Afton Fraser v. B.J. Fraser
MEMORANDUM OF DECISION ON THE PLAINTIFF'S MOTION TO OPEN THE JUDGMENT # 212 DATED NOVEMBER 2, 2011 WITH THE OBJECTION TO SAID MOTION FILED BY THE DEFENDANT # 213 AND THE MEMORANDUM OF DECISION ON THE DEFENDANT'S MOTION FOR MODIFICATION # 208 DATED JANUARY 14, 2011
I. Motion to Open Judgment dated November 2, 2011.
The plaintiff filed her motion to open the judgment of dissolution dated February 17, 2009 alleging that the defendant at the time of the separation agreement dated February 11, 2009 incorporated by reference in the judgment failed to disclose two contracts in his February 12, 2009 affidavit. Specifically the plaintiff alleges that the defendant failed to disclose; 1. A one million dollar contract in connection with a film project entitled “Extraordinary Measures” entered in January of 2009 and 2. An eight million dollar contract in connection with a film project entitled “Furry Vengeance” entered into in March 2009. The plaintiff further alleges that she only became aware of these two projects when the defendant filed his motion for modification. Further she alleges that the failure to disclose constitutes fraud and that the disclosure of the information would have resulted in a different outcome of the case.
The issue is whether failure to disclose these two projects on the defendant's 2009 financial affidavit constitutes fraud thereby opening the judgment for a retrial of all issues.
“It is a well established general rule that ․ a judgment rendered by the court ․ can subsequently be opened [after the four month limitation set forth in General Statutes § 52–212a and Practice Book § 17–43] 1 ․ if it is shown that ․ the judgment was obtained by fraud ․” (Internal quotation marks omitted.) Terry v. Terry, 102 Conn.App. 215, 222, 925 A.2d 375 (2007). Even a “judgment rendered by the court with the consent of the parties may be subsequently opened if it is shown that the agreement was obtained by fraud or intentional material misrepresentation.” Jucker v. Jucker, 190 Conn. 674, 677, 461 A.2d 1384 (1991).
“The party alleging fraud ․ bears the burden of proving it with ․ direct or circumstantial [evidence].” (Citation omitted.) Aksomitas v. Aksomitas, 205 Conn. 93, 100, 529 A.2d 1314 (1987). The standard of proof is a demanding one, that of “[c]lear and convincing proof ․ [The burden] is sustained if evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist.” (Internal quotation marks omitted.) Shelton v. Statewide Grievance Committee, 85 Conn.App. 440, 443–44, 857 A.2d 432 (2004), quoting Somers v. Statewide Grievance Committee, 245 Conn. 277, 290–91, 715 A.2d 712 (1998).
“Fraud consists in deception practiced in order to induce another to part with property or surrender some legal right, and which accomplishes the end designed ․ The elements of a fraud action are: (1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment ․ There are three limitations on a court's ability to grant relief from a dissolution judgment secured by fraud: (1) there must have been no laches or unreasonable delay by the injured party after the fraud was discovered; (2) there must be clear proof of the fraud; and (3) there is a substantial likelihood that the result of the new trial will be different.” (Internal quotation marks omitted.) Weinstein v. Weinstein, 275 Conn. 671, 685, 882 A.2d 53 (2005). In cases where the nonmoving party has not raised the issue of laches or undue delay, as is the case here, the court limits its consideration to whether there was sufficient proof of fraud and whether the result in a new trial would differ. Id., 686.
“To determine whether there was proof of fraud, we consider the evidence through the lens of our well settled policy regarding full and frank disclosure in marital dissolution actions. Our [rules of practice have] long required that at the time a dissolution of marriage, legal separation or annulment action is claimed for a hearing, the moving party shall file a sworn statement ․ of current income, expenses, assets and liabilities, and pertinent records of employment, gross earnings, gross wages and all other income ․ The opposing party is required to file a similar affidavit at least three days before the date of the hearing ․ Our cases have uniformly emphasized the need for full and frank disclosure in that affidavit. A court is entitled to rely upon the truth and accuracy of sworn statements required by ․ the [rules of practice], and a misrepresentation of assets and income is a serious and intolerable dereliction on the part of the affiant which goes to the very heart of the judicial proceeding.” (Internal quotation marks omitted.) Id. Additionally, Practice Book § 31–15 imposes upon each party the continuing duty to disclose asset values up to and until the judgment is rendered, and to correct or supplement discovery responses if a party discovers new or additional information. In marital dissolution actions, “the sole purpose of disclosing pertinent financial information and mandating updated financial affidavits is to value the parties' assets properly, and it would completely thwart that purpose if the duty to disclose were to end before the asset valuation date.” Weinstein v. Weinstein, supra, 275 Conn. 697.
In the present case, the plaintiff's allegation of fraud centers upon the defendant's failure to fully disclose his assets in his financial affidavit by neglecting to include two pending movie contracts. The plaintiff argues that the portion of the financial affidavit entitled “Projected Income from Acting Services” did not include the defendant's projected income in connection with two films, Extraordinary Measures, for which she claims he signed a $1 million contract in January 2009, and Furry Vengeance, for which she claims he signed a $8 million contract in March 2009. The plaintiff adds that the defendant represented in the parties' separation agreement, which was incorporated into the judgment of the court, “that he [had] provided [the plaintiff] with and [would] file in court ․ a sworn financial affidavit ․ which accurately sets forth his current income, assets, expenses, and liabilities, as required by law.” The defendant counters in his opposition to the plaintiff's motion that neither contract was signed until sometime in 2010, and that, although negotiations for the contracts were ongoing at the time the judgment was rendered in February 2009, he was not entitled to any rights or privileges in connection with either film at that time.
Although the specific issue of opening a dissolution judgment on the basis of a failure to disclose pending employment contracts has not yet been addressed in Connecticut courts, the existing case law on the related issue of failure to fully disclose financial assets is instructive here. In Weinstein v. Weinstein, supra, 275 Conn. 671, 675, the Supreme Court reviewed a motion to open a dissolution judgment on the ground of fraud based on the defendant's failure to fully disclose his financial interest in a small, privately held software company. At several places in his financial affidavit, the defendant assigned a $40,000 value to his interest in the company. One month after the judgment of dissolution was rendered, the defendant received and rejected a purchase offer of $2.5 million for the company, which would have netted him $500,000 for his interest alone. Two weeks later, the defendant accepted a $6 million purchase offer for the company. The plaintiff subsequently moved to open the judgment on the basis of fraud, and the trial court denied the motion. Id., 674. At the hearing on the appeal, the defendant testified that he had based his valuation on the company's book value and failed to account for the worth of the intellectual property asset of the company, which the Supreme Court held constituted “a blatant and deliberate misrepresentation.” Id., 691. The court added that the defendant was well equipped to value the intellectual property asset of the company because he was the one who created it and therefore knew its worth better than any other party involved in the marriage dissolution proceedings. Id., 690 n.12. The Supreme Court reversed and remanded the case to the trial court with the direction to grant the motion to open on the ground that the defendant knew the value of the asset and fraudulently undervalued his ownership interest in the company. Id., 707–08.
In Terry v. Terry, supra, 102 Conn.App. 215, 227, the Appellate Court noted that the salient fact in Weinstein was that the defendant knew the value of the company's intellectual property and fraudulently withheld it during the dissolution proceedings. In Terry, the court reviewed a motion to open based on an allegation that the plaintiff fraudulently failed to disclose the value of a pending civil lawsuit, in which the plaintiff received an award of $2.5 million six years after the judgment of dissolution was rendered. The court distinguished the facts in Terry from those in Weinstein, finding that the defendant had full knowledge of the lawsuit throughout the proceedings because it was mentioned in a court hearing one year prior to the dissolution judgment, and the litigation file pertaining to the lawsuit was turned over to the defendant's counsel well before the final hearings on the dissolution. Id., 224. Although the lawsuit had no specific value at the time of the judgment, the court reasoned that the defendant could have requested a percentage of whatever verdict might be rendered in a subsequent trial, which he chose not to do. Id., 221. The court therefore concluded that there was no basis for the defendant's claim that he was not aware of the value of the lawsuit on the date of the dissolution or that the plaintiff intentionally withheld information from the defendant during the proceedings, and that the trial court therefore properly denied the motion to open the judgment on the basis of fraud. Id., 228.
In the present case, in order to succeed on her motion to open the judgment, the plaintiff must demonstrate through clear and convincing evidence that the defendant failed to disclose two pending employment contracts with the intent of inducing her reliance on that nondisclosure, and that the plaintiff relied upon the defendant's nondisclosure to her detriment. Additionally, the plaintiff must show that, had the information regarding the contracts been provided to her, the result in a new trial would differ.
First, with respect to the Extraordinary Measures movie contract, the plaintiff argues that the defendant received an offer to perform in the film in December 2008 and subsequently signed a contract to that effect on January 8, 2009. Citing to both the contract itself and the testimony of the defendant's business attorney, Eric Suddleson, the plaintiff avers that the contract terms included payment to the defendant in the amount of $1 million for his work on the film. The plaintiff therefore argues that, because the contract went into effect prior to the judgment of dissolution, the defendant had a duty to disclose the contract and the projected income for his performance in the film in his financial affidavit submitted on February 17, 2009. By way of reply, the defendant contends that, although the contract for the film is dated January 8, 2009, he did not sign it until sometime in 2010. The defendant further claims that, while the negotiations for the film began in late 2008 and were ongoing at the time the judgment was rendered in February 2009, he was not entitled to any rights or privileges in connection with the film at that time.
It is clear from the defendant's admissions that, regardless of when he signed the contract for Extraordinary Measures, the defendant was aware of the offer to work on the film when the judgment of dissolution was rendered on February 17, 2009. Additionally, however, the defendant notes the uncertain nature of film contracts and, citing to his business attorney's testimony, asserts that he frequently receives preliminary offers for film contracts “that never [come] to fruition” because the films are cancelled or the financing falls through. As the Appellate Court has noted, however, the affiant in a marital dissolution proceeding must disclose the existence of an asset even when the specific value of that asset is not yet known. In Terry v. Terry, supra, 102 Conn.App. 231, it was the fact that the plaintiff disclosed her pending civil lawsuit to the defendant by mentioning it during a preliminary hearing and turning over the litigation file to the defendant's counsel prior to the dissolution judgment that led the court to find that she had not fraudulently concealed its potential value. The projected income from the plaintiff's pending lawsuit in Terry was equally as uncertain, if not more so, than the potential value of the defendant's contract in the present case, given that several of her motions in the suit had been denied at the time of the dissolution judgment. Terry v. Terry, supra, 102 Conn.App. 224. Relevant case law is quite clear on the importance of full and frank disclosure in financial affidavits, and Practice Book § 13–15 imposes a continuing duty to correct or supplement discovery responses up to and until the dissolution judgment is rendered. In the present case, the defendant did not disclose anything about the Extraordinary Measures contract during the proceedings or in his financial affidavit, even though the affidavit contained a section entitled, “Projected Income from Acting Services.” It is therefore reasonable to conclude that the defendants' failure to disclose the pending contract for Extraordinary Measures and its potential value as a financial asset constitutes a fraudulent misrepresentation that was intended to deceive the plaintiff.
As to the question of detrimental reliance on the defendant's nondisclosure, it is undisputed that the plaintiff relied on the defendant's representations in his financial affidavit during the dissolution proceedings. Additionally, the dissolution court is entitled to rely upon the truth and accuracy of sworn statements in dividing the parties' assets. See Weinstein v. Weinstein, supra, 275 Conn. 702. Indeed, “a misrepresentation of assets and income is a serious and intolerable dereliction on the part of the affiant which goes to the very heart of the judicial proceeding.” (Internal quotation marks omitted.) Id., 686. In light of these facts, the defendant's failure to disclose the contract for Extraordinary Measures in his financial affidavit was a material omission that the plaintiff relied upon to her detriment.
The separation agreement paragraph 12.1 provides, The Husband represents to the Wife that he has provided her with and will file in Court in connection with the pending action for dissolution of the parties' marriage a sworn Financial Affidavit dated February 13, 2009, which accurately sets forth his current income, assets, expenses and liabilities, as required by law.
Obviously, the parties intended full disclosure of finances.
The court has previously concluded that failure to disclose the project of “Extraordinary Measures” was a material omission on the defendant's financial affidavit. The question remains was it fraudulent on the part of Mr. Fraser. Did he know it to be untrue. Did he intend to induce the plaintiff's reliance? Fraud must be proved by clear and convincing evidence. The plaintiff bears the burden of proof. The court has reviewed every transcript of the hearing. It has carefully reviewed the testimony of Mr. Fraser. The court can only conclude that Mr. Fraser did not believe it was a project to which he was contractually obligated to provide services and for which he was contractually entitled to receive payment. Mr. Eric Suddleson, Mr. Fraser's attorney of 8 to 9 years testified to this effect T. 2/6/13. Mr. Barash, Mr. Fraser's business manager, testified that at the date of the affidavit Mr. Fraser did not have any contractual rights or obligations to any existing project. T. 2/6/13. There was much testimony concerning “chain of title,” “pay or play” in reference to the various dates “as of” and when the contracts were actually signed. Mr. Fraser obviously entrusted virtually all negotiations concerning his professional and the organization and running of business life to the gentleman. The court is well aware of the alliance of these gentlemen with Mr. Fraser. The court therefore does not solely focus its attention on their testimony but rather reads their testimony in conjunction with that of Mr. Fraser. The court finds that the plaintiff failed to prove by clear and convincing evidence that the omission of “Extraordinary Measures” on the February 13, 2009 was fraudulent.
The court will next address the plaintiff's allegation that the defendant failed to disclose a pending contract for the film, Furry Vengeance. The defendant argues that the plaintiff's motion should be denied on this ground because the potential value of his participation in Furry Vengeance was disclosed in the financial affidavit, and the payment amount for the film was not finalized until after the dissolution judgment was rendered. The defendant contends that the reference to Found Objects on page five of the defendant's financial affidavit constitutes sufficient disclosure of the Furry Vengeance contract because Found Objects is the corporation that managed the project on the defendant's behalf. The defendant further explains that the hyphen lines in the column entitled “Found Objects” indicate that there was no projected income for any films managed by the corporation at that time. The defendant also adds that the affidavit listed income “for acting services as of that date,” and as of the date of the affidavit, there was no projected income for the defendant's participation in Furry Vengeance. The plaintiff, however, citing to the testimony of the defendant's business attorney, claims that the defendant received an offer to perform in Furry Vengeance for $7.5 million in either December 2008 or January 2009. The plaintiff notes that the defendant's testimony about when he received the offer is inconsistent, but that in any case, the offer, which included the payment amount, was made prior to the dissolution judgment on February 17, 2009. The defendant maintains that he did not have an enforceable obligation in connection with the film until mid-March 2009, and that the contract was not sent to him for signature until August 2009. It is undisputed that the contract for Furry Vengeance is dated March 10, 2009, and that the defendant received payment for the film in August 2009.
The fact that the defendant listed Found Objects as an asset in his financial affidavit makes the plaintiff's argument on the basis of fraud less persuasive with respect to the pending contract for Furry Vengeance, since Found Objects managed the defendant's participation in the film. Just as the defendant in Terry was informed of the plaintiff's pending lawsuit, the plaintiff in this case was given notice in the affidavit about the defendant's potential earnings through the Found Objects corporation and could have requested a percentage of whatever income the defendant might earn from future contracts that the corporation managed, which she chose not to do. Additionally, as stated in footnote 2 of the affidavit, Found Objects was created pursuant to the parties' prenuptial agreement to manage the defendant's income from acting services in the United States. The plaintiff was therefore aware of the corporation's role in managing the defendant's movie contracts, unlike the plaintiff in Weinstein, who could not reasonably have estimated the value of the intellectual property asset of the defendant's corporation. Moreover, the defendant did not materially misrepresent the potential value of Found Objects or the Furry Vengeance contract, as the defendant did in Weinstein, because he did not indicate that he would make little or no money from the contract by placing a zero or a low dollar amount in the income line. He simply used hyphen lines to indicate that the projected income amount was uncertain. Finally, the fact that the contract is dated March 10, 2009, three weeks after the judgment of dissolution was rendered, lends further support to the defendant's argument that the payment amount was not set at the time of the judgment. Unlike the Extraordinary Measures contract, for which negotiations began and a contract price was set prior to the date of the dissolution judgment and which was not disclosed anywhere in the financial affidavit, the defendant's failure to disclose the amount of the Furry Vengeance contract does not constitute a fraudulent misrepresentation, and, on its own, is an insufficient ground on which to open the judgment.
The Defendant's Motion for Modification
Judgment of Dissolution entered on February 17, 2009. The separation agreement dated February 11, 2009 was incorporated by reference in the judgment. Article III. Alimony provides, in pertinent part,
3.1 Commencing February 1, 2009, until the death of either party, the remarriage of the Wife, or January 31, 2019, whichever event first occurs, the Husband shall pay the Wife as periodic alimony the sum of $50,000.00 per month, payable on the fifth of each month, by direct deposit to an account selected by the Wife.
3.2(a) Periodic alimony paid pursuant to Paragraph 3.1 shall not be subject to modification as to duration and shall terminate no later than January 31, 2019. The Wife shall be precluded from seeking modification of periodic alimony pursuant to Section 46b–86(a) of the Connecticut General Statutes, or otherwise which would extend the duration of alimony beyond January 31, 2019.
(b) The amount of alimony and child support shall only be subject to modification at the request of the Husband in the event that his gross income from employment, after deduction for ordinary and necessary business expenses is less than $3,000,000.00 dollars in any calendar year.
(c) The amount of alimony shall not be subject to modification at the request of the Wife except that she may request a modification to recoup the amount of alimony the Husband was relieved from paying as a result of a previous modification and/or to seek that alimony be increased up to $50,000.00, per month.
The plaintiff therefore is precluded from seeking modification of alimony as to duration and amount. The defendant's motion for modification 2 is based on his claim that his gross income from employment, after deduction for ordinary and necessary business expenses, was less than $3,000,000.00 dollars in calendar years 2010, 2011 and 2012. The threshold issue is therefore proof of gross income. The plaintiff has contended that the court does not have sufficient evidence to determine gross income. The plaintiff argues that without the corporate returns the court cannot properly allocate ordinary and necessary business expenses. The court however notes that the corporate returns, K–1s, ledger reports, statement of assets and liabilities were provided in extensive detail for Resarf, Found Objects, Nadnerb, A Road and Three Bridges, East Coast Dreams and for Brendan Fraser individually during discovery. Ex. H, I & J, testimony of Mr. Fraser and Mr. Barash. If the plaintiff wished to challenge the testimony of Mr. Fraser or Mr. Barash or the veracity of the tax returns filed, both corporate and individual, counsel had the opportunity and presumably the information. Similarly the plaintiff questioned Mr. Fraser's decision to turn down projects, rejected a multimillion offer for the sequel to Journey to the Center of the Earth. The plaintiff ignores the fact that this sum was nearly two-thirds less than what was originally promised. Mr. Fraser testified that the studio did not keep its bargain. Perhaps more important is the fact that this is not the case where the movant is in contempt for nonpayment. The court therefore must look at the existing evidence and testimony.
In 2010 the defendant reported gross income of $2,042,778.00. His ordinary and necessary business expenses were $236,843.00 thereby netting an income of $1,805,935.00. This amount was corroborated by Mr. Barash, Mr. Fraser's business manager. T. 2/6/13. Mr. Barash further testified that he has been Mr. Fraser's business manager for eight years. Everything financial goes through his hands. He maintains separate books and records for all entities including Mr. Fraser individually. Mr. Barash testified that he determined what was allocated to business and what was a personal expense, generally allocating one-third (1/3) to personal. T. 2/6/13.
In 2011, the defendant reported gross income of $1,090,370 less ordinary and necessary business expenses of $125,885 netting $964,485.00. Exhibit F. Mr. Barash also prepared this tax return. Mr. Barash at the time of the hearing has not prepared the 2012 tax return. He however assisted in preparing the 2013 financial affidavit filed by Mr. Fraser which computed his gross income, less ordinary and necessary business expenses to be $1,114,829.00. T. 2/6/13 p. 149.
In sum, Mr. Fraser's reported income for the past three years was less than the $3,000,000 dollar threshold. By contract, he is entitled to move for a modification. In deciding however whether the modification is warranted the court must reexamine the financial affidavits filed by the parties in 2009, the date of dissolution and, the financial affidavits filed in 2013, the date of the hearing applying the factors of Borkowski v. Borkowski, 228 Conn. 729, 739 (1994). The court may also consider the defendant's earning capacity, Weinstein v. Weinstein, 104 Conn.App. 482, 490 (2007), Schade v. Schade, 110 Conn.App. 57, 61 (2008).
Mr. Fraser's 2009 financial affidavit lists total assets, after property settlement of $17,814,549.50. His 2013 Financial Affidavit lists assets of $26,966,959.34 less liabilities of $2,230,224.92 for net total of approximately $24,736,000. His net worth has increased by approximately 7 million dollars.
Mrs. Fraser's 2009 Financial Affidavit after a property settlement paid by the defendant of $8,689,132.00 lists net assets of $8,967,193.00. The plaintiff's 2013 financial affidavit lists current assets of $9,266,846.61, a change of $300,000.00. She is a homemaker and cares for the parties' three sons one of whom requires constant supervision and attention. To their credit, both parents are actively engaged in the lives of their sons. Mrs. Fraser's nonmodifiable alimony terminates in 2019. She may only seek recoupment in the event the defendant's obligation to pay was relieved or reduced in any given year. Mrs. Fraser at this point has a limited ability to earn or acquire assets.
Conversely, Mr. Fraser has had significant artistic success in the film industry. He has had starring roles in more than thirty major films. While currently on a “hiatus” due to surgeries, stress and general financial problems in the film industry, Mr. Fraser intends to work and does spend time pursuing projects and offers. He currently has two pending projects, A & B. In addition he has a number of films which have been released or completed and unreleased including:
The Damien Lee Project, Standoff (no release date)
Hair Brained (no release date)
Whole Lotta Soul (released 2012)
(Voice over) for Escape from Planet Earth (released 2013)
A Case of You (World premiere at 2013 Tribeca Film Festival)
Guinea Shelter (not released)
Pawn Shop Chronicles (not released)
(Voice over) Nut Job (not released)
(Offer to perform)—In With the Outlaws (Declined)
(Offer to Perform)—Married and Cheating
(Verbal Offer) Seconds of Pleasure
The court finds that Mr. Fraser continues to enjoy success in the film industry. He has the ability to earn income and acquire assets. Indeed during the pendency of this proceeding he acquired property in Bedford, N.Y. for $3,389,779. T. 4/30/13 p. 77. In addition he spent $755,496.00 furnishing said home. Financial Affidavit 1/29/13.
Counsel Fees: Each party will be responsible for their own counsel fees.
In conclusion based on its analysis the court finds that there has not been a change in circumstances sufficient to warrant modification. The defendant's motion is denied. So ordered.
By the Court,
FN1. General Statutes § 52–212a provides in relevant part: “Unless otherwise provided by law and except in such cases in which the court has continuing jurisdiction, a civil judgment or decree rendered in the Superior Court may not be opened or set aside unless a motion to open or set aside is filed within four months following the date on which it was rendered or passed ․” Practice Book § 17–43 contains similar language. “Courts have interpreted the phrase, ‘[u]nless otherwise provided by law,’ as preserving the common law authority of a court to open a judgment after the four month period.” Terry v. Terry, supra, 102 Conn.App. 222 n.5, citing In re Jonathan M., 255 Conn. 208, 238–39, 764 A.2d 739 (2001).. FN1. General Statutes § 52–212a provides in relevant part: “Unless otherwise provided by law and except in such cases in which the court has continuing jurisdiction, a civil judgment or decree rendered in the Superior Court may not be opened or set aside unless a motion to open or set aside is filed within four months following the date on which it was rendered or passed ․” Practice Book § 17–43 contains similar language. “Courts have interpreted the phrase, ‘[u]nless otherwise provided by law,’ as preserving the common law authority of a court to open a judgment after the four month period.” Terry v. Terry, supra, 102 Conn.App. 222 n.5, citing In re Jonathan M., 255 Conn. 208, 238–39, 764 A.2d 739 (2001).
FN2. The defendant seeks only to modify his alimony payment. He is not seeking a modification of child support.. FN2. The defendant seeks only to modify his alimony payment. He is not seeking a modification of child support.
Schofield, Marylouise, J.