Property Classification and Fraudulent Conveyance: Phillips v. Rountree

Facts: Husband and Wife divorced after a 17-year marriage. The parties jointly owned a Ford truck. Husband also acquired a GMC truck from his sister, which vehicle was titled solely to Husband. Two months before Husband filed for divorce, Wife transferred title of the Ford truck to Wife’s adult son and claimed it was payment for electrical work performed by her son. The day before Husband filed for divorce, Wife used her authority under a 16-year old power of attorney from Husband to transfer the GMC truck to her son. The trial court found the two trucks were not marital property subject to equitable division. Husband appealed.

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

Tennessee Code Annotated § 36-4-121(b)(1)(A) defines marital property as follows:

[A]ll real and personal property, both tangible and intangible, acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing and owned by either or both spouses as of the date of filing of a complaint for divorce, except in the case of fraudulent conveyance in anticipation of filing, and including any property to which a right was acquired up to the date of the final divorce hearing, and valued as of a date as near as reasonably possible to the final divorce hearing date.

Husband argued that Wife’s transfers of the two vehicles to her son constitute fraudulent conveyances or dissipation of marital assets and, therefore, the vehicles should still be considered marital property.

Regarding the Ford truck, Wife testified Husband agreed to transfer the vehicle to her son as payment for electrical work performed by her son. Husband denied this. Regarding the GMC truck, Wife testified Husband instructed her to sign title over to her son as collateral for a loan agreement between Husband and the son. Husband denied this, too.

In an exchange with Husband’s counsel at trial, the trial court commented:

After [Husband] stated his name, I didn’t believe a word your client said. And the only reason I believed this name is because you [Husband’s counsel] told me that’s what it was. Your client is totally incredible, wouldn’t believe him if he told me the sun was shining.

Because the trial court observed the manner and demeanor of the witnesses and was in the best position to evaluate their credibility, a trial court’s findings regarding credibility are given great deference by appellate courts. Appellate courts are not to reevaluate a trial court’s assessment of witness credibility absent clear and convincing evidence to the contrary.

After reviewing the record, the Court concluded:

There is no clear and convincing evidence to contradict the trial court’s credibility determination. Given the trial court’s finding that Husband lacked credibility, the evidence does not preponderate against the court’s decision to exclude the two vehicles at issue from the category of marital property.

On an unrelated and mostly inconsequential note, the trial court also required Husband to provide Wife with his residential mailing address to assist Wife with enforcing the trial court’s ruling that Husband pay certain debts, if the need for enforcement should arise. The Court reversed this particular ruling, stating:

Wife does not cite any authority allowing a trial court in the context of a divorce to order a spouse to provide his or her residential address in anticipation of problems in enforcing the divorce decree. If Husband fails to obey the court’s order, the proper procedure is for Wife to file a contempt petition and prove her case. In the context of the contempt petition, the court can take whatever action is necessary to force Husband’s compliance.

Because of the premature nature of the court’s requirement that Husband provide Wife with his residential address, we reverse that portion of the court’s order.

Phillips v. Rountree (Tennessee Court of Appeals, Middle Section, March 7, 2012).

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

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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.

One thought on “Property Classification and Fraudulent Conveyance: Phillips v. Rountree

  1. This is/was actually my divorce – a very messy and long procedure, which could have been completely avoided, since the lower court judge followed a compromise agreement we both signed prior to any divorce proceedings (and was my attempt to avoid an unnecessary trial).

    I represented myself in the appellate process and, thankfully, was successful. I am unclear what the timeline is for the finalization of the divorce. If neither party files with the Supreme Court, which I definitely will not be doing (and the deadline to do so was May 7th, I believe), when is the divorce final? Is it 60 days from the appellate decision or 60 days from the last date to file with the Supreme Court, or does the lower court issue another order and it’s 60 days from that order? Any assistance would be greatly appreciated.

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