A Former Spouse’s Income Growth is Not Guaranteed to Affect Support

February 25, 2013 | No Comments
Posted by Catherine Bick

A recent non-precedential decision of the Appellate Division has highlighted the important role the matrimonial settlement agreement language plays in applications for modification of support obligations, even when there has been a seemingly significant change in circumstances of one party’s income.

In Retik v. Retik, (App. Div. Feb. 15, 2013, A-4988-10T4), the plaintiff supporting spouse suffered a reduction in income that was, thereafter, followed by a substantial increase in income.  The parties in Retik divorced in 2008; in 2007, the husband/supporting spouse’s income was reported on his CIS to be in excess of $2.7 million.  Pursuant to the marital settlement agreement, he was obligated to pay both limited-duration and rehabilitative alimony and child support for the parties’ four children.  After he claimed a reduction in income for 2008 to $300,000, the parties engaged in motion practice and mediation.  In July 2009, only ten months after the parties’ amended dual judgment of divorce was filed, a supplemental marital settlement agreement was agreed upon and entered.  This agreement provided for a buy-out and termination of the payor’s alimony obligations, but did not alter his child support obligations. Just over one year later, defendant/wife filed a motion to increase in child support, asserting that the plaintiff’s income had risen, in 2010, to over $3 million.  Her primary argument was based on language in the marital settlement agreement that provided, in part, as follows: “in the event [plaintiff’s] base salary and year end discretionary cash bonus is less than $800,000 in any year, … the parties shall review [plaintiff’s] child support and alimony obligation[s] for a downward modification.”  After finding that the plaintiff’s cash income was consistent with pre-divorce levels, the court denied an increase based upon the $800,000 figure in the foregoing language, finding that it was intended to act as a downward modification figure, not for an increase.  The defendant was required to meet the Lepis standard of changed circumstances to modify child support, which she did not do.

The Appellate Division affirmed the trial court’s findings.  In particular, the Appellate court found that the absence of any reference to what impact earnings in excess of $800,000 would have on other than a downward modification application did not render the language ambiguous.  Thus, no plenary review to determine the meaning of the $800,000 figure was necessary.  Significantly, the court observed that the language of the marital settlement agreement reflected that the parties had a “firm understanding” of how the plaintiff was compensated.  The agreement also memorialized their understanding that the plaintiff’s earnings were subject to “a measure of unpredictable fluctuation.”  Thus, the fact that the $800,000 figure addressed only downward modifications, not upward, did not constitute unfairness or ambiguity and the agreement would be enforced as written.  While it was doubtless important that there did not appear to be a dispute that the children’s needs were being met by the $8,000 per month the defendant was already paying, it should not be ignored what impact the existence of a well-written and documented agreement had on the Court’s decision.

The Retik decision is also important for its reaffirmation of the “changed circumstances” standard.  As inconsistently as it sometimes seems to be applied, this continues to be the threshold showing a party must make in order to obtain a plenary hearing for support modification.  See Lepis v. Lepis, 83 N.J. 139 (1980).

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