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Phipps v. Phipps

Court of Appeals of Tennessee, Knoxville

January 27, 2015


Session Date November 24, 2014

Appeal from the Chancery Court for Claiborne County No. 17660 Hon. Robert M. Estep, Judge[1]

David H. Dunaway and Rick A. Owens, Lafollette, Tennessee, for the appellant, William Phipps.

Lee Dan Stone, III, Tazewell, Tennessee, for the appellee, Cathy Phipps.

John W. McClarty, J., delivered the opinion of the Court, in which D. Michael Swiney and Thomas R. Frierson, II., JJ., joined.




William Phipps ("Husband") and Cathy Phipps ("Wife") were married in March 1973. Two children were born of the marriage, while a third child was adopted. All three children have since attained the age of majority. In January 2012, Wife sought a divorce after nearly 39 years of marriage. Husband responded by filing a counter-complaint for divorce.

Prior to Husband and Wife's (collectively "the Parties") lengthy marriage, Husband served in the Vietnam War. Husband was in college when he finally met Wife, who worked in the nursing profession. Following their marriage, Wife eventually became a stay-at-home mother. Husband retained various jobs and at one point, operated his own coal mining business, with Wife serving as an administrative assistant. Wife returned to nursing after Husband suffered a heart attack and sold the business. By the time Wife sought a divorce, neither of the Parties were employed. The Parties relied on Husband's disability benefits from the Social Security Administration and Veterans Affairs ("VA") and their significant monetary assets that they had amassed during their lengthy marriage. Husband had also recently received a lump sum award from VA for retroactive benefits a few months before Wife filed her complaint. The benefits, in the amount of approximately $125, 399, were awarded as a result of Husband's exposure to Agent Orange during the Vietnam War. The award letter reflects that a portion of the retroactive benefits was attributable to Husband's marriage status. The benefits were automatically deposited into their joint checking account; however, Husband, along with Wife, later purchased a certificate of deposit in the amount of $110, 000.

During the pendency of the hearing on the complaint, the court awarded Wife spousal support at the rate of $2, 500 a month. Prior to the hearing, the Parties stipulated that statutory grounds existed to support the request for divorce. As pertinent to this appeal, Wife, who was 61 years old at the time of the hearing, testified that she and Husband separated in January 2012. However, she acknowledged that she remained on the property in a garage apartment until March 2012. She stated that she was unable to move until she received spousal support. She explained that shortly before their separation, Husband withdrew approximately $9, 000 from their savings account and $4, 000 from their checking account, leaving her with approximately $1, 000 and no income.

Wife acknowledged that she also withdrew money from the certificate of deposit that they opened after receiving Husband's lump sum benefits from VA. She asserted that she eventually returned the money. She recalled that the retroactive benefits were initially deposited into their joint checking account but that she and Husband later purchased a certificate of deposit. She asserted that Husband decided to purchase a joint certificate of deposit because he believed that she "was a big part in him getting this VA settlement." She stated that he never claimed that the money did not belong to her but that he considered it joint property.

Wife testified that Husband failed to forward her mail to her once she left the residence. She asserted that as a result, she missed the deadline for renewing her nursing license. She stated that she had practiced nursing for approximately 38 years. She acknowledged that at times, she was not employed as a nurse but was responsible for raising the children and maintaining the home. She returned to nursing in 1993, when Husband had a heart attack.

Wife testified that she suffered from mitral valve prolapse and was required to take medication for her condition. She related that her doctor also found two masses in her right breast and one mass in her left breast. She explained that she underwent breast augmentation surgery in 1980 and that the doctor could not perform a biopsy until the implants were removed. She asserted that she had also been diagnosed with a malignant melanoma and would have to receive continuous treatments for the remainder of her life. She stated that she did not intend to return to the nursing profession or any other profession because of her various health issues.

Wife testified that while she and Husband were married, he drew approximately $8, 000 per month from various sources for their living expenses. She related that he drew VA benefits and Social Security benefits and that he also drew $1, 500 per month from an annuity. She asserted that her temporary alimony was sufficient to maintain her frugal standard of living, with the exception of her additional medical bills.

As pertinent to this appeal, Husband testified that he was in the Air Force for approximately three years and eight months. He related that upon his discharge, he worked at various places and obtained an engineering degree. He stated that he eventually started his own business, Black Mountain Mining and Burnside Excavating, but that he sold everything approximately three years later when he had a heart attack. He established several retirement and savings accounts throughout the marriage to supplement his income once he retired. He claimed that he suffered from various health issues and that he would probably never work again.

Husband testified that his retroactive VA benefits were automatically deposited into their joint checking account. He purchased a certificate of deposit with Wife because he wanted her to receive the benefits when he died. He explained that he thought he was dying on more than one occasion when his health drastically deteriorated in 2011. He acknowledged that the way in which they purchased the certificate of deposit allowed Wife equal access to the money.

Husband conceded that Wife worked throughout the marriage and also stayed home with the children at times. He admitted that Wife returned to work when he suffered from a heart attack and that she assisted him in obtaining his VA benefits. He claimed that his relationship with Wife had been strained for several years. He acknowledged that a family conflict involving his grandchild was partly to blame for their deteriorating relationship.

Husband testified that his monthly income totaled $6, 936. He stated that he recouped approximately $4, 156 in VA benefits per month and $1, 780 in Social Security benefits per month. He acknowledged that he also withdrew approximately $1, 000 per month from another account. He claimed that he no longer depended upon the $1, 000 from the separate account because he had been required to remit that money as temporary alimony pending the divorce hearing. He asserted that he also remitted approximately $1, 300 per year for homeowner's insurance and $1, 500 per year for property taxes. He stated that he was also responsible for remitting payment for Wife's medical insurance. He conceded that he was still able to support himself even after remitting payment for these extra expenses.

Following the presentation of the above evidence, the trial court granted the request for divorce. As pertinent to this appeal, the court classified the certificate of deposit opened with Husband's retroactive VA benefits as marital property as a result of transmutation. The court then divided the marital assets, awarded Wife alimony at the rate of $1, 500 per month until she reached the age of 65, and ordered Husband to remit ...

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