18, 2016 Session
from the Chancery Court for Williamson County No. 43349 James
G. Martin III, Chancellor
case arises out of the demise of a long-term marriage. The
trial court declared the parties divorced, equitably divided
the marital estate, and awarded the wife alimony in solido,
rehabilitative alimony, and alimony in futuro. On appeal, the
husband raises many issues, including whether the doctrine of
unclean hands should bar wife from receiving an award of
alimony in solido, whether the court's division of the
marital estate was inequitable, and whether the court's
alimony awards were based on a clearly erroneous assessment
of the evidence. Finding no abuse of discretion, we affirm
the trial court's decision in all respects.
E. Lee Davies, Franklin, Tennessee, (on appeal only) for the
appellant, John Arthur Norman IV.
Lorraine Wade, Nashville, Tennessee, (on appeal only) for the
appellee, Dinah Bostic Norman.
Neal McBrayer, J., delivered the opinion of the court, in
which Andy J. Bennett and Richard H. Dinkins, JJ., joined.
NEAL McBRAYER, JUDGE
15, 2014, Dinah Bostic Norman ("Wife") filed a
complaint for absolute divorce from John Arthur Norman IV
("Husband") in the Chancery Court for Williamson
County, Tennessee. The parties had been married for
twenty-two years, and since 2006 had jointly owned and
operated A-Z DME, LLC ("A-Z"), a durable medical
addition to her request for an absolute divorce, Wife sought
an ex parte restraining order. She alleged that Husband had
verbally abused and threatened her during the marriage, acted
inappropriately at A-Z's business offices, and
misappropriated company funds. Wife asked the court to
prohibit Husband from having any contact with her pending a
final hearing and from "coming about" A-Z,
contacting any employees, accessing any business records or
accounts, or otherwise interfering with Wife's operation
on Wife's sworn allegations, on July 16, 2014, the court
issued the requested temporary restraining order. After an
August 12, 2014 hearing, the court modified the restraining
order to allow Husband to return to the marital residence and
granted Husband limited access to A-Z.
the couple's most valuable marital asset and their sole
source of income. After hearing testimony from both parties,
the court imposed strict requirements on the use of funds
generated by the business pending a final hearing. The court
ordered Wife to transfer sufficient funds from the business
to the parties' joint checking account to pay their
respective household bills and prohibited any other
withdrawals from the account. Each party was also directed to
maintain separate checking accounts for personal expenses,
and Wife was ordered to transfer $5, 000 per month from the
business to those accounts.
second hearing, the court dissolved the restraining order.
Beginning September 29, 2014, the court ordered a return to
the parties' traditional roles in the company but
required them to alternate the days that they were physically
present in the local office. The court left in place the
previously ordered restrictions on the use of marital funds.
parties were unable or unwilling to work together. In
December, each spouse asked the court to exclude the other
from the business based on allegations of misconduct. After a
hearing, on December 19, 2014, the court issued an order
excluding Wife from A-Z and placing Husband solely in charge
of business operations. The court ordered Husband to be
transparent in operating the business operation and to share
copies of all business information with Wife. The court
ordered Wife to provide an accounting of all funds removed
from the business and prohibited her from receiving any
additional funds until the accounting was provided. Husband
was allowed to withdraw $5, 000 per month from the business
for personal expenses. The court also ordered the parties to
sell the marital residence.
Evidence Produced at Trial
court held a four-day trial, beginning on July 13, 2015. At
the outset, the parties stipulated to the value of their
marital assets and the total amount of funds A-Z had
distributed to each party in 2014.
History of A-Z
time of the hearing, Wife was 44 and Husband was 49. Both
parties were in good physical and mental health. They had two
adult sons. Originally from Texas, the family moved to
Tennessee in 2006. Shortly thereafter, they formed A-Z, with
each spouse having a 50% ownership interest.
A-Z sold durable medical supplies from a small office space
in Nashville. In 2008, Wife became interested in soliciting
contracts from the Veterans Administration. She discovered
that the federal government, through the Small Business
Administration, operates a business development program to
assist eligible small disadvantaged businesses in competing
for federal government contracts. See 13 C.F.R.
§ 124.1 (2017). Wife decided to apply for 8(a)
certification,  which would enable A-Z to participate in
the business development program and compete for federal
contracts that are set aside for small
businesses. To qualify for the program, the parties
modified their respective ownership percentages in A-Z, after
which Wife owned a 51% controlling interest.
28, 2009, Wife and, by extension, A-Z were awarded 8(a)
certification. A-Z also qualified to compete for federal
contracts set aside for small businesses in general, 13
C.F.R. § 121.101 (2017), for qualified
HUBZone small businesses, 13 C.F.R. § 126.100
(2017), and for woman-owned small businesses, 13 C.F.R.
§ 127.100 (2017). A-Z obtained its first government
contract in April 2010, and a second followed shortly
thereafter. At the time of the hearing, A-Z had four
government contracts, and its business had expanded to
include eleven offices in six states.
parties contributed to A-Z's success. While Husband was
responsible for the financial aspects of the business, Wife
was the "face" of the company. She pursued the
contracts, secured warehouse space, and hired employees. Her
focus was marketing and networking. She also set up the
initial quality control systems for A-Z.
time of trial, contracts with the Veterans Administration
comprised 90% of A-Z's business. Since obtaining 8(a)
certification, the company had been highly profitable.
A-Z's ordinary business income since 2010 had been well
over $200, 000 a year. The couple paid many expenses,
including their mortgage, car payments, life and health
insurance premiums, and the children's student loans,
through A-Z. Husband and Wife distributed all company profits
to themselves. Customarily, they received monthly
distributions of $20, 000.
Changes in A-Z's Financial Condition
the pendency of the divorce, A-Z's financial situation
deteriorated markedly. Husband testified that, when the
restraining order was dissolved, he discovered a company in
disarray. The Veterans Administration placed the company on
month-to-month probation for October through December 2014
based on quality issues that arose during his absence. The
business checking account had a negative balance, and Wife
had withdrawn all available funds from the line of credit. He
also discovered that Wife had used company funds to pay over
$20, 000 to a personal friend, Latda Vaughn, and $14, 000 to
family members. Because of the company's poor financial
condition, Husband did not withdraw his allotted $5, 000 for
personal expenses during the last three months of 2014 or in
took immediate steps to implement more oversight of the
company's quality control system and increased
communication with federal procurement officials. In
December, based on the company's good performance, the
Veterans Administration renewed the expiring contract.
According to Husband, at the time of trial, all contracts
were renewed, and none were in danger of termination for
noncompliance. The cash balance in the business checking
account also grew steadily during his tenure.
testified that the company's cash flow issues were
Husband's fault. She claimed that Husband remotely
deleted A-Z's bookkeeping records for 2014, preventing
her from making payroll or paying company bills and forcing
her to hire two accountants, Erica Hayes and Latda Vaughn, to
recreate the missing data.
reality, Husband had not deleted the files, but had
transferred them to an outside accountant for necessary
upgrades. The "missing" files were returned in less
than a week. Wife maintained that, even then, crucial data
was missing, which necessitated additional work by Ms.
Vaughn. But two accountants who regularly performed work for
A-Z testified that Wife had a backup copy of the allegedly
missing data on her computer. Ms. Vaughn admitted at trial
that the work she performed did not benefit A-Z.
court called Paul Demonbreun, a certified public accountant
who had provided services to A-Z since its formation, to
testify on two separate occasions about the company's
financial health. Initially, he opined that the company's
future was "much more cloudy" than in previous
years. The company's debt load had increased and its cash
flow had greatly diminished. In December 2014, the bank
refused to renew the line of credit and notified the company
to repay the loan immediately. Between February and July of
2015, the company only distributed a total of $20, 000 to the
parties, in addition to paying the couple's household
asked his opinion as to when the company would be able to
return to its previous level of financial success, Mr.
Demonbreun responded: "[I]t may take a year. It may take
four years. It may not happen. It's going to be
difficult." He was doubtful that either spouse would be
able to enjoy the same standard of living post-divorce as
during the marriage. But he conceded that, since Husband had
returned to the company, the company's financial
situation had improved.
Mr. Demonbreun revised his opinion, explaining that even
"[c]loudy skies do sometimes turn to blue." After
reviewing the company finances for 2014, he determined that,
even during the tumultuous divorce proceedings, the
company's net income was approximately $231, 000. In the
last few months, the company profits and the bank account
balance had also increased.
Husband and Wife were optimistic about the future of the
company. Each testified that, if they were awarded the
business, they could pay $3, 000 to $5, 000 per month to the