In the January 15, 2014 opinion of Burgess v. Burgess, 407 S.C. 98, 753 S.E.2d 566 (Ct. App. 2014), the Court of Appeals reversed and remanded the family court’s alimony and attorney’s fees award, finding that the family court had improperly imputed too high an earning capacity to husband.
Husband worked in commercial real estate. From 2001 to 2007 his earnings varied from $91,789 to $675,374. When the real estate market collapsed in 2009 Husband was involuntarily bought out of his business and started his own commercial real estate firm. Two months later Wife moved out and filed for separate maintenance the next day.
Husband’s income fell from $384,237 in 2007 to approximately $32,000 in 2011. At the February 2012 trial the family court imputed a $100,000 earning capacity to Husband and, based on that earning capacity, ordered him to pay $2,150 per month in alimony and $67,589 in attorney’s fees and costs. Husband appealed.
The Court of Appeals reversed and remanded the alimony and attorney fee awards, finding the family court improperly imputed Husband’s earning capacity. It noted:
Based on Husband’s education, training, experience, age, health, and other factors, the family court imputed a gross annual income of $100,000 to Husband. The court noted it was mindful of the deteriorated state of the commercial real estate market, but found that considering Husband’s skill set and experience, he should be able to find employment either as a commercial real estate broker or as a property manager. The family court further noted Husband had a proven history of “putting together real estate deals with little or no money invested on his part,” and, based on his testimony, he was inclined to continue pursuing such deals.
While the family court considered several factors in imputing income to Husband, including his work history and occupational qualifications, the court failed to consider prevailing job opportunities and earning levels in the community…. Here, as in Sanderson [v. Sanderson, 391 S.C. 249, 705 S.E.2d 65 (Ct. App. 2010)], the family court failed to address the necessary factors delineated by the Guidelines concerning the prevailing job opportunities and earning levels in the community. Because the family court failed to address all of the factors required by the Guidelines, and because there is nothing in the record to suggest how the family court arrived at the annual income figure of $100,000 to be imputed to Husband, we remand the issue of Husband’s imputed income to the family court pursuant to Sanderson for reconsideration based upon the factors set forth in the Guidelines.
The family court didn’t seem concerned with how a Husband making $31,000 a year would pay his Wife $25,800 a year in alimony–it simply expected him to go make more money. The irony is that Wife was laid off too–and working on her Master’s Degree in student affairs at Clemson–at the time of trial. Like Sanderson, Burgess seems like an example of the family court “piling on” a downsized Husband. Too often the family courts fail to recognize that a primary wage-earner’s earning capacity is not what it once was because the economy is changing and certain employment fields–especially real estate and manufacturing–may never come back to their previous peaks. While Wife is certainly unhappy at her lowered lifestyle–and, I suspect, unhappy that she has to reenter the workforce–I wouldn’t be surprised if her earning capacity was now greater than her Husband’s.
Well, so much for the notion that if you once did you now can. So much for imputed income without some expert opinions.
Would love to know your thoughts on a somewhat similar similar situation I encountered recently. Husband worked as a government contractor and accepted a position in Iraq. His wife and young child accompanied him to live in Iraq. While there the Wife decided she wanted a divorce and moved back to the US with the child. During the separation but prior to wife filing, Husband’s contract ended and he returned to the US. He continued to work for the same company but his income was significantly less in the US.
The judge ruled that because he had the option to renew his contract and instead chose to return to the US that he had a voluntary reduction in income and calculated support (alimony and child support) based on his average earnings, which came out to be about double what he was making in the US. Of course, the evidence of adultery and new $50K truck he bought didn’t help the situation.
That aside, however, what do you believe is the appropriate way to calculate earning capacity for those returning to the US at the expiration of their contract to work overseas?
There’s a recent case that said a man didn’t have to move to increase his earnings. Search for it.