In a Texas family law case, the question arises as to whether there is a fiduciary relationship between the husband and wife that raises the bar for treatment of decisions made and how to account for a breach of this duty upon divorce.

From the American Bar Association Journal:  A Maryland appeals court has handed a victory to a partner and former managing principal of Beveridge & Diamond embroiled in a battle with his ex-wife over alleged financial malfeasance during their marriage.

The ruling (PDF) affirms the dismissal of Nancy Lasater’s tort suit against her former husband, Beveridge & Diamond partner John Guttmann Jr. Lasater had claimed that Guttman ran up large debts during their marriage, spending money on ill-advised real estate projects, exotic merchandise, personal adventures and a huge collection of compact discs. Her suit, filed after 25 years of marriage, had claimed conversion, intentional infliction of emotional distress, breach of fiduciary duty and fraud, according to the ruling by the Maryland Court of Special Appeals.

“We decline to open the door to tort suits arising from disagreements over allocation of marital resources when these grievances properly can be remedied in the divorce setting,” the appeals court said an opinion issued on Monday.

Lasater had claimed that Guttmann blamed their dire financial situation on her decision to stop working to stay at home with the kids and that he lied about his status at the law firm, claiming he had become of-counsel. Lasater had worked for 20 years as a lawyer before she left law practice.

The appeals court said the alleged behavior, even if true, does not rise to the level of extreme or outrageous conduct justifying the count of intentional infliction of emotional distress. And a husband and wife are not true fiduciaries, the court said, absent an agreement establishing that relationship.

A Texas divorce court would reach the same result as the case outlined in Maryland, taking consideration for the bad conduct out in the division of the marital estate, but Texas takes a different route to get there.

In Texas, there is unquestionably a fiduciary relationship owed by the spouses to each other and to the management of the community estate.  Schlueter v. Schlueter, 975 S.W.2d 584 (Tex. 1998), adopting the opinion of In re Marriage of Moore, 890 S.W.2d 821 (Tex. App — Amarillo 1994, no writ), which underscored the fiduciary relationship owed between spouses and the community estate.  Where a spouse mismanages property to the extent that such mismanagement rises to the level of fraud, the fraud is against the community estate and is, therefore, considered a part of the overall just and right division of the community estate between the spouses incident to divorce.  The divorce court does not have to divide the community estate equally, but may consider the competing equities in determining a just and right division, even if unequal.  Fraud may be one of those equitable considerations.  Loaiza v. Loaiza, 130 S.W.3d 895 (Tex. App. — Fort Worth 2004, no pet.).

Thsu, in Maryland, the court determined that there was no independent claim for fraud and the improper actions could be accounted for within the divorce, Texas would reach the same result, just a different route.

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Photo of Michelle O'Neil Michelle O'Neil

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes…

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes genuine compassion for her client’s difficulties, yet she can be relentless when in pursuit of a client’s goals. One judge said of Ms. O’Neil, “She cannot be out-gunned, out-briefed, or out-lawyered!”

Family Law Specialist

Ms. O’Neil became a board-certified family law specialist by the Texas Board of Legal Specialization in 1997 and has maintained her certification since that time. While representing clients in litigation before the trial court is an important part of her practice, Ms. O’Neil also handles appellate matters in the trial court, courts of appeals and Texas Supreme Court. Lawyers frequently consult with Ms. O’Neil on their litigation cases about specialized legal issues requiring particularized attention both at the trial court and appellate levels. This gives her a unique perspective and depth of perception that benefits both her litigation and appellate clients.

Top Lawyers in Texas and America

Ms. O’Neil has been named to the list of Texas SuperLawyers for many years, 2011-2018, a peer-voted honor given to only about 5% of the lawyers in the state of Texas. In 2014-2018, Ms. O’Neil received the special honor of being named by Texas SuperLawyers as one of the Top 50 Women Lawyers in Texas, Top 100 Lawyers in Texas, and Top 100 Lawyers in DFW. She was named one of the Best Lawyers in America for 2016 and received an “A-V” peer review rating by Martindale-Hubbell Legal Directories for the highest quality legal ability and ethical standards.

Author and Speaker

A noted author, Ms. O’Neil released her second book Basics of Texas Divorce Law in November 2010, with a second edition released in 2013, and a third edition expected in 2015.  Her first book, All About Texas Law and Kids, was published in September 2009 by Texas Lawyer Press. In 2012, Ms. O’Neil co-authored the booklets What You Need To Know About Common Law Marriage In Texas and Social Study Evaluations.  The State Bar of Texas and other providers of continuing education for attorneys frequently enlist Ms. O’Neil to provide instruction to attorneys on topics of her expertise in the family law arena.