Discovery Laws Require Truth About Assets & Income in Tennessee Divorce

Tennessee divorce discovery laws require truth in disclosure about assets & income to prevent hidden income and omitted assets.

Tennessee Divorce Discovery Laws Help Prevent Hidden Income and Assets

The production of documents during discovery is important to ensure an equitable distribution of the marital estate and accurate determination of income.  Each spouse may request information regarding the opposing spouse’s assets, whether those assets are tangible or intangible.  Discoverable assets are those that are “relevant” to the divorce action.  There are a number of legal procedures that attorneys may utilize to obtain financial information from the opposing spouse during discovery.  Two discovery tools that are especially important to the discovery of assets are interrogatories and requests for production of documents.

An interrogatory is a formal question written by one party for an opposing party to answer.  The party responding to the interrogatory must do so in writing and under oath.  Similarly, a party may request that the opposing party supply or allow inspection of documents and business records.  A request for production of documents may cover both electronically stored information and paper documents.

Interrogatories and requests for the production of documents should be meticulous and detailed, but should not unduly burden, harass, or oppress the opposing party.  In family law, they are often sent by parties as a set of pre-drafted forms, revised to fit the particular details of the case.

Interrogatories and requests for production of documents are important because they help ensure an accurate listing, classification (marital vs. separate), and valuation of assets, in addition to helping determine a party’s income for child support and alimony purposes.  An attorney who does not conduct a detailed investigation of the opposing spouse’s assets risks an undervaluation of the marital estate.  Supplementation of an initial discovery response may be required if the initial response is incomplete or becomes inaccurate.

In family law discovery, attorneys must ask the right questions and request the right documents.  If the right questions are asked and the other party omits a valuable asset, understates income, or otherwise fraudulently answers, and the questioning party relies upon the response, the questioning spouse receives an important layer of protection.  If the inaccurate information is discovered after settlement or trial, the trial court may consider vacating the settlement or ruling and allow the party who discovered the inaccuracy to reopen the case.  If that happens, the party guilty of the non-disclosure or od providing fraudulent discovery will likely lose credibility.  This loss of credibility can result in a much different outcome, favoring the party who uncovered the lie.

The following case illustrates a scenario where a response to discovery was considered complete, even though the responses to discovery did not include a potentially substantial asset mostly acquired during the marriage.  In Day v. Day, No. M2001-01624-COA-R9-CV, 2002 WL 13036 (Tenn. Ct. App. Jan. 4, 2002), Mr. Day, an attorney, entered into a marital dissolution agreement (“MDA”) with Mrs. Day.  The MDA valued Mr. Day’s interest in his legal practice at $22,500, valued Mr. Day’s pension fund at $185,000, and set Mr. Day’s child support payments at $4,000 per month.  Less than a week after the MDA was approved by the court and the final decree of divorce was entered, Mr. Day’s law firm received a $950,000 judgment from a class action lawsuit.  Mr. Day did not disclose the pending class action suit during discovery, and Mrs. Day and her attorney were not aware of the pending suit at the time the MDA was signed.  Almost a year later, Mrs. Day petitioned the court for relief from portions of the MDA on the basis of mistake or neglect of the parties and also brought a separate malpractice suit against her attorney.  Mrs. Day sought relief from the child support arrangement, division of property, and alimony payments outlined in the MDA.  Mr. Day moved for summary judgment.  The trial court did not find a basis for reopening the alimony and property provisions agreed to in the MDA but denied Mr. Day summary judgment due to issues with the child support agreement.

The Tennessee Court of Appeals granted Mr. Day summary judgment.  The court upheld the original child support agreement, alimony payments, and division of property outlined in the MDA.  In its opinion, the court emphasized that Mr. Day did not act fraudulently in his failure to disclose his firm’s pending $950,000 judgment during discovery.  The parties made the agreement based on the existing income of Mr. Day known to both of them at the time the MDA was signed, and the failure to discover the pending judgment was not a mistake attributable to Mr. Day.  The court noted that Mrs. Day’s loss was more properly attributed to deficiencies in the actions taken by her attorney during discovery.

Attorneys must be specific, comprehensive, and diligent during discovery.  This case illustrates what can happen when an attorney fails to make a complete determination of assets and income.  Attorneys may hire a consulting expert witness to advise what documents and information should be requested and then assist with their review.  It is often beneficial to hire a forensic accountant who is trained to investigate and evaluate financial information before propounding discovery requests.  Obtaining and relying on the services of a forensic accountant, business valuation expert, or other financial expert can help ensure that documents and information provided are both complete and reliable.

To learn more, see Hidden Income and Hidden Assets in Tennessee Divorces.