In re Marriage of Murphy

• Docket Number: 22-1326
• Decision Date: 07 June 2023
• Parties: IN RE THE MARRIAGE OF PATRICIA F. MURPHY AND MICHAEL J. MURPHY Upon the Petitionof PATRICIA F. MURPHY, Petitioner-Appellee, And Concerning MICHAEL J. MURPHY, Respondent-Appellant.
• Court: Iowa Court of Appeals

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IN RE THE MARRIAGE OF PATRICIA F. MURPHY AND MICHAEL J. MURPHY Upon the Petitionof PATRICIA F. MURPHY, Petitioner-Appellee, And Concerning MICHAEL J. MURPHY, Respondent-Appellant.

No. 22-1326

Court of Appeals of Iowa

June 7, 2023

Appeal from the Iowa District Court for Shelby County, John J Haney, Judge.

A former husband appeals the denial of his petition to modify spousal support.

Amanda Heims, Council Bluffs, for appellant.

Robert J. Engler of Cambridge Law Firm, P.L.C., Atlantic, for appellee.

Heard by Ahlers, P.J., Chicchelly, J., and Blane, S.J. ^[*]

BLANE SENIOR JUDGE.

Michael Murphy appeals the district court's denial of his petition to modify his spousal support to ex-wife Patricia following the dissolution of their marriage in 2005. The district court denied the petition because Michael failed to show that either his ability to pay or Patricia's needs underwent a substantial change in circumstances justifying eliminating the award. We find, as did the district court that Michael failed to carry his burden to show a substantial change and affirm.

I. FACTS AND PRIOR PROCEEDINGS.

Michael and Patricia were married for twenty-five years and divorced in 2005. They agreed to a stipulated decree which included an award of alimony to Patricia:

[Michael] shall pay to [Patricia] traditional alimony in the sum of $2,750.00 per month beginning April 1, 2005 and continuing . . . until the death of either [Patricia or Michael] or the remarriage of [Patricia]. The receipt of alimony shall not be affected by any co-habitation with a member of the opposite sex that may occur on the part of [Patricia].

In November 2015 Michael sought to modify his alimony payment on the grounds that he was moving toward retirement, his health was deteriorating and Patricia no longer needed the support. See In re Marriage of Murphy, No. 160831, 2017 WL 2465788, at *2 (Iowa Ct. App. June 7, 2017). Our court affirmed the district court and found no substantial change in circumstances warranted a modification of the alimony. Id. at *4. In January 2021, Michael again filed to modify his alimony obligation asserting basically the same bases.

Michael and Patricia married in 1980. Michael had served in the Army in the Vietnam War from 1968 to 1971. Afterward, he went to college and then law school. He was in private practice until his retirement. Patricia has a high school education. She had two children from a previous marriage. When the children were very young, Patricia worked in retail and office work, including with the Nonpareil newspaper in Council Bluffs. After her marriage to Michael, they agreed that she would stay home and care for the children and the home. She also did clerical work in Michael's law office, although she did not receive wages for that. Around 1997, they bought their first rental property. Patricia took full control of managing and renting that property, although she never drew a salary. Over the years, they purchased six more rental properties.

At the time of the divorce, Michael reported monthly income of $8584.25. Patricia's financial statement at the time said she had no income because she was managing the rental properties with no salary and had no other employment. Her tax returns, however, showed earnings between roughly $23,434 and $32,164 per year starting in 2011. In the 2015 modification action, she reported $2000 in rental income for a total of $6061.63 in monthly income. She listed expenses at $7202.

In the dissolution, to offset Michael's law practice receivables, Patricia kept five of the rental properties and Michael received two. Patricia also got a share of Michael's National Guard pension. They also split several investment and retirement portfolios. Since the divorce, Patricia did not obtain employment but continued to manage the rentals and dabbled in antiques but does not report any income from sales. She has paid off all mortgages on her rental properties as well as the marital home, which she was also awarded. Her investments have appreciated substantially in the seventeen years since their divorce.

After the divorce, Michael married Kimberly, who is also an attorney. Together they started the Murphy and Murphy Law Office. They worked out of an office building owned by a limited liability company in Kimberly's name. Michael was not involved in any financial aspect of running the firm. He drew a salary of $118,500 per year. Michael has also had disability ratings from the Veterans' Administration (VA) since his service for heart disease and PTSD.

With the onset of the COVID-19 pandemic, Michael and Kimberly decided to retire. They concluded operations at their firm^[1] in 2020 and sold the law office building for $300,000. They purchased a recreational vehicle for around $90,000, and spent a year traveling the country. In 2021, they purchased a home in Arizona for $285,000 cash. Neither the RV nor the home are in Michael's name. Also following retirement, the VA increased Michael's disability rating to 100% based on his heart condition as service related.

At trial, Michael, now seventy-two years old, listed the following sources of income following retirement: $3569 from Social Security; $610 from his National Guard pension; and $3915 in VA benefits, totaling $8094. He listed expenses of $8310, which includes the $2750 alimony payment to Patricia.

Patricia is also seventy-two years old and testified that she does not consider herself retired. But she does collect Social Security of $963; a pension from the Nonpareil of $142; and a National Guard pension of $371.28.^[2] Including alimony, she receives $4226.28 each month. She lists $6142.76 in expenses. She testified the difference in her expenses is covered by income from her rental properties. She reported she receives $4775 in rental payments each month.

Minus taxes of $1021 and insurance of $341, that would leave $3413 in rental income. But she also testified that amount does not include expenses associated with the rentals.

The district court found Michael did not show a substantial change in circumstances. His income and expenses had not substantially changed from the 2015 action and neither had Patricia's. Nor had his lifestyle or standard of living changed. The court noted Michael and Kimberly have been careful to keep his finances separate from Kimberly's and to "shelter" many of their assets under her name. But the court found Michael was still able to pay the alimony without adversely affecting his lifestyle. Patricia's lifestyle appeared "stable," and the appreciation of her assets was a function of time, but did not warrant cessation of the alimony. Michael appeals.

II. STANDARD OF REVIEW.

We review spousal-support-modification decisions de novo. In re Marriage of Sisson, 843 N.W.2d 866, 870 (Iowa 2014). "We will not disturb the trial court's conclusions 'unless there has been a failure to do equity.'" In re Marriage of Michael, 839 N.W.2d 630, 635 (Iowa 2013) (citation omitted). We also note our supreme court's recent repeat of this admonition:

"Although our review is de novo, we afford deference to the district court for institutional and pragmatic reasons." The institutional deference afforded the district court in determining spousal support counsels against undue tinkering with spousal support awards. An appellate court should disturb the district court's determination of spousal support "only when there has been a failure to do equity."

In re Marriage of Sokol, 985 N.W.2d 177, 182 (Iowa 2023) (citations omitted).

III. ANALYSIS. A. SPOUSAL SUPPORT.

Iowa Code section 598.21C(1) (2021) allows a district court to modify spousal-support orders based on a substantial change in circumstances. Michael, as the party seeking modification, "bears the burden of establishing by a preponderance of the evidence the substantial change in circumstances." Michael, 839 N.W.2d at 636. "[T]he substantial change must not have been within the contemplation of the district court when the decree was entered ...." Id. (citation omitted). Further, "we presume the decree is entered with a 'view to reasonable and ordinary changes that may be likely to occur.'" Id. (citation omitted). Relevant factors for whether there has been a change in a circumstances include: "employment, income, earning capacity, health, and medical expenses of a party." Sisson, 843 N.W.2d at 870. Additional factors are those listed in Iowa Code section 598.21C(1). The change in circumstances must be "material and substantial" as well as "essentially permanent." Sisson, 843 N.W.2d at 870.

Michael argues that spousal support depends on the payor's ability to pay and the receiver's need. He contends circumstances have changed such that he is no longer able to pay the $2750 per month and Patricia no longer needs it. "When determining the appropriateness of alimony, the court must consider '(1) the earning capacity of each party, and (2) present standards of living and ability to pay balanced against relative needs of the other.'" In re Marriage of O'Rourke, 547 N.W.2d 864, 866 (Iowa Ct. App. 1996). In other words, the lower-earning spouse is entitled to support "in a manner as closely resembling the standards existing during the marriage as possible without destroying the right of the party providing the income to enjoy at least a comparable standard of living as well." In re Marriage of Stark, 542 N.W.2d 260, 262 (Iowa 1995) (citation omitted).

Michael notes that, under In re Marriage of Gust, the court found the purpose of traditional alimony is "to provide the receiving spouse with support comparable to what he or she would receive if the marriage continued." 858 N.W.2d 402, 408 (quoting In re Marriage of Hettinga, 574 N.W.2d 920, 922 (Iowa Ct. App. 1997)). The ...