                   IN THE COURT OF APPEALS OF TENNESSEE
                                AT KNOXVILLE
                            December 11, 2001 Session

    STAN WALLACE MOSLEY v. CARRIE LYNN CHECCHI MOSLEY

              Direct Appeal from the Chancery Court for Washington County
                         No. 6976    Hon. Jean A. Stanley, Judge

                                      FILED MARCH 4, 2002

                                No. E2001-01006-COA-R3-CV



In this divorce case, the husband appealed the classification and division of the parties’ marital
property and the basis for awarding child support. We affirm the Trial Court’s Judgment, as
modified.

Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Affirmed, as modified.

HERSCHEL PICKENS FRANKS, J., delivered the opinion of the court, in which HOUSTON M. GODDARD ,
P.J., and WILLIAM H. INMAN , J., joined.

Daniel D. Coughlin, Kingsport, Tennessee, for Appellant, Stan Wallace Mosley.

Judith Fain, Johnson City, Tennessee, for Appellee, Carrie Lynn Checchi Mosley.



                                            OPINION


               In this divorce action, the parties stipulated there were grounds for divorce, agreed
that the mother would have custody of the minor child and spousal support to wife of $650.00 per
month. The issues reserved for trial were the division of marital property and support.

               The husband testified that he is primary stockholder in Telescan (90%), which he
started in 1987. The wife worked for Telescan before they were married, and returned to work for
the corporation after they were married in April 1995. They had a daughter, aged 4 at the time of
trial.

              The husband offered as a witness a CPA who had worked on the company’s books
since 1998. This witness testified that the book value of Telescan was $524,00.00 on August 31,
1999, $763,000.00 on December 31, 1998, and $546,000.00 on December 31, 1994. As a witness,
she was not qualified as an expert in business valuation.

                 The wife offered a CPA who testified that he was a certified valuation analyst and
accredited by the American Institute of CPA’s, in business valuation since 1997. The parties
stipulated he could testify as an expert. He was of the opinion that the husband’s interest in the
business at the time of the parties’ marriage was $639,000.00, and at the date nearest the time of the
parties’ separation (December 31, 1998), the husband’s interest was $801,900.00. He further
testified that as of the date nearest the time of the parties’ divorce in August of 1999, the husband’s
interest was $477,000.00. He testified that the 1999 value was less reliable because it was only
based on performance through eight months of the year. He explained that Telescan had been
profitable for seven years and then “all of a sudden” in 1999 the company lost $201,000.00 by
August. He explained that part of the loss was due to a $38,000.00 lawsuit settlement paid out, and
there was also a substantial decline in advertising. He testified that Telescan had spent $40,000.00
on advertising in 1998, and had spent less than $2,000.00 in 1999. He further testified that Telescan
had excess retained earnings compared to the industry norm, and this represented money which
should have been distributed as income.

                 At the conclusion of the trial, the Court found that the wife had made a significant
contribution to Telescan, and credited the testimony of the expert regarding the value of the business.
The Court further found that the intangibles and goodwill of the business came about mainly due to
the efforts of the husband, but the husband had admitted he had reduced his advertising and other
efforts to obtain new business during the divorce, and that his actions reduced the income and growth
of Telescan. The Court relied on the expert’s testimony that the value of the business had increased
during the marriage of the parties by an amount of $162,900.00, and concluded the wife was entitled
to a share in the in the amount of $54,000.00.

               The Court divided the remainder of the parties’ marital property, set child support,
and found that the wife was entitled to additional rehabilitative alimony of $500.00 per month for
six months. The husband attempted to appeal the Trial Court’s Judgment, but this Court dismissed
the appeal because the Judgment was not final. After remand, the Trial Court entered an Amended
Judgment after a further hearing on the issue of retained earnings and child support. The Court then
determined that the retained earnings of Telescan was higher than the industry norm, and that
$220,000.00 of those earnings should be amortized over three years and should be considered as part
of the husband’s income for the purpose of setting child support. The Court adjudged the husband’s
annual income, finding the same to be $12,675.00 per month gross, and set child support at
$1,819.00 per month.

                On appeal, the husband argues that the Trial Court erred in classifying the increase
in the value of Telescan as marital property, used the wrong valuation date, and further erred in
awarding the wife a third of the increase in the company’s value and half of the increase in the value
of the marital residence. He further insists that the Court erred in imputing the retained earnings of
Telescan to the husband as income for purposes of child support.



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                Husband argues that there is no proof that the wife made a substantial contribution
to the increase in the value of Telescan. Tenn. Code Ann. §36-4-121 states that “substantial
contribution” may include “the direct or indirect contribution of a spouse as a homemaker, wage
earner, parent or family financial manager, together with such other factors as the court having
jurisdiction thereof may determine.”

                The Trial Court’s finding that the wife had substantially contributed to Telescan is
supported by the evidence, not only because she testified that she did significant work there (which
husband did not really dispute), but that she also contributed as a homemaker and caretaker for the
parties’ minor child. The evidence does not preponderate against this determination. Tenn. R. App.
P. 13(d). Also see Wright-Miller v. Miller, 984 S.W.2d 936, 943-944 (Tenn. Ct. App. 1998).

                 Next, the husband takes issue with the Trial Court’s valuation of Telescan, arguing
that the Court should have used the opinion of value as of August 1999, which was closer to the date
of the parties’ divorce, and bases his argument on Tenn. Code Ann. §36-4-121(b)(1)(A), which states
that marital property “shall be valued as of a date as near as reasonably possible to the final divorce
hearing date.” In this case, the divorce decree was in September 1999, and the parties had separated
in late 1998.

                 The valuation of assets is a question of fact, and there is a presumption on appeal that
the Trial Court’s valuation is correct. Watters v. Watters, 959 S.W.2d 585 (Tenn. Ct. App. 1997).
In our view, the Court was correct in determining the value that was reflected in August of 1998,
since the evidence establishes the business could have been more profitable in 1999, had it not been
for the lack of advertising and seeking new business. The proof is uncontradicted that the husband
had complete control over such decisions, and he admitted that he did not advertise in 1999 and did
not seek new customers because of problems he was having with Sprint, one of his long distance
suppliers. Moreover, the one-time lawsuit settlement payment which occurred in 1999 should not
be taken into account, according to the expert testimony. There was proof that the husband
manipulated the expenses of Telescan by utilizing Telescan funds for personal expenditures and
writing commission checks to “supplement his income”. Under all the circumstances of this case,
we affirm the Trial Court’s Judgment as to the value of the Telescan.

                 As to the pro-ration of the marital property, the Trial Judge had broad discretion, and
its decision is entitled to great weight on appeal. Mahaffey v. Mahaffey, 775 S.W.2d 618 (Tenn. Ct.
App. 1989).

                The husband’s appeal focuses on the pro-ration of two assets. The Court awarded
the wife one-third of the increase in value of Telescan, finding that the husband made a greater
contribution to its increase than the wife, and awarded the wife one-half of the increase of equity in
the marital residence. The evidence established that the wife had contributed to the increase in same
by overseeing and/or making improvements to the home herself. The valuation and increase was
based on the husband’s testimony, and the Court’s determination as to the increase was supported
by the proof. We find the Court’s division was equitable, based upon the wife’s contributions and


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the statutory factors.

                  The wife argues that the Trial Court erred in reducing the wife’s share of the increase
in value of Telescan for goodwill and intangibles, because this was not a business which is reliant
upon husband’s personal involvement and reputation. In this case the Court said that “because of
the Court’s consideration of the intangibles and good will which the Court finds was mainly from
the efforts of Plaintiff/Counter-Defendant the Court finds that of the increase, Defendant/Counter-
Plaintiff is entitled to Fifty-four Thousand Dollars ($54,000.00).” The court simply attributed more
of the increase to the husband, based upon his contribution to the business, as compared to the
contribution of the wife. This is appropriate under Tenn. Code Ann. §36-4-121, which allows the
court to consider the parties’ contributions to the assets in making a property division. Accord:
Wright v. Quillen, 909 S.W.2d 804 (Tenn. Ct. App. 1995).

               Finally, the husband argues that it was improper for the Trial Court to impute income
to him from the excess retained earnings of Telescan for the purpose of establishing child support.
Husband relies upon the case of Piper v. Andrews, 1999 WL 772127 (Tenn. Ct. App. Dec. 17, 1997),
wherein the Court held that retained earnings of a corporation of which husband was the sole
shareholder would not be imputed to husband as income, because there was no evidence that the
retained earnings were excessive, and the company’s accountant testified that the amount of retained
earnings was consistent with prudent business practices.

               The wife, however, relies upon the case of Sandusky v. Sandusky, 1999 WL 734531
(Tenn. Ct. App. Sept. 22, 1999), where the Court held that income could be imputed to the sole
owner of a business for the purpose of setting child support. It was explained that in a self-
employment situation where the obligor spouse could control the salary he or she received, the court
should examine whether the obligor had the potential to manipulate his or her income by allowing
the company to accumulate profits as retained earnings, which could have been distributed as
dividends. In this case, husband is not the sole shareholder, but does own 90% of the stock, and has
the authority to manipulate his income by accumulating retained earnings in the company if he
chooses. The proof showed that the company had $200,000.00 in retained earnings when the parties
married, and had $425,000.00 in retained earnings at the end of 1998, and had $240,000.00 in
retained earnings in August 1999. The Trial Court imputed the entire increase in retained earnings
from December 1994 to December 1998, ($225,000) as income to husband, and amortized it over
three years.

              The guidelines provide that all income “from any source” is to be considered (Tenn.
Comp. R. & Regs. ch. 1240-2-4-.03(3)), and the evidence supports the imputation of additional
income based upon the company’s excess retained earnings and the husband’s control of the
corporation. The parties agree in their briefs that the Trial Court should have reduced any amount
imputed by 10%, since the husband only owns 90% of the corporation.

               Accordingly, we affirm the Trial Court’s property division in all respects, but modify
the Trial Court’s finding of additional income by reducing that amount by 10%. Upon remand, the


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Trial Court is directed to enter an Order reducing the child support by an amount to reflect the 10%
reduction in income imputed to the husband. The Judgment of the Trial Court is affirmed, as
modified, and the cause remanded with the cost of the appeal assessed to Stan Wallace Mosley.




                                                      _________________________
                                                      HERSCHEL PICKENS FRANKS, J.




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