In a recent case, a Texas appellate court considered a motion by an ex-wife to compel her former husband to produce financial records. The husband petitioned for divorce from the wife in 2008. He was employed by a limited liability company and also participated in other limited liability partnerships with his employer, from which he received income.
During the divorce, the court addressed how the husband’s interest and income derived from the limited liability partnerships would be divided. Both parties submitted their proposed divisions to the court. The court divided the marital estate in 2009 and adopted the husband’s proposed division. This gave the wife more than $3.2 million and other property, as well as 50% of the estimated income from one limited liability partnership for 2008.
The husband got the entire interest in both limited liability partnerships other than what was expressly awarded to the wife. The appellate court affirmed the divorce decree and found that the wife was estopped from challenging the division on appeal because she’d accepted the benefits of the property division. There was further litigation about the income from the partnerships, as well as other post-divorce litigation to modify various aspects of the judgment.
In 2015, the ex-wife sued for a post-divorce division of community property. She claimed certain community assets weren’t divided by the court, including the estate’s earned income for one of the limited liability partnerships and the community’s earned income for 2007 and 2009 for the other limited liability partnership. After suing, she asked the ex-husband to produce financial records related to all three entities and his bank account records from 1997-2009.
The husband filed a motion for protection from the discovery requests, arguing that these requests were irrelevant, were served improperly, and were requests upon which the trial court had already ruled. The wife made no arguments in her responding motion to compel. The husband then filed a motion for summary judgment on the basis of collateral estoppel, res judicata, and the statute of limitations.
The trial court denied the ex-wife’s motion to compel and granted the husband’s motion for protection and summary judgment motion. The wife appealed.
On appeal, the wife argued that the trial court shouldn’t have denied her motion to compel. She argued that the husband’s interest in the partnerships was unvested at the time of the 2009 decree, so bonuses he got were kept in accounts controlled by the entities. She argued that since the bonuses were in accounts controlled by the companies, they weren’t divided by the divorce decree.
The appellate court explained that the wife’s belief that community property wasn’t divided by the divorce decree wasn’t enough to show an abuse of discretion related to her motion to compel. It further explained that the community’s interest in these bonuses had been litigated during the first property division trial. The lower court had awarded the husband the total membership interest in the companies, except for what was awarded expressly to the wife, and also awarded him all sums and rights related to benefits that existed by reason of employment. Based on the literal language, this included the bonuses that hadn’t been distributed.
It also found the husband had proved an affirmative defense of collateral estoppel as a matter of law. He had to show: (1) the facts sought to be litigated in a second lawsuit were fairly and fully litigated already, (2) the facts were essential to the judgment in the earlier litigation, and (3) the parties were adversaries in that earlier litigation. Since he established this, he was entitled to summary judgment on the basis of collateral estoppel.
This case illustrates the importance of retaining an attorney for your divorce. You do not get a chance to re-litigate property division through a separate action once the divorce judgment has been entered and affirmed on appeal.
If your divorce involves matters related to property division, or you need to appeal, contact the Texas attorneys at the McClure Law Group at 214.692.8200.
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