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Reason: I attest to the accuracy and integrity of this document Date: 2021-06-23 10:41:16 ARKANSAS COURT OF APPEALS Foxit PhantomPDF Version: DIVISION II, III & IV 9.7.5 No. CV-19-363

Opinion Delivered: May 13, 2020 WILLIAM B. CHERRY APPELLANT/CROSS-APPELLEE APPEAL FROM THE COLUMBIA V. COUNTY CIRCUIT COURT [NO. 14DR-14-245] RHONDA MARLENE CHERRY (NOW FULKROAD) APPELLEE/CROSS-APPELLANT HONORABLE SPENCER G. SINGLETON, JUDGE

AFFIRMED ON DIRECT APPEAL; AFFIRMED ON CROSS-APPEAL

RITA W. GRUBER, Chief Judge

The parties in this case, William Cherry and Rhonda Cherry (now Fulkroad), were

divorced by a decree entered on February 3, 2016,1 after twenty-five years of marriage.

William appeals from the divorce decree and a postdecree order, arguing that the circuit

court erred in (1) calculating income for purposes of alimony; (2) awarding alimony as a

substitute for division of nonmarital property; (3) holding him in contempt, calculating an

arrearage, and imposing a fine for nonpayment of alimony; and (4) finding no change of

circumstances to support a reduction or elimination of the alimony award. Rhonda cross-

appeals, arguing that the circuit court erred in (1) finding that two annuities resulting from

William’s personal-injury settlement were not marital property, and (2) refusing to order

1 This is the second time this case has been before us. In Cherry v. Cherry,

, we dismissed for lack of a final order because the divorce decree did not dispose of the counterclaim for divorce filed by William. A final order is now before us. William to obtain a life-insurance policy or maintain her as beneficiary on the annuities to

secure payment of alimony after his death. We affirm.

I. Facts

William and Rhonda married in 1990 and have two children. William was a truck

driver, and Rhonda stayed at home to care for their children. In addition, Rhonda took

care of William’s mom who suffered from Alzheimer’s and lived with them for twelve years

prior to her death. On March 20, 2006, William was driving his truck on the job when

another truck broadsided him. The accident resulted in severe traumatic injuries, which left

him permanently disabled and unable to work.

William filed a personal injury suit and reached a settlement in 2009, which is the

main focus of the present appeal. The approximately four-million-dollar settlement

consisted of three annuities. The first annuity is a Medicare set-aside annuity that pays

William $11,602 annually to cover his medical expenses or reimburse Medicare. The annual

lump-sum payments are guaranteed for thirty-two years with the last payment to be made

in April 2041.

The other two annuities are almost identical. One pays William $2,903 monthly for

life, guaranteed for thirty years, as well as lump-sum payments every five years—$25,000 in

May 2013, $50,000 in May 2018, $50,000 in May 2023, $50,000 in May 2028, and

$100,000 in May 2033. The other annuity pays William $2950 monthly for life, guaranteed

for thirty years, with an identical lump-sum payment schedule. In addition to the annuity

payments, William receives $826 in Social Security disability benefits each month.

2 Rhonda filed for divorce on December 23, 2014, requesting temporary and

permanent alimony. William filed a counterclaim for divorce. At the temporary hearing,

the court ordered temporary alimony of $1600 a month. Prior to the final hearing, the

parties reached an agreement as to the majority of their marital property but asked the circuit

court to determine the status of William’s annuities and Rhonda’s request for permanent

alimony.

Following the hearing, the circuit court entered an order on February 3, 2016,

granting Rhonda a divorce, finding that the annuities were not marital property, and

ordering William to pay Rhonda permanent alimony of $2750 a month. William appealed

from this order, and Rhonda cross-appealed. See footnote 1.

After dismissal, Rhonda filed a motion for contempt on June 22, 2018, stating in part

that William had failed to pay the full amount of the court-ordered alimony and asking the

court to order William to obtain a life-insurance policy to secure payment of the alimony

award or to maintain her as a beneficiary on the annuities. William denied that he was in

contempt claiming that he had been paying monthly alimony of $1800 based on the parties’

“agreement” and asked the court to reconsider the award of permanent alimony, or

alternatively, to modify it based on a material change in circumstances.

In a December 31, 2018 order, the circuit court (1) dismissed William’s counterclaim

for divorce; (2) found William in contempt for failing to pay the court-ordered alimony,

ordered him to pay $44,850 in arrears to be paid within thirty days, and if not paid within

thirty days, ordered that he be fined $50 a day until the judgement is satisfied; (3) denied

Rhonda’s request that William be ordered to obtain life insurance or maintain her as the

3 beneficiary on the annuities; (4) declined to amend the order of alimony on reconsideration;

(5) and denied William’s request for modification of alimony based on changed

circumstances. William filed a timely notice of appeal, and Rhonda filed a timely notice of

cross-appeal.

We first turn to Rhonda’s cross-appeal because her first point may be dispositive of

William’s arguments pertaining to the award of alimony and her second point can be

addressed independent of William’s direct appeal.

II. Rhonda’s Cross-Appeal

A. The Circuit Court Erred When It Ruled that the Income Annuities from the Personal-Injury Settlement Were Not Marital Property under Arkansas Code Annotated Section 9-12-315(b)(6)

Rhonda argues that the circuit court erred when it ruled that the income annuities

from the personal injury settlement were not marital property under Arkansas Code

Annotated section 9-12-315(b)(6) (Repl. 2015).

Divorce cases are reviewed de novo. Kelly v. Kelly,

, at 5–6,

, 822–23. A circuit court’s determination of whether certain property is marital

property is a fact question that will not be reversed unless it is clearly erroneous. Hargrove v.

Hargrove,

, at 1–2,

. A finding is clearly erroneous

when, although there is evidence to support it, the reviewing court on the entire evidence

is left with a distinct and firm conviction that a mistake has been committed.

Arkansas Code Annotated section 9-12-315(b)(6), provides:

(b) For the purpose of this section, “marital property” means all property acquired by either spouse subsequent to the marriage except:

....

4 (6) Benefits received or to be received from a workers’ compensation claim, personal injury claim, or Social Security claim when those benefits are for any degree of permanent disability or future medical expenses[.]

Here, it is undisputed that William’s injury occurred during the marriage; he is permanently

disabled as a result of the accident and no longer able to work; and his personal injury suit

was settled in the form of three annuities in 2009. The only dispute is whether the annuities

fall within the exception of section 9-12-315(b)(6)—benefits received or to be received

from a personal injury claim when those benefits are for any degree of permanent disability

or future medical expenses.

Rhonda argues, as she did below, that the two almost identical annuities do not fall

within the exception.2 The circuit court found that because William is totally and

permanently disabled, the annuity payments and the monthly Social Security payments

received by William cannot be designated as marital property because of the exclusion under

Arkansas Code Annotated section 9-12-315(b)(6).

Relying on Clayton v. Clayton,

,

(1988), Rhonda

contends that subsection (b)(6) excepts only the portion of the personal injury claim for

permanent disability or medical expense. In contrast to the present case, the personal injury

claim in Clayton had not been liquidated at the time of the divorce, and the supreme court

remanded for further proceedings to determine whether the benefits, if any, from the claim

must be considered marital property. The supreme court explained that

[Act 676 of 1987] excepted from marital property only those benefits from an unliquidated personal injury claim that would be for any degree of permanent 2 Rhonda acknowledges that the Medicare annuity is not marital property.

5 disability or future medical expenses. With these specific benefits excepted, the remaining benefits or elements of damage from one’s personal injury claim are subject to division as marital property pursuant to

(a)(1)(A).

Clayton,

,

.3

After Clayton, the supreme court stated in Mason v. Mason,

,

(1995), that “the mere labeling of a claim as ‘personal injury’ does not

satisfy the requirement for exemption from marital property. It is necessary that the claim

be for a degree of permanent disability or future medical expenses.” The Mason court

implemented a two-prong test to determine whether a claim labeled as a “personal injury”

satisfies the requirement for an exemption from marital property: (1) the claim must be for

a degree of permanent disability or future medical expenses, and (2) the injury must be

sustained on the job or in the consequence of a tortious act. See Skelton v. Skelton,

,

(1999); Collins v. Collins,

,

(2001).

In both Collins and Skelton, the appellants challenged the circuit court’s findings that

the settlements were excepted from the definition of marital property. The supreme court

affirmed in both cases. In Collins, the court held that overwhelming evidence supported the

circuit court’s conclusion that the award was for a degree of permanent disability and not

subject to division. Collins,

,

. The Skelton court stated that

3 Rhonda, in contravention of our rule that prohibits citation to unpublished opinions, cites Montroy v. Montroy,

, for the proposition that William had the burden to prove which part of his settlement was for his disability and exclude other damages that would be considered marital property. Rule 5-2(c) provides that supreme court and court of appeals opinions “issued before July 1, 2009, and not designated for publication shall not be cited, quoted, or referred to by any court or in any argument, brief, or other materials presented to any court (except in continuing or related litigation upon an issue such as res judicata, collateral estoppel, or law of the case).”

6 the parties did not dispute that Mr. Skelton was injured on the job or the 1991 determination

that Mr. Skelton suffered from an anxiety disorder. Skelton,

,

.

The court noted that eight years after the 1991 determination, Mr. Skelton continued to be

compensated for that disability; therefore, the continued compensation reflects he still

suffered from a degree of permanent disability.

William contends that the circuit court correctly employed the two-prong test set

out in

in its letter ruling:

There is no question but that the defendant is totally and permanently disabled and that he continues to be under the care of doctors and seeks medical care at least monthly. He is taking numerous medications daily and pays significant medical bills and incurs other expenses regularly as a result of his injuries. Upon review of the Arkansas statutory law and recent cases dedicated to this issue, the Court is of the opinion that the periodic payments received by the defendant as a result of the structured settlement and the income received by reason of his workers’ compensation claim of $810.00 monthly, cannot be designated as martial property and therefore subject to division by the Court.

Here, both prongs of the Mason test are met. There is no dispute that William was

driving his truck when another truck struck him broadside, causing severe traumatic injuries.

William sued the parties responsible for the accident and reached a settlement. It is also

undisputed that William is permanently disabled and is unable to work. On these facts, we

cannot say that the circuit court’s finding that the annuities were not marital property is

clearly erroneous.

B. The Circuit Court Erred in Failing to Order William to Purchase a Life Insurance Policy or to Not Change the Beneficiary on the Two Income Annuities

For her second point on cross-appeal, Rhonda contends that the circuit court erred

in failing to order William to purchase a life-insurance policy or to not change the

beneficiary on the two income annuities payable for his lifetime in order to secure payment

7 of the alimony after William’s death. Rhonda made this request in her motion for contempt.

The circuit court denied her request, recognizing that while there may be some authority

to support her argument, it is the legislature’s intent for alimony to cease upon the death of

either party. William responds that to the extent that the payments designated by the circuit

court are alimony, security is inappropriate.

Arkansas Code Annotated section 9-12-312(a)(2) provides in part:

(2) Unless otherwise ordered by the court or agreed to by the parties, the liability for alimony shall automatically cease upon the earlier of:

....

(A) The death of either party[.]

Rhonda cites Farrell v. Farrell,

, in support of her argument. In that case,

we reversed and remanded because the circuit court failed to comply with Arkansas Code

Annotated section 9-12-315 and there was uncertainty as to whether the $13,000 monthly

payment was payment of wife’s share of marital property or payment of alimony to equalize

an unequal distribution of the marital estate. Farrell,

. We noted

that if the circuit court was attempting to have husband pay wife for her share of the marital

property, it should have upheld its original order to have husband provide wife with some

form of security such as life insurance, citing Rudder v. Hurst,

,

.

In Rudder, this court upheld the circuit court’s order directing a husband, who was

ordered to pay child support and alimony, to maintain a life insurance policy to secure both

8 obligations. Rudder,

, at 11–12, 337 S.W.3d at 573–74.4 There, we

recognized that our supreme court in Raney v. Raney,

,

(1978),

affirmed a circuit court’s order that the husband maintain a life-insurance policy in lieu of

giving the wife an interest in marital property. In addition to Raney, we noted that Arkansas

Code Annotated section 9-12-312(c)(1) provides that a court may require a person ordered

to pay money for the support and care of any children to post a bond or give some other

guarantee. We held that the circuit court had the authority to order appellant to maintain a

life insurance policy because “[b]ecause the supreme court has indicated its approval of an

order requiring the maintenance of a life insurance policy under these circumstances, and

based on section 9-12-312(c)(1).” Rudder,

. at 11–12, 337 S.W.3d at

573–74.

The present case is distinguishable because it does not involve either child support

or payment for marital property. Because alimony generally terminates upon the death of

the payor unless otherwise ordered by the court or agreed to by the parties, and because it

does not involve any payment for marital property or child support, we cannot say that the

circuit court erred in refusing to order William to secure payment of the alimony award in

the event of his death.

III. William’s Direct Appeal

A. The Circuit Court Erred in Calculating William’s Monthly Available Resources to Include Amounts Received Annually or Every Five Years

4 At the time of the 2008 divorce in Rudder, the children were about eight and ten years old, and the court awarded temporary alimony for three years.

9 An award of alimony is not mandatory but is solely within the circuit court’s

discretion. Nauman v. Nauman,

, at 7,

. We will

not reverse absent an abuse of that discretion.

An abuse of discretion means discretion

improvidently exercised, i.e., exercised thoughtlessly and without due consideration.

Foster v. Foster,

,

. The circuit court is in the best position

to view the needs of the parties in connection with an alimony award.

If alimony is

awarded, it should be set at an amount that is reasonable under the circumstances.

William argues on appeal that the circuit court erred in calculating his income to

include lump-sum annuity payments received annually or every five years. He suggests that

his income for purposes of calculating alimony should have included only the monthly

annuity payments of $2950 and $2903, as well as monthly Social Security income of $826,

which totals $6,679.5 He argues that the circuit court calculated alimony using an incorrect

monthly income of $9600.

Citing Craig v. Craig,

,

, William contends that

it is error for the circuit court to include money not available to a payor in determining

income for alimony purposes. That case, however, involved a situation in which the court

improperly considered a payor’s girlfriend’s income deposited into a joint account. This

court held that the circuit court’s discretion was exercised improvidently when it imputed

the payor’s girlfriend’s salary in determining his income for alimony.

at 7–8,

.

5 At the time of the November 2018 hearing, William’s monthly Social Security income was $804.

10 In determining William’s income, the circuit court’s order provided:

7. A Medicare Set Aside fund/account in the defendant’s name pays him a lump sum amount of $11,600.00, annually. This is to go toward his future medical or to reimburse Medicare. A separate contract pays the defendant $2,950.86 monthly plus lump sum payment of $50,000.00 every five years from May 2018 through 2028 and a final payment of $100,000.00 in May 2033. A third contract pays the defendant $2,903.00 monthly plus lump sums of $50,000.00 every five years from May 2018 through May 2028 and a final sum of $100,000.00 in May 2033. Therefore, the defendant can expect to receive approximately $8,000.00 monthly by reason of the three contracts plus a total of $100,000.00 every five years for an average of an additional $1,666.00 per month from the lump sums. Thus, the defendant can be expected to receive net monthly amounts of approximately $9,600.00.

The circuit court’s calculation of income is confusing at first glance. However, the

total income from all sources except the two $50,000 periodic lump-sum annuity payments

amounts to approximately $7645.6 The circuit court appears to have rounded this number

to $8000 before adding the two guaranteed lump-sum annuity payments of $50,000 every

five years that equal $1666.66 (100,000/60 months = 1666.66) to reach the $9600 figure,

which the court referred to as the “approximate amount” of income. 7

In determining alimony, the income of both parties, from whatever source, should

be considered. Craig v. Craig,

,

(citing Davis

v. Davis,

,

(2002); Cochran v. Cochran,

,

(1983)). Similarly, the definition of income under the child-support

guidelines is broadly construed. Dare v. Frost,

, at 6. In determining income for

6 The sources included the $826 monthly Social Security, the $2950 monthly annuity, the $2902 monthly annuity, and $966, which represents the Medicare annuity of $11,600 divided monthly.

The circuit court did not include the final lump-sum payments of $100,000 for each annuity to be received in May 2033.

11 purposes of child support, this court has stated that common sense dictates that an average

of appellant’s monthly income over a year or two years will present a truer picture of his

income than a calculation derived solely by reference to one of the highest earning months.

Delacey v. Delacey,

,

(2004). Our supreme court

approved this method in Taylor v. Taylor,

,

(2007).

Here, the circuit court considered what William’s average monthly income would

be including the periodic, lump-sum amounts that he had received in the past and will

receive in the future.8 Although William characterizes these periodic amounts as “imputed”

amounts, these amounts are guaranteed to be paid to him. In reviewing an alimony award,

our role is to simply determine whether the circuit court abused its discretion. Medlen v.

Medlen,

, at 8–9. We are not to substitute our judgment for that of the

circuit court. Id.; see also Harbour v. Harbour,

,

(1959). As stated

previously, the circuit court was in the best position to determine the needs of the parties

in connection with the alimony award. On these unique facts and considering our standard

of review, we cannot say that the alimony award was an abuse of the circuit court’s

discretion.

B. The Circuit Court Erred in Awarding Alimony as a Substitute for Division of Nonmarital Property

8 While the dissent characterizes the lump-sum annuity payments payable every five years as “future income,” it should be noted that two $25,000 payments were paid in May 2013, prior to divorce action, which began in December 2014. Likewise, just prior to William’s July 2018 motion for reconsideration or modification of the support order, an additional two $50,000 payments were paid in May 2018.

12 Although William claims his point on appeal is that the circuit court erred in

awarding alimony as a substitute for division of nonmarital property, he is essentially

challenging the alimony award. He argues that the award of permanent alimony without

reference to Rhonda’s need or his ability to pay show that the award was used as a substitute

for a division of the annuities, which the court correctly declared to be nonmarital property.

Arkansas Code Annotated section 9-12-312(a) states that the circuit court may enter

an order concerning alimony that is “reasonable from the circumstances of the parties and

the nature of the case.” As stated above, the circuit court is in the best position to view the

needs of the parties in connection with an alimony award.

In determining the

amount of alimony to be awarded, the circuit court is given great discretion, and the

appellate courts will not disturb the award on appeal unless there is an abuse of that

discretion. Farrell v. Farrell,

, at 7–8,

.

The purpose of alimony is to rectify the economic imbalance in earning power and

standard of living of the parties to a divorce in light of the particular facts of each case.

The primary factors to be considered in making or changing an award of alimony are the

need of one spouse and the ability of the other spouse to pay.

Secondary factors to be

considered by the circuit court include (1) the financial circumstances of both parties; (2)

the amount and nature of the income, both current and anticipated, of both parties; (3) the

extent and nature of the resources and assets of both parties; and (4) the earning ability and

capacity of both parties.

The amount of alimony awarded should not be reduced to a

“mathematical formula” because the need for flexibility outweighs the need for relative

certainty.

13 William suggests that the court failed to consider the primary factors of Rhonda’s

need and his ability to pay but does acknowledge that the court considered some of the

secondary factors. He stated that his monthly expenses before alimony were $6120. The

divorce decree provides:

10. The plaintiff is forty-four years old. She has a very limited work history. She is physically capable of working. However, she has no training and no high school education or GED. She currently works part time and earns approximately $120.00 per week. Based upon the parties’ respective incomes and the plaintiff’s ability to earn monies in the future, as well as other resources that are available to the parties, the plaintiff should be entitled to a permanent alimony.

11. Upon considering the defendant’s total sources of income, $2,750.00 per month is a reasonable amount of permanent alimony for him to pay the plaintiff, commencing October 1, 2015. . . .

These statements demonstrate that the court considered Rhonda’s need and

William’s ability to pay as well as additional factors. The court heard much testimony

regarding the parties’ incomes and expenses. At the time of the divorce decree, Rhonda and

William had respective incomes of approximately $400 and $9300 a month. After the award

of alimony, the parties had respective monthly incomes of $3150 and $6650.

As he did in his first point on appeal, William challenges the inclusion of the periodic

payments for calculating alimony. He points out that at the temporary hearing, the circuit

court did not include the periodic payments received every five years in awarding temporary

alimony stating that it would not be fair to do so because the money is not available to him.

William argues that the circuit court when awarding permanent alimony did “exactly what

it had determined to be unfair.” His characterization of what the circuit court said is

incomplete. The circuit court stated:

14 So I don’t think it would be fair at this point to – for the purpose of this hearing to state that he would have available to him for the purpose of paying spousal support the payments that are given every five years in that that money is just not available to him, and I don’t know that it will be.

The February 4, 2015 temporary hearing was held shortly after William had filed his answer

and counterclaim. Given the complexity of the issues regarding the annuities, the court

declined to consider the periodic payments at that time for the purpose of temporary

support.

The circuit court has the authority to make an award of alimony that is reasonable

under the circumstances, and we will not disturb the award on appeal unless there is an

abuse of that discretion. See

(a); Farrell, supra. On this record,

we cannot say that the circuit court exercised its discretion improvidently, thoughtlessly, or

without due consideration.

C. The Circuit Court Erred in Holding William in Contempt, Calculating an Arrearage, and Imposing a Fine for Nonpayment

Disobedience of any valid judgment, order, or decree of a court having jurisdiction

to enter it may constitute contempt, and punishment for such contempt is an inherent power

of the court. Balcom v. Crain,

,

. We will not

reverse a circuit court’s finding of civil contempt unless that finding is clearly against the

preponderance of the evidence. Id. at 4,

.

The divorce decree ordered William to pay Rhonda $2750 a month in permanent

alimony beginning on October 1, 2015. Subsequent to the decree, William continued to

pay $1600 a month, the amount he was ordered to pay in the temporary order but increased

it to $1800 a month when one of their adult daughters moved in with Rhonda.

15 Rhonda filed a motion for contempt on June 22, 2018, alleging that William willfully

failed to abide by the court’s order to pay $2750 monthly and instead continued to pay

according to the temporary order, resulting in an arrearage of over $36,800. William

responded that he was paying at the rate “agreed to by the parties.”

Following the November 2018 hearing, the circuit court took the matter under

advisement. On December 31, the court found William in contempt for failing to pay the

court-ordered alimony of $2750. The court considered his claim that he was paying $1800

a month but found that William conceded at the hearing that he had “volunteered” to pay

the additional $200. The circuit court suspended sanctions and awarded Rhonda a judgment

for the $44,850 in arrears to be paid within thirty days of the order. The court additionally

ordered that if William failed to pay within thirty days, he would be fined $50 a day until

the judgment is satisfied.

William argues that Rhonda should be estopped from claiming an arrearage after

leading him to believe they had agreed to a different amount. We cannot say that the circuit

court’s finding that William willfully failed to pay $2750 a month in alimony is clearly

erroneous. At the hearing, William acknowledged that he was aware that he was ordered to

pay $2750 and was not doing so. He also testified that he had been advised that there could

be a judgment against him.

William argues on appeal that his inability to pay is a defense to contempt. He did

not, however, raise this below. The only affirmative defense raised in his motion was that

he was paying at the rate “agreed to by the parties.” Inability to pay is a defense to a

contempt citation unless the inability is due to action or inaction on the part of the appellant.

16 Aswell v. Aswell,

,

(2004). Even considering this

argument, William testified to many new financial obligations he took on by choice

subsequent to the court’s order setting alimony. Thus, any inability to pay was due to his

own actions.

Alternatively, William requests that he be given a credit for the extra $200 he paid

in calculating his arrears. The court found that the payment of an additional $200 was

voluntary and this finding is not clearly erroneous.

Finally, William contends that the circuit court’s erred in ordering him to pay a $50

per day fine if the judgment for arrears was not paid within thirty days. A contempt fine for

willful disobedience that is payable to the complainant is remedial and therefore constitutes

a fine for civil contempt, but if the fine is payable to the court, it is punitive and constitutes

a fine for criminal contempt. Applegate v. Applegate,

,

(citing Omni Holding & Dev. Corp. v. 3D.S.A., Inc.,

,

(2004) (“Here, the fine is to be paid to the complainant, and we conclude that it

is for civil contempt.”)).

In the present case, the order provided that the circuit court “suspends the imposition

of any sanctions for contempt at this time.” The order merely provided that a $50 per day

fine was to be paid if the judgment for arrearages was not paid within thirty days.9 This

predetermined sanction for failure to pay the arrearage is not ripe for review. Turner v.

Brandt,

,

(2007).

9 We note that the order did not state to whom the fine was to be paid.

17 D. The Circuit Court Erred in Finding No Change of Circumstances to Support a Reduction or Elimination of the Alimony Award

An award of alimony is always subject to modification upon application of either

party.

(Repl. 2015). Such modification must be based,

however, on a change in the circumstances of the parties. Becker v. Becker,

,

. The primary factors to be considered in making or changing alimony

are the need of one spouse and the ability of the other spouse to pay.

A decision regarding

alimony is a matter that lies within the circuit court’s sound discretion and will not be

reversed on appeal absent an abuse of that discretion.

In his request for modification of alimony, William alleged that Rhonda’s situation

had improved significantly, and his ability to pay had declined significantly, although his

income remained about the same. In denying the request, the circuit court found that while

Rhonda had obtained permanent employment, her income “remains relatively limited and

considerably less than that of [William].”

William argues that at the time of the divorce in 2015, Rhonda was making only

$100 per week but now makes approximately $1500 per month. He suggests that this

increase in earnings is not insignificant, especially considering that it amounts to what their

household income was prior to his accident. In addition, he argues that his inability to pay

has substantially decreased, which he attributes to his medical expenses “drastically

increasing.” William’s calculation of his medical expenses admittedly included amounts that

were not recurring or items that had not yet been paid by insurance.

Most importantly, William contends that the circuit court failed to consider

Rhonda’s need and his ability to pay. While the order may not say those words, the circuit

18 court heard testimony and considered the parties’ affidavits of financial means and

posthearing briefs in denying his request for modification. The court ultimately found that

Rhonda’s income remains “limited” and considerably less than William’s income. We

cannot say that the circuit court abused its discretion in denying William’s request for

modification.

Affirmed on direct appeal; affirmed on cross-appeal.

ABRAMSON, WHITEAKER, VAUGHT, and BROWN, JJ., agree.

VIRDEN, HARRISON, KLAPPENBACH, and HIXSON, JJ., concur in part; dissent in

part.

VIRDEN and HIXSON, JJ., dissent.

BRANDON J. HARRISON, Judge, concurring in part and dissenting in part.

My disagreement with the majority focuses on William Cherry’s first point on appeal, which

presents the following issue of first impression for Arkansas’s alimony law: did the circuit

court err when it used money that Cherry won’t receive for many months, and in some

cases many years, to set his present monthly alimony obligation? The answer is yes.

Therefore, the circuit court’s alimony award should be reversed and the case remanded for

a recalculation. And any alimony arrearage based on Cherry’s mistakenly inflated monthly

income should also be recalculated.

In his 2015 affidavit of financial means, Cherry asserted that his monthly income

consists of his Social Security ($826) and $2,903 and $2,950 per month from two annuities—

all of which totals $6,679. He argues that the circuit court abused its discretion when it

determined that his monthly income is $9,600, an approximately $2,920 inflation of what

19 he receives each month. The sources of the inflation were a Medicare set-aside payment of

$11,602, which Cherry receives one time every year, and lump-sum payments that he

receives every five years from additional annuities. Cherry says that the $2,750 per month

in permanent alimony the circuit court ordered him to pay Fulkroad arose from this

mistaken calculation of his monthly income. I agree.

The purpose of alimony is to rectify the economic imbalance in the earning power

and standard of living of the divorcing parties given the particular facts of each case. Nauman

v. Nauman,

,

. The primary factors to be considered in

determining whether to award alimony are the financial need of one spouse and the other

spouse’s ability to pay. Kuchmas v. Kuchmas,

,

(2006). In

addition, the following secondary factors should be considered: (1) the financial

circumstances of both parties; (2) the couple’s past standard of living; (3) the value of jointly

owned property; (4) the amount and nature of the parties’ income, both current and

anticipated; (5) the extent and nature of the resources and assets of each of the parties; (6)

the amount of income of each that is spendable; (7) the earning ability and capacity of each

party; (8) the property awarded or given to one of the parties, either by the court or the

other party; (9) the disposition made of the homestead or jointly owned property; (10) the

condition of health and medical needs of both husband and wife; (11) the duration of the

marriage; and (12) the amount of child support. Moore v. Moore,

,

. If alimony is awarded, it should be an amount that is reasonable under all the

circumstances. Williams v. Williams,

,

.

20 An unreasonable amount of alimony was set in this case. There is no dispute that

the lump-sum annuity payments every five years will be future income for Cherry and that

the monthly annuity payments are current income for Cherry. (Whether an annual lump-

sum Medicare set-aside payment can be income for alimony purposes was not squarely

challenged, so those payments have been treated as an income source in this case.) It’s true

that this court, and our supreme court, have agreed that “averaging a person’s fluctuating

monthly income over a period of one or two years presents a ‘truer picture’ of the person’s

income than a calculation based on just one month.” Taylor v. Taylor,

,

(2007) (citing Delacey v. Delacey,

,

(2004)). But those child-support cases refer to a payor’s income that had already been

received. They don’t address lump-sum annuity payments that won’t be realized for years

to come. No case embodies the rule of alimony law that the majority has wrought today.

In fact, the contrary principle has arguably been applied recently by our supreme court. See

Dare v. Frost,

, at 6,

(affirming a circuit court’s conclusion

that the growth of a portfolio should be counted as income for child-support purposes only

when the growth is “realized” by the owner).

This court should be ruling this way today: when Cherry gets paid the annuity

lump-sum payments and Medicare set-aside sums, then Fulkroad may promptly petition the

court for some percentage of them; the court can then address the request. In the meantime,

Cherry should not be made to pay a monthly alimony obligation based on a monthly income

calculation that is much greater than what he in fact receives. The ruling is unfair because

21 it ensures that Fulkroad gets certain annuity and Medicare set-aside money before the

designated recipient himself gets it.

* * *

Paying it forward is a noble thing to do for the patron behind you at Starbucks; but

it’s unwise to use the concept in an alimony case. When Cherry gets the money in futuro,

Fulkroad can ask for some of it. In the meantime, the circuit court’s alimony award should

be reversed and the case remanded so the court can recalculate Cherry’s present alimony

obligation. Any related arrearage that accrued based on the inflated obligation should also

be reconsidered.

I join the remainder of the majority opinion.

VIRDEN, KLAPPENBACH, and HIXSON, JJ., join.

KENNETH S. HIXSON, Judge, dissenting. I disagree with the majority’s holding,

“On this record and considering our standard of review, we cannot say that the alimony

award was an abuse of the circuit court’s discretion”; therefore, I respectfully dissent.

In Moore v. Moore,

,

, our supreme court held that

divorce cases are reviewed de novo citing Skokos v. Skokos,

,

(2001). It further stated,

We review the circuit court’s findings pertaining to . . . alimony and affirm them unless they are clearly erroneous or against the preponderance of evidence.” Id.; Taylor v. Taylor,

,

(2007). A finding is clearly erroneous when the reviewing court, on the entire evidence, is left with the definite and firm conviction that a mistake has been committed. Skokos,

,

. The appellant must show that the trial court abused its discretion by making a decision that was arbitrary or groundless.

22 (Emphasis added.) Regardless of the apparent dichotomy regarding the standard of review,

I would hold the circuit court’s decision to use future lump-sum annuity payments in its

calculation of a present-day alimony award is in error and reverse and remand.

The majority cites the following cases in support of its conclusion that the circuit

court did not err in using future lump-sum annuity payments in calculation of present-day

alimony: Foster v. Foster,

,

;1 Craig v. Craig,

,

; Cochran v. Cochran,

,

(1983);

Dare v. Frost,

;2 Delacey v. Delacey,

,

,

(2004); and Taylor v. Taylor,

,

(2007). However, none of these

cases embrace the inclusion of future periodic lump-sum money for calculating present-day

alimony.

In Foster v. Foster,

,

, appellant’s tax returns indicated

he earned an average of $163,000 in 2011 and 2012. The court also noted that appellant

had deposited an average of $12,000/month into the parties’ joint checking account to pay

for the family’s monthly expenses. Based on this history, the circuit court determined his

income for alimony was $10,363/month. Our supreme court affirmed the circuit court’s

rehabilitative alimony award.

1 It should be noted that this opinion was subsequently vacated by the supreme court in Foster v. Foster,

,

. 2 It should be noted that this opinion was subsequently vacated by the supreme court in Dare v. Frost,

,

.

23 In

the circuit court used income earned by appellant’s girlfriend to

calculate appellant’s income for an award of alimony. This court determined the circuit

court abused its discretion when it acted improvidently and reversed and remanded the case

to the circuit court.

In

appellant was receiving social security and military disability

payments, and the circuit court awarded appellee $250/month in alimony. 3 We stated,

“The only question properly before this court is whether a state trial court can give

consideration to disability income derived from United States Army and Social Security in

determining the amount of alimony to be paid.” Cochran, 7 Ark. App. at 146–47,

. We held that it was proper for the circuit court to consider the appellant’s

disability income and social security benefits.

In Dare v. Frost,

,

, Dare had a stock account, and he

sold some stock and reinvested his gain in the stock market. Our supreme court held that

because Dare did not realize the gain, the gain was not income for child-support purposes.

In

appellant argued that the circuit court erroneously calculated his

income for child-support purposes, and we agreed. Appellant was a physician who earned

$246,424 in 2001 and $244,291.93 in 2002. At the trial for divorce, appellee wife called an

expert witness to testify to appellant’s income. For some reason, the expert witness did not

use the 2001 and 2002 actual annual income-earned amounts; rather, the expert witness

pulled out one month—November 2002 (which happened to be the appellant’s second-

3 The opinion did not contain any information regarding the amount of the appellant’s income.

24 best month)—and opined that appellant’s income for child-support purposes should be

calculated by annualizing one month’s salary. The circuit court adopted those figures in

calculating appellant’s income for child support, and we reversed and remanded on that

issue. In doing so, we pointed out that common sense dictates that an average of appellant’s

historic monthly income over a year or two years will present a truer picture of his income

than a calculation derived solely by a future annualization of his highest-earning months.

Finally, in

the circuit court found that Kevin Taylor earned a sum of

$555 per week in take-home pay and ordered him to pay $149 per week in child support

to Kristi Taylor for the support of their two children. The circuit court further ordered

Kevin to pay $110 per-week alimony to Kristi. Our supreme court affirmed the circuit

court’s child-support and alimony awards.

In summary, none of the cases cited by the majority support the proposition that

future lump-sum annuity payments can or should be used to calculate present-day monthly

alimony payments.

Since there is a lack of precedent for a circuit court to use future lump-sum annuity

payments in the calculation of present-day alimony, I conclude that this is an issue of first

impression. Arkansas Code Annotated section 9-14-201(4)(A) defines “income” as “any

periodic form of payment due to an individual, regardless of the source, including wages,

salaries, commissions, bonuses, workers’ compensation, disability, payments pursuant to a

pension or retirement program, and interest.” In Foster, our supreme court stated, “We

review issues involving statutory interpretation de novo on appeal, as it is for this court to

determine what a statute means. . . . However, unless it is shown that the circuit court erred,

25 we will accept its interpretation as correct.” Foster,

,

.

Thus, the issue is whether William’s five-year lump-sum payments (which continue until

2033) meet the definition of income as defined under Arkansas Code Annotated section 9-

14-201(4)(A).

While this is a case pertaining to alimony, appellate courts have consistently held that

precedent discussing income for child support is guidance to determine income for the

calculation of alimony. See Cole v. Cole,

,

(2003);

Schumacher v. Schumacher,

,

(1999). There are some key

principles and similarities found in these cases. In Delacey, we stated, “It is the ultimate task

of the trial judge to determine the expendable income of a child-support payor.”

,

(emphasis added). In Grimsley v. Drewyor,

,

, we held that an unliquidated inheritance was not income for purposes

of calculating child support because the spouse had not yet received any money from the

inheritance. In Dare, supra, the supreme court held that an unrealized gain from the sale of

stock is not income for child support. In Hiett v. Hiett,

,

(2004), this court discussed future exercised stock options, and the holding therein is

particularly relevant. In Hiett, James Hiett was employed by Walmart and was granted a

certain number of unvested stock options each year. The stock options would vest in the

future after specific time periods. In determining James’s income for child-support purposes,

the circuit court held that, in the future, when James exercised any stock option, the

proceeds from the exercise of the stock option would be income for child-support

calculations. What is crucial to understand is that the Hiett court held that the proceeds

26 from the future stock options is income in the year when it is exercised and not somehow

“paid forward” to calculate present-day child support. This is one of the points made in

Judge Harrison’s dissent. In the future, when those five-year periodic annuity payments are

made, Rhonda certainly has the right to petition the court and request a partial distribution

of those future payments as alimony. At those future hearings, Rhonda can introduce

evidence regarding the twelve factors set forth in Foster, the polestar of which is the financial

need of one spouse and the other spouse’s ability to pay. By using the terminology of

Delacey, the future five-year payments until 2033 are not “expendable” today; of Grimsley,

the future five-year payments have not been “received”; of Dare, the future five-year

payments have not been “realized”; and of Hiett, the future five-year payments have not

been “exercised.” Hence, Delacey, Grimsley, Dare, and Hiett make it clear that those future

five-year payments are not considered income today in the calculation of present-day

alimony.

In conclusion, depending on the schizophrenic nature of the standard of review in

these cases, I would find: (1) if the proper analysis of this case is the interpretation of

Arkansas Code Annotated section 9-14-201(4)(A) (which I support), that under our de novo

standard of review, the circuit court erred in finding that the future five-year annuity

payments are income for present-day alimony payments; (2) if the proper analysis is clearly

erroneous as set forth in

that the court’s finding that the future five-year annuity

payments are income for present-day alimony payments is clearly erroneous and against the

preponderance of the evidence; and (3) if the proper analysis is an abuse of discretion, that

27 the court abused its discretion in finding that the future five-year annuity payments are

income for present-day alimony payments. Thus, I would reverse and remand.

VIRDEN, J., joins.

Bell & Boyd, PLLC, by: Karen Talbot Gean, for appellant.

Crane, Phillips & Rainwater, PLLC, by: Steve R. Crain, for appellee.

28