Opinion
No. FA04-019 86 18 S
November 21, 2006.
FINDING OF FACTS AND CONCLUSIONS OF LAW RE TERMINATION OF AUTOMATIC STAY
PROCEDURAL HISTORY:
This matter was tried before the Regional Family Trial Docket, on a referral from the Stamford Judicial District, on February 27th-March 3rd, March 6th-10th, March 29th-31st, April 17th and 25th, 2006. The court issued a written decision on June 12, 2006. Plaintiff filed a Motion to Terminate Stay Postjudgment on July 25, 2006. The court heard oral arguments on September 19, 2006 and ordered the parties to submit current Financial Affidavits, which were submitted September 22, 2006.
The plaintiff has requested that the court terminate the stay as to the Merrill Lynch CMA (originally a joint account) with an approximate balance of $4,894,714.00 and the Fidelity (Joint) account with an approximate balance of $1,952,988.00. The plaintiff's motion, and in her testimony, contends that she will have inadequate funds to pay her expenses and those of the minor children while the appeal is pending.
APPLICABLE LAW:
Section 61-11 of the Practice Book sets out the rules for stays of execution in noncriminal cases. Practice Book § 61-11(a) provides in relevant port:
"Except where otherwise provided by statute or other law, proceedings to enforce or carry out the judgment or order shall be automatically stayed until the time to take an appeal has expired. If an appeal is filed, such proceedings shall be stayed until the final determination of the cause."
The proper procedure for the termination, or lifting, of an automatic stay is provided in Practice Book § 61-11(d). Section § 61-11(d) provides that "[a] motion to terminate the stay of execution may be filed before judgment; if it is, it may be ruled upon when judgment is entered. If such a motion is filed before judgment, or after judgment but before an appeal, it shall be filed in triplicate with the clerk of the superior court. If it is filed after an appeal is filed, an original and three copies shall be filed with the appellate clerk, who shall forward the motion to the judge who tried the case. That judge shall file any ruling thereon with the appellate clerk and with the clerk of the trial clerk where the matter was tried. If the judge who tried the case is unavailable, the motion shall be forwarded to the clerk of the court in the judicial district where the case was tried, who shall assign the motion for a hearing and decision to any judge of the superior court."
Practice Book § 61-11(c) sets out two grounds upon which a judge may grant a motion to terminate an automatic stay. Section 61-11(c) provides: "Termination of stay may be sought in accordance with subsection (d) of this rule. If the judge who tried the case is of the opinion that (1) an extension to appeal is sought, or the appeal is taken, only for delay or (2) the due administration of justice so requires, the judge may at any time after a hearing, upon a motion or sua sponte, order that the stay be terminated." It is within the trial court's discretion to determine whether due administration of justice warrants the termination of a stay of execution. Northeastern Gas Transmission Co. v. Benedict, 139 Conn. 36, 40-41, 189 A.2d 379 (1952). The determination of whether "due administration of justice" requires a termination of an automatic stay must involve an analysis in which the following principles are considered: (1) the likelihood of success on appeal; (2) the irreparability of injury to be suffered if the stay is lifted; (3) the effect of the stay on other parties to the proceedings; and (4) the public interest. Griffin Hospital v. Commission of Hospitals, 196 Conn. 451, 456-57, 493 A.2d 229 (1985).
In addition, Practice Book § 61-11(b) sets out the matters in which no automatic stay is available under § 61-11(a). It provides in relevant part: "no automatic stay shall apply to orders of relief from physical abuse pursuant to General Statutes § 46b-15 or to orders of periodic alimony, support, custody or visitation in domestic relations matters brought pursuant to chapter 25 or to any later modification of such orders." Notwithstanding, Practice Book § 61-12 does provide for discretionary stays in noncriminal matters in which the automatic stay provisions of § 61-11 are not applicable and in which there are no statutory stay provisions.
Finally, Practice Book § 61-14 provides in relevant part that "the sole remedy of any party desiring the court to review an order concerning a stay of execution shall be by motion for review under [Practice Book] Section 66-6. Execution of an order of the court terminating a stay of execution shall be stayed for ten days from the issuance of notice of the order, and if a motion for review is filed within that period, the order shall be stayed pending the decision of the motion, unless the court having appellate jurisdiction rules otherwise."
The family law cases discussed below deal with the issue of termination of a postjudgment stay.
In Wasson v. Wasson, Superior Court, judicial district of Stamford, Docket No. FA 98-01 65911 (April 19, 2004, Frazzini, J.), the plaintiff-appellee moved the trial court to terminate, in whole or part, the automatic stay. The court found that in considering the plaintiff's motion for stay pursuant to § 61-11(c)(2) and the principles set forth in Griffin, "the due administration of justice requires a stay of certain financial orders because of the best interests of the minor children and to preserve the full value of the parties' most significant asset, the marital home." The court explained its analysis as follows:
The first Griffin factor is the likelihood of success on appeal. In view of the broad discretion afforded [to] trial courts in dissolution actions, the defendant's appeal in this action faces an uphill battle . . . The second factor set forth in Griffin . . . irreparable harm to appellee, strongly militates in the plaintiff's favor. In view of the defendant's continuing reduction of assets during the appeal period, it becomes ever more important to preserve the full value of the equity in the marital home for the financial welfare of the plaintiff and her minor children. The third Griffin factor, the effect of delay in implementing the judgment on other parties to the action, also supports terminating the stay . . . [T]erminating the stay is probably the only way to ensure preservation of the equity . . ." . . . " The children would also be significantly harmed emotionally by the loss of the marital home through foreclosure. The Connecticut legislature has adopted a public policy in favor of the best interest of the children . . . In Griffin . . . the court specifically rejected a claim that courts must apply a `rigid formula' in deciding whether to grant a stay. Even if the best interests of the three minor children here do not qualify as the sort of `public interest' that Griffin mandates considering when applicable, in balancing the equities, this court concludes that their interest in continuing to live in their home must be considered. The parties have been unable to work together to save the marital home; terminating the stay will not only protect the parties' own financial interest, but also serve the best interest of these three children, already so wounded by the conflict between their parents.
In Pospisil v. Pospisil, Superior Court, judicial district of Tolland, Docket No. FA 93 0054011 (February 26, 1999, Zarella, J.), the plaintiff moved to terminate the automatic stay of execution which was entered when the defendant appealed the trial court's denial of his motion to re-open the stipulation for judgment. The court denied the motion based on its analysis of the four pertinent principles of due administration of justice as set out in Griffin: (1) the likelihood that the defendant will prevail on appeal; (2) the irreparability of the injury to be suffered from the execution of the judgment; (3) the effect of the stay upon the other parties to the proceedings; and (4) the public interest involved.
As for the first factor, the court stated that in its opinion "the trial court's decision was reasonable and rational in light of existing law . . . While this court is mindful that there is a possibility that the Appellate Court could choose, in reviewing the defendant's claims, to reverse the denial of the motion to re-open the judgment, the likelihood of that happening is slight, particularly in light of the fact that the standard for appellate review is abuse of discretion by the trial court . . . Thus the likelihood that the defendant would prevail on appeal is slight." (Citations omitted.)
As for the second factor, the court stated that neither party would be irreparably harmed by the continuation of the automatic stay. The court found the plaintiff's claim that the pension fund should be immediately executed because she may lose its benefit it the defendant died while the appeal was pending to be insufficient, as there was no testimony that he was in imminent danger of dying. In addition, the court found that the plaintiff's argument that she was entitled to court-ordered attorneys fees because they were awarded as support also to be insufficient, due to the fact that those fees were actually awarded in connection with the court's finding the defendant in contempt.
In its analysis of the third factor, the court stated that there were no third parties, such as children, that may be impacted by the continuation of the automatic stay to consider.
Finally, the court held that as to the fourth factor, there were few, if any, public policy concerns. "The stay arose out of an appeal of a divorce decree, a matter private in nature. The only persons affected by the judgment as it relates to the pension and the attorneys fees are the plaintiff and defendant."
Thus, the court held that "[h]aving considered all four principles, it is the opinion of this court that the due administration of justice does not require that the stay in this case be terminated. Neither party is likely to suffer irreparable harm from the stay of the court's denial of the motion to reopen and order to sign the QDRO and award of attorneys fees. No other parties are effected by the stay and there are no public policy considerations that weigh against leaving the stay in place. Although the defendant is unlikely to succeed on appeal that alone is not sufficient reason to terminate the stay."
In Hill v. Hill, Superior Court, judicial district of Fairfield; Docket No. FA 91 0374254 (January 8, 2001, Sheedy, J.), the petitioner filed a motion to terminate a stay pending the appeal with regard to certain judgments. The court granted the motion to terminate the automatic stay based on both grounds provided in Practice Book § 61-11(c) — that the appeal was being taken only for delay and that it would frustrate the due administration of justice. The court based its decision on the following: (1) Hill had filed numerous [unsuccessful] appeals throughout the case; and (2) "[i]n view also of the conduct of Hill (the number and duplication of motions filed, the inflammatory and accusatory content of those motions, her failure to comply with prior court orders as here referenced, her non-compliance with the rules of practice applicable to pro se parties particularly as regards notice to parties, etc.)."
In Hauge v. Mapley, Superior Court, Judicial District of Stamford, Docket No. FA 01 01871 (July 17, 2003, Abery-Wetstone, J.), the court terminated, sua sponte, the automatic stay pursuant to Practice Book § 61-11(d), in the interest of due administration of justice. The court stated that "[t]he Court is making this order due to the defendant's repeated willful contempt of the pendente lite orders, the defendant's having no assets in his name or employment in the U.S., and the Court's finding that the defendant intentionally submitted a financial affidavit that failed to accurately reflect his income or assets."
In Smith v. Smith, Superior Court, judicial district of Danbury, Docket No. FA 01 00341470 (July 15, 2003, Abery-Wetstone, J.), the court terminated the automatic stay pursuant to Practice Book § 61-11(d) in the event of an appeal by either party. The court stated that "the court is making this order due to the precarious state of the wife and minor child's financial condition and the knowledge that the plaintiff has violated the automatic orders and numerous prior court orders."
In Zilkha v. Zilkha, Superior Court, judicial district of Stamford, Docket No. FST FA 03 0196546 (May 25, 2005, Black, J.), the plaintiff filed a motion to terminate stay in reference to a previous order directing the defendant to pay $110,000 to the plaintiff's counsel in legal fees. The court found that ground two, due administration of justice, required a termination of the stay based on the following: "The Court has found the defendant to be in contempt; he has repeatedly not followed the Court's direction. He has hampered the process by his inability to heed orders or by completely ignoring the Court's order all the while feigning innocence. He has dissipated the assets of the marital estate to the detriment of his children."
In Kelly v. Kelly, Superior Court, Judicial District of Waterbury, Docket No. FA 04 0184087 (June 6, 2006, Cutsumpas, J.T.R.), the plaintiff moved for a termination of the automatic stay of execution pending appeal with respect to the sale of the marital residence and the division of the proceeds. The court held that because "[the] child would obviously benefit from the sale [of the home] and neither party would be prejudiced financially because the net proceeds would be held in escrow pending disposition of the appeal . . . [t]he due administration of justice requires the termination of stay."
ANALYSIS:
Prior to July 2006, the defendant paid the plaintiff the sum of $33,333 per month or a total of nearly $400,000 per year as unallocated support. Per this court's decision of June 12, 2006, the defendant was ordered to pay child support in the amount of $636 per week (plus 20% of his annual cash bonus (after state and federal tax is deducted) within 7 days of his receipt on a yearly basis). The husband's 2005 cash bonus was paid in January 2006 and was deposited into the accounts that were divided in the property settlement. The defendant was ordered to pay the plaintiff alimony in the amount of $1,215 per week and 20% of his yearly after tax cash bonus for a period of 16 years from the date of judgment. This is in effect a total monthly payment of $7,959.30 per month or $95,511.60 per year representing a significant reduction of $304,489.00 per year in income available to the plaintiff and minor children. This was clearly not the court's intention.
The alimony and child support awards were based on a percentage of the defendant's yearly bonus income and was to be awarded on a yearly basis. Practice Book § 61-11(b) sets out the matters in which no automatic stay is available under § 61-11(a). It provides in relevant part: "no automatic stay shall apply to orders of relief from physical abuse pursuant to General Statutes § 46b-15 or to orders of periodic alimony, support, custody or visitation in domestic relations matters brought pursuant to chapter 25 or to any later modification of such orders." The alimony and child support owed on the bonus received in 2006 were made part of the property settlement in the mosaic of financial orders in this case.
In 2006, the defendant's incentive compensation (for performance in 2005) was $870,000 gross and $489,449.50 net. Pursuant to the court's orders the plaintiff would have been owed a total of 40% of the after tax bonus or $195,779.80 in additional alimony and support. The court in constructing the mosaic of financial orders for the family support did not specify what asset the additional child support and alimony would come from. The total amount of alimony and child support including the percentage from the bonus and $200,000 base salary for 2006 is $291,291.40, nearly $100,000 less than the pendente lite orders.
The court took into consideration the amount of debt incurred by the wife for legal fees during the course of this acrimonious divorce in making the final property division. As the result of the stay, she has inadequate funds to pay her trial counsel and her appellate attorney. In addition, as cited by the plaintiff's counsel, she will owe income taxes on the interest and dividends generated by the Merrill Lynch CMA account and the Fidelity account but have no access to the principal or income with which to pay the tax liability.
The second factor set forth in Griffin . . . irreparable harm to appellee, strongly militates in the plaintiff's favor. It is clear to the court that without the account, she will be unable to maintain the life style she and the minor children maintained during the marriage and pendente lite period. As was cited in the Wasson case, the minor children in the instant case would be significantly harmed emotionally by a dramatic change in their standard of living while the appeal is pending. Additionally, the property settlement included the following assets still covered by the stay and available if the appeal is successful:
PROPERTY SETTLEMENT:
a. The husband shall quitclaim all his right, title and interest in and to the family home located at 1 Leeuwarden Road, Darien, CT, to the wife within 21 days of the date of judgment. The wife shall hold the husband indemnified and harmless from the real estate taxes, homeowners insurance, utilities and maintenance for said home. The value of the property is $2,550,000.00.
b. The wife shall have as her sole property the following assets:
1. The Wachovia Checking account in her name with an approximate balance of $10,644.00;
2. The Wachovia Savings account in her name with an approximate balance of $3,089.00;
3. The Merrill Lynch CMA (Joint) with an approximate balance of $4,894,714.00;
4. The Fidelity (Joint) account with an approximate balance of $1,952,988.00;
5. The sum of $867,391.00 shall be rolled over from the husband's Fidelity IRA (with an approximate balance of $1,092,103) into an IRA or other retirement vehicle of her choice;
6. The Fidelity Traditional IRA in the wife's name with an approximate balance of $110,999;
7. The Fidelity Rollover IRA in the wife's name with an approximate balance of $137,194.00;
8. The wife's jewelry with an approximate value of $6,200.00;
9. The household furniture and artwork located in the family home with an approximate value of $117,500.00.
TOTAL $10,650,719.00 c. The husband shall have as his sole property the following assets:
1. The Wachovia Checking account in his name with an approximate balance of $11,630;
2. The husband's Merrill Lynch CMA account with an approximate balance of $762,627;
3. The husband's Merrill Lynch sub account with an approximate balance of $101,782;
4. The husband's Merrill Lynch Restricted Shares with a value of $1,850,000;
5. The husband's Merrill Lynch Unexercised Stock Options with a value of $3,529,000;
6. The balance of the husband's Fidelity IRA, after the wife's share of $867,391 is withdrawn, in the approximate amount of $224,712.00;
7. The husband's 401(k) with a balance of approximately $142,154.00;
8. The husband's Merrill Lynch Retirement Program with an approximate value of $32,747.00;
9. The husband's Merrill Lynch Deferred Compensation Plan with a value of $264,494.00;
10. The husband's rare book collection with a value of $50,000.00;
11. The husband's coin collection with a value of $1,400.00;
12. The husband's 1/3 interest in his parent's home with a value of $33,333.00;
13. US Savings bonds with a value of $96,000.00.
TOTAL $7,099,879.00
The assets listed above are in excess of $17.75 million dollars. Termination of the stay on the Merrill Lynch CMA account of $4,894,714.00 will result in $12,855,884 remaining covered by the stay and provide more than sufficient security for the husband's interest in the event the trial court decision is overturned on appeal. Therefore, neither party will be irreparably harmed by lifting the stay on these assets. Therefore, the court is lifting the stay on the Merrill Lynch CMA account.