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Kelly v. Kelly

Court of Appeals of Arkansas, Division I

May 18, 2016

OWEN KELLY APPELLANT
v.
MANDY KELLY APPELLEE

         APPEAL FROM THE WASHINGTON COUNTY CIRCUIT COURT [NO. DR-13-2217] HONORABLE JOANNA TAYLOR, JUDGE

          Everett, Wales & Comstock, by: John C. Everett; and Smith, Cohen & Horan, PLC, by: Matthew T. Horan, for appellant.

          Clark Law Firm PLLC, by: Suzanne G. Clark, for appellee.

          DAVID M. GLOVER, Judge

         This is the second time the Kelly divorce has been before our court. In Kelly v. Kelly, 2015 Ark.App. 147, we dismissed the appeal for lack of finality. The Arkansas Supreme Court accepted the case on a petition for review, addressed only the finality issue, and remanded the case to our court to decide the merits. Kelly v. Kelly, 2016 Ark. 72, S.W.3d ___.

         Thus, the remaining issue for decision is whether the trial court abused its discretion in setting the amount of alimony and by directing Owen Kelly's alimony obligation to automatically increase as child-support payments decreased to ensure that Mandy Kelly continued to receive the total support she requested in the amount of $16, 659 per month. We hold that the trial court abused its discretion both in its determination of the initial award of alimony and in the provision of an "escalator clause" for alimony each time child support was automatically reduced. We reverse and remand for entry of an order consistent with this opinion.

         Owen and Mandy were married on April 24, 1994; they were divorced by decree entered on March 24, 2014, in the Washington County Circuit Court. Two children were born of the marriage, K.G.K. in November 1999, and H.K. in October 2002. Mandy was awarded custody of the children. The trial court determined Mandy needed $16, 659 per month for expenses. Owen was ordered to pay $7, 528 in child support and $9, 131 in alimony monthly beginning on April 1, 2014. We note that Owen further agreed to pay $1, 000 per month outside of his child-support obligation for H.K. to attend the New School, and that tuition will increase as H.K. advances in grade.

         Of particular significance to this appeal, the divorce decree provided that when Owen's child support is reduced to $5, 366 per month (when K.G.K. attains the age of majority), the $9, 131 per month alimony amount would automatically increase to $11, 293 per month, thereby keeping the total amount of support Owen was to pay to Mandy at $16, 659. The decree further provided that when H.K. attained majority and child support ceased, Owen's alimony obligation to Mandy would increase to the full $16, 659 sum.

         On appeal, divorce cases are reviewed de novo. Webb v. Webb, 2014 Ark.App. 697, 450 S.W.3d 265. An award of alimony is not mandatory, but is solely within the circuit court's discretion, Mitchell v. Mitchell, 61 Ark.App. 88, 964 S.W.2d 411 (1998); we will not reverse absent an abuse of that discretion. Cole v. Cole, 89 Ark.App. 134, 201 S.W.3d 21 (2005). An abuse of discretion means discretion improvidently exercised, i.e., exercised thoughtlessly and without due consideration. Foster v. Foster, 2015 Ark.App. 530, 472 S.W.3d 151. However, if alimony is awarded, it should be set at an amount that is reasonable under the circumstances. Mitchell, supra.

         The division of marital property and an award of alimony are complementary devices that may be utilized by the circuit court to make the dissolution of a marriage financially equitable. Webb, supra. The purpose of alimony is to rectify the economic imbalances in earning power and standard of living in light of the particular facts of each case. Kuchmas v. Kuchmas, 368 Ark. 43, 243 S.W.3d 270 (2006). The primary factors that a court should consider in awarding alimony are the financial need of one spouse and the other spouse's ability to pay. Gilliam v. Gilliam, 2010 Ark.App. 137, 374 S.W.3d 108. The circuit court may also consider other factors, including the couple's past standard of living, the earning capacity of each spouse, the resources and assets of each party, and the duration of the marriage. Johnson v. Cotton-Johnson, 88 Ark.App. 67, 194 S.W.3d 806 (2004). We adhere to no mathematical formula or bright-line rule in awarding alimony. Valetutti v. Valetutti, 95 Ark.App. 83, 234 S.W.3d 338 (2006).

         Owen is and has been an orthopaedic surgeon since 2003. He testified, and his affidavit of financial means indicated, that his gross monthly salary was $35, 000, but his net monthly take-home pay was $19, 975 for the first three months of the year (when social-security taxes were taken out of his paycheck) and $20, 170 for the remainder of the year. He showed monthly expenses of $10, 665, which included mortgage payments on both the marital home and the residence he now occupies. When the parties married in 1994, Owen was preparing to go to medical school, and Mandy had completed two or three years of college. Early in the marriage, Mandy worked at Sam's Club in the marketing department and then for Metropolitan National Bank as a vault teller making a salary in the low $30, 000 range. After K.G.K.'s birth, the parties agreed that Mandy would not continue to work outside the home.

         Within the divorce decree, by prior agreement of the parties, Mandy was awarded $367, 000 as an equal distribution of marital property, as well as all personal property currently in her possession (with the exception of two 12-piece place settings of silver from Owen's family that were awarded to Owen) and any personal property located in the former marital residence. Mandy was also awarded $12, 220 as her marital share of two businesses: Owen's medical practice and Leasing Services of Arkansas. Mandy testified during the divorce hearing she had about $350, 000 of the $367, 000 division remaining; she further testified she would rather not spend that money but instead get alimony from Owen because that was all the money she had. She testified she had not looked into obtaining any type of employment from which to derive income. She acknowledged the marital home was on the market; Owen was paying the mortgages on it; the divorce decree ordered Owen to continue making the mortgage payments until it sold; and the parties would divide equally the net proceeds from the sale of the house after the payment of the mortgages and other costs.

         On her affidavit of financial means, Mandy calculated that she needed $16, 659 per month for expenses. Specifically, Mandy listed monthly expenses as follows:

• $2, 400 Rent/house ...

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