On March 26th, the court of appeals reversed a trial court's decision to enter a judgment of divorce that included conditions regarding termination that were not included in the settlement placed on the record. This case illustrates how important it is to fully state the parties' agreement on the record in open court and to avoid making assumptions that "what we usually expect" as conditions for termination of alimony will also belong in the judgment.
In this case, the Plaintiff husband's lawyer put the parties settlement agreement on the record,
reciting the following pertinent terms to the court:
* * *
"With regard to the alimony provisions, the parties have agreed that Mr. Guiles will pay alimony of not more than $1,050 per month until Mrs. Guiles reaches the age of 60. And it will terminate on her 60th birthday. It will be nonmodifiable as far as Mrs. Guiles is concerned. It is modifiable only to Mr. Guiles and it’s only modifiable if there is a significant modification in his employment or a termination of his employment.
"As the Court is aware, he’s employed at General Motors. If everything continues basically as it is, we will obviously not be petitioning for a modification, but with the current upheaval in the automotive industry, if there is something that results in a dramatic increase or decrease in his income--a decrease, essentially, we wouldhave the right to come back to the Court and ask for a modification of the alimony or spousal support." [Slip opinion, emphasis in the original]
Plaintiff's attorney prepared the judgment of divorce. Despite the terms of the parties’ agreement, the judgment contained a provision that would allow termination of the spousal support award upon the death of either of the parties, defendant’s remarriage, or the defendant co-habitating with an adult, non-relative male.
Defendant challenged the the inclusion of the language concerning remarriage, cohabitation, and plaintiff’s death. However, the trial court overruled her objections, stating:
" 'Obviously, for example, this judgment can be 10—15 pages long. We don’t put every single thing on there. There,--especially with support, there’s tons of provisions that apply. I believe that these are standard provisions that are found in most judgments of divorce. I believe that in negotiating, that these are standard provisions that are included. Accordingly, I’m going to allow those to be in the judgment. I think it’s appropriate and fair under the totality of the
circumstances of the settlement.' "
Defendant wife appealed, arguing that the trial court clearly erred when it found that the additional terms in the spousal support award were “standard provisions that are found in most judgments of divorce” and that the parties intended to include them in their settlement agreement. The court of appeals reversed.
The COA stated that general contract provisions applied, that the parties were bound by their settlement placed on the record in open court absent a showing of fraud, duress, etc. and that the court was not free to modify their unambiguous agreement. The COA also said that nothing in MCL 552.13(2) requires a court to terminate alimony upon the recipient's remarriage.
The part I found interesting was this: Defendant did not appeal termination of alimony upon her death, although I believe that it's clear she could have done so because it was not stated in the parties' settlement. The COA had this to say about the issue of termination upon the Plaintiff's death:
"Similarly, the specific language used by the parties precludes the trial court from adding the provision that terminated spousal support upon plaintiff’s death. While the parties agreed to consider modification of spousal support if plaintiff’s income dramatically decreased, the language used essentially amounted to agreement that the spousal support would be in gross, which is in the nature of a property division and is not subject to modification. See Staple v Staple, 241 Mich App 562, 566; 616 NW2d 219 (2000). An agreement to such non-modifiable spousal support is permissible. Id. at 568-569."
It appears that Plaintiff husband is fortunate that his former wife did not complain about termination upon her death, which apparently remained in the judgment. Without that language, the spousal support would not have been taxable income to the defendant and tax deductible to the husband.
What's the take-away? Never assume. When stating a settlement on the record in open court (or when reducing it to writing to be signed by both parties) carefully consider every condition upon which alimony is meant to be terminated. Otherwise, a judgment could enter that does not include all conditions that the parties may have intended or assumed. Taking a checklist to settlement conferences is a good idea. It helps attorneys remember all of the fine points that need to be tied down in a settlement.
Such checklists are within your reach. Judith Curtis notes in Chapter 10 of Michigan Family Law (referred to the "the Family Law Bible" by many practitioners]:
"See §§10.16–10.20 for lists of the required provisions and many of the optional provisions that may be included in a judgment. See also Monika Holzer Sacks, Divorce Cases in Michigan: A Systems Approach forms 10.1 and 10.2 (ICLE 2d ed 2003 & Supp). A checklist ensures (1) that the attorney covers all areas of concern in negotiations and thus avoids having to either reopen negotiations or explain to the parties that certain previously unmentioned provisions are required by law to be included; (2) that in putting the agreement on the record the attorney does not omit any part of the agreement; and (3) that the written judgment accurately reflects the terms put on the record. Attorneys must be careful that all items of agreement are placed on the record. If anything is left out, the opposing attorney can insist that the record contains the entire settlement and that nothing be added."
Michigan Family Law ch 10 (Hon. Marilyn J. Kelly et al eds, ICLE 6th ed 2004 & Supp)
You may read the COA's opinion in Guiles v Guiles here.