Facts: Husband and Wife divorced after 21 years of marriage.
At the time of divorce, Husband and Wife entered into it a marital dissolution agreement (“MDA”) that required the marital residence to be immediately listed for sale. The MDA allowed Husband to occupy the marital residence until it sold. The MDA provided:
If the house and land are not sold within four years of the date of the entry of the Final Judgment of Divorce, Husband shall have an additional two years to sell the property but shall begin paying a monthly payment to Wife equal to a monthly portion of the prime interest rate on $460,000.
The MDA further provided that the property would be sold at auction if it had not otherwise sold after six years. As long as Husband resided in the marital residence, the MDA required him to be responsible for its maintenance and upkeep as well as the property taxes and insurance.
Many years later, and after a trip to the Court of Appeals when the sale of the property fell through because Husband objected to it, Wife asked the trial court to impose a monthly rental obligation of $10,000 per month for Husband’s continued occupancy of the property.
After a hearing, the trial court ordered the property to be sold at auction and imposed a rental obligation on Husband in the amount of $3000 per month.
On Appeal: The Court of Appeals reversed the trial court.
Husband argued the trial court’s imposition of a monthly rental obligation was an impermissible modification of the MDA. Specifically, Husband argued the trial court erred by imposing a rental obligation in excess of the amount provided for in the MDA, i.e., a monthly portion of the prime interest rate on $460,000, which comes to $1245.83 per month.
In Tennessee, a marital dissolution agreement incorporated into a final judgment of divorce is a contract that is binding on the parties.
When Tennessee courts interpret contracts, the words expressing the parties’ intentions are to be given the usual, natural, and ordinary meaning. If the language of a written instrument is unambiguous, the court must interpret it as written rather than according to the unexpressed intention of one of the parties. Courts cannot make contracts for parties but can only enforce the contract which the parties themselves have made.
After reviewing the record, the Court agreed with husband, explaining:
Under the clear language of the MDA, Husband was given the right to reside in the marital residence until the Property is sold. His right to occupy is subject to a monthly payment “equal to a monthly portion of the prime interest rate on the $460,000.00,” effective upon the expiration of four years following the entry of the judgment of divorce. In her appellate brief, Wife characterized this “monthly payment” as an obligation to pay rent. We agree with this characterization; however, the Parties explicitly provided for the amount of the obligation. To the extent that the court’s imposition of rent exceeds this amount, the court was in error. Accordingly, we modify the judgment to reflect an imposition of rent that conforms to the MDA. In so holding, we further conclude that the obligation to pay rent is in addition to Husband’s obligation to remit payment for the property taxes and insurance and to ensure the reasonable maintenance and upkeep of the Property pursuant to the terms of the contract.
Accordingly, the trial court’s rental obligation was reversed and modified to conform to the marital dissolution agreement.
Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family Law Attorney.