Husband’s Income Imputed for Alimony After 29 Years Married

Tennessee alimony divorce case summary after 29 years married.

Sallie Lunn Tarver v. John Taylor Tarver, et al.

The husband and wife in this Shelby County, Tennessee, case were married in 1987 when both were 23 years old.  The husband worked for his father’s railroad construction business since he had turned 18, including during most of the marriage.  The husband was ultimately made vice president of the company, and he was a joint owner along with his father of numerous assets such as certificates of deposit.  The father later testified that this was done as a form of rudimentary estate planning.

The wife had a college degree in fashion merchandising but had never worked in that field.  During the marriage, she worked as a data entry clerk, and reduced her hours to about 30 per week and worked from home when the children were born.  She was laid off in 2009.  Her highest income during the marriage was about $20,000, as compared to the husband’s income of about $200,000.

The wife filed for divorce in 2014.  Two children had reached majority, but two twins were only 11 years old.  The wife’s complaint named the husband’s father as a co-defendant in order to adjudicate the property rights in the jointly held property.

A trial was held before Judge Robert Samual Weiss.  The wife presented the testimony of a forensic CPA in order to calculate the husband’s true income for purposes of alimony and child support.  The husband had received benefits including salary, bonuses, rent, and reimbursement of personal expenses.  The CPA calculated the husband’s income as being between $216,000 and $285,000.  He also testified that the wife’s earning potential was $28,000.

The wife also offered the testimony of an appraiser as to the value of a business property owned by the husband.  This was a combination office building and garage service building, valued at about $2.8 million.  However, the husband’s appraiser set the value at $1.8 million.  The appraisers also differed as to the fair rental value.  The wife’s appraiser set it at $221,000 per year, while the husband’s pegged it at $178,000.

After trial, the court entered a divorce decree in late 2016.  After numerous motions, this was amended and the final decree issued in July 2017.

The trial court granted the divorce and divided the property.  Particularly at issue was the business property.  The court concluded that the husband owned a half interest shared with his father.  Since it was acquired during the marriage, there was a presumption that this was marital property.  The court concluded that this presumption would stand, since the husband failed to meet his burden of showing that the property was a gift.  Instead, the court concluded that it was part of the husband’s compensation for working for the company.  It valued the property at about $2.4 million, which was based upon an average of the two appraisals.  The wife was accordingly awarded a judgment of about $620,000, representing half of the husband’s half interest.

The trial court also imputed income to both spouses.  Even though the business had cut back on rent payments while the divorce was pending, the court went with the imputed value.  It ultimately set the husband’s income at about $188,000 per year.  The wife’s imputed income was set at $28,000 per year.  Based upon this finding, the husband was ordered to pay $1,332 per month in child support and $1,500 in alimony until the youngest children graduated from high school.  At that time, the child support would cease and the alimony would increase to $2,832 for 10 years.  It also ordered the husband to pay $200,000 of the wife’s attorney’s fees.  The husband and his father then appealed to the Tennessee Court of Appeals.

The husband first argued that the trial court erred in finding the business property to be marital property.  The husband argued that it was a gift to him from his father, and accordingly should be considered his separate property.

The appeals court first noted that property acquired during the marriage is presumed to be marital.  The title on the property is not dispositive of the issue.

The appeals court noted that the case was very similar to a 2017 case.  That case held that the recipient had the burden of showing that a gift was actually separate property.  In this case, the business relationship with the father was very informal, but the appeals court noted that there had been a change in the employment relationship at the time of the “gift,” and that the trial court’s conclusion that it was compensation was a reasonable one.  Even though the father had testified that this was part of an estate planning program, the appeals court agreed with the trial court that this evidence was not necessarily credible.  For this reason, the Court of Appeals affirmed this part of the judgment.

The husband next argued that the trial court had erred in valuing the husband’s property.  While the husband did not challenge the overall valuation, he did dispute the value of his interest.  The appeals court first noted that in a joint tenancy, the presumption is that each party owns half.  The appeals court zeroed in on the fact that both the husband and father were receiving the same amount of rent.  The husband and grandfather argued that the ownership of the property was instead a “joint venture,” but the appeals court held that the trial court had property rejected this theory.

The husband next argued that the alimony and child support were excessive due to his income being overstated by the trial court.  Here, the father chimed in that he ran the company “as a dictatorship” and had no obligation to pay higher income than he had been paying.  In particular, while the divorce was pending, he reduced the amount of rent being paid for the previously discussed property.

Unfortunately, the husband did not specify what he believed his income should be, other than to say that the trial court’s calculation had been wrong.

The appeals court noted that income determinations are very fact driven, and that the trial court is in the best position to make this determination.

Based upon that level of income, the appeals court reviewed the trial court’s final award of alimony and concluded that the lower court had acted within its discretion.

For these reasons, the Court of Appeals affirmed the lower court in all respects.  It did, however, deny the wife her request for attorney’s fees on appeal.

No. W2017-01556-COA-R3-CV  (Tenn. Ct. App. Mar. 13, 2019).

See original opinion for exact language.  Legal citations omitted.

To learn more, see Alimony Law in Tennessee.