Brooks v. Brooks

IN THE SUPREME COURT OF TENNESSEE

AT KNOXVILLE
FILED
June 1, 1999

DEBORAH LORRAINE BROOKS, ) FOR PUBLICATIONCecil Crowson, Jr.
) Appellate Court Clerk
Plaintiff/Appellant ) FILED: June 1, 1999
)
V. ) POLK COUNTY CIRCUIT
)
RICKEY LAMAR BROOKS, ) HON. EARLE G. MURPHY,
) JUDGE
Defendant/Appellee )
) No. 03S01-9804-CV-00034

For the Appellant: For the Appellee:

Barrett T. Painter D. Michell Bryant
Cleveland, Tennessee Cleveland, Tennessee

OPINION

REVERSED AND REMANDED BARKER, J.
 We granted this appeal to determine whether the Court of Appeals and the trial

court erred in their determinations of the amount of child support to be paid by the

child’s father. Although both the trial court and the Court of Appeals determined that

the total monthly payment should be increased from four hundred dollars ($400.00) to

six hundred fifty dollars ($650.00), each court reached its conclusion upon different

reasons. We conclude that both courts erred and that the base amount of child

support should have been $1,241.00 per month. In addition, Mr. Brooks shall pay the

child's private education expenses per the parties agreement.

In setting the amount of child support, we hold: (1) that Mr. Brooks was

voluntarily underemployed; and (2) that he should pay the costs for private school

tuition under the facts of this case. Accordingly, we reverse the lower courts and

remand this case to the trial court for further proceedings consistent with this opinion.

STANDARD OF REVIEW

Our role, in cases such as this, is to review the record of the trial court de novo

with the presumption that the decision of the trial court with respect to the facts is

correct unless the evidence preponderates against such factual determinations.

Farrar v. Farrar, 553 S.W.2d 741, 743 (Tenn. 1997). In this case, however, the trial

court made no findings of fact despite the appellant’s motion for specific findings of

fact and conclusions of law pursuant to Tenn. R. Civ. P. 52.01. The trial court did

issue written conclusions of law in response to the motion, but not findings of fact.

Both the memorandum and order of the trial court simply conclude, without

explanation, that Mrs. Brooks is not entitled to an increase in support, that Mr. Brooks

shall pay the total private school expense of the parties’ minor child, and that each

party pay his or her own attorney fees. Accordingly, there was nothing found as a fact

which we may presume correct. Therefore, under these circumstances, we must

2
conduct our own independent review of the record to determine where the

preponderance of the evidence lies. Devorak v. Patterson, 907 S.W.2d 815, 818

(Tenn. App. 1995); Goodman v. Memphis Park Comm’n, 851 S.W.2d 165, 166 (Tenn.

App. 1992); Kelly v. Kelly, 679 S.W.2d 458, 460 (Tenn. App. 1984).

BACKGROUND

The appellant, Deborah Lorraine Brooks, and the appellee, Rickey Lamar

Brooks, were divorced in 1990 in the Circuit Court of Polk County. The agreed order

of divorce required Mr. Brooks to pay $400.00 per month as child support for the

parties’ four-year-old son. Additionally, Mr. Brooks was required to maintain

hospitalization insurance for the benefit of the child. The divorce decree awarded the

parties’ residence, subject to its mortgage, and two office buildings to Mrs. Brooks.

Mr. Brooks was awarded certain personal items, his IRA account, two automobiles,

and $175,000.00 in cash.

In March 1995, Mrs. Brooks filed a petition in the trial court for an increase in

child support and to modify Mr. Brooks’ visitation.1 In response, Mr. Brooks filed a

counter-petition requesting that the court require Mrs. Brooks to pay one-half the cost

of their child’s private schooling and for an increase in his visitation.

The evidence introduced at the evidentiary hearing established that in 1991

Mrs. Brooks sold the residence she had been awarded in the divorce and used a part

of the proceeds to finance a legal education at the University of Tennessee College of

Law. Following her graduation in 1994, she successfully completed the bar

examination and obtained employment as an attorney for Title Guaranty & Trust

1
The re is n o issu e of v isitatio n in this appe al.

3
Company in Chattanooga, Tennessee. At the time of the hearing, her annual salary

was $24,960.00. In addition, in 1994 she received $14,229.00 rental income from the

two office buildings awarded her in the divorce.

At the time of the divorce, Mr. Brooks was employed as a sales agent for Ben

Milan Tire Company and earned $21,981.00 in 1991 from that employment. In

addition, in that same year he had interest income of $8,908.00 and capital gains of

$5,529.00. With his divorce proceeds he purchased some land in Benton,

Tennessee. In 1992, he opened a Conoco gas station and convenience store on a

portion of that property. His adjusted gross income in 1992 was $60,966.00. During

1993, he resigned from Milan Tire Company to concentrate on the management of the

Conoco store and to spend more time with his son. In 1993, his total earnings from

the Conoco store and Milan Tires were $95,350.00. In addition, in that same year he

had interest income and capital gains totaling $10,293.00. In 1994, his earnings from

the operation of the Conoco store rose to $102,087.00. He also realized $297,467.00

in capital gains from the sale of the convenience store and several profitable real

estate and timber transactions. Mr. Brooks testified that he speculated in land and

planned to continue that activity.

Although the Conoco store was very successful, Mr. Brooks voluntarily sold it in

1994. Thereafter, he began living off of interest income from a bank account of

approximately $500,000.00 and devoted all of his time to the start up and operation of

a cattle farm on approximately 159 acres of land which he owned free and clear. He

testified that 1,000 acres of land adjoining his farm was for sale and that he had been

advised by Benton Bank that he could borrow $200,000.00 to apply to the cost of

purchase.

4
 According to Mr. Brooks, in the first six months of 1995, he received $18,838.57

in interest income, but had incurred farming expenses in the amount of $12,735.19.

Accepting those farming expenses as accurate, his net income was $6,103.38 from

January 1, 1995, through July 10, 1995. His 1995 tax return, filed as a late exhibit,

listed his adjusted gross income as $25,888.00 for that entire year.

Mrs. Brooks moved to Chattanooga in 1994, and the parties agreed to send

their son to Boyd Buchanan School, a private school in Chattanooga. The tuition for

the 1995-1996 school year was $3,156.00, plus $100.00 for materials. Mr. Brooks

agreed to assume the responsibility for those expenses. Mr. Brooks stated the

agreement extended only to the first year. Mrs. Brooks testified that Mr. Brooks told

her that he would pay the tuition "as long as [Eric] wanted to go there."

Following an evidentiary hearing on July 17, 1995, the trial court held that the

appellant was not entitled to an increase in child support, but required Mr. Brooks to

continue paying his son’s full tuition to Boyd Buchanan School. 2 The trial court

declined to award any attorney’s fees to Mrs. Brooks.

The Court of Appeals concluded that the trial court had erred in deciding that

Mrs. Brooks was not entitled to an increase in child support.

The Court of Appeals found Mr. Brooks to be voluntarily underemployed and

capable of earning a substantial income. In calculating what it to considered to be the

proper amount of child support due based upon the evidence and the 1994 Child

Support Guidelines, the Court of Appeals relied upon Tenn. Comp. R. & Regs. ch.

2
Although the record contains a memo dated February 14, 1996, signed by the trial judge,
containin g a finding that “the pa rties have mutu ally agreed th at the cos t of tuition for the minor child to
attend a private school shall be borne equally by each party,” the order actually signed by the trial court
several months later, following an in-chambers conference between the trial judge and the parties,
ordered Mr. Broo ks to be solely respo nsible for th e private s chool ex pense s.

5
1240-2-4-.03(3)(f) (1994) to apply a flat ten percent (10%) per year increase since the

entry of the original order. The intermediate court was of the opinion that the present

income of Mr. Brooks had not been reliably established. Concluding that the ten

percent (10%) annual increase was applicable to the circumstances of this case, the

intermediate appellate court concluded that the child support should properly be set at

$645.00 per month, presuming that the yearly increases were compounded.

Reasoning that since the private school tuition was approximately $250.00 monthly,

the Court of Appeals increased the monthly child support payment due from Mr.

Brooks to $650.00 per month, but gave him credit on that amount for the private

school tuition he was required to pay by the trial court. Thus, the Court of Appeals

affirmed the trial court’s decision regarding the total monthly sum to be paid by Mr.

Brooks.

DISCUSSION

This case presents an unique set of factual circumstances. The record

supports the implicit findings of the Court of Appeals that Mr. Brooks liquidated his

Conoco business during tax year 1994 to decrease both his income and his child

support obligation. He derived a substantial capital gain from the sale of his Conoco

business and did not work or earn an income as an employee in 1995. His 1995

income was derived from: (1) taxable interest in the amount of $38,109.00

(apparently interest earned, at least in part, from the proceeds of the Conoco sale);

and (2) capital gains of $249.00. This income was offset by a farming loss of

$12,470.00 for a total adjusted gross income of $25,888.00 in 1995. Despite the

decrease in Mr. Brooks' actual income in 1995, his standard of living apparently did

not change in 1995.

6
 The issue now before us is whether Mr. Brooks' child support obligation should

be based on his 1995 income of $25,888.00 or, if he is underemployed, should be

based upon his earning potential. Our independent review of the record in this case

leads us to conclude, as did the Court of Appeals, that Mr. Brooks was willfully and

voluntarily underemployed at the time of the evidentiary hearing in July 1995. The

Guidelines provide: “If an obligor is willfully and voluntarily unemployed or

underemployed, child support shall be calculated based on a determination of

potential income, as evidenced by educational level and/or previous work experience.”

Tenn. Comp. R. & Regs. ch. 1240-2-4-.03(3)(d).

In calculating an underemployed obligor’s potential income, the Court is

required to consider the obligor’s education and prior work experience. Mr. Brooks is

a college graduate and has a history as a successful sole proprietor of a business and

as a land speculator. The earnings he derived from the Conoco store were the best

evidence of his earning capacity at or near the time the petition for an increase in

support was filed. One year prior to the hearing, the store generated profits of

$102,087.00. Moreover, since the record in this case contained Mr. Brooks’ tax

returns for the years 1991, 1992, 1993, 1994, and 1995, the Court of Appeals erred in

concluding that reliable evidence of Mr. Brooks’ earning potential was not in the

record. Tenn. Comp. R. & Regs. ch. 1240-2-4-.03(3)(f). Accordingly, we impute Mr.

Brooks' income for child support purposes at the time of the hearing before the trial

court in this case at $102,087.00.

The appellant, Mrs. Brooks, also argues that the trial court and Court of

Appeals erred in not considering Mr. Brooks’ capital gains income in calculating his

child support obligation. Generally, capital gains are included in the definition of gross

income. See Tenn. Comp. R. & Regs. ch. 1240-2-4-.03(3)(a) (defining income to

include "wages, salaries, commissions, bonuses, pay pensions, interest, trust income,

7
annuities, capital gain . . . and income from self-employment.”). Where, however, the

capital gain is derived from the sale of a business that provided the obligor's principal

source of income, the obligor liquidated the business in part to avoid child support

obligations, and the obligor is found to be voluntarily underemployed, child support

may be calculated as if the obligor is still deriving an income from the business and as

if the obligor never realized a capital gain from the sale of the business.

We have held that Mr. Brooks is voluntarily underemployed and have imputed

an income of $102,087.00 based on the income he made prior to liquidating his

Conoco business. Were we to then impute additional income based on the capital

gains derived from sale of his Conoco store, we would have "double dipped" in

calculating his imputed income. Accordingly, under the facts of this case, the capital

gains derived from the sale of the Conoco store shall not be considered when

imputing Mr. Brooks' child support income.

Next, we are called upon in this case to address whether educational expenses

for private schooling are considered “extraordinary educational expenses.” The Child

Support Guidelines establish a rebuttable presumption of a minimum amount of child

support. Tenn. Code Ann. § 36-5-101 (1996). Obligor parents generally cannot

decrease their minimum child support obligations merely by paying other expenditures

for their children. See Dwight v. Dwight, 936 S.W.2d 945, 950 (Tenn. App. 1996)

(holding obligor cannot deduct his payments of private school tuition from his

mandatory twenty-one percent.). Whether private education expense is an

extraordinary education expense or a mandatory expense of the obligor under Rule

1240-2-4-.04(2) or whether it is a discretionary expense that may be ordered or

equitably apportioned in the "appropriate" case under Tenn. Comp. R. & Regs. ch.

1240-2-4-.04 is an issue of first impression.

8
 In this case now before us, however, Mr. Brooks is not seeking to reduce his

twenty-one percent base child support obligation. The issue is whether Mr. Brooks

shall be ordered to pay the costs of private school tuition in addition to his twenty-one

percent obligation. Both Mr. and Ms. Brooks agreed that their child should attend

private school. Mr. Brooks argued that he agreed only to pay the private school

expenses for the first year. Ms. Brooks alleged that Mr. Brooks agreed to assume the

full financial responsibility for the private school tuition and expenses. The trial court

implicitly found that Mr. Brooks agreed to assume responsibility for the private school

expenses and ordered Mr. Brooks to pay those expenses. The evidence does not

preponderate against the trial judge's findings. We, therefore, hold that Mr. Brooks

shall pay the private school expenses pursuant to the parties' agreement and we need

not address whether private school expenses are extraordinary educational expenses

in all cases.

Finally, based upon our independent review of the record in this case, we hold

that the appellant, Deborah Lorraine Brooks, is entitled to a reasonable attorney’s fee

to be paid by the appellee, Rickey Lamar Brooks, to assist her in the payment of her

attorney’s fees made necessary by the appeal in this matter. On remand, the trial

court shall determine the proper amount of those fees.

CONCLUSION

Child support will be imputed to Mr. Brooks based upon his earning capacity of

$102,087.00. Under the unique circumstances of this case, capital gains will not be

used to compute Mr. Brooks' income. Accordingly, child support is awarded to Ms.

Brooks in the amount of $1,241.00 per month. The child support ordered by this Court

shall be effective as of March 27, 1995, the date of the filing of the petition for

9
modification.3 Mr. Brooks shall pay the private school tuition for the parties' minor

child in the total sum of $3,256.00 for the 1995-96 school year based upon the

agreement of the parties. This cause is remanded to the trial court to determine the

amount of private school tuition to be paid by Mr. Brooks for subsequent school years

and to set a reasonable attorney's fee to be paid by Mr. Brooks.

Cost of this appeal shall be assessed against Mr. Brooks for which execution

may issue if necessary.

William M. Barker, Justice

Concur:
Anderson, C.J., Birch and Holder, J.J.

Birch, J. - Separate dissenting opinion

Not participating:
Drowota, J.

3
See Tenn. Code A nn. §36-5-101(a)(5).

10