Session: June 19, 2019
from the Chancery Court for Shelby County No. D27924 Walter
L. Evans, Judge
appeal involves a former husband's fourth petition to
reduce or terminate his alimony in futuro obligation since
the parties were divorced. When considering the appeal of
husband's third attempt, in Malkin v. Malkin,
475 S.W.3d 252 (Tenn. Ct. App. 2015), this Court reversed the
trial court's reduction of the award and reinstated the
prior alimony obligation. We found that the husband's
retirement was objectively reasonable and constituted a
substantial and material change in circumstances, but we
concluded that the husband failed to prove that the change in
circumstances significantly diminished his financial ability
to pay alimony or his former wife's need for it. Just
months after the Tennessee Supreme Court denied the
husband's application for permission to appeal, he filed
his fourth petition to reduce or terminate his obligation.
The wife filed a counter-petition to increase the award. The
trial court granted the husband's petition, again, and
reduced the award to less than half of its previous amount.
The wife appeals. We reverse and remand for further
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Reversed and Remanded
R. Holyfield, Memphis, Tennessee, for the appellant, Karen
A. Wampler and J. Luke Sanderson, Memphis, Tennessee, for the
appellee, Reed Lynn Malkin.
Dennis McGee, J., delivered the opinion of the court, in
which J. Steven Stafford, P.J., W.S., and Thomas R. Frierson,
II, J., joined.
DENNIS McGEE, JUDGE
Facts & Procedural History
Lynn Malkin ("Husband") and Karen Abrams Malkin
("Wife") were married in 1978. Prior to the
marriage, Wife had worked as a professional ballet dancer and
owned a dance studio for a few years. She also worked at a
restaurant owned by her father. However, Wife spent a
substantial amount of time out of the workforce during the
marriage to serve as primary caretaker for the parties'
two children. Husband worked as an attorney throughout the
marriage. According to Wife, the parties traveled around the
world, they bought whatever they wanted, and she never
thought about money.
filed for divorce in 1996. The chancery court held a two-day
trial in March 1998, and a divorce decree was entered in
April 1998. Husband admitted to inappropriate marital
conduct. The parties' older child was at or near the age
of majority, and Wife was awarded custody of the younger
child. The divorce decree did not contain any findings
regarding Husband's income, but it contained the
following paragraph addressing alimony:
[T]he Court finds, after considering all of the relevant
factors set forth in T.C.A. § 36-5-101, such as the
length of the marriage, [Wife's] age, [Wife's]
education, and other relevant factors, that she is so
economically disadvantaged that rehabilitation is not
feasible or possible, so that the Court awards [Wife] alimony
in futuro in the sum of $3, 500 per month, which shall be
paid beginning April 1, 1998, and the first of every month
thereafter until her death or remarriage[.]
was also ordered to pay $1, 500 per month in child support.
April 2003, five years after the divorce decree was entered,
Husband filed his first petition to reduce or terminate his
alimony in futuro obligation. Husband alleged that "at
the time of the divorce," he was earning a gross income
from his "professional corporation" of $2, 221,
962, and the annual distribution to him from his professional
corporation was $744, 231. For the most recent tax year,
2002, Husband alleged that his professional corporation had
received annual gross income of $882, 650, and it distributed
gross income to him in the sum of $157, 298. Husband alleged
that his taxable income had decreased from $736, 009 in 1998
to only $90, 969 in 2002, for a decrease of 88 percent.
Husband argued that this constituted a substantial and
material change in circumstances justifying a reduction or
termination of his alimony in futuro obligation. He further
alleged that Wife "was not fully employed" at the
time of the divorce decree and that she had refused to work
on a full-time basis since that date.
hearing, the chancery court entered an order addressing
Husband's petition in January 2004. The trial court found
that Husband had a sharp increase in income in 1998 due to
the settlement of one case, but his income was not nearly
that high in the years before or after that settlement. More
importantly, however, the trial court found nothing in the
record to indicate that the 1998 income figure was before the
original chancellor at the time of the divorce trial in March
1998. The trial court found that Husband's taxable income
in the two years prior to the divorce trial equaled $273, 000
in 1997 and $271, 000 in 1996, and this was the information
the court had before it at the divorce trial when it made its
aside the anomaly that occurred in 1998, the trial court
found that Husband's taxable income for the five years
since the divorce (from 1999 to 2003) ranged between
$157, 000 and $281, 000. Recognizing the "up and
down" nature of a law practice, the trial court decided
to calculate Husband's average taxable income for the
past five years, which equaled $221, 894. The trial court
determined that this represented an 18 percent decrease in
income for Husband from the $271, 000 he earned around the
time of the divorce.
trial court also found that at the time of the divorce trial,
Wife had shown her expenses to be approximately $6, 250 per
month. The trial court noted that Wife's current
affidavit of income and expenses reflected only $4, 705 in
expenses, indicating a decrease of 25 percent. Considering
Husband's decrease in income and Wife's decrease in
expenses, the trial court reduced Husband's alimony
obligation by 18 percent, from $3, 500 to $2, 870 per month
effective February 1, 2004. However, the court also ordered
Husband to pay a portion of Wife's attorney's fees.
years later, in 2007, Husband filed his second petition to
reduce or terminate his alimony in futuro obligation. He
alleged that Wife had been unemployed "during most if
not all of the parties' marriage," at the time of
the divorce, and at the time of the last hearing, and he
claimed "it was not foreseeable that she would ever be
employed." Husband alleged that Wife had recently
obtained employment with a ballet school in Nashville and was
believed to be earning at least $25, 000 per year. He argued
that this constituted a substantial and material change in
circumstances warranting reduction or termination of his
alimony obligation. Wife filed a counter-petition seeking an
increase in her alimony obligation.
second modification proceeding lasted three years. The matter
was tried over the course of six days in late 2009. The trial
court's order noted the "excessive amount of legal
energy, talent, and expenses consumed and invested into this
proceeding on both sides." The trial court found that
Husband's average taxable income for the past five years
was $265, 397, nearly as much as he earned at the time of the
original divorce hearing ($271, 000). The court also found that
Wife had "relevant monthly expenses" of $6, 200 per
month, roughly the same amount she had at the time of the
divorce. However, the court found her income to be
approximately $1, 300 per month, and it found that she was
also qualified to receive some social security retirement
benefits because she had reached the age of 64. Considering
these additional sources of income now available to Wife, the
trial court found that the existing alimony award of $2, 870
per month should not be disturbed despite the increase in
Husband's income and Wife's expenses since the last
hearing. Both petitions to modify were denied pursuant to an
order entered in April 2010.
years later, in May 2013, Husband filed his third petition to
reduce or terminate his alimony in futuro obligation. This
time, Husband alleged that he had retired in December 2012
and was only drawing social security and pension funds, so he
could no longer afford to pay Wife alimony in futuro at the
rate of $2, 870 per month. After a very brief hearing in
December 2013, with the entire transcript spanning only 88
pages, the trial court entered an order granting
Husband's petition. The trial court found that Husband
had retired at the age of 67 and that his income was limited
to $8, 000 per month, consisting of $5, 500 from a retirement
account and $2, 500 from social security. The trial court
found that "[Husband] was earning approximately $271,
000.00 per year at the time of the previous modification of
alimony setting that amount at $2, 870 per month and he is
now earning approximately $98, 000.00 per year." As
such, the court found that Husband "suffered at least a
2/3's decrease in income and therefore the alimony in
futuro heretofore awarded should be modified to the sum of
$1, 035.00 per month effective January 1, 2014." Wife
timely filed a notice of appeal to this Court.
appeal, we began by examining the type of alimony awarded to
Wife by the final decree of divorce:
This case involves an award of alimony in futuro. This type
of alimony "is intended to provide support on a
long-term basis until the death or remarriage of the
recipient." Gonsewski [v. Gonsewski],
350 S.W.3d [99, ] 107 [(Tenn. 2011)] (citing Tenn. Code Ann.
§ 36-5-121(f)(1)). Alimony in futuro can be awarded
"when the court finds that there is relative economic
disadvantage and that rehabilitation is not feasible."
Tenn. Code Ann. § 36-5-121(f)(1). In other words,
alimony in futuro is appropriate when one spouse "is
unable to achieve, with reasonable effort, an earning
capacity that will permit the spouse's standard of living
after the divorce to be reasonably comparable to the standard
of living enjoyed during the marriage, or to the post-divorce
standard of living expected to be available to the other
spouse[.]" Tenn. Code Ann. § 36-5-121(f)(1).
An award of alimony in futuro remains in the court's
control for the duration of the award and "may be
increased, decreased, terminated, extended, or otherwise
modified, upon a showing of substantial and material change
in circumstances." Tenn. Code Ann. §
36-5-121(f)(2)(A). The party seeking modification of the
alimony award "bears the burden of proving that a
substantial and material change in circumstances has
occurred." Wiser v. Wiser, 339 S.W.3d 1, 12
(Tenn. Ct. App. 2010) (citing Freeman v. Freeman,
147 S.W.3d 234, 239 (Tenn. Ct. App. 2003)).
"'[W]hether there has been a sufficient showing of a
substantial and material change of circumstances is in the
sound discretion of the trial court.'"
Bogan [v. Bogan], 60 S.W.3d [721, ] 727
[(Tenn. 2001)] (quoting Watters v. Watters, 22
S.W.3d 817, 821 (Tenn. Ct. App. 1999)).
Malkin v. Malkin ("Malkin I"),
475 S.W.3d 252, 257-58 (Tenn. Ct. App. 2015) (footnote
respect to this first prong of the analysis, we discussed the
circumstances surrounding Husband's recent retirement and
whether his retirement constituted a substantial and material
change in circumstances:
It is well-settled that "when an obligor's
retirement is objectively reasonable, it does constitute a
substantial and material change in circumstances-irrespective
of whether the retirement was foreseeable or voluntary-so as
to permit modification of the support obligation."
Bogan, 60 S.W.3d at 729. However, it is equally
clear that "an obligor cannot merely utter the word
'retirement' and expect an automatic finding of a
substantial and material change in circumstances. Rather, the
trial court should examine the totality of the circumstances
surrounding the retirement to ensure that it is objectively
reasonable." Id. In the case before us, the
trial court found that Husband "retired at sixty seven
(67) years of age from the practice of law," but the
court did not make any finding regarding whether
Husband's retirement was objectively reasonable. On
appeal, Wife seems to imply that Husband's retirement
either was not "bona fide" or was not objectively
reasonable, noting that he maintained his law license in
"active" status and continued to advertise his
services as a mediator. Husband testified that he officially
closed his law office on March 1, prior to the filing of his
petition for modification on May 31, 2013. He testified that
he would be interested in doing mediation work but said he
had not received any calls for such work. Husband testified
that his law practice essentially "dried up"
because his work was primarily worker's compensation
cases involving employees of Northwest/Delta, and
Northwest/Delta no longer maintained a workforce in Memphis.
He testified that he experienced periods of several months
without any new clients, and he did not earn enough to cover
his overhead during the last five months he practiced.
Husband also testified that he shared office space and
expenses with a gentleman who was retiring, and the building
they leased had been sold, so in order to continue practicing
he would have been required to lease a new office and hire
new staff. Husband was 67 years old and dealing with some
health issues. Considering these circumstances, Husband's
retirement was bona fide and objectively reasonable. . . .
Id. at 258. We held that "Husband's
retirement constituted a substantial and material change in
circumstances," but, we added, "this finding does
not end our inquiry." Id.
we turned to the second prong of the alimony modification
"[E]ven when an obligor is able to establish that a
retirement is objectively reasonable, and therefore that it
constitutes a substantial and material change in
circumstances, the obligor is not necessarily entitled to an
automatic reduction or termination of his or her support
obligations." Bogan, 60 S.W.3d at 730. The
alimony statute provides that an award of alimony in futuro
"may" be modified upon a showing of a substantial
and material change in circumstances. Tenn. Code Ann. §
36-5-121(f)(2)(A). "As evidenced by its permissive
language, the statute permitting modification of support
awards contemplates that a trial court has no duty to reduce
or terminate an award merely because it finds a substantial
and material change in circumstances." Bogan,
60 S.W.3d at 730. Instead, the change in conditions resulting
from retirement merely allows the obligor the opportunity to
demonstrate that reduction or termination of the award is
appropriate. Id. The "actual modification of
the award, if any, is addressed to the trial court's
discretion after considering the relevant factors listed in
Tennessee Code Annotated section 36-5-[121(i)]."
Id. at 727. Although the statute lists numerous
factors for consideration, "the two most important
considerations in modifying a spousal support award are the
financial ability of the obligor to provide for the support
and the financial need of the party receiving the
support." Id. at 730.
Id. at 258-59 (footnote omitted).
noted that the trial court made few findings to justify its
reduction of the award from $2, 870 to $1, 035 per month.
Id. at 259. Initially, we noted that the trial court
made an incorrect factual finding regarding Husband's
income, as the trial court found that "'[Husband]
was earning approximately $271, 000.00 per year at the
time of the previous modification of alimony setting that
amount at $2, 870.00 per month and he is now earning
approximately $98, 000.00 per year.'" Id.
(emphasis added). We explained that this finding was
factually incorrect because Husband was actually earning
approximately $271, 000 at the time of the divorce, and at
the time of the modification to $2, 870 in 2004, he was
earning $221, 894. Id. at 260.
event, however, we found that the trial court applied an
incorrect legal standard by focusing solely on the decrease
in Husband's income without making "any findings
regarding Husband's expenses, Wife's income,
Wife's expenses, or any other factors relevant to setting
an alimony obligation." Id. The trial court had
simply considered Husband's decrease in income and
reduced the alimony award by a corresponding percentage.
Id. We explained:
Deciding whether an obligor has the ability to provide
spousal support requires consideration of more than the
obligor's income. See, e.g., Evans v. Young, 280
S.W.3d 815, 827 (Tenn. Ct. App. 2008) (finding that an
obligor still had the "ability to pay" the same
level of alimony despite his retirement and significant
reduction in income). A decrease in income "should not
be viewed in a vacuum." Proctor v. Proctor, No.
M2006-01396-COA-R3-CV, 2007 WL 2471504, at *5 (Tenn. Ct. App.
Aug. 31, 2007). To the contrary, we must consider the
obligor's "ability to pay" the alimony
obligation, which can be impacted by a variety of factors.
Id. "Income is but one of the factors to be
considered." Id. The obligor's expenses are
another important factor for consideration. Id.
Moreover, "the trial court should carefully consider the
relevant factors of Tennessee Code Annotated section
36-5-[121(i)] in deciding by what amount, if any, the award
should be modified." Bogan, 60 S.W.3d at 734.
The need of the receiving spouse cannot be overlooked; it is
"an important consideration in modification cases."
Id. at 730.
Id. at 261.
the trial court had erred in its factual findings and also
applied an incorrect legal standard, we reviewed the limited
evidence presented at the hearing to determine whether
modification of the alimony award was appropriate.
Id. From our review of the record, we concluded that
Husband failed to meet his burden of demonstrating that
modification was warranted. Id. Although he had
experienced a decrease in income due to his retirement, he
was still receiving $8, 166 per month from retirement
benefits and social security. Id. Husband's
retirement funds were valued at approximately $1.2 million,
and he decided how much to withdraw from the accounts based
on online formulas and annuity tables. Id. If he
continued his current level of withdrawals, his retirement
funds would last until his mid-eighties, which corresponded
to his life expectancy. Id.
despite Husband having the burden of proof, "he did not
produce any evidence of his monthly expenses in an effort to
demonstrate an inability to pay his current level of
alimony." Id. The limited evidence he presented
regarding his expenses showed that his current monthly income
enabled him to pay Wife's alimony and all of his expenses
without going into debt. Id. He was paying the bulk
of the household expenses for himself and his new wife, who
was 49 years old and had accepted a voluntary buyout enabling
her to stop working during the same month as Husband.
Id. When asked about his deposition testimony in
which he estimated that he and his wife spend $1, 500 per
month on groceries, he responded,
All right. You asked me a bunch of questions about expenses
in the deposition.... And to be honest with you, I wasn't
prepared to answer those because I only thought the only
issue involved in this was the fact that my income had
dropped while I was-a significant amount and the fact that my
ex-wife had done nothing in terms of rehabilitation.
Id. at 261-62. Even at the modification hearing,
Husband testified, "I would be guessing at what each
expense is.... I couldn't break down exactly what my
expenses are." Id. at 262. Although he
testified to charging some expenses to credit cards, he was
able to pay off those balances at the end of every month.
Id. His expenses included considerable discretionary
spending, and he was voluntarily paying off his
daughter's student loan of $20, 000. Id. at 261.
Husband claimed to have "cut back" on some
"social things," but he was still traveling to
France every year. Id. at 262. We found that
"Husband's lifestyle indicated that he had no
trouble paying for luxuries in addition to meeting his
obligations," and we concluded that he "still has
the financial ability to pay Wife's current level of
alimony in the sum of $2, 870 per month." Id.
considered Wife's financial need for the current level of
alimony. She was 69 years old at the time of the hearing in
2013, and her most recent full-time employment was four years
earlier when she worked as a secretary at the ballet school,
earning $22, 728 per year. Id. The ballet school
"let [her] go" when a new director was hired and
brought in his own staff. Id. Wife had only minimal
income since then, earning $3, 585 in 2010; $1, 023 in 2011;
and $312 in 2012. Id. She had worked at a real
estate company for $12 an hour but was replaced by someone
with an accounting degree. Id. At the time of trial,
she was working three to six hours per week at a yarn store.
Id. She attributed her lack of meaningful employment
to her advanced age, health issues, and her lack of
education. Id. She had begun drawing social security
benefits in the past year and was receiving around $1, 150
per month. Id. Aside from her social security
benefit, minimal paycheck, and alimony payment, she had no
other source of income. Id. She had no savings and
no retirement and said she did not really own anything
besides thirty-year-old furniture and an old car.
Id. at 262-63. Wife testified that she lived
"[v]ery frugally" and was unable to afford
vacations or other luxuries. Id. at 262. When asked
if her monthly expenses had decreased since the last hearing,
Wife said, "I can promise you it's less. I don't
do anything extra." Id. at 263. She testified
that some months she had a deficit, and some months she had a
surplus, but she used any surplus to pay on a $150, 000 tax
debt she owed to the IRS or for attorney's fees from
defending against Husband's petitions to modify
"every couple of years." Id. She believed
she would have to live with one of her children if her
alimony was significantly reduced. Id. Considering
all these facts, we concluded that Wife had continued
financial need for her current level of alimony. Id.
Even though her expenses had decreased somewhat, we said this
did not warrant a further decrease in her alimony payment.
Id. (citing Richards v. Richards, No.
M2003-02449-COA-R3-CV, 2005 WL 396373, at *11 (Tenn. Ct. App.
Feb. 17, 2005) ("Wife's frugality should not be held
against her."); Claiborne v. Claiborne, No. C/A
744, 1988 WL 5684, at *2 (Tenn. Ct. App. Jan. 29, 1988)
(declining "to penalize wife for being prudent and
in Malkin I, we concluded that Husband's
retirement did constitute a substantial and material change
in circumstances, but we found that he failed to prove that
the change in circumstances significantly diminished his
financial ability to pay alimony or Wife's need for it.
Id. "Despite Husband's retirement," we
said, "he is financially able to continue to pay spousal
support at pre-retirement levels." Id. We
reiterated that "'[e]ven a material change of
circumstances does not necessarily require a reduction of
alimony, if the payor still has the ability to pay the
support awarded and the need of the payee has not
diminished.'" Id. (citing Willet v.
Taeubel, No. E2014-00364-COA-R3-CV, 2014 WL 5812338, at
*8 (Tenn. Ct. App. Nov. 10, 2014)). We reversed the trial
court's reduction of alimony to $1, 035 and reinstated
the previous obligation of $2, 870 per month. Id. We
held that if ...