Court Opinion

ID: 4441152
Source: CourtListenerOpinion
Date Created: 2019-09-24 22:09:38.02113+00
Date Added: 2024-06-11T14:45:18.828572
License: Public Domain

09/24/2019
               IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                        September 4, 2019 Session

                JOANNE ACKERMAN V. SCOTT ACKERMAN

                Appeal from the Circuit Court for Sequatchie County
                     No. 17-CV-55       Justin C. Angel, Judge

                            No. M2019-00211-COA-R3-CV

In this divorce appeal, Wife argues that the trial court erred in dividing the equity in the
marital home and in calculating her net award. We find no error in the trial court’s
division of the equity in the marital home, but we have determined that the court erred in
its calculation of the net award by crediting the marital debt against Wife twice. We,
therefore, affirm in part and reverse in part.

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

ANDY D. BENNETT, J., delivered the opinion of the Court, in which W. NEAL MCBRAYER
and ARNOLD B. GOLDIN, JJ., joined.

Michael Keith Davis, Dunlap, Tennessee, for the appellant, Joanne Ackerman.

Samuel F. Hudson, Dunlap, Tennessee, for the appellee, Scott Ackerman.

                                        OPINION

                       FACTUAL AND PROCEDURAL BACKGROUND

       Scott Ackerman (“Husband”) and Joanne Ackerman (“Wife”) married in
November 2011 while living in Florida. No children were born of the marriage, but both
parties had children from previous relationships. Husband and Wife both accumulated
funds in retirement accounts while working for the Florida Department of Corrections.

       Approximately four years after their marriage, Husband and Wife decided to move
to Tennessee. They both liquidated their retirement accounts. After taxes, Husband
received $87,756.17 out of his account valued at $109,695.21. Wife’s account, with a
gross value of $56,768.56, paid her $45,414.85 after taxes. With their combined funds,
Husband and Wife purchased unimproved land, cleared the property, and installed a new
mobile home. Both obtained employment in Sequatchie County.

       Unfortunately, problems arose in the marriage approximately one year after the
parties moved into their new home, and Wife decided to relocate to Florida with her
children. She and the children moved back to Florida in September 2016 and did not
return to Tennessee. Husband continued to reside in the marital home. On September
19, 2016, Husband obtained a loan for $25,000.00 in his name using the marital home as
security. (The use of the loan proceeds was an issue at trial.)

        Husband filed for divorce in March 2017. The case went to trial on November 26,
2018, on stipulated grounds for divorce, and both parties testified. The parties agreed
that the marital home was worth $107,000.00. The balance due on the loan was
$22,972.03. Thus, the value of the remaining equity in the home was $84,027.97. Wife
requested that the marital home be sold and the proceeds divided equally between the
parties. Husband argued that he should be awarded 65.9% and Wife should be awarded
34.1% of the equity in the marital home based upon their respective contributions toward
the purchase. He further asserted that Wife should be responsible for the entire balance
of the loan, whereas she argued that the parties should be equally responsible for the debt.

       Assessing the statutory factors (discussed below), the trial court found factor five
most significant in that “Husband contributed a substantially greater percentage of funds
to the parties’ purchase of the real property and mobile home . . . .” The court awarded
the marital home to Husband and ordered that the outstanding debt on the loan be equally
divided between the parties. Wife was awarded 25% of the net equity in the marital
home ($21,006.99) minus her one-half of the marital debt ($11,486.02), resulting in a net
recovery of $9,520.97.

       Wife appeals, arguing that the trial court erred in its determination of her share of
the equity in the marital home and in calculating her net award.

                                  STANDARD OF REVIEW

       A trial court has a great deal of discretion in determining the manner in which it
divides marital property, and an appellate court will generally defer to a trial court’s
decision regarding what is equitable unless that decision is inconsistent with the factors
set out in Tenn. Code Ann. § 36-4-121(c) or the evidence preponderates against the
division. Jolly v. Jolly, 130 S.W.3d 783, 785-86 (Tenn. 2004). Appellate courts “‘are
disinclined to disturb the trial court’s decision unless the distribution lacks proper
evidentiary support or results in some error of law or misapplication of statutory
requirements and procedures.’” Larsen-Ball, 301 S.W.3d 228, 234 (Tenn. 2010) (quoting
Keyt v. Keyt, 244 S.W.3d 321, 327 (Tenn. 2007)).

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                                          ANALYSIS

       A trial court’s division of marital property “involves the distribution of both
marital assets and marital debts.” Robertson v. Robertson, 76 S.W.3d 337, 341 (Tenn.
2002); see also Pollan v. Pollan, No. M2011-01896-COA-R3-CV, 2012 WL 2582336, at
*3 (Tenn. Ct. App. July 3, 2012). Once a trial court has classified divorcing parties’
property as marital or separate, the court is tasked with equitably dividing the marital
property between the parties “without regard to marital fault in proportions as the court
deems just.” Tenn. Code Ann. § 36-4-121(a)(1); see also Larsen-Ball, 301 S.W.3d at 231.
An equitable division of property “is not necessarily an equal one.” Batson v. Batson, 769
S.W.2d 849, 859 (Tenn. Ct. App. 1988); see also Owens v. Owens, 241 S.W.3d 478, 490
(Tenn. Ct. App. 2007) (“A division of marital property is not rendered inequitable simply
because it is not precisely equal or because each party did not receive a share of every
piece of marital property.”) (citations omitted). The division of marital property “is not a
mechanical process” but rather is guided by the factors set forth in Tenn. Code Ann. § 36-
4-121(c). Kinard v. Kinard, 986 S.W.2d 220, 230 (Tenn. Ct. App. 1998).

       A similar analysis applies with respect to marital debt. See Alford v. Alford, 120
S.W.3d 810, 813 (Tenn. 2003). Our Supreme Court has defined marital debt as “all debts
incurred by either or both spouses during the course of the marriage up to the date of the
final divorce hearing.” Id. The following four factors are to be used by trial courts as
guidelines in the equitable distribution of marital debt: “(1) the debt’s purpose; (2) which
party incurred the debt; (3) which party benefitted from incurring the debt; and (4) which
party is best able to repay the debt.” Id. at 814 (citing Mondelli v. Howard, 780 S.W.2d
769, 773 (Tenn. Ct. App. 1989)).

       I. Equity in marital home.

       Wife argues that the trial court failed to make an equitable division of the marital
assets when it awarded her only 25% of the equity in the marital home. Tennessee Code
Annotated section 36-4-121(c) sets out the factors for the court to consider in making an
equitable division of the marital property.

       The trial court set forth its analysis of the statutory factors as follows:

       (1) The duration of the marriage: the eight (8) year marriage was of a
       moderate length, and the Court placed little emphasis on this factor;
       (2) The age, physical and mental health, vocational skills, employability,
       earning capacity, estate, financial liabilities and financial needs of each of
       the parties: the parties are close in age to each other, and they appear to
       have similar earning capabilities, and the Court places little weight on this
       factor;

                                             -3-
(3) The tangible or intangible contribution by one (1) party to the
education, training or increased earning power of the other party: no proof
was presented on this factor, and the Court gives it no weight to it [sic];
(4) The relative ability of each party for future acquisitions of capital assets
and income: both parties are in extremely poor financial health, and this
factor does not favor either party;
(5)(A) The 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, with the contribution of a party as homemaker or wage
earner to be given the same weight if each party has fulfilled its role:
Husband contributed a substantially greater percentage of funds to the
parties’ purchase of the real property and mobile home in Tennessee, and
the Court affords great weight to this factor. The court also considered
Wife’s testimony that she was the primary homemaker, even though both
parties worked. The Court considered Wife’s additional contribution, but
the Court gives Husband’s financial contributions more weight;
(6) The value of the separate property of each party: although there was
some testimony that Wife owned some assets at the time of the parties’
marriage, the Court affords this factor little weight;
(7) The estate of each party at the time of the marriage: this factor does not
favor either party;
(8) The economic circumstances of each party at the time the division of
property is to become effective: based on the Court’s distribution of assets
and liabilities, this factor does not [favor] either party;
(9) The tax consequences to each party, costs associated with the
reasonably foreseeable sale of the asset, and other reasonably foreseeable
expenses associated with the asset: this factor is not applicable;
(10) In determining the value of an interest in a closely held business or
similar asset, all relevant evidence, including valuation methods typically
used with regard to such assets without regard to whether the sale of the
asset is reasonably foreseeable. Depending on the characteristics of the
asset, such considerations could include, but would not be limited to, a lack
of marketability discount, a discount for lack of control, and a control
premium, if any should be relevant and supported by the evidence: not
applicable;
(11) The amount of social security benefits available to each spouse: this
factor is not applicable;
(12) Such other factors as are necessary to consider the equities between the
parties: [there] were not any additional factors considered by the Court that
were necessary to consider the equities between the parties.

                                     -4-
      A. Contributions of each party.

       In arguing that the trial court erred in awarding her only 25% of the equity in the
marital home, Wife asserts that the court misapplied the statutory factors. According to
Wife, the trial court failed to give adequate weight to her financial condition at the time
of the marriage, her more stable employment history, her undisputed contributions as a
homemaker, and Husband’s failure to preserve the parties’ assets and credit after the
separation. Most of these issues were disputed at trial. The trial court acknowledged that
Wife was in a better financial condition at the time of the parties’ marriage, but Wife
argues that the court did not give this fact sufficient weight. Wife testified that she
owned a duplex and two vehicles when the parties married. On cross-examination,
however, she admitted that the duplex was in foreclosure prior to the parties’ marriage
and that one of the vehicles was eventually repossessed. Husband testified that, during
the parties’ relationship, he owed the Internal Revenue Service (“IRS”) around $20,000
and that their joint account was garnished, but cross-examination of Wife revealed that
the IRS garnishment occurred before the parties’ marriage.

       As to the evidence regarding the parties’ employment histories, Wife argues that
she was “essentially” employed throughout the marriage whereas Husband was not. Both
parties were employed with the Florida Department of Corrections, Husband since 2001,
Wife since 2006. Husband lost his job with the State of Florida and was unemployed for
a period of about three months, during which time he received no income. Wife was
injured for a period of months and received some income while she was unable to work.
After the parties moved to Tennessee, Wife was able to obtain employment sooner than
Husband.

        Wife further asserts that she contributed a greater percentage of the parties’
income during the marriage because Husband had to pay child support for his two
children. She testified that, when they lived in Florida, she brought home about $1000
and Husband brought home about $800 every two weeks because child support was
deducted from his paycheck. At the time of the parties’ separation, Wife testified,
Husband was only bringing home $386 and she was bringing home $900 every two
weeks. Wife further testified that she performed most of the household chores and was
responsible for paying the bills. Husband acknowledged what he characterized as a slight
disparity in the parties’ income but emphasized that Wife’s additional financial
contribution was necessary because she had two children from a previous relationship
living in their home. Husband also argues that much of the household work Wife did was
in her role as mother to the two children.

       The proof regarding Husband’s alleged failure to protect the parties’ assets was
disputed. There was evidence of both parties’ irresponsible actions with respect to
paying bills. We find it unnecessary to detail all of the evidence and the parties’
competing arguments on this subject.

                                           -5-
        In its order, the trial court stated that it gave “little weight” to Wife’s greater assets
at the time of the marriage. As to Wife’s employment history and contributions as a
homemaker, the court considered Wife’s role as the primary homemaker and the fact that
both parties worked. The court afforded “great weight” to Husband’s contribution of a
“substantially greater percentage of funds” from his retirement account to the purchase of
the real property. On the subject of dissipation of assets, the court noted Wife’s
testimony regarding the dilapidated state of the marital home when she returned for a
visit to Tennessee after the parties’ separation.

       Because “issues of credibility and weight of testimony are involved, we afford
considerable deference to the trial court’s findings of fact.” Larsen-Ball, 301 S.W.3d at
235. We find no error in the trial court’s weighing of the evidence with respect to the
parties’ respective contributions to the “acquisition, preservation, appreciation,
depreciation or dissipation” of the marital property (factor five). Tenn. Code Ann. § 36-
4-121(c)(5)(A).

       B. Time horizon.

       In a related argument, Wife asserts that the trial court erred in considering only the
year and a half when the parties lived in the marital home when determining the weight to
give to their respective non-economic contributions. In particular, Wife relies upon the
following statement made by the trial court during its oral ruling: “The Court does take
note that it was a seven-year marriage and I was focusing in on the year and a half of
being at the property just to figure out how much of the non-economic contribution that
I’m to consider.”

       The only substantial piece of marital property subject to division by the trial court
was the marital home and, pursuant to Tenn. Code Ann. § 36-4-121(c)(5)(A), the court
must consider the parties’ contributions to the acquisition, preservation, appreciation, and
dissipation of the marital property, including certain non-economic contributions.
Because the parties lived in the house during a period of a year and a half, the trial court
did not err in focusing on that period in determining the weight to be afforded to the
parties’ respective non-economic contributions. The trial court properly considered the
entirety of the parties’ marriage in assessing the overall impact of the statutory factors.

       II. Net recovery for Wife.

      Wife next argues that the trial court erred in its calculation of the monetary amount
awarded to her because it assigned to her double the amount of the debt associated with
the marital home.

                                              -6-
        In its final order, the trial court made the following pertinent findings regarding
the parties’ use of the proceeds from the $25,000 loan taken out by Husband at the time
of the separation:

          While Husband testified that Wife received the funds in exchange for her
          interest in the marital property and to assist her with relocating to Florida,
          Wife testified that only a portion of the funds were used to relocate and the
          remaining funds were used to pay marital debts. As of the date of the
          hearing, the balance of the mortgage was $22,972.03.

Later in the order, the trial court ordered that the balance of this loan “shall be equally
divided between the parties, with each party responsible for $11,486.02.” The equity in
the marital home was $84,027.97.1 With respect to Wife’s share of the marital home, the
trial court ordered:

          Wife is awarded 25% of the net equity in the real property and mobile
          home, or $21,006.99 ($84,027.97 x 0.25). However, Wife’s marital interest
          in the real property and mobile home shall be offset by her one-half (1/2)
          share of the aforementioned mortgage and Wife’s net share of the marital
          equity shall be reduced to $9,520.97 ($21,006.99 - $11,486.02).

Thus, Wife received a net award of $9,520.97.

       We find that the trial court erred in its calculation of Wife’s award. By definition,2
the amount of the loan related to the marital home has been subtracted from the value of
the home to arrive at the amount of the parties’ equity. Thus, when the trial court
subtracted the loan amount from Wife’s share of the equity, the court charged one half of
the loan amount against Wife a second time. Wife’s net award should be $21,006.99.

1
    This figure represents the value of the marital home ($107,000.00) minus the loan balance ($22,972.03).
2
  The applicable definition of “equity” states: “The amount by which the value of or an interest in
property exceeds secured claims or liens; the difference between the value of the property and all
encumbrances on it.” BLACK’S LAW DICTIONARY (11th ed. 2019).

                                                    -7-
                                     CONCLUSION

       The judgment of the trial court is affirmed in part and reversed in part, and this
matter is remanded with costs of appeal assessed equally against both parties, for which
execution may issue if necessary.

                                                 ________________________________
                                                 ANDY D. BENNETT, JUDGE

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