providing a summary of the Calhoun four part inquiry to determine if the assumption of a debt or obligation was support
How later courts described this case
- providing a summary of the Calhoun four part inquiry to determine if the assumption of a debt or obligation was support
Written by the judges who cited it.
The opinion
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
________________________________________
TAMARA KAY WILLIAMS EMISON,
Appellee, FILED
Crockett Chancery No. 7365
Vs. C.A. No. W1998-00591-COA-R3-CV
December 27, 1999
RANDY JOE EMISON,
Cecil Crowson, Jr.
Appellant. Appellate Court Clerk
_____________________________________________________________________
FROM THE CROCKETT COUNTY CHANCERY COURT
THE HONORABLE GEORGE R. ELLIS, JUDGE
Middlebrooks & Gray, P.A., of Jackson
For Appellee
L. L. Harrell, Jr.; Harrell & Harrell of Trenton
For Appellant
REVERSED IN PART, AFFIRMED IN PART AND REMANDED
Opinion filed:
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:
ALAN E. HIGHERS, JUDGE
HOLLY KIRBY LILLARD, JUDGE
This case concerns the division of property, allocation of marital debts, alimony,
child support, and life insurance as security for child support. Defendant-appellant,
Randy Joe Emison (Husband), appeals from the judgment of the trial court granting an
absolute divorce to plaintiff-appellee, Tamara Kay Emison (Wife).
The parties were married on July 12, 1985. There were two children born of this
marriage, Randa Joanne Emison, born June 23, 1986 and Randy Joe Emision Jr.,
born April 18, 1988. Husband had one previous marriage, and there are no previous
marriages by Wife. At the time of trial, Wife was 36 years old, and Husband was
37years old.
In the early years of the marriage Wife held several short term jobs, but has
stayed at home for most of the marriage. Wife received an associates degree in office
administration in May of 1997. At the time of trial Wife was employed as a bookkeeper
at Fletcher Equipment in Burlison, Tennessee, with a net income of approximately
$1,100.00 per month. Wife testified that expenses for herself and two minor children
are $2,199.00 per month.
Husband completed high school. From the beginning of the marriage through
February of 1997 Husband was a self employed truck driver. Husband then went to
work for his brother. At the time of trial Husband testified that he worked for his
stepmother making $410.00 per week, and that his monthly expenses were $2,080.03.
Tax returns indicate that Husband’s income was $54,059.00 in 1994, $41,715.00 in
1995, and $29,755.00 in 1996. Husband attributed his loss of income to the sale of his
truck to his brother for $19,500.00 in March of 1997.
Wife filed her complaint for divorce in Madison county on September 4, 1997 on
the grounds of irreconcilable differences and inappropriate marital conduct. Wife
asserts that from the time that Husband began an extra-marital relationship with Lisa
Mauldin in January 1996 he began transferring assets from himself to his father,
brother, and step-mother. Husband admits to the extra-marital affair from January of
1996 through September of 1996, but asserts that W ife found out about the affair in
October 1996, approximately one year prior to filing for a divorce. Husband contends
that he admitted
to the affair and that the parties subsequently continued a physical marital relationship.
Husband asserts that the parties went for counseling and that although Wife denied
that the reason she wanted a divorce was because Husband did not make enough
money, she claimed to have forgiven him for the affair.
The parties separated on September 21, 1997. Husband made a motion to
dismiss based on lack of venue, and divorce was transferred to Crockett county. By
order of December 16, 1997 the court awarded temporary custody of the children to
Wife and ordered Husband to pay child support of 104.00 per week, plus clerk’s fee of
$5.20, for a total of $109.20 per week. By the same order Husband was ordered to pay
the mortgage payment on the former marital residence as alimony until the house was
sold. On January 12, 1998 Husband was found in wilful contempt of the court order
and was in arrears in payment of the home mortgages in the amount of $3,445.00. The
court ordered that the Husband be held in jail until payment of the arrearage amount
or such other sum as satisfactory to the Bank of Crockett to prevent foreclosure
proceedings. Husband’s father paid an amount sufficient to have Husband released
from jail. At the closing of the sale of the marital home the mortgage payments were
five months in arrears.
After a non-jury trial, the court awarded Wife an absolute divorce from the
Husband on the grounds of inappropriate marital conduct and awarded custody of the
two minor children to Wife with visitation according to the shared parenting plan as
stipulated by the parties. The trial court found Husband to be underemployed and
ordered child support of $192.00 plus commission per week to be paid by Husband by
wage assignment. The trial court further ordered Husband to maintain health insurance
on the minor children, and the parties were to split equally all medical, dental, optical,
and psychological expenses above the deductible not covered by insurance. Husband
was ordered to take out a life insurance policy for the benefit of the minor children in
the amount of $100,000.00 until each child reaches 18 years of age. The court
ordered that the parties shall own the real estate located at Cherokee Heights as
tenants in common.
As to the division of personal property the court awarded Husband property
3
valued at $40,185.00, and the Wife property valued at $14,805.00. In addition the Wife
was awarded $25,380.00 as alimony in solido, which the court found represents the
difference between the value of personal property received by Husband and Wife. As
to funds receive by the parties as a result of Wife’s car accident, the court ordered that
Husband receive an amount of $648.88 (which represents one-half of the marital funds
spent on Wife’s medical bills as a result of her accident) to be credited against the
award of $25,380.00 as alimony in solido. The trial court ordered that Husband assume
the debt to Volunteer Bank in the amount of $19,500.00, and to hold Wife harmless
from any liability therefor. The court also ordered that this is a support obligation and
nondischargeable in bankruptcy pursuant to 11 U.S.C. § 523 (a)(5). The court further
ordered that Wife shall receive the remaining funds received as a result of the car
accident (3 checks totaling $6,939.93). The court awarded as alimony in solido the
sum of $6,298.27 to be paid by Husband to Wife’s attorney. Wife was also granted as
alimony in solido the sum of $25,000.00 as a judgment against Husband. In addition
Wife was granted a judgment of one-half of all payments, interest, late charges and
fees that have accrued on the parties’ house note since November 5, 1997 in the
amount of $1,404.58. Husband was ordered to pay the costs of the cause. Trial court
further ordered that it retained jurisdiction to modify support in the event of Husband’s
filing bankruptcy. Husband has appealed and presents seven issues for review.
I. Did the trial court err in the setting of child support in the amount
of $192.00 per week, plus clerk’s commission?
II. Did the trial court err in the division of personal property
between the parties?
III. Did the trial err in awarding plaintiff a judgment for $25,000.00
and in making said judgment a non-dischargeable debt in bankruptcy by
classifying same as support pursuant to 11 U.S.C. § 523 (a)(5)?
IV. Did the trial court err in awarding the plaintiff a judgment in the
amount of $25,380.00 as alimony in solido, which sum represented the
difference between the value of personal property received by the
Husband and that received by the Wife?
V. Did the trial court err in ordering the defendant to assume the
debt owing to Volunteer Bank and in making same a part of plaintiff’s
support so as to be non-dischargeable in bankruptcy pursuant to 11
U.S.C. § 523 (a) (5)?
VI. Did the trial court err in awarding the Wife as alimony in solido
4
the sum of $6,298.27 for attorney’s fee?
VII. Did the trial court err in ordering the defendant to maintain life
insurance on himself in the amount of $100,000.00 as security for
payments to be made by the defendant for the support and maintenance
of the children?
Since this case was tried by the trial court sitting without a jury, we review the
case de novo upon the record with a presumption of correctness of the findings of fact
by the trial court. Unless the evidence preponderates against the findings, we must
affirm, absent error of law. T.R.A.P. 13 (d). (Tenn. App. 1995).
Husband’s first issue is whether the trial court erred in setting the child support
in the amount of $192.00 per week, plus court clerk’s commission. Husband asserts
that when the costs of operating his trucks is considered, his reported income is not
nearly as great as it appears on paper. Husband argues that evidence offered by Wife
inflates his income by including the depreciation taken on the equipment. However we
agree with Wife that according to the child support guidelines promulgated by the
Tennessee Department of Human Services depreciation is not considered a reasonable
expense.
With regard to gross income, the child support guidelines provide that “[i]ncome
from self-employment includes income from business operations and rental properties,
ect., less reasonable expenses necessary to produce such income . Depreciation,
home offices, excessive promotional, excessive travel, excessive car expenses, or
excessive personal expenses, ect., should not be considered reasonable expenses...”
Tenn. Comp.R. & Regs., CH. 1240-2-4-.03(3) (a) (1994).
As to Husband’s income Wife contends that Husband began transferring assets
from himself to his father, brother, and stepmother intentionally lowering his reported
income. Wife asserts Husband had been self-employed from the beginning of the
marriage until March of 1997, at which time he began to work for his brother. Wife
asserts that after transferring his truck to his brother the truck earned $76,006.97 in
1997, doing the same type work performed while Husband owned the truck. Wife
asserts that in November of 1997 Husband represented to the court that his income was
$1,773.33 per month, while in July of 1997 Husband signed a business loan agreement
5
with Bank of Crockett representing his income as $4,187.88.
The court in Garfinkel v. Garfinkel, 945 S.W. 2d 744 (Tenn. Ct. App. 1996) held
that “[i]f an obligor is willfully and voluntarily unemployed or underemployed, child
support shall be calculated based on a determination of potential income, as evidenced
by educational level and/or previous work experience.” Id. at 748 (citing Tenn.Comp.R.
&Regs., ch. 1240-2-4-.03 (3) (d) (1994). The Garfinkel court noted the decision on
appeal in Ford v. Ford, No. 02A01-9507-CH-00153, 1996 WL 560258 (Tenn. Ct. App.
Oct.3, 1996) where the court held that the term “willfully” in the child support guidelines
does not mean that income may only be imputed to the husband when he is found to
be purposefully trying to avoid child support obligations. Id. at 748 (citing Ford at *3).
In Ford the court remanded the case to the trial court and ordered a recalculation of
child support based on husband’s “potential income, considering his educational
background and previous work experience.” Id. at 748 (citing Ford at *3). Following the
reasoning of the Ford court, the Garfinkel court affirmed the trial court 1 stating the child
support was correctly calculated based on Husband’s potential income considering his
educational background and earnings before he decided to discontinue employment.
The court in Herrera v. Herrera, 944 S.W.2d 379(Tenn. Ct. App. 1996), agreed
with the proposition that when an obligor is willfully and voluntarily underemployed or
unemployed, child support should be determined by a calculation of obligor’s potential
income, based on education and prior work experience. Herrera, 944 S.W.2d at 387
(citing Tenn. Comp.R. & Regs. 1240-2-4-.03(3)(c) (1991). The court in Herrera
remanded the case to the trial court for a determination of Dr. Herrera’s monthly income
potential, finding “that the trial court erred in not making a determination as to Dr.
Herrera’s monthly income potential and in setting the child support obligation.” Id.
In accordance with the ruling in Herrera and with the rulings of Ford and
Garfinkel in mind, we are of the opinion that the trial court erred in not making a specific
determination as to Husband’s monthly income potential and in setting the child support
1
The trial court ordered husband to pay $900.00 per month child support
based on his last reported income of $40,000.00 in 1983, his educational level, and his
annual income from rental properties.
6
obligation. Consequently, the case should be remanded to the trial court for a
determination of Husband’s monthly income potential. The child support shall remain
$192.00 per week until otherwise ordered.
Husband’s second issue is whether the trial court erred in the division of personal
property between the parties.
In dividing the property the trial court found that the sale of the tractor, the fishing
boats, the trailer, two trucks, a box blade, and the truck that Husband currently drives
were not arm’s lengths transactions and that these items shall be credited to Husband.
The court’s order states that Husband agreed to take the Clark Michigan front-end
loader and assume the indebtedness to Volunteer Bank, the only indebtedness that the
parties had at the time of the order, and hold the Wife harmless.
The Husband advances no argument as to the division of the property, rather
Husband argues that the values used do not reflect the present value, which was given
by Husband. Instead, values used were given by Wife and reflect what Wife claims that
Husband told her the items were worth or reflect the value of the item when new.
Husband contends that there was no finding by the court as to why the values submitted
by Wife were favored over those submitted by Husband. Husband asserts that the
award to Wife was $105,157.20 and the award to Husband was a negative $29,244.39.
Husband disputes Wife’s assessment as to the value of the shop equipment at
$15,000.00, stating that she had no actual knowledge of its fair market value. Husband
urges that value of the shop equipment is $225.00. The record reveals that Wife
testified that the value of the shop equipment was based on Husband’s statement to
Wife at the time that the parties insured the shop.
The value of marital assets is determined by considering all relevant evidence
of value. Watters v. Watters, 959 S.W.2d 585, 589 (Tenn. Ct. App. 1997) (citing Koch
v. Koch, 874 S.W.2d 571, 577 (Tenn. Ct. App. 1993) (citations omitted)). The burden
to prove the value of the assets is on the parties through production of evidence and
parties are bound by the evidence that they produce. Id. It is within the discretion of the
trial court to place a value on the assets within the range of the evidence submitted by
parties. Id.
7
Since the value of assets is a question of fact, the presumption on appeal is that
the trial court’s valuation is correct. Watters, 959 S.W. 2d at 589; see also Smith v.
Smith, 912 S.W. 2d 155, 157 (Tenn. Ct. App. 1995). We find that the values given to
assets are within the range of the evidence given as they reflect the testimony and
assertions of Wife. The Husband claims that there is no showing that the Husband has
any assets that were not accounted for and further that a detailed account was given by
the Husband as to what was done with all property sold and where all funds received
were applied. However, we do not find that the record indicates that the trial court failed
to consider all evidence when making its decision, rather that the court, within its
discretion, found the testimony of the Wife more creditable than that of the Husband.
When the resolution of issues in a case depends upon the truthfulness of a witnesses,
the trial court judge, who has had the opportunity to observe the witnesses in their
manner and demeanor while testifying is in a far better position than a court of appeal
to decide those issues. McCaleb v. Saturn Corp., 910 S.W. 2d 412, 415 (Tenn. 1995);
Whitaker v. Whitaker, 957 S.W. 2d 834, 837 (Tenn. Ct. App. 1997). The record
supports the finding by the trial court regarding valuation of property as the valuations
given were within the range of the evidence given. We therefore affirm the trial court’s
ruling as to the property settlement.
Husband’s third issue disputes the court’s award to Wife of a non-
dischargeable judgment for $25,000.00 as alimony in solido. Husband argues that
because an award of alimony must be based upon an ability to pay, and because he
neither has the ability to pay the $25,000.00 judgment, or the assets out of which to
raise these funds, the award is in error.
There is testimony of Wife that indicates an ability of Husband to pay this
award. Wife asserts that there was $143,011.95 for which the Husband cannot
account. Wife testified that she did not know how the proceeds from the sale of
assets were spent, nor is she aware of how loan moneys were applied. The record
reflects that the Husband took out various loans, including the loan for $19,500.00
from Volunteer Bank, to pay bills. Wife further asserts that Husband received
$300.00 from the sale of the six-teen foot trailer, 19,500.00 from the sale of the truck
8
to his brother and that a note against the truck sold to his brother was paid from
proceeds from the sale of the marital home. Wife asserts that the record reflects that
Husband admits to receiving $38,000.00 from the sale of a truck to a third party and
that money was used to pay off notes , but that Husband can not identify which notes
where paid. Wife asserts that Husband claims that the $1,500.00 that he received
from his step mother for the mower was used to pay bills. Wife further asserts that
Husband admits that a second mortgage made in May of 1997 was used to pay off
notes for a swimming pool and unpaid taxes, and to pay bills, however Husband is not
able to identify which bills were paid. Although Wife concedes that some money was
used to pay bills, she contends that not all of these funds was so used. Wife asserts
that money has been hidden in Husband’s father’s safe. In making the award the
court stated:
The wife urges that she be given a judgement for some
of the $143,011.95 for which the husband cannot
account. The husband filed a number of exhibits of loans
which he incurred, and claims that any excess monies
were spent for bills with nothing to substantiate the same.
The Court therefore awards the wife, as alimony in solido,
her attorney’s fees, cost of this cause and a judgement
for $25,000.00 plus the difference between the value of
any personal property that she received from the
husband.2
Upon consideration of Wife’s testimony and the findings of the trial court
we do not believe that the record substantiates Husband’s claim of inability to pay.
As to the characterization of the awards as alimony in solido, “[t]he
award of alimony is within the sound discretion of the trial court.” Houghland v.
Houghland, 844 S.W.2d 619, 621 (Tenn. Ct. App. 1992)(citing Rains v. Rains, 58
Tenn. Ct. App. 214, 428 S.W.2d 650 (1968)). The factors to consider in awarding
alimony are enumerated in T.C.A. § 36-5-101(d), of which “the need of the spouse
is the single most important factor followed by the ability of the obligor spouse to
pay.” Houghland , 844 S.W.2d at 621(quoting Campanali v. Campanali, 695 S.W.
2d 193, 197 (Tenn. Ct. App. 1985). These are the factors for the court to consider
2
The difference between the value of any personal property the Wife received
and what Husband received is represented by the award of $25,380.00 as alimony in
solido to Wife.
9
whether making an award of alimony in futuro or alimony in solido. Id. (Citing Fisher
v. Fisher, 648 S.W.2d 244, 246-47 (Tenn. 1983). “Where possible, awards of
alimony in solido are preferred to awards in futuro.” Id. (Citing Spalding v. Spalding,
597 S.W. 2d 739, 741 (Tenn. Ct. App. 1980). Alimony in solido is distinguished from
alimony in futuro in that the former is paid in a lump sum and “generally considered
a final judgment, ordinarily unchangeable by the court after expiration of the time for
appeal” and the later is “paid periodically and remains subject to the control of the
Trial Court”. Loria v. Loria, 952 S.W.2d 836, 838 (Tenn. Ct. App. 1997). All alimony
must be “administered within the capability of the supporting spouse to provide the
needed support.” Id.
In addressing whether an award was properly deemed alimony in solido the
court in Aleshire v. Aleshire , 642 S.W.2d 729 (Tenn. Ct. App. 1981) determined
that alimony in solido should not be awarded based on an expectation of future
earnings. Houghland, 844 S.W.2d at 622. However extreme circumstances could
justify the award of alimony in solido from future earnings. “Illustrative of those
circumstances, but not all inclusive, is a situation where a spouse intentionally
disposed of his or her tangible assets in order to deprive the other spouse of alimony
in solido”. Id. (Citing Aleshire, 642 S.W. at 733). The Houghland,3 court held that
the trial court did not abuse its discretion in ordering husband to pay amount of note
that was not disclosed to Wife as the “record indicates that Husband disposed of
marital assets without informing Wife and later concealed these actions from her.”
Id. at 623. The court in Hall v Hall, 772 S.W. 2d 432 (Tenn. Ct. App. 1989)
responded to a similar complaint4 by concurring in the trial court’s finding “that the
husband was instrumental in the dissipation of the wife’s assets, and that this fact is
entitled to consideration in fixing alimony, both periodic and lump sum.” Hall, 772
3
The record in Houghland v. Houghland indicated that husband received
a check in satisfaction of a promissory note for $83,479.71, representing the equity in
the marital home, which he retained and invested into his company without informing
wife.
4
The appellant in Hall v. Hall, 722 S.W. 2d 438, complained that the award
of alimony in solido was based on an erroneous finding of dissipation of assets.
10
S.W. 2d at 438.
From our review of the record, we conclude that the trail court did not abuse
his discretion in finding that the award of $25,000.00 as alimony in solido was
necessary for the support and maintenance of Wife. The award of $25,000.00 as
alimony in solido is supported by a finding that the necessary factors enumerated in
T.C.A. § 36-5-101 (d) are present. As to those factors the evidence at trial indicated
that Wife earned an associates degree in office administration, but had remained at
home for the majority of the marriage. At the time of trial Wife was working at
Flecher Equipment as a bookkeeper with net income of approximately $1,100.00 per
month. Wife is the custodian of the parties’ two minor children and testified to
expenses of $2,199.00 per month.
Husband was self-employed from the beginning of the marriage until March of
1997, when he began working for his brother. In a hearing before the court in
November of 1997 Husband testified that his salary was $400.00 per
week,(approximately $1,7200.00 per month), however at trial evidence in the form of
an application for a loan was produced showing that in July of 1997 Husband had
represented to the Bank of Crockett that his income was $4,187.00 per month.
Federal income tax returns for the years 1994, 1995, and 1996 show perspective
incomes of $54,059.00, $41,715.00, and $29,755.00. Husband indicated that the
decrease in his income was due to selling his truck to his brother for $19,5000.00 in
March of 1997. The record indicates that this truck grossed $76,006.97 for
Husband’s brother in 1997. Husband claims $2,080.03 in monthly expenses. Despite
Husband’s sale of his truck to his brother and decreased income , we agree with the
trial court that Husband is underemployed.
Even if the award was made from future earnings, we think that this
circumstance falls within the exception designated by the court in Aleshire, as
evidence indicates that Husband intentionally disposed of assets in order to deprive
Wife of support. In the instant case Wife testified at trial that she believe that the
Husband is hiding money in his father’s safe.
Q The $19,500, Volunteer Bank: Do you know: What
11
were those funds borrowed for?
A I found out that it was borrowed on the front-end
loader and Ford – No. Just the front-end loader,
I think, is all that was.
Yeah, just the front-end loader, I think, is all that
was tied up with that. But I didn’t find out about
that until we was going through the divorce.
Q What were those funds used for; do you know?
A No.
Q Do you say that because you don’t know that
those funds were, therefore, wasted or dissipated?
A Well, they never was deposited. Nothing was ever
deposited into a checking account. So, where’s
the money at, if we had to pay all these bills?
Q Are you saying that none of these funds were
deposited in your account?
A Yes, I am.
Q Do you know if any of the $19,500.00 was
dissipated?
A I saw a check from Volunteer Bank that he had
cashed for $9500.00. And I asked him where it
was at, and he said he was going to have to look
it up, he didn’t remember. And that right there told
me that he wasn’t telling the truth, because he
keeps up with his money and he knows.
* * * * * *
Q My question is– You didn’t hear my question. Can
you tell us one thing that he has wasted money on
or dissipated money on of these funds that you’re
talking about?
A He just put it up where nobody can get to it.
Q Where is it?
A I’m sure it’s in his daddy’s safe.
Q You’re saying that now it’s in his daddy’s safe?
A I’m pretty sure it is, but I have no proof of that.
Although Wife admits to having no proof of where unaccounted for funds are,
both Husband and Wife testify that he was solely in charge of household finances in
the latter part of the marriage. As the party in charge of the family finances, Husband
12
is the one most likely to know where the funds were applied. We think that evidence
of the transactions not at arm’s length along with Husband’s inability to account for
funds, supports a finding that Husband dissipated or concealed funds. We further
think that evidence supports the trial court’s finding that Husband is underemployed,
the finding that transfers were not at arm’s length, and the finding that evidence does
not substantiate Husband’s claims as to how monies were spent. We therefore do
not think that the trial court abused its discretion in the award of $25,000.00 as
alimony in solido.
Having found the award of $25,000.00 to be properly made as alimony in
solido we now consider the characterization of the award as non-dischageable.
Husband argues that the final determination as to whether a debt is dischargeable in
bankruptcy is one that can only properly be addressed by bankruptcy court
considering the specific criteria applicable under federal statutes. The applicable
federal statute is U.S.C. § 523(a) (5) (1993 & Supp. 1997) which provides criteria to
qualify a debt as non-dischargeable.
One of the most venerable principles of American
bankruptcy law is that a debtor’s obligation to provide
spousal support cannot be discharged. (Citations
omitted). This principle is embodied in 11 U.S.C.A. § 523
(a)(5) (1993 & Supp. 1997) which provides that a
discharge does not relieve an individual debtor from any
debt “to a spouse, former spouse, or child of the debtor,
for alimony to, maintenance for, or support of such
spouse or child, in connection with a separation
agreement, divorce decree or other order of a court of
record.” Thus, while state law may guide the federal
courts in ascertaining the nature of the obligation, federal
law will determine whether the purported spousal or child
support is dischargeable (Citations omitted).
LeMaster v. Ross, 1997 WL 717237 *2, There is “a strong policy favoring the
enforcement of spousal and child support orders in 11 U.S.C.A. § 523 (a) (5)” which
overrides the general policy that exceptions to discharge should be interpreted in the
debtor’s favor. Id. (Citations omitted). Although federal courts are bound to look past
the labels given debts by state court or the parties, when there is no question that the
obligation is support, and it so labeled, the obligation is non-dischargeable in
bankruptcy. Id. at *3. (Citations omitted). As to what is considered proper alimony
13
by federal courts:
[t]his is a long-standing standard for alimony where a
spouse’s assets or earning capacity justifies such an
award. Bankruptcy law does not place a restriction on the
state courts’ ability to award alimony. As we stated in
Calhoun, “[d]ivorce, alimony, support and maintenance
are issues within the exclusive domain of the state
courts.”
Fitzgerald v. Fitzgerald, 9 F.3d 517, 521 (6th. Cir. 1993)5(citing Calhoun, 715 F.2d
at 1107 (citing Boddie v. Connecticut, 401 U.S. 371, 389, 91 S.Ct. 780, 792, 28
L.Ed.2d 113 (1971)(Black, J., dissenting)).
In re Calhoun, 715 F.2d 1103 (6th Cir. 1983), provided an analysis for
determining when obligations are actually alimony, maintenance, or support and
therefore non-dischargeable in bankruptcy when obligations are not so designated.
Fitzgerald, 9 F.3d at 520. The obligation in question in Calhoun was an assumption
of marital debts and to hold harmless the former spouse as part of divorce
settlement. The Calhoun court found that the “hold harmless” obligation could be
a non-dischargeable obligation even where not directly paid to the former spouse.
Id.
This Court considered whether an award of alimony in solido was non-
dischargeable in bankruptcy in Hale v. Hale, 838 S.W. 2d 206 (Tenn. Ct. App.
1992)6 The Hale Court explained and followed the analysis of the court in In re
Calhoun, and identified Calhoun as the leading case with regard to the issue of
dischargeability stating:
Calhoun held that, under 11 U.S.C. Sec. 523 (a)(5),
5
In Fitzgerald v. Fitzgerald the court addressed the question of whether
something called alimony is “really alimony and not, for example, a property settlement
in disguise.” Fitzgerald, 9 F.3d at 521. The court found the award was alimony as
Husband did not produce contrary proof and the award contained conventional alimony
restrictions.
6
Hale v. Hale, involved the interpretation of a divorce decree which
incorporated a marital dissolution agreement by which husband would assume the
second mortgage on the marital house. When husband failed to make payments wife
made a motion to the court to determine the dischargeability of debts and asking the
court to deem the second mortgage and wife’s attorney fees as alimony, maintenance,
or support. While the trial court deemed the debts child support, on appeal the Court
held that debts were support but modified the trial court’s order to make debts spousal
support even though the MDA did not obligate parties to pay alimony.
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payments must be actually in the nature of alimony or
support, to be exempt from discharge but that such
payments need not be made directly to the debtor’s
spouse or to his children. (FN3) The Court further found
that Congress intended the determination of what
constitutes alimony, maintenance, or support to be made
by bankruptcy law, not state law. To make this
determination, the Court fashioned a four prong test: (1)
whether the state court or the parties intended to create
a support obligation through the assumption of a joint
debt; (2) whether the assumption of the debt has the
actual effect of providing necessary support to insure the
daily needs of the former spouse and children are
satisfied; (3) whether the amount of the support
represented by the assumption is so excessive as to be
manifestly unreasonable when measured by traditional
concepts of support; (4) if the amount of support is
unreasonable , how much of it should be discharged for
the purpose of bankruptcy. Although we are not bound
by the Sixth Circuit’s opinion in Calhoun, we find the
Court’s reasoning to be persuasive.
Id. at 208. See also Herrerra v. Herrera, 944 S.W.2d 379 (Tenn. Ct. App.
1996)(citing In re Fitzgerald, 9 F.3d 517, 520 (6th Cir,. 1993) (providing a summary
of the Calhoun four part inquiry to determine if the assumption of a debt or obligation
was support)). Footnote 3 to the above excerpt from Hale addresses the
assertion made in Husband’s brief that “the final determination as to whether a debt
is dischargeable in bankruptcy is one that can only properly be addressed by the
bankruptcy court to see if it meets the specific criteria as set fourth by applicable
federal statues” stating:
[w]hile the bankruptcy code gives the bankruptcy court
exclusive jurisdiction to determine the issue of
dischargeability for most debts, jurisdiction to determine
the dischargeability of alimony, child support or
maintenance of wife or child is concurrence with that of
state court. The bankruptcy court may be bound by the
final order of the state court, after a full evidentiary
hearing involving the same issue, on the theories of res
judicata and collateral estoppel.
Hale at FN3 at 211 (citations omitted); see also Houghland v. Houghland, 844
S.W. 2d 625 (finding that the trial court has concurrent jurisdiction with federal
bankruptcy court in determining the dischargeability of debt with regard to a divorce
decree).
The trial court plainly labeled the award as a support obligation and under the
above authorities we find the trial court did not err in making the award non-
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dischargeable.
We disagree with Husband’s contention regarding his fourth issue that the
award of $25,380.00 as alimony in solido was an improper award to equalize a
property settlement. In reaching our conclusion we refer to the discussion in issue
III regarding Tennessee law on the propriety of awards of alimony in solido, and to
the order of the trial court awarding the difference between the value of property
received by Wife and the value of that received by Husband . The trial court made
the award of $25,380.00, as it did in awarding $25,000.00, based upon the finding
that Husband had not substantiated his claims as to how money was spent.
Following the reasoning of the courts in Hall and Houghland, we believe that the
trial court did not err in awarding Wife alimony in solido based on the discrepancy in
the property division where the record indicates the Husband’s sale of assets were
to family members and not at arm’s length and where Husband did not account for
a large sum of marital assets ($143.011.95 according to Wife). We further believe
that the record substantiates Wife’s need as discussed in Issue III.
In Husband’s fifth issue he does not contest the assumption of the $19,500.00
debt to Volunteer Bank, but rather takes issue with the trial court’s order making the
debt non-dischargeable in bankruptcy. Husband also contends that the trial court
erred in not taking this debt into consideration when dividing the assets between the
parties.
The trial court indicates that it considers this debt a marital debt and issued
in its findings the statement:
[t]he Husband agreed to take the Clarke Michigan front-
end loader and assume the indebtedness to Volunteer
bank, which is the only debt that the parties have at this
time and hold the Wife harmless.
Also in the decree the trial court orders: “[t]hat the Husband shall assume the
indebtedness to Volunteer” and that “Husband shall pay this debt, and shall hold
Wife harmless from any liability therefor.”
Tennessee courts have held that before making the division of marital
property, property should be classified as separate or marital. Kinard v. Kinard, 986
16
S.W. 2d 220, 230 (Tenn. Ct. App. 1998) (citations omitted). The definition of marital
and separate property found in T.C.A. § 36-4-121 (b) provides the ground rules for
the classification of property. Id. (Citations omitted). After the classification of
property the trial court is to divide the marital property in an equitable manner, and
the division need not be equal to be equitable. Id. (Citations omitted). Because
Tennessee is a dual property jurisdiction, the court also distinguishes as between
marital and separate debts. Mondelli v. Howard, 780 S.W. 2d 769, 773 (Tenn. Ct.
App. 1989)(citations omitted) “Marital debts are those debts incurred during the
marriage for the joint benefit of the parties, (citation omitted), or those directly
traceable to the acquisition of marital property.” Id. (Citations omitted).
On appeal the decisions of the trial court in dividing the marital estate is not
disturbed unless the distribution lacks proper evidentiary support or results from
some error or misapplication of law. Id. (Citations omitted).
In light of the evidence, we find that the debt to Volunteer Bank was the sole
obligation of the Husband. 7 The proof establishes that Wife is not legally obligated
for this debt and therefore the trial court erred in designating the debt as non-
dischargeable.
Husband’s sixth issue is whether the trial court erred in awarding the Wife as
alimony in solido the sum of $6, 298.27 for attorney’s fees. Husband cites Brown
v. Brown, 913 S.W.2d 163 (Tenn. Ct. App. 1994) for the proposition that attorney
fees are only appropriate when the spouse seeking them lacks sufficient funds to
pay her legal expenses or would be required to deplete her resources in order to pay
these expenses. Husband asserts that the award of attorney’s fee was an abuse of
the court’s discretion and submits in the alternative that if the award of attorney’s
fees is appropriate, the award should not be classified as alimony in solido, thereby
preventing discharge in bankruptcy.
7
In his deposition Husband testifies that W ife did not go with him to make
the loan and “[s]he might not had knew it”. Nor can Husband produce proof of the use
of these funds stating that the money was used to pay “family bills” but is unable to
name which bills. As noted in our discussion of issue III herein, Wife testifies as to her
belief that Husband concealed at least a portion of these funds from her.
17
The decision to award attorney’s fees to a party in a
divorce proceeding, and the amount thereof, are largely
within the trial court’s discretion and will not be disturbed
upon appeal unless the evidence preponderates against
such a decision. (Citations omitted).
As with any alimony award, in deciding whether to award
attorney’s fees as alimony in solido, the trial court should
consider the relevant factors enumerated in T.C.A. § 36-
5-101(d).
Houghland, 844 S.W. 2d at 623. Where the wife has shown that she is not able to
pay wife’s attorney, and where the husband is able to pay, the court may properly
order the husband to pay wife’s attorney’s fees. Id. (Citing Harwell v. Harwell, 612
S.W. 2d 182, 185 (Tenn. Ct. App. 1980); Palmer v. Palmer, 562 S.W. 2d 833, 839
(Tenn. Ct. App. 1977). However, where the trial court awards the wife alimony in
solido sufficient to meet the needs of the wife and to pay her attorney’s fees, it may
not be proper for the trial court to make an additional award of alimony in solido for
the payment of wife’s attorney’s fees. Id.
We find the award $25,000.00 as alimony in solido, along with the award of
$25,380.00 as alimony in solido is an adequate award from which to pay her
attorney’s fees. Therefore we conclude that the additional award of $6,298.27 for
Wife’s attorney’s fees was not appropriate. Accordingly, we reverse that part of trial
court’s order.
The Husband’s seventh and final issue is whether the trial court erred in
ordering him to maintain life insurance in the amount of $100,000.00 on his life for
the benefit of the minor children. Husband concedes that T.C.A. § 36-5-101(g)
empowers the court to order the purchase of a life insurance policy and to designate
the beneficiary on the policy. However, Husband contends that this requirement by
the trial court is in error due to his limited income. Husband contends that the trial
court did not explore the cost of such a policy. However, Husband put on no proof
of the cost in order to show his inability to pay.
The court in Young v. Young, 971 S.W. 2d 386 (Tenn Ct. App. 1997), held
that the trial court did not abuse its discretion in ordering that the husband maintain
$100,000.00 in life insurance for his minor child stating that the court was unwilling
18
to “interfere with the trial court’s exercise of its discretion absent a showing of
abuse.” Id. at 392. Because we find that the trial court did not abuse its discretion
in ordering the Husband to purchase and maintain a $100,000.00 life insurance
policy on his life for the benefit of the minor children, we affirm this order of the trial
court.
On appeal the Wife requests that an award of attorney’s fees and expenses
for the appeal of this cause. The Court in Houghland, 844 S.W.2d 623 declined to
award the Wife, appellee, attorney’s fees incurred on appeal citing Baggett v.
Baggett, 512 S.W.2d 292, 294 (Tenn. Ct. App. 1973) in which this Court held that
where both parties were partially successful on appeal, an award of attorney’s fees
was improper. In the instant case we decline to award Wife’s attorney’s fees
incurred on appeal.
In sum, the order of the trial court ordering the Volunteer Bank debt to be non-
dischargeable in bankruptcy is reversed. The trial court’s award of attorney fees to
Wife is reversed. The case is remanded to the trial court for further proceedings
consistent with this Opinion regarding child support. The order is affirmed in all other
respects. Costs of the appeal are assessed one-half to each party.
____________________________
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:
____________________________________
ALAN E. HIGHERS, JUDGE
____________________________________
HOLLY KIRBY LILLARD, JUDGE
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