                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                February 5, 2010 Session

              WILLIAM J. BRADLEY v. CHRISTY L. BRADLEY

               Appeal from the Chancery Court for Robertson County
                 No. 18248     Laurence M. McMillan, Chancellor


                  No. M2009-01234-COA-R3-CV - Filed July 8, 2010


Mother filed a petition for an increase in child support, which was denied by the trial court
based on the findings and recommendations of a special master. On appeal, Mother
challenges the special master’s determination that Mother was voluntarily underemployed,
that Father should continue to provide Child’s health insurance, and that Mother owed Father
$498.73 for her share of medical bills incurred on behalf of Child, as well as the special
master’s calculation of Father’s income for child support purposes. Because we have
determined that the special master erred in considering evidence outside the record, we
vacate the trial court’s decisions regarding Father’s income and child support obligation and
remand those matters for redetermination. We affirm the trial court’s finding that Mother
is underemployed and remand the matter to the trial court for a calculation of imputed
income. We also vacate the trial court’s calculation and division of medical bills and remand
the matter for reexamination, recalculation and redivison. The trial court’s decision
regarding Child’s health insurance coverage is affirmed.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed in
                      Part, Vacated and Remanded in Part

A NDY D. B ENNETT, J., delivered the opinion of the Court, in which P ATRICIA J. C OTTRELL,
P.J., M.S. and F RANK G. C LEMENT, J R., J., joined.

Laurie Lea Doty, White House, Tennessee, for the appellant, Christy L. Bradley.

Charlotte U. Fleming, Springfield, Tennessee, for the appellee, William J. Bradley.
                                               OPINION

                            F ACTUAL AND P ROCEDURAL B ACKGROUND

        William J. Bradley (“Father”) and Christy L. Bradley (“Mother”), the parents of a
minor child (“Child”), divorced in 2004. The parties entered into a Marital Dissolution
Agreement and a Permanent Parenting Plan, which set Father’s support at $1,000 per month.
        Mother filed a petition for an increase in child support on January 16, 2007, claiming
that since entry of the final divorce decree, Father had a 15% variance in his income. Father
denied this assertion in his answer, filed on February 21, 2007, and claimed that Mother was
purposefully underemployed.

       On June 2, 2008, the Chancery Court for Robertson County appointed a special
master, Lisa Richter, to hear all issues regarding child support modification and discovery.

            The First Set of Findings and Recommendations of the Special Master

       A hearing before the special master was held on September 22, 2008. The special
master issued her findings and recommendations on October 6, 2008. The parties presented
four issues for determination: (1) Mother’s motion for an increase in child support, (2)
Father’s allegation that Mother was underemployed, (3) which parent should provide health
insurance for Child, and (4) the division of medical bills incurred on Child’s behalf.

       The special master first addressed the issue of Father’s income from 2005 to 2008 in
order to determine whether there was a 15% variance in his income.1 The special master
took note of the fact that Father was self-employed and calculated his yearly income by
taking his gross income and deducting what the special master believed to be the ordinary
and reasonable deductions allowed by the Child Support Guidelines.

       Combining income from rental property with income from construction sales, less the
cost of commissions and expenses for the construction sales, the special master found that
Father’s year-to-date income for 2008 was $90,823.10. Thus, Father’s average monthly
income in 2008 was found to be $10,091.46. Next, the special master concluded that
Father’s 2007 income was at least $197,827.00, for an average monthly gross income of
$16,485.58. The special master then determined that Father’s 2006 income was at least


        1
         Pursuant to Tenn. Comp. R. & Regs. § 1240-2-4-.05(2)(a), a significant variance is required for the
modification of a child support order. Under Tenn. Comp. R. & Regs. § 1240-2-4-.05(2)(c), a significant
variance exists when there is at least a 15% change between the amount of the current support order and the
amount of the proposed presumptive support order.

                                                    -2-
$181,951.00, for an average monthly gross income of $15,162.58. The special master noted
that Father admitted that his 2007 and 2006 income tax returns may not have reflected all of
his income from rental properties. Finally, the special master concluded that Father’s 2005
income was $137,887.00, for an average monthly gross income of $11,490.58. The special
master then averaged Father’s monthly gross income from 2005 to 2008 and determined that
his average monthly gross income for those years was $13,307.55.

        The special master next addressed Mother’s income. At the hearing, Mother claimed
that she had no income at all in 2007 or 2008. However, the special master noted that
Mother owned at least six rental properties during 2007 and sold two homes that she
constructed. The special master also observed that “Mother owned and operated a flower
shop and video shop at a huge loss according to the Mother, but persisted in this course of
action with no diminution in her lifestyle.” The special master attributed income to Mother
in the amount of $29,300.00 per year for 2007 and 2008.2 Thus, the special master assigned
Mother monthly income of $2,441.67 for 2007 and 2008.

       In 2006, Mother reported a loss of $31,738.00 on her income tax return. However,
“in examining the income and expenses of both the flower shop and video shop as reflected
on her 2006 income tax return,” the special master concluded that Mother had income for
child support purposes in the amount of $37,533.00, resulting in monthly income of
$3,127.75. Mother’s 2005 income tax return was not entered into evidence at the trial.
However, the special master noted that Mother’s 2005 income tax return reflected a loss of
$6,012.00 and concluded that, for child support purposes, Mother had annual income of
$31,678.00 in 2005, resulting in monthly income of $2,639.83. Averaging Mother’s monthly
gross income for the last four years, the special master found that Mother’s average monthly
gross income was $2,662.73.

       The special master next addressed Father’s allegation that Mother was
underemployed, concluding that Mother was willfully and/or voluntarily underemployed
under the Child Support Guidelines, Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(ii).
The special master concluded that it was not reasonable for Mother to continue as a
contractor given the poor residential home sales market, the failure of Mother’s side
businesses, and the fact that Mother had reported a negative income to the IRS for the last
three years. The special master stated the following about Mother’s income:


        2
          The special master cited Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(3)(iv)(I) as the basis for her
conclusion. However, this provision does not exist in the Child Support Guidelines. It appears that the
special master meant to refer to Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(iv)(I)(III), the provision
that allows for the imputation of income in the amount of $29,300 to female parents when there is no reliable
evidence of income.

                                                    -3-
       The Mother has been employed in the construction and lending industry for
       most of her adult life and has a bachelor’s degree. Nothing prevents the
       Mother from working for someone else yet she has not sought work simply
       saying that she cannot live on minimum wage. Instead, the Mother is asking
       the Special Master to find that she is able to live on nothing. The Special
       Master notes that the Mother owns considerable rental property and is not
       behind on her mortgage or line of credit. Even allowing for the fact that she
       could use half of her One Thousand Dollars and No Cents ($1000.00) per
       month child support to pay her mortgage payment, the Special Master is at a
       loss to explain how the Mother could then afford to buy food for herself and
       the minor child and to put gas in her Toyota Tundra that she uses for work.

       To summarize, the special master found Father’s average monthly gross income to be
$13,307.55 and Mother’s to be $2,662.73. Father’s child support obligation had been set at
$1,000.00 per month, and he provided health insurance for Child at a rate of $84.81 per
month. Based on the Child Support Worksheet she prepared, the special master found that
Father’s “presumptive child support order” was $899.00 per month. Thus, the variance
between Father’s ordered child support order and his presumptive child support order was
$101.00. In order for a 15% variance to exist under Tenn. Comp. R. & Regs. § 1240-2-4-
.05(2)(c), that figure would have to be $150.00 or more. Thus, the special master concluded
that there was not a 15% variance and Father’s child support was fixed at $1,000.00 per
month.

       As to the medical bills, the special master found that Mother owed Father $498.73 for
her share of medical bills incurred on behalf of Child, and Father owed Mother $137.76 for
his share. Thus, the special master granted Father a judgment against Mother in the amount
of $360.97 for her share of medical bills incurred by Father on Child’s behalf.

       The special master also instructed that Father should continue to provide health
insurance for Child. The special master noted that she was “not convinced changing the
obligation on to the Mother would create a savings for the parents or be in the best interest
of the child.”

       Finally, because neither party submitted any proof as to the amount of attorney fees
incurred, the special master stipulated that each party would be responsible for his/her own
attorney fees and would equally divide any remaining court costs.

       On October 27, 2008, the Chancery Court for Robertson County entered an order
implicitly adopting the findings and recommendations of the special master. Mother’s
income was set at $2,662.73 per month for the purpose of child support calculations, and

                                             -4-
Father’s was set at $13,307.55 per month. Father’s child support obligation remained at
$1,000.00 since there was no 15% variance in income. Father was awarded a judgment of
$360.97 for his share of Child’s medical bills and was ordered to continue to provide health
insurance for Child.

         Mother’s Objections to the First Set of Findings and Recommendations

      On October 31, 2008, Mother filed a motion objecting to the findings and
recommendations of the special master, asserting that the findings were contrary to the
evidence.

       In her objections, Mother first asserted that the special master considered evidence
outside the record. Mother specifically objected to the special master’s reliance on Mother’s
2005 tax return in her findings and recommendations when that return was not one of the
fifteen exhibits introduced into evidence at trial. Mother noted that the special master
explicitly instructed the parties to make exhibits of anything they wanted to become a part
of the record. Mother pointed to a conversation her attorney, Laurie Doty, had with the
special master during direct examination of Father at the September 22, 2008 trial:

       Q: . . . And did you take Mary as a deduction in 2006?

       A: I’d have to look at the tax return.

       [FATHER’S ATTORNEY]: Your Honor, we provided all these tax returns
       twice to Counsel and to the Court. If you’d like me to get those out and have
       my client review them, I’d be happy to do that.
       ...

       THE COURT: I have the income tax returns up here on the bench. I can look
       at them and see when Mary was taken as a deduction. So I’ve got that
       information.

       MS. DOTY: Are the documents that we’ve provided before going to be
       exhibits, or do I need to actually make them exhibits as we go?

       THE COURT: If you want it to be in the record, then I would make it an
       exhibit.




                                                -5-
        MS. DOTY: Okay.

        (Emphasis added).

        In her objections to the special master’s findings, Mother also insisted that the special
master erred by imputing income to Mother. First, Mother argued that instead of using the
criteria set forth by the Child Support Guidelines under Tenn. Comp. R. & Regs. § 1240-2-4-
.04(3)(a)(2)(ii)(II) for the imputation of income, the special master used Mother’s 2005 tax
return, which was not introduced into evidence. Second, Mother insisted it was error for the
special master “to extrapolate a figure from [Mother’s] 2006 income tax return that is neither
explained in the Findings and Recommendations nor discernable from an examination of the
exhibit itself.” Finally, Mother asserted that the special master erred by imputing income to
her.3

      Next, Mother claimed that the special master’s conclusion regarding the amount of
money that Mother owed Father for his share of Child’s medical bills was based on
information that was not introduced at trial.

         Mother also objected to the special master’s refusal to change Child’s health insurance
provider to Mother’s provider. According to Mother, co-pays through her provider “would
mean less out-of-pocket expenses for both parties.” Mother claimed that Father’s testimony
at trial indicated his willingness to switch Child’s insurance to Mother’s plan.

       Finally, Mother argued that the special master’s findings as to Father’s income were
contrary to the evidence. Mother claimed that Father never presented proof of his 2005
income at trial and asserted that the special master’s findings regarding Father’s 2006 and
2007 income were also contrary to the evidence.

Chancery Court Order and Interim Findings and Recommendations of the Special Master

       On November 25, 2008, the chancery court issued an order remanding this matter to
the special master to consider (1) the evidence contained in the subpoena served on Father
on September 18, 2008, and (2) “[a]ny additional documents which should be entered into
evidence to be considered by the Special Master in her Findings & Recommendations


        3
          As previously noted, the provision cited by the special master, Tenn. Comp. R. & Regs. § 1240-2-4-
.04(3)(a)(3)(iv)(I), does not exist in the Child Support Guidelines. In her objections, Mother claims that the
provision cited by the special master addresses instances in which there is no reliable evidence of income.
Thus, it seems that in her objections, Mother was referring to the correct section of the Child Support
Guidelines, Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(iv)(I).

                                                     -6-
including but not limited to [Mother’s] 2005 Tax Return.” A rehearing before the special
master was held on February 23, 2009. The special master’s interim findings and
recommendations were filed on March 4, 2009.

       In her interim findings, the special master instructed Father to provide a copy of his
2005 financial statement to Mother’s attorney if such a statement existed. The special master
also noted that she “received into evidence the Mother’s 2005 income tax return.” The
special master stated that she would consider Father’s financial statements along with
Mother’s 2005 income tax return and then submit a second set of findings and
recommendations.

         The Second Set of Findings and Recommendations of the Special Master

       The special master submitted a second set of findings and recommendations on March
20, 2009. The special master noted that Father had provided handwritten financial statements
for 2006, 2007, and 2008, which she had reviewed. The special master stated in her findings
that Father could not recall if he had done a financial statement for 2005, but he stated that
he would provide this to Mother’s attorney if one existed. The special master then concluded
that “nothing in the Father’s financial statements to his bank contradicts the Special Master’s
finding as to his income.” The special master reaffirmed her previous finding that Father’s
monthly gross income was $13,307.55.

        The special master stated that she had “reviewed” Mother’s 2005 income tax return,
which was entered into evidence at the February 23, 2009 rehearing, and reaffirmed her
earlier findings regarding Mother’s 2005 income, including that, for child support purposes,
Mother had annual income of $31,678.00 and monthly income of $2,639.83. The special
master reaffirmed her finding that Mother was voluntarily unemployed or underemployed.

        Mother’s Objections to the Second Set of Findings and Recommendations

       Mother filed her objections to the second set of findings and recommendations of the
special master on April 13, 2009, asserting that they were “contrary to evidence.”

        Mother again insisted that the special master’s imputation of income to Mother was
contrary to the evidence. First, Mother repeated her objection to the special master’s finding
regarding her 2005 income. According to Mother, instead of allocating additional income
as described in Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(ii)(II), the special master
relied on “a tax return which was not introduced into evidence until the remand hearing on
February 23, 2009.” Mother also objected to the special master’s assignment of annual
income of $31,687.00 in 2005 when her tax return shows that she had no taxable income.

                                              -7-
Additionally, Mother claimed that it was error for the special master to consider 2005 income
that was two years prior to the filing of the petition on January 16, 2007, and one year after
the parties’ divorce in 2004. Second, Mother again objected to the special master’s
assignment of $37,533.00 of income in 2006 when the tax return showed that she had no
taxable income. Third, Mother again claimed that the special master erred by imputing
income to her.4

       Mother also repeated her objections to the special master’s finding regarding the
amount of money that she owed Father for Child’s medical bills and the special master’s
refusal to change Child’s health insurance provider to Mother’s provider.

        Finally, Mother again objected to the special master’s findings as to Father’s income.
First, Mother claimed that evidence of Father’s 2005 income was not introduced at trial or
at the February 23, 2009 rehearing. Additionally, Mother claimed it was error for the special
master to consider 2005 income that was two years prior to the filing of her petition in 2007
and one year after the parties’ divorce in 2004. Mother also repeated her objections to the
special master’s findings regarding Father’s 2006 and 2007 income.

                                        Trial Court Ruling

       In an ordered filed May 11, 2009, the chancery court denied Mother’s motion on
objections. On August 19, 2009, this court entered a per curiam order finding that a final
judgment, which was necessary in order for the appeal to proceed, had not been entered in
this matter. On September 14, 2009, the chancery court issued a final order denying
Mother’s motion on objections to the second set of findings and recommendations of the
special master, adopting the special master’s second set of findings and recommendations,
and adopting the special master’s original findings and recommendations to the extent not
inconsistent with the second set of findings and recommendations. Mother filed this appeal.

                                      S TANDARD OF R EVIEW

       Courts are required to use child support guidelines developed by the Tennessee
Department of Human Services “to promote both efficient child support proceedings and
dependable, consistent child support awards.” State ex rel. Vaughn v. Kaatrude, 21 S.W.3d
244, 249 (Tenn. Ct. App. 2000); see also Tenn. Code Ann. § 36-5-101(e). Trial courts are
to apply the child support guidelines as a rebuttable presumption in determining the amount
of child support for any minor child. Tenn. Comp. R. & Regs. § 1240-2-4-.01(1)(d)(1). If


       4
         As discussed, the special master cited Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(3)(iv)(I),
apparently intending Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(iv)(I).

                                                 -8-
the court finds the evidence sufficient to rebut that presumption, the court may order an
amount of support different from the presumptive child support. Tenn. Comp. R. & Regs.
§ 1240-2-4-.07(1)(b). The amount or method of such deviation is within the discretion of the
court. Id. However, the court’s order must contain written findings of fact stating the
reasons for the deviation from the presumptive amount of child support that would have been
paid pursuant to the guidelines, the amount of child support that would have been required
under the guidelines if the presumptive amount had not been rebutted, how application of the
guidelines would be unjust or inappropriate, and how the best interests of the child will be
served by deviation from the presumptive guideline amount. Tenn. Comp. R. & Regs. §
1240-2-4-.07(1)(c).

        The standard of review in situations involving the findings of a special master is set
forth in Tenn. Code Ann. § 27-1-113: “Where there has been a concurrent finding of the
master and chancellor, which under the principles now obtaining is binding on the appellate
courts, the court of appeals shall not have the right to disturb such finding.” This proposition
is more fully explained by our case law:

       The trial court’s order referring certain matters to the Special Master, the
       Special Master’s report, and the trial court’s order on the report affect our
       standard of review on appeal. See Manis v. Manis, 49 S.W.3d 295, 301 (Tenn.
       Ct. App. 2001); Archer v. Archer, 907 S.W.2d 412, 415 (Tenn. Ct. App. 1995).
       Generally, concurrent findings of fact by a special master and a trial court are
       conclusive and cannot be overturned on appeal. Manis, 49 S.W.3d at 301.
       However, a concurrent finding is not conclusive where it is upon an issue not
       properly referred to a special master, where it is based upon an error of law or
       a mixed question of fact and law, or where it is not supported by any material
       evidence. Id.

Pruett v. Pruett, No. E2007-00349-COA-R3-CV, 2008 WL 182236, at *4 (Tenn. Ct. App.
Jan. 22, 2008) (quoting Dalton v. Dalton, No. W2006-00118-COA-R3-CV, 2006 WL
3804415, at *3 (Tenn. Ct. App. Dec. 28, 2006)). The standard of review to apply in such
cases is similar to the standard applied when reviewing a jury verdict; “we must affirm if
there is any material evidence to support the trial court’s concurrence.” In re Estate of Ladd,
247 S.W.3d 628, 636-37 (Tenn. Ct. App. 2007) (citing Coates v. Thompson, 713 S.W.2d 83,
84 (Tenn. Ct. App. 1986); Tenn. R. App. P. 13(d)). This heightened standard of review
applies only to findings that are made by both the special master and the chancery court. Id.
at 637.

       When the findings of the special master and the trial court are not concurrent, the
standard of review of a trial court’s findings of fact is de novo with a presumption of

                                              -9-
correctness unless the preponderance of the evidence is otherwise. Id.; Tenn. R. App. P.
13(d). We review questions of law de novo with no presumption of correctness. Nelson v.
Wal-Mart Stores, Inc., 8 S.W.3d 625, 628 (Tenn. 1999).

                                               A NALYSIS

       On appeal, Mother asserts that the trial court erred in adopting the findings and
recommendations of the special master. Mother claims that the special master considered
evidence outside the record, which resulted in errors in the findings that Mother was
voluntarily underemployed, that Mother owes Father $498.73 for her share of Child’s
medical bills, that Child should remain on Father’s health insurance policy, and in the
determination of Father’s income in 2005, 2006, and 2007.

                    Father’s Income/Modification of Father’s Child Support

       In considering a petition to modify child support, the trial court must determine
whether there is a significant variance between the obligor’s current obligation and that set
by the guidelines. See Tenn. Code Ann. § 36-5-101(g); Kaplan v. Bugalla, 188 S.W.3d 632,
636 (Tenn. 2006). The parent seeking to modify a child support obligation has the burden
of proving that a significant variance exists. Wine v. Wine, 245 S.W.3d 389, 394 (Tenn. Ct.
App. 2007).

       The permanency plan entered into between the parties set Father’s child support at
$1,000.00 per month. Mother petitioned the court for an increase in Father’s child support,
claiming that there existed a 15% variance in his income. Based on the Child Support
Worksheet, the special master found that Father’s “presumptive child support order” was
$899.00 per month. The special master concluded, therefore, that a 15% variance did not
exist and Father’s child support would remain at $1,000.00 per month.5

       The special master listed Father’s “monthly gross income” as $13,307.55 on the Child
Support Worksheet that she used to calculate Father’s presumptive child support. The
special master’s first set of findings and recommendations states that she arrived at this figure
by averaging Father’s income from 2005 to 2008. Mother claims that the special master
erred by considering Father’s 2005 income when there was no proof of his 2005 income
presented. Mother also claims that the special master’s findings for Father’s 2006 and 2007
income are contrary to the evidence.


        5
         Tenn. Comp. R. & Regs. § 1240-2-4-.05(2)(c) of the Child Support Guidelines defines a significant
variance as at least a 15% difference between the amount of the current support order and the amount of the
proposed presumptive support order.

                                                   -10-
         First, Mother is correct that evidence of Father’s 2005 income was not introduced at
trial or at the subsequent February 23, 2009 rehearing. After Mother objected to the special
master’s original findings and recommendations, the special master instructed Father in her
interim findings to provide a 2005 financial statement. Father did not provide such a
statement prior to the rehearing. The rehearing transcript indicates that the special master
instructed Father to check with his bank and, if he had any 2005 financial statements, to give
them to Mother’s attorney following the proceeding. The special master’s second set of
findings, following the rehearing, reflects as much:

       At [the time of the February 23, 2009 rehearing], the Father was required to
       provide financial statements requested by the Mother for 2005, 2006, 2007 and
       2008. The Father did provide the handwritten financial statements for 2006,
       2007 and 2008. The Father stated that he could not recall if he had done a
       financial statement for 2005 but stated he would provide this to the attorney
       for the Mother if one existed. The Mother’s attorney was then allowed to
       question the Father as to his financial statements.

The special master also stated in the second set of findings that she had “reviewed the income
information from the Father’s financial statements to his bank in 2006, 2007 and 2008” and
that nothing in those statements contradicted her earlier findings as to Father’s income.

        From these statements, it is clear that Father did not present proof of his income for
2005, contrary to his assertion. Father does not state what form this alleged proof took, but
there is no 2005 tax return for him in the record. As such, it is unclear how the special
master arrived at her conclusion that Father had income of $137,887.00 in 2005 in her
original findings and recommendations, which she reaffirmed in her second set of findings
and recommendations.

       Mother also claims that the special master’s findings for Father’s 2006 and 2007
income are contrary to the evidence. In her original findings, the special master determined
that Father had income of “at least” $181,162.58 in 2006 and “at least” $197,827.00 in 2007.
However, Father’s income tax returns reflected adjusted gross income of $162,988.00 in
2006 and $181,131.00 in 2007. The special master also noted that “Father did admit that his
2007 income tax return and his 2006 return might not reflect all of the income from his rental
properties.” It is again unclear what evidence the special master relied upon in reaching the
amount of income she assigned to Father in 2006 and 2007.

       Based on the lack of support for the special master’s determination of Father’s income
in 2005, 2006, and 2007, we conclude that there is not material evidence to support the trial
court’s adoption of the special master’s finding that a 15% variance in Father’s income did

                                             -11-
not exist. We remand this issue to the trial court for a redetermination of Father’s income
and presumptive child support to determine whether a 15% variance exists.

                                Mother’s Underemployment

       In response to Mother’s assertion that Father had a 15% variance in his income, Father
claimed that Mother was purposefully underemployed. In her first set of findings and
recommendations, the special master concluded that Mother was “willfully and/or voluntarily
underemployed” under Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(ii). In reaching this
conclusion, the special master relied in part on Mother’s 2005 income tax return. Mother
claims that this was error because her 2005 tax return was not entered into evidence until the
February 23, 2009 rehearing, following the special master’s first set of findings.

        Mother is correct that there is no 2005 tax return in the record from the September 22,
2008 hearing. Mother’s 2005 tax return was only entered into evidence after she objected
to the special master’s first set of findings and recommendations and the trial court remanded
the matter to the special master to consider any additional documents that should be
considered by the special master, “ including but not limited to [Mother’s] 2005 Tax Return.”

       In her second set of findings and recommendations, the special master noted only that
she had “reviewed” Mother’s 2005 income tax return and reaffirmed her earlier findings that
Mother’s annual income for 2005 was $31,678.00, for a monthly gross income of $2,639.83.
The special master did not explain how she arrived at this amount in her original findings
when Mother’s 2005 tax return had not been submitted into evidence at that time.
Furthermore, Mother’s 2005 tax return reflects an adjusted gross income of -$6,012.00.
Evidently the special master imputed income to Mother based on her conclusion that Mother
was willfully and/or voluntarily underemployed. It is unclear, however, how the special
master arrived at the $31,678.00 figure.

       The special master also attributed income of $37,533.00 to Mother for 2006, despite
a tax return that reflects adjusted gross income of -$31,738.00. In explanation of her
calculation, the special master offered only that she had “examin[ed] the income and
expenses of both the flower shop and video shop as reflected on [Mother’s] 2006 income tax
return.” Again, we are unable to see how the special master arrived at these figures based
on the evidence submitted.

      Under the Child Support Guidelines, imputing additional gross income to a parent is
appropriate if the parent is found to be willfully and/or voluntarily underemployed or
unemployed. Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(i)(I). “The purpose of the
determination [of willful and/or voluntary underemployment or unemployment] is to

                                             -12-
ascertain the reasons for the parent’s occupational choices, and to assess the reasonableness
of these choices in light of the parent’s obligation to support his or her child(ren) and to
determine whether such choices benefit the children.” Tenn. Comp. R. & Regs. § 1240-2-4-
.04(3)(a)(2)(ii). “A determination of willful and/or voluntary underemployment or
unemployment is not limited to choices motivated by an intent to avoid or reduce the
payment of child support. The determination may be based on any intentional choice or act
that adversely affects a parent’s income.” Tenn. Comp. R. & Regs. § 1240-2-4-
.04(3)(a)(2)(ii)(I). The Child Support Guidelines do not presume that any parent is willfully
and/or voluntarily underemployed or unemployed; the burden of proof is on the party
alleging that a parent is willfully or voluntarily underemployed or unemployed. Tenn. Comp.
R. & Regs. § 1240-2-4-.04(3)(a)(2)(ii); Owensby v. Davis, No. M2007-01262-COA-R3-JV,
2008 WL 3069777, at *4 (Tenn. Ct. App. July 31, 2008).

        There are a number of factors that a court may consider when making a determination
of willful and voluntary underemployment. Those applicable in the present case include the
following:

       (I) The parent’s past and present employment;
       (II) The parent’s education, training, and ability to work;
       ...
       (IV) A parent’s extravagant lifestyle, including ownership of valuable assets
       and resources (such as an expensive home or automobile), that appears
       inappropriate or unreasonable for the income claimed by the parent;
       ...
       (VI) Whether unemployment or underemployment for the purpose of pursuing
       additional training or education is reasonable in light of the parent’s obligation
       to support his/her children and, to this end, whether the training or education
       will ultimately benefit the child in the case immediately under consideration
       by increasing the parent’s level of support for that child in the future;
       (VII) Any additional factors deemed relevant to the particular circumstances
       of the case.

Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(iii). Once a parent is found to be willfully
and/or voluntarily underemployed, additional income can be allocated to increase the parent’s
gross income “to an amount which reflects the parent’s income potential or earning
capacity.” Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(ii)(II). In determining that
amount, courts are to use the following criteria: the parent’s past and present employment
and the parent’s education and training. Id.




                                              -13-
       The special master concluded that Mother was willfully and/or voluntarily
underemployed under the Child Support Guidelines, “specifically § 1240-2-4-
.04(3)(a)(2)(ii).” The special master determined that it was not “reasonable for the Mother
to continue as a contractor given the poor residential home sales market, the failure of the
Mother’s side businesses and the fact that the Mother has reported a negative income to the
IRS for the last three (3) tax years.” The special master was critical of Mother’s decision not
to seek other work when her side businesses had failed and construction sales were weak.

        In order to ascertain whether Mother was willfully and/or voluntarily underemployed,
we must consider her employment history, as well as her education, training, and ability to
work. See Tenn. Comp. R. & Regs. 1240-2-4-.04(3)(a)(2)(iii). Mother has a bachelor’s
degree from the University of Michigan in anthropology, although she testified that the
degree was “[n]ot at all” useful for obtaining employment. She was a mortgage loan officer
from 1990 to 1997, and she earned “a minimum of $30,000 a year at that time.” Mother
testified that she did not think returning to employment as a loan officer would be profitable
“[b]ecause people aren’t getting mortgages right now.”

       Following her career as a loan officer, Mother began helping Father in the
construction business. Mother has a contractor’s license and has “built” some homes. At the
time of the September 22, 2008 hearing, Mother had five homes for sale. Mother described
her involvement in the construction business:

       I secure financing. I choose locations. I get permits. I set up subcontractors,
       when and where they’re supposed to do their stuff. I oversee the job, make
       sure everything is being done properly and in the right order. I make sure
       that’s done on time, what they have to do in order to get another sub in there.
       I need to inspect the houses every day while the work is going on.

       As far as actual work, I do the mowing, the landscaping, the painting, the tile
       work, put on door knobs, locks. I deal with all of the contractors and supply
       the building materials. I deal with the real estate agent. That’s it.

       Mother started a flower shop while the parties were married. Mother purchased the
property for the shop in the spring of 2002 and opened it in September 2002, before the
parties were divorced. The flower shop was not successful. Mother laid off all of her
employees and was the only person working at the shop. At the time of the September 22,
2008 hearing, Mother testified that the flower shop property had been for sale for almost a
year. While she had not received any offers, there had been “some interest.” The property
was listed for sale for $512,000; Mother testified that she owed $264,000 on the property.



                                             -14-
        Because the flower shop was unsuccessful, Mother tried “to find a way to cut the
overhead expense and divide it between something else.” She opened a video store, which
was also unsuccessful. Mother testified, “Well, the video business is not a good business to
be in right now because there’s so many other options for people. You can rent off the
satellite. You can rent off the cable. You can rent from NetFlix. And you can go to
McDonald’s and rent them for a dollar.” Mother stated that opening the video store only
“made things worse.” Mother closed the video store and was in the process of selling off the
assets at the time of the hearing.

       Mother’s tax returns for 2005 and 2006 reflect adjusted gross income of -$6,012 and
-$31,738, respectively. Mother acknowledged at trial that all of the losses showing on her
financial statements “really are losses through the flower shop and the video store.” Her
2007 projected tax return showed projected net profit of $12,116 from the flower shop and
projected net loss of $31,379 from the video store.6

        Mother stated at trial that she was not seeking other employment because she did not
“have the time to do that and finish these houses and keep from going bankrupt.” Mother
testified that if she got a job making minimum wage, she would bring home “less than $200”
each week, which would not meet her expenses.

       In addition to the flower shop and video store property, Mother acknowledged that she
had six rental properties listed on her projected tax return for 2007. Mother further testified
that the house in which she resided at the time of the hearing was for sale for $235,000;
Mother owed $150,000 on the home.

       A parent’s lifestyle is also relevant to the underemployment determination. Tenn.
Comp. R. & Regs. 1240-2-4-.04(3)(a)(2)(iii)(IV). When asked to describe her lifestyle,
Mother testified, “I work and take care of my home. I take care of my child when I have her,
and that’s it.” Mother stated, “I get to go on a rare vacation when I get to use my brother’s
condo for free in Florida.” Mother later acknowledged having traveled to Florida four times
and Las Vegas three times since the divorce in 2004. Mother testified that she did not own
any vacation property, did not dine out frequently, and did not go on shopping sprees. She
owned one vehicle, a 2007 Toyota Tundra, which she used for work.

      Upon review of the entire record and application of the factors set forth in Tenn.
Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(iii), we agree with the special master that Mother
was willfully and/or voluntarily underemployed. Mother focused her efforts on extremely
unsuccessful businesses despite having training and experience in other fields. Mother

       6
           Mother testified that she lacked the money to pay an accountant to complete her 2007 tax return.

                                                   -15-
testified that she had not sought other employment and that a minimum wage job would still
not cover her expenses. This is an unacceptable excuse when Mother was already earning
negative income.

        In light of the foregoing, we conclude that there is material evidence to support the
trial court’s adoption of the special master’s determination that Mother was willfully or
voluntarily underemployed. However, the amount of income that the special master
apparently imputed to Mother was not explained and lacks proper evidentiary support. We
remand this issue to the trial court for a redetermination of Mother’s income under the
appropriate standard set forth in Tenn. Comp. R. & Regs. § 1240-2-4-.04(3)(a)(2)(ii).

                                        Medical Bills

        The special master found that Mother owed Father $498.73 for her share of medical
bills incurred on behalf of Child and that Father owed Mother $137.76 for his share of
medical bills incurred on behalf of Child. Mother insists that this finding is contrary to the
evidence presented at trial. Mother is correct that the only evidence presented at trial as to
medical bills paid by Father was his testimony on direct examination:

       Q: And the back medical bills—you have also paid back medical bills for your
       daughter, correct?

       A: Yes.

       Q: And so about $500 that we submitted details the billing on that.

       A: Sounds right.

There are no exhibits in the record reflecting Father’s expenditures for Child’s medical bills.
The special master did not explain how she arrived at $498.73 when the only proof submitted
is that Father spent “about $500.” We therefore conclude that there is not material evidence
to support the trial court’s adoption of the special master’s finding that Father owes Mother
$498.73 for Child’s medical bills.

        Father insists that even if the special master improperly relied on out-of-court
documents to reach the $498.73 figure, the finding should be affirmed because Mother
suffered no harm from that reliance. While we agree that the $1.27 difference is nominal,
it is symptomatic of the greater problem that the special master appears to have consistently
relied on evidence outside the record and/or failed to explain her calculations. Our concern
is that the special master may have omitted or relied on other evidence that could make a

                                             -16-
more significant difference in the calculation of medical bills and the final amount owed by
the parties. In fact, we are also unable to find evidence in the record to support the special
master’s determination that Father owed Mother $137.76 for his share of Child’s medical
bills. Because we cannot ascertain how the special master arrived at these figures, we
believe a redetermination of the expenses incurred on behalf of Child is in order.

                                      Health Insurance

        Child has been covered under Father’s health insurance policy since the parties’
divorce. At trial, Mother sought to have Child’s coverage changed to her own policy because
the monthly premiums and deductible were both lower than on Father’s policy. Mother
asserts that Father agreed to this proposition at trial with the following testimony:

       Q: And your plan would be for the judge to order that—you have had the
       insurance all this time.

       A: Yes.

       Q: And you know that she’s asking to add her on at approximately $80.

       A: Yes.
       ....

       Q: You don’t care if she adds the child. You just don’t want to have to drop
       your insurance. Is that what you’re telling me?

       A: That’s correct. I don’t want her to be (inaudible) $80. I can deal with that.
       I would still like to keep my policy because it has a million dollar cap on it so
       if something major happens, I don’t have to worry about a cut off of coverage.
       Potentially, 500,000 (indistinct) reach 500. But if she wants to carry it, I’ll be
       happy to pay her that portion of it. I don’t mind—

       Q: You want to keep your—

       A: I just want to keep mine, but I will happily pay her part.

Mother challenges the special master’s recommendation that Father continue to provide
coverage when his testimony indicates his willingness for Mother to provide the coverage.




                                              -17-
        Mother’s argument, however, mischaracterizes Father’s testimony and disregards
other portions of his testimony in which he makes clear that he would like to continue to be
the parent responsible for Child’s health insurance coverage. Father explained at trial that
he objected to Mother providing Child’s coverage because of his concern over her financial
instability, so much so that he intended to continue to provide coverage for Child regardless
of the special master’s recommendation:

       Q: Now, you heard me say that the reason was because you don’t feel that
       she’s as stable as you are with regard to the medical insurance. You heard me
       say that.

       A: Yes.

       Q: Do you feel that she has some issues going on right now with money that
       might make it difficult for her to even pay her bill? Is that what you’re saying?

       A: She can’t pay her accountant’s bill, yes. And I hate that that’s where at
       [sic], but the medical insurance is so important. I would like to think that she
       would never let a lapse happen. But, you know, if you get—if you’re behind
       on money, it could potentially happen. You know, hopefully it wouldn’t, but
       in that I’m willing to pay the extra 80-something dollars.

       Q: So basically, you just want—you’re going to cover the insurance whether
       the judge lets you put that in the box [on the child support worksheet] or not.

       A: Correct.

       Q: All right. And what you’d like the judge to do is let hers be in the box, $80
       and some cents, and yours be in the box, which is just about the same amount,
       correct? Is that what you’re asking for?

       A: Yes.

       Father maintains that throughout these proceedings, his position has been that he
should remain the party responsible for Child’s health insurance coverage. Given Father’s
testimony, we find that there is material evidence supporting the special master’s conclusion
that Father should continue to provide Child’s health insurance coverage. The trial court’s
decision regarding Child’s health insurance coverage is affirmed.




                                             -18-
                                       C ONCLUSION

       We vacate the trial court’s decisions regarding Father’s income and child support
obligation and remand those matters for redetermination. We affirm the trial court’s finding
that Mother is underemployed and remand the matter to the trial court for a calculation of
imputed income. We also vacate the trial court’s calculation and division of medical bills
and remand the matter for reexamination, recalculation and redivison. Costs of appeal are
assessed against the appellee, for which execution may issue if necessary.


                                                   _________________________________
                                                   ANDY D. BENNETT, JUDGE




                                            -19-
