Luckow Estate v. Luckow

• Decision Date: 27 January 2011
• Docket Number: Docket No. 294398.
• Citation: 805 N.W.2d 453,291 Mich. App. 417
• Parties: LUCKOW Estate v. LUCKOW.
• Court: Court of Appeal of Michigan — District of US

291 Mich.App. 417

805 N.W.2d 453

LUCKOW Estate

v.LUCKOW.

Docket No. 294398.

Court of Appeals of Michigan.

Submitted Jan. 11, 2011, at Detroit.Decided Jan. 27, 2011, at 9:05 a.m.

Gentry Law Offices, P.C., Whitmore Lake (by Kevin S. Gentry), for the estate of Stanley Luckow.

Carl Bloetscher III for Pamela Luckow.

Before: O'CONNELL, P.J., and SAAD and BECKERING, JJ.

BECKERING, J.

Plaintiff¹ appeals by leave granted the opinion and order of Wayne Circuit Court Judge Eric W. Cholack granting defendant's motion for reconsideration regarding an alimony award rendered by his predecessor, Judge Richard M. Skutt.We reverse.

I.FACTUAL OVERVIEW

Plaintiff and defendant divorced on October 8, 2003.Comporting with an arbitration award previously rendered, the parties' divorce judgment directed plaintiff to pay defendant modifiable spousal support in the amount of $2,500 a month until her death or remarriage, whichever occurred first.Neither of these contingencies has transpired.The spousal-support award was based on plaintiff's annual income of $90,000 and an imputation of income to defendant of $15,000 a year.It was to be secured by naming defendant as a beneficiary of a portion of plaintiff's life insurance proceeds.Among other assets, plaintiff was awarded as part of the property division the value of his life insurance policies, subject to defendant's interest in the proceeds as security for spousal support, and the marital interest in the business partnership known as Metal Prep Technology.Defendant was awarded assets including the marital home, half of plaintiff's individual retirement account (IRA), and a portion of plaintiff's Metal Prep Technology profit-sharing account.

On January 3, 2005, plaintiff moved to reduce his spousal-support obligations, citing defendant's move to Florida and consequent lower living expenses.Plaintiff also asserted that defendant had sufficient assets to support herself and that his income, having declined since the entry of the divorce judgment, was insufficient to pay the amount ordered.Defendant opposed this motion, asserting that her living expenses had increased, not declined, as a result of her move.Defendant denied having sufficient assets to support herself and asserted that plaintiff had sufficient means to continue paying spousal support in the ordered amount.Judge Skutt denied plaintiff's motion following an evidentiary hearing on August 12, 2005.Judge Skutt determined that plaintiff had not demonstrated a significant change in circumstance on which to base a change in spousal support and that, while plaintiff had demonstrated a decrease in his annual income, that decrease was “not so great that it equal[led] a lack of ability to pay the ordered spousal support.”

Thereafter, plaintiff moved to set aside the trial court's opinion and order denying his motion for reduction of spousal support.The trial court granted that motion, and on February 9, 2006, the parties stipulated to resolve the matter by binding arbitration.The record indicates that plaintiff sold his interest in Metal Prep Technology and that he received his last paycheck from that company on September 15, 2006.On October 30, 2007, the arbitrator issued his binding arbitration report, recommending that plaintiff's obligation to pay spousal support be abated to zero but reserving future spousal-support obligations for future adjudication.As a result of the arbitrator's recommendation, it was determined that defendant was entitled to more than $35,000 in spousal-support arrearages; the arbitration award limited plaintiff's obligation to secure future spousal support by way of a life insurance policy in this arrearage amount.

On November 27, 2007, plaintiff moved the court to adopt the binding arbitration report and award.Plaintiff died on December 12, 2007.Plaintiff's estate was substituted as partyplaintiff in February 2008.At that time, Judge Skutt specifically recognized that he had the authority to modify the terms and conditions of spousal support after plaintiff's death.On March 21, 2008, Judge Skutt entered an order adopting the October 30, 2007, arbitration award.As a result, plaintiff's obligation to pay spousal support was abated effective December 31, 2006.Further, in accordance with the arbitration award, Judge Skutt ordered that “[a]ny future spousal support obligation due and owing by Plaintiff to the Defendant is reserved for the future adjudication by this Court.Plaintiff's obligation to provide life insurance to secure his spousal support obligation shall be limited only to the extent of the arrears created by this Order.”

On April 3, 2008, less than two weeks after Judge Skutt entered the order adopting the arbitration award, defendant moved to increase spousal support.Defendant asserted that a reduction in her annual income and anticipated increased health-insurance expenses stemming from a mild stroke, as well as plaintiff's increased ability to pay following his death, constituted a sufficient change in circumstances to warrant modification.Judge Skutt denied defendant's motion.Judge Skutt specifically recognized both that spousal support may be modified following a payor's death and that spousal support may be collected from a deceased payor's estate.He noted that he did not believe it was necessary to show a change of circumstances, but in the event that it was, defendant had established a change in circumstances warranting consideration of the motion on the basis of her own changing needs and a decrease in her income.However, considering the pertinent circumstances of the parties, Judge Skutt concluded that general principles of equity made increasing spousal support inappropriate.Judge Skutt explained:

In the present casethe Plaintiff filed a motion to decrease spousal support prior to his death.As a result of that motion the matter was arbitrated and the arbitration award was adopted by the Court as an Order.Therefore, while the Plaintiff was alive and earning an income of sorts it was determined that his spousal support obligation should be zero and now that the Plaintiff has deceased and is earning no income the Defendant requested that spousal support be modified/increased.In the general principles of equity [it] is difficult for the Court to reconcile abating Plaintiff's spousal support obligation to zero while Plaintiff is alive and earning an income and raising the Plaintiff's spousal support obligation after the Plaintiff has died and his estate earns no income.

This Court is mindful of the Defendant's decrease in income as well as her other financial concerns regarding health insurance, however this Court is satisfied that those changes do not outweigh the general principles of equity and require an increase in spousal support.It should also be noted that, with the life insurance policy being the only known source of funds [for the estate], the issue has been previously decided by the arbitrator and was not appealed.The change of circumstances cannot be used as a collateral attac[k] on that decision.

Judge Skutt awarded defendant a portion of the proceeds of plaintiff's life insurance in an amount equal to the spousal-support arrearage.

Defendant moved for reconsideration, asserting that the order denying her motion reflected an erroneous determination that the estate had no obligation to pay alimony because alimony had been reduced to zero while plaintiff was alive and there was no estate income with which to pay alimony.Defendant also asserted in a supplemental pleading that, previously unbeknownst to her or the court, the estate held substantial assets at the time of plaintiff's death.Judge Cholack, sitting as Judge Skutt's successor, granted plaintiff's motion for reconsideration.Judge Cholack found that Judge Skutt had made a palpable error by determining “in essence that, once spousal support had been abated to zero, it could not be increased.”Judge Cholack explained that such a determination was “at odds with the statutorily modifiable character of spousal support” and with the order adopting the arbitration award, which reserved adjudication of future spousal-support obligations.Judge Cholack disagreed with Judge Skutt's assessment of the equities presented, explaining that defendant had demonstrated that the previous award of no spousal support had become insufficient to meet her needs and that, after his death, plaintiff no longer needed any funds for his own suitable support and maintenance.Judge Cholack determined that the estate had sufficient means available to pay support and that an increase in support was warranted.Therefore, he ordered an evidentiary hearing to determine the appropriate amount of spousal support.This Court granted plaintiff's delayed application for leave to appeal.

On appeal, plaintiff argues that Judge Cholack erred by granting reconsideration of Judge Skutt's decision.We agree.

II.STANDARD OF REVIEW

We review for an abuse of discretion a trial court's decision on a motion for reconsideration.Tinman v. Blue Cross & Blue Shield of Mich.,264 Mich.App. 546, 556–557, 692 N.W.2d 58(2004).A trial court abuses its discretion when it reaches a decision that falls outside the range of principled outcomes.Corporan v. Henton,282 Mich.App. 599, 605–606, 766 N.W.2d 903(2009).We review questions of law bearing on the trial court's decision, however, de novo.Churchman v. Rickerson,240 Mich.App. 223, 227, 611 N.W.2d 333(2000).

III.BACKGROUND LAW

MCL 552.28 permits modification of spousal-support awards contained in divorce judgments:

On petition of either party, after a judgment for alimony ..., the court may revise and alter the judgment, respecting the amount or payment of the alimony ..., and may make any judgment respecting any of the matters that the court might have made in the original action.

To warrant modification, however, the moving party first must establish new facts...