IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

March 24, 2004 Session

DANA BRYAN ELLIS v. SUSAN LYNN ELLIS (JOHNSON)

Appeal from the Circuit Court for Hamilton County

No. 91 DR 2801 L. Marie Williams, Judge

FILED MAY 17, 2004

No. E2003-01327-COA-R3-CV

Several years after Dana Bryan Ellis (“Father”) and Susan Lynn Ellis (Johnson) (“Mother”) were

divorced, Mother filed a petition seeking to increase Father’s child support payments. Father filed

a counterclaim seeking a downward deviation in his child support payments claiming he was

exercising visitation in excess of that contemplated by the Child Support Guidelines. After a trial,

the Trial Court found Father’s annual gross wages were $80,000 and set current child support

payments based on that amount. The Trial Court also awarded retroactive child support to the date

the petition for modification was filed and concluded the retroactive support also should be based

on Father’s current salary of $80,000. The Trial Court denied Father’s request for a downward

deviation after concluding it was in the best interests of the children not to reduce Father’s child

support payment. Father appeals. We affirm in part, vacate in part, and remand.

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

Court Affirmed in Part and Vacated in Part; Case Remanded

D. MICHAEL SWINEY,J., delivered the opinion of the court, in which HERSCHEL P. FRANKS,J., and

BEN H. CANTRELL, SP. J., joined.

Lisa Z. Espy, Chattanooga, Tennessee, for the Appellant Dana Bryan Ellis. 

Marvin Berke, Chattanooga, Tennessee, for the Appellee Susan Lynn Ellis (Johnson).
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OPINION

Background

Mother and Father were married in August of 1982 and divorced almost ten years

later. At that time, the Trial Court concluded irreconcilable differences had arisen between the

parties, declared them divorced, and incorporated into its Final Judgment a Marital Dissolution

Agreement ("MDA") submitted by the parties. In the MDA, Mother was designated the primary

residential parent of the parties' minor son and daughter. Father had visitation with the children

every other weekend from 6:00 p.m. on Friday until the children were taken to school the following

Monday morning. In the weeks that Father had weekend visitation, he also had visitation

Wednesday evening from 6:00 p.m. until the children were taken to school the following morning.

In those weeks Father did not have visitation on the weekends, his visitation was from Wednesday

evening until the children were taken to school on Friday morning. Father also had visitation one

week at Christmas and one week during the summer. The parties alternated holidays. Father's child

support payment was set at $828 per month. 

In September of 1995, mother filed a petition for contempt and to modify. Mother

claimed Father was behind on child support payments and in contempt of the Trial Court’s Final

Judgment. Mother also sought to increase the amount of the child support she was receiving. Father

filed an answer denying he was in contempt of court. Father also filed a counterclaim arguing that

his child support payments should be decreased because he now had a third child he was obligated

to support and because his visitation with the parties' two minor children was much more than was

contemplated by the Child Support Guidelines ("Guidelines"). After a hearing, the Trial Court

concluded Mother failed to establish she was entitled to an increase in child support payments. The

Trial Court also concluded that while Father did prove his visitation with the two children was

significantly more than that contemplated by the Guidelines, it nevertheless was not in the best

interests of the children to lower the level of payments. An order was entered by the Trial Court on

October 30, 1996, setting forth these findings. The record does not show that either party appealed

this October 1996 Order.

On July 5, 2000, Mother filed another petition to modify, once again claiming Father's

income had increased to such an extent that she was entitled to an increase in child support

payments. In his answer, Father denied there was an increase in his income sufficient to justify an

increase in his child support payments. Once again Father filed a counterclaim arguing his child

support payments should be reduced due to the significant amount of time the children were

spending with him. Mother later amended her petition claiming Father was in contempt of court

because he was behind on child support payments. Mother also claimed that, pursuant to the MDA,

the parties were required to maintain an account for their son’s college education and that Father had

dissipated all of the funds in this account. 

A hearing was held in January of 2003. Mother testified that she is a surgical nurse

employed at Erlanger Hospital in Chattanooga. The previous year she earned a gross income in
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excess of $47,000, which included a large amount of overtime. The parties’ son was seventeen years

old and their daughter was thirteen. Mother filed a sworn income and expense statement and

testified to its contents at trial. According to Mother, her monthly expenses are $1,744 more than

her net income from Erlanger Hospital. This shortfall, however, does not take into account the child

support payments she receives from Father. Mother also is remarried and the shortfall likewise does

not take into account any financial assistance Mother receives from her current husband who is

gainfully employed. When asked how much financial assistance she received on a monthly basis

from her current husband, Mother testified there was “no set limit.” Mother’s monthly expenses for

her and the two children include $550 for food, $425 for clothing, $100 for laundry, $350 for

recreation, and $550 for school expenses. Mother testified the parties’ son is in the eleventh grade

and is a member of the band. Mother claimed the costs associated with the band are approximately

$2,000 per year and that Father does not contribute toward this expense. Mother also stated she pays

the car insurance expense for the son. In addition, the parties’ daughter has filled out an application

hoping to attend a private school. 

Mother testified that Father is supposed to exercise visitation on Wednesday evening

until he takes the children to school the following morning. On those weeks when Father does not

have the children on the weekend, his visitation is extended to include Thursday as well. According

to Mother, when the children do not attend school because of snow days or the like, she ends up

missing work to care for the children because Father claims he cannot take off from work. Mother

also stated that even though Father is entitled to visitation with the children during spring break

every other year, he has never exercised this right. Mother maintained a diary on which she indicated

the various days when Father was supposed to exercise visitation but for one reason or another did

not. The diary included various dates in 1996 through 2000. Other documents show dates on which

Mother claimed Father did not exercise visitation during 2001 and 2002. Mother admitted, however,

that on some of the days where she indicated Father did not exercise visitation, the children were

with her on vacation. 

Pursuant to the original divorce decree, the parties were to maintain two already

existing accounts and use these funds for the college education of their two children. It was

undisputed at trial that one of these accounts contained approximately $12,800, up until the time

Father began making withdrawals from this account and eventually withdrew all of the money.

Father admitted making the withdrawals and explained that they were made at times when he was

experiencing financial difficulties and had no other liquid assets available, such as when he needed

to replace the transmission in his vehicle. Father stated he fully intended at all times on replacing

the money he withdrew from this account. 

With regard to the alleged child support arrearage, Mother testified that she did not

receive any child support payments from Father on approximately thirteen different occasions since

June of 2000 and Father was in arrears a total of $5,006.95. Mother also testified Father owed

$346.31 in medical bills for the children’s health care treatment.
1

 The income and expense statement filed by Father was based on his 2001 income. We have adjusted the

relevant figures to reflect Father’s current salary. 

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Father testified that, to his knowledge, he had not missed any child support payments.

Father testified his gross wages for 1999 totaled $57,036.54. His annual gross wages for 2000 and

2001 increased to $68,848. In 2000, Father also received $11,050 from pension and IRA

distributions. For the first three months in 2002, Father worked for Contin-U-Care Home Health

Inc., and earned gross wages of $17,616.04. Father then changed jobs effective April 1, 2002, and

began working for Home Care Solutions, Inc. Father’s gross income for the remainder of 2002 was

$57,893.44, thereby resulting in total gross wages of $75,509.48 for 2002. As of the date he began

working Home Care Solutions, Inc, Father’s annual salary was $80,000.

Father maintained a calendar which he claimed showed the dates on which he

exercised visitation with the children. According to Father, during 2002 the children were with him

a total of 174 days, which was typical of the amount of time the children have been with him since

1996. Father disputed not having the children on the vast majority of the days Mother claimed to

be those on which he failed to exercise visitation. Father went on to claim that there were several

times he exercised visitation in addition to the regularly scheduled visitation because Mother was

unable to care for the children for one reason or the other. Father testified to the various expenses

he assisting in paying on the children’s behalf over and above the regular child support payments,

such as a class ring for his son and the like. Father also stated that he gives both children spending

money. 

Father filed an Income and Expense Statement with the Trial Court. According to

this statement, Father’s net monthly income is $4,791.80. Father’s mortgage payment is $1,952.81

per month. Father claimed his monthly expenses exceeded his net income by approximately $550,

not taking into account child support payments made to Mother.1 Some of the monthly expenses

listed on the statement for Father and/or the children include: $600 for installment contracts; $400

for food; $175 for laundry and dry cleaning; $350 for recreation; $100 for the barber shop; and $300

for miscellaneous expenses. 

Father identified a deed showing that he had purchased a house on March 28, 1994,

for $119,900. Father sold this house in March of 2000 for $185,000. Father then reinvested this

money when he purchased his current house for $237,000. His new house is large enough so that

the parties’ two children have their own rooms when they stay with Father. 

On February 27, 2003, the Trial Court entered an Order resolving the various issues

presented by Mother and Father. In its Order, the Trial Court stated:

Having heard the testimony of the parties and witnesses and

reviewing the exhibits submitted into evidence, the Court finds Mr.

Ellis’ income for 2002 is as found in Exhibit 7 reflecting total

earnings of $75,508.48. He changed employment in April of 2002,
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going to work for Home Care Solutions. He has testified he will be

earning $80,000.00 per year. ... Clearly, a modification [in Mr. Ellis’

child support payments] is in order as there has been a deviation in

excess of 15 percent. Under the Tennessee Child Support Guidelines,

the support should be set at $1,515.84 for two children. The Court

has reviewed the contentions of the parties in detail concerning the

request for deviation by Mr. Ellis. The Court finds it is not in the best

interests of the children for a deviation to take place. The Court finds

Mr. Ellis has not carried the burden of proof of establishing that a

deviation should take place and that a deviation is ... in the best

interests of the children. Whereas, Mr. Ellis may spend more than the

time presumed by the Guidelines with the children (although the

proof is conflicted on this issue), the Court finds that [the son] has

band and other expenses for activities which contribute to his wellbeing and [the daughter] is seeking augmentation of her educational

experience in ways which may incur additional expense.

Accordingly, no deviation is ordered. 

The Trial Court then concluded that the modification in child support should be

retroactive to July 5, 2000, resulting in Father owing Mother a total of $22,689.72. The Trial Court

then concluded Father also was behind $5,006.95 in child support payments and $346.31 for unpaid

medical bills. Next, the Trial Court stated that Father’s explanations for why he withdrew all the

money out of the account being held for his son’s education “do not justify his actions.” The Trial

then stated: 

Mr. Ellis is found in contempt for failure to make child

support and medical payments and for this withdrawal from the

childrens’ accounts and is sentenced to 10 days in jail for the child

support arrearage and the medical bills, plus 10 days in jail for the

contempt for withdrawing funds from the child’s account, which

sentences are suspended pending strict compliance with the orders of

this Court.

The Trial Court established a time table for Father to pay the child support arrearage and unpaid

medical bills, as well as a payment schedule for restoring the funds taken from the education fund.

Father raises two issues on appeal, which we quote in reverse order:

I. The Trial Court erred in failing to reduce Plaintiff’s child

support in accordance with the Child Support Guidelines.
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II. TheTrial Court erred in retroactively increasing the Plaintiff’s

child support obligation based on his current earnings rather

that averaging his earnings during the retroactive period.

Discussion

The factual findings of the Trial Court are accorded a presumption of correctness, and

we will not overturn those factual findings unless the evidence preponderates against them. See

Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). With respect to legal

issues, our review is conducted “under a pure de novo standard of review, according no deference

to the conclusions of law made by the lower courts.” Southern Constructors, Inc. v. Loudon County

Bd. Of Educ., 58 S.W.3d 706, 710 (Tenn. 2001).

The first issue we will address is whether the Trial Court erred when it concluded

Father was not entitled to a downward deviation in his child support payments. The Guidelines

detail what is to be considered income of the obligor parent and how to calculate the child support

payment depending on the obligor’s income and the number of children subject to support. The

amount of child support established by the Guidelines was “designed to apply to situations where

children are living primarily with one parent but stay overnight with the other parent at least as often

as every other weekend from Friday to Sunday, two weeks in the summer and two weeks during

holidays throughout the year.” Tenn. Comp. R. & Regs., ch. 1240-2-4-.02(6). The Guidelines

further provide that a “court may consider a downward deviation from the guidelines if the obligor

demonstrates that he/she is consistently providing more care and supervision for the children than

contemplated in the rule.” Tenn. Comp. R. & Regs., ch. 1240-2-4-.04(1)(b). However, when

considering whether to deviate upward or downward, primary consideration must be given to what

is in the best interest of the children. Tenn. Comp. R. & Regs., ch. 1240-2-4-.04(5). 

In October of 1996, the Trial Court ruled on Father’s first request for a downward

deviation in child support payments, concluding Father demonstrated that he has “visited with his

children significantly in excess of the every other weekend and four additional weeks contemplated

by the Child Support Guidelines.” Nevertheless, the Trial Court concluded it was not in the best

interests of the children to reduce Father’s child support payments. The record does not reflect that

any appeal was taken from this October 1996 order. 

In State ex rel. Vaughn v. Kaatrude, 21 S.W.3d 244 (Tenn. Ct. App. 2000), this Court

acknowledged the Trial Court’s discretion in setting the appropriate amount of child support

payments, stating:

Having found that the juvenile court properly determined that

Mr. Kaatrude should pay back child support, we turn to the question

of the proper amount of the support. Setting child support is a

discretionary matter. See State ex rel. Coleman v. Clay, 805 S.W.2d
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at 755. Accordingly, we review child support decisions using the

deferential "abuse of discretion" standard of review. This standard

requires us to consider (1) whether the decision has a sufficient

evidentiary foundation, (2) whether the court correctly identified and

properly applied the appropriate legal principles, and (3) whether the

decision is within the range of acceptable alternatives. See BIF v.

Service Constr. Co., No. 87-136- II, 1988 WL 72409, at *2 (Tenn. Ct.

App. July 13, 1988) (No Tenn. R. App. P. 11 application filed).

While we will set aside a discretionary decision if it rests on an

inadequate evidentiary foundation or if it is contrary to the governing

law, we will not substitute our judgment for that of the trial court

merely because we might have chosen another alternative.

The goal of the statutes and regulations governing child

support is to assure that children receive support reasonably

consistent with their parent or parents' financial resources. See Shell

v. Law, No. 03 A01-9608-CV-00251, 1997 WL 119581, at *4 (Tenn.

Ct. App. March 18, 1997), perm. app. dismissed (Tenn. Jan. 29,

1998). The statutes and regulations promote this goal by requiring

the courts to set child support using guidelines developed by the

Tennessee Department of Human Services to promote both efficient

child support proceedings and dependable, consistent child support

awards. See Tenn. Code Ann. § 36-5-101(e) (Supp. 1999); Tenn.

Comp. R. & Regs. r. 1240-2-4-.02(2)(b), (c) (1994).

Kaatrude, 21 S.W.3d at 248-49. 

Addressing the Trial Court’s denial of Father’s most recent request for a downward

deviation, it appears the reason a downward deviation was denied was the Trial Court’s continuing

conclusion that such a reduction in child support would not be in the best interest of the children.

The Trial Court correctly observed that there was conflicting proof on whether Father continued to

exercise visitation in excess of what was contemplated by the Guidelines. Although the Trial Court

seemingly held that Father had not met his burden of proving increased visitation, the Trial Court

also stated that while Father “may” spend more than the time contemplated by the Guidelines, due

to other expenses such as band for the son and the daughter’s hope of attending private school, no

deviation would be ordered. The Trial Court’s conclusions appear to this Court to be inconsistent

as to whether Father’s visitation with the children exceeded the time contemplated by theGuidelines.

In Gray v. Gray, 78 S.W.3d 881 (Tenn. 2002), our Supreme Court stated as follows:

The Guidelines contemplate the downward deviation of an award of

support in cases in which the child spends more equal amounts of

time with each parent than the schedule presumed under Tenn. Comp.
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R. & Regs. 1240-2-4-.02(6). Tenn. Comp. R. & Regs. R.

1240-2-4-.04(2)(b); see also Tenn. Comp. R. & Regs.

1240-2-4-.02(6) ("In situations where overnight time is divided more

equally between the parents, the courts will have to make a

case-by-case determination as to the appropriate amount ofsupport.").

"If the child(ren) spend more time with the obligor than is assumed

by Tenn. Comp. R. & Regs., ch. 1240-2-4-.02(6), . . . the obligor's

child support payments should be reduced." Jones v. Jones, 930

S.W.2d 541, 545 n.5 (Tenn. 1996). Downward deviation could

conceivably include even a downward deviation to zero child support.

Id. at 884 (emphasis added). The Gray Court also concluded that the use of a “comparative analysis”

of the parties' relative income earnings was improper under the Child Support Guidelines inasmuch

as “Rule 1240-2-4-.03(2) specifically states that ‘the income of the obligee should not be considered

in the calculation of or as a reason for deviation from the guidelines in determining the support

award amount.’" Id. 

The reasons cited by the Trial Court for refusing to deviate downward were the son’s

band expenses and the daughter’s interest in attending private school. When this case was tried,

however, the parties’ daughter had only recently applied for admission to private school. At most

this could be considered a potential expense. The expenses actually incurred by the parties for their

children do not appear to be anything out of the ordinary or expenses which are not incurred by most

parents while raising their adolescent children. It certainly benefits children when their parents have

the financial wherewithal to enable them to participate in extracurricular activities. However, in the

present case, as in many cases, the pot containing available funds to pay for these type of activities

is only so big. If we conclude that simply incurring ordinary expenses associated with raising

adolescent children, such as band expenses, is sufficient to preclude a downward deviation, then it

is difficult to conceive of a situation where a downward deviation would ever be appropriate. We

do not believe this is the intent of the Guidelines. Furthermore, absent a downward deviation an

obligor parent may have to cease increased visitation with his or her children due to the added

financial burden associated with this increased visitation. In most circumstances, this result would

not be in the best interest of the children and would conflict with public policy of encouraging nonresidential parents to spend as much time as possible with their children. In light of the foregoing,

we conclude the Trial Court erred when it concluded that it was in the best interest of the children

to preclude a downward deviation in Father’s child support obligation.

The Trial Court never actually decided whether Father was spending more time with

the children than what is contemplated by the Guidelines. The Trial Court did determine that based

on Father’s monthly salary at the time of trial, his monthly child support payment should be

$1,515.84. After oral argument before this Court, the parties stipulated that, if no downward

deviation was appropriate, the Trial Court correctly applied the Guidelines in arriving at a monthly

child support obligation of $1,515.84. Therefore, we remand this case to the Trial Court for a

determination as to what extent Father’s $1,515.84 monthly child support payment should be subject
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to a downward deviation if Father carries his burden of showing he is spending more time with the

children than is contemplated by the Guidelines. 

The second issue on appeal is Father’s claim that the Trial Court erred when it

retroactively increased his child support obligation based on his then current earnings of $80,000,

as opposed to averaging his earnings from the date the petition for modification was filed. When

the Trial Court made the child support award based on $80,000 in gross wages retroactive to the date

the petition to modify was filed, it essentially required Father to pay child support on a total of

approximately $19,515.93 in gross wages that he never earned at his full-time job. If only Father’s

actual earnings from his full-time job were used when calculating retroactive child support back to

the date the petition to modify was filed, then the total judgment against Father would be reduced

by approximately $3,990, assuming Father is not entitled to a downward deviation which could

reduce the judgment further. This, however, does not end our review of this issue.

The initial step in calculating an appropriate child support payment is to determine

the obligor parent’s gross income. The Guidelines define “gross income” to include “all income

from any source (before taxes and other deductions), whether earned or unearned, and includes but

is not limited to, the following: wages, salaries, commissions, bonuses, overtime payments,

dividends, severance pay, pensions, interest, trust income, annuities, capital gains, . . . .” Tenn.

Comp. R. & Regs. ch. 1240-2-4-.03(3)(a)(1). 

If Father’s gross income was limited solely to the wages from his full-time job, then

we would be more likely to agree with Father’s argument that the Trial Court should not have set the

retroactive child support based on an annual income of $80,000 for that period of time when he

undeniably was not earning a salary at that level. However, Father had other “gross income” in 2000

which was separate and apart from the wages he earned at his full-time job. In particular, Father

received a pension and IRA distribution totaling $11,050 and had a capital gain of $65,100 from the

sale of his house. In Eldridge v. Eldridge, No. W2000-00730-COA-R3-CV, 2002 Tenn. App.

LEXIS 583 (Tenn. Ct. App. Aug. 8, 2002), appl. perm appeal denied Mar. 10, 2003, this Court noted

the following with regard to capital gains from the sale of a house for purposes of determining child

support payments:

Both parties raise issues regarding the calculation of

Husband's income. Wife contends that capital gains associated with

the sale of the parties' Deerpath residence should be included when

the court determines Husband's income for child support purposes.

On his 1997 tax return, Husband reported a capital gain of $340,000

which represented the sale of the Deerpath residence. This capital

gain should be included when the trial court calculates Husband's

income for child support purposes.

“Generally, capital gains are included in the definition of

gross income." Brooks v. Brooks, 992 S.W.2d 403, 407 (Tenn. 1999)
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(citing Tenn. Comp. R. & Reg. ch. 1240-2-4-.03(3)(a)). In Smith v.

Smith, No. 01-A-01-9705-CH-00216, 1997 Tenn. App. LEXIS 733,

at *6-8 (Tenn. Ct. App. Oct. 29, 1997) (no perm. app. filed), we held

that the trial court should have considered a one time capital gain

when determining the obligor's income. In our decision, we

distinguished Hall v. Hall, No. 03A01-9701-GS-00030, 1997 Tenn.

App. LEXIS 501 (Tenn. Ct. App. July 21, 1997) (no perm. app. filed).

In Hall, we did not include an isolated capital gain when calculating

Husband's gross income. 1997 Tenn. App. LEXIS 501 at *7.

However, this was due to the fact that the capital gain was included

in the marital estate. Id.; see also Smith, 1997 Tenn. App. LEXIS

733, at *8. In this case, the evidence fails to establish that the

$340,000 capital gain was included in the marital estate.

Accordingly, the trial court shall consider the $ 340,000 capital gain

when determining Husband's income for child support purposes.

Eldridge, 2002 Tenn. App. LEXIS 583, at ** 51-53.

The precise issue for resolution is whether the Trial Court erred when it concluded

Father’s retroactive child support for the thirty-three month period from the date the petition to

modify was filed up until the date of trial should be based on Husband’s annual gross income being

$80,000. Father’s average annual gross income, including his pension and IRA distribution as well

as his capital gains, during the time period in question is at least as much as the $80,000 used by the

Trial Court. Because of Father’s additional income in 2000, we conclude the Trial Court made no

error as claimed by Father in its decision to base Father’s retroactive child support on an $80,000

annual gross income. In so doing, we note that Mother does not claim on appeal that the retroactive

support should have been higher than what was set by the Trial Court. Notwithstanding the

foregoing, because the resolution on remand of the issue of whether Father is entitled to a downward

deviation may impact the amount of retroactive child support he owes, we vacate the amount of that

judgment and remand this issue as to the amount of the retroactive child support to the Trial Court

as well. In all other respects, the judgment of the Trial Court is affirmed.

Conclusion

The judgment of the Trial Court is affirmed in part and vacated in part, and this cause

is remanded to the Trial Court for further proceedings consistent with this Opinion and for collection

of the costs below. Costs on appeal are assessed one-half against the Appellant Dana Bryan Ellis

and his surety, and one-half against the Appellee Susan Lynn Ellis (Johnson). 

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D. MICHAEL SWINEY, JUDGE