Schlueter v. Schlueter – Divorce – Property Division
Schlueter v. Schlueter, 975 S.W.2d 584, 41 Tex. Sup. Ct. J. 1064 (Tex. 1998).
NATURE OF THE CASE: This case involved a dispute over the remedy available in a divorce proceeding to a spouse alleging fraud on the community. Mr. Schlueter (H) transferred various community assets to his father shortly before filing for divorce. Ms. Schlueter (W) counterclaimed for divorce and brought independent tort claims against H and her father in law seeking damages for breach of fiduciary duty and conspiracy.
FACTS: H and W were married in 1969 and in 1992 H began investing in emus. He used $3,250 of community funds to purchase a pair of emus and sold his interest in the business to his father for $1,000 prior to filing for divorce. The business was worth at least $10,000 at the time. W did not learn of the details of the sale until the divorce was filed. Shortly before filing for divorce, H accepted a $30,360.41 check for taking an early retirement. H gave the check to his father and the father wrote himself a check for $12,565 allegedly to reimburse himself for past loans to H. A week later H filed for divorce.
At trial the jury found for W and the trial court awarded a disproportionate division of the community estate favoring the wife and rendered judgment for W against H for $50,000 and against the father in law for $15,000 for actual and exemplary damages. The court of appeals ruled that a tort cause of action for fraud on the community exists independent of a divorce proceeding and affirmed. This appeal resulted.
ISSUE: Can a spouse have an independent action for fraud on the community at divorce?
RULE OF LAW: No. A spouse cannot have an independent action for fraud on the community at divorce.
HOLDING AND DECISION: Because a wronged spouse has a remedy for fraud on the community through property division upon divorce we hold that there is no independent tort cause of action between spouses for damages to the community estate. In this case, W sued H for improperly depleting the community assets. However the court already has the power to redress that problem by distributing the marital assets in a right and just manner. Under the community property doctrine, property acquired during marriage is divided among the parties in a just and right manner. This is different from the recovery of separate property through an independent tort.
The well developed just and right standard should remain the primary method to account for improper uses of community property. The action against the father in law was valid and we note that the trial court’s award of $12,850 for actual damages against the father in law was awarded to the community estate. Because this made the community whole the court cannot affect a disproportionate property division solely to make up for that formerly lost asset when it was returned to the community. However, the trial court may take into account the fact that H’s conduct resulted in defrauding the community. The award of attorney fees is reversed.
DISPOSITION: Reversed.