Increased Income Not Unforeseeable in Memphis Alimony Modification Case: Pembroke v. Cooley

Facts: After 24 years of marriage, Husband and Wife divorced in 2005. The trial court approved their marital dissolution agreement (“MDA”), which provided in relevant part:

ALIMONY: Husband shall pay to Wife, as transitional alimony, the sum of $8000 per month for a period of sixty (60) months, and thereafter, Husband shall pay to Wife, as alimony in futuro the sum of $7500 per month for a period of sixty (60) months. All alimony will terminate in the event of Wife’s death or remarriage; however, the transitional alimony shall not otherwise be subject to modification. The alimony in futuro may be modified by either party upon a showing of a material, unanticipated change in circumstances.

In 2014, Wife filed a petition seeking to increase the amount of Husband’s alimony payments and to extend the term of the payments. Wife alleged that Husband’s income had increased dramatically since the divorce, leaving him with more disposable income and making him financially capable of making extended and/or increased alimony payments.

After a hearing, the trial court found Husband’s income increased approximately 5% each year [it should be noted Husband is a dentist]. The trial court also found Wife continued to need alimony. Thus, the trial court found there was a substantial and material change of circumstances to justify a modification/extension of alimony in futuro.

The trial court ordered Husband to continue paying alimony in futuro in the amount of $6200 per month for a period of six years or until Husband’s retirement, whichever occurs later.

Husband appealed.

On Appeal: The Court of Appeals reversed the trial court.

Alimony in futuro is intended to provide support on a long-term basis until the death or remarriage of the recipient. Alimony in futuro can be awarded when the court finds there is relative economic disadvantage and rehabilitation is not feasible.

Tennessee Code Annotated § 36-5-121(f)(2)(A) provides that alimony in futuro remains in the court’s control for the duration of the award and may be increased, decreased, terminated, extended, or otherwise modified upon a showing of a substantial and material change in circumstances.

alimony appealA court may not modify or terminate an alimony award until it first finds a sufficient change in circumstances has occurred since the entry of the original alimony award. Thus, in most cases, the party seeking modification of an alimony award must initially prove a substantial and material change in circumstances has occurred.

In this case, the parties’ marital dissolution agreement slightly altered the initial burden of proof by stating “[t]he alimony in futuro may be modified by either party upon a showing of a material, unanticipated change in circumstances.”

When the contractual language used in an MDA is plain and unambiguous, the court’s function is to interpret and enforce the MDA according to its plain terms.

On this issue, the Court commented:

In this case, the plain language of the MDA provides that Husband alimony in futuro obligation may be modified upon a showing of a “material, unanticipated” change in circumstances. Accordingly, it appears that the parties disposed of the statutory requirement that such a change in circumstances be “substantial.” As such, our first task is to determine whether Wife met her burden of proving a change in circumstances that was not anticipated or contemplated by the parties at the time of their divorce.

A change is material if it was not anticipated or within the contemplation of the parties at the time of the original divorce.

A change in circumstances is substantial if it significantly affects either the obligor’s ability to pay or the obligee’s need for support.

Regarding Husband’s increased income, the Court ruled:

The increase in Husband’s income since the time of the parties’ divorce . . . does not constitute a material change in circumstances in this case….

Husband’s income has increased relatively steadily since the parties’ divorce. This cannot be said to be unanticipated. We reject the argument that such an increase in the income of a professional over time constitutes an unforeseen change in circumstances….

Here, Wife seeks not only an increase in alimony but also to extend [] Husband’s monthly alimony obligation beyond the termination date set forth in the parties’ divorce decree. Moreover, [] the parties bargained for and agreed to Husband’s alimony obligation for a specific amount and a specific period of time when they executed their MDA. By itself, the fact that Husband’s ability to pay has increased since the parties’ divorce, though perhaps relevant to whether the amount of his alimony obligation should be modified, is not necessarily relevant to whether its term should be extended. Indeed, past cases in which courts have extended alimony beyond its previously ordered termination date have involved a substantial and material change in circumstances that was not contemplated at the time of entry of the final decree…. Accordingly, we conclude that Husband’s increased income since the parties’ divorce is insufficient to constitute a material change in circumstances in this case.

Regarding Wife’s continued need for alimony, the Court commented:

Obviously, the fact that the alimony would end after 10 years was contemplated and perceivable by the parties when they executed the MDA. Nevertheless, Wife has made little effort to find a greater source of income or to set aside a portion of the income she has received. Instead, she has continued to invest a great deal of her time, energy, creativity, and resources into endeavors that produce little, if any, income. While we certainly do not intend to discourage Wife from engaging in whatever creative or artistic pursuits she desires, we cannot force Husband to bear the financial consequences of her decisions…. Simply put, there is no basis in the record from which a material or unanticipated change in circumstances could be found.

Accordingly, the trial court’s judgment modifying and extending Husband’s alimony obligation was reversed.

K.O.’s Comment: The Court distinguishes its holding here from that in Wiser v. Wiser by noting the husband’s income prior to the divorce in Wiser was erratic and unpredictable. Thus, the post-divorce increase in that case was unforeseeable. In this case, however, Husband’s income had never been erratic or unpredictable. Husband is a dentist. His post-divorce income increased steadily by approximately 5% per year, which the Court held was not unforeseeable.

Pembroke v. Cooley (Tennessee Court of Appeals, Western Section, January 29, 2016).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family Law Attorney.

Posted by

K.O. Herston is a family-law attorney in Knoxville, Tennessee whose practice is devoted exclusively to family law, including divorce, child custody, child support, alimony, prenuptial agreements, and other aspects of family law.

Leave a Comment