James Martin Dell'orco v. Laura Anne Dell'orco
329672
| Mich. Ct. App. | Jan 24, 2017Background
- James and Laura Dell’Orco divorced in 2012; their settlement agreement stated James would retain a structured-settlement annuity that paid $3,250/month and a final lump-sum of $439,750 in 2015.
- The settlement characterized the annuity as James’s separate property and said child support would be reviewed after the final lump-sum payment.
- After the monthly payments ceased and James received the lump sum, James moved to modify child support; Laura argued the lump sum should be included as income for support calculations.
- The trial court referred the matter to the Friend of the Court (FOC) and instructed the FOC to exclude the lump-sum annuity payment from James’s income; the FOC calculated support accordingly.
- Laura appealed the referral order, arguing the Michigan Child Support Formula (MCSF) defines annuity distributions and amounts owed as income and thus the lump sum should be included.
Issues
| Issue | Plaintiff's Argument (James) | Defendant's Argument (Laura) | Held |
|---|---|---|---|
| Whether the final lump-sum annuity payment is "income" for child support under the MCSF | Lump-sum is separate property under the settlement and thus not income; structured settlements are not taxable income | The lump sum is a distributed payment from an annuity and money owed by a legal entity, both defined as income in the MCSF | Lump-sum is income and must be included in child support calculations |
| Whether the settlement agreement precludes treating the lump sum as income | Settlement labels the annuity as James’s separate property and places it in property settlement section | Settlement did not address exclusion of the lump sum from child support; child support review was anticipated | The property-characterization in the settlement does not bar treating the payment as income for support purposes |
| Whether other concessions (debt assumption, college payment) show parties agreed to exclude lump sum from support | James assumed debts and college expenses in reliance on lump-sum; this was the tradeoff | Agreement contains no express bargain to exclude the lump sum from income for support | No express agreement shown; such parental bargains cannot override child support rules |
| Relevance of tax treatment of structured settlements | Structured settlements are not taxable income, so lump sum should not be treated as income for support | MCSF defines income differently from tax code; tax treatment is immaterial | Tax status irrelevant; MCSF definitions control |
Key Cases Cited
- Peterson v. Peterson, 272 Mich App 511 (review of child support formula is a question of law)
- Shinkle v. Shinkle, 255 Mich App 221 (trial court generally must apply MCSF formula)
- Clarke v. Clarke, 297 Mich App 172 (court must follow plain language of MCSF)
- Thompson v. Merritt, 192 Mich App 412 (annuity payment is income under support statutes)
- Good v. Armstrong, 218 Mich App 1 (settlement payments can be income but courts may consider particular facts)
- Borowsky v. Borowsky, 273 Mich App 666 (distinguishing income from non-income assets under MCSF)
- Mikonczyk v. Detroit Newspapers, Inc., 238 Mich App 347 (settlement agreements are binding contracts)
- Holland v. Trinity Health Care Corp., 287 Mich App 524 (contract interpretation gives words their ordinary meaning)
- Keyser v. Keyser, 182 Mich App 268 (courts enforce negotiated property settlements absent fraud or inequity)
- Holmes v. Holmes, 281 Mich App 575 (parents cannot contract away a child’s right to adequate support)
Reversed and remanded for proceedings consistent with the opinion; the final lump-sum annuity payment must be considered income under the MCSF.