Court of Appeals of Texas,

Houston (14th Dist.).

Troy Lee CATES, Appellant,

v.

Billie Elaine CATES, Appellee.

No. B14-93-00536-CV.

|

Feb. 2, 1995.

Before: LEE, AMIDEI, and EDELMAN

LEE, Justice.

O P I N I O N

*1 This is case deals with the division of property in conjunction with a divorce. Appellant, Troy Cates, appeals a divorce decree awarding each party the property in their possession, and awarding appellee, Billie Cates, all of the funds due under a personal injury settlement agreement. In a single point of error, appellant contends the trial court erred in finding any of the funds from the personal injury settlement were Billie Cates’ separate property, and abused its discretion in awarding all of the settlement to Billie Cates. We reverse and remand. Troy and Billie Cates were married in October 1980. During the marriage, Billie Cates fell from a ladder onto a concrete floor and suffered severe spinal injuries. As a result of the injuries, she incurred significant medical expenses. Her treatment required her to be hospitalized fifteen (15) times and she has undergone seven back surgeries, including four laminectomies, two spinal fusions, and an experimental implant. In addition, she has been unable to hold a full time job. She filed a personal injury suit against the ladder manufacturer. In 1988, the parties reached a settlement agreement under which Billie Cates received an immediate lump sum payment, monthly payments, and periodic deferred payments.¹ In exchange, she released all claims against the ladder manufacturer and its insurers. The settlement, however, does not indicate what portion of the funds are for past and future lost earnings, mental pain and suffering and medical expenses. Troy Cates was not a party to the suit or the settlement.

In 1991, Troy Cates filed for divorce. In 1993, following a bench trial, the trial court granted the divorce. The trial court awarded each party the personal property in their possession and awarded Billie Cates all of the proceeds of the personal injury settlement. Neither possessed significant property other than their personal effects. Billie Cates retained possession of an automobile and Troy Cates retained possession of a home-made trailer valued at $150.00. The primary asset of the estate was the proceeds of the settlement agreement which were awarded to Billie Cates.

Troy Cates requested and the trial court made only the following finding of fact:

The court finds that the personal injury settlement received by [Billie Cates] was both community and separate property. The court was unable to determine what portion of the personal injury settlement was community property and what portion was separate property, however, the court awarded one hundred percent (100%) of the settlement to [Billie Cates] as a fair, just, and right decision pursuant to § 3.63 Texas Family Code because it was [Billie Cates’] serious injury and numerous surgeries that resulted in the personal injury settlement.

The latter consideration was the primary equity among others the court considered in making the division.

Billie Cates does not contest the trial court’s finding of fact and she did not request any other findings of fact. In addition, Billie Cates does not contest the trial court’s characterization of the settlement proceeds as community property. The court’s finding of fact, when coupled with the community property presumption,² results in all of the proceeds being community property. We are not called upon to determine whether the trial court correctly determined that all of the proceeds were community property.³ Thus, we are only concerned with whether the trial court abused its discretion by awarding all of the settlement proceeds to Billie Cates.

*2 The Family Code provides that in a divorce “the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party.” Tex. Fam. Code Ann. § 3.63(a) (Vernon 1986). The trial court has wide latitude and discretion in dividing the community estate in a divorce action. Vallone v. Vallone, 644 S.W.2d 455, 460 (Tex. 1982). The division can only be corrected if the trial court abused its discretion by making a decision that was manifestly unjust or unfair. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981); Welch v. Welch, 694 S.W.2d 374, 376 (Tex. App.-Houston [14th Dist.] 1985, no writ). As a result, the court can order an unequal division of marital property provided there is a reasonable basis for the division. Massey v. Massey, 807 S.W.2d 391, 398 (Tex. App.-Houston [1st Dist.] 1991) writ denied, 867 S.W.2d 766 (Tex. 1993).⁴

During the divorce proceedings, Billie Cates explained how she was injured by falling from a six foot ladder onto a concrete floor. She also explained how she incurred in excess of $200,000 in medical expenses while undergoing numerous surgeries and treatments. She stated that she has been unable to work for eleven years since her accident and that she has no medical insurance to cover any future needs. She further stated because she is unable to hold a full-time job, the settlement funds will serve not only to pay for future medical expenses, but also provide for necessary living expenses.⁵

On the other hand, Troy Cates testified that he was unemployed and that he had sustained a lower back injury, but the workers’ compensation benefits had ended. He also stated that he was living with his mother and had very few items in his possession. Because of the severity of her injury and her lack of future earnings and medical benefits, the evidence presented would, generally, justify awarding Billie Cates a larger portion of the community estate. However, in a case such as this, where neither party has significant separate property and each has limited earning capacity, it would be manifestly unjust to award essentially all of a sizable community estate to one party. See Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981). Troy Cates’ point of error is sustained.

The portion of the divorce decree awarding Billie Cates essentially all of the community property constitutes an abuse of discretion and is reversed and remanded to the trial court for further proceedings on the division of the parties’ estate consistent with this opinion.

	Footnotes
1		According to the terms of the settlement agreement, Billie Cates received $285,000 at the time the settlement agreement was executed. In addition to this payment, Billie Cates was to receive monthly payments of $1,200 for 1988 to 1993, $1,400 from 1993 to 1998, $1,700 from 1998 to 2003, and $2,000 from 2003 to 2018. The $2,000 monthly payments will continue after 2018, if she survives. She is also scheduled to receive lump sum payments of $15,000, $20,000, $30,000, $60,000, and $90,000 in 1993, 1998, 2003, 2008, and 2013. Billie Cates’ workers compensation insurance carrier was also reimbursed $56,000 for medical and weekly benefits paid.
2		The community property presumption is stated in Family Code § 5.02 which provides that “[p]roperty possessed by either spouse during or on dissolution of marriage is presumed to be community property. The degree of proof necessary to establish that property is separate property is clear and convincing evidence.” Tex. Fam. Code Ann. § 5.02 (Vernon 1993). See also, McKinley v. McKinley, 496 S.W.2d 540 (Tex. 1973); Kyles v. Kyles, 832 S.W.2d 194 (Tex. App.-Beaumont 1992, no writ); Moreno v. Alejandro, 775 S.W.2d 735 (Tex. App.-San Antonio 1989, writ denied); Harris v. Harris, 765 S.W.2d 798 (Tex. App.-Houston [14th Dist.] 1988, writ denied); York v. York, 579 S.W.2d 24 (Tex. Civ. App.-Beaumont 1979, no writ).
3		In general, funds recovered for personal injuries sustained during the marriage are the separate property of the injured spouse. Tex. Fam. Code Ann. § 5.01(a) (Vernon 1993); Graham v. Franco, 488 S.W.2d 390, 396 (Tex. 1972); Huls v. Huls, 616 S.W.2d 312, 315 (Tex. Civ. App.-Houston [1st Dist.] 1981, no writ). Damages for mental pain and anguish are also separate property. Moreno v. Alejandro, 775 S.W.2d 735, 737 (Tex. App.-San Antonio 1989, writ denied). Only funds recovered for past and future medical expenses incurred by the community and loss of earning capacity during marriage are community property. Tex. Fam. Code Ann. § 5.01(a)(3) (Vernon 1993); Graham, 488 S.W.2d at 396; Huls, 616 S.W.2d at 315. Because of the peculiar nature of the case before this court, we are not called upon to determined whether the characterization of the settlement proceeds is correct. We will not disturb the trial court’s finding without an attack on the finding by one of the parties.
4		Appellate court’s have looked to various factors as justification for an unequal division of community property: the nature of the property; the relative earning capacities and business experience of the spouses; educational background of the parties; size of separate estates; the age, health and physical condition of the parties; fault in breaking up the marriage; the benefits the innocent spouse would have received had the marriage continued; and probable need for future support. Patt v. Patt, 689 S.W.2d 505, 507 (Tex. App.-Houston [1st Dist.] 1985, no writ). See also, Murff, 615 S.W.2d at 699; Goren v. Goren, 531 S.W.2d 897, 899-900 (Tex. Civ. App.-Houston [1st Dist.] 1975, writ dism’d).
5		It is important to note that this evidence was relied upon by Billie Cates to justify awarding her a disproportionate share of the community property under the trial court’s power of just and right division. She does not rely on this evidence to prove that the settlement funds are her separate property under § 5.01. It would appear, however, that the evidence could support a finding that the settlement funds were primarily her separate property. Billie Cates conceded that the unpaid portion of the settlement is community property.