$2M Handshake Deal Is Dissipation | $4M Gifts to Wife Are Separate
Tennessee case summary on dissipation, gift and separate property, and valuation in divorce.
Kisha Dean Trezevant v. Stanley H. Trezevant, III
The husband and wife in this Shelby County, Tennessee, case were married in 1990. They had two daughters, both of whom had reached the age of majority by the time of the divorce trial. The husband was a successful real estate entrepreneur with a degree in business management. The wife had a GED and earned a degree in creative literature during the marriage. Other than providing some assistance to the husband’s business ventures, the wife never worked outside the home during the marriage.
In 2013, citing irreconcilable differences and inappropriate marital conduct, the wife filed for divorce. The husband followed up with a counter-complaint denying any inappropriate marital conduct on his part, but alleging that it was the wife who was guilty of inappropriate marital conduct.
The husband had been successful in his business ventures, the couple had tremendous wealth, and they lived what the court called an extravagant lifestyle. In addition to their large home in Shelby County, they owned several vacation homes. They took international vacations and attended many events and took shopping trips around the country. Ultimately, the trial court valued the marital estate at over $44 million.
Trial was held over several days in 2016, and in early 2017, Judge Donna M. Fields issued the final decree.
A number of issues were raised during the case, including classification and valuation of property, and the wife’s claim that the husband had dissipated assets by transferring over $2 million to the Cayman Islands.
Since the vast majority of the property was investment real estate, two appraisers testified during the trial. They were Todd Glidewell and Rip Walker, both of who testified on behalf of the husband. The wife did not offer expert testimony. Instead, she relied on a financial statement created by the husband in 2012. The statement showed valued much higher than the appraisers testified to. The trial court made a list of the properties, assigned a value to each, and then divided the properties to either the husband or wife. During this process, the husband objected that the wife was given properties with un-inflated values, but used the higher values in the 2012 financial statement for the properties awarded to him. The wife’s share was about $10 million, and the husband’s, about $34 million. To make up part of the difference, the wife was awarded $7.5 million alimony in solido.
The trial court had found that the husband had committed dissipation of marital assets by transferring over $2 million to his attorney and friend in the Cayman Islands. According to the husband, the friend was a business partner in a real estate transaction, and that he was making reimbursement for the sale of some property. But the wife argued, and the trial court agreed, that this money was simply being held for the husband until the divorce was over. Accordingly, the trial court held that the wife’s share of these funds was just over $1 million, and ordered the husband to pay this amount.
The trial proceedings also involved various claims by the wife that the husband was guilty of contempt. The trial court agreed and sentenced the husband to serve 55 days in jail. The husband appealed to the Tennessee Court of Appeals, and the jail sentence was stayed pending the outcome of the appeal.
The first issue to be addressed by the Court of Appeals was the classification of certain property, a nursery business. The husband claimed that this business was his separate property, because he had owned it prior to the marriage. But the trial court had noted that the business was subsequently sold and only re-acquired during the marriage. Many of the assets, such as tractors, actually post-dated the marriage. The Court of Appeals agreed with the lower court that the husband had not proven that he acquired these assets with his separate funds. Therefore, it held that they were marital property.
After sorting out some other pieces of property, the court turned to some money transfers that the lower court had ruled were gifts to the wife. Between 2007 and 2012, the husband had written checks to the wife totaling over $4 million. The wife claimed, and the lower court had agreed, that these were the wife’s separate property because they were gifts.
The Court of Appeals went through these transfers one by one. In many cases, the checks were written on the wife’s birthday or anniversary, and the wife had testified that the checks were gifts for those occasions. In another case, she testified that the check was repayment for a loan that had come from her separate funds.
The husband argued that only the wife’s testimony supported the findings of gift. But the Court of Appeals disagreed with this. It noted, for example, that the wife had also introduced other evidence, such as contemporaneous e-mails, which described the checks as gifts or “your money.” In addition, this money was not included on many of his financial statements. After reviewing all of the evidence, the appeals court agreed with the lower court that the evidence supported a finding that the money was a gift.
The appeals court then turned to the question of whether the husband had dissipated assets by transferring money to his lawyer friend in the Cayman Islands.
The husband testified that the attorney was a half owner of a property in the Cayman Islands, but had to keep his name off the title. The money, the husband claimed, was to reimburse expenses by the silent partner. The trial judge had characterized the alleged business deal by saying, “you don’t do business like that over two million dollars and a handshake. I just don’t buy it.”
The Court of Appeals didn’t buy it either. The husband had argued that the trial judge’s ruling had put him in the position to prove that there had been no dissipation, even though the burden of proof was on the wife. But the appeals court agreed with the trial court that the wife had met her burden of proof by showing that the $2 million had been transferred, with no evidence that the recipient was entitled to the money. For this reason, the Court of Appeals also affirmed the finding of dissipation.
The court next turned to the numerous valuation issues in the case. Basically, the husband argued that the values shown in his 2012 financial statement were unreliable, and that the court instead should have looked at the more recent appraisals.
The appeals court noted that the lower court had offered very little explanation in rejecting the appraisals. It found this to be fatal to the lower court’s holding. The appeals court pointed out that it is tasked with determining whether the lower court had applied the correct legal standard. But without an explanation of why the earlier statement was relied upon, the appeals court pointed out that it was unable to fulfill this duty.
On appeal, the wife argued that the appraisals were all based upon information provided by the husband. But the court pointed out that there had been no specific finding by the lower court that the husband had somehow manipulated these values.
For this reason, the Court of Appeals remanded the case for determination of the values. It pointed out that this did not mean that it would blindly accept the appraisals. But the trial court would need to show its reasoning for whatever ruling it made.
Finally, the Court of Appeals addressed the alimony and attorney fee rulings, and examined the various contempt findings. After extensively examining them, it affirmed the finding of contempt and sentence.
For these reasons, the Court of Appeals affirmed in part, reversed in part, and remanded the case for further proceedings.
No. W2017-00715-COA-R3-CV (Tenn. Ct. App. Apr. 25, 2018).
See original opinion for exact language. Legal citations omitted.
To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.
