Metcalf v. Metcalf

K enneth R oss M etcalf , appellant , v .
R ita J o M etcalf , appellee .
757 N.W.2d 124
Filed October 21, 2008. 	No. A-07-1346.
1. Modification of Decree: Appeal and Error. Modification of a dissolution decree
is a matter entrusted to the discretion of the trial court, whose order is reviewed
de novo on the record, and which will be affirmed absent an abuse of discretion
by the trial court.
2. Judges: Words and Phrases. A judicial abuse of discretion exists when reasons
or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a
substantial right and denying just results in matters submitted for disposition.
3. Modification of Decree: Alimony: Good Cause: Words and Phrases. Pursuant
to Neb. Rev. Stat. § 42-365 (Reissue 2004), alimony orders may be modified
or revoked for good cause shown. Good cause means a material and substantial
change in circumstances and depends on the circumstances of each case.
4. Modification of Decree. To determine whether there has been a material and
substantial change in circumstances warranting modification of a divorce decree,
a trial court should compare the financial circumstances of the parties at the time
of the divorce decree, or last modification of the decree, with their circumstances
at the time the modification at issue was sought.
5. Modification of Decree: Alimony: Proof. The moving party has the burden of
demonstrating a material and substantial change in circumstances which would
justify the modification of an alimony award.
6. Judgments: Collateral Estoppel. Under the doctrine of collateral estoppel, also
known as issue preclusion, an issue of ultimate fact that was determined by a
valid and final judgment cannot be litigated again between the same parties or
their privities in any future litigation.
Appeal from the District Court for Lancaster County: J effRe
cheuvRont, Judge. Affirmed.
Paul E. Galter, of Butler, Galter, O’Brien & Boehm, for
appellant.
Kristina M. Teague and Donald H. Bowman, of Bowman &
Krieger, for appellee.
iRwin , M ooRe, and cassel, Judges.
M ooRe, Judge.
INTRODUCTION
Kenneth Ross Metcalf and Rita Jo Metcalf were divorced in
1999. Kenneth appeals from an order of the district court for
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Lancaster County which dismissed his complaint to modify
the alimony award found in the decree of dissolution. Because
we find no abuse of discretion by the district court, we affirm.
Pursuant to this court’s authority under Neb. Ct. R. App.
P. § 2-111(B)(1), this case was ordered submitted without
oral argument.
BACKGROUND
The district court entered a decree dissolving Kenneth and
Rita’s marriage on March 18, 1999. Among other things, the
court ordered Kenneth to make alimony payments to Rita
of $2,000 per month for a period of 120 months starting
April 1.
On March 31, 2005, Kenneth filed a complaint seeking to
modify the decree. Specifically, Kenneth requested that his
alimony obligation be terminated or reduced because of his
reduced income and Rita’s increased income. Following a
hearing on December 20, the district court entered an order on
January 26, 2006, dismissing the complaint and finding that
Kenneth “has failed to prove by the greater weight of evidence
that a material and substantial change in circumstances suffi-
cient to modify or revoke alimony occurred.” Kenneth did not
appeal the January 26 order.
On March 15, 2006, Kenneth filed another complaint seek-
ing to terminate or reduce his alimony obligation. Shortly
thereafter, Kenneth filed a motion seeking the recusal of the
trial judge who heard his previous modification complaint
because of the “‘[c]ourt’s previous involvement with [Kenneth]
in criminal or contempt proceedings.’” The judge who heard
the original modification recused himself, and the case was
assigned to another district court judge.
An evidentiary hearing was held before the district court
in the current modification proceedings on October 15, 2007.
The record shows that Kenneth has worked as a chiropractic
physician for 23 years. Kenneth is currently married, and his
wife is employed as a nurse. Kenneth testified with respect to
his current health, indicating that he has issues with “arthritic
changes” in his knees and hands that limit him to a degree in
his work as a chiropractor and that he has recently experienced
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problems with dizziness. While Kenneth had health insurance
at the time of the divorce in 1999, he did not have health insur-
ance at the time of the second modification hearing because he
does not have funds to pay for insurance.
Before becoming a chiropractor, Kenneth was a licensed
funeral director and embalmer. At the time of the hearing,
Kenneth had investigated employment with three local funeral
firms because of the diminishing income in his current pro-
fession. Kenneth had hoped to be able to find employment
within the limitations of his current physical issues, but he
was unable to find employment with a funeral firm that would
eliminate the need for lifting and carrying associated with
that business.
The district court took judicial notice of the divorce decree,
which showed that the divorce judge attributed to Kenneth a
total annual income of $98,532 for child support purposes.
The district court also took judicial notice of certain exhibits
which were received into evidence at the previous modification
hearing. One of these exhibits shows that Kenneth’s average
yearly income for 1996 through 2004 was $112,703 ($114,918
in 1996, $98,533 in 1997, $95,000 in 1998, $99,787 in 1999,
$140,981 in 2001, $159,091 in 2002, $44,070 in 2003, and
$149,244 in 2004; no income for 2000 was shown on the
exhibit). Also judicially noticed were Kenneth’s 2004 income
tax return, showing income of $149,244, and a financial state-
ment submitted by Kenneth to his bank dated May 24, 2005,
wherein Kenneth stated that his income was $80,000.
Kenneth’s 2005 and 2006 income tax returns show that his
net income from self-employment was $50,047 in 2005 and
$50,293 in 2006. Kenneth testified that he incurred approxi-
mately $20,000 in unpaid business debts as part of his 2005
expenses, that he did not have the money to pay the debts,
and that had he been able to pay those debts, he would
have shown less income for that tax year. The debts were
ultimately discharged in bankruptcy. Kenneth also discovered
that an employee made billing errors in both 2004 and 2005.
Kenneth’s computer showed that the billings were sent when
they were not; so, his 2006 income includes money that was
actually earned in 2004 and 2005 as a result of finally sending
140 	17 NEBRASKA APPELLATE REPORTS

out proper billings. Kenneth estimated that half of his earned
income shown for 2006 was earned in 2004 and 2005. Kenneth
discovered the billing problem around the time he commenced
the present modification action. Kenneth testified that his net
income at the time of the second modification hearing was
about $3,000 a month.
Kenneth testified about certain events which have occurred
since the December 20, 2005, hearing. Kenneth has filed a
chapter 7 bankruptcy petition and received a discharge in bank-
ruptcy. However, Kenneth has debt to the Internal Revenue
Service, which debt was not discharged in the bankruptcy.
Kenneth owes the Internal Revenue Service $21,000 and is
making monthly payments of $250 on that debt. Because
the lending institution holding a mortgage against Kenneth’s
home initiated foreclosure proceedings, Kenneth deeded the
home back to the lender in lieu of foreclosure. Kenneth had
a full-time employee beginning in 2004, but he had to elimi-
nate the position in February 2006. Kenneth testified that he
has continued to experience a gradual decline in new patients
and services rendered and that while the percentage of his
collections has stayed about the same, the total dollar amount
of collections has continued to decrease. Kenneth previously
had a retirement account of approximately $35,000, but he
cashed it in incrementally starting in 2003 in an attempt to
prevent the bankruptcy. At the time of the second modifica-
tion hearing, Kenneth did not have any stocks, bonds, or
other investments.
Rita owned a beauty salon at the time the parties were
divorced in 1999. Subsequent to the divorce, Rita became the
owner of a drycleaning business. In 2005, Rita and her son also
opened a coffee shop, and they have since opened a second cof-
fee shop. Since the parties’ divorce, Rita and her son acquired
some real estate for investment purposes. The cost of the land
was $195,000. Rita refinanced her home a few years before
the second modification hearing to obtain part of the money
for the land purchase, borrowing $110,000 against her house
at that time.
The divorce decree attributed a total annual income of
$16,044 to Rita for child support purposes. Exhibits received
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into evidence at the prior modification hearing and judicially
noticed by the court in the present proceeding included Rita’s
income tax returns for 2003 and 2004, which show income
of $39,267 and $64,708, respectively, excluding the $24,000
in alimony received by Rita in each of those years. Rita’s net
income in 2005 was $9,408. In 2006, Rita suffered a net loss of
$37,867, and in the first 8 months of 2007, her net income was
$10,708. To meet her monthly living expenses of $3,633, Rita
cashed in her IRA in the amount of $23,800.
On November 28, 2007, the district court entered an order
dismissing Kenneth’s complaint to modify the decree. The
court determined that since Kenneth had failed to appeal from
the January 26, 2006, order denying his previous request for
modification, Kenneth was required to show that a material
change of circumstances had occurred subsequent to January
26. The court noted that the evidence showed that Kenneth’s
income was about the same as at the time of the previous
modification. The court found it “interesting that the claim of
a change of circumstances occurred in about a two or three
month period.” The court observed that Kenneth’s evidence
was “substantially his own testimony with a lack of substan-
tive evidence to corroborate his opinions” and found the evi-
dence insufficient to show a material change in circumstances.
Kenneth subsequently perfected his appeal to this court.
ASSIGNMENTS OF ERROR
Kenneth asserts that the district court erred in (1) concluding
that any material change in circumstances must have occurred
since the date of the last modification hearing and (2) failing to
reduce or terminate his alimony obligation.
STANDARD OF REVIEW
[1,2] 	Modification 	of 	a 	dissolution 	decree 	is 	a 	matter
entrusted to the discretion of the trial court, whose order is
reviewed de novo on the record, and which will be affirmed
absent an abuse of discretion by the trial court. Schwartz v.
Schwartz, 275 Neb. 492, 747 N.W.2d 400 (2008). A judicial
abuse of discretion exists when reasons or rulings of a trial
judge are clearly untenable, unfairly depriving a litigant of a
142 	17 NEBRASKA APPELLATE REPORTS

substantial right and denying just results in matters submitted
for disposition. Simpson v. Simpson, 275 Neb. 152, 744 N.W.2d
710 (2008).
ANALYSIS
[3-5] Pursuant to Neb. Rev. Stat. § 42-365 (Reissue 2004),
alimony orders may be modified or revoked for good cause
shown. Good cause means a material and substantial change in
circumstances and depends on the circumstances of each case.
Simpson v. Simpson, supra. To determine whether there has
been a material and substantial change in circumstances war-
ranting modification of a divorce decree, a trial court should
compare the financial circumstances of the parties at the time
of the divorce decree, or last modification of the decree, with
their circumstances at the time the modification at issue was
sought. Id. The moving party has the burden of demonstrating a
material and substantial change in circumstances which would
justify the modification of an alimony award. Id.
In this case, we must first determine whether the district
court reviewed the correct time period in making its determina-
tion that no material change in circumstances occurred. Second,
if the court applied the correct time period in its review, we
must determine whether the court was correct in finding that no
material change in circumstances occurred.
Correct Time Period Reviewed.
The district court found that Kenneth’s change in circum-
stances, if any, must have occurred since the January 26,
2006, order entered in the previous modification proceedings.
Kenneth argues that where a prior attempt to modify resulted
in a denial, the court should look to the original decree and not
the last order of denial in determining whether there has been a
material change in circumstances sufficient to justify modifica-
tion. Kenneth cites to no case law to support this proposition,
and in fact, we believe that the practice in Nebraska is contrary
to Kenneth’s argument.
The Nebraska Supreme Court has held that to determine
whether there has been a material and substantial change in cir-
cumstances warranting modification of a divorce decree, a trial
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Cite as 17 Neb. App. 138

court should compare the financial circumstances of the parties
at the time of the divorce decree, or last modification of the
decree, with the circumstances at the time the modification at
issue was sought. See, e.g., Simpson v. Simpson, supra; Finney
v. Finney, 273 Neb. 436, 730 N.W.2d 351 (2007). In Simpson
v. Simpson, supra, the former wife sought, on two occasions, to
increase her former husband’s alimony from that ordered in the
decree. The first modification proceeding resulted in a denial of
the requested increase in alimony. In the second modification
proceeding, the Supreme Court analyzed whether a substantial
change in circumstances occurred since the last modification
proceeding and ultimately affirmed the denial of the request for
an increase in alimony.
[6] We believe that limiting the review to evidence occurring
since the last modification proceeding, even if said proceeding
resulted in a finding that no material change in circumstances
had occurred since the entry of the decree, is sound judicial
policy and consistent with the principles of collateral estoppel.
Under the doctrine of collateral estoppel, also known as issue
preclusion, an issue of ultimate fact that was determined by
a valid and final judgment cannot be litigated again between
the same parties or their privities in any future litigation.
Amanda C. v. Case, 275 Neb. 757, 749 N.W.2d 429 (2008). As
applied in this case, the issue of whether a change in circum-
stances occurred between the time of the entry of the decree
and the modification proceeding which resulted in the January
26, 2006, order has been fully litigated between the same par-
ties. This order was a final judgment on the issue of a change
in circumstances up to the time of the hearing resulting in the
January 26 order, which judgment was not appealed.
We conclude that the district court did not err in limiting
its review to whether a material change in circumstances had
occurred since the last modification proceeding which culmi-
nated in the January 26, 2006, order.
No Material Change in Circumstances.
We have examined the evidence presented at the second
modification hearing and have compared the financial cir-
cumstances of the parties at the time of the first modification
144 	17 NEBRASKA APPELLATE REPORTS

proceedings with their circumstances at the time of the current
modification proceedings. We agree with the district court’s
conclusion that Kenneth’s income is about the same as it was
at the time of the prior modification proceedings and that
Kenneth did not meet his burden of proving a material change
of circumstances in the requisite time period. Because the dis-
trict court did not abuse its discretion in finding no material
change in circumstances, we affirm the court’s determination
in that regard.
CONCLUSION
The district court did not err in concluding that any material
change in circumstances must have occurred since the date of
the last modification hearing and did not abuse its discretion in
failing to reduce or terminate Kenneth’s alimony obligation.
affiRMed .
iRwin, Judge, dissenting.
I dissent from the majority’s conclusion that any alleged
material change in circumstances for modifying Kenneth’s
alimony obligation has to have occurred after a previous unsuc-
cessful attempt to modify the original dissolution decree. I
believe the more reasoned and defensible reading of Nebraska
jurisprudence is that the material change in circumstances must
have occurred since the time of the original decree or the most
recent successful modification of the decree.
Initially, I note that this appears to be an issue of first
impression in Nebraska. The parties have cited to no authority,
and the majority provides none, where the issue of whether
a prior unsuccessful application to modify “starts the clock
over” was specifically raised by the parties and addressed by
the court. Such was not the case in either of the two published
opinions in Nebraska that contain the statement that
[t]o determine whether there has been a material and sub-
stantial change in circumstances warranting a modifica-
tion of a divorce decree, a trial court should compare the
financial circumstances of the parties at the time of the
divorce decree, or last modification of the decree, with
their circumstances at the time the modification at issue
was sought.
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Cite as 17 Neb. App. 138

Simpson v. Simpson, 275 Neb. 152, 158, 744 N.W.2d 710, 715
(2008). Accord Finney v. Finney, 273 Neb. 436, 730 N.W.2d
351 (2007).
I believe that the majority is misreading and misapply-
ing the relevant proposition of law to the facts of the present
case, because the plain language of the proposition suggests
an outcome contrary to that set forth by the majority, because
the authority cited by the majority in support of its application
does not support such an outcome, and because the majori-
ty’s application sets an untenable precedent for future cases.
Additionally, I do not believe that collateral estoppel has bear-
ing on this issue or supports the majority’s conclusion.
First, as noted above, the relevant proposition of law, first
espoused in this form by the Nebraska Supreme Court in
2007, indicates that the relevant time period for consideration
is the time since the divorce decree, “or last modification of
the decree.” See, Simpson v. Simpson, supra; Finney v. Finney,
supra. A plain reading of this proposition indicates that, to
“start the clock” over in terms of a material change in cir-
cumstances, there must actually be a “last modification of the
decree.” In the present case, there was no prior modification,
because Kenneth’s prior application was denied. The plain
meaning of “last modification” suggests that only a prior suc-
cessful modification should be relevant.
The issue in a modification proceeding is whether the pres-
ent circumstances are substantially and materially different
than they were when the order sought to be modified was
entered. Kenneth is currently paying alimony based upon the
circumstances as they existed in 1999, and the focus should
be on whether the present circumstances are substantially and
materially different than they were when the court established
Kenneth’s alimony obligation, not whether Kenneth made the
unfortunate mistake of seeking modification “too soon” and
thus has to establish an even greater change in circumstances.
Second, the authority cited by the majority in support of its
conclusion that a prior unsuccessful modification should have
the effect of starting the clock over on the applicable time
period does not support such an outcome. Although the major-
ity accurately notes that the applicant in Simpson v. Simpson,
146 	17 NEBRASKA APPELLATE REPORTS

supra, had twice sought to modify her husband’s alimony
obligation and had been unsuccessful in the first attempt, and
although the Nebraska Supreme Court did state the above
proposition of law and analyze whether there had been a mate-
rial change in circumstances since the previous “attempt,” the
application and conclusion in Simpson is not as easily made to
the present case as the majority suggests.
In Simpson v. Simpson, supra, the Nebraska Supreme Court
never specifically discussed or analyzed whether the proposed
material change in circumstances should be limited only to the
time since the previous modification proceeding. In fact, in the
previous modification proceeding, the court actually did modify
the husband’s child support obligation so there was, in a sense,
a successful previous modification, albeit not on the alimony
issue. More importantly, the Supreme Court’s conclusion that a
material change in circumstances had not been shown was not
premised upon any problem with the “timing” of the alleged
material change but upon the fact that the alleged material
change was due to the fault or voluntary wastage or dissipation
of the applicant’s talents or assets. This was true regardless of
whether the time period was actually to be limited to the time
since the prior unsuccessful attempt to modify alimony.
Finney v. Finney, 273 Neb. 436, 730 N.W.2d 351 (2007),
is even more starkly distinguishable and inapposite to the
majority’s application in the present case. In Finney, there had
not even been a prior attempt to modify, successful or unsuc-
cessful. Rather, the only intervening proceeding from the time
of the original decree was the direct appeal from the original
decree and the appellate decision thereon. Finney does not,
explicitly or implicitly, support the outcome reached by the
majority in the present case.
The outcome reached by the majority in the present case sets
a dangerous and untenable precedent. By making the focus be
the time since a previous attempted modification, the majority
has essentially indicated that parties will be penalized for fil-
ing applications to modify that prove to be unsuccessful. For
example, assume that Kenneth’s decrease in income since the
time of the dissolution decree and Rita’s increase in income
since that time would otherwise be a sufficient substantial and
METCALF v. METCALF 	147
Cite as 17 Neb. App. 138

material change in circumstances to warrant modification. By
focusing on the time since a previous unsuccessful attempt to
modify, the majority has penalized Kenneth by forcing him
to continue paying alimony based on circumstances that are
admittedly substantially different, while a litigant in another
case who had experienced the exact same change in circum-
stances but not filed an intervening application to modify
would be afforded relief. And, in addition, Kenneth’s clock will
again start over now; before Kenneth will be entitled to any
relief, he will have to demonstrate a substantial and material
change in circumstances something akin to thrice over what
the litigant who was not unfortunate enough to have asked “too
early” would be required to show.
In addition, because the majority has read the term “prior
modification” to not actually require a modification but only
to require a request for modification, it is arguable that even
an application that is filed but dismissed before a ruling on the
merits would have the effect of starting the applicant’s clock
over again.
Finally, I believe the majority’s reliance on the doctrine of
collateral estoppel to justify its outcome in the present case is
misplaced. The doctrine of collateral estoppel, or issue preclu-
sion, applies when an ultimate fact has been determined by
a final judgment with the result that the issue cannot be liti-
gated again between the same parties in a future lawsuit. See
Amanda C. v. Case, 275 Neb. 757, 749 N.W.2d 429 (2008).
I agree with the majority that the issue of whether a mate-
rial change in circumstances occurred between the time of the
original decree and the modification proceeding which resulted
in the January 26, 2006, order has been fully litigated and
cannot be litigated again. That issue, however, is not the issue
being raised by Kenneth at this time. The issue being raised
by Kenneth at this time is whether there has been a mate-
rial change in circumstances between the time of the original
decree and the present action, which is not the issue that was
litigated and resolved in 2006.
The majority’s use of collateral estoppel in this fashion
would lead to absurd results in a variety of cases. For example,
assume a case in which a party claims title through adverse
148 	17 NEBRASKA APPELLATE REPORTS

possession, which requires the adverse possessor to have been
in adverse possession for a statutory period of 10 years. See
Madson v. TBT Ltd. Liability Co., 12 Neb. App. 773, 686
N.W.2d 85 (2004). Under the majority’s application of col-
lateral estoppel, a party who filed his adverse possession claim
after only 9 years and was unsuccessful would have to start
all over on his 10 years and wait until he had adversely pos-
sessed for a total of 19 years before again requesting title to
the land.
Kenneth previously sought a modification of his alimony
obligation and was unsuccessful. In the present action, the
question should be whether the present circumstances are sub-
stantially and materially different than they were at the time the
present alimony obligation was entered. Such is consistent with
the proposition that we should look to the original decree or
prior modification as a basis for comparing the present circum-
stances, such is not inconsistent with existing Nebraska case
law, and such is a more defensible and tenable precedent for
future cases. Accordingly, I dissent from the majority’s conclu-
sion in this case.
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