Jill Smothers Lucchesi v. Eugene Anthony Lucchesi ( 2019 )

01/23/2019
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
November 13, 2018 Session
JILL SMOTHERS LUCCHESI v. EUGENE ANTHONY LUCCHESI
Appeal from the Circuit Court for Shelby County
No. CT-004818-13 Gina C. Higgins, Judge
___________________________________
No. W2017-01864-COA-R3-CV
___________________________________
In this divorce proceeding, the Husband appeals the trial court’s reliance on certain
evidence in valuing the marital assets, the classification and valuation of specific assets,
and failure to recuse itself. Wife appeals the award to her of alimony in solido as being
insufficient. After a thorough review of the record, we affirm the court’s classification
and valuation of the marital assets, with the exception of one, which we vacate and
remand for further consideration; we reject Husband’s argument that the court should
have recused itself. We modify the award of alimony and remand the case for the court
to consider whether an additional award of alimony is appropriate.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in
Part, and Vacated and Modified in Part; Case Remanded
RICHARD H. DINKINS, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and BRANDON O. GIBSON, J., joined.
Stuart Breakstone, Memphis, Tennessee, for the appellant, Eugene Anthony Lucchesi.
Mitchell D. Moskovitz, Zachary M. Moore, and Adam N. Cohen, Memphis, Tennessee,
for the appellee, Jill Smothers Lucchesi.
OPINION
I. FACTUAL AND PROCEDURAL HISTORY
Jill Lucchesi (“Wife”) and Eugene Lucchesi (“Husband”) were married in
December 1994 in Shelby County. The couple had one son, born in October 2000.
During the marriage, Husband was the operations manager and secretary/treasurer of
Delta Wholesale Liquors (“Delta”), a family-owned liquor distributorship started by his
father. In addition to working at Delta, Husband bought, managed, and sold assets,
investments, and businesses as a venture capitalist. At the time of the marriage, Wife
worked as a special education teacher at a middle school. She left that job and earned an
associate’s degree in information technology in 2002; from 2003 through the time of trial,
Wife worked sporadically selling real estate on a part time basis, never earning more than
$20,000 per year.
On November 7, 2013, Wife filed a complaint for divorce, alleging inappropriate
marital conduct and irreconcilable differences as grounds. Wife alleged that Husband
“has an extensive history of abusing alcohol” and a “lengthy history of verbal and
physical abuse of Wife”; she sought to be named primary residential parent of the parties’
son and sought pendente lite and permanent alimony. Husband answered, denying the
salient allegations in Wife’s complaint and asserting that Wife had been “both physically
and verbally abusive to him during the marriage”; Husband counterclaimed for divorce
on the grounds of Wife’s inappropriate marital conduct and irreconcilable differences.
He sought to be named primary residential parent of the parties’ child and to receive the
marital home as alimony in solido.
After nearly three years of protracted litigation, trial was held over nine days in
August and September 2016. Numerous witnesses testified, including Wife; the child’s
therapist; Husband; Husband’s two brothers; William “Rob” Vance, a forensic
accountant and economist, and business valuation analyst; and David Harris, a business
evaluator and appraiser. The trial court entered a lengthy order on August 15, 2017,
granting Wife a divorce on the grounds of inappropriate marital conduct. The court
classified the parties’ property as separate or marital, then valued and divided the marital
assets and debts; awarded Wife alimony in solido in the amount of $200,000;1 established
a parenting plan;2 awarded Wife “an additional sum of alimony in solido in the amount of
. . . $200,000 . . . for her attorney’s fees”; and held Husband in civil contempt for his
failure to pay Wife $2,000 per month from February to August 2016 and for his failure to
make necessary repairs to the marital residence, and ordered him to pay Wife $14,000
within 10 days of the entry of the decree.
Germane to our resolution of the issues in this appeal, the court made the
following adverse credibility determination in its ruling:
The court finds that Husband and some of his witnesses lack credibility.
The court finds that Husband has been evasive and less than truthful under
1
The court stated it was making the award “in lieu of Husband paying alimony in futuro to Wife” and for
the purpose of “assist[ing] Wife with the payment of litigation expenses incurred unnecessarily due to
Husband’s conduct of delay and failures to comply with repeated request[s] during the course of the
trial.”
2
The parenting plan is not at issue in this appeal.
2
oath on multiple occasions including, but not limited to, providing false
answers in his Answer to Interrogatories filed with this court on March 21,
2014; testifying untruthfully during the trial in this cause; and responding
untruthfully in responsive pleadings filed with this court. In his Answer to
Interrogatories filed with this court on March 21, 2014, regarding having a
sexual relationship with J[.] E[.,] Husband was untruthful and Husband
failed to disclose marital assets in other responses to discovery.
***
Husband’s antics throughout the trial in this matter caused this court to also
question Husband’s veracity. Husband frequently had vocal outbursts and
made hand gestures to witnesses, including Wife during her testimony. This
court and counsel for Husband frequently admonished Husband that his
behavior was unacceptable in the courtroom, causing the court on one
occasion to require Husband to step into the hallway for a period of
approximately fifteen (15) minutes. Additionally, at one point during
Wife’s testimony, this court ordered Husband to remove himself from the
line of sight of Wife as she testified, required him to sit by the court’s clerk
for a period of approximately one (1) hour.
With respect to the two awards of alimony in solido, the trial court later, sua
sponte, amended the order, stating:
. . . Wife shall only be awarded the total sum of $200,000 as alimony in
solido, rather than a total of $400,000, to assist Wife with payment of
litigation expenses incurred unnecessarily due to Husband’s conduct of
delay and failure to comply with repeated requests during the course of the
trial. Said sum of $200,000 as alimony in solido is not being awarded to
Wife in the form of support. . . .
Husband appeals, stating the following issues for our review:
1. The trial court erred in classifying all the appreciation in the value of
Delta as marital property.
2. The trial court abused its discretion in its ruling on countless
evidentiary issues where said rulings affected the outcome of the
trial.[3]
3
Husband’s arguments on appeal are focused on one evidentiary ruling that admitted a report prepared by
Wife’s expert witness, Rob Vance. Husband sought to exclude three pages of that report. We deal with
this issue in conjunction with the third issue Husband raises in section III. C, infra.
3
3. The trial court erred in its valuation of the marital assets and
liabilities.
4. The trial court abused its discretion in not recusing itself when it
became apparent that it could not remain impartial.
Wife states the following additional issues for our review:
1. Did the trial court err by awarding Wife an insufficient amount of
alimony in solido?
2. Should Husband be required to pay Wife’s attorney fees and suit
expenses on appeal?
II. STANDARD OF REVIEW
Because this case was tried without a jury, our review of the trial court’s factual
findings is de novo upon the record, accompanied by a presumption of correctness, unless
the preponderance of the evidence is otherwise. Tenn. R. Civ. P. 13(d). Our review of a
trial court’s conclusions of law is de novo upon the record with no presumption of
correctness. Tryon v. Saturn Corp., 254 S.W.3d 321, 327 (Tenn. 2008).
III. ANALYSIS
A. Recusal
As an initial matter, we address Husband’s argument that this Court should reverse
the rulings of the trial court and remand this case with instructions to transfer the case to
another judge because the trial court “should have recused [it]self when it became
apparent that it was not able to remain impartial in these proceedings.” This argument is
without merit.
Rule 10B of the Rules of the Tennessee Supreme Court sets forth the “procedures .
. . [that] shall be employed to determine whether a judge should preside over a case.”
Tenn. Sup. Ct. Rule 10B. The Rule requires that a motion for the court to recuse itself be
timely made, supported by a sworn affidavit, and that the motion state with specificity all
factual and legal grounds supporting disqualification of the judge. After such a motion is
made, the trial court is to promptly grant or deny the motion. Husband did not seek
recusal of the trial judge in accordance with Rule 10B and, in the absence of a motion and
ruling thereon by the court, there is nothing for this court to review.
4
B. Classification of the Increase in the Value of Delta Stock as Marital
Property
Husband challenges the trial court’s classification of the appreciation in value of
his shares of Delta as marital property. It is undisputed that at the time of the marriage,
Husband owned 103.25 shares of Delta; the trial court valued these shares at $75,000. It
is also undisputed that Husband worked at Delta during the marriage, that he and his two
brothers bought out the remaining shareholders in 1996, and that he sold his one-third
interest in February 2012 for $3,699,983. Husband stipulated that Wife’s role as a
homemaker significantly contributed to the appreciation in value of the shares of Delta.
The court concluded that the $3,624,984 increase in value of Husband’s shares of Delta
during the marriage was marital property, subject to equitable division. Husband argues
that the increase in value of the stock was not due to any contribution or actions on his
part, but rather that market forces caused the increase in value; he contends that he was
not actively involved in Delta and “did not fulfill his role at Delta because he was too
busy working his deals and running his other business ventures,” and therefore, the
increase in value is not marital property,
“The classification of particular property as either separate or marital is a question
of fact to be determined in light of all relevant circumstances.” Snodgrass v. Snodgrass,
295 S.W.3d 240, 245 (Tenn. 2009). Our analysis is guided by Tennessee Code
Annotated section 36-4-121(b)(1)(B)(i), which defines marital property to include income
from and appreciation on separate property that accrues during the marriage where “each
party substantially contributed to [the separate property’s] preservation and appreciation.”
Thus, increases in the value of separate property during a marriage will not be considered
marital property unless both parties substantially contributed to the appreciation in value
of the property. Keyt v. Keyt, 244 S.W.3d 321, 328-29 (Tenn. 2007). “In order to be
substantial, a spouse’s contributions must be real and significant[; t]hey need not,
however, be monetarily commensurate to the appreciation in the separate property’s
value, nor must they relate directly to the separate property at issue.” Yates v. Yates, No.
02A01-9706-CH-00122, 1997 WL 746377, at *2 (Tenn. Ct. App. Dec. 4, 1997) (quoting
Brown v. Brown, 913 S.W.2d 163, 167 (Tenn. Ct. App. 1994). Accordingly, we focus on
whether the record shows that Husband’s contributions as an owner and employee of
Delta are “real and significant” and whether they directly or indirectly caused the
preservation and appreciation in the value of the separate property. See Keyt, 244 S.W.3d
at 330.
The court devotes more than 7 pages of findings to this asset, discussing
Husband’s stipulation that Wife substantially contributed to Husband’s separate property
in accordance with section 36-4-121(b)(1)(B)(i), the positions Husband held at Delta, the
redemption of three other siblings’ shares of Delta stock in 1996, the sale of the business
in 2012, Husband’s role in that sale, and the conflicting valuations of the business
proposed by the parties’ experts. The court concluded its discussion as follows:
5
It is clear that both Husband and Wife substantially contributed to the
preservation and appreciation of Husband’s interest in Delta Wholesale.
When the parties married on December 30, 1994, Husband was employed
as vice president and operations manager for Delta Wholesale and, in this
role, Husband handled communications and financial matters pertaining to
the company and ran the company’s inside operation. There is no question
that each of the brothers had a defined role and Husband ran Delta
Wholesale with his brothers and worked hard to grow Delta Wholesale into
one of the largest wine and spirits distributors in Tennessee. When the three
(3) brothers acquired their one-third (33.3%) interest in the company,
arguably, it was operating at a loss. However, due to the efforts of
Husband, Paul Lucchesi and Bill Lucchesi, the company grew significantly
and, on February 20, 2012, each brother sold his interest in the company to
Kahn Ventures, for Three Million Six Hundred Ninety-nine Thousand Nine
Hundred Eighty-three Thousand Dollars ($3,699,983). Accordingly, from
the date of the parties’ marriage to February 2012, Husband’s interest in
Delta Wholesale appreciated from Seventy-five Thousand Dollars
($75,000) to Three Million Six Hundred Ninety-nine Thousand Nine
Hundred Eighty-three Thousand Dollars ($3,699,983). Husband stipulated
during the trial in this cause that Wife substantially contributed to the
increase in Husband’s separate property pursuant to T.C.A. 36-4-
121(b)(1)(D). During the parties’ marriage, Husband took an active role in
the operations of Delta Wholesale and, therefore, substantially contributed
to the preservation and appreciation of his stock in the company. Wife
performed and contributed in accordance with her role as homemaker.
Accordingly, this court finds that the appreciation of the value of Husband's
stock in the company is marital property. Due to the proximity of this date
to the date of the parties’ marriage, this court finds that the value of
Husband’s 103.25 shares on the parties’ date of marriage was Seventy-five
Thousand Dollars ($75,000), and that this Seventy-five Thousand Dollars
($75,000) is Husband’s separate property. Sixteen years later, in 2012,
Husband sold the parties’ one-third (33.3%) interest to Kahn Ventures for
Three Million Six Hundred Ninety-nine Thousand Nine Hundred Eighty-
three Thousand Dollars ($3,699,983), for an increase in the value of the
stock during the parties’ marriage, of Three Million Six Hundred Twenty-
four Thousand Nine Hundred Eighty four Dollars ($3,624,984), which is
found to be marital property due to both parties’ substantial contribution to
the preservation and appreciation of this stock.
The record shows that Husband held the title of Senior Vice President and Chief
Operating Officer, handled communications with the buyers and brands, and handled the
negotiations for the sale of the business in 2012. He was a member of the executive
6
management team and testified that he and his brothers ran Delta and worked hard to
build on the success of their father. While the testimony at trial shows that Husband
delegated much of his authority as operations manager, he remained a member of the
executive management team that ultimately made the decision to cut expenses, raise
prices, and expand the brands Delta carried. Husband’s testimony also shows that he
played a part in the sale of the company by engaging in negotiations on behalf of Delta.
While Husband testified that “it was more of a collective group of the three of us
deciding what price do we want to sell it,” Husband’s brother Bill testified that Husband
handled the negotiations with Kahn Ventures on behalf of the brothers.
This evidence supports the conclusion that Husband’s role at Delta included the
authority to delegate power and to engage in negotiations that led to the profitable sale of
the business; the evidence does not preponderate against the court’s finding that his
efforts substantially contributed to the appreciation in the value of Delta stock. In like
manner, the parties have stipulated that Wife’s efforts as a homemaker substantially
contributed to the appreciation of marital assets. The court did not err in holding that the
increase in value of Husband’s shares in Delta was marital property subject to equitable
division.
C. Valuation of Certain Marital Assets
Husband contends that the court erred in its valuation of several marital assets,
specifically several pieces of real estate,4 a business he calls CGN Energy, a real estate
investment called “Investec 1407 Union Partnership,” an ownership interest in LGR
Beverage Group, a credit union account, and a security interest in a patent. As we
consider his arguments, we bear in mind our standard of review announced in Wallace v.
Wallace:
The value of marital property is a fact question. Thus, a trial court’s
decision with regard to the value of a marital asset will be given great
weight on appeal. In accordance with Tenn. R. App. P. 13(d), the trial
court’s decisions with regard to the valuation and distribution of marital
property will be presumed to be correct unless the evidence preponderates
otherwise.
4
The real estate at issue consists of properties located in Shelby, Cheatham and Hardin counties. Those
in Shelby County are referred to as 3433 Forest Hill, 5055 Simsbury, 1284 Snowden, 3138 Carnes, and
three condominiums, two of which were located on Quince Road; the property in Cheatham County is Lot
41A Pleasant View; and in Hardin County is a cabin and adjoining lot on Brittany Cove. With respect to
the property at 5055 Simsbury, Husband has not raised the erroneous classification of this property in his
statement of issues on appeal and addresses it along with the other properties in his argument regarding
the valuation of the real estate; in the course of that argument he argues briefly that it was incorrectly
classified as marital property when it should have been classified as separate property. We deem any
argument relative to the classification of this property to be waived. See Tenn. R. App. P. 13(b).
7
The value of a marital asset is determined by considering all relevant
evidence regarding value. The burden is on the parties to produce
competent evidence of value, and the parties are bound by the evidence
they present. Thus the trial court, in its discretion, is free to place a value on
a marital asset that is within the range of the evidence submitted.
733 S.W.2d 102, 107 (Tenn. Ct. App. 1987)
The court adopted the opinion of Wife’s expert, Mr. Vance, as to the value of the
real property assets at issue, which were based on the appraisals made by the county tax
assessor in its assessment of each parcel or condominium unit. Husband contends that
the court erred in adopting these values because Mr. Vance “was not qualified in the field
of real estate appraisals.”
“Generally, questions pertaining to the qualifications, admissibility, relevancy, and
competency of expert testimony are matters left to the trial court’s discretion, and the trial
court’s ruling admitting or excluding expert testimony may be overturned only if the
court abused its discretion.” City of Pulaski v. Morris, No. M2010-00047-COA-R3-CV,
2010 WL 3732161, at *3 (Tenn. Ct. App. Sept. 23, 2010) (citing Brown v. Crown
Equipment Co., 181 S.W.3d 268, 273 (Tenn. 2005)). The weight to be given to an expert
opinion and the resolution of legitimate, competing expert views are matters
appropriately entrusted to the trier of fact. Id.With respect to the real estate valuations, Mr. Vance testified that he used the 2015
tax assessments by the Shelby County and Cheatham County Tax Assessors as the basis
for his opinion of those properties’ value. For the Brittany Cove properties in Hardin
County, Mr. Vance utilized the State of Tennessee’s Comptroller of the Treasury’s Real
Estate Assessment Data website to examine both of the properties; the report from that
website states that it is for the 2016 tax year and lists the “Total Market Appraisal” value
of each property, based upon a 2013 reappraisal.
The use of a tax appraisal to value a property has been held to be competent
evidence of value of real property. See Hancock v. Hancock, No. E1999-01003-COA-
R3-CV, 2000 WL 224366, at *3 (Tenn. Ct. App. Feb. 28, 2000).5 The tax appraisals for
the respective properties were admitted into evidence without objection as Mr. Vance
discussed each property. The testimony of Mr. Vance cited by Husband in his brief does
5
In Hancock v. Hancock, “the Trial Court considered the three alternative valuations [as to the value of
the parties’ home] presented at trial (Husband’s guess, Wife’s guess, the tax appraisal), and chose to
accept the tax valuation.” No. E1999-01003-COA-R3-CV, 2000 WL 224366, at *3 (Tenn. Ct. App. Feb.
28, 2000). This Court held that the trial court did not abuse its discretion in valuing the marital home
according to the tax appraisal. Id.8
not reveal a lack of trustworthiness in the underlying tax appraisals, such that we could
conclude that the trial court abused its discretion in admitting Mr. Vance’s opinion of
value; rather, in the testimony, Mr. Vance merely identifies the source and content of the
particular records upon which he based his opinions.6 Other evidence of value was
presented by Husband and consisted of his opinion of fair market value, based on the
condition of the property; his proposed value was lower than that set by the court.
Inasmuch as the values set by the court were within the range of values presented, we
find no error in the court’s adoption of Mr. Vance’s opinions of 5055 Simsbury, 1284
Snowden, 3138 Carnes, and Lot 41A Pleasant View. See Watters v. Watters, 959 S.W.2d
585, 589 (Tenn. Ct. App. 1997).
Husband raises additional issues with respect to the court’s valuation of 3433
Forest Hill, condominiums located on Quince Road, and a cabin and adjoining lot on
Brittany Cove near Pickwick Lake.
a.) 3433 Forest Hill
The trial court valued this property at $816,600; Husband contests this valuation,
citing his testimony that the property is worth $465,000 due to it being in “extremely
poor condition.” Husband also argues that the court erred in not taking into consideration
a second mortgage he had purportedly taken out on the property.
The court specifically held that it “shall not include a debt in the amount of Two
Hundred Thousand Dollars ($200,000) to Trust One Bank as Husband has failed to
introduce any evidence related to the current balance of said debt.” From our review of
the record, Husband introduced a $200,000 promissory note and deed of trust, both of
which were executed in August 2010. The deed of trust does not show that it was
recorded but states that the balance was due and payable on August 17, 2014. Wife
contends that Husband’s testimony and the supporting documentation of this alleged debt
“were highly suspect,” citing, inter alia, Husband’s testimony that he never made any
payments on the note, notwithstanding the fact that it called for payments of interest until
maturity. Given the adverse credibility finding the court made with respect to Husband
and his failure to introduce proof that the indebtedness still existed when he testified in
2016, we find no error in the court’s disregard of Husband’s testimony about this alleged
mortgage.
6
At trial and on appeal Husband contends that Mr. Vance was not competent to testify as to the value of
real estate because such testimony was outside his area of expertise; the court overruled the objection,
holding that Husband would be able to cross-examine Mr. Vance on those matters, which his counsel
proceeded to do. Counsel did not dispute Mr. Vance’s qualifications as an expert and the court accepted
him as such. As explained herein, we find no error in Mr. Vance’s utilization of the tax appraisals as the
basis of his opinions of value and no error in the court’s adoption of those values for the real property.
See Tenn. R. Evid. 703.
9
The Shelby County Tax Assessor’s 2015 appraisal of this piece of property is
$816,600. Thus, the valuation of the property was within the range of values presented,
and we affirm the court’s valuation. See Watters, 959 S.W.2d at 589.
b.) Properties owned by Atled Investments, LLC
Husband and his two brothers each own one-third of Atled Investments, LLC,
which owns several pieces of real estate, specifically, two condominiums located at 5676
and 5718 Quince Road and a cabin and adjoining lot on Brittany Cove near Pickwick
Lake. Wife alleged that a third, unnamed condominium was owned by Atled. The trial
court adopted Mr. Vance’s $67,500 and $52,500 valuation of the Quince Road
condominiums and $60,000 valuation of the unnamed condominium. Consistent with the
opinion of Mr. Vance, the valuation of the property at Brittany Cove was set at $196,300
for the cabin and $25,000 for the adjoining lot.
Husband argues that the values assigned to the properties at 5676 Quince Road
and at Brittany Cove do not take into account the mortgages on those properties; Husband
admitted into evidence a balance sheet listing the marital assets and liabilities, which
shows a $56,164 mortgage on the property at 5676 Quince Road and an $80,000
mortgage on the Britney Cove property. As an initial matter, we note that the court
treated the real estate owned by Atled as if the parcels themselves were marital property,
instead of valuing and dividing Husband’s one-third interest in Atled. Neither party
raises this as a concern on appeal and our resolution of Husband’s objection to the
valuation is not affected by the court’s action in this regard.
In his argument Husband conflates the value of marital property with the debt
encumbering the property; he incorrectly argues that debt should be considered in
establishing the value. Value of marital assets, however, is established separate from and
irrespective of marital debt; after the court divides the assets, it divides the debt, which in
most circumstances will follow the asset. See Mansfield v. Mansfield, No.
01A019412CH0058, 1995 WL 643329, at *9 (Tenn. Ct. App. Nov. 3, 1995); Hanover v.
Hanover, 775 S.W.2d 612, 614 (Tenn. Ct. App. 1989). In the final decree, when dividing
the marital assets, the court used one-third of the values of the properties as the value
received by Husband; in dividing the marital debt, the court assigned one-third of the
Atled debt as Husband’s responsibility. Accordingly, the court did not err in its valuation
of these properties in this regard.
What the parties refer to as the “unnamed condominium” was valued at $60,000
and awarded to Husband. He contends that the court erred in including this asset as
marital property because “Atled never owned a condominium other than the two on
Quince that it currently owns”; he cites his testimony as well as that of both of his
brothers in support. In contrast, Mr. Vance testified that the condominium was listed on
Atled’s 2014 tax return and that he got the value by averaging the values of the other
10
condominiums. Also, Exhibit 25 contains numerous years’ tax returns and related
schedules for Atled, and includes documents entitled “Federal Asset Report” for fiscal
years ending December 31, 2014 and December 31, 2015; both reports list three
condominiums.
In the portion of the decree where the court identifies marital assets, the court
states that “Husband submits that the unnamed condominium no longer exists and has
been sold . . . [but that] Husband introduced no proof evidencing the sale. . . ”; after
acknowledging the information on the tax returns, the court held that “[t]his property no
longer exists and the likelihood [is] that the listing was an error.” Notwithstanding these
statements, the court included the condominium in its division of marital property. We
cannot resolve the seeming inconsistency between the two holdings on the record before
us; consequently, we vacate this holding and remand the issue for the court to determine
whether this condominium was a marital asset on the date of trial and, if so, to value the
asset and make such adjustments to the overall division of property as may be necessary.
c.) W.M. Barr
This issue involves the valuation of Husband’s interest in royalties generated from
a patent, which the trial court valued at $61,250, or 35 percent of a $175,000 proposal
offered by W. M. Barr, the manufacturer of the product protected by the patent. Husband
argues on appeal, as he did at trial, that there is no competent proof of value upon which
the court could rely. The record shows that Miracle Shield Partnership, composed of four
individuals, is the owner of a patent; that Husband owns a security interest in the patent,
which includes the right to license the patent; and that W.M. Barr is a manufacturer
which holds the rights to manufacture products protected the patent.7
Various exhibits demonstrate that Husband received hundreds of thousands of
dollars in royalties from W.M. Barr in 2013 and 2014 and that W.M. Barr offered him
$175,000 in 2016 to extinguish his royalty rights, to transfer to Barr any and all
intellectual property rights in the technology he held, and to release any claims he held in
those rights. Husband testified that he and his partners discussed the offer but decided to
reject it and have contemplated pursuing litigation. Mr. Vance valued the asset based on
35 percent of the offer.8
7
Although there is no agreement between the partnership and Husband in the record, in their briefs on
appeal, the parties agree that Husband’s security interest is 35 percent of the royalties payable to the
partnership; the trial court so found.
8
Mr. Vance explained that he valued Husband’s interest in the royalties at 35% of the offer because, on
his tax returns, Husband indicated that he distributed 65% of the royalties to “somebody else.”
11
On appeal, Husband contends that “[t]here was no competent evidence that the
trial court could reasonably rely upon to determine any value in W.M. Barr.” Husband’s
testimony with respect to this asset is short; he did not testify as to his opinion of value or
offer any proof in that regard. Husband’s brief contains a “Marital Balance Sheet,” in
which he lists the value at $0; contrary to the requirement of Rule 7 of the Rules of the
Court of Appeals, he does not cite to testimony in support of the value. We have
reviewed the testimony and exhibits cited in his brief and conclude the evidence does not
preponderate against the court’s valuation of his security interest in the royalties
generated by the patent as of the date of trial. Mr. Vance’s opinion is supported by
evidence in the record, and we discern no error in the valuation of this asset.
d.) CGN Energy, LLC
Husband invested $150,000 in CGN Energy during the pendency of the divorce.9
Mr. Vance found evidence of this investment during discovery and sought more
information from Husband about the investment; Husband did not provide any
information. In light of Husband’s failure to respond, Mr. Vance used the initial
investment as his opinion of value of the asset. For his part, Husband testified that due to
the decrease in crude oil prices from $80 a barrel to $40 a barrel, he has received no
income from the investment and that therefore the fair market value of his investment is
$0.10 The trial court valued the asset in accordance with the opinion of Mr. Vance,
9
On appeal, Husband’s brief states that he “invested $150,000 for a twenty-five percent interest in an oil
well in Brookhaven, Mississippi.” This statement is not supported by citation to the record, and in the
portions of the record to which he cites, Husband provided no testimony about the nature of the company
or its location.
10
In the course of his cross examination Mr. Vance was asked his opinion as to the effect of a drop in oil
prices on the value of the investment and engaged in the following colloquy:
Q. Okay. So when you looked at the value that Mr. Lucchesi, the investment that he put
into this oil investment and taking into consideration that oil prices have dropped
considerably over the last couple of years, do you still believe that the fair market value
of his interest in CGN is what he invested before the prices dropped?
A. Well, I don’t know. I don’t know what kind of oil investment that it was. Was it an oil
well, was it oil drilling, was it oil rigs, was it offshore. I mean, I don’t know what it was
because the information wasn’t provided.
Q. Okay. You would agree that if it was in the -- centered around and dependent upon the
prices of oil, that it’s probably not worth what it was when the oil prices were higher?
A. I wouldn’t agree with that. If he bought oil futures expecting oils to go down, they
would have tripled his investment.
Q. But do you have any indications that this was futures?
A. No. But your question was just oil prices in general. And no, that’s not necessarily
true.
Q. Okay. But you would agree for CGN Energy, if it was associated with something other
than futures and speculation but rather just the oil, dependent upon oil prices staying high
or going higher and oil prices drop, they would not be worth the same value?
12
assigning a value of $150,000. Husband contends that, because Mr. Vance was not able
to assess a fair market value to the investment, his opinion of value was “not based on
generally accepted valuation methods,” and the court erred in accepting the valuation.
This argument is unavailing. In formulating his opinion, Mr. Vance sought
pertinent information from Husband as to the nature of the investment, which Husband
refused to provide. In the absence of such information, Mr. Vance based his opinion of
value on the amount of Husband’s investment; we discern no infirmity in Mr. Vance’s
use of the amount of the initial investment as his opinion of value of this marital asset.
To adopt Husband’s argument would effectively reward him for his failure to produce the
information which was sought by Wife; this court will not countenance such a result. Mr.
Vance’s opinion was factually based, inasmuch as the amount of Husband’s investment is
evidence of the value that Husband placed on the venture. Husband based his opinion of
value on a drop in oil prices; his testimony, however, is perfunctory and unsupported by
any articles, documents, or the testimony of his valuation expert. The trial court was
presented with two opinions of the value of this asset and adopted Mr. Vance’s. As Mr.
Vance’s opinion was within the range of values presented, the court was free to accept it.
See Watters, 959 S.W.2d at 589.
e.) Investec 1407 Union Partnership
During the marriage Husband invested $50,000 into this partnership, which holds
a ten percent ownership interest in an office building in Memphis. As with other assets
for which Husband failed to provide requested information, Mr. Vance valued this asset
at $50,000, the amount of Husband’s investment. Husband contends that the recent loss
of a major tenant has resulted in the value of his investment being only $5,000, and that
the court should not have accepted Mr. Vance’s opinion of value over his; he cites only
his testimony in this regard. In the portion of the final decree in which the court sets a
value for the marital property, with respect to this asset, the decree states “the current
value of Investec is Fifty Thousand Dollars ($50,000)”; in the section of the decree
dividing the marital assets, however, the court awarded this asset to Husband and listed
the value as $10,000. For the reasons set forth previously relative to the court’s adoption
of Mr. Vance’s opinions of value of assets as to which Husband refused to provide
A. If it was -- yes, if it was dependent on oil prices being higher or going higher and they
dropped, I would agree, but that’s only – that’s all that it is dependent upon, then it
possibly could have gone down, yes.
Q. Possibly or probably?
A. I don’t know. I haven’t been given the information on the company.
Husband’s testimony as to the value of this asset was limited to a conclusory statement that there was a
$40 drop in per barrel price of crude oil; this testimony does not preponderate against the finding by the
court and would not support an alternative finding of value.
13
information, we affirm the valuation of the asset at $50,000, as that amount was within
the range of values presented.11
e.) LGR Beverage Group
The trial court adopted Mr. Vance’s opinion that the value of this import company
formed to market a vodka brand was $25,000, which was the amount of Husband’s initial
investment. As with other assets, Mr. Vance requested from Husband, but was not
provided, additional information about this asset; he valued the asset at the amount of
Husband’s initial investment. Husband contends in his brief on appeal that the asset is
worth “only $20,000.” For the reasons set forth previously, and again giving deference to
the court’s adverse credibility finding with respect to Husband’s testimony, we find no
error in the court’s valuation of this asset.
f.) Southern Security Account 3690
The trial court found that this credit union account had a value of $134,334; the
court ultimately divided the account equally. Husband argues that “the trial court erred in
valuing the Southern Security account at $134,334.00 where the evidence clearly
supports with greater convincing effect that the marital portion of the account is
$40,000.” The evidence to which Husband refers is his testimony that $40,000 of the
$134,334 in the account belongs to him, with the remainder belonging to his partners in
“the W.M. Barr deal.” While it is not clear from the record or the briefs of the parties, it
appears that the trial court accepted Husband’s testimony in the portion of the final
decree in which the court divides the marital property, wherein the court utilizes the
amount of $40,000 as the amount or marital interest in the account to be divided. Wife
does not cite to evidence preponderating against the court’s valuation of the marital
portion of this account as $40,000, and we are not persuaded that the court erred with
respect to this account, inasmuch as the decree ultimately adopts the value Husband
seeks.
D. Alimony
In the final decree, the trial court made the following findings with respect to the
award of alimony:
The parties have been married for over twenty years, and Wife has not been
employed full-time outside of the parties’ home since the birth [of their son
in October 2000].
11
Our affirmance of the value adopted by the court pretermits our consideration of any issue presented by
the court’s listing of the asset at $10,000.
14
Wife is 53 years old and both spouses are in good physical health. Wife has
monthly needs of approximately Twelve Thousand Dollars ($12,000), but
has earning abilities of at least $2,500. Wife has transferable skills and
training, but is the disadvantaged spouse and has needs that Husband has
the ability to meet.
Husband has the ability to earn far more money than Wife.
No real proof was offered on the standard of living of the parties during the
marriage, except that they had certain expenses. Wife is financially
dependent upon Husband. The Divorce Referee found Husband’s income to
be in excess of Thirty Thousand Dollars ($30,000) per month at the
Divorce Referee hearing on August 25, 2015, and this was later confirmed
by this court. The court does find that Husband’s income was reduced in
2015 by some $10,000, due to the issues with the Miracle Shields deal.
However, the court finds that Husband is under employed to the amount of
$100,000 as a consequence of refusing to accept a job with Delta Wholesale
(Kahn). Additionally, the court finds that Husband has other undefined and
undetermined income from investments and other elusive sources and
amounts.
It is, therefore, found by this court that Husband’s income shall be
established and imputed at $27,000.00 per month. The court also takes into
consideration that Husband expressed his plan to earn more income after
the parties’ divorce.
On May 23, 2016, during a hearing on Husband’s failure to comply with
Wife’s discovery requests, this court reprimanded Husband for his failure
to provide an accounting of his assets and business interests.
On July 7, 2016, following the May 23, 2016 hearing, Wife sent Husband’s
counsel a deficiency list containing numerous documents, many of which
Husband never produced. As such, Husband’s attempt to conceal the
parties’ assets and his repeated refusal to comply with Wife’s discovery
requests are compelling reasons for this court to award Wife alimony in
solido.
***
The court finds that Wife will be forced to deplete her share of the marital
estate unless Wife is awarded some form of alimony.
15
The parties’ gross marital estate has been established at approximately
$4,558,771. The court has awarded Wife some $1,662,438.50 in mostly
liquid assets. Husband is awarded some $2,896,272.50 in a mixture of
liquid assets and real property. This figure for Husband also includes a
reduction of Wife’s share of the assets by the $75,000 that would be
considered his separate property.
The trial court initially awarded Wife $400,000 in alimony in solido but later
amended its order sua sponte, awarding Wife “the total sum of $200,000 as alimony in
solido, rather than a total of $400,000, to assist Wife with payment of litigation expenses
incurred unnecessarily due to Husband’s conduct of delay and failure to comply with
repeated requests during the course of the trial.” The Court continued, “Said sum of
$200,000 as alimony in solido is not being awarded to Wife in the form of support. . . .”
Wife appeals the award as being insufficient and an abuse of discretion because she “will
most certainly have to deplete a considerable portion of the assets she received in the
divorce just to pay her attorney fees.” She asks this Court to award a total of $800,000 in
alimony in solido, $500,000 of which she seeks “in lieu of alimony in futuro,” and the
other $300,000 to “offset Wife’s attorney fees and suit expenses.” Husband did not
appeal the award of alimony or the finding that Wife has a need and that he has the ability
to pay.12
Tennessee recognizes four distinct types of spousal support: (1) alimony in futuro,
(2) alimony in solido, (3) rehabilitative alimony, and (4) transitional alimony. Tenn.
Code Ann. § 36-5-121(d)(1).13 There are no hard and fast rules for spousal support
12
In his reply brief, Husband argues that “despite the trial court’s determining Husband’s income was
$27,000 per month, Husband’s income will be substantially less after the division of the marital estate
where the trial court considered Husband’s investment income as part of his imputed income and where
Wife received over two million dollars of the estate.” Husband did not raise any issue relative to these
findings or the award of alimony in his appeal. Consequently, we consider the matters he attempts to
raise in his reply brief as waived. See Tenn. R. App. P. 13(b).
13
Alimony in futuro, a form of long-term support, is appropriate when the economically disadvantaged
spouse cannot achieve self-sufficiency and economic rehabilitation is not feasible. Gonsewski v.
Gonsewski, 350 S.W.3d 99, 107 (Tenn. 2011). Alimony in solido is also “a form of long-term support,”
id. at 108, and “may be awarded in lieu of or in addition to any other alimony award, in order to provide
support, including attorney fees, where appropriate.” Tenn. Code Ann. § 36-5-121(d)(5). Rehabilitative
alimony is “a separate class of spousal support,” Tennessee Code Annotated section 36-5-121(e)(1), the
purpose of which is “to assist an economically disadvantaged spouse in acquiring additional education or
training which will enable the spouse to achieve a standard of living comparable to the standard of living
that existed during the marriage or the post-divorce standard of living expected to be available to the other
spouse.” Gonsewski, 350 S.W.3d at 108. Finally, transitional alimony may be awarded “when the court
finds that rehabilitation is not necessary, but the economically disadvantaged spouse needs assistance to
adjust to the economic consequences of a divorce, legal separation or other proceeding where spousal
support may be awarded.” Tenn. Code Ann. § 36-5-121(g)(1).
16
decisions. Anderton v. Anderton, 988 S.W.2d 675, 682 (Tenn. Ct. App. 1998); Crain v.
Crain, 925 S.W.2d 232, 233 (Tenn. Ct. App. 1996). In determining whether to award
spousal support, the trial court is required to consider “all relevant factors.” Tenn. Code
Ann. § 36-5-121(i).14 “While a trial court should consider all the relevant factors under
the circumstances, the two most important factors to be considered are the need of the
economically disadvantaged spouse and the obligor spouse’s ability to pay.” Small v.
Small, No. M2009-00248-COA-R3-CV, 2010 WL 334637, at *3 (Tenn. Ct. App. Jan. 28,
2010) (citing Riggs v. Riggs, 250 S.W.3d 453, 457 (Tenn. Ct. App. 2007)). Of these two
factors, “the primary consideration is the disadvantaged spouse’s need.” Id.“[T]here is a statutory bias toward awarding transitional or rehabilitative alimony
over alimony in solido or in futuro. While this statutory preference does not entirely
displace long-term spousal support, alimony in futuro should be awarded only when the
court finds that economic rehabilitation is not feasible and long-term support is
necessary.” Gonsewski, 350 S.W.3d at 109 (citing Bratton v. Bratton, 136 S.W.3d 595,
605 (Tenn. 2004); Robertson v. Robertson, 76 S.W.3d 337, 341-42 (Tenn. 2002)). In this
context, “rehabilitated” means that, with reasonable efforts, the economically-
disadvantaged spouse will be able to achieve:
14
Those factors set forth in Tennessee Code Annotated section 36-5-121(i)are:
(1) 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;
(2) 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 earnings capacity to a reasonable
level;
(3) The duration of the marriage;
(4) The age and mental condition of each party;
(5) The physical condition of each party, including, but not limited to, physical
disability or incapacity due to a chronic debilitating disease;
(6) 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;
(7) The separate assets of each party, both real and personal, tangible and intangible;
(8) The provisions made with regard to the marital property, as defined in § 36-4-
121;
(9) The standard of living of the parties established during the marriage;
(10) 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;
(11) The relative fault of the parties, in cases where the court, in its discretion, deems
it appropriate to do so; and
(12) Such other factors, including the tax consequences to each party, as are necessary
to consider the equities between the parties.
17
an earning capacity that will permit the economically disadvantaged
spouse’s standard of living after the divorce to be reasonably comparable to
the standard of living enjoyed during the marriage, or to the post-divorce
standard of living expected to be available to the other spouse, considering
the relevant statutory factors and the equities between the parties.
Tenn. Code Ann. § 36-5-121(e)(1).
The standard of review for an award of alimony was set forth in Gonsewski v.
Gonsewski:
[A] trial court’s decision regarding spousal support is factually driven and
involves the careful balancing of many factors. Kinard v. Kinard, 986
S.W.2d 220, 235 (Tenn. Ct. App. 1998); see also Burlew [v. Burlew], 40
S.W.3d [465] at 470 [(Tenn. 2001)]; Robertson v. Robertson, 76 S.W.3d
337, 340–41 (Tenn. 2002). As a result, “[a]ppellate courts are generally
disinclined to second-guess a trial judge’s spousal support decision.”
Kinard, 986 S.W.2d at 234. Rather, “[t]he role of an appellate court in
reviewing an award of spousal support is to determine whether the trial
court applied the correct legal standard and reached a decision that is not
clearly unreasonable.” Broadbent v. Broadbent, 211 S.W.3d 216, 220
(Tenn.2006). Appellate courts decline to second-guess a trial court’s
decision absent an abuse of discretion. Robertson, 76 S.W.3d at 343. An
abuse of discretion occurs when the trial court causes an injustice by
applying an incorrect legal standard, reaches an illogical result, resolves the
case on a clearly erroneous assessment of the evidence, or relies on
reasoning that causes an injustice. Wright ex rel. Wright v. Wright, 337
S.W.3d 166, 176 (Tenn. 2011); Henderson v. SAIA, Inc., 318 S.W.3d 328,
335 (Tenn. 2010).
350 S.W.3d 99, 105 (Tenn. 2011) (footnote omitted).
We agree with Wife that, on the record presented, the amount of alimony awarded
is insufficient. “An award of attorney’s fees in divorce cases is treated as a form of
spousal support, and the award is characterized as alimony in solido.” Wilder v. Wilder,
66 S.W.3d 892, 894 (Tenn. Ct. App. 2001) (citing Sannella v. Sannella, 993 S.W.2d 73,
76 (Tenn. Ct. App. 1999); Anderton, 988 S.W.2d at 682; Smith v. Smith, 984 S.W.2d 606(Tenn. Ct. App. 1997); Gilliam v. Gilliam, 776 S.W.2d 81, 86 (Tenn. Ct. App. 1988)).
“These awards are appropriate only when the spouse seeking them lacks sufficient funds
to pay his or her own legal expenses, or would be required to deplete his or her resources
in order to pay these expenses.” Riggs v. Riggs, 250 S.W.3d 453, 459–60 (Tenn. Ct. App.
2007) (citations omitted). The court found that Wife would deplete her share of the
18
marital estate unless she was awarded some form of alimony, and accordingly awarded
her alimony in solido; the $200,000 awarded, however, was contrary to the proof that her
counsel fees were $272,000 as of the time of trial. Based upon the division of property in
this case, it appears that, in order to pay her attorney’s fees Wife would deplete a
significant amount of her resources. Accordingly, it is appropriate that the award of
alimony in solido be increased to $300,000, to cover the amount of attorney’s fees and
costs Wife incurred.
In addition, we note that, despite the court’s finding that Wife has a monthly need
of $12,000 and an earning ability of $2,500 per month, and that she has transferable skills
and training, the court did not consider whether an award of short term alimony would be
appropriate. Wife testified that, prior to the marriage and birth of the parties’ child, she
was a special education teacher; after the child’s birth in 2000, she received an
associate’s degree in information technology and began to sell real estate part-time in
2003, earning up to $20,000 per year. The record supports further inquiry as to whether
an award of rehabilitative and/or transitional alimony would be appropriate. If
rehabilitation of Wife is feasible, the court should determine the amount and duration of
such award, and whether an award of transitional alimony is also appropriate. If the court
determines that rehabilitative or transitional alimony is not appropriate, the court should
consider an additional award of long term support, in light of Wife’s demonstrated need.
E. Fees on Appeal
Wife requests her attorney’s fees on appeal, a decision that is within our
discretion. See Seaton v. Seaton, 516 S.W.2d 91, 93-94 (Tenn. 1974); Davis v. Davis, 138
S.W.3d 886, 890 (Tenn. Ct. App. 2003). In light of our disposition of this appeal and
Wife’s need and Husband’s ability to pay, we award Wife her fees incurred in this
appeal.
IV. CONCLUSION
For the foregoing reasons, we affirm the court’s classification, valuation, and
division of marital assets, with the exception of the unnamed condominium; we vacate
the court’s order in that regard and remand for further findings, valuation, and division, if
necessary. We modify the award of alimony in solido to increase the award to $300,000;
we remand for further consideration of whether an additional award of rehabilitative or
transitional alimony is warranted.
RICHARD H. DINKINS, JUDGE
19