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Barnes v. Barnes

Court of Appeals of Tennessee, Nashville

June 12, 2019


          Session May 7, 2019

          Appeal from the Chancery Court for Bedford County No. 27833 J. B. Cox, Chancellor

         This is the third appeal to address the issue of alimony between these parties. Pursuant to our decision in the first appeal, Husband was required to pay Wife $6, 000 per month in alimony in futuro. In this proceeding, Husband sought termination or reduction of his alimony obligation due to a disability that rendered him unable to work. After Husband filed his petition, he unilaterally reduced the amount of alimony that he paid during the proceeding. Following a hearing, the trial court found that a substantial and material change in circumstances had occurred due to Husband's disability, and the court concluded that a reduction of the alimony obligation was warranted. The trial court reduced the alimony in futuro award from $6, 000 per month to $3, 900 per month. However, the trial court found Husband in contempt for willfully failing to pay alimony in accordance with the existing order during this proceeding. The trial court awarded Wife a judgment for the arrearage but calculated it based on the reduced rate of $3, 900 per month. Wife appeals, asserting that Husband maintains the ability to pay alimony at the previous level of $6, 000 per month despite his disability. She also requests recalculation of the arrearage and seeks an award of attorney's fees. For the following reasons, we reverse the decision of the trial court and reinstate the alimony award of $6, 000 per month. The arrearage should also be recalculated based on the original award of $6, 000 per month plus post-judgment interest. We further conclude that Wife is entitled to an award of attorney's fees on appeal and remand for the trial court to determine an appropriate award. The trial court should reconsider Wife's request for attorney's fees incurred in the trial court.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed and Remanded

          Donald Capparella, Nashville, Tennessee, for the appellant, Leann Barnes.

          Daryl M. South and David O. Haley, Murfreesboro, Tennessee, for the appellee, David Ellett Barnes.

          Carma D. McGee, J., delivered the opinion of the court, in which Richard H. Dinkins, J., and J. Steven Stafford, P.J., W.S., joined.


          CARMA D. McGEE, JUDGE.

         I. Facts & Procedural History

         Leann Barnes ("Wife") and David Ellett Barnes ("Husband") were married for over twenty-five years. Throughout most of the marriage, Wife worked as a nurse, and Husband worked as a dentist. They lived a lavish lifestyle and accumulated a sizeable marital estate, including numerous real properties, a dental practice, retirement and investment accounts, an airplane, several vehicles, all-terrain vehicles, a motorcycle, a ski boat, and numerous other assets.

         Wife filed for divorce in 2009, and the divorce trial was held over the course of five days in April and May 2011. Wife was 48 years old at the time of the divorce trial, and Husband was 50. In the final decree of divorce, each party was awarded a share of the marital estate valued at over one million dollars. The trial court initially awarded Wife alimony in futuro in the amount of $6, 000 per month, finding that Husband was making $400, 000 per year and that Wife was making around $50, 000 per year, and therefore, she was not "able to improve her earnings in such a way that she will keep pace with [Husband's] ability to earn" and "not able to be rehabilitated" within the meaning of the alimony statute. The trial court later granted a motion to alter or amend and modified its alimony award, concluding that its original award was inconsistent with the Tennessee Supreme Court's recently issued opinion in Gonsewski v. Gonsewski, 350 S.W.3d 99 (Tenn. 2011). As a result, the trial court replaced its previous award of $6, 000 per month in alimony in futuro until death or remarriage with an award of $4, 300 per month in rehabilitative alimony for four years, finding that this would give Wife an opportunity to rehabilitate herself.

         On appeal, this Court vacated the trial court's amended order modifying the alimony award and reinstated its original award of $6, 000 per month in alimony in futuro, finding that Wife simply could not be rehabilitated within the meaning of the alimony statute. Barnes v. Barnes, No. M2012-02085-COA-R3-CV, 2014 WL 1413931, at *30 (Tenn. Ct. App. Apr. 10, 2014) perm. app. denied (Tenn. Sept. 18, 2014) ("Barnes I"). We discussed in detail each of the statutory factors relevant to the alimony determination. Id. at *23-29. Notably, we found that Wife had a monthly gross income of $3, 917 and a monthly shortfall of $6, 878 per month after payment of her expenses. Id. at *25. We were unable to locate in the voluminous record any form of income and expense statement showing Husband's monthly income and expenses, and Husband did not testify as to his monthly gross income. Id. at *25 n.15, *30. However, we noted that Husband received $435, 073 in compensation from his dental practice in 2010, the year prior to trial, which would equate to $36, 256 per month, and he also received rent from the practice at the rate of $6, 000 per month. Id. at *30. Thus, in 2010, Husband had received over $500, 000 from the practice. Id. at *24. We found that Husband's monthly income from compensation and rent "would easily exceed $40, 000 per month." Id. at *30. Our opinion reinstating the award of $6, 000 per month in alimony in futuro was issued on April 10, 2014, and the Tennessee Supreme Court denied Husband's application for permission to appeal on September 18, 2014.

         On remand after Barnes I, the trial court awarded Wife a judgment for the difference between the alimony awarded in the original decree and that paid by Husband pursuant to the amended decree. In the second appeal to this Court, we only briefly considered the issue of alimony, modifying the trial court's arrearage judgment to also specify that Husband must pay $6, 000 per month in alimony in futuro. Barnes v. Barnes, No. M2015-01254-COA-R3-CV, 2016 WL 6078562, at *1-2 (Tenn. Ct. App. Oct. 14, 2016) ("Barnes II").

         By the time our second opinion was issued, however, Husband had already filed a petition to modify or terminate his alimony obligation in the trial court. Husband filed his petition on December 17, 2015, alleging that he had recently had back surgery and carpal tunnel surgery. He alleged that he was no longer able to practice dentistry and that he was experiencing "a financial crisis." Husband claimed that he lacked the ability to pay alimony in futuro at the rate of $6, 000 per month, and he asked the court to either reduce or terminate his alimony obligation going forward.

         In January 2016, Husband began receiving disability benefits. Wife filed an answer to Husband's petition in which she claimed that Husband maintained the ability to pay alimony at the current rate regardless of whether he was presently employed or not. She also asserted that her need for alimony had not changed and requested an award of attorney's fees for having to defend against the petition. In February 2016, Wife filed a petition for civil contempt, alleging that Husband had paid only $1, 000 of his $6, 000 alimony obligation for the month of January 2016. Husband filed an answer in which he admitted that he did not pay all of the amount owed for January, but Husband insisted that he did not have the ability to pay the full amount. In June 2016, Wife filed another motion alleging that Husband had only paid her between $500 per month and $1, 500 per month since the beginning of 2016. She requested a judgment for $29, 500 in unpaid alimony.

         Husband's petition to modify and Wife's petition for contempt were tried on May 10, 2018. By that time, Wife claimed that Husband owed her $95, 500 in unpaid alimony. Husband and Wife both testified at the hearing, and Husband also presented testimony from his financial planner, an accountant, and an insurance agent.

         Husband testified that his taxable income in 2010, the year before the divorce trial, was approximately $500, 000. He testified that he continued to practice dentistry thereafter until he underwent numerous surgeries in the fall of 2015. He attempted to return to work but was unable to do so. Husband filed a claim against a disability policy he maintained with a private insurer, and, as mentioned above, he began receiving disability benefits in January 2016. At the time of trial, his disability payment from the private insurer was $19, 226 per month. Notably, this income was not subject to federal income taxes.

         Husband had also applied for and received Social Security disability benefits. His claim was approved in October 2016 retroactive to April 2016. Husband explained that his private insurer required him to seek Social Security disability, and when he received his first lump sum payment of $33, 449 from Social Security, he was required to pay that amount to his private insurer. Husband testified that he was presently receiving a Social Security disability benefit of $2, 795 per month. He said that the amount he received from Social Security was deducted from the amount he received from the private insurer. In other words, once Husband started receiving the Social Security disability payments, the monthly amount he received from the disability policy was reduced (by the same amount of the Social Security benefit) to its present level of $19, 226.

         In April 2016, also while the petition to modify was pending, Husband had sold his dental practice for $950, 000. After paying commission and various debts, Husband received $785, 994.26 in proceeds from the sale, which he deposited in his bank account. Husband conceded during the hearing that he used this money to pay off most of his debts. Husband paid off three mortgages: a $219, 000 mortgage on his residence; a $122, 000 mortgage on the dental practice building he still owned; and a $172, 000 mortgage on his mother's home. He also paid some other miscellaneous debts, and he contributed $250, 000 to an investment account. Husband also sold his airplane while the petition was pending and received a "net" payment of $130, 000 from the sale after the payment of commission. He testified that he saved that money and "put it away for retirement."

         Husband also received other forms of monthly income. He leased the building where the dental practice operated to the purchaser of the dental practice for $6, 000 per month. He also owned property where four mobile homes were located, and those tenants paid a total of $800 in rent per month. However, he had agreed for his mother to receive that rent rather than himself. Husband also received at least $5, 000 per year in investment income.

         Altogether, Husband calculated his present income at around $27, 450 per month and $329, 640 per year. Husband testified that this annual sum was about $170, 000 less than what he had become accustomed to living on for the past 30 years. Utilizing these numbers, he insisted that his gross income had dropped by at least 34 percent. At the same time, however, Husband acknowledged that he would not owe federal income taxes on the monthly payments he received from his private disability policy, which made up the majority of his monthly income. He would owe federal income taxes on a percentage of his Social Security disability income and his rental income.

         Even though Husband admitted to paying off most of his debts, he vaguely testified that he still had the same "fixed expenses" that he had at the time of the divorce, and he said these fixed expenses had increased. However, he did not submit an income and expense statement detailing his monthly expenses. Husband only testified generally about a few isolated expenses. For example, he estimated that about $1, 000 of his $6, 000 monthly rent check would be used for expenses connected to the rental property, such as insurance, taxes, and maintenance. Husband estimated that he still owed "over $100, 000 in debt," which included two car notes, a line of credit, and a $69, 000 balance on his mortgage. Husband was remarried, and his wife had an annual income of over $40, 000, but he testified that she did not contribute to the household expenses. Husband was insured on his Wife's health insurance policy, but he estimated that he spent $6, 000 per year on out of pocket medical expenses. Husband was also financially assisting his parents. He had paid off the mortgage on his mother's home and continued to pay the taxes, insurance, lawn maintenance, and other expenses for the property. He was also contributing $6, 000 per month to a personal investment account managed by his financial planner, although he also made withdrawals from the account to pay expenses.

         Husband insisted that the only way he could have afforded to pay Wife the full amount of alimony he owed was if he had utilized the proceeds from the sale of the dental practice. However, Husband did not believe that he should have to use the proceeds from the sale of the practice to pay alimony because ...

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