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Supreme Court provides clarity to maintenance agreement modification

September 10, 2014

If divorcing parties want to make judicial modification available for the maintenance agreements, they must say so in their contract, the Indiana Supreme Court pointed out Tuesday. Because a divorced couple’s maintenance agreement allowed for court intervention, the justices ordered the trial court to consider the wife’s request for modification.

Barbara and Michael Pohl divorced in 2009 after 18 years of marriage. After they entered into a settlement agreement, they filed an addendum calling for Barbara Pohl to pay her ex-husband monthly maintenance of $4,000 beginning in June 2013. Since injuring his back in 1996, Michael Pohl has been receiving Social Security Disability payments, which are his sole income.

Just a few months prior to the first payment being due, Barbara Pohl sought modification, citing Michael Pohl’s changed circumstances. He was now receiving higher SSDI payments and he moved in with his fiancée, who paid the mortgage and made more than $100,000 a month. Barbara Pohl earned around $182,000 a year in 2012. She wanted the amount reduced to $1,000 monthly.

The trial court denied the motion, finding the agreement was not intended to be modifiable and she must show fraud, duress or mistake, which she had not done.

She appealed, citing Voigt v. Voigt, 670 N.E.2d 1271. The Court of Appeals affirmed.

In Voigt, the Supreme Court held that “a court has no statutory authority to grant a contested petition to modify a maintenance obligation that arises under a previously approved settlement agreement if the court alone could not initially have imposed an identical obligation had the parties never voluntarily agreed to it.” The courts, under statute, have discretion to impose maintenance only in the areas of incapacity, caregiver and rehabilitative.

The Supreme Court in that case concluded that agreements for non-statutory forms of maintenance may be modified only by agreement because modifications should not be used to expand the courts’ statutorily limited authority for ordering maintenance; and the parties’ freedom of contract requires enforcing the contract they freely made because involuntarily changing one provision could unravel the consent that made the agreement possible, Chief Justice Loretta Rush wrote in Barbara J. Pohl v. Michael G. Pohl, 32S04-1404-DR-245.

The Court of Appeals has wrestled with this issue since Voight and has been divided. As such, Rush wrote, “it is time to settle the issue.”

“If we presume the agreement to be non-modifiable unless it specifies otherwise, parties may be deprived of relief in the face of unforeseen changes (for recipients, a deterioration of their condition or increased expenses; for payors, lost income or other financial catastrophe). But the alternative risks pulling the rug out from under parties who legitimately thought their negotiations had brought finality and predictability during the tumultuous time of a divorce,” she wrote.

Citing Chief Justice Randall Shepard’s freedom-of-contract concerns expressed in Haville v. Haville, 825 N.E.2d 375, 378 (Ind. 2005), the justices decided presuming the contract to be modifiable would “defy grownups’ freedom of contract more frequently than it would save disabled spouses from being stuck with an inadequate award or able-bodied spouses from an award that had become oppressive.”

“We therefore hold that even when a court could have unilaterally ordered an identical maintenance award, we will presume the parties intended their agreement to be final and non-modifiable unless they specifically provided otherwise,” Rush wrote.

The addendum does contain such a provision in this case, calling for Barbara Pohl’s payments to continue “until further order of the court or agreement of the parties.” And when an agreed maintenance award provides for modification, the “substantial and continuing change in circumstances” standard governs such requests, the justices held.

As such, the trial court erred when it denied her modification petition for failure to prove “fraud, duress, or mistake.” On remand, the court should consider the evidence under this standard found in the incapacity maintenance statute to determine whether the agreement originally made has become unreasonable.
 

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