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Effect of Merger on Modification of Alimony

Posted on : January 13, 2016, By:  Christopher Hildebrand
Modification of Alimony and Merger

Modification of Alimony and Merger in Arizona

In Arizona, the decision of the court regarding modification of spousal maintenance is based upon Arizona Revised Statute Section 25-327(A) (2007) which requires that modification be dependent upon changed circumstances. For modification or termination of spousal support to be warranted it is also necessary that the circumstances be proven by comparison to the situation as in place at the time of dissolution. An issue was raised with the Arizona Court of Appeals regarding the effect of a merger on modification of alimony in Arizona.

When is a Modification of Spousal Maintenance Appropriate?

In MacMillan v. Schwartz, Gail E. MacMillan (“Wife”) filed an appeal after the trial court ordered a modification of spousal maintenance. She contended that the court erred in finding that her earnings triggered the modification clause of the original spousal maintenance agreement and in the determination of the actual modified award due from William C. Schwartz (“Husband”). The two parties were divorced in March of 2005 by a consent decree with a property settlement agreement (PSA) incorporated into the decree.

The PSA included this clause: “Husband shall pay spousal maintenance to Wife in the amount of $6,666.67 per month directly to Wife for a period of eight (8) years commencing April 1, 2005.” In May of 2009, Husband filed for a modification in spousal support, citing that the Wife was living with her fiancé, decreasing her expenses and that she was purposefully delaying marrying him in order to continue receiving the spousal maintenance. The Wife’s fiancé moved out the house within the month.

Effect of Merger on Modification of Alimony.

Effect of Merger on Modification of Alimony.

In December of 2009, Wife filed for a modification of spousal support, citing that Husband’s income had increased by 30%, that he was not contributing to the care/support of their 23-year-old son (who lives with the Wife and is completely dependent upon her for financial support), Wife’s illnesses could worsen decreasing her chances to earn a living, and that Wife’s age, employment history, and experience affected her earning ability negatively. She requested an increase in spousal maintenance from the original amount to $10,000/month and to extend the duration for an additional ten years.

After several attempts to settle on the Husband’s part, Wife refused to accept Husband’s proposed settlement unless her request for access to internal documentation of the Husband’s company was provided. She refused to sign a confidentiality agreement regarding the requested access to company documents, so the two parties ended up in court.
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Modification of Alimony and Merger

After deliberating regarding the circumstances, the trial court decided to decrease the amount of spousal maintenance to $4,250 due to increased earnings on the part of the Wife. She appealed. Incorporation vs. Merger of Property Settlement Agreement (PSA) with Decree: The basis for the Arizona Court of Appeals’ decision to affirm the decision made by the trial court to decrease spousal maintenance was based on the fact that the PSA was incorporated into the decree; not merged.

If the PSA had been merged it would have become part of the decree making spousal maintenance modifiable only upon changed circumstances. Incorporation of the agreement into the decree has a different purpose. In this type of situation, the agreement will retain the independent status granted by the incorporation, leaving it subject to rights and limitations as pertaining to contract law. The contractual intent of the two parties must be determined.

The Arizona Court of Appeals Affirmed the Trial Court’s Decision to Decrease Spousal Maintenance: Once the text of the agreement was considered as well as changed circumstances on the part of both parties, it is clear that the intent behind the original spousal maintenance amount was based on the belief that Wife’s earning capacity was minimal. As the Wife was receiving income amounting to approximately $60,000/year at the time of the filing, the appeals court found that the trial court did not err in their decision to modify spousal maintenance, in their calculations resulting in the revised award, in their acceptance of the Husband’s assertion that he did not want (or feel it necessary) to support their adult son, in executing a protective order for company documents requested by Wife and on Husband’s behalf, or in awarding partial attorney’s fees to Husband based on unreasonable positions held by wife that forced litigation.

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