Court Opinion

ID: 4554872
Source: CourtListenerOpinion
Date Created: 2020-08-12 14:11:54.794253+00
Date Added: 2024-06-11T09:26:24.197256
License: Public Domain

08/11/2020
                IN THE COURT OF APPEALS OF TENNESSEE
                             AT JACKSON
                           Assigned on Briefs April 15, 2020

   VERNELL LYNN CARPENTER LEWIS v. WILLIAM BILLY LEWIS

                   Appeal from the Circuit Court for Shelby County
                     No. CT-000021-17 Valerie L Smith, Judge
                      ___________________________________

                            No. W2019-00542-COA-R3-CV
                        ___________________________________

The sole issue in this appeal concerns the trial court’s decision to classify residential
property as the wife’s separate asset. The trial court made its decision upon finding the
wife purchased the property prior to the marriage, titled it in her name only, and paid the
mortgage and expenses to maintain the property with money she earned during the
marriage and with only occasional assistance from the husband. This appeal followed. The
husband contends the property should have been classified as a marital asset because the
couple resided there as husband and wife for ten years; the money the wife earned during
the marriage was marital property; and he made substantial contributions to maintaining
the property and paying expenses. We have determined that the funds the wife used to pay
the mortgage and expenses were marital assets because they were earned during the
marriage. Moreover, the couple used the property as their marital residence during their
ten-year marriage, and the husband provided some, albeit modest, assistance in maintaining
the property. Accordingly, we reverse the decision of the trial court and hold that the
property shall be classified as a marital asset. Based on this decision, we vacate the division
of the marital estate and remand for the trial court to determine the value of the marital
assets, equitably divide those assets, and enter judgment accordingly. The husband also
contends the trial court’s discovery sanction against the wife was insufficient. Finding no
error with this discretionary decision, we affirm the sanction imposed by the trial court.

        Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                 Affirmed in part; Reversed in part and Remanded

FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which JOHN W.
MCCLARTY and ARNOLD B. GOLDIN, JJ., joined.

Jimmie D. Drewry, Memphis, Tennessee, for the appellant, William Billy Lewis.

Vicki L. Green, Millington, Tennessee, for the appellee, Vernell Lynn Carpenter Lewis.
                                       OPINION

                          FACTS AND PROCEDURAL HISTORY

                                     I. BACKGROUND

       William Billy Lewis (“Husband”) and Vernell Lynn Carpenter Lewis (“Wife”)
began dating in 1995. Each had children from a previous marriage and maintained separate
residences. Ten years later, while the couple was still dating, Wife purchased a four-acre
parcel of land on Hines Road in Millington, Tennessee (“the Property”). The Property
included a single-family residence and a detached garage. Wife made the down payment
with her separate funds and placed the title in her name.

       Wife moved into the residence shortly after the purchase. Within a year, Husband
moved in with her. They built stalls for Husband’s horses, and Wife paid to have a shed
built on the property. A few months later, Husband moved out when Wife refused to allow
his grown son to live with them. Husband lived nearby in his motorhome for three or four
months, after which the couple reconciled, and Husband moved back to the property.

      After Husband returned, Wife prepared a handwritten document (“the Agreement”),
which provided, in its entirety, as follows:

      By this agreement made and entered into on August 17, 2006 between
      Vernell C. Davis and William Lewis, co-habitants on the premises situated
      at (7890 Hines Rd. Millington, Tenn. 38053) together with all the privileges
      and rights equally divided for an indefinite term of years to commence on
      Aug 17, 2006.

      Both parties agree to pay without demand 1/2 each of the monthly mortgage
      payments, utilities and upkeep of the premises, with all decision making and
      rights pertaining to the property equally divided.

The couple signed the Agreement, and their signatures were notarized.

      Eight months later, the couple was married. One month after getting married,
Husband quit his job as an automobile mechanic and stopped paying his share of the
expenses. During the remainder of the marriage, Wife paid the mortgage with her earnings.

                               II. DIVORCE PROCEEDINGS

       In 2017, after ten years of marriage, both Husband and Wife filed complaints for
divorce, each alleging irreconcilable differences and inappropriate marital conduct. In May
2018, the trial court entered a scheduling order, and the parties proceeded with discovery.

                                           -2-
       During Wife’s deposition in September 2018, a dispute arose, at which time
Husband’s attorney cut the deposition short and filed a motion for sanctions including
expenses related to the deposition. The trial court granted the motion but reserved ruling
on the amount of the sanction. Husband’s counsel later submitted an invoice for court
reporting services, “representing the cost incurred related to the Motion for Sanctions.”

       The court held a trial over three days in October and November 2018. After the trial
began, the parties stipulated to the grounds for divorce and the division of personal
property. The only remaining issue was the classification, value, and division of the
Property.

       In her testimony, Wife insisted that she never intended for the Property to be a
marital asset. She explained that she asked Husband to sign the Agreement in August 2006
because Husband had been using the garage as a workshop and kept his horses on the
property without contributing to expenses. Wife presented numerous receipts, showing she
paid for home improvement materials and services during the marriage. She also testified
that Husband told her she should pay the bills because it was her house. Although Wife
conceded that Husband performed some maintenance tasks on the property, she insisted
that she did most of the upkeep.

       For his part, Husband testified that Wife always intended for him to be a co-owner,
but she left him off the title and financing because of his credit. He also asserted that he
asked for the Agreement in August 2006. He explained that he wanted to memorialize his
equal rights after Wife refused to allow his son to live with them. But Husband
acknowledged that Wife told him the property was hers on several occasions, both before
and after they signed the Agreement. As for payment of the expenses, Husband admitted
he did not always contribute as much as Wife, but he asserted that he gave Wife half of
everything he earned. Further, Husband contended that his contributions took the form of
physical labor and insisted that he did most of the upkeep.

       In February 2019, the trial court entered a final divorce decree, finding the Property
was not a part of the marital estate. As for who contributed what, the court found Wife’s
testimony more credible than that of Husband. The court concluded that Wife managed
and performed the property maintenance with only occasional help from Husband. The
court also found that the Agreement did not entitle Husband to an interest in the Property
because Husband had not paid his half of the mortgage and utility bills.

        In a separate order, the court sanctioned Wife’s attorney by awarding Husband $250
for attorneys’ fees and $451.80 for costs related to Wife’s deposition.

       This appeal followed.

                                            -3-
      Husband raises two issues on appeal: (1) whether the Property was marital property
based on transmutation; and (2) whether the trial court’s modest Tennessee Rule of Civil
Procedure 37 discovery sanction against Wife was an abuse of discretion.

                                  STANDARD OF REVIEW

        "Whether or not transmutation has occurred is a fact question." Luplow v. Luplow,
450 S.W.3d 105, 114 (Tenn. Ct. App. 2014) (citing Fox v. Fox, No. M2004-01616-COA-
R3-CV, 2006 WL 2535407, at *3 (Tenn. Ct. App. Sept. 1, 2006)). Under Tenn. R. App. P.
13(d), we review a trial court’s determinations on issues of fact “de novo upon the record.”
Kelly v. Kelly, 445 S.W.3d 685, 692 (Tenn. 2014). We presume the court’s findings are
correct, “unless the preponderance of the evidence is otherwise.” Id. “For the evidence to
preponderate against a trial court’s finding of fact, it must support another finding of fact
with greater convincing effect.” State ex rel. Flowers v. Tenn. Trucking Ass’n Self Ins. Grp.
Tr., 209 S.W.3d 595, 599 (Tenn. Ct. App. 2006) (citations omitted). Further, we will not
second guess a trial court’s credibility determination absent clear and convincing evidence
to the contrary. Kelly, 445 S.W.3d at 692.

       Our review of a trial court’s determinations on issues of law is de novo, with no
presumption of correctness. Lind v. Beaman Dodge, Inc., 356 S.W.3d 889, 895 (Tenn.
2011).

        In contrast, we review a trial court’s decisions regarding sanctions under an abuse
of discretion standard, Brooks v. United Uniform Company, 682 S.W.2d 913, 915 (Tenn.
1984), which does not permit reviewing courts to substitute their discretion for that of the
trial court, Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010). Nevertheless, the
abuse of discretion standard of review does not immunize a trial court’s decision from any
meaningful appellate scrutiny:

       [R]eviewing courts should review a [trial] court’s discretionary decision to
       determine (1) whether the factual basis for the decision is properly supported
       by evidence in the record, (2) whether the [trial] court properly identified and
       applied the most appropriate legal principles applicable to the decision, and
       (3) whether the [trial] court’s decision was within the range of acceptable
       alternative dispositions. When called upon to review a lower court’s
       discretionary decision, the reviewing court should review the underlying
       factual findings using the preponderance of the evidence standard contained
       in Tenn. R. App. P. 13(d) and should review the [trial] court’s legal
       determinations de novo without any presumption of correctness.
Id. at 524–25 (internal citations omitted). Stated another way, the appellate court should
review a discretionary decision to determine if it was “a conscientious judgment, consistent
with the facts, that takes into account the applicable law.” White v. Beeks, 469 S.W.3d 517,
527 (Tenn. 2015).

                                            -4-
                                                ANALYSIS

                          I. CLASSIFICATION OF HINES ROAD PROPERTY

       Husband contends the trial court erred in ruling that the Property did not transmute
to become marital property because (1) the Agreement evidences Wife’s intent for the
Property to be jointly owned with Husband, (2) the Property was the marital residence, (3)
Wife admitted that Husband maintained the Property, and (4) Wife used marital funds to
pay the mortgage and for improvements to the Property.

       “The classification of particular property as either separate or marital is a question
of fact to be determined in light of all relevant circumstances.” Snodgrass v. Snodgrass,
295 S.W.3d 240, 245 (Tenn. 2009). Moreover, “the trial court is to consider both the legal
and equitable interests of the parties in deciding whether the property is separate or
marital.” Wallace v. Wallace, No. C.A. 23, 1989 WL 31627, at *3 (Tenn. Ct. App. Apr. 7,
1989) (citing Jones v. Jones, 597 S.W.2d 886 (Tenn. 1979)).

        The parties created confusion in the trial court by asserting claims and defenses
based on the doctrine of transmutation and the statutory definition of marital property under
Tenn. Code Ann. § 36-4-121(b)(1)(B)(i) without distinguishing them. In its final ruling,
the trial court cited only the doctrine of transmutation; however, some of its findings
identify factors that are only applicable to a claim based on Tenn. Code Ann. § 36-4-
121(b)(1)(B)(i). Because the doctrine of transmutation and the definition of marital
property under Tenn. Code Ann. § 36-4-121(b)(1)(B)(i) are distinct in their purpose and
requirements, we find it necessary to distinguish the two as we determine whether the trial
court correctly determined that the Property did not transmute into marital property.1

        “Common-law” transmutation is “founded upon principles of acquisition by gift
[and] transforms the separate asset into a marital asset in its entirety,” Galligan v. Galligan,
No. M2006-00833-COA-R3-CV, 2007 WL 2295999, at *6 n.5 (Tenn. Ct. App. Aug. 10,
2007), while Tenn. Code Ann. § 36-4-121(b)(1)(B)(i) classifies only the “increase in the
value” of a separate asset during the marriage as marital property “if each party
substantially contributed to its preservation and appreciation.” Stated another way, under
the common-law doctrine of transmutation, “[a]n asset separately owned by one spouse
will be classified as marital property if the parties themselves treated it as marital
property.” Trezevant v. Trezevant, 568 S.W.3d 595, 610 (Tenn. Ct. App. 2018) (emphasis
added) (quoting Fox, 2006 WL 2535407, at *5). By contrast, under the statutory definition

        1
           We find it implicit in the trial court’s final order that Husband failed to prove that the Property
increased in value during the marriage due to his contributions; thus, Husband was not entitled to relief
pursuant to Tenn. Code Ann. § 36-4-121. Moreover, Husband did not raise the issue of whether he was
entitled to relief pursuant to Tenn. Code Ann. § 36-4-121. Therefore, our analysis is limited to the doctrine
of transmutation.

                                                    -5-
of marital property, the increase in value during the marriage of a separate asset will be
classified as marital property if the nonowner spouse contributed substantially to the
asset’s preservation and appreciation. Tenn. Code Ann. § 36-4-121(b)(1)(B)(i). Thus,
under the doctrine of transmutation, the entire asset may become marital property when
the parties treated it as marital property, while under the statutory definition, only the
increase in value resulting from the nonowner’s substantial contributions becomes
marital property.

       In its final order, citing to Hayes v. Hayes, No. W2010-02015-COA-R3-CV, 2012
WL 4936282 (Tenn. Ct. App. Oct. 18, 2012), the trial court correctly recognized four
factors that are persuasive in the transmutation analysis:

        The Court looks to Hayes v. Hayes, 2012 WL 4936282 *12 for factors to be
        considered in determining whether or not the property which was purchased
        by [Wife] prior to the marriage has been transmuted. Those factors include:

        1. The use of the property as a marital residence,

        2. The ongoing maintenance of the property by both parties,

        3. Placing the title to the property in joint ownership, and

        4. Using the credit of the non-owner spouse to improve the property.

The court found the title was not placed in joint ownership, Husband’s credit was not used
to improve the property, and the property was used as a marital residence. None of these
findings are contested on appeal. However, the trial court based its finding that no
transmutation occurred largely on a comparison of Husband and Wife’s physical and
financial contributions to the Property’s maintenance and upkeep, which are statutory
factors, not transmutation factors2:

        The Court heard disputed testimony regarding the maintenance of the
        property. While both parties agreed that [Husband] cut grass, the Court finds
        the testimony of [Wife] to be more credible in this regard and finds that she
        was the party engaging in maintenance for the most part with only occasional
        help from [Husband]. The court finds that [Wife] was the party managing the
        property. . . . The testimony is undisputed that [Wife] made all payments on

        2
          The court’s findings relative to physical and financial contributions to the Property’s maintenance
and upkeep may be due to the parties’ failure to properly distinguish between the common law doctrine of
transmutation and the statutory definition of marital property in the context of an increase in value of
separate property.

                                                   -6-
       the property. While [Husband] testified that he provided cash to [Wife]
       regularly, the Court finds that testimony to be less than credible.

        The four factors cited by the trial court are not exclusive. Fox, 2006 WL 2535407,
at *5 (listing the factors as the most commonly used). In particular, Tennessee courts have
also found persuasive the use of marital funds for improving the property or paying off an
encumbrance. See, e.g., Owens v. Owens, 241 S.W.3d 478, 486 (Tenn. Ct. App. 2007)
(finding husband’s interest in real property was marital when he used marital funds to pay
the mortgage for 20 years). Significant to this case, a spouse’s earnings are marital
property, regardless of whether they are deposited into a joint or separate bank account.
See Wade v. Wade, 897 S.W.2d 702, 716 (Tenn. Ct. App. 1994); see also Cohen v. Cohen,
937 S.W.2d 823, 833 (Tenn. 1996); Wright v. Wright, No. W2018-02163-COA-R3-CV,
2020 WL 1079266, at *11 (Tenn. Ct. App. Mar. 6, 2020) (expenditure of marital funds
“was sufficient to transmute the entirety into marital property”); Carter v. Browne, No.
W2018-00429-COA-R3-CV, 2019 WL 424201, at *12 (Tenn. Ct. App. Feb. 4, 2019)
(mortgage “frequently paid” with marital funds); Givens v. Givens, No. E2016-00865-
COA-R3-CV, 2017 WL 4339489, at *9 (Tenn. Ct. App. Sept. 29, 2017) (husband spent
“significant amounts of marital income on paying off and remodeling [the property]”);
Liner v. Liner, No. M2010-00582-COA-R3-CV, 2011 WL 1420883, *3 (Tenn. Ct. App.
April 13, 2011) (considering the fact that “[t]he mortgage and utilities for the home were
paid out of [a] joint account”); Daniel v. Daniel, No. M2006-01579-COA-R3-CV, 2007
WL 3202778, at *6 (Tenn. Ct. App. Oct. 31, 2007) (finding transmutation where “[t]he
mortgage, insurance, and taxes on the [ ] property were paid with the rental proceeds that
had been deposited into a joint bank account held by the parties”); Davis v. Davis, No.
03A01-9708-CH-00381, 1999 WL 83948, at *4 (Tenn. Ct. App. Feb. 19, 1999) (affirming
marital classification when there was “insufficient proof to substantiate” the husband’s
claim that he purchased the property with funds given to him by his uncle).

       Our assessment of the evidence begins with Wife’s testimony that she used pre-
marital insurance proceeds to make the down payment for the Property in 2005 and
obtained a mortgage for the balance of the purchase price. The next year, Husband moved
to the Property and agreed to pay half of the mortgage and expenses. Wife testified that
Husband paid half of the mortgage for only six or seven months—at which time the parties
got married, and Husband quit his job. With Wife’s support, Husband attempted to start a
private security business, repairing and equipping two security trucks on the Property. That
business failed, and Husband remained “self-employed.” Wife testified that Husband
subsequently had a lawn service and performed odd jobs but never gave her any money for
the mortgage or utilities. She paid for property expenses and improvements for the duration
of the marriage out of her separate bank account, which was funded with her earnings.

       Wife performed most of the maintenance on the Property, but she acknowledged
that Husband performed several tasks, including cutting the grass, clearing fallen trees and
branches, chopping firewood, cleaning the septic tank, performing small electrical projects,

                                           -7-
and repairing fences. She also testified that she and Husband made a few improvements
together, such as installing a new kitchen countertop and hanging drywall in a shed.

        Regarding the August 2006 Agreement, we agree with the trial court’s conclusion
that the Agreement did not convey any interest in the Property to Husband. The Agreement
was executed seven months prior to the marriage. Wife testified that it was not executed in
contemplation of marriage. Husband testified to the same effect, stating the parties were
not engaged until 2007. Thus, the Agreement is of little relevance to how the parties treated
the Property during the marriage.

        The trial court found that Husband’s testimony regarding his contributions to the
property was not credible, and we find no reason to second guess this determination.
“[B]ecause trial courts are ‘uniquely positioned to observe the demeanor and conduct of
witnesses,’” appellate courts afford them “considerable deference when reviewing issues
that hinge on the witnesses’ credibility.” Kelly, 445 S.W.3d at 692 (quoting State v. Binette,
33 S.W.3d 215, 217 (Tenn. 2000)). We will not reevaluate a trial court’s assessment of a
witness’s credibility unless there is clear and convincing evidence to the contrary. Id.
Because there is no clear and convincing evidence to the contrary, we find no reason to
second guess this determination regarding Husband’s lack of credibility. Nonetheless,
Wife’s own testimony established facts that preponderate against the finding that the
Property did not transmute during the marriage.

       As discussed, the transmutation analysis is focused on how the parties treated the
property and not their relative efforts. See Hayes, 2012 WL 4936282, at *12. Here, it is
undisputed that the parties used the Property throughout the marriage as their marital
residence. Also persuasive is the use of marital funds for improving property or paying off
an encumbrance. See Owens, 241 S.W.3d at 486. Admittedly, while Wife assumed more
responsibility for the Property than Husband, in addition to performing her role as the
primary wage earner, it is undisputed that Wife used marital funds, her earnings during the
marriage, to pay the mortgage, property taxes, and expenses to maintain the Property. For
these and other reasons apparent from the record, we find that the evidence preponderates
against the trial court’s finding that the Property did not transmute to marital property and
remand with instruction for the Property to be classified as marital property.

        Because the Property is to be classified as marital property, we find it necessary to
remand this matter to the trial court to fashion an equitable distribution of the marital estate.
In ruling that the Property shall be classified as marital property for the purpose of dividing
the marital estate, we do not express any opinion as to how the marital estate should be
divided. On remand, the trial court will be tasked with equitably dividing the marital estate,
considering all the factors in Tenn. Code Ann. § 36-4-121(c), including “[t]he contribution
of each party to the acquisition, preservation, appreciation, depreciation or dissipation of
the marital or separate property, including the contribution of a party to the marriage as
homemaker, wage earner or parent[.]”

                                              -8-
                                       II. SANCTIONS

       Next, we consider whether the amount of monetary sanctions awarded to Husband
was consistent with the facts, took account of the applicable law, and was within the range
of acceptable alternatives. See White, 469 S.W.3d at 527.

       Husband contends that the trial court’s sanction against Wife’s attorney for one hour
of attorneys’ fees was unreasonable because Husband’s attorney spent nine hours
researching and drafting due to the misconduct. Husband asserts that he filed two motions
for sanctions along with an affidavit of attorney time, but “the trial court refused to allow
for more than one (1) hour of attorney time to be granted as an award[,] stating that
[preparing the motion for sanctions] would only take one (1) hour.”

       Tennessee Rule of Civil Procedure 37 contains several provisions that allow courts
to issue monetary sanctions when a party has failed to cooperate during discovery. See,
e.g., Tenn. R. Civ. P. 37.01(4) (authorizing courts to “require the party or deponent whose
conduct necessitated the motion [to compel] or the party or attorney advising such conduct
or both of them to pay to the moving party the reasonable expenses incurred in obtaining
the order, including attorney’s fees”). The record on appeal, however, does not contain a
copy of Husband’s motion for sanctions, nor does it contain a transcript from the October
2018 hearing or a statement of the evidence.

       Moreover, the order granting Husband’s motion fails to delineate the basis for its
decision. Thus, the record before this court is “devoid of any matter upon which an abuse
of discretion can be predicated.” Brooks, 682 S.W.2d at 915. “[I]n the absence of a
transcript or statement of the evidence, there is a conclusive presumption that there was
sufficient evidence before the Trial Court to support its judgment and this Court must
therefore affirm the judgment.” Brown v. Christian Bros. Univ., 428 S.W.3d 38, 48 (Tenn.
Ct. App. 2013) (quoting Outdoor Management LLC v. Thomas, 249 S.W.3d 368, 377
(Tenn. Ct. App. 2007)). Accordingly, we cannot say that the trial court erred by awarding
one hour of attorney time as sanctions against Wife’s attorney.

                                     IN CONCLUSION

       The judgment of the trial court is affirmed in part, reversed in part, and this matter
is remanded for further proceedings consistent with this opinion. Costs of appeal are
assessed against the parties equally.

                                                   ________________________________
                                                   FRANK G. CLEMENT JR., P.J., M.S.

                                            -9-