Modifying Spousal Support
Thomas L. Saxe
Rhoades McKee PC
Grand Rapids
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
II. Statutory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
III. Threshold Consideration: What Does the Order Say?. . . . . . . . . . . . . . . . . . . . 9-2
IV. Legal Basis for Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7
V. Examples of Changed Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-9
VI. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-12
VII. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-13
Exhibit
Exhibit A Rose v Rose MI Court of Appeals Docket No. 286568 . . . . . . . . . . . . . 9-15
I.
Introduction
One of the most challenging aspects of the practice of family law is to successfully
prosecute or defend a motion to modify a spousal support award. These materials will
attempt to educate you about the current State of Michigan law governing modifications of
spousal support, so as to maximize your chances of success, whether you are filing the
motion or defending the motion. Armed with this knowledge, the prudent practitioner
should carefully assess the probable outcome of the case, carefully explain the procedures
and the law to the client, and proceed accordingly.1
II.
Statutory Authority
A court handling a divorce case has no authority to order anything absent a statute
granting that authority. Charlton v Charlton, 397 Mich 84; 243 NW2d 261 (1976). That is
why it is imperative for practitioners to always consult the primary law, the statutes, first.
The statute most used by the courts relative to modifications of spousal support is
MCL 552.28:
On petition of either party, after a judgment for alimony or other allowance for either
party or a child, or after a judgment for the appointment of trustees to receive and hold
property for the use of either party or a child, and subject to section 17, the court may
revise and alter the judgment, respecting the amount or payment of the alimony or
allowance, and also respecting the appropriation and payment of the principal and
income of the property held in trust, and may make any judgment respecting any of the
matters that the court might have made in the original action.2
1. The author would like to thank Janice K. Cunningham, who prepared the materials in
conjunction and coordination with the “Spousal Support Overview” materials by Charlotte
Allen of Charlotte Allen, PLLC, Midland, Michigan as part of the 2010 ICLE seminar “Handling Property Division & Spousal Support Issues”.
© 2013 The Institute of Continuing Legal Education
9-1
Handling Property Division & Spousal Support Issues, January 15, 2013
Turning to a much more recent statute, dealing with the right of a delinquent payer of
child or spousal support to seek review of the amount of such support, see MCL
552.607(1)(g):
[l]f the payer believes that the amount of support should be modified due to a change in
circumstances, the payer may file a petition with the court for modification of the support order. [Emphasis supplied.]
III.
Threshold Consideration: What Does the Order Say?
The initial inquiry for any request to modify a spousal support award is what is provided in the parties’ judgment of divorce or the last order for spousal support.
Practice Tip: Never give advice, either over the phone or in your office, on the
impact of the language of a document, without having the document in front of you. Usually, a potential client will call an attorney and ask if it is possible to modify or amend a
support award. You cannot know the answer without examining the order or judgment. Do
not hazard a guess. Politely insist that it is impossible to give a reasonable answer without
a thorough examination of the applicable document. This way, you do not give confusing
or misleading advice, and you will get paid for your professional opinion. Have the person
email or fax it to you and then meet with this potential client face-to-face.
The first review must be of the document(s) itself. If the spousal support award was
after January 1, 2006, it is required to be on the most recent Uniform Spousal Support
Order (USSO) which is prepared by the state court administrator’s office and administratively adopted by Michigan Supreme Court. Even though this form is required, often there
is language in the Judgment of Divorce or order that also deals with the issue of spousal
support. These orders must be read together. If the orders conflict, then the USSO controls
and that is the document you must review and base your advice. (MCR 3.211[0][1])
A.
Judgment of Divorce Omits Spousal Support Altogether
Every Judgment of Divorce is required by MCR 3.211(8)(4) to contain a provision
“reserving or denying spousal support.” If for some inexplicable reason, a Judgment of
Divorce is silent regarding spousal support, under MCR 3.211(8)(4), the issue of spousal
support is reserved. Prior to the enactment of MCR 3.211(8)(4), if a Judgment of Divorce
was silent in regards to spousal support it was barred and, therefore, not modifiable. Mack
v Mack, 283 Mich 365; 278 NW 99 (1938).
B.
Spousal Support Is labeled “Alimony in Gross”
As indicated in “Spousal Support Overview”, alimony in gross is not modifiable
absent a showing of fraud. Oknaian v Oknaian, 90 Mich App 28 (1979), Schmidt v
Schmidt, 35 Mlch App 185, lv denied 386 Mich App 774 (1971).
C.
Judgment of Divorce Reserves the Issue of Spousal Support
Despite the plethora of law regarding to the critical nature of “change in circumstances” as a threshold inquiry when addressing the viability of a spousal support modifi2. Note that the statute refers to “petition”. The standard practice is to use the term
“motion.” However, it is important to note that the statute was originally enacted in 1846. It
was proper to use that term in that era. However, because nomenclature is procedural, not substance, the court rule takes precedence over the statute. Yeo v Yeo, 214 Mich App 598, 601
(1995); MCR 2.114(A)(1).
9-2
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
cation claim, there is no such requirement when the issue of spousal support was reserved
in the judgment of divorce. See, for example, McCarthy v McCarthy, 192 Mich App 279,
283; 480 NW2d 617 (1991) (“[W]here the question of alimony is reserved, no change of
circumstances is required as a prerequisite to an award of alimony at a later time.”).
There is parallel reasoning in the area of child support. In Lamer v Lamer, 113 Mich
App 126; 317 NW2d 315 (1982), the Court held that no change in circumstances was
required when there was no award of child support in the judgment of divorce:
Generally, support provisions may not be modified absent a change of circumstances.
Andris v Andris, 77 Mich App 715, 718-719; 259 NW2d 203 (1977). However, when a
divorce decree does not provide for support, such maintenance may be provided by the
court and does not depend on a change of circumstances. West v West, 241 Mich 679,
686; 217 NW 924 (1928), Ebel v Brown, 70 Mich App 705, 709; 246 NW2d 379 (1976).
Lamer at 128.
In Alton v Alton, unpublished opinion per curium of Court of Appeals, issued June 17,
2008 (Docket No. 267802), the Court of Appeals affirmed the trial court award of $950
per week ($4,132.50/month) for 18 months. The trial court reserved the right to extend the
spousal support for up to 48 months if Defendant/wife submitted proof she was enrolled in
school consistent with her testimony that she intended to go back to school to become a
special education teacher. This was only a four year marriage, but Plaintiff/husband’s
average income was $200,000 per year.
D.
Judgment or Order Provides Spousal Support Is Non-Modifiable
If the language of the Judgment of Divorce provides that spousal support is barred,
your inquiry is not concluded. The next question is whether the bar of spousal support was
negotiated and therefore, entered by consent, or whether the Court simply did not award
spousal support. This is not a distinction without a difference.
1.
Parties Consent to spousal support being barred or non-modifiable
If the parties agree to an award of spousal support, and add the necessary language3 contained in Staple v Staple, 241 Mich App 562; 660 NW2d 219 (2000),
the parties can provide that the spousal support award is not modifiable:
Without prescribing any “magic words,” we hold that to be enforceable, agreements to waive the statutory right to petition the court for modification of alimony must clearly and unambiguously set forth that the parties (1) forgo their
statutory right to petition the court for modification and (2) agree that the alimony provision is final, binding, and nonmodifiable. Staple at 581.
Generally, we agree with the statement in Vam, supra, 311 stating that “parties
to an alimony agreement may obtain modification unless the agreement
expressly waives the right of modification by referring specifically to that
right; the right to modification will be waived by agreement of the parties only
in very clear waiver language which refers to the right of modification.”
3. Despite the court’s remark that there are no “magic words,” the standard of practice is,
in fact, to use the suggested language contained in the opinion.
© 2013 The Institute of Continuing Legal Education
9-3
Handling Property Division & Spousal Support Issues, January 15, 2013
Drafting Tip: The following is sample language to use when settling the spousal support issue by an award of spousal support but insuring nonmodifiability:
Non-modification of Spousal Support Award
The award of spousal support contained in this Judgment in favor of [payee]
shall not be modifiable by court order in any manner whatsoever, it being the
intention of the Court and the parties hereto to resolve, with finality, the issue
of the support and maintenance for [payee] by means of the award of spousal
support contained herein. As a result, such award shall not be increased,
decreased, extended, or reduced, or in any other manner or form amended or
modified, either prior to or subsequent to the date such payments are to cease.
This non-modification provision is made for the benefit of both of the parties
hereto, so that each party can rely upon the payment and receipt, respectively,
of a specific amount of money over a specific period of time, without the
uncertainty of any contingency not herein provided for.
This non-modification provision is drafted in accordance the intent of the parties and the Court, that the spousal support award not be modifiable. The parties each waive all statutory rights granted by Michigan law to move the Court
for modification of spousal support, and each party agrees that the spousal support provisions set forth in this Judgment are final, binding, and nonmodifiable.
Negotiating Tip: Regardless of which spouse you represent, the effect of Staple on the decision of whether to proceed to trial on the spousal support issue is
dramatic. You must impress upon your client that if the case is tried and the court
awards any spousal support, the award is always modifiable. What this means is
that the “certainty” factor comes into play, just as it does with proceeding to trial
in the first place. One primary reason for settling a case is that the client has the
certainty of knowing the outcome, while proceeding to trial means that both parties have lost control of the case, and therefore the judge will make the decision.
With spousal support, the reason to settle the issue is that both parties know what
the spousal support obligation is (amount and duration are the primary considerations). Not so with a trial. If a spouse is awarded any spousal support, no matter
how small an amount or short in duration, it is always modifiable. Consider accidents or naturally-occurring problems relating to health, which may severely
impact either spouse’s ability to earn a living. By agreeing, you take all that
uncertainty out of the equation. In sum, Staple is a powerful settlement tool.
Proceed with Caution: Rose v Rose, 289 Mich App 45 (2010) is the single
most important recent case regarding non-modifiable spousal support (See
attached Exhibit 1). Non-modifiable agreements were used frequently prior to the
economy taking a downward turn; the severity of the ramifications were not fully
realized until it was too late for some clients, as illustrated in Rose.4
In Rose the parties agreed that the Plaintiff/wife would receive $230,000.00 per
year in non-modifiable alimony in exchange for the Defendant /husband retaining
his business which was valued at six million dollars ($6,000,000.00) at the time
of the divorce. Defendant/husband wanted his son from a previous marriage to be
4. Rose was recently appealed again, regarding an enforcement issue.
9-4
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
able to buy his business, a tool and die company. Less than twenty months after
the divorce, the company closed and was worth only salvage value because of the
financial improprieties of the son. Defendant/husband filed a motion to reduce or
modify the spousal obligation. The trial court denied the motion because the
proper Staple, supra language was used in the consent judgment and therefore
modification was prohibited. However, the trial did conduct an evidentiary hearing on the Defendant/husband’s motion for relief from the judgment of divorce
pursuant to MCR 2.612(C).
The trial court granted the motion and reduced the spousal support to $800.00
month, finding that “extenuating circumstances existed to justify relieving Defendant from the divorce judgment’s non-modifiable spousal support language.” Id.
at 55–56. The Michigan Court of Appeals reversed:
Given the judgment’s clearly expressed, enforceable and nonmodifiable spousal support wording, we conclude that the circuit court erred by failing to
afford proper deference to the parties’ binding agreement. Where parties have
expressly elected finality in lieu of flexibility, a court considering relief under
MCR 2.612(C)(1)(f) must strictly apply the factors limiting relief from judgment, as set forth in Kaleal, 73 Mich App 181, and subsequent cases. Those
factors confine application of subsection (f) to extraordinary situations not
covered by subsections (a) through (e), and mandate that a court refrain from
vacating a judgment if doing so detrimentally affects the rights of the opposing
party. Id. at 59–60.
As is usually the case in otherwise black letter law, there are few exceptions
under limited, extraordinary circumstances relating to fraud and unconscionability. Kaleal v Kaleal, 73 Mich App 181; 250 NW2d 799 (1977). See, also, Heugel
v Heugel, 237 Mich App 471; 603 NW2d 121 (1999). What constitutes such
extraordinary circumstances was the precise discussion by the Court of Appeals
in Rose, and it noted that while the failure of the Defendant/husband’s business
was tragic, it was hardly extraordinary and did not overcome the detrimental
effect on the Plaintiff/wife’s substantial rights that would result from setting aside
the Judgment of Divorce. “We feel hard pressed to conclude that a business failure amounts to a circumstance so unexpected and unusual that it may constitute a
ground for setting aside a final, binding and non-modifiable spousal support provision.” Rose, supra, at 62.
2.
Court attempted to order non-modifiable spousal support
As indicated above, a risk for both parties proceeding to Court on the issue of
spousal support is that the order is always subject to modification, even if the
Court erroneously attempts to make it non-modifiable.
In Brooks v Brooks, unpublished opinion per curium of the Court of Appeals,
issued June 7, 2002 (Docket No. 237550), the trial court ordered rehabilitative
spousal support, subject to wife’s death or remarriage, in the amount of
$20,000.00 a year for three years. The Court of Appeals affirmed the spousal support award, but ordered stricken the language providing that “spousal support
shall be forever barred”, and further ordered that the judgment of divorce reflect
© 2013 The Institute of Continuing Legal Education
9-5
Handling Property Division & Spousal Support Issues, January 15, 2013
that wife be allowed to move for modification of spousal support in accordance
with MCL 552.28. Id., slip op at 2.
The next case dealing with the duration issue was Crissman v Crissman,
unpublished opinion per curium of the Court of Appeals, issued February 14,
2003 (Docket No. 228304). The trial court awarded wife “$72,000.00 per year in
nonmodifiable spousal support terminable on her death, remarriage, or during
2004, the year of defendant’s planned retirement.” Id., slip op at 1. Despite the
contingencies, and the trial court affirmatively characterizing the award as “rehabilitative”, it appears that the award was classic, traditional, permanent alimony.
Yet without not even a mention of Staple, the Court of Appeals affirmed the trial
court’s award, by recharacterizing the award as nonmodifiable alimony in gross,
citing Tomblinson v Tomblinson, 183 Mich App 589, 593; 455 NW2d 346 (1990)
for the proposition that, “Although the circuit court has the authority to modify an
alimony award upon a showing of a change in circumstances, MCL 552.28…, an
exception exists for alimony in gross which cannot be modified absent a showing
of fraud.” In other words, the Court of appeals called this award “alimony in
gross”, even though it clearly appears to be “permanent alimony,” and it cannot
be modified.
Then, Gates v Gates, 256 Mich App 420; 664 NW2d 231 (2003) arrived. The
trial court awarded wife “$200.00 a week in rehabilitative spousal support for a
five-year period”. Id. at 422. Wife argued on appeal that Staple precluded nonmodifiable spousal support following a trial. The Court of Appeals agreed, but
nevertheless indicated that limiting the duration of the award did not make the
award nonmodifiable. In other words, even though Staple at 569 made it clear
that, “MCL 552.28…will always apply to any alimony arrangement adjudicated
by the trial court when the parties are unable to reach their own agreement.”:
[B]ecause the spousal-support provision of the divorce judgment resulted from
the trial court’s disposition rather than agreement of the parties, the judgment
may not be interpreted to preclude defendant from seeking to continue spousal
support, or, in other words, modify the spousal support award, at the end of the
five-year rehabilitative period established by the trial court. Id. at 433–434.
[Emphasis supplied].
The wife’s appellate counsel further argued that even if the trial court’s award
was modifiable, the five-year limitation on the award inappropriately shifted the
burden of proving whether spousal support should continue beyond the five-year
period. The Court of Appeals disagreed, and reverted back to basic modification
law:
The modification of an award of spousal support must be based on new facts or
changed circumstances arising after the judgment of divorce. (Citation omitted.) The party moving for modification has the burden of showing such new
facts or changed circumstances. (Citation omitted.) Gates at 434.
The Court of Appeals then resolved the burden of proof issue by holding that
whichever party sought to modify the award, that party bore the burden of proof:
9-6
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
Accordingly, we reaffirm the principle that either party may seek a modification of an award of spousal support at any time, and that the party seeking the
modification, whether upward or downward, bears the burden of proving the
justification for the modified award…. Applying this principle to the instant
case, we conclude that at the end of the five-year rehabilitative period, defendant may request that the trial court modify the spousal-support award to an
amount justified by facts and circumstances that exist at the time of the
request, but that were not, and could not have been, before the trial court at the
time the original judgment was entered. Id. at 435.
In the unpublished opinion of Hagen v Jones-Hagen, unpublished opinion per
curium of the Court of Appeals, issued April 3, 2008 (Docket No. 270930) the
Court of Appeals remanded back to the trial court the administrative correction of
the divorce judgment to reflect the trial court award of spousal was modifiable.
The trial court had labeled the two-and-a-half years award as nonmodifiable
which was improper because it was periodic alimony and the Plaintiff never
agreed it would be nonmodifiable.
Take Away: At first blush, it may seem difficult to reconcile the holding in
Staple with the holding in Gates. However, both remain the law in Michigan. The
“take away” is that a trial court can impose a limited duration when awarding
spousal support after trial, per Gates, but any language such as “and is thereafter
barred” or “non-modifiable” must be stricken, as spousal support awards made by
a Judge following trial are always subject to modification.
E.
Parties Want to Bar Spousal Support
Drafting Tip: To insure that spousal support is forever barred by consent of the parties, use similar language to non-modifiable Staple, supra, making it clear the parties
understand their statutory rights and are waiving them:
IT IS FURTHER ORDERED AND ADJUDGED that each party hereby waives his or
her right to receive alimony/spousal support and his or her statutory right under MCL
552.28 to petition the Court for modification of the alimony/spousal support provisions
set forth herein. This waiver is intended to be final, binding and nonmodifiable.
IT IS FURTHER ORDERED AND ADJUDGED that based on the waiver of each party,
neither party is awarded alimony/spousal support and that all rights, claims and demands
of Plaintiff against Defendant or Defendant against Plaintiff in and to alimony/spousal
support shall be and the same are hereby forever barred. This Order is final, binding and
non-modifiable.
F.
Spousal Support Provision Is Silent on Issue of Modification
If the parties provide for spousal support in a judgment of divorce, without the “magic
language” discussed in Staple, supra, spousal support is always subject to modification.
Rickner v Frederick, 459 Mich 371; 590 NW2d 288 (1999).
IV.
Legal Basis for Modification
The legal basis to modify a spousal support award is “change of circumstances.” See
Ackerman v Ackerman, 197 Mich App 300, 301; 495 NW2d 173 (1992) (“The modification of an alimony award must be based on new facts or changed circumstances arising
© 2013 The Institute of Continuing Legal Education
9-7
Handling Property Division & Spousal Support Issues, January 15, 2013
after the judgment of divorce.”) This basis is comparable to one part of the statutory
threshold needed for a change in custody found at MCL 722.27(1)(C) and defined in Vodvarka v Grasmayer, 259 Mich App 499; 675 NW2d 847 (2003):
[T]o establish a change of circumstances, a movant must prove that, since the entry of
the last custody order, the conditions surrounding custody of the child, which have or
could have a significant effect on the child’s well-being, have materially changed.
Again, not just any change will suffice, for over time there will always be some changes
in a child’s environment, behavior, and well-being. Instead, the evidence must demonstrate something more than the normal life changes (both good and bad) that occur during the life of a child, and there must be at least some evidence that the material changes
have had or will almost certainly have an effect on the child. Vodvarka at 513–514
[Emphasis in original].
These thresholds seem to make sense, became finality of judgments is an important
policy consideration in the law of Michigan. In fact, property settlement provisions of a
divorce judgment, unlike spousal support or child support provisions, are final and as a
general rule cannot be modified. Zeer v Zeer, 179 Mich App 622, 624; 446 NW2d 328
(1989).
Practice Tip: When representing the party claiming changed circumstances, take a
broad approach as to the definition of “changed circumstances”. Conversely, when opposing the motion that circumstances have changed, take the more narrow view of “changed
circumstances” as defined in Vodvarka, supra. By way of illustration, the party filing the
motion claiming changes of health and income will press the court to find that poor health
and less income constitute changed circumstances. When opposing that motion, point out
that “normal life changes (both good and bad),” such as health and income, were taken
into consideration when spousal support was initially established.
The moving party must demonstrate a change in circumstances. However, a factor
which is considered at the time of the alimony award may not be the basis for a modification of the alimony award at a later date. Andris v Andris, 77 Mich App 715; 259 NW2d
203 (1977). For example, in Stroud v Stroud, 450 Mich 542; 542 NW2d 582 (1995), the
Supreme Court agreed that circumstances had indeed changed for the payor and the payee,
but the difficulties the payor was alleging about could have been readily foreseen at the
time of the judgment of divorce:
While the circuit court correctly observed that there have been changes in the circumstances of the parties, the original agreement clearly was written with future contingencies in mind. Even though the parties could not have foreseen the exact income
levels…the changes were of a kind that fit neatly within the formulae upon which the
parties agreed. Put another way, the changes were not unanticipated changes. Id. at 550.
[Emphases in original.]
The Supreme Court then used language which can be very useful when opposing a
motion to modify spousal support:
It thus appears that the plaintiff’s [payer’s] 1989 motion was actually a tardy attack on
the original judgment of divorce. Stroud at 551.
9-8
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
Practice Tip: Be sure to attach some documentation of the changed circumstances to
your motion if you are the moving party, and be able to present sufficient evidence thereof
at a subsequent evidentiary hearing: “A mere assertion of changed circumstances is insufficient to support a showing of changed circumstances because the evidence of changed
circumstances must appear on the record.” Rapaport v Rapaport, 158 Mich App 741, 746;
405 NW2d 165 (1987), modified 429 Mich 876 (1987).
V.
Examples of Changed Circumstances
Section 71 of the Internal Revenue Code requires the order for spousal support to terminate on the death of the payee if the parties want the payments deductible to the payor
and included in the income of the payee. Remember the parties can also agree that spousal
support will terminate on other conditions such as remarriage or cohabitation by the
payee. The Court may also place those conditions on payment of periodic spousal support.
In those situations, once the condition is proved, the spousal support terminates. Contrast
that scenario with periodic spousal support where one party is simply asking the Court to
modify the existing order.
A.
Death of Payer
Unless the judgment of divorce specifically provides to the contrary, the death of the
payer does not automatically terminate the spousal support obligation. Flager v Flager,
190 Mich App 35, 36; 475 NW2d 411 (1991). This rule of law may seem counter-intuitive, however, presumably the payee still needs the money for support, and the circuit
court is still permitted to modify the spousal support award upon motion of decedent’s
personal representative and proof of a substantial and material change in circumstances.
Practice Tip: If you represent the payee, secure the spousal support with a life insurance policy on the payor’s life with your client as beneficiary. Typically, it is an amount
sufficient to pay the present value of future support, so the amount declines over time.
B.
Remarriage
Absent a specific provision in the spousal support order, remarriage alone is not sufficient to support a cancellation or modification of alimony. Hettiger v Hettiger, 37 Mich
App 431, 433; 195 NW2d 10 (1971), lv den 386 Mich 789 (1972). Remarriage may be the
catalyst to other changes that would support a finding that a change of circumstances has
occurred when assessing the spousal support factors justifying modification, but those
facts would need to be set forth in detail.
C.
Cohabitation
Cohabitation relative to termination or modification of spousal support is a tricky
issue. If the spousal support order states that it shall terminate upon cohabitation by the
payee the question is whether the payee is actually living with someone.5 Unlike remarriage, it is not as straightforward. In 2008 the Michigan Court of Appeals published Smith
v Smith, 278 Mich App 198, 748 NW2d 258 (2008), finally giving a definition to the term
“cohabitation” and guidance on what type of proof is required to establish cohabitation.
5. Novak v Novak, unpublished opinion per curium of the Court of Appeals, issued July
22, 2008 (Docket No. 275267). Spousal support modification (inclusion of cohabitation
restriction when neither party requested the inclusion of such language and imputation of
income. Reversed on cohabitation language.
© 2013 The Institute of Continuing Legal Education
9-9
Handling Property Division & Spousal Support Issues, January 15, 2013
In Smith (supra) the parties divorced in 1999 after seventeen-year marriage with the
judgment of divorce requiring the Plaintiff/husband to pay spousal support to Defendant/
wife until such time as she cohabitated with a non-related male. In 2005 Plaintiff moved to
terminate spousal support alleging Plaintiff was cohabitation with her boyfriend. The trial
court looked at various definitions for the term cohabitation after concluding that Michigan case law had no authoritative definition and the judgment of divorce did define the
term. The trial court adopted the test set forth in Birthelmer v Birthelmer, unpublished
opinion of the Court of Appeals of Ohio for the Sixth District issued July 15, 1983.
Birthelmer, supra set out three elements to consider:
1.
Actual living together, they must reside in same home or apartment
2. living together must be of a sustained duration
3.
Shared expenses with respect to financing the residence and incidental day-today
expenses.
In addition to the factors from Birthelmer, supra the trial court also considered:
whether the parties intended to cohabited; whether they held themselves out as living
together,; whether they assumed obligations generally arising from ceremony marriage;
whether a sexual relationship existed; whether marriage was contemplated; whether they
used each other address; whether they share bank accounts; whether the spousal support
was used to subsidize the alleged cohabiting.
The Court of Appeals held that whether cohabitation exists is a factual determination
based on the totality of the circumstances by considering many factors. The Court of
Appeals found the trial court properly employed a multiple-factor test when it determined
they were not cohabitation.
The trial court found the defendant’s relationship with her boyfriend was more accurately characterized as a committed, long-distance dating relationship. The parties were
not financially interdependent, they did not hold themselves out as living together, they
did not share personal property, and he did not receive mail at her residence.
If you are seeking to modify a spousal support order that does not mention cohabitation, your task is greater than simply proving the payee is actually living with another person. Cohabitation alone is not sufficient to establish a change in circumstances. Petish v
Petish, 144 Mich App 319, 322; 375 NW2d 432 (1985) (“Indeed in the milieu of the times
it might be anticipated.” ld.) You must prove that because of the cohabitation there are
facts and circumstances that have changed to justify modification of the spousal support
when assessing the spousal support factors.
Practice Tip: Your focus will generally be on a change in the present situation of the
party and a change in the need of the payee. Hopefully the cohabitation has resulted in
either additional income to the household or a reduction in the expenses that the payee
incurs. Remember even the revised child support manual now recognizes these factors.
See 2008 MCSFM 2.01(D).
D.
Health
A change in the payee’s health can be a valid basis for an increase or decrease in alimony. Lamb v Lamb, 348 Mich 557, 561; 80 NW2d 323 (1957).
9-10
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
E.
Income
1.
Payor
A change in the payor’s income can serve as a basis for modification of an
award of spousal support. Esslinger v Esslinger, 9 Mich App 11, 19; 155 NW2d
702 (1967) and Stone v Stone, 349 Mich 162, 84 NW2d 338 (1957). On the other
hand, a trial court may award alimony on the basis of a party’s ability to pay
where that party has voluntarily reduced his or her income so as to avoid paying
alimony. This rule of law relative to alimony, which is an extension of that which
is applicable in child support situations,6 was adopted in Healy v Healy, 175
Mich App 187, 191; 437 NW2d 355 (1989).
In determining whether imputing income to former wife was appropriate, for
purposes of modifying a spousal support award, trial court should have considered whether former wife could have elected to draw her share of her former husband’s pension currently without any reduction in benefits; if so, former wife
would be voluntarily reducing her income and the income would be imputed to
her. If by taking her share of pension she would not have received a reduced
amount, it was inappropriate to impute pension benefits as income. Moore v
Moore, 242 Mich App 652; 619 NW2d 723 (2000).
2.
Payee
A change in the income of the payee alone will not generally result in modification. Harter v Harter, 307 Mich 258 (1943). However, it should be considered
when determining whether there has been a change in circumstances. Dresser v
Dresser, 130 Mich App 130, 342 NW2d 545 (1983).
F.
Retirement
The payer’s retirement constitutes changed circumstances. McCallister v McCallister,
205 Mich App 84, 86; 517 NW2d 268 (1994). However, the inquiry does not stop there.
The Court in McCallister resolved a split of authority in Michigan, and held that a trial
court must consider all of the circumstances of the case when modifying an alimony
award, and therefore empowers courts to award alimony out of the property of the payer
when circumstances warrant. McCallister at 87–88. Simply put, even though husband’s
pension was awarded to him in the divorce, his pension benefits may be considered in
assessing his ability to pay alimony in a subsequent modification proceeding. Furthermore, even where a party demonstrates that retirement is a change in circumstance, the
parties must also show that the resources are available for living expenses have also
changed. Stoltman v Stoltman, 170 Mich App 653; 429 NW2d 220 (1988).
Drafting Tip: Some crafty practitioners sought to remedy this apparent “double-dip”
situation by drafting divorce judgments to specifically bar the payee from making a claim
to the payer’s retirement benefits, and to bar the court from considering those benefits.
That technique did not work in Barch v Barch, unpublished opinion per curium of the
Court of Appeals, issued October 10, 1995 (Docket No. 172642):
6. “[W]hen a party voluntarily reduces or eliminates income, and the trial court concludes that the party has the ability to earn an income and pay child support, the court does not
err in entering a support order based upon the unexercised ability to earn.” Olson v Olson, 189
Mich App 620, 622; 473 NW2d 772 (1991) [affd in lieu oflv gtd, 439 Mich 986 (1986)].
© 2013 The Institute of Continuing Legal Education
9-11
Handling Property Division & Spousal Support Issues, January 15, 2013
[C]ontrary to plaintiffs assertions, the fact that his only actual income was his pension
and that the judgment provided that the pension income was “not available for any alimony claim” does not necessitate the reduction of alimony to zero.
G.
Disability
The same reasoning relative to retirement benefits applies to a payer’s disability
insurance proceeds. In Ackerman v Ackerman, 197 Mich App 300; 495 NW2d 173 (1992),
“AI” Ackerman, was employed full-time as a respected sportscaster with a major television station. Fourteen years later, after a serious medical disability, he retired. He began
receiving retirement pension, disability benefits, and Social Security benefits. His wife
was seeking a modification of her alimony award, and argued that the court should be able
to consider her former husband’s disability insurance income. The court agreed, and even
though the disability insurance policy was purchased years after the divorce entered, and
even though the payer was of such advanced age that he was collecting Social Security,
and disabled severely enough to qualify for disability insurance benefits, nevertheless, one
factor to be considered in awarding alimony is the ability of the party to pay alimony.
Despite the nature and source of his income, the payer in this case had sufficient funds to
pay spousal support.
VI.
A.
Procedure
The Family Court Judge Must Decide Modification Requests
An important distinction in this area of family law to remember is that a Referee cannot modify a spousal support award. (See MCL 552.507)
B.
An Evidentiary Hearing Must Be Held
The court must hold an evidentiary hearing to determine whether there is a sufficient
change of circumstances to warrant modification of spousal support where the parties do
not agree to the modification and there are factual disputes. Petish v Petish, 144 Mich App
319 NW2d (1985) and Dresser v Dresser, 130 Mich App 130, 342 NW2d 545 (1983).
C.
Conflict Between USSO and Language in Judgment of Divorce
The Uniform Spousal Support Order controls if there is conflict between it and the
Judgment of Divorce. (See MCR 3.211[D][1])
D.
Modify Order to Meet IRC Requirements
A judgment of divorce may be amended to provide alimony payments terminate upon
the recipient’s death to give effect to the intent of the parties, where the parties and language in judgment of divorce provide that the payments are tax deductible and included as
income, but not terminable upon death. Daiek v Daiek, unpublished opinion per curium of
the Court of Appeals, issued April 8, 2008 (Docket No. 275569)
E.
Modification Can Be Sought While Appeal Is Pending
In 2008, the Michigan Supreme Court held a motion to modify spousal support may
be brought even though the original decision from the trial court was pending on appeal.
In Lemmen v Lemmen, 481 Mich 164, 749 NW2d 255 (June 4, 2008) the Michigan
Supreme Court affirmed both the Court of Appeals and trial court’s analysis of the interplay between MCR 7.208(A) regarding appeals and MCL 552.17 regarding modification
of spousal support. While a divorce proceeding was on appeal the defendant/mother
9-12
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
sought modification of the spousal support order. Plaintiff/father argued that spousal support could not be modified while the appeal was pending. The Michigan Supreme Court
held that it would make no sense for the trial court to wait years while an appeal was pending when a change of circumstances had occurred with the ability to pay or the needs of
the children or spouse.
VII.
Conclusion
Janice Cunningham’s graph below summarizes the questions which must be asked
when assessing the viability of a request to modify spousal support. It is not difficult to
grasp the primary concept involved in most spousal support modification proceedings,
which is “change in circumstances”. The difficult part is grasping, then applying, the condition attached to the threshold, which is that the modification must be based on new facts
or changed circumstances arising after the date of entry of the judgment of divorce/last
order. Modification case law illustrates that the results will be very fact specific. Also, take
note of the trend by the Courts to look at foreseeability when assessing what type of
change will justify judicial action.
Judgment is silent
Judgment says spousal
support reserved
Alimony in Gross
Consent Order
Modifiable
Modifiable
Non-Modifiable
Fraud
Judgment says it is not
Non-Modifiable
reserved/barred
Use Staple language
Periodic spousal support Non-Modifiable
non-modifiable
Use Staple language
Periodic spousal support Modifiable
© 2013 The Institute of Continuing Legal Education
Judicial Order
Modifiable
Modifiable
Non-Modifiable
Fraud
Non-Modifiable
Cannot Order
Modifiable
Modifiable
9-13
Modifying Spousal Support
Exhibit A
Rose v Rose MI Court of Appeals Docket No. 286568
STATE OF MICHIGAN
COURT OF APPEALS
REBECCA ANN ROSE,
Plaintiff-Appellant/Cross-Appellee,
v
WESLEY ALLEN ROSE, SR.,
FOR PUBLICATION
June 22, 2010
9:15 a.m.
No. 286568
Ottawa Circuit Court
LC No. 06-055337-DO
Defendant-Appellee/CrossAppellant.
Before: STEPHENS, P.J., and GLEICHER and M.J. KELLY, JJ.
GLEICHER, J.
In this postdivorce dispute over nonmodifiable spousal support language in a divorce
judgment, plaintiff Rebecca Ann Rose appeals by leave granted a circuit court order relieving
defendant Wesley Allen Rose, Sr., from the judgment and reducing his spousal support
obligation. We reverse and remand for further proceedings.
I. UNDERLYING FACTS AND PROCEEDINGS
The parties, who wed in 1983, entered into a consent judgment of divorce in 2006.
During the 22 years of the parties’ marriage, they acquired substantial wealth. The couple’s
most valuable marital asset consisted of stock that defendant owned in Die Tron, Inc., a tool and
die company in which defendant partially acquired an interest in 1992. In 2000, defendant
purchased the entirety of Die Tron’s stock and became the company’s sole owner. When the
parties divorced, they valued defendant’s interest in Die Tron at six million dollars.
Defendant wished to avoid liquidating or selling Die Tron in the course of the parties’
divorce, in part because he hoped that David Rose, his son from a prior marriage, would
eventually buy the business. Instead of converting defendant’s Die Tron holdings into cash, the
parties agreed that defendant would pay plaintiff spousal support in the amount of $230,000 a
year and that plaintiff would forego any interest in Die Tron. The parties further agreed that
plaintiff’s spousal support would be nonmodifiable. The divorce judgment, which the parties
negotiated with the assistance of counsel, includes the following relevant detail concerning
modification:
B.
The spousal support provided for herein shall be paid directly to or
for the benefit of plaintiff by defendant and not through the Office of the Friend
© 2013 The Institute of Continuing Legal Education
9-15
Handling Property Division & Spousal Support Issues, January 15, 2013
of the Court. The parties intend that the spousal support provided for herein shall
be all of the spousal support that plaintiff shall receive from defendant. Spousal
support payments shall automatically terminate upon plaintiff’s death or upon
defendant’s death.
***
D.
It is the intention and understanding of the parties that the spousal
support obligations of the defendant be non-modifiable regarding duration and
amount, except:
(1)
(2)
If defendant has died, since the parties have provided for the
continuation of plaintiff’s spousal support through the assignment by defendant to
plaintiff of his New England Life Insurance Company Variable Universal Life
Policy No. 1Y203159, a significant part of the life insurance proceeds of which
are intended to secure to plaintiff adequate spousal support in the event of
defendant’s death.
This is the agreement of the parties, and it is the intention of the parties that
regardless of any change in circumstances or in the lifestyles of plaintiff or
defendant, this spousal support provision is to be non-modifiable.
If plaintiff has died, resulting in early termination as provided
herein;
After entry of the divorce judgment, defendant ceded to David Rose responsibility for
Die Tron’s day-to-day operations. In January 2008, defendant learned that David Rose had
committed financial improprieties that severely compromised Die Tron’s ability to remain
solvent. Defendant shared this information with plaintiff, who agreed to modify temporarily the
spousal support payment schedule while defendant attempted to rescue Die Tron. Defendant’s
efforts proved unsuccessful, and Die Tron ceased operation in March 2008. In April 2008,
plaintiff moved to enforce the divorce judgment’s spousal support provision.
Defendant
countered with a motion to modify his support obligation and for relief from the spousal support
portion of the divorce judgment under MCR 2.612.
The circuit court denied defendant’s motion to modify the judgment, finding that the
spousal support term “is non-modifiable and not subject to judicial review.” After conducting an
evidentiary hearing, the circuit court granted defendant’s motion for relief from judgment, and
reduced his spousal support obligation to $900 a month. This Court granted plaintiff’s
application for leave to appeal.
II. ANALYSIS
Plaintiff contends that because the parties clearly and unambiguously agreed to forego
their statutory right to petition for modification of spousal support, the circuit court abused its
discretion by partially relieving defendant of his spousal support obligation. A divorce judgment
entered by agreement of the parties represents a contract.
If the judgment’s language is
unambiguous, we interpret it de novo as a question of law. Holmes v Holmes, 281 Mich App
9-16
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
575, 587; 760 NW2d 300 (2008). Likewise, “[t]he proper interpretation and application of a
court rule is a question of law, which we review de novo.” Henry v Dow Chem Co, 484 Mich
483, 495; 772 NW2d 301 (2009). We review for an abuse of discretion a circuit court’s ultimate
decision to grant or deny relief from a judgment. Yee v Shiawassee Co Bd of Comm’rs, 251
Mich App 379, 404; 651 NW2d 756 (2002).
In Staple v Staple, 241 Mich App 562, 564, 574; 616 NW2d 219 (2000), a special conflict
panel of this Court considered whether parties to a divorce judgment may voluntarily relinquish
their statutory right to seek modification of a spousal support agreement, “and instead stipulate
that their agreement regarding alimony is final, binding, and nonmodifiable[.]” The Court in
Staple answered this question affirmatively, holding that if divorcing parties negotiate a divorce
settlement in which they clearly and unambiguously forego their statutory right to modify
spousal support, courts must enforce their agreement. Id. at 564, 581. Here, the parties agree
that the holding in Staple supplies the appropriate analytical starting point.
Staple recognized that for some divorcing parties, “the general rule of finality is not
always suitable[.] . . . In many situations, judgments of divorce must anticipate that
circumstances will change for both the spouses who require support and the spouses who must
provide that support.” 241 Mich App at 565 (footnote omitted). In the face of changed
circumstances, “flexibility in the form of modifiable arrangements may be more important than
finality . . . .” Id. Recognizing the need for flexibility in this realm, our Legislature enacted
MCL 552.28, which imbues circuit courts with authority to modify the spousal support award
contained in a judgment of divorce.1
This Court explained in Staple, 241 Mich App at 574, that the plain language of MCL
552.28 does not preclude a party from waiving his or her right to seek modification of a spousal
support award, and that Michigan courts often enforce agreements to waive statutory rights. The
Court observed that, “[m]ore importantly,” longstanding case law agrees that when both parties
waive their rights to seek spousal support altogether, “neither party has the right to petition the
court” to modify that agreement by adding a provision for spousal support where none
previously existed. Id. at 575. In light of these legal principles, we concluded in Staple that “the
statutory right to seek modification of alimony may be waived by the parties where they
specifically forgo their statutory right to petition the court for modification and agree that the
alimony provision is final, binding, and nonmodifiable.” Id. at 578.
1
In MCL 552.28, the Legislature set forth that
[o]n petition of either party, after a judgment for alimony or other allowance for
either party or a child, … and subject to section 17, the court may revise and alter
the judgment, respecting the amount or payment of the alimony or allowance, and
also respecting the appropriation and payment of the principal and income of the
property held in trust, and may make any judgment respecting any of the matters
that the court might have made in the original action.
© 2013 The Institute of Continuing Legal Education
9-17
Handling Property Division & Spousal Support Issues, January 15, 2013
After announcing this holding, the Court in Staple approvingly acknowledged the
following five “public policy reasons why courts should enforce duly executed nonmodifiable
alimony arrangements”:
(1) Nonmodifiable agreements enable parties to structure package
settlements, in which alimony, asset divisions, attorney fees, postsecondary
tuition for children, and related matters are all coordinated in a single, mutually
acceptable agreement; (2) finality of divorce provisions allows predictability for
parties planning their postdivorce lives; (3) finality fosters judicial economy; (4)
finality and predictability lower the cost of divorce for both parties; (5) enforcing
agreed-upon provisions for alimony will encourage increased compliance with
agreements by parties who know that their agreements can and will be enforced
by the court. [Id. at 579 (footnote omitted).]
The Court further emphasized that its decision “also advances the public policy of requiring
individuals to honor their agreements.” Id. at 579-580.
The circuit court determined that the instant judgment’s nonmodifiable spousal support
language fully complied with the requirements this Court identified in Staple. The circuit court
then considered whether, despite the parties’ covenant not to seek any modification of spousal
support, defendant had established a ground for relief from judgment under MCR 2.612(C).
Subrule (1) of this rule authorizes a court to relieve a party from a final judgment on the
following grounds:
(a)
(b)
Newly discovered evidence which by due diligence could not have
been discovered in time to move for a new trial under MCR 2.611(B).
(c)
Fraud (intrinsic or extrinsic), misrepresentation, or other
misconduct of an adverse party.
(d)
The judgment is void.
(e)
The judgment has been satisfied, released, or discharged; a prior
judgment on which it is based has been reversed or otherwise vacated; or it is no
longer equitable that the judgment should have prospective application.
(f)
judgment.
Mistake, inadvertence, surprise, or excusable neglect.
Any other reason justifying relief from the operation of the
A motion for relief from judgment under subsections (a), (b) and (c) must be made within one
year after the judgment. MCR 2.612(C)(2).
The circuit court noted that “[a]t first glance,” defendant’s request for relief appeared
unsupportable under MCR 2.612(C)(a) through (e), “[b]ut on deeper analysis it does appear that
there are some elements of MCR 2.612(C[)](1)(a) and (b) at issue.” The court continued that
“while a downturn in business was contemplated, it was not contemplated by any of the parties
9-18
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
that a family member would falsify financial records that were relied upon by Defendant and
third parties,” or that the business “would be involuntarily closed.” According to the circuit
court, these circumstances “contain an element of surprise.” The circuit court further found that
defendant’s “neglect” of the business was “excusable” because defendant had entrusted the
business operations to his son. The court detected no “undiscovered evidence” that existed at the
time the parties’ entered the judgment of divorce, but added that David Rose began altering the
books “within months” thereafter. The circuit court finally found that “within twenty months
after the Judgment of Divorce was entered, the value of the company was reduced to scrap value,
after debts were paid. As such, it appears that a significant mistake may have been made in the
valuation of the Company.”
Although the circuit court discovered some evidence supporting “elements of MCR
2.612(C)(1)(a) and (b),” the court recognized that because defendant filed his motion more than a
year after entry of judgment, these subrules did not apply. The circuit court then considered
whether defendant had demonstrated grounds for relief under MCR 2.612(C)(1)(f), which
permits a court to set aside a judgment for any reason justifying relief other than those listed in
MCR 2.612(C)(1)(a) through (e).
This Court first considered the “exact parameters” of subsection (f) in Kaleal v Kaleal, 73
Mich App 181; 250 NW2d 799 (1977), and adopted an approach to the rule’s utilization
consistent with federal precedent.2 The Court explained that federal courts generally grant relief
under this provision “where the judgment was obtained by the improper conduct of the party in
whose favor it was rendered, or resulted from the excusable default of the party against whom it
was directed, under circumstances not covered” by the other clauses permitting relief from
judgment, “and where the substantial rights of other parties in the matter in controversy were not
affected.” Id. at 189, quoting 3 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed),
p 189. In Lark v Detroit Edison Co, 99 Mich App 280, 284; 297 NW2d 653 (1980), this Court
set forth a three-part test for ascertaining whether the “extraordinary relief” envisioned in the
predecessor to MCR 2.612(C)(1)(f) is warranted:
(I) [T]he reason for setting aside the judgment must not fall under subrules
(1) through (5), (II) the substantial rights of the opposing party must not be
detrimentally affected if the [judgment] is set aside, and (III) extraordinary
circumstances must exist which mandate setting aside the judgment in order to
achieve justice.
And in McNeil v Caro Comm Hosp, 167 Mich App 492, 497; 423 NW2d 241 (1988), we
specifically reiterated that “relief is to be granted only where the judgment was obtained by the
improper conduct of the party in whose favor it was rendered.”
In Heugel v Heugel, 237 Mich App 471; 603 NW2d 121 (1999), this Court affirmed a
circuit court’s invocation of MCR 2.612(C)(1)(f) in setting aside the property division and
2
Kaleal construed GCR 1963, 528.3(6). The language of MCR 2.612(C)(1)(f) mirrors that of
the former GCR 1963, 528.3(6).
© 2013 The Institute of Continuing Legal Education
9-19
Handling Property Division & Spousal Support Issues, January 15, 2013
spousal support terms of a divorce judgment. In Heugel, the parties stipulated to the entry of a
divorce judgment after a 14-year marriage that had produced one child. Id. at 473-474. The
judgment afforded the wife a property settlement consisting of a lump sum payment of $50,000,
and no other spousal support. Id. The wife suffered from “severe health problems,” and claimed
that she had agreed to the property settlement because her husband deceived her into believing
that the couple would remain together after the divorce. Id. at 476-477. The circuit court set
aside as “unconscionable” the judgment’s property and spousal support provisions, finding that
the husband’s fraud tolled the one-year time limit set forth in MCR 2.612(C)(2). The circuit
court also invoked MCR 2.612(C)(1)(f). Id. at 477.
This Court affirmed the circuit court’s reliance on subsection (f), reasoning that, like its
counterpart in Federal Rule of Civil Procedure 60(b)(6), MCR 2.612(C)(1)(f)
provides the court with a grand reservoir of equitable power to do justice in a
particular case and vests power in courts adequate to enable them to vacate
judgments whenever such action is appropriate to accomplish justice. … [W]e
believe that a trial court may properly grant relief from a judgment under MCR
2.612(C)(1)(f), even where one or more of the bases for setting aside a judgment
under subsections a through e are present, when additional factors exist that
persuade the court that injustice will result if the judgment is allowed to stand.
[237 Mich App at 481 (internal quotation omitted).]
The Court in Heugel identified as “additional factor[s]” supporting relief from judgment the
husband’s “abuse[ of] the unique nature of the husband-wife relationship,” leading the wife “to
believe that the entry of the divorce judgment was an irrelevant formality,” and the wife’s
physical condition, which prevented her from working. Id. at 481. This Court concluded that
under the circumstances, relief from judgment under subsection (f) “is therefore proper because
the judgment was obtained by [the husband’s] improper conduct.” Id. The Court further
observed that “plaintiff’s substantial rights are not detrimentally affected” by relieving him from
the judgment “because he is not permitted to enforce an unconscionable agreement.” Id. at 482.
Using Heugel as an analytical framework, the circuit court in the instant case found that
extraordinary circumstances existed to justify relieving defendant from the divorce judgment’s
nonmodifiable spousal support language.
The circuit court identified as follows the
extraordinary circumstances on which it relied:
The business that provided a substantial income to both parties no longer
exists.
Defendant is not responsible for the loss of the business. Defendant was
presented with false financial documents prepared by the Company’s president.
When Defendant was made aware of the Company’s dire financial predicament,
Defendant immediately took action to attempt to salvage the business. This
included meeting with bankers, divesting an asset and reconfiguring rental
agreements.
Plaintiff was and is aware that Defendant’s ability to pay spousal support
rested on the continued viability of the Company. In fact, the checks for spousal
9-20
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
support were written by Die Tron. Defendant timely informed Plaintiff of Die
Tron’s financial instability.
Plaintiff acknowledged in the January, 2008
modification to the non-modifiable spousal support provision of the Judgment that
Defendant “will be unable to make the required payments for a period of time.”
Defendant is no longer able to pay spousal support of $230,000 per year,
since he is now earning $52,000 per year.
Defendant’s only ability to pay the ordered amount of spousal support is
through the liquidation of his assets. Defendant’s assets amount to approximately
$500,000 out of which $79,000 is due and owing for spousal support as noted
above. Defendant also has $300,000 in a 401K plan. The complete liquidation of
Defendant’s estate will only satisfy approximately three years of his spousal
support obligations. After the exhaustion of Defendant’s estate, he will still owe
spousal support for an additional 15 years, which is 75% of the obligation.
The above shows that it is impossible for Defendant to comply with the
spousal support provisions contained in the Judgment of Divorce.
Plaintiff has spent $870,718.19 since August, 2006.
Plaintiff has
liquidated much of the cash value of a $6 million life insurance policy that was
designed to provide her with continued spousal support in the event of
Defendant’s death. Defendant is not responsible for Plaintiff’s choices in
spending or business investments. Plaintiff has, through unwise investments,
nearly destroyed her estate. Plaintiff would require that this Court allow the
complete destruction of Defendant’s estate to pay Plaintiff’s post marital debt.
In March, 2008 Plaintiff filed a motion to modify the non-modifiable
spousal support agreement. . . .
The circuit court explained that plaintiff’s substantial rights were not “detrimentally
affected” by relieving defendant from his spousal support obligation:
Plaintiff would have this Court determine that it is Plaintiff’s reliance on
receiving $230,000 in spousal support that must be analyzed. The Court
disagrees. Spousal support is equitable in nature. Plaintiff is only entitled to an
equitable amount of spousal support. Heugal [sic] is in accord when it stated:
“We cannot find that plaintiff’s substantial rights are detrimentally affected
because he is not permitted to enforce an unconscionable agreement.” Id., at 482.
Likewise, Plaintiff argues that in lieu of 50% of Die Tron, she received the
spousal support provision. As mentioned, the appraisal value of Die Tron was not
admitted into evidence. But, the Court notes that upon liquidation of the
Company, Defendant received $150,000 of which one-half went to pay debts
associated with the Company. Obviously, Die Tron was worth only scrap value.
To claim $230,000 a year for an additional 18 years to compensate Plaintiff for
50% of a Company that is worth only scrap value is not equitable.
© 2013 The Institute of Continuing Legal Education
9-21
Handling Property Division & Spousal Support Issues, January 15, 2013
The circuit court concluded that although relief from judgment under MCR
2.612(C)(1)(f) is generally granted only “when the judgment was obtained by the improper
conduct of the party in whose favor it was rendered … in domestic relations actions, the court
must equitably divide the marital estate and set, if applicable, an equitable amount of support.”
In light of the goal to equitably apportion the marital estate, the circuit court opined that “this
case is an exception to the general rule,” reasoning that “nothing in MCR 2.612(C)(1) limits the
rule’s application to misconduct of a party.” After relieving defendant from his obligation to pay
$230,000 in annual spousal support, the circuit court applied the factors analyzed in Sparks v
Sparks, 440 Mich 141, 159-160; 485 NW2d 893 (1992), and ruled that defendant must pay
plaintiff spousal support of $900 a month.
Well-settled policy considerations favoring finality of judgments circumscribe relief
under MCR 2.612(C)(1). See Wayne Creamery v Suyak, 10 Mich App 41, 51; 158 NW2d 825
(1968). The first five grounds for vacating a judgment, subsections (a) through (e), delineate
narrow, time-critical pathways for relief. Subsection (f) indisputably widens the potential
avenues for granting relief from a judgment. But the competing concerns of finality and fairness
counsel a cautious, balancing approach to subsection (f), lest the scale tip too far in either
direction. Thus, while permitting relief under this subsection for “any other reason” justifying it,
our courts have long required the presence of both extraordinary circumstances and a
demonstration that setting aside the judgment will not detrimentally affect the substantial rights
of the opposing party. Cautious application of MCR 2.612(C)(1) in divorce cases also advances
the policy considerations described in Staple, 241 Mich App at 579.
It is equally well settled that contracts must be enforced as written: “[W]hen parties have
freely established their mutual rights and obligations through the formation of unambiguous
contracts, the law requires this Court to enforce the terms and conditions contained in such
contracts, if the contract is not contrary to public policy.” Bloomfield Estates Improvement
Ass’n, Inc v City of Birmingham, 479 Mich 206, 213; 737 NW2d 670 (2007) (internal quotation
omitted). The instant parties negotiated a divorce judgment containing unambiguous spousal
support terminology prohibiting future modifications “regardless of any change in circumstances
or in the lifestyles of plaintiff or defendant.” “A long line of case-law reflects that divorcing
parties may create enforceable contracts.” Holmes, 281 Mich App at 595. When plaintiff and
defendant included the clear and unambiguous nonmodifiability of spousal support language in
their divorce judgment, both had representation by counsel and presumably understood that,
absent this language, a circuit court possessed the authority to revise spousal support if
circumstances changed. Instead of opting for flexibility, the parties struck a bargain favoring
finality, benefiting both. Defendant maintained full ownership of his business and the ability to
transfer its ownership to his son; plaintiff obtained equitable and certain support. In striking their
deal, both parties deliberately risked that future circumstances would render their contract
inequitable.
Given the judgment’s clearly expressed, enforceable and nonmodifiable spousal support
wording, we conclude that the circuit court erred by failing to afford proper deference to the
parties’ binding agreement. Where parties have expressly elected finality in lieu of flexibility, a
court considering relief under MCR 2.612(C)(1)(f) must strictly apply the factors limiting relief
from judgment, as set forth in Kaleal, 73 Mich App 181, and subsequent cases. Those factors
confine application of subsection (f) to extraordinary situations not covered by subsections (a)
9-22
© 2013 The Institute of Continuing Legal Education
Modifying Spousal Support
through (e), and mandate that a court refrain from vacating a judgment if doing so detrimentally
affects the rights of the opposing party.
Here, the circuit court reasoned that because spousal support is “equitable in nature,”
plaintiff “is only entitled to an equitable amount of spousal support.” Die Tron’s demise, in the
circuit court’s estimation, rendered “unconscionable” plaintiff’s enforcement of the spousal
support agreement, and consequently did not detrimentally affect her substantial rights. We
reject this analysis for the simple reason that by entering into a nonmodifiable divorce judgment,
the parties conclusively waived their rights to a judicial determination of “equitable” spousal
support. The circuit court’s invocation of its equitable authority to modify spousal support
pursuant to MCL 552.28 ignores and invalidates the parties’ election to forego flexibility and
their explicit waiver of the right to seek support modifications based on equitable considerations.
Rather, the parties’ carefully crafted compromise reflects their willingness to accept that changed
circumstances might render this election unfair to one or the other.
In Rory v Continental Ins Co, 473 Mich 457, 461; 703 NW2d 23 (2005), our Supreme
Court underscored the importance of the right to contract, emphasizing that “the judiciary is
without authority to modify unambiguous contracts or rebalance the contractual equities struck
by the contracting parties because fundamental principles of contract law preclude such
subjective post hoc judicial determinations of ‘reasonableness’ as a basis upon which courts may
refuse to enforce unambiguous contractual provisions.” Here, the parties agreed to be bound by
the judgment, not a circuit court’s notion of fairness. Indisputably, affording defendant relief
from this freely negotiated, nonmodifiable judgment would detrimentally affect plaintiff’s
substantial right to contractual enforcement. Accordingly, the circuit court erred by failing to
consider plaintiff’s substantial right to enforcement of the parties’ agreement, and in so doing
neglected “to honor the parties’ clearly expressed intention to forgo the right to seek
modification.” Staple, 241 Mich App at 568. Because the circuit court incorrectly found that
setting aside the plain terms of the parties’ consent judgment with respect to spousal support
would detrimentally affect plaintiff’s substantial rights, the circuit court abused its discretion in
granting defendant’s motion to set aside the judgment under MCR 2.612(C)(1)(f).
Moreover, we reject that Heugel operates as controlling authority in this case. Unlike in
Heugel, no evidence here tends to support that the spousal support provision qualified as
“unconscionable” when the parties negotiated it. We know of no authority permitting a court to
find a contract unconscionable based on events that occur long after the contract’s formation.3
Furthermore, the parties’ divorce judgment in Heugel apparently did not incorporate a
nonmodification clause. Consequently, in that case the circuit court’s discretion to favor fairness
when it construed MCR 2.612(C)(1)(f) remained unconstrained by competing considerations of
finality and freedom of contract.
3
“The determination of whether a given clause or contract is in fact unconscionable is to be
made at the time of its making rather than at some subsequent point in time (e.g., at the time for
performance) . . . .” 8 Williston, Contracts (4th ed), § 18:12, pp 77-80 (footnote omitted).
© 2013 The Institute of Continuing Legal Education
9-23
Handling Property Division & Spousal Support Issues, January 15, 2013
Although we conclude that vacation of the spousal support term detrimentally affected
plaintiff’s substantial rights in this case, we recognize that in rare cases, a circuit court’s “grand
reservoir of equitable power to do justice” may necessitate setting aside a judgment despite
prejudice to the opposing party. Heugel, 237 Mich App at 481 (internal quotation omitted).
However, the record here does not support the existence of truly exceptional circumstances. The
case law construing MCR 2.612(C)(1)(f) contemplates that extraordinary circumstances
warranting relief from judgment generally arise when the judgment was obtained by the
improper conduct of a party. Heugel, 273 Mich App at 479; see also Altman v Nelson, 197 Mich
App 467, 478; 495 NW2d 826 (1992). No such misconduct occurred in this case. Moreover, the
events giving rise to Die Tron’s failure qualify as tragic, but hardly extraordinary. As a seasoned
business owner, defendant undoubtedly understood that an economic downturn, or financial
mismanagement, could endanger the solvency of his company. He nevertheless agreed that
plaintiff could receive nonmodifiable spousal support. We feel hard pressed to conclude that a
business failure amounts to a circumstance so unexpected and unusual that it may constitute a
ground for setting aside a final, binding and nonmodifiable spousal support provision. “When a
party makes a deliberate, strategic choice to settle, she cannot be relieved of such a choice
merely because her assessment of the consequences was incorrect.” United States v Bank of NY,
14 F3d 756, 759 (CA 2, 1994). The extraordinary circumstances cited by the circuit court simply
do not overcome the detrimental effect on plaintiff’s substantial rights that would result from
setting aside the judgment.
Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Elizabeth L. Gleicher
/s/ Cynthia Diane Stephens
/s/ Michael J. Kelly
9-24
© 2013 The Institute of Continuing Legal Education