Case: Barbara J. Pohl v. Michael G. Pohl
Case Summary by Mike Kohlhaas, Bingham Greenebaum Doll
HELD: Indiana Supreme Court holds that a spousal maintenance provision in a settlement agreement, regardless of its grounds, is modifiable only if the agreement so provides. This decision resolves the question left open in Voigt, which is whether a trial court has the authority to modify a spousal maintenance provision of a settlement agreement if the obligation were in the nature of a support award that the court had legal authority to issue in the first place (e.g., incapacity-based maintenance).
HELD: The modification of agreed upon maintenance awards are subject to the “substantial and continuing change in circumstances” standard.
FACTS AND PROCEDURAL HISTORY:
Husband and Wife divorced in 2009. During the marriage, Husband had been receiving Social Security disability payments as a result of a back injury. The parties’ original divorce agreement addressed property division, along with custody and support of their minor child. However, several months later, the parties also submitted to the trial court, and the trial court approved, an addendum to their final Decree which obligated Wife, beginning in June 2013, to pay $4,000 per month spousal maintenance to Husband “until further order of the court or agreement of the parties.”
In 2012, as the obligation to start making these maintenance payments approached, Wife filed a petition to modify the spousal maintenance obligation, citing an improvement in Husband’s financial circumstances (e.g., his Social Security income increased substantially, and Husband’s fiancée was making substantial contributions to household finances). Wife requested that the $4,000/mo obligation be reduced to $1,000/mo. After a hearing, the trial court declined to modify Wife’s spousal maintenance obligation, noting that the agreement was not intended to be modifiable and that Wife had not demonstrated fraud, duress, or mistake to set it aside. Wife appealed.
Last December, the Court of Appeals concluded that the basis for the maintenance in the addendum to the Decree arose from Husband’s disability. Therefore, unlike in Voigt, the trial court had the authority to modify the maintenance order, including based upon a substantial and continuing change in circumstances.
The Indiana Supreme Court granted transfer. The Court essentially weighed the competing interests of “principles of contract finality” and the risks of undue hardship arising from unforeseen circumstances. Engaging in essentially a cost-benefit analysis, the Court concluded: “presuming the contract to be modifiable would defy grown-ups’ freedom of contract more frequently than it would save disabled spouses from being stuck with an inadequate award or able-bodied spouses from an award that had become oppressive…. even when a court could have unilaterally ordered an identical maintenance award, we will presume the parties intended their agreement to be final and non-modifiable unless they specifically provided otherwise.”
However, in this particular case, the parties’ did contemplate the possibility of future court modification, with the added phrase in their agreement: “….until further order of the court or agreement of the parties.” This language renders the order modifiable in the future by the trial court. Here, the trial court declined to modify the maintenance order in part based upon Wife’s failure to prove fraud, duress, or mistake. However, since Wife was seeking to modify an order, not have it set aside, that standard should not been applied and instead the trial court should have used the standard of “substantial and continuing change of circumstances.”
The trial court’s order denying Wife’s requested modification was reversed, with instructions on remand to consider whether the evidence established substantial and continuing circumstances that make the agreed upon maintenance amount unreasonable and, if so, determine an appropriate modification.
To view the text of this opinion in its entirety, click here: Barbara J. Pohl v. Michael G. Pohl
James A. Reed and Michael R. Kohlhaas of Bingham Greenebaum Doll represent clients in a wide spectrum of relationship transition and wealth planning matters, including premarital agreements, estate planning, cohabitation, separation, divorce (especially involving high net worth individuals and/or complex asset issues), custody, parenting arrangements, adoption, and domestic partnerships. Bingham Greenebaum Doll, a multidisciplinary law firm serving regional, national, and international clients, is the fourth-largest law firm in Indiana. The firm’s main practices include corporate, property, litigation, labor, government law, and personal services law. Visit the firm’s website at www.bgdlegal.com.