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Darnell v. Darnell

Court of Appeals of Tennessee, Knoxville

August 12, 2019

DANA DARNELL
v.
MARK DARNELL

          Session May 20, 2019

          Appeal from the Chancery Court for Bradley County No. 2017-CV-271 Jerri S. Bryant, Chancellor

         This appeal arose from the parties' divorce proceedings. After approximately five years of marriage, Dana Darnell ("Wife") filed a complaint in September 2017 with the Bradley County Chancery Court ("Trial Court"), seeking a divorce from Mark Darnell ("Husband"). Following trial, the Trial Court granted the parties a divorce, classified the parties' property, and divided the marital property and debts. Determining that Wife's savings account should have been classified as marital property due to commingling, we reverse the trial court's classification that such account was Wife's separate property and award Husband one-half of the funds in Wife's savings account. We affirm the Trial Court's distribution of the remaining marital assets.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed, in Part, and Modified, in Part; Case Remanded

          Stephen M. Hatchett, Athens, Tennessee, for the appellant, Mark Darnell.

          Randy Sellers, Cleveland, Tennessee, for the appellee, Dana Darnell.

          D. Michael Swiney, C.J., delivered the opinion of the court, in which Charles D. Susano, Jr., and Thomas R. Frierson, II, JJ., joined.

          OPINION

          D. MICHAEL SWINEY, CHIEF JUDGE

         Background

         Wife was awarded a piece of real property during a previous divorce proceeding with her former husband. Wife was given three years to refinance the mortgage or sell the property. If Wife did not refinance or sell the property within those three years, the property could be sold at an auction. As the three year deadline approached, Wife was in college and was unable to refinance the home. Husband and Wife became engaged after dating for approximately one year. Husband then offered to purchase Wife's home from her and her former husband for the amount of the existing mortgage. Husband purchased the home on September 26, 2012. At the time Husband purchased the home, it was worth $269, 000, but the cost to Husband was only $134, 000, which consisted of the existing $120, 000 mortgage on the home and closing costs.

         Husband and Wife were married less than a month later on October 13, 2012. On September 23, 2013, Husband executed a deed conveying to Wife a one-half undivided interest in the marital residence. Prior to the marriage, Wife had approximately $30, 000 in a bank account. Husband had a retirement account prior to the marriage that continued to accrue during the marriage. When the parties married, Wife was in college. However, she later became a teacher with an annual income of $36, 000. During the marriage, Husband was employed by the Cleveland Police Department with an annual salary between $50, 000 and $60, 000.

         Wife filed a complaint for divorce with the Trial Court on September 25, 2017. In her petition, Wife alleged as grounds for divorce that the parties had irreconcilable differences or, alternatively, that Husband had committed inappropriate marital conduct. Husband filed an answer to Wife's complaint agreeing that Husband and Wife had irreconcilable differences but denying any inappropriate marital conduct on his part. Husband further filed a counter-complaint seeking a divorce on the ground of irreconcilable differences or, alternatively, on the grounds of inappropriate marital conduct or indignities to the spouse's person. Husband also requested a mutual restraining order between the parties.

         The Trial Court conducted a trial on June 19, 2018. Upon stipulation of the parties to grounds for divorce, the Trial Court declared the parties divorced pursuant to Tennessee Code Annotated § 36-4-129. At the beginning of trial, Husband's attorney presented a "master asset list" to the Trial Court which included division of certain items of property of which the parties had mutually agreed.[1]

         Based upon the parties' agreement, the Trial Court found that the home Husband had inherited from his father would be Husband's separate property, as well as his mother's iron skillet. The Trial Court further found, consistent with the parties' agreement, that Husband be awarded the 2003 Chevy S-10 pick-up truck, 2010 Mercedes, 2007 Ford Mustang, Tennessee Valley Federal Credit Union checking and savings account in his name, weedeater, leaf blower, and extension ladder as his portion of the marital estate. Similarly, the Trial Court awarded to Wife as her portion of the marital property, per the parties' agreement, the 2014 Lexus, 1990 Ford Taurus, Southern Heritage Bank checking account in her name, lawnmower, and all other household items in her possession at the time of the divorce.

         The Trial Court awarded to Husband as his separate property the value of his TCRS retirement account that had accrued prior to the marriage. The parties stipulated that the retirement account had a total value of approximately $118, 000 as of June 2016. However, no value was determined for the marital portion of the retirement account. The Trial Court found that a certified public accountant had been employed to calculate the value of the marital portion of Husband's retirement account. As such, the Trial Court determined that once that value was calculated, the marital portion of the retirement account would be divided equally between Husband and Wife.

         The parties agreed that Wife would be awarded the marital home, as well as the remaining mortgage debt on the home. The parties stipulate that at the time of divorce, the value of the marital home remained $269, 000, and the mortgage balance was $72, 000. The parties disagreed, however, as to how the marital home's equity was to be divided between the parties. The parties agree that during that marriage, Husband paid the mortgage out of his marital income and that Wife paid other household bills out of her marital income. Wife's name was never added to the mortgage. The parties further stipulate that there were no significant improvements to the home during the marriage. Wife testified that when Husband purchased the home, Husband told her the house was her retirement because he already had a retirement account. Husband testified that he purchased the home from Wife and her former husband to protect her so that she and her children would not have to move from the home.

         The parties also disagreed on whether Wife's savings account which had remained in her name throughout the marriage was separate or marital property. The parties stipulate that the savings account had a balance of $30, 000 at the time of the marriage and that Wife had placed marital funds into the account during the marriage before removing funds from the account to purchase, among other things, a 2014 Lexus for $26, 000. At the time of the parties' divorce, the savings account in Wife's name had a balance of $20, 000. Wife further testified that she had placed money in the account from her teacher's salary and that when she took money out of the account, she put money back in, keeping the balance about the same.

         Following trial, the trial court entered an order classifying the parties' property and making an equitable division of the marital assets. The Trial Court found that Wife's savings account was her separate property. In its order, the Trial Court further found as follows regarding the marital home:

As to the real property of the parties, the Court finds that as an equitable division of this property the Court has determined that the marital equity of the parties in and to the property is $63, 000.00 and therefore, Husband is awarded one-half (1/2) of such or $31, 500.00 as his interest in the real property located at . . . Cleveland TN 37323. The remaining equity in such is awarded to Wife as her separate property. Husband shall execute a Quitclaim Deed to such evidencing this transfer upon the entry of a Final Decree of Divorce. The issue of payment of such is reserved until the marital value of Husband's TCRS account is determined.

         Subsequently, Husband filed a motion to alter or amend, contending, inter alia, that the savings account awarded to Wife as her separate property should be classified as marital property and that the total amount of equity from the marital home should be equally divided between Husband and Wife. Following a hearing on Husband's motion to alter or amend, the Trial Court found as follows:

As to the savings account, it was stipulated that [Wife's] savings account was hers prior to the marriage and it remained in her name both during and after the marriage. While she may have placed some monies into the account during the marriage, all of that money was spent, according to her testimony. The account held less money at the time of the divorce than at the time of the marriage. The Court held that account was a premarital asset of [Wife] and retained the same value, both at the time of the marriage and at the time of the divorce and therefore remained her separate property. The motion to alter or amend on that issue is DENIED. Both parties kept their finances separate during this marriage. Both parties purchased their own automobiles and maintained their own separate accounts. [Husband] testified he paid the house payment and [Wife] paid the parties' other expenses. Those facts impact not only the savings account, but also the home.
As to the parties' home, the facts are not in dispute. The parties executed a "sale" in an effort to get the financing of [Wife's] pre-marital home and her separate property off of her former husband's credit. The transaction between [Wife] and [Husband] was not an arm's length transaction. It was between these two parties who intended to marry. [Husband] wants the parties to be put back to where they were prior to the marriage. Prior to the marriage, [Wife] had a house with $149, 000 in equity. The payoff on the house was $120, 000 and it appears there was an additional $14, 000 in costs associated with that refinance and mortgage. [Husband] "purchased" the home in an effort to protect [Wife]. After making house payments during the marriage, there appears to be $72, 000 left on the note on the home, creating current equity of $197, 000. This additional equity was created by [Husband] making house payments. [Husband] received a place to live. Between his purchase of the home and the divorce, [Husband] put the house in both parties' names as tenants by the entirety and created a transmutation of all the equity. [Husband] paid $62, 000 on the house during the parties' marriage.
[Husband] is not just asking to be returned to the same position he was in at the time the parties married but is asking for $197, 000 in equity to be divided between the parties. The Court finds that would be fundamentally unfair or inequitable in this situation in that [Husband] only paid $62, 000 on the home during the marriage, that he received a place to live during the marriage, and [Wife] had a home with approximately $149, 000 in equity just before agreeing to marry him. Further, [Wife] paid other marital bills. There is no proof [Wife] was being forced to sell the property. The Court previously found there was net equity in the home, at the time of the marriage of $149, 000 and net equity at the time of the divorce of $197, 000. Since [Wife] paid the parties' other marital debts, it is equitable for her to receive one-half of the net equity of this home.

(Paragraph numbering omitted.) The Trial Court, therefore, denied Husband's motion to alter or amend. ...


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