X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Two weeks prior to his wedding to Christina Teadora Varrasso, Esteban Antonio Loaiza, a baseball player with the Texas Rangers, began an affair with Ashley Esposito. The wedding went as planned in October 1998, though Ashley made harassing phone calls to Christina throughout 1999. In January 2000, Christina and Esteban bought a house in Pennsylvania, but Esteban and Ashley continued to see each other, and Ashley announced in July 2000, while she and Esteban were at an Arizona resort together, that she was pregnant with Esteban’s child. Shortly after the Arizona trip, Esteban was traded to the Toronto Blue Jays, so Esteban and Christina moved to Toronto for the remainder of the 2000 season. Esteban also started making plans at this time to divorce Christina. He filed for divorce on Aug. 31, 2000, but did not tell Christina. Though he told Christina he would return to the Pennsylvania home at the end of the season, he went to Texas instead to shop for a home with Ashley. Esteban paid $75,000 to lease a house, with an option to purchase, with Ashley. In the meantime, Esteban bought Ashley at $64,000 car, and bought his brother and sister new cars worth about $30,000 each. Then, after Christina was finally notified of the divorce papers, Esteban bought several Rolex watches for his teammates, a car for his mother and two cars for himself, all totaling around $184,000. During the separation, Esteban signed a contract with Toronto that “guaranteed” him $4 million in 2001 and $5.8 million in 2002. The contract listed several conditions under which Toronto could withhold payment, including Esteban’s use of drugs, participation in inherently dangerous activities, a labor dispute, voluntary retirement, intentional self-injury or refusal to render services. Ashley had the baby in March 2001. Esteban paid all the medical bills, then hired Ashley’s mother to take care of the baby for a salary of $72,000 per year. The trial court granted the divorce on April 30, 2002. The trial court divided the community property roughly 77 percent to 23 percent in favor of Christina. Christina appeals the property division. She claims she met her burden of proving that Esteban wasted community assets, breached fiduciary duties owed to her and/or committed fraud on the community. She also argues that the trial court mischaracterized Esteban’s contract with Toronto as being future earnings. HOLDING:Affirmed. The court establishes that while waste of community assets is a factor that can be taken into consideration during the division of the community estate, there is no independent tort cause of action for the wrongful disposition by a spouse of community assets. The court also establishes that fraud on the community is not technically fraud, but is a judicially created concept based on the theory of constructive fraud. It is applied when one spouse breaches a legal or equitable duty, which violates the fiduciary relationship of the spouses. A presumption of constructive fraud arises where one spouse disposes of the other spouse’s half of the community property without that spouse’s knowledge. Here, the court cites the inventory of Esteban’s expenses that he made during his affair with Ashley, unbeknownst to Christina. Aside from the cars, houses, watches and child-related expenses, there was also travel and cash advances. The court confirms that gifts made to “”strangers’ of the marriage, particularly of the female variety” amounts to fraud on the community estate, and that Christina had no knowledge of those gifts. Esteban did not meet his burden of showing fairness in the disposal of community assets, so the court holds that the evidence conclusively establishes that Esteban breached his fiduciary duty to Christina and committed fraud on the community. Again, under Schlueter v. Schlueter, 975 S.W.2d 584 (Tex. 1998), these claims do not stand as separate causes of action, only as factors to consider in dividing the community estate. However, contrary to Christina’s contention, the court rules that the trial court “clearly considered” the facts of Esteban’s fraud on the community, as evidence by the disproportionate division of the community property, 77 percent to 23 percent. The court rejects Esteban’s attempt to include that portion of the temporary support he paid Christina that she did not spend in the community estate. Calculating the rest of the estate, the court confirms that Christina received approximately $887,000 of the $1.14 million estate, or approximately 77 percent. The court also points to the trial court’s findings justifying the disproportionate award, including: “1. fault in the break up of the marriage; 2. fraud on the community; 3. benefits the innocent spouse may have derived from the marriage; 4. disparity of earning power; 5. appellant’s education and employability; 6. community liabilities; 7. tax consequences; 8. earning power of spouses; 9. need for future support; 10. nature of the property; 11. waste of community assets; 12. community funds to purchase out-of-state property; 13. gifts to or by the spouses during marriage; 14. reimbursement; 15. attorney’s fees; 16. creation of community property by the effort of the spouses.” The trial court did not abuse its discretion in its division of the community estate, the court concludes. The court next turns to whether Esteban’s contract, a Uniform Player’s Contract plus an addendum, was a guaranteed contract, as Christina claims, or was conditioned on Esteban’s performance as a professional baseball player. The court notes that Christina’s expert called the contract the most guaranteed she’d ever seen, while Esteban’s agent said the contract is only guaranteed if the player is otherwise willing to perform the skilled services of a baseball player. The court distinguishes the line of cases Christina relies on awarding stock options to spouses. The court finds the analogy to stock options misapplied, as payments under Esteban’s contracts were not fixed property rights subject to divestment only under circumstances. The court further distinguishes cases dealing with other claims to future earnings, once again disagreeing that Esteban’s right to payment accrued when he signed the contract, rather than when he performed his services. “After a thorough review of the contract at issue, it is clear that it was the intent of the parties that [Esteban] render skilled services as a baseball player in exchange for the payment of $5,800,000 for the year 2002. The contract’s guarantee provision cannot be construed to excuse [Esteban] from performance of his obligations under the contract.” OPINION:Livingston, J.; Cayce, C.J., Livingston and Walker, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.