Court Opinion

ID: 3185857
Source: CourtListenerOpinion
Date Created: 2016-03-16 14:41:49.343338+00
Date Added: 2024-06-11T14:37:32.615062
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                              February 9, 2016 Session

ELIZABETH ANN MORROW GRANOFF v. ANDREW SCOTT GRANOFF

                Appeal from the Circuit Court for Jefferson County
                   No. 19472-II    Hon. Richard Vance, Judge

              No. E2015-00605-COA-R3-CV-FILED-MARCH 16, 2016

This second appeal of this post-divorce case concerns the husband‟s continued
occupation of the marital residence. Upon remand, the trial court imposed a rental
obligation upon the husband and established a reserve price for the auction sale of the
residence. We modify the court‟s decision to reflect an imposition of rent that conforms
to the marital dissolution agreement. We affirm the decision in all other respects.

       Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                     Affirmed as Modified; Case Remanded

JOHN. W. MCCLARTY, J., delivered the opinion of the Court, in which D. MICHAEL
SWINEY, C.J. and THOMAS R. FRIERSON, II, J., joined.

William A. Mynatt, Jr., Knoxville, Tennessee, for the appellant, Andrew Scott Granoff.

James R. Scroggins, Jefferson City, Tennessee, for the appellee, Elizabeth Ann Morrow
Granoff.

                                       OPINION

                                 I.     BACKGROUND

       Elizabeth Ann Morrow Granoff (“Wife”) and Andrew Scott Granoff (“Husband”)
were divorced by order of the court on May 16, 2006. In their 21 years of marriage,
Husband and Wife (collectively “the Parties”) amassed significant assets, including their
marital residence (“the Property”), a luxury estate situated on 26 acres with an
approximately 9,000 square foot home, a guest house, a swimming pool, and tennis
courts. As pertinent to this appeal, the Parties‟ marital dissolution agreement (“MDA”),
incorporated into the final judgment of divorce, provided as follows:
      REAL PROPERTY: The parties own a residence and land located at 390
      Highway 113, White Pine, Tennessee 37980, as tenants by the entireties.
      The land shall be immediately placed for sale. Wife shall be given a Trust
      Deed to secure an interest in the property of $460,000.00 or 30% of the
      proceeds, whichever is higher. If the house and land are not sold within
      four years of the date of the entry of the Final Judgment of Divorce,
      Husband shall have an additional two years to sell the property but shall
      begin paying a monthly payment to [W]ife equal to a monthly portion of
      the prime interest rate on the $460,000.00, should Husband fail to make a
      payment as required, Wife shall have the right to demand an immediate
      auction subject to the same conditions set forth herein regarding an auction
      of the property. If the house has not sold in six years from the date of entry
      of the divorce it shall be auctioned by a reputable auction company with a
      mutually agreeable reserve. At the time of any nonauction sale, after the
      payment of any expenses of said sale, the Wife shall receive (30%) of the
      net proceeds or $460,000.00, whichever is greater. Should the property
      require an auction, the parties shall divide the proceeds of the auction, after
      the payment of the expenses of the sale evenly between them. Until such
      time as the property is sold, Husband shall have the right to reside in the
      marital residence and shall be responsible for the reasonable maintenance
      and upkeep as well as the property tax and insurance. The Husband may
      decide to auction the home at any time with a reputable auction [company]
      and a mutually agreeable reserve.

When Husband‟s efforts to sell the Property proved unsuccessful, the parties announced
an agreement whereby Wife was permitted to market and sell the Property. The
agreement was memorialized in a written order on September 6, 2011. The order
provided, in pertinent part, as follows:

      1.     [Wife] shall assume the right to list, market, show and sell [the
      Property]. [Husband] shall continue to occupy the residence and he shall
      cooperate fully with [Wife] with regard to showing the premises and
      marketing the premises for sale. [Wife] shall have full access to come upon
      the [P]roperty, to show the [P]roperty, inspect the [P]roperty, and otherwise
      participate in the usual and customary acts associated with sale.

      2.     In the event that [the Property] does not sell pursuant to the listing of
      said property on or before August 1, 2009, [Wife] shall select a date during
      the month of October 2009 for the [P]roperty to be sold at auction with an
      auctioneering firm to be agreed between the attorneys of the parties.
      [Husband] shall comply with previous orders relative to upkeep,
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       maintenance, payment of real estate taxes and maintaining sufficient
       insurance with regard to the [P]roperty.

       3.     [Wife] shall assume responsibility for attempting to secure a one (1)
       year loan with monthly interest only and principal being payable on the
       anniversary date of the loan in an amount up to sixty thousand dollars
       ($60,000.00) with the loan proceeds utilized to satisfy past-due taxes,
       penalty and interest, and the expense of insurance premium for [the
       Property]. [Husband] shall cooperate fully with [Wife] in her attempts to
       secure the loan and he shall sign notes, instruments, or other documents
       necessary and associated with applications and the securing of the loan.
       The funds borrowed shall be repaid from funds of [Husband] upon sale of
       [the Property]. He shall continue to be responsible for all of the expenses
       associated with taxes, maintenance, insurance and upkeep of the marital
       residence that he occupies pending sale.

        Despite the significant passage of time and the provision providing for an auction,
the Property was never offered at auction because the Parties could not agree on a reserve
price. In August 2013, Wife secured an offer for the sale of the Property at a price of
$925,000. She filed a motion to approve the sale at that price. Husband opposed the sale
and questioned her authority to convey the Property without his approval. The trial court
approved the sale and affirmed Wife‟s authority to convey the property without
Husband‟s approval. A panel of this court affirmed the trial court‟s order, despite the fact
that the purchase and sale contract had expired and had not been renewed by the potential
purchasers. Granoff v. Granoff, No. E2013-02598-COA-R3CV, 2014 WL 4792652, at
*6-15 (Tenn. Ct. App. Sept. 26, 2014) (“Granoff I”).

       Upon remand, the trial court considered Wife‟s post-judgment motion to impose a
monthly rental obligation of $10,000 per month for Husband‟s continued occupancy of
the Property. Wife later filed a motion to order the sale of the Property at auction with a
reserve price established by the trial court. In support of her motion, she alleged that the
recent proceedings, as recounted in Granoff I, indicated that she and Husband could not
establish a mutually agreeable reserve price. She provided her preferred reserve price
under seal and requested that Husband also propose a reserve price for the court‟s
consideration. Husband obliged and provided his proposal under seal. We will not
recount the specific reserve price suggested by either party in an effort to protect the
future marketability of the Property. We do note that Husband‟s reserve price exceeded
$925,000, while Wife‟s price was below $925,000.

        Following a hearing on the pending motions, the court adopted Wife‟s reserve
price, appointed two auctioneers, ordered the auction sale of the Property “at the earliest
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reasonable time,” and imposed a rental obligation on Husband in the amount of $6,000
per month. Husband filed a motion to alter or amend, requesting a reduction in his
monthly rental obligation and questioning the court‟s authority to impose a rental
obligation beyond that provided for in the MDA. A hearing was held during which Wife
recounted her financial difficulties as a result of Husband‟s refusal to cooperate with the
sale of the Property. The court granted the motion to alter or amend, in part, by reducing
the rental obligation to $3,000 per month. This timely appeal followed.

                                        II.     ISSUES

       We consolidate and restate the issues raised on appeal by Husband as follows:

       A.     Whether the trial court erred in setting the monthly rental obligation.

       B.     Whether the trial court erred in setting the reserve price for the
       auction sale of the Property.

Wife presented an issue for our consideration on appeal that we restate as follows:

       C.      Whether Wife may approve the auction sale of the Property without
       court approval in the event that the highest bid is less than the reserve price
       set by the trial court.

                              III.   STANDARD OF REVIEW

       We review a trial court‟s findings of fact de novo with a presumption of
correctness unless the preponderance of the evidence is otherwise. Tenn. R. App. P.
13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). We review questions of law
de novo with no presumption of correctness. Whaley v. Perkins, 197 S.W.3d 665, 670
(Tenn. 2006).

       In Tennessee, a marital dissolution agreement incorporated into a final decree of
divorce “is a contract which is binding on the parties and as such it is „subject to the rules
governing construction of contracts.‟” Johnson v. Johnson, 37 S.W.3d 892, 896 (Tenn.
2001); Honeycutt v. Honeycutt, 152 S.W.3d 556, 561 (Tenn. Ct. App. 2003). “[T]he
interpretation of a contract is a matter of law.” Honeycutt, 152 S.W.3d at 561. Decisions
regarding the value of marital property are questions of fact. Kinard v. Kinard, 986
S.W.2d 220, 231 (Tenn. Ct. App. 1998).

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                                    IV.    DISCUSSION

                                            A.

        Husband argues that the trial court‟s imposition of a monthly rental obligation was
an impermissible modification of the MDA. In the alternative, he claims that the court
imposed an obligation he cannot meet given his monthly income and expenses. Wife
responds that review of this issue is waived because Husband did not object to the court‟s
authority to impose a rental obligation. In the alternative, she claims that the court did
not err in setting the rental obligation.

       Our review confirms that this issue is not waived because Husband objected to the
court‟s authority to impose a rental obligation beyond that provided for in the MDA. In
Husband‟s motion to alter or amend, he argued, in pertinent part, as follows:

      It should also be noted that the [MDA], the contract between the [P]arties
      regarding [the Property], contains no provision for rent. It contains a clause
      that requires [Husband] to [begin paying a monthly payment to Wife equal
      to a monthly portion of the prime interest rate on the $460,000]. Prime rate
      is currently 3.25%, which applied to $460,000 is [$1,245.83] per month.
      There is also a question regarding to whom any such rent is owed. The
      property is the joint property of the parties. [Husband] should not have to
      pay 100% of any rent to [Wife].

       In this state, a MDA incorporated into a final decree of divorce “is a contract
which is binding on the parties.” Stiel v. Stiel, 348 S.W.3d 879, 885 (Tenn. Ct. App.
2011). This court discussed the general rules and principles guiding the construction of a
contract by stating as follows:

      The cardinal rule in the construction of contracts is to ascertain the intent of
      the parties. If the contract is plain and unambiguous, the meaning thereof is
      a question of law, and it is the Court‟s function to interpret the contract as
      written according to its plain terms. The language used in a contract must
      be taken and understood in its plain, ordinary, and popular sense. In
      construing contracts, the words expressing the parties‟ intentions should be
      given the usual, natural, and ordinary meaning. If the language of a written
      instrument is unambiguous, the Court must interpret it as written rather than
      according to the unexpressed intention of one of the parties. Courts cannot
      make contracts for parties but can only enforce the contract which the
      parties themselves have made.

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Pitt v. Tyree Org. Ltd., 90 S.W.3d 244, 252 (Tenn. Ct. App. 2002) (internal citations
omitted) (emphasis added). Additionally, a MDA “is not subject to later modification by
the court.” Hannahan v. Hannahan, 247 S.W.3d 625, 627 (Tenn. Ct. App. 2007)
(citation omitted).

      As pertinent to this appeal, the MDA provides as follows:

      Wife shall be given a Trust Deed to secure an interest in the property of
      $460,000.00 or 30% of the proceeds, whichever is higher. If the house and
      land are not sold within four years of the date of the entry of the Final
      Judgment of Divorce, Husband shall have an additional two years to sell
      the property but shall begin paying a monthly payment to [W]ife equal to a
      monthly portion of the prime interest rate on the $460,000.00, should
      Husband fail to make a payment as required, Wife shall have the right to
      demand an immediate auction subject to the same conditions set forth
      herein regarding an auction of the property. If the house has not sold in six
      years from the date of entry of the divorce it shall be auctioned by a
      reputable auction company with a mutually agreeable reserve. At the time
      of any nonauction sale, after the payment of any expenses of said sale, the
      Wife shall receive (30%) of the net proceeds or $460,000.00, whichever is
      greater. Should the property require an auction, the parties shall divide the
      proceeds of the auction, after the payment of the expenses of the sale
      evenly between them. Until such time as the property is sold, Husband
      shall have the right to reside in the marital residence and shall be
      responsible for the reasonable maintenance and upkeep as well as the
      property tax and insurance. The Husband may decide to auction the home
      at any time with a reputable auction [company] and a mutually agreeable
      reserve.

(Emphasis added.).

       Under the clear language of the MDA, Husband was given the right to reside in
the marital residence until the Property is sold. His right to occupy is subject to a
monthly payment “equal to a monthly portion of the prime interest rate on the
$460,000.00,” effective upon the expiration of four years following the entry of the
judgment of divorce. In her appellate brief, Wife characterized this “monthly payment”
as an obligation to pay rent. We agree with this characterization; however, the Parties
explicitly provided for the amount of the obligation. To the extent that the court‟s
imposition of rent exceeds this amount, the court was in error. Accordingly, we modify
the judgment to reflect an imposition of rent that conforms to the MDA. In so holding,
we further conclude that the obligation to pay rent is in addition to Husband‟s obligation
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to remit payment for the property taxes and insurance and to ensure the reasonable
maintenance and upkeep of the Property pursuant to the terms of the contract.

                                              B.

        Husband argues that the trial court failed to protect the value of the Property by
setting a reserve price below the fair market value. He notes that the court relied on
testimony concerning “what the experts believed the [P]roperty would sell for” instead of
establishing the actual fair market value of the Property. Wife responds that the court did
not err in setting the reserve price given the loss of the prior offer of $925,000; the lack of
an additional offer; the length of time the Property has been on the market; and the cost to
maintain the property.

        The trial court may order the sale of the marital property by public auction
pursuant to Tennessee Code Annotated section 36-4-121(a)(3). In such cases, “[t]he
court, in its discretion, may impose any additional conditions or procedures upon the sale
of property . . . as are reasonably designed to ensure that such property is sold for its fair
market value.” Tenn. Code Ann. § 36-4-121.

       Here, the trial court ordered an auction sale and set a reserve price to ensure that
the Property was sold at fair market value. In setting the reserve price, the court stated,

       The marital residence identified in the pleadings and the real property
       associated therewith shall be sold at auction. The [c]ourt has given due
       consideration to testimony previously rendered from real estate
       professionals and is now well familiar with the nature and extent of the real
       property consisting of the marital residence in Jefferson County, Tennessee.

       The [c]ourt establishes the amount of reserve for the auction sale of the
       marital residence and real property to be the amount submitted by [Wife].

Like the trial court, this court is now well familiar with the Property. See Granoff I, 2014
WL 4792652, at *6-12 (recounting the testimony concerning the nature and extent of the
Property and the difficulty in securing a reasonable offer). Husband may be correct that
the Property is worth substantially more than the reserve price. However, “fair market
value” is defined, in pertinent part, by Black‟s Law Dictionary, 10th ed., as “[t]he price
that a seller is willing to accept and a buyer is willing to pay on the open market and in an
arm‟s-length transaction.” Given the failure of either party to secure the sale of the
Property in the almost ten years since the entry of the final judgment of divorce and the
unique nature of the Property, we uphold the trial court‟s setting of the reserve price as

                                             -7-
indicative of the fair market value. In so holding, we reject Husband‟s assertion that the
trial court failed to protect the fair market value of the Property.

                                             C.

        In an effort to prevent future delays and the need for additional appellate review,
Wife asks this court to grant her the authority to approve the auction sale of the Property
without court approval in the event that the highest bid is less than the reserve price set
by the trial court. We are sympathetic to Wife‟s predicament given the significant
passage of time since the entry of the final judgment of divorce. However, this request
was not considered by the trial court. Appellate courts “cannot exercise original
jurisdiction” and act as the “trier-of-fact.” Peck v. Tanner, 181 S.W.3d 262, 265 (Tenn.
2005) (citations omitted); see also Pierce v. Tharp, 461 S.W.2d 950, 954 (Tenn. 1970)
(rejecting appellants‟ “novel” request to adduce proof in support of their motion). The
jurisdiction of this court is “appellate only.” Tenn. Code Ann. § 16-4-108. Additionally,
a party may not offer a new issue for the first time on appeal. Lane v. Becker, 334
S.W.3d 756, 764 (Tenn. Ct. App. 2010) (citing Campbell Cnty. Bd. of Educ. v. Brownlee-
Kesterson, Inc., 677 S.W .2d 457, 466-67 (Tenn. Ct. App. 1984)). “The jurisprudential
restriction against permitting parties to raise issues on appeal that were not first raised in
the trial court is premised on the doctrine of waiver.” Fayne v. Vincent, 301 S.W.3d 162,
171 (Tenn. 2009) (citations omitted).

                                    V.     CONCLUSION

       The judgment of the trial court is affirmed as modified to reflect an imposition of
rent that conforms to the marital dissolution agreement. This case is remanded to the trial
court for such further proceedings as may be necessary. Costs of the appeal are taxed
one-half to the appellant, Andrew Scott Granoff, and one-half to the appellee, Elizabeth
Ann Morrow Granoff.

                                                   _________________________________
                                                   JOHN W. McCLARTY, JUDGE

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