496 S.W.3d 391
Ark. Ct. App.2016Background
- Owen and Mandy Kelly divorced in 2014; they have two minor children and Mandy was awarded custody.
- Trial court ordered Owen (an orthopedic surgeon with ~$20,000 net monthly pay) to pay $7,528/month child support and $9,131/month alimony, a total of $16,659/month.
- Decree included an automatic “escalator clause”: as child support decreased (when children reached majority) Mandy’s alimony would increase to keep total payments at $16,659, ultimately rising to $16,659 when child support ceased.
- Mandy received a $367,000 equal distribution of marital property (about $350,000 remaining) and $12,220 from business interests; she sought $16,659/month in expenses on affidavit.
- The trial court awarded Mandy the full requested amount without explanation; many expense items were unsupported, exaggerated, or nonexistent (e.g., taxes on alimony, excessive vacations, overstated insurance and household costs).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amount of alimony awarded was reasonable | Mandy: needs $16,659/month to meet expenses; trial court correctly awarded requested amount | Owen: award is excessive relative to his income and Mandy’s assets; many expenses unsupported | Reversed and remanded — trial court abused discretion; many expense items unsupported and award must be recalculated |
| Whether court may require payor to pay taxes on alimony | Mandy: trial court can order payment to cover her tax liability | Owen: no basis to require him to pay taxes on Mandy’s taxable alimony | Reversed — trial court abused discretion; alimony is taxable to recipient and deductible to payor, so ordering tax payment was improper |
| Whether an automatic “escalator clause” increasing alimony as child support abates is permissible | Mandy: preserving total support level is appropriate; relies on Jones v. Jones precedent | Owen: automatic increases improperly eliminate requirement to prove changed circumstances for modification | Reversed — automatic increases were an abuse of discretion; modifications require proof of significant changed circumstances |
| Whether Mandy’s property award and ability to work affect alimony necessity | Mandy: lacks employable skills presently and needs support despite property award | Owen: Mandy has substantial property award and ability to work in future; no showing she will need the escalated support | Reversed — presence of substantial property and evidence she could work undermines justification for escalator clause without further proof |
Key Cases Cited
- Mitchell v. Mitchell, 964 S.W.2d 411 (Ark. Ct. App.) (alimony is discretionary and must be reasonable)
- Kuchmas v. Kuchmas, 243 S.W.3d 270 (Ark.) (purpose of alimony is to rectify economic imbalances)
- Gilliam v. Gilliam, 374 S.W.3d 108 (Ark. Ct. App.) (primary alimony factors: need and ability to pay)
- Valetutti v. Valetutti, 234 S.W.3d 338 (Ark. Ct. App.) (no mathematical formula for alimony)
- Wadley v. Wadley, 395 S.W.3d 411 (Ark. Ct. App.) (tax treatment of alimony: taxable to recipient, deductible to payor)
- Jones v. Jones, 447 S.W.3d 599 (Ark. Ct. App.) (child-support abatement may justify later alimony increases where need is established)
- Weeks v. Wilson, 234 S.W.3d 333 (Ark. Ct. App.) (modification of alimony requires a material change in circumstances)
- Hix v. Hix, 458 S.W.3d 743 (Ark. Ct. App.) (burden to show changed circumstances lies with party seeking modification)