Metropolitan News-Enterprise

Thursday, December 20, 2018

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Court of Appeal:

Ex-Wifes Hiked Earnings Justified Modifying Her Percentage-Based Alimony Obligation

But, Opinion Says, Judge Erred in Failing to Take Into Account Parties Expectation of Pay Raises in Formulating Agreement

By a MetNews Staff Writer

The Fourth District Court of Appeal has declared that a womans substantial salary increase, including bonuses, constituted changed circumstances justifying a modification of the alimony to her ex-husband, which included 10 percent of income over a specified amount, but that the judge failed to consider that the parties expected upward earnings in formulating their marital settlement agreement.

The opinion, filed Tuesday, was written by Justice William Dato of Div. One. It reverses an order by San Diego Superior Court Judge William Y. Wood modifying the spousal support order, and remands the matter for further consideration.

Under the dissolution agreements that Tawnya L. Clark entered into in 2014 with her then-husband, Devin Clark, she was to pay him $850 a month, plus 10 percent of any earnings beyond $180,000, her yearly salary at the time of their separation two years prior. Over time, the base amount of $850 was to decrease on a set schedule (and is now set at $551 per month, the level at which it is to remain until payments cease at the end of 2020).

Wifes Motion

By 2016, the ex-wife was making $265,000 per year in addition to potential annual bonuses up to 40 percent of that amount. In her motion to modify her support obligations, she argued that such a huge increase would be a windfall to her husband, putting him well over the marital standard of living.

Wood agreed that the new salary was a changed circumstance justifying the modification. He noted that the husband had the expectation at the time the settlement agreement was fashioned of receiving 10 percent of his wifes $9,900 bonus$990while, if she received all of her potential bonus under her present employment, his share would be $19,100.

They left in place the base payments and the additional 10 percent of earnings beyond $180,000, but capped the extra support at $990 per year.

Changed Circumstances

The ex-husband argued that Woods finding of changed circumstances was error because the parties had expected increased earnings. He contended that the provision that spousal support in 2020, years before such spousal support would normally end, made it clear that the parties lack of a cap on the support was deliberate.

Dato wrote:

We disagree with Husband that the Agreements demonstrate a reasonable expectation that an increase in Wifes earnings could never amount to a change in circumstances.

The real question is what magnitude of earnings increase would be necessary to create changed circumstances. On this point we are forced to conclude substantial evidence supports the trial courts finding that Wifes dramatic one-year leap in earnings constitutes a material change in circumstances such that it could consider modification of spousal support.

Although the increase was a change in circumstance, the jurist agreed with the husband that it was not unexpected by the parties. He wrote:

The Agreements reflect the parties reasonable expectation that Wifes earnings would continue to increase, primarily through the way the parties agreed to calculate spousal support .

Furthermore, the parties earnings history is expressly contemplated in the Agreements modification provision: the court may consider the annual incomes of each party during marriage and at date of separation. As discussed above, Wifes annual earnings unmistakably show a pattern of significant increases throughout the marriage, including the five and 10-year periods before execution of the Agreements.

He declared:

Because of its history with the parties and firsthand experience, it is for the trial court to craft a specific modification to spousal support in light of its finding of changed circumstances. But any restriction on additional spousal support should not deny Husband what the parties reasonably contemplated at the time they entered into the Agreements. For our part, we only direct that on remand the court (1) take account of the parties reasonable expectation that Wifes earnings would continue to increase, and (2) modify the spousal support obligations accordingly.

The opinion identifies the parties by their initials to provide the parties with a semblance of privacy although the couple litigated under their real names below and those names appear in the Court of Appeals docket.

The case is T.C. v. D.C., 2018 S.O.S. 6057.

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