### IN THE SUPREME COURT OF IOWA

No. 12

– 0912
Filed November 15 , 2013

IN RE THE MARRIAGE OF KENNETH R. MICHAEL AND MELISSA J. MICHAEL Upon the Petition of KENNETH R. MICHAEL , Appellant , And Concerning MELISSA J. MICHAEL , Appellee.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Black Hawk County,
Andrea J. Dryer , Judge.

Ex

- husband sought, and we granted, further review of a court of appeals decision reversing in part the district court’s modification of h is spousal support obligation. DECISION OF COURT OF APPEALS
VACATED IN PART AND AFFIRMED IN PART; DISTRICT CO URT
JUDGMENT AFFIRMED AS MODIFIED
.

Steven H. Lytle and Ryan G. Koopmans of Nyem aster Goode, P.C., Des Moines, for appellant

.

Ashley A. Tollakson of Hartung & Schroeder, LLP, Des Moines , for appellee.2

HECHT , Justice. The district court modified Kenneth Michael’s obligation to pay
Melissa Michael traditional alimony, concluding th e payments should cease when Kenneth reaches age sixty

- seven . The court’s order also terminated immediately Kenneth’s obligation to pay for Melissa ’s health insurance. The court of appeals affirmed the termination of Kenneth’s health insurance obligation , but found no substantial change of circumstances justifying the termination of the alimony obligation prior
to Melissa’s remarriag e or death. On further review, we vacate the decision of the court of appeals, modify the decision of the district court,

a nd affirm.
I. Background Facts and Proceedings.
Kenneth and Melissa Micha el were married in April 1971. Both

are now sixty

- three years old, and they are the parents of two adult
children who are not involved in this appeal

. Melissa worked as a homemaker and stay

- at

- home mother for the duration of the parties’ twenty

- three year marriage. Melissa secured part

- time work outside the
home s hortly after Kenneth initiated a dis solution proceeding in September 1993 . S he worked in various jobs during the course of the proceeding , but when the dissolution decree was entered in June 1994, she was temporarily unemployed and without any expectation of retirement or pension benefits. At the same time, Kenneth had just begun a new job a t Brown & Brown

— a construction company in
Kansas

— at an annual salary of approximately $47,000.
The decree required Kenneth remain responsible for : (1) the
student loans of the children, up to $20,000 exclusive of interest for each child; (2) medical and hospital insurance for the children until they completed postsecondary education; (3) a life insurance policy for as long3

as he was obligated to contribute to the costs of post secondary education for the children; (4) medical insurance coverage for Melissa ; and (5) weekly spousal support payments of $450 for fifty

- two weeks, followed by payment of one

- third of his annual gross salary and bonuses thereafter until Melissa died, remarried, or cohabited

. Kenneth sought modification of the spousal support obli gation in
December 1996. By the time of t he trial on the modification in November
1997 , Kenneth had married his current wife, Barbara, and had
established a new home with her

. He had continued working at Brown &
Brown and had seen his salary increase to $1 500 weekly , or approximately $78,000 annually . He had earned annual bonuses of $1500, $7000, and $20,000 in 1994, 1995, and 1996 , and he had consistently made his support payments based on his gross earnings including weekly wages and bonuses. After f ifty

- two weekly payments of $450 , his obligation had been reduced briefly to $397 week ly, but the obligation thereafter increased as his salary increased . By November 1997, Kenneth was paying Melissa $500 per week plus one

- third of his
annual bonus. Beyo nd the spousal support obligation, Kenneth was also making monthly loan payments of approximately $440 on a debt of nearly $45,000 incurred in part for the cost of the children’s postsecondary education. Barbara was then employed full

- time, making approximately $10.35 per hour. Melissa had secured full

- time employment with Principal Mutual Life Insurance Company at an annual salary of $17,551 , exclusive of bonus and overtime

. After the 1997 trial on modification , the di strict court noted various changes had occurred since the entry of the original decree but
nonetheless denied Kenneth’s request for relief , explaining the changes
were not substantial or mate rial and would have been within the4

contemplation of the district court at the time of the decree. In August
1998 , while an appeal of the court’s order was pending , the parties stipulated to and the court entered an order modifying Kenneth’s spousal support obligation , setting the amount at $48 0 weekly until Melissa di ed,
remarried , or cohabited

. The other provisions, including the medical insurance support provision , were neither litigated nor mentioned in the
sti pulated modification and remained unchanged.
Kenneth filed a second petition for modification in July 20 11, requesting termination or significant reduction of his weekly support and monthly medical insurance payments to Melissa

. The district court held

a trial on the matter in February 2012. Although Kenneth had earned $111,399 in the 2010 calendar year at Hall Brothers, he had been laid off in early 2011 as part of a reduction in the employer’s work force. 1 After three weeks of job search, he had secured new full

- time employment as a project manager with Venture Corporation at an annual salary of $85,020, or approximately $1 635 per week. At the 2012 modification
trial , Kenneth expressed doubt that he would receive bonuses with his new employer

. He also testified that despite his receipt of steadily increasing bonuses prior to the 1998 proceeding, h e had not received a
substantial bonus in any of the years following the 1998 proceeding. 2 He was making payments on a credit card debt of approximately $44,000 , some of which remained from the obligations allocated to him in the 1994 decree, and some of which was attributable to Kenneth’s and

1 Hall Brothers acquired Brown & Brown in 2008. Kenneth remained with the company as vice president of operations through that transition and until the layoff in 2011.

2 He did , however, receive a special $5 000 bonus at the beginning of 2011 for his work relating to the Hall acquisition of Brown & Brown.5

Barbara’s increasing medical expenses

. Kenneth owned an individual
retirement account with a value of $90,614. Barbara had remained in
the same full

- time employ ment since the 1998 m odification and her
annual income had approximately doubled over the years . Her gross earnings in 2010 were $43,5 30 and she earned $39,749 in 2011.
Melissa had remained with the same employer, now called Principal Financial Group (Principal) , since the 1998 modification

. By 2011, h er pen sion benefits had vested, and she had accumulated approximately $190,000 in retirement funds. With wages of $29,201 , 3
Kenneth’s weekly support payments totaling $24,960 for the year , and $333 in interest and dividend in come, Melissa’s reportable income in
2010 was $54,494.
Kenneth testified at the 2012 modification trial that he had growing concerns about his and Barbara’s medical expenses. Kenneth
and Barbara are smokers, and Kenneth is a recovering alcoholic.
Kenneth had received treatment for his alcoholism o nce during the marriage in 1982. He suffers from degenerative spondylitis and underwent back surgery to repair two herniated discs in 2008. H e entered treatment for alcoholism again voluntarily in 2009 followin g the back surgery

. He now takes Aleve ® for his back pain, but he does not currently take any prescription medications. He has also dealt with various neck and knee problems. His job as project manager at Venture Corporation requires a 160

- mile roundtri p commute , longer on

- the

- job
hours , and more daily physical exertion than his previous job. He did

3 Melissa’s rate of pay since 2007 has been $17 per hour, or $35,638 annually, exclusive of overtime and bonuses. Her pay has been capped for the past four years and she does not expect a raise in the foreseeable future. The discrepancy between her gross wages and her reportable income is apparently due to her pre

- tax contributions to her retirement accounts.6

not testify at the trial that he was incapable of performing these tasks, but he speculated that he might not be capable for much longer, based on his physi cian’s advice and his own perception of his condition.
Barbara testified at the trial that she suffers from inflammatory neuropathy, chronic pain, and numbness in her feet. She takes Lyrica ® for the chronic pain, after having tried several other medica tions, each of which brought various side effects. The Lyrica ® affects Barbara’s vision and has contributed significantly to an increase in Barbara’s and
Kenneth’s out

- of

- pocket medical expenses. The prognosis for her
condition is uncertain, but she pres ently plans to continue working full

time and has no plans for retirement.
Melissa raised medical concerns of her own at the trial . She
suffers from osteoarthritis and takes prescription medication for joint
inflammation . She wears eye glasses and incurs optometry expenses each year. She has also experienced shingles and migraines

. She has, however, characterized her medical concerns and expenses as routine. After considering the evidence , the district court determined the increase in Melissa’s income, her continued employment with Principal, and the pension and other resources that would be available to her upon retirement were circumstances not contemplated by the district court at
the time s the 1994 decree and 1998 m odification were entered. Further, the court explained, thes e changes were substantial and more or less permanent. The court found inequitable the requirement that Kenneth continue making weekly support payments indefinitely . Accordingly, the
court modi fied the decree to require instead that Kenneth continue making weekly payments of $480 until he reaches age sixty

- seven , or until Melissa remarries or either party dies

. Finding Melissa’s continued employment with Principal had allowed her to obtain medi cal, dental,7

and vision insurance coverage, the court further modified the decree by eliminating the requirement that Kenneth subsidize Melissa’s monthly health insurance premium. The court ordered that the parties pay their own attorney fees and split th e court costs of the modification action

. Melissa appealed and we transferred the case to the court of appeals. The court of appeals reversed the modification of Kenneth’s weekly support obligation , concluding Kenneth had failed to demonstrate a substantial change in the parties’ financial circumstances not contemplated by the court at th e time of the 1998 modification . The court of appeals found any disparities in savings and debt obligations between the parti es had been self

- inflicted and could not constitute grounds for a reduction in Kenneth’s spousal support obligation

. The court of appeals affirmed , however, the termination of Kenneth’s monthly health insurance payment obligation and the allocation of att orney fees
and costs. We granted Kenneth’s application for further review of the court of appeals decision.
II. Scope of Review.
We review de novo a decision modifying the terms of a mar riage
dissolution decree

. In re Marriage of Johnson , 781 N.W.2d 55 3, 554 (Iowa 2010). We will not disturb the trial court’s conclusion s “ unless there has been a failure to do equity. ” In re Marriage of Wessels , 542 N.W.2d 486, 490 (Iowa 1995). We review a distric t court’s decision on attorney fees for abuse of discretion. See In re Marriage of Goodwin , 606 N.W.2d 315, 324 (Iowa 2000).
III. Discussion.
Kenneth raises two issues on appeal , contending (1) the district court erred in failing to eliminate or substantially reduce his weekly
supp ort obligation before he reaches the age of sixty

- seven, and (2) t he8

district court erred in failing to award him reasonable attorney fees as the prevailing party below. Melissa cross

- appeals, assigning as error the
district court ’s elimination of Kenneth ’s weekly support obligation at age sixty

- seven and the court’s immediate elimination of his monthly health insurance payment obligation. Both parties request appellate attorney
fees.
A. The Spousal Support Obligation s . The parties dispute the
soundness of the district court’s determination that Kenneth established
a substantial change in circumstances has occurred since the 1998
modification . Kenneth argues that because Melissa now supports her self and has accumulated substantial retirement savings, no justification for a continuing traditional alimony payment remains. Further, Kenneth contends, his decrease in real earnings from employment after his transition from Hall Brothers to Venture Corporation, his significant health issues, his inability to a ccumulate significant retirement resources in part due to his spousal support and debt service obligations arising from the original decree, and his advancing age, when taken together, constitute a substantial change in circumstances justify ing
immediate m odification of his support obligations, instead of prospective relief delayed five years as the district court ordered

. Melissa responds
that the facts Kenneth presents, regardless whether taken in isolation or in combination, cannot constitute a change i n circumstances justifying modification. She also contends that regardless whether Kenneth has demonstrated a substantial change, she has demonstrated a need for continuing support until her death or remarriage . Therefore, she argues,
the district court erred in making any further modification beyond that agreed to by the parties in 1998

.9

Our marriage dissolution statute provides that a district court

“ may subsequently modify child, spousal, or medical support orders when there is a substantial change in circumstances.” Iowa Code § 598.21C(1) (2009). The statute adds that the court shall consider a number of specific factors in determining whether ther e has been a substantial change. Amon g the factors relevant here are:

( a ) C hanges in the employment, earning capacity, income, or resources of a party

. ( b ) R eceipt by a party of an inhe ritance, pension, or other gift. ( c ) C hanges in the medical expenses of a party.

. . . . ( e ) C hanges in the physical, mental, or emotional health of a party.

. . . . ( l ) O ther factors the court determines to be relevant in an individual case.
Id. In reviewing an earlier version of this provision, which enumerated substantially the same list of factors, w e explained that we examine the
factors in conjunction with severa l “ other well

- established principles governing modification.” See In re Marriage of McCurnin , 681 N.W.2d 322, 329 (Iowa 2004). The party seeking modification, for example, bears the burden of establishing by a preponderance of the evidence the substantial change in circumstances. Wessels , 542 N.W.2d at 489

– 90.
A substantial change justifying a modification must be permanent or continuous rather than temporary in nature

. McCurnin , 681 N.W.2d at
329

– 30. We have also consistently explained the substantial change must not have been within the contemplation of the district court when the decree was entered, and we presume the decr ee is entered with a10

“view to reasonable and ordinary changes that may be likely to occur.”
Wessels , 542 N.W.2d at 490; see also McCurnin , 681 N.W.2d at 3 29

– 30. 4
Several additional principles from our prior modification cases guide our analysis

. W e may consider the unrealized but existing earning potential of a party at the time of the decree and contrast that with a later established earning potential as part of our determination of whether a substantial change in circumstances has been demonstrated.
See McCurnin , 681 N.W.2d at 330; see also In re Marriage of Sjulin , 431 N.W.2d 773, 777 (Iowa 1988). We have cautioned that w hile changes in earning capacity or earning potential may constitute substantial changes for purposes of the statutory determinati on, the changes will not justify a modification if they result from an improper intent to deprive an obligee of support. In re Marriage of Rietz , 585 N.W.2d 226, 2 29

– 30 ( Iowa 1998). In addition, in certain modification cases, we have distinguished
rehabi litative alimon y from permanent alimony awards and explained
that the rationale underlying the award may have some bearing on the determination of whether modification is justified. See Wessels , 542 N.W.2d 489

– 90. Finally, regardless the type of award, w e have often observed that a change in an obligee spouse’s ability to or potential for
self

- support may be an important consideration in our determination.
See id

. at 490 (affirming modification extending duration of award in case where obligee had been u nable to meet rehabilitative goal of self

support) ; cf. In re Marriage of Francis , 442 N.W.2d 59, 64 (Iowa 1989) (explaining , in reviewing an initial dissolution decree, that traditional

4 In developing that principle in the context of modification of child support orders, we have emphasized we examine what the court entering the decree actually knew, as opposed to what the parties knew or should have known at the time of the earlier proceeding. See Mears v. Mears , 213 N.W.2d 511, 515 (Iowa 1973).11

alimony is “ payable for life or so long as a spouse is incapable of self

support ”)

. The parties have raised various significant equitable considerations for our analysis here. Addressing Kenneth’s present circumstances first,
we note the district court found Kenneth failed to establish that his
current salary at Venture Corporation is permanent and raised the possibility that his salary might soon approach his previous compensation level at Hall Brothers. We view Kenneth’s current position somewhat differently. Kenneth reached his 2009 and 2010
compen sation levels at Hall Brothers after more than ten years of service as a vice president at the company, and after having previously served for several years as a project manager for the company Hall Brothers later acquired. He now works again as a new pro ject manager, not a vice president, at Venture Corporation, and the record suggests he has had
no indication thus far of any prospect for advancement. He has not received a substantial bonus since the 1998 modification and has had no
indication that bonus es
— a very significant component of his compensation prior to the 1998 modification

— will be paid by his new employer

. Moreover, despite his advancing age and his deteriorating health and physical condition, he now works in a more physically demanding role than the one he had performed for the previous twelve years, casting significant doubt on his potential for longevity and advancement at the company. 5 See Iowa Code § 598.21C(1)( a ) (requiring consideration of changes in both income and earning capacity in determining whether modification is appropriate); see also In re Marriage

5 The record does not suggest Kenneth has any desire to retire or choose a course of employment for the purpose of reducing his support obligation; rather, it merely suggests he has significant uncertainty regarding his future at the company

.12

of Wegner

, 434 N.W.2d 397, 399 (Iowa 1988) (noting distinction between changes in present income and changes in earning potential and explaining both were relevant in affirming modification of obligee’s award).
Melissa notes that regardless whether Kenneth has the potential
for advancement with Venture Corporation , his current salary is actually greater than the salary he received at the time the 1998 decree was

en tered, but we find this contention unpersuasive. Kenneth’s annual salary of $85,000 in 2011 is nominally greater than his 1998 base salary of $78,000, but we think it important to note again that Kenneth received significant year

- end bonuses from Brown & Brown in the years preceding the 1998 modification

— bonuses that rendered his total compensation for those years greater than his 2011 compensation. In addition, we have often explained that we may consider the effects on income of inflation and increasing costs of living

— both of which render Kenneth’s 2011 compensation significantly smaller in real terms than his 1998 compensation. See, e.g., Page v. Page , 219 N.W.2d 556, 558 (Iowa 1974) (concluding a twenty percent decrease in income at a time when
the c ost of living had increased constituted a substa ntial decrease in the obligee’s income and affirming the district court’s modification of the obligor’s support obligation). 6 Taken together, Kenneth’s new uncertainty regarding his employment longevity and earning potential and his significantly smaller income relative to his income at the time of
the 1998 modification strongly influence our determination of whether a substantial change has been established and modification is appropriate

.

6 We note these considerations will also inform our analysis of Melissa’s position, and we consider the relative impact of these factors on the positions of both parties. See Page v. Page , 219 N.W.2d 556, 558 (Iowa 1974).13

See Iowa Code § 5 98.21C(1)( a ); see also Rietz , 585 N.W.2d at 231 ( affirming district court’s modification when record revealed obligor was no longer likely to be employed at the high income level he had enjoyed at the time of the original decree); cf. American Law Institute, Principles of the Law of Family Dissolution § 5.08 cmt. d , at 970 ( 2000) [hereinafter Principles ] ( explaining modification may be appropriate when “ the former spouses’ living standards are less disparate than expected because of a
d ecline in the obligor’s income ”). Our modification analysis also requires consideration of Melissa’s
current financial position. As Kenneth contends, and as the district court found, Melissa now earns more than twice what she earned at the
time of the 1998 modification and she is more than capable of supporting
herself. Her position now provides significant medical, dental, and vision insurance coverage. She has minimal debt, s he holds an undergraduate degree in business, and she has remained employed at Principal for the past seventeen years. Her pension at Principal has now vested and will yield her a n estimated payment of approximately $774 monthly upon her retirement. The district court observed, and we think it important to note, she had been at Principal just three years at the time of the 1998 modification, and her pension had not yet vested. We agree with the district court’s finding that her longevity at the company, her substantial increase in income, and her accrual of significant retirement benefits were not likely within the contemplation of the district court at the time
the 1998 modification was entered. See McCurnin , 681 N.W.2d at 330 (explaining change from an un realized earning potential to an established earning potential m ay be an important consideration in the modification analysis); Sjulin , 431 N.W.2d at 777 (same).14 We acknowledge Melissa’s current income remains significantly less than Kenneth’s, but we think it important to emphasize , as the district court did, that o ur equitable analysis must also account for changes in the relative positions of the parties. See, e.g., McCurnin , 681 N.W.2d at 330

– 31 (affirming modification of award extending payment obligation despite finding obligee’s income had nearly doubled, in p art because obligor’s income had nearly tripled and his financial position
had “vastl y improved” since the decree); see also Principles § 5.08 (1)(a) , at 963 (recommending modification when the living standards of the spouses are “substantially more or subs tantially less disparate than contemplated by the prior order” as a result of a decline in the obligor’s
income ) ; cf

. Wegner

, 434 N.W.2d at 399 (“ [B] oth parties, if they are in reasonable health, need to earn up to their capacities

. . . and not lean
undul y on the other party for permanent support

. ”). Given Melissa’s current financial position as compared to her position in 1998, the change in Melissa’s financial position relative to Kenneth’s position at present as compared to her position relative to Kenneth’s position in 1998, and Melissa’s present ability to support herself , we conclude
Kenneth has established a substantial change in circumstances and is
entitled to a modification of his weekly support obligation. In addition,
we conclude Kenneth ha s established a substantial change with respect
to Melissa’s medical support requirements, given the advent of her employer

- sponsored insurance coverage, which she had not obtained at
the time of the dissolution and was not addressed at the time of the 199 8
modification. We therefore turn to the question of what modification of Kenneth’s obligations is justified by this record. Giving due account to our various equitable considerations, including the parties’ respective financial positions and the change i n the15

income gap between the parties, we conclude Kenneth’s weekly support obligation should be reduced to $285 per week. 7 Cf. Rietz , 585 N.W.2d at
228

– 2 9, 231 (affirming district court’s modification of an obligation from $4000 monthly to $1000 monthly w hen obligor’s expected annual
income declined from approximately $200,000 to approximately $50,000 and obligee’s earning capacity remained stable). We do not distu rb th at portion of the 1998 modification requiring that the obligation persist until Melissa’s remarriage, cohabitation, or death. 8 We agree with the
district court’s determination that the changed circumstances dictate
Kenneth’s monthly medical insurance payment obligation s should cease

now
. B. Attorney Fees
. As we have already noted, Kenneth contends
the district court erred in ordering the parties to pay their own attorney fees incurred in the district court proceedings , and he requests this court order Melissa to pay his appellate attorney fees. Melissa respon ds that

7 We note that at the time of t he 1998 modification, Kenneth earned $98,000 ($78,000 base pay plus a bonus of $20,000) per year. Melissa earned $17,551 per year. The 1998 modification established a spousal support obligation of $24,960 per year ($480 per week)

— a figure equivalent to a pproximately thirty

- one percent of the difference between the parties’ annual employment earnings at the time (24,960 ÷ 80,449 = .3102). The reduction of Kenneth’s support obligation to $285 per week ($14,820 per year) will maintain Kenneth’s support obli gation at approximately thirty

one percent of the difference between Kenneth’s current annual earnings of $85,020 and Melissa’s current earn ings of $37,413 (14,820 ÷ 47, 607 = .3113).

8 Although the district court concluded the support obligation should te rminate when Kenneth reaches the age of sixty

- seven, equitable considerations lead us to a different result. Whether Kenneth’s obligation to pay traditional spousal support should terminate at that future date will depend on the circumstances of the parti es prevailing at that time. See, e.g. , In re Marriage of Rietz , 585 N.W.2d 226, 231 (Iowa 1998) (affirming modification setting support obligation “based on [o bligor’s] present actual income ”); In re Marriage of Geil , 509 N.W.2d 738, 743 (Iowa 1993) (stri king portion of modification that “prejudge[d]” obligee’s right to modification and noting “future events” would “determine the parties’ relative rights”); cf. In re Marriage of Schlenker

, 300 N.W.2d 164, 165 (Iowa 1981) (“[T]rial courts should make final disposition of [dissolution] cases on the circumstances then existing.”).16

the district court’s order was reasonable and within its discretion , but
she requests an award of her appellate attorney fees. The court of appeals affirmed the district court’s order on attorney fees below, and denied both parties’ requests for a ttorney fees incurred in the appeal

. Section 598.36 addresses attorney fee awards in modification
pro ceedings. The section provides that the district court “ may award attorney fees to the prevailing party in an amount deemed reasonable by
the court.” Iowa Code § 598.36. We have emphasized that the language of the provision is permissive and that we give the district court considerable discretion in determining whether it should award fees at the district court level

. See In re Marriage of Maher , 596 N.W.2d 561, 568 (Iowa 1999). We have similar discretion in awarding appellate attorney fees. See i d. We have often explained the controlling considerations in the attorney fee determination are the parties’ respective abilities to pay. See Wessels , 542 N.W.2d at 491; Francis , 442 N.W.2d at 67. We may also consider whether a party resisting the modification petition was successful, and whether a party has been
ob liged to defend the trial court’ s decision on appeal

. In re Marriage of
Bolick , 539 N.W.2d 357, 361 (Iowa 1995)

. Here, we note b oth parties may be deemed to have prevailed to some extent in the proceedings below. While neither party is affluent, both parties have resources with which to pay their fees , and we find their respective abilities t o pay comparable. Accordingly, we cannot find
the district court erred in ordering the parties pay their own attorney fees, and we decline to award either party appellate attorney fees.
IV. Conclusion.
We modify the parties’ dissolution decree by reducing Kenneth’s obligation to pay weekly spousal support and terminating his monthly17

obligation to contribute to the cost of Melissa’s health insurance. Accordingly, we vacate in part and affirm in part the decision of the court of appeals, and affirm as modified the judgment of the district court. Each party shall pay half the costs of the appeal.
DECISION OF COURT OF APPEALS VACATED IN PART AND AFFIRMED IN PART; DISTRICT COURT JUDGMENT AFFIRMED AS
MODIFIED.