Texas Appeals Court Upholds Business Property Valuation in Divorce Case

Businesses can be difficult to accurately value in a Texas divorce.  A wife recently challenged a property division involving two businesses, arguing the court had insufficient evidence to make the just and right division.

When the husband filed for divorce, each party pleaded the marriage was insupportable.  The wife also pleaded the husband had committed adultery.

According to the appeals court’s opinion, the significant assets were a business operated by the wife, an interest in a pool-installation business operated by the husband, the houses each party lived in, two rental properties, a house in Mexico, an interest in two lots where the pool installation business was located, several vehicles, and several bank accounts and a CD.

The husband testified his brother owned half the pool installation business.  There was also evidence the brothers jointly owned the lots where the business was located.  The husband’s expert testified his interest in the business was worth $236,000.  The husband’s inventory and appraisement valued the community estate’s interest in the business at $386,233 more than a year before the trial.

That same document valued the business operated by the wife at $700,000 as of the same date, but the wife disputed that amount in her testimony.  There was not any other evidence of that business’s market value in the record.  Tax returns showed that its “Ordinary business income” was $64,529 for 2019 and $17,959 for 2020.

There were discrepancies between the parties’ evidence regarding the bank accounts.  According to the appeals court, most of the information provided by the husband was more than two years old and the wife’s list was not dated.

The husband testified he had an adulterous relationship while the parties were married.  The trial court found he committed adultery.

The final decree provided that the husband would receive 100% of the pool installation business and the associated lots, one rental house, the house in Mexico, the house he resided in, 100% of a particular Bank of America account, 100% of the Chase savings account, and 50% of three other Bank of America accounts.  The wife was awarded 100% of the business she operated, one rental property, the house she lived in, the other Chase account, and 50% of the other Bank of America accounts.  The decree stated the wife would get the other lot if she paid the husband $200,000 by June 1, 2020.  If she did not do so, the property was to be sold for at least $425,000 with the proceeds split equally.

The wife moved to modify, correct, or reform the judgment.  At the hearing, the wife argued she had been awarded less than half of the community estate.  The judge, however, stated she calculated that the division was around $83,000 in the wife’s favor and denied the motion.

In the findings of fact and conclusion of law, the judge did not set forth a value for either business or the real property.  She stated she had considered the following factors in determining the property division: the father’s adultery, the wife’s conservatorship of the child, the child’s future needs, the debt and liabilities of the community, the division’s tax consequences, the parties’ future earning potential, business opportunities, abilities, and capacities, and the money in the wife’s possession when the parties separated and the amount depleted from the Chase account in her control.

The Wife’s Appeal

The wife appealed, arguing there was not evidence supporting the valuation of the interest in the pool installation business, there was no evidence supporting the valuation of the business she operated, and there was insufficient evidence supporting the court’s finding regarding the funds in the Chase account.

Business Valuations

The wife argued there was only conclusory evidence of the value of the business she operated. The husband argued the wife had failed to present any probative evidence of the business’s value and therefore forfeited the right to make the argument.

Prior Texas case law has held that a party cannot complain the court lacked sufficient evidence for a property division if that party failed to provide values for the property.  Because the wife had not presented any evidence of the business’s value, she waived the right to argue the trial court did not have sufficient evidence to make a just and right property division. The appeals court acknowledged there was some conflicting case law regarding exceptions, but stated it had to follow its own precedent.

The appeals court also noted that the rules are different in the case of default.  A property division in a default divorce must be supported by evidence of the community estate’s value.

The appeals court concluded the wife could not complain about the lack of sufficient evidence on appeal when she had not introduced any evidence of the business’s value.

The wife also argued that the trial court erred in dividing the community estate when there was no probative evidence of the pool installation company’s value presented at trial.  She argued the testimony of the husband’s expert was conclusory and speculative.  The appeals court noted the wife had not provided any evidence of the value of this business either.  She therefore could not complain on appeal about a lack of sufficient evidence.

Depletion of Funds

The wife also argued there was insufficient evidence supporting the factor listed in finding 39(g) and that the error affected the property division.  Specifically, she argued there was no evidence she had depleted the Chase account.  The husband argued there was sufficient evidence to support the finding.

For the appeals court to reverse the trial court’s property division, the wife would have to show the trial judge erred in making the finding and that the error caused the property division to be an abuse of discretion.  The trial judge had not, however, found the amount by which the wife “depleted” the account.  Without a finding of the amount, the wife could not show any error had greater than a de minimis effect on the property division.

The appeals court affirmed the final decree.

Seek Advice from a Knowledgeable Dallas Divorce Lawyer

This case shows that a party must submit evidence of property value in order to challenge a property division on the grounds there was insufficient evidence for a just and right division.  If a business is part of your marital estate, a skilled Texas divorce attorney can work with you to identify the appropriate evidence to present regarding the value of the business.  Set up a consultation with McClure Law Group by calling 214.692.8200.




Contact Information