Texas Divorce Attorney Blog
Mediated settlement agreements and Texas agreed divorce decrees are construed according to standard contract interpretation principals. A former wife recently challenged an enforcement order based on her interpretation of the agreed divorce decree.
The parties got married in 2002. The husband had acquired a business interest in the company for which he worked before the marriage. He sold that business interest in 2020, receiving one payment of a million dollars and four additional deposits totaling more than $1.8 million. Those funds were deposited into multiple accounts. Some of the funds had been spent.
The wife petitioned for divorce in May 2021. She withdrew funds from the parties’ accounts to support her children. Although she repaid some of the withdrawn funds, she did not repay all of it.
The Agreed Divorce Decree
The parties entered into a mediated settlement agreement (“MSA”) and an agreed divorce decree. The decree provided that the wife was awarded as her sole separate property various personal property in her possession or sole control “SAVE AND EXCEPT the following items described by [the Husband’s separate property: . . . All funds received by [the husband] from the sale of his separate property interest in [the company].” A separate paragraph awarded the wife “[a]ll sums of cash in the possession of wife or subject to her sole control. . .”
The section stating the property awarded to the husband did not include a provision identifying the funds from the sale of the business interest as the husband’s separate property. The part of the decree that divided the marital estate, however, did identify the proceeds from the sale as the husband’s separate property.
Enforcement Actions
Neither party appealed the decree. The husband petitioned for enforcement in March 2023, alleging the wife had failed to turn over his separate property. He requested a money judgement and clarifying order. He alternative alleged there was an ambiguity in the decree based on the wife’s argument that the paragraph awarding her “all sums of cash” in her possession invalidated the “SAVE AND EXCEPT” clause that identified the proceeds from the sale of his interest in the company as the husband’s separate property.
The wife filed a petition to enforce by contempt, also requesting a money judgment. She alleged the husband had not paid $200,000 or given her the 2020 tax refund, as he was ordered to do in the decree.
The husband testified neither the MSA nor the decree stated the exact amount of funds received from the sale of his business interest because both parties knew the amount. The MSA and agreed decree both provided that “all” of the proceeds would go to the husband. He said he had not turned over the tax refund because it was not in his possession. He said he was “totally willing” to comply with the decree when he received the funds from the sale.
The husband’s expert testified he tracked the proceeds using the community-out-first methodology. The wife had withdrawn some funds, but had not repaid them all. He determined the husband was entitled to $482,398.53.
The trial court awarded the husband a money judgment of $482,398.53 as his separate property, but the wife received credits for amounts the husband owed for the tax refund and the $200,000 payment. The wife was therefore ordered to pay the husband $147,321.53. The court also found the decree was in accordance with the parties’ intent when it was entered, but included a patent ambiguity.
Subject Matter Jurisdiction
The wife appealed. She argued the trial court did not have subject matter jurisdiction to make substantive changes to the terms of the agreed decree.
A trial court keeps jurisdiction to clarify and enforce the property division in the divorce decree. Tex. Fam. Code § 9.002. The court cannot make substantive changes to the property division once the decree becomes final, however. It can only clarify its prior order or enter an order to assist in implementing it. Tex. Fam. Code § 9.007. If the property division is not specific enough to enforce through contempt, the trial court can set forth specific terms in a clarifying order, but must give a reasonable time for compliance and cannot make it retroactive. Tex. Fam. Code § 9.008.
The trial court’s plenary power expired on January 20, 2023. The wife argued the husband’s enforcement petition was an effort to improperly modify the decree’s terms. The appeals court noted the husband thought the MSA and decree resolved everything and there was no controversy until the wife failed to comply.
The appeals court rejected the wife’s arguments the husband’s enforcement action was an improper collateral attack on the property division and barred by res judicata. The appeals court determined he was not trying to relitigate or collaterally attack the decree, but instead wanted clarification and enforcement of the division. The trial court had jurisdiction to clarify the property division with more specific terms.
The appeals court also rejected the wife’s argument the language awarding her “all sums of cash” in her possession or sole control overrode the “Save and Except” clause. The court noted the entire document must be considered to give effect to all provisions. Additionally, terms that are stated earlier in the agreement are favored over terms stated later in the agreement.
The appeals court pointed out the “Save and Except” clause occurs earlier than the “all sums of cash” provision. The trial court found the “Save and Except” clause to control in accordance with the rules of contract construction. The Save and Except clause would have no effect if interpreted according to the wife’s position. The appeals court found no uncertainty with regard to the proceeds based on the decree as a whole. If the court accepted the wife’s interpretation, the husband would be divested of his separate property.
The parties intended for the proceeds to be the husband’s separate property when the MSA was signed and the wife agreed to those terms. She testified she knew what the husband received from the sale and that the funds were in their accounts.
The appeals court concluded the enforcement order clarified the property division the parties had agreed upon with more specific terms and did not substantively change the property division. The appeals court concluded the wife had not shown the court lacked subject matter jurisdiction or that it had abused its discretion.
No Ambiguity
The wife argued in the alternative that the trial court erred when it determined there was a patent ambiguity in the decree.
The appeals court agreed that there was not a patent ambiguity in the decree. It determined that the language at issue was “facially unambiguous.” The appeals court further concluded, however, that the wife was not harmed by the court’s error.
The appeals court affirmed the enforcement order.
Call an Experienced Dallas Divorce Lawyer
Mediated settlement agreements can help parties avoid protracted litigation, but it is important that both parties fully understand the terms of the agreement. Parties may not be able to reach an agreement in all cases, especially where the division of a business or complex estate is involved. If you are considering ending your marriage, a knowledgeable Texas divorce attorney can advise you of your options. Call McClure Law Group at 214.692.8200 for a consultation.