In the case titled Jackson v. Cash, No. M2012-01338-COA-R3-CV Slip Copy, 2013 WL 5762354 (Tenn. Ct. App. Oct. 22, 2013) Knoxville family law attorneys learn when it is appropriate for liens to be granted in regards to a party's interest in a marital estate and what constitutes an equitable division in regards to debt accrued in maintaining a marital estate during the course of a divorce spanning over two years.
In May 2010 an agreed order was entered allowing Wife to borrow money to pay the mortgage, insurance, and make repairs to preserve the marital home. The order required Husband to make some of the repairs since he was a contractor. However, Husband never made them. Wife petitioned the court to allow her to hire others to do the work. The court acquiesced, and in its order advised that they would make "an equitable adjustment to compensate Wife" at a later time.
Again in September 2010, the court allowed Wife to borrow money to keep the marital home out of foreclosure. The court noted in its order that Wife would be credited for this amount in regards to her interest in the marital estate at the final hearing.
The trial for the divorce began in April 2011 and spanned ten days. During trial, Husband was ordered by the court to leave the marital residence, and Wife was granted the ability to lease the home. Prior to the final hearing, a Mr. Tucker that had done work on the estate and loaned Wife money for maintenance of the estate filed a motion to intervene alleging he was owed $240,000 for services provided and monies loaned. In his petition, he requested a lien on the marital home that would be subordinate to the existing mortgages. The court granted his petition.
The trial court found that Mr. Tucker loaned Wife $240,128 in cash, services, supplies, and payments. It awarded him a judgment against Wife for the full amount, and granted a lien on Wife's interest in the marital estate. Further, it was found that Husband never agreed to pay Mr. Tucker, and, in fact, Husband had specifically stated that he would not agree to be liable for the work Mr. Tucker did. However, because the work was done to improve/preserve the marital home for which Husband had a financial interest, the trial court found Husband to be liable to Mr. Tucker for $75,889.59 and granted a lien on Husband's interest in the marital estate. In addition to Mr. Tucker's liens, Wife was awarded a lien against Husband's interest in the marital home for her expenses maintaining it during the divorce in the amount of $100,714.69.
In June 2012, the trial court amended its memorandum and order to state that the judgment in favor of Mr. Tucker against Husband was against both Husband and Wife, jointly and severally. It also noted that the judgment against wife in favor of Mr. Tucker in the amount of $240,128.19 included the judgment against Husband. Husband appealed the decision.
Husband raised the following issues on appeal: the trial court erred in awarding a judgment against him in favor or Mr. Tucker; and the trial court erred in awarding a judgment against him in favor of Wife in regard to expenses she spent on the marital estate. As there was no transcript or statement of evidence in the record for the appellate review, the facts of the case were extracted entirely from the trial court's Memorandum and Order.
In regards to the lien awarded to Mr. Tucker, the appellate court looked to Tenn. Code Ann. § 36-4-121(c) to ensure the trial court applied the correct legal standards, weighed the correct legal factors, applied the correct logic and reason, and whether the division of the marital estate, assets, and debt was equitable. Owens v. Owens, 241 S.W.3d 478, 490 (Tenn. Ct. App. 2007).
When determining if marital debt has been equitably divided, the court must consider the following factors:
• The debt's purpose
• Which party incurred the debt
• Which party(ies) benefitted from the incurred debt
• Which party is best able to repay the debt
Alford v. Alford, 120 S.W.3d 810,814 (Tenn. 2003) (citing Mondelli v. Howard, 780 S.W.2d 769, 773 (Tenn. Ct. App. 1989)). Per case law, marital debt is defined as "all debts incurred by either or both spouses during the course of the marriage up to the date of the final divorce hearing." Id. at 813.
Here, the trial court found Wife incurred a debt of $240,128.19 to maintain and preserve the marital estate. Despite Husband's objections, these expenditures were approved by the trial court prior to the debt being incurred. Of the total amount of debt incurred, the trial court specifically found that $75,889.55 was used to keep the marital estate out of foreclosure, maintain homeowner's insurance, and to do maintenance. For this reason, it was found that this portion of the debt was for Husband's benefit as well. The appellate court found no evidence to dispute the trial court's findings; therefore, the trial court's ruling on Mr. Tucker's lien against Husband's interest in the marital property was affirmed for $75,889.55.
In regards to the trial court's judgment in favor of Wife for a lien against Husband's interest in the marital estate in the amount of $100,714.69, Husband argued that it was inequitable to make him liable to Wife for the full amount. He further averred that if he was liable at all, it should only be for one-half of the total debt.
Because there was no transcript or statement of evidence provided, the appellate court was unable to reweigh the equities in the matter. Manufacturers Consolidation Serv., Inc. v Rodell, 42 S.W.3d at 865. The appellate court was left with no other choice but to assume the trial court's findings were supported by the evidence and affirmed its ruling.