Fraud on the Community

| Aug 20, 2010 | Divorce |

In Schlueter v. Schlueter, the question was answered of what remedies are available to a spouse alleging “fraud on the community” committed by the other spouse.

In that case, the husband transferred various community assets to his father shortly before he filed for divorce.  The wife brought independent tort claims against her husband and father-in-law, seeking damages for fraud, breach of fiduciary duty and conspiracy in her counterclaim for divorce.  Based on favorable jury findings the trial court ordered a disproportionate division of the community estate in favor of the wife, and rendered judgment for the wife against the husband and his father for actual and exemplary damages.
Holding that a tort cause of action for fraud on the community exists independent of a divorce proceeding, the Austin Court of Appeals affirmed.  The Texas Supreme Court granted petition for review to resolve the conflict among the Courts of Appeals on this question. 
The Supreme Court held that because a wronged spouse has an adequate remedy for fraud on the community through the “just and right” property division upon divorce, the Court held there is no independent tort cause of action between spouses for damages to the community property estate.  The Court reversed and remanded for a new division of the marital estate.