Opinion
No. FA06-4012064S
July 6, 2009
MEMORANDUM OF DECISION
This is an action for dissolution of marriage and other relief brought to the Waterbury Judicial District, Plaintiff and defendant, whose maiden name was Carolyn T. Bushka, were married on May 8, 1983 in Southington, Connecticut. Plaintiff has resided continuously in this state for at least 12 months prior to the date the complaint was filed. The marriage of the parties has broken down irretrievably without any reasonable prospect of reconciliation. There are two children of this marriage, both of whom are now over the age of 18. Neither party has received support nor assistance from the State of Connecticut or any town or municipality of the state.
Plaintiff is 54 years old. He completed high school and two years of community college. He is currently employed by the City of Waterbury as a foreman in the painting department. He earns $1,203.44 gross and $765.88 net per week from that source of employment, which includes a substantial amount of overtime. Plaintiff also owns a painting company known as G. Fusco Painting. Although he claims that he is currently earning $190.40 per week gross from that business, his actual gross earnings are more consistent with his financial affidavit of January 16, 2007, where he indicated his income to be $400 gross and $360 net per week.
Defendant prepared the jointly filed tax returns for each year of the marriage until 2006, the year that plaintiff left the marital residence. Although she claims to have had only the information provided by plaintiff for the income and expenses of the painting business, she knew of the nature of this business and the fact that cash was received by plaintiff for some of his work, and also used by plaintiff to pay some of his business expenses. Neither party was entirely credible with regard to their finances and each of their memories was somewhat selective.
Defendant is 49 years old. She completed high school and thereafter received an associate's degree in business. She claims that she is not employed and that she is not on the payroll of her father's business, however she does work for his business at least 20 hours each week. That business is prepared to offer defendant a paid position once this case is concluded, which will include medical benefits. Defendant believes she should earn $15 per hour.
Defendant's father has assisted her financially in the past and continues to pay her attorneys fees, real estate taxes, expenses on the marital home and other expenses that plaintiff's payments to her do not cover.
On the first day of this seven-day trial, the parties entered into a written stipulation which provided:
1. For the admission of numerous trial documents;
2. That plaintiff maintain all employment provided health insurance for the benefit of his children until each child is no longer eligible for such coverage as a dependent;
3. That plaintiff pay defendant $200 per week in child support;
4. That plaintiff pay for tuition and books for his son, Jonathan's Holy Cross secondary school education, and further pay all undergraduate college expenses for both children in an amount not to exceed $10,000 per child per academic year (modifiable upon a showing of a substantial change in the circumstances of the parties);
5. That the court shall retain jurisdiction to address all post-majority educational support issues; and
6. That plaintiff transfer to defendant a sum equal to one-half of his monthly City of Waterbury pension benefit valued as of the date of the dissolution of marriage.
The parties submitted this written stipulation to the court and requested the court to incorporate their agreement into the final judgment.
Both parties share the fault in the breakdown of this marriage. They partied together on marijuana, cocaine and other illegal drugs before they were married, and continued to do so during the course of their marriage. Although plaintiff primarily acquired these drugs for the parties, both freely admitted using them on a regular basis. Plaintiff's income from the painting business primarily supported their use of these drugs. His income from the City of Waterbury was most often deposited by the parties to pay household bills.
For a long time, according to the testimony of the parties, the use of these drugs did not cause a problem to their family. It was part of their social life, which they enjoyed with family and friends. Plaintiff worked long hours to satisfy his family's financial needs and defendant was a good homemaker and mother to their children. They both apparently satisfied their respective responsibilities to their family.
Plaintiff eventually became addicted to heroin. Whereas both parties recognized the need for plaintiff to get treatment, defendant was insistent that he go into a 30-day program. Plaintiff believed that he needed more extensive treatment and elected to become part of a three-year methadone program with Connecticut Counseling. He not only felt that he could not recover by just doing the 30-day program but also believed he had the responsibility to keep working to provide income to the family. Plaintiff's decision to go into the methadone program was repulsive to defendant, who called plaintiff weak for not doing the 30-day program and described the program as a "coward's way out." She did not consider the methadone program a rehabilitative program and told him she did not want to be married to a husband on methadone. Defendant continued her use of illegal drugs during the more than three years plaintiff was involved in this program.
Despite the regular and ongoing use of drugs by both parties, plaintiff's addiction to heroin had a significant impact on the marriage. Although it is not hard to understand how many years of drug use may lead to addiction, the fact that plaintiff was addicted to heroin and that he was going into a long-term methadone program was particularly offensive to defendant. The parties argued frequently and thereafter the marriage broke down. Each of the parties has apparently moved on with their lives and each is involved with a "significant other" at this time.
It is difficult to imagine the circumstances that would lead these parties to a seven-day trial, after this action was commenced two and a half years ago, and after incurring legal fees which consumed a substantial portion of the total assets. A core dispute is plaintiff's belief that he should share in the marital real estate and defendant's belief that he is not so entitled. A history of this property is important to understand the nature of these respective positions.
Defendant's father and his brother owned a substantial parcel of land, which was subdivided into building lots. In 1987, when the parties outgrew the apartment they were living in, one of these lots was given to them. Title to the property was originally transferred to them in joint ownership. However, the plaintiff asked that title be vested solely in defendant's name as he was conducting his painting business and was concerned about the resulting liability. There were no conditions placed on the gift of this property to the parties.
Defendant's father oversaw the construction of the house, hired the subcontractors and paid for most of the labor and materials. Plaintiff, with members of both his and defendant's family also worked together to build this house. The family members did not charge for their services as they helped each other when their own houses were being built. As a result of these contributions from everyone, the house was constructed without a mortgage. This property was the marital residence of the parties from the time it was built until July of 2006, when plaintiff vacated the residence.
Both parties were grateful to defendant's father for this gift to them. Plaintiff did painting and other work on many of his real estate projects at reduced rates. Defendant, who had worked for her father before she was married, continued to help him in his business when the children started going to school. Throughout the marriage, defendant's father was generous to the family and each of the parties responded by helping him in many ways.
Plaintiff believes this residence is a marital asset and is requesting one-half of its equity. He relies on the fact that this property was unconditionally gifted to both parties and that he was the sole financial support for the family for the length of the marriage. In fact, according to defendant, plaintiff regularly worked from 6:00 A.M. to 10:00 P.M. and she was grateful that he worked those hours because they would have "gone under" if he hadn't done so.
Defendant believes the property is hers alone, and plaintiff should have no claim to any of its equity. Her belief lies partly in the fact that they never had a mortgage to pay, and that was her "contribution to the marriage." What she fails to recognize is that her entire immediate family benefited because they didn't have a mortgage to pay. The income available to their family, for necessities and their pleasures, was increased by the fact they didn't have to pay a mortgage.
Her further position that the property was a gift to her alone is likewise without merit. The gift of this property was made to both parties, there were no conditions or restrictions on this gift, and the parties treated it as marital property throughout the course of their marriage.
The current fair market value of this property is found to be $270,000.
There are two major assets of this marriage, the marital home and plaintiff's pension (which has been divided equally pursuant to the stipulation of the parties). Defendant has further postulated that the court should also consider the present value of plaintiff's future income streams as an asset. She initially presented this proposition by way of disclosure of expert witnesses when this case was first scheduled for trial (approximately one year ago). Her pleadings then disclosed Peter Wu as an expert who would testify as to the present value of plaintiff's Social Security retirement benefits (even though he was not yet receiving them), the present value of plaintiff's "future earning capacity employment" with the City of Waterbury, and the present value of plaintiff's "future earning capacity employment" from his painting business. Defendant further disclosed Melvin Rodriguez as another expert who would testify as to what it would have cost the parties if a mortgage was obtained at the time the parties acquired their home, despite the fact there was never any mortgage on the property.
Defendant claims that the present value of plaintiff's future Social Security benefits and future earning capacity should result in the sum of $539,281 being attributed to plaintiff in the distribution of current assets.
After a hearing held on April 9, 2008, immediately before this case was first scheduled for trial, the Court sustained plaintiff's motions to preclude this proposed evidence. Defendant appealed these decisions to the Appellate Court, which dismissed the appeal for lack of a final judgment. Defendant raised these issues once again during the course of the trial, and the court again sustained plaintiff's objections to this testimony.
The court granted plaintiff's motion to preclude the testimony of Rodriguez finding that it was speculative, immaterial and irrelevant. Even if defendant were able to approximate the amount and terms of a mortgage the parties might have secured, it would be even more speculative for the court to consider the countless variety of actions the parties might have taken during the course of their home ownership, such as prepaying principal amounts or refinancing the mortgage. What would then preclude either party from arguing that during the course of the marriage another mortgage or home equity line of credit might or should have been secured for some specific reason? The proposed testimony regarding a nonexistent mortgage was highly speculative and not relevant to any material issue in this case.
The court also precluded any testimony by Wu as to the value of the plaintiff's future social security benefits. One Connecticut Superior Court decision is especially pertinent. "The court is unaware of any case directly on point decided by the Connecticut Supreme Court or by the Appellate Court, which would allow a trial court to make a finding of a present value of the anticipated Social Security benefit of one party and offset it against other marital assets. In a long and well-reasoned analysis, in the case of In re Marriage of Crook, 211 Ill.2d 437 (2004), a case of first impression, the Illinois Supreme Court did address that very issue. In dissolving the thirty-three-year marriage of Robert L. Crook and Patricia J. Crook, the trial court took into consideration the various retirement accounts of the parties, including the wife's State University Retirement System benefits as well as her Illinois Municipal Retirement Fund benefits. The evidence before the trial court indicated that while the husband was eligible, the wife was ineligible to receive Social Security benefits. However, in the event of the husband's death, she would be eligible for a small survivor benefit as his widow, if she did not remarry. The trial court specifically did not include the husband's anticipated Social Security benefit in dividing the marital assets, including the wife's pensions. The Appellate Court reversed on this issue, and it remanded the case to the trial court, with instructions to, `consider [the husband's] anticipated Social Security benefits in `striving to arrive at a division of property that is equitable to both parties and places each party in similar economic circumstances.' (Emphasis added.)
"The specific question to be decided by the Illinois Supreme Court was whether or not the use of the anticipated Social Security benefit of the husband as an offset would amount to an impermissible assignment of that benefit. The Illinois Supreme Court reversed the Appellate Court, relying chiefly upon the case of Hisquierdo v. Hisquierdo, 439 U.S. 572, 59 L.Ed.2d 1, 99 S.Ct. 802 (1979). There, the issue was whether or not the trial court had jurisdiction to offset one spouse's anticipated benefits under the Railroad Retirement Act of 1974 ( 45 U.S.C. § 231 et seq.). The answer in that case was an emphatic no. The ground for the decision was based upon the supremacy clause of the federal constitution. The court found that to allow an offset or an assignment of the husband's anticipated benefit would undermine the purposes of the act. In reaching this conclusion, the United States Supreme Court considered Section 659 of the Social Security Act ( 42 U.S.C. § 659(i)(3)(B)(ii)) as analogous. That section states that federal retirement benefits may not be used to satisfy a `community property settlement, equitable distribution of property, or other division of property between spouses or former spouses.'
"While acknowledging a split of authority among the states that have considered the issue, and the `potential inequities, nevertheless, the Illinois Supreme Court concluded at page 459 of its opinion, that, in this case federal law clearly preempts state law regarding this issue, and that therefore, `Social Security benefits may not be divided directly or used as an offset during state dissolution proceedings.'" McClymont v. McClymont, Superior Court, judicial district of Danbury, Docket No. FA 03 0348725 (October 6, 2004, Shay, J.) (38 Conn. L. Rptr. 116). See also Wright v. Wright, Superior Court, judicial district of New Haven, Docket No. FA 04 4002927 (August 19, 2005, Brennan, J.).
This court concurs with the analysis of these cases and finds, as it did when it first precluded this evidence, that the present value of plaintiff's anticipated U.S. Social Security benefits is not marital property, and will not be factored into the determination of property division.
As a result, the present value, if any, of plaintiff's future Social Security retirement benefits is not relevant to any material issue in this case. Section 4-2 of the Connecticut Code of Evidence states "all relevant evidence is admissible, except as otherwise provided by the Constitution of the United States, the constitution of this State, the Code or the General Statutes." Relevant evidence, as defined by section 4-1 of the Code is "evidence having a tendency to make the existence of any fact that is material to the determination of the proceeding more probable or less probable than it would be without the evidence." See State v. Jeffrey, 220 Conn. 698, 704, 601 A.2d 933 (1991) "(Evidence is irrelevant if there is such a want of open and visible connection between the evidentiary and principal facts that, all things considered, the former is not worthy or safe to be admitted in proof of the latter" (citations omitted); see also Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 569 (1995). Section 4-2 of the Connecticut Code of Evidence further states that "evidence that is not relevant is inadmissible."
"Evidence is admissible only to prove material facts, that is to say, those facts directly in issue or probative of matters in issue; evidence offered to prove other facts is immaterial." Tait Prescott, Handbook of Connecticut Evidence, Fourth Edition, section 4.1.3. Inconsequential evidence that would distract the trier's attention from the main issues is also excludable. See State v. Talton, 197 Conn. 280, 284 (1985).
Defendant's claim that plaintiff's future earnings from his employment with the City of Waterbury and his painting business be considered by the court as property and attributed to plaintiff in its division of property orders is likewise without merit. Certain future streams of income may be considered an asset. A stream of income from a pension has been deemed an asset rather than income by the Supreme Court in Krafick v. Krafick, 234 Conn. 783 (1995). Unlike a pension, however, plaintiff's earnings are not fixed but rather are subject to change. Those earnings must be regarded as income as they may be increased, decreased, or terminated based upon a myriad of circumstances, many of which are well beyond plaintiff's control. This variability is most appropriately dealt with by the law which provides for the modification of alimony based upon a substantial change in the circumstances of the parties. As these anticipated earnings are not fixed and definite, and are subject to change beyond plaintiff's control, they do not constitute property, they are not relevant or material to the issue of property division.
During the course of the trial defendant also attempted to enter evidence as to the present value of the plaintiff's private painting business through Kevin Kennedy, a Certified Public Accountant. Defendant disclosed Kennedy as an expert who "will testify as to the value of the defendant's business known as Fusco Painting." After voir dire, plaintiff moved to preclude any evidence from Kennedy regarding the value of the plaintiff's private painting business, as Kennedy did not perform an admissible analysis of the business's fair market value, his opinions were without foundation, and his opinions did not conform to accounting standards.
Kennedy admitted he did not complete a fair market value analysis per standard accounting practices and did not perform a business appraisal of plaintiff's business. He further represented that although he knows the specific rules that CPAs have to follow in valuing businesses, he did not do so in this case, as he was only asked to review the tax returns. Kennedy acknowledged that the CPA rules require a fair market value determination, which means a price that a willing buyer would pay for the business, but that he did not use that fair market value standard and did not assign a market value to plaintiff's business.
Defendant argued that Kennedy's review of the previous years financial statements to determine the "capitalization of earnings" value is admissible to show the fair market value of a business. Our Supreme Court, however, has stated "[w]e reject the notion that professional goodwill may be evaluated without consideration of the saleability of the practice and the existence of a market for its purchase." Eslami v. Eslami, 218 Conn. 801, 814, 591 A.2d 411 (1991). In Eslami, the court rejected the theory that a business could be valued based solely on the capitalization of excess earnings, without also taking into consideration the saleability of the business. See also Turgeon v. Turgeon, 190 Conn. 269, 273-74, 460 A.2d 1260 (1983) (capitalization of actual income appropriate method of valuation as part of fair market analysis).
Had Kennedy performed the proper analysis, the court would have considered this information in its property determinations, but without it, the court was obliged to grant defendant's request to preclude his testimony. His opinions were without sufficient basis, did not comply with the current legal or accounting standards of determining value, and were not relevant to the material issues in this case.
Kennedy was allowed to testify as to his review and findings of plaintiff's 2008 tax return. After testifying about various discrepancies he found, he honestly declared that after finding these discrepancies he did not see further clarification from the plaintiff, had no other knowledge regarding the business, i.e., the number of employees, assets, etc., did not request any further evidence relating to the discrepancies, and did not draw any conclusions from the discrepancies he found. His testimony is not given great weight by the court.
Defendant has asked the court to not only consider the ownership of defendant's painting business as a property interest, but to also consider his income from this business when determining alimony. The Appellate Court has said "the [trial] court's taking the corporation into account in both the property division and in the award of alimony and other payments is, in essence, "double dipping" and inequitable because the corporation provides the only significant stream of income by which the defendant can meet his alimony and other court ordered payment obligations." Greco v. Greco, 82 Conn.App. 768, 776, 847 A.2d 1017 (2004); see also Utz v. Utz, 112 Conn.App. 631, 639, 963 A.2d 1049 (2009). The court finds that the primary value of plaintiff's business is the income stream it provides to plaintiff. Defendant's request that plaintiff's business be valued for property division and also a source of future alimony payments constitutes impermissible double dipping.
Defendant also seeks an award of alimony of $365 per week, continuing to be paid from plaintiff's estate after his death. While it seems appropriate that alimony be ordered, defendant's request apparently lacks consideration of the fact that she was not working when the pendente lite order was entered, will be working after her marriage is dissolved, and that the stipulation of the parties obligates plaintiff to pay the college expenses of the children in an amount not to exceed $10,000 per child per academic year.
This court has specifically considered all statutory provisions and case law affecting the issues in this case as well as the testimony and evidence presented by the parties. The Court enters the following orders:
A. DISSOLUTION OF MARRIAGE
The marriage of the parties is hereby dissolved on the grounds of irretrievable breakdown and each party is declared to be single and unmarried.
B. WRITTEN STIPULATION OF THE PARTIES
The written stipulation of the parties dated May 5, 2009 was reviewed by the court, found to be fair and equitable, and its terms and conditions are incorporated into the final orders and judgment. Any cost associated with the preparation of the Domestic Relations Order documents regarding the pension shall be shared equally by the parties. The court shall retain jurisdiction over the division of the pension until the orders are approved by the plan administrators.
C. ASSETS NOT DISPOSED OF BY STIPULATION
1. Defendant shall continue to reside in and have title ownership of the real estate located at 83 Middleway East, Waterbury, Connecticut, provided she pay the sum of $110,000 to plaintiff within 60 days from the date of this judgment. During such time as she resides in said property, she shall be responsible for paying all taxes, repairs, maintenance, insurance and other costs of said property and hold plaintiff harmless therefrom. If defendant is either unwilling or unable to pay said sum to plaintiff within that time, she shall immediately list said property for sale with a recognized realtor in the Waterbury area, at an asking price of not less than $285,000, unless both parties agree to a reduction of price in writing, and shall do all things reasonable and necessary to sell said property in a bona fide arms length transaction, and shall maintain the property in good condition to be shown for sale at all times. The property shall not be sold without the consent of both parties to all terms and conditions of sale. The net proceeds of sale, after the payment of all reasonable and necessary costs of closing, shall be divided 40% to plaintiff and 60% to defendant. The court hereby retains jurisdiction over the sale of this property in the event further orders are necessary to effectuate these provisions.
2. Plaintiff shall retain his one-third interest in the property located at 29 Moorland Avenue, Waterbury, Connecticut.
3. Plaintiff shall be entitled to all personal property currently in his possession, including motor vehicles registered in his name, and shall pay all expenses associated with said properties and hold defendant harmless therefrom. Defendant shall be entitled to all personal property currently in her possession, including motor vehicles registered in her name, and shall pay all expenses associated with said properties including the outstanding loan balance on the 2004 Volvo, and hold plaintiff harmless therefrom.
4. Each of the parties shall be entitled to any checking or savings accounts in their respective names. Defendant shall be entitled to any funds remaining in the joint checking account as well as in her Fidelity account.
5. Plaintiff shall retain his business known as G. Fusco Painting.
D. ALIMONY
Plaintiff shall pay to defendant the sum of $250 per week in periodic alimony for a period of 15 years from the date of this judgment, which shall not be modifiable by way of extension of time. Said alimony shall also terminate upon the death of either party or defendant's remarriage or cohabitation with another person in accordance with Connecticut General Statutes and case law.
E. COUNSEL FEES
This Court has reviewed the respective merits of the positions of the parties, their respective financial circumstances, Connecticut General Statute § 46b-62 and other relevant statutory factors, and has reviewed the affidavits of attorneys fees provided by both counsel. No counsel fees are ordered.
F. INSURANCES
Plaintiff is ordered to maintain that certain life insurance policy in the face amount of $27,500 with GE Capital, naming defendant as sole beneficiary, until such time as he no longer has an obligation to pay alimony. He shall immediately liquidate the cash value of said policy and pay one-half of that value to defendant.
So long as it is available to him through his employment, plaintiff is also ordered to maintain that certain life insurance policy through his employment in the face amount of $15,000, naming defendant as sole beneficiary, until such time as he no longer has an obligation to pay alimony.
Each party is to secure, pay for and maintain their own medical insurance. Defendant may elect COBRA coverage on plaintiff's policy at her sole cost. Plaintiff is ordered to cooperate with her and sign any documentation necessary for her to secure this coverage.
G. DEBTS AND LIABILITIES
Each of the parties shall assume, indemnify and hold the other harmless from all stated liabilities as set forth in their respective financial affidavits. Said obligations on the part of each party are in the nature of support and shall not be dischargeable in bankruptcy.
H. EXCHANGE OF FINANCIAL INFORMATION
So long as plaintiff has an alimony obligation to defendant the parties shall exchange their complete state and federal income tax returns by April 15 of each year. Unless otherwise directed in writing the parties shall send this information to the other's home address by certified mail, return receipt requested.
Bach party is ordered to advise the other of a change in their residence address. Each of the parties is also ordered to immediately notify the other if there is a substantial change in their employment or income.
I. RESTORATION OF DEFENDANT'S MAIDEN NAME
Defendant's maiden name of Carolyn T. Bushka is hereby restored.
J. MISCELLANEOUS ORDERS
Counsel for plaintiff is to prepare the judgment file within 30 days and send it to counsel for defendant for signature and filing with the court within 15 days after his receipt of same.