In re Pazhoor

• Decision Date: 18 March 2022
• Docket Number: 20-0090
• Citation: 971 N.W.2d 530
• Parties: IN RE the MARRIAGE OF Suraj George PAZHOOR and Hancy Chennikkara Pazhoor, Upon the Petition of Suraj George Pazhoor, Appellee, and Concerning Hancy Chennikkara f/k/a Hancy Chennikkara Pazhoor, Appellant.
• Court: Iowa Supreme Court

971 N.W.2d 530

IN RE the MARRIAGE OF Suraj George PAZHOOR and Hancy Chennikkara Pazhoor, Upon the Petition of Suraj George Pazhoor, Appellee, and Concerning Hancy Chennikkara f/k/a Hancy Chennikkara Pazhoor, Appellant.

No. 20-0090

Supreme Court of Iowa.

Submitted January 19, 2022

Filed March 18, 2022

Rehearing Denied April 6, 2022

Amended April 6, 2022

Jenny L. Weiss (argued) of Fuerste, Carew, Juergens & Sudmeier, Dubuque, for appellant.

Andrew B. Howie (argued) of Shindler, Anderson, Goplerud & Weese, P.C., West Des Moines, and Darin S. Harmon and Jeremy N. Gallagher of Kintzinger, Harmon, Konrardy, P.L.C., Dubuque, for appellee.

Waterman, J., delivered the opinion of the court, in which all justices joined.

WATERMAN, Justice.

On further review, a divorced physician is challenging the increase in spousal support ordered by the court of appeals. He invites us to formally recognize "transitional" alimony. Iowa courts have long considered three categories of spousal support: traditional, rehabilitative, and reimbursement, which can be blended for a hybrid award. The court of appeals in this case modified a hybrid traditional and rehabilitative alimony award. Concurring opinions of our court of appeals have foreshadowed the adoption of transitional alimony as a fourth category. For the reasons explained below, we now adopt transitional alimony as another tool to do equity in calculating spousal support. On our de novo review, we further modify the hybrid alimony award.

I. Background Facts and Proceedings.

Suraj George Pazhoor and Hancy Chennikkara were married in India in 2002. Hancy had graduated from medical school in India and was completing her internship. She is a registered physician in India. Suraj had graduated from medical school in Russia and completed his internship in India. He was working and volunteering in the medical field in India when they married. After about a year of living with Suraj's parents in India, the couple relocated to Naperville, Illinois, to live with Hancy's parents. The couple later moved to their own residence. At the time, Hancy worked in a bookstore and Suraj worked day shifts at a college library and night shifts at a retailer.

Both Hancy and Suraj began studying to become licensed physicians in the United States. Suraj ultimately obtained his medical license; Hancy did not. Licensure requires completion of the United States Medical Licensing Exam: a four-part test, commonly known as "the Boards". Passing the first three parts is required for residency. The fourth part is completed during residency. Upon passing part of the exam, the examinee has a limited amount of time to pass the remaining parts. Neither Suraj nor Hancy were successful on the first attempt. Suraj ultimately passed the third part and entered residency. Hancy never passed the third part. Their daughter was born in 2008. Hancy was preparing for her second attempt at the third part of the exam when she learned her father had been diagnosed with cancer. She continued to study "[b]ut the fear of failing again was overwhelming," and she never retook the exam.

Hancy used her medical degree to research and coauthor several published articles with a cardiologist, most recently in 2010. In 2012, after Suraj completed a three-year residency program at Loyola University Chicago, the couple agreed Suraj would accept a hospitalist position in Wisconsin and Hancy would care for their children and home. Their son was born in 2013 while they lived in Wisconsin. Suraj was promoted that year to serve as a director of a hospitalist fellowship program, which added to his responsibilities without an increase in his pay.

In 2016, Suraj accepted a position as a hospitalist and medical director at the Grand River Medical Group (GRMG) in Dubuque, Iowa. While Suraj focused on his career, Hancy ran the household, facilitated their moves, managed their finances, provided childcare, and focused on the children's development, education, medical care, and extracurricular activities. From 2008 to 2017, Hancy earned no income. In 2017, she began volunteering as a religious education teacher on Wednesday and Sunday nights during the school year. Suraj's income in 2018 was $500,742. The family's lifestyle in Dubuque during the marriage was largely unbudgeted and reflected Suraj's substantial income.

Suraj petitioned for divorce on August 31, 2018. In response, Hancy began earning $12 an hour, or $918 annually, as a religious education teacher (instead of volunteering). She also began working part-time, up to twenty hours a week, as a barista at a local coffee shop for $8 an hour, or $8,320 annually. After Suraj filed for divorce, Hancy interviewed for a patient advocacy position at a local hospital. She was denied that employment because her foreign medical degree did not satisfy the requirement for a nursing degree. She earns passive income from a 10% interest in two commercial real estate holding companies ($13,387 average annual income over three years) and rental income from the Naperville condo ($490 annual net income). Her total annual income from these sources is $23,115.

The court conducted a two-day trial in August of 2019. The parties agreed that Hancy should receive spousal support but disagreed on its duration and amount. Suraj requested the court award Hancy $5,000 monthly for five years in spousal support, totaling $300,000. Hancy sought $12,000 monthly in traditional spousal support. Hancy argued the spousal support award, in part, should serve as reimbursement because she used her nonmarital funds to support the family while they lived in Naperville, put $9,000 of her money into Suraj's individual retirement account, and sold some of her premarital jewelry to help with the down payment on their Wisconsin home.

Suraj was age forty-three at trial. His parents still lived in India. Suraj had earned $252,172 by August and was on track to earn $415,152 in 2019. He testified that after paying 46.5% of his income in taxes, his after-tax income is approximately $232,500 annually or $19,375 a month. Hancy was age forty at trial. Her father died ten years earlier but her mother still lived in Illinois. Because too much time had passed, Hancy would essentially have to start over the process to become licensed to practice medicine in the United States. Suraj agreed that it was too late for Hancy to take the Boards again. Hancy testified she is interested in earning a master's degree in public health, which would take two to three years to complete if she attended school full-time, assuming her credits from medical school transferred. If her credits do not transfer, she would need to complete additional undergraduate coursework. Hancy estimated she will earn up to $80,000 a year after she earns her master's. Suraj asserted that Hancy does not need additional education and could immediately return to a nonclinical role earning $100,000 to $200,000 a year. His assertions were not supported by expert testimony or other evidence.

Hancy estimated her monthly expenses to be $10,244, which included tuition for a master's program. According to Hancy's counsel, this estimate omitted "variable purchases for the children, including clothing, club membership dues, incidentals, personal grooming, laundry, allowances, life insurance, babysitting, church donations, gifts, or the ability to save for herself." Suraj testified that he overstated his monthly expenses in his financial affidavit but estimates his monthly expenses to be at least $13,118, including allocations for vacations, clothing, and other incidentals, but not including contributions to his savings. In a brief filed with the district court during trial, Suraj discussed transitional alimony citing court of appeals decisions and advocated for a transitional award.

On October 18, the district court entered its decree dissolving the seventeen-year marriage. The court ordered shared custody and physical care of their children and divided their property. Each was awarded marital property valued at $337,754, and Hancy was able to retain premarital assets totaling $136,565. Hancy retained the Naperville condo, her vehicle, some bank accounts, and a portion of the marital debt as well as her premarital investment accounts and jewelry. The court ordered Suraj to pay Hancy $143,977 as an equalization payment from the property division, $643 a month in child support, and $7,500 monthly in spousal support for five years totaling $450,000. The court found Hancy "is more than a minimum wage employee" and "is, at the very least, capable of working full time at the hourly rate of $12.00, if she chooses to do so." The court imputed income of $40,000 to Hancy, which included $24,960 in estimated wages and her passive business income, the rental income, and child support. Pursuant to the dissolution decree, a Qualified Domestic Relations Order was filed awarding Hancy a 50% interest in the balance of Suraj's GRMG retirement plan as of October 18, 2019.

Hancy filed a motion to reconsider, enlarge, or amend the district court's order under Iowa Rule of Civil Procedure 1.904(2). She argued the spousal support award was inequitable and the court erred when it imputed a $40,000 income. The court denied her motion, and Hancy appealed.

On appeal, Hancy argued the district court erred by awarding shared physical care, reducing both Suraj's income and child support payment because he pays for the children's medical insurance, and failing to award her attorney fees. She also argued the spousal support award was inequitable and sought appellate attorney fees. Suraj argued the district court correctly determined those issues and opposed an award of appellate fees.

We automatically transferred the case to the court of appeals. The court of appeals affirmed the district court's shared physical care determination and denial of attorney fees for the district court proceedings. The court of appeals awarded Hancy $3,000 in appellate...