Fault and alimony in South Carolina

Since 1990, when South Carolina adopted its current alimony statute, there have been surprisingly few published appellate decisions on how fault affects alimony. The statute itself, S.C. Code § 20-3-130, makes adultery by the supported spouse a bar to the award of alimony. Thus it’s not surprising (or informative) that there are a number of decisions analyzing whether a supported spouse committed adultery.

There have been no recent reported decisions addressing how a supported spouse’s habitual intoxication should affect alimony. The last reported opinion addressing alimony for a habitually intoxicated supported spouse is Lee v. Lee, 282 S.C. 76, 316 S.E.2d 435 (Ct.App.1984), which affirmed an award of $150 per month in alimony for six months. It is doubtful the appellate court would approve such a limited alimony award now.

There has been only one published opinion since 1990 addressing an alimony award to a physically cruel supported spouse (although the family court granted the divorce on no-fault grounds). In Sharpe v. Sharpe, 307 S.C. 540, 416 S.E.2d 215 (Ct.App. 1992), the wife actually conspired to kill her husband. The family court required husband to keep wife on his company’s health insurance plan as a form of alimony, and Court of Appeals affirmed this award. I know one local attorney who believes this award was to keep Ms. Sharpe’s health care from being the responsibility of the South Carolina taxpayers (he indicates she was incarcerated as a result of the conspiracy).

One might understand why in 1990 (when there wasn’t reliable paternity testing) South Carolina legislators would have wanted to place such a strong sanction on a supported spouse’s adultery–although, even then, that ban was both sexist and patriarchal, and it remains unique in United States family law. If one views marriage as primarily a means to legally bind men to children then strongly punishing a wife whose actions potentially break that linkage is conceivably justified. In today’s culture it simply seems a method a treating a woman’s body as her husband’s possession. I don’t think any politician supports that view of marriage–at least in public.

Although desertion as a fault ground fell into increasing disuse after the separation time period for a no-fault divorce was reduced to one year (the same period required to prove desertion), Gilfillin v. Gilfillin, 334 S.C. 213, 512 S.E.2d 534 (Ct.App. 1999), notes wife’s desertion as the family court’s basis to award wife only $3,200 per month in alimony. However, as wife suffered from serious mental conditions that she believed her husband exacerbated, the Gilfillin opinion does not appear to sanction her desertion strongly in setting her alimony.

It’s odd that, of the three commonly used fault divorce grounds, adultery is the only one which leads to an automatic alimony ban. I’ve long thought that our culture is too tolerant of domestic violence and habitual intoxication within a marriage and too intolerant of adultery. Only gaslighters blame their spouse for their own domestic violence and habitual intoxication but adultery is more often a symptom than the cause of a troubled marriage. Further, domestic violence and habitual intoxication directly impact the children. Typically, adultery does not. Yet it is only adultery that South Carolina has chosen to sanction with an outright ban on alimony.

In contrast to the dearth of case law on how fault impacts a supported spouse’s alimony, there is plenty of case law on a supporting spouse’s fault being a factor in alimony. In Johnson v. Johnson, 296 S.C. 289, 372 S.E.2d 107 (Ct. App. 1988) the Court of Appeals authorized permanent alimony on a fourteen-month marriage because husband had physically abused wife. In response to husband’s argument that a short marriage should not result in permanent alimony, the Court of Appeals held:

Unlike most cases, fault is a substantial factor in awarding alimony in this case. Dr. Johnson, not Mrs. Johnson, is to blame for the shortness of the marriage. When the duration of the marriage is seen in its proper light, the equities favor Mrs. Johnson, not Dr. Johnson. An at fault spouse cannot destroy a marriage and then claim its short duration entitles him to more favorable consideration when the economic adjustments attendant to divorce are made.

There are myriad cases in which an adulterous husband was made to pay alimony to his wife. McElveen v. McElveen, 332 S.C. 583, 506 S.E.2d 1 (Ct.App.1998), still holds the South Carolina record for highest alimony award in a published opinion (even though it reduced the award for $11,000 to $7,500 per month). In Bojilov v. Bojilov, 425 S.C. 161, 819 S.E.2d 791(Ct. App. 2018), the Court of Appeals affirmed a $200 per month alimony award to a higher-income wife in part due to husband’s adultery. There are no recent published opinions addressing a supporting spouse’s habitual intoxication as a factor in alimony–possibly because the habitually intoxicated have employability issues that impact their earning capacity.

In my experience, at the trial court level, marital fault is one of the most important factors–after length of marriage, and the parties reasonably anticipated income and expenses–in determining alimony. In Patel v. Patel, 359 S.C. 515, 599 S.E.2d 114 (2004), the South Carolina Supreme Court acknowledged the “[t]hree important factors in awarding periodic alimony are (1) the duration of the marriage; (2) the overall financial situation of the parties, especially the ability of the supporting spouse to pay; and (3) whether either spouse was more at fault than the other.” However thirty years of appellate court opinions provide almost no guidance on how a supported spouse’s fault should affect the alimony award. We could use more case law on the issue.

An issue more philosophical than legal is whether there should be a ceiling on alimony and (especially) child support awards. On one hand, alimony (and to some extent child support) is intended to allow the spouse or child to enjoy a similar lifestyle to a high-income spouse or parent. On the other hand, why should anyone be legally required to involuntarily support others in an ultra-lavish lifestyle? This concern is even more pronounced when it comes to children, who can end up spoiled if lavished too extravagantly.

South Carolina law hints, but doesn’t clearly state, that there is a ceiling on such support. On alimony, the case of McElveen v. McElveen, 332 S.C. 583, 506 S.E.2d 1 (Ct.App.1998), suggests there is a ceiling on alimony. In that case, the Court of Appeals reduced an alimony award from $11,000 to $7,500 per month with this rationale:

We recognize that Husband’s income is substantial and that his adultery brought about the dissolution of this marriage. Nevertheless, these facts do not alter our view that $11,000 per month constitutes an excessive award. It is inconceivable to this court that such an award would not deter Wife from ever seeking to improve her financial circumstances. After careful review of Wife’s financial declaration and monthly expenses, we hereby reduce Husband’s monthly alimony obligation from $11,000 per month to $7,500 per month, effective immediately.

This alimony reduction took place despite Wife having fibromyalgia and despite Husband having an annual income of $500,000. In reducing Wife’s alimony award, the Court of Appeals found the following expenses to be excessive: $1,105 per month for food and household supplies; $300 per month for laundry and cleaning; $900 per month for clothes; $960 per month for entertainment; $250 for child care; and $164 per month for pet expenses. For a household with a $500,000 annual income, I don’t see these expenses as outlandish but the Court of Appeals did.

Personally, while I don’t think alimony should be used to equalize income (unless the parties were married 40+ years and are both fully retired) I also don’t think there should be a ceiling on alimony. One would assume folks with ten figure net worths or nine figure annual incomes live much more lavishly than folks with “mere” eight figure net worths or seven figure annual incomes. To the extent that one believes anyone “deserves” alimony, the spouse of the former is probably entitled to greater alimony (although likely a smaller percentage of the supporting spouse’s income) than the spouse of the latter.

However McElveen suggests the Court of Appeals disagrees with me. I read McElveen as preventing alimony awards above $7,500 in 1998 dollars. Given the growth in per capita income since 1998, I assume it would approve alimony awards greater than $7,500 per month (an approximate equivalent is $15,000 per month in 2019 dollars). However, I occasionally see separation agreements in which a supporting spouse–represented by counsel–agreed to even greater alimony. Their counsel may not have read McElveen.

As for child support, per South Carolina Regulation 114-4710(A)(3), “[w]here the combined gross income [of the parties] is higher [than $360,000 per year], courts should determine child support awards on a case-by-case basis.” This regulation is silent on what factors the court should look at to determine high-income child support. Pre-guidelines cases indicated that, “In determining the proper amount of such awards a court should consider not only the needs of the children but also the ability of the father to pay and all other surrounding circumstances.” Lowe v. Lowe, 256 S.C. 243, 182 S.E.2d 75, 77 (1971). The child(ren)’s needs and a parent’s ability to pay seem a good starting point for determining high-income child support.

The issue then becomes, what does the child of an extremely high-income parent need and is there a ceiling on need? Some attorneys try to calculate high-income child support via extrapolation of the guidelines. I think that’s inappropriate. First, some states do authorize extrapolation and I assume South Carolina would have authorized it had it intended to. Second, the child support guidelines are curvilinear: that is, they slope more gently the higher the income. To use a linear extrapolation–which is the only extrapolation I’ve seen attorneys suggest–is to assume that there is no ceiling on child support and thus a child could have unlimited need. I don’t accept that.

While South Carolina has not adopted the oft cited “three pony rule,” that rule suggests there are limits to any child’s needs. The rule originated with In re Marriage of Patterson, 22 Kan. App.2d 522, 528, 920 P. 2d 450 (1996), which held “no child, no matter how wealthy the parents, needs to be provided more than three ponies.” I not only agree with that rule but find it too generous on child support–having yet to encounter the child who could not get by with a mere two ponies. But if the law believes that no child needs more than three ponies, there is a clear ceiling on child support.

Even if the supporting parent is a multi-billionaire, I cannot envision a South Carolina appellate court affirming a child support award of $1,000,000 (or even $100,000) a year. Ultimately, I think there should be a ceiling on child support but not on alimony. However, I believe South Carolina law suggests there is a ceiling on both.

There are occasionally cases in which a spouse who would typically pay significant permanent periodic alimony as part of a marital dissolution has destroyed his career around the time of the parties’ separation. Often this career destruction was the cause of the marital dissolution: a spouse charged with a crime that leaves him incarcerated or unable to continue in his career; job misconduct or substance abuse issues that result in employment termination.

When such supporting spouses lose their earning capacity due to “misconduct” during or shortly before marital litigation, the family court is left in an awkward position. If it requires that spouse to pay permanent periodic alimony based upon his recent earning capacity, it is likely setting that spouse up for failure (and jail) as it would be basing support on an unrealistic earning capacity. Further the supported spouse is unlikely to receive the alimony awarded. However, if the family court doesn’t require that spouse to pay alimony, then the supported spouse will incur a substantial reduction in lifestyle due to the supporting spouse’s misconduct. That isn’t just.

The court could attempt to effect a just result by giving the supported spouse a majority of the marital assets. In dividing marital property, South Carolina’s equitable distribution statute, S.C. Code § 20-3-620(B)(2), allows the family court to consider, “marital misconduct or fault of either or both parties, whether or not used as a basis for a divorce as such, if the misconduct affects or has affected the economic circumstances of the parties, or contributed to the breakup of the marriage…” In practice, our appellate courts rarely approve a division in a long-term marriage more extreme than 60/40. See Doe v. Doe, 370 S.C. 206, 634 S.E.2d 51 (Ct.App.2006) (reducing 70/30 division to 60/40 due to family court’s over reliance on marital misconduct).

However, what if, in this situation, the family court could essentially award the supported spouse all of the marital assets? That would be more just than awarding the supported spouse a mere 60% of the marital estate. Through a creative application of lump sum alimony, the family court could do this. The family court could give the supported spouse 50% (or 60%) of the marital estate and then award that spouse the supporting spouse’s share of the marital estate as lump sum alimony. Lump sum alimony can be awarded in exceptional cases where special circumstances require it. Johnson v. Johnson, 296 S.C. 289, 372 S.E.2d 107, 114 (Ct.App. 1988). A supporting spouse destroying his earning capacity through misconduct might just be one of those exceptional cases and special circumstances.

Where a supporting spouse’s misconduct has diminished his earning capacity, the family court has three options: 1) issue a permanent periodic alimony award based on the prior earning capacity of the supporting spouse with the understanding that the supporting spouse likely can’t pay it and the supported spouse likely won’t receive it; 2) award the supported spouse a majority–but not a supermajority–of the marital estate and hope she can maintain the marital lifestyle from a majority of the assets; 3) award the supported spouse lump sum alimony from the supporting spouse’s share of the marital assets (essentially leaving the supporting spouse with no assets but no support obligation and the supported spouse with the whole marital estate).

I see few reasons why that third option isn’t the best. Until the appellate courts inform us otherwise, it’s an argument worth making.

When I first began practicing family law twenty-five years ago it was almost unheard of for South Carolina wives to be ordered to pay alimony. Even when circumstances suggested alimony might be appropriate (high income wife; low income husband staying home with the parties’ children) few took these husbands’ alimony requests seriously. Often these husbands wouldn’t even seriously pursue alimony–considering it “unmanly” to do so. The few times I represented such husbands in their pursuit of alimony, opposing counsels rarely took the claims seriously and I almost never could get the family courts to award alimony–and even then the alimony was limited in amount and rehabilitative.

I’ve noticed a change in attitude since Ricigliano v. Ricigliano, 413 S.C. 319 775 S.E.2d 701 (Ct. App. 2015). In that case the family court granted a husband limited rehabilitative alimony in what was clearly a permanent periodic alimony case. He appealed and the Court of Appeals remanded the matter for an award of permanent periodic alimony. It was the first published South Carolina opinion awarding a husband alimony. That the Court of Appeals made the alimony permanent was particularly noteworthy.

Family court judges took notice of Ricigliano. In the right fact pattern (high income wife; lower income husband; long marriage; no fault by husband) the family court seems much more inclined to make wives pay permanent periodic alimony. Sometimes they are doing this in cases in which the husband wasn’t even the primary homemaker.

But if family court judges are more open to making wives pay alimony, I don’t see the culture catching up quite as quickly. I’ve seen a few cases recently in which wives unwisely pursued trial over settlement on financial issues because they discounted their risk of paying alimony. I’ve seen other cases in which wives were frustrated their cases were not settling because they inaccurately treated their husband’s alimony claim as having no value.

It’s a new decade in South Carolina. For a specific but growing subset of wives reducing their potential alimony exposure should be as standard a part of an attorney’s representation (as it has traditionally been for husbands).

The July 17, 2019 Court of Appeals opinion in Hagood v. Hagood, 427 S.C. 642, 832 S.E.2d 609 (Ct. App, 2019), establishes important points on transmutation and alimony. It is one of the rare published opinions to reject a transmutation claim while finding a special equity interest. It is the first published opinion in twenty years to address nonmarital assets as a basis to award alimony.

In Hagood, Husband had inherited substantial real estate prior to the marriage. In the early years of the marriage, the parties lived in a mobile home own by his sister on land he had inherited. Later in the marriage he sold some of this real estate, using the proceeds to purchase land and build the marital home and purchase some vehicles. He also deposited some of these funds into jointly titled CDs and bank accounts. At trial, Wife argued that all of these accounts, the vehicles, and the real property for both marital residences had been transmuted. The family court rejected all of Wife’s transmutation claims.

On appeal, the Court of Appeals affirmed that none of these disputed assets had been transmuted. It held that mere joint titling of CDs and accounts was insufficient to establish an intent to treat the property as marital. It held that, although Wife assisted in the care of the property where the mobile home was located, she did not make any significant contributions to this property, and accordingly the property was not transmuted. It held that her mere use of these vehicles was insufficient to establish transmutation.

However, the Court of Appeals did reverse and remand on one equitable distribution issue: holding that Wife was entitled to a special equity interest in the marital home, as she was significantly involved in the construction as well as the care and maintenance of the home. The Court of Appeal cited S.C. Code § 20-3-630(A)(5) as allowing a spouse to receive a special equity interest in the increase in the value of nonmarital property when the spouse contributes directly or indirectly to the increase.

At trial the family court denied Wife alimony, noting that Husband was in poor health and that both parties had substantially equal income capacities. Further, while the opinion is not explicit on this issue, it appears that Husband has primary physical custody of the parties’ minor child (the opinion simply notes that the parties bifurcated the financial issues and the custody issue, and that Wife does not have custody). Despite this, the Court of Appeals found it was err to deny Wife alimony, holding:

[T]he family court gave insufficient weight to the parties’ standard of living and Husband’s significant nonmarital property. During the marriage, the parties moved from a mobile home to a large new home. Wife and Husband frequently traveled to car shows and purchased numerous collectable cars. Wife received several large cash gifts from Husband. In addition, Husband has over $3 million in nonmarital assets according to his financial declaration. We find Wife should be allowed alimony in some form. Thus, we remand the issue of alimony to the family court to determine the appropriate type and amount of alimony Wife should receive.

As Professor Roy Stuckey notes in his upcoming revision of Marital Litigation in South Carolina:

The case law about transmutation has been both consistent and chaotic. It has been consistent in that the courts agree that the primary question is one of intent: did the owner of the property intend to transmute it into marital property?

The case law about transmutation has been chaotic because courts have struggled to interpret circumstantial evidence of transmutation in a consistent manner. It is impossible to discern consistent lines of reasoning or themes from which one could predict outcomes with any degree of certainty. Even worse, some of the explanations for the outcomes in transformation cases are inconsistent with common sense and human nature.

One method of making transmutation cases less chaotic is finding a special equity interest in lieu of transmutation. Hagood is a welcome example of the appellate courts doing that.

Hagood is also important for establishing that substantial nonmarital assets can be a basis to award alimony. Factor eight in the alimony code–the marital and nonmarital properties of the parties, including those apportioned to him or her in the divorce or separate maintenance action– would seem to authorize this. See S.C. Code § 20-3-130(C)(8). However Hagood is (I believe) the first reported case to reverse a denial of alimony because of one spouse’s substantial nonmarital assets.

On June 6, 2019, I argued an appeal in the Court of Appeals that involved a novel issue that I expect to become increasingly common. The family court ordered my client, the Appellant/Wife (I was not the trial attorney), to pay significant permanent periodic alimony to her now Ex-Husband. Unhappy with the both amount and the permanency of the alimony award, she appealed (she also appealed other issues irrelevant to this blog).

In addition to making arguments about the family court miscalculating her income or overstating Husband’s need, we raised a novel issue: arguing her Husband, despite having an income approximately one-quarter of Wife’s, was not a “supported spouse.” To justify this result we noted that the family court explicitly found Wife was the primary caretaker of the parties’ three children and that the family court made no finding that Husband handled more of the household chores than Wife did. If one spouse is simply less ambitious or hard working does that make that spouse “supported”?

The traditional rationale for alimony was that the husband worked while the wife stayed home. Not only would the wife do almost all of the child rearing and household chores, she would also primarily handle the “emotional labor” of the marriage (although this term would not have been used at the time). Even if society had been as open to women in the labor force as it was to men, the fact that women deferred career development to run the household justified alimony when the marriage ended.

As the labor force became more accepting of women, and as women began entering higher paying and more prestigious positions, the unequal division of household labor lessened but still persisted–begetting the concept of the “second shift.” While more women worked, few earned as much as their husbands. Given wives significant second shift work during the marriage, the historic justifications for alimony still existed, even if the need for alimony was often reduced.

But in the past few years, I’ve encountered a few cases in which wives not only substantially outearn their husbands, but also handle the majority of the child care, household chores, and emotional labor. Until a few years ago, I almost never saw this situation: in the rare circumstances in which wives were outearning their husbands, their husbands were typically deferring career goals (and handling the majority of child care) to support their wives’ careers. Given current demographic trends, I expect this cohort to increase in size in the coming years.

Such wives are nothing like the hard charging husbands I encountered a generation ago. Such husbands almost uniformly directed their ambitions towards career and let their wives run the household. This small but increasing cohort of wives are simply more involved with their children and more ambitious in their career. My client on this appeal was awake before the roosters so she could go running before she woke up the children to get them ready for and to school and she literally burned the midnight oil so she could finish her work after the children were asleep. In such a situation, is a husband a “supported spouse” or is he simply less ambitious? And if he’s simply less ambitious, is there any justification for significant alimony or permanent alimony?

Roy Stuckey’s “Marital Litigation in South Carolina” lists five justifications for alimony. One of them is marital misconduct but the other four all involve compensation for the caregiving and reduction in career ambition that traditional homemaker services entails:

Compensation for the loss in standard of living

Compensation for loss of earnings arising from care of children

Compensation for loss of earnings arising from care of third parties

Compensation for loss due to investment in other spouse’s earning capacity

Absent these situations what is the justification for significant permanent alimony? Is alimony permanent welfare for unambitious spouses? I don’t think that was our legislature’s intention.

As noted above, it’s a novel issue on how to address alimony where one spouse (and in my experience to date that spouse is always the wife) was both more ambitious in career goals and more active in running the household. It’s an issue I expect South Carolina’s Supreme Court to address within a few years.

For the 25 years I have been practicing family law no published South Carolina appellate opinion has approved an award of rehabilitative alimony. While I only began reading unpublished opinions in 2004, I cannot recall any such unpublished opinions. I certainly cannot recall any opinion in which an appellate court reversed an award of permanent periodic alimony and awarded rehabilitative alimony instead.

Thus the May 15, 2019 Court of Appeals opinion in Gillmann v. Gillmann is unprecedented. Further the Gillmann opinion offers only opaque justification for this reversal:

We find the family court erred in awarding Wife permanent periodic alimony, and we award Wife alimony of $2,000 per month for eighteen months from the date of divorce. There was compelling evidence that, given her impressive experience and marketable skills in the banking industry, Wife would be able to find suitable employment at a significant salary within this eighteen month period.

We acknowledge permanent periodic alimony is the preferred form, but based on our review of the facts and considering the statutory factors, we find an alimony award of $2,000 per month to Wife for eighteen months is just and equitable in this case.

Citations omitted.

Perhaps Wife has “impressive experience and marketable skills in the banking industry” that would have enabled her to maintain the marital lifestyle within eighteen months of the divorce–a time period that elapsed on February 9, 2018. However the Gillmann opinion fails to substantiate this claim. Given how unusual it is for the South Carolina appellate courts to approve rehabilitative alimony–and it being even more unusual to reverse an award of permanent periodic alimony to reach this result–a more thorough explanation is certainly justified.

…And if ever a family law appeal justified a petition for certiorari–after the required petition for rehearing–Gillmann is it.

The March 20, 2019, South Carolina Supreme Court opinion in Sweeney v. Sweeney, 420 S.C. 69, 800 S.E.2d 148 (2019), “establishes” something I had assumed was already well established: in setting alimony, the family court should consider investment income available to the parties. After all, the sixth alimony factor is “the current and reasonably anticipated earnings of both spouses.” S.C. Code Ann. § 20-3-130(C)(6).

The issues in Sweeney were two fold. First, the parties’ experts disagreed on what rate of return to apply to Wife’s share of the parties’ liquid assets, with Husband’s expert suggesting a higher rate of return and more aggressive liquidation of principal. Second, the family court did not make a factual finding on what income Wife could earn from her share of the liquid assets.

After the Court of Appeals affirmed the family court’s award of $5,000 per month of permanent periodic alimony to Wife, Husband sought, and was granted, certiorari. The Supreme Court affirmed. In affirming, the Supreme Court noted that the family court clearly considered Wife’s potential investment income in setting alimony and held that the family court was not required to determine an actual numerical value to apply to investment income. The Supreme Court further emphasized the “reasonably anticipated” (emphasis in original) nature of investment income, suggesting that the family courts should use a conservative rate of return in considering the investment income potential of liquid assets.

So while potential investment income is a factor in alimony, the family court’s should apply a conservative rate of return and be conservative about liquidation of principal in determining alimony. Further, the family court is not required to determine an actual investment income figure in its alimony factual findings.