IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE
June 6, 2007 Session
TIMOTHY WADE KEYT V. NANCI SUZANNE KEYT
Appeal by permission from the Court of Appeals, Middle Section
No. 02-174 Vernon Neal, Chancellor
No. M2005-00447-SC-R11-CV - Filed December 19, 2007
We granted the application for permission to appeal in this divorce case to address two issues
presented by Husband: (1) whether the increase, if any, in value of his separately-owned stock
interest in the family-owned company for which he worked qualifies as marital property; and if so,
(2) whether the chancellor correctly assessed the increase in value. Because we find that Husband’s
employment with the company in which he owned stock did not substantially contribute to the
preservation and appreciation of the stock, we reverse the judgment of the Court of Appeals and
remand this matter to the trial court for further proceedings consistent with this opinion.
Tenn. R. App. P. 11; Judgment of the Court of Appeals Reversed and Case Remanded to
the Chancery Court for Putnam County
CORNELIA A. CLARK , J., delivered the opinion of the court, in which WILLIAM M. BARKER, C.J., and
JANICE M. HOLDER , J., joined. GARY R. WADE, J., dissenting.
Michael W. Binkley, Nashville, Tennessee, for the appellant, Timothy Wade Keyt.
Rankin P. Bennett, Cookeville, Tennessee, for the appellee, Nanci Suzanne Keyt.
OPINION
Factual and Procedural History
Timothy Wade Keyt (“Husband”) and Nanci Suzanne Keyt (“Wife”) were married
December 16, 1988. Their only child, a son, was born March 20, 1990. During the marriage, Wife
did not work outside the home and was the primary caregiver for the child. Husband, who had
completed three years of college, was employed by Service Transport, Inc. (“Service Transport”),
a trucking company based in Putnam County that was founded and owned, in principal part, by
Husband’s father.
In May 2002, Husband filed for divorce, alleging irreconcilable differences and inappropriate
marital conduct. Wife filed an answer and counter-complaint, also alleging irreconcilable
differences and inappropriate marital conduct as grounds for divorce. Wife sought alimony, child
support, attorney’s fees, and an equitable division of the marital estate, which, she alleged, included
the appreciation in value of Husband’s shares of stock in Service Transport. Both Husband and Wife
sought to be named the primary residential parent of their minor child.
Husband testified at trial that he was first employed by Service Transport in 1979 at the age
of twenty-three. He began working as a truck driver and mechanic in Knoxville. After an
unidentified period of time in Knoxville, Husband moved to the Memphis terminal and worked in
sales for six months. He subsequently moved to Kingsport and assisted in the expansion of company
operations by opening another freight terminal. Husband described his role in the expansion by
saying that he “drove and picked up freight, and delivered freight, and answered phones.” Husband
then moved back to Knoxville and helped open another terminal. Approximately five years after
beginning his employment with Service Transport, Husband moved to the general office in
Cookeville. While there, he learned about freight billing and the general operations of the office.
The same year that Husband moved to the main office in Cookeville, Husband’s father and
mother (“the Keyts”) developed and implemented an estate plan. Under the plan, regular gifts were
made to Husband at or near the maximum level of the annual exemption permitted without exposure
to a gift tax.1 The gifts, in the form of cash or Service Transport stock, were made regularly from
1984, approximately four years prior to the parties’ marriage, to 2001, and were valued at $20,000
per year.2 According to the Keyts’ Tennessee gift tax returns, the cumulative “full and true value”3
of Husband’s stock, which amounted to 14.24% of the outstanding shares in the company, was
$253,229.
As part of the estate plan, the Keyts placed significant restrictions on the stock, thus
preventing Husband from having voting privileges or the ability to sell the stock. The limitations
also prohibited Husband from encumbering the stock in any way. The Keyts reserved the right to
repurchase the stock at book value in the event of Husband’s desire to sell his shares or in the event
of his death. Husband was, however, assured that he would receive the same price per share as other
shareholders if and when the Keyts sold their entire share in the business.
1
Similar gifts of stock were made to an irrevocable trust for a disabled son of the Keyts and to two separate
irrevocable trusts for the benefit of each of the Keyts’ two grandchildren.
2
No gifts of stock were made from 1986 to 1988.
3
See Tenn. Code Ann. § 67-8-107(a) (2006).
2
In 1988, shortly before the parties’ marriage, Husband moved to Nashville, where he worked
in the company’s break bulk center.4 In 1996 or 1997, Husband moved back to the general office
in Cookeville and did “whatever needed to be done.” He undertook freight billing, learned the
logistics of the business, and performed general office duties which included answering questions
for terminal managers about operational issues. He covered for terminal manager(s) during illness,
and he also helped open a salvage store for the company in Algood, Tennessee.
During the marriage, Husband acknowledged that he “did a little bit of everything” for the
company. Husband denied, however, that he: (1) solicited business in an attempt to make the
corporation grow; (2) decided where new terminals would be built or whether additional terminals
would be bought; (3) purchased equipment for the company; (4) dealt with accounts receivable; or
(5) participated in sales during the marriage. Wife presented no evidence to the contrary.
When asked about Husband’s contribution to Service Transport, Wife testified that
Husband’s responsibilities with the company required him to be out of town three or four nights per
week. To support her claim, Ruth Burkes, a frequent visitor in the parties’ residence, confirmed that
Husband was often gone on business. Neither Wife nor Ms. Burkes testified specifically about what
work Husband performed when he was out of town. This discussion about Husband’s travel
constituted Wife’s entire testimony concerning Husband’s role in the company.
In 2002, Widney Keyt, Husband’s father, and the remaining shareholders agreed to sell their
stock in the business. The buyer, STACAS Holdings, Inc., a Delaware corporation, agreed on a
gross purchase price of $18,000,000 and, as additional consideration, permitted the shareholders to
retain ownership of income producing real estate having a value of approximately $5,000,000.
Husband was Service Transport’s representative at the closing. There is no proof in the record that
he participated in negotiating the contract, however. The percentage of ownership of each
shareholder and each shareholder’s portion of the gross sale proceeds was as follows:
Shareholder Stock Ownership Share of Proceeds
The 2002 W.C. Keyt Revocable Trust 22.83% $ 4,109,400
Timothy Wade Keyt (Husband) 14.24% $ 2,563,200
The 1989 W.C. Keyt Irrevocable Trust - Share A 12.43% $ 2,237,400
The 1989 W.C. Keyt Irrevocable Trust - Share B 22.73% $ 4,091,400
Dennis Britt 27.77% $ 4,998,600
$18,000,000
4
The extent of Husband’s duties at the break bulk center is unclear from the record.
3
Although the sales contract established that Husband was entitled to $2,563,200 as his share
of the gross proceeds, Gary McNabb, a certified public accountant employed at Service Transport,
explained that Husband’s net proceeds amounted to only $1,283,367.65 because of legitimate
deductions based upon indemnities to the buyer. In addition to the net proceeds amount of
$1,283,367.65, Husband also retained a 14.24% interest in the real estate reserved from the sale,
which was valued at $709,904.
At the conclusion of the trial, the chancellor granted the divorce to Wife based on
inappropriate marital conduct, declared Wife the primary residential parent, and awarded her child
support of $1,800 per month and alimony in futuro of $1,500 per month for the first year and $2,500
per month thereafter. After deducting the reported value on the gift tax returns, $253,229, from the
net sales price of Husband’s stock, $1,283,367.65, the chancellor found the appreciation in value,
$1,030,139, was marital property. Husband’s $709,904 retained interest in the real estate reserved
from the sale of Service Transport was also classified as marital property.5 The entire marital estate
was valued at $2,221,820, some $1,740,904 of which was the appreciation in the value of the stock
and the value of the 14.24% real estate interest retained by Husband from the sale of his stock. Wife
was awarded 37.5% of the total marital estate. The court denied Wife attorney’s fees because of her
considerable participation in the division of the marital estate.
On appeal, Husband argued that the trial court erred in: (1) determining the value of the
appreciation of his interest in the corporation; (2) classifying the appreciation of his interest in the
corporation as marital property; (3) the type and amount of alimony awarded to Wife; and (4) the
amount of child support awarded to Wife. Wife also claimed that the trial court erred in the
valuation of the appreciation of Husband’s interest in the corporation and that she should have been
awarded attorney’s fees.6 The Court of Appeals affirmed the judgment of the trial court, in part, but
modified the alimony award from in futuro, which is payable indefinitely, to rehabilitative alimony
of $2,500 per month extending over an eight year period.
In his application for permission to appeal to this Court, Husband presented only two issues:
(1) that the trial court erred by ruling that the increase in the value of his interest in Service Transport
was marital property; and (2) that the trial court erred in its stock valuation method. He maintained
that his work was limited to tasks that could be performed by the average employee. Husband
contended that he was not involved in the managerial or business-planning decisions of the company
in that he did not “solely” or “individually” choose routes, negotiate acquisitions, or make
purchasing decisions.
5
Although the basis of the trial court’s classification of Husband’s retained interest in the real estate as marital
property is not entirely clear from the record, it appears that the trial court must have determined that there was an
increase in the value of the real estate during the course of the marriage and that “each party substantially contributed
to [the real property’s] preservation and appreciation.” See Tenn. Code Ann. § 36-4-121(b)(1)(B) (2005).
6
Neither party challenged any issues pertaining to residential parenting time or child support.
4
After our grant of review, Wife filed a brief claiming additional errors both in the
modification of the award of alimony in futuro and in the denial of her request for attorney’s fees for
trial and appeal. Wife argued that she should have been awarded alimony in solido and claimed an
entitlement to attorney’s fees under the Uniform Child Custody Jurisdiction and Enforcement Act.
Wife also contended that Husband was bound by his admission during discovery that the initial value
of his stock was reflected by the amounts shown on the Keyts’ gift tax returns; she argued that he
was judicially estopped from presenting new evidence regarding the valuation.
Standard of Review
This Court gives great weight to the decisions of the trial court in dividing marital assets and
“we are disinclined to disturb the trial court’s decision unless the distribution lacks proper
evidentiary support or results in some error of law or misapplication of statutory requirements and
procedures.” Herrera v. Herrera, 944 S.W.2d 379, 389 (Tenn. Ct. App. 1996). As such, when
dealing with the trial court’s findings of fact, we review the record de novo with a presumption of
correctness, and we must honor those findings unless there is evidence which preponderates to the
contrary. Tenn R. App. P. 13(d); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn.
1993). Because trial courts are in a far better position than this Court to observe the demeanor of
the witnesses, the weight, faith, and credit to be given witnesses’ testimony lies in the first instance
with the trial court. Roberts v. Roberts, 827 S.W.2d 788, 795 (Tenn. Ct. App. 1991). Consequently,
where issues of credibility and weight of testimony are involved, this Court will accord considerable
deference to the trial court’s factual findings. In re M.L.P., 228 S.W.3d 139, 143 (Tenn. Ct. App.
2007) (citing Seals v. England/Corsair Upholstery Mfg. Co., 984 S.W.2d 912, 915 (Tenn. 1999)).
The trial court’s conclusions of law, however, are accorded no presumption of correctness.
Langschmidt v. Langschmidt, 81 S.W.3d 741, 744-45 (Tenn. 2002).
Analysis
Marital Property
Initially, Husband contends that the Court of Appeals erred by affirming the chancellor’s
determination that the appreciation in Husband’s interest7 in Service Transport qualified as marital
7
By “interest,” Husband is referring to both the net sale amount he received when he sold his Service Transport
stock and the 14.24% interest he retained in the real estate reserved from the sale. Although Husband sold the separate
property - the gifted stock - and received both cash and real property in return, “[p]roperty acquired prior to a final
[divorce] hearing that is traceable to separate property constitutes separate property unless it has been gifted to the
marital estate or has been transmuted into marital property through inextricable commingling with marital estates.”
Church v. Church, M 2004-02702-COA-R3-CV, 2006 W L 2168271, at *7 (Tenn. Ct. App. Aug. 1, 2006); see also Batson
v. Batson,769 S.W .2d 849, 858 (Tenn. Ct. App. 1988); 19 W . W alton Garrett, Tennessee Practice: Tennessee Divorce,
Alimony and Child Custody § 15.4, at 334 & n. 26. (rev. ed. 2004) (“Tennessee Divorce”). Because nothing in the
record suggests that the real property was “gifted to the marital estate or has been transmuted into marital property
through inextricable commingling with marital estates,” see Church, 2006 W L 2168271, at *7, Husband’s net sale
amount and retained interest in the real estate are both classified as separate property, subject to an equitable division
only after W ife carries the burden of proving that Husband’s separate property fits within the statutory definition of
5
property. In a proceeding for divorce or legal separation, the trial court is authorized, prior to
determining the support and maintenance of one party by the other, to “equitably divide, distribute
or assign the marital property between the parties without regard to marital fault in proportions as
the court deems just.” Tenn. Code Ann. § 36-4-121(a)(1) (2005).8 The trial court is empowered to
do what is reasonable under the circumstances and has broad discretion in the equitable division of
the marital estate. See Flannary v. Flannary, 121 S.W.3d 647, 650 (Tenn. 2003). The division of
assets is not a mechanical process and trial courts are afforded considerable discretion. Manis v.
Manis, 49 S.W.3d 295, 306 (Tenn. Ct. App. 2001).
Division of the estate begins with the identification of all property interests. 19 Tennessee
Divorce § 15.2, at 321. The classification of property as either marital or separate is next. Flannary,
121 S.W.3d at 650; Brown v. Brown, 913 S.W.2d 163, 166 (Tenn. Ct. App. 1994). Because the
courts do not have the authority to make an equitable distribution of separate property, whether
separate property should be considered marital is a threshold matter. Cutsinger v. Cutsinger, 917
S.W.2d 238, 241 (Tenn. Ct. App. 1995). As such, a spouse seeking to include the other spouse’s
separate property in the marital estate has the burden of proving that the property fits within the
statutory definition of marital property. Kinard, 986 S.W.2d at 232.
According to statute, “marital property” includes the following:
(1)(A) [A]ll real and personal property, both tangible and intangible, acquired by
either or both spouses during the course of the marriage up to the date of the final
divorce hearing and owned by either or both spouses as of the date of filing of a
complaint for divorce . . . .
(B) [I]ncome from, and any increase in value during the marriage of, property
determined to be separate property in accordance with subdivision (b)(2) if each
party substantially contributed to its preservation and appreciation . . . .
Tenn. Code Ann. § 36-4-121(b)(1)(A), (B) (2005) (emphasis added).
“Separate property,” on the other hand, is in the exclusive ownership of the husband or the
wife and is defined as follows:
(2)(A) All real and personal property owned by a spouse before marriage . . . ;
marital property. See Kinard v. Kinard, 986 S.W .2d 220, 232 (Tenn. Ct. App. 1998). As such, for purposes of this
analysis, when discussing whether W ife carried her burden of proving that Husband “substantially contributed” to the
increase in the value of Husband’s separate property, Husband’s separate property includes both the net sale amount of
the Service Transport stock and his interest in the real estate reserved from the sale.
8
The divorce in this case was granted on August 24, 2004, before the 2005 version of the relevant statute came
into effect. Because the language of the cited statutes has not changed from the version in effect in 2004, we cite to the
most recent edition.
6
(B) Property acquired in exchange for property acquired before the marriage;
(C) Income from and appreciation of property owned by a spouse before marriage
except when characterized as marital property under subdivision (b)(1);
(D) Property acquired by a spouse at any time by gift, bequest, devise or descent . .
..
Tenn. Code Ann. § 36-4-121(b)(2)(A)-(D) (2005) (emphasis added).
Thus, increases in the value of separate property during a marriage will not be considered
marital property unless both parties “substantially contributed” to the appreciation in the value of the
property.9 Tenn. Code Ann. § 36-4-121(b)(1)(B); Harrison v. Harrison, 912 S.W.2d 124, 127 (Tenn.
1995). While these contributions may be either “direct” or “indirect,” Tenn. Code Ann. § 36-4-
121(b)(1)(D), they must satisfy two requirements. McFarland v. McFarland, No. M2005-01260-
COA-R3-CV, 2007 WL 2254576, at *6 (Tenn. Ct. App. Aug. 6, 2007). First, the contributions must
be “real and significant.” Id.; Brown, 913 S.W.2d at 167. “Second, there must be some link between
the spouses’ contributions and the appreciation in the value of the separate property.” McFarland,
2007 WL 2254576, at *6; Langschmidt, 81 S.W.3d at 746. Whether a spouse made a “substantial
contribution” to the preservation and appreciation of separate property is a question of fact. Sherrill
v. Sherrill, 831 S.W.2d 293, 295 (Tenn. Ct. App. 1992).
Because our statute requires the “substantial contribution” of both a husband and a wife to
the preservation and appreciation of separate property before an increase in value may be considered
as a part of the marital estate, the focus in most cases is directed to whether the non-owning spouse’s
contributions are sufficient to meet the “substantial contribution” standard. In this case, however,
because the Husband as the owning spouse has argued that he did not “substantially contribute,” we
focus first on whether the Husband’s contribution as an employee of a company in which he owned
9
Obviously, the party claiming that an increase in value of separate property is marital property must initially
demonstrate that an increase in value has occurred. In this case, W ife’s proof of an increase in the value of Husband’s
stock consisted of subtracting the cumulative value of each gift of stock as reflected on the Keyts’ Tennessee gift tax
returns from the eventual sale price of the stock. That calculation results in an alleged increase in value of $1,030,139.
However, W ife’s argument fails to take into consideration the fact that the stock at the time it was gifted was, in a very
real sense, distinguishable from the stock that was sold to STACAS Holdings, Inc. At the time the stock was gifted, it
was heavily restricted. Those restrictions, Mr. McNabb testified, “drastically deflated [the value of the stock] for gift
tax purposes.” The stock that was sold, however, was unrestricted. Thus, the value of the stock was no longer
“drastically deflated.” In short, comparing, as W ife does, the value of the restricted stock with the value of the
unrestricted stock is akin to comparing apples to oranges. Thus, we are unpersuaded that any actual appreciation in the
value of the stock is necessarily accurately reflected by the W ife’s method of calculation. Nevertheless, we will assume,
for the sake of argument, that the stock did experience some increase in value independent of its change in status from
restricted to unrestricted. W e make this assumption based on the fact that the company expanded its operations during
the time period that the Keyts were gifting stock to Husband.
7
stock is sufficient to meet the standard. If we find that Husband did not “substantially contribute,”
discussion of Wife’s contribution is unnecessary.10
Until now, Tennessee courts, when asked to determine whether a spouse’s separately-owned
stock should be classified as marital property, have found that the owning spouse did not
“substantially contribute” only when the increase in the value of stock was wholly unrelated to the
contributions of one or both spouses. For example, in Mitts v. Mitts, the Court of Appeals found that
the husband’s role as general manager of a golf course did not “substantially contribute” to the
increase in value of the golf course’s stock because, although husband’s efforts “certainly
contributed, directly or indirectly, to the success of the golf course . . ., the increase in value of the
[stock] resulted not from the [success of the] golf course . . . but rather from the attractiveness of the
raw land as developable residential property.” 39 S.W.3d 142, 146 (Tenn. 2000) (emphasis omitted).
In Sherrill, the Court of Appeals held that the husband’s stock was separate property because the
“record is absolutely void of any proof that either party took any action whatsoever to aid in the
increase in the value of the [stock].” 831 S.W.2d at 294. Similarly, in McFarland, the Court of
Appeals held that husband’s family farm was separate property because neither spouse “engaged in
efforts that led to the preservation and appreciation of the property.” 2007 WL 2254576, at *7.
Instead, the court agreed with the trial court’s finding that “the sole basis for the increase in the value
of the real property to the value testified to was market driven forces.” Id. (emphasis added). And,
in Harrison, this Court held that the increase in the value of the owning spouse’s real property from
approximately $7,000 to $1.36 million was not the result of the spouses’ substantial contributions.
912 S.W.2d at 127. This Court based its decision on the acknowledgment by both parties that “the
sole cause of the increase in value [of the land] was the construction of [an interstate highway].” Id.
(emphasis added). Although the Court’s analysis in Harrison focused on the non-owning spouse’s
contribution and not the owning spouse’s, the Court was persuaded to hold that the real property was
separate property upon its finding that the sole cause for the increase in the value of the property
could not be attributed to the efforts of either spouse.
In each of the cases discussed above, a “substantial contribution” was not found because the
increase in the value of the separate property was wholly unrelated to the contributions of either
spouse. We do not conclude from these cases, however, that a finding of any contribution to the
appreciation and preservation of separate property results in an automatic finding that the
contribution is substantial. Instead, the facts must be reviewed to determine: (1) whether the
contributions were “real and significant;” and (2) whether the real and significant contributions
directly or indirectly caused the preservation and appreciation in the value of the separate property.
10
The Dissent places great emphasis on the fact that W ife “substantially contributed” to the increase in the value
of Husband’s separate property through her “direct or indirect contribution . . . as homemaker . . . [and] parent or family
financial manager.” Tenn. Code Ann. § 36-4-121(b)(1)(D) (2005). W e do not disagree with the trial court’s finding that
W ife’s efforts in this marriage would be sufficient to constitute a “substantial contribution” to the increase in the value
of Husband’s separate property. However, because we find that Husband, as the owning spouse of the separate property,
did not “substantially contribute” to its increase in value, discussion of Wife’s contribution is irrelevant.
8
For his part, Husband does not deny that he made contributions to Service Transport as an
employee. Instead, Husband argues that his contributions as an employee were not substantially
related to the appreciation in the value of the Service Transport stock. As Husband argues, “[his]
contribution to the corporation was no different than any other employee who worked for Service
Transport, or any low or mid-level employee who owns stock in the corporation in which he or she
is employed.”
In attempting to carry her burden of proving that Husband’s separate property is marital, Wife
argues that Husband “substantially contributed” to the increase in the value of the stock because it
had a gifted value of $253,229 and a net sale proceeds value of $1,283,367.65. She also points out
in her testimony that Husband traveled “three or four nights a week” and relies on Husband’s
testimony that he worked at Service Transport for 23 years, did “a little bit of everything,” and did
“whatever needed to be done.” Wife argues that Husband’s many years of experience with Service
Transport made him valuable to the business.
Given the parties’ positions, this Court does not find the analyses in Mitts, Sherrill,
McFarland, and Harrison particularly helpful. Instead, this Court finds it necessary to examine the
facts in cases where a “substantial contribution” by the owning spouse was found and determine
whether the facts in this case meet those same standards.
In Yates v. Yates, the Court of Appeals determined that Husband’s separately owned stock
in the family business should be treated as marital property because both spouses “substantially
contributed” to its increased value. No. 02A01-9706-CH-00122, 1997 WL 746377, at *2-3 (Tenn.
Ct. App. Dec. 4, 1997). The Yates stock, similar to the stock in this case, was from a family-owned,
closely-held corporation. Id. at *3. And just like Husband, the owning spouse in Yates worked for
his father. Id. Unlike in the instant case, however, the owning spouse in Yates was the director of
the company and the head of one of the two divisions within the company. Id. at *3 & n.1. He “was
responsible for determining what appliances the company bought each year, purchasing the
appliances, and then selling them to customers.” Id. at *3.
Although the record in this case contains few details about what Husband did specifically for
Service Transport or what titles he may have held, it is clear that he had no involvement in acquiring
new customers, in determining shipping routes, or in deciding what equipment to purchase and
where to build new terminals. We acknowledge that Husband started a salvage store in Algood,
Tennessee, but are unable to find that enough income was generated for the business by selling
damaged merchandise to be considered “real and significant.”11
11
The record indicates that, in the year prior to the sale to STACAS Holding, Inc., Service Transport had a total
revenue of approximately $70 million, of which $69.5 million was from freight revenue. Therefore, at best, the salvage
store brought in less than 1% of the total revenue for the company.
9
In Clement v. Clement, the Court of Appeals again found that the increase in the value of the
husband’s separate property should be considered marital property because both spouses
“substantially contributed” to its appreciation and preservation. No. W2003-02388-COA-R3-CV,
2004 WL 3396472, at *11 (Tenn. Ct. App. Dec. 30, 2004). In Clement, the husband owned real
property and shares in several real estate firms. Id. The shares and real property, the husband
argued, increased in value through no efforts of his own because he was not involved in the day-to-
day management of his property. Id. The court disagreed, and stated that, although the husband
delegated many of the day-to-day responsibilities, he oversaw the operations of “his wide range of
properties and investments.” Id. He was an owner of one of the real estate firms. Id. He took an
active role in the managing of the properties, firing property managers when necessary, and
determining when improvements needed to be made. Id. Additionally, the proof established that
husband’s “properties maintained their value, or appreciated in value, under the management of Mr.
Clement or his agents.” Id.
In direct contrast to the husband’s claim in Clement, Husband argues in this case that his
involvement in Service Transport’s day-to-day activities was that of any average employee. Husband
had no permanent managerial authority, and he did not oversee the delegation of authority to other
employees. Further, although Husband did hire his mother-in-law and father-in-law to work in the
Algood salvage store, nothing else in the record indicates that Husband personally was involved in
the hiring and firing of employees, as was the case in Clement. And, nothing in the record suggests
that Husband was an officer or director of the company, or that he was the head of a division.12 To
the contrary, Husband helped open two of twelve terminals by “dr[iving] and pick[ing] up freight,
and deliver[ing] freight, and answer[ing] phones” - tasks that are typically done by low- to mid-level
employees. If a terminal manager was out sick, Husband “would go in and work in his place.”
When asked what he did in the general office, Husband answered, “I pretty much just answered
phones from other terminals about questions if they had problems.”
Husband’s testimony concerning his contributions to Service Transport, which went
unchallenged during cross-examination, established that his contributions to Service Transport did
not rise to the level of those by the owning spouses in Clement and Yates. Instead, Husband’s role
in Service Transport was one of filling in and being helpful but not directing the company or
contributing to its growth. Nothing in the record demonstrates to us that Husband’s contributions
substantially led to the increase in the value of the company’s stock.
Whether a spouse made a “substantial contribution” to the preservation and appreciation of
separate property is a question of fact, and as such, “we are disinclined to disturb the trial court’s
decision” unless the trial court’s findings “lack[] proper evidentiary support or result[] from some
error of law or misapplication of statutory requirements and procedures.” Herrera, 944 S.W.2d at
12
Although the Dissent, in arguing that Husband was more than a low- to mid-level employee, places great
emphasis on the fact that Husband “was the designated representative of Service Transport in the sale” of the business,
we find nothing in the record that explains why Husband was the chosen signatory other than the fact that Husband’s
father lived out of state and the only other known relative in the State is mentally disabled.
10
389. To this end, to affirm the trial court’s findings in this case, the facts presented must
demonstrate that both spouses “substantially contributed” to the increase in value of Husband’s
separate property. The facts in this case do not do so.13 Accordingly, Husband’s stock and any
increase in the value of that stock should be treated as separate property.
Calculation of Stock Value and Rehabilitative Alimony
Our holding that any appreciation in value of Husband’s separately-owned stock did not
become marital property pretermits the need to address how to calculate the amount of
appreciation.14 Similarly, because our determination significantly affects the total amount of marital
property subject to division, it is not possible for this Court to address the issues relating to the award
of alimony. Therefore, these issues must be remanded to the trial court for further proceedings
consistent with the findings in this opinion.
Attorney’s Fees
Finally, Wife argues that the trial court and the Court of Appeals erred in refusing to award
her attorney’s fees. Wife gives two reasons: (1) she is entitled to attorney fees under the Uniform
Child Custody Jurisdiction and Enforcement Act (UCCJEA), see Tenn. Code Ann. §§ 36-6-201 to
-243 (2005); and (2) she is entitled to attorney’s fees because she would have to “deplete other
assets” to pay for the fees that she has incurred throughout the trial, see Kinard, 986 S.W.2d at 236.
As to the first issue, Wife reasons that, because this litigation included a dispute over the
custody of the parties’ minor child and because she was the prevailing party in the litigation at the
trial court and Court of Appeals, there is a presumption that she is entitled to her attorney’s fees
under the UCCJEA. Wife’s sole basis for this argument is the fact that the UCCJEA defines the
term “child custody proceeding” to include “proceeding[s] for divorce . . . in which the issue [of
custody] may appear,” Tenn. Code Ann. § 36-6-205(4) (2005), and states that “[t]he court may
award the prevailing party . . . necessary and reasonable expenses incurred . . . during the course of
the [custody] proceedings,” Tenn. Code Ann. § 36-6-236 (2005).
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The Dissent argues that the trial court found W ife’s testimony to be more credible on the issue of substantial
contribution than that of Husband and as such, under this Court’s limited scope of review, the trial court’s factual
findings, “where issues of credibility and weight of testimony are involved,” should be given considerable deference.
W e agree. However, in giving more weight and credibility to W ife’s testimony, we still find that the facts do not support
the conclusion that Husband “substantially contributed” to the increase in the value of his separate property.
14
Our holding also pretermits two other issues raised by W ife: (1) that we are bound by the “concurrent” factual
findings of the trial court and the Court of Appeals as to the extent and value of the marital estate; and (2) that Husband
should be bound by his sworn response to W ife’s request for admissions as to the value of the stock at the time of gift.
As to the first issue, even if it were not pretermitted, W ife’s argument would fail because this Court made clear in our
order denying the petition to rehear in In re Adoption of A.M.H., 215 S.W .3d 793, 813-14 (Tenn. 2007), that the
concurrent finding statute applies only when the Court of Appeals has filed written findings of fact pursuant to that
section, and none appear in this case.
11
Pursuant to Tennessee Code Annotated section 36-6-202 (2005), however, the UCCJEA is
to only be “applied to promote its underlying purposes and policies,” which are:
(1) Avoid[ing] jurisdictional competition and conflict with courts of other states . . .;
(2) Promot[ing] cooperation with the courts of other states . . .;
(3) Discourag[ing] the use of the interstate system for continuing controversies over
child custody;
(4) Deter[ing] abductions of children;
(5) Avoid[ing] relitigation of custody decisions of other states . . .; and
(6) Facilitat[ing] the enforcement of custody decrees of other states.
Tenn. Code Ann. § 36-6-202(1) to (6) (2005) (emphasis addd). Of these listed “purposes and
policies,” only one lacks an explicit reference to problems of an inherently interstate nature. Id. at
(4). Moreover, we find no other language within the UCCJEA statutory scheme that broadens its
application to purely intrastate custody disputes.15 Consequently, we find that, because it is
undisputed that this proceeding involved a purely intrastate custody dispute, the trial court and the
Court of Appeals were correct in refusing to award attorney’s fees under the UCCJEA.
As to Wife’s second argument, Tennessee Code Annotated section 36-5-103(c) (2005) states
that whether to award attorney’s fees in “any suit or action concerning the adjudication of the
custody or the change of custody of any child, . . . both upon the original divorce hearing and any
subsequent hearing” is “in the discretion of [the] court.” Additionally, in domestic relations cases,
attorney’s fees, in the form of alimony in solido, can be awarded to the economically disadvantaged
spouse in a divorce hearing. See Yount v. Yount, 91 S.W.3d 777, 783 (Tenn. Ct. App. 2002);
Wilder v. Wilder, 66 S.W.3d 892, 894 (Tenn. Ct. App. 2001). As Wife correctly argued, trial courts
customarily award attorney’s fees as alimony in solido when the economically disadvantaged spouse
would otherwise be forced to deplete assets in order to pay attorney’s fees. Koja v. Koja, 42 S.W.3d
94, 98 (Tenn. Ct. App. 2000). However, awards of attorney’s fees are largely discretionary with the
trial court. Owens v. Owens, No. M2005-00639-COA-R3-CV, 2007 WL 957184, at *11-12 (Tenn.
Ct. App. Mar. 29, 2007). As such, this Court will only interfere on appeal when a clear abuse of that
discretion has occurred. Because this case is being remanded for reconsideration of the marital
property and alimony awarded to Wife, we remand this issue to the trial court as well, and express
no opinion on whether, if other elements of the award are amended, an award for attorney’s fees
incurred in the trial court would be warranted. See Eldridge v. Eldridge, 137 S.W.3d 1, 24 (Tenn.
Ct. App. 2002). We do, however, deny Wife’s request for attorney’s fees incurred in conjunction
with this appeal.
15
Other courts that have grappled with this issue have reached the same conclusion. See, e.g., Seamans v.
Seamans, 37 S.W .3d 693, 696 (Ark. Ct. App. 2001).
12
Conclusion
Because we find that Husband’s employment with Service Transport did not “substantially
contribute” to any preservation and appreciation in its stock value, we hold that any actual increase
in the value of this stock remained the separate property of Husband. We reverse the judgment of
the Court of Appeals and remand the case to the trial court for further proceedings consistent with
this opinion. Costs of this appeal are assessed to Wife, for which execution may issue if necessary.
______________________________
CORNELIA A. CLARK, JUSTICE
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