Texas Divorce Attorney Blog
A court may render orders to enforce or clarify the property division in a Texas divorce decree, but generally may not render an order that makes substantive changes to the property division once it is final. A former husband recently challenged a clarification order, arguing it improperly modified the decree.
Divorce Decree
According to the appeals court, the parties were married for more than 15 years when they got divorced in 2018. The agreed divorce decree referenced a “privately held compan[y]” that employed them both. The decree awarded all ownership interest in the company to the husband as separate property. It also awarded him the intellectual property he created used in connection with that ownership and the cash in two bank accounts in the company’s name beginning November 1, 2018.
Those bank accounts had been included in a list in the decree for which the husband would have the “sole right to withdraw funds” or “subject to [his] sole control[.]”
The decree further provided that the wife would receive $3,000 two times per month from the company directed by the husband as salary from November 1, 2018 to November 1, 2022. It stated that the husband would be personally liable for any unpaid amounts if the company was unable to make any payment in full and would guarantee that the payment would be sent within 14 days.
Clarification Order
The wife petitioned for clarification and enforcement three years later. She alleged neither the company nor the husband had sent her payments for over a year and that the husband was personally liable for the amount owed. She also requested clarification if the court determined the decree was “not specific enough to be enforced by contempt.”
The wife argued she was awarded payments instead of an ownership interest in the business. She presented evidence of her bank records showing the payments stopped after 2019. She testified she had not received payments from either the company or the husband beginning in January 2020 and the outstanding payments totaled $75,000.
The husband moved for an instructed verdict, arguing the decree obligated the company to make the payments, but it was not enforceable because the company was not a party to the divorce.
The trial court said it would grant the directed verdict, but stated the language was unclear and that it needed to decide if there was a way to clarify it without changing it substantively. The court held another hearing. The husband argued that any clarification that made him liable for the payments would improperly change the property division. The wife argued that the husband had been awarded ownership of the company and therefore could direct the payments. She also pointed out that the decree stated the husband was personally liable for any payments the company did not make.
The trial court signed a clarification order, finding that some terms were not specific enough to be enforced by contempt. The order stated that the wife was to receive $3,000 on the first and fifteenth days of each month from the company “as directed by [the husband] in his control as salary. . .” The order further stated the husband would be “personally liable for any unpaid amounts” if the company had not made any payment and would guarantee payments would be made no later than 14 days after due. The court also ordered that the husband’s debt included the unpaid amounts of the payments. The court did not hold the husband in contempt, but ordered him to paid $75,000 for the unpaid payments through January 1, 2021.
No Improper Modification
The husband argued the clarification order improperly modified the property division in the decree by making him liable for the payments. He pointed to language in the decree that the wife would receive the payments “from [the company]” and that ordered him to pay unpaid payments “that [the company] is liable to [the wife] . . .” He argued that his liability was based on the company’s liability, and the decree could not order the company to make payments because it was not a party to the action. He argued the company was not liable to the wife for the unpaid amounts, so he was therefore not liable for them. He argued the clarification order did not address the company’s liability as the basis for his own liability and instead made him directly liable.
The appeals court pointed out, however, that the decree included other provisions regarding the business, including those awarding the husband ownership of both the company and the funds in its accounts. The decree specified that the wife would receive the payments from the company “directed by [the husband] in his control as salary.” The appeals court concluded that the decree as a whole could only be construed to impose an obligation on the husband to direct salary payments to the wife from the company and making him personally liable for any unpaid amounts if he failed to do so. The appeals court determined the decree was not ambiguous and the clarification order did not improperly modify the decree.
No Improper Retroactive Application
The husband also argued the order had a retroactive effect that was prohibited under Tex. Fam. Code 9.08(c). This subsection prohibits a trial court from giving retroactive effect to a clarification order. The appeals court noted this section addresses clarification with regard to contempt enforcement. The court concluded that subsection (c) therefore prohibits a court from giving a retroactive effect to a clarifying order that would immediately subject the party to contempt. The appeals court concluded the order was consistent with decree. The appeals court further pointed out that if the husband was not required to pay the obligations that had already accrued, it would have changed the wife’s rights to receive payments pursuant to the decree.
The appeals court concluded the trial court did not abuse its discretion in ordering the husband to pay the accrued amounts.
The appeals court affirmed the trial court’s clarification order.
Obtain Skilled Legal Advice
Ownership in a business can complicate a property division. If you or your spouse own a business or other complex assets, you need the guidance of a knowledgeable Texas family law attorney for your divorce case. Call McClure Law Group at 214.692.8200 for a consultation.