Opinion
21-P-696
11-01-2022
LYNNE T. GIROUARD v. BRIAN J. MCSWEENEY.
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiff, Lynne T. Girouard (wife), appeals from a judgment of the Probate and Family Court declining to find the defendant, Brian J. McSweeney (husband), in contempt of the divorce judgment for having failed to pay to the wife a portion of certain forms of equity compensation he received beginning in February 2016. The parties' 2013 separation agreement defined alimony to include "[thirty percent] of any gross bonus received" by the husband, and further required the husband to provide the wife with copies of his pay stubs to document the amounts of his bonuses. The wife argues that the judge (1) erroneously determined that the language of the separation agreement was ambiguous; (2) erroneously found that the bonus provision of the separation agreement could be reasonably interpreted not to encompass the equity compensation that the husband received for the first time three years later; (3) erred in declining to find the husband in contempt for having redacted portions of the copies of his pay stubs; and (4) abused her discretion in declining to award attorney's fees to the wife in connection with $2,475 of overdue alimony that the husband paid her during the pendency of the contempt proceedings. We affirm the judgment finding the husband not in contempt, but remand to the judge for determination of attorney's fees that she incurred in order to recoup the overdue alimony owed her.
Background.
On September 16, 2013, after twenty-four years of marriage, the parties divorced. They entered into a separation agreement, which was merged into the divorce judgment, providing that husband would pay to the wife $444 per week in alimony. It further provided:
Our review was very nearly hampered by the fact that the parties provided us with only a single page of the separation agreement, and their omission of a copy of the divorce judgment. See Cavanagh v. Cavanagh, 490 Mass. 398, 403-404 & nn.3, 4 (2022). At oral argument, we ordered the parties to provide copies of those documents, and they did so.
"As additional alimony the [h]usband shall pay to the wife [thirty percent] of any gross bonus received within five (5) days of receipt of same and shall provide the [w]ife with a copy of the pay stub along with the check. In addition he shall provide a copy of his final paycheck of the year on or before January 15th to confirm that the correct bonus [amounts] have been received." (Emphasis added.)
That alimony obligation was for ten years, i.e., until September 16, 2023.
At the time of the divorce, the husband was employed as a facilities manager for a company, and was paid a base salary as well as semiannual cash bonuses that were discretionary based on certain performance criteria of both him and his employer. Consistent with the terms of the judgment, the husband paid thirty percent of those bonuses to the wife. During the marriage and for several years after the divorce, the husband did not receive any equity compensation, such as restricted stock, phantom stock, or stock options.
In early 2016, the husband's employer merged with another company, which was then acquired by another company in September 2016. As part of his compensation, the husband received merit bonuses in cash, of which he paid thirty percent to the wife, and provided unredacted copies of his pay stubs for those bonuses to her. Beginning in February 2016, the husband's compensation also included equity compensation in the form of restricted stock. The husband did not pay any portion of the value of that restricted stock to the wife. He redacted from the copies of his pay stubs that he provided to the wife the amounts of equity compensation he received. In early 2017, the husband left the company, and received as part of his termination package a long-term incentive (LTI) payment in cash, of which he paid thirty percent to the wife.
Beginning in February 2017, the husband was employed by a pharmaceutical company. As part of his compensation, he received birthday and merit bonuses in cash, of which he paid thirty percent to the wife. The husband also received equity compensation in the form of restricted stock. He did not pay any portion of the value of that restricted stock to the wife, and redacted the information about the restricted stock from the copies of his pay stubs that he provided to the wife. In January 2019, the husband's employer was acquired by another pharmaceutical company, of which the husband became an employee. At that point, all of the husband's unvested stock options and restricted stock in the former pharmaceutical company immediately vested. On April 4, 2019, the husband's employer notified him that as part of its LTI plan he was granted shares of phantom stock, twenty-five percent of which would vest annually beginning on April 1, 2020, until the total amount was vested on April 2, 2023. When the first twenty-five percent of the phantom stock vested on April 1, 2020, the husband did not pay any portion of its value to the wife. His understanding, which the judge credited, was that the phantom stock was not a "bonus" within the meaning of the separation agreement because it was not paid in cash. From the copies of his pay stubs that he provided to the wife, the husband redacted the information about the phantom stock, referred to as a "Retention Programme Payment."
On August 5, 2019, the wife filed the complaint for contempt, alleging that the husband had violated the order to pay in alimony thirty percent of "any gross bonus," and since August 2014 he had redacted the copies of his pay stubs he had provided to the wife by blacking out "all of the columns and amounts making it impossible for [her] to quantify his above salary bonus amounts." In response, the husband asserted that he had provided the wife with the required documentation regarding his bonuses. At his deposition, the husband conceded that he had not paid the wife her share, totaling $2,475, of three cash bonuses he had received in April 2015, March 2017, and June 2020. In September 2020, after the husband was served with the complaint for contempt, he paid the wife that amount.
At a trial on January 19, 2021, the judge heard testimony from the husband; twelve exhibits were admitted in evidence, including unredacted and redacted copies of the husband's pay stubs, and the parties' statement of uncontested facts. As to the language requiring the husband to pay to the wife as additional alimony "[thirty percent] of any gross bonus received within five (5) days of receipt of same," the judge found that it was "ambiguous" as to whether it encompassed equity compensation. The judge credited the husband's testimony that he believed that "any gross bonus" meant only cash bonuses like those he had received up until the time of the divorce, and not bonuses in the form of equity compensation that he first received more than two years afterwards. The judge concluded: "The [c]ourt finds this is a reasonable interpretation given that at no time prior to February 2016 had the [h]usband ever received any form of equity compensation." The judge also noted that the wife did not testify to any contrary intent or understanding of the meaning of "any gross bonus." The judge went on to state:
"[J]ust because the [c]ourt has found in this [j]udgment that the [h]usband is not obligated to pay the [w]ife [thirty percent] of the equity compensation he receives through his employment does not mean that the equity compensation would not be considered income to the [h]usband for purposes of considering a modification to his base alimony amount.
The [c]ourt makes no findings herein as to the appropriateness of any such alimony modification." The judge also found that the husband was not in contempt for having redacted his pay stubs, but ordered that in the future he was not to redact them. The judge declined to award attorney's fees to either party. The wife appealed.
Discussion.
1. Contempt.
The wife argues that the judge erred in ruling that the separation agreement was ambiguous as to whether "[thirty percent] of any gross bonus received" encompassed equity compensation, and so the judge should have held the husband in contempt, both for failing to pay the wife thirty percent of his equity compensation, and for redacting his pay stubs. "We review the judge's ultimate finding . . . [on the complaint for] contempt for abuse of discretion, but we review underlying conclusions of law de novo and underlying findings of fact for clear error" (quotation omitted). Jones v. Jones, 101 Mass.App.Ct. 673, 688 (2022). A judge is considered to have abused her discretion only when "the judge made a clear error of judgment in weighing the factors relevant to the decision . . . such that the decision falls outside the range of reasonable alternatives" (quotation omitted). L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014).
a. Sufficiency of legal analysis.
The wife contends that the judge's ruling on the complaint for contempt amounts to an abuse of discretion or error of law because it contains "no legal analysis" and cites to no case law. Certainly citation to legal authority would have been helpful to us in considering this appeal. However, because we review de novo the judge's conclusions of law, see Jones, 101 Mass.App.Ct. at 688, the lack of citation to legal authority in the judge's memorandum does not by itself demonstrate any abuse of discretion or error of law.
"[T]o constitute civil contempt there must be a clear and undoubted disobedience of a clear and unequivocal command." Birchall, petitioner, 454 Mass. 837, 851 (2009) (quotation omitted). See Smith v. Smith, 93 Mass.App.Ct. 361, 363 (2018). As the plaintiff, the wife bore the burden of proving contempt by clear and convincing evidence, and the judge was to consider "the totality of the circumstances." Voorhis v. Relle, 97 Mass.App.Ct. 46, 54 (2020), quoting Wooters v. Wooters, 74 Mass.App.Ct. 839, 844 (2009). Although the judge's memorandum setting forth her judgment, findings, and rationale did not cite to those legal precedents, she effectively applied them, and did not abuse her discretion in doing so.
b. Whether "any gross bonus" included equity compensation.
The wife argues that the judge erroneously determined that the phrase "any gross bonus" in the separation agreement was ambiguous, and that the husband reasonably interpreted it as applying to cash bonuses, but not those in the form of equity compensation.
When a judge is tasked with allocating equity compensation between the parties, the issue is often complex. See Jones, 101 Mass.App.Ct. at 675. See also Ludwig v. Lamee-Ludwig, 91 Mass.App.Ct. 36, 37-41 (2017) (appropriate date for valuation and treatment of income from unvested stock options considered when allocating equity compensation). Here the issue arose in the context of a contempt proceeding, and so the meaning of the separation agreement governs. See Jones, supra at 682 ("The extrinsic evidence in this case highlights the complexity of executive compensation schemes and the importance of precision in drafting separation agreements"). The judge concluded that the language in the separation agreement requiring that the husband pay to the wife thirty percent of "any gross bonus" was ambiguous, and so the divorce judgment incorporating that requirement was not a clear and unequivocal order.
The wife argues that the plain language of the separation agreement does not qualify or restrict bonuses, and so the term "bonus" should be interpreted to encompass equity compensation. "Whether a separation agreement is ambiguous is a question of law. If a separation agreement is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one, the language is ambiguous, and resort may be made to extrinsic evidence." Jones, 101 Mass.App.Ct. at 681 (quotation omitted). "[I]ndefinite and uncertain language cannot support a complaint for contempt because of a lack of fair notice" (quotation omitted). Wooters, 74 Mass.App.Ct. at 844 (quotation omitted).
We conclude, as the judge did, that in this separation agreement the meaning of the phrase "any gross bonus" is ambiguous. See Jones, 101 Mass.App.Ct. at 681 (phrase "any manner of bonus" was ambiguous). As in Jones, the parties here did not "define whether and under what conditions these forms of [executive] compensation would be a bonus within the meaning of the separation agreement, or to otherwise determine whether to divide these income streams." Id. at 682 (explaining that "bonus" can have different meanings in separation agreements, executive compensation agreements, and for purposes of taxes). Lacking such a definition in the separation agreement, the phrase is "inherently ambiguous." Id. at 681.
"[W]here the separation agreement is ambiguous, the governing consideration is the intent of the parties to the separation agreement as determined by objective evidence." Jones, 101 Mass.App.Ct. at 683. The husband testified that at the time of the separation agreement, he had received bonuses only in cash, and never received any compensation in the form of equity, such as stock options, restricted stock, or phantom stock. As a result, he understood the phrase "any gross bonus" in the separation agreement to mean a cash bonus, and did not contemplate that it would mean equity compensation. In contrast, the wife presented no evidence of her intent: she did not testify at the contempt trial, nor did she offer expert testimony about the meaning of the phrase "any gross bonus." The judge did not abuse her discretion in crediting the undisputed testimony of the husband about his understanding of the meaning of the term "any gross bonus" in the separation agreement. Cf. Cavanagh v. Cavanagh, 490 Mass. 398, 411-417 (2022) (as to meaning of "preparatory school" in separation agreement, wife's undisputed testimony was that husband had referred to older son's school as the one younger son would attend). Contrast Jones, 101 Mass.App.Ct. at 679 (as to meaning of "any manner of bonus" in separation agreement, wife testified about her intent and husband called two experts). In the absence of any countervailing evidence from the wife, we cannot say that the judge erred in crediting the testimony of the husband as to the parties' intent.
The husband's testimony, elicited by the wife's counsel, that "any gross bonus" meant "unlimited in amount, number or extent," "without deduction for tax," and "to supplement [his] base pay," did not invalidate his testimony, which the judge credited, that he did not believe that "any gross bonus" applied to stock options, phantom stock, or other forms of equity compensation.
The wife argues that because the severance bonus in cash that the husband received from his employer in 2017 and the phantom stock that he received in 2019 from the pharmaceutical company were each labeled by those employers as performance based, they should have been treated the same under the separation agreement. The argument is unavailing. "While the executive compensation agreements themselves may provide background relevant to an understanding of the terms of the separation agreement, . . . it is the intent of the parties to the divorce, not the intent of the company -- or even the labels attached to various forms of compensation by the company -- that ultimately governs." Jones, 101 Mass.App.Ct. at 675.
Similarly, the wife argues that, at the time of the divorce, the husband received twice-yearly bonuses, but after the divorce, husband paid wife her share of bonuses three and four times a year, thus contradicting his intent to pay her twice a year. How frequently the husband's employers paid him bonuses is not dispositive of the question whether equity compensation is a bonus within the meaning of the separation agreement.
Moreover, because the judge found that the husband "did not believe the bonus provision encompassed the equity compensation," and that "this [was] a reasonable interpretation," the judge essentially concluded that the husband did not engage in a "clear and undoubted disobedience" of a clear and unequivocal order. Birchall, 454 Mass. at 851 (quotation omitted). See Wooters, 74 Mass.App.Ct. at 844 (husband's "disagreement or misunderstanding" of whether proceeds of stock options constituted income as defined in divorce judgment "does not constitute clear and undoubted disobedience of a clear and unequivocal command"). See also Voorhis, 97 Mass.App.Ct. at 54 ("The judge found that there was a clear and unequivocal order, but not an undoubted disobedience").
Because the issue before us arises in the context of a contempt complaint, we do not consider and express no opinion on whether the circumstances would provide a basis for modification, or whether the husband's income derived from the equity compensation should be considered for the purposes of alimony. See Jones, 101 Mass.App.Ct. at 681 n.12. Contrast Ludwig, 91 Mass.App.Ct. at 39; Wooters, 74 Mass.App.Ct. at 843.
We conclude that the judge did not abuse her discretion in declining to find the husband in contempt for not paying the wife thirty percent of his equity compensation.
c. Redacted pay stubs.
The wife argues that the judge should have held the husband in contempt for having redacted the copies of his pay stubs that he provided to her as required by the separation agreement.
The bonus provision of the separation agreement required the husband to "provide the [w]ife with a copy of the pay stub along with the check" and to "provide a copy of his final paycheck of the year on or before January 15th to confirm that the correct bonus [amounts] have been received." Between August 2014 and December 2020, the husband redacted from the copies of his pay stubs that he provided to the wife information including the descriptions and amounts of equity compensation that he received, such as restricted stock, stock options, or nonqualified stock. He made similar redactions from his final paycheck for each of those years.
The judge did not abuse her discretion in determining that the husband was not in contempt for providing redacted pay stubs, but requiring "that unredacted pay stubs be provided" in the future. Because the separation agreement did not specify that the pay stubs should be unredacted, and the husband reasonably understood that he was not required to pay the wife a percentage of his equity compensation, his redacting information about his equity compensation from his pay stubs was not an "undoubted disobedience of a clear and unequivocal command." Wooters, 7 4 Mass.App.Ct. at 843.
2. Attorney's fees.
The wife argues that the judge abused her discretion in not awarding her attorney's fees pursuant to G. L. c. 215, § 34A, for the monies she expended in order to bring the husband into compliance with the amount of alimony that he agreed that he owed her from a portion of his cash bonuses that he paid to her four months before the contempt trial.
As of the contempt trial, the husband was no longer in contempt because he had paid the wife her share of his cash bonuses. See Hennessey v. Sarkis, 54 Mass.App.Ct. 152, 156157 (2002) (husband who paid on day of trial not in contempt). Of the wife's share of the husband's cash bonuses, the husband had delayed paying $300 for five years, $1,875 for three years, and another $300 for three months. That the husband paid that $2,475 on the eve of the contempt trial meant that he avoided a contempt finding, but it should not absolve him of paying those reasonably incurred attorney's fees that the wife was required to expend to enforce the divorce judgment. See Coppinger v. Coppinger, 57 Mass.App.Ct. 709, 714-715 (2003) . See also Hennessey, 54 Mass.App.Ct. at 157.
The husband requests that we award him appellate attorney's fees, citing G. L. c. 208, § 38. We decline to do so. See Freidus v. Hartwell, 80 Mass.App.Ct. 496, 504 (2011) (husband found not in contempt, attorney's fees denied for both sides). Contrast Kelley v. Kelley, 64 Mass.App.Ct. 733, 742-743 (2005) (wife granted attorney's fees after husband misrepresented income and transferred assets to hide them from wife).
Conclusion.
So much of the contempt judgment entered May 26, 2021, as is set forth in paragraph numbered three is vacated. The case is remanded for reconsideration and entry of findings concerning an award of attorney's fees to the wife for the amounts she reasonably incurred to obtain from the husband the $2,475 he paid on or about September 17, 2020. In all other respects, the judgment is affirmed.
So ordered.
The panelists are listed in order of seniority.