17 Million Reasons to Appeal

The Tennessee Supreme Court only issues a handful of family law opinions each year so when it speaks the wise lawyer must listen.  It is axiomatic that, subject to specific exceptions not applicable here, marital property includes all property acquired during the marriage up to the date of divorce.

Tenn. Code Ann. § 36-4-121(b)(1)(A) defines marital property as all assets acquired during the course of the marriage up to the date of the final divorce hearing and owned as of the date the divorce complaint is filed.

So when the Supreme Court agreed to hear an appeal involving the classification of an asset acquired after the divorce was filed but before the divorce was granted, I thought: What could possibly be the issue?  And why would the Court choose to take a case involving what appears to be well-settled law?   The Court’s opinion provides the answer:

On January 31, 2006, Wife filed a complaint for divorce against Husband in the Chancery Court for Knox County.  Seven months later, on August 31, 2006, Husband received a $17 million attorney fee from a class action lawsuit in South Carolina that was the culmination of several years’ work. Wife filed a motion for partial summary judgment requesting that the trial court classify the attorney fee as marital property subject to equitable division . . . .

Ahhh, now I understand.

Husband’s attorney engaged in some creative lawyering, arguing the $17 million fee was separate property because, although it was acquired prior to the divorce hearing, it was not acquired at the time the divorce was filed.  By using the word “and” in the definition of marital property, Husband argued, the Legislature required marital property to be owned both at the time of filing and the time the divorce was granted.

For a bunch of reasons I won’t get into here (read the opinion if you want to know), the Court systematically took apart Husband’s argument and affirmed that marital property means what we all thought it meant.  The net loss to Husband?  $6.8 million. Ouch.

If there is any lesson to be learned, it is that the people we elect to write our laws often do a terrible job of actually writing our laws.  Sometimes it takes a good lawyer with 17 million motivations to point that out.

Larsen-Ball v. Ball (Tenn. S. Ct., Jan. 14, 2010).

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K.O. Herston is a family-law attorney in Knoxville, Tennessee whose practice is devoted exclusively to family law, including divorce, child custody, child support, alimony, prenuptial agreements, and other aspects of family law.

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