Michigan Supreme Court

Lansing, Michigan

Robert P. Young, Jr.,

 Chief Justice

Michael F. Cavanagh

Marilyn Kelly

Stephen J. Markman

Diane M. Hathaway

Mary Beth Kelly

Brian K. Zahra, Justices

Order 

October 7, 2011 

142682 

BETH C. MATTER, 

Plaintiff-Appellant, 

v SC: 142682 

 COA: 293421 

Oakland CC Family 

Division: 2005-708339-DO 

RICHARD C. MATTER, 

Defendant-Appellee. 

_________________________________________/ 

 On order of the Court, the application for leave to appeal the January 20, 2011 

judgment of the Court of Appeals is considered, and it is DENIED, because we are not 

persuaded that the question presented should be reviewed by this Court. 

 MARILYN KELLY, J. (dissenting). 

 I dissent from the Court’s order denying plaintiff’s application for leave to appeal 

and would reverse the Court of Appeals decision. I agree with the dissenting opinion of 

that court which would have affirmed the circuit court decision. The circuit court held an 

extensive evidentiary hearing and determined that defendant’s gross income for the 

purpose of calculating his spousal support includes certain amounts he treated as 

investment or passive income. It granted plaintiff’s motion for an increase in spousal 

support, but the Court of Appeals reversed that decision. 

 The underlying facts are as follows. Soon after the parties’ divorce, defendant left 

his employment as an oncologist at a large Michigan hospital and relocated to Kentucky 

where he took employment with United Surgical Associates PSC (USA). He soon chose 

to become a shareholder of USA. This required him to purchase shares in USA’s captive 

medical equipment affiliate, Radiation Oncology Associates, PLLC (ROA). His 

employment included work for another USA affiliate, United Radiation Oncology 

(URO), which operates cancer treatment centers and uses ROA’s medical equipment to 

treat USA’s cancer patients. 
2

 Under the terms of the parties’ judgment of divorce, plaintiff’s spousal support is a 

percentage of defendant’s gross earnings. The earnings comprised income from 

defendant’s employer and from Premier Radiation Oncology Services P.C. The latter 

was a captive affiliate of defendant’s employer, and the income it generated was “passive 

interest or investment income.” 

 While in Michigan, defendant’s average annual income was $390,000. In 2006-

2007, his first year in Kentucky, defendant asserted that the income subject to his spousal 

support obligation was $374,805. But his W-2 reported income of $466,174. Defendant 

claimed that the difference between his W-2 income and his salary came from returns on 

his investments in USA and ROA, a sum of roughly $90,000. And, he claimed that the 

amount of spousal support he should pay must be based solely on his salary. He viewed 

it irrelevant that the base used in Michigan included income from his investment in a 

captive affiliate corporation of his employer there. 

 The circuit court disagreed and ruled that his divorce settlement contemplated that 

the income reported on his W-2 was defendant’s income for the purposes of calculating 

his spousal support obligation. The court pointed out, in addition, that the language of 

the Michigan Child Support Formula supports its position. The Formula would interpret 

defendant’s income as his “earnings generated from a business, partnership, contract, 

self-employment, or other similar arrangement or from rentals,” and additionally include 

“. . . interest, [and] dividends . . . to the extent that they represent income or may be used 

to generate regular income.” MCSF 2.01(C)(2) and (5). 

 The trial court reasoned that defendant realized the return on his investment in 

ROA and URO solely as a result of his employment. Consequently, that income was part 

of his gross earnings from his employment. Additionally, the court found that defendant 

did not act in good faith in leaving his employment in Michigan. His move to Kentucky 

stripped plaintiff of her interest in his supplemental employee retirement plan. 

 However, the Court of Appeals majority found the divorce judgment unambiguous 

and held that the plain language of the parties’ agreement excluded consideration of 

defendant’s investment income from USA and ROA. It also held that defendant did not 

breach the implied covenant of good faith and fair dealing, because he did not violate any 

of the terms of the parties’ settlement agreement. 

 The Court of Appeals majority failed to grasp the equitable nature of spousal 

support. It also failed to recognize the ambiguity in the settlement agreement and 

incorrectly applied a de novo standard of review. I agree with the Court of Appeals 

dissent that this case should have been reviewed for clear error. Had that standard been 

applied, the judgment would not have been found to be clearly erroneous, for the reasons 

stated in both the Court of Appeals dissenting opinion and the circuit court opinion.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the 

foregoing is a true and complete copy of the order entered at the direction of the Court. 

 _________________________________________ 

 Clerk

October 7, 2011 

p1004 

 

3

 The circuit court determined that, for purposes of the judgment, the definition of 

“investment income” was not the same as the definition used in the Internal Revenue 

Code. The proper analysis must take its guidance from the Child Support Formula. 

Using that guide, it is apparent that defendant’s income included the gains from his 

employment and labor while working with URO. The income accumulated from ROA 

and URO was not passive investment income, especially given the relationship between 

those captive affiliates. Defendant’s income increased as the number of patients he 

treated at URO increased the number of patients using ROA’s equipment. 

 Additionally, the machinations that defendant employed to avoid the classification 

of this income as gross income beg for the application of equitable principles by the 

circuit court. Plaintiff claimed in the trial court, and defendant has yet to rebut, that 

defendant represented during the divorce proceedings that he would continue to work at 

the Michigan hospital. Plaintiff was unaware when the settlement agreement was written 

that defendant would terminate that employment just two months after the judgment of 

divorce was entered. Defendant led her to believe that her rights to defendant’s unvested 

supplemental employee retirement plan with the Michigan hospital were secure. 

 The application of equitable principles, always appropriate in domestic relations 

matters, requires a different result under the facts of this case than the Court of Appeals 

reached. I would reverse the Court of Appeals decision. 

 ZAHRA, J., did not participate because he was on the Court of Appeals panel.