Spousal Support Always Modifiable Once Awarded by Family Court

If the parties to a divorce do not settle their divorce, then a family court will decide the issues in the case, including spousal support and whether income should be imputed to a non-earning spouse. The court’s decision is discretionary thus, what the court orders will stand unless that powerful discretion is somehow abused; that is precisely what happened in Loutts v Loutts regarding the issue of alimony.

The Loutts case is an interesting case study on the valuation of a business and the calculation of alimony. Both spouses had PhDs and both were “hands-on” in the running of a global laser business developed by husband.

The Washtenaw Circuit Court cannot seem to get the alimony equation correct as the case has made two trips to the Michigan Court of Appeals and the appellate court has twice reversed the decision of the lower court. The first appellate decision addressed the “double dip” concept of alimony: where the business is valued by capitalizing the income derived from the operation of the business while, at the same time, factoring that same income stream into a spousal support calculation. The court cannot count the same dollars twice.

The second appeal involves the statute that allows alimony to be modified by the family court upon the petition of either party. The right to modify alimony, once awarded by the trial court, cannot be extinguished according to this case. The only way to foreclose any future modification of alimony is for the parties to make this agreement themselves, and to expressly memorialize this bar in their initial divorce decree.

A trial at which a family court makes the initial alimony determination will keep the question open, subject to modification, apparently forever. The family court cannot place what is known as a “presumptive term” on an alimony award and then deny any request for modification filed after the term expires.

Once awarded by the family court, the question of spousal support remains open. The irony of this case is that, although the reviewing court held it was error to foreclose the request for modification of alimony, it concluded the error was harmless because Wife did not persuade the family court that there was a change of circumstances to merit an extension of her alimony payments.