Marsha Bordes v. Julian Bordes

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

July 13, 2011 Session

MARSHA BORDES v. JULIAN BORDES

Appeal from the Circuit Court for Williamson County

No. II99106 Robbie T. Beal, Judge

No. M2010-02036-COA-R3-CV - Filed September 30, 2011

Husband filed a petition to modify the amount of alimony in futuro set in the divorce decree,

asserting that health problems and a decrease in his income arising after the divorce

constituted a substantial and material change in circumstances that warranted a reduction in

the amount of alimony. Husband appeals the denial of the petition and award of attorney fees

to Wife. Finding that Husband was entitled to modification and that the award of attorney

fees was inappropriate, we reverse the judgment of the trial court and modify the award of

alimony.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed

R ICHARD H. D INKINS, J., delivered the opinion of the court, in which F RANK G. C LEMENT,

J R. and A NDY D. B ENNETT, JJ., joined.

J. Todd Faulkner, Nashville, Tennessee, for the appellant, Julian Bordes.

Angela R. Hoover, Franklin, Tennessee, for the appellee, Marsha Bordes.

OPINION

I. Procedural History

Marsha Bordes (“Wife”) and Julian Bordes (“Husband”) were divorced on June 29,

1999; at the time of the divorce, they had two minor children. The Final Decree of Divorce

incorporated a Marital Dissolution Agreement (“MDA”) which granted Wife custody of the

children and required Husband to pay support in accordance with the Child Support

Guidelines. The MDA also provided that Husband would pay alimony in futuro as follows:

$1,700 per month until child support for the parties’ oldest child ended; at that time, the

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alimony payment would increase to $2,300 and continue until child support for the parties’

youngest child ended; alimony would then reduce to $2,000 per month. The MDA contained

no provision for modification of the nature or amount of alimony.

On January 11, 2008, Husband filed a Petition to Modify Final Decree to Decrease

Alimony Payment; Wife duly answered the petition and filed a counter-petition.1 At the time

of filing the petition to modify, Husband’s child support obligations had ended and he was

paying alimony of $2,000 per month. At the hearing on the petition on July 15, 2010,

Husband testified that he owned an Orkin pest control franchise at the time of the divorce and

that he had experienced health problems since the divorce—including heart surgery and

diabetes—which limited his ability to work. As a consequence, he sold the Orkin franchise

in 2009 and he and his current spouse purchased a restaurant; he further testified that he

received $400 every two weeks from the restaurant and $1,100 per month from a retirement

account. Husband contended that his health problems and the decrease in his income

constituted a substantial and material change in circumstances that warranted a reduction in

the amount of alimony.

On September 1, the court entered an order in which it held that the “economic

downturn in the economy” was a substantial and material change, and that Husband had

“some health issues and that his age was beginning to limit his ability to do his job” but that

these matters were “not necessarily unanticipated” at the time the parties executed the MDA.

The court also held that Husband made a “significant amount of money which would have

paid his alimony obligation for a significant amount of time” when he sold the franchise and

that Husband’s choice to invest the proceeds of sale in the restaurant, from which he only

received $800 in income per month, did not justify “penalizing” Wife by lowering the

amount of alimony. The court denied the petition to modify and awarded Wife attorney fees

in the amount of $7,500.

Husband appeals and asserts that the trial court erred in failing to modify and reduce

his alimony obligation; he also contends that the trial court erred in awarding attorney fees

to Wife.

1

The court’s ruling on the counter-petition is not at issue on appeal.

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II. Analysis

A. Standard of Review

Alimony in futuro is intended to provide support on a long-term basis until the death

or remarriage of the recipient. Tenn. Code Ann. § 36-5-121(f)(1).2 An award of alimony in

futuro remains in the court’s control for the duration of such award, and “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).

A party seeking a modification of alimony in futuro must satisfy two requirements.

First, the petitioner must establish that there has been a change in circumstances that is

substantial and material since the entry of the original support decree. Bogan, 60 S.W.3d at

727–28 (citing Tenn. Code Ann. § 36-5-101(a)(1)). Second, the person seeking modification

must establish that modification is warranted. See Byrd v. Byrd, 184 S.W.3d 686, 691 (Tenn.

Ct. App. 2005) (citing Freeman v. Freeman, 147 S.W.3d 234, 239 (Tenn. Ct. App. 2003)).

A trial court’s decision regarding modification of a spousal support award is “factually

driven and calls for a careful balancing of numerous factors.” Cranford v. Cranford, 772

S.W.2d 48, 50 (Tenn. Ct. App. 1989). “[T]he role of an appellate court in reviewing an

award of spousal support is to determine whether the trial court applied the correct legal

standard and reached a decision that is not clearly unreasonable.” Gonsewski v. Gonsewski,

M2009-00894-SC-R11CV, 2011 WL 4116654 at *3 (Tenn. Sept. 16, 2011) (citing Broadbent

v. Broadbent, 211 W.W.3d 216, 220 (Tenn. 2006). We review the trial court’s specific

findings of fact de novo in accordance with Tenn. R. App. P. 13(d). Thus, when the trial

court has set forth its factual findings in the record, we will presume the correctness of those

findings unless the evidence preponderates against them. See, e.g., Crabtree v. Crabtree, 16

S.W.3d 356, 360 (Tenn. 2000).

Appellate courts decline to second-guess a trial court’s decision to modify support

absent an abuse of discretion. Robertson v. Robertson, 76 S.W.3d 337, 343 (Tenn. 2002)).

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Alimony in futuro may be awarded where “the court finds that there is relative economic

disadvantage and that rehabilitation is not feasible,” and is appropriate when:

the disadvantaged spouse is unable to achieve, with reasonable effort, an earning capacity

that will permit the spouse’s standard of living after the divorce to 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.

Tenn. Code Ann. § 36-5-121(f)(1).

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An abuse of discretion “reflects an awareness that the decision being reviewed involved a

choice among several acceptable alternatives,” Gonsewski, 2011 WL 4116654 at *3, and

occurs when the trial court causes an injustice by applying an incorrect legal standard,

reaches an illogical result, resolves the case on a clearly erroneous assessment of the

evidence, or relies on reasoning that causes an injustice. Id. (citing Wright ex rel. Wright

v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011); Henderson v. SAIA, Inc., 318 S.W.3d 328, 335

(Tenn. 2010)).

B. Modification of Alimony in Futuro

In this case, neither party contests the court’s finding of a substantial and material

change of circumstance; that finding allowed the court to consider whether a modification

was warranted. With regard to its finding, the court held:

That the Court can find as a material and substantial change of circumstance

the economy. Petitioner is in a business that drives the economy. The Court

can certainly take note that there has been a downturn in the economy, and that

would substantially affect his income-earning ability. There has been a

material and substantial change in circumstances, at least on that basis, to

believe that the Court can review this.

The trial court determined that the “economic downturn” constituted a substantial and

material change; the court did not make factual findings in support of this determination. We

have reviewed the record and do not find evidence in support of the court’s determination.3

However, mindful of our ability to consider issues not presented for review, see Tenn. R.

App. P. 13(a), and to affirm the trial court’s determination on different grounds, see

Continental Cas. Co. v. Smith, 720 S.W.2d 48 (Tenn. 1986), we conclude that the record does

show a substantial and material change in circumstance, which allowed Husband to proceed

to show that a modification was warranted.

A change in circumstances is “substantial” when it significantly affects either the

obligor’s ability to pay or the obligee’s need for support.” Bogan, 60 S .W.3d at 728 (citing

Bowman v. Bowman, 836 S.W.2d 563, 568 (Tenn. Ct. App. 1991)). Husband’s Social

Security Administration earnings record was introduced into evidence and showed that, when

the parties were divorced in 1999, Husband earned $121,823; during the years following,

Husband’s earnings decreased from $120,950 in 2000 to $9,000 in 2007. With respect to his

business interests and other income, records of Husband’s accountant showed: in 2007

3

Husband did testify that “the economy went down.” However, this testimony was in the context

of his operation of the pest control franchise and not the restaurant.

4

Husband received $277 in interest income and $8,179 as his share of profits from the Orkin

franchise in addition to the $9,000 earnings income; in 2008, $9,000 in earnings from the

pest control business, $1,605 in gambling income, $177 in interest income, and a loss of

$20,438 from his ownership interest in the franchise; in 2009, $6,200 in earnings from the

restaurant, $1,875 in earnings from the pest control business, $1,200 in gambling income, a

one-time gain of $109,045 on the sale of the Orkin franchise, a $4,691 loss on the final year

of operation of the pest control business, and $62,761 loss on the first year operation of the

restaurant; and from January through May of 2010, $4,400 in salary received and $5,418 as

his share of profits from the restaurant.4 Husband testified that the restaurant was “breaking

even” and that he was receiving $800 in salary each month from the restaurant. Husband

also testified that he was receiving $1,100 each month from a retirement plan.

The evidence shows that Husband’s income dropped dramatically from the time of

the divorce to the time of the hearing on the petition for modification. His earnings

consistently decreased over the period and the gain from the sale of the Orkin franchise was

invested into a new business enterprise which was just “breaking even.”5 From 2003 through

2008, Husband’s alimony obligation exceeded his income from all sources. Husband

testified that he was only able to make alimony payments because his spouse paid for “every

bit of [the household expenses].” The decrease in Husband’s income constituted a

substantial change of circumstance because it impaired Husband’s ability to pay the amount

of alimony set at the time of the divorce. Bogan, 60 S .W.3d at 728.

A change in circumstances is “material” when the change occurs since the date the

alimony was ordered, and the change was not within the contemplation of the parties when

they entered into the property settlement. Bogan, 60 S.W.3d at 728 (citing Watters v.

Watters, 22 S.W.3d 817, 821 (Tenn. Ct. App. 1999)). The evidence in this case shows that

the decrease in Husband’s income was a consequence of his health problems, arising after

the divorce, which led to his inability to continue in the pest control business and the

resulting sale of the Orkin franchise. Although the trial court held that these problems were

“not necessarily unanticipated,” the record does not show that the severity of the problems

and the effect that they would have on Husband’s income was anticipated.6 Accordingly,

4

The accountant reported that, in 2010, Husband would also receive the final installment payment

from the sale of the Orkin franchise, totaling $10,874.

5

We have taken the proceeds of sale of the Orkin franchise into account in our discussion of

Husband’s earning capacity, infra.

6

Husband testified that, at the time of the divorce, he was taking medication for high blood pressure;

since the divorce, he had a stent put in his heart, was diagnosed as “diabetic 2," and had numbness in his feet

(continued...)

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Husband’s health problems and his resulting decrease in income are material because they

were not within the contemplation of the parties at the time of the divorce.

Having affirmed the court’s finding of a substantial and material change in

circumstances, we next consider whether the trial court abused its discretion in denying a

modification. Husband contends that the court erred in denying the modification because he

“has experienced an unanticipated loss of earning ability and the Wife is capable of

supplementing her income.”

Whether modification is justified is based upon the same factors employed in the

consideration of an initial award of alimony; the factors are set forth at Tenn. Code Ann. §

36-5-121(i).7 Bogan, 60 S.W.3d at 730; Wright v. Quillen, 83 S.W.3d 768, 773 (Tenn. Ct.

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(...continued)

and legs. The accountant’s records reported that Husband hired a service manager to run the Orkin franchise

in 2008; Husband testified that his health problems forced him to hire this manager.

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The factors are:

(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;

(6) The extent to which it would be undesirable for a party to seek employment outside the

home, because such party will be custodian of a minor child of the marriage;

(7) The separate assets of each party, both real and personal, tangible and intangible;

(8) The provisions made with regard to the marital property, as defined in § 36-4-121;

(9) The standard of living of the parties established during the marriage;

(10) The extent to which each party has made such tangible and intangible contributions to

the marriage as monetary and homemaker contributions, and tangible and intangible

contributions by a party to the education, training or increased earning power of the other

party;

(11) The relative fault of the parties, in cases where the court, in its discretion, deems it

appropriate to do so; and

(12) Such other factors, including the tax consequences to each party, as are necessary to

consider the equities between the parties.

Tenn. Code Ann. § 36-5-121(i)

(continued...)

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App. 2002); Threadgill v. Threadgill, 740 S.W.2d 419, 422–23 (Tenn. Ct. App. 1987); Hasty

v. Hasty, No. M2002-01756-COA-R3-CV, 2003 WL 21954190, at *2–3 (Tenn. Ct. App.

Aug. 15, 2003). Although the court must consider all factors under the statute, the two most

important considerations in modifying a spousal support award are the financial ability of the

obligor to provide the support and the financial need of the party receiving the support.

Bogan, 60 S.W.3d at 730. While the need of the receiving spouse is the most important

factor in addressing an initial award of support, when deciding whether to modify an award,

the need of the receiving spouse and the ability of the obligor to provide support must be

given at least equal consideration. Id.

With regard to Husband’s ability to pay, the trial court determined that Husband’s

earning capacity was between $75,000 to $100,000 per year. In calculating Husband’s

earning capacity, the court stated:

That if the Court looks at Petitioner’s earning potential back to 1990 and

averages it out, even the years that he made Ten Thousand ($10,000.00)

Dollars or so, it averages out to be Eighty Thousand and 00/100 ($80,000.00)

Dollars per year. This Court has to consider earning potential and Petitioner

has earning potential of significantly more than his current income of Eight

Hundred and 00/100) Dollars per month. The Court finds that Petitioner is an

experienced business owner who has real life experiences that would suggest

that he is capable of making a very good living. Petitioner had significant

income over a significant period of time, even with the economy downturns

and Petitioner choosing to embark on a new career, it is expected that

Petitioner would continue to be able to make a very good living.

While we agree that Husband’s earning capacity is greater than what he is currently earning,

we are unable to agree that the range found by the court is Husband’s earning capacity.

“Determining . . . what a [parties’] potential income would be [is] a question[] of fact

that require[s] careful consideration of all the attendant circumstances.” Richardson v.

Spanos, 189 S.W.3d 720, 726 (Tenn. Ct. App. 2005). In establishing this range, the court

relied primarily on evidence of Husband’s earnings history, including time prior to the

divorce and time when Husband was not suffering health problems which adversely affected

his ability to earn income. Taking pre-divorce earnings into account is proper and consistent

with the court’s responsibility under Tenn. Code Ann. § 36-5-121(i) in determining an initial

award of alimony. When the inquiry before the court is whether the award should be

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(...continued)

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modified as provided in Tenn. Code Ann. § 36-5-121(f)(2)(A), however, post-divorce

earnings and other attendant circumstances are more probative of earning capacity.

The record shows that Husband currently receives $1,900 per month in income from

the restaurant and his retirement plan, which are his only sources of income. Proof of the

statutory factors includes evidence that Husband was 58 years old at the time of the hearing;

that he has Type II diabetes, asthma, and a stent in his heart; and that his only other assets are

a 2004 Ford F-150 truck and his home, in which he has approximately $100,000 in equity.

An expense statement was introduced by Husband showing his monthly expenses at

$2,498.00.

During the period 1999-2010, Husband was the owner of the Orkin franchise and his

income—both from earnings and his ownership interest in the business—was derived from

that source; Husband’s earnings, as reflected in the Social Security Administration earnings

record and the record from his accountant, averaged approximately $50,000. Husband

testified that in the years after the divorce he became no longer physically able to perform

the tasks that the pest control job required and, as a consequence, sold the business.

The Orkin business was the property of a limited liability company composed of

Husband and his present spouse and sold for $409,137.70. Husband and his present spouse

formed a new LLC and, from the proceeds of sale of the Orkin franchise, paid $250,000 in

cash as a down payment on the restaurant.8 $110,000 of the proceeds was used to pay debt

encumbering the franchise and the remainder was allocated to working capital for the

restaurant. The franchise sale agreement also provided that $48,846.70 of the purchase price

was financed by Husband, to be paid in 18 monthly installments of $2,640.00 beginning

April 2009. The sale of the Orkin franchise produced income to Husband during a portion

of the ten year period at issue; this could properly be considered as evidence of Husband’s

ability to pay in accord with Tenn. Code Ann. § 36-5-121(i)(1) and it is appropriate to

consider this amount in the determination of earning capacity. Dividing this amount by the

ten years between the divorce and the sale of the franchise results in a figure of $25,000 per

year.

In considering all the evidence bearing on Husband’s earning capacity, we find that

Husband’s earning capacity is $75,000 per year. In addition to the earnings and business

income and proof of statutory factors recited above, Husband has 44 years of work

experience and has operated two businesses; his qualifications make it possible for him to

pursue employment elsewhere if the restaurant does not succeed.

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$250,000 of the purchase price of the restaurant was financed.

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With respect to her need for support, Wife testified that she was not working at the

time of the hearing and that the alimony payments were her only source of income. She

submitted an affidavit attesting that her expenses were $2,438 per month and testified that

she had a 401(k) account containing approximately $100,000, and a home in which she had

approximately $130,000 in equity. Wife also testified that she is 58 years old, has scoliosis

and is deaf in one ear and that she had difficulty lifting boxes and staying on her feet. Wife

was a homemaker during the parties’ marriage from 1975 to 1999 and has had limited work

experience since the divorce. In 2000, she worked for three months as a receptionist at a

veterinary clinic, earning $9.00 an hour. From November 2005 to November 2007, she

worked part-time at Bath & Body Works as a cashier and salesperson, earning $7.50 an hour,

with her salary rising to $8.00 an hour.

The trial court found that Wife was underemployed and could earn approximately

$20,000 per year. The record supports the court’s finding that Wife is capable of working

and is underemployed. While her health and physical condition may limit the type of work

she is capable of performing, she did not testify that she is disabled from working, and she

has not shown that she could not find employment that would accommodate her medical

conditions.

We do not find support in the record, however, for the court’s finding that Wife’s

earning capacity is $20,000. In this regard, the court stated that “[Wife] is unemployed but

should be earning money and could be earning approximately Twenty Thousand and 00/100

($2,000.00) Dollars per year.” The court did not make findings or otherwise refer to

evidence. The best evidence in the record of Wife’s earning capacity was her testimony that

when she was employed at Bath & Body Works she earned $8.00 an hour. This evidence

supports a finding that, based on a year of full-time employment at $8.00 an hour, Wife’s

earning capacity is $16,640 per year.9 This income would not, however, cover Wife’s yearly

expenses as set forth in her affidavit, and she would still have a financial need of $12,616 per

year or $1,050.00 per month.

As noted previously, the two most important considerations in modifying a spousal

support award are the financial ability of the obligor to provide for the support and the

financial need of the party receiving the support and these considerations stand on equal

footing. Bogan, 60 S.W.3d at 730. The evidence supports a finding that, based on

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In addition, Wife testified that she maintained the retirement account which she had been awarded

in the divorce and that the account had a balance of approximately $100,000.00. There was no proof of

whether the funds were immediately available to her and, if so, any conditions attendant to her drawing on

this account.

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Husband’s earning capacity of $75,000 per year, he has the ability to pay alimony; the record

also shows that Wife’s need is $950 per month less than the amount Husband is currently

paying. The decision to deny modification of the award of alimony is not supported by the

preponderance of the evidence, and Husband’s alimony payment should have been modified

in accordance with Tenn. Code Ann. § 36-5-121(f)(2)(A).

C. Attorney Fees

Husband asserts that the trial court erred in awarding Wife attorney fees incurred in

defending his petition for modification. The trial court awarded attorney fees based on the

ruling that Wife prevailed on the petition for modification. Because we reverse the court’s

denial of the petition, we also reverse the trial court’s decision to award attorney fees.

III. Conclusion

For the foregoing reasons, the judgment of the trial court dismissing the petition and

awarding counsel fees to Wife is reversed; the case is remanded to the trial court with

instructions to enter an order modifying the amount of alimony to $1,050.00 per month.

___________________________________

RICHARD H. DINKINS, JUDGE

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