Beverly Wilson v. Thomas Wilson ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
August 7, 2003 Session
BEVERLY GAYLE WILSON v. THOMAS RANDALL WILSON
Direct Appeal from the General Sessions Court for Jackson County
No. 1500-C-134 Steven A. Cassety, Judge
No. M2002-02286-COA-R3-CV - Filed September 30, 2003
This appeal arises from an order of the trial court distributing 25% of the increase in value of the
husband’s business to the wife as marital property. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the General Sessions Court Affirmed;
and Remanded
DAVID R. FARMER , J., delivered the opinion of the court, in which W. FRANK CRAWFORD , P.J., W.S.,
and ALAN E. HIGHERS, J., joined.
Bobby James Ellis, Gainesboro, Tennessee, for the appellant, Thomas Randall Wilson.
John Philip Parsons, Cookeville, Tennessee, for the appellee, Beverly Gail Wilson.
OPINION
The parties were divorced for the first time in October of 1994. As part of the Marital
Dissolution Agreement, the Appellee, Beverly G. Wilson (“Ms. Wilson”), relinquished all
interest in Wilson Brothers Disposal (“Business”) giving Appellant, Thomas Randall Wilson
(“Mr. Wilson”), sole and separate interest in the business. The parties remarried on October 17,
1996, with Ms. Wilson owning no interest in the business.
During the second marriage, Ms. Wilson quit her job working for the State of Tennessee
to begin working for the business. While working for the business, Ms. Wilson presented
evidence that she answered phones, took care of the books, helped secure contracts for the
business, wrote checks for the business, helped load garbage on trucks, painted dumpsters, and
helped to secure containers riding on the trucks. For this work, Ms. Wilson received
compensation of $200 per month to pay for her and Mr. Wilson’s health insurance. After Mr.
and Ms. Wilson separated in January of 1999, Ms. Wilson had no further involvement with the
business.
Ms. Wilson filed for divorce on February 5, 1999. In the complaint, Ms. Wilson
requested an award of an equitable marital interest for the increase in the value of the business.
The divorce was granted on August 16, 2001. On November 28, 2001, the trial court entered an
order requiring Mr. Wilson to supply all financial information relating to himself and the
business to Ms. Wilson. A hearing for the distribution of marital property was held on June 24,
2002. At that hearing, Ms. Wilson offered two valuations of the business prepared by a Certified
Public Accountant (“expert”) as proof of the increase in the business’s value. The first valuation,
$250,000, represented the value of the business at the time of the second marriage, October of
1996, and the second valuation, $550,000, represented the value of the business as of December
31, 1999. At trial, Ms. Wilson’s expert explained that she arrived at these going concern values
by using accounting procedures based on the business’s financial records. The expert also
explained that she used December 31, 1999, as the date of final valuation because Mr. Wilson
only supplied financial information up to that date, despite the trial court’s order requiring
production beyond that date.
In the trial court’s final order, entered July 19, 2002, the court found that Ms. Wilson had
contributed substantially to the improvements of the business and awarded her $37,500 as an
equitable distribution of the marital interest in the business’s increase in value.1 In addition, the
trial court ordered Mr. Wilson to pay Ms. Wilson the discretionary costs of $2,400 representing
the costs of appraisal. It is from these awards that Mr. Wilson appeals.
Issues Presented
Mr. Wilson asserts that the trial court committed the following errors, which he presents
for our review:
1. The trial court erred in finding Mr. Wilson’s interest in the business to be
marital property.
2. The trial court erred in finding that Ms. Wilson substantially contributed to
the preservation and appreciation of the business.
3. The trial court erred in finding that the December 31, 1999 appraisal
represented an accurate value of the business as of the date of divorce.
4. The trial court erred in its award to Ms. Wilson of the discretionary costs
of appraisal.
Standard of Review
1
The trial court arrived at $37,500 as an equitable distribution by dividing the increase in value figure of
$300,000 by the parties’ share, $150,000, from the other co-owners of the business and then awarding Ms. Wilson 25%
of the parties’ share amounting to $3 7,50 0.
-2-
The determination of whether property is jointly owned and the value as to a party’s
interest in that property is a question of fact. Cutsinger v. Cutsinger, 917 S.W.2d 238, 241
(Tenn. Ct. App. 1995) (quoting Hardin v. Hardin, 689 S.W.2d 152, 154 (Tenn. Ct. App. 1983).
Our review of findings of fact by the trial court is de novo upon the record of the trial court,
accompanied by a presumption of correctness of the finding, unless the preponderance of
evidence is otherwise. Tenn. R. App. P. 13(d); Farrar v. Farrar, 553 S.W.2d 741, 743 (Tenn.
1977).
Determination of Marital Property
In response to Mr. Wilson’s first issue, it is undisputed that the business was Mr.
Wilson’s separate property from the beginning and throughout the marriage. However, the
determination of the trial court and this Court rests on the classification of the business’s increase
in value as separate or marital property. It is to this issue that our analysis turns.
The trial court based its determination of marital property on Tenn. Code Ann. § 36-4-
121(b)(1)(B),-(D) (Supp. 2002) which provides in pertinent part:
(B) “Marital property” includes . . . any increase in value during the
marriage of, property determined to be separate property in accordance with
subdivision (b)(2) if each party substantially contributed to its preservation and
appreciation. . . .
....
(D) As used in this subsection, “substantial contribution” may include,
but not be limited to, the direct or indirect contribution of a spouse as homemaker,
wage earner, parent or family financial manager . . . . (emphasis added)
The increase in value of separate property is considered to be marital property only when the
non-owner spouse substantially contributes to the property’s preservation and appreciation.
Langschmidt v. Langschmidt, 81 S.W.3d 741, 746 (Tenn. 2002) (citing Harrison v. Harrison,
912 S.W.2d 124, 127 (Tenn. 1995). Before the appreciation of the property is considered
marital, there must be some link between the efforts of the spouse and the property’s
appreciation. Id.
The trial court found that Ms. Wilson’s employment and overall involvement with the
business substantially contributed to its preservation and appreciation resulting in the court’s
finding the increase of the business’s value as marital property. As such, the determination of
whether this increase is separate or marital property is a question of fact. Cooke v. Cooke, No.
M2001-03026-COA-R3-CV, 2003 WL 21392003, at *5 (Tenn. Ct. App. June 17, 2003) (no
-3-
perm. app. filed) (citing Cutsinger, 917 S.W.2d at 241). The trial court’s classification
determination is entitled to great weight on appeal and is presumed correct unless the
preponderance of evidence is otherwise. Cooke, 2003 WL 21392003, at *5 (citing Tenn. R. App.
P. 13(d); Langschmidt, 81 S.W.3d at 744; Wilson v. Moore, 929 S.W.2d 367, 372 (Tenn. Ct.
App.)).
In this case, Ms. Wilson quit her job to begin working with the business. The record
indicates that Ms. Wilson assisted in the daily operations of the business by painting dumpsters,
answering phones, and securing containers on the trucks. It is also evident that she was involved
with administrative duties of the business by writing checks, securing contracts, and taking care
of the books. Mr. Wilson argues that Ms. Wilson was compensated for this work but the record
indicates that Ms. Wilson only received the nominal compensation of $200 a month that was
used for both Mr. and Ms. Wilsons’ insurance. Upon reviewing the record, the evidence does not
preponderate against the trial court’s finding that Ms. Wilson’s involvement with the business
substantially contributed to the preservation and appreciation of the business making the increase
in the business’s value marital property. Accordingly, we affirm the trial court’s classification of
the business’s increase in value to be marital property.
Appraisal Valuation
Mr. Wilson next argues that it was reversible error for the trial court to base its finding of
the business’s increase in value on a valuation that was performed over two years before the
distribution of marital property. Mr. Wilson’s argument is not without merit but his actions
preclude its assertion.
In order for a non-owner spouse to claim an equitable share of the increase in value of
separate property, that spouse must prove, inter alia, an increase in value of the separate property
during the marriage. Cutsinger v. Cutsinger, 917 S.W.2d 238, 241 (Tenn. Ct. App. 1995).
Further, Tenn. Code Ann. 36-4-121 (b)(1)(A) (Supp. 2002) requires that “[a]ll marital property
shall be valued as of a date as near as possible to the date of entry of the order finally dividing the
marital property.”
In this case, the proper date for the ending valuation would be as close as possible to the
final order, July 19, 2002. Mr. Wilson argues that the December 31, 1999, valuation date is not
as near as possible to that date and the trial judge committed reversible error by basing its
findings upon such a date. However, the record indicates that the 1999 date was used by the
expert because Mr. Wilson failed to deliver any financial information beyond that date despite an
order from the trial court requiring further production. As a result, Mr. Wilson is precluded from
asserting a premature valuation when such valuation is a product of his own doing. Accordingly,
we affirm the trial court’s use of the December 31, 1999, valuation date as timely under the
circumstances.
-4-
Appraisal Cost Award
Mr. Wilson argues that the appraisal presented was not an accurate valuation and as a
result the cost of such appraisal cannot be awarded. As the preceding part explains, the appraisal
was accurate under the circumstances and the cost may be awarded as discretionary in
accordance with Tenn. R. Civ. P. 54.04(2). The awarding of such costs is a matter within the
discretion of the trial court. Lock v. Nat’l Union Fire Ins. Co., 809 S.W2d 483, 490 (Tenn.
1991). We find no abuse of the trial court’s discretion in awarding these costs. Accordingly, we
affirm the trial court’s order requiring Mr. Wilson to pay the discretionary costs and costs of the
expert amounting to $2,400 to Ms. Wilson.
Conclusion
We affirm the trial court’s equitable distribution of 25% of the increase in the business’s
value to Ms. Wilson as marital property. The costs of this appeal are taxed to the Appellant, Mr.
Wilson, and his surety, for which execution, if necessary, may issue.
___________________________________
DAVID R. FARMER, JUDGE
-5-