Michigan Court Of Appeals Reverses Spousal Support, Attorney Fees Orders

On June 2, 2015, the Michigan Court of Appeals held in a divorce case that the trial court erred in entering an order limiting spousal support to six years and in failing to award attorney fees to plaintiff's attorney for legal fees incurred as a result of defendant's failure to comply with previous court orders.

In Richards v Richards, Docket No. 319753, the Michigan Court of Appeals addressed arguments by both plaintiff and defendant.  Among other things, plaintiff argued that the trial court erred when the court limited the duration of spousal support to six years and when the court refused to award attorney fees to plaintiff's attorney.

The Court first recited the facts of the case.

The parties were married on December 20, 1980. At the time of the divorce, both plaintiff and defendant were 53 years old. Throughout the marriage, defendant had been employed as a successful urologist, and partly owned a number of medical practices, i.e., BayCare Clinic, BayCare Ambulatory Service, and BayCare Health Services (collectively BayCare), until he was diagnosed with Parkinson’s disease and the disease progressed to the point where he could no longer practice. He also held interests in two medical device companies. Plaintiff is a registered nurse, but stopped working in 1989 to care for and home school the couple’s children, as well as manage the parties’ finances. A back problem would make it difficult to resume her nursing career as a bedside nurse, but plaintiff had returned to school for her bachelors degree and a master’s degree, hoping to obtain employment teaching nursing.

During the marriage, defendant earned between $500,000 and $800,000 yearly, and the parties amassed substantial assets, including a primary residence in Gladstone, appraised at approximately $650,000, and a home in Houghton worth approximately $225,000. The parties also had substantial savings accounts. Near the time plaintiff filed for divorce, defendant had begun receiving proceeds from two disability insurance policies through Northwestern Mutual Insurance Company, which totaled approximately $22,000 a month; defendant was to receive the payments from one policy until he turned 65 and the payments from the other until he turned 68. Defendant also began receiving social security disability payments. Defendant also received distributions representing his interest in BayCare.

Defendant admitted that he began having an affair in October of 2011. According to plaintiff, the circumstances of defendant’s relationship with the other woman caused a great deal of stress with the other woman engaging in stalking behavior and the woman’s boyfriend threatening defendant. Defendant acknowledged the affair but also maintained that the breakup of the marriage was due to longer-term problems in the marriage.

In March 2012 the court heard plaintiff’s motion for temporary spousal support and held that each party was to receive an equal share of defendant’s monthly disability income, with plaintiff to receive an additional $10,000 a month to pay the parties’ expenses on both of their homes. This resulted in a calculated “allowance” to each party of $6,000 a month. On June 5, 2012, a stipulated order was entered concerning the BayCare distributions and also contained an “increase” in the monthly allowance so that each party would receive $8,500 a month. Thereafter, following an allegation that defendant was not complying with either the initial or new order, the trial court ordered all future income to be placed in defendant’s attorney’s trust account, and reordered that $6,000 a month in allowance be awarded to each party, as well as $10,000 a month to be given to plaintiff to pay the parties’ expenses.

Testimony was presented concerning defendant’s shortfalls and missed payments of the spousal support amounts during the proceedings. Plaintiff also testified that defendant took more than his allotted $6,000 a month at times. Plaintiff testified that she had paid her attorney to date; however, she expected to have another $13,000 in fees, for a total of $33,000. She maintained that from between $12,000 and $14,000 of the amount was to determine where the various moneys had been placed, particularly by defendant, and that he should pay that amount toward her attorney fees.

In addition, the court heard testimony concerning the handling, or alleged mishandling, of various bank accounts. At the time the parties separated, the trial court stated the parties had approximately $502,347.03 in assets in various bank accounts, based on plaintiff’s calculations. Plaintiff removed $250,000 from these accounts and placed them in accounts under her individual name. Plaintiff admitted that she used a portion of this money, in addition to her monthly allowances, ostensibly for college expenses for her and the children and for taxes.

At the close of proofs, the parties submitted proposed findings of fact. The trial court generally adopted plaintiff’s financial calculations. The trial court awarded plaintiff 55 percent of the parties’ marital assets, with some exceptions, such as an equal split of the marital home and an award of the Houghton property to defendant. The trial court also awarded to plaintiff, 50 percent of defendant’s disability payments for six years as temporary spousal support. The trial court declined to award plaintiff attorney fees which she claimed to be entitled to due to defendant’s misconduct during the divorce proceedings. The trial court entered an amended judgment of divorce on December 11, 2013. Defendant contests the trial court’s judgment to the extent that it awarded an unequal division of the marital estate and provided for spousal support. Plaintiff cross appeals from the trial court’s refusal to order defendant to pay plaintiff a portion of her attorney fees.

The Court's analysis of whether the trial court erred in its orders regarding spousal support and attorney fees followed.

[W]e agree with plaintiff that the trial court erred when it ordered spousal support for a fixed time period. The relevant portion of the divorce judgment provides, in part:

IT IS FURTHER ORDERED that Defendant pay spousal support to Plaintiff in the amount of 50% of his income derived from his Social Security Disability payments and the two Northwestern Mutual Disability payments h[e] receives monthly. The spousal support payments are modifiable on showing of proper cause by either party. This award is limited in time to six (6) years from the date hereof.

Plaintiff correctly notes that a spousal support award may be modified upon petition of the receiving party showing new facts or changed circumstances. MCL 552.28 provides:
On petition of either party, after a judgment for alimony or other allowance for either party or a child, or after a judgment for the appointment of trustees to receive and hold property for the use of either party or a child, and subject to section 17, the court may revise and alter the judgment, respecting the amount or payment of the alimony or allowance, and also respecting the appropriation and payment of the principal and income of the property held in trust, and may make any judgment respecting any of the matters that the court might have made in the original action.

We have recently reaffirmed that the plain language of MCL 552.28 does not create a “bright- line rule” about when spousal support may be modified. Loutts v Loutts, ___ Mich App ___: ____ NW2d ___ (Docket No. 318468, issued February 10, 2015), slip op, p 4-6, app pending. Once a trial court provides for spousal support, it has continuing jurisdiction to modify such an order, even without “triggering language” in the judgment of divorce. Id., quoting Rickner v Frederick, 459 Mich 371, 378-379; 590 NW2d 288 (1999).

We read the trial court’s judgment to mean that spousal support is not modifiable upon a showing of proper cause after the six-year timeframe. The judgment is simply not clear. To the extent the trial court intended that spousal support would come to a definitive end after six years and could not be revisited, the judgment violates the plain reading of MCL 552.28 and must be vacated . . . .

“Attorney fees in a divorce action are awarded only as necessary to enable a party to prosecute or defend a suit” but are also “authorized when the requesting party has been forced to incur expenses as a result of the other party's unreasonable conduct in the course of litigation.” Hanaway, 208 Mich App at 298. Specifically, MCR 3.206(C) provides:

(1) A party may, at any time, request that the court order the other party to pay all or part of the attorney fees and expenses related to the action or a specific proceeding, including a post-judgment proceeding.

(2) A party who requests attorney fees and expenses must allege facts sufficient to show that

(a) the party is unable to bear the expense of the action, and that the other party is able to pay, or

(b) the attorney fees and expenses were incurred because the other party refused to comply with a previous court order, despite having the ability to comply. [MCR 3.206 (emphasis added).]

Because we have seen this problem in the past, we take this opportunity to clarify that MCR 3.206(C)(2) provides two independent bases for awarding attorney fees and expenses. “In general, ‘or’ is a disjunctive term, indicating a choice between two alternatives.” Paris Meadows, LLC v City of Kentwood, 287 Mich App 136, 148; 783 NW2d 133 (2010). “The drafters of statutes are presumed to know the rules of grammar, and statutory language must be read within its grammatical context unless a contrary intent is clearly expressed.” Greater Bethesda Healing Springs Ministry v Evangel Builders & Const Managers, LLC, 282 Mich App 410, 414; 766 NW2d 874 (2009). As plaintiff points out, we have not clarified the rule in a published opinion. However, in an unpublished opinion, we held that “[t]he Court Rule is phrased as an inclusive disjunction” and “provides two possible avenues to an award.” Kalaydjian v Kalaydjian, unpublished opinion per curiam of the Court of Appeals, issued September 29, 2011 (Docket No. 298107). “[A]lthough unpublished opinions of this Court are not binding precedent . . . they may, however, be considered instructive or persuasive.” Paris Meadows, 287 Mich App at 150 n 3.

Whereas MCR 3.206(C)(2)(a) allows payment of attorney fees based on one party’s inability to pay and the other party’s ability to do so, MCR 3.206(C)(2)(b) considers only a party’s behavior, without reference to the ability to pay. As plaintiff points out, the staff comments to the court rule provide:

The April 1, 2003, amendment of MCR 3.206(C), effective September 1, 2003, was suggested by the Michigan Judges Association to (1) reduce the number of hearings that occur because of a litigant's vindictive or wrongful behavior, (2) shift the costs associated with wrongful conduct to the party engaging in the improper behavior, (3) remove the ability of a vindictive litigant to apply financial pressure to the opposing party, (4) create a financial incentive for attorneys to accept a wronged party as a client, and (5) foster respect for court orders.

Here, the trial court specifically found that defendant failed to obey its orders and found that these violations “certainly caused confusion and extra time by all parties involved.” Nevertheless, because of the property division and the spousal support award, the trial court refused to award attorney fees to plaintiff. In so doing, it appears that the trial court conflated the two different bases for awarding attorney’s fees. Plaintiff alleged facts and provided testimony that included defendant’s admissions sufficient to prove that she incurred attorney’s fees “because the other party refused to comply with a previous court order, despite having the ability to comply” under MCR 3.206(C)(2)(b). The property and spousal support awards do not affect the fact that plaintiff was forced to incur additional attorney fees due solely to defendant’s failure to comply with the trial court’s orders during the divorce proceedings. Plaintiff sought only attorney’s fees for the amount related to these failures.