Woods v. Woods, No. M2002-01736-COA-R3-CV (TN 7/12/2005)
| Decision Date | 12 July 2005 |
| Docket Number | No. M2002-01736-COA-R3-CV.,M2002-01736-COA-R3-CV. |
| Parties | JOHN EDWARD WOODS v. JILL SUZANNE WOODS. |
| Court | Tennessee Supreme Court |
Appeal from the Circuit Court for Williamson County; No. I-2K475; Russ Heldman, Judge.
Judgment of the Circuit Court Modified and Affirmed.
Thomas F. Bloom, Nashville, Tennessee, for the appellant, John Edward Woods.
Jeffrey L. Levy, Nashville, Tennessee, for the appellee, Jill Suzanne Woods.
OPINION
This appeal involves the financial aspects of the dissolution of a twelve-year marriage. Even though the husband filed a petition for divorce in the Circuit Court for Williamson County, the parties eventually stipulated that the wife was entitled to divorce on the ground of the husband's adultery. Following a bench trial, the court awarded the wife eighty percent of the net marital estate, $1,000 per month in rehabilitative alimony for three years, $25,000 in alimony in solido, and one-half of her attorney's fees. The husband appealed. We have determined that the evidence does not support the manner in which the trial court divided the marital estate, the amount of the rehabilitative alimony award, the alimony in solido award, or the award for attorney's fees. We modify the judgment accordingly.
John and Jill Woods were married in 1988. They lived in Chattanooga where Mr. Woods was employed by a food brokerage firm. Ms. Woods returned to college to earn a degree in education and then began teaching. In addition to their regular employment, the parties supplemented their income by selling clothing at flea markets. They obtained the clothing from Irwin Karp, Ms. Woods's father, who owned a chain of clothing stores throughout Tennessee. Mr. Karp sold the clothes to the Woodses at cost, and they would keep all the profits for themselves.
The first of the parties' three children was born in September 1992. They moved to the Nashville area in 1994 when Mr. Woods's employer offered to transfer him either to Knoxville or Nashville. With financial help from Ms. Woods's family, they purchased a house in Brentwood. Ms. Woods found employment as a teacher in Franklin. Their second child was born in May 1995 and their third child in August 1997.
The Woodses continued to sell clothes at flea markets after they moved to Nashville. Ms. Woods eventually tired of teaching and of the flea market merchandising and convinced her father to open one of his clothing stores in Nashville and to hire her as manager. The new Clothing World store opened in the 100 Oaks Mall in 1998, and Ms. Woods became the manager. Her father paid her $1,000 per week and also provided her with a generous expense allowance. The opening of Clothing World was just one indication of Mr. Karp's generousness to Ms. Woods and her family. He lavished them with gifts and money throughout the marriage, and his largesse enabled the parties to maintain a lifestyle that was beyond their means.
All was not well with the parties' relationship after they moved to Nashville. Mr. Woods came to believe that Ms. Woods had a domineering personality and became increasingly disenchanted with her desire to control most aspects of the family's life. According to Mr. Woods, he eventually tired of arguing with Ms. Woods and began acceding to her demands on most matters. In May 1998, Mr. Woods began a clandestine extramarital affair with a co-worker. He eventually left home and filed for divorce in 1999 but later returned for the children's sake.
In 1999, Mr. Woods began to be concerned about his job security. He and Ms. Woods approached Mr. Karp about the possibility of opening a second Clothing World store in Nashville and hiring him as manager. Mr. Karp agreed. Opening the second store was a joint effort by the Woodses and Mr. Karp. Mr. Woods found suitable space in the Rivergate Mall area, and he and Ms. Woods signed a five-year lease. Mr. Karp provided money to prepare the store and purchase fixtures, and Ms. Woods used some of her own funds to purchase the inventory. The Rivergate Clothing World store opened in April 2000, but Mr. Woods withdrew from the enterprise in August 2000 when he decided to leave the marriage for the second and final time.1
Mr. Wood moved into an apartment in Hendersonville and filed a divorce complaint in the Circuit Court for Williamson County. Ms. Woods was distraught and suspicious about Mr. Woods's departure. She retained a private investigator who uncovered Mr. Woods's extramarital affair. Ms. Woods confronted Mr. Woods with this information in October 2000, and in December 2000, she filed an answer and counterclaim denying that she had engaged in inappropriate marital conduct and asserting that Mr. Woods had committed adultery and had abandoned his family. She also sought pendente lite support, as well as a restraining order to prevent Mr. Woods from having any contact with his girlfriend. The trial court, siding with Ms. Woods, ordered Mr. Woods to pay $2,000 in spousal support and to refrain from having intentional contact of any sort with his girlfriend until the litigation was concluded.
Mr. Karp continued to operate the Rivergate Clothing World store on his own after the parties separated. He eventually decided to close both this store and the store at 100 Oaks Mall. In May 2001, he negotiated a release of the Rivergate store lease which required the payment of $24,598.13 to the lessor. Mr. Karp paid $18,598.13 to the lessor and agreed to permit the lessor to liquidate a $6,000 certificate of deposit that the Woodses had provided to secure the lease.
The proceeding became more contentious when Ms. Woods filed a petition seeking to hold Mr. Woods in criminal or civil contempt for disobeying the order directing him to avoid contact with his girlfriend. Following a lengthy hearing, the trial court granted Ms. Woods a divorce based on Mr. Woods's stipulation to adultery but dismissed her petition to hold Mr. Woods in contempt.
In a series of orders spread out between April 3, 2001 and July 11, 2002, the trial court granted custody of the parties' three children to Ms. Woods, defined Mr. Woods's visitation rights, and ordered Mr. Woods to pay $1,325 in monthly child support. In addition, the court ordered Mr. Woods to pay Ms. Woods $1,000 per month in rehabilitative alimony for three years, awarded Ms. Woods $25,000 in alimony in solido, and ordered Mr. Woods to pay $9,308 of Ms. Woods's remaining attorney's fees.
The trial court also awarded Ms. Woods eighty percent of the parties' marital estate. In this context, the court determined that the post-divorce payment Mr. Karp had made to obtain the release of the lease on the Rivergate store was a joint marital debt. Accordingly, the court imposed on each of the parties the obligation to pay Mr. Karp one-half of the amount he had paid to the lessor of the Rivergate store.
Mr. Woods has appealed. He takes issue with (1) the trial court's classification of Mr. Karp's investment in the second clothing store as a marital debt, (2) the division of the marital estate, (3) the award of rehabilitative alimony, (4) the $25,000 alimony in solido award, and (5) the award for Ms. Woods's attorney's fees. We have determined that the trial court erred with regard to each of these matters.
We turn first to Mr. Woods's issues regarding the classification of marital debt and the distribution of the parties' marital estate. He asserts that the trial court erred by determining that the parties incurred a marital debt to Mr. Karp when he paid part of the consideration for the release from the remainder of the Rivergate Clothing World's lease and by awarding a disproportionately large share of the marital estate to Ms. Woods. We have determined that the trial court erred by classifying Mr. Karp's payment to release the lease as a marital debt and that the manner in which the trial court divided the marital estate was inequitable.
Dividing a marital estate necessarily begins with the classification of the parties' property as either separate or marital property. Miller v. Miller, 81 S.W.3d 771, 775 (Tenn. Ct. App. 2001); Anderton v. Anderton, 988 S.W.2d 675, 679 (Tenn. Ct. App. 1998). Tennessee is a "dual property" state. Smith v. Smith, 93 S.W.3d 871, 875-76 (Tenn. Ct. App. 2002). Accordingly, property cannot be included in the marital estate unless it fits within the definition of "marital property" in Tenn. Code Ann. § 36-4-121(b)(1)(A) (Supp. 2002). By the same token, "separate property," as defined in Tenn. Code Ann. § 36-4-121(b)(2), should not be included in the marital estate.2 Because property classification issues are questions of fact, Mitts v. Mitts, 39 S.W.3d 142, 144-45 (Tenn. Ct. App. 2000); Brown v. Brown, 913 S.W.2d 163, 167 (Tenn. Ct. App. 1994), appellate courts will review a trial court's classification decisions using the familiar standard of review in Tenn. R. App. P. 13(d).
After a trial court has classified the property as either marital or separate, it should place a reasonable value on each piece of property subject to division. Edmisten v. Edmisten, No. M2001-00081-COA-R3-CV, 2003 WL 21077990, at *11 (No Tenn. R. App. P. 11 application filed); Robertson v. Robertson, No. M1999-02103-COA-R3-CV, 2001 WL 459100, at *3 (No Tenn. R. App. P. 11 application filed). The parties themselves must come forward with competent valuation evidence. Kinard v. Kinard, 986 S.W.2d at 231; Wallace v. Wallace, 733 S.W.2d 102, 107 (Tenn. Ct. App. 1987). When valuation evidence is conflicting, the court may place a value on the property that is within the range of the values presented by all...
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