Michigan Court of Appeals: No Exceptions To “Non-Modifiable”
On June 22, 2010, the Michigan Court of Appeals reversed the Ottawa Circuit Court’s decision to modify a non-modifiable spousal support obligation in the case of Rose v. Rose, No. 286568, 2010 WL 2505919 (Mich. App. June 22, 2010). By way of background, the Roses were married for 22 years before they divorced in 2006. During the course of the marriage, Mr. Rose acquired a tool and die company called Die Tron, Inc. At the time of the parties’ divorce, Die Tron, Inc. was worth approximately $6 million. To avoid having to sell Die Tron, Inc., Mr. Rose agreed to pay Mrs. Rose $230,000 a year in non-modifiable spousal support. In exchange, she would forgo any interest in Die Tron, Inc.
By January 2008, Die Tron, Inc. was experiencing financial difficulties, many of which were attributable to mismanagement of the company by the Roses’ son. Mrs. Rose initially agreed to temporarily modify the spousal support obligation to help Die Tron, Inc. recover, but eventually moved the Circuit Court to enforce the parties’ agreement as written. Unfortunately, Die Tron, Inc. did not remain viable and Mr. Rose’s income fell to approximately $52,000 per year. The Circuit Court originally denied Mr. Rose’s motion to modify the spousal support agreement, but subsequently granted Mr. Rose relief from the judgment after an evidentiary hearing. The Circuit Court reduced his spousal support obligation to $900 per month.
On appeal, the Michigan Court of Appeals reversed the Circuit Court’s decision, finding the Circuit Court had abused its discretion in modifying the non-modifiable spousal support obligation. As the Court noted, “[i]nstead of opting for flexibility, the parties struck a bargain favoring finality, benefiting both … In striking their deal, both parties deliberately risked that future circumstances would render their contract inequitable.” The Court’s reasoning for not modifying the judgment fell squarely on the notion that the spousal support agreement was a contract, and contracts must be enforced as written. Thus, any individual contemplating a non-modifiable support agreement should heed the Michigan Court of Appeals’ opinion and fully consider whether it is flexibility or finality they seek, not only in the short-term but in the long-term as well.
