William N. Nusbaum v. Lucile E. Nusbaum

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
October 14, 2011 Session
WILLIAM N. NUSBAUM v. LUCILE E. NUSBAUM
Appeal from the Circuit Court for Sumner County
No. 83CC12009CV1008 C.L. Rogers, Judge
No. M2011-00832-COA-R3-CV - Filed January 5, 2012
In this divorce appeal, wife challenges the distribution of husband’s federal retirement
benefits, the award of transitional alimony, and the court’s failure to award her attorney fees.
Because of an error in the percentage of husband’s FERS classified as marital assets, we
reverse the trial court’s decision. As to transitional alimony, we affirm the award of $500
per month but extend the award until the time of husband’s retirement. We affirm the trial
court’s decision regarding attorney fees.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed in
Part, Affirmed as Modified in Part, Affirmed in Part
A NDY D. B ENNETT, J., delivered the opinion of the Court, in which P ATRICIA J. C OTTRELL,
P.J., M.S., and R ICHARD H. D INKINS, J., joined.
Elizabeth A. Garrett and Gregory Dye Smith, Nashville, Tennessee, for the appellant, Lucile
E. Nusbaum.
Bruce N. Oldham and Sue Hynds Dunning, Gallatin, Tennessee, for the appellee, William
N. Nusbaum.
OPINION
F ACTUAL AND P ROCEDURAL B ACKGROUND
William Nusbaum (“Husband”) and Lucile Nusbaum (“Wife”) were married in 1994.
No children were born of their marriage.
At the time of their marriage, Husband and Wife lived in Maryland, where they were
both employed. Wife, who has a high school education, worked in the mortgage industry;
Husband, who has a degree in electrical engineering, worked for the federal government.
Shortly after retiring from his job with the federal government, Husband moved to Tennessee
in May 2003 to take a position at the University of Tennessee. The parties purchased a house
in Tennessee in July 2003, and Wife joined Husband there in August 2003. After the move,
Wife initially worked for a mortgage company but left that job after eight or nine months.
She had some income in 2005 and 2006 but never returned to full time employment.
Husband filed for divorce in August 2009, and Wife counterclaimed for divorce. At
the time when Husband’s divorce petition was filed, Husband was 59 years old and Wife was
65 years old. The case was tried over two days in September 2010 and February 2011. The
second day of the trial focused on evidence concerning the value of Husband’s three
pensions–a navy military retirement, a Federal Employee Retirement Service (FERS)
pension, and University of Tennessee retirement benefits.
In its final order entered on March 22, 2011, the trial court found both parties to be
equally at fault in the divorce. Wife was awarded the marital residence in Tennessee, valued
at $280,000, subject to mortgages totaling $150,000. Wife owned a home in Maryland at the
time of the parties’ marriage; the court found that Husband had performed work on the
property and that marital funds had been used to maintain the property. The court valued the
Maryland property at $185,000; a debt of $49,770.59 was owed on the property. The court
determined that Wife’s separate interest was $27,823.24 and the marital portion was
$107,406.17. The Maryland home was awarded entirely to Wife.
The court went on to value and divide the parties’ pension benefits, retirement
accounts, and other bank accounts. The court valued Husband’s navy pension at
$372,362.50, with only $37,125.54 being marital; the entire asset was awarded to Husband.
As to the FERS pension, the court placed a value of $328,341.31 on the asset, with
$138,724.20 classified as marital. Each party was awarded one-half of the marital portion
($69,362). The court found the total value of the marital estate to be $803,887, with Wife
receiving $404,944 (50.37%) and Husband receiving $398,943 (49.63%).
As to alimony, the court concluded that, “the reasonable needs of the Wife in the long
term can be satisfied by the Wife’s Social Security income, the income she will receive from
the distribution of the Husband’s FERS pension and the assets she will receive from the other
distribution of marital assets as well as her separate property . . . .” The court recognized that
Wife was in need of some transitional alimony and ordered Husband to “continue to pay the
Wife a sum equal to the amount of the first and second mortgages on the marital residence
for a period of four months or until sale of the marital residence, whichever occurs first.”
The court further awarded Wife transitional alimony of $500 per month for a period of
twelve months, commencing March 1, 2011.
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The court declined to award Wife her attorney fees.
A NALYSIS
On appeal, Wife raises three issues: (1) Whether the trial court erred in its calculation
of the marital portion of Husband’s FERS benefits and in its distribution of those benefits.
(2) Whether the trial court erred in awarding Wife transitional alimony of only $500 per
month for twelve months. (3) Whether the trial court erred in denying Wife’s request for her
attorney fees and expenses.
(1)
We begin with the FERS pension benefits. On appeal, Wife does not challenge the
court’s valuation of the total FERS pension benefits at $328,341.1 She argues, however, that
the court erred in the portion of the FERS pension it classified as a marital asset. The trial
court classified $138,724.20 as marital. Wife asserts that the proper calculation would result
in a marital portion of $230,429 (70.18%), of which she should receive half.
The classification of property as separate or marital is a question of fact. Snodgrass
v. Snodgrass, 295 S.W.3d 240, 245 (Tenn. 2009). Similarly, the valuation of a marital asset
is a question of fact. Kinard v. Kinard, 986 S.W.2d 220, 231 (Tenn. Ct. App. 1998). As to
findings of fact, “we review the record de novo with a presumption of correctness, and we
must honor those findings unless there is evidence which preponderates to the contrary.”
Snodgrass, 295 S.W.3d at 245 (quoting Keyt v. Keyt, 244 S.W.3d 321, 327 (Tenn. 2007)).
Conclusions of law, however, are accorded no presumption of correctness. Id. at 245-46.
With respect to the FERS pension, the trial court made the following findings and
conclusions:
The Husband was a participant in the FERS pension program prior to the
marriage starting in November, 1987. During his active military service, the
Navy did not withhold any Social Security payments and in 1994, he was given
the option of paying the equivalent of the Social Security amount as a
“Military Deposit” in the amount of $1474.35 and receiving six years credit
toward his years of service for the purposes of taking early retirement. This
did not increase the value of his pension; it merely made it possible for him to
retire earlier and that the value of his pension was based upon his earnings for
the three years prior to his date of retirement April 30, 2003.
1
Wife’s expert valued the total FERS benefits at approximately $335,000.
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The Court finds that the Husband’s FERS pension has a present fair market
value of $328,341.31 and that the marital portion of this pension is
$138,724.20. Each party is hereby awarded one-half of the 54.8% marital
portion of this pension or 27.4%, which has a value of $69,362 per party.
There is no real dispute about the first paragraph of the court’s findings, and Wife is not
disputing the total value figure of $328,341.31 on appeal. We understand the trial court’s
finding that the military deposit “did not increase the value of his pension” to mean that
Husband’s monthly pension benefit did not change as a result of the additional six years of
service. By making it possible for Husband to retire six years earlier, however, the additional
six years of service did increase the present value of the pension.2 The question before us
is whether the value attributable to the additional six years should be considered marital or
separate property.
The figures adopted by the trial court in the second paragraph of its findings (quoted
above) reflect its reliance on the calculations provided by Pension Appraisers, which were
presented by Husband’s expert witness, Robert Jennings. It should be noted that the court
erred in concluding that $138,724.20 represents 54.8% of the FERS pension; rather, as
indicated in the Pension Appraisers report, $138,724.20 represents 42.25% of the total value
of $328,341.31.
The question here is the proper portion of the FERS pension to consider as marital
property, particularly in light of the addition of six years of credit to Husband’s years of
service after the parties’ marriage and with marital funds. The trial court credited the expert
testimony presented by Husband over that presented by Wife. Husband’s expert, Mr.
Jennings, relied upon calculations performed by a pension appraisal company, Pension
Appraisers, based upon figures provided to them by Mr. Jennings. Pension Appraisers
assumed that Husband’s employment started on November 2, 1981, six years prior to his
actual start date in November 1987. Presumably, this modification was to take into account
the six additional years purchased in 1994. Mr. Jennings, apparently unaware of this
modification, himself manually recalculated by adding in an additional six years. Wife
argues, and we agree, that the total number of days of Husband’s participation in the FERS
is 7,845 days3 (5,655 days of participation plus 2,190 purchased in 1994).
2
We note that the expert calculations admitted into evidence concerning the value of the pension take
into account the age at which benefits would begin and the life expectancy of the benefit recipient.
3
Mr. Jennings based his calculations on a total of 10,035 days.
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The trickier issue is the number of FERS days attributable to the marriage. It is
undisputed that 3,316 days of the total FERS days occurred during the marriage (from April
1, 1994 through April 30, 2003). By paying a “military deposit,” Husband added 2,190 days
to his FERS participation, thus allowing him to retire six years earlier. Although Husband’s
active military service (for which he paid the military deposit) occurred prior to the marriage,
the $1,474 military deposit was made during the parties’ marriage and with marital funds.
As a result of this deposit, six years of Husband’s military service, which had not previously
been considered for purposes of the FERS pension, were counted as years of participation
under the FERS pension. Tenn. Code Ann. § 36-4-121(b)(1)(B) provides, in pertinent part,
that marital property includes “the value of vested and unvested pension, vested and unvested
stock option rights, retirement or other fringe benefit rights relating to employment that
accrued during the period of the marriage.” Pursuant to this provision, any increase in the
value of pension benefits that accrues during the marriage, regardless of the reason for the
increase, should be considered marital property. Snodgrass, 295 S.W.3d at 248-49.
Without offering specific calculations, Husband argues in favor of the result reached
by the trial court–a marital portion of $138,724.20, which represents 42.25%, not 54.8% as
stated by the trial court. The $138,724 figure appears to come from the report of Pension
Appraisers, which reached this amount by dividing 3,315 days (time in the FERS plan during
marriage) by 7,845 days (total days of participation, including 2,190 extra days from military
deposit). Pension Appraisers did not add the military deposit days into the marital portion
of the FERS pension.
We agree with Wife’s reasoning that the value attributable to the additional six years
should be considered marital because the military deposit was paid during the marriage with
marital funds. Thus, the marital portion of the FERS days is 3,316 plus 2,190, or 5,506 days.
Dividing 5,506 days (days attributable to marriage) by 7,845 days (total FERS days) yields
a result of 70.18% for the marital portion, or $230,429.93, of which each party should receive
one-half.
(2)
The next issue is whether the court erred in its award of temporary alimony in the
amount of $500 a month for twelve months. Wife argues that the award is insufficient in
amount and duration.
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). An award of spousal
support will not be disturbed on appeal absent an abuse of the trial court’s discretion.
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Broadbent v. Broadbent, 211 S.W.3d 216, 220 (Tenn. 2006). Under the abuse of discretion
standard, a reviewing court cannot substitute its judgment for the trial court’s judgment.
Wright ex rel. Wright v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011). Rather, a reviewing
court will find an abuse of discretion only if the trial court “applied incorrect legal standards,
reached an illogical conclusion, based its decision on a clearly erroneous assessment of the
evidence, or employ[ed] reasoning that causes an injustice to the complaining party.”
Konvalinka v. Chattanooga–Hamilton County Hosp. Auth., 249 S.W.3d 346, 358 (Tenn.
2008); see also Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010). Therefore,
“when reviewing a discretionary decision by the trial court, such as an alimony
determination, the appellate court should presume that the decision is correct and should
review the evidence in the light most favorable to the decision.” Gonsewski v. Gonsewski,
350 S.W.3d 99, 105-06 (Tenn. 2011).
Our Supreme Court has recognized the principle that “a trial court’s decision
regarding spousal support is factually driven and involves the careful balancing of many
factors.” Id. at 105 (footnote omitted). 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). Oakes v. Oakes, 235 S.W.3d 152, 160
(Tenn. Ct. App. 2007). 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 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;
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(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.
The most important considerations for the court in awarding alimony are the need of the
disadvantaged spouse seeking support and the ability of the obligor spouse to pay support.
Bratton, 136 S.W.3d at 640; Oakes, 235 S.W.3d at 160.
In making its alimony award, the trial court reasoned as follows:
The court finds that, taking into consideration the statutory factors of T.C.A.
§ 36-5-121 relative to alimony, that the reasonable needs of the Wife in the
long term can be satisfied by the Wife’s Social Security income, the income
she will receive from the distribution of the Husband’s FERS pension and the
assets she will receive from the other distribution of marital assets as well as
her separate property identified hereinabove. The Husband has already
provided temporary support to the Wife for 20 months during the pendency of
this case during which time the Wife took no action toward contributing to her
own support. Further, the Wife owns a residence in Walkersville, Maryland
which could be income producing, but she has elected to allow her son to live
there rent-free. . . .
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In the short term, the Court finds that the Wife is in need of some transitional
alimony and orders that the Husband, in addition to the sums he has already
paid to her during the pendency of this case, continue to pay the Wife a sum
equal to the amount of the first and second mortgages on the marital residence
for a period of four months or until sale of the marital residence, whichever
occurs first. Additionally, he shall pay transitional alimony of $500.00 per
month for twelve months, commencing March 1, 2011.
Elsewhere in its order the trial court made other findings relevant to the alimony
determination. After reviewing Wife’s income and expense statement claiming $4,541.35
per month in expenses, the court found “that the Wife has significantly exaggerated her needs
and that her income and expense statement is not credible.” The court noted that Husband
continued to pay alimony to a former spouse. Having stated that Wife elected to quit her job
and earn less income during the last years of the parties’ marriage, the court went on to make
the following findings:
The Wife testified that she stopped working to take care of the Husband; the
Husband testified that he had surgery for which his daughter (who is a nurse)
came to provide him with care and he returned to work a month or so later and
that the Wife simply told him one day she had quit working. The parties
separated in June, 2009 and the Husband has provided support for the Wife
thereafter without the necessity of a court order. The Wife testified that she
receives Social Security income of $1047.00 per month. She further testified
that she is thinking about setting up some kind of a sewing business, but has
not yet done so (income from which is speculative), but gave no other reason
as to why she doesn’t contribute to her own support.
On appeal, Wife argues that she should have been awarded at least $2,300 a month
in alimony in futuro, or transitional alimony through the time of Husband’s retirement. Wife
emphasizes her age at the time of the divorce (over 65), her high school education, and the
fact that her previous employment was in the mortgage industry, which was in distress during
the relevant time period. Husband acknowledged at trial that Wife could not be rehabilitated
and that he had the ability to pay $2,300 a month. Wife also points out that the trial court
divided the marital assets about equally; she argues that the trial court therefore did not make
extra provision for support in the property division.
As stated above, we review the trial court’s alimony decision under an abuse of
discretion standard. In this case, the trial court found Wife’s testimony concerning her needs
and expenses not to be credible. A trial court’s findings regarding credibility are given great
deference by appellate courts because the trial court “observed the manner and demeanor of
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the witnesses and was in the best position to evaluate their credibility.” Union Planters Nat'l
Bank v. Island Mgmt. Auth., Inc., 43 S.W.3d 498, 502 (Tenn. Ct. App. 2000). We “will not
re-evaluate a trial judge’s assessment of witness credibility absent clear and convincing
evidence to the contrary.” Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999).
Although Wife asserts that the trial court’s credibility findings are not supported by the
evidence, we cannot find that there is clear and convincing evidence to contradict the trial
court’s assessment. As to the distribution of marital assets, an equitable division does not
necessitate an equal division. Robertson v. Robertson, 76 S.W.3d 337, 341 (Tenn. 2002).
In justifying its alimony decision, the trial court expressly referred to the distribution of
marital assets and Husband’s FERS pension. Moreover, this court’s decision with regard to
the FERS pension makes the overall division of assets even more favorable to Wife.
We conclude that the trial court did not abuse its discretion in awarding Wife
transitional alimony in the amount of $500 a month, but we find that the award should be
extended to the time of Husband’s retirement. As the trial court noted, any future income for
Wife from her proposed sewing business is speculative. We find nothing in the record to
justify limiting the transitional alimony to one year.
(3)
Wife’s final argument is that the trial court erred in denying her request for an award
of attorney fees and expenses.
Decisions to award attorney fees are reviewed under an abuse of discretion standard.
Huntley v. Huntley, 61 S.W.3d 329, 341 (Tenn. Ct. App. 2001). Thus, we are required to
uphold the trial court’s ruling “as long as reasonable minds could disagree about its
correctness,” and “we are not permitted to substitute our judgment for that of the trial court.”
Caldwell v. Hill, 250 S.W.3d 865, 869 (Tenn. Ct. App. 2007).
The trial court made the following findings with regard to Wife’s request for attorney
fees:
Counsel for the Wife submitted an affidavit of fees showing that the Wife
incurred $15,290.00 in attorney fees; however, the affidavit does not specify
the time spent for the actual services listed. Further, the affidavit shows that
the client has already paid $10,000.00 toward those fees. The Wife had
removed $10,000 from a joint account and she used these funds to pay her
attorney. The Wife is receiving marital assets with in excess of $400,000.00
in addition to her separate property and therefore has sufficient assets to pay
the remainder of her fees.
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Wife asserts that, for the same reasons put forward with respect to the alimony award, the
trial court should have awarded her attorney fees of $10,000 “based on the relative fault of
the parties, her need and Mr. Nusbaum’s ability to pay.” The trial court found the parties
“equally at fault” in the divorce. Moreover, as discussed above, the trial court found Wife’s
testimony regarding her needs and expenses not credible.
We find no abuse of discretion in the trial court’s decision not to award Wife her
attorney fees and expenses.
C ONCLUSION
We reverse the trial court’s decision with respect to the portion of the FERS pension
to be classified as marital property; we affirm as modified the trial court’s alimony award;
and we affirm the trial court’s decision with respect to attorney fees. Costs of this appeal,
for which execution may issue if necessary, are assessed against Husband.
______________________________
ANDY D. BENNETT, JUDGE
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