Davenport v. Davenport

• Citation: 156 So.3d 231
• Decision Date: 06 November 2014
• Docket Number: No. 2012–CA–01423–SCT.,2012–CA–01423–SCT.
• Court: United States State Supreme Court of Mississippi
• Parties: Tammy English DAVENPORT a/k/a Tammy English v. Richard D. DAVENPORT.

156 So.3d 231

Tammy English DAVENPORT a/k/a Tammy English

v.Richard D. DAVENPORT.

No. 2012–CA–01423–SCT.

Supreme Court of Mississippi.

Nov. 6, 2014.

Rehearing Denied Feb. 19, 2015.

George Philip Schrader, IV, B. Blake Teller, Lauren Roberts Cappaert, Vicksburg, attorneys for appellant.

Penny B. Lawson, J. Mack Varner, David M. Sessums, Vicksburg, attorneys for appellee.

Before RANDOLPH, P.J., LAMAR and KITCHENS, JJ.

Opinion

RANDOLPH, Presiding Justice, for the Court.

¶ 1. Tammy and Dane Davenport were granted an irreconcilable-differences divorce in 2012. Tammy appeals from the final judgment of divorce. Finding no error, we affirm the final judgment of the Chancery Court of Warren County.

FACTS

¶ 2. Tammy English Davenport and Richard “Dane” Davenport were married in 1996. Three children were born of the marriage. Additionally, Tammy had custody of three children from her previous marriage. Dane worked as a highway patrolman and supported Tammy in her career as a physical therapist, which included opening and operating her own physical therapy practice. Over the years, Tammy endeavored to create and grow multiple corporations. The leading corporation was Good Samaritan Physical Therapy (“GSPT”), which was incorporated in 1997. Tammy held seventy-five percent ownership of GSPT, while Dane held twenty-five percent. The couple also owned their marital home, a lake house, and a condominium.

¶ 3. In September 2007, Tammy claimed that she had discovered Dane molesting one of her sons from her previous marriage. The Youth Court of Warren County found that Dane had molested two of his stepsons, resulting in the boys being adjudicated abused and the remaining four children being adjudicated neglected. Tammy and Dane separated in September 2007. Dane thereafter filed a complaint for divorce on the ground of habitual cruel and inhuman treatment. The proceedings were stayed during the time in which criminal charges were being pursued against Dane. Dane was indicted for sexual battery in both Oktibbeha County and Warren County. Dane was found not guilty in Oktibbeha County on one count of sexual battery. Dane was tried on nine counts of sexual battery in Warren County. The first trial in Warren County resulted in a mistrial. After the second trial, the jury returned a verdict of not guilty on five counts; however, a unanimous verdict could not be reached on the remaining four counts, resulting in a mistrial on the remaining counts. Thereafter, the Attorney General's office entered an order dismissing with prejudice the four remaining counts.

¶ 4. Once the criminal proceedings concluded, Tammy moved the Warren County Chancery Court to lift its order staying the divorce proceedings and sought leave to amend her answer and to file a countercomplaint. Subsequently, the parties entered into an agreed order withdrawing fault grounds and sought an irreconcilable-differences divorce. Tammy and Dane petitioned the chancery court to determine how certain expenses should be paid regarding insurance, medical expenses, and extra expenses involving the children. Tammy and Dane also requested that the chancery court determine marital assets and equitable distribution, alimony, and child support. As to child custody, the parties agreed to incorporate and adhere to the custody and visitation order previously entered by the youth court.

¶ 5. Dane moved the court to appoint experts to value their assets. Tammy and Dane agreed to Annette Herrin, CPA. She testified as an expert witness, and they split the costs associated with Herrin's services. Tammy designated Herrin and Todd Boolos, CPA, as her expert witnesses. Dane also designated C. Rodney Cummins, CPA, to support his position regarding the finances of GSPT. Each testified at trial.

¶ 6. At trial, it was admitted that, during Tammy and Dane's marriage, the parties received distributions from GSPT each year to cover any expenses which were not covered by their salaries. After the parties separated, Dane no longer received distributions from GSPT. It is undisputed that, after the separation, the only marital property that Dane continued to benefit from was the use of his truck. Based on the testimony of each accountant, it was revealed that Tammy's regularly received distributions were later reclassified as “loans to shareholder,” after the parties separated in 2007.

¶ 7. On July 23, 2012, the chancery court entered a final decree of divorce. The chancellor found that GSPT was incorporated after their marriage and both parties worked to start and develop the business. Further, the success of GSPT funded the formation of other businesses and funded the purchase of the marital property. From the testimony provided by each accountant, the chancellor considered the value of the marital assets and accepted the values established by Herrin, with two exceptions. The following reflects the values of each asset as determined by Herrin:

1. Great Dane Properties—$167,000

2. Nehemiah Properties, LLC—$6,300

3. Aquilla Group, LLC—$600

4. Aquilla Development, LLC—$000

5. Rehab Resources Unlimited, Inc.—$188,000

6. Medical Real Estate Management, LLC—$29,000

7. Medical Supplies Unlimited, Inc.—$2,500

8. Good Samaritan Performance Sports, LLC—$14,000

9. Competitive Edge University, LLC—$1,300

10. Good Samaritan Physical Therapy, Inc.—$2,683,000

11. Change of Habit, Inc.—$000

Total Net Business Assets Value for Equity Interests of parties—$3,092,000

The chancellor also accepted the following real and personal property values:

1. Marital dwelling (equity)—$320,000

2. Condominium—$51,923.46

3. Pontoon Boat—$18,000

4. Ski Boat—$25,000

5. Household furnishings—$50,000

6. Lot adjacent to marital dwelling—$62,000

Total—$526,923.46

¶ 8. The lake house was owned by Great Dane Properties. However, the chancellor determined that the lake house was an asset for personal use and not for business use. The chancellor also found that the value of Great Dane Properties did not include the debt owed on the lake house. Therefore, the chancellor deducted the debt of $18,856.59, assessing the actual value of Great Dane Properties as $146,143.41. The chancellor found that, although Herrin had given Aquilla Development, LLC, a value of zero because the company owed a debt to Tammy, Aquilla Development, LLC,¹ was the owner of real property valued at $249,725 with a mortgage of $185,137.00. The chancellor found that, if the land was sold, Tammy would receive thirty-three percent of the difference in the land's value and the amount of the mortgage, resulting in an asset value of $21,452.23 as to Aquilla Development.

¶ 9. Further, the chancellor determined that Dane had received a K–1 from GSPT in 2010 reporting income of $107,000, due to his twenty-five percent ownership in the corporation, even though Dane had not received any distributions since the time of separation in 2007. As a result, Dane incurred a tax liability of $41,054.

¶ 10. Lastly, the chancellor found that Dane was entitled to forty percent of the business values, excluding the lake house; fifty percent of the real-property equity not used in businesses, including the lake house; and fifty percent of the value of the personal property. Further, the chancellor determined that lump-sum alimony best suited the needs of the parties to avoid dividing the companies, pursuant to MacDonald v. MacDonald, 698 So.2d 1079 (Miss.1997).

¶ 11. In the final divorce decree, the chancellor equitably divided Tammy's and Dane's assets under the factors set forth in Ferguson v. Ferguson, 639 So.2d 921 (Miss.1994).² The chancellor ruled that Dane was entitled to business assets in the amount of $1,179,380.89 and nonbusiness assets in the amount of $336,533.44. Thus, Dane was entitled to $1,515,914.33 in total assets, awarded in the form of lump-sum alimony, payable in monthly installments of $8,421.75 for 180 months. Tammy also was ordered to reimburse Dane for the income taxes resulting from GSPT issuing him a K–1, totaling $41,054. Lastly, the chancellor ordered Dane to pay child support in the amount of $683.66 per month, twenty-two percent of his gross monthly income of $3,107.51.

¶ 12. Aggrieved, Tammy appealed the final divorce decree to this Court, raising the following issues:

I. Whether the trial court manifestly erred in disregarding marital liabilities owed by Tammy, resulting in an over-valued marital estate;

II. Whether the trial court manifestly erred in failing to consider that the expenditures made during the time of separation were legitimate and not wasteful dissipation of assets;

III. Whether the trial court manifestly erred by excluding expert opinion testimony from Certified Public Accountant, Todd Boolos;

IV. Whether the trial court manifestly erred by failing to give proper weight to the findings of sexual child abuse by the Warren County Youth Court;

V. Whether the trial court manifestly erred in excluding from evidence a document authored by the Warren County Youth Court Judge describing facts and circumstances underlying the youth court's findings of sexual child abuse; and

VI. Whether the trial court manifestly erred in failing to consider and make on-the-record findings as to whether Tammy could reasonably pay the alimony awarded to Dane.

STANDARD OF REVIEW

¶ 13. Chancellors are awarded complete discretion, “as equity demands,” when equitably dividing marital assets. Ferguson v. Ferguson, 639 So.2d 921, 929 (Miss.1994). A chancellor's findings will not be overturned unless those findings were “manifestly wrong, clearly erroneous, or an erroneous legal standard was applied.” MacDonald v. MacDonald, 698 So.2d 1079, 1083 (Miss.1997) (citing Ferguson, 639 So.2d at 928, 930 ).

ANALYSIS

I. Whether the trial court manifestly erred in disregarding marital liabilities owed by Tammy, resulting in an over-valued marital estate.

¶ 14. Tammy testified that she had monthly personal expenses totaling $37,000 per month, but her monthly net income was only $8,000. The $29,000 difference was covered by disbursements from...