Attorney/Wife Gets Transitional Alimony $2K x 36 Mos. After 13 Yrs.
Shelby County Courthouse
Tennessee case summary on divorce, property classification, and alimony after 13 years married in divorce.
The husband and wife in this Shelby County, Tennessee, case were married in Utah in 2005. It was the husband’s first marriage but the wife’s second. They had one child together, and the wife had an adult daughter from a previous marriage. They first lived in Illinois before moving to Shelby County in 2009.
The wife was an attorney and was licensed in Tennessee since 2009. However, she never practiced law during the marriage. She was an adjunct professor for one semester in 2012 and earned about $4,000.
The husband had a degree in chemical engineering and an MBA. From 2007 to 2014, he worked for AutoZone in Memphis, earning an average salary of about $208,000. In 2015, he accepted a buy-out, although it was disputed whether this was voluntary or he was forced. He was unemployed until that fall when he began as a consultant. His W-2 income in 2016 and 2017 was about $126,000 and $63,000.
The husband had owned a residential property in Texas prior to the marriage. That was valued at $500,000 and had a mortgage of about $370,000. About $100,000 in marital funds had been used to maintain that property.
At the time of the marriage, the husband had a 401K with his former employer worth about $47,000, as well as an IRA of about $6,000. In 2007, he rolled the 401K, then with a balance of $119,000, into the IRA. Because of market fluctuations, the balance had dropped to $44,000 by 2009.
In 2014, the wife filed for divorce. In 2015, the court, Judge Gina C. Higgins, set a temporary parenting plan giving the parties equal parenting time. They also later agreed to a permanent parenting plan along the same lines. The only custody issues at trial were child support, who would be the primary residential parent, and which parent would be entitled to the tax credit.
The trial court entered its final decree in 2018, and the husband appealed to the Tennessee Court of Appeals. Both parties asserted that the trial court had committed errors. The appeals court first addressed issues concerning the classification of property, the first of those being the treatment of the husband’s IRA. At the time of trial, the account had a value of over $350,000. The parties had agreed that at least 41% of that amount was the husband’s separate property. But the remaining 59% was in dispute. The trial court had awarded the husband an additional $50,000 as his separate property. Therefore, the husband’s total separate share, according to the trial court, was $196,000. The remaining balance was divided. The division, however, was not equal, because other assets were taken into account. Also, the parties had consented to some transfers from the account after the trial.
The appeals court first noted that normally, the entire net increase of a retirement asset during the marriage, by whatever means, is deemed to be marital property, although there can be exceptions. However, a 2009 Tennessee Supreme Court Case held that in the case of a 401K, the net gain is marital property, since it comes only as a result of the spouse’s employment. Specifically, the husband was not entitled to appreciation on the balance that was his at the time of the marriage. His separate property remained the original balance.
Even when the 401K was rolled into the IRA, the original balance remained treaceable.
The trial court’s calculation of the husband’s separate property was $196,000. But when the appeals court traced the property in light of its reasoning, it held that the husband’s separate portion was only $52,000. It held that amounts over that amount were appreciation during the marriage and therefore marital property.
Then, the appeals court turned to the property in Texas, which had been owned by the husband prior to the marriage. The trial court had computed the equity in that property as $203,000, and held that $175,000 of that amount was marital property. In particular, the trial court had found that marital funds were used to refinance the property and make renovations. In addition, marital funds were used to make mortgage payments. It therefore held that only $28,000 was the husband’s separate property.
The husband argued that the trial court had made inadequate findings to support this conclusion. But the appeals court disagreed. It held that the lower court’s orders set forth sufficient facts for the decision to be reviewed.
The appeals court noted that during the marriage, a substantial amount of marital funds had been used to maintain the property and make the mortgage payments. The parties differed as to the amount—the husband took the position that no more than $100,000 in marital funds had been expended. The wife, however, testified and had corroboration that the amount was closer to $500,000.
The appeals court didn’t get into which spouse was right. It noted that the equity was about $203,000, and therefore, even if only $100,000 in marital funds had been spent, this would be sufficient to transmute the property from separate to marital. Therefore, the court reversed the lower court’s holding that part of the equity was separate property.
After resolving these property classification issues, the Court turned to the question of the parties’ income. When calculating child support, the lower court imputed income to both spouses. The trial court imputed income of $12,000 per month to the husband, and $2,000 per month to the wife.
The appeals court first noted that imputing income is proper in cases of voluntary underemployment. Voluntary underemployment is a factual question based upon the reasonableness of the employment decision. The lower court found both parties to be voluntarily underemployed.
The husband had conceded that he took a part-time position partially to be able to spend more time with his child. While the appeals court found this to be commendable, it also held that it was evidence of voluntary underemployment.
The husband’s actual pay had averaged $78,000, but he acknowledged that a full time position would be between $100,000 and $130,000. The trial court had imputed $144,000, and the appeals court found that there was no basis in the record for this specific amount. The appeals court found that there was sufficient evidence that the husband would be able to land a job paying $120,000. Therefore, it reduced the husband’s imputed income to $10,000 per month.
The court then turned to the wife’s imputed income. The lower court had found that she was an attorney in good standing. The appeals court agreed that there was nothing preventing her from seeking gainful employment. It held that she was fully capable of earning at least $50,000 per year. Therefore, it changed her imputed income to $4,166.67 per month.
Next, the appeals court turned to the issue of the parenting plan and child support. Here, the court found that there were some deficiencies with the lower court’s ruling. There were few factual findings supporting the ultimate plan. In particular, there were no findings specifically as to the child’s best interest, the most important factor.
For these reasons, the Court of Appeals vacated the parenting plan and remanded the case for more factual findings. Since the imputed incomes had also changed, child support would need to be recomputed on remand.
Next, the appeals court looked at alimony. The lower court had awarded transitional alimony of $2,000 per month for 36 months, plus rehabilitative alimony of $500 per month for one year. The appeals court reversed the award of rehabilitative alimony. The lower court had reasoned that the wife would need to complete continuing legal education courses to get up to speed as she re-entered the practice of law. But the appeals court pointed out that such courses are required for most lawyers in the state, and that lawyers are always learning. Therefore, it reversed the award of the additional $500. It found, however, that the transitional alimony was appropriate while she got back up to speed in the profession.
Finally, the wife requested her attorney’s fees on appeal, but the court denied this request.
For these reasons, the Court of Appeals affirmed the lower court’s ruling in part, reversed it in part, and remanded the case.
No. W2018-02163-COA-R3-CV (Tenn. Ct. App. Mar. 6, 2020).
See original opinion for exact language. Legal citations omitted.
To learn more, see Property Division in Tennessee Divorce.
