JOSE LUIS LOYO AND SANDRA NUNEZ LOYO v. JOSEPH STEPHEN (2026)

OPINION

Under Texas Family Code section 3.202(d), “[a]ll community property is subject to tortious liability of either spouse incurred during marriage.” TEX. FAM. CODE § 3.202(d). Appellants Jose “Luis” Loyo and Sandra Nunez Loyo were married when (a) appellee Joseph Stephen sued Luis for breach of fiduciary duty, (b) the claim was arbitrated and the arbitrator awarded Stephen $300,000 for Luis's breach of fiduciary duty, and (c) the trial court in Stephen's tort suit rendered an interlocutory order confirming the arbitrator's award; however, the Loyos were divorced by the time the order confirming the arbitrator's award was merged into a final judgment in Stephen's tort case. Stephen sued the Loyos and others for a declaration that, under section 3.202(d), he may satisfy the judgment against Luis by executing on real property that formerly was the Loyos' community property, but which was awarded to Sandra in the divorce.

In this appeal from the summary judgment permitting Stephen to execute on Sandra's property, the Loyos argue that “tortious liability” was not “incurred” until the arbitration award was reduced to a final judgment after the Loyos' divorce. We conclude, however, that Luis's tortious liability was incurred during his marriage to Sandra, when the arbitration award was both issued and confirmed. Thus, we affirm the trial court's judgment.

I. BACKGROUND

This case turns on the application of a statute to the following undisputed facts concerning the chronology of events:

In 2006, Sandra and Luis Loyo purchased a vacant lot (“the Property”) as an investment.

In 2013, Stephen sued Luis and Luis's affiliated companies for, among other things, the tort of breach of fiduciary duty. Luis immediately moved successfully to stay proceedings in the trial court and compel arbitration pursuant to the Texas Arbitration Act (TAA).

Stephen's claims against Luis were still pending in arbitration when Luis filed a petition for divorce in June 2015.

On December 9, 2015, the arbitrator signed an award holding Luis and an affiliated company jointly and severally liable to Stephen for $300,000 for breach of fiduciary duty. The arbitrator additionally found for Stephen on Stephen's request for an accounting of two co-defendant business entities.

On January 29, 2016, the trial court in Stephen's tort suit confirmed the arbitration award and ordered the accounting; however, the order was interlocutory because other, non-arbitrable claims against one of Luis's co-defendants remained pending.

On November 3, 2016, the trial court in the divorce suit signed an agreed judgment awarding the Property to Sandra “as her sole and separate property” and decreeing that Luis “is divested of all right, title, interest, and claim in and to that property.”

In Stephen's tort suit, the trial court rendered an initial final judgment after the Loyos' divorce was final, but after partially granting a motion for new trial concerning the liability of one of Luis's co-defendants, the trial court rendered a new final judgment on May 15, 2017. Stephen recorded the abstract of that judgment on July 17, 2018.

Finally, on January 28, 2019, Stephen sued Luis, Sandra, Sandra's parents, and two companies affiliated with Luis. Stephen initially alleged that Luis and Luis's company Loy Properties violated the Texas Uniform Fraudulent Transfers Act and that the agreed transfer of the Property to Sandra was such a fraudulent transfer; however, Stephen later voluntarily dismissed his fraudulent-transfer claims with prejudice. He instead sought declaratory judgment that the Property is subject to execution under Texas Family Code section 3.202(d) and successfully moved for partial summary judgment solely on that basis.

After Luis and Sandra voluntarily dismissed their counterclaims with prejudice, the trial court rendered final judgment holding Luis, Sandra, and Loy Properties jointly and severally liable for Stephen's attorney's fees and ordering the clerk of the court to issue execution on the Property. The trial court allowed the various motions for new trial to be overruled by operation of law.

II. ISSUES PRESENTED

Luis presents four issues for appeal, and Sandra has adopted all of Luis's briefing.¹ As we have reordered the issues, Luis contends in his first issue that section 3.202(d) does not apply to Stephen's 2017 judgment because the judgment does not expressly include, refer to, or attach a finding that Luis is liable to Stephen in tort. In his second and third issues, Luis argues that the trial court erred in concluding that under Texas Family Code section 3.202(d), Stephen can satisfy his 2017 final judgment against Luis by executing on former community property that was awarded to Sandra in their 2016 divorce. Finally, Luis asserts in his fourth issue that because the final judgment in this case is erroneous, Stephen is not entitled to an award of attorneys' fees and costs.

III. STANDARD OF REVIEW

All of the issues in this case ultimately are matters of statutory construction. The construction of a statute presents a question of law, which we review de novo. City of Houston v. Houston Mun. Emps. Pension Sys., 549 S.W.3d 566, 580 (Tex. 2018).

When construing a statute, our primary objective is to determine the legislature's intent. State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006). As a rule, the most accurate manifestation of the legislature's intent is the literal text it enacted. Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006). We presume that the legislature acted deliberately and purposefully in choosing the words it included or excluded. Crosstex Energy Servs., L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 390 (Tex. 2014). When a statute assigns a particular meaning to a term, courts are bound by the statutory usage. City of Houston v. Hotels.com, L.P., 357 S.W.3d 706, 713 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (citing TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011)). We accordingly interpret statutes by considering their plain language in light of the statute as a whole, without adding extra-textual words or requirements. City of Austin v. Quinlan, 669 S.W.3d 813, 821 (Tex. 2023). We interpret the statute's terms consistently throughout the statute. Sunstate Equip. Co., LLC v. Hegar, 601 S.W.3d 685, 690 (Tex. 2020).

IV. THE LANGUAGE OF THE TORT SUIT'S FINAL JUDGMENT

In his first issue, Luis contends that Texas Family Code section 3.202(d) does not apply to Stephen's judgment against him because that judgment “did not include any finding of tortious liability or refer to or attach any document finding that [Luis] was liable to [Stephen] in tort.”

But section 3.202(d) simply says, “All community property is subject to tortious liability of either spouse incurred during marriage.” It does not require the final judgment to expressly incorporate a finding of tort liability. Indeed, when the final judgment in Stephen's tort suit was rendered, Texas Rule of Civil Procedure 299a stated, “Findings of fact shall not be recited in a judgment.”² Moreover, the Texas Rules of Civil Procedure authorize the trial court to make findings of fact only as to matters “tried in the district or county court without a jury.” TEX. R. CIV. P. 296. Stephen's claims were adjudicated by an arbitrator, not by a district or county court, and Luis does not dispute that the Arbitration Award specifically states, “The Arbitrator awards damages to [Stephen] on his counterclaim for breach of fiduciary duty against 4105 Bar LLC and Luis Loyo, individually, for $300,000.00.”³

We overrule this issue.

V. EXECUTION ON THE PROPERTY

On appeal, Luis primarily argues that tort liability is incurred when a final judgment is rendered on a tort claim, not merely when a tort is committed. But those are not the only possible dates when Luis's tort “liability” was “incurred.”

Here, Luis and Stephen agreed that questions of Luis's liability to Stephen in tort would be resolved only by an arbitrator, and the arbitration award was issued during Luis's marriage to Sandra. Acknowledging this, Luis asserts that his tort liability was incurred only when the arbitration award was “confirmed by entry of a final judgment.” But this assertion overlooks the fact that in Stephen's tort case, the trial court's orders confirming the arbitration award and rendering final judgment are separate. The trial court confirmed the arbitration award during Luis's marriage to Sandra but disposed of the remaining claims in a final judgment rendered after Luis's divorce.

Under the TAA—on which Luis relied in his motion to compel arbitration—an order confirming an arbitration award is treated as a judgment. See TEX. CIV. PRAC. & REM. CODE § 171.092(a) (“On granting an order that confirms, modifies, or corrects an award, the court shall enter a judgment or decree conforming to the order. The judgment or decree may be enforced in the same manner as any other judgment or decree.”).⁴ As we have previously stated, “our courts have recognized that an arbitration award has the same effect as the judgment of a court of last resort.” Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d 244, 270 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (op. on reh'g); see also CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002) (“[A]n award of arbitrators upon matters submitted to them is given the same effect as the judgment of a court of last resort.” (quoting City of San Antonio v. McKenzie Constr. Co., 136 Tex. 315, 326, 150 S.W.2d 989, 996 (1941))). Moreover, “courts have held that an arbitration award can have preclusive effect, even though it is not confirmed and a judgment is not entered.” Tanox, 105 S.W.3d at 270; see also Villanueva v. Structural Repair, LLC, No. 04-24-00797-CV, 2026 WL 100421, at *2 (Tex. App.—San Antonio Jan. 14, 2026, no pet.) (“An arbitration award has preclusive effect for purposes of res judicata.”); Premium Plastics Supply, Inc. v. Howell, 537 S.W.3d 201, 205 (Tex. App.—Houston [1st Dist.] 2017, no pet.) (“An arbitration award is treated as a prior final judgment and has preclusive effect for purposes of res judicata.”).

The force of an order confirming an arbitration award is further seen in that the TAA authorizes appeals from such orders regardless of whether a final judgment has been rendered. See TEX. CIV. PRAC. & REM. CODE § 171.098(a)(3) (“A party may appeal a judgment or decree entered under this chapter or an order ․ confirming or denying confirmation of an award ․”); see also E. Tex. Salt Water Disposal Co., Inc. v. Werline, 307 S.W.3d 267, 268 (Tex. 2010) (order denying confirmation and instead vacating the award and ordering re-arbitration is subject to interlocutory appeal under section 171.098); Holcim (Tex.) Ltd. P'ship v. Humboldt Wedag, Inc., 211 S.W.3d 796, 801 (Tex. App.—Waco 2006, no pet.) (“[A] party seeking review of an order that confirms or denies an arbitration award may do so by an interlocutory appeal.”). As the Supreme Court of Texas explained in Werline, “judicial review of an arbitration award is extraordinarily narrow,” and the right of appeal “assures that a trial court does not exceed the limitations on its authority to review an arbitration award.” Werline, 307 S.W.3d at 371.

Luis argues that, despite confirmation of the arbitration award, Stephen could not execute on the ruling until it was reduced to a final judgment. From this, Luis reasons that liability is not “incurred” until a final judgment is signed. But the question whether liability has been incurred cannot be answered merely by asking whether that liability can be satisfied by execution, because the question of execution does not even arise in the absence of liability. And even when liability is decided by a Texas court, one usually cannot satisfy that liability by execution on Texas assets within thirty days after the judgment. See TEX. R. CIV. P. 627. Moreover, Luis's argument is inconsistent with the authorities giving an arbitration award preclusive effect. Res judicata requires “a prior final judgment on the merits by a court of competent jurisdiction,”⁵ but under our own binding precedent, a confirmed arbitration award would fulfill that requirement, even though additional steps are required before the award can be enforced.

On these facts, we conclude that Luis incurred tortious liability not later than the time that arbitration award was confirmed; we need not determine whether Luis incurred tort liability at the earlier date when the arbitration award was issued or only when the award was confirmed because both events occurred during the marriage, and on both dates the Property at issue in this case was still community property. As such, the Property was “subject to [the] tortious liability of either spouse.”⁶ “Subject to” means “subordinate to,” “subservient to” or “limited by.” State v. Green, 682 S.W.3d 253, 268 (Tex. Crim. App. 2024); Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10, 16, 299 S.W.2d 672, 676 (1956). Thus, when the divorce court awarded the Property to Sandra as her sole and separate property, it was already “subordinate to” that liability.

We accordingly conclude that the trial court did not err in ruling in Stephen's favor and ordering the district court clerk to issue execution on the Property. We overrule Luis's second and third issues.

Luis's fourth issue was contingent on prevailing on those issues: he argued that because the trial court erroneously decided the execution issue, the trial court's award of attorneys' fees also must be reversed. Because we have instead affirmed that part of the judgment, we overrule Luis's fourth issue and affirm the award of attorneys' fees.

VI. CONCLUSION

For the foregoing reasons, we overrule the issues presented and affirm the trial court's judgment.

FOOTNOTES

1.   We note that although the trial court's final judgment concerns the execution of judgment on the Property, which is now owned solely by Sandra, Luis has standing to challenge the judgment not only because he is jointly and severally liable with Sandra for the attorneys' fees awarded by the trial court, but also because the divorce decree requires him to defend, indemnify, and hold Sandra harmless from any debt, obligation, liability, act, or omission of Luis not described in the divorce decree. That provision applies to Stephen's judgment against Luis for breach of fiduciary duty.

2.   53 TEX. B.J. 603 (1990, amended 2023). The current version of the rule amended this sentence only in substituting “must” for “shall.”

3.   And technically, the judgment does include the arbitrator's finding of Luis's tort liability. The arbitration award is attached as an exhibit to the trial court's order confirming the award, and the confirmation order is merged into the final judgment. See Bonsmara Nat. Beef Co., LLC v. Hart of Tex. Cattle Feeders, LLC, 603 S.W.3d 385, 390 (Tex. 2020) (trial court's prior orders merge into the final judgment).

4.   The Federal Arbitration Act contains a similar provision. See 9 U.S.C. § 13 (a judgment confirming an arbitration award under the Federal Arbitration Act “shall have the same force and effect, in all respects, as, and be subject to all the provisions of law relating to, a judgment in an action”).

5.   J-W Power Co. v. Sterling Cnty. Appraisal Dist., 691 S.W.3d 466, 472 (Tex. 2024) (quoting Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996)) (cleaned up).

6.   TEX. FAM. CODE § 3.202(d).

Tracy Christopher Chief Justice