Opinion
No. HHDFA044004630
December 23, 2005
MEMORANDUM OF DECISION
The named plaintiff is the mother of a minor child Edwin Dylan Rabsch III born February 6, 1999. The Commissioner of Social Services filed this action seeking a child support order and arrearage finding against the defendant, who is allegedly "the legally liable parent." According to the verified statement of facts appended to the complaint, the defendant is the child's father by way of an acknowledgment of paternity. The defendant filed no responsive pleading denying any of the foregoing allegations.
At the initial hearing, the State filed a photocopy of a purported acknowledgment of paternity signed by the defendant two days after the birth of the child. Based on the defendant's testimony that he earned $12,000 per year as a sell-employed landscaper, the court, Sosnoff Baird, F.S.M., entered a temporary order requiring the defendant to pay $58.00 per week child support and continued the matter for a full evidential hearing regarding the defendant's ability to pay and to determine the arrearage. The defendant was ordered to produce income tax returns. The court specified that no motion was required to establish a final child support order.
Subsequently, an extensive evidential hearing was held. The plaintiff mother is a wage earner. She works as a dental assistant, earning $455.00 average weekly gross, and a net of $402.02 per week. She incurs work-related day care expenses of $59.00 per week. Her financial affidavit is credible and there was no evidence or testimony casting any serious doubt as to those numbers.
The defendant, who was represented by counsel at the hearing, filed a sworn financial affidavit at the commencement of the hearing. On that affidavit, he stated his occupation as landscaper, and his employer as Pine Forest Landscaping, L.L.C. He claimed a weekly gross income from the "employer" as $300.00 subject to deductions for "federal tax," "self-employment tax," state tax, and medicare totaling $81.46, leaving a net from principal employment of $218.54. He then disclosed under the caption "all other income" rental income of $151.16 per week, against which he claims deductions totaling $336.32 per week. He states a total net income of $33.38 per week. He discloses expenses of $570.27 per week.
He disclosed total net assets of $28,708.61. This includes two buildings in Meriden and real estate in New Hampshire, a car, a truck, two checking accounts, a utility trailer and his landscaping business, which he valuated at $0. On the form's summary section he listed total liability of $0, but in the detail, listed credit card debts of $13,991.88 on which he claims to he paying $74.42 per week.
Just four days later, the defendant filed a new financial affidavit. The primary change was that the principal employer is now listed as L+S Automotive, his occupation is shown as "mechanic" and the income from the principal employer is listed as $400.00 with tax deductions of 79.89 per week. The net from the principal employer is shown as 320.11 per week. The same rental income and deductions are listed, making the total net income $134.95 per week. The expense, asset and liability figures were unchanged.
The defendant, as ordered, filed copies of his federal and state income tax returns for calendar years 2002 through 2004. He also introduced numerous bank statements, loan applications and correspondence. There was extensive testimony as well. The plaintiff and the State dispute the defendant's claims regarding his income and financial resources.
It is up to this court, as the trier of fact, to determine the credibility of witnesses and the weight to be given to their testimony. Powers v. Olson, 252 Conn. 98, 105, 742 A.2d 799 (2000); Leo v. Leo, 197 Conn. 1, 4, 495 A.2d 704 (1985); Griffin v. Nationwide Moving Storage Co., 187 Conn. 405, 422, 446 A.2d 799 (1982); Riccio v. Abate, 176 Conn. 415, 418, 407 A.2d 1005 (1979); Raia v. Topehius, 165 Conn. 231, 235, 332 A.2d 93 (1973); Shearn v. Shearn, 50 Conn.App. 225, 231, 717 A.2d 793 (1998); Cook v. Bieluch, 32 Conn.App. 537, 549, CT Page 16685 629 A.2d 1175, cert. denied 228 Conn. 911, 635 A.2d 1229 (1993); Cruz v. Kourpouanidis, 12 S.M.D. 38, 39 (1998); Hepburn v. Hepburn, 8 S.M.D. 126, 133 (1994); Fretina v. Fretina, 5 S.M.D. 139, 142 (1991).
"A trier of fact is free to reject testimony even if it is uncontradicted; and is equally free to reject part of the testimony of a witness even if other parts have been found credible." (Citations omitted.) Barrila v. Blake, 190 Conn. 631, 639, 461 A.2d 1375 (1983). The court has the right to accept part and disregard part of the testimony of any witness. Smith v. Smith, 188 Conn. 121, 123, 438 A.2d 842 (1981); Rood v. Russo, 161 Conn. 1, 3, 283 A.2d 220 (1971); Clark v. Haggard, 141 Conn. 668, 674, 109 A.2d 358 (1954); Baretta v. TT Structural, Inc., 42 Conn.App. 522, 527, 681 A.2d 359 (1996); Lynk v. Lynk, 11 S.M.D. 233, 241 (1997); Carli v. Ruszala, 10 S.M.D. 320, 321 (1996); Tsirigotis v. Tsirigotis, 9 S.M.D. 152, 155 (1955); Kimery v. Kimery, 9 S.M.D. 54, 56 (1995); Berluti v. Berluti, 5 S.M.D. 377, 382 (1991).
Practice Book § 25-30(a) requires each party to file a sworn financial affidavit disclosing current income, expenses, assets and liabilities. Practice Book § 25-32(a) provides for exchange of a substantial amount of financial information including income tax returns, statements of accounts from financial institutions and evidence of income. Practice Book § 25-32(b) establishes a continuing duty to disclose. Additionally, information may be obtained through interrogatories, requests for production and requests for admissions pursuant to Practice Book §§ 13-6, 13-9, 13-22 and 25-31.
Connecticut courts have uniformly emphasized the need for full and frank disclosure of the financial circumstances of the parties to family litigation. "`A court is entitled to rely upon the truth and accuracy of sworn statements required by 380 [now § 25-30(a)] of the Practice Book, 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.' Casanova v. Casanova, 166 Conn. 304, 305, 348 A.2d 668 (1974) . . . [S]ee also O'Bymachow v. O'Bymachow, 12 Conn.App. 113, 118-19, 529 A.2d 747, cert. denied, 205 Conn. 808, 532 A.2d 76 (1987) (defendant entitled to rely on information in plaintiff's financial affidavit); Gelinas v. Gelinas, [ 10 Conn.App. 167, 175, 522 A.2d 295, cert. denied 204 Conn. 802, 525 A.2d 965 (1987)] (recognition of `the need for a full and fair disclosure of information contained in a financial affidavit'); Grayson v. Grayson, [ 4 Conn.App. 275, 287, 494 A.2d 576 (1985)] ('compliance with the rules concerning the filing of financial affidavits is essential in order for the court to make a reasoned decision with respect to such orders'); Jackson v. Jackson, [ 2 Conn.App. 179, 188, 478 A.2d 1026 (1984)] ('[t]he sworn financial statements of the parties under Practice Book 463 have great significance in domestic disputes')." Billington v. Billington, 220 Conn. 212, 219-20, 595 A.2d 1377 (1991); AG v. PD, 15 S.M.D. 138, 143 (2001).
In summary, the defendant claims that he started his landscaping business, Pine Forest Landscaping, about five years ago. Although he was able to win some large landscaping and snow removal contracts, he does not characterize the business as successful. In 2003, the business went into a tailspin initiated by the cancellation of contracts with two condominium complexes. Later in the year, several additional affiliated condominiums failed to renew their contracts with Pine Forest. The resulting loss of 85% of the gross revenues resulted in the defendant selling off much of his equipment. At an earlier hearing he testified that he was "living off the equity" presumably the remains of the business and certain real estate investments. In the four-day interval between two hearing dates, the defendant claims that he discovered the necessity of obtaining regular wages and acquired a position as a mechanic earning $10 an hour.
The State and the plaintiff challenge the defendant's story and claimed financial condition, pointing to significant contradictions in his testimony and disclosed documentation. After a review of the transcripts and exhibits, the court agrees that there are numerous inconsistencies. Although the defendant, under questioning of his counsel, attempted to explain many of the inconsistencies, the explanations were not persuasive.
For purposes of these child support proceedings, the defendant evidenced a marked tendency to understate both the actual income and earning potential of his landscaping business. The income tax returns provide some useful information. The 2002 Schedule C, Profit or Loss from Business schedule indicates a business gross income of $124,722. Yet the defendant reported personal gross income of $11,960 for that year on his individual income tax return (Form 1040). The calendar year 2003 tax returns indicate a business gross income of $88,058 with a personal gross income of $27,897 which reduced to taxable income of $17,763. In calendar 2004, his reported business gross income dropped to $13,343 and his individual return claims a loss of $4,157 as his total "income."
Meanwhile, in February 2004, the defendant applied for loans to be secured by real estate in the Town of Meriden. The application for the loan to be secured by 118 Columbia Street is Defendant's Exhibit L. On that application, the blank labeled "monthly income . . . borrower" is answered $4,500. He disclosed total assets of $183,000 including $6,500 in bank accounts. He claimed the value of his home at 39 Draper Avenue to be $175,000.
The application for the residential mortgage on his Draper Avenue home, Defendant's Exhibit M, discloses an even higher monthly income, $6,559. He valuated his home at $168,000 and listed his total assets as $172,000 with $4,000 in bank deposits (in a different bank than listed in the other application). The information the defendant disclosed on these loan applications, which were signed by the defendants under penalty of false statement, conflict severely with his testimony, financial affidavit and even his income tax returns. These statements, particularly the statements of monthly income, are evidential admissions. "The words and acts of a party-opponent are generally admissible against him [or her] under the admission exception." C. Tait J. LaPlante, Connecticut Evidence (2d Ed. 1988) § 11.5.1, p. 330; Willow Funding Company v. Grencom Associates, 246 Conn. 615, 620, 717 A.2d 1211 (1998).
"An evidential admission is subject to explanation by the party making it so that the trier may properly evaluate it." Id., 621. An evidential admission, "while relevant as proof of the matter stated . . . [is] not conclusive." (Citation omitted.) Remkiewicz v. Remkiewicz, 180 Conn. 114, 118, 429 A.2d 833 (1980); Nationwide Mutual Ins. Co. v. Allen, 83 Conn.App. 526, 542, 850 A.2d 1047 (2004). However, in the present case, the defendant's explanations are simply not credible. For example, he lists his Draper Avenue residence on both 2005 financial affidavits as valued at $150,000, almost a year after he valuated the same property at $168,000 and $175,000 on his loan applications. When questioned, he explained that it was an "oversight" and that had he remembered the loan application, he would have put $175,000 on his financial affidavit. When asked how much he would ask were he selling the house today, his answer was $179,900. (Transcript, 2/14/2005, pp. 40-42).
Even more dubious is his explanation of the discrepancy in the income disclosure. He claimed that notwithstanding his signature on the form, that the information was taken by phone, that he was unaware of the exact numbers, and he implied that the loan officer coached him to put figures that would qualify him for the loan requested. Even if that were true, his failure to correct the numbers when signing the application under penalty of false statement also constitutes an admission. Obermeier v. Neilsen, 158 Conn. 8, 255 A.2d 819 (1969). Elsewhere, he claimed that the income represented business income, not personal income — notwithstanding the fact that he, personally, was the applicant (borrower) and that the section of the form made specific reference to the borrower's income. Even if this implausible rationalization could be credited, the disclosure of monthly income of $4,500 to $6,559 occurred in 2004, a year in which he disclosed total gross business income for the year of $13,843.
The credibility gap widens further upon evidence that the defendant deposited over $54,000 into his personal bank account during calendar year 2004. Deposits in Pine Forest's account for that year were nearly $30,000. The defendant claims that some of that money reflected sale of assets and gifts from his father. He also claims that some of the deposits in his personal account were draws from the business. (Transcript, 2/14/2005, pp. 17-19). Albeit some money may have transferred from the business account to the personal, it is clear that somewhere between $54,000 and $84,000 passed though the defendant's hands in calendar year 2004.
It is perhaps worthy of note that defendant's counsel attempted to rehabilitate his client's credibility by pointing to the business income disclosed on the 2003 tax return. This supposedly supports the claims that the defendant's income disclosure for the loan applications in 2004 was based on his business income in 2003. It is true that if one annualizes the monthly income reported on the Draper Avenue loan application, that number ($78,708) falls roughly between the 2003 reported gross receipts ($88,058) and the gross profits ($71,844) reported on Schedule C. (Transcript, 2/14/2005, pp. 81-82). However, a much more telling coincidence is that the monthly income reported on the Columbia Street loan application, when annualized ($54,000), is almost exactly the amount the defendant deposited in his personal account for the calendar year ($54,275.59). If the court were to draw any conclusions at all from these numbers, it's obvious which would prevail.
Taxes present yet another blow to the defendant's credibility. On his February 10, 2005 financial affidavit, at which time his employer was still purportedly Pine Forest Landscaping, he reported deductions of $30.48 per week for "Federal Tax," $0.73 for "State Tax," $4.35 "Medicare" and $45.90 "Self-employment Tax." These deductions, which would total $4,235.92 if annualized, appear on the sworn financial affidavit notwithstanding that the defendant was not subject to withholding and was not in fact making any tax payments. Nor could he reasonably claim to be reporting anticipated tax liability. He knew or should have known that his 2004 U.S. income tax return was reporting a net loss with a total tax of $0. That tax return was signed by the accountant that prepared it just one day before the financial affidavit was submitted.
The tax returns, Defendant's Exhibit C, verify that the defendant also paid no self-employment tax and no Connecticut State Income Tax for calendar 2004. The defendant only paid a total of $2,316 in federal taxes in calendar 2003 when the business was purportedly turning a profit.
The defendant's financial affidavits lack candor and do not fairly and fully apprise the court or the parties of his true circumstances. The ancillary documentation, including his tax returns, and the testimony of the defendant is not trustworthy. "The court is not bound to accept the financial affidavit of the defendant and simply apply the mathematical formula, where the evidence supporting that affidavit is so lacking in credibility." Dillon v. Dillon, 15 S.M.D. 210, 214 (2001); Yochum v. Yochum, 6 S.M.D. 75, 80 (1992).
The defendant submitted a guidelines worksheet based on ostensible income of $401 weekly gross with a net of $362. The calculated support order would be $63 per week. The defendant argues that the court embrace this calculation to establish a guidelines order, and base arrearages on an equal earning capacity. The court declines this theory because it finds the defendant's financial affidavits and claims regarding his income to lack credibility. However, it is easier to convince the court that the defendant's claims are suspect than to establish an alternative income figure.
The State and plaintiff suggest that the court impose an earning capacity deviation on the defendant. The child support guidelines provide for deviation where the court finds "[o]ther financial resources available to a parent." Regs. Conn. State Agencies § 46b-215a-3-(b)(1)(B). A parent's earning capacity is specifically included in this subsection. "It is well established that a court may consider a party's earning capacity rather than actual income in computing a support order." Johnson v. Johnson, 185 Conn. 573, 576, 441 A.2d 578 (1981); Miller v. Miller, 181 Conn. 610, 611-12, 436 A.2d 279 (1980); Siracusa v. Siracusa, 30 Conn.App. 560, 566, 621 A.2d 309 (1993); Carey v. Carey, 29 Conn.App. 436, 440, 615 A.2d 516 (1992); Hart v. Hart, 19 Conn.App. 91, 94, 561 A.2d 151 (1989); Fredo v. August, 13 S.M.D. 83, 87, 1999 Ct.Sup. 7998 (1999); Moffit v. Moffit, 12 S.M.D. 41, 42-43 (1998); Danford v. Symonds, 12 S.M.D. 32, 36 (1998); Murray v. Stone, 11 S.M.D. 149, 152 (1997); Brown v. Brown, 11 S.M.D. 140, 147 (1997); Englemann v. Englemann, 10 S.M.D. 90, 147 (1997); Henja v. Brown, 10 S.M.D. 42, 147 (1996); Kimery v. Kimery, 9 S.M.D. 54, 57 (1995) Jodoin v. Jodoin, 9 S.M.D. 7, 8 (1995); Hay v. Hay, 8 S.M.D. 51, 54 (1994); Guidone v. Moschette, 8 S.M.D. 10, 11 (1994); Webster v. Webster, 8 S.M.D. 4, 5 (1994); Campbell v. Scott, 7 S.M.D. 8, 12, 8 CSCR 507, 11 Conn.Fam.L.J. 71 (1993); Bardsley v. Bardsley, 6 S.M.D. 112, 116 (1992); Ouellette v. Ouellette, 6 S.M.D. 83, 85 (1992).
The court agrees with the State and the plaintiff that the defendant has an earning capacity significantly higher than his claimed income. However, it is difficult to quantify his actual earning capacity. The State suggests numbers that range from annual income of $78,700 per year to as much as $356,000 per year. (Transcript, 2/14/2005, pp. 78). The Attorney General arrives at the lower figure by simply adding up the gross deposits for calendar 2004 for the defendant's personal checking account and adding the deposits to his business account. He contends that the higher end can be computed by extrapolating the worth of the landscaping and snow removal contracts of the business as stated by the defendant to an annual amount and adding another 20%.
Attorney Blanchette reasoned that 80% of the defendant's business came from the Spring Lake condominium associations, thus justifying the 20% premium. (Transcript, 2/14/2005, p. 78). Actually, the defendant testified that the Spring Lake contracts provided 85% of the revenues. (Transcript, 2/14/2005, p. 50).
The defendant's attorney pointed out several flaws in this reasoning. He challenges the inference that the oral testimony that the snow removal contracts at Spring Late were a minimum of $4,000 per month, can be annualized in the manner urged by the State. The Court agrees that this is a stretch. There was no evidence as to whether the $4,000 figure was in fact payable for the entire year or just during the winter. The income from landscaping at the complex was not made clear. Neither party put the contracts into evidence nor was any testimony from the condominium associations offered. The defense also argues that simply adding the total deposits of the personal and business accounts is unreliable. It is plausible that at least some of the money deposited in the business account was later transferred to the personal account, and that some deposits were from sources other than income.
Additionally, the court does not accept either party's treatment of the loss of the Spring Lake condominium contracts. It is true, as the State and plaintiff argue, that at least two of the contracts were terminated for cause, and it is a reasonable inference that the failures of other associations to renew were the result of poor performance. However, there is insufficient evidence that the defendant's substandard performance in the context of a very competitive business amounted to volitional conduct causing the reduction of income. The circumstances here do not equate to a wage earner voluntarily quitting a job, or committing specific acts resulting in being fired.
However, the evidence also does not justify the court accepting without question, the sudden $10 an hour job, nor a presumption that the remaining business income is simply 15% or 20% of the former gross income. The court cannot glean from the bank statements, and the defendant did not provide evidence that was either adequate or credible to allow a building from the ground up of the current business income.
The fact that the State's proposal is flawed does not warrant default to the defendant's theory. The evidence is imperfect in any event. In reviewing the whole record, the court concludes that while far from complete, there is more and better evidence to support a finding of actual income than there is to establish an earning capacity. Accordingly, the request for an earning capacity deviation is denied, and the defendant's guideline argument is rejected.
For purposes of making a guideline determination, the court finds the best evidence of the defendant's income to be the admissions contained on the loan applications, which were signed by the defendant under penalty of false statement. The testimony of the defendant and arguments of counsel, which in effect attempt to impeach the defendant's own admission, are not credible.
Furthermore, analysis of the bank statements supports an inference that the defendant's gross personal income for calendar 2004 was at least that amount. The bank statements do not list either the source of deposits or the payee of checks. It is a fair inference that some of the money deposited in the personal account reflects money transferred from the business account. Between half a dozen and ten deposits in the personal account correspond to checks from the business account in the same amount around the same date. Additionally, notations suggest that about $3,000 in deposits originate from the sale of vehicles or equipment. These two items are more than offset by business account moneys that are not explained or accounted for. Curiously, the deposits into the personal account for calendar 2004 are about double those for 2002, when the business was at its zenith. Based on this evidence, the finding that the total gross deposits in the personal account roughly equate to the defendant's income, is, if anything, generous to the defendant. Although this analysis is based on calendar 2004 data, the court finds all evidence of any subsequent income figures for the defendant, specifically including his financial affidavits, to lack credibility.
The court finds the defendant's gross weekly income to be $1,040.00. The deductions for federal and state income tax, social security and medicare total zero, because according to his tax return for that year he paid zero. A child support guidelines worksheet is appended hereto. The presumptive order is $191 per week. The court finds no reason to deviate.
The defendant has income or potential income from his real estate. There is some circumstantial evidence that he has unreported income either from landscaping activities, side jobs as a mechanic or otherwise. Extensive analysis of these income sources as well as the reported income shown on his tax return, including due consideration of reasonable deductions for out-of-pocket business expenses would be required to arrive at an income figure. This analysis is not necessary because the court finds that his admission and the loan application is more reliable than the alternatives.
With regard to past due child support, the presumptive amount is applicable for calendar 2004. The court, having found his two 2005 financial affidavits to lack credibility also disbelieves his claims that his income is now limited to a $10 per hour wage. In the absence of credible evidence to the contrary, the presumptive amount applies for calendar year 2005 to date.
In determining past due support from the date of separation to the end of 2003, the court finds the defendant's average weekly gross income to be $1,515. In arriving at that figure, the court considered the monthly income amount admitted on the Draper Avenue mortgage application as well as the testimony and tax returns. Deductions for federal and state income tax are derived from the actual amount of taxes stated on his income tax returns. The average weekly net income for calendar year 2003 is $1,462 and the presumptive child support is $239 per week. The arrearage dates back to December 21, 2002 which is the date the plaintiff and the defendant separated. The total amount of past due support is $32,340.
Recall that the defendant himself claimed that the amount was derived from the business income for the prior year. Furthermore, this number is roughly consistent with the result derived from the gross business income reported on the 2003 schedule C, adjusted for out-of-pocket deductions plus rental and other income. "Items such as depreciation which do not represent an actual cash flow, or items that would not be deducted by a wage earner, such as commuting costs, are not deductions for purposes of a child support computation, even if they are lawful deductions allowed by the Internal Revenue Service for tax purposes. Means v. Means, 17 Conn.L.Rptr. 26, 1996 Ct.Sup. 4010-kk, 4010-oo (Teller, J. 1996); Figler v. Figler, Superior Court, judicial district of New Haven, doc. no. FA95-0374849, 1996 Ct.Sup. 6122, 6129 (Alander, J., Aug. 2, 1996); Tharau v. Koutroumanis, 13 S.M.D. 149, 152 (1999); Nicholas v. Nicholas, 10 S.M.D. 98, 101, affirmed, Solomon. J. Oct. 8, 1997)." Burns v. Burns, 18 S.M.D. ___ 2004 Ct.Sup. 9143, 9158 (2004).
$191 × 103 weeks = $19,673, $239 × 53 weeks = $12,667. $19,673 + $12,667 = $32,340.
The defendant claims that he made some voluntary payments which is flat out contradicted by the plaintiff. The defendant has burden of proof on this issue. He has failed to sustain that burden. No credits are granted for alleged payments prior to the conclusion of the trial.
The court orders the defendant to pay $191.00 per week current support plus $38.00 per week on be arrearage making a total payable order of $229.00 per week. The order is effective December 26, 2005. The arrearage is $32,340 to the plaintiff as of December 21, 2005. Immediate income withholding is ordered. Notwithstanding the withholding order, the defendant is directed to make weekly payments as directed by the support enforcement division.
The support enforcement division is directed to provide the defendant with written payment instructions as well as an advisement of rights regarding income withholding.
As provided in the child support guidelines each parent is ordered to provide medical and dental insurance for the benefit of the minor child as available at reasonable cost on a group basis through an employer or union. The provisions of General Statutes § 46b-84(e) are incorporated. The defendant father is ordered to pay 57% and the plaintiff mother 43% of all unreimbursed or uninsured medical or dental costs.
The child support guidelines require the court to provide an order providing for payment by the non-custodial parent toward child care costs. Regs. Conn. State Agencies, § 46b-215a-2a(h)(2). The defendant is ordered to pay 57% of reasonable, necessary, unreimbursed, employment-related childcare costs.