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Court of Appeals provides guidance on alimony reduction in an economic downturn

As I have previously noted in Lump Sum Alimony, it is hard to offer clients guidance as to potential alimony reduction when they incur a reduction in income through no fault of their own.  A recent Court of Appeals decision, Gartside v. Gartside, 383 S.C. 35, 677 S.E.2d 621 (Ct.App. 2009) is not only a victory for a local colleague, Paul Schwartz, but also offers some guidance to attorneys and ex-spouses on how income reduction in an economic downturn might effect alimony.

Gartside was an alimony reduction case brought by an ex-husband who, through no fault of his own, had lost his job at a local yacht club.  He sent his resume to other local clubs but there were no local positions available in that field.  He was able to find employment in the Charleston area but at approximately 60% of his previous pay, and in a different field.

Since alimony was last set, ex-wife’s gross monthly income had increased from $3,814 to $5,249 while ex-husband had decreased from $9,079 to $5,200.  At trial, the family court reduced ex-husband’s alimony obligation from $1,775 per month to $800 per month.

Ex-wife’s primary argument against an alimony reduction was that ex-husband, to maximize his earning capacity, should have been forced to look for work outside the Charleston area.  The family court disagreed, finding that:

[Husband and Wife] moved to Charleston, S.C., in 1982 . . . . [T]hey have raised their children here, have owned property here, have had their work careers here, have put down roots, have made friends and have established themselves as citizens of Charleston County[,] and if [they] were still living together and [Husband] had lost his job, I have serious doubts they would move away just so they could continue making the same salary . . . .

[Husband] testified that there were no comparable jobs available in the Charleston area[,] . . . and I find no compelling reason that [Husband] should be forced to leave the environment he has known for 25 years to seek employment which might pay the same as he was receiving in Charleston at his previous employment.

Wife appealed the family court’s ruling but the Court of Appeals affirmed.  It looked to the regulations for the South Carolina Child Support Guidelines to address the issue of determining earning capacity.  The Court of Appeals noted that Guidelines define “income” as “the actual gross income of the parent if employed to full capacity, or potential income if unemployed or underemployed.” S.C. Code Ann. Regs. 114-4720(A) (Supp. 2008).  It further noted that the Guidelines provide: “In order to impute income to a parent who is unemployed or underemployed, the court should determine the employment potential and probable earning level of the parent based on that parent’s recent work history, occupational qualifications and prevailing job opportunities and earning levels in the community.”

The Court of Appeals’ reading of the Child Support Guidelines regulations led it to conclude that the courts should look to earning capacity in the local community to determine a spouse’s earning capacity.  Because ex-husband could not earn more in the Charleston area he was not underemployed, and the family court did not err in using his actual income to determine his alimony obligation.

Gartside was a relatively easy case: ex-wife is not only making more money than she was when alimony was last set but is now making more money than the ex-husband from whom she continues to receive alimony. However, Gartside is the South Carolina Appellate Court’s first published decision recognizing that the current economic downturn will require sacrifices from supported ex-spouses.  It also affirms that supporting ex-spouses will not need to leave their communities to maximize their earnings. Whether this logic will be applied to supporting parents of minor children remains to be seen.

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