Ability to Pay Argued in Murfreesboro, Tennessee Alimony Modification: Gensci v. Wiser

March 17, 2021 K.O. Herston 0 Comments

Facts: The parties divorced after a 23-year marriage.

Husband, a self-employed businessperson, was ordered to pay alimony in futuro until August 1, 2017, the date Wife would receive title to two commercial buildings.

In 2014, Husband petitioned to modify alimony because he had no income. The trial was delayed until 2018, at which point the alimony had ended on its terms. Husband sought retroactive relief in the form of a credit for the alimony paid that could be applied to other financial obligations he owes Wife.

Because Wife’s need for alimony remained unchanged, the trial focused on Husband’s ability to pay.

Husband argued he had no income during the relevant time. His tax returns showed significant business losses. Husband described himself as insolvent, with all his assets fully leveraged.

I’ll spare you the details, but the opinion succinctly says, “Intense cross-examination cast doubt on Husband’s narrative.” That’s putting it mildly.

The trial court found Husband’s ability to pay remained unchanged. Husband’s petition was denied, and Wife was awarded $49,000 in attorney’s fees.

Husband appealed.

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

An award of alimony in futuro stays in the court’s control for the duration of the award and may be increased, decreased, terminated, extended, or otherwise modified upon showing a substantial and material change in circumstances.

The party seeking modification must prove that a substantial and material change occurred and that modification is warranted.

Tax returns are not definitive proof of income, and a trial court does not have to accept a tax return at face value. This is particularly true when a party can manipulate income, such as the sole owner of a business.

The Court found the same holes in Husband’s story that Wife’s counsel developed through “intense cross-examination”:

Husband contends that it is undeniable that his companies’ revenues shrank in the 2013-17 period. This may be true. But while Husband may have shown a material change, he did not prove that this change was substantial. A change in circumstances is substantial if it significantly affects either the obligor’s ability to pay or the obligee’s need for support. Despite falling revenues, Husband continued to pay his personal expenses, including his alimony, with company funds. Husband’s “intermingling” of personal and business finances makes it close to impossible to determine Husband’s true financial position. Proof at trial showed that Husband still controls the cash flow of his business. Whether he called it a draw or repayment of the debt, company funds were available to him. Multiple entries in his company ledger evidenced transfers of funds to and from personal and business accounts. Husband’s attempts to explain otherwise were unconvincing.

Contrary to Husband’s protestations, the trial court was not required to view his ability to pay in a vacuum. Ability to pay alimony can be impacted by a variety of factors, including the financial contributions of others. His companies paid a wide variety of his obligations. Husband’s current wife paid others. Both of these facts are relevant to the consideration of his ability to pay alimony.

The trial court’s judgment was affirmed, and Wife was awarded her attorney’s fees on appeal.

Gensci v. Wiser (Tennessee Court of Appeals, Middle Section, February 26, 2021).

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Ability to Pay Argued in Murfreesboro, Tennessee Alimony Modification: Gensci v. Wiser was last modified: March 14th, 2021 by K.O. Herston

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