Paula Ruth Sheffield Hartman v. Melvin Thomas Hartman, Jr.

Citation: Not availableDocket: 03A01-9608-CV-00249

Court: Court of Appeals of Tennessee; August 17, 2004; Tennessee; State Appellate Court

Original Court Document: View Document

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Melvin Thomas Hartman, Jr. appeals the divorce judgment from the Hamilton County Circuit Court, challenging the characterization of certain jewelry awarded to his ex-wife, Paula Ruth Sheffield Hartman, as separate property rather than marital property. He contends that the trial court made an inequitable division of marital assets by failing to consider the tax implications associated with the distribution of retirement funds and real property. The couple, married on March 9, 1979, had one minor child, and both had prior marriages. Mr. Hartman filed for divorce in July 1994, citing inappropriate marital conduct and irreconcilable differences, while counterclaiming for adultery. The trial court granted the divorce on October 24, 1995, awarding joint custody of their daughter and directing a payment schedule for her expenses. The division of marital assets was referred to a Special Master, whose report was later adopted by the trial court, including the disputed jewelry allocation. Mr. Hartman argues that the trial court incorrectly categorized the jewelry as gifts and asserts that the burden of proof was not met to establish it as such. He provided a marital asset list valuing the jewelry at $33,000, while his wife’s list valued it at $16,000 without clarification on its classification. Ultimately, he highlights the absence of testimony regarding the jewelry’s status as gifts during the proceedings.

The Trial Judge upheld the Special Master’s decision that the jewelry in question was separate property. According to T.C.A. 36-4-121, the Trial Court is required to equitably divide all marital property, which includes all property acquired during the marriage. Separate property, as defined in T.C.A. 36-4-121(b)(2)(d), includes gifts received by a spouse during the marriage. However, it is the responsibility of the donee to prove the existence of a gift, which necessitates showing intent, delivery, and acceptance (Pamplin v. Satterfield). The court found that Mr. Hartman did not provide sufficient evidence to support the claim that the jewelry was a gift. Instead, his documentation suggested the jewelry was marital property. Consequently, the court remanded the issue to the Trial Court for further examination of evidence to determine if Mr. Hartman met the burden of proving the jewelry was a gift, thereby affecting its classification as marital property.

Additionally, Mr. Hartman's appeal included a claim that the Trial Court erred by not considering the tax implications of pension benefits awarded to him, which he argued led to an unfair division of assets. A Certified Public Accountant was prepared to testify about these tax consequences, but the Trial Judge denied this request, asserting that such proof should have been presented to the Special Master. Mr. Hartman contended that the Trial Court abused its discretion by refusing to consider new evidence during the hearing on the Special Master’s Report.

The Trial Court is not obligated to consider new evidence regarding a Special Master’s report, as per Rule 53.04(2) of the Tennessee Rules of Civil Procedure, which mandates that the court act on the report. Parties have ten days to raise written objections after notice of the report's filing, and any court action on the report must follow the procedures outlined in Rule 6.04. While the court may adopt, modify, reject the report, or hear additional evidence, it is not required to do so.

Mr. Hartman argues that the Trial Judge should have considered his evidence related to tax consequences of his pension fund under T.C.A. 36-4-121(c), which mandates consideration of relevant factors in equitable property divisions. He claims the division was inequitable since he received home equity while being awarded a pension fund that, if liquidated, would incur penalties and taxes, effectively reducing its value significantly. Mr. Hartman contends that to achieve equitable division, he should be entitled to a liquid asset of equal value to the home equity.

The Trial Judge refused to hear testimony from Mr. Hartman’s CPA regarding these tax consequences, stating that the evidence should have been presented to the Special Master. However, since tax implications emerged only after the Special Master had concluded the asset division, the Trial Court failed to address them adequately. The Court referenced Stephenson v. Stephenson, emphasizing the necessity of considering tax consequences in asset divisions.

The judgment regarding the jewelry and property division is vacated, and the case is remanded to the Circuit Court to determine if the jewelry is Mr. Hartman’s separate or marital property, and to reassess the tax implications of the retirement fund award. The Trial Court may refer these questions to a Special Master. Mr. Hartman is responsible for the costs of appeal.