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SJC-12240
DEREK L. YOUNG vs. JOY G. YOUNG (and a consolidated case1).
Norfolk. March 6, 2017. - September 25, 2017.
Present: Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ.2
Divorce and Separation, Alimony, Findings.
Complaints for divorce filed in the Norfolk Division of the Probate and Family Court Department on January 29 and February 5, 2013.
After consolidation, the case was heard by Jennifer M.R. Ulwick, J.
The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.
David H. Lee (Jessica M. Dubin also present) for the husband. David E. Cherny (Erin M. Shapiro also present) for the wife. W. Sanford Durland, III, & Glenn M. Schley, amici curiae, submitted a brief.
1 Joy G. Young vs. Derek L. Young. 2 Justice Hines participated in the deliberation on this case prior to her retirement. 2
Jennifer C. Roman & Johnathan P. Diggin, for Women's Bar Association, amicus curiae, submitted a brief.
GANTS, C.J. The Probate and Family Court judge in this
divorce action made two rulings that are the primary subjects of
this appeal. First, the judge found that, where the husband's
income from his employment was "on an upward trajectory," the
wife may only maintain a standard of living "consistent with the
marital lifestyle (which was one where the parties['] needs
expanded in accordance with the increasingly available income)"
by an award of general term alimony that increases commensurate
with the increase in the husband's income. Second, the judge
found that, because of "the complex nature of [the husband's]
compensation over and above his base salary and bonus," and
because of "the constantly shifting nature of [the husband's]
compensation," "it is reasonable and fair in the circumstances"
to award alimony to the wife in the amount of thirty-three per
cent of the husband's gross income, rather than a fixed amount.
We conclude that, where the supporting spouse (here, the
husband) has the ability to pay, the need for support of the
recipient spouse (here, the wife) under general term alimony is
the amount required to enable her to maintain the standard of
living she had at the time of the separation leading to the
divorce, not the amount required to enable her to maintain the
standard of living she would have had in the future if the 3
couple had not divorced. We also conclude that, although there
might be circumstances where it is reasonable and fair to award
a percentage of the supporting spouse's income as general term
alimony to the recipient spouse, those circumstances are not
present in this case. We therefore remand the case to the
Probate and Family Court with instructions to reevaluate the
alimony judgment in light of our opinion and enter a new
judgment accordingly.3
Background. Derek L. Young (husband) and Joy G. Young
(wife) had been married for nearly twenty-four years when the
husband filed a complaint for divorce in the Probate and Family
Court in January, 2013. The wife filed a complaint for divorce
one week later, and the two actions were effectively treated as
one. In October, 2013, the judge ordered the husband to pay
temporary alimony in the amount of $48,950 per month. After a
four-day trial, the judge made voluminous findings of fact and
issued an amended judgment of divorce on September 25, 2015. We
summarize only those findings relevant to the issues on appeal.
The judge found that the husband works as a "high level
executive" with a financial institution who receives substantial
compensation in various forms. Apart from his annual base
salary (which was $350,000 in 2014) and an annual bonus (which
3 We acknowledge the amicus briefs submitted by the Women's Bar Association, and by attorneys W. Sanford Durland, III, and Glenn M. Schley. 4
was $1.6 million in 2013), he receives compensation through at
least seven different compensation programs or share plans,
including several types of stock options, a special bonus
program, investor entity units, and opportunities to purchase
shares of common stock at a discount. The compensation programs
vary in how consistently they produce income and in the amount
of income they produce. Some investment assets that are earned
are liquid and immediately transferrable, and some may not be
transferred or converted to cash until sometime in the future.
The amount earned, above and beyond the base salary and annual
bonus, through these compensation programs is both considerable
and variable. The husband's gross income from 2008 through 2012
was approximately $1.53 million in 2008, $2.07 million in 2009,
$3.81 million in 2010, $7.96 million in 2011, and $7.76 million
in 2012.
The judge found that the parties agreed early in their
marriage that the husband would work and the wife would "be a
stay-at-home parent and not be employed outside the home." As a
result, the wife has not worked outside the home since 1992, and
the judge found that she "has no ability to be employed at a
level to allow her to maintain a lifestyle post divorce similar
to that maintained during the marriage without alimony."
The husband's substantial compensation package allowed the
parties to enjoy "an affluent, upper-class station in life and 5
marital lifestyle during their marriage." The couple's expenses
increased as the husband's income increased during the course of
his employment. Before the separation, the parties were living
in a lavish, eight-bedroom home, driving luxury vehicles, and
regularly dining out three to four times a week at expensive
restaurants. They had purchased a summer home in Nantucket,
were spending "tens of thousands of dollars on articles of
clothing and handbags" from designer stores, and regularly
enjoyed expensive vacations.
The judge found that, after the parties separated, the wife
maintained a level of spending similar to what she spent during
the marriage. According to the wife's October 8, 2013,
financial statement, the wife's weekly expenses totaled $8,728
(or $453,856 per year) after subtracting expenses related to the
children's college tuition and room and board. However,
according to the wife's September 10, 2014, financial statement,
the wife's weekly expenses had increased to $12,575.77 (or
$653,940 per year). The judge found that "many of [the] wife's
expenses" were supported by the evidence at trial, but she
lacked "personal knowledge regarding her own expenses," certain
expenses were "overstated," and her "representations of expenses
on her financial statements [were] not an accurate reflection of
her needs." The judge did not make a finding regarding her
actual weekly or annual expenses or needs. 6
The wife sought alimony in the amount of $713,781.49 per
year. After considering the husband's ability to pay, the
wife's needs, and the other factors required by G. L. c. 208,
§ 34, the judge did not set a fixed amount of general term
alimony but instead ordered the husband to pay the wife each
year alimony in the amount of thirty-three per cent of his
annual gross income.4 The judge included within the husband's
gross income the husband's base salary and annual bonus, as well
as several of the additional components of the husband's
compensation package, including but not limited to the husband's
deferred bonus, special bonus, special retention bonus, special
dividends, and distributions for payment of taxes.5 The judge
reasoned, "Because the parties lived with the expectation and
reality that [the husband's] bonus level is on an upward
trajectory, and given the fact that their needs historically
followed this upward trajectory, and due to the complex nature
4 The judge determined that the husband's alimony obligation would extend until September 18, 2031, the death of one of the parties, or the wife's remarriage, whichever came first. 5 Under G. L. c. 208, § 53 (b), for purposes of determining the amount of alimony, with exceptions not relevant here, "income shall be defined as set forth in the Massachusetts child support guidelines." See Zaleski v. Zaleski, 469 Mass. 230, 242-244 (2014). Under the guidelines, "income is defined as gross income from whatever source," and specifically includes "salaries," "bonuses," "interest and dividends," and "perquisites of in-kind compensation to the extent that they represent a regular source of income." Child Support Guidelines § I(A) (Aug. 1, 2013). See Snow v. Snow, 476 Mass. 425, 431 (2017). 7
of [the husband's] compensation over and above his base salary
and bonus, it is reasonable and fair in the circumstances to use
a percentage for the future alimony particularly given the
constantly shifting nature of [the husband's] compensation."
The judge appointed a special master to oversee compliance with
the judgment and to assist in resolving disputes that might
arise.
The husband appealed, and we transferred the case to this
court on our own motion.
Discussion. 1. Determination of need for support.
"Alimony" is defined in the Alimony Reform Act of 2011,
St. 2011, c. 124 (act), as "the payment of support from a
spouse, who has the ability to pay, to a spouse in need of
support for a reasonable length of time, under a court order."
G. L. c. 208, § 48. Neither "ability to pay" nor "need of
support" is a defined term under the act. Rather, the act
identifies a number of factors that a judge must consider in
"determining the appropriate form of alimony and in setting the
amount and duration of support," and gives the judge the
discretion to consider other factors that the judge deems
"relevant and material." G. L. c. 208, § 53 (a).6 "A judge has
6 General Laws c. 208, § 53 (a), provides: "In determining the appropriate form of alimony and in setting the amount and duration of support, a court shall consider: the length of the marriage; age of the parties; health of the parties; income, 8
broad discretion when awarding alimony under the statute,"
Zaleski v. Zaleski, 469 Mass. 230, 235 (2014), citing Heins v.
Ledis, 422 Mass. 477, 480-481 (1996), but the act establishes
presumptive parameters: the amount of general term alimony
"should generally not exceed the recipient's need or [thirty] to
[thirty-five] per cent of the difference between the parties'
gross incomes established at the time of the order being
issued." G. L. c. 208, § 53 (b).
A judge must consider and weigh all the relevant factors,
but where the supporting spouse has the ability to pay, "the
recipient spouse's need for support is generally the amount
needed to allow that spouse to maintain the lifestyle he or she
enjoyed prior to termination of the marriage." Pierce v.
Pierce, 455 Mass. 286, 296 (2009). See Heins, 422 Mass. at 480,
quoting Inker, Alimony and Assignment of Property: The New
Statutory Scheme in Massachusetts, 10 Suffolk U. L. Rev. 1, 8
(1975) (noting "the inherent limitation of alimony that it be
only for 'the amount necessary to support the wife in the manner
of living to which she has been accustomed'"); Grubert v.
Grubert, 20 Mass. App. Ct. 811, 819 (1985) ("The standard of
employment and employability of both parties, including employability through reasonable diligence and additional training, if necessary; economic and non-economic contribution of both parties to the marriage; marital lifestyle; ability of each party to maintain the marital lifestyle; lost economic opportunity as a result of the marriage; and such other factors as the court considers relevant and material." 9
need is measured by the 'station' of the parties -- by what is
required to maintain a standard of living comparable to the one
enjoyed during the marriage"). Two of the statutory factors in
§ 53 (a) are "marital lifestyle" and the "ability of each party
to maintain the marital lifestyle." Both focus on the spouses'
lifestyle during the marriage. See Zaleski, 469 Mass. at 243
("Because 'need' is a relative term for purposes of the act, it
must be measured in light of mandatory considerations that
include the parties' marital lifestyle"). See also 1 Lindey and
Parley on Separation Agreements and Antenuptial Contracts
§ 22.63[2][e] (2d ed. 2017) ("standard of living experienced
during the several years before the divorce" relevant for
alimony determination is preseparation standard of living); L.D.
Wardle & L.C. Nolan, Fundamental Principles of Family Law 715
(2d ed. 2006) ("the historic baseline for measuring 'need' has
been the standard of living the parties enjoyed during the
marriage"). Thus, both the act and the case law interpret
"need" in terms of the marital lifestyle the parties enjoyed
during the marriage, as established by the judge at the time of
the order being issued, in this case, the judgment of divorce.7
7 The other factors the judge must consider in making an alimony determination under G. L. c. 208, § 53 (a), may also bear on the analysis of need, such as the health and age of the parties. See, e.g., 1 Lindey and Parley on Separation Agreements and Antenuptial Contracts § 22.63[2][l] (2d ed. 2017) (must evaluate need in light of other criteria, such as party's 10
Where, as so often happens, the couple's collective income
is inadequate to allow both spouses to maintain the lifestyle
they enjoyed during the marriage after their household is
divided in two through divorce, "the recipient spouse 'does not
have an absolute right to live a lifestyle to which he or she
has been accustomed in a marriage to the detriment of the
provider spouse.'" Pierce, 455 Mass. at 296, quoting Heins, 422
Mass. at 484. Instead, "[t]he judge must consider all the
statutory factors and reach a fair balance of sacrifice between
the former spouses when financial resources are inadequate to
maintain the marital standard of living." Pierce, supra. The
act presumptively provides that the "fair balance of sacrifice"
means that the supporting spouse generally should not be
required to pay more than thirty-five per cent of the difference
between the parties' gross incomes. G. L. c. 208, § 53 (b).
Here, given the husband's substantial ability to pay, the
determination of alimony rested solely on the wife's needs, that
is, the amount necessary to allow her to maintain the lifestyle
she enjoyed prior to the termination of the marriage. Where, as
here, the husband's income grew considerably over the years and
the marital lifestyle grew with it, the wife's need for alimony
reflects the need to enjoy the more expensive lifestyle she had
grown accustomed to before the marriage ended. See Zaleski, 469
health). 11
Mass. at 243; Wardle & Nolan, Fundamental Principles of Family
Law, supra at 715. The judge here appropriately recognized that
"the parties' needs expanded in accordance with the increasingly
available income" during the marriage, but the judge erred in
determining that the wife's need for support is to continue to
expand after the divorce commensurate with the anticipated
"upward trajectory" of the husband's income. "[T]he award must
reflect the parties' marital lifestyle," not the marital
lifestyle the parties might have enjoyed had they stayed
together. See Zaleski, supra at 242. Even if the parties
enjoyed an upwardly mobile lifestyle for the duration of their
marriage, nothing in the language of the statute or our case law
suggests that the recipient spouse is entitled, by way of
alimony, to enjoy a lifestyle beyond what he or she experienced
during the marriage.8,9
8 In light of this conclusion, we need not address the husband's argument that the judge was clearly erroneous in finding that the husband's income would continue to grow on an "upward trajectory." Even if it did, the wife's alimony would still be limited to the amount needed to allow her to continue to live the lifestyle she enjoyed at the end of the marriage. 9 We do not address what alimony would be appropriate in the quite different circumstances of a divorce where one spouse was on the cusp of being able to afford a more expansive lifestyle after separating from the spouse who had financially supported him or her while he or she completed medical school or business school. The alimony sought in this case was general term alimony. In the circumstances we describe in this footnote, G. L. c. 208, § 48, provides for "reimbursement alimony," defined as "the periodic or one-time payment of support to a 12
2. Percentage-based alimony award. The judge ordered that
the husband pay the wife alimony in the amount of thirty-three
per cent of his various sources of income. The husband contends
that the percentage-based award is "self-modifying" because the
amount of alimony he must pay under its terms varies with his
income from year to year. He contends that a "self-modifying"
order is prohibited by G. L. c. 208, § 49 (e), which permits
modifications in the amount of alimony only upon a showing of "a
material change of circumstances warranting modification."
We reject the argument, as we have before in a different
context, that a judge lacks statutory authority to order a
supporting spouse to pay alimony in an amount that may vary
according to variables or contingencies set forth in the order,
such as the income of the supporting spouse, the rate of
inflation, or, where the spouses reside in different countries,
recipient spouse after a marriage of not more than [five] years to compensate the recipient spouse for economic or noneconomic contribution to the financial resources of the payor spouse, such as enabling the payor spouse to complete an education or job training." See Drapek v. Drapek, 399 Mass. 240, 248 (1987) (where wife "postponed her educational and professional plans in order to put her husband through [medical] school," judge did not abuse discretion in awarding wife 9.35 per cent of gross income or at least $60,000 with time limit of five years).
We also note that different factors and principles govern the equitable division of property in a divorce. See G. L. c. 208, § 34 (identifying factors judge "shall consider" in division of property in divorce); Heins v. Ledis, 422 Mass. 477, 482 (1996) ("The concepts of alimony and property division have been historically viewed as separate and distinct"). We address only the issue of general term alimony. 13
changes in the currency exchange rate. See Stanton-Abbott v.
Stanton-Abbott, 372 Mass. 814, 815-816 (1977) (affirming
judgment requiring semiannual increases in alimony by one-half
of any percentage increase in British retail price index). We
do not consider every change in the amount of payment under such
an alimony order to be a modification of the judgment, which we
recognize would require a showing "by the party favorably
affected that conditions [have] changed justifying the
modification, and . . . procedural due process for the party
adversely affected." Id. at 816. "When time brings about the
change of situation of the parties, or trips the contingency, or
alters the basis of the calculation, as provided in the
judgment, we should not regard the corresponding shift in the
rate of payment as a modification of the judgment which requires
new justification in another court proceeding. The judgment has
remained the same although its variable terms, which were
presumably argued and deliberated before they were approved,
have produced results which in some sense are new." Id.
As we have also recognized, the fact that the statute does
not bar alimony orders with variable or contingent provisions
does not mean that such orders are "advisable on the merits, or
compatible with the fundamental purposes of alimony." Id. at
817. Here, the percentage-based award ran afoul of the act and
therefore was an abuse of discretion not because of its variable 14
nature, but because it was intended to award the wife an amount
of alimony that exceeds her need to maintain the lifestyle she
enjoyed during the marriage.
There may be cases in which a variable or contingent award
is warranted, but such cases are the exception rather than the
rule, and must be justified by the special circumstances of the
case. See id. (parties' circumstances "presented a special
case"). In most cases, setting the amount of alimony at a fixed
amount, subject to modification upon a material change in
circumstances, is preferable in order to provide "a clean break
between the parties" and avoid "continued strife and
uncertainty" (citation omitted). Cf. Dewan v. Dewan, 399 Mass.
754, 757 (1987) (involving division of property). A variable or
contingent award may make alimony judgments more difficult to
enforce, especially where the variable or contingency is
inadequately defined or where it may not be clear whether the
contingency has been triggered. See, e.g., Wing v. Wing, 549
So. 2d 944, 947-948 (Miss. 1989) (finding of contempt improper
where separation agreement did not specify precisely which
consumer price index governed progressive increases in child
support). See also Breiner v. Breiner, 195 Neb. 143, 145-146
(1975); Provenzano v. Provenzano, 71 A.D.2d 618, 618 (N.Y.
1979). Awarding alimony as a percentage of income may encourage
income manipulation in order to reduce the alimony obligation. 15
See Baccanti v. Morton, 434 Mass. 787, 800 (2001) (potential for
fraud where spouse may collude with employer to manipulate
compensation in view of divorce proceedings). Relatedly, where
alimony is a percentage of income, proving contempt becomes more
difficult because, instead of simply proving that payments have
fallen short of a specified amount and that the supporting
spouse had the ability to pay, the parties may be forced to
litigate what is and is not "income." See, e.g., In re Marriage
of Winne, 239 Ill. App. 3d 273, 284-285 (1992); Mabee v. Mabee,
159 Vt. 282, 285-286 (1992) (considering whether capital gains
are income). We note that the judge thought it necessary to
appoint a special master, paid for by the parties, to ensure
compliance "[d]ue to the complicated nature of . . . the ongoing
obligations between the parties regarding the payment of
alimony." Not everyone can afford to pay a special master.
We do not suggest that variable or contingent awards are
warranted only in extraordinary circumstances. We recognize
that returning to court to modify a judgment may be an
unnecessary and costly burden where it is based on a foreseeable
change of circumstances that can be anticipated in the alimony
judgment. For instance, where the inflation rate is
significant, a cost-of-living adjustment based on a specific
consumer price index will result in changes to the actual amount
of alimony paid, but is intended to keep the original award of 16
alimony constant in terms of real purchasing power. Several
Massachusetts cases have affirmed alimony judgments that
included cost-of-living adjustments. See, e.g., DeMatteo v.
DeMatteo, 436 Mass. 18, 22, 39 (2002); Mailer v. Mailer, 390
Mass. 371, 375 (1983); Moore v. Moore, 389 Mass. 21, 22, 26
(1983); Stanton-Abbott, 372 Mass. at 815-818.
There may also be special circumstances where an alimony
award based on a percentage of the supporting spouse's income
might not be an abuse of discretion, such as where the
supporting spouse's income is highly variable from year to year,
sometimes severely limiting his or her ability to pay, and where
a percentage formula, averaged over time, is likely not to
exceed the needs of the recipient spouse. In Wooters v.
Wooters, 42 Mass. App. Ct. 929, 929-931 (1997), the Appeals
Court affirmed a judgment that ordered the husband, who was a
partner in a large law firm, to pay alimony in the amount of
one-third of his gross employment income because he "was about
to undergo a serious operation, and it was uncertain how much he
would be able to work," and because his compensation from his
law firm "had considerable fluctuations." The court found that
these circumstances "presented a special case" that suggested
the use of a "self-executing formula." Id. at 931, quoting
Stanton-Abbott, 372 Mass. at 817.
The fluctuations in the husband's income in this case do 17
not present a comparable "special case" warranting the judge's
percentage-based formula for two reasons. First, given the
substantial financial assets available to the husband, the
fluctuations in his annual income do not materially affect his
ability to pay a fixed alimony award that would meet the wife's
needs. Second, as earlier noted, the percentage-based formula
was intended to allow the wife's lifestyle to become more lavish
than the marital lifestyle as the husband's income increases
over time, not to approximate over time the amount needed to
meet the wife's need to maintain her marital lifestyle.10
Conclusion. The case is remanded to the Probate and Family
Court with instructions to reevaluate the alimony judgment in
light of our opinion and enter a new judgment accordingly.
So ordered.
10 Because we reverse the percentage-based judgment in this case, we need not address the husband's argument that the provision in paragraph 6(c) of the amended judgment, which awards the wife a thirty-three per cent interest in any shares the husband subsequently acquires with his bonus compensation and imposes a constructive trust for the wife's benefit regarding these shares, represents an impermissible award of property acquired after the marriage.