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  • Writer's pictureBeth M. Johnson

Changes to Reimbursement Statutes for Just and Right Division of Community Estate in Divorce

The Texas Family Code statutes addressing reimbursement claims in divorce proceedings were completely rewritten in the last legislative session. The Legislature explicitly stated that its intended purpose was as follows:

 

State law regarding reimbursement and economic contribution with respect to marital property rights can be very confusing to those not well versed in the history of such law, as it is often misinterpreted and misunderstood by litigants, practitioners, and courts, leading to an unnecessary waste of public and private resources. C.S.H.B. 1547 seeks to aid litigants, practitioners, and courts alike by clarifying a number of issues regarding such claims for reimbursement, including what constitutes a reimbursement claim and offset and the elements that must be proved to recover a claim or offset.[1]

 

What stayed the same:

  • Section 3.402(f) still provides that the court shall apply equitable principles in determining reimbursement claims and offsets;

  • The party seeking reimbursement still bears the burden of establishing the claim (though this burden is now located in subsection (h) of 3.402 instead of subsection (c));

  • “Benefits for use and enjoyment of property may be offset against a claim for reimbursement for expenditures to benefit a marital estate the separate property of a spouse may not claim an offset for use and enjoyment of a primary or secondary residence owned wholly or partly by the separate estate against contributions made by the community estate.” (former 3.402(c));

    • Kept with non-substantive changes but now located in 3.402(g)(1);

  • “reimbursement for funds expended by a marital estate for improvements to another marital estate shall be measured by the enhancement in value to the benefited marital estate.” (former 3.402(d)); and

    • essentially kept but now located in 3.402(c)(2) and (d)(2).

 

The Legislature also changed the verbiage from “contributing marital” estate to “conferring” estate and dropping the word “marital” sometimes when referring to one of the three estates in a divorce ((1&2) each party’s separate estate and (3) the community estate).

 

Additionally, Sections 3.404 (application of inception of title rule; ownership interest not created); 3.405 (management rights not affected); 3.406 (equitable liens); 3.409 (nonreimbursable claims); and 3.410 (marital property agreements can waive claims) were not substantively changed. Thus, you still may not make a claim for reimbursement for:

  1. the payment of child support, alimony, or spousal maintenance;

  2. the living expenses of a spouse or child of a spouse;

  3. contribution of property of a nominal value;

  4. the payment of a liability of a nominal amount; or

  5. a student loan owed by a spouse.

Tex. Fam. Code § 3.409.

 

The major difference between the former and current statute is that the non-exclusive list of potential reimbursement claims in former Section 3.402(a) was deleted in its entirety, and additional sections were added, in an apparent attempt to add more clarity and definition to the concept of reimbursement. Instead of providing a long list of brief descriptions of potential reimbursement claims, the statute now more simply says that if one of the three estates confers a benefit to another, there may be a reimbursement claim.

A claim for reimbursement exists when one or both spouses use property of one marital estate to confer on the property of another marital estate a benefit, if not repaid, would result in unjust enrichment to the benefited estate.

Tex. Fam. Code § 3.402(a).

 

However, the newly revised statute does not completely rid itself of examples. Instead of the relatively specific list in former 3.402(a), the new 3.402(c) and (d) provide more generalized examples of what could constitute a reimbursement claim. Subsection (c) provides examples of how one estate confers a benefit on the other, and subsection (d) defines the time window in which to value a claim. As has been the long history of this statute and the common law before it, no matter how many words are spilled, the idea will always be one of equity and determined in a case-by-case analysis. For example, an estate confers a benefit if one estate pays a debt of another estate “that in equity and good conscience should have been paid from the benefited estate[].” Tex. Fam. Code § 3.402(c)(1) (emphasis added). Clear as mud.

 

Section 3.402(c)(3) and (d)(3) appear to codify Jensen claims. Tex. Fam. Code § 3.402(c)(3), (d)(3). And, Section 3.402(g) defines offsets. While (g)(1) is the same language found in the former statute (former subsection (c)), subsection (g)(2) defines an offset for income received and (g)(3) references tax benefits.

 

In addition to providing who bears the burden, the statute now explicitly defines the burden of proof. The party seeking reimbursement must show:

  1. that the spouse(s) used property of one estate to benefit another;

  2. the value of the benefit; and

  3. that unjust enrichment will occur without reimbursement.

Tex. Fam. Code § 3.402(b). The phrase “unjust enrichment” appears important, and the statute goes on to specifically provide: “[t]he determination of whether unjust enrichment will occur if one marital estate is not required to reimburse another marital estate is a question of law for the court to decide.” Tex. Fam. Code § 3.402(e) (emphasis added).

 

Finally, the new Section 3.411 provides “[t]he remedies provided by this subchapter are not exclusive and are in addition to any other remedy provided by law.” Tex. Fam. Code § 3.411. So, in other words, do not in any way infer that these changes are depriving a party of potential reimbursement claim otherwise permitted by common law—unless explicitly excluded by Section 3.409.

 

Generally, it seems that the newly revised statute is trying to keep it simple. (1) Did one estate benefit from another? (2) Was that just?

 

From a practical perspective, while that seems easy, the question of “just” will really come down to what the person behind the bench interprets as “just.” On the side of the person seeking reimbursement, I would argue that this statute massively opens the door to almost any conceivable claim (other than the excluded items in Section 3.409). On the other side, the revisions did not actually change much and just attempted (again) to put into writing a generally vague (yet old) equitable concept.

 

Although pre-September 1, 2023 case law can be helpful, I would not argue that it is binding. The trial judge—for better or worse—gets to “determin[e] whether unjust enrichment will occur.” Tex. Fam. Code § 3.402(e). Thus, the trial attorney’s guidance on a particular judge’s leanings and preferences and whether settlement could be a better avenue become of even greater value after the implementation of these statutory revisions.


[1] House Comm. on Juvenile Justice & Family Issues, Bill Analysis, Tex. H.B. 1547, 88th Leg., R.S. (2023) (available at https://capitol.texas.gov/BillLookup/Text.aspx?LegSess=88R&Bill=HB1547).




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