In the case of Davis v. Davis, No. E2010-00958-COA-R3-CV (Tenn. Ct. App. Aug. 30, 2011), the Wife appealed the trial court's classification of Husband's agreement to carry Wife's insurance as alimony in futuro. The original agreement was as follows: Wife was given a paid position on the board of Husband's company, CBM, which allowed her to be on the company's health insurance plan. Wife was then to reimburse CBM for all costs they incurred from her coverage. Husband eventually sold CBM to his son, who continued Wife's position and coverage. Then in 2005, CBM ended its group coverage for all employees and ceased paying Wife as a board member. Wife sued CBM and Husband. The Chancery Court for McMinn County held that the CBM payments were alimony in futuro, deemed Husband liable for CBM's lack of coverage and required him to cover Wife going forward. Husband appealed.
Interestingly, both parties disagreed with the trial court's classification of the insurance provision as alimony. Wife argued the payments could not be modified (and therefore cannot be alimony in futuro, which is modifiable) and did not cease upon death or remarriage. Husband argued that the agreement was a good-faith compromise allowing Wife to obtain insurance in return for her services as a board member.
The Court of Appeals noted that the original agreement stated that neither party would owe the other any spousal support. Also, the trial court, under T.C.A. §36-5-121(k) may require either party to pay health insurance costs for any appropriate length of time. However, this was an agreement of the parties, which the Appeals Court stated was terminable by Wife at any time or by Husband upon the extinguishing of his interest in the company, which he retained the right to do. Accordingly, the Appeals Court agreed with Husband that this was a good faith concession to allow Wife to easily obtain coverage, and therefore is properly classified as property division. Therefore, when Husband sold his interest in CBM, his obligation to carry Wife's insurance ended and Husband should not be held liable for prior unmade payments or future payments related to Wife's health insurance. The Court also ruled that the Wife could not recover payments from CBM either, because this was not an employment contract but an agreement between Husband and Wife. The Court further stated that neither the Husband nor CBM would be tasked with providing coverage for Wife indefinitely. The option for Wife to be covered by insurance in this manner was just that - an option, which the parties' agreement allowed to terminate at any time. Therefore the decision of the trial court was reversed and costs taxed to the Wife.