Spousal Maintenance Extended Because Karon Waiver Was Ineffective without Specific Provisions in the Decree and Judgment

In Hietpas v. Reed, A14-0105 (Minn. Ct. App. Dec. 8, 2014), the Minnesota Court of Appeals upheld a district court order modifying spousal maintenance because the judgment and decree did not have a proper Karon waiver. The parties had divorced in May 2008, and the agreement provided for spousal maintenance of $3,650 until Dec. 31, 2012, when maintenance was to end.   The agreement recited that the wife waived future maintenance after Dec. 31, 2012 based on a Karon waiver, the length of the marriage, and her ability to earn sufficient income to support herself and the minor children.

Requirements of a Karon Waiver

Because the courts have no jurisdiction to modify spousal maintenance when the parties execute a Karon waiver, the court first held that the decree did not include a proper Karon waiver.   There are four requirements for a valid Karon waiver:

1. The stipulation includes a contractual waiver of the parties’ right to modify spousal maintenance.
2. The stipulation expressly provides that the district court has been divested of jurisdiction over maintenance.
3. The stipulation is incorporated into the final judgment and decree.
4. The court has specifically found “that the stipulation is fair and equitable, is supported by consideration described in the findings, and that full disclosure of each party’s financial circumstances has occurred.”

The first two requirements, the contractual waiver and express language regarding jurisdiction, are required to divest the court of jurisdiction. In this case, there was no dispute that the judgment and decree included the contractual waiver; the problem was the absence of specific language in the decree stating that the court was divested of jurisdiction over future motions. Although the hearing on the agreement included testimony by the wife that she understood that the court would not have jurisdiction to entertain a motion to continue maintenance, the judgment and decree did not contain specific language regarding divestiture of jurisdiction or language incorporating the stipulation in court. Further, there were no specific findings that the agreement was fair and equitable. The court held that referencing the Karon waiver in the agreement was not sufficient because the Karon waiver limits the court’s jurisdiction as well as the party’s ability to modify the support order.

The Minnesota Court of Appeals also held that, given the parties’ extended conflict, the court did not abuse its discretion or lose jurisdiction by waiving the requirement that the parties engage in mediation.

Modification of Spousal Maintenance

The Court of Appeals also held that the district court did not abuse its discretion in modifying spousal maintenance. The parties had stipulated at the time of the divorce that the wife would be capable of earning at least $50,000 annually by the time maintenance ceased. The wife was an attorney, and she earned $48,400 in 2012, including eight months of employment in a position that she lost due to insufficient workload, unemployment insurance, and short-term work. She had applied for many jobs and had registered with four employment search organizations. The district court found she did not have the ability to earn the amount contemplated in the judgment and decree because of her difficulty both in finding work and, more significantly, keeping a job. The district court included that her potential annual income at the time of the motion was $32,597.

The Court of Appeals held that the district court did not err in finding that the wife’s mental health problems affected her ability to earn income even though the wife had testified that she lost her high paying job because of a lack of work, not her performance or mental health problem. It concluded that her testimony did not mean that her mental health problems had not prevented her from meeting her job’s billable hours requirement or finding another similar high-paying job.

It found that the wife’s income was more than 20% less than the $50,000 that had been estimated at the time of the divorce, and that amount created a presumption of a substantial change of circumstances, leading to a rebuttable presumption that the existing maintenance award was unfair. It held that the five-year extension of additional maintenance was supported by the record. It held that the district court did not abuse its discretion by failing to consider evidence that the wife had recently been hired for a $52,000 job, as it was not evidence that she would be able to sustain employment, which was her particular problem.

The Court of Appeals held that the district court did abuse its discretion by prohibiting the husband from bringing a motion to modify spousal maintenance for twelve months, as there could be many reasons under Minnesota law, Minnesota Statute Section 518A.39 subd. 2, why a motion to modify spousal maintenance would be appropriate other than a change in the wife’s income, including a change in the husband’s income.

This case illustrates the importance of having good legal advice in crafting an order and judgment dissolving a marriage. If you need a divorce or are considering a motion to modify an order and judgment dissolving a marriage, you may find it useful to consult with an experienced family law attorney.