Opinion
15–P–1587
02-06-2017
Susan Michelle WHITE v. Michael HARMON.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Susan Michelle White (wife), appeals from a supplemental judgment of divorce, challenging her alimony award. She argues that the Probate and Family Court judge erred in determining (1) the income of the defendant, Michael Harmon (husband), and (2) the length of the marriage. We affirm.
1. Alimony award . a. Background . The judge based the alimony award on the following findings of fact. In 1988, after graduating from Oklahoma State University with a bachelor's degree in finance, the wife founded Tulsa Computer Group, which bought, remanufactured, and sold computer equipment. In 2007, the wife stopped working full-time to stay home with the parties' daughter and the wife's two sons from a previous marriage. She remained with the company on a part-time basis until November 1, 2012, drawing a yearly salary of $24,000. The judge found that between April, 2012, when the parties separated, and May, 2014, the wife "made no real efforts to find gainful full-time employment." In May, 2014, she began working full-time in charge of business development at a "stock option education company," earning a total of $12,000 for eight months of work, based solely on commissions.
Between July, 2013, and January, 2014, she earned $1,700 helping market new software.
Because the wife failed to seek employment despite her "skills and training in computer technology, sales and business administration," the judge found that she was "grossly underemployed." In calculating the alimony award, the judge attributed income to the wife, finding that her potential earning capacity was $25,000 per year. The wife accepts this determination.
The husband has a bachelor's degree in business management and a background in computer equipment sales. He started working at the wife's company in 2003 or 2004 and was responsible for sales, while the wife concentrated mainly on the operation of the company. In 2007, he took over operations and was involved in sales on a more limited basis. The husband changed the name of the company to Technology Consulting Group (TCG) in 2010. At that time, TCG had between eight and ten employees. At the time of trial in late 2014, it had one consultant and six employees. The husband's salary from TCG fluctuated from $103,189 in 2010 to $72,001 in 2013. At the time of trial, the husband's gross weekly salary was $930.23, or $48,371.96 per year. The judge attributed income to the husband, finding that he had the potential to earn $92,000 per year—"the salary that his senior salesperson is receiving."
b. Standard of review . In reviewing an alimony award under G. L. c. 208, §§ 48 – 55, we conduct a two-step analysis. See Adams v. Adams , 459 Mass. 361, 371 (2011). "First, we examine the trial judge's findings to determine whether all relevant factors were considered (and whether irrelevant factors were disregarded)." Hassey v. Hassey , 85 Mass. App. Ct. 518, 524 (2014). Next, we decide whether "the reasons for the judge's conclusion are apparent and flow rationally from the findings and rulings." Williams v. Massa , 431 Mass. 619, 631 (2000).
We will not reverse the judge's determination of a spouse's earning capacity unless clearly erroneous. Feathler v. Feathler , 33 Mass. App. Ct. 924, 926 (1992). "A judge has considerable discretion when awarding alimony," Vedensky v. Vedensky , 86 Mass. App. Ct. 768, 773 (2014) (quotation omitted), and the judge's "determinations as to alimony ... will not be reversed unless plainly wrong and excessive." Hassey v. Hassey , supra .
c. Determination of husband's income . The wife assigns error to the judge's justification for attributing income to the husband and her related failure to consider the husband's actual available income from TCG. For the purposes of determining alimony, a party's "income shall be defined as set forth in the Massachusetts child support guidelines." G. L. c. 208, § 53(b ), inserted by St. 2011, c. 124, § 3. The applicable guidelines define income as "gross income from whatever source," and include salaries and wages, commissions, bonuses, and income derived from businesses. Massachusetts Child Support Guidelines § I.A (effective Aug. 1, 2013) (2013 Guidelines). In addition, "the court may attribute income to a party who is unemployed or underemployed." G. L. c. 208, § 53(f ). See C.D.L . v. M.M.L ., 72 Mass. App. Ct. 146, 153 n.5 (2008) ( "[T]he attribution of income in the alimony context is not different in rationale from that in the child support context").
The judge found that the husband's salary from TCG dropped from as high as $103,189 annually in 2010 to $72,001 in 2013 and $48,372 at the time of trial. Noting this decline, the judge also found that the husband "has not reduced his staff, or increased the time that he spends on sales which would both reduce expenses and increase his income." Similarly, despite his falling salary, the husband had not modified his lifestyle, had taken vacations and cruises since the separation, and continued to have "large personal expenses for skiing, entertainment, vacations, lottery tickets, sports/equipment, and the child's individual entertainment and gifts."
The judge's determination that the husband's salary was far below his actual earning capacity, and that he had "the ability to earn at least $92,000 a year which is the salary that his senior salesperson is receiving," is not clearly erroneous. The judge's conclusion that the husband was underemployed, and her decision to attribute income to him, "flow[ed] rationally from the findings and rulings." Williams v. Massa , 431 Mass. at 631. See Canning v. Juskalian , 33 Mass. App. Ct. 202, 211 (1992) ("Estimation is inherent in the attribution of future earnings").
The wife's real objection to the judge's rationale is that the judge considered the husband's income to be his stated salary as an employee of TCG, rather than the income available to him as its owner. The husband controls TCG, its expenses, and the salary he allocates to himself and others. The wife's claim depends on a showing that TCG had available profits, or avoidable expenses, that the husband could tap for additional income. However, the judge's findings are to the contrary.
The judge carefully evaluated TCG's finances and determined that it lost $42,325 in 2010, lost $59,730 in 2011, had profits of $61,153 in 2012, and lost $125,766 in 2013. With respect to 2012, the only profitable year, the judge further found that while revenues had increased, "the adjusted gross income after salaries was similar to the two prior years." The wife asserts in her brief, as she did at trial, that substantially more income from TCG was available to the husband. The judge specifically rejected this claim, finding the figures the wife used to calculate the husband's income to be "overly inflated." The judge concluded, "The Court does not find that the income available to the Husband, even with his payment of personal expenses, comes close to [the] amount [put forward by the wife]." In her brief, the wife does not explain how she arrived at her estimate of the husband's income, and her only record citation refers us to the proposed findings of fact that the judge rejected. The wife provides no basis for us to conclude that the judge's determination of the husband's income from TCG was clearly erroneous. See Mass.R.A.P. 16(a)(3)-(4), (e), as amended, 428 Mass. 1603 (1999) (facts and arguments in brief must be supported with appropriate references to parts of record relied upon); O'Meara v. Doherty , 53 Mass. App. Ct. 599, 606 (2002).
Income includes "payment of personal expenses by a business in the course of employment ... if such payments are significant and reduce personal living expenses." 2013 Guidelines § I.C. The judge found that the husband and wife had paid "many personal expenses from TCG over the years," and that these payments "have clearly reduced the Husband's expenses and inflated the ‘losses' of TCG." Nonetheless, the judge found that the majority of TCG's expenses were for legitimate business purposes, and the wife provides no basis to challenge this finding as clearly erroneous. Moreover, the judge took the payments of personal expenses into account in attributing income to the husband above his stated salary.
d. Rental income . The wife also contends that the judge erred by not including the husband's rental income in her calculation of his gross income. See 2013 Guidelines § I.A.26 (income includes "net rental income"). We disagree.
Under the parties' separation agreement, the wife retained the marital home in Gloucester, including an apartment over the garage, which the judge found "had the potential to earn $21,600 in rental income annually or $415.38 per week." The husband retained a three-family rental property in Gloucester and a property in Topsfield, which is rented to TCG. The judge found that both of these properties produced rental income. The judge credited the husband's evidence that he "receives $248.23 a week in net rental income" from the Gloucester property. The judge found that the Topsfield property "does not provide [the husband] with a positive cash flow." On balance, the judge decided "not [to] consider either [party's] rental/trust[ ] income in determining the alimony obligation though it will consider the payments in reducing the parties['] reported expenses"—a decision that favored the wife. Far from "ignor[ing] the net rental income of the Husband," as the wife contends, the judge acted within her discretion in concluding that the parties' rental income and associated expenses roughly balanced out.
The Topsfield property is held by TCG Topsfield Realty Trust, which pays disbursements to the husband, its sole trustee.
Likewise, we disagree with the wife's assertion that the judge "did not properly consider the Wife's economic contribution to the marriage by bringing TCG and her lost economic opportunity as a result of the Husband receiving one hundred percent of it post-divorce." As an initial matter, the husband retained the business as a result of the parties' separation agreement. Moreover, the judge found that the husband took sole responsibility for operating the company, and that the wife was misusing the company's funds for stock trading, during the marriage.
2. Length of the marriage . The parties were married on March 18, 2001, and the wife served the husband with a complaint for divorce on August 3, 2012. The judge found that the length of the marriage was eleven years and five months, or 137 months. The judge ordered the husband to pay the wife alimony for 95 months, "which represents 70% of the number of months of the marriage." The wife contends that the judge abused her discretion by failing to increase the duration of alimony to account for the nineteen months that the parties lived together before their marriage.
General Laws c. 208, § 48, inserted by St. 2011, c. 124, § 3, defines the "[l]ength of the marriage" as "the number of months from the date of legal marriage to the date of service of a complaint or petition for divorce." However, "the court may increase the length of the marriage if there is evidence that the parties' economic marital partnership began during their cohabitation period prior to the marriage." Ibid . For marriages lasting between ten and fifteen years, "general term alimony shall continue for not longer than 70 percent of the number of months of the marriage." G. L. c. 208, § 49(b )(3), inserted by St. 2011, c. 124, § 3. The statute thus "establishes presumptive termination dates for general term alimony, which are calculated based on the length of the marriage." Duff–Kareores v. Kareores , 474 Mass. 528, 535 (2016).
To increase the length of the marriage to account for cohabitation, a judge "must consider the factors set forth in G. L. c. 208, § 49(d )(1), which are determinative of whether the parties share a ‘common household,’ in order to ascertain whether the parties were participating in an economic marital partnership." Ibid . See George v. George , 476 Mass. 65, 70 (2016) (requiring written findings "based on evidence to determine whether the ‘interests of justice’ require alimony payments to continue beyond the durational limits of" G. L. c. 208, § 49 [b ] ).
The G. L. c. 208, § 49(d )(1), factors are as follows: "(i) oral or written statements or representations made to third parties regarding the relationship of the persons; (ii) the economic interdependence of the couple or economic dependence of [one] person on the other; (iii) the persons engaging in conduct and collaborative roles in furtherance of their life together; (iv) the benefit in the life of either or both of the persons from their relationship; (v) the community reputation of the persons as a couple; or (vi) other relevant and material factors."
While judges "may" decide to increase the length of the marriage, if supported by the evidence and written findings, judges have no reciprocal duty to justify a decision not to do so. Here, we discern no abuse of discretion in the judge's decision not to exceed the maximum presumptive length of the marriage as defined in G. L. c. 208, § 48.
Supplemental judgment affirmed .