Opinion
No. FA 02 00731070
April 13, 2010
MEMORANDUM OF DECISION MOTION NUMBERS 138, 139 AND 140
I BACKGROUND
The parties have filed cross motions, numbers 138 and 140, for the modification of alimony, ordered in the judgment by the court (Brennan, J.), on May 22, 2003. Alimony was ordered to be paid by the defendant to the plaintiff in the weekly amount of $400. In addition, the plaintiff has filed a motion for attorneys fees, number 139, based upon her assertion that the defendant's motion to modify is frivolous.
Upon the dissolution of this 24-year marriage, the court's order of alimony was modifiable for changes in circumstances, but not as to its term which was unlimited and non-modifiable. Both parties claim a change in circumstances, including increases in income. In addition, the defendant asserts that, pursuant to the judgment, the plaintiff has the option to receive her allocated portion of the defendant's retirement, which she is unwilling to exercise at this time due to its diminished value. The defendant therefore claims that the plaintiff's income should be credited with the current value of the pension, for purposes of determining alimony.
II FACTS AND DISCUSSION A. Income Analysis
At the time of the dissolution, the defendant's financial affidavit showed net weekly income of $1,205. The plaintiff claims that the defendant's net weekly income at the time of dissolution was $1,380, when deductions are properly limited to taxes and other mandatory reductions from gross income. The court agrees.
"It is well settled that a court must base its child support and alimony orders on the available net income of the parties, not gross income." Auerbach v. Auerbach, 113 Conn.App. 318, 338, 966 A.2d 292 (2009).
"General Statutes §§ 46b-81 and 46b-82 require the court to consider, inter alia, the amount and sources of income of the parties when making an award of alimony or a property assignment in a dissolution action. The available net income, however, rather than gross income is the criterion for the establishment of an appropriate figure for periodic alimony . . . In general accounting practice, net income would ordinarily consist of total income received by a party from all sources, less the legitimate expenses of realizing it . . . For the purposes of General Statutes §§ 46b-81 and 46b-82, however, [the Appellate Court held] that net earned income for a wage earner is the gross amount of salary, wages or commissions, less all deductions by the employer for obligatory statutory or contractual obligations of the employee. Withholding of income taxes, FICA, and wage garnishment are examples of deductions required by law. Union dues, insurance premiums and some deductions for pension plans are examples of deductions authorized by contract. Optional deductions, such as for IRAs, profit sharing plans, stock purchases, and credit union deposits are not proper deductions for a determination of net earned income for alimony or other financial orders. The latter deductions are optional and inure to the benefit of the employee. They are basically within the control of the employee and would allow him to establish the amount of his own net income were he allowed to deduct them from gross income." (Citations omitted; internal quotation marks omitted.) Sunbury v. Sunbury, 13 Conn.App. 651, 661-62, 538 A.2d 1082 (1988); reversed on other grounds, 210 Conn. 170, 553 A.2d 612 (1989).
"On June 3, 1988, we granted the plaintiff's petition for certification and thereafter concluded that `[t]o limit the remand in this case to the issue of periodic alimony [only] would impede the trial court's ability to weigh the statutory criteria for financial orders to achieve an equitable result.' Sunbury v. Sunbury, 210 Conn. 170, 174-75, 553 A.2d 612 (1989). We further concluded that `[o]n the facts of this case . . . the trial court on remand could no more fashion just and equitable financial orders by reconsidering only the issue of periodic alimony, than it could reassemble a broken vase with only one piece.' Id., at 173, 553 A.2d 612. Accordingly, we reversed the judgment of the Appellate Court and remanded the case for further proceedings that would include a reconsideration of all financial orders." Sunbury v. Sunbury, 216 Conn. 673, 675, 583 A.2d 636 (1990).
The defendant's net weekly income has increased substantially since the time of the dissolution. At that time, the defendant's gross weekly income was identified on his financial affidavit, dated May 21, 2003, as $1,865, with net weekly income of $1,205. However, in light of the holding in Sunbury, the court increased this figure to $1,380 to account for 401k and credit union deductions he made from his gross income to calculate his net weekly income figure. On his current financial affidavit, dated March 31, 2010, he claims $1,666.71 in net weekly income; however, the court similarly increases this figure to $1,981.23 to account for 401k and credit union deductions he made from his gross income to calculate his current net weekly income figure. Comparing these adjusted figures, the defendant's net weekly income has increased by just over $600, equaling approximately 43%.
The financial affidavit identifies the date as May 21, 2002. However, court records show this date to be mistaken in that it was actually filed on May 21 in the year 2003.
The gross weekly income of the plaintiff at the time of the dissolution was $607. Based upon the same mandatory deductions, applied to both parties, her net weekly income was $487, based upon her financial affidavit dated May 21, 2003. Again, based upon the same analysis applied by the court to the defendant's financial affidavit, her current financial affidavit shows gross income of $865, netting her $627. Comparing these adjusted figures, the defendant's net weekly income has increased by $140, equaling just under 29%.
The original weekly order of alimony has remained unchanged since the time of dissolution. At that time, the plaintiff's net weekly income of $487 was increased by the gross amount of $400 in alimony and the defendant's net weekly income of $1,380 was reduced by the corresponding gross amount of $400. Absent the tax effect of this transfer of alimony dollars between the parties, the incomes of the parties were equalized to within $100. Based upon the current adjusted net weekly incomes of the parties and the same analysis applied above, the plaintiff's current net weekly income of $627 is increased by the gross alimony amount of $400 and the defendant's net weekly income of $1,981 is decreased by a corresponding amount. The difference in the incomes of the parties is now approximately $550, representing a significant disparity in income compared with the financial circumstances of the parties at the time of the dissolution in 2003.
The court recognizes that the alimony payments involve tax ramifications to both parties. Although the plaintiff has provided the deduction for taxes on her alimony payment, namely $50 on each of the $400 alimony payments, there is no corresponding evidence of the defendant's deduction from income, allowable for his alimony payment. The court recognizes that, from a tax perspective, alimony payments favor the defendant as the alimony obligor. However, absent evidence of the tax consequence to the defendant, the court has used the gross alimony figure for both parties.
B. Retirement Resources
The defendant asserts that the plaintiff has the legal right to access her allocated portion of the defendant's defined retirement plan, administered by his long-standing employer, United Technologies. In particular, pursuant to the judgment, the plaintiff has the right to receive retirement income of approximately $709.67 per month, which he claims should be income imputed to her for purposes of an alimony modification analysis. Although this imputed retirement income is not, in the court's view, a sufficient change in circumstances to modify alimony, the court further concludes that it should not be included in the plaintiff's income.
This figure was determined by the defendant's plan administrator at United Technologies, Defendant's Exhibit A, assuming a retirement date of January 1, 2010. The figure now would be slightly higher, according to expert testimony at the hearing.
In reaching the conclusion that the retirement income should not be imputed to the plaintiff, the court has considered the following relevant facts. At the time of the judgment, the parties agreed to equally divide the marital portion of the defendant's pension. According to the judgment file, supported by the transcript of oral decision, the court ordered that: "at the Plaintiff's option, the Defendant shall name the Plaintiff as the surviving spouse with respect to pre-retirement and/or post retirement annuity, at the Plaintiff's cost."
The plaintiff did not exercise the surviving spouse option in the original Qualified Domestic Relations Order (QDRO). Therefore, pursuant to the judgment and original QDRO, the plaintiff was entitled to commence retirement benefits at any time after reaching the allowable retirement age of 55, which she has reached. The full retirement benefit at age 65 is $1,836.96 per month. As of January 1, 2010, however, and based upon her age on that date, the exercise of her right to a retirement benefit would result in an actuarially reduced monthly payment of $709.67.
The plaintiff has, instead, exercised her option for each party to be a contingent annuitant of the other party at her cost. Therefore, under the operative amended QDRO, signed by the parties and ordered by the court (Brennan, J.) on February 8, 2007, the plaintiff is unable to retire until the defendant elects to do so. According to the terms of the amended QDRO, and as applied to the retirement plan, the current monthly benefit would be $475.33 as of January 1, 2010. See Defendant's Exhibit A. Although the plaintiff cannot access this benefit unless and until the defendant opts to retire, this benefit will grow over time and, as the defendant's contingent annuitant, her benefit will increase further in the event she survives his death. Although the judgment and amended QDRO currently prevent her access to this benefit, the defendant is willing to return to the original QDRO in order for her to access a retirement benefit at this time. She is unwilling to do this because it is inconsistent with her retirement plan.
C. Discussion 1. Defendant's Motion to Modify Alimony
"[O]nce the trial court has determined that there has been a substantial change in the circumstances of either party subsequent to the last modification, the same criteria outlined in § 46b-82, used to determine an initial award of alimony, are relevant to the question of modification . . . Under § 46b-82, the trial court, when awarding alimony, should consider the causes for the dissolution of the marriage. We see no reason why the trial court, in determining whether alimony should be modified or terminated, should not be permitted also to consider the causes for a party's substantial change of circumstances.
"Although created by statute, a dissolution action is essentially equitable in nature . . . The power to act equitably is the keystone to the court's ability to fashion relief in the infinite variety of circumstances which arise out of the dissolution of marriage . . . Although in making its financial determinations the court is required to consider the criteria outlined in § 46b-82 in the exercise of its inherent equitable powers it may also consider any other factors which may be appropriate for a just and equitable resolution of the marital dispute." (Citations omitted; internal quotation marks omitted.) CT Page 8639 Borkowski v. Borkowski, 228 Conn. 729, 743-44, 638 A.2d 1060 (1994).
The court considers the plaintiff's retirement plan to be reasonable. Although her benefit is reduced under the contingent annuitant option she has selected, it may provide her with long-term benefits, based upon her retirement strategy. It would also be inequitable for the court to prevent the plaintiff from fully exercising the option of a contingent annuity benefit, obtained in the dissolution judgment, especially when it is exercised at her cost. By exercising this option, the plaintiff has essentially made an investment choice, which she has shown to be reasonable. As such, the court will not substitute its judgment for that of the plaintiff's. See Weinstein v. Weinstein, 280 Conn. 764, 773, 911 A.2d 1077 (2007). ("Accordingly, we conclude that the better course is to . . . place the burden on the party holding the investment to show why the imputation of income is improper in the given circumstance.")
The remaining change in circumstances alleged by the defendant is the plaintiff's increased income. Although her income has increased substantially, the defendant's income has increased more significantly than the plaintiff's. There remains a disparity of income between the parties, and this would remain true even if the plaintiff's potential retirement benefit was included in the income analysis of the parties, as asserted by the defendant. On a weekly basis, the retirement benefit of $709.67, arguably available to the plaintiff, would be approximately $165. The gap in income of the parties has grown from less than $100 to $550. Without full consideration of the tax consequences of this income disparity, the inclusion of this imputed income would narrow the disparity to $285. Therefore, if the court had included this retirement income in the calculation of the plaintiff's weekly income, there would have been an insufficient basis for a modification of alimony, as claimed by the defendant. The defendant's motion to modify is therefore denied.
Although not considered by the court as speculative, this would generally favor the defendant, as be appears to be in a substantially higher income bracket than the plaintiff.
2. The Plaintiff's Motion to Modify
The plaintiff also seeks a modification of alimony, based upon the disparity of income between the parties. Although both parties have substantial debts, as well as substantial assets, the defendant is able to save approximately $300 per week, which would fill the gap between his current weekly expenses and income, absent tax consequences. Moreover, his voluntary payments to his adult children would similarly fill this gap. Nonetheless, the court finds that the existing alimony order adequately provides for the plaintiff's financial needs at this time. The plaintiff's motion to modify is therefore denied.
3. The Plaintiff's Motion for Attorneys Fees CT Page 8640
General Statutes § 46b-62 permits the award counsel fees to parties "in accordance with their respective financial abilities and the statutory criteria for an alimony award." Venuti v. Venuti, 185 Conn. 156, 162, 440 A.2d 878 (1981). General Statutes § 46b-62 provides in pertinent part: "In any proceeding seeking relief under the provisions of this chapter . . . the court may order either spouse to pay the reasonable attorneys fees of the other in accordance with their respective financial abilities and the criteria set forth in section 46b-82." See Miller v. Miller, 16 Conn.App. 412, 419, 547 A.2d 922 (1988).In awarding attorneys fees to the plaintiff in this case, the court takes into consideration the relative financial circumstances of the parties as well as the defendant's basis for bringing his motion to modify alimony. Although the court does not take the position that the defendant's motion to modify was frivolous, as asserted by the plaintiff, it was factually insufficient. Although the plaintiff's income has increased, the defendant's income has increased far more significantly since the time of the dissolution. Moreover, the retirement benefit the defendant sought to include in the plaintiff's income would not, in the court's view, have been a sufficient basis for a modification. Therefore, attorneys fees in the amount of $2,500 are to be paid by the defendant to the plaintiff at the rate of $100 per week until fully paid. See Plaintiff's Exhibit 6.
SO ORDERED.