Middendorf v. Middendorf

Decision Date27 June 2019
Docket NumberNo. M2018-00409-COA-R3-CV,M2018-00409-COA-R3-CV
PartiesSHARON KAY MIDDENDORF v. BYRON SCOTT MIDDENDORF
CourtTennessee Court of Appeals

Appeal from the Circuit Court for Davidson County

No. 12D-1891

Phillip R. Robinson, Judge

In this appeal, the parties were declared divorced in February 2013 when the trial court approved their marital dissolution agreement and entered a final decree of divorce; at the same time, the parties entered into a separate agreement which was to govern the transfer of the wife's marital interest in four businesses operated by the husband. In July 2014, the husband filed a motion pursuant to Rule 60.02(5) of the Tennessee Rules of Civil Procedure to have the decree set aside. The court granted the motion and vacated the decree, reinstating the marital relationship; the court also rescinded the agreement transferring the wife's interest in the businesses on the ground of mutual mistake. Following a trial, the court entered a final decree of divorce in 2017. Both parties appeal. Wife asserts that the trial court erred in vacating the 2013 decree, in rescinding the parties' agreement, and in failing to award her all of the attorney's fees she incurred at the trial court level. Husband appeals the division of the marital estate in the 2017 decree, and contends that the trial court erred when it failed to order the return of payments he made to wife pursuant to the agreement that was rescinded and alimony payments he made pursuant to the 2013 decree that was vacated. Both parties seek their attorney's fees on appeal. Upon our review, we affirm the judgment of the trial court in all respects and decline to award fees on appeal.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

RICHARD H. DINKINS, J., delivered the opinion of the court, in which ANDY D. BENNETT and THOMAS R. FRIERSON, II, JJ., joined.

Donald Capparella and Tyler Chance Yarbro, Nashville, Tennessee, for the appellant, Sharon Kay Middendorf.

Cathy Speers Johnson and Sarah Richter Perky, Franklin, Tennessee, for the appellee, Byron Scott Middendorf.

OPINION
I. FACTUAL AND PROCEDURAL HISTORY

Sharon Middendorf ("Wife") and Byron Middendorf ("Husband") were married in 1983; they are the parents of one child, who reached the age of majority in April 2018. They separated in December 2011 after Wife learned of Husband's infidelity throughout the marriage, and Wife filed for divorce on June 18, 2012, on the ground of irreconcilable differences. Husband, an experienced businessman, represented himself during the initial divorce proceedings and settlement negotiations, during which time the parties agreed on a permanent parenting plan and marital dissolution agreement ("MDA"), which included spousal support and the division of marital property and debt. Wife's counsel, who prepared the documents, filed the MDA and parenting plan with the court and set the matter on the Court's non-contested docket for February 12, 2013. At the hearing, the court declined to approve the MDA, raising concerns relative to a provision in which Husband agreed to pay Wife one-half of the total amount of distributions and income he would receive from a marital business interest as alimony. The parties negotiated further and entered into another MDA and a separate Transfer Agreement ("TA") that governed the transfer of Wife's marital interest in four businesses held in Husband's name. The court approved the MDA and declared the parties divorced by decree entered February 22, 2013 ("the 2013 Decree").

On July 1, 2014, represented by counsel, Husband filed a Petition to Modify Support, contending that the terms of the divorce were "unsustainable" and had "broken him financially in a one-year period"; he sought to have the court modify the terms of the final decree by reducing his support obligations "to an equitable level." Wife moved to dismiss the petition. Husband responded in opposition to Wife's motion, including a "Counter Motion for Relief Pursuant to T.R.C.P. 60.02(5)," in which he asserted that, during the time of the negotiations leading to the 2013 decree, he suffered a mental impairment that prevented him from advocating for himself; he requested that the court set aside the 2013 Decree "so as to come closer to conforming with our laws which require an equitable division of the marital estate." The countermotion was supported by Husband's affidavit and summaries he prepared of the terms of the initial and the final MDA and parenting plan, emails sent between Wife's counsel, Wife, and Husband, and a copy of his then-current income and expenses.1

Husband amended the countermotion on January 12, 2016, to seek additional relief on the basis of Rule 60.02(3), specifically, that the 2013 Decree be set aside because it "purports to incorporate the so-called Transfer Agreement [and therefore] is void as against public policy." The trial court held a hearing over three days in January 2016 on all pending matters, including a petition filed by Wife to hold Husband in civil contempt.2 At the hearing, Husband and his psychiatrist testified, and Husband introduced the deposition testimony of Wife's attorneys, and nineteen exhibits. Wife did not present proof.

After the hearing was completed, on its own initiative, the court entered an order setting a hearing for counsel to show cause why an expert accountant should not be appointed pursuant to Rule 706 of the Tennessee Rules of Evidence to give testimony as to the income tax consequences to each party of the MDA, parenting plan, and TA; the order also proposed to reopen the proof to consider additional evidence as to Wife's income and expenses. Both parties objected to the reopening of proof as to Wife's income and expenses; each submitted the names of three accountants for the court's consideration. Following the show cause hearing, the court entered an order reopening the proof as to the tax consequences only, and appointing Vic Alexander, a certified public accountant, to prepare a report and provide expert testimony in that regard. Mr. Alexander duly submitted his report, and it was filed; Husband thereafter presented a report from Thomas Price, also a CPA. The parties then filed a joint stipulation that each expert would testify to the findings contained in their respective reports and waived their right to examine and cross examine those witnesses. After the joint stipulation was filed, the court entered an order closing the proof.

The court entered an order on May 20, 2016 (the "May 20 order"), setting aside the 2013 Decree, holding:

In light of the Husband's history of severe sexual abuse as a child, his sexual addiction, his diagnosis of Post-Traumatic Stress Disorder and his severe depression, his inability to advocate or properly defend himself and the inequity of the alimony award in this case rendering the Husband almost unable to comply with the Court's Order, this Court finds by clear and convincing evidence that this case is one of extraordinary circumstances and extreme hardship justifying Rule 60.02(5) relief.

The court also found that Husband's delay of 15 months after the entry of the judgment was "timely and within a reasonable period." In the same order, the court declined to hold that the reference to the TA in final divorce decree rendered the decree void; instead, the court applied the law of contracts and rescinded the TA, finding that "the parties suffered a mutual mistake as to the character and deductibility by the Husband of the Wife's share of the disbursements for income tax purposes."3

Husband thereupon answered the complaint for divorce, including a counter-complaint for divorce on the ground of cruel and inhuman treatment. Wife amended her complaint to allege adultery and inappropriate marital conduct, and Husband responded. Trial was held over two days in August 2017 at which Wife, Vic Alexander, Husband, and Thomas Price testified.

The court entered a Final Decree of Divorce on November 20, 2017 ("the 2017 decree"), awarding Wife the divorce on the ground of adultery, naming Wife as primary residential parent of the parties' son, setting child support, and establishing a parenting schedule. The court classified, valued, and divided the marital assets (including the four companies that were previously the subject of the TA) and debts, and ordered that Wife would be responsible for two-thirds of any taxes, penalties, and interest incurred by Husband, whose tax liability for tax years 2013, 2014, and 2015 was being determined in an audit by the Internal Revenue Service that had resulted from Husband's attempts to deduct the payments he made to Wife pursuant to the TA. The court found Wife's testimony relative to the nearly $19,000 in monthly expenses she sought not credible and awarded her $10,800 per month as alimony in futuro. The court also awarded Wife $73,000, a portion of the attorney's fees she incurred in the proceeding.

Both parties appeal. Wife contends that the trial court erred in setting aside the final decree and in rescinding the TA and that she is entitled to all of her attorney's fees incurred in the trial court. Husband asserts that the court failed to account for monies and alimony paid to Wife pursuant to the TA and the MDA, erred in its division of the marital estate, and erred in awarding attorney's fees to Wife. Both parties seek an award of attorney's fees for this appeal.

II. ANALYSIS

Because this case was tried without a jury, our review of the trial court's factual findings is de novo upon the record, accompanied by a presumption of correctness, unless the preponderance of the evidence is otherwise. Tenn. R. Civ. P. 13(d). Our review of the trial court's conclusions of law is de novo upon the record with no presumption of correctness. Tryon v. Saturn Corp., 254 S.W.3d 321, 327 (Tenn. 2008).

A. Relief Pursuant to Rule 60.02(5)

Rule 60.02 of the Tennessee Rules of Civil Procedure provides in pertinent part:

On motion
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