Durkee v. Durkee

HOLLANDER, Judge. In this case, we focus primarily on the propriety of a circuit court judgment granting a reservation as to an award of alimony. The case arises from the dissolution of the marriage of Michael Lee Durkee, appellant, and Katherine Marie Durkee, appellee. After more than eighteen years of wedlock, the ¹⁶⁶ Circuit Court for Carroll County entered a judgment of absolute divorce on January 25, 2001, awarding legal and physical custody of the couple’s two minor children to Ms. Durkee.

Additionally, after imputing annual income of $62,000 to Mr. Durkee, the court ordered him to pay monthly child support of $497.55 per child. Although the court did not make a monetary award, it ordered the parties to divide equally the proceeds of sale of the marital home. Finally, the court denied alimony to appellant, but reserved as to alimony for appellee. On appeal, appellant presents two issues for our review, which we have rephrased: I. Did the circuit court err or abuse its discretion in reserving as to alimony for the wife?

II

Did the circuit court err in imputing income to appellant in order to calculate child support, when appellant’s reduced income occurred during the marriage and the court did not find voluntary impoverishment? For the reasons stated below, we answer question one in the affirmative. Therefore, we shall vacate the reservation and remand for further proceedings. FACTUAL SUMMARY The parties were married on September 25, 1982.

Two children were born to the couple: Alexander Joseph Durkee, on May 6, 1985, and Nicholas Allen Durkee, on September 23, 1987. After several temporary separations that began in 1997, the parties separated for good in November 1998. By the time the parties married, appellant had already graduated from college. A few years after the marriage, in 1985, appellant obtained a Master’s Degree in Computer Science from Johns Hopkins University.

His tuition was paid ■with marital funds. Appellant concedes in his brief that he was the “primary financial provider” during the marriage; for most of the marriage, appellee was economically dependent upon appellant. Until about 1997, appellant worked in the field of computer technology, first as an engineer and later in ¹⁶⁷ sales. He earned $78,596 in 1995, $92,417 in 1996, and $109,781 in 1997.

At the outset of the marriage, appellee worked as a dental assistant, but when the couple’s first child was bom in 1985, appellee ceased outside employment and became a “stay-at-home” mom. She did not resume work outside the home until the parties separated for the first time in 1997. During the marriage, appellant’s last employment was with a company called Storage Technologies. In late 1997 or early 1998, however, appellant lost that job due to a reduction in the work force.

While there, appellant received a $25,000 signing bonus and a $20,000 commission check for sales made at his prior employment, Essential Communications. The parties dispute the extent to which appellant attempted to earn any money after he lost his job with Storage Technologies. But, it is undisputed that appellant elected not to seek further employment with a third party. Instead, he decided to establish his own business.

According to appellee, appellant has earned little in the way of income since 1998. Further, she testified that she was at home in 1998 during the period when appellant was supposedly trying to establish his own business, and claimed that appellant did not devote adequate effort to the endeavor. Instead, she asserted that appellant “slept late. He was back at his desk, feet up, watching Sally Jessie Raphael on TV.

On the phone, he—then it would be lunchtime and he would take his flight bag on one shoulder and ski bag on the other and leave.” During this period, appellant cashed out his 401K account, which had a balance of $45,417. He also transferred the parties’ joint checking account balance of about $20,000 into his own account. From these funds, appellee received just $4,500. Although appellant used some of the money to pay the family’s bills, he also used some of it to pay for his personal hobbies, such as horseback riding and skiing, as well as a new Jeep Cherokee and a trip to San Francisco. ¹⁶⁸ As we noted, the parties separated for the first time in 1997, when appellant left the marital home for three months.

Although appellant paid the bills during the separation, appellee obtained part-time employment at a deli and used the money to pay for groceries. In March 1998, the parties experienced another separation, which lasted until July 1998. Then, in November 1998, appellee left the marital home with the children and took up residence with her sister. No further reconciliations occurred.

Appellee testified that, since November 1998, she has supported herself and the children by working full time at a greenhouse between January and May, and by making crafts the rest of the year. She earned $13,159.20 in 2000. Appellee explained that she also “made ends meet” with child support and the assistance of her parents, but had to defer certain expenses for the children, such as dental care. Ms. Durkee’s frugal lifestyle stands in sharp contrast to the one the parties enjoyed during the marriage.

Appellee testified that the parties previously “went on vacations and ... ate at nice restaurants and ... did okay when [appellant] was earning money.” She added, “we enjoyed it, yeah we did.” Now, however, appellee said she lives “simply.” As to her current financial state, appellee stated: “Well, I’m hoping to make ends meet with what I do and my business.” Appellant explained his conduct after losing his job by saying that he was not ready to “search [for] employment,” because he did not know what he wanted to do. Moreover, appellant said he did not seek unemployment benefits after he lost his job, because he “wanted to build [his] own business.” Consequently, he decided to keep his “options open” and “was keeping an ear to the ground.” The following testimony is noteworthy: [APPELLEE’S COUNSEL] Okay. And, in 1998, do you believe that there were job openings in the Baltimore/Washington area for a person holding a Master’s Degree in Computer Science? [APPELLANT] Yes. ¹⁶⁹ [APPELLEE’S COUNSEL] And, that didn’t change in 1999 or 2000, did it? [APPELLANT] There’s always job openings. [APPELLEE’S COUNSEL] And, in 1998, do you believe that there were job openings in the Baltimore/Washington area for a person with systems engineering experience? [APPELLANT] Yes. Uh—huh. [APPELLEE’S COUNSEL] And, that didn’t change in 1999 or 2000, either, did it? [APPELLANT] No. [APPELLEE’S COUNSEL] From 1998 to the present, how have you been employed? [APPELLANT] I have been self-employed. [APPELLEE’S COUNSEL] And, what is the name of the business? [APPELLANT] Durkee Strategic Technologies. * * * [APPELLEE’S COUNSEL] And, in 1998, what earnings did you derive from that business? [APPELLANT] A couple thousand. [APPELLEE’S COUNSEL] In 1999, what earnings did you derive from that business? [APPELLANT] ...

I think I had a loss of like Twelve Thousand. [APPELLEE’S COUNSEL] And, in the year 2000, what income did you derive from that business? [APPELLANT] I had revenues of Eighty Thousand and my income is probably gonna [sic] be about Fifteen to Twenty, somewhere along—that range. [APPELLEE’S COUNSEL] And, you did not seek outside employment in 1998, 1999, and 2000, did you? Did not seek third party employment? ¹⁷⁰ [APPELLANT] There might have been an early part in '98 where I did. [APPELLEE’S COUNSEL] Okay. Were you successful? [APPELLANT] Not really, no. [APPELLEE’S COUNSEL] Okay. Did you have any job offers? [APPELLANT] I think I—well, I did actually have—I mean, my whole purpose was to go and—was to start my own business.

At the same time, I was having trouble getting it started and so, certainly, I was keeping my options open and I was keeping an ear to the ground. [APPELLEE’S COUNSEL] Did you make regular applications to third parties to be employed in early 1998? [APPELLANT] I don’t remember. It’s been, what, three years? In her original divorce complaint filed on November 12, 1998, appellee asked the court for permanent alimony as well as alimony pendente lite. In her Supplemental Complaint for Absolute Divorce, filed on January 14, 2000, appellee alleged “insufficient means with which to support herself ...,” and renewed her request for permanent alimony.

Nevertheless, at the outset of the merits hearing on January 25, 2001, appellee asked the court, instead, to reserve as to alimony. Her attorney said: We’re ... asking the Court to reserve alimony. We think Mr. Durkee, in the future, will want to make more money. We believe he’s capable of making more money and we believe that this nearly twenty-year marriage deserves that consideration as it relates to Mrs. Durkee.

With respect to imputed income for purposes of child support and the reservation of alimony, the court stated: Now, with regard to the imputation or imputing of salary, a question that has been raised and considerable testimony and exhibits submitted, I’ve taken Mr. Durkee’s three highest years, Seventy-eight Thousand, a Hundred and Nine ¹⁷¹ Thousand, Seven Hundred and Ninety-two Thousand, Four Hundred to round those off. Got a total of those three years of Two Hundred Eighty Thousand, Ninety-nine Dollars, divided that by three and came up with an average of Ninety-three Thousand, Three Hundred and Sixty-six Dollars as his ... average of his highest earning over three years. I believe that, based on the testimony that Mr. Durkee has not achieved his full potential as a result of his advanced degree—Master’s Degree, Science—... computer science is one of the hottest ticket status [sic] that a person can have in our present economy and environment—and whether he is successful based on his own abilities to run his own business as an entrepreneur or working for wages for someone else using his highest skills, he has infinite potential to earn. So, I’ve taken this Ninety-three, Three Sixty-six ... but in this case, I believe that a fair imputation of salary based on your infinite ability to earn and your decision to be self-employed is Sixty-two Thousand Dollars and I’m imputing Sixty-two Thousand Dollars for purposes of child support.

Now, on the question of reservation of alimony and relying on the case that you cited, Turrisi versus Sanzaro, 308 Md. 515 [, 520 A.2d 1080 ], I find that, in the reasonably foreseeable future, the Plaintiff will be in circumstances that would justify an award of either rehabilitative or indefinite alimony. She may wish to retrain or the Court could find, based on testimony to be considered at that time, that the situation of ... these parties’ marriage of long duration is so unconscionably disparate, that an award of indefinite alimony could be granted sometime in the future. I don’t have to make those findings today because Pm simply reserving on alimony and not deciding on a particular sum of... alimony. When people marry, of course, the law provides certain standards to get married; the church provides certain standards; we have all heard the terms of marriage “for better or for worse, for richer or for poorer, in sickness and in ¹⁷² health.” You earned, Mr. Durkee, a Master’s Degree ... in Computer Science at Johns Hopkins University with tuition paid by you and your wife.

The family unit had a right to believe that your degree and your abilities would benefit the entire family. Now, you chose ... to become self-employed. That’s great, because I think you have the skills to be a successful entrepreneur; you can use some of that—what did you call it—red hot or real slick software and make yourself a lot of money. I believe you have the ability to do that, but part of the basis upon which you will achieve that success as an entrepreneur or as a person working for wages is as a result of the sacrifices [of the wife], both financially and in the house ... [I]t just would not be fair to the parties to have you in the' posture that you are today and thirty days after a divorce was granted that did not reserve on alimony, you go out and earn your potential.

That would constitute in ... an injustice. So, what I’m doing today is simply reserving on that question. (Emphasis added) We shall include additional facts in our discussion. DISCUSSION I. Appellant contends that the court erred in reserving as to alimony.

He maintains that appellee “is only entitled to rehabilitative or permanent alimony, if it is requested.” Because appellee failed to make a request for immediate alimony, appellant claims that Ms. Durkee has no right to alimony at “some indefinite time after that hearing.” Moreover, Mr. Durkee characterizes “as a trial tactic” appellee’s request for a reservation of alimony, arguing that “the testimony clearly showed that Michael was the ‘breadwinner,’ that Michael had had substantial income years between 95-97, and that [appellee] had been a house wife [sic] during most of the marriage.” He asserts: Boiled down to the bare facts, [appellee] has requested the opportunity to request alimony in case her ex-husband ¹⁷³ earns more money. She does not testify that she has any substantial needs that are unmet. She does not testify that her health will deteriorate for reasons known at the time or that she desires the opportunity to be retrained. Essentially, Mrs. Durkee is requesting the opportunity to request alimony in case she needs assistance.

With respect to alimony, appellee counters, in part: Although the parties’ earnings at the time of the divorce were not unconscionably disparate, it is solely the choice of the husband that has made it so. As such, equity demands that the Court reserve alimony such that if the Husband returns to employment with a third party and earns funds equivalent to his prior earnings, the Wife should receive a benefit from that employment. When reviewing a trial court’s award as to alimony, an appellate court will not reverse the judgment unless it concludes that “the trial court abused its discretion or rendered a judgment that was clearly wrong.” Crabill v. Crabill, 119 Md.App. 249, 260 , 704 A.2d 532 (1998); see Tracey v. Tracey, 328 Md. 380, 388 , 614 A.2d 590 (1992). Moreover, “appellate courts will accord great deference to the findings and judgments of trial judges, sitting in their equitable capacity, when conducting divorce proceedings.” Tracey, 328 Md. at 385 , 614 A.2d 590 .

The statutory provisions governing the award of alimony are contained in Title 11 of the Family Law Article. They enable the trial court to ensure “ ‘an appropriate degree of spousal support ... after the dissolution of a marriage.’ ” Innerbichler v. Innerbichler, 132 Md.App. 207, 246 , 752 A.2d 291 (quoting Tracey, 328 Md. at 388 , 614 A.2d 590 ), cert. denied, 361 Md. 232 , 760 A.2d 1107 (2000). Nevertheless, the Court of Appeals made clear in Tracey that the “purpose of alimony is not to provide a lifetime pension, but where practicable to ease the transition for the parties from the joint married state to their new status as single people living apart ¹⁷⁴ and independently.” Tracey, 328 Md. at 391 , 614 A.2d 590 . The Court of Appeals explained: [Ajlimony’s purpose is to provide an opportunity for the recipient spouse to become self-supporting.

The concept of alimony as life-long support enabling the dependent spouse to maintain an accustomed standard of living has largely been superseded by the view that the dependent spouse should be required to become self-supporting, even though that might result in a reduced standard of living. Id. (citations and quotations omitted). Thus, “Maryland’s statutory scheme favors fixed-term, rehabilitative alimony rather than indefinite alimony.” Innerbichler, 132 Md.App. at 244 , 752 A.2d 291 .

Rehabilitative alimony is consistent with “the ‘policy of this State ... to limit alimony, where appropriate, to a definite term in order to provide each party with an incentive to become fully self-supporting.’ ” Digges v. Digges, 126 Md.App. 361, 386 , 730 A.2d 202 "(quoting Jensen v. Jensen, 103 Md.App. 678, 692 , 654 A.2d 914 (1995)), cert. denied, 356 Md. 17 , 736 A.2d 1065 (1999); see Rock v. Rock, 86 Md.App. 598, 608 , 587 A.2d 1133 (1991); Blake v. Blake, 81 Md.App. 712, 727 , 569 A.2d 724 (1990); Rogers v. Rogers, 80 Md.App. 575, 591 , 565 A.2d 361 (1989). Notwithstanding Maryland’s preference for rehabilitative alimony, in appropriate cases F.L. § 11-106 continues to permit a court to award indefinite alimony. Nor does the statute prohibit the reservation of alimony. The issue here is whether the reservation as to alimony was properly granted.

In Turrisi v. Sanzaro, 308 Md. 515 , 520 A.2d 1080 (1987), the Court of Appeals considered whether the Alimony Act of 1980 (the “Act”) abrogated the chancellor’s power to reserve judgment as to an award of alimony. In that case, the parties were both medical doctors, and each was self-supporting. The wife had been diagnosed with multiple sclerosis, however, and was forced to abandon surgery and hospital work in favor of part-time work in a medical office. The evidence also showed that multiple sclerosis is a chronic, progressive disease that ¹⁷⁵ would probably render the wife totally disabled in less than five years.

While the wife was self-supporting at the time of the hearing, she sought the right to seek alimony in the future, in the event that she became unable to support herself due to her poor health. Nevertheless, the chancellor determined that the wife had declined an immediate award of alimony, and that he did not have the power to reserve with respect to future alimony. The Court of Appeals disagreed and reversed. The Court held that the Act did not “abolish[ ] the inherent power of an equity court to reserve jurisdiction as to alimony when it awards a divorce.” Id. at 528, 520 A.2d 1080 .

Rather, the Court concluded that the chancellor retains discretion under the Act to reserve as to alimony. Id. The Court explained: The concepts of rehabilitative alimony for a definite time, the desirability of each spouse becoming self-supporting, the undesirability of alimony as a lifetime pension, and the use of indefinite alimony only in exceptional circumstances do not mandate the elimination of the power to reserve. For example, facts before a court may demonstrate no present basis for either rehabilitative or indefinite alimony.

But those same facts may show that a highly probable basis for awarding one or the other will exist in the immediate future. Under such circumstances, we see no reason why reservation would be inconsistent with the purposes of the Act. Indeed, under such circumstances, reservation would be consistent with the Act’s overall purpose ... to provide for an appropriate degree of spousal support in the form of alimony after the dissolution of the marriage. Turrisi, 308 Md. at 527 , 520 A.2d 1080 .

In reaching its decision, the Court reviewed the historical treatment of alimony by Maryland equity courts, noting the “long-standing rule” that “the right to claim alimony ordinarily could not survive the dissolution of the marriage.” Id. at 521, 520 A.2d 1080 . See also Thomas v. Thomas, 294 Md. 605, 609-615 , 451 A.2d 1215 (1982) (discussing historical treatment of alimony in Maryland). Consequently, the Court observed that ¹⁷⁶ it became “common practice for the equity courts to reserve jurisdiction over alimony, even though none was awarded at the time of divorce.” Turrisi, 308 Md. at 522 , 520 A.2d 1080 . The reservation enabled the court to award alimony “long after the grant of an absolute divorce.” Id.

The Court recognized that the Act, now codified in Title 11 of the Family Law Article, had a profound effect on “the alimony landscape.” Id. at 525, 520 A.2d 1080 . Yet, as the Court observed, the Act was silent as to reservation. Id. at 527, 520 A.2d 1080 . Concluding that the many changes generated by the Act did not alter the equity court’s inherent power to reserve, id. at 525-26, 520 A.2d 1080 , the Court reasoned: “To ask us to assume that by mere silence the legislature intended to abolish a long-standing inherent power of Maryland equity courts, specifically called to its attention by the [Governor’s 1980] Commission [on Domestic Relations Law], is to ask too much.” Id. at 527, 520 A.2d 1080 .

Noting that the “[r]epeal of such a power by silence is not favored,” the Court declined to “indulge any such assumption----” Id. at 527, 520 A.2d 1080 . Nor did it believe that the. purpose of the Act mandated the abolishment of the power to reserve. Id. Notwithstanding the continued power of an equity court to reserve, the Court made clear that a reservation requires the proper exercise of discretion.

Moreover, the Court specified a number of circumstances in which a reservation “is no longer proper.” Id. at 529, 520 A.2d 1080 . For example, the Court declared that a reservation would not be appropriate based on a “vague future expectation....” Id. Elaborating on the types of circumstances that would or would not justify a reservation, the Court said: To hold that the power to reserve [alimony] still exists is not to say that it may be appropriately exercised in every case. The power is a discretionary one, and whether a chancellor should exercise his discretion in favor of reservation is a matter affected by various considerations, non-statutory as well as statutory....

Furthermore, in view of the Act’s emphasis on promotion of economic self-sufficiency, its favorable approach to alimony for a definite period, and its ¹⁷⁷ opposition to the notion of alimony as a lifetime pension, it would not be appropriate to reserve simply because there may be some vague future expectation of circumstances that might show a basis for alimony. By the same token, the possibility that a claimant