Thomas Henry Campbell v. Ruth Caroline Campbell

IN THE COURT OF APPEALS OF TENNESSEE
WESTERN SECTION AT JACKSON
______________________________________________
THOMAS HENRY CAMPBELL,
Plaintiff-Appellant,
FILED
Shelby Chancery No. D12056-2
Vs. C.A. No. 02a01-9803-CH-00073
November 4, 1998
RUTH CAROLINE CAMPBELL,
Cecil Crowson, Jr.
Defendant-Appellee. Appellate C ourt Clerk
____________________________________________________________________________
FROM THE SHELBY COUNTY CHANCERY COURT
THE HONORABLE FLOYD PEETE, JR., CHANCELLOR
David E. Caywood, Marc E. Reisman
Causey, Caywood, Taylor, McManus & Bailey of Memphis
For Appellee
Dennis J. Sossaman of Memphis
For Appellant
AFFIRMED AND REMANDED
Opinion filed:
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:
DAVID R. FARMER, JUDGE
HEWITT P. TOMLIN, JR., SENIOR JUDGE
This appeal involves a motion to modify an alimony award. Appellant, Thomas Henry
Campbell (Husband), appeals from the Chancellor’s order denying his motion to modify alimony
and awarding Appellee, Ruth Caroline Campbell (Wife), attorney’s fees and costs.
The parties were married on March 1, 1953 in Reno, Nevada. In December of 1982, the
couple separated and on August 21, 1984, Husband filed a complaint for divorce on the grounds
of irreconcilable differences. The parties entered into a Property Settlement Agreement
(Agreement) on April 22, 1985. Subsequently, a final decree of divorce was entered on May 6,
19851 which approved and incorporated the Agreement.
The Agreement provides in pertinent part:
Husband agrees to pay to Wife the sum of $1,500.00 per month
as periodic alimony until Wife’s death or remarriage. It is
anticipated Wife may seek gainful employment and the fact she
is receiving wages in an amount not to exceed $800.00 per month
net pay after FICA and Federal taxes will not be a material change
of circumstances so as to warrant a decrease in the amount of
periodic alimony paid to her by Husband.
In addition, the Agreement required Husband to convey all of his right, title and interest in the
marital residence to Wife with Wife to assume payments on the first mortgage. The Agreement
also requires Husband to maintain a life insurance policy with Wife as beneficiary until she dies
or remarries. Furthermore, the Agreement requires Husband to provide a hospitalization and
major medical insurance policy for the benefit of Wife until she dies or remarries or becomes
eligible for such through employment which is comparable to that available through Husband’s
employment at the time of the divorce.
On March 20, 1995, Wife filed a Petition for Scire Facias because Husband had
unilaterally reduced and eventually terminated his alimony payments. On March 31, 1995,
Husband filed a Motion to Modify the Decree specifically requesting the Chancellor “to reduce
his support payments to $200.00 per month, with medical payments to $300.00 per month.”2 In
support of his request, Husband alleges that there have been material and substantial changes in
circumstances since the entry of the divorce decree warranting a reduction in his alimony
obligation. Husband asserts that Wife’s financial upswing, which included an inheritance from
her mother’s estate, coupled with his financial downturn, which resulted in filing for bankruptcy
on his part, constitutes a substantial and material change of circumstances to justify the requested
1
At the time of the divorce, there were no longer any minor children in the couple’s
home.
2
In his brief before this Court, Husband’s concludes by requesting that his alimony
obligation be reduced to $300.00 per month.
2
reduction in alimony. In response to Husband’s motion, Wife asserts that Husband is able to
afford the support obligation and that she at all times has been in need of the support.
In late July of 1995, a Divorce Referee denied Husband’s motion to modify the divorce
decree and awarded attorney’s fees to Wife in the amount of $20,000.00 plus costs in the amount
of $685.10. Subsequently, Husband filed a motion in Chancery Court requesting the Chancellor
to vacate the Referee’s ruling with regard to the motion to modify and the award of attorney’s
fees. On June 6, 1996, the Chancellor entered an order denying the motion to modify, affirming
the ruling of the Divorce Referee, and awarding Wife an additional $5,000.00 for attorney’s fees
incurred in defending the appeal.3
Husband appeals and presents the following issues for review: (1) whether Wife’s
inheritance coupled with Husband’s bankruptcy constitute substantial and material changes of
circumstances to warrant a reduction in alimony, and (2) whether the Chancellor erred in failing
to overturn the initial award of attorney’s fees and in awarding additional attorney’s fees.
Our review of this case is governed by T.R.A.P. 13(d), which provides that review of
findings of fact by the trial court shall be de novo upon the record of the trial court, accompanied
by a presumption of correctness of the findings, unless the evidence preponderates otherwise.
T.R.A.P. 13(d); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993).
Alimony
Modification of an alimony obligation is authorized only if such is periodic alimony, as
opposed to alimony in solido. Brewer v. Brewer, 869 S.W.2d 928, 934 (Tenn. App. 1993).
T.C.A. § 36-5-101, which provides for spousal support, states, in pertinent part, that “on
application of either party for spousal support, the court may decree an increase or decrease of
such allowance only upon a showing of a substantial and material change of circumstances.”
T.C.A. § 36-5-101(a)(1) (1996 & Supp. 1998) (emphasis added). Whether there has been a
sufficient showing of a substantial and material change of circumstances is in the sound
discretion of the trial court. Wilkinson v. Wilkinson, 1990 WL 95571, at *4 (Tenn. App. W.S.
July 12, 1990) (citing Jones v. Jones, 784 S.W.2d 349, 352 (Tenn. App. 1989)).
3
The Chancellor determined that Wife had incurred $10,196.00 in attorney’s fees in
defending the appeal. However, in light of the fact that Wife had already been awarded
attorney’s fees incurred in the original hearing on this matter, the Chancellor reduced this amount
to $5,000.00.
3
The party seeking relief on the grounds of a substantial and material change in
circumstances has the burden of proving such changed circumstances warranting an increase or
decrease in the amount of the alimony obligation. Seal v. Seal, 802 S.W.2d 617, 620 (Tenn.
App. 1990). The change in circumstances must have occurred since the entry of the divorce
decree ordering the payment of alimony. Elliot v. Elliot, 825 S.W.2d 87, 90 (Tenn. App. 1991).
Furthermore, the change in circumstances must not have been foreseeable at the time the parties
entered into the divorce decree. Id. If the change in circumstances was anticipated or in the
contemplation of the parties at the time they entered into the property settlement agreement, such
change is not material to warrant a modification of the alimony award. Jones v. Jones, 784
S.W.2d 349, 353 (Tenn. App. 1989).
The decision to modify the alimony obligation is factually driven and requires a careful
balancing of several factors. Cranford v. Cranford, 772 S.W.2d 48, 50 (Tenn. App. 1989). The
factors set forth in T.C.A. § 36-5-101(d), applicable to the initial grant of spousal support and
maintenance, where relevant, must be taken into consideration in determining whether there has
been a change in circumstances to warrant a modification of the alimony obligation. Threadgill
v. Threadgill, 740 S.W.2d 419, 422-23 (Tenn. App. 1987).
While T.C.A. § 36-5-101(d) enumerates several factors for the court to consider, the need
of the spouse receiving the support is the single most important factor. Cranford, 772 S.W.2d
at 50. In addition to the need of the spouse receiving support, the ability of the obligor spouse
to provide support is taken into consideration. Id.
As part of Husband’s contention that his support obligation should be reduced, Husband
asserts that Wife’s inheritance of approximately $125,000.00 from her mother’s estate
subsequent to the divorce constitutes a substantial and material change in circumstances.
Husband also contends that a reduction is justified because, in addition to the inheritance, Wife
now owns the former marital house mortgage-free, purchased a new 1994 Honda vehicle with
cash, and is now receiving Social Security benefits along with proceeds from a V.A. Dependent
and Indemnity Fund.4 Furthermore, Husband avers that his financial downturn, which includes
his company’s and his joint bankruptcy in 1990 and the loss of numerous property rights to
4
Wife receives the V.A. fund for being a widow of a Korean War veteran.
4
foreclosure, warrants a reduction in alimony.
On the other hand, Wife asserts that Husband is a man of substantial wealth and earning
potential. Wife contends in her brief that since the divorce Husband has substantially increased
his assets:
by acquiring an interest in a valuable Cadillac lease which is paid
in full, an interest in a $30,000.00 Chevrolet Suburban which is
titled in his live-in lady friend’s name, an interest in real property
in Shelby County, Tennessee, an interest in at least 4 parcels of
real property in the State of Colorado, an interest in 107
condominiums in Memphis, Tennessee, an interest in two pieces
of property in Mississippi, an interest in a limited liability
corporation which, at least for the next 8 months, will pay him
$4,000.00 per month as a return in capital and cash value in a life
insurance policy.
Furthermore, Wife asserts that, along with the accumulation of numerous assets,
Husband’s income has increased since the time of the divorce, and that one of Husband’s
business entities substantially contributes to his living expenses which is not charged to him as
income. According to Wife, despite the fact that Husband has gone through a bankruptcy
proceeding, his financial situation and lifestyle have improved since the entry of the divorce
decree.
Wife argues that even though her income has increased due to the inheritance she
received and various other investments, Husband failed to prove that these matters were not in
the contemplation of the parties at the time of the divorce decree. In addition, Wife asserts that
while her income may have increased, the cost of living has substantially increased, and, as a
result, she is barely able to afford her reasonable expenses even with the full amount of alimony.
It is true, as Husband argues, that inheritance may constitute a substantial and material
change warranting a reduction in the award of alimony. See Brewer v. Brewer, 869 S.W.2d 928
(Tenn. App. 1993). However, as previously stated, the determination of whether there has been
a change in circumstances to justify a modification in the support obligation is a factually driven
inquiry determined on a case-by-case basis. So while inheritance by one spouse may constitute
a change in circumstances in one case, inheritance under a different set of circumstances may fail
to constitute such. See Claiborne v. Claiborne, 1988 WL 5684 (Tenn. App. E.S. Jan. 29, 1988).
While it is true that Wife has improved her financial status since the time of the divorce
due in part to the receipt of the inheritance from her mother’s estate, Husband has failed to carry
5
the burden thrust upon him in proving that such has constituted a substantial and material change
of circumstances. It must have been foreseeable to the parties in a marriage of thirty-two years
that Wife would receive an inheritance from her mother’s estate. Regardless, Husband failed to
carry his burden of proving that such was unforeseeable or that such was not within the
contemplation of the parties at the time of the Agreement.
In addition, the Agreement suggests that the parties did not contemplate that $1,500.00
would be all the support that Wife would need. As noted above, the Agreement provides that
if Wife received future income from employment, such would not constitute a change in
circumstances. This suggests that the alimony agreed to was not contemplated to constitute all
that Wife truly needed.
Furthermore, this Court does not believe that alimony of $18,000.00 per year was all that
Wife truly needed to support herself nor is it sufficient for Wife to maintain the standard of living
to which she was accustomed prior to the divorce. The record indicates that the parties enjoyed
a comfortable standard of living during their marriage and there is no evidence presented to
indicate that Wife is now able to enjoy a higher standard of living based on her alimony
combined with the proceeds from the inheritance.5 Wife’s Affidavit of Income and Expenses
establishes that she is just able to afford her reasonable expenses even when in receipt of the full
amount of spousal support.
With regard to the marital residence, ownership of such mortgage-free was obviously
foreseeable and within the contemplation of the parties at the time of the divorce decree. The
Agreement provides for Wife to receive the marital residence and to assume the first mortgage.
Surely it was foreseeable that the mortgage would be paid-off and Wife would thereafter own
the home mortgage-free. Furthermore, the increase in equity in the marital home awarded to
Wife cannot be considered to constitute a substantial and material change in circumstances. See
Norvell v. Norvell, 805 S.W.2d 772, 775 (Tenn. App. 1990) (“[T]he increased value of marital
assets received in a divorce decree is not to be considered as a factor constituting a substantial
change in circumstances to support an alimony award reduction.”). In addition, Wife’s receipt
of monthly Social Security benefits and proceeds from a V.A. Dependent and Indemnity Fund
5
The record reveals that Wife receives through interest income and dividends from the
investment of the inheritance approximately $610.00 per month.
6
were foreseeable and, thus, presumably within the contemplation of the parties at the time of the
Agreement.
With regard to Husband’s financial status, Husband’s protestations of poverty are not
supported by the record. At the time of the divorce, Husband had an income of approximately
$75,000.00. Following the divorce, Husband’s financial situation improved substantially
according to the record. At the beginning of 1990, the year in which Husband filed the Chapter
11 bankruptcy, Husband’s corporation, Professional Development Corporation, had a value of
approximately $3,100,000.00. In addition, according to a financial statement prepared in 1994,
Husband, approximately four years after the bankruptcy filing, had a net worth of approximately
$2,700,000.00, and according to a 1994 W-2 form from Campbell Management Company,
another business entity of Husband’s, his wages were $84,700.00 which did not account for the
numerous individual bills and debts paid for by the company. At the proceedings below,
Husband contended that his salary was $2,467.00 per month which is approximately $30,000.00
a year. However, this amount does not include the substantial contributions his business entity
provided for his living expenses which Wife asserts equals, at a minimum, approximately
$88,000.00 a year when added to his salary.
Furthermore, in January 1995, during the time when Husband began to unilaterally
reduce his support obligation, Husband’s live-in girlfriend became an employee at his company
with a $30,000.00 salary, and Husband tendered a check to her in the amount of $5,500.00. Also
during this time, Husband leased a 1995 Cadillac and purchased a 1994 Chevrolet Suburban for
$30,000.00.6 Finally, there are numerous assets, such as, to name a few, a house in Memphis
valued at $285,000.00 and two houses in Colorado valued at $385,000.00 and $415,000.00
respectively, that Husband has acquired since the Agreement.
The record indicates that while Husband may have suffered some financial setbacks due
particularly to his profession as a real estate developer, Husband’s financial situation has
improved, not deteriorated, since the execution of the Agreement. After extensive discovery on
the part of Wife, thwarted by evasive actions on the part of Husband, it was revealed that
Husband’s financial situation is not as disastrous as he claims. As previously stated, Husband
6
Even though Husband’s live-in girlfriend did not contribute financially, her name was
listed on each of these transactions.
7
has acquired numerous rights in property and assets and has had significant increases in income
since the divorce decree. The record simply does not support Husband’s contention that there
has been a substantial and material change of circumstances when consideration is given to
Husband’s entire financial situation. The record taken as a whole does not reveal a man who
does not have the ability to provide $18,000.00 per year in alimony for which he is liable.
Husband’s bankruptcy does not automatically constitute a substantial and material change
of circumstances. See Lampley v. Lampley, No. 01A01-9708-CH-00423, 1998 WL 44938
(Tenn. App. M.S. Feb. 6, 1998). In Lampley, the husband had, since the entry of the divorce
decree, filed a Chapter 7 bankruptcy, suffered several financial downturns, and had acquired
numerous financial commitments. In contrast, the wife had acquired, as gifts from her mother
and son-in-law, three real estate properties which were used as rental property, had built a new
house for herself, and had numerous other financial upswings since the date of the divorce
decree. In an attempt to reduce his alimony obligation, the husband contended that he could no
longer pay the agreed alimony and that the wife was no longer in need of such. The wife
responded by noting that the husband’s earnings had increased since the divorce decree, that he
had purchased a new home with his paramour and her children, and that he had numerous other
assets unaffected by the bankruptcy. The Court, refusing to alter the husband’s alimony
obligation, said:
Alimony is not a required provision in the marital dissolution
agreement. . . . Nevertheless, the parties saw fit to include
alimony in their agreement. It must be presumed that the alimony
provision was part of the inducement or consideration for the
other provisions regarding division of the marital estate. The
Courts are justified in being reluctant to disturb an alimony
obligation assumed under such conditions.
Id. at *5.
We agree with the trial court that the changes in circumstances since the entry of the
divorce decree are not substantial or material insofar as Husband’s ability to pay and the Wife’s
needs. Accordingly, we affirm the Chancellor’s denial of Husband’s motion to modify the
divorce decree.
Attorney Fees
Husband contends that the Chancellor erred in affirming the Divorce Referee’s awarding
Wife $20,000.00 for attorney’s fees. Moreover, Husband contends that the Chancellor
8
committed further error in awarding Wife an additional $5,000.00 for attorney’s fees incurred
on appeal of the Referee’s ruling.
T.C.A. § 36-5-103(c) authorizes recovery of reasonable attorney’s fees incurred in the
enforcement of a decree for alimony. Brewer, 869 S.W.2d at 936. The trial court has wide
discretion in matters involving the awarding of attorney’s fees. Thus, this Court will not
interfere absent a showing of an abuse of that discretion. Threadgill, 740 S.W.2d at 426.
Husband has failed to establish that the evidence preponderates against the Chancellor’s
affirmance and additional award of attorney’s fees. It was Husband who unilaterally reduced and
subsequently terminated his alimony obligation, causing Wife to take action to enforce payment.
Husband’s response included the motion for reduction, requiring Wife’s counsel to enter a
defense. Furthermore, the record indicates that Husband’s evasive actions and attitude
contributed significantly to the attorney’s fees incurred by Wife. Thus, we find that the
Chancellor did not abuse his discretion in the award of attorney’s fees in the amount of
$25,000.00 to Wife.
The judgment of the trial court is affirmed, and the case is remanded to the trial court for
such further proceedings as may be necessary. Appellee’s motion for attorney fees on appeal is
denied. Costs of appeal are assessed against Appellant.
_________________________________
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:
____________________________________
DAVID R. FARMER, JUDGE
____________________________________
HEWITT P. TOMLIN, JR.
SENIOR JUDGE
9