Kim Brown v. Carlton Brown

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

October 11, 2005 Session

KIM BROWN v. CARLTON BROWN

Direct Appeal from the Chancery Court for Williamson County

No. 29171 Hon. Russ Heldman, Chancellor

No. M2004-01573-COA-R3-CV - Filed December 14, 2005

In the divorce action, the Trial Court awarded wife a divorce, alimony, child support, and divided

marital property and debts of the marriage, and awarded fees for the wife’s attorney. The husband’s

issues on appeal are valuation and division of property, alimony, attorney’s fees and amount of child

support. We affirm the Trial Court’s Judgment.

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

HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which D. MICHAEL SWINEY ,

J., and SHARON G. LEE, J., joined.

Gregory D. Smith, and Aminah M. Collick, Nashville, Tennessee, for Appellant.

Jeffrey L. Levy, Nashville, Tennessee, for Appellee.

OPINION

In this divorce action, prior to the trial of the divorce issues, the Trial Court Ordered

the husband to pay pendente lite child support of $2,242.00 per month, pendente lite alimony of

$1,000.00 per month, and to pay the mortgage on the house of $1,638.00 per month. He was also

ordered to pay the family’s health insurance premium of $414.00 per month. As to wife’s Motion

for Pendente Lite Attorney Fees, the Court denied the Motion but stated the wife could seek the

award of fees at the final hearing.

The Trial Court then bifurcated the trial, such that the business valuation expert

testimony could be heard at a later time, and then scheduled all other issues for trial. The Trial Court

adopted the wife’s Permanent Parenting Plan, and a trial was held on December 12, 2003, January

23, 2004, and February 4, 2004.

At the conclusion of the trial, the Trial Court entered an Order, finding the wife to

be a credible witness and awarded her an absolute divorce on the grounds of adultery and

inappropriate marital conduct. The Court found the husband’s testimony was “questionable”, based

on his answers during cross-examination, and the Court ordered the husband to pay child support

in the amount of $2,120.00 per month, based on the 2003 “net income”. The Court took the

remaining issues under advisement, and on April 23, 2004, entered a Memorandum, crediting wife’s

evidence of valuation of the business at $100,000.00, and stated that the Court did not consider

“good will” in arriving at the value.

The Court adopted the wife’s valuation of the parties’ separate and marital property,

and also adopted her proposed division of the property. The Court held the wife would not be able

to achieve an earning capacity which permitted a standard of living after the divorce reasonably

comparable to that which she enjoyed during the marriage, nor that which would be comparable to

the standard of living the husband would be able to achieve. The Court found that there was

economic disadvantage to the wife and that rehabilitation was not feasible, and awarded periodic

alimony of $2,500.00 per month until her death or remarriage, or until the husband’s death. The

Court found that due to economic disadvantage, the wife should not have to diminish her funds by

paying attorney’s fees (since the divorce was solely caused by the husband’s misconduct) and

awarded wife $35,000.00 in attorney fees.

On appeal, the following issues are presented:

1. Did the trial court err in its valuation and division of property/debts?

2. Did the trial court err in awarding wife alimony when husband has no ability

to pay?

3. Did the trial court err in awarding wife attorney’s fees?

4. Did the trial court err in its determination of husband’s child support

obligation?

5. Should wife be awarded her attorney’s fees and costs on appeal?

The husband asserts that the Trial Court erred in its valuation of the business and the

country club membership. He argues that by setting unreasonably high values on these items, the

overall property distribution is skewed in that it appears that husband received a greater share of

assets than he actually was awarded.

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We have previously explained:

The valuation of a marital asset is a question of fact. It is determined by considering

all relevant evidence, and each party bears the burden of bringing forth competent

evidence. If the evidence of value is conflicting, the trial judge may assign a value

that is within the range of values supported by the evidence. On appeal, we presume

the trial judge's factual determinations are correct unless the evidence preponderates

against them.

Kinard v. Kinard, 986 S.W.2d 220, 231 (Tenn. Ct. App. 1998). In this case, the Trial Court was

presented with differing opinions regarding the value of the business. The wife’s expert, Clyde

Bright, opined that the business was worth around $100,000.00, while the husband’s expert, Gerald

LeCroy, opined that the value of the business was $45,000.00. The husband opined that the business

had no value.

Both experts testified at length regarding their method of valuing the business.

Significantly, both experts tended to agree that the business would be worth around $100,000.00,

but LeCroy discounted that amount due to the company’s debt and what he characterized as a general

undercapitalization of the company. LeCroy also did not account for the $48,000.00 owed to the

company by Victor McCauley,1 a sales rep of the company, because he felt that was inappropriate

due to the fact that this money purportedly could not be collected if McCauley left his employment.

Bright, on the other hand, counted McCauley’s debt to the company as a receivable, and also did not

discount the company for being undercapitalized, because he stated that there was no reason to do

so. The Trial Court credited Bright’s valuation, and placed a value on the business that was within

the range of evidence submitted. The evidence does not preponderate against the Trial Court’s

finding that the value of the husband’s interest in the company was $100,000.00, not including

professional or personal goodwill. Tenn. R. App. P. 13(d).

The husband further argues the Trial Court’s valuation of the business was in error,

because the Court did not discount same for husband’s personal goodwill. The Trial Court

specifically stated that its value did not include personal goodwill. Moreover, neither expert testified

regarding what the exact value of the husband’s personal goodwill would be, vis a vis the goodwill

of the business. Bright testified he felt the business could be run without the husband, because the

husband acted mainly as a sales rep, and McCauley was performing the same job. Bright also

testified, however, that a lot of the income of the business was tied to the husband’s efforts. LeCroy

testified the husband was very “hands-on” and involved, and that it would be hard to separate the

husband’s goodwill from that of the business. LeCroy also admitted that he did not know what

percentage of sales was attributable to husband’s efforts versus McCauley’s. Neither expert placed

a value on the goodwill attributable to husband personally. Therefore, the evidence presented does

not preponderate against the Trial Court’s finding as to value. Tenn. R. App. P. 13(d).

Further, the husband claims that the Trial Court’s value of the country club

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The husband testified that McCauley owed the husband $48,000.00 at the time of trial.

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membership was unnecessarily high. Both parties testified that a membership would sell for

$16,000.00. The husband then testified, however, that this value would have to be discounted for

a 25% transfer fee and some other types of assessments, but did not explain or present any other

proof regarding these alleged “discounts” to the value. The Court accepted both parties’ testimony

that a membership would sell for $16,000.00, and the evidence does not preponderate against this

finding. Tenn. R. App. P. 13(d). The Court specifically found the wife to be a more credible witness

than the husband, and "[w]hen a trial court has seen and heard witnesses, especially where issues of

credibility and weight of oral testimony are involved, considerable deference must be accorded to

the trial court's factual findings." Seals v. England/Corsair Upholstery Mfg. Co., 984 S.W.2d 912,

915 (Tenn.1999).

Having found the values found by the Trial Court to be correct, we are now required

to look to the overall distribution to determine if it is equitable. We have often noted that an

equitable division does not necessarily have to be an equal division. Barnhill v. Barnhill, 826

S.W.2d 443 (Tenn. Ct. App. 1991). Further, “Appellate review of a division of marital property is

de novo upon the record with a presumption of the correctness of the trial court's findings of fact.

Trial courts have wide discretion in the manner in which marital property is divided, and their

decisions are accorded great weight on appeal.” Dellinger v. Dellinger, 958 S.W.2d 778, 780 (Tenn.

Ct. App. 1997).

We defer to the Trial Court’s division of marital property unless it is inconsistent with

the statutory factors set forth in Tenn. Code Ann. §36-4-121(c), or is not supported by the evidence.

Kinard v. Kinard, 986 S.W.2d 220 (Tenn. Ct. App. 1998). We conclude the Trial Court made an

equitable division of the parties’ marital property. This was a marriage of long duration, and each

party’s age and health status was similar. (The wife was 47 and the husband 45 at the time of trial).

The wife, however, had a much smaller earning capacity due to the fact that she had not worked

(except doing general bookkeeping for the parties’ business) outside the home in almost 20 years.

She testified she had not kept up with the current standards in her profession, and had very few

computer skills.2 The husband had a consistent income of over $100,000.00 per year from his

business for the last several years, and the wife had been the primary caretaker of the children

throughout their lives, and had stayed home with them from the time they were born.

Neither party contributed to the other’s education, but the wife contributed to the

husband’s earning capacity in the business by taking care of things at home and helping out with the

business bookkeeping. Both parties contributed to the marital estate, and neither party had a

significant separate estate, either at the time of the marriage or presently. The wife demonstrated her

financial needs because of her lack of income and her need to provide housing, clothing and food

for herself and the children. The wife had little social security history, and based upon the statutory

factors, it would appear the Trial Court’s award of 72% of the marital estate was not inequitable.

2

The wife testified that when she married, she was working for the State in the Department

of Tourists and Development, and her salary there was approximately $23,000.00. She testified that

she had obtained an accounting degree in 1979 but was not a CPA.

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We note that the biggest cause of the discrepancy in the division was actually the

distribution of debt. When looking at the assets only, the wife received property worth

approximately $107,000.00, and the husband received property worth approximately $135,000.00.

The wife was ordered to pay debts of $7,500.00, however, the husband was ordered to pay

indebtedness of approximately $96,000.00. This Court has previously instructed that when

distributing marital debt, the Court should consider the following factors:

(1) which party incurred the debt and the debt's purpose,

(2) which party benefitted from incurring the debt, and

(3) which party is best able to assume and repay the debt.

Mondelli v. Howard, 780 S.W.2d 769, 773 (Tenn. Ct. App. 1989).

The evidence established both parties incurred and benefitted from the debt, but the

husband had a greater responsibility, because of his greater tendency to live outside the parties’

realistic means, taking lots of trips, having expensive hobbies such as golf, and insisting on the

country club membership, which he admitted the wife was against because she thought they could

not afford it. Most significantly, the proof established the husband was the party best able to assume

and repay the debt, based on his significantly higher earning capacity, and the income potential of

his business. We therefore affirm the Trial Court’s valuation and distribution of the parties’ marital

estate.

Next, the husband asserts the Trial Court erred in ordering him to pay alimony to the

wife, because he does not have the ability after paying the indebtedness assessed to him. We have

previously stated:

Whether an alimony award is appropriate is dependent on the facts and circumstances

of each case. The need of the recipient spouse, followed by the obligor's ability to

pay, are the primary considerations in the determination of an award of alimony.

Lancaster v. Lancaster, 671 S.W.2d 501, 503 (Tenn. Ct. App.1984); Goodman v.

Goodman, 8 S.W.3d 289, 295 (Tenn. Ct. App.1999). In making its determination of

an alimony award, the court must balance several statutory factors including those

enumerated in section 36-5-101(d)(1) of the Tennessee Code.

The trial court has broad discretion in determining the type, amount, and duration of

alimony based upon the particular facts of each case. Kinard v. Kinard, 986 S.W.2d

220 (Tenn. Ct. App.1998). The amount of alimony is largely within the discretion

of the trial court. Burlew v. Burlew, 40 S.W.3d 465, 470 (Tenn. 2001). This Court

is not inclined to alter a trial court's award of alimony absent a finding of an abuse

of discretion. Id.

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Sullivan v. Sullivan, 107 S.W.3d 507, 511 (Tenn. Ct. App. 2002).

The parties agree that it would be error for the Court to have ordered the husband to

pay alimony that was beyond his ability, but they disagree whether such was the case. The wife

argues the husband will have at least $3,000.00 left after paying his child support and alimony, but

he insists that he will have a monthly shortfall after payment of these obligations and necessary

payments toward the indebtedness assessed against him by the Trial Court.

The husband argues the Trial Court erred in finding his annual income level to be

$121,000.00, as opposed to $109,000.00. The evidence established that the husband’s income had

met or exceeded $121,000.00 for the last several years. The husband admitted that in 2003, this was

his income level, but then stated that the $11,000.00 business loss should be deducted. Accepting

the husband’s testimony as to the $11,000.00 loss, the husband still drew $121,000.00 from the

business as income. The evidence does not preponderate against the Trial Court’s finding with

regard to the husband’s income. Tenn. R. App. P. 13(d).

The husband then asserts that after paying his court-ordered support obligations, he

would be left with approximately $1,500.00 per month with which to pay his personal living

expenses. He did not provide a breakdown of the items he claimed he would have to pay, aside from

the child support and alimony. He did present proof regarding the minimum payments on credit

cards, but did not present proof regarding what amount he would have to pay per month toward his

tax arrearage, insurance obligations, or other expenses he was claiming. The husband presented the

Trial Court with a statement of his income and expenses, but then testified that many of these

expenses were speculative, due to the fact that he was living with his girlfriend most of the time, and

thus had incurred no actual expenses for rent or mortgage, utilities, phone, etc.

The husband was questioned regarding his spending habits during the parties’

separation, and admitted that he was still taking trips, golfing, hunting, eating out three meals per

day, paying the country club membership, etc. The husband failed to produce convincing proof

regarding his actual expenses, and therefore was unable to demonstrate that he was unable to pay the

alimony awarded. However, the wife did demonstrate her need for the alimony, as shown by her

testimony and her statement of income and expenses.

We have previously said:

We review matters of alimony under an abuse of discretion standard. If the

discretionary decision is within a range of acceptable alternatives, appellate courts

will not substitute their decision for that of the trial court simply because the

appellate court would have chosen a different alternative. We review the trial court’s

discretionary decisions to determine: (1) whether the decisions are supported by the

facts in evidence; (2) whether the trial court identified and applied the applicable

legal principles; (3) whether the trial court’s decisions are within the range of

acceptable alternatives.

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Sullivan, at 510.

The Trial Court’s decision is supported by evidence. Tenn. R. App. P. 13(d).

The husband argues the Trial Court erred in ordering him to pay a portion of the

wife’s attorney’s fees. An award of attorney’s fees in a divorce case is treated as an award of

alimony, and is reviewed under an abuse of discretion standard. Kinard. We have previously stated

that “[o]n appeal this Court will not interfere with the trial court's decision awarding attorney fees

except where there is a clear showing that the trial court reached the wrong conclusion, with a result

that manifest injustice would be done if the award is allowed to stand.” Long v. Long, 957 S.W.2d

825, 829 (Tenn. Ct. App. 1997). An award of fees is proper when “one spouse is disadvantaged and

does not have sufficient resources with which to pay those fees.” Sullivan.

In this case, the Trial Court was presented with evidence regarding the outstanding

fees owed to the attorneys and made a determination as to what was a reasonable fee, and considered

the wife’s need and inability to pay the fees and the husband’s fault, etc., all of which were proper

considerations. The evidence demonstrated the husband had greater ability to accumulate and

replace assets than the wife, and if the wife was made to pay her entire amount of fees, it would

deplete the small amount of liquid or semi-liquid assets she received. The record does not establish

an abuse of discretion by the Trial Court in making this fee award, and the award of fees is affirmed.

As to the child support obligation, the husband simply argues the Trial Court used

the wrong number for his income, by including “borrowed money”, i.e. because the company had

to take on debt in the same year that the husband received $121,000.00 in income (due to the

company’s $11,000.00 loss for the year). However, in fact, the husband actually received

$121,000.00 in income from the company, regardless of how the company went about establishing

his income. There is nothing in the guidelines to suggest that an obligor’s actual income received

should be reduced because the company which he owns/works for had to incur debt. We find this

argument without merit.

While the wife argues that she should receive an award of additional fees on appeal,

because the appeal is frivolous and because she is the prevailing party, we conclude the wife has

already received a substantial fee award, and that an award of additional fees may well be excessive.

Moreover, this appeal is not so devoid of merit that sanctions are called for pursuant to Tenn. Code

Ann. §27-1-122. In our discretion, we decline to award the wife additional attorney’s fees.

We affirm the judgment of the Trial Court and remand, with the cost of the appeal

assessed to Carlton Brown.

_________________________

HERSCHEL PICKENS FRANKS, P.J.

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