CHRISTY L. GRIFFITH
GLEN H. GRIFFITH
January 15, 2015
Appeal from the Chancery Court for Bradley County No. 2013-CV-126 Jerri S. Bryant, Chancellor.
Joshua H. Jenne, Cleveland, Tennessee, for the appellant, Glen H. Griffith.
H. Franklin Chancey, Cleveland, Tennessee, for the appellee, Christy L. Griffith.
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, Christy L. Griffith ("Wife"), and the defendant, Glen H. Griffith ("Husband"), were married in September 1998. One child was born to their marriage on January 11, 2000. Following the parties' separation on May 1, 2013, Wife filed a complaint for divorce on May 28, 2013. At the time of the divorce hearing, Wife was forty-four years old while Husband was fifty-seven years of age.
Husband owns a Kawasaki dealership in Cleveland known as Griffith's Kawasaki ("the Business"), which has been owned by his family since before his birth. At the time of the parties' marriage, Husband owned a one-third interest regarding the Business. He subsequently inherited the remaining two-thirds interest upon the deaths of his parents in 2001. The parties own the real property upon which the Business is located, 150 Worth Street ("Worth Street Property"), as tenants by the entirety. Following the deaths of his parents in 2001, Husband inherited a fifty-percent interest in the Worth Street Property. The remaining fifty-percent interest was owned by his uncle. The parties subsequently obtained a joint loan to purchase the uncle's ownership interest, thereby acquiring title to the Worth Street Property as tenants by the entirety. The installment payments relative to the loan for the purchase of the Worth Street Property have been made by the Business.
In addition to the Business and the Worth Street Property, Husband inherited from his parents three vacant lots behind the Business. One of those lots was subsequently sold to a third party. Husband retained ownership of the other two lots. In recent years, Husband entered into an agreement to sell the Business to Mr. Tony Oglesby for $225, 000.00. That sale, however, was never consummated. Husband received earnest money of $25, 000.00, which he deposited into the Business's account and used for expenses. He testified at trial that he considered the $25, 000.00 earnest money deposit to be a debt of the Business.
Wife had worked for the Bank of Cleveland for twenty-two years at the time of trial. Regarding her employment, she earned between $90, 000.00 and $100, 000.00 per year for the past few years. Wife testified that she had the ability to work and earn this level of income for many more years. Husband, by contrast, had never been employed outside of the Business. Husband's earnings for the last four years averaged approximately $8, 000.00 per year, which he asserted was due to a downturn in the economy and a reduction in the demand for recreational vehicles. By contrast, Wife testified that Husband had, in previous years, earned approximately $400.00 to $500.00 per week from the Business. Since Husband's income had dropped, Wife was responsible for paying the mortgage on the marital residence and most all other household bills.
Wife claimed that while Husband was inattentive to the Business, their marriage, and their child, he instead spent inordinate amounts of time on other pursuits, including gambling. Wife attempted to demonstrate at trial that Husband satisfied numerous personal expenses through the Business while writing many checks from the Business's account simply to cash. Wife also established that the deposits to the Business's account did not comport with the Business's reported sales. Wife admitted that the Worth Street Property had been appraised in 2012 at a value of $190, 000.00, although she believed that the value of a garage attached to that property should be added, such that the total value of the Worth Street Property would be $240, 000.00.
The parties' marital residence was located on twenty acres of real property. The premises were purchased from Husband's family in 2006 for $227, 000.00. The home and real property appraised in May 2012 for $300, 000.00. Wife stated at trial that the appraisal was disappointing as she believed the home to have been worth more. At the appraised value, the home essentially maintained no equity.
Upon the outset of trial, the parties, pursuant to local rule, presented a master asset and liability list in which they purportedly stipulated as to the classification and division of certain assets. The parties listed the Business as Husband's separate property. Wife's counsel, however, asserted during his opening statement that there was an issue of transmutation that would be addressed during the parties' testimony. Following the presentation of proof, which included a large volume of testimony regarding the parties' respective contributions to the Business, Wife's counsel indicated in closing that she did not intend to stipulate that the Business was Husband's separate property. Rather, her intent was simply to list the Business and its value as a disputed asset, which Husband claimed was his separate property.
Upon the conclusion of trial, the court took the matter under advisement. In later announcing its rulings from the bench, the court noted that the Business was stipulated on the master asset list to be Husband's separate property; however, the court found that the proof did not support a determination that the Business was Husband's separate property. The court ruled that the Business was marital property by operation of transmutation, based on Wife's direct and indirect contributions during the marriage. The court, inter alia, awarded the Business to Husband in the overall division of marital assets.
With regard to the $25, 000.00 alleged debt owed to the potential buyer of the Business, representing the buyer's earnest money deposit, the trial court stated:
The husband received $25, 000.00 from Tony Oglesby as earnest money for a potential purchase of the Kawasaki business and which Husband deposit[ed] in the business checking account. The Court is unable to determine whether these funds are subject to repayment by the husband or the business. In any event, whether the funds represent an asset or a debt they are awarded to the husband as part of an equitable division of property.
Further, regarding the Worth Street Property, the trial court determined its value to be $240, 000.00 based on Wife's expressed opinion of its value, notwithstanding the $190, 000.00 appraisal. The court divided all marital assets between the parties. In so doing, the court awarded Wife one hundred percent of her retirement investments, which included her 401(k) and bank stock. The court also ordered the marital residence to be sold. Husband has appealed the trial court's classification, valuation, and division of marital property.
II. Issues Presented
Husband presents the following issues for our review:
1. Whether the trial court erred in its classification of the parties' assets and debts.
2. Whether the trial court erred in its valuation and division of ...