Altay Koc v. Beatrix Koc-Caviezel (2009)

MEMORANDUM OF DECISION RE DEFENDANT'S MOTION FOR CONTEMPT (# 120), DEFENDANT'S MOTION FOR MODIFICATION (# 122)

This matter comes before the court on the Defendant's Motion for Contempt and Motion for Modification filed March 4, 2009.   This court conducted a hearing on October 21, 2009 and each party submitted trial briefs for the court's consideration on November 4, 2009.

This Court, having heard the testimony of the witnesses, and having considered the exhibits entered into evidence, the legal arguments of counsel, and after having considered the factors enumerated in C.G.S. §§ 46b-82 and 46b-86, and applicable case law hereby makes the following findings:

a. Procedural History

On October 22, 2002, a Foreign Judgment of Dissolution from the District Court of Zurich, Switzerland was filed with the Superior Court in the Judicial District of New Haven at New Haven.   That on February 24, 2003, the parties entered into a Stipulation pursuant to a Contempt proceeding, and approved by the court (Gruendel, J.), regarding post-judgment payment for past due arrearage on alimony and child support.   Pursuant to that agreement the plaintiff agreed to a finding of an arrearage for alimony and child support in an amount of $250,000 to be paid in four biannual lump sum payments.   The parties were last heard by this Court on February 3, 2009 on the Plaintiff's Motion for Modification dated July 15, 2008.   After an evidentiary hearing this Court denied the plaintiff's Motion for Modification finding no substantial change of circumstances to warrant an order decreasing the plaintiff's alimony obligations.

b. Motion for Contempt

This Court first addresses the Defendant's Motion for Contempt.   Due process requires a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross-examine adverse witnesses.  Cologne v. Westfarms Associates, 197 Conn. 141, 151-53 (1985);  see also Kelly v. Kelly, 54 Conn.App. 50, 58 (1999).  “When the conduct underlying the alleged contempt does not occur in the presence of the court, a contempt finding must be established by sufficient proof that is premised upon competent evidence presented to the trial court in accordance with the rules of procedure as in ordinary cases.”  (Internal quotation marks omitted.)  Bryant v. Bryant, 228 Conn. 630, 637 (1994).   The court cannot rely on findings and evidence from prior evidentiary hearings, Kelly v. Kelly, 54 Conn.App. 50, 58 (1999);  nor can a contempt finding be based solely on the representations of counsel, Wilson v. Wilson, 38 Conn.App. 263, 277 (1995).

The defendant alleges the plaintiff failed to comply with the court orders entered on February 25, 2003 in that he wrongfully withheld 30% of his support payments to the defendant for taxes, and that he never requested a modification from this court in order to do so.   In support of this claim, the defendant asserts the plaintiff was under no obligation to withhold taxes pursuant to the provisions contained in the treaty known as the “Convention Between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income.” ¹  Under the terms of this international agreement, the defendant maintains that as a Swiss citizen, she is not obligated to pay taxes to the United States and therefore, the plaintiff was not required to withhold and in doing so he is in contempt of a court order.

In support of this argument the defendant produced the testimony of Mr. Casper Spescha, the defendant's accountant, who rendered his opinions to the court concluding that pursuant to the terms of the treaty mentioned above the defendant was on under no obligation to pay taxes to the United States.

The plaintiff husband readily admits that he withheld 30% of his support obligations as taxes and forwarded those monies directly to the IRS. The exact figures are uncontested.   The plaintiff testified that he did so pursuant to the advice of his accountant, Michael Mezzapelle and upon further advice from a tax attorney.   Loius Shatz ․ That plaintiff further presented testimony from Mr. Mezzapelle ² and Attorney Shatz ³ which supported the plaintiff's decision to withhold the taxes at issue.   This court finds that there was a legitimate legal dispute as to the requirement for withholding taxes on payments for support to foreign residents.

The court also finds that the dispute over the application of the treaty provisions could have been readily resolved had the defendant provided a simple form W8BEN with the Internal Revenue Services.⁴  The court further finds that the court order of February 4, 2003 does not provide for treatment of tax issues, and therefore the order is ambiguous in this regard.

For the foregoing reasons, this Court finds the defendant has failed to meet her burden of establishing, by a preponderance of the evidence, that the plaintiff was noncompliant with the court orders or that his withholding of the taxes under these circumstances constituted a wilful noncompliance in light of the accounting and the legal advice he received from professionals in this field.

Accordingly, the defendant's Motion for Contempt # 120 is dismissed with prejudice.

c. Defendant's Motion for Modification

The defendant wife moves this Court to modify a foreign Judgment of Dissolution dated December 22, 1994 and duly filed in the Superior Court, Judicial District of New Haven on October 22, 2002.   The defendant alleges a substantial change in circumstances under Connecticut General Statute § 46b-86 in that the defendant wife's income is less than it was in 2003 and that the plaintiff husband's income has increased.

“The trial court has the authority to modify its alimony order pursuant to General Statutes § 46b-86, which provides in relevant part that ‘[u]nless and to the extent that the decree precludes modification ․ any final order for the periodic payment of permanent alimony or support ․ may at any time thereafter be continued, set aside, altered or modified by [the] court upon a showing of a substantial change in the circumstances of either party ․’ “ Gay v. Gay, 266 Conn. 641, 645, 835 A.2d 1 (2003).  “The party seeking modification bears the burden of showing the existence of a substantial change in circumstances.”  (Internal quotation marks omitted.)  Gorton v. Gorton, 80 Conn.App. 52, 54, 832 A.2d 675 (2003).   Moreover, the party seeking the modification “must clearly and definitely establish [a] substantial change of the circumstances of either party which demonstrates that continuation of the prior order would be unfair and improper.”  Gleason v. Gleason, 16 Conn.App. 134, 136, 546 A.2d 966 (1988).

“To obtain a modification, the moving party must demonstrate that circumstances have changed since the last court order such that it would be unjust or inequitable to hold either party to it.   Because the establishment of changed circumstances is a condition precedent to a party's relief, it is pertinent for the trial court to inquire as to what, if any, new circumstance warrants a modification of the existing order.”  Borkowski v. Borkowski, 228 Conn. 729, 737-38, 638 A.2d 1060 (1994).   In determining whether to modify the award of alimony, the court is to use the same criteria that are relevant to an initial award of alimony.  Id., 736.   These factors include the length of the marriage, the causes for dissolution, age, health, station, occupation, amount and sources of income, vocational skills ․ employability, estate and the needs of the parties.   See General Statutes § 46b-82.

In determining alimony at the time of the decree the Swiss court stated in paragraph 4, entitled “Wife's Alimonies:”

In order to fix an appropriate amount of such wife's pension, we consider that the minimum amount to cover the life expenses of the Respondent is still the same as defined in the reasoning which led to the Court Decision of November 4, 1992.   In particular we remind that there is a need to grant the fee for the housekeeper within the calculation of the Respondent's living expenses, because the Respondent depends definitely on such an assistance.   On the other hand, the basic monthly need of the Respondent and the children has increased in the total amount of 215 Swiss Francs.   Therefore, the monthly need of the Respondent-living together with the children-is calculated at 6.269 Swiss Francs.   This minimum amount of living expenses is increased of a reserve of 20%-according to a precedent pronounced by the Federal Supreme Court of Switzerland.   Therefore, we expect that the Respondent should have the monthly amount of 7.522 Francs at her disposal, amount which should be covered by the invalidity pension on one side, and the wife's pension and the children's pensions payable by the respondent at the other side.   Therefore, we consider that the wife's pension payable by the Respondent should be fixed at the monthly amount of 3.000 Francs.   The validity during which such pension is due, should be unlimited, because we cannot expect the respondent to earn a personal income by labouring activity in the future.

This court, having considered the defendant's due process rights to an evidentiary hearing allowed counsel to proceed in presenting her evidence.   At the hearing the moving party failed to appear and offer testimony.   Counsel for the defendant submitted a signed sworn financial affidavit stating her financial condition to the court.  (Defendant's Exhibit F.) This court finds the defendant's failure to appear at the hearing to have effectively denied the plaintiff's rights to confront and cross examine the defendant in regards to her financial condition which was the very essence of her claim and the basis for her request to modify a prior court decree.

This court further finds the defendant failed to offer any proof to this court that the amount of income reported on her financial affidavit in dollars is substantially less than her income at the time of the original decree as she did not offer any evidence as to the currency conversion rate for this court to make any factual findings in this regard.

Additionally, counsel for the defendant also argues this court should modify the original alimony award on grounds that the plaintiff now earns substantially more income.   In support of this claim counsel for the defendant offered the plaintiff's financial affidavit and relies on the transcripts from a prior court proceeding.  (Defendant's Exhibit G.) In this regard the court finds the plaintiff's financial affidavit was marked for identification only and never entered into evidence as a full exhibit for the court's determination.   The court also finds that the transcripts offered at a prior hearing on the plaintiff's Motion for Modification is not probative in that the sole issue before the court was whether, as the plaintiff alleged, the defendant's wife's rental income constituted a substantial change in circumstances as a basis for a reduction of alimony and the court's findings were relevant to that issue only.   Further, this court cannot rely on findings from another court proceeding.  Kelly v. Kelly, supra.

For the foregoing reasons, this Court finds that the defendant has failed to prove by a preponderance of the evidence, that there has been a substantial change of circumstances requiring an upward modification of the alimony award as originally set forth in the final decree of December 22, 1994.

Accordingly, the Defendant's Motion for Modification is denied with prejudice.

Markle, J.

FOOTNOTES

FN1. Defendant's Exhibit A..  FN1. Defendant's Exhibit A.

FN2. The essence of Michael Mezzapelle's testimony was that he advised the plaintiff that he was a “witholding agent” under the IRS Code and that as such he was personally liable for the payment of those taxes to the IRS..  FN2. The essence of Michael Mezzapelle's testimony was that he advised the plaintiff that he was a “witholding agent” under the IRS Code and that as such he was personally liable for the payment of those taxes to the IRS.

FN3. Attorney Louis B. Schatz was also qualified as an expert and testified that he examined the stipulation of the parties dated February 25th 2003, and it was his opinion that if Mr. Koc failed to comply with his obligations under the internal revenue code and had not properly withheld the taxes and had not paid them to the Internal Revenue Service the plaintiff would be subject to interest penalties of up to 25% and possible criminal sanctions if his refusal to withhold was found to be willful.   Attorney Schatz further testified that it was his opinion that if there was any obligation under the treaty in this case it would be the recipient's obligation to make claims under the terms of the treaty and that she could have rectified the situation by filing for a refund from the internal revenue service within the three years..  FN3. Attorney Louis B. Schatz was also qualified as an expert and testified that he examined the stipulation of the parties dated February 25th 2003, and it was his opinion that if Mr. Koc failed to comply with his obligations under the internal revenue code and had not properly withheld the taxes and had not paid them to the Internal Revenue Service the plaintiff would be subject to interest penalties of up to 25% and possible criminal sanctions if his refusal to withhold was found to be willful.   Attorney Schatz further testified that it was his opinion that if there was any obligation under the treaty in this case it would be the recipient's obligation to make claims under the terms of the treaty and that she could have rectified the situation by filing for a refund from the internal revenue service within the three years.

FN4. The defendant's counsel upon inquiry from the court as to why her client did not file its form with the IRS responded that the client was advised that she could remedy the situation, but that she never heard of anything called mitigating damages..  FN4. The defendant's counsel upon inquiry from the court as to why her client did not file its form with the IRS responded that the client was advised that she could remedy the situation, but that she never heard of anything called mitigating damages.

Markle, Denise D., J.