A Determination of a Material Change of Circumstances Relative to a Modification of a Spousal Support Obligation is Dependent on the Intent and Reasonable Expectations of the Parties as Expressed in their Divorce Agreement

Park Dietz and Laura B. Dietz entered into a stipulated judgment in 1999, which was filed in the Orange County Superior Court, in which they divided their community property, including their retirement accounts, and agreed Park would pay Laura monthly spousal support. Park was to pay Laura $16,500 per month in spousal support, continuing until the death of Laura, the death of Park, remarriage of Laura, or further order of Court. The Orange County divorce judgment also required Park to pay Laura $3,500 in monthly child support until their son reaches 19, or reaches 18 and is not a full-time high school student residing with a parent, whichever occurs first. As to the division of the retirement accounts, Park and Laura would each retain 1/2 the retirement plans earned by Park during the marriage, including any and all contributions made up to the date of separation, and any increase or decrease in value of such assets related to market conditions.

In May 2007, Laura’s Orange County divorce lawyer filed an order to show cause seeking the actual division of the parties’ retirement accounts. In August 2007, Park’s Orange County divorce attorney filed an order to show cause in the Orange County Superior Court seeking termination of his spousal support obligations because Laura began supporting herself based on her earning capacity and income from assets or other investments. The Orange County divorce court considered whether to terminate or modify Park’s spousal support obligation by reweighing the factors set forth in Section 4320 to determine a “just and reasonable result under the facts and circumstances of this case.” The Orange County divorce court concluded that some of the relevant facts “militate strongly in [Park’s] favor” in that Laura “has substantial assets.” The Orange County divorce court stated Laura’s substantial retirement assets were now accessible to her without penalty. And the divorce court ordered Park’s monthly spousal support obligation be reduced by $3,000.

Laura’s Orange County divorce lawyer contended that the Orange County divorce court erred by reducing Park’s monthly spousal support obligation because there had been no material change of circumstances since the 1999 stipulated judgment to warrant a reduction. Modification of spousal support, even if the prior amount is established by agreement, requires a material change of circumstances since the last order. A change of circumstances means a decrease or increase in the supporting spouse’s ability to pay and/or an increase or decrease in the supported spouse’s needs. A divorce court must consider all of the factors set forth in Section 4320.

The Court of Appeal located in Orange County’s review of orders modifying spousal support is governed by an abuse of discretion standard. And such an abuse occurs when a court modifies support order without substantial evidence of a material change of circumstances. When “determining what constitutes a change in circumstances the divorce court is bound to give effect to the intent and reasonable expectations of the parties as expressed in the agreement,” and thus, “the divorce court’s discretion to modify the spousal support order is constrained by the terms of the marital settlement agreement.” In re Marriage of Aninger (1990) 220 Cal.App.3d 230, 238. The Orange County divorce court is required to “give effect to” Park and Laura’s “intent and reasonable expectations…as expressed in the agreement.” Ibid. The 1999 stipulated judgment expressly acknowledges the possibility of an increase in value of Laura’s share of the retirement accounts, which expresses the parties’ reasonable expectations. The record is unclear whether the securities were awarded to Laura through the 1999 stipulated judgment. If the securities were not included as a part of the 1999 stipulated judgment, the Orange County divorce court may reconsider whether there had been a material change of circumstances sufficient to justify a reduction in spousal support.

Park’s Orange County divorce attorney argued argues that the divorce court did not rely solely on the accessibility and value of the retirement accounts in determining the change of circumstances. The Orange County divorce court considered the duration of the marriage (which was 15 years), Laura’s testimony regarding her health condition and inability to work, Laura’s earning capacity, and her marketable skills. The Orange County divorce court relied on balancing the Section 4320 factors Given the assets she was provided in the 1999 stipulated judgment, and the accessibility and appreciation of such assets, she should be expected to be more self-sufficient. As a result, the Orange County divorce court reduced the spousal support by $3,000 per month. The Orange County divorce court heavily relied on In re Marriage of Schmir (2005) Cal.App.4th 43, but that case is not directly on point. While reaching attainment of retirement age may constitute a material change of circumstance for purposes of a motion to modify a support order in some cases, here the parties agreed to an equal division of their community property.

Furthermore, Laura’s Orange County divorce lawyer argues the divorce court erred in refusing to order Park to pay her attorney’s fees. The Orange County divorce court held that it found no need for Park to pay any portion of Laura’s attorney’s fees because both parties have equal access to quality legal services. However, the Orange County divorce court is required to determine how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances.

This Court of Appeal reversed the Orange County divorce court’s order to reduce the monthly spousal support, with respect to the securities remanded to the divorce court to determine whether there was any material change in circumstance and the issue of attorney’s fees was also remanded to the divorce court.

In re Marriage of Dietz (2009) 176 Cal.App.4th 387