Opinion
No. COA94-1179
Filed 5 March 1996
1. Divorce and Separation § 288 (NCI4th) — modification of alimony — reconsideration of dependency issue — error It is not appropriate to reconsider in a modification hearing the dependent spouse's dependency and entitlement to alimony, as the entitlement issue is permanently adjudicated by the original order; rather, the purpose of the modification hearing is to permit the trial court to adjust the decree to some distinct and definite change in the financial circumstances of the parties, and this adjustment may include reducing the amount of alimony to zero.
Am Jur 2d, Divorce and Separation § 699.
Change in financial condition or needs of husband or wife as ground for modification of decree for alimony or maintenance. 18 ALR2d 10.
2. Divorce and Separation § 291 (NCI4th) — modification of alimony — substantial change of circumstances — sufficiency of evidence
Am Jur 2d, Divorce and Separation §§ 710-715.
Change in financial condition or needs of husband or wife as ground for modification of decree for alimony or maintenance. 18 ALR2d 10.
Appeal by plaintiff from order filed 25 August 1994 in Moore County District Court by Judge Adam C. Grant, Jr. Heard in the Court of Appeals 18 October 1995.
Maxwell, Freeman Beason, P.A., by James B. Maxwell, for plaintiff-appellant.
Ann Marie Vosburg for defendant-appellee.
Judge SMITH dissenting.
Bruce T. Cunningham, Jr. (plaintiff) appeals from the trial court's 25 August 1994 order which denied plaintiff's motion to modify a previous alimony award.
Plaintiff and Janet F. Cunningham (defendant) were married in 1972 and the following year, plaintiff, who is an attorney, began practicing law with defendant's father where he practiced until sometime after the parties separated in 1989. In the three years prior to the separation, plaintiff earned an income ranging from $100,000 to $125,000 per year.
During the marriage, plaintiff and defendant accumulated a marital estate worth approximately $450,000 at the time of the parties' 1 January 1989 separation agreement. The parties' separation agreement provided a roughly equal distribution of the marital estate, with plaintiff receiving approximately $225,000 in stock and liquid assets and defendant receiving the marital homeplace, valued at $140,000 (with a debt of $30,000), and $115,000 in liquid assets and other investments. Plaintiff also agreed to pay alimony to defendant equalling "the sum of one half [plaintiff's] monthly salary after first deducting social security." The separation agreement was, on 26 June 1989, incorporated by reference into the judgment of divorce. The incorporated separation agreement specifically provided that the alimony was separate from the property settlement and thus, the alimony provisions were not reciprocal consideration for the settlement and division of the marital estate.
In 1992, plaintiff's former father-in-law changed plaintiff's compensation schedule to one-half of the actual gross receipts he produced for the firm, which reduced plaintiff's annual salary. Shortly after this change, plaintiff left the law firm and joined another firm as partner. In 1993, plaintiff's gross income at his new law firm was approximately $42,000, and he paid defendant approximately $18,000 in alimony that year. Defendant's investment portfolio was valued at approximately $335,000, producing an "income of more than $30,000 in 1993." The defendant's home debt had been decreased to $2,000. She also earned an income of $7,000 from part-time work, compared to an income of $2,400 during the marriage. On 17 September 1993, plaintiff moved that his alimony obligation to defendant be modified, based upon defendant's increased investment income and plaintiff's involuntary reduction in compensation. The trial court found that between the date of the alimony order and the date of the modification hearing, the parties' reasonable expenses remained constant. The trial court concluded that "[p]laintiff has failed to meet his burden of establishing a material change of circumstances" and that defendant "is a dependent spouse." The trial court denied plaintiff's motion on 25 August 1994 and plaintiff appealed.
The issues are whether (I) the defendant's status as a dependent spouse is subject to reconsideration at a modification hearing; and (II) the evidence in this case supports the trial court's conclusion that there has been no "change of circumstances."
I
The trial court concluded that the defendant remained a "dependent spouse." This is an issue that was not properly before the trial court. The statutes applicable to this case permit the modification of an alimony decree upon a "showing of changed circumstances." N.C.G.S. § 50-16.9(a) (1995). The "circumstances" to be considered are those "factors used in the original determination of the amount of alimony awarded under G.S. 50-16.5." Rowe v. Rowe, 305 N.C. 177, 187, 287 S.E.2d 840, 846 (1982). In other words, the "circumstances" are only those that "bear upon the financial needs of the dependent spouse or the ability of the supporting spouse to pay." Britt v. Britt, 49 N.C. App. 463, 470-71, 271 S.E.2d 921, 926 (1980). It is not appropriate to reconsider, in a modification hearing, the dependent spouse's entitlement to alimony, as the entitlement issue is "permanently adjudicated by the original order." Rowe, 305 N.C. at 187, 287 S.E.2d 846. The purpose of the modification hearing is to permit the trial court to adjust the decree "to some distinct and definite change in the financial circumstances of the parties." 2 Robert E. Lee, North Carolina Family Law § 152, at 237 (4th ed. 1980). This adjustment may include reducing the amount of alimony to zero, but it cannot result in a loss of entitlement to alimony on the grounds that the once dependent spouse is no longer dependent. In this case, the trial court concluded that the defendant remained a dependent spouse. As it was error for the trial court to address that issue, we need not review whether that conclusion was error.
II
In this case, the parties' expenses remained constant between the date of the initial order of alimony and the date of the modification hearing. The defendant's income (not including her income from her assets which amounted to $30,000 a year at the time of the hearing) increased from $2,400 a year to $7,000 a year. The plaintiff's income decreased from $110,000 a year to $42,000 a year. The net value of the defendant's assets increased from $225,000 to approximately $473,000. The value of the plaintiff's assets did not change. There is no evidence that the needs of the parties changed. This evidence reveals that the defendant's assets and income increased substantially between the date of the original hearing and the date of the modification hearing. The plaintiff's income decreased substantially during this period of time. This reflects a substantial change in circumstances and the conclusion of the trial court to the contrary cannot be supported. See Sayland v. Sayland, 267 N.C. 378, 383, 148 S.E.2d 218, 222 (1966) (increase in value of wife's property after entry of alimony decree evidence of changed circumstances).
The language of the original decree adjusting the alimony payments based on a percentage of the plaintiff's income does not require a different result. This adjustment clause contemplated a change in the plaintiff's income. It did not, however, contemplate or make any adjustment for an increase in the estate or income of the defendant.
On remand the trial court is to consider, in its discretion, whether to modify the original decree of alimony. N.C.G.S. § 50-16.9(a) (order of alimony "may" be modified upon changed circumstances). There is no requirement, even in the face of a changed circumstance, that the alimony be modified. Robinson v. Robinson, 10 N.C. App. 463, 468, 179 S.E.2d 144, 148 (1971).
Reversed and remanded.
Chief Judge ARNOLD concurs.
Judge SMITH dissents.