Janis Oliver Cummins v. Roy B. Cummins ( 2010 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
October 8, 2009 Session
JANIS OLIVER CUMMINS v. ROY B. CUMMINS
Appeal from the Chancery Court for Williamson County
No. 32668 Jeffrey S. Bivens, Judge
No. M2009-00386-COA-R3-CV - Filed July 29, 2010
Husband appeals the trial court’s decision that Wife’s payment of taxes, insurance and
association dues on houses titled jointly were contributions of separate property to the homes
which, under a premarital agreement, entitled her to a credit before Husband could recover
appreciation on those homes. The agreement provides for the treatment of a party’s
contributions of separate property to jointly held property, and we share the trial court’s
interpretation of those provisions. Accordingly, we affirm the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed
P ATRICIA J. C OTTRELL, P.J.,M.S., delivered the opinion of the court, in which F RANK G.
C LEMENT, J R. and A NDY D. B ENNETT, JJ., joined.
Branch Heard Henard, III, Nashville, Tennessee, for the appellant, Roy B. Cummins.
Rose Palermo, Nashville, Tennessee, for the appellee, Janis Oliver Cummins.
OPINION
The only question in this appeal involves the allocation, in accordance with the terms
of the parties’ prenuptial agreement, of appreciation on two homes acquired during the
marriage. The parties stipulated to the validity of the agreement, but disagree as to the proper
interpretation of the agreement and its application to the facts of this case.
I. B ACKGROUND
Mr. and Ms. Cummins wed in the fall of 2000. At that time, the parties entered into
a prenuptial agreement that governed, among other things, the distribution of property in the
event of a divorce. Neither party was employed during the marriage. Rather, Ms. Cummins
fully supported the couple with investment income stemming from her separate assets.
During the marriage, Ms. Cummins paid cash for two residences that she then had
titled in both the parties’ names. First, in approximately January of 2003, she purchased a
condominium in Taos, New Mexico, for three hundred sixty-six thousand nine hundred
thirty-nine dollars ($366,939). Second, in approximately February of 2005, Ms. Cummins
purchased the home where the parties resided in Franklin, Tennessee, for one million seven
hundred nine thousand six hundred eighty-six dollars ($1,709,686). At the time of the
divorce hearing, the parties stipulated that the Taos house was valued at five hundred
thousand dollars ($500,000) and the Franklin house was valued at one million seven hundred
fifty thousand dollars ($1,750,000). Consequently, during the time the houses were owned
by the parties during the marriage, the Franklin home appreciated $40,132 and the Taos
house appreciated $133,061, with the appreciation at issue totaling $173,193.
During the time the couple owned the houses, Ms. Cummins expended substantial
sums of money to pay for the property taxes, insurance premiums, and association dues
related to these two properties. These expenses totaled seventy-three thousand eight hundred
twelve dollars ($73,812) for the Tennessee property and sixty-eight thousand three hundred
twenty-five dollars ($68,325) for the New Mexico property.1
Ms. Cummins filed a Complaint for Divorce in July of 2006. Six months later, she
also filed a motion for Mr. Cummins to vacate the marital home. In response, Mr. Cummins
filed a Motion for Pendente Lite Support. The parties resolved their motions by an Agreed
Order under which Mr. Cummins vacated the residence. In exchange, Ms. Cummins
provided him with twenty-six hundred dollars ($2,600) per month until the couple’s divorce
and ten thousand dollars ($10,000) for assistance with his moving expenses. Under the
Agreed Order, Ms. Cummins was to receive credit for these monies against any amount Mr.
Cummins may be awarded from the dissolution of their marriage. It is undisputed by the
parties that the credit due Ms. Cummins is sixty-nine thousand eight hundred dollars
($69,800).
1
Although the exact amount of the expenses are unclear from the record, these are the amounts
acknowledged by Mr. Cummins in his brief on appeal
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The issue on appeal stems from the trial court’s findings about whether Mr. Cummins
was entitled to recover under the prenuptial agreement for half of any appreciation on the two
homes. The trial court found that under their agreement Ms. Cummins was entitled to award
of both the Franklin and Taos homes. Mr. Cummins does not dispute this finding on appeal.
As to the appreciation, the trial court gave Ms. Cummins a credit for the $69,800 in support,
which Mr. Cummins also does not dispute. However, Mr. Cummins does dispute the trial
court’s treatment of the taxes, insurance, and homeowner association fees on the two houses.
II. I SSUE P RESENTED O N A PPEAL
Mr. Cummins argues on appeal that the court erred in finding that half of appreciation
due him must first be reduced by the property taxes, insurance premiums, and association
dues on the Tennessee and New Mexico properties paid by Ms. Cummins.
III. S TANDARD OF R EVIEW
In Tennessee, valid prenuptial agreements apply to govern distribution of a divorcing
couple’s property. T.C.A. § 36-3-501. Consequently, the parties are correct in their
assertions that the prenuptial agreement and its interpretation are dispositive of the outcome
of this dispute.2
Tennessee law gives effect to prenuptial agreements in the same manner as other
contracts. Wilson v. Moore, 929 S.W.2d 367, 373 (Tenn. Ct. App.1996). Our courts construe
them in accordance with applicable statutes on the distribution of marital property and under
rules of construction that are applicable to contracts generally. Id. at 373. Ultimately, the
court’s task is to discern and to honor the intent of the contracting parties. Bob Pearsall
Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn.1975); Wilson,
929 S.W.2d at 373. “The central tenet of contract construction is that the intent of the
contracting parties at the time of executing the agreement should govern.” Planters Gin Co.
v. Fed. Compress & Warehouse Co., Inc., 78 S.W.3d 885, 890 (Tenn. 2002).
In ascertaining and giving effect to the contracting parties’ intentions, where the
parties have reduced their agreement to writing, courts look to the parties’ intentions as
reflected in the language of contract itself. Frizzell Constr. Co. v. Gatlinburg, L.L.C., 9
S.W.3d 79, 85 (Tenn. 1999). “The intent of the parties is presumed to be that specifically
expressed in the body of the contract . . . .” Planters Gin Co., 78 S.W.3d at 890. Therefore,
2
In pertinent part, the agreement provides, “The parties agree that this Agreement shall govern the
division of property between them in event of their divorce or legal separation, and that neither party shall
request a court having equity jurisdiction to divide, distribute, or assign property between them.”
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the court’s role in resolving disputes regarding the interpretation of a contract is to ascertain
the intention of the parties based upon the usual, natural, and ordinary meaning of the
language used. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999); Bob Pearsall
Motors, Inc., 521 S.W.2d at 580. Where the language of the contract is clear and
unambiguous, its literal meaning controls the outcome of contract disputes. Planters Gin
Co., 78 S.W.3d at 890. Stated another way, where terms of the agreement are clear and
unambiguous, the courts must wholly ascertain the parties’ intent from the plain and ordinary
meaning of those terms. Bob Pearsall Motors, Inc., 521 S.W.2d at 580; Ballard v. North
American Life & Casualty Co., 667 S.W.2d 79, 82-83 (Tenn. Ct. App.1983); Sutton v. First
Nat’l Bank, 620 S.W.2d 526, 530 (Tenn .Ct. App.1981).
Ultimately, the trial court’s findings of fact are presumed correct unless a de novo
review of the record produces a preponderance of evidence to the contrary. Tenn. R. App.
P. 13(d). However, no such presumption of correctness is afforded to the trial court’s
conclusions of law. Angus v. Western Heritage Ins. Co., 48 S.W.3d 728, 730 (Tenn. Ct. App.
2000) The question of interpretation of a contract is a question of law. Guiliano, 995
S.W.2d at 95. Therefore, the trial court’s interpretation of a contractual document is not
entitled to a presumption of correctness on appeal. Id.; Angus, 48 S.W.3d at 730. This court
must review the document ourselves and make our own determination regarding its meaning
and legal import. Hillsboro Plaza Enters. v. Moon, 860 S.W.2d 45, 47 (Tenn. Ct. App.
1993). Our review is governed by the well-settled principles set out above.
IV. A NALYSIS
The provision in the agreement that governs in the event of divorce is found at
Paragraph 4 and provides, in pertinent part:
In the event of an Order of Divorce . . . each party shall be solely entitled to
a return of his or her Separate Property and an equal division of the Marital
Property . . . The parties acknowledge that the provisions contained in this
Agreement for the equal division of Marital Property after restoration to
each party of his or her Separate Property shall constitute an acceptable
property division . . . (emphasis added).
There is no disagreement herein that the parties agreed to split evenly any Marital
Property, as that term is defined in the agreement. The language “after restoration to each
party of his or her Separate Property” is relevant to the definition of the Marital Property to
be divided. It is consistent with another provision of the agreement, Paragraph (1)(b), which
defines Marital Property in pertinent part as follows:
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. . . the term “Marital Property” shall include any property acquired jointly by
the parties . . . and titled in their joint names, . . . and all income, growth and
appreciation realized on all such property . . . . The parties . . . reject the
concept prohibiting existence of a duality or combination of Marital Property
and Separate Property in the same asset and, to the extent that tracing of
Separate Property can be established, it is the parties’ intention to return to
the person contributing the Separate Property the value of his or her
contribution before the division of the remainder of the marital asset.
After return to each party of his or her Separate Property contribution, all
Marital Property shall be equally divided. (emphasis added).
There is no dispute that the two houses at issue are Marital Property as defined in the
agreement, pursuant to the paragraph quoted above, because they were jointly titled. The
parties agree that the dispute between them is over the distribution of the appreciation in
value of the houses.3 There is no dispute that Ms. Cummins is entitled to the return of her
separate funds that were used to make the initial purchase of the houses and that such funds
are to be subtracted from the appreciation before division of Marital Property between the
parties.
At issue herein is the interpretation and application of the language highlighted above
with regard to other payments made on the property by Ms. Cummins from her separate
funds. It is undisputed that Ms. Cummins paid a total of $142,137 from her separate assets
for property taxes, insurance premiums, and association dues on the two houses. Ms.
Cummins asserts that the plain language of the agreement requires that this amount be
subtracted from the gross appreciation of the two houses before the remaining amount is
divided between the parties.
Because the parties were able to identify the amount of her separate money Ms.
Cummins paid toward taxes, insurance, and association fees, there can be no dispute that
“tracing of Separate Property [her money] can be established,” which is the prerequisite for
return of contributions of separate property to joint property.
Ms. Cummins argues that her payment of the taxes, insurance, and association fees
were “contributions” of her separate property, the “value” of which is to be returned to her,
relying on the language that “it is the parties’ intention to return to the person contributing
the Separate Property the value of his or her contribution before the division of the remainder
of the marital asset.”
3
Mr. Cummins concedes that he is not entitled to the homes themselves, only arguing that the
appreciation is marital property that must be split between them.
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Mr. Cummins seems to argue that Ms. Cummins’ acquisition costs alone constitute
such contributions and that the other identified necessary expenses associated with the homes
do not qualify as “contributions.” We disagree.
The agreement expressly provides for the return to a party the value of that party’s
contribution to marital property of his or her separate assets to the extent the contribution
or its value can be traced or identified. The agreement speaks in terms of “contribution,” and
that term is not defined therein. The term has a broad meaning in general usage.4
“Contribution” is not limited by any language in the agreement to purchase price or
acquisition expenses. The language of the agreement suggests that the parties did not intend
that contributions be limited to the costs of acquisition. They could have explicitly said so
had that been their intention.
It is clear that the parties’ agreement envisioned that each party would get credit for
their separate property contributions to the fullest extent. Ms. Cummins does not seek return
of any money she spent on maintenance or improvements to the homes. Instead, the
expenses at issue, taxes, insurance, and association fees, were required to be paid in order for
the parties to retain ownership (which was joint) or to protect the investment in the homes.
Without Ms. Cummins’ contribution of her separate funds to pay those costs, the parties
would not have owned the houses at the time of divorce, and there would be no appreciation
to divide.
Given the broad nature of the term “contribution,” the statement of intent in the
agreement, and the purpose of the payments, we agree with the trial court that the enumerated
expenses paid by Ms. Cummins, which were expenses necessary to retain ownership of the
homes, are included within the term “contribution” as used in the parties’ agreement.
Mr. Cummins also asserts that, by placing the property in both their names, Ms.
Cummins gave her husband one half of any resulting appreciation, and that she later
acknowledged this gift. He makes an alternate argument that this gift of Ms. Cummins takes
the transaction out of the purview of their prenuptial agreement. By the terms of the
prenuptial agreement, Ms. Cummins having the properties titled in both names made them
Marital Property, as defined in the agreement. While one might describe the effect of that
decision as a gift, the scope and terms of that gift are determined by the agreement. In other
words, his wife may have gifted him with one half of the houses, since they became Marital
Property when they were deeded jointly, but the value of that Marital Property is
4
Even in Black’s Law Dictionary(4th ed.), “contribute” is defined, inter alia, as lending assistance or aid or
giving something to a common purpose.
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determined by the agreement’s provisions on the division of property in the event of divorce.
The total appreciation of the two houses (subtracting original purchase price from
value at date of divorce) was $173,193. When Ms. Cummins’ contribution to the houses in
the form of payment of taxes, insurance, and association fees, totaling $142,137, is
subtracted, the remaining appreciation subject to equal division is $31,056. Half of that
amount is $15, 528.
Therefore, Mr. Cummins share of the remaining Marital Property would be $15, 528.
However, he agreed that his share would be reduced by the amount of pendente lite support
he received. The parties agree that the total of that support was $69,800. Therefore, under
the terms of the agreement, Mr. Cummins is not entitled to receive any money as division of
the Marital Property at issue.
We affirm the trial court.
V. F RIVOLOUS A PPEAL
Ms. Cummins also petitions this Court to review Mr. Cummins’ appeal as potentially
frivolous, for which she may be awarded various damages. “An appeal is deemed frivolous
if it is devoid of merit or if it has no reasonable chance of success.” Wakefield v. Longmire,
54 S.W.3d 300, 304 (Tenn. Ct. App. 2001).
Although this Court rules against Mr. Cummins, we do not find that his argument and
the appellate record he supplied are devoid of merit such that it had no reasonable chance of
success. Consequently, the circumstances of his appeal do not merit a finding as frivolous
or a related award for damages.
VI. C ONCLUSION
We affirm the chancery court’s order in this matter. Costs of this appeal are taxed to
the appellant, Mr. Roy B. Cummins.
_________________________________
PATRICIA J. COTTRELL, P.J., M.S.
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