Christy Keller Elrod Church v. Darrell Gene Elrod

03/25/2019
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
January 10, 2019 Session
CHRISTY KELLER ELROD CHURCH v. DARRELL GENE ELROD
Appeal from the Chancery Court for Williamson County
No. 28861 Deanna B. Johnson, Judge
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No. M2018-01064-COA-R3-CV
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In this post-divorce petition to modify, the Appellant (former Husband) contends that the
trial court erred in concluding that his obligation to provide life insurance for the benefit
of Appellee (former Wife) was part of a property settlement and therefore not subject to
modification. The trial court’s order included an upward deviation for support of the
parties’ youngest child for the twelve month period prior to her emancipation. The trial
court also ordered Appellant to pay college tuition equal to that of the University of
Tennessee at Knoxville without providing any allowance for scholarships and sponsor
fees received by the parties’ daughter. The trial court further found that Appellant was
not guilty of civil contempt for failure to make payments into Appellee’s retirement
account under the terms of the parties’ Agreed Order of Legal Separation (AOLS).
However, the trial court refused to relieve Appellant of his obligation to continue funding
Appellee’s retirement account at the same level as he funds his own retirement account.
We conclude from our review that the life insurance policy obligation constitutes spousal
support, which is subject to modification. We vacate the trial court’s judgment
concerning college tuition and hold that Appellant is obligated to pay the cost of tuition
and books, less scholarships and sponsor fees received by the parties’ daughter. All other
aspects of the trial court’s order are affirmed. Accordingly, we affirm in part, reverse in
part, and remand for further proceedings in accordance with this opinion.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Affirmed
in Part, Reversed in part, and Remanded.
KENNY ARMSTRONG, J., delivered the opinion of the court, in which RICHARD H.
DINKINS and W. NEAL MCBRAYER, JJ., joined.
Craig H. Brent, Franklin, Tennessee, for the appellant, Darrell Gene Elrod.
Thomas F. Bloom, Nashville, Tennessee, for the appellee, Christy Keller Elrod Church.
OPINION
I. Background
On August 20, 2002, Darrell Gene Elrod (“Appellant”) and Christy Keller Elrod
Church (“Appellee”), entered into an Agreed Order of Legal Separation (“AOLS”) that
was prepared by Ms. Church’s then-attorney. The relevant portions of the AOLS are as
follows:
A. The ( ) Wife (X) Husband will pay child support, in accordance with the
Tennessee Child Support Guidelines, in the amount of $3,003.00 per month
payable every two (2) weeks in the amount of $1,386.00, directly to the (X)
Ms. Church.
TOTAL AMOUNT OF CHILD SUPPORT: $3,003.00 per month based
upon Husband's annual income of $111,000.00 per year.
The AOLS further provided:
ORDERED, ADJUDGED and DECREED that Husband shall continue to
maintain and keep current the life insurance policy on his life at
Northwestern Mutual Life in the face amount of Seven Hundred Thousand
($700,000) Dollars, with such policy payable to the Wife for her use and
benefit; and it is further
ORDERED, ADJUDGED and DECREED that Husband shall continue to
make the maximum contribution possible to his employer’s, D.F. Chase,
Inc., profit sharing plan during the legal separation; provided, however, that
Wife shall be entitled to one-half (1/2) of the then balance of the profit
sharing plan in the event that a Final Decree of Divorce is entered between
the parties, and in the event that a Final Decree of Divorce is entered
between the parties, a Qualified Domestic Relations Order shall be entered
segregating Wife’s fifty (50%) percent of the retirement account into a
separate account in her name, with Husband being required thereafter to
make equal contributions to Wife’s separate retirement account as he makes
his own retirement account or accounts through his employer or any
subsequent employer until he reaches the age of sixty-five (65) years, and it
is further
ORDERED, ADJUDGED and DECREED that Husband shall and does
agree to be contractually bound to pay college tuition and books for the
parties’ minor children for up to five (5) years of college for each or until
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each child has reached the age of twenty-five (25) years, whichever occurs
first, at a rate not to exceed that charged for in-state tuition at the University
of Tennessee, Knoxville;
The parties did not reconcile after the entry of the AOLS, but were divorced by order of
February 14, 2005. With regard to the AOLS, the Final Decree states in relevant part:
4. The court found that the parties to the Agreed Order of Legal
Separation intended that Order to be a final adjudication of their property
rights and support obligations arising out of their marriage.
***
8. The court found that there were no issues of division of assets,
residential time, spousal or child support that had not been addressed in the
Agreed Order of Legal Separation and Permanent Parenting Plan nor were
there any issues that were not intended by the parties to be a final
adjudication. The Agreed Order of Legal Separation specifically addressed
what would occur if the parties divorced.
***
ORDERED, ADJUDGED and DECREED that the Wife’s Motion to
Dismiss Husband’s divorce prayer for the Court to make an equitable
division of the assets and liabilities of the marriage is granted, the Court
having found that the parties Agreed Order of Legal Separation made a full
and complete division of the parties’ assets and liabilities at the time of the
legal separation and made provisions in contemplation of a divorce and,
thus, was a Final Order;
On May 29, 2015, Mr. Elrod filed a petition to modify his child support and other
support obligations. By his petition, Mr. Elrod sought: (1) to terminate his child support
obligation for the parties’ three older children because they had emancipated;1 (2) to have
his child support obligation recalculated for Shelby, the youngest child, effective June of
2015; (3) to terminate his obligation to maintain certain life insurance policies including a
$700,000 policy naming Ms. Church as the beneficiary; and (4) to terminate his
obligation to fund a retirement account for Ms. Church.
On August 4, 2015, Ms. Church filed an answer and counter-petition for civil
contempt. In relevant part, Ms. Church’s answer denied that Mr. Elrod was entitled to
termination of the $700,000 life insurance policy because the policy was in the nature of
1
Mr. Elrod did not seek modification when the first two children emancipated.
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a property settlement. Ms. Church also argued that Mr. Elrod should be required to pay
an upward deviation in child support to maintain Shelby’s lifestyle. Ms. Church’s
counter-petition alleged that Mr. Elrod breached the divorce decree and the AOLS by
failing to make contributions to Ms. Church’s separate retirement account and by failing
to pay the children’s college tuition.
The trial in this matter was held on November 15, 2017. At the time of trial, Mr.
Elrod was 61 years old and he had been employed as an Executive Vice President in
charge of construction projects for D.F. Chase for approximately 31 years. His annual
gross income in 2016 was $289,583, which was more than double his income of
$111,000 at the time of the parties’ divorce. Both Mr. Elrod and Ms. Church have
remarried. Ms. Church and her new husband had an annual income of approximately
$161,535 in 2016. Ms. Church contributed approximately $44,316 to this total.
By order of April 16, 2018, the trial court held that Mr. Elrod’s child support
obligation for Shelby would remain $3,003 per month from May 29, 2015 until her
emancipation on July 5, 2016. The trial court’s decision was based on Mr. Elrod’s
increased annual income, his limited parenting time, and his high standard of living,
which under the Guidelines, Shelby was entitled to share in because of her Father’s
wealth. The trial court further held that the $700,000 life insurance policy was in the
nature of a property settlement, or in the alternative was alimony in solido and, therefore,
not modifiable. Consequently, the trial court held that Mr. Elrod was still obligated to
maintain the $700,000 life insurance policy naming Ms. Church as the beneficiary.
Although the divorce decree required Mr. Elrod to make equal contributions to Ms.
Church’s separate retirement account, the trial court found that he had “not contributed to
his retirement account since the parties’ divorce;” therefore, Mr. Elrod was not in
contempt and was not obligated to fund Ms. Church’s retirement account. The trial court,
however, did not eliminate Mr. Elrod’s obligation under the AOLS to fund Ms. Church’s
retirement account at a level commensurate with the funding of his own retirement
account.
The trial court further held that Mr. Elrod was liable for payment of Shelby’s
tuition up to the amount of in-state tuition at University of Tennessee, Knoxville (UTK)
without a credit for scholarships and sponsor fees received by Shelby. On its finding that
“[t]here is nothing in the MDA (sic) that entitles [Mr. Elrod] to take credit for the
scholarship or sponsor fee money,” the trial court determined that “[t]here is no basis for
the court to take these benefits into account in computing [Mr. Elrod’s] obligation.”
Accordingly, the trial court awarded Ms. Church $12,724 for 2018-2019 and 2019-2020
and ordered Mr. Elrod to reimburse Ms. Church $24,346 for 2016-2018. The trial court
also ordered Mr. Elrod to pay for Ms. Church’s attorney fees. Mr. Elrod appeals.
II. Issues
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The following issues are presented for appeal by Mr. Elrod:
1. Whether the trial court erred in characterizing Mr. Elrod’s seven
hundred thousand dollar ($700,000) term life insurance policy on
himself with Ms. Church as beneficiary, as part of the division of the
marital estate or, in the alternative, alimony in solido, and ordering
that he shall continue to maintain said policy on himself with Ms.
Church as beneficiary.
2. Whether the trial court erred in awarding an upward deviation in Mr.
Elrod’s monthly child support obligation.
3. Whether the trial court erred in failing to credit against Mr. Elrod’s
obligation for the minor children’s college tuition and books, the
scholarships, grants, stipends, and other cost reducing programs
received by or on behalf of the parties’ children for college tuition.
4. Whether the trial court erred in failing to find the Agreed Order of
Legal Separation ambiguous.
5. Whether the trial court erred in characterizing Mr. Elrod’s obligation
to make equal contributions to Ms. Church’s separate retirement
account as he make to his own retirement account until he reaches
the age of sixty-five as a contractual obligation.
6. Mr. Elrod requests that this Court award him his attorney’s fees and
expenses (or remand the case to the trial court for this trial court to
do so) for the prosecution of this Appeal to the extent permitted by
law.
In the posture of Appellee, Ms. Church presents the following issues on appeal:
7. Whether Mr. Elrod breached his duty of good faith and fair dealing
in failing to fund his retirement plan in order to deprive the Ms.
Church of equal contributions as required under the agreed order of
legal separation.
8. Ms. Church also asks for her attorneys’ fees on appeal.
III. Standard of Review
Because this case was tried by the trial court, sitting without a jury, our review of
the trial court’s factual findings is de novo upon the record, accompanied by a
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presumption of the correctness of the findings, unless the preponderance of the evidence
is otherwise. See Tenn. R. App. P. 13(d); Kendrick v. Shoemake, 90 S.W.3d 566, 570
(Tenn. 2002); Hass v. Knighton, 676 S.W.2d 554, 555 (Tenn. 1984). To preponderate
against the trial court’s findings of fact, the evidence “must support another finding of
fact with greater convincing effect.” 4215 Harding Road Homeowners Ass’n v. Harris,
354 S.W.3d 296, 305 (Tenn. Ct. App. 2011). We review the trial court’s resolution of
questions of law de novo, with no presumption of correctness. Kendrick, 90 S.W.3d at
569.
IV. Analysis
A. $700,000 Life Insurance Policy
The trial court characterized Mr. Elrod’s obligation concerning the $700,000 life
insurance policy as part of the division of the marital estate, or in the alternative as
alimony in solido, and ordered Mr. Elrod to continue maintaining the policy with Ms.
Church as beneficiary. Mr. Elrod contends that his obligation to provide the life
insurance policy was in the nature of long term support to secure payment of his
obligations outlined in the AOLS and, as such, the trial court has authority to terminate
this obligation.
After a divorce decree becomes final, a marital dissolution agreement becomes
merged into the decree as to matters of child support and alimony, and the trial court has
continuing statutory power to modify the decree as to those matters when justified by
changed circumstances. Penland v. Penland, 521 S.W.2d 222, 224 (Tenn. 1975). To the
extent that a marital dissolution agreement is an agreement as to distribution of marital
property, it does not lose its contractual nature by merger into the decree of divorce and is
not subject to later modification by the court. Hannahan v. Hannahan, 247 S.W.3d 625,
627 (Tenn. Ct. App. 2007) (citing Towner v. Towner, 858 S.W.2d 888 (Tenn. 1993)).
[I]t is not uncommon for property settlements to provide that a husband maintain
life insurance for the benefit of his wife indefinitely and that he pay the premiums until
policy maturity or until his death. The insurance proceeds may, and frequently do,
comprise a major portion of an overall or lump-sum division of assets between the
parties. Prince v. Prince, 572 S.W.2d 908, 909 (Tenn. 1978); Siletchnik v. Siletchnik,
No. 01-A-019103CH00110, 1991 WL 164382, at *4 (Tenn. Ct. App. Aug. 28, 1991).
The problem is primarily one of draftsmanship and of the intention of the parties.
The trial court cites the case of Prince v. Prince, 572 S.W.2d 908 (Tenn. 1978) to
support its finding that the life insurance policy here is in the nature of a property
settlement. In Prince, the Tennessee Supreme Court concluded that the life insurance
provisions incorporated into the final divorce decree were intended to be part of a
property settlement or division of assets between these parties and were not intended
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merely to be temporary security for the payment of interim alimony. Id. at 912. In that
case, the language in the property settlement stated that the life insurance policy “is to be
the absolute property of the [Wife] with no strings attached, and [Husband] is to continue
paying the premiums on said life insurance policy.” Id. at 909.
Unlike the current case, one of the life insurance policies in the Prince case was a
whole life insurance policy with a substantial cash surrender value. Prince, 572 S.W. 2d
at 912. Here, the policy in question is a term life insurance policy with no cash value. In
Prince, the Tennessee Supreme Court acknowledged that had the Husband only provided
term life insurance having no cash value or other benefits, “his insistence that the
insurance was intended only as security for . . . alimony payments would be
strengthened.” Id. at 911. Mr. Elrod testified at trial that the term policy obligation was
for Ms. Church’s use and benefit to secure his support obligations under the AOLS. His
obligations included college expenses for Ms. Church, COBRA payments for Ms.
Church, home mortgage payments, child support, health insurance for the children, and
college expenses for up to five years for each of the parties’ four children.
In rejecting Mr. Elrod’s contention that the term life insurance obligation was to
secure the obligations outlined above, the trial court reasoned that the plain language of
the AOLS does not mention “support.” This is true. Likewise, the terms “property
division” and “property settlement” are not mentioned in the AOLS. The AOLS does not
refer to the life insurance obligation as part of the parties’ property division or division
of marital assets. In fact, other than the agreed order, there is no separate written
property settlement agreement between the parties in this case. As such, from the
language in the AOLS, we cannot conclude that the life insurance obligation was
intended to be part of a property settlement as opposed to support to secure Mr. Elrod’s
various financial obligation under the AOLS. We now turn to address whether the life
insurance obligation was in the nature of alimony in solido as found by the trial court.
Tennessee recognizes four different types of alimony: rehabilitative alimony,
transitional alimony, alimony in futuro, and alimony in solido. Tenn. Code Ann. § 36-5-
121(d)(1). Each type of alimony addresses a specific need. Alimony in futuro and
alimony in solido are the two forms of “long term or more open-ended support.” Burlew
v. Burlew, 40 S.W.3d 465, 471 (Tenn. 2001) (citing Waddey v. Waddey, 6 S.W.3d 230,
232 (Tenn. 1999)). “Whether alimony is in futuro or in solido is determined by either the
definiteness [in solido] or indefiniteness [in futuro] of the sum of alimony ordered to be
paid at the time of the award.” Waddey v. Waddey, 6 S.W.3d 230, 232 (Tenn. 1999)
(citing McKee v. McKee, 655 S.W.2d 164, 165 (Tenn. Ct. App. 1983)). Alimony in
solido is an award of a definite sum of alimony and “may be paid in installments
provided the payments are ordered over a definite period of time and the sum of the
alimony to be paid is ascertainable when awarded.” Burlew, 40 S.W.3d at 471.
Typically, the purpose of such an award is to adjust the distribution of the parties’ marital
property. Id. As such, alimony in solido is generally not modifiable and does not
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terminate upon death or remarriage. Tenn. Code. Ann. § 36-5-121(h)(2)-(3); Gonsewski
v. Gonsewski, 350 S.W.3d 99, 108 (Tenn. 2011).
“Alimony in futuro, however, lacks sum-certainty due to contingencies affecting
the total amount of alimony to be paid.” Waddey, 6 S.W.3d at 232. Unlike alimony in
solido, an award of alimony in futuro is subject to modification, and its duration may be
affected by contingencies agreed upon by the parties or imposed by courts. Id. at 232-33.
An award of alimony in futuro “may be increased, decreased, terminated, extended, or
otherwise modified, upon a showing of substantial and material change in
circumstances.” Tenn. Code Ann. § 36-5-121(f)(2)(A). The party seeking modification
of the alimony award “bears the burden of proving that a substantial and material change
in circumstances has occurred.” Wiser v. Wiser, 339 S.W.3d 1, 12 (Tenn. Ct. App. 2010)
(citing Freeman v. Freeman, 147 S.W.3d 234, 239 (Tenn. Ct. App. 2003)).
By contrast, rehabilitative alimony is short-term support that enables a
disadvantaged spouse to obtain education or training necessary to become self-reliant
following a divorce. Gonsewski, 350 S.W.3d at 109. Where economic rehabilitation is
unnecessary, transitional alimony may be awarded. Transitional alimony assists the
disadvantaged spouse with the “transition to the status of a single person.” Id.; Miller v.
McFarland, No. M2013-00381-COA-R3-CV, 2014 WL 2194382, at *2 (Tenn. Ct. App.
May 23, 2014). Tennessee statutes concerning spousal support reflect a legislative
preference favoring rehabilitative or transitional alimony rather than alimony in futuro or
in solido. See Tenn. Code Ann. § 36-5-121(d)(2)-(3); Parrish v. Parrish, No. W2013-
00316-COA-R3CV, 2013 WL 3203352, at *5-6 (Tenn. Ct. App. June 21, 2013) (citing
Gonsewski, 350 S.W.3d at 109).
Here, the trial court’s order states in pertinent part:
Assuming, arguendo, that maintenance of the $700,000 life insurance
policy is a form of “support” instead of a property settlement, then the court
finds it to be alimony in solido of a definite amount, which is not
modifiable. . . .
The face value of the Northwestern Mutual life insurance policy is fixed at
$700,000, payable upon Husband’s death. (ex. 11). It is a definite sum to
be paid at the time of the award. Alimony in solido is not modifiable even
upon a showing of changed circumstances, including such events as
remarriage or the increased fortunes of the recipient spouse. Bryan v.
Leach, 85 S.W.3d 136, 145-46 (Tenn. Ct. App. 2001) (citing Self v. Self,
861 S.W. 2d 360, 362 (Tenn. 1993); Towner, 858 S.W.2d at 890.
[Mr. Elrod] cannot modify his bargain, whether it is a property settlement
or alimony in solido. . . . For all of these reasons, [Mr. Elrod’s] request that
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the court modify the requirement that [Mr. Elrod] maintain and keep
current the life insurance policy on his life in the amount of $700,000 is,
respectfully, denied.
Mr. Elrod argues that the insurance policy cannot be defined as alimony in solido because
the life insurance policy “contains contingencies and conditions that render the total
obligation of support indefinite.” Tennessee Code Annotated section 36-5-121(h)(1)
defines alimony in solido as
[L]ump sum alimony . . . a form of long term support, the total amount of
which is calculable on the date the decree is entered, but which is not
designated as transitional alimony. Alimony in solido may be paid in
installments; provided, that the payments are ordered over a definite period
of time and the sum of the alimony to be paid is ascertainable when
awarded.
Tenn. Code Ann. § 36-5-121(h)(1). For a payment to be considered alimony in solido,
the statute requires that the amount of alimony to be paid be ascertainable at the time of
the award and that the payments be made over a definite period of time. Mr. Elrod’s
obligation to maintain a $700,000 life insurance policy has no definite end date.
Furthermore, the amount he is obligated to pay in premiums is not ascertainable now, nor
when ordered as insurance rates fluctuate according to age and overall physical health.
Moreover, depending on Mr. Elrod’s health, the premiums for such a large policy could
reach a level that payment of the premium is not sustainable in the future. For these
reasons, we conclude that the $700,000 life insurance policy maintained by Mr. Elrod
cannot be classified as alimony in solido and must therefore fall into the category of
alimony in futuro, which may be modified or terminated. Under the facts here involving
a term life insurance policy and no written agreement designating the life insurance
obligation as part of a property division, we hold that the life insurance policy was meant
to secure Mr. Elrod’s obligations under the AOLS in the event of his early death leaving
his wife and children without his support. Inasmuch as Mr. Elrod’s obligation for his
children’s college education expenses have not been satisfied, we decline to relieve him
of his obligation to maintain the life insurance policy at this time.
B. Child Support
At the time of the divorce, the parties had four minor children. Under the
parenting plan, Mr. Elrod paid $3,003 per month for the support of all four children. On
May 29, 2015, after the three of his children had reached majority, Mr. Elrod filed a
petition to modify his child support among other things. Specifically, Mr. Elrod sought
to terminate his child support obligation for the three emancipated children and to
recalculate his child support obligation for Shelby, the only remaining minor child. In
response, Ms. Church argued that Mr. Elrod’s child support should not be modified
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because a reduction in child support would be a hardship for Shelby and make it
impossible for her to pay all of Shelby’s expenses. Ms. Church testified that she paid for
all of Shelby’s art expenses and clothes, as well as her car and car insurance, vacations
and entertainment for Shelby. Additionally, she paid $3,000 to the Savannah School of
Art and Design for Shelby’s two week summer camp and all of Shelby’s extra expenses
for her senior year including college application fees.
With regard to child support, the trial court determined that:
[A] deviation is applicable in this case pursuant to Tenn. Comp. R. & Regs.
1240-2-4.01(4), which provides that “these Guidelines are a minimum base
for determining child support obligations. The presumptive child support
order may be increased according to the best interest of the child for whom
support is being considered, the circumstances of the parties, and the rules
of this chapter.”
In the instant case, Shelby’s best interests as well as the circumstances of
the parties lead the Court to conclude that [Mr. Elrod]’s child support
obligation should be $3,003 per month during the relevant time period of
May 29, 2015 through July 5, 2016.
The criteria for ascertaining a parent’s child support obligation is governed by
Child Support Guidelines promulgated by the Tennessee Department of Human Services,
in accordance with Tennessee Code Annotated section 36-5-101(e). The law set out in
Reeder v. Reeder, 375 S.W.3d 268, 275-76 (Tenn. Ct. App. 2012) is applicable here.
The amount of support derived from a proper application of the formula in
the Child Support Guidelines becomes the presumptive child support.
Richardson v. Spanos, 189 S.W.3d 720, 725 (Tenn. Ct. App. 2005). The
presumptive amount of support, however, is rebuttable, Tenn. Code Ann. §
36-5-101(e)(1)(A); Tenn. Comp. R. & Regs. 1240-02-04-.01(1)(d)(1);
Taylor v. Fezell, 158 S.W.3d 352, 357 (Tenn. 2005), and a trial court may,
in its discretion, deviate from the amount of support required by the Child
Support Guidelines. State v. Wilson, 132 S.W.3d 340, 343 (Tenn. 2004);
Jones v. Jones, 930 S.W.2d 541, 544 (Tenn. 1996). When a trial court
deviates from the Guidelines, the court is required to specifically state in
written findings why the application of the Child Support Guidelines would
be unjust or inappropriate in the case. Tenn. Code Ann. § 36-5-
101(e)(1)(A); Tenn. Comp R. & Regs. 1240-02-04-.07(1)(b). Although the
trial courts retain an element of discretion to deviate from the presumptive
amounts, such discretionary decisions must take into consideration the
applicable law and the relevant facts. Ballard v. Herzke, 924 S.W.2d 652,
661 (Tenn. 1996).
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We review such discretionary decisions pursuant to a review-
constraining standard. Richardson, 189 S.W.3d at 725 (citing State ex rel.
Jones v. Looper, 86 S.W.3d 189, 193 (Tenn. Ct. App. 2000); White v.
Vanderbilt Univ., 21 S.W.3d 215, 222-23 (Tenn. Ct. App. 1999)). We do
not have the latitude to substitute our judgment for that of the trial court. Id.(citing Henry v. Goins, 104 S.W.3d 475, 479 (Tenn. 2003); State ex rel.
Vaughn v. Kaatrude, 21 S.W.3d 244, 248 (Tenn. Ct. App. 2000)). To the
contrary, a trial court’s discretionary decision to deviate from the
Guidelines will be upheld as long as the trial court applied a correct legal
standard, Perry v. Perry, 114 S.W.3d 465, 467 (Tenn. 2003), the decision is
not clearly unreasonable, Bogan v. Bogan, 60 S.W.3d 721, 730 (Tenn.
2001), and reasonable minds can disagree about its correctness. Eldridge v.
Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001).
Reeder, 375 S.W. 3d at 275-76.
Tennessee Code Annotated section 36-5-101(e)(1)(B) states that “if the net income
of the obligor exceeds ten thousand dollars ($10,000.00) per month, then the custodial
parent must prove, by a preponderance of the evidence, that child support in excess of the
amount provided for in the child support guidelines is reasonably necessary to provide for
the needs of the minor child . . . .” Tenn. Code Ann. § 36-5-101(e)(1)(B). In making its
determination, the court must consider all available income of the obligor and make a
specific finding that the deviation is reasonably necessary. Id.; Tenn. Comp. R. & Regs.
1240-02-04-.07(2)(g). Here, there is no dispute that the presumptive child support
amount is $2,031.00 per month. In reaching its decision, the trial court noted Mr. Elrod’s
high standard of living including the fact that Mr. Elrod and his current wife maintain two
homes and travel back and forth between homes in Michigan and Tennessee. The trial
court also found that his annual income had increased from $111,000 at the time of the
divorce to $289,000 and that Mr. Elrod had already paid $3,003 per month during the
months at issue while still supporting his new wife and her three children, including
payment of his step-children’s private school expenses. Further, the trial court noted all
of the expenses that Ms. Church paid for Shelby including tuition for summer camp at
Savannah School of Art and Design and all of the extra expenses for senior year
including college application fees. Tennessee imposes a legal obligation on parents to
support their minor children in a manner commensurate with their own means and station
in life. Atkins v. Motycka, No. M2007-02260-COA-R3-CV, 2008 WL 4831314, at *6
(Tenn. Ct. App. Nov. 6, 2008); Richardson v. Spanos, 189 S.W.3d 720, 724 (Tenn. Ct.
App. 2005); Tenn. Code Ann. § 34-1-102(a) (2001); Wade v. Wade, 115 S.W.3d 917,
920 (Tenn. Ct. App. 2002)). Taking the applicable law into account, the trial court
determined that an upward deviation of $972.00, for a limited period of time, was
supported by the facts and was in Shelby’s best interest.
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One of the major goals of the Guidelines is to “[e]nsure that, when parents live
separately, the economic impact on the child is minimized, and, to the extent that either
parent enjoys a higher standard of living, the child shares in that higher standard.” Tenn.
Comp. R. & Regs. 1240-02-04-.01(3)(e). See Stack v. Stack, No. M2014-02439-COA-
R3-CV, 2016 WL 4186839, at *12 (Tenn. Ct. App. Aug. 4, 2016) (affirming an upward
deviation noting Father’s high standard of living and determining that the deviation was
reasonably necessary.”); Wiser v. Wiser, 339 S.W.3d 1, 19-20 (Tenn. Ct. App. 2010)
(acknowledging the goal of the Guidelines to “ensure that the children fully share the
standard of living enjoyed by the parent with the most financial resources.”); State ex rel.
Middleton v. Cochran, No. E2002-00164-COA-R3-JV, 2002 WL 31059286, at *5 (Tenn.
Ct. App. Sept. 17, 2002) (finding upward deviation appropriate when one parent had
substantially higher income than the other); Cunningham v. Cunningham, No. W1999-
02054-COA-R3-CV, 2000 WL 33191364, at *7 (Tenn. Ct. App. Oct. 20, 2000)
(approving upward deviation in light of goal of the Guidelines to ensure child shares in
parent’s high standard of living). In light of the additional expenses for Shelby’s needs,
all of which have been paid by Ms. Church, and Mr. Elrod’s limited parenting time and
affluent lifestyle, we find that the trial court did not abuse its discretion in making the
upward deviation ordered. The trial court considered Mr. Elrod’s available income and
the goals of the Guidelines in its determination that an upward deviation was reasonably
necessary in this case. Accordingly, we conclude that the trial court appropriately
exercised its discretion to deviate from the presumptive child support amount under the
Guidelines.
C. College Tuition
The AOLS obligated Mr. Elrod to pay for Shelby’s college tuition and books “at a
rate not to exceed that charged for in-state tuition at the University of Tennessee,
Knoxville.” Mr. Elrod argues that the trial court erred in failing to deduct from Mr.
Elrod’s obligation certain scholarships, sponsor fees and other cost reducing programs
received by or on behalf of Shelby. As previously explained by this Court:
While it is generally true that a parent cannot be ordered by the courts to
pay child support for an adult child, Blackburn v. Blackburn, 526 S.W.2d
463, 465 (Tenn. 1975); Garey v. Garey, 482 S.W.2d 133, 135 (Tenn. 1972),
a party to a divorce may by agreement obligate himself or herself beyond
the support duties imposed by law. Such a provision in an agreement
constitutes “a contractual obligation outside the scope of the legal duty of
support during minority and retains its contractual nature, although
incorporated in a final decree of divorce.” Penland v. Penland, 521 S.W.2d
222, 224-25 (Tenn. 1975); Blackburn, 526 S.W.2d at 465. Any voluntarily
assumed obligation exceeding the minimum child support required by
statute is based on the parties’ contract, enforceable as a contractual
obligation, and controlled exclusively by the agreement. Haas v. Haas,
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No. 02A01-9604-CV-00073, 1997 WL 194852, at *3 (Tenn. Ct. App. Apr.
22, 1997) (no Tenn. R. App. R. 11 application filed).
Powers v. Powers, No. W2012-01763-COA-R3CV, 2013 WL 1804188, at *4 (Tenn. Ct.
App. Apr. 30, 2013) (quoting Bryan v. Leach, 85 S.W.3d 136, 151 (Tenn. Ct. App.
2001)).
“The interpretation of a written agreement is a matter of law and not of fact;
therefore, our scope of review is de novo upon the record with no presumption of
correctness of the trial court’s conclusions of law.” Clear Channel Outdoor, Inc. v. A
Quality, Inc., 250 S.W.3d 860, 863 (Tenn. Ct. App. 2007); NSA DBA Benefit Plan v.
Connecticut Gen. Life Ins. Co., 968 S.W.2d 791, 795 (Tenn. Ct. App. 1997); Rainey v.
Stansell, 836 S.W.2d 117, 118 (Tenn. Ct. App. 1992). Our task is to review the contract
anew and make our own independent determination of the agreement’s meaning. Pylant
v. Spivey, 174 S.W.3d 143, 150 (Tenn. Ct. App. 2003); Hillsboro Plaza Enterprises v.
Moon, 860 S.W.2d 45, 47 (Tenn. Ct. App. 1993).
With regard to college tuition, the AOLS states as follows:
ORDERED, ADJUDGED and DECREED that Husband shall and does
agree to be contractually bound to pay college tuition and books for the
parties’ minor children for up to five (5) years of college for each or until
each child has reached the age of twenty-five (25) years, whichever occurs
first, at a rate not to exceed that charged for in-state tuition at the University
of Tennessee, Knoxville;
In-state tuition for the 2016-2017 academic school year at UTK is $12,724.00
Shelby attends Indiana University-Perdue University Indianapolis (IUPUI) where the cost
of her attendance is approximately $44,061.41 per year. In addition to tuition, this
amount includes a full meal plan, housing, and all manner of fees including placement
fees, lab fees, parking permits etc. For the 2016-2017 school year, Shelby received
$27,515.76 in scholarships and sponsor fees, which is credited to the total cost of her
attendance. In calculating what he owed for Shelby’s college expenses, Mr. Elrod
deducted Shelby’s scholarships and sponsor fees, leaving a total of $1,211.00 remaining
in tuition costs. The trial court found that
Husband has paid $1,102 toward Shelby’s college tuition. Husband used
Shelby’s scholarship funds and the University Sponsor Fee Credit for the
2016-2017 and Fall 2017 semesters to offset his tuition payment obligation
and thus shifted the majority of the costs of Shelby’s college expenses to
the child and [Ms. Church].
In Bowling v Bowling, No. E2004-01219-COA-R3-CV, 2005 WL 336913 (Tenn.
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Ct. App. Feb. 14, 2005), the parties’ daughter attended college where the mother worked.
The father in Bowling asserted that it was error for the trial court to refuse to give him the
benefit of the tuition credit the mother received from her employer. In that case, the
contract stated that the father was to pay one-half of his daughter’s college expenses, and
did not mention employment benefits. This Court held that “[t]here is no basis for the
Court to take these benefits into account in computing the father’s obligation. The fact
that the mother receives such a benefit and may have voluntarily allowed the father to
share the same in the past, does not affect the father’s contractual obligation.” Id. at *3.
Here, the trial court relied on the Bowling case to reach its conclusion that “[t]here is no
basis for the court to take these benefits into account in computing [Husband’s]
obligation.” Accordingly, the trial court ordered that
[Mr. Elrod] shall be responsible for $12,724 of Shelby’s college tuition for
the 2018-2019 and $12,724 for the 2019-2020 school years, or whatever the
in-state tuition is for the University of Tennessee Knoxville. In addition,
[Mr. Elrod] shall reimburse [Ms. Church] $24,346 for Shelby’s college
expenses for the 2016-2017 and 2017-2018 school years thus far.
The trial court also cited the case of Lopez v. Taylor, 195 S.W.3d 627, 633-34
(Tenn. Ct. App. 2005) in support of its opinion. In Lopez, both parents agreed to
“equally pay the children’s college education including tuition, books, school dues and
room and board while they attend college.” Id. The parties’ older son became eligible
for a substantial tuition discount when Father became employed by the university where
son was enrolled. Father and son conspired to withhold this information regarding
Father’s employment and the tuition discount from Mother so that she would continue to
pay tuition that was not owed. Due to the fraud perpetrated against her, this Court held
that Mother was no longer obligated to pay for son’s college expenses. Id. Importantly,
the Court in Lopez concluded that the parties’ agreement for each to pay one-half of their
children’s college expenses, contractually obligated each to pay one-half of the expenses
actually incurred. Lopez, 195 S.W. 3d at 633-34. This holding in Lopez is in line with
our holding in Cooper v. Cooper, No. W1999-01450-COA-R3-CV, 2001 WL 29459,
(Tenn. Ct. App. Jan. 10, 2001).
In Cooper, Husband agreed that he “shall pay for Patrick’s college or education
needed after high school.” Cooper, 2001 WL 29459, at *1. After determining exactly
which expenses Husband was obligated to pay, this Court held that “Mr. Cooper is liable
for the cost of tuition, fees, books, and the dormitory costs for room and board, less
grants and scholarships received by Patrick.” Id. at *5 (emphasis added). Although
there are not many Tennessee cases on this issue, cases from nearby states support the
reasoning of Cooper and Lopez. In Norrell v. Norrell, 225 S.E.2d 305 (Ga. 1976), the
Supreme Court of Georgia interpreted a divorce decree requiring the father to “pay
tuition for the children as they reach college age or tuition in any other school which they
may enter.” Id. at 306. The evidence in Norrell showed that the parties’ son attended the
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Julliard School of Music, which had an annual tuition of $2,690.00. The trial court
required the father to pay this entire amount, despite the fact that the son received an
$800.00 scholarship that was applied to his tuition. The Supreme Court of Georgia held
that the language of the divorce decree only obligated the father to pay the net tuition and
remanded the case to the trial court with instructions to allow the father a credit for the
$800.00 scholarship. Id. The Missouri Court of Appeals has also decided a similar issue,
stating that “any court order for the payment of educational expenses should properly be
based on actual out-of-pocket costs to the student.” Panettiere v. Panettiere, 945 S.W.2d
533, 539-540 (Mo. Ct. App. 1997).
Here, Shelby has received certain scholarships and credits meant to reduce her
cost of attendance. The IUPUI Scholarship Statement of Rights and Responsibilities
entered into evidence states that “[i]f the balance on your bursar account is paid in full . .
. any remaining scholarship monies will be refunded to you. . . .” Under the AOLS, Mr.
Elrod is not obligated to pay for Shelby’s college expenses other than books and a portion
of tuition. Therefore, based on our decisions in Cooper and Lopez, we hold that Mr.
Elrod is liable for the cost of tuition and books, less scholarships and sponsor fees
received by Shelby. The issue then becomes a question of how to apply the scholarship
and credits. Other than a small housing stipend received during the 2016-17 school year,
none of the scholarships or other credits are specifically designated for a particular cost.
To the contrary, it appears that all educational expenses are totaled, and all financial aid
is then subtracted from that total. Absent evidence of an actual designation of financial
aid awards for application to tuition expenses, we cannot generally presume such awards
were so designated. Thus, under the unique circumstances of this case, the scholarships
and sponsor fees received by Shelby shall be spread across the cost of Shelby’s tuition,
books, fees, and room and board owed to the university. The financial transcript from
IUPUI indicates that the cost of Shelby’s attendance for the 2016-2017 school year is
$44,061.41. She received $27,515.76 in scholarships and sponsor fees, leaving a balance
of $16,545.65 owed to IUPUI. When you subtract Mr. Elrod’s $12,724.00 tuition
obligation from the balance, a balance of $3,821.65 remains. This balance is the
responsibility of Shelby and Ms. Church. The cost of Shelby’s attendance at IUPUI for
the fall semester of 2017 is $16,225.49. Shelby received $15,072.30 in scholarships and
sponsor fees leaving a balance of $1,170.69 owed to IUPUI. As there is no evidence of
any other costs owed to IUPUI, Mr. Elrod is only obligated to pay $1,170.69 for the 2017
fall semester. Accordingly, if the balance owed to the university for Shelby’s tuition,
fees, books, and room and board after all credits for scholarships and sponsor fees is
more than $12,724.00, Mr. Elrod is obligated to pay the full $12,724.00. If the balance
owed by Shelby after all credits is less than $12,724.00, Mr. Elrod is only obligated to
pay the lower amount. Accordingly, we vacate the trial court’s order requiring Mr. Elrod
to reimburse Ms. Church $24,346.00 for the 2016-17 and 2017-18 school years and
ordering him to pay the full amount of in-state tuition for UTK for the 2018-19 and 2019-
20 school years. We remand the matter to the trial court with instructions to determine
Mr. Elrod’s actual obligation for Shelby for each school year in question giving him
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credit for scholarships, sponsor fees, and other cost reducing programs received by
Shelby.
D. Retirement Plan
Mr. Elrod argues that the trial court erred in characterizing his obligation to make
equal contributions to Ms. Church’s separate retirement account as a contractual
obligation. With regard to the parties’ retirement accounts after divorce, the AOLS
states:
[I]n the event that a Final Decree of Divorce is entered between the parties,
a Qualified Domestic Relations Order shall be entered segregating Ms.
Church's fifty (50%) percent of the retirement account into a separate
account in her name, with Husband being required thereafter to make equal
contributions to Ms. Church’s separate retirement account as he makes his
own retirement account or accounts through his employer or any
subsequent employer until he reaches the age of sixty-five (65) years[.]
Mr. Elrod argues that the obligation to contribute to Ms. Church’s retirement plan is in
the nature of support and should be considered alimony in futuro, making the obligation
modifiable. Mr. Elrod further argues that the “obligation contains contingencies, lacks
certainty and is incapable of definite calculation.” The trial court’s order states in
pertinent part:
Husband requests that the court allow Husband to terminate his obligation
to fund a separate retirement account for Ms. Church. In her pleading, Ms.
Church seeks to have Husband held in contempt of court for his failure to
fund her retirement account. Both parties’ requests in this regard are
denied. As for Husband’s request, he agreed to this provision. He cannot
back out of the agreement now . . . .
As for Ms. Church’s request, it is denied because the MDA [sic] requires
Husband to make equal contributions to Ms. Church’s separate retirement
account as Husband “makes to his own retirement account or accounts
through his employer or any subsequent employer . . .” The proof at trial
was that Husband does not and has not contributed to his retirement
account since the parties’ divorce. Thus, Husband is not in breach of the
contract and he is not in contempt of court.
It is well settled under Tennessee law that "only that portion of a property
settlement agreement between husband and wife dealing with the legal duty of child
support, or alimony over which the court has continuing statutory power to modify, loses
its contractual nature when merged into a decree for divorce." Penland v. Penland, 521
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S.W.2d 222, 224 (Tenn. 1975) (emphasis supplied); see also Blackburn v. Blackburn,
526 S.W.2d 463, 465 (Tenn. 1975). The reason for stripping the agreement of its
contractual nature "'is the continuing statutory power of the Court to modify its terms
when changed circumstances justify.'" Towner v. Towner, 858 S.W.2d 888, 890 (Tenn.
1993) (quoting Penland, 521 S.W.2d at 224). However, voluntarily assumed obligations
outside the scope of a Court’s statutory power to modify are enforceable as a contractual
obligation and are controlled exclusively by the agreement. Penland, at 224; Bryan v.
Leach, 85 S.W.3d 136, 151- 152 (Tenn. Ct. App. 2001). Similarly, agreements to make
monthly payments pursuant to a property settlement agreement do not lose their
contractual nature by merger into the decree of divorce and are not subject to later
modification by the Court. Towner, 858 S.W.2d at 888; Hannahan v. Hannahan, 247
S.W.3d 625 (Tenn. Ct. App. 2007). If the agreement did not merge into the final decree
of divorce and lose its contractual nature, then any subsequent modification of the
obligation by the trial court would violate the constitutional prohibition against the
impairment of contractual obligations. Blackburn, 526 S.W.2d at 465 (citing Tenn.
Const. art. I, § 20). See Eberbach v. Eberbach, 535 S.W.3d 467, 474 (Tenn. 2017)
(concluding that on issues other than child support during minority and alimony, the
MDA retains its contractual nature). See also Towner, 858 S.W.2d at 890; Yarbro, 1999
WL 1097983, at *4. Here, Mr. Elrod agreed to fund Ms. Church’s retirement account at
a level commensurate with his own until he reached the age of 65. The terms of the
AOLS in this regard are clear and finite. We conclude the trial court correctly ruled that
the parties’ agreement concerning retirement accounts was contractual in nature. Mr.
Elrod has not presented any argument that persuades us otherwise.
Concerning the issue of the retirement account, Ms. Church argues that Mr. Elrod
breached his duty of good faith and fair dealing in failing to fund his retirement plan in
order to deprive her of equal contributions as required under the AOLS. Ms. Church
argues that “[t]he parties agreed that [Mr. Elrod] would make the maximum contribution
possible to his retirement savings and an equal amount to [Ms. Church]’s retirement
account.” A fair reading of the AOLS, however, reveals this argument has no merit. The
AOLS states that upon entry of a Final Decree of Divorce and a Qualified Domestic
Relations Order (QDRO), Mr. Elrod shall be required thereafter “to make equal
contributions to [Ms. Church]’s separate retirement account as he makes his own
retirement account or accounts through his employer or any subsequent employer until he
reaches the age of sixty-five (65) years.” While it is undisputed that Mr. Elrod has not
contributed any funds to Ms. Church’s retirement account since the divorce, it is also
undisputed that Mr. Elrod has not contributed any funds to his own retirement account
since the divorce. Therefore, Mr. Elrod has complied with his obligation under the
retirement provision in the AOLS. Ms. Church has received exactly that for which she
bargained. As such, Mr. Elrod has not breached his duty of good faith and fair dealing.
E. Attorneys’ Fees on Appeal
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Both parties have requested that this Court award attorneys’ fees on appeal.
Litigants must typically pay their own attorneys’ fees absent a statute or agreement
providing otherwise. See State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186,
194 (Tenn. 2000). An award of appellate attorney fees is a matter that is within this
Court’s sound discretion. Archer v. Archer, 907 S.W.2d 412, 419 (Tenn. Ct. App. 1995).
Neither party has alleged that the appeal of the other is frivolous or “utterly devoid of
merit.” Combustion Eng’g, Inc. v. Kennedy, 562 S.W.2d 202, 205 (Tenn. 1978). In
considering a request for attorney fees on appeal, we consider the ability of the party
seeking the fee award to pay such fees, his or her success on appeal, whether the appeal
was taken in good faith, and any other equitable factors relevant in a given case.
Darvarmanesh v. Gharacholou, No. M2004-00262-COA-R3-CV, 2005 WL 1684050 at
*16 (Tenn. Ct. App. July 19, 2005). Considering all of the relevant factors, we
respectfully decline to exercise our discretion to award attorneys’ fees to either party in
this appeal.
V. Conclusion
For the foregoing reasons, we reverse the trial court’s finding that the $700,000.00
term life insurance obligation was not modifiable, but affirm the decision not to terminate
the obligation at this time. We vacate the trial court’s order requiring Mr. Elrod to
reimburse Ms. Church $24,346.00 for the 2016-17 and 2017-18 school years and
ordering him to pay the full amount of in-state tuition for UTK for the 2018-19 and 2019-
20 school years. We remand the matter to the trial court with instructions to determine
Mr. Elrod’s actual obligation for Shelby for each school year in question giving him
credit for scholarships, sponsor fees, and other cost reducing programs received by
Shelby. We affirm the trial court’s decision with regard to the upward deviation of child
support. We affirm the trial court’s order regarding the funding of Ms. Church’s
retirement account. We respectfully deny the parties’ request for attorneys’ fees and
expenses on appeal and remand for further proceedings as may be necessary and are
consistent with this opinion. Costs of the appeal are assessed equally against the parties,
and their sureties, for all of which execution may issue if necessary.
_________________________________
KENNY ARMSTRONG, JUDGE
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