COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-358-CV
GORDON WAYNE PORTER APPELLANT
V.
KIMBERLY ANN PORTER APPELLEE
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FROM THE 16TH DISTRICT COURT OF DENTON COUNTY
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MEMORANDUM OPINION 1
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After a bench trial, the trial court granted a divorce to Appellant Gordon
Wayne Porter and Appellee Kimberly Ann Porter. In two issues, Gordon
contends that the trial court erred by mischaracterizing separate property as
community property and abused its discretion by failing to make a just and right
1
See Tex. R. App. P. 47.4.
division of the marital estate. Because we cannot conclude that the trial court
erred or abused its discretion, we affirm the trial court’s judgment.
I. Relevant Findings of Fact and Conclusions of Law
In the case before us, the trial court found that
• [Gordon] alleged that he had a separate property interest in
several equity accounts[;]
• [Gordon] failed to show by clear and convincing evidence the
value of these assets on the date of the marriage[;]
• [Gordon] commingled community assets with his alleged
separate assets[; and]
• [Gordon] failed to provide clear and convincing tracing
evidence to segregate community and alleged separate
assets.
The trial court concluded that Gordon failed to prove by clear and convincing
evidence what portion, if any, of the equity accounts were separate property.
II. Characterization of Accounts
In his first issue, Gordon argues that the trial court erred by refusing to
recognize his separate claim in and to each of the following accounts:
• Capital Appreciation;
• Select Gold;
• Fidelity Traditional IRA;
• Informix stock options rolled into Fidelity Account Number X36–17xxxx;
2
• Informix 401(k) rolled into Fidelity IRA Account Number 13x–2xxxxx;
• American Funds Account Number 88xxxxxxxx; and
• DWS Scudder Account.
A. Substantive Law
As this court has previously explained,
Under Texas law, property possessed by either spouse during
or on dissolution of the marriage is presumed to be community
property, absent clear and convincing evidence to the contrary.
The characterization of property as either community or separate
is determined by the inception of title to the property. Inception of
title occurs when a party first has a right of claim to the property
by virtue of which title is finally vested. . . .
In order to overcome the community presumption, the burden
is on the spouse claiming certain property as separate to trace and
clearly identify the property claimed to be separate. The burden of
tracing is a difficult, but not impossible, burden to sustain. Tracing
involves establishing the separate origin of the property through
evidence showing the time and means by which the spouse
originally obtained possession of the property.
. . . Separate property will retain its character through a
series of exchanges so long as the party asserting separate
ownership can overcome the presumption of community property
by tracing the assets on hand during the marriage back to property
that, because of its time and manner of acquisition, is separate in
character. However, if the evidence shows that separate and
community property have been so commingled as to defy
resegregation and identification, the community presumption
prevails.
When tracing separate property, it is not enough to show that
separate funds could have been the source of a subsequent deposit
of funds. Moreover, as a general rule, mere testimony that
3
property was purchased with separate funds, without any tracing
of the funds, is insufficient to rebut the community presumption.
Any doubt as to the character of property should be resolved in
favor of the community estate. 2
When findings of fact are filed and are unchallenged, they occupy the
same position and are entitled to the same weight as the verdict of a jury; they
are binding on an appellate court unless the contrary is established as a matter
of law or there is no evidence to support the finding. 3
B. Evidence and Analysis
Gordon relies on his own testimony about the accounts, the exhibits he
introduced, and Kimberly’s testimony that he would be the person to ask about
the challenged accounts, but he does not directly challenge the trial court’s
findings of commingling and insufficient tracing.
Kimberly testified that she did not know how much money was in the
accounts when they married and that she did not think that “[they] had maybe
all of these [accounts]” but that Gordon “would be able to tell you.” When
questioned whether Gordon “[w]ould . . . be the only one that would know that
information or have access to that information, “ she answered, “I would think
2
Boyd v. Boyd, 131 S.W.3d 605, 612 (Tex. App.—Fort Worth 2004,
no pet.) (citations omitted).
3
McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986); Raman
Chandler Props., L.C. v. Caldwell’s Creek Homeowners Ass’n, Inc., 178 S.W.3d
384, 390 (Tex. App.—Fort Worth 2005, pet. denied).
4
so.” When questioned on cross-examination whether the investments occurred
both before and during the marriage, she replied, “I wouldn’t think very much
pre[-] because he started that job right out of college, so there was no pre
jobs,” and she answered, “Correct,” to the question, “He would be the best one
to testify as to the origin of those funds, correct?”
1. Capital Appreciation, Select Gold, and Fidelity Traditional IRA
The evidence shows that the Fidelity Traditional IRA is made up of
holdings in three separate funds: Capital Appreciation, Magellan, and Select
Gold. The Magellan fund is not at issue in this appeal. Kimberly testified that
she believed that the Fidelity Traditional IRA originated from Gordon’s
employment at Informix. Gordon testified that he began working with Informix
in September 1988 but that he put $1,000 in the Capital Appreciation fund
while he was at TI. He testified that after the marriage, he put $1,000 into
another Capital Appreciation fund. He testified that the two Capital
Appreciation funds were merged about two years after the marriage. As of
October 31, 2007, the Capital Appreciation fund had a value of $14,733.47.
Gordon believed that the Capital Appreciation fund was one-half his separate
property and one-half community property based on his two equal but
separately timed deposits.
5
Gordon also testified that in 1988, he put $500 into the Select Gold fund,
which he testified is or was also known as the Precious Metals fund; that
“nothing else ha[d] been added to that”; and that “[t]he Gold is 100 percent
prior to marriage.” 4 But our review of the record shows that the Select Gold
fund has more shares now than it did before the marriage, and there is no
explanation in the record for why the number of shares increased. While stock
splits and stock dividends retain the character of the original stock, 5 shares
acquired after the marriage with community funds would be community
property. 6
Similarly, the Fidelity Traditional IRA contained earned, tax-deferred
income. It is unclear from the record how this income is apportioned among the
three funds, much less between the community and separate estates. Interest
income and cash dividends earned during the marriage on separate property are
community property. 7
4
We note that Gordon’s Exhibits Nos. 3 and 4, which according to the
testimony were records of investments at Fidelity with regard to the Capital
Appreciation and the Select Gold fund, were offered but not admitted into
evidence.
5
Tirado v. Tirado, 357 S.W.2d 468, 473 (Tex. Civ. App.—Texarkana
1962, writ dism’d).
6
See Tex. Fam. Code Ann. § 3.002 (Vernon 2006).
7
Id.; see also Fischer-Stoker v. Stoker, 174 S.W.3d 272, 279 (Tex.
6
2. Stock Option Rollover
Gordon testified that he spent about $22,000, including community
monies and money borrowed from his father, to exercise 10,000 of 15,000
Informix stock options (losing 5,000 for his failure to exercise within thirty days
of termination) and “after that, they rolled right into the Fidelity [Account
Number X36–17xxxx].” Gordon believed that this account had a one-third
separate, two-thirds community property split. He testified that he based this
belief on the contention that he had exercised options awarded prior to marriage
under a FIFO system, but the record does not contain computations or evidence
explaining his conclusions. The record does show, however, that the Fidelity
Account Number X36–17xxxx contains earned cash dividends. Cash dividends
on separate property are community property.8
3. 401(k) Rollover
App.—Houston [1st Dist.] 2005, pet. denied) (“[D]ividends paid on
investments, whether the investments are separate property or not, are income
under Texas law and are generally community property.”); McClary v.
Thompson, 65 S.W.3d 829, 834 (Tex. App.—Fort Worth 2002, pet. denied);
Perez v. Perez, No. 09-06-00521-CV, 2007 WL 5187895, at *3 (Tex.
App.—Beaumont May 22, 2008, pet. denied) (mem. op.) (“Interest earned on
separate bank accounts is community property.”).
8
See Tex. Fam. Code Ann. § 3.002; Fischer-Stoker, 174 S.W.3d at
279.
7
Gordon testified that he “invested the maximum amount [he] could” into
his 401(k) each pay period at Informix. When he left Informix, he rolled his
401(k) into a Fidelity IRA. At trial, he claimed that 70% of the fund was
community property and that 30% of the fund was his separate property,
apportioned according to his length of employment before and after marriage.
The record shows that Gordon had worked at Informix about ten years and had
worked there for about two and a half years before their marriage. But the
record contains no computations of how Gordon arrived at these percentages.
Further, the record shows that the Fidelity IRA into which he rolled over his
Informix 401(k) balance has received cash dividends. Again, cash dividends on
separate property are community property. 9
4. American Funds and DWS Scudder Fund
Kimberly testified that she thought both the American Funds account and
the DWS Scudder account originated from Gordon’s employment at Informix.
Gordon testified that the American Funds account was begun before he was
married and that he had not put any money into it after the marriage. He
believed that the value at the time of the divorce was all his separate property.
9
See Tex. Fam. Code Ann. § 3.002; Fischer-Stoker, 174 S.W.3d at
279.
8
Gordon testified that he established the DWS Scudder account before the
marriage and put in an additional $500 after the marriage, so of the value at the
time of divorce, he “attributed $2,500 more or less to be [his] separate property
and $500 to be the community’s share.” Our review of Gordon’s exhibits
shows, however, that both the American Funds account and the DWS Scudder
account contain earned “income dividends,” that is, community property. 10
C. Resolution
Because evidence in the record supports the trial court’s findings that
Gordon commingled funds and did not provide sufficient tracing evidence to
show exactly how much, if any, of the property in the various accounts was his
separate property, those unchallenged findings are binding. 11 We therefore
conclude that the trial court did not abuse its discretion by upholding the
community presumption. Further, in the interest of justice, to the extent that
Gordon’s global challenge somehow includes a complaint about the findings of
commingling and inadequate tracing, we nevertheless cannot conclude, based
on our review of the law and the record, that the trial court abused its
10
See Tex. Fam. Code Ann. § 3.002; Fischer-Stoker, 174 S.W.3d at
279; see also Perez, 2007 WL 5187895, at *3.
11
See McGalliard, 722 S.W.2d at 696; Raman Chandler Props., L.C.,
178 S.W.3d at 390.
9
discretion in upholding the community presumption. We therefore overrule
Gordon’s first issue.
10
III. Division of Property
In his second issue, Gordon contends that because of the alleged errors
set forth in his first issue, the trial court failed to make a just and right division
of property. Because we overruled Gordon’s first issue, we also overrule this
issue.
IV. Conclusion
Having overruled both of Gordon’s issues, we affirm the trial court’s
judgment.
PER CURIAM
PANEL: DAUPHINOT, MCCOY, and MEIER, JJ.
DELIVERED: February 4, 2010
11