George Touponse v. Susan Touponse
02-20-00285-CV
| Tex. App. | Jul 1, 2021Background
- George and Susan married in 1993; lived mainly in Connecticut. Susan moved to Texas in 2018 and filed for divorce in Texas in January 2019. George did not contest personal jurisdiction.
- Several business entities (including T4 Holdings, LLC and Ashford Woods, LLC) were formed during the marriage and owned Connecticut real property (South Main Street and Bunker Hill).
- Days before trial, George’s father and his company sued several of George’s businesses in Connecticut for alleged unpaid equipment rent; trial court viewed that suit as suspicious and ordered George to indemnify Susan and the community estate for that litigation.
- At bench trial, experts offered conflicting valuations; the trial court characterized the South Main Street and Bunker Hill properties as community property and then awarded those properties to George as his separate property, valuing them at a combined $332,000, and awarded George specified percentage interests in the LLCs.
- On appeal George argued the court erred in treating LLC-owned real property as party-owned community property and that the mischaracterization and valuation materially affected the just-and-right division.
- The court of appeals held the LLC-owned real property was erroneously characterized as community property (property of the LLCs is not the members’ property); because the error materially affected the division, the court reversed the community-property division and remanded the entire community estate for a new division. The decree granting the divorce was affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court abused discretion by characterizing and awarding LLC‑owned real property as community property | George: properties were owned by LLCs, not the parties; trial court mischaracterized and overvalued them (didn’t account for debts) | Susan: valuations and expert testimony supported inclusion; LLC interests were reflected in division and indemnity was warranted given suspicious timing of father’s lawsuit | Court: Abuse of discretion—property owned by LLCs is not community or separate property of members; business interest (not assets) is divisible, so treating the properties as community property was error |
| Whether the error was material and required remand of the community‑property division | George: $332,000 mischaracterization in a ~$2.6M community estate materially affected the just‑and‑right division; remand required | Susan: (argued error not significant enough to disturb division) | Court: Error materially affected the division; remanded the entire community estate for a new division; divorce decree otherwise affirmed |
Key Cases Cited
- Murff v. Murff, 615 S.W.2d 696 (Tex. 1981) (abuse‑of‑discretion review and presumption trial court properly exercised discretion in property division)
- Mann v. Mann, 607 S.W.2d 243 (Tex. 1980) (trial court abuse of discretion standard for manifestly unfair division)
- Eggemeyer v. Eggemeyer, 554 S.W.2d 137 (Tex. 1977) (trial court may divide only parties’ community estate)
- Jacobs v. Jacobs, 687 S.W.2d 731 (Tex. 1985) (mischaracterization that affects just‑and‑right division requires remand of community estate)
- Lewis v. Lewis, 944 S.W.2d 630 (Tex. 1997) (errors in property division that materially affect equities require reversal/remand)
- Mandell v. Mandell, 310 S.W.3d 531 (Tex. App.—Fort Worth 2010) (business entity property is separate from members; divide membership interest, not entity assets)
- McKnight v. McKnight, 543 S.W.2d 863 (Tex. 1976) (assets owned by a partnership are not the partners’ individual property for division purposes)
- In re Marriage of Collier, 419 S.W.3d 390 (Tex. App.—Amarillo 2011) (business property subject to division is the interest in the entity, not the entity’s specific assets)