Robert Howard Lubell v. Deborah Jo Lubell

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

July 23, 2015 Session

ROBERT HOWARD LUBELL v. DEBORAH JO LUBELL

Appeal from the Circuit Court for Bradley County

No. V-12-912 J. Michael Sharp, Judge

No. E2014-01269-COA-R3-CV-FILED-NOVEMBER 12, 2015

This is a divorce action involving a long-term marriage between parties whose primary

source of income throughout the marriage was their respective employment by a

nonprofit corporation they had co-founded. The wife alleged that the nonprofit

corporation was the husband‟s alter ego and should therefore be classified as the parties‟

marital asset. The trial court found, inter alia, that the nonprofit corporation could not be

classified or distributed as a marital asset. The wife appeals this finding, as well as the

trial court‟s (1) capping of the husband‟s child support obligation in combination with an

award to the wife of transitional alimony, (2) denial of her requests for alimony in futuro

and in solido, (3) allocation of certain marital debts to the wife, and (4) inclusion of

extraordinary educational expenses in the calculation of the husband‟s income for child

support purposes. Having determined that the trial court placed an improper cap on child

support by linking it to the transitional alimony award and improperly considered

extraordinary educational expenses as an adjustment to the husband‟s gross income rather

than as a deviation, we vacate the trial court‟s determination of the husband‟s child

support obligation. We remand for recalculation of the husband‟s child support

obligation. We modify the award of transitional alimony to an award of alimony in

futuro and separate the amount from the calculation of child support. Having also

determined that the wife is entitled to an award of alimony in solido to more equitably

adjust the distribution of the marital estate, we reverse the trial court‟s denial of alimony

in solido and remand for the trial court to determine the amount to be awarded. We

affirm the trial court‟s judgment in all other respects.

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

Vacated in Part, Reversed in Part, Affirmed in Part as Modified; Case Remanded

THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which CHARLES D.

SUSANO, JR., C.J., and D. MICHAEL SWINEY, J., joined.

William J. Brown, Cleveland, Tennessee, for the appellant, Deborah Jo Lubell.

Philip M. Jacobs, Cleveland, Tennessee, for the appellee, Robert Howard Lubell.

Stephen S. Duggins, Chattanooga, Tennessee, for the third-party appellee, Partners for

Christian Media, Inc.

OPINION

I. Factual and Procedural History

The parties were originally married in July 1976. They subsequently divorced in

1988 but began cohabitating approximately a year later and were married a second time

in February 1991. At the time of trial in the instant action, Husband was fifty-eight years

old while Wife was fifty-seven years of age. Their second marriage had lasted twenty-

two years, and it had been thirty-seven years since they were first married. During the

marriage at issue in this divorce action, the parties adopted two children: a son who was

fourteen years old and a daughter who was twelve years old at the time of trial. The son

was diagnosed at the age of two with a high-functioning form of autism and Asperger‟s

syndrome. By the time of trial, he had for several years attended Bachman Academy, a

private school designed to meet special needs. The parties‟ daughter attended a private

Christian school.

The parties founded Partners for Christian Media (“Partners”) in 1992. Husband

had been President of Partners since its establishment. He began his career by

completing two and one-half years of coursework toward a bachelor‟s degree with a

major in broadcast journalism at Lee College (now Lee University). Prior to founding

Partners, Husband worked as a sales manager for two radio stations and a marketing

manager for a cellular communications company. He also founded and served as

president of two safety product companies and a cellular telephone company. Since

1992, Partners had been Husband‟s only source of employment.

In previous years, Wife had held the position in Partners of National Sales

Manager. Partners terminated Wife‟s employment in December 2012. Through Partners,

Wife had also served as General Manager and Vice President of an affiliate radio station,

Friendship Broadcasting (“Friendship”), although it was undisputed that Wife‟s role in

this regard was primarily as a figurehead. Friendship terminated Wife‟s employment in

January 2013. Wife holds a bachelor‟s degree in psychology from Lee College. At the

time of trial, Wife had also completed several courses toward a master‟s degree in

theology by attending the Church of God‟s Seminary part-time. Prior to Partners‟

formation, Wife had held other positions in broadcast advertising sales. During Partners‟

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early years, Wife had also worked part-time as a river guide to assist with the parties‟

expenses.

Partners is a nonprofit corporation, registered with the Tennessee Secretary of

State and certified by the Internal Revenue Service as a 501(c)(3) organization. It

operates a radio station broadcasting Christian content throughout Tennessee and three

other states, as well as operating a second radio station through an affiliate. As a

nonprofit religious organization, Partners accepts a high number of donations from third

parties. In addition, Partners sells some broadcast time and advertising, and it is

undisputed that in the organization‟s early years, Wife was instrumental in securing

funding through her efforts as the primary sales representative and business manager. In

addition, Wife designed the bookkeeping process used to track donors and their

donations.

In 2012, Partners reported a net worth on its federal income tax return of

$1,294,816.00. This reflected total revenues of $2,157,980.00 and salary expenses of

$1,182,737.00. The trial court found that Husband‟s income at the time of trial was

$190,000.00 per year. Testimony and compensation records also demonstrated that

Husband received multiple benefits, including health insurance, disability insurance, a

401(k), a company automobile, and compensation through trade barter.

When Wife was employed by Partners, her income was based on a twenty-percent

commission for her sales. Her W-2 forms demonstrate that she earned approximately

$60,000 per year from 2002 through 2006. Her salary began to decrease, however, in

2007. By 2009, she earned $39,845.51. At that time, Wife began to work less, and by

2010, she was earning income only from residual accounts she had managed. She earned

$22,725.74 in 2010 and $20,682.00 in 2011. Wife‟s 2012 W-2 reflected income received

from Partners in the amount of $42,679.16. According to Partners‟ Finance Director

Linda Yeargan, the $42,679.12 received by Wife in 2012 included $20,000.00 in trade

barter. Ms. Yeargan testified that Wife‟s 2012 income represented commissions owed to

Wife from residual accounts, although Wife disputed this explanation and implied that

her income was falsely bolstered. Husband testified that Wife suffered from depression

and insomnia and simply stopped going to work. Wife insisted, however, that she felt

“pushed out” of her position by Husband‟s hiring of a new sales manager. She

acknowledged that she had not worked on any accounts for Partners since 2009.

Wife, acting through her former counsel, first filed a complaint for divorce in the

Hamilton County Circuit Court.1 On December 12, 2012, Husband subsequently

commenced the instant action by filing a complaint for divorce in the Bradley County

1

Wife‟s initial complaint for divorce is not in the record on appeal.

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Circuit Court (“trial court”). He alleged irreconcilable differences as a ground for

divorce, or in the alternative, inapprorpriate marital conduct on the part of Wife. See

Tenn. Code Ann. § 36-4-101(11), (14) (2014). Upon agreement of the parties, the

Hamilton County Circuit Court entered an order on March 22, 2013, transferring the

Hamilton County action to the trial court and consolidating it with the action commenced

by Husband. In the meantime, Wife had filed a motion seeking alimony pendente lite

and child support on January 23, 2013. The parties had stipulated to attend mediation in

an agreed order entered by the trial court on Januay 28, 2013.

On March 7, 2013, Wife, acting through her current counsel, filed an answer to

Husband‟s complaint, a counter-complaint against Husband, and a “Cross Complaint”

against Partners. Wife alleged irreconcilable differences as a ground for divorce, or in

the alternative, inappropriate marital conduct on the part of Husband. See id. In her

“Cross Complaint,” Wife requested that the trial court classify Partners as a marital asset.

Wife also filed amended motions seeking an award of alimony pendente lite and entry of

a proposed temporary parenting plan.

Partners responded on April 8, 2013, by filing a motion to dismiss what it treated

as Wife‟s “third-party complaint” against it. Wife filed a response to the motion to

dismiss on April 25, 2013. Following a hearing conducted on May 8, 2013, the trial court

determined that Partners was a legal nonprofit corporation and that as such, its assets

could not be included as a marital asset when distributing the parties‟ marital estate. On

August 13, 2013, the trial court entered an order, inter alia, granting Partners‟ motion to

dismiss what it found to be Wife‟s third-party complaint against Partners, pursuant to

Tennessee Rule of Civil Procedure 12.02(6). The court also made several findings of fact

regarding other issues concerning the divorce.

On August 30, 2013, the court sua sponte rescinded the August 13, 2013 order,

pursuant to Tennessee Rule of Civil Procedure 60.02, noting that the matter had been

before it solely on Partners‟ motion to dismiss the third-party complaint. The court

substituted a new order confirming the dismissal of Wife‟s complaint against Partners.

The trial court subsequently entered an order on September 6, 2013, clarifying its order

dismissing Partners and providing for temporary child and spousal support pending trial.

Wife filed a motion for contempt on September 17, 2013, alleging that Husband

had paid only half of the approxmately $2,000.00 owed for the first month‟s child support

ordered by the trial court. Husband subsequently filed a response, asserting, inter alia,

that he was breaking down the child support obligation into twice-monthly payments and

that he was also paying many expenses on Wife‟s behalf. On September 20, 2013,

Husband filed motions requesting that the trial court order the marital residence sold and

enjoin Wife from extending the rental agreement on the parties‟ rental property and from

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extending the lease on the apartment in which she had been living. Wife subsequently

filed a response objecting to Husband‟s motions.

Following a hearing conducted on September 30, 2013, the trial court denied

Wife‟s motion for contempt and denied Husband‟s motions to sell the marital residence

and to enjoin Wife from renewing the lease on her apartment. The court granted

Husband‟s motion to enjoin Wife from renewing the lease on the rental property. The

court entered an order memorializing these decisions on November 5, 2013. Upon

Husband‟s subsequent motion and Wife‟s response, the court entered an agreed order

regarding holiday co-parenting time on November 25, 2013.

The trial court conducted a bench trial spanning the course of two days on

December 16 and 18, 2013. Following the trial, Wife filed a motion in January 2014,

seeking attorney‟s fees and costs. Husband filed a motion requesting that the court direct

Wife to amend her federal tax return. On March 7, 2014, the trial court entered a “Final

Order,” incorporating its findings of fact and conclusions of law as a memorandum

opinion. The court took judicial notice of its September 6, 2013 order dismissing

Partners from the case and concluded that all issues regarding Partners had been resolved

by that order. The court then approved the parties‟ agreed permanent parenting plan,

distributed the marital estate, and awarded transitional alimony to Wife for a period of ten

years in incrementally decreasing amounts. The court directed that for the first six years

following the final judgment, the amount of transitional alimony would be inclusive of

child support so that Wife would receive the following: $2,750.00 monthly combined

alimony and child support for three years, followed by $2,000.00 monthly combined

alimony and child support for three years, followed by $1,750.00 monthly alimony for

two years, followed by $1,000.00 monthly alimony for two years.

Each party respectively filed a motion to alter or amend the judgment. The parties

also filed various other motions not relevant to this appeal. Wife noted in her motion to

alter or amend that, inter alia, no income shares worksheet for child support calculation

had been filed with the final order. Following a hearing conducted on March 18, 2014,

the trial court entered an order on March 26, 2014, denying all motions to alter or amend

the judgment, resolving issues raised by the parties‟ other motions, and setting a schedule

for child support payments. In calculating child support, the court adopted Husband‟s

proposed income shares worksheet, which included an adjustment to Husband‟s income

for payment of private school tuition for the parties‟ son. In response to subsequent post-

judgment motions, the trial court entered a revised final order on June 9, 2014,

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modifying, inter alia, the distribution of marital property. Wife timely appealed on July

7, 2014.2

II. Issues Presented

Wife presents three issues on appeal, which we have restated as follows:

1. Whether the trial court erred by dismissing Partners from this action

and declining to consider the nonprofit corporation as a marital asset.

2. Whether the trial court erred in the type, duration, and amount of

alimony awarded to Wife, particularly by (a) awarding Wife

transitional alimony rather than alimony in futuro, (b) capping

Husband‟s child support obligation in combination with the award of

transitional alimony, (c) declining to award Wife alimony in solido,

and (d) allocating certain marital debts to Wife.

3. Whether the trial court erred in calculating child support on the

income shares worksheet by including extraordinary educational

expenses for the parties‟ son as an adjustment to Husband‟s income

rather than a deviation from the base child support amount.

III. Standard of Review

In a case involving the proper classification and distribution of assets incident to a

divorce, our Supreme Court has elucidated the applicable standard of appellate review as

follows:

This Court gives great weight to the decisions of the trial court in dividing

marital assets and “we are disinclined to disturb the trial court‟s decision

unless the distribution lacks proper evidentiary support or results in some

error of law or misapplication of statutory requirements and procedures.”

Herrera v. Herrera, 944 S.W.2d 379, 389 (Tenn. Ct. App. 1996). As such,

when dealing with the trial court‟s findings of fact, we review the record de

novo with a presumption of correctness, and we must honor those findings

unless there is evidence which preponderates to the contrary. Tenn. R.

App. P. 13(d); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91

(Tenn. 1993). Because trial courts are in a far better position than this

2

Upon Husband‟s and Partners‟ joint motion to dismiss the appeal as untimely, this Court entered an

order on December 6, 2014, denying the motion and concluding that the June 9, 2014 order was a final

judgment pursuant to Tennessee Rule of Appellate Procedure 3(a).

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Court to observe the demeanor of the witnesses, the weight, faith, and

credit to be given witnesses‟ testimony lies in the first instance with the

trial court. Roberts v. Roberts, 827 S.W.2d 788, 795 (Tenn. Ct. App.

1991). Consequently, where issues of credibility and weight of testimony

are involved, this Court will accord considerable deference to the trial

court‟s factual findings. In re M.L.P., 228 S.W.3d 139, 143 (Tenn. Ct.

App. 2007) (citing Seals v. England/Corsair Upholstery Mfg. Co., 984

S.W.2d 912, 915 (Tenn. 1999)). The trial court‟s conclusions of law,

however, are accorded no presumption of correctness. Langschmidt v.

Langschmidt, 81 S.W.3d 741, 744-45 (Tenn. 2002).

Keyt v. Keyt, 244 S.W.3d 321, 327 (Tenn. 2007). Questions relating to the classification

of assets as marital or separate are questions of fact. Bilyeu v. Bilyeu, 196 S.W.3d 131,

135 (Tenn. Ct. App. 2005).

Further, as this Court has previously held:

Because Tennessee is a “dual property” state, a trial court must identify all

of the assets possessed by the divorcing parties as either separate property

or marital property before equitably dividing the marital estate. Separate

property is not subject to division. In contrast, Tenn. Code Ann. § 36-4-

121(c) outlines the relevant factors that a court must consider when

equitably dividing the marital property without regard to fault on the part of

either party. An equitable division of marital property is not necessarily an

equal division, and § 36-4-121(a)(1) only requires an equitable division.

McHugh v. McHugh, No. E2009-01391-COA-R3-CV, 2010 WL 1526140 at *3-4 (Tenn.

Ct. App. Apr. 16, 2010) (internal citations omitted) (emphasis in original). See also

Manis v. Manis, 49 S.W.3d 295, 306 (Tenn. Ct. App. 2001) (holding that appellate courts

reviewing a distribution of marital property “ordinarily defer to the trial judge‟s decision

unless it is inconsistent with the factors in Tenn. Code Ann. § 36-4-121(c) or is not

supported by a preponderance of the evidence.”).

Regarding alimony, our Supreme Court has “repeatedly and recently observ[ed]

that trial courts have broad discretion to determine whether spousal support is needed

and, if so, the nature, amount, and duration of the award.” See Gonsewski v. Gonsewski,

350 S.W.3d 99, 105 (Tenn. 2011). The Court has further explained:

[A] trial court‟s decision regarding spousal support is factually driven and

involves the careful balancing of many factors. As a result, “[a]ppellate

courts are generally disinclined to second-guess a trial judge‟s spousal

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support decision.” Kinard, 986 S.W.2d at 234. Rather, “[t]he role of an

appellate court in reviewing an award of spousal support is to determine

whether the trial court applied the correct legal standard and reached a

decision that is not clearly unreasonable.” Broadbent v. Broadbent, 211

S.W.3d 216, 220 (Tenn. 2006). Appellate courts decline to second-guess a

trial court‟s decision absent an abuse of discretion. An abuse of discretion

occurs when the trial court causes an injustice by applying an incorrect

legal standard, reaches an illogical result, resolves the case on a clearly

erroneous assessment of the evidence, or relies on reasoning that causes an

injustice. This standard does not permit an appellate court to substitute its

judgment for that of the trial court, but “„reflects an awareness that the

decision being reviewed involved a choice among several acceptable

alternatives,‟ and thus „envisions a less rigorous review of the lower court‟s

decision and a decreased likelihood that the decision will be reversed on

appeal.‟” Henderson, 318 S.W.3d at 335 (quoting Lee Medical, Inc. v.

Beecher, 312 S.W.3d 515, 524 (Tenn. 2010)). Consequently, when

reviewing a discretionary decision by the trial court, such as an alimony

determination, the appellate court should presume that the decision is

correct and should review the evidence in the light most favorable to the

decision.

Id. at 105-06 (other internal citations omitted).

This Court has described the proper standard of review for child support

determinations as follows:

Prior to the adoption of the Child Support Guidelines, trial courts

had wide discretion in matters relating to child custody and support.

Hopkins v. Hopkins, 152 S.W.3d 447, 452 (Tenn. 2004) (Barker, J.,

dissenting). Their discretion was guided only by broad equitable principles

and rules which took into consideration the condition and means of each

parent. Brooks v. Brooks, 166 Tenn. 255, 257, 61 S.W.2d 654, 654 (1933).

However, the adoption of the Child Support Guidelines has limited the

courts‟ discretion substantially, and decisions regarding child support must

be made within the strictures of the Child Support Guidelines. Berryhill v.

Rhodes, 21 S.W.3d 188, 193 (Tenn. 2000); Jones v. Jones, 930 S.W.2d 541,

545 (Tenn. 1996); Smith v. Smith, 165 S.W.3d 279, 282 (Tenn. Ct. App.

2004).

***

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Because child support decisions retain an element of discretion, we

review them using the deferential “abuse of discretion” standard. This

standard is a review-constraining standard of review that calls for less

intense appellate review and, therefore, less likelihood that the trial court‟s

decision will be reversed. State ex rel. Jones v. Looper, 86 S.W.3d 189,

193 (Tenn. Ct. App. 2000); White v. Vanderbilt Univ., 21 S.W.3d 215, 222-

23 (Tenn. Ct. App. 1999). Appellate courts do not have the latitude to

substitute their discretion for that of the trial court. Henry v. Goins, 104

S.W.3d 475, 479 (Tenn. 2003); State ex rel. Vaughn v. Kaatrude, 21

S.W.3d 244, 248 (Tenn. Ct. App. 2000). Thus, a trial court‟s discretionary

decision will be upheld as long as it is not clearly unreasonable, Bogan v.

Bogan, 60 S.W.3d 721, 733 (Tenn. 2001), and reasonable minds can

disagree about its correctness. Eldridge v. Eldridge, 42 S.W.3d 82, 85

(Tenn. 2001); State v. Scott, 33 S.W.3d 746, 752 (Tenn. 2000).

Discretionary decisions must, however, take the applicable law and the

relevant facts into account. Ballard v. Herzke, 924 S.W.2d 652, 661 (Tenn.

1996). Accordingly, a trial court will be found to have “abused its

discretion” when it applies an incorrect legal standard, reaches a decision

that is illogical, bases its decision on a clearly erroneous assessment of the

evidence, or employs reasoning that causes an injustice to the complaining

party. Perry v. Perry, 114 S.W.3d 465, 467 (Tenn. 2003); Clinard v.

Blackwood, 46 S.W.3d 177, 182 (Tenn. 2001); Overstreet v. Shoney’s, Inc.,

4 S.W.3d 694, 709 (Tenn. Ct. App. 1999).

Richardson v. Spanos, 189 S.W.3d 720, 725 (Tenn. Ct. App. 2005).

IV. Nonprofit Organization Not a Marital Asset

Wife contends that the trial court erred by dismissing Partners from this action and

by finding that the value of Partners should not be included within the marital estate due

to its status as a nonprofit corporation. Husband asserts that the trial court properly

dismissed Partners from the lawsuit and properly declined to consider Partners as part of

the marital estate due to its nonprofit status. Partners has filed a responsive brief on

appeal and likewise argues that the trial court properly dismissed it as a third party and

declined to consider it a marital asset. Upon our thorough review, we agree with

Husband and Partners on this issue.

A. Dismissal of Third-Party Complaint

Wife contends that when the trial court considered Partners‟ motion to dismiss the

third-party complaint against it, the court erred by failing to apply the standard

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appropriate to a Tennessee Rule of Civil Procedure 12.02(6) motion in that the court did

not treat all statements made in the complaint as true. See Trau-Med of Am., Inc. v.

Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn. 2002). (“In reviewing a motion to dismiss,

the appellate court must construe the complaint liberally, presuming all factual

allegations to be true and giving the plaintiff the benefit of all reasonable inferences.”).

In her “Cross Complaint” against Partners, Wife alleged, inter alia, that (1) she and

Husband co-founded Partners, (2) Partners had been their exclusive source of income, (3)

the purpose of the nonprofit designation was so that the parties could solicit tax-free

contributions to increase Partners‟ assets, (4) Partners was Husband‟s alter ego, and (5)

Husband operated Partners as though it were his personal property with the purpose of

increasing his personal wealth.

As Husband notes, Wife made the same allegations regarding Partners in her

complaint against Husband. In dismissing Partners as a party to this action, the trial court

found that Partners was a legal nonprofit corporation under Tennessee law and that it

therefore could not be subject to distribution as a marital asset of the parties. The court

also found that Wife‟s allegations did not constitute a claim that Partners, as an entity,

had caused Wife an injury. We conclude that the trial court properly considered Wife‟s

allegations in determining that even if those allegations proved true, Wife had failed to

state a claim against Partners upon which she could be granted relief. The court therefore

did not err in dismissing Partners as a party.

B. Exclusion of Partners from Marital Estate

The general focus of Wife‟s issue on appeal regarding Partners is that the trial

court erred by excluding the nonprofit organization‟s value from the classification,

valuation, and distribution of the marital estate. Specifically, Wife posits that Partners

functions as Husband‟s alter ego and that equity considerations merit piercing the

corporate veil to assess Husband‟s interest in Partners as marital property. Upon careful

consideration of the record and applicable law, we conclude that the evidence

preponderates in favor of the trial court‟s finding that Partners cannot be considered a

marital asset of the parties.

It is undisputed that the parties formed Partners in 1992 as a nonprofit corporation

pursuant to the Tennessee Nonprofit Corporation Act. See Tenn. Code Ann. §§ 48-51-

101, et seq. (2012 & Supp. 2015). Partners is a public benefit corporation pursuant to

Tennessee Code Annotated § 48-52-102(a) (Supp. 2015). Since its inception, Partners

has maintained tax exempt status as a charitable organization under section 501(c)(3) of

the Internal Revenue Code of 1986. See 26 U.S.C. § 501(c)(3). Section 501(c)(3)

exempts from taxation “[c]orporations, and any community chest, fund, or foundation,

organized and operated exclusively for religious, charitable, scientific, testing for public

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safety, literary, or educational purposes . . . .” It also requires that “no part of the net

earnings of [the exempt organization] inures to the benefit of any private shareholder or

individual.” See also Summers v. Cherokee Children & Family Servs., Inc., 112 S.W.3d

486, 500 (Tenn. Ct. App. 2002). Federal regulations interpreting § 501(c)(3) emphasize

the prohibition on distribution of net earnings to individuals:

An organization is not organized or operated exclusively for one or more

[charitable purposes] unless it serves a public rather than a private interest.

Thus, to meet the requirement of this subdivision, it is necessary for an

organization to establish that it is not organized or operated for the benefit

of private interests such as designated individuals, the creator or his family,

shareholders of the organization, or persons controlled, directly or

indirectly, by such private interests.

Treas. Reg. § 1.501(c)(3)–1(d)(1)(ii).

The Tennessee Nonprofit Corporation Act also precludes distribution of a

nonprofit corporation‟s assets to any private individual. As this Court explained in

Cherokee Children:

This prohibition on distribution of corporate assets or earnings to

those operating a nonprofit corporation has been reinforced by specific

statutory provisions. Under Tenn. Code Ann. § 48-63-101 a nonprofit

corporation may make no distributions that are not authorized by Tenn.

Code Ann. § 48-63-102. That section provides that a public benefit

corporation may make distributions to its members: (1) who are public

benefit corporations; and (2) if in conformity with its charitable purposes.

Tenn. Code Ann. § 48-64-102(b).3 “Distribution” is defined as “the direct

or indirect transfer of assets or any part of the income or profit of a

corporation, to its members, directors, or officers.” Tenn. Code Ann. § 48-

51-201[13]. Thus, in combination, these statutes clearly prohibit the

transfer of assets, income, or accumulated revenue to any individual who is

a member, director, or officer of the corporation. The statutory exception to

that prohibition is found in the definition “distribution.”

3

Effective January 1, 2015, after the filing of the complaint in the instant case, the Tennessee General

Assembly amended Tennessee Code Annotated § 48-63-102(b) to read: “A public benefit corporation

may make distributions to its members who are public benefit corporations if the distributions are in

conformity with its charitable purposes.” See 2014 Pub. Acts ch. 899, § 97.

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“Distribution” does not include:

(A) The payment of compensation in a reasonable amount to its

members, directors, or officers for services rendered;

(B) Conferring benefits on its members in conformity with its

purposes;

(C) Repayment of debt obligations in the normal and ordinary course

of conducting business activities; or

(D) The incurrence of indebtedness, whether directly or indirectly

(including through a guaranty), for or on behalf of a member,

director or officer.

Id.4

In addition to these limitations on distributions, nonprofit

corporations are specifically prohibited from lending money to, or

guaranteeing the obligation of, a director or officer of the corporation.

Tenn. Code Ann. § 48-58-303.

Cherokee Children, 112 S.W.3d at 501-02.

Referencing, inter alia, Cherokee Children, the trial court concluded that

according to Tennessee law, Partners, as a registered nonprofit corporation, could not

belong to an individual or individuals and therefore could not be considered marital

property. See also State ex rel. Little People’s Child Dev. Ctr., Inc. v. Little People’s

Child Dev. Ctr., Inc., No. M2007-00345-COA-R3-CV, 2009 WL 103509 at *8 (Tenn. Ct.

App. Jan. 9, 2009) (“[A]ssets belonging to the nonprofit corporation must be used only

for the public benefit purposes.”). Wife asserts, however, that Partners is actually the

alter ego of Husband and that Partners‟ identity as a nonprofit entity should be “pierced”

4

Effective January 1, 2015, after the commencement of this action, the Tennessee General Assembly

amended the definition of “Distribution” provided by Tennessee Code Annotated § 48-51-201 to insert

“and the reimbursement of reasonable expenses” in (A), substitute paired commas for the parentheses

enclosing the phrase, “including through a guaranty,” in (D), and add two additional exceptions: “(E) A

sale on credit in the ordinary course of business or a life insurance policy loan; or (F) Any item in § 48-

58-303(c).” See 2014 Pub. Acts ch. 60, § 8. In the 2015 version, the definition of “Distribution” is

number (13) within section -201. See id.

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in order to allow consideration of Husband‟s interest in Partners when distributing the

marital estate. We disagree.

Generally, a shareholder of a corporation is treated as a separate entity from the

corporation itself and is not personally liable for the corporation‟s actions. See Rogers v.

Louisville Land Co., 367 S.W.3d 196, 214 (Tenn. 2012). The doctrine of piercing the

corporate veil, however, provides that “in appropriate circumstances . . . the corporate

veil may be pierced and the acts of a corporation attributed to a shareholder.” Id. (“„The

corporate entity generally is disregarded where it is used as a cloak or cover for fraud or

illegality, to work an injustice, to defend crime, or to defeat an overriding public policy,

or where necessary to achieve equity.‟”) (quoting Am. Jur. 2d Corporations § 57 (2004)).

Regarding the applicable factors to be considered, our Supreme Court has explained:

When determining whether the corporate veil should be pierced, the

following factors are applicable:

Factors to be considered in determining whether to disregard

the corporate veil include not only whether the entity has

been used to work a fraud or injustice in contravention of

public policy, but also: (1) whether there was a failure to

collect paid in capital; (2) whether the corporation was

grossly undercapitalized; (3) the nonissuance of stock

certificates; (4) the sole ownership of stock by one individual;

(5) the use of the same office or business location; (6) the

employment of the same employees or attorneys; (7) the use

of the corporation as an instrumentality or business conduit

for an individual or another corporation; (8) the diversion of

corporate assets by or to a stockholder or other entity to the

detriment of creditors, or the manipulation of assets and

liabilities in another; (9) the use of the corporation as a

subterfuge in illegal transactions; (10) the formation and use

of the corporation to transfer to it the existing liability of

another person or entity; and (11) the failure to maintain arms

length relationships among related entities.

[CAO Holdings, Inc. v.] Trost, 333 S.W.3d [73,] 88 n.13 [(Tenn. 2010)]

(quoting FDIC v. Allen, 584 F. Supp. 386, 397 (E.D. Tenn. 1984)). No

single factor among those listed is conclusive, nor is it required that all of

these factors support piercing the corporate veil; typically, courts will rely

on a combination of the factors in deciding the issue. [The Oceanics Schs.,

Inc. v.] Barbour, 112 S.W.3d [135,] 140 [(Tenn. Ct. App. 2003)].

13

However, in all events, the equities must “substantially favor” the party

requesting relief, Trost, 333 S.W.3d at 89, and the presumption of the

corporation's separate identity should be set aside only “with great caution

and not precipitately.” Schlater [v. Haynie], 833 S.W.2d [919,] 925 [(Tenn.

Ct. App. 1991)].

Rogers, 367 S.W.3d at 215.

In its March 7, 2014 order, the trial court adopted its previous findings made

regarding Partners in the order entered August 30, 2013. These specific findings were as

follows in relevant part:

The Court notes that [Wife‟s] third-party complaint against Partners

for Christian Media, Inc. is essentially her request to pierce the corporate

veil and to declare the assets of the corporation to be part of the marital

estate, therefore subject to equitable division in this divorce proceeding.

The third-party complaint alleges that [Husband] is the president of the

non-profit corporation. The third-party complaint further alleges that the

corporation has a separate Board of Directors and that the selection of the

Board of Directors was and is made by [Husband]. The third-party

complaint also alleges that the corporation “is a Public Non-Profit

Corporation founded under the laws of the State of Tennessee” with a

registered agent and business address in East Ridge, Tennessee.

***

[Wife] alleges that she and her husband founded Partners for Christian

Radio Media, Inc. in 1992, and that the organization was primarily funded

at that time from [Wife‟s] services as the business manager and primary

sales representative. The Court takes judicial notice of the fact that [Wife]

herself alleges that Partners for Christian Media, Inc. is in fact a non-profit

corporation. In paragraph 5 of her third-party complaint, [Wife] notes that

Partners for Christian Media, Inc. was the exclusive source of income for

both she and [Husband]. The third-party complaint also refers to

distributions being made to [Husband and Wife] from the organization‟s

revenues. However, the third-party complaint does not define what was

meant by distributions. The Court must assume the allegation was referring

to something other than her regular income, however, there was no specific

allegation as to what was meant by the term “distribution.”

14

This Court concludes pursuant to T.C.A. §48-51-201(12)(A) that

non-profit corporations are allowed to provide reasonable compensation to

their employees. The third-party complaint does not contain any specific

allegations of wrongdoing but does allege that the corporation was created

“for the purpose of permitting the company to accept tax free contributions

to the corporation and accept tax deductible contributions from individuals

all for the purpose of increasing the assets of the corporation for Robert

Lubell‟s personal gain.” While the Court recognizes that the corporation

was in fact incorporated as a non-profit corporation, the fact that this

corporation was formed with an expectation that it would have tax exempt

status does not in any way prove that there has been any impropriety that in

some way has negatively affected [Wife] giving her a cause of action

against the corporation. The third-party complaint alleges that [Wife] acted

as a business manager and sales representative for the corporation, and does

not allege a failure to pay for her efforts and activities on behalf of the

corporation. The third-party complaint does not allege that the corporation

has done her wrong or has caused her any harm.

***

The third-party complaint alleges that Partners for Christian Media,

Inc. was formed as a non-profit corporation under the State of Tennessee

and implicitly alleges that such non-profit corporation is still alive. There

is no allegation suggesting a lack of an appropriate charter and/or other

appropriate paperwork being filed with the Secretary of State for the State

of Tennessee, and the third-party complaint indicates that the corporation

remains a legal non-profit corporation in the State of Tennessee. In

Tennessee, the Secretary of State‟s filing of the charter is conclusive proof

that the incorporator satisfied all conditions precedent to incorporation,

except in the proceedings by the State . . . See T.C.A. §48-52-103(b).

Thus, from the moment the Secretary of State recognizes an organization as

a non-profit corporation, it remains a non-profit corporation until dissolved.

See [Summers v.] Estate of Ford [146 S.W.3d] at 570 and 571 [(Tenn. Ct.

App. 2004)]. As noted above, upon dissolution, a non-profit corporation‟s

assets must be distributed to another non-profit corporation, not to

individuals. Based on all of the above, the Court concludes that [Wife‟s]

request that the assets of Partners for Christian Media, Inc. be declared

marital assets, and thus subject to equitable division as part of the marital

estate, is not well taken.

15

The trial court therefore concluded that Wife failed to allege facts that would support a

finding that Partners was not a legitimate nonprofit corporation. Because nonprofit

corporations in Tennessee are statutorily prohibited from distributing corporate assets or

earnings to those operating the corporation, the court determined that Partners could not

be considered a marital asset subject to distribution. See Tenn. Code Ann. §§ 48-63-101,

-102; Cherokee Children, 112 S.W.3d at 501-02.

Having reached this determination, the trial court did not further engage in a

piercing-the-veil analysis pursuant to the Allen factors. Upon our careful review, we

determine that Wife‟s allegations do not address the majority of the Allen factors. In

particular, Wife does not allege that Partners “has been used to work a fraud or injustice

in contravention of public policy . . . .” See Allen, 584 F. Supp. at 397. In addition, Wife

does not allege a failure to collect capital (factor 1), gross undercapitalization (factor 2),

use of the same office or business location (factor 5), employment of the same employees

or attorneys (factor 6), use of the corporation as a subterfuge in illegal transactions (factor

9), use of the corporation to transfer existing liability (factor 10), or failure to maintain

arm‟s length relationships among related entities (factor 11). See id. Factors (3)

(nonissuance of stock certificates) and (4) (sole ownership of stock) are inapplicable to a

nonprofit corporation in that no individuals may hold shares. See id., Tenn. Code Ann. §

48-53-103(b) (2012); Tenn. Code Ann. §§ 48-63-101, -102 (2012 & Supp. 2015). Wife‟s

allegations regarding Husband as Partners‟ alter ego could, arguendo, implicate the

remaining factors: use of the corporation as an instrumentality of an individual (factor 7)

and diversion of corporate assets to a stockholder (or in this case, officer) to the detriment

of creditors (factor 8). See Allen, 584 F. Supp. at 397. However, as the trial court found,

Wife‟s allegations in the complaint were not specific regarding any “distributions” made

by Partners to Husband or to Wife other than compensation and benefits provided to them

as employees. Specifically as to factor 8, Wife alleged no detriment to Partners‟ creditors

as a result of any funds paid to Husband.

Testimony and compensation records demonstrated that the benefits provided to

Husband by Partners included health insurance, disability insurance, a 401(k), a company

automobile, and compensation through trade barter. Wife had also in previous years been

provided with trade barter and a company automobile. Following the termination of

Wife‟s employment with Partners, Husband entered an agreement to purchase the

company automobile Wife had been driving. Husband continued to make payments on

the debt associated with Wife‟s automobile at the time of trial and was ordered by the

court to continue doing so until the debt was satisfied. Husband also continued to utilize

an automobile provided to him by Partners.

Regarding the use of trade barter, Ms. Yeargan testified that Partners provided

employees with some compensation through two types of barter. One type was offered

16

through two barter-trade banks that “barter with all kinds of companies and then

[Partners] barter[s] with them for whatever services they have.” The second type of

barter involved “direct trade,” in which companies seeking radio advertising bartered

their services with Partners. According to Husband‟s most recent compensation

agreement, he earned $179,000.00 in salary augmented by $20,000.00 in trade barter. As

Ms. Yeargan also testified, Husband‟s compensation records indicated that he was taxed

on his trade-barter income as well as his salary.

Wife asserted that Husband was able to obtain funds from Partners whenever he so

needed. In support of her assertion, she presented copies of non-payroll checks, dated

between November 2008 and June 2012, which were written to Husband on Partners‟

account and signed by Husband. Ms. Yeargan and Husband respectively testified that

these checks represented “advance repayment” of accrued compensation that Husband

had previously earned and elected not to collect. According to Ms. Yeargan, if Husband

“didn‟t take his [accrued compensation] in past years, he did not take what he was

authorized to take under pay, then he has the ability to take that whenever he needs it . . .

.” She further testified that any such advance repayment was accounted for on Husband‟s

pay stubs. Husband testified that he collected no advance repayments in 2013 and that he

no longer had a balance of accrued compensation.

Wife also questioned why Husband‟s trade-barter income had risen above the

contracted $20,000.00 in 2013. Ms. Yeargan explained that a new staff member had not

realized in 2012 that private school tuition fees for Husband‟s children needed to be

charged to Husband‟s barter balance. According to Ms. Yeargan and Husband, the

additional 2012 barter income was then reflected in his 2013 taxable barter income. We

conclude that the evidence does not preponderate against the trial court‟s finding that

Husband was compensated by Partners as allowed by the Tennessee Nonprofit

Corporation Act. See Tenn. Code Ann. § 48-51-201(13) (Supp. 2015); Cherokee

Children, 112 S.W.3d at 501-02.

In support of her argument that Partners should be classified as a marital asset,

Wife relies on a Nebraska Supreme Court decision in which that court applied an “alter

ego” doctrine to a divorce action in which the husband was the president of a nonprofit

religious corporation, “Union Oaks.” See Medlock v. Medlock, 642 N.W.2d 113 (Neb.

2002). The Nebraska court held that equity demanded the inclusion of the nonprofit

corporation‟s assets in the distribution of the parties‟ marital estate. See id. at 125-28.

The Medlock court determined, inter alia, that “[t]he record show[ed] a nearly complete

unity of interest between [the husband] and Union Oaks,” that the husband “made

extensive personal use of corporate funds and assets . . . and carried on personal dealings

in the name of the corporation.” Id. at 125. The court explained that the parties owned

no personal property in their own names because “all the property that would ordinarily

17

have been acquired over the course of a 28-year marriage was instead acquired in the

name of Union Oaks.” Id. In addition, Union Oaks had not been financed by third-party

donations but had primarily multiplied its assets through commercial real estate dealings.

Id. at 682 (“If Union Oaks had been financed by donations from third parties, intended to

support religious activities, the equities of this situation would be far different.”).

Wife cites two additional cases from other jurisdictions in which the courts found

that summary judgment was not warranted regarding the possible inclusion of a nonprofit

corporation in the distribution of marital property. See Barineau v. Barineau, 662 So.2d

1008 (Fl. Ct. App. 1995) (intermediate appellate decision); CH v. RH, 18 Misc. 3d 268

(N.Y. Sup. Ct. Nov. 13, 2007) (trial court decision). Wife also relies heavily on a law

review article cited with approval in Medlock: Evelyn Alicia Lewis, When Entrepreneurs

of Commercial Nonprofits Divorce: Is it Anybody’s Business? A Perspective on

Individual Property Rights in Nonprofits, 73 N.C.L. Rev. 1761 (June 1995).

These authorities upon which Wife relies do not constitute controlling authority

for Tennessee courts. See, e.g., Culbreath v. First Tenn. Bank Nat’l Assoc., 44 S.W.3d

518, 526-27 (Tenn. 2001) (determining that cases from other jurisdictions and law review

articles cited by the appellee were inapposite where other authorities controlled); Brooks

Cotton Co., Inc. v. Williams, 381 S.W.3d 414, 422 (Tenn. Ct. App. 2012) (consulting a

treatise on contract law and an Alabama Supreme Court decision as persuasive but not

controlling authority). We also determine that the instant action is highly factually

distinguishable from the Nebraska high court‟s decision in Medlock. In the instant

action, it is undisputed that Husband‟s pay rate is set by Partners‟ Board of Directors

(“the Board”). Wife argues that the Board would provide Husband with whatever

amount of money he requested. Testimony indicated, however, that the Board had used

guidelines to establish Husband‟s salary, first by comparing compensation rates at other

radio stations in similar markets and later by following pay guidelines recommended by

the Evangelical Council for Financial Accountability. Moreover, unlike the nonprofit

corporation in Medlock, Partners has been financed in significant part through donations

from the public. The trial court did not err in determining that Partners‟ status as a

nonprofit corporation prohibited its classification or distribution as a marital asset.

V. Spousal Support

Wife contends that the trial court erred in the type, duration, and amount of

spousal support awarded to her. The trial court awarded Wife transitional alimony

spanning the course of ten years and setting the amounts during the first six years to be

inclusive of child support. The court thereby set transitional alimony in decreasing

increments as follows:

18

 three years – combination of monthly alimony and child support: $2,750.00

 three years – combination of monthly alimony and child support: 2,000.00

 two years – monthly alimony: 1,750.00

 two years – monthly alimony: 1,000.00

Wife asserts that the trial court erred by (a) awarding to Wife transitional alimony rather

than alimony in futuro, (b) capping the amount of child support to be paid to Wife in

combination with the alimony award, (c) declining to award Wife alimony in solido, and

(d) declining to require Husband to pay certain disputed debts. We will address each of

Wife‟s arguments regarding spousal support in turn.

A. Type and Duration of Alimony

Tennessee law recognizes four types of spousal support: (1) alimony in futuro,

also known as periodic alimony; (2) alimony in solido, also known as lump-sum alimony;

(3) rehabilitative alimony; and (4) transitional alimony. Tenn. Code Ann. § 36-5-121(d)

(2014); Mayfield, 395 S.W.3d at 115. Our statutory scheme indicates a legislative

preference favoring the short-term forms of spousal support, rehabilitative and

transitional alimony, over the long-term types of support, alimony in futuro and alimony

in solido. See Tenn. Code Ann. § 36-5-121(d)(2)-(3); Mayfield, 395 S.W.3d at 115;

Riggs v. Riggs, 250 S.W.3d 453, 456 (Tenn. Ct. App. 2007).

It is well settled that “trial courts in Tennessee have broad discretion to determine

whether spousal support is needed and, if so, to determine the nature, amount, and

duration of the award.” Mayfield, 395 S.W.3d at 114; see also Fickle v. Fickle, 287

S.W.3d 723, 736 (Tenn. Ct. App. 2008). Tennessee Code Annotated § 36-5-121(i)

(2014) provides that when determining the nature and amount of an alimony award, the

trial court should consider all relevant factors, including:

(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;

19

(5) The physical condition of each party, including, but not limited

to, physical disability or incapacity due to a chronic debilitating disease;

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

employment outside the home, because such party will be custodian of a

minor child of the marriage;

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

and intangible;

(8) The provisions made with regard to the marital property, as

defined in § 36-4-121;

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

marriage;

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

intangible contributions to the marriage as monetary and homemaker

contributions, and tangible and intangible contributions by a party to the

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

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

discretion, deems it appropriate to do so; and

(12) Such other factors, including the tax consequences to each

party, as are necessary to consider the equities between the parties.

“Although each of these factors must be considered when relevant to the parties‟

circumstances, „the two that are considered the most important are the disadvantaged

spouse‟s need and the obligor spouse‟s ability to pay.‟” Gonsewski, 350 S.W.3d at 110

(quoting Riggs, 250 S.W.3d at 457).

In its March 7, 2014 order, the trial court made the following factual findings

regarding the statutory alimony factors in pertinent part:

With regard to factor #1, the court finds that both of these parties

have the requisite physical and mental health to continue to work and to

earn an income for the next several years, based upon the current facts in

evidence. The court finds that both parties are still relatively young.

[Husband] is in good health, and in the court[‟s] opinion will likely enjoy

20

many more years of health and the ability to work and make an excellent

income in the future. This is based upon the current evidence before this

court. On the other hand, [Wife] is also relatively young, and she has

excellent training, based upon her college degree, and based upon her prior

work experience. The court also takes judicial notice of the fact that [Wife]

is about halfway or possibly a little over halfway through her graduate

seminary training in the process of obtaining a graduate seminary degree.

The court has no way of knowing when or if she will complete the graduate

training. However, the court is cognizant of the fact that [Wife] is highly

intelligent, is fluent in several languages, and has an excellent past

employment resume. However, the court is also cognizant of the fact that

[Wife] has experienced some health problems. . . . The court heard the

testimony of several witnesses, all who testified that [Wife] was an

excellent mother, interacted well with her fellow students, and functioned

well both early in the day as well as all throughout the day. The court also

observed [Wife] in court on numerous occasions, and finds her to be in

excellent health, both physically and mentally.

There is no [question] that there has been a great disparity between

what the parties have earned, based upon the past history of [Husband and

Wife]. The court finds that [Husband] has earned in excess of $150,000.00

for the last several years. The court takes judicial notice of the fact that

[Husband] has earned in excess of $175,000.00 in the most recent years.

On the other hand, the court takes judicial notice of the fact that in the last

ten years, the most that [Wife] ever earned was about $70,000.00 (see trial

exhibit #13 for the year 2005). The court also takes judicial notice of the

fact that for the previous three years, [Wife‟s] earnings have averaged about

$28,000.00 per year. Furthermore, the court finds that [Wife‟s] current

income is only about $21,000.00 per year. The court finds that it is highly

likely that [Husband‟s] earning capacity and financial resources will

continue at the same or greater rate for the next several years, based upon

his earnings history and all of the evidence before the court.

The court finds that [Wife‟s] earning capacity and financial

resources are likely to improve from the current level of income. However,

the court finds that [Wife‟s] earning capacity and financial resources are

greatly inferior to [Husband‟s], given the current facts and evidence before

the court.

With regard to factor #2, the court finds that both parties have

extensive training and/or education, and furthermore, that both parties have

21

excellent abilities and skills to continue in the work force into the future.

As noted above, [Wife] is in the process of furthering her education, which

should hopefully broaden her scope for potential employers.

With regard to factors #3, #4 and #5, the duration of this marriage as

well as the age and mental condition of each party, the court has already

found that this is a marriage of long duration, and the court has already

made findings regarding the age, mental and physical condition of both

parties.

With regard to factor #6, the court finds that both of these parties

have worked outside the home during a great part of this marriage, and it is

the court‟s belief that both parties will continue to be able to work outside

the home going forward. However, the court also recognizes that the

parties have minor children, and therefore that will cause some limitation

pertaining to child care and/or child related responsibilities and needs.

With regard to factors #7 and #8, the court has made an equitable

division of the partie[s‟] marital estate, and has essentially split the equities

of the partie[s‟] assets equally, therefore enabling both parties to begin their

single lives in an essentially equal position as it relates to cash assets.

With regard to factor #9, the court finds that these parties have

enjoyed a very high standard of living during the course of this marriage. . .

. The court finds now that [Husband] shows his total expenses at

$10,095.00 per month, while [Wife] shows her total monthly expenses at

$8,137.00 per month. Thus, the parties now show, based upon their sworn

exhibits . . . monthly expenses of over $18,000.00. This is compared to a

net monthly income of somewhere between $11,000.00 and $12,000.00 per

month. Therefore, the court takes judicial notice of the fact that there is a

deficit of more than $6,000.00 per month expenses over income. This is

based upon the partie[s‟] sworn testimony, and given their exhibits entered

with the court. The court finds that there is no way that either of the parties

can continue on with their past standard of living nor their current monthly

expenses, based upon their current monthly incomes and/or expected future

incomes. . . . [T]he court has analyzed the partie[s‟] statements, and the

court finds realistically that [Wife‟s] realistic monthly expenses are in an

approximate amount of between $4,000.00-$4,250.00 per month, while

[Husband‟s] realistic monthly expenses, including expected child support

payments, payment for the Bachman Academy tuition, the children‟s

medical insurance and out of pocket medical expenses, as well as his

22

continued payment for [Wife‟s] car payment, are in the approximate

amount of $5,000.00-$5,250.00 per month. Obviously, the court has made

substantial deletions or eliminations of some of the items shown on the

partie[s‟] income and expense statements. This has been done out of

necessity and in the effort to craft a more realistic budget going forward.

The court wishes to point out that the court has totally eliminated monthly

credit card payments on both [Husband‟s and Wife‟s] monthly expenditures

by means of the suggestion that both [Husband] and [Wife] pay off all

outstanding credit cards out of the equity being received from the sale of

their homes. Furthermore, the court has eliminated certain other monthly

expenses from both [Husband‟s and Wife‟s] current monthly income and

expense statements for items such as charitable contributions, pet care, vet

bills, and other non-essential expenses. Furthermore, the court has based its

findings and numerical calculations, assuming that both parties‟ monthly

rental figure would be $1,000.00 per month, and both parties‟ utilities and

house-hold related expenses including groceries would be equal. The court

is also requiring [Husband] to pay the children‟s out of pocket medical

expenses, which shall be included as a part of his child support obligation

on an as needed basis. Ultimately, the court understands that the parties are

free to use the equity from the sale of their two homes for whatever items

they choose. The parties must decide what expenses they deem most

important to themselves individually, such as pets and charitable

contributions. The court is simply making the effort, and the financial

provision, to allow these parties to live reasonably based on a realistic

monthly income figure going forward. The court recognizes that the parties

are free to choose to do as they deem appropriate.

With regard to factor #10, the court finds that both parties have made

tangible and intangible contributions to this marriage, both monetary and

otherwise, to the overall marriage, the overall marital estate, and to the

raising and care of the partie[s‟] children.

With regard to factor #11, the court finds that both of these parties

are equally at fault with regard to the overall demise of this marriage, and

neither party is substantially more at fault than the other party.

Finally, in regards to factor #12, the court finds that given the court‟s

division of the marital estate, tax consequences, and the other equities

between the parties have been adequately and equitably addressed.

23

The court finds that [Wife] is the economically disadvantaged

spouse. This is given the fact that [Husband‟s] past income, as well as what

the court expects to be his future income, is far greater than [Wife‟s] past

income, and what the court expects to be [Wife‟s] future income and her

potential to earn future income. The court finds that [Husband] has the

ability to pay alimony.

The last issue left for this court to consider regarding alimony is

whether or not [Wife] can be sufficiently rehabilitated so as to be able to be

free from the current economic disadvantage that she faces.

***

The court finds that [Husband‟s] current income and previous three

year[s‟] income has ranged, considering his total income package, between

$179,000.00 and $199,000.00 per year based upon the testimony and trial

exhibits before the court . . . . The court finds that this income level is

likely to continue into the immediate future. On the other hand, the court

finds that [Wife‟s] income for the previous three years has averaged the

$28,000.00 previously mentioned . . . . The court finds that her income for

the immediate future is not likely, based upon the proof currently before the

court, to increase substantially. However, the court finds that [Wife] has

the ability to earn a reasonable income. Based upon all of the proof and

evidence before the court, the court finds that [Husband‟s] income, for child

support and for alimony consideration purposes, shall be $190,000.00 per

year, while [Wife‟s] income shall initially be set at $24,000.00 per year. . . .

The court finds that [Wife‟s] income shall be considered to be $24,000.00

for a period of three years. After the initial three years, then her income

will be imputed at $30,000.00, or her actual income if higher, for a period

of three years. After that time, her actual income shall be imputed at

$36,000.00, or her actual income if higher, for the remainder of time that

the parties have a minor child. In the event [Husband] continues to pay

school tuition for the children, he shall be given credit on the child support

work sheet, and furthermore [Husband] shall be given credit for the

insurance premiums that he is paying for the children. While the court has

already found that both parties have shown numerous expenses that the

court finds to be inflated and/or not credible on their respective income and

expense statements, the court finds that [Wife] still has a need, and in the

opinion of the court, will continue to have an ongoing need in her monthly

finances. Therefore, the court finds that [Wife] shall receive the sum of

$2,750.00 per month inclusive of child support for a period of three years.

24

In addition, [Husband] shall be required to pay for [Wife‟s] current car

payment (the Honda Pilot) until it is paid in full. Furthermore, the Care

Credit debt shall be the responsibility of [Husband]. After that time, [Wife]

shall receive $2,000.00 per month for a period of three years. After that

time, [Wife] shall receive $1,750.00 per month for a period of two years.

Finally, the court finds that [Wife] shall receive $1,000.00 per month for an

additional two years. In the event of death or remarriage of [Wife] prior to

the expiration of this 10 year period, then the alimony obligation shall

cease.

In weighing the statutory factors, the trial court emphasized the parties‟ disparate

income and earning potential while also emphasizing that both parties possessed the

education and training necessary for future productive work lives (factors 1 and 2). See

Tenn. Code Ann. § 36-5-121(i). The court found Wife‟s age and mental condition (factor

4), as well as her physical condition (factor 5), to be comparable to Husband‟s age and

condition, although the court noted that Wife had recently weathered some health

problems. See id. The court further found that both parties would need to make

allowances for their equal roles as custodians of the minor children (factor 6), would need

to trim their respective standards of living to more nearly meet income (factor 9), had

contributed to the marriage in tangible and intangible ways (factor 10), and had stipulated

as to fault (factor 11). See id. The court also considered the long duration of the

marriage (factor 3). See id. As to the division of property (factors 7 and 8), the court

concluded that because it had “essentially split the equities of the partie[s‟] assets

equally,” the judgment “therefore enabl[ed] both parties to begin their single lives in an

essentially equal position as it relates to cash assets.” See id.

1. Transitional Alimony versus Alimony in Futuro

Wife argues that although the the trial court properly found that she was the

economically disadvantaged spouse, the court contradicted its own findings by awarding

transitional alimony rather than alimony in futuro. Upon thorough review of the record,

we agree with Wife on this issue. As the trial court found in its analysis of statutory

factors, Wife was essentially healthy, well educated, and experienced in maintaining a

career outside the home. As the trial court also found, however, Wife was definitely the

economically disadvantaged spouse with far less potential than Husband for earning

income commensurate to the parties‟ standard of living before the divorce. Although

shorter-term alimony is preferable under Tennessee law, alimony in futuro may be

appropriate when rehabilitation of the economically disadvantaged spouse is not feasible.

See Tenn. Code Ann. § 36-5-121(d)(4). Tennessee Code Annotated § 36-5-121(f)(1)

further provides:

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Alimony in futuro, also known as periodic alimony, is a payment of support

and maintenance on a long term basis or until death or remarriage of the

recipient. Such alimony may be awarded when the court finds that there is

relative economic disadvantage and that rehabilitation is not feasible,

meaning that the disadvantaged spouse is unable to achieve, with

reasonable effort, an earning capacity that will permit the spouse‟s standard

of living after the divorce to be reasonably comparable to the standard of

living enjoyed during the marriage, or to the post-divorce standard of living

expected to be available to the other spouse, considering the relevant

statutory factors and the equities between the parties.

In contrast, 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, legal separation or other

proceeding where spousal support may be awarded . . . .” Tenn. Code Ann. § 36-5-

121(g)(1). In determining that Wife was in need of transitional alimony rather than

longer-term support, the court emphasized Wife‟s progress already accomplished toward

a master‟s degree in theology. Wife testified that she had earned twenty-five credit hours

out of sixty required toward her master‟s degree. According to Wife, she had typically

attended one class a semester from 2008 through 2012. Partners previously had paid

Wife‟s tuition through trade barter. Wife explained that she had suspended her graduate

education when Partners terminated her employment due to the cost of tuition. She had

paid for one graduate class herself, which she completed in 2013. Wife also testified that

in the year before trial, she had completed coursework to become certified as a

pharmaceutical sales representative and as an insurance sales representative. She

indicated that she had applied for employment positions but had so far been unable to

obtain employment.

In addition to emphasizing Wife‟s education, the court emphasized Wife‟s “prior

work experience” and “excellent past employment resume.” Certainly testimony

demonstrated that Wife had served successfully in her prior position as a sales manager at

Partners, although Wife did not refute Husband‟s testimony that her title of vice-president

had been primarily titular. Husband did acknowledge that he had long given Wife credit

publically for helping to found Partners and bring in revenue prior to 2009.5 It was also

5

Husband authored a book, published in 2008, extolling the story of Partners‟ formation and success, in

which he acknowledged Wife as “an essential part of the heart and soul of this story” and thanked her for

“indispensable help in remembering the exciting and challenging events of the past few years, and for

[her] insightful reading and critiquing of the story.” Bob Lubell with Dean Arnold, FINDING GOD‟S

FREQUENCY: MY ENCOUNTER WITH THE POWER OF MUSIC, MIRACLES, AND THE FM DIAL,

“Acknowledgments” (Klesis Press 2008).

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undisputed that Wife had initially created a system for tracking donors and their

donations at Partners.

Although we agree that the record supports a finding that Wife possessed valuable

work experience, we determine the outlook for Wife‟s ability to transfer this experience

to a future career to be much less sanguine than in the trial court‟s view. As Wife notes,

Partners had been her sole place of employment since it was formed in 1992. Her ability

to reference a position at which her ultimate supervisor was her former husband and from

which her employment was terminated under difficult personal circumstances would be

problematic. Since the termination of her employment by Partners in December 2013

and by Friendship in January 2013, Wife had remained unemployed despite her efforts to

obtain additional professional certifications and other employment. She planned to finish

her master‟s degree, but her source of tuition funding had been curtailed when she lost

the benefit of Partners‟ barter with the Church of God‟s Seminary. In addition, neither

party presented evidence regarding any increased earning power a master‟s degree in

theology might afford Wife.

Moreover, even at the peak of Wife‟s earned gross income in the past, found by

the trial court to be approximately $70,000.00 in 2005, she earned only thirty-eight

percent of Husband‟s 2012 gross income of $190,000.00. In 2012, Wife‟s gross yearly

income was only $21,000.00. In contrast, as the trial court found, Husband‟s earning

power is likely to improve given his relationship with the successful nonprofit

corporation. Finally, the unusually long duration of transitional alimony awarded in this

matter indicates that the trial court recognized Wife‟s need for alimony beyond a

transitional period. See Tenn. Code Ann. § 36-5-121(g)(1) (explaining that transitional

alimony is a short-term type of spousal support, payable “for a determinate period of

time.”); see also Lunn v. Lunn, No. E2014-00865-COA-R3-CV, 2015 WL 4187344 at

*10 (Tenn. Ct. App. June 29, 2015) (“In previous cases where the award of transitional

alimony was questioned . . . this Court has affirmed an award of transitional alimony for

a period of eight years at most.”) (internal citations omitted).

We agree with the trial court‟s determinations that Wife is in need of alimony and

that Husband has the ability to pay alimony. We further determine, however, that due to

the widely disparate respective incomes and future earning capabilities of the parties, the

trial court‟s award of transitional alimony should be modified to an award of alimony in

futuro.

2. Alimony in Solido

We are further persuaded by Wife‟s argument that she was entitled to an award of

alimony in solido. Alimony in solido, also known as lump-sum alimony, “is typically

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awarded to adjust the distribution of the marital estate and, as such, is generally not

modifiable and does not terminate upon death or remarriage.” Mayfield, 395 S.W.3d at

115. In analyzing the statutory factors, the trial court noted the approximately equal

division of the marital estate and found that both parties would therefore be able to

“begin their single lives in an essentially equal position as it relates to cash assets.” We

agree with Wife that this finding was somewhat in contradiction of the trial court‟s

overall conclusion that “[Husband‟s] past income, as well as what the court expects to be

his future income, is far greater than [Wife‟s] past income, and what the court expects to

be [Wife‟s] future income and her potential to earn future income.” At the time of trial,

Husband was fifty-eight years old while Wife was fifty-seven years of age. Although

their ages were comparable, Husband was the president of a successful nonprofit

corporation, earning compensation of $190,000.00, while Wife was not only unemployed

but also separated from the career support system of her longtime former employer.

Upon a thorough review of the record, we conclude that Wife as the disadvantaged

spouse was entitled to a lump-sum award in order to more equitably adjust the

distribution of the marital estate. We therefore reverse the trial court‟s denial of Wife‟s

request for alimony in solido.

B. Amount of Alimony Award

1. Capped Child Support with Transitional Alimony

As to the amount of alimony, Wife first contends that the trial court erred by

combining the award of transitional alimony with child support under one maximum

“cap.” We agree. As noted above, the trial court in its March 7, 2014 order set the

amount of transitional alimony at a maximum amount per month inclusive of child

support. Following a subsequent hearing, the trial court in an order entered March 26,

2014, adopted the income shares worksheet presented by Husband, noting that such

adoption was over the objection of Wife. Based on the calculations thus adopted, the

court ordered Husband to pay $675.00 per month in child support.

We will address the issue Wife has raised regarding the calculation of child

support in a subsequent section of this opinion. Here we address the court‟s decision to

combine alimony and child support into one capped amount. Because child support must

remain modifiable and cannot therefore be “capped” at a maximum amount, we conclude

that the trial court erred in this regard as a matter of law. See Tenn. Code Ann. § 36-5-

101(g)(1) (Supp. 2015) (“Upon application of either party, the court shall decree an

increase or decrease of support when there is found to be a significant variance, as

defined in the child support guidelines established by subsection (e), between the

guidelines and the amount of support currently ordered . . . .”); Tenn. Comp. R. & Regs.

1240-02-04-.05 (providing for modification of child support orders upon demonstration

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that a significant variance exists, as calculated under the Income Shares Guidelines, since

entry of the original order); see also Kaplan v. Bugalla, 188 S.W.3d 632, 636 (Tenn.

2006). Having determined that the award to Wife of transitional alimony should be

modified to alimony in futuro, we therefore establish the amount of alimony in futuro to

be awarded separately from the amount of child support.

2. Amount of Alimony in Futuro

Husband has not disputed the amount of transitional alimony awarded to Wife.

The trial court imputed a future income to Wife in the amount of $24,000.00 for a period

of three years, to be followed by an imputed income of $30,000.00 for three years, to be

followed by an imputed income of $36,000.00 while the parties co-parented a minor

child. Considering Wife‟s education and skills, the evidence does not preponderate

against a finding that Wife‟s income will gradually increase. As Wife notes, however,

when the parties‟ youngest child obtains the age of eighteen years in March 2019, she

will be sixty-two years old. It is unlikely that Wife at sixty-two years of age would be

able to increase her income beyond the imputed amount of approximately $30,000.00 to

an amount in any way approaching the income Husband can be projected to earn in the

future.

Upon our careful review, we determine that the amount of $2,075.00 monthly in

transitional alimony set by the trial court, when separated from the $675.00 monthly in

child support initially included, was within the discretion of the trial court and supported

by a preponderance of the evidence presented regarding Wife‟s need and Husband‟s

ability to pay. As previously determined, we modify the award of transitional alimony to

alimony in futuro. We conclude that $2,075.00 per month is an appropriate amount of

alimony in futuro based on the purpose of rendering the standard of living reasonably

comparable between the two households. See Tenn. Code Ann. § 36-5-121(c)(2).

3. Alimony in Solido and Disputed Debt

Having previously determined that Wife is entitled to an award of alimony in

solido in order to more equitably adjust the distribution of the marital estate, we turn now

to the amount of alimony in solido to be awarded. Within her argument regarding

alimony, Wife has raised the question of certain disputed debts that she asserts should

have been attributed to Husband. Inasmuch as Wife does not raise the issue of the overall

distribution of the marital estate, we address this disputed debt solely within the context

of Wife‟s request for alimony in solido.

Concerning alimony in solido, Wife requested a lump-sum award of $100,000.00

to be paid in annual installments of $25,000.00 over the course of four years. In support

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of her request, Wife asserts that the trial court‟s judgment left her without resources to

pay outstanding debts attributed to her. In particular, Wife argues that she is in need of

funds to pay $32,000.00 owed against improved real property awarded to her (what had

been the parties‟ rental property) and credit card debt in the amount of $33,194.00

accrued during the pendency of the divorce, in part to pay living expenses. According to

Wife, she also owed an additional debt for attorney‟s fees, although she acknowledged

that a portion of her credit card debt was attributable to pre-trial attorney‟s fees. Upon

our reversal of the trial court‟s denial of Wife‟s request for alimony in solido, we remand

for the trial court to determine the amount of the award based upon the applicable

statutory factors and the trial court‟s previous well-supported findings that Wife is the

disadvantaged spouse and that Husband has the ability to pay alimony. See Tenn. Code

Ann. § 36-5-121(i), Mayfield, 395 S.W.3d at 116. On remand, the trial court shall also

determine any payment schedule necessary to fulfillment of the alimony in solido award.

VI. Calculation of Extraordinary Educational Expenses in Child Support

Wife also contends that the trial court erred by including $2,250.00 per month in

extraordinary educational expenses paid by Father in the calculation of Father‟s income

for child support purposes. The court found that the parties‟ son, having been diagnosed

with a high-functioning form of autism, would continue to need private schooling at the

Bachman Academy. Father‟s testimony and pay stubs demonstrated that Father paid half

of the tuition for the oldest child directly and that he provided the other half through trade

barter with Bachman Academy. Wife does not dispute the trial court‟s rationale for

finding private schooling appropriate. She solely disputes the manner in which the court

calculated the expense on the income shares worksheet because she maintains that the

court‟s method improperly reduced Father‟s monthly income for child support purposes.

Husband argues that if the court erred by including the extraordinary educational

expenses as a deduction from Father‟s income, the error was harmless because the

deduction was allowable as a deviation from the basic child support obligation. Upon

careful review, we agree with Wife on this issue.

The income shares worksheet adopted by the trial court included a downward

adjustment to Husband‟s gross income for $2,250.00 in private school tuition, entered on

the worksheet as “work-related childcare expenses.” Tennessee‟s Child Support

Guidelines allow adjustments to a parent‟s gross income for certain additional expenses.

See Tenn. Comp. R. & Regs. 1240-02-04-.04(8). Among those expenses are work-

related childcare expenses, defined as follows in pertinent part:

Childcare expenses necessary for either parent‟s employment, education, or

vocational training that are determined by the tribunal to be appropriate,

and that are appropriate to the parents‟ financial abilities and to the lifestyle

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of the child if the parents and child were living together, shall be averaged

for a monthly amount and entered on the Worksheet in the column of the

parent initially paying the expense.

Tenn. Comp. R. & Regs. 1240-02-04-.04(8)(c)1.

In contrast, the Child Support Guidelines provide that a trial court may add

extraordinary educational expenses to the base child support amount when the court finds

such a deviation to be in the best interest of the child or children. See Tenn. Comp. R. &

Regs. 1240-02-04-.03(6)(b)5, 1240-02-04-.07(1)(b), (2)(d). In particular, Tennessee

Rules and Regulations 1240-02-04.07(2)(d) provides in pertinent part:

d) Extraordinary Expenses.

The Schedule includes average child rearing expenditures for families

based upon the parents‟ monthly combined income and number of children.

Extraordinary expenses are in excess of these average amounts and are

highly variable among families. For these reasons, extraordinary expenses

are considered on a case-by-case basis in the calculation of support and are

added to the basic support award as a deviation so that the actual amount of

the expense is considered in the calculation of the final child support order

for only those families actually incurring the expense. These expenses may

be, but are not required to be, divided between the parents according to

each parent‟s PI [percentage of income].

1. Extraordinary Educational Expenses.

(i) Extraordinary educational expenses may be added to the

presumptive child support as a deviation. Extraordinary educational

expenses include, but are not limited to, tuition, room and board, lab

fees, books, fees, and other reasonable and necessary expenses

associated with special needs education or private elementary and/or

secondary schooling that are appropriate to the parents‟ financial

abilities and to the lifestyle of the child if the parents and child were

living together.

(ii) In determining the amount of deviation for extraordinary

educational expenses, scholarships, grants, stipends, and other cost-

reducing programs received by or on behalf of the child shall be

considered.

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(iii) If a deviation is allowed for extraordinary educational expenses,

a monthly average of these expenses shall be based on evidence of

prior or anticipated expenses and entered on the Worksheet in the

deviation section.

(Emphasis added.) See also In re Andrea A.R., No. M2011-00574-COA-R3-JV, 2012

WL 397475 at *7 (Tenn. Ct. App. Feb. 7, 2012) (“If the court finds private schooling is

appropriate, then the trial court is required to calculate the extraordinary education

expenses separately and add them to the base child support award.”) (citing Tenn. Comp.

R. & Regs. 1240-02-04-.07(2)(d)).

As noted previously, “we review child support decisions using the deferential

„abuse of discretion‟ standard of review,” which “requires us to consider (1) whether the

decision has a sufficient evidentiary foundation, (2) whether the court correctly identified

and properly applied the appropriate legal principles, and (3) whether the decision is

within the range of acceptable alternatives.” State ex rel. Vaughn v. Kaatrude, 21 S.W.3d

244, 248 (Tenn. Ct. App. 2000). We conclude that the trial court erred by inappropriately

entering the private school tuition as an adjustment to Husband‟s gross income rather

than as a deviation to be calculated separately and added to the base child support

obligation. We therefore vacate the trial court‟s judgment regarding the amount of child

support to be paid by Husband. We remand for recalculation of the income shares

worksheet according to the Child Support Guidelines with Husband‟s payment of private

school tuition for the parties‟ son entered as a deviation added to the base child support

award.6 We emphasize also upon remand that the amount of child support is to be

calculated separately from the amount alimony in futuro awarded to Wife.

VI. Conclusion

For the reasons stated above, we vacate the trial court‟s calculation of Husband‟s

child support obligation. We remand for recalculation of child support according to the

Child Support Guidelines with Husband‟s payment of private school tuition for the

parties‟ son entered as a deviation added to the base child support award. We modify the

trial court‟s award to Wife of transitional alimony to an award of alimony in futuro in the

amount of $2,075.00 per month, separate from consideration of child support. We

6

Although Husband argues on appeal that with calculation of the private school tuition as a deviation,

each party would pay according to his or her percentage of income, such “expenses may be, but are not

required to be, divided between the parents according to each parent‟s PI [percentage of income].” See

Tenn. Comp. R. & Regs. 1240-02-04.07(2)(d) (emphasis added). Inasmuch as Husband maintained

throughout the trial that he would be responsible for the parties‟ son‟s tuition and testimony demonstrated

that a portion of the tuition was paid through barter as a benefit afforded to Husband by Partners, we find

no reason to disturb the trial court‟s allocation of the responsibility for private school tuition to Husband.

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reverse the trial court‟s denial of Wife‟s request for alimony in solido and remand for the

trial court to determine the amount of the award based upon the applicable statutory

factors. The court is also to determine any payment schedule necessary. We affirm the

trial court‟s judgment in all other respects, including the dismissal of the third-party

appellee, Partners for Christian Media, Inc., from this action. This case is remanded to

the trial court for recalculation of Father‟s child support obligation, determination of the

amount of alimony in solido to be awarded to Wife, modification and enforcement of the

judgment as consistent with this opinion, and collection of costs below. Costs on appeal

are taxed one-half to the appellant, Deborah Jo Lubell, and one-half to the appellee,

Robert Howard Lubell.

_________________________________

THOMAS R. FRIERSON, II, JUDGE

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