Averwater v. Averwater

• Docket Number: M2020-00851-COA-R3-CV
• Decision Date: 28 December 2023
• Parties: WANDA SUE AVERWATER v. JAMES PAUL AVERWATER
• Court: Tennessee Court of Appeals

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WANDA SUE AVERWATER
v.
JAMES PAUL AVERWATER

No. M2020-00851-COA-R3-CV

Court of Appeals of Tennessee, Nashville

December 28, 2023

Session January 4, 2023

Appeal from the Chancery Court for Rutherford County No. 15CV-1326 Philip E. Smith, Judge

In this divorce, the trial court evenly divided the marital estate and denied the wife's request for alimony. It also ordered wife to pay the attorney's fees and costs of a third party. On appeal, the wife challenges the court's decisions on multiple grounds. After a thorough review, we find that the court erred in not dividing the profit from a business the husband created during the pendency of the divorce as marital property. And the court erred in ordering the wife to pay attorney's fees and costs. We affirm in all other respects.

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

Donald K. Vowell, Knoxville, Tennessee, for the appellant, Wanda Sue Averwater.

Donald Capparella, Nashville, Tennessee, and John J. Hollins, Jr. and LB McCullum, Franklin, Tennessee, for the appellee, James Paul Averwater.

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.

OPINION

W. NEAL MCBRAYER, JUDGE

I.

A.

Wanda Sue Averwater ("Wife") and James Paul Averwater ("Husband") were married in 1992. At the time, both worked for a construction company - Wife as an operations manager and Husband as a construction superintendent. Three years later, they

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started their own construction company, Averwater Construction, Inc. And they had one child together ("Daughter").

After 27 years of marriage, Wife filed for divorce in September 2015. She alleged irreconcilable differences and inappropriate marital conduct as grounds. She requested an equitable division of the marital estate and an award of alimony and attorney's fees. Husband filed an answer and counter-complaint. He denied Wife's allegations and instead alleged that she was guilty of inappropriate marital conduct.

The case was initially set for a two-day trial in June 2016. But the parties needed more time for discovery, so they agreed to continue the case until September 2016. Over the next nine months, the case was continued three more times and eventually set for trial in August 2017. Less than two weeks before the August 2017 trial date, however, the court struck the case from its docket and sent the parties to mediation. When mediation proved unsuccessful, the case was again set for trial, now in December 2017. But then the judge presiding over the case passed away. And the remaining judges in the judicial district recused themselves. So the case was reassigned by interchange to a judge from another district.

Soon after the reassignment, $380 was deposited into an Averwater Construction account at First National Bank - an account that was supposed to be closed. Wife contacted the bank. The bank told her that there had been a clerical error, but it would not provide her with any more information. Suspicious that Husband was hiding money, Wife subpoenaed First National Bank for all records related to Husband and Averwater Construction. The bank responded with a letter informing Wife that it did not have any records or active accounts in Husband's name. Dissatisfied, Wife issued a subpoena and notice of deposition for several of the bank's employees.

First National Bank moved to quash the subpoena and depositions. After a motion hearing in February 2019, the court ordered the bank to provide Wife's counsel with "a full and complete explanation of the deposit," but instructed counsel to "not divulge said information to anyone including Wife unless otherwise ordered by the Court." The court also ruled that Wife's counsel could conduct discovery "of the individual whose account ultimately received the funds."

The bank provided Wife's counsel an explanation on April 2019, one month before the new trial date. It revealed that Daughter was a borrower of the bank, and one of her loan payments was accidentally deposited into the Averwater Construction account. When the bank learned of the mistake, it moved the funds into the correct account. Based on this explanation, Wife deposed Daughter, who confirmed the bank's explanation. Still dissatisfied, Wife moved to continue the trial for a seventh time and to seek additional discovery from the bank. The court denied her motions, and the case finally proceeded to trial on May 7, 2019.

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After three days of trial, Wife fired her attorney. She requested another continuance and a disbursement from the marital estate so that she could hire new counsel. The court granted the request in part. It continued the case until September 2019 with the understanding that Wife had identified substitute counsel. But the court did not allow her to draw additional funds from the marital estate.

One month before trial was set to resume, Wife moved for another continuance on the basis that she had not yet obtained counsel. She apparently found an attorney willing to take her case, but the attorney was not available until December 2019. The court denied Wife's motion, and the case resumed as scheduled.

Wife represented herself on the fourth and fifth days of trial. On the fourth day, the court ended the proceedings in the early afternoon because Wife did not bring extra copies of exhibits she intended to introduce into evidence. On the fifth day, the proceedings again ended early; Wife suffered a panic attack during a break and could not proceed. On January 7 and 8, 2020, the final two days of the trial, Wife was represented by counsel.

B.

The proof at trial showed that, for most of their marriage, Husband and Wife ran Averwater Construction together. The company primarily built residential homes and occasionally did repair work or built additions to existing homes. Wife handled the administrative side of the business while Husband managed the job sites. By the time Wife filed for divorce, the couple was making between $200,000 and $300,000 per year from the business. But the parties decided to shut it down when they separated in 2015.

Husband and Wife were also involved in another business called Puckett Station. It was a general partnership formed to develop a large tract of farmland in Murfreesboro, Tennessee. Husband and Wife owned 50 percent of the partnership, and John Floyd owned the other 50 percent. The development was nearly complete by the time of trial, with only a few lots left to sell. But the business needed to stay open for at least a few more years to honor several outstanding maintenance bonds. During the pendency of the divorce, Husband and Wife lived off draws from their Puckett Station capital account.

Much of the trial was devoted to Wife's claim that Husband was trying to hide money from her. As evidence, Wife pointed to the accidental deposit into the Averwater Construction account; transfers of property between Puckett Station and Mr. Floyd's company, Ole South; and the creation of Spring Creek, LLC, a construction company formed by Husband after Wife filed for divorce. Wife believed that Husband, Mr. Floyd, and others were conspiring to shield money and property so that it would not be included as part of the marital estate.

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In response to Wife's allegations, Mr. Floyd and one of his employees testified that the property transfers between Puckett Station and Ole South were in the normal course of business. As for Spring Creek, Husband explained that he only created the company to build one home for a longtime customer of Averwater Construction. And after he finished that job, he dissolved the company and let his contractor's license lapse into retirement status. Still, he conceded that the $34,000 profit earned from the Spring Creek job was marital property.

While the parties had business success, their marriage did not fare as well. Their home life was a major point of contention. Husband was severely allergic to cats and bothered by cigarette smoke. Yet Wife smoked inside and kept many cats and dogs as pets. Eventually, Wife moved to the third floor of the house with the animals while Husband stayed on the first floor with Daughter.

Daughter testified that Wife isolated herself on the third floor. It was filthy. No one went up, and Wife rarely came down. Daughter believed that this was a significant factor in the breakdown of her parents' marriage. But Wife disputed this. She did not think that Husband had any justifiable complaints about her actions other than her not sleeping with him often enough.

Another point of contention was the parties' relationships with their children. According to Husband, Wife did not have a meaningful relationship with Daughter or her two sons from a previous marriage. Husband thought that Wife's behavior was the primary cause for the breakdown of those relationships. Wife agreed that the relationships were strained, but she blamed Husband.

Daughter testified extensively about her relationship with Wife. She told the court that it began to deteriorate during her teenage years and had only worsened since then. When Daughter testified, the two had not spoken for several years. And Wife had not been invited to Daughter's recent wedding or law school graduation. Daughter blamed Wife for the state of their relationship, but Wife again blamed Husband.

C.

In its final divorce decree, the trial court found Wife was at greater fault for the demise of the marriage, so it granted Husband a divorce on the ground of inappropriate marital conduct. See Tenn. Code Ann. § 36-4-129(b) (2021) (permitting a court to "grant a divorce to the party who was less at fault"). The court also determined that there was no proof of fraud by Husband or anyone else.

The court then classified and divided the parties' property. Husband and Wife...