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SJC-12240

DEREK L. YOUNG vs. JOY G. YOUNG (and a consolidated case1).

Norfolk. March 6, 2017. - September 25, 2017.

Present: Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ.2

Divorce and Separation, Alimony, Findings.

Complaints for divorce filed in the Norfolk Division of the Probate and Family Court Department on January 29 and February 5, 2013.

After consolidation, the case was heard by Jennifer M.R. Ulwick, J.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

David H. Lee (Jessica M. Dubin also present) for the husband. David E. Cherny (Erin M. Shapiro also present) for the wife. W. Sanford Durland, III, & Glenn M. Schley, amici curiae, submitted a brief.

1 Joy G. Young vs. Derek L. Young. 2 Justice Hines participated in the deliberation on this case prior to her retirement. 2

Jennifer C. Roman & Johnathan P. Diggin, for Women's Bar Association, amicus curiae, submitted a brief.

GANTS, C.J. The Probate and Family Court judge in this

divorce action made two rulings that are the primary subjects of

this appeal. First, the judge found that, where the husband's

income from his employment was "on an upward trajectory," the

wife may only maintain a standard of living "consistent with the

marital lifestyle (which was one where the parties['] needs

expanded in accordance with the increasingly available income)"

by an award of general term alimony that increases commensurate

with the increase in the husband's income. Second, the judge

found that, because of "the complex nature of [the husband's]

compensation over and above his base salary and bonus," and

because of "the constantly shifting nature of [the husband's]

compensation," "it is reasonable and fair in the circumstances"

to award alimony to the wife in the amount of thirty-three per

cent of the husband's gross income, rather than a fixed amount.

We conclude that, where the supporting spouse (here, the

husband) has the ability to pay, the need for support of the

recipient spouse (here, the wife) under general term alimony is

the amount required to enable her to maintain the standard of

living she had at the time of the separation leading to the

divorce, not the amount required to enable her to maintain the

standard of living she would have had in the future if the 3

couple had not divorced. We also conclude that, although there

might be circumstances where it is reasonable and fair to award

a percentage of the supporting spouse's income as general term

alimony to the recipient spouse, those circumstances are not

present in this case. We therefore remand the case to the

Probate and Family Court with instructions to reevaluate the

alimony judgment in light of our opinion and enter a new

judgment accordingly.3

Background. Derek L. Young (husband) and Joy G. Young

(wife) had been married for nearly twenty-four years when the

husband filed a complaint for divorce in the Probate and Family

Court in January, 2013. The wife filed a complaint for divorce

one week later, and the two actions were effectively treated as

one. In October, 2013, the judge ordered the husband to pay

temporary alimony in the amount of $48,950 per month. After a

four-day trial, the judge made voluminous findings of fact and

issued an amended judgment of divorce on September 25, 2015. We

summarize only those findings relevant to the issues on appeal.

The judge found that the husband works as a "high level

executive" with a financial institution who receives substantial

compensation in various forms. Apart from his annual base

salary (which was $350,000 in 2014) and an annual bonus (which

3 We acknowledge the amicus briefs submitted by the Women's Bar Association, and by attorneys W. Sanford Durland, III, and Glenn M. Schley. 4

was $1.6 million in 2013), he receives compensation through at

least seven different compensation programs or share plans,

including several types of stock options, a special bonus

program, investor entity units, and opportunities to purchase

shares of common stock at a discount. The compensation programs

vary in how consistently they produce income and in the amount

of income they produce. Some investment assets that are earned

are liquid and immediately transferrable, and some may not be

transferred or converted to cash until sometime in the future.

The amount earned, above and beyond the base salary and annual

bonus, through these compensation programs is both considerable

and variable. The husband's gross income from 2008 through 2012

was approximately $1.53 million in 2008, $2.07 million in 2009,

$3.81 million in 2010, $7.96 million in 2011, and $7.76 million

in 2012.

The judge found that the parties agreed early in their

marriage that the husband would work and the wife would "be a

stay-at-home parent and not be employed outside the home." As a

result, the wife has not worked outside the home since 1992, and

the judge found that she "has no ability to be employed at a

level to allow her to maintain a lifestyle post divorce similar

to that maintained during the marriage without alimony."

The husband's substantial compensation package allowed the

parties to enjoy "an affluent, upper-class station in life and 5

marital lifestyle during their marriage." The couple's expenses

increased as the husband's income increased during the course of

his employment. Before the separation, the parties were living

in a lavish, eight-bedroom home, driving luxury vehicles, and

regularly dining out three to four times a week at expensive

restaurants. They had purchased a summer home in Nantucket,

were spending "tens of thousands of dollars on articles of

clothing and handbags" from designer stores, and regularly

enjoyed expensive vacations.

The judge found that, after the parties separated, the wife

maintained a level of spending similar to what she spent during

the marriage. According to the wife's October 8, 2013,

financial statement, the wife's weekly expenses totaled $8,728

(or $453,856 per year) after subtracting expenses related to the

children's college tuition and room and board. However,

according to the wife's September 10, 2014, financial statement,

the wife's weekly expenses had increased to $12,575.77 (or

$653,940 per year). The judge found that "many of [the] wife's

expenses" were supported by the evidence at trial, but she

lacked "personal knowledge regarding her own expenses," certain

expenses were "overstated," and her "representations of expenses

on her financial statements [were] not an accurate reflection of

her needs." The judge did not make a finding regarding her

actual weekly or annual expenses or needs. 6

The wife sought alimony in the amount of $713,781.49 per

year. After considering the husband's ability to pay, the

wife's needs, and the other factors required by G. L. c. 208,

§ 34, the judge did not set a fixed amount of general term

alimony but instead ordered the husband to pay the wife each

year alimony in the amount of thirty-three per cent of his

annual gross income.4 The judge included within the husband's

gross income the husband's base salary and annual bonus, as well

as several of the additional components of the husband's

compensation package, including but not limited to the husband's

deferred bonus, special bonus, special retention bonus, special

dividends, and distributions for payment of taxes.5 The judge

reasoned, "Because the parties lived with the expectation and

reality that [the husband's] bonus level is on an upward

trajectory, and given the fact that their needs historically

followed this upward trajectory, and due to the complex nature

4 The judge determined that the husband's alimony obligation would extend until September 18, 2031, the death of one of the parties, or the wife's remarriage, whichever came first. 5 Under G. L. c. 208, § 53 (b), for purposes of determining the amount of alimony, with exceptions not relevant here, "income shall be defined as set forth in the Massachusetts child support guidelines." See Zaleski v. Zaleski,

(2014). Under the guidelines, "income is defined as gross income from whatever source," and specifically includes "salaries," "bonuses," "interest and dividends," and "perquisites of in-kind compensation to the extent that they represent a regular source of income." Child Support Guidelines § I(A) (Aug. 1, 2013). See Snow v. Snow,

(2017). 7

of [the husband's] compensation over and above his base salary

and bonus, it is reasonable and fair in the circumstances to use

a percentage for the future alimony particularly given the

constantly shifting nature of [the husband's] compensation."

The judge appointed a special master to oversee compliance with

the judgment and to assist in resolving disputes that might

arise.

The husband appealed, and we transferred the case to this

court on our own motion.

Discussion. 1. Determination of need for support.

"Alimony" is defined in the Alimony Reform Act of 2011,

St. 2011, c. 124 (act), as "the payment of support from a

spouse, who has the ability to pay, to a spouse in need of

support for a reasonable length of time, under a court order."

G. L. c. 208, § 48. Neither "ability to pay" nor "need of

support" is a defined term under the act. Rather, the act

identifies a number of factors that a judge must consider in

"determining the appropriate form of alimony and in setting the

amount and duration of support," and gives the judge the

discretion to consider other factors that the judge deems

"relevant and material." G. L. c. 208, § 53 (a).6 "A judge has

6 General Laws c. 208, § 53 (a), provides: "In determining the appropriate form of alimony and in setting the amount and duration of support, a court shall consider: the length of the marriage; age of the parties; health of the parties; income, 8

broad discretion when awarding alimony under the statute,"

Zaleski v. Zaleski,

(2014), citing Heins v.

Ledis,

(1996), but the act establishes

presumptive parameters: the amount of general term alimony

"should generally not exceed the recipient's need or [thirty] to

[thirty-five] per cent of the difference between the parties'

gross incomes established at the time of the order being

issued." G. L. c. 208, § 53 (b).

A judge must consider and weigh all the relevant factors,

but where the supporting spouse has the ability to pay, "the

recipient spouse's need for support is generally the amount

needed to allow that spouse to maintain the lifestyle he or she

enjoyed prior to termination of the marriage." Pierce v.

Pierce,

(2009). See Heins,

,

quoting Inker, Alimony and Assignment of Property: The New

Statutory Scheme in Massachusetts,

, 8

(1975) (noting "the inherent limitation of alimony that it be

only for 'the amount necessary to support the wife in the manner

of living to which she has been accustomed'"); Grubert v.

Grubert,

(1985) ("The standard of

employment and employability of both parties, including employability through reasonable diligence and additional training, if necessary; economic and non-economic contribution of both parties to the marriage; marital lifestyle; ability of each party to maintain the marital lifestyle; lost economic opportunity as a result of the marriage; and such other factors as the court considers relevant and material." 9

need is measured by the 'station' of the parties -- by what is

required to maintain a standard of living comparable to the one

enjoyed during the marriage"). Two of the statutory factors in

§ 53 (a) are "marital lifestyle" and the "ability of each party

to maintain the marital lifestyle." Both focus on the spouses'

lifestyle during the marriage. See Zaleski,

("Because 'need' is a relative term for purposes of the act, it

must be measured in light of mandatory considerations that

include the parties' marital lifestyle"). See also 1 Lindey and

Parley on Separation Agreements and Antenuptial Contracts

§ 22.63[2][e] (2d ed. 2017) ("standard of living experienced

during the several years before the divorce" relevant for

alimony determination is preseparation standard of living); L.D.

Wardle & L.C. Nolan, Fundamental Principles of Family Law 715

(2d ed. 2006) ("the historic baseline for measuring 'need' has

been the standard of living the parties enjoyed during the

marriage"). Thus, both the act and the case law interpret

"need" in terms of the marital lifestyle the parties enjoyed

during the marriage, as established by the judge at the time of

the order being issued, in this case, the judgment of divorce.7

7 The other factors the judge must consider in making an alimony determination under G. L. c. 208, § 53 (a), may also bear on the analysis of need, such as the health and age of the parties. See, e.g., 1 Lindey and Parley on Separation Agreements and Antenuptial Contracts § 22.63[2][l] (2d ed. 2017) (must evaluate need in light of other criteria, such as party's 10

Where, as so often happens, the couple's collective income

is inadequate to allow both spouses to maintain the lifestyle

they enjoyed during the marriage after their household is

divided in two through divorce, "the recipient spouse 'does not

have an absolute right to live a lifestyle to which he or she

has been accustomed in a marriage to the detriment of the

provider spouse.'" Pierce,

, quoting Heins,

. Instead, "[t]he judge must consider all the

statutory factors and reach a fair balance of sacrifice between

the former spouses when financial resources are inadequate to

maintain the marital standard of living."

The

act presumptively provides that the "fair balance of sacrifice"

means that the supporting spouse generally should not be

required to pay more than thirty-five per cent of the difference

between the parties' gross incomes. G. L. c. 208, § 53 (b).

Here, given the husband's substantial ability to pay, the

determination of alimony rested solely on the wife's needs, that

is, the amount necessary to allow her to maintain the lifestyle

she enjoyed prior to the termination of the marriage. Where, as

here, the husband's income grew considerably over the years and

the marital lifestyle grew with it, the wife's need for alimony

reflects the need to enjoy the more expensive lifestyle she had

grown accustomed to before the marriage ended. See Zaleski, 469

health). 11

Mass. at 243; Wardle & Nolan, Fundamental Principles of Family

Law, supra at 715. The judge here appropriately recognized that

"the parties' needs expanded in accordance with the increasingly

available income" during the marriage, but the judge erred in

determining that the wife's need for support is to continue to

expand after the divorce commensurate with the anticipated

"upward trajectory" of the husband's income. "[T]he award must

reflect the parties' marital lifestyle," not the marital

lifestyle the parties might have enjoyed had they stayed

together. See

. Even if the parties

enjoyed an upwardly mobile lifestyle for the duration of their

marriage, nothing in the language of the statute or our case law

suggests that the recipient spouse is entitled, by way of

alimony, to enjoy a lifestyle beyond what he or she experienced

during the marriage.8,9

8 In light of this conclusion, we need not address the husband's argument that the judge was clearly erroneous in finding that the husband's income would continue to grow on an "upward trajectory." Even if it did, the wife's alimony would still be limited to the amount needed to allow her to continue to live the lifestyle she enjoyed at the end of the marriage. 9 We do not address what alimony would be appropriate in the quite different circumstances of a divorce where one spouse was on the cusp of being able to afford a more expansive lifestyle after separating from the spouse who had financially supported him or her while he or she completed medical school or business school. The alimony sought in this case was general term alimony. In the circumstances we describe in this footnote, G. L. c. 208, § 48, provides for "reimbursement alimony," defined as "the periodic or one-time payment of support to a 12

2. Percentage-based alimony award. The judge ordered that

the husband pay the wife alimony in the amount of thirty-three

per cent of his various sources of income. The husband contends

that the percentage-based award is "self-modifying" because the

amount of alimony he must pay under its terms varies with his

income from year to year. He contends that a "self-modifying"

order is prohibited by G. L. c. 208, § 49 (e), which permits

modifications in the amount of alimony only upon a showing of "a

material change of circumstances warranting modification."

We reject the argument, as we have before in a different

context, that a judge lacks statutory authority to order a

supporting spouse to pay alimony in an amount that may vary

according to variables or contingencies set forth in the order,

such as the income of the supporting spouse, the rate of

inflation, or, where the spouses reside in different countries,

recipient spouse after a marriage of not more than [five] years to compensate the recipient spouse for economic or noneconomic contribution to the financial resources of the payor spouse, such as enabling the payor spouse to complete an education or job training." See Drapek v. Drapek,

(1987) (where wife "postponed her educational and professional plans in order to put her husband through [medical] school," judge did not abuse discretion in awarding wife 9.35 per cent of gross income or at least $60,000 with time limit of five years).

We also note that different factors and principles govern the equitable division of property in a divorce. See G. L. c. 208, § 34 (identifying factors judge "shall consider" in division of property in divorce); Heins v. Ledis,

(1996) ("The concepts of alimony and property division have been historically viewed as separate and distinct"). We address only the issue of general term alimony. 13

changes in the currency exchange rate. See Stanton-Abbott v.

Stanton-Abbott,

(1977) (affirming

judgment requiring semiannual increases in alimony by one-half

of any percentage increase in British retail price index). We

do not consider every change in the amount of payment under such

an alimony order to be a modification of the judgment, which we

recognize would require a showing "by the party favorably

affected that conditions [have] changed justifying the

modification, and . . . procedural due process for the party

adversely affected."

. "When time brings about the

change of situation of the parties, or trips the contingency, or

alters the basis of the calculation, as provided in the

judgment, we should not regard the corresponding shift in the

rate of payment as a modification of the judgment which requires

new justification in another court proceeding. The judgment has

remained the same although its variable terms, which were

presumably argued and deliberated before they were approved,

have produced results which in some sense are new."

As we have also recognized, the fact that the statute does

not bar alimony orders with variable or contingent provisions

does not mean that such orders are "advisable on the merits, or

compatible with the fundamental purposes of alimony."

. Here, the percentage-based award ran afoul of the act and

therefore was an abuse of discretion not because of its variable 14

nature, but because it was intended to award the wife an amount

of alimony that exceeds her need to maintain the lifestyle she

enjoyed during the marriage.

There may be cases in which a variable or contingent award

is warranted, but such cases are the exception rather than the

rule, and must be justified by the special circumstances of the

case. See

(parties' circumstances "presented a special

case"). In most cases, setting the amount of alimony at a fixed

amount, subject to modification upon a material change in

circumstances, is preferable in order to provide "a clean break

between the parties" and avoid "continued strife and

uncertainty" (citation omitted). Cf. Dewan v. Dewan,

(1987) (involving division of property). A variable or

contingent award may make alimony judgments more difficult to

enforce, especially where the variable or contingency is

inadequately defined or where it may not be clear whether the

contingency has been triggered. See, e.g., Wing v. Wing,

(Miss. 1989) (finding of contempt improper

where separation agreement did not specify precisely which

consumer price index governed progressive increases in child

support). See also Breiner v. Breiner,

(1975); Provenzano v. Provenzano,

, 618 (N.Y.

1979). Awarding alimony as a percentage of income may encourage

income manipulation in order to reduce the alimony obligation. 15

See Baccanti v. Morton,

(2001) (potential for

fraud where spouse may collude with employer to manipulate

compensation in view of divorce proceedings). Relatedly, where

alimony is a percentage of income, proving contempt becomes more

difficult because, instead of simply proving that payments have

fallen short of a specified amount and that the supporting

spouse had the ability to pay, the parties may be forced to

litigate what is and is not "income." See, e.g., In re Marriage

of Winne,

(1992); Mabee v. Mabee,

(1992) (considering whether capital gains

are income). We note that the judge thought it necessary to

appoint a special master, paid for by the parties, to ensure

compliance "[d]ue to the complicated nature of . . . the ongoing

obligations between the parties regarding the payment of

alimony." Not everyone can afford to pay a special master.

We do not suggest that variable or contingent awards are

warranted only in extraordinary circumstances. We recognize

that returning to court to modify a judgment may be an

unnecessary and costly burden where it is based on a foreseeable

change of circumstances that can be anticipated in the alimony

judgment. For instance, where the inflation rate is

significant, a cost-of-living adjustment based on a specific

consumer price index will result in changes to the actual amount

of alimony paid, but is intended to keep the original award of 16

alimony constant in terms of real purchasing power. Several

Massachusetts cases have affirmed alimony judgments that

included cost-of-living adjustments. See, e.g., DeMatteo v.

DeMatteo,

(2002); Mailer v. Mailer,

(1983); Moore v. Moore,

(1983); Stanton-Abbott,

.

There may also be special circumstances where an alimony

award based on a percentage of the supporting spouse's income

might not be an abuse of discretion, such as where the

supporting spouse's income is highly variable from year to year,

sometimes severely limiting his or her ability to pay, and where

a percentage formula, averaged over time, is likely not to

exceed the needs of the recipient spouse. In Wooters v.

Wooters,

(1997), the Appeals

Court affirmed a judgment that ordered the husband, who was a

partner in a large law firm, to pay alimony in the amount of

one-third of his gross employment income because he "was about

to undergo a serious operation, and it was uncertain how much he

would be able to work," and because his compensation from his

law firm "had considerable fluctuations." The court found that

these circumstances "presented a special case" that suggested

the use of a "self-executing formula."

, quoting

Stanton-Abbott,

.

The fluctuations in the husband's income in this case do 17

not present a comparable "special case" warranting the judge's

percentage-based formula for two reasons. First, given the

substantial financial assets available to the husband, the

fluctuations in his annual income do not materially affect his

ability to pay a fixed alimony award that would meet the wife's

needs. Second, as earlier noted, the percentage-based formula

was intended to allow the wife's lifestyle to become more lavish

than the marital lifestyle as the husband's income increases

over time, not to approximate over time the amount needed to

meet the wife's need to maintain her marital lifestyle.10

Conclusion. The case is remanded to the Probate and Family

Court with instructions to reevaluate the alimony judgment in

light of our opinion and enter a new judgment accordingly.

So ordered.

10 Because we reverse the percentage-based judgment in this case, we need not address the husband's argument that the provision in paragraph 6(c) of the amended judgment, which awards the wife a thirty-three per cent interest in any shares the husband subsequently acquires with his bonus compensation and imposes a constructive trust for the wife's benefit regarding these shares, represents an impermissible award of property acquired after the marriage.