In the recently decided case of Rose v Rose (issued June 22, 2010 for publication), the Court of Appeals dealt a blow to litigants who were hoping that postjudgment financial insolvency might get them out of non-modifiable spousal support obligations. This case makes clear that no matter how dire the postjudgment situation, non-modifiable support obligations will not be set aside.
In Rose, the Defendant-husband (“husband”) was the sole owner of Die Tron, a tool and die company. At the time of the divorce, the parties valued husband’s interest in Die Tron at $6 million dollars. Instead of converting Husband’s holdings in the company to cash to pay wife her marital share, the parties agreed that husband would pay wife $230,000 per year in non-modifiable spousal support. Spousal support would end only upon wife’s death. After entry of the divorce judgment, husband transferred responsibility of the company to his son from a previous marriage. Shortly thereafter, husband learned that his son had committed financial improprieties that severely compromised the company’s ability to remain solvent. Husband alerted his ex-wife, and attempted to correct the problems, but it was too late. The company shortly became worth only “scrap” due to his son’s conduct. Husband sought relief from the spousal support provision of the divorce judgment under MCR 2.612(C)(1)(f). The trial court found that the demise of the company was not husband’s fault, that he could not satisfy his obligation without liquidating all of his assets, and that wife was only entitled to an “equitable” amount of spousal support. The trial court granted husband’s motion and reduced wife’s spousal support to $900/month. The Court of Appeals reversed, finding that the trial court lacked authority to exercise its equitable powers in this case because the parties had agreed to waive their right to a judicial determination of “equitable” spousal support when they made the spousal support provision non-modifiable. The Court of Appeals also noted that while the demise of the business was “tragic,” it was not “extraordinary” in the sense required by this court rule to warrant relief from judgment. This case should give litigants pause when structuring their spousal support provisions.