Tennessee case summary on collection of money after divorce.
The husband and wife in this Washington County, Tennessee, case were married in 2014. During the marriage, the wife loaned the husband about $200,000, approximately half of which was paid back during the marriage. They were divorced in 2019 after executing a marital dissolution agreement. In that agreement, the husband acknowledged that he owed $100,000, and that he was responsible for paying it back in installments of $2500 per month.
Two months later, the wife was back in court, asking to have the husband held in contempt for failing to make the first two payments.
The husband answered and reported a significant decline in his business income, making him unable to make the monthly payments. He argued that his failure was not willful, and asked for a reduction to $1000 for six months. The next year, she asked for a judgment for the arrearages, along with interest and attorney’s fees.
The trial court held a hearing and held that the agreement was ambiguous. It accepted parol evidence that the husband had made payments prior to the execution of the agreement, and that the balance was only $14,636. The trial court also denied the wife’s request for attorney’s fees. The wife then appealed to the Tennessee Court of Appeals.
The appeals court first noted that marital dissolution agreements, once approved by the court, become legally binding obligations and enforceable contracts. The trial court had concluded that since the agreement contained the word “loan” instead of “loans,” that this created an ambiguity, since the wife had made more than one loan. But the appeals court quickly concluded that this reasoning was flawed. The use of the singular instead of the plural was immaterial, and the husband clearly acknowledged the total amount owed. As the court noted, the important fact was the amount owed, and not how that obligation came to be.
Since there was no ambiguity, especially since the contract stated when the first payment should be made, the trial court erred in allowing parol evidence to be considered.
For this reason, the Court of Appeals determined that the amount owed would need to be adjusted considerably, and that the wife was entitled to post-judgment interest on the increased amount.
The trial court had based its ruling of no contempt upon the allegedly ambiguous agreement. Since this issue was now resolved against the husband, the appeals court held that the lower court would need to revisit the issue of whether the husband was in contempt.
Finally, the agreement called for attorney fees. Since the wife was the prevailing party, the appeals court held that the lower court erred in refusing them. Therefore, it remanded the case for a computation of those fees.
For these reasons, the Court of Appeals reversed and remanded the case.
No. E2020–01343-COA-R3-CV (Tenn. Ct. App. May 17, 2021).
See original opinion for exact language. Legal citations omitted.
To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.