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### STATE OF MICHIGAN

COURT OF APPEALS

GEORGII B. LOUTTS,

Plaintiff-Appellee, FOR PUBLICATION February 10, 2015

9:05 a.m.

v No. 318468
Washtenaw Circuit Court IRINA V. LOUTTS, LC No. 08-002970-DM

Defendant-Appellant.

Before: S AAD , P.J., and O WENS and K.F. K ELLY , JJ.

P ER C URIAM

.

In this post-judgment divorce proceeding, defendant Irina Lout ts appeals by leave granted 1 two orders issued by the trial court on July 17, 2013, and Sep tember 12, 2013, which recalculated spousal support, but denied defendant’s request to modify and extend spousal support and denied defendant’s request for attorney and expert witness fees. For the reasons discussed below, we affirm.

I. FACTS AND PROCEDURAL HISTORY

The parties are Russian immigrants who were married in 1988 an d came to the United States a few years later. They have one adult son. In 2000, p laintiff Georgii (referred to as George) Loutts started QPhotonics, a business that buys, sells, imports and exports light emitting
diodes and laser diodes. He has a Ph.D in Materials Science earned in 1990 from General Physics Institute in Moscow, and worked as a physics professor at Norfolk State University in Virginia until the partie s moved to Ann Arbor in 2007.

Defendant has a Ph.D in Intern ational Studies, earned in 2004 from Old Dominion University in Norfolk, Virginia, and a Master’s degree in Econo mics from Moscow State University in Moscow. Defendant had earned $14,000 per year as an adjunct professor at Old Dominion, and was hired as bookkeeper/accountant for QPhotonics at a salary of $2,000 per

1 Loutts v Loutts , unpublished order of the Court of Appeals, entered March 26, 2014 (Docket No. 318468).-2- month after the parties moved to Ann Arbor. Near the time of t he divorce in 2008, defendant was fired from the QPhotonics job.

Plaintiff filed for divorce i n December 2008. Following a ben ch trial, the parties’ divorce judgment was entered on March 15, 2010. The trial court found that permanent spousal support was not appropriate “because both parties have PhDs, are in goo d health, and are clearly employable.” However, plaintiff was required to pay defendant r ehabilitative spousal support in the amount of $1,510 per month for a period of four years. Pla intiff was awarded the marital home, and defendant was ordered to vacate the home before April 1, 2010, which she did. The trial court determined the value of QPhotonics to be $280,000 a nd awarded the business to plaintiff, and half of its val ue, $140,000, to defendant. The rest of the property was split approximately equally with plaintiff being ordered to pay defen dant $247,788 as an equalizer. At trial, defendant had indicated some intent to develop a busi ness similar to QPhotonics. Consequently, in the divorce j udgment, the trial court ordered that defendant was restrained for three years from competing in any way with QPhotonics. Because both parties requested to be awarded the company and issue a noncompete restriction against the other spouse, this Court upheld the restriction. Loutts , 298 Mich App at 36.

Following the judgment of divorce, defendant appealed to this Court which remanded to the trial court to (1) address and decide defendant’s request f or attorney and expert fees under MCR 3.206(C)(2)(a), (2) redetermine spousal support, including whether the equities in the case warrant utilizing the value of QPhotonics for purposes of both property division and spousal support, and (3) recalculate s pousal support, imputing to defen dant an income of $34,000. Loutts

v Loutts , 298 Mich App 21, 25, 31, 34; 826 NW2d 152 (2012).

Nine months after this Court’s remand decision, defendant file d a “Motion to Recalculate Spousal Support, Modify Spousal Support, and Extend It; and For Attorney Fees and Expert Witness Fees.” Defendant requested that the trial court hold a n evidentiary hearing on spousal support, attorney fees, and expert witness fees, and that it mo dify and extend her spousal support based on her continuing need for s upport and plaintiff’s ability to pay. Defendant argued that her health had deteriorated substantially. Specifically, she alleg ed that she suffered from bleeding stomach ulcers that led to hospitalization a few times, the fir st occurring in March 2012. Nevertheless, defendant asserted that she continued to look for work. However, she alleged that she was unable to obtain suitable employment because she was ov er-qualified for the few jobs that existed in her geographical area, and that Michigan’s decl ining economy made it near impossible to find work.

Based on the extensive nature of the file, the trial court det ermined that an evidentiary hearing was not necessary and dec lined defendant’s request for one. The trial court dispensed with oral argument and decided the matter based on the parties’ written submissions pursuant to MCR 2.119(E)(3). The trial court stated that rehabilitative sp ousal support had been ordered at $1,510 per month retro active to April 23, 2009, and that it terminated on April 23, 2013. Despite defendant claiming that her health problems began prior to Sept ember 2012, the trial court noted that she waited until June 14, 2013 to request to modify and ex tend spousal support. The trial court noted that the spousal suppo rt terminated before the requ est to modify and extend was made, despite the fact that the alleged change of circumstance occurred nearly one year prior to the termination. Accordingly, th e trial court held that any re quest for a modifica tion or extension-3- of spousal support must occur before the termination of the duty to pay. The trial court acknowledged that MCL 552.28 author izes the modification of ali mony on a showing of changed circumstances, but noted that de fendant’s reading of the rule a llows a party to “come back five, ten or even 20 years later to request a modification of spousal support because of a ‘change of circumstance,’ ” which in the trial court’s opinion is unreason able. Therefore, the trial court denied defendant’s request to modify and extend spousal support . The trial court did, however, recalculate the spousal support using $34,000 as defendant’s in come. This increased defendant’s monthly spousal support to $1,790, for a total of $85,920 over four years, which was $13,440 more than the original award.

With regard to the remaining issues raised in defendant’s moti on, as well as this Court’s remand directives, the trial court took them under advisement a nd addressed them in the September 13, 2013 order. The trial court determined that the equities in this case did not warrant using the value of QPhotonics for purposes of both prop erty division and spousal support, and that defendant’s request for attorney and expert w itness fees was without merit. Consequently, this appeal ensued.

II. SPOUSAL SUPPORT

Defendant first challenges the spousal support award and the t rial court’s decision to deny her motion to modify and extend spousal support. The stan dard of review regarding a trial court’s decision to award spousal s upport was adequately stated in this Court’s previous opinion:

It is within the trial court’ s discretion to award spousal sup port, and we review a spousal support award for an abuse of discretion. Woodington v
Shokoohi , 288 Mich App 352, 355, 792 NW2d 63 (2010); Berger v Berger , 277 Mich App 700, 726, 747 NW2d 336 (2008). We also review for an abuse of discretion a trial court’s decision whether to impute income to a party. Carlson v
Carlson , 293 Mich App 203, 205, 809 NW2d 612 (2011). “An abuse of
discretion occurs when the tria l court’s decision falls outside the range of reasonable and principled outcomes.” Woodington , 288 Mich App at 355. “The object in awarding spousal support is to balance the incomes an d needs of the parties so that neither will be impoverished; spousal support i s to be based on what is just and reasonable under the circumstances of the case .” Berger , 277 Mich App at 726. We review for clear error the trial court’s f actual findings regarding spousal support. Id. at 727. A finding is clearly erroneous if, after reviewing the entire record, we are left with the definite and firm conviction that a
mistake was made. Woodington , 288 Mich App at 355. If the trial court’s findings are not clearly erroneous, we must determine whether the dispositional ruling was fair and equitable under the circumstances of the ca se. Berger , 277 Mich App at 727. We must affirm the trial court’s dispositiona l ruling unless we
are convinced that it was inequitable. Id. [ Loutts , 298 Mich App at 25-26.]

At the outset, we decline to a ddress defendant’s argument that spousal support in the amount of $1,510 per month for four years was insufficient beca use the trial court did not properly consider the spousal support factors set out in Olson v Olson , 256 Mich App 619, 631; 671 NW2d 64 (2003), as we are bound by the law of the case doct rine. See Ashker ex rel Estate-4- of Ashker v Ford Motor Co , 245 Mich App 9, 13; 627 NW2d 1 (2001). This Court in Loutts rejected defendant’s same argume nt and concluded that the recor d supported the trial court’s factual findings regarding the spousal support factors. Loutts , 298 Mich App at 31-33. This Court remanded only for the tria l court to recalculate spousal support by imputing to defendant an income of $34,000, rather than $40,000, and to redetermine s pousal support by deciding whether the equities in this case warranted utilizing the value of QPhotonics for purposes of both property division and spousal support. Id. at 31, 34.

We also decline to address defendant’s argument that the trial court erred by failing to grant an evidentiary hearing on the motion to extend spousal su pport because defendant abandoned this issue by failing to address the merits of her as sertion of error. Thompson v Thompson , 261 Mich App 353, 356; 683 NW2d 250 (2004). The trial court stated that based on
the extensive nature of the file , no evidentiary hearing was ne cessary. On appeal , defendant does not argue how this decision was error.

Defendant argues on appeal that there is no requirement that a motion to modify or extend spousal support be made w ithin the initial term of suppo rt that was awarded. The trial court denied defendant’s motion to modify and extend spousal su pport, citing the fact that the support terminated on April 23, 2013, before the request to mod ify and extend was made, and held that any request to modif y or extend had to be made before the support terminated.

MCL 552.28 creates a statutory r ight for either party to seek modification of alimony, and provides:

On petition of either party, after a judgment for alimony or o ther allowance for either party or a child, or after a judgment for the appointment of trustees to receive and hold property for the use of either party or a child, and subject to section 17, the court may revise and alter the judgm ent, respecting the amount or payment of the alimony or allowance, and also respect ing the appropriation and payment of the principal and income of the pr operty held in trust, and may make any judgment respecting any of the matters that the court might have made in the original action.

In interpreting MCL 552.28, our Supreme Court in Rickner v Frederick , 459 Mich 371; 590 NW2d 288 (1999), determined that the plain language of the statute did not create a brightline rule such as the one imposed by the trial court in this ca se. In Rickner , the trial court awarded the plainti ff alimony, but provided t hat it would be au tomatically reviewed in two years.

Id. at 372. The award was later modified to state that it would t erminate if plaintiff died, remarried, or cohabitated with a man. Id. at 373-374. After it was reported that the plaintiff was cohabitating with a man, the tr ial court cancelled the alimony and ordered that the file be closed.

Id . at 374-375. Almost two years after the file was closed, and three years after the alimony was stopped, the plaintiff was no longer cohabitating and moved to reinstate the alimony. She also cited the fact that her multiple sclerosis had worsened substan tially and she was unable to work.

Id . at 375. Expressing its concern in language nearly identical to that employed by the trial court in the present case, the trial court in Rickner denied the motion to reinstate the alimony, stating,-5- [T]here must come a time where these matters are over with. Th e alimony has
been terminated. To think then t hat person could come in in fi ve years, ten years, 20 years later and ask again that alimony be reinstated, the Co urt finds to be a situation that simply would never put matters to rest. One wou ld never know when the other party might decide that they want to come in and at least file a motion. Maybe they can’t meet the criteria, as has been pointe d out by counsel,
because there are certain criteri a, but these matters have to b e laid to rest. [ Id . at 376.]

This Court affirmed, but our Suprem e Court reversed, stating,

In this instance, we are faced w ith a statute that simply prov ides that “on petition of either party, af ter a judgment for alimony . . . th e court may revise and alter the judgment, respecting the amount or payment of the ali mony . . ., and may make any judgment respecting any of the matters that the court might have made in the original action.” MCL 552.28; MSA 25.106. This is a ca se in which the court originally provided alimony, and thus continuing jurisdic tion is plainly provided by the statute.

This conclusion is buttressed by the absence of a prior Michig an appellate decision holding that the statuto ry power to modify is extingui shed if it is once exercised to eliminate alimony. F urther, the statutory power t o modify is not dependent on triggering la nguage in the judgment.

For these reasons, we are persuaded that the proper reading of the statute is that the Legislature intends, in cases in which alimony is i nitially ordered, that the court retain the power to make necessary modifications in a ppropriate circumstances. [ Id . at 378-379 (internal citation and footnote omitted).]

Accordingly, based on Rickner and the plain language of MCL 552.28, it was error for the tri al court to interpret the law to st ate that any request to modify or extend spousal support had to be made before the support terminated. However, we conclude that this error was harmless because it is implicit in the trial court’s two orders that defendant f ailed to show a change of
circumstances to warrant modi fication or extension of the rehab ilitative spous al support.

To modify a spousal support award, the moving party must show that there has been a change of circumstances since the judgment of divorce. Moore v Moore , 242 Mich App 652, 654; 619 NW2d 723 (2000). Defendant argued that her changed ci rcumstances were her deteriorating health and her inability to find work based on Mi chigan’s declining economy. In its first order, although the trial court cited the fact that d efendant’s motion was untimely, it also noted that it was reviewing all the documents and testimony and had the case under advisement as to the modification of spousal support. The court further n oted that it was very specific in ordering rehabilitative support for four years and denying perm anent spousal support. In its second order, it noted that defendant was clearly employable ba sed on her education and professional experience at the time the divorce judgment was en tered and referenced the expert testimony from the trial regarding her potential job prospects. The trial court made it clear in its
two orders that in addition to d etermining that defendant’s mot ion was untimely, it was also-6- relying on the reasons initially set forth in the divorce judgm ent as a basis for only awarding rehabilitative spousal support for four years.

Further, as the trial court not ed in its first order, despite her claiming that her ulcers began in March 2012, defendant did not file her motion to modify or e xtend spousal support until June 2013, which certainly diminishes the urgency for further spousa l support to address her alleged health issues. Moreover, except for the few hospitalizations that prevented her from working while she was in the hospital, defendant never asserted that he r alleged medical issues hindered her ability to work. In fact, she stated that despite her ulce rs, she continued to look for employment. Her main reason for seeking continued spousal supp ort appears to be the fact that she could not obtain suitable employment due to the fact that s he was overqualified for the jobs available in her geographical area and that Michigan’s economy was declining. However, she did not identify which jobs, if any, for which she applied and was turned down based on her qualifications. In fact, defenda nt did not provide evidence to support any of the allegations made in her motion to modify or exte nd spousal support. Thus, the r ecord is clear that defendant did not sustain her burden to show a change of circumstances since the divorce judgment, and therefore, the trial court did not abuse its discretion by deny ing her motion to modify or extend spousal support.

Next, defendant argues that the trial court erred by determini ng that the equities in this case did not warrant utilizing the value of QPhotonics for purp oses of both property division and spousal support. The trial court determined that the valuation of QPhotonics could be used for either property division or s pousal support, but not both. How ever, this Court held that there is no bright-line rule. Loutts , 298 Mich App at 31. Rather, M CL 552.23(1), whic h governs spo usal support, favors a case-by-case approach. Loutts , 298 Mich App at 29. This Court stated that a trial court’s decision to award spousal support “should reflect what is just and reasonable under
the circumstances of the case.” Id. at 30 (quotation marks and citations omitted). Because the trial court applied a bright-line rule and did not consider the specific facts and circumstances of the case, this Court directed the trial court on remand to rede termine spousal support by deciding whether the equities in this case warrant utilizing the value o f QPhotonics for purposes of both property division and spousal support. Id. at 31.

On remand, the trial court thor oughly discussed its decision t o use the value of QPhotonics for the purpose of pr operty division, but not spousa l support. The trial court relied on plaintiff’s expert who stated that “where a business is valu ed on the present value of the future income to the owner, some of the earnings/profits are co nsidered as payment for labor (reasonable compensation) and the remaining profits (excess com pensation) are reduced to present value and multiplied by a factor to yield a business va lue.” The trial court stated, “If this excess compensation is considered in awarding spousal support, then it could be argued that the Court would be awarding the same dollars twice.” Further, the trial court cited defendant’s extensive bad behavior during the proceedings, including numero us unsubstantiated allegations she made against plaintiff, and the fact that she did receive h alf the value of the business, that resulted from plaintiff’s own labors. The court further noted that defendant had extensive knowledge of QPhotonics and could easily establish a competing business that would “create havoc for,” and significantly re duce the value of, QPhotonics. Therefore, contra ry to defendant’s argument, the trial court did as directed by this Court and con sidered the equities of this case and what was just and reasonable unde r the circumstances, to determ ine that the value of the business-7- would only be used for the purposes of property division. We c onclude that the record supports the trial court’s factual findings, and its decision is within the range of reasonable and principled

outcomes.

III. ATTORNEY FEES AND COSTS

Finally, defendant argues thatthe trial court erred by declin ing to award attorney and expert witness fees. We disagree. We review for an abuse of d iscretion a trial court’s decision to award attorney fees in divorce proceedings. Woodington , 288 Mich App at 369. We review for clear error the findings of fact on which the trial court b ases its decision, and any issues of
law are reviewed de novo. Id. ; see also Myland v Myland , 290 Mich App 691, 701-702; 804 NW2d 124 (2010).

This Court remanded for the tria l court “to address and decide defendant’s request for attorney and expert fees under MCR 3.206(C)(2)(a).” This rule states:

(2) A party who requests attorney fees and expenses must alleg e facts
sufficient to show that

(a) the party is unable to bear the expense of the action, and that the other party is able to pay . . .

“This Court has interpreted this rule to require an award of at torney fees in a divorce action ‘only as necessary to enable a party to prosecute or defend a suit.’ ” Myland , 290 Mich App at 702, quoting Gates , 256 Mich App at 438. “With respect to a party’s ability to p rosecute or defend a divorce action, a party ‘may not b e required to invade her asse ts to satisfy attorney fees when she is relying on the same a ssets for her support.’ ” Id. , quoting Maake v Maake , 200 Mich App 184, 189; 503 NW2d 664 (1993).

Further, the Myland Court went on to state that “a party sufficiently demonstrates an inability to pay attorney fees when that party’s yearly income is less than the amount owed in attorney fees.” Id. Although this Court in Loutts seemed to imply that this is a dispositive rule,

see Loutts , 298 Mich App at 25, 2 a fair reading of Myland indicates otherwise. Myland cited

Stallworth v Stallworth , 275 Mich App 282, 288-289; 738 N W2d 264 (2007), for the propo sition that “a party sufficiently demonstrates an inability to pay att orney fees when that party’s yearly

2 This Court in Loutts noted that defendant demonstrated her inability to pay because she alleged that her attorney fees totaled over $62,000, which is more than her annual income. Loutts , 298 Mich App at 25. Although not mentioned by the parties in this appeal, we note that this statement does not implicate the law of the case doctrine becau se this Court did not specifically
decide that defendant demonstrat ed an inability to pay. Rather , this Court remanded for the trial court to specifically address and decide defendant’s request fo r attorney fees under MCR 3.206(C)(2)(a), which included a determination whether defendan t demonstrated an inability to

pay.-8- income is less than the amount owed in attorney fees.” Myland , 290 Mich App at 702. In

Stallworth , this Court stated the following:

Necessary and reasonable attorney fees may be awarded to enabl e a party to carry on or defend a divorce action. In the present case, t he trial court decided that awarding plaintiff attorney fees was necessary to enable h er to obtain a divorce. The parties stipulated that each attorney was owed $1 8,500. Plaintiff was awarded $10,000 in attorney fees. Because plaintiff’s year ly income is less than the amount she owed her attorney, she sufficiently demonstrated her inability to pay her attorney fees. Furthermore, defendant earns more th an double what plaintiff earns in a year, which demonstrated his ability to co ntribute to plaintiff’s attorney fees. Under these circumstances, the trial court’s ru ling was within the range of reasonable and principled outcomes. [ Stallworth , 275 Mich App at 288- 289.]

Therefore, it is clear that this Court in Stallworth was merely stating that the particular factual circumstances of the case show that the plaintiff estab lished her inability to pay. The Court did not state that when a party’s attorney fees exceed th at party’s yearly income, it is dispositive of the party’s abil ity to pay in all cases. Rather , it is merely an example of one way a party may demonstrate an inability to pay, and whether a party has an inability to pay is dependent on the particular facts and circumstances of each cas e. As the Myland Court stated,

[i]t [i]s incumbent upon the trial court to consider whether attorney fees [a]re necessary for plaintiff to defe nd her suit, including whether, under the circumstances, plaintiff would have to invade the same spousal support assets she is relying on to live in order to pay her attorney fees and whe ther, under the specific circumstances, defendant has the ability to pay or contribute to plaintiff’s fees.” [ Myland , 290 Mich App at 703.]

This requires a trial court to give “special consideration to t he specific financial situations of the parties and the equities involved.” Id.

In this case, the trial court c oncluded that defendant failed to carry her burden of proof
that she was unable to bear the expense of the litigation. The trial court cited the fact that defendant received a cash equalizer payment of $247,788, rehabi litative spousal support for four years, and $50,000 early in the li tigation as an advance agains t the property settlement. These findings are not clearly erroneous, particularly where the reco rd shows that defendant received approximately $310,000 in cash from the divorce, which included a cash equalizer payment of $247,788 and a distribution of $62,630.50 from plaintiff’s reti rement account, as well as $1,510 in monthly spousal support for four years. Defendant did not s how that she would have to invade the spousal support assets that she is relying on to liv e to pay her attorney fees and costs.

See Myland , 290 Mich App at 702-703.

Further, this Court has interpreted MCR 3.206(C)(2)(a) to requ ire attorney fees “only as necessary to enable a party to prosecute or defend an action.” Gates , 256 Mich App at 438. The
trial court cited the fact that a substantial amount of the fee s and costs incurred by defendant were due her own conduct in pur suing unsubstantiated claims. T he trial court stated that-9- defendant participated in a “cl ear fishing expedition” that was without merit. Therefore, according to the trial court decision, it is clear that defenda nt incurred substantial fees and costs that were not necessary to defend the divorce action. We concl ude that the trial court properly gave special consideration to the equities involved in this cas e when declining to award defendant attorney fees and costs, see Myland , 290 Mich App at 703, and therefore, it did not
abuse its discretion.

Affirmed.

/s/ Henry William Saad
/s/ Donald S. Owens /s/ Kirsten Frank Kelly