Opinion
HHDFA970715804S
08-22-2017
Paul A. Grillo v. Candace A. Grillo
UNPUBLISHED OPINION
Filed August 23, 2017
MEMORANDUM OF DECISION RE PLAINTIFF'S POSTJUDGMENT MOTION FOR MODIFICATION OF ALIMONY (#151)
Elizabeth A. Bozzuto, J.
I
INTRODUCTION
Before the court is the Plaintiff's December 15, 2016, postjudgment motion to modify alimony (#151). In it, the plaintiff alleges that he is sixty-seven years of age, retiring and in poor health. He further alleges that the defendant's financial circumstances have substantially improved since the court entered its order for payment of alimony on April 6, 2000. The plaintiff requests that this court terminate or modify its April 6, 2000 order of alimony and life insurance.
The plaintiff and defendant appeared through counsel. The plaintiff's motion was heard by the court on May 18, 19 and 31, 2017. Both parties testified, as well as the defendant's expert witness. Numerous exhibits were received into evidence and reviewed by the court. At the close of evidence, the plaintiff filed a post-trial brief. The defendant requested and received ten days to file a responsive brief. Thereafter, each party filed subsequent responsive briefs, all of which the court reviewed and considered.
II
BACKGROUND
The parties' twenty-five-year marriage was dissolved by the court, after trial, on April 6, 2000. The court has reviewed the trial court's (Caruso, J.) memorandum of decision in its entirety, and notes the trial court findings, particularly those most relevant to the motion to modify alimony currently pending before the court.
At the time of trial in 1999, the court found that the plaintiff had an earning capacity of $350,000 per year and the defendant anticipated earning approximately $30,000 per year after she completed her college degree. At the time of trial, the defendant's financial affidavit indicated that she had zero income.
Further, the trial court, agreeing with the plaintiff's expert witness, found that the plaintiff's business, Grillo Financial Services (GFS), was valued at $84,000 at the time of the decree.
[2]Although the parties have two children, there was no order of child support in that both children had attained the age of majority prior in time to the dissolution of marriage. This business was started by the plaintiff's father.
Amongst many orders, the trial court ordered the plaintiff to pay the defendant alimony in the amount of $2,000 per week. Although not entirely clear, it would appear that this was a " lifetime" order in that there was no condition for its termination. The court's order reads as follows: " [t]he plaintiff shall pay to the defendant periodic alimony of $2,000 per week commencing December 15, 1999, less any amounts paid by the plaintiff to the defendant since that date as alimony pendent lite. Said amount shall be taxable to the defendant wife and deductible by the plaintiff husband."
In conjunction with the order of alimony, the court further ordered the plaintiff " to maintain the defendant as irrevocable beneficiary of his present $500,000 life insurance policy with the Travelers as long as he has an obligation to pay periodic alimony to the wife."
As for the parties' marital estate, the court awarded to the plaintiff 100 percent of GFS, including its bank accounts and the real property located at 7 Arapahoe Road, West Hartford, wherein the business was located, " free and clear of any claims of the defendant."
The court awarded the defendant the marital home, which had a net value of either $161,500 as disclosed on the plaintiff's financial affidavit, or $142,000 as disclosed on the defendant's financial affidavit. Securities totaling $109,540.24 were ordered to be divided equally. Deferred compensation that totaled $362,801 was ordered divided 60 percent to the defendant and 40 percent to the plaintiff.
By stipulation dated April 26, 2001, the parties agreed that the assets from the deferred compensation plan would he divided equally.
This court would further note that the trial court found the plaintiff more at fault for the divorce than the defendant. The court wrote: " [w]hile both parties contributed to the breakdown of the marriage, the court finds that the plaintiff was more responsible for the breakdown than the defendant."
This is the first motion to modify alimony since the date of judgment. The plaintiff has been compliant with the court's order since issuance. Since the date of judgment, more than seventeen years ago, much has changed for both parties, the details of which are set forth below.
III
FINDINGS OF FACT
Most of the relevant and material facts before the court are not in dispute. The plaintiff is sixty-seven years of age. In April of 2014, he was diagnosed with cancer. He underwent an aggressive course of chemotherapy treatment from June of 2014, through September of 2014. Thereafter, he underwent radiation treatment for two successive months. He has been in remission since January of 2015. He undergoes a CT and PET scan every three months. He testified that he has a " new mass" on the left shoulder that was to be evaluated. The outcome of the evaluation was not made known to the court. As a result of the cancer treatment, the plaintiff has lost some feeling in his feet; lost saliva glands on the right side of the neck and lost taste bud sensation. He has lost thirty-two pounds and has been prescribed medication to help with sleep and anxiety.
The plaintiff married Heidi Mazur (Mazur) in May of 2000. The evidence is clear that Mazur has worked for and contributed significantly to the plaintiff's business over the past seventeen years and assumed responsibility for the parties' personal investments and finances as well. For her work at GFS, she was paid approximately $50,000 per year, a salary comparable to the only other staff employee of GFS. For GFS, Mazur did most of the bookkeeping, paid the bills and estimated taxes, negotiated health insurance and internet contracts, developed the website, arranged client events and meetings. The plaintiff testified credibly that Heidi " ran the office, " which allowed him flexibility and opportunity to grow the business. The plaintiff worked ten-hour days, six days per week.
In addition to the responsibilities to the plaintiff's business, Mazur also acted as general contractor or project manager and landlord for the many properties bought, renovated and sold or leased by the plaintiff and Mazur over the past seventeen years. The proceeds from the sale of the properties were divided and or shared between the plaintiff and Mazur. The evidence indicates that some, if not all of these monies were used primarily to purchase two residential properties in Rhode Island, which the plaintiff and Mazur continue to hold, in one form or another. The evidence was further clear that anything the plaintiff earned or anything the defendant earned they used, shared, invested, sold and/or transferred together. The court did not find anything unusual or suspect about the way the parties handled their income, joint finances and marital estate.
More than a decade before this proceeding, the plaintiff and Mazur set up a trust in each of their names. The trusts are used by the plaintiff and Mazur to manage their estate, consistent with advice they received from their financial advisor. Some of the plaintiff and Mazur's jointly acquired assets are held in the trust. The parties utilized a joint account for regularly recurring deposits and expenses. When the plaintiff and Mazur's joint account exceeds $40,000, the excess is deposited into a bank account held by the trust in Mazur's name. If money is needed by the plaintiff or Mazur, money could be and has been withdrawn from the account held in the trust. The court finds that this trust, established more than a decade ago, and the plaintiff's conduct relative to the trust is not illegal, fraudulent, or done with the intention of harming the defendant.
The plaintiff's business continued to grow and thrive through the years. The plaintiff attributes much of the growth in the business and its value from his decision, post-dissolution, to transition the business from a transactional business to a fee-based financial planning business. In the end, the plaintiff managed the accounts of approximately 250 individuals, totaling close to $140 million in assets under his management. The business was audited at least once per year. It passed all audits.
The plaintiff's earnings have been significant over the last decade. The plaintiff's earnings in 2016, the last year in which he owned and worked for GFS, as reflected on line twelve of his joint tax return, totaled $440,034 in business income.
All of the plaintiff's wages have been generated solely from GFS. During the time period from 2000 to 2016, the plaintiff grossed approximately $8 million from GFS. Approximately 22 percent of this gross income, or $1,768,000, has been paid to the defendant as alimony. The defendant would suggest to the court that plaintiff's earnings have been secreted away. The evidence before the court does not support such a finding.
In the fall of 2016, the plaintiff engaged the services of a business appraiser to perform a business valuation of GFS. The appraiser valued GFS at $1,400,000 to $1,600,000. An individual who leased space from and worked with the plaintiff for approximately ten years was interested in purchasing GFS. After reviewing the appraisal, this individual offered to purchase the business from the plaintiff for $1,398,650. The plaintiff accepted the offer.
The buy-out of GFS was structured to be paid over time. The actual purchase price of $1,398,650, plus interest on the promissory note, totaled payments to the plaintiff in the amount of $1,500,000. The asset purchase agreement, which was entered into evidence, was executed by plaintiff and the buyer on December 13, 2016. One hundred percent of all fees generated by the business were assigned to the new owner as of January 2017. The buy-out of the plaintiff's business, pursuant to the terms of the promissory note, is payable over seven years, by way of annual quarterly payments of principal and interest, at the rate of $53,571.43 per quarter or approximately $214,286.00 per year.
The plaintiff did receive approximately $100,000 from the business in January 2017 for fees generated by the business in December of 2016.
The plaintiff plans to live off the proceeds from the sale of GFS over the next seven years. The plaintiff is now fully retired. Since the year 2000, the plaintiff and Mazur have amassed a significant marital estate, including real estate, mutual funds, stocks and deferred compensation. Some assets are held by the plaintiff jointly with Mazur, some assets by the plaintiff alone, some assets held by Mazur alone and some assets are held in the trust. The evidence is clear, that regardless of how the asset is held, it was almost all generated by the. success of GFS since the date of the parties' dissolution, with the exception of approximately $850,000 of gross earnings earned by Mazur by way of her employment with GFS.
Putting aside the proceeds from the sale of GFS, the plaintiff's current income is comprised of the following: Dividends--$137 per week; Interest--$289 per week; and, pension--$131 per week, for a total post-retirement gross weekly income, of $557 per week. The plaintiff's financial affidavit submitted at the time of trial indicates that he pays $17,000 per quarter in federal taxes; $7,700 per quarter in state income tax to Rhode Island and $95 per week in Medicare. These obligations are relative to the plaintiff's former income.
The plaintiff plans to wait until the latest time possible, age seventy and a half, to apply for and receive social security benefits. Given his health concerns, and the fact that his wife is several years younger, the plaintiff wants to make sure his wife receives the maximum social security benefit upon his death. His current estimated benefit is approximately $2,639 per month. At age seventy, he will be eligible to receive benefits in the amount of approximately $3,614 per month.
In addition to the promissory note for the purchase of GFS, the plaintiff has an interest in the following assets:
Property in Ecuador:
$100,000
Property in Rhode Island:
$150,000
$320,000
Two-week time share:
$0
Miscellaneous bank accounts:
$26,500
Stocks, bonds, mutual funds, inheritance:
$663,156
Asset Mark: $1,236,928
Other assets of Mazur, including trust:
$765,000
This is a rental property. The property is held in the " Heidi Grillo Trust." Proceeds go into the trust and Mazur pays the expenses from the trust.
This is the plaintiff's primary residence. The property is held in the " Heidi Grillo Trust."
As ordered by the trial court, the plaintiff maintains a life insurance policy for the benefit of the defendant. The. policy is for $500,000 and has a schedule for thirty-nine years. At year twenty, two years from now, the annual policy premium accelerates from $1,165 to $27,950 per year. The plaintiff seeks relief from this order.
The defendant is sixty-seven years of age, and in good health. At the time of dissolution, the defendant had a high school degree, but was enrolled at the University of Hartford, planning to obtain a bachelor's degree within two to three years. The defendant did in fact obtain her bachelor's degree, post-dissolution and thereafter enrolled in a master's degree program at Central Connecticut State University. The defendant testified that she pursued her master's degree with the goal of earning more money. The defendant attended the program full-time for two years and completed sixteen courses, but for reasons that were not entirely clear to the court, she did not obtain the master's degree. The defendant completed her studies in 2004.
The defendant testified that she worked full time, forty hours per week, as an artist and providing private art lessons, until 2015. She testified that most years her earnings " were in the negative." There was no evidence before the court to dispute this claim. The defendant continued in this manner for ten years, until she retired at age sixty-five. The defendant testified she continues to work part-time as an artist, for fifteen hours per week, grossing approximately $19 per week. The evidence indicates the defendant never earned the anticipated $30,000 per year neither after graduating firm college, nor after post-graduate study. The defendant testified that she never gave any thought as to where she would be in seventeen years, and she needed " to be who I am and do what I do."
Despite the defendant's lack of earnings over the past seventeen years, she too has amassed a large estate. The defendant testified that she saved the alimony payments she received from the plaintiff so she could retire. Both parties agreed that the defendant has received over $1,700,000 in alimony payments from the plaintiff since the date of dissolution. Excluding the value of a trust of which the defendant is a beneficiary, the defendant currently has nearly $2,200,000 in assets in her name alone.
In addition to the increase in the defendant's estate, the defendant's income has increased from zero dollars per week at the time of divorce to $834 per week, exclusive of the alimony payments. The defendant's income is more now than when she was working full-time in her chosen career.
The income disclosed on the defendant's financial affidavit does not include any IRA or retirement withdrawals. The defendant testified at trial that she was advised that she couldn't withdraw from these funds until she reached age seventy and one-half years old. The plaintiff testified, with credibility given his long tenure in the financial planning industry, that withdrawals from qualified plans are permissible as early as age fifty-nine and one-half years old, but that at age seventy and one-half years old, one is required to take a minimum distribution of least 3.4-4.0 percent of the asset value of the previous year. Regardless of this Internal Revenue Service rule or the advice the defendant received, the evidence clearly indicates that the defendant had no need to draw on any of her funds for purposes of her support currently, or at any time in the recent past.
The defendant lists weekly expenses of $1,883. Included in these expenses are several discretionary expenses, including, but not limited to, the following: IRA contribution--$125 per week; Investment fees--$336 per week; payments to an adult child--$63 per week; and gifts--$58 per week. Additionally, the defendant pays $6,188 per year, principal and interest, for a $36,900 residential mortgage balance which she clearly has the current ability to pay off in its entirety. The total of these expenses alone approximate $36,452 per year. If the defendant chose to, she could reduce her weekly expenses to $1,182 by elimination of these non-essential or discretionary payments.
[8]General Statutes § 46b-86 provides in relevant part: " Unless and to the extent that the decree precludes modification, any final order for the periodic payment of permanent alimony . . . or an order requiring either party to maintain life insurance for the other party . . . may, at any time thereafter, be continued, set aside, altered or modified by the court upon a showing of a substantial change in the circumstances of either party . . ." [9]Despite the defendant's argument, the court does not attribute the $100,000 earned in December 2016, but received by the plaintiff in January 2017, as the plaintiff's current income. It was a one-time payment reflective of income earned by GFS during the month of December 2016, prior to the sale of GFS. The defendant's financial advisors charge her a 1 percent fee for investment services. It was not clear to the court whether the balance of the defendant's investment portfolio was grossed up to include this claimed expense. If not, it is improper for the defendant to deduct the fee from the portfolio balance and additionally include the fee as an expense. This amounts to " double dipping, " or otherwise counting the same expense two times.
The court would further note that even the remaining payment of $1,182 per week in expenses allows for the payment of several other discretionary expenditures including travel, entertainment, alcohol, dining out, education, charity, hobbies and clubs, totaling another $119 per week in discretionary expenses.
Presently, the defendant's income, including the alimony, is far greater than the sum total of all of her current expenses, discretionary and non-discretionary, combined. The defendant's total gross income is $146,889 per year, or $2,264 net weekly. The defendant's total expenses, discretionary and non-discretionary, are $97,916 per year, or $1,883 per week, leaving a net weekly cash surplus of $381 per week. The defendant has no debt.
As the defendant testified at trial her financial circumstances have definitely improved since the time of divorce.
The defendant currently holds the following assets:
Real estate:
$ 256, 100
Savings:
$91,957
Ellen Abbott Candace Trust:
unknown
IRA:
$449,000
Brokerage account:
$1,327,300
IV
LAW AND DISCUSSION
The law is clear regarding the court's authority to modify alimony postjudgment. " General Statutes § 46b-86 governs the modification or termination of an alimony or support order after the date of a dissolution judgment." (Footnote omitted; internal quotation marks omitted.) Borkowski v. Borkowski, 228 Conn. 729, 734, 638 A.2d 1060 (1994). " When presented with a motion for modification, a court must first determine whether there has been a substantial change in the financial circumstances of one or both of the parties . . . Second, if the court finds a substantial change in circumstances, it may properly consider the motion and, on the basis on the . . . § 46b-82 criteria, make an order for modification." (Internal quotation marks omitted.) Coury v. Coury, 161 Conn.App. 271, 282, 128 A.3d 517 (2015).
" In general, the same factors used by the court to establish an initial award of alimony are relevant in deciding whether the decree may be modified . . . 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.) Gay v. Gay, 70 Conn.App. 772, 776, 800 A.2d 1231 (2002), aff'd in part on other grounds, 266 Conn. 641, 835 A.2d 1 (2003).
The law requires, as a threshold matter, that the court first determine whether the plaintiff has satisfied the first prong of his motion to modify, namely, whether there has been a substantial change in circumstances since April 6, 2000, the date of the court's alimony order. This court finds, by a fair preponderance of the credible and reliable evidence, that there has been a substantial change in circumstances of the parties since the year 2000, given the following facts: (1) the plaintiff's retirement and sale of his business, which the court finds reasonable and without ill or deceitful intentions; (2) the plaintiff's cancer diagnosis, current medical condition and health, which the court views in conjunction with the plaintiff's age and reasonable decision to retire from employment, sell his business and change his lifestyle; (3) the plaintiff's retirement which reduced his current income to zero, a substantial decrease made clearly evident when reviewing the plaintiff's wages over the last sixteen years in comparison to his current wages; (4) the defendant's increased income, from zero at the time of dissolution to approximately $834 per week currently; (5) the defendant's increased estate, which went from less than two hundred thousand dollars at the time of dissolution, to more than two million dollars currently; and (6) the defendant's reduced need for financial support.
Having found a substantial change in circumstances of the parties, the court must next turn its attention to consideration of all the factors set forth in General Statutes § 46b-82.
One area of disagreement between the parties is relative to the court's treatment of the proceeds from the sale of GFS. The defendant argues that the court should treat the cash from the buy-out of GFS as income to the plaintiff for purposes of alimony. The plaintiff argues that the court should exclude the proceeds from the sale of GFS as income available for payment of the alimony order.
The law is clear as to a trial court's consideration and treatment of assets distributed to the parties at the time of dissolution in the context of a postjudgment motion to modify alimony. " [C]apital gains generated by an asset distributed in the dissolution decree do not fall within the purview of § 46b-86, and by implication, § 46b-82. This is so because the capital gain is merely the appreciation of property previously distributed pursuant to § 46b-81. The court does not have continuing jurisdiction over property distributed at the time of dissolution . . . and therefore cannot consider the appreciation of such property in its inquiry pursuant to § § 46b-86 and 46b-82." (Citation omitted.) Gay v. Gay, 70 Conn.App. 772, 780, 800 A.2d 1231 (2002), aff'd in part on other grounds, 266 Conn. 641, 835 A.2d 1 (2003). See also McKeon v. Lennon, 155 Conn.App. 423, 439, 109 A.3d 986 (2015) (" Once property is distributed in accordance with a dissolution decree, the court ceases to have jurisdiction over that property . . . Furthermore, courts may not consider the liquidation of awarded property as income . . . When the conversion of property reflects gains or profit, this increase in value is also not considered income unless it is shown to reflect a steady stream of income" [citations omitted]), reversed in part on other grounds, 321 Conn. 323, 138 A.3d 242 (2016); Schorsch v. Schorsch, 53 Conn.App. 378, 386, 731 A.2d 330 (1999) (holding that principal payments to defendant resulting from purchase money mortgage held on real property awarded him in dissolution decree is not income for purposes of determining change in circumstances); Denley v. Denley, 38 Conn.App. 349, 353-54, 661 A.2d 628 (1995) (concluding trial court improperly included as income to defendant value of exercised stock options awarded in dissolution decree); Simms v. Simms, 25 Conn.App. 231, 235, 593 A.2d 161 (concluding redemption of treasury bonds representing defendant's financial interest in employer awarded to him in dissolution decree was merely exchange of assets), cert. denied, 220 Conn. 911, 597 A.2d 335 (1991).
Despite this, the defendant argues that the facts of the present case are similar to the case of Jansen v. Jansen, 136 Conn.App. 210, 211, 46 A.3d 201 (2012), and, as a result, this court should ignore the plaintiff's retirement and decreased income because the plaintiff is guilty of " culpable conduct." In Jansen, the defendant husband sought to modify his alimony obligation due to forced retirement which decreased his annual taxable income. Id., 211-12. The Appellate Court affirmed the trial court's finding that the defendant failed to demonstrate a substantial change in circumstances. Id. Specifically, the trial court found that the defendant's station in life was no different than it was at the time of the dissolution, coupled with the fact that defendant's payment of all household expenses, and current wife's de minimis contribution to those expenses, permitted his current wife to save all of her earnings in a joint brokerage account Id., 215. Moreover, the defendant gifted substantial monies to his children and transferred significant assets to his current wife. Id., 216. Expert testimony revealed that the defendant commingled assets with his current wife in excess of $11 million. Id., 215-16. It was the defendant's burden to demonstrate that this commingling was not culpable conduct, which the defendant failed to meet. Id., 221-22. The trial court specifically found that it was not the court's responsibility " to discern and dissect the sum that is clearly attributable to either or both." Id., 217. Additionally, the court found that the defendant had transferred his assets without consideration to his current wife, including two homes purchased with the defendant's income. Id., 216. In affirming the trial court's decision, the Appellate Court concluded that " [t]he defendant's commingling of his assets . . . and his making of large gifts to [current wife] and to his children without consideration clearly constitutes culpable conduct . . ." Id., 223.
This court disagrees that the Jansen case is applicable to the matter currently before the court. The case at bar is fundamentally distinguishable from Jansen in that this court does find a substantial change in circumstances, for the reasons given previously; factors which the Jansen court did not find. Additionally, this court finds no " culpable conduct" on the part of the plaintiff.
The facts of the case before the court are similar to those of Simms v. Simms, supra, 283 Conn. at 498-99. In Simms, the defendant, at the age of sixty-eight years old and in ill health, moved to modify his alimony obligation on the ground of substantial change in circumstances since he had sold his business, and retired. Id., 498. The defendant argued that his income was comprised of installment payments for the value of the business (constituting a return of capital), and social security benefits. Id. The trial court agreed with the defendant finding that he had met his burden in establishing a substantial change in circumstances. Id., 499. On appeal, however, the Appellate Court concluded that the trial court abused its discretion when it reduced the defendant's alimony obligation from $1,500 per week, to $1 per year. Id., 498-99.
The court does not consider the proceeds from GFS as income to the plaintiff for purposes of the motion before the court, but does include the proceeds as an asset of the plaintiff's estate subject to the court's consideration pursuant to § 46b-82.
The undisputed facts before the court are that both parties are now sixty-seven years old and retired from employment. Both parties are presently in relatively good health, although the plaintiff's medical condition remains variable. Both parties have estates in excess of $2 million. Although the plaintiff's income has decreased given his retirement, both parties are more financially stable today than in 1999. The defendant's financial needs and dependence have reduced substantially given her current income and estate.
V
CONCLUSION
The court has considered all of the relevant and credible evidence and testimony before it; has considered the case law and applicable statutes, including all statutory criteria; and, has considered the arguments and briefs of counsel. Accordingly, based upon the court's findings of fact and the substantive law, the court grants the plaintiff's motion for modification of alimony (Entry #151) and enters the following orders.
1) The plaintiff shall pay to the defendant periodic alimony in the amount of $2,000 per month for two years. Thereafter, the plaintiff shall pay to the defendant periodic alimony in the amount of $1,000 per month for a period of 10 years. This order is retroactive to January 1, 2017. All alimony payments shall be made by the 15th of each month. Alimony shall terminate upon the plaintiff's death, the defendant's death or the expiration of 12 years from January 1, 2017, whichever event shall first occur.
2) The plaintiff shall provide life insurance in the amount of $200,000 naming the defendant as irrevocable beneficiary, so long as he has an obligation to pay alimony.
SO ORDERED.