Opinion
No. FA99 036 05 58S
August 1, 2003
MEMORANDUM OF DECISION
The plaintiff, Nancy Sachs, brought this dissolution action in January 1999. Both the plaintiff and the defendant, Martin Sachs, were represented by experienced and capable matrimonial attorneys. During the course of the litigation, the plaintiff retained a certified public accountant, Mark Harrison, to value the defendant's dental practice. The defendant was aware that Harrison had been retained to perform this service for the plaintiff. Harrison met with and obtained documents and information from counsel for both sides and the defendant. Upon completing the evaluation report, in April 2000, Harrison mailed it to both parties. The case was pretried twice by Judge Brennan, who was also provided with a copy of Harrison's evaluation.
Over a period of time, the parties negotiated a separation agreement. Prior to the uncontested dissolution hearing on June 5, 2000, the defendant and his attorney had discussed the issues for months. Before the defendant executed the agreement on June 5, 2000, the defendant and his counsel reviewed the language contained in Article XII, entitled "Acceptance By The Parties," and in the "Entire Understanding" clause. At the June 5 hearing, the court canvassed the defendant and he acknowledged, under oath, that he and his counsel had gone over the agreement a number of times, that they had discussed the concepts over a number of months, that he believed the agreement was fair and equitable under all the circumstances, and that he was satisfied with the legal advice he had received. At the close of the hearing on June 5, 2000, the court ordered the dissolution of the marriage and ordered the separation agreement incorporated into the judgment of dissolution.
"12.1 The Wife is being represented in the preparation and execution of this Agreement by an attorney of her own choosing and selection, and the Husband is likewise being represented by an attorney of his own choosing and selection, and each of the parties fully understands the terms, covenants and conditions of this Agreement and is of the belief that said Agreement is fair, just, adequate and reasonable as to each of them, and after consideration freely and voluntarily accepts and agrees to said terms, covenants, conditions and provisions."
"13.1 Both the legal and practical effects of this Agreement in each and every respect have been fully explained to both parties by their respective counsel and they both acknowledge that it is a fair Agreement and is not the result of any fraud, duress, coercion or undue influence exercised by either party upon the other, or by any person or persons upon either, and they further agree that this Agreement contains the entire understanding of the parties . . ."
The defendant is an extremely sophisticated investor who had, for many years, managed his large stock portfolios. The separation agreement provided that after the dissolution, Harrison would direct a pro rata division of the defendant's stock with the parties sharing the cost for his services. The agreement included an example of how the division was to be accomplished. It also provided that within ten days of the date of the judgment, the defendant would transfer $1,250,000 from his deferred assets to an Individual Retirement Account (IRA) that the plaintiff was to establish forthwith. In addition, the agreement provided that the defendant's stock portfolio and deferred assets should be valued as of the close of business on May 15, 2000.
"5.9 In order to effectuate the division of assets set forth in Paragraph 5.8, the Wife shall retain ownership . . . In addition, $1,250,000 of the Husband's deferred assets shall be transferred within ten (10) days of the execution of this Agreement into her Individual Retirement Account pursuant to a Qualified Domestic Relations Order, if necessary, and, in addition, a pro rata division of each stock in the Husband's stock portfolio described in Paragraph 5.8(c), so that the Wife shall receive assets having a total value of forty-two (42%) percent of all the assets described in Paragraph 5.8 . . .
"5.10 The distribution and division of assets, as provided above, shall be under the direction of Mark Harrison, Esq., CPA, of Woodbridge, Connecticut. The cost for his services shall be shared equally by the Husband and Wife."
After the dissolution hearing, the parties advised Harrison that the judgment had entered and sent him their financial affidavits to assist him in preparing the required valuations. Harrison made the calculations as required and sent a letter to counsel, dated July 25, 2000, that contained his conclusion and requested that he be contacted if there were questions or concerns. After the dissolution, the defendant and his counsel had numerous conversations with Harrison, both by telephone and in meetings, concerning the defendant's obligations and performance and/or lack thereof.
The defendant made his first distribution of stock prior to and without direction from Harrison. The defendant spoke with Harrison about the difference between this distribution and that which Harrison had directed, and a small adjustment was made. The defendant still owes the plaintiff $17,283 to reach the May 15, 2000 values as agreed.
The defendant also did not transfer the full $1,250,000 from his deferred assets to the plaintiff's IRA within ten days of the date of the judgment. At the defendant's request, the plaintiff established an IRA account at Westport Resources, the same place where the defendant had his IRA, and, prior to July 18, 2000, the defendant transferred $687,000 out of his IRA into the plaintiff's IRA. At the time of the dissolution, the balance in the defendant's IRA was more than $1,750,000, well in excess of the $1,250,000 he was required to transfer. He also had additional assets in retirement accounts with the American Dental Association. At no time did the defendant seek a court order to compel preparation of a QDRO to accomplish a transfer of any portion of the ADA pension accounts, the defendant has not made up the $573,000 difference between the $1,250,000 which he agreed to transfer to the plaintiff and the $687,000 he actually transferred to her.
On September 6, 2000, the plaintiff filed a motion for contempt claiming that the defendant had failed to transfer the required amount of deferred assets and had not followed Harrison's recommendation for stock division. The plaintiff filed additional motions for contempt in substantially the same form, dated August 6, 2001 and March 12, 2002. The defendant filed an answer and four special defenses in which he claims, inter alia, that the separation agreement and dissolution judgment were improper, voidable and unenforceable for the following reasons: Harrison had a conflict of interest; contempt is inappropriate because Harrison failed to make a direction as to the deferred assets and because Harrison's direction as to the defendant's stock portfolio failed to comply with the terms of the agreement and judgment. In addition, the defendant asserts that the plaintiff is not entitled to pursue the remedy of contempt because she is guilty of laches and has unclean hands.
DISCUSSION
CONTEMPT
"A judgment rendered in accordance with . . . stipulation of the parties is to be regarded and construed as a contract . . . Accordingly, [the court's] resolution to the [plaintiff's] claim [for contempt] is guided by the general principles governing the construction of contracts. A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Citations omitted; internal quotation marks omitted.) Issler v. Issler, 250 Conn. 226, 235, 737 A.2d 383 (1999). "In order to constitute contempt, a party's conduct must be wilful . . . The contempt remedy is particularly harsh . . . and may be founded solely upon some clear and express direction of the court . . . One cannot be placed in contempt for failure to read the court's mind . . . A good faith dispute or legitimate misunderstanding of the terms of [a post-dissolution] obligation may prevent a finding that the payor's nonpayment was wilful. This does not mean, however, that such a dispute or misunderstanding will preclude a finding of wilfulness as a predicate to a judgment of contempt. Whether it will preclude such a finding is ultimately within the trial court's discretion. [Also, it] is within the sound discretion of the court to deny a claim for contempt when there is an adequate factual basis to explain the failure to honor the court's order." (Citations omitted; internal quotation marks omitted.) Sablosky v. Sablosky, 258 Conn. 713, 718, 784 A.2d 890 (2001). "The burden, however, remains on [t]he contemnor [to] establish that he cannot comply, or was unable to do so." (Internal quotation marks omitted.) Id., 723.
On the other hand, "[a]n order of the court must be obeyed until it has been modified or successfully challenged." (Internal quotation marks omitted.) Id., 719. Accordingly, "where there is an ambiguous term in a judgment, a party must seek clarification upon motion rather than resort to self-help." Id., 720. "[A] finding of wilfulness as a predicate to a judgment of contempt of court is not barred, as a matter of law, by the fact that the terms of the judgment involved are ambiguous. Such ambiguity is merely one of the factors for the trial court to take into consideration in exercising its discretion regarding a finding of wilfulness." Id., 723.
Division of Stock Portfolio
The plaintiff alleges that the defendant is in contempt of the June 5, 2000 dissolution order because he failed to follow the terms of the separation agreement as to the division of his stocks. The separation agreement clearly and unambiguously provided that Harrison would direct the stock division. Rather than follow the language of and example in the separation agreement, the defendant proceeded on his own path and course of division: he started the division prior to receiving Harrison's direction, made the division as he saw fit and did not follow Harrison's direction when received. The testimony he gave in which he attempted to excuse, explain and justify his actions was incredible. What is clear is that the defendant, for reasons of his own and in an effort to attempt to reduce the financial impact of the orders, determined to follow his own plan for disposition of the stock and to disregard the orders of the court. His claims that he was not provided the opportunity to read, and did not fully understand the agreement can be given no credence. The defendant is intelligent and financially sophisticated. Furthermore, at the dissolution hearing, he advised the court, under oath, that he and his counsel had reviewed the agreement several times, that he had no questions as to the meaning of the agreement, that he was satisfied with his legal advice, and that the agreement was fair and equitable. The court finds that the defendant knowingly, intentionally, and wilfully violated the orders of the court and finds him in contempt.
The defendant asserts that the agreement is invalid and he is not obligated to comply with its terms because Harrison had a conflict of interest. He cannot prevail on this claim. The defendant was fully aware that Harrison had been retained by and was working on behalf of the plaintiff. Indeed, he worked with Harrison in valuing his own practice. With this information and with the advice and approval of his attorney, the defendant inserted provisions in the separation agreement that Harrison would be the person to direct the division of his stock. The defendant then acted contrary to the agreement and made his first distribution of stock prior to receiving Harrison's direction and without waiting for Harrison's calculations. The defendant did not raise any allegations of conflict until he filed his special defenses to the plaintiff's motion for contempt, which he filed more than two years after the dissolution. The defendant may not disregard court orders in an attempt to better his position and then, when his effort is unsuccessful, raise a claim of conflict of interest. The defendant's assertions as to Harrison's alleged conflict and his own claims of ignorance as to Harrison's relationship to the plaintiff are not credible.
Transfer of Deferred Compensation
The plaintiff also alleges that the defendant is in contempt of the June 5, 2000 dissolution order as to the transfer of deferred assets. Paragraph 5.9 of the separation agreement required the defendant to transfer $1,250,000 of his deferred assets into the plaintiff's IRA account within ten days of the execution of the agreement. The deferred assets were to be valued as of May 15, 2000. The agreement also provided that the transfer was to be made by a Qualified Domestic Relations Order (QDRO), if necessary.
As previously noted, at the time of the dissolution hearing, on June 5, 2000, the defendant had sufficient funds in his IRA to cover the transfer. Moreover, at the defendant's request, the plaintiff set up an IRA at the same firm. Accordingly, the defendant could have transferred the deferred assets from his IRA to the plaintiff's IRA without using a QDRO. In mid-July 2000, the defendant transferred only $677,000 from his IRA to the plaintiff's IRA. He has not transferred the remaining balance nor has he at any time, asked the court for an order requiring preparation of a QDRO to permit him to transfer the balance from another deferred asset account.
The defendant claims that he had the right to satisfy a portion of this obligation by transferring assets from his ADA pension accounts. While the agreement did not specify which deferred assets the defendant should use to accomplish the transfer, the defendant, with assistance of his counsel, agreed that the transfer was to be made within ten days of the dissolution. The fact that counsel and the defendant agreed to this time requirement makes clear that the defendant's IRA assets were intended for the transfer. The defendant's counsel did not make any effort to prepare, or have someone else prepare, a QDRO to transfer assets from his ADA accounts within the ten-day period. In any event, as the defendant's counsel was fully aware, preparation and approval of a QDRO would have required far more than ten days. Therefore, the defendant's counsel would not have agreed to insertion of a ten-day provision if the defendant intended to use the ADA assets because to do so would have necessarily placed the defendant in breach after the passage of the deadline. The defendant's protestations to the contrary are not credible. Moreover, the defendant still had the ability to comply with the ten-day deadline by transferring the assets that were available in his IRA. Any claim by the defendant that he did not make the transfer because he believed that a QDRO was necessary or that he was awaiting receipt of the same is not credible. The defendant wilfully failed to transfer the required amount of deferred assets in a timely fashion. The court finds that the defendant knowingly, intentionally, and wilfully violated the orders of the court and finds him in contempt.
Indeed, the defendant has still not transferred the remaining $563,000 and must do so. Breiter v. Breiter, Superior Court, judicial district of Hartford, Docket No. FA 99 0720705 (January 23, 2003, Pickard, J.) ( 34 Conn.L.Rptr. 36); Stone v. Stone, Superior Court, judicial district of New London at Norwich, Docket No. FA 00 0554118 (January 24, 2003, Devlin, J.) ( 33 Conn.L.Rptr. 740).
SPECIAL DEFENSES
First Special Defense: Conflict of Interest
The defendant claims that Harrison violated a fiduciary duty to the defendant because of a claimed conflict of interest. The court does not find such a conflict. Both parties, with the full knowledge and assistance of counsel, determined that Harrison, who had valued the defendant's dental practice for the plaintiff, should assist them post-judgment in directing the stock division. The defendant, aware of Harrison's relationship to the plaintiff, agreed to his post-dissolution functions, and raised no conflict claims at the time. "We have repeatedly indicated our disfavor with the failure, whether because of a mistake of law, inattention or design, to object to errors occurring in the course of a trial until it is too late for them to be corrected, and thereafter, if the outcome of the trial proves unsatisfactory, with the assignment of such errors as grounds of appeal. Timm v. Timm, 195 Conn. 202, 205, 487 A.2d 191 (1985); Krattenstein v. G. Fox Co., 155 Conn. 609, 616, 236 A.2d 466 (1967)." Pickel v. Automated Waste Disposal, Inc., 65 Conn. App. 176, 180, 782 A.2d 231 (2001). The defendant did not present any evidence to indicate or suggest that Harrison did not perform his functions in accordance with the terms of the agreement, that he did anything inappropriate, that he did anything that was unfair to the defendant, or that his recommendations were tainted or erroneous in any faction.
Accordingly, the defendant has failed to provide credible evidence to sustain the claims contained in the first special defense. See, Fiddelman v. Redmon, 31 Conn. App. 201, 213-14, 623 A.2d 1064 (1993); Bratz v. Bratz, 4 Conn. App. 504, 508-09, 495 A.2d 292 (1985); Bowman v. 1477 Central Avenue Apartments, Inc., 203 Conn. 246, 251, 524 A.2d 610 (1987).
Second Special Defense: Laches and Estoppel
The defendant claims that the plaintiff cannot pursue the remedy of contempt because she has been guilty of laches. In order to rely on this special defense, the defendant must show that the plaintiff inexcusably delayed in seeking relief and that the delay resulted in prejudice to the defendant. John H. Kolb Sons, Inc. v. GL Excavating, Inc., 76 Conn. App. 599, 612-13, 821 A.2d 774 (2003). "The defense of laches does not apply unless there is an unreasonable, inexcusable, and prejudicial delay in bringing suit . . . Delay alone is not sufficient to bar a right." (Citations omitted; internal quotation marks omitted.) Cummings v. Tripp, 204 Conn. 67, 88, 527 A.2d 230 (1987).
The plaintiff's delay in seeking relief was not inexcusable nor did it prejudice the defendant. She pursued her claim in a reasonably timely fashion. The delay in a final determination was due in large part to efforts on behalf of both parties to resolve the issues. However, it was the defendant's failure to comply with his obligations under the separation agreement that resulted in losses from a decline in the value of his securities. The defendant has failed to satisfy his burden of proof as to the claim of laches. John H. Kolb Sons, Inc. v. GL Excavating, Inc., supra, 76 Conn. App. 612-13.
The defendant also claims that the plaintiff should be estopped from asserting her claim. "There are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in existence of certain facts and to act upon that belief and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done." (Internal quotation marks omitted.) W. v. W., 248 Conn. 487, 496, 728 A.2d 1076 (1999). The defendant failed to provide any credible evidence to warrant an estoppel, i.e. that the plaintiff did or said anything calculated or intended to induce him to believe that certain facts existed and to act on this belief, and that he changed his position in reliance on these facts to his injury.
Similarly, the defendant failed to provide any credible evidence of conduct by the plaintiff that would constitute unclean hands. "The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue . . . Unless the plaintiff's conduct is of such a character as to be condemned and pronounced wrongful by honest and fair-minded people, the doctrine of unclean hands does not apply . . . The doctrine generally applies [only] to the particular transaction under consideration, for the court will not go outside the case for the purpose of examining the conduct of the complainant in other matters or questioning his general character for fair dealing." (Internal quotation marks omitted.) Thompson v. Orcutt, 257 Conn. 301, 310-11, 777 A.2d 670 (2001).
For these same reasons, and for the untimeliness of the request to reopen the judgment, some twenty-eight months after the judgment, the court denies the defendant's motions to reopen the judgment.
Third and Fourth Special Defenses
The defendant's testimony as to his justifications for his behavior and for his failure to perform his obligations as agreed and ordered is found not credible. Rather, the court finds that the defendant wilfully and intentionally violated the orders of the court as asserted by the plaintiff. The plaintiff's motion for contempt is granted.
ORDERS
The defendant is ordered to pay to the plaintiff, on or before August 20, 2003, the sum of $17,283 for his failure to complete the pro rata division of stock. In addition, the defendant is ordered to transfer to the plaintiff's IRA, on or before August 22, 2003, the sum of $573,000 for his failure to complete the transfer of deferred assets. Together with the payment of said $573,000, the defendant shall pay interest to the plaintiff from July 1, 2000, to the date of payment, at the legal rate. The defendant shall also pay to the plaintiff on or before August 29, 2003, attorneys fees in the amount of $31,570, which fees are found to be fair and reasonable, and, in addition, $839.25 for "out of pocket" disbursements including filing and marshal's fees.
The issue of the fees requested for Harrison remains unresolved. On August 29, 2003, at 10:00 a.m., the defendant is ordered to appear and report as to whether he has complied with said orders and a hearing will be on the issue of Harrison's fees.
HILLER, J.