After TN Divorce, Liens Against Business Led to Increased Alimony
Tennessee alimony law case summary modifying alimony from the Tennessee Court of Appeals.
Philip Wayne Hamby v. Myra Renee Wheeler – Tennessee divorce post-divorce contempt of court.
The parties were divorced in 2004. They had jointly owned a publishing business, Premier Publishing, Inc., and the trial court had required husband to turn over his share in the business to wife. Prior to the divorce, the husband, who controlled the business, had failed to pay certain federal taxes. As a result, when he turned over the business, it had been subject to an IRS lien. Since the business was encumbered by this lien at the time it was turned over, the wife filed a motion for contempt. She argued that since the business was encumbered by the tax liens, it had not been transferred to her as stipulated by the order. She also sought an increase in alimony, since the alimony had been set based upon the fact that she would have received the business.
The trial court agreed with the wife, and held the husband responsible for the tax lien. It also modified the amount of the alimony, since the business had not be transferred as required by the original order. The husband appealed this order to the Tennessee Court of Appeals, which affirmed the trial court’s judgment.
In ruling in the wife’s favor, the trial court had noted that the husband had “unbridled control” of the business and failed to pay the taxes. Even though the resulting lien was not searchable in any way, it was nevertheless a lien against the business, and the husband had failed to disclose it. Since the husband thus failed to deliver the business unencumbered, he had violated the order requiring him to do so. As the trial court put it, “he is responsible for the mess he created” by not paying the taxes.
The trial court denied the contempt motion, but did require the husband to hold the wife harmless for the IRS debts, and increased the amount of alimony.
The husband appealed, and the Court of Appeals affirmed. It first determined that it had jurisdiction to adjudicate tax debts, as it routinely does in many divorce cases. Even though the IRS is not a party to the case and cannot be bound, the court has jurisdiction to allocate the debt between the parties.
The Court of Appeals also held that provisions of an employment contract between the husband and the corporation were not relevant to the dispute between the husband and wife.
Finally, the Court of Appeals held that the trial court had acted properly in increasing the husband’s alimony obligation. In the original divorce decree, the court had reduced the alimony based upon the fact that the husband would transfer his ownership in the company. Since that ownership was substantially encumbered, the husband had failed in the obligation to turn over the ownership. Therefore, it was proper to adjust the alimony accordingly. The Court of Appeals also denied attorney fees to either party.
No. E2011-00872-COA-R3-CV (Tenn.Ct. App. Oct. 26, 2012).
See original opinion for exact language. Legal citations omitted.
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