Posted by: K.O. Herston | October 29, 2012

Post-Divorce Challenge to Marital Dissolution Agreement Leads to Substantial Sanctions in Tennessee: Schutt v. Miller

Facts: The parties’ divorce was resolved by a Mediation Agreement executed by both parties and their lawyers. One month later, Husband accepted a new job with substantial income, including stock options. (Husband’s job ended two months later when his employer went out of business.) A few weeks later, the trial court approved a marital dissolution agreement that mirrored the terms of the Mediation Agreement. Two weeks later, Wife filed a motion to alter the divorce decree. Wife alleged that Husband failed to disclose the terms of his new employment, which, Wife argued, should result in a larger alimony award to her. Wife also alleged that Husband had concealed from her information regarding several marital assets. After discovery revealed no basis for Wife’s arguments, Husband moved to dismiss her motions and for an award of sanctions. Finding that Wife had “zero proof” and “no evidentiary support whatsoever” for her allegations, the trial court granted Husband’s motions and awarded him $61,500 in sanctions. Wife appealed.

On Appeal: The Court of Appeals affirmed the trial court.

Wife argued the trial court erred by dismissing her motion to alter the divorce decree, but the Court rejected her argument.

Wife’s allegations of fraud as to Husband’s [new] employment, frankly, are baffling. As noted by the trial court, Wife never produced any evidence that Husband had the job offer at the time of the parties’ mediation. Rather, in the [] mediation and the resulting Mediation Agreement, Husband agreed to the stated financial obligations to Wife without knowing whether he would even have a job, much less the terms of any job. Moreover, as noted by the trial court, Wife insisted upon an agreement at mediation and in the later [marital dissolution agreement] that specified a dollar amount of alimony, so that it would not be affected by whatever Husband’s income level turned out to be. . . .  The trial court correctly observed that Wife “tries to have her cake and eat it, too.” The trial court found that, under those circumstances, Husband had no duty to inform Wife about the terms of his new employment. We agree.

Wife’s allegations regarding the stock options referenced in Husband’s [new] employment contract are especially perplexing. It is undisputed that Husband never actually received the stock options, and so received zero value from the stock option provision in the employment agreement. It is unclear what Wife thinks she would have received under any set of circumstances. Recalling grade school mathematics, ½ of zero = zero. . . .

[U]sing the nondisclosure of Husband’s employment information as the ostensible reason, Wife sought to re-open discovery to find out if any assets were not disclosed. As we now know, after much discovery permitted by the trial court, none were found.

Finally, Wife argued the trial court erred in awarding sanctions to Husband. Again, the Court overruled Wife’s objection.

[The trial judge] warned Wife that if her motions were deemed to be without merit, “she is going to get to pay for [Husband's attorney's] fees.” Instead of reconsidering her advocacy for motions that had no evidentiary basis, Wife doubled down. This resulted in the spin-off disputes over discovery, recusal, and the funds deposited with the clerk’s office. . . . [H]er litigiousness [was] finally curtailed by the trial court’s decision to put an end to it.

The award of $61,500 in sanctions, which the Court characterized as “large” and “a hefty sanction indeed,” was affirmed.

Schutt v. Miller (Tennessee Court of Appeals, Western Section, September 27, 2012).

Information provided by K.O. Herston: Knoxville, Tennessee Matrimonial, Divorce and Family Law Attorney.


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