Opinion ID: 1620481
Heading Depth: 1
Heading Rank: 3

Heading: Should the dissolution decree have been modified?

Text: On further review, John asserts that the court of appeals erred in finding that he intentionally reduced his income with reckless disregard to deprive Barbara and his children of support. In response, Barbara argues that the dissolution court anticipated John might choose not to be employed at his potential level of income in order to reduce his alimony and child support obligations. She also claims that John has no one to blame for suspension of his broker's license but himself. Barbara thus contends that these facts, plus additional facts in the record, support a finding that John intentionally reduced his income to deprive her and the couple's children of support. Thus, the overall question is whether the district court erred in finding there had been a substantial change in circumstances after the April 1995 dissolution decree to warrant modifying John's support obligations. Specifically, we must consider whether John intentionally reduced his income.
A dissolution court may modify child support and alimony provisions of a dissolution decree when there has been a substantial change in circumstances. Iowa Code § 598.21(8) (1995). The party seeking modification must prove the change in circumstances by a preponderance of the evidence. Walters, 575 N.W.2d at 741. In Walters we discussed the following relevant principles which may be considered when ruling on a petition for modification: (1) there must be a substantial and material change in the circumstances occurring after the entry of the decree; (2) not every change in circumstances is sufficient; (3) it must appear that continued enforcement of the original decree would, as a result of the changed conditions, result in positive wrong or injustice; (4) the change in circumstances must be permanent or continuous rather than temporary; (5) the change in financial conditions must be substantial; and (6) the change in circumstances must not have been within the contemplation of the trial court when the original decree was entered. Id. (quoting In re Marriage of Vetternack, 334 N.W.2d 761, 762 (Iowa 1983)). A primary factor to be considered in determining whether support obligations should be modified is whether the obligor's reduction in income and earning capacity is the result of activity, which, although voluntary, was done with an improper intent to deprive his or her dependents of support. See id. This is because we have held that an obligor's voluntary reduction in income or earning capacity may be a basis for refusing to modify support obligations. Id.
Upon our de novo review, we conclude that John did not intentionally reduce his income to deprive Barbara and his children of support. We therefore conclude that the district court properly held that John met his burden of showing that there was a substantial change in circumstances justifying a modification of his alimony and child support obligations under the dissolution decree. First, we disagree with Barbara's contention that John was largely responsible for his termination from his last brokerage firm. We recognize that John was terminated for work performance, which according to his employer was unsatisfactory. However, Barbara has presented no facts suggesting John tried to get fired to avoid future support obligations. [2] Nor can we fault John for pursuing his lawful remedies concerning his termination. We also recognize that Johns inability to retain his stockbroker's license was due to his failure to pay the $53,000 arbitration award. However, this is a substantial amount and as the modification court noted, one would question whether it would be appropriate to pay the arbitration award or to give that support to his family. Moreover, John is not employable in a brokerage firm without a broker's license. Even if he had a valid license, John would likely have difficulty obtaining new clients given his termination from two brokerage firms and the adverse results of the arbitration. Additionally, the dissolution court was at a distinct disadvantage because both John and Barbara were unemployed at the time of the dissolution trial. The court therefore had to estimate or guess at the parties' future possible income. Based on John's past financial success as a stockbroker, the dissolution court estimated John's annual net earning capacity at $150,000 to $200,000. We believe that the dissolution court's estimate was based on the assumption that John could continue to work as a stockbroker in the future. However, we agree with the modification court and do not believe that this was a realistic assumption. The record shows that John tried to, but was unable to find work as a stockbroker. Thus, the reality of the situation as noted by the modification court is that John will not and cannot return to his prior career. We also point out that John's advancing age and limited education are significant factors affecting his future earning potential. His competition in stock brokering would be from persons younger and with better education than he has. As a result, we doubt whether John will ever obtain a position that will pay $100,000 to $200,000 per year. We do not ignore the fact that John at times has failed to make all alimony and child support payments. However, John is currently employed in a well paying, seemingly stable job, albeit at substantially less than what he was earning as a stockbroker. We do not consider John's actions surrounding his termination indicative of a reckless disregard of his support obligations. This is not a situation where the obligor has refused to pursue a previous career, cf. Ellis v. Ellis, 262 N.W.2d 265, 267-68 (Iowa 1978) (modification not allowed where obligor voluntarily retired at time when he still had substantial earning capacity), or quit a job to take a position with lower pay, cf. In re Marriage of Bales, 439 N.W.2d 228, 230 (Iowa App.1989) (modification not allowed where obligor quit job paying $15,000 per year to take job paying $5900 per year). Rather, John has simply been unable to resume his career as a stockbroker. Additionally, Barbara always has the right to file an application to modify should John's income increase in the future. We therefore conclude that John did not intentionally reduce his income to avoid his alimony and child support obligations. We thus distinguish this case from others where we have held that an intentional reduction in income or earning capacity will preclude modification of support obligations. See Walters, 575 N.W.2d at 741-42 (citing cases where modification of support obligations was not appropriate based on obligor's voluntary reduction in earning capacity). In summary, the record shows that John realistically can no longer be employed as a stockbroker nor at the high income level he then enjoyed. The expectations of the dissolution court as to John's earning capacity cannot be achieved. He now is employed at a seemingly stable job at a lower income level that is still substantial. The modification court set his alimony and child support obligations at a lower level based on his present actual income. We thus conclude that John met his burden of proving that a substantial and material change of circumstances had occurred after the entry of the dissolution decree. Neither party otherwise challenges the alimony amount nor the child support amount ordered by the modification court.