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Click here for the full text of this decision FACTS:Gerald and Sally Owens were divorced in New York in December 1979. Their separation agreement formed the basis of their divorce decree and it required Gerald to pay Sally $4,855 per month, starting in January 1980, until either party died or until Sally remarried. Gerald domesticated the agreement in Texas and filed a petition to modify his obligation under the agreement on Jan. 24, 2001. Sally filed for summary judgment saying a letter Gerald’s attorney sent her constituted an anticipatory repudiation of the agreement. She argued that this anticipatory repudiation entitled her to judgment in the amount of the present value of all future payments. The trial court granted Sally’s motion, awarding her $474,091 and granting her $30,000 under a turnover order for her efforts in enforcing Gerald’s compliance with the separation agreement. The trial court also severed this judgment, making it final, a ruling that this court reversed and remanded in May 2003. In November 2003, Sally filed another motion for summary judgment, challenging four aspects of Gerald’s motion to modify: 1. His claim against her for rental payments of the house she lived in but that they both owned fails; 2. A separation agreement cannot be modified by a court; 3. Gerald has not full payments since March 2001 (he made a partial payment in March, then no payments from April 2001 to November 2003; and 4. Gerald’s wrongful-garnishment claims against Sally fail for a number of reasons. Gerald responded: 1. Summary judgment would be improper because he did not owe any payments while his petition to modify was pending; 2. The turnover order of the first judgment was improper; and 3. Fact issues remain over his claim for rental payments and wrongful garnishment. In a letter sent to the parties in March 2004, the trial court said it was granting summary judgment to Sally on the unpaid alimony and that this judgment would be severed from the others to make it final. The letter also stated that the trial court was denying Gerald’s motion for summary judgment on the unpaid rent and wrongful garnishment claims and that Gerald would not receive an offset of $30,000 to reflect the amount Sally was awarded in the turnover order. Judgments reflecting the statements in the letter were entered April 12, 2004, and the trial court rejected Gerald’s argument that the severance would improperly split causes of action based on the same facts. Gerald now appeals. HOLDING:Reversed and remanded. The court notes that under New York law, where the separation agreement was first entered, if Gerald shows a substantial change in circumstances, then a trial court can cancel or lower his obligation to pay alimony (this law applies applications to modify judgment made before July 19, 1980). Also under New York law, the trial court may cancel or modify Gerald’s obligations under the divorce judgment as to future payments and as to all payments that accrued on or after the date Gerald filed his petition to modify. Finally, the trial court measures the change in circumstances by comparing Gerald’s financial circumstances in December 1979 and in January 2001, when Gerald filed his petition to modify. Under the unambiguous language of the separation agreement and the divorce judgment, the separation agreement was incorporated but not merged into the judgment. Gerald and Sally entered into the separation agreement and were divorced before the July 19, 1980, statutory effective date. Therefore, even if the trial court retroactively relieves Gerald of his obligation to pay alimony under the judgment on or after March 1, 2001, the trial court cannot relieve Gerald of his payment obligation under the separation agreement based on Gerald’s petition to modify, and Sally still may assert a claim for breach of that agreement. However, the court continues, Gerald’s liability under the separation agreement is measured by the difference between the amount of alimony provided for in the separation agreement and the lower amount, if any, owed by Gerald under the judgment after the trial court rules on Gerald’s petition to modify. “Gerald’s petition to modify has been on file since January 2001, before Gerald stopped making payments. The trial court should hear and consider the merits of this petition before ruling on Sally’s claim for payment, in order to determine the amount, if any, that Gerald owes under the Separation Agreement. While Gerald might be liable for the full $4,855.50 per month under the Separation Agreement, this result would follow only if the trial court were to grant Gerald’s petition to completely annul his alimony liability under the judgment, which would preclude enforcement of Gerald’s alimony obligation by contempt. We conclude that the trial court erred in granting summary judgment in Sally’s favor as to her claim for breach of the Separation Agreement, because the amount, if any, of her damages under that claim cannot be determined until the trial court rules on Gerald’s petition to modify.” The court next turns to the trial court’s severance order, noting that at the time of the order, 10 claims asserted by both Gerald and Sally still existed. The court points out that Gerald asserts as a defense to the severed claim that he is excused in whole or in part from paying the claim, based on his petition to modify. This defense involves the same facts and issues that exist in Gerald’s petition to modify, which still exists. They both involve the divorce judgment, the separation agreement and the issues of how much alimony Gerald has paid and how much, if any, he owes under the judgment and under the agreement. The court also notes that Sally’s anticipatory repudiation claim remains, which is also based on unpaid alimony payments she may or may not be entitled to. The court thus concludes that the severed claim is so interwoven with the remaining actions and that severance results in prejudice. The trial court abused its discretion in making the severance order. OPINION:Frost, J.; Hudson, Frost, and Seymore, J.J.

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