Marika Avery v. Thomas Avery ( 2001 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
January 29, 2001 Session
MARIKA AVERY v. THOMAS EDWARD AVERY
Appeal from the Chancery Court for Williamson County
No. II-25850 Russ Heldman, Chancellor
No. M2000-00889-COA-R3-CV - Filed July 11, 2001
In this divorce case ending a 25 year marriage, the trial court classified a bequest made solely to the
husband as marital property under an “implied partnership” theory and divided the bequest equally.
The parties’ other property was divided, and the wife was awarded alimony in futuro. The husband
appeals the classification and division of property and the award of alimony in futuro. We reverse
the trial court’s classification of the bequest as marital property and classify the original bequest as
Husband’s separate property. We find the increase in value of that separate property to be marital
because of the parties’ contribution to its maintenance and increase. We modify the award of marital
property accordingly, modify the alimony award, and decline to award Wife attorney fees on appeal.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Reversed in Part, Affirmed as Modified and Remanded.
PATRICIA J. COTTRELL , J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S.,
and WILLIAM B. CAIN , J., joined.
Mark Hartzog, Franklin, Tennessee, John D. Kitch, Nashville, Tennessee, for the appellant, Thomas
Edward Avery.
Mary Frances Lyle, Nashville, Tennessee, for the appellee, Marika Avery.
OPINION
Marika Avery (“Wife”) and Thomas Edward Avery (“Husband”) were married for 25 years
and have two daughters, the older born in 1981 and the younger born in 1983. Both children were
in high school at the time of the hearing, although the older daughter was expected to graduate the
following spring. Mr. Avery was a 52 year old college educated stockbroker, earning an average
income of more than $90,000 per year. Ms. Avery was a 48 year old graphic designer earning
$31,000 per year.
The parties met in Germany while Mr. Avery was stationed there in the military. They
married there in 1974 and, after Mr. Avery’s discharge from service, they moved to Miami, Florida.
For most of their marriage, the parties lived in Florida. They moved to Tennessee in late 1995. Mr.
Avery developed his business in Tennessee while retaining business in Florida. The parties
purchased a large house for $410,000. As the trial court found, the parties enjoyed a high standard
of living. The court also found, “Both parties have worked hard and contributed financially to the
marriage. They have lived a nice lifestyle but both have been good at managing funds and they have
acquired substantial assets.”
The marriage was not always satisfactory to Ms. Avery. She testified to her husband’s anger
and threats of violence and his difficulties with their older child. She has described Husband as
demanding, controlling and threatening. In 1992, Ms. Avery told her husband she was considering
a divorce. She actually filed a divorce action in 1996. The parties and their children obtained
counseling for a while, and Ms. Avery dismissed her complaint. She filed this action in November
of 1998.
Wife’s complaint alleged as grounds irreconcilable differences and inappropriate marital
conduct. Husband answered the complaint, admitted there were irreconcilable differences, but
denied that he had been guilty of inappropriate marital conduct. He also counter complained for
divorce alleging Wife had been guilty of inappropriate conduct. Husband also averred that he had
accumulated a substantial separate estate through inheritance and requested the court to award him
his separate property free from any claims by Wife.1 Wife responded denying she was guilty of
inappropriate marital conduct. She also denied that Husband had a substantial separate estate and
alleged that all property owned by either party was “acquired by the joint efforts of the parties and
is subject to equitable division.”
Wife affirmatively agreed that the parties were unable to live together successfully as
Husband and Wife. They both agreed that the parties had irreconcilable differences; however, they
were unable to agree to an equitable distribution of their property or other matters. Eleven months
after filing her original complaint for divorce, Wife amended her complaint to add the ground of
adultery.2 An agreed order was entered allowing this amendment.
After a six day trial, spread over several weeks, the trial court awarded a divorce to Wife on
the ground of adultery. In subsequent orders, the trial court disposed of the remaining issues,
including award of custody of the daughters to Wife, and an order that Husband pay $3,739 per
1
In her complaint, Wife asked that Husband be restrained from transferring, removing, or dissipating the marital
property or the separate property including withdrawal from the “very substantial accounts in Husband’s sole name”
without agreemen t from W ife on the basis “Husband is secretive about money and financial matters and Wife fears that
she and the minor children will be irreparably harmed” without such restraint. The trial court granted the restraining
order. In his answer, Husband denied there was any reason for the restraining order.
2
In recently received responses to discovery requests, Husband had admitted to three separate one-time
instances of ad ultery, the last having occurred after Wife filed the divorce complain t.
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month in child support until the older child graduated from high school, and then pay $2,453 per
month until the younger child graduated from high school. None of these holdings is appealed.
The primary issues in Husband’s appeal involve the trial court’s classification and
distribution of the parties’ property and the award to Wife of alimony in futuro of $500 per month
until the child support terminates and $1,500 per month after that, until the death or remarriage of
Wife. In addition, Wife asks for attorney fees on appeal.
We review the findings of fact by the trial court de novo upon the record of the trial court,
accompanied by a presumption of the correctness of the findings, unless the preponderance of the
evidence is otherwise. Tenn. R. App. P. 13(d). No such presumption is afforded to conclusions of
law. Lavin v. Jordan, 16 S.W.3d 362, 364 (Tenn. 2000).
I. Classification and Distribution of Property
Upon the dissolution of a marriage, courts are called upon to divide the assets the parties
accumulated during the marriage. Such decisions are very fact specific, and many circumstances
surrounding the property, the parties, and the marriage itself play a role. However, statute and case
law provide the legal principles to which the facts must be applied. The task involves several steps,
the first being to determine whether an asset is subject to division at all.
Tennessee, being a “dual property” state, recognizes two distinct classes of property: (1)
“marital property,” as defined in Tenn. Code Ann. § 36-4-121(b)(1); and (2) “separate property,” as
defined in Tenn. Code. Ann. § 36-4-121(b)(2). Batson v. Batson, 769 S.W.2d 849, 856 (Tenn. Ct.
App. 1988). The distinction is important because, in an action for divorce, only marital property is
divided between the parties. Tenn. Code Ann. § 36-4-121(a)(1); Brock v. Brock, 941 S.W.2d 896,
900 (Tenn. Ct. App. 1996). Separate property is not part of the marital estate subject to division.
Cutsinger v. Cutsinger, 917 S.W.2d 238, 241 (Tenn. Ct. App. 1995). Accordingly, when it comes
to dividing a divorcing couple’s property, the court should initially identify the separate property,
if any, belonging to each party. Anderton v. Anderton, 988 S.W.2d 675, 679 (Tenn. Ct. App. 1998).
As a general statement, separate property is that which was owned by one party before the
marriage or given to one party during the marriage. Tenn. Code Ann. § 36-4-121(b)(2). It includes
(1) property owned by a spouse before marriage, (2) property acquired in exchange for property
acquired before marriage, (3) income from and appreciation of property owned by a spouse before
marriage (except in certain defined circumstances), and (4) property acquired by a spouse at any time
by gift, bequest, devise, or descent. Tenn. Code Ann. § 36-4-121(b)(2).
Whether an asset is separate property or marital property is generally a question of fact.
Cutsinger, 917 S.W.2d at 241; Sherrill v. Sherrill, 831 S.W.2d 293, 295 (Tenn. Ct. App. 1992).
Thus, a trial court’s classification decisions are entitled to great weight on appeal. Wilson v. Moore,
929 S.W.2d 367, 372 (Tenn. Ct. App. 1996). These decisions will be presumed to be correct unless
the evidence preponderates otherwise, Hardin v. Hardin, 689 S.W.2d 152, 154 (Tenn. Ct. App.
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1983), or unless they are based on an error of law. Mahaffey v. Mahaffey, 775 S.W.2d 618, 622
(Tenn. Ct. App. 1989).
A. Classification of the Grundy Fund
The trial court entered a thorough and detailed order reflecting its disposition of the parties’
property, and the parties have provided detailed information to us, including the statements required
by Tenn. R. Ct. App. 7.3 The trial court included a number of items in the marital estate: the
couple’s residence (which was ordered sold with proceeds going to Wife), two vehicles (awarded
to Wife), household furnishings and other items whose distribution was agreed to by the parties, and
a number of IRA, 401(k), and other investment accounts. Neither party questions the categorization
of these items.
However, the correct classification of the major asset owned by the parties, or one of the
parties, is the primary area of dispute in this appeal. That asset has been referred to, and will be
referred to herein, as the “Grundy Fund.” Of the total “marital” estate, the trial court awarded
$1,854,800 (approximately 47%) to Husband and $2,094,950 (approximately 53%) to Wife.4 These
calculations, provided by the parties, reflect a total estate of approximately $3.95 million. The
“Grundy Fund” had a value at trial of approximately $2.7 million. The impact of its correct
classification is obvious.
Husband received the original corpus of the “Grundy Fund” in 1994 as a bequest from Mrs.
Florence Grundy. In 1976, while Husband was working as a stockbroker/financial consultant, he
began doing business with Mrs. Grundy who was then 82 years old. In 1984, when Mrs. Grundy
was about 90 years old, she turned over management of her accounts to Husband pursuant to his
offer that his firm would manage her investments at no charge except for commissions on the
transactions. He also directed her to an attorney who drew up a trust instrument for her accounts
which named Husband as a $50,000 beneficiary.
In 1989, Mrs. Grundy broke her hip and was hospitalized. Husband visited her in the hospital
and assisted her with personal matters, since she had no relatives to help her. After Mrs. Grundy
moved into a rehabilitation facility, Husband asked Wife to help her find a suitable assisted living
arrangement, which Wife did. Shortly thereafter, Mrs. Grundy amended the trust to make Husband
a $100,000 beneficiary and to make him the sole residual beneficiary of the trust.5 Husband informed
Wife of the change.
3
This was formerly Tenn. R. Ct. App. 15.
4
These figures, provided by the parties, also include some property awarded to W ife as separate property and
a judgment awarded to Wife.
5
Although the trust was ame nded after W ife began assisting Mrs. Gr undy, Husband testified that Mrs. Grundy
decided to amend the revocable trust before she met Wife.
-4-
Husband asked Wife to visit Mrs. Grundy and help her as needed. Wife agreed to do so, and
took Mrs. Grundy to doctors’ appointments, shopping, and to her women’s club. The parties
included Mrs. Grundy in family holiday celebrations, and Wife arranged for Mrs. Grundy to receive
a birthday card from the President on her 100th birthday. Mrs. Grundy grew fond of Wife and the
children; in three different years Mrs. Grundy gave each of the parties and each daughter a cash gift
of $9,900 and expressed her gratitude for their friendship.
Mrs. Grundy died in 1994 at 101 years of age and Husband received more than two million
dollars as a specific bequest and as residual beneficiary. Husband placed those funds in an account
solely in his name, the Grundy Fund.6
It is clear that the Grundy Fund was left to Husband alone by Mrs. Grundy. By statute
“separate property" means “property acquired by a spouse at any time by gift, bequest, devise or
descent.” Tenn. Code Ann. § 36-4-121(b)(2)(D). The court’s authority to award property to either
of the parties in this case arises from its authority to “equitably divide, distribute or assign the marital
property between the parties” upon request of a party, in an action for divorce. Tenn. Code Ann.
§36-4-121(a)(1). Thus, the court may only divide and distribute property which is statutorily defined
as marital and may not divide and distribute property which is statutorily defined as separate.
A. Partnership Theory
The trial court divided the Grundy Fund equally between the parties, specifically finding it
to be marital property because it was acquired during the course of the marriage as “partnership
property,” as defined in Tenn. Code Ann. § 61-1-107(a), on the theory the parties had an implied
partnership. The trial court stated:
Clearly, an implied partnership under Bass v. Bass makes the Grundy Fund
“partnership property” in accordance with law because it was acquired “on account
of the partnership.” T.C.A. 61-1-107(a). The fact that the Grundy Fund is
“partnership property” under Tennessee law therefore disqualifies it from being
controlled by the law of “separate” property under T.C.A. 36-4-121(b)(2)(D), for
partnership property under these circumstances becomes “marital” property as that
term is defined by T.C.A. 36-4-121(b)(1)(A).
The trial court relied on Bass v. Bass, 814 S.W.2d 38 (Tenn. 1991) for its finding that a
partnership existed between these parties and quoted extensively from that case in its order,
including the following excerpts:
6
It is this fund, acquired by Husband as an inheritance, to which the parties referred in their pleadings discussed
earlier.
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In determining whether one is a partner, no one fact or circumstance may be pointed
to as a conclusive test, but each case must be decided upon consideration of all
relevant facts, actions, and conduct of the parties. . . .
Moreover, the existence of a partnership depends upon the intention of the parties,
and the controlling intention in this regard is that ascertainable from the acts of the
parties. Although a contract of partnership, either express or implied, is essential to
the creation of partnership status, it is not essential that the parties actually intend to
become partners. The existence of a partnership is not a question of the parties'
undisclosed intention or even the terminology they use to describe their relationship,
nor is it necessary that the parties have an understanding of the legal effect of their
acts. It is the intent to do the things which constitute a partnership that determines
whether individuals are partners, regardless if it is their purpose to create or avoid the
relationship.
Bass, 814 S.W.2d at 41 (citations omitted by this court).7
Other language in Bass regarding the prerequisites of a partnership, also quoted by the trial
court, presents what appears to us to be the greatest impediment to a finding that Mrs. Grundy’s
bequest or gift to Husband alone is partnership property.
If the parties' business brings them within the scope of a joint business undertaking
for mutual profit--that is to say if they place their money, assets, labor, or skill in
commerce with the understanding that profits will be shared between them--the
result is a partnership whether or not the parties understood that it would be so. . .
Stated another way, the existence of a partnership may be implied from the
circumstances where it appears that the individuals involved have entered into a
7
The trial court made p articular reference to footnote 3, which states:
"The intent of parties to form a par tnership ma y be implied ; it need not be expressed in writing or
orally, if it can be derived from the parties' actions. [I]t may be asserted objectively from all the
evidence and circumstances. It is not essential that the parties know that their contract, in law, creates
a partnership. The legal effect of the parties' agreement, not their subjective intent, determines
whether there is a partnership .
Where parties agree on all matters w hich, in law, con stitute a contrac t of partnership , it will be
presumed that they intend that contract, notwithstanding that the parties propose to avoid the liability
otherwise attaching to partners, intend to avoid partnership, or even expressly stipulate that they are
not partners. The legal effects of their relationship follow whether or not the parties foresee and intend
them, and it is immaterial that the parties do not realize they are partners." 59A Am.Jur.2d,
Partnership, § 152 (1987).
Id. n.3.
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business relationship for profit, combining their property, labor, skill, experience,
or money.
Id. (emphasis added by this court).
Thus, the law requires that a partnership, implied or otherwise, will only be found where the
parties are jointly involved in a business undertaking. Similarly, the Uniform Partnership Act, also
relied on by the trial court, defines a partnership as “an association of two (2) or more persons to
carry on as coowners a business for profit.” Tenn. Code Ann. § 61-1-105(a) (emphasis added). In
Bass, the question before the Supreme Court was whether the plaintiff and the deceased were
implied business partners in three separate businesses: a restaurant, a video machine venture, and
a convenience store. Bass, 814 S.W.2d at 43-44. In reaching its decision, the Supreme Court
itemized the plaintiff’s involvement in, financial contribution to, and work at the three businesses
and found, “There is no question that the Plaintiff and William Bass carried on as co-owners of a
business for profit.” Id. at 43.
The trial court’s classification of the Grundy Fund as “partnership property” was based on
its determination that the parties had worked together to maintain Husband’s status as a beneficiary.
The trial court stated:
Clearly, the Averys invested joint efforts into preserving Mr. Avery’s beneficiary
status based on an agreement which came into being as a result of Mr. Avery’s
invitation and with the joint anticipation and expectation that that status would not
change and the marriage would benefit from the inheritance from the trust should
they jointly care for Ms. Grundy in individual ways until Ms. Grundy’s death.
Wife takes a similar position and argues on appeal that the business in which she and
Husband were engaged was to keep Mrs. Grundy happy so she would maintain Husband as the
residuary beneficiary of her trust.8 Wife characterizes the bequest as compensation.
We cannot agree that befriending, helping, and entertaining an elderly person in anticipation
of inheriting from that person is a business, a business undertaking, or a business enterprise designed
to make a profit. We cannot agree that the acts of kindness performed by either of the Averys placed
their efforts in commerce. We have found no authority to support Wife’s assertion, or the trial
court’s implicit finding, that being nice to an older person in hopes of inheriting is a business
enterprise. Public policy dictates against our creating such authority.
8
On appeal, Wife also takes the position that it is irrelevant whether the funds were received as a result of efforts
by the partnersh ip or by Hus band’s efforts solely, because even if the enterprise was a sole proprietorship, the funds were
compensation for services. Because Husband earned them during the marriage they fall within the definition of marital
property, she asserts. We agree that the typ e of business entity is probably not determinative. We disagree with the
overall proposition, however, because we think some business enterprise must be involved, rather than a personal
bequest.
-7-
While Tennessee recognizes a cause of action for claims against an estate when one has
rendered services pursuant to a contract to compensate by an inheritance, Cobble v. McCamey, 790
S.W.2d 279, 281 (Tenn. Ct. App. 1989), a party making such a claim must show the existence of a
contract, express or implied. Otherwise,
Where one renders services to another in the hope or expectation of a legacy, devise,
or other provision by will for his benefit, without any contract, express or implied,
but relying solely upon the generosity of the person for whom such services were
rendered, he cannot recover for such services because of the failure of such person
to make such testamentary provision in his behalf.
Cobble, 790 S.W.2d at 282 (quoting Cotton v. Roberts’ Estate, 337 S.W.2d 776, 780 (Tenn. Ct. App.
1960)).
Ms. Avery has not alleged that she and/or Mr. Avery had an agreement with Mrs. Grundy that
she would provide for them in her will if they would provide various services for her. Even where
such a contract can be proved, the providers of the services are entitled to recover only an amount
equal to the reasonable value of the services. Cobble, 790 S.W.2d at 282. Thus, to the extent Mr.
or Ms. Avery relied upon or were able to prove a contract by which Mrs. Grundy agreed to
compensate them for his or their services,9 any recovery would be limited to the value of the services
provided. Any amount over that reasonable value would be simply a gift to Mr. Avery. Ms. Avery’s
recourse for her absence from Mrs. Grundy’s will would lie with a claim against the estate, not in
an action for divorce.
The trial court, and Wife, rely on Bass for the additional proposition that, as the trial court
stated it, “Tennessee partnership law cannot be undermined or trumped by ‘the laws of domestic
relations.’” The trial court relied on the following language from Bass:
The fact that the parties cohabited, and were married at one point, has absolutely no
bearing whatsoever in our decision today. A partnership can be implied in this case
while completely ignoring the parties' social relationship. If these parties had, for
example, been brothers, it is doubtful that there would have been any question raised
to begin with about whether a partnership existed. As recognized by the Supreme
Court of Washington in Thornton,10 the ordinary laws pertaining to partnership, not
the laws of domestic relations, apply in a situation such as this where a business
partnership can be implied from the facts and circumstances, a meretricious
relationship notwithstanding. The fact that the parties may be involved socially
9
“[I]f plaintiffs establish that the decede nt expressly or impliedly re quested the services, and if plaintiffs proved
that they rendered those services with the expectation that they were to be paid in some manner for those services, then
a contract is made out entitling the plaintiffs to recover against the estate for the reasonable value of those services. This
contract must be proven in the face of the ‘Dead Man’s’ statute and the hearsay rule.” Cobb le, 790 S.W.2d at 282.
10
In re Estate of Thornton, 499 P.2d 864 (W ash 1972).
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should not, and does not, slam shut the courthouse doors to a claimant such as Linda
Bass who invests time, money, labor, and energy into establishing a profit
producing enterprise. This Court takes the view that the claimant's rights under
such circumstances are predicated upon established business partnership doctrine,
nothing more and nothing less.
814 S.W.2d at 44 (emphasis added by this court).
The Bass case involved a claim to one-half the assets of specific business ventures by the
deceased’s business partner. When Mr. Bass died intestate, Ms. Bass sought to be declared the
business partner of the deceased or the equitable owner of half of the assets of his estate. Id. at 40.
It was not a divorce case. The parties had cohabited, married briefly but divorced after a few
months, and continued cohabitation, their relationship spanning a total of twelve years. Id. They
had worked together to build several businesses. Thus, the Supreme Court’s statements quoted
above must the construed in context. The court simply determined that a partnership may exist in
a profit making business enterprise regardless of any other relationship between the parties.
Bass differs from the case before this court in two very important respects. First, the Basses
were actually engaged in business enterprises. Secondly, the Basses were not married or seeking a
divorce, and the ownership to the business assets did not arise in the context of a divorce. In the case
before us, the trial court only has authority to distribute marital property, and the applicable statute
clearly defines a bequest to one party alone as that party’s separate property. That statute furthers and
is consistent with the well-settled rule that a testator may dispose of his or her assets freely and
according to his or her own wishes. It was Mrs. Grundy’s unvarying wish to leave her residuary
estate to Husband alone, and she knew how to change her will and had given gifts to Wife in the
past. The trial court’s decision herein would have the effect of negating the testator’s intent.
We conclude there is no basis in law for ignoring the statutory definition of separate property
in this case, and reverse the trial court’s decision to include the entirety of the Grundy Fund in the
marital estate.
B. Other Means by Which Separate Property may Become Marital Property
Tennessee recognizes other theories by which separate property is converted to marital
property. Among those are the related theories of transmutation and commingling. These have been
raised by Wife as alternative bases upon which the Grundy Fund should be considered marital
property.
The related doctrines of transmutation and commingling have been explained as follows:
[T]wo related doctrines of commmunity property have made their appearance in the
marital property cases. The first of these is commingling, according to which
separate property becomes marital property if inextricably mingled with marital
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property or with the separate property of the other spouse. If the separate property
continues to be segregated or can be traced into its product, commingling does not
occur. The second doctrine is that of transmutation. This occurs when separate
property is treated in such a way as to give evidence of an intention that it become
marital property. One method of causing transmutation is to purchase property with
separate funds but to take title in joint tenancy. This may also be done by placing
separate property in the names of both spouses. The rationale underlying both these
doctrines is that dealing with property in these ways creates a rebuttable presumption
of a gift to the marital estate. This presumption is based also upon the provision in
many marital property statutes that property acquired during the marriage is
presumed marital. The presumption can be rebutted by evidence of circumstances
or communications clearly indicating an intent that the property remain separate.
2 HOMER H. CLARK, JR., LAW OF DOMESTIC RELATIONS IN THE UNITED STATES § 16.2 at 185 (2d
ed.1987).
Thus, conduct between the parties can affect the classification of property. “Transmutation”
occurs when the owner of separate property treats the property as marital.11 Batson, 769 S.W.2d at
858. For example, if either spouse makes a gift of separate property to the marital estate, that
property is transmuted into marital property. McClellan v. McClellan, 873 S.W.2d 350, 351 (Tenn.
Ct. App. 1993); Batson, 769 S.W.2d at 858. Similarly, a presumption of transmutation arises when
a party uses separate funds to purchase property but places the property in the names of both spouses.
Wright-Miller v. Miller, 984 S.W.2d 936, 942 (Tenn. Ct. App. 1998); Barnhill v. Barnhill, 826
S.W.2d 443, 452 (Tenn. Ct. App. 1991). Transfer of title in previously separately owned property
to joint ownership also creates a presumption of a gift to the marital estate. Kincaid v. Kincaid, 912
S.W.2d 140, 142 (Tenn. Ct. App. 1995).
Commingling otherwise separate property with marital property, or the other spouse’s
separate property, such that it is inextricably combined may result in transmutation of the separate
property into marital property. Hofer v. Hofer, No. 02A01-9510-CH-00210, 1997 WL 39503 at *3
(Tenn. Ct. App. Feb. 3, 1997) (no Tenn. R. App. P. 11 application filed). Such commingling is
evidence of the party’s treatment of the separate property as marital. However, “if the separate
property continues to be segregated or can be traced into its product, commingling does not occur.”
Id. (quoting 2 CLARK , LAW OF DOMESTIC RELATIONS § 16.2 at 185); Pope v. Pope, No. 88-58-II,
1988 WL 74615 at *3 (Tenn. Ct. App. July 27, 1988) (no Tenn. R. App. P. 11 application filed).
These presumptions can be rebutted with “evidence of circumstances or communications
clearly indicating an intent that the property remain separate.” McClellan, 873 S.W.2d at 351;
Batson, 769 S.W.2d at 858. In determining whether otherwise separate property has been converted
into marital property, courts will look to the intent and actions of the parties. Id.; Wilson v. Moore,
11
Similarly, either spouse can give his or her in terest in marital p roperty to the other spou se, making it sep arate
property. Kinard v. Kina rd, 986 S.W.2d 220 , 232 (Tenn. Ct. App. 1998).
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929 S.W.2d at 374. In such situations, the determination of whether property is jointly or separately
held depends upon the circumstances. Langford v. Langford, 421 S.W.2d 632, 634 (Tenn. 1967).
In the case before us, Wife claims that the Grundy Fund “was both transmuted by being
treated as marital property, and commingled and thus converted into marital property.” Husband
deposited the Grundy Fund into a personal investment account, held solely in his name. He
sometimes used money from this account to supplement the parties’ income, by making deposits out
of his account into the couple’s joint account. Husband concedes that those funds already spent
could be determined to have transmuted into marital funds. We agree with Husband, however, that
the remainder of the money in his personal account, originating from the Grundy fund, was not
transmuted into marital property.12 We find no evidence of Husband’s intent to gift the marital estate
or Wife with the remainder of the money in his separate account, and no evidence that he
commingled his separate account with jointly held property.
To the contrary, the evidence showed that Husband took great care to keep the Grundy Fund
separate from the joint accounts. He specifically refused Wife’s requests that the entirety of the
Grundy fund be placed in a joint account.
C. Increase in Value of Grundy Fund
After Mrs. Grundy’s death, Husband received three distributions from her trust, the total
value of which was $2,302,734, much of it in the form of securities. By the time of the trial the
asssets, including a promissory note for repayment of a loan to Husband’s brother from Grundy Fund
money, had increased in value to $2,869,997. Thus, Husband’s separate property had increased by
$567,263 during the marriage.
Marital property is defined to include income from, and any increase in value during the
marriage of separate property where “each party substantially contributed to its [the separate
property’s] preservation and appreciation.” Tenn. Code Ann. § 36-4-121(b)(1)(B). Substantial
contributions must be real and significant, but they need not be direct. Mahaffey, 775 S.W.2d at 623.
Contributions are substantial if they enable the spouse who owned the property to retain it during the
marriage. Id. “While the claimed contributions must be real and significant, they need not relate
directly to a particular piece of separate property . . . and they need not be monetarily commensurate
with the appreciation in the separate property’s value.” Mahler v. Mahler, No. 01A01-9507-CH-
00303, 1997 WL 187130 (Tenn. Ct. App. Apr. 18, 1997) (no Tenn. R. App. P. 11 application filed)
(citing Mahaffey, 775 S.W.2d at 623).
Husband asserts that the appreciation or increase in value of the Grundy Fund cannot be
considered marital property because neither of the Averys contributed to it. It is true that our courts
have previously held that when separate property increases in value with no contribution from either
12
In addition to finding no basis for such a finding in the law, we think it would be bad po licy for a court to hold
that a party risks all o f his or her sepa rate prop erty by spend ing some o f it for the benefit of his o r her family.
-11-
party, that increase remains the separate property of the owner spouse, no matter how great the other
spouse’s contribution to the marriage. See Harrison v. Harrison, 912 S.W.2d 124,127 (Tenn. 1995)
(husband’s separately owned land increased in value solely because an interstate highway was built
across it); Mitts v. Mitts, 39 S.W.3d 142, 146 (Tenn. Ct. App. 2000) (increase in value of husband’s
stock resulted from sale of land for development, and “neither party by his or her efforts, directly or
indirectly, contributed to the increase in value”); Sherrill, 831 S.W.2d at 295 (wife was not entitled
to any portion of the increase in husband’s separately owned stocks, based in part on the finding that
“neither made a ‘substantial contribution’ to the appreciation in the value of the stock,” in fact,
husband’s performance at the family owned corporation “very likely had a negative influence” on
the value of the stock); Crews v. Crews, 743 S.W.2d 182, 189 (Tenn. Ct. App. 1987) (husband not
entitled to any portion of increase in the value of stock when stock itself was wife’s separate property
and she placed unspent cash dividends in a separate bank account).
Thus, we have previously held that if separate property increases in value with no
contribution from either party, the property remains separate. Only when one party contributes to
the increase in value will courts even consider the indirect contributions of the other spouse. In the
case before us, Husband, a stockbroker, managed the funds himself. Husband contends, “[T]he
proof established that the increase in value came solely from the bull market of the time and the
manner in which the Grundy Fund was invested, with Mr. Avery alone handling the investments.”
(emphasis added). Although Husband’s contention was intended to establish Wife’s lack of
contribution, it shows that Husband did, in fact, contribute to the increase in the Grundy Fund’s
value. Unlike the increases in value in the above-cited cases where neither party was responsible
for the increase, in the case before us, Husband’s expertise in financial matters and his own
investment decisions were responsible for the increase in value. Thus, at least one of the parties
made a substantial contribution to the Fund’s preservation and increase in value.
Under the circumstances, Wife’s indirect contribution to the increase becomes relevant. The
increase in the value of separately owned property may be classified as marital “if each party
substantially contributed to its preservation and appreciation.” Tenn. Code Ann. § 36-4-121(b)(1)(B)
(emphasis added). A substantial contribution by the non-owner spouse “may include, but not be
limited to, the direct or indirect contribution of a spouse as homemaker, wage earner, parent or
family financial manager, together with such other factors as the court having jurisdiction thereof
may determine.” Tenn. Code Ann. § 36-4-121(b)(1)(D). The trial court herein found that Wife had
worked hard and helped in the couple’s management of their money; that she had worked outside
the home and contributed her income to the family’s expenses; and that she had performed
household and child-rearing functions. Therefore, we find that Wife’s
continued performance of her roles of homemaker, wage earner and mother after Husband received
the Grundy Fund substantially contributed to its preservation and appreciation. We find the
$567,263 increase in the Grundy Fund to be marital property.13
13
Wife argues that the increase in value should be measured from the date of Mrs. Grundy’s death, rather than
from the date Husband actually received the assets because Husband managed the trust’s assets during the pendency of
(continued ...)
-12-
III. Distribution of Marital Property
The trial court made findings as to the value of the property, which the parties included in
their Tenn. R. Ct. App. 7 tables.14 As noted above, the trial court included the Grundy Fund in its
division of marital property. The total value of the marital property, as awarded by the trial court,
was $3,915,940.15 Of that, the trial court awarded Husband a total of $1,854,800.50, or about 47%,
and awarded Wife a total of $2,061,139.50, or about 53%.
We have determined that the amount inherited by Husband as the Grundy Fund, $2,302,734,16
is his separate property; therefore it should be removed from the total marital estate. On the other
hand we have determined that the increase in the Grundy fund during the marriage, $567,263,17 is
marital property; therefore, it should remain included in the marital estate subject to distribution.
With those adjustments, the total marital estate subject to distribution is $1,613,206.
Husband argues that if this court corrects the trial court’s inclusion of the Grundy Fund in
the marital estate, the entire division of the remaining marital property must be adjusted to provide
13
(...continued)
the estate admin istration. Howev er, there is nothing in the record to indicate that Husband’s role as investment manager
for the trust, or the estate, gave him unfettered control. We find no basis for valuing the increase from any date other
than the date upon which Husband actually received the assets of the Grundy Fund.
14
The parties’ tables reflecting the trial court’s award are entirely consistent, with one exception . The trial court
awarded Wife a jud gment of $2 3,810.5 0, which rep resented ha lf of some IRA’s that Husband had liquidated during the
pendency of the divorce litigation. Both parties listed this amount as an award to Wife. Wife added a similar amount
to Husband’s award. Because Husban d’s half was alrea dy included in the assets con sidered in the award, we c hoose to
use the figures o n the table presented by Husband for purposes of describing the amounts involved in the trial court’s
distribution o f property.
15
Although the parties’ tables reflect a total of $3,949,750 in property distributed by the court, that figure
includes $10,000 in Wife’s separate property, an inheritance, and the judgment of $23,8 10.50 a warded to Wife. W e
make this ad justment to ac curately reflect the total distributed by the court a s marital pro perty.
16
This total comes from the testimony of Mrs. Grundy’s lawyer who distributed the inheritance, giving Husband
the residuary estate in three installments. We used the total of the three payments.
17
The trial court found that the value of the Grundy fund at the time of trial was $2,708,411; because the final
judgment making the property award was not entered for several months after the trial, the court recognized that the fund
“must have fluctuated in value” and ordered the equal distribution of the fund as of entry of the final judgment. However,
we interpret Tenn. Code Ann. § 36-4-121(b)(2)(B) as establishing the date of the hearing as the appropriate valuation
date “unless equity would require another valuation date.” The order divorcing the parties was entered only one day after
the final day of the trial, and only the increase in the Grundy Fund which occurred during the marriage is marital
property. Therefo re, we conc lude it is equitab le to use the valu es as of the trial date. In a ddition, the trial c ourt’s
valuation figure does not inc lude the value of a prom issory note. Husban d had loa ned his brother some money out of
the Grundy F und, and the brother ha d given him a promisso ry note. As of the trial, the note had an outstanding balance
of $161,586. The trial court treated this note as a sep arate asset from the Grund y Fund, but a warded it in to tal to
Husband as part of the distribution of the marital pro perty. We include the amount of the note in the total value of the
Grundy Fund, for ease of discussion. Thus, the total value of the fund at trial was $2,869,997.
-13-
a more equitable distribution. Otherwise, he asserts, Wife would receive approximately two-thirds
of the marital property. Wife objects to the adjustments proposed by Husband. She also asserts that
if she is not “otherwise awarded a substantial portion of the Grundy Fund” an award of alimony in
solido would be appropriate.
The trial court is charged with equitably dividing, distributing, or assigning the marital
property in “proportions as the court deems just.” Tenn. Code Ann. § 36-4-121(a)(1). Thus, after
the property is classified, the court is to make an equitable division of the marital property. The
court is to consider several factors in its distribution, including the duration of the marriage, the
contribution to and dissipation of the marital estate, and the value of the separate property. Tenn.
Code Ann. § 36-4-121(c) (listing the factors to be considered).18 The court may consider any other
factors necessary in determining the equities between the parties, Tenn. Code Ann. § 36-4-
121(c)(11), except that division of the marital property is to be made without regard to marital fault.
Tenn. Code Ann. § 36-4-121(a)(1).
A court’s distribution of property “is not achieved by a mechanical application of the
statutory factors, but rather by considering and weighing the most relevant factors in light of the
unique facts of the case.” Batson, 769 S.W.2d at 859. An equitable distribution is not necessarily
an equal one. Word v. Word, 937 S.W.2d 931, 933 (Tenn. Ct. App. 1996). Thus, a division is not
rendered inequitable simply because it is not precisely equal, Cohen v. Cohen, 937 S.W.2d 823, 832
(Tenn. 1996); Kinard v. Kinard, 986 S.W.2d 220, 230 (Tenn. Ct. App. 1998). Similarly, equity does
not require that each party receive a share of every piece of marital property. King v. King, 986
S.W.2d 216, 219 (Tenn. Ct. App. 1998); Brown v. Brown, 913 S.W.2d 163, 168 (Tenn. Ct. App.
1994).
18
Tenn. Cod e Ann. § 36-4-12 1(c)lists these factors:
(1) The duration of the marriage;
(2) The age, physical and mental health, vocational skills, employability, earning capacity, estate,
financial liabilities and financial needs of each of the parties;
(3) The tangible or intangible contribution by one (1) party to the education, training or increased
earning po wer of the oth er party;
(4) The relative ability of each party for future acquisitions of capital assets and income;
(5) The co ntribution of e ach party to the acquisition, p reservation, a ppreciatio n, deprec iation or
dissipation of the marital o r separate p roperty, includ ing the contrib ution of a party to the marriage
as homemaker, wage earner or parent, with the contribution of a party as homemaker or wage earner
to be given the same weight if each party has fulfilled its role;
(6) The value of the sep arate prop erty of each p arty;
(7) The estate of each party at the time of the marriage;
(8) The eco nomic circu mstances o f each party at the time the division of property is to become
effective;
(9) The tax conseq uences to ea ch party, cos ts associated with the reasonably foreseeable sale of the
asset, and oth er reasona bly foreseea ble expen ses associate d with the asset;
(10) The amount of social security benefits available to each spouse; and
(11) Such other factors a s are necessary to consider the eq uities between the parties.
-14-
The trial court’s goal in a divorce case is to divide the marital property in an essentially
equitable manner, and equity in such cases is dependent on the facts of each case. The fairness of
a particular division of property between two divorcing parties is judged upon its final results.
Watters v. Watters, 959 S.W.2d 585, 591 (Tenn. Ct. App. 1997). Because dividing a marital estate
is a process guided by considering all relevant factors, including those listed in Tenn. Code Ann.
§ 36-4-121(c), in light of the facts of a particular case, a trial court has a great deal of discretion
concerning the manner in which it divides marital property. Smith v. Smith, 984 S.W.2d 606, 609
(Tenn. Ct. App. 1997); Wallace v. Wallace, 733 S.W.2d 102, 106 (Tenn. Ct. App. 1987). Appellate
courts ordinarily defer to the trial judge’s decision unless it is inconsistent with the factors in Tenn.
Code Ann. § 36-4-121(c), or is not supported by a preponderance of the evidence. Brown, 913
S.W.2d at 168; Wilson v. Moore, 929 S.W.2d at 372.
We consider the factors most relevant in this case to be the length of the marriage, the
contribution of each to the marriage, the earning capacity of each party, the relative ability of each
for future acquisitions of capital assets and income, and the value of the separate property of each
party. The parties were married for twenty five years. Nothing in the record indicates that either
party entered the marriage with substantial separate assets. Both worked throughout the marriage.
At the time of the divorce, Husband was earning an average salary of more than $90,000 per year,
while Wife’s salary was approximately $31,000. Husband’s separate property, as redefined by this
court, is worth $2,302,734, while Wife had separate property valued at $10,000.
We find no reason to modify the trial court’s distribution of the other marital property, which
appears equitable in light of the facts and circumstances of this case and the factors to be considered.
Husband is not entitled to a greater share of the reduced marital estate; the removal of the Grundy
Fund from the marital estate, confirming it as his separately-owned property, weighs against his
receiving a greater share of the marital property rather than in favor of it.
The trial court divided the Grundy Fund equally between the parties. Similarly, we conclude
that the increase in value of the fund during the marriage should also be equally divided between the
parties.19 To summarize and clarify, we affirm the trial court’s distribution of marital property with
regard to the proceeds from the house, the vehicles, and the various investment retirement accounts
(not including the Grundy fund). In addition, each party is awarded half of the increase in the Grundy
Fund during the marriage, or $283,631.50. We calculate the resulting distribution as follows:
19
W e specifically direct that the promissory note from Hu sband’s br other shall be included e ither (1) in
Husban d’s half of the increase in value, or (2) as part o f the Grund y Fund co rpus which is H usband’s se parate pro perty.
Because the payment on this note will be made to Husband, it should be counted as his asset, not in addition to the
Grundy F und assets, bu t as part of them .
-15-
To Wife To Husband
Per Trial Court $706,934 $339,009
½ Increase in Fund 283,631.50 283,631.50
Total $990,565.50 (about 61%) $622,640.50 (about 39%)
In addition, we affirm the judgment to Wife of $23,810.50 for one-half of the money
withdrawn by Husband during the pendency of this litigation from marital accounts. We also find
that the $10,000 inherited by Wife is her separate property, and the $2,302,734 inherited by Husband
is his separate property.
IV. Alimony
Thus, Wife leaves the marriage with approximately $1,025,000 in assets, and no debts. In
addition to the distribution of property made by the trial court, that court also awarded Wife “the
alimony she has requested, $500 per month until the child support terminates,20 then $1,500 per
month until her death or remarriage or Mr. Avery’s death. . . . In fact, had she requested $1,500 per
month upon entry of divorce, she would have been entitled to the same . . .” This open-ended award,
without a specific duration, is an award of alimony in futuro.
Tennessee law recognizes three distinct types of alimony or spousal support. Self v. Self, 861
S.W.2d 360, 361-62 (Tenn. 1993). Alimony may be in solido, in futuro, or rehabilitative. Alimony
in solido promotes the twin goals of certainty and finality though an award of a fixed amount
without conditions. Waddey v. Waddey, 6 S.W.2d 230, 232 (Tenn. 1999); Self, 861 S.W.2d at 362.
That fixed amount may be paid in a single lump sum payment, or it may be paid in periodic
installments. Isbell v. Isbell, 816 S.W.2d 735, 738 (Tenn.1991). Alimony in solido is not modifiable
even upon a showing of changed circumstances, including such events as remarriage or the increased
fortunes of the recipient spouse. Self, 861 S.W.2d at 362; Towner v. Towner, 858 S.W.2d 888, 890
(Tenn. 1993); Grissom v. Grissom, 15 S.W.3d 474, 477 (Tenn. Ct. App. 1999). “A typical purpose
of such an award would be to adjust the distribution of the parties’ marital property.” Burlew v.
Burlew, 40 S.W.3d 465, 471 (Tenn. 2001).
Alimony in futuro, sometimes referred to as “permanent alimony” or “periodic alimony,”
continues support that was incident to the marital relationship and continues indefinitely. It is
generally based on the need of the recipient for continued longterm support after the breakup of the
marriage. Alimony in futuro remains subject to the control of the court, and may be modified upon
a showing of a significant and material change of circumstances. Self, 861 S.W.2d at 361.
20
The order reflects that child support ends in May of 2002, when the younger child will graduate from high
school at age 18.
-16-
Rehabilitative alimony is designed to help a spouse who is economically disadvantaged,
relative to the other spouse, to become financially self-sufficient. It is intended to eliminate
dependency of one ex-spouse upon the other.
Tennessee statutory law regarding alimony provides:
It is the intent of the general assembly that a spouse who is economically
disadvantaged, relative to the other spouse, be rehabilitated whenever possible by the
granting of an order for payment of rehabilitative, temporary support and
maintenance. Where there is such relative economic disadvantage and rehabilitation
is not feasible in consideration of all relevant factors, including those set out in this
subsection, then the court may grant an order for payment of support and
maintenance on a long-term basis or until the death or remarriage of the recipient
except as otherwise provided in subdivision (a)(3). Rehabilitative support and
maintenance is a separate class of spousal support as distinguished from alimony in
solido and periodic alimony.
Tenn. Code Ann. § 36-5-101(d)(1).
Our Supreme Court has consistently interpreted this statute as the legislature’s clear
preference for an award of rehabilitative alimony to encourage divorced spouses to become self-
sufficient. Burlew, 40 S.W.3d at 470-71; Crabtree v. Crabtree, 16 S.W.2d 356, 359 (Tenn. 2000);
Self, 861 S.W.2d at 361.
[T]he legislature has demonstrated a preference for an award of rehabilitative
alimony to rehabilitate an economically disadvantaged spouse. . . . This Court
previously addressed the application of Tenn. Code Ann. § 36-5-101(d)(1) in Self v.
Self, 861 S.W.2d 360 (Tenn.1993). In Self, we held that § 36-5-101 reflects an
obvious legislative policy to eliminate the dependency of one ex-spouse upon the
other and to relieve the parties of "impediments incident to the dissolved marriage."
Id. at 361. Accordingly, alimony in futuro should be awarded only when the trial
court finds that "economic rehabilitation is not feasible and long-term support is
necessary." Id.
Crabtree, 16 S.W.3d at 358-59.
The trial court’s findings herein included the following:
. . . It is unlikely Mrs. Avery’s income will grow substantially greater than $2,583
gross, $2,000 net, per month. Mrs. Avery’s expenses will drastically exceed her
income when the younger child graduates. . . . Mrs. Avery’s earning capacity from
employment is approximately $30,000 per year. Taking into account Mr. Avery’s
$92,000 annual earning capacity from wages and Mrs. Avery’s approximately
-17-
$30,000 earning capacity, one must conclude that Mrs. Avery cannot be rehabilitated
to a level approaching the earning capacity of Husband. There is “such relative
economic disadvantage and rehabilitation is not feasible in consideration of all
relevant factors” set forth in T.C.A. 36-5-101(d)(1), including factor (d)(1)(K) [the
relative fault of the parties], it being Mr. Avery’s adultery which caused the demise
of the marriage . . . 21
As the trial court indicated, courts are to consider all relevant factors when deciding whether
spousal support should be awarded, the nature or type of support, the amount, and the duration.
Among those factors which a court is directed to consider are the following:
(A) The relative earning capacity, obligations, needs, and financial resources of each
party, including income from pension, profit sharing or retirement plans and all other
sources;
(B) The relative education and training of each party, the ability and opportunity of
each party to secure such education and training, and the necessity of a party to
secure further education and training to improve such party's earning capacity to a
reasonable level;
(C) The duration of the marriage;
(D) The age and mental condition of each party;
(E) The physical condition of each party, including, but not limited to, physical
disability or incapacity due to a chronic debilitating disease;
(F) The extent to which it would be undesirable for a party to seek employment
outside the home because such party will be custodian of a minor child of the
marriage;
(G) The separate assets of each party, both real and personal, tangible and intangible;
(H) The provisions made with regard to the marital property as defined in §
36-4-121;
(I) The standard of living of the parties established during the marriage;
(J) The extent to which each party has made such tangible and intangible
contributions to the marriage as monetary and homemaker contributions, and tangible
and intangible contributions by a party to the education, training or increased earning
power of the other party;
(K) The relative fault of the parties in cases where the court, in its discretion, deems
it appropriate to do so; and
(L) Such other factors, including the tax consequences to each party, as are necessary
to consider the equities between the parties.
21
The evidence preponderates against the finding that Husband’s adultery “caused the demise” of the marriage.
Husband admitted to three one-time sexual encounters over the course of the marriage, one of those after Wife filed for
divorce. Wife learned of the affairs during the discovery process, almost a year after she filed her co mplaint. While the
adultery provides grounds fo r divorce, w e cannot a gree that Husba nd’s undisclo sed affairs cau sed the dem ise of a
marriage which had been troubled for many years or triggered Wife’s filing a complaint for divorce.
-18-
Tenn. Code Ann. § 36-5-101(d)(1).
Obviously, the beginning point in any consideration of an award of spousal support is
whether one spouse is economically disadvantaged relative to the other spouse. Tenn. Code Ann.
§ 36-5-101(d)(1). The trial court found that Wife, with an earned income of less than $31,000, is
economically disadvantaged relative to Husband who earns more than $90,000 per year. Wife was
also awarded, after our determination that the Grundy Fund was not marital property, approximately
$1,025,000 in assets, and assigned no debts. She received more than sixty percent of the marital
property. Both parties agree that Wife was awarded substantial retirement assets, although they
disagree as to the exact amount. Using the lower figure, Wife was awarded approximately $360,000
in retirement accounts. Her financial expert witness testified that this amount would have a value
of over $1.5 million by the time she reached age 61.22 Wife asserts, in her argument regarding the
award of attorney fees, that her retirement accounts will grow exponentially over time because they
are not taxed until funds are withdrawn.23 Her current employment provides her with insurance and
retirement benefits.
The trial court also considered Wife’s age, 48, the 25-year duration of the marriage, and the
parties’ standard of living during the marriage. The court found that Wife was “most likely at the
peak of her earning capacity.”
Having determined that Wife was economically disadvantaged relative to Husband, the trial
court’s next task was to determine whether “rehabilitation” of Wife was feasible. As the Supreme
Court has stated, alimony in futuro is only appropriate where “economic rehabilitation is not feasible
and long term support is necessary.” Crabtree, 16 S.W.3d at 359; Self, 861 S.W.2d at 361. The trial
court herein made the required finding, but based it upon its conclusion that Wife was incapable of
being rehabilitated to “a level approaching the earning capacity of Husband.”
The question of what standard a trial court is to apply in determining whether a spouse can
be rehabilitated is, to some extent, still unsettled. See, e.g., JANET L. RICHARDS, RICHARDS ON
TENNESSEE FAMILY LAW § 12-4(a) (Supp. 2000) (questioning whether achieving “self sufficiency,”
as discussed in Loria v. Loria, 952 S.W.2d 836, 838 (Tenn. Ct. App. 1997), meant “not qualifying
for welfare” or “a comparison between the relative economic positions of the parties”).
In a recent opinion, this court examined the same issue, explaining it as follows:
22
Both Mr. Avery and Wife’s expert testified that a 10% rate of return was both con servative and historically
accurate.
23
In addition to the retirement accounts, she acknowledges that she has other income- or growth-producing
investments she will need for future support and security. It is unclear whether she was referring to the portion of the
Grundy Fund awarded her by the trial court or to other funds. W e have affirmed the trial court’s distribution of th e
marital property, without t he Grundy Fund, and have additionally awarded Wife half of the increase in value of the
Grundy Fund. So, she is not without assets additio nal to her retirement accounts. The value of those assets, based on
Wife’s estimate of her retirement assets, is approximately $665,000.
-19-
The statute establishing the legislative preference for rehabilitative support does not
define rehabilitation and gives little guidance regarding the level of rehabilitation
which should be considered in determining whether rehabilitation is feasible.
However, the legislature has directed that “in determining whether the granting of an
order for payment of support and maintenance to a party is appropriate, and in
determining the nature, amount, length of term, and manner of payment, the court
shall consider all relevant factors, including:
(B) The relative education and training of each party, the ability and
opportunity of each party to secure such education and training, and
the necessity of a party to secure further education and training to
improve such party’s earning capacity to a reasonable level. Tenn.
Code Ann. § 36-5-101(d)(1) (emphasis added).
Dempsey v. Dempsey, No. M1998-00972-COA-R3-CV, 2000 WL 1006945 at *3-4 (Tenn. Ct. App.
July 21, 2000) (no Tenn. R. App. P. 11 application filed). Similarly, in Robertson v. Robertson, No.
E2000-01698-COA-R3-CV, 2000 WL 1211314 at *2-3 (Tenn. Ct. App. Aug. 25, 2000) (perm. app.
granted Mar. 12, 2001), this court indicated that an appropriate factor in making the determination
of whether rehabilitation is feasible is the parties’ pre-divorce standard of living. The court indicated
that the question should be whether the disadvantaged spouse can be rehabilitated to “a standard of
living that is reasonable in relation to the one enjoyed by that party prior to the divorce.” Id. at *3.24
In these and many other cases, our courts have made it clear that the issues surrounding
spousal support are fact-intensive. In the usual case, it is simply not financially possible to create
an award which will allow two people separately to continue the same, or even close to the same,
standard of living they enjoyed while living together on the same income and assets. While the
courts may not have arrived at a universally applicable precise definition of feasible economic
24
W e note that the Su preme C ourt defined rehabilitation in Isbell v. Isbell , 816 S.W.2d at 738-39, as follows:
The concept of rehabilitation in ordinary usage “involves the p rocess of res toring an indiv idual . . . to
a useful and constructive place in society through some form of voc ational . . . retraining or through
relief, financial aid, or other reconstructive measur e.” W EBSTER ’S T H I R D N E W I NTERNATIONAL
D ICTIONARY 1949 (1 961). In leg al parlance and in conn ection with alim ony, rehabilitation
“contemplates sums necess ary to assist a divorced person in regaining a useful and constructive role
in society through vocational or therapeutic training or retraining and for the further purpose of
preventing financial hardship on society or individual during the rehabilitative process.” B LACK’S
L AW D ICTIONARY 1157 (5 th ed. 1979). Both definitions contemplate the enhancement of an
individual’s capacity to function inde penden tly and with eco nomic sec urity in society. Likewise, the
statute in question expresses the General Assembly’s intent that the economically disadvantaged
spouse be rehabilitated whenever possible and provides guidelines for the court to consider when
“determining the nature, am ount, length o f term, and manner of payment.” The concept of
rehabilitation in the statute is the imp rovemen t of one’s pres ent and future capacity to function
independ ently in society.
-20-
rehabilitation, we interpret the Supreme Court’s holding in Crabtree v. Crabtree as eliminating
salary differential between the parties as the appropriate standard.25
In Crabtree, the Court vacated an award of alimony in futuro made in conjunction with an
award of rehabilitative alimony, finding that such a concurrent award is inconsistent. While
declaring that a court must at the time of the initial setting of spousal support determine if an
economically disadvantaged spouse can be rehabilitated, the Court did not address the measure a trial
court is to use in making that determination. However, in reversing the intermediate appellate
court’s decision which expressed the concern that rehabilitative support would not place the wife
“anywhere near an equal footing with Husband nor will she be able to continue living in the manner
in which she had become accustomed during this twenty-three year marriage,” the Supreme Court
stated that its opinion in Aaron v. Aaron, 909 S.W.2d 408 (Tenn. 1995), relied upon the intermediate
appellate court to provide “closing in money,” “was intended neither to provide a new standard for
awarding alimony nor to suggest that every spouse should be entitled to be placed in the same
financial condition occupied prior to the divorce.” Crabtree, 16 S.W.3d at 359-60.
In Crabtree, the Supreme Court found that both parties had received sufficient education to
enable them to compete in the workforce; that because the wife had worked only part time after the
parties had children, her earning capacity exceeded her current income; wife did not need more
training, she was a CPA; and the wife received 45% of the parties’ assets. Although the Court
reversed the award of alimony in futuro, it affirmed the five-year rehabilitative alimony award, and
increased the monthly amount, stating that the increase would assist wife in making the transition
from part time to full time employment before her alimony was scheduled to end.
In Crabtree, the husband’s average income for the six previous years was $340,600. The
estimated income for the wife if she worked full time and charged higher fees was $65,000 to
$100,000. Because the Supreme Court determined that economic rehabilitation of the wife was
feasible, based on these facts, and that five years of rehabilitative alimony would ease her transition
into full time employment, we conclude that the Court did not consider disparity in income or
earning potential to be an appropriate standard for determining the feasibility of economic
rehabilitation. Despite the disparity in the earning capacities of the parties, the Court “conclude[d]
that an award of alimony in futuro in this case is not justified and does not recognize or further the
legislative purpose of encouraging divorced spouses to become self-sufficient.” 16 S.W.3d at 360.
Thus, in the case before us, we are reluctant to agree with the trial court that the fact that
Husband had a much higher income and potential earning capacity at the time of divorce than Wife
supports a conclusion that Wife cannot be economically rehabilitated.26 Clearly, such a situation
25
Crabtree was released in April 200 0, a few weeks after the trial court entered its order; thus, the trial court
did not have the benefit of that opinion when making its decision.
26
We, like the Suprem e Court, “rec ognize that a tria l court has wid e discretion in determining whether an award
of alimony should be rehabilitative or in futuro.” Crabtree, 16 S.W.3d at 360. Our conclusion that the Crabtree decision
(continued ...)
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supports a finding of economic disadvantage, but factors other than, or in addition to, current earning
capacity are relevant to a person’s economic self-reliance, including other assets.
The basic purpose of any award of spousal support is “to aid the disadvantaged spouse to
become and remain self-sufficient and, when economic rehabilitation is not feasible, to mitigate the
harsh economic realities of divorce.” Burlew, 40 S.W.3d at 470-71 (quoting Anderton, 988 S.W.2d
at 682). When deciding whether to award spousal support, as well as its type, duration, and amount,
courts are required to consider all relevant factors, including those listed in Tenn. Code Ann. § 36-5-
101(d) and set out above. However, “the real need of the spouse seeking support is the single most
important factor. In addition to the need of the disadvantaged spouse, the courts most often consider
the ability of the obligor spouse to provide support.” Id. at 470 (quoting Aaron, 909 S.W.2d at 410,
quoting Cranford v. Cranford, 772 S.W.2d 48, 50 (Tenn. Ct. App. 1989)); Sannella v. Sannella, 993
S.W.2d 73, 76 (Tenn. Ct. App. 1999). Further, the legislative preference, affirmed by our Supreme
Court, is to eliminate the dependency of one spouse upon the other and to relieve the parties of
impediments incident to a dissolved marriage. That can be best or most fairly accomplished by
providing the assistance necessary for the disadvantaged spouse to realize his or her full economic
potential, or achieve economic self-sufficiency, as quickly as the circumstances allow, so that
dependency is not prolonged.
Clearly, eliminating Wife’s dependency on Husband should be the court’s objective. Where,
as in this case, the economically advantaged spouse possesses sufficient assets to allow a relatively
shorter term of dependency, we think such an award recognizes and furthers “the legislative purpose
of encouraging divorced spouses to become self-sufficient.” Crabtree, 16 S.W.3d at 360.
Husband herein does not argue that the amount of alimony ($1500 per month after May 2002)
is too great; he objects to the unlimited duration. He argues that Wife has been awarded sufficient
retirement funds to make her self-sufficient, in fact a millionaire, at age 59 ½, and that his alimony
obligation should cease then. Wife argues that the in futuro alimony award is not excessive in either
amount or duration. However, she asserts that if the Grundy Fund is removed from the distribution
of marital property, she should receive an additional amount of alimony in solido.
We agree to some extent with each party. In view of the considerable assets awarded to
Wife, including the retirement accounts with their estimated future value, we find no basis for
continuing support beyond her reasonable retirement age. It is not unreasonable to expect her to
begin using those assets saved for retirement at age 62. She would turn 62 in April of 2013. If we
limit the alimony award to that date, Husband would have paid $18,000 per year for almost eleven
26
(...continued)
makes inapplicable the trial court’s stated basis for its determination that Wife cannot be rehabilitated, however, places
that determination outside the range of that discretion. See State ex rel. Vaughn v. Kaatrude, 21 S.W.3d 244, 24 8 (Tenn.
Ct. App. 2000).
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years, for a total of $195,000.27 In addition, Husband would have paid approximately $12,000 before
the child support ended in May 2002.
Just as the Supreme Court in Crabtree recognized the impact of its vacating the alimony in
futuro award and increased the monthly amount of the rehabilitative alimony award to adjust for that
impact, 16 S.W.3d at 361, we are aware that our decision regarding the Grundy Fund reduces the
assets available to Wife to supplement her earnings and meet her expenses without depleting assets
intended for retirement. We also recognize, however, that Wife was awarded almost two-thirds of
the marital property, including proceeds from the sale of the marital home and one half the increase
in value of the Grundy fund, along with no debt. In view of all the factors courts are required to
consider, including the long duration of this marriage, and in consideration of the goal of economic
independence of former spouses, we conclude that an additional award of support is warranted.28
We also conclude that an award of alimony in solido, to be paid in installments over a shorter
period of time than the alimony in futuro award or our estimation of Wife’s retirement date is the
best available vehicle for achieving a fair result and promoting certainty that “benefits both parties,
allowing each to make long-range financial plans for their own futures . . .” with the additional effect
of fostering the legislative policy of eliminating the dependency of divorced spouses. Isbell, 816
S.W.2d at 739.
Therefore, we modify the trial court’s award of alimony herein and award the Wife alimony
in solido in the amount of $457,000, to be paid as follows: 1) $125,000 lump sum to be paid within
sixty (60) days of this opinion and judgment becoming final; 2) sixty (60) monthly payments of
$3,450 to begin the first full month after this opinion and judgment are final, for a total of $207,000;
3) a final lump sum payment of $125,000 due within 30 days after the last of the 60 monthly
payments. Husband shall be given credit for any alimony he has paid since the entry of the trial
court’s final judgment. The total amount he has so paid will be divided by twelve, and the first
twelve of the sixty monthly payments shall be reduced by that amount.
V. Attorney Fees
Wife asks this court to award her attorney fees on appeal. She contends that the failure to
award the requested fees would cause her to deplete her resources. Attorney fees are considered a
form of alimony in solido, and as such, are subject to the same factors of consideration as an alimony
27
June 2002 through March 20 13 equals 130 months, at $1,500 per month.
28
W e are also aware that the amount of alimony awarded is largely a matter left to the discretion of the trial
court, and the appellate courts will not interfere except in the case of an abuse of d iscretion. Burlew, 40 S.W.3d at 470.
However, our other decisions regarding the marital property and the duration of alimony require our consideration of
modification of the amount of the award. Based upon the trial court’s findings and other holdings, specifically that Wife,
even after being awarded half the Grundy Fund, was entitled to more alimony than she requested or was awarded, we
presume that the trial court, had it reached the same conclu sions we did regarding the G rundy Fund, would ha ve also
increased the alimony award.
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award. Lindsey v. Lindsey, 976 S.W.2d 175, 181 (Tenn. Ct. App. 1997). Because the assets awarded
to Wife are substantial, we find that she does not have the requisite need for the additional funds and
decline to award attorney fees on appeal. We do not, however, disturb the award of attorney fees
made by the trial court.
VI. Conclusion
In conclusion, we overturn the trial court’s classification of the Grundy Fund as marital
property under an “implied partnership” theory, and classify the original $2,302,734 as Husband’s
separate property. We find the increase in that separate property to be marital property because of
the parties’ contribution to its increase, and divide that increase equally between the parties. We
affirm the remainder of the trial court’s division of marital property. The award of alimony in futuro
is modified to an award of alimony in solido to be paid as set out in this opinion. We decline to
award Wife attorney fees on appeal. Costs of this appeal are taxed equally to both parties for which
execution may issue if necessary.
___________________________________
PATRICIA J. COTTRELL, JUDGE
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