### IN THE COURT OF APP EALS OF TENNESS EE AT JACKS ON 

### JA N U A R Y 20, 200 5 S es sio n STA NLE Y D AV ID KA HN v. R AN DA LIPM AN KA HN
Direc t Appeal from the Circ uit Court for Sh elby County No. CT-003684-01 R obert A . Lani er, Judge

No. W2003-02611-C OA-R3-C V - F iled Jun e 6, 2005

This appea l arises out of a divorce betw ee n t he parties. I n its decre e, the tria l court dec lare d the parties we re divorc ed, divided the marital property and the debts of the parties, order ed the husba nd to pay the entire balanc e of the g uardia n ad litem fe e s, na me d the wi fe the prima ry re sid e nti a l pa

re nt, and orde red the husband to pay wife c hild support. The husband now a ppeals to this Court. For the fo llo wi ng re a so ns , w e a ff ir m in pa rt , r e ve rs e in p art , a ndre ma ndfo r f urthe r p ro c e e din g s.

Te nn. R . A pp. P . 3 ; A ppe al a s o f Rig ht ; J udgm e nt of t he Affir m e d in P ar t; Re ve r se d in P art and Rem anded
A L AN E. H I G H ERS , J. , d e li v e r e d th e o p in io n o f th e c o u r t, inw h ic h W. F RAN K C RAW FORD , P.J ., W.S ,. and H OL L Y M. K I RBY , J ., joined.
Richard A.G ordon, Memphis, TN, for Appellant
Caren B . Nichol and B lake W. Bourland, Memphis, TN, for Appellee
OP IN ION
F acts and P roce dural Hi story
Randa L

. Kahn (“Wife” or “Appe llee”) and Stanley D. Kahn (“H usband” o r “ Ap p ell ant”) wer e mar ried on May

9, 1982. I t w as the first marria g e for both pa rties. Husband a nd Wife adopted two children during the marriag e: Stephen D. Ka hn (“Son”) (d.o.b. 6/28/1991) and Emily D. Kahn (“D aug hter” ) ( d

. o .b. 6/3/1993). Thoug h he has improve d, Son previously exhibi ted beha vioral problems which r esulted in his suspension from school on two occ asions. He ha s been dia g nosed with attention deficit hy

pera ctivity

disorder and takes medic ation for this condition as w el l as anxiety

. At four and a half months old, Daug hter was diag nosed wit h canc er and rec eived tre atment at St. J ude C hildren’s Hospital. Husband and Wife alternated staying in the hospital with Daug hter while she re ceive d treatment.Daug hter no long er suf fer s from cancer

and excels in school.W e n ot e t h at H u s ban d admi t t ed t o at t empt i n g t o u s e D au g h t er ’ s ca n ce r h i s t or y t o ov er come t h e debt 1

o w e d to the In te rn a l R e v e n u e S e rv ic e
.

T he t r i al cour t addi t i onal l y order ed H us band t o pay t he bi l l s for car i ns ur anc e, pay W i f e $ 4 0 0 per 2

m o nt h i n ad d i t i o nal chi l d supp o rt , and p ay o ne hal f o f t he chi l d ren’ s uni nsur ed m ed i cal , d ent al , o rth o d o n tic, a nd
o p htha l m i c e xp en ses.

T he t es t i mo ny at t r i al r eve al ed t hat H us band has had di f f i cul t y s t ay i ng cur r ent on t he propert y t axe s 3 for t he Summ er proper t y an d t hat , at t he t i me of t r i al , a t ax l i en exi s t ed on t he propert y
. At one poi nt dur i ng t he marr i age , W i fe di s cover ed t hat t he Summ er proper t y was about t o be auc t i oned for fai l ure to p ay proper t y t axe s an d al er t ed H u sb a n d b e fo re the p ro p e rty w a s so ld

. F u rth e r, in W ife’s 1 4 (D ) M e m o ra n d u m , w h ic h w a s a d m itt e d into e v id e n c e , i t sta te s tha t “H u sb a n d p a id tax e s o n the [S u m m e r] p ro p e rty fro m m a rita l f u n d s.” H u sb a n d a rg u e s tha t t h e S u m m e r p ro p e rty i s s epar at e pr op er t y but does not appear t o di s put e t hat he us ed mari t al f un ds t o pay t he propert y t axe s on t he Summ er p ro p e rty.

W i fe l at er a men ded h er c ompl ai n t for di v or ce by addi n g i n appr opr i at e mar i t al c on du ct a s a g r ou n d.

4

-2- Wife holds a bache lor’s deg ree in public relations a nd g raphic desig n. She is now employ ed as a g ener al manage r for

the Memphis Flea

Marke t and ea

rns appr ox imately

$65,000.00 per y ear
. Husband attended colleg e but neve r g raduated. He ha s since wo rked in the a rea of photog raph equi p me n t r e p a ir

. O n e s u c h v e n tu r e b e g u n b y H u s b a n d w a s a b u s in e s s c a ll e d St a n ’ s Ph otos, an un inc or po rate d b us in ess. H ow e ve r, Hu sb a ndran u p a de bt o f a pp ro xima te ly

$2 3, 00 0. 00 ow e d to the I RS for failure to pay an employ ees’ withholding tax for the last three quart er s b efor e the business was shut down. Thoug h Husband’s pare nts g ave Husband the money to pay off the de bt 1 to the I RS, he did not do so. Addit ionally , during the marriag e, Husband incurre d a business loan of $30,000.00 with Morg an Stanley

. Since the closing of Stan’s Photos, Husband has cre ated two new businesse s: Phot o Applications, which off ers the se rvice of optical e quipment repa ir, and Gra phic Applications, which c oncerns digital photog r a p h y
. H u s b an d

te s ti f ie d that thirty -five pe rce nt (35%) of his g ross sales a re the profits from his business. Husband’ s g ro s s re ceipts were $218,214.00 for 2001 a nd $199,000.00 for 2002.
The lar g est asset of the marital estate is the marital re sidence , having a value of $220,500.00 wi th a mortg a g e of

$9 5, 62 1. 00

. Wif

e ha s pa id the ma

jority of ho us e no te s a s we ll a s th e ho us e ho ld expenses such as utilities and telephone . After Wife filed her

complaint for divorc e, Husba nd was or de re d to p a y

the bil ls a sso c ia te d w iththe ma ri ta l r e sid e nc e . Wh e n h e faile d to do so in a tim e ly 2
manner eac h month, Memphis L ight, Ga s & Water threatened to cut off utility service s to the home, and the tele phone wa s cut o ff on four oc casions. Additionally , Husband’s g randmother g ave Husband a parc el of land located on Summer Avenue (the “ Summer property ”) a round 1995 value d at $30,800.00. Further, Wife has $60,796.03 in a 401(k) r etireme nt plan. 3
Wife fi led her

complaint for divorc e on June 15, 2001, citing irr econc ilable diffe renc es as a g ro un d f or div or c e
. Hu sb a nda ns we re d a ndc ou nte r- c la ime d f or div or c e c iti ng ir

re con cil able 4E v e n tua lly, the p a rtie s a g re e d tha t gr o u n d s e x isted e n tit ling the m to a d ivo rc e
. 5

T h o u g h the p a rtie s, in th e ir b rie fs, ar g u e o v e r w h e the r th e trial co u rt e rr e d in se tti n g the a m o u n t o f ch ild 6

s uppo r t owed by H us band t o W i fe, dur i ng ora l ar gu m en t , co un sel for bot h par t i es conc eded t hat t hi s i s s ue had been
se ttl e d b e lo w a n d , as su c h , t h e issu e is no lo n g e r b e fo re this C o u rt. -3- dif fe re nc e s a ndina

pp ro pria te mari ta l c on du c t a s g ro un ds

. On July 9, 20 02 , th e pa

rt ie s e nte re d in to 5 a consent order appointing Patricia Worley the g uardia n ad litem fo r t h ei r c h i l d re n
. Af t era h ea ri n g, the trial court awar ded the pa rties a divorc e, divided the mar i t al es t ate a nd debt, named Wife the primary residential pa

rent for Son and Daug hter, orde red H usband to pay the entire balanc e of the g uardia n ad litem fee s in the amount of $4,154.00, and or dere d Husband to pay child support in the amount of $1,526.00 per

month. Husband now appeals to this Court and presents the f ollowing issues for our

revie w: 6
I

. Whether the trial c ourt err ed in its divisi on of the marital estate; and I I

. Whether t he trial c ourt err ed whe n it ordere d Husband to pay the entire balanc e of the g uardia n ad litem fe e s.
F or the fo llo wi ng re a so ns , w e a ff ir m in pa rt , r e ve rs e in p art , a ndre ma ndfo r f urthe r p ro c e e din g s. Stand ard of Review
W e r e v i e w a

tr i a l c o u r t ’ s d i v i s i o n o f

m ar i t a l p r o p e r t y de novo u p o n t h e r ec o rd af fo rd i n g a presumption of corr ectne ss to the trial court’s finding s of fac t. Dellinger v. D ellinger , 958 S.W .2d 77 8, 78 0 (T e nn
. Ct. Ap p. 19 97 ) (c iti ng Te nn
. R. Ap p. P. 1 3( d) ; Hass v. Knighton , 676 S.W .2d 554, 55 5 ( Te nn . 1 98 4) ; Dalton v. Dalton , 8 58 S.W. 2d 32 4, 32 7 (T e nn
. Ct. Ap p. 19 93 ))

. A tr ia l c ou rt is g iven wide discr etion in the manner in which it divides marital property , and we g ive its decisions on appea l gr eat we ight. Id

. (c i t i n g W ade v. W ade , 89 7 S

. W

. 2d 702, 715 (Tenn. Ct. App. 1994); W allace v. W

allace , 733 S.W .2d 102, 106 (Tenn. Ct. App. 1987)). The trial court’s distribution of marital prope rty

is presumed c orre ct unless the evidenc e preponde rate s otherwise. Id . (citing Tenn. R. A pp . P. 13 (d ); W

allace , 733 S.W .2d at 107). Additionally , we g ive the trial court broad discretion in the awa rd of g uardia n ad litem fe e s. Townsend v. Bingham , N o. 02 A0 1- 98 01 -C V- 00 01 9, 19 99 Te nn . A pp . L EX I S 22 6, a t *1 8 ( Te nn . Ct

. Ap p
. Ap r. 6 , 1 9 9 9 ) ( ci t i n g McKee han v. Mc Keehan , No. 02A01-9407- CV-165, 1995 Tenn. App. LEXI S 838 (Tenn. Ct. App. Nov. 21, 1995)). Absent a clea r showing of an a

buse of discr etion on the part of the trial court, we may n o t d i s t urb the trial c ourt’s aw ard of g uardia n ad litem fee s on appea l. Id

. at* 1 8 -1 9 (c i t i n g Sa lis bu ry v . Sali sb ur y , 657 S.W .2d 761, 770 (Tenn. Ct. App. 1983))

.T houg h t he t r i al cour t di d no t m ake an ex pl i ci t f i ndi ng t hat t he Summ er proper t y was “ mari t al 7 propert y , ” i t adop t ed W i fe’ s Rul e 14(d) M emo r andum s t at i ng t hat t he Summ er propert y s houl d be cons i dere d “ mari t al p ro p e rty,” a n d the trial c o u rt, in its f ina l d e c re e , “a w a rd e d ” H u sb a n d the S u m m e r p ro p e rty.

-4- Marit al P roperty Division
Hu sb a ndarg ue s th a t th e tr ia l c ou rt e rr e d w he n it

de te rm ine d th a t th e Sum me r p ro pe rty wa s “ ma ri ta l pr op e rty ” a ndin i ts d ivi sio n o f the mari ta l e state . T o g uid e Te nn e sse e c ou rt s in

7 making an equitable distribution of marital property , a trial c ourt must consider the f ollowing fa c tor s: (1) The duration of the ma rriag e; (2) The ag e, phy sical and m en t al hea lth, vocational skills, employ ability , earning c apa c ity , e state , f

inanc ia l li abil iti e s a ndfi na nc ia l ne e ds of e a c h o f the pa

rt ie s; (3) The tang ible or intang ible contribution by one (1) party to the education, training o r i n c r e a s e d e ar n i n g p o w e r

o f t h e o t h e r p ar t y; (4) The relative abilit y o f ea ch party for f uture a cquisitions of capital asse ts and income; (5) The contribution of ea ch party to the acquisition, prese rvation, appr eciat i on, depre ciation o r dissipation of the marital or se parate prope rty , including the contribution of a pa

rty to the marria g e as home maker , wag e ea rner or pare nt, with the c on tr ibu tio n of a pa

rty a s ho me make r or wa g e e arn e r to b e g ive n th e sa me we ig ht i f eac h party

has fulfilled its role; ( 6 ) T h e v a l u e o f

t h e s e p ar a t e p r o p e r t y o f

e a c h p ar t y; (7) The estate of

eac h party

at the time of the ma

rriag e; (8 ) T he e c on omi c c ir c ums ta nc e s o f e a c h p arty a t th e tim e the div isi on of pr op e rty is to become e ffe ctive; (9 ) T he ta x co ns e qu e nc e s to e a c h p arty , c os ts a sso c ia te d wi th the re a so na bly fore seea ble sale of

the asset , an d other re asonably fore seea ble expenses associated wi th the a sse t; (10) The amount of social se curity benef its available to ea ch spouse; and (1 1) Suc h o the r f

a c tor s a s a

re ne c e ssa

ry to co ns ide r the e qu iti e s b e tw e e n th e pa rt ie s. Tenn. Code Ann. § 36- 4-121(c ) (2003) . Further, the Te nnessee Code define s “marital property ” and

“ se pa rate pr op e rty ” a s f

oll ow s: (b) F or purpose s of this chapter : (1) (A) “Marital property ” means all rea l and persona l prope rt y , b o t h t ang ible and intang ible, acquir ed by

either or both spouses during the cour se of the ma rriag e up to the date of

the final divorc e hea

ring and owne d by

either or both spouses as of the date of filing of a complaint for divorce, ex cept in the ca se of f raudule nt convey ance in anticipation of filing, and including any property to which a right wa s acquire d upT h e pa r t i e s do n ot a r g u e t h a t t h e i n c om e or i n c r e a s e i n v a l u e of t h e Su mme r pr op e r t y i s mar i t al 8
p rop ert y
. Furt her, ther e i s no e vi d ence o f a ny incr ease in val ue o f the S um m er p rop ert y o r t hat i t pro d uces i nco m e. T he fo c u s o f t h e a rg u m e n t i s o n w h e the r th e S u m m e r p ro p e rty itself is “m a rita l p ro p e rty.” -5- to the date of

the fi na l di vo rc e he ari ng , andva lue d a s o f a date a s ne ar a s r e a so na

bly possible to t h e fi nal divorce hearing date. I n the ca se of a complaint for leg al separ ation, the court may

make a final di sposition of t he marital property either at the time of entering an order

of leg al sepa

ration or at the time of entering a final divorce decr ee, if any . I f the marital property i s divided as part of the orde r of leg al se pa ratio n, a ny pr op e rty a c qu ir e d by a sp ou se the re a ft e r i s d e e me d s e pa rate pr op e rty of that sp ou se . A ll m ari ta l pr op e rty sh a ll be va lue d as of a date a s nea r as po ssi ble t o t h e d a t e o f

e n tr y o f t h e o r d e r f i n a l l y d i v i d i n g t h e m ar i t a l p r o p e r t y. (B ) “Mari t al p ro p erty ” includes income from, and any incre ase in va lue during the mar ri age of

, p ro pe rty

de te rm ine d to be se pa rate pr op e rty

in a c c or da nc e wi th subdivision (b)(2) if e ach pa rty substantially

contributed to its pres er vation and

8 appre ciati o n , an d the value of vested a nd unvested pe nsion, vested and unve sted stock option rights, re tirement or other fringe benef it rights re lating to e mploy ment that acc rued during the period of the marria g e. (C) “Ma rital property ” includes rec overy in persona l injury , worke rs’ compensation, social sec urity

disabilityactions, and othe r similar ac tions for the following : wag es los t du ri ng the marria g e , r e imb ur se me nt fo r m e dic a l bi lls inc ur re d a ndpa id w ith m ar i t a l p r o p e r t y, a n d p r o p e r t y d a m a g e t o m ar i t a l p r o p e r t y. (D) As used in this subsection, “subst an t i al co n t ri b ution” may include, but not be limit ed to, the dire ct or indirect contribution of a spouse as homemaker , wag e ea rner , pare nt or familyfinanc ial manag er, tog ether with such other f

actor s as the court having jurisdiction thereof may determine. (E) Prope rty

shall be consider ed marital pr operty as def ined by this subsection for the sole purpose of dividing a ssets upon divorce or leg al separ ation and for no other pu rp os e ; a nda sse ts dis tr ibu te d a s ma ri ta l pr op e rty

wi ll n ot b e c on sid e re d a s in c ome fo r c hil d s up po rt

or a lim on y pu rp os e s, e xce pt t o th e e xten t th e a sse t w ill c re a te additional income af

ter the division. (2 ) “ Se pa rate pr op e rty ” me a ns : (A) A ll real a nd persona l property owned by a spouse befor e marria g e, including, but no t li mit e d to, as se ts h e ld i n in div idu a l r e tir e me nt a c c ou nts (IRA s) a s th a t te rm is define d in the I nterna l Revenue Code of 1986, as ame nded; (B ) Property

acquir ed in exchang e for property acquir ed bef

ore the marria g e;-6-

(C ) Inc o m e f

ro man d ap p re ci at i o n o f pr o p er t y o wn ed b y

a s p o u s e b ef

o re m arri age except when c hara cterized as marital prope rty under subdivision (b)(1) ; (D) Pr op e rtyac qu ire d b

y a s po us e at a ny tim e by gif

t , b e qu e st, de vis e or

de sc e nt; (E) Pain and suffe ring awa rds, victim of crime compensation awa rds, future medical expenses, and future lost wag es; and (F ) Property acquir ed by a spouse afte r an order of leg al sepa

ration whe re the court h a s m a d e a

f i n a l d i s p o s i t i o n o f

p r o p e r t y. Tenn. Code Ann. § 36- 4-121(b) (2003) ( emphasis adde d).
I n addition to the increa se in value or income fr om separate prope rty being considere d “marital property ” pursua nt to section 36-4-121(b) (1)( B) of the Te nnessee Code, property falling under the definition of “se parate prope rty ” in sec tion 36-4-121(b)( 2) may be included in the mari ta l e state fo r e qu ita

ble div isi on pu rp os e s p ur su a nt t o th e do c tr ine of tr a ns mut a tio n. Th is Cou rt qu ote d th e fo llo wi ng de fi nit ionof tr a ns mut a tio n w ithapp ro va l: [Transmutation] occur s when sepa rate property

is treate d i n s u ch a way

as to g ive evidenc e of an intention that it be co m e m ar i t al prope rty . One method of causing transmutation is to purchase property wit h s ep ar at e funds but to take title in joint te na nc y . T his ma y

a lso be do ne by

pla c ing se pa

rate pr op e rty

in the na me s o f b oth sp ou se s. Th e ratio na le un de rl y ing bo th the se do c tr ine s is th a t de a lin g wi th p ro pe rty in the se way s creat e s a

re bu tta ble pr e su mpt ionof

a g if t to themari ta l e state . T his presumption is based also upon the provision in many marital prope rty

statutes that property acquir ed during the marriag e is presume d marital. The pre sumption can be rebut t ed b y

ev i d en ce o f c i rc u m s t an ce s o r c o m m u n i ca t i o n s cl ea rl y i n d i ca t i n g an int ent that the prope rty

rema in separate.
Batson v. Batson , 769 S.W .2d 849, 858 (Tenn. Ct. App. 1988) ( quoting 2 H. Clar k, The Law of Domestic Re lations i n the United States § 16.2 at 185 (1987))

. Thoug h Wife arg ues that the Summer pr op e rty is m ari ta l pr op e rty be c aus e sh e wa rn e d Hu sb a nd of

the po ssi bil ity

that th e Sum me r p ro pe rty would be sold at an auction for f alling de linquent in property taxes and that marital funds we re use d to pay the prope rty

taxes, there is no evidenc e in the record to support the finding that the Summer pr op e rty its e lf, a s o pp os e d to a ny inc re a se in v a lue , is “ mari ta l pr op e rty ” su bje c t to e qu ita ble division. The Summ er pr operty was in Husband’ s name and g iven to Husband by his gr andmother as a g ift. Th e r e is n o e v id e n c e th a t th e Su mm e r p r o p e r ty w a s in te n d e d to b e “ ma

r it a l p r o p e r ty .” Further, we note t hat “[ t] he determination of what is equitable must be viewed i n light of all factor s set forth in Tenn. Code Ann. § 36-4-121, and the prope rty division a s a who le .” See W ilson v. W ilson , No. E2002-01636- COA-R3-CV, 2003 Tenn. App. L EXI S 357, at *5 (Te nn. Ct. App. May 19, 2003) (e mphasis add ed ). T h er ef ore, w e hold that the trial c ourt err ed whe n it considered theT h ou g h t h e ev i den ce i n t h e r ec or d i n di ca t es t h at t h e Su mmer prope r t y i s “ s epa r at e pr oper t y ” an d n ot 9 subject t o an eq ui t ab l e d i vi si o n be t ween t he p art i es, w e no t e t hat , in eq ui t ab l y d i vi d i ng the m ari t al e st at e, a tr i al co urt
m ust co nsi d er “ [t ]he val ue o f t he separat e p rop ert y of each p art y
. ” T enn. C o d e A nn. § 3 6

- 4

- 1 2 1 (c)( 6 ) ( 2 0 0 3 ).

H usband do es not ap p ear t o chal l enge t he reasonab l eness of t he guardian ad l i t em ’ s f ee s. 10
-7- Summer property

to be “marital property ” and, a s a re sult, remand this case for an equitable division of the marital estate. 9
G uar dia n Ad Litem F ees
Husband a lso arg ues that the trial court err ed when it order ed him to pay the entire rema ining balanc e of g uardia n ad litem fee s amounting to $4,154.00. As noted above , absent a clea r showing 10 of an abuse of discretion, thi s Court will not reve rse a trial court’s awar d of g uardia n ad litem fe e s. Townsend v. Bingham , No. 02A01-9801-CV-00019, 1999 Tenn. App. L EXI S 226, at *18-19 (Te nn. C t

. Ap p
. Ap r. 6 , 1 9 9 9 ) ( ci t i n g Sa lis bu ry v . Sali sb ur y , 657 S.W .2d 761, 770 (Tenn. Ct. App. 1983))

. I n this case, ne ither party alone soug ht the appoin t m ent of a g uardia n ad litem , b ut r a the r, bo th parties e ntere d into a consent order , appointing Patricia Worley and outlining the pa

rame ters of the g uardia n ad litem ’s power s and re sponsibili ties. After revie wing t h e entire rec ord, we cannot say that the t rial court abused its discretion whe n it ordere d Husband to pay the re maining ba lance of the g uardia n ad litem fee s. There fore , we aff irm the trial court’s decision orde ring Husband to pay the entire ba lance of the g uardia n ad litem fe e s.
Attor ney’s F ees on Appeal Finally , during oral a

rg ument, counsel for

Wife requ es t ed this Court awar d Wife her attorney ’s fe es incurr ed on appe al. We have previously noted that it is inappropriate f or this Court t o aw ar d att orney ’s fe es on appe al when both pa rties ar e partially

succe ssful. Houghland v. Houghland , 8 4 4 S

. W

. 2 d 6 1 9 , 6 2 3 (T en n
. C t

. Ap p
. 1 9 9 2 ) ( ci t i n g Ba gg e tt v . B ag ge tt , 512 S.W .2d 292, 294 (Tenn. Ct. App. 1973)) . There fore , we de cline to awa rd Wife her

atto rn ey ’s fees incurr ed on app e a l.
Conclusion
F or the re a so ns state d a

bo ve , w e a ff

ir m th e tr ia l c ou rt ’s or de r re qu ir ing Sta nle y D. Kahn to pay the re maining ba lance of the g uardia n ad litem fee s. We rever se the trial c ourt’s division of the ma ri ta l est a t e w h i c h i n c l u d e d S t a n l e y D

. K ah n ’ s s e p ar a t e p r o p e r t y a n d r e m a n d f

o r a n e q u i t ab le division of the ma

rital estate. Costs of this a ppeal are taxed e qually to A ppellee, Randa L . Kahn, a nd A p p e l l a n t , S t a n l e y D

. K ah n , a n d h i s s u r e t y f o r w h i c h e x e c u t i o n m a y i s s u e i f n e c e s s ar y.

___________________________________ ALAN E. HI GHERS, J UDGE