Mary Celone v. James Celone (2010)

MEMORANDUM OF DECISION

This action was commenced by writ and summons dated November 14, 2007, and made returnable to this court December 4, 2007.   An Answer and Cross-Complaint were filed by the defendant on September 23, 2007.   The parties represented by counsel, appeared for trial on January 19 and 20, 2010.   After having been granted continuances upon the request by the plaintiff for medical reasons, the trial continued further on July 23, 2010, and concluded on July 30, 2010.   The court heard testimony of five witnesses, including the parties and received into evidence forty-three exhibits offered by the plaintiff and thirteen exhibits offered by the defendant.

The court has fully considered the statutory criteria and factors enumerated in General Statutes §§ 46b-56, 46b-56c, 46b-81, 46b-82, 46b-84, and 46b-215a, Child Support and Arrearage Guidelines, as well as the applicable case law, has evaluated the credibility and demeanor of both parties, and has considered the exhibits entered into evidence according to the standards required by law and makes the following findings.

The court has jurisdiction in this case, both parties have resided continuously in the state of Connecticut for more than one year before the bringing of this action.   The allegations contained in the complaint were proven and found to be true.   The parties were intermarried in Ansonia, Connecticut, on June 3, 1989, and have two minor children, Cynthia Celone, born August 24, 1997, and Christina Celone, born April 20, 1994.   Neither party has received public financial assistance.   This marriage of twenty-one years has broken down irretrievably.

The plaintiff wife is fifty-three years old and resides in the marital home in the Town of Orange with her two children.   She holds a Bachelor of Science degree in nursing from the University of Connecticut, obtained in 1978 and is currently employed as a registered nurse at South Central VNA. The plaintiff currently earns a gross annual income of $77,584.   After discovering a small intraductal carcinoma, the plaintiff is currently undergoing treatment for breast cancer.   She is taking Tamoxifen and is monitored by the oncologist every three to six months.   She reports other health conditions, including hypothyroid, a hiatal hernia and a “ground glass lesion” in her lung, but does not claim it impacts on her ability to work.

The defendant husband is forty-eight years old and a graduate of Yale University.   When the parties were first married, the husband was employed at his family's custom re-upholstering furniture manufacturing business.   In 1992 he changed direction and became employed as a teacher at the West Haven High School where he continued for the next thirteen years as a math teacher and chess coach.   In 2006 he voluntarily left the West Haven Schools to take employment as a teacher at the Amistad School, a magnet school in New Haven where he earned $90,170 as his annual salary during the 2008-2009 academic year.   In 2009 he changed his employment and took a teaching position at the Engineering Science University Magnet School, although it resulted in a decrease in his annual salary to $78,260.

The defendant husband has a very significant medical condition and history.   Since the age of twelve he has suffered from a spinal cord arteriovenous malformation at the junction of the cervical and thoratic spine, resulting in an arm amputation and bilateral leg weakness.   He has in the recent past, and will continue to undergo in the future, a very dangerous procedure known as endovascular embolization in an effort to slow the progressive deterioration associated with this condition.   Without treatment, his condition would likely lead to quadriplegia.¹  Despite his extensive medical history and treatment, he has consistently remained employed as a full-time teacher.

This is a marriage that has had its problems for many years as evidenced by the fact that the parties had been engaged since 1995 in marital counseling and therapy with at least three different therapists without success.   The wife claims the breakdown of the marriage was caused by the husband's verbal abuse toward herself and the children and further alleges that the husband had engaged in an extramarital relationship.   The plaintiff subpoenaed the third party in question, but failed to prove this relationship was sexual or that it in any manner contributed to the cause of the breakdown of the marriage.   The husband claims the breakdown of the marriage began in 1994 after the birth of the first child, and further claims the plaintiff scolded and berated him because he was not financially as successful as she wished.   He further claims, the plaintiff failed to support him emotionally through his medical procedures and maintains the marriage had broken down as a result of years of conflict.

This court finds the marriage has broken down irretrievably due to the parties' inability to effectively communicate about matters in their daily lives as well as the wife's distrust of the husband.   It is clear from the testimony of each party that they have both contributed equally to the wrongs which created the situation in which they now find themselves.

Despite their differences, the parties have reached an agreement as to custody and have filed a parenting plan that has been previously accepted by the court which shall be incorporated by reference into the final judgment.

In 1994, the defendant started a company known as Educational Technologies with the purpose of offering educational consulting, promoting chess tournaments for high school students, and creating and distributing tournament programs to public schools in the surrounding area.   From 1999 through 2006, the wife worked beside the husband performing services for the company including running raffles, providing food services for tournaments, setting-up tournaments, distributing flyers and other promotional duties.   At the height of the business the company had ten to twelve part-time student employees and each of the parties worked twelve to thirty hours per week in addition to their full-time employment to advance Educational Technologies.

The value of Educational Technologies is disputed and both parties offered valuation experts to support their respective claims.   The plaintiff's expert used the “income capitalization method” finding the most significant factor to be the company's ability to generate cash flow above the market value of the owner's work product.   Taking into consideration the adjusted earnings of the business from 2004 through 2008, the expert concluded the fair market value of the business to be “approximately $99,000” with a cash balance of $31,000 as of December 31, 2008.   Adding the cash balance into the value, the expert concluded the business value to be $131,000 as of December 2008.

The defendant's expert employed a “fair market valuation” analysis asserting the viability of the company in the future is questionable.   The expert took into consideration several factors in his evaluation, including the downturn in the economy and the lack of marketability of the business and concluded that the business is valued at $14,532, an amount equal to the assets held in cash.

Each expert commented on the other's methodology and gave their reasons for their differing opinions based on market multiples, capitalization rates, and marketability discounts they had applied.

The defendant testified to a downturn in the revenues derived from Educational Technologies during 2009 and the first part of 2010 and attributed the decrease in income to the cumulative effect of a distressed economy, the lack of funding in the public schools for extracurricular programs, the limited enrollment of students in chess programs, his inability to hire student employees for assistance due to his change in employment, and to his physical limitations.

“In assessing the value of the assets that comprise the marital estate, the trial court functions as the trier of fact.   The trial court has the right to accept so much of the testimony ․ as [it] finds applicable ․ [It] arrives at [its] own conclusions by weighing the opinions of the appraisers, the claims of the parties, and [its] own general knowledge of the elements going to establish value, and then employs the most appropriate method of determining valuation ․ In selecting and applying an appropriate valuation method, the trial court has considerable discretion ․ The trial court's findings will be overturned only if it misapplies, overlooks, or gives a wrong or improper effect to any test or consideration which it was [its] duty to regard.”   (Citations omitted;  internal quotation marks omitted.)  Bornemann v. Bornemann, 245 Conn. 508, 531-32, 752 A.2d 978 (1998).

The court finds Educational Technologies is a business which relies primarily on the defendant's special skills and knowledge of the game of chess and his services in promoting chess tournaments.   Accordingly, the court accepts the defendant's expert opinion as to the value of Educational Technologies and finds the fair market value of the business to be based on the net income derived by the defendant, and takes this into consideration in entering an alimony order.

The parties are joint owners all of real property located at 452 Peck Lane, Orange, Connecticut, valued at $500,000.   Just prior to the commencement of this dissolution action, the defendant withdrew $60,000 from the marital estate and made a lump sum payment to his mother.   The defendant claims it was a repayment of the loan from his parents from May of 1994.   After having examined the exhibits entered into evidence, and after having considered the testimony of the parties regarding this transaction, this court finds there is clear and convincing evidence that the $60,000 had been transferred from the marital estate fraudulently.   The defendant never made any installments or payments on the loan during the thirteen years it is alleged to have been in place, the loan amount and lender on the note (Exhibit C) does not comport with payment amount, and the defendant was never advised of such debt on the property.   The court has considered this fraudulent conveyance in the equitable distribution of the marital home.

After the commencement of this action, and in violation of the automatic orders, in what appears to be a response to the husband's fraudulent conveyance, and out of fear that the marital assets would be dissipated, the plaintiff withdrew $118,000 from the parties' joint home equity line of credit without the knowledge or consent of the husband or the court.   She deposited $60,000 of the proceeds into a money market in her name alone and deposited an additional $38,000 into a custodial account for the children.   The court, during the course of the trial, found the plaintiff's actions to be in violation of the automatic orders and ordered the plaintiff to return those funds to the home equity line of credit.   The plaintiff reported to this court on July 29, 2010, that after she had returned the funds at issue, there still remained a balance of approximately $18,000 on the HELOC loan.

Besides the home and business, other assets include the 2004 Honda Odyssey, unencumbered valued at $7,350, which the plaintiff operates, and the 2008 Subaru Outback, unencumbered and valued at $17,000, which the defendant operates.   The parties further hold various Janus Funds, including a joint fund worth $2,298, the Worldwide Fund of $4,686 and have maintained custodial accounts for their minor children in the amount $42,815 in Christina's name and $17,795 in Cynthia's name.   The parties agree the custodial accounts should be left intact for the benefit of the children's college education.

In deferred compensation funds, the plaintiff has a 401(k) valued at $6,325.   The defendant holds a Janus Global Tech IRA valued at $14,344 and a pension through the Teacher's Retirement Board valued as of June 30, 2009 at $105,048.

ORDERS

This Court hereby enters the following orders:

1. The marriage of the parties having broken down irretrievably is hereby dissolved and each party is hereby declared to be single and unmarried.

2. The defendant is to pay to the plaintiff $800.00 (eight hundred dollars) per month in alimony, non-modifiable to commence October 1, 2010 and to continue for a period of five years.   This alimony obligation shall terminate upon the death of either party, the remarriage of the plaintiff or cohabitation by the plaintiff as that term is defined by statute.   The plaintiff shall pay to the defendant $1.00 per year in alimony modifiable upon a showing of a substantial change in circumstances in the defendant's employment or income based on the defendant's health.

3. The parties shall have joint legal custody of the minor children, Cynthia Celone, born August 24, 1997, and Christina Celone, born April 20, 1994, with primary residence and parental access as set forth in the parenting plan, dated December 2009 approved by the court, Judge Kenefick and is hereby ordered incorporated by reference into the final judgment of dissolution.

4. Child Support:  The defendant shall pay child support in accordance with the child support guidelines in the amount of $227 per week by means of immediate wage withholding.

5. As to extracurricular activities for the benefit of the children, the parties shall equally share the expenses of piano and dance.   As to summer camps and expenses, the parties shall sufficiently communicate with each other 30 days in advance of any payment due, the intentions of each party to contribute for tuition and expenses and each party shall communicate their respective intentions in writing to the other.

6. The husband shall provide for health care coverage for the benefit of the minor children, Cynthia Celone, born August 24, 1997, and Christina Celone, born April 20, 1994, as a beneficiary of any medical or dental insurance available through his place of employment at a reasonable cost.   In the event that medical insurance is either unavailable to the plaintiff at a reasonable cost, or is available through the plaintiff's place of employment at a lesser cost, the plaintiff shall be obligated to provide for such health care coverage.   Any unreimbursed medical, dental, orthodontic, optical, psychiatric, psychological, or prescriptive expenses for the children shall be equally divided between the parties.

7. The court shall retain jurisdiction over post-majority educational support orders in accordance with Connecticut General Statute § 46b-56c.   The custodial funds previously set aside in the Janus Fund accounts for the benefit of the minor children's education shall be maintained for that purpose and shall be distributed equally for the benefit of each of the two children.

8. Dependency Exemptions:  For income tax purposes, the husband shall be entitled to claim the oldest child, Cynthia, as a dependent for the purposes of a deduction so long as he is current in his child support.   The plaintiff shall be entitled to claim the youngest minor child, Christina, as a dependent for the purposes of a deduction.

9. Both parties are ordered to maintain the Jackson National Life Insurance policies in the face amount of $500,000 as listed in their respective financial affidavits for the benefit of the minor children.

10. As to the marital home located at 452 Peck Lane in Orange, Connecticut, the plaintiff shall have the option of refinancing the home within 90 days of this decree and paying a lump sum of $200,000 (two-hundred thousand dollars) to the defendant.   Upon receipt of said sums, the defendant shall simultaneously convey the title of the property to the plaintiff.   Should the plaintiff choose not to refinance the marital home, then the home shall be immediately placed on the open market for sale with a duly licensed realtor at a price consistent with an updated appraisal.   The parties shall accept all offers within 5% of the listing price.   In the event the property is not sold within 90 days, the parties shall reduce the listing price by 3%. The court retains jurisdiction over further terms and conditions of sale.

11. Upon the sale of the home, the net proceeds (after having paid the customary closing fees, sales commission and attorneys fees) shall be divided as follows:  The first $30,000.00 (thirty thousand dollars) shall be payable to the plaintiff and the remaining proceeds shall be divided equally between the parties.

12. The plaintiff shall have exclusive possession of the premises until such time as the refinance takes place or the property is conveyed and she shall be responsible for the timely payment of all taxes, utilities, home equity loans, insurance and maintenance expenses.   Any repairs in excess of $1000 shall be equally shared between the parties.

13. The plaintiff shall retain the 2004 Honda Odyssey and the husband shall retain the 2000 Subaru Outback free from any claim by the other.   Each party shall be responsible for payment of all cost relating to their respective vehicles, including any loans, taxes, costs of operation and repair, insurance and each will indemnify and hold the other harmless.   With regards to the same period, the parties shall cooperate in executing any and all paperwork as may be required to carry out this court order.

14. As to personal property, the husband shall retain the dresser, photo albums, books and other personal property located in his office, and in part, in the garage of the marital residence.   All other personal property contained in the marital residence, including furnishings shall be divided between the parties as they may agree or in the event that they may not agree, the matter will be referred to binding arbitration.

15. Bank Accounts:  The Plaintiff shall be the sole owner of her VNA 401(k) account.   The plaintiff shall further be entitled to 25% of the fair market value of the Janus Global Tech IRA, and 50% of the fair market value of the Teacher's Retirement Board account as listed on the husband's financial affidavit, by way of a qualified domestic relations order, as the alternate payee determined as of September 21, 2010, subject to any gains or losses as of that date.   The QDROs are to be prepared within 30 days of this decree by plaintiff's counsel, or by alternate counsel, and both parties shall equally share the expense for the preparation and filing of said QDROs.

16. The defendant shall be liable for any debt or loans he obtained from his parents as listed on his financial affidavit in the amount of $23,000 and he shall solely be responsible for the repayment of any such debt and hold the plaintiff harmless therefrom.   The plaintiff shall be responsible for the outstanding home equity line of credit in the approximate amount of $18,000 and shall hold the defendant harmless therefrom.

BY THE COURT

Denise D. Markle, Judge

FOOTNOTES

FN1. Medical records reporting the husband's diagnosis and treatment were submitted into evidence as Defendant's Exhibits F and G..  FN1. Medical records reporting the husband's diagnosis and treatment were submitted into evidence as Defendant's Exhibits F and G.

Markle, Denise D., J.