SANDHYA VEGUNTA NAGUBADI v. NARAYANA SWAMY NAGUBADI AND RAMAMURTHY NAGUBADI--Appeal from 148th District Court of Nueces County

NUMBER 13-02-621-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI EDINBURG

SANDHAYA VEGUNTA NAGUBADI, Appellant,

v.

NARAYANA SWAMY NAGUBADI AND

RAMAMURTHY NAGUBADI, Appellees.

On appeal from the 148th District Court

of Nueces County, Texas.

M E M O R A N D U M O P I N I O N

Before Chief Justice Valdez and Justices Rodriguez and Garza

Opinion by Chief Justice Valdez

This is an appeal from a final decree of divorce. Appellant, Sandhya Vegunta Nagubadi, is appealing the trial court s decision dividing community assets and dictating the terms of child custody and support following her divorce from appellee, Narayana Swamy Nagubadi ( Swamy ). Ramamurthy Nagubadi, Swamy s father, was also joined in the suit and is an appellee here. Sandhya alleges that the trial court erred by (1) restricting the location of her future residence in its child custody order; (2) declaring that the home state of the child would be Illinois; (3) granting Swamy s father, Ramamurthy, title to certain property in India and ordering Sandhya to execute a quitclaim deed on said property; (4) failing to find certain transfers of property and funds from Swamy to Ramamurthy fraudulent; and (5) failing to effectuate an equitable division of the couple s community property. Because we conclude the trial court should not have named Illinois as the home state of the child and, further, should not have granted title to the property in India to Ramamurthy, we modify the judgment and affirm as modified.

Home State Designation

Sandhya alleges by her first two issues that the trial court was without jurisdiction to issue an advisory opinion declaring that Sandhya would lose her joint managing conservatorship rights if she did not move to Chicago after two years and further declaring that the child s home state would be Illinois.

Sandhya, Swamy, and their child, N. N., resided in Texas when Sandhya first filed her petition for divorce; however, by the time the final decree of divorce was entered, Sandhya was living in Dayton, Ohio, where she was completing a two-year medical residency program, and Swamy was residing with his parents in Chicago, Illinois. In its final decree of divorce, the trial court recognized the new locations of the parties by declaring that the home state of the child shall be Illinois. The court then established provisions for the joint custody order and concluded:

The above period of possession of and access to the child between the parents are conditioned upon [Sandhya s] residence in a location no further from Chicago, Illinois than Dayton, Ohio. The above period of possession and access between the parents will continue to be in effect until further order of a court of competent jurisdiction. In the event [Sandhya] removes her residence at the end of two years of her physician s training program and relocates to a residence other than Chicago, Illinois, possession of the child shall be in accordance with the terms of a standard possession order for parents who reside 100 miles or more apart.

Sandhya complains that these portions of the order are improperly advisory, as the court has attempted to dictate the actions of the parties after they leave the jurisdiction of Texas. We answer her complaint by first addressing the designation of Illinois as the home state of the child.

A trial court s conservatorship and child support decisions are evaluated against an abuse of discretion standard. Agraz v. Carnley, 143 S.W.3d 547, 553-54 (Tex. App. Dallas 2004, no pet.). At the time Sandhya filed for divorce, the trial court was to designate a primary physical residence for the child when establishing the terms of a joint conservatorship. See Tex. Fam. Code Ann. 153.136 (Vernon 2002), repealed by Acts 2003, 78th Leg., ch. 1036, 22 (eff. Sept. 1, 2003). A home state designation, however, is not equivalent to a primary physical residence designation; instead, a home state is statutorily defined as the state in which a child lived with a parent . . . for at least six consecutive months immediately before the commencement of a child custody proceeding. Tex. Fam. Code Ann. 152.102 (7) (Vernon 2002); see also In re Brilliant, 86 S.W.3d 680, 684-85 (Tex. App. El Paso 2002, no pet.). Both parties assert that at the commencement of the proceeding, Sandhya, Swamy and N.N. had all resided in Texas for the requisite period of time. Therefore, by statute, the home state of the child was Texas. See Tex. Fam. Code Ann. 152.102 (7). Furthermore, following the commencement of the proceedings, N.N. had resided in both Illinois and Ohio; she had not spent six consecutive months in any one location. Thus, we conclude that the trial court erred by designating the home state of the child as Illinois, and we strike the language in the final decree of divorce referring to Illinois as the home state of N.N. See In re Poole, 975 S.W.2d 342, 347 (Tex. App. Waco 1998, no pet.). Sandhya s second issue on appeal is, accordingly, sustained.

Sandhya also alleges that the trial court s decree strips her of her conservatorship rights if, upon completion of her residency program, she fails to move to Chicago. We disagree. The trial court s order essentially expires at the conclusion of Sandhya s residency. Although the order goes on to state that a standard possession order will be invoked if the parties reside in separate cities, it first qualifies this statement by noting that the order may be modified by a court of competent jurisdiction. As Texas will no longer be the home state of any party involved, the Texas courts will no longer possess exclusive continuing jurisdiction over the divorce, and upon expiration of the existing order, the terms of the conservatorship may be modified by the new home state court as it sees fit. See Tex. Fam. Code Ann. 152.202 (Vernon 2002); In re B.O.G., 48 S.W.3d 312, 317 (Tex. App. Waco 2002, pet. denied). Furthermore, the implementation of a standard possession order will not act to strip Sandhya of her conservatorship of N.N., as such an order acts to establish effective joint custody routines and gives both parents rights to possession of and access to the child. See Tex. Fam. Code Ann. 153.313 (Vernon 2002). Neither parent loses conservatorship rights if a standard possession order is enacted. Thus, we conclude that the trial court s order does not threaten Sandhya s conservatorship rights if she fails to move to Chicago at the end of her residency. Although her rights to possession may change or be subject to the jurisdiction of a different court, she will still be considered, under the terms of the order, a joint conservator of the child. Accordingly, this issue is overruled.

Property in India

By her third issue, Sandhya complains that the trial court exceeded its jurisdiction when it granted Ramamurthy, Swamy s father, title to property in India. The trial court s decree ordered Sandhya to enter a quit claim deed in favor of Ramamurthy Nagubadi to her share of rights to the land in India, and it provided further that if the quit claim deed were found to be insufficient under Indian law to transfer Sandhya s interest in the property to Ramamurthy, then Ramamurthy would be entitled to a declaratory judgment from this court to effect same. Sandhya now argues that the trial court did not have jurisdiction over the property in question.

We review questions of jurisdiction de novo. Herring v. Welborn, 27 S.W.3d 132, 136 (Tex. App. San Antonio 2000, pet. denied). Texas courts cannot adjudicate title to interests in real property located outside the borders of this state. See Kelly Oil Co., Inc. v. Svetlik, 975 S.W.2d 762, 764 (Tex. App. Corpus Christi 1998, pet. denied). Texas courts may, however, compel a party over whom it has jurisdiction to execute a conveyance of a real property interest situated elsewhere. Id. The important factor distinguishing between these two principles is whether the cause before the court involves a naked question of title. Id. (citing Hartman v. Sirgo Operating, Inc., 863 S.W.2d 764, 766 (Tex. App. El Paso 1993, writ denied)). To determine whether a naked question of title is involved, courts look to the primary purpose underlying the disputed claim. Id.

In this case, Ramamurthy alleges in his third-party cross-claim against Sandhya that he should be recognized as the equitable title holder of the disputed property. The primary purpose of his involvement in the case, by his own admission, was to ensure that the property was declared to be his. Therefore, this issue did involve a naked question of title as a part of the divorce decree and should be resolved by a court having jurisdiction over the property in question. As the Texas district court did not have jurisdiction over the property such that it could resolve this title dispute, we accordingly sustain Sandhya s third issue on appeal and strike the section of the final divorce decree that purports to award title of the property in India to Ramamurthy.

Community Property

In her fourth issue on appeal, Sandhya asserts that the trial court erred by failing to find certain transfers of property from Swamy to Ramamurthy to be fraudulent. Before Sandhya filed her petition for divorce, Swamy transferred various funds to his father from the couple s joint bank accounts. At trial, Swamy accounted for these transfers by noting that they were repayments of various investments made by his father. For example, Ramamurthy had purchased a condominium for Swamy in Texas. Once Swamy sold the condominium following his marriage to Sandhya, the proceeds from the sale belonged not to the couple but to Ramamurthy. Likewise, Ramamurthy had invested in an Indian bio-technology company known as Transgene. The investment failed to perform as expected, and Swamy and his brother attempted to recoup their father s initial investment. The Transgene funds recovered by Swamy were later transferred to Ramamurthy.

In divorce proceedings, a spouse has various remedies against another spouse for improper conduct involving the community estate. See Schlueter v. Schlueter, 975 S.W.2d 584, 588 (Tex. 1998). Texas recognizes the concept of fraud on the community, which is a wrong by one spouse that the court may consider in its division of the estate of the parties and that may justify an unequal division of the property. Id. The burden of proof to demonstrate the fairness of a transfer of property outside of the community is upon the spouse responsible for the transfer; however, the complaining spouse has the initial burden to show that there was a transfer of community property in the first place. // In re Marriage of Notash, 118 S.W.3d 868, 873 (Tex. App. Texarkana 2003, no pet.).

Fraud on the community can be committed through actual or constructive fraud. Actual fraud requires the non-managing spouse to show that the other spouse dishonestly and purposely intended to deprive the non-managing spouse of the use and enjoyment of the assets of the joint community property. See id. Constructive fraud does not require a showing of fraudulent intent and may be shown if a managing spouse unfairly deprives the other spouse of the benefit of the community property. See id. On appeal, the appellate court reviews the trial court s decision under an abuse of discretion standard, keeping in mind that trial courts are allowed to consider many factors when making a just and right division of community property, including the fraudulent wasting of community assets. See Schlueter, 975 S.W.2d at 589.

Sandhya alleges that Swamy committed both actual and constructive fraud on the community by transferring funds belonging to the couple to his father. At trial, Swamy and his father testified as to why the transfers had been made. Both men accounted for each transaction. Sandhya failed to provide probative evidence disputing their testimony, and apart from bare allegations made by counsel for Sandhya, there was no evidence of dishonesty or fraudulent intent. Swamy demonstrated that the condominium sold was the property of his father, and the Transgene investment was made by his father. A bank account also disputed by the parties was opened by his father, and Swamy testified that he had never handled the account, a fact which Sandhya did not dispute or disprove. The evidence was both legally and factually sufficient to support the trial court s order, see In re Marriage of Notash, 118 S.W.3d at 873, and we conclude that the court did not err in failing to find that the transactions were fraudulent. Accordingly, Sandhya s fourth issue is overruled.

Unequal Distribution

Sandhya argues, by her final issue on appeal, that the division of property made by the trial court was inequitable. A trial court is presumed to have properly exercised its discretion in dividing the fruits of a marriage. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981); Saldana v. Saldana, 791 S.W.2d 316, 319 (Tex. App. Corpus Christi 1990, no writ). In this regard the trial court has wide discretion in dividing the parties' community estate and that division should not be corrected on appeal except when a clear abuse of discretion is shown. Murff, 615 S.W.2d at 698; Saldana, 791 S.W.2d at 319.

Sandhya complains that the trial court s order dividing the couple s property unfairly favored Swamy and awarded him the majority of the couple s property. However, in making this allegation, she included as part of the couple s community property the funds allegedly subject to fraudulent transfer by Swamy to Ramamurthy. We have previously concluded that these transfers were not fraudulent and, therefore, the property in question was not community property. Without considering the disputed property as community property subject to division, the remainder of the property was divided almost evenly between the parties.

We have reviewed the trial court s division of the couple s community property, and we conclude that the trial court properly exercised its discretion in dividing the property between the two parties. Accordingly, we overrule Sandhya s final issue on appeal.

Conclusion

We modify the trial court s judgment so as to strike the paragraphs establishing Illinois as the home state of the child, N.N., and granting Ramamurthy a quitclaim deed to the property claimed by Sandhya in India. We otherwise affirm the judgment of the trial court as modified.

Rogelio Valdez,

Chief Justice

Memorandum Opinion delivered and filed

this 10th day of February, 2005.