Gensci v. Wiser

REGINA D. GENSCI v. CYRUS W. WISER

No. M2019-00442-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

May 6, 2020 Session

February 26, 2021

Appeal from the Circuit Court for Rutherford County

No. 50085

Larry B. Stanley, Judge

A husband filed a petition to retroactively reduce or terminate his alimony obligation, claiming he had no income during the relevant time period. The husband also sought to recover payment from his former wife for half of the remaining marital debt based on his interpretation of the final divorce decree. The trial court denied both requests. We conclude that the evidence does not preponderate against the trial court's finding that the husband's ability to pay remained unchanged. Based on the clear language of the final divorce decree and a subsequent agreed order, we also conclude that the wife was not responsible for the remaining debt. So we affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which FRANK G. CLEMENT, JR., P.J., M.S., joined. RICHARD. H. DINKINS, J., not participating.

Heather G. Parker, Murfreesboro, Tennessee, for the appellant, Cyrus W. Wiser, Jr.

D. Scott Parsley¹ and Joshua G. Strickland, Nashville, Tennessee, for the appellee, Regina D. Smith.

OPINION

I.

A.

Regina D. Wiser ("Wife") and Cyrus W. Wiser, Jr. ("Husband") divorced in 2005 after a twenty-three-year marriage. Post-divorce financial disputes have brought them before us for a third time. See Wiser v. Wiser, 339 S.W.3d 1, 5 (Tenn. Ct. App. 2010) [hereinafter "Wiser I"] and Wiser v. Wiser, No. M2013-02510-COA-R3-CV, 2015 WL 1955367, at *1 (Tenn. Ct. App. Apr. 30, 2015) [hereinafter "Wiser II"].

As we previously noted, "Husband is a self-employed engineer and businessman" and "[h]is business activities are conducted through various solely owned limited liability companies registered in Tennessee and Alabama." Wiser I, 339 S.W.3d at 5. The Wiser companies are single-member limited liability companies. Their success or failure has historically depended "to a large extent on Husband's personal efforts and his relationships with various government officials and business associates." Id. As sole owner, Husband "receives all of the profits and bears all of the losses" experienced by the companies. Id. Profits during the marriage "fluctuated greatly." Id. Still, at the time of the divorce, the trial court found the companies to be "overall profitable." Id. at 6.

In the division of the marital estate, Husband was awarded his interest in the Wiser companies "virtually in toto" along with most of the business assets. Id. Husband and Wife also owned four commercial buildings as tenants in common. The trial court awarded each spouse two of the buildings, but it delayed transfer of ownership until August 1, 2017. In the interim, Husband was ordered to continue paying the debt on the buildings, as well as, the cost of repairs and maintenance. And he was prohibited from "refinanc[ing] or further financially encumber[ing] the commercial buildings in any way" without Wife's agreement. The divorce decree also provided that, if a certain debt remained unpaid on August 1, 2017, Husband and Wife would share equal responsibility for the remaining balance of that debt.

The court found that Wife was the economically disadvantaged spouse. And it structured an alimony plan that would provide her with long-term support. The court ordered Husband to pay alimony in varying amounts until August 1, 2017, the date Wife would receive title to the two commercial buildings. After the ownership transfer, "the two commercial buildings would be Wife's primary source of income." See id. at 6-7.

A month later, the court issued an amended divorce decree. Among other things, the amended decree allowed Husband to seek more favorable financing terms for the debt on the commercial buildings as long as his efforts did not increase Wife's indebtedness.

B.

Two years later, Husband sent Wife several refinancing proposals. "Because she believed that Husband's . . . proposals would increase the total debt secured by the buildings, Wife refused to consent." Id. at 7. Husband filed a petition seeking to enforce and/or modify the amended divorce decree. Before the court could address the refinancing dispute, the parties reached an agreement. And on January 29, 2008, the trial court entered an agreed order incorporating the terms of their agreement. See id.

While Husband's petition was pending, Wife filed her own petition to modify alimony and child support. She argued that Husband's tax returns "show[ed] a clear trend of high income." Id. at 11. After a bench trial, the court ordered Husband to pay an increased amount of child support, but left the alimony award unchanged. Id. at 9-10. Wife appealed.

We reversed the court's alimony ruling and increased the alimony payment "to $10,000 per month, retroactive to [June 7, 2007,] the date on which Wife filed her [modification] petition." Id. at 18. And we ruled that the increased amount would "remain constant" until alimony terminated on August 1, 2017. Id.

A year later, Husband petitioned to reduce or terminate alimony based, at least in part, on a decrease in income.² Wiser II, 2015 WL 1955367, at *1. The trial court found that Wife's need remained substantially the same. Id. at *2. But "Husband's income had decreased during the period from April 14, 2011, until January 31, 2012." Id. So the court reduced his alimony for this specific period to $5,000 per month. Id.

This time Husband appealed. He argued that the trial court abused its discretion in failing to reduce his alimony payment for a longer period. Id. at *8. We concluded that the evidence did not "preponderate[] against the trial court's finding that Husband . . . failed to show a substantial and material change in circumstances to justify a modification of his alimony obligation for the period from February 1, 2012, through [August 1, 2017]. Id. at *9. We affirmed the trial court's decision in all respects. Id. at *11.

C.

While the second appeal was pending, Husband filed another petition to reduce or terminate alimony. Before trial, he notified the court that he was also seeking reimbursement for half the remaining debt on the commercial buildings as of August 1, 2017. Wife opposed both requests and sought additional attorney's fees.

Husband's new modification petition, filed November 6, 2014, alleged that he had no income. For various reasons, trial was delayed until September 20, 2018. By this time, the alimony award had terminated on its own terms. So Husband asked for retroactive relief. In effect, Husband wanted a credit for $550,000, the amount of alimony he paid between January 1, 2013, and July 31, 2017. He planned to use the credit to offset his other obligations to Wife.³

Trial focused primarily on Husband's ability to pay. Wife's claim that her need remained unchanged was not seriously challenged. Husband acknowledged that he paid Wife $10,000 a month in alimony between January 1, 2013, and July 31, 2017. But he claimed that he had to borrow the funds.

Husband maintained that he had no income during the relevant time period. As proof, he submitted copies of his joint federal tax returns for tax years 2013 to 2016 showing significant business losses.⁴ Husband expected the 2017 tax return to be substantially the same. He explained that the modest income reflected on the returns represented his current wife's employment earnings. And the rental income from the commercial buildings was "simply a passthrough." Rent was paid directly to the lender.

He described himself as basically insolvent. All his assets were fully leveraged. His current wife paid his living expenses. And he had been forced to borrow from friends and family to meet his financial obligations. In addition to his lack of income, Husband revealed that he had been diagnosed with cancer in the spring of 2016. The cancer treatments exhausted him and made it difficult to concentrate. He had no plans to retire. But he had delegated the day-to-day operations of his companies to others.

According to Husband, he had also curtailed his spending habits. He denied having a lavish lifestyle. His health precluded travel. And he was forced to sell his private plane to satisfy creditors.

Intense cross-examination cast doubt on Husband's narrative. Husband was confronted with multiple entries in a consolidated company ledger labeled as capital contributions. He denied making the contributions from his own resources, explaining he was "just a conduit." He had borrowed from friends, family, and other investors and funneled the proceeds into the companies. He also discounted the multiple cash withdrawal entries. He explained, just "[b]ecause there is—there is an entry on this form doesn't mean that I got cash out." He surmised,

These companies float money back and forth, too. I don't know. You're asking something that's just an entry here. I can't tell you anything other than the way it's entered. But there is going to be money floating—it doesn't float, but one company may give money, or it may be their money, but you can't tell this without real detailed accounting. So I have no idea. I have no idea as to what these entries are.

Husband maintained that his current wife loaned him 1.7 million dollars to keep the Wiser companies afloat. He admitted that he had no official documentation of this transaction. And he was unable to explain where his wife, a claims manager at an insurance company, obtained these funds other than a vague reference to her "resources" from a prior marriage. According to Husband, his current wife's "resources" also paid for their home renovations in 2014, the cruise the couple enjoyed in 2016, and their sizeable charitable donations.

He admitted that the Wiser companies paid his current wife a monthly amount equal to the mortgage payment on his house and his alimony payment. Husband justified...