The case of Bowers v. Bowers, No. E2011-00978-COA-R3-CV (Tenn. Ct. App. May 17, 2012) shows Tennessee divorce lawyers that proving whether property is marital or separate at trial can have far-reaching consequences for property division.
Wife entered the marriage with assets including real property on Loma Drive, which the Husband subsequently moved into. The parties kept their finances separate during the marriage, with Wife continuing to pay the Loma Drive mortgage. Husband paid for a renovation of the basement of Loma Drive. Then in 2002, the property was refinanced, but remained in Wife's name only. Wife then reimbursed Husband for all expenditures incurred as a result of the renovation. In 2005, Wife purchased another property on Navigator Pointe solely in her name. Wife then sold Loma Drive and received approximately $172,000, which was deposited into Husband's private bank account. Because the Husband's name was on the title to this property, a rebuttable presumption was created that Loma Drive was martial property. However, the trial court held this presumption was overcome by Wife's payment history and the repayment of Husband's investment in the renovation. The trial court also found that the $172,000 in proceeds from the sale of the home was Wife's separate property and Husband had dissipated it. The Navigator Pointe property was deemed marital and the equity was divided 2/3 to Wife and 1/3 to Husband.
The issues upon appeal included whether the properties were properly classified, whether Husband should have to pay back Wife the sale proceeds of Loma Drive and whether Wife should receive her attorneys fees upon appeal.
The Appeals Court must first classify all property as separate or marital pursuant to T.C.A. §36-4-121(a)(1). Separate property includes that owned prior to the marriage, income and appreciation from the same, pain and suffering awards (including future lost wages and medical expenses), gifts or inheritances. Marital property includes all that is acquired after the date of marriage. Separate property can be transmuted in marital property in the following situations: taking title in joint tenancy or treating the property in such a way as to give rise to evidence of the intent for it to become marital. These actions raise a rebuttable presumption of marital property.
Regarding Loma Drive, the Wife owned the property prior to the marriage and was her separate property. Although the joint deed created a presumption of marital property, that was rebutted by the care and maintenance and treatment of the obligations on the property and was properly classified as separate property by the trial court. With the Navigator Pointe property, Wife argues that she used separate funds to acquire it via her down payment and it is therefore not marital property. However, Husband signed the sales contract and was added as a purchaser. Husband also proved that he had paid for some expenses toward the home after the purchase. The testimony also showed an intent by the parties for the home to be owned jointly. Therefore, this was properly classified as marital property.
Finally, because Husband was reimbursed for the Loma renovation, because Wife asked for the proceeds to be returned to her and because she bore all the expenses, the trial court properly concluded that Husband should pay the Wife back the proceeds from the sale. Further, the Appellate Court found that Husband unlawfully dissipated these funds due to Wife's continued request for that the funds be returned to her. The trial court found these funds had been spent by the Husband in a way that did not contribute to the marriage and did not belong to him in the first place.
The decision of the trial court was affirmed, but Wife was not entitled to her attorneys fees as Husband's appeal was not totally lacking in merit.