Opinion
No. FA 09-4011324S
February 17, 2011
MEMORANDUM OF DECISION
This decision dissolves a 25-year marriage between the parties. Agreeing on parenting orders regarding their five-year-old child, Maria, they appeared with counsel on eight days last June, July and November for a trial on financial issues, after which both sides then submitted post-trial briefs. The defendant seeks an equal division of marital assets, worth more than 1.4 million dollars, while the plaintiff asks the court to award her 60% of the value of her veterinary practice, South Windsor Veterinary Clinic (SWVC), and to exclude an inheritance that she received from her father from equitable division. The defendant is asking for an award of counsel fees and alimony of $1,000 per week for 12 years, while the plaintiff asks the court to limit her alimony obligation to six years at the rate of $600 per week through June 30 of this year and $480 per week thereafter. Although both parties agree that the child support order should comport with the child support guidelines, they disagree substantially about the amounts to use for the income of each party. Finally, the parties presented evidence on several pendente lite motions for contempt filed by the defendant.
On these issues, the court heard from both parties and the following additional witnesses: Teresa Renner, a certified public accountant who has prepared the parties' tax returns for several years; Gary Glassman, a certified public accountant who testified, pursuant to a joint stipulation that he is an expert in valuing veterinary practices, about the results of a forensic valuation that he conducted for both parties of the plaintiff's veterinary practice; Patrick Sklenar, a longtime friend of the plaintiff whose relationship with her is alleged by the defendant to be a cause for the breakdown of the marriage; Joanne Zak, the plaintiff's sister; Dale Werkhoven, the defendant's brother; Dr. Lisa Carlson, a veterinarian employed by SWVC; and Amy Gamberdella, now the office manager at SWVC. Both parties also introduced numerous exhibits into evidence, including reports on Glassman's forensic evaluation of the SWVC and appraisals conducted for the parties of the value of the marital home, the real property where the business is located, and real property once owned by the plaintiff's deceased father and now part of his estate. The court observed the demeanor of the parties and witnesses and has evaluated their credibility. The court has carefully considered all of the evidence, including the exhibits and the testimony presented, the parties' proposed orders, and their briefs and arguments according to the standards required by law.
The marriage of the parties, which began on September 21, 1985, in Bolton, Connecticut, has broken down irretrievably without hope of reconciliation. They have one minor child, Maria Sara Werkhoven, who was born on May 9, 2004, and adopted by them on September 21, 2005. The parties and their child have all resided continuously in the state of Connecticut for the year preceding the filing of this action and none of them have received financial assistance from the State of Connecticut or any municipal subdivision thereof. All statutory stays having expired, the court has jurisdiction to dissolve the marriage and enter custodial orders.
I
HISTORY OF THE MARRIAGE
The parties met in 1984 when the plaintiff, then 24 years of age and living with her parents, was a student finishing her bachelor's degree in animal science at the University of Connecticut and the defendant, 12 years her senior, was living with his mother at her Ellington home and working as a computer operator at a typesetting company. After getting married, they initially lived in the Ellington home, which the defendant inherited from his mother when she died a few months before their wedding, but after a couple of years there they used equity in that home to buy another in Coventry. In the first years of their marriage, the plaintiff worked as a laboratory research assistant, then a high school teacher, and finally in the insurance industry, while longing the entire time to become a veterinarian, and the defendant held various computer-related jobs. In 1992 they decided to move to Ithaca so that the plaintiff could attend the four-year veterinary school at Cornell. The defendant found a job there as a computer specialist but for less pay than he had been earning in Connecticut, and he was their primary means of financial support for their four years in Ithaca, although the plaintiff financed much of her education through grants, loans, and student employment. The plaintiff's friend Patrick Sklenar, whom she had met as a high school student, resided in the marital home while they were in Ithaca.
After veterinary school, the parties returned to Connecticut and the plaintiff worked at several veterinary clinics until opening her own practice at the South Windsor Veterinary Clinic in 2002. The defendant continued working in computer support, finding a job at an investment firm and then in 2000 at the Harrington Hospital in Springfield. After the clinic had been open a year, the defendant began working there part-time doing the books. Over the next few years his responsibilities increased and by mid-2005 he was working there full-time as the clinic's practice manager. The parties created two limited liability companies, one for the clinic in the plaintiff's name and one for the real estate at 69 Oakland Road in South Windsor, where the clinic is located, in the defendant's name.
The parties testified extensively about their relationship in the years before they lived in Ithaca, while they were there, and after they returned, each one depicting various crisis points in the marriage. The plaintiff claimed that in the late 1980s the defendant told her he wanted to leave her for another woman, whereas after the plaintiff opened SWVC the defendant thought that she was having too much contact with Sklenar, whom he confronted directly and warned to stay away from the plaintiff. The plaintiff felt that the defendant was not supportive of her desire to go to veterinary school, while he gave up a higher-paying job and the possibility of accumulating a pension at Aetna so that she could go to Cornell, and he even stayed by himself in Ithaca one summer while the plaintiff came back to Connecticut to console her father after the death of her mother. Each party denied the other's claims about these other individuals, and there was an insufficient basis in the evidence upon which the court could resolve their contradictory claims.
It was clear, however, that having children was an issue in the marriage from the beginning. The plaintiff insisted that she told the defendant before they got married that she wanted children, although not immediately, while the defendant, who had served before the marriage in secret military missions, testified that he was wary of having offspring in a world with so much war. He claimed that before the marriage they only discussed "the possibility of having children" and agreed "to consider" the issue later. The plaintiff said that whenever she tried to raise the topic in the years before she went to Cornell, the defendant would always change the subject, while he said that during those early years they jointly decided that they were not yet ready for children.
In listening to and evaluating the parties' testimony on this issue, the court found them both sincere and concludes that they entered the marriage without agreement on this fundamental issue and continued to misunderstand the other's point of view for many years. Not until after they had returned from Cornell and the plaintiff insisted that she would divorce the defendant unless he consented to children did they finally agree to have children. When they had difficulty getting the plaintiff pregnant, one of the reasons for the defendant taking the job at the Harrington Hospital was because the benefit package there would pay for the in-vitro fertilization (IVF) procedures that they embarked on.
Yet, even after they made that decision, the evidence shows the parties to have been at odds. The plaintiff was fervent in her desire to have a child, but she felt that, despite finally agreeing to have children, the defendant was not always supportive of her desires. During the IVF process she was upset that he did not go with her to some of the procedures, which she testified were painful and uncomfortable. She said that he was not emotionally supportive and showed no regret when the procedures failed. Yet the defendant perceived himself as acquiescing in her desire to have children and supportive of her during the fertility treatments. After finding that the plaintiff was unable to conceive, they agreed to adopt a child, but, when Department of Children and Families placed an interracial child with them, the defendant insisted upon its return. When they finally found Maria through an adoption agency and traveled to Guatemala to pick her up, the defendant became very upset when she cried throughout her first night with them and he tried the next day to return her, only to find out that the adoption had already been completed.
While admitting that he found the first few nights with the baby to be very trying, the defendant said at trial that he quickly bonded with her. The adoption agency had insisted that one of the parents stay at home with her for at least three months after the adoption, and the defendant was the one who agreed to do so. After one month, however, he began bringing Maria to the clinic and taking care of her there, a practice that continued throughout the marriage. While the plaintiff was occupied during the day with her veterinary job, the defendant would take care of Maria in a small office at the back of the clinic; and, until the parties' separation and the defendant's loss of his job at the clinic, he interspersed his responsibilities as the clinic's practice manager with being Maria's primary caretaker during the day. Those daily, minute-by-minute, tasks, from changing and feeding her as an infant to supervising her as a toddler, helped Mr. Werkhoven to learn the joy of parenting, and though initially he probably was, as suggested by much of the plaintiff's evidence, a reluctant parent, the court finds that today Mr. Werkhoven is a dedicated father who loves his daughter very much.
In the years after adopting Maria, they parties began to argue more and to talk occasionally about divorce but they stayed together, and one of the clinic employees who testified suggested that they appeared to have a solid marriage. In the winter 2009, however, the marriage began to fall apart under the pressure of the hospitalization of the plaintiff's father in February and his decline over the next month until his death. The plaintiff perceived her husband as unhappy that the many hours she was spending at her father's hospital bedside were affecting her productivity at the clinic, while the defendant saw himself as encouraging her to take all the time that she needed away from work to be with her father. When she asked him to spend time with her father in the hospital and to hold his hand and stroke his head, he refused, saying that her father was not his family. The plaintiff testified that "[t]hat's when I knew he wouldn't hold my hand when I was dying and couldn't love the way I did and decided to get a divorce."
At trial the defendant explained his statement about the plaintiff's father not being part of his own family in a rational and logical manner: Her father was not his father; his wife's biological family was "her family," his own biological family was "his family," and the two of them plus Maria were "our family." But his explanation shows how far he was from understanding or sympathizing with the sadness and grief that his wife was experiencing. The plaintiff soon thereafter saw a divorce attorney, who counseled her to wait before taking any drastic action, and she forbore from filing suit. But the parties continued talking about divorce, and on the first of June they had an argument that led to the plaintiff taking Maria to her deceased father's home for a night. They then had another argument the next day in which she said that if they got divorced he could not continue working at the clinic, he insisted that he would fire all the clinic employees if she filed a divorce, and she then terminated his employment as the office practice manager. Both parties testified about these two arguments, and it is impossible to determine the sequence of who said what. What is clear is that, by the end of that discussion, the defendant was no longer employed as the practice manager, and that same day the plaintiff filed this action and took Maria to live with her in the home of her deceased father in Bolton.
The parties attempted a trial reconciliation between August and October. The defendant had repeatedly called the plaintiff pleading to save the marriage, and she testified here that she was worried about his mental state, feared that he might harm himself, and didn't believe she had been "100 percent ready to throw in the towel." The plaintiff returned with Maria to the marital home, where the parties then slept in separate bedrooms for most of that time. They tried marriage counseling again, but by October the attempts at reconciliation had failed, and the plaintiff and Maria left the marital home for good.
Sometime between the initial and final separations, the plaintiff engaged in intimate relations at least once with Patrick Sklenar, with whom she has since then become romantically involved. Yet, the evidence shows a marriage long broken down by that time. Here, just as in Venuti v. Venuti, 185 Conn. 156, 440 A.2d 878 (1981), both parties may have engaged in sexual relationships after the filing of the dissolution action, but the court concludes that none of that conduct affected the deterioration of the parties' relationship or marriage, which had broken down due to their inability to communicate and agree over fundamental aspects of the marital relationship long before. In her grief over the death of her father, the plaintiff was no longer willing to accept the disparity in the parties' sympathies, but this decision does not lay blame for the breakdown on her. And while the defendant bears the greater responsibility for the final estrangement between the parties that occurred in the last few months before their initial separation, the defendant's inability to empathize with the plaintiff as her father lay dying was not the cause of the breakdown of this marriage either. What happened between February and June first, or between the initial and final separation, did not change that this marriage had long been broken down, with two people living side by side for many years, but perceiving and experiencing many of the principal events of their marriage completely differently, and never managing to communicate with each other in such a way as might have bridged or overcome the differences in their wishes, wants, and viewpoints. On the evidence presented, the court thus finds no greater fault or responsibility for the dissolution of this marriage on the part of either spouse.
II
FINANCIAL ISSUES
The alimony and child support issues before the court both require the court to determine the parties' gross and net incomes, but the alimony statute, General Statutes § 46b-82, expressly permits the court's alimony decision to take into consideration the court's equitable distribution of property. The statutory criteria for property distributions in § 46b-81 and alimony orders are otherwise relatively similar except that for equitable distributions the law omits "the desirability of . . . securing employment" as a factor and adds "the opportunity of each for future acquisition of capital assets and income" and "the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates." Whereas alimony "is based primarily upon a continuing duty to support," Blake v. Blake, 211 Conn. 485, 498, 560 A.2d 396 (1989); "the purpose of property division is to unscramble the ownership of property, giving each spouse what is equitably his." Beede v. Beede, 186 Conn. 191, 195, CT Page 5230 440 A.2d 283 (1982).
Section 46b-82(a) of the General Statutes provides in relevant part: "In determining whether alimony shall be awarded, and the duration and amount of the award, the court shall . . . consider the length of the marriage, the causes for the . . . dissolution of the marriage . . . the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate and needs of each of the parties and the award, if any, which the court may make pursuant to Section 46b-81, and, in the case of a parent to whom the custody of minor children has been awarded, the desirability of such parent's securing employment."
Section 46b-81(c) of the General Statutes states as follows: "In fixing the nature and value of the property, if any, to be assigned, the court . . . shall consider the length of the marriage, the causes for the annulment, dissolution of the marriage or legal separation, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties and the opportunity of each for future acquisition of capital assets and income. The court shall also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates."
Court decisions construing the alimony and property division statutes emphasize the responsibility of the trial court to consider all of the evidence, weigh all of the statutory factors, and then to place the weight on each factor that the court deems most fair and appropriate under the particular circumstances of each case. "While the trial court must consider the delineated statutory criteria, no single criterion is preferred over the others, and the court is accorded wide latitude in varying the weight placed upon each item under the peculiar circumstances of each case." Carpenter v. Carpenter, 188 Conn. 736, 740-41, 453 A.2d 1151 (1982). The court is not obligated to make express findings on each and "is not required to give equal weight to each of the specified criteria it considers in determining its award, nor is any single criterion preferred over the others." Graham v. Graham, 25 Conn.App. 41, 45, 592 A.2d 424 (1991). The weight to place on each factor depends on the circumstances of each case. Debowsky v. Debowsky, supra, 12 Conn.App. 526-27; Weiman v. Weiman, 188 Conn. 232, 234, 449 A.2d 151 (1982). Moreover, the statutory factors for awarding alimony or assigning property are not exclusive, and the court may consider other equitable factors in either. Smith v. Smith, 249 Conn. 265, 284, 752 A.2d 1023 (1999). Robinson v. Robinson, 187 Conn. 70, 72, 444 A.2d 234 (1982).
A
Equitable Distribution
Since the determination here of the plaintiff's income that is necessary for determining alimony and child support requires an assessment of her veterinary practice and an alimony decision may take into consideration equitable division of property, the court will begin its analysis of the financial issues with equitable distribution. "There are three stages of analysis regarding the equitable distribution of each resource; first, whether the resource is property within Section 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." Krafick v. Krafick, 234 Conn. 783, 792-93, 663 A.2d 365 (1995).
The court finds that all items listed as assets on each party's financial affidavit are property within the meaning of § 46b-81 and hence subject to equitable distribution by the court. Despite the plaintiff's desire to exempt her inheritance, comprised of cash and property worth almost $57,000, from equitable distribution, the law in Connecticut is clear that "§ 46b-81 . . . provides that the court may assign to either the husband or wife all or any part of the real or personal estate of the other . . . The `estate' of the parties . . . includes any property a party may have received by reason of inheritance." North v. North, 183 Conn. 35, 39, 438 A.2d 807 (1981). It is true that a contested will led the court in Eslami v. Eslami, 218 Conn. 801, 591 A.2d 411 (1991), to conclude that "[t]he interest of the wife in her father's estate had vested upon his death and had ceased to be a mere expectancy. Its value, however, could not be ascertained with certainty because of the unresolved will contest . . . [That] uncertainty as to the amount she would eventually receive from her father's estate militated against consideration of that interest for the purpose of the financial awards." Id., 806-07. Such is not the case here. The plaintiff has a one-fifth interest in her father's estate, whose value is known. Her inheritance is a property within the meaning of § 46b-81 and subject to equitable distribution.
Valuation is an issue here only as to the plaintiff's veterinary practice at the South Windsor Veterinary Clinic. The parties' joint expert, Gary Glassman, testified that the business was worth $530,000 as of December 31, 2009. In his written report and testimony, he stated that he had determined that the "income approach," which he described as "a general way determining a value . . . of a business . . . using one or more methods that convert anticipated economic benefits into a present single amount," pl.'s exhibit 6, at 12; should be used in determining the value of the clinic. Among the methodologies commonly employed in the income approach, he concluded that the excess earnings method and the capitalization of earnings method were the "most appropriate in determining the value of South Windsor Veterinary Clinic, LLC." Id. The excess earnings method, he said, "computes the practice's equity value based on the `appraised' value of tangible assets, plus an additional amount for intangible assets." Id. This methodology arrived at a value for the practice of $504,000. The other methodology, the capitalization of earnings method, is determined "by dividing normalized earnings by a capitalization rate to estimate the operating value of the company and adding non operating assets to this value to arrive at the value of the company." Id., 15. At trial he defined "capitalization rate" as the percentage that an outside investor "would . . . expect as a return on the money that I might utilize to invest to this practice to make it a worthwhile investment for me and coming up with that capitalization rate is what . . . an outside investor would be looking for to suggest that this is worthwhile investment." Transcript of proceedings, testimony of Gary Glassman, June 4, 2010, at 36. This methodology yielded a practice value of $532,000. Considering both methodologies together, he concluded that the clinic was worth $530,000 at the end of last year.
Glassman testified that the value he placed on the practice under either methodology was affected by the fact that SWVC held cash at the end of 2009 in the amount of $152,305. He stated that under normal operating conditions the clinic needed working capital of $57,707 (which he rounded to $57,700), and that a cash balance of $152,305 was "well above an amount [necessary] to support [its] working capital requirements." Pl.'s exhibit 6, at 8. Instead, he testified, "about one-twelfth of the yearly expenditures would be enough — an adequate amount to maintain as the cash balance." Glassman testimony, June 6, 2010, at 56. He called the difference between $152,305 on hand at year's end and the needed working capital of $57,700, an amount of $94,605, "non-operating cash," "excess cash," and funds held by the business in excess of what it needed under normal operating conditions. By the end of trial in September 2010, however, the business's cash balance had fallen almost $50,000 to $104,871, thereby reducing excess cash to $47,171 (if one continued to use Glassman's rounded number of $57,700 for needed working capital, as his valuation did in computing excess cash). The court finds that the value of the veterinary practice has also been reduced by the amount of the decline in excess cash to $482,566.
As shown on the parties' last financial affidavits, there is equity in the real property located at 69 Oakland Road in South Windsor, where the clinic is located, in the amount of approximately $444,500, and in the marital home at 14 Providence Pike in Eastford in the amount of approximately $306,000. The parties also own, separately and jointly, certain mutual funds and various bank accounts and individual retirement accounts (IRAs) whose values fluctuated during trial because of changes in the stock market and the parties' use of those accounts. At the end of trial, the total deferred compensation was worth approximately $178,000; and the bank accounts totaled just over $15,000. In addition, they have mutual funds worth $33,000 plus a custodial account set aside for Maria worth $10,319. They also own various vehicles worth approximately $28,000, two horses worth a few hundred dollars, and other livestock and assorted personal property that they did not value. The only liabilities shown on their affidavits were the mortgages on real property and their counsel fees for this proceeding.
When the parties married in 1985, the plaintiff had few assets while the defendant brought more than $120,000 into the marriage in the form of the Ellington home that he had inherited from his mother and provided substantial equity for the purchase of their next home and cash from the inheritance that formed the basis for the parties' TD Ameritrade mutual funds. Any remaining portions of his inheritance, like the plaintiff's from her father, are nonetheless part of the marital estate subject to equitable distribution, but the court concurs with the plaintiff that the court's property orders should take into consideration that neither party played any role in the other's acquisition of its inheritance. The plaintiff did, on the other hand, contribute to the preservation and appreciation in the value of the funds they received from sale of the defendant's mother's home, and over the years both parties contributed several times the original amount of his inheritance placed in the mutual funds, whose present reduced value is the result of the stock market, rather than any action on the parties' part. On the other hand, a basic sense of fairness suggests that the inheritances each party received from its parents ought not be treated differently in equitable distribution without a sound basis. The court here concludes that the mutual funds belong in the pot of assets to be apportioned between the parties, while the plaintiff should be able to keep her inheritance. In view of her contribution to the maintenance and appreciation in value of the defendant's inheritance of his mother's home, the appreciated portion should also be assigned to the pot to be apportioned, and he should be allowed to keep $80,000 of the original inherited amount.
The defendant is 60 years of age, 12 more than the plaintiff. Although he worked many years as a computer specialist and technician, he has not done so for half a decade; and he has only a few years of experience as a veterinary practice manager. He earned somewhat more than the wife before she went to Cornell, but since opening the clinic her income has substantially exceeded his. As practice manager, he was paid a salary based on hourly rates of $12 to $14, while her practice has had net profits in the last several years of more than $150,000 annually. The plaintiff complains that he is underemployed in his current job as a custodian for the Eastford public schools and that the weekly income there that he claims on his financial affidavit, $494 gross and $386 net, is less than his earning capacity, and the court concurs with her complaint that his job search efforts do not appear very vigorous. He testified in June 2010, for example, that he sends out one to two resumes a week seeking working in computer support and was "also looking for a practice manager job." He mentioned only three interviews that these efforts had produced. On the other hand, there was sparse evidence as to the availability of jobs for persons with his job skills and experience. The court thus has an insufficient basis for finding that his earning capacity is greater than his income.
The plaintiff, on the other hand, has a vocation and job history that virtually ensure her employability even if she no longer owns her own practice. As shown by the growth in her veterinary practice, her professional skills are themselves a means for future acquisition of capital assets and income, while the defendant's principal means for future such acquisition probably lie not in his own right but from what he can obtain through equitable division here. In considering the facts of this case in view of the statutory factors for equitable division of property, the court concludes that, except for the inheritances referred to above and the "core value" of the veterinary practice itself, the value of all other assets should be divided equally. Since the values of the mutual funds, deferred compensation and bank accounts have all changed over the course of the trial, the court will order each one divided 50-50, based on value of each asset on the date of dissolution.
As for the veterinary practice, the South Windsor Veterinary Clinic, while the defendant's support allowed the plaintiff to acquire the skills that enabled her to become a veterinarian and played a role in the operation of clinic and his daily care of Maria freed his wife up to provide veterinary services, the plaintiff provided or directed the professional veterinary services that customers sought when coming or returning to the clinic. In less than a decade of operation, it is doing almost a million dollars of business a year and had net profits of $174,592 in 2008, $226,000 in 2009 (based on Teresa Renner's testimony that the net profits of $229,603 reported on the 2009 federal income tax return included $3,000 attributable to Dew Properties LLC and $226,000 attributable to the clinic itself), and at the end of evidence was on target to have net profits of approximately $200,000 in 2010. Although the defendant claimed at trial that he was responsible for the clinic's advertising and marketing, he offered little to establish that his efforts had any appreciable effect on the growth of the business. He also claimed to be responsible for supervising the non-professional and support staff, but the fact that the plaintiff was the one who prepared their evaluations shows that she was the one ultimately in charge of them. On the other hand, the court finds his testimony credible that one of the reasons the clinic had so much excess cash is that the parties were using it as a savings device. The court thus finds that an equitable distribution of property will divide the "excess cash" equally, and award the plaintiff 55 percent and the defendant 45 percent of the balance of the business's value.
As noted above, however, the amount of "excess cash" in the business has decreased since December 31, 2009, thereby reducing the value of the business. On June 3, 2009, Judge Abery-Wetstone directed that neither party was to do anything to diminish the value of the business. Ironically, the primary target of her order that day was the defendant, who had picketed the clinic on the day he was fired, but the import of her order was directed to both parties: "The automatic orders are clear, that they prevent either party from dissipating marital assets while this action is pending . . . Therefore there shall be no more picketing of the business. It is in everybody's best interest that this business maintain its value, because it's a marital asset and will ultimately be divided. If anybody dissipates the value, they'll be hurting themselves." Def.'s ex. AA, transcript of proceedings, at 46. The court concludes that the amount of the "excess cash" that should be divided equally is that existing on December 31, 2009, less certain expenditures made by the plaintiff or business in 2009 that could be properly attributable to both parties. Expenditures of excess cash since then, other than those listed in the margin, shall, in effect, be debited against the plaintiff's 50% share of excess cash in existence at the end of 2009.
The evidence showed that the plaintiff or SWVC paid the following expenses in 2010:
Contributions to plaintiff's IRA being divided equally $10,564.00
Overdue taxes on joint 2009 return $10,842.00
Payments to joint experts Goia and Burzenski $11,780.00
TOTAL $33,186.00
Another difficulty in effectuating an equitable distribution is that most of the parties' assets are non-liquid: the business is worth close to $483,000, the real property on which the business is located has equity of approximately $445,000, and the marital home has equity of approximately $306,000. These assets together comprise more than 80% of the value of the marital estate. Plus, much of the wife's inheritance from her father is tied up in his former home in Bolton where she is now living, but it is still owned by his estate and has not yet been distributed to his heirs. The wife's proposed orders suggest that she be awarded both the practice and the real estate on which it is located, that the husband be awarded the marital home, that cash and retirement assets be divided 50-50 and that she pay him the balance over the next six years, amortized over 30 years, at three percent simple annual interest, with a balloon payment due on January 1, 2016, when she proposes to end alimony. Awarding the marital home to the husband and the clinic and real property housing it to the wife would result in her having to pay him more than $300,000, funds that she does not have unless she either liquidates the practice or sells the real property. The plaintiff's suggestion for resolving this dilemma would leave approximately $260,000 still owing in six years. This court does not regard alimony here as properly or fairly payable for only six years, however, and hence it is not clear where the plaintiff would obtain funds to pay any such balloon payment without selling one of these assets.
The husband's proposed orders do not address how to effectuate the division, while his trial brief suggests two alternatives. The first suggestion is to divide bank and retirement accounts equally and then award the clinic business and property to the wife and the marital home to him and would require the wife to obtain a bank loan of $150,000, which might be feasible, and give him a note for the balance, which would be approximately another $150,000; but it is not clear that the wife has the means to pay him alimony, a note for $150,000, and a bank loan for another $150,000. His other suggestion is to sell the clinic business and property so that the net proceeds could be used to effectuate an equal division; but this suggestion would substantially interfere with the plaintiff's stream of income from SWVC and his from DEW Properties.
The court concludes that a more appropriate way to effectuate the equitable distribution here would be to award the practice to the wife and title to the home and business property to the husband, the latter subject to a mortgage payable to the plaintiff in six years, when he will have reached the age for collecting full social security old age benefits, and then to divide other assets 50-50. At any time during that six-year period, the plaintiff will also have an option to purchase the property for the greater of (i) $305,200 less accrued interest on the mortgage debt owed her or (ii) its fair market value less the debt owed her. She will also have a right of first refusal should the defendant seek to sell it to someone else and a lease for the property for a period of six years, at its current fair market rent of $16 per square foot triple net, subject to the terms set forth in defendant's exhibit E.
B
Alimony and Child Support
Both alimony and child support require consideration of the parties' gross and net incomes or their earning capacities, which are not so easily determined here. The plaintiff's financial affidavits have consistently reported her as having a weekly income of $1,596 gross (representing $82,992 per year, rounded up by her brief to $83,000; pl.'s brief at 15) and $1,072 net. It is clear from her testimony, however, that her affidavits do not represent the actual, true income she receives as a veterinarian practicing at and owning the South Windsor Veterinary Clinic, but instead relies on Glassman's calculation of "normalized" compensation for the purpose of determining the value of the practice. He testified that the valuation required him to determine all the reasonable costs associated with the business, including fair market compensation for the two veterinarians that it primarily uses, Dr. Werkhoven and her employee, Dr. Lisa Carlson. Using methodologies that he testified were common for the veterinary industry, he determined that their fair market normalized "Total DVM compensation," which he said did not include benefits, would be $165,555 in 2009, but this figure included a management fee of $26,700 for hospital administrative functions normally performed by the owner of a small veterinary practice such as this one.
Glassman testified that, in order to determine the value of the practice as "an ongoing business enterprise with management operating in a rational way with a goal of maximizing value;" pl.'s ex 6, p. 3; he had to determine fair market compensation for doctors Werkhoven and Carlson based on standards in the veterinarian industry. He said that veterinarians employed by a veterinary practice are commonly paid a percentage of the revenue, not including prescription refills, that they generate for the practice, or what he termed their "professional production" or "productivity," and he concluded that "twenty-one percent was the most appropriate percentage for this particular practice:"
[T]he way that hospitals many times calculate, the pay associated with the doctor is based off of what we would refer to as that professional production . . . [O]ne of the common ways in veterinary medicine that is used to compensate veterinarians is on what's referred to as a production based compensation system meaning that there's a definite correlation between what they generate for income and how much they are paid . . . Again, we look to industry standards and benchmarks for what normal veterinary would be-what veterinary compensation would be if that veterinarian was paid on a production based system. There is a range that's normally considered to be average for this compensation type system. The range happens to be from eighteen to twenty-two percent, and so in our professional judgment we use what we believe to be the current marketplace for determining what a production pay would be based upon the most adequate and appropriate percentage; again, based on the current marketplace.
Testimony of Gary Glassman, June 4, 2010, at 16ff.
Although he had been provided with data from the practice's computer software that attributed most of the customer receipts and invoices generated by the practice either to Dr. Werkhoven or Dr. Carlson, that data included prescription refills that Glassman said are usually excluded from determining a veterinarian's "productivity" for the purpose of determining compensation:
[F]rom a general industry standpoint, when we use these professional production calculations, which is referred to as the twenty-one percent of production, prescription refills is not normally a part of that calculation . . . So, we had to make a further adjustment to determine what part of the professional production related to prescription refills to then get us to what true professional production was for what we could then say the doctors should be paid at twenty-one percent of what that production was . . . We determined that we needed to adjust the total professional production by about fifteen percent for those . . .
Id., 18ff. Glassman then reduced each doctor's productivity totals by fifteen percent, as an estimate for the amount represented by that prescription income, based on "our knowledge . . . of the veterinary profession." "We determined that we needed to adjust the total professional production by about fifteen percent for those prescription refills that should not normally be provided as part of the calculation for professional production, . . ." Id., 20.
The plaintiff's brief acknowledges that she derived her claimed compensation of $1,596 gross income per week by subtracting the actual salary paid to Dr. Carlson from this "normalized" number. She asserted during cross-examination, moreover, that the numbers on her financial affidavit are compelled by Glassman's practice valuation. Glassman's report and testimony all indicate, however, that number for "total DVM compensation" is a hypothetical construct used to value of the business by determining fair market compensation for its two veterinarians, not what Dr. Werkhoven is actually earning there in her dual capacities as a veterinary doctor providing services to customers and the owner of the business. Such a determination is obviously important, in assessing the fair market value of the business, for a disinterested third party considering purchase of SWVC would want to know how much of the gross revenues it generated would be paid to the two veterinarians employed there. But this number represents what the plaintiff would have been paid if both Dr. Carlson and she had been clinic employees receiving a "fair market wage" based on compensation methodologies commonly employed in the veterinary industry, not what she is actually earning.
"It is axiomatic that if Dr. Carson's salary is a known figure of $82,738 for 2009, then the balance of the $165,555 salary is attributable to the Plaintiff, specifically $83,000." Pl's brief, at 15.
It is inconsistent with Glassman's methodology, however, to compute the plaintiff's actual income by subtracting Dr. Carlson's actual income from this hypothetical construct, for the evidence shows that there is no direct relationship between actual income of either veterinarian and the "normalized" income adjustments made by Glassman for purposes of determining the fair market value of the SWVC. Using Glassman's method, for example, Dr. Carlson's productivity-based compensation in 2009 would have been $65,222, or 21 percent of her "professional production," but first reduced by 15 percent for the fact that the practice software included in that number prescription refills that Glassman testified "should not normally be provided as part of the calculation for professional production." In 2009, however, SWVC paid Dr. Carlson $17,500 more than Glassman's methodology calculated would be her fair market wage based on productivity-based pay. Since the numbers for "total DVM compensation" do not include the cost of fringe benefits provided to employees, her actual income may reflect the fact that Dr. Carlson is paid by the hour and receives no benefits.
Glassman's written report stated that her total professional production in 2009 was $365,391.
Similarly, the plaintiff's annualized productivity-based compensation, using the 2009 productivity totals, would be calculated by multiplying her total professional production of $412,509 by 85 percent, to adjust for prescription refills included by the clinic software in reports of her productivity, and then further by 21 percent, for a result of $73,633, to which would be added a management fee of $26,700 (since the defendant no longer performs those services), for a total productivity-based compensation of $100,333. As the defendant pointed out in cross-examination of Glassman, however,
Q And that doesn't include any compensation based upon the food sale or the prescription-drug sales; that has been taken out of the picture by your 85 percent discount?
A That's correct.
Q And it also doesn't include — for example in the year 2009, the additional hundred-thousand-dollars plus between the gross revenue of the business and the amount that you got from the Avimark data?
A That's correct.
Transcript of proceedings, testimony of Gary Glassman and Teresa Renner, November 5, 2010, at 36-37.
The plaintiff's use of this construct for her income ignores, moreover, the fact that "total DVM compensation" does not include the plaintiff's income taxes paid from SWVC funds — the $77,000 paid from SWVC bank accounts in 2010 for her and their income taxes is only $6,000 less than the amount that she claims as her entire annualized income — or benefits paid by the practice. It ignores the fact that the SWVC has income from prescription refills and other sales and services that Glassman did not attribute to either veterinarian or include in determining "total DVM compensation" and is solely the income of the practice's owner, the plaintiff. In 2009, for example, the revenues generated by what Glassman referred to as "total professional production," from which he then calculated total DVM compensation, were $110,000 less than the clinic's gross receipts, and Glassman reduced ("adjusted") total professional production because the data provided to him by the clinic's software had included certain sales not typically allocated to veterinarian compensation — by an additional 15 percent, which represents another $110,000 that would thus be income belonging to the practice's owner, the plaintiff.
The plaintiff's income tax returns, the records from her business, and other financial information introduced into evidence all show instead that the plaintiff's actual gross income in 2010 would be closer to $200,000. This includes the moneys identified in the business records as her "draw," or what she actually paid herself from the business bank accounts, ($52,751.29 through September 30), payments made by the business on her behalf that are normally included in the determination of gross income for purposes of determining alimony and child support, such as income taxes paid on her behalf directly by the business ($77,042, of which approximately $11,000 was attributable to 2009 taxes), her health and life insurance premiums paid by the business ($11,968.65 through September 30), contributions to her deferred compensation account ($10,564), funds paid from the business account to her divorce attorney ($12,780), moneys paid to Glassman and Renner, both of whom she called as witnesses in the dissolution proceeding ($10,100 through September 30), and funds paid directly by the business to comply with the court order that the plaintiff pay for the defendant's living expenses at the marital home ($25,648.86). These amounts total to approximately $200,000. Not all of the payments from the business represent income received in 2010, however, as the plaintiff spent some approximately $50,000 of the practice's cash reserves (of income earned in previous years but retained in SWVC bank accounts as a saving device by the parties and included in Glassman's appraisal of the practice's value). The best evidence available leads the court to conclude that through September 30, 2010, the plaintiff had gross income of approximately $153,000, a figure that is consistent with her business accountant's testimony that the clinic was on track to provide her with approximately $200,000 of net profits in 2010. This would equal weekly income, while the plaintiff is still paying less than fair market rent to the defendant on the Oakland Road property in South Windsor where the clinic is located, to the plaintiff of $3,846 gross and $2,539 per week net at current tax rates.
The plaintiff complains, however, that "[t]o value SWVC utilizing `DVM Compensation' while at the same time calculating child support and/or alimony using a higher number results in double dipping." Her trial brief quotes the Appellate Court's decision in Greco v. Greco, 82 Conn.App. 768, 777 (2004), for the proposition that "taking the corporation into account in both the property division and in the award of alimony and other payments is, in essence, `double dipping' and inequitable because the corporation provides the only significant stream of income by which the defendant can meet his alimony and other court ordered payment obligations." In Greco the trial court had given the partial owner of a business the option of either paying his wife a sum certain as her share of his business interest or transferring his stock in the business to her. If the husband elected the option of keeping his stock and paying her the sum certain, he had the additional option of paying that amount immediately or amortized over ten years; but the Appellate Court found that this order would require the husband to pay funds to the plaintiff "which, in light of the court's other orders and findings, he does not appear to have." The Appellate Court held that "[t]he court's order, therefore, in effect, requires the defendant to transfer control of the closely held corporation to the plaintiff, which gives her control over the defendant's employment and his only significant source of income. Accordingly, the court's taking the corporation into account in both the property division and in the award of alimony and other payments is, in essence, `double dipping' and inequitable because the corporation provides the only significant stream of income by which the defendant can meet his alimony and other court ordered payment Obligations . . . [T]he court's award, in practical effect, equates to `double dipping.'" While agreeing that the order was inequitable, the Supreme Court stated that we disagree with the Appellate Court's conclusion that the trial court's "taking the corporation into account in both the property division and in the award of alimony and other payments is, in essence, `double dipping . . .' " Greco v. Greco, supra, 82 Conn.App. 776. In Krafick v. Krafick, 234 Conn. 783, 804-05 n. 26, 663 A.2d 365 (1995), we concluded that the consideration of a vested employee pension in both the property distribution and alimony award did not constitute "double dipping" unless "any portion of the pension assigned to the nonemployee spouse was counted in determining the employee spouse's resources for purposes of alimony." In the present case, the stock itself did not constitute a significant resource or source of income and the trial court did not attribute any such income (e.g. cash dividends) to the defendant in determining his income for the purpose of calculating alimony.
Greco v. Greco, 275 Conn. 348, 357 fn.8, 880 A.2d 872 (2005).
In Krafick, the husband had a vested pension not yet in pay status which the trial court had refused to value. "The trial court acknowledged that the pension was an asset, but indicated that because it did not have a liquidated value, it was not amenable to reliable valuation and, therefore, was not considered alongside other assets in distributing the marital property." Krafick v. Krafick, supra, 234 Conn. 791. On appeal, the husband argued that "a trial court may assign a pension no value if the pension is taken into account as a source of alimony." Id., 804. The Supreme Court disagreed, rejecting the notions that an asset whose principal value is providing a future stream of income is not property within the meaning of our statutes for purposes of equitable distribution or that courts should not place values on such assets to the extent that they represent a future income stream. Although the plaintiff here does not advance the proposition that the clinic is not an asset subject to valuation and equitable distribution, she is attempting the converse of what was rejected in Krafick — to shield from consideration for support purposes that portion of the value of the practice that relates not to her ongoing labors as a veterinarian but instead to additional profits being generated by the practice. In Krafick, however, the court expressly rejected the proposition that "to consider vested benefits for purposes of equitable distribution and also, as allocated, as a source of alimony constitutes impermissible `double dipping.' Our alimony statute expressly provides that `in determining whether alimony shall be awarded, and the duration and amount of the award, the court . . . shall consider . . . the award, if any, which the court may make pursuant to section 46b-81.' General Statutes § 46b-82. Relying on the pension benefits allocated to the employee spouse under § 46b-81 as a source of alimony would be improper only to the extent that any portion of the pension assigned to the nonemployee spouse was counted in determining the employee spouse's resources for purposes of alimony.'" Id., 804, n. 26.
In holding that "[r]elying on the pension benefits allocated to the employee spouse under § 46b-81 as a source of alimony would be improper only to the extent that any portion of the pension assigned to the nonemployee spouse was counted in determining the employee spouse's resources for purposes of alimony," the court in Krafick v. Krafick, 234 Conn. 783, n. 26, 663 A.2d 365 (1995), (1995), cited a New York Court of Appeals decision, Majauskas v. Majauskas, 61 N.Y.2d 481, 463 N.E.2d 15, 474 N.Y.S.2d 699 (1984), which rejected a similar argument that ordering a husband to award his ex-wife as part of the property order part of "his future pension income which when received may constitute the basis for maintenance payments to defendant, constitutes impermissible `double-dipping.'" Id., 489. "Finally, the suggestion that by making the distribution under consideration the husband will be unjustly burdened by `double-dipping' ignores the provisions of the statute which require that in determining distribution the court must consider `any award of maintenance under subdivision six . . . and that in determining the amount of maintenance the court must consider `marital property distributed pursuant to subdivision 5.'" (Citations omitted.) Id., 492.
To the extent that language in the case of Eslami v. Eslami, 218 Conn. 801, 591 A.2d 411 (1991), might be construed as supporting the plaintiff's position here, the Supreme Court's decisions in Krafick and its progeny undo any implication that an asset may not considered both for purposes of equitable distribution and also as a source of income for purposes of support. In Utz v. Utz, 112 Conn.App. 631, 963 A.2d 1049, cert. den. 291 Conn. 908, 969 A.2d 173 (2009), for example, the Appellate Court again recently and expressly rejected the plaintiff's argument here "that the court's decision to take into account his business in both the property division and alimony award results in `double dipping' because the business is his only significant stream of income that he can use to meet the court's alimony order." Id., 640. "Our Supreme Court in Greco disagreed with a `double dipping' argument where the husband's business, his main source of income, was transferred to his wife but also was taken into account in the court's order for the husband to pay his wife alimony. Id., 357 n. 8. Unlike the husband in Greco, in the present case, the defendant still owns his business, and no restrictions have been placed on his ability to get a line of credit using the business as security. In addition, the defendant did not present any legal basis for the court to consider as to why the home equity loan is the only viable credit line for the business. Therefore, we will not entertain such a claim here." Id.
The child support guidelines and alimony statute require a court to determine a party's income from all sources, both earned and unearned. Two of the assets awarded here, the veterinary practice and the real property on which it is located, were valued by the parties' joint-retained experts — values to which the parties stipulated — based on the ability of those assets to provide income. Those steady streams of income for both of the parties should be considered for the purposes of determining the alimony and support orders. The definition of gross income in the child support guidelines, for example, includes "rental income after deduction of reasonable and necessary expenses," "interest, dividends and annuities," and "self-employment earnings, after deduction of all reasonable and necessary business expenses," without regard to whether the source of these incomes was awarded in the divorce. In Gay v. Gay, 266 Conn. 641, 647, 835 A.2d 1 (2003), our Supreme Court held that capital gains are not income for purposes of modifying a support order "if those gains do not constitute a steady stream of revenue," but though it expressly declined to "decide whether capital gains would constitute income under § 46b-82 if those capital gains represented a steady stream of revenue"; id., fn.3.; trial courts since then have generally applied the Gay test — whether revenue generated by an asset represents a regular stream of income or an isolated incident — in determining whether to treat such moneys as income for support purposes.
See Child Support Guidelines, Regulations, Conn. State Agencies, § 46b-215a-1(11), which provides, in relevant part, as follows: "`Gross income' means the average weekly earned and unearned income from all sources before deductions, including but not limited to the items listed in subparagraph (A) of this subdivision, but excluding the items listed in subparagraph (B) of this subdivision.
(A) Inclusions
The gross income inclusions are:
***
(xiii) rental income after deduction of reasonable and necessary expenses;
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(xvi) interest, dividends and annuities;
(xvii) self-employment earnings, after deduction of all reasonable and necessary business expenses; . . .
See, e.g., Caragnano v. Caragnano, Superior Court, judicial district of New Haven, docket number FA99-0424285 (March 15, 2004) (Abery-Wetstone, J.) (holding that steady streams of income from rent and a business awarded to defendant in the prior dissolution of marriage should be considered as income, based on Gay, but that an increase in the value of the marital home awarded to plaintiff should not because "the appreciation does not represent a steady stream of income available for . . . support"); Couto v. Couto, Superior Court, judicial district of Stamford-Norwalk at Stamford, docket number FA97-0161219S (November 18, 2009) (Shay, J.) (holding that a steady stream of revenue from defendant's day trading of assets should be considered on motion for modification of support); and Juliano v. Juliano, Superior Court, judicial district of Stamford-Norwalk at Stamford, docket number FA 93 0134251 S (August 23, 2006) (Tierney, J.) [ 42 Conn. L. Rptr. 107] (declining to consider, on motion for modification of support, capital gains from cashing in of retirement account and exercising of stock options that were not shown to be a "steady stream of revenue").
The parties' present incomes do not represent their incomes after judgment, however, for two reasons. The first, and simplest, is that the child support guidelines require the deduction from gross income of the cost of life-insurance ordered by the court for the benefit of the minor child. The parties' most recent financial affidavits, filed on November 2, 2010, showed that the plaintiff then had life insurance of $721,590 and the defendant had life insurance of $400,000. The general statutes allow courts to enter orders that parties owing a support obligation, obtain or maintain life insurance as security for such orders, an authority the Appellate Court has held also extends to securing present or future educational support orders. See General Statutes § 46b-82, § 46b-84, and Crews v. Crews, 107 Conn.App. 279, 299-308, aff'd on other grounds, 295 Conn. 153 (2010) (holding that parent may be ordered to maintain life insurance to secure an educational support order that may be entered in the future). Here the court finds it appropriate to order the plaintiff to maintain life insurance as security for alimony in the amount of $375,000, and to name the defendant as an irrevocable beneficiary thereof for so long as she has such an obligation, although the amount of insurance so required may decrease by the sum of $31,200 per year. Similarly, both parties shall maintain life insurance as security for their maintenance of the minor child, naming Maria as the irrevocable beneficiary of such life insurance until she turns age 23, in the amount of $250,000. Prorating the cost of life insurance shown on the parties' financial affidavits, the plaintiff will spend $17 a week on court-ordered life insurance for Maria's benefit, and the defendant will spend $20 a week.
The Child Support Guidelines, Regulations, Conn. State Agencies, § 46b-215a-2b(c)(2) provide in relevant part as follows:
Determine the net weekly income of each parent
Follow the instructions in this subdivision to determine the net weekly income of each parent.
(A) Enter the parent's gross income on line 1, and indicate the number of work hours, to a maximum of forty-five, used to determine the gross income.
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(G) Enter the parent's payments on court-ordered life insurance for the benefit of the child whose support is being determined on line 7 . . .
General Statutes 46b-82 provides, in relevant part, as follows: "(a) At the time of entering the decree, the Superior Court may order either of the parties to pay alimony to the other, in addition to or in lieu of an award pursuant to section 46b-81. The order may direct that security be given therefor on such terms as the court may deem desirable, . . . The court may order that a party obtain life insurance as such security unless such party proves, by a preponderance of the evidence, that such insurance is not available to such party, such party is unable to pay the cost of such insurance or such party is uninsurable."
General Statutes Section 46b-84 provides, in relevant part, as follows: "(f)(1) After the granting of a decree annulling or dissolving the marriage or ordering a legal separation, and upon complaint or motion with order and summons made to the Superior Court by either parent or by the Commissioner of Administrative Services in any case arising under subsection (a) or (b) of this section, the court shall inquire into the child's need of maintenance and the respective abilities of the parents to supply maintenance. The court shall make and enforce the decree for the maintenance of the child as it considers just, and may direct security to be given therefor, including an order to either party to contract with a third party for periodic payments or payments contingent on a life to the other party. The court may order that a party obtain life insurance as such security unless such party proves, by a preponderance of the evidence, that such insurance is not available to such party, such party is unable to pay the cost of such insurance or such party is uninsurable."
The second reason that their present incomes do not represent their post-judgment income is that, unlike in the past, the clinic must prospectively pay the defendant fair market rent to occupy the premises where the clinic is located and which is property being awarded to the defendant. The real estate appraisal conducted of the property for the parties concluded that fair market rent of the property is $16 per square foot triple net, or $49,600 per year, a figure used by Glassman in his valuation of the clinic. Under a triple net rent, as described in the defendant's exhibit B, the plaintiff would also pay real property taxes and sewer assessments on the property, and the defendant's net rental income would include deductions for those expenses as well as his mortgage payments. Although there was no direct evidence as to the amount of the mortgage payments on the property, there was evidence showing the amount paid for the property in March 2004 ($200,000), the down payment ($40,000), the loan costs associated with the mortgage ($4,765.25), mortgage interest and real property taxes on the property for the last five years, and the depreciation taken on income tax returns for each of those years. The parties' financial affidavits dated November 2, 2010, stated that the mortgage balance as of that date was $130,000 (plaintiff) or $131,000 (defendant). Using this information, a simple amortization table suggests that the monthly mortgage payment is approximately $950 and that the defendant's net monthly rental income, after paying mortgage principal, interest, and real estate taxes, all of which are reasonable and necessary expenses, will be approximately $3,100. His weekly income from employment and rental income will be, for purposes of computing the presumptive support amount and including a deduction of $20 a week for life insurance payments to benefit Maria, $1,229 gross and $922 net. The plaintiff's income will, correspondingly, be reduced since he will be receiving a fair market rent and will, after judgment (but before any support orders), be $3,164 gross and $2,096 net per week (which includes a deduction of $17 a week for life insurance payments to benefit Maria). The presumptive child support amount, under the child support guidelines, is for the defendant to pay the plaintiff $125 per week in current child support.
The defendant requests alimony of $1,000 per week for 12 years while the plaintiff, though recognizing that she will pay alimony, has asked the court to limit its term to six years in the amount of $600 per week. The defendant's request of $1,000 per week would award him more than half of the parties' after-tax income, even after payment of child support, but his request was premised on his proposed order that the plaintiff be awarded the property at 69 Oakland in South Windsor where the clinic is located; and, under such circumstances, would have provided him with weekly income from his earnings and alimony in the approximate amounts of $1,500 gross and $1,185 net after taxes. His proposed orders also assumed that he would receive of additional moneys from the plaintiff both immediately and over time from her payout on the property orders. The defendant's limited efforts to find higher-paying work show lack of motivation and diligence on his part to become self-supporting and counsel that of alimony be determined not just with a view to providing support for him but also "an incentive for the spouse receiving support to use diligence in procuring training or skills necessary to attain self-sufficiency." Markarian v. Markarian, 2 Conn.App. 14, 16, 475 A.2d 337 (1984). After considering the statutory factors for awards of alimony and the facts of this case, the court deems it appropriate to award the defendant alimony of $500 per week for twelve years. Such an amount, plus the other income he now earns or will receive under these orders, should enable him to meet his reasonable expenses. A term of twelve years will give him a considerable period to increase his income and take him several years past the date when he will be eligible to collect social security. After taking the alimony order into consideration, as mandated by the child support guidelines, the defendant shall pay 40% of unreimbursed medical expenses, and qualifying child care expenses.
"80% of any alimony paid by one of the parents to the other is now added to the net income of the receiving parent, and deducted from the net income of the paying parent, in the calculation of net disposable income, for purposes of calculating unreimbursed medical and child care contribution amounts." Child Support and Arrearage Guidelines (2005), preamble, § (b)(3), p. 1.
C
Counsel Fees
The defendant also seeks a contribution from the plaintiff in the amount of $25,000 toward his counsel fees. His trial brief argues that "[t]he wife's position that her income is $83,000, her inaccurate financial affidavit, her spend-down of the business accounts, and her unsubstantiated efforts to cast fault on the husband, all resulted in many unnecessary days at trial . . . Based on the wife's fraudulent financial affidavit and her unsupported testimony about her own income, based on her use of the clinic assets to pay her litigation expenses, and based on her over-litigation on issues that were readily resolved by the parties' tax returns, financial accounts and joint appraisal, an award of substantial attorneys fees to the husband is warranted in this action." Def.'s Post-Trial Brief, at 14-16.
Section 46b-62 of the General Statutes governs the award of attorneys fees in dissolution actions and provides that "the court may order either spouse . . . to pay the reasonable attorneys fees of the other in accordance with their respective financial abilities and the criteria set forth in [General Statutes §] 46b-82 . . ." The court must also take care that its determination of this question does not substantially undermine its other financial orders:
In determining whether to award counsel fees the trial court must consider the total financial resources of the parties in light of the statutory criteria. The statutory criteria are to be applied in light of the following three broad principles: First, such awards should not be made merely because the obligor has demonstrated an ability to pay. Second, where both parties are financially able to pay their own fees and expenses, they should be permitted to do so. Third, where, because of other orders, the potential obligee has ample liquid funds, an allowance of counsel fees is not justified. If, on the basis of the total financial resources of the parties, the trial court concludes that denying an award of counsel fees would not undermine its purpose in making its prior financial orders, the court should allow each party to pay his or her own counsel fees.
(Citations omitted; quotations omitted.) Miller v. Miller, 16 Conn.App. 412, 418, 547 A.2d 922 (1988). Under the recent decision of Ramin v. Ramin, 281 Conn. 324, 353, 915 A.2d 790 (2007), a court also has "discretion to award attorneys fees to a party who incurs those fees largely due to the other party's egregious litigation misconduct."
The defendant's argument that the wife's "fraudulent" financial affidavit and her claims there and at trial that her income is only $83,000 unduly prolonged the trial appears to be a Ramin v. Ramin argument of litigation misconduct. Although this court strenuously disagrees with the plaintiff's position, however, she has been straightforward in her explanation as to why she claims this amount of income. There does not appear here to be any subterfuge or deliberate concealment of income but instead an effort on her part, and which she explained, to characterize the profits being generated by the practice as not income to her for purposes of alimony and support. Although time was spent at trial on evidence relating to her claim, the court does not find fees under Ramin to be warranted.
The defendant's alternative argument is that not awarding him legal fees would undermine the court's other financial orders. While his brief asserts that his "income is insufficient for him to obtain a loan" on the marital home, it did not take into consideration the court's award to him of the regular rental income that will now be generated on the Oakland Street property. It also claims that "his only source of cash" will be funds awarded to him out of the clinic's excess funds, but the court has also divided equally the existing bank accounts. Neither party here will have substantial cash on hand after the court's orders. On balance, after considering the facts of this case and the relevant law, the court declines to award counsel fees, and each party shall be responsible for its own legal expenses in this proceeding.
III
CONTEMPT MOTIONS
The defendant's motion for contempt #116 claims that the plaintiff disobeyed the order directing the plaintiff to pay the defendant's household and certain other expenses entered by the court, Abery-Wetstone after a hearing on June 3, 2009, but he did not offer sufficient evidence establishing such a violation. At trial he claimed that the plaintiff was supposed to pay for his car repairs, but he showed no such order or refusal that she do so. The motion also asserts that she had violated an unspecified order not to expose the child to Mr. Sklenar but he did not establish that there was such an order or that the child had been with Mr. Sklenar. This motion is denied.
His motions for contempt #117 and #118 claim that the plaintiff violated the court ordered pendente lite parenting plan. The basis for motion #117 is that on one weekend in January 2010, after learning an ambulance had taken the defendant to the hospital that Friday for an adverse drug reaction, the plaintiff refused to allow Maria to go for scheduled visitation with her father. The plaintiff called him at the hospital and, although the defendant insisted at trial that he was fine after his stay there, she testified credibly that her telephone call gave her concern over whether Maria would be safe that weekend. She said that he told her he had been on medication for depression and that he had felt stressed on that particular day and unable to function. She also said that several times after they separated the previous June he had told her he was considering going to a gun shop and ending it all. Under these circumstances, her actions that day were prudent and the court exercises its discretion not to find the plaintiff in contempt for having violated the parenting orders.
Motion for contempt #117 claims that the plaintiff scheduled Maria for dance classes during his parenting time, but he admitted at trial that, though the plaintiff may have enrolled their daughter in such classes, he had no evidence that the child actually attended them. There is thus an inadequate basis to find any contempt.
The basis for motion #118, however, does warrant a finding of contempt. The plaintiff took Maria with her to a convention in Puerto Rico in February 2010 and thereby caused father and child to miss parenting time under the pendente lite orders. Although she provided him with advance notice of her intention to do so and make-up parenting time, she did not obtain permission from either the defendant or the court to depart from the parenting orders. There is a discernible difference between these facts and those underlying motion #117. In the former, a parent acted prudently to protect her child under circumstances where it was impracticable first to present the issue to a court and obtain a timely court order; and while her actions may have violated the court's orders, she did not act contumaciously. In the other, she had time to seek a court order but did not do so. She probably wanted to share a pleasurable trip with her daughter and did not want to forfeit her own parenting time while away, but neither was a sufficient basis for violating the court orders. The privileges of a custodial parent do not include the unilateral right to take away the parenting time of the other parent and then offer make-up time. Motion for contempt #118 is granted.
Motion for contempt #127 claims that the plaintiff violated the automatic orders by taking the horses, pickup truck, horse trailer and related items from the marital home to sell them and that she refused to return these items. Judge Abery-Wetstone's orders on June 3, 2009, gave the defendant "exclusive possession of the Eastford home, except for the exchange of whatever clothing and items the mother and child need," def.'s ex. AA, transcript of proceedings on 6/3/09, at 47, gave the plaintiff access to the barn and farm animals, and permitted the plaintiff "to remove her possessions as long as we're not hauling out furniture." Id. 48. The defendant testified that he later told the plaintiff to remove the horses and that he knew she would need the truck and trailer to do so, but he complained that she had not returned the truck and trailer. The plaintiff described how the horses were being cared for after their removal from the Eastford home, and it appears to the court that she continued to need the trailer and truck to comply with the defendant's desire to remove the horses from the Eastford property. This motion is denied.
Under General Statutes § 46b-87, the prevailing party in a contempt proceeding may be awarded a reasonable attorneys fee. "The award of attorneys fees in contempt proceedings is within the discretion of the trial court." Tatro v. Tatro, 24 Conn.App. 180, 189, 587 A.2d 154 (1991). In Champagne v. Champagne, 43 Conn.App. 844, 685 A.2d 1153 (1996), for example, the court upheld the trial court's refusal to award counsel fees for successfully defending against a motion for contempt because "the defendant raised a valid issue in his motion." Id., 850. Although the plaintiff has prevailed on most of the contempt motions raised here, her conduct on motion #118 was particularly contumacious. On these facts and circumstances, the court exercises its discretion to award no fees on the contempt motions to either party.
General Statutes Section 46b-87 provides in relevant part as follows: "When any person is found in contempt of an order of the Superior Court entered under section 46b-60 to 46b-62, inclusive, 46b-81 to 46b-83, inclusive, or 46b-86, the court may award to the petitioner a reasonable attorneys fee and the fees of the officer serving the contempt citation, such sums to be paid by the person found in contempt, provided if any such person is found not to be in contempt of such order, the court may award a reasonable attorneys fee to such person."
IV
ORDERS
After considering all of the evidence in light of the parties' proposed orders, the arguments of the parties, and the statutory and regulatory criteria set forth in General Statutes § 46b-81 as to equitable distribution of property and debt, § 46b-82 as to alimony, § 46b-84 as to support and medical insurance for a minor child, § 46b-82 and 46b-87 as to counsel fees, and § 46b-215a-1 et seq., Regulations, Connecticut State Agencies, as to child support, and court decisions construing the same, the court hereby enters the following orders:
1. Dissolution of marriage
The marriage of the parties, having broken down irretrievably, is hereby dissolved.
2. Parenting orders
By agreement of the parties, the following orders are found to be in the best interest of the minor child:
On July 16, 2009, the parties entered into a pendente lite parenting plan approved by the court. On the first day of trial, the parties entered into a written stipulation, adopted above, that effectively adds additional detail to the agreement previously approved by Judge Abery-Wetstone.
(1) The parties will share joint legal custody of their child, primary residence with the plaintiff.
(2) The defendant shall have flexible and liberal visitation, including not limited to every other weekend from Friday afternoon until Sunday after dinner and a midweek visitation each week;
(3) Each party will have the right of first refusal if the other one is unable to care for the child.
(4) The parties will alternate major holidays and each shall have time with Maria during the Christmas holiday and on the child's birthday.
(5) Maria will spend Mother's Day with the plaintiff and Father's Day with the defendant.
(6) Each parent shall have time with Maria on that party's birthday.
(7) The parties shall have unrestricted phone access with Maria.
(8) If either parent has business travel or work conflicts that interfere with this schedule, they shall cooperate in rescheduling parenting time to accommodate these obligations, of which each party shall give the other reasonable notice.
(9) The plaintiff shall not relocate so as to interfere substantially with the father's access without prior written agreement or court order.
(10) If the defendant relocates for purposes of employment or other reason, he will give the plaintiff reasonable advance notice. If he does relocate in such a way as to interfere with this access schedule and the parties are unable to agree on a revised access schedule, they shall first attempt mediation of their differences with Mediated Solutions, LLC, or other appropriate mediator if that program is not available before seeking court intervention.
(11) Each parent may exercise up to two non-consecutive weeks of exclusive parenting time with the child each year for the purpose of vacation travel. In the event of summer vacation travel or any other extended out-of-state travel, each parent will give the other reasonable notice of the intent to travel with the child and include the destination, dates of departure and return, and a phone number where the traveling parent can be reached.
(12) Each parent will have a full and active role in providing a sound, ethical, economic and educational environment that is conductive to their child's positive physical, social and emotional development. The parents will work cooperatively to meet their child's changing needs. They will exert their best efforts to resolve amicably any parenting disputes that may arise. Neither parent will do anything to estrange the child from the other parent, injure her opinion of the other parent, or in any way impair the natural development of the child's love and respect for the other parent.
3. Financial orders regarding the minor child
(1) Child support: Pursuant to the child support guidelines, the defendant shall pay the plaintiff $125 per week in child support, by way of immediate wage execution, and 40 percent of qualifying child care expenses and unreimbursed medical expenses. The plaintiff shall be responsible for 60 percent of qualifying child care expenses and unreimbursed medical expenses.
(2) Health insurance: The plaintiff shall provide health insurance for the minor child if available to her at a reasonable cost through her place of employment. If health insurance for the minor child is not available at a reasonable cost at the plaintiff's place of employment, the defendant shall provide such insurance if available to him at a reasonable cost through his place of employment. If not available to either party at a reasonable cost, they shall cooperate in placing and maintaining the children on HUSKY or other publically-funded health insurance available to them.
(3) Post-secondary educational support: The court will retain jurisdiction to enter orders regarding post-secondary educational support pursuant to General Statutes § 46b-56c.
The plaintiff's proposed orders contained in her trial brief request a specific order now while the defendant asks the court to reserve jurisdiction for purposes of an order later. General Statutes § CT Page 5260 46b-56c(c) provides, in relevant part, as follows: "The court may not enter an educational support order pursuant to this section unless the court finds as a matter of fact that it is more likely than not that the parents would have provided support to the child for higher education or private occupational school if the family were intact. After making such finding, the court, in determining whether to enter an educational support order, shall consider all relevant circumstances, including: (1) The parents' income, assets and other obligations, including obligations to other dependents; (2) the child's need for support to attend an institution of higher education or private occupational school considering the child's assets and the child's ability to earn income; (3) the availability of financial aid from other sources, including grants and loans; (4) the reasonableness of the higher education to be funded considering the child's academic record and the financial resources available; (5) the child's preparation for, aptitude for and commitment to higher education; and (6) evidence, if any, of the institution of higher education or private occupational school the child would attend." The court finds that it is more likely than not that the parties would have provided support to Maria for higher education if the family had remained intact. Since Maria is so young, however, the court finds it premature to enter such an order, as the parties' financial circumstances may be substantially different when their daughter needs such an order.
4. Alimony
The plaintiff shall pay the defendant alimony of $500 per week for twelve years. Alimony shall terminate upon remarriage of the defendant or the death of either party. Alimony may be modified or terminated based on cohabitation by the defendant as the circumstances may warrant pursuant to General Statutes § 46b-86(b).
5. Life insurance
The plaintiff shall maintain life insurance as security for alimony in the amount of $375,000, and name defendant as an irrevocable beneficiary thereof for so long as she has such an obligation, although the amount of insurance so required may decrease by the sum of $31,200 every 12 months. Both parties shall maintain life insurance as security for their maintenance of the minor child, naming Maria as the irrevocable beneficiary of such life insurance until she turns age 23, in the amount of $250,000.
6. Equitable distribution
(1) Except as otherwise stated herein, each party is awarded the property and assets listed on its November 2010 financial affidavit filed with the court and shall be responsible for its own debts and liabilities and shall indemnify and hold the other party harmless thereon.
(2) The South Windsor Veterinary Clinic and all its assets, contents, and obligations are awarded to the plaintiff, except that plaintiff shall pay to defendant the sum of $30,709.50, representing his half share in the excess cash in the clinic.
(3) The plaintiff is awarded all rights and interests in her inheritance from her father and in any moneys, properties or other assets she may receive from him by upon his death, and without any claim or right thereto in the defendant.
(4) The DEW Limited Liability Company and all its assets, property, including the real property located at 69 Oakland Road in South Windsor, and obligations are awarded to the defendant, subject to the following:
(a) A debt to the plaintiff in the amount of $139,300, plus simple annual interest thereon at the rate of four percent, which shall be memorialized by a mortgage note and secured by a mortgage deed on the property, as set forth below, and become fully due and payable in six years from the date of this decision.
(b) The defendant shall provide documentation to the plaintiff on a monthly basis verifying that he is current on the mortgage, real property insurance, sewer assessment/fee, and real property taxes. If the defendant fails to pay a full mortgage payment or fall behind on real property taxes, the sewer assessment/fee, or real property insurance, the plaintiff may make such payment and deduct the amount paid from her next rent check to the plaintiff. For as long as the plaintiff is either (i) obligated on any mortgage for this property or (ii) renting the property under the six-year lease provided here, if the defendant falls more than 60 days behind on the mortgage or real property insurance, the property shall be sold and the plaintiff paid from net proceeds any amounts owing to her under this section, unless plaintiff agrees in writing to waive the right of sale for that breach of defendant's obligations.
(c) For six years following the date of this decision, the plaintiff will have:
(i) an option to purchase the property for the greater of (i) $305,200 less accrued interest on the mortgage debt owed to her or (ii) its fair market value less the amount owed her.
(ii) A right of first refusal should the defendant propose seek to sell the property to someone else (defendant shall provide the plaintiff at least 30 days advance written notice of the terms of any such proposed sale);
(iii) A lease of the property for a period of six years, at its current fair market rent of $16 per square foot triple net, subject to the following terms:
1) Rent will be payable monthly by the plaintiff in equal amounts, due on or before the first of each month, and shall include in addition 1/12 of the annual property taxes and sewer assessment.
2) Plaintiff will be responsible for all maintenance and utilities for the property.
3) Plaintiff shall maintain adequate and sufficient insurance for the building and its fixtures.
4) The parties and their rights under this provision shall be subject to the rights and remedies under chapter 832 of the general statutes or otherwise available at law.
(d) Within thirty days of the date of this decision, the husband shall prepare, sign and deliver to the plaintiff the following:
(i) A mortgage deed and note to the plaintiff in the amount of $139,300, plus four percent simple annual interest, due and payable in full in six years and secured by the real property located at 69 Oakland Road in South Windsor;
(ii) A written option to purchase the real property to the plaintiff incorporating the terms set forth above;
(iii) A written right of first refusal in the plaintiff to purchase the property should he propose to sell the property to someone else, on the terms set forth above.
(iv) A written lease providing for plaintiff's right to occupy and use the property for a period of six years and incorporating the provisions set forth above and subject to the general rights and remedies of both parties set forth in the landlord-tenant laws contained in chapter 832 of the general statutes or otherwise available at law.
(v) Defendant shall be responsible for preparing such documents, but the reasonable cost of such legal fees for their preparation shall be divided equally by the parties.
(e) For as long as the current mortgage remains on the real property at 69 Oakland Road, the defendant shall be responsible for all payments thereon and indemnify and hold the plaintiff harmless thereon.
(f) Within ten years of the date of this decision, the defendant shall cause the plaintiff's removal from the current mortgage on the property and her release from any obligations or liabilities she may owe thereon, either by refinancing or selling the property. If he does not do so, the property shall be sold.
(5) The real property located at 14 Providence Pike in Eastford, Connecticut, and all contents therein, except as otherwise specified here, are awarded to the defendant, subject to the following additional orders:
(a) The plaintiff shall quitclaim to the defendant any interest she has therein.
(b) For as long as the current mortgage remains on the property, the defendant shall be responsible for all payments thereon and indemnify and hold the plaintiff harmless thereon.
(c) The defendant shall maintain sufficient real property insurance.
(d) The defendant shall provide proof on a monthly basis that he is current on the mortgage, property taxes and real property insurance. If defendant is more than 60 days late on the mortgage, real property taxes, or property insurance, the property shall be sold.
(e) Within one year after Maria's eighteenth birthday, the defendant shall cause the plaintiff's removal from the current mortgage on the property and her release from any obligations or liabilities she may owe thereon, either by refinancing or selling the property. If he does not do so, the property shall be sold.
(6) The following IRAs and bank accounts are divided equally between the parties, based on their values as of the date of judgment:
(a) TD Ameritrade Roth IRA, account number-8009
(b) TD Ameritrade IRA, account number-8005
(c) Fidelity Simple IRA, account number-1691
(d) TD Ameritrade Roth IRA, account number-7977
(e) TD Ameritrade IRA, account number-8069
(f) Fidelity Rollover IRA, account number-1732
(g) Fidelity Simple IRA, account number-1683
(h) TD Ameritrade mutual funds, account number-7993
(i) Savings Bank of Rockville account numbers-7649,-349,-2019, and-3151.
(j) New Alliance Bank, account number-2276.
(7) Each party is awarded the personal property in its possession or under its control, except that
(a) The plaintiff is awarded the horses, horse trailer, hay conveyer, bales of hay and any other horse food at the marital home, and saddles or other tools or equipment relating to the horses, and the following items at the Eastford home: dining room table and chairs, the patio furniture, the drop leaf desk, the treadmill, the hammock, the pedestal lamp, the metal fence, the kitchen chicken picture, the yellow kitchen paint, and the kitchen table.
(b) The plaintiff is awarded the GMC truck, Chevy Tracker, and the various tractors.
(c) The defendant is awarded the Jeep Wrangler.
7. Child's money
The plaintiff shall have custody and possession of the bank accounts created for Maria's benefit. If not already having been done, such funds shall be placed in an appropriate custodial account. She may not spend those funds or interest or dividends earned thereon without the defendant's written consent before the child turns 18 years old.
8. Wage Garnishments
Pursuant to General Statutes § 52-362, an immediate wage withholding from defendant's earnings is hereby ordered for payment of weekly child support and from plaintiff's earnings for payment of alimony.
Section 52-362 of the General Statutes provides, in pertinent part, as follows: "(b) The Superior Court and any family support magistrate shall issue an order for withholding pursuant to this section against the income of an obligor to enforce a support order when the support order is entered or modified or when the obligor is before the court in an enforcement proceeding. The court shall order the withholding to be effective immediately or may, for cause or pursuant to an agreement by the parties, order a contingent withholding to be effective only on accrual of a delinquency in an amount greater than or equal to thirty days' obligation."
9. Tax exemption for the minor children
The parties shall prospectively alternate the tax exemption for the minor child. The plaintiff shall be entitled to the exemption in odd-numbered years and the defendant in even-numbered years, so long as the party owing child support or post-secondary educational support is current at year's end in all such obligations. A party in default of such obligations shall forfeit its right to claim the exemption for that year.