                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                               November 19, 2013 Session

                      ROBERT L. MACY v. OUIDA J. MACY

             Direct Appeal from the Chancery Court for DeKalb County
                  No. 2011-CV-1      Ronald Thurman, Chancellor


               No. M2012-02370-COA-R3-CV - Filed February 11, 2014


This appeal challenges the effectiveness of a QDRO which requires Wife to pay taxes on a
$115,000.00 divorce settlement. The trial court held that the amount should not be reduced
by taxes. We conclude that the trial court erred in holding that Wife’s $115,000.00 divorce
settlement was not subject to reduction for taxes, and we reverse its holding in that regard.
The case is remanded for further proceedings consistent with this opinion.


 Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Reversed
                                   and Remanded

A LAN E. H IGHERS, P.J., W.S., delivered the opinion of the Court, in which D AVID R. F ARMER,
J., and J. S TEVEN S TAFFORD, J., joined.

Stephen W. Pate, Murfreesboro, Tennessee, for the appellant, Robert L. Macy

Bratten H. Cook, II, Smithville, Tennessee, for the appellee, Ouida J. Macy
                                               OPINION

                             I.   F ACTS & P ROCEDURAL H ISTORY

        Robert L. Macy (“Husband”) and Ouida J. Macy (“Wife”)1 married in 1987. Husband
filed a Complaint for Absolute Divorce in the Dekalb County Chancery Court on January 4,
2011 alleging irreconcilable differences and inappropriate marital conduct. Wife filed an
Answer and Counter-Complaint conceding irreconcilable differences and alleging
inappropriate marital conduct by Husband.

       The divorce case was settled by mediation in June 2011. A Marital Dissolution
Agreement (“MDA”) was entered on August 29, 2011; Wife executed the MDA on July 11,
2011 and Husband executed the MDA on August 24, 2011. Pursuant to the MDA, Husband
was awarded the parties’ marital residence, 9.93 acres of land adjoining the marital residence
property, and “two tracts of real property of approximately twenty three acres of land located
in Dekalb County, Tennessee[.]” Wife was required to execute quitclaim deeds conveying
her interest in the above-properties to Husband.

        The MDA further provided:

        2.5 As a division of marital property, the husband will pay to the wife the sum
        of $115,000.00, which shall be paid from his retirement account pursuant to
        paragraph 4.0 below, for any and all interest she has in the marital property
        which will become the property of the husband, included but not limited to, all
        of the realty ow[n]ed by the parties, and the husband’s retirement account.2

        ....

        4.0 PENSION/RETIREMENT ACCOUNTS: Husband maintains a 401(k)
        account through his employment with Johnson Controls, with the present
        balance being approximately $200,000.00, after deducting the loans
        outstanding on said account in the amount of approximately $16,000.00. The
        parties agree that wife shall receive the total sum of one hundred fifteen

        1
        Appellee’s name is spelled both Ouida and Quida throughout the record. We will utilize the
“Ouida” spelling used in Appellee’s brief.
        2
         The MDA also distributed personal property including motor vehicles and all-terrain vehicles. The
MDA provided that Wife was entitled to all proceeds, if any, received from her pending workers’
compensation claim and that she would be responsible for medical bills incurred for her injuries as well as
for reimbursing medical expenses paid by Husband’s health insurance provider.

                                                   -2-
        thousand dollars ($115,000.00) from said 401(k) account, pursuant to the terms
        of a qualified domestic relations order (QDRO). Wife shall be responsible for
        the preparation of the QDRO or any other documents required to convey said
        funds, and husband shall cooperate in providing all information and/or
        executing any documents necessary to convey wife’s portion in said account.
        The parties shall be equally responsible for any administrative fees assessed
        by the plan administrator to process the transfer pursuant to the terms of the
        QDRO.

       The MDA was incorporated into a Final Judgment, filed on September 6, 2011, which
dissolved the parties’ marriage on the ground of irreconcilable differences. Also on
September 6, 2011, a Qualified Domestic Relations Order (“QDRO”) was signed by the
parties and their counsel and filed in the chancery court. The QDRO provided in relevant
part:

        11. Taxation
        For purposes of Section 402 and 72 of the Code, any alternate payee who is the
        spouse or former spouse of the participant shall be treated as the distributee of
        any distributions or payments made to the alternate payee under the terms of
        the order and, as such, will be required to pay the appropriate federal, state,
        and local income taxes on such distributions.

       On February 22, 2012, Wife filed a Motion in the chancery court, pursuant to
Tennessee Rule of Civil Procedure 70,3 moving the court to “enforce the requirement set
forth in the Order heretofore entered in this cause on September 6, 2011 which required
[Husband] to pay to [Wife] the sum of $115,000.00 from []his retirement account.”
According to the Motion, Wife had been “informed that the administrator for the employer
has set aside the $115,000.00 due the wife, but . . . that she will be responsible for the
payment of penalties and taxes on such amount, which would reduce the $115,000.00 to
approximately $90,000.00, which was not the agreement of the parties.”

       In response, Husband filed a Motion on April 17, 2012, pursuant to Tennessee Rule
of Civil Procedure 60.02, moving the court to order Wife to execute three quitclaim deeds

        3
           In his appellate brief, Husband argues that Wife inappropriately relied upon Rule 70. However,
Husband does not list this as an issue for our review, and it is unclear whether this argument was raised in
the trial court. Therefore, we will not consider, on appeal, the appropriateness of Wife’s reliance upon Rule
70. See Barnes v. Barnes, 193 S.W.3d 495, 501 (Tenn. 2006) (“Issues that were not raised in the trial court
may not be raised for the first time on appeal.”); Childress v. Union Realty Co., Ltd., 97 S.W.3d 573, 578
(Tenn. Ct. App. 2002) (“We consider an issue waived where it is argued in the brief but not designated as
an issue.”) (citation omitted).

                                                    -3-
conveying her interest in the above-referenced properties to Husband consistent with the
Final Judgment and the MDA. According to Husband, Wife had refused to relinquish her
interest in the properties until she received the $115,000.00 sum unreduced by taxes.
Husband argued that Wife was responsible for paying taxes on the amount, and in any event,
that the requirement that she execute the quitclaim deeds was not contingent upon her receipt
of funds.

        A hearing was held on the parties’ motions on May 4, 2012. At the hearing, the
chancellor sua sponte raised the issue of whether additional consideration was given to Wife
for her execution of the QDRO, which it found contained terms different from those set out
in the MDA. The court allowed Husband’s counsel ten days in which to file a statement of
any consideration received by Husband subsequent to her execution of the MDA on July 11,
2011 and her execution of the QDRO filed on September 6, 2011. Husband responded on
May 14, 2012 by filing a Notice in which he “concede[d] that he [was] unaware of any new
or additional consideration directly benefitting wife between the date of her execution of the
MDA and the date of the filing of the QDRO[;]” Husband, however, argued that Wife
received consideration when she executed the MDA and that additional consideration was
unnecessary.

        On July 20, 2012, the chancery court entered an Order in which it found and ordered
as follows:

               1. That there was no new or additional consideration benefitting
       defendant/wife between the dates of the execution of the Marital Dissolution
       Agreement and the Qualified Domestic Relations Order. The plaintiff/husband
       was given the opportunity to present such evidence, and counsel for
       plaintiff/husband candidly admitted no such evidence existed.

               2. That based upon the language of the Marital Dissolution Agreement,
       where it recites that “as a division of marital property, the husband will pay to
       the wife the sum of $115,000.00, which shall be paid from his retirement
       account . . .”, the Court is of the opinion that said payment is in the nature of
       a division of marital property, and the plaintiff/husband was merely afforded
       an opportunity to pay same out of his retirement account, of which he received
       100%.

             3. The defendant/wife should receive the payment of $115,000.00
       unreduced by any taxes, etc.

              4. That in the event the plaintiff/husband does not agree to the payment

                                              -4-
        to the defendant/wife of $115,000.00 unreduced by taxes, etc., then the Court
        hereby sets aside the Marital Dissolution Agreement in its entirety and the
        Court will decide all issues related thereto absent a subsequent agreement by
        the parties.4

       On August 3, 2012, Husband filed a Motion for Interlocutory Appeal regarding the
taxation issue. In an October 16, 2013 Order, the chancery court denied Husband’s motion
and instead it ordered that its July 20, 2012 Order5 be deemed a final order subject to appeal.6
Husband filed a Notice of Appeal to this Court on October 19, 2013.7

                                          II.   I SSUE P RESENTED

        Husband presents the following issue for review:

1.      Whether the trial court erred in ordering Wife to receive the total sum of $115,000.00
        net and unreduced by taxes, from Husband’s 401(k) account.

For the following reasons, we reverse the decision of the chancery court and we remand for
further proceedings.




        4
            As noted below, this paragraph was later stricken by the court.
        5
         The October 16, 2013 Order stated that it was amending a July 18, 2012 Order. We will refer to
the July Order by its filing date of July 20, 2012 rather than by its execution date of July 18, 2012.
        6
        In the October 16, 2013 Order, the chancery court also amended the July 20, 2012 Order by striking
paragraph four in its entirety.
        7
         On January 16, 2013, the chancery court entered an Order ordering, among other things, that Wife
“shall not be required to execute the quit claim deeds to [Husband] . . . until there is a final resolution of the
appeal filed by [Husband.]” In response to an Order of this Court directing entry of a final judgment, the
record was supplemented with an Agreed Order, filed January 6, 2014, ordering that Wife “shall execute
quitclaim deeds to [Husband] regarding the parties’ real property, immediately upon the conclusion of the
appeal by [Husband.]”

                                                       -5-
                                           III. D ISCUSSION8

       The sole issue on appeal is whether Wife’s $115,000.00 divorce settlement is subject
to reduction through taxation. As stated above, the trial court held that Wife should receive
the entire $115,000.00 sum, unreduced by taxes. Ostensibly, the trial court reached this
conclusion on two grounds: Wife did not receive additional consideration for her execution
of the QDRO and, according to the trial court, the MDA provided for Wife’s receipt of
$115,000.00 and Husband “was merely afforded an opportunity to pay same out of his
retirement account[.]”

       On appeal, Husband argues that the plain language of the MDA and the QDRO clearly
requires Wife to pay taxes on distributions from Husband’s retirement account and that both
documents should be enforced under general contract principles. He contends that both the
MDA and the QDRO were entered into “with full disclosure, adequate provisions for each
party, consideration by each party, without fraud or misrepresentation, with neither party
being under undue influence or duress, and with each party having the right to seek
independent advi[c]e.”9 Husband maintains that the MDA and the QDRO do not contain
conflicting terms and he rejects the idea that additional consideration was necessary for
execution of the QDRO because the QDRO was necessary to “effectuate[] the transfer of
assets pursuant to the terms of the MDA.”

       In response, Wife does not argue that the MDA and/or the QDRO should be set aside
for failure of consideration or because there was no meeting of the minds–theories
considered sua sponte by the trial court. Instead, she argues solely that the MDA and the
QDRO contain conflicting language and, therefore, that the MDA–which, according to Wife
provides for a $115,000.00 award to Wife unreduced by taxes–controls.




        8
         At the outset, we address Wife’s argument in her appellate brief that Husband’s appeal is untimely.
Wife contends that the order appealed from is the Final Judgment entered on September 6, 2011, and
therefore, that the appeal period lapsed on October 7, 2011, prior to Husband’s Notice of Appeal in October
2012. Although Wife failed to properly raise this issue in her statement of issues presented for review, see
T.R.A.P. 27(a)(4), we must, sua sponte, review the record to determine whether this Court properly possesses
appellate jurisdiction. Davis v. Shelby County Sheriff’s Dept., No. W2006-00980-COA-R3-CV, 2007 WL
609159, at *3 (Tenn. Ct. App. Feb. 28, 2007) (citing Huntington Nat’l Bank v. Hooker, 840 S.W.2d 916, 922
(Tenn. Ct. App. 1991)). We conclude that the Order appealed from was entered on October 16, 2012, and
therefore, that Husband’s October 19, 2012 Notice of Appeal was timely filed.
        9
        Wife does not argue otherwise. As stated below, Wife merely argues that the QDRO contains
language in conflict with the terms of the MDA, and therefore, that the MDA controls.

                                                    -6-
        In Tennessee, an MDA incorporated into a final decree of divorce “is a contract which
is binding on the parties and as such it is ‘subject to the rules governing construction of
contracts.’” Stiel v. Stiel, 348 S.W.3d 879, 885 (Tenn. Ct. App. 2011) (quoting Johnson v.
Johnson, 37 S.W.3d 892, 896 (Tenn. 2001)). “‘When resolving disputes concerning contract
interpretation, our task is to ascertain the intention of the parties based upon the usual,
natural, and ordinary meaning of the contractual language.’” Johnson, 37 S.W.3d at 895
(quoting Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999)). This interpretation is not
possible where ambiguity exists with regard to material terms; however, ambiguity “‘does
not arise in a contract merely because the parties may differ as to interpretations of certain
of its provisions.’” Id. (quoting Cookeville Gynecology & Obstetrics, P.C. v. Southeastern
Data Sys., Inc., 884 S.W.2d 458, 462 (Tenn. Ct. App. 1994)). “‘A contract is ambiguous
only when it is of uncertain meaning and may fairly be understood in more ways than one.’”
Id. (quoting Farmers-Peoples Bank v. Clemmer, 519 S.W.2d 801, 805 (Tenn. 1975)). The
interpretation of a contract is a question of law, and therefore a trial court’s interpretation is
not entitled to a presumption of correctness on appeal.10 Pylant v. Spivey, 174 S.W.3d 143,
150 (Tenn. Ct. App. 2003) (citations omitted).

        The middle section of this Court has previously held that a QDRO expressly
incorporated into an MDA–where the MDA was incorporated into the final divorce
decree–and contemporaneously executed and entered with the final decree “must be treated
as part of the parties[’] agreement to divide the marital property.” Pruitt v. Pruitt, 293
S.W.3d 537, 543 (Tenn. Ct. App. 2008) (holding that the MDA and the initial QDRO–rather
than a subsequent QDRO–which were incorporated into the Final Decree of Divorce,
governed the rights and responsibilities of the parties) (citing Thornton v. Thornton, 277
Mich. App. 453, 746 N.W.2d 627, 629-30 (2007) (holding the provisions of the
contemporaneous QDRO must be treated as part of the settlement because the parties
approved the content of the judgment of divorce at the same time they approved the initial
QDRO referred to by the judgment of divorce)) (footnote omitted). We have similarly held
that a QDRO contemporaneously entered with a final divorce decree either merges into the
divorce decree or is eliminated if it conflicts with the decree. See Davidson v. Davidson, 916
S.W.2d 918, 922 (Tenn. Ct. App. 1995); see also Pruitt, 293 S.W.3d at 544 (“[P]arties may
not amend the terms of the property division in a final judgment by a subsequent agreement,
such as a QDRO.” (citations omitted) (emphasis added)). In considering merger/elimination
of a QDRO, this Court previously considered the following contract principles:


        10
          Similarly, the interpretation of a judgment–for example, a final decree of divorce–is a question of
law. Pruitt, 293 S.W.3d at 544. “We are to construe judgments as we do other written instruments, and the
determinative factor is the intention of the court as collected from all parts of the judgment. The construction
of a judgment should give force and effect to every word of it, if possible, and make all of the parts
consistent, effective, and reasonable.” Id. at 544-45 (citations omitted).

                                                      -7-
        It is a well-recognized principle of contract construction that the intention of
        the parties as ascertained from the entire context of their agreement is
        controlling. And where an executed agreement refers to other documents and
        makes their conditions part of the executed agreement, the documents must be
        interpreted together as the agreement of the parties.

        ....

        It is the universal rule that a contract must be viewed from beginning to end
        and all its terms must pass in review, for one clause may modify, limit or
        illuminate another.’” Id. (quoting Associated Press v. WGNS, Inc., 48 Tenn.
        App. 407, 348 S.W.2d 507 (1961)).

        ....

        Taking its words in their ordinary and usual meaning, no substantive clause
        must be allowed to perish by construction, unless insurmountable obstacles
        stand in the way of any other course. Seeming contradictions must be
        harmonized if that course is reasonably possible. Each of its provisions must
        be considered in connection with the others, and, if possible, effect must be
        given to all. A construction which entirely neutralizes one provision should
        not be adopted if the contract is susceptible of another which gives effect to all
        of its provisions. The courts will look to the entire instrument, and, if possible,
        give such construction that each clause shall have some effect, and perform
        some office.

Id. (quoting Engert v. Peerless Ins. Co., 53 Tenn. App. 310, 382 S.W.2d 541 (1964);
Associated Press v. WGNS, Inc., 48 Tenn. App. 407, 348 S.W.2d 507 (1961)).

       To determine the effectiveness of the QDRO in this case–which undisputedly calls for
Wife to pay taxes on distributions from Husband’s 401(k) account– a review of the operative
documents is in order. As set forth above, the MDA, which was entered on August 29, 2011,
and which was expressly incorporated into the Final Judgment, provided in relevant part:11

        2.5 As a division of marital property, the husband will pay to the wife the sum
        of $115,000.00, which shall be paid from his retirement account pursuant to
        paragraph 4.0 below, for any and all interest she has in the marital property


        11
             Again, Wife executed the MDA on July 11, 2011 and Husband executed the MDA on August 24,
2011.

                                                   -8-
        which will become the property of the husband, included but not limited to, all
        of the realty ow[n]ed by the parties, and the husband’s retirement account.

        ....

        4.0 PENSION/RETIREMENT ACCOUNTS: Husband maintains a 401(k)
        account through his employment with Johnson Controls, with the present
        balance being approximately $200,000.00, after deducting the loans
        outstanding on said account in the amount of approximately $16,000.00. The
        parties agree that wife shall receive the total sum of one hundred fifteen
        thousand dollars ($115,000.00) from said 401(k) account, pursuant to the terms
        of a qualified domestic relations order (QDRO). Wife shall be responsible for
        the preparation of the QDRO or any other documents required to convey said
        funds, and husband shall cooperate in providing all information and/or
        executing any documents necessary to convey wife’s portion in said account.
        The parties shall be equally responsible for any administrative fees assessed
        by the plan administrator to process the transfer pursuant to the terms of the
        QDRO.

       The QDRO, which was referenced in the MDA and entered contemporaneously with
the Final Judgment,12 provided in pertinent part:

        11. Taxation
        For purposes of Section 402 and 72 of the Code, any alternate payee who is the
        spouse or former spouse of the participant shall be treated as the distributee of
        any distributions or payments made to the alternate payee under the terms of
        the order and, as such, will be required to pay the appropriate federal, state,
        and local income taxes on such distributions.

       As noted above, on appeal, Wife contends that the MDA and the QDRO contain
conflicting language. Specifically, she focuses upon the phrase “As a division of marital
property,” and she seems to suggest that this phrase indicated an intent that her $115,000.00
award not be subject to reduction through taxation. Thus, she contends that because the
QDRO subjects her award to reduction, a conflict exists, and, therefore, we must disregard
the QDRO. We disagree.



        12
          The record indicates that both the Final Judgment and the QDRO were filed in the chancery court
at 9:55 A.M. on September 6, 2011. The QDRO was signed by Husband, Wife, and their respective counsel,
and the Final Judgment was approved for entry by both parties’ counsel.

                                                  -9-
        Although the MDA, itself, did not expressly state that Wife would be responsible for
paying taxes on any distribution from Husband’s 401(k) account, the converse–that Wife
would not be responsible for the payment of taxes–likewise, was not expressed. Wife has
cited no authority, nor have we found any, to support her apparent assertion that an award
made as a “division of marital property” is necessarily not subject to reduction through
taxation.13 The MDA did not apportion any tax consequences resulting from distributions
from Husband’s retirement account. Instead, it expressly provided that Wife’s award would
be made “pursuant to the terms of a qualified domestic relations order (QDRO)” and such
QDRO was contemporaneously entered with the Final Judgment to provide the missing
details. Pursuant to the unambiguous terms of the QDRO, Wife is “required to pay the
appropriate federal, state, and local income taxes” on distributions from Husband’s 401(k)
account.

       Because the QDRO was expressly incorporated into the MDA–and thus the Final
Judgment–because it was contemporaneously entered with the Final Judgment, and because
it complements the terms of the MDA, the QDRO must be treated as part of the parties’
agreement to divide the marital property. See Pruitt, 293 S.W.3d at 542-43. Read together,
the QDRO and the MDA unambiguously provide for the payment of $115,000.00 to Wife
from Husband’s 401(k) account, subject to reduction for appropriate federal, state, and local
income taxes. Accordingly, we find the trial court erred in holding that Wife’s $115,000.00
divorce settlement was not subject to reduction for taxes, and we reverse its holding in that
regard. The case is remanded for further proceedings consistent with this opinion.




        13
          Wife argues in her brief that “the most telling evidence regarding the intent of the parties[] has to
do with the initial ‘draft’ Marital Dissolution Agreement submitted by counsel for husband, and rejected by
counsel for wife. Counsel for wife sent to counsel for husband the appropriate language that was to be
included in the Marital Dissolution Agreement clearly evidencing the fact that the $115,000.00 due the wife
was a division of marital property, not simply an award from his retirement account.” Again, Wife has cited
no authority that a “division of marital property” is necessarily without tax consequences, and in any event,
unexecuted drafts and correspondence between the parties may not properly be considered where, as here,
the contract language is unambiguous. See Marcum v. Ayers, 398 S.W.3d 624, 629 (Tenn. Ct. App. 2012).

                                                     -10-
                                   V.   C ONCLUSION

      For the aforementioned reasons, we reverse the decision of the chancery court and we
remand for further proceedings. Costs of this appeal are taxed to Appellee, Ouida J. Macy,
for which execution may issue if necessary.




                                                  _________________________________
                                                  ALAN E. HIGHERS, P.J., W.S.




                                           -11-
