### IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON August 30, 2000 Sessio

n JENNIFER PURCELL THOMAS v. STEPHEN ALEXANDER THOMAS

A Direct Appeal from the Chancery Court for Shelby County No. D27019-2 The Honorable Floyd Peete, Chancellor

No. W1999-00284-COA-R3-CV - Filed November 13, 2000

In this divorce case, th

e trial court,

among other things, made a division of marital property, awarded Wife alimony in solido, made an award of child support, and ordered payments of various debts by the parties. Both parties have appealed present ing issues concerning the court’s above stated actions.

Tenn.R.App.P. 3; Appeal as of Right; Judgment of the Chancery Court Vacated in Part, Affirmed in Part and Remanded

W. F RANK C RAWFORD , P.J., W.S., delivered the opinion of the court, in which D AVID R. F ARMER , J. and J OHN E VERETT W ILLIAMS , J., joined. David E. Caywood, Stacy A. Ingle, Memphis, For Appellant, Jennifer Purcell Thomas Dorothy J. Pounders, Memphis, For Appellee, Stephen Alexander Thomas
OPINION

This is an appeal of the final decree of the Chan cery Court of

Shelby County, Tennessee, granting plaintiff/appell ant, Jennifer Pur

cell Thomas (“Wi

fe”), a fin

a l divorce from defendant/appellee, Stephen Alexander Thomas (“Husban d ”), presenting issues dealing with the division of marital

property, alimony, and child support

. On March 21, 1976, Wife filed a complaint for divorce, and Husband responded with an Answer and Counterclaim.

On December 3, 4, 8, and 9, 1997, a no n-jury tr ial was held on the original complaint filed by Wife and the counter-complaint filed by Husband, answers thereto, the testimony of Wife and Wife’s witnesses, the testimony of witnesses for Husband, exhibits filed in the cause, statements of counsel and the entire record. Husband did not testifyat the trial. At the end of the trial, counsel for both parties and the court agreed that closing argu ments would be submitted on brief. On January 8, 1998, Wife filed a motion to join Clinton Ceci l Thomas,-2-

Husband’s father, as a

party defendant. On

June 1, 1998, Wife filed a petition for civil contempt alleging that Husband was in arrears in his pendente

lite support in the amount of $11,725.00 and that he had not paid any private school tuition for the 19 98-99 school year for the parties’ three minor children. Wife averred that Husband’s failure to pay support and tuition were violations of th e trial court ’s orders. On September 21, 1998, the trial court entered an order denying Wife’s motion to j oin Clinton Cecil Thomas as a party defendant. On October 21, 1998, the trial court entered a final decree

of absolute

divorce. On November 10, 1998, the trial court entered an order correcting a

previous order and dismissing Wife’s petitionfor civil contempt against Husband w

ith prejudice over Wife’s obje ction. Both

p arties filed motions to alter or amend the judgment. On April5, 1999, the trial court entered an order on both parties’ motions to alter or amend, inter alia, clarifying Wife’ s award of alimony in solido and the judgment wi th regard to payme

nt of private school tuition. Thereafter, both parties filed notices of appeal. T hi s Court entered an order designating Wife to be appellant and Husband to be appellee. Wife presents se

ven issues for re

view as stated in he

r brief:

I. Whether the trial court erred in c alcu lating Mr. Thomas’ child support based upon

the evidence pr

esented at trial?

II. Whether the tria

l court erred in c

lassifying the owne

rship interest in LADS as Mr. Thomas’ separate prope rty pursuant

to T.C.A. § 36- 4-121?

III. Whether

the trial court’s award of one-half of the future proceeds in LADS as alimony in solido should be a division of proper

ty, or in the alternative, a sum certain?

IV. Whether

the trial court er

red in denying Mrs.

Thomas’ motion to join Clinton C. Thomas a s a party defend

ant?

V. Whether the trial court erre d in dismissing Mrs. Thomas’ petition for civil contempt with prejudice?

VI. Whether the tria l court erred in only awarding Mrs. Thomas $25,000.00 in attorney’s fees?

VII. Whether the trial court erred in f ailing to assign the p

arties’ marital liabilities ? Husband presents

issues for revie

w as follows:

I. Whether

the trial court erred in calculatingStephen Thomas’ c hild support obliga tion based on $25,000 income where the evidence at-3- trial established his inability to earn income in an amount greater than $20,000.00?

II. Whether the trial court erred in its classification of the Eaton Street residenceas marital proper ty when it was acqu

ired in the same manner as Stephen Thomas’ separate property?

III. Whether

the trial court erred in the classification and amount of alimony?

IV. W het her the trial court erred in awarding Jennifer Thomas $25,00 0.00 in attorney’s fees where Jennifer Thomas’ need was no greater than Stephen Thomas’ and Stephen Thomas had no ability to pay?

V. Whether

the trial court er

red in failing to cr

edit Stephen Thomas $10,400.00 for the loan he obtained to pay the children’ s private school tuition?

VI. Whether the trial court erred in refusing to join Clint Thomas as
a th ird-party defe

ndant where he h

as no liability or obl

igatio n t o either or the par

ties?

VII. Whether the trial court erred in dismissing Jennifer Thomas’s petition for civil contempt with prejudice?

Since this case was trie

d by the trial cour

t sitting without a

jury, we review the case de novo upon the record with a presumption of correctness of the findings of fa

ct by the trial cou

rt. Unless the evidence preponderates against the findings, we must affirm, absent error of law. Tenn. R. App. P. 13(d). The trial court made specific findings of facts incorporated by reference into the dec ree:
1. The parties married on Decem b er 21, 1984, the final separation occurred on De cember 2 6, 1995, the parties lived together in the marital relationship for eleven (11) y ea rs and had been married thirteen (13) ye

ars at the time of t

rial.

2. The youngest child

of the parties, I

vy is, at the time of t

ria l , developmentally

impaired by Williams Syndrome, a genetic disease that is attributed to neither party, and is likely to remain so.-4- 3. At the time of the marriage, Husband had a history of mental illness, sufficiently severe to re qui re confinement i n a psychiatric wardin the year preceding the marriage, had a history of alcohol and drug abuse and was completely financially dependent on his father, all of which was known to Wife prior to marriage.

4. Husband suffered both before and throughout the marr iage with bouts of addictive behavior and mental illness, and Husband has often required prescription medication.

5. Husband, both prior to and periodically throughout the marriage, required psychotherapy to deal with his drug and alcohol abuse and mental illness.

6. At the time of trial, Husband’s pro gnosis was only fai r, and it is unlikely that Husband will ever sustain gainful employment to the extent that he is going to make a lot of money.

7. At the time of the ma rriage, Wif

e was emplo yed as a school teacher, but, since the birth of the parties first child Grace in March 19 8 5, Wife has not been gainfully employed outside the home but was a homemaker and parent.

8. Mrs. Thomas must

now devote the majority of her time and energy to the care and upbringing of the parties’ youngest daughter, Ivy.

9. At the time of the marriage, Husband was employ ed in th e mail
roomat one of his f

athe r’s appliance stores and later doing clerical work and running errands for LADS, a Thomas family business; after
a month-long period of confinement in the psychiatric ward in 1989, Husbanddecided to complete his collegeeducation and attended the University

of Memphis, at his f

ather’s expense, and received a bachelor’s degree in

social work in 1990 or 1991. After receiving his degree, he was employed in a juvenile detention center, then as a tec hnician in a psychiatric w ard at St. Francis H

ospital, then as a child abuse caseworker for

the Te nnessee Department of Human Services; he resigned his employme nt as a caseworker for the Tennessee Department of Human Serv ices following his institutionalization for drug addiction at the Hazelden Clinic in 1995, later became employed as a social work er for St . Peter’s Villa for a short time and had resum

ed his employme nt as a technicia n at St. Francis Hospital at the time of the separation.-5- 10. Husband has limited employability.

11. The standard of living enjoyed by the parties during the marriage
was made possible solely by gifts from Husband’s parents, who providedthe house they live in and the cars the

y drove, who paid their utility bills, who took them on vac ations to Europe a

nd Hawaii, who paid Husband’s medical expenses and his debts and who paid for their children’s private education.

12. Following the marriage, Husband’s father provided the par

ties a residencerent free, prov

ided automobiles f

or the parties’ u

se without cost, paid certain of the parties living expenses, and, as the children of the parties r eached school a ge, paid the expe

nses of their priv

ate school education until Husband rec eived his college

degree in 1990
or 1991. Husband’s father provided him employment and, afterward, Husband’s father continued to subsidize the parties’ standard of livin g by causing Husband to be paid a salary by LADS, although Husband
was employed full-ti

me elsewhere and preformed no services for LADS.

13. In addition to provi

ding those

benefits above-mentioned, each of Husband’s parents, in an effort to reduce their taxable estates, made
a practice of making annual gifts to each of the parties during the marriage in the maximum amount allowable under tax laws, and the
sums comprising these g ifts were accum

ulate d and applied to the acquisition of certain properties owned by Husband ’s fath er on extremely favorable term

s, generally at “

cost;” it was the intention of Husband’s parents in making these gifts to confer a benefit upon their child and heir, the gifts to Wife being made in consequence of and as an accommodation

to the tax laws.

14. The conveyance of property by Husband’s fathe

r to Husband in exchangefor the accumulated gif ts above-mentione

d coincided with the birth of

the children of th

e parties and the

consequent incr

ease in the parties’ l i ving expenses; Hus band’s father's

conveyance to Husbandof his grandmother’s former house in Florida, which had become rental property, coincided with the birth of the parties’ f

irst child Grace, while

Husband’s father’s conveyance to Husband of the
co mmercial rental property on Park Avenue in M

emphis coincid

e d withthe birth of the parties’ second child, Ellen, and in making such conveyanceit was Husband’s father’s intention to provide an income stream from which Husband could support his family.-6- 15. T he parties occupied the marital residence located on Eaton Street in Memphis from the tim e of the marriage, living there rent free until 1992, when the property was conveyed and it has been found that this property is marital property.

16. LADS is a Tennesseegeneral partnership formed by Husband’s father for the exclusi

ve benefit of his four (4) children and was an outgrowth

of Husband’s father’s individual act ivit ies in developing commercial real property for use by the Tandy Corporation, by whom Husband’s father had b een emp loyed following the sale of his own business to the Tandy Corporation around the time of the marriage; at the time of trial,

the part nership owned certain improved real properties and certain securities, and, from its inception, the business of the partnership h

ad always been c

onducted by Husba

nd’s father in the capacity of General Manager.

17. OB Development Compan y, I nc. is a Tennessee corporation formedby Husband’s father for the exclusive benefit of his four (4) children, the sole business of whichis the development of a specific residential subdivision in the State of Mississippi and all of which is administered solely by Husband’s father.

18. With the exception of t

he marital reside

nce, neither pa

rty made any material contribution to th e upkeep, preservation and maintenan ce of any of the properties acquired by the application of the accumulate gifts

abo ve-mentioned, and neither party made any contribut ion whatever, dire ct or indirect, to t

he management, operation or administration o f the business of LA

DS o r O B Development Company. Inc.

19. At the time of the divorce, the parties had acquired the following assets using the gift monies from Husband’s father:

a. The marital resid

ence located a

t 749 Eaton Street, Memphis Tennessee;

b. Commercial rental property at 3906 Park Avenue, Memphis Tennessee;

c. Ownership intere

st in LADS, a

Tennessee General Partnership;-7- d. Ownership interest in O B Development, a Tennessee General Partnership;

e. Note receiva

ble from LADS;

f. Individual Retireme

nt Account of Steph

en Thomas.

20. All of the above-

mentioned assets

were accumulated during the marriage.

21. All decisions concerning the acquisitions of pr operties in exchangefor the accu mula ted gifts above-mentioned, all decisions concerning the formation, operation an d administration of the business of LADS andOB Development Company, Inc. were made by Husband’s father.

22. A t the time of the sepa ration, the partie

s household income consisted of Husband’s ear nings as a technic

ian at St. Francis Hospital, monthl y ren tal income from the Park Avenue property, monthlydistributions of profits by LADS and a monthly salary paid by LADS to Husband, for which Husband rendered no services, and, withthe exception of Husband’s earnings above-mentioned, none of the income was produced by any effort on the part of either party, nor
was any property which

produced income acquired by or through any effort on the part of either party; as between Husband and his father, any and all

decis ions affecting continuation of the income stream from LADS were made by Husband’s father.

23. At the time of th

e trial, neither party owned or controlled any liquidassets. Husband’ s father decline d to make any furth

e r distributions of cash to Husband or to Wife, o r to Husb and which might benefit Wife.

24. Wife enjoyed, during themarriage, a standard of living measured by the Husband ’s fathe r rather than the Husband. Wife knew or should hav e known at the time of the marriage that Husband was substantially impaired in his abilities as a breadwinner.

25. Stephen A. Thomas [ Husband] conspir

ed wit h Cl inton C. Thomas [Husband’s father] and di ssipate d the marital estate in the amount of $67,000.

The trial court or

dered in pertine

nt part:-8- b. As a division of marital property, pursuant to T.C.A. § 36-4-121, Wife shall be awarded the Eaton Street prop

erty which is the marital residence, and one-half (1⁄2) of Husband’s IRA account at Unio n Planters Bank.

c. As alimony in solido , Wife shall be awarded the commercial rental property o n ParkAvenue, Memphis, Tennessee. As additional alimony in solido, Wife is award ed one-half (1⁄2) of Husband’s proceeds from his distribution of profits from LADS for a period of ten (10) years.

d. Hu s band’s portion of the Individual Retirement Account in the amount of $10,076.10 shall be awarded to Wife and shall be applied to Husband’s child su

pport arreara

ges. The remainin

g arrearages i

n the amount

of $7,441.68 which includes interest through August 31, 1998, shall be reduced to judgment, subject to execution.

e. Wife sh all be awarded custody to the parties’ three (3) minor children. Husband shall

have visitation wit

h the minor children one weekend per month so long as he resides outside of Tennessee. In the event

of his return to Tennessee, visitation shall be every other
wee kend, alternating holida ys and up to two wee

ks n on-consecutivel y in the summer.

f. Husband shal l pay child support to Wife, with the child support based upon Hu sband’s earning capacity of $25,000.00 per year. Therefore, Husbandshall pay child supp ort to Wife in

the amount of $692.00 per month beginning September 1, 1998. Husband shall pay to Wife, as additional child support, 41% of Husband’s stock dividends and 41% of Husband’s pro ceeds in the distribution of profits from LADS. g. Husband shall provide sufficient dependent healthcare insurance coverage for the minor children.

h. Husband’s partne

rship inte rest in L ADS and his stock in OB Development

Co ., Inc. is awarde

d to Husband as his se parate property.
i. Husband shall not c

onspire or consor

t with any party in

an attempt to impede or obstruc

t the d istribution of these funds or disobey the Orders of this Cour

t.-9- j. Husband shall pay t o Wife and Wife’ s counsel the sum of $25,000.00 as a por

tion of Wife’s att

orney fees.

k. The Court costs s

hal l be assessed against Husband, for all of which let execution issue.

We will consider Wife’s issues II and III, reg ardi ng the classifica tion of the owners

hip interest in LADS and the award and classification of alimony, together with Husband’s issues II and III , addressing class

ification of the E

aton Street prope

rty and the amount a

nd classif ication o f alimony. Wife takes issue with the trial cour

t’s classificatio

n of the one-quar

ter interest

in LADS as separate property belonging to Husband. Wife asserts that during the marriage the parties used giftfunds from Husban

d’s parents

to capitalize LADS and other assets acquired during the marriage. Wife asserts that since these assets were treated as marital property during the marriage, th ey should be treated as marit

al property in the

classification of

property. Husban

d’s issue I I addresses whether the trial court erred in its classification of the Eaton Street res i dence as marita l property when it was acquired in the same manner as Husband’s separate property. We consider these issues together as they all address the classification and division of property by the trial court.

In Batson v. Batson 769 S.W.2d 849 (Ten n. Ct. App. 1988) the

court said:

Tennessee is a "dual pro perty" jurisdiction because its divorce statutes draw a distinctio n betw een marital and separate property. Since Tenn.Code Ann. § 36-4-121(a) (Supp.1988) provides only for the division of marital property, proper classification o f a couple's property is es sential. See 3 Family Law and Practice § 37.08[1] (1988). Thus, as a first order of business, it is incumbent on thetrial court to classify the property, to give each p a rty their separa te property, and then to divide the marital property equitably. See 2 H. Clark, The Law of Domest ic Relations in

the United States§ 16.2, at 183-84 (2d ed. 1987). Tenn.Code Ann. § 36-4-121(b) contains the ground rules for classifying property, and little elaboration is nee de d beyond the statute itself. Tenn.Code Ann. § 36-4-121(b)(2) define s ‘separate property’ as:

all real and personal property owned b y a s pouse before marriage; property acquired in exchange for property acquired before marriage; income from and
apprec iation of property owned by a spouse before marriage except when chara cter ized as marital-10- property under subdivision (b)(1); and prop erty acquir ed by a spouse at any t

ime by gift, beques

t, devise or desce

nt.

This Court has construed this section to mean that gifts by one sp ouseto another of prop erty that would othe

rwise be classi

fied a s marital property are the separate property of the re cipient spouse. This Court has also foun d that t he porti on of a spouse's pension or other retirement bene

fit attributable to

creditable

service prior to the marriage is separate property.
Tenn.Code Ann. § 36-4-121(b)(1) defines ‘marital property’
as:
all real and personal property, both tangible an d intangible, acquired by either or both spouses during the course of

the marriage ... including income from, and any increase in value during t he marriage, of prop ert y determined to be s eparate prope

rty in accordance

with subdivisio

n ( b)(2) if each pa

rty su bsta ntially

contributed to its preservation and appreciationand the value of a v ested pension, retirement

or other fringe benefit rights accr ue d during the period of the marriage.
Id. at 856 (emphasis added). In addition, Tenne ssee courts have

held that in

determining whether property is marital or separate, the inquiry is not limit ed to what is conta

ined in the title documents , butrather all interests are to be considered. Jones v. Jones , 597 S.W.2d 886 (Tenn. 1979). “In the final analysis, the status of property depends not on the state of its record title, but on the conduct of the parties.” Mondelli v. Howard, 780 S.W. 2d 769, 774 (Tenn. Ct. App. 1989).

In Batson v. Batson, 769 S.W.2d 849 (Tenn.App.19 88), the court re cognized that sep

arate property may become marital if its own er treats it as such. Batson , 769 S.W.2d at 858. The Batson court defined the

doctrine of tran

smutation as follows: [Transmutation] occurs when separate prope rty is tre atedin such a way as to give evidence of a n intention that it become mar ital property. One method of causi ng transmutation is t o purchase p rop erty with separate funds but to take title in joint tenancy. This ma

y a lso be done by plac

ing separate property in the names of both spouses. The rationale-11- un derly ing both these doctrin es is that dealing w

ith property in these ways crea tes a rebuttable presumption of a gift to t h e marital estate. This presumpt ion is based also upon the pro vision in many marital property stat utes that property acquired during the marriage is presumed m arita l. The pres umptio n can be rebutted by evidence of circumstances or communications clearly indicating an intent that the property remain separate.

2 H. Clark, The Law

of Domestic Relati

ons in the Unite

d States § 16.2, at 185 (1987).
Batson, 769 S.W.2d at 585 (emphasis added).

The assets acquired during the marriage include the one-quarter

interest in LADS, the Eaton Street marital residence, the Park Avenue rental property, and an interest in OB Development. All assets were acquired

during the marria

ge and were tre

ated as marital a

ssets by both parties. The trial court drew a

distinction between Husband’s paren ts’ motivation in givin

g gifts to Husband a

nd in giving gifts to Wife stating “it was the intention of Husband’s parents in making these gifts to confer
a benefit upon their child and heir, the gifts to Wife being made in consequence of an d a s accommodation to the tax laws.” A lthough we do not dou

bt that Husband’s p

arents wished to confer a benefit on their son, the te

stimony at trial cle

arly indicates that these gifts, both to Husband and Wife, were intended to result in a tax benefit to Clinton C. Thom as and his wife . The record reflects that gifts were us

ed to pay marital e

xpenses as well a

s to purchase mar

ital assets. With regard to these gifts, Clinton C. Thomas testified:

Q: All right what sort o f gifts are you ta

lking about?

A: We gave them the - - t hat amount of monies or close to it that you could give tax free- - up to $10,000.00 per child per parent.

* * * * * Q: Now, Mr . Thomas, let me just see if we have an agreeme

n t about this. You an d your wife, pursuant to the $10,000 per person year gi ft ta x exemption, gave gifts to your son and Jennifer - - it looks to be anywhere from 35 to $40,000 a year for a while; isn’t that true?

A: Yes. That’s corr

ect.-12- Q: All right. And those funds were used by Steve and Jennifer Thomas for several purposes. They were used to acquire the residence that they now - - she now lives in; isn’t that true?

A: Yes, sir. Q: Those

funds were used to acquire the Park Avenue property.
A: Yes, sir. Q: Those

funds were used to capitalize or make the capital contribution to LAD.

A: Yes, sir.

The cl assi fication and division of the interest in OB development and in the Park Avenue property were not raised

on appeal, however the record indicates that the Eaton Street property, the interest in LADS, the interest in OB Development, and the Park Avenue property were

all acquired during the marriage in the same manner. This Court may in its discretion consider other issues not presented for r

eview. Tenn. R.

App. P. 13(b). In the interest of justice, we therefore include the Park Avenue property and the interest in OB Developments in our classification of property.

Since the Eaton Street pr operty, the one-quarter interest in LADS, the interest in OB Development, and the Park Avenue property were acquired during the marriage, and were treated by both parties as marital property, we find that these properties should all be classified in the same
manner. We see no evidence in the record to r

ebut the presumpti

on that all of these assets acquired during the marriage should be classified as marital property. Accordingly, we find that the trial court erred in classifying the interest in LADS and the interest in OB Development as Hu sband’s separa

te prop erty. Therefore, we vacate the trial court’s order as to those properties. We a ffirm th e classification of the Eaton street property as marital property.

The trial court failed to classify the Park Avenue rental property but awarded such property to Wife as alimony in solido , indicating an implied classification as Husband’s separate property. T. C. A. § 36-5 -101(d)(1)(H) requires that in awarding alimony the court should consider “the pr ovisions made with regard to marital property as defined in § 36-4-121.” In light of ou r classification of property, we vac ate the awar d of the Park Avenue Property as alimony to Wife along with the alimony awa rd of one -half of Husband’s proceeds from distributions of LADS for ten (10) years.

We hold that the Park Avenue property, along with the Eaton Street property, the one-quarter

interest in LADS, a

nd the interest in O

B Developments ar

e classified as ma

rit al proper

ty. The case is remanded for an equitable division

of marital proper

ty inaccordance with our holding and for a reconside

ration of alimony in

light of our finding . Wife’s p ortion of LADS and of OB Development,

as determined by the trial court on r emand, shall be pa

id out in annual instal

lments for a period to be determined by the trial court from distributions from these interests.-13- Wife’s issue I and Husband’s issue I both ask whether the trial court erred in calculating Husbands’s child support. Wife asserts that the trial court did not consider Husband ’s income from all sources, arg

uing that since Hus

band did not offer

evidence at tria

l as to his current income, the trial court should have

taken into conside

ration the income

shown on the 1996 joint tax return. The 1996 joint tax return shows a total gross income of $176,846.00. In addition, Wife contends that the Tennessee Child Support Guidelines provide for an up ward deviation of

childsupport where a noncustodial parent does not exercise minimal visitation rights. Wife asserts that there was no visitation schedule set for

th in trial court’s order or findings. She argues that because it is obvious from the facts of the case that Husband is not exercising the minimum visitation envisioned by the g uidelines,
an additional amount is required to compensate Wife for the added care of the minor children. Wife further asserts that the guidelines provide for an upward deviati on where there are extraordinary expenses for the children. Wife contends that the trial court erred in ordering her to pay one-half of the children’s tuition, in light of her inability to work outside of the home and Husband’s award of valuable income-producing property. On the other hand, Husband contends that the trail court erred in basing his child support on an earning capacity of $25,000.00 per year because all the evidence at trial pointed to an earning capacity of not more than $20,000.00 pe

r year. Husband

asserts that trial court correctly denied Wife’s a

rgument that flow-

through income fr

om his partnership

interest in LADS, which is equa

l to the taxes owed

on the profits, shou

ld be included in Hu

sband’s gross income for the purposes of calculating his child support obligations since he does not actually realize the income. H usband contends the trial court was not in error on this point, as the decision of whether to distribute profits

is made by the Gener

al Manager pursu

ant to the partner

ship agreement. Husban d asserts t

hat according to t

he Tennessee Chi

ld Support Guideline

s, there is a rebu

ttable presumption that all awards of child support a

re to be ba sed upon the obligor ’s gross income le

ss FICA, withholding tax, and other court-ordered child support payments. Husband asserts that the Child Support Guidelines

c ontemplate

the inclusion of only the income that an obligor parent actually receives and not distributive income. Furthermore, the trial court correctly determined that when and if there is

a distribution of income to the partners of LADS, Husband is obligated to pay 41% net income he r

eceives as child

support.

In Brown v. Brown, No. 03A01-9812-CV-0017, 1999 WL 552854 (Tenn. Ct. App. July 28, 1999), the court stated:

Since the Legislature has mandated that courts

set a definite amount of child support, the issue thus becomes how should that amount be calculated. The child support guidelines, which must be applied as
a rebuttable presumption of the proper amoun t of child support, requires that child

support is to

be based upon a flat percentage of the obligor's net income, dependi ng upon the number of children to be supported. Tenn. Comp. R. & Regs. tit. 10, ch. 1240-2-4-.03(2). Net income is calc ula ted by subtracting FICA and federal income tax from gross income, so the first step is determining the obligor's gross income. See Tenn. Comp. R. & Regs. tit. 10, ch. 1240-2-4-.03(4).-14- The guidelines de

fine gross income

as:
all income from any source (b efore taxes and other de ductions), whether

earned or unearned, and includes butis not limit

ed to the following: wag es, salaries, commissions, bon uses, overtime p ayments, dividends , severance pay, pensions, i nte rest, trust income, annuities, ca pital gains, benefits received from the Social Security Administration, i.e., Title II Social Se cu rity benefits, worke rs compensation be

nefits whether temporary or per

manent, judgment s recovered for personal injuries, unemploy m ent insurance benefits, gifts, prizes, lotter y winnings, al imony or maintenance, and in come from self-employment....

Tenn. Comp. R. & Regs. tit 10, ch. 1240-2-4-.03(3)(a). Accordingly, the husband's income in the form of interest, dividends, and partnership

distributions would be inc luded within the definition of "gross inco me." The guideline s further provide

that “[v]ariab

le income such as commissions, bonuses, overtime pay, dividends, etc., should be averaged and added to the obligor's fixed sala ry." Tenn. Comp. R. & Regs. tit. 10, ch. 1240-2-4-.03(3)( b). The refore, we conclude that the husband's additional income must be averaged and addedto his salary in order t o d etermine gross inc ome for child support purposes.
Id. at *4 - *5.

On the issue of the determination of obligor parent’s income for the purpose of calculation of child support other jurisdictions have imputed distributive income to an obligor pare

nt with substant ial contro l over earnings of a corporation or a sole stock holder. See Bleth v. Bleth, 607 N.W.2d577, 579 (N.D. 2000 ) (citations omitte

d). “The less con

trol the obligor spo

use has ove r retained earnings, ho wever, the m ore reluctant courts have been to impute corporate income to a stockholder

obligor.” Id. (citations omitted ). I n Mitts v. Mitts, No. E2000-00374-COA-R3-CV, 2000 WL 1156624 (Tenn. Ct. App. Aug. 16, 2000), the Eastern Section of the Tennessee Courtof Appealsfollowedsimilar reasoning in addressing the issue of the husban d’s income in settin

g his child support obligation. In that case the wife argued on app eal that the husbands’s obligation sh ould be based upon his distributable share of the corporation and the trial co urt based hi s obligation on the amount of his share actually received. Id. The corporation is a Subchap ter S corporation, and the shareholders are required to pay taxes on their a pport ioned shares of the corpor ation’ s earnings, regardless of the actual interest paid. This requirement is essentially the
samefor a partnership as in the case of LADS. In add r essing the question the Mitts Court stated:-15- This court has held that where a business is solely owned, the business' accumulation of retained ear nings can be consi

dered in determining an obligor's income for the purpose

of child support. See Sandusky v. Sandusky , C/ANo. 01A01-9808-CH-00416, 1999 WL 734531, at

*4 (Tenn.Ct.App. M.S., filed September 22, 1999). That is because "[a] self-employment situation where an obligor spouse or parent can c ontrol the salary he or she receives may raise issues requiring the court to examine whether the pot en tial exists for the obligor to manipulate his re

ported income eit

her by fail

ing to aggressively

solic it bus iness or by inflating his expenses, thereby minimizing his income." Id. (internal quotati on ma rks and citation omitted). However, Husband in the instant ca se is not the sole shareholder

of Rivermont. On t he contrary, he is a minority shareholder, and the distribution of the corporati

on's income is

within th e control of the majority shareholder, his father. Thus, Husband does not have the abilit

y "to manipulate his r

eported in

come" as a soleshareholder would. Wife has not citedany authority--and we are notaware of any--that would require a c o urt to consider a corporation's retain e d earnings in calc ulating an obligor' s income where th e obli gor is a minority shareholder and thus lacks control
ov erthe distribution of the corporation's income. We therefore find that the trial court properly based Husband's minimum ch

ildsupport obligation o n the payments Husband actually received from the corporation. Mitts, at *5.

Wife asserts that

the distributive inc

ome from LADS f

or 1996 should

have been considered in making a determination of Husband’s income for ch ild support purposes. Husban d contends, however, that the amount show n as distributive inc

ome by the pa

rtnership was not a

ctually inc

ome that he received. The trial court found that Husband did not receive the income as cont emplate d under the child support guidelines, an d f rom our review of the record, the evidence does not preponderate

against the trial court’s findings. The trial court’s omission of Husband’s distributive shares not actually received is in accordance

with Tennessee law as Husband’s father, not Husband, controlsdistributions from LADS. See Mitts, supra. Husband also ass erts that the trial court’s finding that his child

support obligation should be based upon $25,000.00 per year is not supported by the evidence and that it should be $20,000.00 per year.We must disagree. Husband’s brief notes that when the distributive income from LADS and the rental income from Park Avenue are deducted from the 1996 tax return, along with the $686. 00 income attributed to Wife, the total amount of income Hus ban d rec eiv ed fo r th e fi scal year 1 996 was $25 ,80 4.0 0. A ccor din gly, the evidence does notpreponderate against the trial court’s finding tha t Hus band’s annual income for child support calculation i s $25,000.00. The trial court properly awarded child support based upon this figure

. Howe ver, on remand the trial court must reconsider the award of child support as to 41% of-16-

Husband’s share of distributions from LADS and OB Development. As previously noted, we have determinedthat Husband’s intere st in LADS and OB Developm ent as marital pro

perty subje

ct to divi sion by the court. Wife’s interest is to be paid in installments as determined by the trial c ourt from the distribution Husband received therefrom. Accordingly, Husband’ s child suppo rt obligation for 41 percent of the distribution shall be calculated on the difference

between the total distribution and the amount paid to Wife. In addition, the trial court should address the upward deviations from the child support guid

elines requeste

d by wife an

d the division of pr ivate school tuition for the parties’ three minor children.

In Wife’s Issue 4, Husband’s Issue 6, Wife con t ends that the trial court erred in failing to join Husband’s father, Clinton C. Thomas, as a third party defendant. Wife asserts that evidence at trial showed that LADS owes the marital estate $67,000.00. Wife

asserts that Clinton C. Thomas and Husband fabricated promis sory notes to create a debt from Husband to his father, and that Clinton C. Thomas testified at trial that these notes were repaid to him by a distribution from LADS to Husband.

Rule 19 of the Tennessee Rules of Civil Procedure addresses “Joinder of Persons Needed for Just Adjudication” stating:

19.01. Person to Be

Joined if Feasible. - A person who is subject to the jurisdiction of

the court shall be

join ed as a party if (1) in the person’s absence complete relief cannot be accorded a mong those already parties, or (2) the person c laims an interest relating to the subject of the a ction an d is so situated that the disposition of the action in the pers

ons absence may (

i) as a practical matter impair or impede the person’s ability to protect that interest, or (ii) leave any of the persons already

parties su

bj ect to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reasons of th e claimed interest. If the person has not been so joined, the cour t shall order that the person be made a party....

The trial court found

that Wife’s motion

to join Clinton C. Thomas as a party defendant was notwell taken and de

nied that motion in

its entirety. Our review of the record reveals testimony that the distributions made to repay the loans that Clinton C. Thomas’s children had made to LADS were made in November of 1997. Clinton C. Thomas stated that the $49,000.00 distribution from LADS to Husbandwas actually a payment on the $67,000.00 no

te that Husband wa

s holding against LA

DS. Clinton C. Thomas further testified that upon the distribution to Husband, he received funds to apply to the outstanding loan to his son. Although the evidence at trial indicates that the five promissory notes representing Clinton C. Thomas’s “loan” to Husband were not executed on the dates testified to by Clinton C. Thomas, we do not believe t hat the LADS distribution to Husband or the questionable

promissory notes justify the addition of Clinton C. Thomas as a third party defendan

t. The refore, we find that evide nce does not prep

onderate again

st the trial court’ s denial o f Wife’ s-17-

motion. On remand, the trial court should take into account the discredited testimony of the promissory notes in the valuation of LADS for the purpose of an equitable division.

Wife’s Issue V and Husband’s Issue VII address whether the trial

court erred in dismissing Wife’s petition for civil contempt with prejudice. On June 1, 199 8, Wife fi led a petition for c ivil contempt alleging that Husba

nd was in arrear

s on his pendente lite

support for the months of Nove mb er

1997 through May 1998 in the amount of $11,725.00. The petition also alleged that Husbandhad failed to pay the children’s private school tuition for the 1998/99 school ye ar. The petition was set to

be heard on July 21, 1998. On July 20, 1998, counsel for Mr. Thomas requested
a continuance. The hearing was rescheduled for August 18, 1998. On October 26, 1998, the trial court enter e d an order stating that Wife desires to dismiss the petition with prejudice and thereby dismissed Wife’s petition for civil contempt with prejudice. On December 11, 1998, the trial court entered a corrected order

Nunc Pro Tunc stating that W ife desired to dism iss the petition for

civil contempt without prejudice and that the trial court’s order of dismissal with prejudice was over the objection of Wife. Wife contends that the dismissal of the petition by the trial court with prejudice
was in error, because Husband was able to effe ctive ly avoid service by moving to Florida. Wife asserts that she is now barred from pursuing a contempt action against Husband for failure to support his children. We find that the trial court was not in error in dismissing Wife’s petition with prejudice. Th e order correcting the previous order of voluntary dismissal with prejudice states that Husband desiredto have the petition for civil contempt dismissed with prejudice. Tennessee Rules o f Civil Procedure provide for a dismissal for plaintiff’s failure to prose cute or comply with

the rules. Tenn. R. Civ. P. 41.02(1). The trial court was not in error in dismissing the petition with prejudice at the request of Husband, as Wifehad failed to serve process

on the Husband pur

suant to Tennesse

e Rule of Civil Procedure 5.01 requiring se rvice of proces s of “every plea ding subsequent to

the original complaint.” Finally, In Wife’s issue VI, she contends that the trial court erred in failing to assign marital liabilities. Wife contends tha t Husband’s substa

nce abuse had a tremendous impact on the family’s finances. Wife asserts that Husband is in a better position to assume the marital de bt as he has a degree in social work and has been employed since receiving his degree. On the other hand, Wife has not been emplo

yed outside the home

since the birth of

the parties’ olde

st child in 1986, and is currently consumed with the care of the youngest child, Ivy, who has been diagnosed w ith Williams Syndrome. Trial courts have the authority to divide marital debts in the same manner that they apportion marital assets. Mahaffey v. Mahaffey , 775 S.W. 2d 618, 623 (Tenn. Ct. App

. 1989) (citing Whitley v. Whi

t ley, 757 P.2d 849, 850 (Okla. Ct. App. 1988); 2 H. Clark, The Law of Domestic Relations in the United States § 16.4, at 198 (2d ed. 1987). When app ortioning debts, courts are to consider:-18- (1) which party incurred the deb t and the reason for the debt, see Dahlberg v. Dahlberg, 358 N.W.2d 76, 80 (Minn. Ct. App. 1984); (2) which party benefitted from the loan, Bodie v. Bodie, 590 S.W.2d 895, 896 (Ky. Ct. App. 1979); Shink v. Shink, 140 A.D.2d 506, 528 N.Y.S.2d 847, 849 (1988); and (3) w hich par ty is better able to
assume the debt. Geldmeier v. Geldmeier, 669 S.W.2d 33, 35 (Mo. Ct. App. 1984). Mahaffey, 775 S.W.2d at 624. Wife’s uncontroverted testimony at trial indicated that Husband’s use of drugs and alcohol contributedto the martial debt. However, it does not appear that Husband was the sole contributor to the debt, nor was he thesole beneficiary. Wife’s amended affidavit of income and expenses filed
on December 3, 1997, and introduced at trial shows credi t card debts totaling $16,602.25, and $177.19 in outstanding, uninsured medical bills.

B ecause the trial court failed to make an assignment of marital debt, on remand, marital debts should be divided according to the foregoing Tennessee law.

Husbandalso raises a question regardi ng the a ssignment of debt in his issue V which questions whether the tria l court erred in

failing to credit him $10,400 for the loanhe obtained to pay the children’s private school tuition. At trial, Husband failed to put on any proof as to the existence of his loan and the record lacks sufficient evidence to establish such debt. In light of the foregoing, the trial court did not err in refusing to rule upon this issue in the parties' divorce proceeding.

In Husband’s issue IV, he asserts that the trial court erred i n awarding W ife $25,000.00 attorney’s fees. An award of attorney’s fees constitutes alimony in solido. Herrera v. Herrera, 944 S.W.2d 379, 390 (Tenn. Ct. App.1996); Cranford v. Cranford , 772 S.W.2d 48, 52 ( Tenn. Ct. App.1989). As with any alimony award, in determining whether to award attorney's fees, the trial court should consider the relevant factors in T.C.A. § 36-5-101(d)(1). The decision whether or not to award attorney’s fees is within the sound discretion of the trial court and "will not be disturbed upon appeal unless the evidence preponderates against such a decision." Kincaid v. Kincaid, 912 S.W.2d 140, 144 (Te

nn. Ct. App. 1995); see Rule 13(d) Tenn. R. App. P. A spouse with adeq

uate property an

d income is not entitl

ed to an award of

alimony to pay attorney’s fees and expenses. Umstot v. Umstot968 S.W.2d 819, 824 (Tenn. Ct. App. 1997); and Duncan v. Duncan , 686 S.W.2d 568, 573 (Tenn. Ct. App. 1984). Where the court awardsthe wife alimony in solido adequate for her needs and attorney’s fees, it may not be proper for the court to make an additional award of alimonyin solido for payment of the wife's attorney’s fees. Id.

“These awards

are appropriat

e, however, only

when the spouse se

eking them lacks su fficient funds to pay his or her own legal expenses,” Houghland v. Houghland, 844 S.W.2d 619, 623 (Tenn. Ct. App.1992); Ingram v. Ingram, 721 S.W.2d at 264, or would be required to deplete his or her-19-

resources in order to pay the se expenses. Harwell v. Harwell, 913 S.W.2d 163." Brown v. Brown, 913 S.W.2d 163, 170.(Tenn. Ct. App. 1994). In addition , the spouse

obtaining the divor

ce should notbe left in a wo rse financial situation than he/she was before the other spouse's misconduct brought about the breakup of the marriage. See Long v. Long, 9 57 S.W.2d 825, 830 (T enn. Ct. App. 1997); Shackleford v. Shackleford, 611 S.W.2d 598, 601 (Tenn. Ct. App.1980).

Because of our reclassification of

the parties’ property and the necessity of a determination by the trial court of the division of marital property, the award of attorney fees should be vacated for further consideration by the trial court on remand.

In sum, the trial cour

t’s classificatio

n of the one quart

er interest in LADS and the

interest in OB Development is

reversed, and t

hese interests

are classified as marital property. The trial court’s implicit classification of

the Park Avenue property as Husband’s separate prope rty is reversed, and th is property is

classified as mar

ital property. The trial court’ s classification o f the Eaton Stree t property as marital property is affirmed. In view of the reclassification of the marital property, we vacate the decree of th

e trial court as to

distribution of mari tal ass ets and the awar d of ali mon y in solido and remand the case to the trial co urt for a proper determination of the division of marital property and awar d of ali mon y in solido if required, consistent with this opinion. The award to Wife of $25 ,00 0.0 0 at tor ney fe es as ali mon y in solido is likewise vacated to be considered on remandin conjunction with

the court’s distribution of marital property

. On remand, the tr

ial court shall als

o apportionedthe marital debt. The trial court’s decree as to child support is vacated. On remand, the trial court should set the amount of Husband’s monthly child support obligatio

n in accordance w

ith t his opinion. The trial c ourt’s present a

ward of child supp

ort remains in eff

ect p endin g determination and award of child support on remand. The trial court’s decree

is affirmed with regard to Hus band’s IRA, the award of custody of the parties’ three minor children, visitation, and insurance. The case is r emanded for further pro ceedings consistent with the opinion. Costs of the appeal are equall

y d ivided between the parties, appellant, Jennifer Purcell Thomas, and appellee, Stephen Alexander

Thomas, and their

sureties.

__________________________________________ W. FRANK C RAWFORD, PRESIDING JUD GE, W.S

.