documentation underlying his

separate property tracing schedule, and he produced the schedule itself two months

before trial. According to Towery, even if the requests for production on which

Richard relied did cover the documents in question, Towery would not have been

obligated to produce the documents pursuant to those requests because Richard did

not obtain rulings on Towery’s objections to those requests. Towery also contends

that Richard was not unfairly surprised by the production of his updated tracing

schedules and the underlying documents because Towery disclosed the starting

balances for his separate holdings before the first trial of this case and disclosed his

proposed division of assets two months before the second trial; his supplemental

production twenty-seven days before the second trial merely amended his separate

property calculations. Alternatively, Towery responds that the documents were

admissible as documents supporting a summary under Rule 1006 of the Texas

Rules of Evidence, which does not require that underlying documents be made

available thirty days before trial. Finally, Towery responds that Richard’s

6 argument on appeal is waived because it is not the argument she made in her

motion to strike in the trial court.

A. Richard must demonstrate an abuse of discretion and error that probably caused the rendition of a wrong judgment

Whether to admit or exclude evidence and whether to impose discovery

sanctions generally are decisions within the trial court’s discretion, and the trial

court’s decision regarding discovery sanctions will be set aside only if the court

clearly abused its discretion. Leax v. Leax, 305 S.W.3d 22, 32 (Tex. App.—

Houston [1st Dist.] 2009, pet. denied) (citing In re J.P.B., 180 S.W.3d 570, 575

(Tex. 2005) and United Bus. Mach., Inc. v. S.W. Bell Media, Inc., 817 S.W.2d 120,

122 (Tex. App.—Houston [1st Dist.] 1991, no writ)). To establish a clear abuse of

discretion, Richard must show that the trial court’s action was arbitrary or

unreasonable in light of all the circumstances of the case. See id. (citing Downer v.

Aquamarine Operators, Inc., 701 S.W.2d 238, 241−42 (Tex. 1985)). “The trial

court may consider everything that has occurred during the history of the litigation

when determining how to sanction a party.” Id.

Moreover, to obtain reversal of the trial court’s judgment based on error in

the admission or exclusion of evidence, Richard must show that the trial court’s

ruling was in error and that the error (1) probably caused the rendition of an

improper judgment or (2) probably prevented the appellant from properly

presenting the case to the court of appeals. TEX. R. APP. P. 44.1; Interstate 7 Northborough P’ship v. State, 66 S.W.3d 213, 220 (Tex. 2001). “Typically, a

successful challenge to a trial court’s evidentiary rulings requires the complaining

party to demonstrate that the judgment turns on the particular evidence excluded or

admitted.” Interstate Northborough P’ship, 66 S.W.3d at 220.

B. Richard has not demonstrated that the trial court abused its discretion in denying her motion to strike

In her motion to strike late discovery responses and tracing schedules,

Richard asserted that Towery produced updated tracing schedules for his separate

assets in supplemental document productions on March 10 and 11, 2009—less than

thirty days before the April 2009 trial setting—and that these productions included

brokerage and stock statements timely requested by Richard but not previously

produced by Towery. Richard attached to her motion to strike her “Interrogatories,

Requests for Production and Requests for Disclosure,” but did not identify which

requests or interrogatories compelled the production of the documents she

identified as having been untimely produced. On appeal, Richard relies on request

for production number twenty-four and interrogatory number eleven,1 though she

1 Interrogatory number eleven states, “In the event you are claiming any property as your separate property, please state each and every item that you claim as separate property and the factual basis that supports your claim that such property is your separate property.” Request for production number twenty-four seeks documents “reflecting upon the factual basis of your claim to separate property inquired about in Interrogatory 11 served upon your counsel contemporaneously herewith.”

8 admits that she did not raise these requests before the trial court. 2

The “Interrogatories, Requests for Production and Requests for Disclosure”

that Richard attached to her motion to strike contain fifty requests for production,

thirteen interrogatories, and requests for disclosure. Richard did not attach any of

Towery’s responses to her discovery requests. Nor does the record contain any

evidence submitted by Richard to the trial court at the hearing on her motion to

strike in April 2009. After filing this appeal, Richard filed Towery’s sixth and

seventh supplemental responses to her requests for production with the trial court.

Although Towery’s original responses were not offered into evidence in

connection with Richard’s motion to strike, they are in the appellate record from an

earlier discovery dispute. In his responses to Richard’s requests for production,

Towery objected to the time and manner of production demanded in Richard’s

requests and responded that the responsive documents “are voluminous” and that

responsive documents “are available for inspection” at Towery’s office “during

regular business hours, upon reasonable request.”

2 Richard also references requests for production numbers seventeen and thirty- three, which she also did not rely on before the trial court. Request for production number seventeen states, “Video tape recordings, motion pictures, photographs, demonstrative evidence or portraits reflecting upon or evidencing any facts involved in this litigation.” Request for production number thirty-three states, “All drawings, graphs, charts, photographs, tape or electronic records, and audio/video recordings responsive to the discovery propounded upon you contemporaneously herewith.”

9 In March 2008, over a year before the hearing on Richard’s motion to strike,

Richard filed a motion to compel in which she asserted that Towery’s responses to

her requests for documentation were incomplete. Pursuant to this motion, the trial

court ordered Towery to produce documents responsive to requests for production

numbers one, nine, twenty-eight, and twenty-nine by making the responsive

documents available in Towery’s office for inspection and copying by Richard in

May 2008; the trial court otherwise denied Richard’s motion to compel. Richard

does not appeal the trial court’s ruling on her motion to compel, nor does she rely

on requests for production number one, nine, twenty-eight, or twenty-nine as

requiring production of the documents in question.

At the hearing on Richard’s motion to strike, conducted at the start of trial in

April 2009, Towery’s counsel referenced his objections to her discovery requests

and argued that the documents in question had “always been available” at

Towery’s office for inspection and copying by Richard’s counsel. Richard

responds on appeal that the tracing schedules were not created until January 2009

and therefore could not have been available for inspection and copying before that

date. Towery replies that, regardless of when the tracing schedules were created,

the underlying documents that Richard asserts the trial court should have excluded

existed before January 2009 and Richard did not provide the trial court with any

evidence that those documents were not available for inspection and copying as

10 provided in Towery’s discovery responses. The tracing schedules, Towery states,

were never requested in discovery and were filed with the trial court in February

2009—two months before trial.

Richard correctly asserts that Towery had a duty to supplement his discovery

responses “reasonably promptly” after discovering that his previous responses

were no longer complete. See TEX. R. CIV. P. 193.5(b). She is also correct that “[a]

party who fails to make, amend, or supplement a discovery response in a timely

manner may not introduce in evidence the material or information that was not

timely disclosed” unless the trial court finds good cause for the delay or the

absence of unfair prejudice to the requesting party. See TEX. R. CIV. P. 193.6(a).

But, while the burden of demonstrating good cause and a lack of prejudice is on

Towery, that burden—and rule 193.6’s exclusionary sanction—is only implicated

if Richard first establishes that Towery had an obligation to produce the

complained-of documents in discovery. See TEX. R. CIV. P. 193.6(b). Specifically,

Richard had the burden to show that the documents were relevant and responsive

to one or more of her discovery requests and if the relevant discovery requests

were the subject of a proper objection, to obtain a ruling on the objection or order

compelling discovery. See, e.g., In re Marriage of Bivins, No. 10-11-00018-CV,

2012 WL 6099066, at *8 (Tex. App.—Waco Dec. 6, 2012, pet. denied) (“Where

there are objections to discovery, the party seeking discovery can either file a

11 Motion to Compel or seek a ruling on objections. The requestor waives the failure

to produce documents when there is no ruling on the objections.”) (citing Pace v.

Jordan, 999 S.W.2d 615, 622 (Tex. App.—Houston [1st Dist.] 1999, pet. denied));

Balay v. Gamble, No. 01-10-00017-CV, 2011 WL 2435929, at *6 (Tex. App.—

Houston [1st Dist.] June 16, 2011, no pet.) (mem. op.) (“When a party receives

objections to its discovery, its failure to seek a ruling on those objections waives its

right to the requested discovery. A party cannot sit on an objection and then seek

exclusion of the evidence at trial.”) (citations omitted).

The trial court determined that Richard did not satisfy her burden. Assuming

that the documents at issue fell within one or more of her requests for production,

Richard did not identify those requests for the trial court, she did not obtain a

ruling on Towery’s objections to those requests, and she did not demonstrate that

the documents were not available to her at Towery’s office as provided for in

Towery’s discovery response. On this record, we cannot conclude that the trial

court’s determination constituted an abuse of discretion. See, e.g., In re Marriage

of Bivins, 2012 WL 6099066, at *8 (overruling challenge to trial court’s admission

of attorney’s fees evidence not produced in discovery when non-producing party

had objected to discovery requests and requesting-party had not obtained ruling on

objection); Fourth & Frankford Sonic, Ltd. v. Brown, No. 07-09-0379-CV, 2011

WL 6846197, at *7 (Tex. App.—Amarillo Dec. 28, 2011, no pet.) (mem. op.)

12 (“[B]ecause [appellant] never challenged the validity of [appellee’s discovery]

replies below, we cannot say whether the trial court erred in admitting evidence

. . . . This is so because if the [discovery] replies were legitimate (an issue we do

not decide), [appellee] was not obligated to provide the information. And, if she

was not obligated to provide it, she cannot be punished for failing to provide it. So,

[appellant] failed to build the requisite foundation upon which we could address its

complaint on appeal, and we overrule the issue.”) (citing McKinney v. Nat’l Union

Fire Ins. Co. of Pittsburg, Pa., 772 S.W.2d 72, 75 (Tex. 1989), for proposition that

party securing discovery has burden to request hearing upon objections urged by

opponent); see also Mandell v. Mandell, 214 S.W.3d 682, 691 (Tex. App.—

Houston [14th Dist.] 2007, no pet.) (holding that appellant waived complaint about

untimely supplementation of discovery responses by refusing to accept

supplemental production and failing to obtain ruling compelling production);

Langley v. Comm’n for Lawyer Discipline, 191 S.W.3d 913, 915 (Tex. App.—

Dallas 2006, no pet.) (holding that appellate court “cannot say the trial court

abused its discretion” in refusing to exclude documents not produced in discovery

when record did not contain relevant discovery requests); Norwest Mortg., Inc. v.

Salinas, 999 S.W.2d 846, 862 (Tex. App.—Corpus Christi 1999, pet. denied)

(holding that appellant waived right to exclude evidence on basis of incomplete

disclosure when appellant failed to file motion to compel).

13 We overrule Richard’s first issue.

Sufficiency of the Evidence

Richard contends that the evidence is legally and factually insufficient to

support the trial court’s findings regarding Towery’s separate property even if the

documents discussed above were properly admitted. Richard indicates that

Towery’s tracing of separate property is unreliable for several reasons. Although

she does not appeal from any expert challenge to Towery’s tracing testimony and

exhibits, Richard asserts that Towery, who is a licensed attorney and a certified

accountant, lacked training, experience, and knowledge in how to perform such

tracing. Richard also contends that Towery’s tracing schedules are defective and

not supported by sufficient underlying documentation and that, in the absence of

corroborating tracing schedules, Towery’s testimony as to his separate assets is not

sufficient to carry his burden of proof.

Towery responds that Richard’s attacks on the methodology he used in his

tracing schedules are waived because Richard did not object to those exhibits on

that basis. He also asserts that Richard judicially admitted to most of his separate

property through sworn inventories. According to Towery, the cases on which

Richard relies do not apply because they are cases in which the party claiming

separate property failed to trace the funds at all or because the tracing evidence

was entirely deficient, neither of which is true here; he further states that while

14 those cases involved a lack of tracing evidence, Richard challenges the

methodology of the tracing performed by Towery. Finally, Towery challenges the

application of the cases on which Richard relies for the contention that one

spouse’s unsupported testimony cannot satisfy the burden of proving separate

property, noting that courts have held that tracing sheets like the one he presented

at trial constitute supporting evidence.

A. Richard must show that the trial court erred in its characterization of the property at issue and that the error caused the trial court to abuse its discretion in dividing the estate

The trial court has wide discretion in dividing the marital estate. Murff v.

Murff, 615 S.W.2d 696, 698 (Tex. 1981). We presume the trial court exercised its

discretion properly, and we review the trial court’s determinations under an abuse

of discretion standard. Id.; Vannerson v. Vannerson, 857 S.W.2d 659, 668 (Tex.

App.—Houston [1st Dist.] 1993, writ denied). The test for abuse of discretion is

not whether, in the opinion of the reviewing court, the facts present an appropriate

case for the trial court’s action, but rather, whether the court acted arbitrarily or

unreasonably. Vannerson, 857 S.W.2d at 668 (citing Downer, 701 S.W.2d at 241–

42). In dividing the estate of the parties, the trial court shall order a division of the

property “that the court deems just and right, having due regard for the rights of

each party and any children of the marriage.” TEX. FAM. CODE ANN. § 7.001 (West

2006). “It is the duty of this Court to indulge every reasonable presumption in

15 favor of the proper exercise of discretion by the trial court in dividing the

community estate,” and we “will correct the trial court’s division of marital

property only when an abuse of discretion has been shown.” Vannerson, 857

S.W.2d at 668 (citing Murff, 615 S.W.2d at 698, and Massey v. Massey, 807

S.W.2d 391, 398 (Tex. App.—Houston [1st Dist.] 1991, writ denied)).

Property possessed by either spouse on dissolution of marriage is presumed

to be community property. TEX. FAM. CODE ANN. § 3.003 (West 2006). A spouse

claiming certain property as separate rather than community property must trace

and clearly identify the property claimed to be separate. Zagorski v. Zagorski, 116

S.W.3d 309, 316 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). In

reviewing a challenge to a trial court’s characterization of property as separate

property, we utilize a two-pronged approach: we determine first whether the trial

court’s finding of separate property is supported by clear and convincing evidence

and if it is not, whether the characterization error caused the trial court to abuse its

discretion in the overall division of the community estate. Viera v. Viera, 331

S.W.3d 195, 207 (Tex. App.—El Paso 2011, no pet.). Thus, Richard must first

establish error by challenging the legal or factual sufficiency of the evidence to

support the separate property characterization, and must then conduct a harm

analysis showing that because of the mischaracterization, the overall division of

the property constitutes an abuse of discretion. See id.

16 B. Richard has not shown that the trial court erred in its characterization of the property at issue

Towery claimed separate property within fourteen investment accounts held

in his name. In her brief, Richard states that she “stipulate[ed] to [Towery’s]

tracing on all [of these] accounts but SMH 2422 and RJ 7892.” We therefore

review the sufficiency of the evidence to support the trial court’s determination of

the separate property in these accounts.3

1. Sanders Morris Harris account

The SMH Capital Account ending in 2422 is item number thirteen on the

parties’ joint Exhibit 1. Richard and Towery stipulated that certain holdings in that

account were community property and divided them as agreed. 4 Towery claimed

that certain holdings in the account were his separate property, including interests

in GRT Inc., Genesis Energy, Global Entertainment Corp., Orchard Enterprises,

Sports Express, Corporate Opportunity Fund, SMH Quodd, SMH Lombardi, SMH

Private Group Equity I and II, Lombardi Series B, and SMH Protons. Richard’s

3 In her briefing, Richard states that her stipulations were “based exclusively on” the purportedly late-produced documents discussed above and that “[i]f this Court agrees that the schedules were admitted in error, then [Richard’s] stipulations should be rendered ineffective.” Because we have overruled Richard’s issue regarding the trial court’s admission of documents, we need not consider her request to set aside her stipulations regarding Towery’s separate property. 4 In connection with the SMH account, there is an interest in a baseball. This interest was treated as community property pursuant to the parties’ agreement in joint Exhibit 1 and is therefore not discussed here.

17 sworn inventories indicate that she initially agreed with Towery’s claimed separate

property in the SMH account, but at the time of the second trial, Richard contended

that the interests in the account had been comingled and could not reliably be

separated into separate property.

Towery testified at trial that the SMH account included three types of

investments: money market, stocks, and partnership interest. He testified that the

money market accounts were in a sub-account in his name but that the other

investments were in the name of Sanders Morris Harris. With respect to the

partnership interests, he stated that Sanders Morris Harris “will form a partnership

to purchase an interest in a partnership that will joint venture with other investment

bank firms.” With regard to his tracing of separate property and proceeds from the

sale of separate and community property within the account, Towery testified that

when an interest was purchased with both community and separate funds, he

treated the proceeds from a subsequent sale of that interest as separate and

community property on a pro rata basis based on the purchasing funds.

Both parties filed inventories before trial that related to the SMH account. In

his February 2009 affidavit, Towery swore that $647,719.42 in the SMH account

was his separate property; Towery attached to his affidavit Exhibit 11, which

included (1) an itemized list of each asset in the account, what portion of the asset

was attributable to the community estate, and what portion of the asset was

18 Towery’s separate property; (2) an analysis of each cash transaction for the

account from March 2003 through December 2008; and (3) an analysis of each

stock purchase and sale for the account from March 2003 through December 2008.

Financial records from Sanders Morris Harris presented at trial show the

following. At the end of February 2003, before Towery and Richard’s marriage in

March 2003, the value of the SMH account was $521,610.70. Towery testified that

the cash balance in the account at that time was $114,000 and that he used that

money to purchase stocks during the marriage. April 2008 statements for the SMH

account shows that the account holdings at that time included the following

interests purchased before Towery and Richard’s marriage:

• 2,000 shares 5 in Netversant Solutions Inc., purchased in March and November 2000;

• 105.319 shares in Waste Services, purchased in February 2002;

• 100,000 shares in Corporate Opportunity Fund, purchased in December 1998;

• 0.544 shares in SMH Lombardi, purchased in October 2000;

• One share in SMH Wayport LLC, purchased in January 2001;

5 The parties used the term “shares” in their testimony and documents as a generic term to describe ownership interests in various entities, without specifically identifying whether the “shares” are actually references to shares of stock in a corporation, membership interests in a limited liability company, or other kinds of ownership interests. We therefore use the term “shares” in the same broad manner here. We also use the term “purchase” broadly, recognizing that the interests at issue may have been obtained through another type of transaction.

19 • 1,250 shares in SMH Lombardi Series B, purchased in June 2002; and

• 50,000 shares in SMH Protons LLC, purchased in December 2002.

The Corporate Opportunity Fund, SMH Lombardi Series B, SMH Lombardi, and

SMH Protons interests remained in the account at the time of trial and remained

Towery’s separate property. See TEX. FAM. CODE ANN. § 3.001(1) (providing that

property “owned or claimed by the spouse before marriage” is that spouse’s

separate property).

The financial documents indicate Towery’s separate interests in Netversant

Solutions, Waste Services, and SMH Wayport were sold, in whole or in part,

before the divorce. The Netversant Solutions interest was sold in December 2008

for a loss of $3.50. The SMH Wayport interest was sold in December 2008 for

$25,875.02. The Waste Services interest was supplemented and diminished as

discussed below. The proceeds from the sales of this separate property are also

Towery’s separate property, if properly traced. See, e.g., Pace v. Pace, 160 S.W.3d

706, 715 (Tex. App.—Dallas 2005, pet. denied) (stating that “proceeds from the

sale of separate property are the separate property of the spouse whose property

was sold”); Scott v. Scott, 805 S.W.2d 835, 838 (Tex. App.—Waco 1991, writ

denied) (stating that proceeds from sale of separate property retain their separate

character).

20 In addition to the separate property owned by Towery before the marriage

and still held in the SMH account in April 2008, Towery’s exhibits show that the

account contained the following separate property interests owned by Towery

before the marriage but sold before April 2008: American Equity Investment Life,

Capital Title Group, General Waste Corp, Indx Software, Waste Corp America,

SMH Ceri II, SMH Ceri, Environmental Opportunity Fund, Environmental

Opportunity Fund II, Hearthside Invt Partners II, SMH Index II, SMH Hostcentric,

SMH Agency, and SMM Champion. According to Towery’s documents, these

shares were sold or otherwise disposed of as follows. The 2,000 shares in SMH

Ceri owned by Towery before he married Richard were converted to 10,000 shares

in Capital Environmental Resources Common in September 2003; in February

2004, Towery’s SMH Ceri II interest also converted into Capital Environmental

Resources Common; Towery received 5,416 additional shares in Capital

Environmental Resources Common from his interests in Environmental

Opportunity Fund and Ceri II. In August 2004, the 15,416 shares in Capital

Environmental Resources Common became 15,416 shares in Waste Services Inc.

The American Equity Investment Life interest was sold in three transactions: (1)

3,000 shares in April 2004 for $36,892.03, (2) 2,000 shares in April 2005 for

$24,935.04, and (3) 4,000 shares December 2005 for $49,341.81. The Capital Title

Group interest was sold in two transactions: (1) 8,000 shares on May 12, 2003 for

21 $24,546.35 and (2) 10,519 shares on May 28, 2003 for $41,694.01. The General

Waste Corp interest was sold in July 2007 for $23.80. The Indx Software interest

was sold in January 2004 for $14,213.43. The Hearthside Invt Partners II interest

was sold in March 2006 for $14,250. The SMH Index II interest was sold in March

2005 for $1,641.93. The SMM Champion interest was sold in January 2006 for

$177,199.19.

As noted above, the proceeds from the sales of Towery’s separate property

are also Towery’s separate property, so long as Towery properly traces the

transactions. See, e.g., Pace, 160 S.W.3d at 715; Scott, 805 S.W.2d at 838. And, if

properly traced, property purchased with such proceeds is likewise Towery’s

separate property. See Pace, 160 S.W.3d at 715; Scott, 805 S.W.2d at 838; Ridgell

v. Ridgell, 960 S.W.2d 144, 150 (Tex. App.—Corpus Christi 1997, no pet.) (noting

that when proceeds from sale of separate property were used to pay off other

property, “separate property begat separate property”). In his tracing schedules,

Towery treated the proceeds from the sales of separate property discussed above as

his separate property and treated the property purchased with the separate funds in

the account—including funds in the account before the marriage and funds

resulting from the sale of separate property in the account—as separate property on

a pro rata basis.

22 Towery’s tracing exhibits follow his separate funds through various

purchases and sales, including the following purchases:

• $25,000 in separate funds to purchase 4,000 shares in Sports Express LLC in September 2004;

• $50,000 in separate funds to purchase 50 shares in SMH Private Equity Group I in December 2004;

• $33,326.40 in separate funds and $19,673.60 in community funds to purchase 20,000 shares in Dune Energy in January 2006;

• $47,604.50 in separate funds to purchase 10,000 shares in Regent Communications in January 2006;

• $19,504.50 in separate funds to purchase 2,000 shares in Orchard Enterprises, formerly known as Digital Music Group, in February 2006, which were the subject of a reverse split in November 2007, resulting in ownership of 666 shares;

• $50,025 in separate funds to purchase 8,700 shares in Global Entertainment Corp. in April 2006;

• $63,033.50 in separate funds to purchase 5,000 shares in Luby’s Inc. in April 2006, followed by three more purchases of Luby’s Inc. shares: (1) $6,067.30 in separate funds to purchase 500 shares, (2) $5,907.45 in community funds to purchase another 500 shares in May 2006, and (3) and $36,364.50 in separate funds to purchase another 4,000 shares in January 2008;

• $35,788.50 in separate funds and $9,211.50 in community funds to purchase 30,000 shares in Gran Tierra in June 2006, followed by another purchase of 15,000 shares in Gran Tierra in August 2008 using $15,567.30 in separate funds and $182.70 in community funds;

• $19,500 in separate funds and $5,500 in community funds to purchase 50 shares in SMH Private Equity Group II in August 2006;

23 • $33,794.07 in separate funds and $3,922.53 in community funds to purchase 3,000 shares in Sanders Morris Harris Group in September 2006;

• $35,247.45 in separate funds and $7.05 in community funds to purchase 15,000 shares in Endeavour Intl Corp. in October 2006, followed by a purchase of another 20,000 shares in April 2008 using $18,801.19 in separate funds and $7,551.31 in community funds;

• $50,000 in separate funds to purchase 50 shares in SMH Quodd in May 2007;

• $10,713.21 in separate funds and $4,291.29 in community funds to purchase 1,000 shares in Main Street Cap Corp. in October 2007, $330 in separate funds to purchase 23.061 shares in Main Street Cap Corp. in December 2007, $347.84 in community funds to purchase another 25.298 shares in March 2008, $366.93 in community funds to purchase 25.578 shares in June 2008, $386.62 in community funds to purchase 27.736 shares in September 2008, $137.71 in community funds to purchase 11.479 shares in October 2008, $139.14 in community funds to purchase 12.253 shares in November 2008, $140.67 in community funds to purchase 13.399 shares in December 2008, $142.35 in community funds to purchase 14.423 shares in January 2009, $144.15 in separate funds to purchase 14.232 shares in February 2009, and $145.93 in separate funds to purchase 15.129 shares in March 2009;

• $3,743.12 in separate funds and $17,324.12 in community funds to purchase 20,000 shares in KMG Chemicals in January 2008;

• $37,842.30 in separate funds to purchase 2,000 shares in Genesis Energy LP in August 2008;

• $14,667.26 in separate funds and $837.24 in community funds to purchase 5,000 shares in WCA Waste Corp. in November 2008; and

• $44,262.29 in separate funds and $474.21 in community funds to purchase 5,000 shares in Southwest Airlines Co. in January 2009;

Additionally, the GRT interest in the SMH account was received from the

Environmental Opportunities Fund in March 2007.

24 According to Towery’s documents, subsequent transactions affecting these

separate or partially-separate property interests include the following: a short sale

on WCA Waste Corp in May 2004 which netted $46,906.26 in separate funds and

$1,375.99 in community funds; a sale of 1,700 shares in Waste Services Inc. in

October 2007, netting $15,825.25 in separate funds; a sale of 10,000 shares in Gran

Tierra Energy in February 2008, netting $30,547.53 in separate funds and

$7,862.54 in community funds; a sale of another 10,000 shares in Gran Tierra

Energy in June 2008, netting $66,937.70 in separate funds and $17,218.32 in

community funds; and a sale of 2,500 shares in Endeavor in October 2005, netting

$9,516.84 in separate funds.

In her inventories, Richard did not itemize the SMH account or segregate its

holdings or sub-accounts; she treated it as a single inventory item. In her inventory

showing an adjustment date in July 2008, Richard represented that the SMH

account had a value of $516,106.27 at the time of the marriage and that the

community interest in the account was the account’s value at the time of the

inventory’s accounting less its value at the time of marriage ($516,106.27). In her

January 2009 and February 2009 inventories, Richard made the same

representation regarding the amount in the account at the time of marriage and

again stated that the community’s interest in the account excluded that amount. In

her April 5, 2009 amended inventory with proposed division of assets and

25 liabilities, filed with the trial court on April 6, 2009, Richard again made the same

representations regarding the account and also specifically identified $516,106.27

of the funds in the account as “separate property of [Towery.]” Richard filed a

verification in which she swore that the representations in her amended inventory

and proposed division of assets and liabilities were true and correct. But in her

April 6, 2009 amended inventory with proposed division of assets and liabilities—

which she filed with the trial court on April 7, 2009, after commencement of the

April 2009 trial—Richard swore for the first time that Towery’s separate property

in the account was $0. She filed a verification in which she swore that the

representations in the new amended inventory and proposed division of assets and

liabilities were true and correct.

According to the trial court’s findings of fact and conclusions of law, the

following interests in the SMH account were the separate property of Towery: all

of GRT Inc, all of Genesis Energy, all of Global Entertainment Corp., all of

Orchard Enterprises, all of Sports Express, all of Corporate Opportunity Fund, all

of SMH Quodd, all of SMH Lombardi, all of SMH Private Group Equity I, all of

SMH Lombardi Series B, all of SMH Protons, 62.88% of Dune Energy, 83.62% of

Endeavour Intl, 98.84% of Gran Tierra, 17.9% of KMG Chemicals, 95% of Luby’s

Inc., 64.81% of Main Street Capital, 89.6% of Sanders Morris Harris Group,

98.94% of Southwest Airlines, 94.6% of WCA Waste Corp, 54.66% of Waste

26 Services Inc., 78% of SMH Private Equity Group II. These findings are consistent

with Towery’s testimony and exhibits.

We note that the percentages calculated by trial court need not be perfect—

minor variances in the math, if any, do not amount to reversible error as long as

they are not material in light of the community estate as whole. When an appellant

asserts that the trial court has mischaracterized property, we remand the entire

community estate for a new division only if the trial court’s error, if any, materially

affects the trial court’s just and right division of the community estate on the

whole; reversal is not necessary if a mischaracterization of property has only a de

minimis effect on the trial court’s just and right division. See, e.g., Monroe v.

Monroe, 358 S.W.3d 711, 718 (Tex. App.—San Antonio 2011, pet. denied) (“Even

though the jewelry was separate property, we remand the entire community estate

for a new division only if ‘[we] it find[ ] reversible error in a specific part of the

division that materially affects the trial court’s just and right division of the entire

community estate.’ Reversal is not required if the mischaracterization of property

has only a de minimis effect on the trial court’s just and right division.”) (quoting

Grossnickle v. Grossnickle, 935 S.W.2d 830, 836 (Tex. App.—Texarkana 1996,

writ denied) (emphasis added)); Graves v. Tomlinson, 329 S.W.3d 128, 153−54

(Tex. App.—Houston [14th Dist.] 2010, pet. denied) (reversing and remanding for

new division when trial court’s mischaracterization of $134,000 in community

27 property as separate property had “more than a de minimis effect on the trial

court’s just and right division” and “materially affected the court’s just and right

property division”). “Mathematical precision in dividing property in a divorce is

usually not possible.” Murff, 615 S.W.2d at 700.

Under the circumstances of this case, giving due regard for the trial court’s

role as the finder of fact, Richard has not demonstrated that the evidence was

legally or factually insufficient to support the trial court’s conclusions regarding

the separate nature of this property. See Sink v. Sink, 364 S.W.3d 340, 344–45

(Tex. App.—Dallas 2012, no pet.) (“Tracing involves establishing the separate

origin of the property through evidence showing the time and means by which the

spouse originally obtained possession of the property. Separate property will retain

its character through a series of exchanges so long as the party asserting separate

ownership can overcome the presumption of community property by tracing the

assets on hand during the marriage back to property that, because of its time and

manner of acquisition, is separate in character.”) (citations omitted); Pelzig v.

Berkebile, 931 S.W.2d 398, 402 (Tex. App.—Corpus Christi 1996, no writ) (“In

evaluating the trial court’s findings of fact, we must give substantial deference to

the trial court’s determination of the weight and credibility of the evidence, and

only disturb the trial court’s findings in a case of clear abuse.”) (citing Murff, 615

S.W.2d at 700).

28 2. Raymond James account

The Raymond James account ending in 7892 is item number seventeen on

the parties’ joint Exhibit 1. Richard and Towery stipulated that certain holdings in

that account were community property and divided them as agreed. Towery

claimed that certain holdings in the account were his separate property, including

interests in “Berkshire Hathaway” and “El Paso Pipeline Partners.” He testified

that he owned the Berkshire Hathaway investment before he married Richard. He

also claimed 49% of the cash in the account as his separate property.

Both parties filed inventories before trial that related to the Raymond James

account. In his February 2009 affidavit, Towery swore that his separate property in

the Raymond James account was $144,893.33 as of December 31, 2008. Towery

attached to his affidavit Exhibit 13, which included (1) an itemized list of each

equity in the account, the number of shares of each equity attributable to the

community estate, and the number of shares of each equity that was Towery’s

separate property; (2) an analysis of each cash transaction for the account from

March 2003 through December 2008; and (3) an analysis of each stock purchase

and sale for the account from March 2003 through December 2008. Towery

identified the following shares as his separate property: 10 of 10 Berkshire

Hathaway shares, 300 of 300 El Paso Pipeline Partners LP shares, 65 of 200

Williams Pipeline Partners shares, and 2,350 of 2,500 Whiting USA shares.

29 The analysis of share purchases and sales shows:

• The 10 Berkshire Hathaway shares were purchased in February 2000, before Towery married Richard, and were still owned by Towery as of December 31, 2008;

• The 300 El Paso Pipeline Partners LP shares were purchased in November 2007 using $6,004 in separate funds and $0 in community funds;

• The 200 Williams Pipeline Partners shares were purchased in January 2008 using $2,702.70 in community funds and $1,301.30 in separate funds, for a total purchase price of $4,004; and

• The 2,500 Whiting USA shares were purchased in April 2008 using $3,000.24 in community funds and $47.003.76 in separate funds, for a total purchase price of $50,004.

If Towery’s representation as to the time of purchase is credited, the Berkshire

Hathaway shares are his separate property, as represented in Towery’s affidavit. If

Towery’s representations regarding the purchasing funds are credited, 300 of the

El Paso Pipeline Partners LP shares, 65 of the Williams Pipeline Partners shares,

and 2,350 of the Whiting USA shares are Towery’s separate property, as

represented in Towery’s affidavit.

Raymond James financial statements presented at trial demonstrated that the

balance in the Raymond James account at the end of February 2003, before

Richard and Towery married in March 2003, was $186,652.89, including

$114,624.14 in “cash/cash equivalents,” $23,928.75 in “equities/options,” and

$48,100 in “REIT’s/Tangibles.” According to Towery’s tracing schedule and

30 exhibits, the Raymond James account included the following separate property, in

addition to the Berkshire Hathaway shares, before Towery and Richard married in

February of 2003: 100 shares of Kraft Foods, 2,050 shares of Marex, 20,500 shares

of Vigilant Applied Technologies, and 2,000 shares of Crosstex Energy LP. All of

these shares were sold out of the account between February 2003 and the time of

divorce. Towery’s tracing exhibits treat the income from those sales as his separate

property and trace the separate funds through various stock purchases and sales,

including the $6,004 purchase of the El Paso Pipeline Partners LP shares in

November 2007, the $1,301.30 purchase of 65 Williams Pipeline Partners shares in

January 2008, and the $47.003.76 purchase of 2,350 Whiting USA shares in April

2008. See Sink, 364 S.W.3d at 344–45.

In her inventories, Richard did not itemize the Raymond James account or

segregate its holdings; she treated it as one inventory item. In her inventory

showing an adjustment date of July 2008, Richard represented that the account had

a value of $186,652.89 at the time of the marriage and that the community interest

in the account was the account’s value at the time of the inventory’s accounting

less its value at the time of marriage ($186,652.89). In her January 2009 and

February 2009 inventories, Richard made the same representation regarding the

account balance at the time of marriage and again stated that the community’s

interest in the account excluded that amount. In her April 5, 2009 amended

31 inventory with proposed division of assets and liabilities, filed with the trial court

on April 6, 2009, Richard again made the same representations regarding the

account and also specifically identified $186,652.89 of the funds in the account as

“separate property of [Towery.]” Richard filed a verification in which she swore

that the representations in her amended inventory and proposed division of assets

and liabilities were true and correct. But in her April 6, 2009 amended inventory

with proposed division of assets and liabilities, filed with the trial court after

commencement of the April trial, Richard swore for the first time that Towery’s

separate property in the account was $0. She filed a verification in which she swore

that the representations in the new amended inventory and proposed division of

assets and liabilities were true and correct.

According to the trial court’s findings of fact and conclusions of law, the

following interests in the Raymond James account were the separate property of

Towery: 49% of the cash, all 10 Berkshire Hathaway shares, all 300 El Paso

Pipeline Partners shares, 32.5% of the Williams Pipeline Partners shares (or 65 of

200 shares), and 94% of the Whiting USA shares (2,350 of 2,500). These findings

generally are consistent with Towery’s testimony and exhibits. Again, the

percentages calculated at trial need not be perfect, so long as any variances are

minor and immaterial in light of the community estate as whole. See, e.g., Monroe,

358 S.W.3d at 718 (quoting Grossnickle, 935 S.W.2d at 836); Graves, 329 S.W.3d

32 at 153−54. Under the circumstances of this case, giving due regard for the trial

court’s role a finder of fact, Richard has not demonstrated that the evidence was

legally or factually insufficient to support the trial court’s conclusions regarding

the separate nature of this property. See Sink, 364 S.W.3d at 344–45; see also

Pelzig, 931 S.W.2d at 402 (citing Murff, 615 S.W.2d at 700).

Moreover, Richard’s complaints on appeal focus largely on Towery’s

credibility and reliability. With respect to her reliability complaints, Richard did

not make a Daubert objection at trial, did not object to Towery’s tracing

methodology at trial, and has not appealed from the trial court’s decision to admit

Towery’s tracing evidence and testimony on any basis other than as a discovery

sanction. With respect to her credibility complaints, the determination of the

credibility of a witness’s testimony and the weight to be given that testimony is an

issue entirely within the purview of the trial court. See, e.g., Zagorski, 116 S.W.3d

at 317−18 (“[W]e do not evaluate the credibility of oral testimony given by Tony,

Robert Adams, CPA, Ken Zagorski, and John Rundell about the inception of title

to the Account. This court is not permitted to interfere with the fact finder’s

resolution of conflicts in the evidence or to pass on the weight or credibility of the

witnesses’ testimony.”) (citing Sprick v. Sprick, 25 S.W.3d 7, 13 (Tex. App.—El

Paso 1999, pet. denied), and Puri v. Mansukhani, 973 S.W.2d 701, 711 (Tex.

App.—Houston [14th Dist.] 1998, no pet.)). “The credibility of witnesses in a

33 divorce action, including the husband and wife, is solely under the purview of the

trial court, not an appellate court.” Id. at 318 (citing Bailey v. Bailey, 295 S.W.2d

438, 439 (Tex. App.—Amarillo 1956, no writ)). We must rely upon the

factfinder—here, the trial court—to make findings based upon its belief or

disbelief of the testimony before the court. Carter v. Carter, 736 S.W.2d 775, 779

(Tex.App.―Houston [14th Dist.] 1987, writ denied). If the trial court found

Towery’s testimony and tracing to be credible, the trial court could have

reasonably formed a firm belief or conviction about the truth of Towery’s claim

that the assets discussed above were Towery’s separate property. See id. (citing In

re C.H., 89 S.W.3d 17, 25 (Tex. 2002)).

We overrule Richard’s second issue.

Towery & Associates

In her third issue, Richard asserts that the trial court abused its discretion by

under-valuing Towery & Associates, Towery’s sole proprietorship. Specifically,

she asserts that, “[p]ursuant to the trial court’s findings, the community property

interest in Towery & Associates was valued at a negative $490,243.38.” Towery

responds that Richard misunderstands the trial court’s findings; he states that the

trial court gave the community estate credit for the value of Towery & Associates’

accounts receivable, furniture and fixtures, accounts payables, and accrued pay but

also gave Towery an offset against those values based on the value of the separate

34 property accounts receivable and work-in-progress that Towery contributed to

Towery & Associates, citing Schmidt v. Huppman, 11 S.W. 175, 176 (Tex 1889).

The trial court made the following factual finding with regard to Towery &

Associates:

• Towery & Associates had $383,233.35 in accounts receivable on the date of Towery and Richard’s marriage and $180,632.81 in accounts receivable as of April 1, 2009, resulting in a $202,540.54 community-property offset for Towery;

• Towery & Associates had $175,391.70 in unbilled time for work in progress on the date of Towery and Richard’s marriage and $0 in unbilled time for work in progress as of April 1, 2009, resulting in a $175,391.70 community- property offset for Towery;

• Towery & Associates had $5,000 worth of furniture and fixtures, which was community property;

• Towery & Associates had $22,003.74 in accounts payable as of the March 31, 2009, resulting in a $22,003.74 community-property offset for Towery; and

• Towery & Associates had $95,307.40 in accrued payroll of the March 31, 2009, resulting in a $95,307.40 community-property offset for Towery.

With respect to Towery & Associates’ accounts receivable, Richard asserts

that Towery “uses pre-marriage accounts receivable from early 2003 in the amount

of $383,233 (all of which were [Towery’s] separate property) and deducts them

from current account receivables as of 3/31/09 to create a ‘negative asset’ for the

community estate of $202,540.54.” She continues, “Not only does the record

reflect that a substantial portion of the pre-marriage accounts receivable was

35 collected, any remaining receivables from 2003 would be uncollectible in 2009 by

the applicable 4 year statute of limitations.” But the fact that the accounts

receivable were ultimately received by Towery & Associates does not undercut

Towery’s entitlement to reimbursement or offset; to the contrary, it establishes that

Towery & Associates—a community asset—received value for the receivables

owned by Towery before the marriage and contributed by Towery to the law firm

after the marriage.

The only evidence, which Richard does not controvert, is that these

receivables were Towery’s separate property and that he contributed them to

Towery & Associates. Towery testified that most of the receivables were collected

the month after Towery and Richard married and that the unbilled work was billed

on April 1, 2003. Towery also testified that the collected receivables went into

Towery & Associates’ account, the unbilled work was collected by Towery &

Associates, and Towery & Associates had no accounts receivable or unbilled work

outstanding at the time of trial. Richard presented no controverting evidence

regarding the value of the accounts receivable. The trial court was free to credit

Towery’s testimony and evidence regarding the amount of the accounts receivable

and unbilled work Towery contributed to the community estate—i.e., Towery &

Associates, a community asset—and that the community estate benefited from

those contributions in that amount.

36 Richard asserts that “[i]f [Towery] wanted to claim a potential benefit from

[the accounts receivable], he was obligated to trace the cash proceeds from these

separate collections and thereafter seek reimbursement from the community estate

under Tex. Fam. Code §3.402 as limited by §3.409. This kind of ‘before and after’

tracing generally does not discharge a spouse’s burden of proof to clearly trace

separate property,” citing Tarver v. Tarver, 394 S.W.2d 780, 785 (Tex. 1965) and

Smith v. Smith, 694 S.W.2d 426, 433 (Tex. App.—Tyler 1985, writ ref’d n.r.e.).

We agree that Towery has the burden of proving and tracing his separate

property, but we disagree that the trial court abused its discretion in determining

that burden was satisfied here. Richard admits that the Towery & Associates’ pre-

marriage accounts receivable were Towery’s separate property, and she does not

deny that the accounts receivable were contributed to Towery & Associates during

the marriage or that Towery & Associates was community property. Thus, Towery

presented evidence that he contributed personal property to the community, for

which the trial court gave him an offsetting credit.

Richard’s cases do not require a different result. In Tarver, the Texas

Supreme Court rejected an argument that the law of trusts governed the parties’

divorce; instead, the Court applied the general rule that a party claiming separate

property bears the burden of tracing the property and required the heirs of one

spouse to trace the proceeds of the sale of separate property. Tarver, 394 S.W.2d at

37 783–85. In Smith, the Tyler Court of Appeals determined that the proceeds of the

sale of one spouse’s separate property were commingled with community funds

and that the parties had “made no attempt to trace or identify any separate property

funds of [the spouse] into any financial institution.” Smith, 694 S.W.2d at 433.

Unlike in Tarver and Smith, Richard’s third issue does not relate to proceeds from

the sale of separate property which Towery has claimed as his separate property.

Instead, Richard’s third issue relates to separate assets—accounts receivable and

unbilled work—that Towery contributed to the community estate and for which the

trial court recognized an offset.

Under these circumstances, we cannot conclude that the trial court abused its

discretion in granting Towery offsets in the amounts of Towery & Associates’

accounts receivable and unbilled time before Richard and Towery’s marriage.

These amounts, as Richard recognizes in her brief, were Towery’s separate

property, which he contributed to a business that was part of the community estate.

The trial court was thus within its discretion in allowing Towery offsets for those

contributions. See, e.g., Schmidt, 11 S.W. at 176 (“Where it satisfactorily appears,

as in this case, that one spouse brought into the partnership separate funds invested

in a particular business, which business was carried on and the profits arising

therefrom used in creating and building up the community estate, and the separate

funds are employed in the same business at the dissolution of the partnership, upon

38 settlement with the community estate we think the spouse furnishing such separate

funds is entitled to be reimbursed therefor.”); Vallone v. Vallone, 644 S.W.2d 455,

459 (Tex. 1982) (“A right of reimbursement arises when the funds or assets of one

estate are used to benefit or enhance another estate without itself receiving some

benefit.”).

With respect to Towery & Associates’ accounts payable and accrued payroll,

Richard asserts that Towery “simply asserts the current amounts owed, not

reducing these amounts by any pre-marriage balances that may have existed.”

Richard’s contention suggests that she does not believe Towery’s representation

that the amount of accounts payable and accrued payroll were $0 at the time of

divorce, but she presents no evidence to contradict Towery’s $0 assertion.

Towery’s assertion that Towery & Associates did not have any outstanding

balances on these expense accounts at the time of divorce is consistent with his

testimony that he recently changed the business model for his practice. Towery

testified that he recently negotiated a deal with one of his primary clients under

which the client pays all of Towery & Associates business expenses in exchange

for certain benefits. The trial court was free to believe Towery’s testimony on this

issue. See, e.g., Pelzig, 931 S.W.2d at 402 (discussing deference to factfinder’s

determination of credibility issues).

39 Richard next contends that “[e]ven if a pre-marriage balance for these two

items was zero, reductions to the community estate presented by [Towery] and

adopted by the trial court are based on unrecognized methodologies and [are]

clearly inequitable, especially considering the evidence establishing that [Towery]

collected a significant portion of pre-marriage receivables and the disturbing use of

‘estimated’ current amounts.” It is difficult to identify the exact complaint Richard

makes regarding Towery’s methodology. We cannot see that the trial court’s

division is inherently unjust in this regard: the trial court distributed 100% of

Towery & Associates, a community asset/liability, to Towery but also credited

Towery with an offset in the amount of 100% of the entities’ debts. Without more,

we cannot conclude that the trial court abused its discretion in this regard.

We overrule Richard’s third issue.

The April 1, 2009 Cut-Off

In her fourth issue, Richard asserts that “[t]he trial court’s decision to

‘freeze’ the marital estate and delay rendition of the divorce for more than nineteen

(19) months contributed to a division of property which is unjust and the entry of a

final judgment that precludes [Richard] from seeking post-divorce relief.” In her

fifth issue, Richard asserts that the trial court abused its discretion by awarding

assets acquired by Towery after April 1, 2009 to Towery. Because both of these

40 issues relate to the passage of time between the second trial of this action and the

court’s rendition of final judgment, we address them together here.

After the first trial of this action, the parties discovered “potential IRS

issues” that they believed would affect the community estate. Pursuant to the

parties’ agreement, the trial court set aside the first trial and ordered a new trial.

After a second, two-day trial in early April 2009, the parties still needed additional

tax information. Towery suggested a mistrial for this reason, but Richard requested

that the trial court instead abate the trial until the information was available. The

trial court agreed with Richard that abatement was preferable to trying this action a

third time. After Richard expressed concern about the disposition of assets and

“manipulation” of accounts between the time of the second trial and ultimate

disposition, the trial court agreed to use April 1—a date suggested by Richard—as

the cutoff date for the community estate and valuation of the parties’ assets.

At the November 2010 rendition hearing, Richard and Towery went through

a spreadsheet of assets, addressing each disputed item. The hearing record

demonstrates that the trial court and both parties were aware of the April 1 cut-off

and employed that cut-off in evaluating the parties’ assets and liabilities without

objection. Richard expressly recognized that Towery had acquired additional assets

after the cut-off and did not request that those assets be accounted for in the

41 distribution of assets; nor did Richard identify assets and liabilities she had

incurred since April 1 and request that they be included in the division of assets.

A review of the hearing transcripts indicates that the actions about which

Richard complains were taken by the trial court in response to Richard’s own

requests and concerns, and that Richard participated in the procedure adopted by

the trial court without objection. It was, in fact, Richard who suggested the April 1

cut-off date. We have not found, and Richard has not identified, evidence in the

record that Richard preserved any complaint relating to these issues for appeal by

making a timely and specific objection to the procedure announced by the trial

court and by obtaining a ruling on that objection before the trial court entered a

final judgment. See TEX. R. APP. P. 33.1(a) (stating that, “[a]s a prerequisite to

presenting a complaint for appellate review, the record must show” that

complaining party made proper, timely, and sufficiently specific objection or

request in trial court and obtained ruling); see also Ahmed v. Shimi Ventures, L.P.,

99 S.W.3d 682, 684 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (rejecting

appellant’s objection on appeal to when he “implicitly acquiesced in [the

complained-of] procedure below” after having been advised of the procedure and

having participated without complaint). To the contrary, Richard raised these

complaints for the first time in her motion for new trial.

42 A motion for new trial is a timely manner of raising certain types of

complaints—primarily, complaints (1) “on which evidence must be heard such as

one of jury misconduct or newly discovered evidence or failure to set aside a

judgment by default,” (2) “of factual insufficiency of the evidence to support a jury

finding,” (3) “that a jury finding is against the overwhelming weight of the

evidence,” (4) “of inadequacy or excessiveness of the damages found by the jury,”

and (5) on incurable jury argument; but it is not a timely manner of raising various

other types of complaints—for example, complaints relating to jury charge error or

a failure to segregate attorney’s fees. See TEX. R. CIV. P. 324(b) (listing types of

error that must be preserved in motion for new trial); Kirkpatrick v. Mem’l Hosp.

of Garland, 862 S.W.2d 762, 769 (Tex. App.—Dallas 1993, writ denied)

(“Objections to the charge in a motion for a new trial are untimely and preserve

nothing for review.”); Am. First Nat. Bank v. Jordan-Lewis Dev. L.P., No. 01-09-

00990-CV, 2011 WL 2732779, at *8 (Tex. App.—Houston [1st Dist.] July 14,

2011, no pet.) (mem. op.) (holding that appellant waived complaint that attorney’s

fees should have been segregated by raising it for first time in motion for new

trial). Unlike complaints relating to jury argument, jury misconduct, or the jury’s

findings, which may be raised for the first time in a motion for new trial, Richard

could have raised her complaints about the trial court’s actions here before the

verdict/judgment stage of the case. Instead, Richard agreed that a final disposition

43 of the community estate required resolution of the tax issues and requested that the

parties be prevented from altering the community estate after April 1.

The purpose of Rule 33.1’s requirement that parties preserve error by raising

their complaints in the trial court in a timely and specific manner is to promote

judicial efficiency by allowing the trial court an opportunity to correct an error. See

Morris v. Aguilar, 369 S.W.3d 168, 170 n.3 (Tex. 2012); see also Osterberg v.

Peca, 12 S.W.3d 31, 40 (Tex. 2000); In re C.O.S., 988 S.W.2d 760, 765 (Tex.

1999). That purpose would be disserved if we allowed Richard to complain about

the trial court’s delay in entering final judgment and use of the April 1 cut-off

when: (1) Richard and Towery both agreed that the tax issues needed to be

resolved before final judgment issued; (2) Richard opposed Towery’s request for a

new trial, which would have been the third time the case was tried, and asked the

trial court to abate the case until the tax issues could be resolved instead; (3)

Richard requested that the trial court protect her from post-trial manipulation of the

parties’ assets during the abatement period; (4) Richard suggested the trial court

use April 1 as the cutoff date for the asset analysis; (5) Richard adopted the April 1

cut-off date in her arguments, did not attempt to have assets she required after that

date divided between herself and Towery, and did not object to Towery’s adoption

of the April 1 cut-off date; and (6) Richard waited until after the close of evidence

to raise her complaint, at which time the only remedy available was a third trial of

44 this action—the very outcome that the trial court wished to avoid and that Richard

previously asked the trial court not to grant in first instance. We therefore conclude

that Towery has not preserved this issue for appellate review. 6 See In re S.C.S., No.

05-06-01600-CV, 2008 WL 1973570, at *3 (Tex. App.—Dallas May 8, 2008, no

pet.) (mem. op.) (citizing Metzger v. Sebek, 892 S.W.2d 20, 38 (Tex. App.—

Houston [1st Dist.] 1994, writ denied), for proposition that “trial court exercises

broad discretion in conducting trials and processing its docket to promote the

economical and efficient use of time and effort by itself, counsel, and litigants”).

We overrule Richard’s fourth and fifth issues.

Motion for Continuance

In her sixth issue, Richard asserts that the trial court abused its discretion by

denying her motion for continuance before trial based on the late production of

documents Richard asserts in her first issue. Because we hold in Richard’s first

issue that Richard failed to demonstrate to the trial court that Towery had an

obligation to produce the complained-of documents in the first place, we likewise

cannot conclude that the trial court abused its discretion in failing to grant Richard

6 We also note that Richard contends, on the one hand, that she was harmed by the trial court’s failure to enter judgment at the conclusion of the April 2009 trial setting, but she contends on the other hand that she was harmed by the trial court’s failure to include Towery’s post-April 1 assets in her share of the property division. If, however, the trial court had entered final judgment at the conclusion of the April 2009 trial setting, property acquire by Towery after that would necessarily have been his separate property.

45 a continuance based on her complaint that the documents were not timely

produced.

We overrule Richard’s sixth issue.

Conclusion

We hold that the trial court did not abuse its discretion in the discovery

ruling and judgment about which Richard complains in this appeal. We therefore

affirm the trial court’s judgment.

Harvey Brown Justice

Panel consists of Chief Justice Radack and Justices Higley and Brown.