VON REKOWSKY v. VON REKOWSKY

No. 16-P-486.

NICOLE MARIE VON REKOWSKY, vs. ROBERT B. VON REKOWSKY.

Appeals Court of Massachusetts.


Attorney(s) appearing for the Case

Brian J. Kelly, Esquire , Grace C. Roessler, Esquire , Matthew Bove, Esquire , for Nicole Marie Von Rekowsky, Plaintiff/Appellee.

William Sanford Durland, III, Esquire , for Robert B. Von Rekowsky, Defendant/Appellant.

By the Court (Vuono, Carhart & Kinder, JJ.)


MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass.App.Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).

Robert B. Von Rekowsky (father), the former husband of Nicole Marie Von Rekowsky (mother), appeals from a modification judgment (dated April 3, 2015) entered by the Probate and Family Court on April 13, 2015, which increased his weekly child support payments from $2,000 to $3,500. For the reasons set forth below, we reverse the upward modification of the father's child support obligation.

Background.

The parties were married in August of 2002. During the marriage, the father was the primary wage earner while the mother stayed at home caring for the parties' two children, Oscar and Josephine. The mother initiated divorce proceedings in May of 2009, and following a trial before a judge of the Probate and Family Court (divorce judge), an amended judgment of divorce nisi, dated June 29, 2011, entered on July 5, 2011 (divorce judgment).1 Pursuant to the divorce judgment, the mother received primary physical custody of the children, subject to a detailed parenting plan under which the children would be in the father's care more than one-third, but less than one-half, of the time. The father was ordered to pay child support to the mother in the amount of $2,000 per week, along with alimony in the amount of $1,500 per week. The mother also received several assets pursuant to the divorce judgment, including but not limited to, (1) the former marital home, (2) a forty percent interest in the net, after-tax value of the father's various Fidelity holdings (FMR LLC shares), and (3) a forty percent interest in the net, after-tax value of the father's 2010 special retention bonus, while any future special retention bonuses received by the father were to "remain his sole property."2

At the time of the divorce, the father was employed as a portfolio manager for Fidelity Investments. The father earned an annual base salary of $400,000, along with various bonuses and stock options, which resulted in "significant fluctuation" in his income.3 The divorce judge found that "[o]ver the past five years, [the father's] earnings have ranged from a low of $1,152,091 in 2005 to a high of $4,695,179 in 2008."4 At the time of the divorce trial in October, 2010, the father reported his total earnings for the prior year (2009) in the amount of $1,218,684. In light of the father's fluctuating income, the divorce judge used the first $250,000 of the father's base salary to arrive at a "minimum presumptive" child support amount of $1,098 per week, and then "adjusted upward" to $2,000 per week "to reflect [the father's entire base salary of $400,000], and the availability of other forms of income and bonuses historically available to [the father]."5 As for the mother (who, at the time, was earning $75 per week from the YMCA despite holding a master's degree), the divorce judge found that she was "capable of some gainful employment outside of the home in a capacity more substantial than that which she is currently engaged." Notwithstanding this finding, the divorce judge declined to attribute income to the mother because she was "meeting the needs of the children and fulfilling the role to which the parties had agreed, and to which they continue[d] to agree."

In September of 2012, the father's position changed from portfolio manager to emerging market strategist, which resulted in a reduction of his annual base salary to $275,000.6 On June 13, 2013, the father filed an amended complaint for modification7 (dated June 10, 2013) seeking, among other things, (1) a reduction in his child support payments in light of his reduced base salary, and (2) termination of his alimony obligation pursuant to the durational limits imposed by the Alimony Reform Act, G. L. c. 208, § 49(b). A two-day trial on the father's complaint for modification was held before a different judge (modification judge) in January of 2015. On April 13, 2015, a modification judgment (dated April 3, 2015) entered, terminating the father's weekly alimony obligation of $1,500, and increasing the father's weekly child support obligation to $3,500.8 The father filed a motion to amend the modification judgment, requesting, inter alia, that the modification judge take steps to minimize the adverse tax consequences of the modified child support order. The motion was denied on June 19, 2015, without explanation. The present appeal followed.

Discussion.

The father principally argues that the upward modification of his weekly child support payments was an abuse of discretion because there was no evidence that the children's needs had changed, or that either party's financial circumstances had changed in a manner that would justify an increase in child support. We agree.

We review the modification of child support for an abuse of discretion. Wasson v. Wasson, 81 Mass.App.Ct. 574, 576 (2012). "[A] judge's discretionary decision constitutes an abuse of discretion where we conclude the judge made `a clear error of judgment in weighing' the factors relevant to the decision, such that the decision falls outside the range of reasonable alternatives." L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014), quoting from Picciotto v. Continental Cas. Co., 512 F.3d 9, 15 (1st Cir. 2008).

"To be successful in an action to modify a judgment for. . . child support, the petitioner must demonstrate a material change of circumstances since the entry of the earlier judgment." Pierce v. Pierce, 455 Mass. 286, 293 (2009), quoting from Schuler v. Schuler, 382 Mass. 366, 368 (1981).9 The change may be in the parties' respective lifestyles or financial resources, or in the needs of the children. See Brooks v. Piela, 61 Mass.App.Ct. 731, 734-735 (2004), and cases cited. Here, the modification judge found that an increase in child support was warranted because the father's lifestyle had "improved," thereby entitling the children "to enjoy a higher standard of living . . . in [the] [m]other's household," and the children's expenses would "continue to . . . increase[]" as they grew older.

The father's lifestyle.

When modifying child support, a judge may consider, "as a component of the children's needs," the noncustodial parent's increased financial resources and resulting improved "standard of living." Brooks v. Piela, supra at 732. This is because "children are entitled to participate in the noncustodial parent's higher standard of living when available resources permit, in furtherance of the principle that such support should provide the standard of living the child would have enjoyed had the family been intact." Smith v. Edelman, 68 Mass.App.Ct. 549, 554 (2007) (citation and quotation omitted). However, an "increase in child support based solely on an increase in" the financial resources "of the noncustodial spouse may have the effect of constructively distributing the noncustodial parent's estate, and is accordingly disfavored." Ibid., citing Pearson v. Pearson, 52 Mass.App.Ct. 156, 160 (2001). Accordingly, even if the noncustodial parent "is capable of providing a greater financial contribution toward the children's needs . . ., an increased capacity [does not] compel[] an increase in child support, at least where the increased capacity has not resulted in a material disparity in the parties' respective lifestyles." Smith v. Edelman, supra at 554.10

Here, the modification judge found that while there had not "been a material and substantial change in [the] [f]ather's income," his net worth had increased "significantly" and his lifestyle had "improved," thereby entitling the children "to enjoy a higher standard of living . . . in [the] [m]other's household." In concluding that the father's lifestyle had improved since the time of the divorce, the modification judge found that the father purchased a new home in Cambridge for $3.3 million, and that he had chosen to employ a full-time nanny. However, these findings alone are insufficient to demonstrate a material change in the father's lifestyle, especially given contrary evidence in the record indicating that the father's overall discretionary spending, a primary indicator of a party's standard of living,11 had actually decreased since the time of the divorce.12 Moreover, in concluding that the father's lifestyle had changed, the judge appears to have relied heavily on her erroneous finding that the father had "doubled . . . almost tripled his weekly expenses" since the time of the divorce trial. In fact, the father's total weekly expenses, including his new mortgage and childcare expenses, had only increased by approximately sixteen percent since the divorce trial.13 In contrast, the modification judge found that there had only been a "slight increase" in the mother's expenses since the time of the divorce. However, in so finding, the judge appeared to overlook the fact that the mother's overall discretionary spending had actually increased considerably since the time of the divorce, because the mother had eliminated her largest expense (her mortgage payment).14

Not only is there minimal support in the record for the judge's conclusion that the father's lifestyle had improved since the divorce, there is simply no evidence demonstrating a "material disparity" between the parties' respective lifestyles. The only evidence regarding the parties' homes consisted of the father's testimony indicating that each party's house has five bedrooms, which the modification judge apparently credited. However, there is no indication in the record as to each home's square footage, amenities, furnishings, and the like. Moreover, it is undisputed that both parties possessed substantial assets at the time of the modification trial — the father having a total net worth of approximately $10 million, and the mother having a total net worth of approximately $8.9 million. While the judge found that the father's net worth had increased "significantly" since the time of the divorce, it appears from the record that the mother's net worth had actually increased by a greater percentage than the father's.15

The children's expenses.

To the extent the judge predicated her decision to modify child support on her finding that the children will "continue to have increased expenses" as they grow older, this was error. It is true that an increase in the children's expenses may justify an increase in child support. See, e.g., Brooks v. Piela, 61 Mass. App. Ct. at 732-733. However, there is no evidence in the record demonstrating that the children's expenses had, in fact, increased by the time of the modification trial. Insofar as the children's expenses may increase at some point in the future, the father is already obligated under the divorce judgment to cover one hundred percent of their uninsured medical and extracurricular expenses. The father has also generously funded separate 529 accounts for the children to cover their future educational expenses.16 Moreover, there is no indication in the record that the mother is unable to meet the children's reasonable needs under the original child support order, especially given that she possesses substantial assets, which the divorce judge noted would be available to her as an additional source of income.17 See, e.g., Smith v. Edelman, 68 Mass. App. Ct. at 555 (affirming denial of wife's request for increased child support, noting that "[t]o the extent there was evidence tending to suggest that the wife struggled in recent times to maintain her lifestyle at its elevated status . . . the judge was within her discretion to attribute the wife's strain principally to her election not to. . . apply other assets allocated to her [in the divorce] . . . when her entitlement to alimony ended").

Conclusion.

In light of the foregoing, we conclude that the increased "child support award d[oes] not have a factual basis." M.C. v. T.K., 463 Mass. 226, 237 (2012).18 Accordingly, that portion of the modification judgment dated April 3, 2015, increasing the father's weekly child support obligation to $3,500 is reversed.19, 20 The father's previous child support obligation of $2,000 per week, as set forth in the amended judgment of divorce nisi dated June 29, 2011, shall be reinstated. In all other respects, the modification judgment is affirmed.21

So ordered.

FootNotes


22. The panelists are listed in order of seniority. Justice Carhart participated in the deliberation on this case prior to his retirement.
1. The original judgment of divorce nisi (dated March 28, 2011) entered on April 4, 2011.
2. With respect to the father's special retention bonuses, the divorce judge found that the father "is eligible to receive payments which have a total value of $1,682,523, of which $1,103,678 is currently vested and $578,845 is unvested. These payments will be made over a number of years from 2010 through 2018, are contingent on market conditions and on the company's financial performance at the time of payment, and are also subject to forfeiture if [the father] leaves his employment at Fidelity."
3. The divorce judge found that the father's earnings consisted of his base salary, a year-end performance bonus that varied each year, "ICT shares issued by Fidelity (dividend like payments which vary each year)," and special retention bonuses.
4. The divorce judge specifically found that the father's "total income from Fidelity was $1,219,000 in 2009, $4,695,179 in 2008, $3,239,054 in 2007, $2,191,739 in 2006, and $1,152,091 in 2005."
5. "Where the parties' combined gross income exceeds [$250,000,] the maximum level at which the guidelines are strictly applicable, a judge has discretion to adjust upward from the `minimum presumptive level of support,' i.e., the award applicable at the maximum combined income level." M.C. v. T.K., 463 Mass. 226, 233 (2012).
6. The father remained eligible for performance bonuses and special retention bonuses.
7. The father's original complaint for modification (dated May 1, 2013) was filed on May 14, 2013.
8. As acknowledged by the mother's counsel at oral argument, the mother did not include a request for increased child support in her answer to the father's complaint for modification. Accordingly, it appears that the modification judge increased the father's child support payments sua sponte.
9. In cases such as this, where the child support guidelines do not strictly apply because the parties' combined annual income exceeds $250,000, the familiar "material change in circumstances" standard applies to requests for modification, rather than the alternative "inconsistency" standard applicable to cases in which the parties' combined income does not exceed $250,000. See Morales v. Morales, 464 Mass. 507, 510-511 & n.4 (2013).
10. In Smith v. Edelman, the wife sought an upward modification of the father's child support payments in light of the substantial increase in the father's income, from $302,600 at the time of the divorce to $720,000 at the time of the modification. The lower court judge denied the wife's request, which was upheld on appeal, on the basis that there was no material disparity between the parties' lifestyles, nor any indication that the children's reasonable needs could not be met under the existing child support order.
11. "A party's standard of living is distinct from, although related to, his or her net worth. Parties might enjoy comparable standards of living notwithstanding a substantial disparity in the net value of their assets. As reflected in the Report of the Child Support Guidelines Task Force (Oct. 2008) (Task Force Report), standard of living, as the concept is used in the guidelines, may be closely linked to household spending." M.C. v. T.K., 463 Mass. at 234 n.11 (citation omitted).
12. By way of example, the father's reported expenses for clothing, vacation, and entertainment remained virtually unchanged since 2010, whereas the following discretionary expenses were either substantially reduced or eliminated by the father from 2010 to 2015: (1) $420.19 for charitable contributions in 2010, reduced to $213 in 2015; (2) $84.62 for gym membership in 2010, reduced to $0 in 2015; (3) $507.45 for food (including meals at work and dining out) in 2010, reduced to $400 in 2015; (4) $126.91 for furnishings in 2010, reduced to $0 in 2015; and (5) $168.75 for miscellaneous expenditures (including books, sporting goods, hardware, and computer supplies) in 2010, reduced to $0 in 2015. Indeed, the only discretionary expense that substantially increased from 2010 to 2015 (not including expenses related to the father's new home in Cambridge) was the father's childcare expense, which increased from $0 in 2010, to $1,170 in 2015.
13. On his 2010 financial statement, the father reported total weekly expenses of $5,690.30. This amount did not include any child support or alimony obligation. On his 2015 financial statement, the father reported total weekly expenses of $10,096; however, this amount included the father's weekly child support and alimony payments totaling $3,500. Accordingly, after deducting the father's support obligations, his reported weekly expenses in 2015 were actually $6,596, which represents an increase of approximately $905 (or sixteen percent) since the time of the divorce.
14. The mother's reported expenses increased from $2,970.85 at the time of the divorce trial, to $3,146.09 at the time of the modification trial. The following weekly discretionary expenses increased between the divorce and modification trials: (1) $235 for food, dining, and entertainment in 2010, increased to $336.19 in 2015; (2) $62 for clothing in 2010, increased to $109.12 in 2015; (3) $60 for vacation in 2010, increased to $203.71 in 2015; (4) $6 for charity in 2010, increased to $20 in 2015; (5) $20 for gym/country club membership in 2010, increased to $40.17 in 2015; and (6) $0 for financial services (investment management and tax preparation) in 2010, increased to $638.19 in 2015.
15. The modification judge acknowledged that it was difficult to determine the precise value of the parties' assets immediately following the divorce, as no figures were provided regarding the value of assets transferred to the mother as a result of the divorce judgment. The judge noted that the father reported total assets of approximately $7.6 million at the time of the divorce trial in 2010, and assets of approximately $10 million (including the value of the father's FMR LLC shares, 529 accounts, and investments in certain entities) at the time of the modification trial in 2015. With respect to the mother's assets, the judge noted that the mother reported total assets of approximately $1.1 million at the time of the divorce trial, which had increased to approximately $8.9 (including the value of the mother's FMR LLC shares) by the time of the modification trial.
16. The modification judge found that, as of January, 2015, the 529 accounts "held a total of $952,328."
17. The divorce judge found that the mother "will have the ability to earn income from investment of her share of the marital estate to further provide for her security in the future," allowing her and the children "to enjoy the same lifestyle they enjoyed during the marriage."
18. In M.C. v. T.K., supra, the court stated: "Because the judge made no finding that the mother was unable to provide for the child's reasonable needs while the child was in her care . . . and because the evidence does not support an implied finding that the standard of living the child experienced at her mother's home was grossly inferior to that which she enjoyed while with her father, the child support award did not have a factual basis."
19. Because we reverse the upward modification of child support, we need not consider whether the judge improperly declined to consider the potential adverse tax consequences stemming from the increased support order, or the order denying the father's motion to amend the judgment. Likewise, we need not reach the issue of "double-dipping" raised by the father with respect to the judge's consideration of his special retention bonuses when increasing his child support obligation. See Croak v. Bergeron, 67 Mass.App.Ct. 750, 758-759 (2006), quoting from Champion v. Champion, 54 Mass.App.Ct. 215, 219 (2002) (The term "double-dipping" is used "to describe the seeming injustice that occurs when property is awarded to one spouse in an equitable distribution of marital assets and is then also considered as a source of income for purposes of imposing support obligations"). Notwithstanding the double-dipping issue, we note that the special retention bonuses appear to be a temporary source of income, as the father is slated to receive his last special retention bonus in 2018.
20. To the extent that we do not address the father's other contentions, "they `have not been overlooked. We find nothing in them that requires discussion.'" Department of Rev. v. Ryan R., 62 Mass.App.Ct. 380, 389 (2004), quoting from Commonwealth v. Domanski, 332 Mass. 66, 78 (1954).
21. The parties' requests for attorney's fees are denied.

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