Modification of Support Orders During an Economic Downturn

Modification of Support Orders During an Economic Downturn

By Barry L. Kaufman, Esq., Marianne Quinn, Esq. and Kit E. Calligaro, Esq.

Spousal support (alimony) and child support orders may be revised and altered from time to time as circumstances may require. When filing an application to recalculate or terminate a support obligation, the party seeking the change must prove a material change in circumstances. Lepis v. Lepis, 83 N.J. 139, 145 (1980). An alleged reduction in income is only part of the overall circumstances the judge considers in determining whether the supporting spouse has met the burden of demonstrating a right to discovery or a plenary hearing. The court must consider what is equitable and fair in all circumstances. This requires not only an examination of the parties’ earnings, but also how they have expended their income and utilized their assets. Donnelly v. Donnelly, 405 N.J. Super. 117, 130 (App. Div. 2009). Once [the individual seeking the modification successfully makes] a prima facie showing of a change in circumstances occurs, the court will usually order a hearing and allows for discovery of each party’s financial circumstances.

The factors considered at this stage [during the plenary hearing] are the same that apply at the time of the original Judgment of Divorce including the dependent spouse’s needs, the spouse’s ability to contribute to the fulfillment of those needs and the supporting spouse’s ability to maintain the dependent spouse at the former standard of living. The obligor’s ability to pay, the needs of the child(ren) and the best interest of the child(ren) are additional considerations for child support modifications. Lepis at 152.

Spousal and child obligations that were either court-ordered or agreed to by the parties at a time when our economy was thriving have become onerous and often times impossible to pay for many. Unemployment is at a record high and it takes significantly longer for out-of-work individuals to find employment in our downward spiraling economy. Many companies have placed a moratorium on wages/salaries and in some instances, have reduced wages/salaries. The New Jersey Family Courts are inundated with modification applications and must balance the inability of payor to pay with the long established precedent that to consider a support modification, a change in circumstances must be permanent, not temporary. Lepis v. Lepis, 83 N.J. at 151.

There is no brightline rule to measure when a changed circumstance has endured to warrant a modification of a support obligation. Larbrig v. Larbrig, 384 N.J. Super. 17, 23 (App. Div. 2006). Similarly, there is no formula for achieving a support reduction on the basis that the payor no longer has the ability to comply with his or her support obligation(s). In addition to reviewing the circumstances of the payor, our courts must also consider the payee former spouse’s circumstances in deciding if and how much a support obligation(s) should be modified. It should be evident that seeking a reduction or termination of a support obligation because the payor has lost his or her job due solely to the economy is not sufficient.

The applicant must provide the court with sufficient documentation to support their diminishing finances and an active pursuit of employment. These proofs should include an updated Case Information Statement (together with the original CIS) reflecting comprehensive financial information, severance package information, income tax returns, W-2s, 1099s, K-1s, resume and a detailed log of efforts made to find employment including dates, time, contact, contact mode, synopsis of communication, response, etc. together with tangible back up support.

A motion to modify a support obligation based upon a loss of employment should not be filed too quickly. Sufficient time must lapse for an applicant to make a concerted effort at finding employment. In the past, being out of a job for one (1) year was considered “temporary” and an application based upon a change of circumstances was generally denied. Today, our courts have recognized that obtaining employment has become more difficult and have reduced the time frame in the context of an application to modify support when considering what is “temporary.” Although the period of time sufficient for considering a change as no longer being “temporary” for modification purposes has reduced from more than twelve (12) months to as little as four (4) months in some courts, there is no exact science for determining what a court will consider “temporary.”

Two recent cases provide insight to our courts’ reasoning when considering modification applications: In Gonzales-Posse v. Ricciardulli, 410 N.J. Super. 340 (App. Div. 2009), the payor was working as in-house counsel for Direct TV Latin America in New Jersey under a visa at the time of the divorce. The spousal and child support recited in the parties Agreement (which was incorporated into their Judgment of Divorce) was based upon the payor earning $150,000.00 per year and the dependent spouse earning $21,000.00 per year. The supporting spouse was then laid off from his job. When he was terminated, the employer withdrew their petition in support of the employee’s labor certification. By law, the former employee was required to leave the United States. Upon his return to Argentina, he obtained part time employment from various employers earning $9,378.00 per year. Eventually he obtained full time employment as a lawyer earning $26,000.00 annually which was commensurate with the country’s economic circumstances. The court found that the decision of payor to return to Argentina was not a voluntary choice and recognized a substantial change in circumstances sufficient to reduce his support obligations. The matter was remanded to the trial court for a determination as to whether the spousal support obligation should have been terminated rather than reduced and to review the court’s extension of the duration of limited duration alimony.

In an unpublished opinion, the defendant moved for a reduction in child support payments alleging a pre-existing medical condition of psoriasis had worsened and negatively impacted his earnings.Lester v. Lester, A-2024-08T2 (November 2009). The physician claimed he could no longer perform complex surgeries and his earnings reduced from $230,000.00 in 2004 to $73,500.00 in 2007. The court looked to the applicant’s assets, extravagant expenses and lifestyle. They also considered that no attempt was made by the physician to reduce costs of the declining medical practice despite the alleged reduced workload. The application to reduce child support was denied.

These cases highlight the depth of analysis our courts will undertake prior to modifying an existing court order. In the current economic climate, applicants and counsel must be diligent in gathering all necessary facts to present sound reasoning for a court to rule in an applicant’s favor. The trial court has great discretion in determining these applications and their decision and will not be overturned by an appellate court absent an abuse of discretion, failure to consider controlling legal principals or findings made that are inconsistent with or unsupported by competent evidence.Storey v. Storey, 373 N.J. Super. 464, 479 (App. Div. 2004).

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