Courts lack authority to transfer property owned by LLC
Tennessee case summary on property division in divorce.
TN divorce court doesn’t have authority to award property owned by LLC, but can award the LLC’s interest.
Louise Ann Sexton v. Michael Bryant Sexton
The wife in this Knox County, Tennessee, case filed for divorce in 2018. The filing of the case put into effect the automatic statutory injunction under a Tennessee statute, and both parties signed a document acknowledging that injunction.
The husband was the owner of real estate, all of which were purchased during the marriage. The husband owned a large amount of real estate, which he transferred at some point to an LLC. The husband claimed the LLC belonged to his father but provided no evidence. The husband appealed the case to the Tennessee Court of Appeals. The appeals court noted that trial courts have considerable discretion in allocating property. The appeals court agreed that the lower court was right in determining that the husband owned 100% of the LLC. It noted that the lower courts acted correctly in not confirming husband’s testimony claiming that his father owned it. The court affirmed the finding.
The wife fared much better when he argued the trial court made a mistake in ordering him to transfer the property on behalf the LLC.
He argued that the LLC was not a party to the case, and that the trial court over-stepped its authority.
The appeals court agreed, but the husband’s victory was pyrrhic. The court remanded and stated that the lower courts should award the wife her entire interest in the LLC rather than the LLC’s property. After addressing other issues, The Court of Appeals remanded this case to the trial courts.No. E2023-00136-COA-R3-CV (Tenn. Ct. App. See original opinion for exact wording. Legal citations have been omitted.
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