## Facts

- Richard and Karen Schlueter married in 1969.
- Richard used community funds to invest in an emu business, then sold his interest to his father, Hudson Schlueter, for $1,000 when the business was worth at least $10,000.
- Karen learned of the transfer only after Richard filed for divorce.
- Shortly before filing, Richard received an early-retirement incentive check for $30,360.41, gave it to Hudson to deposit in Hudson’s account, and Hudson wrote himself a check for $12,565, allegedly as repayment of prior loans.
- Karen counterclaimed in the divorce and asserted tort claims against Richard and Hudson for fraud, breach of fiduciary duty, and conspiracy, all based on depletion of the community estate (not her separate property).
- The tort claims were tried first to a jury, which awarded damages labeled as compensation to the community and exemplary damages against both Richard and Hudson.
- In a later phase, the trial court divided the community estate disproportionately in Karen’s favor, relying in part on the fraud-related findings, and also entered exemplary damage awards.

## Issues

1. Whether a spouse may maintain an independent tort action against the other spouse for “fraud on the community” seeking actual and exemplary damages for harm to the community estate, in addition to remedies available in the divorce.
2. Whether the availability of a “just and right” property division in divorce provides an adequate remedy that bars an independent interspousal tort claim for depletion of community assets.

## Decision

- The Texas Supreme Court held that there is no independent tort cause of action between spouses for damages to the community estate based on “fraud on the community.”
- The Court concluded that a wronged spouse has an adequate remedy through the divorce court’s “just and right” division of the community property, including a disproportionate division to account for waste or improper transfers.
- The Court reversed the judgment against the husband and remanded for a new division of the marital estate consistent with its holding.
- The Court affirmed the remainder of the court of appeals’ judgment.

## Legal Principles

- “Fraud on the community” is remedied within the divorce proceeding through the trial court’s authority to divide community property in a “just and right” manner.
- When the alleged injury is only to the community estate (and not to the claimant’s separate property or a personal injury), divorce remedies are treated as adequate and exclusive as between spouses.
- Abrogation of interspousal immunity does not create an interspousal tort remedy for community-estate depletion where the divorce court can compensate through unequal property division.
- Allowing both tort damages (including exemplary damages) and an unequal property division for the same depletion of the community estate risks duplicative recovery.

## Conclusion

The Texas Supreme Court limited a spouse’s remedy for “fraud on the community” to the divorce court’s property division powers, holding that a spouse cannot pursue an independent interspousal tort claim for damages to the community estate arising from improper transfers or depletion of community assets.


Schlueter v. Schlueter, 975 S.W.2d 584 (Tex. 1998)