Dudley v. Dudley

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

July 1999 Session

SAND RA EL IZABE TH DU DLEY v. BOBB Y G. DU DLEY , II

Appeal from the Chancery Court of Montgomery County

No. 97-06-0128 Carol A. Catalano, Chancellor

No. M1998-00982-COA-R3-CV - Filed September 28, 2000

In this divorce case, the trial court awarded the divorce to the Wife and divided the property.

Husband appeals the award of the marital residence and its contents to Wife. We affirm.

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

Affirmed and Remanded

PATRICIA J. COTTRELL , J. delivered the opinion of the court, in which BEN H. CANTRELL , P.J.,

M.S., and WILLIAM C. KOCH , JR., J., joined.

Robert Todd Jackson, Nashville, Tennessee, for the appellant, Bobby G. Dudley, II.

Timothy K. Barnes, Clarksville, Tennessee, for the appellee, Sandra E. Dudley.

OPINION

This case involves an appeal from the trial court’s property distribution decision in a divorce

which ended a nine year marriage. Bobby G. Dudley, II (“Husband”) appeals the award of the

marital residence and its contents to Sandra Elizabeth Dudley (“Wife”). He also appeals the

court’s decision not to provide him with any part of Wife’s retirement plan. For the following

reasons, we affirm.

I. Background

The parties were married in 1989 and separated in 1997. They have two children, a girl,

born in 1989 and a boy, born in 1996.

The parties purchased the marital residence in 1990. Their home contained apartments,

and Wife assumed the responsibility of renting out those apartments during the marriage. Wife

and the children moved out in 1997, leaving Husband in the home. For seven or eight months

during the separation, Husband did not rent the apartments, and, according to his testimony, he

only made one mortgage payment. Wife testified that she made all the mortgage payments on

the marital residence during the marriage. The marital residence had equity of approximately

$47,000 at the time of the trial.

Wife worked for the same employer throughout the marriage. Husband was employed at

the time of the marriage, but stopped working regularly in 1991. He received a worker's

compensation settlement of $35,000 early in the marriage and by the time of the trial he had

$15,000 to $16,000 remaining. The record does not reveal the reason for the settlement. Thus,

although we can assume Husband sustained a work-related injury at some point, we do not know

the extent of the injury, nor whether Husband fully recovered. Evidence showed that Husband

went fishing and patronized a "lounge" where he bet on football games while unemployed.

Although Husband was not working, his mother cared for the children while Wife worked, and a

neighbor met the older child when she got off the school bus.

The trial court found that Husband physically abused his wife and choked another

woman. The court also found that Husband was arrested for marijuana use and that he was

arrested twice for assaulting other people. The court found that Husband underwent counseling,

but refused to take his prescribed medication.

The trial court awarded Wife a divorce on grounds of Husband's inappropriate marital

conduct. Wife was awarded custody of the children and Husband was ordered to pay $60 per

week in child support. The court awarded the marital residence, including all household

furniture, utensils, and appliances to Wife, along with the corresponding debt on the residence.

Each party retained his or her own vehicle, and Husband was awarded the Skeeter boat; each of

those items was awarded subject to any debt on it. Husband was awarded the certificates of

deposit which represented the balance of his worker's compensation settlement. Wife was

ordered to pay certain credit card debts, and Husband was ordered to pay one credit card debt

and any debt owed to his parents.

Husband appeals the awards of the equity in the marital residence, all household

contents, and Wife's retirement plan to Wife, claiming the division of marital property was not

equitable.

II. Standard of Review

We review the findings of fact by the trial court de novo upon the record of the trial

court, accompanied by a presumption of the correctness of the findings, unless the

preponderance of the evidence is otherwise. See Tenn. R. App. P. 13(d). Because the trial

judge is in a better position to weigh and evaluate the credibility of the witnesses who testify

orally, we give great weight to the trial judge's findings on issues involving credibility of

witnesses. See Gillock v. Board of Prof’l Responsibility, 656 S.W.2d 365, 367 (Tenn. 1983).

In cases such as this one, involving issues of classification and distribution of property, a

trial court’s decisions on these matters is entitled to great weight on appeal. See Batson v.

Batson, 769 S.W.2d 849, 856 (Tenn. Ct. App. 1988). Accordingly, a trial court’s division of the

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marital estate should be presumed proper unless the evidence preponderates otherwise. See

Lancaster v. Lancaster, 671 S.W.2d 501, 502 (Tenn. Ct. App. 1984).

Thus, Husband’s burden in this appeal is to demonstrate that the evidence preponderates

against the trial court’s decisions. No transcript of the hearing is included in the record.

Husband filed a Tenn. R. App. P. 24(c) Statement of the Evidence. That statement, objected to

by Wife, was not approved by the trial court. See Tenn. R. App. P. 24(e) and (f). The Statement

does not, however, provide any specific statements of fact or evidence which directly address

some of the issues raised by Husband.1 In the absence of a transcript or statement of the

evidence, the trial court’s findings of fact are presumed correct. See King v. King, 986 S.W.2d

216, 220 (Tenn. Ct. App. 1998).

III. Classification of Property

Although Husband’s primary complaint is the distribution of marital property, we note

that he claims that some of the property awarded to him, presumably as marital property, was

actually his separate property. In Tennessee, courts are to classify the parties’ property as

separate or marital property before dividing the marital property. See Batson, 769 S.W.2d at

856. Generally, separate property is that which was owned by one party before the marriage or

given to one party during the marriage. See Tenn. Code Ann. § 36-4-121(b)(2) (1996). Marital

property is, generally, that which was acquired by either or both parties during the marriage. See

Tenn. Code Ann. § 36-4-121(b)(1).

Husband argues that his worker’s compensation settlement, which was placed into

certificates of deposit, should have been classified as separate property, and thus, was not subject

to division. No evidence regarding the certificates (such as whether they were jointly held) or

the nature of Husband’s settlement or injury appears in the record other than in the trial court’s

findings. The trial court did not explicitly classify the certificates of deposit as separate or

marital property, but did award them to Husband. We interpret the award, in the context of the

entire decree,2 as a distribution of marital property, meaning that the trial court determined that

the certificates of deposit were marital property.

There appear to be no appellate decisions regarding the correct classification of workers’

compensation lump sum payments. See Miller v. Miller, No. M1999-00226-COA-R3-CV, 2000

WL 546391 at *5 (Tenn. Ct. App. May 5, 2000) (no Tenn. R. App. P. 11 application filed)

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Husband’s Statement of Evidence contained the following paragraph:

From the best of the Defendant/Appellant’s recollection, he would submit that the proof

at the final hearing also showed that this was a marriage of nine (9) years; that he

contributed to this marriage as a wage ea rner, husban d, and pa rent; that he con tributed to

the preservation and appreciation in value of the property by payment of mortgage

payments, homemaking, cleaning, and yard work.

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In the final decree, the trial court referred to Husband’s “dissipation of marital property” and

noted that he had spent m uch of his wor kers’ comp ensation settlem ent.

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(“whether the [workers’ compensation] funds were, in fact, separate property appears to be an

open question in this state”). However, in other related contexts, our courts have adopted an

analytical approach focusing on the purpose of the payment. See Gragg v. Gragg, 12 S.W.3d

412, 417-18 (Tenn. 2000) (adopting an “analytical approach” to payments under a private

disability insurance policy, such that future disability benefits which replace income are not

classified as marital property “because they are personal to the spouse who receives them and

compensate for loss of good health and replace lost earning capacity,” but any portion of such

benefits which constitute a “retirement component” will be classified as marital property);

Hunley v. Hunley, No. 88-206-II, 1988 WL 123956 at *4-5 (Tenn. Ct. App. Nov. 23, 1988) (no

Tenn. R. App. P. application filed) (personal injury settlement should be classified by looking at

the purpose of the settlement, i.e., the portion attributable to compensation to injured spouse for

injuries personal to him vs. compensation for marital expenses).

The purpose of workers’ compensation payments is to provide insured workers with

periodic payments, which are a substitute for regular wages. See Bailey v. Colonial Freight Sys.,

Inc., 836 S.W.2d 554, 557 (Tenn. 1992); Burris v. Cross Mountain Coal Co., 798 S.W.2d 746,

750 (Tenn. 1990). In Gragg v. Gragg, the Supreme Court held that “disability benefits and

income should be treated in the same manner since disability benefits are income replacement.”3

Gragg, 12 S.W.3d at 418. Because workers’ compensation payments, whether lump sum or

periodic, are also income replacement, they should also be treated as income. If considered as an

income substitute, the workers’ compensation settlement funds are marital property to the extent

that they replaced wages that Mr. Dudley would have earned during the marriage had it not been

for his work-related injury.

In the case before us, the only information regarding the source of the money claimed as

separate property by Husband is the trial court’s finding that, “during the early part of the

marriage Mr. Dudley received a Workers’ Compensation settlement in the amount of $35,000.00

and that of that $35,000.00 only $15,000.00 to $16,000.00 remains.” Thus, the funds were

received during the marriage and, therefore, presumptively meet the statutory definition of

marital property. Husband has provided us with no evidence in the record from which we could

conclude that the funds, or any portion of them, should not be classified as marital property. 4

Absent any evidence in the record before us regarding the certificates of deposit, we must

presume that the trial court heard sufficient evidence regarding the certificates to determine that

they were marital property. Husband is unable to point to any evidence to overcome that

presumption. We also note that the award of the certificates, whether as separate or marital

property, does not necessarily affect the equitable distribution of marital property, because the

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The court also held that the future benefits could be considered income to the disabled spouse for

purpose s of comp uting suppo rt obligations. See Gragg, 12 S.W.3d at 419.

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In his brief, Husband asserts the settlement was for an injury occurring three years before the

marriage. However, the record includes absolutely no evidence regarding Husband’s injury or the nature of

the settlement (such as the duration of periodic payments it covered).

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amount of separate property awarded to a party is one of the factors for a court to consider in

making its division of marital property. See Tenn. Code Ann. § 36-4-121(c)(6).

IV. Distribution of Marital Property

Trial courts are to make an equitable division of marital property. See Tenn. Code Ann.

§ 36-4-121(a)(1). An equitable distribution is not necessarily an equal one, however. See

Batson, 769 S.W.2d at 859. The court is to consider several factors in its distribution. See Tenn.

Code Ann. § 36-4-121(c). The court’s distribution of property “is not achieved by a mechanical

application of the statutory factors, but rather by considering and weighing the most relevant

factors in light of the unique facts of the case.” Batson, 769 S.W.2d at 859.

A trial court has a great deal of discretion concerning the manner in which it divides

marital property. See Smith v. Smith, 984 S.W.2d 606, 609 (Tenn. Ct. App. 1997); see also

Wallace v. Wallace, 733 S.W.2d 102, 106 (Tenn. Ct. App. 1987). Tenn. Code Ann. § 36-4-

121(c) states:

In making equitable division of marital property, the court shall consider all

relevant factors including:

(1) The duration of the marriage;

(2) The age, physical and mental health, vocational skills, employability,

earning capacity, estate, financial liabilities and financial needs of each of the

parties;

(3) The tangible or intangible contribution by one (1) party to the

education, training or increased earning power of the other party;

(4) The relative ability of each party for future acquisitions of capital

assets and income;

(5) The contribution of each party to the acquisition, preservation,

appreciation or dissipation of the marital or separate property, including the

contribution of a party to the marriage as homemaker, wage earner or parent, with

the contribution of a party as homemaker or wage earner to be given the same

weight if each party has fulfilled its role;

(6) The value of the separate property of each party;

(7) The estate of each party at the time of the marriage;

(8) The economic circumstances of each party at the time the division of

property is to become effective;

(9) The tax consequences to each party; and

(10) Such other factors as are necessary to consider the equities between

the parties.

Husband argues that the distribution of property was inequitable. He argues, correctly,

that the trial court is to make the distribution of marital property without regard to fault. See

Tenn. Code Ann. § 36-4-121(a)(1) (the court shall divide “the marital property between the

parties without regard to marital fault in proportions as the court deems just”). He claims that, in

the case before us, the trial court allowed his fault in the breakdown of the marriage to influence

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its decision regarding the marital property. As noted above, the trial court awarded Husband the

certificates of deposit which represented the remainder of his worker’s compensation settlement,

his vehicle, and the Skeeter boat. Husband was ordered to pay some of the parties’ debts. Wife

was awarded her vehicle, the marital residence, and all of its contents. Wife was also ordered to

pay some of the parties’ debts.

The trial court made specific findings regarding its decision on distribution:

The Court, in making an equitable distribution of the marital assets, particularly

the marital home, considers the following factors embodied within T.C.A. §36-4-

121:

(a) Contribution of the parties: The Court finds that Mrs. Dudley, throughout

course of the marriage has made the mortgage payments on the marital home, and

that Mr. Dudley has not had steady employment since 1991.

(b) Preservation of marital assets: The Court finds that throughout the marriage

Mrs. Dudley was responsible for renting out the apartments contained within the

marital residence, and did rent said apartments throughout the course of the

marriage, with the exception of one or two months. The Court further finds that

after the date of separation, when Mr. Dudley was responsible for the marital

residence, Mr. Dudley did not rent said apartments during the seven or eight

month separation, and has only made, according to his testimony, one mortgage

payment.

(c) Dissipation of marital property: The Court finds that during the early part of

the marriage Mr. Dudley received a Workers’ Compensation settlement in the

amount of $35,000.00, and that of that $35,000.00 only $15,000.00 to $16,000.00

remains. The Court further finds that Mr. Dudley admits that he patronized JP’s

lounge where he gambled, betting on football games. The Court, therefore finds

that Mr. Dudley has difficulty keeping money.

We see, as the trial court did, that Wife had singlehandedly maintained the household

financially. In addition, Wife had taken the bulk of the responsibility of providing and caring for

the children of the marriage. Husband had made little contribution to the household financially

or otherwise. Furthermore, the trial court was required to “give special consideration to a spouse

having physical custody of a child or children of a marriage” when awarding “the family home

and household effects.” Tenn. Code Ann. § 36-4-121(d).

Husband was awarded $15,000 to $16,000 in certificates of deposit. Wife received no

corresponding liquid asset. The trial court specifically found that, despite her years of work,

Wife had not been able to set aside any money for herself or for her family. Wife now has the

responsibility to raise the two children, while Husband was ordered to pay only a small amount

of child support. We find the trial court did not err in awarding the home and its contents to

Wife. Husband failed to support his contention that the trial court included fault as a deciding

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factor in its ruling. Rather than perceiving this as a case in which “fault” was considered, we see

this as a case in which the trial court relied upon the parties’ contributions to the marriage when

making the division of marital property. Under the facts of this case, we find no error in

awarding the bulk of the marital estate to the spouse who has supported the family.

In addition to his specific and most significant complaint with the court’s property

distribution, i.e. the award of the marital home to Wife, Husband also claims that the trial court

erred in two other ways which affect the comparative awards to the parties. First, without

support from the record, Husband claims that the boat awarded to him was no longer owned by

the parties at the time of the trial. The trial court, by awarding the boat to Husband, implicitly

found that the boat was still owned at the time of the trial. Because we have no basis on which

to disagree with the trial court, we must assume that the boat was indeed owned by the parties at

the time of trial and was awarded to Husband.

Husband also argues that the trial court should have awarded him an interest in Wife’s

pension plan. It is generally true that the accumulation or increase of a pension during a

marriage is marital property. See Cohen v. Cohen, 937 S.W.2d 823, 828 (Tenn. 1996).

However, there is nothing in the record before us to indicate that such a pension plan exists. The

trial court made no award and no mention of a pension plan for either party. Because the record

fails to demonstrate the existence of a fund, we cannot say that the trial court erred in not

awarding a portion of it to Husband. The court may distribute only those assets actually owned.

See Brock v. Brock, 941 S.W.2d 896, 900 (Tenn. Ct. App. 1996) ("a court cannot divide and/or

distribute what is 'not there'").

Husband has failed to demonstrate that the evidence preponderates against the trial

court’s distribution of the marital estate. Therefore, we affirm the trial court’s award.

V. Conclusion

For the reasons stated above, we affirm the order of the trial court. This case is remanded

to the trial court for such further proceedings as may be necessary. Costs are taxed to Husband,

Bobby G. Dudley, II, for which execution may issue if necessary.

____________________________

PATRICIA J. COTTRELL, JUDGE

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