Timothy Wade Keyt v. Nanci Suzanne Keyt

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
April 13, 2010 Session
TIMOTHY WADE KEYT v. NANCI SUZANNE KEYT
Appeal from the Chancery Court for Putnam County
No. 02-174 Ronald Thurman, Chancellor
No. M2008-01609-COA-R3-CV - Filed May 14, 2010
This is the second appeal in a divorce action. Husband appeals the division of marital
property and the award of alimony in solido to Wife. In the 2005 Final Decree of Divorce,
the trial court determined that the husband’s shares of stock in the family business, which his
parents gifted to him, were his separate property; however, the appreciation of that stock
during the marriage, $1.7 million, was held to be marital property. The court awarded the
wife 37.5 percent of the marital estate and alimony in futuro of $1,500 per month for the first
year and $2,500 per month thereafter. This court affirmed the division of marital property but
modified the award of alimony, holding that she was entitled to eight years of rehabilitative
alimony but not alimony in futuro. The Supreme Court held that the appreciation of the
husband’s stock was his separate property, not marital property, and remanded the case to the
trial court to reconsider the division of the marital estate and to reconsider the award of
alimony due to the substantial reduction of the marital estate. On remand, the trial court
awarded the wife 64 percent of the substantially reduced marital estate and granted her
alimony in solido in the amount of $478,000. In this second appeal by the husband, we affirm
the division of marital property, finding it is not inequitable under the circumstances, and we
affirm the award of alimony in solido to Wife, finding that the award was based on the
relevant factors in Tenn. Code Ann. § 36-5-121(i).
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which P ATRICIA J.
C OTTRELL, P.J., M.S., and A NDY D. B ENNETT, J., joined.
Michael W. Binkley, Franklin, Tennessee, for the appellant, Timothy Wade Keyt.
William F. Roberson, Jr., Cookeville, Tennessee, for the appellee, Nanci Suzanne Keyt.
OPINION
Husband, Timothy Wade Keyt, and Wife, Nanci Suzanne Keyt, were married in 1988.
In May 2002, Husband filed for divorce citing irreconcilable differences and inappropriate
marital conduct. Wife filed an answer and counter-complaint alleging irreconcilable
differences and inappropriate marital conduct by Husband, and she asserted claims for
alimony and an equitable division of the marital estate.
In the first trial of this case, which was held in 2004, Husband’s interest in Service
Transport, Inc., a family business founded by his father, was a principal issue. Husband
owned 14.24 percent of the company, which he acquired as his parents made annual gifts of
shares to him.1 The company had an estimated value of $18 million and Husband’s share was
estimated to be $2,563,200.
It was undisputed that Husband maintained the stock as his separate property
throughout the marriage; nevertheless, Wife claimed the appreciation in the value of the
stock during their seventeen-year marriage constituted marital property because Husband
worked for the family business since he was 23 years old and his efforts increased the value
of the business. The trial court agreed with Wife and classified as marital property the
amount the stock appreciated in value during the marriage. The trial court further found that
Husband’s 14.24 percent interest in Service Transport, valued at $2,563,200, had appreciated
by $1,740,904 during the marriage as a consequence of Husband’s efforts. Accordingly, the
trial court included that amount as part of the marital estate and with the inclusion of the
appreciation in value of Husband’s interest in Service Transport, the marital estate was
valued at $2,221,820.2
In its Final Decree of Divorce on January 24, 2005, the trial court granted Wife the
divorce on the ground of Husband’s inappropriate marital conduct. In the division of marital
property, Wife was awarded 37.5 percent of the marital estate. She received the marital
1
Husband’s parents implemented an estate plan in 1984 pursuant to which annual gifts were made
to Husband at the maximum level of the annual gift tax exemption. The gifts, which were in the form of cash
or Service Transport stock, were made all but two years from 1984 to 2001. The gifts were valued at $20,000
per year.
2
The sales contract established that Husband was entitled to $2,563,200 as his share of the gross
proceeds; however, a certified public accountant explained that Husband’s net proceeds were only
$1,283,367.65 as a consequence of deductions for indemnities the sellers owed the buyer. Husband also
retained a 14.24% interest in real estate reserved from the sale of stock; Husband’s share of the real estate
retained was valued at $709,904. The methodology used to calculate these figures is explained by the
Supreme Court in its opinion. See Keyt v. Keyt, 244 S.W.3d 321, 326 (Tenn. 2007).
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residence, a separate residence in which Wife’s mother resided, Husband’s 401(k) plan, and
a cash award of $520,000 as her share of the appreciation of the stock. Husband received a
houseboat, tracker, motorcycle, and the BKM Truck Terminal. Husband also retained other
substantial assets that were classified as his separate property. The trial court also awarded
Wife alimony in futuro of $1,500 per month for one year and $2,500 per month thereafter.
In the first appeal, this court affirmed the division of the marital estate, but reversed
and modified the award of alimony, changing it from in futuro to eight years of rehabilitative
alimony. The Tennessee Supreme Court, in its opinion filed on December 19, 2007, reversed
the division of the marital estate, holding that Husband did not substantially contribute to the
appreciation of the stock in Service Transport and, therefore, the appreciation was not an
asset of the marital estate. See Keyt v. Keyt, 244 S.W.3d 321 (Tenn. 2007). Accordingly, the
Supreme Court remanded the case to the trial court for reconsideration of the division of
marital property. The Supreme Court also directed the trial court to reconsider the award of
alimony due to the substantial change in the division of the marital estate.
In the interim, after this court filed its opinion in the first appeal, but before the
Supreme Court filed its opinion, Husband paid Wife $478,000 as the balance of her share of
the marital estate. Following the release of the Supreme Court’s decision, Husband sought
an injunction to preserve the money Husband had previously paid to Wife as part of the
previous division of marital property. As Wife had used a substantial portion of the assets to
pay off the mortgages on the real property awarded to her, the trial court enjoined Wife from
encumbering her real property. Thereafter, the trial court took up the issues as directed by the
Supreme Court, the division of the marital estate and alimony.
On June 17, 2008, the trial court conducted a hearing concerning the two issues
remanded by the Supreme Court and limited the proof to that which had been presented in
the August 2004 trial.1 That proof established that during the marriage Wife did not work
outside the home, she was the primary caregiver to the parties’ child, she had a high school
education, she had worked in sales for six years prior to the marriage, and that Wife had no
separate assets of any real value. The proof also established that Husband had attended three
years of college, he worked for Service Transport his entire adult life in various capacities,
his monthly income at the time of the divorce was $13,370, he received net cash proceeds
of $1,283,368 from the sale of his 14.24 percent interest in Service Transport in 2002, and
he retained real estate of which his proportionate interest was valued at $709,904.
1
This case was presided over by Chancellor Vernon Neal at all times prior to September 1, 2006,
when Chancellor Neal retired. He was succeeded in office by Chancellor Ronald Thurman, who has presided
over this matter ever since, including the reconsideration of the issues on remand in 2008. The Final Order
After Remand from which this appeal arises was issued by Chancellor Thurman.
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The trial court issued its Final Order After Remand on June 27, 2008. As directed by
the Supreme Court, the trial court excluded the appreciation of Husband’s stock in Service
Transport from the marital estate. The trial court then examined the marital estate and
decided to reaffirm the division of marital property as stated in the 2005 divorce decree – less
the $520,000, the amount awarded to Wife from the stock appreciation, which had been ruled
as Husband’s separate property. As a result, Wife received 64 percent of the marital estate
and Husband received 36 percent of the marital estate. The court specifically found that the
division was equitable under the relevant factors in Tenn. Code Ann. § 36-4-121(c). The
court then reevaluated the award of alimony to Wife by applying the relevant factors in Tenn.
Code Ann. § 36-5-121(i) and the public policy as stated in Tenn. Code Ann. § 36-5-121(c).
After making numerous and specific findings of facts, which are discussed in our analysis
that follows, the trial court awarded Wife $478,000 as alimony in solido. The trial court
denied Wife’s request for attorneys’ fees finding that the award of alimony in solido and
marital property offset her need to be reimbursed for her attorney’s fees and expenses.
Thereafter, Husband filed the second appeal in this matter.
A NALYSIS
Husband contends that the trial court erred in its division of the marital property and
in its award of alimony in solido to Wife. We shall address each issue in turn.
D IVISION OF M ARITAL P ROPERTY
Following a hearing, the trial court found it “equitable for Wife to own all of the
marital property awarded to her by Chancellor Neal in Paragraph 7, subparagraphs (a)-(e) of
the [2005] Final Decree,” less the $520,000 cash award. As the Final Decree After Remand
reveals, Wife was awarded the marital residence, a second residential property in which her
mother resides, Husband’s 401(k), and a 2002 Camaro. Husband was awarded a houseboat,
a tracker, a motorcycle, and interest in a BKM Truck Terminal. With the appreciation of
Husband’s stock classified as his separate property, which was the largest asset in the marital
estate, the percent of the marital estate awarded to Wife increased to 64 percent.2 Husband
contends this is not equitable.
2
In his brief, Husband stated that Wife received 83 percent of the marital estate, not 64 percent. At
oral argument, Husband’s attorney announced that he had miscalculated the assets and stipulated that Wife’s
figures were correct, that Wife received 64 percent and Husband received 36 percent of the marital estate.
We wish to express our appreciation to Husband’s counsel for voluntarily acknowledging the error in his
brief; other attorneys should follow his lead.
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The classification of the parties’ property as separate or marital is no longer at issue.
Moreover, the valuation of marital property is no longer at issue. Accordingly, our focus is
on the division of the marital property.3
The trial court has wide latitude in the division of marital property. Kinard, 986
S.W.2d at 230. A division of marital property in an equitable manner does not require that
the property be divided equally, Robertson v. Robertson, 76 S.W.3d 337, 341 (Tenn. 2002),
and it is not a mechanical process; rather, it should be guided by considering the factors in
Tenn. Code Ann. § 36-4-121(c). Kinard v. Kinard, 986 S.W.2d 220, 230 (Tenn. Ct. App.
1998). Factors to consider in the division of the marital estate include:
(1) The duration of the marriage;
(2) The age, physical and mental health, vocational skills, employability,
earning capacity, estate, financial liabilities and financial needs of each of the
parties;
(3) The tangible or intangible contribution by one (1) party to the education,
training or increased earning power of the other party;
(4) The relative ability of each party for future acquisitions of capital assets
and income;
(5) The contribution of each party to the acquisition, preservation,
appreciation, depreciation or dissipation of the marital or separate property,
including the contribution of a party to the marriage as homemaker, wage
earner or parent, with the contribution of a party as homemaker or wage earner
to be given the same weight if each party has fulfilled its role;
(6) The value of the separate property of each party;
(7) The estate of each party at the time of the marriage;
(8) The economic circumstances of each party at the time the division of
property is to become effective;
(9) The tax consequences to each party, costs associated with the reasonably
foreseeable sale of the asset, and other reasonably foreseeable expenses
associated with the asset;
(10) The amount of social security benefits available to each spouse; and
(11) Such other factors as are necessary to consider the equities between the
parties.
Tenn. Code Ann. § 36-4-121(c)(1)-(11).
3
Once the marital property has been identified and valued, the trial court is to divide the marital
property in an equitable manner. Tenn. Code Ann. § 36-4-121(a)(1); Miller v. Miller, 81 S.W.3d 771, 775
(Tenn. Ct. App. 2001).
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The relevant facts are undisputed. Husband and Wife were married for seventeen
years, during which time Husband was always the primary financial contributor, while Wife
was always primarily responsible for the care of the home and the parties’ child. Husband has
a far superior income and a far superior earning capacity than Wife. Husband’s separate
estate, which appears to exceed $2,000,000, dwarfs that of Wife’s for she has no separate
assets of any value. Moreover, the relative ability of each party for future acquisitions of
capital assets and income once again places Wife at another significant disadvantage.
The Final Order After Remand reveals that the trial court considered the relevant
factors listed in Tenn. Code Ann. § 36-4-121(c) in the division of marital property. This court
accords great weight to the trial court’s division of marital property, Wilson v. Moore, 929
S.W.2d 367, 372 (Tenn. Ct. App. 1996), and we defer to the trial court’s decision unless it
is inconsistent with the factors in Tenn. Code Ann. § 36-4-121(c), or is not supported by a
preponderance of the evidence. Brown v. Brown, 913 S.W.2d 163, 168 (Tenn. Ct. App.
1994). After considering the relevant statutory factors and the evidence in the record, we
have determined that the trial court’s division of the marital estate is not inconsistent with
the factors in Tenn. Code Ann. § 36-4-121(c) and that the evidence does not preponderate
against the trial court’s division of the marital estate. Accordingly, the division of the marital
estate is affirmed.
A LIMONY IN S OLIDO
The trial court granted Wife alimony in solido in the amount of $478,000. Husband
contends that the trial court abused its discretion by awarding alimony in excess of Wife’s
financial needs and the standard of living she enjoyed during the marriage. Specifically,
Husband argues that the trial court “simply changed the Wife’s allocation of the Husband’s
interest in his father’s corporation from division of ‘marital property’ to ‘alimony in solido.’”
The question, as Husband identifies it in his brief, is “whether the increase in value of
Husband’s separate property should determine the type and the amount of alimony to be
awarded. . . .”
It has long been recognized in Tennessee that the trial court has broad discretion in
awarding spousal support. Broadbent v. Broadbent, 211 S.W.3d 216, 220 (Tenn. 2006)
(citing Bratton v. Bratton, 136 S.W.3d 595, 605 (Tenn. 2004)). Further, the trial court has
broad discretion to determine whether spousal support is needed and, if so, the nature,
amount, and duration of support. See Garfinkel v. Garfinkel, 945 S.W.2d 744, 748 (Tenn. Ct.
App. 1996). Accordingly, we are generally disinclined to second-guess a trial judge’s
decision regarding spousal support unless it is not supported by the evidence or is contrary
to the public policies reflected in the applicable statutes. Broadbent, 211 S.W.3d at 220;
Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001); Kinard, 986 S.W.2d at 234).
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The General Assembly has directed in Tenn. Code Ann. § 36-5-121(c)(2) that where
one spouse suffers economic detriment for the benefit of the marriage, e.g., by staying home
to care for the parties’ children instead of pursuing a career, the economically disadvantaged
spouse’s post-divorce standard of living should “be reasonably comparable to the standard
of living enjoyed during the marriage or to the post-divorce standard of living expected to
be available to the other spouse, considering the relevant statutory factors and the equities
between the parties.” The statutory factors a trial judge is to consider when deciding whether
to award alimony and, if so, the type of alimony and the amount and duration, are set forth
at Tenn. Code Ann. § 36-5-121(i).
(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;
....
(7) The separate assets of each party, both real and personal, tangible and
intangible;
(8) The provisions made with regard to the marital property;
(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, . . . as are necessary to consider the equities between
the parties.
Tenn. Code Ann. § 36-5-121(i).
In this case, the trial court correctly found that Wife was economically disadvantaged
compared to Husband. That determination was based on the following specific findings of
fact, which the trial court found to be “especially relevant”:
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A. The divorce was granted to [Wife] on her Counter-Complaint because of
the inappropriate marital conduct of [Husband]. Chancellor Vernon Neal found
Wife and her witnesses to be more truthful and credible.
B. Separate property of the parties must be considered as Husband has over
Two Million ($2,000,000) Dollars of separate property while Wife has little
separate property.
C. Husband has a significantly greater earning capacity than Wife. Chancellor
Neal found [Husband] to have income of $14,423.00 per month. [Wife] has
been out of the job market a good while as the parties agreed she would be a
stay at home Mother since the parties’ child was born in 1990. She was a full-
time homemaker and also the family financial manager. The proof showed
Wife has Hashimoto disease, which is a disease causing her internal organs to
age faster than normal. But no proof showed that the disease prevented her
from working or caused or to be totally incapacitated. The Court of Appeals
found Wife could be rehabilitated. The undersigned concurs in that finding.
D. Wife has a high school education. Husband has completed three years of
college.
E. [Wife] has made significant contributions caring for the parties’ home and
child. Husband worked for Service Transport, Inc. and was away from home
on the road three to four nights a week much of the time.
F. Wife has a need for alimony and Husband has the ability to pay. Husband’s
separate property stock in Service Transport, Inc. and its appreciation in value
during the marriage (which was ruled by the Supreme Court to also be his
separate property) was valued at $1,993,272.00. (As shown in Paragraph 5 of
the Final Decree, Husband’s net money proceeds from the sale were
$1,283,368.00 and his interest in Dartmoor Realty, LLC received from the sale
of Service Transport, Inc. was valued at $709,904.00).
The trial court then stated in its June 27, 2008 Final Order After Remand that it
considered the facts set forth above and the relevant law, including Tenn. Code Ann. § 36-5-
121(h) and § 36-5-121(d)(5)), and found it appropriate to order Husband to pay to Wife, in
a lump sum, alimony in solido, in the amount of $478,000.00.
It is the role of this court in reviewing an award of spousal support to determine
whether the trial court applied the correct legal standard and reached a decision that is not
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clearly unreasonable. Id. (citing Bogan, 60 S.W.3d at 733). As revealed in the June 27, 2008
order, the trial court considered the relevant statutory factors in Tenn. Code Ann. § 36-5-
121(i), it made specific findings regarding those factors as well as the General Assembly’s
intent stated in Tenn. Code Ann. § 36-5-121(c)(2), finding that Wife was economically
disadvantaged as compared to Husband, that Wife had little separate property of her own,
while Husband had substantial separate assets, that Husband had a greater earning capacity
than Wife, and that Wife had made significant contributions during the marriage caring for
the parties’ home and child while Husband worked. The trial court also found that Wife had
the need for alimony while Husband had the ability to pay.
We are generally disinclined to second-guess a trial judge’s decision regarding spousal
support unless it is not supported by the evidence. Broadbent, 211 S.W.3d at 220; Bogan, 60
S.W.3d at 727. We have determined that the trial court’s findings of fact are fully supported
by the evidence in this record. Thus, the question is whether the amount of the award is
clearly unreasonable. See Broadbent at 220, see also Bogan, 60 S.W.3d at 733.
As Husband correctly notes, the amount of alimony in solido awarded to Wife is the
same amount as the cash payment made by Husband after the stay was lifted in 2007. We
recognize this is more than a coincidence; however, that fact standing alone is not sufficient
for us to conclude that an award of $478,000 of alimony in solido is clearly unreasonable in
light of the fact Husband has separate assets of approximately $2 million and an earning
capacity that greatly exceeds that of Wife. As we noted earlier, the trial court has broad
discretion to determine the nature and amount of alimony, see Garfinkel, 945 S.W.2d at 748,
and we will not reverse or modify the court’s decision regarding spousal support unless it is
not supported by the evidence or is contrary to the public policies reflected in the applicable
statutes. Broadbent, 211 S.W.3d at 220; Bogan, 60 S.W.3d at 727; Kinard, 986 S.W.2d at
234. We have determined the trial court’s decision to award Wife alimony in solido of
$478,000 is not contrary to public policy and it is supported by the evidence. Accordingly,
the award of $478,000 to Wife as alimony in solido is affirmed.
I N C ONCLUSION
The judgment of the trial court is affirmed in all respects, and this matter is remanded
with costs of appeal assessed against the appellant, Timothy Wade Keyt.
______________________________
FRANK G. CLEMENT, JR., JUDGE
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