Felicia Pierot Brody v. Cary Brody (2010)

Memorandum of Decision on Plaintiff's Motion to Terminate Stay

Before the court is the plaintiff's motion for termination of stay of execution, post-judgment and the defendant's objection thereto.   The plaintiff's motion was prematurely filed before the defendant took an appeal.   However that appeal has been filed and both parties have acknowledged to the court that the motion for termination of stay is now ripe for consideration.

The court issued a memorandum of decision after trial on March 12, 2010.   The orders, inter alia, required the defendant to pay plaintiff $2,500,000 as lump sum alimony, to be paid in installments as follows:  $1,000,000 on or before June 1, 2010, the same sum due on or before June 1, 2011 and $500,000 on or before June 1, 2012.   No periodic alimony was ordered from the defendant to the plaintiff.   No periodic alimony order was requested by the plaintiff at trial.

Among other orders the defendant was ordered to pay $350,000 to plaintiff's counsel within 90 days of judgment, $250,000 to the plaintiff within six months, said sum representing both attorneys fees ($75,000) and repayment of moneys of hers found to be wrongfully withheld by the defendant from the collection of an asset known as the Lewis loan (175,000) and $15,000 for unpaid health expenditures during the pendente lite period.   All of these orders are the subject of the plaintiff's motion for termination of stay.

The defendant has objected, essentially claiming that the plaintiff cannot satisfy the standard for the court to apply before the stay may be terminated.

At issue are the relevant stay provisions of P.B. Sec. 61-11.

Sec. 61-11.  Stay of Execution in Noncriminal Cases (a) Automatic stay of execution

Except where otherwise provided by statute or other law, proceedings to enforce or carry out the judgment or order shall be automatically stayed until the time to take an appeal has expired.   If an appeal is filed, such proceedings shall be stayed until the final determination of the cause.

(b) Matters in which no automatic stay is available under this rule

Under this section, there shall be no automatic stay in actions concerning attorneys pursuant to chapter 2 of these rules, in juvenile matters brought pursuant to chapters 26 through 35a, or in any administrative appeal except as otherwise provided in this subsection. n addition, no automatic stay shall apply to orders of relief from physical abuse pursuant to General Statutes § 46b-15 or to orders of periodic alimony, support, custody or visitation in domestic relations matters brought pursuant to chapter 25 or to any later modification of such orders.

(c) Termination of stay may be sought in accordance with subsection (d) of this rule.   If the judge who tried the case is of the opinion that (1) an extension to appeal is sought, or the appeal is taken, only for delay or (2) the due administration of justice so requires, the judge may at any time after a hearing, upon a motion or sua sponte, order that the stay be terminated.

Before the court is a motion to terminate which claims that the due administration of justice requires the termination of the stay.   The seminal case of Griffin Hospital v. Commission on Hospitals, 196 Conn. 451, 456, 493 A.2d 229 (1985) considered the standard for application by the court in considering whether to terminate a stay.   It looked at the federal standard of, “(1) the likelihood that the appellant will prevail;  (2) the irreparability of the injury to be suffered from immediate implementation of the agency order;  (3) the effect of a stay upon other parties to the proceeding;  and (4) the public interest involved” and concluded that this standard does not require a rigid application.  “These considerations involve essentially the application of familiar equitable principles in the context of adjusting the rights of the parties during the pendency of litigation until a final determination on the merits.   See Stocker v. Waterbury, 154 Conn. 446, 451, 226 A.2d 514 (1967);  Sisters of St. Joseph Corporation v. Atlas Sand, Gravel & Stone Co. 120 Conn. 168, 176-77, 180 A. 303 (1935).   We have indicated that the same principles are pertinent to the “due administration of justice” criterion of Practice Book 3065 in deciding whether a stay following a judgment in the trial court should be terminated while an appeal is pending in this court.  Northeastern Gas Transmission Co. v. Benedict, 139 Conn. 36, 42-43, 89 A.2d 379 (1952).   It is not possible to reduce all of the considerations involved in stay orders to a rigid formula, however, as the commission claims the federal standards to require.”  Id., at 458.

As summarized by the court, “While we thus approve the “balancing of the equities” test employed by the trial court, we do not in its application eschew such factors as the likely outcome of the appeal, the irreparability of the prospective harm to the applicant, or the effect of delay in implementation of the order upon other parties as well as upon the public interest.  Id., at 458-9.

I. Likelihood of success on the merits

The defendant's preliminary statement of issues on appeal challenge several aspects of the court decision.   Five preliminary issues were presented:  (1) Do the financial orders violate the parties' enforceable prenuptial agreement;  (2) Was an order of lump sum alimony both unnecessary and inappropriate, and, a disguised distribution of property in violation of the parties' prenuptial agreement;  (3) Were the order of fees for the New York litigation in which the defendant tried to stop the plaintiff from acquiring discovery of his wholly controlled businesses as a part of this divorce improper;  (4) Is the child support order in accordance with the law;  and (5) Were the financial orders supported by a sufficient evidentiary basis under established law.

The assertion that the court's financial orders violate the parties' prenuptial agreement is without substance or texture for the court to evaluate (except the claim regarding the alimony order below).   Without some specificity, the court cannot accord this claim credence as to its sustainability on appeal.

The decision as to whether to order alimony, how much and for how long is left to the sound discretion of the court.   The standard of review is abuse of discretion.   The court issued an alimony order by way of a lump sum paid in three installments.   Lump sum alimony is an entirely appropriate mechanism for spousal support in our state.  “[T]he purpose of § 46b-82 is to recognize “the obligation of support that spouses assume toward each other by virtue of the marriage.”  Id., 234;  see also Smith v. Smith, 249 Conn. 265, 275, 752 A.2d 1023 (1999) (“the purpose of both periodic and lump sum alimony is to provide continuing support”).”  Mickey v. Mickey, 292 Conn. 597, 615-6, 974 A.2d 641 (2009).

It is in the discretion of the trial court as to whether to issue an order of periodic alimony, lump sum alimony or both.   The order of the court was issued after findings of the court in accord with the statutory factors of § 46b-82.   Notably, the plaintiff is a stay at home mother who left her career as an investor in Initial Public Offerings to parent the parties' children.   The court orders reflect that she remains the primary parent and cannot immediately replace her support needs.   Also, the court notes, that the defendant provided no evidence at trial that the plaintiff's previous work is still available in today's marketplace.   The alimony order reflects her spousal need as the defendant finds her not as he wishes she were.   This order addressed a distinct duty of the defendant to support the plaintiff as found by the court.   It is clearly separate and distinct from the rights to property that accrued to each of the parties under their pre-nuptial agreement.

The court secured the payment of alimony with an asset owned by the defendant.   This too is permissible under our law.   The court finds that the appeal of the alimony order of the court is not likely to be successful.

The court ordered the defendant to pay the plaintiff for a debt for attorney fees incurred by her in the pendente lite period of this litigation.   The defendant controls certain businesses as described in the memorandum of decision.   The businesses, located in New York, sought to enjoin the plaintiff from gaining discovery from it as a part of this dissolution action.   This court found the defendant to wholly be part and parcel of that effort.   Defending against that action cost the plaintiff money for attorney fees.   This debt was the subject of the order challenged in this ground of appeal.   Once again an abuse of discretion standard will be applied to this allocation of that attorney fee indebtedness.   This court finds it hard to envision a decision of an appellate authority which would reward such conduct by the defendant seeking to deprive the plaintiff of discovery due under Connecticut law.   Additionally, the order-in terms of real dollars-is de minimus in the context of the overall court orders and unlikely to be found, in any case, essential to the mosaic of the orders and enforcement orders regarding the pre-nuptial agreement.

The defendant also challenges the child support order of the court's decision.   The child support order is $7,500 per month.   The court noted that the Guidelines were inapplicable inasmuch as the income and earning capacity of the defendant greatly exceeds the Guidelines.   The Guidelines provide that for incomes that exceed the Guidelines chart ($4,000) the amount ordered must at least satisfy the chart order at the highest amount.

After the issuance of the memorandum of decision, our Supreme Court issued the decision in Maturo v. Maturo, 296 Conn. 80, 109 (2010), which examined a child support order for a high income family where the order was expressed as a percentage of the obligor's future net cash bonus.   The plurality opinion wrote:

We first note that the plaintiff improperly conflates the guidelines and the schedule contained therein.   To the extent that the parties' combined net weekly income exceeds $4000, the upper limit of the schedule, we agree with the plaintiff that the schedule cannot, and does not, apply, except insofar as the guidelines mandate a minimum child support payment.   This does not mean, however, that the guideline principles that inform the schedule, including equity, consistency and uniformity in the treatment of persons in similar circumstances;  Child Support and Arrearage Guidelines (2005), preamble, § (c)(1) and (2), p. ii.;   do not continue to apply merely because the parties' income exceeds the schedule's upper limit.   As previously discussed, § 46b-215b requires that the guidelines “shall be considered in all determinations of child support amounts”;  (emphasis added);  which, according to the preamble, have been established in the schedule on the basis of the income shares model and reflect the principle that spending on children declines as a proportion of family income as income levels rise.   Child Support and Arrearage Guidelines (2005), preamble, § (d), pp. ii-iii.   Accordingly, the guidelines cannot be ignored when the combined net family income exceeds the upper limit of the schedule, but remain applicable to all determinations of child support.

The choice of the word ‘inapplicable’ may have been inartful but it is clear what the court meant, that the child support would exceed the maximum on the chart.   The body of the decision reflects this and any articulation that might be requested would clarify the word choice.   In the decision the court emphasized that these parties had selected and agreed to an upbringing filled with private schools, sleep away camps, and all of the accoutrements of the lifestyle attendant thereto, all of which come at significant cost.   Finally, in reference to other holdings of Maturo, this court did not extrapolate any non-descending percentage for child support as criticized in that decision.   Lastly, the court in the memorandum of decision acknowledged that it considered statutory law regarding the order of child support.   The court finds it not probable that this will be a successful ground of appeal.

The last challenge to the court's decision is “whether the trial court erred by basing its financial orders on factual findings of misconduct that lacked a sufficient evidentiary basis under established Connecticut law?”   The court finds it highly likely that this ground will be unsuccessful:  the findings of fact made by the court are supported in the record.   The court applied applicable law.   Finally, the choice of the word ‘misconduct’ is the defendant's not the court's and is not accepted by the court as a substitution for the findings of fact in the memorandum of decision.

Finally, the court notes that an alternative ground for termination of stay under 61-11 is if the court finds the appeal wholly frivolous.   While the court believes the appeal is unlikely to be successful, the issue of the inter-relationship of enforcement of pre-nuptial agreements and retained areas of judicial decision-making under statutory and case law is a fairly new and evolving area of our law.   Accordingly, the court finds that the appeal on this basis is made in good faith.¹

II. The irreparability of the injury to be suffered by the defendant from immediate implementation of the court's orders and the effect of the stay on the plaintiff

The court must next consider whether the defendant will be harmed if there is a termination of the stay in place as to the orders entered by the court.   If the stay is terminated the defendant will be required to pay sums of money that are currently ordered but he is not currently required to pay.   Those sums will leave his control.   At argument, through counsel, he argued that he would be required to give over capital necessary to his hedge fund business.   Another way of saying this is that he wants to continue to invest and use money that, but for his appeal, would belong to the plaintiff.

As was noted at argument, the plaintiff was the recipient of $19,000 in child support and alimony combined paid to her monthly by the defendant during the pendente lite period.   The current child support order, which is not stayed, is $7,500 per month.   That creates a shortfall of $11,500 per month from that order.   The plaintiff submitted a financial affidavit at the hearing on the instant matter and testified.   The savings that she has realized from releasing her nanny from service does not bridge that shortfall.   Interestingly, at argument defendant's counsel offered that he would not seek review of an order of the court that partially terminates the stay on the alimony order by ordering a monthly portion of it paid out in an amount short of the actual shortfall.   What this says is that the defendant wants the continued use of the plaintiff's ordered sums of money.   Meanwhile, if the stay continues the plaintiff will be required to live off her own savings.   The defendant's argument that she has sufficient assets to cover her shortfall is fallacious.   Her monthly expenses are over $60,000 per month while her net income is just over $13,000 per month.   This creates a burn rate of savings of approximately $47,000 per month.   Her saving investments throw off the interest and dividends that account for $5587 net of that monthly income.   Her investments that could be liquidated are $2,379,000 gross, which would cover her loss of her spousal support payments but wholly deplete her liquid assets.   Against those assets she also has liquid debt of $161,000 on her financial affidavit to be satisfied.

To recap, the lump sum alimony orders are $1,000,000 on or before June 1, 2010, the same sum due on or before June 1, 2011 and $500,000 on or before June 1, 2012.   These are sums that are needed by the plaintiff for her support.   The court's choice apparently is to have her deplete her interest bearing accounts or the defendant loses the use of her alimony monies as his capital.   Her inability to receive that alimony means she loses her support.   The defendant neither testified nor submitted a financial affidavit at the hearing on this matter to provide evidence of irreparable harm to him.   Accordingly, the court does not find that any irreparable harm would befall the defendant as a result of the order itself;  it merely fulfills his duty of support.   His only potential irreparable harm that the court can infer is if he was to be successful on appeal and the plaintiff were to then be unable to repay him.   This is harm that should not occur.   Accordingly, the court will issue an order of security for the payment of the alimony upon the termination of the stay.

The anomaly that exists here was created by the court ordering lump sum alimony in installments rather than periodic alimony.   Periodic alimony and child support are not stayed under 61-11.   One isolated Appellate Court decision, Lowe v. Lowe, 58 Conn.App. 805, 816, 755 A.2d 338 (2000) asserts the principle that an award of lump sum alimony is stayed because it is not periodic alimony.   Interestingly in that case, the question was whether an award paid in one installment was periodic or lump sum.   Because it was one installment, the court concluded it was lump sum.

The court wrote, “We also note that this court, in ruling on the defendant's motion for review, reversed the trial court's granting of the plaintiff's motion for a stay of judgment, which claimed that the alimony order, being periodic, was exempt from the automatic stay provision of Practice Book § 61-11.   Our vacation of the order of the court indicates our determination that the alimony order was lump sum in nature and subject to an automatic stay.”

The balance of the orders for which the plaintiff seeks a termination are the attorneys fees, repayment of the Lewis proceeds and the payment of pendente lite health expenditures.   The Lewis proceeds order is an order in furtherance of enforcing the pre-nuptial agreement.   The defendant has no basis to challenge this order.   Indeed at trial, he only sought to keep it to re-coup other sums he believed were due to him from the plaintiff.   He has no basis, likewise, to appeal the health expenditure reimbursement payment.   All that remains, then for the court to consider under this section are the attorneys fees orders which were are committed to the sound discretion of the court, so long as there are sufficient bases in the record and proper application of the law.   If the court does not order these fees to be paid by the defendant, then cumulative of the two orders, the plaintiff will be at loss for $425,000 until the resolution of the appeal.   Defendant put on no evidence of irreparable harm.   The plaintiff will lose the reimbursement of these sums;  this however is not so great a loss except if she does not receive her alimony.   The harm to her is that she will not be able to put the money to work for her.   Presently her apparent rate of return on her cash investments is approximately 3% in gross terms only, based upon her interest and dividend income and cash investments, annualized (May 11, 2010 financial affidavit).   Therefore that is the approximate rate at which she loses use of funds ordered to be reimbursed to her for her out of pocket expenses.   Similarly, the defendant's retention of said funds gives him use of the same.   The stay in effect as to these sums is a swing loss of use to the plaintiff of $12,750 yearly in rough terms of in income, not sufficiently significant in terms of the funds and needs in this case) to order the stay terminated.

IV. Public Interest Involved

“The stay arose out of an appeal of a divorce decree, a matter private in nature.   The only persons affected by the judgment as it relates to the pension and the attorneys fees are the plaintiff and defendant.”   Pospisil v. Pospisil, Superior Court, judicial district of Tolland, Docket No. FA 93 0054011 (February 26, 1999, Zarella, J.).   This court could not state it better here.

V. Orders

The court orders that the stay in effect shall be terminated as to the alimony order, the Lewis loan order, and the health expenditures order.   Regarding the termination of this stay, and therefore the resulting payment of these sums by the defendant, the court notes that the stay remains in effect as to all of the property orders in the case.   Accordingly, the plaintiff's interest in the real estate at 106 Husted Lane, Greenwich, CT and 52 Knapp Road, South Salem, New York as well as other property whose ultimate ownership is stayed by the appeal provide adequate security to the defendant upon his payments of these sums pendente appeal.   As to the attorneys fees order the court, at the present time, declines to order the termination of the stay.

MUNRO, J.

FOOTNOTES

FN1. Additionally, appellate counsel for the defendant filed this preliminary statement on April 30, 2010.   He is also counsel on Maturo and likely knew that a decision on child support for high income families was soon forthcoming;  it was issued on May 4, 2010.   Therefore, he had good reason to believe this may be a fertile ground for appeal..  FN1. Additionally, appellate counsel for the defendant filed this preliminary statement on April 30, 2010.   He is also counsel on Maturo and likely knew that a decision on child support for high income families was soon forthcoming;  it was issued on May 4, 2010.   Therefore, he had good reason to believe this may be a fertile ground for appeal.

Munro, Lynda B., J.