Opinion ID: 901900
Heading Depth: 3
Heading Rank: 2

Heading: Actual Expenses

Text: [¶ 18.] This case presents an unusual situation in which the recipient spouse is seeking an upward modification while cohabitating with another. Since the moving party bears the burden of proving a change in circumstances sufficient to necessitate the modification of alimony, Denice must establish that her actual expenses and financial needs for support are unmet. Because of her cohabitation, Denice must also prove the financial effect, if any, cohabitation has on these needs and expenses. She has failed to meet these burdens.
[¶ 19.] Denice presented several budgets to the trial court during the course of these proceedings. Interestingly, none of the expenses itemized in these budgets met or exceeded her claimed budgetary needs at the time of the divorce. In 2003 her budgeted monthly expenses were $3,674. At the initiation of the modification proceedings in November 2006, her monthly expense budget was $2,172. In Denice's response to interrogatories, provided in 2007, her monthly expense budget was increased to $3,057. By the time of the first hearing, her monthly budgetary needs total was again altered to $3,389 still approximately $300 less than her needs at the time of the divorce. [¶ 20.] Most importantly for our purposes, Denice testified that the budgets she prepared did not reflect costs she actually paid, but rather were what she and Russell thought were fair of what the cost was to live where we're [plural] at. (Emphasis added.) Finding of Fact § 59 states: In order to be able to live independently, [Denice] would have expenses in the approximate sum of $3,389 monthly. (Emphasis added.) But, Denice does not live independently; she cohabitates with Russell. Her obligation is to substantiate her actual needs, not merely the hypothetical amount necessary to live independently. Furthermore, it would be insufficient for her to claim one-half of the living expenses in the home she shares with Russell if they are not her actual expenses. Finally, John presented documentary evidence that refuted Denice's proposed budgets. Denice's bank records, provided to John only after the first hearing for modification, reflect that Denice's actual expenditures are less than $1,000 per month. [¶ 21.] While budgets are, in essence, estimates and by their nature inexact, the evidence provided by Denice is wholly inconsistent with itself and goes beyond the pale of acceptable ambiguity. By accepting these speculations, the moving party was relieved of her burden of proof and the decision was based on speculation and guesswork as to Denice's living and medical expenses.
[¶ 22.] In general, cohabitation, in and of itself, is not a circumstance upon which alimony may be modified or terminated. Horr, 445 N.W.2d at 28 (citing Myhre v. Myhre, 296 N.W.2d 905 (S.D. 1980)). Typically, it is the obligor spouse who raises cohabitation as a change of circumstance warranting a decrease in alimony. In this case the recipient of the alimony is the moving party seeking an increase due to the change in her health. [¶ 23.] Cohabitation may affect the financial needs of the recipient. Id. [C]ohabitation by an alimony recipient is to be considered a sufficient change of circumstances for alimony modification only when it affects the financial needs of the recipient. Myhre, 296 N.W.2d at 908. We ... must determine if [the recipient's] economic well-being was enhanced by her act of cohabitation. Id. In this case, Denice has a double burden, proving her economic needs and disproving that her economic well being was enhanced by cohabitation. She has failed to do so. [¶ 24.] Denice's testimony disclosed that Russell controls her finances. She repeatedly was unable to respond to questions regarding her finances or provide a consistent account of her financial situation. In light of this, Russell's total absence from these proceedings [7] contributed to Denice's failure to overcome her evidentiary burdens. She repeatedly deferred to his sole knowledge of her finances, without calling him to substantiate her claims. His absence is particularly noticeable given Denice's repeated reliance on evidence of Luanna's finances in considering John's ability to pay. [¶ 25.] No burden was imposed on Denice to prove her economic circumstances. The trial court's holding gave an unreasonable level of deference to Denice's testimony given her admitted lack of knowledge and failure to substantiate her estimations.
[¶ 26.] Denice presented evidence and testimony at the hearings which would indicate that all of her living expenses have been met by Russell without any expectation of reimbursement. As the moving party, she failed to show why John should be required to pay greater alimony when her living expenses are, in reality, being voluntarily met by Russell. [¶ 27.] In the absence of any direct evidence of Russell's contributions, we find the greatest indicator of his support is the increase of Denice's net wealth, and, in particular, the manner by which she has increased her assets. At the modification hearing, Denice's net assets totaled $179,737, an increase of almost $57,000 since the divorce. [8] Her assets have increased, in large part, from her monthly investment in $500 certificates of deposit (CDs). These CDs were funded by the monthly $100 alimony payments from John, $262 received by her in payment on a contract for deed from a property in Council Bluffs, Iowa, that Denice received in the divorce settlement, and an additional $138 per month provided by Russell. [¶ 28.] The sources of this funding reflect several inconsistencies in Denice's financial claims. First, she has not used the alimony payments to support herself or to defer her living expenses. [9] Second, this circumstance and the evidence as a whole suggest that Russell has paid Denice's living expenses without the expectation of repayment or reimbursement. While in control of Denice's finances, Russell did not allocate the alimony or contract for deed monies to reimburse himself to defer living expenses. To the contrary, he provided additional financial support toward the purchase of these CDs. This history strengthens John's argument that Denice's financial position has been enhanced by cohabitation, precluding such a significant increase in alimony. [¶ 29.] Records indicate that Denice was the owner of the CDs as of December 31, 2007. Less than three weeks later, at the modification hearing on January 17, 2008, Denice claimed to have transferred the CDs to Russell as reimbursement for medical expenses paid by him. Only Denice's testimony was presented to explain or substantiate this transfer. [10] No evidence was presented to indicate which medical expenses Russell had paid. Even so, Finding of Fact § 20 provides, [Denice] has cashed in all but one of the CD's held solely in her name to reimburse Russell Dulany for part of the medical care costs he had paid. Under these circumstances, without reliable and persuasive proof, we cannot accept that this asset transfer is worthy of consideration. The moving party's actions must be scrutinized for any attempts to hide or minimize assets, increase their financial needs, etc. We believe that the trial court put no such burden on Denice to explain this eleventh hour transfer.
[¶ 30.] In December 1999 the marital home was appraised at $205,000. In 2003, one day before the divorce was finalized, Denice entered into a purchase agreement to sell it to Russell for $175,000. (Denice used the proceeds of the sale to pay off the mortgage loan on the home.) In doing so, she deprived herself of a residence, a major asset provided for her in the divorce (not to mention the loss to her net worth through the difference between the sale price and the fair market value of the home). And, as indicated above, some months later, she returned to live with Russell in that same home. [¶ 31.] In effect, Denice has voluntarily reduced her assets and deprived herself of ownership of a residence, which would seemingly make her appear in greater need. However, she continues to live in the same house. In her expense budgets, Denice claimed to pay $600 a month in rent, though no evidence was presented which substantiate this claim. [11] Despite her cohabitation and absent evidence that she is actually paying the expense, Denice would have John's financial support for this expense. That is inappropriate and not permitted by law.
[¶ 32.] On appeal, Denice asserts that it is undisputed that [her] Tysabri treatment cost her over $3,000 monthly. The $3,000 figure comes from a document received from her insurance provider, Defendant's Exhibit W. [12] However, this document clearly states, This is NOT a Bill. (Emphasis original.) Furthermore, Denice's own budgets dispute the $3,000 amount. [¶ 33.] While discussing Exhibit W, Denice testified that she believed her insurance would cover these expenses. Q: Now, Ms. Moore, why are you taking this treatment if you don't have the money to pay for it? A: I'm optimistic that they will cover this through my Blue Cross and Blue Shield. Later, on cross-examination, she added, My insurance hopefully will be paying after the deductible. I'm not certain what I will owe at this point.  (Emphasis added.) [¶ 34.] Without requiring Denice to prove her actual medical costs or waiting for a final bill after insurance consideration, the trial court's holding adopted the highest suggested figure and charged John with support. When Denice's testimony and evidence on this subject is fully considered, the error of this conclusion becomes apparent. [¶ 35.] The expense budget presented by Denice includes a line for her Tysabri treatment of $525 per month. [13] On direct examination, she explained that $525 is 15% of the $3,500 estimated cost of Tysabri, and her insurance covers the remaining 85%. Therefore, the $525 figure does not account for the $450 Denice receives to aid in the costs of Tysabri treatment. [14] Applying the $450 aid to Denice's budget, her estimated actual cost per month for Tysabri is only $75. This is a far cry from the $3,000 plus she urges this Court to approve on appeal. [¶ 36.] Denice's estimations are wholly inconsistent with each other and cannot reasonably be considered to have satisfied her burden of proving this expense. There is no basis in evidence which supports the conclusion that Denice's actual need for support for Tysabri is $3,000 per month. Thus, the amount of her medical bills is mere speculation. Because the burden is on the moving party, and because Denice has failed to substantiate her claim, any increase of alimony based on this speculation was arbitrarily made.