Court Opinion

ID: 9963803
Source: CourtListenerOpinion
Date Created: 2024-04-26 13:03:08.528814+00
Date Added: 2024-06-11T08:25:00.557640
License: Public Domain

DISTRICT COURT OF APPEAL OF FLORIDA
                        SECOND DISTRICT

                        KATHERINE J. DUHAMEL,

                                Appellant,

                                     v.

                         GERALD E. DUHAMEL,

                                 Appellee.

                               2D2022-4145

                              April 26, 2024

Appeal from the Circuit Court for Pasco County; Alicia Polk, Judge.

William S. Graessle of William S. Graessle, P.A., Jacksonville, for
Appellant.

Deborah L. Thomson of The Women's Law Group, P.L., Tampa, for
Appellee.

SILBERMAN, Judge.
     Katherine J. Duhamel (the Wife) appeals a final judgment
dissolving her marriage to Gerald E. Duhamel (the Husband). Because
the trial court erred in determining the alimony award and the valuation
date of the Husband's retirement accounts, we reverse the final judgment
as to those two determinations. We affirm the remainder of the final
judgment without discussion.
                      I. FACTUAL BACKGROUND
      The parties were married in 1986 and had three children during
the marriage, all of whom had reached the age of majority prior to the
dissolution action. The Wife filed her petition for dissolution in April
2015, and the Husband subsequently filed a counterpetition. During the
marriage, the Husband was the sole income earner as a professor of
veterinary medicine. The Wife was a homemaker, caring for the parties'
three children.
      After a trial, an amended final judgment dissolving the parties'
marriage was entered in 2019. However, in Duhamel v. Duhamel, 304
So. 3d 51, 54 (Fla. 2d DCA 2020), this court reversed that judgment
based on its finding that the trial court erred in rejecting the Wife's
request to reopen her case. On remand, the trial court held additional
trial proceedings and thereafter entered the final judgment at issue in
this appeal in November 2022.
                             II. DISCUSSION
A. Alimony as Taxable Income
      In the 2022 final judgment, the trial court ordered the Husband to
pay permanent periodic alimony to the Wife and further ordered that the
"alimony shall be taxable as income to the Wife and shall be deductible
to the Husband." The Wife correctly argues that the trial court erred in
ordering that her monthly alimony is taxable as income following the
repeal of the applicable provision of the Internal Revenue Code. See Tax
Cuts and Jobs Act, Pub. L. No. 115-97, 131 Stat. 2054 (2017) (repealing
26 U.S.C. § 71, which had addressed special tax treatment for alimony
and maintenance payments) (the Act). The Act specifically provides that
it applies to "any divorce or separation instrument . . . executed after
December 31, 2018." Id.

                                      2
     In Overley v. Overley, 268 A.3d 691, 698 n.4 (Conn. App. Ct. 2021),
the court noted that the Act "provides that, with respect to divorce
decrees and separation agreements executed on or after December 31,
2018, a payor of alimony may not deduct such payments from taxable
income and a recipient of alimony is not required to report the receipt of
alimony payments as taxable income." If a final judgment of dissolution
is entered after December 31, 2018, alimony payments are "neither
income to the recipient-spouse nor deductible by the payor-spouse."
Montemurro v. Montemurro, No. 1 CA-CV 19-0228 FC, 2020 WL 632612,
at *5 (Ariz. Ct. App. Feb. 11, 2020). In the present case, the final
judgment was entered after December 31, 2018, and therefore, the trial
court erred in ordering that the Wife's alimony was taxable income.
B. Need and Ability to Pay Alimony
     In deciding whether to award alimony, the trial court must first
determine if either party has a need for alimony and if the other party
has the ability to pay alimony. § 61.08(2), Fla. Stat. (2015). In the 2022
final judgment, the trial court based its determination of the parties'
need and ability to pay on their financial status in July 2018. The trial
court found that the Husband "testified his new and current annual
gross income as of July 2018 is $205,000.00." The Wife's financial
affidavit reflects that she receives no monthly income other than alimony.
     The final judgment awarded the Wife $2,500 per month in alimony.
The trial court found that the Wife did not need more than that amount
and that the Husband did not have the ability to pay more than that
amount. In the final judgment, the trial court stated:
     It is not lost on this Court that the Husband's ability to pay
     will require him to "go without" in certain circumstances and
     the Wife's need will require her to be more reasonable about
     how she spends her money. Both Parties will require [sic] to

                                     3
     modify their lifestyles as they were living a lifestyle that was
     not support [sic] by income.
We conclude that the record does not support the trial court's finding
that the Husband does not have the ability to pay more than $2,500 in
alimony. See Wabeke v. Wabeke, 31 So. 3d 793, 795 (Fla. 2d DCA 2009)
("The trial court's award of alimony is subject to an abuse of discretion
standard of review, and where the record does not contain substantial,
competent evidence to support the trial court's findings regarding the
amount of alimony awarded, the appellate court will reverse the award."
(quoting Farley v. Farley, 858 So. 2d 1170, 1172 (Fla. 2d DCA 2003))).
     The Husband's gross monthly income is $17,083.33, his monthly
alimony payment is $2,500, and his monthly taxes are $4,153.25. Thus,
after taxes and alimony, the Husband is left with a monthly income of
$10,430.08. The Husband's monthly rent, property tax, and insurance
on his residence total $1,489.75, and his monthly utilities total $319.78.
As the trial court noted, a large portion of the Husband's monthly
expenses is for creditors, which amounts to $4,113.75 every month.
After paying taxes, alimony, and the above noted expenses, the Husband
is left with $4,506.80 every month.
     By comparison, the Wife will receive $2,500 a month in alimony.
The trial court found that the Wife's monthly rent is $1,360 and that her
monthly necessary living expenses totaled $1,140. The court did not
specify how it arrived at $1,140 for necessary living expenses when the
Wife's financial affidavit reflects significant additional expenses. The
affidavit lists basic utilities and renter's insurance of $251.04 and
telephone and cable television of $319. After paying these two items, the
Wife is left with $569.96 per month to pay for food, gas, health and auto
insurance, home supplies, clothing, medication, and multiple other
items. The Wife's affidavit also reflects that her monthly expense for
                                      4
creditors is $1,658, which would give her a monthly deficit. It is unclear
which of the claimed expenses the trial court determined were
unreasonable in full or in part.
      In Wright v. Wright, 577 So. 2d 1355, 1358 (Fla. 1st DCA 1991), the
court found that the wife had been shortchanged where her annual
income before taxes was about $34,000 to $36,000, which would allow
her to pay for about half of the expenses listed in her financial affidavit.
In contrast, the court noted that the husband "will continue to enjoy a
level of affluence which far exceeds that enjoyed by his former spouse"
where he has a net annual income after taxes and support payments of
about $80,000 to $91,000. Id. The court held that there was "a gross
disparity in the parties' earning capacities and standards of living, which
is unreasonable under the facts here. The alimony awarded is
insufficient to provide for the needs of the wife and is not commensurate
with the husband's ability to pay and standard of living." Id.
      In Martinez v. Martinez, 228 So. 3d 164, 167 (Fla. 2d DCA 2017),
this court held that a monthly $600 alimony award was insufficient
where, before alimony, the husband earned $5,654.78 monthly and the
wife earned $1,100 monthly. This court further held that, on remand,
the trial court may consider "additional evidence to establish the parties'
current financial circumstances." Id. at 167 (citing Levy v. Levy, 900 So.
2d 737, 744-45 (Fla. 2d DCA 2005)). Here, the Husband's monthly
income after alimony is $14,583.33, and the Wife's monthly income after
alimony is $2,500. We conclude that the alimony award is insufficient to
meet the Wife's basic needs even though the Husband has the ability to
pay additional alimony. See Zinovoy v. Zinovoy, 50 So. 3d 763, 767 (Fla.
2d DCA 2010) (holding that "the income disparity in this case is far too
great to be overlooked," where the alimony award would leave the

                                      5
husband with a monthly income of $32,337 and would leave the wife
with a monthly income of $7,627).
      On remand, the trial court may consider the most recent affidavits
of the parties, and the parties shall have an opportunity to present
additional evidence based on conditions as may then exist. See Levy,
900 So. 2d at 744-45 (reversing final judgment and directing that on
remand, because more than twenty-two months had passed since the
final hearing, the trial court should hold an evidentiary hearing on the
issue of the amount of the alimony and "[a]t such hearing, the parties
shall have an opportunity to present additional evidence based on
conditions as may then exist"); see also Martinez v. Abinader, 37 So. 3d
944, 947 (Fla. 2d DCA 2010) (reversing the final judgment of dissolution
where the trial court found that the husband's gross monthly income
was $4,264, but this amount was not reflected in his most recent
affidavit and did not include his overtime).
C. Valuation Date of Retirement Accounts
      When valuing the Husband's retirement accounts, the trial court
used several valuation dates, all from 2015. The Wife argues that the
trial court abused its discretion when it failed to value the Husband's
retirement accounts on the date of the 2022 final judgment. See Ortiz v.
Ortiz, 315 So. 3d 149, 152 (Fla. 2d DCA 2021) ("The standard of review
for the equitable distribution of marital assets and liabilities is abuse of
discretion." (quoting Van Maerssen v. Gerdts, 295 So. 3d 819, 823 (Fla.
4th DCA 2020))).
      "All vested and nonvested benefits, rights, and funds accrued
during the marriage in retirement, pension, profit-sharing, annuity,
deferred compensation, and insurance plans and programs are marital
assets subject to equitable distribution." § 61.076(1). The cut-off date

                                      6
for determining whether an asset is marital or nonmarital is typically
when the parties reach a valid separation agreement or the date the
petition for dissolution of marriage is filed. § 61.075(7). However, the
trial court must determine what date is just and equitable in each case,
and "[d]ifferent assets may be valued as of different dates, as, in the
judge's discretion, the circumstances require." Id.
      The selection of a valuation date should not result in distributing
an increase in a fund's value that is due to contributions made after the
petition for dissolution is filed because such contributions are "due to
nonmarital efforts." Weininger v. Weininger, 290 So. 3d 928, 934 (Fla. 3d
DCA 2019) (quoting Jahnke v. Jahnke, 804 So. 2d 513, 516 (Fla. 3d DCA
2001)). In other words, when a spouse continues to contribute to a
retirement fund after the petition for dissolution is filed, the postfiling
contributions are nonmarital. Id.
      However, when the spouse does not contribute to the retirement
fund after the petition for dissolution is filed, any increase in the fund's
value is due to passive accumulation. Each spouse has "an interest in
the marital part of the assets, and any passive accumulations thereon,
through" the date of the final hearing. Jahnke, 804 So. 2d at 516. In
Jahnke, the court noted that if the assets are valued at an earlier date,
the wife would be deprived "of the appreciation of her interest in the
assets." Id. Here, the Wife points to record evidence reflecting passive
appreciation in the Husband's retirement accounts, to which she claims
some entitlement. By choosing valuation dates in 2015, the trial court
erroneously denied the Wife of several years of passive appreciation that
accrued in the accounts.
                             III. CONCLUSION

                                      7
      We reverse and remand the award of alimony with directions to
strike language in the final judgment requiring that alimony be taxable
as income to the Wife. We also reverse the award of alimony for the trial
court to reconsider the parties' need and ability to pay and to consider
additional admissible evidence that the parties may present on remand.
The distribution of the Husband's retirement accounts is reversed for the
trial court to utilize a valuation date that includes an award of passive
appreciation that may have accrued in the accounts.
      Affirmed in part, reversed in part, and remanded with directions.

NORTHCUTT and KELLY, JJ., Concur.

Opinion subject to revision prior to official publication.

                                      8