Updated: May 10
One of the unfortunate realities of many divorce proceedings is that the people getting them do not usually like each other very much, at least in the time being. It can be hard to wrap one's head around the fact that individuals who are otherwise mature, and intelligent can, during a divorce, behave in a manner which is irrational and downright childish. But it happens. More than you might think. Quite a lot, in fact.
Psychologists sometimes attribute obnoxious divorcee behavior to the complex array of emotions ignited by any loss. Whatever the reason, there comes a time when bad behavior crosses the line from "angst" to "just crazy," and while that line is not always easy to define, it frequently lies at a point on the roadmap to divorce that judges call "constructive or actual fraud on the community estate."
"There comes a time when bad behavior crosses the line from "angst" to "just crazy..."
The answer to "why are they acting this way" could be as simple as "well...I mean they are getting divorced. They probably aren't the best of buds." Psychologists sometimes attribute obnoxious divorcee behavior to the complex array of emotions ignited by any loss. Whatever the reason, there comes a time when bad behavior crosses the line from "angst" to "just crazy," and while that line is not always easy to define, it frequently lies at a point on the roadmap to divorce that judges call "constructive or actual fraud on the community estate."
To understand "fraud on the community estate" you have to understand how married people are supposed to handle community assets during marriage. In Texas, each spouse owns an undivided one-half interest in all community assets. Carnes v. Meador, 533 S.W.2d 365, 370 (Tex.Civ.App.—Dallas 1975, writ ref'd n.r.e.); See also Farmers Tex. Cty. Mut. Ins. Co. v. Okelberry, 525 S.W.3d 786, 794 (Tex. App.-Houston [14th Dist.] 2017, pet. denied) ("The community property scheme thus makes the spouses equal owners of undivided interests in all of the community property.").
That said, each spouse ordinarily enjoys the right to dispose of community property subject to his or her sole management or control; and it is not necessary for one spouse to approve of every disposition of community property made by the other. Id., see also Murphy v. Metropolitan Life Insurance Company, 498 S.W.2d 278 (Tex.Civ.App. — Houston [14th Dist.] 1973, writ ref'd n. r. e.) Texas courts do however recognize that a trust relationship exists in marriage. This duty, in turn, gives rise to a fiduciary duty not to dispose of community property in a manner that is unfair one's spouse. See In re Marriage of Moore, 890 S.W.2d 821, 827 (Tex.App.—Amarillo 1994, no writ). The violation of this duty is known as "fraud on the community estate", sometimes referred to as "waste". In re Marriage of Moore, 890 S.W.2d 821, 827 (Tex.App.—Amarillo 1994, no writ).
It is presumed that if one spouse disposes of the other's half-interest in community property without their knowledge or consent the disposition was "constructively fraudulent". This is a judicial concept created to provide an equitable remedy to spouses who are harmed by the other's unfair disposal of community assets.
As stated by the Texas Supreme Court, "[a] claim of fraud on is a means to an end, either to recover specific property wrongfully conveyed, ... or ... to obtain a greater share of the community estate upon divorce, in order to compensate the wronged spouse for his or her lost interest in the community estate." Schlueter v. Schlueter, 972 S.W.2d 584, 589 (Tex. 1998), quoting Belz v. Belz, 667 S.W.2d 240, 247 (Tex.App.—Dallas 1984, writ ref'd n.r.e.) Courts have found "fraud on the community" in a variety of circumstances, including:
1. A husband withdrew funds from a community account and failed to make them available to his wife. see Schaban-Maurer v. Maurer-Schaban, 238 SW 3d 815, 824 (Tex. App. - Ft. Worth 2007, no pet.);
2. A wife persuading her husband to invest community assets in a business venture without disclosing her ulterior motives for doing so. see Matter of Marriage of DeVine, 869 S.W.2d 415, 420 (Tex.App.—Amarillo 1993, writ denied);
3. "Arbitrary and capricious" gifts made by a husband to his lover. See Osuna v. Quintana, 993 S.W.2d 201, 210 (Tex. App.-Corpus Christi 1999);
4. A husband's failure to account for funds over which he exercised exclusive control. Puntarelli v. Peterson, 405 S.W.3d 131, 138-39 (Tex. App.-Houston [1st Dist.] 2013, no pet.).
While the circumstances that constitute fraud on the community may vary, an experienced Dallas Divorce Lawyer can evaluate your case and advise whether or not the facts could constitute fraud.
"An experienced Dallas divorce lawyer can evaluate your case and advise whether the facts constitute fraud"
If you prove fraud on the community estate, the Court has several options to remedy any unfair advantage obtained by the wrongdoing spouse as a result of fraud. While this analysis can be complicated, the basic rule is that if the Court finds that one party has defrauded the estate, it must "reconstitute the estate." Specifically, the Family Code provides that:
If the trier of fact determines that a spouse has committed actual or constructive fraud on the community, the court shall: