November 2012 Archives

When Transitional Alimony, Attorney Fees, and Moving Expenses are Proper After A Short Marriage

November 21, 2012 by The McKellar Law Firm, PLLC

In Gorbet v. Gorbet, No. W2011-01879-COA-R3-CV (Tenn. Ct. App. Oct. 11, 2012), Tennessee divorce attorneys learn that the Tennessee Court of Appeals finds transitional alimony, attorney fees and moving expenses proper after a short marriage where one spouse relocated and sacrificed former employment. The Court of Appeals also sheds light on how to determine whether property is marital or separate.

The facts are as follows: Husband owned a construction company building custom homes. He had a daughter from a prior marriage who visited every other weekend. Wife, a quality management analyst in Little Rock, AR, lived with her daughter from a prior marriage. Wife and her daughter moved to Jackson, TN and Wife stopped working following the marriage. Only Husband attended the closing of the parties' new Jackson, TN home several weeks prior to the marriage, and only Husband's name was on the deed. After the marriage, Husband moved out of the parties' new home in February 2011--before Wife could sell her home in Arkansas. Husband filed for divorce, and both parties contested ownership of the home and alimony. After a hearing, the trial court "grant[ed] Wife's petition for exclusive use of the... home." Wife also was to receive temporary alimony in the amount of $2,055 per month.

At trial, Husband stated that Wife's only contribution to Husband's company, which "purchased lots on a speculative basis", was interacting with potential clients at a home show and signing twenty checks. The parties used the business account (personal account) rather than a joint bank account to pay for monthly living expenses during their short marriage. Husband asserted that the parties' new home constituted separate property as the mortgage and title were in his name and he bought it prior to marriage; however, in order to have $2,000 of stonework completed, Wife gave away her car to the workmen, and the parties intended the home to be the "marital home." The parties disputed whether some of the business properties were separate or marital. Husband estimated that he had a $625,000 net worth, including $60,000 to $70,000 per year in income, a $162,000 annuity from his first divorce settlement, and two vehicles. Husband also confessed to engaging in an extramarital affair .

Wife testified she quit her job to assist Husband with his construction business "by running errands, signing checks, and helping Husband with a week-long home show." Wife spent her entire $20,000 savings account during the short marriage to contribute to marital expenses and "pay her own bills" (including the mortgage on her unsold home in Arkansas). She alleged that Husband never permitted her to access either of the bank accounts in his name. Wife claimed that the parties' home constituted marital property, that she did not need to have her name on the title, and that Husband said she was not required to be present at the closing. She referred to obtaining $2,000 of brick and stone services by trading her car. Wife also alleged that another lot constituted marital property since the parties (through the business bank account) made a $16,000 down payment with a loan obtained during the marriage since they anticipated establishing another residence there. Wife sought temporary spousal support. She had received a salary of more than $32,000 per year after working at the Arkansas hospital for ten years. Since the hospital was on a "hiring freeze", Wife was unable to reacquire her former job following the parties' separation; the hospital informed her that she would not reacquire seniority, even in the event that jobs became available. Wife was interested in obtaining a certification or master's degree to improve her likelihood of employment in the speech pathology and audiology field, in which she had already earned a bachelor's degree. In order to find a job in Arkansas, Wife felt that it was necessary to relocate from Tennessee to Arkansas. Wife only earned $500 per month in child support paid by her former husband; she alleged that Husband was responsible for "cutting off her phone" and thus impeded her job search. Wife also alleged that Husband was largely responsible for her high attorney fees because he was dishonest during discovery regarding his infidelity, neglected to maintain the marital residence, and did not pay temporary spousal support as ordered.

The trial court considered the Jackson, TN marital residence, the other lot, and Husband's whole-life insurance policy as marital assets and equitably divided them between the parties. It also provided Wife with two-year transitional alimony of $1700/month the first year and $750/month the following year, $8,000 in attorney fees as alimony in solido, and $2,500 in relocation costs.

The Tennessee Court of Appeals decided the following issues: (1) the award of transitional alimony to Wife; (2) the classification of the marital home, the other lot, and Husband's whole life-insurance policy as marital property; (3) [the award of attorney fees to Wife as alimony in solido; (4) the award to Wife of $2500 in moving expenses.

First, the court indicated that "when the court finds that rehabilitation is not necessary, but the economically disadvantaged spouse needs assistance to adjust to the economic consequences of a divorce", transitional alimony is proper (Tenn. Code Ann. § 36-5-121(g)) and upheld the award of transitional alimony to Wife, referring to her sacrifice in leaving Arkansas and her former employment there.

Second, the court upheld the classification of the aforementioned property as marital assets. It described that "marital property" is "all real and personal property, both tangible and intangible, acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing..." and that it "must be divided equitably... without regard to fault on the part of either party" (Tenn. Code Ann. § 36-4-121). The court further stated that under the transmutation or commingling doctrine, "separate property can become part of the marital estate due to the parties' treatment of the separate property." Eldridge v. Eldridge, 137 S.W.3d 1, 13 (Tenn. Ct. App. 2002). The marital residence that both parties agreed to purchase, the lot on which both parties expended marital funds, and the whole-life insurance policy that Husband changed from a pre-existing term life insurance policy using marital funds all constituted marital assets.

Third, the court affirmed the alimony in solido attorney fees to Wife due to Husband's inappropriate discovery behaviors (lying about an affair under oath), Wife's minimal income, and the importance of Wife being restored to her former standard of living. Fourth, the court upheld the award of $2,500 in moving costs to Wife since the parties had received estimates for this amount and because Husband testified during trial that he should reimburse Wife for such costs.

Value of Assets and Debts Must Be Determined Prior to Distribution in Tennessee Divorces

November 15, 2012 by The McKellar Law Firm, PLLC

Tennessee divorce attorneys learn in Hill v. Hill, No. M2011-02253-COA-R3-CV (Tenn. Ct. App. October 5, 2012) that a trial court must value all property before determining equitable distribution.

The facts of the case are as follows: Husband and Wife married in 1999 and had 2 children. Ten years later, after Husband's filing, he purchased a home in Clarksville, Tennessee for $199,000 in December 2010. Husband had previously filed a motion with the Court in February 2010 "requesting permission to purchase the property and classification of the home as his separate property", though the court never heard the motion. It was found that Wife did not contribute to the down payment and never lived in the home. Wife was not listed as a co-borrower on the mortgage or the deed. Husband said he had paid $10,000 on the down payment that he saved during their separation. Wife introduced into evidence, during the divorce proceeding, that the property was valued for $259,000.

The case was tried in August 15, 2011. Husband testified he finished law school and starting working as a lawyer while married. Wife did not keep a consistent job during the marriage and did "seasonal tax work." Husband said he paid off several marital debts during the course of their separation: $13,000 to IRS, $7,500 Visa credit card debt, $5,000 MasterCard debt, $3,000 to pay off Wife's vehicle, and around $75,000 in student loans. Husband also owed $22,000 to the IRS for 2010 tax year. The male child was determined to be outside the marriage and wasn't included in the divorce. Wife was designated the primary residential parent of the female child. The court ruled that the Clarksville property was owned by both parties as tenants in common, and the Wife was therefore entitled to a share of the property. The Court ordered Husband to pay for his student loans, for his 2010 tax liability, and "all other debts, including those incurred during the marriage and those he has incurred sine the date of separation."

Husband filed an appeal against the trial court's findings of the marital property and debts and provisions of the permanent parenting plan. Husband argued that "the trial court erred in granting Wife an interest in Husband's residence and failed to make an equable distribution of the marital assets and debts."

The appellate court reviewed the trial court's decision on the classification of Husband's purchase of the real property during the separation. The Court followed Tennessee Code Annotated §36-4-121(b)(1)(A), which describes marital property as "all real and personal property... acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing... and including any property to which a right was acquired up to the date of the final divorce hearing... and including any property to which a right was acquired up to the date of the final divorce hearing..." The appellate court found that the property "falls squarely within the definition of marital property." The appellate court did find that the trial court failed to assign a value on the property at issue, but ordered that "the property was owned by both parties as tenants in common, and that [Wife] is entitled to a share of the property." The Appellate Court found that the trial court should have decided the total value of all marital property before distributing it.

Husband also disagreed with the trial court's decision to give him all marital debt. When distributing the marital estate, "a court must equitably divide the marital debts as well as the marital assets." See Alford v. Alford, 120 S.W. 3d 810, 813 (Tenn. 2003). Our Supreme Court has defined "marital debts" as "all debts incurred by either or both spouses during the course of the marriage up to the date of the final divorce hearing." Our courts must consider the following factors in determining the equitable apportionment of marital debts: "(1) the debt's purpose; (2) which party incurred the debt; (3) which party benefitted from incurring the debt; and (4) which party is best able to repay the debt." Id. at 814. On appeal, the Court here found that the trial court did not "value and distribute the parties" interests in the house purchased by Husband during pendency of the divorce. The appellate court found "on remand, the trial court shall value and divide the parties, interests in Husband's residence and consider the effect (if any) this decision should have on the apportionment of debt."

Husband next argued that the trial court erred in calculating the child support. Courts are required to use child support guidelines pursuant to Tenn. Code Ann. § 36-5-101(e). The appellate court found that Husband received two different incomes, which derived from self-employment and employment from the law firm. The trial court understood that he was entitled to a 15.3% off from his self-employment for taxes. Tenn. Comp. R. & Regs. § 1240-2-4-.04(4)(a), (d). On appeal, the Court found that the trial court did make a mistake in the calculation by not subtracting the percentage from Husband's monthly income. The trial court also wrongly credited daycare to Wife, because $40 was for the total amount for both of the children's daycare not just the daughter, Husband's only legal child. Lastly, Husband alleged that the trial court erred in the 54 days of parenting time that was assigned to him. He believed the total days to be 60. Husband did not have an explanation in his brief as to justify the 60 days. The appellate court found that the trial court was correct in the number of days assigned to Husband for parenting time and that this issue was without merit.

Modification of Residential Parenting Plan: Material Change in Circumstances and Best Interests of the Child

November 13, 2012 by The McKellar Law Firm, PLLC

In Fillers Crum v. Fillers, No. E2011-01885-COA-R3-CV (Tenn. Ct. App. Oct. 11, 2012), Tennessee divorce attorneys learn how Tennessee courts determine whether a modification of a residential parenting plan is warranted by determining whether a material change in circumstances has occurred and by assessing the best interests of the child.

The facts are as follows: The parties married and had three children. The parties agreed that Father would pay child support and have visitation on regularly scheduled holidays, every Tuesday and Thursday for five hours, and every other weekend. Under the plan, each party was entitled to 182.5 days with the children, with Mother designated primary. Five years later, issues pertaining to the plan arose. Father failed to reasonably communicate, inform Mother of changes in his employment, pay child support, or visit with the children on holidays; also, he claimed the children on his income tax returns, behaved inappropriately and used inappropriate language in the children's presence, and had improper relations with a woman who was married (who also insulted Mother in front of the children). On account of the aforementioned reasons, Mother filed to modify the parenting plan to decrease Father's visitation, obtain a greater amount of child support, and hold Father in contempt.

After mediation failed, the parties had a hearing. Mother mentioned the above grounds and also alleged that one of the children was injured while with Father and that Father failed to maintain electricity at his home and neglected to maintain the children's life insurance coverage. In 2005, a pending domestic abuse case had resulted in the children's three-month placement in State Custody; however, Mother stated that there had been no other issues since that one incident. Mother complained about Father's failure to follow the designated visitation schedule and failure to relinquish the children in a timely manner several times; however, Mother conceded that "the procedure for exchanging the children had improved since the filing of her petition for modification." She also provided Father with more visitation time throughout the week than Father was granted under the Plan. Mother resided with her second husband in a five-bedroom home; her husband was financially stable and had no criminal background. Both Mother and her new husband were on prescription medication. The trial court held that there had been a material change in circumstances. It provided Father with only 80 days of co-parenting time and Mother with 285 days. The court also raised Father's child support. The court held father in contempt for violating the parenting plan by claiming the children on his tax return and by failing to maintain life insurance.

The Tennessee Court of Appeals considered only one issue: "whether the trial court erred in modifying the parenting plan by awarding Father with less than equal co-parenting time." Citing to case law from our jurisdiction, the appellate court explained: "When a petition to change or modify custody is filed, the parent seeking the change has the burden of showing (1) that a material change in circumstances has occurred and (2) that a change of custody or in the residential schedule is in the child's best interest." The following factors indicate that a material change in circumstances has occurred: (1) a change happened after the order was entered; (2) at the time of the order's entry, this change was not "reasonably anticipated"; (3) the change "affects the child's well-being in a meaningful way."

The court alleges that in this case, Mother only wished to modify the residential parenting schedule--not custody. As such, Mother "must prove by a preponderance of the evidence a material change of circumstance affecting the child's best interest. [It] does not require a showing of a substantial risk of harm to the child. A material change of circumstance for purposes of modification of a residential parenting schedule may include, but is not limited to, significant changes in the needs of the child over time, which may include changes relating to age; significant changes in the parent's living or working condition that significantly affect parenting; failure to adhere to the parenting plan; or other circumstances making a change in the residential parenting time in the best interests." Tenn. Code Ann. § 36-6-101(a)(2)(c).

The appellate court affirmed the existence of a material change in circumstances since Father made insulting statements regarding Mother and did not follow the plan. For assessing the best interests of the child, the court listed Tenn. Code Ann. § 36-6-404(b) factors including: "the relative strength, nature, and stability of the child's relationship with each parent...; willingness and ability to facilitate and encourage a close and continuing parent-child relationship with the other parent...; the disposition of each to provide food, clothing, medical care, education...; the degree to which a parent has been the primary caregiver...; the importance of continuity and the length of time the child has lived in a stable, satisfactory environment; evidence of physical or emotional abuse, the character and behavior of any other person who resides in or frequents the home of a parent and their interactions with the child; the reasonable preference of the child if 12 or older...; each parent's employment schedule..." Since Mother provided Father with greater visitation time than the parenting plan mandated, and since Father did not provide a proposed parenting plan, the Appellate Court upheld the trial court's adoption of Mother's proposed plan.