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Texas Divorce Court May Clarify Latent Ambiguity in Divorce Decree

Parties sometimes realize they have different understandings of a Texas divorce decree.  The trial court may issue a clarifying order if the decree is ambiguous.  In some cases, the decree may be facially unambiguous, but have a latent ambiguity when read in context of the surrounding circumstances.  In a recent case, a husband challenged a clarification order.

The final divorce decree included a provision setting forth the amount of his bonuses the husband would pay to the wife.  It further provided he would provide her a 1099 tax statement for each payment if allowed by his employer.  If he could not provide the 1099, “then the payments made to [the wife would] be the amounts above net of taxes paid in [his] tax bracket.”

The wife later petitioned for enforcement, arguing the husband was not dividing the bonuses “net of taxes paid in [his] bracket,” but was instead dividing them after the tax withholding by his employer.  She requested a clarifying order if the court found the decree was not specific enough to enforce by contempt.

The husband testified he withheld 39.6% from the bonus payments he made to his wife even though he paid only 32.5%.  He testified his effective tax rate was 32.5%.  Part of his income was taxed in each tax bracket.

The trial court signed the husband’s proposed final judgment, which awarded the wife $6,212.50 plus attorney’s fees.  The enforcement judgment clarified the final decree by changing the language to: “In the event [the husband] is unable to provide [the wife] [a] 1099 tax statement for payments made, then the payments made to [the wife] shall be the amounts above net of taxes paid in [husband’s] effective tax rate.”

The court also found that, with the progressive federal income tax system, the husband paid taxes on part of his income in every bracket.  The court also found his effective tax rate for the year in question was 32.5%, meaning he paid federal taxes equaling 32.5%.

The husband moved for reconsideration, or alternatively, for a new trial, arguing the change to “effective tax rate” was a modification after the expiration of the plenary power of the trial court.  He argued the new language was not consistent with the previous language.  He also argued a clarification can only be made when the final divorce decree is ambiguous, but the wife’s petition stated the final decree was unambiguous.

The wife argued it was a clarification and if the court had not clarified the language, the husband would be able to choose which tax bracket to apply to his payment to the wife.  He had already chosen the bracket most favorable to him.

The court denied the husband’s motion for reconsideration and the husband appealed.

A trial court keeps jurisdiction to clarify an ambiguous divorce decree.  The appeals court examined the language in the original decree to determine if it was ambiguous.  The husband was to pay the wife “amounts above net of taxes paid in [husband’s] tax bracket.”  The appeals court found “net of taxes paid” was sufficient, and the inclusion of “tax bracket” added an ambiguity.  The appeals court noted that the decree did not indicate which tax bracket should be applied and the husband had been taxed at every bracket.  The appeals court found this created a latent ambiguity, meaning the ambiguity is not necessarily apparent from the document but becomes ambiguous when read in context of surrounding circumstances.   The trial court therefore had continuing jurisdiction to enter the order clarifying the divorce decree.

The husband argued that the change constituted a substantive change rather than a clarification. The court noted that the decree stated the wife would receive a specific portion of the bonus payments, net of taxes.  The decree did not state the husband was to receive any part of the bonuses.  The appeals court found that it would be contrary to the decree to interpret it to allow the husband to keep any part of the specified amounts by withholding more than he actually paid for taxes.  The trial court did not create a new obligation, but instead carried out the intention of the final decree.  The appeals court also found the substitution of terms did not make the order inconsistent with the decree.

The appeals court affirmed the enforcement judgment.

When you are facing divorce, a knowledgeable Texas divorce attorney can advise you and help you protect your rights.  Set up an appointment to discuss your case with McClure Law Group by calling 214.692.8200.