Donna Scott v. Hugh Scott (2013)

MEMORANDUM OF DECISION

A review of the record reveals that the parties were married on October 31, 1992 and are the parents of three children;  presently aged 13, 16 and 18.   The parties were divorced pursuant to a complex and detailed 30–page marital settlement agreement which was reached through the collaborative process.   Both parties were represented by eminently competent counsel.   The parties returned to court and entered into a postjudgment agreement on some issues and the matter was set down for a special assignment for the remaining postjudgment issues.   The parties appeared before the court, together with counsel on August 20, 2013 regarding all outstanding issues.

The plaintiff wife claimed, essentially, that the defendant husband was in arrears for a large amount of unpaid alimony and child support, that any shortfalls or deficiencies related to the jointly owned real estate be borne solely by the defendant husband, that certain monies are due to her for actions taken by the defendant husband since the date of dissolution, that the defendant husband be responsible for $102,000 of joint credit card debt incurred solely by the defendant himself, that the defendant be found in contempt for failing to maintain life insurance, using joint credit cards and failing to produce his 2012 tax return.

The defendant husband claims that the plaintiff wife is indebted to him for her failure to pay 50% of the costs associated with the jointly held real estate, that the motion for contempt be denied regarding the life insurance, that the 2012 tax return has not yet been filed and that no alimony or child support arrearage accrued due to the language of the dissolution of agreement as more fully discussed below.

The court has fully considered the criteria of General Statutes §§ 46b–82, 46b–84, 46b–56, 46b–56c and 46b–62 as well as the evidence, applicable case law, the demeanor and credibility of the witnesses and arguments of counsel in reaching the decisions reflected in the orders that issue in this decision.

FACTUAL FINDINGS

The court finds that the following facts were proven by a preponderance of the evidence:

1. The parties were divorced pursuant to a complex and detailed 30–page marital settlement agreement which was reached through the collaborative process.

2. At the time of the dissolution the husband was a highly paid real estate investment portfolio manager earning in excess of $500,000 annually and had previously earned $1 million per year.   The parties had a combined net worth of approximately $3.5 million.   The parties had agreed that the wife was mostly at home with the children during the 18–year marriage.

3. The marital separation agreement called for the husband to pay the wife unallocated family support (agreement, pages 11–12) calculated as a percentage of his “earned income only.”   The agreement stated as follows:  “unallocated family support or alimony shall be from earned income only.   Lottery type winnings, inheritances, gifts, legal damages, interest, dividends, insurance proceeds and similar unearned income sources shall be excluded from any future claim by either party for a modification of unallocated family support or alimony.”   The agreement further stated “if the husband is terminated and receives a lump sum severance, the wife shall receive a share of said severance in accordance with the percentages as previously outlined herein which shall be treated as unallocated family support or alimony depending on when it is received.   If the husband becomes self-employed, his net profit from schedule C taking into account reasonable business expenses, shall be utilized when applying the percentages for unallocated alimony/child support as herein before defined.”

4. During the course of the negotiations leading to the marital settlement agreement, the husband lost his job on or about January 2010 and received severance pay through June 2010.   The husband disclosed to his wife and her attorney, during the negotiations that his job was ending and in fact, the separation agreement contemplated that possibility.

5. Through and including July 2010, the husband paid his unallocated alimony/support order in the amount of $9,000 per month.   When his severance pay ended, he and his ex-wife agreed that he would pay $4,000 per month which he paid from July 2010 until April 2011.   Thereafter, he and his ex-wife agreed that he would pay $5,000 per month which he paid from May 2011 until December 2011.   The husband paid no further support/alimony from January 2012 until May 2013.

6. The husband argues that the language of the separation agreement allocates to the wife a percentage of his gross earned income or wages defined as “earned income only.”   He argues that when his earned income went to zero, his obligation under the agreement went to zero.   In support of his argument, he points to the specific language of the agreement defining “earned income.” that the language of the agreement referenced and contemplated that he may be terminated from his employment and that in the property settlement, the wife received approximately $1.2 million of liquid assets.   The husband further argues that the wife could have moved to modify the alimony/child support order after the husband had lost his job but did not.

7. The wife argues that the language of the separation agreement should be construed to mean that if his job was terminated and his income went to zero that he should be held to pay an alimony/support order commensurate with his earning capacity, notwithstanding the fact that nowhere in the marital settlement agreement is a reference made to earning capacity.   The wife further claims that it would be contrary to public policy to permit the unallocated alimony/child support order to be reduced to zero when the husband has a proven earning capacity and significant assets.

8. On May 13, 2013, the parties entered a stipulation which became an order of the court (143) that the unallocated child support/alimony order be terminated and that the husband would pay child support in the amount of $368 per week.   The parties further stipulated that the plaintiff would begin collecting the rental income from the tenant in East Haddam and that a special assignment would be sought for further issues.

9. The parties entered a further stipulation dated July 19, 2013 as a result of a private arbitration/mediation that the plaintiff wife owed the defendant husband $225,000 as her share of the carrying costs for the real estate properties pursuant to the marital settlement agreement but that this sum would be offset by $102,000 which the husband owed to the wife for his use of joint credit cards following the divorce.

10. Since the date of the dissolution, the parties have essentially been living on their accumulated assets, all of which have essentially been spent down.

11. The marital residence, once valued at $4 million, is being taken in strict foreclosure within the next few weeks.   The rental property in East Haddam will be sold on or about December 2013 and the parties estimate that they will clear perhaps $7,000.   The wife's residence, purchased postjudgment, is valued at $550,000 but is subject to a $400,000 prejudgment lien.   Presently, the wife has approximately $8,000 in a bank account and $10,000 in an IRA while the husband has $2,500 in the bank account.   They have little or nothing saved for their children's college educations.

12. The wife owes to the husband the sum of $225,000 for expenses he incurred in maintaining the real estate properties since the date of dissolution.   The husband owes to the wife the sum of $102,000 for credit card debt he incurred on joint credit cards since the date of the dissolution and thus, the wife owes to the husband the sum of $123,000 as a result of those two claims.

13. The parties stipulated and agreed that as of May 13, 2013, the husband should be found to have an earning capacity of $140,000 per year.

14. The husband paid no alimony/child support from January 2012 until May 13, 2013.   The wife argues that the husband's earning capacity stipulated to in May 2013 should relate back to January 2012.   Carrying that argument forward and applying the 50% of “gross earned income” formula from the marital settlement agreement, the plaintiff computes that the husband should have paid $70,000 in 2012 and an additional $26,250 for the period January 2013 until May 2013 for a total alimony and support arrearage of $96,250.

15. The court finds that based on the clear and unequivocal language of the marital settlement agreement, the wife is not entitled to that sum of money.   The husband's “earned income” during that period was zero and the court concludes that it was the intention of the parties that the husband's alimony/support order would be a percentage of his “earned income.”   If his income rose, her share would rise and conversely, if his income fell, her share would fall.   Clearly, the wife could have moved to modify that agreement based on a change in circumstances but did not.

16. The plaintiff wife argues that the defendant husband owes to her the sum of $35,250 for his underpaying his alimony and child support order in 2010.   The court agrees.   While it is true that the parties entered into a number of informal, out-of-court agreements regarding those payments, they were never reduced to writing and signed or entered into as a lawful modification of the then existing court order.

17. The plaintiff wife requests that the lien on her residence in the amount of $400,000 be absorbed or shared by the defendant husband.   The court finds this request premature.   The attachment is only a prejudgment remedy attachment and is neither a final judgment nor a sum certain.   That request is denied.

18. The wife requests that the IRS attachment on the marital residence and the rental property be the sole responsibility of the defendant husband.   This request is denied.   There is nothing found in the marital settlement agreement substantiating this allocation of debt and there was not sufficient evidence at the August 20, 2013 hearing to substantiate that claim.

19. The plaintiff wife requests that any fees or costs associated with the foreclosure proceeding of the rental property be borne solely by the defendant in the approximate amount of $12,000.   This request is denied.   Again, there is nothing found in the marital settlement agreement substantiating this allocation of debt and there was not sufficient evidence at the August 20, 2013 hearing to substantiate that claim.

20. The plaintiff wife requests that the defendant husband reimburse her for one-half of the stone taken from the marital residence in the amount of $4,000.   The court finds that indeed, the defendant husband removed and sold stone from the marital residence in the amount of $4,000 and shall pay to the wife the sum of $2,000 within 90 days.

21. The plaintiff wife requests that the defendant husband reimburse to her 50% of the deposit paid by the tenant for its purchase or $6,500 plus pay to her 50% of the rental income received by him or $2,700 for a total of $9,200 payable to the wife.   The court agrees that the husband received and converted those sums to his own personal gain when, in fact, they should have been shared between the parties.   The husband is ordered to pay that $9,200 to the wife out of the sale of the rental property and if that is an insufficient amount, to pay the balance within 90 days thereafter.

LEGAL DISCUSSION

The parties argued extensively about the interpretation of the language in the separation agreement pertaining to the husband's income as it effects his support obligation.   The court in Danehy v. Danehy, 118 Conn.App. 29 (2009), held that “Separation agreements incorporated by reference into dissolution judgments are to be interpreted consistently with accepted principles governing contracts.”  Cushman v. Cushman, 93 Conn.App. 186, 191, 888 A.2d 156 (2006).  “When the language is clear and unambiguous ․ the contract is to be given effect according to its terms ․ [N]o room exists for construction.”   Greenburg v. Greenburg, 26 Conn.App. 591, 596, 602 A.2d 1056 (1992).

A court simply cannot “disregard the words used by the parties or revise, add to, or create a new agreement.”  Collins v. Sears, Roebuck & Co., 164 Conn. 369, 374, 321 A.2d 444 (1973).  “A term not expressly included will not be read into a contract unless it arises by necessary implication from the provisions of the instrument.”  Texaco, Inc. v. Rogow, 150 Conn. 401, 408, 190 A.2d 48 (1963);  see Albrecht v. Albrecht, 19 Conn.App. 146, 151–53, 562 A.2d 528, cert. denied, 212 Conn. 813, 565 A.2d 534 (1989).”  Id. 33.

The court in Isham v. Isham, 292 Conn. 170, 180 (2009) held that “[i]t is well established that a separation agreement that has been incorporated into a dissolution decree and its resulting judgment must be regarded as a contract and construed in accordance with the general principles governing contracts.”   Issler v. Issler, 250 Conn. 226, 234–35, 737 A.2d 383 (1999).   When construing a contract, we seek to determine the intent of the parties “from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction ․ [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ․ the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract.”  (Emphasis added;  internal quotation marks omitted.)  Id., 235.  “When only one interpretation of a contract is possible, the court need not look outside the four corners of the contract ․ Extrinsic evidence is always admissible, however, to explain an ambiguity appearing in the instrument ․ Hare v. McClellan, 234 Conn. 581, 597, 662 A.2d 1242 (1995).”  (Citation omitted;  internal quotation marks omitted.)  Poole v. Waterbury, supra, 266 Conn. 89.  “When the language of a contract is ambiguous, the determination of the parties' intent is a question of fact.”  (Internal quotation marks omitted.)  O'Connor v. Waterbury, 286 Conn. 732, 743, 945 A.2d 936 (2008).  “When the language is clear and unambiguous, however, the contract must be given effect according to its terms, and the determination of the parties' intent is a question of law.”

Our Supreme Court has recognized that the government has an interest in encouraging private agreements that have been incorporated into decrees for dissolution, separation or annulment.   See Billington v. Billington, 220 Conn. 212, 221, 595 A.2d 1377 (1991) (“strong policy that the ‘private settlement of the financial affairs of estranged marital partners is a goal that courts should support rather than undermine’ ”).   Negotiated settlement of these affairs conserves judicial resources and encourages private resolution of family issues.   Additionally, the government has an interest in preserving and enforcing orders that were entered by the courts in dissolution proceedings after a determination that the judgment is fair and equitable.   See General Statutes § 46b–66(a) (court may accept stipulation for judgment only after inquiry and finding that it is fair and equitable under all circumstances).   This conserves judicial resources because the courts are not forced to rework decrees to account for newly raised postjudgment arguments that are based on public policy.   Otherwise, the public would have no confidence in the judiciary to resolve disputes in a conclusive manner.

Finally, it is well and firmly established that “[t]he rendering of a judgment in a complicated dissolution case is a carefully crafted mosaic, each element of which may be dependent on the other.”  Ehrenkranz v. Ehrenkranz, 2 Conn.App. 416, 424, 479 A.2d 826 (1984);  accord Greco v. Greco, 275 Conn. 348, 354, 880 A.2d 872 (2005);  Krafick v. Krafick, 234 Conn. 783, 806, 663 A.2d 365 (1995);  Fahy v. Fahy, 227 Conn. 505, 515, 630 A.2d 1328 (1993);  Sunbury v. Sunbury, 210 Conn. 170, 175, 553 A.2d 612 (1989);  Picton v. Picton, 111 Conn.App. 143, 149–50, 958 A.2d 763 (2008), cert. denied, 290 Conn. 905, 962 A.2d 794 (2009);  Chyung v. Chyung, 86 Conn.App. 665, 668, 862 A.2d 374 (2004), cert. denied, 273 Conn. 904, 868 A.2d 744 (2005);  Quindazzi v. Quindazzi, 56 Conn.App. 336, 339, 742 A.2d 838 (2000);  Cordone v. Cordone, 51 Conn.App. 530, 533, 752 A.2d 1082 (1999);  Puris v. Puris, 30 Conn.App. 443, 449, 620 A.2d 829 (1993);  Watson v. Watson, 20 Conn.App. 551, 557, 568 A.2d 1044 (1990), rev'd in part on other grounds, 221 Conn. 698, 607 A.2d 383 (1992);  Daly v. Daly, 19 Conn.App. 65, 70, 561 A.2d 951 (1989);  Cuneo v. Cuneo, 12 Conn.App. 702, 710, 533 A.2d 1226 (1987).  General Statutes § 46b–66(a) recognizes this delicate balance and requires courts either to accept or to reject those agreements in their entirety.   When the court approves of a stipulated judgment, it cannot later be set aside “unless the parties agree to do so or it is shown that the judgment was obtained by fraud, accident or mistake.”  Bernet v. Bernet, 56 Conn.App. 661, 666, 745 A.2d 827, cert. denied, 252 Conn. 953, 749 A.2d 1202 (2000).

With these principles in mind as applied to the facts in this case, the court is unable to adopt the plaintiff's arguments that the husband's earning capacity should be used as the basis for his payments rather than his “earned income” as contemplated and agreed to by the parties.

ORDERS

1. The defendant shall pay to the plaintiff the sum of $35,250 regarding an alimony and support arrearage from 2010 within one year.

2. The parties shall cooperate with one another to continue to lease and sell the rental property.   The plaintiff will continue to collect the rent.   Upon its sale, 100% of the money will go to the plaintiff to reduce the husband's indebtedness to her.

3. The defendant shall reimburse the plaintiff $9,200 within 90 days pursuant to the findings of fact, in paragraph 21 above.

4. The defendant shall reimburse the plaintiff the sum of $2,000 within 90 days pursuant to the findings of fact, in paragraph 20 above.

5. The defendant shall pay the joint credit card bills in the approximate amount of $102,000 and hold the plaintiff harmless from any costs associated therewith.   This figure will serve as an offset against the plaintiff's indebtedness to the defendant in the amount of $225,000 for costs which he incurred associated with the marital real estate and thus, the plaintiff shall pay to the husband the amount of $123,000 plus any amounts which the husband pays toward the credit card debt reducing that offset within one year.

6. The husband shall complete his life insurance application and immediately provide documentation to the wife that it is in full force and effect pursuant to the marital settlement agreement.   On January 1 of each year, he shall provide to her verification that it remains in full force and effect pursuant to the judgment.

7. The court will not order the parties to meet with a mental health provider to address co-parenting and joint decision-making issues, the court finding, at this point, that their financial resources simply do not afford them this luxury.

8. The court will retain continuing jurisdiction regarding post-majority educational support.

9. The defendant is found in contempt for his failure to comply with the order to maintain life insurance and cooperate with the real estate agents in lowering the price of the marital home.   The husband shall pay to the wife the sum of $5,000 toward her attorneys fees within 90 days and thereafter, each party will pay their own attorneys fees.

10. The defendant shall pay child support of $432 per week and 66% of any unreimbursed health-related expenses based on the guidelines worksheet showing the wife earning $384 per week and the husband earning $2,692 per week.

11. All other orders not inconsistent with these orders shall remain in full force.

Shluger, J.

Shluger, Kenneth L., J.