Modifying Spousal Maintenance in Arizona: Are Changed Circumstances Continuing?
In Perkins vs. Perkins (1), Division One of the Arizona Court of Appeals addressed the question of changed circumstances for the purposes of modifying a spousal maintenance order and what constituted ‘continuing’ (as opposed to temporary) changed circumstances. The opinion is a memorandum decision and is therefore not precedential; however, it may however be cited for persuasive value subject to various limitations (2).
Spousal Maintenance Modified Due to Loss of Income
Beverly Bright Perkins (“Wife”) and Rayotis Perkins (“Husband”) were married in 1990 and in 2009, Husband filed his Petition for Dissolution. The Decree concluded that Wife qualified for an award of spousal maintenance (because she was unable to provide for her own financial needs and that she was unlikely to find employment to allow her to do so) and ordered Husband to pay Wife $1,000 per month for spousal maintenance for a period of ten years. Importantly, the trial court found that Husband was highly educated, made approximately $100,000 per year as a school assistant principal, had an earning ability far greater than Wife, and he could meet his own needs while paying spousal maintenance.
Four years later, Husband’s employment was terminated when his contract was not renewed. Following a prompt and diligent local job search – and in view of the narrowing hiring window for the academic year - Husband accepted employment earning $51,000 annually.
Husband approached Wife to address reduction of his spousal maintenance obligation. Wife refused to address same, threatening to seek an increase in spousal maintenance. Husband then petitioned for termination of his spousal maintenance obligation or reduction to $502.00 per month.
Wife objected to the reduction arguing that Husband had additional income sources and that his reduction in income was voluntary. Additionally, Wife asserted that she had been ill (with the result that her income had reduced) and consequently, her need for support had increased.
The trial court found that Husband had met his burden of establishing substantial and continuing changed circumstances and reduced Husband’s spousal maintenance obligation to $500 per month for the remainder of the ten-year spousal maintenance term. The court also awarded Husband his reasonable attorney fees (with interest at 10% per annum) on account of Wife’s unreasonable behavior in the litigation including her failure to dispute Husband’s position with competent evidence or testimony, relying rather on insinuation and speculation. Wife timely appealed.
Standard of Modification
Judge Howe identified the requirements for modification of spousal maintenance as set forth in A.R.S. § 25–327(A), namely a substantial and continuing change in circumstances. Whether a change has occurred is determined by comparing the current circumstances with those present at the time of the entry of the spousal maintenance order. MacMillian v. Schwartz, 226 Ariz. 584, 588 ¶ 12, 250 P.3d 1213, 1217 (App. 2011).
Wife argued as follows:
- Wife argued that Husband voluntarily terminated his employment in order to avoid paying her more spousal maintenance. The Court rejected this argument. They confirmed that Husband had provided all pertinent financial information to prove the reduction in income and that Husband had met his burden of proof.
- Wife argued that Husband’s current lower salary was temporary. This argument was also rejected with the Court finding that Husband’s likelihood of finding employment with comparable salary is slim. Further, at the time of hearing, Husband’s reduced salary was continuing. Should Husband’s income later increase, Wife could seek an upward modification.
- Wife asserted that modification is not appropriate because she had demonstrated an increased need for spousal maintenance. The Court of Appeals rejected this assertion because the trial court had relied exclusively upon Husband’s reduced income as the basis for modifying the spousal maintenance award.
Wife contested two aspect of the trial court’s award of attorney fees:
- The Court of Appeals confirmed the trial court’s finding that Wife acted unreasonably by refusing to discuss Husband’s proposal for a temporary reduction in spousal maintenance and threatening an increase, refusing to acknowledge Husband’s changed circumstances, and failing to disclose her financial information.
- Wife argued that interest on any attorney fee judgment should not be at ten percent (10%) per annum. The Court of Appeals agreed – interest on a judgment must be the “lesser of ten per cent per annum or at a rate per annum that is equal to one per cent plus the prime rate as published by the board of governors of the federal reserve system in statistical release H. 15 . . . on the date that the judgment is entered.” (3) At the date of entry of the trial court’s attorney fee order, the statutory interest rate was 4.5%. Therefore, the Appeal Court remanded to the trial court to correct the interest rate from the rate of the judgment.
The Perkins Case is Instructive in a Number of Areas:
- Failure to negotiate and/or recognize the reality of the circumstances will be considered unreasonable.
- Failure to make appropriate disclosure will be considered unreasonable.
- A single factor is sufficient to justify modification of a spousal maintenance order.
- Interest on all judgments (including attorney fees) will determined by A.R.S. § 44–1201(B).
- CA-CV 16-0430 FC, filed March 28, 2017
- In accordance with the recent amendments to Supreme Court Rule 111, a memorandum decision may be cited for persuasive value if (i) the decision was issued after January 1, 2015; (ii) no opinion adequately addresses the issue before the court; and (3) the citation is not to a de-published opinion or a de-published portion of an opinion.
- A.R.S. § 44–1201(B)