Automatic Escalation Clauses Relating to Maintenance and Child Support

• Publication year: 1983
• Pages: 1083

12 Colo.Law. 1083 Colorado Lawyer 1983.

1983, July, Pg. 1083. Automatic Escalation Clauses Relating to Maintenance and Child Support

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1083

Vol. 12, No. 7, Pg. 1083

Automatic Escalation Clauses Relating to Maintenance and Child Support

by Marcy R. Levy

Child support and maintenance have traditionally been set either by including a fixed sum in a separation agreement, which is ultimately incorporated into a decree of dissolution, or awarding a fixed sum in the context of a contested dissolution of marriage proceeding. Once those amounts become inadequate, based on statutory factors,(fn1) a party must seek modification through the court which entered the decree of dissolution.(fn2) The obvious result is additional attorney's fees, overcrowded court dockets and unneccessary aggravation and emotional trauma for all parties involved. The only alternative has been to subsist on an increasingly inadequate amount of support.

Faced with this unattractive choice, many practitioners have sought to alleviate the problems regarding modification of child support and maintenance by including an automatic escalation clause in a separation agreement or by requesting that the court order such a provision in the context of a contested proceeding. The courts in a number of jurisdictions, including Colorado, have sanctioned and upheld these clauses, when based on certain factors.

The purpose of this article is to examine the Colorado experience regarding automatic escalator provisions in the context of both negotiated settlements and contested proceedings.(fn3) In addition, pertinent cases from several other jurisdictions are discussed.

Court-Ordered Escalation Clauses

The Colorado Court of Appeals has refused to uphold court-ordered escalation clauses regarding child support and maintenance. In the recent case of In re Marriage of Davis,(fn4) the trial court declared in its amended decree that if the cost of living rose 25 percent:

Such change will create prima facie showing of changed circumstances, both substantial and continuing as to make the terms of this decree concerning maintenance unconscionable, and shall constitute sufficient basis for either party to apply to this court for a modification of the decree with respect to such matter based upon the change in the cost of living.(fn5)

The Court of Appeals held that the trial court had clearly exceeded its jurisdiction by creating an automatic presumption of unconscionability of the maintenance award which was neither authorized nor contemplated by statute

The court noted that the applicable statute, C.R.S. 1973, § 14-10-122(1), requires evidence of a substantial and continuing change of circumstances from the time of the previous decree awarding maintenance or child support to justify a modification(fn6) and places the burden of proof upon the party who seeks the modification.(fn7) The court found that the effect of the trial court's ruling was to remove the burden of proof from the party, who by statute must prove a substantial change in circumstances. Finally, the court stated:

By rendering the maintenance order automatically unconscionable at some indefinite future time, the trial court deprived itself, as well as the parties, of the right to have an objective judicial determination in the future based on the circumstances then existing.(fn8)

A number of other jurisdictions have ruled in accordance with Colorado law, invalidating court-ordered escalation clauses.(fn9) These cases articulate the concerns expressed by the courts in Colorado regarding clauses which automatically increase support based on an arbitrary formula, without taking...