How Changes in Income and the Ability to Work Affect Alimony in North Carolina

The income of each spouse is the most significant factor when calculating alimony obligations, but there are many factors that can complicate spousal support figures. If the spouse receiving support is able to work but chooses not to, the court may impute income, which means they will use the amount of money that spouse could earn in the calculations. Another common issue is a modification of spousal support, which the paying spouse may request if they begin earning less money than they were at the time of the alimony order. Both of these issues were heard in the Court of Appeals case of Davidson v. Davidson.

Background of the Case

In the case of Davidson v. Davidson, the plaintiff was the ex-wife of the defendant, and Plaintiff appealed an order modifying Defendant’s alimony payment obligation. The parties divorced in 2016. As part of the divorce, Plaintiff sought permanent alimony, and she was awarded spousal support for a period of 14 years. Defendant was ordered to pay $4,500 per month until the parties’ youngest child graduated high school, then $5,300 per month for the remainder of the time.

In 2019, Defendant filed a motion to modify based on a substantial change of circumstances. The trial court heard his motion in September 2020, and the evidence tended to show:

• Defendant left a lucrative job at Hitachi Data Systems in 2017 due to a change in corporate direction
• He accepted a job as a sales representative with Connection Enterprise, which paid significantly less
• Defendant then formed a contracting company with his new wife
• Defendant also had his general contractor’s license and renovated several rental properties
• He was terminated from his position at Connection Enterprise in 2019

At the time of the initial hearing on his motion to modify, he was running his company and working as a handyman but was earning much less than he was at his previous positions and was seeking employment.

Plaintiff had been unemployed since 1998, when she voluntarily left her job to be a stay-at-home mother to the parties’ children. She was spending a substantial amount of time volunteering for non-profit organizations at the time of the hearing.

The Trial Court’s Decision in Davidson

The trial court determined that when the order for alimony was entered, Defendant was employed at Hitachi Data Systems, making approximately $180,000 per year. He left that position and began working for Connection Enterprise for a much lower income, and he then formed his own company to supplement his income. When he was fired from Connection Enterprise, his income decreased further. The trial court did not believe that the changes in employment were a bad faith attempt to avoid his alimony obligation, and the court found that Defendant had made significant attempts to pay spousal support to Plaintiff, including by:

• Making partial payments during the pandemic when his income dropped
• Continuing to look for employment that would allow him to meet his alimony obligation
• Seeking additional licenses and certifications to increase his marketability to employers
• Taking out numerous loans to meet the alimony obligation

The court also determined that Plaintiff had the means and ability to earn an income that would cover most, if not all, of her reasonable monthly expenses and needs. Income was imputed to Plaintiff when recalculating Defendant’s spousal support obligation, and alimony was reduced from $5,300 per month to $1,966.90 per month. Plaintiff appealed.

Court of Appeals Decision

The Court of Appeals determined that the evidence sufficiently supported the trial court’s findings, but the case was remanded for additional findings of fact regarding the parties’ income.

Specifically, the appellate court agreed that Plaintiff was abundantly qualified and able to earn an income, but it could not ascertain how the trial court determined Plaintiff’s earning capacity of $40,000 per year. The case was remanded to the trial court for additional findings to support this earning capacity.