Zettersten v. Zettersten ( 2000 )

  •                      IN THE COURT OF APPEALS OF TENNESSEE
                                     AT NASHVILLE
                                                 APRIL 2000 Session
                      Direct Appeal from the Chancery Court for Williamson County
                        No. II25288; The Honorable Donald P. Harris, Chancellor
                            No. M1999-01186-COA-R3-CV - Filed August 31, 2000
    This appeal arises from an action for divorce and division of marital assets. The court below granted
    Linda Jean Zettersten (“Wife”) a divorce on grounds of Rolf Birger Zettersten’s (“Husband’s”)
    stipulation of inappropriate marital conduct; awarded Wife alimony in futuro and rehabilitative
    alimony and child support for the parties’ minor child; awarded Wife $11,923.50 in attorney’s fees,
    discretionary costs and court costs. Wife appeals.
    Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed in Part,
                        Reversed in Part, Modified in Part, and Remanded
    ALAN E. HIGHERS, J., delivered the opinion of the court, in which FARMER , J., and LILLARD, J.,
    Mary Frances Lyle, Nashville, for Appellant
    Maclin P. Davis, Jr., Caroline Thomas Trost, Nashville, for Appellee
    The parties were married in June 1976. At the time of the marriage, Wife had recently completed
    college and Husband was still in college.1 During the marriage, Husband worked at various jobs in
    the religious publication industry. Wife did not work except for a brief period shortly after the
    marriage and another brief period when Husband returned to school for his Masters. Wife remained
    at home to care for the parties three children.2 During the course of the marriage, the family
    relocated several times due to Husband’s job. At the time of the divorce, the family was residing
    in Williamson County, Tennessee.
               Husband has a BA in journalism. Wife has a BA in religious education.
               At the time of the parties’ divorce, only one of the parties’ children (Trevor, age 9) was a minor.
            Wife filed for divorce on February 25, 1998, alleging irreconcilable differences as grounds
    for divorce. Husband answered and counter-claimed for divorce, alleging irreconcilable differences
    and inappropriate marital conduct. Wife dismissed her complaint and filed an answer to Husband’s
    counter-claim. Wife later filed an amended answer and counter-claim alleging irreconcilable
    differences, inappropriate marital conduct, and adultery as grounds for divorce. At trial the parties
    reached an agreement by which Wife was granted a divorce on the ground of Husband’s stipulated
    inappropriate marital conduct without evidence of the conduct required.
            Both parties proffered evidence at trial regarding Husband’s earning capacity, the parties’
    standard of living, and the relative assets and expenses of the parties. Based on this evidence, the
    court below found that Husband’s earning capacity was slightly more than two hundred and eighty-
    five thousand dollars per year. This amount included Husband’s base salary of two hundred
    thousand dollars with the remainder earned as bonus and royalty income.3 Testimony was also
    offered about Husband’s stock options received from 1992 through 1997. The options were offered
    as incentive which guaranteed Husband a fixed price if he wished to purchase company stock. The
    options had to be exercised by a certain date or they expired. At the time of the divorce, part of
    Husband’s stock options were vested and part were unvested.
            Wife claimed that her monthly expenses to care for herself and the minor child was eight
    thousand nine hundred and fifty dollars. This figure included the mortgage payment and upkeep on
    the parties’ marital residence. Wife also requested alimony of thirty-five hundred dollars ($3,500)
    per month and child support of thirty-three hundred dollars ($3,300) per month. In addition, Wife
    requested that Husband be required to pay for the minor child’s private school tuition of six thousand
    dollars ($6,000) per year.
            Wife was awarded assets worth three hundred eighty-six thousand three hundred and four
    dollars and thirty six cents ($386,304.36) including the marital residence.4 Husband was awarded
    assets valued at the exact same amount. However, in making a division of marital assets, the court
    found that Husband’s stock options and royalty contract rights were not marital property.5 In
    addition, the court awarded Wife alimony in futuro of two thousand dollars ($2,000) per month until
    Wife remarried or Husband reached the age of sixty-five. If Wife had not remarried when Husband
    reached sixty-five, the alimony in futuro would be reduced to one thousand dollars ($1,000) per
    month. The court awarded Wife rehabilitative alimony of two thousand dollars ($2,000) per month
    for six months, followed by one thousand dollars ($1,000) per month for thirty-six months. Husband
    was ordered to provide life insurance coverage in the amount of one hundred thousand dollars for
              Husband received royalty payments for his contributions to several books. In addition, Husband’s company
    periodically provided him with stock options.
             In making this award, the court reduced the valuation of the residence by seven percent as the costs of selling.
    On appeal, Husband argues that this reduction was not justified du e to Wife ’s stated intention to remain in the residence.
                 The court did consider the royalty contract rights as part of Husband’s income.
    the benefit of Wife for so long as he was required to pay alimony or until he reached age sixty-five.
    Husband was not required to provide Wife with health insurance.
            The court awarded two thousand and ninety-six dollars ($2,096) per month to Wife as child
    support, along with health insurance and medical expense coverage for the minor child. Husband
    was required to deposit an additional three hundred and fifty dollars per month in an educational
    fund for the minor child’s future college expenses. The court did not order Husband to pay for the
    minor child’s primary school education tuition. In making the child support award, which fell below
    statutory guideline amount based on Husband’s income, the court noted that Husband was providing
    over two thousand dollars per month in expenses for the college education of the parties’ two adult
    children. Wife was awarded an additional $11,923.50 for attorney’s fees and discretionary and court
    costs. Wife appeals.
           On appeal, Wife asserts that the trial court erred in excluding Husband’s royalty rights and
    stock options from the parties’ marital property. Wife also asserts that the trial court erred in failing
    to award a greater amount of alimony and child support. In addition, Wife requests attorney’s fees
    incurred on appeal. Husband asserts two additional issues on appeal: the award of attorney’s fees
    to Wife and the division of marital property.
          Our review of this case is pursuant to Rule 13(d) of the Tennessee Rules of Appellate
    Procedure, which provides for a de novo review upon the record of the trial court's findings of fact,
    accompanied by a presumption of correctness, unless the evidence preponderates otherwise.
                                       A. Alimony & Life Insurance
             The court below awarded Wife both rehabilitative alimony and alimony in futuro, including
    an award of life insurance benefitting Wife. Wife asserts that the trial court erred in reducing the
    amount of her alimony in futuro once Husband reaches age sixty-five. In addition, Wife asserts that
    the trial court erred in automatically terminating Husband’s duty to provide life insurance coverage
    for the benefit of Wife when Husband reached age sixty-five.
           The trial court has broad discretion concerning the amount, type, and duration of spousal
    support based on the particular facts involved. The exercise of such power will not be interfered
    with absent a showing of abuse. Watters v. Watters, 
    959 S.W.2d 585
    , at 593 (Tenn. Ct. App. 1997)
    citing Aaron v. Aaron, 
    909 S.W.2d 408
    , 410 (Tenn.1995); Luna v. Luna, 
    718 S.W.2d 673
    , 675
    (Tenn. Ct. App. 1986). Accordingly, this Court is not inclined to alter a trial court's award of
    alimony unless it is not supported by the evidence or is contrary to the public policy embodied in the
    applicable statutes. Brown v. Brown, 
    913 S.W.2d 163
    , 169 (Tenn. Ct. App.1994); Gilliam v.
    776 S.W.2d 81
    , 86 (Tenn. Ct. App.1988); Ingram v. Ingram, 
    721 S.W.2d 262
    , 264 (Tenn.
    Ct. App.1986).
            While the alimony analysis is factually driven, the court also must balance several statutory
    factors including those enumerated in § 36-5-101(d).6 Brown at 169; Denton v. Denton, 
    902 S.W.2d 930
    , 932 (Tenn. Ct. App.1995). The most significant factors are need and the ability to pay. Loyd
    v. Loyd, 
    860 S.W.2d 409
     (Tenn. Ct. App.1993). In addition, the fault of a spouse in precipitating a
    divorce is a consideration when determining an alimony award. See Tenn. Code Ann. §
    36-5-101(d)(1)(K); Gilliam, at 86.
                Tenn. Co de Ann. §3 6-5-101(d ) provides:
              It is the intent of the gene ral assemb ly that a spo use wh o is econo mically disadvantaged, relative to the other
    spouse, be rehabilitated whenever possible by the granting of an order for payment of rehabilitative, temporary support
    and maintenance. Where there is such relative eco nomic disadvan tage and rehabilitation is not feasible in consideration
    of all relevant factors, including th ose set out in this subsection, then the court may grant an order for payment of
    support and maintenance on a long-term basis or until the death or remarriage of the recipient except as otherwise
    provided in subdivision (a)(3). Rehabilitative support and maintenance is a separate class of spousal support as
    distinguished from alim ony in so lido and p eriodic alimony. In determining whether the granting of an order for
    payment of supp ort and m aintenan ce to a party is appropriate, and in determining the nature, amount, length of term,
    and manner of payment, the court shall consider all relevant factors, including:
              (A) The relative earning capacity, obligations, needs, and financial resources of each party, including income
    from pen sion, profit sharing or retirem ent plans and all othe r sources;
              (B) The relative education and training of each party, the ability and opportunity of each party to secure such
    education and t rainin g, an d the nece ssity o f a pa rty to secu re fur ther e duca tion a nd tra ining to im prov e suc h par ty's
    earning capacity to a reasona ble level;
              (C) The duration of the marriage;
              (D) The age and mental condition of each party;
              (E) The physical condition of each party, including, but not limited to, physical d isability or inc apacity due to
    a chronic debilitating disease;
              (F) The ex tent to wh ich it wou ld be un desirable fo r a party to seek employment outside the home because such
    party will be custodian of a minor child of the marriage;
              (G) The separate assets of each party, both real and personal, tangible and intangible;
              (H) The provisions made with regard to the marital property as defined in § 36-4-121;
              (I) The standard of living of the parties established during the marriage;
              (J) The extent to which each party has mad e such tangible and intangible contributions to the marriage as
    monetary and homemaker contributions, and tangible and intangible contributions by a party to the education, training
    or increased earning power of the other party;
              (K) The relative fault of the parties in cases where the court, in its discretion, deems it appropriate to do so;
              (L) Such other factors, inclu ding the ta x conse quenc es to each party, as are necessary to consider the equities
    between the p arties.
              (2) An award of rehabilitative, temporary support and maintenance shall remain in the court's control for the
    duration of such award, and may be increased, decreased, terminated, extended, or otherwise modified, upon a showing
    of substantial and material change in circumstances. Rehabilitative support and maintenance shall terminate upon the
    death of the recipient. Such sup port and m aintenance shall also term inate upon the d eath of the payo r unless otherwise
    specifically stated. The recipient o f the supp ort and m aintenan ce shall have the burden of prov ing that all reasonab le
    efforts at reh abilitation ha ve been made a nd hav e been u nsuccess ful.
             In the case at bar, the express findings of the trial court supported by the record include the
    following: Wife is financially disadvantaged due to her long absence from the working world; even
    with appropriate training, Wife could never enjoy the same standard of living as Husband; Husband
    is at fault for the marriage break-up. Based on the facts above, the trial court found that Wife was
    entitled to both rehabilitative alimony and alimony in futuro. Wife asserts that both the mandatory
    reduction of alimony in futuro and the termination of life insurance upon Husband’s attaining the
    age of sixty-five is an abuse of discretion. The supreme court has stated:
             If an award of rehabilitative alimony is justified by the parties’ circumstances, a trial
             court initially should award rehabilitative alimony only. An award of rehabilitative
             alimony pursuant to Tenn. Code Ann. § 36-5-101 must be predicated upon a finding
             that the recipient can be economically rehabilitated. Once awarded, rehabilitative
             alimony may be modified if the recipient’s prospects for economic rehabilitation
             materially change. If rehabilitation is not feasible, the trial court may then make an
             award of alimony in futuro. Accordingly, a concurrent award of both types of
             alimony is inconsistent. At the time of the decree, a trial court must necessarily find
             that the recipient of alimony either can be or cannot be rehabilitated although that
             determination is subject to later modification. Allowing concurrent awards of
             alimony in futuro and rehabilitative alimony would require a trial court to engage in
             an act of clairvoyance. The trial court would not only be required to anticipate the
             duration necessary for rehabilitation but would also be required to anticipate the
             future needs of a spouse who, it has been determined, can be rehabilitated.
    Crabtree v. Crabtree, No. M1997-00262-SC-R11-CV, slip op. at 5, (Tenn. Apr. 24, 2000). We
    therefore reverse the trial court’s award of rehabilitative alimony and modify alimony in futuro to
    provide Wife with three thousand dollars ($3,000) per month until her death or remarriage. The
    award is further modified to provide that Husband shall keep life insurance of one hundred thousand
    dollars ($100,000) in effect for benefit of Wife so long as his alimony obligation continues.
                                                 B. Health Insurance
            On appeal, Wife also requests that Husband be required to provide health insurance coverage
    for Wife until the earlier of three years following the divorce or until Wife is eligible for health
    insurance through her employment. While Wife apparently sought this relief in the lower court, the
    court failed to address this issue.7 On review, we find that Wife’s request for health insurance
    coverage is well taken and should have been granted by the court below.
            Wife requested that Husb and pro vide CO BRA h ealth insura nce at his expense. The cost of this insurance is
    approximately one hundred and eighty dollars per month.
            Pursuant to §36-5-101(f)(1) of the Tennessee Code, the court can order an obligor spouse to
    provide health insurance coverage to the dependant spouse.8See Gillam v. Gillam, No. 01A01-9609-
    1997 WL 187313
    , at *2 (Tenn. Ct. App. April 18, 1997) Based on the relative positions
    of the parties, we hold that Wife is entitled to the requested coverage. We note, however, that this
    coverage is limited to no more than three years, and Husband’s obligation ceases earlier if Wife
    becomes eligible for insurance through her employment. Accordingly, the trial court’s failure to
    order Husband to provide this coverage is hereby modified to include such coverage.
                                                       C. Child Support
           Wife asserts that the lower court erred in deviating from the statutory child support guidelines
    based on Husband’s support of the parties’ adult children and Wife’s alimony award. Wife asks that
    Husband be required to pay the full amount authorized by the child support guidelines. In addition,
    Wife requests that Husband pay for the minor child’s private school tuition. For the following
    reasons, we agree.
            While the trial court’s findings of facts are entitled to a presumption of correctness on appeal,
    the lower court’s discretion is tempered by the child support guidelines. TENN . R. APP . P. 13 (d);
    Jones v. Jones, 
    930 S.W.2d 541
    , 544 (Tenn. 1996). Statutory authority provides for a rebuttable
    presumption that the percentage amount of child support provided in the guidelines is the correct
    amount. However, "[the guidelines] are subject to deviation upward or downward when the
    assumptions on which they are based do not pertain to a particular situation." Nash v. Mulle, 
    846 S.W.2d 803
    , 805 (Tenn.1993) In order to justify a downward deviation from this amount, the trial
    court must make written findings outlining the reasons for this deviation. These reasons must show
    that the deviation is either in the best interest of the child; that the child support guidelines would
    be unjust or inappropriate; or needed to maintain equity between the parties. Tenn. Code Ann. §36-
    5-101(e)(1).9 The Tennessee Supreme Court discussed when such deviations were acceptable in
    Jones v. Jones:
              Tenn. Co de Ann. §3 6-5-101(f)(1 ) provides:
            The court may d irect the acq uisition or m aintenan ce of hea lth insurance covering each child of the marriage
    and may o rder either p arty to pay all, or each p arty to pay a pro rata share of, the health care costs not paid by insurance
    proceeds. The court may also direct a party to pay the premiums for insurance insuring the health care costs of the
    other party.
               Tenn. Code Ann. §36-5-101(e)(1) provides: In making its determination concerning the amount of support
    of any minor child or children of the parties, the court shall apply as a rebuttable presumption the child support
    guidelines as provided in this subsection. If the court finds that evidence is sufficient to rebut this presumption, the court
    shall make a written finding that the application of the child support guidelines would be unjust or inappropriate in that
    particular case, in order to provide for the best interest of the child(ren) or the equity betw een the parties. Findings that
    the application of the gu idelines w ould be unjust or in approp riate shall state the amount of support that would have been
    ordered un der the child supp ort guidelines and a justification for the variance fro m the guide lines.
            “While § 36-5-101(e)(1) does authorize deviation in order to ensure equity between
            the parties, and while downward deviation is clearly not prohibited, the trial court's
            authority to do so must be considered in light of the provisions dealing with such
            deviation--Rule 1240-2-4-.04(2) and (4). Although not exclusive, those subsections
            provide for downward deviation in three instances: (1) where DHS has taken custody
            of the child(ren) pursuant to a neglect, dependency, or abuse action; (2) where the
            child(ren) spend more visitation time with the obligor than is assumed by the
            guidelines; and (3) in cases in which the obligor is subjected to an "extreme
            economic hardship," such as where other children living with the obligor have
            extraordinary needs. Therefore, the guidelines expressly provide for downward
            deviation where the obligee has utterly ceased to care for the child(ren); where the
            obligee clearly has a lower level of child care expense than that assumed in the
            guidelines; and where the obligor is saddled with an "extreme economic hardship."
            Although the rule does not purport to set forth an exhaustive list of instances in
            which downward deviation is allowed, these specific instances nevertheless are a
            powerful indication as to the types of situations in which it is contemplated under the
    Jones, at 545.
            In the case at bar, the trial court based its deviation from statutory guidelines on Husband’s
    support of the parties’ adult children and Wife’s “substantial” alimony award. While we agree that
    Husband’s continued contribution to the living and educational expenses of the adult children is
    admirable, it is an inappropriate basis for deviating from the minor child’s entitlement under the
    guidelines. Pursuant to the guidelines, the parties’ minor child is entitled to twenty-one percent of
    the obligor’s “net income.” See TENN . CO M P . R. & REGS . Tit. 10, Ch. 1240-2-4-.03. Upon review,
    we find no adequate justification for the deviation from this percentage amount. Therefore, the trial
    court’s decision on this issue is reversed. This issue is remanded to the trial court for a
    determination of Husband’s net income.10
            Wife also asks that Husband be required to pay the minor child’s private school tuition.
    Pursuant to the statutory guidelines, the court can authorize an upward deviation if it finds that the
    child will incur “extraordinary educational expenses.” See TENN . CO M P . R. & REGS . Tit. 10, Ch.
    1240-2-4-.04(1)(c). Furthermore, the obligor spouse cannot reduce his child support payments by
    the private school expenses. Dwight v. Dwight, 
    936 S.W.2d 945
    , 950 (Tenn. Ct. App. 1996). In order
    to constitute “extraordinary educational expenses,” the party requesting the deviation must show
    both that private school would benefit the child and that the parties can afford the expense.
    Jankovich v. Jankovich, No. 35801-A-01-9111-CV00427, 
    1992 WL 81446
    , at *3-*4 (Tenn. Ct. App.
    April 24, 1992).
               The court below found that Husband had an earning capacity of approximately two hundred and eighty-five
    thousand dollars a year. In order to determine the correct amount of child support, the court below must determine
    Husband ’s net income.
            Based on the standard set forth above and our review of the record, we hold that Husband
    should be responsible for the private school expenses of the parties’ minor child. The child has been
    attending the same private school since kindergarten at an expense of about five hundred dollars per
    month. Without a doubt, the continuity of his school experience as well as the smaller classes and
    individual instruction available in the private school setting will benefit the child. In addition, based
    on the child’s previous attendance as well as the Husband’s ability to provide for the adult children’s
    educational expenses, Husband is clearly able to afford the expense. Accordingly, the trial court
    erred in failing to require Husband to pay this expense. The decision of the trial court is hereby
    reversed on this issue.
                                             D. Marital Property
            Wife asserts that the trial court erred in excluding Husband’s royalty rights and stock options
    from the parties’ marital property. Husband asserts that the trial court erred in allocating a
    disproportionate amount of the marital assets to Wife. The lower court did, however, consider both
    the stock options and the royalty income in computing Husband’s income for the purposes of
    alimony and child support. Based upon the following, we find that the trial court did not err in the
    division of the marital assets and that any error in the classification of marital assets was harmless.
           It is necessary for the trial court to classify the parties' property as either separate or marital
    before making an equitable division of the marital estate. Watters v. Watters, 
    959 S.W.2d 585
    , at
    588 (Tenn. Ct. App. 1997). “Marital property” is defined as follows:
             “[A]ll real and personal property, both tangible and intangible, acquired by either or
            both spouses during the course of the marriage up to the date of the final divorce
            hearing and owned by either or both spouses as of the date of filing of a complaint
            for divorce, except in the case of fraudulent conveyance in anticipation of filing, and
            including any property to which a right was acquired up to the date of the final
            divorce hearing, and valued as of a date as near as reasonably possible to the final
            divorce hearing date.”
    TENN. CODE ANN . § 36-4-121(b)(1)(A). Pursuant to this definition, Wife asserts that both the stock
    options and the royalty income qualify as marital property and should have been subject to division
    by the court.
           Testimony at trial indicated that Husband has both vested and unvested stock options. These
    options may or may not be redeemable at a profit, depending on the price of the stock on the open
    market. As this court recently stated, “We do not believe unvested property that is so contingent and
    so speculative should be considered marital property.” Brandon v. Brandon, No. 01-A-01-9805-CV-
    1999 WL 248652
    , at *5 (Tenn. Ct. App. April 29, 1999). However, vested stock options
    obtained as a result of efforts expended during the marriage should be subject to equitable
    distribution. Johnson v. Johnson, No. 02A01-9703-CH-00069, 
    1998 WL 835562
    , at *4 (Tenn. Ct.
    App. Dec. 3, 1998) citing Pascale v. Pascale, 
    140 N.J. 583
    660 A.2d 485
    , 498 (N.J.1995). Wife also
    claims that the trial court erred in excluding Husband’s royalty income from the division of marital
    assets. Testimony regarding the royalty income indicated it is highly variable and will likely
    diminish significantly in the future. As a result, the trial court considered the royalty and the stock
    options as part of Husband’s income rather than part of the marital estate subject to equitable
            In light of the mixed character of these assets, and Wife’s generous marital property award,
    we find that the trial court did not err in excluding the stock options and the royalty income from the
    division of marital assets. As stated above, the trial court is granted broad discretion in adjusting and
    adjudicating the parties' interest in all jointly owned property. Its decision regarding division of the
    marital property is entitled to great weight on appeal. Watters at 590; citing Batson v. Batson, 
    769 S.W.2d 849
    , at 859 (Tenn. Ct. App. 1988). The fairness of the property division is judged upon its
    final results. With the forgoing in mind and considering all relevant factors, we do not find the final
    results of the trial court's distribution to be inequitable.
                                              E. Attorney’s Fees
            Husband asserts that the trial court erred in requiring Husband to pay Wife’s attorney’s fees
    incurred in the proceedings below. Wife asserts that the trial court did not err, and requests
    attorney’s fees incurred on appeal. For the following reasons, we find that the trial court did not err.
    In addition, we hold that Wife is entitled to attorney’s fees incurred on appeal.
            In a divorce case, attorneys' fees may be properly allowed as part of the alimony awarded.
    Raskind v. Raskind, 
    325 S.W.2d 625
     (Tenn. Ct. App. 1959). The decision to grant attorney's fees
    is largely in the discretion of the trial court, and this court will not interfere unless there is a clear
    showing of abuse of that discretion. Aaron at 411. When the spouse seeking an award of legal
    expenses lacks sufficient funds to pay her expenses or would be required to deplete her resources,
    the award of legal expenses is appropriate. Brown, 913 S.W.2d at 170; Butler v. Butler, 
    680 S.W.2d 467
     (Tenn. App. 1984). In addition, the trial court has the authority to make an additional award to
    an innocent spouse in order to offset the legal expenses resulting from the divorce. Luna at 676.
            Based upon the foregoing, as well as the circumstances presented in this case, we find that
    Wife is entitled to an award of legal expenses incurred both in the proceedings below and on appeal.
    Accordingly, the decision of the trial court on this issue is affirmed, and the matter is remanded for
    consideration of attorney fees on appeal.
            For the foregoing reasons, the decision of the trial court is hereby affirmed in part, reversed
    in part, modified in part, and remanded. Costs of appeal are taxed to Appellee, Rolf Birger
    Zettersten, for which execution may issue, if necessary.
                                                            ALAN E. HIGHERS, JUDGE