### IN THE COURT OF APP EALS OF TENNESS EE AT NAS HVILLE Jul y 6, 200 4 S es sio n DONNA WOO DS HARTMAN v . PATRICK ERW IN HART MAN

Appeal f romthe Chancer y Court for Maury County No. 99-441 JimT. Hamilton, Judge

No. M2003- 00805-COA-R 3-CV - F iled Dece m ber 30, 2004

This a ppeal arises out of the parties’ divorce following their sec ond marria g e to ea ch other

. Th e tria l c ou rt i n t e r a lia aw ar d ed the wife $75,000 for he r contributions, in the form of pe rsonal service s to the husband’s medical prac tice, and awa rded her one- half of the equity in the home wher e the parties resided during the second ma rriag e. Husba nd appeal s the first awa rd, ar g uing that the medical pr acticewas his sepa rate property

and that the wife failed to prove any incre ase in the va lue of the pra ctice during the marria g e. He appea ls the second awar d, arg uing that the trial court e rre d b y n o t c o n s id e r in g tw o ma

r it a l de b ts w h e n it a w ar d e d h a lf o f th e e q u ity

inth e h o meto th e w if

e
. We va c a te the $7 5, 00 0 a wa

rdpe rt a ini ng to the va lueof thehu sb a nd ’s me dic a l pr a c tic e be c aus e the reis no evidenc e of the value of t he practice at the beg inning or end of the second ma

rriag e. We re mand for further procee dings the awa rd of the equityin the home bec ause the trial court f ailed to consider two marital debts, the husband’s loan to w ife of $18,500 – which she used t o b u yh er curr ent residenc e – and the couple’s debt of $10,599.12, for which they

wer e jointly

liable. On re mand, the trial court should consider inte r a lia : 1) thepu rp os e of e a c h d e bt, 2) wh ic h p arty inc ur re d th e de bt, 3) wh ic h p arty

be ne fi tte d f

ro m in c ur ri ng thede bt, a nd4) wh ic h pa rty is b e st a

bleto r e pay

thede bt. Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court Vacat ed in Par t, Re verse d in P art, and Rem anded
F RAN K G. C L EME NT , J R ., J ., delivere d the opi nion of the c ourt, in which P ATR I C I A J. C O T T RE LL , J ., joined. W I L L I AM B. C A IN , J ., filed a se parate conc urring opinion. Keith R. Peterson, Pulaski, Tennesse e, for the appe llant, Patrick Erwin Ha rtman.
J ohn Phili p Parsons, Cookeville, Tenne ssee, f or the a ppellee, D onna Wood Hartman.
OP IN ION The pa rties wer e mar

ried to ea ch other

twice. The ir first marriag e ende d in divorce in 1988. The pa rties’ a ssets from the fir st ma rr iag e we re divided pur suant to the first divorce decr ee and succe ssfully

re- titled in their separate names. One such asset was Husband’s medical pr acticewhich was a war ded to him as his separate prope rty . Following the 1988 d i v o rc e, Husband purcha sed aT i t l e t o t he hous e n eve r ch ang ed. I t r emai ned i n H us band’ s na me onl y t hr ough out t he s econd mar r i age
. 1

O ne o f t he “ot her m at t ers ” p ert ai ned t o H usband ’ s IR A

. T he IR A was awarde d t o H usband pursuant t o t he 2 fina l o rd e r a n d is no t at issu e o n a p p e a l.

T he o nl y ord er aut ho ri zi ng A D R was t he M ay 8 , 20 0 2 , ord er i n whi ch Jane Je nni ngs was d e si gnat ed as t he 3

m e d ia to r. -2- house with assets he w as aw arde d in the first divorce . There afte r, the pa rties re kindled their romanc e and began living tog ether in Husband’s ne w house. F ollowing a period of c ohabitation, the parties ag ain exchang ed vows of ma rriag e in 1992. They

continued to reside in the house Husband ha d purcha sed bef

ore the second ma

rriag e. 1
I n 1993, Wife beg an wor

king w ithout pay in Husband’s medical pra ctice. It is estimated that she worke d betwee n 30 and 60 hours a wee k for four y ear s. This continued until Husband closed his medical pra ctice in 1997. The practice was closed due to a substantial dec line in reve nue which was the r esult of Husband losing his hospital privil eg es and a substantial decline in patients.
Wife commence d this divorce ac tion in J u l yof 1999. The pa rties wer e g rante d a divorc e p u rs uant to an ag ree d order enter ed on Aug ust 1, 2000; however, a ll issues pertaining to marital assets and pr operty

wer e re serve d for f

urther he aring s. On M ay 8, 2002, the t rial court entere d an order in acc ordanc e with Tenn. R. Civ. P. 31 desig nating J ane J enning s to conduct mediation of the rema ining issues. Mediation ensu ed an d o n J une 21, 2002, a F inal Report of Mediator was f iled which re ported that the pa rt i es ap p eared a nd participated but the ca se did not settle. The re port further provided that, “The re are leg al issues involved to de termine which propert yi s marital p r o p e rt y t h a ti s s u b

j e c tt o d i v i s i o n
. U n t i l i ti s d e t e r m i n e d e x a c t l y w h i c h p r o p e rt y i s m ar i t a l p r o p e rt y, these pa rties cannot rea ch an a g ree ment.”
Th e re a ft e r, a no the r o rd e r w a s e nte re d o n N ov e mbe r 2 0, 20 02 , r e so lvi ng mor e , b ut n ot a ll, re m ai n i n g issues. The orde r stated that the pa rties had a g ree d the “Starlig ht” business was Husband’s se parate prope rty and that the pa

rties had r esolved disputed claims relative to t he per sonal property in the home. The order further stated that “the main issue” to be decided was the value of thepa rt ie s’ ma ri ta l ho me a ndthedis tribu tio n o f the e qu ity in the ho me a ndthat “ a ll o the r m a tte rs ” wer e re serve d. Howeve r, the orde r did not specify which “othe r matters” wer e re serve d. 2
The next orde r appea

ring chronolog ically in the rec ord is the Fe bruary 25, 2003, order that contains the two ruling s at issue on appe al

. T h e o rder states that the re maining issues w ere

“ c on sid e re d b y

Al te rn a tiv e Di sp uteRe so lut ion .” Th e reis, ho we ve r, no or de r or writt e n c on se nt i n the re cord e videncing the parties’ conse nt to r esolve all rema ining issues by ADR. The Statement 3 of the Evidenc e provide s a modicum of information from which we can only assume that the pa

rties ag ree d to submit the rema ining issues to the trial judg e via an informal and unorthodox evidentiary proce dure.W e do n ot kn ow t he exa ct procedur e fol l owed i n t hi s ca s e f or t her e i s no or der or a gr eement conc er ni ng s uch 4 and t here i s no verbati m t rans cri p t of t he e v id e n c e
. F ro m the l i t t l e i nfo rma t i o n avai l ab l e i n t he reco rd, i t ap p ears t he p arti es ag r eed t o al l ow t he adver s ar y t o m eet pri vat el y wi t h t he t r i al j udge and t o i nt r od uce an y an d al l ev i dence t hey d esi red, f

o l l o wi ng whi ch t he t ri al judge wo ul d m ake a rul i ng t hat was bi nd i ng on t he p art i es. T he fo regoing i s no t one o f t he A D R pro ced ures aut ho ri zed pursuant t o T enn. S. C t

. R

. 31

. M o reove r, i t i s no t i n co m p l i ance wit h t he U ni fo rm Ar bi t r at i on Act , T en n
. Code An n
. § 29- 5- 301, e t s eq. -3- The F ebrua

ry 25, 2003, order , which is the subject o f t h i s appeal, contains the following rec itation: “An Orde r filed on Nove mber 20, 2002, . . . fi n al i z ed all matters in dispute with the exception of the valuation of both the rea l and persona l ma rital property

owned by

the parties and the marital intere st into certain business re lationships.” I t then rec ites the two ruling s at i ssue. One, that the equity

in the residenc e is $3 0 , 9 7 3 , o f wh i ch Wife wa s awa rded one -half. T wo, that Husband’s me dical pra ctice should be considere d a marital asset “a s the [W ife] clea rly contributed to the ong oing succe ss of t he medical prac tice” and t hat W ife is entitled to “a distributive shareof this marital asset bec ause of [si c] he r eff

orts as an unpaid employ ee contributed to the maintenanc e a ndsu c c e ss o f s a id m e dic a l pr a c tic e .” Th e tria l cou rt fo un d the va lueof “ thi s d ist ri bu tiv e a sse t” to be $75,000 and that this sum “re prese nts some four y ear s labor without monetary compensation.” The $30,973 equit y

in the residenc e wa s based on the trial court’s f indings that Husband purcha sed the home in 1990 for $97,500 and the home had a c urre nt market va lue of $128,473. The marke t value wa s disputed. Husband had insisted the va lue was $125,000. W ife ha d insisted the value was $157,000. The judg e’s f inding wa s based on the inde pendent a ppraiser ’s opinion. As for the v a lu e o f Wi f

e ’ s c o n trib u ti o n s to th e me d ic a l p r a c ti c e , th e tria l c o u rt s tate d th a t th e a w ard of $75,000 repr esents “some four y ear s labor without monetary compensation.”
Issues
Husband raises two issues on appea l. One, whe ther the trial court err ed in awa rding $75,000 to Wi fe f or her alleg ed contribution to Husband’s medical pra ctice. T wo, whethe r the tr i al court err ed in awa

rding Wife one-ha lf of the equity in the residenc e that wa s separ ately owned by Husband and without consideration of Husband’s loan of $18,500 to Wi fe and the parties’ joint debt of $10,599.12.
Alter native Dispute Resolution
The orde r fr om which this appea l arises states that the issues wer e “conside red by Alternative Dispute Resolution.” That charac terization, howeve r, i s not corr ect be cause the dec ision-making 4
auth ority in the c a se be fo reus di d no t res t withthepa rt ie s a ndthepr oc e du ree mpl oy e d w a s n ot a re c og nize d f

orm of AD R un de r T e nn . S. Ct. R. 3 1. “ I n d isp utere so lut ionpr oc e e din g s, decisionmaking author ity rests with the parties .” (e mphasis added) Tenn. S. Ct. R. 31, Appendix “A” § 1(b). Procee dings authorized by Rule 31 are “Mediations,” “Judi cial Settlement Confer ence s,” “N onBinding Arbitrations,” “ Case Eva luations,” “Mini-Tria ls,” and “Summary J ury Trials.” Te nn. Sup. Ct. R.3 1, §§ 2, 17 , 2 0- 24 . Su c h p ro c e e din g s a re ini tiate d by a n Or de r of Re fe re nc e
. Te nn . Su p. Ct. R.31, § 2(j).T he p ro ce d ure em p l o yed sho uld no t b e c o nfused wit h a T en n. S. C t . R . 3 1 § § 2 (g) & 2 3 M i ni- T rial b ec au se 5
t hat A D R pro ceed i ng do es not co nt em p l at e a b i nd i ng rul i ng b y the “neut ral ” o r j ud ge, as was t he case here. M o reove r, a M i n i

- T r i al i s t o be pr ec ede d by a n Ag r ee d O r der t h at s h ou l d be c on s i s t en t w i t h Appen di x D t o T en n
. S. Ct

. R. 31.

Su ch a pr oce du r e i s a ppr opr i at el y e mpl oy ed i n me di at i on , a n d ot h er AD R pr oce edi n g s , t o f ac i l i t at e a r es o l u t i on 6 of t h e di s pu t e; h owe v er , i n a l l s u ch pr oce edi n g s t h e n eu t r al i s me r el y a f ac i l i t at or of di s cu s s i on s be t we en t h e par t i es a n d,
m o st i m p o rt ant l y , i s no t aut ho ri zed t o m ake a b i nd i ng rul i ng t o dis p o se of t he i ss ues i n dis p ut e. T he o nl y way such a p roce ed i ng can b ri ng c l o sur e i s when t he p art i es vo l unt ari l y a gree to set t l e t hei r di sput e. T hat i s no t t he case here and we quest i o n t he p rop ri et y o f t ri al co unsel agreei ng t o al l o w t hei r ad vers ary t o p res ent evi d ence t o t he t ri er of f act wi t ho ut kn o w i ng wh at i s b eing p rese nted wh en t he result i ng d ec i si o n b y t he co urt i s b i nd i ng o n the p arti es.

O ur previ o us cri t i ci sm i s fo und i n S m ith v . S m ith , 9 8 9 S .W .2 d 3 4 6 (T e n n . C t. A p p . 1 9 9 8 ), Ki ng v . Ki ng , N o. 7 M 2001- 00275- CO A- R3- CV , 2001 W L 158 9 131 ( T en n
. Ct

. App. D ec embe r 13, 2001) a n d Thom as v . Thom as , N o. M 2 0 0 1

- 0 1 2 2 6

- C O A

- R 3

- C V , 20 0 2 W L 1 7 8 7 9 5 0 (T enn. C t

. A p p
. A ugust 2, 20 0 2 ). T he co ncurri ng op i ni o n i n Thom as n o te d tha t t h e a p p e a l m a r k e d t h is c o u rt’s third o c c a sio n to re v ie w the 2 2 n d J u d ic ia l D istric t’s use o f a p ro c e d u re this
co urt charact eri zed as “not a goo d i d e a .” W e w e n t on t o recom m end t hat i n t he f ut ure, “ shoul d ei t her or bo t h of t he part i es propose t hi s procedur e, t r i al cour t s s houl d s i mp l y s ay no. ” Id

. at * 8. Lit i gant s and co urt s “have amp l e o p t i o ns fo r a lter n a tive d isp u te re so lutio n un d e r T e n n
. S

. C t. R

. 3 1 w itho u t ju ry-rig g ing a p ro c e d u re li k e the o n e us e d in this c a se .” Id

. a t * 8. -4- Therewas a

Rule 31 ADR proce eding conducte d in this m atter; howe ver, it was not the one that is the subject of this appea l. I t was the mediati o n authorized by the May 8, 2002, Orde r of Refer ence . The pa

rties participated in the orde red me diation, however , as som e times occ urs, the mediation did not resolve the matter s in dispute. There fore , as Rule 31 § 5 re quires, the mediator fi l ed h erfi n al re p o rto n J u n e 2 1 , 2 0 0 2 , wh i ch co n cl u d ed t h e T en n
. S

. C t

. R

. 3 1 AD R p ro ce ed i n g.
Severa l months following t h e filing of the former mediator’s final r eport, the pa rties submitt ed the rema ining issues to the t rial j udg e, who was to rende r a f inal judgme nt following the prese ntation of evidenc e by the parties. Thoug h we ha ve no way of knowing the exact proc edure the parties and the trial court empl o y ed to present evidenc e to the court, the proce dure e mploy ed constituted a benc h trial, albeit an unor thodox bench trial. Since our rec ord tells us littl e about the 5 pr oc e du ree mpl oy e d, we a ssu me the “ be nc h tria l” wa s c on du c te d p ur su a nt t o p ro c e du re s si mil ar t o those employ ed by

the same tria l judge in Thomas v. Thomas , No

. M 2 0 0 1 -0 1226-COA-R3-CV, 2002 WL 178795 0 (T en n
. C t . App. Aug ust 2, 2002), wher ein the parties waived the rig ht to be prese nt when the a dversa

ry party prese nted his or her e vidence to the trial judg e, to cr oss examine witnesses and to eve n know what e vidence the adve rsary prese nted. 6
T h i s c o u rt h a s p r e v i o u s l y c r i t i c i z e d t h e s o
- c a l l e d A D R p r o c e d u r e p r a c t i c e d i n t h e T w e n t ySecond Judi cial District an d we se e no re ason to withdraw f rom our cr

iticism. A brief

revie w of 7 the conf usion and problems re sulting fr om this unorthodox proce dure w ill ex plain why it is a bad idea. In Sm ith v . S

mi th , 989 S.W .2d 346, 348 (Tenn. Ct. App. 1998), the appellant arg ued that the same trial judg e er

red in “ re- opening the ca se” a fter issuing its decre e, conte nding that “the proce dure the parties initially ag ree d upon amounted to a type of A lternative D ispute Resolution (ADR) a kin to binding ar

bitration, with the trial court a cting as ar bitrator.” Id

. at 348. The a ppellant relied upon the Uniform Ar bitration Act, Tenn. Code Ann. § 29-5-301, e t seq., under w hich an arbitration awar d may not be modified or vac ated e x cept unde r circ umstances that we re not pre sentKi ng i nvo l ved t he same tr i al co urt and one of t he same att o rney s i n Thom as
. 8
-5- in Sm ith

. See T en n
. C o d e A n n
. § 2 9 -5 -3 1 0 , 3 1 3 an d 3 1 4

. T h i s co u rtfo u n d t h att h e p ro c e e d i n gs conducte d by

the trial court wer e ill advise d beca use they differ ed in many

important respe cts from an ar bitration authorized by

the Uniform Arb i t ra t i o n Act. “I t appea rs to us that some of the p rovisions of the Act we re a dopted as saf eg uards, to pre vent parties from being victimiz ed by the very finality that makes a

rbitration the proc edure of choic e for certain types of disputes. Thus, an ag ree ment to arbitrate m ust be in writing, T enn. Code Ann. § 29- 5-302(a ).” Id

. at 348. Not only was ther e n o wr itten ag ree ment to arbitrate , the attorne y s prese nted diffe ring acc ounts as to the nature of the purported ag ree ment. Counsel for the a ppellant testified b yaff

idavit that he and opposing counsel “ had ag ree d that the dec ision of the judgefollowing the in came ra procee ding w ould be final, and the ‘ca se would for ever be conc luded base d on his ruling.’ ” Id . at 348. Appellee ’s counse l fi le d h is o wna ff

ida vit in w hic h h e e xpla ine d th e c ir c ums ta nc e s th a t le d h im t o s ug g e st that so me me tho d o f A DRbeus e d to de c idethec a se , b ut d e nie d th a t he ha d e ve r a g re e d to waivehis ri g ht t o appea l an unfa vorable outcome. The wife, Ms. Smit h, filed an a ffidavit, in which she stated that her attorney told her that if the de cision was adve rse, the pr ocess of appellate revie w was still available

. Id . at 348. Due to the c onfused state of af fairs a ppearing in the Sm ith re c or d, thi s c ou rt had li ttle option but to f

in d th a t e v e r y o n e h a d a g r e e d th a t “ th e p r io r h e ar in g h e ld in c h a mb e r s b e tw een the Co u rt an d th e p arti e s a n d th e Co u rt' s ru li n g b a s e d o n th a t h e ar in g , w o u ldb e h eld do novo (sic).” T h u s , i twa s re v i ew ed b y

t h i s co u rtas an ap p ea l fr o ma b en ch tri al , n o tfr o man AD R p ro ce ed i n g. The ill advi s ed p ractice a nd resulting confusion continued in King v. King , M2 00 1- 00 27 5- C0A -R 3- CV , 2 00 1 WL 15 89 13 1 a t *3 (T e nn . Ct . A pp . D e c . 1 3, 20 01 ), wh e re in this court c onsidered a

proce dure ve ry

simil ar t o t h e o n e above and that used her e. I n King we 8 determined that the unorthodox proce dure was not a mediation, as was arg ued byo n e p ar t y , but in st ead "an agreed- u p o n m e t h o d o f pr esen ti ng evi den ce t o t he t ri al c ou rt ." Id . at *3. Simil ar problems ar ose once ag ain from the same trial court in Thomas v. Thomas

. Due to the continuing confusion conc erning the unce rtainty as to the type of proce dure that had bee n employ ed in the trial c ou rt , me diatio n o r b e nc h tria l, the c ou rt c ou c he d it s ruli ng a s f

oll ow s:
I f, in fac t, the parties be low simplyag ree d to an alternative method for g etting e vid e nc e be fo re the tria l cou rt up on wh ic h th e c ou rt wa s to ba se its ru lin g , th e re su lt of t hat agr eeme nt was a waiver of t he right t o prese nt additional rele vant testimony throug h other witnesse s with know ledg e of the fac ts, the rig ht to be prese nt when the other pa rty test i fi ed , an d the rig ht to cross-examination, all of which a re w aivable. Although the t ri al court appare ntly authorized court r eporte rs to be pre sent at the separ ate pr esentation of eac h party , neither pa rty took advantage o f t h is offer . The combination of this decision and the waiver of the right to be pre sent during the other party ' s testimony resulted in ne ither party knowing the details of the ot h er 's testimony , even a fter- the fa ct, and the subse quent inability to preserve that testimony for a ppellate r eview e ither throug h a tra nscript or a statement of the e vidence

.T h e c o u rt w e n t o n to e x p la in: 9 T he procee di ng s au t hor i zed by Rul e 31 i nclud e, am ong ot her s , medi at i on an d ju di ci al
s et t l ement conf

er enc e. T enn
. R

. S up. C t

. 3 1 § 2. M edi at i on i s "an i nf ormal proces s i n w hi ch a n eut r al pers on, ca l l ed a med i at or, conduct s di s cus s i ons amo ng t he di s put i ng part i es des i gn ed t o ena bl e t hem to re a c h a m u tua lly a c c e p ta b le a g re e m e n t a m o n g the m se lve s o n a ll o r a n y p a rt o f t h e issu e s in d isp u te ." T enn
. R. Sup. Ct

. 31 § 2(f )

. A "judi ci al set t l ement co nf er enc e" i s " a m edi at i on conduc t ed by a j udi ci al
o ff ic e r o the r th a n the ju d g e b e fo re w h o m the c a se w ill b e trie d ." T e n n
. R

. S u p . C t. 3 1 § 2 (e ). [fo o tno te o m itt e d ] A s the d e finiti o n s m a k e c le a r, a m e d ia tio n , in c lud ing o n e c o n d u c te d b y a j u d ic ia l o ff ic e r, is
a s et t l ement procedur e; i t s pur po s e i s t o hel p t he part i es r es ol ve t hei r d i sp ute b y a gr eement , as an al t ernat i ve t o res o l ut i o n t hrough t he well

- est ab l i shed proc ed ures go verni ng l i t i gat i o n. N o t hi ng i n t he d efi nit i o n o f

m ed i ati o n o r elsew he re in R ule 3 1 au t ho rizes a m ed i ato r, i nc l ud i ng a ju d ge ac t i ng as a m ed i at o r, t o res o l ve t he d i sput e b y i m p o si ng hi s o r her judgm ent as t o t he co rr ect res o l ut i o n. [ci t at i o ns o m itt e d ]. If the p a rtie s a re u n a b le in m e d ia tio n to re a c h a n a g re e a b le so lutio n , t h e y re ta in th e ir rig h ts to ha v e the c o u rts re so lve the ir d isp u te thr o u g h li tiga tio n
. Id

. a t * 3. -6- The p ivotal question, then, is whether the parties, throug h counsel, a g ree d: (1) to a " mediation" proce ss w ith the expectation that ag ree ment of the pa rties was ne c e ssa ry to r e so lut ion ; or (2 ) to an u nu su a l me tho d o f p re se nti ng e vid e nc e , w hil e still operating in the litigation model, with the expectation the court would resolve the dispute based upon the evidenc e pre sented in this unusual proce dure.
The re cord doe s not include a formal written agre ement or a g ree d order o u t l i n i n g t h e s p ec i fi cs o f t h e p ar t i es ' agr ee m en t

. [ fo o t n o t e o m i t t ed ] T h e t ri al co u rt 's final orde r sets out all we k n o w ab o u t t h e ag ree ment. That orde r is silent on the question of whethe r the pa rties ag ree d to r esolution by ag ree ment throug h mediation or wh e the r the y

a g re e d th a t th e c ou rt

wo uldre so lvethe ir

dis pu te , b ut c e rt a in alterations in presentation of evide nce w ould be made. H oweve r, the langua g e used by the trial court sug g ests that the parties, throug h their counse l, were awa re that the se p ar a t e h e ar i n g s w i t h t h e tr i a l c o u rtw e r e " t o o f f e r t e s t i m o n y

. . . p r e s e n te xh i b its , and other documentation."
Thomas , 2002 WL

1787950 at *3-4. 9
Whil e we encour age courts and litig ants to eng ag e in alternative dispute re solution proce eding s, such proc eeding s should be conducte d in acc ordanc e with the proc edure s established un de r T e nn . S. Ct. R. 3 1, e sp e c ia lly wh e n the tria l judg e is a p art ic ipant. Th e pu rp os e of Te nn . S. Ct. R. 31 i s stated in the Prea mble of Appe ndix “A” :

These r ules areintended to instill and promote pu b lic confide nce in the Alterative Dispute Resolution process under Tenne ssee Supre me Court Rule 31 and to be a gui d e t o Neutra ls serving under Rule 31. As w ith other forms of judicia l sy stem activity , Rule 31 proce eding s must be built on publ ic u n d erstanding and confide nce.-7-

Conducting A DR pursu an t t o T en n . S. Ct . R. 31 provides established proc edure s for the parties and the neutra l or the trial judge to f ollow and aff

ords the parties the safe g uards intende d by tho se wh o c ra ft e d T e nn e sse e ’s a lte rn a tiv e dis pu te re so lut ionstand ard s a ndpr oc e du re s.
We s ub mit , w ith a ll du e re sp e c t, that the so -c a lle d “ Al te rn a tiv e Di sp uteRe so lut ion ” pr oc e ss e mpl oy e d b y

thetria l c ou rt

is not un de rs too d by the pu bli c or , for that matte r, the ir

c ou ns e l, a s Smith, King and Thomas reve al. More i m p ortantly , we submit that it does not foster conf idence in the judicial sy stem. For the fore g oing r easons, werec ommend that the unorthod ox prac tice be discontinued and re place d by one of sever al opt ions aff orded under Tenn. S. Ct . R. 31 or by litigation conducte d in acc ordanc e with g ener ally acc epted pr actice s and rules of proce dure.
Stand ard of Review
Ha vin g de te rm ine d th a t w hat tr a ns pir e d inthe tria l cou rt wa s n ot an A DRpr oc e e din g bu t a be nc h tria l, w e sh a ll c on du c t ou r r e vie w o f the pr oc e e din g s inthetria l c ourt pu rsu ant to T e nn . R. App. P. 13. A trial court’s decision with r espec t to division of marital prope rty is reviewe d de novo with a pre sumption of corre ctness as to fa ctual dete rminations unless the evidenc e pre ponderates otherwise. T enn. R. App. P. 13(d), Mi ller v. Miller , 81 S.W . 3d 771, 774 (Tenn. Ct. App. 2001). So l on g a s th e fa c ts d o n ot p re po nd e rate a g a ins t th e fi nd ing of thetria l c ou rt , th e app e llate c ou rt mus t aff irm. Denton v. D enton , 33 S.W .3d 229, 231 (Tenn. Ct. App. 2000).
What c on sti tut e s ma

ri ta l pr op e rty

a ndtheva lueof a pa

rty ’s int e re st in mari ta l pr op e rty is a question of fac t. Po we ll v . P owe ll , 124 S.W . 3d 100, 103 (Tenn. Ct. App. 2003). In adjudicating the rig hts of parties in a divor ce, trial courts ar e entitled to broa d discretion, Cutsinger v. Cutsi nger , 917 S.W .2d 238, 243 (Tenn. Ct. App. 1995), and such discretion is entitled to gr eat we ight. Po we ll at 103. Equitable distribution of marital prope rty is not a mecha nical dec ision, and such a de cision is not necessa

rily inequitable bec ause it is not prec isely equal. Br

own v . B ro wn , 913 S.W .2d 163, 168 (Tenn. Ct. App. 1994).
A t ri a l c ou rt is a ff or de d g re a t lati tud e in the va luatio n of mari ta l pro pe rty , th us a va luewi thi n therang e of

va lue s ine vid e nc e maybe up he ld e ve n if thetria l c ou rt

do e s n ot e xpla in the pr e c ise method used to arrive at the va lue it has assig ned. Ray v . Ray, 916 S.W .2d 469, 470 (Tenn. Ct. App. 1995). On the othe r hand, a valuation can be set a side eve n though it is within the rang e of pr oof, if the valuation is ag ainst the preponde ranc e of the evidenc e. Loyd v. Loyd , 860 S.W . 2d 409, 411 (Tenn. Ct. App. 1993).
A trial court’s determination reg arding the cr edibili t y o f wit nesses is ac corde d defe renc e since the tria l court is in the best position to make this de termination. Po we ll at 104-105. Abse nt c le ar andc on vin c ing e vid e nc e to the c on tr ary , the tria l cou rt ’s de c isi on s o n w itn e ss c re dib ili ty wi ll not be re viewed. Id . at 105.H e pr es ent s four ar gu ment s
. O ne, he as s er t s t hat t he cour t er red in f i ndi ng t hat t he prac t i ce was a mar i t al 10

ass et

. T wo , he co nt end s t hat t here i s no evi d ence o f t he val ue o f

t he p ract i ce at t he b egi nni ng of t he second m arri age or of an i ncr eas e i n v al ue of

t he prac t i ce and t hat i ns t ead t he ev i dence sh owed t hat t he prac t i ce was cl ose d becaus e i t was d o i ng s o ba d l y
. T hi rd, he co nt end s t hat t he co urt ’ s award was not ba se d o n t he i ncrease i n val ue o f t he p ract i ce, but bas ed on t he un com pens at ed t i me W i fe wor ked i n t he prac t i ce. Four t h, he as s er t s t he cour t er r ed by not cons i deri ng t hat W i fe e nj oy ed t he f

r ui t s of t he prac t i ce dur i ng t he marr i age
.
H e w a s a w a rd e d the m e d ic a l p ra c tice a s h is se p a ra te p ro p e rty in th e fi rs t d ivo rc e
. 11
-8- Husb and’s Medical P ractice
Husband c halleng es the trial c ourt’s cha rac terization of his medical pra ctice a s a marital a s set and the a war d of $75,000 to Wife based on he r contributions to the practice. Husband owned the 10
me dic a l pr a c tic e prior to the se c on d ma rria g e a ndhe c on te nd s th e me dic a l pr a c tic e re ma ine d h is

11
se pa rate pr op e rty

du ri ng themarria g e . H e fu rthe r c on te nd s tha t an inc re a se in the va lueof his separ ate pr operty

– his medical pra ctice – may only be considere d marital prope rty upon a finding that Wife made a

“substantial contribution” that c an be quantified. He arg ues that the only evidenc e of Wife’s contribution to the prac tice was testimony that she worke d approximately 30 to 60 hours per wee k from 1992 to 1997; y et, there is no e vidence of the va lue of the pr acticeat the beg inning and the e nd of the sec ond marria g e. Whe n a sp ou se se e ks to i nc lud e pr op e rty in the mari ta l e state that th e oth e r s po us e c la ims is se pa rate , th e sp ou se se e kin g to inc lud e the pr op e rty ha s the bu rd e n of pr ov ing that th e pr op e rty fi ts within the s tatutory

definition of marital prope rty

. Kin ar d v . Ki na rd , 986 S.W . 2d 220, 232 (Tenn. Ct. App. 1998). Thus, “as a threshold matter, property must fir st qua lify as marital prope rty under T.C.A. § 36-4-12 1 (b )( 1)(A) or T.C.A. § 36-4- 121(b)( 1)(B ) bef ore it can be subjec t to the court’s power s of equitable divisi on under T.C.A. § 36- 4-121(a )(1) .” Cutsinger , 917 S.W . 2d at 241. Our c ou rt s d o n ot h a ve auth ority to make a n e qu ita

ble div isi on of

thepr op e rty

if theno no wn e r s po us e cannot pr ove that the pr operty at issue is marital prope rty

. Id . at 241. An incre ase in the va lue of separ ate pr operty

and the income derive d from it c an be treated as marital property if the nonowne r s p o u s e m a d e s u b s t a n t i a l c o n tr i b u t i o n s t o t h e p r e s e r v a t i o n a n d ap p r e c i a t i o n o f t h e s e p ar a t e p r o p e rt y. Te nn . Co de An n. § 3 6- 4- 12 1( b) (1 )( B ); Cohen v. Cohen , 937 S.W . 2 d 8 2 3 , 832 (Tenn. 1996) ; Harrison v. Harrison , 912 S.W . 2d 124, 126 (Tenn. 1995) . Mari t al p roperty is defined in Te nn. C o d e A n n
. § 3 6 -4 -1 2 1 t o m ea n an d i n cl u d e t h e f o l l o wi n g: (1)( A) " Marital prope rty " me ans all re al and pe rsonal prope rty , both t an gi b l e and intang ible, acquir ed by

either or both spouses during the course of the mar riag e up to the date of the final divorc e hea ring and owne d by

either or both spouses as of the date of filing of a complaint for divorce , except in the case of fr audulent conve y ance in anticipation of filing , and including any property to which a rig ht w as acquir ed up to the date of the fi na l divo rc e he ari ng , an d va lue d as of a date a s nea r as re a so na

bly possible to the final divorce hearing date. . .

. All marital property shall be value d as of a date as ne ar a s possible to the date of entry of the orde r finally

dividing the m ar i t a l p r o p e rt y.-9-

(B ) " M ar it a l p r o p e rty " in c lu d e s in c o mef r o m, a n d a n y

in c r e a s e inv a lu e d u r in g the marria g e of

, pr op e rty de te rm ine d to be se pa rate pr op e rty in a c cord ance with subdivision (b)(2) if e ach p artysubstantially contributed to its preservation and appre ciation, and the va lue of ve sted and unve sted pen s i o n , v est ed and unve sted stock option rights, re tirement or other fring e bene fit rig hts relating to employ ment that acc rued during the period of the marria g e.
* * * * (D) A s used in this subse ct ion, "substantial contribution" may include, but not be limit ed to, the dire ct or indirect contribution of a spouse as homemaker , wag e ea rner , pare nt or family

financial manag er, tog ether with such other f

actor s as the court having jurisdiction thereof may determine. A finding that a no n o wn ers p o u s e’ s co n tri b u t i o n i s “s u b s t an t i al ” r eq u i re s that the contribution be re al and sig nificant. Mi tts v . Mitt s , 39 S.W.3 d 142 , 145 (T e nn . Ct . A pp . 2 00 0) ; Denton v. D enton , 33 S.W . 3d 229, 236 (Tenn. Ct. App. 2000). Whether substantial contributions to the prese rvation and appr eciation of separ ate pr operty have be en made by

a spouse is a que stion of fac t. Sherrill v. Sh e rri ll , 831 S.W .2d 293, 295 (Tenn. Ct. App. 1992).
The nonowne r spouse who c laims an incre ase in the se parat e property must prove that the value of the sepa rate property

incre ased during the marr i age. It thus follows that the value of the property immediately

befor e the mar

riag e and at the time of the divorcemust be proven. Swett v. Swett, M1998-00961-COA- R3-CV, 2002 WL 1389614 at *10 (Te nn. Ct. App. Jun e2 7 , 2 002) (c iting Garfinkel v. Garfinkel , 94 5 S.W 2d 74 4, 74 7 ( Te nn . Ct . A pp . 1 99 6) ; Cutsinger , 917 S.W . 2d at 241. With ou t pro of of the va lue of the se pa rate a sse t bef

or e the marria g e , the tria l c ou rt ha s n o le g iti mate basis on which to base an appre ciation of the a sset and ther efor e an e quitable distribution of claimed appre ciation cannot be made. Cutsinger a t 2 4 1 ( ci t i n g Bryson v. Bry son , N o
. 8 8

- 9 4

- I I , 1 9 8 8 WL 87685 at *3 (Te nn. Ct. App. Aug . 26, 1988)). “ One who c laims an interest in the incre ase in va lue of t he se p ar a tep r o p e rty

o f h is s p o u s e h a s th e b u r d e n o f s h o w in g th e a mo u n t o f

s u c h in cre ase.” Bryson at *3.
I n C u t s inger

the wife beg an wor

king in he r husband’ s chiropra ctic clinic shortly afte r the c ou plewa s ma

rrie d a ndc on tin ue d to do so thr ou g ho ut the marria g e . Sh e wa s p a id a sa lary wh ile working at the clinic. Id . at 239. The husband became ill and had to leav e t h e practice for app ro xima te ly

on e y e ar d uring wh ic h ti me thewi fec on tin ue d to wo rk in the pr a c tice and ke pt i t running by obtaining the service s of ot her c hiroprac tors to treat the patients. Id. at 239. She ar g ued that her c ontributions entitl ed her to part of the pur chase price when the pr acticewas sold. The trial c ou rt a wa rd e d the wi fe a n int e re st in the pr a c tic e , bu t thi s c ou rt re ve rs e d, fi nd ing that the wi fedid not offe r sufficient proof a s to the value of the business prior to the marriag e. Id. a t 24 3. He r o nly proof of appre ciation was that when the c ouple was first married the prac tice served 4-5 patients per day , but that when the c ouple divorce d 35-40 patients per day wer e being treated. Id. at 242. She asserted that this increa se in patients proved an incre ase in va lue. This court, howe ver, f ound that the r e w a s n o e v i d e n c e t h a t t h e “ a c t u a l m o n e t ar y v a l u e o f t h e h u s b a n d ’ s p r a c t i c e h a d r i se n toIt w a s a d d iti o n a lly n o te d th a t th e w ife h a d b e e n c o m p e n sa te d fo r h e r w o rk in the p ra c tice

. C ut s i ng er a t 243. 12
-10- c or re sp on d w iththeinc re a se in the nu mbe r of patie nts ” a nd wa s unw ill ing to inf e r that th e bu sin e ss had apprec iated jus t beca

use i t was treating more patients. Id

. 24 2. I n re ve rs ing thetria l c ou rt , th is court said:
With ou t su c h f

un da me nta l in fo rm a tio n, Wif e ' s in te re st i n th e pu rc has e price c ou ld not be made w ithout speculati o n as to the exact amount of appr eciation of the prac tice attributable to her services. Ac cording ly , we f ind that the trial court e rre d in awar ding w ife a

30% intere st in the purchase price of Husband' s prac tice.
Id. at 242. 12
The rec ord befor e us is mode st. Thereis no verbatim transc ript of the proc eeding s. There is however

a br i ef S t at em ent of the Evide nce, f our pag es, and of

course the final orde r. The State me nt o f the Ev ide nc e te lls us that:
Therewas a lso testimonyas to Patrick Erw in Hartman’ s medical p ra cti ce. D onna Woods Hartman worke d at this medical pra ctice durin g t h e co u rse of the parties se c on d ma

rriage. Ho we ve r P a tric k E rw in H art ma n c los e d h is m e dic a l pr a c tic e in November

1997 due to a loss of hospital privileg es as we ll as a decl i n i n g prac tice. At the tim e he c los e d th e me dic a l pr a c tic e , h e a ndDo nn a Woo ds Ha

rt ma n w e resti ll marrie d and she was awa re of the rea sons f

or the closing of the medi ca l p ra cti ce. Donna Woods Hartman filed for divorce J uly 27, 1999, and som e 20 months after the closing of the medic al pra ctice.
* * * * J udg e Ji m T. Hamilton also found in the Orde r date d Fe bruary 25, 2003, that the medica l prac tice wa s a m arital asset and awarde d $75,000.00, to the plaintiff for he r 4 y e ars of

la bo r, 19 92 thr ou g h 1 99 7, wi tho ut r e c e ivi ng a sala ry or a n h ou rl y wag e.
Th e pe rt ine nt p art

of thefi na l or de r r e a ds a s f

oll ow s:
It further appea red to the Court that the medical pra ctice w hich exist ed thr ou g ho ut the ma

rria g e sh ou ld b e c on sid e re d a mari ta l a sse t a s th e Pla int if f c le arl y contributed to the ong oing suc cess of the medica l prac tice. The Court further finds that the Plaintiff is e ntitled to a distributi ve shar e of this marital asset because of her e fforts as an unpaid e mploy ee c ontributed to the maintenanc e and suc cess of said medica l prac tice. The Court finds that t h e v al ue of this distributive asset awa rded to the Plaintiff is S eventy -five T housand ($7 5 , 0 0 0 ) Doll ars, whic h repr esents some four y ear s labor without monetary compensation beg inning in 1993, af ter the pa rt i es-11-

rema rried in 1992, throug h 1997, when the D efe ndant clos ed h is medical off ice without the knowledg e or c onsent of the Plaintiff and w ithout any fore warning to he r. Testimony

offe red at [ sic] in t hese pr ocee dings show that the Def endant wa s advised by h is CP A to s e t u p s o mety p e o f a c c o u n t f

o r th e Pl a in ti f

f a s s h e w as wo rking so me 30 -6 0 ho ur s pe r we e k. Ho we ve r, the De fe nd a nt ne ve r f oll ow e d th is advise [sic] s aying, “ her ke ep is enoug h.” The Court f inds that this statement is not sufficie nt.”
The modest re cord be fore us fails to establish an evide ntiary link between Wife’ s service s to Husband’s medic al pra ctice and an aw ard of $75,000

. Thereis no evidence of the va lue of the prac tice at the time of

the sec ond marria g e and the re is no evide nce of the value of

the pra ctice at the time of the second divorce

. Thus, there is no evidence that Wife’s servic es caused an inc rea se in the value of Husban d ’s m ed i ca l prac tice. More over, f rom the limited recor d befor e us, all we can determine is that the prac tice wa s closed long befor e the divorce complaint was filed and that if the remna nts of the pra ctice ha d any value it was in wor se financ ial shape tha n when the pa rties married for the se cond time in 1992. To justify an aw ard to Wife for working 30 to 60 hours per wee k in the prac tice fr om 1992 to 1997, there must be ev i d en ce that such contributions “substantially contributed to . . . [the] prese rvation and a

pprec iation” of Husband’s m e d ic al p r a c ti c e , T e n n
. Co d eA n n
. § 3 6

- 4-121(b) (1)( B) , and there m ust be evidenc e of the value of such contributions. See Garfinkel , 945 S.W 2d at 747; Cutsinger , 917 S.W . 2d at 241. The re cord be fore us is devoid of any proof that Wife’s se rvice s contributed to an increa se i n the value of t he medical prac tice. We, there fore , find that the evide nce preponde rate s ag ains t an y awa rd to Wife for he r contributions to Husband’s medic al pra ctice and vacate the aw ard of

$75,000 to Wi fe.
Division of E qui ty in Homeand All ocation of Marital Debts
Husb a n d a s s e rts th a t th e tria l c o u rt f a il e d to ma

k e a n e q u it ab led is trib u ti o n o f th e ma r it al assets and marital debts. Specifica lly , he asserts that the trial court e rre d by awa rding one half

of the e qu ity in the ho me to Wife wi tho ut a llo c a tin g re sp on sib ili ty fo r t wo mari ta l de bts . O ne of thede bts is an $18,500 loan Husband provided to his Wife near the end of the second marria g e to enable he r to purcha se a home to be her re s i d en ce fo l lowing the divorce . The other is a $10,599.12 debt for which the pa

rties ar e jointly

liable.
“M ar it a l d e b ts ” ar e a ll d e b ts in c u rr e d b y e it h e r o r b o th s p o u s e s d u r in g th e c o u r s e o f the marria g e up to the date of the final divorc e hea

ring

. Al for d v . A lfo rd , 120 S.W .3d 810, 813 (Tenn. 2003). The Stateme nt of the Evidence reve als that Husband submitted evidenc e conc erning the two mari ta l de bts . It r e a ds in p e rt ine nt p art :

The defe ndant, Patrick Erwin Hartman, Sr., further testified that the parties have a joint loan at First Fa

rmer’ s and Mer chants B ank with an a pproxi mate balance of $10,599.12 as of September 2, 2001 plus a ccr ued interest. The de fendant asked-12-

the court to consider this note when making its de cision to the interest of the plaintiff in the rea l p ro p er t y l o ca ted at Clifton Drive [the marital re sidence ]. A copy of the loan s tate me nt w a s e xhibi te d b y thede fe nd a nt.
The de fendant, Patrick Erwin Hartman, Sr., also testified that he had made a pe rs on a l lo a n o f $ 18 ,5 00 .0 0 to theplaint if f p ri or to the div or c e so a s to a llo w h e r t o pu rc ha se a ho me in F rank lin , Te nn e sse e
. Th e De fe nd a nt a lso re qu e ste d th e c ou rt to c o n s id e r th is a mo u n t i n c o n s id e r in g th e d iv is io n a s to th e [m ar it a l r e s id e n c e ]. Thoug h evidenc e wa s prese nted conce rning the two debts, the final or der doe s not mention either de bt. Moreove r, there is nothing in the rec ord to indicate that the debts wer e conside red by the trial court it was making a distribution o f t h e m ar i tal assets and none of the pre vious orders allocate the re sponsibili ty for the de bts.
The re levant fina ncial liabiliti es of eac h of the parties is one of many rele vant fac tors for the co u rt to consider in making an equitable division of marital property

. See T e n n
. Co d e A nn. § 36-4-121( c)( 2). To provide for an equitable dis t ri bution of marital assets whe n there are marital de bts , o ur c ou rt s a reto c on sid e r f

ou r f a c tor s: (1) the debt' s purpose; (2) which party incurre d the debt; (3) which party benef itted from incur

ring the debt; and (4) which party is best able to re pay

the debt. Mo nd

e lli , 78 0 S. W.2 d at 77 3. A c are fu l app lic a tio n o f the se fa c to rs will i ns ur e thefair e st possible allocation of de bt. I t will also protect the spouse who did not incur the de bt from bea ring responsibilityfor de bts that are the result of persona l excesses of the other spouse.
Al for d , 1 2 0 S

. W

. 3 d at8 1 4 (c i t i n g Mo nd e lli v . H owa rd , 780 S.W .2d 769 (Tenn. Ct. App. 1989))

. The re cord be fore us is sim ilar to that in Al for d wher ein the court found the re cord de ficient with respe ct t o two of the Mo nd e lli fa c tor s. Whil e fi nd ing it c le ar that th e wi feinc ur re d th e de bts and that the husba nd was in a be t t er fi nancia l positi on to repay the debts, the Al

for d court noted there was “ not sufficient e vidence in the rec ord indicating the purpose of the debts or who be nefitted from incur

ring the debt.” Id. at 814. Ba sed on t hat finding , the court remande d the ca se to the trial court

t o d e t e r m i n e ho w th e ma ri t al d eb t s ar e to b e al l o ca t ed b et we en t h es e pa rt i es
. In making this determination, the trial court should be g uided by the Mo nd

e lli fac tors and should requir e the pa

rties to prese nt more evide nce r elevant to the fac tors set out abo ve. We n otethat th e tria l c ou rt ha s b ro a d d isc re tio n a ndsh ou ld d o e qu ity in allocating debt as one part of the overall distribution of marital property . Be cause the rele vant financ ial liabiliti es of eac h of the parties is one of many rele vant fa ctors for the court to consider in making an equitable division of marital property , on rema nd-13-

the t ri a l c o u rt s h o u ldr e c o n s id e r it s e q u it ab led is trib u ti o n o f th e p arti e s ' ma

r it al property

. See Tenn. Code Ann. § 36- 4-121(c )(2)

. Id. at 814.
Whil e the e vidence fully supports the trial court’s finding that the equity in the marital residenc e was $30,973, the re cord f ails to establish that the four Mo nd e lli fac tors wer e conside red in allocating the marital de bts or in making an equitable division of marital prope rty . Moreove r, the rec ord fa i l s to establish that the two marital debts we re a llocated. Ac cording ly , we r ever se and re ma ndfo r f

urthe r pr oc e e din g s th e e qu ita blediv isi onof

themari ta l pr op e rty , s pe c if ic a lly thee qu ity in the marital re sidence and the two marital debts at issue.
In Conclu sion
This matter is rema nded to the t rial court for further proc eeding s consistent with this opi nion a n d c o s t s o f

ap p e a l ar e a s s e s s e d a g a i n s tt h e p art i e s e q u a l l y.

___________________________________ FRANK G. CLEMENT, JR ., J UDGE