Joseph Bolinger v. Sharon Ann Bolinger ( 2002 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
August 19, 2002 Session
JOSEPH D. BOLINGER v. SHARON ANN PIERCE BOLINGER
Appeal from the Circuit Court for Campbell County
No. 11734 Conrad Troutman, Jr., Judge
FILED NOVEMBER 22, 2002
No. E2002-00103-COA-R3-CV
In this divorce case, the sole issue for our review is whether the Trial Court properly classified three
IRAs held by Joseph D. Bolinger (“Husband”) as partially marital and partially separate assets.
Applying the analysis set forth by the Supreme Court in the case of Langschmidt v. Langschmidt,
81 S.W.3d 741 (Tenn. 2002), we hold that the IRAs, which were funded with premarital assets,
should be classified as Husband’s separate property. We therefore vacate the Trial Court’s judgment
that the IRAs are partially marital assets and remand this case.
Tenn.R.App.P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated in Part;
Cause Remanded
HOUSTON M. GODDARD , P.J.,, delivered the opinion of the court, in which CHARLES D. SUSANO, JR.,
and D. MICHAEL SWINEY, JJ., joined.
Terry M. Basista, Jacksboro, for the Appellant, Sharon Ann Pierce Bolinger
Johnny V. Dunaway, LaFollette, for the Appellee, Joseph D. Bolinger
OPINION
The parties were married on March 27, 1990. Husband testified that he has been employed
by LaFollette Utilities since July 16 or 17, 1968. His pension plan with his employer had an
effective starting date of May 1, 1970. In 1999, Husband participated in a buyout of his pension
plan, took the resulting $191,346.42 and deposited it into the three IRAs that are at issue in this
appeal. Husband filed for divorce on November 17, 2000.
Due to the stipulations made by the parties, the sole issue at trial was the classification of
Husband’s IRAs and the equitable distribution of that portion of the IRAs deemed marital property
by Trial Court. Husband presented the expert testimony of Van T. Elkins, a Certified Public
Accountant. Because Husband had been unable to provide any evidence showing what the value of
his pension account was at the time of the marriage, Mr. Elkins testified that he based his analysis
on the following calculations. Mr. Elkins calculated that 10,957 days had elapsed between the
effective starting date of his pension and the time of the buyout and rollover to the IRAs. According
to Mr. Elkins, of those 10,957 days, the parties were married 3,687 days, or 33.65 percent.
Thus, Mr. Elkins testified, “approximately two-thirds of the days were prior to the marriage
and approximately one-third was after they were married.” Mr. Elkins multiplied the value of the
pension plan at the time of the buyout, $191,346.42, by 33.65 percent, which yielded, according to
Mr. Elkins, an amount of $64,387.50.1 Mr. Elkins stated that this amount was a reasonable estimate
of the marital portion of the account at the time of the buyout.
The Trial Court, in its memorandum opinion, found that “[p]laintiff’s witness, Van Elkins,
a Certified Public Accountant, made a thorough study and evaluated not only [Husband’s] retirement
account, but other marital investments of both parties. . .and the Court adopts the findings of Mr.
Elkins in this regard.” On appeal, Sharon Ann Pierce Bolinger (“Wife”) presents the issue, as stated
in her brief, of whether “the Honorable Trial Court [was] correct in relying upon this expert’s
testimony in rendering the Court’s opinion.” Wife attacks Mr. Elkins’ testimony on two grounds,
arguing that it was (1) unduly speculative, and (2) based on incorrect legal premises.
Subsequent to the Trial Court’s decision in this case, the Supreme Court’s decision in the
case of Langschmidt v. Langschmidt, 81 S.W.3d 741 (Tenn. 2002), which we believe is dispositive
of this appeal, was released for publication. The Langschmidt court held that an IRA account
wholly funded with premarital assets is not a “retirement benefit” as defined by T.C.A 36-4-
121(b)(1)(B). The court reasoned that
In Cohen [v. Cohen, 937 S.W.2d 823 (Tenn.1996)], this Court held
that unvested pension benefits accrued during the marriage are marital
property, even though the statute only expressly designated accrued
“vested” pension benefits to be marital property. In so holding, we
noted that
[t]o the extent earned during the marriage, the benefits
represent compensation for marital effort and are
substitutes for current earnings which would have
increased the marital standard of living or would have
been converted into other assets divisible at
dissolution. . .[R]etirement benefits have been
described as part of the consideration earned by an
employee, [] and as a form of deferred compensation
provided by the employer for work already performed.
1
The correct product of this calculation is $64,388.07, but this minor discre pancy is immaterial in light of our
disposition of this case.
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Cohen, 937 S.W.2d at 828-29 (citations omitted). Unlike the accrual
of vested or unvested pension during the marriage, Husband’s IRAs
in this case do not represent deferred compensation during the
marriage, but were funded with premarital assets.
* * *
Since Husband’s IRAs do not represent deferred marital
compensation, but were funded with premarital earnings,. . .we
conclude that Husband’s premarital IRAs are not retirement benefits
under Tenn. Code Ann. § 36-121-4(b)(1)(B).
Langschmidt, 81 S.W.3d 741 at 749, 750.
In the present case, Husband testified as follows:
Q.: Have you made any contribution to this Travelers account
[Husband’s pension fund account] since you married Sharon
Bolinger?
A: No, sir.
* * *
Q.: If the Travelers fund is worth more money today, it’s based on
accrued interest, not upon any other deposits to it. There have not
been any other deposits to it.
A: That is correct.
Based on our review of the record, we find the facts of this case indistinguishable from those in
Langschmidt and we are bound by its holding.
The Langschmidt court continued its analysis as follows:
Having concluded that Husband’s IRAs are not retirement benefits,
we must now consider whether these IRAs are the Husband’s separate
property. With exception of the 401(k) assets in this case, because it
was established that the Husband owned these IRAs before the
marriage, they are the Husband’s separate property under Tenn. Code
Ann. § 36-4-121(b)(2)(A). Appreciation in value of the IRAs during
the marriage may be classified as marital property, however, if both
parties “substantially contributed to [the IRAs’] preservation and
appreciation.” Tenn. Code Ann. § 36-4-121(b)(1)(B), 121(b)(2)(C).
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81 S.W.3d at 750.
In the present case, the Trial Court did not make a finding as to whether the Wife
substantially contributed to the preservation and appreciation of the accounts at issue. The
Langschmidt court offered the following guidance in making that determination:
In Harrison v. Harrison, this Court held that Tenn. Code Ann. § 36-
4-121(b)(1)(b) “does not permit the conclusion that any increase in
value [of separate property] during marriage constitutes marital
property. The increase in value constitutes marital property only
when the spouse has substantially contributed to its preservation and
appreciation.” 912 S.W.2d 124, 127 (Tenn. 1995)(emphasis added).
* * *
[I]n the spirit of Harrison, we require that some link between the
marital efforts of a spouse and the appreciation of the separate
property must be established before the separate property’s
appreciation is considered marital property.
Langschmidt, 81 S.W.3d at 746. The court found no evidence that the wife substantially contributed
to the preservation and appreciation of the husband’s separate property where it was “evident that
appreciation in the value of these assets was entirely market-driven .” Langschmidt, 81 S.W.3d at
746, 750. In the present case, based on Husband’s undisputed testimony that there have been no
marital deposits to the IRAs, or the pension fund account prior to Husband’s rolling it over into the
IRAs, we likewise find no evidence that Wife has substantially contributed to the preservation and
appreciation of the IRAs.
As did the Langschmidt court, we find it necessary to remand this case to the Trial Court for
a determination of whether the division of marital property is equitable under T.C.A. 36-4-121(c),
in light of our determination that Husband’s IRAs are separate property.
For the foregoing reasons the judgment of the Trial Court is vacated in part and the cause
remanded for proceedings not inconsistent with this opinion. Costs of appeal are adjudged one-half
against Sharon Ann Pierce Bolinger and her surety, and one-half against Joseph D. Bolinger.
__________________________________________
HOUSTON M. GODDARD, PRESIDING JUDGE
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