Opinion
No. FST FA 78 0035162 S
October 24, 2005
MEMORANDUM OF DECISION ON DEFENDANT'S MOTIONS TO MODIFY ( #287.00 AND #301.00)
The principle issue raised by these two motions to modify is: Should a 67-year-old man with some health problems who is no longer employed due to the sale of his own business, be required to continue to pay alimony to his 68-year-old wife who has more serious health problems?
LAW
"The trial court has the authority to modify its alimony order pursuant to General Statutes § 46b-86, which provides in relevant part that `unless and to the extent that the decree precludes modification . . . any final order for the periodic payment of permanent alimony . . . 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 . . .' As we have stated, `once the trial court determines that there has been a substantial change in the financial circumstances of one of the parties, the same criteria that determine an initial award of alimony . . . are relevant to the question of modification.' Borkowski v. Borkowski, 228 Conn. 729, 737 (1994). Under § 46b-82, those criteria include `the length of the marriage, the causes for the annulment, dissolution of the marriage or legal separation, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate and needs of each of the parties and the award, if any, which the court may make pursuant to section 46b-81 . . .' General Statutes § 46b-81(a) provides in relevant part that `at the time of entering a decree annulling or dissolving a marriage . . . the Superior Court may assign to either the husband or wife all or any part of the estate of the other . . .'" Gay v. Gay, 266 Conn. 641, 645 (2003).
The substantial change in circumstances provision establishes "the authority of the trial court to modify existing . . . orders to respond to changes economic conditions." Turner v. Turner, 219 Conn. 703, 718 (1991). Specifically, it "allows the court to modify an . . . order when CT Page 13351-hu the financial circumstances of the individual parties have changed, regardless of their prior contemplation of such changes." Id. The party seeking modification of an order bears the burden of "clearly and definitely [showing] individual facts and circumstances which have substantially changed." McGuinness v. McGuinness, 185 Conn. 7, 10, (1981); Prial v. Prial, 67 Conn.App. 7, 11 (2001).
The procedures for the court conducting a modification of alimony hearing after the date of dissolution is governed by statute. General Statutes § 46b-86. "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 of the § 46b-82 criteria, make an order for modification . . . The court has the authority to issue a modification only if it conforms the order to the distinct and definite changes in the circumstances of the parties . . . . . The inquiry, then, is limited `to a comparison between the current conditions and the last court order." Crowley v. Crowley, 46 Conn.App. 87, 92 (1997); Gervais v. Gervais, 91 Conn.App. 840, 854 (2005). "The court's power to modify is created by statute, and it must make its determination on the basis of the statutory standards . . . The trial court is limited to reviewing the current situation of the parties in light of the statutory criteria set forth in § 46b-82." Crowley v. Crowley, supra, 46 Conn.App. 98.
PROCEDURAL FACTS
The parties were married on February 28, 1961. Their marriage was dissolved on September 24, 1979. (Tedesco, J.) The judgment of dissolution incorporated the terms and provisions of the August 24, 1979 Separation Agreement entered into by the parties. The agreement provided for unallocated alimony and child support to be paid to the plaintiff with the payments to increase automatically beginning on August 1, 1982 at stated amounts plus "additional periodic alimony" at a stated percentage beginning August 1, 1982. The children attained the age of majority prior to 1989. In 1989 the plaintiff filed a motion to modify the alimony which was denied. She appealed and the trial court's denial was affirmed by the Appellate Court. Simms v. Simms, 25 Conn.App. 231, cert. denied, 220 Conn. 911 (1991).
On August 8, 1998 the plaintiff filed a motion to modify the 1979 alimony orders and on November 12, 1998, sought to amend the motion to modify. After a hearing the court granted the dismissal of the August 8, 1998 motion to modify and granted the plaintiff's November 12, 1998 motion to amend her modification motion. CT Page 13351-hv
On July 12, 2002, date stamped July 15, 2002, the plaintiff filed another motion to modify the alimony order which was heard by the trial court on November 25, 2002. On February 25, 2003 the trial court filed a Memorandum of Decision (#254.00) in which it acted on both the November 12, 1998 amended motion to modify and the July 12, 2002 motion to modify. The court's decision modified the 1979 alimony order and ordered the defendant to pay weekly alimony in the amount of $1,500 retroactive to the date of the original motion for modification, August 18, 1998. The defendant appealed. The trial court's decision modifying the alimony award was affirmed by the Appellate Court on May 24, 2005. Simms v. Simms, 89 Conn.App. 158 (2005).
The defendant filed two motions to modify the alimony; the first on November 7, 1989 and the second on July 18, 2002. Both motions were denied.
The trial court's February 26, 2003 decision granting the motion to modify stated: "The court concludes that the defendant's present earnings constitute a substantial change in circumstances for the increase is dramatic, when compared to 1979, to the extent that neither party anticipated it would occur. In his testimony the defendant admitted the same."
Therefore, the court finds that the base financial order for modification purposes is the order of Judge Harrigan on February 25, 2003 in the amount of $1,500 per week. The financial affidavits supporting the February 25, 2003 decision are the defendant's financial affidavit dated November 22, 2002 and the plaintiff's financial affidavit dated December 4, 2002. The two financial affidavits supporting the current motion for modification before this court are both dated May 13, 2005.
FACTS
The defendant claims that the substantial change of circumstances are a combination of his age, his health, the sale of his own business and the fact that his principal source of income is social security. The defendant has sustained his burden of proof as to a substantial change of circumstances and that legal conclusion is based on the following facts having been found by the court.
The defendant husband is 67. His health has deteriorated. He was treated for depression for the past two years, a condition that existed at the 2002 hearing. That condition has deteriorated since 2002. He has continuing heart problems for which he is undergoing treatment. He had a CT Page 13351-hw trial fibrillation since 1997. He has had two heart attacks since 2002, the most recent on March 15, 2005. His physician has recently advised the insertion of a catheter into his leg to his heart to redirect the electric current to his heart. He takes multiple medications for both depression and the heart condition. He needs operative procedures on both knees.
For many years, the defendant was employed by Simms Capital Management. He created the company in 1984. He was its chief executive officer owning eighty percent of the stock. In November 2004 he divested himself of all ownership and employment interest in Simms Capital Management. A Redemption and Purchase Agreement signed by the defendant was marked as Exhibit 1. This Agreement is in full force and effect. All of the stock sales price in accordance with Exhibit 1, $468,571, has been paid to the defendant.
An additional set of business sale payments are due the defendant referred to as the New Mexico payments. Exhibit 1, paragraph 15. A $50,000 payment was received in January 2005. A $50,000 payment was due on June 30, 2005, which was the last day of the hearing on this motion. There was evidence to indicate that this June 30, 2005 payment would be made. The last payment of $300,000 was due on September 30, 2005. There is no evidence that this last payment would not be made. These $400,000 New Mexico payments along with the $468,571 stock sales price total $868,571. The defendant sold all his right, title and interest in Simms Capital Management for $868,571 including all rights to stock dividends, interest, loan repayments, salary, bonus, employment rights and participation rights in the New Mexico payments. The court finds that none of those payments are wages or income and all are a return of capital. Simms v. Simms, supra, 25 Conn.App. 234; Denley v. Denley, 38 Conn.App. 349, 353 (1995).
Since the November 2004 closing, the defendant has not received any compensation or wages from the new firm nor does he anticipate receiving any income in the future. No compensation agreement was offered in evidence by either party. Defendant has resigned as an officer, employee and director of the corporation. The defendant signed a non-compete agreement. The court finds that the defendant has no income or right to any future income in Simms Capital Management. The sale of a capital asset is not a substantial change of circumstances. Schorsch v. Schorsch, 53 Conn.App. 378, 385 (1999).
The court has examined the defendant's base financial affidavit dated November 22, 2002. The defendant is no longer receiving any earned income from the sources listed in that 2002 financial affidavit including salary CT Page 13351-hx and other income from Simms Capital Management, ownership fees or director fees. The defendant still continues to receive interest from investments. The November 22, 2002 financial affidavit listed the defendant's income as: $265,000 annual salary and additional income from Simms Capital Management of $23,429. Judge Harrigan on February 25, 2003 found his net income to be $14,880.14 a month or $178,562 annually. Defendant's only current income is monthly social security of $1,640. He discloses cash or investment assets as follows: bank assets $18,456, securities $211,541, IRA $10,946, 401(k) $61,214, and a one-quarter interest in a ranch valued of $500,000. In addition the court assumes that he has received the additional $350,000 New Mexico payments. The defendant has remarried and owns a home with his current wife. His one-half net value of that house is $1,555,000. There was no evidence offered at trial on the prospective income received or income capable of being received from these assets. He does not anticipate any gainful employment in the future and he is retired. His expenses far exceed his income. He therefore must invade assets to pay his expenses. Currently he is in arrears in the alimony order a minimum of $96,000 due to the recently confirmed order retroactive to August 18, 1998. The plaintiff claims that alimony arrears are $122,000. The determination of the alimony arrears is not at issue in this motion. The plaintiff has filed a Motion for Contempt dated June 8, 2005 (#307.00) addressing that issue. That motion will be argued and decided in the future.
The current alimony order is $6,500 a month and his current gross income is $1,640 a month.
Having found a substantial change of circumstances, the court must now consider the statutory factors of General Statutes § 46b-82. The above findings of facts outline these statutory considerations for the defendant.
The plaintiff is 68. She is employed at Greenwich Hospital working fifteen hours a week as a counselor and therapist. She has been working there for the past eleven years. Her gross earnings are $1,625 a month and her work hours are flexible. In addition, she receives $797 social security monthly and investment income of approximately $250 a month. She is covered by Medicare Part A and B. The plaintiff is a cancer patient and is currently under medication for both thyroid and breast cancer. She has numbness in her arms and sides due to a stroke and is concerned that she may have a recurrence of the cancer. She sees a surgeon, an endocrinologist, an oncologist, a heart specialist and a neurologist, all in the last few months. Based on her age, health and training, the plaintiff has little opportunity to increase her income. There are no retirement benefits at Greenwich Hospital. She is not paid for holidays CT Page 13351-hy and there are no vacation benefits. She has a small IRA of $6,000 and stock and bank accounts of an additional $78,215. She owns her own home, which has equity of at least $695,000.
The August 24, 1979 decree divided the parties' assets. The court cannot consider in this modification motion the parties' current assets except as they relate to the production of income or their capability of income production. The parties' two homes are not capable of producing income. The defendant's other assets may produce income. There was no evidence of that possible income. The court has no authority to order the defendant to sell assets in order to pay future alimony when the court has found he has no earning capacity.
The court has no authority to estimate potential income on its own and cannot take judicial notice of current investment returns without giving the parties an opportunity to be heard on the subject being judicially noticed. Moore v. Moore, 173 Conn. 120, 123-24 (1977); Izard v. Izard, 88 Conn.App. 506, 508 (2005).
The defendant is seeking to modify a periodic alimony order of $1,500 per week by either terminating, suspending or reducing the alimony to one dollar a year. The defendant has paid alimony for twenty-six years. Based on the May 24, 2005 Appellate Court decision confirming the $1,500 per week alimony order retroactive to August 18, 1998, the defendant owes at least $96,000 in alimony arrears. The defendant anticipates paying that alimony arrears to the plaintiff over the next few years in periodic payments or he may be required to make lump sum payments. Again, those issues are not before this court.
CONCLUSION
The court finds that there has been a substantial change in the financial circumstances of the defendant. Since 2002 his health situation has deteriorated substantially. In November 2004 he sold his entire interest in the sole source of his income in an arm lengths transaction and is unemployed. He is 67 years of age.
A bona fide retirement prior to age 65 has been held sufficient to warrant a downward modification of periodic alimony. Gay v. Gay, 70 Conn.App. 772, 773 (2002). A parties' illness and a loss of employment has been held to be a substantial change in circumstances. Berry v. Berry, 88 Conn.App. 674, 684 (2005). Time limited alimony terminating at the age of 62 has been upheld. Clark v. Clark, 66 Conn.App. 657, 668-69 (2001). CT Page 13351-iz
The court, having applied General Statutes § 46b-82, finds that the permanent alimony order of $1,500 per week must be modified.
ORDER
Both motions for modification #287.00 and #301.00 are granted. The defendant is ordered to pay to the plaintiff periodic alimony of $1.00 per year. This order is retroactive to February 15, 2005 pursuant to the parties' written stipulation dated February 11, 2005 (#295.10). No further retroactivity is warranted. The parties shall exchange copies of their respective federal and state income tax returns for the tax years 2005, 2006, 2007 and 2008. Upon a proper motion filed by either party the exchange of federal and state income tax returns can be extended beyond 2008. CT Page 13351-ia