## IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE August 20, 2003 Session ANGELA D. ( FEZELL) TAYLOR v. DOU GLAS W. FEZ ELL Direct Appeal from the Chancery Court for Gr eene County No. 98000057 Hon. Thomas R. Frierson, II., Judge

FILED NOVEMBER 13, 2003 No. E2002-02937-COA-R3-CV

In post -divorce action by husband, the Trial Court refused to void trust provision in M arital Dissolutio n Agreement and calcul ated child support . Husband appealed, we af

firm.
Tenn. R. App.P.3 Appeal as of Right ; Judgme nt of the Cha

ncery Court Affirm

ed.

H ERSCHEL 

### P ICKENS 

### F RANKS 

### , J. delivered the opinion of the cour t, in which H OUSTON 

### M. G ODDARD 

### , P.J., and D. M ICHAEL 

### S WINEY 

### , J., joined.

John P. Chiles, Kingspo

rt, Tenne ssee, and Thomas F . Bloom, Nashville , Tennes see, for Appellan t. C. Dwaine Evans, Morristown, Tennessee, for Appellee

.

OPINION

The husban d file d this post- divorc e act ion i n August 2001, se eking equalparent ing time, reduction in child support and seeking a determination that the Trust Agreem ent in the Marital Dissol utio n Agreemen t (“MDA”) be decl ared vo id bec ause i t was c hild support basedupon a hypothetical percenta ge of f uture income, and did not comply with t

he chi ld supp ort g uidel ines . The mother fi led a

count er-c lai m that

the f athe r had wil lfully ref

used t o fund the trust , not payi ng the proper amo unt of child support, and she asked for attorney’s fees.

The parties had divorced in 1999, and in their Marital Dissolution Agreem en t the mother was designated as primaryresidential custodian of t he two m inor children, ages 5 and 3 on the date of divorce. The father would havevisitati on time more than the standard am ount contemp lated1 Father ’s 2001 tax ret urn shows t

hat his income in 2001 wa s actually higher than in 1999 or 2000. 

### -2- by the Child Suppo rt Guidelines. It was agreed that the child support would b e $1,300.00 p er month, and additionally, the parties agreed the Father would make con tributions to a trust to be est abli she d for the ben efit of the children. T he M DA set forth the term s of the Tru st Agreem ent.

At the ti me of the divorce, the parties owned a business, Professional Vending Services , Inc., (PVS), which they had purchas ed in 1989 with Wife’s f ather. He sold his interest to the parties in 1994. The comp any buys vending machines and aux iliary equipment, and p laces and services them in commerci al l ocations. It is un disput

ed tha t PVS is a

very capi tal -intensi ve business, and a proper valuationof t

he busi ness was a major iss ue at the t ime of the d ivorc e. The fi nal a gree ment between the parties was that t

he fat her would conti nue to be th e sol e st ockhold er and presi dent of the c om pan y, and the mot

her would be paid $310,000 .00 for her one-half share. The mother testified that she agreed to accept less cash than the bu siness w as actually wo rth in exchang e for the t rust benef it to go to t

he chil dren. Her te sti mony is not c ontra dicted.

The purposes of the trust are “only for medical emergency expenses, educational expenses, and/o r for

eit her chi ld t o use towards a d own payment for t he purcha se of

a home af

ter the chil d(ren) reaches age twenty-one.” The trust is funded from a percentage of the net corp orate pro fits of PV S, Inc., w ith the percen tage to be in crea sed f or each tax year through 2002, or w hen the eldest child turns 18 or gr aduat es f rom high school . At t

hat po int, the contr

ibutions r emaine d at a

maximum of 32% of thenet p rofi ts f rom PVS. The pare nts wer e desi gnat ed as co-t rust ees and had to agree on any disburs emen ts from the trust. If a child dies before th e trust term inates, then h is or her sh are wo uld be distributed to the other child. The tr ust wil l be p aid ou t one- fourt h to a chil d upon at

tai ning a ge 21, another one-fourth at age 25, and the balance at age 30.

Mother asse rts that

converting PVS to C corp s tat us and th e res ulti ng remova l of company earnings from Father’s incom e was d one in co njunction with his attem pt to redu ce child suppo rt, and she fu rther con tends that by accumul ati ng ret aine d earni ngs f rom $9,341. 00 to $61 ,498.00 in 200 1 de mons tr at ed th e f at he r’ s a ttemp t to reduce his inc ome in antic ipati on of the c hild support hearing. However, the mother presented no ev idenc e to c ontra dict the t esti mony of the account antand t

he tax prepar er t

hat t he company ’s ea

rni ngs were no t excessive, and that PVS w as severely under capitalized an d that legitimate bu siness pu rposes necessitate d th e changes made to imp rov e the fin ancia l health of the c om pan y.

The Trial Co urt foun d that the father’ s actions w ere taken for legit im ate business purposes and at the adv ice of coun sel, but this did not d emo nstrate an y act ua l r ed uc ti on i n hi s i nc ome th at wou ld justifya reduction in his child support obligations. The Trial Court imputed the total in co me of PVS for 19 99 and 2000 to t he father , al thoughhe ac tual ly rece ived o nly a fr action of the in co me shown on th e tax retur ns. Most

of t he inc ome was ret aine d in t he bus iness; h owever, t he deci sions on sal ary and company earnings were so lely within his co ntrol. Th e Cou rt did not im pute the corporate income for 200 1 to t he father , af

ter PVS changed to a C cor poration. 1 The Court

### -3-

averaged the f

athe r’s totalincome f

or 1999, 2000 and 20 01, w hich compu ted to an average annual in co me of $107 ,433.0 0. This ca lculates to a sup port ob ligatio n of $2, 01 2.00 per month under

the Guidelines. The Court credited $435 .42 per month to adjus t f or thefather’s increased parenting ti me, with the net result of $1576.58 per m onth child support.

W ith respect to the trust est ablished in the MDA , the Trial Cour t ruled that it wa s valid as a term of the p roperty settlement an d wa s not to be co nstrued as child sup port. Accordingly, it was not subject to the child support rules. Arrearages for t he failure to make the contributions to the trust were assessed against the f ather in the amount of $21,014 .48. Finally, the C ourt de nied Mother’s request for attorney fees

.

The fat her’s primary ar gument i s that t he tr ust i s void becaus e it is c a lculated based upon future, rather than present income, and d oes not state a sum certain amount.

Agree men ts to extend a par ent’ s obli gation be yond t he le gal dutyof

support as defined by statute, are enforceable in court under principles of contract l aw. Wendel l v. Sovran Bank/Cen tral South, 780 S.W.2d 372, 374, (Tenn. Ct . App. 1989) . I n Nob le v. Stubb lefield , 755 S.W.2d 454 (Tenn. Ct. App . 1988 ), a trust wa s established for th e use and benefit of the wife as a part of t he divorce agreem ent, butthe document did not contain t he word “al imony” or “suppo rt” or the ir e quival ent. The ex-husba nd sought

to ha ve thetrust terminated based upon a change in the ex-w ife’s circumstances, conte nding that it was peri odic ali mony and theref ore modifiable by the court. This Court held that the trus t was s et up as a repla cement for t he gove rnmentfunds she had forfeited upon her marriage, and we co nstrued the trust as a part o f her over all property settlement, which would no t be modified upon “a change of

cir cumsta nces” . This caseis i nstr ucti ve on the iss ue before us. The st arti ng poi nt in con stru ing a docum ent is to ascertain the intent of the parties t o the agreement. Plante rs Gin Co. v. Federal Com press & Warehouse Com pany, Inc., 78 S.W .3d 885, 890 (Tenn. 2002 ). If the language is clear and u nam biguou s, then its interpr etation is a ques tion of law , and the literal m eaning of t he language controls the dispute. Perry v. Sl oan , 277 S.W .2d 355, 360 (Tenn. 1955 ).

There is no a mb iguity in the portion of the M DA in dispute. T he docu men t clearly creates a trust for the chil dren which cl earl y ext ends wel l bey ond the leg al dut y of suppo rt, potentially until they reach the age o f 30. Th e uncon tradicted evid ence in the record is that the mother accepted a lesser cash payment

for h er sha

re of the b usine ss i n exchang e for the trust agreement. The fact that the trus t provi sion i s loc ate d in t he “chi ld supp ort” sect

ion of the MDA, is not di sposi tiveof t he int ent of the p arti es, n or is the a

bsenceof t

he te rm “propert

y se ttl ement. ” The locationof t he tr ust wit hin t he document

is of no assistance in dete rmining whether it is c hild support or prope rtydivi sion. See, e.g., Hampton v. Hampton, 1992 W L 1400 (Tenn . Ct. App. 199 2).

There is no basis to find thatthe Agre emen t was inten ded to b e child sup port w ithin the documen t, and we affirm the Trial Court’s determination that the Trust was a part of t he Marital Propert y Divi sion. Both part ies disput

e themanner i n which t

he Trial Court c alc ulated thefather’s child suppo rt. Fathe r ins ist s that he was not mani pulat ing hi s inc ome and the company’s retained earnings in 199 9 a nd 2 000 sh oul d no t b e i mputed as in co me to him. The m other on the other hand, argues that

### -4-

the corpor ate earni ngs i n 2001 , af ter the c on version of PVS to a C corporation, should have been added to the father’s income.

The accumulated earnings retained by a solely-owned business may be considered by the Court when setti ng child support under t he guidelines. Higgs v. Higgs , 1997 WL 691530 ( Tenn. Ct. App . 1997 ). Retained earnings w hich app ear exce ssive in view of the indus tr y norm for the business will be scrutinized to determined whe ther they are con sistent with prudent business practices. Piper v. Andre ws , 1999 W L 772127 (Ten n. Ct. A pp. 19 97); Moseley v. M oseley , 2002 WL 340593 (Tenn. Ct. App . 2002 ). W e hold the T rial Cour t proper ly impu ted certain of the r etained earn ings to the father.
We affirm the Jud gmen t of the Trial Co urt in est abli shing the a mount of child supp ort, as the e videnc e does notpreponde rateagai nst t he findi ng of theTrial Court. Tenn. R. App. P. 13(d). The wife has asked for attorney’s fees inci dent to thi s act ion. The award of attorney’s fees is withi n the trial c ourt’s broad discretion. Koch v. Koch, 874 S.W.2d 571 (Tenn. Ct. App. 1993). Unles s it "af fir mative ly appea

rs t hat t he trialcourt 's deci sion was agai nst l ogic or rea soning , and caused an in

just ice or inj ury to the party compl aini ng, " the t rial court 's exerci se of

disc reti on will not be reversed on appeal. Marcu s v. Marcus, 993 S.W.2d 596, 60 1 (Tenn.199 9). We find no abuse of discretion in the Trial Court’s denial of at torney’s fees.
For the foregoing reasons, we affirm the Judgment of the Trial Cour t and rem and, w ith the cost of the ap peal assessed to Do uglas W . Fezell.



### _________________________ H ERSCHEL 

### P ICKENS 

### F RANKS 

### , J.