Court Opinion

ID: 4537285
Source: CourtListenerOpinion
Date Created: 2020-05-28 18:12:12.572769+00
Date Added: 2024-06-11T09:24:58.278311
License: Public Domain

05/28/2020
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                                 June 5, 2019 Session

           RICHARD EGAN v. RACHAEL MARIE BAILEY EGAN

              Appeal from the Chancery Court for Williamson County
                   No. 43616 Michael W. Binkley, Chancellor
                     ___________________________________

                           No. M2018-01858-COA-R3-CV
                       ___________________________________

In this appeal from a final decree of divorce, the husband contends the trial court abused
its discretion in awarding spousal support. He challenges the type, amount, and duration
of the alimony awarded. Discerning no abuse of discretion, we affirm.

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

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which FRANK G.
CLEMENT, JR., P.J., M.S., and ANDY D. BENNETT, J., joined.

Adrian H. Altshuler, Caroline B. Altshuler, and Jodi Melind, Franklin, Tennessee, for the
appellant, Richard Egan.

Larry Hayes, Jr. and Rachel M. Thomas, Nashville, Tennessee, for the appellee, Rachael
Marie Bailey Egan.

                                       OPINION

                                            I.

       By the time of trial, the divorcing parties, Richard Egan (“Husband”) and his wife
of nearly 20 years, Rachael Egan (“Wife”), had narrowed the issues significantly. But
they were still far apart on the issue of spousal support. Husband proposed paying Wife
$5,000 per month for five years. Wife proposed that Husband pay $30,000 per month
indefinitely.

      The testimony concerning spousal support came primarily from Husband and
Wife, who were 47 and 46, respectively. When the parties married in 1996, they lived in
California. Husband worked as “a day-to-day manager” for musical acts as part of a
management company. Wife worked as a sales associate for a “high-end women’s
store.”

       Within a couple of years after the marriage, Husband had formed his own
management company, Hard 8 Management. In 2010, after a move to Tennessee,
Husband began managing a country/southern rock artist, who became Husband’s biggest
act. In the five calendar years prior to the 2016 trial, Husband reported income for
federal tax purposes of $685,110 in 2011, $926,198 in 2012, $1,469,410 in 2013,
$3,657,703 in 2014, and $424,080 in 2015. Sources of income included salary and
bonuses from Husband’s management company, rental income, royalties, and, in years
2013, 2014, and 2015, significant gains from the sale of capital assets. The parties
stipulated that, as of the day of trial, Husband had received gross income from his
management company of $1,595,000 and that he would receive two additional payments
of $10,000 before the year-end.

        Wife stopped working outside of the home in 1998 after the birth of the couple’s
first child. Over the course of the marriage Husband and Wife had three more children.
According to Wife, she primarily cared for the children while Husband served as the
wage earner.

       Prior to the divorce filing, the family enjoyed a high standard of living. But
Husband claimed that they maintained their lifestyle only through the accumulation of
substantial debt and that the couple was heading toward bankruptcy when the divorce
was filed. He testified that their difficult financial circumstances prompted the couple’s
move to Tennessee to take advantage of its lower cost of living. Still, they retained their
home in Los Angeles and built a seven-bedroom home in Franklin, Tennessee.

       The parties agreed to the value of their marital estate, nearly $4.4 million. Much
of that value was composed of cash that had been accumulated during the course of the
divorce. The other significant marital assets were the LA and Franklin homes and the
ownership interest in Hard 8 Management.

       In granting the parties a divorce, the court equally divided the marital estate.
Much of Wife’s share of the estate came in the form of cash as the division contemplated
the sale of the marital residence. Among other marital assets, Husband received the LA
home, valued at $1.4 million, and the interest in Hard 8 Management.

       The court also awarded Wife alimony in futuro of $17,500.00 per month. In
reaching its alimony decision, the court analyzed each of the relevant factors for
“determining the nature, amount, length of term, and manner of payment [of support and
maintenance].” Tenn. Code Ann. § 36-5-121(i) (2017). But before doing so, it made
what it characterized as “preliminary findings.” Among other things, the court found that
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“Husband’s average gross monthly income is in the range of $134,635.00.” Concerning
Husband’s assertion that the couple was heading toward bankruptcy, the court was
unconvinced and found the financial picture presented misleading.

      [T]he Court finds that, particularly during the time that the parties lived in
      California, there was a period of time where Husband’s income did not
      keep up with the parties’ regular expenses. Thus, the parties experienced a
      cash flow gap that periodically happens to people with unusual income
      variations . . . . Despite the cash flow gap, the parties continued to enjoy a
      high standard of living. In order to satisfy their mounting debt serviced by
      loans, family members, and some lifestyle cutback, it became apparent that
      there was a serious problem and there was a possibility of filing bankruptcy
      against the debt that had accumulated. Husband sold large assets to service
      the parties’ debt, but the problem was that there was a tax consequence — a
      capital gain flat tax applied to gain realized from the sale . . . . The parties
      then had to pay tax on the capital gains from the sale of assets, which
      became a vicious cycle. The Court acknowledges that Husband has made
      some hard decisions in order to get the parties out of debt and has used his
      talents to get back on his feet. The Court respects Husband for doing so
      and applauds him for his hard work and effort to rebuild. None-the-less,
      the Court does not believe that when the divorce was filed, the parties were
      as close to bankruptcy as Husband represented. It bothers the Court that the
      full picture was not presented to it on this issue, but the Court believes that
      it has the full picture now.

The court concluded its preliminary alimony findings with the observation that “there
was inconsistent testimony on the alimony factors and gross inconsistency in the parties’
regular testimony.”

        Dissatisfied with the award of spousal support, Husband moved for “amended and
additional findings relevant to the issue of alimony” or, in the alternative, “to alter or
amend the judgment as to the amount and type of alimony awarded.” Husband suggested
that “an alimony award in the range of $7,000.00 per month would be more than
sufficient for the reasonable needs of Defendant Wife, encourage her to work to satisfy
her wants, discourage her from overspending, and be an equitable award.” Husband also
suggested that the award should be “rehabilitative alimony or transitional alimony instead
of alimony in futuro.”

       The court denied Husband’s motion. It explained that, “if the alimony statute
means what it says, that an award of alimony in futuro is appropriate to allow the
disadvantaged spouse a standard of living reasonably comparable to the standard enjoyed
during the marriage, then the amount of $17,[5]00 per month in alimony in futuro, before
the payment of taxes, is reasonable.”
                                            3
                                             II.

        On appeal, Husband argues that the trial court erred in awarding Wife alimony in
futuro as opposed to rehabilitative or transitional alimony. He argues that the evidence at
trial did not support the trial court’s award to Wife of $17,500 per month. Finally,
Husband argues that the balancing of the statutory support and maintenance factors did
not justify alimony of an indefinite term.

       In a non-jury case, our review of the trial court’s factual findings is de novo upon
the record, accompanied by a presumption of the correctness of the findings, unless the
preponderance of the evidence is otherwise. See Tenn. R. App. P. 13(d). We give great
deference to the trial court’s credibility assessments. See Watson v. Watson, 309 S.W.3d
483, 490 (Tenn. Ct. App. 2009). We do not disturb “factual findings based on witness
credibility unless clear and convincing evidence supports a different finding.” Coleman
Mgmt., Inc. v. Meyer, 304 S.W.3d 340, 348 (Tenn. Ct. App. 2009). Our review of
questions of law is de novo, with no presumption of correctness. Armbrister v.
Armbrister, 414 S.W.3d 685, 692 (Tenn. 2013).

       Trial courts are accorded “broad discretion to determine whether spousal support
is needed and, if so, the nature, amount, and duration of the award.” Gonsewski v.
Gonsewski, 350 S.W.3d 99, 105 (Tenn. 2011). We do not disturb a spousal support
decision unless “the trial court causes an injustice by applying an incorrect legal standard,
reaches an illogical result, resolves the case on a clearly erroneous assessment of the
evidence, or relies on reasoning that causes an injustice.” Id. Although “[t]he abuse of
discretion standard of review does not . . . immunize a lower court’s decision from any
meaningful appellate scrutiny,” it does “envision[] a less rigorous review of the lower
court’s decision and a decreased likelihood that the decision will be reversed on appeal.”
Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010).

                                             A.

       Husband submits that alimony in futuro was inappropriate here because Wife had
the capacity for self-sufficiency. He also contends that the evidence does not support the
court’s finding that Wife could not be rehabilitated or the finding that the family enjoyed
a very high standard of living and would continue to do so after the divorce.

       Alimony in futuro is “intended to provide support on a long-term basis until the
death or remarriage of the recipient.” Gonsewski, 350 S.W.3d at 107; Tenn. Code Ann.
§ 36-5-121(f)(1) (2017). This long-term support is awarded when one spouse is
relatively disadvantaged and rehabilitation is not feasible. Tenn. Code Ann. § 36-5-
121(f)(1). Rehabilitation is not feasible if,

                                             4
       the disadvantaged spouse is unable to achieve, with reasonable effort, an
       earning capacity that will permit the spouse’s standard of living after the
       divorce to be reasonably comparable to the standard of living enjoyed
       during the marriage, or to the post-divorce standard of living expected to be
       available to the other spouse, considering the relevant statutory factors and
       the equities between the parties.

Id. Even though awards of this type of spousal support are disfavored, alimony in futuro
may be awarded under the proper circumstances. Bratton v. Bratton, 136 S.W.3d 595,
605 (Tenn. 2004); Gonsewski, 350 S.W.3d at 109.

       The trial court found that “Wife cannot be reasonably rehabilitated and, regardless
of the efforts that she uses including increased education and increased earning capacity
that may come as a result of that, the Court cannot see how Wife will ever reach near the
earning capacity of Husband.” The proof established that Wife had a high school
diploma and some college course work, but she had not worked outside of the home in 18
years. She last worked outside the home in the retail field. Also, the court found that,
despite making significant strides, “Wife still ha[d] some semblance of mental health
problems and personality issues.”

       On appeal, Husband places particular emphasis on the court’s findings concerning
the parties’ standard of living prior to the divorce and Husband’s anticipated standard of
living after the divorce. Husband characterizes the parties’ pre-divorce standard of living
as “an illusion, fueled by crippling debt.” As for his expected standard of living after the
divorce, Husband states that his “livelihood is completely dependent upon the success of
the artists he manages, with whom he has no employment contracts and no guaranteed
income.” Husband also notes that his “most popular client was not even touring,
meaning Husband expected to earn little from the management of said client for the
foreseeable future.”

       The court specifically rejected Husband’s contention regarding the pre-divorce
standard of living. The court found that the couple experienced cash flow issues that
resulted in the accumulation of debt, particularly prior to their move to Tennessee. Still,
the couple enjoyed the “tangible and intangible rewards as the result of a high income.”
The court also found that Husband and Wife “took nice trips, including ski trips and trips
to various islands,” “enjoyed nice cars and nice homes to live in,” and “were able to
afford nannies and housekeepers at times.” Perhaps more importantly, the court made an
adverse credibility determination, finding that the parties were not “as close to
bankruptcy as Husband represented” and that Husband had not presented the “full
picture.”

     As for Husband’s anticipated standard of living after the divorce, the court found
Husband’s “earning capacity is approximately $135,000.00 per month.” Historically,
                                         5
“Husband’s average gross monthly income [wa]s in the range of $134,635.00.” As Wife
notes on appeal, the average found by the trial court was just under the five-year monthly
average as reflected in the parties’ tax returns for 2012 through 2015. The court’s finding
was also consistent with the parties’ stipulation concerning Husband’s 2016 gross income
from his management company. Although Husband offered reasons why he might not
replicate his 2016 financial success in subsequent years, the evidence does not
preponderate against the court’s findings relative to Husband’s earning capacity.1

       The court did not abuse its discretion in awarding alimony in futuro. Although we
agree with Husband that Wife had the capacity for self-sufficiency, the record supports
the court’s finding that Wife lacked the capacity to achieve, with reasonable effort, an
earning capacity that will permit her to enjoy the same standard of living expected to be
available to Husband.

                                                   B.

       Husband submits that the amount of alimony was inappropriate because Wife did
not demonstrate a need for $17,500 and he does not have the ability to pay that amount.
Of the statutory alimony factors, “the two most important factors considered are the need
of the disadvantaged spouse and the obligor spouse’s ability to pay.” Robertson v.
Robertson, 76 S.W.3d 337, 342 (Tenn. 2002). “[T]he disadvantaged spouse’s need is the
threshold consideration.” Riggs v. Riggs, 250 S.W.3d 453, 457 (Tenn. Ct. App. 2007).

        On the threshold consideration, Husband complains that the trial court “failed to
make a specific finding as to the amount of Wife’s needs.” He also complains that, in her
sworn income and expense statement, Wife only “alleged expenses totaling $15,604.00
per month.” And Wife’s statement is “not reliable in that most of the [expense] items are
listed in italics with an asterisk indicating that those expenses are merely estimations, not
concrete expenses evidencing her need.”

        Husband does not dispute that Wife has a need. And as Wife notes, we have not
required trial courts to find a specific dollar amount of need in every instance. See
Andrews v. Andrews, 344 S.W.3d 321, 343 (Tenn. Ct. App. 2010) (“[T]he trial court’s
failure to make a finding on the specific amount of Wife’s need d[id] not in and of itself
render the alimony award an abuse of discretion.”). Here, we can deduce an approximate

        1
          Husband notes that his commissions as an artist manager can be impacted by a number of
factors beyond his control, including the popularity of the artist. He also notes that he does not have a
contract with his most popular client or any of the artists he manages and that all or one of them could
leave. The statute takes such circumstances into account by authorizing the modification of an award of
alimony in futuro “upon a showing of substantial and material change in circumstances.” Tenn. Code
Ann. § 36-5-121(f)(2)(A).

                                                   6
amount of need from the court’s findings concerning what Wife was capable of earning
from work and returns on her share of the marital estate along with the alimony award.2

        As Husband complains, the amount of alimony awarded did exceed Wife’s
expense estimates. The court found some of the estimated expenses were “extravagant,”
while others were reasonable. But the court’s award took into consideration “the tax
liability associated with the alimony that [Wife] is going to have to receive in order to
meet the standards under the alimony statute.”3 Because Wife did not include income
taxes in her estimates, an award of alimony in excess of the expenses listed was
supported by the evidence.

       Based on the court’s findings, Husband had the ability to pay the alimony
awarded. The court rejected Husband’s contention that his gross income post-divorce
would be $35,340 per month. Instead, the court found Husband’s post-divorce earning
capacity was $135,000 per month. As noted above, the higher amount found by the court
was consistent with the parties’ stipulation concerning Husband’s 2016 gross income
from his management company. In making this finding, the court again made an adverse
credibility determination against Husband, noting its “disappoint[ment] in Husband for
miscalculating his income.”

                                                       C.

       Finally, Husband submits that the statutory alimony factors do not support an
indefinite alimony award. Specifically, he argues that the evidence preponderated against
the court’s factual findings relative to factors (1), (8), (9), (10), and (12).

        Factor 1 requires the trial court to consider the “[t]he relative earning capacity,
obligations, needs, and financial resources of each party, including income from pension,
profit sharing or retirement plans and all other sources.” See Tenn. Code Ann. § 36-5-
121(i)(1). We have already discussed Husband arguments concerning factor 1. The
evidence does not preponderate against the court’s findings concerning the relative
earning capacity or need of the parties.

       Factor 8 looks at “[t]he provisions made with regard to the marital property.” Id.
§ 36-5-121(i)(8). Husband faults the court for not properly considering “the significant
interest and dividend income Wife expected to earn from the principal of her cash
assets.” He also complains that the court did not appreciate that he would receive
relatively illiquid assets as part of the division. But the court specifically found that Wife
       2
         The parties stipulated “that a reasonable rate of return on money invested would be
approximately 3.5% [per annum].”
       3
           The parties also stipulated to effective federal tax for various levels of taxable income.

                                                       7
would have approximately $1 million for investment and that those funds would earn a
stipulated 3.5% per annum. We also note that the bulk of Husband’s illiquid assets, his
ownership interest in Hard 8 Management and the LA home, were tied to his post-divorce
income.

        Factor 9 requires consideration of “[t]he standard of living of the parties
established during the marriage.” Id. § 36-5-121(i)(9). The court found “that the parties
enjoyed a very high standard of living during their marriage.” As previously discussed,
the evidence does not preponderate against the court’s findings concerning the standard
of living established during the marriage.

       Factor 10 evaluates “[t]he extent to which each party has made such tangible and
intangible contributions to the marriage as monetary and homemaker contributions, and
tangible and intangible contributions by a party to the education, training or increased
earning power of the other party.” Id. § 36-5-121(i)(10). Husband contends that “Wife
was [not] a traditional, primary caregiver,” and he “question[s] the extent of her
intangible contributions.”

       The court found that both Husband and Wife made tangible and intangible
contributions to the marriage. With respect to Wife, the court found that she “was the
primary caretaker of the parties’ children.” Although Husband offered testimony
indicating that Wife relied on nannies and au pairs to care for the children, the court
credited Wife’s testimony that she was actively involved in the rearing of the parties’ four
children. We decline to disturb this finding on appeal.

       Factor 12 permits evaluation of “[s]uch other factors . . . as are necessary to
consider the equities between the parties.” Id. § 36-5-121(i)(12). The factors may
include “the tax consequences to each party.” Id. Husband complains that “[t]he Trial
Court took into account Wife’s tax liability when ordering alimony, yet there [wa]s no
finding that the Trial Court likewise took into account Husband’s tax liability.” He also
complains that the court imputed “a sinister motive in Husband paying quarterly taxes in
2016.”

        Husband does not elaborate on the tax liability he submits the court overlooked.
Based on our review of its order, the court took into account income taxes when it
evaluated his earning capacity. And the court found that Husband’s monthly income
after taxes would be approximately $100,000. We also note that the court considered the
deductibility of Husband’s alimony payments to Wife.

       As for Husband’s final complaint, the court found that Husband had overpaid
estimated quarterly taxes to the Internal Revenue Service during 2016. Based on the
proof offered, the court determined that the overpayments were part of an attempt by

                                             8
Husband to disguise his actual after-tax income. On this record, we discern no error in
the trial court making such a determination.
.
                                           III.

      We discern no abuse of discretion in the type, amount, or duration of the alimony
awarded. So we affirm the judgment of the trial court.

                                              _________________________________
                                              W. NEAL MCBRAYER, JUDGE

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