Jimmy D. Ogle v. Julie D. Duff ( 2017 )

05/24/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
March 24, 2017 Session
JIMMY D. OGLE V. JULIE D. DUFF
Appeal from the General Sessions Court for Loudon County
No. 11-DV-332 Rex A. Dale, Judge
No. E2016-01295-COA-R3-CV
Husband and Wife were married for approximately five and one-half years when
Husband filed a complaint for divorce. Wife filed a counter-complaint for a divorce.
The trial court granted the parties a divorce based on stipulated grounds, classified the
parties’ assets as separate or marital, and divided the marital estate. Husband appealed,
arguing that the trial court erred in (1) divesting a revocable trust of all assets and
refusing to enforce a valid postnuptial agreement associated with the revocable trust; (2)
classifying the increase in value of the marital residence as marital property; (3)
classifying the increase in value of Husband’s premarital IRA as marital property; and (4)
dividing the marital estate equally between the parties given the short duration of the
marriage. We affirm as modified and deny Wife’s request for an award of attorney fees
on appeal.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the General Sessions Court
Affirmed in Part, Modified in Part and Remanded
ANDY D. BENNETT, J., delivered the opinion of the Court, in which D. MICHAEL SWINEY,
C.J., and THOMAS R. FRIERSON, II, J., joined.
Brian E. Nichols, Loudon, Tennessee, for the appellant, Jimmy D. Ogle.
Mandy M. Hancock, Knoxville, Tennessee, for the appellee, Julie D. Duff.
OPINION
FACTUAL AND PROCEDURAL BACKGROUND
Jimmy D. Ogle (“Husband”) and Julie D. Duff (“Wife”) were married on April 30,
2006. After five and one-half years, Husband filed for divorce on the grounds of
inappropriate marital conduct and irreconcilable differences. Wife filed an answer and
counter-complaint for divorce based on the same grounds. At the time of trial, Husband
was fifty-eight years old and Wife was forty-five years old. Wife worked for the Lenoir
City Schools as a school teacher. Husband was a self-employed surveyor. This was the
second marriage for both parties, and Wife had two minor children from her previous
marriage.
Throughout the entirety of the marriage, the parties maintained separate accounts
for their earnings. At trial, Wife testified that she deposited her earnings into her separate
bank account. Husband identified six separate bank accounts he used during the
marriage: (1) business account, (2) line of credit, (3) personal checking, (4) farm
account, (5) Duff-Turner account, and (6) savings account. He testified that he usually
deposited his earnings into the business account but occasionally deposited his earnings
into the line of credit account. During the marriage, Wife wrote Husband several checks
from her separate account to pay for utilities and other household expenses. After
Husband received these checks, he would deposit the funds into one of his several
accounts and often transferred the money between the various accounts.
At the time of the marriage, Husband held three individual retirement accounts
(“IRAs”): (1) Fidelity account (“Fidelity Primary IRA”) with a value of $118,412.39, (2)
State Farm account ending in -3452 with a value of $3,373.75, and (3) State Farm
account ending in -3833 with a value of $4,568.42. On August 22, 2012, Husband rolled
the entire $4,011.60 balance of the State Farm account ending in -3452 into the Fidelity
Primary IRA account. The Fidelity Primary IRA account was valued at $181,628.32 at
the time of divorce.
Prior to the marriage, Husband owned a lakeside residence referred to as “the
Tanasi Shores property.” Early in the marriage, Husband purchased a 50-acre lot and a
separate 5.5 acre lot in White County. On July 14, 2009, Husband created the Jimmy D.
Ogle Revocable Trust (“Trust”) as both settlor and trustee. Husband transferred the
Tanasi Shores and White County properties into the Trust. Wife signed warranty deeds
for these properties whereby she conveyed all marital interest she had in the properties to
Husband as trustee of the Trust. In the Trust, Husband designated Wife and her children
as beneficiaries of the Trust and named Wife as successor trustee. Contemporaneously
with creation of the Trust, Husband executed a Last Will and Testament that directed that
all other assets be placed in the Trust upon his death. After creation of the Trust,
Husband, as trustee, purchased what is referred to as the Duff-Turner property. The trust
agreement contains no provision regarding Wife’s marital interest in property acquired
following creation of the Trust.
On July 17, 2012, Husband filed a motion requesting that the trial court determine
what effect the Trust had on the classification of marital property. Husband argued that
the Trust was created pursuant to a postnuptial agreement between the parties. The trial
court found there was not sufficient mutual assent between Husband and Wife to form an
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enforceable postnuptial agreement. The trial court, therefore, divested the Trust of titles
to all properties transferred into the Trust and revested the titles in the names of the
parties as they existed prior to creation of the Trust. The trial court entered an order and
judgment on November 3, 2014 granting the parties a divorce on stipulated grounds
pursuant to Tenn. Code Ann. § 36-4-1291 and reserved the issue of dividing the marital
estate. Following trial on the issue of property division, the trial court entered a final
order on June 1, 2016 dividing the marital estate into equal shares between both parties.
Husband has now perfected this appeal and raises the following issues: (1)
whether the trial court erred in divesting the Trust of all assets and refusing to enforce the
valid postnuptial agreement; (2) whether the trial court erred in classifying the increase in
value of Husband’s separate property on Lot 28 Tanasi Shores and the increase in value
of the Fidelity Primary IRA as marital property; and (3) whether the trial court erred in
dividing the marital estate into equal shares in light of the short duration of the marriage.
STANDARD OF REVIEW
We review a trial court’s findings of fact de novo with a presumption of
correctness unless the evidence preponderates otherwise. TENN. R. APP. P. 13(d); Church
v. Church, 346 S.W.3d 474, 481 (Tenn. Ct. App. 2010). A trial court’s conclusions of
law are reviewed de novo with no presumption of correctness. Whaley v. Perkins, 197
S.W.3d 665, 670 (Tenn. 2006). Because a trial court is in a position to observe a
witness’s demeanor as he or she testifies, a trial court is “accorded significant deference
in resolving factual disputes when the credibility of the witnesses is of paramount
importance.” Davis v. Davis, 223 S.W.3d 233, 238 (Tenn. Ct. App. 2006) (citing Wells v.
Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999)). We will not re-evaluate a trial
court’s credibility determinations “‘absent clear and convincing evidence to the
contrary.’” Id. (quoting Wells, 9 S.W.3d at 783).
ANALYSIS
Jimmy D. Ogle Revocable Trust
Husband first takes issue with the trial court divesting the Trust of all assets and
revesting titles to those assets in the names of the parties as they existed prior to creation
1
Tennessee Code Annotated section 36-4-129 provides as follows:
(a) In all actions for divorce from the bonds of matrimony or legal separation the parties
may stipulate as to grounds and/or defenses.
(b) The court may, upon stipulation to or proof of any ground of divorce pursuant to § 36-
4-101, grant a divorce to the party who was less at fault or, if either or both parties are
entitled to a divorce or if a divorce is to be granted on the grounds of irreconcilable
differences, declare the parties to be divorced, rather than awarding a divorce to either
party alone.
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of the Trust. Husband argues that the trust documents and accompanying warranty deeds
constitute a valid postnuptial agreement and the trial court erred by refusing to evaluate
these documents in light of the factors set forth in Tenn. Code Ann. § 36-3-501.2
Spouses or prospective spouses may enter into various types of agreements,
including antenuptial agreements, reconciliation agreements, and postnuptial agreements.
Bratton v. Bratton, 136 S.W.3d 595, 599 (Tenn. 2004). Prospective spouses execute
antenuptial agreements “in contemplation of marriage,” whereas reconciliation
agreements and postnuptial agreements are entered into by spouses after marriage. Id.
Spouses execute reconciliation agreements after a separation or the filing of a complaint
for divorce. See Atkins v. Atkins, 105 S.W.3d 591, 594 (Tenn. Ct. App. 2002) (stating
that “[a] reconciliation agreement . . . is executed following a separation during a
marriage.”); Minor v. Minor, 863 S.W.2d 51, 53 (Tenn. Ct. App. 1993) (involving a
husband and wife who executed a reconciliation agreement after being separated and
contemplating divorce); Gilley v. Gilley, 778 S.W.2d 862, 863 (Tenn. Ct. App. 1989)
(involving a husband and wife who entered into a reconciliation agreement after the wife
filed for divorce). Postnuptial agreements, on the other hand, “are entered into before
marital problems arise.” Bratton, 136 S.W.3d at 599. Because postnuptial agreements
are similar in nature to reconciliation agreements and antenuptial agreements, courts
generally apply the same principles in interpreting them. In re Estate of Wiseman, 889
S.W.2d 215, 217 (Tenn. Ct. App. 1994); see also Bratton, 136 S.W.3d at 600. “That is to
say, [postnuptial agreements] should be interpreted and enforced as any other contract.”
Bratton, 136 S.W.3d at 600.
Contract interpretation presents a question of law. Atkins, 105 S.W.3d at 594.
Consequently, we review the trial court’s judgment de novo with no presumption of
correctness. Id. A tenet of contract law is that contracts “can be express, implied,
written, or oral[.]” Thompson v. Hensley, 136 S.W.3d 925, 929-30 (Tenn. Ct. App. 2003)
(citing Klosterman Dev. Corp. v. Outlaw Aircraft Sales, Inc., 102 S.W.3d 621, 635
(Tenn. Ct. App. 2002)). Valid, enforceable contracts require a meeting of the minds,
adequate consideration, and sufficient definiteness to be enforced. Ace Design Grp., Inc.
v. Greater Christ Temple Church, Inc., No. M2016-00089-COA-R3-CV, 2016 WL
7166408, at *7 (Tenn. Ct. App. Dec. 8, 2016). We have explained the meeting of the
minds requirement as follows:
2
Tennessee Code Annotated section 36-3-501 provides:
Notwithstanding any other law to the contrary, except as provided in § 36-3-502, any
antenuptial or prenuptial agreement entered into by spouses concerning property owned
by either spouse before the marriage that is the subject of such agreement shall be
binding upon any court having jurisdiction over such spouses and/or such agreement if
such agreement is determined, in the discretion of such court, to have been entered into
by such spouses freely, knowledgeably and in good faith and without exertion of duress
or undue influence upon either spouse. The terms of such agreement shall be enforceable
by all remedies available for enforcement of contract terms.
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“Under general principles of contract law, a contract must result from a
meeting of the minds of the parties in mutual assent to the terms.” Sweeten
v. Trade Envelopes, Inc., 938 S.W.2d 383, 386 (Tenn. 1996) (citation
omitted). “[T]he meeting of the minds . . . [is] to be determined . . . not
alone from the words used, but also the situation, acts, and the conduct of
the parties, and the attendant circumstances.” [Moody Realty Co., Inc. v.]
Huestis, 237 S.W.3d [666, 675 (Tenn. Ct. App. 2007)]. “Courts determine
mutuality of assent by assessing the parties’ manifestations according to an
objective standard.” Id. at 674.
In re Estate of Josephson, No. M2011-01792-COA-R3-CV, 2012 WL 3984613, at *2
(Tenn. Ct. App. Sept. 11, 2012). Thus, there must be mutual assent to a contract in order
for the contracting parties to have a meeting of the minds. See Ace Design Group, Inc.,
2016 WL 7166408, at *7. If there is insufficient mutual assent, no contract exists.
Wofford v. M.J. Edwards & Sons Funeral Home, Inc., 490 S.W.3d 800, 810 (Tenn. Ct.
App. 2015) (citing Allstate Ins. Co. v. Tarrant, 363 S.W.3d 508, 528 (Tenn. 2012)).
The trial court determined that no valid postnuptial agreement existed in this case
because the court found “there was insufficient mutual assent between the parties” to
form an oral contract. In making its determination, the trial court considered the
transcript of an oral conversation between the parties. At some time after the marriage,
but before executing the trust documents, Husband and Wife discussed the creation of the
Trust. Wife recorded this conversation and introduced a transcript of the recording as an
exhibit at the hearing on Husband’s motion. At the beginning of the transcript, the
parties were discussing issues of distrust with each other and agreeing they intended to
remain married. The discussion then turned to creation of the Trust to protect Husband’s
personal assets from potential lawsuits connected to his land survey business and to
bequeath all Trust properties to Wife and her children in the event of Husband’s death, if
she survived him. The transcript does not indicate, however, that the parties discussed
separation or divorce issues related to the division of the real properties transferred into
the Trust.3
In addition to the transcript of the parties’ conversation, both parties testified at the
hearing on Husband’s motion regarding the effect of the Trust on the classification of the
property at issue. The record on appeal contains no transcript from the motion hearing.
However, the record does contain a transcript from the trial on the issue of property
division where both parties testified regarding the circumstances surrounding the creation
of the Trust. Husband testified that the Trust was created “to protect [his] assets in case
of a divorce.” He further testified that he did not present Wife with a postnuptial
agreement because he did not think “she would have signed a post-nuptial agreement just
giving away any rights afterwards.” Wife testified that she signed the trust agreement
3
Several sections of the transcript indicate that the recording was inaudible.
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and accompanying warranty deeds but did not know that she was conveying any marital
interest she might have had in the real properties. Wife further testified that had she
known she was conveying such interest, she would not have signed the documents.
According to Wife, she signed the documents because she “took [Husband] at his word”
and believed the Trust was created to protect Husband’s personal assets from potential
lawsuits from third parties. An examination of the transcript of the recorded conversation
in conjunction with the testimony of the parties shows that the parties held different
understandings about the purpose of the Trust. Thus, there was insufficient mutual assent
for the parties to have a meeting of the minds. We conclude, therefore, that the trial court
appropriately determined that there was not an enforceable oral postnuptial agreement.
Husband argues that the trust documents and accompanying warranty deeds
constitute a written postnuptial agreement and the trial court erred by not considering
these documents for what they state in clear and unambiguous terms and in accordance
with Tenn. Code Ann. § 36-3-501. We disagree. Wife signed the warranty deeds for the
Tanasi Shores and White County properties. The warranty deeds contain the following
provision after the description of each parcel of real property: “JULIE R. DUFF-OGLE
executes this Warranty Deed to convey all marital interest she may hold in the above
described property.” Wife testified that she was unaware that the warranty deeds
contained this provision. As Husband correctly asserts, “[i]t is a bedrock principle of
contract law that an individual who signs a contract is presumed to have read the contract
and is bound by its contents.” 84 Lumber Co. v. Smith, 356 S.W.3d 380, 383 (Tenn.
2011). When a court interprets a contract, however, “the court must attempt to ascertain
and give effect to the intention of the parties.” Simonton v. Huff, 60 S.W.3d 820, 825
(Tenn. Ct. App. 2000). When a court attempts to determine the parties’ intention, a court
must:
[E]xamine the language of the contract, giving each word its usual, natural,
and ordinary meaning. Additionally, the court may consider the situation
of the parties, the business to which the contract relates, the subject matter
of the contract, the circumstances surrounding the transaction, and the
construction placed on the contract by the parties in carrying out its terms.
Id. (citations omitted) (emphasis added). The parties must also have a meeting of the
minds. See Id. at 825-26.
In order for an enforceable written postnuptial agreement to exist in the current
case, Husband and Wife must have had a meeting of the minds regarding creation of the
Trust as a postnuptial agreement. The trust documents neither reference a postnuptial
agreement nor do they discuss divorce and separation issues pertaining to the division of
the real properties transferred into the Trust. The trust agreement appoints Husband as
the sole trustee and grants him the power to pay himself, or pay for his benefit, “as much
of the net income and principal from the Trust as [he] shall request.” Husband also has
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the power, as trustee, to dispose of, by sale or other means, any properties transferred into
the Trust. Thus, there is no guarantee that any assets would remain in the Trust until
Husband’s death because he could have, as the trial court found, “done away with all
assets of the Trust and attempted to take possession of the Trust property or proceeds and
transferred them to himself in his individual capacity.” The record does not reflect that
the parties discussed or considered this possibility before Husband created the Trust. In
light of these facts and the parties’ differing views of the purpose of the Trust discussed
above, there was insufficient mutual assent to form a contract.
After a thorough examination of the record, we conclude that there was no
meeting of the minds to form an enforceable oral or written postnuptial agreement and
the trial court did not err by divesting the Trust of all assets and revesting titles in the
names of the parties as they existed prior to Husband’s creation of the Trust. Because the
trust documents and warranty deeds fail to meet the requirements of an enforceable
contract, we do not find it necessary to examine them in light of Tenn. Code Ann. § 36-3-
501.
Classification of the Marital Property
We turn now to the trial court’s classification of the increase in value of two assets
as marital property. Husband asserts that the trial court erred by classifying the increase
in value of the Lot 28 Tanasi Shores property and the increase in value of the Fidelity
Primary IRA account as marital property.
Before dividing a marital estate, a trial court must identify all property interests at
issue and classify each property interest as either separate or marital property. Summer v.
Summer, 296 S.W.3d 57, 60 (Tenn. Ct. App. 2008). Classification of the property
interests is an essential step because only marital property is subject to division in a
divorce action. Id.; see also Smith v. Smith, 93 S.W.3d 871, 876 (Tenn. Ct. App. 2002).
Tennessee Code Annotated section 36-4-121(b)(2) defines separate property, in pertinent
part, as follows:
(A) All real and personal property owned by a spouse before marriage,
including, but not limited to, assets held in individual retirement accounts
(IRAs) . . . ;
(B) Property acquired in exchange for property acquired before the
marriage;
(C) Income from and appreciation of property owned by a spouse before
marriage except when characterized as marital property under subdivision
(b)(1).
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Marital property, by contrast, is defined, in pertinent part, as follows:
(A) [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 . . . .
(B)(i) [I]ncome from, and 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;
(ii) [T]he value of vested and unvested pension, vested and unvested stock
option rights, retirement and other fringe benefit rights accrued as a result
of employment during the marriage[.]
Tenn. Code Ann. § 36-4-121(b)(1).
Classification determinations present questions of fact. Woodward v. Woodward,
240 S.W.3d 825, 828 (Tenn. Ct. App. 2007). Accordingly, a trial court’s classification of
property as either separate or marital will not be disturbed unless it is not supported by a
preponderance of the evidence. Id.
A. Lot 28 Tanasi Shores
Husband purchased Lot 28 in the Tanasi Shores subdivision on November 6, 1996,
before he married Wife. Thereafter, he built a home on the property. At the time of the
marriage, there were no debts encumbering the property. The parties treated the property
as their marital residence throughout the marriage. The trial court classified the marital
residence as Husband’s separate property and assigned it a value of $739,400 as of May
1, 2006.4 The trial court classified the increase in value of the property, which the court
valued at $125,250, as marital property because Wife made intangible contributions of
labor and tangible financial contributions that “substantially contributed to the
preservation and appreciation of the marital home.” The trial court awarded the Tanasi
Shores property to Husband and awarded Wife $94,106.29 as her equitable division share
of the increase in value of the property.
4
At trial, Husband’s expert testified that the Tanasi Shores property was valued at $835,000 as of May 1,
2006. Wife presented tax assessment records valuing the property at $643,800 for 2005-2008. “When
valuation evidence is conflicting, the court may place a value on the property that is within the range of
the values represented by all the relevant valuation evidence.” Owens v. Owens, 241 S.W.3d 478, 486
(Tenn. Ct. App. 2007).
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If property classified as separate property increases in value during the marriage
and “each party substantially contributed to its preservation and appreciation,” the
appreciation will be considered marital property. Tenn. Code Ann. § 36-4-
121(b)(1)(B)(i); Keyt v. Keyt, 244 S.W.3d 321, 328-29 (Tenn. 2007). The Supreme Court
has stated the following in regard to the contributions of a non-owner spouse:
While these contributions may be either “direct” or “indirect,” Tenn. Code
Ann. § 36-4-121(b)(1)(D), they must satisfy two requirements. McFarland
v. McFarland, No. M2005-01260-COA-R3-CV, 2007 WL 2254576, at *6
(Tenn. Ct. App. Aug. 6, 2007). First, the contributions must be “real and
significant.” Id.; Brown [v. Brown], 913 S.W.2d [163, 167 (Tenn. Ct. App.
1994)]. “Second, there must be some link between the spouses’
contributions and the appreciation in the value of the separate property.”
McFarland, 2007 WL 2254576, at *6; Langschmidt [v. Langschmidt], 81
S.W.3d [741,746 (Tenn. 2003)]. Whether a spouse made a “substantial
contribution” to the preservation and appreciation of separate property is a
question of fact. Sherrill v. Sherrill, 831 S.W.2d 293, 295 (Tenn. Ct. App.
1992).
Keyt, 244 S.W.3d at 329.
In the current case, Husband testified that improvements were made to the marital
residence, such as adding walls and flooring in the basement and new flooring in the
master bathroom. Wife testified that she gave Husband $55,635.92, the net proceeds she
received from the sale of her premarital property, to pay for the improvements to the
marital residence. Husband testified that Wife gave him the $55,635.92 as repayment for
expenditures Husband made to Wife’s premarital property for Wife’s benefit prior to the
sale thereof. The trial court, however, found “Husband’s entire testimony concerning all
monetary matters existing prior [to] and during the marriage to be highly suspect and
lacking in credibility” and considered the $55,635.92 as a financial contribution made by
Wife towards the preservation and appreciation of the marital home. The record contains
no evidence, other than Husband’s testimony, that an agreement existed between the
parties for Wife to repay Husband for expenditures he made on her behalf pending sale of
her premarital property. Furthermore, evidence in the record does not contradict the trial
court’s assessment of Husband’s credibility.5 We, therefore, defer to the trial court’s
assessment of Husband’s credibility and will consider the $55,635.92 as Wife’s financial
5
In addition to evidence regarding the marital residence, Husband testified that he sold his separate real
property located in Sevier County, Tennessee on August 18, 2008, and used the $35,268.41 in proceeds
from this sale to fund the purchase of property for the Trust, referred to as the Duff-Turner property on
December 2, 2010. However, bank account statements introduced at trial reveal that Husband had
depleted these funds prior to purchasing the Duff-Turner property. Additionally, Husband claimed that
Wife did not contribute to the purchase of a jet ski the parties acquired during the marriage. Wife
introduced bank statements showing she paid $3,062.69 towards the jet ski.
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contribution towards improvements to the marital home. In light of this financial
contribution by Wife, we conclude that the evidence preponderates in favor of the trial
court’s finding that Wife substantially contributed to the preservation and appreciation of
the marital residence. The trial court’s classification of the appreciation in value of Lot
28 Tanasi Shores as marital property is affirmed.
B. Fidelity Primary IRA
Husband created three IRAs prior to the marriage. One of these IRAs was the
Fidelity Primary IRA. At the time of the marriage, the Fidelity Primary IRA contained
$118,412.39. The account had a value of $181,628.30 at the time of trial. The trial court
classified the entire appreciation value of $63,215.91 as marital property and awarded the
full amount to Husband. On appeal, Husband argues that the trial court erred by
classifying the increase in value of the Fidelity Primary IRA as marital property because
no contributions were made to the IRA during the marriage and Wife did not
substantially contribute to the preservation and appreciation of the Fidelity Primary IRA.
In support of his argument, Husband relies on the case Langschmidt v.
Langschmidt, 81 S.W.3d 741 (Tenn. 2002). In Langschmidt, the husband had two
premarital IRAs. Id. at 743. The husband made no contributions to the premarital IRAs
during the marriage. Id. The trial court determined that, “according to the language of
Tenn. Code Ann. § 36-4-121(b)(1)(B), any appreciation in value of the parties’ IRAs
during the marriage was marital property subject to equitable division.” Id. at 744. On
appeal, the Court of Appeals affirmed the trial court’s classification of the appreciation in
value of Husband’s separate IRAs as marital property because the court concluded the
husband’s IRAs constituted retirement benefits within the meaning of Tenn. Code Ann.
§ 36-4-121(b)(1)(B). Id. The Supreme Court reversed the trial court’s classification of
the appreciation of the IRAs as marital property. Id. at 751. The Supreme Court began
its examination of the issue by stating that “[r]etirement benefits accrued during the
marriage clearly are marital property under Tennessee law.” Id. at 749 (citing Tenn.
Code Ann. § 36-4-121(b)(1)(B); Gragg v. Gragg, 12 S.W.3d 412 (Tenn. 2000); Cohen v.
Cohen, 937 S.W.2d 823 (Tenn. 1996)). The Court determined, however, that the
premarital IRAs at issue “were not retirement benefits under Tenn. Code Ann. § 36-4-
121(b)(1)(B)” because they did not “represent deferred compensation during the
marriage” due to the fact that the IRAs were funded with the husband’s premarital
earnings. Id. at 749. Because the husband owned these IRAs prior to the marriage and
funded them with premarital assets, the court concluded that they were the husband’s
separate property. Id. at 750.
According to the Court in Langschmidt, both parties must have “‘substantially
contributed to [the IRAs’] preservation and appreciation’” in order to classify the IRAs’
appreciation in value during the marriage as marital property. Id. (quoting Tenn. Code
Ann. § 36-4-121(b)(1)(B), -121(b)(2)(C)). The Court required some nexus between the
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wife’s marital contributions and the appreciation in value of the husband’s separate
property in order to find that the wife made a substantial contribution. Id. The
Langschmidt Court concluded that the appreciation in value of the IRAs was the
husband’s separate property because the record failed to show that the wife substantially
contributed to the appreciation and preservation of the IRAs due to a lack of connection
between her marital contributions and the appreciation. Id.
In the current case, as in Langschmidt, Husband owned the Fidelity Primary IRA
prior to the marriage and funded it with premarital assets. Therefore, the Fidelity Primary
IRA was Husband’s separate property under Tenn. Code. Ann. § 36-4-121(b)(2)(A).
Under the reasoning of Langschmidt, the appreciation in value of the Fidelity Primary
IRA would become marital property if Wife substantially contributed to its preservation
and appreciation. The record before us fails to support such a conclusion. Wife testified
that she had no involvement with the management of the Fidelity Primary IRA.
Examination of the record shows that Wife’s involvement with the Fidelity Primary IRA
was limited to Husband showing Wife the account statements to inform her of how the
account’s balance fluctuated due to market factors. The record contains no evidence
establishing a nexus between Wife’s marital contributions to household expenses and the
appreciation in value of the Fidelity Primary IRA. Thus, we conclude Wife did not
substantially contribute to the preservation and appreciation of Husband’s separate
property.
Although the appreciation in value of the Fidelity Primary IRA did not become
marital property due to Wife’s substantial contributions, it may have become marital
property under the doctrine of commingling if Husband contributed marital funds to the
account during the marriage. With regard to the doctrine of commingling, the
Langschmidt Court adopted the following principles: “‘[S]eparate property becomes
martial property [by commingling] if inextricably mingled with marital property or with
the separate property of the other spouse. If the separate property continues to be
segregated or can be traced into its product, commingling does not occur . . . .”
Langschmidt, 81 S.W.3d at 747 (quoting 2 Homer H. Clark, THE LAW OF DOMESTIC
RELATIONS IN THE UNITED STATES § 16.2 at 185 (2d ed. 1987)).
In this case, the trial court classified the appreciation in value of the Fidelity
Primary IRA as marital property because the court found that Husband contributed to the
account during the marriage. The record, however, does not support such a conclusion.
The record contains a check written by Husband on February 5, 2007 to Fidelity
Investments for $5,000 and a corresponding deposit slip for the Fidelity Primary IRA.
Husband wrote the check from his business account, which the trial court classified as
marital property. Husband argued at trial, and on appeal, that the check was deposited
into the Fidelity Primary IRA by mistake and the funds were re-routed to his Fidelity
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SEP-IRA.6 The record also contains a check written by Husband from his business
account for $5,000 on March 27, 2007 and a corresponding deposit slip for the Fidelity
SEP-IRA. Additionally, the record includes account statements for both the Fidelity
Primary IRA and the SEP-IRA for the year 2007. The account statement for the Fidelity
Primary IRA shows that no contributions were made to the account for that year. The
account statement for the SEP-IRA, by contrast, shows that Husband contributed $10,000
to that account in 2007. Thus, evidence in the record shows that the check written on
February 7, 2007 was not a contribution to the Fidelity Primary IRA, but rather a
contribution to the SEP-IRA. Examination of the record shows that the only contribution
Husband made to the Fidelity Primary IRA during the marriage was when he rolled his
premarital State Farm IRA into the Fidelity Primary IRA. The record contains no
evidence that Husband contributed to the State Farm IRA prior to rolling it over into the
Fidelity Primary IRA. Thus, Husband did not commingle separate and marital funds with
regard to the Fidelity Primary IRA.
We conclude that the trial court erred when it classified the appreciation in value
of the Fidelity Primary IRA as marital property. Accordingly, some adjustments must be
made to the trial court’s division of the marital estate. The trial court awarded each party
fifty percent of all marital property. The trial court valued the appreciation of the marital
residence at $125,250 and awarded Wife $94,106.29 as her equitable share of the
appreciation. She received more than fifty percent of the increase in value of the marital
residence because the trial court awarded Husband the entire $63,215.91 increase in value
of the Fidelity Primary IRA. Therefore, Wife’s interest in the appreciation of the Tanasi
Shores property should be reduced to $62,625.00 (a fifty percent share of $125,250).
Equitable Distribution of Marital Assets
Husband next takes issue with the trial court’s division of the marital estate.
Husband argues that the trial court erred by dividing the marital estate equally between
the parties because the trial court failed to give proper weight to what Husband considers
the most important factors in this case: the relatively short duration of the marriage and
each spouse’s contribution to the accumulation of assets during the marriage.
After a trial court has classified the parties’ marital property, the court must
equitably divide the marital assets. Fox v. Fox, No. M2004-02616-COA-R3-CV, 2006
WL 2535407, at *7 (Tenn. Ct. App. Sept. 1, 2006). An equitable division does not
require that each party receive an equal share of the marital estate or that both parties
receive a share of each marital asset. Id. The factors enumerated in Tenn. Code Ann.
§ 36-4-121(c) guide a trial court in determining how to equitably divide marital property.
A trial court does not merely apply these factors in a mechanical fashion when dividing
marital assets. Id. at *8. On the contrary, a trial court considers and weighs “the most
6
Husband created the SEP-IRA during the marriage. The trial court classified it as marital property.
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relevant factors in light of the unique facts of the case.” Batson v. Batson, 769 S.W.2d
849, 859 (Tenn. Ct. App. 1988). A trial court, therefore, is granted considerable
discretion in how it decides to equitably divide marital property. Fox, 2006 WL
2535407, at *8. We will defer to the trial court’s decision concerning property division
unless the decision is not consistent with the factors found in Tenn. Code Ann. § 36-4-
121(c) or the evidence preponderates otherwise. Brown, 913 S.W.2d at 168.
One of the factors a trial court is permitted to consider is “[t]he duration of the
marriage[.]” Tenn. Code Ann. § 36-4-121(c)(1). If a case involves a marriage of short
duration, “it is appropriate to divide the property in a way that, as nearly as possible,
places the parties in the same position they would have been in had the marriage never
taken place.” Batson, 769 S.W.2d at 859. In such cases, it is important for a court to
consider the contributions made by each spouse “to the accumulation of assets during the
marriage[.]” Id. Additionally, a marriage of short duration diminishes the significance
and value of the non-monetary contributions made by a spouse, and “claims by one
spouse to another spouse’s separate property are minimal at best.” Id.
Husband argues that the trial court should have restored the parties to the position
they were in prior to the marriage because this was a marriage of short duration. In
support of his argument, Husband relies on the case Lewis v. Frances, No. M1998-
00946-COA-R3-CV, 2001 WL 219662 (Tenn. Ct. App. Mar. 7, 2001). Lewis involved a
short-term marriage between parties who entered the marriage with a large discrepancy in
assets. Lewis, 2001 WL 219662, at *1. The wife filed a petition for divorce after twenty-
three months of marriage. Id. She had a pre-marital estate that was approximately fifty
times greater than that of the husband. Id. The parties filed separate tax returns and
maintained separate financial accounts throughout the marriage. Id. Moreover, the
parties never owned any property jointly. Id. The evidence established that an agreement
existed between the parties to keep their assets segregated. Id. at *9. The husband
argued that the wife’s separate property had been converted into marital property under
the doctrine of commingling and that he should have received an equal share of the
marital estate. Id. at *1, *8. The Lewis court determined that no commingling occurred.
Id. at *9. The court also determined that the husband made few contributions to the
marriage, either monetary or non-monetary. Id. at *3. As a result, the Lewis court
concluded “that the parties should, in large measure, be restored to their pre-marriage
financial condition.” Id.at *10.
Husband argues that the current case is similar to Lewis because it also involves
a short-term marriage and a disparity in premarital assets. See Stewart v. Stewart, No.
02A01-9106-CH-119, 1992 WL 70927, at *4 (Tenn. Ct. App. Apr. 10, 1992) (implicitly
finding that a marriage of almost nine years constituted a marriage of short duration).
This case, however, is distinguishable from Lewis. At trial, Husband testified that he
entered the marriage with approximately $1,300,000 in assets. Husband also provided a
list of his premarital assets and their estimated values. Examination of the evidence
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shows that Wife entered the marriage with approximately $100,000 in assets. This
disparity in assets falls far short of the disparity found in Lewis. Moreover, Husband
testified on cross-examination that he entered the marriage with a $33,000 debt he owed
the Internal Revenue Service (“IRS”). Husband further testified that he satisfied this debt
during the marriage. Our examination of the record shows that, when Husband listed his
premarital assets and their values he failed to account for the debt owed to the IRS. In
addition, the document Husband introduced at trial detailing his claimed premarital assets
lists $95,000 in cash as a premarital asset. He testified that he inherited this money from
his father and kept it in a safe located in the marital home. Husband provided no
evidence of the existence of this $95,000 other than the list of premarital assets he
prepared and his testimony, which the trial court did not find credible. Thus, the
evidence in the record fails to substantiate Husband’s claim that he entered the marriage
with $1,300,000 in assets.
Husband further argues that the current case is similar to Lewis because the
parties maintained separate financial accounts. In Lewis, “the uncontroverted evidence”
established the existence of an agreement between the parties, both prior to and during
the marriage, that their assets would remain separate. Id. at *9. In the current case, the
parties dispute the reason they maintained separate financial accounts. At trial, Husband
testified that the parties maintained separate accounts because they agreed that Wife’s
earnings would be her property and Husband’s earnings would be his property. Wife, on
the other hand, testified that the parties maintained separate accounts because Husband
owed the IRS $33,000 at the time of the marriage. The trial court found Wife’s testimony
more credible than that of Husband. Thus, the trial court classified the parties’ earnings
during the marriage as marital property. In addition, the record in this case, unlike the
record in Lewis, contains evidence that Husband commingled his separate funds with
marital funds. During the marriage, Wife wrote Husband several checks from her
separate account to assist in paying household bills. Husband testified that he would
deposit these checks into one of his accounts and often transferred the money among his
various accounts. Therefore, Husband, unlike the wife in Lewis, inextricably mingled
separate funds he received from Wife with marital earnings.
The current case is further distinguishable from Lewis because each spouse made
substantial monetary contributions to the marriage. In Lewis, the wife paid almost all of
the household expenses. Id. at *3. The husband only contributed $1,090 toward
household expenses. Id. The current case, however, contains evidence showing that both
parties made substantial monetary contributions. At trial, the parties introduced tax
returns for the years 2006 through 2011. Based on these tax returns, the trial court found
that the total reported gross income of the parties from the time of their marriage through
the date of their separation was as follows: $222,310 contributed by Wife and $366,103
contributed by Husband. The trial court found that Wife’s claimed gross income
constituted thirty-eight percent of the parties’ combined income and Husband’s claimed
gross income constituted sixty-two percent. Husband argues that the trial court “assigned
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an incorrect value to Husband’s gross income for each year,” which resulted in the trial
court deciding “to assign each party an equal share of all marital property.” For example,
the trial court found that Husband’s 2007 income was $99,411. According to Husband,
his gross income for 2007 was $128,619.
Examination of the record shows that the trial court determined Husband’s income
based on the number Husband reported on his Schedule C tax form for each of the years.
Line seven on the 2007 Schedule C tax form shows Husband’s gross income was
$128,619. However, this is Husband’s income prior to deductions for additional business
expenses. Part II of the 2007 Schedule C shows that Husband deducted $29,208 in
additional business expenses. After calculating these deductions, Husband’s income for
2007 was $99,411. Husband reported the post-deduction income on line twelve of the
parties’ 2007 joint tax return as his business income and paid taxes based on that claimed
income rather than on the gross income. Examination of the tax returns shows that
Husband claimed the post-deduction income for each year from 2006 through 2011.
Wife argues that if Husband paid the additional business expenses he claimed on each
Schedule C tax form, that money would not have been available for use by the parties for
the marriage. We agree. Thus, we conclude that the trial court did not err in calculating
Husband’s claimed gross income based on the post-deduction value. The evidence
preponderates in favor of a finding that Wife contributed thirty-eight percent to the
parties’ combined income and Husband contributed sixty-two percent.
The record also contains evidence showing that Wife made substantial financial
contributions to household expenses. Credit card bills and bank account statements show
that Wife paid for groceries, utilities, and medical and dental insurance for both parties.
Additionally, she gave Husband the $55,635.92 net proceeds from the sale of her
premarital residence to be used toward additions and improvements to the marital
residence.
In light of Wife’s substantial financial contributions during the marriage, we
conclude that the trial court did not err in dividing all marital property in equal shares to
both parties even though the marriage was of short duration.
Attorney Fees
Wife seeks an award of attorney fees and costs for this appeal. Litigants are
generally required to pay their own attorney fees unless a statute or contract provision
provides otherwise. John Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 534
(Tenn. 1998). An award of attorney fees is appropriate in a domestic relations case in the
following circumstances: “(1) awards to economically disadvantaged spouses as
additional spousal support in divorce proceedings; (2) awards to spouses who must return
to court to enforce child support obligations; and (3) awards to spouses seeking to enforce
an MDA when the MDA contains a provision for attorney’s fees.” Elliott v. Elliott, 149
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S.W.3d 77, 88 (Tenn. Ct. App. 2004) (footnotes excluded). When an appellate court
considers a request for appellate attorney fees, the court considers “the requesting party’s
ability to pay, the requesting party’s success on appeal, whether the appeal was taken in
good faith, and any other relevant equitable factors.” Culbertson v. Culbertson, 455
S.W.3d 107, 158 (Tenn. Ct. App. 2014) (citing Moran v. Willensky, 339 S.W.3d 651, 666
(Tenn. Ct. App. 2010)). A decision to award attorney fees on appeal is within the
“‘sound discretion’” of the appellate court. Id. (quoting Moran, 339 S.W.3d at 666).
Wife has offered no legal argument regarding why she is entitled to an award of attorney
fees for this appeal. Accordingly, we respectfully decline to award Wife her appellate
attorney fees.
CONCLUSION
The judgment of the trial court is affirmed as modified herein. This case is
remanded to the trial court for further proceedings consistent with this opinion. Costs of
this appeal shall be taxed to the appellant, Jimmy D. Ogle, and execution may issue if
necessary.
________________________________
ANDY D. BENNETT, JUDGE
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