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Lunn v. Lunn

Court of Appeals of Tennessee, Knoxville

June 29, 2015

ANDREW R. LUNN, DDS
v.
CAROLE MICHELLE LUNN

March 10, 2015 Session

Appeal from the Chancery Court for Hamilton County No. 11-0240 Jeffrey M. Atherton, Chancellor

John P. Konvalinka and Katherine H. Lentz, Chattanooga, Tennessee, for the appellant, Andrew R. Lunn, DDS.

Harold L. North, Jr., and Nathaniel S. Goggans, Chattanooga, Tennessee, for the appellee, Carole Michelle Lunn.

Thomas R. Frierson, II, J., delivered the opinion of the court, in which Charles D. Susano, Jr., C.J., joined.

OPINION

THOMAS R. FRIERSON, II, JUDGE

I. Factual and Procedural Background

Andrew R. Lunn, DDS ("Husband"), filed this divorce action against Carole Michelle Lunn ("Wife"), on April 4, 2011. The parties married on June 17, 1995, and separated on February 13, 2011. They are the parents of three children, who were ages fifteen, thirteen, and eleven at the time of trial. Husband is a dentist who operates a practice in Chattanooga as a sole proprietor. Wife was a registered nurse but has worked primarily as a homemaker since the birth of the parties' first child in 1996. Wife has, however, been employed on a part-time basis as office manager for Husband's dental practice.

Husband and Wife married immediately following Husband's graduation from dental school. The parties' first child, a daughter, was born approximately eighteen months later. The parties' sons were born in 1999 and 2001, respectively. Before the birth of their daughter, Wife had been employed as a staff development instructor for the University of Mississippi Medical Center. The parents agreed that Wife would be a homemaker following the births of the parties' children. Wife did not maintain her nursing certification thereafter. Wife was primarily tasked with the caregiving responsibilities for the children and management of the household while Husband was the primary wage earner.

In 2009, Husband became involved in an extra-marital relationship with his dental assistant. Wife discovered this relationship in October 2010. Following months of marital counseling, the parties separated in February 2011, with Husband renting an apartment and Wife and the children remaining in the marital residence. As Husband maintained payment of the marital responsibilities pending the parties' divorce, he provided Wife a weekly allowance of $600 for food and gas expenses.

During the pendency of this action, Husband sought permission from the trial court to obtain a loan of $60, 000, which he claimed would enable him to improve the parties' financial situation and resolve other liabilities. Husband asserted that the recent "economic downturn" had negatively impacted his business. The trial court granted Husband's request. The trial court later found Husband to be in contempt for withdrawing funds from the parties' line of credit without the approval of Wife or the court.

A trial of this matter was conducted over several non-consecutive days, spanning June 26-29, 2012, and July 3, 2012. Numerous witnesses testified in addition to the parties, including the children, other family members and friends, and valuation experts for both sides. After the parties rested, the trial court scheduled a hearing for July 6, 2012, to consider closing arguments. On July 5, 2012, Wife filed a motion seeking to reopen the proof for the limited purpose of clarifying her testimony regarding her parents' payment of her expert witness and attorney's fees. During the scheduled hearing on July 6, 2012, the trial court granted the motion, stating that limited supplementation could be presented by both parties. The trial court also announced that due to concerns regarding the children's best interest and implementation of an appropriate permanent parenting plan, the court was, sua sponte, appointing counsel Robin Miller as the children's guardian ad litem. The court directed Ms. Miller to prepare a report addressing the respective issues.

The trial court conducted a subsequent hearing on July 27, 2012, wherein Wife was allowed ten minutes to present additional proof, and Husband was afforded twenty minutes. Following its receipt of the report from the guardian ad litem, the trial court issued a memorandum opinion on November 26, 2012. Concerning grounds, the trial court found that Husband's extra-marital relationship resulted in the destruction of the marriage and accordingly awarded a divorce to Wife.

Regarding the parties' real property, the trial court determined that the marital residence, the parties' lake lot, and the commercial building housing Husband's dental practice were all marital property. As the trial court noted, the marital residence had been sold at a loss and the lake lot was being marketed for sale. The trial court ordered that the deficiency from the sale of the marital residence be paid from the proceeds of the sale of the lake lot. Any proceeds remaining were ordered to be equally divided between the parties. By agreement, the parties valued the commercial property, upon which Husband's dental practice was located, at $620, 000. The trial court determined that the undisputed amount of debt concerning this commercial property was $435, 757, resulting in an equity value of $ 184, 242.

The trial court noted in its memorandum opinion that the parties had previously divided their personalty. The parties conceded that all of their bank accounts were marital property. In connection therewith, the trial court found that although there existed some variations in the values listed for the bank accounts, Husband's values were more accurate because Husband's amended asset and liability statement had been filed most recently. The court also adopted values for the parties' automobiles.

The trial court next discussed at length the proper valuation of Husband's dental practice. On this issue, the court noted that the practice was undisputedly marital property and that Wife had contributed to the value of same both as an office manager and a homemaker. The court specified that Tennessee law precluded the distribution upon divorce of personal goodwill as a component of the business's value. Therefore, the court determined that it would adopt the valuation of Wife's expert regarding the business minus any amount attributable to personal goodwill. The court further found that Husband's expert "grossly undervalued" the practice. The court concluded that the resultant value determined by Wife's expert, once personal goodwill was deducted, comported closely with a value Husband had placed on the practice on a 2005 financial statement. Having valued all of the parties' real and personal property, the court fashioned a nearly equal division.

Regarding spousal support, the trial court determined that the applicable statutory factors weighed in favor of an award of alimony to Wife. Having found that Wife needed time to re-establish her career, the court awarded her rehabilitative alimony for three years. Having also determined that Wife would not be able to earn an income comparable to that of Husband, the court awarded her transitional alimony in progressively decreasing amounts for sixteen years, the approximate duration of the parties' marriage. The court further awarded Wife alimony in solido to pay her attorney's fees.

Concerning co-parenting responsibilities, the trial court determined that Wife was the appropriate primary residential parent for the children. The court accordingly entered a permanent parenting plan that allowed the children time to transition to a greater amount of co-parenting time with Husband following family counseling. Child support was calculated based on Husband's income level of $411, 457 per year, which the court gleaned from the parties' 2011 federal income tax return.

Both parties respectively filed motions to alter or amend the judgment. The trial court entered a subsequent order, allowing Husband to satisfy a portion of his obligations owed to Wife by transferring funds from his retirement account via a Qualified Domestic Relations Order ("QDRO"). Husband was directed to reimburse Wife for any tax liability she incurred as a result of such transfer. The court also ordered Husband to pay $5, 000 of Wife's expert witness fees. The court denied Wife's request to base Husband's child support obligation on the actual co-parenting time he was currently spending with the children.

The trial court referred issues regarding the proper amount of an award of attorney's fees to Wife to the clerk and master, who conducted a hearing and issued a report finding that such fees should be set at $180, 026. The court approved and adopted the master's report, with the exception of finding an additional $5, 976 in fees and expenses inadvertently omitted from the report. The court thus increased the total attorney's fees awarded in favor of Wife to $186, 003. The court subsequently entered a supplemental award of $21, 295.

Husband timely appealed. Thereafter, Wife filed a motion seeking reimbursement for the additional taxes she incurred resulting from the transfer of funds Husband made to her from his retirement account. Husband objected to this motion, arguing that jurisdiction resided with this Court. This Court allowed a limited remand so that the trial court could resolve the issue. Upon remand, the trial court found that Wife's tax liability had increased by $16, 022 due to the transfer of funds by QDRO. The court thus ordered Husband to pay this amount, finding that the additional tax liability was due to Husband's decision to use retirement funds to pay his obligations to Wife.

II. Issues Presented

Husband presents the following issues for our review, which we have restated slightly:

1. Whether the trial court erred in its valuation of Husband's dental practice.
2. Whether the trial court erred in the type, duration, and amount of alimony awarded to Wife.
3. Whether the trial court erred by reopening the proof to allow additional testimony by the parties.
4. Whether the trial court erred by assessing the guardian ad litem's fees to Husband.
5. Whether the trial court erred in allocating Wife's 2013 additional tax liability to Husband.

Wife presents the following additional issues for review:

6. Whether the trial court erred in declining to award Wife the entire amount of her expert witness fees and expenses.
7. Whether the trial court erred in failing to determine Husband's child support obligation based on his actual co-parenting time.
8. Whether Wife should be awarded her attorney's fees with regard to this appeal.

III. Standard of Review

The value of marital property is a fact question, and a trial court's decision with regard to the value of a marital asset should be given great weight on appeal. See Wallace v. Wallace, 733 S.W.2d 102, 107 (Tenn. Ct. App. 1987). A trial court's decision with regard to the valuation of a marital asset will be presumed to be correct unless the evidence preponderates otherwise. Id. The trial court should determine the value of a marital asset by considering all relevant evidence regarding value, and the parties are bound by the evidence they present. Id. The trial court, in its discretion, is free to place a value on a marital asset that is within the range of the evidence submitted. Id.

Regarding alimony, our Supreme Court has "repeatedly and recently observ[ed] that trial courts have broad discretion to determine whether spousal support is needed and, if so, the nature, amount, and duration of the award." See Gonsewski v. Gonsewski, 350 S.W.3d 99, 105 (Tenn. 2011). The Court has further explained:

a trial court's decision regarding spousal support is factually driven and involves the careful balancing of many factors. As a result, "[a]ppellate courts are generally disinclined to second-guess a trial judge's spousal support decision." Kinard, 986 S.W.2d at 234. Rather, "[t]he role of an appellate court in reviewing an award of spousal support is to determine whether the trial court applied the correct legal standard and reached a decision that is not clearly unreasonable." Broadbent v. Broadbent, 211 S.W.3d 216, 220 (Tenn. 2006). Appellate courts decline to second-guess a trial court's decision absent an abuse of discretion. An abuse of discretion occurs when the trial court causes an injustice by applying an incorrect legal standard, reaches an illogical result, resolves the case on a clearly erroneous assessment of the evidence, or relies on reasoning that causes an injustice. This standard does not permit an appellate court to substitute its judgment for that of the trial court, but "'reflects an awareness that the decision being reviewed involved a choice among several acceptable alternatives, ' and thus 'envisions a less rigorous review of the lower court's decision and a decreased likelihood that the decision will be reversed on appeal.'" Henderson, 318 S.W.3d at 335 (quoting Lee Medical, Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010)). Consequently, when reviewing a discretionary decision by the trial court, such as an alimony determination, the appellate court should presume that the decision is correct and should review the evidence in the light most favorable to the decision.

Id. at 105-06 (other internal citations omitted).

Our Supreme Court has described the proper standard of review for child support determinations as follows:

Prior to the adoption of the Child Support Guidelines, trial courts had wide discretion in matters relating to child custody and support. Hopkins v. Hopkins, 152 S.W.3d 447, 452 (Tenn. 2004) (Barker, J., dissenting). Their discretion was guided only by broad equitable principles and rules which took into consideration the condition and means of each parent. Brooks v. Brooks, 166 Tenn. 255, 257, 61 S.W.2d 654, 654 (1933). However, the adoption of the Child Support Guidelines has limited the courts' discretion substantially, and decisions regarding child support must be made within the strictures of the Child Support Guidelines. Berryhill v. Rhodes, 21 S.W.3d 188, 193 (Tenn. 2000); Jones v. Jones, 930 S.W.2d 541, 545 (Tenn. 1996); Smith v. Smith, 165 S.W.3d 279, 282 (Tenn. Ct. App. 2004).
Because child support decisions retain an element of discretion, we review them using the deferential "abuse of discretion" standard. This standard is a review-constraining standard of review that calls for less intense appellate review and, therefore, less likelihood that the trial court's decision will be reversed. State ex rel. Jones v. Looper, 86 S.W.3d 189, 193 (Tenn. Ct. App. 2000); White v. Vanderbilt Univ., 21 S.W.3d 215, 222-23 (Tenn. Ct. App. 1999). Appellate courts do not have the latitude to substitute their discretion for that of the trial court. Henry v. Goins, 104 S.W.3d 475, 479 (Tenn. 2003); State ex rel. Vaughn v. Kaatrude, 21 S.W.3d 244, 248 (Tenn. Ct. App. 2000). Thus, a trial court's discretionary decision will be upheld as long as it is not clearly unreasonable, Bogan v. Bogan, 60 S.W.3d 721, 733 (Tenn. 2001), and reasonable minds can disagree about its correctness. Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001); State v. Scott, 33 S.W.3d 746, 752 (Tenn. 2000). Discretionary decisions must, however, take the applicable law and the relevant facts into account. Ballard v. Herzke, 924 S.W.2d 652, 661 (Tenn. 1996). Accordingly, a trial court will be found to have "abused its discretion" when it applies an incorrect legal standard, reaches a decision that is illogical, bases its decision on a clearly erroneous ...

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