IN THE SUPREME COURT OF TEXAS


No. 96-1091



J. Hudson Schlueter and Richard Stephen Schlueter, Petitioners

v.


Karen Sue Schlueter, Respondent

On Application for Writ of Error to the

Court of Appeals for the Third District of Texas



Argued on October 7, 1997


Justice Spector, dissenting.

The Court today holds that fraud on the community is not an independent tort for which a defrauded spouse can recover actual and punitive damages. Although a disproportionate share of the community estate may serve as an appropriate remedy, I believe that Karen Schlueter should be able to recover from Richard Schlueter the punitive damages found by the jury as well. Accordingly, I dissent.

The Court's decision today signifies a retreat from its abrogation of the interspousal immunity doctrine in Price v. Price , 732 S.W.2d 316 (Tex. 1987). Six years after Price , in Twyman v. Twyman , 855 S.W.2d 619, 624 (Tex. 1993), we stated that "there appears to be no legal impediment to bringing a tort claim in a divorce action based on either negligence or an intentional act such as assault or battery." However, while the Court today affirms the fraud judgment against her father-in-law, the Court nevertheless prohibits Karen Schlueter from recovering from her husband on the same fraud cause of action.

Adopting the Court's approach, the trial judge will simply take the tortfeasor-spouse's conduct into account in dividing the community estate. The fraudulently transferred, converted, or wasted community property is rightly returned to the community through a resulting trust, a money judgment against the tortfeasor-spouse, or, as here, a judgment against a third party. These reimbursed funds are community property, in which the tortfeasor-spouse retains a property interest.

While the trial court may consider the tortfeasor-spouse's actions in making a just and right property division, his or her separate property will not be affected. I believe that the wronged spouse should be able to reach the defrauding spouse's separate property to recover punitive damages, in addition to a share of the community, for actual fraud on the community. See , e.g. , Mazique v. Mazique , 742 S.W.2d 805, 807-08 (Tex. App.--Houston [1st Dist.] 1987, no writ) (awarding a money judgment for actual and punitive damages against husband who had defrauded wife's interest in community estate); see also Thomas M. Featherston, Jr., Marital Property Law -- A Trusts & Estates Perspective , State Bar of Tex., Advanced Family Law Course 13, 14 (1997) (citing Mazique ).

Punitive damages punish wrongdoers and serve as an example to others. Transportation Ins. Co. v. Moriel , 879 S.W.2d 10, 17 (Tex. 1994); Hofer v. Lavender , 679 S.W.2d 470, 474 (Tex. 1984). "Our duty in civil cases, then, . . . is to ensure that defendants who deserve to be punished in fact receive an appropriate level of punishment . . . ." Moriel , 879 S.W.2d at 17. The imposition of punitive damages here would serve the very purposes for which they were designed: to punish the wrongdoer and deter others from similar conduct.

In a related context, a partner in a partnership may recover punitive damages from other partners for breach of their fiduciary duty, a duty analogous to that owed between spouses. See Hawthorne v. Guenther , 917 S.W.2d 924, 936 (Tex. App.--Beaumont 1996, writ denied) ("An award of exemplary damages is, therefore, supported by a finding that the partner's breach of fiduciary duty was willful and intentional.") (citing International Bankers Life Ins. Co. v. Holloway , 368 S.W.2d 567, 583­84 (Tex. 1963)); Miller v. Kendall , 804 S.W.2d 933, 944 (Tex. App.--Houston [1st Dist.] 1990, no writ) (finding sufficient evidence to support punitive damages award to one partner against another); Cheek v. Humphreys , 800 S.W.2d 596, 599 (Tex. App.--Houston [14th Dist.] 1990, writ denied) ("Exemplary damages are proper where a fiduciary has engaged in self-dealing.") (citing Texas Bank & Trust Co. v. Moore , 595 S.W.2d 502, 510 (Tex. 1980)). I see no reason to reach a different result in the divorce context.

* * *

This Court is able to fashion remedies to right wrongs. See Yamini v. Gentle , 488 S.W.2d 839, 843 (Tex. Civ. App.--Dallas 1972, writ ref'd n.r.e.) ("[E]quity leaves the way open to punish frauds and to redress wrongs perpetrated by means of fraud in whatever form it may appear."). Presented with this opportunity, the Court today fails to do so.

Rose Spector

Justice





OPINION DELIVERED: July 3, 1998