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Preparation of Constructive Fraud and Reimbursement Claims in Mediation

Posted by Walter Armatys | Aug 14, 2023 | 0 Comments


I conducted a mediation recently that was successful, in my estimation, for one reason and one reason only. Preparation!

This case involved various issues, but most prevalent were the issues of:

  1. Constructive fraud for money expended on one party's adult children, and
  2. Reimbursement of the community estate for expenditures made toward the separate estate of a party.

Constructive Fraud Claim

Regarding the constructive fraud claim, counsel defending the claim had case law at the ready, which laid out the elements necessary for a successful waste claim. Those elements are (1) the size of the gift in relation to the total size of the community estate; (2) the adequacy of the estate remaining to support the other spouse in spite of the gift; and (3) the relationship of the donor to the donee. Marshall v. Marshall, 735 S.W.2d 587, 594 (Tex.App. – Dallas 1987, writ ref'd n.r.e.)

In this case, the constructive fraud claim was based on one party's payment of college expenses for children from a prior marriage. If constructive fraud is adequately pled, the burden falls on the donor of the gift to prove the gift of his or her share of the community was fair. Id.

The lawyer defending the fraud claim came prepared. With the above case law being provided, the lawyer bringing the constructive fraud claim recognized that they had an uphill climb, at best, in being successful with this cause of action and was able to convince their client of the same.

Reimbursement Claim

A common reimbursement claim is for the reduction of the principal amount owed on a mortgage secured by a lien on real property owned by a spouse prior to marriage. However, the reimbursement claim in this case was for something you don't see a lot: the payment of taxes and insurance on the property. In Penick v. Penick, 783 S.W.2d 194, 196-198, the court held that a litigant may seek reimbursement to the community estate for the interest, taxes, and insurance paid on a party's separate property residence, to the extent those expenditures were greater than the benefit received by the contributing estate.

Again, where there was pushback, counsel had at the ready, caselaw under Texas Family Code 3.402(c) that allowed for reimbursement for the payment of the above.

The payment of interest, taxes, and insurance are areas oSen overlooked in pleadings seeking reimbursement. While there is no guarantee that the moving party will be successful in bringing these claims, they certainly will not be successful if they are never pled.

This case was destined for trial. But by virtue of counsel's diligence and foresight in understanding their case, being prepared to present their case at trial, AND being prepared to present their case at mediation, the case seeled, saving the parties scores of thousands of dollars.

Armatys Millard Is Here to Help!

Walter Armatys and John Millard have significant family law experience as trial lawyers and Family Court Judges. This judicial experience gave Walter and John a keen insight into how Judges think, what persuades them, what annoys them, and, importantly, what information Judges need to make an appropriate ruling. Armatys Millard provides mediation and arbitration services for family law disputes pending in Fort Bend, Harris, and surrounding counties. You can count on our extensive family law experience and judicial wisdom to help successfully resolve your case.


If you need to mediate or arbitrate a divorce, custody dispute, or other family law issue, Armatys Millard, PLLC, can help. Check availability and book your session online or call our office at 281-313-6800. We're here to help!

About the Author

Walter Armatys

Walter Armatys is a former Family Court Judge for the 328th District of Fort Bend County. More than thirty years of family law experience, including contentious custody and complex property division cases, Walter can assist you in resolving even the most complex cases through mediation or arbitration.


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