Theodore Stanley Landry v. Janelle Nicole Landry

Supreme Court of Texas

══════════

No. 24-0910

══════════

Theodore Stanley Landry,

Petitioner,

v.

Janelle Nicole Landry,

Respondent

═══════════════════════════════════════

On Petition for Review from the

Court of Appeals for the Fifth District of Texas

═══════════════════════════════════════

PER CURIAM

In this divorce case, Husband offered clear and convincing

evidence, including expert testimony, that two investment accounts

were his separate property outside the marriage’s community estate.

Wife submitted no contrary evidence regarding those two accounts. The

trial court accordingly declared the accounts to be Husband’s separate

property and rendered a corresponding judgment. Wife appealed.

The court of appeals has now erred twice in overturning the trial

court’s judgment. The first time it considered this appeal, the court of

appeals misread the record. It concluded (incorrectly) that certain

evidence relating to the two investment accounts at issue was absent

from the record, and it reversed the trial court’s judgment on that basis.

We granted review, showed the court of appeals that the evidence it

claimed was missing was actually in the record all along, reversed its

judgment, and remanded for the court of appeals to perform the proper

analysis. Landry v. Landry, 687 S.W.3d 512 (Tex. 2024).

Now the court of appeals has erred on the law. On remand, it

summarily rejected Husband’s unrebutted evidence, including his

expert’s testimony and the full record of account statements, that the

trial court relied on to conclude the accounts were Husband’s separate

property. There was no lawful basis to do so. We reverse and render

judgment for Husband.

I

The full procedural history is set out in In re B.N.L., 700 S.W.3d

681 (Tex. App.—Dallas 2022), rev’d sub nom., Landry v. Landry, 687

S.W.3d 512 (Tex. 2024). As recounted there, Husband and Wife married

in January 2003. Wife filed for divorce in 2017, and after a two-day

bench trial, the trial court signed a divorce decree on March 5, 2020.

The trial court found that various assets belonged to Husband as

his separate property—including, as relevant here, two investment

accounts with Charles Schwab. Husband opened these two accounts

prior to the marriage: the first in 1992 and the second in 1995. Husband

designated Bryan Rice, a certified public accountant, to offer expert

testimony that these accounts were Husband’s separate property. Using

a “tracing” analysis, Rice concluded that the funds in the investment

accounts remained identifiable as Husband’s separate property

throughout the course of the marriage. See generally In re J.Y.O., 709

2

S.W.3d 485, 499 (Tex. 2024) (explaining that litigants may trace

separate property through bank records).

To reach that conclusion, Rice traced the funds through the

accounts’ monthly statements from January 2003 to June 2019. At trial,

Rice testified that the accounts’ funds did not commingle with

community assets “except for reinvestments.” And while the accounts

earned some community income in the form of interest and dividends,

the community estate withdrew money from the accounts “as fast” as it

was earned and used it to fund community expenses—meaning the

funds in the accounts retained their separate character.

Although Rice considered sixteen years of monthly data from

2003 through 2019, he testified that he did not consider four months of

account statements from July 2018 to October 2018. Those statements

are in the trial court record, as we pointed out in our prior decision in

this case. Landry, 687 S.W.3d at 513. It is not clear why Rice did not

receive them. But what is clear is that Rice testified unequivocally,

consistent with his expertise, that those isolated account statements

would not have materially impacted his conclusions. Rice testified on

direct and cross-examination that he “had established a pattern over

15 years of money going out of this account as fast as it went in” with

the other statements. He assured the trial court that his tracing

analysis was “completely supported by sufficient documentation” and

that he was “very confident in [the] trace” despite the “missing

3

statements” because he had reviewed the “majority of” the statements. 1

Wife left that testimony effectively unrebutted. 2

The trial court went on to credit Rice as an expert witness. It

admitted his testimony, as well as the documentary evidence underlying

it. And, as we noted previously, the trial court had before it all relevant

account statements, even those Rice did not consider. Id. Based on that

full record, the trial court determined that the two investment accounts

are Husband’s separate property.

Wife appealed, and relevant here, the court of appeals reversed

the trial court’s judgment as to the two investment accounts. B.N.L.,

700 S.W.3d at 693, 696. The court focused its analysis on the account

statements for the four months spanning July through October 2018.

Id. at 692-93. The court reasoned that because Rice did not review those

documents, he did not “adequately trace the separate-property character

of the accounts.” Id. at 693. It speculated that “any number of

transactions could have occurred affecting the amount of separate

property in those accounts” during that period and concluded that “it

1 The trace analyzed monthly statements for the years 2003 to 2017

(fifteen years), six months of statements in 2018 (January to June), and six

months of statements in 2019 (January to June). So, the trace actually

analyzed sixteen years’ worth of statements, not fifteen.

2 Wife retained an expert, Larry Settles, to testify in rebuttal and as to

“any tracing done by [Husband’s] expert.” Settles produced a “draft” report

regarding his impressions of Rice’s report and was deposed. However, the trial

court excluded Settles as untimely designated, and the court of appeals

affirmed that exclusion. B.N.L., 700 S.W.3d at 689. Wife did not raise an issue

regarding Settles’s exclusion in this Court and did not make any further

attempt to rebut Rice’s testimony. Additionally, she did not raise an issue

regarding the characterization of the accounts until after trial, in her motions

to reconsider and for a new trial.

4

was Husband’s burden to prove with clear and convincing evidence that

no transactions occurred affecting the separate character of the accounts

and proving the amount of separate property in the accounts.” Id.

Because of the “missing” statements, the court continued, “the trial

court, as the trier of fact, could not have reasonably formed a firm belief

or conviction that the accounts contained only separate-property funds

as Rice testified and as the trial court found.” Id. The court of appeals

disregarded Rice’s unrebutted expert testimony, credited by the trial

court, that his tracing analysis would not be materially affected by the

four months of statements in question.

We granted Husband’s petition for review and reversed. Landry,

687 S.W.3d at 514. We ascertained that the monthly account statements

the court of appeals declared “missing” were actually present in the trial

and appellate record all along. Id. We directed the court of appeals to

“perform a new sufficiency analysis” regarding the separate character of

the accounts and to “address any challenge to the characterization of the

two investment accounts with the relevant statements under

consideration.” Id. at 513-14.

On remand, the court of appeals did not perform a new sufficiency

analysis as we instructed. Rather, it stated that “[w]hether the

statements do, in fact, support Rice’s assumptions about them and

whether the trial court would find Rice’s testimony less credible if they

do not, are not matters this Court may determine.” ___ S.W.3d ___, 2024

WL 4211330, at *3 (Tex. App.—Dallas Sept. 17, 2024) (citing Slicker v.

Slicker, 464 S.W.3d 850, 858 (Tex. App.—Dallas 2015, no pet.)). The

5

court then once again reversed the trial court’s decision and remanded

for a new division of the community estate. Id. at *4.

Husband again sought our review, and again, we reverse.

II

We begin our analysis by restating the legal principles the court

of appeals failed to apply. As an initial matter, “[p]roperty possessed by

either spouse during or on dissolution of marriage is presumed to be

community property.” TEX. FAM. CODE § 3.003(a). To overcome the

community property presumption, a party must establish by clear and

convincing evidence that the property is separate. Id. § 3.003(b).

Specifically, the party must “trace and clearly identify the property in

question as separate.” Pearson v. Fillingim, 332 S.W.3d 361, 363 (Tex.

2011) (citing McKinley v. McKinley, 496 S.W.2d 540, 543 (Tex. 1973)).

“Litigants may trace separate property through documentary evidence,

including bank or business records.” J.Y.O., 709 S.W.3d at 499 (citing

McKinley, 496 S.W.2d at 543).

We afford trial courts “wide discretion in dividing the estate of the

parties.” Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981) (citing Hedtke

v. Hedtke, 248 S.W. 21, 23 (Tex. 1923)). Appellate courts may not

overturn a trial court’s decision dividing the marital estate absent an

abuse of discretion. See id.; Bell v. Bell, 513 S.W.2d 20, 22 (Tex. 1974)

(“[A trial court’s] discretion [to divide the marital estate] will not be

disturbed on appeal unless the court has clearly abused its discretion.”

(citing Hedtke, 248 S.W. at 23)). A trial court abuses its discretion when

it characterizes property as separate without legally sufficient evidence

to do so. See In re Marriage of Williams, 646 S.W.3d 542, 545 (Tex.

6

2022); Fuentes v. Zaragoza, 555 S.W.3d 141, 162 (Tex. App.—Houston

[1st Dist.] 2018, no pet.) (“A trial court abuses its discretion in dividing

the community estate if insufficient evidence supports the division.”).

Where, as here, the standard of proof is clear and convincing

evidence, appellate review of “the legal sufficiency of the evidence

considers ‘all evidence in the light most favorable to the finding to

determine whether a reasonable trier of fact could have formed a firm

belief or conviction that its finding was true.’” In re C.E., 687 S.W.3d

304, 308 (Tex. 2024) (quoting In re J.F.C., 96 S.W.3d 256, 266 (Tex.

2002)). In a legal-sufficiency review, appellate courts must be mindful

that the fact-finder is “the sole judge[] of the credibility of the witnesses

and the weight to give their testimony.” City of Keller v. Wilson, 168

S.W.3d 802, 819 (Tex. 2005). Indeed, “a core function of the [fact-finder]

under any standard of proof—including clear and convincing evidence—

is to resolve conflicts in testimony, weigh evidence, and draw reasonable

inferences from basic facts to ultimate facts.” C.E., 687 S.W.3d at 308

(citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)).

Here, the trial court heard extensive, unrebutted expert

testimony regarding the separate character of the two investment

accounts at issue. Rice was duly qualified and accepted as an expert.

He “trace[d] and clearly identif[ied]” the accounts’ funds as separate

through sixteen years’ worth of bank statements. See Pearson, 332

S.W.3d at 363; supra n.1. Wife did not challenge Rice’s qualifications.

The trial court was free to credit Rice’s expert testimony as the basis for

its findings of fact and conclusions of law. See TEX. R. EVID. 702; State

v. Petropoulos, 346 S.W.3d 525, 529 (Tex. 2011). And the four months of

7

statements Rice did not consider—a mere two percent of the total

number of account statements—were in the record and available to the

trial court as fact-finder.

The court of appeals erred when it “substitute[d] its judgment for

that of the” trial court. C.E., 687 S.W.3d at 309 (citing City of Keller,

168 S.W.3d at 819). It did not carry out our prior instruction to “perform

a new sufficiency analysis” including the four months of account

statements that were before the trial court as fact-finder. Landry, 687

S.W.3d at 513. It instead treated those statements it believed were

missing as dispositive, even though they were in fact before the trial

court, and even though Rice testified that they would not have altered

his expert conclusions. This exemplifies the type of appellate

second-guessing our precedents forbid. See C.E., 687 S.W.3d at 309.

We now choose to make our Court “the final stop for this

litigation.” See Ammonite Oil & Gas Corp. v. R.R. Comm’n of Tex., 698

S.W.3d 198, 208 n.35 (Tex. 2024); TEX. R. APP. P. 60.2(c). Reviewing the

above evidence in the light most favorable to the trial court’s decision,

as we must, we conclude that the trial court could have reasonably

formed a firm belief or conviction that the two investment accounts at

issue are properly characterized as separate property. Accordingly,

there is no basis to disturb its judgment.

III

Without hearing oral argument, see TEX. R. APP. P. 59.1, we grant

the petition for review, reverse the court of appeals’ judgment, and

render judgment reinstating the trial court’s judgment.

OPINION DELIVERED: March 20, 2026

8