Mary Rachel Cayson v. Patrick Cayson ( 2024 )

10/24/2024
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
April 9, 2024 Session
MARY RACHEL CAYSON v. PATRICK CAYSON
Appeal from the Chancery Court for Tipton County
No. 35605 Kasey Culbreath, Judge
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No. W2023-00943-COA-R3-CV
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In this divorce, the husband claims the trial court erred in its classification of certain
separate property and valuation of certain marital property. The trial court found that the
equity held in the marital home attributable to the sale of property owned by the wife prior
to the marriage had been transmuted into marital property, but then treated that property as
separate despite its initial finding due to what it believed the wife’s intent would have been
under an alternative set of circumstances. The husband argues this was improper. The trial
court also valued certain marital property, including the home and Wife’s 401(k) retirement
account, as of several years prior to the divorce proceedings. The trial court reasoned that
the divorce proceedings had been delayed by the husband’s criminal proceedings and
subsequent incarceration arising from his theft of funds from the wife during the marriage.
Husband filed this appeal. We reverse in part, vacate in part, and remand for further
proceedings.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed
in Part, Vacated in Part, and Remanded
CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which ANDY D. BENNETT,
J., and J. STEVEN STAFFORD, P.J., W.S., joined.
Jeff Mueller, Trenton, Tennessee, for the appellant, Patrick Cayson.
Lucie K. Brackin and S. Suzanne Brown, Memphis, Tennessee, for the appellee, Mary
Rachel Cayson.
OPINION
I. FACTS & PROCEDURAL HISTORY
Mary Rachel Cayson (“Wife”) and Patrick Cayson (“Husband”) were married on
May 30, 2015. The couple separated in November 2019 and a final decree of divorce was
entered on May 30, 2023. At the time of the divorce proceedings, Wife was employed as
a registered nurse and Husband was employed as a project manager for a concrete
contractor. One child was born of the marriage in 2017 but tragically passed away two
days after birth. It appears no other children were born to either party at the time of the
divorce.
Wife’s grandfather gave her certain shares of stock which the parties agree was her
separate property. Sometime in 2017, Husband began selling shares of the stock without
Wife’s knowledge. Husband also took out credit cards with Wife listed as an authorized
signer without her knowledge and accrued a large amount of debt. While the record is
unclear as to when, at some point in 2019, Wife began receiving letters from the IRS. After
she questioned Husband, he stated that he would contact the couple’s CPA to resolve the
issue. When more letters arrived, Wife contacted the CPA who indicated that he had not
heard from Husband. Wife then had a finance manager at Raymond James review her
accounts. The manager informed Wife that stock had been sold. She then confronted
Husband about the theft. The date on which this occurred is not clear from the record, but
it appears that the parties separated, and Husband was no longer living in the marital
residence after Halloween of 2019. Wife filed for divorce on November 14, 2019, and
criminal charges were also filed against Husband. On May 13, 2022, Husband pled guilty
to theft of Wife’s separate property in the amount of $394,659.28. At the sentencing
hearing, Husband was ordered to pay Wife $344,659.28 in restitution and was sentenced
to 8 years in prison.1 Husband was to serve six months of incarceration and the remaining
seven and one-half years on supervised probation. Husband was incarcerated from July
2022 to January 2023, while the divorce proceeding was pending. The parties’ final
divorce hearing took place on March 31, 2023.
There are two assets concerned in this appeal: the marital home and Wife’s 401(k)
retirement account. The couple’s first home was located in Ripley, Tennessee, and was
purchased by Wife’s grandfather prior to the marriage. The deed held only the names of
Wife and her grandfather as “tenants in common with rights of survivorship[.]” Wife’s
grandfather passed away prior to the marriage and upon his death Wife became the sole
owner of the property. Husband testified that he lived in the home prior to the marriage,
and Wife moved in after. The couple lived in the home together from 2015 until January
2018, when they purchased a home located at 54 Coffeetree Cove, Atoka, Tennessee, for
$282,000. The Ripley home was sold for $175,729.04, and the proceeds were used toward
the purchase, with the remainder being financed. They lived in the Atoka home together
1
On the date of the sentencing hearing, Husband’s father delivered a check to Wife in the amount
of $50,000 as payment toward the restitution. Husband’s father had previously paid $50,000 to pay off the
credit card debt Husband incurred in the parties’ names.
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until their separation in late 2019. Husband attempted to enter into evidence an appraisal
of the Atoka home performed just before the divorce proceedings began but the appraiser
did not appear in court to establish the foundation of the document. After objection by
Wife’s counsel, the trial court refused its admission into evidence. However, the trial court
did hear testimony regarding the value of the home and the contents of the appraisal from
both Husband and Wife. Testimony from Husband indicated that the appraisal had valued
the home at approximately $425,000. Husband and Wife each attributed the increase in
value to the market conditions in Atoka.
Additionally, Wife began contributing to a 401(k) retirement account on October
30, 2015, shortly after the parties married. The value of the account at the time of the
separation was $32,348.38, and the value at the time of the divorce proceedings was
$62,797.84.2 The only other marital assets discussed at the trial were items of personal
property which the parties agreed to divide between themselves. The court approved that
division. Additionally, the trial court determined that Husband’s interest in certain real
property owned by him and his father was separate property. In the final decree of divorce,
the trial court granted Wife an absolute divorce on grounds of inappropriate marital
conduct. The trial court ultimately determined that the $175,729.043 contributed to the
purchase price of the Atoka home was marital property but treated it as separate property
because it derived from the sale of the Ripley home gifted to Wife by her grandfather. The
trial court valued the Atoka home at its purchase price of $282,000 rather than at a market
price at the time of the proceedings. It valued Wife’s 401(k) retirement account at
$32,348.38, its value at the time of separation, rather than the value held at the time of the
divorce proceedings. Husband then filed this appeal.
II. Issue Presented
Husband presented one issue on appeal which we have reframed as two separate
issues:
1. Whether the trial court erred when it categorized the $175,729.04 of equity
held in the Atoka home attributable to the proceeds from the sale of the
Ripley home as separate property of Wife despite holding that it had
transmuted into marital property.
2. Whether the trial court erred when it assessed the value of the marital home
at its 2018 purchase price and Wife’s 401(k) retirement account at the time
of separation rather than at the time of the divorce proceedings.
2
The court found the value of the 401(k) retirement account to be $62,797.38 at the time of the
divorce rather than that shown by the proof in the record, which is $62,797.84.
3
The court found the value of Wife’s contribution to the purchase price to be $175,729 rather than
$175,729.04 as shown by the proof.
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In addition to answering Husband’s issues, Wife raised two separate issues on appeal,
which we have slightly restated:
1. Whether Husband waived his argument on appeal by failing to include a table
of the disputed assets pursuant to Rule 7 of the Tennessee Court of Appeals.
2. Whether Husband’s appeal was filed solely for delay so as to justify an award
of attorney’s fees to Wife in this appeal.
For the following reasons, we reverse in part, vacate in part, and remand for further
proceedings.
III. Discussion
Here, the issues pertain to the classification and valuation of the Atoka home and
the valuation of Wife’s 401(k) retirement account. The classification of property as marital
or separate and the valuation of marital property are questions of fact. Hill v. Hill, 682
S.W.3d 184, 196 (Tenn. Ct. App. 2023) (citing Kinard v. Kinard, 986 S.W. 2d 220, 231
(Tenn. Ct. App. 1998); Snodgrass v. Snodgrass, 295 S.W.3d 240, 245 (Tenn. 2009)). Thus,
these findings are reviewed de novo with a presumption of correctness and those findings
will be upheld unless there is evidence which preponderates to the contrary pursuant to
Tennessee Rule of Appellate Procedure 13(d). Keyt v. Keyt, 244 S.W.3d 321, 327 (Tenn.
2007). We have previously stated when reviewing an equitable distribution of property
that “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). While a trial court’s findings of fact are granted deference, a “trial court’s
conclusions of law, however, are accorded no presumption of correctness.” Keyt, 244
S.W.3d at 327 (citing Langschmidt, 81 S.W.3d at 744-45).
A. Whether the trial court erred when it categorized the $175,729.04 of equity
held in the Atoka home attributable to the proceeds from the sale of the
Ripley home as separate property of Wife despite holding that it had
transmuted into marital property.
Neither party challenged the trial court’s initial finding that the equity in the Atoka
home had transmuted into marital property. However, in order to fully analyze the court’s
ruling on the division of property, we first briefly examine the classification of property
and concept of transmutation.
In Tennessee, an equitable property division begins with the “identification of all of
the parties’ property interests.” Owens v. Owens, 241 S.W.3d 478, 485 (Tenn. Ct. App.
2007). Once property is identified, “trial courts must first classify the parties’ property as
either separate or marital before equitably dividing the marital estate.” Wade v. Wade, 897
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S.W.2d 702, 713 (Tenn. Ct. App. 1994) (citing Batson v. Batson, 769 S.W.2d 849, 856
(Tenn. Ct. App. 1988)). Marital and separate property are each defined in Tennessee Code
Annotated section 36-4-121. “Marital property” is defined in relevant part as:
all real and personal property, both tangible and intangible, acquired by either
or both spouses during the course of the marriage up to the date of the final
divorce hearing and owned by either or both spouses as of the date of filing
of a complaint for divorce, except in the case of fraudulent conveyance in
anticipation of filing, and including any property to which a right was
acquired up to the date of the final divorce hearing, and valued as of a date
as near as reasonably possible to the final divorce hearing date. . . .
Tenn. Code Ann. § 36-4-121(b)(1)(A).4 “Separate property” is defined as:
(A) All real and personal property owned by a spouse before marriage,
including, but not limited to, assets held in individual retirement accounts
(IRAs) as that term is defined in the Internal Revenue Code of 1986 (26
U.S.C.), as amended;
(B) Property acquired in exchange for property acquired before the marriage;
(C) Income from and appreciation of property owned by a spouse before
marriage except when characterized as marital property under subdivision
(b)(1);
(D) Property acquired by a spouse at any time by gift, bequest, devise or
descent;
(E) Pain and suffering awards, victim of crime compensation awards, future
medical expenses, and future lost wages; and
(F) Property acquired by a spouse after an order of legal separation where the
court has made a final disposition of property.
Tenn. Code Ann. § 36-4-121(b)(2) (footnote omitted).
However, “separate property may be deemed marital by operation of law under
theories of commingling or transmutation.” Snodgrass, 295 S.W.3d at 247 (citing
Langschmidt, 81 S.W.3d at 747). Transmutation of separate property into marital property
“‘occurs when separate property is treated in such a way as to give evidence of an intention
that it become marital property . . . .’” Id. at 256 (quoting Langschmidt, 81 S.W.3d at 747).
Whether separate property has transmuted into marital property is a question of fact. Lewis
v. Lewis, No. W2019-00542-COA-R3-CV, 2020 WL 4668091, at *2 (Tenn. Ct. App. Aug.
11, 2020) (citing Luplow v. Luplow, 450 S.W.3d 105, 114 (Tenn. Ct. App. 2014); Fox v.
Fox, No. M2004-01616-COA-R3-CV, 2006 WL 1435407, at *3 (Tenn. Ct. App. Sept. 1,
4
The Legislature amended this statute in 2022. We cite to the version of the statute in effect when
Wife filed the divorce complaint throughout this Opinion.
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2006)).
The trial court initially determined that the proceeds from the sale of the Ripley
home were Wife’s separate funds, but that those funds had transmuted into marital
property. The trial court stated:
6. The separate funds Wife contributed towards the purchase price of the
marital home were transmuted into marital property. However, based
upon the statutory provisions of TCA §36-4-121 [sic] the Court finds
that Wife would not have transmuted her separate property into marital
property had she known Husband was stealing from her.
7. As such, the Court finds that Wife should be and is hereby awarded
$196,098.15 as an equitable division of the marital home — which
consists of the $175,729 of separate funds Wife paid towards the
purchase price of the marital home and the $20,969.15 in principal
mortgage payments Wife solely made since the parties[’] separation in
November 2019.
Husband argues that the trial court properly determined that the home equity was
transmuted into marital property but erred when it treated the proceeds as Wife’s separate
property despite that initial finding.
The trial court essentially attempted to reverse the transmutation of the home equity
at issue. As stated above, transmutation is determined to have occurred when the court
finds that the parties intended to treat what was once separate property as marital property.
Snodgrass, 295 S.W.3d at 256 (citing Langschmidt, 81 S.W.3d at 747). Here, the trial court
determined that the parties intended for the property to be marital, and thus ruled that the
property transmuted. The trial court then stated that, had Wife known of Husband’s theft,
she “would not have transmuted her separate property into marital property” and went on
to treat the property as separate for the purposes of division. Therefore, when performing
the analysis, the trial court essentially substituted for Wife’s actual intent what her intent
would have been given an alternative set of circumstances.
We agree with the trial court’s initial finding that what was once Wife’s separate
property was transmuted into marital property. We must now determine whether the trial
court’s decision to reverse the transmutation of the property based on its prediction of what
Wife’s intent regarding the property would have been under another set of circumstances
is authorized by law. We find that it is not.
The trial court relied only on the terms of Tennessee Code Annotated section 36-4-
121 to justify its decision. However, there is nothing in this statute which permits a trial
court to discern what the intent of a party would have been under an alternative set of
circumstances and substitute this predicted intent for the actual intent of the parties. There
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is also nothing in that statute which allows a court to reverse the process of transmutation
once it has been found to have occurred. See Tenn. Code Ann. § 36-4-121.
This case arises from an extreme set of circumstances. Husband pled guilty to the
theft of $394,659.28 from Wife during the marriage. Husband was incarcerated for six
months and ordered to pay restitution in the amount of $344,659.28 after remitting a check
for $50,000 to Wife on the day of the sentencing hearing. The trial court stated that
Husband’s actions, had they been known to Wife at the time of transmutation, would have
altered Wife’s intent regarding the property. However, the transmutation analysis is
predicated on the actual intent of the parties, not what the intent would have been under
another set of circumstances.5 The trial court does not provide any other reasoning to
justify the finding that the funds converted from marital property back to the separate
property of Wife. Additionally, we have found no case law or statutory law authorizing a
trial court to substitute the actual intent of the parties with what the intent of the parties
would have been under a different set of circumstances. Therefore, we find that the trial
court erred when it treated the equity in the home as Wife’s separate funds, despite finding
that the funds had been transmuted into marital property.
Wife argues that even if the trial court erred when it treated the property as separate
property, the error was harmless because there would be no difference in the distribution
of property and that “the Trial Court’s decision is supported by caselaw.” Wife contends
that the statutory factors contained in Tennessee Code Annotated section 36-4-121(c)
would have justified a decision to award the full amount of this portion of the equity held
in the home to Wife, even if the trial court had properly classified it as marital property.
Wife points to the duration of the marriage and states that it supports the trial court’s
decision to not award Husband any portion of the proceeds of the Ripley home sale.
However, the trial court did not address the duration of the marriage, or any of the other
factors in section 36-4-121(c) in its decision.
Wife relies on our opinion in Batson which states that a trial court equitably divides
property not by making a precisely equal distribution of property, “but rather by
considering and weighing the most relevant factors in light of the unique facts of the case.”
Batson v. Batson, 769 S.W.2d 849, 859 (Tenn. Ct. App. 1988). We also stated in Batson
that when distributing property at the conclusion of a short-term marriage, a court should
seek to place the parties back in the position that they would have been in if the marriage
had never happened. Batson, 769 S.W.2d at 859. Wife argues that Batson shows that the
5
Further, while it may be valid to presume that a person who was a victim of theft would
immediately dissociate from the person committing the theft, it is impossible to know what would have
actually happened. At the time of the sale of the Ripley home, the full extent of the theft had not yet
occurred. It is possible that, had Wife learned of the theft at or around the time of the sale of the Ripley
home, she could have forgiven Husband or found a path forward which did not result in the criminal charges
and divorce. While this may be unlikely, it is impossible to know what the parties would have actually
done.
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trial court’s present award accomplishes that goal and because Wife held the Ripley
property prior to the marriage that she should exit the marriage with the proceeds from the
sale of the property. However, as we recognized in Batson, “as a first order of business, it
is incumbent on the trial court to classify the property, to give each party their separate
property, and then to divide the marital property equitably.” Id. at 856. Here, the trial court
found the property to be marital but then treated it as separate for the purposes of property
division. Additionally, in Batson, we emphasized the importance of the statutory factors
in the division of marital property. Id. at 859. Wife’s argument relies on the factor of
duration, but Wife does not point to any findings made by the trial court that show any
factors were considered.
Wife also argues that the facts of this case are similar to those we encountered in
Amos v. Amos, No. M2009-00777-COA-R3-CV, 2010 WL 286768, at *4 (Tenn. Ct. App.
Jan. 25, 2010). In Amos, the husband in a short-term marriage contributed $90,000 worth
of funds earned prior to the marriage to the construction of what would serve as the couple’s
home. We held that the husband should have been awarded the value of that $90,000 as
separate property, even though the wife had contributed approximately $56,000 of marital
funds toward the construction costs of the home. Id. These contributions did not entitle
the wife to the husband’s separate property invested into the home. Although Husband
argues that he contributed to the purchase of the home as a wage earner, Wife submits that
in an equitable distribution, the trial court would still have awarded the value of the home’s
equity to Wife. However, it should be noted that in Amos, the assets contributed by the
husband were determined to be his own separate assets whereas here the trial court found
that Wife’s separate property had transmuted into marital property. Amos, 2010 WL
286768 at *4.
Further, we cannot agree with Wife’s contention that the error was harmless. In the
context of an equitable distribution of marital property, harmless errors are those which do
not require reversal or have no real effect on the equitability of a distribution when
“considering the overall distribution of assets.” Watters v. Watters, 959 S.W.3d 585, 589
(Tenn. Ct. App. 1997). In Watters, we found it to be harmless error where certain furniture
was miscategorized as separate property of the wife rather than marital property. Id.However, that error was deemed to be harmless because the items were “clearly” to remain
with the wife, and it did not affect the overall distribution. Id. Here, the value at stake is
large. One-half of an award of $175,729.04 would be approximately $87,864.52. Even an
award of less than one-half of that value could amount to several thousand dollars; thus,
this error cannot be said to be small. Further, it is unclear whether the equity amount should
remain with Wife according to a complete analysis of the required statutory factors. The
remaining equity attributable to the mortgage principal payments made toward the Atoka
home prior to the separation was divided between Husband and Wife, indicating that the
trial court was prepared to split property which it determined to be marital property.
Therefore, we cannot find this error to be harmless because the trial court could properly
award a portion of the equity to Husband, and it could make a substantial difference to the
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overall distribution of the marital estate.
In summary, the trial court erred when, after finding that transmutation had
occurred, it reversed the transmutation process and treated the property as separate. No
case law or statute authorizes a trial court to do so. Further, as explained, we cannot
consider an error of this magnitude to be harmless due to the monetary value, and it is
unclear whether the property should be fully awarded to Wife when treated as marital.
Therefore, we reverse the trial court’s treatment of the proceeds from the Ripley home as
separate property. We also vacate the trial court’s division of the marital estate and remand
this case for the trial court to make an equitable distribution of the marital estate in which
the equity held in the Atoka home attributable to the proceeds from the sale of the Ripley
home is treated as marital property. In doing so, the trial court should consider the factors
listed in Tennessee Code Annotated section 36-4-121(c).
B. Whether the trial court erred when it assessed the value of the marital home
at its 2018 purchase price and Wife’s 401(k) retirement account at the time of
the couple’s separation rather than at the time of the 2023 divorce
proceedings.
Next, Husband argues that the trial court erred when it valued the Atoka home at its
2018 purchase price and Wife’s 401(k) retirement account at its value at the time of the
couple’s 2018 separation. Husband argues that both assets should have been valued closer
to the date of the divorce proceedings. Tennessee law provides that, “[a]ll marital property
shall be valued as of a date as near as possible to the date of entry of the order finally
dividing the marital property.” Tenn. Code Ann. § 36-4-121(b)(1)(A); Hill, 682 S.W.3d at
196. We consider both the Atoka home and Wife’s retirement account in turn.
1. The Atoka Home
For the purposes of property division, the trial court valued the Atoka home at
$282,000, which was the purchase price. The trial court stated that it used this value rather
than a more current value of the home “because the case could not have been tried sooner
during Husband’s pending criminal action.” The Court went on to explain that it
“decline[d] to award Husband the increased value of the home since the parties’ separation
because the delay in trying this matter was due to his criminal action.” Husband argues
that this was improper as these actions were not authorized by the statute.
We have previously considered cases in which parties sought to have assets valued
at a time other than that of the divorce proceedings. In Preston, we affirmed a trial court’s
decision to value marital property at the date on which the final divorce decree was entered
rather than the date on which the marital assets were distributed despite “a material increase
in the value of the marital assets in that interim period.” Preston v. Preston, No. 03A01-
9406-CV-00202, 1995 WL 10345 at *7 (Tenn. Ct. App. Jan. 11, 1995). There, we held
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that the phrase “final divorce hearing date” referred to the date the final divorce decree was
entered, rather than the later distribution date which the wife argued would constitute “the
date the case is finally heard on all unresolved issues.” Id. That decision was primarily
predicated on the determination that any property acquired by either party after that date of
the decree of divorce could not be properly classified as marital property and thus an
increase in the value of the home after the divorce decree could not be marital property.
Id. In our opinion in Dunlap, we relied on Preston and determined that a wife was not
entitled to be paid an amount to compensate for an increased value of the parties’ home
when the distribution of the marital property did not occur until five years after the final
divorce hearing date. Dunlap v. Dunlap, 996 S.W.2d 803, 817 (Tenn. Ct. App. 1998).6
In both Dunlap and Preston, a party sought the valuation of property at a date after
the final decree of divorce so as to benefit from an increase in the property’s value. Here,
the trial court valued the property at a date several years prior to the final decree of divorce
in order to deprive a party of a home’s increased value. We find that the same principles
apply, and that the mandatory language in the statute requires a trial court to value marital
property at a time as close as possible to the divorce proceedings. In those cases, we
declined to provide a spouse the benefit of additional appreciation in marital property after
the parties were legally divorced. Here, we decline to deprive a party of the growth in a
marital asset held up to the time of divorce. The home remained marital property until the
legal conclusion of the parties’ marriage when the final decree of divorce was entered. No
authority has been cited which would authorize a trial court to value property at a date other
than the date of the divorce. The statute uses mandatory language requiring the trial court
to value the property as near as possible to the date of the divorce decree and does not
include any exceptions.
Having determined that the trial court erred by valuing the Atoka home at the time
of purchase, we must now determine whether enough evidence is contained within the
record to enable us to assign a value to the property for the trial court to use upon remand
in making its equitable distribution. Testimonial evidence was presented to establish the
Atoka home’s value at the time of the divorce proceedings. Husband did attempt to enter
into evidence an appraisal done on the home in 2022. The appraiser was supposed to testify
regarding his findings but failed to appear. Husband presented a copy of the appraisal, but
the trial court did not accept it as evidence due to a lack of foundation. However, the parties
testified extensively about the contents of the appraisal. When asked about the date listed
on the appraisal, Wife agreed that it was dated May 19, 2022, several months prior to the
March 2023 trial. Wife and Husband each acknowledged that the price listed on the
appraisal was $425,000.00. Husband spent several years working in banking and stated
that the market in the Atoka area had been very good in the years between the separation
6
Both Dunlap and Preston were decided at a time where a prior version of Tennessee Code
Annotated section 36-4-121 was in place. As such we referred to Tennessee Code Annotated section 36-
4-121(b)(1)(A) in both of those cases.
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and the divorce proceedings and attributed much of the growth in value to the market.
When asked about whether the value had changed any in the months since the appraisal
had been done, Husband stated, “[n]o. If anything, maybe it appreciated more.” Wife
acknowledged that the market had been good in the area and stated that any increases in
value were attributable to the market in Atoka. When asked on cross-examination about
the appraisal, Wife indicated that she did not have “any knowledge or any evidence”
indicating that the appraisal was inaccurate and further testified in part:
Q Ms. Cayson, we previously discussed the appraisal. And I
understand, I’m no expert, you know, you don’t necessarily disagree with it.
I get that part. I just want to make sure. You’ve seen this document; right?
A Yes, I have.
Q You understand this to be the appraisal that was submitted by Mr.
Hoover, I think it is?
A Yes.
Q And do you have any objection to that? Is there something in there
that you think is false information? Or ...
A No, sir.
The evidence indicates that the value of the home at the time of the divorce
proceedings would have been $425,000. A witness is permitted to testify as “to the value
of the witness’s own property or services.” Tennessee Rule of Evidence 701. We have
previously affirmed a trial court which accepted lay opinions of the parties as the sole
source of evidence as to the value of a marital home subject to an equitable distribution.
Brown v. Brown, 577 S.W.3d 206, 214 (Tenn. Ct. App. 2018). Each of the parties in Brown
relied on the prices of other homes in the same neighborhood as the marital home to form
their opinions regarding the value of the home. Id. We determined in that case that the
trial court’s valuation of the marital home was supported by the evidence presented, and
that the value was within the range of acceptable values since it fell in between the values
submitted by the husband and the wife. Id. at 214-15. Similarly, here, the only evidence
pertaining to the value of the Atoka home was the lay opinion of the parties. Each of the
parties considered the appraisal in forming their opinion, even though the appraisal was
not entered into evidence. Therefore, we hereby reverse the trial court’s decision to value
the Atoka home’s value as that at the time of purchase. We remand this issue to the trial
court to make an equitable distribution of the Atoka home using the $425,000 value of the
home established by the evidence presented at trial.
2. The 401(k) Retirement Account
Husband also argues that the trial court erred when it valued Wife’s 401(k)
retirement account at the time of the separation rather than at the time of the proceedings.
The trial court valued Wife’s account at the date that the parties were separated, rather than
at the date the final order was entered. In its findings of fact, the trial court stated that the
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value at the time of the proceedings was $62,797.38 and that the value of the account at
the time of separation was $32,348.38. The trial court stated that it would be dividing the
value of the 401(k) retirement account using the value at the time of the separation, “[d]ue
to the delay in this matter because of Husband’s criminal actions[.]”
Wife argues that the trial court did not err in its timing of the valuations of both the
home and the 401(k) retirement account. However, Wife does not seem to argue with any
real ardor that the trial court was authorized to choose dates several years prior to the date
of divorce at which to value the assets. Wife certainly did not provide any caselaw
supporting that contention. Instead, Wife argues that even if the trial court did err by
assessing the value of the assets at the date of separation rather than at the date of the
divorce decree, Husband suffered no prejudice as the trial court would not have awarded
the increase in property value even if the property had been valued at the later date. Wife’s
arguments again contemplate the statutory factors laid out in Tennessee Code Annotated
section 36-4-121(c). Particularly, Wife argues that Husband dissipated $394,659.28 of
Wife’s separate assets prior to the divorce. However, the trial court made no finding
regarding the dissipation of assets.
We have previously considered a case in which a trial court valued a party’s
retirement account at a time several years prior to the divorce proceedings. In Hill, the
trial court assigned a value to a wife’s retirement account “at the time of separation,” but
the final order regarding the disposition of marital property was not entered until twenty-
two months after the divorce proceedings. Hill v. Hill, 682 S.W.3d 184, 202 (Tenn. Ct.
App. 2023). The husband argued on appeal that the account should have been valued at
the time of the entry of the decree rather than at the time of separation. Id. We agreed,
explaining that marital property must be valued as of a date as near as possible to the date
of entry of the order finally dividing the marital property. Id. Thus, we found error where
the trial court’s order valued the wife’s retirement account at a date approximately a year
before the proceedings, and almost three years before the final order was entered. Id. We
remanded that case for the trial court to hear evidence and make a finding on the retirement
accounts as of a date as near as possible to the date the final order was entered. Id.Similarly, we find here that the trial court erred when it valued Wife’s 401(k) retirement
account at the time of the separation, rather than at the time of the final order. No authority
has been provided which authorizes a Tennessee court to value marital property at an earlier
date on the basis of delay in proceedings. We have also found none. Further, nothing in
Tennessee Code Annotated section 36-4-121(b)(1)(A) authorizes these actions.
The concerns of Wife and the trial court appear to be that Husband’s theft would
lead to an inequitable distribution. While marital fault is not a factor to be considered in a
property division, there are several equitable factors contained in Tennessee Code
Annotated section 36-4-121(c) that may be used to ensure that a property distribution is
equitable. A trial court is not authorized to value assets at different times in order to achieve
an equitable result but is authorized to distribute property using its discretion to achieve an
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equitable result.
The trial court made a finding regarding the value of the account at a time near the
proceedings. The trial court stated in its findings of fact that the value of the 401(k)
retirement account at the time of the divorce decree was $62,797.38. The evidence does
not preponderate against this finding. The value of the account at the time of separation
was determined to be $32,3458.38. The trial court awarded one-half of that value to
Husband in the amount of $16,174.19. To justify this decision, the trial court referred only
to the delay in the matter caused by Husband’s criminal proceedings. Because Tennessee
Code Annotated section 36-4-121(b)(1)(A) provides that the values of marital assets are to
be determined as closely as possible to the time of the divorce proceedings, and because
the trial court purposefully assessed the value of Wife’s 401(k) retirement account at the
time of the parties’ separation, the trial court erred. Therefore, we hereby reverse the trial
court’s decision to value Wife’s 401(k) retirement account at the time of the parties’
separation.
Given our findings regarding valuation, we must vacate the court’s division of
marital property and remand this matter to the trial court so that it may make an equitable
distribution of the parties’ marital property using a $425,000.00 value for the Atoka home
and a value of $62,797.38 for Wife’s 401(k) retirement account. In performing this
analysis, the trial court should consider the equitable factors listed in Tennessee Code
Annotated section 36-4-121(c).
C. Whether Husband waived his argument on appeal by failing to include a
table of the disputed assets pursuant to Court of Appeals Rule 7.
Wife argues that Husband waived his arguments on appeal by submitting his brief
without a table contained in the body of the brief or an attached appendix setting out the
assets disputed. We have often held that failure to include a table complying with Rule 7
of the Rules of the Tennessee Court of Appeals serves as waiver of “issues relating to the
division of property in a divorce case.” Smith v. Smith, No. E2017-00515-COA-R3-CV,
2017 WL 6467153, at *6 (Tenn. Ct. App. Dec. 18, 2017). See e.g, Henry v. Henry, No.
M2019-01029-COA-R3-CV, 2020 WL 919248, at *3 (Tenn. Ct. App. Feb. 26, 2020);
Harden v. Harden, No. M2009-01302-COA-R3-CV, 2010 WL 2612688, at *8 (Tenn. Ct.
App. June 30, 2010). This rule provides that:
(a) In any domestic relations appeal in which either party takes issue with the
classification of property or debt or with the manner in which the trial court
divided or allocated the marital property or debt, the brief of the party raising
the issue shall contain, in the statement of facts or in an appendix, a table in
a form substantially similar to the form attached hereto. This table shall list
all property and debts considered by the trial court, including: (1) all separate
property, (2) all marital property, and (3) all separate and marital debts.
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(b) Each entry in the table must include a citation to the record where each
party’s evidence regarding the classification or valuation of the property or
debt can be found and a citation to the record where the trial court’s decision
regarding the classification, valuation, division, or allocation of the property
or debt can be found.
(c) If counsel disagrees with any entry in the opposing counsel’s table,
counsel must include in his or her brief, or in a reply brief if the issue was
raised by opposing counsel after counsel filed his or her initial brief, a similar
table containing counsel’s version of the facts.
Rule 7 of the Rules of the Court of Appeals of Tennessee.
Here, Husband did not attach a table complying with Rule 7 to his brief. Wife
pointed out in her brief that Husband failed to do so and argues that Husband thereby
waived his claim. Husband sought permission to submit a table containing the information
through the filing of a motion to amend the brief. We granted that motion on March 19,
2024. We hold discretion to review a party’s appeal despite failure to include a table
complying with Rule 7 when good cause is shown. Smith, 2017 WL 6467153 at *6. Given
that Husband submitted a table later, we will consider Husband’s arguments despite the
initial failure to comply with the rules of this court.
D. Whether Husband’s appeal was filed solely for delay so as to justify an
award of attorney’s fees to Wife in this appeal.
Finally, Wife argues that Husband has only filed this appeal to delay the payment
of the restitution owed from the criminal proceedings. Attorney’s fees may be awarded
when an appeal is frivolous or taken solely for delay. Tenn. Code Ann. § 27-1-122. An
appeal may be deemed frivolous when it “is ‘devoid of merit,’ or one in which there is little
prospect that it can ever succeed.” Indus. Dev. Bd. of City of Tullahoma v. Hancock, 901
S.W.2d 382, 385 (Tenn. Ct. App. 1995) (quoting Combustion Engineering, Inc. v.
Kennedy, 562 S.W.2d 202, 205 (Tenn. 1978)). An appellate court holds discretion when
determining whether an appeal is frivolous to justify an award of attorney’s fees which is
“exercised ‘sparingly so as not to discourage legitimate appeals.’” Eberbach v. Eberbach,
535 S.W.3d 467, 475 (Tenn. 2017) (quoting Whalum v. Marshall, 224 S.W.3d 169, 181
(Tenn. Ct. App. 2006)).
Given that we have reversed the trial court’s decision regarding the classification of
the property and the time at which the property was valued, this appeal was neither
frivolous nor filed solely for delay. We therefore deny Wife’s request for attorney’s fees
in this matter.
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IV. Conclusion
Having carefully reviewed the record and the issues raised by both parties, we
reverse in part the ruling of the trial court, vacate the marital property division, and remand
this matter for proceedings consistent with this opinion. Costs of this appeal are taxed to
the appellee, Mary Rachel Cayson, for which execution may issue if necessary.
_________________________________
CARMA DENNIS MCGEE, JUDGE
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