Opinion
No. FA93-0314872 S
October 27, 2006
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION FOR CONTEMPT REGARDING PROPERTY POSTJUDGMENT DATED JUNE 13, 2001, CODED 116
The defendant's motion coded 116 claims $160,000 from the plaintiff plus interest for failure of the plaintiff to pay over to the defendant moneys realized from the sale of stock options. At the hearing before this court on defendant's motion coded 116 the parties stipulated to three matters: (1) the court could consider the transcript and all of the exhibits as evidence that were entered at the hearing before Judge Doherty as well as the appellate briefs; (2) neither party was seeking attorneys fees under the defendant's contempt motion coded 116; and (3) in the event the defendant prevailed, the amount of additional funds that she was entitled to receive from the plaintiff was $160,000 with the question of interest being in dispute. The parties are in agreement that the defendant received in excess of $209,000 from the plaintiff from his exercise of stock options.
Many of the facts that give rise to this motion are not in dispute. The marriage between the parties was dissolved on May 19, 1995. The parties submitted to the court a separation agreement dated May 19, 1995 which the court found to be fair and equitable and incorporated it by reference into the judgment file. The parties are in dispute regarding the interpretation of section 20B, section 21 and section 24 of the separation agreement.
Section 20B provides as follows:
B) STOCK OPTIONS:
The Husband shall pay to the Wife a sum equal to fifty percent (50%) of the net, after-tax proceeds realized by the Husband from his exercise of the stock options granted and exercisable through December 31, 1994. Net, after tax proceeds shall be defined as the after sale value of the options less the cost of acquisition, cost of sale and less all state, federal and local taxes and any other governmental impositions upon the transaction.
It is understood that the Husband will use his best efforts to maximize the amount to be realized from his exercise of these options. The Husband shall not be required to exercise any options which will not result in a net profit. Otherwise, the Husband shall exercise the options prior to their respective expirations and he shall pay over to the Wife such sums as may be due to her within 30 days of his receipt of the net proceeds.
Section 21 provides in part as follows:
21. REAL PROPERTY
A) The Husband and Wife are the owners of real property located at 18 Big Buck Lane, Brookfield, Connecticut. The said real property is encumbered by a first mortgage in the approximate amount of $89,900 and an equity loan in the approximate amount of $49,000. The Wife shall have the option to either purchase the Husband's interest in the premises or list the property for sale. In the event that the Wife has, for any reason whatsoever, not listed the property for sale within six months from the date of the execution of this Agreement, then in that event the Wife shall be required to purchase the Husband's interest in the premises. Time is of the essence to this date. The purchase price to be paid by the Wife in such event shall be determined as follows:
The parties shall have the property appraised within 30 days of the expiration of the above six-month period. The purchase price shall be the appraised fair market value less the balance on the first mortgage, the principal balance on the equity line, $30,000.00, less any points charged to the Wife by her lending institution with respect to her obtaining a mortgage, reasonable attorneys fees and usual bank charges associated with the mortgage closing. The Wife shall pay to the Husband 1/2 of the sum so determined.
The proceeds from the sale, after payment of the first mortgage, equity line, real estate commission, conveyance taxes, reasonable attorneys fee, recording charges and any other typical "closing costs" and the sum of thirty thousand ($30,000.00) dollars to the Wife, shall be equally divided by the parties.
In the event the Wife shall decide to purchase the Husband's interest in the premises, she shall be required to refinance the first mortgage and equity line so as to remove the Husband from any obligation with respect to the premises . . .
Provided the Wife shall elect to purchase the Husband's interest in the premises rather than sell the same as hereinabove provided, then in that event the Wife shall be entitled to receive all payments made by her children or the Husband's children with regard to reimbursement for funds borrowed from the equity line and lent to the respective children; however should the premises be listed for sale and sold as hereinabove provided, then the equity line shall be paid from the proceeds of sale.
(Emphasis provided.)
Section 24 provides as follows:
24. OPTION:
The parties have hereinabove agreed to a division of the Husband's stock options and to the division of the real estate. When the Husband's interest in the real estate is determined by sale or purchase as previously set forth, the Wife shall have the option to retain a sufficient portion from the Husband's proceeds as an offset against her portion of the stock options yet to be exercised. It is understood and agreed that should the Wife so elect then in that event her portion of the stock option proceeds and any offset shall in no event exceed the maximum of $209,000.00.
(Emphasis provided.)
Example: $209,000.00
Less previously received stock option proceeds
Less the Husband's interest in real estate
Balance due to Wife if any.
Example: $209,000.00 Less: (29,000.00) Prior options exercised Less: 115,000.00 Husband's est. interest ___________ BALANCE DUE TO WIFE: $ 65,000.00
The balance to be paid pursuant to Article 20B.
The marital residence was not sold to a third party and on January 27, 1997, the defendant elected to purchase the plaintiff's interest in the marital residence. On March 10, 2003, Judge Doherty held an evidentiary hearing on plaintiff's motion for order, dated May 10, 2001, coded 114; defendant's motion for contempt, coded 115, regarding alimony postjudgment; and defendant's motion for contempt regarding property postjudgment, dated June 13, 2001, coded 116.
The plaintiff's motion for order, coded 114, made two claims. The first claim was that he continued paying alimony to the defendant after the date of her remarriage while the separation agreement said alimony was to terminate in part upon the wife's remarriage. That claim has been withdrawn by the plaintiff. His second claim was that under the provisions of the separation agreement if the wife elected to receive what would have been the husband's proceeds from the sale of the marital residence, then, as a result of that election, the most that she could receive from the stock options and any offset from the husband's proceeds from the home would have been $209,000. The plaintiff then claimed that he had paid to the defendant in excess of $209,000 from the sale of stock options and the offset from the husband's proceeds from the home, and sought a refund of $56,713.76 from the sale of stock options that he had paid over to the defendant.
Judge Doherty held hearings on the motions coded 114, 115 and 116 simultaneously.
Judge Doherty's memorandum of decision regarding the defendant's motion for contempt coded 115 provided in part as follows:
DEFENDANT'S MOTIONS FOR CONTEMPT
On June 13, 2001, the Defendant filed a motion (#115) to have the Plaintiff found in contempt for failing to share with the Defendant stock options awarded to him postjudgment which she considered to be "bonuses" and, therefore part of the alimony awarded to her by the judgment . . .
AS TO (#115) DEFENDANT'S MOTION FOR CONTEMPT
The basis for the Defendant's claim of contempt is the language in Article 17 of the Agreement which sets out the alimony award and goes on to describe and include "additional alimony."
The Plaintiff did receive stock options after the date of dissolution. The Defendant in her memorandum states that the items considered to be "additional alimony" " should have included all stock options granted post dissolution." (Emphasis added.)
The . . . [plaintiff], in his brief in opposition to the relief sought in the motion, points out the express language of the Agreement, Article 17 which obligates the Plaintiff to the Defendant various forms of income as "additional alimony, but which further provides, however, excluding earnings from his exercise of stock options (which are treated separately a `property division') . . ."
The court finds that the Plaintiff is not in contempt for failing to share with the Defendant income from that type of asset as it is not properly "additional alimony." For that reason, (#115) Defendant's Motion for Contempt is denied.
The decision of Judge Doherty as to the defendant's motion coded 115 is not on appeal.
Judge Doherty's memorandum of decision regarding the plaintiff's motion coded 114 provided in part as follows:
To interpret the terms of Article 24 in the manner the Plaintiff seeks would be to find that the Defendant agreed to give up of her interest in stock options as exceeded $209,000.00 in consideration for the Plaintiff's interest in the house.
That interpretation is not reasonable in view of the other Articles of the agreement and in view of the evidence and testimony provided by the parties. It is especially incongruous in view of the fact that when all was said and done, the Plaintiff's interest in the property amounted to (only) $81,000.00 and the value of the stock options otherwise owing to the Defendant was an amount considerably in excess of that figure.
The court interprets the ambiguous language in Article 24 as follows: ". . . should the [Defendant] so elect then and in that event her portion of the stock option proceeds [and any] to be used as an offset shall in no event exceed the maximum of $209,000.00." To construe the language of Article 24 as the Plaintiff requests would be to provide for a (considerable) change in the price of the house to the Defendant, as well a change in the manner of payment — which is not what the court finds to have been their true intention when they added Article 24. It was intended to give the Defendant an alternative way of paying the Plaintiff the 50% interest in the house which he was entitled to by virtue of Article 21.
Consequently, the Court finds that the Plaintiff cannot use the figure of $209,000.00 as a "cap" of moneys owed to the Defendant for her interest in stock option proceeds, and the sums which he (for some reason not satisfactorily explained) continued to pay her long after the transfer of title to the residence are not sums for which he is entitled to reimbursement.
The decision of Judge Doherty regarding defendant's motion for order coded 114 is currently on appeal to the Appellate Court.
Judge Doherty's decision regarding the defendant's motion for contempt coded 116 was in part as follows:
AS TO (#116) DEFENDANT'S MOTION FOR CONTEMPT
As noted, this motion seeks a finding that the Plaintiff is in contempt for his failure to pay over to the Defendant her share of moneys realized by the sale of stock options during the alimony period. The Plaintiff had predicated his defense to this motion, in part, on his claim that Article 24 changed the Defendant's right and expectation to such payments. The instant decision rejects that defense of the Plaintiff. The Plaintiff also states in his brief that the defendant did not request the Plaintiff to sell the options until after her remarriage — which ended his obligation to pay alimony. Whether the . . . [Plaintiff] has any other bases for not having met the expectations of the Defendant as to moneys owed cannot be determined by the court at this time.
Additionally, the Defendant seeks damages for the Plaintiff's alleged failure to exercise his options in a timely manner. The court is without sufficient evidence and testimony to make such a finding or, more importantly, to make a determination of the amount of damages the Defendant is currently entitled to should the court agree with her claim that he is in contempt.
For the foregoing reasons, the court directs that this motion be reclaimed and argued in detail in order for the court to enter appropriate orders thereon.
(Emphasis provided.)
The defendant filed a motion to reargue and the court entered the following order regarding that motion:
The foregoing motion having been considered, it is hereby ordered: DENIED.
Defendant's (#116) Motion for Contempt was not decided as part of the court's March 10, 2003 Memorandum of Decision due to lack of sufficient evidence and testimony. Any reclaim and reargument sought by the defendant can and shall be argued before the current presiding family judge rather than the undersigned judge.
The defendant appealed Judge Doherty's ruling on the defendant's motion coded 116. The Appellate Court held that the ruling of Judge Doherty on defendant's motion coded 116 was not a final judgment that could be appealed and dismissed the portion of the appeal challenging the ruling on the defendant's motion for contempt coded 116.
The presiding family judge has assigned to this court the defendant's motion for contempt coded #116.
The defendant makes five claims as to why she is entitled to an additional $160,000 from the plaintiff (as well as her claim for interest). Those claims are as follows: (1) Res judicata applies to Judge Doherty's meaning, intent and interpretation of Article 24 regarding a $209,000 cap; (2) Even if res judicata does not apply, the interpretation of Judge Doherty was the correct interpretation; (3) The provisions of Article 24 would only be triggered by the sale of the family home to a third party; (4) If res judicata does not apply and Judge Doherty's interpretation was not the correct interpretation, the defendant is still entitled to recover the $160,000 based on mutual mistake; and (5) If res judicata does not apply and Judge Doherty's interpretation was not the correct interpretation, the defendant is still entitled to recover the $160,000 based on estoppel.
I. THE PLAINTIFF'S CLAIM THAT RES JUDICATA APPLIES TO JUDGE DOHERTY'S INTERPRETATION OF ARTICLE 24 OF THE SEPARATION AGREEMENT REGARDING THE ISSUE OF A $209,000 CAPThe threshold issue is whether in ruling on the defendant's motion coded 116 this court is bound by the principles of res judicata and/or law of the case regarding the meaning and intent of Article 24 of the parties' separation agreement as found by Judge Doherty in his ruling on the plaintiff's motion coded 114. The defendant argues as follows:
This Trial Court is bound by the principles of "Res Judicata" in regards to the meaning and intent of Article 24 of the Parties' Separation Agreement. Judge Doherty found in favor of the Defendant's interpretation of said argument. The decision of original Trial Court (Doherty, J.) in regards to Article 24 is currently on appeal with the Appellate Court. It is a final decision. Thus the determinations made by said Court are binding in any subsequent matter.
Conversely, determinations made by the original Trial Court (Doherty, J.) and contained solely in that Court's determination of Defendant's Motion #116 are considered Law of the Case and should be upheld and followed by a subsequent Trial Court absent a conclusion by said subsequent Court that the initial decision was clearly erroneous.
The Connecticut Supreme Court addressed the differences between Res Judicata and Law of the Case in CFM of Connecticut, Inc. v. Chowdhury, 239 Conn. 375, [403-04], 685 A.2d 1108 [(1996)]. The Court stated . . .
This discussion highlights the dividing line between the general doctrines of res judicata, relied on by Chowdhury, and law of the case, relied on by Timbers, insofar as this case is concerned. Whereas a decision of one trial judge that is res judicata is binding on the second judge who confronts it, a decision of one trial judge that declares the law of the case is not a limitation on the power of the second judge in the case to decide otherwise, under appropriate circumstances. Breen v. Phelps, 186 Conn. 86, 99, 439 A.2d 1066 (1982). The dividing line is not, however, as Timbers argues, whether the two decisions are made in the same or different actions; the dividing line is in the nature of the first decision. If the first decision was final, in the res judicata sense, it cannot be disregarded under the doctrine of the law of the case. [Emphasis added.] If, however, the first decision was not final, but was merely interlocutory, it falls within the doctrine of the law of the case. We strongly suggested as much in Breen, wherein we stated: "Where a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat that decision as the law of the case, if it is of the opinion that the issue was correctly decided, in the absence of some new or overriding circumstance." (Emphasis added.) Id.; see also Ratner v. Willametz, 9 Conn.App. 565, 573, 520 A.2d 621 (1987) (law of the case doctrine "applies only when the prior decision was interlocutory in nature," and not where decision was final for res judicata purposes).
The court is not persuaded by that argument.
This court holds that the ruling of Judge Doherty regarding the plaintiff's motion coded 114 is res judicata in that the plaintiff cannot challenge in the present proceeding the ruling that he has not overpaid the defendant regarding stock options.
This court is not persuaded by the defendant's claim that res judicata applies to the defendant's motion coded 116 regarding Judge Doherty's interpretation of Article 24 relating to the plaintiff's motion coded 114 regarding a $209,000 cap for the following reasons:
1. The memorandum of decision of Judge Doherty ruled in favor of the defendant on the plaintiff's motion for order coded 114. The present claim before this court is not on the plaintiff's motion coded 114 but rather is on the defendant's motion for contempt coded 116. The claim on the plaintiff's motion coded 114 was a claim for a refund for alleged excess payments to the defendant. The claim on the motion coded 116 is a claim for funds allegedly due the defendant from the exercise of stock options. The motion coded 114 is not the same claim as the motion coded 116.
2. Res judicata is a bar to a subsequent action brought on a same claim. The motion before this court is a continuation of the hearing that was initially before Judge Doherty and is not a subsequent action on the same claim. The claim under motion coded 114 is not the same claim as under the motion coded 116. The motion coded 114 is the plaintiff's motion seeking a refund of stock option proceeds paid to the defendant. The claim under motion coded 116 is the defendant's motion seeking additional funds from stock option proceeds.
3. In remanding the defendant's motion coded 116 for a new hearing Judge Doherty ruled in part as follows:
As noted, this motion seeks a finding that the Plaintiff is in contempt for his failure to pay over to the Defendant her share of moneys realized by the sale of stock options during the alimony period. The Plaintiff had predicated his defense to this motion, in part, on his claim that Article 24 changed the Defendant's right and expectation to such payments. The instant decision rejects that defense of the Plaintiff . . . Whether the . . . [Plaintiff] has any other bases for not having met the expectations of the Defendant as to moneys owed cannot be determined by the court at this time.
(Emphasis provided.)
When Judge Doherty ruled that "[w]hether the . . . [Plaintiff] has any other bases for not having met the expectations of the Defendant as to moneys owed cannot be determined by the court at this time," that allows for the hearing on remand to decide on the merits any other basis that the plaintiff may have for not having met the expectations of the defendant other than the claim that any moneys realized by the sale of stock options during the alimony period is not a valid defense. The claim of the plaintiff regarding the defendant's motion coded 116 does not in any way relate to the sale of stock options during the alimony period. The basis for the plaintiff's current defense to the defendant's motion rests solely on the setoff provision of Article 24 of the separation agreement and does not relate to the defendant's remarriage.
Finally, while Judge Doherty's decision was final regarding the plaintiff's motion coded 114, it was not final regarding the defendant's motion coded 116. The rulings of Judge Doherty regarding the motion coded 116 are interlocutory in nature which can be treated by this court as the law of the case if this court is of the opinion they were correctly decided. For reasons hereinafter stated, this court believes that the following rulings of Judge Doherty regarding the defendant's motion coded 116 should be afforded law of the case status. Judge Doherty ruled that the defense of the plaintiff that Article 24 changed the right and expectations of the defendant to receive her share of moneys realized by the sale of stock options during the alimony period was rejected. The court does find that the law of the case doctrine does not allow the plaintiff to raise as a defense to the defendant's motion coded 116 the claim that the defendant's remarriage changed her right to receive her share of moneys realized by the sale of stock options during the alimony period. Judge Doherty also ruled on motion coded 116 that whether the plaintiff has any other basis for not having met the expectations of the defendant as to moneys owed cannot be determined; and Judge Doherty also ruled that the court is without sufficient evidence to make a determination of the amount of damages the defendant is currently entitled to should the court agree with her claim that he is in contempt. Judge Doherty did not find the plaintiff in contempt for failing to pay additional funds to the defendant and simply remand the matter for a hearing in damages. He remanded the defendant's motion coded 116 to be argued in detail in order for the court to make appropriate orders but held that the plaintiff's defense regarding the payment of stock option proceeds during the alimony period was not a valid defense. When Judge Doherty ruled that whether the plaintiff had any other basis for not having met the expectations of the defendant as to moneys owed other than as it related to the remarriage of the defendant that such basis could not be determined by him, Judge Doherty left open for the remand judge to determine whether there was any other basis (other than the defendant's remarriage) for not having met the expectations of the defendant as to moneys owed. A second judge can interpret a ruling made by a prior judge. DeMaria v. DeMaria, 247 Conn. 715, 719 n. 5, 724 A.2d 1088 (1999). In DeMaria the Supreme Court following oral argument sought from the second court the following articulation:
2. In rendering the judgment denying the defendant's post-judgment motion to terminate alimony, did the trial court apply General Statutes § 46b-86(b) or the common law to determine that the plaintiff was not "cohabiting with a nonrelated male" as required by the dissolution judgment for the termination of alimony?
The trial court responded as follows to the first question: "Answer: There was no separation agreement"; and to the second question: "Answer: In rendering the judgment denying the defendant's post-judgment motion to terminate alimony, I applied General Statutes § 46b-86(b) to determine that the plaintiff was not `[cohabiting] with a nonrelated male' as required by the dissolution judgment for the termination of alimony."
The Supreme Court affirmed the second judge's construction of the term cohabitation as found in the memorandum of decision of the prior court to include the financial impact found in 46b-86(b).
This court is aware of the fact that in his ruling regarding the defendant's motion coded 116 Judge Doherty actually stated "whether the defendant has any other bases for not having met the expectation of the defendant as to moneys owed cannot be determined by the court at this time." This court interprets that ruling as intending to say "whether the plaintiff has any other bases for not having met the expectation of the defendant as to moneys owed cannot be determined by the court at this time." There would be no reason to believe that the defendant would have any basis for not having met the expectations of the defendant.
Normally, if a defendant has a full hearing on a particular claim and the trial court rules that the court is without sufficient evidence and testimony to make a determination of the amount of damages that the defendant is currently entitled to, that ruling would result in a judgment in favor of the plaintiff for failure of the defendant to meet its burden to prove damages. However, an exception to that rule is where the first judge remands the case in order for a new court to enter appropriate orders thereon. The remand order gave the defendant a second opportunity to prove damages and gave to the plaintiff the opportunity to defend the claim other than the defense of moneys realized from the sale of options during the alimony period.
In Corcoran v. Department of Social Services, 271 Conn. 679, 859 A.2d 533 (2004), the court was faced with the claim of collateral estoppel regarding conflicting decisions of an administrative hearing officer and a probate court decision.
The probate court held a hearing to construe the terms of a trust "as they pertain to any rights the State . . . may have to claim reimbursement from the Trust for benefits heretofore provided . . . and/or for any such benefits provided by the State to the [plaintiff] in the future." The trustees requested the Probate Court to issue "a ruling classifying said Trust as a `special needs' trust, from which it is neither appropriate nor required to reimburse said State for benefits received by [the plaintiff] . . ." The probate court conducted its scheduled hearing and entered its order on June 12, 2001, determining that the testator intended the "trust at issue to be . . . a `special needs, discretionary trust' not otherwise available to the state . . ." Before the probate court issued its order an administrative hearing was convened by the Department of Social Services. On July 12, 2001, the hearing officer issued a ruling on the hearing record, indicating that she had closed the record on June 8, 2001, four days prior to the issuance of the probate court's decision on June 12, 2001. On July 17, 2001, the hearing officer issued a decision upholding the Department's decision to discontinue the plaintiff's medicaid benefits because the trust was an asset that was available to her and therefore her assets exceeded the regulatory limits. The court stated in part as follows:
To invoke collateral estoppel the issues sought to be litigated in the new proceeding must be identical to those considered in the prior proceeding. . . . ("[t]he present case presents a question of issue preclusion, which requires an identity of those issues between the prior and subsequent proceedings"); . . . ("[i]n order for collateral estoppel to bar the relitigation of an issue in a later proceeding, the issue concerning which relitigation is sought to be estopped must be identical to the issue decided in the prior proceeding"). In other words, "[i]n order for collateral estoppel to apply . . . there must be an identity of the issues, that is, the prior litigation must have resolved the same legal or factual issue that is present in the second litigation."
Turning to the facts of the present case, we conclude that, because the issue decided by the Probate Court, namely, that the trust was not available to the plaintiff's creditors, is not identical to the issue before the hearing officer, namely, whether the trust constituted an asset available to the plaintiff, the hearing officer was not collaterally estopped from construing the trust. Our conclusion is supported by a review of the proceedings before each tribunal . . .
The Probate Court's opinion is notable for what it did not conclude, namely, whether the plaintiff had a legal right to compel distribution from the trust. [Emphasis provided.]
(Citations omitted.)
Judge Doherty did not conclude or rule on the defendant's motion coded 116 on the following issues:
1. The plaintiff's claim that as a result of defendant retaining the plaintiff's portion of the proceeds from the purchase of his interest in the family home, her portion of stock option proceeds and any offset should in no event exceed the maximum of $209,000;
2. Whether his interpretation of Article 24 regarding the issue of a $209,000 cap as it related to the plaintiff's motion coded 114 would also apply to the defendant's motion coded 116;
3. Whether his interpretation of the defendant's claim that Article 24 was only triggered by the sale of the home to a third party as it related to plaintiff's motion coded 114 would also apply to the defendant's motion coded 116;
4. The defendant's defense of mutual mistake; and
5. The defendant's defense of equitable estoppel.
Restatement of the Law, Judgments, Second, § 20 provides in part as follows:
§ 20. Judgment for Defendant — Exceptions to the General Rule of Bar
(1) A personal judgment for the defendant, although valid and final, does not bar another action by the plaintiff on the same claim . . .
Consistent with the ruling of Judge Doherty regarding the defendant's motion coded 116 as well as Corcoran and § 20 of the Restatement, Judgments, Second, this court concludes that res judicata and/or collateral estoppel do not apply to the defendant's motion coded 116 regarding Judge Doherty's interpretation of Article 24 of the separation agreement in ruling on the plaintiff's motion coded 114 regarding the issue of a $209,000 cap. This court further concludes that res judicata and/or collateral estoppel do not apply to the five issues that Judge Doherty did not rule upon regarding the defendant's motion coded 116.
II. THE DEFENDANT'S CLAIM THAT EVEN IF RES JUDICATA AND/OR COLLATERAL ESTOPPEL DO NOT APPLY, THE INTERPRETATION OF JUDGE DOHERTY TO ARTICLE 24 OF THE SEPARATION AGREEMENT REGARDING THE ISSUE OF A $209,000 CAP WAS THE CORRECT INTERPRETATIONOne of the leading cases on the interpretation of a separation agreement that has been incorporated into a judgment dissolving the marriage is Barnard v. Barnard, 214 Conn. 99, 570 A.2d 690 (1990), where the court stated in part as follows:
"A contract is to be construed as a whole and all relevant provisions will be considered together." . . . In ascertaining intent, "we consider not only the language used in the making of the contract, the motives of the parties and the purposes which they sought to accomplish." Connecticut Co. v. Division 425, 147 Conn. 608, 616, 164 A.2d 413 (1960); Marcus v. Marcus, 175 Conn. 138, 141, 394 A.2d 727 (1978). "The intention of the parties to a contract is to be determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. The question is not what intention existed in the minds of the parties but what intention is expressed in the language used."
"In interpreting contract items, we have repeatedly stated that the intent of the parties is to be ascertained by a fair and reasonable construction of the written words and that the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract." Sturman v. Socha, supra, 10; Marcus v. Marcus, supra, 141-42; Sturtevant v. Sturtevant, 146 Conn. 644, 647-48, 153 A.2d 828 (1959). Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. "A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity and words do not become ambiguous simply because lawyers or laymen contend for different meanings . . ."
Where parties have their agreement in writing "`their intention is to be determined from its language and not on the basis of any intention either may have secretly entertained.' . . . Parties generally do not insert meaningless provisions in their agreements and therefore every provision must be given effect if reasonably possible." (Citation omitted.)
The defendant in her brief to the Appellate Court makes the following claims:
The first question raised is whether the language of Article 24 . . . [is] ambiguous. The Defendant and more importantly the Trial Court determined that there was a question of whether the $209,000.00 figure was a "cap" (for which there is no reference to a supposed "cap" in the Separation Agreement) on the total amount of moneys the Defendant could receive from the enumerated stock options or whether it was a limit on the amount of money the Defendant had the right to demand to be paid upon the . . . [sale] of the former marital residence.
Article 24 states,
The Parties hereinabove have agreed to a division of the Husband's stock options and to the division of the real estate. When the Husband's [interest] in the real estate is determined by sale or purchase, as previously set forth, the Wife shall have the option to retain a sufficient portion of the Husband's proceeds as an offset against her portion of the stock options yet to be exercised. It is understood and agreed that should the Wife so elect then in that event her portion of the stock options proceeds and any offset shall in no event exceed the maximum of $209,000.00.
Example: $209,000.00
Less previously received stock option proceeds
Less Husband's interest in real estate
Balance due to the Wife if any.
Example: $209,000.00 Less: (29,000.00) Prior options exercised Less: (115,000.00) Husband's est. interest ____________ BALANCE DUE TO WIFE: $ 65,000.00
The balance to be paid pursuant to Article 20B.
It is important to note that the example and language of Article 24 does not have any repayment provisions contained therein. In no event does there appear to be a method or formula to calculate a return payment to the Husband.
EXAMPLE I: If the Husband had paid the Wife $100,000 by the date Article 24 went into effect, and he were to receive $115,000 from the sale of the property, and the Wife's interest in stock options not yet exercised were $409,000.00 on the date Article 24 went into effect, then the following example would seem to apply:
Example: $209,000.00
Less previously received stock option proceeds
Less Husband's interest in real estate
Balance due to the Wife if any.
Example: $209,000.00 Less: (100,000.00) Prior options exercised Less: (115.000.00) Husband's est. interest __________ BALANCE DUE TO WIFE: $ -6,000
The balance to be paid pursuant to Article 20B.
Under the hypothetical provided herein, the Wife would not be able to retain the entire $115,000, she would only have been able to retain $109,000.00 of the Husband's proceeds. Thus her original figure of $409,000 would be reduced by the $100,000.00 she received from the exercise of options and the $109,000 she was entitled to claim from the Husband's real estate sale proceeds, leaving her due a total of $200,000.00 in stock options on that date with the balance of options being payable according to Article 20B.
EXAMPLE 2: If the Husband had paid the Wife $300,000 by the date Article 24 went into effect, and he were to receive $100,000 from the sale of the property, and the Wife's interest in stock options not yet exercised were $200,000.00 on the date Article 24 went into effect, then the following example would seem to apply:
Example: $209,000.00
Less previously received stock option proceeds
Less Husband's interest in real estate
Balance due to the Wife if any.
Example: $209,000.00 Less: (300,000.00) Prior options exercised Less: 100 000.00 Husband's est. interest ___________ BALANCE DUE TO WIPE: $-181,000.00
The balance to be paid pursuant to Article 20B.
Example 2 is a situation where no moneys would be due to the Wife through the offset provision. She would have already received $81,000.00 above the offset amount ($181,000-$100,000 husband's real estate interest) and thus the entire $100,000.00 of proceeds would then be turned over to the Plaintiff and the Defendant would need to wait on her remaining stock option moneys "to be paid pursuant to Article 20B . . ."
The defendant then proceeds to argue as follows:
This understanding was not only by the Wife, but also by the Husband who detailed in writing (Defendant's Exhibits A, B, and C) the effect the transaction would have on the moneys still due to the Wife.
When looking to the example provided in Article 24, there was no reference to paying back the hypothetical $6,000.00 or $181,000 that resulted from the hypothetical examples set forth in this brief because the intent and language of Article 24 never contemplated such an event ever occurring.
To accept the interpretation of the Plaintiff regarding the meaning of Article 24 would make the language of Article 20B meaningless. If the parties choose to provide Ms. Patron the sum of $209,000, they could have simply done so without the formula's spread throughout three different provisions. Article 20B makes no reference to it being limited by Article 24. There was no such language, because there was no such limitation on the Defendant's rights to her share of the stock options.
The court is not persuaded by the arguments of the defendant contained in either Example 1 or Example 2.
RE EXAMPLE 1: Article 24 allowed the defendant the right to retain a sufficient portion of the husband's proceeds as an offset against her portion of the stock options yet to be exercised with that portion of the stock option proceeds and any offset in no event to exceed the maximum of $209,000. The value of the stock options not exercised that the defendant would have the court consider is not relevant. Under Example 1, if the defendant elected to retain $109,000 of the plaintiff's $115,000 proceeds from the sale of the home, then there would be no further balance due to her to be paid pursuant to Article 20B. Nowhere in the language of Article 24 or in the example to that article found in the separation agreement is there any reference to the value of the stock options that have not been exercised as of the date of the sale of the family home.
Example #1 shows a deficit of $6,000 due to the defendant. Article 24 of the separation agreement refers to "balance due to wife if any" and not simply balance due to wife. More importantly, Article 24 of the separation agreement allows the wife the option to retain a sufficient portion of the husband's proceeds as an offset. In Example 1, the defendant would not have the right to retain $115,000 of the plaintiff's interest in the home as an offset but only a sufficient portion which would amount to $109,000. In Example #1, the wife would have the option to retain $109,000 of the husband's $115,000 interest in the home and pay to him the remaining $6,000. If she elected to retain $109,000 of the $115,000 then she would not have the right to receive any further funds from the stock option proceeds in the future. That would have been her election to make as to whether she wanted to gamble as to what the value of future stock option elections would be when exercised.
RE: EXAMPLE 2: Example 2 creates a totally different scenario. In Example #2, if the defendant had received $300,000 from prior options exercised, she would not have the right to retain any of the $100,000 of the husband's interest because she would have already received more than the $209,000 maximum amount. In Example 2 the defendant would be required to pay to the plaintiff the full $100,000 as she only had the right "to retain a sufficient portion of the husband's proceeds as an offset against her portion of the stock options yet to be exercised." Since under Example #2 she had already received $300,000 from options prior to the sale of the home, she would not have the right to retain any portion of the funds due to the husband from the sale of the home. Under the Example #2, if the wife had already received $300,000 from prior options exercised, then under the provisions of Article 24, she would not have had the right to retain any part of the husband's interest from the sale or her acquisition of his interest in the home and would have to pay the $100,000 over to him. She then would have had the right to the 50 percent referred to in Article 20B of the exercise of all remaining stock options.
At the time the wife acquired the husband's interest in the premises on January 27, 1997, the parties agreed that the husband's interest in the family home had a value of $81,000. The wife elected not to pay that amount to him but to retain that amount as an offset against her portion of stock options yet to be exercised. The court finds that when the defendant acquired the interest of the plaintiff in the family residence, she would have the right to retain a sufficient portion of the husband's proceeds (i.e., $81,000) as an offset against her portion of the stock options yet to be exercised, and if she so elected, then in that event her portion of stock option proceeds and any offset shall in no event exceed the maximum of $209,000. Alternately, the defendant could have obtained a higher mortgage to pay the plaintiff $81,000. If she had done that, then she would have the right to the additional $160,000 in stock option funds.
The defendant also argues that under Example 1 and Example 2 that there was no reference to paying back the hypothetical $6,000 and the $180,000 that results from those examples. The reason that there is no reference to paying back those hypothetical sums is because the defendant would not have had the right to retain any amount in excess of $209,000 when adding the combination of money she already received from prior stock options exercised and the husband's proceeds.
This court concludes that Article 24 is not ambiguous as it relates to the defendant's motion coded 116.
III. THE DEFENDANT'S CLAIM THAT ARTICLE 24 OF THE SEPARATION AGREEMENT WAS ONLY TRIGGERED BY THE SALE OF THE FAMILY HOME TO THE THIRD PARTY
The court is not persuaded by this argument.
The defendant wrongfully believed that Article 24 would only be triggered if a third party purchased the family home as opposed to the defendant buying out the plaintiff's interest in the family home.
Article 21 regarding real property provided in part that the wife shall have the option to either purchase the husband's interest in the premises or list the property for sale.
Article 24 of the separation agreement provided in part that:
The parties have hereinabove agreed to a division of the husband's stock options and to the division of the real estate.
The reference to the division of the stock options in Article 24 is a reference to Article 20B. The reference in Article 24 to a division of the real estate is a reference to Article 21. Article 24 further provided in part:
when the husband's interest in the real estate is determined by sale or purchase as previously set forth . . .
is a reference to so much of Article 21 that provided in part that "the wife shall have the option to either purchase the husband's interest in the premises or list the property for sale." The reference to "sale" in Article 24 is a reference to sale to a third party. The reference to "purchase" in Article 24 is a reference to the wife having the option to purchase the husband's interest in the premises. Article 24 would be triggered if the wife purchased the husband's interest in the family home but only in the event the wife elected to retain a portion from the husband's proceeds as an offset against her portion of stock options yet to be exercised. This court concludes that Article 24 of the separation agreement was also triggered by the purchase of the husband's interest by the defendant.
IV. THE DEFENDANT'S CLAIM THAT MUTUAL MISTAKE EXISTS IN THIS CASE
The defendant argues in part regarding mutual mistake:
If the Court finds that the Plaintiff's arguments are correct judgment should still be rendered in favor of the Defendant based upon mutual mistake . . . "A mutual mistake is one that is common to both parties and effects a result that neither intended."
The Plaintiff testified that he had not thought about whether Article 24 would be triggered by the post judgment transaction of January 1997. Further, Defendant's Exhibit "B" (dated August 23, 1997) is a letter from the Plaintiff to the Defendant seven months after the exchange of assets occurred. The Plaintiff wrote, ". . . Attached are the options remaining in which you have 50% of the after tax proceeds." The Plaintiff listed all options that had not been exercised by that time and were part of the original list of options awarded to the Defendant under the Separation Agreement. The values listed in this exhibit exceed the currently claimed limitation of $209,000.
The Defendant testified that she never believed Article 24 came into effect at any time since the Parties' dissolution of marriage. Certainly she never believed that the postjudgment transaction triggered Article 24 of the Separation Agreement.
If this Court finds that Article 24 was somehow triggered by the January 1997 transaction of the Parties and further that same created a limitation to the moneys the Defendant could receive in total, then the Court must find that a mutual mistake occurred. In that event the Court should void the transaction of January 1997 and then make Orders in accordance with the Court's equitable powers. Those Orders should be that the Plaintiff should not benefit by a result that neither Party intended and thus moneys should be paid to the Defendant in accordance with the calculations set forth herein regarding stock option values and interest to be awarded.
The court is not persuaded by that argument.
The court finds that there is no basis for mutual mistake in this case. The mistake of the defendant was in believing that Article 24 would not be triggered unless the purchase of the family home was made by a third party as opposed to by herself. The plaintiff never shared in that mistake.
§ 70:9 Mistake must be mutual
The law permits reformation of instruments to reflect the true intention of the parties when the erroneous part of the contract is shown to have occurred by a mutual mistake or, in other words, the party seeking relief is able to establish to the court's satisfaction that both parties intended something other than what is reflected in the instrument in question.
Absent some element of fraud, a mistake must be mutual and common to both parties. Where the mistake is unilateral, the contract is not voidable. Moreover, a clear mistake by one party, coupled with ignorance by the other party, is not a mutual mistake and will not be corrected. However, when the mistake of one party, with respect to the meaning of some material provision of the signed contract, is accompanied not only by the other party's knowledge but, also, by that other party's silence, this is treated as the equivalent of a mutual mistake and equity will reform that instrument.
27 S. Williston, Contracts (4th Ed. Lord 2003) § 70:9, p. 224.
It is clear to the court that there was a mistake on the behalf of the defendant. She believed that Article 24 would only be triggered if there was a sale of the home to a third party. The defendant's reliance on defendant's exhibit B dated August 23, 1997 does not create a mutual mistake. The defendant in her brief refers to the letter of the plaintiff to the defendant, dated August 23, 1997, as Defendant's Exhibit B. That letter in fact is Defendant's Exhibit D.
The plaintiff testified regarding Defendant's Exhibit D as follows:
Q. Counsel introduced into evidence two letters in your handwriting — I believe there were two. I'm looking for them. Here we go.
You sent her a letter dated August 23, 1997. Did you in any way intend to vary the terms of the judgment by this document?
A. Nope. It was just a calculation.
Q. Did Ms. Patron pay you anything over and above what was called for in the judgment, to get you to agree to change the terms of the divorce decree in any fashion?
A. No.
(p. 150.)
The fact is that when the plaintiff wrote Defendant Exhibit B, Article 24 had not entered his mind. The court finds that the mistake of the defendant was not common to both parties.
V. THE DEFENDANT'S ARGUMENT REGARDING EQUITY BY LATCHES ESTOPPEL AND/OR WAIVER
The defendant makes the following argument regarding this claim:
If the Court finds that the Plaintiff's arguments are correct judgment should still be rendered in favor of the Defendant based upon Estoppel. The Connecticut Supreme Court in Union Carbide v. City of Danbury, 257 Conn. 865 [872] (2001) stated in regards to equitable estoppel,
"Estoppel has its roots in equity and stems from the voluntary conduct of a party whereby [the party] is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed . . . as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse. 3 Pomeroy, Equity Jurisprudence (5th Ed. 1941) § 804, p. 189; 28 Am.Jur.2d, Estoppel and Waiver § 76; accord Spear-Newman, Inc. v. Modern Floors Corporation, 149 Conn. 88, 91, 175 A.2d 565 (1961); Tradesmens National Bank of New Haven v. Minor, 122 Conn. 419, 424, 190 A. 270 (1937); MacKay v. Aetna Life Ins. Co., 118 Conn. 538, 548, 173 A. 783 (1934)." (Internal quotation marks omitted.) Page 873 Boyce v. Allstate Ins. Co., 236 Conn. 375, 383-84, 673 A.2d 77 (1996). "We [have] recognized that estoppel always requires proof of two essential elements: the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and the other party must change its position in reliance on those facts, thereby incurring some injury. Bozzi v. Bozzi, 177 Conn. 232, 242, 413 A.2d 834 (1979); Dupuis v. Submarine Base Credit Union, Inc., 170 Conn. 344, 353, 365 A.2d 1093 (1976); Pet Care Products, Inc. v. Barnett, 150 Conn. 42, 53-54, 184 A.2d 797 (1962)." (Internal quotation marks omitted.) Boyce v. Allstate Ins. Co., supra, 236 Conn. 385. Id. at 872-73. (Emphasis provided.)
The Connecticut Supreme Court has enunciated a two-prong test for determining whether estoppel applies to a particular set of facts. First, the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief.
(Defendant's Brief, pp. 22-23.)
This Court was presented with written proof of such statements being made by the Plaintiff to the Defendant. Defendant's Exhibit "B" reads, "More importantly, I will swap options for my half of the house. If house was worth $420,000, my share would be a hundred and thirty-five. This would still leave you two hundred and twenty thousand in options. You have more than enough for the house." (Transcript A, Page 96, Lines 7-15.) The Plaintiff's own writing showed the Defendant would have $220,000 in options remaining after the exchange of assets. This alone is greater than the now claimed limitation of $209,000. Further, Defendant's Exhibit "C" (dated January 23, 1997) was also written by the Plaintiff. This Exhibit instructs Plaintiff's Counsel as to the Plaintiff's understanding of the agreement between the Parties to exchange assets. In this document the Plaintiff lists all of the options that were identified by the Separation Agreement, but were not yet exercised.
Therefore, the party against whom estoppel is claimed (the Plaintiff) must do or say something calculated or intended to induce another party (the Defendant) to believe that certain facts exist (Defendant's Exhibits "B" and "C") and to act on that belief. This prong is satisfied by written proof of statements made by the Plaintiff to the Defendant.
(Defendant's brief, p. 23.)
The court is not persuaded by that argument.
The court finds insofar as the defendant's reliance on Defendant's Exhibits B and C that when the plaintiff wrote those documents it was not calculated or intended to induce the defendant to believe that certain facts existed and to act on that belief.
The plaintiff testified in part regarding Defendant's B as follows:
Q. So is it fair to say that in May of 1996 you did not believe Ms. Patron's stock options moneys would be limited to two hundred and nine thousand after that transaction of real estate occurred?
A. I can't answer yes or no. I don't know what I believed.
. . .
Q. So I'll ask you again: After discussing the letter, that in May of 1996, or at least when you wrote this letter, you didn't believe there was a cap of $209,000 if the real estate transaction occurred. Is that correct?
A. No.
Q Did you intentionally lie to Ms. Patron in this letter?
A. No.
Q. So is it your testimony that you were truthful in saying she'd have more than $220,000 in options remaining, after the purchase; but there was a $209,000 cap, you believed at that time was in effect?
A. It had not entered my mind . . .
(Pp. 97-99.)
He also testified in part regarding Defendant's Exhibit C as follows:
Q. Thank you. Did you believe in January, on January 23rd of '97, that there was a cap of two hundred and nine thousand that would be in effect after the real estate transaction?
A. It had not entered my mind.
Q. Okay. Would that be a "no"?
A. No.
(P. 102.)
Q. In January of 1997, did you know there was a cap?
A. I don't think I thought of it.
(P. 171.)
Q. Mr. Kline, on May 19, 1995 is it your opinion that there was a cap on the options if Ms. Patron exercised her choice to swap option for the real estate?
A. Yes.
Q. Is it your testimony that in the course of events you forgot about that provision of the agreement?
A. Yes.
Q. Did you ever intend to waive that provision of the agreement?
A. No.
Q. Did you ever agree to waive that provision of the agreement?
A. No.
Q. Why is it you overpaid her, per your claim?
A. I made a mistake.
(Pp. 172-73.) The court finds that the defendant did not change her position in reliance upon any statements made by the plaintiff on or about January 27, 1997. The following is a portion from the transcript of the hearing before Judge Doherty on March 12, 2002.
The defendant testified in part on page 13 as follows:
Q. Did you rely on this letter in any way in making your decision to swap options for Mr. Kline's equity in the house?
A. Positively, yes.
The reference to "this letter" is a reference to Defendant's Exhibit B, a letter from the plaintiff to the defendant dated May 26, 1996, which was approximately eight months prior to the transfer of the plaintiff's interest in the family home to the defendant. The court finds that the defendant's claim that she relied on Exhibit B in making her decision to swap options for the plaintiff's equity in the family home is not credible.
The defendant further testified on page 17 as follows:
Q. Miss Patron, we were just discussing the January 27th, 1997 buy-out of Mr. Kline of the marital property. So, referring to that time frame.
At the time of that exchange was it your understanding that Paragraph 24 of your separation agreement was triggered in any way?
A. No.
Q. What was your understanding of that exchange on January 27th of 1997?
A. That I was just exchanging one asset for another that —
Q. What was your understanding of what would trigger Paragraph 24 coming into effect?
A. I thought a third party had to be involved in purchasing —
CT Page 19650
Q. Is that your understanding at the time —
A. Yes.
Q. (Continuing) — you signed the separation agreement?
A. Ah —
Q (Continuing) — If you remember.
A. I — I don't clearly remember.
Q. Was that your understanding at the time of the swap in January 27th, 1997?
A. Yes.
Q. Was that your understanding after the exchange in January 2 — in January 27th, 1997?
A. Yes.
She further testified on page 44 as follows:
Q. And you testified at your deposition that when you had issues concerning the finances after your divorce, specifically with respect to the options and the real estate, you consulted Mr. Gersten for his advice?
A. Yes.
Q. And you relied on Mr. Gersten's advice?
A. Yes.
Mr. Gersten is an attorney at law and is a friend of the defendant. He testified before Judge Doherty regarding the defendant's motion coded 116 as follows:
Q. You counseled Miss Patron prior to her entering into the May 19th separation agreement of '95; is that correct?
CT Page 19651
A. Yes, sir.
Q. Paragraph 24 in the agreement did you have any opportunity to discuss that with Miss Patron?
A. My recollection is, prior to her executing the document I did discuss the — the significance of this provision with her.
. . .
A. I advised her that this provision dealt with an alternative that provided for her to give liquidity in the event that the property was sold to a third party. There were cash proceeds generated and those proceeds would have been divided after Mr. Kline and after her. And that this provision gave her the ability to basically capture his half of the cash proceeds in exchange for some of the options that she held.
That was an addition to the other provision of the agreement that dealt with both options of real estate.
Q. Did you counselor her, at that time, that this would be a cap if she exercised this option?
A. Only — Only in a limited circumstance of this paragraph. A third party sale which generated cash.
Q. Did you counselor her that it could be triggered if she purchased the interest for Mr. Kline?
. . .
Q. If she purchased his interest, did you indicate whether — did you have discussions whether or not that would trigger Paragraph 24?
A. As I said, I indicated to her this paragraph was . . . [only] applicable in a case of a third party purchased the property and cash was generated from the sale . . .
CT Page 19652
. . .
Q. Did you tell Miss Patron at that time why you felt that it had to be a sale with third parties?
A. Yes.
Q. And that did you tell — What did you rephrase — What did you tell her regarding that?
A. I specifically referred to the language of Paragraph 24 in part which sales the wife shall have the option to retain a sufficient portion from the husband's proceeds as an offset.
. . .
A. I indicated that this language based on my discussions with Miss Patron, to what has transpired in her dialogue with Miss Andersen and at their meetings was that this was geared towards providing a cash option to her since she was unable to direct the sale of the options.
They were in Mr. Kline's control. This gave her a vehicle in the event that real estate was signed to — to be sold to a third party. To receive cash proceeds.
Q. And you consulted with — did you consult with her prior to her entering into the January of '97 memo/document whatever we're calling it?
A. Yes.
Q. And did you consult with her regarding any cap that would be triggered had she made this agreement?
A. I indicated to her that in my opinion I advised her that Paragraph 24 was inapplicable to the transaction which she was exchanging options for real estate?
(Transcript, pp. 68-72.) The court finds that the defendant relied on the advice of Attorney Gersten to the effect that Article 24 would be triggered only by a sale to a third party while that advice in fact was erroneous. The court finds that the defendant did not rely on the plaintiff in deciding to use stock options to purchase his interest in the family residence.
In Connecticut National Bank v. Voog, 233 Conn. 352, 367, 659 A.2d 172 (1995), our Supreme Court also stated in part as follows:
It is fundamental that a person who claims an estoppel must show that he has exercised due diligence to know the truth, and that he not only did not know the true state of things but also lacked any reasonably available means of acquiring knowledge . . . This defense, upon which the defendant bears the burden of proof . . .
The court finds that the defendant did not exercise due diligence to determine the truth regarding whether Article 24 would be triggered only by a sale to a third party. The reasonable means for the defendant to have determined that truth would have been to have contacted Attorney Dianne Andersen who was her trial attorney. There was no evidence presented that the defendant lacked any reasonable means of acquiring that knowledge from Attorney Andersen.
ORDER
The court finds that the defendant is not entitled to any additional funds from the plaintiff from the exercise of stock options.