## Facts

- Richard H. Alsenz, an inventor, founded Altech Controls, Inc. in 1975 and assigned to it patents he obtained before marrying Marjorie Sue (“Sue”) Alsenz.
- The parties married in 1996, kept separate bank accounts, and had no joint credit cards or joint accounts.
- During the marriage, Richard received $706,730.56 in royalties equal to 4% of gross sales of products developed from his pre-marriage inventions; he deposited these payments into his separate account.
- No inventions patented during the marriage generated royalties during the marriage.
- Richard used community funds (including tax refunds and proceeds of a second mortgage) to fund a day-trading account that sustained significant losses.
- Community funds were also used for repairs or improvements to Richard’s separate-property 1988 BMW, but the amount and effect on value were disputed and poorly documented.
- The trial court granted a no-fault divorce, classified the royalty payments as community property, awarded Sue a disproportionate share of certain community assets with a smaller share of community debts, and ordered reimbursements tied to day-trading losses and BMW expenditures.
- Richard appealed the property characterization, division, and reimbursement awards.

## Issues

1. Whether royalty payments received during marriage from inventions patented (and assigned) before marriage are community property or the inventor-spouse’s separate property.
2. Whether the appeal should be abated due to the absence of findings of fact and conclusions of law.
3. Whether a nondisclosed accounts-payable claim on Sue’s inventory required a new trial.
4. Whether the trial court mischaracterized separate property as community property.
5. Whether the trial court abused its discretion in the disproportionate division and in ordering reimbursements for day-trading losses and BMW expenditures.

## Decision

- The court held the royalty payments received during marriage from pre-marriage patented inventions were community property.
- The court rejected the requests for abatement for findings and for a new trial based on the nondisclosed accounts-payable claim.
- The court upheld the unequal division of community property and debts as within the trial court’s “just and right” discretion.
- The court reversed the reimbursement awards for day-trading losses and BMW expenditures due to insufficient evidentiary support.
- The court reversed and remanded the property division for further proceedings consistent with its rulings.

## Legal Principles

- In Texas, absent a specific exception, “rents, revenues, and income” produced during marriage from a spouse’s separate property are community property.
- Royalties paid during marriage from pre-marriage patents may be treated as income from a separate asset (the patent) rather than as the separate asset itself.
- A trial court has broad discretion to make a “just and right” division of the community estate, including a disproportionate division based on factors such as earning capacity disparities, fault-related evidence, relative separate estates, and liquidity of assets.
- Reimbursement awards in divorce must be supported by evidence permitting a reliable determination of the amount and basis for reimbursement; speculative or undocumented amounts are reversible as an abuse of discretion.

## Conclusion

The court classified patent royalties received during marriage as community income even though the underlying patents were separate property, affirmed the trial court’s unequal division of the community estate, but reversed and remanded because the reimbursement awards for day-trading losses and BMW expenditures were not supported by sufficient evidence.


Alsenz v. Alsenz, 101 S.W.3d 648 (Tex. App.—Houston [1st Dist.] 2003)