IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
______________________________________________
DIANE SLAWSON WATTERS,
Plaintiff-Appellee,
Shelby Chancery No. D23808-2
FILED
October 19, 1999
Cecil Crowson, Jr.
Appellate Court Clerk
Vs. C.A. No. 02A01-9810-CH-00306
WILLIAM C. WATTERS,
Defendant-Appellant,
and GENERAL MILLS, INC.,
Defendant.
______________________________________________________________________
______
FROM THE SHELBY COUNTY CHANCERY COURT
THE HONORABLE FLOYD PEETE, JR., CHANCELLOR
Daniel D. Warlick of Nashville
For Appellee
James D. Causey and Jean E. Markowitz of Memphis
For Appellant
AFFIRMED AND REMANDED
Opinion filed:
Page 1
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCURS:
DAVID R. FARMER, JUDGE
DISSENTS: (With Separate Opinion)
DAVIG G. HAYES, JUDGE
This case, which is before us a second time, involves an attempt to modify a final
decree of divorce. Defendant/Appellant, William G. Watters (Husband), 1 appeals the order
of the trial court denying Husband’s petition to modify final decree of divorce as to child
support and alimony to be paid to Plaintiff/Appellee, Diane Slawson Watters (Wife).
After approximately fourteen years of marriage, Wife was awarded a divorce on
grounds of inappropriate marital conduct by a final decree entered June 23, 1995. The
decree, inter alia, awarded Wife the marital residence and its accompanying
indebtedness; gave Wife her separate property totaling $12,990.00 and Husband his
separate property totaling $3,915.00; awarded marital property to Wife totaling
approximately $326,000.00 which includes the marital residence, the General Mills
Voluntary Investment Plan in Husband’s name (401K) in the amount of $185,543.00, and the
proceeds less capital gains tax realized from the exercise of certain General Mills stock
options in the amount of $47,960.00; awarded Husband marital property totaling
approximately $247,000.00 which includes certain General Mills’ stock options
($75,593.00) and restricted stock options ($15,995.00) and his pension benefit with a
present value of $139,423.00; ordered Wife responsible for marital debts in the amount of
$13,346.00 and Husband responsible in the amount of $12,545.00; awarded custody of the
minor child to Wife; 2 ordered Husband to pay $1,027.00 per month in child support plus 21%
of his annual bonus, less appropriate deductions for income taxes and social security, and
all private school tuition and expenses; ordered Husband to maintain medical insurance on
Wife and child and be responsible for 50% of the uncovered medical expenses; ordered
Page 2
Husband to pay Wife $1,900.00 per month in alimony for seven years or until her death or
remarriage; ordered Husband to pay Wife’s attorney’s fees in the amount of $38,798.66;
and ordered Husband to maintain a $200,000.00 insurance policy on his life with Wife as
beneficiary for five years with the amount of coverage to then drop $20,000.00 per year for
two years. 3
On July 19, 1996, Husband filed a “Petition to Modify Final Decree of Divorce as to
Child Support and Alimony.” In the petition, Husband avers that there is a substantial
change of circumstances in that the Memphis office of his employer has closed and
relocated its principal place of business to Atlanta, Georgia. He avers that because he did
not want to relocate to another state and forfeit a large portion of his time with his son, he
has taken a job with another employer at a much lower salary. Due to this change of
circumstances, Husband requests that his child support obligation and alimony obligation
be reduced in conformity with his present income. Husband subsequently filed an amended
petition wherein he submitted that Wife has obtained employment and is no longer in need
of alimony.
On November 12, 1996, the matter was heard before a divorce referee pursuant to
an Order of Reference. The divorce referee found that there has been a change of
circumstances; that Husband is not willfully underemployed; that Husband is to remain
responsible for fifty percent of the minor child’s uncovered medical expenses; that monthly
child support should be reduced to $804.00 with the difference from the amount Husband
was previously paying to be paid into an educational account for the minor child; that
Husband shall continue to be responsible for the minor child’s private education expenses
as an extraordinary expense; that Husband’s alimony obligation is to be reduced to
$1,000.00 per month; that the arrearage of alimony is not forgiven; that Husband shall
continue to maintain Wife’s medical insurance; and that Husband shall be responsible for 25
% of Wife’s uncovered medical expenses for three years or until she graduates whichever is
sooner.
Page 3
Both parties appealed the referee’s order, and after a hearing, the trial court entered
an order on September 21, 1998, vacating the referee’s order and reinstating the final
decree of divorce. In its order, the trial court found that there has been no substantial
change in circumstances even though Husband’s income is substantially less; that the
decrease in income was voluntary in that Husband was offered a transfer with his company
to Atlanta at the same rate he was making at the time of the divorce; that, although Husband
states he remained in Memphis to be near his son, he has not participated in visitation in
any way that could not have been done from Atlanta; that child support should remain the
same, based on earning capacity since Husband was voluntarily underemployed; and that
alimony should not be reduced. 4
Husband has appealed and presents the following issues, as stated in his brief, for
review:
1. Whether the trial court erred in finding that there was no
substantial change in circumstances and in failing to ascertain
Husband’s earning capacity.
2. Whether the evidence presented at the referee’s hearing
supports the trial court’s finding that the defendant is voluntarily
underemployed.
3. Whether the trial court erred in not reducing child support,
alimony and the remaining obligations ordered in the final
decree of divorce and in failing to forgive alimony arrearage.
4. Whether the trial court erred in considering marital assets
awarded at the time of the divorce in determining defendant’s
ability to pay ongoing support.
Since this case was tried by the trial court sitting without a jury, we review the case
de novo upon the record with a presumption of correctness of the findings of fact by the trial
court. Unless the evidence preponderates against the findings, we must affirm, absent error
of law. T.R.A.P. 13(d).
The crux of Husband’s appeal is whether the trial court erred in refusing to reduce his
child support obligation and alimony obligation. The issues presented can be considered
together.
Page 4
Modification of an existing child support order is controlled by T.C.A. § 36-5-101(a)
(Supp. 1998), which states, in pertinent part:
In cases involving child support, upon application of either party,
the court shall decree an increase or decrease of such
allowance when there is found to be a significant variance, as
defined in the child support guidelines established by
subsection (e), between the guidelines and the amount of
support currently ordered unless the variance has resulted from
a previously court-ordered deviation from the guidelines and the
circumstances which cause the deviation have not changed.
“For the purposes of defining a significant variance between the guideline amount
and the current support order pursuant to T.C.A. § 36-5-101, a significant variance shall be
at least 15% if the current support is one hundred dollars ($100.00) or greater per month
and at least fifteen dollars ($15.00) if the current support is less than $100.00 per month.”
Tenn. Comp. R. & Regs. 1240-2-4-.02(3) (1994). However, “[s]uch variance would justify
the modification of a child support order unless, in situations where a downward
modification is sought, the obligor is willfully and voluntarily unemployed or underemployed.”
Id.
The guidelines direct trial courts to determine the amount of support required by the
guidelines “based on a flat percentage of the obligor’s net income.” Tenn. Comp. R. &
Regs. 1240-2-4-.03(2). However, where an obligor is “willfully and voluntarily unemployed or
underemployed,” rather than awarding child support based on an obligor’s actual income,
the trial court is required to award child support “based on a determination of [the obligor’s]
potential income, as evidence by [his or her] educational level and/or previous work
experience.” Tenn. Comp. R. & Regs. 1240-2-4-.03(3)(d).
As for alimony, T.C.A. § 36-5-101, which provides for spousal support, states, in
pertinent part, that “on application of either party for spousal support, the court may decree
an increase or decrease of such allowance only upon a showing of a substantial and
material change of circumstances.” T.C.A. § 36-5-101(a)(1) (1996 & Supp. 1998)
(emphasis added). Whether there has been a sufficient showing of a substantial and
Page 5
material change of circumstances is in the sound discretion of the trial court. Wilkinson v.
Wilkinson, 1990 WL 95571, at *4 (Tenn. App. July 12, 1990) (citing Jones v. Jones, 784
S.W.2d 349, 352 (Tenn. App. 1989)).
The party seeking relief on the grounds of a substantial and material change in
circumstances has the burden of proving such changed circumstances warranting an
increase or decrease in the amount of the alimony obligation. Seal v. Seal, 802 S.W.2d
617, 620 (Tenn. App. 1990). The change in circumstances must have occurred since the
entry of the divorce decree ordering the payment of alimony. Elliot v. Elliot, 825 S.W.2d
87, 90 (Tenn. App. 1991). Furthermore, the change in circumstances must not have been
foreseeable at the time the parties entered into the divorce decree. Id. If the change in
circumstances was anticipated or in the contemplation of the parties at the time they
entered into the property settlement agreement, such changes are not material to warrant a
modification of the alimony award. Jones v. Jones, 784 S.W.2d 349, 353 (Tenn. App.
1989).
The decision to modify the alimony obligation is factually driven and requires a
careful balancing of several factors. Cranford v. Cranford, 772 S.W.2d 48, 50 (Tenn. App.
1989). The factors set forth in T.C.A. § 36-5-101(d), applicable to the initial grant of spousal
support and maintenance, where relevant, must be taken into consideration in determining
whether there has been a change in circumstances to warrant a modification of the alimony
obligation. Threadgill v. Threadgill, 740 S.W.2d 419, 422-23 (Tenn. App. 1987).
While T.C.A. § 36-5-101(d) enumerates several factors for the court to consider, the
need of the spouse receiving the support is the single most important factor. Cranford, 772
S.W.2d at 50. In addition to the need of the spouse receiving support, the courts most often
take into consideration the ability of the obligor spouse to provide support. Id.
At the time the final decree was entered, Wife was forty-seven years of age,
Husband was forty-four, and their minor child was thirteen. Husband was employed as a
regional sales manager with General Mills, Inc. in Memphis with a net base salary of
Page 6
approximately $4,890.47 per month along with a bonus he received each year. His gross
income in 1994 was $135,254.00. During the parties’ marriage, Wife was primarily a
homemaker and student. At the time of the decree, Wife was pursuing her doctorate
degree in counseling education with an expected graduation date in August 1998 with an
estimated earning capacity between $35,000.00 and $50,000.00 after she had developed
her practice over several years. Husband was in good health at the time while Wife had
undergone a double mastectomy during the marriage.
Husband left his employment with General Mills, Inc. in 1995 when General Mills, Inc.
closed its regional office in Memphis and made Atlanta its principal place of business.
Husband was offered a lateral move to Atlanta or a severance package. Husband
accepted the severance package because, according to Husband, he wanted to stay in the
Memphis area for his son. After he left General Mills, Inc. and after an alleged extensive job
search, Husband accepted a position with Display Arts, Inc. Husband asserts that while the
salary is lower than his General Mills salary, it is the best offer he could find. At the time he
filed the petition to modify, Husband was employed as president of Display Arts, Inc. with a
yearly income of $65,000.00 and net pay of $3,367.16 per month. Husband filed an affidavit
of monthly income and expenses which revealed a monthly deficit of $2,538.40.
Husband asserts that the trial court erred in not reducing his child support obligation
by failing to apply the proper standard and failing to make the proper findings related to that
standard. He states that the trial court is required to determine whether there has been a
significant variance in determining whether child support should be modified, that the trial
court failed to apply this standard, and that a significance variance exists warranting a
modification of his child support obligation. Husband also disputes the trial court’s finding
that he was voluntarily underemployed. He contends that the mere fact that he chose to
decline the lateral transfer to Atlanta should not be, in and of itself, grounds to find that he
was voluntarily underemployed. He states that he did not refuse to take the transfer for his
own personal pleasure, but out of his concern and desire to be near his son so he could not
Page 7
only exercise his visitation rights but to be involved in his son’s other activities. Husband
contends that the internal change in General Mills, Inc. leading to his severance, his long and
hard efforts to find a comparable position, his demonstrated willingness to support his child,
and his desire to remain an active participant in his son’s life do not support a finding of
voluntary underemployment. He further submits that upon finding that he was voluntarily
underemployed, the trial court erred in automatically assuming that Husband had the same
earning capacity as before.
Husband also contends that the trial court erred in failing to reduce his alimony
obligation in light of the fact that there has been a substantial and material change in
circumstances impacting his ability to pay. He submits that based on his ability to pay, this
Court should reduce his alimony obligation to $400.00 per month and terminate his
remaining obligations for private school tuition, school-related expenses, and expenses
related to Wife’s insurance and uncovered medical expenses. He also asserts that the trial
court erred in using his marital assets as a basis to determine he had the ability to pay
alimony when it was his income that was the determining factor in initially awarding alimony,
and when there was not sufficient proof to determine the current marital assets. Husband
finally submits that the trial court erred in refusing to forgive the alimony arrearage under the
circumstances of the case.
Wife, on the other hand, submits that the trial court did not err in finding that there was
no substantial change in circumstances and in failing to ascertain Husband’s earning
capacity because his willful underemployment does not justify a finding of a substantial
change in circumstances. Furthermore, she submits that there was sufficient evidence to
support the finding that Husband was voluntarily underemployed when it was demonstrated
that Husband’s position was not terminated by his employer but was terminated by himself
so that he would not have to drive from Atlanta to Memphis twice a month to visit with his
son. Wife further submits that the trial court did not err in not reducing child support, alimony
and the remaining obligations and in failing to forgive alimony arrearage because there was
Page 8
a justifiable finding that there had been no substantial change in circumstances, that
Husband was voluntarily underemployed, and that the rehabilitative alimony of a sum certain
over a period of time was not subject to modification. Finally, Wife asserts that the trial court
did not err in considering marital assets awarded at the time of the divorce in determining
Husband’s ability to pay.
From our review of the record, we find that the evidence does not preponderate
against the trial court’s finding that Husband is voluntarily underemployed. Husband
voluntarily decided to leave his job. This is not a situation where Husband’s job was being
terminated or at jeopardy of being terminated. Rather, Husband had before him an
opportunity to continue in the same position with the same salary. However, rather than
pursue this avenue, Husband decided to leave his job without first securing employment at
or near the same earning level. He did this in light of his obligations to his son and Wife.
While Husband’s contention that he wished to remain in Memphis to stay near his son is
admirable, his first obligation is to provide support to his son and to Wife. The trial court
found and we concur that Husband’s visitation with his son would not be curtailed by his
employment scheduled in Atlanta. Admittedly, Husband’s ability to participate in some of
his son’s activities might have been affected, but this must be balanced with the need for
support and maintenance. Husband is voluntarily underemployed, and the trial court was
correct in not reducing his child support obligation. The trial court was also correct in
imputing income to Husband based on his previous income at General Mills, Inc. since this
is a good indicator of his earning potential and is authorized by the guidelines. See Tenn.
Comp. R. & Regs. 1240-2-4-.03(3)(d). The trial court did not err in refusing to modify
Husband’s alimony obligation. While technically there is a change of circumstances, the
change was brought about solely by Husband’s voluntary actions. He should not be able to
escape his obligations under such circumstances.
Accordingly, the order of the trial court is affirmed, and the case is remanded for
such further proceedings as necessary. Costs of appeal are assessed against the
Page 9
appellant.
_________________________________
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCURS:
____________________________________
DAVID R. FARMER, JUDGE
DISSENTS:
DAVID G. HAYES, JUDGE
Page 10