Robert E. Covington v. Barbara Covington

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

May 19, 2010 Session

ROBERT E. COVINGTON v. BARBARA COVINGTON

Appeal from the Chancery Court for Hamilton County

No. 07-0565 Howell N. Peoples, Chancellor

No. E2009-01583-COA-R3-CV - FILED JUNE 18, 2010

In this divorce case following a twenty-one year marriage, the Trial Court designated Barbara

Covington (“Wife”) as primary residential parent, distributed the marital property, and

awarded Wife transitional alimony. Robert Covington (“Husband”) appeals claiming the

Trial Court incorrectly determined that the entire amount of each party’s pension was

separate property. Husband also appeals the award of transitional alimony, claiming that

both the amount and the length of time he was ordered to make payments were excessive.

Wife claims she should have been awarded rehabilitative alimony after the transitional

alimony ended. We hold that the Trial Court incorrectly classified as separate property those

portions of the parties’ pensions earned during the marriage. We also conclude, however,

that the overall property division nevertheless was equitable, and so we find the error to be

harmless. We agree with Husband that the amount of transitional alimony awarded was

excessive and modify the award. As so modified, the judgment of the Trial Court is

affirmed.

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

Chancery Court Affirmed as Modified; Case Remanded

D. M ICHAEL S WINEY, J., delivered the opinion of the court, in which H ERSCHEL P. F RANKS,

P.J., and N ORMA M CG EE O GLE, S P., J., joined.

Jillyn M. O’Shaughnessy, Chattanooga, Tennessee, for the Appellant, Robert E. Covington.

Glenna M. Ramer, Chattanooga, Tennessee, for the Appellee, Barbara Covington.

OPINION

Background

This divorce case was filed by Husband in June 2007. Husband sought a

divorce from Wife on the ground of inappropriate marital conduct or, in the alternative,

irreconcilable differences. The parties have two sons who were 12 and 18 years old when

the divorce was filed. Husband’s proposed parenting plan provided that parenting time with

the minor child be split equally, but that Wife be designated the primary residential parent.

Wife answered the complaint and denied that she had engaged in inappropriate

marital conduct, although she admitted that irreconcilable differences existed between the

parties. Wife filed a counterclaim seeking a divorce from Husband based on inappropriate

marital conduct or, alternatively, irreconcilable differences. Wife requested that she be

designated the minor child’s primary residential parent.

Husband currently is 48 years old and Wife is 54. At the time of the divorce,

the parties had been married for 21 years, since September 27, 1987. After an unsuccessful

attempt at mediation, a three day trial began on March 16, 2009. We will summarize only

that testimony which is relevant to the specific issues on appeal.

Husband testified that he has a bachelor of science degree in psychology from

Middle Tennessee State University. Wife has a bachelor of science degree from the

University of Tennessee at Chattanooga. Husband explained that he and Wife first met when

both were working for State Farm Insurance Company (“State Farm”). Husband worked for

State Farm from 1985 until December 31, 1995, at which time he terminated his employment

and became an independent contractor with State Farm.

Husband testified that Wife also had worked for State Farm. Wife worked

there for approximately twenty years, beginning in 1984 and ending when she voluntarily

terminated her employment in 2003. Wife quit working for State Farm because of the stress.

Husband initially was in agreement that Wife should quit her job with State Farm. However,

according to Husband, he and Wife eventually discussed the fact that she either would have

to find a job or they would have to scale back on their standard of living. Husband testified

that Wife still was unemployed when he moved out of the marital residence.

Husband claimed that in order to make ends meet after Wife quit her job, he

had to borrow against a home equity line of credit and various life insurance policies.

Husband claimed that Wife asked him why he could not make enough money for them to live

without her having to work. Husband told Wife that if she did not get a job, they would

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eventually go broke. When asked if Wife would have any problem finding a job, Husband

stated that with her education and experience, she should have no problem finding a job in

the insurance industry. He added that she could find a job working for a State Farm agent

making between $27,000 to $32,000 a year.

Husband testified that Teri Marshall (“Marshall”) began working for him in

2003 as an office manager. Husband admitted that he began having an affair with Marshall

in July of 2005. Husband moved out of the marital residence in October 2006, but returned

in November. He moved out of the marital residence for good in December 2006. Although

Husband originally denied having an affair, he claimed that Wife knew about the affair by

the time he moved out of the marital residence. Husband currently lives with his mother and

has since moving out of the marital residence.

Husband testified that his monthly gross income is $10,544, and his net

monthly income is $7,544. Husband also filed as an exhibit an expense statement detailing

his monthly expenses, which included a mortgage on a home, etc. Husband claimed that his

monthly expenses totaled $6,681. Husband acknowledged that his expense statement

included an estimate of the expenses that would be incurred when he moves out of his

mother’s house and actually buys a house.

Husband admitted that Wife may need some financial assistance in order to

adjust to the economic situation caused by the divorce. Husband testified that he paid Wife

anywhere from $3,000 to $4,000 a month ever since they separated. Husband also testified

that he cannot continue to pay that much money because he has borrowed all that he can from

his line of credit, and that he was using this borrowed money to make the monthly payments

to Wife. Husband testified that he also cashed out an IRA that was valued at $28,754 in

order to keep current on various obligations, including quarterly payments to the IRS.

Notwithstanding his claim of running out of money, Husband admitted to

“dissipating” marital assets by spending money on Marshall. Husband admitted he

“purchased a ring for Marshall sometime in 2006, some furniture, another piece of jewelry

or two, and then we have had meals out, and a weekend trip or, you know, weekend travel.”

A detailed list of the money Husband admitted to spending on Marshall was admitted at trial.

This exhibit, titled “Dissipation by Husband,” shows Husband spent $19,949.65 on Marshall.

While Husband disputed a few of the entries, he acknowledged that, for the most part, the

exhibit was accurate. The funds spent on Marshall include an $8,000 ring, $1,100 toward

getting the rent on Marshall’s apartment caught up, and two trips to Florida with Marshall

and her two daughters. During 2006, Husband paid Marshall employment bonuses

equivalent to $1,000 per month. Husband asserted, however, that these bonuses were

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commensurate with the amount of work being performed by Marshall and were consistent

with the pay of other employees of State Farm agents performing the same work.

Husband’s father died in October of 2006. Husband inherited two annuities

with a combined value of approximately $173,683. Husband intends to put these annuities

in his name and his mother’s name. Husband also inherited some guns from his father.

Wife testified that when she quit her job in 2003, Husband was in full

agreement and stated that he could handle paying for everything even without her income.

Wife began working for Webco in late 2006 in sales and continues to work there. The

success of Webco is dependent upon on the viability of the construction industry, and sales

have declined due to the economy. In 2007, Wife earned $26,735.04, but she earned only

$9,266.38 in 2008. Wife indicated that she intends to find more stable employment.

Wife filed as an exhibit at trial an income and expense statement. According

to this statement, Wife was making only $184.77 per month at Webco, and was receiving

$3,000 per month from Husband. Thus, her total monthly income was $3,184.77. Her

monthly expenses totaled $5,116.00, which included $2,150 for the mortgage and insurance

on the marital residence and $860.00 in payments for credit cards. The marital residence has

five bedrooms and four bathrooms.

Wife testified that she worked for State Farm for almost 20 years. Three of

those years were before the parties were married. Thus, Wife asked that 15% of her pension

be considered her separate property. Wife acknowledged that she was making approximately

$70,000 per year when she quit her job at State Farm. She also acknowledged that she

generally is in good health and there is nothing preventing her from finding a better paying

job from what she currently is earning.

Following trial, the Trial Court awarded Wife a divorce based on Husband’s

admitted inappropriate marital conduct. The Trial Court designated Wife as the minor

child’s primary residential parent. The Trial Court concluded that Husband’s gross annual

income was $126,000, and Wife was capable of earning $20,000 annually. Based on these

figures, Husband was ordered to pay child support in the amount of $1,029.15 per month.1

Both parties had a pension plan through State Farm. At the time of the divorce,

Wife’s pension plan would provide her an annual benefit of $16,661 upon her retirement.

Wife earned this pension by working at State Farm for 20 years and the parties were married

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The amount of Husband’s child support payment and the designation of Wife as primary residential

parent are not at issue on appeal. We have omitted trial testimony pertaining to these issues.

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for 17 of those 20 years. Husband also had a retirement plan based on his 11 years as a State

Farm employee. The parties were married for 9 of those 11 years. Husband’s pension plan

will provide him an annual benefit upon his retirement of $6,480. The Trial Court concluded

that these pension plans were separate property and awarded Wife her entire plan and

Husband his entire plan as separate property. Excluding Husband’s inheritance, the vast

majority of the remaining property was found to be marital property. The Trial Court ordered

the parties to sell the marital residence but allowed Wife to remain in possession of the

marital residence until it was sold.

The Trial Court determined that the marital property should be split equally and

that the equity in the marital residence should be used to make the allocation equal. Wife

was awarded a total of $108,547.48 in marital assets and ordered to pay $11,990.00 in marital

debt, resulting in a net award to Wife of $96,557.59. Husband was awarded a total of

$64,674.59 in marital assets and ordered to pay $50,243.00 in marital debt, resulting in a net

award to Husband of $14,431.59. In order to equalize the overall award, the Trial Court

ordered that Husband receive the first $82,126.00 in equity from the sale of the marital

residence, with the remaining equity to be divided equally. The Trial Court also awarded

Wife transitional alimony for six years. According to the Trial Court:

It is ORDERED that until the marital residence is sold,

[Husband] shall pay transitional alimony in the amount of Three

Thousand Dollars ($3,000.00) per month on the 1 st day of each

month, beginning April 1, 2009. Said alimony shall be

deductible by [Husband] and taxable to [Wife].

It is ORDERED that beginning the first full month following the

sale of the marital residence, [Husband] shall pay transitional

alimony in the amount of Four Thousand Dollars ($4,000.00)

per month on the 1st day of each month and shall continue to pay

$4,000 per month on the first day of each month thereafter until

the first of the following events: the death of either party, the

remarriage of the Wife or until March 1, 2015. Said alimony

shall be deductible to [Husband] and taxable to [Wife].

Finally, the Trial Court ordered Husband to pay Wife’s attorney fees in the amount of

$25,024.25.

Husband appeals claiming the Trial Court erred when it concluded that each

party’s State Farm pensions were entirely separate property. Husband also claims the award

of transitional alimony to Wife was excessive and the award of attorney fees was error.

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Wife also appeals. Wife asserts that the Trial Court properly classified the

State Farm pensions as separate property and properly awarded transitional alimony for the

amount and duration set forth in the final decree. Wife, however, claims that the Trial Court

erred by not awarding her rehabilitative alimony once the transitional alimony ends. Wife

claims that, once the transitional alimony ends, she should be awarded rehabilitative alimony

in the amount of $3,000 per month until she becomes eligible for her pension at age 62. Wife

also requests an award of attorney fees incurred on appeal.

Discussion

The factual findings of the Trial Court are accorded a presumption of

correctness, and we will not overturn those factual findings unless the evidence

preponderates against them. See Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721,

727 (Tenn. 2001). With respect to legal issues, our review is conducted “under a pure de

novo standard of review, according no deference to the conclusions of law made by the lower

courts.” Southern Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706, 710

(Tenn. 2001). This Court reviews a trial court’s decision with respect to an award of alimony

under an abuse of discretion standard. See Garfinkel v. Garfinkel, 945 S.W.2d 744, 748

(Tenn. Ct. App. 1996).

We first address whether the Trial Court properly classified the parties’

pensions as separate property. In Langschmidt v. Langschmidt, 81 S.W.3d 741 (Tenn. 2002),

the Tennessee Supreme Court noted that “marital property” includes “any increase in value

during the marriage of . . . separate property . . . if each party substantially contributed to its

preservation and appreciation and the value of vested pension, retirement or other fringe

benefit rights accrued during the period of the marriage.” Id. at 745 (quoting Tenn. Code

Ann. § 36-4-121(b)(1)(B)). In addition, “separate property” includes “appreciation of

property owned by a spouse before marriage” except when that property is properly

characterized as marital property. Id. (quoting Tenn. Code Ann. § 36-4-121(b)(2)(C)).

Relying on these statutory provisions and relevant case law, in Pedine v. Pedine, No.

E2008-00571-COA-R3-CV, 2009 WL 585943 (Tenn. Ct. App. March 9, 2009), no appl.

perm. appeal filed, we easily concluded that “[h]ow to characterize retirement accounts that

accrue during the marriage is much simpler to answer as such benefits ‘clearly are marital

property under Tennessee law.’” Pedine, 2009 WL 585943, at *6 (quoting Langschmidt, 81

S.W.3d at 749) (emphasis added). See also Snodgrass v. Snodgrass, 295 S.W.3d 240, 246

(Tenn. 2009)(marital property includes contributions to an employment related 401(k)

account made during the marriage, net gains on those contributions, as well as net gains on

the pre-marital balance of the 401(k) when those gains accrue during the marriage).

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In Pedine, we ultimately concluded that the appropriate way to divide the

husband’s pension between what accrued prior to and what accrued during the marriage was

as follows:

Husband also has a pension with his employer. The value of

this pension is based on years of service. Counsel for Husband

acknowledged at trial that the plan was valued at $214,497 on

the day of trial. Because we know the exact value of the

pension as of the trial date, it is much easier to determine the

amount that is separate property since “[o]nly the portion of the

retirement benefits accrued during the marriage are marital

property subject to equitable division.” Cohen v. Cohen, 937

S.W.2d 823, 830 (Tenn. 1996). As of the trial date, Husband

had been employed with the same employer for thirty-two years.

Fifteen of those years were prior to the marriage at issue, and

seventeen years of service were earned while the parties were

married for the second time. Accordingly, 47% of the $214,497,

or $100,813.59, is Husband's separate property, and the

remaining 53%, or $113,683.41, is properly characterized as

marital property.

Pedine, 2009 WL 585943, at *6 (footnote omitted).

Returning to the present case, we agree with Husband that only that portion of

the parties’ pensions earned prior to their marriage is properly classified as separate property,

and the Trial Court erred when it classified each parties’ entire pension as separate property.

According to Husband, after subtracting each party’s separate part of their pension, in order

for each party to receive one-half of the remaining value of the pensions, he should receive

enough of Wife’s pension to enable him to receive an additional $4,423.83 per year upon

Wife’s retirement.

A trial court has wide discretion in dividing the interest of the parties in marital

property. Barnhill v. Barnhill, 826 S.W.2d 443, 449 (Tenn. Ct. App. 1991). As noted by this

Court in King v. King, when dividing marital property:

The trial court’s goal in every divorce case is to divide the

parties’ marital estate in a just and equitable manner. The

division of the estate is not rendered inequitable simply because

it is not mathematically equal, Cohen v. Cohen, 937 S.W.2d 823,

832 (Tenn. 1996); Ellis v. Ellis, 748 S.W.2d 424, 427 (Tenn.

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1988), or because each party did not receive a share of every

item of marital property. Brown v. Brown, 913 S.W.2d [163] at

168.... In the final analysis, the justness of a particular division

of the marital property and allocation of marital debt depends on

its final results. See Thompson v. Thompson, 797 S.W.2d 599,

604 (Tenn. App. 1990).

King v. King, 986 S.W.2d 216, 219 (Tenn. Ct. App. 1998) (quoting Roseberry v. Roseberry,

No. 03A01-9706-CH-00237, 1998 WL 47944 (Tenn. Ct. App. Feb.9, 1998), no appl. perm.

appeal filed).

Excluding their pension, each party was awarded net marital assets of

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$96,557.59. Although the Trial Court did conclude that the marital property should be

divided equally, it reached this conclusion in conjunction with its determination that Wife

was an economically disadvantaged spouse, that her future earnings never would match those

of Husband, and that she should receive her entire pension.

We conclude that the portion of each party’s pension earned during the

marriage was marital property. We further conclude that even though the Trial Court

incorrectly found that each party’s pension was entirely separate property, when considering

the relevant statutory factors set forth in Tenn. Code Ann. § 36-4-121(c) (2005), the overall

property distribution made by the Trial Court nevertheless was equitable. Thus, although we

reclassify a portion of each party’s pension, the Trial Court’s overall property distribution

remains intact and is affirmed.

We next address the Trial Court’s award of alimony. The pertinent statute

setting forth the factors to consider when determining whether to award alimony is Tenn.

Code Ann. § 36-5-121(i) (2005), which provides as follows:

(i) In determining whether the granting of an order for payment

of support and maintenance to a party is appropriate, and in

determining the nature, amount, length of term, and manner of

payment, the court shall consider all relevant factors, including:

2

As set forth previously, the Trial Court concluded that Husband was entitled to the first $82,126

in proceeds from the sale of the marital residence, and thereafter any remaining equity was to be split equally.

When we state that each party was awarded net proceeds of $96,557.59, this does not take into account any

additional amounts the parties may receive from the remaining equity after the sale of the marital residence.

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(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

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(12) Such other factors, including the tax consequences

to each party, as are necessary to consider the equities between

the parties.

“The two most important factors a trial court must consider are the need of the

disadvantaged spouse and the obligor spouse’s ability to pay.” Mimms v. Mimms, 234

S.W.3d 634, 638 (Tenn. Ct. App. 2007) (citing Bratton v. Bratton, 136 S.W.3d 595, 604

(Tenn. 2004)).

Tenn. Code Ann. § 36-5-121(g)(1) (2005) defines “transitional alimony” as “a

sum of money payable by one (1) party to, or on behalf of, the other party for a determinate

period of time. Transitional alimony is awarded when the court finds that rehabilitation is

not necessary, but the economically disadvantaged spouse needs assistance to adjust to the

economic consequences of a divorce . . . .”

Wife was earning very little at the time of trial and did not appear to be

particularly motivated to change that situation. Nevertheless, the Trial Court found that she

could earn at least $20,000 annually. In addition, Wife’s income and expense statement

included a $2,150 payment for the mortgage and insurance on the marital residence, which

was ordered sold. Although both parties will need to find a new place to live, it is likely

neither of them will need or be able to afford to reside in a home the size and cost of the

marital residence, which has five bedrooms and four bathrooms.

The Trial Court found that Wife did not need to be rehabilitated. Given the

level of Wife’s education, her work history, and other relevant factors, we agree with that

finding. When concluding that transitional alimony was the proper form of alimony to

award, the Trial Court stated:

[T]he Court had considered the factors that are set out in

Tennessee Code Annotated 36-5-121. Based on those factors,

the Court finds that she is entitled to alimony in the nature of

transitional alimony. In making this determination, the Court

finds . . . [that Wife] is economically disadvantaged as

evidence[d] by the difference in her ability to earn as opposed to

that of Mr. Covington. . . .

Based on Wife’s demonstrated need for transitional alimony and Husband’s

ability to pay such alimony, we affirm the Trial Court’s determination that Wife should

receive transitional alimony in the amount of $3,000 per month until the marital residence

is sold. We find, however, that the evidence preponderates against the Trial Court’s finding

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that Wife proved either her need for $4,000 per month in alimony after the sale of the marital

residence, or that Husband has the ability to continue paying alimony at that amount.

We also are troubled by the fact that Wife earned $70,000 per year as recently

as 2003. The fact that Wife left her job because she felt it was too stressful does not

eliminate her having an earning capacity greater than the $20,000 as found by the Trial

Court. A great many jobs people work at every day are stressful. Further, we find Wife’s

argument that Husband has the ability to pay her this amount of alimony by working longer

hours than he does, despite the fact that Wife apparently has done very little to change her

situation in order to earn additional money herself, unpersuasive. We, therefore, modify the

transitional alimony award to reflect an award of $2,000 per month from the time the house

is sold until “the death of either party, the remarriage of the Wife or until March 1, 2015.”

Having affirmed the Trial Court’s finding that Wife does not need to be

rehabilitated, it necessarily follows that we reject Wife’s claim that she is entitled to

rehabilitative alimony once the transitional alimony ends. We also note that Wife’s request

for “rehabilitative” alimony from the time the transitional alimony ends until she will start

drawing her retirement would in no way “rehabilitate” Wife and, as such, would be

inappropriate as rehabilitative alimony.

In modifying the alimony award, we also note that “[t]he parties’ incomes and

assets will not always be sufficient for them to achieve the same standard of living after

divorce that they enjoyed during the marriage.” Robertson v. Robertson, 76 S.W.3d 337, 340

(Tenn. 2002). It is evident from the record before us that once Wife voluntarily quit her

employment with State Farm and gave up her $70,000 per year income, the parties continued

to live far beyond their means, and this would be so even if Husband had not improperly

dissipated the estate by spending marital funds on Marshall. Likewise, the evidence shows

that both parties’ post-divorce standard of living likely will be lower even than what they

actually could have afforded before the divorce.

The next issue is Husband's claim that the Trial Court erred when it awarded

Wife $25,024.25 in alimony in solido toward payment of her attorney fees. An award of

alimony in solido for payment of attorney fees likewise should be based on the factors set

forth in Tenn. Code Ann. § 36-5-121(i), and is appropriate when the spouse seeking attorney

fees does not have adequate funds to pay his or her legal expenses. See Young v. Young, 91

S.W.3d 777, 783 (Tenn. Ct. App. 2002). Conversely, a spouse with sufficient property or

income to pay his or her attorney fees is not entitled to be compensated. Koji v. Koji, 42

S.W.3d 94, 98 (Tenn. Ct. App. 2000). If a spouse is receiving alimony intended to sustain

that spouse, and he or she would be required to deplete those funds in order to pay attorney

fees, then an award of attorney fees is proper. See Baton v. Baton, 769 S.W.2d 849, 862

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(Tenn. Ct. App. 1988). If Wife is ordered to pay her attorney fees, she will be required to

deplete other funds awarded to her, in particular the transitional alimony. We cannot

conclude that the Trial Court abused its discretion when it ordered Husband to pay Wife’s

attorney fees in the amount of $25,024.25. That portion of the final decree is affirmed.

The final issue is Wife’s request for an award of attorney fees incurred on

appeal. Exercising our discretion, considering all relevant factors, and in light of the manner

in which the issues were resolved, we decline to award Wife attorney fees incurred on appeal.

Conclusion

We modify the amount of the Trial Court’s award of transitional alimony from

the time the marital residence is sold to be an award of $2,000 per month for that period. The

judgment of the Trial Court is affirmed as modified. This cause is remanded to the Trial

Court solely for collection of the costs below. Costs on appeal are taxed one-half to the

Appellant, Robert E. Covington, and his surety, and one-half to the Appellee, Barbara

Covington, for which execution may issue, if necessary.

_________________________________

D. MICHAEL SWINEY, JUDGE

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