Williams v. Williams

Thompson, Justice.

This case is before the court pursuant to the grant of an application for discretionary appeal in an action for modification of alimony and child support. We inquired whether a change in the financial condition of the provider, which arises from an increase in the value of an asset allocated in a property settlement, may be a change warranting modification of alimony and child support obligations. We answer in the negative and affirm the judgment of the trial court.

Sue Z. Williams and Sam A. Williams were divorced in October 1994. During the marriage, husband acquired minority interests in more than 15 limited partnerships and subchapter-S corporations through his employment with the Portman Companies. In the divorce proceedings, he retained the accounting firm of Arthur Anderson to prepare a financial report regarding the value of the partnership interests. Wife obtained independent financial and tax advice from the firm of Ernst & Young, and an individual certified public accountant, and these, experts were permitted access to the .financial data regarding husband’s partnership interests, to his accountants, and to the Arthur Anderson financial report. Husband, represented that due to lack of marketability, uncertainty of future distributions, and recapture of tax liabilities effective on various events of transfer of the interests, the value of the partnership interests after liabilities and offsets was “basically a wash.”

After extensive negotiations, the parties entered into a settlement agreement allocating various assets between them and obligating husband for alimony and child support. As part of that agreement wife relinquished any interest in the partnership interests and instead settled for a division of other marital assets; husband received 100 percent of the Portman interests as part of the marital estate. The settlement agreement was incorporated in the final judgment and decree, both of which were placed under seal by order of *127the trial court.1

Eight months after the divorce, husband filed suit in federal court against the Portman Companies seeking $9.5 million in compensatory and punitive, damages for alleged attempts to interfere with his partnership interests. The parties in that litigation entered into a confidential settlement agreement that was placed under seal pursuant to federal court order.

Wife then filed the present petition for upward modification of alimony and child support, asserting that the terms of the divorce settlement “are no longer an equitable division of assets acquired in the marriage.” Her claim for modification was based on the sole contention that the Portman settlement resulted in a substantial change in husband’s financial status or condition. Wife subsequently filed various discovery motions, including a motion to compel discovery of the sealed federal documents. After a hearing, the trial court granted husband’s motion for summary judgment on the modification action, and dismissed wife’s pending discovery motions as moot.

OCGA § 19-6-19 provides that permanent alimony for the support of a spouse or child in a divorce decree may be modified upon a showing of a “change in the income and financial status of either former spouse.” Though the statute is phrased in the conjunctive, this Court has historically interpreted the statute to require only a change in the payor spouse’s “ability to pay,” which may result from a change in income or financial status. Perry v. Perry, 213 Ga. 847 (3) (102 SE2d 534) (1958); Miller v. Tashie, 265 Ga. 147, 149, fn. 2 (454-SE2d 498) (1995). But alimony and equitable property division are not synonymous, and “the definition of permanent alimony within OCGA Ch. 19-6 is not sufficiently broad to include the revision or modification of awards of equitable division of property within the. scope of OCGA § 19-6-19.” Holler v. Holler, 257 Ga. 27, 28 (354 SE2d 140) (1987).

[The statutory law] in OCGA §§ 19-6-18 through 19-6-27 [provides] the “exclusive method by which the alimony provisions of a divorce decree may be revised and modified.” [Cit.] . . . However, not all provisions in a divorce decree may be modified through the statutory procedure. [Cit.] Fixed allocations of economic resources between spouses, those that are already vested or perfected, are not subject to modification by the court. . . .

*128Spivey v. McClellan, 259 Ga. 181, 181-182 (378 SE2d 123) (1989). See also Douglas v. Cook, 266 Ga. 644 (2) (469 SE2d 656) (1996); Holler, supra.

Recognizing that OCGA § 19-6-19 does not provide authority for the modification of judgments for equitable division of property, Douglas, supra; Holler, supra, wife asserts that she is nevertheless entitled to an upward modification of alimony and child support under OCGA § 19-6-19 based on a change in husband’s financial status that resulted from an increase in value of an asset allocated in the property settlement. This argument is flawed.

In arriving at the terms of the property settlement, the parties were given full opportunity to vigorously contest the value of the marital assets, and to arrive at a mutually satisfactory negotiated settlement agreement. Each had the benefit of counsel as well as extensive business and financial advice. The parties agreed, after full disclosure, that husband would accept the full risk of gain or loss associated with the partnership interests. Though valuation was difficult then, and any future value was clearly uncertain, neither party was prevented from providing for the future contingency that a radical increase or decrease in liquidation value might occur. On the contrary, any potential benefit from liquidation of these assets was bargained away during the property settlement. By agreement of the parties, husband was unequivocally awarded the partnership interests (along with any future gain or loss in their value) as property in the dissolution decree.

Conversion of an asset awarded in the dissolution decree will not be considered income for the purpose of assessing whether there has been a change in the financial status of the obligor spouse. To allow modification of husband’s support obligations on this basis would permit re-litigation of matters already settled, and would allow wife to obtain indirectly that which is directly prohibited by the current state of our law. Spivey, supra; Holler, supra. Other jurisdictions have reached similar conclusions. See, e.g., Denley v. Denley, 661 A2d 628 (Conn. App. 1995) (husband’s exercise of divorce allocated stock options at a profit was not a change in financial circumstances to be considered in modification action); Innes v. Innes, 569 A2d 770 (N.J. 1990) (annuity payments purchased with divorce allocated assets excluded for purposes of alimony modification); Flach v. Flach, 606 A2d 1153 (N.J. Super. 1992) (assets equitably distributed in divorce, and all assets acquired with equitably distributed assets, when repaid, not deemed income for purposes of modification); In re Marriage of Norvall, 237 Cal. Rptr. 770 (Cal. App. 1987) (divorce allocated community property settlement excluded); Beltz v. Beltz, 466 NW2d 765 (Minn. App. 1991) (promissory note awarded in divorce settlement not considered as earnings in modification action); In re *129Marriage of Case, 879 P2d 632 (4) (Kan. App. 1994) (proceeds from sale of divorce allocated asset excluded).

Finality in law is well served by this Court’s established policy that a fixed allocation of a property right that is already vested or perfected is not. subject to modification. See Spivey, supra; Holler, supra. And an unexpected increase in the value of a risky asset is insufficient grounds to upset the policy disfavoring modification of fixed allocations of economic resources distributed in a property settlement. Id. Therefore, we hold that an increase in value of an asset allocated in a property settlement is not a change in financial status warranting modification of alimony or child support under OCGA § 19-6-19.2 In so holding, we do not exclude from consideration in modification actions any future income generated from economic resources distributed in the property settlement, as such may bear •on the obligor’s ability to pay. Perry, supra.

Since wife’s claim is based solely on an alleged increase in an asset allocated in the divorce, and she alleges no other change in husband’s financial status, her modification claim must fail as a matter of law.

Judgment affirmed.

All the Justices concur, except Sears, Hun-stein and Carley, JJ, who dissent.

Because these documents were sealed, they are not contained in the record now before this Court. However, the parties are generally in agreement as to the terms as set out herein.

While fraud may be a basis for setting aside the separation agreement, wife did not assert a claim for fraud in the modification action; she instead specifically based her claim on the absence of fraud. We thus agree with the trial court’s refusal to consider wife’s claim that husband fraudulently misrepresented the value of the partnership interests. *131retirement benefits in divorce because those benefits not subject to property division under Federal law at that time; when Federal law changed, wife sought an equitable division of those benefits. Held: Absent statutory basis to authorize modification of property distribution provisions of divorce decree, wife could not recover).