Divorce Mediation Blog

GUEST BLOG: The Appeals Court Has it Right Regarding Self-Adjusting Support Orders

Wednesday, May 25, 2016

By: David H. Lee

William and Chouteau Levine’s March 28, 2016 Opinion Piece seems to suggest support for and the value of self-adjusting support orders in family law cases. In support for their position they reference the case of Stanton-Abbott v. Stanton-Abbott, 372 Mass. 814 (1977); suggest a chilling effect on negotiated resolutions as a result of limiting the court’s authority to enter self-adjusting support orders; and speculate that courts might reject agreements reached which contain self-adjusting formulae. While recognizing the general acceptance that such self-adjusting court imposed orders offend due process, the authors seem to suggest that construction of the law endorsing such support orders will give a greater opportunity for people to reach agreements including adjustments based on future circumstances.

All good family lawyers strive to assist their clients in achieving a settled resolution whether by encouraging mediation or by counsel directed negotiation. Creative and competent lawyers and mediators are often able to assist parties in achieving a settled resolution without their support case having to be tried in court. But expanding the Trial Court’s authority to enter self-adjusting support orders in order to accommodate opportunity for possible out of court settlement is not an acceptable basis for the compromise of established law and due process rights of the parties.

The Stanton-Abbott case recognizes its own uniqueness. Justice Kaplan identified the use of a self-executing formula in that case as being appropriate based on the special case circumstances presented there (a paraplegic payee living in a foreign country and the consideration of the payor’s resources to meet the judgment supporting an annual adjustment of the payee’s alimony by 50 percent of the UK equivalent of the consumer price index increase). He also acknowledged that the question was not reached in that particular case whether a variable provision was “advisable on the merits or compatible with the fundamental purposes of alimony.”

Since that decision almost forty (40) years ago, there have been fewer than a handful of appellate decisions which have supported any such type of judgments in the absence of the parties’ agreement, and each of those has been based upon “special case” circumstances. See Wooters v. Wooters, 42 Mass. App. Ct. 929 (1997); Drapek v. Drapek, 399 Mass. 240 (1987); Kirtz v. Kirtz, 12 Mass. App. Ct. 141 (1981).

Contingent or variable provisions for support orders in a divorce judgment such as termination on death of a party, remarriage of a recipient, events relating to children (which avoid concern for IRC Section 71 considerations), known future dates of trust or estate distributions or other identified events having a reasonable basis founded upon statute, fact, or trial evidence can be understood to often be appropriately included in judgments. But these examples are quite different from judgments applying fixed percentages to unlimited amounts of increased payor income in establishing future support obligations.

The general extension of the concept of “self-adjustment” or “self-modification” to support judgments poses serious concerns which run afoul of history, statutory direction and the Constitution. The CPI adjustment of an alimony order as in Stanton-Abbott is more a preservation of an existing order translated into future value than it is a substantive modification of a set support order. The entry of a judgment ordering support to be paid based upon a sharing of a future level of income or future source of income is a very different matter.

In Hassey v. Hassey, 85 Mass. App. Ct. 518, 528 (2014), the Appeals Court properly reversed the trial court’s judgment ordering alimony to be paid without limit as a fixed percentage of the payor’s gross income in excess of $250,000. This was done without consideration of the incomes and general financial circumstances of the parties at the time the additional income might be received and without consideration of the then existing need of the recipient. See also North v. Stephens-North, Rule 1:28 Decision (June 18, 2015) (reversing alimony award of 30 percent of payor’s bonus income because a self-modifying support order based on payor spouse’s income increases results in an automatic increase in alimony without the recipient spouse being required to show a material change in circumstances, and without judicial findings regarding the recipient spouse’s needs or the provider spouse’s ability to meet them).

A self-adjusting alimony order based upon a fixed percentage of the payor’s income, without limitation, is unsupportable. Alimony is a creature of statute and has historically been based upon the need of the recipient and ability of the payor to pay. Need has been defined by case law as referring to the lifestyle maintained by the parties during the course of the marriage. No modification can be made unless the party seeking modification shows a material change of circumstances warranting modification since the entry of the earlier judgment. Kelley v. Kelley, 64 Mass. App. Ct. 733 (2005); Binder v. Binder, 7 Mass. App. Ct. 751 (1979).

G. L. c. 208, § 49(e) states: “Unless the payor and recipient agree otherwise, general term alimony may be modified in duration or amount upon a material change of circumstances warranting modification.” G. L. c. 208, § 53(b) provides that the measure of need or difference between the parties’ incomes in setting alimony is to be established “at the time of the order.” If the measure of alimony set on a statutory basis is based upon need of the recipient at the time of the issuance of the order or the difference of income between the parties at that point in time, the self-adjusting alimony order applicable to a later point in time bypasses the well-established standard of change of circumstance. In essence, the law provides that alimony is set at one point in time “at the time of the order.” Alimony generally is not to exceed the recipient’s need at the time of the order of 30 to 35 percent of the difference between the parties’ gross incomes at the time of the order. G. L. c. 208, § 53(b). Thereafter, alimony may be modified in duration or amount upon a material change in circumstances warranting modification. G. L. c. 208, § 49(e). A self-adjusting order, without limit and without the requirement of showing change in circumstance, disregards the predicate for alimony. It circumvents established law, failing to consider the needs of the recipient at some future time, what the disparity in income may be between the parties at some time or whether or to what extent there have been any changes in circumstance which would warrant a modification. Case law also supports the principle that an award of alimony is improper absent a finding of corresponding financial need of the recipient. Heins v. Ledis, 422 Mass. 477 (1996). That essential element is not satisfied in an unlimited self-adjusting alimony order.

Massachusetts has long held that future earnings are not a marital asset to be divided by the court incident to divorce. The court cannot equitably assign to a spouse a present interest in the future earnings of the other spouse. Drapek. Awarding a fixed percentage of the future income of the payor effectively treats the payor’s increased income as a property element. The recipient is made an effective “owner” of a share of an indeterminate amount earned by the payor subsequent to judgment irrespective of circumstantial review, reference to need and other factual considerations which would typically be taken into consideration by the Court in determining whether any modification is appropriate.

Irrespective of the limitation on the Court’s ability to impose a self-modifying order, there is essentially no practical limitation placed on parties’ reaching an agreement which may contemplate support changes by the inclusion of self-adjusting provisions. Such provisions might be specific to the support issue or be in consideration of other provisions of the integrated settlement agreement. The suggestion that courts might not accept negotiated, reasoned self-adjusting provisions of an agreement is not supported by experience nor would it be supported by the strong Massachusetts public policy and case law encouraging parties to reach agreements. Moore v. Moore, 389 Mass. 21 (1983).

It is far more important in our legal system for the court, absent an agreement, to be able to timely assess each case on its merits after hearing and enter appropriate modified support judgments consistent with the law than run the risk of formulaic approaches becoming the norm for predetermining uncertain future circumstances. Expanding the court’s authority in an effort to lessen the alleged “chilling effect” on mediation or negotiation is not an acceptable basis for a compromise of fundamental legal rights.

The decisions of the Appeals Court in Hassey and the more recent North v. Stephens-North are not inconsistent with the special case standard of Stanton-Abbott and Wooters. It is the exceptional situations such as in Stanton-Abbott or Wooters where a self-adjusting alimony order may be acceptable, but not a common practice to be encouraged in setting alimony orders.

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