Kim Covarrubias v. Gerald Edward Baker ( 2017 )

12/11/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs October 2, 2017
KIM COVARRUBIAS v. GERALD EDWARD BAKER
Appeal from the Circuit Court for Knox County
No. 107966 Gregory S. McMillan, Judge
No. E2016-02316-COA-R3-CV
This appeal arises out Husband’s petition to reduce his alimony in futuro obligation and
Wife’s motion for criminal contempt for Husband’s failure to pay his alimony obligation
in full. Wife opposed the modification of alimony on two grounds: (1) the 2007 Marital
Settlement Agreement was not modifiable and (2) there had been no material change in
circumstances. The trial court held that the alimony in futuro provision was modifiable
and, based on a finding that Husband had proven a material change in circumstances,
reduced Husband’s alimony obligation. The court then calculated Husband’s alimony
arrearage for 2015 based on his income in 2007, not on his income as stated on his W-2
for 2015, which was greater. The court also dismissed the contempt petition upon a
finding that Wife failed to prove the essential elements. Wife appeals, contending the trial
court erred (1) by dismissing her motion for criminal contempt; (2) by finding that the
trial court had the authority to modify alimony; (3) by finding that a substantial and
material change in circumstances warranted a modification; and (4) by failing to properly
calculate Husband’s alimony arrearage for 2015. We have determined that the double
jeopardy clause of the Fifth Amendment to the United States Constitution precludes us
from reviewing the trial court’s decision to dismiss the contempt petition; therefore, we
affirm the dismissal of the criminal contempt petition. As for Husband’s petition to
modify alimony in futuro, we affirm the trial court’s determination that the alimony in
futuro provision was modifiable; however, we have determined that there is no factual
basis to support a finding that Husband proved a substantial and material change in
circumstances. Accordingly, we reverse the trial court’s decision to decrease Husband’s
alimony obligation and remand with instructions to reinstate the alimony award as stated
in the final divorce decree. Because the alimony arrearage judgment was based on the
reduced alimony obligation, we also reverse that award and remand with instructions for
the trial court to award an arrearage judgment based on Husband’s gross earnings in
2015, not his salary in 2007. Therefore, we affirm in part, reverse in part, and remand for
recalculation of the alimony arrearage judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed in Part, Reversed in Part, and Remanded
FRANK G. CLEMENT JR., P.J., M.S. delivered the opinion of the Court, in which THOMAS
R. FRIERSON II and BRANDON O. GIBSON, JJ., joined.
Stephanie L. Prager and Shelley S. Breeding, Knoxville, Tennessee, for the appellant,
Kim Covarrubias.
J. Patrick Henry, Kingston, Tennessee, for the appellee, Gerald Edward Baker.
OPINION
On October 22, 2007, the Knox County Circuit Court granted a divorce to Kim
Covarrubias (“Wife”) and Gerald Edward Baker (“Husband”) after twenty-two years of
marriage. The parties’ Marital Settlement Agreement, which was incorporated into the
divorce decree, provided that Husband would pay Wife fifty percent of his gross income
as alimony “until either party is deceased.”
On the same day the divorce decree was entered, a separate and agreed upon Order
for Alimony in Futuro was entered, which stated that Husband would pay Wife “on the
15th and 30th of each month, the sum of ½ of all his gross earnings…and continuing
thereafter the sum of ½ all bonuses as they are accumulated.” The order provided that the
remarriage of either party would not terminate Husband’s obligation to pay alimony, and
it stated that Wife could modify the alimony award due to “unforeseen circumstances.”
In May 2015, Husband filed a petition to terminate or modify his alimony
obligation, claiming that his income of $120,000 per year had not increased since the
time of the divorce. He also claimed that since his income had not “kept up with the cost
of inflation,” he had difficulty maintaining his standard of living. Husband additionally
claimed that he could not afford to buy a home or to pay his bills, and he owed
approximately $19,000 in taxes while Wife was now making twenty dollars per hour, had
a good credit rating, and was able to purchase a home. Wife filed an answer opposing any
modification of alimony and asserted a counterclaim for an arrearage judgment for
alimony that Husband failed to pay in 2015. She also filed a motion for criminal
contempt. In her motion for contempt, Wife alleged that Husband failed to disclose
income to Wife and paid Wife less than he owed under the divorce decree.
The court held a hearing on July 12, 2016, on Husband’s petition to modify
alimony and Wife’s motion for criminal contempt where both Husband and Wife
testified. At the hearing, Wife argued that Husband could not seek a modification of
alimony from the court because the Order for Alimony in Futuro did not merge into the
final divorce decree.
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The trial court ruled that the Order for Alimony in Futuro merged into the final
divorce decree and thus became modifiable by the court. After considering the testimony
and the other evidence presented at the hearing, the court found that a substantial and
material change in circumstances warranted a modification of Husband’s alimony
obligation:
[T]he Court finds that there has been a substantial and material change in
circumstances unanticipated by the parties. The Court finds that one of
those is [Husband’s] loss of the Marital residence and his injury in 2008. It
was anticipated in 2007 that [Husband] would continue to gain equity in the
house. The Court also finds that it’s significant that the Wife is helping to
provide for an adult son and daughter and her grandchildren. The daughter
receives $300 per month in child support and the son pays his groceries and
works as a plumber. That was not anticipated by the Parties. The daughter
has OCD and Picking [Disorder], and that makes work difficult for her. It is
the testimony of the Wife that if the daughter were to work, her income
wouldn’t cover the cost of daycare.
The court considered the relevant factors in Tenn. Code Ann. § 36-5-121, finding
that the parties’ relative earning capacity and resources remained the same since the
divorce and that neither party had accumulated substantial separate assets. The court
found that Husband’s income had increased from $120,000 per year at the time of the
divorce to $158,000 per year in 2015, while Wife’s remained the same. The court then
determined that alimony should be reduced to $3,500 per month effective January 1,
2016, stating, “The reason this modification is later than the day of filing is that
[Husband’s] dealings with [Wife] in 2015 were less than forthright in trying to negotiate
a decrease in alimony when he knew that he had received an increase in salary….”
The court found that Husband owed Wife $3,440 in unpaid alimony after giving
Husband credit for overpayments since the modification’s effective date. While the court
found that Husband was “less than forthright” with Wife about his income and failed to
completely fulfill his alimony obligation under the divorce decree, it ruled that the
evidence was insufficient to prove that Husband was guilty of criminal contempt. Wife
filed this appeal.
ISSUES
In this appeal, Wife asks us to consider whether the trial court erred (1) in
dismissing Wife’s motion for criminal contempt; (2) in finding that it had the authority to
modify the parties’ agreement for alimony; (3) in finding that a substantial and material
change in circumstances existed which warranted a reduction in Husband’s alimony
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obligation; and (4) in failing to properly calculate Husband’s arrearage in alimony
payments.
ANALYSIS
I. CRIMINAL CONTEMPT
Wife argues that the trial court erred by dismissing her motion for criminal
contempt because the trial court found that Husband was not forthright with Wife about
his salary increase and that Husband failed to fulfill his alimony obligation to Wife on
several occasions. Husband argues that Wife did not prove beyond a reasonable doubt
that Husband was guilty of criminal contempt and that the double jeopardy clause of the
Fifth Amendment to the United States Constitution precludes this court from considering
the issue. We agree with Husband.
“Although contempt proceedings are traditionally classified as ‘civil’ or
‘criminal,’ in point of fact, contempt proceedings are neither wholly civil nor criminal in
nature and may partake of the characteristics of both.” Baker v. State, 417 S.W.3d 428,
435 (Tenn. 2013). Because criminal contempt has both civil and criminal elements,
defendants in criminal contempt proceedings are afforded some, but not all, of the same
constitutional protections as criminal defendants. Id. at 436. Our Supreme Court has held
that the double jeopardy clause of the Fifth Amendment to the U.S. Constitution is one of
the protections afforded to defendants in criminal contempt proceedings. Ahern v. Ahern,
15 S.W.3d 73, 80 (Tenn. 2000). The double jeopardy clause “protects an accused against
a second prosecution for the same offense after an acquittal, and multiple punishments for
the same offense.” Id. “Perhaps the most fundamental rule in the history of double
jeopardy jurisprudence has been that ‘[a] verdict of acquittal…could not be reviewed, on
error or otherwise, without putting (a defendant) twice in jeopardy, and thereby violating
the Constitution.’” U.S. v. Martin Linen Supply Co., 430 U.S. 564, 571 (1977) (quoting
United States v. Ball, 163 U.S. 662, 671 (1896)); see Cansler v. Cansler, No. E2008-
01125-COA-R3-CV, 2010 WL 342652, at *7 (Tenn. Ct. App. Feb. 1, 2010).
In this case, the court held a trial on Wife’s motion for criminal contempt where
Wife and Husband presented evidence. Based on the evidence, the court determined that
Wife did not meet her burden of proof. Because the trial court’s dismissal functioned as
an acquittal for the purposes of double jeopardy, we cannot review the trial court’s
decision without violating the Constitution.
II. TRIAL COURT’S AUTHORITY TO MODIFY THE AGREEMENT
Since the trial court’s determination that it had the authority to modify the alimony
agreement involves contract interpretation, it is a matter of law, which we review de novo
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with no presumption of correctness accorded to the trial court. Allstate Ins. Co. v.
Watson, 195 S.W.3d 609, 611 (Tenn. 2006).
A marital dissolution agreement (or Marital Settlement Agreement in this case) is
a contract between a husband and a wife that merges into the final divorce decree when
approved by the trial court. Eberbach v. Eberbach, No. M2014-01811-SC-R11-CV, 2017
WL 2255582, at *3 (Tenn. May 23, 2017). Once incorporated into the final decree, issues
governed by statute, like alimony and child support, lose their contractual nature and
become a judgment of the court. Id. As such, alimony and child support provisions are
modifiable by the court in accordance with the applicable statutes. Id. Though aspects of
the Marital Dissolution Agreement lose their contractual nature, the court interprets a
marital dissolution agreement like any other contract. Bogan v. Bogan, 60 S.W.3d 721,
730 (Tenn. 2001).
Here, the final divorce decree states that “all of the terms and provisions of the
Marital Settlement Agreement between the parties…which is attached to and
incorporated by reference, are hereby approved and incorporated, merged into, and made
part of this court order….” Accordingly, the Marital Settlement Agreement merged into
the final divorce decree. The Marital Settlement Agreement provides that “Husband
agrees to pay Wife 50% of his gross total income including, but not limited to, bonuses
and salary,” and it states that alimony “will continue until either party is deceased.”
Because this alimony provision merged into the final divorce decree, it was subject to
modification by the court in accordance with the applicable statutes.
Wife argues that even if the Marital Settlement Agreement merged into the final
divorce decree, the Order on Alimony in Futuro did not merge, and therefore, it retained
its contractual nature, making it non-modifiable by the court. The Order on Alimony in
Futuro does not contradict the alimony provision in the Marital Settlement Agreement.
To the contrary, it simply reiterates that Husband will pay Wife fifty percent of his gross
earnings, which includes bonus pay. It then specifies the days of the month that Husband
must remit payment. Like the trial court, we do not find the differences between the
Martial Settlement Agreement and the Order on Alimony in Futuro to be material. Thus,
it is inconsequential in this case whether the Order on Alimony in Futuro merged into the
final divorce decree because the Marital Settlement Agreement did. Therefore, the
alimony agreement became modifiable by the court by virtue of the Marital Settlement
Agreement.
Even so, Wife contends that the Order on Alimony in Futuro precludes Husband
from seeking a modification of his alimony obligation. We disagree. The order states
“that said [alimony] payments are subject to modification by [Wife] for unforeseen
changes of circumstances that occur during the period of payments.” The order does not
state that only Wife may seek a modification, or that Husband may not seek a
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modification. Therefore, the trial court did not err by holding that it had the authority to
modify the alimony agreement upon Husband’s request.
III. MODIFICATION OF ALIMONY
Decisions regarding spousal support are generally within the discretion of the trial
court, Gonsewski v. Gonsewski, 350 S.W.3d 99, 105 (Tenn. 2011), and discretionary
decisions are reviewed pursuant to the “abuse of discretion” standard of review. Lee
Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010). The abuse of discretion
standard does not permit reviewing courts to substitute their discretion for that of the trial
court. Id. Nevertheless, the abuse of discretion standard of review does not immunize a
lower court’s decision from any meaningful appellate scrutiny. Id.Discretionary decisions must take the applicable law and the relevant facts
into account. An abuse of discretion occurs when a court strays beyond the
applicable legal standards or when it fails to properly consider the factors
customarily used to guide the particular discretionary decision. A court
abuses its discretion when it causes an injustice to the party challenging the
decision by (1) applying an incorrect legal standard, (2) reaching an
illogical or unreasonable decision, or (3) basing its decision on a clearly
erroneous assessment of the evidence.
[R]eviewing courts should review a [trial] court’s discretionary decision to
determine (1) whether the factual basis for the decision is properly
supported by evidence in the record, (2) whether the [trial] court properly
identified and applied the most appropriate legal principles applicable to the
decision, and (3) whether the [trial] court’s decision was within the range of
acceptable alternative dispositions. When called upon to review a lower
court’s discretionary decision, the reviewing court should review the
underlying factual findings using the preponderance of the evidence
standard contained in Tenn. R. App. P. 13(d) and should review the [trial]
court’s legal determinations de novo without any presumption of
correctness.
Id. at 524-25 (internal citations omitted).
Therefore, we shall review the trial court’s decision to modify the alimony
agreement to determine, where applicable, whether there is a factual basis for the
decision in the record, whether the court properly identified and applied the applicable
legal principles, and whether the decision is within the range of acceptable alternative
dispositions. Id. at 524.
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An award of alimony in futuro “may be increased, decreased, terminated,
extended, or otherwise modified, upon a showing of substantial and material change in
circumstances.” Tenn. Code Ann. § 36-5-121(f)(2)(A). A party seeking a modification of
alimony in futuro has two significant hurdles to overcome. First, the petitioner must
establish that there has been both a substantial and a material change in circumstances
since the entry of the original support decree. Bogan, 60 S.W.3d at 727-728 (citing Tenn.
Code Ann. § 36-5-101(a)(1)). A change in circumstances is “substantial” when it
significantly affects either the obligor’s ability to pay or the obligee’s need for support.
Bogan, 60 S.W.3d at 728. A change in circumstances is “material” when the change
occurred since the original alimony award, and the change was not within the
contemplation of the parties at the time of the divorce. Id.If the petitioner establishes that both a substantial and a material change in
circumstances exists, then the petitioner must overcome the second hurdle—proving that
he or she is entitled to a modification. For the petitioner to be entitled to a modification of
his or her alimony obligation, the petitioner must establish the modification is justified
based upon the same factors that are relevant to the initial award of alimony. Id. at 730.
Those factors are found in Tenn. Code Ann. § 36-5-121(i) and include, inter alia, the
relative earning capacity, financial resources, education, and separate assets of each of
the parties.
Here, the trial court found that Husband’s “loss of the Marital residence and his
injury in 2008” constituted a substantial and material change in circumstances because it
was unanticipated by the parties at the time of the divorce. However, the trial court made
no factual findings that would show that Husband’s injury in 2008 and the subsequent
“loss” of the marital home substantially affected his ability to fulfill his alimony
obligation. The court merely noted that Husband rents a home while Wife owns a home.
There appears to be no testimony as to the nature of Husband’s injury in 2008 and no
testimony showing the level of financial hardship that resulted. Nor is there testimony
explaining the circumstances surrounding the loss of Husband’s home, whether through
foreclosure or traditional sale.
The trial court acknowledged in its oral ruling that Husband made “intimations” in
his testimony about “a serious medical condition” he suffered in 2008, and this caused
him to lose his home. However, Husband gave no further explanation. In Harris v.
Harris, No. W2003-02112-COA-R3-CV, 2004 WL 2607541, at *4 (Tenn. Ct. App. Nov.
16, 2004) this court determined that the husband’s diagnosis of cancer did not constitute a
substantial change in circumstances because “the evidence did not indicate that the cancer
or the resulting surgery affected Husband’s monthly income. Indeed, the evidence
indicates that Husband has slightly more income now than he did. . . .”
We also find it significant that the trial court found that Husband’s income
increased from $120,000 per year in 2007, when the parties divorced, to $158,000 per
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year in 2015. Moreover, this fact was undisputed because Husband’s 2015 W-2
statement, which was admitted into evidence, confirmed it. To be specific, the 2015 W-2
established that Husband’s gross income for 2015 was $158,967.05. Conversely, and
significantly, it is undisputed that Wife’s annual income of $41,000 per year remained the
same.
Although the trial court found it “significant” that Wife financially supported the
couple’s adult daughter, adult son, and two grandchildren, the record reveals that she had
been supporting them prior to the parties’ divorce in 2007. Therefore, this circumstance
cannot constitute a change that occurred after the divorce.
The fact that Wife owns a home while Husband had to sell his house and now
rents a home fails, on its own, to support a finding that Husband no longer has the ability
to pay alimony pursuant to the 2007 decree. Instead, and as this court reasoned in a
factually similar case, “Husband’s assertions that he struggles to pay his bills while Wife
is able to maintain her standard of living shows only that Wife is better able to manage
her funds.” Allen v. Allen, No. W2007-02224-COA-R3-CV, 2008 WL 5169570, at *7
(Tenn. Ct. App. Dec. 10, 2008). Given the foregoing, we find no factual basis in the
record that would support a finding that this change in circumstances was substantial.
Moreover, even if we were to find that the change in circumstances was
substantial, the court’s factual findings regarding the factors found in Tenn. Code Ann. §
36-5-121(i) do not support the court’s decision to decrease Husband’s alimony
obligation. As to the relevant factors, the trial court made the following findings:
A) As far as relative earning capacity and resources neither one of them has
any additional income at this point. The last W-2 from the Husband
shows that he made $158,000 in 2015. The Wife made approximately
$41,000. That was also approximately what she made during two or
more of the years that the Parties were married.
B) There is no indication about the relative education and training. All we
have is that [Husband] was employed making $120,000 when the
Parties divorced and is making $158,000 now. The Wife has no
education beyond High School and has not sought any since the divorce.
C) The duration of the marriage is irrelevant in post-divorce proceedings.
D) As far as the age and mental condition of the Parties, there has been no
proof or indication regarding either of them being impaired by any
current health condition.
E) As far as the physical condition of each Party, there has been no proof
on that.
F) Neither Party has accumulated significant separate assets.
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G) As far as the distribution of Marital Property, it is unknown to the
Court. The Wife received some cash and the Husband received the
Marital residence, which he lost in the years following the Divorce.
H) There was no testimony about the standards of living except that the
Parties lived in a home and now the Wife lives in a home. Husband
currently rents a home.
I) As far as the tax consequences go, the Court is unable to determine the
effective rate.
The only significant change in these factors since the divorce is that Husband’s
income has increased. Wife’s income, however, has remained the same. We fail to see
how this finding supports a decrease in Husband’s alimony obligation.
Because there is no factual basis upon which to modify the 2007 alimony
provision, we reverse the trial court’s decision to decrease Husband’s alimony obligation
and remand with instructions to reinstate the alimony award as set forth in the final
divorce decree. Since the alimony arrearage judgment was based on the reduced alimony
obligation, we also reverse that award and remand with instructions for the trial court to
recalculate Husband’s arrearage based on the 2007 alimony agreement.
IV. HUSBAND’S ARREARAGE
Wife argues that the trial court erred by calculating Husband’s arrearage for 2015
based on the salary he made at the time of the divorce rather than the salary he made in
2015. We agree.
The trial court’s order awarding an arrearage judgment reads as follows:
Husband shall pay $2,500.00 per pay period for 2015, plus one half of the
$12,000.00 bonus he received in that year. He shall be credited for the
overpayments he made in 2016, at the rate of $760.00 per month. If this
results in an overpayment to Wife rather than a deficiency, then it shall be
extinguished. Any deficiency owed to Wife shall be paid.
In calculating this, there were four payments that were $500.00 short, plus
the one half of the bonus ($6,000.00) for a total of $8,000.00 in credit owed
for 2015. There were six months paid before the date of Trial, at an overage
of $760.00 per month. This results in an overpayment in 2016 by Husband
of $4,560.00. This results in a net arrearage of $3,440.00 owed by Husband
to Wife, which is hereby reduced to JUDGMENT.
Pursuant to the final divorce decree, Husband was to pay Wife half of his gross earnings
from each year. Based on Husband’s W-2 for 2015, his gross earnings were $158,967.05;
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however, the trial court calculated the alimony arrearage for 2015 based upon Husband’s
2007 income, which was $120,000. Therefore, on remand, the trial court should award an
arrearage judgment that is based on Husband’s gross earnings for 2015.
IN CONCLUSION
The judgment of the trial court is affirmed in part and reversed in part, and this
matter is remanded with costs of appeal assessed against Husband, Gerald Edward Baker.
________________________________
FRANK G. CLEMENT JR., P.J., M.S.
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