May 2013 Archives

One Party's Failure to Pay A Property Settlement Does Not Relieve Other Party's Child Support Obligation

In the case of Cantrell v. Cantrell, No. M2012-01847-COA-R3-CV (Tenn. Ct. App. May 23, 2013), Knoxville divorce lawyers learn that one party's failure to timely pay a property settlement does not relieve the other party's child support obligation.

Facts: The parties divorced in 2008. In 2012, Wife filed a Petition for Contempt based upon Husband's failure to comply with the terms of the divorce. Husband also had a pending Petition to Set Child Support, and the two issues were heard on the same day. The trial court ordered the following: Husband would pay to Wife $20,000 in sixty (60) days; Wife would retrieve all property within sixty (60) days and child support would be paid by Wife of $281 per month from 2008-2011. Wife appealed, arguing that she should not have been ordered to pay child support and that the trial court should have imposed further punishment on the Husband for his failure to pay.

Analysis: Wife's appeal regarding the child support rests on her assertion that she should not have had to pay support based upon fairness and the history of the case. Wife did not argue that the amount was wrongly calculated or inappropriate numbers were used in the calculation itself. Wife argued that she should not pay support because Husband failed to pay the $20,000 property settlement to her in a timely manner. The Appeals Court here finds Wife's argument lacking. The Court held that is was proper for the trial court to hear the contempt and the child support petition simultaneously, and that Husband's failure to pay the property settlement should not affect Wife's duty of support.

Regarding the issue of Husband's contempt, Wife argues additional punishment should have been handed down by the trial court in addition to requiring Husband to pay the outstanding amount in sixty (60) days. However, Wife's Petition only requested civil contempt, not criminal contempt. Civil contempt is intended to bring a party into compliance with a court order; criminal contempt is intended to punish a party for wrongdoing. Because Wife asked for civil contempt and received an order directing Husband to comply, no other action would have been proper. Therefore the trial court is affirmed.

Taking "Loans" While Self-Employed Will Be Viewed as Income (and Will Not Lower Your Alimony in Tennessee)

In the case titled Harkleroad v. Harkleroad, No. E2012-01804-COA-R3-CV, 2013 Tenn. App., WL 1933024 (Tenn. Ct. App. May 10, 2013) Knoxville divorce attorneys learn that not all income changes qualifies as a "material change in circumstance" in order to modify alimony.

Facts: Husband and Wife filed for divorce after forty (40) years of marriage. At the time of the divorce, the children of the marriage were over the age of eighteen (18) years. Wife alleged adultery while Husband alleged Wife was "verbally and mentally cruel to him." Wife requested spousal support. The court found her earning potential to be $14,000-$16,000 per year; Husband was assessed an earning potential of $60,000 per year. The court divided the martial estate and ordered Husband to pay wife alimony in futuro in the amount of $1,300 per month and to provide Wife's medical insurance. The court stated Wife needed the spousal support to make the mortgage payment on the marital home which she kept as part of the divorce.

In 2012 Husband petitioned to modify the alimony and medical insurance obligation arguing a "material change in circumstances." Husband alleged he had not received a paycheck from his insurance company (of which he was the sole stockholder) since 2009 and was solely living off his Social Security income. He averred that Wife never got a job as the lower court ordered, she refinanced the home prolonging the payments, and she now received Social Security income.

Income statements were submitted by both parties. The Husband's showed a loss of $1,574 per month; Wife's showed a net income of $149.19 per month. Husband testified that he received $1,660 per month in Social Security benefits and retirement income. He claimed he had not received income from his insurance business since 2009, however; he conceded that the business covered its expenses and provided him with personal loans over the years with the most recent loan being three (3) years after his divorce from Wife in the amount of $106,000. He averred that this loan was used to pay Wife's medical insurance premiums and alimony payments. Husband agreed that his business' appraisal value was $268,000, but he argued that he owed the company $260,000. Husband also admitted to obtaining personal loans from friends and family in the amount of $34,000.

Husband stated that the purpose of the alimony in futuro was to assist Wife in paying the mortgage on the marital home which was awarded to her in the divorce and that the mortgage should have been paid off in 2010, but Wife refinanced the home which extended the payment for another 30 year mortgage term. Wife rebutted that she was not working at the time she refinanced the home, and the alimony payments were not enough to cover the mortgage and her living expenses. She averred that the refinance of the home lowered her mortgage payment to $490 which allowed her to remain in the home.

Wife stated that she had been employed as a substitute teacher but had injured her back rendering her unable to work. In response to her costly medical insurance premiums, Wife explained that she had to have several operations on her back. Wife testified to the court that she was eligible and intended to apply for Medicare which would reduce the cost of her medical insurance premium to $98 per month.

In regards to Husband's income, the lower court found that the loans he received from his business were income as was his Social Security benefits. Therefore, it reasoned, Husband had the ability to pay the alimony in futuro in the amount of $1,300 per month and further ordered him to pay an additional $400 per month to pay his arrearage of same. It was also ordered that Husband pay Wife's Medicare premium in the amount of $98. Husband filed an appeal.

Analysis: On appeal Husband asserted that his entire estate was dissipated by the alimony in futuro and medical insurance premiums awarded to Wife in the divorce. He further asserted he had not received any income from his business since 2009. Wife argued that Husband did receive income from his business through loans instead of a traditional salary; therefore, the lower court's opinion should be affirmed.

The appellate court found that Husband reported an income of $20,000 from his company at the time of the divorce. That income would amount to approximately $1,666 per month. The court found that while Husband no longer received said income his Social Security benefits were almost exactly the same amount, therefore; his income had not drastically changed. It further averred Husband chose to take loans against his company instead of a salary, so, while he did not have a salary, he did have income from the business. In regards to Wife, the appellate court found her ability to work had drastically declined since the divorce was finalized and her Social Security benefits were "not commensurate with her imputed income at the time of the divorce."

Conclusion: The appellate court found the lower court did not abuse its discretion in finding that Husband did not prove a "material change in circumstance" in order to dictate a modification of the alimony in futuro obligation. The lower court's opinion was affirmed.

Relief from Default Judgment Difficult, Not Impossible

In the case of Butler v. Vinsant, No. M2012-01553-COA-R3-JV (Tenn. Ct. App. April 15, 2013), Knoxville divorce lawyers learn that obtaining relief from a default judgment requires proof of mistake, inadvertence, surprise or excusable neglect.

Facts: In 2010, Mother filed a Petition to Set Child Support against Mr. Vinsant, the alleged biological father in Juvenile Court. Father filed a Response admitting paternity but denying that he owed support due to the fact that the children resided with him the majority of the time. Simultaneously but under a different docket number, Father also filed a Petition to Legitimate and for Custody, requesting that he be named the primary parent. The two actions were consolidated and Mother was allowed to amend her petition to include custody. Mother then filed an Amended Petition asking to be the primary parent. Meanwhile, Father's attorney withdrew. Father never filed an Answer to Mother's Amended Petition, so Mother filed a Motion for Default Judgment and set a hearing. Father failed to appear at that hearing. The trial court found the following: Mother was entitled to a default based upon Father' s failure to answer or appear; that Father's paternity was established; that Mother was primary residential parent with Father having every-other-weekend visitation; that child support was set and Mother was awarded an arrearage.

Father then filed a Rule 60.02 Motion to Vacate Default Judgment. In said Motion, Father provided affidavits stating that his failure to answer or appear was excusable because his prior attorney failed to forward his file to the new counsel. The Rule 60.02 motion was denied by the trial court and Father appealed.

Analysis: Rule 60.02 of the Tennessee Rules of Civil Procedure states that a court may relieve a party from a final judgment or order based upon mistake, inadvertence, surprise or excusable neglect. A trial court's ruling shall only be overturned upon a finding of abuse of discretion (meaning application of an incorrect legal standard, an illogical conclusion, a clearly erroneous assessment of the evidence or reasoning causing injustice to the complaining party).

Further, three factors are used to determine if the default should be vacated: whether the default was willful; whether there was a meritorious defense; and whether the other party would be prejudiced.

Here, the Appeals Court found that Father only had a meritorious defense regarding the custody issue. The evidence in the record submitted by Father - an affidavit and his original petition (which is not evidence by itself) - only contains allegations regarding child custody factors and failed to include facts about his income, child support obligation or arrearage. Further, his Rule 60 Motion fails to dispute or point out any error in the trial court's calculation of child support or the arrearage. However, his Petition avers that he has a loving relationship with the child, and had been the primary caretaker.

Next, the Appeals Court looked to see whether Father's failure to appear and answer was willful. "Willful" means intentional and voluntary rather than accidental and not due to coercion. Father argues he did not have actual notice of the hearing. Therefore, the question becomes whether Father's inaction in promptly obtaining a new attorney and failing to stay updated on the proceedings was willful, less than willful but not excusable, or excusable. Even though Father's first attorney failed to keep Father informed, Father failed to promptly obtain new counsel even after being advised to do so; Father further failed to inform opposing counsel or the court of his lack of representation for several months, until the filing of the Rule 60 Motion. The record also showed that Father ignored his prior attorney's repeated advice to quickly obtain substitute counsel. Therefore, although these actions were not calculated to avoid the court proceedings, the Appellate Court found his actions were not inexcusable, meaning Father is not entitled to any relief under Rule 60.02.

Primary Residential Parent Determination Depends On T.C.A. 36-6-106 Factors

In the case of Wood v. Wood, No. W2012-01250-COA-R3-CV (Tenn. Ct. App. May 16, 2013), Knoxville divorce attorneys learn that trial courts determine the primary residential parent based upon the factors found in T.C.A. 36-6-106.

Facts: The parties married in 2007 and separated in 2010 after having one child together. At the trial, both alleged that the other had an alcohol abuse problem, and Mother additionally alleged that Father was guilty of physical violence as well. Father admitted his DUI conviction, other alcohol related offenses and two arrests for domestic violence that occurred during the marriage. Father alleged that the Mother admitted she had several relationships with different men and had introduced them to the minor child. At the time of trial, Mother worked from 7am to 7pm three days a week, but had a 2 hour commute. Father worked for his parents, who were also proffered as alternate caregivers. However, testimony showed that Father would sometimes leave the child in the care of his parents due to his drinking and social life. Mother also argued that the grandparents interfered with her relationship with the children. The trial court named Father the primary residential parent due to his flexible work schedule and support system. The trial court refused to impute Father's income to account for the free housing provided by his parents as Mother requested. Mother appealed.

Analysis: The Court of Appeals first turns to T.C.A. ยง36-6-106(a), which outlines the factors a court is supposed to use to determine the primary parent and the co-parenting schedule. Based upon those factors, the Appeals Court made the following analysis: that both parents were devoted to the child and this factor favored neither (same as the trial court); both parents were capable of providing for the child's needs and favors neither party (same as the trial court); that the continuity and stability factor favors Father, due to Mother's many other romantic relationships, Mother have relocated the child twice due to her job changes and Father having lived and worked in the same location continuously (same as the trial court); that stability of the family until also favored Father due to Mother's commute and the closeness of the paternal grandparents (same as the trial court); that the evidence of physical and emotional abuse to the child favored neither party (same as the trial court); all other factors were found to be equal or not applicable. Accordingly, the Appeals Court upheld the trial court's decision to make the Father the primary residential parent.

Next, the Court looked at whether the trial court erred in failing to impute income to Father because he received free housing. The Court found that Mother presented no evidence regarding the reasonable rental value of his home. The Court noted that even if Mother had shown the housing was a fringe benefit of Father's employment, that the Court had no way of determining from the evidence presented how much income to actually impute. Therefore, the trial court was correct in refusing to impute income to Father based upon his free housing in that the record lacked sufficient data with which to do so.

Trial Courts Cannot Ignore Overpayment of Child Support

In the case of Huffman v. Huffman, No. M2012-01538-COA-R3-CV (Tenn. Ct. App. May 1, 2013), Knoxville divorce attorneys learn that although trial courts have broad discretion, they cannot simply refuse to allow a credit, judgment or repayment for overpayment of child support.

Facts: The parties divorced in 2002. In 2006, Father filed for a recalculation of child support. The trial court found an upward deviation and Father appealed. On appeal, the decision was vacated because the trial court failed to support its deviation from the Child Support Guidelines with specific findings and the issue was remanded. Upon remand in 2011, a hearing was held and the Court found that Father paid a total of $79,224 in child support since 2006, when he should have only paid $35,259, a difference of $43,965. But the trial court found Mother was entitled to a credit of $4,950, reducing father's overpayment to $35,259. However, the trial court found that "it was not economically viable to order Mother to repay this overage to Father" and refused to grant Father a judgment for his overpayment, stating that "neither party is to blame for the is simply a function of the judicial process." Father appealed.

Analysis: The Tennessee Court of Appeals looked at several prior cases on this issue, including: Guthrie v. Guthrie, No. W2012-00056-COA-R3-CV 2012 WL 5200079 (Tenn. Ct. App. Oct. 23, 2009) which affirmed a Father's judgment for overpayment of $6,4452,82 of child support; Stockman v. Stockman, No. M2009-00552-COA-R3-CV, 2010 WL 623724 (Tenn. Ct. App. Feb. 22, 2010), remanded to the trial court to determine the award for Father's overpayment; and Kopp v. Kopp, No. M2008-01146-COA-R3-CV, 2009 WL 2951172 (Tenn. Ct. App. Sept. 14, 2009), where the trial court gave Father a monthly credit on his child support obligation until the amount he overpaid was credited.

Based on this prior case law, the Appellate Court stated that no authority allows a trial court to forgive one party from reimbursing another for overpayment of child support simply based on that trial court's discretion, and that in this case, that decision resulted in an "injustice" to Father. Therefore, the decision that Father is not entitled to a judgment is reversed and remanded to the trial court, with instruction to give Mother a repayment plan so that Father can be reimbursed for his overpayment.