Joy Henley McKee v. Jeffrey Elston McKee ( 2010 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
April 13, 2010 Session
JOY HENLEY MCKEE v. JEFFREY ELSTON MCKEE
Appeal from the Chancery Court for Rutherford County
No. 06-1965DR Royce Taylor, Judge
No. M2009- 01502-COA-R3-CV - Filed August 17, 2010
In a divorce action, Husband appeals the trial court’s valuation of Wife’s dental practice, its
division of the marital assets, and its denial of alimony. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
A NDY D. B ENNETT, J., delivered the opinion of the Court, in which P ATRICIA J. C OTTRELL,
P.J., M.S., and F RANK G. C LEMENT, J R., J., joined.
Darrell L. Scarlett, Murfreesboro, Tennessee, for the appellant, Jeffrey Elston McKee.
James L. Weatherly, Jr., Nashville, Tennessee, for the appellee, Joy Henley McKee.
OPINION
F ACTUAL AND P ROCEDURAL B ACKGROUND
Jeffrey McKee (“Husband”) and Joy McKee (“Wife”) were married on December 18,
1982. Wife filed for divorce on December 27, 2006, citing irreconcilable differences and
inappropriate marital conduct.
The parties met in Memphis while Wife was completing her graduate program in
pediatric dentistry. They eventually moved to Murfreesboro so that Wife could open her
dental practice, which she did in August 1983. Upon their relocation, Husband worked for
Wife’s father for three years and then found employment in the banking industry. Wife made
significantly more money than Husband. The parties’ tax returns show that Wife averaged
a yearly income of approximately $524,280 from 2001 to 2006. During these same years,
Husband’s average yearly income was $81,362. The parties had children in 1987 and 1989,
and both parents continued working. Although Husband contributed much less financially
to the marriage than Wife, he insisted at trial that he made significant contributions as a
homemaker and caregiver to the parties’ children.
The trial was held on January 7, January 8, and March 9, 2009. On June 15, 2009, the
court entered its order granting Wife a divorce on the grounds of Husband’s inappropriate
marital conduct. The court concluded that Wife “proved by a preponderance of the evidence
that [Husband] offered indignities to her throughout the marriage in front of family, friends,
business associates and strangers.” The court noted that Husband “had a continuing open
relationship with another woman since the parties’ separation,” and while Wife admitted to
having a sexual affair of her own seventeen or eighteen years ago, her conduct was “remote
and not equal to the fault of the husband.”
Much of the focus at trial concerned the valuation of Wife’s one-third interest in the
dental practice of which she is a partner. The court noted that if Wife’s business interest was
sold, “the only assets which would be marketable would be the equipment and accounts
receivable.” With regard to the equipment, the trial court stated in its order, “Since neither
party offered proof of the market value of the used dental equipment, the court will use the
value of the wife’s expert as being closest to the market value.” As for the business itself,
Wife claimed her practice had a value of $97,220, while Husband insisted its value was
$460,000. Husband attempted to put a value on patient files because they had been valued
by Wife’s accountant in a previous sale to Wife’s partners. However, Husband’s valuation
expert admitted that the patient files had no value without a non-compete agreement. The
court sided with Wife and valued the practice at $97,220.
With regard to other marital assets, the court noted that the majority of the household
furnishings were antique pieces that Wife purchased with the “thousands of dollars annually”
that she received as gifts. The court determined that the antiques should be classified as
separate property. The court valued the other household furnishings according to Wife’s
estimates, concluding that Husband had relied on “an unexplained banking formula.” All
other assets were valued by agreement. The parties agreed to be bound by the appraisals
submitted on the real property, despite the fact that market conditions had changed
considerably since the appraisals.
Husband proposed a 50/50 division of assets, and Wife proposed an 80/20 division.
The court found Wife’s division to be most equitable, noting that an equal division of the
property was not equitable under the circumstances. The court pointed out Husband’s failure
to provide bank records during discovery, any record of expenditures as required by Tenn.
Code Ann. § 36-4-106(d)(1)(B), or any accounting for his earnings except for his 401(k).
The court noted that Husband moved from the marital residence in 2003 and provided no
support for the children’s private schooling or other necessities. Wife paid the mortgage on
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their Sewanee home where Husband stayed. Husband testified that he paid utilities, but the
court noted that Wife had records of payment and Husband had none. The court described
Husband’s contribution to the family:
[Husband] turned down the opportunity to stay home with the children when
they were firstborn and the burden was on [Wife] to care for the boys with a
nanny to assist and build her business. [Husband] provided little assistance
except to keep the children a few weekends per year when they were school
age when [Wife] had dental meetings and provide transportation to school and
sporting events before the children could drive. As noted previously, he left
the marital home while the children were teenagers. [Wife] built her business,
paid the vast majority of all expenses, provided most of the care for the
children and saved her money. [Husband] pursued his career, played, partied
and failed to account for his earnings.
As such, the court ordered that Wife receive all assets titled in her name, as well as
jointly titled real property. Husband received all assets titled in his name.1 Additionally,
Wife was ordered to transfer to Husband one-half or $399,906.00 from the T-Bank-
Investment account or other cash source upon the order becoming final. In total, Husband
was to receive assets valued at $750,122.75 (25%), and Wife was to receive assets valued at
$2,238,637.00 (75%).
The court also denied Husband’s request for alimony. The court noted that because
Husband did not suffer the relative economic disadvantage typical of homemakers, an award
of alimony was inappropriate. Instead, the court noted that Husband “pursued his career
unhindered by any marital obligations” and “did not subordinate his career for the benefit of
the marriage.”
S TANDARD OF R EVIEW
We review a trial court’s findings of fact de novo with a presumption of correctness
unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d). We review
questions of law de novo with no presumption of correctness. Nelson v. Wal-Mart Stores,
Inc., 8 S.W.3d 625, 628 (Tenn. 1999). Issues of statutory construction present questions of
1
The court made no mention of the parties’ debts. Three debt items are listed on the statement of
assets and liabilities that was attached to the trial court’s order. The Sewanee home has a listed value of
$975,000 and debt of $603,394. The other two debt items are “business interests” listed as “Joy McKee,
DDS, MS, PC” for $406,080 and “McKee, Curry, Stanley Pediatric Realty Partnership” for $494,804.
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law. Lipscomb v. Doe, 32 S.W.3d 840, 843-44 (Tenn. 2000); Jordan v. Baptist Three Rivers
Hosp., 984 S.W.2d 593, 599 (Tenn. 1999).
A NALYSIS
On appeal, Husband asserts that the trial court erred in the valuation of Wife’s dental
practice, in the division of the marital assets, and in denying him alimony.
Valuation of Wife’s Dental Practice
Husband asserts that the trial court erred in its valuation of Wife’s dental practice.
The valuation of a marital asset is a question of fact. Kinard v. Kinard, 986 S.W.2d 220, 231
(Tenn. Ct. App. 1998). Each party bears the burden of producing competent evidence
regarding the valuation of a marital asset. Kinard, 986 S.W.2d at 231; Wallace v. Wallace,
733 S.W.2d, 102, 107 (Tenn. Ct. App. 1987). If the evidence of value is conflicting, the trial
court has discretion to assign a value that is within the range of values supported by the
evidence. Kinard, 986 S.W.2d at 231. The trial court’s valuation is given great weight on
appeal. Powell v. Powell, 124 S.W.3d 100, 103 (Tenn. Ct. App. 2003).
Wife started her dental practice as a sole proprietorship in 1983. Wife added Dr.
Curry as a partner in her practice in 2000 and added Dr. Stanley in 2005. At the time of trial,
Wife owned a one-third interest in McKee, Curry and Stanley Dentistry Partnership. Wife
relied on Cain, Watters & Associates, P.L.L.C. in determining the price of the buy-ins during
these two transactions. Cain Watters is a consulting and accounting firm, specializing in
dental practices, that had worked with Wife’s practice for thirteen years at the time of trial.
Cain Watters assisted Wife with practice management, as well as planning for retirement and
other personal financial issues.
Two experts at trial testified with regard to the valuation of Wife’s dental practice;
Tom Price testified on behalf of Wife, and Mike Hallum testified on behalf of Husband. Mr.
Price valued the practice at $97,220, while Mr. Hallum valued it at $460,000. Both experts
valued the practice as of December 31, 2007. Approximately $30,000 of the discrepancy is
due to a difference in the valuation of dental equipment. Mr. Hallum acknowledged at trial
that he “would certainly be willing to acquiesce to [Mr. Price’s higher] number” regarding
the equipment. The more significant difference between the two values lies in the valuation
of goodwill in the form of patient files. Mr. Price disregarded the patient files for valuation
purposes while Mr. Hallum considered them as a factor.
Mr. Price testified about the methodology for valuation of a professional business in
a buy/sell setting like the one used in acquiring Drs. Curry and Stanley versus in a divorce.
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In a buy/sell transaction, Mr. Price stated that the value is based on tangible assets like cash,
accounts receivable, fixed assets, and prepaid expenses, as well as intangible assets in the
form of goodwill. The relevant distinction between goodwill for valuation purposes in a
buy/sell is in identifiable goodwill and unidentifiable goodwill. In a valuation for divorce
purposes, however, the distinction is between personal goodwill and business goodwill.
Under Tennessee law, personal goodwill is not considered a marital asset.2 See, e.g.,
Cunningham v. Cunningham, No. W1999-02054-COA-R3-CV, 2000 WL 33191364, at *3
(Tenn. Ct. App. Oct. 20, 2000); Smith v. Smith, 709 S.W.2d 588, 592 (Tenn. Ct. App. 1985)
(“[P]rofessional good will is not a marital asset which would be accounted for in making an
equitable distribution of the marital estate.”).
Mr. Price testified that Cain Watters had used the “capitalization of earnings” method
to value Wife’s dental practice for the purposes of the buy-sell. This method incorporates
both tangible and intangible assets. Cain Watters allocated a portion of the intangible value
to “patient records.” Mr. Price testified that Cain Watters informed him that it did not have
a formula for determining the value of patient records in 2005 when Dr. Stanley was added
to the practice. Mr. Price testified that in his opinion, no value should be attributed to patient
records in the context of a divorce proceeding because it equates to personal/professional
goodwill and only business/practice goodwill is admissible in a marital dissolution.
In reaching the conclusion that the patient records were personal goodwill rather than
business goodwill, Mr. Price relied on a checklist developed and used by Rod Burkert, a CPA
and business valuation expert, in business valuation courses that Mr. Price has attended.
According to Mr. Price’s valuation report, Mr. Burkert states that professional goodwill is
goodwill that is associated primarily with the individual practitioner while practice goodwill
is associated primarily with the practice as an institutional entity. Under the rubric of Mr.
Burkert’s checklist, Mr. Price stated that “the customer components are all factors of
personal goodwill.” Mr. Price offered the following explanation:
In the case of a dentistry practice the customers (patients) come to see a person
licensed to deliver a personal professional service. . . . [A] relationship with
the patient and dentist is based on the good reputation, trust and personal skill
of the professional. That relationship is what the buyer hopes to purchase from
the seller.
2
Mr. Price and Mr. Hallum, as well as the sources upon which they relied, variously refer to
“practice” or “business” goodwill versus “professional” or “personal” goodwill. Both experts agree that it
is appropriate to include practice/business goodwill in valuing a business for divorce purposes, but not
professional/personal goodwill. For purposes of this opinion, we use the terms interchangeably.
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Mr. Price testified that patient records are not capable of earning money “without a
professional providing the service.” Mr. Price further noted that the presence of a non-
compete or other restrictive covenant in a buy-sell is proof of the existence of personal
goodwill. That was the case with Wife’s practice:
The restrictive agreement that is part of the current partnership agreement
seeks to eliminate the possibility of the retiring or departing
partner/shareholder competing in any fashion whatsoever with the remaining
dentists further verifying the importance of the doctor and dentist relationship
whether it is referred to as patient records and files or goodwill.
While Mr. Price and Mr. Hallum agree that it is inappropriate to consider personal
goodwill in valuing a business for divorce purposes, they differ in their categorization of
patient files. Mr. Price believes patient files fall under the category of personal goodwill and
therefore should not be considered for valuation purposes. Mr. Hallum, on the other hand,
believes that patient files are a separate asset from goodwill. Mr. Hallum claimed that his
view was consistent with Cain Watters’s earlier valuation of the practice for buy/sell
purposes in that Cain Watters made separate allocations for personal goodwill and patient
files.
Mr. Hallum relied heavily on Cain Watters’s 2005 valuation of the dental practice,
testifying that without that transaction, “it could have been very difficult for me to say, well,
here’s my calculation of how much of the intangible value of this business is attaching to the
business versus attached to the goodwill.” Mr. Hallum testified that he considered the 2005
sale as part of his valuation assessment because valuation literature dictates that transactions
occurring within five years of the valuation be considered.
In the 2005 transaction, Dr. Stanley purchased a one-third interest in the practice for
$749,000. Of that amount, $333,334, or 45% of the total purchase price, was allocated to the
personal goodwill of Wife and Dr. Curry. Approximately 34% of the total purchase price
was allocated to patient files and records. Mr. Hallum testified at trial that he had “no idea”
how Cain Watters arrived at the value assigned to patient files. He states in his valuation
report that the amounts allocated to goodwill in the 2005 transaction “appear reasonable
based on the general makeup of the Practice given the number of employees, dentists,
reputation of the practice and the fact that some referrals are made to the Practice as opposed
to individual dentists.” Mr. Hallum did acknowledge that allocations of goodwill between
personal and business goodwill are “subject to argument and difficult to define.” At trial,
Mr. Hallum again reiterated that “[t]here’s definitely an art versus a science to valuation
theory in this area where you’re talking about allocations of goodwill.”
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Mr. Price, on the other hand, did not consider either the 2000 or 2005 transaction in
his valuation. Mr. Price noted that “[b]oth of these sales offer a reasonable basis for valuing
the partner and shareholder interest of [Wife] if personal goodwill is to be included in the
value,” as is the case in determining fair market value outside of a divorce proceeding. For
the purposes of a marital dissolution, however, the calculation of personal goodwill is not
appropriate. He therefore did not consider the two previous buy-ins.
On appeal, there is a presumption that the trial court’s valuation, a question of fact,
is correct. Tenn. R. App. P. 13(d). Because courts have consistently held that personal
goodwill cannot be a component in the valuation of a professional practice in an equitable
distribution of a marital estate, Mr. Price’s valuation report is reasonable and was properly
considered by the trial court. The value that the trial court placed on Wife’s dental practice
was within the range of the valuation evidence presented by the parties. See Kinard, 986
S.W.2d at 231.
Husband also focuses heavily on the fact that Cain Watters did not serve as Wife’s
valuation expert at trial. Given Cain Watters’s national reputation for work with dental
practices and its involvement in “every phase” of Wife’s practice for thirteen years, Husband
claims that its lack of participation in this trial is significant. As a result, Husband insists that
the missing witness rule should be applied to Cain Watters.
The missing witness rule provides that the failure of a party to call a witness gives rise
to a permissible inference. State v. Francis, 669 S.W.2d 85, 88 (Tenn. 1984). “[I]f a party
has it peculiarly within his power to produce witnesses whose testimony would elucidate the
transaction, the fact that he does not do it creates the presumption that the testimony, if
produced, would have been unfavorable.” Graves v. United States, 150 U.S. 118, 121
(1893). There are three prerequisites to application of the rule: (1) the witness had
knowledge of material facts; (2) a relationship exists between the witness and the party that
would naturally incline the witness to favor the party; (3) the missing witness was available
to the process of the court for trial. Delk v. State, 590 S.W.2d 435, 440 (Tenn. 1979). These
requirements are to be strictly construed. Francis, 669 S.W.2d at 89.
The mere fact that a party fails to produce a particular person who may have
some knowledge of the facts involved does not justify application of the
inference against him. However, when it can be said “with reasonable
assurance that it would have been natural for a party to have called the absent
witness but for some apprehension about his testimony,” an inference may be
drawn by the jury that the testimony would have been unfavorable.
Id. at 88-89 (quoting Burgess v. United States, 440 F.2d 226, 237 (D.C. Cir. 1970).
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As Wife’s dental practice consultant for thirteen years, it cannot be disputed that Cain
Watters had access to “knowledge of material facts” with regard to the valuation of Wife’s
practice. And there is nothing in the record to suggest that Cain Watters was unavailable for
process. However, it is unclear whether Cain Watters would be naturally inclined to favor
Wife simply by virtue of having worked with her in the past. As previously stated, the Delk
requirements for application of the missing witness rule are to be strictly construed.
Additionally, Husband had access to Cain Watters’s valuation figures for the 2000 and
2005 sales. Mr. Hallum included the figures from these transactions in his valuation report
and testified that they were instrumental in his own valuation of the practice for purposes of
this divorce proceeding. It is not clear what additional information Husband hoped to gain
from Cain Watters’s testimony. Even assuming an unfavorable inference under the missing
witness rule, Mr. Price’s valuation is reasonable, and the trial court used its discretion to
value the practice within the range of the evidence presented by the parties. The trial court’s
valuation of the business is not contrary to the preponderance of the evidence. We affirm the
trial court’s valuation.
Division of Marital Assets
Husband insists that the trial court abused its discretion in allocating 75% of the
marital assets to Wife. Husband claims that he is entitled to “no less than 50% of the net
assets.” Tenn. Code Ann. § 36-4-121 governs the distribution of marital property. After
classifying the property of a divorcing couple, the trial court is charged with equitably
dividing the marital property. “Dividing a marital estate is not a mechanical process but
rather is guided by considering the factors in Tenn. Code Ann. § 36-4-121(c).3 Trial judges
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Tenn. Code Ann. § 36-4-121(c) instructs the court to consider all relevant factors in making an
equitable division of marital property, including the following:
(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 power of the other party;
(4) The relative ability of each party for future acquisitions of capital assets and income;
(5) The contribution of each party to the acquisition, preservation, appreciation, depreciation
or dissipation of the marital or separate property, including the contribution of a party to the
(continued...)
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have wide latitude in fashioning an equitable division of marital property, and appellate
courts accord great weight to a trial judge’s division of marital property.” Kinard, 986
S.W.2d at 230-31 (citations omitted). Thus, “we are disinclined to disturb the trial court’s
decision unless the distribution lacks proper evidentiary support or results from some error
of law or misapplication of statutory requirements and procedures.” Herrera v. Herrera, 944
S.W.2d 379, 389 (Tenn. Ct. App. 1996) (citing Wade v. Wade, 897 S.W.2d 702, 715 (Tenn.
Ct. App. 1994)). More specifically, “we will 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.” Kinard, 986 S.W.2d at 231.
Husband first criticizes the trial court’s failure to make written findings with regard
to the relevant statutory factors, claiming that the factors were “not examined by the court.”
However, while the court is required to consider all relevant factors under Tenn. Code Ann.
§ 36-4-121(c), it is not required to make written findings of fact. Woods v. Woods, No.
M2006-01000-COA-R3-CV, 2007 WL 2198110, at *1-2 (Tenn. Ct. App. July 26, 2007)
(“[W]hile it is helpful to a reviewing court if the trial court discusses each of the applicable
statutory factors and how those factors impacted its ruling, we will not alter the trial court’s
decision simply because the trial court failed to do so.”).
Husband next claims that the court’s division of the marital assets was not equitable.
“A division is not rendered inequitable simply because it is not precisely equal, or because
each party did not receive a share of every piece of marital property.” Kinard, 986 S.W.2d
at 230 (citations omitted). Rather, the division of a marital estate is guided by consideration
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(...continued)
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 separate property of each party;
(7) The estate of each party at the time of the marriage;
(8) The economic circumstances of each party at the time the division of property is to
become effective;
(9) The tax consequences to each party, costs associated with the reasonably foreseeable sale
of the asset, and other reasonably foreseeable expenses associated with the asset;
(10) The amount of social security benefits available to each spouse; and
(11) Such other factors as are necessary to consider the equities between the parties.
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of the factors of Tenn. Code Ann. § 36-4-121(c). We will outline the facts that are relevant
to the Tenn. Code Ann. § 36-4-121(c) analysis below.
The parties’ marriage lasted twenty-six years. At the time of trial, Wife was fifty-
three and Husband was fifty-one. Both parties were in good physical and mental health. At
the time of trial, Wife had just completed physical therapy for an ongoing hip affliction
related to her scoliosis which may limit her ability to work full-time in the future. Wife
testified that the pain associated with her hip problem required her to spend less time on her
feet and that the condition was worsening.
Both parties are well-educated. Wife completed dental school and has a masters
degree in pediatric dentistry. Husband has a bachelor’s degree with a concentration in
business administration and had been employed in the banking industry for more than twenty
years. According to the parties’ tax returns from 2001 to 2006, Wife earned an average
yearly income of approximately $524,280, while Husband earned an average yearly income
of approximately $81,362.
In 1983, shortly after they were married and following Wife’s graduation from dental
school, the parties moved to Murfreesboro so that she could open her dental practice. All of
Wife’s education was funded exclusively by her parents. Wife had accumulated $84,000 at
the time of the parties’ marriage by saving money that had been given to her by her parents
and grandparents. Wife used money from her savings to buy out the lease from the previous
owners of the property which would house her dental practice, as well as to complete
renovations on the building before the parties moved to Murfreesboro. Wife estimates that
she spent between $17,000 and $20,000 on these costs. Wife also testified that she paid off
Husband’s credit card bills before they were married and before they shared a joint checking
account. Husband testified that this amount was only $250 to $300.
In order to begin her practice, Husband and Wife jointly obtained a line of credit in
the amount of $50,000, which was used to purchase equipment. Husband assisted in
establishing the initial loan, as well as preparing financial statements for additional loans as
the business grew. Wife noted that at the time, as a married female, she was unable to
borrow money or buy property without her husband co-signing. Wife agreed at trial that
Husband was “an integral part” of obtaining the loans which allowed her to expand the
business and make the type of money it eventually made. In terms of Husband’s contribution
to the preservation of Wife’s practice, the parties agreed that he occasionally trimmed the
hedges and once put down plastic in the basement to treat a moisture problem. Wife testified
that Husband made no direct contribution to improving the property.
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There was significant testimony at trial regarding which expenses each party paid
throughout the marriage. For the first two or three years of their marriage, the parties had a
joint checking account. Thereafter, they used separate checking accounts with Husband’s
earnings deposited into his account and Wife’s earnings deposited into her account. Wife
testified that she used earnings from her practice to pay off “a big chunk” of the line of credit
in January 1984 and used her personal savings to pay bills and make payroll. Wife stated that
she never used the parties’ joint account to pay the expenses of her practice. Wife testified
that early on, the income that both parties earned was used to pay living expenses, including
the mortgage on their home.
Husband’s first job upon the parties’ relocation to Murfreesboro was with Henley
Supply, Wife’s father’s business. Husband acknowledged that working for Henley Supply
worked out well for him in that when he returned to banking, he had a book of customers that
he had established through the selling of building supplies. After two or three years of
working for Henley Supply, Husband began working for a bank. It was at that point that
Husband opened his own checking account and began depositing earnings from his job into
that account. Wife continued to deposit her earnings into her own account.
Wife contributed $16,000 or $17,000 to the purchase of the parties’ marital home from
her separate pre-marital savings in 1983. Wife also paid the mortgage and insurance on the
home from her earnings, as well as $160,000 in improvements to the home, including a 1,000
square foot addition, a garden shed, landscaping, an irrigation system, a remodel of three
bathrooms, and furnishings. Wife claims that Husband made no financial contribution to the
marital home other than being a co-signer on the loan.
The parties’ vacation home in Sewanee, Tennessee was also purchased solely by Wife
for $850,000 in 2002. Wife paid $125,000 for the down payment and closing costs on the
home from her earnings. Husband co-signed on the loan. Wife was also responsible for
making the mortgage and insurance payments on the Sewanee residence, which totaled
$375,000 during the entirety of the marriage. Husband moved into the Sewanee residence
for a time after the parties’ separation in 2003 or 2004. When asked about his contribution
to the Sewanee home, Husband testified that he had paid utility bills on the property,
performed lawn maintenance, trimmed trees, and changed light bulbs.
With respect to the relative ability of each party for future acquisitions of income,
Wife acknowledged that her earning capacity substantially exceeds that of Husband and that
Husband was not going to earn a similar income to hers. Wife’s 2007 income tax return
reflected gross income of $538,228. The most recent information regarding Husband’s
income came from his 2006 tax return, which reflected income of $109,036. At trial,
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Husband testified that he made close to $100,000 a year in income during the five and a half
years since the parties had separated in 2003.
Husband testified about the tenuous state of the banking industry given the economic
climate. He stated that he was concerned about the security of his job, noting that he was
“probably the highest paid lender in [his] office.” He stated that while he earned the bank
money last year, he was still “almost $800,000 off mark what I should have produced.”
Wife also expressed concerns about the economy, noting that she had experienced a
decrease in business. She stated that fewer patients were coming in and she was having more
difficulty collecting. Wife also testified that her practice was facing increased competition
in Murfreesboro; two pediatric dentists had opened in the last year and two more were
scheduled to open in the next two months. At the time of trial, Wife and her partners were
planning to expand their practice to Tullahoma.
Much of the testimony at trial focused on the parties’ contribution as parents and
homemakers. Wife claims that she served as the primary wage-earner, homemaker, and
caregiver to the parties’ two children. In 1987, the parties’ first son, Willis, was born. The
parties hired a nanny to care for him four days a week and to provide domestic help. Wife
testified that she was off work and home with Willis the other three days of the week. Wife
paid the nanny out of her own personal account. Wife claimed that she was solely
responsible for performing all of the familial duties when the nanny was not available,
including cooking, cleaning, laundry, and gardening. According to Wife, Husband’s only
contributions were occasionally mowing the lawn, cleaning the gutters, and picking the
children up from school. This routine continued when the parties’ second son, Robert, was
born in 1989.
Wife claims that Husband had very little involvement in raising the children once they
became older. Rather than helping the children with their homework after school, Wife
claimed that Husband would spend hours running or biking around the neighborhood after
work, then drink beer and listen to music with friends in Nashville an average of three to four
nights per week. Robert also testified that Husband went out that frequently. However,
Husband disputed the frequency of these activities, stating, “I just don’t see how I could have
maintained a job and been out three and four nights a week.” Neither son thought their father
had contributed much in terms of cooking and cleaning at home. Wife claims that Husband’s
involvement with the children was limited to taking them to a few extracurricular activities
and attending their sporting events.
The parties’ sons testified at trial and discussed their father’s involvement in their
lives. They discussed attending sporting events, hunting, and playing together. The parties’
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oldest child, Willis, testified, “He’s been there. He’s been active.” Robert also
acknowledged that he and his father have a good relationship and that he had profited as an
individual from that relationship. Willis testified that his father was “very caring” and “very
loving” toward him and Robert. Willis acknowledged having challenged his father about his
drinking on one occasion, telling him that he thought it was inappropriate. Husband testified
about the many hunting trips he took with his sons and time spent together attending concerts
and sporting events. Wife acknowledged Husband’s participation in the lives of their
children, agreeing that he had taken them to sporting events, attended practices and games,
and taken them hunting. Wife conceded that Husband had been involved with their children
and their care during the course of the marriage.
Wife claims that she exclusively paid for the children’s preschool, aftercare, private
school tuition, books, clothing, cell phones, gas, uniforms, vehicles, activity fees, insurance,
college tuition, and all miscellaneous expenses. Husband asserted that he also supported the
children financially, such as the time Willis ran out of money during a trip to New Orleans
and Husband deposited $500 into his account. Willis testified that Husband supported him
in the form of “[c]ash, spending money, enough to get breakfast in the morning on the way
to school and grab lunch.” He estimated that amounted to approximately $50 per week.
Husband also provided health insurance for the family during the parties’ marriage.
The trial court seemed to place some weight on Husband’s alleged failure to provide
bank records and expenditures. The trial court stated that Husband “failed to provide any
accounting for his earnings except for his 401(k).” The court further noted that Husband
“acknowledged that he failed to provide bank records during discovery and he further failed
to provide any records of expenditures,” as required by Tenn. Code Ann. § 36-4-
106(d)(1)(B), which states that “[e]ach party shall maintain records of all expenditures,
copies of which shall be available to the other party upon request.” Husband asserts that no
such request was ever made. Indeed, there is no such request in the record.
Husband claims that the trial court considered fault in making its decision, in violation
of Tenn. Code Ann. § 36-4-121(a)(1), which requires that the court equitably divide the
marital property without regard to fault. There is no evidence that the trial court considered
the fault of Husband in dividing the marital assets. The court discusses Husband’s infidelity
and anger issues but not in the context of the division of marital assets. Rather, the court
offered the following reasons for its division of the marital property: Husband provided no
support for the children’s private schooling or other necessities, Wife paid the mortgage on
the Sewanee home in which Husband resided, Husband turned down the opportunity to stay
home with the children when they were first born and Wife assumed the role of caretaker,
and Husband did not provide any record of his expenditures as required by statute. The court
summarized: “[Wife] built her business, paid the vast majority of all expenses, provided most
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of the care for the children and saved her money. [Husband] pursued his career, played,
partied and failed to account for his earnings. Under those circumstances, an equal division
of the property is not equitable.”
We concur with the trial court. An equal division of marital property is appropriate
when an evaluation of the factors in Tenn. Code Ann. § 36-4-121(c) show that the parties are
approximately equally situated. In this instance, it is difficult to imagine a marriage where
the statutory factors weighed more heavily on one side. Wife was both the primary wage
earner and the primary caregiver. She paid the mortgages and insurance on both homes,
tuition for private schools, and other major expenses. Husband maintains that he gave the
children some spending money, provided health insurance for the family, and took the
children biking and hunting. These are laudable actions but quite minor in the context of a
26-year marriage.
We affirm the trial court’s division of marital assets.
Alimony
A trial court has broad discretion to determine the need for spousal support, as well
as the appropriate nature, amount, and duration of that support. Tenn. Code Ann. § 36-5-
121; Bratton v. Bratton, 136 S.W.3d 595, 605 (Tenn. 2004). As such, an award of spousal
support will not be disturbed on appeal absent an abuse of the trial court’s discretion.
Broadbent v. Broadbent, 211 S.W.3d 216, 220 (Tenn. 2006). “Appellate courts are generally
disinclined to second-guess a trial judge’s spousal support decision unless it is not supported
by the evidence or is contrary to the public policies reflected in the applicable statutes.”
Kinard, 986 S.W.2d at 234.
Decisions regarding the nature and amount of spousal support hinge upon the unique
facts of each case and require careful consideration of the factors found at Tenn. Code Ann.
§ 36-5-121(i).4 Oakes v. Oakes, 235 S.W.3d 152, 160 (Tenn. Ct. App. 2007). The single
4
Tenn. Code Ann. § 36-5-121(i) instructs the court to consider all relevant factors in determining
whether spousal support is appropriate and in determining the nature, amount, length of term, and manner
of payment, including the following:
(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
(continued...)
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most important consideration for the court in awarding alimony is the need of the
disadvantaged spouse seeking support, followed by the ability of the disadvantaged spouse
to pay support. Id.The trial court denied Husband’s request for alimony. The court’s order stated the
following:
[Husband] also requests alimony on the basis that he is economically
disadvantaged because plaintiff earns more money. That is not what is meant
by economically disadvantaged. The legislature sets forth the policy basis for
alimony in T.C.A. § 36-5-121(c)(1). . . .
In essence, a homemaker who sacrifices career opportunities for the
marriage suffers a relative economic disadvantage. [Husband] suffered no
relative economic disadvantages. Both [Husband] and [Wife] completed their
4
(...continued)
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.
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education and began professional careers at the time of the marriage.
[Husband] pursued his career unhindered by any marital obligations. He did
not subordinate his career for the benefit of the marriage. Since he suffered
no relative economic disadvantages, alimony is inappropriate.
Husband asserts that the trial court erred “in its determination that before one could receive
alimony one must have foregone working during the course of the marriage.” Husband
misstates the trial court’s reasoning. The court only makes the point that Husband did not
suffer “economic detriment” of the kind described in Tenn. Code Ann. § 36-5-121(c)(1) in
that he did not subordinate his career in order to focus on “nurturing the personal side of the
marriage” or to build “the economic strength of the family unit.” Husband’s choosing of a
career that provides substantial income, but not as substantial as that of Wife, is not a basis
for finding an economic disadvantage.
Husband asks this court to award alimony in futuro of at least $10,000 per month.
Tennessee law provides four different types of alimony that may be appropriate in
combination or alone: rehabilitative alimony, alimony in futuro, transitional alimony, or
alimony in solido. Tenn. Code Ann. § 36-5-121(d)(1). There is a statutory bias in favor of
temporary, rehabilitative spousal support. Tenn. Code Ann. § 36-5-101(d)(2); Kinard, 986
S.W.2d at 234. Rehabilitative alimony is intended to assist the economically disadvantaged
spouse “to achieve, with reasonable effort, 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.” Tenn. Code Ann. § 36-5-
121(d)(2). Rehabilitative alimony is intended to allow “the disadvantaged spouse to acquire
additional job skills, education, or training that will enable him or her to be more self-
sufficient.” Kinard, 986 S.W.2d at 234. Alimony in futuro, on the other hand, is awarded
when there is relative economic disadvantage and rehabilitation is not feasible. Tenn. Code
Ann. § 36-5-121(f)(1); Bowie v. Bowie, 101 S.W.3d 420, 424 (Tenn. Ct. App. 2002).
Husband asserts that the Tenn. Code Ann. § 36-5-121(i) factors support an award of
alimony. Husband notes that Wife earns a great deal more than Husband, and Wife
acknowledged at trial that Husband would not ever make as much as she. Husband argues
that the trial court’s 75/25 division of the marital assets should be particularly persuasive in
the alimony determination. Husband also asserts that the parties’ standard of living during
the marriage points strongly to an award of alimony. Husband claims that it would be
impossible for him to enjoy the lifestyle he previously enjoyed without an award of alimony
and points out that his requested award of $10,000 per month is less than the amount charged
by Wife each month. Husband also claims that he made significant contributions to the
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marriage as a parent. Finally, Husband claims that while the trial court found him to be more
at fault, that factor alone does not justify a denial of alimony.
Wife, on the other hand, argues that Husband does not have a need for alimony
because he is in good mental and physical health and earned $109,036 in 2006 as the vice
president of lending at First Tennessee. Wife claims that during the parties’ five year
separation, Husband maintained the same standard of living he enjoyed during the marriage.
Additionally, Wife claims that Husband provided “no financial support” to Wife for their
children from 2003 until they turned eighteen. Husband was awarded assets valued at
$750,122.75 by the trial court. In terms of other financial resources, Husband acknowledged
that his mother has a $3,000,000 estate, of which he is a one-third beneficiary. Further,
Husband admitted that he purchased a home in 2007 through a trustee, in violation of the
statutory restraining order, that he intended to title in his name at the completion of the
divorce because he “didn’t want [Wife] to get at it.”
Wife also points to the income and expense statement that Husband submitted to the
court in asserting that he could not meet his existing monthly obligations based on his salary
alone. In that statement, Husband estimated that his “necessary and anticipated” monthly
expenses totaled $13,023.90. At trial, Husband stated that he was no longer incurring a
number of those expenses, including cable and internet ($127), automobile payments ($850),
clothing replacement for himself ($300), clothing replacement for his children ($108),
furniture payments ($2,083), and debt reduction ($3,000). Deducting those expenses,
Husband’s estimated monthly expenses total $6,555.90. Wife points to a number of other
questionable expenses on Husband’s monthly estimate, including $583.29 for transportation
to and from work, $1,500 for vacations, and $325 for work lunches, in addition to $800 for
groceries.
Wife focuses heavily on Husband’s fault in the marriage. Fault is an appropriate
consideration in the determination of alimony. Gilliam v. Gilliam, 776 S.W.2d 81, 86 (Tenn.
Ct. App. 1989). There was extensive testimony at trial about each party’s adultery and about
Husband’s alleged temper. Wife accused Husband of emotional and physical abuse, calling
her names and threatening her safety. The parties gave differing accounts of these incidents.
Wife stated the following when asked about Husband’s behavior when he came home from
a night of drinking:
He had slurred speech and he would just be loud and demanding, and the boys
and I learned to just hide from him. When we heard the car door close or
whatever, we would go to our rooms and turn the lights off and act like we had
been asleep for a long time and hope he would just turn the TV on go out to
the red room and stay out there and not bother us.
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Wife testified that this occurred three to four times per week, which was substantiated by the
parties’ son.
Wife further stated, “I had to be careful not to leave any tools out, especially like
screwdrivers or hammers or knives or whatever, because he would grab it up and threaten
you with it, you know, (demonstrating) just right in your face with something.” Wife
testified that she had been threatened with a knife twice: “[H]e was standing in front of the
stove and just held [the knife] in front of my face and said ‘let’s just see how sharp this thing
is’ or something to threaten.” Husband, however, testified that he has “a bad habit” of
pointing his finger, and he happened to be doing that with the knife in his hand while
chopping something in the kitchen.
Wife testified that Husband had hit her with his open hand and had thrown a pot at
her. Husband denied ever having hit Wife. He also denied having thrown a pot although the
parties’ son Willis also claims to have witnessed that particular incident. Wife did admit to
having hit Husband. The parties’ other son, Robert, testified about an incident he witnessed:
“My mother threw a glass of wine in my father’s face after an argument had ensued, and my
father pushed my mother against the wall and screamed at her, in her face, and then I left the
room.” Robert stated that he was concerned about his mother’s welfare.
Wife testified that Husband’s temper often manifested itself in public:
[T]here were times when he embarrassed me in front of both my family and
my colleagues just because he would lose his temper and pick a fight in
restaurants. I remember a specific example when we were with a group of
people at the Polynesian restaurant in Smyrna, and he and Steve [a friend of
the parties’] almost got in a fistfight, to the point where it was, like, meet me
out on the street and we will settle this.
Husband, on the other hand, testified that he told Steve that he was not going outside with
him, that he was not at fault for the argument, and that the two are good friends. Wife
recalled another occasion on which Husband was publicly abusive:
I remember an earlier time when my mom and dad had rented a big cabin up in
Gatlinburg for everybody. And in the restaurant [Husband] was verbally and
physically abusive, because he was hitting me under the table, and that night he was
mean and abusive and called me names.
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The trial court found that Wife “proved by a preponderance of the evidence that [Husband]
offered indignities to her throughout the marriage in front of family, friends, business
associates and strangers.”
As for infidelity, Wife admitted to having a “one-night stand in Memphis” in 1991.
Husband was also unfaithful during the marriage. Although Husband admitted only that he
and his girlfriend became romantically linked after the parties’ separation. Husband
acknowledged that the two had gone on several vacations together, including trips to Florida,
Auburn, North Carolina, University of Tennessee football games, and New Mexico. The trial
court found Husband’s conduct more reprehensible: “[Husband] further had a continuing
open relationship with another woman since the parties’ separation. While [Wife] admitted
to a one-night sexual affair at a convention 17 or 18 years ago, the conduct was remote and
not equal to the fault of [Husband].”
Wife acknowledged that she “withdrew physically, emotionally, mentally” and that
she had something to do with the breakup of the marriage. But she testified that she
withdrew “subconsciously as a protective mechanism” to protect herself from physical and
emotional abuse. Husband admitted to being “50 percent of the fault” in the marriage.
Based on our review of the entire record, we cannot conclude that the trial court
abused its discretion in failing to award Husband alimony. The determination hinged, in part,
on the trial court’s assessment of the relative credibility of the parties. Husband contributed
comparatively little to the marital estate financially, and although he did make contributions
as a parent, he did not suffer the “economic detriment” described under Tenn. Code Ann. §
36-5-121(c) by subordinating his career in order to make contributions as a homemaker or
parent. Husband’s actions also played a significant role in the demise of the marriage.
Under these circumstances, we affirm the trial court’s denial of alimony to Husband.
C ONCLUSION
The decision of the trial court is affirmed. Costs of appeal are assessed against the
appellant, for which execution may issue if necessary.
_________________________________
ANDY D. BENNETT, JUDGE
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