Opinion
No. FST FA-78-0035162 S
October 17, 2008
MEMORANDUM OF DECISION
This matter is back before the trial court on remand from the Connecticut Supreme Court after the reversal of the trial court decision granting the defendant's motion for modification of alimony. For efficacy, the court quotes the history of this long, tortured matter from the Supreme Court opinion, Simms v. Simms, 283 Conn. 494 (2007):
The record reveals the following facts and procedural history. The plaintiff and the defendant were married in 1961 and the marriage was dissolved by order of the court in 1979. The judgment of dissolution required the defendant to make periodic alimony and child support payments to the plaintiff. In 1989, the plaintiff filed a motion for modification to increase the alimony award and the defendant filed a motion to decrease or terminate his alimony obligation. The trial court denied both motions. The plaintiff appealed to the Appellate Court, which affirmed the trial court's judgment. See Simms v. Simms, 25 Conn.App. 231, 235, 593 A.2d 161, cert. denied, 220 Conn. 911, 597 A.2d 335 (1991).
In August 1998, the plaintiff again filed a motion for modification of the alimony award and the defendant responded by filing a motion to terminate his alimony obligation. The plaintiff's motion was dismissed, however, she was permitted to amend her motion for modification. She subsequently filed another motion for modification, which eventually was argued before the court in late 2002. On February 25, 2003, the trial court, Hon. Dennis F. Harrigan, judge trial referee, issued a memorandum of decision in which he found that the defendant's income had increased from $4,450 per month in 1979 to $14,880.14 per month in 2002. The court concluded that "this dramatic increase in salary is an unanticipated substantial change in the defendant's financial circumstances." Accordingly, the court granted the plaintiff's motion and modified the defendant's alimony obligation upward to $1,500 per week, or $78,000 per year, retroactive to August 18, 1998. This order resulted in an arrearage, (footnote omitted) which the court ordered the defendant to pay at the rate of $500 per week until it was paid off. The defendant appealed from the judgment to the Appellate Court and that court affirmed the judgment. See Simms v. Simms, 89 Conn.App. 158, 164, 872 A.2d 920 (2005).
The defendant again filed a motion to modify his alimony obligation downward, which motion was dated June 4, 2003. He argued that "[t]here has been a substantial change in [his] financial circumstances in that his income from employment and all other sources has declined substantially." On December 12, 2003, Judge Harrigan denied the motion.
On November 29, 2004, the defendant yet again filed a motion to modify his alimony obligation contending that there had been a substantial change in his financial circumstances because he had retired. Thereafter, in April 2005, he filed an amended motion to modify in which he contended that the deterioration of his health as the result of depression and heart disease also constituted a substantial change of circumstances justifying the modification or termination of his alimony obligation. The trial court, Tierney, J., held a hearing on the motion on May 16, 2005, and June 30, 2005. At the hearing, the defendant testified that he was sixty-seven years old, that he suffered from depression, manifested by intense headaches, lack of energy and the inability to get out of bed, that he recently had suffered two heart attacks and that he needed knee replacement surgery on both knees. He further testified that, since Judge Harrigan's February 2003 ruling granting the plaintiff's motion for modification, he had retired from his position as chief executive officer of Simms Capital Management and had no current income from employment. His sole current income was $1,640 per month in social security benefits. The defendant presented evidence that he had sold his entire interest in Simms Capital Management, including stocks for $468,571 plus $400,000 to be paid in installments. The defendant's current expenses were $18,422.67 per month, including $8,666.67 in alimony and arrearage payments to the plaintiff. He paid these expenses primarily by borrowing against his residence. The evidence presented at the hearings also established that the value of the defendant's assets less the value of his liabilities was $4,092,720 at the time of Judge Harrigan's February 2003 ruling and currently was $2,806,338.
After hearing, the court found a substantial change of circumstances and modified the defendant's alimony obligation payable to the plaintiff from $78,000 per year to $1.00 per year. The Supreme Court held that while the trial court properly found a substantial change of circumstances it "abused its discretion in determining the amount by which the defendant's alimony obligation should be reduced as a result of the change of his financial circumstances." Id. at p. 504.
The Supreme Court found that the trial court (1) "should have considered the value of installment payments received by the defendant from the sale of his business, his home and other `assets' in determining the amount of the modified alimony obligation." Id., at 507; (2) "should consider the amount and sources of the plaintiff's income and her needs, as required by § 46b-82(a)." Id. at p. 508; (3) "failed to give due weight to the plaintiff's health and financial situation." Id. at 509; and (4) "improperly focused on the fact that the defendant's monthly income had been reduced from $14,880.14 to $1,640."
The court also said that "the trial court failed to give proper consideration to the defendant's other financial resources." Id.
Finally, in footnote 16 to the Supreme Court decision, the court stated "Moreover, the court did not explain, and we cannot perceive, why a reduction of the defendant's alimony obligation from $78,000 per year to $1 per year was justified in light of the plaintiff's financial situation."
The Supreme Court, thus, reversed the judgment and remanded the matter for "further proceedings according to the law." Id. at 510.
After laborious discovery proceedings, a trial of the defendant's motion was held on June 3, 4 and 5, 2008. The parties submitted post-trial briefs on July 7, 2008. Existent at the time of trial was a stipulation between the parties that (a) the defendant not make further payments on the alimony order until a determination of what the amount would be; and (b) the alimony order set by this court (or if a modification occurs, then the outstanding order) is retroactive to February 15, 2005. This court is requested to set an order for payment, as well, of all retroactive amounts due. The authority emanates from a motion for contempt filed by plaintiff; she seeks only an order of payment.
Alimony awarded as part of a dissolution of marriage decree may be modified upon a showing of a substantial change of circumstances of either party. Conn. Gen. Stat. § 46b-86(a).
"The traditional purpose of alimony is to meet one's "continuing duty to support." Blake v. Blake, 211 Conn. 485, 498, 560 A.2d 396 (1989); Rubin v. Rubin, 204 Conn. 224, 228, 527 A.2d 1184 (1987); Weiman v. Weiman, 188 Conn. 232, 234, 449 A.2d 151 (1982). Section 46b-86 "reflects the legislative judgment that continuing alimony payments should be based on current conditions." Rubin v. Rubin, supra, 204 Conn. at 236, 527 A.2d 1184. Thus, "[t]o avoid re-litigation of matters already settled, courts in modification proceedings allow the parties only to present evidence going back to the latest petition for modification . . . Alimony decrees may only be modified upon proof that relevant circumstances have changed since the original decree was granted." H. Clark, Law of Domestic Relations (1968) § 14.9, p. 456. "It is, therefore, well established that when a party, pursuant to § 46b-86, seeks a post-judgment modification of a dissolution decree that earlier had been modified, he or she must demonstrate that a substantial change in circumstances has arisen subsequent to the entry of the earlier modification. Benson v. Benson, 187 Conn. 380, 383 n. 3, 446 A.2d 796 (1982); Theonnes v. Theonnes, supra, 181 Conn. At 114, 434 A.2d 343; Cleveland v. Cleveland, 161 Conn. 452, 459-60, 289 A.2d 909 (1971)." Borkowski v. Borkowski, 228, Conn. 729, 735-36, 638 A.2d 1060 (1994).
As a part of this decision, the court must also ask the question for the court as to what is the date for consideration of the modification motion before it? The date of the original hearing or the date of the instant hearing. The hearing before the original trial court (Tierney, J.) on this issue was held in May and June 2005. The hearing before this court was three years later in June 2008. This very issue was before the Supreme Court in Sunbury v. Sunbury, 216 Conn. 673, 583 A.2d 636 (1990) as it related to a remand of an original dissolution. The court then referenced the temporal language of Conn. General Stat. § 46b-82 and in its conclusion that the date of dissolution, not remand, was paramount, adopted the language of a sister state: "In the absence of any exceptional intervening circumstances occurring in the meantime [the] date of the granting of the divorce would be the proper time as of which to determine the value of the estate of the parties upon which to base the division of property." Brackob v. Brackob, 265 Wis. 513, 518, 61 N.W.2d 849 (1953) Sunbury at 676. This principle has been uniformly considered applicable to the remand of all financial matters in dissolution proceedings. The Sunbury court also concluded that "an increase in value of property" in the intervening period did not "constitute such an exceptional intervening circumstance." Id. The court provided no guidance as to what event or amalgam of events might so qualify.
The very same year, the Appellate Court appeared to reject the application of this principle. In remanding a matter where the trial court erred in its date of valuation of real property, the court stated, "what is certain, however, is the court's financial orders must be based on the financial circumstances of the parties at the time of the new hearing." Kindeman v. Kindeman, 19 Conn.App. 534, 538, 562 A.2d 1151 (1989). That must be an error of language because the Kindeman case reversed the trial court for failing to enter orders for the dissolution based upon the plaintiff's most current financial affidavit. The Appellate Court undoubtedly meant the finances current to that date, not the actual date of the new hearing.
It has been upheld that a decrease in the value of property alone does not constitute an exceptional intervening circumstance. Kremenitzer v. Kremenitzer, 81 Conn.App. 135, 140, 838 A.2d 1026, 1029 (2004).
The trial court (Axelrod, JTR) in Casey v. Casey, 2004 Ct.Sup. 15661 (2004) determined that an increase or decrease in liabilities alone does not constitute such an exceptional intervening circumstance.
As the court reviews the facts here, it must consider whether there has been an exceptional intervening circumstance that will result in the court's application of a date other than at the time of the original modification hearing for purposes of ruling on the motion for modification (or termination) of alimony.
The parties, after consideration of the efficacy of the notion of also folding into the hearing a fresh "second look" at the alimony order of the hearing date to prevent the inevitability of further litigation, rejected the idea. Therefore, the evidence received and findings of fact made as to the parties' circumstances from 2005 to 2008 are for two purposes only: (1) whether any event constitutes an exceptional intervening circumstance, and (2) what is an appropriate order for purposes of paying an accumulated arrearage resulting from these orders.
For purposes of determining whether there exists a substantial change in circumstances, the court must determine the factual circumstances at the time the last alimony was ordered. Specifically, on February 25, 2003, the original alimony order was increased to $78,000 per year. (See the Supreme Court summary above.) Based upon the credible evidence, the court finds the following facts.
The plaintiff was born July 28, 1936. In 2003, the plaintiff was employed as an art therapist and the defendant was the owner and manager of Simms Capital Management ("SCM"). At all relevant postjudgment times, he has been married to Martha Page Smith, his current wife. The plaintiff has remained single. She is now 72 years old. In 2005, she was 69 years old. In 1995, she was diagnosed with thyroid cancer; she has treated for that continuously since. It does not present any problems. In 1998, the plaintiff was diagnosed with breast cancer. She underwent a radical mastectomy which included the removal of lymph nodes. She also took a regimen of chemotherapy and oral drugs which she continued until she had a stroke somewhere in 2001-2003. The stroke did not leave any significant damage. Since then, she has been continuing her care through quarterly checkups at Sloane-Kettering with her endocrinologist and neurologist, checkups with her surgeon twice a year, and a yearly checkup with her oncologist and cardiologist. She describes her cancers as in remission. Her daily medications are Vitamin D, Synthroid, a cholesterol-lowering drug and low-dose aspirin. None of these drugs interfere with her functioning.
From May 2007 to April 2008, the plaintiff was medicated with an anti-depressant and pain medication for residual post-surgery pain. At the time of the court hearing, she was not so medicated.
The plaintiff's income from employment was $18,883 and her social security income was $8,393 in 2003. In 2005, her income from employment was virtually unchanged; her social security income was $9,030.00. Her interest income was negligible. Her employment taxes in 2005 were about $2,800; they were substantially similar in 2003. Now in 2008, her annualized earned income is $8,2000 year and $2,3000 net.
The defendant is 70 years old. In 2005, he was 67 years old. In 2005, he had repeated heart attacks with afibrillation of his heart. The condition reoccurred once in 2007. His most significant health problem has been depression. In the period from 2004 to 2005, he suffered a major depression episode which disabled him from employment. He was nonfunctional — "on the couch" — in many ways and was unable to attend to business matters. He had poor attention skills, and was extremely agitated during that time. With medication, under the care of his psychiatrist, he has improved. In 2005, he was unable to work. It was also as a result of this condition that he retired and sold the business, SCM. He had been an 80% owner. The court notes his income from SCM in 2002 (income which the 2003 order was based on) was $14,800. The defendant sold his interest in the business in November 2004. He had started SCM in 1984, five years after the parties' divorce. The sale price was $868,000 (in total) of which $350,000 was originally a contingent sum.
While the defendant's mental health has dramatically improved since 2005, his psychiatrist does not find his condition restored to its robust state of 2001-2002. After observing him in these proceedings, the court agrees that the defendant is not presently the picture of perfect mental health. While he shows occasionally sharp acumen and skills of analysis, he often becomes agitated and meanders, having significant trouble staying on topic.
As to both in 2005 (and for the present), considering the age of both of these parties, with their health challenges, the court finds neither has the present ability to work in any sustained employment (beyond the minimal hours the plaintiff now works). The parties each receive social security as shown on their respective financial affidavits. The plaintiff's is $988.90 per month, from which she pays her Medicare Part B premium, leaving a monthly net of $828. The defendant's social security income was $1,640 per month in 2005; it is presently $1,882 per month. It is not clear what is the effective net. Based upon the financial affidavit, no deductions are shown from gross to net.
At the time of the hearing for the 2003 order, the plaintiff's annual expenses were about $92,640 (not including payment on debt). Her federal tax liability was $17,182 and her state tax liability was $5,243. Effectively, her net income after the alimony order of 2003 (excluding the 2004 tax and income situation inasmuch as it was virtually the same) left her $95,401 in income (including the 2003 alimony order) to meet her annual expenses of $93,000.
This home was also owned by her in 2003, and shown on her financial affidavit.
In 2005, the plaintiff's annual expenses had decreased to $82,644 per year (without regard to indebtedness) which was an overall $10,000 yearly decrease. Her net annual earned income, however, had decreased to $17,412, only about $1,000 less than in 2003.
The plaintiff owns a home at 38 Witch Lane in Rowayton, which she presently values at $650,000. In 2005, it was worth $80,000 with a $105,000 mortgage. As of the time of the hearing, the court finds its value was $729,000. Two months before, she valued it at $100,000 more, or, $750,000. It has a mortgage line of $61,623, and a home equity line indebtedness of $19,660. Her other indebtedness is for attorneys and accountants' fees (about $54,000 total) and credit card debt of $2,800. Two months earlier, she showed none of this debt except the home equity loan (in the mortgage line of her financial affidavit under "assets").
As to this real estate no evidence other than the plaintiff's opinion was offered as to value. As to the Wyoming ranch discussed infra, (held by a corporation) the court received insufficient evidence from which to find a value. Further, the defendant filed a document before the rendering of this decision that the property is no longer listed for sale. Ultimately, however, the listing — or not — does not contribute substantially to the finding of a value of the defendant's interest. Whatever it is, it is not of use to a setting of an alimony order because of the absolutely illiquid quality of the asset.
After the hearing before Tierney, J., (on the instant matter) was completed in May 2005, and before he rendered his decision, the plaintiff's uncle, Albert W. Hogeland ("Unk"), died. On July 13, 2005, plaintiff received a letter that discussed the estate since she was a beneficiary. The inventory of the decedent's estate estimated the value of the estate at $1,662,407. It was included with the letter of notice. How much of that was to go to her was not calculated in the letter; it was subject to deductions and division.
The nature of the first sentence of the letter leads this court to conclude that sometime before this letter plaintiff knew she was a beneficiary of the estate. The testator died on January 14, 2005. The trial court was not notified of this inheritance before it rendered its decision. While the amount was not ascertainable at that time, it was an asset owned by the plaintiff.
Ultimately, in multiple installments, the plaintiff received $344,000 in inheritance from the estate: $310,000 was paid in June 2006, and $49,000 was paid in February 2008. The plaintiff has lived off these funds; she had $99,000 remaining in March 2008, and $85,860 remaining in May 2008.
The defendant filed joint tax returns with his present wife in 2003 and 2004. On his 2003 tax return, he had capital gains attributable to him of $1,484,721, from the sale of Snake River Capital Corp. By 2005, he was no longer working for the reasons stated above. This was based upon sales of his interest in funds he managed. This was how he earned his income at SCM as an investment banker.
The defendant's 2004 return was his last joint one. In 2005, he had a contingent receivable of $350,000, having already received the balance of the sale of SCM. He ultimately received that $350,000. At the time of the last modification in 2003, he had valued his interest at $769,187. Therefore, the sales proceeds received were fairly close to that valuation.
The specific amounts were accurately recited in the Supreme Court opinion.
The defendant's monies derived from SCM have supported his lifestyle as he had enjoyed it from 2003 forward. From 2003 to 2006, he lived largely off the cash netted out from the sales of Snake River and SCM. Commencing in 2006, and to a large extent in 2007, the defendant's lifestyle was subsidized by his wife's payment of expenses on his behalf, their expansion of their equity line on their home, and their joint sale of antiques.
At the time of the entry of the 2003 order, the Court (Harrigan, J.) found the defendant's income to be $178,560 per year ($14,880 per month); although his financial affidavit showed an annual net income of $92,000 per year. His expenses on his financial affidavit (excepting out his alimony payments) were $366,000 a year.
At the time of the 2005 hearing, the defendant's expenses on his affidavit were reduced to $117,000 annualized. At the time of the present hearing, the defendant's expenses were $156,000 annualized.
The defendant, at the end of 2002, owned his business, his home which he owned jointly with his wife, securities valued at $986,000, $34,000 in bank funds, art and antiques valued at $1,350,000, a 1% interest in M.H. Davidson, and his interest in the Wyoming ranch (Rendezvous Ranch) and $42,500 in retirement funds. By the 2005 hearing, he had sold Snake River and SCM as discussed above. He and his wife had also sold most of their antiques and art. Between 2003 and 2005, they sold the lion's share of those antiques at auction sales that the defendant claims produced $1,083,674.50 in proceeds. In 2006-2008, they sold more antiques for $290,113.50 total. The documentary proof of his sales assertion in 2004 and 2005 total only $540,000. The records he has provided make it impossible for the court to determine the accuracy of his other testimony. Given his capacity to largely overstate and understate characteristics including values of assets, as described elsewhere in this decision, the court does not accept this testimony as true. However, his present wife also offered evidence regarding the antique sales. Based upon her testimony, the court finds that most of the joint antiques were sold at auction at depressed prices over the period of 2004 to 2007, because they had significant debt to pay off and the defendant was sick and no longer earning income. He had also sold his 1% interest in M.H. Davidson. It had a $127,000 value.
In 2005, the defendant had approximately $18,000 in bank accounts and no longer had any retirement funds. His securities had reduced to approximately $211,500.00. That amount remained constant at the time of the hearing in June 2008. His bank accounts are less than $1,000.00.
As indicated above, the defendant has held a 25% stake in a sub-chapter S corporation which owns the Rendezvous Ranch in Cora, Wyoming. The ranch contains approximately 1,040 acres. It also had deeded Federal grazing rights. It is improved by corrals, a guest home, and a manager's home. It also has a horse barn, an indoor riding arena, a shop, and a machine shed. The property is one hour away from Jackson Hole, Wyoming, and close to the county seat.
The investment has only thrown off losses to the defendant over the years. The corporation has listed the property for sale at a gross sales price of $9,900,000. The defendant estimates his interest in the ranch is $500,000 (which would dictate a $2,000,000 value). This property is not presently an available asset to throw off income. It has no individual debt capacity for the defendant independent of the agreement of the other shareholders.
After briefing and before this decision is out, the defendant filed notice that the property was no longer on the market for sale. Ultimately the listing for sale is not probative of value. It is merely an indication that there may be a value greater than is offered by the defendant as his opinion.
The defendant's home (which he owned at all times relevant hereto) is owned jointly with his current wife. It is a classic 18th century saltbox restored in a historically accurate manner. It was restored by the defendant and his wife. The property is well-groomed and was improved by them with barns transported to the site from Massachusetts. The barns have been incorporated in the living space. The home is located on Round Hill Road in Greenwich.
The Town of Greenwich valued the property at two different intervals. In October 2001, the Town assessed a 100% Fair Market Value of the premises as $2,197,400. That value increased to $3,696,800 in October 2005. The defendant valued the house at $4,000,000 in 2005 and $3,500,000 in 2008. The court, based upon the limited evidence before it, finds that value substantially accurate as to those dates.
The defendant has described this property as a "tear down" when considering its value. The court finds this assertion was made glibly. In other moments at trial, he testified proudly as to the comprehensive restoration this property enjoyed under the direction of him and his wife.
The property is mortgaged. The debt which was $2,103,000 and paid down from the sale of SCM, has increased from about $400,000 in 2005, to about $675,000 in 2008. The increased indebtedness has helped fund the defendant and plaintiff's expenses they have incurred. The principal outstanding on the home equity loan is due in 2 1/2 years. Recently, the defendant and his wife had owned certain stock which was purchased from their home equity line. It has been sold and that portion of the credit line is being paid back. The transaction is a wash.
Of the sundry other matters that were elicited in evidence, the court notes the following: the plaintiff belongs to no social clubs. The defendant has maintained a club membership with his wife at the Woodway Country Club. The annual cost is $4,979 dues, plus minimum charges. Jointly, they spent about $12,000 per year there. Through 2005, the defendant paid at least $2,000 per year for his membership in the hunting club, Campfire of America. In maintenance of his lifestyle, the defendant paid $21,000 in 2007 through his American Express Card for travel, traveling virtually every month including three times to the Wyoming Ranch.
The defendant is a former professional football player. For the last ten years (even through the most severe times of his depression), he has been a director and head of the investment committee of the National Football Foundation. This has resulted in annual travel to Texas. He also attends the Super Bowl annually. The balance of his travel has been to see relatives.
Though for future years, the meeting will be in the tri-state region.
In 2006, the defendant's wife made certain ascertainable payments on their behalf from her separate funds. She paid $85,000 for a loan from Webster Bank, and other expenses of theirs totaling about $15,000. In 2007, on behalf of both of them, she paid $112,273 of their joint expenses. In 2008, those expenses she paid joint were under $1,500.00.
The plaintiff who received her training post-divorce as an art therapist has seen her hours continually cut back. In 2003, she cut back because of her significant cancer problems, and concerns about greater health problems which did not materialize. In 2006, her hours were cut back when her direct supervisor retired. Finally, she was promised only five hours scheduled every Thursday, which is her work, presently at $26.00 per hour.
The plaintiff's pension is in pay status in July 2008 (now accomplished), and pays her $200.00 per month.
Over the years, the plaintiff has paid significant attorney fees related to this litigant, including $95,000 to successfully prosecute the appeal, which has brought the instant matter about, and handle matters in the local court. She still owes her attorney from this hearing, approximately $31,000. She lived off of her inheritance for living expenses at a rate that ranged between $5,000 to $6,500 per month.
The plaintiff has not taken a vacation since 2003. Her out of state travel has largely been to New York for medical care. In the current year, she has also suffered depression. Since 2005, as stated above, she has been living off of her inheritance. The defendant's significant complaint at trial about the plaintiff's lifestyle that he does not want to support is that she spends $230 every four to six weeks for hair care and her pet care cost. This has not materially changed from 2005 when she paid $250 per month for her grooming and $175 per month for pet grooming, for a total of $425 per month or $5,000 per year.
At the time of the May-June 2005 hearing, the defendant was retired in poor mental and physical (heart) health and had sold his business. His income was from Social Security. The court finds that his poor health and resulting lack of employment is a proper basis from which to find that a substantial change of circumstances has occurred. Berry v. Berry, 88 Conn.App. 674, 684, 870 A.2d 1161 (2002), Simms at 504. The defendant had sold SCM. Because of his health, he was not looking for other employment. The funds from the sale of SCM were used to pay down $400,000 on the debt on his home that he had incurred because he was not working. That debt had been at a high of $1,000,000. The entire sales price of $868,000 was ultimately received. The proceeds of the other assets of the defendant in 2003, that were sold by 2005, were apparently spent and used to pay down another $250,000 of debt.
The assets that presently remained for each party are illiquid real estate investments with the exception of the plaintiff's Schwab account and the defendant's Merrill Lynch account. The Supreme Court in assessing the 2005 trial court decision, found it should have given greater weight to the SCM sale proceeds. By the same logic, the court should have been notified of the plaintiff's impending inheritance, so that it could have been considered as well. The undersigned concludes that the fact that the amount was not then specifically ascertainable, does not mean it was not an asset.
Our cases have uniformly emphasized the need for full and frank disclosure in that affidavit. "A court is entitled to rely upon the truth and accuracy of sworn statements required by § 380 [now § 463] of the Practice Book, and a misrepresentation of assets and income is a serious and intolerable dereliction on the part of the affiant which goes to the very heart of the judicial proceeding." Casanova v. Casanova, 166 Conn. 304, 305, 348 A.2d 668 (1974). Moreover, in Monroe v. Monroe, supra, we referred to the requirement of full and frank disclosure between attorney and marital client. "[Lawyers who represent clients in matrimonial dissolutions have a special responsibility for full and fair disclosure, for a searching dialogue, about all of the facts that materially affect the client's rights and interests.]" Id., 177 Conn. at 183, 413 A.2d 819. In Baker v. Baker, 187 Conn. 315, 322, 445 A.2d 912 (1982), we imposed this requirement of honest disclosure between the litigating parties and the court. It is a logical extension of those precedents to require such full and frank disclosure as well between the marital litigants themselves. Billington v. Billington, 220 Conn. 212, 219-20, 595 A.2d 1377, (1991).
The evidence adduced also leads the court to conclude that the plaintiff's counsel at the time (not counsel for these proceedings) knew that the plaintiff was going to receive an inheritance. Neither the defendant nor the court was notified.
Accordingly, the 2005 trial court (Tierney, J.), and the Supreme Court should have been notified of its existence, and was not.
Subsequent to Billington, the Supreme Court construed the duty of disclosure to include knowledge of an offer to purchase an asset of the husband at a value substantially greater than he listed it for on his financial affidavit. "Indeed, extending the duty to disclose until the judgment is final essentially is mandated by our determination in Billington v. Billington, supra, 220 Conn. at 220-22, 595 A.2d 1377, wherein we underscored the necessity for full and frank disclosure in marital actions. See also Practice Book § 1-8, ("[t]he design of these rules [is] to facilitate business and advance justice, [and] they will be interpreted liberally in any case where it shall be manifest that a strict adherence to them will work surprise or injustice"). Thus, as our case law for the last fifteen years makes clear, the duty to disclose continued until the judgment of dissolution was final." Weinstein v. Weinstein, 275 Conn. 671, 696-98, 882 A.2d 53 (2005).
The defendant argues in his brief that the nondisclosure of the inheritance was fraud. While he correctly states the standard for fraud, he has not specifically pled it in his motion to modify, or any amendment to the motion to modify before the court. Citibank N.A. v. Monic, 2008 WL 714 134 (Conn.Super., 2008); Compass Bank for Sav. v. Katz, 1998 WL 144 858 (Conn.Super. 1998). The court concludes that there is ample opportunity for it to consider the asset not disclosed — the plaintiff's inheritance. The court finds that its actual receipt by the plaintiff constitutes a substantial intervening circumstance under Sunbury, supra.
While the court is not confronted with a question of fraud here, the failure to bring an inheritance to the attention of the court was wrong. It was not a mere expectancy. The person died. The only thing left was the probate process to determine its value. A responsible inquiry by plaintiff would have disclosed the magnitude of the inventory and the nature of the interests of the people who were beneficiaries. While the value was not known, the search for the truth required its disclosure. In any case, it is now before this court.
The debts of the plaintiff in 2005, and presently, relate largely to this litigation, her mortgage and home equity loan, tax advice and taxes. Her 2005 debts were about $23,000 higher than her 2003 debts, which also included a debt of $6,000 for health care. Her home equity loan has been used to pay legal fees.
The debts of the defendant in 2003 were, besides the mortgage, debts incurred to live when income and capital gains did not support them. By 2005, he had received payments from the sale of SCM and paid down the home equity loan and other indebtedness. By 2008, his indebtedness related wholly to liens on the home, the home equity loan being due in 2 1/2 years.
The defendant argues the plaintiff should have saved more for her retirement or should be required to withdraw equity from her home to live off of, just as he and his wife did. She could also rent a room in her house to their son, he points out. He also argues that his present wife (who he has been married to for 25 years of the 29 years he has been divorced) should not be forced to support his former wife by virtue of an alimony order.
The court finds that in 2005 the defendant could not work and had no demonstrated earning capacity as a result of his poor health. "Earning capacity, in this context, is not an amount which a person can theoretically earn, nor is it confined to actual income, but rather it is an amount which a person can realistically be expected to earn considering such things as his vocational skills, employability, age and health." Lucy v. Lucy, 183 Conn. 230, 234, 439 A.2d 302 (1981). From 2005 to 2008 his earning capacity did not increase. Indeed, as recited in this opinion, neither party at their age, and given their respective health problems, has any earning capacity.
As the previous court did, this court finds a substantial change of circumstances since the orders entered in 2003 based in 2005 upon the dependant's poor mental health and cessation of employment.
"In Hardisty v. Hardisty, supra, 183 Conn. At 258-59, 439 A.2d 307, we stated: "Once a trial court determines that there has been a substantial change in the financial circumstances of one of the parties, the same criteria that determine an initial award of alimony . . . are relevant to the question of modification. Sanchione v. Sanchione, [ supra, 173 Conn. at 401-02, 378 A.2d 522; see also [H. Clark, supra], § 14.9, pp. 456-57." By so bifurcating the trial court's inquiry, however, we did not mean to suggest that a trial court's determination of whether a substantial change in circumstances has occurred, and its determination to modify alimony, are two completely separate inquires. Rather, our bifurcation of the trial court's modification inquiry was meant to reflect that, under our statutes and cases, modification of alimony can be entertained and premised upon showing a substantial change in the circumstances of either party to the original dissolution decree. General Statutes § 46b-86. Thus, once the trial court finds a substantial change in circumstances, it can properly consider a motion for modification of alimony. After the evidence introduced in support of the substantial change in circumstances establishes the threshold predicate for the trial court's ability to entertain a motion for modification, however, it also naturally comes into play in the trial court's structuring of the modification orders." Borkowski, op. cit., at 737.
Conn. Gen. Stat. § 46b-86(a) provides that upon the court finding a substantial change of circumstances it shall consider the statutory criteria in § 46b-82 for the award of alimony here. The court has carefully considered that criteria and found the necessary facts herein, in furtherance thereof.
The court further notes that the defendant has paid alimony to the plaintiff for her special support continually and consistently from 1979 to 2005, or 26 years. The plaintiff has no savings as a result of those payments. In July 10, 2006, by agreement of the parties, the following stipulation was made and entered as an order of the court.
It is hereby stipulated and agreed by and between the parties individually, and acting herein through their respective counsel, as follows:
1. The total arrearage of alimony owed by the defendant to the plaintiff is $125,808 for the period August 18, 1996 through February 15, 2005. Against that arrearage the defendant has made payments totaling $42,500 leaving a balance of $83,308, as of July 7, 2006.
2. On October 24, 2005, the Court (Tierney, J.) rendered a retroactive modification of the alimony order to $1.00 per year effective February 15, 2005. Based upon the amount of alimony paid during the time period February 15, 2005 to October 24, 2005, the defendant would be due a refund of $54,000 from the plaintiff. The Court's October 24, 2005, order is on appeal.
3. The parties agree that, in the event the trial court refuses to stay its October 24, 2005 order and the judgment is affirmed on appeal, the $54,000 will be treated as a set-off against the $83,308 due the plaintiff, leaving a net arrearage due to the plaintiff of $29,308.
4. The defendant shall continue to make weekly payments of $1,500 towards the $29,308 arrearage until it is paid in full.
5. The defendant shall make no payments against the remaining $54,000 until further order of the trial court or until a decision has been rendered by the Appellate Court.
The defendant has paid all sums referred to in #4 fully and punctually.
The defendant's wife has contributed significantly to his support in 2006 and 2007. She has not, in 2008. The court may consider these past gifts in setting the alimony order ". . . the payments that are made regularly and consistently to one of the former spouses are to be considered by a trial court in setting financial orders. Unkelbach v. McNary, supra, 365. There is nothing in Unkelbach or in the cases cited therein that limits consideration of such funds to payors or to fact situations involving child support guidelines." Zahringer v. Zahringer, 262 Conn. 360, 369, 815 A.2d 75 (2003). However, she is a cosigner on the home indebtedness and therefore her payment of those sums cannot be construed as receiving gifts to the defendant for inclusion in income. Instead, this court looks to those payments as reducing the defendant's need to use his own income from Social Security and sale of assets to service those shelter costs.
The shortfall of the plaintiff, if all of her expenses are accepted, is just about $2,000 per week plus debt payment. Her mortgage and taxes as indicated earlier are $509.00 per week, $172.00 more than her net income. Her utilities and food add another $425.00 in expenses. Transportation, insurance and health expenses (without her auto loan of $377.00 which is indicated per week, but is likely monthly) is about $300-$400 per week more. These are significant shortfalls.
The defendant also has significant shortfalls of about $11,000 per month of which about $4,700 are the shared mortgage and taxes, half of which are $2,350 per month or $546.00 per week, $147.00 more than his net income. His other expenses contribute to shortfalls similar to the plaintiff's.
The affidavits before this court in 2005 showed both parties having similarly large shortfalls which each satisfied with the expenditure of liquid assets as outlined above.
Inasmuch as the inheritance actually received by the plaintiff constitutes an exceptional intervening circumstance, the court would normally be guided by Sunbury to establish the receipt of the inheritance as the valuation date. That, however, would result in a gross inequity since defendant's alimony would be lower as a result thereof because of the retroactivity agreement, and yet when she had not received the inheritance money. Therefore, the court, having considered the inequity, is issuing a bifurcated alimony order: first, as of the agreed retroactivity date before the receipt of the inheritance and second, as of the receipt of inheritance proceeds.
Based upon all of the facts found herein, and the statutory criteria, the court orders:
(1) As of February 15, 2005, the date to which retroactivity was ordered by Judge Tierney, the defendant shall pay to the plaintiff alimony in the amount of $800.00 per week; and
The parties stipulated to that retroactivity date.
(2) As of February 1, 2006, the defendant shall pay the plaintiff alimony in the amount of $200.00 per week, until either party shall die or the plaintiff shall remarry or cohabit (subject to the statutory language regarding modification upon cohabitation).
(3) The court has calculated that from February 15, 2005 to October 17, 2008, the defendant's alimony obligation totaled $68,200. The parties shall perform the calculation of arrearage and set offs due under the stipulation between the parties. Once established by either written agreement submitted to the court, or after hearing and order by the court, the arrearage sums shall be paid at the rate of $100.00 per week until paid in full. If the defendant sells his home or interest in the Wyoming ranch, the entire arrearage, as may still be due from him, shall be paid in full from the proceeds.
CT Page 16639