Lead Opinion
OPINION
I. Introduction
Relator Wade White seeks mandamus relief from the trial court’s February 7, 2012 order denying his motion to reconsider a prior order denying his plea to the jurisdiction and permitting Real Party in Interest Deborah White to conduct discovery in furtherance of her post-judgment action to clarify or enforce a divorce decree. We will conditionally grant the petition.
Wade was a greater-than-50% shareholder of Republic Intelligent Transportation Services, Inc. (Republic ITS) when in December 2007, in his capacities as president of Republic ITS, a shareholder of Republic ITS, and the shareholder representative, he executed an “Agreement and Plan of Merger” in which Republic ITS merged with an affiliate of Alinda Capital Partners. Under the terms of the merger agreement, Wade’s shares of Republic ITS were “converted into the right to receive” (1) shares of the post-merger Republic ITS entity (“newly issued Republic ITS shares”); (2) cash calculated according to the merger agreement; (3) funds under promissory notes; and (4) earn-in payments. According to Wade and Deborah’s 2007 income tax return, Wade received over $13 million in pre-tax cash as a result of the merger.
Wade and Deborah entered into an agreed decree of divorce on May 13, 2008, approximately five months after Wade executed the merger agreement. In his inventory and appraisement, Wade had listed as an asset “Republic ITS Stock” valued at $2,000,000. Deborah filed an identical inventory and appraisement, except that she listed “UNKNOWN” for the value of the “Republic ITS Stock.” At her 2009 deposition, Deborah acknowledged that she had relied upon and “accepted” the $2 million valuation that Wade attributed to the “Republic ITS Stock,” and she agreed that she could have hired an expert to evaluate the Republic ITS stock but that she never did so. As part of the division of the marital estate, pursuant to section 18.a of the decree, the trial court awarded Wade, among other things, (1) the balance of the funds held by the Bank of the West money market account ending in 6936 — $10,104,501—less $7,500,000 to be paid to Deborah, and (2) “The Republic ITS stock, together with all dividends, splits, and other rights and privileges in connection with it.” Pursuant to section 18.b of the divorce decree, the trial court awarded Deborah, among other things, $7,500,000 to be paid by Wade from the Bank of the West account ending in 6936. The divorce decree contains a provision that the parties refer to as a “residuary clause”:
IT IS ORDERED AND DECREED that any asset of the parties that was not disclosed or undervalued in the spreadsheet attached to each party’s Inventory and Appraisement as Exhibit “A” is awarded to the party not in possession or control of the asset.
No post-judgment motions were filed, and the trial court’s plenary power expired on June 12, 2008. See Tex.R. Civ. P. 329b(d).
Approximately six months later, in December 2008, Deborah filed a “Motion for Clarification Order and to Enforce Property Division.” In her amended motion, Deborah alleged (1) that Wade had failed to disclose or had undervalued on his inventory and appraisement cash and contractual rights consisting of “purchase price consideration” as set forth in the merger agreement; (2) that Wade had failed to disclose or had undervalued on his inventory and appraisement approximately $9,500,000 in cash; (3) that Wade had undervalued on his inventory and appraisement the newly issued Republic ITS shares; and (4) that Wade had failed to disclose on his inventory and appraisement a 401 (k) plan held by John Hancock Funds. Deborah identified the “residuary clause” contained in the divorce decree and requested “delivery” of each of the undisclosed and undervalued assets to her.
Wade filed a plea to the jurisdiction, arguing that the trial court lacked subject-matter jurisdiction to substantively alter
III. Standard of Review
Mandamus relief is proper only to correct a clear abuse of discretion when there is no adequate remedy by appeal. In re Columbia Med. Ctr. of Las Colinas,
. IV. Section 18.a v. The “Residuary Clause ”
In his only issue, Wade argues that the divorce decree unambiguously awarded to him all of the alleged undisclosed or undervalued assets of which Deborah complains and, therefore, that Deborah is seeking a post-divorce redivision of previously divided community property, not a clarification and enforcement of the divorce decree. Because the trial court has no subject-matter jurisdiction to alter or redivide the previously divided community property, Wade contends that the trial court clearly abused its discretion by denying his plea to the jurisdiction.
Deborah contends that Wade (1) failed to disclose a promissory note in the amount of approximately $4.3 million and contractual rights to cash payments (one of the payments being approximately $1.1 million) and (2) undervalued the newly issued Republic ITS shares by at least $2,490,000. In response to Wade’s argument that she seeks a redivision of previously divided property, Deborah argues that the undisclosed and undervalued assets were never awarded to Wade under section 18.a of the divorce decree but, instead, were awarded to her at the time of the divorce pursuant to the “residuary clause.” She advocates the following construction of the divorce decree and “residuary clause”:
• All of the property awards expressly made pursuant to the divorce decree are contingent upon a proper valuation of each asset.
• If a party failed to disclose or undervalued an asset in his or her inventory and appraisement, then that asset was “concurrently” awarded to the other party pursuant to the “residuary clause” when the divorce decree was executed.
• But if an asset was both disclosed and properly valued in the party’s inventory and appraisement, then the “conditions precedent” contained in the “residuary clause” — undervaluation and nondisclosure — were not triggered, and the asset was not awarded pursuant to the “residuary clause” but pursuant to section 18 of the divorce decree.
Deborah therefore contends that by filing her “Amended Motion for Clarification Order and to Enforce Property Division,” she merely seeks (1) to determine whether assets were undisclosed or undervalued and, if so, (2) to enforce the division of undisclosed and undervalued assets that already occurred via the “residuary clause.”
(a) A court may not amend, modify, alter, or change the division of property made or approved in the decree of divorce or annulment. An order to enforce the division is limited to an order to assist in the implementation of or to clarify the prior order and may not alter or change the substantive division of property.
(b) An order under this section that amends, modifies, alters, or changes the actual, substantive division of property made or approved in a final decree of divorce or annulment is beyond the power of the divorce court and is unenforceable.
Tex. Fam.Code Ann. § 9.007(a), (b) (West 2006).
A trial court does, however, retain continuing subject-matter jurisdiction to clarify and to enforce the decree’s property division. Id. §§ 9.002, 9.008(a) (West 2006); see also id. § 9.006(a) (West 2006) (providing that trial court has continuing jurisdiction to “render further orders to enforce the division of property made in the decree of divorce ... to assist in the implementation of or to clarify the prior order”). But a clarification order cannot be used to make a substantive change in a divorce decree after it becomes final, even if it contains substantive legal error. See Shanks v. Treadway,
We agree with Wade that section 18.a of the divorce decree expressly and unambiguously awarded all of the alleged undisclosed or undervalued assets to him. The divorce decree awarded Wade the “Republic ITS stock,” which included the newly issued Republic ITS shares, and all other “rights and privileges in connection with it.” The “rights and privileges in connection” with the “Republic ITS Stock” included the matters set out in section 2.3 of the merger agreement that Wade had the “right to receive,” which included the alleged undisclosed or undervalued assets — the promissory note, cash, and newly issued Republic ITS shares. As for the $9,500,000 that Deborah initially complained about in her amended motion, to the extent that she has not abandoned this argument, she agreed in her deposition that the $10 million divided approximately 70/30 in her favor by the divorce decree accounted for those funds. Similarly, regarding the John Hancock 401(k) account, Deborah’s attorney conceded at the hearing on the plea to the jurisdiction that it was a non-issue if she was mistaken that an Ameritrade account identified on the inventory and appraisement was the same account as the John Hancock account, which is consistent with Wade’s explanation of the Ameritrade account.
But our conclusion that section 18.a awarded all of the alleged undisclosed or undervalued assets to Wade does not resolve the issue here because Deborah contends that the disputed section 18.a asset awards were merely contingently awarded to Wade and “concurrently” awarded to her under the “residuary clause” when Wade failed to disclose or undervalued certain assets. However, under Deborah’s construction of the divorce decree, if it is
An agreed divorce decree, such as the one in this case, is a contract subject to the usual rules of contract construction. See McGoodwin v. McGoodwin,
We disagree with Deborah that the unambiguous section 18.a asset awards are contingent upon the “conditions precedent” — nondisclosure and undervaluation — contained in the “residuary clause.” Deborah says that “the parties elected to include the Residuary Clause in the Decree in order to provide a ‘safety net’ in the event either party was less than forthcoming,” but examining the entire decree as written, there is no indication that Wade and Deborah intended for the section 18.a asset awards to be contingent upon anything, including the “conditions precedent” of the “residuary clause.” As written, the section 18.a asset awards are final. We cannot harmonize section 18.a with the “residuary clause” by construing the asset awards under section 18.a as contingently awarded upon a proper disclosure and valuation of property in the inventory and appraisement.
As far as we can tell, the only other way to possibly harmonize the “residuary clause” with section 18.a is to construe the “residuary clause” as applying to residual assets that were not awarded by section 18.a of the divorce decree. But as with Deborah’s “contingency” argument, this contention leads to a dead end.
The word “residuary” is derived from the word “residue,” which means “something that remains after a part is taken, separated, removed, or designated.” See Webster’s Third New International Dictionary 1932 (3d ed.2002). Consistent with this meaning, a standard residuary clause contained in a divorce decree provides a remedy for property that was not otherwise divided and awarded by the divorce decree. See, e.g., Buys v. Buys,
Here, the divorce decree’s “residuary clause” purports to devise a remedy for property “that was not disclosed or undervalued in the spreadsheet attached to each party’s Inventory and Appraisement.” [Emphasis added.] This is not a residuary clause as that term is commonly used because in no way does it contemplate a division of property that was not otherwise divided by the divorce decree. Instead, according to Deborah’s construction, the “residuary clause” operates on an unwritten contingency — idling along and irrelevant when a section 18.a asset was
Deborah directs us to Noyes v. Noyes and argues that the decision involves “similarly situated facts [and] provides firm grounds for determining whether a petitioner is seeking ‘enforcement’ or ‘modification’ of a previously entered decree.” No. 04-08-00627-CV,
The court of appeals in Noyes thus resolved a dispute over the construction of a single provision contained in the divorce decree. Unlike in this case, the court of appeals did not have to resolve a conflict between two provisions of a divorce decree that arguably awarded the same assets to two different people, nor did the court of appeals address a provision worded anything remotely similar to the “residuary clause” at issue in this case. Noyes is therefore inapposite.
We are unable to harmonize the “residuary clause” with section 18.a’s final asset awards. Consequently, the “residuary clause” irreconcilably conflicts with section 18.a — the alleged undisclosed or undervalued assets could not have been unambiguously awarded to Wade under section 18.a but simultaneously “concurrently” awarded to Deborah by the “residuary clause” if she demonstrates in a post-judgment action that Wade failed to disclose or undervalued those assets in his inventory and appraisement.
When portions of a contract cannot be reconciled, a court may resolve the conflict by striking one of the provisions. See Ogden v. Dickinson State Bank,
Section 18.a specifically awarded the disputed assets to Wade, and Wade and Deborah positioned section 18.a in the divorce decree ahead of the generally worded “residuary clause.” See Wells Fargo Bank, Minn., N.A. v. N. Cent. Plaza I, L.L.P.,
Further, for Deborah to prevail upon her theory that she was awarded assets under the “residuary clause,” a hearing and proof of an in-fact undervaluation would be required in the trial court. Deborah’s contention of undervaluation certainly could be contested by Wade, even under Deborah’s interpretation of the “residuary clause.” However, the trial court lacks jurisdiction to conduct an evidentiary hearing on the issue of a disputed asset’s actual value because the trial court’s plenary power expired long ago. See Pearson,
As written, the divorce decree either finally awarded Wade certain assets or it did not. The decree could not have “concurrently” awarded Deborah assets that were expressly, unambiguously, and finally awarded to Wade. For these reasons, the “residuary clause” is ineffective.
The dissent (a) accuses the majority of “discarding]” contract principles because we are unable to harmonize the “residuary clause” with section 18.a’s final asset awards and (b) claims that the divorce decree can be construed so that effect is given to all of its provisions — the decree apparently “awarded the assets to one person in the event of one circumstance that had occurred before signing of the decree or another person in the event of the opposite antecedent circumstance.” Dissent Op. at 809-10. [Emphasis added.] We disagree with the dissent’s contentions on both counts. We reach our proper conclusion through a precise application of relevant contract-construction principles, and as explained, the divorce decree is not worded in such a way that Wade and Deborah intended for the unambiguous section 18.a asset awards to be contingent upon nondisclosure or undervaluation, nor could the decree as written “concurrently” award Deborah assets that were expressly and unambiguously awarded to Wade. We hold that in the unavoidable confrontation between the “residuary clause” and section 18.a, the “residuary clause” must fail.
Examining the entire divorce decree, the only reasonable construction that can be given to the “residuary clause” as written is that it permits the post-judgment division of previously decree-divided property
Absent extraordinary circumstances, mandamus will not issue unless relator lacks an adequate remedy by appeal. In re Van Waters & Rogers, Inc.,
The trial court lacks subject-matter jurisdiction to redivide community property that has already been awarded to Wade. See Tex. FarmCode Ann. § 9.007(a), (b). The trial court issued the February 7, 2012 order denying Wade’s motion to reconsider his plea to the jurisdiction and permitting Deborah to conduct discovery in furtherance of her post-judgment action seeking to redivide previously divided property after its plenary power over the divorce decree had expired. See, e.g., In re Liberty Ins. Corp.,
V. Conclusion
We conditionally grant Wade’s petition for writ of mandamus and direct the trial court (1) to set aside its February 7, 2012 order denying Wade’s motion to reconsider
Dissenting Opinion
dissenting.
The majority concludes that the “residuary clause”
Section 5 of the parties’ agreed decree states in part, “The Court finds that the parties have entered into a written agreement. ... To the extent permitted by law, the parties stipulate the agreement is enforceable as a contract.” The parties’ decree, therefore, is a contract that can be enforced through contractual remedies. See In re Green,
Furthermore, the law of contracts requires us to
ascertain the true intent of the parties as expressed in the instrument. In doing so, we must examine and consider the entire contract in an effort to harmonize and give effect to all provisions so that none are rendered meaningless. Contractual provisions should be considered with reference to the entire instrument; no single provision should control. Words in a contract must carry their ordinary, generally accepted meanings unless the contract itself shows that the terms have been used in a technical or different sense. In construing a contract, we may not rewrite it nor add to its language.
Doe v. Tex. Ass’n of Sch. Bds., Inc.,
are considered masters of their own choices. They are entitled to select what terms and provisions to include in a contract before executing it. And, in so choosing, each is entitled to rely upon the words selected to demarcate their respective obligations and rights. In short, the parties strike the deal they choose to strike and, thus, voluntarily bind themselves in the manner they choose. And, that is why parties are bound by their agreement as written.
Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d 24, 26 (Tex.App.-Amarillo 2000, no pet.) (emphasis added).
The majority’s opinion discards these principles. The plain meaning of the stipulation that the parties chose is that “any asset” of the parties that was “not disclosed or undervalued” in the parties’ inventories is awarded “to the party not in possession or control of the asset.” [Emphasis added.] Because the items described in section 18.a of the agreement, under the heading “Property to WADE LLOYD WHITE,” are unquestionably assets of the parties, they must be subject to the requirements of the parties’ clear stipulation.
It is true that section 18.a states that the items contained within the section are awarded to Wade as his “sole and separate property” and that Deborah is “divested of all right, title, interest, and claim in and to that property.” In a normal case — one that does not have a clause with the language of the stipulation in this case — it would be clear that the property in section 18.a would belong to Wade. But our task requires us to construe and give effect to the whole contract, not just section 18.a. See Doe,
We can give effect to the entire contract so that we render no provision meaningless. Harmonizing section 18.a with the stipulation, the parties’ contract, as of the date that the contract was signed, made the items in section 18.a (including the Republic ITS stock)
When the trial court’s decree and the parties’ contract are properly construed this way,
I believe that the majority’s disposition is based on its conclusion that Deborah is impermissibly seeking to amend a provision of the divorce decree. But it is actually the majority’s opinion that makes a “substantive change” to the decree and that alters the expressed intentions of the parties and of the trial court concerning the distribution of the parties’ assets. See Majority Op. at 803; Shanks v. Treadway,
For these reasons, I would hold that the trial court did not abuse its discretion by denying Wade’s plea to the jurisdiction. I respectfully dissent to the majority’s conditional grant of Wade’s petition for writ of mandamus.
Notes
. The majority correctly explains that section 23 of the parties' agreed divorce decree is not a residuary clause as that term is traditionally understood. See Majority Op. at 804; Pearson v. Fillingim,
. See Tex. Fam.Code Ann. § 9.007 (West 2006).
. Deborah alleges that Wade "grossly undervalued" this stock.
. The stipulation states, "IT IS ORDERED ... that any asset of the parties that was not disclosed or undervalued ... is awarded to the party not in possession or control of the asset.”
. I believe that this is the proper construction of how section 18.a can and should be harmonized with the stipulation. At least, however, reasonable minds could disagree as to how these provisions affect each other. In that event, the parties’ contract would be ambiguous, the trial court would have jurisdiction to clarify it, and the parties could offer parol evidence to support their respective interpretations of the contract that they made. See Tex. Fam.Code Ann. §§ 9.002, .006 (West 2006); DaimlerChrysler Motors Co., LLC v. Manuel,
. The majority cites Pearson,