August 2013 Archives

Appreciation Due to Market Factors Not Enough to Justify Distribution of Value to Spouse in Tennessee Divorce

August 13, 2013 by The McKellar Law Firm, PLLC

In the case of Huddleston v. Huddleston, No. M2012-00851-COA-3-CV (Tenn. Ct. App July 30, 2013), a case out of Putnam County Chancery Court, Knoxville divorce attorneys learn that an increase in value of separate property during a marriage, if due to market factors only, will not justify dividing that increase between the spouses upon a divorce.

Facts: The parties married in 1996, and each brought property into the marriage. The Husband owned a farm and the Wife a house in Cookeville. Wife moved to the farm until they separated in 2010. During the marriage, the couple bought a vacant lot adjacent to the Cookeville house. Husband then quitclaimed his interest in that property to Wife, and Wife conveyed the property to her sons but retained a life estate. Wife then gave that up and the sons sold the property and the proceeds were used to purchase a life insurance policy on the Wife. In a trial in 2012, the court bisected the farm property, giving each spouse half. Wife's life insurance property was awarded solely to her. Husband appealed the classification of the increase of the value of the farm as marital property, the award of half the property to the Wife and the classification of life insurance as separate property.


The Farm Property: The trial court decided that this property was marital and not separate because Wife contributed to its appreciation during the marriage. T.C.A. §36-4-121 defines marital property as that which is acquired during the marriage and includes income or increase in value of separate property if the spouse substantially contributed to its preservation and appreciation. Substantial contribution can include a spouse who is a homemaker, wage earner, parent, financial manager and other factors. Separate property is defined as that owned by either spouse prior to the marriage or income/appreciation earned after the marriage from separate property, gifts, bequests, or inheritance. Here, this Farm property was acquired in 4 parcels, three prior to the marriage and one after. An appraiser concluded that the increase in value during the marriage was approximately $330,000. Here, the trial court found that the Wife maintained the home, did laundry, cleaned, cooked, gardened, landscaped, painted and decorated, helped with farm chores, maintained fencing and helped harvest crops. However, the Appellate Court concluded that these efforts did not contribute to the increase in the value of the property. Because the court failed to make a finding as to why it held that Wife did substantially contribute to the appreciation. Prior case law emphasizes that when property increases due to market factors, and not efforts of either spouse, that increase in value is not marital property. Accordingly, the trial court's award is reversed as what was given to the Wife.

Life Insurance: Husband argues that the life insurance policy was marital because even though purchased with proceeds from separate property, the policy itself was acquired during the marriage and was comingled and/or transmuted into a marital universal policy worth over $250,000. The trial court found that Husband had signed over his interest via deed of the property to Wife. Husband offered no proof or evidence to support his contention. Accordingly, the proceeds from the sale of separate property to buy the separate life insurance policy was correctly determined to be Wife's separate property, and the trial court was affirmed on this issue.

Judges Must Follow Statutory Instruction to "Maximize Co-Parenting Time" for Both Parents in Tennessee

August 7, 2013 by The McKellar Law Firm, PLLC

In the case of McDaniel v, McDaniel, No. M2012-01892-COA-R3-CV (Tenn. Ct. App. July 29, 2013) out of Rutherford County, Tennessee, Knoxville divorce attorneys learn that trial courts must maximize the co-parenting time of both parents so long as that is in the children's best interests, and a trial court's failure to do so can result in reversal and remand for determination of a new plan.

Facts: The parties married in 1994 and Mother filed for divorce in 2011. After a trial, the marital residence was awarded to Father (Father desired it and Mother could not afford it) and because of that, with all other factors being equal, Father was designated primary residential parent "PRP" with Mother having 120 days per year. Mother appealed the PRP designation and the parenting schedule.

Analysis: T.C.A. 36-6-404 and T.C.A. 36-6-106 both contain a list of factors a trial court must look at to determine (the two lists are "substantially similar"). Here, the trial court found the following:
• Both parents showed they were caring, loving, motivated and active in the children's lives
• Mother , who did not work, provided care for the children when not in school or daycare
• Mother organized the parties' finances
• Father regularly "took over" parenting duties when he came home from work, and Mother would leave and run errands for the household
• Two witnesses testified that Father was the primary caregiver
• Both parties testified it would be important for the children to remain in the marital residence
• At the time of trial, when Father was awarded the martial residence, Mother did not have alternate living arrangements but was hopeful she could obtain housing nearby.
T.C.A. 36-6-106 allows trial courts to look at the contemplated future residences of the parents as well as the factor of continuity in the children's lives. Here, continuity weighed heavily in favor of Father. Accordingly, the trial court did not err in designating Father PRP.

T.C.A. 36-6-106 also states that in light of the children's best interests, the court should implement a plan that allows each parent to have "maximum participation" in the children' s lives. However, the trial court only awarded Mother 120 days, even though Father' s proposed parenting plan gave her 159, with no explanation for why that was appropriate. Accordingly, the Appellate Court could not find that the 120 days with Mother was in the children's best interests and reversed and remand. The trial court was directed to put down a parenting schedule that maximized participation of both parents.

Post-Majority Child Support Modification Reversed for Lack of Sufficient Basis

August 1, 2013 by The McKellar Law Firm, PLLC

In the case titled Johnston v. Harwell, No. M2012-01808-COA-R3-CV, WL 3788258 (Tenn. Ct. App. July 16, 2013) Knoxville family law attorneys learn how Tennessee law deals with child support orders from other states that allow for child support obligations for children over the age of majority, which contradicts Tennessee law.

Facts: Mother and Father were married and had two children in Hawaii where Father was stationed while in the military. In October 2003, a final decree of divorce was entered by the Circuit Court in Hawaii. While living in separate states, the court designated Mother as the primary residential parent ("PRP") for the children. This was to be changed to joint custody once she and the children moved to where the Father lived. It was determined by the Hawaii court that Father was to pay child support through any post-high school education or until the age of 23, whichever occurred first. After the divorce in Hawaii was final, Mother and the children moved to Tennessee as planned. However, they never moved to Virginia.

In 2006, Father filed a Petition to Enroll Foreign Decree Granting Absolute Divorce and Awarding Child Custody and For Enforcement and For Contempt in the Chancery Court of Maury County, Tennessee. This litigation went on for three years, and at some point during this time Father also moved to Tennessee. In 2009, the parties and the trial court entered an agreed order that Tennessee assumed jurisdiction; that the Hawaii divorce decree was enrolled in Tennessee; an agreed Parenting Plan; and Father was ordered to pay support. Because the duration of the child support payments was not addressed, the Tennessee court incorporated its Agreed Order and the Hawaii divorce decree as the Order of the Court.

In 2011Father requested the court to modify the child support, in accordance with Tennessee law, to cease when the children were age eighteen and had graduated from high school. Father argued that the current child support agreement was not supported by Tennessee law and, therefore, should be modified.

Mother argued that the trial court lacked the authority to modify the duration of the child support as set forth in the Hawaii divorce decree. Her argument relied upon the Uniform Interstate Family Support Act ("UIFSA") located in Tenn. Code Ann. § 36-5-2201 and Tenn. Code Ann. § 36-5-2615, which governs jurisdiction and enforcement of orders for matters that cross state lines. Mother asserted the statues only allow for Tennessee to modify Hawaii's order as to "those portions of the decree that would be modifiable under [Hawaii's] state law." Mother also asserted the 2009 parenting plan ordered in Tennessee did not nullify the duration of the child support set forth in the Hawaii divorce decree.

The trial court heard arguments on the child support modification matter in July 2012. In its order it found the following:

• The Hawaii divorce decree was a child support order as defined in Tenn. Code Ann. § 36-5-2101(2) and Hawaii was the "issuing" state for the child support order as defined in Tenn. Code Ann. § 36-5-2101(13).
• Tennessee was the home state, as defined in Tenn. Code Ann. § 36-5-2101(8) for at least six months.
• The Hawaii divorce decree was registered in Tennessee in based on the statutory definition of "register" in Tenn. Code Ann. § 36-5-2101(21).
• Hawaii no longer had "continuing, exclusive jurisdiction over [the] child support order" due to the parties no longer being residents of the state.
• The Hawaii decree had been modified after it was registered in the state of Tennessee by agreement of the parties.
• In accordance with UIFSA, any "[m]odifiation[s] of the registered child support order is now an intrastate matter," because all of the parties were residents of Tennessee pursuant to Tenn. Code Ann. § 36-5-2613(a).

Upon its finding that the matter qualified as an intrastate matter in accordance with UIFSA, the trial court found UIFSA to require it to apply "the procedural and substantive law of [Tennessee] to the proceedings for enforcement and modification," of the Hawaii divorce decree. In its interpretation of UIFSA, the trial court advised that it could not modify any portion of a child support order registered in Tennessee that is not modifiable under the law of the issuing state, Hawaii. It found Hawaii law to allow for modification of child support orders, including any provisions for child support of adult children who are "full-time post high school students." It also found that the modified, agreed parenting plan did not establish duration for the obligation of the support.

Once the trial court determined the divorce decree was modifiable according to Hawaii law, it applied Tennessee procedural and substantive law to Father's request to modify his support obligation. In accordance with Corder v. Corder, 231 S.W.3d 346, 355-56 (Tenn. Ct. App. 2006), the trial court found that Tennessee does not require child support for children that are age eighteen and graduates of high school. In its order the trial court stated it had, "no authority to order [Father] to pay child support for his adult [children] who [have] graduated from high school."

Mother appealed the decision. She argued that the trial court erred in claiming subject matter jurisdiction under UIFSA to modify the child support order from the divorce decree in Hawaii. Alternatively, she argued that even if the trial court had the subject matter jurisdiction, it erred in its decision that the child support provision was modifiable under Hawaii law. Father countered her argument by averring the trial court acted appropriately in applying Tennessee substantive law to the child support modification, because the child support was modifiable under Hawaii law.

Analysis: The appellate court determined that UIFSA did not govern this matter due to the Act's concept of "continuing exclusive jurisdiction," as interpreted by the Supreme Court in Letellier v. Letellier, 40 S.W.3d 490, 493 (Tenn. 2001). The Supreme Court explained "[a] state that issues a support order has continuing exclusive jurisdiction over that order. No other state may modify that order as long as the issuing state has continuing exclusive jurisdiction." Id.

According to Tenn. Code Ann. § 36-5-2205, if an issuing state has continuing exclusive jurisdiction, a Tennessee court may modify an out-of-state child support order only after the order is registered in Tennessee so long as the statutory requirements are met. However, the issuing state loses continuing exclusive jurisdiction under circumstances that are listed in Tenn. Code Ann. § 36-5-2205. The comments on the statute in pertinent part states "if all relevant persons--the obligor, the individual obligee, and the child--have permanently left the issuing state, the issuing state no longer has an appropriate nexus with the parties or child to justify exercise of jurisdiction to modify." The comments on the statute go on to state the issuing state can also lose continuing exclusive jurisdiction "if the parties consent in writing for another state to assume jurisdiction to modify." Id.

The appellate court reasoned that for the purposes of this appeal it was clear that Hawaii lost its continuing exclusive jurisdiction since the parties no longer lived in the state. Further, Tennessee gained continuing exclusive jurisdiction when the parties consented for the Tennessee trial court to adopt the Hawaii divorce decree as an Order of the Court.

Turning to Mother's subject matter jurisdiction argument, the appellate court found that for the foregoing reasons Mother's argument was invalid. All of Mother's arguments regarding the issue were based on UIFSA which the appellate court had already deemed did not apply.

Because the child support order was enrolled by agreement of the parties in Tennessee, which made it a Tennessee order, it was subsequently modifiable under Tennessee law. However, according to Tennessee statute, in order to modify a child support obligation the party must show a "material change in circumstances." Father in this case did not assert any material changes or any change or reason at all to warrant a modification of the child support and therefore the trial court's modification was unwarranted.

Conclusion: The appellate court reversed the modification of support and remanded the matter back to trial court. Costs of the appeal were taxed to Father.