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A Lump-Sum Severance Payment is Not to be Considered Compensation that is Allocated to a Single Month by a Divorce Court

Wife’s divorce lawyer filed a petition for dissolution of the marriage and sought a temporary spousal support order. The divorce court ordered husband to pay wife, $15,031 per month and 35% of all his compensation in excess of $45,000 per month. Husband’s divorce lawyer sought to modify the divorce court order based on a decrease in his monthly commissions. The parties stipulated that husband would pay wife $9,059 per month and 35% of all compensation in excess of $25,000 for each month. Husband then received notice that he would be fired from his job. After husband received the notice, his divorce lawyer filed an order to show cause seeking clarification of the effect the severance pay would have on the spousal support order and moved to terminate the temporary spousal support award because wife was cohabitating with another man. The divorce court rejected husband’s divorce attorney’s request and husband’s divorce lawyer appealed.

Husband’s divorce lawyer had requested that the divorce court treat his severance pay as income to be spread over a period of thirteen months. The Court determined that the divorce court had erred by determining the lump-sum severance payment was standard compensation and thus subjected to being assessed “over and above guideline support” for any discretionary bonus actually received. The Court found that the majority of husband’s severance payment was designed to compensate him for 12 months of lost salary and 6 months of lost commission. Thus, the Court determined the severance payment should not have been treated as compensation and would send the case for remand back to the divorce court. The Court stated that the divorce court had the discretion to allocate husband’s severance payment.

Additionally, the Court affirmed the divorce court’s decision to uphold husband’s spousal support obligation. The Court explained that temporary spousal support orders are based on a spouse’s need and the other spouse’s ability to pay. A change of circumstances is required for a modification of spousal support. The divorce court found that the man that wife was cohabitating with was only contributing $800 per month to wife and that wife’s need for support had not substantially diminished. However, the Court could not determine whether husband had established a change in circumstances, which would have justified modifying the spousal support order because it depended on how his severance payments were to be distributed. Thus, the Court disagreed with wife’s divorce attorney and determined that husband’s lump-sum severance payment was not compensation and consequently could not be allocated to a single month.

In re Marriage of Tong and Samson (2011) 197 Cal. App. 4th 23