1

 The parties have two daughters together. Both daughters were eighteen years of age or older at the time the

trial court’s Final Decree of Divorce was entered.

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

May 21, 2003 Session

KATHLEEN ANNE EARLEY v. ROBERT KEITH EARLEY

A Direct Appeal from the Circuit Court for Shelby County

No. CT-003076-00 The Honorable John R. McCarroll, Jr., Judge

No. W2002-01354-COA-R3-CV - Filed August 26, 2003

In this divorce case, the final decree granting wife a divorce made a division of marital

property but failed to include as part of the marital estate several expenditures made by the husband.

Wife asserts that such expenditures constitute a dissipation of assets by the husband and should have

been included as part of the marital property. Wife appeals. We affirm.

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Affirmed

W. FRANK CRAWFORD, P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS, J. and HOLLY M. KIRBY,

J., joined.

David E. Caywood, Laurie W. Hall, Memphis, For Appellant, Kathleen Anne Earley Earley

Michael L. Robb, Dawn Davis Carson, Susan T. Hunt, Memphis, For Appellee, Robert Keith Earley

OPINION

Appellant Kathleen Anne Earley (“Wife”) and appellee Robert Keith Earley (“Husband”)

were married in Elmont Long Island, New York on September 29, 1973. The parties separated on

May 7, 2000.1 Throughout most of the marriage, Husband served as the sole financial provider, and

Wife acted as the primary caregiver and homemaker.

Husband was hired as Vice President of Distribution for Williams-Sonoma Corporation

(“Williams-Sonoma”) in June 1983. In July 1984, Husband was transferred from WilliamsSonoma’s offices in California to the corporation’s distribution center in Memphis, Tennessee.

Husband was eventually promoted to the position of Senior Vice President of Distribution. 
2

 Pro Trans was created as a freight forwarding corporation. Williams-Sonoma was a Pro Trans client.

3

 Husband contends that he did not reveal his involvement in Pro Trans because he considered Pro Trans a

“stock investment” rather than a business interest, on the basis that he had no responsibility for the day-to-day operations

of the corporation.

4

 At trial, an Agreed Dissipation list was entered as an exhibit. This list represents the total amount by which

Husband dissipated the parties’ marital assets through gifts and payments to Ms. Payne. 

-2-

In addition to his annual salary as Senior Vice President of Distribution, Husband was also

awarded a ten percent interest in the Hewson-Memphis Partnership in the early 1990’s. The

Hewson-Memphis Partnership was a partnership that owned the land and building where WilliamsSonoma’s Shelby County distribution center was located. Husband maintains that the interest he

received in this partnership was a “gift,” and not an element of his annual compensation from

Williams-Sonoma. 

Shortly after his arrival in Memphis, Husband entered into a business agreement with Bill

Norris to form Professional Transportation Services, Inc. (“Pro Trans”).2 Husband testified that he

was a silent partner in Pro Trans, and as such was entitled to a fifty percent share of the corporation

profits. According to Husband, Pro Trans generated very little profit in its early years of inception.

However, as the business continued to grow, Husband testified that the corporation’s profit margin

increased to between $90,000.00 and $200,000.00 per year. Husband testified that Wife knew about

Pro Trans, and further insists that his family benefitted financially from his interests in the

corporation.

As an executive employee of Williams-Sonoma, Husband was required to sign a Yearly

Officer’s Statement and truthfully answer several questions, including inquiries regarding outside

business interests. Husband admits that he was required to reveal his interests and involvement in

Pro Trans; however, despite this knowledge, he consciously chose not to reveal this information in

violation of Williams-Sonoma policy.3 

In February 1993, Husband began an extramarital affair with his Williams-Sonoma coworker, Bobbye Payne (“Ms. Payne”). Husband admitted to purchasing jewelry, trips, various

household goods, and a residence for Ms. Payne with marital funds during his marriage to Wife.

Husband further admitted to paying several of Ms. Payne’s debts or bills with marital funds. He

calculated the total “agreed dissipation” amount at $440,233.97.4 At the time of trial, Husband and

Ms. Payne were still involved.

Husband resigned from Williams-Sonomain January1997. In early 1999, Williams-Sonoma

filed a complaint against Husband and Ms. Payne in the United States District Court for the Western
5

 Williams-Sonoma specifically contended that Husband and Ms. Payne “diverted Williams-Sonoma corporate

funds for their own personal use and benefit.” According to Williams-Sonoma’s First Amended Complaint, Husband

opened an unauthorized corporate account at a Memphis bank. Husband placed the account in the name of “WilliamsSonoma, Inc. Employee Fund.” The account was referenced to Husband’s own social security number, and he received

all account statements at his private residence. Williams-Sonoma alleged that Husband funded the account with

Williams-Sonoma money, and further asserted that Husband “wrote checks, drawn on the unauthorized account, to cash,

to himself and to defendant Payne, and to other persons and entities, as payment for his and defendant Payne’s respective

personal expenses and for their respective personal benefit.”

6

 Ms. Payne was included as a defendant only as to Williams-Sonoma’s actions for conversion, money had and

received, fraud, conspiracy to defraud, and unjust enrichment.

7

 In her testimony before the trial court, Wife admitted that she knew about Pro Trans, but denied any

knowledge that Husband’s participation in this corporation was a violation of Williams-Sonoma policy. Wife further

denied any knowledge regarding the unauthorized and illegal “Employee Fund” established by Husband.

-3-

District of Tennessee, alleging corporate theft.5

 Williams-Sonoma’s First Amended Complaint,

entered as a trial exhibit in this matter, alleged eight causes of action against Husband, to wit: (1)

conversion; (2) money had and received; (3) fraud; (4) conspiracy to defraud; (5) unjust enrichment;

(6) breach of fiduciary duty; (7) fraud, in connection with the Settlement Agreement and General

Release of July 5, 1997; and (8) rescission of contract.6

 Williams-Sonoma later filed an amendment

to its First Amended Complaint, alleging a ninth cause of action against Husband for unjust

enrichment and breach of fiduciary duty. Pursuant to this ninth cause of action, relating to

Husband’s interest and involvement in Pro Trans, Williams-Sonoma alleged:

As a direct and proximate result of Earley’s breach of his

fiduciary duty as herein alleged, Earley has received substantial

benefits which constitute secret profits and which have a value of at

least $2,000,000.00 in the form of distributions and benefits paid or

provided to him by ProTrans. Earley is fully liable to WilliamsSonoma for all such secret profits that he obtained in violation of his

fiduciary duties. The exact amount of Earley’s secret profits will be

proven at the time of trial.7

Husband retained the Memphis law firm of Armstrong Allen to represent him in the

Williams-Sonoma suit. On December 10, 1999, Husband and Williams-Sonoma entered into a

Mutual Release and Settlement Agreement in the above cited action. The Settlement Agreement

provided:

Not later than twenty (20) days following the full execution

and delivery of this Release by the parties hereto, Earley shall cause

the sum of $4 million Dollars ($4,000,000) (the “Settlement

Amount”) to be wire transferred in immediately available funds to the

account of Williams-Sonoma in accordance with the wire transfer

instructions provided byWilliams-Sonoma. Additionally, Earley will
8

 Wife testified that she only met with Mr. Lathram once, and stated that she did not speak with him at any time

after the Settlement Agreement was reached or prior to her signing of said agreement.

-4-

donate his 10% interest in the Memphis Hewson partnership to a

qualified charity of Williams-Sonoma’s choice....

This agreement further specified that the $4,000,000.00 paid by Husband represented a “return of

compensation” as to Williams-Sonoma’s ninth cause of action for breach of fiduciary duty.

The Settlement Agreement between Husband and Williams-Sonoma included the signatures

of Wife, and the parties’ children. With regard to her knowledge of the litigation and settlement

agreement details, Wife admitted that she and Husband discussed the lawsuit during its pendency,

and further conceded that, at the suggestion of Husband’s attorney, she spoke with attorney Brook

Lathram (“Mr. Lathram”) on one occasion regarding the Williams-Sonoma lawsuit.8

 Wife noted,

however, that she did not speak with Husband about the Settlement Agreement prior to signing it,

and further asserted that she was never advised of the possibility that this agreement could be used

against her interests in a future divorce proceeding. Wife acknowledged that she did not read the

Settlement Agreement prior to affixing her signature.

When questioned as to whether he explained the terms and consequences of the Settlement

Agreement to Wife prior to giving final approval to the agreement, Husband testified:

Q: And did you talk to her about the settlement when that issue came

up?

A: Yes. We went to mediation in Dallas. Dallas, Texas was the site

that Williams-Sonoma insisted that we meet in. And when we –

when we arrived at a mediation number or an agreement number, I

called Kathy and explained to her what the number was, how much

Williams-Sonoma stock we would have to sell in order to meet that

number and also explained the – that we – what assets we would have

left.

******************************************************

Q: Did she agree with [the Settlement Agreement]?

A: Yes, she did.

Q: Did you tell her about also the charitable gift of the partnership?

A: Yes, I did.
9

 In her Complaint, Wife also sought alimony pendente lite and alimony in futuro. On September 12, 2000,

Wife filed a Motion Pendente Lite for alimony, child support, and attorney’s fees. On March 12, 2003, after the trial

court entered its Final Decree of Divorce and Wife filed a Notice of Appeal of the court’s order, this Court entered an

Order stating that it did not have jurisdiction to hear the appeal as the trial court’s decree was not a final order. In

support of our finding, this Court noted that there was nothing in the record to show that the trial court adjudicated Wife’s

claim for alimony. As a result, this Court dismissed Wife’s appeal. 

Wife filed a Petition for Rehearing with this Court on March 24, 2003. The petition, unopposed by appellee,

acknowledged that Wife asked for alimony in her original complaint. However, despite her initial pleading, Wife cited

to an exchange between the trial court and appellant, documented in the trial transcript, where “it was stipulated

Appellant was not seeking any rehabilitative or periodic alimony.” On this basis, Wife asked this Court to “remand the

issue of the alimony claim back to the Trial Court so that an appropriate Order might be entered in the Trial Court

adjudicating the claim for alimony based upon the stipulation of the parties.”

Soon thereafter, this Court entered an Order giving Wife thirty days in which to supplement her petition with

a trial court order adjudicating her claim for alimony. Wife supplemented her petition in compliance with this Court’s

Order on April 8, 2003. Attached to her petition was a Consent Order Amending Final Decree of Absolute Divorce, filed

in the trial court, stating that the court’s May 2, 2003 decree “should be amended to add that Plaintiff was not awarded

any alimony by the trial court.” The following day, this Court entered an Order vacating its March 12, 2003 Order in

its entirety.

10 The dissipation argument asserted in Wife’s Complaint is premised on appellant’s allegation that Husband

“gave, conveyed and otherwise transferred substantial property and funds [to Payne] which far exceeded a quarter of a

million dollars, which funds were, in fact, marital property and/or property of another,” thereby constituting a dissipation

of the parties’ marital assets.

-5-

Q: Did she know all the terms about the settlement?

A: Yes.

******************************************************

Q: Did you make a specific point of calling her before you

consummated the mediated settlement?

A: Yes, I did. I wanted her to understand about the settlement and to

– to get her approval basically.

In addition to these assertions, Husband further maintained that Wife was aware that he was using

marital funds to pay his attorney’s fees in the Williams-Sonoma litigation.

On June 12, 2000, Wife filed a Complaint for Absolute Divorce and Injunctive Relief in the

Circuit Court of Shelby County, Tennessee. Wife sought a divorce on the grounds of irreconcilable

differences and, in the alternative, inappropriate marital conduct and adultery.9

 Pursuant to her

Complaint, Wife asked the court for a fair and equitable distribution of the parties’ marital assets,

such distribution taking into consideration Husband’s alleged dissipation of marital property.10
11 Husband moved for a continuance on the ground that he would be prejudiced by the pending criminal

proceedings but the trial court denied.

12 These documents are required by Rules of Practice and Procedure 14 (c) and 14 (d), Circuit Court for the

Thirtieth Judicial District at Memphis.

-6-

Husband filed a Motion to Stay Divorce Proceedings in the trial court on February 23, 2001.

As the basis for his motion, Husband asserted that he was at that time a target of a federal criminal

investigation. In support of this motion, Husband filed the Affidavit of Kemper B. Durand, his

attorney in the criminal matter. Mr. Durand averred that he advised Husband not to answer any

questions posed in the course of a civil proceeding that “could be the subject of the criminal

investigation or subsequent charges.”

On June 8, 2001, Husband filed an Answer and Counter-Complaint. In his Answer, Husband

admitted Wife’s alleged grounds for divorce, and further acknowledged his extramarital relationship

with Ms. Payne. Husband moreover admitted “transferring some property” to Ms. Payne, but did

not admit to the monetary value of the property transferred. Husband thereby asked the court to

grant a divorce on the grounds of irreconcilable differences. In the event that the parties could not

reach a marital dissolution agreement, Husband asked that he be allowed to proceed with his

Counter-Complaint which sought a divorce on the grounds alternatively, of inappropriate marital

conduct.

A non-jury trial was held from February 25, 2002 through February 26, 2002.11 Prior to trial,

Wife filed an Affidavit of Income, Expenses, Assets, and Liabilities and a Memorandum.12

Husband, in turn, also filed a Rule 14(D) Memorandum. A Final Decree of Absolute Divorce was

entered in the trial court on May 2, 2002. In its Order, the court declared the parties divorced

pursuant to T.C.A. § 36-4-129, and, regarding division of marital property, stated:

The marital property shall be valued as set out below, and the

Court finds the total value of the marital estate is Three Million Seven

Hundred Thirty-Eight Thousand Eight Hundred Fifty-Four Dollars

and Sixteen Cents ($3,738,854.16). The marital property shall be

divided equally, but wife shall receive an additional Five Hundred

Thirty-Three Thousand One Hundred Forty-Five Dollars and

Seventy-Four Cents ($533,145.74) because of Husband’s dissipation

of marital assets in that amount. In summary, Wife shall receive Two

Million One Hundred Thirty-Five Thousand Nine Hundred NinetyNine Dollars and Ninety-Five Cents ($2,135,999.95) of the marital

property more specifically set out below and Husband shall receive

One Million Six Hundred Two Thousand Eight Hundred Fifty-Four

Dollars and Twenty-One Cents ($1,602,854.21) of the marital

property as described below.
-7-

******************************************************

The Court finds that Wife did not dissipate any marital assets

and the Court further finds no further dissipation of marital assets by

Husband other than the Five Hundred Thirty-Three Thousand One

Hundred Forty-Five and Seventy-Four Cents ($533,145.74) referred

to herein above.

Although the court did not specifically detail in its Final Decree how it arrived at the

dissipation total of $533,145.74, the trial judge’s commented from the bench: 

All right. I think that the dissipation numbers that I gave you

as far as the issues with Mrs. Payne – or Ms. Payne – are the correct

numbers. And those numbers being the 440,233.97 that’s on Exhibit

27 [Agreed Dissipation List].

The Court further finds that 85,298 dollars and 48 cents worth

of jewelry was purchased for Ms. Payne, and I think I’ve gone

through the recitation of how I came up with that number, but I’ll do

it again just so we have everything right in the record.

******************************************************

Further, I think that there is an additional dissipation of 7,613

dollars and 28 cents. I went through Exhibit 11 previously, and I told

you how I arrived at that number, and going through the various

items, broke down exactly how I came up with the number, but the

number is 7,613.28.

The court further noted:

The real issue for me is whether or not then to add the

$207,277.50 in attorney fees that were paid in connection with the

civil suit to the dissipation. And I find that the civil – preparation for

defense of and settlement of the civil suit was something Ms. Earley

knew about all along.

It is certainly not a commendable course of action that gave

rise to the civil case, but I don’t think that it amounts to legal

dissipation, so I’m not going to include the $207,277.50 in the

dissipation figure. Therefore, the figure I come up with for the

amount that was dissipated is 533,145 dollars and 74 cents

[$533,145.74].
13 Exhibit 11 includes a “Dissipation of Marital Assets” list compiled by Wife with regard to her allegations

of dissipation against Husband. Included in this list is the $4,000,000.00 wire transfer from Husband to WilliamsSonoma, Husband’s ten percent interest in the Hewson-Memphis Partnership valued by Wife at $2,187,000.00, and

various fees advanced by Husband to Armstrong Allen for payment of legal services rendered in the Williams-Sonoma

litigation.

-8-

The record reflects that the court did not factor Husband’s ten percent interest in Hewson-Memphis

Partnership, the $4,000,000.00 payment to Williams-Sonoma pursuant to the Settlement Agreement,

and the above noted attorney fees into the dissipation total.13

Wife appeals, presenting the following issue for review, as stated in appellant’s brief:

Did the trial court err in holding that the Four Million Dollar

($4,000,000.00) return of compensation to Williams-Sonoma, the

donation of Mr. Earley’s ten percent (10%) interest in HewsonMemphis Partnership to charity valued at Two Million, One Hundred

EightySevenThousand ($2,187,000.00), and the attorney’s feesspent

by Mr. Early in his defense of the Williams-Sonoma lawsuit totaling

Two Hundred Thirty-Three Thousand, Eight Hundred Nineteen

Dollars and Fourteen Cents ($233,819.14) were not a dissipation of

marital assets?

Since this case was tried by the court sitting without a jury, we review the case de novo upon

the record with a presumption of correctness of the findings of fact by the trial court. Unless the

evidence preponderates against the findings, we must affirm, absent error of law. See Tenn. R. App.

P. 13(d).

Although there is a presumption that marital property is owned equally, there is no

presumption that marital property should be divided equally. Bookout v. Bookout, 954 S.W.2d 730,

31 (Tenn. Ct. App. 1997). Thus, an equitable division of the marital property need not be an equal

division of the property. Id. A trial court is afforded wide discretion when dividing the marital

property, and its distribution will be given “great weight” on appeal. Ford v. Ford, 952 S.W.2d 824,

25 (Tenn. Ct. App. 1997). Guidelines for the equitable division of marital property are set forth in

T.C.A. § 36-4-121 (c) (Supp. 2002). Among the factors to be considered by the court in making an

equitable division of marital property is the “contribution of each party to the acquisition,

preservation, appreciation, depreciation or dissipation ofthemarital orseparate property, including

the contribution of a party to the marriage as homemaker, wage earner or parent, with the

contribution of a party as homemaker or wage earner to be given the same weight if each party has

fulfilled its role.” See T.C.A. § 36-4-121(c)(5) (Supp. 2002) (emphasis added).

This Court set forth the standard for determining whether a party to a divorce action is guilty

of dissipating marital assets in Ward v. Ward, No. W2001-01078-COA-R3-CV, 2002 WL

31845229, at *3 (Tenn. Ct. App. Dec. 19, 2002). We quote at length from the Ward decision:
14 The trial court calculated Husband’s attorney’s fees at $207,277.50.

-9-

The court notes dissipation is not defined in [T.C.A. § 36-4-

12(c)]. In such circumstances, courts must look to the plain language

of the statute and apply the ordinary meaning of the words. Cohen

v. Cohen, 937 S.W.2d 823, 827 (Tenn. Ct. App. 1996). “Dissipate”

is defined “[t]o destroy or waste, as to expend funds foolishly.”

Black’s Law Dictionary 473 (6th ed.1990). This Court finds

instructive an article by Lee R. Russ examining how courts around

the country have dealt with the difficult task of making the fine-line

distinction between dissipation and discretionary spending. See Lee

R. Russ, Annotation, Spouse’s Dissipation of Marital Assets Prior

to Divorce as a Factor in Divorce Court’s Determination of

Property Division, 41 A.L.R. 4th 416 (1985). Trial courts must

distinguish between what marital expenditures are wasteful and

self-serving and those which may be ill-advised but not so far

removed from “normal” expenditures occurring previously within the

marital relationship to render them destructive.

In determining whether dissipation occurred, we find trial

courts should consider the following: (1) whether the evidence

presented at trial supports the alleged purpose of the various

expenditures, and if so, (2) whether the alleged purpose equates to

dissipation under the circumstances. Id. at 420-421. The first prong

is an objective test. To satisfy this test, the dissipating spouse can

bring forward evidence, such as receipts, vouchers, claims, or other

similar evidence that independently support the purpose as alleged.

The second prong requires the court to make an equitable

determination based upon a number of factors. Those factors include:

(1) the typicality of the expenditure to this marriage; (2) the

benefactor of the expenditure, namely, whether it primarily benefitted

the marriage or primarily benefitted the sole dissipating spouse; (3)

the proximity of the expenditure to the breakdown of the marital

relationship; (4) the amount of the expenditure. Id. at 421.

Ward v. Ward, No. W2001-01078-COA-R3-CV, 2002 WL 31845229, at *3 (Tenn. Ct. App. Dec.

19, 2002).

Specifically, Wife contends that the trial court erred in finding that the following did not

constitute a dissipation of marital assets: (1) the $4,000,000.00 payment and charitable gift of the

Hewson-Memphis partnership made by Husband pursuant to the Williams-Sonoma settlement

agreement; and (2) the $233.819.1414 in attorney’s fees incurred and paid by Husband for

representation in the Williams-Sonoma civil lawsuit.
15 When questioned about his annual profit share in Pro Trans, Husband testified:

[I]n our early years – some of the early years, we didn’t have but a little

profit. But as we grew, the profits went from anywhere – my share, from [$]90,000

to up over [$]200,000 in our better years.

-10-

Applying the standard set forth in Ward, we first consider whether the $4,000,000.00

payment and charitable gift made by Husband pursuant to the settlement agreement amounted to a

dissipation of marital assets, thereby entitling Wife to an additional award of marital property. The

parties do not dispute that Husband’s $4,000,000.00 payment and charitable gift were relinquished

for the purpose of satisfying the conditions of the settlement agreement. Therefore, we proceed to

the second prong of the Ward analysis, and consider whether Husband’s payment and gift constituted

a dissipation of marital assets in light of the four factors introduced by the Ward court.

Under the first factor, we find that Husband’s payment and charitable gift were not

expenditures typical to the parties’ marriage. Although Husband was the subject of a separate but

related criminal investigation at the time of the trial in this matter, there is no evidence that payment

of civil or criminal penalties, settlement agreements, or lawsuits was typical to the marriage.

With regard to the second factor, Wife contends that the expenditures made by Husband in

accordance with the settlement agreement were made solely for Husband’s benefit. In reaching this

conclusion, Wife notes that she was never a party to the Williams-Sonoma lawsuit and further

suggests that she did not benefit “from the acts complained of by Williams-Sonoma against

[Husband] and Ms. Payne in the Complaint for Damages alleging rescission of contract, conversion,

money had and received, fraud, conspiracy to defraud, unjust enrichment, and breach of fiduciary

duty.”

We disagree with Wife’s assertion that she did not benefit from Husband’s payment and gift

under the settlement agreement. Recognizing that Wife was not a party to the lawsuit, nor was she

directly or indirectly involved with the underlying wrongful conduct, the evidence is nonetheless

undisputed that Wife knew of Husband’s involvement in Pro Trans and further received significant

financial benefits as a result of Husband’s business venture and his lucrative employment with

Williams-Sonoma. According to his business arrangementwithBillNorris, Husband received a fifty

percent share of Pro Trans’s annual profits. Husband testified that the profit total varied, but

acknowledged that his annual share totaled more than $200,000.00 on at least one occasion.15

Moreover, there is no evidence in the record, aside from payments and gifts made in accordance with

the settlement agreement, that Husband’s involvement in Pro Trans resulted in financial loss to his

family.

Husband offered unrefuted testimony that his family benefitted financially from his

involvement in Pro Trans. Husband testified that Pro Trans allowed his family to maintain a

privileged lifestyle, as profits from the business funded racquet club memberships, cars for the

parties’ children, and provided extra family income. Additionally, because Wife was not employed
16 Wife’s reply brief recognizes that settlement of the controversy with Williams-Sonoma prevented greater

liability and loss of marital assets.

-11-

outside of the home, Husband’s compensation from Williams-Sonoma and his profit share from Pro

Trans provided the only income for the parties’ family.

Having found that Wife directly benefitted from the business venture that led to the breach

of fiduciary duty claim upon which the settlement agreement was based, we also find that Wife

benefitted from and consented to the expenditures made pursuant to the settlement agreement.

Finalized on December 10, 1999, the Williams-Sonoma settlement agreement provided that the

entire $4,000,000.00 payment be allocated to the corporation’s ninth cause of action for Unjust

Enrichment and Breach of Fiduciary Duty, stemming from Husband’s involvement in Pro Trans.

As such, no part of the $4,000,000.00 was assigned to any of the corporation’s other eight claims

against Husband. Husband asserts that Wife benefitted from the settlement agreement expenditures

as said expenditures helped to preserve the parties’ estate.

16 We are inclined to agree.

Entered as an exhibit at trial, Williams-Sonoma’s First Amended Complaint sought punitive

and exemplary damages as to five of the eight causes of action levied against Husband. The

corporation’s First Amended Complaint also sought compensatory damages on each of the eight

claims in excess of $500,000.00. In its amendment to this First Amended Complaint, WilliamsSonoma added claims for compensatory, punitive, and exemplary damages based on Husband’s

breach of fiduciary duty, resulting from his involvement with Pro Trans. 

Considering the corporation’s multiple claims for damages, both compensatory and punitive,

we find that it is entirely possible that the Williams-Sonoma litigation, had it proceeded to trial,

could have depleted the parties’ estate by more than the amount settled upon by the parties.

Moreover, Husband and Wife’s willingness to settle appears to indicate an acknowledgment that a

trial of the Williams-Sonoma suit could have proven even more costly to the Earley family.

Furthermore, we note that the parties satisfied the $4,000,000.00 payment required by the settlement

agreement in its entirety by “paying back” Williams-Sonoma stock options. As such, the parties

acted in full compliance with the settlement agreement without further depleting marital funds or

being forced to sell the marital home or any other substantial marital assets. For these reasons, we

are persuaded that the expenditures made in accordance with the settlement agreement provided

insurance against further depletion of the parties’ estate, thereby constituting a benefit to the

marriage, and not just Husband as the “dissipating” spouse.

Finally, with regard to the second Ward factor, we note that Wife affixed her signature to the

settlement agreement, thereby authorizing and consenting to the expenditures made in accordance

thereto. The fact that Wife was required to sign the settlement agreement indicates to this Court that

Wife had a significant interest in the resolution of the Williams-Sonoma suit. Therefore, we are

unable to conclude that the expenditures made pursuant to the settlement agreement, especially in

light of Wife’s signature authorizing and consenting to such expenditures, were not made for the

primary purpose of benefitting the parties’ marriage.
17 On cross examination, Husband’s counsel questioned Wife as to the steps taken by the parties to reconcile:

Q: All right. All right, Ms. Earley. And you and your husband were

actually in counseling for probably a year or two before the Williams-Sonoma

lawsuit, were you not?

A: Yes.

Q: And during that counseling, your husband acknowledged that he had

an affair with Bobbye Payne; correct?

A: Yes.

Q: And you and your husband attempted through counseling and other

means to try to work out your relationship; correct?

A: Yes.

Q: And once again, that continued through the Williams-Sonoma lawsuit,

as you all were together during that lawsuit up to the time it was settled; correct?

A: Yes.

Q: And then you stayed together for some time after that?

A: Yes.

-12-

The third factor in Ward requires a court to consider the proximity of the expenditures to the

breakdown of the marital relationship. It is undisputed that Husband began an extramarital affair

with Ms. Payne in 1993. Husband’s on-again-off-again relationship with Ms. Payne continued

through December 10, 1999, the date of the settlement agreement, and was still intact at the time

of trial in this matter. From the record, it is apparent that Wife was aware of Husband’s marital

indiscretions years prior to the settlement agreement.

The record indicates that Husband and Wife were still living together at the time of the

settlement agreement and expenditures. Wife testified that the parties were attempting to reconcile

at the time of settlement.17 Husband acknowledged that the parties were attempting to reconcile at

the time of the settlement, and added that they attended church and counseling sessions together in

an effort to mend their marital relationship.

Wife offered conflicting testimony as to whether she had entertained thoughts of divorce

prior to meeting with her attorney, Mr. Lathram. Wife conceded, however, that she never discussed

or considered discussing the possibility of divorce in her meeting with Mr. Lathram. Wife did not

file her Complaint for divorce until June 12, 2000, approximately six months after the WilliamsSonoma lawsuit was settled, and several years after first learning of Husband’s affair.
-13-

While it is apparent that the parties’ marital relationship began to break down the moment

Husband began his affair with Ms. Payne, we are unable to make a finding of dissipation based on

this factor in light of the particular facts of this case. We find no evidence that the expenditures

mandated by the settlement agreement were motivated by or related to the breakdown of the parties’

marriage. We are further convinced that Husband’s involvement in Pro Trans was premised solely

on Husband’s concern for his own financial stability, and that of his family. While we do not find

that dissipation requires an intent to dissipate, we are unwilling to find that the expenditures made

by Husband in an effort to preserve the greater part of the marital estate while attempting to save the

marriage constitutes dissipation of marital assets. Concerning the third Ward factor, we note

Husband’s reliance on the decision of the Illinois Supreme Court in In Re Marriage of O’Neill, 563

N.E.2d 494 (Ill. 1990), where the Court construed the Illinois statute dealing with distribution of

marital property requiring that, among other things, dissipation of assets by each party is a factor to

be considered in distributing marital property. This statute is similar to the Tennessee statute dealing

with the same subject. In O’Neill, the Court stated:

We therefore hold that the term “dissipation,” as used in

section 503 (d)(1) of the Illinois Marriage and Dissolution of

Marriage Act, refers to the “use of marital property for the sole

benefit of one of the spouses for a purpose unrelated to the marriage

at a time that the marriage is undergoing an irreconcilable

breakdown.” 

Id. at 498-99 (citations omitted). 

Husband asserts that the evidence in the record preponderates against a finding that the

parties’ marriage was undergoing an irreconcilable breakdown, citing to evidence that the parties

were still living together at the time of the settlement agreement expenditures, were participating in

marriage counseling, and even attended church together. While we find that the evidence relied upon

by Husband strongly suggests that the parties were putting forth every effort to reconcile at the time

of the settlement agreement expenditures, we are unwilling to adopt the definition set forth by the

Illinois Supreme Court requiring a finding of an irreconcilable breakdown. Ward sets forth no

requirement of irreconcilability, and we find no case law in Tennessee explicitly providing for such

requirement.

The final Ward factor requires a reviewing court to consider the total amount of the

expenditure(s) in determining whether said expenditure(s) constituted a dissipation of marital assets.

It is undisputed that Husband made a $4,000,000.00 payment to Williams-Sonoma in accordance

with the settlement agreement. Although the parties offered conflicting testimony as to the purported

value of the Hewson-Memphis Partnership, it is apparent from the record that the partnership

represented a substantial financial worth to the parties. However, in recognizing the substantial

value of the parties’ marital estate, and considering the fact that the payments made by Husband to

Williams-Sonoma represented less than fifty percent of the parties’ total estate, we find that the
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payments, under the circumstances of this particular case, were not so as to require or suggest a

finding of dissipation.

In weighing the Ward factors, as they apply to the facts in this case, we find that the

$4,000,000.00 expenditure and charitable gift made by Husband pursuant to the settlement

agreement do not constitute a dissipation of marital assets. We premise our decision specifically

upon our findings with regard to the second, third, and fourth factors set forth in Ward. Having

found that Wife directly benefitted from the expenditures, and that said expenditures were not related

to or the product of the breakdown of the parties’ marital relationship, we are unable to conclude that

these expenditures were a dissipation of marital assets.

The final issue presented for review before this Court is the question of whether the

attorney’s fees incurred and paid by Husband in exchange for services rendered in the WilliamsSonoma civil lawsuit constitute a dissipation of marital assets. In his ruling from the bench denying

Wife’s claim for inclusion of the Williams-Sonoma attorney’s fees in the dissipation total, the trial

judge stated:

The real issue for me is whether or not then to add the

$207,277.50 in attorney fees that were paid in connection with the

civil suit to the dissipation. And I find that the civil – preparation for

defense of and settlement of the civil suit was something Ms. Earley

knew about all along.

It is certainly not a commendable course of action that gave

rise to the civil case, but I don’t think that it amounts to legal

dissipation, so I’m not going to include the $207,277.50 in the

dissipation figure. Therefore, the figure I come up with for the

amount that was dissipated is [$533,145.74].

Wife asserts that the trial court erred in refusing to include Husband’s attorney’s fees in the

dissipation total. In presenting this argument, Wife relies heavily on a footnote contained in the case

of Pennington v. Pennington, No. W2000-00568-COA-R3-CV, 2001 WL 277993 (Tenn. Ct. App.

Mar. 14, 2001). In Pennington, a divorce case involving child support and marital property issues,

Mr. Pennington was a former doctor who had been arrested and convicted several times for drugrelated offenses, including possession of cocaine and illegally writing prescriptions for controlled

substances. Id. at *1. Mrs. Pennington filed for and was awarded an absolute divorce on the

grounds of inappropriate marital conduct and adultery. Id. at *1-2. In dividing the parties’ marital

property, the court considered evidence of the husband’s dissipation of marital assets. Id. at *2. The

appellate court included the following footnote with regard to the trial court’s findings as to

dissipation:

The trial court cited the following as examples of Mr.

Pennington’s dissipation of assets: (1) $3,200 in attorney’s fees for

one of the women with whom Mr. Pennington was having an affair,
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and (2) thousands of dollars in attorney’s fees for Mr. Pennington’s

various legal infractions.

Id. at *2 n.6.

The appellate court made no other reference and engaged in no further analysis of Mr. Pennington’s

alleged dissipation. 

Based on our reading of Pennington, and in consideration of the factors set forth in Ward,

we find that the attorney’s fees incurred by Husband, under the specific facts of this case, do not

constitute a dissipation of marital assets. Addressing first Wife’s assertion that Pennington requires

a finding of dissipation, we note that the issue of dissipation was not before or considered by the

Pennington court. Further, the appellate court did not provide a sufficient factual background with

regard to the legal charges for which Mr. Pennington incurred “thousands of dollars in attorney’s

fees,” thereby preventing us from accurately comparing and/or analogizing Pennington with this

particular case. Finally, we note that the legal infractions referred to in Pennington appear to be

strictly criminal in nature. In contrast, the nine counts listed in Williams-Sonoma’s complaint, and

specifically the corporation’s action for breach of fiduciary duty, were initiated as part of a civil

lawsuit. We are unwilling to interpret or apply Pennington as a blanket rule that attorney’s fees

incurred in a civil lawsuit, by and as a result of the legal indiscretions of a single party to the marital

relationship, necessarily constitute a dissipation of marital assets.

Applying the factors set forth in Ward, we reiterate our finding that the attorney’s fees

incurred by Husband do not constitute a dissipation of marital property. With regard to factor two,

whether the expenditure “primarily benefitted the marriage or primarily benefitted the sole

dissipating spouse,” we note that the attorney’s fees at issue in this case were incurred solely for

Husband’s defense in the Williams-Sonoma lawsuit. Although the fees were incurred for Husband’s

defense, Wife also benefitted from this expenditure when considering that the parties, both Husband

and Wife, were able to reach a settlement agreement in a lawsuit that could have resulted in a

substantially greater financial loss to the parties’ estate. We reiterate that Husband’s involvement

in Pro Trans was premised on a desire to increase the financial resources of his family. As for the

expenditures made and fees incurred as a result of the settlement agreement and lawsuit, we find that

all such expenditures and fees were paid for the purpose of preserving the marital estate. Moreover,

we find that Wife admitted that she knew Husband had retained counsel to represent him in the

Williams-Sonoma litigation, and authorized and consented to the terms of the settlement agreement

by affixing her signature. Because Husband was the sole financial provider for the family, it is

unlikely that Wife was unaware that marital funds were being used to secure representation in the

Williams-Sonoma lawsuit.

The evidence in the record does not preponderate against the trial court’s finding that the

attorney’s fees paid by Husband in connection with the Williams-Sonoma lawsuit and the settlement

thereof do not constitute a dissipation of marital property.
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The decree of the trial court is affirmed and the case is remanded for such further proceedings

as necessary. Costs of this appeal are assessed against Kathleen Anne Earley and her sureties.

__________________________________________

W.FRANKCRAWFORD,PRESIDINGJUDGE,W.S.