Will a court reduce husband’s spousal support due to changes in the economy and the real estate market?
In an unpublished opinion, the Virginia Court of Appeals upheld the Circuit Court’s denial of a reduction in the case of Lane v. Lane, Record No. 0951-09-4 (September 15, 2009) . The husband and wife were married for twenty-four years before separating. At the time the parties entered into a separation agreement, husband was a CEO of a company and made more than half a million a year in salary. In the separation agreement, the husband agreed to pay to wife $6,000 a month in spousal support with the following condition:
“[Wife] agrees to make a good faith effort to obtain a job so that she may become more financially self-sufficient. If [husband]’s income is reduced substantially through no voluntary act on his part, the amount of spousal support to be paid shall be subject to renegotiation and modification within six weeks of such a reduction. If [husband] and [wife] are unable to agree as to the amount of support to be paid, then they agree to return to mediation in an attempt to resolve these issues before taking any legal action.”
The separation agreement was incorporated into the final decree of divorce. Three years after the date of the property settlement agreement, husband’s company was bought by another company. The husband began investing in real estate projects and the stock market. With the onset of the recession in 2007 and 2008, husband experienced a substantial reduction in his income.
After the divorce, the wife became a real estate agent in an attempt to become self-sufficient. After she was diagnosed with cancer four years later, wife exited the real estate business.
The husband made a motion to reduce his spousal support obligation in the Virginia Circuit Court. The divorce court judge found the necessary material change in circumstances to modify support, but held that the involuntary change in husband’s income did not warrant a reduction in spousal support. The trial court also held that wife had made a good faith effort to obtain employment and income. The husband appealed the judge’s denial of his motion to reduce spousal support.
The Virginia Court of Appeals first restated its standard of review, that it would not disturb a trial court’s decision where it is based on an ore tenus hearing, unless it is ‘plainly wrong or without evidence in the record to support it. Citing Virginia Code Section 20-109(C), the court recognized that it’s authority was limited by the stipulation or contract between the parties. In this case, the separation agreement provided for a reduction in support when husband’s income decreased through no fault of his own. A party moving for a reduction in spousal support must prove both a material change in circumstances and that the change justifies a reduction in support. The material change must relate to the ability of the spouse paying support to pay or the needs of the spouse receiving support. Here, although the husband had prudently decided to invest in the stock market and was not required to use his investments for support, the husband was in good health, had better earning capacity than wife, and had enjoyed a higher standard of living than during the marriage. The divorce court judge found that wife had a greater need for support due to her health and the husband was not less able to provide support to her. Consequently, although there had been a material change in circumstances, that change did not justify a modification of support. The trial court’s ruling that wife had made a good faith effort to secure employment was supported by the evidence. The Virginia Court of Appeals recognized that the trial court judge, as fact finder, properly ascertained wife’s credibility, determined the weight to be given to her testimony, and had the discretion to accept or reject any of the wife’s testimony. The court declined to award either appellant or appellee attorney’s fees and costs.
You should consult with your divorce lawyer to discuss whether the consequences of the current recession justify a modification of a support obligation in your case.