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Court Throws Life Preserver to Alimony Payors Struggling to Stay Afloat

Mills v. Mills, 447 N.J. Super 78 (Ch. Div. 2016).
In the context of divorce proceedings, many are familiar with the concept of “alimony”: the requirement of the higher-earning spouse of the marriage to make payments to the lesser-earning spouse in order to maintain his or her post-divorce support. The amount of alimony paid and received, as well as the term of the alimony payments, are both dependent on the specific facts of each individual case. Specifically, the New Jersey statute outlines various factors which the attorneys or the Judge must consider in formulating an alimony obligation. Whether the parties ultimately agree upon an alimony amount and term, or the Judge imposes this obligation, it is common for one party to make alimony payments to the other for a set period of time. But, what happens when the alimony payment is no longer possible, due to the obligor’s loss of his or her job or a reduction of the salary held at the time of the divorce?

New Jersey case law has long held that an alimony obligation may be modified upon a showing of a “change in circumstance.” A reduced salary or complete loss of income (if not temporary) may warrant a reduction of alimony. However, this situation often presents the obligor with a Catch-22 in light of the recent amendments to the alimony statute. The statute provides for the court’s ability to consider the obligor’s documented, good faith efforts to obtain replacement employment or to pursue an alternative occupation. While the obligor remains responsible to actively search for comparable employment, the opportunity to take a lower-paying job may arise. If the obligor accepts such new employment at a reduced salary, and thereafter moves to reduce his alimony obligation, the supported spouse would likely argue that the obligor is underemployed. On the other hand, if the obligor were to decline an offer for a lower-paying job in order to continue searching for a higher-paying position, the supported spouse may argue that the obligor turned down an opportunity to earn at least some amount of income that could be used toward his continuing support obligation.

The recently-published case of Mills v. Mills, from Ocean County, addresses this dilemma. In Mills, Judge Jones provided a common-sense analysis for courts to consider in determining whether to grant an obligor’s request to reduce his or her alimony obligation. The obligor-Husband (“Mr. Mills”) lost his job of twelve years as a district sales manager, earning about $108,000 per year. Under the parties’ divorce agreement, Mr. Mills was obligated to pay to Ms. Mills $330 per week in alimony for a term of eight years. After the involuntary loss of his job, Mr. Mills accepted a position for a lower salary of about $70,000 with benefits and a discretionary bonus. He then applied for a reduction of alimony. Ms. Mills opposed the motion, asserting that Mr. Mills failed to sufficiently demonstrate that he could not continue to earn at least $108,000, as he had prior to his loss of employment.

The Court, in its analysis of prior case law and review of recent amendments to the statute, utilized a practical two-step inquiry:

“First, was the supporting spouse’s choice in accepting a particular replacement employment opportunity objectively reasonable under the totality of the circumstances? Second, if so, what if any resulting support adjustment should occur that is fair and reasonable to both parties, given their respective situations?”

While the Court clarified that each case is fact-sensitive, it reasoned that the focus on this two-step inquiry was a logical supplement to the factors enumerated in the statute. The Mills court ultimately concluded that Mr. Mills made legitimate, good faith efforts to obtain new employment in the same or similar field soon after losing his job and that his decision to accept a significantly lower-paying job was in fact “reasonable and appropriate under the circumstances” of the case. His motion to reduce his alimony obligation was granted and it was reduced to an amount commensurate with his current income. The comprehensive decision even addressed the possibility of Mr. Mills’ salary increasing. Judge Jones ordered that he notify Ms. Mills in writing of any such change and that the parties exchange financial information every year.

While this case is not binding upon trial courts, it does provide for a common-sense approach to a difficult scenario. Whether this analysis will be widely utilized by other trial judges faced with similar situations remains to be seen. However, for those ex-spouses attempting, in good faith, to comply with their alimony obligation to the fullest extent possible, it may provide the life preserver they need to prevent them from going down like the Titanic.

 

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