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Ogle v. Duff

Court of Appeals of Tennessee, Knoxville

May 24, 2017


          Session March 24, 2017

         Appeal from the General Sessions Court for Loudon County No. 11-DV-332 Rex A. Dale, Judge

         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

          Brian E. Nichols, Loudon, Tennessee, for the appellant, Jimmy D. Ogle.

          Mandy M. Hancock, Knoxville, Tennessee, for the appellee, Julie D. Duff.

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



         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 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. § 36-4-129[1] 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).


         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 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:

"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 ...

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