March 7, 2018 § Leave a comment
When Charles and Lajuana Easterling were divorced in 2013, the judgment incorporated their property-settlement agreement under which Charles agreed to pay Lajuana $2,500 a month in periodic alimony. He also agreed to pay the monthly note on the former marital residence, which Lajuana continued to occupy.
At the time of the divorce Charles worked offshore as a tool pusher. He later remarried and had two stepchildren and an adopted child by his second wife.
In 2015, Charles’s employment was terminated for reasons beyond his control. His efforts to file other employment in the oil industry were unsuccessful. He filed a petition for modification asking the court to eliminate the alimony obligation, and there was a temporary agreement reducing his alimony to $600 a month. He quit making the mortgage payment, forcing Lajuana to pay it herself.
At the time of the final hearing in May, 2016, Charles still reportedly had no income. He did have $400,000 in a securities account, an annuity, real property, vehicles, and other assets. He claimed living expenses of $7,574.56 a month. He said that he made up the deficit by increasing credit-card debt.
Following a hearing, the chancellor reduced Charles’s alimony obligation to $1,500 per month. Charles filed a motion for rehearing charging that the court should have terminated, not reduced, alimony. The chancellor denied the motion and Charles appealed.
In Easterling v. Easterling, a February 20, 2018, decision, the COA appealed. Judge Griffis wrote for a unanimous court:
¶11. Here, the chancellor’s final judgment found that Charles’s “decrease in income from his loss of employment was not anticipated at the time of the divorce and is a material change in circumstances[, but] . . . the loss of employment does not justify a termination of alimony[.]” After which, the chancellor considered the Armstrong factors to determine the proper amount of alimony. See Holcombe, 813 So. 2d at 703-04 (¶12).
¶12. “Personal bills cannot be used as a factor to reduce support payments.” Hardin v. Grantham, 201 So. 3d 511, 515 (¶15) (Miss. Ct. App. 2016). Since the divorce, Charles has acquired a new home and land, and has remarried and adopted one child and has two stepchildren. The law is clear that the claim of the divorced wife under an alimony award on the ex-husband’s earnings takes precedence over that of a second wife. De Marco v. De Marco, 199 Miss. 165, 167, 24 So. 2d 358, 359 (1946). The obligations to the first wife also take precedence over any obligations the ex-husband may have as the result of children with his new wife. James v. James, 724 So. 2d 1098, 1104 (¶22) (Miss. Ct. App. 1998). As a result, Charles’s post-divorce personal bills and remarriage cannot be used as factors to reduce his support payments. See Hardin, 201 So. 3d at 515 (¶15).
¶13. Further, the chancellor considered the Armstrong factors and concluded that Charles had not missed any payments on his monthly financial obligations since the divorce. Despite having been fired and claiming that he was in financial jeopardy because of his alimony obligation, all of his debts were current and there was no risk of foreclosure or repossession at the time of the hearing. Charles argues that he was current on all of his debts only because he took on additional credit-card debt through cash advances in order to make the payments. However, “simply alleging, as does [Charles], that one is subsisting on borrowed funds does not show with the required particularity that he is unable to pay.” Varner v. Varner, 666 So. 2d 493, 497 (Miss. 1995).
¶14. At the time of trial, Charles held more than $400,000 in stocks and an annuity, along with real property, vehicles, and other assets. Here he argues that he will run out of money within four years if he is forced to pay $1,500 a month in alimony, $120 a month in mortgage payments— including retroactive payments on each—and his reported $7,574.56 in monthly expenses. If this were the case, at that rate without any other income, Charles would be rendered destitute regardless of the court-required support payments.
¶15. At the hearing, Charles could make his obligatory alimony payments to Lajuana, whose living expenses and needs have remained unchanged since the divorce. The supreme court has held:
[i]n property and financial matters between the divorcing spouses themselves, there is no question that, absent fraud or overreaching, the parties should be allowed broad latitude. When the parties have reached [an] agreement and the chancery court has approved it, we ought to enforce it and take as dim a view of efforts to modify it, as we ordinarily do when persons seek relief from their improvident contracts. Weathersby v. Weathersby, 693 So. 2d 1348, 1351 (Miss. 1997) (quoting Bell v. Bell, 572 So. 2d 841, 844 (Miss. 1990)).
¶16. “[T]he chancellor has substantial discretion in reaching a decision that [she] finds equitable and fair to both parties.” Seale v. Seale, 863 So. 2d 996, 999 (¶14) (Miss. Ct. App. 2004). The chancellor determined that Lajuana had been substantially dependent upon both her disability payments and the alimony payments from Charles since the divorce to meet her monthly living expenses. Her financial situation has not changed. As a result of Charles’s material change in circumstances, the chancellor concluded that a $1,000 reduction in his alimony obligation was warranted. We find the chancellor’s reduction in the amount of the alimony was neither manifest error nor an abuse of discretion. The chancellor’s judgment is affirmed.
It seems a harsh rule when viewed from the payer’s perspective, but the chancellor’s job is to find a solution that is “equitable and fair to both parties.” At ¶10, the court noted that, “When analyzing [the Armstrong] factors and ‘deciding whether to modify periodic alimony,’ chancellors should ‘compar[e] the relative positions of the parties at the time of the request for modification in relation to their positions at the time of the divorce decree.’ Steiner v. Steiner, 788 So. 2d 771, 776 (¶16)(Miss. 2001)(citations omitted).”
The only other thing to which I would call your attention is that there was “no record or written order” documenting the temporary proceeding, per ¶4. That’s just asking for trouble. Here the parties agreed to what had transpired, but absent an agreement it could have been dicey, particularly for Charles, who had reduced his alimony and quit paying the mortgage note. Had Lajuana denied any agreement, Charles might have a big arrearage judgment and may have had his modification case bounced for unclean hands. Make sure you get an order; better yet, make a record and get an order entered.
February 12, 2018 § 3 Comments
Last summer we posted here about the COA’s decision in Harris v. Harris, in which the court affirmed the chancellor’s decision to reduce alimony based on the ex-wife’s receipt of Social Security benefits derived from those of her husband. You can read my post at this link, if you care to. The chancellor and the COA relied on Spalding v. Spalding as authority for the proposition that the chancellor is required to give the alimony payer credit for Social Security benefits derivative of the payer’s.
The MSSC granted cert, and in Harris v. Harris, decided February 1, 2018, the court reversed the COA and the trial court, overruling Spalding. Here’s what Justice Chamberlin wrote for the court en banc:
¶19. Today, we hold that … Social Security benefits derived from the other spouse’s income do not constitute a special circumstance triggering an automatic reduction in alimony. When a spouse receives Social Security benefits derived from the other spouse’s income, the trial court must weigh all the circumstances of both parties and find that an unforseen material change in circumstances occurred to modify alimony. See Ivison, 762 So. 2d at 334 (holding that the circumstances of both parties are considered to determine whether there was a material change); see also
Tingle, 573 So. 2d 1389, 1391 (Miss. 1990) (holding that change in circumstances must be after-arising and unanticipated). To the extent that Spalding states otherwise, it is overruled.
You can read the other 18 paragraphs reasoning their way through the law of Mississippi and other jurisdictions to get to this point. The court remanded the case to the chancellor to analyze it under Armstrong v. Armstrong, 618 So.2d 1278, 1280 (Miss. 1993) to determine whether modification was warranted, and, if so, how to modify.
Maybe it’s just me, but it seems that one of the murkiest areas of alimony law is what effect retirement has on the obligation. Retirement is, after all, a foreseeable event. Social Security benefits are foreseeable. What are we supposed to do? One of the easiest answers until this case was that Social Security benefits derived from the payer created a credit. Now that certainty is taken away. I think lawyers should spend more time negotiating over the future of retirement benefits. Clients absolutely do not want to think or talk about it until retirement is the 500-pound gorilla knocking at the front door. But this decision leaves your clients little choice but to deal with it now or engage in expensive and impoverishing litigation later.
August 30, 2017 § Leave a comment
The fairly commonplace practice of securing alimony awards via life insurance has come under increasing scrutiny. A recent post on the subject is at this link.
You can add the COA’s decision in Griner v. Griner, handed down June 27, 2017, to your collection of cases on point. In that case, the chancellor had ordered Chip Griner to obtain a $1,000,000 life insurance policy based on an award of alimony to his wife, Melanie. On appeal, Chip argued that the parties’ consent to divorce authorized the judge to consider alimony, but not life insurance. Justice Irving wrote for the court:
¶28. We also find that the chancellor operated within the authority granted to him by the parties’ submission of the issue of alimony when he ordered Chip to maintain a life-insurance policy with Melanie designated as the beneficiary. Mississippi Code Annotated section 93-5-23 (Rev. 2013) provides that, when granting a divorce, a chancellor
may, in [his] discretion, having regard to the circumstances of the parties and the nature of the case, as may seem equitable and just, make all orders . . . touching the maintenance and alimony of the wife or the husband, or any allowance to be made to her or him, and shall, if need be, require bond, sureties or other guarantee for the payment of the sum so allowed.
Miss. Code Ann. § 93-5-23. This Court has held that “[a]n alimony payor may be required to maintain life insurance in an amount sufficient to satisfy payment of alimony obligations that survive the payor’s death.” Coggins v. Coggins, 132 So. 3d 636, 644 (¶35) (Miss. Ct. App. 2014) (citations and internal quotations omitted). “Recognizing the possibility that an alimony payor may fall behind in periodic-alimony payments and then die leaving those vested payments unsatisfied, this court has acknowledged the chancellor’s authority to require the alimony payor to maintain a life-insurance policy to protect the recipient spouse against such a contingency.” Id. at 645 (¶37); see also Johnson v. Pogue, 716 So. 2d 1123, 1134 (¶41) (Miss. Ct. App. 1998); Beezley v. Beezley, 917 So. 2d 803, 808 (¶17) (Miss. Ct. App. 2005).
¶29. While we find that the chancellor was within the authority granted him by the parties when he ordered Chip to maintain a life-insurance policy with Melanie named as the beneficiary, we also find that the amount that Chip was required to maintain—$1,000,000— was unreasonable and excessive. The purpose of requiring an alimony payor to maintain a life-insurance policy with the alimony payee designated as the beneficiary is to protect the vested but unpaid amount of alimony in case of the payor’s death.
¶30. In Coggins, we held that the chancellor erred in his requirement that the husband designate his former wife as the beneficiary to a $175,000 life-insurance policy “to protect against [the husband] defaulting on his $504-per-month alimony payments and then dying before curing the default.” Coggins, 132 So. 3d at 645 (¶38). We reasoned that “[t]his amount of insurance—the equivalent of thirty years worth of alimony payments—assumes not only that [the husband] may fall behind for three decades but also that [his former wife] will experience no material change of circumstances altering or terminating her need for alimony.” Id.
¶31. Here, with respect to the protection of the alimony awarded to Melanie, the chancellor stated in the modified order:
The [c]ourt failed [in its final judgment] to ensure that the amount of alimony awarded to Melanie [was] covered by insurance and hereby directs Chip to change the beneficiary on his $1,000,000.00 life insurance policy to make the same payable to Melanie for the performance of the [j]udgment of the [c]ourt in case of Chip’s death.
As noted earlier in this opinion, the chancellor awarded Melanie periodic alimony of $3,000 a month, as well as lump-sum alimony of $480,000, or $4,000 a month for ten years. Although Chip was allowed to pay the lump-sum alimony in installment payments, the full amount vested immediately. Only a $480,000 policy would be required to guarantee payment of the lump-sum alimony. If Chip immediately paid his lump-sum-alimony obligation in a single payment, he would have to fail making his monthly periodic-alimony payments for more than twenty-seven years to accumulate a $1,000,000 arrearage. And if Chip chose to pay his lump-sum-alimony obligation in installment payments, along with his
periodic-alimony payments, and failed to make any payments for ten years, he would be in arrears by only $840,000, not counting any accrued interest. It is unreasonable to assume that Melanie would allow the payments to get that far behind before seeking judicial redress. Moreover, it is not unreasonable that Melanie may remarry, at which time Chip’s periodic alimony obligation would cease. Since we are already reversing on other grounds, we direct that on remand the chancellor take a new look at the amount of life insurance that will be required to protect Melanie’s alimony interest.
Again, the amount of life insurance ordered needs to be enough to protect any arrearage that might reasonably be expected to accrue, and no more.
August 8, 2017 § 3 Comments
Yesterday I posted about the Powell bankruptcy case and how it addressed the handling of equitable distribution in divorce when there is a pending bankruptcy proceeding. As promised, here are my thoughts:
- I have heard it said that Powell is a big change fraught with implications for family law practitioners, but I don’t see that. The language cited from Professor Bell clearly states what the law has been. Powell does not change that.
- Some may have misinterpreted the federal domestic relations exception barring federal courts from exercising jurisdiction over divorce to mean that all matters incidental to a divorce are included. The US Supreme Court, however, has made it clear that it is the granting of the divorce itself that is barred. Any matters pertaining to the property of the bankruptcy debtor are subject to bankruptcy jurisdiction.
- The only way that a chancellor may proceed in divorce after bankruptcy is filed is for you to lift the automatic stay. You have to petition the bankruptcy court to remand all of the issues, as Jessica Powell did, even knowing that some will not be remanded.
- Only problem is, per Heigle, cited in the Powell opinion, our supreme court has made it clear that the chancery court should stay all proceedings before it until the bankruptcy is concluded.
- Even without Heigle to stop you from going forward, it’s obvious that if the bankruptcy estate is taken away, equitable distribution is impossible. If equitable distribution is impossible, alimony is impossible, since you can’t get to alimony without going through equitable distribution. If most of the assets are in the bankruptcy estate, that may well limit or even eliminate child support.
- As I mentioned yesterday, I am no bankruptcy expert, but it appears that if you represent the other spouse (not the debtor), you had better file a claim for him or her in bankruptcy court right away to protect that client’s rights. You need to ask a bankruptcy expert about this.
July 18, 2017 § 1 Comment
In 2015, Ronnie and Amy Ali were divorced in an acrimonious proceeding that featured over 200 docket entries. Amy was granted the divorce on HCIT, and was awarded custody, child support, equitable distribution, alimony, and attorney’s fees. To secure the financial award, the chancellor ordered Ronnie to maintain a $2 million life insurance policy. Ronnie appealed on several issues, including the life insurance.
In Ali v. Ali, handed down June 13, 2017, the COA reversed and remanded on the life insurance issue. Since the opinion is a concise statement of the law on the point, I am including that portion. Judge Fair wrote for a 6-4 court:
¶22. The chancellor ordered Ronnie to maintain a life insurance policy valued at $2 million, with Amy to receive $1.5 million and the minor daughter to receive $500,000 in the event of Ronnie’s death. On appeal, Ronnie argues that the policy amounts required for Amy are excessive in light of the permissible purposes of such awards. We agree.
¶23. In Coggins v. Coggins, 132 So. 3d 636, 644-45 (¶¶35-37) (Miss. Ct. App. 2014), this Court explained:
An alimony payor “may be required to maintain life insurance in an amount sufficient to satisfy payment of alimony obligations that survive the payor’s death.” [Deborah H.] Bell, Mississippi Family Law § 9.08[c] [(2005)] (citing In re Estate of Hodges, 807 So. 2d 438, 442-44 (¶¶14-23) (Miss. 2002)). The key phrase is “alimony obligations that survive the payor’s death.”
Periodic alimony is an obligation that “terminates automatically” upon the payor’s death and cannot be imposed upon the payor’s estate, absent an express agreement. Armstrong [v. Armstrong, 618 So. 2d 1278, 1281 (Miss. 1993)]; see In re Hodges, 807 So. 2d at 443 (¶19). While lump-sum alimony fully vests at the time of the divorce judgment, periodic alimony only vests on the date each payment becomes due. In re Hodges, 807 So. 2d at 442 (¶17). So when the payor dies, the only alimony obligations that survive—and the only obligations that may be insured—are unpaid lump-sum alimony and unpaid periodic-alimony payments that have already vested.
Recognizing the possibility that an alimony payor may fall behind in periodic-alimony payments and then die leaving those vested payments unsatisfied, this court has acknowledged the chancellor’s authority to require the alimony payor to maintain a life-insurance policy to protect the recipient spouse against such a contingency. [Johnson v. Pogue, 716 So. 2d 1123, 1134 (¶41) (Miss. Ct. App. 1998)]; see also Beezley v. Beezley, 917 So. 2d 803, 808 (¶17) (Miss. Ct. App. 2005). But in Pogue, this court found that requiring the payor to maintain a $75,000 life-insurance policy to protect against the potential failure to make $500-per-month alimony payments was “excessive.” Pogue, 716 So. 2d at 1134 (¶41).
¶24. Given the standard we have just recited, it is impossible to say that a life insurance policy of $1.5 million is necessary to guard against the potential failure to make $5,500 monthly alimony payments and to repay approximately $376,500 in marital debt. On remand, the chancery court should determine an appropriate award in light of the authorities we have just discussed.
- I think most attorneys have thought about life insurance as a replacement for future years of alimony that will not be paid in the event of the payer’s untimely death. Coggins, however, makes it clear that what is insured is any unpaid arrearage existing at the time of death, since periodic alimony payments cease at the death of the payer.
- Does the same rule apply to child support? In the absence of an agreement to the contrary, the child support obligation ceases at the death of the payer, and the estate of the decedent is not liable for future support. It would appear, then, that child support would be subject to the same considerations as alimony.
- One failing of most attorneys is to offer any proof of the cost of life insurance. I refuse to award it without some testimony of the projected cost.
June 22, 2017 § 1 Comment
Susan and Thomas Leon Harris were divorced from each other in 2011. Their property settlement agreement provided that Leon would pay Susan $2,755 monthly in periodic alimony. The only contingency recited in the agreement was that the alimony would cease at Susan’s remarriage or death.
At some point after the divorce, Susan filed for and began receiving Social Security retirement benefits in the amount of $1,035 per month. Susan’s benefit was based on Leon’s earnings record and was described as “derivative” of his benefit.
After Susan filed a pleading asking the court to review part of the agreement, Leon counterclaimed to reduce or terminate the alimony because Susan had begin drawing benefits off of his earnings record. Following a hearing, the chancellor ordered that Leon should pay Susan only $1,720 per month in alimony, since he was already receiving $1,035 based on his earnings record. Susan appealed.
In Harris v. Harris, decided May 16, 2017, the COA affirmed. Since the opinion addresses two issues of interest to chancery practitioners, I am including Judge Irving’s entire analysis:
¶6. Susan asserts that the chancellor erred in modifying the Agreement before requiring Leon to show a material change in circumstances. Susan asserts that the Agreement is a binding contract that is devoid of fraud, unconscionability, or any other factors which would render it an invalid contract; thus, the chancellor erred by disturbing the Agreement’s terms. She cites Peebles, in which this Court held that a property-settlement agreement—like any other contract—is “an agreement made between the parties [and] should ordinarily be enforced, and the court should take a dim view of efforts to modify or reform the parties’ settlement agreement.” Peebles v. Peebles, 153 So. 3d 728, 732 (¶17) (Miss. Ct. App. 2014) (quoting McFarland v. McFarland, 105 So. 3d 1111, 1119 (¶23) (Miss. 2013)). Susan also cites Lestrade, in which this Court held that property-settlement agreements “entered into by divorcing parties and incorporated into the divorce decree are not subject to modification, except in limited situations.” Lestrade v. Lestrade, 49 So. 3d 639, 642 (¶10) (Miss. Ct. App. 2010).
¶7. In support of her argument that the chancellor erred when he granted Leon credit for the Social Security benefits that she was receiving without first requiring Leon to show that a material change in circumstances had occurred since entering into the Agreement, Susan cites this Court’s decision in Cockrell, which provides:
A payor spouse’s alimony obligation may be modified or even terminated if the spouse is able to show a material change of circumstances has occurred since the original divorce decree. West v. West, 891 So. 2d 203, 212 (¶21) (Miss. 2004) (citation omitted). However, “the material change must be one that was not reasonably anticipated at the time of the original decree.” Clower v. Clower, 988 So. 2d 441, 444 (¶7) (Miss. Ct. App. 2008) (citing Holcombe v. Holcombe, 813 So. 2d 700, 703 (¶11) (Miss. 2002)). A material change in the income and expenses of both parties should be considered in determining any modification of periodic alimony. Austin v. Austin, 766 So. 2d 86, 90
(¶19) (Miss. Ct. App. 2000) (citing Armstrong [v. Armstrong], 618 So. 2d [1278,] 1280 [(Miss. 1993)]).
Cockrell v. Cockrell, 139 So. 3d 766, 770 (¶12) (Miss. Ct. App. 2014). Susan contends that Leon cannot show a material change in circumstances, as his health status has not changed, and he is still working as a bank president like he was at the time of the divorce. Susan
argues that even if her receipt of Social Security benefits constitutes a material change, Leon should have reasonably anticipated at the time of the divorce that she would begin collecting Social Security benefits in a few years, since Leon was sixty-one years old and Susan was sixty years old at that time. She also points out that at the time the two entered into the Agreement, Leon could have reasonably anticipated the need for a clause addressing Susan’s probable receipt of Social Security benefits in a few years.
¶8. In response, Leon submits that neither Peebles nor Lestrade is proper authority for this issue because both cases address modification of property division, not modification of alimony. Leon references this Court’s decision in Clower, which provides that “[p]eriodic alimony can be modified by increasing, decreasing, or terminating the award due to a material change in circumstances.” Clower, 988 So. 2d at 444 (¶7). Leon asserts that he was not required to show a material change in circumstances because he was not attempting to modify his alimony payment; rather, he maintains that he was only seeking clarification from the court as to how to make his alimony payment, because the Agreement is devoid of language specifying from which source those payments may be derived.
¶9. Leon cites Spalding v. Spalding, 691 So. 2d 435, 439 (Miss. 1997), in support of his argument that the chancellor was correct in finding that he should be credited for Susan’s receipt of the Social Security benefits derived from his work record. The facts of Spalding are similar to those in the matter at hand. In Spalding, the appellant insisted that “the decision of the chancellor to credit derivative Social Security benefits against alimony represented a downward modification of the alimony granted to [the appellant],” and asserted that “[the appellee] failed to meet his burden of proof regarding a material change in circumstances.” Id. The chancellor, in considering whether derivative Social Security benefits could be credited against alimony, relied on the Mississippi Supreme Court’s decision in Mooneyham v. Mooneyham, 420 So. 2d 1072, 1073-74 (Miss. 1982), wherein the court held that Social Security payments derivative from the child-support payor should be credited against the payor’s child-support obligation. Spalding, 691 So. 2d at 438 (citing Mooneyham, 420 So. 2d at 1073-74). The Mississippi Supreme Court in Spalding affirmed the chancellor’s application of Mooneyham, finding that, in light of Mooneyham’s holding that “Social Security payments derivative from the child[-]support payor should be credited against the child support,” it could not “fathom any valid reason or reasonable logic” as to why the rule of law would be any different with respect to periodic alimony rather than child support. Spalding, 691 So. 2d at 439 (citations omitted).
¶10. We agree with Leon that Spalding is dispositive of the issue presented. Therefore, we affirm the decision of the chancellor. The Agreement between Leon and Susan did not specify or qualify the source of income for payment of the alimony obligation. It simply required that Leon pay the amount to Susan. Crediting Social Security payments derivative from Leon against his alimony obligation, as set forth in the Agreement, is not a breach of the terms of that Agreement. As Leon points out, Susan is receiving the same amount of alimony that she is entitled to under the Agreement, and she would not be receiving the Social Security payments unhinged from Leon’s Social Security earnings record. Thus, we find that the chancellor did not abuse his discretion in failing to require Leon to show a material change in circumstances because Leon’s obligation to pay alimony in the amount set forth in the Agreement remains the same.
I agree that Spalding is dispositive for the reasons stated.
I wonder, though, at the statement in ¶8 that Leon argued that he “was not attempting to modify his alimony payment; rather, he maintains that he was only seeking clarification from the court as to how to make his alimony payment, because the Agreement is devoid of language specifying from which source those payments may be derived.” That does not seem to square with the very first sentence of Judge Irving’s opinion that “Thomas L. Harris (Leon) — alleging that a material change in circumstances had occurred since the judgment of divorce from his former spouse, Susan Harris — filed a complaint …” That sounds like modification language, not clarification language.
At any rate, I think both the chancellor and the COA were on the right track in this case. Spalding controls.
Pointer: It seems that older couples are getting divorced at a greater frequency. You would do well to explore the effect Social Security will have on the parties’ post-divorce standard of living. If Susan wants her retirement benefit excluded or to allow only partial credit, the agreement should say so.
June 13, 2017 § Leave a comment
Brian and Ruth’e Korelitz were in negotiations to settle their divorce case in 2006. When it came time to address the alimony issue, one of them produced a proposed provision that required Brian to pay Ruth’e periodic alimony in reducing amounts in three-year increments until Brian’s retirement. In the course of negotiations, however, the parties agreed to some handwritten deletions and insertions so that the alimony provision ended up looking like this:
Periodic Alimony. [Brian] agrees to pay unto [Ruth’e] as periodic alimony the monthly sum of $2,850.00 per month, beginning the first day of the month immediately following execution of this Agreement for a period of thirty-six (36) months, reducing to $2,600.00 for a period of thirty-six (36) months, [and] reducing to $2,100.00 for a period of thirty-six (36) months. Periodic [A]limony shall then reduce to $1,750.00 until September 1, 2019, or [Brian’s] retirement, whichever occurs later, whereupon periodic alimony shall cease. Said periodic alimony shall be payable one-half on the 1st and one-half on the 15th of each month. In addition, such periodic alimony shall cease upon the remarriage of [Ruth’e] or upon the death of either party[,] whichever occurs first. The payments shall be deductible by [Brian] and includable as income by [Ruth’e], both for state and federal income tax purposes. [Handwritten addition as follows:] Said payments are further non-modifiable, except as set forth herein above.
All of the strikeouts and handwritten language were initialed by the parties. The agreement was approved by the court, and the parties were divorced.
In 2014, after Ruth’e had taken up with another man, Brian filed for modification to terminate based on the relationship. He also contended that he had suffered a reduction in income.
It should not surprise you that the chancellor denied his request, concluding that the agreement not only prohibited modification on its face, but also that it created a form of lump-sum alimony, which is unmodifiable anyway, so that neither Ruth’e’s relationship nor Brian’s income were relevant.
Brian appealed, and it should not surprise you that the COA affirmed. You can read Judge Ishee’s opinion in the case of Korelitz v. Korelitz at the link.
This case highlights several points:
- Hybrid alimony can be a tricky thing. The language above, with its edits, clearly shows the parties’ intent that these payments were not intended as periodic alimony, even though they were to cease on remarriage or death, and were deductible to Brian and income to Ruth’e. Often, though, the intent is not so clear, and if you leave it murky you are putting it into the hands of a judge who might not see it the same way you and your client did. A case in point is at this link.
- Keep in mind that the default setting for alimony is periodic. In other words, if the court can’t make out what kind of creature was intended, it must consider it to be periodic.
- I wonder whether Brian understood, when he initialed that handwritten language, that he was signing away his right to ask the court to do the very thing he took Ruth’e back to court to do? I’m sure the lawyer has a letter from Brian in her file documenting that she explained it thoroughly to him before he signed, and that she advised him not to agree to it.
- I guess Brian’s argument at trial was that the agreement does say that the alimony was terminable on Ruth’e’s remarriage, so if the relationship is tantamount to marriage, then that clause should be invoked. Once the judge determined that it was lump-sum alimony, however, that boat sank.
March 7, 2017 § Leave a comment
In the divorce judgment between Herman and Lillie Scott, the chancellor equitably divided the marital estate, awarding Herman most of the unencumbered real property and one small debt, and awarding Lillie the encumbered real property and the bulk of the marital debt. There was a large disparity in income in favor of Lillie.
In his judgment the chancellor said:
“All of the Armstrong factors mentioned above which suggest the appropriateness of an award of alimony to Herman have been considered by the Court to entitle him to a modest award of lump sum alimony. The Court considers that the division of the marital estate outlined below incorporates an equitable division of the estate and an award of such lump sum alimony.”
The chancellor’s ruling, however, did not state an amount or otherwise describe of what the lump-sum award consisted.
Herman appealed, complaining that the chancellor erred in not awarding him periodic alimony. In Scott v. Scott, handed down December 13, 2016, the COA affirmed with an opinion by Judge Greenlee. It’s a routine opinion that you will not likely find very useful.
The special concurring opinion by Judge Lee, however, makes some good points about how a trial judge should address alimony:
¶17. I concur in result with the majority’s decision to affirm; however, I find that the chancellor’s decision to categorize a portion of the equitable division of the marital assets as lump-sum alimony was incorrect.
¶18. First, the chancellor did not provide for a specific amount of lump-sum alimony. Whether lump-sum alimony is “used either as alimony or as part of property division,” it must be a “fixed and irrevocable sum.” Beezley v. Beezley, 917 So. 2d 803, 806 (¶10) (Miss. Ct. App. 2005) (citing Wray v. Wray, 394 So. 2d 1341, 1345 (Miss. 1981)). The chancellor did not designate a specific amount of lump-sum alimony; rather, he divided the marital assets, giving Herman the majority of the unencumbered assets. The chancellor simply stated that “the division of the marital estate . . . incorporates an equitable division of the estate and an award of such lump sum alimony.”
¶19. Second, the nature of the award is, in reality, equitable distribution. This Court in East v. East, 775 So. 2d 741, 745 (¶9) (Miss. Ct. App. 2000), determined that the chancellor incorrectly labeled an equity transfer from the husband to the wife as lump-sum alimony, when, “in effect, it is a portion of the . . . equitable distribution of the estate.” We affirmed the transfer but corrected the labeling error. Id. Here, I would affirm the equitable distribution award but decline to accept the chancellor’s decision to label any amount thereof as lump-sum alimony.
Judge Lee’s opinion was joined by Judge Wilson and by Judge Fair, who is the sole former chancellor on the court.
February 13, 2017 § Leave a comment
When Suzann and Greg Davis went to court on modification issues, the chancellor ruled that Suzann had to pay Greg a sum of child support. In calculating the amount, the chancellor included lump-sum alimony payments she was receiving as part of her adjusted gross income. Suzann appealed.
In the case of Davis v. Davis, decided January 24, 2017, the COA affirmed.
¶13. Suzann also argues that the chancellor erred in including lump-sum alimony as part of her income when calculating her child-support obligation, because lump-sum alimony is not the type of alimony contemplated in the statute. [Fn 1] She points to Neville v. Neville, 734 So. 2d 352 (Miss. Ct. App. 1999), and Dickerson v. Dickerson, 34 So. 3d 637 (Miss. Ct. App. 2010), to support her argument. In Neville, this Court held that lump-sum alimony payable in installments is not “‘alimony’ necessarily includable” when calculating a parent’s adjusted gross income. Neville, 734 So. 3d at 359 (¶31). In Dickerson, this Court simply detailed the connection between lump-sum alimony and the division of property. Dickerson, 34 So. 3d at 645 (¶32). Neither of these cases prohibits a chancellor from considering lump-sum alimony as income under section 43-19-101(3)(a). Thus, we find that a chancellor retains the discretion to classify lump-sum alimony as income when calculating child support. We find no abuse of discretion in the present case.
[Fn 1] Section 43-19-101(3)(a) provides that alimony is a potential source of income that may be considered when determining a parent’s adjusted gross income.
Not much to comment on. I thought this was something useful to have in your arsenal when you have a similar case.