DEALING WITH – RECOVERIES AS PROPERTY

JOHN F. NICHOLS, SR. TRISTAN H. LONGINO Nichols Law, P.L.L.C. Tradition Bank Plaza 5020 Montrose Blvd., Suite 400 Houston, Texas 77006 (713) 654-0708 (713) 654-0706 (Fax) [email protected] [email protected] www.nicholslaw.com

JASON OSTROM NICOLE SAIN Ostrom / Sain LLP 5020 Montrose Blvd., Suite 310 Houston, Texas 77006 (713) 863-8891 (713) 863-1051 (Fax) www.ostromsain.com

State Bar of Texas 34TH ANNUAL MARRIAGE DISSOLUTION INSTITUTE April 28-29, 2011 Austin

CHAPTER 3

BIOGRAPHICAL INFORMATION ON JOHN F. NICHOLS, Sr.

EDUCATION

B.S., Rice University 1963 LL.B., University of Houston 1967

PROFESSIONAL ACTIVITIES

Board Certified; Family Law, Personal Injury, Civil Trial Past Chairperson; Litigation Section, State Bar of Texas Diplomate: American Board of Trial Advocates Fellow: International Society of Barristers Fellow: American College of Family Trial Lawyers (Charter Member) Fellow: American Academy of Matrimonial Lawyers Fellow: International Academy of Matrimonial Lawyers (Charter Member) Fellow: State Bar College (Charter Member) State Bar of Texas Course Director, Advanced: Family Law, Civil Trial Law, and Discovery, Fiduciary Litigation, Trial of a Family Law Jury Case Best Lawyers in America - all editions Texas Super Lawyers - all editions

LAW RELATED PUBLICATIONS

Author of 146 articles on family law, fiduciary litigation, personal injury and civil trial law. Two books on depositions (family law and personal injury law).

HONORS

State Bar of Texas – 2008 Gene Cavin Award Texas Center for the Judiciary – 2008 Exemplary Article Award Rice University – Athletic Hall of Fame (Football)

TRISTAN H. LONGINO Nichols Law, P.L.L.C. (www.nicholslaw.com) Tradition Bank Plaza 5020 Montrose Blvd., Suite 400 Houston, Texas 77006 Work: (713) 654-0708, Fax: (713) 654-0706, Cell: (713) 581-4991; E-mail: [email protected]; www.linkedin.com/in/tristanlongino

EDUCATION

University of Houston Law Center J.D. expected May 2011 GPA 3.156 • Treasurer of Family Law Organization, a student group • Moot court speaker: semifinalist in John Black Moot Court Competition and competitor in ABA Negotiation and Mediation Competitions

University of Richmond B.S. in Business Administration, May 2005 GPA 3.34, graduated on Dean’s List

CERTIFICATIONS • Certified in mediation by A.A. White Dispute Resolution Center June 7, 2009 • Certified in advanced family mediation by Blakely Advocacy Institute February 20, 2011

EXPERIENCE

Nichols Law, P.L.L.C., Houston, Texas Jan 2011 – Current Law Clerk • Assist with work on cases and appeals • Assist in writing and editing CLE and other materials for publication

312th District Court, Houston, Texas May 2010 – August 2010 Summer Intern for the Hon. Robert Hinojosa • Worked on renditions with judge, one involving complex property issues

Duane Morris, Houston, Texas June 2009 – August 2009 Summer Associate • Wrote client alerts • Researched and analyzed legal issues for partners and associates

Dell Financial Services, Austin, Texas June 2007 – July 2008 Operations Coordinator • Audited leases and loans to commercial clients

Merrill Lynch, Pennington, New Jersey 2005 – 2007 Financial Advisor • Advised retail clients on financial plans and holdings; mentored other advisors

Sandler O’Neill & Partners, L.P., New York, New York Summers 2002 – 2004 Summer Intern • Managed various servers and databases; provided end-user support

Jason B. Ostrom 2305 Gostic Street Houston, Texas 77008 [email protected]

EDUCATION: SOUTH TEXAS COLLEGE OF LAW, Houston, Texas Doctor of Jurisprudence, May 2000 GPA: 3.51 Top 5% of class [Ranked 6th] Magna Cum Laude Law Review: Note & Comment Editor -1999/2000 Board

LOYOLA UNIVERSITY OF NEW ORLEANS, New Orleans, Louisiana Bachelor of Arts, Political Science with a minor in Environmental Studies, 1995

EXPERIENCE: OSTROM/Sain, LLP, Houston, Texas Partner 2006-Present Areas of Practice: Civil Litigation regarding Probate, Guardianship, Fiduciary Duty, and Consumer Rights. Preparation of wills, trusts, and ancillary planning documents.

ABRAHAM, WATKINS, NICHOLS, SORRELS, MATTHEWS & FRIEND, Houston, Texas Attorney 2005-2006 Areas of Practice: Estate Planning, Estate Administration, Guardianships and Probate Litigation, Personal Injury Litigation, Business Litigation and Mass Litigation. Prepare pleadings, motions, deeds, estate planning documents, and settlement documents.

CENATIEMPO & DITTA, L.L.P., Houston, Texas Attorney 2001-2005 Areas of Practice: Estate Planning, Estate Administration, Guardianships and Probate Litigation. Prepare pleadings, motions, deeds, estate planning documents, trust reformation and recession agreements, and settlement documents. Develop relationships with probate court judges and procure court appointments. Interview clients of all backgrounds.

FOURTEENTH COURT OF APPEALS, CHIEF JUSTICE PAUL MURPHY, Houston, Texas Briefing Attorney 2000-2001 Attended oral arguments and drafted civil and criminal appellate opinions. Presented case to justices sitting on the panel. Collaborated with other justices on the panel in preparing opinions.

PUBLICATIONS: Nicole Sain & Jason B. Ostrom, A Law Degree Doesn’t Come With a Halo: Navigating Ethical Issues In Probate Practice (2008), presented at NATIONAL BUSINESS INSTITUTE SEMINAR: THE PROBATE PROCESS FROM START TO FINISH, April 2007 & April 2008.

Nicole Sain & Jason B. Ostrom, The Rights of the Surviving Spouse (2008), presented at NATIONAL BUSINESS INSTITUTE SEMINAR: THE PROBATE PROCESS FROM START TO FINISH, April 2007 & April 2008.

Nicole Sain & Jason B. Ostrom, Litigating the Case in Probate Court (2008), presented at NATIONAL BUSINESS INSTITUTE SEMINAR: THE PROBATE PROCESS FROM START TO FINISH, April 2007 & April 2008.

Nicole Sain & Jason B. Ostrom, Will Contest Basics (2007), presented at HOUSTON BAR ASSOCIATION, 2007 WILLS AND PROBATE INSTITUTE.

Nicole Sain & Jason B. Ostrom, Intestate Succession, The New American Family (2006), presented at SOUTH TEXAS COLLEGE OF LAW WILLS AND PROBATE INSTITUTE, September 2006.

Jason B. Ostrom, Patient’s Bill of Rights, HOUS. LAW. May/June 2006, at 34.

Benny Agosto, Jr. & Jason B. Ostrom, A Party’s Illegal Status During Trial, MEXICAN AMERICAN BAR ASSOC. OF HOUSTON, presented July 2005.

Jason B. Ostrom, A Law Degree Doesn’t Come With a Halo: Navigating Ethical Issues in Probate Practice, NATIONAL BUSINESS INSTITUTE: ODDITIES AND CHALLENGES IN TEXAS PROBATE LAW, presented November 16, 2004.

Jason B. Ostrom & Nicole Sain, HBA Appellate Section Case Update, presented July 30, 2003.

Hon. Russell Austin & Jason B. Ostrom, Forcible Entry and Detainer Actions and Probate: Who Decides?

Louis M. Ditta & Jason B. Ostrom, Things Every Personal Injury Attorney Needs To Know About Probate, SOUTH TEXAS COLLEGE OF LAW PERSONAL INJURY CONFERENCE, March 7, 2002.

Jason B. Ostrom, The Competing Roles of Law Professors, 42 S. TEX. L. REV. 539 (2001).

C.F. Jeb Wait, The Governing Medical Claims: Rules, Problems, and Solutions, 41 S. TEX. L. REV. 371 (2000)(Footnote Credit).

Randall Sorrels & Jason B. Ostrom, Should an Employee’s be Submitted in a Non-Subscriber Case?, HOUS. LAW., January/February 2000, at 10.

PROFESSIONAL ASSOCIATIONS: Member of the Texas Trial Lawyers Association, the Houston Trial Lawyers Association, the Houston Bar Association, past editor on the board of the Houston Lawyer, “Texas Rising Star” 2007, 2008, and “Houston’s Top Lawyers” 2008.

Licensed in the State of Texas and admitted to practice before the U.S. District Court, Southern District of Texas.

NICOLE SAIN 1125 E. 25th Street Houston, Texas 77009 713.863.8891 (business) 713.863.1051 (facsimile) 713.208.4340 (cell) [email protected]

EDUCATION

University of Houston Law Center, Houston, Texas September 2001 – December 2003 Juris Doctorate

Pitzer College, Claremont, California September 1996 – May 1999 Bachelor of Arts, Psychology

PROFESSIONAL EXPERIENCE

OSTROM/Sain LLP, Houston, Texas Partner 2006-Present Areas of Practice: Estate Planning, Estate Administration, Probate and Fiduciary Litigation, Appeals. Meet with clients to discuss estate planning needs, prepare wills, trusts and ancillary documents; attend contested and uncontested court hearing; highly intensive motion practice; prepare appellate briefs and present oral argument to appellate courts; conduct written discovery and depositions; second chair in trial; preparation of jury charges.

ABRAHAM, WATKINS, NICHOLS, SORRELS, MATTHEWS & FRIEND, Houston, Texas Attorney 2005 - 2006 Areas of Practice: Estate Administration, Probate Litigation, Ad Litem Appointments. Attend court hearings; prepare motions, pleadings, briefs, orders, discovery, correspondence, inventories and accountings; participate in depositions; interview clients and witnesses; meet with expert witnesses.

LAWTER & LAWTER, L.L.P, Houston, Texas Contract Attorney 2004 - 2006 Areas of Practice: Probate Litigation. Prepare motions, pleadings, briefs, discovery; prepare senior attorneys for depositions; review and analyze documents and witness interviews; research and brief legal issues.

CENATIEMPO & DITTA, L.L.P., Houston, Texas Law Clerk 2003 - 2004 Research and brief legal issues; prepare petitions, motions, and discovery requests; file documents; speak with and draft correspondence to clients.

PUBLICATIONS

Nicole Sain & Jason B. Ostrom, A Law Degree Doesn’t Come With a Halo: Navigating Ethical Issues In Probate Practice (2008), presented at National Business Institute Seminar: The Probate Process from Start to Finish, April 2007 & April 2008.

Nicole Sain & Jason B. Ostrom, The Rights of the Surviving Spouse (2008), presented at National Business Institute Seminar: The Probate Process from Start to Finish, April 2007 & April 2008.

Nicole Sain & Jason B. Ostrom, Litigating the Case in Probate Court (2008), presented at National Business Institute Seminar: The Probate Process from Start to Finish, April 2007 & April 2008.

Nicole Sain & Jason B. Ostrom, Will Contest Basics (2007), presented at Houston Bar Association, 2007 Wills and Probate Institute.

Nicole Sain & Jason B. Ostrom, Intestate Succession, The New American Family (2006), presented at South Texas College of Law Wills and Probate Institute, September 2006.

Jason B. Ostrom & Nicole Sain, Standing and Capacity: Who is the Correct Party to Bring Suit?, HOUS. LAW. (Publication Pending).

Hon. Russell Austin, Ray Black, Jr., & Nicole Sain, Estate Liability for Child Support Obligations, (2004), presented March 1, 2005 at the Attorneys in Tax and Probate Section Meeting.

Jason B. Ostrom & Nicole Sain, HBA Appellate Section Case Update, presented July 30, 2003 at the HBA Appellate Section Meeting.

COMMUNITY SERVICE

University of Houston “Small Firm Panel” Volunteer Panelist September 30, 2008 Participated in panel presentation and discussion at University of Houston Law Center.

Pro Bono Work, Gonzales v. Seton Family of Hospitals Research and Prepare Trial Brief April 2007 Brief state and federal constitutional issues associated with Section 166.046 of the Health and Safety Code

Houston Young Lawyers’ Association “Spring Fling” Volunteer Panelist March 10, 2005 Participated in panel presentation and discussion at Texas Southern University, Thurgood Marshall School of Law.

Texas Young Lawyers Association “Off-Campus Recruitment Program” Volunteer Panelist March 4, 2005 Participated in panel presentation and discussion at South Texas College of Law.

Houston Young Lawyers’ Association “Spring Fling” Volunteer Panelist February 21, 2005 Participated in panel presentation and discussion at University of Houston Law Center.

PROFESSIONAL ASSOCIATIONS

Texas Bar Association Houston Bar Association Probate and Will Section of Houston Bar Association The Houston Lawyer Board

FOREWORD

This article is a mutation of a wonderful article on “Proving Difficult Damages” by Harrison, Bettis, Staff, McFarland & Weems, L.L.P., a treatise on “Texas Damages” by Brock Akers, and all of the hardworking trial lawyers who serve on the State bar of Texas Pattern Jury Charge Committees. Thank you very much for your contributions, Texas trial lawyers.

APPRECIATION

John F. Nichols, Sr. expresses grateful appreciation to Jason Ostrom and Nicole Sain for their valuable contribution to this article and to Tristan Longino for his research and writing of this article. Tristan Longino is a third year law student at the University of Houston Law Center.

Dealing with Damages – Recoveries as Property Chapter 3

TABLE OF CONTENTS

I. INTRODUCTION ...... 1 A. Overview of Article...... 1 B. Basic Questions...... 1 C. References ...... 1

II. ARE “DAMAGES” AVAILABLE, AS A REMEDY, TO A TEXAS FAMILY LAW LITIGANT FOR CIVIL AND CRIMINAL WRONGS PERPETRATED ON THE LITIGANT? ANSWER: YES ...... 1

III. MAY THOSE REMEDIES AND THE TORTFEASORS BE JOINED WITH THE DIVORCE ACTION IF THEY DO NOT ARISE OUT OF CLAIMS RELATING SOLELY TO COMMUNITY PROPERTY? ANSWER: YES ...... 1 A. References ...... 1 B. Joinder of Additional Parties and Actions ...... 2 1. Definition and Scope ...... 2 2. Interpleader - Tex. R. Civ. P. 43 ...... 3 3. Impleader (Joinder) - Tex. R. Civ. P. 37, 38, 39 and 40 ...... 6 4. Plea In Intervention - Tex. R. Civ. P. 60 and 61 ...... 10 5. Consolidation - Tex. R. Civ. P. 174(a) ...... 12 6. Conclusion ...... 13 C. Intentional and Unintentional – Claims and Defenses ...... 14 1. Elements–Intentional Torts ...... 14 2. Elements–Unintentional Torts ...... 14 3. Redressing Wrongs ...... 14 4. Res Judicata and Collateral Estoppel—Distinction ...... 14 5. Procedural Bars And Defenses To Bringing Actions And Limiting Damages ...... 14 6. Limitations of Actions and Defenses Thereto ...... 15 D. The limitations of Schlueter...... 16 1. Introduction ...... 16 2. Schlueter v. Schlueter - Briefed ...... 16

IV WHAT REMEDIES ARE AVAILABLE TO THE TEXAS FAMILY LAW LITIGANT?...... 19 A. Personal Injury Damages ...... 19 1. Non-Economic Damages ...... 19 2. Economic Damages ...... 20 B. Property Damages ...... 21 1. Generally ...... 21 2. Household Items ...... 21 3. Heirlooms ...... 21 C. Commercial Damages ...... 21 1. Direct vs. Consequential Damages ...... 21 2. Lost Profits ...... 22 3. Benefit of The Bargain Damages ...... 22 4. Out-of-Pocket Damages ...... 22 5. Loss of Goodwill ...... 22 6. Loss of Credit ...... 22 7. Interest Expense ...... 23 D. Contract Damages ...... 23 1. Generally ...... 23 2. Breach of Contract ...... 23 3. Actual Damages ...... 23 4. Liquidated Damages ...... 23 5. Related Causes of Action ...... 23

i Dealing with Damages – Recoveries as Property Chapter 3

V. WHAT IS THE CHARACTERIZATION OF DAMAGES RECOVERED BY A FAMILY LAW LITIGANT? ...... 23 A. Damage Awards – Operation of Law: Constitution, Statutes, Case Law ...... 23 B. The Marriage Partnership ...... 24 C. Income and the Marriage Partnership ...... 24 D. Constitutional Definitions of Separate and Community Property ...... 24 1. Separate Property...... 24 2. Community Property ...... 25 E. Marital Property Statutes Regarding Property Characterization ...... 25 1. Separate Property – Texas Family Code ...... 25 F. ...... 26 G. Characterization of Damages Summary ...... 33

VI. WHAT TORTS ARE AND ARE NOT RECOGNIZED IN TEXAS? ...... 34 A. Torts Recognized in Texas ...... 34 1. Statutory Torts ...... 34 2. Statutory and Common Law Torts Covered in Family Law Cases ...... 34 B. Torts Not Recognized In Texas ...... 34

VII. PROVIDING CIVIL REMEDIES FOR CIVIL AND CRIMINAL WRONGS...... 35

APPENDIX ...... 37

ii Dealing with Damages – Recoveries as Property Chapter 3

DEALING WITH DAMAGES – Property: 30 Rules with Explanations and Examples, 2010 Advanced Family Law RECOVERIES AS PROPERTY Course, Chapter 62, p.p. 36-38;

(4) State Bar of Texas, Pattern Jury Charges – I. INTRODUCTION Family, 2010 Edition; A. Overview of Article (5) State Bar of Texas, Pattern Jury Charges – This article is intended to inform Texas family General negligence, 2010 Edition; law practitioners in navigating the uncertain waters that (6) State Bar of Texas, Pattern Jury Charges – run between divorce and tort actions. It attempts to Business Consumer · Employment, 2010 answer the six (6) questions below regarding how these Edition; actions are brought, sued on, and how any recoveries (7) State Bar of Texas, Pattern Jury Charges – are characterized by the court. The pleadings and jury Malpractice · Premises · Products, 2010 charges, which may also be used in answering the Edition; same questions in non-jury cases, are provided as (8) State Bar of Texas, Damages In Civil appendices. Litigations, 2011 Dallas, Texas;

(9) State Bar of Texas, Strategies For Damages B. Basic Questions and Attorney’s Fees, 2010, Houston, Texas. The title assigned to this article by the Course

Director, Judge Judy Warne, and her planning II. ARE “DAMAGES” AVAILABLE, AS A committee, “Dealing with Damages – Recoveries as REMEDY, TO A TEXAS FAMILY LAW Property” raises the following basic questions, to wit: LITIGANT FOR CIVIL AND CRIMINAL

WRONGS PERPETRATED ON THE Q1. Are “damages” available, as a remedy, to a LITIGANT? ANSWER: YES Texas family law litigant for civil and In 1977 the Supreme Court of Texas abolished criminal wrongs perpetrated on the litigant? interspousal immunity for intentional torts in Bounds v. If yes, Candle, 560 S.W. 2d 925, 927 (Tex. 1977). Ten years Q2. May those remedies, and the tortfeasors, be later the Supreme Court of Texas abolished joined with the divorce action if they do not interspousal immunity for unintentional torts, and any arise out of claims relating solely to cause of action, in Price v. Price, 732 S.W.2d 316, 319 community property? (Tex. 1987). If yes,

Q3. What remedies are available to the Texas III. MAY THOSE REMEDIES AND THE family law litigant? TORTFEASORS BE JOINED WITH THE And, DIVORCE ACTION IF THEY DO NOT Q4. What remedies or damages are not available ARISE OUT OF CLAIMS RELATING to the Texas family law litigant? SOLELY TO COMMUNITY PROPERTY? And, ANSWER: YES Q5. What is the characterization of damages New or developing causes of action in the twenty recovered by a family law litigant? first century in Texas law and family law, including And, torts and fiduciary litigation, generally track or follow Q6. What torts are, and are not, recognized in developing technology and themes. This article covers Texas? those new or emerging torts as well as the application

existing torts and contractual or quasi - contractual C. References actions to family law cases, primarily in personal and Useful references on “damages” used in this property torts, fiduciary and third party litigation. article and recommended to the Texas family law practitioner in the preparation and trial of jury and non- A. References jury cases involving damages arising inside and outside References to articles on this topic and family law of the Texas Family Code are: tort litigation are:

(1) D. Mitchell McFarland and Richard W. Staff, (1) “Spy Torts, Damages and Jail Time” by John “Proving Difficult Damages”, 2010 Nichols, Sr. and John F. “Bo” Nichols, Jr., Advanced Civil Trial Course, Chapter 26; 2010 American Bar Association; (2) Brock Akers, Texas Damages, 2nd Edition (2) “The Trial of a Fiduciary Litigation Case” by Knowles Publishing Inc., 2010; John Nichols, Sr., 2010 State Bar of Texas – (3) Richard Orsinger, Scott Downing and Advanced Family Law Course; Stephen Orsinger, Separate and Community

1 Dealing with Damages – Recoveries as Property Chapter 3

(3) “Electronic Evidence” by John Nichols, Sr. controversy versus the argument of prejudice by the and John F. “Bo” Nichols, Jr., 2010 Family party resisting joinder. Mogford 616 S.W.2d at 940- Law on the Front Lines; 41. (4) “Fiduciary Litigation and Other Financial Joinder of non-spouse third parties is permitted Causes of Action” by John Nichols, Sr., 2010 and governed by T.R.C.P. 37 [Additional Parties], 38 New Frontiers for Family Law; [Third-Party Practice], 39 [Joinder of Persons needed (5) “Joinder of Third Parties: Entities or for Just Adjudication], 40 [Permissive Joinder of Individuals” by John Nichols, Sr., 2009 State Parties] and 41 [Misjoinder & non-joinder of Parties]. Bar of Texas – Advanced Family Law Careful attention is suggested to the deadlines set by Course; the rules for joinder of third parties before and after (6) “Drafting Jury Charges Outside of the leave of court is required. Standard” by John Nichols, Sr., 2009 State The trial court has great discretion on questions of Bar of Texas – Advanced Family Law joinder of parties and causes of actions, and of Drafting Course; consolidation or separation of cause of action under (7) “Creative And Innovative Marital Causes of rules 37-43, 97 and 174. Barbee v. Buckner, 265 Action,” by Cheryl L. Wilson, James E. S.W.2d 869 (Tex. Civ. App.—Austin 1954, writ ref’d Farris, Pamela E. George, and Robert J. Piro, n.r.e.); Wilson v. Ammann & Jordan, 163 S.W.2d. 660 2005 New Frontiers In Marital , (Tex. Civ. App.—Fort Worth 1942, writ dism’d.); Chapter 2; Varme v. Gordon, 881 S.W.2d 877 (Tex. App.— (8) “Dead on Arrival: Advising When They Houston [14th Dist.] 1994, writ denied). This Don’t Have A Cause of Action,” by Dan discretion is measured by the “abuse of discretion” Pozza, 2005 State Bar College “Summer standard. In Re Arthur Anderson, LLP, 121 S.W.3d School,” Chapter 12; 471 (Tex. App.—Houston [14th Dist.] 2003, mandamus (9) “Tips For Drafting Like A Pro: From Basic denied). Practice note – agreements of counsel on Clams To Exotic Causes of Action” by consolidation of causes are not binding on the court Wendy S. Burgower and Carlotta H. because rules 37 to 73, 97 and 174 bestow on the trial Ramirez, 2003 Advanced Family Law courts broad discretion in such matters. Hamilton v. Drafting and Advocacy: “Art and Form,” Hamilton, 280 S.W.2d 588 (Tex. 1955) Chapter 3; The following section of this article covers, (10) “Taking Divorce To A Toxic Level” by without change, the outstanding 2002 article by Susan Bobby K. Newman, 2002 State Bar of Texas Myres and Tara Luedke-Mora on “Drafting Third Party – Advanced Family Law Drafting Course, Actions” presented at the Advanced Family Law Chapter 19; Drafting Course. This article has been reprinted with (11) “Drafting Third Party Actions – Three’s A the permission of Susan Myres, for which the author is Crowd – Drafting Third Party Actions” by very appreciative. Susan Myres and Tara Luedke – Mora Myres, Dale and Associates, 2002 State Bar 1. Definition and Scope of Texas – Advanced Family Law Drafting The substantive information within this paper is Course, Chapter 14; and an updated version of a paper prepared by Ellen Yarrell (12) “Economic And Physical Torts [What’s Left and Susan Myres for the 1996 Advanced Family Law After Schlueter?]” by John Nichols, Sr., 2001 Course. The scope of this article and the attached State Bar of Texas – Advanced Family Law forms do not include discovery forms. Course, Chapter 23. There are many considerations that must be taken into account prior to a decision to bring a third- party B. Joinder of Additional Parties and Actions into your lawsuit, or allowing another party to bring Joinder of tort and other matrimonial actions is a someone in, or conversely, allowing someone to function of the subject matter jurisdiction of the courts. remain in your lawsuit who is uninvited. Those For example, Texas blends it's courts of equity with considerations include: courts of law so that all district courts are courts of general jurisdiction and may hear matrimonial and tort (1) Whether someone has funds or assets and the actions, separately or together. Twyman v. Twyman, party does not want to be in the middle of a 855 S.W.2d 619 (Tex. 1993); Massey v. Massey, 807 controversy; S.W.2d 391 (Tex. App. —Houston [1st Dist.] 1991), (2) Whether someone else is culpable, is needed writ denied, 867 S.W.2d 766 (Tex. 1993) H.N. 4, 5 and to fully control discovery, or the resolution of 6; Mogford v. Mogford, 616 S.W.2d 936 (Tex. Civ. the case; App.—San Antonio 1981, writ ref'd n.r.e.). Texas courts balance judicial economy in hearing the entire 2 Dealing with Damages – Recoveries as Property Chapter 3

(3) Whether someone else wants some portion of discharged, and the court proceeds to determine the the existing parties’ assets; relative rights of the claimants. (4) Whether someone thinks they are more By filing an interpleader, a party protects himself appropriate than the existing parties in from multiple liability because the property in dispute determining the resolution of the case. is placed in the registry of the court until the underlying claims are evaluated and judgment The essential decisions regarding third-party actions rendered. Cable Communications Network, Inc. v. revolve around cost and control. The distinction Aetna Cas. & Sur. Co., 838 S.W.2d 947, 950-51 (Tex. between the various procedures can be defined as App.—Houston [14th Dist.] 1992, no writ). The suit follows: filed as an interpleader is a suit in equity. Northshore Bank v. Commercial Credit Corp., 668 S.W.2d. 787, (1) Interpleader involves a disinterested party 790 (Tex. App.—Houston [14th Dist.] 1984, writ ref d (the stakeholder) who voluntarily chooses to n.r.e.). The practitioner who represents the bring all interested parties into court or to disinterested holder of the property may file an join an existing controversy. Tex. R. Civ. P. interpleader. Interpleader is appropriate only when the 43. disputed property is identified such as money, real (2) Impleader concerns the permissive estate, and goods. “A petitioner in interpleader must involuntary joinder of third parties that may prove (1) that he is subject to, or has reasonable be liable to the joining party for all or part of grounds to anticipate, rival claims to the same find or the original claim asserted or who needs to property, (2) that he has not unreasonably delayed in be joined to dispose of the entire subject filing the interpleader action, and (3) that he has matter or avoid multiplicity of suits. Tex. R. unconditionally tendered the funds into the court.” Tri- Civ. P. 37-40. State Pipe & Equip., Inc. v. Southern Cty. Mut. Ins. (3) Intervention involves the voluntary joining Co., 8 S.W.3d 394, 402 (Tex. App.—Texarkana 1999, of an existing action by a third party. Tex. R. no pet.). Civ. P. 60-61. (4) Consolidation, Severance, and Separate b. Filing the Interpleader Petition Trials are remedies for improper joinder of A petition in interpleader is filed by either the parties. Tex. R. Civ. P. 174(a). plaintiff stakeholder, the defendant-stakeholder, or the garnishee, all of whom can be referred to as a 2. Interpleader - Tex. R. Civ. P. 431 “stakeholder” or “interpleader.” An interpleader action a. Introduction can be filed in the following circumstances: A bill of interpleader is the procedure for a person or entity, referred to as a “stakeholder,” who is in (1) plaintiff-stakeholder, a party subject to possession of a fund or property and who needs to file multiple liability because competing claims an original suit or to enter an on-going dispute (by have been asserted against the property in his cross-claim or counterclaim) between persons claiming possession, may file a petition in interpleader rights to the fund or the property by consolidating the joining the competing claimants as suits and transferring the funds or property to the court. defendants. After the deposit or tender is made, the stakeholder is (2) defendant-stakeholder, a defendant or respondent already in the suit, may file an interpleader as a cross-claim. Pursuant to

Tex. R. Civ. P. 43, the defendant can deposit 1 TRCP. 43. Interpleader. “Persons having claims against the the disputed property into the registry of the plaintiff may be joined as defendants and required to court Olmos v. Pecan Grove Mun. Util. Dist., interplead when their claims are such that the plaintiff is or 857 S.W.2d 734, 741 (Tex. App.—Houston may be exposed to double or multiple liability. It is not [l4th Dist.] 1993, no writ). ground for objection to the joinder that the claims of the several claimants or the titles on which their claims depend (3) garnishee, a person or entity subject to a do not have a common origin or are not identical but are garnishment action where competing claims adverse to and independent or one another, or that the to the property are asserted, may file an plaintiff avers that he is not liable in whole or in part to any interpleader. Northshore Bank, supra at 787. or all of the claimants. A defendant exposed to similar liability may obtain such interpleader by was of cross-claim In the event a stakeholder is made a defendant by one or counterclaim. The provisions of this rule supplement and claimant before initiating an interpleader action, the do not in any way limit the joinder of parties permitted in stakeholder may interplead the other claimants by any other rules.” filing a cross-claim or counterclaim. Barnett v.

3 Dealing with Damages – Recoveries as Property Chapter 3

Woodland, 310 S.W.2d 644 (Tex. App.—Austin 1958, (2) Timely Filing writ ref 'd n.r.e.). The stakeholder must show that he did not If two claimants file separate actions, the unreasonably delay in filing the interpleader action. stakeholder may assert his counterclaim in the action Savings & Profit Sharing Fund of Sears Employees v. which first placed the stakeholder’s liability in issue. Stubbs, 734 S.W.2d 76, 79 (Tex. App.—Austin 1987, The claimant who filed his action second should seek no writ). In that case, the court determined that a year’s consolidation of the two actions or an abatement of his delay in filing was unreasonable. If a counterclaim or proceedings if consolidation is not an available option. cross-action seeking to interplead is warranted, it must If a jurisdictional conflict arises, the interpleader is the be filed promptly. It also must be filed before rendition dominant action. The court claiming jurisdiction may of judgment in favor of a claimant. King Son Wong v. issue injunctions. Smith, 537 S.W.2d 468 (Tex. Civ. App.—Houston [14th Dist.] 1976, no writ). c. Requirements for Interpleader A party seeking relief by interpleader must initiate (3) Deposit with Court an action by filing a pleading which joins all parties The stakeholder must show that he asserting rival claims and which establishes the unconditionally placed or tendered the disputed money allegations set forth below. In the event the rival or property into the registry of the court. Olmos, supra parties have already initiated litigation, the stakeholder at 741. According to the Stubbs case above, the deposit should file his abatement plea and seek consolidation of the money or property discharges the stakeholder, of all actions. The allegations to be set forth in the and the court can then determine the allocation of the interpleader action are as follows: fund or property as part of its judgment in the trial on the merits. (1) Competing Claims The stakeholder must show that he is subject to or (4) Discharge has reasonable grounds to anticipate competing claims The stakeholder should submit and request an to the same fund or property. A life insurer may order of discharge. interplead the policy funds where there are conflicting claims to the proceeds of the policy. Great Am. (5) Costs and Attorney Fees Reserve Ins. Co. v. Sanders, 525 S.W.2d 956, 958 The party who justifiably seeks relief through (Tex. 1975) (where life policy named insured’s ex-wife interpleader without asserting any claim to the funds or as beneficiary but policy was taken out and premiums property on its own behalf is entitled to recover were paid at time when insured was married to his reasonable attorneys’ fees and taxable costs related to surviving widow, raising question whether use of the necessary investigation, preparation, and filing of community funds was constructive upon his the interpleader suit. Olmos v. Pecan Grove Mun. wife, fact that policy was to secure delinquent support Utility Dist., 857 S.W.2d 734, 741 (Tex. App.— payments for benefit of insured’s minor children would Houston [l4th Dist.] 1993, no writ); Brown v. Getty not require insurer to determine that ex-wife was Reserve Oil, Inc., 626 S.W.2d 810, 815 (Tex. App.— entitled to proceeds, and reasonable doubt as to Amarillo 1981, writ dism’d); Salazar v. San Benito whether ex-wife or widow was entitled to proceeds Bank & Trust Co., 730 S.W.2d 21,24 (Tex. App.— entitled insurer to maintain interpleader suit). Davis v. Corpus Christi 1987, no writ); Givens v. Girard Life East Texas Savings & Loan Association, 163 Tex. 361, Ins. Co. of America, 480 S.W.2d 421, 424 (Tex. Civ. 354 S.W.2d 926 (1962) (claims must place stakeholder App.—Dallas 1972, writ ref d n.r.e.). An innocent in some real doubt or hazard). Orem v. Farmers Nat’l stakeholder may receive fees and costs only if it pleads Bank in Brenham, 325 S.W.2d 149 (Tex. Civ. App.— for such relief, Briden v. Osborne, 184 S.W.2d 860, Waco 1959, writ ref’d n.r.e.). Interpleader is not proper 864 (Tex. Civ. App.—Eastland 1944, no writ), and if claimants do not involve the same subject matter. establishes that it has reasonable doubts over who was Southern Ins. Co. v. Federal Service Finance Corp., entitled to the funds of property and brought a family 370 S.W.2d 24 (Tex. Civ. App.—Austin 1963, writ action. Rio Grande Nat. Lfe Ins. Co. v. Schmidt, 292 dism’d). All other claimants in the funds or property S.W.2d 864, 868 to 869 (Tex. Civ. App.—Dallas 1956, are essential to the interpleader and must be joined as no writ). parties. Great Southern Life Ins. Co. v. Kinney, 276 The trial court has discretion to award the SW. 741, 743 (Tex. Civ. App.—Waco 1925, no writ) stakeholder’s attorneys’ fees and costs from the (insurer held entitled to interplead several claimants of property or funds in dispute. U.S. v. Ray Thomas proceeds of life insurance policy). Gravel Co., 380 S.W.2d 576, 580 (Tex. 1964). The court may also tax costs to one or more unsuccessful claimants for good cause. Gillman v. Gillman, 313 S.W.2d 931, 942 (Tex. Civ. App.—Amarillo 1958, 4 Dealing with Damages – Recoveries as Property Chapter 3 writ ref'd n.r.e.). Usually the fees and costs are awarded signature of either without further liability on from the fund in dispute; however, the court can tax part of association; them as costs against an unsuccessful claimant. Givens (2) unreasonably delayed filing; v. Girard Life Ins. Co. of America, 480 S.W.2d 421 (3) failed to unconditionally tender the funds or (Tex. Civ. App.—Dallas 1972, writ ref'd n.r.e.). When property to the registry of the court; the stakeholder claims are diverse to all claimants, the (4) is not a disinterested stakeholder; or costs are taxed as in other cases and the attorney’s fees (5) is responsible for the conflicting claims and, borne by the litigants incurring same. Miller v. Nacol, therefore, is not entitled to recover costs and 224 S.W.2d 734 (Tex. Civ. App.—Fort Worth 1949, attorney fees. Brown v. Getty Reserve Oil, no writ). Inc., 626 S.W.2d 810, 815 (Tex. App.— Amarillo 1981, writ dism’d). (6) Venue Generally, the interpleader may select the county e. Hearing on the Interpleader where any of the defendants reside in which to file the The court must conduct a hearing to determine the interpleader action. The county selected is then the threshold issue of whether the interpleader action is proper venue as to all defendants so long as no appropriate. Taliaferro v. Texas Commerce Bank- mandatory venue section controls. Tex. Civ. Prac. & Hurst, 669 S.W.2d 172, 174 (Tex. App.—Fort Worth Rem. Code Ann. § 15.066 (Vernon Supp. 1995). 1984, no writ). The burden is on the stakeholder to present evidence on the requirements listed above and (7) Subject Matter Jurisdiction attorney’s fees, if requested. Jurisdiction is ordinarily determined by the amount in controversy. Threadgill v. Federal Land f. Order Bank of Houston, 26 S.W.2d 345 (Tex. Civ. App.— If the court determines that the interpleader action Fort Worth 1930, writ dism’d). Therefore, when the does not meet the requirements, an order of dismissal initial interpleader is filed, it must specify that the is appropriate. If the court determines that reasonable value of the disputed property is within the court’s grounds for potential multiple liability exists or if the jurisdictional limits. Vassiliades v. Theophiles (Sussex interpleader action is untimely, then it should enter an Fire Ins. Co. of Newark), 115 S.W.2d 1220 (Tex. Civ. order dismissing the interpleader action. See Duval App.—Eastland 1938, writ dism’d). County Ranch Co. v. Texas Co., 301 S.W.2d247, 248 (Tex. Civ. App.—Austin 1957, no writ). d. Filing a Response Assuming the interpleader is correctly presented A party opposing the interpleader action should and appropriate, the interpleader should submit an file a written response and assert his position to the order to the court which provides for the following: court. Allegations may state that the stakeholder: (1) deposit of the find or property in the registry (1) is not subject to rival or competing claims. of the court if not already on deposit; The rival claims element is not supported (2) discharge of the stakeholder if the holder of when undisputed facts show that all but one the funds or property asserts no claim to the of the claims are clearly invalid, even though funds, the court’s order should discharge the there may be a threat of vexatious litigation. stakeholder and award attorney’s fees. US. v. In Davis v. East Texas Sav. & Loan Ass ‘n. Ray Thomas Gravel Co.,380 S.W.2d 576. 163 Tex. 361, 365, 354 S.W.2d 926, 930 581(Tex. 1964); and (1962). Building and loan association was (3) enjoinment of the competing claimants from not justified in filing interpleader suit to taking any action against the stakeholder; determine whether widow was entitled to (4) an award of costs and attorney’s fees to the entire $6,000 or testator’s daughter was innocent stakeholder; and entitled to half, where testator had originally (5) continuation of the underlying suit on the deposited money is association in his own merits to determine the rights of the name prior to marriage, and had certificate competing claims. changed after marriage to indicate that he and widow held funds as joint tenants with right An order granting the interpleader is a final and of survivorship, although will left residue of appealable order. Taliaferro v. Texas Commerce Bank, estate equally to widow and daughter, under 660 S.W.2d 151 (Tex. App.—Fort Worth 1983, no statute providing that shares issued by a writ). building and loan association in name of two persons or survivor may be withdrawn on

5 Dealing with Damages – Recoveries as Property Chapter 3 g. Family Law Case Application from a non spouse or non parent the protections of the In divorce actions where there is a dispute over Texas Rules of Civil Procedure. Therefore, when a characterization or distribution of insurance proceeds, petitioner includes a third party as a respondent one employee benefits, escrow accounts, trust funds, or a must provide a verified pleading or affidavit (TRCP writ of garnishment, the practitioner representing the 682) and reflecting a likelihood of irreparable harm disinterested holder of the property may file an and the Court is admonished to set the matter for final interpleader. trial (TRCP 680) and a bond must be posted (TRCP Case: Husband changed the nonemployer 684.). provided life insurance beneficiary during pendency of Factors which will effect decisions whether or not divorce in violation of temporary injunctions and then to include third parties in the original pleading are fact died. The insurance company could interplead the intensive. Common causes of actions that requiring funds into family or probate case for the wife and new analysis of third party claims include: actual fraud, beneficiary to argue over. Great Am. Reserve Ins. Co. constructive fraud, , cotenants, alter ego, v. Sanders, supra. parentage, partition, fraudulent transfer, third-party Query: In a post-divorce contest over the trustee. interpretation of the division of employee benefits, An amended pleading relates back to the filing of could the employer deposit a lump sum payment into the original petition for statue of limitations purposes, the court’s registry and subject the parties to potential unless the amendment is wholly based on a new, tax and penalty issues? Boggs v. Boggs, 520 U.S. 833, distinct, or different transaction or occurrence. Tex. 117 S.Ct. 1754, 138 L.Ed2d 49 (1997) ERISA Civ. Prac. & Rem. Code Ann. § 16.068; Chien v. Chen, preempts Louisiana community property law - first 759 S.W.2d 484, 493 (Tex. App.—Austin 1988, no wife’s attempt to leave “her share” of husband’s writ) (causes of action for breach of contract, fraud, retirement plan to her heirs ineffective; second wife and deceptive trade practices were not barred by two- takes as surviving spouse. Barnett v. Burnett, 67 year statute of limitations when partner filed original S.W.3d 107 (Tex. 2001), reversing, in part, 985 petition within two years of date causes of action S.W.2d 520 Federal ERISA preempts Texas Family accrued, without mentioning that he sued for other Code regarding life insurance obtained through partners, and he alleged fact of partnership in a first employment. Consider: amended original petition filed after expiration of two- year period; recovery on original petition would have (1) Potential risks: being removed to federal barred recovery under amended petition, and thus, court and the costs associated therewith. amended petition related back to original petition). It is (2) Suggestions: reach agreements between the unclear whether the filing of a third-party petition will parties to retain funds with employer find or toll the running of the statute of limitations on a cause join the employer in the suit and enjoin any of action between the plaintiff and the third-party distribution. defendant. Joining additional parties is subject to the trial 3. Impleader (Joinder) - Tex. R. Civ. P. 37, 38, 39 court’s discretionary power. A third-party petition and 40 maybe denied if the joinder will result in undue delay a. Introduction in the trial. Valley Industries, Inc. v. Martin, 733 Impleader (commonly referred to as “joinder”) is S.W.2d 720 (Tex. App.—Dallas 1987, no writ). The the procedure for joining other parties as either standard for appellate review of a denied joinder is additional third-party defendants or third-party abuse of discretion. Threeway Constructors, Inc. v. plaintiffs. Inclusion in the existing suit is generally Aten, 659 S.W.2d 700 (Tex. Civ. App.—El Paso 1983, involuntary on the part of the third parties. The original no writ). Previously, courts entertained the distinction respondent impleads a third party whom the respondent concerning “dispensable versus indispensable parties”; believes is liable to him for the claims of the original however, courts have usually ceased to use these terms. petitioner. As a result, the original respondent becomes Texas Oil & Gas Corp. v. Ostrnm, 638 S.W.2d 231 the third-party plaintiff and the added defendant (Tex. App.—Tyler 1982, writ ref'd n.r.e.). becomes the third-party defendant. Any defending patty against whom claims are made may implead third b. Filing the Third-party Petition by Original parties in accordance with Tex. R. Civ. P. 38 or join Respondent - Tex. R. Civ. P. 38(a) additional parties by cross-claims or counterclaims No leave of court is required if the third-party pursuant to Tex. R. Civ. P. 39 and 40. petition is filed within 30 days of the original filing of A plaintiff may always choose to name third the answer of the respondent (now the third-party parties in the original proceeding. Family practitioners plaintiff). If the third-party petition is filed after 30 are wise to remember that when a temporary days of the deadline for the original answer of the restraining order or temporary injunction is sought respondent, leave of the court is required before 6 Dealing with Damages – Recoveries as Property Chapter 3 serving the third-party defendant with citation. Tex. R. compulsory. However, if the claim exceeds Civ. P. 38(a). Notice of the hearing to secure leave of the Court’s jurisdictional amount, the claim the court must be served on all existing parties. If the is permissive. Age v. Tom Fairey Co., 692 third-party plaintiff fails to secure leave, the service of S.W.2d 127 (Tex. App.—Dallas 1985, writ the third-party defendant is technically invalid. Bilek & ref’d n.r.e.); Purcell Industries, Inc. v. Paderwerk Gebr. Benteler (2) not the basis for another pending lawsuit; GmbH & Co., 694 S.W.2d 225 (Tex. App.—Houston (3) mature - claims that are speculative or [13t Dist.] 1985, no writ). However, if no party files an premature at the time the answer if filed are objection, the third-party plaintiff’s failure to secure not considered compulsory. (Note however, leave is not reversible error. Trueheart v. Braselton, that in Fidelity Mut. Life Ins. Co. v. 875 S.W.2d 412 (Tex. App.—Corpus Christi 1994, no Kaminsky, 820 S.W.2d 878 (Tex. App.— writ). Texarkana 1991, writ denied), the claim for Assuming proper service of the third-party attorneys fees was compulsory even though it plaintiff, the third-party defendant may exercise any of was contingent on the outcome at trial.) the following options: (4) related to the same transaction or occurrence - Texas adopts the “logical relationship” test (1) assert defenses against the original petitioner to determine whether claims arise from the by cross-claim; same transaction or occurrence. Jack H. (2) counterclaim against the third-party plaintiff; Brown & Co. v. Northwest Sign Co. 718 (3) join additional third-party defendants based S.W.2d 397 (Tex. App.—Dallas 1986, writ on the same procedure under Tex. R. Civ. P. ref d n.r.e.); and 38(a); and/or (5) against the party in the same capacity – in (4) assert defenses against the third-party other words, if the plaintiff/petitioner filed a plaintiff for indemnity and contribution. claim as a representative or agent, a claim against the plaintiff/petitioner in his c. Filing the Third-party Petition by Original individual capacity is not a compulsory Petitioner claim. The original petitioner may assert a claim against a third-party defendant if it arises out of the action on Finally, if all five criteria are met, the Court must have file. The claim must be filed within sixty (60) days personal jurisdiction of all parties. after the original third-party claim was filed. When a defending party asserts a third-party claim d. Effect of Dismissal of Original Petition for (or a cross claim) against another party, the third-party Petitioner plaintiff is required to assert all claims against the In the event the petitioner dismisses or nonsuits third-party defendant that arise from the subject matter the original action, the petition filed by the third- party of the claim. Otherwise, the claims are precluded by plaintiff (who is the original respondent) is abated as to res judicata. Judwin Properties Inc. v. Velsicol the joined third-party defendant. Dismissal does not Chemical Co., 928 S.W.2d 127, 133 (Tex. App.—San prejudice the right of an “adverse party” to be heard on Antonio 1996), rev’d on other rounds, 956 S.W.2d 529 a pleading requesting affirmative relief. Tex. R. Civ. P. (Tex. 1997). 162. Note the original petitioner must counterclaim against the third-party defendant if a claim has been e. Motion to Strike, Sever, Separate asserted against the petitioner by the third-party and if Any party to an action may file a motion to strike, the petitioner’s counterclaim arises out of the same sever or separate any third-party claim. Tex. R. Civ. P. transaction. Tex. R. Civ. P. 97(a). 3 8(a). Youngblood v. Central Soya Co., Inc., 522 Determining whether a claim is compulsory is S.W.2d 277 (Tex. Civ. App.—Ft. Worth 1975, writ essential to the Petitioner, because failure to join ref'd n.r.e.). If impleader is attempted or granted when compulsory counter-claim creates a bar to assertion of no claim for contribution or indemnity exists, a motion the claim in a later suit. Tex. R. Civ. P. 97(a), Wyatt v. to strike should be filed. The motion should be filed Shaw Plumbing Co., 760 S.W.2d 245 (Tex. 1988). and heard before trial begins. Hernandez v. Houston According to the Court in Wyatt, counterclaims are Lighting and Power Co., 795 S.W.2d 775 (Tex. claims: App.—Houston [14th Dist.] 1990, no writ). In other eases, severance maybe the appropriate (1) within the Court’s jurisdiction – if the claim relief. For example, although misjoinder of parties to arises from the same transaction or the third-party petition is not a basis for striking a occurrence, yet is below the Court’s third-party claim, it may be the basis for severance and, minimum jurisdictional limits, it is therefore, two separate decisions from the court. 7 Dealing with Damages – Recoveries as Property Chapter 3

Valdez v. Gill, 539 S.W.2d 477 (Tex. Civ. App.—San Tex. R. Civ. P. 39(a) requires that a person who is Antonio 1976, writ ref’d n.r.e); Tex. R. Civ. P. 41; subject to service of process must be joined as a party Frost v. De Bogory, 291 S.W.2d 414 (Tex. Civ. is: App.—Dallas 1956, no writ). A claim is properly severable if, Guaranty (1) In his or her absence complete relief cannot Federal Say. Bank v. Horseshoe Operating Co., 793 be accorded among those who are already S.W.2d 652, 658 (Tex. 1990): parties; or (2) He or she claims an interest relating to the (1) The controversy involves more than one subject matter of the action and is so situated cause of action. that the disposition of the matter without him (2) The severed action could have been or her would: independently brought. (3) The claim is not so interwoven with the (a) As a practical matter impair or impede remaining action that they involve the same his or her ability to protect that interest; facts and issues. Tex. R. Civ. P. 41.2 or (b) Leave any of the persons already parties The reasons for severance are to do justice, to avoid subject to the risk of incurring double, prejudice, and to further convenience. Guaranty multiple, or otherwise inconsistent Federal Sav. Bank v. Horseshoe Operating Co., 793 liabilities by reason of his or her claimed S.W.2d 652, 658 (Tex. 1990) (third-party action interest. brought by savings and loan association, which had drawn teller’s check, against its customer for alleged If such person is not been joined, the court shall order fraud was properly severed from the payee’s action that he or she be joined as a party. Tex. R. Civ. P. against the savings and loan on the check). 39(a). A motion for separate trials maybe requested on The court has the discretion to determine whether one or more of the claims to facilitate the trial, to to proceed with the parties already involved absent the accommodate judicial convenience, or to avoid undue other possible parties. Cooper v. Texas Gulf Industries, prejudice if severance is inappropriate. Tex. R. Civ. P. Inc., 513 S.W.2d 200 (Tex. 1974). Dismissal of the 174(b). Separate trials of joined claims result in one original suit for failure to join absent parties in final judgment at the conclusion of the last trial uncommon; however, in partition cases, one court has whereas severed claims result in one judgment per held that failure to join all parties owning an interest in trial. the land was reversible error. Carper v. Halamicek, 610 S.W.2d 556 (Tex. Civ. App.—Tyler 1980, writ ref f. Risks Involving Impleader d n.r.e.). Whenever third-party actions, cross-claims, and counterclaims are asserted either by the original g. Trial Court Considerations Involving Impleader petitioners or respondents acting as third-party The trial court has discretion to vacate certain plaintiffs, compulsory joinder becomes an issue. Tex. orders concerning leave to implead third-party R. Civ. P. 39 mandates that all parties necessary to defendants. Valley Industries, supra at 720. Such final adjudication of the claim must be joined if they considerations are as follows: are subject to citation. Tex. R. Civ. P. 39 and 97(f). Therefore, the impleading party must ascertain which (1) Factors persons or entities are required. The court should consider the following factors in making its decision to proceed or dismiss, Cooper v. Texas Gulf Industries, Inc., 513 S.W.2d 200, 204 (Tex. 1974): 2 TRCP 41. Misjoinder & Non-Joinder of Parties. “Misjoinder of parties is not ground for dismissal of an (a) The extent to which a judgment rendered in action. Parties may be dropped or added, or suits filed the person’s absence might be prejudicial to separately may be consolidated, or actions which have been him or her or to those already parties. improperly joined may be severed and each ground of (b) The extent to which prejudice can be recovery improperly joined may be docketed as a separate diminished or avoided by protective suit between the same parties, by order of the court on provisions in the judgment, the relief motion of any party or on its own initiative at any stage of the action, before the time of submission to the jury or to the afforded, or other measures. court if trial is without a jury, on such terms as are just. Any (c) Whether a judgment rendered in the person’s claim against a party may be severed and proceeded with absence will be adequate. separately.” 8 Dealing with Damages – Recoveries as Property Chapter 3

(d) Whether the plaintiff will have an adequate third-party claims in divorce litigation. Post-Divorce remedy if the action is dismissed for litigation will be subject to the venue rules as set out in nonjoinder under Tex. R. Civ. P. 39(b). the Texas Rules of Civil Procedure and in the Texas (e) In it sound discretion, the trial court may Civil Practices & Remedies Code. consider additional grounds. (5) Limitation on Joinder of Liability Insurers (2) Discretionary Grounds An indemnity or liability insurance company may (a) Undue delay - third-party petitions must be not be involuntarily joined under Tex. R. Civ. P. 38 timely filed and not unduly delay the trial unless the insurer is liable by contract or statute to the or interfere with the progress of litigation. person injured or damaged. Tex. R. Civ. P. 38(c). Parties may not be joined at a time or under such circumstances to unreasonably delay the (6) Meritless Third-Party Action trial of the case. Tex. R. Civ. P. 37; see Whether brought by a party or on its own motion, Threeway Constructors, Inc. v. A ten, 659 the court can deny request for leave and/or grant S.W.2d 700, 701 to 702 (Tex. App.—El Paso motions to strike, to separate, or to sever. Tex. R. Civ. 1983, no writ) (trial court did not abuse its P. 41; Brown & Root, Inc. v. Rust Engineering, 679 discretion in denying motion for leave to file S.W.2d 576 (Tex. App.—Texarkana 1984, writ ref'd third-party petition against doctor who n.r.e.). allegedly negligently treated plaintiff, in as much as motion was not filed until more than h. Family Law Case Application one year after plaintiff filed original petition, In family law cases, examples of third-party and grant of motion would have defendants might include corporations, partners, trusts, unnecessarily delayed scheduled trial of the co-owners of property, and extended family members. case). Query: Husband and wife have community (b) Absence of common question of law and property interest in a time share condo jointly owned fact. Williamson v. Tucker, 615 S.W.2d 881 with two other couples. Should someone implead the (Tex. Civ. App.—Dallas 1981, writ ref'd other couples? It depends. Carper v. Halamicek, 610 n.r.e.). S.W.2d 556 (Tex. Civ. App.—Tyler 1980, writ ref'd (c) Potential confusion to the jury. Ruthart v. n.r.e.). If a third-party’s interest will be affected by First State Bank, Tulia, Texas, 431 S.W.2d judgment or partition, they should be included. Texas 366 (Tex. Civ. App.—Amarillo 1968, writ Oil & Gas Corp. v. Ostrom, 638 S.W.2d 231 (Tex. ref d); United Fidelity Lfe Ins. Co. v. App.—Tyler 1982, writ ref d n.r.e.) holds that you only Holliday, 226 S.W.2d 139 (Tex. Civ. App.— need to join co-owners if you request to partition their Amarillo 1949, writ ref‘d n.r.e.). interest. Migura v. Dukes, 770 S.W.2d 568 (Tex. (d) Pendency of another action between third- 1989). Common law wife brought executrix into party plaintiff and third-party defendant. divorce case to resolve divorce property issues. The Jones v. Hubbard, 302 S.W.2d 493 (Tex. court found that it was not necessary to join ceremonial Civ. App.—Waco 1957, writ ref’d n.r.e.). wife in divorce suit because it only involved a lien or (e) Unavailability of contribution or indemnity real property that the “husband” had devised to as a matter of substantive law. ceremonial wife. Had the dispute involved title, then ceremonial wife would need to be included. Tex. Civ. (3) Jurisdiction Limitations Prac. & Rem. Code Ann. § 17.001 (Vernon 1986). It is unclear what the effect of the minimum dollar Query: Husband transfers property to his jurisdictional limitations is on third-party actions. brother-in-law near time of divorce. Does wife have to White v. Hill, 283 S.W. 529,530 (Tex. Civ. App.—San implead brother-in-law to set aside transfer? No, at Antonio 1926, no writ); but see Higgings v. Standard least according to K.B. v. N.B., 811 S.W.2d 634 (Tex. Lloyds, 149 S.W.2d 143, 164, (Tex. Civ. App.— App.—San Antonio 1991), writ denied, 112S. Ct. 1963 Galveston 1941, writ dism’d). However, this risk is not (1992). In addition to setting aside the transfer, the applicable to most family law matters. court awarded that property to the child’s attorney ad litem as attorney’s fees. The appellate court found that (4) Venue Considerations under the amended Rule 29 and pursuant to Cooper v. The general rule is that venue in third-party Texas Gulf Indies., Inc., 513 S.W.2d 200 (Tex. 1974), actions, cross-claims, and counterclaims is governed only in rare instances will the absence of a party by the original action. Tex. Civ. Prac. & Rem. Code deprive a court of jurisdiction to adjudicate the issues Ann. § 15.062 (Vernon Supp. 1995). Thus, an joined between the parties already before it. The underlying divorce action will govern venue. Venue appellate court held that the district court had considerations will almost never present an obstacle to jurisdiction to adjudicate the rights of the husband and 9 Dealing with Damages – Recoveries as Property Chapter 3 wife in the divorce proceeding regarding property in [1st Dist.] 1967, writ ref’d n.r.e.); Aetna Life Ins. Co. v. question and that the husband lacked standing to assert Creel, 390 S.W.2d 522 (Tex. Civ. App.—Houston whatever rights his brother-in-law may have to the 1965, writ ref’d); Kuper v. Schmidt, 338 S.W.2d 948 property. The court held that “[A] party may not (Tex. 1960); Lancaster v. Lancaster, 277 S.W.2d 824 complain of errors that do not injuriously affect him or (Tex. Civ. App.—Waco) affirmed 291 S.W.2d 303; which merely affect the rights of others.” Walsh v. Walsh, 255 S.W.2d 240 (Tex. Civ. App.— However, when in Schlueter v Schlueter, 975 Amarillo 1952). [Paternity] J.M.R. v. A.M., 683 SW2d 584 (Tex. 1998), the wife included her former S.W.2d 552 (Tex. Civ. App.—Forth Worth 1985, writ father-in-law in her claims against husband for fraud ref’d n.r.e.) on the community her cause for action was diminished In conclusion, the consideration whether to by his indecision where as an independent lawsuit for proceed without a person or entity is within the sound conversion may be more productive. However, it may discretion of the court. Any decision by the practitioner subject the non owning spouse to a defense of res or the Court is very fact intensive. In arguing that a judicata. trial cannot proceed without certain persons, be Query: What is couple co-owns a business with specific in terms of the factors listed above and any others? Can one spouse implead other owners to force other reason why, in all fairness, the trial should not the sale of the business? Areas of law to explore: proceed. corporate, partnerships, regulations of the particular business, etc. 4. Plea In Intervention - Tex. R. Civ. P. 60 and 61 Query: Can an ad litem implead meddlesome or a. Introduction even helpful relatives in a custody case to acquire Intervention is a voluntary procedure wherein an enforceable orders or assistance? interested party joins a suit in progress. Any person or Query: During the divorce action wife gets entity may intervene in a pending suit either as a pregnant by a man not her husband. She requests petitioner or respondent, subject to the rules of spousal maintenance and other support from husband. procedure and standing. Tex. R. Civ. P. 60; Mendez v. Can husband implead paramour into divorce case to Brewer, 626 S.W.2d 498 (Tex. 1982). The intervenor is have the paramour support wife during and after not required to obtain leave of court prior to filing a pregnancy? plea in intervention. Bell v. Craig, 555 S.W.2d 210 Additionally cases of interest to review are: [Non- (Tex. Civ. App.—Dallas 1977, no writ); Guaranty Fed. divorce] de Anda v. Blake, 562 S.W.2d 497 (Tex. Civ. Say. Bank v. Horseshoe Operating Company, 793 App.—San Antonio 1978); Williams v. Saxon, 521 S.W.2d 652 (Tex. 1990). S.W.2d 88 (Tex. Civ. App.—San Antonio 1975, writ ref’d n.r.e.); Cooper v. Texas Gulf Industries, Inc., 513 b. Filing the Plea S.W.2d 200 (Tex. 1974; Dulak v. Dulak, 496 S.W.2d, Intervenors must comply with the rules of 496 S.W.2d 776 (Tex. Civ. App.—Austin 1973 pleading. Tex. R. Civ. P. 61. The plea must be in reversed 513 S.W.2d 205 (Tex. 1974); Ramos v. writing and filed in the pending cause number. Diaz v. Horton, 456 S.W.2d 565 (Tex. Civ. App.—El Paso Attorney General, 827 S.W.2d 19, 22 (Tex. App.— 1970); Horn v. Maples, 407 S.W.2d 867 (Tex. Civ. Corpus Christi 1992, no writ). App.—San Antonio 1966); Firence Footwear Co. v. Campbell, 406 S.W.2d 516 (Tex. Civ. App.—Houston c. Notice of the Plea 1966) rehearing affirmed 411 S.W.2d 636, writ ref’d Citation is not necessary on parties already n.r.e; Lusk v. General Motors Acceptance Corp., 395 appearing in the lawsuit; therefore, the intervenor may S.W.2d 847 (Tex. Civ. App.—Tyler 1965); Texas & P. serve the plea pursuant to Tex. R. Civ. P. 21, 21a, and Ry. Co. v. Leatherman, 351 S.W.2d 633 (Tex. Civ. 60. Although the comment to the 1990 amendment to App.—Eastland 1961, writ ref’d n.r.e.); Scoggins v. Tex. R. Civ. p. 60 clearly states that “[R]ules 21 and Taylor, 248 S.W.2d 549 (Tex. Civ. App.—Amarillo 21a control notice and service of pleadings of 1952, writ ref’d). [Divorce] K.B. v. N.B., 811 S.W.2d intervenors,” there is conflicting case law. In Mallia v. 634 (Tex. App. San Antonio 1991) writ denied, cert. Bousquet, 813 S.W.2 628, 630 (Tex. App.—Houston denied 112 S.Ct. 1963, 504 US 918, 118 L.Ed.2d 564; [1st Dist.] 1991, no writ), the court concluded that General Dynamics Corp. v. Harris, 581 S.W.2d 300 because the intervenor sought affirmative relief from (Tex. Civ. App.—Waco 1979); Bourne v. Bourne, 559 the petitioner, the plea should have been served on the S.W.2d 844 (Tex. Civ. App.—Houston [1st Dist.] petitioner by citation. 1977); Glasscock v. Citizens Nat’l Bank, 553 S.W.2d In the event there are parties who have not yet 411 (Tex. Civ. App.—Tyler 1977. writ ref’d n.r.e.); appeared in the lawsuit (e.g. a respondent who has not Miller v. Miller, 487 S.W.2d 382 (Tex. Civ. App.— filed an answer) and against whom the intervenor is Fort Worth 1972, writ ref’d n.r.e.); Roberson v. seeking affirmative relief, intervenor should serve Roberson, 420 S.W.2d 495 (Tex. Civ. App.—Houston those parties with citation. Similarly, if there are third 10 Dealing with Damages – Recoveries as Property Chapter 3 parties brought into the lawsuit by the intervenors, each (Tex. App.—El Paso 1995, no writ) (also includes a should be served with citation. 4 R. McDonald, Texas thorough analysis that distinguishes general and Civil Practice in District and County Courts § 5.81 specific rules of intervention in a SAPCR). The (rev. 1992). intervenors may oppose both the petitioner and the respondent. d. Requirements (1) Justiciable interest - general (2) Same transaction or occurrence. Texas law permits a party to file a plea of An intervenor must plead and prove that his claim intervention and join an ongoing lawsuit. Tex. R. Civ. arises from the same transaction or occurrence and F. 60 and 61. Rodriquez v. Printone Color Corp., 982 there is a common question of law or fact with the S.W.2d 69 (Tex. App.—Houston [1st Dist.] 1998, pet. underlying claim or suit. Tex. R. Civ. P. 40. denied). Unless a party opposes an intervention and obtains an order striking the plea in intervention, any (3) Time frame. person may intervene as a matter of right in a case. An intervention must generally be filed before Bryant v. United Shortline Inc. Assur. Services, NA., judgment is rendered in the case. In re Guerra & 984 S.W.2d 292, 295 (Tex. App.—Fort Worth 1998, Moore, L.LF., 35 S.W.3d 210, 217 (Tex. App.— no pet.) (insurance company’s liquidator, by failing to Corpus Christi 2000, orig. proceeding) (law firm’s file a motion to strike intervention and obtain a ruling, intervention in lawsuit in effort to recover attorney fees waived right to complain of bank’s decision to was properly before county court absent a showing that intervene in broker’s lawsuit against another insurer final judgment had been rendered in lawsuit); San Juan and to interplead funds obtained through premium 1990-A, L.P. v. Meridian Oil Inc., 951 S.W.2d 159, finance business and allegedly claimed by both 164 to 165 (Tex. App.—Houston [14th Dist.] 1997, insurers); Atchley v. Spurgeon, 964 S.W.2d 169, 170 to pet. denied). A party is barred from intervening if the 171 (Tex. App.—San Antonio 1998, no pet.); Schwartz court orally renders judgment in the case. Keim v. v. Taheny, 846 S.W.2d 621,622 (Tex. App.—Houston Anderson, 943 S.W.2d 938, 943 (Tex. App.—El Paso [14th Dist.] 1993, writ denied). The right of 1997, no writ) (divorce court’s oral announcement at intervention is an equitable one that is not based solely conclusion of hearing on parties’ stipulation on statutes or a rule for its existence. Any person or constituted rendition of final judgment disposing of all entity may intervene to protect their rights as long as issues and parties, for purposes of husband’s claim that the intervention does not delay the case or otherwise court erred in considering subsequent petition in prejudice the existing litigants. Atchley v. Spurgeon, intervention filed by wife’s former attorney without supra. An intervenor does not require the permission of first setting aside judgment; judge’s statements the court to intervene and the court may only address indicated intent to render judgment at time they were the issue of intervention if the intervention is spoken). challenged by a motion to strike. Grizzle v. Texas Commerce Bank, N.A., 38 S.W.3d 265, 272 (Tex. (4) Role as party App.—Dallas 2001, no pet. h); Ghidoni v. Stone Oak, Intervenors, when not stricken, are parties for Inc., 966 S.W.2d 573, 586 (Tex. App.—San Antonio all purposes, entitled to notice of all matters, subject to 1998, pet. denied). discovery rules in Tex. R. Civ. P. 190 et seq., and An intervenor must have a justiciable interest in bound by any scheduling orders issued by the court or the case, whether joining as a plaintiff of defendant. per local rules. Guaranty Federal Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 657 (Tex. 1990); Grizzle v. e. Motion to Strike and Hearing Texas Commerce Ban/c N.A., supra. Because an A party objecting to the intervention must file a intervenor bears the burden of showing a justiciable written motion to strike a plea in intervention. interest, the court should permit the intervenor to Guaranty Fed., supra at 657; Tex. R. Civ. P. 60. The explain and show proof of its justiciable interest in the burden is on the intervenor to present evidence lawsuit. In re Estate of York, 951 S.W.2d 122, 126 to demonstrating compliance with the requirements listed 127, n.3 (Tex. App.—Corpus Christi 1997, no writ). in section D. above. National Un. Fire Ins. Co. v. Until Troxel v. Granville, 530 U.S. 57; 120 S.Ct. 2054 Pennzoil, 866 S.W.2d 248, 250 (Tex. App.—Corpus (2000), the case law of Texas provided that a Christi 1993, no writ). grandparent as “natural guardian” of a grandchild A plea to jurisdiction or motion for severance and possesses a justiciable interest. McCord v. Watts, 777 separate trials are not proper procedural vehicles for S.W.2d 809 (Tex. App.—Austin 1989, no writ). A challenging a plea in intervention. See Bryant v. United party’s justiciable interest may be determined on the Shortline Inc. Assur. Services, NA.., 984 S.W.2d 292, basis of the sufficiency of the petition and other 295 (Tex. App.—Fort Worth 1998, no pet.); Ghidoni v. pleadings. Segovia-Slape v. Paxson, 893 S.W.2d 694 Stone Oak, Inc., 966 S.W.2d 573, 586 (Tex. App.— 11 Dealing with Damages – Recoveries as Property Chapter 3

San Antonio 1998, pet. denied). The motion to strike a conservatorship on grandparents and other relatives of plea in intervention should allege the factors set forth the child related within the third degree by in Guaranty Federal, Guaranty Federal Say. Bank v. consanguinity if there is “satisfactory proof to the Horseshoe Operating Co., 793 S.W.2d 652, 657 (Tex. court” that: 1990); Atchley v. Spurgeon, 964 S.W.2d 169, 171 (Tex. App.—San Antonio 1998, no pet.): (1) the order requested is necessary because the child’s present circumstances would (1) The intervenor could not bring an significantly impair the child’s physical independent action in its own name. health or emotional development; or (2) The intervention will complicate the case and (2) both parents, the surviving parent, or the excessively multiply the issues; and managing conservator or custodian either (3) Intervention is not essential to protect the filed the petition or consented to the suit. intervenor’s interest. Tex. Fam. Code § 102.004(b) bars grandparents or The intervenor should request a court reporter because other persons from filing an original suit for possessory without a statement of facts from the hearing, the conservatorship; “[h]owever, the court may grant a losing party may not have much success on appeal. grandparent or other person deemed by the court to Evidence of abuse of discretion is the standard on have had substantial past contact with the child leave to appeal. Saldana v. Saldana, 791 S.W.2d 316, 320 (Tex. intervene in a pending suit filed by a person authorized App.—Corpus Christi 1990, no writ). The court’s to do so under this subchapter if there is satisfactory ruling on the motion to strike is interlocutory and not proof to the court that appointment of a parent as a sole appealable until a final judgment between the original managing conservator or both parents as joint parties is entered of record. Metromedia Long managing conservators would significantly impair the Distance, Inc. v. Hughes, 810 S.W.2d 494 (Tex. child’s physical health or emotional development.” App.—San Antonio 1991, writ denied). Failure of a party to move to strike the 5. Consolidation - Tex. R. Civ. P. 174(a)3 intervention constitutes waiver of any objections a. Introduction concerning the appropriateness of the intervention. According to Tex. R. Civ. P. 174(a), the court Helton v. Kimbell, 621 S.W.2d 675 (Tex. Civ. App.— may consolidate separate lawsuits that are pending if Fort Worth 1981, no writ). A court cannot strike an the suits involve common questions of law or fact and intervention on its own motion i.e. sua sponte. if the consolidation does not cause delay, jury Guaranty Fed., supra at 657. confusion, or prejudice to the parties. Dal Briar Corp. v. Baskette, 833 S.W.2d 612, 615-16 (Tex. App.—El f. Order on Motion to Strike Paso 1992, no writ). In Dal Briar, the court of appeals The following options are available to the court concluded that in granting either a motion to when considering a pending motion to strike: consolidate or the opposite, a motion for separate trials as provided for by Tex. R. Civ. P. 174(a), the same (1) Deny the motion; legal principles apply. In that case, consolidation was (2) Sever the intervention; inappropriate because of prejudice and jury confusion. (3) Order a separate trial on the intervenor’s issues; or (4) Strike the intervention for good cause. Saldana, supra at 320. g. Family Law Case Application 3 In family law practice, pleas in intervention are TRCP 174. Consolidation; Separate Trials. “(a) commonly filed by creditors, stakeholders, Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a grandparents, relatives, adoptive couples, and foster joint hearing or trial of any or all the matters in issue in the parents regarding child issues and by attorneys seeking actions; it may order all the actions consolidated; and it may payment of fees. The most frequent cases utilizing make such orders concerning proceedings therein as may intervention involve grandparents seeking custody of, tend to avoid unnecessary costs or delay. (b) Separate Trials. or court ordered access to, their grandchildren. The court in furtherance of convenience or to avoid The practitioner should distinguish standing to prejudice may order a separate trial of any claim, cross- intervene, which requires a justiciable interest, from claim, counterclaim, or third- party claim, or of any separate the independent standing to sue as set for in Tex. Fam. issue or of any number of claims, cross-claims, Code § 102.004. Tex. Fam. Code § 102.004(a) confers counterclaims, third-party claims, or issues.” standing to file an original suit requesting managing 12 Dealing with Damages – Recoveries as Property Chapter 3 b. Motion e. Family Law Case Application A party seeking consolidation must file a motion In family law cases, consolidation may be and secure a hearing. The allegations must include the appropriate in a variety of cases such as debt following allegations: collection, taxes, probate, malpractice, and others. Query: After divorce, wife’s attorney sues her in (1) subject matter of suit is the same; the divorce court for collection of fees. Client sues (2) suits are pending in same court or in different attorney for malpractice in non-family civil court. district courts within the same county. Should the cases be consolidated? Yes. Hardey v. Starnes v. Holloway, 779 S.W.2d 86, 96 McCorkle, 765 S.W.2d 910 (Tex. App.—Houston [lst (Tex. App.—Dallas 1989, writ denied); and, Dist.] 1989, no writ). (3) compliance with local rules concerning Query: Husband is being sued for breach of consolidation. Santa Fe Drilling Co. v. contract involving property of the marriage. Can this O’Neill, 774 S.W.2d 423, 424 (Tex. App.— case be consolidated with divorce case? What if in the Houston [14th Dist.] 1989, mand. over.). contract case, the plaintiff is wife’s father and there are allegations of to defraud? c. Response Other cases of interest are: Sanchez v. Sanchez, A party objecting to consolidation must file a 609 S.W.2d 307 (Tex. Civ. App.—El Paso 1980) specific and timely objection. The objection must (division of property may not be severed from allege that consolidation is not appropriate because it divorce); Peterson v. Peterson, 502 S.W.2d 178 (Tex. will cause delay, jury confusion, and/or prejudice to Civ. App.—Houston [1st Dist] 1973) (court can add the parties. Objections can include that evidence which children to action and appoint guardian ad litem to may be admissible in one action but not the other represent them); In Re Burgett, 23 S.W.3d 124 (Tex. and/or which will create prejudice. For instance, party App.—Texarkana 2000, reconsideration denied) admissions or statements against interest may be (alleged conspirator may be joined); Martin v. Martin, admissible because of additional parties to the suit and 840 S.W.2d 586 (Tex. App.—Tyler 1990, writ denied) may result in prejudice. Guidance maybe found in (bill of review severed from post-decree division of cases discussing severance of actions. If the claims are property); James v. Texas Dept. Of Human Services, determined to be compulsory counterclaims, it would 836 S.W.2d 236 (Tex. App.—Texarkana 1992 (need be error to sever them. Mathis v. Bill De La Garza & not sever mom and dad termination cases); Rodarte v. Assoc., 778 S.W.2d 105 (Tex. App.—Texarkana 1989, Cox, 828 S.W.2d 65 (Tex. App.—Tyler 1991, writ no writ). denied) (need not server termination from adoption If a bill of review is a portion of the required suits); Vautrain v. Vautrain, 646 S.W.2d 309 (Tex. relief, a may reduce the number of trials necessary to Civ. App.—Forth Worth 1983, writ denied) (divorce motion to sever may be appropriate. Amanda v. may not be severed from division); In Re J.W., 113 adjudicate the same claims, leverage and strength in S.W.3d 605 (Tex. App.—Dallas 2003, pet denied) Montgomery, 877 S.W.2d482 (Tex. App.—Houston (termination of mom and dad parental rights may be negotiations and trial. [1st Dist] 1994, no writ). tried together). d. Order 6. Conclusion If the court grants the consolidation, a written The practitioner must evaluate the costs versus the order should be entered. A filly consolidated action benefits of interpleader, impleader, intervention, and/or proceeds as though it had been originally filed as a consolidation. Multiparty litigation is inherently single action. Any interlocutory orders entered in either complex and may result in additional costs, especially separate suit prior to consolidation will remain discovery costs, to your client. It may expose your interlocutory until final judgment is rendered in the client to compulsory counterclaims and additional consolidated case. Posey v. Posey, 386 S.W.2d 884 liability. Other pitfalls can involve jurisdiction (Tex. Civ. App.—Fort Worth 1965, no writ). An order questions, venue considerations, evidence questions, granting or denying consolidation is reversible error and/or alignment of parties at trial. only in the event the order is a clear abuse of Benefits include resolution of multifaceted issues discretion. Hamilton v. Hamilton, 280 S.W.2d 588 and participation of all interested parties which may (Tex. 1955). reduce the number of trials necessary to adjudicate the Practice Note: An agreement by the parties to same claims, leverage and strength in negotiations and consolidate is not binding on the court. Hamilton, trial. supra.

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C. Intentional and Unintentional Torts – Claims 4. Res Judicata and Collateral Estoppel—Distinction and Defenses Bonniwell v. Beech Aircraft Corp., 663 S.W.2d In distinguishing between intentional and 816, 818 (Tex. 1984). "Res judicata is frequently unintentional torts, the Supreme Court of Texas in characterized as claim preclusion because it bars Reed Tool Co. v. Copelin, 686 S.W.2d 404 (Tex. 1985) litigation of all issues connected with a cause of action stated at p. 404, “[T]he fundamental difference or defense which, with the use of diligence, might have between negligent injury or even grossly negligent been tried in a prior suit. [citing case] When a prior injury, and intentional injury, is the specific intent to judgment is offered in a subsequent suit in which there inflict injury.” The Restatement (Second) of Torts is identity of parties, issues and subject matter, such defines “intent” to mean that “the actor desires to have judgment is treated as an absolute bar to retrial of caused consequences of his act or that he believes that claims pertaining to the same cause of action on the the consequences are substantially certain to result theory that they have merged into the judgment. [citing from it.” Sec. 8A (1965). cases]. ... Collateral estoppel is narrower than res judicata. It is frequently characterized as issue 1. Elements–Intentional Torts preclusion because it bars re-litigation of any ultimate The elements of intentional torts are: issue of fact actually litigated and essential to the judgment in a prior suit, regardless of whether the (1) intentional conduct that breaches a recognized second suit is based upon the same cause of action. ... duty; and A party suing to invoke the doctrine of collateral (2) actual damages. estoppel must establish (1) the facts sought to be litigated were fairly litigated in the prior action; (2) Practice Note: foreseeability is not required in those facts were essential to the judgment in the first determining damages for an intentional or knowing tort action; and, (3) the parties were cast as adversaries in if recovery is sought for the immediate and direct the first action." "Res judicata, or merger and bar, consequences of the tort. Thompson v. Hodges, 237 precludes re-litigation of the same claim [cause of S.W.2d 757, 759 (Tex. Civ. App.—San Antonio 1951, action] while collateral estoppel precludes re-litigation writ ref’d n.r.e.). of the same issue." McCoy v. Cook, 419 N.W.2d 44, 46 (Mich. App. 1988). Therefore, res judicata = claim 2. Elements–Unintentional Torts preclusion, and collateral estoppel = issue preclusion. The elements of unintentional torts are: In K. F. v. Faour, 762 S.W.2d 361 (Tex. App.— Houston [1st Dist.] 1989) a sexual abuse claim was not (1) unintentional conduct that breaches a precluded because neither the pleadings nor the terms recognized duty; of the divorce decree showed that the issue was (2) foreseeability [proximate or producing asserted and determined in the divorce court. See, cause]; and contra, Brinkman v. Brinkman, 966 S.W.2d 780 (Tex. (3) actual damages. App.—San Antonio 1998, pet. denied) and criticism of Brinkman in “Brinkman v. Brinkman: Where Res 3. Redressing Wrongs Judicata has gone too far,” 13 BYU J. Pub. L. 379, 390 All torts discussed herein necessarily include the (1999) above stated elements, depending on whether they are intentional or unintentional torts. An injury without a 5. Procedural Bars And Defenses To Bringing wrong does not create a “cause of action”, but to give a Actions And Limiting Damages right or redress there must not only be an injury but it a. Divorce Cases must have been occasioned by a commission of a legal Tex. Fam. Code § 7.001 provides for a court wrong or violation of a legal right and breach of a legal ordered equitable [“just and right”] division of marital duty. State v. Brewer, 169 S.W.2d 468 (Tex. 1943). A property having due regard for the rights of each party “tort” is a wrongful act [generally] not involved in a and any children of the marriage. This standard for breach of contract for which a civil action may be equitable distribution has existed in Texas since 1841, maintained. Smith v. International Printing Pressman when Texas was still a Republic, and which gives the and Assistants Union of North America, 190 S.W.2d court wide discretion in dividing the estate of the 769 (Tex. Civ. App.–Dallas, 1946), reversed 198 parties, correctable only when an abuse of discretion S.W.2d 729 (Tex. 1946). A tort may be based on has been shown. Murff v. Murff, 615 S.W.2d 696 (Tex. misfeasance or omission to act, as well as an act of 1981); Hedtke v. Hedtke, 112 Tex. 404, 248 S.W.2d commission. Montgomery Ward & Co. v. (1923). As such, the trial court may consider any Scharrenbeck, 204 S.W.2d 508 (Tex. 1947). number of factors, including the economic, financial and social histories of the parties. If a two, four or even

14 Dealing with Damages – Recoveries as Property Chapter 3 ten year statute of limitations applied to the equitable 6. Limitations of Actions and Defenses Thereto division of property, inequitable results would occur. A primary concern is whether marriage tolls the Since there is no statute of limitations for bringing bringing of an interspousal tort action. Whitley v. an action for divorce of a formal or informal marriage, Whitley, 436 S.W.2d 607 (Tex. Civ. App.—Houston a good faith argument can be made that no statute of 1968) (alienations action - fact that plaintiff was limitations should be applied to the equitable division married did not toll statute of limitations after cause of of property by the trial court at the time of divorce. No action arose). It can be argued in "fiduciary torts" that cases have been found where a statute of limitations as long as a fiduciary relationship exists between was applied in the context of a division of property spouses, the statute of limitations is tolled until under Tex. Fam. Code § 7.001, or any of its discovery of the tort [conversion, etc.], much the way it predecessors statutes. However, in post-divorce is in other fiduciary relationships, such as attorney and divisions of undisclosed or undivided property, Tex. client or stockbroker and client. Pace v. McEwen, 574 Fam. Code § 9.202 provides for a two year statute of S.W.2d 792 (Tex. Civ. App.—El Paso 1978, writ ref'd limitations and states: (a) a suit under this sub-chapter n.r.e.) (stockbroker). See Little v. Smith, supra and Belt must be filed before the second anniversary of the date v. Oppenheimer, Blend, Harrison, and Tate, Inc., 192 a former spouse unequivocally repudiates the existence S.W. 3d 780 (Tex. 2006). However, these tort suits are of the ownership interest of the other former spouse generally based on deceptive, fraudulent conduct. and communicates that repudiation to the other former Practice Note: Since the disability of coverture in spouse; and, (b) the two-year limitations period is domestic tranquility arguments does not prevent the tolled for the period that a court of this state does not running of limitations in interspousal property and have jurisdiction over the former spouses or over the contract actions [Dyer v. Dyer, 616 S.W.2d 663, 665 property. (Tex. Civ. App.—Corpus Christi 1981, no writ)], it is difficult to see how suits based in tort would have the b. Non-Divorce Cases effect of destroying domestic tranquility. The disability Several appellate courts in non-divorce cases have of coverture argument was rejected in Whitley v. held that an independent action for breach of fiduciary Whitley, 436 S.W.2d 60 (Tex. Civ. App.—Houston duty is controlled by the two year statute of limitations. 1968, no writ) (alienation action). The general rule is Clade v. Larsen, 838 S.W.2d 277, 281 (Tex. App.— that a cause of action sounding in tort accrues when the Dallas 1992, writ denied); El Paso Associates, Ltd. v. tort is completed, that is, the act is committed and J.R. Thurman & Co., 786 S.W.2d 17, 20 (Tex. App.— damage is suffered. Atkins v. Crosland, 417 S.W.2d El Paso 1990, no writ); Redman Industries Inc. v. 150 (Tex. 1967). This rule is supported by the public Couch, 613 S.W.2d 787 (Tex. App.—Houston [14th policy expressed in 12 statutes of limitations, which Dist.] 1981, writ ref’d n.r.e.). However, one court held favor repose and discourages the assertion of stale that since a claim for fraud or misrepresentation demands. McClung v. Johnson, 620 S.W.2d 644 (Tex. ordinarily is a claim for a debt and is governed by a Civ. App.—Dallas 1981, writ ref'd n.r.e.). four year statute of limitations, a breach of fiduciary duty claim subsumes a claim of constructive fraud. a. The “Relation Back” Doctrine Therefore, the Corpus Christi Court of Appeals held a The doctrine of "relation back" has been codified breach of fiduciary duty claim is also governed by a in Texas and states: four year statute of limitations. In re Estate of Herring, 970 S.W.2d 583 (Tex. App.—Corpus Christi 1998, no "If a filed pleading relates to a cause of writ). But see Maxon v. Travis County Rent Account, action, cross action, counterclaim, or defense 21 S.W. 3d 311 (Tex. App.—Austin 1999, pet. dism’d that is not subject to a plea of limitation when by argmt.) where the Austin Court of Appeals declined the pleading is filed, a subsequent to follow Herring’s four year statue of limitations amendment or supplement to the pleading ruling in breach of fiduciary duty cases and applied the that changes the facts or grounds of liability two year statute of limitations in breach of fiduciary or defense is not subject to a plea of duty cases under Tex. Civ. Prac. & Rem. Code, § limitation unless the amendment or 16.003. This issue has not been settled by the Texas supplement is wholly based on a new, Supreme Court. In Little v. Smith, 943 S.W.2d 414 distinct, or different transaction or (Tex. 1997) the Court addressed a case in which the occurrence." Tex. Prac. & Rem. Code § issue of the statute of limitations was applicable. 16.068. Unfortunately the period of time was well beyond the four year statute of limitations and the asserting party This is effective for pleading additional causes of probably cared little as to whether the two or four year action after discovery is completed. See Peek v. De statute applied. The Court did not address this issue. Barry, 871 S.W.2d 520 (Tex. App.—San Antonio

15 Dealing with Damages – Recoveries as Property Chapter 3

1994, writ denied) and Cain v. State, 882 S.W.2d 515 (Tex. App.—Austin 1990), reversed on other grounds, (Tex. App.—Austin 994, no writ). 855 S.W.2d 619 (Tex. 1993). A matter in avoidance of the statute of limitations, not raised affirmatively by b. Aggravation of Pre-Existing Conditions the pleadings is deemed waived. See Woods v. William Most domestic torts will not be of the M. Mercer, Inc., 769 S.W.2d 515, 518 (Tex. 1988) "continuing" variety; for example, an and (stating this principle in the context of a case dealing has a beginning and end; beginning when the with the discovery rule). act or event occurs and the ending when damage is A continuing tort involves both continuing suffered. Most often domestic torts of this variety will wrongful conduct and continuing injury. Upjohn Co. v. go through periods of quiescence followed by a period Freeman, 885 S.W.2d 542 (Tex. App.—Dallas 1994, of new assaults. Flashbacks from prior assaults writ denied). , for example is a generally occur and make worse the effects of new continuing tort for which a cause of action accrues assaults. In Texas, the tortfeasor takes his victim as he when the detention ceases. Adler v. Beverly Hills finds him. Padget v. Gray, 727 S.W.2d 706, 711 (Tex. Hospital, 594 S.W.2d 153, 156 (Tex. Civ. App.— App.—Amarillo 1987, no writ). As the court stated in Dallas 1980, no writ). Thompson v. Quarles, 297 S.W.2d 321, 329 (Tex. Civ. Traditionally, continuing tort theories apply to App.—Galveston 1956, writ ref'd n.r.e.), when quoting such causes of action as , and false from 15 Am. Jur., Damages, Sec. 81, page 490: imprisonment, Jim Arnold Corp. v. Bishop, 928 S.W.2d 761, 766-67 (Tex. App.—Beaumont 1996, no "The general rule seems to be that where the writ) and intentional infliction of emotional distress. result of the accident is to bring into activity Newton v. Newton, 895 S.W.2d 503, 506 (Tex. App.— a dormant or incipient disease, or one to Fort Worth 1995, no writ) (verbal abuse). which the injured person is predisposed, the A continuing tort involves wrongful conduct defendant is liable for the entire damages inflicted over a period of time that is repeated until which ensue, for it cannot be said that the desisted, and each day creates a separate cause of development of the disease as a result of the action. See Two Pesos, Inc. v. Gulf Ins. Co., 901 injury was not the consequence which might S.W.2d 495, 500 (Tex. App.—San Antonio 1983, writ naturally or ordinarily follow as a result of ref’d n.r.e.) A cause of action for continuing tort does the injury, and therefore, the negligent person not accrue until the defendant’s tortious act ceases. See may be held liable therefore. In other words, Tectonic Realty Ins. Co. v. CNA Lloyd’s of Texas Ins. if a latent condition itself does not cause Co., 812 S.W.2d 647, 654 (Tex. App.—Dallas 1991, pain, suffering, etc., but that condition plus writ denied). Because continuing tort causes of action an injury caused such pain, the injury, and are grounded in the idea of a continuing injury to the not the latent condition, is the proximate Plaintiff, tort claimants may sue for acts that occurred cause." [emphasis added] beyond the two-year statute of limitations, as long as the cause of action accrued within the applicable Practice Note: This reasoning would also apply to statute of limitations. Twyman v. Twyman, 790 S.W.2d intentional torts. 819, 821 (Tex. App.—Austin 1990), reversed on other grounds, 855 S.W.2d 619 (Tex. 1993). c. “Discovery Rule” Fraud, be it actual or constructive, can be D. The limitations of Schlueter inherently undiscoverable. A breach of fiduciary duty 1. Introduction claim is subject to the “discovery rule”. Little v. Smith, This section discusses the impact of Schlueter v. 943 S.W.2d 414, 420 (Tex. 1997). Where there has Schlueter, 975 S.W.2d 584 (Tex. 1998) on Texas been a breach of fiduciary duty, the statute of family law remedies and damages practice. limitations does not begin to run until the claimant knew, or should have known, of the facts in existence 2. Schlueter v. Schlueter - Briefed or facts that in the exercise of reasonable diligence a. Question Answered would have led to discovery of the wrongful act. See Schlueter answered the question of what remedies also Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d are available to a spouse alleging “fraud on the 377, 394 (1945); Belt v. Oppenheimer, 192 S.W.3d 780 community” committed by the other spouse. (Tex. 2006). b. Facts d. “Continuing Tort” The husband transferred various community Conceptually, a “continuing tort” is a tolling assets to his father shortly before he filed for divorce. provision allowing the avoidance of a limitation The wife brought independent tort claims against her defense. Twyman v. Twyman, 790 S.W.2d 819, 820 husband and father-in-law, seeking damages for fraud, 16 Dealing with Damages – Recoveries as Property Chapter 3 breach of fiduciary duty and conspiracy in her that upon divorce, the trial court must enter a counterclaim for divorce. Based on favorable jury division of the married couple’s estate “in a findings the trial court ordered a disproportionate manner that the court deems just and right,” division of the community estate in favor of the wife, considering rights of the parties and any and rendered judgment for the wife against the children of the marriage. Tex. Fam. Code § husband and his father for actual and exemplary 7.001. Such a standard may at times lead to damages. Holding that a tort cause of action for fraud disproportionate division of assets and on the community exists independent of a divorce liabilities for the parties, depending on the proceeding, the Austin Court of Appeals affirmed, 929 circumstances that courts may consider in S.W.2d 994. The Texas Supreme Court (hereinafter refusing to divide the marital estate equally. referred to as the “Court”) granted petition for review (2) “The just and right” standard is the sole to resolve the conflict among the Courts of Appeals on method to be used. As stated in Cameron v. this question. Cameron, 641 S.W.2d 210, 223 (Tex. 1982), “Community property owes its existence to c. Holding the legal fact of marriage, and when the Because a wronged spouse has an adequate parties to the compact determine their remedy for fraud on the community through the “just relationship should end, the property and right” property division upon divorce, the Court acquired during marriage is and should be held there is no independent tort cause of action divided among them in a just and right between spouses for damages to the community estate. manner.” This is distinguishable from a Accordingly, the Court reversed the judgment against recovery of separate property through an the husband and remanded the cause for a new division independent tort, which the Court allowed of the marital estate. The Court affirmed the remainder Twyman because “separate property ... owes of the Austin Court of Appeals judgment. its existence to wholly extramarital factors, things unrelated to the marriage. In relation d. Discussion to that property, the parties are in essence, The Court discussed its prior decisions in Bounds strangers; they are separate.” Cameron, 641 v. Caudle, 560 S.W.2d 925, 927 (Tex. 1977), Price v. S.W.2d 223. With these differences in mind, Price, 732 S.W.2d 316, 319 (Tex. 1987), and Twyman the Court held that the well developed “just v. Twyman, 855 S.W.2d 619, 624 (Tex. 1993) and and right” standard should continue to be the found that the salient characteristics distinguishing sole method used to account for and divide Bounds, Price and Twyman from the case at hand was community property. that Bounds, Price and Twyman involved independent (3) “Fraud on the Community” damages may causes of action for personal injury torts. Bounds, 560 be considered. There are also aspects of the S.W.2d 926 [wrongful death]; Price, 732 S.W.2d 316 Texas community property system that [negligence claim for personal injury]; and Twyman, provides additional remedies against a spouse 855 S.W.2d 621 [intentional infliction of emotional for improper conduct involving the distress]. The Court also compared Cleaver v. George community estate. Texas recognizes the Staton Co., Inc., 908 S.W.2d 468, 471 n.2 (Tex. concept of fraud on the community, which is App.—Tyler 1995, writ denied). Cleaver distinguished a wrong by one spouse that the court may Twyman, which involved outrageous spousal conduct, consider in its division of the estate of the and noted that the trial court could sort out the parties and that may justify an unequal husband’s claims against the wife for breach of division, citing Belz v. Belz, 667 S.W.2d 240, fiduciary duty and fraud on the community estate in the 247 (Tex, App.—Dallas, 1984, writ ref’d property division but not by a separate independent n.r.e) (a claim for fraud on the community is cause of action. The Court further reasoned that there a means to an end, either to recover specific was no potential for double recovery for pain and property wrongfully conveyed, ... or ... to suffering in a personal injury claim because this obtain a greater share of the community recovery is the separate property of the injured spouse estate upon divorce, in order to compensate and does not add to the marital estate. the wronged spouse for his or her lost interest in the community estate). See also Massey v. e. Reasoning Massey, 807 S.W.2d 391 (Tex.—Houston The Court’s reasoning for its opinion was: [1st Dist.] 1991), writ denied, 867 S.W.2d 766 (Tex. 1993), where an owelty (1) There is a statutory remedy for fraud on equalization money judgment was awarded the community already in place. This as a part of the division of community state’s community property system provides 17 Dealing with Damages – Recoveries as Property Chapter 3

property based upon a spouse’s fraud, and share. Such behavior is properly considered this followed the Belz rationale. when dividing a community estate. (4) A money judgment may be considered. (7) No punitive damages allowed in a just and The Court further noted that it is well settled right division. As to punitive damages, the that a trial court may award a money Court reasoned that heightened culpability judgment to one spouse against the other in does not change the essential character of the order to achieve an equitable division of the wrong: a deprivation of community assets as community estate, citing Murff v. Murff, 615 opposed to a tort committed against a person S.W.2d 696, 699 (Tex. 1981) (allowing or his or her separate property. A recovery of money judgment against husband in division punitive damage requires a finding of an of community property where he had independent tort with accompanying actual substantial sums in savings before separation damages. Twin City Fire Insurance Co. v. that had disappeared by the time of trial). The Davis, 904 S.W.2d 663, 665 (Tex. 1995); Court further reasoned that the money Federal Express Corp. v. Dutschman, 846 judgment can only be used as a means for the S.W.2d 282, 284 (Tex. 1993); cf. Emco Prod. wrong spouse to recoup the value of his/her Co. v. Alexandra, 627, S.W.2d 563. 571 share of the community estate loss through (Tex. 1981). The Court held, because of the the wrongdoer spouse’s actions, citing holding in Schlueter there is no independent Mazique v. Mazique, 742 S.W.2d 805, 808 tort cause of action for wrongful disposition (Tex. App.—Houston [1st Dist.] 1987, no by spouse of community assets, the wronged writ). The Court further noted that because spouse may not recover punitive damages the amount of the judgment is directly from the other spouse. The Court did referable to a specific value of lost however state that despite the community property, it will never exceed the inappropriateness of the punitive damages, it total value of the community estate, that is, is a logical extension of a standard that calls he or she should not suffer just because when for a just and right division to allow the it is time to divide the community estate, the Court to consider that a spouse not only other spouse has depleted the estate such that deprive the community of assets to the there is not enough money or property left to detriment of the other spouse, but may have effect a just and right division. done so with dishonesty of purpose or intent (5) No independent tort for actual or to deceive. See Land v. Marshall, 426 constructive fraud exists in a divorce S.W.2d 841, 846 n.3 (Tex. 1968). The Court context. The Court relied on In re Marriage concluded its reasoning stating that while it of Moore, 890 S.W.2d 821, (Tex. App.— held that a separate and independent tort Amarillo 1994, no writ) which concluded action for actual fraud and accompanying that the only course available to a wronged exemplary damages against ones spouse does spouse is breach of fiduciary duty to the not exist in the context of a deprivation in community estate, that is, an action for fraud community assets, if the wronged spouse can on the community. Id. at 827. The Court in prove the heightened culpability of actual Schlueter found the Court of Appeals fraud, the trial court may consider it in the correctly determined that no independent property division. cause of action existed in Texas to recover separate damages when the wrongful act f. Dissents defrauded the community estate. Id at 829. (6) Waste of community assets may be (1) Justice Hecht, joined by Chief Justice considered. Additionally, the Court Phillips, dissented and pointed out the only reasoned that trial courts have wide rationale for treating fraud on a spouse discretion and are allowed to take many differently from other intentional torts is that factors into consideration in making a just fraud does not involve personal injuries; that and right division including waste of there seemed to be a distinction between community assets. See Murff, 615 S.W.2d at personal and economical damages without 698-99. Waste of community assets is similar any rational reason therefore; and the rule to the allegations in Schlueter, that is, announced results in a full recovery being without the wife’s knowledge or , the allowed for mental anguish as well as husband wrongfully depleted the community punitive damages for non- but of assets of which the wife was entitled to a only a limited recovery for economic tort damages that can be determined to the penny. 18 Dealing with Damages – Recoveries as Property Chapter 3

The dissent commented regarding the effect (4) Compensation for damages due to a breach of of Schlueter on Vickery v. Vickery, 999 contract, referred to herein as “contract S.W.2d 342 (Tex. 1999), and opined that damages.” Schlueter reverses the lower court opinion in Vickery based on the application of the rule A. Personal Injury Damages announced in Schlueter. 1. Non-Economic Damages (2) Justice Spector observed in her dissent the No fixed rule exists for measuring non-economic wronged spouse should be able to receive the personal injury damages. SunBridge Healthcare Corp. punitive damages portion of the verdict. v. Penny, 160 S.W.3d 230, 247 (Tex. App.— Justice Spector pointed out that in Mazique v. Texarkana 2005, no pet.). Because of the amorphous Mazique, 742 S.W.2d 805, 807-08 (Tex. nature of non-economic damages, each personal injury App.—Houston [1st Dist.] 1987, no pet.) the case must be measured by its facts, and considerable wronged spouse was awarded a money discretion and latitude must be given to the jury’s judgment for actual and punitive damages award. Weidner v. Sanchez, 14 S.W.3d 353, 372 (Tex. against the other spouse who defrauded the App.—Houston [14th Dist.] 2000, no pet.). spouses interest in the community estate. Still further, Justice Spector reasoned that a. Pain and Suffering punitive damages punished wrongdoers and Pain and suffering is an inherently subjective served as an example to others, citing question. Dollison v. Hayes, 79 S.W.3d 246, 249 (Tex. Transportation Ins. Co. v. Moriel, 879 App.—Texarkana 2002, no pet.) No direct proof of the S.W.2d 10, 17 (Tex. 1994); Hofer v. existence of pain is necessary if the nature of the injury Lavender, 679 S.W.2d 470, 474 (Tex. 1984). is serious. City of Tyler v. Likes, 962. S.W.2d 489, 495 For example, in a related context, a partner in (Tex. 1997). a partnership may recover punitive damages Pain and suffering is included as an element of from other partners for breach of their damage in Texas Pattern Jury Charge 15.3, 15.5 and fiduciary duty, a duty analogous to that owed 17.3. between spouses . See Hawthorne v. Guenther, 917 S.W.2d 924, 936 (Tex. b. Mental Anguish App.—Beaumont, 1996, writ denied) (“An Mental anguish is “a relatively high degree of award of exemplary damages is, therefore, mental pain and distress. It is more than mere supported by a finding that the partner’s disappointment, anger, resentment or embarrassment, breach of fiduciary duty was willful and although it may include all of these. It includes a intentional.”), citing International Bankers mental sensation of pain resulting from such painful Life Ins. Co. v. Holloway 368 S.W.2d 567, emotions as grief, severe disappointment, indignation, 583-84 (Tex. 1963). Justice Spector wounded pride, shame, despair, and/or public concluded, the Court is able to fashion humiliation.” Trevino v. Southwestern Bell Tel. Co., remedies to right wrongs, quoting Yamini v. 582 S.W.2d 582, 584 (Tex. Civ. App.—Corpus Christi Gentle, 488 S.W.2d 839, 843 (Tex. App.— 1979, no writ). To recover damages for mental Dallas 1972, writ ref’d, n.r.e.) (“Equity anguish the plaintiff must show the following: (i) leaves the way open to punish and to physical injury; or (ii) direct evidence of mental redress wrongs perpetrated by means of fraud anguish or mental pain and distress. Parkway in whatever form it may appear.”). Company v. Woodruff, 901 S.W.2d 434 (Tex. 1995). Mental anguish is included as an element of IV. WHAT REMEDIES ARE AVAILABLE TO damage in Texas Pattern Jury Charge 15.3, 15.5 and THE TEXAS FAMILY LAW LITIGANT? 17.3. Appendix. Remedies for damages compensate the victim in four (4) basic areas, to wit: c. Disfigurement Disfigurement is that which impairs the beauty, (1) compensation for damages to the victim’s symmetry, or appearance of a person or thing. Hopkins person, referred to herein as “personal injury County Hosp. Dist. v. Allen, 760 S.W.2d 341, 343 damages”; (Tex. App.—Texarkana 1988, no writ). Disfigurement (2) compensation for damages to the victim’s damages are awarded for the plaintiff’s embarrassment property, referred to herein as “property and for his or her need to conceal the disfigured body damages”; part. Id. at 343-44. (3) compensation of damages to the victim of a Disfigurement is included as an element of commercial enterprise, referred to herein as damage in Texas Pattern Jury Charge 15.3 and 15.5. “commercial damages”; and 19 Dealing with Damages – Recoveries as Property Chapter 3 d. Physical Impairment medicines and drugs. Staff, Proving Difficult Physical impairment is the loss of the injured Damages, 33rd Annual Advanced Civil Trial Course, party’s former lifestyle. Ramirez v. Fifth Club, Inc., Ch. 26, p. 6. To recover past medical expenses, a 144 S.W.3d 574, 591 (Tex. App.—Austin 2004), rev’d claimant must prove that the expenses were reasonable in part on other grounds, 196 S.W.3d 788 (Tex. 2006). and necessary. Nat’l Union Fire Ins. Co. v. Wyar, 821 Physical impairment includes both economic and non- S.W.2d 291, 297 (Tex. App.—Houston [1st Dist] 1991, economic losses. Golden Eagle Archery, Inc. v. no writ). Jackson, 116 S.W.3d 757, 763 (Tex. 2003). Past medical expenses is included as an element Practice Note: A plaintiff seeking recovery for of damage in Texas Pattern Jury Charge 15.3, 15.5 and physical impairment must establish injuries that are 17.3. distinct from injuries compensable as pain and suffering and loss of earning capacity. Golden Eagle b. Future Medical Expenses Archery, Inc. v. Jackson, supra, at 765; Patlyek v. Texas follows the “reasonable probability rule” Brittain, 149 S.W.3d 781 (Tex. App.—Austin 2004, for future damages for personal injuries. Rosenboom pet. denied)(discussing distinction between evidence Mach & Tool, Inc. v. Machalai, 995 S.W.2d 817, 828 establishing damages for pain and suffering and lost (Tex. App.—Houston [1st Dist.] 1999, pet. denied). A earning capacity and evidence establishing damages plaintiff must show that there is a reasonable for physical impairment). probability that expenses resulting from the injury will Physical Impairment is included as an element of be necessary in the future and the reasonable costs of damage in Texas Pattern Jury Charge 15.3 and 15.5. such care. Id. Future medical expenses is included as an element e. of damage in Texas Pattern Jury Charge 15.3, 15.5 and Loss of consortium is based on the loss of love, 17.3. affection, protection, emotional support, companionship, care, and society. Reagan v. Vaughn, c. Loss of Earning Capacity 804 S.W.2d 463 (Tex. 1990). Unlike damages of Loss of earning capacity refers to the past and mental anguish, loss of consortium damages are future impairment on one’s ability to work. Border recoverable only when the injured person suffered an Apparel-East, Inc. v. Guadian, 868 S.W.2d 894, 897 actual physical injury. Express, Inc. v. Rodriguez, 925 (Tex. App.—El Paso 1993, no writ). Recovery for loss S.W.2d 638, 640 (Tex. 1996). of earning capacity is not based on the actual earnings Practice Note: Parents may only recover loss of lost, but rather on the loss of capacity to earn money. consortium for a child who suffers fatal injuries. Brazoria County v. Davenport, 780 S.W.2d 827, 832 Roberts v. Williamson, 111 S.W.3d 113, 119 (Tex. (Tex. App.—Houston [1st Dist.] 1989, no writ). 2003). Earning capacity has been defined as the “ability and Loss of consortium is included as an element of fitness to work in gainful employment for any type of damage in Texas Pattern Jury Charge 15.4, 15.11 and remuneration, including salary, commissions, and other 15.12. benefits, whether or not the person is actually employed.” Baccus v. American States Ins. Co. of f. Loss of Services Texas, 865 S.W.2d 587, 588 (Tex. App.—Fort Worth “Services” refers to household and domestic 1993, no writ); Home Indem. Co. v. Eason, 635 S.W.2d duties. Dougherty v. Gifford, 826 S.W.2d 668 (Tex. 593, 594 (Tex. App.—Houston [14th Dist.] 1982, no App.—Texarkana 1992, no writ). Loss of services is writ). It does not necessarily mean actual wages, distinct from loss of consortium and can be recovered income, or other benefits received during the period by spouses and parents. Whittlesey v. Miller, 572 inquired about. Baccus, 865 S.W.2d at 588; Eason, 635 S.W.2d 665, 666 n.2 (Tex. 1978); Gonzalez v. Hansen, S.W.2d at 594-95. Plaintiff should enter evidence of 505 S.W.2d 613 (Tex. Civ. App.—San Antonio 1974, past earnings, the plaintiff’s ability to work with pain, no writ)(a parent’s right to a child’s services and the weaknesses and degenerative changes that will earnings is codified in Texas Family Code § naturally result from the plaintiff’s injury and the 151.001(a)(5)). plaintiff’s work –life expectancy. Tagle v. Galvan, 155 Loss of services is included as an element of S.W.3d 510, 519 (Tex. App.—San Antonio 2004, no damage in Texas Pattern Jury Charge 15.6. pet.). Loss of earning capacity is included as an element 2. Economic Damages of damage in Texas Pattern Jury Charge 15.3. a. Past Medical Expenses Recoverable medical expenses include hospital care, doctors and other health professionals’’ services, nursing care, laboratory tests, transportation, and 20 Dealing with Damages – Recoveries as Property Chapter 3 d. Loss of Earnings (Tex. Civ. App.—Houston [14th Dist.] 1973, no writ). Loss of earnings is the actual income lost due to A proper measure of is the reasonable cost an inability to perform a specific job from the time of of renting a replacement while the damaged article is injury to the time of trial. Strauss v. Continental being repaired. Id. Airlines, Inc., 67 S.W.3d 428, 435 (Tex. App.— Loss of use as a damage is found in Texas Pattern Houston [14th Dist.] 2002, no pet.). Loss of earnings Jury Charge 18.4. has been allowed in some cases. Home Interiors & Gifts v. Veliz, 695 S.W.2d 35 (Tex. App.—Corpus 2. Household Items Christi 1985, writ ref’d n.r.e); Carr v. Galvan, 650 “The measure of damage that should be applied S.W.2d 864 (Tex. App.—San Antonio 1983, writ ref’d in case of destruction of this kind of property n.r.e.). [household items] is the actual worth or value of the Practice Note: The proper measure of damages articles to the owner for use in the condition in which in a personal injury case is loss of earning capacity, they were at the time of the [occurrence] excluding any rather than loss of earnings in the past. Dallas Railway fanciful or sentimental considerations.” Crisp v. & Terminal v. Guthrie, 210 S.W.2d 550 (Tex. 1948). Security National Insurance Co., 369 S.W.2d 326, 329 (Tex. 1963). However, if the lost property is B. Property Damages replaceable, the damages for its loss are limited to 1. Generally replacement value, less an amount for depreciation. “A plaintiff whose property has been destroyed Restatement (Second) of Torts Section 911 cmt.(e) by the tortuous acts of another is generally entitled to (1979). recover the market value of the property at the time of its loss” Seminole Pipeline Co. v. Broad Leaf 3. Heirlooms Partners, Inc., 979 S.W.2d 730, 754 (Tex. App.— “The law recognizes that articles of small market Houston[14th Dist.] 1998, no pet.). If the property can value of which the owner is despoiled may have a be repaired, then rather receive fair market value of the special value to him as heirlooms….” Brown v. property, the plaintiff may elect to recover the costs of Frontier Theaters, Inc., 369 S.W.2d 299, 304 (Tex. repair. Hartley v. Schwab, 564 S.W.2d 829, 831 (Tex. 1963). In cases involving damage to heirlooms, the Civ. App.—Amarillo 1978, writ ref’d n.r.e.). plaintiff is entitled to compensation for the reasonable Practice Note: Plaintiff may not recover cost of special value of such articles to him, taking in repair if the cost of repair exceed the pre-injury value consideration the feelings of the owner for such of the property. Id. property. Id. at 305; see also Bond v. A.H. Belo Corp., 602 S.W.2d 105, 109 (Tex. App.—Dallas 1980, writ a. Market Value ref’d n.r.e.)(“the correct measure of damages is Market value is defined as the price property supplied by Brown, that is the reasonable special value would bring when it is offered for sale by one who of such articles to their owner taking into consideration desires, but is not obligated to sell, and is bought by the feelings of the owner of such property”). one who is under no of buying it. Exxon In determining sentimental damages the fact Corp. v. Middleton, 613 S.W.2d 240, 246 (Tex. 1981). finder should consider the actual value to the owner at Market value as a damage is found in Texas the time of loss, the original cost of the item, cost of Pattern Jury Charge 18.4. replacement, opinions of qualified witnesses, including the owner, the use of the property, as well as any other b. Cost of Repair relevant facts. Gold State Utilities Co. v. Low, 79 Cost of repair damages are determined as follows: S.W.3d 561, 566 (Tex. 2002). (i) the difference in the fair market value of the item before and after the damage; or (ii) the sum of the C. Commercial Damages reasonable cost of repair, with due allowance for any 1. Direct vs. Consequential Damages difference between the original value and the value Actual damages are either direct or consequential. after repairs, and the value of loss of use of the Direct damages or general damages compensate for the property during the repairs. Pasadena State Bank v. loss, damage, or injury that is conclusively presumed Isaac, 228 S.W.2d 127, 128 (Tex. 1950). to have been foreseen or contemplated by the party as a Cost of repair as a damage is found in Texas consequence of his breach of contract or wrongful act. Pattern Jury Charge 18.4. Henry S. Miller Co. v. Bynum, 836 S.W.2d 160, 163 (Tex. 1992)(Phillips, J. concurring). Consequential c. Loss of Use damages are those damages which result naturally, but Loss of use damages are available only if the not necessarily, from the breach complained of. Id. claimant elects or is entitled to recover the costs of repair. Allright, Inc. v. Lowe, 500 S.W.2d 190, 192 21 Dealing with Damages – Recoveries as Property Chapter 3

2. Lost Profits Benefit of the bargain damages are included as an Lost profits are “damages for the loss of net element of damage in Texas Pattern Jury Charge 115.3 income to a business measured by reasonable and 115.9. certainty.” Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). They are considered consequential damages 4. Out-of-Pocket Damages and must be specifically plead and proved separately. Out-of-pocket damages are measured as the See e.g. Alaniz v. Jones & Neuse, Inc., 907 S.W.2d difference between the amount the plaintiff actually 450, 452 (Tex. 1995). The appropriate damage for lost paid and the value of what the plaintiff received. profits is net profits not gross profits. Holt v. Atherton Arthur Anderson & Co. v, Perry Equip. Corp., 945 Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. S.W.2d 812, 817 (Tex. 1997). Because out-of-pocket 1992). “Reasonably certain evidence of lost profits is a damages are meant to compensate for money actually fact intensive determination.” Id. at 84. parted with, a plaintiff pleading out-of-pocket damages, unlike benefit of the bargain damages) a. Reasonable Certainty cannot recover lost profits. Formosa Plastics Corp. “Damages are not recoverable for loss beyond an USA v. Presidio Eng’rs & Contractors, Inc., 960 amount that the evidence permits to be established with S.W.2d 41, 49-50 (Tex. 1998). reasonable certainty.” Restatement of Out-of-pocket damages can include out-of-pocket (Second) § 352 (1981) (emphasis added). administrative costs during the delay period, such as site administration, travel, site security expenses, b. Evidence temporary telephone costs, field office supplies, and In Texas Instruments, Inc. v. Teletron Energy bond and insurance expenses, are recoverable as direct Management, Inc., the Texas Supreme Court noted that and foreseeable damages resulting from the breach. the “requirement of ‘reasonable certainty’ in the proof McDevitt & Street Co. v. Marriot Corp., 713 F.Supp. of lost profits is intended to be flexible enough to 906, 933-35 (E.D. Va. 1989), aff’d in part, rev’d in accommodate the myriad circumstances in which part on other grounds, 911 F.2d 723 (4th Cir. 1990); claims for lost profits arise.” 877 S.W.2d 276, 279 Tennessee Gas Pipeline Company v. Technip USA (Tex. 1994). The Texas Supreme Court also confirmed Corporation, 2008 WL 38376141 (Tex. App.— that the reasonable certainty test should focus on the Houston [1st Dist.] 2008, pet. denied). commercial activity rather than of the age of the Out-of-pocket damages are found in Texas Pattern business. Id. at 280. The Texas Supreme Court then Jury Charge 115.3 and 115.9. Appendix. went on to hold: Practice Note: Benefit of the bargain damages “Profits which are largely speculative, as from an and out-of-pocket damages are mutually exclusive activity dependent on uncertain or changing market remedies, and recovery under both theories for the conditions, or on chancy business opportunities, or on same injury would be an impermissible double promotion of untested products or entry into unknown recovery. Foley v. Parlier, 68 S.W.3d 870, 885 (Tex. or unviable markets, or on the success of a new and App.—Fort Worth 2002, no pet.). unproven enterprise, cannot be recovered. Factors like these and others which make a business venture risky 5. Loss of Goodwill in prospect preclude recovery of lost profits in A business’s goodwill includes “the advantages retrospect.” Id. at 279. accruing to a business on account of its name, location, Lost profits is an element of damage included in reputation, and success. Airflow Houston, Inc. v. Texas Pattern Jury Charge 115.3 and 115.9. Theriot, 849 S.W.2d 928, 933 (Tex. App.—Houston [1st Dist.] 1993, no writ). The value of goodwill is 3. Benefit of The Bargain Damages computed as “the amount by which net earnings of a Benefit of the bargain damages are the difference business exceed normal earnings in the same or similar between what a party expected to receive and what business.” Taormina v. Culicchia, 355 S.W.2d 569, they did receive. Arthur Anderson & Co. v, Perry 574 (Tex. Civ. App.—El Paso 1962, writ ref’d n.r.e.). Equio. Corp., 945 S.W.2d 812 (Tex. 1997). Benefit of the bargain damages are available in following types of 6. Loss of Credit cases: (i) violations of the DTPA; (ii) breaches of To recover for “loss of credit” or “damage to contract and warranty; and common law fraud. Id.; credit reputation” a plaintiff must show that its Kemijoki Industrial D.D. v. Advanced Polymer Skis., inability to obtain an loan “resulted in injury and proof Inc., 128 S.W.3d 304, 317 n.6 (Tex. App.—Dallas of the amount of that injury.” St. Paul Surplus lines 2004, no pet.). Benefit of the bargain damages are Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53 direct damages. Frost National Bank v. Heafner, 12 (Tex. 1998). Damages for loss of credit are shown in S.W.3d 104, 111 n.5 (Tex. App.—Houston [1st Dist.] the following cases: (i) a party’s loan is actually denied 1999, pet. denied). or a higher interest rate is charged; or (ii) a party who 22 Dealing with Damages – Recoveries as Property Chapter 3 could obtain a loan from a bank without collateral interests: expectation interest, reliance interest, and before a disagreement with a creditor may afterwards restitution interest. Abraxas Pet. Corp. v. Hornburg, only obtain a loan if collateral or some other condition 20 S.W.3d 741, 760 (Tex. App.—El Paso 2000, no is imposed. Citizen’s Nat’l Bank v. Allen Rae Invs., pet.); O’Farrill Avila v. Gonzalez, 974 S.W.2d 237, Inc., 142 S.W.3d 459, 481 (Tex. App.—Fort Worth 247 (Tex. App.—San Antonio, 1998, pet. denied); 2004, no pet.). O’Connor’s Texas Causes of Action 2011, ch. 5-B, 79. Damage to credit reputation is included as an Expectation interest damages give the plaintiff his element of damage in Texas Pattern Jury Charge 115.4 or her benefit of the bargain by putting him or her in as and 115.9. good a position as if the contract had been performed. Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 7. Interest Expense 882, 888-89 (Tex. App.—Dallas 2004, pet. denied); Interest costs incurred and the interest on the O’Connor’s Texas Causes of Action 2011, ch. 5-B, 79. capital invested during the delay caused by the Reliance interest damages restore any expenses contractor were “predictable results of the delay and made or financial losses incurred by the plaintiff in therefore, compensable direct damages.” Baldwin v. reliance on the contract. Mays, 203 S.W.3d at 577; Smith, 586 S.W.2d 624, 631 (Tex. Civ. App.—Tyler Mistletoe Express Serv. v. Locke, 762 S.W.2d 637, 1979), rev’d on other grounds, 611 S.W.2d 611 (Tex. 638-39 (Tex. App.—Texarkana 1988, no writ); 1980). Restatement (2d) of Contracts §349; O’Connor’s Texas Interest expense would be an incidental damage Causes of Action 2011, ch. 5-B, 79. included in Texas Pattern Jury Charge 115.3 and 115.9. Restitution interest damages return the plaintiff to his or her position had the contract not been entered D. Contract Damages into, returning property or money paid by plaintiff to 1. Generally defendant under the contract. See City of Harker Generally, a “contract” is an enforceable or Heights v. Sun Meadows Land, Ltd., 830 S.W.2d 313, otherwise recognizable legal agreement between two 317 (Tex. App.—Austin 1992, no writ); Coon v. or more parties that creates an obligation to do or not to Schoeneman, 476 S.W.2d 439, 441 (Tex. App.—Dallas do some act. Frady v. May, 23 S.W.3d 558, 565 (Tex. 1972, writ ref’d n.r.e.); O’Connor’s Texas Causes of App.—Fort Worth 2000, pet denied); see Black’s Law Action 2011, ch. 5-B, 80. Dictionary 365 (9th ed. 2009); 1 Lord, Williston on Contracts 1.1 (4th ed. 1990). 4. Liquidated Damages Liquidated damages can also be recovered if there 2. Breach of Contract was an enforceable clause in the contract; the amount Some causes of action, including breach of is predetermined by agreement in the clause. Shin-Con contract and with a contract, Dev. Corp v. I.P. Invs., 270 S.W.3d 759; 767 (Tex. require an enforceable contract as an element of proof. App.—Dallas 2008, pet. denied); O’Connor’s Texas These elements are (1) an offer, (2) an acceptance, (3) Causes of Action 2011, ch. 5-B, 81. mutual assent, (4) execution and delivery of the contract with the intent that it be mutual and binding, 5. Related Causes of Action and (5) consideration supporting the contract. For page references and further information on the O’Connor’s Texas Causes of Action 2011, ch. 5-A, 55- related causes of action of promissory estoppel, 56. quantum meruit, breach of contract by an attorney, Under common law, the elements for a breach of breach of covenant not to compete, breach of warranty, contract are (1) a valid, enforceable contract, (2) fraud, tortious interference, torts arising from contract plaintiff has standing (is a proper party to sue for or duties arising out of contract by operation of law, breach of the contract), (3) plaintiff performed, and violation of the Texas Deceptive Trade Practices tendered performance of, or was excused from Consumer Protection Act (DTPA), see O’Connor’s performing its contractual obligations, (4) defendant Texas Causes of Action 2011, ch. 5-B, 64-65, 106. breached the contract, and (5) the defendant's breach caused the plaintiff injury. O’Connor’s Texas Causes V. WHAT IS THE CHARACTERIZATION OF of Action 2011, ch. 5-B, 66-67. DAMAGES RECOVERED BY A FAMILY LAW LITIGANT? 3. Actual Damages A. Damage Awards – Operation of Law: A plaintiff can recover actual damages in a suit Constitution, Statutes, Case Law for breach of contract, provided there is no excuse or Damage awards are characterized as separate or defense to breach on the part of the defendant. Mead v. community by operation of law or, lacking Johnson Group, 615 S.W.2d 685, 687 (Tex. 1981). constitutional or statutory guidance, by analysis of the Recoverable damages protect three contractual elements of damages being asserted. 23 Dealing with Damages – Recoveries as Property Chapter 3

D. Constitutional Definitions of Separate and By the clear weight of common law Community Property authority, a cause of action for personal 1. Separate Property injury is not property in any sense, nor for a. Constitutional Definition any purpose [until] it has been reduced to Tex. Const. Art. 16, § 15 defines separate property judgment; and the judgment, as property, as “[a]ll property, both real and personal, of a spouse takes its character as separate or common owned or claimed before marriage, and that [is] from the right violated in committing the acquired afterward by gift, devise or descent.” Id. wrong-the personal injury. b. Partition and Exchange of Assets McKay, Law of Community Property § 182 (2nd ed. Art. 16, § 15 also provides for the partition and 1925). exchange of assets between spouses by written agreement, provided the purpose is not to defraud pre- B. The Marriage Partnership existing creditors. This recharacterizes future assets It is important to understand the concept of the (yet to be received or earned) from community marital partnership when analyzing property property into separate property: characterization. See Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676 (1953)(“The principle which lies at [P]ersons about to marry and spouses, the foundation of the whole system of community without the intention to defraud pre-existing property is, that whatever is acquired by the joint creditors, may by written instrument from efforts of the husband and wife, shall be their common time to time partition between themselves all property”). In a marriage, the parties explicitly or or part of their property, then existing or to implicitly agree to roles in the marriage, and as a result be acquired, or exchange between themselves of these communal decisions each party should be the community interest of one spouse or entitled to share in the fruits of the other’s labor. future spouse in any property for the Wealth created by the marital partnership is community interest of the other spouse or community in nature, whereas assets not originating future spouse in other community property from the partnership’s efforts are often separate in then existing or to be acquired, whereupon nature. Norris v. Vaughan, 152 Tex. 491, 501, 260 the portion or interest set aside to each S.W.2d 676, 682 (1953) (“Any property or rights spouse shall be and constitute a part of the acquired by one of the spouses after marriage by toil, separate property and estate of such spouse talent, industry or other productive faculty is or future spouse; spouses also may from time community property”); Logan v. Logan, 112 S.W.2d to time, by written instrument, agree between 515, 525 (Tex. Civ. App.—Amarillo 1937, writ dism'd) themselves that the income or property from (“community property may thus be defined as all all or part of the separate property then property and pecuniary rights obtained by, or in the owned or which thereafter might be acquired name of, either spouse after the marriage, by toil, by only one of them, shall be the separate talent, thrift, energy, industry, or other productive property of that spouse…. faculty, and all the rents, issues, profits, fruits, and revenues of separate property”). Id.

C. Income and the Marriage Partnership c. Gifts Between Spouses Income earned during the marriage, whether Gifts of property between spouses are presumed wages or investment income (in Texas this applies to transfer the right to income along with the principal: even if the investment capital is separate property) is “[I]f one spouse makes a gift of property to the other usually found to be community in character. See that gift is presumed to include all the income or Cartwright v. Cartwright, 18 Tex. 626 (1857) (fruits of property which might arise from that gift of property.” separate property fall into the community, but that is Id. This is also codified in Tex. Fam. Code § 3.005. not conclusive for similar treatment of natural appreciation of separate property). Contrast this with d. Passing Community Property by Will and the separate characterization of gifts, inheritance, or Inheritance natural appreciation in separate properties, which lack Finally, the Constitution provides that “spouses any community contribution. 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.” Tex. Const. Art. 16, Sec. 15.

24 Dealing with Damages – Recoveries as Property Chapter 3

2. Community Property future, is separate property…and…a statute which a. Community Property Presumption provides that such recovery shall be the separate Texas common law has consistently applied a property of the wife is constitutional”). community presumption to property, requiring a party to establish that property is separate under the c. Definition of Community Property constitutional and statutory definitions. De Blane v. “Community property consists of the property, Hugh Lynch & Co., 23 Tex. 25, 29 (1859). This other than separate property, acquired by either spouse presumption has also been codified in Tex. Fam. Code during marriage.” Id. at § 3.002. § 3.003, and will be discussed further in the following two sections. d. Presumption of Community Property Tex. Fam. Code § 3.003 creates a community b. Recharacterizing Separate Property as Community presumption for property, requiring the party asserting Property by Contract an asset is separate property to prove by "clear and A spouse can recharacterize separate property as convincing evidence" the facts that exist to justify that community property by written instrument: “[S]pouses legal conclusion. “Clear and convincing” is the degree may agree in writing that all or part of the separate of evidence necessary to “produce in the mind of the property owned by either or both of them shall be the trier of fact a firm belief or conviction about the spouses’ community property.” Tex. Const. Art. 16, § allegations sought to be established.” Tarver v. Tarver, 15. 394 S.W.2d 780, 783 (Tex. 1965); In re J.F.C., 96 S.W.3d 256, 264 (Tex. 2002). This burden can be E. Marital Property Statutes Regarding Property satisfied by tracing separate property through its Characterization mutations to its original separate source. Norris v. Characterization of property is determined by Vaughn, 152 Tex. 491, 498-99, 260 S.W.2d 676, facts according to rules of law. Hilley v. Hilley, 161 679(1953); see Tex. Fam. Code § 3.003(b). This Tex. 569, 342 S.W.2d 565, 568 (Tex. 1961). This concept is known as “inception of title”: if title is section provides and explains operative statutory rules acquired before marriage, or after if acquired by gift, of law when characterizing damages. devise or descent, or personal injury award for harm or suffering, it is separate. Tex. Const. Art. 16, §15; Tex. 1. Separate Property – Texas Family Code Fam. Code §3.001; see Barnett v. Barnett, 67 S.W.3d The Texas Family Code parallels the provisions of 107, 11 (Tex. 2001) (discussing application of the state constitution, largely due to the Texas Supreme inception of title rule and just cited laws on point). Court’s holding in Arnold v. Leonard, 114 Tex. 535, 273 S.W. 799 (1925) that a statute expanding the e. No Divestiture of Separate Property definition of separate property beyond what was If a court divests a spouse of his or her proven specifically enumerated in the constitution was separate property, it is a reversible abuse of discretion. unconstitutional. See Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139-42 (Tex. 1977) (The Texas constitution bars courts from a. Separate Property Categories divesting a spouse of separate property when dividing A spouse’s separate property consists of property: the property in divorce). “If a court of appeals finds reversible error that materially affects the trial court's (1) owned or claimed by the spouse before ‘just and right’ division of property, then it must marriage; remand the entire community estate for a new division (2) acquired by the spouse during marriage by gift, of the property.” Wilson v. Wilson, 132 S.W.3d 533, devise, or descent; and 536 (Tex. App.—Houston [1st Dist.] 2004, pet. (3) the recovery for personal injuries sustained by denied); Jacobs v. Jacobs, 687 S.W.2d 731, 733 the spouse during marriage, except any (Tex.1985) (remanding to trial court for new division recovery for loss of earning capacity during of community estate when court of appeals found marriage. [Emphasis added] portion of division lacked evidentiary support). “The test of whether the trial court abused its Tex. Fam. Code § 3.001. discretion is whether the court acted arbitrarily or unreasonably, and without reference to any guiding b. Personal Injuries principles.” Hailey v. Hailey, 176 S.W.3d 374, 380 The constitutionality of § 3.001(3) was vindicated (Tex. App.—Houston [1st Dist.] 2004, no pet.). “If the by the Texas Supreme Court in Graham v. Franco, 488 division of marital property lacks sufficient evidence in S.W.2d 390 (Tex. 1972) (“[R]ecovery for personal the record to support it, then the trial court's division is injuries to the body of the wife, including an abuse of discretion.” Raymond v. Raymond, 190 disfigurement and physical pain and suffering, past and S.W.3d 77, 83 (Tex. App.—Houston [1st Dist.] 2005, 25 Dealing with Damages – Recoveries as Property Chapter 3 no pet.). Note, however, that “sufficient evidence” F. Common Law means evidence in the record: it does not mean there This section explores the common law must be a certain threshold of findings of fact or characterizations of damages for awards issued during conclusions of law by the court. a marriage and characterization of potential recoveries In fact, there is a presumption that a trial court when a civil action is pending at the time of dissolution made all the necessary findings in support of its of the marriage. Any damages awarded prior to the judgment, absent separate findings of fact or marriage are patently that spouse’s separate property, conclusions of law. Wilson v. Wilson, 01-06-00908- falling squarely within the constitutional and statutory CV, 2010 WL 2545579 (Tex. App.—Houston [1st definitions of separate property, and therefore will not Dist.] June 24, 2010, no pet.); Boyd v. Boyd, 131 be addressed further beyond this cursory treatment. S.W.3d 605, 611 (Tex. App.—Fort Worth 2004, no Tex. Const. Art. 16, § 15; Tex. Fam. Code § 3.001(1). pet.) citing Pharo v. Chambers County, 922 S.W.2d 945, 948 (Tex. 1996); Gainous v. Gainous, 219 S.W.3d a. Characterizing Property, Generally 97, 103 (Tex. App.—Houston [1st Dist.] 2006, pet. The Texas Supreme Court relaxed the reasoning denied). Finally, if any legal theory supported by the of implied exclusion to define property in Arnold v. evidence upholds the trial court’s ruling, it must be Leonard, 114 Tex. 535, 273 S.W. 799 (1925) when the affirmed. In re W.E.R., 669 S.W.2d 716, 717 court later applied an affirmative test, similar to the (Tex.1984). marital partnership concept discussed at the beginning Characterization is a mixed question of law and of this section on characterization, that: fact, and if a jury is requested it will apply the law, as defined and explained by the court, to the evidence [P]roperty is community which is acquired provided to make a factual finding on the character of by the work, efforts or labor of the spouses or an asset. For further discussion of proving separate their agents, as income from their property, property and characterization of assets, see “Proving or as a gift to the community. Such property, Separate Property: An Argument For More Use of acquired by the joint efforts of the spouses, Summary Judgment Practice in Family Law Cases” by was regarded as acquired by ‘onerous title’ Chris Nickelson, 2010 State Bar Advanced Family and belonged to the community. Law Course; “Separate and Community Property: 30 Rules with Explanations & Examples” by Richard Graham v. Franco, 488 S.W.2d 390, 392 (Tex. Orsinger, R. Scott Downing, and Stephen Orsinger, 1972) citing Norris v. Vaughan, 152 Tex. 491, 260 2010 State Bar Advanced Family Law Course. S.W.2d 676 (1953). Courts in Texas have consistently applied the f. Mixed Title Property community property presumption in Tex. Fam. Code § If an asset is owned both by the community and 3.003, assigning the burden of proof for establishing by the separate estate of a spouse, the respective separate property on the party asserting it. See De ownership interests are determined by the rule of Blane v. Hugh Lynch & Co., 23 Tex. 25, 29 (1859) inception of title. Tex. Fam. Code § 3.006. (“The law…conclusively presumes that whatever is acquired, except by gift, devise or descent, or by the g. Dividing the Community Estate exchange of one kind of property for another kind, is After all separate property has been claimed and acquired by their mutual industry”). established, a trial court, in a divorce decree or annulment, “shall order a division of the estate of the b. Mixed Title Awards parties in a manner that the court deems just and right, The community presumption extends to damages having due regard for the rights of each party and any awards of mixed character—the party asserting children of the marriage.” Tex. Fam. Code § 7.001. separate property carries the burden of proving it. Tex. “One who complains of the way the trial court divided Fam. Code § 3.003; Douglas v. Delp, 987 S.W.2d 879, the properties must be able to show from the evidence 883 (Tex. 1999) (“When different kinds of damages in the record that the division is so unjust and unfair as are claimed in a single cause of action, we look to the to constitute an abuse of discretion.” Finch v. Finch, nature of each injury when classifying those damages 825 S.W.2d 218, 221 (Tex. App.—Houston [1st Dist.] as community or separate property”); Licata v. Licata, 1992, no writ) citing Wallace v. Wallace, 623 S.W.2d 11 S.W.3d 269, 273 (Tex. App.—Houston [14th Dist.] 723, 725 (Tex. Civ. App.—Houston [1st Dist.] 1981, 1999, pet. denied); Kyles v. Kyles, 832 S.W.2d 194, writ ref'd n.r.e.). 198-99 (Tex. App.—Beaumont 1992, no writ); In re Marriage of Franklin, 07-04-00515-CV, 2006 WL 1680875 (Tex. App.—Amarillo 2006, pet. denied); Wilson v. Wilson, 01-06-00908-CV, 2010 WL 2545579 (Tex. App.—Houston [1st Dist.] June 24, 2010, no 26 Dealing with Damages – Recoveries as Property Chapter 3 pet.); Cottone v. Cottone, 122 S.W.3d 211, 213-14 or medical expenses. Id. Failure to meet this burden (Tex. App.—Houston [1st Dist.] 2003, no pet.). resulted in the annuity being treated as 100% A settlement agreement that allocates amounts to community, the husband having failed to rebut the specific damages elements may be sufficient to community presumption. Id.; Tex. Fam. Code. Ann. § overcome the community property presumption. In re 3.003. This view is consistent with prior common law Franklin, 2006 WL 1680875 citing Licata v. Licata, 11 authority, well expressed in the following quote from S.W.3d 269, 274 (Tex. App.—Houston [14th Dist.] McKay, Law of Community Property § 182 (2nd ed. 1999, pet. denied). “The same rationale is applicable 1925): to allocations established by jury answers or findings of fact supporting a judgment.” In re Franklin, 2006 “By the clear weight of common law WL 1680875 citing Osborn v. Osborn, 961 S.W.2d authority, a cause of action for personal 408, 415 (Tex. App.—Houston [1st Dist.] 1997, pet. injury is not property in any sense, nor for denied). The parties in a divorce proceeding can also any purpose till it has been reduced to stipulate the amounts of a personal injury settlement judgment; and the judgment, as property, attributable to various elements of damages. In re takes its character as separate or common Franklin, 2006 WL 1680875 citing Slaton v. Slaton, from the right violated in committing the 987 S.W.2d 180, 183 n. 1 (Tex. App.—Houston [14th wrong-the personal injury.” Dist.] 1999, pet. denied). In Slaton the parties stipulated what portions of a personal injury settlement d. Personal Injuries were recovery for damages to the community estate. (1) Noneconomic Damages The spouses then presented evidence of their individual (A) Disfigurement, Physical Impairment Physical damages resulting from the personal injury to Pain, and Mental Anguish determine the recovery belonging to their separate The Graham court concluded Tex. Const. Art. 16, estates. Slaton, 987 S.W.2d at 183 n. 1 (Tex. App.— § 15 did not intend to change the common law or Houston [14th Dist.] 1999, pet. denied). Spanish law traditions characterizing personal injury recoveries as separate property, and that “property” as c. Future Awards defined by the constitution did not encompass causes One exception to the community presumption of action arising out of injury. Graham v. Franco, 488 arises when the court is dealing with a potential S.W.2d 390, 392 (Tex. 1972) (summarizing common recovery in a personal injury suit, where litigation has law and scholarly commentary on the separate property not concluded during the divorce proceedings. Osborn character of personal injury awards). The court held v. Osborn, 961 S.W.2d 408 (Tex. App.—Houston [1st “it is clear that the personal injuries to the wife are not Dist.] 1997, pet. denied). In Osborn, characterization ‘acquired’ by the efforts of the spouses and would not of a husband's potential personal injury recovery was belong to the community.” Id. Note the personal an issue to be decided by trial court as matter of law; injuries being discussed are noneconomic: there was no community presumption or burden on the compensation for lost wages, lost earning capacity, and husband to prove the damages were his separate medical expenses will be addressed in the next section. property. Osborn v. Osborn, 961 S.W.2d 408, 414 Damages awarded for disfigurement, physical (Tex. App.—Houston [1st Dist.] 1997, pet. denied). impairment, physical pain, and mental anguish are Tex. Fam. Code § 5.01, now § 3.001, provided that a separate property because they are recoveries on a spouse's recovery for personal injuries is separate separate property—each spouse having been in property, so the injured spouse is not required to prove possession of his or her mind and body prior to anything since character is determined as a matter of marriage. Graham v. Franco, 488 S.W.2d 390, 394 law. Id. (Tex. 1972) (personal injuries that are damages to the Note, however, this is not viewed as inconsistent body, including disfigurement, loss or impairment of with case law establishing that the spouse claiming the use of the body, and physical pain and suffering, separate property has the burden of proof. Rather, there are all separate property recoveries); Kirkpatrick v. is simply no presumption created by pending litigation Hurst, 472 S.W.2d 295, 304 (Tex. Civ. App.— because there is no verdict delineating what damages Texarkana 1971), reversed on other grounds 484 the award will compensate. In re Marriage of S.W.2d 587 (Tex.1972) (recovery of separate property Franklin, 07-04-00515-CV, 2006 WL 1680875 (Tex. damages includes mental pain and anguish) Tex. Fam. App.—Amarillo 2006, pet. denied). Code §3.001(3); Douglas v. Delp, 987 S.W.2d 879, In Franklin—a case involving a previously 883 (Tex. 1999) (mental anguish damages are separate rendered award—the husband had a burden to show his property); Perez v. Perez, 587 S.W.2d 671, 673 annuity, the result of a personal injury settlement, was (Tex.1979); Moreno v. Alejandro, 775 S.W.2d 735, obtained as result of his personal injuries and was not 737 (Tex. App.—San Antonio 1989, writ denied); compensation for lost earning capacity during marriage Johnson v. Holly Farms of Tex., Inc., 731 S.W.2d 641, 27 Dealing with Damages – Recoveries as Property Chapter 3

646 (Tex. App.—Amarillo 1987, no writ). “The at 396; Lester v. U.S., 487 F.Supp. 1033, 1039 (N.D. reasoning is that the recovery is a replacement, in so Tex. 1980); Smith v. Smith, 473 S.W.2d 299, 302 (Tex. far as practicable, and not the ‘acquisition’ of an asset Civ. App. Texarkana 1971), writ ref’d n. r. e. per by the community estate,” and is akin to an insurance curiam, 478 S.W.2d 81 (Tex.1972); Dawson v. Garcia, award for the loss of an automobile owned by a party 666 S.W.2d 254, 267 (Tex. App.—Dallas 1984, no prior to damage. Graham, 488 S.W.2d at 392. writ); Gen. Ins. Co. of Am. v. Casper, 426 S.W.2d 606, Characterization of these types of damages does 608 (Tex. Civ. App.—Tyler 1968) writ refused n.r.e., not change regardless of whether the recovery is for the 431 S.W.2d 311 (Tex. 1968); Few v. Charter Oak Fire past or future. Id. at 396; Henslee v. Henslee, 12-09- Ins. Co., 463 S.W.2d 424, 425 (Tex. 1971); Henslee v. 00274-CV, 2010 WL 2982928 (Tex. App.—Tyler July Henslee, 12-09-00274-CV, 2010 WL 2982928 (Tex. 30, 2010, no pet.); Osborn v. Osborn, 961 S.W.2d 408, App.—Tyler July 30, 2010, no pet.); Tex. Fam. Code § 414 (Tex. App.—Houston [1st Dist.] 1997, reh'g of 3.001. To the extent the marital partnership has lost pet. for rev. overruled); In re Bippert, 311 B.R. 456, wages, both spouses have been damaged, both have 467 (Bankr. W.D. Tex. 2004). claims against the wrongdoer, and therefore the recovery is community in character. Graham, 488 (B) Loss of Consortium S.W.2d at 396. Recovery for loss of consortium (i.e., loss of love, Recovery for future medical expenses received support, affection, companionship and sexual relations) during the marriage are community property. Dawson of a spouse is separate property. Whittlesey v. Miller, v. Garcia, 666 S.W.2d 254, 267 (Tex. App.—Dallas 572 S.W.2d 665, 669 (Tex.1978) (“character of the 1984, no writ). If a recovery is received during deprived spouse's recovery for loss of consortium is marriage, and the parties later divorce, courts view the [not] community property”); In re Bippert, 311 B.R. award as being community in its entirety and do not 456, 468 (Bankr. W.D. Tex. 2004); Osborn, 961 prorate the recovery over time. Id. The operative fact S.W.2d at 414. This is not the case for loss of services, in this case was that the injury and claim arose during which is an entirely separate and distinct concept in the marriage. Id. “The community status of recovery Texas and is addressed in the next section. Whittlesey, for loss of earnings and earning capacity recognized in 572 S.W.2d at 666 n. 2. Graham, 488 S.W.2d at 396-97, does not rest on the Parents are allowed to recover consortium length of time following injury to one spouse that the damages for their child’s wrongful death. Roberts v. other spouse survives.” Dawson, 666 S.W.2d at 267. Williamson, 111 S.W.3d 113, 119-20 (Tex. 2003); Recovery for lost or reduced earnings incurred Sanchez v. Schindler, 651 S.W.2d 249, 251 prior to or after marriage are separate property; the (Tex.1983). While a child has a cause of action for issue is when the loss of earning capacity occurred: loss of parental consortium, Reagan v. Vaughn, 804 “[w]hen it occurs outside marriage, compensation is S.W.2d 463, 466 (Tex. 1990), the Texas Supreme separate property.” Lewis v. Lewis, 944 S.W.2d 630, Court has not extended a cause of action for loss of 631 (Tex. 1997); Tex. Fam. Code § 3.001. In Casper, consortium to parents whose children have only been the court held that “a husband did not have a seriously injured. Roberts, 111 S.W.3d at 119-20 (Tex. community interest in his wife's compensation benefits 2003). when her injury occurred during marriage but her disability did not begin until after divorce.” Lewis, 944 (2) Economic Damages S.W.2d at 631 discussing Casper, 426 S.W.2d at 608. (A) Medical Expenses Recovery for lost or reduced earnings for an Recovery for medical expenses is considered to be unemancipated minor child is the community property community property in Texas. Gracia v. RC Cola-7- of the parents. Tex. Fam. Code § 151.001(5); Bolling Up Bottling Co., 667 S.W.2d 517, 520 (Tex. 1984); v. Rodriguez, 212 S.W.2d 838, 841-42 (Tex. Civ. Perez v. Perez, 587 S.W.2d 671, 673 (Tex.1979); App.—Galveston 1948, writ ref’d n.r.e.); Hawkins v. Graham v. Franco, 488 S.W.2d 390, 396 (Tex.1972); Schroeter, 212 S.W.2d 843, 845 (Tex. Civ. App.—San Moreno v. Alejandro, 775 S.W.2d 735, 738 (Tex. Antonio 1948, no writ) (“damages recoverable by the App.—San Antonio 1989, writ denied). This parents for injury to, or death of, a child are characterization is logical: because a medical expense community property where such child is a minor”). is an obligation of the community owing to the duty of However, a managing conservator has a separate support, compensation for expenses should reimburse property right to the award if one has been appointed. the community. Tex. Fam. Code § 153.132(8) (the rights and duties of the parent appointed the sole managing conservator (B) Loss of Earnings and Reduced Earning include “the right to the services and earnings of the Capacity child”). A recovery for loss of earnings or earning capacity is community property. Graham, 488 S.W.2d 28 Dealing with Damages – Recoveries as Property Chapter 3

(C) Loss of Services 11 S.W.3d 269, 276-77 (Tex. App.—Houston [14th A recovery for loss of the other spouse’s Dist.] 1999, pet. denied) (benefits were spouse’s “services” (i.e., “the performance by a spouse of separate property where settlement agreement household and domestic duties”) is community classified workers compensation benefits as personal- property. Whittlesey v. Miller, 572 S.W.2d 665, 666 n. injury damages); Patt v. Patt, 689 S.W.2d 505, 509-10 2 (Tex. 1978). As mentioned in the previous section, (Tex. App.—Houston [1st Dist.] 1985, no writ) in Texas this is an “entirely separate and distinct” (benefits were community property where spouse concept from loss of consortium. Rosenbaum, 167 failed to rebut community presumption by establishing S.W.2d 508. “In our community property system the benefits compensated personal injuries and not lost husband and wife are equal” and, therefore, a spouse's earnings). services are counterbalanced by the other spouse's duty to support the community with earnings, entitling the (E) Federal Military Disability Retirement community to recovery for the loss of such services. While federal military disability benefits are not a Id. Essentially, those services have an economic value damage award, it is worth addressing in this section to to the community, with the result that characterization avoid any mistaken characterization. The United States is treated by analogy to loss of earnings. Supreme Court ruled these benefits are not divisible on divorce, Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. (D) Worker’s Compensation 2028, 104 L.Ed.2d 675 (1989), and federal preemption While worker’s compensation is technically not of this rule overrides any community property right a damages award, proper characterization is important. that may exist under Texas law. Wallace v. Fuller, 832 The question to be asked is whether, or what portion S.W.2d 714, 717-18 (Tex. App.—Austin 1992, no of, the compensation replaces retirement benefits, lost writ); Press v. Press, 03-97-00432-CV, 1998 WL wages, or is a reward for personal injury suffered. See 271054 (Tex. App.—Austin May 29, 1998, no pet.) York v. York, 579 S.W.2d 24, 26 (Tex. Civ. App.— (not designated for publication). Note the above Beaumont 1979, no writ) (workers compensation discusses disability retirement benefits only, not pure presumed community property, and burden is on retirement benefits, which are differently treated. spouse asserting a separate property interest to establish that interest by clear and convincing e. Exemplary Damages evidence); Anthony v. Anthony, 624 S.W.2d 388, 390 There are two theories for the treatment of (Tex. App.—Austin 1981, writ dism’d) (the portion of exemplary damages, and it seems no case has explicitly the worker’s compensation benefits that replace the ruled exemplary damages are one character or the other employee’s retirement benefit receives the same in all instances. characterization as the replaced benefit). Disability The first approach to characterizing exemplary benefits compensating for lost earnings take the damages is: character of the lost wages being replaced. Tex. Fam. Code §3.008(b); see, e.g., Bonar v. Bonar, 614 S.W.2d Under the constitutionally implied exclusion 472, 473 (Tex. App.—El Paso 1981, writ ref’d n.r.e. theory, only those properties specifically (benefits compensating for lost earning capacity delineated as separate by the constitution are received after divorce were separate property); Lewis v. actually separate. Under this theory, Lewis, 944 S.W.2d 630, 630 (Tex. 1997) (character is exemplary damages would be characterized determined based on when the loss of earning capacity as community property, because although occurred, not when the injury occurred, so any they are not earned by the community, these payments replacing earnings lost before marriage or damages result in a marital acquisition. after its dissolution are separate property regardless of Exemplary damages are not personal, like when the payment is received); Simmons v. Simmons, recoveries for the loss of an arm or for 568 S.W.2d 169, 170 (Tex. App.—Dallas 1978, writ mental pain and anguish, and therefore fall dism’d) (compensation for earnings lost during the outside the constitutional and statutory limits marriage are community property, regardless of when of separate property. The constitution clearly the payments are received). restricts separate property to gift, devise, A distinction should be made for “impairment descent, or spousal agreement. Exemplary income benefits” and any other compensation for damages fall outside of each of these personal injuries, which are a separate property award. categories. This fact coupled with the Family Sooy v. Sooy, No. 04-06-00509-CV, 2007 WL 516259 Code's definition of community property as (Tex. App.—San Antonio Feb. 21, 2007, no pet.) any property other than separate property (mem. op.) (impairment income benefits are “for the acquired by a spouse would appear to make impairment itself” and are awards for the personal exemplary damages fall within the category injury, not loss of earning capacity); Licata v. Licata, of community property. 29 Dealing with Damages – Recoveries as Property Chapter 3

writ ref’d n.r.e.). In divorce proceedings, the trial court 39 Tex. Prac., Marital Property And Homesteads § possesses wide discretion and authority in dividing the 19.8. martial estate as it finds “just and right.” McKnight v. A second theory for characterizing these damages McKnight, 543 S.W.2d 863 (Tex.1976); see Tex. Fam. is to use the “earned property theory of community Code § 7.001; Schlueter, 975 S.W.2d 584. Using this property,” which would result in exemplary damages discretion and authority, a court may equalize the being characterized as separate property, “since they estate under owelty to award the injured spouse for are not the result of onerous endeavor.” Id.; see property depleted unfairly from the estate. Massey v. Graham v. Franco, 488 S.W.2d 390 (Tex.1972) Massey, 807 S.W.2d 391, 404 (Tex. App.—Houston (discussing the concept of “onerous title”). [1st Dist.] 1991) writ denied, 867 S.W.2d 766 (Tex. No court has held explicitly how exemplary 1993) (see Massey for discussion of owelty in damages are to be treated in all suits where the cause of equalization of an estate). This precludes double action arises during the marriage. The Commission of recovery for tort damages (tort damages and Appeals has held that when a suit is undertaken largely disproportionate property division) to the community for the benefit of the community, the recovery of while providing the injured spouse with relief. A exemplary damages is community property. spouse may also separately sue any third party in tort Rosenbaum v. Texas Bldg. & Mortg. Co., 140 Tex. who assisted in the commission of the fraud on the 325, 330, 167 S.W.2d 506, 508 (Tex. Comm'n App. community. 1943); cf. Matter of Marriage of DeVine, 869 S.W.2d Schlueter only proscribes causes of action in tort 415, 429 (Tex. App.—Amarillo 1993, writ denied) (in for fraud on the community: it does not proscribe a a suit against wife for actual fraud, exemplary damages cause of action for a tort committed against the awarded to husband against wife were not part of the spouse’s person. Schlueter v. Schlueter, 975 S.W.2d community but a personal judgment against her). 584 (Tex. 1998). The court explicitly differentiated its Rosenbaum does not provide any explicit holding proscribing suits in tort for fraud on the guidance for which theory, implied exclusion or community from Price (negligence claim for personal onerous title, has more common law support. Some injuries), Bounds (wrongful death), and Twyman preference can be inferred from the opinion, however. (intentional infliction of emotional distress), all of In Rosenbaum, the cause of action was based on an which involved personal injury claims. Schlueter, 975 obligation of the community. That the court discussed S.W.2d at 587. the nature of suit, and the basis for the recovery being The Texas Supreme Court declined an immediate related to the community obligation, implies the court opportunity to retreat from this holding in Vickery. adopted the “onerous title” theory of characterization. Vickery was ruled on by Houston’s 1st Court of Had the court believed constitutionally implied Appeals prior to Schlueter and denied review by the exclusion prevented the recovery from being separate, Supreme Court of Texas immediately after its analysis of the nature of the suit and cause of action for Schlueter decision. Vickery allowed a wife to sustain a exemplary damages would have been entirely tort action for actual fraud against her person, and a unnecessary. For this reason, and the previously mental anguish tort action stemming from the fraud, discussed concept regarding the marital partnership, it for her husband’s fraudulent inducement in getting her is likely that the theory of “onerous title,” discussed in to enter into a divorce settlement. Vickery v. Vickery, Graham v. Franco, is the stronger of the two, and an 01-94-01004-CV, 1997 WL 751995 (Tex. App.— advocate could successfully argue to characterize Houston [1st Dist.] Dec. 4, 1997, pet. denied) (not exemplary damages as either separate or community designated for publication); Vickery v. Vickery, 999 property on this theory. S.W.2d 342 (Tex. 1999). It is clear the Supreme Court was aware of its recent decision in Schlueter, as made f. Interspousal Tort Damages clear by Justice Hecht’s dissenting opinion in the The first issue is whether a spouse can sue. The court’s denial of the appellant’s petition for review. doctrine of interspousal tort immunity was adopted in Vickery, 999 S.W.2d 342 (Hecht, J., dissenting). Texas in the case of Nickerson v. Nickerson, 65 Tex. Therefore, it seems Schlueter does not act as bar to one 281 (1886). Interspousal immunity was limited to spouse’s suit in tort for economic personal injury negligent torts by the Bounds case, later abolished damages inflicted by the other spouse as allowed by “completely as to any cause of action” in Price. Vickery, but this is not certain and will be discussed in Bounds v. Caudle, 560 S.W.2d 925 (Tex. 1977); Price greater detail shortly. v. Price, 732 S.W.2d 316, 319 (Tex. 1987). One spouse may now sue the other for negligent There is no separate cause of action for fraud on or inflicted on their person, but is a the community estate by a spouse. Schlueter v. separate action required or can a divorce and tort action Schlueter, 975 S.W.2d 584, 589 (Tex. 1998); Belz v. be brought in once proceeding? Twyman v. Twyman, Belz, 667 S.W.2d 240, 247 (Tex. App.—Dallas 1984, reaffirming Price v. Price, tackled this issue and how a 30 Dealing with Damages – Recoveries as Property Chapter 3 tort award should be considered when making a “just Schleuter, 975 S.W.2d at 588. In Belz, the Dallas and right” division of the marital estate. Twyman v. Court of Appeals stated: “We know of no precedent in Twyman, 855 S.W.2d 619, 624 (Tex. 1993). The Texas for allowing one spouse to sue the other in tort Supreme Court of Texas held in Twyman that resolving for common law fraud, as a separate cause of action, both tort and divorce actions in the same proceeding based upon a depletion of the community estate prior was proper and aided judicial efficiency. Id. at 625. to dissolution of the community estate...” Belz v. Belz, The court, however, cautioned that when both cases are 667 S.W.2d 240, 246 (Tex. App.—Dallas 1984, writ tried together “it is imperative that the court avoid ref'd n.r.e.). The court went on to say “a claim of fraud awarding a double recovery.” Id. A spouse should not on the community is a means to an end, either to be allowed to both recover tort damages and a recover specific property wrongfully conveyed [or] to disproportionate division of the community estate obtain a greater share of the community estate upon based on the same conduct. Id. However, this does divorce, in order to compensate the wronged spouse for not preclude the court from awarding a his or her lost interest in the community estate.” Id. at disproportionate division of property for reasons other 246-47. The court went on to conclude fraud on the than the tortious conduct that has been compensated in community is not a separate cause of action; unequal the merged cause of action for tort. Id. division of the estate is the proper means of redress. Spouses can sue for torts on their person and these Id. at 247; see Matter of Marriage of DeVine, 869 can be litigated in the same action as their divorce. S.W.2d 415, 428 (Tex. App.—Amarillo 1993, writ There are only two questions remaining. First, under denied) (applying the above reasoning from Belz). Schlueter, must a wronged spouse suffer without relief This understanding of Schlueter, that a cause of when the community estate has been so depleted that action based on damage to a community interest may there is not enough money or property left to effect a not be brought separately and that adequate relief is just and right division? Second, does the tortfeasor available by just and right division of the community spouse share in half of the recovery of economic estate, has been adopted by lower courts. See Boyo v. personal injury damages, being a community property Boyo, 196 S.W.3d 409, 420 (Tex. App.—Beaumont recovery, or is the tortfeasor spouse prevented from 2006, no pet.) citing Schlueter v. Schlueter, 975 participating? S.W.2d 584, 585-89 (Tex.1998) (“Although the claim Sadly, the answer under current law to the first may not be brought as an independent cause of action question appears to be “yes, with one exception.” for damages against the spouse in a suit for divorce, the Recovery for fraud on the community, and any other claim may be asserted for consideration in the court's claims that arise out of that cause of action, is limited just and right division of the community estate.”). to the value of the community estate and a court’s “just Justice Hect, joined by Chief Justice Phillips, and right” division of it. Schlueter v. Schlueter, 975 dissenting in Schlueter, lamented this potential S.W.2d 584 (Tex. 1998). In 1994 the Amarillo Court inadequacy of remedy, not only in the present case but of Appeals stated: “Mental anguish…is only an also by citation to Vickery v. Vickery, which had element of an award of damages and cannot stand allowed a recovery that now appeared proscribed by alone without an affirmative finding that an Schlueter. Schlueter, 975 S.W.2d at 591 (Hect, J., independent tort has been committed.” In re Marriage dissenting) citing Vickery v. Vickery, 01-94-01004-CV, of Moore, 890 S.W.2d 821, 829-30 (Tex. App.— 1997 WL 751995 (Tex. App.—Houston [1st Dist.] Amarillo 1994, no writ). Schlueter adopted the Dec. 4, 1997, pet. denied) (not designated for Amarillo court’s reasoning, limiting a spouse’s relief to publication) (allowing recovery for various damages equalization of the community; if the tortfeasor spouse based on an independent pleading for actual fraud on didn’t conspire with a third party, who can be sued Mrs. Vickery’s person in addition to uneven division of directly in tort to recover the assets, it appears the community). It is worth noting that the holding of equalization is the only remedy. Schlueter, 975 Schlueter, properly applied, appears to proscribe S.W.2d at 588-89. The same rule applies to punitive Vickery type recoveries but the Supreme Court of damages; a recovery of punitive damages requires a Texas itself declined to extend its rule in Schlueter to finding of independent tort with accompanying actual Vickery when it denied a petition for review of that 1st damages. Twin City Fire Ins. Co. v. Davis, 904 District Court of Appeals holding. Vickery v. Vickery, S.W.2d 663, 665 (Tex. 1995). Schlueter proscribes the 999 S.W.2d 342 (Tex. 1999). independent cause of action for fraud on the In Vickery, the underlying court of appeals’ community, so punitive damages, and all other opinion was unpublished. When the Supreme Court of damages that would be pled on tort against the Texas denied the petition for review, Justice Hect community, are unavailable. Schlueter, 975 S.W.2d at dissented from the denial in a published opinion which 588-89. incorporates the full court of appeals opinion on the The Texas Supreme Court’s endorsement of Belz merits in an appendix. Justice Hecht, thinking the in the Schlueter opinion furthers this understanding. discord of the Supreme Court’s Schlueter holding and 31 Dealing with Damages – Recoveries as Property Chapter 3 the 1st District’s Vickery holding intolerable, stated Dec. 4, 1997, pet. denied) (not designated for that while he was not eager to see the holding of publication). Either way, pleading actual fraud is Schlueter extended, Mrs. Vickery failed to distinguish likely prudent since it may sustain awards for her case from Schlueter and that “[t]he Court cannot exemplary damages and mental anguish regardless of simply pick and choose the cases in which the rule it which recovery the plaintiff chooses. Id. has announced will apply,” and that the Court’s Graham v. Franco seems to resolve the question holdings in Schlueter v. Schlueter and Douglas v. Delp of whether a recovery is barred in a situation where a require the court to grant the petition for review, tortfeasor spouse would share in the recovery sought. reverse the court of appeals’ judgment, and remand the The Supreme Court of Texas held in Graham that a case to the district court for further proceedings Id. at tortfeasor spouse's negligence is imputed to the 342-44 (Hecht, J., dissenting). On remand, the trial community, precluding the cause of action if the court would reconsider what division of the community recovery would be a community asset the tortfeasor is just and right, in which case the trial court could would share in, effectively depriving the victim spouse consider the husband’s “dishonesty of purpose or intent of any means of relief beyond a court’s consideration to deceive” and “the heightened culpability of actual of the wrong when rendering its “just and right” fraud” as found by the jury. Id. at 344-45. It is likely division of the community. Graham v. Franco, 488 Vickery survived this fate because, when the tort S.W.2d 390, 397 (Tex. 1972) (included in this article’s damages would have resulted in a double recovery Appendix). Essentially, the tortfeasor’s contributory when combined with the court’s property division, the negligence operates as a bar to the cause of action plaintiff elected to recover her marital property solely because of his half-interest in it, “for to hold otherwise under the latter in her bill of review and forfeited her would be to allow him to recover regardless of his own right to the jury award for loss of marital property. See negligence.” Id. citing N. Texas Traction Co. v. Hill, generally id. at 373-74 (for the 1st District’s discussion 297 S.W. 778, 780 (Tex. Civ. App.—El Paso 1927, on the topic of double recovery and how this did not writ ref'd), disapproved of by Graham, 488 S.W.2d 390 occur with Mrs. Vickery). (disapproved of in situations where the character of the The Supreme Court of Texas, as recently as 2008, recovery is the spouse’s separate property, not where has reaffirmed it’s holding in Schlueter limiting the recovery is community in character). The court recovery for fraud on the community to a “just and summarized this position as follows: right” property division. Chu v. Hong, 249 S.W.3d 441, 445 (Tex. 2008); see also Boyo, 196 S.W.3d at Where, as in the case of medical expenses 420 citing Lucy v. Lucy, 162 S.W.3d 770, 777 (Tex. and lost earnings, the recovery would be App.—El Paso 2005, no pet.) (“A claim of fraud on the community, the of community may [only] be used to recover specific the husband must be attributed to the marital property or to obtain a greater share of the community community so far as affects any right of estate on divorce.”). The current state of law for action on behalf of the marital community. economic torts committed against the community estate is still uncertain, and it remains to be seen Graham, 488 S.W.2d at 397 citing De Funiak, whether Schlueter will eventually be employed to Principles of Community Property (1971) § 83. proscribe Vickery type recoveries as Justice Hecht In cases where interspousal tort damages have believed it did. been denied by the court, attorneys may want to look In summation, the remedy available when damage toward other jurisdictions for guidance in deciding is to a community asset is by and large limited to the whether to appeal and, if they decide to do so, how to court’s just and right division of the property. In doing structure their argument. Some jurisdictions have so, a court may effect a just and right division by a concluded that the community character of recoveries monetary judgment against the offending spouse, “but in tort do not preclude recovery. In Self v. Self, the the amount of the judgment must be referable to a Supreme Court of California held a recent statutory specific value of lost community property” and, amendment resolved the difficulties discussed in this therefore, such judgment may not exceed the total section. Self v. Self, 58 Cal. 2d 683, 684, 691, 376 P.2d value of the community estate. Boyo, 196 S.W.3d at 65 (1962) (a recent statutory amendment making all 420 citing Schlueter, 975 S.W.2d at 588. The damages awarded to a married person in a personal exception to this rule would be a Vickery type pleading injury action that person’s separate property was held of actual fraud as the cause of action, which would to have removed the last bar to a more modern rule on appear to allow the plaintiff the choice of recovery of interspousal recovery, overcoming the “incongruity” of damages for loss of marital property through actual a wife suing her husband for a personal tort “as long as fraud or recovery of property through the court’s just the recovery would be community property controlled and right division. Vickery v. Vickery, 01-94-01004- and managed by the husband”). CV, 1997 WL 751995 (Tex. App.—Houston [1st Dist.] 32 Dealing with Damages – Recoveries as Property Chapter 3

Because Texas lacks such a salutary statute, Salinas v. Rafati, 948 S.W.2d 286, 291 (Tex. 1997) Washington’s Freehe v. Freehe is of greater assistance (when goodwill is not attached to the person of the than California’s Self v. Self. The Supreme Court of professional, it is a divisible community asset); see Washington, lacking statutory guidance, stated “absent Geesbreght v. Geesbreght, 570 S.W.2d 427, 435-36 express statutory provision, or compelling public (Tex. Civ. App.—Fort Worth 1978, writ dism’d) policy, the law should not immunize tortfeasors or (goodwill in a company that is distinct from the deny remedy to their victims.” Freehe v. Freehe, 81 professional, and would be retained by the company on Wash. 2d 183, 192, 500 P.2d 771, 777 (1972) departure of that professional, does have worth and overruled on other grounds by Brown v. Brown, 100 value). Applying the previously discussed Wash. 2d 729, 675 P.2d 1207 (1984). To give effect to characterization principles to the requirements of this ruling, the Court fashioned a formula for allowing Hirsch and the other cited cases, if goodwill is a interspousal tort recovery despite the fact that, under divisible community asset in that it was created during common law at the time, the recovery would be the marriage and has value distinct from the community property. The court’s formula was (1) professional’s person, any awards for damages to that special damages, actual out-of-pocket expenses, are asset would be community in character. recoverable to the community; (2) general damages for loss of future earnings are recoverable in the fraction of G. Characterization of Damages Summary one half, by the injured spouse, as his or her separate property; and (3) general damages compensating for • Personal Injury pain and suffering, emotional distress, etc., are fully recoverable and are the separate property of the injured o Noneconomic spouse. Id. Such a logical treatment of the current state of affairs on this subject would be welcome in . Pain and suffering: SP Texas, as it would provide the victim spouse more . Mental anguish: SP relief than is currently allowed under current common . Disfigurement: SP law. . Physical impairment: SP In summation, a spouse may sue for interspousal . Loss of consortium: SP tort only if (1) the tort is personal to the spouse rather . Impairment Income Benefit: SP than the community, and (2) the character of the damages recovered is separate under the laws and rules o Economic discussed earlier in this section. . Lost wages: CP g. Contract Damages and Property Damages . Reduced earning capacity: CP The character of any recovery for contract . Past medical expenses: CP damages is determined by looking to see whether the . Future medical expenses: CP harm was to separate or community property. E.g. . Loss of services: CP Brazos Valley Harvestore Systems, Inc. v. Beavers, 535 . Workers compensation: CP (if S.W.2d 797, 799 (Tex. Civ. App.—Tyler 1976, writ recovery is for lost wages or dism’d) (a claim for lost profits from community earning capacity) business is community in character). If the contract damages award is a recovery for damage to a separate • Vested Future Payments: CP presumption property, the party asserting the damages are separate applies, but rebuttable depending on claim property must overcome the community presumption being compensated of Tex. Fam. Code §3.003 by clear and convincing • Pending litigation – no presumption if evidence. This can be done using previously discussed multiple elements of mixed character being methods for establishing separate property. pled • Exemplary Damages: no presumption, h. Loss of Goodwill characterization likely determined by theory Goodwill of a professional corporation is not advocated (constitutionally implied exclusion considered in property division unless it can be valued, or onerous title) it exists independently of the personal ability of the • Contract Damages: look to character of asset professional spouse, and it has a commercial value in being recovered on which the community estate is entitled to share. • Property Damages: look to character of asset Hirsch v. Hirsch, 770 S.W.2d 924, 927 (Tex. App.—El being recovered on Paso 1989, no writ); Nail v. Nail, 486 S.W.2d 761, 764 • Loss of Goodwill: look to character of asset (Tex. 1972) (goodwill that had no value apart from the being recovered on spouse’s person has no value for a court to divide); 33 Dealing with Damages – Recoveries as Property Chapter 3

VI. WHAT TORTS ARE AND ARE NOT 16) Breach of Fiduciary Duty Under the Trust RECOGNIZED IN TEXAS? Fund Doctrine. Recognized torts in Texas that have found, or will 17) Breach of Fiduciary Relationship - Business find, their way into the family law arena are statutory and Personal. and common law in nature, to-wit: 18) Constructive Fraud on the Person and Property. A. Torts Recognized in Texas 19) Identifying Information. 1. Statutory Torts 20) Misapplication of Fiduciary Property. Statutory torts are: 21) Breach of Contract and Money Had and Received. 1) Texas Deceptive Trade Practices Consumer 22) Rescission. Protection Act. Tex. Bus. & Com. Code, §§ 23) Promissory Estoppel. 17.41-.63; Tex. Pattern Jury Charges - 24) Usurpation of Community Opportunity. Business/ Consumer, Chapter 102 (2006). 25) Waste of Assets. 2) Texas Fraud in Real Estate and Stock 26) Alter-Ego Corporations. Transactions Act. Tex. Bus. & Com. Code, § 27) Joint Venture/Partnership. 27.01 (Vernon 2002, and Supp. 2007). 28) Alter-Ego Trusts. 3) Texas Uniform Fraudulent Transfer Act. 29) Civil Conspiracy. Tex. Bus. & Com. Code, §§ 24.001-.013 30) Wrongful Interference with Existing (Vernon 2002 and Supp. 2007). Contract. 4) Texas Family Code - Transfer and Debts 31) Tortious Interference with Prospective or Pending Decree. Tex. Fam. Code § 6.707. Business Relations. 5) Texas Kidnapping Act. Tex. Fam. Code, §§ 32) Oral Gift of Land. 42.001-.009. 33) Estoppel. 6) Texas Theft Liability Act. Tex. Civ. Prac. & 34) /. Rem. Code, §§ 123.001-.005. 35) Agency. 7) Texas Civil Wiretap Act. Tex. Civ. Prac. & 36) Bailment. Rem. Code, §§ 123.001-.004. 37) Fraudulent Conveyance. 8) Texas Principal and Income Act. Tex. Prop. 38) . Code, §§ 116.001-.171. 39) Property Held or Controlled. 9) Texas Prudent Investor Act. Tex. Prop. 40) Fraudulent Destruction, Removal, or Code, §§ 117.001-.012. Concealment of Writing. 41) Securing Execution of Documentation 2. Statutory and Common Law Torts Covered in through Deception. Family Law Cases 42) Damages. The following statutory and common law causes of actions covered in family law cases: B. Torts Not Recognized In Texas “The Texas Supreme Court has stated it must 1) . ‘tread cautiously’ when deciding whether to recognize 2) Assault. a new tort, asserting that ‘[W]hile the law must adjust 3) False Imprisonment. to meet society’s changing needs, we must balance that 4) Intentional Infliction of Emotional Distress. adjustment against boundless claims in an already 5) Intentional or Negligent Transmission of crowded judicial system.’ Trevino v. Ortega, 969 Venereal Disease. S.W.2d 950, 951-52 (Tex. 1998) (declining to 6) Invasion of Privacy-Intrusion on Seclusion recognize the tort of evidence spoliation)”; J. Scott and Solitude. Rose and Toni Price, “Deepening Insolvency: Not A 7) Invasion of Privacy-Public Disclosure of Rose by Any Other Name (not in Texas at least), State Private Facts. Bar of Texas, 24th Annual Advanced Business 8) - Slander. Bankruptcy Course, Chapter 15.1, page 4. “The 9) Interception of Wire, Aural and Electronic Supreme Court has refused to recognize a new cause of Communications. action, no matter how well established in other states, 10) Conversion. where it largely duplicates other rights of recovery and 11) Economic Duress. lacks many of the procedural limitations that 12) Forgery. accompany similar actions. See Cain v. Hearst 13) Fraudulent Transfer of Community Property. Corporation, 878 S.W.2d 577, 579 (Tex. 1994).” Rose 14) Accounting. & Price, supra at p.4. Additionally, the Texas Supreme 15) Actual Fraud on the Person and Property. Court admonished in Trevino, supra, at p. 952 that 34 Dealing with Damages – Recoveries as Property Chapter 3

“[W]e are especially averse to creating a tort that (14) Single Business Enterprises – SSP Partners would lead only to duplicative litigation, encouraging and Metro Novelties, Inc. v. Gladstrong inefficient relitigation of issues better handled within Investments (USA) Corporation, 275 S.W.3d the context of the core cause of action.” Rose & Price, 444 (Tex. 2008). supra, at p.4. The following torts have not been, or are no VII. PROVIDING CIVIL REMEDIES FOR CIVIL longer, recognized in Texas: AND CRIMINAL WRONGS Texas law provides a civil damage remedy for the (1) Alienation of Affection - Tex. Fam. Code § commission of recognized statutory and common law 1.107 [third party’s willful or malicious civil wrongs. It is a fundamental principle of damages interference with a marriage]. that a person who has wrongfully, or negligently, (2) Conspiracy to Breach Contract - San Saba committed an act that is injurious to another may be Energy, L.P. v. McCord, 167 S.W.3d 67 held liable for the damage that results from such (Tex. App.–Waco 2005, pet. denied). actions. Reddick v. Longacre, 228 S.W.2d 264 (Tex. (3) Conversion of Real Property - Cage Bros. v. Civ. App.–Fort Worth 1950, writ ref’d n.r.e.); Tex. Jur. Whiteman, 139 Tex. 522, 163 S.W.2d 638 3d, Damages, 2, p.23 (2007). As a general rule, if (1942). there has been a breach of an agreement or an invasion (4) - Tex. Fam. Code, § of a right, a damage will be inferred, and there exists a 1.106. [tort based on adultery]. remedy irrespective of the extent of the harm suffered. (5) Fraud on The Community Estate [as an Tex. Jur. 3d, Damages, 7-14, pp. 28-35 (2007). independent tort] - Schlueter v. Schlueter, However, the Texas Penal Code, Sec. 1.01 et. 975 S.W.2d 584 (Tex. 1998). seq., does not create private civil causes of action for (6) Grossly Negligent Inducement of Contract - penal code violations. Conversely, the fact that D.S.A., Inc. v. Hillsboro Independent School conduct is justified under the penal code does not Dist., 973 S.W.2d 662 (Tex. 1998). abolish or impair any remedy for the conduct that is (7) Intentional Interference With Familial available in a civil suit. V.T.C.A., Penal Code, § 9.06. Relationship - Stites v. Gillum, 872 S.W.2d Interesting cases on these points are: Trevino v. 786 (Tex. App.–Fort Worth 1994, writ Ortega, 969 S.W.2d 950,953 (Tex. 1998); Joyner v. denied). DeFriend, 2008 WL 880223, – S.W.3d – (Tex. App.— (8) Negligent Interference With Familial Waco 2008); Spurlock v. Johnson, 94 S.W.3d 655,658 Relationship - Helena Laboratories Corp. v. (Tex. App.— San Antonio 2002, no pet.); Long v. Snyder, 886 S.W.2d 767(Tex. 1994). Tanner, 170 S.W. 3d 752,755 (Tex. App.—Waco (9) Invasion of Privacy - Placing A Person in a 2005, pet. Denied). As a practical matter, most of the - Cain v. Hearst Corp., 878 penal code violations can be covered under existing S.W.2d 577 (Tex. 1994). common law torts covering intentional conduct, such (10) Negligent Infliction of Emotional Distress - as common law fraud. Boyles v. Kerr, 855 S.W.2d 593 (Tex. 1993). (11) “Prima Facie Tort” - Martin v. Trevino, 578 The End S.W.2d 763 (Tex. Civ. App.–Corpus Christi 1979, writ ref’d n.r.e.); Leon Ltd. v. Albuquerque Commons Partnership, 862 S.W.2d 693 (Tex. App.—El Paso 1993, no writ); Greater Southwest Office Park, Ltd. v. Texas Commerce Bank Nt. Ass’n, 786 S.W.2d 386 (Tex. App.—Houston [1st Dist.] 1990, writ denied) (intentional infliction of harm on another person by a lawful but unjustified act that results in special damages). (12) Spoliation of Evidence - Trevino v. Ortega, 969 S.W.2d 950 (Tex. 1998). (13) Wrongful - Gaspard v. Beadle, 36 S.W.3d 229 (Tex. App.–Houston [1st Dist.] 2001, pet. denied) (persuasion of a “chaste” female to have sexual intercourse by promise, deception, or other means not involving force). 35

Dealing with Damages – Recoveries as Property Chapter 3

APPENDIX

Jury Charges on Equitable and Legal Damages in a Family Law Case

TABLE OF CONTENTS 1. Graham v. Franco ...... 38 2. Equitable Damages ...... 45 PJC 204.1 Reimbursement ...... 46 PJC 206.1 Confidence and Trust Relationship between Spouses ...... 47 PJC 206.2 Actual Fraud by Spouse against Community Estate ...... 47 PJC 206.3 Actual Fraud by Spouse against Separate Estate ...... 47 PJC 206.4 Constructive Fraud by Spouse against Community Estate...... 48 PJC 206.5 Fraud Action against Nonspouse Party ...... 48 3. Legal Damages ...... 50 PJC 15.3 Personal Injury Damages—Basic Questions ...... 51 PJC 15.4 Personal Injury Damages—Injury of Spouse ...... 52 PJC 15.5 Personal Injury Damages—Injury of Minor Child ...... 52 PJC 15.6 Personal Injury Damages—Parents’ Loss of Services of Minor Child ...... 54 PJC 15.11 Personal Injury Damages—Child’s Loss of Consortium—Question about Parent’s Injury ...... 54 PJC 15.12 Personal Injury Damages—Child’s Loss of Consortium—Damages Question ...... 55 PJC 17.3 Survival Damages—Compensatory Damages ...... 55 4. Property ...... 57 PJC 18.1 Property Damages—Instruction Conditioning Damages Questions on Liability ...... 58 PJC 18.2 Property Damages—Instruction on Whether Compensatory Damages Are Subject to Income Taxes—Actions Filed on or after September 1, 2003 ...... 58 PJC 18.3 Property Damages—Market Value before and after Occurrence ...... 58 PJC 18.4 Property Damages—Cost of Repairs and Loss of Use of Vehicle ...... 58 5. Exemplary Damages ...... 60 PJC 15.7C Personal Injury Damages—Exemplary Damages—Actions Filed on or after September 1, 2003 ...... 61 6. Contract Damages ...... 62 PJC 115.1 Predicate—Instruction Conditioning Damages Question on Liability ...... 63 PJC 115.1.5 Instruction on Whether Compensatory Damages Are Subject to Income Taxes (Actions Filed on or after September 1, 2003) ...... 63 PJC 115.2 Question on Contract Damages ...... 63 PJC 115.3 Sample Instructions on Direct and Incidental Damages—Contracts ...... 63 PJC 115.4 Instructions on Consequential Damages—Contracts ...... 64 PJC 101.41 Question on Promissory Estoppel ...... 64 PJC 115.5 Question on Promissory Estoppel—Reliance Damages ...... 65 PJC 115.9 Sample Instructions—Deceptive Trade Practice Damages ...... 65

37 Dealing with Damages – Recoveries as Property Chapter 3

1. Graham v. Franco

488 S.W.2d 390 (1972) Bill GRAHAM et al., Petitioners, v. Rafael FRANCO et ux., Respondents. No. B-2997. Supreme Court of Texas. November 8, 1972. Rehearing Denied December 20, 1972.

Kleberg, Mobley, Lockett & Weil, Lev Hunt, Corpus Christi, for petitioners.

Allison, Maddin, White & Brin, Harry F. Maddin and James A. Smith, Corpus Christi, for respondents.

*391 GREENHILL, Chief Justice.

The writ of error was granted in this case to pass upon the constitutionality of a statute which provides: "The recovery awarded for personal injuries sustained by either spouse during marriage shall be the separate property of that spouse except for any recovery for loss of earning capacity during marriage."[1] We hold that the statute, as construed, is constitutional. We also hold that the acts of negligence of the husband as found by the jury are not imputed to the wife so as to bar her recovery.

This action arises out of a rear end collision. The car in which the plaintiffs, Mr. and Mrs. Franco, were riding was struck from the rear at night by a truck owned by Bill Graham and driven by Roosevelt Tillis. The Francos testified that Mr. Franco was driving down the right side of the highway with lights burning. As to the rear lights, the testimony was that they had recently been checked and found to be in good order. The truck driver testified that the Franco car was stopped on the highway with its lights off.

The jury found that the truck driver was negligent in failing to keep a proper lookout. It also found that the acts of Mr. Franco in stopping his car on the highway and in having the car upon the highway without a rear light burning constituted negligence. Each of such acts was found to be a . There were no allegations or findings that the wife, Mrs. Franco, was guilty of negligence in any respect.

The jury found that Mr. Franco's damages were "zero." It also found that Mrs. Franco's medical expenses were $2,212.92; but her damages, resulting from the occurrence in question, were likewise found to be "zero." The trial court entered judgment for the defendants.[2]

As to Mr. Franco, the Court of Civil Appeals affirmed. His contributory negligence was held to have barred his recovery, and the question of his damages became immaterial. As to Mrs. Franco, that court reversed and remanded for a new trial. It found that the answer to the damages issue of "zero" was against the great weight and preponderance of the evidence. It recited, among other things, that she was in the hospital for 13 days, several of which were in intensive care. Her injuries, as well as the details of the accident, are set out in the opinion of the Court of Civil Appeals. 470 S.W.2d 429.

THE CHARACTER OF RECOVERY FOR PERSONAL INJURY

The Court of Civil Appeals, in holding the statute constitutional, held that a wife would be entitled to recover, as her separate property, damages for injury to her body, including disfigurement, loss or impairment of the use of the body, and physical pain and suffering, both past and present. It excluded from her separate recovery loss of earnings, medical expenses, and "all other damages." These latter items were held to be recoverable by the community of the husband and wife.

38 Dealing with Damages – Recoveries as Property Chapter 3

In arriving at a proper solution of this problem, it is necessary to begin with law as it existed at the time of the adoption of our Texas constitutions and to ascertain the purpose of those portions of the constitutions which provide for the separate and community estates. Generally speaking, our civil procedure and our rules of necessary *392 parties were adopted from the English; but the substantive rights of the spouses in separate and community property were taken from Spain and Mexico. In England, the spouses were one; and generally, the husband was dominant. He generally controlled the property of the wife and most litigation. He, at least, was generally a necessary party.

The problem in this litigation begins with the early Texas case of Ezell v. Dodson, 60 Tex. 331 (1883). The court had before it the right of a wife to sue alone for her personal injuries growing out of an assault. The defendant filed exceptions on the ground that the husband was a necessary party. The wife refused to amend, and the trial court dismissed her suit. This Court affirmed. We have examined the transcript in that case, and the only question was one of necessary parties. The character of the recovery, if any, whether separate or community, was not at issue. Nevertheless, by dictum, the court added that the assault and battery upon the wife gave rise to a chose in action; that the chose in action was property; and since it was acquired after marriage and not by way of gift, devise or descent, it would be community property. Thus the dictum was that an injury to the wife constitutes an asset or claim of the community estate.

The holding of Ezell was correct on the parties question as the law then existed. But we are of the opinion that its dictum was wrong for the reasons set out below and as ably discussed by Dean Leon Green in his analysis of the Texas Death Act in 26 Texas Law Review 461 at 466 et seq.

After Ezell, the question as to the character of the recovery for personal injuries, whether separate or community, was not examined in depth. The courts simply followed the dictum of Ezell.

The basic question is the interpretation of Section 15 of Article 16 of the Texas Constitution. With the key words underscored by us, it provides,

"All property, both real and personal, of the wife, owned or claimed by her before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of the wife; .."

This Court in Arnold v. Leonard, 114 Tex. 535, 273 S.W. 799 (1925), held unconstitutional a statute which attemped to declare as separate property the rents and revenues from the wife's separate realty. The holding of that case is so limited; and in view of the history of our community property system and laws, it was a correct decision. The language of the opinion, however, is broad. The reasoning of the court in Arnold v. Leonard, and of cases following it, is one of implied exclusion; i. e., if property was acquired during marriage by any other means than gift, devise, or descent, it was and is necessarily community.

A much later case of this Court reverted to a test more akin to that prevailing under the Spanish and Mexican law, and several early opinions of this Court, dealing with community property. It applied an affirmative test; i. e., that property is community which is acquired by the work, efforts or labor of the spouses or their agents, as income from their property, or as a gift to the community. Such property, acquired by the joint efforts of the spouses, was regarded as acquired by "onerous title" and belonged to the community. Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676 (1953); DeBlane v. Lynch, 23 Tex. 25 (1859); Smith v. Strahan, 16 Tex. 314 (1856); Epperson v. Jones, 65 Tex. 425 (1886); De Funiak, Principles of Community Property (1971) § 62; Moynihan, Community Property, 2 American Law of Property (1952) § 7.16. Under this reasoning, it is clear that the personal injuries to the wife are not "acquired" by the efforts of the spouses and would not belong to the community. Thus in Norris v. Vaughan, supra, Justice Smith wrote for this Court that:

"The principle which lies at the foundation of the whole system of community *393 property is, that whatever is acquired by the joint efforts of the husband and wife, shall be their common property."

It is not necessary, however, to here make a decision on the correctness or applicability of Norris v. Vaughan and related cases and the concept of "onerous title."

39 Dealing with Damages – Recoveries as Property Chapter 3

The dictum of Ezell reasoned, as indicated, that if the wife were injured after marriage, this created a chose in action; that a chose in action [a cause of action for personal injuries] was property; that this property (chose in action) was acquired after marriage; and since it was not acquired by gift, devise or descent, it belonged to the community.

There is a large body of law, including cases by this Court, that a chose in action (a cause of action) for injuries to the person (as contrasted to injuries to property) was not regarded as property at the time of the adoption of our constitution. This Court stated the general rule in G. H. & S. A. Ry. v. Freeman, 57 Tex. 156 (1882):

"Mere personal torts die with the party and are not assignable. `Such are actions of slander, libel, assault and battery, false imprisonment, crim. con., seduction, etc. On the other hand, when the injury affects the estate rather than the person, when the action is brought for damage to the estate and not for injury to the person, personal feelings or character, the right of action could be bought and sold. Such right of action, upon the death, bankruptcy or insolvency of the party injured, passes to the executor or assignee as a part of his assets, because it affects his estate, and not his personal rights.' * * * * In the American notes to the case of Row v. Daudon, * * * * the rule stated above is treated as the general rule in America." 57 Tex. at 158.

The Freeman case was followed in Stewart v. H. & T. C. Ry. Co., 62 Tex. 246 (1884).

At common law, a cause of action (chose in action) for damage to property was property and could be transferred and inherited. But a cause of action for personal injuries at common law was not inheritable or assignable. As is stated in McKay, Law of Community Property § 182 (2nd ed. 1925), and relevant here as speaking as of the time our constitution was adopted,

"By the clear weight of common law authority, a cause of action for personal injury is not property in any sense, nor for any purpose till it has been reduced to judgment; and the judgment, as property, takes its character as separate or common from the right violated in committing the wrong—the personal injury."

The Ezell opinion cites two authorities for the proposition that a chose in action for personal injuries is property: 2 Bishop on Married Women § 271, and C. B. & Q. RR. Co. v. Dunn, 52 Ill. 260 (1869). Bishop does not say that a chose in action for personal injuries is property. It says only that "the right to sue for a tort which one has suffered is a chose in action," and that after marriage the suit must be brought in the joint names of the husband and wife,— the procedural point before the Ezell court. Bishop continues, "But where the injury is in whole or in part to the wife, the right to sue for the injury to her is her post-nuptial chose in action."

The other authority ctied in Ezell, the Dunn opinion by the Illinois court, is one based on the construction of the intent of the Illinois Legislature in enacting a statute to change the common law. That opinion demonstrated that the Illinois Legislature intended that the cause of action for damages arising out of personal injuries should become property. Moreover, contrary to Ezell, the Illinois court said that it was the wife's property:

"Who is the natural owner of the right? Not the husband, because the injury did not accrue to him; it was wholly personal to the wife. It was her body that was bruised; it was she who *394 suffered the agonizing mental and physical pain." 52 Ill. at 264.

Assuming that a chose in action arising out of a personal injury to a spouse is, or created, "property," the character of the "property" was personal to the one spouse injured at common law.

McKay, in his work on Community Property cited above, says, at page 269, that in a personal injury, the right violated is to personal security; that no right is more intensely separate than this; and that the violator of this separate right gives rise to a separate cause of action. "This right belonged to the wife at common law, and so did the cause of action for its violation. There has never been any mistake about this in the common law authorities...."

Similarly under Spanish law, an injury to the wife gave rise to rights in her, for her separate estate, not to the community. A recognized authority in this area, De Funiak, writes in "Principles of Community Property," Section 81, that:

40 Dealing with Damages – Recoveries as Property Chapter 3

"There is no question that this ["delictus" or "delict"] included the wife as a person wronged ... with the right to be made whole so nearly as was possible .... Thus, the injury to the person of a wife was compensable to her to the extent that she was wronged or dishonored by such injury...."

That authority concludes that injuries to the wife were her separate right under the Spanish and Mexican law upon which our system of community property law was based.

Professor Joseph W. McKnight, whose views are similar to those of Dean Leon Green referred to above, concluded,

"The sort of recovery for personal loss referred to by Article 4615 was not construed as a property interest either under the common law as adopted in Texas in 1840 or under the Spanish law which prevailed prior to 1840 and thereafter with respect to marital property and other family matters. It is perhaps worthy of note that, even today, neither the federal Internal Revenue Code nor the federal Bankruptcy Act treats such losses as property interests." Trial Lawyers Forum 7 at 31 (1968).

It was also recognized at the time of the adoption of our various constitutions including that of 1876, that as to property which was exchanged for other property, and damages which were awarded to the separate property of a spouse, the recovery would be separate in character. Love v. Robertson, 7 Tex. 6 (1851); Rose v. Houston, 11 Tex. 324 (1854); Chapman v. Allen, 15 Tex. 278 (1855); Cleveland v. Cole, 65 Tex. 402 (1886); San Antonio & A. P. Ry. Co. v. Flato, 13 Tex.Civ.App. 214, 35 S.W. 859 (1896).

Under this line of authorities, able scholars have reasoned that the body of the wife brought into the marriage was peculiarly her own; and that if any "property" was involved in a personal injury to the wife, it was peculiarly hers. If her house, her separate property, were set afire and destroyed by a third person, the recovery should be her separate property. If an automobile were owned by the wife before marriage and was injured or destroyed, the recovery should go to repay the loss or damage to her separate property. So, the reasoning continues, if the arm of the wife is cut off, the recovery for the loss because of disfigurement and for the attendant pain and suffering should go to the wife. The reasoning is that the recovery is a replacement, in so far as practicable, and not the "acquisition" of an asset by the community estate. See Huie, Definition of Wife's Separate Property, 35 Texas Law Review 1054 at 1061 (1957); McKnight, Personal Injury as Separate Property, 3 Trial Lawyers Forum 7 (1968); McKnight, Matrimonial Property, 26 Southwestern Law Journal 31 at 36 (1972); McSwain, The New Marital Property Statutes, 2 Family Law Newsletter (State Bar of Texas), number 3 (1968).

*395 Other noted writers outside of Texas agree with Dean Green that the Ezell dictum and cases following it are incorrectly decided. Green, The Texas Death Act, 26 Texas Law Review 461 at 466 et seq.; Moynihan, 2 American Law of Property (1952) § 7.16; McKay, Law of Community Property §§ 182, 184, and 378. In Section 398, McKay concludes,

"But neither at common law or by the law of community does he [the husband] hold the wife's right to personal security and should not be permitted to recover for the violation of this right. It does not belong to him nor to the community. The wife's physical pain and suffering are not his loss nor the loss of the community."

In the light of the foregoing, it is our conclusion that, in adopting the provisions of Section 15 of Article 16 of our constitution, the people did not intend to change the common law or the Spanish law under which Texas operated so as to make a cause of action for injuries to the wife an asset of the community. A personal injury, and the chose in action created, was not "property" at common law as then understood, and it was not property "acquired" by any community effort. If it was "property" under the common law, the Spanish law, or the Texas law, its character was separate, or personal, to the wife. In using the word "property," the framers of the constitution apparently had in mind property which could be given, bought and sold, and passed by will or by inheritance. A chose in action, or cause of action, arising out of injury to the wife was none of these. So, as stated, the dictum of Ezell v. Dodson was in error, and it still is. Granted our great reluctance to disapprove or overrule decisions in the field of property, or in the field of contracts upon which people deliberately rely, we consider it our particular duty to follow the constitution and to right the wrongs especially where the Legislature has felt strongly enough about it to take the action it has. This Court has, in the past, corrected the dictum of its previous decisions when the dictum was wrong. Valmont Plantations v. State of Texas, 163 Tex. 381, 355 S.W.2d 502 (1962). We have also overruled opinions where we

41 Dealing with Damages – Recoveries as Property Chapter 3 regard them as erroneous. Watkins v. Southcrest Baptist Church, 399 S.W.2d 530 at 535 (Tex. 1966), and Howle v. Camp Amon Carter, 470 S.W.2d 629 at 630 (Tex.1971). The dictum of Ezell v. Dodson is therefore overruled.

Most of the opinions of this Court dealing with injuries to the wife after Ezell were, like Ezell, concerned with procedural matters, mainly the question of who could or should, or should not, bring the suit. The merits of the question of the character of the recovery, whether separate or community, apparently were not re-examined. Texas Central Ry. Co. v. Burnett, 61 Tex. 638 (1884); G. C. & S. F. Ry. v. Greenlee, 62 Tex. 344 (1884); Missouri Pacific Ry. Co. v. White, 80 Tex. 202, 15 S.W. 808 (1891). These and other opinions are likewise overruled to the extent that they conflict with this opinion.

The Legislature in 1915 attempted to change the rule by a statute which was too broad.[3] That statute was carried forward in the Revised Statutes of Texas of 1925 as Article 4615. It provided, in effect, that all recovery by the wife for personal injuries, except medical expenses, should be her separate property. This included loss of earnings which under common law and community property concepts at the time of the adoption of our constitution were community. The earnings of the spouses were funds acquired by the efforts of a spouse which have been considered part of the community of the spouses. That statute and the drafting of its successor are analyzed *396 by Joseph W. McKnight in his article, Personal Injury as Separate Property, 3 Trial Lawyers Forum 7 (1968).

A court of civil appeals held that the above statute was unconstitutional. Northern Texas Traction Co. v. Hill, 297 S.W. 778 (Tex.Civ.App.1927, writ refused). Because the statute classified all recovery, including personal earnings, to be separate, it was a correct decision as above indicated. But the court in the Hill case wrote too broadly and cited only the dictum of Ezell v. Dodson for its broad language. To the extent that the holding of the Northern Texas Traction Co. case conflicts with this opinion, it is overruled.[4]

Our holding is that, independent of the statute involved, recovery for personal injuries to the body of the wife, including disfigurement and physical pain and suffering, past and future, is separate property of the wife. And, of course, a statute which provides that such recovery shall be the separate property of the wife is constitutional.

RECOVERY FOR MEDICAL EXPENSES AND LOSS OF EARNING CAPACITY

Though there is room for a difference of opinion, our research indicates that the recovery for medical and related expenses is for the community. The reasoning has been that it is the burden of the community to pay these expenses. Moynihan in 2 American Law of Community Property (1952) says at page 160,

"Although it would on principle seem the sounder view that damages recovered for pain, suffering and bodily disfigurement are the separate property of the injured spouse, it does not follow that all elements of damage for personal injury are properly classified as separate property. Damages for impairment of earning capacity and consequential damages in the nature of medical, hospital and nursing expenses are properly recoverable for the community."

De Funiak writes in Section 82 of Principles of Community Property, that while recovery for injuries to the spouse should be separate, the rule is different for other elements of recovery:

"But on the other hand, if injury deprives the marital community of the earnings or services of the spouse, that is an injury to the marital community; likewise there is loss to the community where the community funds are expended for hospital and medical expenses. * * *[5] If the wife is contributing earnings to the marital community, any injury interrupting or lowering those earnings is equally, as in the case of the husband, an injury to the community...."

He also states that:

"The earning capacity, as such, would presumably be translated into earnings during the marriage, which would be community property."

To the extent that the marital partnership has incurred medical or other expenses and has lost wages, both spouses have been damaged by the injury to the spouse; and both spouses have a claim against the wrongdoer. The recovery,

42 Dealing with Damages – Recoveries as Property Chapter 3 therefore, is community in character. This Court has held, however, that the wife could bring suit alone for medical services. Few v. Charter Oak Fire Ins. Co., 463 S.W. 2d 424 (1971).

*397 CONTRIBUTORY NEGLIGENCE OF HUSBAND

The Texas cases which have denied the wife a recovery for her personal injuries have for their basis the reasoning that, following Ezell, the recovery would be community property. Since the husband was negligent, he should not be permitted to recover for his own wrong; and since the husband shares in a recovery for the community property, there should be no recovery. Dean Page Keeton, in analyzing the holdings in the early cases, writes that, "it might be said that contributory negligence is a bar, not because it is unjust to hold the defendant but because it is unjust for the negligent plaintiff [the husband] to benefit from his own wrong." And "it is for this reason that the Texas courts... will not allow an injured spouse to recover for personal injuries, where the other spouse contributes to produce the injuries by negligent conduct." Keeton, Imputed Contributory Negligence, 13 Texas Law Review 161 at 177 and 179 (1935). This reasoning is spelled out in Northern Texas Traction Co. v. Hill, 297 S.W. 778 (Tex.Civ.App.1927, writ refused) where the court pointed out that the husband had a "half interest" in the cause of action. Hence his contributory negligence would be a defense, "for to hold otherwise would be to allow him to recover regardless of his own negligence." 297 S.W. at 780.

In other situations, our decisions have not denied a wife to recover where the husband has been guilty of wrongdoing. Thus in Nickerson v. Nickerson, 65 Tex. 281 (1886), the husband and a third party had the wife wrongfully imprisoned. It was argued that she should not be permitted to recover from the third person because the recovery would be community, and hence the husband would profit from his own wrong. Before the case came to trial, there was a divorce. Contrary to the dictum of Ezell and in line with the other authorities cited above, this Court held,

"... like other choses in action [for injuries to the person] not reduced to possession during the coverture, the sum recovered would be her separate estate." 65 Tex. at 283.

In any event, the reason for the rule that the negligence of the husband should be imputed to the wife (that he would profit from his own wrong) falls where the recovery for her injuries is her separate property. We have held that such recovery is her separate property, and the recovery will not be to him or the community. Therefore, the contributory negligence of the husband does not bar the recovery by the wife. Cases which have followed the dictum of Ezell and have used the community property defense ("imputed negligence") are therefore wrong and should be overruled. Accordingly, the language in Missouri Pacific Ry. Co. v. White, 80 Tex. 202, 15 S.W. 808 (an adopted opinion by the Commission of Appeals, 1891), and the holding of Dallas Railway & Terminal Company v. High, 129 Tex. 219, 103 S.W.2d 735 (1937), and cases following them such as Northern Texas Traction Co. referred to above, are overruled in so far as they conflict with this opinion. In the case at bar, the only acts of contributory negligence pleaded, submitted, and found were those of Mr. Franco. Mrs. Franco is therefore not barred from those items for which she may recover, set out above.

Where, as in the case of medical expenses and lost earnings, the recovery would be community, the contributory negligence of the husband must be attributed to the marital community so far as affects any right of action on behalf of the marital community. De Funiak, Principles of Community Property (1971) § 83.

Other points are brought forward which include questions dealing with the admissibility of evidence dealing with contributory negligence, or not, of the husband in stopping his car upon the highway without proper lights burning. We have examined all the points, and we are in substantial agreement with their handling by the Court of Civil Appeals. They are overruled.

*398 The opinion and judgment of the Court of Civil Appeals was that the part of the judgment of the trial court which denied a recovery to the husband was affirmed; but as to the wife, that court reversed the judgment of the trial court and remanded the cause for a new trial. The effect of the judgment of the Court of Civil Appeals was to sever the cause of action of the wife for such damages as she may be entitled to recover, but its judgment did not so provide. We order such a severance. Accordingly, the judgment of the Court of Civil Appeals is reformed to provide for a severance; and as reformed, it is affirmed.

43 Dealing with Damages – Recoveries as Property Chapter 3

[1] Article 4615, which became effective January 1, 1968. That article was repealed after the accident in question and was replaced by Section 5.01 of the Texas Family Code which provides that a spouse's separate property consists of "(3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage." All statutory references are to Vernon's Texas Civil Statutes Annotated. Emphasis is ours throughout.

[2] There was a cross action which is immaterial here. The defendants recovered nothing under their cross action.

[3] Acts 34th Leg.1915, Chapter 54, page 103. This Court called that legislation "over-broad." Few v. Charter Oak Fire Ins. Co., 463 S.W.2d 424 at 427 (Tex. 1971).

[4] Ordinarily, if this Court disagrees with an opinion of a Court of Civil Appeals, the opinion of the intermediate court is "disapproved." Since this court "refused" the writ of error in the above case, the opinion will be "overruled" in so far as it conflicts with this opinion.

[5] We do not have before us, and express no opinion upon a situation which might show that the medical expenses were paid from the separate funds of the injured spouse.

44 Dealing with Damages – Recoveries as Property Chapter 3

2. Equitable Damages

45 Dealing with Damages – Recoveries as Property Chapter 3

PJC 204.1 Reimbursement

Texas law recognizes three marital estates: the community property owned by the spouses together and referred to as the community estate; the separate property owned individually by the husband and referred to as a separate estate; and the separate property owned individually by the wife, also referred to as a separate estate.

A claim for reimbursement for funds expended by an estate to pay debts, taxes, interest, or insurance for the property of another estate is measured by the amount paid. An offset against a claim for reimbursement for funds expended by an estate to pay debts, taxes, interest, or insurance for the property of another estate is measured by the value of any related benefit received by the paying estate, such as the fair value of the use of the property by the paying estate, income received by the paying estate from the property, and any reduction in the amount of any income tax obligation of the paying estate by virtue of the paying estate’s claiming tax-deductible items relating to the property, such as depreciation, interest, taxes, maintenance, and other deductible payments, except that an offset for use and enjoyment of a primary or secondary residence owned wholly or partly by a separate estate against contributions made by the community estate to the separate estate is not to be a part of such measurement.

A claim for reimbursement of funds expended by an estate for capital improvements to property of another estate is measured by the enhancement in value to the receiving estate resulting from such expenditures. An offset against a claim for reimbursement for capital improvements to property of another estate is measured by the value of any related benefit received by the paying estate, such as the fair value of the use of the property by the paying estate, income received by the paying estate from the property, and any reduction in the amount of any income tax obligation of the paying estate by virtue of the paying estate’s claiming tax-deductible items relating to the property, such as depreciation, interest, taxes, maintenance, and other deductible payments, except that an offset for use and enjoyment of a primary or secondary residence owned wholly or partly by a separate estate against contributions made by the community estate to the separate estate is not to be a part of such measurement.

A claim for reimbursement to the community estate for the spouses’ time, toil, talent, or effort expended to enhance a spouse’s separate estate is measured by the value of such community time, toil, talent, and effort other than that reasonably necessary to manage and preserve the separate estate. An offset against a claim for reimbursement for the spouses’ time, toil, talent, or effort expended to enhance a spouse’s separate estate is measured by the compensation paid to the community in the form of salary, bonuses, dividends, and other fringe benefits.

Texas law does not recognize a marital estate’s claim for reimbursement for the payment of child support, alimony, or spousal maintenance; for living expenses of a spouse or child of a spouse; for contributions of property of nominal value; for the payment of a liability of a nominal amount; or for a student loan owed by a spouse.

A spouse seeking reimbursement has the burden of proving each element of the claim by a preponderance of the evidence. However, a spouse seeking reimbursement to a separate estate must prove by clear and convincing evidence that the funds expended were separate property. “Clear and convincing evidence” is that measure or degree of proof that produces a firm belief or conviction that the allegations sought to be established are true. The amount of the claim is measured as of the time of trial.

A spouse seeking an offset against a claim for reimbursement has the burden of proving each element of the claim by a preponderance of the evidence. The amount of the offset is measured as of the time of trial.

QUESTION 1

State in dollars the amount of the reimbursement claim, if any, proved in favor of—

1. the community estate against JANE DOE’s separate estate Answer: $ ______

2. JANE DOE’s separate estate against JOHN DOE’s separate estate Answer: $ ______

If you have inserted a sum of money in answer to Question 1, answer the corresponding part of Question 2. Otherwise, do not answer Question 2. 46 Dealing with Damages – Recoveries as Property Chapter 3

QUESTION 2

State in dollars the amount of the offset against such reimbursement claim, if any, proved in favor of—

1. JANE DOE’s separate estate Answer: $ ______

2. JOHN DOE’s separate estate Answer: $ ______

PJC 206.1 Confidence and Trust Relationship between Spouses

A relationship of confidence and trust exists between a husband and wife with regard to that portion of the community property that each controls. This relationship requires that the spouses use the utmost good faith and frankness in their dealings with each other.

Because of the nature of the spousal relationship, conduct of a spouse affecting the property rights of the other spouse may be fraudulent even though identical conduct would not be fraudulent as between nonspouses.

PJC 206.2 Actual Fraud by Spouse against Community Estate

A spouse commits fraud if that spouse transfers community property or expends community funds for the primary purpose of depriving the other spouse of the use and enjoyment of the assets involved in the transaction. Such fraud involves dishonesty of purpose or intent to deceive.

QUESTION 1

Did JOHN DOE commit fraud with respect to the community-property rights of JANE DOE?

Answer “Yes” or “No.”

Answer:

If you have answered Question 1 “Yes,” then answer Question 2. Otherwise, do not answer Question 2.

QUESTION 2

State in dollars the loss, if any, suffered by the community estate of JANE DOE and JOHN DOE as a result of the fraud of JOHN DOE.

Answer: $

PJC 206.3 Actual Fraud by Spouse against Separate Estate

A spouse commits fraud if that spouse transfers separate property of the other spouse or expends separate funds of the other spouse for the primary purpose of depriving the other spouse of the use and enjoyment of that property or those funds. Such fraud involves dishonesty of purpose or intent to deceive.

QUESTION 1

Did JOHN DOE commit fraud with respect to the separate-property rights of JANE DOE?

Answer “Yes” or “No.”

Answer:

If you have answered Question 1 “Yes,” then answer Question 2. Otherwise, do not answer Question 2.

47 Dealing with Damages – Recoveries as Property Chapter 3

QUESTION 2

What sum of money, if paid now in cash, would fairly and reasonably compensate the separate estate of JANE DOE for the damages, if any, resulting from the fraud of JOHN DOE?

Answer in dollars.

Answer: $

PJC 206.4 Constructive Fraud by Spouse against Community Estate

A spouse may make moderate gifts, transfers, or expenditures of community property for just causes to a third party. However, a gift, transfer, or expenditure of community property that is capricious, excessive, or arbitrary is unfair to the other spouse. Factors to be considered in determining the fairness of a gift, transfer, or expenditure are—

1. The relationship between the spouse making the gift, transfer, or expenditure and the recipient.

2. Whether there were any special circumstances tending to justify the gift, transfer, or expenditure.

3. Whether the community funds used for the gift, transfer, or expenditure were reasonable in proportion to the community estate remaining.

QUESTION 1

Was the transfer made by JOHN DOE to FI FI LARUE fair?

Answer “Yes” or “No.”

Answer:

If you have answered Question 1 “No,” then answer Question 2. Otherwise, do not answer Question 2.

QUESTION 2

State in dollars the loss, if any, suffered by the community estate of JANE DOE and JOHN DOE as a result of the transfer made by JOHN DOE to FI FI LARUE.

Answer: $

ALTERNATE QUESTION 2

What sum of money, if paid now in cash, would fairly and reasonably compensate the separate estate of JANE DOE for the damages, if any, resulting from the transfer made by JOHN DOE to FI FI LARUE?

Answer in dollars.

Answer: $

PJC 206.5 Fraud Action against Nonspouse Party

A person commits fraud if that person participates with a spouse in a transfer of community property for the primary purpose of depriving the other spouse of the use and enjoyment of the assets involved in the transaction. Such fraud involves dishonesty of purpose or intent to deceive.

48 Dealing with Damages – Recoveries as Property Chapter 3

QUESTION 1

Did FI FI LARUE commit fraud with respect to the community-property rights of JANE DOE?

Answer “Yes” or “No.”

Answer:

If you have answered Question 1 “Yes,” then answer Question 2. Otherwise, do not answer Question 2.

QUESTION 2

What sum of money, if paid now in cash, would fairly and reasonably compensate the community estate of JANE DOE and JOHN DOE for the damages, if any, resulting from the fraud of FI FI LARUE?

Answer in dollars.

Answer: $

49 Dealing with Damages – Recoveries as Property Chapter 3

3. Legal Damages

50 Dealing with Damages – Recoveries as Property Chapter 3

PJC 15.3 Personal Injury Damages—Basic Questions

QUESTION ______

What sum of money, if paid now in cash, would fairly and reasonably compensate Jane Doe for her injuries, if any, that resulted from the occurrence in question?

Consider the elements of damages listed below and none other. Consider each element separately. Do not award any sum of money on any element if you have otherwise, under some other element, awarded a sum of money for the same loss. That is, do not compensate twice for the same loss, if any. Do not include interest on any amount of damages you find.

Answer separately, in dollars and cents, for damages, if any. Do not reduce the amounts, if any, in your answers because of the negligence, if any, of Jane Doe. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

a. Physical pain and mental anguish sustained in the past.

Answer: ______

b. Physical pain and mental anguish that, in reasonable probability, Jane Doe will sustain in the future.

Answer: ______

c. Loss of earning capacity sustained in the past.

Answer: ______

d. Loss of earning capacity that, in reasonable probability, Jane Doe will sustain in the future.

Answer: ______

e. Disfigurement sustained in the past.

Answer: ______

f. Disfigurement that, in reasonable probability, Jane Doe will sustain in the future.

Answer: ______

g. Physical impairment sustained in the past.

Answer: ______

h. Physical impairment that, in reasonable probability, Jane Doe will sustain in the future.

Answer: ______

i. Medical care expenses incurred in the past.

Answer: ______51 Dealing with Damages – Recoveries as Property Chapter 3

j. Medical care expenses that, in reasonable probability, Jane Doe will incur in the future.

Answer: ______

PJC 15.4 Personal Injury Damages—Injury of Spouse

QUESTION ______

What sum of money, if paid now in cash, would fairly and reasonably compensate John Doe for injuries, if any, to his wife, Jane Doe, that resulted from the occurrence in question?

Consider the elements of damages listed below and none other. Consider each element separately. Do not award any sum of money on any element if you have otherwise, under some other element, awarded a sum of money for the same loss. That is, do not compensate twice for the same loss, if any. Do not include interest on any amount of damages you find.

Answer separately, in dollars and cents, for damages, if any. Do not reduce the amounts, if any, in your answers because of the negligence, if any, of Jane Doe. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

a. Loss of household services sustained in the past.

“Household services” means the performance of household and domestic duties by a spouse to the marriage.

Answer: ______

b. Loss of household services that, in reasonable probability, John Doe will sustain in the future.

Answer: ______

c. Loss of consortium sustained in the past.

“Consortium” means the mutual right of the husband and wife to that affection, solace, comfort, companionship, society, assistance, sexual relations, emotional support, love, and felicity necessary to a successful marriage.

Answer: ______

d. Loss of consortium that, in reasonable probability, John Doe will sustain in the future.

Answer: ______

PJC 15.5 Personal Injury Damages—Injury of Minor Child

QUESTION ______

What sum of money, if paid now in cash, would provide fair and reasonable compensation for Baby Jane Doe’s injuries, if any, that resulted from the occurrence in question? Consider the elements of damages listed below and none other. Consider each element separately. Do not award any sum of money on any element if you have otherwise, under some other element, awarded a sum of money for the same loss. That is, do not compensate twice for the same loss, if any. Do not include interest on any amount of damages you find. 52 Dealing with Damages – Recoveries as Property Chapter 3

Answer separately, in dollars and cents, for damages, if any. Do not reduce the amounts, if any, in your answers because of the negligence, if any, of Baby Jane Doe Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

a. Physical pain and mental anguish sustained in the past.

Answer: ______

b. Physical pain and mental anguish that, in reasonable probability, Baby Jane Doe will sustain in the future.

Answer: ______

c. Loss of earning capacity sustained in the past.

Answer: ______

d. Loss of earning capacity that, in reasonable probability, will be sustained in the future from the time of trial until Baby Jane Doe reaches the age of eighteen years.

Answer: ______

e. Loss of earning capacity that, in reasonable probability, will be sustained in the future after Baby Jane Doe reaches the age of eighteen years.

Answer: ______

f. Disfigurement sustained in the past.

Answer: ______

g. Disfigurement that, in reasonable probability, Baby Jane Doe will sustain in the future.

Answer: ______

h. Physical impairment sustained in the past.

53 Dealing with Damages – Recoveries as Property Chapter 3

Answer: ______

i. Physical impairment that, in reasonable probability, Baby Jane Doe will sustain in the future.

Answer: ______

j. Medical care expenses incurred in the past on behalf of Baby Jane Doe

Answer: ______

k. Medical care expenses that, in reasonable probability, will be incurred on behalf of Baby Jane Doe in the future from the time of trial until Baby Jane Doe reaches the age of eighteen years.

Answer: ______

l. Medical care expenses that, in reasonable probability, Baby Jane Doe will incur after he reaches the age of eighteen years.

Answer: ______

PJC 15.6 Personal Injury Damages—Parents’ Loss of Services of Minor Child

QUESTION ______

What sum of money, if paid now in cash, would fairly and reasonably compensate John Doe and Jane Doe for their loss, if any, of Baby Jane Doe’s services, as a result of the occurrence in question?

Do not include interest on any amount of damages you find.

Answer in dollars and cents for damages, if any, that—

were sustained in the past; Answer: ______

in reasonable probability will be sustained in the future until age eighteen. Answer: ______

PJC 15.11 Personal Injury Damages—Child’s Loss of Consortium—Question about Parent’s Injury

If you answered “Yes” to Question[s] ____ [question(s) establishing the liability of one or more defendants], then answer the following question. Otherwise, do not answer the following question.

QUESTION ______

Was the physical injury to Jane Doe a serious, permanent, and disabling injury? 54 Dealing with Damages – Recoveries as Property Chapter 3

Answer “Yes” or “No.”

Answer: ______

PJC 15.12 Personal Injury Damages—Child’s Loss of Consortium—Damages Question

If you answered “Yes” to Question ____ [15.11], then answer the following question. Otherwise, do not answer the following question.

QUESTION ______

What sum of money, if paid now in cash, would fairly and reasonably compensate Baby Jane Doe for the loss, if any, of parental consortium that resulted from the physical injury to Jane Doe?

“Parental consortium” means the positive benefits flowing from the parent’s love, affection, protection, emotional support, services, companionship, care, and society.

In considering your answer to this question, you may consider only the following factors: the severity of the injury to the parent and its actual effect on the parent-child relationship, the child’s age, the nature of the child’s relationship with the parent, the child’s emotional and physical characteristics, and whether other consortium-giving relationships are available to the child.

Do not include interest on any amount of damages you find. Do not reduce the amounts, if any, in your answer because of the negligence, if any, of Jane Doe. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

Answer in dollars and cents for damages, if any, that—

were sustained in the past; Answer: ______

in reasonable probability will be sustained in the future. Answer: ______

PJC 17.3 Survival Damages—Compensatory Damages

QUESTION ______

What sum of money would have fairly and reasonably compensated Jane Doe for—

a. Pain and mental anguish.

“Pain and mental anguish” means the conscious physical pain and emotional pain, torment, and suffering experienced by Jane Doe before her death as a result of the occurrence in question.

Answer in dollars and cents for damages, if any.

Answer: ______

b. Medical expenses.

“Medical expenses” means the reasonable expense of the necessary medical and hospital care received by Jane Doe for treatment of injuries sustained by her as a result of the occurrence in question. 55 Dealing with Damages – Recoveries as Property Chapter 3

Answer in dollars and cents for damages, if any.

Answer: ______

c. Funeral and burial expenses.

“Funeral and burial expenses” means the reasonable amount of expenses for funeral and burial for Jane Doe reasonably suitable to her station in life.

Answer in dollars and cents for damages, if any.

Answer: ______

Do not reduce the amount, if any, in your answers because of the negligence, if any, of Jane Doe. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

56 Dealing with Damages – Recoveries as Property Chapter 3

4. Property

57 Dealing with Damages – Recoveries as Property Chapter 3

PJC 18.1 Property Damages—Instruction Conditioning Damages Questions on Liability

Answer Question _____ [the damages question] if you answered “Yes” for John Doe to Question _____ [the liability question] and answered:

1. “No” for Jane Doe to Question _____ [the liability question], or

2. 50 percent or less for Jane Doe to Question _____ [the percentage causation question].

Otherwise, do not answer Question _____ [the damages question].

PJC 18.2 Property Damages—Instruction on Whether Compensatory Damages Are Subject to Income Taxes—Actions Filed on or after September 1, 2003

You are instructed that any monetary recovery for [list each element of economic or noneconomic damages that is subject to taxation] is subject to [federal or state] income taxes. Any recovery for [list each element of economic or noneconomic damages that is not subject to taxation] is not subject to [federal or state] income taxes.

PJC 18.3 Property Damages—Market Value before and after Occurrence

QUESTION ______

What is the difference in the market value in Big County, Texas, of the vehicle driven by Jane Doe immediately before and immediately after the occurrence in question?

“Market value” means the amount that would be paid in cash by a willing buyer who desires to buy, but is not required to buy, to a willing seller who desires to sell, but is under no necessity of selling.

Do not reduce the amount, if any, in your answer because of the negligence, if any, of Jane Doe. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

Answer in dollars and cents for damages, if any.

Answer: ______

PJC 18.4 Property Damages—Cost of Repairs and Loss of Use of Vehicle

QUESTION ______

What sum of money, if paid now in cash, would fairly and reasonably compensate Jane Doe for her damages, if any, for the repairs to and loss of use of her vehicle resulting from the occurrence in question?

Consider the elements of damages listed below and none other. Consider each element separately. Do not award any sum of money on any element if you have otherwise, under some other element, awarded a sum of money for the same loss. That is, do not compensate twice for the same loss, if any. Do not include interest on any amount of damages you find.

Do not reduce the amount, if any, in your answers because of the negligence, if any, of Jane Doe. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

a. Cost of repairs.

Consider the reasonable cost in Big County, Texas, to restore the vehicle to the condition it was in immediately before the occurrence in question. 58 Dealing with Damages – Recoveries as Property Chapter 3

Answer in dollars and cents for damages, if any.

Answer: ______

b. Loss of use of vehicle.

Consider the reasonable value of the use of a vehicle in the same class as the vehicle in question for the period of time required to repair the damage, if any, caused by the occurrence in question.

Answer in dollars and cents for damages, if any.

Answer: ______

c. Difference in market value.

Consider the difference, if any, in the market value in Big County, Texas, of the vehicle in question immediately before the occurrence in question and immediately after the necessary repairs were made to the vehicle.

“Market value” means the amount that would be paid in cash by a willing buyer who desires to buy, but is not required to buy, to a willing seller who desires to sell, but is under no necessity of selling.

Answer in dollars and cents for damages, if any.

Answer: ______

59 Dealing with Damages – Recoveries as Property Chapter 3

5. Exemplary Damages

60 Dealing with Damages – Recoveries as Property Chapter 3

PJC 15.7C Personal Injury Damages—Exemplary Damages—Actions Filed on or after September 1, 2003

Answer the following question regarding John Doe only if you unanimously answered “Yes” to Question ______[4.2 or other question authorizing potential recovery of punitive damages] regarding John Doe. Otherwise, do not answer the following question regarding John Doe.

QUESTION ______

You are instructed that you must unanimously agree on the amount of any award of exemplary damages.

What sum of money, if any, should be assessed against John Doe and awarded to Jane Doe as exemplary damages for the conduct found in response to Question ______[question authorizing potential recovery of punitive damages]?

“Exemplary damages” means any damages awarded as a penalty or by way of punishment but not for compensatory purposes. Exemplary damages includes punitive damages.

Factors to consider in awarding exemplary damages, if any, are—

a. The nature of the wrong.

b. The character of the conduct involved.

c. The degree of culpability of the wrongdoer.

d. The situation and sensibilities of the parties concerned.

e. The extent to which such conduct offends a public sense of justice and propriety.

f. The net worth of John Doe.

Answer in dollars and cents, if any.

Answer: ______

61 Dealing with Damages – Recoveries as Property Chapter 3

6. Contract Damages

62 Dealing with Damages – Recoveries as Property Chapter 3

PJC 115.1 Predicate—Instruction Conditioning Damages Question on Liability

If you answered “Yes” to Question ______[insert number of appropriate liability question], then answer the following question. Otherwise, do not answer the following question.

PJC 115.1.5 Instruction on Whether Compensatory Damages Are Subject to Income Taxes (Actions Filed on or after September 1, 2003)

You are instructed that any monetary recovery for [list each element of economic or noneconomic damages that is subject to taxation] is subject to [federal or state] income taxes. Any recovery for [list each element of economic or noneconomic damages that is not subject to taxation] is not subject to [federal or state] income taxes.

PJC 115.2 Question on Contract Damages

If you answered “Yes” to Question ______[insert number of appropriate liability question], then answer the following question. Otherwise, do not answer the following question.

QUESTION ______

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Jane Doe for her damages, if any, that resulted from such failure to comply?

Consider the following elements of damages, if any, and none other.

[Insert appropriate instructions. See samples in PJC 115.3 and instructions in PJC 115.4., both made available immediately below]

Do not add any amount for interest on damages, if any.

Answer separately in dollars and cents for damages, if any.

a. [Element A] sustained in the past.

Answer: ______

b. [Element A] that, in reasonable probability, will be sustained in the future.

Answer: ______

c. [Element B] sustained in the past.

Answer: ______

d. [Element B] that, in reasonable probability, will be sustained in the future.

Answer: ______

PJC 115.3 Sample Instructions on Direct and Incidental Damages—Contracts

Loss of the benefit of the bargain

The difference, if any, between the value of the paint job agreed to by the parties and the value of the paint job performed by John Doe. The difference in value, if any, shall be determined at the time and place the paint job was performed. 63 Dealing with Damages – Recoveries as Property Chapter 3

Remedial damages

The reasonable and necessary cost to repaint Jane Doe’s truck.

Loss of contractual profit

The difference between the agreed price and the cost Jane Doe would have incurred in painting the truck.

Loss of contractual profit plus expenses incurred before breach

The amount Jane Doe agreed to pay John Doe less the expenses Jane Doe saved by not completing the paint job.

Damages after mitigation

The difference between the amount paid by Jane Doe to John Doe for painting the truck and the amount Jane Doe had agreed to pay John Doe for that work.

Mitigation expenses

Reasonable and necessary expenses incurred in attempting to have the truck repainted.

Incidental damages

Reasonable and necessary costs to store Jane Doe’s tools while the truck was being repainted.

(§ 2.708) Seller’s damages for nonacceptance

The difference between the market price of the goods at the time and place Jane Doe was to tender them to John Doe and the unpaid contract price.

(§ 2.710) Seller’s incidental damages

Commercially reasonable charges, expenses, or commissions John Doe incurred in stopping delivery of goods.

Commercially reasonable charges John Doe incurred for transportation, care, and custody of goods in connection with their return or resale.

(§ 2.713) Buyer’s damages for nondelivery

The difference between the market price at the time Jane Doe learned of John Doe’s failure to comply and the contract price.

PJC 115.4 Instructions on Consequential Damages—Contracts

Lost profits that were a natural, probable, and foreseeable consequence of John Doe’s failure to comply.

Damage to credit reputation that was a natural, probable, and foreseeable consequence of John Doe’s failure to comply.

PJC 101.41 Question on Promissory Estoppel

QUESTION ______

64 Dealing with Damages – Recoveries as Property Chapter 3

Did Jane Doe substantially rely to her detriment on John Doe’s promise, if any, and was this reliance foreseeable by John Doe?

Answer “Yes” or “No.”

Answer: ______

PJC 115.5 Question on Promissory Estoppel—Reliance Damages

If you answered “Yes” to Question ______[insert number of appropriate liability question], then answer the following question. Otherwise, do not answer the following question.

QUESTION ______

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Jane Doe for her damages, if any, that resulted from his reliance on John Doe’s promise?

Consider the following elements of damages, if any, and none other.

[Insert appropriate instructions on elements for economic and/or noneconomic damages being asserted.]

Do not add any amount for interest on damages, if any.

Answer separately in dollars and cents for damages, if any.

a. [Element A] sustained in the past.

Answer: ______

b. [Element A] that, in reasonable probability, will be sustained in the future.

Answer: ______

c. [Element B] sustained in the past.

Answer: ______

d. [Element B] that, in reasonable probability, will be sustained in the future.

Answer: ______

PJC 115.9 Sample Instructions—Deceptive Trade Practice Damages

Loss of the benefit of the bargain

The difference, if any, in the value of the paint job as it was received and the value it would have had if it had been as [represented] [warranted]. The difference in value, if any, shall be determined at the time and place the paint job was done.

Out of pocket

65 Dealing with Damages – Recoveries as Property Chapter 3

The difference, if any, in the value of the paint job as it was received and the price John Doe paid for it. The difference, if any, shall be determined at the time and place the paint job was done.

Expenses

The reasonable and necessary cost to repaint the truck.

The reasonable and necessary interest expense that John Doe incurred on the loan he received to pay for the paint job.

Loss of use

[The reasonable and necessary expense incurred in renting a car.] [The reasonable rental value of a replacement vehicle.]

Lost profits

John Doe’s lost profits sustained in the past.

John Doe’s lost profits that, in reasonable probability, he will sustain in the future.

Lost time

The reasonable value of the time spent by John Doe correcting or attempting to correct the problems with the paint job.

Damage to credit

Damage to John Doe’s credit reputation sustained in the past.

Damage to John Doe’s credit reputation that, in reasonable probability, he will sustain in the future.

Medical care

Medical care in the past.

Medical care that, in reasonable probability, John Doe will sustain in the future.

Loss of earning capacity

Loss of earning capacity sustained in the past.

Loss of earning capacity that, in reasonable probability, John Doe will sustain in the future.

Mental anguish

John Doe’s mental anguish sustained in the past.

John Doe’s mental anguish that, in reasonable probability, he will sustain in the future.

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