If a judge agrees to reduce a party’s existing alimony obligation, does that reduction automatically go into effect once the judgment issues? Or, can the judge delay the reduction’s effective date? A new Massachusetts Appeals Court case, Dolan v. Dolan, answers that question. In this case, the judge reduced the husband’s alimony obligation. Yet, given the circumstances, the judge delayed the reduction’s effective date until five months after the modification judgment issued.

 

Case Facts

The parties in Dolan v. Dolan married in September 1988. They enjoyed an upper class lifestyle during most of their marriage. The wife managed their home and cared for the parties’ two children. The husband earned an income from his business, East Coast Benefit Plans, Inc. (ECBP). When the parties divorced, the husband was a co-owner of ECBP, as well as an employee. His annual employee income was $481,233.

 

Trial Court

After many years of marriage, the parties divorced. In an amended divorce judgment, which was effective as of December 2015, the court ordered the following. The court divided the marital estate equally — each party received assets worth about $3.9 million. The husband’s ownership interest in ECBP was among the assets the court assigned to him. This interest was worth $838,500 at the time.

In the divorce judgment, the court ordered the husband to pay alimony to the wife. The court set the alimony amount at $2,885 per week. In determining alimony, the court attributed an annual income to the wife of $31,200. The court based this amount on the wife’s part-time earning history. The divorce judge also took into account the statutory factors in determining alimony. These factors included the parties’ lifestyle during the marriage, the wife’s support need, and the husband’s ability to pay.

 

Husband’s Complaint for Modification

In August 2017, the husband and his business partner sold ECBP to Digital Insurance LLC (OneDigital). As part of the sale, the husband received an initial lump sum payment of over $1.9 million. The agreement with OneDigital further provided for a second lump sum payment of over $400,000 in August 2018 and a potential third lump sum payment in August 2020. Additionally, the purchase agreement gave the husband 24 monthly installments of over $4,100 between August 2017 and July 2019.

The husband also signed an employment agreement with OneDigital. As a result, the husband would earn $300,000 annually for the first two years of employment, from August 2017 to August 2019, subject to adjustment thereafter.

In September 2017, one month after the sale of ECBP, the husband filed a complaint for modification. Through the modification, the husband sought an alimony reduction. As a basis for the alimony reduction, the husband cited his reduced salary due to the sale of ECBP.

 

Alimony Modification Trial

In December 2018, the court held a modification trial. The court then issued a modification judgment, dated March 19, 2019. Finding several material changes in circumstances since the divorce, the modification judgment reduced the husband’s alimony obligation to $1,680 per week. The alimony reduction, however, would not go into effect until August 1, 2019.

In making this reduction, the court considered multiple factors. The court considered the parties’ lifestyles and the fact that they each still had significant assets. The modification judge also affirmed the wife’s attribution of income. Additionally, the judge factored in her expenses, which would decrease in August 2019 as the parties’ eldest child was graduating from college. The modification judge found that the wife still had a need for support.

Regarding the husband, the modification judge found that his income significantly increased between the time of the divorce and the time of the modification trial. At the time of the modification trial, the husband’s income comprised of his OneDigital salary and payments from the ECBP sale.

Regarding the alimony reduction delay, the court reasoned as follows. The husband’s income would include both a salary and ECBP sale payments through July 2019. So, the court decided he would be able to pay the original alimony amount until then. However, starting in August 2019, the husband would no longer receive the ECBP sale payments — his income would only come from his employment at OneDigital. This loss would result in the husband’s income decreasing by over 35% starting in August 2019,  as compared to the husband’s income at the time of the divorce. So, starting in August 2019, the court essentially found the husband would no longer be able to pay the original alimony obligation.

The husband appealed the court’s decision.

 

Appeals Court

On appeal, the husband argued that the modification judge’s decision went against the law about alimony. Specifically, the husband contended that the judge should not have delayed the implementation of the alimony reduction based on the income from the ECBP sale. The husband further contended that the ECBP sale installment payments came from an asset which the divorce judge assigned to him at the time of the divorce. Meaning, that income should not have even been considered in connection with his alimony modification request.

 

The Appeals Court’s Analysis

In its analysis, the Appeals Court turned to the language of the relevant Massachusetts law, G.L. chapter 208. The court specifically focused on two sections of the law. The court first looked to section 49(e) of the law. This section provides that a court can modify general term alimony if a material change of circumstances so warrants. Therefore, to modify an existing alimony obligation, the court must first determine there is a material change in circumstances. This is step one.

Second, the court reviewed section 53(c)(1) of the alimony law. This section states, when issuing an alimony order, the court must exclude from the income calculation “capital gains income and dividend and interest income which derive from assets equitably divided between the parties…” So, after concluding a material change in circumstances exists, the court cannot include the above income in determining the modified alimony amount (this calculation is step two).

 

Determining a Material Change in Circumstances

The Appeals Court found that, yes, the lower court must exclude the aforementioned income when calculating the modified alimony amount in step two. Nonetheless, the court in fact can consider such income in determining whether a material change in circumstances even exists in step one. This is because the court must consider the totality of the alimony payor’s financial circumstances in deciding if there is a material change in circumstances. That includes the payor’s income and available assets. “We therefore see no error in the modification judge’s consideration of the husband’s income from the sale of ECBP when determining whether he met his burden of demonstrating a material change in circumstances,” the Appeals Court held.

 

Delaying the Alimony Reduction

Regarding the delay, the Appeals Court noted the modification judge’s decision to delay the alimony reduction was partly based on the husband’s capital gains income. That income enabled him to pay the original alimony amount through July 2019, after which it would terminate. According to the Appeals Court, the modification judge implicitly concluded there would be no change in circumstances warranting an alimony modification until then (August 2019). At that point, the material change in circumstances justifying the downward modification would result. The Appeals Court held there was  “no abuse of discretion in the modification judge’s decision to delay the implementation of the reduced alimony obligation to August 1, 2019.”

The Appeals Court agreed with the Probate and Family Court modification judge in this case.

 

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