Elliott v. Elliott

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
October 7, 2003 Session

STEVEN D. ELLIOTT v. GINGER W. ELLIOTT (ECTON)

Appeal from the Circuit Court for Davidson County
No. 00D-2375 Muriel Robinson, Judge

No. M2003-00492-COA-R3-CV - Filed April 8, 2004

This appeal involves a post-divorce dispute regarding stock options that were part of the marital
estate. The Circuit Court for Davidson County approved a marital dissolution agreement in which
the husband agreed to transfer one-half of his employee stock options to the wife as part of the
division of the martial estate. After the husband’s employer and the employer’s brokerage firm
declined to transfer the stock options to the wife, she orally requested the husband to exercise the
options on her behalf. The value of the employer’s stock fell after the husband did not exercise the
options. The wife sought to hold the husband in contempt or to modify the divorce decree. The trial
court declined to hold the husband in contempt but found that he had impermissibly impeded the
division of the martial estate. Accordingly, the court awarded the wife $59,759.25, the stock
options’ before-tax value had they been exercised on the day the divorce decree was entered. In
addition, the court ordered the husband to immediately sell the options originally awarded to the wife
and to pay her the proceeds as a credit against the judgment. The court also ordered the husband to
pay the wife’s attorney’s fees, as well as prejudgment interest. The husband has appealed. We have
determined that the trial court properly concluded that the husband unreasonably impeded the wife’s
acquisition of the value of the stock options. However, we have determined that the trial court erred
by valuing the stock options as of the time of the divorce rather than the time the wife and the
husband orally agreed to exercise the options and that the court erred by requiring the husband to
exercise his options to pay the judgment. We have also determined that the court erred by awarding
the wife prejudgment interest but properly awarded the wife her attorney’s fees.

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

WILLIAM C. KOCH , JR., P.J., M.S., delivered the opinion of the court, in which WILLIAM B. CAIN and
FRANK G. CLEMENT , JR., JJ., joined.

Markley Runyon Gill, Erin, Tennessee, for the appellant, Steven D. Elliott.

Jeffrey L. Levy, Nashville, Tennessee, for the appellee, Ginger W. Ecton.
 OPINION

I.

On April 10, 2001, Steven D. Elliott and Ginger W. Elliott, now Ecton, executed a marital
dissolution agreement (“MDA”) as part of their divorce proceeding pending in Circuit Court for
Davidson County. Under the terms of this MDA, Mr. Elliott, then a manager at The Home Depot
(“Home Depot”), agreed to transfer one-half of the stock options he had earned during the marriage
to Ms. Ecton. The MDA specified the division as follows:

1997 Options $11.33 per share 1050 to Wife 1050 to Husband
1998 Options $21.29 per share 675 to Wife 675 to Husband
1999 Options $37.92 per share 300 to Wife 300 to Husband
2000 Options $53.00 per share 100 to Wife 100 to Husband

The trial court approved the MDA and incorporated it into the final divorce decree that was entered
on April 27, 2001. Had Ms. Ecton exercised these options on the day the divorce decree was
entered, they would have generated $59,759.25 before taxes.

The MDA did not specify how Mr. Elliott would transfer the options to Ms. Ecton, although
it did require both parties to undertake all further acts necessary to carry out the purposes and intent
of the MDA. At the time of the divorce, both Ms. Ecton and Mr. Elliott thought that he could simply
place the options in Ms. Ecton’s name or that Ms. Ecton could simply call Mr. Elliott to exercise the
options whenever she was ready. The MDA did not allocate the tax burden for the exercise of the
options, but the parties’ understanding was that they would bear the tax consequences for the
exercise of their own options.1

The parties later discovered that Home Depot’s employee stock option plan would not permit
Mr. Elliott to transfer one-half of his stock options to Ms. Ecton. Accordingly, Ms. Ecton’s lawyer
prepared a qualified domestic relations order or “QDRO” under the Retirement Equity Act of 1984,
Pub. L. 98-397, 98 Stat. 1426 (“REA”). The REA permits the assignment of pension plan benefits
to non-plan participants if done pursuant to a QDRO. The QDRO reiterated the division of the stock
options contained in the MDA and specifically provided that Ms. Ecton rather than Mr. Elliott would
be liable for the taxes arising from the exercise of her half of the options.

The trial court signed and entered the QDRO on January 14, 2002, but both Home Depot and
its broker of record, Smith Barney, refused to honor it. Because Mr. Elliott’s stock options were not
part of a retirement plan, Home Depot and Smith Barney concluded that they could not be transferred
under a QDRO. Moreover, under Home Depot’s employee stock option plan, Mr. Elliott could not

1
The MDA specifically assigned Mr. Elliott responsibility for the taxes on the options he exercised after the
parties’ separation but prior to the entry of the MDA.

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transfer his options to any non-employee, including Ms. Ecton.2 Thus, Home Depot and Smith
Barney advised Ms. Ecton that the only way she could receive the benefit of the options Mr. Elliott
agreed to transfer to her in the MDA was for Mr. Elliott to exercise the options himself and transfer
the proceeds to her.3

Shortly thereafter, Ms. Ecton met with a financial advisor to discuss her finances. The
financial advisor told Ms. Ecton that the market price for Home Depot stock was relatively high and
recommended that she exercise the options Mr. Elliott agreed to transfer to her in the MDA. At the
time, Ms. Ecton had not spoken with Mr. Elliott since the parties’ divorce. Nevertheless, the
following day, February 13, 2002, Ms. Ecton telephoned Mr. Elliott.

During this telephone conversation, Ms. Ecton told Mr. Elliott what her financial advisor had
said and that Home Depot and Smith Barney had refused to honor the QDRO. She also told him that
Home Depot and Smith Barney had informed her that the only way she could realize the value of the
options was for Mr. Elliott to exercise them and transfer the proceeds to her. Ms. Ecton instructed
Mr. Elliott to exercise the options and agreed to pay the resulting tax liability. Ms. Ecton said her
tax advisor estimated the tax liability to be 23% and told Mr. Elliott that he could deduct that amount
from the proceeds and give her the remainder.

Mr. Elliott agreed to exercise the options and transfer the proceeds to her. Mr. Elliott said
he believed the tax liability would be closer to 30% and that he wanted to check with his own
financial advisor to determine the amount he needed to withhold to cover the tax liability. Mr.
Elliott also agreed to exercise and give Ms. Ecton the proceeds from 100 of his own 1997 options,
and in return he was going to keep Ms. Ecton’s 100 2000 options which could not be exercised then
because the market price was currently higher than the option price. Had Mr. Elliott done what he
agreed to do, Ms. Ecton would have realized $68,113.25 before taxes from the exercise of the stock
options.

There is no evidence in the record that Mr. Elliott did, in fact, speak with a financial advisor
regarding the tax liability he would incur from the exercise of Ms. Ecton’s options. Instead, Mr.
Elliott apparently contacted his attorney who told him that he was free to renege on his agreement.
At that point, Mr. Elliott decided that he was not going to exercise Ms. Ecton’s options as agreed.
He did not, however, inform Ms. Ecton of his decision. Instead, on February 27, 2002, two weeks
after his conversation with Ms. Ecton, Mr. Elliott exercised 1,225 of his own Home Depot stock
options but none of the 2,125 options he had agreed to exercise for Ms. Ecton. Mr. Elliott realized
a profit of $37,572.26 before taxes.

2
Counsel for the parties failed to include Home Depot’s employee stock option plan in the record on appeal.
It is unclear from the record whether the plan was ever produced to the trial court or, for that matter, whether the parties’
counsel in the divorce proceeding ever consulted it. In any event, it is clear from the record on appeal that whatever else
the plan says, it barred the transfer of options awarded under the plan to individuals like Ms. Ecton who were not
employed by Home Depot.

3
Under Home Depot’s employee stock option plan, the exercise of the options and the sale of the resulting
shares occurs simultaneously, and the employee receives the difference between the option price and the day’s market
price for the stock.

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 Mr. Elliott did not tell Ms. Ecton that he had decided to renege on their agreement until four
to six weeks later when Ms. Ecton called to inquire about the exercise of the options. Further
attempts by Ms. Ecton and her attorney to obtain the cooperation of Mr. Elliott and his attorney to
exercise Ms. Ecton’s options proved futile. Thus, on July 17, 2002, Ms. Ecton filed a petition to
have Mr. Elliott held in contempt or in the alternative to modify the divorce decree.

The trial court held a hearing on Ms. Ecton’s petition on January 9, 2003. Both Mr. Elliott
and Ms. Ecton testified, and several exhibits were admitted into evidence. On February 10, 2003,
the trial court entered a written order declining to hold Mr. Elliott in contempt. The trial court did,
however, grant the petition to modify the original divorce decree. The trial court found that February
13, 2002 was “the date in which the Respondent [Mr. Elliott] first agreed to exercise the options and
turn over the money to the Petitioner [Ms. Ecton].” The trial court explained that Mr. Elliott “then
changed his mind and failed to exercise the options resulting in this lawsuit to enforce the provisions
of the Final Decree of Divorce.” The trial court concluded that Mr. Elliott had impermissibly
impeded the transfer of the cash value of the stock options to Ms. Ecton by not exercising the Home
Depot options in a timely manner and that Mr. Elliott had been an impediment to the division of the
marital assets. The trial court entered a judgment in favor of Ms. Ecton for $59,759.25, the sum the
options would have generated had they been exercised the day the original divorce decree was
entered. The trial court ordered Mr. Elliott to pay Ms. Ecton’s attorneys’ fees in the amount of
$1,776.07 and held that the judgment would accrue interest at the rate of 10% running from the date
Mr. Elliott orally agreed to exercise the options. Mr. Elliott appealed.4

II.
THE STANDARD OF REVIEW

The standards this court uses to review the results of bench trials is well settled. With regard
to a trial court's findings of fact, we will review the record de novo and will presume that the findings
of fact are correct unless the preponderance of the evidence is otherwise. We will also give great
weight to a trial court's factual findings that rest on determinations of credibility. Estate of Walton
v. Young, 950 S.W.2d 956, 959 (Tenn. 1997); B & G Constr., Inc. v. Polk, 37 S.W.3d 462, 465
(Tenn. Ct. App. 2000). However, if the trial judge has not made a specific finding of fact on a
particular matter, we will review the record to determine where the preponderance of the evidence
lies without employing a presumption of correctness. Ganzevoort v. Russell, 949 S.W.2d 293, 296
(Tenn. 1997).

Reviewing findings of fact under Tenn. R. App. P. 13(d) requires an appellate court to weigh
the evidence to determine in which party's favor the weight of the aggregated evidence falls. There
is a reasonable probability that a proposition is true when there is more evidence in its favor than

4
The trial court also ordered Mr. Elliott to exercise all of M s. Ecton’s shares for her immediately, with the
proceeds to constitute a reduction in the judgment, and ordered Ms. Ecton to pay the taxes arising from the exercise of
the options. In addition, the trial court mandated that the judgment against Mr. Elliott would constitute a lien against
all of his property, including wages, retirement accounts, personal accounts, personal property, real property and
automobiles. Mr. Elliott does not specifically challenge these remedies on appeal apart from his attack on the underlying
judgment in general.

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there is against it. Thus, the prevailing party is the one in whose favor the evidentiary scale tips, no
matter how slightly. Parks Props. v. Maury County, 70 S.W.3d 735, 741 (Tenn. Ct. App. 2001);
Realty Shop, Inc. v. RR Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999).

Tenn. R. App. P. 13(d)'s presumption of correctness requires appellate courts to defer to a
trial court's findings of fact. Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296
(Tenn. Ct. App. 2001). Because of the presumption, an appellate court is bound to leave a trial
court's finding of fact undisturbed unless it determines that the aggregate weight of the evidence
demonstrates that a finding of fact other than the one found by the trial court is more probably true.
Parks Props. v. Maury County, 70 S.W.3d at 742. For the evidence to preponderate against a trial
court's finding of fact, it must support another finding of fact with greater convincing effect. Walker
v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn. Ct. App. 2000).

The presumption of correctness in Tenn. R. App. P. 13(d) applies only to findings of fact and
not to conclusions of law. Accordingly, appellate courts review a trial court's resolution of legal
issues without a presumption of correctness and reach their own independent conclusions regarding
these issues. Johnson v. Johnson, 37 S.W.3d 892, 894 (Tenn. 2001); Nutt v. Champion Int'l Corp.,
980 S.W.2d 365, 367 (Tenn. 1998).

III.
THE EMPLOYEE STOCK OPTIONS

Mr. Elliott argues the trial court erred in concluding that he impermissibly impeded the
distribution of the marital assets. According to Mr. Elliott, all he agreed to do in the MDA with
respect to the stock options was to sign paperwork transferring the options to Ms. Ecton. He asserts
that since Ms. Ecton never presented him with paperwork he could sign to transfer the options over
to her, he has not violated the terms of the MDA, and therefore, he did not impede the division of
the marital assets. This argument borders on the disingenuous.

A.

An MDA’s provisions pertaining to the division of the parties’ marital estate are essentially
contractual, even after they have been judicially approved and incorporated into a divorce decree.
Johnson v. Johnson, 37 S.W.3d at 896; Wade v. Wade, 115 S.W.3d 917, 924 (Tenn. Ct. App. 2002);
Gray v. Estate of Gray, 993 S.W.2d 59, 63 (Tenn. Ct. App. 1998). The parties may not unilaterally
modify an MDA once it has been approved by the trial court. Johnson v. Johnson, 37 S.W.3d at 895.
In fact, both parties obtain a vested interest in the property allocated to them in the MDA, and neither
party may frustrate the other’s receipt of his or her vested interest. Johnson v. Johnson, 37 S.W.3d
at 897.

The portions of an MDA that remain contractual after the trial court has approved them
should be construed and enforced like other contracts. Bogan v. Bogan, 60 S.W.3d 721, 730 (Tenn.
2001); Gray v. Estate of Gray, 993 S.W.2d at 63. Thus, our goal is to ascertain and give effect to
the parties’ intentions. Ahern v. Ahern, 15 S.W.3d 73, 81 (Tenn. 2000). Our search for the parties’
intentions must focus on the MDA itself. Each provision of an MDA should be construed in light

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of the entire MDA, and the language in these provisions should be given its natural and ordinary
meaning. We should construe MDAs fairly and reasonably, and we should avoid rewriting these
agreements under the guise of “construing” them. Duvier v. Duvier, No. 01A01-9311-CH-00506,
1995 WL 422465, at *3 (Tenn. Ct. App. July 19, 1995) (No Tenn. R. App. P. 11 application filed).

Every contract imposes upon the parties a duty of good faith and fair dealing in the
performance and interpretation of the contract. Wallace v. National Bank of Commerce, 938 S.W.2d
684, 686 (Tenn. 1996); RESTATEMENT (SECOND ) OF CONTRACTS § 205 (1979); 2 JOSEPH M. PERILLO
& HELEN HADJIYAUUAKIS BENDER , CORBIN ON CONTRACTS § 5.27, at 139 (rev. ed. 1995). This duty
requires a contracting party to do nothing that will have the effect of impairing or destroying the
rights of the other party to receive the benefits of the contract. Winfree v. Educators Credit Union,
900 S.W.2d 285, 289 (Tenn. Ct. App. 1995). The provisions of an MDA that retain their contractual
character following the entry of a final divorce decree carry with them this duty of good faith and
fair dealing. Hilman v. Hilman, No. M2002-00898-COA-R3-CV, 2003 WL 21766254, at *3 (Tenn.
Ct. App. July 31, 2003) (No Tenn. R. App. P. 11 application filed).

B.

There is no dispute regarding the nature of the property division that the parties intended in
this case. The MDA clearly reflects that Mr. Elliott voluntarily agreed to transfer one-half of his
Home Depot employee stock options to Ms. Ecton, and Ms. Ecton voluntarily agreed to accept these
stock options in lieu of cash.5 The parties anticipated that following their divorce, Ms. Ecton would
obtain and exercise complete control over the options she received in the divorce decree.

If there was any uncertainty, it involved the mechanism by which the stock options would
be transferred to Ms. Ecton. When the parties were negotiating the MDA, they apparently believed
that Mr. Elliott could simply sign over the stock options to Ms. Ecton. They later learned that the
transfer process was not that simple. Specifically, Home Depot and Smith Barney informed them
that Mr. Elliott could not sign over the stock options to Ms. Ecton and that they would not recognize
a QDRO. Thus, by early 2002 at the latest, the parties knew or should have known: (1) that the stock
options themselves could not be transferred to Ms. Ecton at all regardless of the paperwork presented
to Home Depot or Smith Barney; and (2) that the only way that Ms. Ecton could obtain the benefit
of the stock options was for Mr. Elliott to exercise the options himself and then transfer the proceeds
to her. Ms. Ecton communicated this information to Mr. Elliott.

Once the parties discovered that the mechanism chosen by their attorneys to transfer the stock
options had failed, they were obligated to deal with each other fairly and in good faith to effectuate

5
The parties could very easily have agreed to accomplish the division of the stock options by requiring Mr.
Elliott to exercise half of the options immediately and pay the proceeds over to M s. Ecton. However, Ms. Ecton
apparently decided that these stock options would increase in value over time and, therefore, that she would be better
served by obtaining the options rather than the cash. It is perfectly permissible for divorcing parties to make this sort
of investment decision. However, like any other investment, they do so with the understanding that stock, stock options,
and other investments cannot only increase but also decrease in value over time. W hen Ms. Ecton decided to accept the
stock options rather than cash, she assumed the risk that the value of these options could decrease before she exercised
them.

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the intent of the MDA. Initially, both parties acted in good faith. During a February 13, 2002
telephone call, Ms. Ecton unequivocally instructed Mr. Elliott to exercise the options awarded to her
in the MDA and offered to pay any tax liability he incurred as a result. Mr. Elliott agreed to comply
with her request.6

Subsequently, Mr. Elliott, apparently acting on the advice of his attorney, decided not to
exercise Ms. Ecton’s options. His decision to renege on the oral agreement without informing Ms.
Ecton of his decision until a much later date constitutes a breach of the parties’ February 13, 2002
oral agreement, as well as a breach of his duty of good faith and fair dealing under the original MDA.
The fact that Mr. Elliott may have viewed his conduct as justified is irrelevant because “[s]ubterfuges
and evasions violate the obligation of good faith in performance even though the actor believes his
conduct to be justified.” RESTATEMENT (SECOND ) OF CONTRACTS § 205 cmt. d. We therefore affirm
the trial court’s conclusion that Mr. Elliott impermissibly impeded the division of the marital estate
and that Ms. Ecton was entitled to recover damages as a result.

Although we are upholding the trial court’s conclusion that Mr. Elliott impermissibly
impeded the division of the marital estate, we note that both parties in this case were caught in a
legal quagmire resulting primarily from their lawyers’ failure to do adequate research in devising the
original MDA. At the time the parties entered into the MDA, the complexities inherent in
structuring the division of a marital estate composed in part of employee stock options had already
been addressed in the legal literature and in case law from other jurisdictions.7 The legal literature
and case law addressing these problems have only grown since that time.8 The parties’ attorneys
should have consulted the Home Depot employee stock option plan and structured the MDA
accordingly. If, as it appears from the record on appeal, there was no way to structure the MDA to
transfer the stock options themselves to Ms. Ecton, the parties’ attorneys should have included in

6
This would be a very different case had Mr. Elliott informed Ms. Ecton on February 13, 2002 that he was
unwilling to exercise the options unless Ms. Ecton put her request in writing. But, as the trial court specifically found,
Mr. Elliott accepted M s. Ecton’s oral offer by agreeing to exercise the options and to transfer the proceeds to her. W e
cannot reverse the trial court’s factual finding in this regard unless we determine that the evidence preponderates against
it. W e have conducted an independent review of the record on appeal and conclude that there was ample evidence in
the record to support the trial court’s finding of an oral agreement. Although there was some uncertainty as to how much
the taxes would be, the essential terms of the agreement were in place. This agreement was enforceable, and Mr. Elliott
should have exercised the options as he agreed and retained the money necessary to pay the taxes.

7
E.g., Andrew C. Littman, Valuation and Division of Employee Stock Options in Divorce, 29 Colo. Law. 61
(M ay 2000); Lynn Curtis, Valuation of Stock Options in Dividing Marital Property Upon Dissolution, 15 J. Am. Acad.
Matrim. Law. 411 (1998). For a discussion of the case law, see Eric Hollowell, Annotation, Divorce and Separation:
Treatment of Stock Options for Purposes of Dividing Marital Property, 46 A.L.R.4th 640 (1986 & Supp. 2003); Eric
Hollowell, Annotation, Valuation of Stock Options for Purposes of Divorce Court’s Property Distribution, 46 A.L.R.4th
689 (1986 & Supp. 2003).

8
E.g., Charles P. Kindregan, Jr. & Patricia A. Kindregan, Unexercised Stock Options and Marital Dissolution,
34 Suffolk U. L. Rev. 227 (2001); Tracy A. Thomas, The New Marital Property of Employee Stock Options, 35 Fam.
L.Q. 497 (Fall 2001); Brett R. Turner, Equitable Distribution of Stock Options, 19 Equitable Distribution J. 133 (Dec.
2002); Laura W . Morgan, Distribution of Employee Stock Options, 15 Divorce Litig. 17 (Jan. 2003); D avid S.
Rosettenstein, Options on Divorce: Taxation, Compensation Accountability, and the Need to Look for Holistic
Solutions, 37 Fam. L.Q. 203 (Summer 2003).

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the MDA specific provisions governing the exercise of the options, transfer of the proceeds, and
payment of the resulting taxes. These provisions would presumably have included procedural
safeguards – e.g., a requirement that any instruction to exercise options be in writing, specify which
and how many of the options were to be exercised and when, and be delivered by certified mail –
to protect the parties from the very eventualities that gave rise to this case.9

C.

Next, we turn to Ms. Ecton’s argument that the trial court erred in measuring her damages.
We agree with Ms. Ecton’s argument that the damages should have been measured from the date Mr.
Elliott agreed to exercise the options, not the date of the divorce decree. The undisputed evidence
in the record shows that had Mr. Elliott exercised Ms. Ecton’s options on February 13, 2002 as he
promised, the net proceeds before taxes would have been $68,113.25. However, as the parties
agreed, this amount would have been reduced by whatever taxes Mr. Elliott became liable to pay as
a result of the exercise of the options.

The trial court should have awarded Ms. Ecton a judgment for $68,113.25 minus the amount
of taxes Mr. Elliott can show he would have had to pay had he exercised the options as he agreed.
The record does not reveal how much the taxes would have been, and therefore, we must remand the
case for a recalculation of the damages award.

We have also concluded that the trial court erred by ordering Mr. Elliott to exercise the stock
options. By the time the trial court ordered Mr. Elliott to exercise his stock options, their value had
decreased substantially compared to their value on April 27, 2001 (the entry of the final divorce
decree) or February 13, 2002 (the date of the parties’ oral agreement to exercise the options). By
demanding a cash settlement, Ms. Ecton had relinquished her claim to these stock options for their
investment value. While these options may, as a practical matter, have been Mr. Elliott’s only source
of funds to pay the judgment, the trial court should have left the decision whether or not to exercise
the options to Mr. Elliott. It would have been appropriate for Mr. Elliott to retain the stock options
as investments and obtain the funds to pay the judgment from other sources.

IV.
THE ATTORNEY ’S FEES AND PREJUDGMENT INTEREST

The trial court also ordered Mr. Elliott to pay Ms. Ecton prejudgment interest and $1,776.07
in attorney’s fees. Mr. Elliott has taken issue with the award of attorney’s fees. While he has not
explicitly taken issue with the award of prejudgment interest, we have decided to address this issue
pursuant to Tenn. R. App. P. 13(b). We have determined that the trial court erred by awarding Ms.
Ecton prejudgment interest but that the trial court properly awarded Ms. Ecton her attorney’s fees.

Awarding prejudgment interest is a discretionary matter. Spencer v. A-1 Crane Serv., Inc.,
880 S.W.2d 938, 944 (Tenn. 1994); Stooksbury v. American Nat’l Prop. & Cas. Co., 126 S.W.3d

9
It is also possible that the parties, had they been informed by their lawyers of the practical difficulties associated
with splitting the stock options in the MDA, might have chosen to structure the property division in some other manner.

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505, 521 (Tenn. Ct. App. 2003). Courts need not award prejudgment interest to every prevailing
party but should award prejudgment interest when it is fair, given the particular circumstances of the
case. Myint v. Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn. 1998); O’Leary v. Johnson, 84 S.W.3d
584, 589 (Tenn. Ct. App. 2002). Prejudgment interest need not be awarded to a party who has been
dilatory in pursuing a claim or who has delayed the proceeding. Christmas Lumber Co. v. Valiga,
99 S.W.3d 585, 596 (Tenn. Ct. App. 2002); Scholz v. S. B. Int’l, Inc., 40 S.W.3d 78, 83 (Tenn. Ct.
App. 2000).

Both parties were attempting to end their marriage as amicably as possible when they were
negotiating their MDA. The imbroglio in which they found themselves in late 2001 and early 2002
was their attorneys’ making, not theirs. When they learned that something was amiss, they should
likewise have cooperated to resolve the problem. However, amicable dealings and cooperation are
frequently not part of post-divorce relationships. With this reality in mind, Ms. Ecton and her
attorney should have realized that the ball was in their court when the problem with her stock options
manifested itself. They should have quickly obtained another enforceable written agreement with
Mr. Elliott regarding the options or returned to court to obtain a modification of the divorce decree
to correct the problem.

A supplemental oral agreement is not an advisable way to modify a marital dissolution
agreement. The existence of these agreements can be too easily disputed, and the terms of these
agreements can be difficult to prove.10 Thus, Ms. Ecton should have given Mr. Elliott written
instructions to sell her share of the stock options and should have insisted on written confirmation
of the transaction. She should not have waited approximately five months before she sought judicial
relief, and it should not have taken another six months for the trial court to address the matter.
During this entire time, both Mr. Elliott and Ms. Ecton bore the risk that the value of the stock
options would change. By the time the trial court addressed the problem, the value of the stock
options was significantly less than the value in February 2002. Under these circumstances, awarding
Ms. Ecton prejudgment interest from February 13, 2002 was unfair, and therefore, we vacate that
portion of the judgment.

As a general matter, litigants are expected to be responsible for their own attorney’s fees in
the absence of a statute or contractual provision otherwise. John Kohl & Co. v. Dearborn & Ewing,
977 S.W.2d 528, 534 (Tenn. 1998); Massachusetts Mut. Life Ins. Co. v. Jefferson, 104 S.W.3d 13,
33 (Tenn. Ct. App. 2002). In domestic relations cases, three of the most common circumstances in
which attorney’s fees are appropriate include: (1) awards to economically disadvantaged spouses
as additional spousal support in divorce proceedings;11 (2) awards to spouses who must return to

10
The difficulty of proof can be a two-edged sword. Parties like Ms. Ecton could have difficulty proving the
existence of an oral agreement if the other party denies its existence. Similarly, parties like Mr. Elliott who act in good
faith based on oral instructions to exercise stock options may find themselves at risk if the other party later denies that
he or she asked for the options to be exercised.

11
E.g., Smith v. Sm ith, 912 S.W .2d 155, 161 (Tenn. Ct. App. 1995); Brown v. Brown, 913 S.W .2d 163, 170
(Tenn. Ct. App. 1994).

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court to enforce child support obligations;12 and (3) awards to spouses seeking to enforce an MDA
when the MDA contains a provision for attorney’s fees.

Paragraph XIX of the MDA explicitly entitles either party to recover his or her “reasonable
expenses including attorney fees” if “it becomes reasonably necessary for either party to institute
legal proceedings to procure the enforcement of any provisions of . . . [the MDA].” Based on the
correspondence in May and June 2002 from Mr. Elliott’s attorney, we find, as did the trial court, that
Ms. Ecton was left with no option other than to seek judicial assistance in obtaining the benefit of
her agreement embodied in the MDA. Accordingly, the trial court properly awarded Ms. Ecton
$1,776.07 in legal expenses.

V.

We affirm the trial court’s determination that Mr. Elliott impeded the division of the marital
estate by breaching the parties’ February 13, 2002 agreement to exercise the stock options allocated
to Ms. Ecton in the MDA. However, we modify the judgment to award Ms. Ecton $68,113.25 less
Mr. Elliott’s tax liability for this sale and remand the case to the trial court to ascertain the amount
of Mr. Elliott’s tax liability and for any other proceedings that may be required. We vacate the award
of prejudgment interest. In addition, we affirm the award of the attorney’s fees Ms. Ecton incurred
in the trial court, but we deny her request for additional attorney’s fees for this appeal. We tax the
costs of this appeal to Steven D. Elliott and his surety for which execution, if necessary, may issue.

_______________________________
WILLIAM C. KOCH, JR., P.J., M.S.

12
Tenn. Code Ann. § 36-5-103(c) (2001).

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