In Search of the Elusive Spousal Maintenance Award (Case Law Round-Up December 1 and 8, 2014)

I’m hardly the first to notice that spousal maintenance (alimony) awards are getting more and more rare of late, even in states, like mine, that haven’t formally amended their alimony laws.  While there’s still a fair bit of debate as to whether the end of alimony really is a good thing, one can’t help but wonder, with all this change afoot, “who gets spousal maintenance anymore, anyway?”

As if in answer to that very question, the Court of Appeals offered up four separate spousal maintenance cases in the past few weeks, which are the focus for this week’s Round-Up.

Going Back to Work

Our first two cases, issued a week apart, seem to be an object lesson in the fact-sensitive nature of spousal maintenance awards, and the wide amount of judicial discretion that shapes them.

By way of background, going back to work after divorce is always a sensitive subject when spousal maintenance is at issue.  While a proposed maintenance recipient has an obligation to contribute to his/her own support, there are also practical considerations when health, age, and long absences from the workforce come into play.

Minnesota Courts seems to be taking a fairly firm stance in favor of a back-to-work interpretation of our maintenance laws, but this hasn’t been absolute.  See Passolt v. Passolt, 404 N.W.2d 18 (Minn. Ct. App. 2011), but compare the reasoning in Brooks v. Brooks (Passolt, “represents only a correction of a misunderstanding of the law…rather than a broad holding that a district court must impute income where there is a reasonable probability that such income is earnable).

Health concerns, in particular, may lead courts to question whether a spouse can really earn any meaningful income from employment.  But the presence of disability alone hardly dictates a long-term spousal maintenance award, as these two recent cases make clear.

In re the Marriage of Farr v. Farr, A13-2395 (Minn. Ct. App. Dec. 1, 2014).  Husband and Wife divorced following a 23-year marriage.  Wife, a “stay-at-home mother with infrequent employment stints outside the home,” was also a cancer survivor.  Though Wife was in remission when the parties divorced, she testified that she continued to suffer long-term side effects including vision problems, headaches, pain and fatigue.  As a result, Wife’s sole source of income was from Social Security Disability benefits.

Following trial, the District Court awarded Wife $515 per month in permanent spousal maintenance over Husband’s objection. Husband appealed, arguing that the District Court should have required Wife to return to work and support herself.

Rejecting Husband’s arguments, the Court of Appeals held that Wife’s testimony alone was sufficient to demonstrate she could not return to paid employment. Thus, the District Court was permitted to rely on Wife’s sworn testimony in setting the amount and duration spousal maintenance even though Wife failed to introduce medical records, call other witnesses, and even admitted that she “hoped to return to work in the future.”

But compare Farr to another affirmance, just a week later, also with a disabled spouse, but other factual differences.

In re the Marriage of Rakow v. Rakow, A14-0281 (Minn. Ct. App. Dec. 8, 2014). Husband and Wife separated in 2011, after 10 years of marriage.  Four years prior to their separation, in 2007, Wife, who had always worked outside the home, hurt her back at work.  While the opinion doesn’t detail Wife’s post-accident employment (or lack thereof), by 2012 (a year after the separation) Wife was receiving social security disability benefits.

Following trial, the District Court awarded Wife a disproportionately larger share of the parties’ property (including all of Husband’s Thrift Savings Retirement Plan), but only reserved spousal maintenance (not awarding Wife any ongoing payments, but giving her the ability to return to Court to seek maintenance in the future).  Wife appealed.

Affirming, the Court of Appeals held a reservation was permissible because Husband’s income of $5,109 per month was $38 per month short of his monthly expenses (though it’s worth noting that Wife’s monthly deficit was $1,735 per month).  The Appellate Court focused much of its attention on the property settlement, which disproportionately favored Wife, in holding that–on balance–the District Court’s decision to reserve spousal maintenance was acceptable.

So two spouses, both disabled at the time of trial, but with notably different outcomes.

While there are enough factual distinctions Farr and Rakow to justify the disparate outcomes, one might still feel slightly skeptical that both cases can co-exist comfortably within a single plane of judicial reasoning.

Retire-mony

Retirement is another sticking point in efforts to change alimony laws, with many new bills (Massachusetts’s and New Jersey’s among them) creating presumptive retirement ages.

Minnesota statutes don’t include a presumptive retirement age, nor do they provide any guidance as to when a maintenance recipient is expected to begin tapping into retirement assets (or at least the income those assets produce) for self-support.  And in the absence of legislative guidance, parties are left to litigate the possibilities.

Turning to a case that I actually missed during my fall blog-abatical (can that be a word?):

In re the Marriage of Beltrand v. Beltrand, A13-2150 (Minn. Ct. App. Sept. 8, 2014).  Husband and Wife divorced after a 29-year marriage. After stipulating to the division of their assets, the duration of spousal maintenance (permanent), and a variety of other issues, the amount of spousal maintenance was submitted for trial. The District Court awarded Wife $5,600 per month in spousal maintenance based upon Husband’s earnings of $5,869 per  month and average business distributions of $9,919 per month.   Husband appealed, arguing that the District Court should have considered the investment income Wife could earn from her retirement assets, and should have ordered spousal maintenance using his base pay and a percentage (rather than an average) of his business distributions given the uncertainty of the latter (what family law attorneys call a base-plus-percentage model).

Affirming in part and reversing in part, the Court of Appeals declined to impute investment income to Wife that “might be generated by illiquid retirement accounts.” The Court reasoned that where Wife would incur penalties to access retirement funds, nothing in Minnesota law required Wife to take early withdrawals from her retirement account to reduce Husband’s spousal maintenance obligation.

(Other states have already begun expecting maintenance recipients to tap the principal of their assets where they will have sufficient funds to support themselves for the rest of their lives.  While Minnesota doesn’t appear to be there yet, its an open question when Courts will begin expecting maintenance recipients to lean more heavily on their retirement assets, or at least the income from those assets.)

However, the Court of Appeals was more sympathetic to Husband’s arguments for a base-plus-percentage model of maintenance. Rejecting the District Court’s decision to average Husband’s income, the Court of Appeals noted:

[W]e conclude that the district court abused its discretion by ordering [Husband] to pay monthly maintenance …which exceeds his reasonable monthly expenses by $200. Over the six-year period of averaging used by the court, [Husband’s] distributions fluctuated greatly on an annual basis… During the marriage, the parties shared the benefits and the uncertainty and risks associated with [Husband’s] receipt of the distributions. Under the [district court’s] monthly maintenance award, [Wife] is able to maintain her marital standard of living while [Husband] is required to bear all uncertainties and risks associated with his receipt, or lack of receipt, of distributions from [his business]. In consideration of the parties’ marital standard of living, the award is inequitable.

See if I Karon?

Too much? Ah well.

Our final Round-Up case this week involves a faulty Karon waiver (an agreement preventing a court from modifying an existing, and otherwise fully modifiable, award of maintenance).

I’ve written about Karon waivers before in the context of the unmovable force that is a full and final waiver of the right to modify a spousal maintenance award.  But not unless they’re drafted appropriately.

In re the Marriage of Hietpas v. Reed, A14-0105 (Minn. Ct. App. Dec. 8, 2014). The parties divorced in 2008 and agreed that Husband would pay Wife temporary spousal maintenance of $3,650 until December 31, 2012, subject to a prohibition on either party returning to Court to seek a modification of spousal maintenance (a Karon waiver).

Or so they thought.

Because even though the parties’ Decree called it a Karon waiver, and even though the parties’ stipulated on the record that neither would ever be able to return to Court, the Decree failed to follow the very specific requirements necessary to formalize a Karon waiver:

1) the stipulation must include a contractual waiver of the parties’ rights to modify maintenance;

2) the stipulation must expressly divest the district court of jurisdiction over maintenance;

3) the stipulation must be incorporated into the final judgment and decree; and

4) the court must make specific findings that the stipulation is fair and equitable, is supported by consideration described in the findings, and that full disclosure of each party’s financial circumstances has occurred.

Here, the parties did not explicitly divest the Court of jurisdiction, leaving their Karon waiver unenforceable.

Because Wife’s mental health had deteriorated since the parties’ divorce, and her income had failed to meet the expectations set forth in the Decree as a result, the District Court extended maintenance for an additional five years, and the Court of Appeals affirmed. The Court of Appeals did reverse on one count, however: the District Court’s prohibition against Husband moving to modify maintenance until Wife maintained employment at the income level contemplated in the judgment and decree for 12 months.

Rounding-Up

So what’s the take-away? It can be difficult to say. Unpublished cases are fickle and often apparently contradictory.

But the past few weeks have offered at lease one lesson we should all take to heart.  Spousal maintenance is one of the most variable and fact-sensitive analyses in all of family law.  Who gets spousal maintenance, how much, and for how long depend on myriad factors, only some of which may be in the parties’ control.

What’s to be done? Law professor Sean Williams of the University of Texas has one suggestion. Let local municipalities, cities or counties, institute their own guidelines in family law cases to help create a system that is both rule based and more sensitive to local sensibilities. Several counties have already experimented with something similar, though the jury may still be out on how successful these experiments have been.

That’s it for this week.  We’ll be rounding out the year with some lessons on social media evidence, and at least one more round-up before the New Year.  Happy Holidays.

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