Session May 21, 2019
from the Chancery Court for Bradley County No. 2014-CV-272
Jerri Bryant, Chancellor
appeal concerns a redetermination of alimony on remand. Erin
Alford Fuller ("Wife") sued Roger Darnell Fuller
("Husband") for divorce in the Chancery Court for
Bradley County ("the Trial Court"). The case was
tried, and Husband appealed the judgment. We determined that
the Trial Court properly classified and valued Husband's
trail income from his business in the property division but
erred by then including, as part of Husband's income, the
amount of trail income distributed as a marital
asset. We thus vacated the Trial Court's
determinations regarding child support and alimony. On
remand, the Trial Court found that Husband inflated his
business expenses. The Trial Court found that Husband earned
approximately $200, 000 per year and ordered him to pay Wife
$1, 500 per month as alimony in futuro. Husband appeals. We
hold that the Trial Court, in keeping with our instructions,
properly excluded the trail income distributed as a marital
asset in making its fresh determination of Husband's
income. We find no reversible error in the Trial Court's
finding as to Husband's income, nor do we discern any
abuse of discretion in the Trial Court's alimony
decision. We affirm the judgment of the Trial Court and
remand for an award to Wife of her reasonable attorney's
fees and costs incurred on appeal.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed; Case Remanded
K. Calfee, Cleveland, Tennessee, for the appellant, Roger
F. Logan, Jr., and Philip M. Jacobs, Cleveland, Tennessee,
for the appellee, Erin Alford Fuller.
Michael Swiney, C.J., delivered the opinion of the court, in
which John W. McClarty and Thomas R. Frierson, II, JJ.,
MICHAEL SWINEY, CHIEF JUDGE.
divorce matter is before us once again. To review, Wife and
Husband were married in the state of California in 1988. Two
children were born of the marriage, both of whom are now of
majority age. In December 2014, Wife filed for divorce.
This case was tried over the course of two days in November
and December 2015. Husband, who works in financial planning,
was age 52 and Wife, a nurse, was 50. In January 2016, the
Trial Court entered its final judgment, which Husband
appealed. In Fuller v. Fuller, No.
E2016-00243-COA-R3-CV, 2016 WL 7403791 (Tenn. Ct. App. Dec.
21, 2016), we affirmed, in part, and vacated, in part, the
Trial Court's judgment. As pertinent to this appeal, we
stated and instructed:
Father's Income and Child Support
also asserts that the trial court erred in determining the
amount of his income for the purpose of setting child
support. According to Father, the trial court failed to
deduct the "ordinary and reasonable expenses of
self-employment necessary to produce income" pursuant to
the Tennessee Child Support Guidelines. See Tenn.
Comp. R. & Regs. 1040-2-4-.04(3)(a)(3). Father appears to
be correct because the trial court's only finding with
regard to Father's income was that he "has income
over the last two years of approximately two hundred thousand
dollars, even though his summary exhibit on Exhibit 5 shows
less than that." The trial court utilized the annual
income amount of $200, 000 when calculating Father's
child support obligation on the child support worksheet. The
parties' tax records demonstrate that an average of $200,
000 for the two years prior to trial would be nearest to the
gross revenue of Legacy without any deduction of ordinary and
reasonable expenses as required by the guidelines.
note another question concerning the trial court's
determination of Father's income. In basing Father's
income amount on the total revenue from Legacy, the court
appears to have included the trail income that was also
divided as a marital asset. As Tennessee Code Annotated
§ 36-4-121(b)(1)(E) (Supp. 2016) provides:
Property shall be considered marital property as defined by
this subsection (b) for the sole purpose of dividing assets
upon divorce or legal separation and for no other purpose;
and assets distributed as marital property will not be
considered as income for child support or alimony purposes,
except to the extent the asset will create additional income
after the division ....
the trail income distributed as marital property should not
be considered as income for child support purposes. For these
reasons, we conclude that the trial court's determination
regarding Father's income and his resultant child support
obligation must be vacated.
accordingly remand this matter to the trial court for a
determination of the proper amount of Father's child
support obligation. The court should make a determination
regarding Father's income by deducting (1) any ordinary
and reasonable expenses of self-employment necessary to
produce income and (2) the amount of the trail income
distributed as a marital asset. The court should consider,
however, any additional income generated by this asset after
the division. See Tenn. Code Ann. §
36-4-121(b)(1)(E); see also Ghorashi-Bajestani v.
Bajestani, No. E2013-00161-COA-R3-CV, 2013 WL 5406859,
at *5 (Tenn. Ct. App. Sept. 24, 2013) ("[T]he trial
court did not err in failing to include the principal amount
of the deferred compensation account as income for child
support purposes, but the court should have considered any
appreciation thereon or income stream generated therefrom as
income in the calculation of child support."), perm.
app. denied (Tenn. Mar. 5, 2014).
also contends that the trial court erred in its award of
spousal support. The trial court awarded alimony in
futuro to Mother in the amount of $1, 500 per month.
Father asserts that the award is erroneous in type, length,
and amount. Without addressing the specific arguments raised
by Father, we again note that the trial court erred in its
determination regarding the amount of Father's income for
the reasons set forth above. See Tenn. Code Ann.
§ 36-4-121(b)(1)(E) ("[A]ssets distributed as
marital property will not be considered as income for child
support or alimony purposes, except to the extent the asset
will create additional income after the division ....").
Inasmuch as the trial court considered the asset of trail
income, which had been divided as marital property, as income
to Father for the purpose of setting alimony, such
determination is erroneous.
We therefore vacate the alimony determination and remand to
the trial court with instructions to determine Father's
income without consideration of the amount of the trail
income distributed as a marital asset. The trial court should
consider, however, any additional income generated by this
asset after the division. See Tenn. Code Ann. §
36-4-121(b)(1)(E). Once Father's income has been
established, the trial court can make a determination
regarding alimony in accordance with the applicable statutory
factors. See Tenn. Code Ann. § 36-5-121(i).
Fuller, 2016 WL 7403791, at *7-9 (footnote omitted).
August and September 2017, this matter was heard on remand.
In December 2017, the Trial Court entered an order addressing
the remanded issues. The Trial Court found that Husband
inflated his business expenses and declined to find his tax
returns accurate. The Trial Court stated in its order, in
This cause came to be heard on the 29th day of
August 2017 on remand from the Court of Appeals, for this
Court to establish the income of Defendant after deducting
ordinary and reasonable expenses to produce that income and
the amount of trail income distributed as a marital asset.
Previously, this Court had determined Defendant's income
to be $200, 000 per year. On remand and after proof, the
Court took the matter under advisement, retrieved the trial
exhibits from the Court of Appeals and reviewed those
exhibits. More particularly, this Court reviewed Exhibits 1,
5, 16, and 17 from the original trial. Additionally, the
Court reviewed the transcripts from this matter.
It was originally difficult for this Court to determine the
income of Defendant because this Court did not find
Defendant's tax returns to be credible. When comparing
his tax returns in Exhibit 5 with his budget in Exhibit 17,
and his income and expense statements from Exhibit 1, the
Court finds that Defendant uses the terminology "gross
and net income" to mean different things at different
times, depending on his purpose. For instance, on the 2014
tax return Defendant claimed his total income was $190, 484.
He inappropriately stated his rental income and failed to
include Schedule C information in his testimony. The Court
will note the testimony from Defendant was that he charged
his business $30, 000 per year for rent (which is income to
him and reduced his business income), as well as an
additional $6, 000 per year for rent, for a total rent of
$36, 000 per year (income to him). It is unknown how much he
allocated to depreciation. The health savings account in the
amount of $6, 500 paid by the business and the self-employed
insurance premium payments on his behalf were not necessary
to produce income from the business and are considered income
to him. This Court has not been provided a list of itemized
deductions from Schedule A and therefore finds that $267, 000
is the gross income for the year 2014. Defendant has come
forth with no additional information to prove the
reasonableness and necessity of any of his deductions. For
the year 2013, Defendant states his Schedule C income at
$145, 459. However, the gross income on Schedule C for 2013
was $233, 150. It is noted the business pays for
Defendant's automobile at $10, 497; that he deducts $30,
000 for an unknown reason; that his meals in the amount of
$2, 738 are deducted and his "other expenses" in
the amount of $15, 017 are deducted. There is no
documentation to back up any of these deductions. On Schedule
E where he did reflect his rent received in the amount of
$36, 000 he also took out $6, 789 for depreciation, $261 for
amortization which both should be added back to his $11, 659
net rent, and these added to his income would certainly put
his 2013 income from Line 22 of his 2013 tax return in the
$200, 000 range. Additionally, Defendant deducted $6, 450 for
his health savings account, which was not necessary to
produce his income as stated above. Defendant also deducted
$10, 000 he put in his retirement and $11, 506 for
self-employed health insurance premiums.
This Court does not find additional deductions in the amount
of $30, 000 for 2014 to be supported by any proof and his car
and truck expense should be added to his income. Exhibit 5 to
the August 29, 2017 hearing shows that while this case was
pending, Defendant produced $60, 000 less in commission in
2015 than he did in 2014.
The Court does not find Defendant's 2015 numbers to be
accurate nor part of the proof in this case. There is no
supporting documentation for his claimed $83, 354 in business
expenses in 2014 nor his $87, 691 in business expenses for
2013. The Court has previously found that the trail, which is