Fiduciary Duty and Constructive Fraud in the Context of Marriage

FIDUCIARY DUTY AND CONSTRUCTIVE FRAUD BETWEEN SPOUSES

A fiduciary duty exists between a husband and a wife as to the community property controlled by each spouse. Knight v. Knight, 301 S.W.3d 723, 731 (Tex. App.—Houston [14th Dist.] 2009, no pet.). “The breach of a legal or equitable duty which violates this fiduciary relationship existing between spouses is referred to as „fraud on the community,‟ a judicially created concept based on the theory of constructive fraud.” Id. Any such conduct in the marital relationship is termed fraud on the community because, although not actually fraudulent, it has all the consequences and legal effects of actual fraud. Id. Such conduct tends to deceive the other spouse or violate confidences that exist as a result of the marriage. Id.

A presumption of constructive fraud arises when a spouse unfairly disposes of the other spouse‟s interest in community property. Jean v. Tyson-Jean, 118 S.W.3d 1, 9 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). The burden is upon the disposing spouse or his donee to prove the fairness of a disposition of the other spouse‟s one-half community property. Id. In considering a claim of constructive fraud, the court may consider three factors: (1) the size of the gift in relation to the total size of the community estate; (2) the adequacy of the remaining estate; and (3) the relationship of the donor to the donee. Knight, 301 S.W.3d at 731.

SOURCE: HOUSTON COURT OF APPEALS - NO. 14-10-01081-CV - 10/4/11