### IN THE COURT OF APP EALS OF TENNESS EE AT NAS HVILLE O ct obe r 7, 200 3 S es sio n
STEVE N D. ELLI OTT v. GI NGER W. E LLI OTT (ECTO N)

Appeal f romthe Circ uit Court for Davidson County No. 00D-2375 M uriel Robins on, Jud ge

No. M2003- 00492-COA-R 3-CV - F iled April 8, 2004

This appea l involves a post-divorce dispute reg arding s t o ck o p t i ons that werepart of the marital estate. TheCircuit Court for Davidson County approve d a marital dissolut ion ag ree ment in which the husband a g ree d to transfe r o n e- h al f o f hi s employ ee stoc k options to t he wife as part of the divisi o n o f th e ma

rti a l e s tate

. A f

te r th e h u s b a n d ’ s e mp lo y e r a n d th e e mp lo y e r ’ s b r o k e r ag e firm declined to transfer

the stock o p t i o n s to the wife, she orally reque sted the husband to exerc ise the options on her beha lf. The va lue of the e mploy er’ s stock fell af ter the husband did not ex erc ise the options. The wife soug ht to hold the husband in c ontempt or to modify the divorce decr ee. T he trial court de clined to hold the husb an d i n contempt but found that he ha d impermissiblyimpeded the division of the martial estate. A ccor dingly , the court awar ded the wif e $59,759.25, the stock

o p t i o n s ’ be fo re -t ax v al u e ha d t h ey b ee n ex er ci s ed o n t h e da y t h e di v o rc e de cr ee wa s en t er e d

. In addition, the court ordere d the hus band to immediately sell the options origina lly awa rded to the w ife
a ndto p a y

he r the pr oc e e ds a s a

c re dit a g a ins t th e jud g me nt. Th e c ou rt a lso or de re d th e hu sb a ndto pay the wife ’s attorne y ’s fee s, as well as pre judgme nt interest. The husband has appe aled. We have determined that the trial court properly conclude d that the husband unre asonably impeded the wif

e’s acquisition of the value of the stock options. Howeve r, we have de termined that the tria l court er red by valuing the stock options as o f t h e ti me of the divorc e rather than the time the wife and the hu sb a ndor a lly

a g re e d to e xer c ise theop tio ns and th at th e court e rr e d b y re qu iring thehu sb a ndto exercise his options to pay the j udg ment. We have also determined that the court err ed by awa rding the wife prejudg ment interest but prope rly awa rded the wife he r attorne y ’s fe es. Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Circ uit Court Aff irm ed in Par t; Modif ied in Part ; and Rem anded

W I L L I AM C. K O CH , J R ., P.J ., M.S., delivered the opinion of the court, in which W I L L I AM B. C A IN and F RAN K G. C L EME NT , J R ., J J ., joined.

Ma rkle y Run y on Gi ll, Erin, Te nn e sse e , f or theapp e llant, Ste ve n D . E lli ott

.
J eff rey L . L evy , Nashville, Tenne ssee, f or the a ppellee, G inge r W. Ecton.T he M D A s p ecifica lly a ss i gned M r. E l l i o t t res p o nsi b i l i t y fo r t he t axes on t he o p t i o ns he exerci sed af t er t he 1
pa r t i e s ’ s e pa r a t i on bu t pr i or t o t h e e n t r y of t h e M D A.
-2- OP IN ION

I.

On April 10, 2001, Steven D. Elliottand Ging er W. Elliott, now Ecton, ex ecute d a marital dissoluti on ag ree ment (“M DA”) as part of their divorc e proc eeding pending in Circuit Court for Davidson County . Under the terms of this MDA, Mr. Elliott, then a mana g er at The Home D epot (“ Ho m e D ep o t ”) , agr ee d t o tra n s fe r o n e- h al f o f t h e s t o ck o p t i o n s h e h ad ea rn ed d u ri n g t h e m arri age to M s. Ec ton . T he MD A s pe c if ie d th e div isi on a s f

oll ow s:
1997 Options $11.33 per sha re 1050 to Wi fe 1050 to Husband 1998 Options $21.29 per sha re 675 to Wi fe 675 to Husband 1999 Options $37.92 per sha re 300 to Wi fe 300 to Husband 2000 Options $53.00 per sha re 100 to Wi fe 100 to Husband

The trial c ourt approve d the MDA and incorporated it into the final divorce de cre e that wa s entere d on April 27, 2001. Had Ms. Ec ton exercised these options on the day the divorce decr ee w as
e nte re d, the y

wo uld ha ve g e ne rate d $ 59 ,7 59 .2 5 b e fo reta xes.

T h e M DA d i d n o ts p ec i fy h o w M r. E l l i o t t wo u l d tra n s fe r t h e o p t i o n s t o M s

. E ct o n , al t h o u gh it did require both parties to undertake all further acts nece ssary to c arry out the purposes a nd intent of theMD A. At

thetim e of

thediv or c e , b othMs. Ec tona ndMr . E lli ott tho ug ht that hec ou ld s imp ly place the options in Ms. Ecton’s name or that Ms. Ecton could simplycall Mr. Elliott to ex erc ise the options wheneve r she wa s rea dy

. The MDA did not allocate the tax burden for the e x erc ise of the options, but t he parties’ under standing was that they would bear

the tax co n s equences for the
e xer c ise of

the ir ow n o pti on s. 1

Th e pa rt ie s late r d isc ov e re d th a t H omeDe po t’ s e mpl oy e e sto c k o pti on plan wou ld n ot p e rm it Mr. Elliott to transfe r one-half of his stock options t o Ms. Ecton. Acc ording ly , Ms. Ecton’s lawy er prepa red a qualified domestic r elations order or “QDRO” under the Retirement Equity Act of 1984, Pub . L . 9 8- 39 7, 98 Stat. 1 42 6 ( “ REA ” ). Th e REA pe rm its the a ssi g nme nt of pe ns ionplan b e ne fi ts to non-plan participants if done pursuant to a QDRO. The QDRO reiter ated the division of the stock op tio ns c on ta ine d intheMD A and sp e c if ic a lly pr ov ide d th a t Ms . E c tonrathe r tha n M r. El lio tt w ou ld be lia blefo r the ta xes a

ri sin g fr om the e xer c ise of he r h a lf of theop tio ns

.
The trial c ourt signe d and entered the QDRO on J anuary 14, 2002, but both Home Depot and its broker of r ecor d, Smit h Ba rney , ref used to honor it. Be cause Mr. Elliott’s stock options wer e not part of a retire ment plan, Home De pot and Smit h Ba rney conclude d that they

could not be tra nsfer

red under a QDRO. Moreove r, under Home Depot’s employ ee stock option plan, Mr. Elliott could notC o u n se l f o r th e p a rtie s faile d to inc lud e H o m e D e p o t’s e m p lo ye e sto c k o p tio n p la n in the re c o rd o n a p p e a l. 2 It i s unc l ea r f

ro m t he rec o rd w he t he r t he p l an w as eve r p ro d uc ed t o t he t rial co urt o r, fo r t ha t m att er, w he t he r t he p arti es’

co un sel i n the d i vo rce p ro ce ed i ng ev er c o nsult ed i t

. In an y eve nt, it i s clear f ro m t he rec o rd o n a p p ea l t ha t wh atev er e l se t h e pl an says , i t ba r r ed t h e t r an s fer of opt i on s a wa r ded u n der t h e pl an t o i n di v i du al s l i k e M s

. Ect on w h o w er e n ot

e m p lo ye d b y H o m e D e p o t.

U nd er H o m e D ep o t ’ s em p l o y ee st o ck o p t i o n plan, the e xerci se of t he o p t i o ns and t he sal e o f t he res ul t i ng 3

s har es occu r s s i mul t ane ous l y , an d t he emp l oy ee r ece i ves t he di f fer enc e bet ween t he op t i on p r i ce and t he day ’ s mar ket p ri ce fo r t he st o ck.
-3- tr a ns fe r h is o pti on s t o any non- e mpl oy e e , in c lud ingMs. Ec ton

. Th us , H omeDe po t a ndSmith 2 B arn e y a dv ise d Ms. Ec ton that the on ly way sh e c ou ld re c e ive the be ne fi t of the op tio ns Mr . E lli ott ag ree d to transfe r to her in the MD A was f or Mr. Elliott to ex erc ise the options himself and transf er the proc eeds to he r. 3
Shortlythere afte r, Ms. Ecton met with a financ ial advisor to discuss her f inance s. The financ ial advisor told Ms. E cton that the mar ket price for Home Depot stock wa s relatively high and
rec ommended that she e x erc ise the options Mr. Elliottag ree d to transfe r to her in the MDA. At the time, Ms. Ecton had not spoken with Mr. Elliott since the parties’ divorce

. Ne v er t h el es s , the fo llo wi ng day , F e br

ua ry 13 , 2 00 2, Ms. Ec tonte le ph on e d M r. El lio tt. During this telephone conve rsation, Ms. Ecton told Mr. Elliott what her financ ial advisor had said and that Home Depot and Smith Ba rney had re fused to honor the QDRO. She also told him t hat Home De pot and Smit h Ba rney had informed her that the only way she could re alize the value of the options was for Mr. E lliott to e x erc ise them and transfe r the proce eds to he r. Ms. E cton instructed Mr. Elliott t o exercise the options and ag ree d to pay the re sulting tax li ability . Ms. Ecton said her tax advisor estimated the tax l iabilityto be 23% a nd told Mr. El liott that he could de duct that amount from the pr ocee ds and g ive her the re mainder.

Mr . Elli ott a g re e d to e xer c ise theop tio ns a ndtr a ns fe r the pr oc e e ds to h e r. Mr . E lli ott sa id he believe d the tax li abilit y wo u ld be closer to 30% and that he wanted to c heck w ith his own financ ial advisor to determin e t h e am o u nt he nee ded to withhold to cover the tax l iability . Mr. El lio tt a lso a g re e d to e xer c ise a ndg iveMs. Ec tonthepr oc e e ds fr om 1 00 of his ow n 19 97 op tio ns , and in re turn he wa s g oing to ke ep Ms. Ecton’s 100 2000 options which could not be e x erc ised then beca use the mar

ket price was curre ntly highe r t han the option price

. Had Mr. E lliott done what he ag ree d to do, Ms. Ecton would have rea liz ed $68,113.25 bef ore ta x es fr om the exercise of the stock op tio ns

.
There is no evidenc e in the record that Mr. Elliott di d, in fac t, speak with a f inancial a dvisor reg arding the t ax l iabilityhe would incur from the e x erc ise of Ms. Ecton’s options. I nstead, Mr. El lio tt a pp are ntl y c on ta c te d his a tto rn e y wh o tol d him that he wa s fre e to re ne g e on his a g re e me nt. At that point, Mr. Elliot t decided that he was not going to exercise Ms. Ecton’s options as a g ree d. He did not, howeve r, inform Ms. E cton of his de cision. I nstead, on F ebrua ry 27, 2002, two wee ks afte r his conver sat i o n wi t h M s. Ecton, Mr. Elliott ex erc ised 1,225 of his own Home D epot stock options but none of the 2,125 options he had ag ree d to exercise for M s. Ecton. Mr. Elliott realized
a pr of it o f $ 37 ,5 72 .2 6 b e fo reta xes.T he t ri al co urt al so o rdered M r. E l l i o t t t o exerci se al l o f M s. E c to n’ s shar es f o r her i m m ed i at el y , wi t h t he 4
pr oce eds t o c on s t i t u t e a re du ct i on i n t h e j u dg men t , an d orde r ed M s

. Ect on t o pa y t h e t ax es a r i s i n g f r om t h e ex er ci s e of t he o p t i o ns. In a d d i t i o n, t he t rial co urt m an d ated t ha t t he jud gm en t ag ainst M r. E l l i o t t wo uld co nsti t ute a li en ag ainst al l of hi s p rop ert y , i ncl ud i ng wages, ret i rem ent acco unt s, pe rs o nal acco unt s, p e rs o nal pro p ert y , real pro p ert y and aut o m o b i l es. M r. E l l i o t t d o es no t specif i cal l y chal l enge t hese rem ed i es o n ap p eal ap art f rom hi s at t ack o n t he und erl y i ng ju d g m e n t i n ge n e ra l.
-4- Mr. Elliott di d not te ll Ms. Ecton that he had decide d to r eneg e on their ag ree ment until four to six we eks later when Ms. E cton called to inquire about the exercise of the optio n s

. Fu rt her
a tte mpt s by Ms. Ec ton a nd he r a tto rn e y to o btain the c oo pe ratio n o f M r. El lio tt andhis a tto rn e y to
e xer c ise Ms. Ec ton ’s op tio ns pr ov e d f uti le . T hu s, on July

17 , 2 00 2, Ms. Ec tonfiled a pet ition to have Mr . Elliottheld in contempt or in the a lternative to modify the divorce decr ee.

Th e tria l c ou rt

he ld a he ari ng on Ms. Ec ton ’s pe tit ion on Janu ary 9, 20 03 . B othMr . E lli ott and Ms. Ecton testified, and sever al exhibi ts w ere admitted into evidence . On Fe bruary 10, 2003, the trial court entere d a written order declining to hold Mr. Elliott in contempt. The trial c ourt did, howeve r, g rant the pe tition t o modify the orig inal divorce decr ee. The trial court found that Fe bruary 13, 2002 was “the date in which the Respondent [ Mr. Elliott] first ag ree d to exercise the options and turn over the money

to the Petitioner [M s. Ecton].” The trial court explained that Mr. Elliott“then chang ed his mind and failed to exercise the options re sulting in this lawsuit to enforce the provisions of theF in al D e c re e of

Di vo rc e .” Th e tria l c ou rt c on c lud e d th a t Mr . E lli ott ha d impe rm iss ibl y imp e de d th e tr a ns fe r o f the c a sh va lueof thesto c k o pti on s to Ms. Ec ton by no t e xer c isi ng theHo me Depot options in a ti mely

manner and that Mr. Elliott had bee n an impediment to the division of the marital asse ts. The trial court entere d a judg ment in favor of Ms

. Ecton for $59,759.25, the sum the options would have g ener ated ha d they been e x erc ised the day

the orig inal divorce d ec ree was enter ed. The trial court o rd er ed M r. E lliott to pay Ms. Ecton’s attorne y s’ fe es in the amount of $1 ,7 76 .0 7 a nd he ld that the jud g me nt wo uld a c c ru e int e re st a t th e rate of 10 % r un nin g fr om the date Mr. Elliott orally

ag ree d to exercise the options. Mr. Elliott appealed. 4

II. T HE S TA N D A R D O F R EVIEW

The standa

rds this court us es t o revie w t he results of bench trials is well settled. Wit h reg ard to a trial court' s finding s of fac t, we will revie w the re cord de novo an d wi l l p re s u m e t h att h e f i n d i n gs of fa ct ar e cor

rec t unless t h e p reponde ranc e of the evidenc e is otherwise . We will also give g reat weig ht to a trial court' s fac tual finding s that rest on dete rminations of cre dibilit y

. Estate of W alton v. Y oung , 9 50 S.W. 2d95 6, 95 9 ( Te nn . 1 99 7) ; B & G Con str ., In c . v . P olk , 37 S

. W

. 3 d 462, 465 (Tenn. Ct. App. 2000). H oweve r, if t h e trial judg e has not made a spec ific finding of fa ct on a particula r m atter, we wil l revie w t he record to determine wher e the preponder anceof the e vidence lies without employ ing a presumption of cor rec tness. Ga nz e v oo rt v . R us se ll , 949 S.W .2d 293, 296 (Tenn. 1997)

.
R ev i ew i n g fi n d i n gs o f f

ac tu n d erT en n

. R

. Ap p

. P

. 1 3 (d ) re q u i re s an ap p el l at e co u rt t o we i gh the evidence to determine in which party ' s favor the weig ht of the ag g reg ated e vidence falls. Ther e is a rea sonable proba

bilitythat a proposition is true when the re is more evidenc e in its favor tha n-5-

there is ag ainst it. Thus, the prevailing party is the one in w hose favor the evidentiary scale tips, no
matt e r h o w s li g h tly

. Park s P ro ps . v . M au ry Cou nty , 70 S.W .3d 735, 741 (Tenn. Ct. App. 2001); Realty Shop, Inc . v. RR W estminster Holding, Inc. , 7 S.W .3d 581, 596 (Tenn. Ct. App. 1999).
Tenn. R. App. P. 13(d)' s presumption o f correctne ss require s appellate courts to def er to a trial court' s findings of

fac t. Rawlings v. John Hancoc k Mut. L i f e In s

. Co. , 78 S.W .3d 291, 296 (Tenn. Ct. App. 2001). B eca use of the pr esumption, an appe llate court is bound to l ea v e a trial court' s finding of

fac t undisturbed unless it determines that th e aggr ega te weig ht of the evide nce demonstrates that a finding of fa ct other than the one f ound by the trial court is more probably true. Pa rk s P ro ps . v . M au ry Cou nty , 70 S.W .3d at 742. For the evidenc e to pre ponderate ag ainst a trial court' s finding of

fac t, it mus t support another finding of fac t with gr eate r convinc ing e ffe ct. W alker

v . S idn ey Gi lre ath & As so c s. , 40 S.W .3d 66, 71 (Tenn. Ct. App. 2000).
The pre sumption of corre ctness in Tenn. R. App. P

. 13(d) applies only to findings of fac t and not to conclusions of law. Ac cording ly , appella t e co u rt s review a trial c ourt' s resolution of leg al issues without a presumption of corr ectne ss and rea ch their ow n independe nt conclusions reg arding these issues. Johnson v. J ohnson , 3 7 S. W.3 d 8 92 , 8 94 (T e nn . 2 00 1) ; Nutt v. Champion Int'l C orp. , 980 S.W .2d 365, 367 (Tenn. 1998)

.
III

. T HE E M PL OY EE S T OCK O P T I ONS Mr. Elliott arg ues t h e t ri al court erre d in concluding that he impermissibly impeded the dis tribu tio n o f the mari ta l a sse ts. Ac c or din g to M r. El lio tt, a ll h e a g re e d to do in the MDA wi th
re sp e c t to the sto c k opti on s wa s to sig n pape rw or k trans fe rring the op tio ns to M s. Ec ton . H e a sse rt s that since Ms. Ecton never prese nted him with paperw ork he c ould sign to transf er the options over to her, he has not violate d the terms of the MDA, and ther efor e, he did not impede the division of themari ta l a sse ts. Th is a rg ume nt b or de rs on thedis ing e nu ou s.

A.

AnMD A’ s p ro vis ion s p e rt a ini ng to the div isi on of thepa rt ie s’ mari ta l est a te aree sse nti a lly contra ctual, eve n afte r they have be en judicially

approve d and incor

porate d into a divorce decr ee. Johnson v. J

ohnson , 37 S. W.3 d at 89 6; W ade v. W ade , 115 S.W .3d 917, 924 (Tenn. Ct. App. 2002); Gray v . Estate of Gray , 9 93 S.W. 2d59 , 6 3 (T e nn . Ct. App . 199 8)

. Th e pa rt ie s may no t un ilate ra lly modify an MDA once it has been approve d by the trial court. Johnson v. J ohnson , 37 S.W .3d at 895. I n fac t, both parties obtain a ve sted interest in the prope rty allocate d to them in the MDA, and ne ither party may frustrate the other’s rec eipt of his or her ve sted interest. Johnson v. J ohnson , 37 S.W .3d at 897.
The portions of an MDA that re main contra ctual af ter the tria l court has a

pproved them should be construed and enfor ced like othe r contra cts. Bogan v. Bogan , 60 S.W .3d 721, 730 (Tenn. 20 01 ); Gray v. Estate of Gray , 99 3 S.W. 2d a t 63

. Th us , o ur g oa l is to a sc e rt a in andg ivee ff e c t to the parties’ intentions. Ah e rn v . A he rn , 1 5 S. W.3 d 73, 81 (T e nn . 200 0)

. Ou r s e arc h f or thepa rt ie s’ intentions must focus on the M DA it self. Eac h provision of an MDA should be construed in lig htT he p art i es coul d very easi l y have agreed t o acco m p l i sh t he d i vi si o n of t he st o c k o p t i o ns b y requi ri ng M r. 5 El l i ot t t o e x er ci s e h al f of t h e opt i on s i mmedi at el y a n d pa y t h e pr oce eds o ver t o M s. Ect on

. H owe v er , M s

. Ect on appare nt l y deci ded t hat t hes e s t ock o pt i ons wo ul d i ncr eas e i n val ue over t i me and, t her efore, t hat sh e woul d be bet t er
ser ved by o b t ai ni ng t he o p t i o ns rat her t han t he cash. It i s p erf ect l y pe rmis si b l e fo r di vo rci ng pa rt i es t o m ake t hi s sort

o f i nv estm en t d ec i si o n. H o w ev er, l i ke an y o t he r i nv estm en t , t he y d o so w i t h the u nd erstan d i ng t ha t st o ck , st o ck o p t i o ns, and other i nvest m ent s canno t only i ncrease but al so d ecrease i n val ue o ver t i m e. W hen M s. E ct o n de ci d ed t o accep t t he

s t ock opt i ons r at her t han cas h, s he as s umed t he r i s k t hat t he val ue of t hes e opt i ons coul d decre as e before s he exe r ci s ed t h e m.
-6- of the e ntire MDA, and the lang uag e in these pro v i s ions should be give n its natural and or dinary
me a nin g . We sh ou ld c on str ue MD As fai rl ya ndre a so na bly , a ndwe sh ou ld a vo id r e writi ng the se ag ree ments under the g uise of “construing ” them. Duvier v . Duvier , No. 01A01-9311- CH-00506, 1995 WL 422465, at *3 (Tenn. Ct. App. J uly 19, 1995) (No T enn. R. App. P. 11 application filed)

. Every contra ct imposes upon the parti es a d u t y of g ood faith and f

air de aling in the perf ormanc e and inter

pretation of the contra ct. W allace v. National Bank of Commerc e , 938 S.W .2d 68 4, 68 6 ( Te nn . 1 99 6) ; R E S TA TE ME NT (S EC OND ) O F C O N T RA CT S § 205 (1979); 2 J OS EP H M. P ER I LLO & H EL EN H A D JI Y A U U A KI S B ENDER , C O R B I N ON C O N T RA CT S § 5 .2 7, a t 13 9 ( re v. e d. 19 95 ). Th is d uty require s a contra cting party to do nothing that will have the eff ect of impairin g or destroying the rig hts of the ot her party to rec eive the benef its of the c ontrac t. W

infree v. Educ ators Credit Union , 900 S.W .2d 285, 289 (Tenn. Ct. App. 1995). The provisions of an MDA that re tain their contra ctual char acte r following the entry of a f in al d i vorce decr ee c arry

with them this dut y

of g ood faith and fair de aling

. Hilman v. Hilman , No. M 2002-00898-COA- R3-CV, 2003 WL 21766254, at *3 (Te nn. Ct. App. J uly

31, 2003) (No T enn. R. App. P. 11 application filed)

.
B.

Th e reis n o d isp utere g ard ing the natur e of the pr op e rty div isi on that the pa rt ie s in te nd e d in thi s c a se . T he MD A c le arl y re fl e c ts that Mr . E lli ott

vo lun tari ly

a g re e d to tr a ns fe r o ne -h a lf of his Ho me De po t e mpl oy e e sto c k o pti on s to Ms. Ec ton , a ndMs. Ec ton vo lun tari ly a g re e d to a c c e pt the se sto c k o pti on s inlie u o f c a sh

. Th e pa rt ie s ant ic ipate d that fol low ing the ir div or c e , M s. Ec tonwo uld 5 obtain and exerc ise complete c ontrol over the options she r ece ived in the divorce decr ee.

I f the rewa s a ny

un c e rt a inty , it

inv olv e d th e me c ha nis m by wh ic h th e sto c k o ption s wou ld be tra nsfer

red to Ms. Ecton. When the parties wer e negotiating the M DA, they appar ently believed that Mr. Elliott could sim ply sign ove r t he st ock opti ons to Ms. Ecton. They later le arne d that the transfe r process was not that simple. Specific ally , Home De pot and Smith Barne y informed them th a t M r

. E ll io tt

c o u ldn o t s ig n o v e r

th e s to c k o p ti o n s to M s

. E c to n a n d th a t th e y w o u ldn o t r e c o g n iz e a QDRO. Thus, by

early 2002 at the latest, the pa

rties knew or

should have known: (1) that the stoc k options themselves could not be transfe rre d to Ms. Ecton at all reg ardle ss of the pape rwork pr esente d to H omeDe po t or Smith B arn e y ; a nd (2 ) that the on ly way that Ms . E c tonc ou ld o btain the be ne fi t of the stock options was for Mr. Elliott to exercise the options himself and then transfer the proc eeds to her. Ms. Ecton c ommunicated this information to Mr. Elliott.

Once the parties discovere d that the mechanism chosen by their atto rney s to transfer

the stock op tio ns ha d faile d, the y we re ob lig a te d to de a l wi th e a c h oth e r fair ly a ndin g oo d f

a ithto e ff e c tuateT hi s would b e a ve ry d i f fer ent ca s e h ad M r

. E l l i ot t i nf ormed M s

. E ct on on Febr uar y 13, 200 2 t hat he was 6

u n wi l l i n g t o e x er ci s e t h e opt i on s u n l es s M s

. Ect on put he r re qu es t i n wr i t i n g

. B u t , as t h e t r i al cou r t s pec i f i ca l l y fou n d, M r. E lli o tt a c c e p te d M s. E c to n ’s o ra l o ff e r b y a g re e ing to e x e rc ise th e o p tio n s a n d to tra n sfe r th e p ro c e e d s to he r. W e
ca nn o t rev erse t he t rial co urt’ s f ac t ua l f i nd i ng i n thi s re ga rd u nless w e d eterm i ne tha t the ev i d en ce p rep o nd era t es a ga i nst it. W e h a v e c o n d u c te d a n ind e p e n d e n t re v ie w o f the re c o rd o n a p p e a l an d c o n c lud e tha t t h e re w a s a m p le e v id e n c e in t he r ecor d t o s uppo r t t he t r i al cour t ’ s f i ndi ng of an ora l agr eement

. A l t houg h t her e wa s s om e u nce r t ai nt y as t o how much the tax e s w o u ld b e , t h e e sse n tial ter m s o f t h e a g re e m e n t we re in p la c e . T h is a g re e m e n t wa s e n fo rc e a b le , an d M r. E lli o tt sho uld ha ve ex erc i sed t he o p t i o ns as h e a gre ed an d retained t he m o ne y nec essa ry t o p ay t he t ax es.

E. g. , A n d re w C . L itt m a n , V al ua t i on and D i vi s i on of E m pl oyee St ock O pt i on s i n D i vor ce , 29 Col o. La w. 61 7 (M a y 2 0 0 0 ); L yn n C u rtis, Val uat i on of St ock O pt i ons i n D i vi di ng M ar i t al Pr oper t y U pon D i s s ol ut i on , 15 J

. Am. Aca d. M a trim

. L a w

. 4 1 1 (1 9 9 8 ). F o r a d isc u ssio n o f the c a se la w , se e E ric H o llo w e ll, A n n o ta tio n , D i vor ce and Separ at i on: T re a tm e n t o

f S to c k O p tio n s fo r P u rp o se s o f D iv id in g M a rita l P ro p e rty , 4 6 A .L .R .4 th 6 4 0 (1 9 8 6 & S u p p . 2 0 0 3 ); E ric H o llo w e ll, A n n o ta tio n , Val uat i on of St ock O pt i ons f or Pur pos es of D i vor ce Cour t ’ s Pr oper t y D i s t r i but i on , 4 6 A .L .R .4 th 6 8 9 (19 8 6 & Sup p

. 20 0 3 ).

E. g. , C h a rle s P . K ind re g a n , J r. & P a tric ia A . K ind re g a n , U nex er ci s ed St ock O pt i ons and M ar i t al D i s s ol ut i on , 8 3 4 S u ff o lk U . L . R e v . 2 2 7 (2 0 0 1 ); T ra c y A . T h o m a s, The N ew M ar i t al P r oper t y of Em pl oye e St ock O pt i ons , 35 F a m. L .Q . 4 9 7 (F a ll 2 0 0 1 ); B re tt R . T u rn e r, Equi t abl e D i s t r i but i on of St ock O pt i ons , 19 E qui t abl e D i s t r i but i on J. 133 ( D ec. 2 0 0 2 ); L a u ra W . M o rg a n , D i s t r i but i on of Em pl oye e St ock O pt i ons , 15 D i v or ce Li t i g

. 17 ( Ja n

. 200 3 ); D avi d S. R o se tten ste in, O p tio n s o n D iv o rc e : T a x a tio n , C o m p e n sa tio n A c c o u n ta b ili ty , a n d th e N e e d to L o o k fo r H o listi c Sol ut i ons , 37 Fam

. L.Q

. 20 3 (Sum m er 20 0 3 ).
-7- the intent of the MDA. Initially , both parties ac t ed i n g ood faith. During a F ebrua ry 13, 2002 telephone c all, Ms. Ecton unequivoca lly instructed Mr. Elliott to ex erc ise the options awar ded to her in the MD A and of

fe re d to pay a ny ta x lia

bil ity he inc ur

re d a s a re su lt. Mr . E lli ott

a g re e d to c omp ly wi th h e r r e qu e st. 6

S u b s e q u e n t l y , M r

. E l l i o t t , ap p ar e n t l y a c t i n g o n t h e a d v i c e o f h i s a t t o r n e y , d e c i d e d no t to
e xer c ise Ms. Ec ton ’s op tio ns . H is de c isi on to r e ne g e on theor a l a g re e me nt w ith ou t in fo rm ing Ms. Ecton of his decision unt il a much later date constit utes a breac h of the pa rties’ F ebrua

ry 13, 2002 oral a g ree ment, as we ll as a bre ach of his dutyof g ood faith and fair dealing under the orig inal MDA. The fa ct that Mr. Elliott may have vie wed his conduc t as justified is irrelevant because “[ s]ubt erf ug es
a nde va sio ns vio late theob lig a tio n o f g oo d f a ith in pe rf

orma nc e e ve n thou g h the a c tor be lie ve s h is conduct to be justified.” R E S TA TE ME NT (S EC OND ) O F C O N T RA CT S § 205 cmt. d. We theref ore a ffirm thetria l c ou rt ’s c on c lus ion that Mr. El lio tt impe rm iss ibl y imp e de d th e div isi onof themari ta l e state
a ndthat Ms . E c tonwa s e nti tle d to re c ov e r d a ma g e s a s a re su lt.

Al though we areup ho ldi ng thetria l c ou rt ’s c on c lus ionthat Mr . E lli ott imp e rm iss ibl y impeded the divi s i o n o f t he marital estate, we note that both parties in this case wer e ca ug ht in a leg al quag mire re sulting primarily from their la wy ers’ failure to do adequate rese arc h in de vising the
orig ina l MD A. At

thetim e thepa

rt ies e nte re d in to the MD A, thec omp le xitie s in he re nt i n structuring the di vision of a marital estate composed in part of employ ee stoc k options had alrea dy been a ddresse d in the l eg al l iterature and in ca se law f rom other jurisdictions. The leg al literature 7

a n d c a s e l a w a d d r e s s i n g t h e s e p r o b l e m s h a v e o n l y g r o w n s i n c e t h a tt i m e

. T h e p art i e s ’ a t t o r n e ys 8 should have c onsulted t h e Ho m e Depot employ ee stoc k option plan and structure d the MDA
a c c or din g ly . I f, a s it

app e ars fr om the re c or d o n a pp e a l, the re wa s no wa y to str uc tur e the MD A t o tr a ns fe r the st ock optio ns the mse lve s to Ms. Ec ton , th e pa rt ie s’ a tto rn e y s sh ou ld h a ve inc lud e d inI t i s al s o pos s i bl e t hat t he part i es , had t hey been i nf ormed by t hei r l awy er s of t he prac t i cal di f

f i cul t i es as s oci at ed 9 wi t h s p l i t t i ng t he st o ck o p t i o ns i n the M D A , m i ght have cho sen t o s t ruct ure t he p rop ert y divi si o n i n s o m e o t her manne r.
-8- the MDA spec ific provisions g overning the exerci s e of the options, transfer of the proc eeds, and payment of the re sulting taxes. These pr ovision s woul d presumably have inc luded proc edura l safe g uards – e.g ., a re quirement that a ny instruction to ex erc ise options be in writing, spe cify which
a ndho w m a ny

of theop tio ns we reto be e xer c ise d a ndwh e n, a ndbe de liv e re d b y c e rt if ie d mail – to protect the pa

rties from the ve ry

eventua lities that ga ve rise to this ca se. 9

C.

Ne xt, w e turn to Ms. Ec ton ’s arg ume nt that th e tria l c ou rt e rr e d inme a su ri ng he r d a ma g e s. We ag ree with Ms. Ecton’s arg ument that the damag es should ha ve been measure d from the date Mr. Elliottag ree d to exercise the options, not the date of the divorce decr ee. T he undisputed evide nce in the record shows that had Mr. Elliott exercised Ms. Ec ton’s options on Februa ry 13, 2002 as he promised, the net pr ocee ds befor e taxes wou l d h av e bee n $68,113.25. Howeve r, as the pa rties ag ree d, this amount would have been reduce d by whateve r t axes Mr. El liott became liable to pay as
a re su lt o f the e xer c ise of

theop tio ns

.
The trial c ourt should have awa rded Ms. E cton a judgme nt for $68,113.25 minus the amount of taxes Mr. Elliottcan show he would havehad to pay had he exercised the options a s he ag ree d. The re cord does not reve al how much the ta x es would have been, and there fore , we must remand the
case for a rec alculation of the damag es aw ard.

We have a lso concluded that the trial court e rre d by ordering Mr. Elliottto exercise the stock options. By the time the trial court order ed Mr. Elliott to e x erc ise his stock options, their value ha d decr ease d substantially

compar ed t o their value on April 27, 2001 (the e ntry of the fina l divorce decr ee) o r Febr uary13 , 2 00 2 (t he d ate of t he p art ies ’ or al a greemen t t o e x e r c i s e th e op ti on s). By de ma nd ing a

c a sh se ttl e me nt, Ms. Ec ton ha d re lin qu ish e d he r cl a im to the se sto c k opti on s for the ir investment value. Whil e these options may , as a prac tical m atter, ha ve bee n Mr. Elliott’s onlysource of fu nd s to pay

thejud g me nt, thetria l c ou rt sh ou ld h a ve le ft the de c isi on wh e the r or no t to e xer c ise the options to Mr. Elliot t. I t would have be en appr opriate f or Mr. Elliott to retain the stock options as investments and obtain the f unds to pay

the judg ment from other

source s.

IV. T HE A TTOR N EY ’ S F E E S AND P R EJUD GM ENT I N TE R EST

The trial court also order ed Mr. Elliott to pay Ms. E cton prejudg ment interest and $1,776.07 in attorney ’s fe es. Mr. Elliott has taken issue with the awa rd of attorney ’s fe es. While he has not expli citly taken issue with the a war d of pre judgme nt inter est, we have decide d to a ddress this iss ue pu rs ua nt t o T e nn . R. Ap p. P. 13( b)

. We h a ve de te rmine d th a t th e tria l c ou rt e rr e d b y a wa rd ing Ms. Ec tonpr e jud g me nt i nte re st b ut that th e tria l c ou rt pr op e rl y a wa rd e d Ms. E c tonhe r atto rn e y ’s fe e s.

Awar ding pr ejudg ment interest is a discr etionary matter. Spence r v. A-1 Crane Se rv., Inc

. , 88 0 S. W.2 d 9 38 , 9 44 (T e nn . 1 99 4) ; St o o ks bury v. Am erican Nat’l Prop. & Cas. Co. , 126 S.W .3dT he d i f f i cul t y of p roo f

can b e a t wo

- ed ged s wo rd. P art i es l i ke M s. E ct o n c o ul d ha ve d i f f i cul t y p roving t he 10

ex i s t en ce of

a n or al ag r ee men t i f t h e ot h er par t y den i es i t s ex i s t en ce

. Si mi l ar l y , par t i es l i k e M r

. El l i ot t w h o a ct i n g ood f ai t h bas ed on ora l i ns t r uct i ons t o exe r ci s e st ock o pt i ons may f i nd t hems el ves at r i s k i f t he ot her par t y l at er deni es t hat h e o r sh e a sk e d fo r th e o p tio n s to b e e x e rc ise d

.

E

. g

. , Sm i t h v. Sm ith , 9 1 2 S .W .2 d 1 5 5 , 1 6 1 (T e n n . C t. A p p . 1 9 9 5 ); Br own v

. Br own , 913 S. W

. 2d 163, 170 11 (T enn. C t

. A p p

. 19 9 4 ).
-9- 505, 521 (Tenn. Ct. App. 2003). Courts ne ed not awa rd pre ju d gm en t interest to eve ry prevailing party but should a war d prejudg ment interest when it is fair, g iven the particular c ircumstance s of the
case

. Myint v. Allstate Ins. Co. , 97 0 S. W.2 d 9 20 , 9 27 (T e nn . 1 99 8) ; O’Leary v . Johnson , 84 S.W .3d 584, 589 (Tenn. Ct. App. 2002). Prejudg ment interest need not be aw arde d to a party who has be en dilatory in pursuing a claim or who has delay ed the pr ocee ding. Christmas Lumber Co. v. Valiga , 99 S.W. 3d 58 5, 59 6 ( Te nn . Ct . A pp . 2 00 2) ; Scholz v. S. B. I nt’l, Inc. , 4 0 S. W.3 d 7 8, 83 (T e nn . Ct

. App. 2000).
Both pa rties wer e attempting to end their mar riag e as amicably as poss ible when they wer e neg otiating their

MDA. The imbrog lio in which they found themselves in late 2001 and ea rly 2002
wa s th e ir a tto rn e y s’ makin g , not the ir s. Whe n the y le arn e d that some thi ng wa s ami ss, the y sh ou ld likewise have cooper ated to resolve the problem. Howe ver, amicable de aling s and coope ration ar e fre quently

not part of p o st-divorce relationships. W ith this rea lityin mind, Ms. Ecton and her attorney should have re alized that the ball was in the ir court when the problem with he r stock options
ma nif e ste d it se lf . T he y

sh ou ld h a ve qu ic kly ob ta ine d a no the r e nf or c e ablewritt e n a g re e me nt w ith Mr. Elliott reg arding the options or returne d to court to obtain a modification of the divorce decr ee to corre ct the proble m. A supplemental ora l agr ee m en t is not an advisable way to modify

a marital dissolut ion
a g r e e m e n t

. T h e e xi s t e n c e o f t h e s e a g r e e m e n t s c a n b e t o o e a s i l y d i s p u t e d , a n d t h e te rm s o f t he se ag ree ments can be difficult to pr ove. Thus, Ms. E cton should ha ve g iven Mr. Elli o t t wr i t t en 10 instructions to sell her share of t he st ock options and should have insisted on written confirmation of the transaction. She should not have waited approximately five months befor e she soug ht judicial
re li e f, a n d it s h o u ld n o t h a v e ta k e n a n o th e r s ix mo n th s f o r th e tria l c o u rt to a d d r e s s the matter. During this entire time, both Mr. Elliottand Ms. Ecto n b o re the risk that the value of the stock options would chang e. By t h e t ime the trial court addre ssed the proble m, the value of the stock options was signific antly

less than the value in Febr uary 2002. Under

these c ircumstance s, awa rding Ms. Ecton prejudgm en t i n t erest from Fe bruary 13, 2002 was unfair, and ther efor e, we vacate that po rt ionof thejud g me nt.

As a g e ne ra l matte r, lit ig a nts are e xpe c te d to be re sp on sib le fo r the ir ow n atto rn e y ’s fe e s in the absence of a st atute or contrac tual provision otherwise. John Kohl & Co. v. Dearborn & Ewing , 97 7 S. W.2 d 5 28 , 5 34 (T e nn . 1 99 8) ; Massachusetts Mut. Life I ns. Co. v. Je

fferson , 104 S.W .3d 13, 33 (T e nn . Ct . A pp . 2 00 2)

. I n do me sti c re latio ns c a se s, thr e e of themos t c omm on c ir c ums ta nc e s in which attorne y ’s fee s are appropriate include: ( 1) aw ards to ec onomically disadvantag ed spouses
a s a dd iti on a l sp ou sa l su pp ort in div or c e pr oc e e dings; (2) a wa rd s to sp ou se s w ho mus t r e turn to 11T enn. C o d e A nn. § 3 6

- 5

- 1 0 3 (c) (20 0 1 ). 12

-10- court to enfor ce child support obligations; and (3) awa rds to spouses seeking to enforc e an MD A 12 wh e n th e MD A c on tains a pr ov isi on fo r atto rn e y ’s fe e s.

Para g ra phXI X of the MD A expl ic itl y e nti tle s eithe r party to re c ov e r h is o r h e r “ re a so na ble
e xpe ns e s in c lud ing a tto rn e y fe e s” if “ it b e c ome s r e a so na

bly ne c e ssary

fo r e ith e r p arty

to i ns titute leg al proc eeding s to procure the enf orce ment of any

provisions of . . . [t he MDA].” B ased on the
corr espondenc e in May and J une 2002 from Mr. Elliott ’s attorney , we find, as di d the trial court, that Ms. Ecton was lef

t with no option ot her tha n to seek judicial a ssistance in obtaining the be nefit of her a g ree ment embodied in the MDA. A ccor dingly , the tri al co urt properly awa rded Ms. Ec ton $1 ,7 76 .0 7 inle g a l e xpe ns e s.

V.

We a ffirm the trial court’s determination that Mr. Elliottimpeded the division of the marital estate by brea ching the parties’ Fe bruary 13, 2002 ag ree ment to e x erc ise the stock options allocated to M s. Ec tonin the MD A. Ho we ve r, we mod if y the jud g me nt to a wa

rd Ms. Ec ton$6 8, 11 3. 25 le ss Mr. Elliott’s tax liability for this sale and rema nd the case t o the t rial court to ascertain the amount of Mr. Elliott’s tax liability and for any other proce eding s that may be re quired. We vac ate the a war d of pre judgme nt interest. I n addition, we af firm the aw ard of the attorne y ’s fe es Ms. Ecton incur red in the trial court, but we deny her r equest for

additional attorney ’s fe es for this appeal. We tax the costs of this appea l to St even D . Elliottand his surety for whic h execution, if nece ssary , may issue.

_______________________________ WILL I AM C. K OC H, JR., P. J., M. S.