Vasudeva M. Kamath v. Sujatha V. Kamath (2010)

MEMORANDUM OF DECISION

I BACKGROUND AND FACTS

The parties appeared before the court on December 2nd and 3rd, 2010 for a hearing on the defendant's postjudgment motions to modify alimony (No. 155), served upon the plaintiff on February 11, 2010, and for contempt (No. 156).   The parties entered into an agreement on the record resolving the contempt;  however, the defendant reserved her right to seek attorneys fees.

A. Motion for Contempt

The court will first address the defendant's allegation of contempt.   The plaintiff failed to comply with the court's order, entered by agreement at the time of the dissolution on February 26, 2007, before Brennan, J., requiring him to maintain health insurance for the parties' adult child, Vikram Kamath.   The plaintiff admitted his noncompliance and testified that he reasonably believed that Vikram was ineligible for coverage under his insurance plan because he was employed.   After Vikram graduated from college, the plaintiff made several unsuccessful attempts to communicate with his son to verify his employment status.   Vikram failed to respond to these communications and the plaintiff removed his son from his health insurance policy, fearing that coverage would be based upon a material misrepresentation of fact.   Thereafter, the defendant included Vikram on her insurance policy at considerable expense.   The court notes that the plaintiff was and continues to be responsible for 100% of unreimbursed medical expenses for his adult children.   See Separation Agreement at § 3.8. Therefore, the plaintiff's failure to appropriately provide medical coverage for Vikram would have exposed him to liability for any unreimbursed medical costs he might have incurred.

This matter was resolved by the parties upon the plaintiff's full payment of the defendant's out-of-pocket expenses for health insurance coverage for Vikram.   The plaintiff has further agreed to continue to pay for the cost of Vikram's coverage until it is restored, at the defendant's option, to the plaintiff's medical insurance policy.

Unfortunately, since the time of the dissolution, communications between the parties has been limited and polarized, resulting in their inability to constructively resolve relatively simple disputes, such as the insurability of their son.   In this context, it is difficult to assign greater fault to one party over the other.   Based upon these facts, the court concludes that the parties shall pay their own attorneys fees for the alleged contempt.

B. Motion to Modify Alimony

The remaining dispute between the parties involves the plaintiff's motion to modify alimony.   At the time of the dissolution of their marriage on February 26, 2007, unallocated support was agreed to by the parties in the amount of $6,000 per month for a period of eleven (11) months, followed by a reduction in unallocated monthly support to $5,000.   Soon after the dissolution, the defendant moved to open the judgment, which was granted by stipulation on November 19, 2007.   By agreement of the parties, unallocated support was modified to $5,666.66 per month, inter alia, for a total of $68,000 per year.

1. Financial Affidavits

The financial affidavits filed with the court reveal the following fiscal circumstances of the parties:  At the time of the dissolution, the plaintiff reported gross weekly income of $4,038 and net weekly income of $2,927, compared with his current affidavit showing gross weekly income of $5,356 and net weekly income of $3,320.   Based upon the income information on the plaintiff's financial affidavits, his gross income has increased by nearly one-third;  however, his total net weekly income has increased by a much smaller margin of approximately 13%.   The plaintiff's weekly expenses at the time of the dissolution were reported as $2,511, leaving him a remaining cash flow of $416 per week.   Based upon his current affidavit, showing weekly expenses of $3,109, his remaining weekly cash flow has been reduced to $211.

The defendant's reported gross weekly income at the time of the dissolution was $313, with net weekly income of $250, compared now with her current affidavit showing gross weekly income of $1,692 and net weekly income of $1,180.   These figures, however, do not take into account financial arrangements, pendente lite, concerning household expenses that did not include an order of alimony.   Therefore, based upon the income information on the defendant's financial affidavits, her gross income has increased significantly, but the court has no information upon which to determine her true cash flow at the time of the dissolution.   Nonetheless, at the time of the dissolution, the defendant's weekly expenses were reported as $1,095, compared with her current affidavit showing weekly expenses of $1,051.   Her reported weekly cash flow at this time, therefore, is $129.

Several additional facts are important to note at the outset.   First, the plaintiff's increase in income results from a change in his employment.   At the time of the dissolution, the plaintiff was employed as a neo-natal doctor in Houston, Texas.   He is now similarly employed as a physician at Stamford Hospital, living in a rented condominium in the neighboring town of New Canaan.   Second, the defendant's income has increased, generally due to her receipt of alimony payments.   Third, the parties testified, and the court also finds, that both parties are frugal and, therefore, neither party shows any liability on their current financial affidavit, including real estate mortgages.

Evidence presented at the hearing additionally shows a change in the parties' total assets.   At the time of the dissolution, the plaintiff reported the total cash value of his assets as $1,071,862 compared with $740,140 today.   The defendant reported the total cash value of her assets as $627,876 at the time of the dissolution, compared with $965,028 today, including sole ownership of the former marital abode in Canton.   Generally, therefore, the plaintiff's assets have been diminished to nearly the same extent the defendant's have increased.   In addition to a disproportionate transfer of marital assets to the defendant at the time of the dissolution, the plaintiff further explained this change in financial circumstances to include the fact that he has paid 100% of his son, Vikram's, private college expenses pursuant to the judgment.

2. Expert Opinions

Both parties presented credible expert testimony at the hearing regarding the meaning of the plaintiff's income increase since the time of the dissolution.   The experts called as witnesses agree on many of the underlying facts of the case.   After a careful analysis of each other's opinions, and excluding bonus payments, the plaintiff's expert testified that the plaintiff's net income had increased by 14.11% and the defendant's expert testified to the higher percentage of 28.28%. The primary differences between the two expert opinions are the following considerations:  First, the defendant's expert included mandatory employee benefit deductions of $128.34 per week in his determination of the plaintiff's net income figure.   Thinking otherwise, the plaintiff's expert did not include them in his client's net weekly wage figure.   In addition to including $128.34 in mandatory deductions for benefits, the defendant's expert also included a $284.33 weekly adjustment in the plaintiff's net income for over withholding taxes, anticipating a significant tax refund due to the plaintiff.   Considering this to be speculative and therefore inappropriate, the plaintiff's expert made no such adjustment but, in the alternative, recommended a division of any refund when it is realized and received by the plaintiff.

The plaintiff's expert also testified that the cost of living in Houston is substantially lower compared with Stamford and the surrounding area.   Based upon comparative statistical data, the plaintiff's expert testified that the cost of living in Stamford is between 42.3% and 44.8% higher in Stamford than in Houston.   This is especially true for the cost of housing.   In fact, the plaintiff's financial affidavits show his housing costs have increased nearly 70%, even though he lived in a three-bedroom home in Houston compared with the two-bedroom condominium where he now resides in New Canaan.

Based upon these facts, the plaintiff claims there is no substantial change in circumstances.   The defendant disagrees and seeks a 47% increase in annualized alimony from $68,000 to $100,000.   The court disagrees with the positions of both parties.

II DISCUSSION

A. Motion to Modify

In order to find that a modification of alimony is warranted, the court must first determine whether there has been a substantial change in the circumstances of either party since the latter of the date of the dissolution judgment or last modification.  General Statutes § 46b-86,¹ see Hardisty v. Hardisty, 183 Conn. 253, 258-59, 439 A.2d 307 (1981).   Furthermore, the court may look not only at changes in income by either party, but also at changes in assets to assess whether there has been a substantial change in circumstances.   Gay v. Gay, 266, Conn. 641, 648, 835 A.2d 1 (2003).

“The party seeking modification bears the burden of showing the existence of a substantial change in the circumstances.”  Santoro v. Santoro, 70 Conn.App. 212, 218-19, 797 A.2d 592 (2002).   However, “[t]he power of the trial court to modify the existing order does not ․ include the power to retry issues already decided ․ or to allow the parties to use a motion to modify as an appeal.”  (Citation omitted).  Borkowski v. Borkowski, 228 Conn. 729, 738, 638 A.2d 1060 (1994).

Under the facts of this case, the assets of the parties have inverted in favor of the defendant, whose assets have increased by over 50%, now nearing one million dollars.   The court's consideration of this disparity in assets is limited in light of the fact that the dissolution agreement provided for a disproportionate division of the parties' marital assets, favoring the defendant with 58% of those assets.   Her weekly income, however, is modest when compared with the plaintiff's income, which has been the focus of the evidence and the court's consideration in this case.

In considering all of the evidence presented, the court cannot ignore the fact that the plaintiff's gross weekly income has increased by approximately one-third since the time of the dissolution.   To hold that this does not constitute a substantial change in circumstances would defy common sense in most cases.   Although the plaintiff has supplied the court with significant evidence to the contrary, the court finds that the defendant has met her burden of proving a substantial change in the plaintiff's financial circumstances, albeit more modest than she has alleged.

Once a substantial change in circumstances is established, “the same sorts of [criteria] are relevant in deciding whether the decree may be modified as are relevant in making the initial award of alimony.   More specifically, these criteria, outlined in General Statutes § 46b-82, require the court to consider the needs and financial resources of each of the parties as well as such factors as the causes for the dissolution of the marriage and the age, health, station, occupation, employability and amount and sources of income of the parties.”  (Citations omitted;  internal quotation marks omitted.)   Schwarz v. Schwarz, 124 Conn.App. 472, 477, 5 A.3d 548 (2010), quoting Crowley v. Crowley, 46 Conn.App. 87, 91-92, 699 A.2d 1029 (1997).

In considering the opinions of the parties' experts, the court credits the plaintiff's expert in reducing his net income by his mandatory employee benefit deductions for purposes of considering alimony.   Both experts appropriately excluded discretionary deductions, such as payments into the plaintiff's 401(k) plan.   Alternatively, the court credits the defendant's expert for increasing the plaintiff's net income by accounting for over-withholding taxes.   The court does this in light of two factors.   First, the plaintiff is a W-2 employee and, therefore, his tax liability is foreseeable in any given year and it is, generally, not subject to significant fluctuations.   And second, the court will separately address the plaintiff's only source of potential income fluctuation;  namely, his bonus.   Based upon this analysis, the court finds the plaintiff's adjusted net weekly income to be $4,063 ² for the purpose of this motion to modify alimony.

The plaintiff's expert has also concluded that an increase in the plaintiff's cost of living has subsumed any increase in his net income.   Generally, the court finds the opinions of the plaintiff's expert to be credible.   However, it is difficult to calculate the theoretical assertion that the cost of living increase in Stamford has eliminated a certain percentage of the plaintiff's increased income.   Although a theoretical cost of living analysis may be generally helpful in reviewing the credibility of defendant's increased expenses, it seems speculative to apply an overall percentage without comparing the specific elements of the expert's cost of living analysis with the plaintiff's actual expenditures.   Therefore, the court will, instead, focus on the evidence and facts of the case.

The court credits both parties with honesty and credible frugality.   The court, therefore, accepts the living expenses of the plaintiff as represented in his financial affidavits.   In comparing the weekly expenses in the plaintiff's financial affidavits at the time of the dissolution and today, his cost of living has substantially increased by $598 or approximately 24%.   The court finds that this reflects a substantial and appropriate increase in the plaintiff's cost of living.

His adjusted net income, however, has also substantially increased.   Using his expert's total net weekly income figure, adjusted upward for over withholding taxes to $4,063, the plaintiff's income is $1,136 higher than his reported net income at the time of the dissolution.   Even using the plaintiff's expert's current net weekly cash flow number of $669.63, adjusted for over withholding of taxes to $953.96, the plaintiff's cash flow is superior to his cash flow at the time of the dissolution.   At the time of the dissolution, the plaintiff's net cash flow was $800 per week, according to his expert.   The adjusted cash flow of $953 is $153, or nearly 20%, higher now than at the time of the dissolution.   Although the court acknowledges this is a relatively small sum, as a percentage of the plaintiff's gross income, it would comparatively represent nearly a 12% increase in the defendant's alimony, if applied to that purpose.

The plaintiff's argument is that, even if the court finds a modest change in net cash flow, Dr. Kamath should be entitled to retain the fruits of his labor, especially in light of his very hard and stressful employment.   The court can only imagine, and yet still appreciate, the stress associated with providing health care to sick, premature babies.   Nonetheless, based upon the facts and circumstances of this case, the court awards a weekly increase of $75 in alimony to the defendant.

Although this modification in alimony reflects a small change as a percentage, the court is not limited to the 15% threshold for child support modifications.   See Schwarz v. Schwarz, supra, 124 Conn.App. 472.   Moreover, one of the additional changes in the plaintiff's circumstances is the bonus structure now in place with his current employer, which the court believes should be accounted for in the order of alimony.   This past year, the plaintiff received a bonus of approximately $27,890 and he remains eligible for a bonus under his existing contract of employment.   Therefore, as additional support, the plaintiff shall pay to the defendant 20% of the gross amount of any bonus and incentive compensation he receives within 10 days of receipt.   The plaintiff shall furnish the defendant with documentation of any bonus or incentive compensation received along with his payments.

In the event the plaintiff secures new employment, he shall immediately notify the defendant of the terms and conditions of any such new employment and shall furnish her with proof of his income, including but not limited to his right to any bonus and incentive compensation.

B. Retroactivity

The defendant's motion to modify child support has been granted, which gives rise to the question of retroactive application.  General Statutes § 46b-86 provides in relevant part:  “No order for periodic payment of permanent alimony or support may be subject to retroactive modification, except that the court may order modification with respect to any period during which there is a pending motion for modification of an alimony or support order from the date of service of notice of such pending motion upon the opposing party pursuant to Section 52-50.”

The court finds that the defendant served her motion for modification on February 11, 2010 and it has been pending for nearly one year.   The motion was justifiably filed due to a significant increase in the plaintiff's salary.   Although the hearing on this motion was scheduled on numerous occasions in June, July and September of this year, continuances were granted, often for the court's convenience until December.   Based upon the facts of this case, the court will exercise its discretion to order the retroactive modification of child support to the date of service on February 11, 2010.   This order of retroactivity includes any bonus payments received since that time.   The payment of any arrearage shall be made within thirty days.

SO ORDERED.

BY THE COURT,

Mark Taylor, Judge

FOOTNOTES

FN1. General Statutes § 46b-86(a) provides in relevant part:  “Unless and to the extent that the decree precludes modification, the court may order ․ any final order for the periodic payment of permanent alimony ․ or an order for alimony ․ may at any time thereafter be continued, set aside, altered or modified by said court upon a showing of a substantial change in the circumstances of either party ․”.  FN1. General Statutes § 46b-86(a) provides in relevant part:  “Unless and to the extent that the decree precludes modification, the court may order ․ any final order for the periodic payment of permanent alimony ․ or an order for alimony ․ may at any time thereafter be continued, set aside, altered or modified by said court upon a showing of a substantial change in the circumstances of either party ․”

FN2. See Plaintiff's Exhibit 3. The plaintiff's total net weekly income is $3,778.63, plus $284.33 for over withholding equals $4,063..  FN2. See Plaintiff's Exhibit 3. The plaintiff's total net weekly income is $3,778.63, plus $284.33 for over withholding equals $4,063.

Taylor, Mark H., J.