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Granoff v. Granoff

Court of Appeals of Tennessee, Knoxville

September 26, 2014


Session June 18, 2014

Appeal from the Circuit Court for Jefferson County No. 19, 472 Richard R. Vance, Judge

William A. Mynatt, Jr., Knoxville, Tennessee, for the appellant, Andrew Scott Granoff.

James Richard Scroggins, Jefferson City, Tennessee, and Lisa A. White, Knoxville, Tennessee, for the appellee, Elizabeth Ann Morrow Granoff.

Thomas R. Frierson, II, J., delivered the opinion of the Court, in which Charles D. Susano, Jr., C.J., and D. Michael Swiney, J., joined.


Thomas R. Frierson, II, Judge

I. Factual and Procedural Background

The plaintiff, Elizabeth Ann Morrow Granoff ("Wife"), and the defendant, Andrew Scott Granoff ("Husband"), were married twenty-one years prior to the entry of a final judgment of divorce on May 16, 2006. At the time of the divorce proceedings, the parties were partners in Granoff Properties, LLC, and owned significant assets. At issue in this appeal is the disposition of the marital residence ("the Property"), a luxury estate situated on twenty-six acres bordering Douglas Lake in White Pine, Tennessee, and including an approximately 9, 000-square foot home, a guest house, a swimming pool, and tennis courts. At the time of the judgment for divorce, the parties' ownership interest in the Property was not encumbered by mortgage debt.

The parties' marital dissolution agreement ("MDA"), incorporated into the final judgment of divorce, provided as to the Property:

REAL PROPERTY: The parties own a residence and land located at 390 Highway 113, White Pine, Tennessee 37980, as tenants by the entireties. The land shall be immediately placed for sale. Wife shall be given a Trust Deed to secure an interest in the property of $460, 000.00 or 30% of the proceeds, whichever is higher. If the house and land are not sold within four years of the date of the entry of the Final Judgment of Divorce, Husband shall have an additional two years to sell the property but shall begin paying a monthly payment to [W]ife equal to a monthly portion of the prime interest rate on the $460, 000.00, should Husband fail to make a payment as required, Wife shall have the right to demand an immediate auction subject to the same conditions set forth herein regarding an auction of the property. If the house has not sold in six years from the date of entry of the divorce it shall be auctioned by a reputable auction company with a mutually agreeable reserve. At the time of any nonauction sale, after the payment of any expenses of said sale, the Wife shall receive (30%) of the net proceeds or $460, 000.00, whichever is greater. Should the property require an auction, the parties shall divide the proceeds of the auction, after the payment of the expenses of the sale evenly between them. Until such time as the property is sold, Husband shall have the right to reside in the marital residence and shall be responsible for the reasonable maintenance and upkeep as well as the property tax and insurance. The Husband may decide to auction the home at any time with a reputable auction [company] and a mutually agreeable reserve.
Parties agree that Wife's Deed of Trust should not be subordinated to any other debt.
Husband and Wife will cooperate so that Husband may borrow sufficient funds to pay the property tax lien now existing against the residence and the 2005 property taxes associated with the residence.

Husband continued to reside on the Property throughout the proceedings. He and his new wife resided on the Property at the time of trial in the instant matter.

Following entry of the divorce judgment, Wife filed a petition for contempt against Husband on August 25, 2006. As relevant to the sale of the Property, Wife alleged that Husband had failed to pay the property taxes, maintain insurance covering the Property, and keep her informed of his efforts to sell the Property. She requested that the trial court allow her access to the house to prepare it for sale and that she be allowed to secure an appropriate auctioneer or realtor to finalize the sale of the Property. Husband filed an answer, acknowledging as to the Property that the taxes were in arrearage by one year and that there was no insurance coverage on the Property. He asserted that he intended to pay the property tax arrearage in full and that insurance could not be obtained because the Property was located too far away from a fire station. He added that construction of a fire station was in process, which upon completion, would allow for insurance coverage of the Property. Husband also filed a counter-petition against Wife for contempt, alleging, as relevant to the Property, that Wife had filed the petition for contempt as a form of harassment.

On January 19, 2007, the trial court entered an Order incorporating and approving an agreement that the parties had announced before the court on November 27, 2006. In great part, this order addressed rental property located on Eleanor Street in Knox County, Tennessee ("Eleanor Street Property"), which had been awarded to Wife in the judgment for divorce and on which she alleged Husband had failed to provide her with documentation of ownership or maintain mortgage payments. The January 2007 agreed order, inter alia, required Husband to pay a mortgage arrearage on the Eleanor Street Property by obtaining financing on the Property at issue in this appeal. The order provided in pertinent part:

The husband shall be solely responsible for the mortgage arrears on the wife's above-referenced real property on Eleanor Street in Knox County, Tennessee, up to Ten Thousand ($10, 000.00) Dollars. The husband shall hold wife harmless for said debt. He shall immediately attempt to obtain financing on the marital residence to pay this outstanding debt on the Eleanor Street property and to pay all outstanding property taxes on the marital residence. Should husband be unable to obtain the financing herein ordered prior to the foreclosure of the Eleanor Street property, he shall then pay the wife Fifty Thousand ($50, 000.00) Dollars as soon as possible with the remaining Twenty Thousand ($20, 000.00) Dollars at the sale of the marital residence. This Seventy Thousand ($70, 000.00) Dollars will be compensation to the wife for the loss of the rental property to foreclosure, should same occur. The wife will be awarded a judgment against the husband for Seventy Thousand ($70, 000.00) Dollars should the Eleanor Street foreclosure occur.

The January 2007 order also required Husband to obtain a homeowner's insurance binder, retroactive to fifteen days following the announcement of the parties' agreement in November 2006. The order reserved issues of contempt and Wife's request for attorney's fees.

Subsequently, following a hearing conducted on April 17, 2007, the trial court entered an Order on June 15, 2007, taking notice that the Eleanor Street Property had been foreclosed and could no longer be valued as Wife's asset. The court ordered Husband, inter alia, to pay Wife the amount of $50, 000.00 toward the value of the Eleanor Street Property within thirty days of the April 17, 2007 hearing. As to the Property at issue in this appeal, the court ordered Husband to provide Wife with a copy of proof of insurance covering the Property. Husband also was ordered to obtain refinancing on the Property, as the sole obligor if possible and with Wife's cooperation in the event he was unable to solely refinance. The court specifically directed that the parties were "to keep one another informed of the progress in selling the home." The court also awarded to Wife attorney's fees in the amount of $1, 500.00.

Less than six months later, on December 4, 2007, Wife filed a "Petition for Contempt and for Sale of Real Property, " requesting, inter alia, full authority to list the Property for sale and to contract for sale of the Property by auction. Wife alleged in regard to the Property that Husband had willfully refused to pay her the funds ordered by the trial court in its June 2007 order, refused to maintain insurance coverage on the Property, failed to pay taxes on the Property, and failed to keep her informed regarding efforts to market and sell the Property. Husband filed a response and a petition for contempt against Wife, averring that inasmuch as he had failed to perform as ordered by the trial court, his failure was the result of Wife's failure to cooperate with him in obtaining financing. Husband again asserted that Wife's petition for contempt constituted "harassment by Court action." He denied failing to inform Wife of his efforts to market and sell the Property.

On December 15, 2008, the parties announced an agreement to the trial court, which was subsequently memorialized in a written order nearly three years later on September 6, 2011.[1] It is undisputed that the September 6, 2011 order accurately represents the December 15, 2008 agreement. Regarding the Property at issue, the trial court ordered in pertinent part:

1. The wife, Elizabeth Ann Morrow Granoff, shall assume the right to list, market, show and sell the real property in Jefferson County, Tennessee consisting of the marital residence situated upon approximately twenty-six (26) acres with improvements. The husband shall continue to occupy the residence and he shall cooperate fully with the wife with regard to showing the premises and marketing the premises for sale. The wife shall have full access to come upon the property, to show the property, inspect the property, and otherwise participate in the usual and customary acts associated with sale.
2. In the event that the real property consisting of the marital residence and approximately twenty-six (26) acres with improvements does not sell pursuant to the listing of said property on or before August 1, 2009, the wife shall select a date during the month of October 2009 for the property to be sold at auction with an auctioneering firm to be agreed between the attorneys of the parties. The husband shall comply with previous orders relative to upkeep, maintenance, payment of real estate taxes and maintaining sufficient insurance with regard to the property.
3. The wife shall assume responsibility for attempting to secure a one (1) year loan with monthly interest only and principal being payable on the anniversary date of the loan in an amount up to sixty thousand dollars ($60, 000.00) with the loan proceeds utilized to satisfy past-due taxes, penalty and interest, and the expense of insurance premium for the marital residence and real property. The husband shall cooperate fully with the wife in her attempts to secure the loan and he shall sign notes, instruments, or other documents necessary and associated with applications and the securing of the loan. The funds borrowed shall be repaid from funds of the husband upon sale of the real property and marital residence. He shall continue to be responsible for all of the expenses associated with taxes, maintenance, insurance and upkeep of the marital residence that he occupies pending sale.

Despite the provision in the above agreed order for auction of the Property, the home was never offered at auction because the parties could not agree on a reserve price. Prior to the agreement, the Property had been listed for as much as $3, 100, 000.00 and as little as $1, 700, 000.00, but no offers to purchase had been tendered. Wife testified that following the December 2008 agreement, Husband refused to agree to a minimum reserve price below $1, 700, 000.00. Wife explained that she believed the Property would not sell at the minimum reserve upon which Husband insisted and that she would not agree to incur the expenses of an auction unless the minimum reserve price could be reduced. Wife acknowledged that she did not pursue further negotiation with Husband regarding a minimum reserve price for auction purposes.

In May 2011, Wife contracted to list the Property with Johnnie Creel, a real estate broker and luxury home specialist who testified at trial. Ms. Creel first listed the Property at a price of $1, 600, 000.00, and it was her understanding that the parties agreed to that price upon her recommendation. The listing price was subsequently reduced twice with Wife's approval, first to $1, 550, 000.00 and finally to $1, 250, 000.00. It is undisputed that Husband had made known his objection to reducing the price below $1, 600, 000.00, and neither Ms. Creel nor Wife consulted him regarding the subsequent price reductions. In August 2013, Wife received an offer to purchase the Property in the amount of $875, 000.00. Acting through Ms. Creel, Wife sent a counter-offer in the amount of $1, 088, 000.00, which the purchasers rejected. Wife eventually tendered the potential purchasers a counter-offer in the amount of $925, 000.00, subject to approval by the trial court. The purchasers accepted that counter-offer. It is undisputed that Wife's negotiation with these potential buyers constituted the only serious offer and negotiation in the nearly eight years the parties had been attempting to sell the Property. Husband acknowledged at trial that he had received no offers to purchase the Property during the years that he was managing the marketing and selling efforts. Wife indicated that she had received only one other offer, which at $400, 000.00, she had rejected as too low to consider.

On August 28, 2013, Wife filed a motion to approve the sale of the Property in the amount of $925, 000.00. She attached to this filing an "Amounts Payable to the Wife by the Husband from Marital Residence Sale, " setting forth amounts claimed as owed to her by Husband pursuant to previous court orders. By Wife's calculations, these amounts included $70, 000.00 associated with the foreclosure on the Eleanor Street property and payable to Wife pursuant to the June 15, 2007 order; unspecified amounts Wife previously paid by securing loans to pay for past-due taxes, penalties, interest, and insurance on the marital residence; monthly payments, pursuant to the MDA, that Husband was to begin paying Wife four years following the divorce judgment, with a total calculated at $49, 286.40; a loan acquired by Wife at Husband's request to pay for a 2009 repair to the swimming pool liner at the Property with a principal owed of $34, 500.00 and total with interest owed of approximately $52, 000.00. Wife also averred that Husband had again failed to pay taxes on the Property, which had accrued in total to $9, 523.36. On appeal, Husband does not dispute the amounts owed to Wife pursuant to previous court orders.

Following a hearing conducted on October 16, 2013, the trial court granted Wife's motion in full and recognized her authority to sell the Property, approving the proposed sale in the amount of $925, 000.00 and vesting Wife with the right to convey the Property "by her signature alone." Husband timely appealed.

Husband subsequently filed a motion for relief pending appeal, requesting a stay of enforcement of the judgment pursuant to Tennessee Rule of Civil Procedure 62.03. Following a hearing conducted on November 18, 2013, the trial court denied Husband's motion. During the pendency of the appeal, this Court granted a motion filed by Wife in May 2014 for consideration of the post-judgment fact, also stipulated to by Husband, that the purchase and sale contract for which Wife had sought approval had expired and was not renewed by the potential purchasers. We determine that because the trial court in its final order vested Wife with the right to convey the Property, the appeal remains viable despite the termination of the purchase and sale contract.[2]

II. Issues Presented

Husband presents three issues for our review, which we restate as follows:

1. Whether the trial court erred by approving the sale of the Property in the amount of $925, 000.00.

2. Whether the trial court erred by finding that Wife had acted in good faith and with sole vested authority to convey the Property when she marketed and ...

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