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Oct 17

Written by: Eric Wolfram
10/17/2011 12:17 PM 

In a claim involving life insurance proceeds, Texas recognizes a fraud on the community claim.

Under Texas law, Marleen Barnett has a cause of action for fraud on the community. Neither Dora nor any of the other defendants challenged the court of appeals' holding that a fraud on the community occurred in this case. Marleen's state-law remedy is to impose a constructive trust on one half of the proceeds of the Prudential policy that insured the life of her estranged husband.

Barnett v. Barnett, 67 S.W.3d 107, 112 (Tex. 2001).

During coverture, Texas does not recognize a fraud on the community claim as an independent tort.

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. (p. 588)

The court of appeals correctly determined that no independent cause of action exists in Texas to recover separate damages when the wrongful act defrauded the community estate. (p. 589)

Schlueter v. Schlueter, 975 S.W.2d 584 (Tex. 1998).  Schleuter has now been codified (effective 9-1-2011):

Texas Family Code § 7.009. Fraud on the Community; Division and Disposition of Reconstituted Estate

(a) In this section, “reconstituted estate” means the total value of the community estate that would exist if an actual or constructive fraud on the community had not occurred.

(b) If the trier of fact determines that a spouse has committed actual or constructive fraud on the community, the court shall:

(1) calculate the value by which the community estate was depleted as a result of the fraud on the community and calculate the amount of the reconstituted estate; and

(2) divide the value of the reconstituted estate between the parties in a manner the court deems just and right.

(c) In making a just and right division of the reconstituted estate under Section 7.001, the court may grant any legal or equitable relief necessary to accomplish a just and right division, including:

(1) awarding to the wronged spouse an appropriate share of the community estate remaining after the actual or constructive fraud on the community;

(2) awarding a money judgment in favor of the wronged spouse against the spouse who committed the actual or constructive fraud on the community; or

(3) awarding to the wronged spouse both a money judgment and an appropriate share of the community estate.

 

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