

Opinion issued April 19, 2012

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-09-01066-CV
———————————
James Alexander
Richards, Appellant
V.
Karen Sue Richards, Appellee

 

 
On
Appeal from the County Court at Law
Washington
County, Texas

Trial Court Case No.
CCL-5596
 

 
OPINION ON REHEARING
We
originally issued our memorandum opinion in this appeal on December 29,
2011.  Appellant, James Alexander
Richards, has filed a motion for rehearing and motion for
en banc reconsideration.  We deny the
motion for rehearing, vacate our earlier judgment, withdraw our previous
opinion, and issue this opinion in its place. 
Accordingly, we dismiss the motion for en banc reconsideration as moot.[1]
James appeals from a decree of divorce dissolving the
marriage between him and appellee, Karen Sue Richards.  In seven issues, appellant argues the trial
court erred by (1) characterizing certain property as community property; (2)
placing the burden of proof on him to establish certain property claims; (3) awarding
Karen certain future income; (4) ordering a lien on his separate property; (5)
failing to recognize his economic contribution claim; (6) rescinding its
earlier order on a motion for summary judgment; and (7) awarding Karen
attorneys’ fees on appeal without awarding him any.  Karen subsequently filed a motion to dismiss
under the acceptance of the benefits doctrine.
We dismiss this appeal as moot.
                                                                                                       
Background
James and Karen were married on December 31, 1999.  Karen filed for divorce on January 22, 2008,
and James counter-filed on March 4. 
Following a trial, the trial court rendered its final decree of divorce
on September 10, 2009.  In dividing the
marital estate, the trial court determined five boats were community property
and awarded them to James.
On January 5, 2010, the trial court held a hearing on
Karen’s motion for temporary orders pending appeal.  At that hearing, James testified that he had
sold two boats: a 39-foot 2002 Mainship and a 29-foot
1994 Proline. 
He also testified that a third boat—a 34-foot 1999 Navigator
Baywatch—was under a contract for sale, which was being paid in monthly
installments.  James stated he had used
the proceeds of the sales to pay down a loan, pay bills, and put into his
business.  Based on this testimony, Karen
filed a motion to dismiss under the acceptance of the benefits doctrine.  We issued an order stating the motion would
be carried with the case.
                                                               
Acceptance of Benefits of Judgment
Under the acceptance of the benefits doctrine, “[a]
litigant cannot treat a judgment as both right and wrong, and if he has
voluntarily accepted the benefits of a judgment, he cannot afterward prosecute
an appeal therefrom.”  Carle v. Carle, 234 S.W.2d 1002, 1004
(Tex. 1950).  “The doctrine arises
most often in divorce cases in which one spouse accepts certain assets awarded
by the judgment and then seeks to appeal the remainder of the judgment.”  Williams v. LifeCare Hosps. of N. Tex.,
207 S.W.3d 828, 830 (Tex. App.—Fort Worth 2006, no pet.).  If a party accepts the benefits of a
judgment, he is estopped from challenging that judgment on appeal.  Waite v. Waite, 150 S.W.3d 797, 803 (Tex. App.—Houston [14th Dist.]
2004, pet. denied).  In that
event, the appeal is rendered moot and must be dismissed.  Harlow Land Co., Ltd. v. City of Melissa, 314 S.W.3d 713, 716 (Tex.
App.—Dallas 2010, no pet.).
The appellee bears the burden of proof to establish
application of the acceptance of the benefits doctrine.  Waite,
150 S.W.3d at 803. 
The parties may rely on affidavits and other satisfactory evidence to
establish whether the appellate court retains jurisdiction over the
appeal.  See Tex. Gov’t Code Ann.
§ 22.220(c) (Vernon Supp. 2011) (appellate courts may consider affidavits and
other evidence to determine proper exercise of its jurisdiction); Tex. R. App. P. 10.2 (requiring
inclusion of affidavits and other satisfactory evidence with motions in certain
circumstances); Twin City Fire Ins. Co.
v. Jones, 834 S.W.2d 114, 116 (Tex. App.—Houston [1st Dist.] 1992, writ
denied) (holding appellate court can consider affidavits and other evidence in
determining motion to dismiss).
An appellant may avoid the application of the acceptance
of the benefits doctrine by showing the application of either of two exceptions:
(1) acceptance of the benefits of the judgment was a result of financial duress
or other economic circumstances or (2) reversal of the judgment on the grounds
appealed could not possibly affect the appellant’s right to benefits
accepted.  Williams, 207 S.W.3d at 830; Waite, 150 S.W.3d at 803–04.  These exceptions are narrow.  Waite,
150 S.W.3d at 804. 
The appellant bears the burden of establishing the application of the
exceptions.  See id. (holding “unless [appellant] satisfies an exception to the
acceptance of the benefits doctrine or otherwise shows that it does not apply,
we must agree with [appellee] that [appellant]’s actions in accepting a
substantial portion of the judgment bars him from appealing that same judgment
he now attacks”); Smith v. Tex. Commerce
Bank-Corpus Christi, N.A., 822 S.W.2d 812, 814 (Tex. App.—Corpus Christi
1992, writ denied) (holding appellant failed to establish application of
exception and, accordingly, appellant was estopped from challenging judgment on
appeal); see also Williams, 207
S.W.3d at 830–32 (considering appellant’s arguments for the application of
exceptions as opposed to appellee’s arguments against their application).
To meet her burden of showing that James has accepted the
benefits of the judgment, Karen cites to James’s testimony from the hearing on
Karen’s motion for temporary orders pending appeal.  At that hearing, James testified that he had
sold two boats that had been awarded to him from the community estate: the Mainship and the Proline.  A third boat awarded to him from the
community estate—the Navigator Baywatch—was under contract for sale and was
being paid in monthly installments.  We
hold that Karen met her burden of establishing James had accepted the benefits
of the judgment.  See Waite, 150 S.W.3d at 804 (holding taking possession of
community funds and filing deed transferring wife’s interest in home to husband
is sufficient to establish acceptance of benefits of judgment).
James does not dispute that he has accepted the benefits
of the judgment.  Instead, he argues the
sale of the boats was an economic necessity. 
At the hearing, he described his financial situation as “almost
bankruptcy” and that his expenses were greater than what he brought in.  While he provided some examples of how he was
losing income on his rental properties, James did not provide a detailed
explanation—through testimony or exhibits—of what his monthly income and
expenses were.  
James also cites to his affidavit attached to the response
to Karen’s motion for support for his claim that he was in dire financial
straits.  The only mention in his
affidavit of his economic condition, however, is his attempt to explain why he
could not sell the separate property Karen identified and why he had to sell
the boats at the time that he did.  His
explanation for why he had to sell the boats was his assertion that the market
for boats was crashing and the cost of maintaining them were outweighing their
value.  James does not otherwise provide
any proof of his monthly income and monthly expenditures.
In the body of his response to Karen’s motion, James
asserts without support that the net value of the community (which he defines
as assets awarded less debts apportioned) awarded to him is negative $142,063
while the amount awarded to Karen is positive $318,672.  In his brief on the merits, James presents a
table of calculations reaching the same numbers.  This table, however, is based on the
assumption that the trial court mischaracterized certain property as community
instead of separate.  Without this
assumption—that is, as reflected currently in the judgment—James acknowledges
his share of the community property is positive $711,502.
In Waite, the
appellant asserted in an affidavit that he had to take the money awarded to him
from the court registry because he needed to pay daily living expenses and to
complete repairs on his home, which had been designated as his separate
property.  150 S.W.3d
at 805.  He also asserted that the
tax refund awarded to him was only a return of money he had advanced as a
result of an accounting error and that he had not sold or encumbered the home that
he had taken possession of and filed a lien establishing he was the sole
owner.  Id.  The court held that the
appellant’s affidavit did not support his claim of economic necessity because
it was largely conclusory.  Id. 
The court observed that the appellant had offered few specifics to
support his initial contention that he needed the money awarded to him to pay
his daily living expenses, stating only that he had to pay for such things as
food, clothing, rent, and insurance.  Id. 
Nor had he presented any proof of what his other assets or sources of
income were.  Id. at 805–06.  The court held that the appellant had failed
to show that he accepted the benefits because of economic necessity and granted
the motion to dismiss.  Id. at 808.
In contrast, the appellant in Garza provided detailed information of what her monthly income was
as well as what her monthly expenditures were.  
Garza v. Garza,
155 S.W.3d 471, 473 (Tex. App.—San Antonio 2004, no pet.).  She also established that she did not have
other assets that could be sold or other sources of income.  Id. at 474.  Based on
the detailed information provided, the appellate court determined that the
appellant’s use of the payments for her equity interest in the marital
homestead was an economic necessity.  Id. at 475.
We determine this case is similar to Waites.  James does not provide any detailed
explanation of his economic circumstances. 
Instead, he provides a mostly conclusory assertion that he is near
bankruptcy and that his expenses were greater than his income.  While some information is present, it is not
enough to determine, with any degree of certainty, what his monthly income and
obligations are.  Accordingly, James has
failed to establish he falls in the narrow exception of economic necessity.
Moreover, we note that James’s explanation for why he had
to sell the community-property boats is at odds with why he could not sell his
separate-property real estate.  In his
response to Karen’s motion to dismiss, James argues he had to sell the boats
because (1) he was incurring costly monthly expenses, including insurance and
monthly maintenance and (2) the market value of the boats was decreasing due to
the economy.  He simultaneously argues
that he could not sell his rental properties because he would “suffer[] a loss in the current depressed real estate market”
despite the fact that he was incurring costly monthly expenses, including
insurance and monthly maintenance.  He
backed up both of these arguments by relying on testimony presented to the
trial court at the hearing on Karen’s motion for temporary orders pending
appeal.  Jim acknowledged that he had
lost two of his nine commercial real estate tenants, that he would have to
incur further expenses by their loss, including bills and maintenance fees that
those tenants otherwise would have paid and advertising fees to find a new
tenant.  As James explained during the
hearing, “With our economy the way it is, I expect a long dry spell.”
Additionally, James offers no explanation for how the declining
value of the boats or the real estate along with their attendant costs was not
known to him prior to the decree of divorce or why he could not have sought
accommodations—either from Karen or from the trial court—to sell the community
property prior to the decree of divorce.
James also argues that the trial court’s unequal division
of the community estate is enough to establish economic necessity.  He relies on Smith v. Smith, 143 S.W.3d 206 (Tex. App.—Waco 2004, no pet.) as
authority for his argument.  In Smith, the appellant withdrew from the
court registry money awarded to her from the community estate.  Id. at 212. In that case, the trial court determined that
the appellant had no separate property and awarded her a portion of the
community property that was less than or equal to the obligations assigned to
her.  Id. at 211, 212.  The court concluded that the appellant fell within
the exception of economic necessity.  Id. at 212.
Even if we were to adopt the holding of Smith, it is unavailing.  As we have noted, James provides no support
for his assertion that his award of the community property coupled with his
assignment of obligations is a negative amount. 
The calculation in his brief on the merits that reflects this amount is
based on the assumption that this Court will agree with his argument on the
merits that the trial court mischaracterized certain property as community
instead of his separate property.  Even
if James prevailed on this point, however, the property would still be his; it
would just be characterized as separate property instead of community.  Accordingly, adding the value of all of his
assets and obligations, he still has a positive net worth.  Based on his own calculations in his brief on
the merits, it is a net worth in excess of $700,000.  In contrast, the appellant in Smith had no separate property and was
left with only a negative net worth.  Id. at 211, 212.  Complaining of receiving a negative combined
amount of community assets and joint obligations, by itself, does not establish
economic necessity.
                                                                                                          
Conclusion
Karen established that James accepted the benefits of the
judgment.  James has failed to establish
that he falls within the narrow exception of economic necessity.  Accordingly, we grant Karen’s motion and
dismiss the appeal as moot.
 
 
                                                                      Laura
Carter Higley
                                                                      Justice

 
Panel consists of Justices Keyes, Higley, and Massengale.




[1]         See Brookshire Bros.,
Inc. v. Smith, 176 S.W.3d 30, 40 n.2 (Tex. App.—Houston [1st Dist.] 2004,
pet. denied).


