Partnership Law Controls Split of Spouses’ Business in Tennessee Divorce

Tennessee law case summary on partnership law in divorce from the Court of Appeals.

William Hunter Babcock v. Sonnia Elizabeth Babcock  – Tennessee partnerships in divorce

In 2009, prior to their marriage, the husband and wife in this Tennessee divorce case entered into a business partnership agreement for a business which owned real property and also operated an ice cream business in Florida.  Under the partnership agreement, all property acquired by either party was partnership property, no matter how titled.

The parties married in 2011, but the marriage was troubled from the start.  They moved to Tennessee in 2012 when the husband took a job with a nuclear power plant in Tennessee.  The relationship soured further, and two actions were filed in Hamilton County, a divorce proceeding and an action to dissolve the partnership.  As his grounds for divorce, the husband alleged irreconcilable difference and inappropriate marital conduct.

The action to dissolve the partnership was filed several months later.  The judge in the divorce case entered an order stating that he would preside over both cases, and he heard the evidence in both cases the same day.  He ordered the parties to place the marital home up for sale immediately, and divide the proceeds of the sale according to the partnership agreement.

The wife was granted a divorce based on the husband’s inappropriate marital conduct and divided the marital property.  In particular, the trial court had held that the parties’ real estate was not marital property, and instead divided it according to the partnership agreement.  The wife took exception with this ruling, and argued that the property should have been divided as part of the marital estate.  She then appealed to the Tennessee Court of Appeals.

The Court of Appeals held that it was proper to deal with the property under partnership law, rather than dividing it as marital property.  This was because the wife had never objected to partnership law being applied.  When the divorce judge took control of the case, she had not made any objection.  On the day of trial, her attorney had made one statement that might have been construed as an objection, but the appeals court held that this had been insufficient.  The appeals court noted that the wife had ample opportunity to contest the procedure used by the lower court, but had failed to do so.

Since the wife had acquiesced in the lower court’s rulings, the Court of Appeals held that this issue was waived.  Therefore, it affirmed the lower court’s use of partnership law in dividing the assets.

The Court of Appeals also addressed a number of issues relating to the divorce action and vacated part of the lower court’s ruling.  Therefore, it remanded the case for consideration of these issues.

Nos. E2014-01670-COA-R3-CV and E2014-01672-COA-R3-CV (Tenn. Ct. App. Mar. 9, 2015).

See original opinion for exact language.  Legal citations omitted.

To learn more, see Tennessee Divorce Laws.