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Click here for the full text of this decision FACTS:James and Kymberly were married in 1990 and separated in 1997. During the marriage, James managed the business of each of the entities. The entities paid various personal expenses for James and Kymberly, including a $95,000 addition to their home. The entities were primarily involved in real estate, including the purchase and collection of notes and rental real estate. During the marriage, James purchased notes and rental real estate for the personal benefit of James and Kymberly. During the divorce proceedings, Kymberly sought to pierce the corporate veil of the entities so that James’ interest in the entities would be included as a community property asset. The entities filed a breach of fiduciary duty claim against James seeking damages for the personal expenses the entities paid on his behalf and a constructive trust or damages for the business opportunities James usurped for the personal benefit of James and Kymberly. Following a bench trial, the trial court found James had breached his fiduciary duty but denied the entities’ claim for damages or a constructive trust based on the trial court’s alter ego finding. Because the trial court found alter ego, it increased the community estate by the amount of James’ interest in the entities. In the first appeal (Lifshutz I), the court held that “the trial court improperly pierced the corporate entities” because the evidence was legally insufficient to support a finding of alter ego in a divorce case. Further, the court held that the trial court improperly pierced Liberty Properties Partnership because it was a partnership. Because the trial court denied damages for the entities’ breach of fiduciary duty claim based on its alter ego finding, the court reversed and remanded for a new trial on breach of fiduciary duty and the division of community property. In the opinion, the court noted, “If the evidence supports a finding that James was undercompensated for his time and talent spent increasing the value of his separate interests, Kymberly may have a claim for reimbursement to the community.” On remand, the trial court reviewed the evidence developed at the original trial along with bank statements regarding the funds received from the sale of James’s carried interest in Hotel Partners. The trial court found that one-third of the stock in Berlee was distributed to James by Liberty Properties Partnership and then recontributed to Liberty Financial Corporation, making the stock a community property asset. The trial court further found that James was undercompensated and that the community estate was entitled to reimbursement. Finally, the trial court found that the breach of fiduciary duty claim should be denied because: 1. the claim is not just; 2. James is the alter ego of the entities; 3. any diversion of corporate opportunities was ratified through agreement, consent or acquiescence or James had actual or apparent authority to divert the opportunities. HOLDING:Reversed and remanded. As a fiduciary, a partner is under the same obligation as a corporate fiduciary not to usurp corporate opportunities. The court holds that the evidence conclusively established as a matter of law that James diverted opportunities from the entities for personal gain, including interests in notes and rental properties. The testimony was undisputed that the entities were engaged in the acquisition of rental properties which is what the Hutchins Palms and San Jacinto projects entailed. These projects came to James’ attention at the offices he used in managing the entities. James did not offer these opportunities to the entities before acquiring them for the personal benefit of James and Kymberly. The undisputed evidence shows that James selected the notes that would be purchased for his personal benefit from those purchased by the Entities so that the notes purchased for his personal benefit were the notes with the highest rates of return or yields and with the least risk of default. The only project in which the entities did not previously engage was the Hotel Partners project; however, the fact that the entities purchased a 10 percent interest while James personally benefitted by receiving a 10 percent carried interest is sufficient to support a breach of fiduciary duty regarding this opportunity. Rather than engage in the services enabling James to receive a carried interest on behalf of the entities, he elected to engage in those services on his own behalf to personally receive the carried interest. The entities challenge the trial court’s alter ego finding. The entities contend that the finding violates the law of the case and exceeds the scope of the remand. The law of the case and the limited scope of the remand in this case precluded the trial court from relying on the theory of alter ego as a basis to deny damages for the breach of fiduciary duty claim, the court decides. Even if it is assumed that a breach of fiduciary duty can be ratified, the court holds that there is no evidence of full disclosure to the other shareholders. Indeed, the evidence establishes that no disclosure was made. Accordingly, the trial court erred in finding that the entities ratified James’ breach based on the usurpation of business opportunities. With regard to the payment of personal expenses, however, the evidence establishes that the shareholders were on notice that these expenses were being paid by the entities. In fact, one of James’ brothers received similar benefits, and the father’s personal expenses had been paid through the entities for years. Accordingly, the evidence supports the trial court’s finding that James’ actions with regard to the payment of personal expenses had been ratified. The entities contend that the evidence is insufficient to establish that James had actual or apparent authority. There is no evidence in the record that the entities intentionally conferred on James the authority to usurp business opportunities, took any action that would enable James to believe he had the authority to usurp business opportunities, or failed to exercise ordinary care thereby allowing James to believe he had authority. With regard to apparent authority, apparent authority exists where the principal’s conduct would lead a reasonably prudent person to believe that the agent possessed the authority to act on behalf of the principal. This concept does not apply in this context where clearly James was not acting on behalf of the entities. Accordingly, the trial court erred in finding that James had actual or apparent authority to use corporate and partnership assets as his own. James contends that the trial court improperly disregarded Lifshutz I and punished James by awarding even more property to Kymberly than it awarded under the first, erroneous judgment. Because this court remanded the cause to the trial court to reconsider the property division, the trial court did not ignore the Lifshutz I decision or violate any legal principal in following this court’s instructions on remand to reconsider the property division. James challenges the finding by the trial court “that 1/3 of the stock of Berlee Lumber Company was distributed by Liberty Partnership to James G. Lifshutz as a non liquidating community distribution and then recontributed by James G. Lifshutz to Liberty Financial during the reorganization and reimbursement was therefore due the community estate.” In the final divorce decree, the trial court further found, “that the distribution of Berlee stock should be and is hereby characterized as community property and when contributed by James G. Lifshutz to his separate corporate entities, James G. Lifshutz’ separate estate was enhanced between $1,100,000.00 – $1,780,630.00.” Although the court notes that the evidence presented on this issue is conflicting, the evidence is sufficient to support the trial court’s finding that a distribution occurred. Because it is within the trial court’s province to weigh the credibility of the witnesses and the weight to be given their testimony, the evidence is legally and factually sufficient to support the trial court’s finding that a minority discount was not applicable. James challenges the trial court’s finding that “James G. Lifshutz was under compensated and that the Jensen Claim of Kymberly Benson Lifshutz should be granted.” In the final divorce decree, the trial court ordered “that Kymberly Benson Lifshutz’ Jensen reimbursement claim be and it is hereby granted in the total amount of $492,835.00.” Although “mathematical certainty” is not required, some evidence was required to be presented regarding the value of the time reasonably necessary to manage and preserve the separate property. Because Kymberly did not meet her burden to present that evidence, the evidence was legally insufficient to support the trial court’s award of the Jensen reimbursement. OPINION:Alma L. L�pez, C.J.; L�pez, C.J., Duncan and Simmons , JJ. CONCURRENCE:Sarah B. Duncan, J. “Because I would instruct the trial court that it could not consider the transfer of the Berlee stock as a basis for Kymberly’s reimbursement claim, I concur in the judgment only.”

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