Non-Modifiable Spousal Support Against Public Policy?

22 January 2022
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Category: Blog
22 January 2022, Comments: 0

The Michigan Court of Appeals (Docket # 353269 Elliot v Elliot) reversed the Oakland County Trial Court decision reducing a spousal support obligation to plaintiff, Kimberly Elliott, from $3,000 per month to $1,500 per month, but not eliminating it completely because the trial court did not apply the “correct legal framework”

The parties’ consent judgment of divorce provided for $3,000 per month in spousal support. The parties also agreed that Payor’s voluntary retirement “that occurs when he is past the age of 65 shall constitute a change of circumstances to which support can be reviewed.” When payor retired he filed a motion to terminate his spousal-support obligation. After reviewing the parties’ proposed findings of fact and law, the court entered an order reducing the support obligation to $1,500 per month.

The Payor argued that the trial court erred by reducing, but not eliminating, his spousal-support obligation.

The Michigan Court of Appeals stated: The objective of spousal support is to balance the incomes and needs of the parties in a way that will not impoverish either party, and support is to be based on what is just and reasonable under the circumstances of the case.

When determining whether to award spousal support, a trial court should consider several factors:

(1) the past relations and conduct of the parties, (2) the length of the marriage, (3) the abilities of the parties to work, (4) the source and amount of property awarded to the parties, (5) the parties’ ages, (6) the abilities of the parties to pay alimony, (7) the present situation of the parties, (8) the needs of the parties, (9) the parties’ health, (10) the prior standard of living of the parties and whether either is responsible for the support of others, (11) contributions of the parties to the joint estate, (12) a party’s fault in causing the divorce, (13) the effect of cohabitation on a party’s financial status, and (14) general principles of equity.

A trial court may modify spousal support on the basis of new facts or different circumstances arising after entry of the divorce judgment. The party seeking a modification of spousal support bears the burden of proving the justification for the modified award.

In its opinion, the Court of Appeals found that the trial court recognized its obligation to make findings on the relevant factors and made findings relating to many of the factors, but that a court is not required to repeat each factor. That it was sufficient for the court to list all of the factors in one paragraph before discussing its findings relative to all the factors in the subsequent paragraphs.

The Payor also argued that the trial court improperly considered his pension income. At the time of the parties’ divorce, the pension was in pay status. The consent judgment of divorce divided that pension, and stated that Payor (Pension holder) was “awarded and retains free and clear the balance of his pension. Payor argued that because he received his portion of the pension free and clear the trial court cannot consider the income generated from the pension when evaluating his motion to terminate spousal support.

Appellant argued that the trial court improperly considered his pension income when evaluating his ability to pay spousal support. In its written opinion and order, the trial court stated:

“Defendant Husband argues that to consider his share of the pensions as his income for purposes of support would allow Plaintiff Wife to “double dip” and to receive a further portion of property which has already been divided. The court agrees. The court found the appellant’s case factually similar to Walker v Walker, 155 Mich App 405 (1986). In Walker, the court held, “The defendant’s pension cannot be recategorized as income in determining his ability to pay alimony. To hold otherwise would violate the binding divorce judgement as well as the equitable principles upon which divorce actions are based.” Id. at 405. Thus, Defendant Husband’s income for purposes of calculating spousal support is his social security income of $37,534.80. The court will consider Defendant Husband’s pension income only so far as it affects the needs of the parties.

The Court of Appeals found that the trial court relied on Walker to exclude Walter’s pension income from its determination of Walter’s ability to pay, but did include it in its determination of the needs of the party.

The Court of Appeals went on to conclude that, by applying Walker, the trial court erred. Decisions issued by this Court before November 1, 1990 are not precedentially binding. MCR 7.215(J)(1) and found the case of McCallister v McCallister, 205 Mich App 84, to be directly on point and a published after November 1, 1990 as precedentially binding.

In McCallister, the judgment of divorce awarded the plaintiff his retirement fund free of all claims the defendant might have against it. Id. at 85. On appeal, the plaintiff argued that it was “improper for the trial court to consider his retirement income when evaluating his ability to pay alimony.” Id. at 86-87. The McCallister Court noted that a number of cases—including Walker and Weaver—had held that such consideration was improper, but noted that in Torakis v Torakis, 194 Mich App this Court held “that it was not error to consider the former spouse’s property in assessing the ability to pay alimony.” McCallister, 205 Mich App at 87. Rather than following the Walker and Weaver line of cases, the Court in McCallister applied the reasoning in Torakis. Additionally, the Court explained:

MCL 552.28 provides in relevant part:

On petition of either party, after a judgment for alimony . . . the court may revise and alter the judgment, respecting the amount or payment of the alimony . . . and may make any judgment respecting any of the matters that the court might have made in the original action.

MCL 552.23 states:

Upon entry of a judgment of divorce . . . if the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party . . . the court may further award to either party the part of the real and personal estate of either party and alimony out of the estate real and personal, to be paid to either party in gross or otherwise and the court considers just and reasonable, after considering the ability of either party to pay and the character and situation of the parties, and all the other circumstances of the case.

These statutes clearly express the intent of the Legislature that our courts consider all the circumstances of the case when modifying an alimony award, and empower courts to award alimony out of the property of the former spouse when circumstances warrant it.

Accordingly, the trial court could properly consider all of plaintiff’s income when assessing his ability to pay alimony. [Id. at 87-88.]

McCallister, therefore, rejected the persuasive authority in Walker, and relying on Torakis and the plain language of the relevant statutes, held that a court evaluating a motion to modify spousal support must consider all the circumstances of the case, including retirement income awarded to a party to a divorce “free and clear” of any claims of the other party. Consequently, by relying on Walker instead of McCallister, the trial court applied the wrong legal framework. Because it is unclear what extent, if any, the trial court’s decision to exclude over $40,000 of Walter’s annual income from its analysis of the issue, it is necessary to reverse and remand this matter to the trial court. On remand, the trial court shall reconsider Walter’s motion to terminate spousal support using the correct legal framework, which requires the court to consider all the relevant circumstances of the case.

Even if McCallister was not binding, we would not find Walker persuasive. It essentially held that, through a consent divorce agreement, the parties to a divorce could waive the trial court’s statutory duty to consider all circumstances when evaluating a spousal-support decision. Such a holding is void as against public policy.

Although it is well-established that a party may properly waive any claim he or she might have to spousal support, an agreement to waive the trial court’s discretion to review a modification of support already awarded is a different matter. In Allard v Allard 318 Mich App 583 (2017), the Court was tasked with determining “whether parties may waive the trial court’s discretion under MCL 552.23(1) and MCL 552.401 through an antenuptial agreement.” In answering the question, the Allard Court balanced “two bedrock principles of Michigan jurisprudence: first, that the fundamental right to contract must be protected by allowing parties to contract freely and by enforcing contractual agreements; second, that courts sitting in equity must be free to afford whatever relief is necessary to see done that which, in good conscience, ought to be done.”

The Court reasoned:

In concert, MCL 552.12, MCL 552.23(1), and MCL 552.401 clearly demonstrate that the Legislature intends circuit courts, when ordering a property division in a divorce matter, to have equitable discretion to invade separate assets if doing so is necessary to achieve equity. These statutes do not afford the parties to a divorce any statutory right to petition for invasion of separate assets—at least none that is distinct from the parties’ right to petition for divorce in the first instance. Rather, the statutes simply empower the circuit court. For this reason, parties have no discernible rights to waive under MCL 552.23(1) and MCL 552.401. Moreover, to the extent that parties attempt, by contract, to bind the equitable authority granted to a circuit court under MCL 552.23(1) and MCL 552.401, any such agreement is necessarily void as against both statute and the public policy codified by our Legislature. Put differently, the parties to a divorce cannot, through antenuptial agreement, compel a court of equity to order a property settlement that is in equitable. Although parties have a fundamental right to contract as they see fit, they have no right to do so in direct contravention of this state’s laws and public policy.

Although Allard addressed whether the parties to a divorce could, through an antenuptial agreement, waive the court’s equitable discretion as it related to the division of property, we conclude that its principals are equally relevant to a determination of whether the parties may, by contract, waive the trial court’s discretion under MCL 552.23(1) to fully consider “the ability of either party to pay [spousal support] and the character and situation of the parties, and all other circumstances of the case,” if it is called upon to make a spousal-support determination. Stated differently, although the parties may agree to waive spousal support completely, once a decision regarding spousal support or the modification thereof is actually before the trial court, any agreements to restrict the equitable authority granted to the circuit court under MCL 552.23(1) is necessarily void as against both statute and public policy.

The Court of Appeals reversed and remanded the case.

An application for leave to appeal to the Michigan Supreme Court was denied (Docket # 163476)

SALIENT POINT

Careful what you ask for, the Appellant in seeking redress from the Michigan Court of Appeals could potentially wind up worse off financially then if he had not appealed the decision.

 

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