#24347-a-DG
2007 SD 85
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
* * * *
MARY C. LOWE, Plaintiff and Appellant,
v.
KARL M. SCHWARTZ, Defendant and Appellee.
* * * *
APPEAL FROM THE CIRCUIT COURT OF
THE FIFTH JUDICIAL CIRCUIT
WALWORTH COUNTY, SOUTH DAKOTA
* * * *
HONORABLE SCOTT P. MYREN
Judge
* * * *
CLARK J. BORMANN of
Bormann & Myerchin, LLP
Bismarck, North Dakota Attorneys for appellant.
KARL M. SCHWARTZ
Sikeston, Missouri Pro se appellee.
* * * *
CONSIDERED ON BRIEFS
ON MAY 21, 2007
OPINION FILED 08/08/07
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GILBERTSON, Chief Justice
[¶1.] On August 23, 2006, Karl M. Schwartz (Schwartz) filed a motion in the
South Dakota Fifth Judicial Circuit for relief from the circuit court’s October 17,
2005 order, compelling him to name his ex-wife, Mary C. Lowe (Lowe), as the
beneficiary of and pay the premiums on a former-spouse-protection annuity related
to his United States Coast Guard retirement plan. On August 28, 2006, Lowe filed
a motion to amend a November 15, 2004 judgment and decree of divorce and order
Schwartz to continue her beneficiary status and to increase alimony. The motions
were heard on September 18, 2006, whereupon the circuit court granted Schwartz’s
motion while denying Lowe’s. Findings of fact and conclusions of law, along with
the order granting Schwartz’s motion for relief were entered on November 1, 2006.
We affirm.
FACTS AND PROCEDURE
[¶2.] Schwartz and Lowe married in August 1997. Schwartz was a thirty-
eight-year-old member of the Coast Guard and Lowe was a forty-six-year-old
business consultant earning a substantial income. Schwartz had relatively few
assets while Lowe had accumulated a net worth of about $365,000. Schwartz
retired from the Coast Guard in April 1998. Lowe was the primary income earner,
although Schwartz began collecting a modest retirement from the Coast Guard. In
2000, Lowe suffered a heart attack. The two separated later that year.
[¶3.] Forced to discontinue her business consultant activities following her
heart attack, Lowe essentially began living off her accumulated assets. She filed for
divorce in 2003. By May 28, 2004, the date of the trial on the divorce action, Lowe’s
net worth had shrunk to about $80,000.
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[¶4.] The circuit court’s amended judgment and decree of divorce was filed
on November 15, 2004. In the decree, Lowe was awarded permanent alimony of
$135.00 per month from Schwartz’s $1359.00 monthly Coast Guard retirement pay
so that she could receive healthcare benefits under the Coast Guard’s Continued
Health Care Benefit Program (CHCBP). 1 Schwartz was directed to complete
whatever paperwork was necessary to establish Lowe’s coverage under the CHCBP
while converting her from the Coast Guard’s survivor-benefit plan to a former-
spouse-protection plan, for healthcare only. Consistent with this provision, the
decree and underlying conclusion of law No. 7 expressly set out that Lowe was not
entitled to survivor-beneficiary payments through the Coast Guard’s former-spouse-
protection-annuity plan. 2
[¶5.] On May 2, 2005, Lowe filed a motion to vacate the divorce decree. The
circuit court denied Lowe’s motion and the corresponding order was filed on June
23, 2005. Lowe appealed that order to this Court, entering notice on August 15,
2005. Pending review of that matter, Lowe filed an application to this Court for
special relief seeking an order requiring Schwartz to continue Lowe’s survivor-
1. Information was provided to the circuit court that several criteria needed to
be met before a former spouse could be covered under the CHCBP. A former
spouse must not remarry before age fifty-five, must have been enrolled in the
Coast Guard’s health care program (TRICARE) for at least eighteen months
prior to divorce, receives or is court ordered to receive a portion of the retired
Coast Guard member’s retirement pay or is a recipient of the Coast Guard
member’s survivor, annuity benefit. Lowe had been enrolled in TRICARE for
more than eighteen months prior to the divorce and by the September 2006
motions hearing, she had reached age fifty-five and had not remarried.
2. Rather, the decree provided that Schwartz was free to designate a
beneficiary.
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beneficiary status under the former-spouse-protection-annuity plan. 3 We granted
Lowe’s application on October 11, 2005, and remanded to the circuit court for an
order continuing Lowe’s status as a survivor-beneficiary. The circuit court’s order
was entered on October 17, 2005. On June 7, 2006, in Lowe v. Schwartz, 2006 SD
48, 716 NW2d 777, we affirmed the circuit court’s order denying Lowe’s motion to
vacate the judgment of decree and divorce.
[¶6.] On August 23, 2006, Schwartz filed a motion for relief from the
October 17, 2005 order on the ground that the November 15, 2004 divorce decree,
setting out that Lowe was not entitled to survivor benefits, was affirmed by Lowe.
On August 28, 2006, Lowe filed a motion to amend the divorce decree by increasing
the amount of permanent alimony, on the ground there had been a change of
circumstances, and to continue her status as a survivor beneficiary.
[¶7.] On September 18, 2006, the circuit court ruled from the bench denying
Lowe’s motion and granting Schwartz’s motion for relief. The circuit court’s bench
ruling was incorporated into its findings of fact and conclusions of law which, along
with its order, was filed on November 1, 2006.
3. Lowe contends, and it appears from the information provided to the circuit
court in 2004, that a former spouse may continue to receive post-divorce,
healthcare benefits as long as the former spouse receives a portion of the
Coast Guard retiree’s retirement pay or is a recipient of survivor benefits
following the retiree’s death. Since retirement payments end upon the death
of a retiree, it appears that a former spouse’s continued healthcare coverage
is then conditioned upon the receipt of survivor beneficiary payments.
Hence, the reason for Lowe’s motion to vacate the divorce decree and
application to this Court for special relief pending appeal of the circuit court’s
order denying the motion.
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[¶8.] Lowe appeals raising two issues:
1. Whether the circuit court abused its discretion by not
increasing Lowe’s alimony.
2. Whether the circuit court erred by not ordering Schwartz
to continue Lowe’s status as a survivor beneficiary of
the Coast Guard’s former-spouse-protection-annuity
plan.
STANDARD OF REVIEW
[¶9.] A circuit court’s decision regarding whether to modify an alimony
award is reviewed under the abuse of discretion standard. Jamison v. Jamison,
1999 SD 129, ¶13, 600 NW2d 577, 581 (citation omitted). “An abuse of discretion is
a discretion exercised to an end or purpose not justified by, and clearly against,
reason and evidence.” Anderson v. Anderson, 2002 SD 154, ¶11, 655 NW2d 104,
107 (citation omitted). We review the circuit court’s findings of fact under the
clearly erroneous standard and conclusions of law de novo. Roth v. Roth, 1997 SD
75, ¶7, 565 NW2d 782, 784.
ANALYSIS AND DECISION
[¶10.] 1. Whether the circuit court abused its discretion
by not increasing Lowe’s alimony.
[¶11.] Following a divorce decree, the circuit court may from time to time
modify an award of support lasting for a lifetime or shorter duration, giving
consideration for the parties’ change in circumstances, as provided by SDCL 25-4-
41. Lowe argues that a change in her and Schwartz’s financial conditions since the
November 15, 2004 divorce decree constitutes a change in circumstances, justifying
an increase in her permanent alimony.
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[¶12.] Permanent alimony is among several types of alimony recognized in
South Dakota. See Sanford v. Sanford, 2005 SD 34, ¶24, 694 NW2d 283, 290. 4 , 5
Permanent alimony is distinguishable from other forms of alimony in that it is
intended as an allowance for support and maintenance for such things as food,
clothing, habitation and other necessaries. Fox v. Fox, 467 NW2d 762, 767 (SD
1991) (citations omitted). Necessaries may include medical or health insurance
coverage. Harding-Moyer v. Harding, 2000 SD 126, ¶12, 616 NW2d 899, 902.
[¶13.] Although the specifics of permanent alimony are determined by the
facts of each case, common to it are payments until death of the recipient or other
significant event, such as remarriage, which terminates the need for continuing
support. Sanford, 2005 SD 34, ¶24, 694 NW2d at 290. We have held that circuit
courts have continuing jurisdiction to modify permanent alimony as circumstances
may require. 6 Saxvik v. Saxvik, 1996 SD 18, ¶11, 544 NW2d 177, 180. To justify
4. In Sanford we summarized the various types of alimony and how they may
be distinguished. 2005 SD 34, ¶24, 694 NW2d at 290. In addition to
permanent alimony, we identified lump-sum alimony, restitutional or
reimbursement alimony and rehabilitative alimony. Id. (citations omitted).
We also noted that there are types of alimony subject to future modification
in order to take into account unforeseen circumstances that may arise. Id.
¶24, 694 NW2d at 290-91 (citation omitted).
5. Factors that are considered when assessing the need, amount and duration of
alimony are: “(1) length of the marriage; (2) respective earning capacity of
the parties; (3) their respective age, health and physical condition; (4) their
station in life or social standing; and (5) relative fault in termination of the
marriage.” Sanford, 2005 SD 34, ¶24 n4, 694 NW2d at 290 n4 (citations
omitted).
6. Our holding in Saxvik was limited, establishing that permanent alimony is
modifiable support that may be reinstated, even when terminated subsequent
to the decree, if dictated by a change in circumstances. 1996 SD 18, ¶¶11, 15,
(continued . . .)
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modification, there must be a change of circumstances from that which existed at
the time of the divorce decree. Id. ¶9, 544 NW2d at 179 (citations omitted).
Although the change need not be substantial, mere proof of a change is insufficient
to mandate modification. Id. ¶21, 544 NW2d at 182 (citation omitted). The party
seeking modification bears the burden of proving a change of circumstances
justifying modification. Id. ¶9, 544 NW2d at 179 (citations omitted).
[¶14.] While Schwartz’s monthly retirement pay had only changed from
$1,359 to $1,452, Lowe presented evidence that his average monthly earned income
had increased from between $2,200 and $2,500 at the time of the May 28, 2004
divorce trial to about $3,250 per month from January through August of 2006. 7
Lowe also presented evidence showing her own monthly income, including alimony,
since the divorce trial had fallen from $317 to $264 per month. While she
submitted an exhibit showing her average monthly living expenses for 2006 totaled
_________________________
(. . . continued)
544 NW2d at 180. However, we reiterated that lump-sum alimony and
restitution or reimbursement alimony are not subject to modification. Id.
¶13, 544 NW2d at 180 (citations omitted). Our holding was likewise
inapplicable “to divorce cases where the trial court [finds] no basis for an
award of alimony to begin with.” Id. ¶15, 544 NW2d at 180 (citations
omitted). We withheld determination of whether rehabilitative alimony is
modifiable, while suggesting that it must be considered on a case-by-case
basis. Id. ¶14, 544 NW2d at 180.
7. Lowe cites, as particularly supportive of her argument for increasing
alimony, Schwartz’s average earned income during the most recent three
months preceding the September 2006 hearing. Schwartz’s average earned
income during that three-month period was about $5,500 per month.
However, we note that the compilation from which the averages were derived
shows that the monthly totals for the extraordinary three-month period
range from $2,628 to $8,005 and that Schwartz’s average monthly income for
January and February of 2006 was $0.
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about $3,800, the exhibit did not include any information as to living expenses for
the balance of 2004 or 2005. Since the divorce trial, Lowe’s net worth had continued
to decline, falling from about $80,000 to $6,287. 8 Over the same period, Schwartz’s
debt had increased from $26,000 to $40,000.
[¶15.] Conclusion of law No. 6, underlying the November 15, 2004 divorce
decree, states that Lowe is to receive, from Schwartz’s retirement, alimony of $135
per month “so that [she] can continue her health care benefits through the
[CHCBP].” See note 1 supra (re. CHCBP eligibility criteria). Lowe testified at trial
that her CHCBP premiums remained unchanged since the divorce decree at $311
per month.
[¶16.] The foregoing evidence was essentially acknowledged in the circuit
court’s findings of fact from which it concluded there was an insufficient basis to
grant Lowe’s motion for an increase in alimony. In so deciding, the circuit court
also stated in its incorporated bench ruling and in conclusion of law No. 14 that it
was aware at the time of the divorce decree that because of Lowe’s diminished
8. Close examination of Lowe’s statements of net worth, submitted as an exhibit
at trial, reveals that her overall decrease in net worth since the divorce trial
attributes about equally between a decrease in the value of assets and an
increase in debt. At least some of the decrease in the value of assets is a
consequence of depreciation and trading of vehicles. Lowe traded her 1996
Alfa Gold (divorce trial value: $28,790) and 1996 Dodge Ram 2500 (divorce
trial value: $11,780) for a 2000 Winnebago 35U (motions trial value:
$55,199). While this trade results in an increase to assets of about $15,000,
her RV Loan Balance correspondingly increased about $17,000 to $54,331,
resulting in a decrease to net worth of $2,000. Over the relevant period, her
1992 Jeep Cherokee depreciated by about $1,700. Lowe attributes an
estimated $6,500 decrease in the value of a 1986 8x8 trolley to vandalism.
Lowe also attributes a $2,500 tax liability to a 2005 Toyota Camry (motions
hearing value: $19,825) that she won at a casino.
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earnings capacity, her net worth would continue to decline unless she was able to
find other means of supplementing her income. 9 The circuit court pointed out that
it had taken that factor into account in determining the amount of alimony to
award in the decree. See Saxvik, 1996 SD 18, ¶19, 544 NW2d at 182 (holding that
recipient spouse’s increased income, post divorce settlement, was a factor
considered at the time alimony was awarded and hence could not be relied on to
support payor spouse’s petition to eliminate alimony when the change in recipient
spouses earnings occurred); see also Foley v. Foley, 429 NW2d 42, 46 (SD 1988)
(observing that while five “‘significant and material’ changes in [the recipient
spouse’s] circumstances” were fully anticipated by the trial court when it awarded
support alimony, other changes in circumstances that justified modification of
support were not anticipated). The following remarks from the bench are consistent
with the circuit court’s conclusion that Lowe’s reduction in assets did not constitute
circumstances justifying an alteration of the prior alimony award:
At the time I awarded alimony, I knew that her assets were
declining and that they were going to continue to decline,
and I took that into account when I made the alimony award
at that time. So there has been no change in that. It hasn’t
declined more rapidly than I anticipated or less rapidly. 10 It has
continued to decline at the rate that I anticipated.
9. The remarks of plaintiff’s counsel at the divorce trial, during closing
argument, summarized the evidence then presented as to the continuing
decline in value of Lowe’s assets: “Certainly her health is all shot. It doesn’t
look like very good prospects for earning income. Tax returns shown as
devastating, her assets are dwindling on at a dangerously fast rate.”
10. The circuit court could have concluded that Lowe’s assets were declining at a
significantly reduced rate following the November 15, 2004 divorce decree as
compared to the rate of decline before that date. Assuming Lowe’s net worth
remained consistent at approximately $365,000 until her heart attack in
(continued . . .)
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[¶17.] The sole purpose the circuit court identified for granting Lowe alimony
was to enable her to continue to receive healthcare benefits through the CHCBP.
Evidence at the motions hearing revealed that the cost of Lowe’s healthcare benefit
thereunder remained unchanged since the divorce decree. Compare with Foley, 429
NW2d at 46 (holding, in a case where unforeseen events circumvented the alimony-
awarding court’s economic objectives for the recipient spouse, that “when the trial
court imposes a decision upon the parties which is based upon certain assumptions,
the courts should be available to modify the decision so that the intended goals of
the original decision are met”). The record also evinces only slight changes to
Schwartz’s retirement pay and Lowe’s monthly income. While Lowe avers that
Schwartz has realized a substantial increase in earned income, any such increase
appears to be inconsistent at best. Although Lowe’s net worth has declined since
the divorce trial, the record reflects that it was declining at the time of the divorce
decree, that the circuit court was cognizant of that fact when it granted alimony and
that it was aware that it most likely would continue to decline. Considering the
foregoing, we conclude that Lowe has not met her burden to prove changes that
justify increasing alimony and thus, no abuse of discretion in the circuit court’s
order denying the same.
_________________________
(. . . continued)
2000, after which she discontinued her employment as a business consultant,
and that her assets at that point began to decline, the rate at which her
assets declined over the approximate four-year period preceding the divorce
decree would be about $6,000 per month. The $74,000 reduction in assets
over the 27-month period between the divorce trial and the motions hearing
corresponds to a monthly reduction of about $2,750 per month.
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[¶18.] 2. Whether the circuit court erred by not ordering
Schwartz to continue Lowe’s status as a survivor
beneficiary of the Coast Guard’s former-spouse-
protection-annuity plan.
[¶19.] Lowe now for the second time on appeal seeks to compel Schwartz to
continue her survivor-beneficiary status under the former-spouse-protection-
annuity plan. As before, Lowe argues that since entitlement to healthcare benefits
under the CHCBP is conditioned on, among other requirements, receipt of Coast
Guard retiree pay or survivor benefits, her healthcare benefits will cease should
Schwartz predecease her.
[¶20.] In Lowe, we reviewed the circuit court’s denial of Lowe’s motion to
vacate the divorce decree that she had in part grounded on the survivor-beneficiary
issue. 2006 SD 48, ¶7, 716 NW2d 777, 778-79. Following the divorce trial, Lowe
failed to submit proposed findings of fact and conclusions of law or object to those
proposed by Schwartz. Id. ¶16, 716 NW2d at 781-82. Hence, Lowe’s attack on the
circuit court’s decision as to survivor-beneficiary status was couched in a motion
premised in relief under SDCL 15-6-60(b)(1) 11 that averred insufficient evidence
underlying the circuit court’s corresponding findings of fact and conclusions of law.
Id. ¶¶9, 11, 716 NW2d at 779. The issue had been tried on the merits below. Id.
¶12, 716 NW2d at 779. We affirmed the circuit court because Lowe neglected to
11. SDCL 15-6-60(b)(1) provides in pertinent part:
On motion and upon such terms as are just, the court may relieve a party or
his legal representative from a final judgment, order, or proceeding for the
following reasons:
(1) Mistake, inadvertence, surprise, or excusable neglect[.]
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avail herself of the opportunity to raise her sufficiency of evidence argument by
objecting to the findings of fact and conclusions of law. Id. ¶16, 716 NW2d at 781.
[¶21.] Lowe’s motion to amend the divorce decree in the instant case, as it
pertains to the survivor beneficiary issue, is nothing more than an attempt to
resurrect a matter that we have previously settled. Therefore, there was no error in
the circuit court’s denial of her motion to amend as to the same, and we need give it
no further consideration on appeal.
[¶22.] Affirmed.
[¶23.] ZINTER and MEIERHENRY, Justices, concur.
[¶24.] SABERS and KONENKAMP, Justices, concur in part and dissent in
part.
SABERS, Justice (concurring in part and dissenting in part).
[¶25.] I concur in Issue 2. I dissent in Issue 1 because the trial court
incorrectly denied Lowe’s alimony modification request. While the trial court may
have expected Lowe’s income would decrease at this rate, it does not follow that the
alimony should not be modified. Contrary to the trial court’s conclusions of law, the
combination of the decrease in Lowe’s net worth, the increase in Schwartz’s
retirement pay, and the increase in Schwartz’s income do justify an alteration in
the prior alimony award. Findings of Fact and Conclusions of Law 17, Lowe v.
Schwartz, No. 03-81 (Walworth County Nov 1, 2006). In this case, Lowe has
demonstrated a change in circumstances and the initial alimony award should be
modified. The trial court abused its discretion when it denied the modification.
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[¶26.] The majority opinion claims that simply because the trial court
expected Lowe’s net worth would decline means the alimony may not be modified
because there is no change in circumstances. However, Lowe need not show a
substantial change of circumstances in order to justify modification. Saxvik, 1996
SD 18, ¶9, 544 NW2d at 179. She need only demonstrate a change in circumstances
sufficient to warrant modification. Id. She has. Lowe met this burden and the trial
court abused its discretion when it failed to modify her alimony payments.
[¶27.] When the divorce decree was issued, Lowe had a net worth of $80,000.
Her monthly income, including alimony payment, was $399, while Schwartz’s
monthly income was $3,559 to $3,859. She has presented evidence that her net
worth is now only $6,000, while Schwartz’s income has increased to $4,792.
According to Lowe, Schwartz’s average earned and retirement income exceeds
Lowe’s by seventeen times. Yet, the trial court refused to modify alimony because it
had expected and estimated Lowe’s income would decline at such a rate. Lowe is
now destitute with health problems while her ex-husband lives comfortably. The
circumstances demand a modification of at least $500.00 per month.
[¶28.] Alimony is awarded after the court considers the circumstances of the
parties, paying particular attention to certain factors. Fausch v. Fausch, 2005 SD
63, ¶17, 697 NW2d 748, 755. These factors are (1) length of marriage; (2) parties’
respective earning capacities; 3) the parties’ respective financial condition after the
property division; (4) the parties’ respective age, health and physical condition; (5)
the parties’ station in life or social standing; and (6) the relative fault of the parties
in the termination of the marriage. Id. Here, just because the trial court expected
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her net worth would decrease, it ignored these factors when awarding alimony,
especially factors 2, 3, 4, and 5. Lowe earns substantially less money than
Schwartz, is in poor health while Schwartz is healthy and continues to earn money,
and Lowe is basically destitute while Schwartz has seventeen times her income.
[¶29.] The trial court abused its discretion when it failed to modify Lowe’s
alimony. Even if it expected Lowe’s net worth would decline, it cannot remove and
insulate its decision concerning modification of alimony from appellate review.
Even though the trial court expected the rate at which Lowe’s assets would decline,
the current financial state and change in circumstances indicate modification of
alimony is warranted. We should reverse and remand Issue 1 for a fair adjustment.
[¶30.] KONENKAMP, Justice, joins this special writing.
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