Opinion ID: 901900
Heading Depth: 4
Heading Rank: 2

Heading: Living Expenses & Cohabitation

Text: [¶ 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.