Gilman v. Gilman

• Decision Date: 09 April 1998
• Docket Number: 28892,Nos. 27896,s. 27896
• Parties: Richard S. GILMAN, Appellant, v. Marjorie GILMAN, Respondent. Kenneth CALLAHAN, Appellant, v. Valerie CALLAHAN, Respondent.
• Court: Nevada Supreme Court

Page 761

956 P.2d 761

114 Nev. 416

Richard S. GILMAN, Appellant, v. Marjorie GILMAN, Respondent.

Kenneth CALLAHAN, Appellant, v. Valerie CALLAHAN, Respondent.

Nos. 27896, 28892.

Supreme Court of Nevada.

April 9, 1998.

Daniel Marks, Las Vegas, for Appellant Gilman.

Joseph W. Houston, II, Las Vegas, for Appellant Callahan.

Davidson & Myers, Las Vegas, for Respondent Gilman.

Jolley, Urga, Wirth & Woodbury and Kathryn Stryker-Wirth, Las Vegas, for Respondent Callahan.

OPINION

SHEARING, Justice:

Docket No. 28892

Appellant Kenneth Callahan ("Ken") and respondent Valerie Callahan ("Valerie") married on December 31, 1984. Shortly after the wedding, Valerie apparently quit her job as a secretary to stay at home. The parties agreed that Valerie would stay home permanently following the birth of their daughter in 1988 or 1989. Ken earned $125,000 in 1992 and $110,000 in 1993 in his position as a mortgage lender.

On July 31, 1992, Valerie filed a complaint for divorce in Clark County. Beginning in November 1992, she received $500 in temporary spousal support every other week pursuant to a court order. On July 27, 1994, the district court increased this amount to $700 biweekly.

After a three-day divorce trial in September 1994, the district court issued an order increasing Valerie's spousal support to $2,000 per month for twenty-four months, then to $1,500 per month for the following thirty-six months. The court found that Valerie had given up her career to raise the couple's child, that Ken had more than twenty-five years experience in his profession, and that Valerie's earning capabilities would never approximate those of Ken. The separate divorce decree approved by the court states that Ken's obligation to pay spousal support shall terminate upon his death or Valerie's remarriage. There is no reference to cohabitation.

After entry of the divorce decree, Valerie and her daughter moved to Reno with Chuck Maraden ("Chuck"). On March 28, 1996, Ken filed a motion to modify the decree of divorce to, inter alia, terminate spousal support based upon the allegation that Valerie and Chuck were cohabiting and "acting in every way as if they were married except the legal solemnization of the marriage." Ken argued that this cohabitation constituted a change of circumstances under NRS 125.150.

On April 30, 1996, at a hearing on the motion, Valerie admitted that she was romantically involved with Chuck and cohabitated with him, but stated that he did not support her financially. She also declared that she shared monthly living expenses with Chuck, that she paid for all of her daughter's expenses, that Chuck had loaned her money, that she had signed promissory notes for the loans, and that Ken had failed to meet his financial obligations to her. The record shows that Ken's gross monthly income in 1996 was $6,500.

On May 14, 1996, the district court issued an order denying Ken's motion to terminate alimony. Ken filed a timely notice of appeal from the May 14 order.

Docket No. 27896

Appellant Richard S. Gilman ("Richard") and Marjorie Gilman ("Marjorie") married in Brighton, Massachusetts on April 25, 1963. During the marriage, Richard worked as a certified public accountant and Marjorie remained at home. In 1989, Richard's annual salary was approximately $60,000.

On August 7, 1989, Richard filed for divorce in Clark County district court. On November 26, 1990, the district court approved the decree of divorce negotiated by the parties. The decree states that "[s]pousal support shall terminate upon the death or remarriage of [Marjorie] and the court will consider the issue of spousal support in the event of co-habitation by [Marjorie] with an adult male who significantly contributes to her support." Richard agreed to pay spousal support of $1,500 per month.

From some time in 1991 until November 1993, Marjorie lived off and on in Las Vegas with her friend-boyfriend, Tom Westmoreland ("Tom"), at Tom's house. From April or May 1993 until November 1993, Marjorie lived full-time with Tom, paid him $400 per month in rent and paid for her telephone bill and some of the food bill. Thereafter, Marjorie and Tom moved to Massachusetts. Marjorie purchased a house, making a down payment with money she received from the sale of the Las Vegas marital residence she shared with Richard. The title to the Massachusetts house is in Marjorie's name alone; Tom has no ownership interest in it. Since November 1993, Tom has been living in the Massachusetts house with Marjorie.

By the time of her deposition in March 1994, Marjorie had been unable to secure a job in Massachusetts. She also had no immediate plans to continue a job search.

In addition to the spousal support, Marjorie also receives $4,000 to $8,000 per year in payments from an irrevocable family trust established for the benefit of herself, her parents, and her siblings.

In early 1994, Tom began working full time in a car dealership making $8.00 per hour. Prior to that, Tom was either collecting unemployment or working odd jobs. Tom does not pay rent, food bills, or other living expenses at the Massachusetts house. Apparently, Tom uses his salary to make his car payment and to make payments on the home he owns in Las Vegas. Tom does carpentry work around the house which, according to Marjorie, is a "fair exchange" for the free rent and food. Tom and Marjorie have separate bank accounts; however, they have put both of their names on the two accounts, allegedly for "emergency purposes." Marjorie has loaned Tom small amounts of money on occasion.

By March 1994, Richard's income had increased to $9,325 per month.

On December 6, 1993, Richard filed a motion to terminate his spousal support payment to Marjorie based on changed circumstances. Richard declared in an affidavit that Marjorie had been cohabiting with Tom for two years and that she had "chosen not to remarry to avoid the cohabitation provision [of the divorce decree]." Richard alleged that these facts were sufficient to warrant termination of spousal support.

On July 25, 1995, the district court denied Richard's motion. The court found that Tom had not significantly contributed to Marjorie's support, that Nevada law contained no presumption that spousal support should terminate if the recipient cohabits with another person, and that legal termination of spousal support would arise only upon death of one of the parties or remarriage of the recipient spouse. The court also noted that parties to a divorce "are free to impose whatever conditions they wish to define the term of alimony." Richard has appealed the district court's decision denying his motion to terminate alimony.

DISCUSSION

Richard and Ken contend that cohabitation constitutes a changed circumstance under NRS 125.150, particularly where the cohabitant's finances have any effect, positive or negative, upon the recipient spouse's finances. ¹ Thus, they contend that the district court erred in refusing to modify or terminate spousal support in their respective cases. ²

Both Marjorie and Valerie concede that financial contributions by a cohabitant might constitute a change of circumstances under NRS 125.150. However, Marjorie argues that the express provisions of her divorce decree should control and that Richard failed to make a showing that Tom significantly contributed to her support. Valerie argues that she presented ample evidence that her financial condition did not improve, and even worsened, during her cohabitation and thus that no changed circumstances occurred.

NRS 125.150 provides, in relevant part:

7. If a decree of divorce ... provides for specified periodic payments of alimony, the decree or agreement is not subject to modification by the court as to accrued payments. Payments ... which have not accrued at the time a motion for modification is filed may be modified upon a showing of changed circumstances, whether or not the court has expressly retained jurisdiction for the modification.

This court reviews a district court's ruling on a motion to modify spousal support for an abuse of discretion. DuBois v. DuBois, 92 Nev. 595, 595, 555 P.2d 839, 839 (1976).

The current majority rule regarding the effect of post-divorce cohabitation on spousal support, at least in jurisdictions where no specific statute covers that situation, appears to be that the right to receive spousal support becomes subject to modification or termination only if the recipient spouse's need for the support decreases as a result of the cohabitation. Gayet, v. Gayet, 92 N.J. 149, 456 A.2d 102, 104 (1983); see also Wendy S. Ricketts, The Relevance of Premarital and Postmarital Cohabitation in Awarding Spousal Support, 7 Divorce Litigation 150, 154 (1995); Annotation, Divorced Woman's Subsequent Sexual Relations or Misconduct as Warranting, Alone or With Other Circumstances, Modification of Alimony Decree, 98 A.L.R.3d 453 (1980 & Supp.1996). Most jurisdictions following the majority rule have determined that some financial dependence by the alimony recipient upon the third-party cohabitant likely warrants a reduction in spousal support. See Gayet, 456 A.2d at 104; Ricketts, supra, at 154. Similarly, those jurisdictions also hold that alimony payments used to benefit the cohabitant should be eliminated or reduced to meet the recipient spouse's actual needs. See e.g., In re Marriage of Tower, 55 Wash.App. 697, 780 P.2d 863, 866-67 (1989). As stated by the New Jersey Supreme Court: "modification [of spousal support] for changed circumstances resulting from cohabitation [is warranted] only if one cohabitant supports or subsidizes the other under circumstances sufficient to entitle the supporting spouse to relief." Gayet, 456 A.2d at 104.

Under this "economic needs" test, the amount of spousal support reduction, if any, depends upon a factual examination of the financial effects of the cohabitation on the recipient spouse. See Ricketts, supra, at 154. Shared living arrangements,...