Fraud, Fiduciaries, and Family Law

Fraud, Fiduciaries, and Family Law

By Justice Ann Crawford McClure+ and John F. Nichols, Sr.

+ Eighth Court of Appeals, El Paso, Texas; B.F.A., magna cum laude, Texas Christian University, 1975; J.D., University of Houston Law Center, 1979; Board Certified by the Texas Board of Legal Specialization, Family Law (1984) and Civil Appellate Law (1987); www.8thcoa.courts.state.tx.us

++ Principal, Nichols Law P.L.L.C., Houston, Texas; B.S., Rice University, 1964; LL.B., University of Houston Law Center, 1967; Board Certified by the Texas Board of Legal Specialization, Family Law (1975), Civil Trial Law (1978), and Personal Injury Law (1987); National Board of Legal Certifications, Civil Law (1988); www.nicholslaw.com.

Excerpt from Fraud, Fiduciaries, and Family Law, 43 Tex. Tech L. Rev. 1081

I. Introduction 1

Creative theories of recovery abound for economic torts committed against the community estate. 2 These range from waste, depletion of assets, the community opportunity doctrine, and its inverse partner, the community jeopardy doctrine 3 to the generic tort of fraud, which encompasses a number of varieties such as breach of fiduciary duty, fraudulent conveyance, excessive gifts to children, and gifts to paramours, just to name a few. The intermediate courts have not been consistent in their determination of whether an economic tort is actionable between spouses for damages to the community estate. The Supreme Court has not been entirely consistent either.

As in other civil litigation, fraud in the divorce context may be actual or constructive. Actual fraud is predicated upon the intent to deceive. The elements are: (1) that a material representation was made; (2) that it was false; (3) that the speaker made it knowing it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) that it was made with the intention that it should be acted upon; (5) that the other party acted in reliance upon it; and (6) suffered damages as a result. 4 "[C]onstructive fraud is the breach of some legal or equitable duty which, irrespective of moral guilt, the law declares fraudulent because of its tendency to deceive others, to violate confidence, or to injure public interests." 5 In other words, intent is irrelevant.

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