                                                                                   ACCEPTED
                                                                              03-14-00435-CV
                                                                                     3637800
                                                                    THIRD COURT OF APPEALS
                                                                               AUSTIN, TEXAS
                                                                          1/2/2015 2:20:49 PM
                                                                            JEFFREY D. KYLE
                                                                                       CLERK
                No. 03-14-00435-CV
               —————————
           IN THE COURT OF APPEALS          FILED IN
                                     3rd COURT OF APPEALS
       FOR THE THIRD DISTRICT OF TEXAS AUSTIN, TEXAS
                    AT AUSTIN        1/2/2015 2:20:49 PM
—————————————————————————————————      JEFFREY D. KYLE
                                                            Clerk

                    LESLIE OTIS ROLLS, JR.

                                   Appellant

                              v.

                     SUSAN D. ROLLS and
                       TERRI H. MOTL

                                   Appellees

—————————————————————————————————
   On Appeal from the 51st District Court of Coke County, Texas
        The Honorable Barbara Walther, Judge Presiding
—————————————————————————————————
                APPELLANT’S REPLY BRIEF
—————————————————————————————————

                                   Chad M. Ruback
                                   State Bar No. 90001244
                                   chad@appeal.pro
                                   The Ruback Law Firm
                                   8117 Preston Road
                                   Suite 300
                                   Dallas, Texas 75225
                                   (214) 522-4243
                                   (214) 522-2191 fax

                ORAL ARGUMENT REQUESTED
                                         TABLE OF CONTENTS

TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

         1.    ARGUMENT RELATED TO ISSUE 1:
         Otis purchased his life insurance policy long before marrying Susan.
         Consequently, the life insurance policy is Otis’s separate property. By
         awarding Susan some of Otis’s separate property, the trial court committed
         reversible error. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

         2.    ARGUMENT RELATED TO ISSUE 2:
         There is no evidence or insufficient evidence that $10,458 was a reasonable
         and necessary attorneys’ fee. Consequently, the trial court abused its discretion
         in awarding $10,458 in attorneys’ fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

PRAYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CERTIFICATE OF COMPLIANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14




                                                            i
                                     INDEX OF AUTHORITIES

Barnett v. Barnett,
     67 S.W.3d 107
     (Tex. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

City of San Antonio v. Lopez,
      754 S.W.2d 749
      (Tex. App.—San Antonio 1988, writ denied). . . . . . . . . . . . . . . . . . . . . . 8, 9

Harrison v. City of San Antonio,
      695 S.W.2d 271
      (Tex. App.—San Antonio 1985, no writ). . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9

Nichols v. Nichols,
      727 S.W.2d 303
      (Tex. App.—Beaumont 1987, writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . 6, 7

Pritchard v. Snow,
      530 S.W.2d 889
      (Tex. Civ. App.—Houston [1st Dist.] 1975, writ ref’d n.r.e.). . . . . . . . . . 4, 5

Seaman v. Seaman,
     756 S.W.2d 56
     (Tex. App.—Texarkana 1988, writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . 3, 4




                                                          ii
                      SUMMARY OF THE ARGUMENT

      Otis purchased his life insurance policy long before marrying Susan.

Consequently, the life insurance policy is Otis’s separate property. By awarding

Susan some of Otis’s separate property, the trial court committed reversible error.

      There is no evidence or insufficient evidence that $10,458 was a reasonable

and necessary attorneys’ fee. Consequently, the trial court abused its discretion in

awarding $10,458 in attorneys’ fees.




                                         1
                                   ARGUMENT

1.    ARGUMENT RELATED TO ISSUE 1: Otis purchased his life insurance
      policy long before marrying Susan. Consequently, the life insurance
      policy is Otis’s separate property. By awarding Susan some of Otis’s
      separate property, the trial court committed reversible error.

      In Susan’s appellate brief, she acknowledges that Otis bought the life insurance

policy at issue long before he married Susan. [Ee brief pp. 1-2] (acknowledging that

Otis bought the policy in 1989, but that Otis did not marry Susan until 2002) She also

acknowledges the Texas Supreme Court’s Barnett case, which holds that whether a

life insurance policy is community property or separate property should be

determined by the “inception of title” rule. See Barnett v. Barnett, 67 S.W.3d 107,

111 (Tex. 2002) (holding that, if a life insurance policy was separate property at

the time it was issued, it will remain separate property). [Ee brief p. 7] However,

Susan argues that Barnett and the “inception of title” rule do not apply to this

case—and that it does not matter whether the policy at issue was separate or

community property—because the trial court did not award Susan the policy itself but

merely awarded her half the value of the policy. [Ee brief pp. 6-8]

      Under Susan’s reasoning, if Otis owned a house that was 100% separate

property, it would be okay for a court to award Susan 50% of the value of the house

. . . as long as the court did not award the house itself. Susan’s reasoning would


                                          2
effectively make meaningless: (1) the Texas Supreme Court’s Barnett holding; (2) the

“inception of title” rule; and even (3) the concept of separate property. Following

Susan’s reasoning, it would be proper for a court to award a wife 50% of the value

of the husband’s separate property possessions . . . as long as the court did not award

the separate property possessions themselves. Of course, that flies in the face of

Texas separate property law.

      Susan cites cases from the Texarkana Court of Appeals, the First District Court

of Civil Appeals, and the Beaumont Court of Appeals in support of her argument that

the Texas Supreme Court’s Barnett case should be disregarded. [Ee brief pp. 5-6]

      First, Susan cites the Texarkana Court of Appeals Seaman case. Seaman v.

Seaman, 756 S.W.2d 56 (Tex. App.—Texarkana 1988, writ ref’d n.r.e.). [Ee brief p.

5] Susan claims that the Texarkana Court “held that increases made to a life

insurance policy during marriage are community property.” [Ee brief p. 5] Susan is

mistaken. Seaman simply does not hold that increases in value of a life insurance

policy during marriage are community property. In fact, in Seaman, “the policy

provide[d] only for term insurance and ha[d] no cash value” whatsoever. Id. at 58.

That alone would make Seaman inapplicable to this case, where the issue is the

propriety of the trial court awarding half the cash value of a policy.




                                          3
      Moreover, the policy at issue in Seaman was not even owned by either party

to the marriage, but rather was owned by the husband’s employer. Id. (“the employer

was the legal owner of the policy”).          That alone would also make Seaman

inapplicable to this case, where the issue is whether the life insurance policy was the

husband’s separate property or was the couple’s community property. At issue in

Seaman was whether a court could require a husband to leave the beneficiary of a life

insurance policy unchanged. Id. Of course, the trial court in this case did not make

any such order, but rather ordered Otis to pay Susan half the value of his (separate

property) life insurance policy. [CR 214]

      Second, Susan cites the First District Court of Civil Appeals Pritchard case.

Pritchard v. Snow, 530 S.W.2d 889 (Tex. Civ. App.—Houston [1st Dist.] 1975, writ

ref’d n.r.e.). [Ee brief pp. 5-6] Susan claims that the First District Court held “that

a wife had a claim against her husband’s separate property life insurance policy

acquired before marriage because community funds were used to pay premiums and

maintain the policy during the marriage.” [Ee brief pp. 5-6] It is unclear exactly what

Susan is suggesting, but Pritchard does not hold that a wife has a claim to her

husband’s separate property life insurance policy based on community funds having

been used to pay the premiums during the marriage.




                                          4
       Rather, Pritchard holds that a wife would have a “right to reimbursement for

policy premiums paid out of community funds.” Id. at 893. As pointed out in Otis’s

appellate brief, Texas law recognizes a wife’s right of reimbursement for her share

of premiums paid during a marriage with community funds. [Ant brief p. 4]

However, the trial court in this case did not award Susan reimbursement for her share

of premiums paid during the marriage with community funds (i.e., an award of half

of the premiums paid during the marriage), but rather expressly awarded Susan half

the total value of the life insurance policy.1 [CR 214; Ant brief pp. 4-5] Moreover,

even if the trial court had awarded Susan reimbursement for her share of life

insurance premiums paid during the marriage with community funds, that would still

constitute reversible error because the Texas Supreme Court has held that a party is

only entitled to reimbursement if the party expressly pleads for reimbursement          ..

. and Susan did not plead for reimbursement. [Ant brief p. 4 n.2]




       1
         In addition to the trial court’s express language awarding Susan half the total
value of the policy, [CR 214] the amount awarded by the trial court is consistent with
an award of half the total value of he policy. Specifically, the trial court specified that
its award shall be no less than $8,390, [CR 214] which is approximately half the
policy’s $16,782 total value. [Ee brief pp. 2-3; CR 104; RR vol. 2 p. 57] The
premiums paid during the marriage totaled only $7,381 [CR 214; RR vol. 2 p. 177]
. . . so Susan’s share of premiums paid during a marriage would have been only
$3,690.50.
                                            5
      Notably, Pritchard specifies that “the inception of title rule must . . . be applied

to determine. . . separate or community property.” Id. at 893. In light of Pritchard

applying the “inception of title” rule, it is curious that Susan would rely upon

Pritchard . . . as she argues that the “inception of title” rule should not be applied

here. [Ee brief p. 7] Additionally, it is curious that Susan would rely upon Pritchard

in light of the fact that Pritchard held that the insurance policy at issue constituted

separate property and that all proceeds therefrom (e.g., the proceeds of a cash

surrender of the policy) would also be separate property. Id. at 893 (“Since the policy

in this case before us was separate in character, the trial court correctly determined

the proceeds thereof to be separate.”)

      Third, Susan cites the Beaumont Court of Appeals Nichols case. Nichols v.

Nichols, 727 S.W.2d 303 (Tex. App.—Beaumont 1987, writ ref’d n.r.e.). [Ee brief

p. 6] Susan claims that the Beaumont Court “found that a trial court could award a

portion of the cash surrender value of a life insurance policy to one spouse without

divesting the other spouse of the right to receive life insurance proceeds in the

future.” [Ee brief p. 6] That might be true, but it is completely irrelevant to the issue

at hand.

      While it would indeed be possible to award a wife a portion of the cash

surrender value of a life insurance policy without divesting the husband of the right

                                           6
to receive life insurance proceeds, this does not address whether it is appropriate to

award a wife a portion of the cash surrender value of a life insurance policy when the

life insurance policy is the husband’s separate property. The Nichols opinion

does not address the propriety of the award itself. This is not surprising, as under the

“inception of title” rule, the insurance policy in that case was community property

. . . the policy having been purchased during the marriage. See id. at 304 (“The

evidence showed that Nichols and his former wife married in 1963 and purchased the

policy at issue in 1964. . . . They divorced on May 19, 1977.”). Dissimilarly, Otis

purchased his life insurance policy prior to the marriage and, under the “inception of

title” rule, that would make the policy his separate property.

      After making arguments (mistakenly) relying upon the Seaman, Pritchard, and

Nichols cases, Susan proceeds to rely upon Otis’s (mistaken) belief in the trial court

that a portion of the policy was community property. [Ee brief p. 8] In his appellate

brief, Otis cited numerous cases holding that a party’s belief about how the law would

apply (e.g., to make something separate property or community property) is irrelevant

to how the law actually does apply. [Ant brief p. 6 and n.4] Oddly, Susan does not

address any of those cases . . . or cite any legal authority which would support her

reliance upon Otis’s mistaken belief that a portion of the policy was community

property.

                                           7
      Rather, Susan makes the conclusory claim that “trial-by-consent supports the

trial court’s award” to Susan. [Ee brief p. 8] But Susan offers no explanation

whatsoever of how the concept of trial-by-consent applies to this case. Instead, she

leaves Otis (and this Court) to guess at how the concept of trial-by-consent might

apply to this case.

      In support of her conclusory claim that the concept of trial-by-consent supports

the trial court’s award, Susan cites two cases. [Ee brief p. 8] The two cases cited by

Susan indicate that the concept of trial-by-consent serves to permit a party to recover

on a theory that the party failed to plead. See City of San Antonio v. Lopez, 754

S.W.2d 749, 751 (Tex. App.—San Antonio 1988, writ denied); Harrison v. City of

San Antonio, 695 S.W.2d 271, 278 (Tex. App.—San Antonio 1985, no writ). What

unpleaded issue is Susan suggesting was tried by consent? Otis (and this Court) can

only guess.

      Otis’s brief mentioned a pleading issue only once, and that mention was merely

as an interesting side note. Specifically, Otis’s brief noted that the trial court in this

case did not award Susan reimbursement for her share of premiums paid during the

marriage with community funds, but rather expressly awarded Susan half the total

value of the life insurance policy. [Ant brief pp. 4-5] Then, as a side note, Otis’s

brief observed that even if the trial court had made an award of

                                            8
reimbursement—which it did not—this would have been inappropriate because Susan

never pleaded for reimbursement. [Ant brief p. 5 n.2]

      If, by citing the two trial-by-consent cases, Susan is suggesting that the trial

court did award her reimbursement and that she didn’t need to plead reimbursement

because the issue was tried by consent, she would have at least four problems. First,

as the two trial-by-consent cases cited by Susan both emphasize, trial-by-consent can

only apply “when the record makes it clear that the parties understood the non-

pleaded matter to be an issue in the case.” Lopez, 754 S.W.2d at 751; see Harrison,

695 S.W.2d at 278 (trial-by-consent “is intended to cover the exceptional case where

it clearly appears from the record as a whole that the parties tried the unpleaded

issue.”). The record in this case in no way makes clear that Otis understood that

Susan was asserting a reimbursement claim . . . rather than merely a claim for a

portion of the value of the policy itself. Second, as noted above, Otis’s mistaken

belief about how the law would apply (to make something separate property or

community property) is irrelevant to how the law actually does apply. [Ant brief p.

6 and n.4]     Third, the trial court in this case simply did not award Susan

reimbursement for her share of premiums paid during the marriage with community

funds, but rather expressly awarded Susan half the total value of the life insurance

policy. [CR 214] Fourth, while the trial court’s decree specifies that its award of half

                                           9
the cash surrender value of the policy shall not be less than $8,390, the

uncontroverted evidence is that the premiums paid during the marriage totaled only

$7,381. [CR 214; RR vol. 2 p. 177; Ant brief p. 7 n.5] So, even if one were to accept

Susan’s invitation to disregard the Texas Supreme Court’s “inception of title” rule,

there would still be no basis for awarding Susan reimbursement of $8,390, as

premiums paid during the marriage totaled only $7,381. And even an award of

$7,381 to Susan would be erroneous because that would constitute an award of all

premiums paid during the marriage rather than merely Susan’s share of premiums

paid during the marriage.

      As to the $7,381 figure, Otis testified that $7,381 was the total amount of

premiums paid during the marriage. [CR 214; RR vol. 2 p. 177; Ant brief p. 7 n.5]

Susan argues that there is “no supporting documentation or testimony explaining how

this figure was generated.” [Ee brief p. 9] Yet Susan has offered no evidence—or

even argument—that more than $7,381 was paid in premiums during the marriage.

If Susan had pleaded for reimbursement (or if reimbursement were somehow tried by

consent), it would seem that Susan would have needed to prove her reimbursement

claim . . . including the amount of reimbursement to which she was entitled. Yet

Susan has offered no evidence—or even argument—that more than $7,381 was paid

in premiums during the marriage.

                                         10
      Next, Susan argues that “there is no evidence in the record reflecting that the

entire Midland Life Insurance Policy is separate property.” [Ee brief p. 8] In fact,

there is uncontroverted evidence that the policy was separate property. Specifically,

as explained above, the Texas Supreme Court held in Barnett that whether a life

insurance policy is community property or separate property should be determined

by the “inception of title” rule . . . and the uncontroverted evidence establishes that

Otis acquired the policy long before he married Susan.

      Finally, Susan argues that “there was no evidence presented as to any cash

surrender value of the Midland Life Insurance Policy before the marriage or at the

time of the marriage.” [Ee brief p. 9] But the value of the policy before the marriage,

during the marriage, or after the marriage is simply irrelevant. Specifically, under the

Texas Supreme Court’s “inception of title” rule, because Otis acquired the policy

before the marriage, 100% of the policy’s value is his separate property.

      2.     ARGUMENT RELATED TO ISSUE 2: There is no evidence or
             insufficient evidence that $10,458 was a reasonable and necessary
             attorneys’ fee. Consequently, the trial court abused its discretion in
             awarding $10,458 in attorneys’ fees.

      The trial court awarded Susan’s counsel Terri Motl $10,458 in attorneys’ fees.

[CR 215]     Terri argues—without any explanation—that her “detailed billing

statements reflect the amount $10,458 was a reasonable and necessary attorney’ fee.”



                                          11
[Ee brief p. 10] Terri is mistaken. While Terri’s billing statements reflect that

$10,458 was the amount she charged Susan, the billings statements are silent as to (1)

whether that amount of fees was a reasonable amount and (2) whether that amount of

fees was necessary. [RR vol. 4 Px 10]

      Next, Terri claims—without explanation—that “trial-by-consent supports the

award of attorneys fees.” [Ee brief pp. 10-11] In support of this claimzz, Terri cites

the same two cases cited earlier in the Appellees’ brief which establish that Texas law

recognizes the concept of trial-by-consent (which, in very limited circumstances

permits unpleaded matters to be adjudicated in spite of their not having been

pleaded). [Ee brief pp. 8, 11] But, as before, Terri offers no explanation whatsoever

of how the concept of trial-by-consent applies to this case.

      Instead, she leaves Otis (and this Court) to guess at how the concept of trial-by-

consent might apply to this case. In his appellate brief, Otis never claimed that Terri

failed to plead entitlement to attorneys’ fees. Rather, Otis argued that Terri failed to

offer sufficient evidence in support of the amount of attorneys’s fees. [Ant brief pp.

8-11] Otis pointed out that no expert—not Terri and not any other attorney—offered

testimony about attorneys’ fees. [Ant brief p. 9]

      Oddly, Terri makes no attempt to address Otis’s arguments that:




                                          12
      (1)    For an attorneys’ fee award to stand, there must be expert testimony that

             the attorneys’ fees were reasonable. [Ant brief p. 9]

      (2)    For an attorneys’ fee award to stand, there must be evidence of the

             attorney’s qualifications. [Ant brief p. 9]

      (3)    While Terri’s invoices are in the same amount ($10,458) as awarded to

             her by the trial court, her invoices reflect that a portion of that amount

             was for fees of non-lawyers who work for Terri . . . but non-lawyer staff

             fees are only recoverable in very limited situations, none of which are

             supported by the record here. [Ant brief pp. 10-11]

                                      PRAYER

      Otis respectfully prays that this Court reverse the trial court’s judgment, render

judgment that the life insurance policy is his separate property, that Susan is not

entitled to any portion of the policy’s cash surrender value, and that neither Terri nor

Susan is entitled to an award of attorneys’ fees. Otis also prays for his costs and for

all other relief to which he may be entitled.




                                          13
Respectfully submitted,

/s/ Chad M. Ruback
Chad M. Ruback
State Bar No. 90001244
chad@appeal.pro
The Ruback Law Firm
8117 Preston Road
Suite 300
Dallas, Texas 75225
(214) 522-4243
(214) 522-2191 fax

                      CERTIFICATE OF COMPLIANCE

      I certify that, according to my word processor’s word-count function, in the
sections of this brief covered by TRAP 9.4(i)(1), there are 2,930 words.

                                                   /s/ Chad M. Ruback
                                                   Chad M. Ruback

                          CERTIFICATE OF SERVICE

      I hereby certify that, on January 2, 2015, I served a copy of this Appellant’s
Reply Brief to the following counsel for Appellees:

Terri H. Motl
202 W. Beauregard Avenue
Suite E
San Angelo, Texas 76093

                                                   /s/ Chad M. Ruback
                                                   Chad M. Ruback




                                        14
