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Spergl v. Spergl

Court of Appeals of Tennessee, Nashville

May 16, 2019

JENNIFER ANN SPERGL
v.
STEPHEN PHILLIP SPERGL

          Session March 7, 2019

          Appeal from the Chancery Court for Williamson County No. 44514 Joseph A. Woodruff, Judge

         In this divorce action, Wife appeals the trial court's action in classifying as Husband's separate property the appreciation in value of shares of stock, arguing that the appreciation in value was marital property. Upon our review of the record, we conclude that the evidence does not show that Wife substantially contributed to the preservation and appreciation in value of the stock; accordingly, we affirm the judgment of the trial court.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Todd G. Cole and Crystal M. Etue, Brentwood, Tennessee, for the appellant,

          Jennifer Ann Spergl. Donald Capparella, Nashville, Tennessee, for the appellee, Stephen Phillip Spergl.

          Richard H. Dinkins, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Andy D. Bennett, J., joined.

          OPINION

          RICHARD H. DINKINS, JUDGE

         I. Factual and Procedural History

         Jennifer Spergl ("Wife") and Stephen Spergl ("Husband") were married in January 2004. No children were born of the marriage, although Husband's two children from a previous marriage lived with the couple. Wife filed a complaint for divorce in September of 2015, alleging irreconcilable differences and inappropriate marital conduct as grounds. Husband answered, denying those grounds; he later amended his answer, admitting that he had been guilty of inappropriate marital conduct, and asserting a counterclaim for divorce on the ground of inappropriate marital conduct.

         A trial was held in January of 2018, at which Wife proceeded pro se.[1] The parties stipulated to the entry of divorce pursuant to Tennessee Code Annotated section 36-4-129, as well as to the classification and valuation of most of the marital assets. Pertinent to this appeal, the trial court was called upon to determine the extent to which shares of United Parcel Service stock that Husband received from his father prior to the marriage, as well as stock acquired after the marriage and the appreciation in value of the stock, was separate property or marital property. In this regard, Husband testified that his Father gave him 1200 shares of Class A UPS stock in the 1990s, and that his Father later, before the marriage, gave him 8, 400 shares of Class B stock. Husband testified that at the time of the marriage, the shares of stock were worth $73 each, and that, at the time of trial, the stock were trading at $132.76 per share.[2] Husband testified that the increase in value was "absolutely . . . market driven." Husband testified that the Class B shares are held in an account at Merrill Lynch and that the shares secure a line of credit that permits him to borrow up to half of the value of the stock. Husband also testified that both classes of stock paid dividends; that through a dividend reinvestment program, the dividends from the Class A shares were used to purchase additional shares of Class A stock, such that at the time of trial, an additional 531 shares of Class A stock had been purchased; and that the dividends from the Class B stock were used to pay down the line of credit.[3]

         The court entered a Memorandum and Order, later amended, [4] in which it made the following findings of fact and conclusions of law relative to the UPS stock:

         A. The UPS Stock:

In the 1990's, several years before the marriage, Husband received two separate gifts from his father of UPS common stock. Specifically, Husband received 8400 shares of Class B common stock, and 1200 shares of Class A common stock. The stock has been continuously held in Husband's name, first in an account in the custody of Ameritrade, then Compu-Share for the Class A stock, and Merrill Lynch for the Class B shares.
Both classes of stock pay dividends. Husband has applied all of the dividends from the Class A shares to a dividend reinvestment program offered by UPS. Since the date of the marriage, this reinvestment activity has acquired an additional 531 shares, so that at the time of trial, Husband holds 1731 shares of Class A stock in his Compu-Share account. Husband did not reinvest the dividends from the Class B shares. Instead, he used all of the dividends paid by the Class B shares to pay down on a line of credit secured by the Class B shares. Husband used his draws on this line of credit for supporting the Parties' lifestyle. This included purchasing income producing real estate, a private school education for Husband's children, purchasing automobiles, and other legitimate family purposes. Husband also used the line of credit draws for personal consumption of alcohol, drugs, and other non-familial pursuits in service of his addictions.
The closing value of UPS common stock on the date the Parties submitted their joint statement of marital assets and liabilities was $132.76 per share. Applying the definition of "marital property" set out in Tennessee Code Annotated § 36-4-121(b)(1), the Court finds Wife made a substantial indirect contribution as a wage earner, homemaker, and parent to the preservation of the Class A shares. Without Wife's earned income as a real estate sales professional, homemaker, and parent to Husband's children (Wife's step-children), Husband would have been required to use the dividends paid by the Class A shares to support the family's lifestyle just as he did with the dividends from the Class B shares. Accordingly, the Court concludes 531 shares of the Class A stock is marital property and subject to equitable division in this divorce proceeding.
The Court concludes the dividends from both classes of UPS stock were marital property when received during the marriage. The dividends from the Class B shares were either used for marital purposes, or were dissipated by Husband. The dividends from the Class A shares were converted into other shares of UPS stock and, thus, were marital property when acquired. The Court's determination of equitable division of all marital property is set out separately in this Memorandum and Order.

(Footnote omitted.)

         The court held that the 8, 400 shares of UPS Class B stock, which it valued at $1, 115, 184.00, and the 1, 200 shares of UPS Class A stock, which it valued at $159, 240.00, [5] were Husband's separate property. In the division of the assets, the court held that the 531 shares of Class A stock acquired during the marriage through the dividend reinvestment program had a value of $70, 463.70 and were marital property, and divided them equally. The court held that the dividends from the Class B stock "were either used for marital purposes or dissipated by Husband." The court found that Husband had spent $50, 000 "servicing his addictions" and awarded Wife $25, 000, or half of the $50, 000 of marital funds dissipated by Husband during the marriage. Wife timely appealed, challenging the trial court's ruling that the UPS stock was Husband's separate property.

         II. Analysis

         The division of the parties' marital estate begins with the classification of the property as separate or marital property. Miller v. Miller, 81 S.W.3d 771, 775 (Tenn. Ct. App. 2001). The first two issues raised by Wife require us to consider whether the increase in value in the shares of stock Husband owned prior to the marriage became marital property. Our resolution requires us to construe and apply Tennessee Code Annotated section 36-4-121(b) to the facts presented; the pertinent portions of the statute read:

(1) (A) "Marital property" means all real and personal property, both tangible and intangible, acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing and owned by either or both spouses as of the date of filing of a complaint for divorce, except in the case of fraudulent conveyance in anticipation of filing, and including any property to which a right was acquired up to the date of the final divorce hearing, and valued as of a date as near as reasonably possible to the final divorce hearing date. . . . All marital property shall be valued as of a date as near as possible to the date of entry of the order finally dividing the marital property;
(B) (i) "Marital property" includes income from, and any increase in the value during the marriage of, property determined to be separate property in accordance with subdivision (b)(2) if each party substantially contributed to its preservation and appreciation;
(D) As used in this subsection (b), "substantial contribution" may include, but not be limited to, the direct or indirect contribution of a spouse as homemaker, wage earner, parent or family financial manager, together with such other factors as the court having jurisdiction thereof may determine;
(2) "Separate property" means:
(A) All real and personal property owned by a spouse before marriage, including, but not limited to, assets held in individual retirement accounts (IRAs) as that term is defined in the Internal Revenue Code of 1986 (26 U.S.C.), as amended;
(B) Property acquired in exchange for property acquired before the marriage;
(C) Income from and appreciation of property owned by a spouse before marriage except when characterized as marital ...

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