law-separate-property-in-divorce-inception-of-title-rule | community property presumption in suit for divorce
Houston divorce marital property division case law  | reimbursement claim against community or separate property |

HOUSTON CASE LAW ON SEPARATE VS. COMMUNITY PROPERTY IN
DIVORCE

Kite v. Kite (Tex.App.- Houston [1st Dist.] Mar. 11, 2010)(Alcala)(separate property in divorce, inception of
title rule) (
spouse's separate property may not be awarded to the other spouse in division of community
property)  
We hold the trial court erred in divesting Michael of his separate property. This necessitates remand for a
new division of the community estate. We reverse the portion of the final decree of divorce that divides the
marital estate. We remand for a new division of the community estate and other appropriate proceedings.
We affirm the final decree of divorce in all other aspects.
AFFIRM TRIAL COURT JUDGMENT IN PART, REVERSE TRIAL COURT JUDGMENT IN PART, AND
REMAND CASE TO TRIAL COURT FOR FURTHER PROCEEDINGS: Opinion by
Justice Alcala     
Before Chief Justice Radack, Justices Alcala and Higley   
01-08-00643-CV  Michael David Kite v. Kendra Senja Kite    
Appeal from 246th District Court of Harris County
Trial Court Judge:
Hon. Jim York  

In a decree of divorce, a trial court must "order a division of the estate of the parties in a manner that the
court deems just and right." Tex. Fam. Code Ann. § 7.001 (Vernon 2006). The court may divide only the
parties' community property. Jacobs v. Jacobs, 687 S.W.2d 731, 733 (Tex. 1985). Property possessed by
either spouse in the course of marriage is presumed to be community property. Tex. Fam. Code Ann. §
3.003(a) (Vernon 2006). To overcome the community property presumption, a party claiming marital
property as separate property must prove the claim with clear and convincing evidence. Id. § 3.003(b)
(Vernon 2006). A party may overcome the presumption by tracing and identifying the separate property.
Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975).

Separate property includes, among other things, property owned or claimed by a spouse before marriage.
See Tex. Const. art. XVI, § 15 ("All property, both real and personal, of a spouse owned or claimed before
marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that
spouse. . . ."); Tex. Fam. Code Ann. § 3.001 (Vernon 2006) (defines separate property as that property
owned by spouse before marriage, acquired during marriage by gift, devise, or descent, or as recovery for
personal injuries sustained during marriage).

The characterization of property as community or separate is determined by the inception of title, i.e.,
when a party first has a right of claim to the property by virtue of which title is finally vested. Tex. Fam.
Code Ann. § 3.404(a) (Vernon 2006); Chavez v. Chavez, 269 S.W.3d 763, 767 (Tex. App.--Dallas 2008,
no pet.). "Once separate property character attaches, that character does not change because community
funds are spent to improve the property." Leighton v. Leighton, 921 S.W.2d 365, 367 (Tex. App.--Houston
[1st Dist.] 1996, no writ)

Any improvements made on separate property, including a residence, are considered the separate
property of the real property owner. Id. However, the marital estate that makes an economic contribution to
property owned by another marital estate may make a claim for economic contribution with respect to the
benefitted estate. See Tex. Fam. Code Ann. § 3.403(a) (Vernon 2006). (1)

When a party demonstrates by clear and convincing evidence that property is separate, a trial court may
not divest the party of the separate property. Cameron v. Cameron, 641 S.W.2d 210, 215-16 (Tex. 1982).
We review property-characterization rulings for abuse of discretion. See Chavez, 269 S.W.3d at 766. To
prevail on a mischaracterization challenge, Michael must establish not only that the trial court erred but
that this error caused sufficient harm to constitute an abuse of discretion. Long v. Long, 234 S.W.3d 34,
38 (Tex. App.--El Paso 2007, pet. denied); see Vandiver v. Vandiver, 4 S.W.3d 300, 302 (Tex.
App.--Corpus Christi 1999, pet. denied) (mischaracterization of community property as separate property
is not reversible unless mischaracterization had more than de minimis effect on just and right division).

Based on the undisputed evidence at trial, the marital residence was Michael's separate property. The
court admitted into evidence a gift deed, naming "Michael David Kite, Grantee," which confirms the real
property that the marital residence was built on was Michael's separate property. See Tex. Fam. Code
Ann. § 3.001(2) (Vernon 2006) (property acquired during marriage by gift is characterized as separate
property). Additionally, both Michael and Kendra testified that the real property was Michael's separate
property. This testimony is sufficient evidence to establish the separate character of the property. See
Chavez, 269 S.W.3d at 767 (undisputed testimony is sufficient evidence to establish separate character of
property). In the absence of any challenge by Kendra at trial, or on appeal, that the real property upon
which the residence was built was gifted to Michael, the real property is Michael's separate property by
virtue of the inception of title rule.

Because the marital residence was built on Michael's separate property, it is separate property. See
Leighton, 921 S.W.2d at 367 (any improvements made on separate property, including residence, are
considered separate property of land owner); see also In re Marriage of Morris, 123 S.W.3d 864, 871 (Tex.
App.--Texarkana 2003, no pet) (stating separate property's character does not change despite use of
community funds to improve property). Although the residence was sold before trial, the net proceeds from
the sale of the residence retain its separate property character because the proceeds represent the equity
from the sale of the house. See Cockerham, 527 S.W.2d at 167-68 (separate property will retain its
character through series of exchanges so long as party asserting separate ownership can trace assets on
hand during marriage back to property that is separate in character); see also Chavez, 269 S.W.3d at 767
(holding trial court did not abuse its discretion by not requiring appellee to trace funds where there was
undisputed testimony that residential property in question was separate property).

Because community funds were expended to improve Michael's separate property, the community estate
was entitled to a claim for economic contribution. Kendra, however, did not present adequate evidence to
calculate economic contribution. See Hailey v. Hailey, 176 S.W.3d 374, 388 (Tex. App.--Houston [1st Dist.]
2004, no pet.) (spouse seeking economic contribution bears burden of proving that claim); see also Tex.
Fam. Code Ann. § 3.403(b), (b-1)(2) (Vernon 2006) (to calculate claim for economic contribution to
separate property there must be evidence of: (1) net equity of separate property as of date of first
economic contribution to property by community estate or by separate property estate of other spouse; (2)
amount(s) of economic contributions (if any) by (a) other spouse's separate property estate, (b)
community property estate, and (c) separate property estate of spouse who owns benefitted separate
property; and (3) net equity of separate property as of date of divorce). Kendra did testify that they built
the house on the separate property using only funds from the community estate and paid the mortgage
with the community estate. Kendra, however, failed to provide specific testimony describing the value of
contribution by the community estate. See id. § 3.403(b), (b-1)(2) (listing factors needed to calculate value
of contribution made by marital estate). Furthermore, although she claims she could not determine the
value of the separate property because Michael did not provide that information to her, she could have
proven the value through some source other than Michael. Kendra failed to prove the amount contributed
by the community estate to establish the claim for economic contribution.

Although it is unclear whether the trial court considered the proceeds from the sale of the residence to be
separate property or community property, we conclude that in either event the division of the property was
erroneous. To the extent that the trial court treated the proceeds as community property, it erred because,
as explained above, the proceeds can be traced back to Michael's separate property. See Cameron, 641
S.W.2d at 215-16. To the extent that it treated the proceeds as separate property, the trial court erred
because the divestiture was more than de minimis as the residence represented the main asset of the
parties. See Vandiver, 4 S.W.3d at 302; see also Evans v. Evans, 14 S.W.3d 343, 347 (Tex.
App.--Houston [14th Dist.] 2000, no pet.) ("When the court mistakenly characterizes property that
constitutes the main asset of the parties, the error is of such a magnitude that it materially affects the just
and right division of the community estate.").

We hold the trial court erred in divesting Michael of his separate property. This necessitates remand for a
new division of the community estate. See Jacobs, 687 S.W.2d at 732; Bufkin v. Bufkin, 259 S.W.3d 343,
350-51 (Tex. App.--Dallas 2008, pet. denied). We sustain Michael's third issue.

Having determined the case must be remanded for a new division of the community estate, we overrule
Michael's first issue that challenges the trial court's refusal to issue the findings of fact and conclusions of
law because he has been able to present his appeal without those findings. See, e.g., White v.
Harris-White, No. 01-07-00521-CV, 2009 WL 1493015, at *7 (Tex. App.--Houston [1st Dist.] May 28, 2009,
pet. denied) (mem. op., not designated for publication) (holding trial court's failure to make requested
findings of fact and conclusions of law harmless because appellant was able to present his case on appeal
concerning value of community estate). We also do not reach Michael's second issue concerning the
entire division of the community assets and the fourth issue concerning the award of attorney's fees
because we are remanding the division of the community estate for reconsideration by the trial court. See
Carle v. Carle, 149 Tex. 469, 474, 234 S.W.2d 1002, 1005 (Tex. 1950); Phillips v. Phillips, 296 S.W.3d
656, 673 (Tex. App.--El Paso 2009, pet. denied) (award of attorney's fees in divorce action is treated as
part of fair and just division of marital estate).





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