TN Husband Must Pay for Workplace Malfeasance in Divorce

Tennessee law case summary on debt division in divorce and family law from the Court of Appeals.

Mary Lisa Gaston Luplow v. Martin Duane Luplow

Mary Lisa Gaston Luplow and Martin Luplow were married in 1983 and had two children.  In 2010, the wife filed a complaint for divorce in Davidson County, Tennessee, alleging inappropriate marital conduct and irreconcilable differences.  The husband filed a counterclaim, alleging the same grounds.  After various pretrial orders, a trial was held in 2012 before Judge Phillip R. Robinson, and a final judgment was entered.  Both parties appealed to the Tennessee Court of Appeals.  On appeal, the wife argued that the trial court had erred in the classification and division of marital debt, and in the division of the proceeds of the marital residence.  The husband appealed the classification of one piece of real property, which the trial court had found to be the wife’s separate property.  He also appealed the manner in which the marital debt was divided.  The Court of Appeals addressed all of these issues in an opinion authored by Judge Richard Dinkins.

The appeals court addressed these issues in turn.  The trial court had ordered that the funds from the sale of the house first be used to pay off two credit card debts.  The wife was then to be awarded approximately $19,000, with the husband receiving the remaining $554.  It had also awarded the husband a judgment of $12,280, which represented the son’s tuition payment.  The wife was held responsible for two credit cards, and the husband responsible for another one.

A complicating factor in the case was the discovery of a $69,000 lien against the homestead.  This was the result of an earlier judgment against the husband in an employment-related lawsuit.  The trial court had held that this lien was a marital obligation, since it arose out of the husband’s work, which was in furtherance of earning income for the benefit of both parties.  On appeal, the wife argued that this judgment, of which she was previously unaware, was the result of the husband’s malfeasance, and should be his responsibility alone.

The appeals court first tackled the status of this judgment.  It arose out of a breach of contract action brought by a former sales manager at the car dealership where the husband was general sales manager.

The appeals court noted that neither spouse benefited from this judgment, and that the husband alone had incurred it by his conduct.  Based upon these factors, the Court of Appeals concluded that the husband should be solely responsible for repayment of the judgment.  Accordingly, it agreed with the wife and reversed this portion of the lower court’s order.

The court then looked at the division of the proceeds of the sale of the home.  Because it had changed the status of the lien, it had to recalculate the distribution of these proceeds.  For that reason, it awarded the wife the balance remaining from the sale, and also awarded her a judgment for the balance.

The appeals court then turned to the status of the real property which the wife had inherited when her father died.  The husband argued that this property had transmuted into a marital asset because they took out a line of credit against the property, and because he had paid a portion of the property taxes during the pendency of the divorce.  The lower court had found that the property had not transmuted, and the appeals court noted that this is a factual determination that has a presumption of correctness.  It examined the evidence and concluded that the evidence did not preponderate against the trial court’s findings.

Even though the appeals court agreed that this property was the wife’s, it did not agree with the disposition of the line of credit secured by the property.  The lower court had found that the line of credit against this property was solely the wife’s responsibility.  But since both parties had incurred this debt, the Court of Appeals held that it was a joint obligation.

The court then examined the various credit card accounts and concluded that the lower court had properly allocated these.  It also held that the tuition debt had been properly allocated.

Finally, the appeals court made rulings as to various other issues, including alimony, contempt, and attorney’s fees.

After making these various modifications to the lower court’s order, the Court of Appeals affirmed.

No. M2013-01399-COA-R3-CV (Tenn. Ct. App. Jun. 19, 2014).

See original opinion for exact language.  Legal citations omitted.

To learn more, see Dividing Debt in a Divorce | Tennessee Debt Division Law.

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