Crater v. Oliver
201 A.3d 582
| D.C. | 2019Background
- Crater and Oliver divorced in 2011; their Term Sheet set alimony at $5,000/month but allowed modification upon an involuntary substantial change in circumstances.
- In 2015 Crater was involuntarily terminated and moved to modify alimony; the Superior Court adopted an 11%-of-gross-income formula for future alimony after finding his income fell.
- The July 26, 2017 judgment applied the 11% formula to Crater’s 2016 gross income, yielding an alimony obligation of $34,930 for 2016 by including roughly $63,000 realized from exercised stock options.
- Crater appealed, arguing the Superior Court abused its discretion by including gains from exercised stock options in 2016 gross income and by effectively forcing him to liquidate assets awarded in the divorce.
- The D.C. Court of Appeals reviewed whether the trial court abused its discretion in treating 2016 stock-option gains as part of Crater’s gross income for alimony purposes and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether gains from exercise/sale of stock options realized in 2016 may be included in gross income for alimony | Crater: stock-option gains are capital/lumpy and not regular income; assets assigned in divorce should not be treated as income to satisfy alimony | Oliver/Superior Court: stock-option gains are income-like, may be treated as gross income, and evidence showed Crater regularly received/exercised options | Court: No abuse of discretion — stock-option gains properly included in 2016 gross income |
| Whether the court improperly forced liquidation of assets awarded in divorce | Crater: court effectively required him to exhaust/divested assets to pay support | Oliver: court did not require future liquidation; it simply counted gains already realized in 2016 | Court: No. The court used gains Crater already realized; it did not compel exercise of options |
| Whether child-support guidelines limit inclusion of capital gains absent regularity | Crater: D.C. Child Support Guideline treats capital gains as income only if a regular source | Oliver: Guideline also defines gross income broadly and lists lump-sum items (bonuses, severance) as income | Court: Trial court reasonably relied on Guideline and evidence showing regularity; inclusion was permissible |
| Whether findings lacked substantial evidentiary support | Crater: insufficient proof that options were recurring or taxed as compensation | Oliver: testimony and past exercises (2013, 2014) supported inference of regularity | Court: Findings had substantial evidence and reasonable basis; affirmed |
Key Cases Cited
- Leftwich v. Leftwich, 442 A.2d 139 (D.C. 1982) (trial court has broad discretion in alimony determinations)
- Ford v. Castillo, 98 A.3d 962 (D.C. 2014) (alimony award reviewed for abuse of discretion)
- Araya v. Keleta, 65 A.3d 40 (D.C. 2013) (standards for appellate review of alimony)
- Johnson v. United States, 398 A.2d 354 (D.C. 1979) (abuse-of-discretion review: consider relevant factors and support for conclusions)
- Lasche v. Levin, 977 A.2d 361 (D.C. 2009) (investment payouts included as income only if regular)
- Slaughter v. Slaughter, 867 A.2d 976 (D.C. 2005) (trial court may include lump-sum settlement proceeds in gross income)
- Butts v. Butts, 192 A.2d 294 (D.C. 1963) (alimony awards need a reasonable basis in the evidence)
- Cefaratti v. Cefaratti, 315 A.2d 142 (D.C. 1974) (findings upheld when supported by substantial evidence)
- Wooters v. Wooters, 911 N.E.2d 234 (Mass. App. Ct. 2009) (income from exercised stock options treated as employment income)
- Hiett v. Hiett, 158 S.W.3d 720 (Ark. Ct. App. 2004) (future exercisable options may be considered in net income)
- In re Dolan, 786 A.2d 820 (N.H. 2001) (exercised stock options analogous to bonuses and includable in income)
- Seither v. Seither, 779 So. 2d 331 (Fla. Dist. Ct. App. 1999) (stock options can be considered as income)
Affirmed.