### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE September 4,

2001 Session JENNY C. WALKER v. JAMES M. WALKER Appeal from the Chancery Court for Robertson County

No. 14672 Carol Catalano, Judge

No. M2001-00087-COA-R3-CV - Filed November 2, 2001

After the parties separated, the husband borrowed a substantial amount of money to complete the renovation of marital proper ty and to pay

household expenses . The trial court di vided the marital property pursuant to divorce, classifying the husband’s post-separation loans as marital debt. The wife argues on appeal that the trial court erred in its classification and division of the post-separation debts. We affirm th

e trial court. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded
B EN H. C ANTRELL , P.J., M.S., delivered the opinion of the court, in which W ILLI AM B. C AIN , J. and D ON R. A SH , S P
. J., joined. Connie Reguli, Nashville, Tennessee, for the appellant, Jenny C. Walker. Gregory D. Smith, Clarksville, Tennessee, for the appellee, James M. Walker. OPINION
I. D IVORCE AND P ROPERTY D IVISI ON James Michael Wa

lker and Jenny Lee Coursey married on March 8, 1991. Two children were born to the marria

ge, but questions

of custody a

nd support, while

disputed at the trial level, are notat issue in this appe

al. The marriag

e was not a

happy one, and each party allegedly engaged

in acts of physical aggression aga inst the other. At trial, Ms. Walker admittedthat during the course of her marriage to Mr. Walker, she had an extramarital affair with a man who was married to another woman. On May 27, 1999, the parties separated. Mr. Walker stay ed in the m arital home w ith the children, while his wife moved to an apartment near her paramour’s

home. Shortly

thereafter, Ms

. Walker filed a Complaint for Absolute Divorce, on the grounds of irreconcilable differen ces o r-2-

inappropriate

marital conduct. Mr. Walker responded by filing an Answer

and Counter-Complaint for Divorce. Fol lowing a heari ng, the court issued a pendente lite decree which affirmed the husband’s physical custody of the children. The trial court conducted a hearing on the Complaint and Counter-C ompl aint on May 11, 2000. In the Final

Decree of Divorce, entered on June 8, 2000, the court found there to be fault on the part of both parti

es, but gran ted a divorce to the husband on the ground of the wife’s inappropriate

marital conduct.

Both parents

were awarded joint custody of the children. The decree namedMr. Walker as the primary custodial parent and set a reasonable visitation schedule for Ms. Walker. Because of some past incidents, the

husband was specific ally warned that withholding visitation from his former wi fe could res ult in a change of physical custody . Ms. Walker was ordered to pay Mr. Walker child support of $820 per month, i

n accordance w

ith the Tennessee

Child SupportGuidelines. No alimony was ordered,as the court found theearning capacity of the parties to be equal. For the purposes of this appeal, the most important part of the trial court’s decree was that portion of the property division that involved the marital home, a piece of real property purchase d as an investment, and

the extensive debts

incurred after

the parti es’ separatio

n, much of which is related to the inv est men t pr ope rty. The court decreed that both pieces of realty should be sold and the mortgages pa

id off, with the net

proceeds divide

d equally be

tween the partie

s. Either pa rty contributing to the payment of the mortgages after trial was t

o be reimbursed from the proceeds of the sale prior to division. The court ruled that all the debt incurred by the partiesup to the date of trial was marital

debt, and its decr

ee divided those d

ebts as follows: The Husband shall be r

esponsible

for the $10,746.00

debt owing to

Citibank; his Fleet card, $4,172; Mr. Walton Walker, $31,188; and his part of the debt owing t o Rooms t o Go, $2,954. This is a total indebtedness of $48,790 and the Husband shall hold the Wife ha

rmless from this de

bt. The Wife shall be responsible for the Discover c ar d, $1,002.00; American Express, $637.00; MNBA, $5,735; Chase, $6, 820.00; First USA, $6,280; Bank of America, $4,806; QVC, $285; Proffitt’s, $820 and Paul Harris and her share of the Rooms to Go Debt, $1,170. 00. This is a total indebtedness of $27,700 and the wife shall hold the Husband harmless from this debt.
Ms. Walker subsequen

tly filed a Motion to Alter or Amend the Final Decree, which the trial court granted in part. The court’s Amended Final Decree, entered December 13, 2000, recognized that the marital home ha

d not yet bee

n sold, and that Mr. Wa

lker had conti

nu ed to live there after the trial. The court order

ed that rent of $1,

400 per month be as sessed against him, to be payable as a charge against an y payments made on the mortga ge for which he was otherwise entitled to be reimbursed. The wife subsequently filed a Notice of Appeal.-3- II. A M OUNTAIN OF D EBT In order to under stand the wife’s arg uments on appeal,

we must first examine

the proof in regard to the parties’ real property and their debts. One problem faced by the

trial court (and b

y this court) is that the parties were not only deeply in de bt, but they both did a very poor job o f documenting their financial a ffairs. Prior to th

e parties’ separation, Ms.

Walker handled the

parties’ finances and was the primary user of the credit cards. The wife’s primary complaint, of course, ha s to do with the husband’s post-separation stewardship of financial resources. There is no doubt that the tw o pieces of real

estate owned by

the parties were

heavily encumbered

prior to their separation. Their marital home in Goodlettsville, with apurported value of $193,000, hada mortgage on it with monthly payments of $1,389. A se cond encumbrance placed on the home was a $50,000 home equity line of credit with monthly pay ments of $734. In 1998, Mr. Wal

ker purchased a

house in East Nashville that

been damaged by a tornado, withthe intention of renovating it and selling it for a profit. He paid $32,000 for the prope rty, encumbering it by a first mortgage with monthly pa ymen ts of $ 305, and a second mort gage with payments of $471. The costs of the project devoured resources at a frightening rate, many tens of thousands of dollars before the parties separated.
Between the time of the parties’ separ ation and the divor

ce hearing, Mr

. Walker took cash advances aga in st his second mortgages totaling $9,000, increased the indebtedness on his Fleet Credit Card (which carried an interest rate of over 20%) by $3,000, borrowed $31,200 fr om his father, and borrowed $14,750 against his 401(k) retirement plan. The attorneys in this case referred to the home on more than one occasion as “the money pit.”
As the trial court noted, however, after Ms. Walker left the marital home, she withdrew all support from the household. While a part of her paycheck had previ ously gone to help with the mortgages and other expenses, Mr. Walker had to pay all the mortgag

e payments

(close to $3,000 per month) after she left, and all the children’s expenses from hi s $52,000 a nnual salary. A substantial portion of the money Mr. Walker borrowed was used for these purposes. III. A RGUMENTS ON A PPEAL Ms. Walker argues o

n appeal that the t

rial court erre

d in classifying the debt incurred by Mr. Walker after their separation as marital debts. She calculates that if those debts were deemed to be his alone, and the remaining debt divided equally between the parties, she would be responsible for only about $16,000, insteadof the $27,700 ordered by the court. As a corollary , she contends she should be given c

redit for the post-separation

cash advances that Mr. Walker took against the two secondmortgages, and

that those advances should be subtracted from Mr. Walker’s share before the net real estate proceeds are divided.-4-

Ms. Walker also argues that the trial court erred in its valuation and division of the personal pro pert y, and that an equal division after a correct valuation would require a cash payment from the husband to the wife. We will examine both of these arguments in turn. A. T HE P OST -S EPARATION D EBTS B oth p arties cite the pronouncements of this court in the case of Goodman v. Goodman , 8 S.W.3d 289 (Tenn. Ct. A pp. 1999) as guid

ing authority

for our treatmen

t of post-separa

tion debt.
“Lik e marital property,

marital debts shoul

d be divided equita

bly, taking

into consideration: (1) which party incurred the debt, (2) the purpose of the de bt, (3) which party benefitted from incurring the debt, and (4) which party

is better able to repay the debt. In the case of debt incurred between the separation and divorce, one spouse should not be held responsible for the debts the other

spouse incurs unless the debts were for a marital purpose or for the joint benefit of the parties.” 8 S.W.3d at 298. See also Mondelli v. Howard , 780 S.W.2d 769 (Tenn. Ct. App. 1989).
It is indisput able that the appellee was the party who incurred the post-separa tion debts at issue. The appellant notes that the spouse incurring the debt has the bu

rden of proving

that the debts were incurred for a marital purpose or for the joint benefit of the parties, and she argues that he simply faile

d to carry h

is burden of provin

g that she derive

d any benef

it from the transa

ctions. The trial court deemed

the improvement of the East Nashville property to be a joint venture of the parties, however, and we note that the only proof in the record as to the purposes for which the debt was inc urr ed i nvo lve d th e im pro vem ent of m ari tal pro pert y, and the pay ment of household and child care expenses. Both of these must be deemed to be marital purposes. The final decree of divorce gave the wife one ha lf of the n et proceeds from the sale of the East Nashville house. Although Mr. Walker had not finished t he ren ovations on the house at the time of trial, he had already received an offer of $149,000on the property, which he declined. There was proof in the reco

rd that additional w

ork to put the property in “primo” condition would increase its value to $230,000. Although there may be a question as to whether there will be any real pr

ofit on the house, there is no doubt that the wife will eventually receive a benefit fr om its sale. During cross-examination of Mr. Walker, the wife ’ s attorney questioned the husband’s stewardship of the

borrowed money

by the use

of a spreadsheet (prepared from invoices and bank statements

given b y Mr. Walker

to his father) to sh

ow Mr. Walker’s expe

nditures on the Ea

st Nashville proper

ty between

August of 1999 and February

of 2000. The spreadsheet (which is not in the record on appea

l) apparently

showed disburseme

nts of only $15,253. However, as we noted earlier, Mr. Walker kept ve ry poor fina

ncial records. F

or example, he paid

his hired labor in cash, and didn’t keep a

record of disbur

sements to them.-5-

While it may have been

an effective trial technique to challenge Mr. Walker to explain the gap be tween the $15,253 documented as having been spent on the house, and the $54,950 he admitted borrowing after separation, the trial court did not regard his res ulting c onfusion as an admission of some sort of misappropriation or unwarranted dissipation of borrowed funds. We do not believe that sloppy or incomplete record

keeping related to the renovation work should relieve Mr. Walker from the requirement of showing t hat borrowed funds were used in an appropriate

way. The pr

oof showed, howe

ver, that Mr. Wa

lker became solely responsible for mortgage payments and household expenses after his wife lef t him in Mayof

1999. If we a

ssume that she had previously paid half of the mortgage expenses, that would result in a shortfall of $17,400 for him between the date of separation and the date of trial. If we ca lcu late the chi ld support she didn’tpay during that year (at the rate later

ordered) we would find an additional shortfall of $9,840. If we add utility

and other househo

ld expenses that may have been shared, the necessity of borrowing a substantial amount of money becomes clear, and the inference that the e xpenditure of borrowed money was for marital purposes is inescapable.
B. T HE M ARITAL P ROPERTY The appellant argu

es that all the assets and debts of the parties were accumulated during their marriage of eight years, and that no factors under Tenn. Code. Ann. § 36-4-121 were presented by either party that w

ould require an unequal

division of the marital property. She concludes that the court was accordingly required to make an equa l division of the marital estate. See S alisbury v. Salisbury , 657 S.W.2d 761 (Tenn. Ct. App. 1983).
Ms. Walker notes that

the husband was a

llowed to retain hi

s entire 401(k) pl

an with a total value of $28,403, while the wife’s 401(k) was worth only $8 ,127. She obs erves that there was $6,000 worth of

equity in the pickup truck that was awarded to the husband, whil

e there was only $2,000 worth of equity

in the Ford Mustan

g awarded to he

r. Sh e als o argues that he received a greater share of their ot

her personal pro

perty, and

she calculates t

hat to equalize the

ir respecti

v e shares, he should be ordered to pay her $35,964.50.
There are two things wro ng with this argument. First, her calculations are based on the theory (which we have rejected) that the post-separation debt is Mr. Walker’s alone. Since we affirm the trial court’s ruling that it is marital debt, a good part of the inequality the appellant complains of is erased by

the court’s order that Mr. Walker be made responsible for $21,100 more of the marital debt than she is.
Sec ond ly, Tenn. Code. Ann. § 36-4-121 charges the court with equitably dividing the marital pro pert y, and an equitable division is not necessarily an equal one. King v. King , 986 S.W.2d 216, 219 (Tenn. Ct. App. 199 8); Cohen v. Cohen , 937 S.W.2d 823, 832 (Tenn.1996); Ellis v. Ellis , 748 S.W.2d 424, 427 (Tenn.1988). But even where, as here, the trial court determines that it is equitable to divide the property equally, too mechanic al an approach to equality can undermine the goal of equity. Mondelli v. Howard , 780 S.W.2d 769, 773 (Tenn. Ct. App. 1989).-6-

Thus, for example, while it may be equ

itable to award e

ach party the ve hicle he is accustomed

to driving, it is not n

ecessarily equitable for the

party r eceiving the mor

e valuable vehicle to pay an of

fsetting amount to

the other party

, particularly

in a situation where the financial resources of the parties are stretched thin. Similarly, a cash award to offset the difference between the values of two retirement plans might work an inequitable hardship on the party required to make up that difference, if neither party can g ain access to the retirement funds withoutpenalty until many years in the future. Of course, the trial court has the power to order just such offsetting payments, where necessary to achieve an equitable result. But trial courts have broad discretion concerning the manner in w hic h th ey di vid e ma rit al p rop ert y. Wallace v. Wallace , 733 S.W.2d 102 (Tenn. Ct. App. 1987). Their decisions are entitled to great weight on appeal and ar

e presumed to be c

orrect unless the evidence preponderates otherwise. Mondelli v. Howard , 780 S.W.2d 769, 772 (Tenn. Ct. App. 1989). We have thoroughly examined the record in this case, and we do no t believe the evidence preponderates against the trial court’s division of marital property. We believe the trial court divided the property equitably, and we a ffirm its decree.

IV. The judgment of the trial court is affirmed. Remand this cause to the Chancery Court of Robertson County for further proceedings consistent with this opinion. Tax the costs on appea l to the appellant, Jenny C. Walker.

_________________________________________ BEN H. CANTREL

L, PRESIDI

NG JUDGE, M.S.