
                                          NO. 07-12-0080-CV

                                       IN THE COURT OF APPEALS

                                  FOR THE SEVENTH DISTRICT OF TEXAS

                                             AT AMARILLO

                                               PANEL C

                                           OCTOBER 10, 2012
                                    _____________________________


       IN THE MATTER OF THE MARRIAGE OF PETER N. CHRISTODOLOU AND KELI ANNE CHRISTODOLOU AND IN
                             THE INTEREST OF B.C.C. AND H.N.C., CHILDREN
                                    _____________________________

                           FROM THE 237TH DISTRICT COURT OF LUBBOCK COUNTY;

                         NO. 2010-553,696; HONORABLE LESLIE HATCH, PRESIDING
                                    _____________________________

                                               Opinion
                                    _____________________________



Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
      Sometimes you try to do right, but the law gets in the way.  This is one of  those  times.   We
reverse in part and remand.
      Keli and Peter Christodolou divorced each other in November of 2011  after  being  married  for
approximately eight years.  Early in the marriage, they  obtained  a  $201,000  unsecured  loan  from
Peter’s father (Nicholas) to buy a house and agreed to repay the  sum  via  monthly  installments  of
$320, plus interest at 1.9% per year.[1]  The house was bought, though not all of the loan  was  used
for the purchase, and it became the  family’s  homestead.   Thereafter,  Keli  became  pregnant,  and
Nicholas allegedly informed his son  and  daughter-in-law  that  they  could  suspend  their  monthly
payments to him.  By that time, only several of those installments had been made.  More  importantly,
no others would be made.
      Time passed.  As it did, Nicholas died in 2008, while Peter and  Keli  decided  to  divorce  in
2011.  Their community estate, for the most part, consisted  of  their  homestead,  which  the  trial
court determined had an equity of about $201,711.  In deciding  to  award  the  house  to  Peter,  it
ordered him to execute a promissory note in  the  amount  of  $103,830  payable  to  Keli.   The  sum
represented her one-half of the equity in the homestead plus her community share of income earned  in
Peter’s separate financial account.  Additionally, the note was to be paid in monthly  increments  of
$3,314, and was secured (per court order) by an owelty lien placed on the house.
      Yet, while the divorce was proceeding, the executor of Nicholas’ estate  became  aware  of  the
outstanding loan to Peter and Keli.  That executor happened to be  Peter’s  brother.   The  discovery
led to discussions about whether  the  loan  could  be  collected  given  the  pertinent  statute  of
limitations.   To avoid incurring litigation costs to resolve the issue,  counsel  for  the  estate’s
executor informed the trial court that no suit would be  filed.   Instead,  collection  of  the  debt
would most likely occur via an offset against any inheritance Peter was to receive.[2]
      Thus, the trial court had before it evidence of a potential community liability  that  may  not
give rise to a lawsuit but could be satisfied indirectly.  And, if satisfied in the manner  suggested
by the executor’s attorney, Peter supposedly would suffer the effects of paying  it  in  toto.   This
led to efforts being taken to address the contingency and   resulted  in  the  trial  court  granting
Peter an “equitable lien” against the promissory note he was to give his ex-wife.  In turn, Keli  was
granted an “equitable lien” on the house (and homestead) awarded Peter.  Apparently,  this  protected
either party from paying more than their proportionate share of  the  debt.   The  trial  court  then
ordered that both liens be treated as “superior lien[s], equivalent to a purchase  money  lien”  that
supercedes 1) any homestead claim Peter may have  in  the  house  and  Keli  may  have  in  the  note
representing the proceeds from the house, and 2) her owelty lien.  So too did the court declare  that
the manner in which it addressed the potential claim of Nicholas‘ estate constituted “a part  of  the
division of the community assets and allocation of debts incurred during the marriage.”   Keli  cried
foul and appealed the decision.
         No one disputes that the way a trial court divides community  assets  and  liabilities  lies
within its discretion.  In re Collier, No. 07-09-00146-CV, 2011 Tex. App. Lexis 13, at  *22-23  (Tex.
App.–Amarillo January 4, 2011, no pet.).  That discretion, however, has  its  limits.   At  the  very
least, it must comport with controlling guidelines and principles. Samlowski v.  Wooten,  322  S.W.3d
404, 410 (Tex. 2011) (defining when a  decision  constitutes  an  abuse  of  discretion).   And,  the
controlling rule or principle violated at bar, according to Keli, was article 16, § 50 of  the  Texas
Constitution.  Under that provision, “[t]he homestead of a family . .  .  shall  be,  and  is  hereby
protected from forced sale, for the payment of all debts . . . .”  Tex. Const. art. 16,  §  50.   The
prohibition extends to proceeds from the disposition of a homestead as well.  Grant v.  Clouser,  287
S.W.3d 914, 919 (Tex. App.–Houston [14th Dist.] 2009, no  pet.).   And,  though  the  edict  has  its
exceptions, none mention the general category  of  “equitable  liens.”   This  may  explain  why  the
equitable lien awarded in the judgment was characterized as “equivalent to a  purchase  money  lien”;
debt for “the purchase money” of the homestead “or a part of such purchase money” falls  outside  the
prohibition against forced sale.  Id.  art. 16, §  50(a)(1).   So,  if  the  equitable  lien  is  the
equivalent of a purchase money security interest, it may be legitimate, or so the argument goes.   In
determining whether it is, we initially make the following observations.
      First, laws protecting a  homestead  against  foreclosure  or  the  payment  of  debt  must  be
liberally construed.  Grant v. Clouser, 287 S.W.3d at 919; Kendall Builders,  Inc.  v.  Chesson,  149
S.W.3d 796,  807 (Tex. App.–Austin 2004, pet. denied).  Second, liens or  like  encumbrances  upon  a
homestead that do not fall within the exceptions provided in art. 16,  §  50  are  void.   Laster  v.
First Huntsville Properties Co., 826 S.W.2d 125, 129-30 (Tex. 1991).   Third,  purchase  money  liens
denote a transaction wherein a person who loans money to another to acquire property obtains  a  lien
on the property purchased.  See First Nat'l Bank v. Lubbock Feeders, L.P., 183 S.W.3d 875, 882  (Tex.
App.–Eastland 2006, pet. denied) (stating that when a creditor makes a  loan  enabling  a  debtor  to
acquire an interest in goods, the creditor may obtain a  purchase  money  security  interest  in  the
goods); CFB-5, Inc. v. Cunningham, 371 B.R. 175, 180 (N.D. Tex. 2007) (describing  a  purchase  money
security interest as one where the party holding the security interest gave value to the debtor  that
enabled the debtor to acquire the collateral).  Fourth, equitable liens are  contractual  in  nature;
that is, they arise from expressed or implied agreements.  Chorman v. McCormick, 172  S.W.3d  22,  24
(Tex. App.–Amarillo 2005, no pet.) (stating that  an  equitable  lien  arises  when  the  surrounding
circumstances indicate the parties to the transaction intended that  certain  property  would  secure
the payment of a debt and that the fundamental element necessary to create an equitable lien  is  the
existence of an express or implied contract arising from circumstances which evince that the  parties
intended for the property to secure repayment).  Next, equitable liens cannot be  imposed  where  the
claimant failed to secure an available statutory lien.  Hoarel Sign Co.  v.  Dominion  Equity  Corp.,
910 S.W.2d 140, 143 (Tex. App.–Amarillo 1995, writ denied) (stating that  because  equity  stays  its
hand when the claimant had an adequate remedy at law, one may not obtain an equitable  lien  when  he
had available to him but failed to pursue a lien created by statute); see In re McConnell, 122 B.  R.
41, 46 (S.D. Tex. 1989) (refusing to impose an equitable lien in  circumstances  where  the  claimant
could have secured a deed of trust).  Finally, the validity of a lien is a question of  law,  subject
to de novo review.  Williams v. Nationstar Mortg., LLC, 349 S.W.3d 90, 94 (Tex. App.–Texarkana  2011,
pet. denied).  Having said this, our focus turns to the circumstances of record.
      No one disputes that the abode acquired  with  the  monies  supplied  by  Nicholas  became  the
homestead of Peter and Keli.  Nor does anyone dispute that at least  $101,000  of  the  $103,000  sum
payable by Peter to Keli under the note represented proceeds from Keli’s homestead interest  in  that
house.  Similarly undisputed is that Nicholas, as opposed to  anyone  else,  loaned  the  couple  the
money in question.  And, while it may be that the loan proceeds were earmarked for  the  purchase  of
the homestead, no one cites us to any evidence suggesting in any way that Nicholas,  Peter,  or  Keli
intended to secure repayment of the loan by imposing a lien on the realty.  Nor did  our  own  review
of the record uncover such evidence.  Nor are we  cited  to  any  evidence  explaining  why  Nicholas
failed to obtain a deed of trust or like lien on the homestead in exchange for  providing  the  means
to acquire it.  But, it is clear that he received none.
      So, what we have here is an award of a purported lien equivalent to a purchase  money  security
interest 1) to individuals who did not provide the loan, 2) in a transaction wherein no one  intended
that the home stand as security to assure repayment though the lender could have  demanded  as  much,
and 3) under circumstances suggesting that the lender lost  or  opted  to  relinquish  his  right  to
payment.[3]  None of those indicia, or any other appearing of  record,  satisfies  the  criteria  for
imposing an equitable lien in general or one that equates to a purchase money  lien,  in  particular.
Instead, the lien insulated the debtors from  bearing  more  than  their  proportionate  share  of  a
potential debt owed to a third party.  As such, it cannot be “equivalent to a  purchase  money  lien”
and thereby survive the prohibitions erected by art. 16, § 50. The  equitable  lien  encumbering  the
note representing Keli’s proceeds from the disposition of her homestead is void, therefore.
      Peter suggests, however, that because Keli already received payments mandated by  the  judgment
of divorce she is barred from attacking it.  It is generally true that a litigant cannot  voluntarily
accept the benefits of a judgment and then prosecute an appeal from it.  Tex. State  Bank  v.  Amaro,
87 S.W.3d 538,  544 (Tex. 2002).  But, an exception arises where the reversal of  a  judgment  cannot
affect an appellant's right to a benefit secured under a judgment; in other words,  “as  long  as  an
appellant ‘accepts only that which appellee concedes, or is bound to concede, to  be  due  him  under
the judgment he is not estopped to prosecute an appeal which involves only his  right  to  a  further
recovery.’”  Id., citing Carle v. Carle, 234 S.W.2d 1002, 1004 (Tex. 1950).   Both  the  requirements
of the rule and the presence of the  exception  cause  us  to  reject  Peter’s  contention.   No  one
questions that Keli is entitled to her  portion  of  the  community  homestead.   So,  her  accepting
payment to what she is otherwise entitled falls within the exception described above.
      Accordingly, we reverse and remand that portion of the divorce  decree  imposing  an  equitable
lien upon the promissory note (and payments thereunder) from Peter to Keli to  the  extent  that  the
note and payments thereunder represent proceeds from her homestead interest.  In  all  other  things,
the judgment is affirmed.

                                        Brian Quinn
                                        Chief Justice


-----------------------
      [1]Simple arithmetic reveals that it would have taken over fifty two years  to  extinguish  the
debt if all abided by the terms of the agreement.


      [2]We are not asked to address whether the executor’s attorney may  permissibly  testify  about
his legal discussions with his client, the legal strategies his client opts to pursue,  or  otherwise
bind his client to dispose of a legal matter in a certain way.   So, that potential debate  need  not
be considered at this time.
      [3]That Nicholas gave the debtors over fifty two years to repay the loan, allowed them to  stop
making installments once a few were made, and apparently undertook no  effort  to  collect  the  debt
before dying could lead one to ponder whether the loan was actually a gift  or  ultimately  became  a
gift.


