Hoffman v. Hoffman

C O U R T O F A P P E A L S O F T E N N E S S E E
A T K N O X V I L L E FILED
April 29, 1998
Cecil Crowson, Jr.
Appellate C ourt Clerk
F O R T U N E E H O F F M A N ) H A M I L T O N C O U N T Y
) 0 3 A 0 1 - 9 7 0 6 - C V - 0 0 2 2 0
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v . ) H O N . W I L L I A M L . B R O W N ,
) J U D G E
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B A R R Y L Y N N H O F F M A N )
) A F F I R M E D I N P A R T ; R E V E R S E D
D e f e n d a n t - A p p e l l e e ) I N P A R T a n d R E M A N D E D
D A V I D E . C A Y W O O D a n d D A R R E L L D . B L A N T O N O F M E M P H I S F O R A P P E L L A N T
W I L L I A M H . H O R T O N O F C H A T T A N O O G A F O R A P P E L L E E
O P I N I O N
G o d d a r d , P . J .
Fortunee Hoffman and Barry Lynn Hoffman both appeal a
divorce judgment rendered by the Hamilton County Circuit Court.
The parties raise various issues, hereinafter restated, one of
which--relative to alimony--is raised by both parties:
M s . H o f f m a n ' s I s s u e s
1 . W h e t h e r t h e T r i a l C o u r t e r r e d i n q u a s h i n g a s u b p o e n a
d u c e s t e c u m r e g a r d i n g t h e p r o d u c t i o n o f d o c u m e n t s r e l a t i n g t o M r .
H o f f m a n ’ s o w n e r s h i p i n t e r e s t i n J o s e p h D e C o s i m o & C o . , L L P .
2 . W h e t h e r t h e T r i a l C o u r t e r r e d i n i t s v a l u a t i o n a n d
d i v i s i o n o f t h e p a r t i e s ' m a r i t a l p r o p e r t y ( M r . H o f f m a n ’ s
p a r t n e r s h i p i n t e r e s t , t h e A r t i c l e I X i n t e r e s t o f t h e p a r t n e r s h i p
a g r e e m e n t , a n d t h e m a r i t a l r e s i d e n c e ) .
3 . W h e t h e r t h e T r i a l C o u r t e r r e d i n t h e a m o u n t o f c h i l d
s u p p o r t o r d e r e d t o b e p a i d b y M r . H o f f m a n t o M s . H o f f m a n .
4 . W h e t h e r t h e T r i a l C o u r t e r r e d i n i t s a l l o c a t i o n o f t h e
d e b t s t o t h e p a r t i e s .
M r . H o f f m a n ' s I s s u e
1 . W h e t h e r t h e T r i a l C o u r t e r r e d i n a w a r d i n g M s .
H o f f m a n a p o r t i o n o f M r . H o f f m a n ’ s f u t u r e c o n t i n g e n t
i n t e r e s t u n d e r h i s p a r t n e r s h i p a g r e e m e n t w i t h J o s e p h
D e C o s i m o & C o . , L L P , a n d i f a n a w a r d o f t h e f u t u r e
i n t e r e s t w a s a p p r o p r i a t e , w h e t h e r t h a t a w a r d s h o u l d b e
a n a f t e r - t a x a w a r d ?
A l i m o n y I s s u e r a i s e d b y b o t h p a r t i e s
M s . H o f f m a n i n s i s t s t h e a l i m o n y a w a r d e d i s
i n a d e q u a t e a n d M r . H o f f m a n c l a i m s t h a t i t s h o u l d h a v e
b e e n r e h a b i l i t a t i v e r a t h e r t h a n p e r i o d i c .
T h e p a r t i e s w e r e m a r r i e d o n D e c e m b e r 1 6 , 1 9 7 3 . F i v e
c h i l d r e n w e r e b o r n a s a r e s u l t o f t h e m a r r i a g e . A t t h e t i m e o f
t r i a l ( D e c e m b e r 1 9 9 6 ) , J a s o n H o f f m a n , a g e 2 1 , w a s i n h i s l a s t
y e a r a t t h e U n i v e r s i t y o f M i a m i . B r i a n H o f f m a n , a g e 1 9 , w a s a
f r e s h m a n a t I n d i a n a U n i v e r s i t y . R i c h i e H o f f m a n , a g e 1 8 , w a s a
2
j u n i o r a t N o t r e D a m e H i g h S c h o o l , a n d w i l l g r a d u a t e i n M a y 1 9 9 8 .
D a v i d H o f f m a n , a g e 1 5 , w a s a s t u d e n t a t t h e M c C a l l i e S c h o o l .
M i c h a e l H o f f m a n , a g e 6 , w a s i n k i n d e r g a r t e n a t S t . J u d e .
M s . H o f f m a n w a s b o r n i n M o r o c c o a n d c a m e t o t h e U n i t e d
S t a t e s w h e n s h e w a s 2 0 y e a r s o l d . S h e a t t e n d e d J o h n s o n C o u n t y
C o m m u n i t y C o l l e g e b u t n e v e r r e c e i v e d a d e g r e e . S h e c a n s p e a k
f i v e l a n g u a g e s . M s . H o f f m a n d i d n o t w o r k t h r o u g h o u t t h e c o u r s e
o f t h e m a r r i a g e , b u t s t a y e d a t h o m e w i t h t h e c h i l d r e n a n d a c t e d
a s t h e p r i m a r y c a r e g i v e r . S h e t o o k e a c h o f t h e b o y s t o s c h o o l ,
c o o k e d , c l e a n e d , a n d s h o p p e d f o r t h e f a m i l y . T h e H o f f m a n s a l s o
h i r e d h e l p i n t h e h o m e t o a s s i s t M s . H o f f m a n w i t h s o m e o f t h e
c o o k i n g a n d c l e a n i n g .
M r . H o f f m a n i s a c e r t i f i e d p u b l i c a c c o u n t a n t a n d a
s e n i o r t a x p a r t n e r i n t h e a c c o u n t i n g f i r m o f J o s e p h D e C o s i m o &
C o . , L L P ( h e r e i n a f t e r r e f e r r e d t o a s “ D e C o s i m o ” ) . H e h a s
c o n t i n u a l l y p r a c t i c e d w i t h t h e f i r m s i n c e 1 9 7 3 . A d d i t i o n a l l y ,
M r . H o f f m a n i s o n e o f t h r e e m e m b e r s o f t h e f i r m ’ s m a n a g e m e n t
c o m m i t t e e . T h e p a r t i e s h a v e a c c u m u l a t e d a s u b s t a n t i a l m a r i t a l
e s t a t e t h r o u g h t h e c o u r s e o f t h e i r m a r r i a g e .
T h e p a r t i e s s e p a r a t e d s o m e t i m e i n 1 9 9 5 . M s . H o f f m a n
f i l e d f o r a b e d a n d b o a r d d i v o r c e o n D e c e m b e r 1 2 , 1 9 9 5 . M r .
H o f f m a n f i l e d a c o u n t e r - c o m p l a i n t f o r a n a b s o l u t e d i v o r c e . M s .
H o f f m a n h i r e d G o r d o n T h o m p s o n , a c e r t i f i e d p u b l i c a c c o u n t a n t , t o
a t t e m p t t o v a l u e M r . H o f f m a n ’ s i n t e r e s t i n D e C o s i m o . M s . H o f f m a n
3
s u b p o e n a e d m a n y d o c u m e n t s h e l d b y D e C o s i m o . D e C o s i m o f i l e d a
m o t i o n t o q u a s h w h i c h t h e T r i a l C o u r t g r a n t e d i n p a r t . T h e T r i a l
C o u r t q u a s h e d t h e p o r t i o n s o f t h e s u b p o e n a t h a t r e q u i r e d D e C o s i m o
t o p r o d u c e i n t e r n a l f i n a n c i a l s t a t e m e n t s , c l i e n t l i s t s , a n d
p r o d u c t i v i t y r e p o r t s b y c l i e n t . D e C o s i m o w a s r e q u i r e d t o t u r n
o v e r c o m p l e t e d o c u m e n t a t i o n r e g a r d i n g t h e c a l c u l a t i o n o f t h e
h u s b a n d ’ s i n t e r e s t i n t h e f i r m s e t o u t i n t h e p a r t n e r s h i p
a g r e e m e n t , i n c l u d i n g t h e v a l u a t i o n o f h i s c a p i t a l a c c o u n t , t h e
b a l a n c e s h e e t p o r t i o n o f t h e f i r m ’ s t a x r e t u r n s , f r i n g e b e n e f i t s ,
t h e v a l u e o f h i s a c c r u a l a n d c a s h b a s i s c a p i t a l a c c o u n t , a n d t h e
a m o u n t o f h i s b i - w e e k l y s a l a r y p a y m e n t s f o r 1 9 9 6 .
O n D e c e m b e r 1 7 , 1 9 9 7 , t h e T r i a l C o u r t g r a n t e d t h e
p a r t i e s a n a b s o l u t e d i v o r c e p u r s u a n t t o T . C . A . 3 6 - 4 - 1 2 9 d u e t o
t h e i n a p p r o p r i a t e c o n d u c t o f b o t h p a r t i e s . M s . H o f f m a n w a s
g r a n t e d c u s t o d y o f t h e t h r e e m i n o r c h i l d r e n w i t h M r . H o f f m a n
r e c e i v i n g v i s i t a t i o n r i g h t s . T h e C o u r t g r a n t e d c h i l d s u p p o r t o f
$ 2 , 0 0 0 p e r m o n t h . H e a l s o g r a n t e d a l i m o n y o f $ 3 , 0 0 0 p e r m o n t h
p a y a b l e u n t i l t h e e a r l i e r o f t h e r e m a r r i a g e o f M s . H o f f m a n , d e a t h
o f e i t h e r p a r t y , o r f u r t h e r o r d e r b y t h e C o u r t . A s a d d i t i o n a l
a l i m o n y , M r . H o f f m a n w a s o r d e r e d t o p a y m o r t g a g e p a y m e n t s o n t h e
p a r t i e s ’ h o u s e , u n t i l s o l d u p o n t h e i r s o n D a v i d ’ s g r a d u a t i o n f r o m
h i g h s c h o o l , a n d t h e r e m a i n i n g l e a s e p a y m e n t s o n t h e 1 9 9 6 A c u r a
u s e d b y M s . H o f f m a n .
M r . H o f f m a n ’ s p a r t n e r s h i p i n t e r e s t i n D e C o s i m o w a s a l s o
a t i s s u e i n t h e d i v o r c e . T h e T r i a l C o u r t h e l d t h a t M r . H o f f m a n ’ s
4
i n t e r e s t i n D e C o s i m o w a s b e s t v a l u e d p u r s u a n t t o t h e p a r t n e r s h i p
a g r e e m e n t . M r . H o f f m a n p r e s e n t e d e v i d e n c e t h a t h i s a c c r u a l b a s i s
e q u i t y w a s w o r t h a p p r o x i m a t e l y $ 3 5 9 , 5 0 0 . M s . H o f f m a n p r e s e n t e d
e v i d e n c e t h a t t h e p r e s e n t v a l u e o f t h e a c c r u a l b a s i s c a p i t a l
a c c o u n t w a s w o r t h a p p r o x i m a t e l y $ 3 8 8 , 0 0 0 . T h e C o u r t h e l d t h a t
M r . H o f f m a n ’ s a f t e r - t a x p r e s e n t v a l u e c a l c u l a t i o n o f t h e a c c r u a l
b a s i s c a p i t a l a c c o u n t , a s s u p p o r t e d b y t e s t i m o n y f r o m t w o o f h i s
p a r t n e r s , J o s e p h D e C o s i m o a n d J e r r y A d a m s , w a s t h e m o r e a c c u r a t e
v a l u a t i o n . T h e a c c r u a l b a s i s c a p i t a l a c c o u n t c a l c u l a t i o n
i n c l u d e s M r . H o f f m a n ’ s p r o p o r t i o n a t e s h a r e o f t h e p a r t n e r s h i p ’ s
c a s h , f i x e d a s s e t s , a c c o u n t s r e c e i v a b l e , a n d w o r k i n p r o g r e s s .
M r . H o f f m a n w a s a w a r d e d h i s p a r t n e r s h i p i n t e r e s t i n D e C o s i m o ,
w h i c h w a s v a l u e d a t $ 3 5 9 , 5 0 0 . T o m o r e e q u i t a b l y d i s p o s e o f t h e
a s s e t s a n d l i a b i l i t i e s o f t h e p a r t i e s , t h e C o u r t a w a r d e d M s .
H o f f m a n a n a d d i t i o n a l p r o p e r t y d i v i s i o n o f a l u m p s u m o f
$ 1 5 0 , 0 0 0 . T h i s l u m p s u m i s t o b e p a i d i n a n n u a l i n s t a l l m e n t s o f
$ 1 5 , 0 0 0 f o r a p e r i o d o f 1 0 y e a r s . M r . H o f f m a n m a y r e p a y t h i s s u m
a t a n y t i m e . F u r t h e r , t h e $ 1 5 0 , 0 0 0 o b l i g a t i o n s h a l l n o t e a r n
i n t e r e s t u n l e s s M r . H o f f m a n i s m o r e t h a n 1 0 d a y s l a t e w i t h a
p a y m e n t .
A n o t h e r c o n t e n t i o u s i s s u e i n t h e d i v o r c e w a s M r .
H o f f m a n ’ s c o n t i n g e n t f u t u r e i n t e r e s t u n d e r A r t i c l e 9 o f t h e
D e C o s i m o P a r t n e r s h i p A g r e e m e n t . M r . H o f f m a n w i l l r e c e i v e t h i s
A r t i c l e 9 b e n e f i t u p o n h i s r e t i r e m e n t a f t e r a g e 6 2 , d e a t h , o r
d i s a b i l i t y . T h e A r t i c l e 9 b e n e f i t i s v a l u e d a s a n a m o u n t e q u a l
t o t w o t i m e s t h e g r e a t e r o f t h e t e r m i n a t i n g p a r t n e r ’ s a v e r a g e
5
a n n u a l i n c o m e f r o m t h e p a r t n e r s h i p ( s a l a r y a n d o t h e r ) f o r ( 1 ) t h e
m o s t r e c e n t f i v e f u l l c a l e n d e r y e a r s i m m e d i a t e l y p r i o r t o t h e
t e r m i n a t i n g e v e n t , o r ( 2 ) f i v e f u l l c a l e n d e r y e a r s e n d i n g w i t h
t h e y e a r i n w h i c h t h e t e r m i n a t i n g p a r t n e r a t t a i n s a g e 6 2 . T h i s
a m o u n t i s p a i d o v e r a p e r i o d o f 1 0 y e a r s . T h e C o u r t f o u n d t h a t
u n c e r t a i n t i e s e x i s t a s t o w h e t h e r t h e A r t i c l e 9 b e n e f i t w i l l b e
r e c e i v e d a n d t h e v a l u e o f t h e b e n e f i t s . T h e r e f o r e , M s . H o f f m a n
w a s a w a r d e d , u n d e r C o h e n v . C o h e n , 9 3 7 S . W . 2 d 8 2 3 ( T e n n . 1 9 9 6 ) , a
p e r c e n t a g e o f t h e g r o s s a m o u n t o f e a c h p a y m e n t w h e n a n d a s
r e c e i v e d b y M r . H o f f m a n u n d e r A r t i c l e 9 . T h e C o u r t d e v e l o p e d t h e
f o l l o w i n g f o r m u l a t o d e t e r m i n e t h e p e r c e n t a g e o f t h e m o n t h l y
p a y m e n t t h a t M s . H o f f m a n w i l l r e c e i v e : o n e - h a l f o f 1 2 o v e r 1 2
p l u s N [ 0 . 5 * ( 1 2 / ( 1 2 + N ) ) ] , w h e r e N i s e q u a l t o t h e n u m b e r o f
y e a r s f r o m t h e d a t e o f d i v o r c e u n t i l t h e y e a r t h e f i r s t p a y m e n t
i s p a y a b l e u n d e r A r t i c l e 9 , a n d 1 2 b e i n g t h e n u m b e r o f y e a r s
1
d u r i n g t h e p a r t i e s ' m a r r i a g e t h a t t h e b e n e f i t a c c r u e d . M s .
H o f f m a n m u s t p a y a l l t a x o b l i g a t i o n s o n h e r p o r t i o n o f t h e
A r t i c l e 9 b e n e f i t s r e c e i v e d .
T h e r e m a i n d e r o f t h e m a r i t a l a s s e t s a n d l i a b i l i t i e s
w e r e d i v i d e d b y t h e T r i a l C o u r t . A c o p y o f t h e T r i a l C o u r t ’ s
d i v i s i o n o f m a r i t a l p r o p e r t y s c h e d u l e i s a t t a c h e d a s A p p e n d i x A
t o t h i s o p i n i o n . T h e T r i a l C o u r t f o u n d t h a t M s . H o f f m a n r e c e i v e d
1
F o r e x
a m p l ,e a s s u m e t h a t M r . H o f f m a n r e t i r e s
a t t h e a g e o f 7 0 .
F u
r t h e r , a s s u m e t h
a t t eh m o n t h l y A r t i c l e 9 b e n e f i t r e c e i
v e d b y M r . H o f f m a n i s
$ 5
, 0 0 0 . T h e N t e r
m w o u
l d b e e q u a l t o 1 7 s i n c e M r . H o f f m
a n w a s 5 3 y e a r s o l d a t
t h
e t i m e o f d i v o r c
e a n d w o r k e d f o r a n a d d i t i o n a l 1 7 y e a r
s a f t e r t h e d i v o r c e .
A p
p l i c a t i o n o f t h e f o r m
u l a w o u l d y i e l d t h e f o l l o w i n g r e s
u l t :
$ 5 , 0 0 0 * 0 . 5 * ( 1 2 / ( 1 2 + 1 7 ) ) = $ 5 , 0 0 0 * 0 . 5 * 0 . 4 1 4 = $ 1 , 0 3 4 . 4 8 .
T h e r e f o r e , M s . H o f f m a n w o u l d r e c e i v e $ 1 , 0 3 4 . 4 8 p e r m o n t h w h i l e M r . H o f f m a n
w o u l d r e c e i v e t h e r e m a i n d e r o f t h e m o n t h l y A r t i c l e 9 b e n e f i t .
6
a p p r o x i m a t e l y $ 5 0 , 0 0 0 m o r e t h a n a n e q u i t a b l e s p l i t o f t h e a s s e t s
a n d d e b t s b e t w e e n t h e p a r t i e s . H o w e v e r , t h e a w a r d w a s j u s t i f i e d
s i n c e M r . H o f f m a n ’ s e a r n i n g c a p a c i t y i s m u c h g r e a t e r t h a n M s .
H o f f m a n ’ s .
O u r r e v i e w o f c a s e s t r i e d w i t h o u t a j u r y i s d e n o v o
u p o n t h e r e c o r d w i t h a p r e s u m p t i o n o f c o r r e c t n e s s a s m a n d a t e d b y
R u l e 1 3 ( d ) o f t h e T e n n e s s e e R u l e s o f A p p e l l a t e P r o c e d u r e . T h i s
R u l e r e q u i r e s u s t o u p h o l d t h e f a c t u a l f i n d i n g s o f t h e t r i a l
c o u r t u n l e s s t h e e v i d e n c e p r e p o n d e r a t e s a g a i n s t t h e m . C a m p a n a l i
v . C a m p a n a l i , 6 9 5 S . W . 2 d 1 9 3 ( T e n n . A p p . 1 9 8 5 ) . A l s o , t r i a l c o u r t s
h a v e w i d e d i s c r e t i o n c o n c e r n i n g t h e d i v i s i o n o f t h e p a r t i e s '
m a r i t a l e s t a t e . W a l l a c e v . W a l l a c e , 7 3 3 S . W . 2 d 1 0 2 ( T e n n .
A p p . 1 9 8 7 ) . T h e t r i a l c o u r t ’ s d i v i s i o n o f m a r i t a l p r o p e r t y i s
e n t i t l e d t o g r e a t w e i g h t o n a p p e a l a n d i s p r e s u m e d p r o p e r u n l e s s
t h e e v i d e n c e p r o v e s o t h e r w i s e . B a t s o n v . B a t s o n , 7 6 9 S . W . 2 d 8 4 9
( T e n n . A p p . 1 9 8 8 ) ; L a n c a s t e r v . L a n c a s t e r , 6 7 1 S . W . 2 d 5 0 1
( T e n n . A p p . 1 9 8 4 ) . I t i s w i t h t h e s e s t a n d a r d s i n m i n d t h a t w e
u n d e r t a k e o u r r e v i e w o f t h e T r i a l C o u r t ’ s d e c i s i o n .
M s . H o f f m a n ’ s f i r s t i s s u e o n a p p e a l i s w h e t h e r t h e
T r i a l C o u r t e r r e d i n q u a s h i n g a s u b p o e n a d u c e s t e c u m r e g a r d i n g
t h e p r o d u c t i o n o f d o c u m e n t s r e l a t i n g t o M r . H o f f m a n ’ s o w n e r s h i p
i n t e r e s t i n J o s e p h D e C o s i m o & C o . , L L P . T h e d e c i s i o n t o q u a s h a
s u b p o e n a d u c e s t e c u m r e s t s i n t h e s o u n d d i s c r e t i o n o f t h e t r i a l
c o u r t . O g r o d o w c z y k v . T e n n e s s e e B d . f o r L i c e n s i n g H e a l t h C a r e
F a c i l i t i e s , 8 8 6 S . W . 2 d 2 4 6 ( T e n n . A p p . 1 9 9 4 ) ; B r o w n v . B r o w n , 8 6 3
7
S . W . 2 d 4 3 2 ( T e n n . A p p . 1 9 9 3 ) . A s u b p o e n a d u c e s t e c u m m a y b e d e n i e d
i f t h e s u b p o e n a w o u l d i m p o s e a n u n d u e b u r d e n a n d s u b s t a n t i a l
e x p e n s e , i f m o s t o f t h e m a t e r i a l s s o u g h t c o u l d b e o b t a i n e d
e l s e w h e r e , o r i f t h e m a t e r i a l s s o u g h t a r e n o t s u f f i c i e n t l y
r e l e v a n t t o t h e p r o c e e d i n g s t o j u s t i f y t h e b u r d e n a n d e x p e n s e .
O g r o d o w c z y k , s u p r a ; B r o w n , s u p r a .
B e f o r e d e t e r m i n i n g w h e t h e r t h e T r i a l C o u r t p r o p e r l y
q u a s h e d t h e s u b p o e n a d u c e s t e c u m , w e m u s t f i r s t p a s s u p o n t h e
u n d e r l y i n g q u e s t i o n , w h e t h e r t h e C o u r t u t i l i z e d t h e p r o p e r
v a l u a t i o n t e c h n i q u e s f o r M r . H o f f m a n ’ s p a r t n e r s h i p i n t e r e s t i n
D e C o s i m o . The Trial Court valued the partnership interest
according to the method set out in the Partnership Agreement,
which excluded any goodwill factor. Courts may utilize several
different methods to value partnership interests. Hazard v.
Hazard, 833 S.W.2d 911 (Tenn.App.1991); Smith v. Smith, 709
S.W.2d 588 (Tenn.App.1985). We find that the Trial Court’s
valuation as established in the Partnership Agreement is
consistent with Hazard and Smith. Although other valuation
variations may be utilized, the Trial Court acted within its
discretion in applying the Partnership Agreement valuation
method.
The portions of the subpoena duces tecum which were
quashed sought internal financial statements, client lists, and
productivity reports by client. These materials were unnecessary
for calculation of the partnership interest under the Partnership
Agreement. We note that the requested materials are confidential
and sensitive materials used for internal business purposes.
8
Courts should force a company to disclose this information only
when absolutely necessary.
DeCosimo disclosed all documents required to value Mr.
Hoffman’s partnership interest under the Partnership Agreement.
Since the materials in the quashed portion of the subpoena sought
by Ms. Hoffman were unnecessary for use in the valuation
technique approved by the Court, Ms. Hoffman has shown
insufficient grounds for disturbing the Trial Court’s
discretionary decision.
Ms. Hoffman’s second issue on appeal is whether the
Trial Court erred in its valuation and division of the marital
property. This issue specifically calls into question the
valuation and division of Mr. Hoffman’s partnership interest, the
Article IX interest of the Partnership Agreement, and the marital
residence. We first discuss the valuation and division of Mr.
Hoffman’s partnership interest. As discussed above, we find that
the Trial Court properly valued Mr. Hoffman’s partnership
interest by using the method set out in the DeCosimo Partnership
Agreement. The Trial Court divided the partnership interest by
awarding the partnership interest to Mr. Hoffman and awarding Ms.
Hoffman $150,000 cash, payable in 10 annual payments of $15,000
without interest. The Trial Court found that this division
awarded Ms. Hoffman more than an equitable division of the
marital property but stated that it was fair due to the
difference in the earning capacities of the parties. T.C.A. 36-
4-121(a) provides that marital property must be equitably divided
without regard to fault. An equitable division is not
necessarily an equal one. In light of the overall division of
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the marital property, we find that this division of the
partnership interest is equitable and should stand.
However, Ms. Hoffman raises the additional issue of
whether interest should be awarded on the $150,000 award. T.C.A.
47-14-121 mandates that:
Interest on judgments, including decrees, shall be
computed at the effective rate of ten percent (10%) per
annum, except as may be otherwise provided or permitted
by statute; provided, that where a judgment is based on
a note, contract, or other writing fixing a rate of
interest within the limits provided in § 47-14-103 for
that particular category of transaction, the judgment
shall bear interest at the rate so fixed.
We read this Code Section to mean that if a court does
not otherwise provide and a statutory provision does not
otherwise permit, interest shall be awarded according to T.C.A.
47-14-121. See Brown v. Brown, 913 S.W.2d 163 (Tenn.App.1994);
Inman v. Inman, 840 S.W.2d 927 (Tenn.App.1992). In Brown, this
Court awarded an additional cash award payable over time without
interest. The Inman Court ruled that interest should be awarded
on a cash award payable over time while the trial court had been
silent on the issue. T h u s , i t a p p e a r s t h a t i n d o m e s t i c r e l a t i o n s
c a s e s , a c o u r t m a k i n g a c a s h a w a r d o v e r t i m e - - w h e t h e r t h i s C o u r t
o r t h e T r i a l C o u r t - - i s c l o t h e d w i t h t h e d i s c r e t i o n t o a w a r d o r
d e n y i n t e r e s t t h e r e o n .
In this case, the Trial Court ruled that no interest
would be paid on the $150,000 cash award payable over 10 years.
The Trial Court acted well within its discretion in awarding no
interest since Ms. Hoffman received $50,000 more than Mr. Hoffman
1 0
after the division of the parties’ assets and liabilities. By
not awarding interest, the Trial Court attempted to more
equitably divide the parties’ assets and liabilities. Therefore,
we uphold the Trial Court’s decision in awarding no interest on
the cash award.
Next, we consider the valuation and division of the
Article IX interest in the Partnership Agreement. Mr. Hoffman
raises the additional issue of whether, if a division of the
future interest is proper, the award should be an after-tax
award. The Article IX future interest is awarded upon Mr.
Hoffman’s death, retirement, or disability while a partner of
DeCosimo. This future interest acts as a retirement benefits
plan. Mr. Hoffman will not receive these future interest
benefits if he retires before the age of 62, he is expelled from
the firm, or the firm is dissolved. Although the likelihood that
Mr. Hoffman will receive these benefits is good, the future
interest is still speculative since events can occur which will
bar the receipt of the future interest. As a result, the Trial
Court devised a formula, set out above, to divide Mr. Hoffman’s
Article IX future interest.
Our Supreme Court has held that a deferred distribution
method should be used to distribute unvested retirement benefits
when the vesting is uncertain. Cohen v. Cohen, supra. The
deferred distribution method allows the court to determine the
formula for dividing the monthly benefit at the time of the
decree while delaying the actual distribution until the future
interest becomes payable. The division method suggested in Cohen
is that the trial court should award a percentage of the marital
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property interest. This percentage may be formulated by dividing
the number of months of the marriage during which the benefits
accrued by the total number of months that the benefits
accumulated. The Cohen Court further instructed that the
valuation method remains within the discretion of the trial court
and that court’s decision should not be disturbed unless the
division is not essentially fair in light of all circumstances of
the case.
Mr. Hoffman’s Article IX benefits are presently
unvested since Mr. Hoffman will not receive these benefits upon
the occurrence of certain events. The value of such benefits is
also speculative since the monthly future interest payments are
based upon an average of the previous five years earnings. Since
these earnings are unknown until the time when the future
interest vests, the Trial Court properly utilized the deferred
distribution method set out in Cohen. We also find that the
Trial Court’s formula is an equitable method of division and
follows the suggestions of Cohen. Thus, we uphold the Trial
Court’s division of the Article IX benefits.
The Trial Court ordered Ms. Hoffman to pay taxes on her
share of the monthly Article IX benefits she receives. Mr.
Hoffman requests this Court to award an after-tax division. This
would allow Mr. Hoffman to receive a tax deduction on the entire
amount of the monthly benefit payment while Ms. Hoffman would
receive theoretically the same amount but without the tax
benefit. We find this request unfair to Ms. Hoffman and uphold
the Trial Court’s order. Ms. Hoffman shall directly receive one-
half of her percentage of the gross monthly benefit payment from
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DeCosimo while Mr. Hoffman shall receive the remainder. The
direct payment from DeCosimo to each party will prevent Mr.
Hoffman from listing on his tax returns that he paid Ms. Hoffman
one-half of the total monthly benefit payment. Each shall pay
the appropriate tax on their share of the monthly benefit
payment.
Ms. Hoffman also appeals the valuation and division of
the marital residence. The Trial Court actually averted
valuation through the division of the residence. The Court
ordered the home sold three years after the decree was issued.
Ms. Hoffman would then receive 60 percent of the net equity. Mr.
Hoffman must pay the mortgage payments until the house is sold.
The marital residence of the parties is a large home and only one
child will be living at home with Ms. Hoffman at the time the
house is to be sold. In light of the Trial Court’s overall
division of the marital property, we find this division of the
martial residence equitable to both parties.
The third issue on appeal is whether the Trial Court
erred in the amount of child support ordered. At the time of
trial, three of the parties’ children were minors. Ms. Hoffman
received custody of the children and was awarded $2,000 per month
as child support by decree of the Trial Court. The Court
provided no support nor analysis in reaching a determination of
the amount of child support. Nor did the Court apply the Child
Support Guidelines to formulate the child support amount.
Courts shall apply as a rebuttable presumption the
Child Support Guidelines whenever making its determination
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concerning the amount of child support. T.C.A. 36-5-101(e)(1).
The court can rebut this presumption if it finds sufficient
evidence and makes a written finding that applying the Guidelines
would be unjust or inappropriate. T.C.A. 36-5-101(e)(1). The
Trial Court did not apply the Child Support Guidelines nor did it
make a written finding on why the Guidelines should not be
applied. Therefore, we must reverse the Trial Court’s decision
on the amount of child support awarded.
In determining the appropriate amount of child support,
we begin with the Child Support Guidelines. Rule 1240-2-4-.04(3)
states:
The court must order child support based upon the
appropriate percentage of all net income of the obligor
as defined according to 1240-2-4-.03 of this rule but
alternative payment arrangements may be made for the
award from that portion of net income which exceeds
$6,250. When the net income of the obligor exceeds
$6,250 per month, the court may establish educational
or other trust funds for the benefit of the child(ren)
or make other provisions in the child(ren)’s best
interest; however, all of the support award amount
based on net income up through $6,250 must be paid to
the custodial parent.
The percentage of net income is 41 percent for three children and
32 percent for two children. Rule 1240-2-4-.03(5).
Ms. Hoffman contends that Mr. Hoffman’s monthly net
income is $15,226.35, while Mr. Hoffman estimates his monthly net
income as $14,592. After reviewing the record, we note that the
Trial Court made no findings of fact on the amount of Mr.
Hoffman’s net monthly income. However, Mr. Hoffman definitely
earns more than $6,250 of net income per month. Therefore, we
hold that Mr. Hoffman must pay 41 percent of $6,250 per month to
1 4
Ms. Hoffman until their son Richie graduates in May 1998. Thus,
Mr. Hoffman must pay Ms. Hoffman $2,562.50 per month. Mr.
Hoffman must also pay the difference between the $2,562.50 per
month ordered in this opinion and the $2,000 per month ordered by
the Trial Court for all payments previously made. After Richie
graduates in May 1998, Mr. Hoffman must pay Ms. Hoffman 32
percent of $6,250 per month, which equals $2,000 per month.
In light of the division of the marital property and
the alimony awarded, discussed below, we hold that this amount of
alimony should allow the Hoffmans’ children to enjoy an
equivalent lifestyle to that enjoyed before their parents’
divorce. In addition, Mr. Hoffman must continue to pay the
private school educational expenses for all of the minor
children. This award complies with the 1994 version of Rule
1240-2-4-.04(3) since the Court has discretion to award
educational expenses in addition to the child support award when
the net income exceeds $6,250 per month. Either party may
petition the Court for an alteration of the child support award
whenever warranted by changed circumstances.
Ms. Hoffman argues that the child support should also
be increased since Mr. Hoffman did not spend a substantial amount
of time with his children before the divorce. Rule 1240-2-4-
.04(1)(b) allows for such a modification only when the children
are not staying with a parent for the full duration of that
parent’s visitation rights. We have no facts on the issue of
whether Mr. Hoffman is fully utilizing his visitation privileges.
Ms. Hoffman must petition the Trial Court and put forth
sufficient evidence before the award of child support will be
1 5
altered. Therefore, the child support award stands as previously
stated in place of the Trial Court’s award.
Ms. Hoffman’s fourth issue on appeal, as previously
noted, is whether the Trial Court erred in the amount of alimony
awarded to Ms. Hoffman. Mr. Hoffman also raises the issue of
whether the Trial Court erred in awarding Ms. Hoffman periodic
alimony as opposed to rehabilitative alimony. We begin our
analysis by examining whether the Trial Court awarded the
appropriate type of alimony. Periodic alimony is paid monthly
until the death of either party or the remarriage of the party
receiving alimony. Rehabilitative alimony should be awarded when
the party receiving alimony could never be rehabilitated relative
to the earnings of the party paying alimony. Whenever one of the
parties is economically disadvantaged and rehabilitation is not
feasible in consideration of all relevant factors, then the court
should order payment of support until the death of either party
or remarriage of the party receiving alimony. T.C.A. 36-5-
101(d)(1).
The Hoffmans were married for over 23 years. Ms.
Hoffman has no college degree and worked in the home for the
duration of the marriage as a homemaker. She also has no
vocational skills. Mr. Hoffman, on the other hand, is a senior
tax partner in the DeCosimo accounting firm who earns in excess
of $200,000 per year. Although Ms. Hoffman speaks five
languages, she can never be rehabilitated and will remain
economically disadvantaged in comparison to Mr. Hoffman.
Therefore, we hold that the Trial Court properly awarded Ms.
Hoffman periodic alimony.
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The Trial Court awarded as alimony $3,000 per month in
addition to $2,000 per month on the house note payment, Ms.
Hoffman’s car lease payments, and health insurance for Ms.
Hoffman for three years at $67.00 per month. This amounts to
$5,467 per month alimony until the house is sold. The Trial
Court found that Ms. Hoffman had excessive spending habits and
could live comfortably on the amount of alimony awarded.
Courts must look to all relevant factors, including
those set out in T.C.A. 36-5-101(d)(1)(A-L) in determining the
amount of alimony. After reviewing those factors, considering
Ms. Hoffman’s excessive spending habits, the disparity in the
parties’ incomes, and the division of the marital property and
debts, we uphold the Trial Court’s award of alimony. The Trial
Court acted well within its discretion and equitably awarded a
sufficient amount of alimony to Ms. Hoffman.
The final issue for consideration, as previously noted,
is whether the Trial Court erred in its allocation of the debts
to the parties. T.C.A. 36-5-121 requires the court to make an
equitable division of assets and debts. After the marital assets
have been equitably divided, the court has the discretion to
order the payment of marital debt in a just and equitable manner
considering the respective earning capacities of the parties.
Hanover v. Hanover, 775 S.W.2d 612 (Tenn.App.1989).
Although the parties disagree as to what debt should
properly be considered as marital debt, it is apparent from the
record that the Trial Court ordered Mr. Hoffman to pay the
majority of the debt owed by the parties. Considering Mr.
1 7
Hoffman’s earning capacity is much greater than Ms. Hoffman’s,
the division of the marital property, and the support payments
Mr. Hoffman must pay, we conclude that the Trial Court acted well
within its discretion and equitably divided the marital debt.
Thus, we affirm the Trial Court’s division of the marital debt.
For the foregoing reasons, the judgment of the Trial
Court is affirmed in part, reversed in part, and the cause
remanded for such further orders, if any, as may be necessary and
collection of costs below. Costs of appeal are adjudged one-half
against Mr. Hoffman and one-half against Ms. Hoffman and her
surety.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
H o u s t o n M . G o d d a r d , P . J .
C O N C U R :
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C h a r l e s D . S u s a n o , J r . , J .
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
W i l l i a m H . I n m a n , S r . J .
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