Opinion
No. FST-FA00-0176333-S
June 10, 2008
MEMORANDUM OF DECISION
The marriage of the parties was dissolved by decree of this court dated May 25, 2001 (#166.55). At that time they had three minor children, and the court entered orders of alimony and child support, as well as the equitable division of marital property pursuant to their Separation Agreement (#170.00) as on file. Subsequent to the entry of the decree, the plaintiff-wife ("wife"), Catherine Reville, now known as Catherine Thorpe since her subsequent remarriage, filed a motion to open the judgment dated May 9, 2005 (#221.00) on the basis of fraud. The gravamen of her claim is that her former husband, John Reville ("husband"), an audit partner at Price Waterhouse Coopers, LLP ("PwC") failed to disclose the existence of two retirement plans or "arrangements" on his financial affidavit, and that as a result, the original property division should be revisited. In addition, or in the alternative, by way of an amended Motion to Reopen and Set Aside Judgment Based Upon Fraud dated September 15, 2005 (# filed but un-coded), the wife seeks to enforce the penalty provision of the Separation Agreement (#170.00, ¶ 13.11) which calls for either a full or partial forfeiture of an undisclosed asset depending upon the circumstances.
For his part, the husband disputes the wife's contention and, in brief, argues that one of the retirement plans or "arrangements," specifically the Price Waterhouse Coopers Partner Retirement Plan ("PwC PRP") was a nonqualified (per ERISA), unvested and unfunded defined benefit plan at the time of the dissolution of marriage, and therefore, it did not constitute marital property within the meaning of the equitable division statute. General Statutes § 46b-81. Thus, he reasons, there was no necessity to disclose it. As to the second plan, specifically the Price Waterhouse Legacy Partner Plan ("Legacy Plan"), he contends that it was relatively small, and that the failure to disclose it was de minimus in its effect.
For three years this case has wound its tortuous way toward a hearing through a nearly impenetrable procedural tangle of discovery. Finally, the court heard one of the many discovery conflicts and concluded that, for a variety of reasons, it was appropriate to divide the hearing into two distinct phases. For one thing, the court found that a determination as to whether or not the PRP was marital property at the time of the decree dissolving the marriage was a distinct, potentially definitive issue, and for another, the burden of proof required to make that determination would be by the application of a preponderance of the evidence standard, as opposed to the clear and convincing standard necessary to establish fraud. Accordingly, Phase I would deal solely with the issue of whether or not the PRP in question was marital property at the time of the decree. In the event that the court were to conclude that, based upon the evidence, the PRP was not marital property, the inquiry as to that issue would for all intents and purposes end. On the other hand, if there was an affirmative finding, the inquiry would move to Phase II. In that event, the court would be called upon to decide whether or not the husband failed to disclose the property in question (i.e., Pwc PRP and Legacy Plan), whether or not the nondisclosure was fraudulent, and if so, would that fact likely have altered the underlying judgment.
The husband testified that he has been employed by PwC since 1998. He began his career at Price Waterhouse in 1980 and was, with the exception of one year at GTE, continuously employed there until the merger with Coopers Lybrand in 1998. He told the court that he became a partner at Price Waterhouse on July 1, 1991, at which time he had been informed about his partnership benefits, including health insurance, life insurance, a 401(k) plan, a Retirement Benefits Accumulation Plan ("RBAP"), and a Keough Plan. He was also advised that there was a PRP, but that, in any event, there were no written plan documents in existence at that time. In fact, the first written version was produced in April 2003 (Exhibit #29), although the witness said that he first saw it in late 2004. He told the court that it was explained to him that the "arrangement" concerned a nonqualified (per ERISA) retirement benefit, currently unvested and unfunded, payable like an annuity, but dependent upon the vote of the then partners and the profitability of the firm, with the pool from which it would be paid from not to exceed 15% of the annual profit for the firm. The benefit itself would be based upon 30% of the average of a former partner's five highest compensation years, however, it was subject to divestment based upon the failure of the former partner to comply with numerous conditions, such as a non-compete clause, otherwise known as "cliff vesting." In addition, the evidence is clear that at the time of the dissolution, the husband was not vested, and therefore, he had no rights in the arrangement. Furthermore, there was no death benefit in place to secure the arrangement in the event of his death prior to receipt, and no benefit available if he left the firm prior to vesting. He told the court that he did not consider the PRP a benefit at that time of the dissolution of his marriage. Mr. Reville also emphasized that he was a "line" partner and not on the governing board. The husband is now vested with PwC, but receipt of the benefits under the PRP are still conditional upon his meeting all of the criteria, and that the arrangement remains yet unfunded.
The husband said that at some point all partners, including himself, were provided with the software to calculate a projection of the value of each of the various plans or arrangements, but that he never used it, and that he did not know if a printout could be made. In any event, he called the report a "hypothetical projection." During the months leading up to the merger, an effort was made to protect the existing benefits of former Price Waterhouse partners like himself, including retirement benefits which were referred to as "legacy" benefits. Nevertheless, he believes that there were some changes in the plan since he first learned of it in 2001, in particular with regard to the length of time needed to qualify, and possibly, a reduction of the potential benefit amount. He did not consider them to be significant changes. He also testified regarding the 1998 Partnership Agreement (Exhibit #3) in particular regarding the definition sections. Reville told the court that he was not aware of any PwC partners in good standing who did not ultimately receive a benefit from the PRP.
The court interrupted the testimony of the husband on February 7 in order to hear from the wife's expert, William Miller, an enrolled actuary with twenty-nine years' experience in the field of pensions. The witness had been called upon to examine and testify regarding the Expanded Retirement Projection Report prepared by PwC, two versions of which were entered into evidence a compact disk (Exhibit #28), and a written report (Exhibit #27A). The evidence disclosed that this document was first prepared in April 2003 (Exhibit #29), and that it was later revised, and was given to PwC partners in order to assist them to calculate their potential retirement benefits. Miller testified that the structure was a defined benefit plan, and even though it was unvested and unfunded, the PRP had significant value, and that he had the ability to calculate that value. He did not, however, make an actuarial present value calculation of value as of May 25, 2001 (the date of the dissolution of marriage) "due to the time constraints, and information provided."
Miller returned to the stand on February 21. He told the court that he relied upon the Expanded Projection Report on the disk, first produced in April 2000 (prior to the decree of dissolution). Within that exhibit, he looked at a number of folders, including the "Plan Document," and he prepared a letter report for the wife's attorneys. (Exhibit A.)
It was stipulated by the parties that the deposition testimony of Roger Hindman dated January 25, 2006 (Exhibit #95) could be considered by the court. Hindman is a partner in Partner Affairs Group of Price Waterhouse Coopers, LLP, and he has responsibility for, among other things, partner and staff benefit programs, which would include administration of the program called Price Waterhouse Coopers LLP Partner Retirement Plan. An affidavit of Mr. Hindman dated December 11, 2007, was also offered into evidence as Exhibit #93.
The court heard the parties and their witnesses over the course of six days, including final argument, and both parties have, at the request of the court, submitted memoranda of law.
FINDINGS
The court having considered the evidence and heard the testimony of the witnesses finds as follows:
1. That the husband was born on March 17, 1956.
2. That the parties were married on July 19, 1987.
3. That the marriage of the parties was dissolved by decree of this court on May 25, 2001; and that at the time of the decree, the court incorporated therein a written agreement of the parties providing for, among other things a division of marital property.
4. That at the time of the marriage the husband was employed by Price Waterhouse as a certified public accountant.
5. That the husband became a partner of Price Waterhouse on July 1, 1991.
6. That as a partner, the husband was entitled to certain benefits, including an interest in the Partner Retirement Plan ("PRP").
7. That said PRP was not in writing; that it was an unfunded, non-contributory, non-qualified defined benefit plan under the Employee Retirement Income Security Act ("ERISA"); and that at the time of the decree dissolving the marriage, the husband's interest therein had not yet vested.
8. That on or about July 1, 1998, Price Waterhouse merged with Coopers Lybrand to form a new partnership called Price Waterhouse Coopers, LLP ("PwC").
9. That under the terms of the Partnership Agreement, former Price Waterhouse partners and Coopers Lybrand partners were entitled to the protection of their existing benefits in whole or in part; and that for Price Waterhouse Partners this included their PRP and the Price Waterhouse Legacy Partner Plan ("Legacy Plan").
10. That the terms of the PRP were subject to change; that the partners were advised of that possibility; and that, in fact, following the merger, the governing partners of PwC modified the terms of the PRP in an attempt to "harmonize" the existing plans from the prior organizations and at the same time to ensure fiscal viability.
11. That a written version of the PwC PRP did not exist until April 2003.
12. That under the terms of the PwC PRP, the normal retirement age is 60; that a partner is eligible for a reduced pension at age 50 with 20 years service; that a partner may receive a full pension at age 55; that the maximum pension is based upon 30% of the partner's highest five years of service; that payment is dependent upon a maximum pool not to exceed 15% of the firm's profits; and that the right to continue to receive the payment is subject to forfeiture if the former partner violates certain conditions ("cliff vesting").
13. That subsequent to the merger, partners of PwC were provided with the means with which to estimate their potential payment from the PRP; that in April 2000, partners were provided with an Expanded Projection Report (Exhibit #36) on their personal office computers, which report was available in a printed version; that said report provided information regarding the employee's 401(k) plan, PwC Capital Account, RBAP, PwC Legacy Partner Plan, and the PwC PRP; that with each plan, certain assumptions were entered as of course; that as to the PRP certain "key assumptions" were made, including an 8% annual return, a life expectancy of 85 years, a CPI of 3%, an annual discount factor of 6%, and a partner's annual earnings growth of 10% through age 50 and 5% thereafter; and that the partner was able to change any or all of the key assumptions.
14. That according to the testimony of the husband, he is not aware of any retired partner of PwC not receiving a benefit under the PwC PRP, provided he or she has met all the criteria.
15. That at the time of the dissolution of marriage on May 25, 2001, the husband had an accrued but unvested interest in the PwC PRP; and that, under all the circumstances, the husband did not have a "nonforfeitable right to receive" any benefits from the PwC PRP at that time, but that he failed to disclose the nature of his interest in the PwC PRP.
16. That at the time of the dissolution of marriage on May 25, 2001, the husband did have a nonforfeitable right to receive" benefits from the PwC Legacy Plan; and that the husband failed to disclose same.
17. That the husband has since become vested in the PwC PRP as of 2006.
DISCUSSION
Where there is a difference of opinion between a less than unanimous holding of the Connecticut Supreme Court and a later decision of the Connecticut Appellate Court on the same subject, a trial judge is faced with a dilemma. The cases in question are Bender v. Bender, 258 Conn. 733 (2001) and Czarzasty v. Czarzasty, 101 Conn.App. 583 (2007). One could simply raise his moistened index finger in the air as a rude gage to test the direction of the wind and proceed with caution. That would be irresponsible. Another course would be to ignore the contrary voices and to proceed in accordance with the Supreme Court decision without so much as a murmur. That course would be safe and easy. However, given the importance of the issue to the family bench and bar, and the vigor of the argument and impeccable logic of the jurists challenging the majority opinion in Bender, it is important to address what will likely be a frequently raised argument in the context of family cases. In any event, the best course for the court is to attempt to reconcile both positions, if possible, and then to apply that reasoning to the particular facts of the case at hand. The objective of such an exercise is, on the one hand, for the court to do justice, while on the other, to discharge its duty to maintain a "coherent and consistent" body of law. Fahy v. Fahy, 227 Conn. 505, 513-14 (1993). Moreover, where, as here, a higher court has signaled a significant change in an established legal standard, it is up to the trial judge to fit his or her case into that collective body of law. However, before commencing an analysis, it is important to lay a brief foundation.
The Superior Court derives its jurisdiction or authority to hear family cases from General Statutes § 46b-1. It is within the context of General Statutes 46b-81 that it enters orders regarding the division of property or assets, which is commonly referred to as "equitable division." The model for exercising this jurisdiction is called the "all property" method, that is, it is within the power of the court to award property to either or both spouses, irrespective of title, regardless of type. Krafick v. Krafick, 234 Conn. 783, 792 (1995). In the exercise of its jurisdiction, the court must consider certain factors, including age, health, income, estate, etc. of each party, although it is not necessary that the court accord equal weight to each factor. Valente v. Valente, 180 Conn. 528, 530-31 (1980). "The purpose of a property division pursuant to a dissolution proceeding is to unscramble existing marital property in order to give each spouse his or her equitable share at the time of dissolution." Smith v. Smith, 249 Conn. 265, 275 (1999) (Emphasis added). In fact, "the court's authority to divide the . . . property of the parties, pursuant to § 46b-81, must be exercised, if at all, at the time that it renders judgment dissolving the marriage." Rathblott v. Rathblott, 79 Conn.App. 812, 819-20 (2003). The court's decision is considered an integrated whole as far as income and assets are concerned, and it has often been referred to as a "carefully crafted mosaic." Ehrenkranz v. Ehrenkranz, 2 Conn.App. 416, 424 (1984). Thus in order for the court to carry out an equitable division, it is essential that there be a full and fair disclosure of the kind and value of all of their property by each of the parties. Billington v. Billington, 220 Conn. 212, 220 (1991). In addition, the Rules of Practice require the filing of sworn financial affidavits, and provide for liberal discovery as well. Practice Book §§ 25-30(a) and 25-31.
The more recent evolution of the expansion of the definition of marital property begins with Krause v. Krause, 174 Conn. 361 (1978), where the Connecticut Supreme Court held that the trial court was correct in not admitting evidence of a potential inheritance on the grounds that it was "at best, speculative." The Supreme Court went on to hold that the potential inheritance was an "expectancy," and as such, it is "a bare hope of succession to the property of another . . . Such a hope is inchoate. It has no attribute of property, and the interest to which it relates is at the time nonexistent and may never exist." Id., 365.
Krause v. Krause was followed shortly afterward by another important decision of the Connecticut Supreme Court in Thompson v. Thompson, 183 Conn. 96 (1981). At issue was whether or not the trial court was correct in taking into account a joint bank account the wife held with her mother, as well as her "unaccrued pension benefits," when it entered its orders for alimony and property division. In upholding the trial court, the Supreme Court found that: "Pension benefits represent a form of deferred compensation for services rendered. As such, they are conceptually similar to wages. General Statutes 46b-81 and 46b-82 both require the trial court to consider, inter alia, the occupation and the amount and sources of income of each of the parties when ordering property assignments and alimony. Just as current and future wages are properly taken into account under these statutes, so may unaccrued pension benefits, a source of future income." Thompson v. Thompson, supra, 100 (Internal quotations omitted). The court defined the term "unaccrued benefits" to mean "those benefits which will accrue in the future if the employee continues to work for the employer," and, by way of contrast, it went on to define "vested benefits" as "those accrued benefits to which an employee has a nonforfeitable right to receive at retirement age whether or not he is in the service of the employer at that time." Id., 100, fn.3. (Emphasis added.)
The court went on to refute the wife's claim that pension benefits are "uncertain and speculative" when it held that: "It is true that the exact amount of benefits to be received often will depend upon whether the employee survives his retirement age, how long he lives after retirement and what his compensation level is during his remaining years of service. But these contingencies are susceptible to reasonably accurate quantification. The present value of a pension benefit may be arrived at by using generally accepted actuarial principles to discount for mortality, interest and probability of the employee remaining with the employer until retirement age." Id., 100-01 (Internal quotations omitted.)
Thus, for the first time, the Connecticut Supreme Court opened the door for the consideration, in some fashion, of both vested and unvested pension benefits pursuant to General Statutes §§ 46b-81 and 46b-82. However, it was not clear from that decision precisely which factors that a court should consider when dealing with vested and unvested interests in pensions. The court did give a hint when it observed that: "The record is rather sparse with respect to exactly what the plaintiff's rights in the plan were. No doubt trial courts would find their task of taking pension rights into consideration much easier, especially when large sums are involved, if evidence were offered showing to what extent the rights are vested and the accrual rate of past and future rights." Thompson v. Thompson, supra, 101, fn.4.
Thereafter, for the next twenty years, the dialogue progressed steadily, if not inexorably toward expansion of the concept of marital property, while at the same time, consistently anchoring its reasoning in the bedrock standard that in order for the resource in question to be considered property for purposes of General Statutes §§ 46b-81 and CT Page 9846 46b-82, it must be either vested, or if not so, it must at least be a tangible, quantifiable, exercisable right or interest, and not a mere expectancy. This bright line has guided litigants and trial judges for more than two decades.
An additional element to be considered in the evolutionary process was the sea change that occurred within the same time frame as the Krause and Thompson decisions with regard to the protections accorded workers participating in pensions or other retirement plans. Prior to the enactment of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA") interests in such plans were neither protected (except by traditional contract law) nor alienable. Raising their status to a federally protected interest, particularly following the 1984 amendment that permitted alienation to a spouse pursuant to a Qualified Domestic Relations Order ("QDRO") or a Domestic Relations Order ("DRO"), 26 U.S.C. § 414(p)(1), forced judges and lawyers in Connecticut to look for ways in which to value that interest for purposes of equitable division, whether by offset or by means of the QDRO. Enter the actuaries with their present value calculations. However, given the aura of certainty surrounding mathematics, statistics, and related disciplines, to all but those initiated in the "Eleusinian Mysteries" of statistics and mathematics, the line between vested and unvested interests has become somewhat blurred over time, since virtually anything is capable of "valuation" provided one is prepared to accept a sufficient number of variables or factual assumptions. That is the so called "slippery slope" of which we should all be aware.
So what then is the process required to be followed by the trial court in complying with the mandate of General Statutes § 46b-81? In Krafick v. Krafick, 234 Conn. 783, 792-93 (1995), the Connecticut Supreme Court established a three-step analysis to be applied by the trial court in performing its duty to divide a "resource" equitably. A court must determine: "first, whether the resource is property within § 46b-81 to be equitably distributed (classification); second, what is the appropriate method for determining the value of the property (valuation); and third, what is the most equitable distribution of the property between the parties (distribution)." Id., 792-93.
In the matrimonial context, the Connecticut Supreme Court has long held that property is, "everything which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal; everything that has an exchangeable value or which goes to make up wealth or estate. It extends to every species of valuable right and interest, and includes real and personal property, easements, franchises, and incorporeal hereditaments." Id., 794. Moreover, General Statutes § 46b-81 has consistently been interpreted broadly. As the Connecticut Supreme Court has held: "The failure to interpret property broadly pursuant to § 46b-81 could result in substantial inequity . . . and would not be in keeping with the equitable nature of dissolution proceedings . . ." Lopiano v. Lopiano, 247 Conn. 356, 371 (1998). However, as a creature of statute, the power of a trial court to divide and distribute property in the course of a proceeding to dissolve a marriage is neither inherent nor absolute. Rather, a court must do so within the bounds of the enabling statute (i.e., General Statutes § 46b-81). Costa v. Costa, 57 Conn.App. 165, 171-72 (2000). The decision of the court then hinges upon whether or not the "resource" in question is property or a "mere expectancy." Rubin v. Rubin, 240 Conn. 224, 229-32 (1987). So far; so good.
Examples of property include: a vested pension ( Krafick v. Krafick, 234 Conn. 783 (1995)); a personal injury award ( Lopiano v. Lopiano, 247 Conn. 356 (1998)); and presently unexercisable stock options ( Bornemann v. Bornemann, 245 Conn. 508 (1998)). On the other hand, the following have been held to be expectancies: an interest in a revocable inter vivos trust ( Rubin v. Rubin, 204 Conn. 224 (1987)); and a medical degree ( Simmons v. Simmons, 244, Conn. 158 (1998)).
Then, along came Bender v. Bender, 60 Conn.App. 252 (2000). There, the marriage of the plaintiff wife and the defendant husband, a firefighter in the Town of Meriden with nineteen-years' service, was dissolved by decree of the Superior Court following a trial. Under the terms of his pension, the husband would not vest until he had served twenty-five years, and that if he left his job sooner, he would only be entitled to the return of his actual contributions. The trial court awarded the wife a share of the husband's refundable contributions to the plan, together with accrued interest, until such time as he became vested in the pension, and if that event occurred, she would receive a portion of his pension benefit accrued through the date of dissolution.
There is no indication whether or not the husband's pension was contractually protected by a collective bargaining agreement.
The husband took an appeal from the decision, arguing that the court had engaged in "unbridled speculation" as to his unvested plan, when the only evidence before it was his actual contributions to it. The Appellate Court went on to note several items of significance. First, it observed that, "the sole substantial asset of the marriage is the defendant's nonvested pension right." Id., at 253. Secondly, it held that, " it is important to note what is not at issue here. Neither party challenges the authority of the court to award nonvested pension rights. The present case, therefore, concerns the proper treatment of the defendant's nonvested pension under the last two stages of our equitable distribution scheme. Thus, we must determine how the nonvested pension benefit of the defendant should be valued and distributed." Id., 254 (Internal quotes omitted.) In other words, ostensibly the Appellate Court skipped step one ("classification") without testing the issue of whether or not the unvested pension was divisible marital property, based solely upon a tacit understanding (or misunderstanding) by both attorneys, and moved directly to the second and third steps ("valuation" and "distribution"). Finally, and what is more, presumably because of the paucity of other assets to use as an offset, the Appellate Court found that the trial court had elected to use the "present division" method, that is, it awarded the wife a percentage of a future benefit, if any. Id., 256-57. It is also interesting to note that the Appellate Court observed by way of dictum that, while not mandated by the statute, for the sake of clarity, the trial court should have made an actual finding of value on the record. Id., 256. Notwithstanding that language, there was absolutely no evidence of the present value of the pension presented at trial, except, as the husband contended, the value of his contributions to the plan to date. In actuality, the trial court and the Appellate Court skipped both stages one and two and moved directly to the distribution stage.
That decision then came to the Connecticut Supreme Court by way of a certified appeal. Writing for the majority, Justice Borden affirmed the decision of the Appellate Court. Obviously recognizing the significance of the underlying legal principle, in doing so, the court rephrased the issue before it to read: " In a dissolution action, are unvested pension benefits property subject to equitable distribution pursuant to § 46b-81, and, if so, how should they be valued and distributed?" Bender v. Bender, 258 Conn. 733, 739 (2001). In short, while moving away from the specific pension in question (i.e., Town of Meriden Firefighter's Pension) to a hypothetical one it framed the question in the form of the three-part analysis set forth in Krafick.
The court then went through a lengthy history of property subject to equitable distribution in light of the dictates of General Statutes § 46b-81, and it concluded that there was a "common theme" running throughout, namely that: "in determining whether a certain interest is property subject to equitable distribution under § 46b-81, we look to whether a party's expectation of a benefit attached to that interest was too speculative to constitute divisible marital property . . . In accordance with the purposes of § 46b-81, our adherence to that theme has outweighed our adherence to strict contract or property principles in determining whether a certain interest constitutes property for purposes of equitable distribution. Traditional property principles, although relevant . . . are not determinative of whether an interest constitutes property under $46b-81." Bender v. Bender, supra, 748-49. (Emphasis added.) In other words, while the court found that as a class of property, an unvested interest in a pension per se constitutes marital property subject to potential equitable distribution, it introduced a subjective element into that analysis, namely: whether or not a party's expectation of receiving that benefit is too speculative.
Whereupon, the court returned to the issue of the specific unvested pension benefits in question and concluded that, aside from the fact that it was "theoretically possible" that Mr. Bender's pension would not vest, "the defendant's expectation in his pension plan, as a practical matter, is sufficiently concrete, reasonable and justifiable as to constitute a presently existing property interest for equitable distribution purposes. Therefore, his unvested pension benefits are not too speculative to be considered property subject to equitable distribution under § 46b-81." Bender v. Bender, supra, 749. (Emphasis added.) This shift back to the specific likely occurred on the basis of the contending positions of the parties in their appellate briefs and oral argument, notwithstanding the fact that the classification of the pension was never an issue at trial, or, for that matter, before the Appellate Court. Bender v. Bender, supra, 740-41 (2001).
More to the point, the majority of the Supreme Court made a finding of fact regarding a critical issue, when the trial court itself had not, and, moreover, no attempt was made at trial to value the asset in question. As the Appellate Court has observed: "The fact finding function is vested in the trial court with its unique opportunity to view the evidence presented in a totality of circumstances . . . which is not fully reflected in the cold, printed record which is available to us. Appellate review of a factual finding, therefore, is limited both as a practical matter and as a matter of the fundamental difference between the role of the trial court and an appellate court . . ." Sabrowvki v. Sabrowski, 105 Conn. 49, 53 (2007). In the end, equity trumped reason — "Good cases make bad law."
In a well-reasoned dissent, Justice Zarella viewed this change as a clear departure from well-established precedent, stating unequivocally that: "The majority overrules a long line of prior decisions that defines the meaning of property for purposes of General Statutes § 46b-81." He articulated the test to determine what is distributable property under that statute as whether or not a party has "an existing enforceable right to it." Bender v. Bender, supra, 764. On the other hand, as we have seen, the majority viewed its more subjective approach as one which has been built upon the "common theme" woven throughout the existing case law. Id., 753. The problem, Justice Zarella pointed out is that, "the majority collapses the classification stage of the analysis into the valuation stage, concluding that, if an expectation can be valued, then it is not speculative but, rather it is transformed into property subject to equitable distribution." Id., 771. In other words, an expectation is property simply because one is able to assign a value to it — surely that is the slippery slope alluded to earlier.
This court agrees with Justice Zarella's analysis and asks the following question: If an invested pension is property per se (classification), however, it has been found to have no intrinsic value (valuation), does the trial court then return to the classification stage and "reclassify" it as a "mere expectancy," and thus it is not marital property subject to distribution? That would appear to be the only logical approach. "Vesting" is a key element of classification, yet it would seem that the majority would adopt an approach which allows "vesting" to float back and forth between the classification and valuation stages, when it points out that "any uncertainty regarding vesting is more appropriately handled in the valuation and distribution stages, rather than in the classification stage." Bender v. Bender, supra, 749-50. Presumably this assumes that the question of vesting first arose during the classification stage.
In following the approach of the majority, we should also be conscious of the dictates of Billington v. Billington, supra regarding the importance and necessity of full disclosure. That is, marital litigants would then have to disclose any interest in an unvested pension, move to the valuation stage, and then either go forward or backward in the analysis depending upon the outcome of the valuation. Disclosure, though, would appear to be a doubly critical element under the new standard, for the simple reason that, but for the disclosure, no analysis could ever take place, thus potentially depriving the "mosaic" of a critically important tile. Would this logic then be extended to any present or future interest, regardless of remoteness? The trial court would then have the unenviable burden of ruling "in" or "out," every single item raised by each party, real or imagined.
Furthermore, Justice Zarella suggested that the new standard could well undermine the court's holding in cases such Rubin v. Rubin and its progeny. Bender v. Bender, supra, 774. Although the majority continues to draw a distinction between a potential inheritance and an interest in an unvested pension. Bender v. Bender, supra, 754, by applying the new subjective standard, would there not be a difference between a child as the sole beneficiary under the will of a 60-year old parent in good health and one where the parent is 99 years old and in extremis?
However, it was here, in the valuation and distribution stages, that the second shoe fell in Bender, when the Supreme Court "expressly rejected" the option to use the so called "reserved jurisdiction" method, whereby the trial court reserves jurisdiction to a later time when there would be more certainty, for instance, at such time as the pension vested or a party retired. While this method ran afoul of the mandate of General Statutes § 46b-81 to distribute property "at the time of entering a decree dissolving the marriage," the logic of its use was inescapable. In the case of Eslami v. Eslami, 218 Conn. 801 (1991), the trial court had found that the wife had a financial interest in the estate of her late father, but since the estate was then entangled in litigation, the value of her interest could not be determined. Therefore, the court reserved jurisdiction to decide that issue until such future dates as the situation resolved itself. In affirming the decision of the trial court, the Connecticut Supreme Court observed that: "Any prediction of what justice between the parties may require when a future event may occur is likely to be less well considered than a determination made after the event, when speculation as to the circumstances involved has been supplanted by actuality." Id., 807-08. (Emphasis added.) This logic is no less valid now that the reserved jurisdiction method can no longer be used, particularly in light of the amended standard. In a worst case scenario, an equitable division resulting in tangible property being awarded to one party which is offset by the award of an "equivalent" intangible asset (e.g., one valued by generally accepted actuarial principles) to the other, could be manifestly inequitable in the event the latter asset never comes to fruition due to the occurrence of some contingency. This potential would lead most prudent judges to use the present distribution method almost exclusively.
Finally, Justice Zarella suggested that the proper treatment of unvested pensions is not as property, but rather as a consideration by the court, inter alia, of a party's opportunity "for future acquisition of capital assets and income," pursuant to General Statutes § 46b-81, when equitably dividing the marital estate, or as a substantial change of circumstances in the case of a motion for modification of alimony pursuant to General Statutes § 46b-86(a). This would be more consistent with the past thirty years of precedent beginning with Thompson v. Thompson, supra. Moreover, the new subjective standard of Bender v. Bender is unlikely to result in consistent decisions throughout the state concerning this important issue, given the fact that no two trial judges will likely view the same facts in the same way.
In Czarzasty v. Czarzasty, 101 Conn.App. 583, (2007) the Appellate Court was confronted with a similar issue on appeal. The asset in question was a certificate representing a $100,000.00 cash award or bonus based upon a ten-year record of performance by an employee at Merrill Lynch who had completed only eight years at the time of the dissolution. The party did not list the certificate on his financial affidavit. The trial judge applied the Bender standard, and he found that the certificate was marital property subject to division based upon the likelihood of his receiving the monies. The Appellate Court affirmed the decision of the trial judge, reasoning that, although his decision was based upon an "imprecise precedent," nevertheless he had a reasonable basis to make his decision, and they would not disturb it.
Writing for the court, Justice Bishop traced the history of the court decisions up to and including Bender, regarding the definition of property for purposes of equitable division under General Statutes § 46b-81, concluding that the Supreme Court, "seems to have recast the analysis used to determine whether an interest or benefit is property under § 46b-81 to a more probabilistic assessment untethered to the existence of a presently existing enforceable right . . . in confronting property claims . . . trial courts must make an assessment on a case-by-case basis of the likelihood of the person's receiving the asset claimed by his or her spouse. If the likelihood is not too speculative, then it is property subject to valuation and distribution." Czarzasty v. Czarzasty, supra, 594. It is difficult to argue with Justice Bishop's analysis. In other words, Justice Borden's reference to a "common theme" notwithstanding, "who could have seen this coming?"
Nevertheless, this court believes that in Bender v. Bender the Connecticut Supreme Court did not intend a wholesale evisceration of the existing precedent, in particular the use of the three-stage model for the trial court to follow in equitably dividing the marital estate under General Statutes § 46b-81. In fact, the three-step model continues to be applied in matrimonial cases citing the Bender decision, for example, Martin v. Martin, 99 Conn.App. 145, 151 (2007). Rather, as we have seen, the majority referred to a "common theme" running through the cases, that being the need to determine whether or not the expectations of a party are too speculative. Thus, where there are sufficient tangible indicia of a presently exercisable right or interest in the putative property in question, this court believes that it is appropriate for the trial court to apply traditional contract or property principles during the first stage (i.e., classification). However, where there are insufficient tangible indicia of such property, Bender v. Bender would have the trial court jump to the second stage (i.e., valuation) and apply the new subjective standard as an additional "arrow in the quiver" so to speak — one of several factors to be considered.
This represents a sea change in thinking. In other words, the emphasis has moved away from traditional property or contract principles, which remain relevant, although less so, to a reliance upon valuation, which, as we have seen, can be problematic, since virtually anything can be valued if we are willing to accept a sufficient number of variables and assumptions. Where then does a trial court draw the line? This case falls squarely within the latter class of cases, as there are virtually no tangible indicia of a present interest in an unvested, unfunded, and nonqualified defined benefit plan subject to multiple contingencies.
Accordingly, having considered the testimony and evidence before it, and in light of the foregoing, the court finds that at the time of the decree dissolving the marriage, the husband did not have an "existing enforceable right" in the Price Waterhouse Coopers Partner Retirement Plan, which was, therefore. not marital property subject to division pursuant to General Statutes § 46b-81. The court bases its opinion on a number of factors. First, there is a need for the finality of judgments in family cases, Martin v. Martin, supra, 155-56, and although this factor is not always controlling, it is an important consideration. Moreover, the clear mandate of General Statutes § 46b-81 is that marital property be assigned "at the time of entering the decree annulling or dissolving a marriage."
Secondly, and more important, as found by Justice Zarella in his dissent, and Justice Bishop in Czarzasty v. Czarzasty, there is no question that the Connecticut Supreme Court introduced a substantial change in the process of defining marital property pursuant to General Statutes § 46b-81 (i. e., expectations of a party too speculative or not) in the Bender v. Bender, 258 Conn. 733 (2001), and, therefore, this court believes that the holding in that case should be applied prospectively. While the right to seek discovery in a family case and the concomitant duty to disclose and produce are important, neither involves a question of subject matter jurisdiction, nor rises to the level of a constitutionally protected fundamental interest Denardo v. Bergamo, 272 Conn. 500, 509-11 (2005). Moreover, this situation is analogous to a statutory change affecting a substantive right, where, in the absence of a clear legislative mandate to do otherwise, the new law is given prospective application. General Statutes § 55-3. As was the situation in Darak v. Darak, 210 Conn. 462, 469 (1989), where the legislature had amended General Statutes § 46b-86(a) to eliminate the element of "contemplation" when considering modification of a decree, to allow retrospective application of the new standard (e.g. whether or not the expectations of a party; are too speculative) "would leave [pre-decision] dissolutions vulnerable to modifications that would previously have been disallowed."
Accordingly, since the present matter went to judgment seven months prior to the Supreme Court ruling in Bender v. Bender, 258 Conn. 733 (2001), this court has applied the law as it existed at the time of the decree (i.e., May 21, 2001) and the months leading up to it. In doing so, the court does not consider the Appellate Court decision in Bender v. Bender, 60 Conn.App. 252 (2000) to be of help to the moving party herein, since, like here, the issue of whether or not the unvested pension was marital property had not been tested, nor had evidence of its present value been obtained or offered. In addition, Bender v. Bender, 258 Conn. 733, 739 (2001) was not available to the litigants or the court prior to December 2001.
The court is aware of its decision in the matter of Hussey v. Hussey, No. FA 01 0183296S (June 11, 2003) which also involved a partner at Price Waterhouse Coopers and his interest in the Partners Retirement Plan. In its Memorandum of Decision, citing Bender v. Bender, the court found, inter alia, that "the husband's expectation is `sufficiently concrete, reasonable, and justifiable as to constitute a presently existing property interest' under General Statutes § 46b-81." However, this decision serves neither as precedent nor is it controlling in the matter before it. For one thing, Hussey v. Hussey was decided in 2003 with the full benefit of the Bender decision. As such, the trial court had a reasonable basis for reaching the conclusion that it did. Czarzasty v. Czarzasty, supra, 593. However, for the reasons set forth in the previous paragraph, this court finds that as of May 25, 2001, neither the court, nor the parties had occasion to apply that "imprecise precedent."
The foregoing notwithstanding, the court further finds that the husband's failure to bring the existence of an actual marital asset (i.e., PwC Legacy Partner Pension Benefit) regardless of its relatively minimal value, as well as a putative marital asset (i.e., PwC Partner Retirement Plan) to the attention of the wife during the course of the litigation, as well as his failure to include same, if only as a footnote, on his financial affidavit, prevented the court from fully performing its statutory duty under General Statutes § 46b-66 to find the agreement of the parties to be fair and equitable under all the circumstances, and/or to otherwise give due consideration to this factor in its award of alimony. If nothing else, the plain mandate of Billington v. Billington, supra, is, "when in doubt, disclose."
ORDER
Accordingly, IT IS HEREBY ORDERED that the parties report to the family case flow office within two weeks from the date hereof, for the purpose of obtaining a date for a status conference so that the remaining issues can be explored and new dates set for the continuation of the hearing for a determination of, inter alia, whether or not the husband's failure to disclose the existence of the interests in question was fraudulent, wilful and without just cause, and if so, whether or not the outcome of the original judgment would have been materially changed had the disclosures been made.