April 14, 2009

Modification of Spousal Support – Part 2 (The law)

Oregon law permits courts to modify awards of spousal support upon a showing of a substantial change in circumstances. The party seeking to modify an award carries the burden of proving that such a substantial change has occurred. Typically, courts require that the change in circumstances is one that was not anticipated by the parties at the time of the original award. Thus, in one recent case, a court denied a business owner’s motion to reduce his spousal support obligation based upon his claim that his business had experienced a down year. The court held that, though the business owner was able to demonstrate a decrease in his income, he was unable to show that the decrease would be sustained. However, the court went on to state that if the business continued to suffer (that if the downturn was more than just the “economic ups and downs” inherent to most businesses), then a reduction in spousal support would have been warranted. This case was decided by the Oregon Court of Appeals in 1998, when the economy was still hitting on all cylinders.

Now, in 2009, the hypothetical situation to which the Oregon Court of Appeals referred back in 1998, has become familiar to many people; that is, most experts believe that the current economic downturn is something more than just a temporary occurrence. Whereas once courts may have been reticent to find that a decrease in a person’s income, or even the loss of a job, was something other than a temporary occurrence, courts now, like the rest of our society, have become more sensitive to the unfortunate realities with which many people are currently faced. Judges read the papers and listen to the news just like the rest of us; they are aware that things are tough, and they are not insensitive to alleviating difficult or impossible situations.

When a court finds that there has been a change of circumstances sufficient to warrant reconsideration of an existing order of support, the court takes into account the original purpose of the award. Judgments are often vague as to the purpose of a spousal support award. In making a spousal support award, courts are directed by statute to designate one or more categories in which the support award falls. Spousal support can be deemed maintenance support, transitional support and/or compensatory support. Some combination of maintenance and transitional support are often awarded in long term marriages, whereas transitional support by itself is often awarded in shorter marriages. Compensatory support is only awarded as the result of very specific fact patterns, and will not be addressed here. Without going into too much detail regarding the difference between the other categories of spousal support, one of the primary reasons behind an award of maintenance and/or transitional spousal support is to enable the parties to live separately at a standard of living “not overly disproportionate” to the one they enjoyed when they were together. Interestingly, as a result of the recent economic downturn, the standard of living of the party receiving spousal support has, in many instances, become overly disproportionate to the party paying it. This is not surprising when you think about it. If the amount of support originally ordered to keeps things “not overly disproportionate” between the parties remains constant, but the payer’s income decreases substantially, then the amount originally ordered will no longer place the parties in a “not overly disproportionate” position to one another. Thus, the original purpose behind the award is no longer being met, and a court would presumably “adjust” the award to maintain its original purpose. This was essentially the logic behind a 1999 Court of Appeals case where the Court found that it was not originally anticipated that the husband would have to draw upon his retirement account to fund his spousal support obligation. In other words, the Court of Appeals held that when a party’s circumstances have changed to the point where his/her continued payment of support would drive that party to the “poorhouse”, the purpose of that support award was no longer being met, and modification would be justified.

The “not overly disproportionate” language can be viewed as another way of saying that the purpose behind many spousal support awards is to make up for the disparity of the parties’ earning capacities at the time of dissolution. Whether the support is deemed maintenance, transitional, or both, courts will often consider this factor when determining the amount, if not the duration, of an award. When the substantial purpose behind an award is to make up for the disparity of the parties’ earning capacities, and no other express reason is provided, the Court of Appeals determined in 1987, that, upon a showing of a substantial change in circumstances, the task of the court is to maintain the “relative positions of the parties as established in the initial decree in light of the changed circumstances.” The Court of Appeals affirmed it’s 1987 decision in more recent cases, finding in 2002 that it would be just and equitable to reduce spousal support to “preserve the overall percentage division of income” between the parties provided by an initial award, and in 2003 modifying a support award due to a party’s decrease in earnings to an amount equal to the “same proportionate share” of the parties’ total income as the original award.

Please continue to Part 3 of this post:  http://oregondivorceblog.com/wordpress/?p=409