Margaret Allen v. Wayne Allen (2010)

MEMORANDUM OF DECISION

On August 23, 2007, the parties appeared and entered a stipulated agreement that modified a separation agreement dated June 16, 2006 relating to unallocated alimony and child support.

The defendant steadfastly refuses to admit that he was in court on August 23, 2007.   However, the transcript of proceedings on said date as well as his stamp dated financial affidavit makes clear that he was present.   The court finds that the representations made in defendant's affidavit are deceitful and flagrant misrepresentations.   Worse, the plaintiff was unrepresented and the defendant had able counsel.   The disparity between his true income and assets and what he reflected on his August 23, 2007 affidavit is staggering.

The written stipulation for modification of the judgment was based on the defendant's sworn financial affidavit dated August 22, 2007 in which the defendant reported gross weekly income of $1,875 per week or $97,500 per year.   After the plaintiff agreed to modify the unallocated alimony and child support orders on August 23, 2007, she first learned that the defendant's income for 2007 was $592,902 when the defendant eventfully produced his 2007 tax return.

On November 25, 2009, the plaintiff filed a Motion to Open Modified Judgment, Post-Judgment, which was duly served upon the defendant with an Order for Hearing and Notice.   The plaintiff is seeking to open the modified judgment dated August 23, 2007 and to vacate that modified judgment to restore the original court orders for unallocated alimony and child support as set forth in Article 3 of the original dissolution judgment dated June 16, 2006.

The principles for opening a Dissolution Judgment based on fraud have been well established in the courts of this State.  Billington v. Billington, 220 Conn. 212 (1991).   The law in this State is now based on a three-part test for reopening judgments based on fraud.   The court is satisfied that the plaintiff has satisfied each of those parts of the three-part test in the present case.

1. There has been no laches or unreasonable delay by the injured party after the fraud was discovered.

The plaintiff filed the instant Motion to Open Modified Judgment dated November 25, 2009 within a short time after the defendant disclosed his tax returns indicating the enormous amounts of income that he earned in 2007 and 2008.   There is no evidence of laches or undue delay on the part of the plaintiff.

2. There is clear proof of the fraud.

The only evidence of the defendant's income available to the plaintiff and the court on August 23, 2007 was the defendant's sworn financial affidavit dated August 23, 2007.   There is clear proof that the defendant's sworn financial affidavit conceals or omits the following facts.

a. The defendant's sworn financial affidavit stated total annualized gross earnings of $97,500, while his actual gross income for 2007 was $592,902.

b. The defendant's sworn financial affidavit stated that the balance in his Webster Bank checking account on August 23, 2007 was $56,230, while the actual balance in that account according to the Webster Bank checking account statement showed $192,372.55 as of August 23, 2007.

c. The defendant's sworn financial affidavit omitted any income from dividends whereas defendant admitted on cross-examination that he received income from stock dividends throughout 2007.   None of the deposits shown on Exhibit 10 totaling $8,998.01 were disclosed to the plaintiff or to the court.

d. It is important to note that the defendant entered into the contract with Sentinel Data Centers on August 28, 2006 which was before he filed his postjudgment Motion to Modify dated September 14, 2006 in which he represented to the plaintiff and the court that he was “unemployed and had no income.”   In contrast to that representation, the defendant's contract with Sentinel Date Centers clearly states that the defendant would receive income of “$5,000 per month, payable semi-monthly ․ plus reasonable out-of-pocket expenses.”   In addition, that contract provided for a schedule of payment of commissions which was not disclosed.

e. On cross-examination, the defendant admitted that he did not inform the plaintiff of these facts.   He admitted that his financial affidavit is devoid of any reference to income from commissions.   He concealed from the plaintiff that he had entered into lucrative contracts whereby he would receive commission income.   He concealed from the plaintiff the facts related to the rate of his commission and the schedule by which he would be paid.

f. On cross-examination, he admitted he deposited $76,775 on March 15, 2007 as the first installment of the commission he had earned for the “Cantor” deal.   He also admitted that he never informed the plaintiff that he received the commission payment.

g. He did not inform the plaintiff that his contract with Sentinel provided that he would receive commissions at two separate times for each deal.   He did not inform the plaintiff that as of August 23, 2002 he had already had a lucrative deal involving the Cantor firm or that he had already received the first installment of the commission associated with that deal.   He also admitted on cross-examination that as of August 23, 2007, the only step remaining before he would receive the remainder of the commission for that deal was for the client to take occupancy of the premises.   As his checking account deposits clearly indicate the defendant received the second commissions payment of $157,152.18 from that deal on December 10, 2007 which was shortly after the August 23rd court date.   It is patently obvious that he fully expected to receive that commission since (a) the deal was in place since at least March;  (b) he had already received $76,773;  and (c) he was actively working with the client to insure that the client could take occupancy of the property.

h. On August 23, 2007, the exact day when the defendant signed and swore to the truth of his financial affidavit and when the parties appeared in court, the defendant deposited $60,000 into his Webster Checking Account.   This fact was concealed from the plaintiff and the court.

i. One week before that court date, namely, on August 16, 2007, he deposited $100,000 into that checking account.   This fact was also concealed from the plaintiff and the court.

j. The defendant did not thereafter testify that those deposits were associated with the sale of his real estate.   The evidence in the record as a whole reveals that those deposits were the proceeds from the sale of stock options.   Contrary to the defendant's attempts to claim that he was “awarded” stock options, the record in this case demonstrates without any doubt that the defendant never previously disclosed to the plaintiff that he owned or had rights to stock options with a net cash value of over $166,000.

k. The total of deposits into the defendant's Webster Bank checking account in 2007 was $574,702.24.   The defendant did not present any evidence to contradict the dates, amounts, and sources of funds.

l. It is clear that the defendant's total commission earned from the Cantor deal in 2007 was far greater than the amount he deposited in 2007, namely, $76,775 on 3/15/07 and $157,152.18 on 12/10/07.   According to his testimony, the defendant earned and was paid the sum of $233,927 from the Cantor deal.   According to Exhibit 8, the defendant was due to receive additional commissions from the Cantor deal in the amount of $101,025.   None of this commission income was disclosed to the plaintiff.   The defendant admitted on cross-examination that he never disclosed to the plaintiff that he had the right to receive commissions.   Nor did he disclose that he either earned or expected to be paid from work “in the pipeline.”

This court finds from all of the evidence that the defendant intentionally concealed his total income earned in 2007 and all of the material facts related to his actual income and earning capacity.

3. There is substantial likelihood that the result would be different.

Plaintiff seeks to open the modified Dissolution Judgment dated August 23, 2007 and to restore the terms and provisions of the original Dissolution Judgment and Separation Agreement dated June 16, 2006.   The effect of this proceeding would be to vacate the orders for unallocated alimony and child support in the amount of $7,800 per month and to restore Article 3, Paragraph B which provides for payments of unallocated alimony and child support based on the same formula that the parties originally agreed upon and that this court accepted, approved and incorporated into the Judgment of Dissolution on June 16, 2006.   This result is radically different from the result of the Stipulation for modification of the judgment and, therefore, satisfies the third part of the test for opening a Dissolution Judgment.

The annual amount of unallocated alimony and child support based on the modified judgment is $93,600.   According to the plaintiff's records, the amount of unallocated alimony and child support paid in 2007 and 2008 was $93,600.

A. 2007 Alimony and Arrearage

According to Paragraph B of the original Dissolution Judgment, the amount of the defendant's income in 2007 payable as unallocated alimony and child support pursuant to the original formula was as follows:

I. Calculation of 2007 Gross Income:

$592,902 Line 22 of 2007 Tax Return

Less ($186,000 ) Proceeds real estate sale per '07 Tax Return Schedule D

TOTAL:  $406,902 2007 Gross Income

II. Calculation of 2008 Alimony Arrearage:

A. $7,800 x 12 months (paid)

B. 80% of income between $125,000 to $160,000 = $32,000.00 (unpaid)

C. 15% of income between $165,000 to $406,902 = $36,285.30 (unpaid)

TOTAL ARREARS FOR 2007:  $68,285.30

B. 2008 Alimony & Arrearage

According to Paragraph B of the original Dissolution Judgment, the amount of the defendant's income in 2008 payable as unallocated alimony and child support pursuant to the original formula was as follows:

I. Calculation of 2008 Gross Income:

Total:  $625,694 Gross 2008 Income

II. Calculation of 2008 Alimony Arrearage:

A. $7,800 by 12 months (paid)

B. 80% of income between $125,000 to $165,000 = $32,000.00 (unpaid)

C. 15% of income between $165,000 to $500,000 = 36,285.30 (unpaid)

TOTAL ARREARS FOR 2008:  $68,285.30

C. 2009 Alimony and Arrearage

According to Paragraph B of the original Dissolution Judgment, the amount of the defendant's income in 2009 payable as unallocated alimony and child support pursuant to the original formula was as follows:

I. Amount owed:  $7,800 per month x 12 months = $93,600

II. Amounts paid:  $7,800 x 3 months = $23,400 (paid)

$6,000 x 9 months = $54,000 (paid)

TOTAL ARREARS FOR 2009:  $16,200

Based on the foregoing calculations, the total amount of arrearage owed from the defendant to the plaintiff for 2007, 2008 and 2009 was $152,770,60.

Credibility of the Defendant

The defendant testified that he signed that Stipulation in March of 2007.   The plaintiff testified that she signed the Stipulation in court on August 23, 2007.   According to the defendant's testimony, he was not in court on August 23, 2007.   The defendant clearly was present in court on August 23, 2007.   The plaintiff was not represented by counsel throughout this post-judgment modification process up to and including the court appearance on August 23, 2007.

Duty of Disclosure

Pursuant to Connecticut law the defendant owed a continuing duty of disclosure to the plaintiff and the court.  Weinstein v. Weinstein, 275 Conn. 671 (2005).   The defendant clearly breached that duty by concealing from plaintiff and the court his true financial circumstances.   Quoting the Appellate Court's decision in Jackson v. Jackson, 2 Conn.App. 179, 195 (1984), in which it was the plaintiff who was guilty of fraud upon the defendant, the Weinstein court noted:

“[T]he plaintiff knowingly made an untrue representation.   The representation was made to induce the defendant to act upon it.   That is the self-evident purpose of such affidavits.”  (Emphasis added).  Weinstein v. Weinstein, 275 Conn. 671, 691-92.

Quoting from the decision in Miller v. Appleby, 183 Conn. 51, 57 n.1, 438 A.2d 811 (1981), the Supreme Court also noted:

When false representations are made for the purpose of inducing an act to another's injury, necessarily there is the plain implication that the representations were made with the intent to deceive.  Id. at 701.

And, again referring the Appellate Court's decision in Jackson v. Jackson, supra, the Supreme Court concluded:

When “a clear case is made under applicable law that a fraudulent and material misrepresentation by one party resulted in a substantial injustice to the other party, we must not hesitate to act.   This is such a case.”  Id., 196, 478 A.2d 1026.

Plaintiff's motion to open the modified dissolution agreement dated August 23, 2007 and the terms and provisions of the original dissolution judgment and separation agreement dated June 16, 2006 are reinstated.

OWENS, J.T.R.

Owens, Howard T., J.T.R.