Curtis Daniels v. Mary Daniels

Citation: Not availableDocket: E2001-00605-COA-R3-CV

Court: Court of Appeals of Tennessee; December 11, 2001; Tennessee; State Appellate Court

Original Court Document: View Document

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The appeal involves Curtis Michael Daniels (Appellee) and Mary Freels Daniels (Appellant) stemming from their divorce finalized by the Rhea County Circuit Court. Ms. Daniels contests three issues: (1) the Trial Court's decision not to award her any share of Mr. Daniels' TVA retirement and pension benefits; (2) the division of marital assets; and (3) the denial of rehabilitative alimony. The appellate court affirms the Trial Court's judgment in part but reverses it in part, remanding for further proceedings.

The couple married on July 14, 1973, and separated in July 1998, without minor children. Mr. Daniels filed for divorce on March 12, 1999, citing inappropriate marital conduct, which Ms. Daniels countered. A hearing on November 2, 2000, resulted in a divorce granted to Mr. Daniels due to Ms. Daniels' admitted extramarital affair. 

In the November 21, 2000 order, the Trial Court classified the entire estate as marital property and detailed the asset division: Ms. Daniels received property valued at $145,605.74 and assumed debt of $11,654.94, yielding a net estate of $133,950.80. Mr. Daniels received property valued at $289,182.00, with debt of $129,851.80, resulting in a net estate of $159,330.20. Notably, within Mr. Daniels' estate, $121,500.00 was traced to a gift from his mother for purchasing property late in the marriage (1993).

The Court finds it inequitable to grant the wife any substantial interest in the farm, leading to a division of assets where the husband retains approximately $37,830 and the wife receives a net estate valued at $133,950. The Court denies spousal support and attorney’s fees, attributing legal fault for the divorce to the wife and noting her self-sufficiency. The marriage is dissolved, and both parties are instructed to execute the necessary documents for property transfer. The asset distribution results in Ms. Daniels receiving 45.7% and Mr. Daniels 54.3% of the marital property. 

The Court reviews the trial findings de novo, presuming correctness unless the evidence suggests otherwise, while conclusions of law are also reviewed de novo. Ms. Daniels appeals the Trial Court's decision not to award her any share of Mr. Daniels’s TVA retirement and pension benefits. Mr. Daniels, employed by TVA since June 1980, has an annual base salary of $49,750, with additional overtime earnings. Ms. Daniels earns about $23,000 annually from her jobs. Ms. Daniels's retirement benefits are valued at $11,335.74, which she received in the property division, while Mr. Daniels’s Fixed Annuity Fund through TVA is valued at $51,419.36, which he also retained.

Additionally, Mr. Daniels has an unvested pension that may become available if he retires after five years of service, but the amount remains undetermined and unaddressed by the Trial Court. Ms. Daniels's Motion to Alter or Amend regarding the pension was denied, with the Court indicating that the unvalued pension rights would be clarified but not awarded at this time.

The Court concludes that the Defendant has already received an equitable distribution of assets, making it unjust to grant her any rights to the Plaintiff's TVA pension. The Court denies the Defendant’s Motion to Alter or Amend and asserts that the TVA pension rights are solely vested in the Plaintiff’s name. Ms. Daniels claims the TVA pension is marital property under T.C.A. 36-4-121 (b)(1)(B) and argues that the Trial Court erred by not awarding her a share of the pension accrued during Mr. Daniels’s 20-year employment with TVA. Mr. Daniels contends that the Trial Court's equitable distribution was justified, emphasizing that the unvested pension is contingent on future events and that no evidence was presented to determine its value. 

The Court notes that T.C.A. 36-4-121 includes pension rights as marital property, highlighting that Mr. Daniels's annuity was classified and valued as a marital asset in the prior order, although the TVA pension was not mentioned. It is acknowledged that the pension is a marital asset that the Trial Court failed to divide. The Court cites precedent that emphasizes the classification of unvested retirement benefits as marital property, regardless of the non-employee spouse's contribution to their value. It concludes that the TVA pension, not addressed in the November 21, 2000 order, should have been divided, and if it had been considered, the Court erred in not granting Ms. Daniels any portion of it. The Court highlights principles for valuing retirement benefits that must be accrued during the marriage and notes that their valuation should occur close to the divorce date.

Cohen advises trial courts on methods for dividing unvested pensions, emphasizing elastic and equitable approaches. The two primary techniques are the present cash value method and the deferred distribution method. 

1. **Present Cash Value Method**: This requires the trial court to assess the retirement benefit's present value as of the final decree date. The calculation involves estimating the number of months the employee spouse will receive benefits, multiplying this by the current benefit amount, and then discounting this figure to account for mortality, interest, inflation, and taxes. Once calculated, the court may award the benefits to the employee spouse and offset this by distributing equivalent marital estate assets to the other spouse. This method is ideal when benefits can be accurately valued, retirement is imminent, and there are sufficient assets for offsetting.

2. **Deferred Distribution Method**: Utilized when the vesting of benefits is uncertain or when retirement benefits are the primary economic asset. This method avoids present value calculations; instead, it establishes a formula for dividing the benefits at the decree time, with actual distribution postponed until the benefits are payable. The marital interest is typically expressed as a fraction or percentage of the monthly benefit, calculated based on the duration of the marriage compared to the total benefit accumulation period. 

Advantages of the deferred method include equitable division without immediate payment for unrealized benefits and shared risk of forfeiture. A potential drawback is the need for the court to maintain oversight for future payments, although this is manageable given existing practices for alimony and child support supervision.

An administrative burden cannot justify an unfair distribution of marital property, as the trial court has discretion in selecting the valuation method based on relevant factors. Although an equitable division of marital property is required, it does not need to be exact. The division must reflect fairness according to the case specifics, as established in Kendrick v. Kendrick and Cohen v. Cohen. The trial court is instructed to choose one of the two valuation methods for the equitable division of Mr. Daniels's TVA pension. Ms. Daniels appeals, claiming an inequitable division where she received 45.7% and Mr. Daniels received 54.3% of the marital assets. Ms. Daniels's net estate is $133,950.80, while Mr. Daniels's is $159,330.20. In Tennessee, the trial court must first classify property as separate or marital before dividing marital property, as only marital property is subject to division under T.C.A. 36-4-121. Marital property includes all property acquired during the marriage, with specific definitions and conditions outlined in T.C.A. 36-4-121. A party's separate property remains undivided, and substantial contributions from either spouse, including homemaking and financial management, may factor into marital property definitions.

Separate property, as defined by T.C.A. 36-4-121 (b)(2), includes: A) all real and personal property owned by a spouse prior to marriage; B) property acquired in exchange for such pre-marital property; C) income and appreciation from pre-marital property unless classified as marital; and D) property received by gift, bequest, or descent. When property is deemed marital, it must be equitably divided, with trial courts granted broad discretion in this process, guided by the factors in T.C.A. 36-4-121 (c). According to legal precedent, an equitable division does not require an equal split or equal shares of each item. Appellate courts defer to trial court decisions unless they lack evidential support or violate statutory factors. Notably, marital fault is excluded from consideration in property division.

In the case at hand, the trial court classified all property and debt as marital, allocating a larger share to Mr. Daniels due to an $85,000 gift from his mother for purchasing property, which was treated as marital rather than separate. The court justified its decision based on equity, affirming its classification. Ms. Daniels appeals the court's denial of rehabilitative alimony, citing the long duration of their 27-year marriage, their ages, health conditions, and their living standards. She emphasizes her health challenges, including past breast cancer, while arguing that fault should not be the sole factor in alimony determinations. The trial court has extensive discretion in alimony awards, which hinge on a balance of factors from T.C.A. 36-5-101(d), with need and ability to pay being paramount. The appellate court typically does not alter alimony decisions unless they are unfounded or contravene public policy.

Ms. Daniels' entitlement to alimony hinges on a determination of whether she is "economically disadvantaged" relative to Mr. Daniels, a finding that the Trial Court did not make. According to T.C.A. 36-5-101(d)(1), a spouse deemed economically disadvantaged should ideally be rehabilitated through temporary support and maintenance. If rehabilitation is not feasible, long-term support may be granted. Different types of spousal support, including rehabilitative support, alimony in solido, and periodic alimony, are distinguished within the statute. 

In evaluating the appropriateness of support and its nature, the court must consider various factors, such as each party's earning capacity, education, duration of marriage, age, mental and physical conditions, custodial responsibilities, separate assets, marital property provisions, standard of living, contributions to the marriage, relative fault, and other relevant factors, including tax implications.

The Court found that Ms. Daniels is not economically disadvantaged compared to Mr. Daniels, who earns approximately $54,750 annually, while Ms. Daniels earns around $23,000 from her full-time and part-time jobs. Both parties have access to retirement benefits, with Mr. Daniels' being significantly greater. Although they were married for 27 years and Ms. Daniels has a history of breast cancer, there is no evidence of physical or mental disabilities preventing either party from working. The issue of Mr. Daniels' pension has been remanded for equitable division, affirming that Ms. Daniels is entitled to a share of that asset.

Ms. Daniels received the marital home debt-free and assets totaling $145,605.74 against liabilities of $11,654.94, resulting in a net estate of $133,950.80. Mr. Daniels was awarded assets worth $289,182.00 with debts of $129,851.80, leading to a net estate of $159,330.20. While both parties own significant real and personal property, Mr. Daniels bears approximately 92% of the marital debt. The Trial Court, although not explicitly stating it, considered Ms. Daniels' extra-marital affair as a factor in denying her alimony, while Mr. Daniels was granted the divorce due to her inappropriate conduct.

Ms. Daniels reported a monthly net income of $1,439.45 and expenses of $1,730.85, resulting in a deficit of $291.41. Her expenses included allowances for a new vehicle despite owning a 1997 Ford Explorer and various monthly charges. Mr. Daniels reported a monthly net income of $3,245.42 and expenses of $4,899.92, indicating a deficit of $1,654.50. However, his expenses have changed post-trial division, and both parties may have overstated their monthly expenses.

The Trial Court's decisions were upheld, with no manifest abuse of discretion as per Robertson v. Robertson. Ms. Daniels' request for attorney's fees was denied, as the awarding of such fees is at the Trial Court's discretion, which was not deemed abused. Additionally, since both parties were partially successful on appeal, Ms. Daniels was not awarded attorney's fees for that process either. The judgment of the Trial Court was affirmed in part and reversed in part, with the case remanded for further proceedings and cost collection, shared equally between the parties.