Given the current economy, a major issue being discussed by family law attorneys and judges is how to handle the issue of support modification where due to the current economy, someones income is eliminated or greatly decreased.  The standard for modification of support is that there has to be a showing of a substantial and continuing change of circumstances.  One of the major issues being discussed is how long does one have to be out of work before making an application to the Court. 

The second issue is even if the change is temporary – whatever that now means – should there still not be some temporary relief because if the existing Order or Agreement is not fair.  A general proposition of law is that Agreements can only be enforced to the extent that they are fair.

Earlier this week, the Appellate Division decided the case of Baker v. Baker which leads me to believe that help may be on the way. To view the case, click here.

In Baker, the parties were divorced in 1998.  At the time, the husband worked was a Managing Director at Pershing Trading Company and earning nearly $800,000 per year, the great
bulk of which came in the form of an annual bonus.  The parties agreed that he would pay alimony in the amount of $10,000 per month.

In May 2005, defendant lost his position at Pershing. He attributed this loss to the fact that Bank of New York had taken over Pershing and his position was eliminated. The husband received a bonus in May 2007 of $700,000 (as opposed to the year-end bonuses defendant had received in the past) and a severance pay of $175,000, supporting the husband’s claim that
his separation from Pershing was involuntary.

The husband eventually obtained a new position at Olson Global Markets, at which he was to receive a salary of $120,000 (equivalent to what he had earned as a salary at Pershing) and
receive bonuses that would place his earnings at the same level he had previously enjoyed. However, he asserted that Olson was not profitable, that he had not received any bonuses, and that he had not even received a salary for the years 2006, 2007, and 2008. Indeed the husband claimed that the situation at Olson was such that he was obliged to advance $138,000 to it from July 2007 to January 2008.

Based upon this apparent reduction in his earnings, the husband filed a motion in March 2008 seeking a reduction in his monthly alimony obligation. After hearing oral argument, the trial court denied defendant’s application. It did so without conducting a plenary hearing.  The trial court analogized the case to a reported decision called Storey v. Storey where the husband changed careers, going from a computer technician to a massage therapist.

The Appellate Division reversed  noting that while the proofs presented by the husband at the motion did not warrant a reduction in and of them self, they certainly warranted a hearing.  The reason was that it was clear that the husband did not voluntarily leave his job and further, remained in the same industry.

The matter was remanded for a plenary hearing on whether a reduction was warranted. 

I suspect that there will be many cases like this.  For instance, I suspect that many people will be forced to take lower paying jobs in the same or similar industry.  They may even try to go into other industries when their job search proves fruitless.  Parties are going to have to be creative and have to be reasonable.  Otherwise, they risk a lot of litigation.