In this spousal support case, the trial court relied on the wrong legal framework to reduce the defendant’s support obligation and, therefore, the matter must be remanded so the proper legal precedent can be applied, the Michigan Court of Appeals has ruled.

The defendant ex-husband in Elliott v Elliott (Docket No. 353269) retired from his job, resulting in a loss of income. He filed a motion in the Oakland County Circuit Court to terminate his spousal support obligation to the plaintiff, his ex-wife. The trial court reduced the defendant’s spousal support payment from $3,000 per month to $1,500 per month but did not completely eliminate it.

The defendant appealed, claiming his support obligation should have been eliminated and his pension income should not have been considered when assessing the modification of support.

The Court of Appeals held the trial court erroneously applied Walker v Walker, 155 Mich App 405 (1986), when making its ruling. Instead, the trial court should have applied McCallister v McCallister, 205 Mich App 84 (1994), which “is both directly on point and, as it is a published decision by this Court issued after November 1, 1990, it is precedentially binding,” the appeals court said.

Judges Michael J. Riordan, Michael J. Kelly and Douglas B. Shapiro were on the Court of Appeals panel that issued the unpublished opinion.

Wrong Legal Analysis

On appeal, the defendant argued the trial court improperly considered his pension income when assessing his spousal support obligation. The defendant maintained that because he received a portion of the pension “free and clear” of any right, title, claim or interest that the plaintiff may have had, the trial court should not have considered the income generated from the pension when reviewing his motion to terminate spousal support.

In support of his argument, the defendant relied on the decision in Walker, where the divorce judgment awarded the defendant a pension and retirement benefits “free and clear from any and all claims” on the part of the plaintiff. In Walker, the Court of Appeals held that because the divorce judgment awarded the pension benefits to the defendant as property, his pension could not be “recategorized as income in determining his ability to pay alimony.”

The defendant also relied on the decision in Weaver v Weaver, 172 Mich App 257 (1988) to support his argument. In Weaver, the divorce judgment awarded the defendant a pension “free and clear” of any claims by the plaintiff. The Court of Appeals in Weaver ruled that it was improper “to reclassify [the pension] as income for purposes of determining alimony because it would allow the plaintiff ‘to obtain part of an asset which was already awarded to the pension-receiving spouse and for which the spouse not receiving the pension had already obtained offsetting property.’”

When determining whether to modify the defendant’s support obligation, the trial court in this case relied on Walker. However, this was erroneous, the Court of Appeals said, because Walker was decided in 1986. “Decisions issued by this Court before November 1, 1990, are not precedentially binding. MCR 7.215(J)(1). Published cases by this Court decided before November 1, 1990, may nevertheless be considered persuasive authority. … However, if there is binding authority on point, the trial court is required to apply it.”

Instead, the 1994 decision in McCallister is both directly on point, is a published decision issued after November 1, 1990, and “is precedentially binding,” the Court of Appeals said. Looking to McCallister, the appeals court noted the divorce judgment in that case awarded the plaintiff his retirement “free of all claims” the defendant may have had against it. The plaintiff appealed, claiming it was “improper” for the trial court to consider his retirement income. “The McCallister Court noted that a number of cases - including Walker and Weaver - had held that such consideration was improper, but noted that in Torakis v Torakis, 194 Mich App 201 (1992), … this court held ‘that it was not error to consider the former spouse’s property in assessing the ability to pay alimony.’”

Rather than following the Walker and Weaver line of cases, the McCallister panel applied the reasoning in Torakis, the Court of Appeals explained. “McCallister, therefore, rejected the persuasive authority in Walker, and relying on Torakis and the plain language of the relevant statutes, held that a court evaluating a motion to modify spousal support must consider all the circumstances of the case, including retirement income awarded to a party to a divorce ‘free and clear’ of any claims of the other party.”

As a result, the trial court in the present case applied the incorrect legal framework by relying on Walker instead of McCallister, the Court of Appeals held. “Because it is unclear what extent, if any, the trial court’s decision to exclude over $40,000 of [the defendant’s] annual income from its analysis of the issue, it is necessary to reverse and remand this matter to the trial court.” On remand, the trial court “shall reconsider the defendant’s motion to terminate spousal support using the correct legal framework, which requires the court to consider all the relevant circumstances of the case.”

The Court of Appeals added, “Even if McCallister was not binding, we would not find Walker persuasive. It essentially held that, through a consent divorce agreement, the parties to a divorce could waive the trial court’s statutory duty to consider all circumstances when evaluating a spousal-support decision. Such a holding is void as against public policy.”