Husband Committed Dissipation When He Paid Off Personal Judgment With Company Assets

Tennessee case summary on property division classification, valuation, and dissipation in divorce.

Eric Wayne Barton v. Mechelle Scholmer Barton

The husband and wife in this Blount County, Tennessee, case were married for 18 years.  They met when the husband was stationed at Camp Lejeune, NC,  where the wife was employed at the base PX.    They moved to Tennessee in 2006, shortly after the husband began doing private contract work with the U.S. Army in Iraq.  He started a company that contracted with an Afghan trucking company to transport goods in Iraq.  They separated in 2015 and filed for divorce.  The case went to trial, and there was a first appeal.  In the first appeal, the Tennessee Court of Appeals held that a $32 million claim the husband’s company had against the U.S. Government was not marital property.  It went on, however, to find that the claim was relevant to an accurate valuation of the company, which was a marital asset.

On remand, the lower court found that the husband had dissipated the $32 million claim by using proceeds to satisfy a personal judgment against him for about $12 million.  To remedy this, the lower court added the amount dissipated to the value of the company.  The husband then brought a second appeal to the Tennessee Court of Appeals, which turned first to the dissipation issue.

The appeals court held that the evidence did not preponderate against the lower court’s ruling.  It noted that the action of satisfying the personal judgment was detrimental to the value of the marital asset, and that the action benefitted the husband personally.  Therefore, it affirmed the lower court’s ruling in this regard.

The appeals court also reviewed the overall division of the estate, which was 55/45 in favor of the wife.  It found no error in the lower court’s ruling.  It also affirmed the lower court’s award of alimony in solido, but reversed an award of interest to the wife on this alimony.

No. E2022-01574-COA-R3-CV (Tenn. Ct. App. Jan. 10, 2024).

See original opinion for exact language.  Legal citations omitted.

To learn more, see Property Division in Tennessee Divorce and view our video Is Tennessee a 50 50 divorce state?