Erickson v. Erickson-Mitchell, No. M2006-00895-COA-R3-CV (Tenn. App. 5/29/2007)
| Decision Date | 29 May 2007 |
| Docket Number | No. M2006-00895-COA-R3-CV.,M2006-00895-COA-R3-CV. |
| Parties | THOMAS G. ERICKSON v. RUTH CHRISTINE ERICKSON-MITCHELL. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Williamson County; No. 31398; Russ Heldman, Chancellor.
Judgment of the Chancery Court Reversed.
Thomas F. Bloom, Nashville, Tennessee, and Mary Catherine Kelly, Franklin, Tennessee, for the appellant, Thomas G. Erickson.
Donald Capparella and Amy J. Farrar, Nashville, Tennessee, for the appellee, Ruth Christine Erickson-Mitchell.
Frank G. Clement, Jr., J., delivered the opinion of the court, in which William B. Cain and Patricia J. Cottrell, JJ., joined.
In this divorce action, Husband appeals the trial court's decision to invalidate the parties' Prenuptial Agreement and the decision to award alimony in the form of attorney's fee to Wife. The trial court found that Husband inadequately disclosed his financial position. The trial court also found that Husband materially misrepresented to Wife, prior to the marriage, that he was a social drinker and not an alcoholic. Finding the evidence preponderates against the trial court's findings, we reverse the trial court's decision to invalidate the Prenuptial Agreement. We also find the Prenuptial Agreement bars an award of attorney's fees to Wife.
Thomas Erickson, Husband, and Ruth Erickson-Mitchell, Wife, met at a wine and cheese reception in August 2000. They began socializing and became romantically involved in the fall of 2000. They married in December 2001.
This marriage was the third for Husband and the fourth for Wife. They were both sixty-four years of age when they met and both had professional careers; Wife was a retired Vice President of Third National Bank, and Husband worked at Global Accessories. At the time of the parties' marriage, Wife was living off of social security income and withdrawals from her investment accounts, which totaled over $ 200,000, and Husband was earning a salary of approximately $ 82,000 a year.
Before marrying, the parties entered into a Prenuptial Agreement to protect their respective assets and provide for an agreed settlement in the event of a divorce. Both parties were adequately represented by counsel during the discussions, drafting and execution of the Prenuptial Agreement. The Prenuptial Agreement provided in pertinent part that the parties' separate property would remain separate and that neither party could receive alimony or any other type of support payments from the other in the event of a divorce.1
As agreed upon, the parties moved into Wife's home following the marriage, and they also refinanced and titled in both of their names the home in March 2002.2 Unfortunately, approximately fifteen months into the marriage, the parties began to experience financial difficulties. One of the side effects of these and other difficulties in the marriage was that Husband became stressed and began drinking more than before the marriage. As a consequence, he voluntarily attended counseling and meetings with Alcoholics Anonymous and, as a consequence, his excessive drinking resolved.
In an effort to ease the financial strain, the parties attempted to sell the marital home, but they had difficulty finding a buyer. In March of 2005, the parties put a deposit down on a new home. They intended to downsize to a $250,000 home, but after meeting with their financial advisor, they decided to move into one of Husband's rental properties. After making this decision, their marital home sold for $460,000. The parties began preparing to move by tearing down wallpaper, packing, and picking out paint colors. Although things seemed to be going well, approximately two weeks later, on March 28, 2005, Husband filed for divorce citing irreconcilable differences. Husband moved out of the marital home and into an apartment the next day. The marital home sold as planned, and Wife moved into a rental property she had purchased during the marriage.
Wife filed her Answer and a Counterclaim for Divorce on June 2, 2005. Wife denied that the parties had irreconcilable differences, and she contested the validity of the Prenuptial Agreement. She sought a divorce based on inappropriate marital conduct and sought damages in tort for intentional misrepresentation. On June 28, 2005, Husband filed an Answer in which he contended, in pertinent part, that he had not misrepresented his finances or his drinking. He also moved to dismiss Wife's claim for monetary damages as being barred by the Prenuptial Agreement.
The matter was tried on February 22, 2006, and March 2, 2006. By Order dated March 7, 2006, the Chancellor awarded the divorce to Wife, declared the Prenuptial Agreement invalid, and awarded transitional alimony and attorneys' fees to Wife. This appeal followed.
The standard of review of a trial court's findings of fact is de novo and we presume that the findings of fact are correct unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn. Ct. App. 2001). For the evidence to preponderate against a trial court's finding of fact, it must support another finding of fact with greater convincing effect. Walker v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn. Ct. App. 2000); The Realty Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999). Where the trial court does not make findings of fact, there is no presumption of correctness and we "must conduct our own independent review of the record to determine where the preponderance of the evidence lies." Brooks v. Brooks, 992 S.W.2d 403, 405 (Tenn. 1999). We also give great weight to a trial court's determinations of credibility of witnesses. Estate of Walton v. Young, 950 S.W.2d 956, 959 (Tenn. 1997); B & G Constr., Inc. v. Polk, 37 S.W.3d 462, 465 (Tenn. Ct. App. 2000). Issues of law are reviewed de novo with no presumption of correctness. Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d 625, 628 (Tenn. 1999).
Prenuptial agreements are favored by public policy in Tennessee. Perkinson v. Perkinson, 802 S.W.2d 600, 601 (Tenn.1990). Prenuptial agreements benefit the parties by defining their marital rights in property, Sanders v. Sanders, 288 S.W.2d 473, 477 (Tenn. Ct. App. 1955), and they enhance the opportunities for middle-aged persons to re-marry by protecting their separate assets for the children of previous marriages. Wilson v. Moore, 929 S.W.2d 367, 370 (Tenn. Ct. App. 1996) (citing Pajak v. Pajak, 182 W.Va. 28, 385 S.E.2d 384, 388 (1989)). Courts are statutorily required to uphold prenuptial agreements provided they meet certain criteria. See Tenn. Code Ann. § 36-3-501.
Notwithstanding any other provision of law to the contrary, except as provided in § 36-3-502, any antenuptial or prenuptial agreement entered into by spouses concerning property owned by either spouse before the marriage that is the subject of such agreement shall be binding upon any court having jurisdiction over such spouses and/or such agreement if such agreement is determined, in the discretion of such court, to have been entered into by such spouses freely, knowledgeably and in good faith and without exertion of duress or undue influence upon either spouse. The terms of such agreement shall be enforceable by all remedies available for enforcement of contract terms.
When preparing to enter into a prenuptial agreement, parties "must make `a full disclosure of the nature, extent and value' of their property in order to enable their prospective spouse to make a knowledgeable decision about entering into the agreement." Wilson, 929 S.W.2d at 371 (citing Williams v. Williams, 868 S.W.2d 616, 619 (Tenn. Ct. App.1992)). The adequacy of the disclosure depends on the context in which the disclosure is provided. Wilson, 929 S.W.2d at 371. The courts, however, have not formulated precise tests for determining whether a particular disclosure is adequate, but they generally require that the disclosure be essentially fair under all of the circumstances. Wilson, 929 S.W.2d at 371. "[M]ost courts have not construed the full and fair disclosure requirement to mandate detailed disclosures such as financial statements, appraisals, balance sheets, or the like." Wilson, 929 S.W.2d at 371 (citing In re Estate of Lopata, 641 P.2d 952, 955 (Colo.1982); In re Thies (Thies v. Lowe), 273 Mont. 272, 903 P.2d 186, 189 (1995); In re Estate of Geyer, 516 Pa. 492, 533 A.2d 423, 427 (1987); Hartz v. Hartz, 248 Md. 47, 234 A.2d 865, 871 n. 4 (1967); In re Estate of Hill, 214 Neb. 702, 335 N.W.2d 750, 753 (1983)).
The inadvertent failure to disclose an asset or the unintentional undervaluation of an asset will not invalidate a prenuptial agreement as long as "the disclosure that was made provides an essentially accurate understanding of the party's financial holdings." Wilson, 929 S.W.2d at 371. "The disclosure will be deemed adequate if it imparts an accurate understanding of the nature and extent of a person's property interests." Wilson, 929 S.W.2d at 371 (citing Nanini v. Nanini, 166 Ariz. 287, 802 P.2d 438, 441 (1990)).
The basis for the trial court holding the Prenuptial Agreement invalid was the conclusion that Husband "failed to make adequate prior financial disclosures and duped Ruth Erickson into the marriage and into executing the prenuptial agreement." The record, however, reveals that Wife was adequately represented by counsel, that Husband made extensive financial disclosures, and while some of the disclosures were high and some were low, the net value of his estate was accurately represented. For example, Husband represented that his life insurance with New York Life was worth $20,000 when the cash value was $8,829.58; the value of his Morgan Stanley account was $70,660 when it was actually...
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