Sunday, November 4, 2007

Property division: Fault considered in no-fault divorce

Houston court of appeals affirms disproportionate division of property in divorce decree even though divorce was not granted on fault grounds; parses factors relevant to unequal division of community estate. Opinion by Justice Fowler states that fault may be considered in no-fault divorce context, and acknowledges only one appellate case holding otherwise.

Chander Mohindra v. Sudha Mohindra, No. 14-06-00056-CV (Tex.App.- Houston [14th Dist.] Oct. 23, 2007)(Opinion by Justice Fowler)(disproportionate division of community property, consideration of fault, including waste of assets and failure to make disclosure in discovery)(Before Justices Brock Yates, Fowler and Guzman)
Appeal from 246th District Court of Harris County, Judge Jim York
Disposition: Trial court's unequal division of property affirmed
Husband Appellant's counsel: Tom Alexander, Nancy Kimberly Bohannon
Wife's attorneys on appeal: Allison Hughes Jones, Eileen M. Gaffney


In this appeal from a final decree of divorce, Chander Mohindra appeals the trial court's division of community property and award of future earnings from his 401K and IRA accounts. For the reasons stated below, we affirm.

Factual and Procedural Background

Chander Mohindra and Sudha Mohindra were married on January 20, 1974, and remained married for 31 years before separating in March 2005. They had two children, both of whom were over 18 years old at the time of the divorce. In her original petition for divorce, Sudha alleged that the marriage had become unsupportable because of discord or conflict of personalities. In an amended petition, she also alleged cruel treatment by Chander and requested a disproportionate share of the parties' estate for the following reasons: fault, lost benefits of marriage, wasting of community assets, reimbursement, attorney's fees, and creation of community property. Chander answered with a general denial and requested attorney's fees.

After a bench trial, the court issued its Final Decree of Divorce. In the decree, issued on December 27, 2005, the trial court ordered that the marriage was dissolved "without regard to fault." It is undisputed that the parties' community property was disproportionately divided.[1] Included in the property division were two retirement accounts at issue here - a Vanguard 401K account and Merrill Lynch IRA account - set out as follows:

A portion of CHANDER M. MOHINDRA's benefits in the Vanguard Group 401K, Plan No. 095555, that portion being the sum of $204,020.00 plus 50% of any amount over the full value of $408,039.00 in the account together with any interest, dividends, gains or losses on that amount arising since that date and more particularly defined in a Qualified Domestic Relations Order signed by the Court.
* * *
A portion of the Merrill Lynch IRRA [sic] account number 443-82F69, that portion being $210,000.00 plus 50% of any amount over the full value of $419,440.00, in the name of Chander Mohindra.

Chander moved for a new trial, asserting that the division of property was manifestly wrong and unjust. Chander also requested findings of fact and conclusions of law, but the trial court did not enter any findings or conclusions. The record does not reflect that Chander filed a notice of past due findings of fact and conclusions of law. The motion for new trial was overruled by operation of law, and this appeal followed.

Analysis of Chander's Issues

1. Did the Trial Court Abuse Its Discretion by Disproportionately Awarding Community Property in Favor of Sudha?

In his first issue, Chander contends that the trial court abused its discretion by dividing the community property in a manner that was not just or equitable, and that the division is not supported by evidence. According to Chander, the evidence favors a disproportionate division in his favor because of his lower earning capacity and physical disabilities.

a. Applicable Law and Standard of Review

In a divorce decree, the trial court "shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Tex. Fam. Code ' 7.001. The trial court has wide discretion in dividing the marital estate of the parties. Jacobs v. Jacobs, 687 S.W.2d 731, 733 (Tex.1985). It is presumed that the trial court exercised its discretion properly, and the division will not be disturbed on appeal unless a clear abuse of discretion is shown. Murff v. Murff, 615 S.W.2d 696, 698-99 (Tex. 1981). The trial court's ultimate division need not be equal as long as it is equitable. Zieba v. Martin, 928 S.W.2d 782, 790 Tex. App.-Houston [14th Dist.] 1996, no writ) (op. on reh'g). Thus, the trial court must have some reasonable basis for an unequal division of the property. Id.

In exercising its discretion, the trial court may consider many factors, including a disparity of incomes or of earning capacities, the spouses= capacities and abilities, benefits which the party not at fault would have derived from continuation of the marriage, business opportunities, education, relative physical conditions, relative financial condition and obligations, disparity of ages, size of separate estates, and the nature of the property. Murff, 615 S.W.2d at 699. The trial court may also consider the wasting of community assets. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998). The circumstances of each marriage dictate what factors should be considered in the property division upon divorce. Young v. Young, 609 S.W.2d 758, 761 (Tex. 1980). A trial court does not abuse its discretion when it bases its decision on conflicting evidence or when there is some evidence of a substantial and probative character to support the division of the property. Zieba, 928 S.W.2d at 787. The appellant bears the burden of showing that the trial court=s abuse of discretion caused a division of property so disproportionate that it is manifestly unjust and unfair. See Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21, 23 (Tex. 1923).

b. No Abuse of Discretion Shown

Chander first argues that, because the trial court granted the divorce without regard to fault, any fault on Chander's part is not to be considered in the division of the community estate. For this proposition, Chander cites O=Carolan v. Hopper, 71 S.W.3d 529 (Tex. App.-Austin 2002, no pet.). However, the court in that case did not hold that fault could never be considered in the context of a no-fault divorce; it merely concluded that fault was not considered in the trial court's property division in that case because conflicting evidence of fault was presented and the divorce was granted on no-fault grounds. Id. at 533 n.4.[2]

In the absence of findings of fact, we do not know if the trial court actually considered evidence of fault on Chander=s part in making its property division. However, fault is recognized as a factor that trial courts may consider when dividing community property. See Murff, 615 S.W.2d at 698; Young, 609 S.W.2d at 762; Janik v. Janik, 634 S.W.2d 323, 324B25 (Tex. App.CHouston [14th Dist.] 1982, no writ). Courts, including this one, have acknowledged that fault may be considered even in the context of a no-fault divorce. See In re Marriage of Brown, 187 S.W.3d 143, 146 (Tex. App.CWaco 2006, no pet.) (holding that trial court had discretion to consider proven fault in break-up of marriage sought solely on grounds of insupportability); Bishop v. Bishop, No. 14-02-00132-CV, 2003 WL 21229476, at *3 (Tex. App.CHouston [14th Dist.] 2003, no pet.) (mem op.) (stating that it was within the trial court=s discretion to consider fault in dividing the parties=s community estate even when a no-fault divorce is granted); see also Vautrain v. Vautrain, 646 S.W.2d 309, 312 (Tex. App.CFort Worth 1983, writ dism=d) (AIt is discretionary with the court, once it decides to hear the divorce on the ground of the no fault basis, as to whether or not he shall consider the matter of fault involved in the divorce case.@); Clay v. Clay, 550 S.W.2d 730, 734 (Tex. Civ. App.CHouston [1st Dist.] 1977, no writ) (noting that trial court was authorized to consider jury=s finding that wife=s conduct toward husband constituted cruel treatment in dividing the parties= estate when divorce was granted on no-fault grounds).

Here, Sudha testified that she endured verbal and emotional abuse throughout the marriage, and at least one incident of physical abuse. She testified that the abuse sometimes caused her to be unable to work or function. Further, Sudha testified that she did not feel financially or emotionally supported by Chander, and she received no nurturing or caring from him. Chander denied abusing or being cruel to Sudha, and testified that he treated her with respect. However, there was also testimony that the Mohindra family=s home life had been Achaotic@ and that the home was a bad environment for the children. Chander acknowledged that he was alienated from his wife and son (not their daughter), but took no responsibility for any alienation, instead blaming it all on Sudha. As the sole judge of witness credibility, the trial court could have reasonably disbelieved Chander and believed Sudha. See Murff, 615 S.W.2d at 700 (noting that the trial court in a divorce case has the opportunity to observe the parties on the witness stand and determine their credibility); see also City of Keller v. Wilson, 168 S.W.3d 802, 819 (Tex. 2005) (reviewing court cannot impose its own opinions of the credibility of witnesses and weight to give their testimony contrary to those of the fact finder). However, even if we exclude this evidence from consideration, there remains ample evidence to support the trial court=s unequal division of the community estate.

Chander contends that various factors not only fail to support the trial court=s unequal division in Sudha=s favor, they favor a disproportionate award in his favor. Primarily, Chander points to evidence that Sudha, who has a master=s degree in chemistry, has worked at Shell for 18 years and earns an annual salary of $62,500. In contrast, Chander was let go from his accounting position at Texaco in 2001 with a severance package of approximately $178,000, and the only income he has earned in the last two years was $1,489 as a part-time consultant. Chander contends that he has not worked since 2001 because he had open heart surgery in 2002 and has other health problems and medical expenses. Sudha, by comparison, is four years younger than Chander and testified that she intended to continue working. Consequently, Chander contends, his opportunities to continue to work and earn money are more limited than Sudha=s.
Chander further contends that at least an equal division of the property is supported by the relative lack of community debt and the Afairly equivalent@ value of the parties= separate property. Chander also argues that the cash and investment accounts, which comprise the majority of the community estate, were readily divisible Ain kind,@ and so the trial court should have divided them equally. Moreover, given the size of that portion of the community estate, adjustments for the value of other assets not divisible in kind, such as the house and cars, as well as his interest in Sudha=s pension fund, could have been apportioned to provide equal value to him without impacting Sudha=s interest.[3]
Other evidence, however, supports the trial court=s unequal division. Concerning Chander=s health and ability to work, Chander presented no evidence that he was unable to maintain employment as a result of any health problems. To the contrary, Chander testified that he did not want to go back to work after he was let go from Texaco because he had his severance pay and wanted to take care of his health problems. He admitted that once the divorce was finished, he would go back to work.[4] Chander also admitted that nothing in his termination papers from Texaco prohibited him from going back to work, and he could have worked and earned money during the roughly three and one-half years he was unemployed. Chander=s education and training is roughly equivalent to Sudha=s, as he was educated in England as an accountant and is a C.P.A. Additionally, the record reveals that both parties have had health issues, as Sudha had previously twice battled cancer.
Evidence was also presented that Chander had wasted or secreted community assets totaling hundreds of thousands of dollars.[5] Money was periodically withdrawn from various retirement accounts over time, and was spent by Chander. As one example, Sudha testified that there had been a direct rollover into a Mellon Bank account in Chander=s name in the amount of $163,459.92, and she had no knowledge of what happened to those funds. Sudha had been unaware of the Mellon Bank account, and it was not included on Chander=s inventory. Sudha also testified that over $300,000 in four accounts had been wasted by Chander. Additionally, the funds in some accounts could not be traced because Chander apparently failed to comply with discovery requests, and failed to appear for deposition. Because Sudha could not obtain information on the balances in some accounts, she had requested that any amounts in the accounts over the amounts known to her be divided 50/50.
The trial court also could have considered the evidence of the parties= needs and the nature of the property divided. Sudha=s monthly expenses were approximately $3,600, while Chander=s monthly expenses, as provided on his financial information statement, were $2,260. Further, Sudha was awarded the family home (a non-liquid asset) and her own retirement account, from which she could not presently withdraw funds, because she was still working at Shell. In contrast, Chander was awarded liquid assets that he could invest or divest as desired.
Given the evidence presented, we cannot say that the trial court=s division of the community estate was manifestly unjust or unfair. We therefore overrule Chander=s first issue.
2. Does the Division of Retirement Accounts Improperly Award Chander=s Future Earnings to Sudha?
In his second issue, Chander contends that the trial court abused its discretion by awarding Sudha half of any future earnings on the Merrill Lynch IRA and the Vanguard 401K retirement accounts, because future earnings are separate property not subject to division. On this record, we disagree.
Initially, we note that the record does not show that Chander raised this issue in the trial court in his motion for new trial or that he otherwise brought it to the trial court=s attention. Preservation of a complaint is a prerequisite for appellate court review. Tex. R. App. P. 33.1(a). Because Chander failed to preserve his complaint below, we have nothing to review and so overrule his issue.
But, even if we were to address Chander=s issue, he would not prevail. Post-divorce increases in the value of a person=s retirement plan that are attributable to that person=s continued employment, such as raises, promotions, services rendered, and post-divorce contributions, are the individual=s separate property and are not subject to division. See Stavinoha v. Stavinoha, 126 S.W.3d 604, 610 (Tex. App.CHouston [14th Dist.] 2004, no pet.); Burchfield v. Finch, 968 S.W.2d 422, 425 (Tex. App.CTexarkana 1998, pet. denied). But, post-divorce increases in value that are not attributable to the person=s continued employment after divorce are community property subject to division. See Stavinoha, 126 S.W.3d at 610; Burchfield, 968 S.W.2d at 424.
Here, Sudha was awarded 50% of any sum existing in the retirement accounts as of the date of divorce, together with interest, dividends, gains or losses on her 50% share of the accounts only. Thus, post-divorce increases in the value of Sudha=s share of the retirement accounts will not be attributable to Chander=s post-divorce employment or to his contributions of separate property to the plans, and so were subject to the trial court=s just and right division. See Tex. Fam. Code ' 7.001; Boyd v. Boyd, 67 S.W.3d 398, 409B10 (Tex. App.CFort Worth 2002, no pet.) (holding trial court did not abuse its discretion in awarding wife 50% of husband=s 401(k) plan when award did not include any interest that would result from husband=s post-divorce employment or contributions of his separate property).
We therefore overrule Chander=s second issue.
We overrule Chander=s issues and affirm the trial court=s judgment.

/s/ Wanda McKee Fowler

Judgment rendered and Memorandum Opinion filed October 23, 2007.
Panel consists of Justices Yates, Fowler, and Guzman.

[1] The parties disagree as to the percentage awarded each. According to Chander, although Sudha requested that the community property be divided 55/45, Sudha was awarded 64.5% of the community estate ($906,788.00 out of $1,404,994.00 in assets). Sudha responds that the trial court=s division mirrors Sudha=s proposed division, except that the two retirement accounts at issue were divided 50/50. Sudha also contends Chander=s division included Sudha=s jewelry, which was not necessarily valued by the trial court, and does not take into consideration the debts awarded to each party, including substantial attorney=s fees owed by Sudha.
[2] We have found only one case in which a court has held that, in a no-fault divorce, evidence of fault may not be considered by the trial court in making its just and right division of the community estate. See Phillips v. Phillips, 75 S.W.3d 564, 572 (Tex. App.CBeaumont 2002, no pet.).
[3] Chander cites two cases to support his contention that the trial court abused its discretion in dividing the community property disproportionately. See O=Carolan v. Hopper, 71 S.W.3d 529 (Tex. App.CAustin 2002, no pet.); Zieba v. Martin, 928 S.W.2d 782 (Tex. App.CHouston [14th Dist.] 1996, no writ). However, the circumstances and evidence presented in those cases are not comparable to that of the present case. For example, in O=Carolan v. Hopper, the court reversed the trial court=s disproportionately high award of community property to Hopper when it found Aa total absence of evidence@ to support the award. 71 S.W.3d at 532. Among other things, Hopper did not allege fault, the parties ages were roughly the same, O=Carolan had no separate estate, Hopper had a significantly greater income, earning capacity, and business opportunities, and O=Carolan suffered from a severe brain malformation that impaired her future earning ability, while Hopper had no health problems. Id. at 532B33. In Zieba v. Martin, this court reversed the trial court=s disproportionately high award to Martin because the evidence showed that the trial court did not order reimbursement for a significant amount of community funds that were unaccounted for or that Martin spent on paramours; other evidence showed that Martin=s separate estate was roughly three times greater than Zieba=s, Zieba=s earning capacity and business opportunities were limited in comparison to Martin=s, Zieba was sole managing conservator of their child, and Zieba presented uncontroverted testimony concerning three years of physical and verbal abuse and evidence of Martin=s infidelity. 928 S.W.2d at 790B91.
[4] Sudha also testified that there was no reason Chander could not work.
[5] Chander denied Astealing@ any money, and testified that he had accounted for every penny. He also testified that he had increased the family funds through investments.

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