Facts: Mother and Father divorced in 2003. Their marital dissolution agreement contained the following provision regarding the children’s college expenses:

The parties shall jointly participate in their children’s’ [sic] choice of college. Cost of tuition, room and board, fees, and books will first be paid from the children’s’ [sic] college funds (whatever remains after any scholarship(s), grants, or other funds are applied or disbursed). All uncovered college expenses (tuition, room, board, fees, and books) shall be divided equally.

When the two oldest children went to college, the parents each paid one-half of the college expenses. When the youngest child elected to attend the University of Alabama, Father complained that he was not consulted about her decision and that Alabama was too expensive. Therefore, Father decided to pay only $2500 per semester.

Mother filed a petition to enforce the marital dissolution agreement.

The trial court concluded that “the Father should not be relieved of his contractual obligation simply because the obligation prove to be more burdensome than anticipated.” Mother was awarded a judgment of $23,750 for Father’s unpaid portion of the youngest child’s college expenses and $6225 for Mother’s attorney’s fees.

Father appealed.

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

A parent’s agreement to provide for college education expenses beyond the age of the child’s majority is a valid contractual obligation. As a general rule, where the parties have unambiguously set out the terms of their agreement, courts will enforce those terms as written, regardless of any inequity arising from that enforcement. The courts of Tennessee read an implied condition of reasonableness into agreements to pay for college. In order to determine the reasonableness of the college, our courts look to whether the chosen college fits the child’s needs and the obligated parent’s ability to pay for that college.

Here, Father conceded that the University of Alabama is a good fit for his youngest child and, therefore, Alabama meets that portion of the reasonableness standard. The issue then became the reasonableness of the cost in light of the Father’s income. After reviewing the trial court record on this issue, the Court reasoned:

Father makes approximately $96,000 a year and maintains that paying half of [his youngest child’s] college expenses at the University of Alabama will require him to “forfeit” 32% of his take home pay. At this level, Father claims that, “[h]e lacks sufficient income to cover his monthly bills and pay for the children’s education.” On cross-examination, Father conceded that he had “at least” $150,000 in equity in his home and that it was possible for him to borrow money, in the form of a second mortgage or a student loan, to pay his share of [the youngest child’s] college expenses…. [A]t the time of trial Father’s one-half share of [the child’s] Fall 2012 college expenses was $9,250.28.

The reasonableness standard we use addresses “the obligated parent’s ability to pay” for the particular college. In the context of college expenses, “the ability to pay” is not a mere calculation of income and expenses, especially where other substantial assets are available for use. Father’s ability to borrow against the significant equity in his home must be considered. The trial court found that Father had the ability to pay his one-half of [his youngest child’s] college expenses at the University of Alabama. The evidence does not preponderate against this finding.

Mother also sought prejudgment interest, which claim was denied by the trial court on the grounds that “since the amount and reasonableness of the financial obligation was disputed upon reasonable grounds, the award of prejudgment interest would be inequitable and therefore not allowed in this case.”

Tennessee law provides that fairness will, in almost all cases, require that a successful plaintiff be fully compensated by the defendant for all losses caused by the defendant, including the loss of use of money the plaintiff should have received. That is not to say that trial courts must grant prejudgment interest in absolutely every case. Prejudgment interest may at times be inappropriate such as (1) when the party seeking prejudgment interest has been so inexcusably dilatory in pursuing a claim that consideration of a claim based on loss of use of the money would have little weight; (2) when the party seeking prejudgment interest has unreasonably delayed the proceedings after suit was filed; or (3) when the party seeking prejudgment interest has already been otherwise compensated for the lost time value of its money.

Applying the law to the facts in this case, the Court concluded that Mother had not been compensated for the loss of use of these funds. Consequently, the trial court’s denial of prejudgment interest was reversed. The case was remanded to the trial court to calculate and award Mother the prejudgment interest to which she is entitled.

Hill v. Hill (Tennessee Court of Appeals, Middle Section, October 11, 2013).

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

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