Opinion
FBTFA124041710S
04-26-2016
Edward Vincent v. Christine V. Vincent
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Howard T. Owens, Judge Trial Referee.
Before the court are six postjudgment motions:
#131.79-Plaintiff's Motion for Modification-dated May 8, 2015;
#134-Defendant's Motion for Contempt relating to medical insurance-dated October 9, 2015;
#135-Defendant's Motion for Contempt re: Child Support dated October 14, 2015;
#138-Defendant's Motion for Contempt-dated January 22, 2016;
#156-Plaintiff's Motion for Contempt dated February 2, 2016. This motion has been resolved pursuant to the parties stipulation of facts, postjudgment, dated February 10, 2016, wherein it is agreed that the defendant owes the plaintiff a total of $3,667.99 in expenses covering a period commencing October 29, 2013. The parties shall submit all optical related expensed to their insurance carriers and the parties shall share equally in any reimbursement for same. In addition the plaintiff owes the defendant $516.34 to reimburse her for the children's short-term insurance coverage from October 9, 2015 through December 31, 2015;
#158-dated February 9, 2016 was resolved in open court in February 10, 2016 with respect to plaintiff's motion for modification (131.79).
The judgment of dissolution incorporated by reference the parties' Separation Agreement dated October 29, 2013. The plaintiff was ordered to pay child support in the amount $12,500 per year, per child in equal monthly installments of $1041.67.
With respect to plaintiff's Motion for Modification (131.79) dated May 8, 2015 the Court orders that the same shall be denied. On February 11, 2015 the plaintiff was discharged from his employment at LPL Financial, LLC because his employer found that plaintiff had violated the employer's policies relating to outside business activities. This was based on an order of the Financial Industry Regulatory Authority (FINRA) who had conducted a thorough investigation of LPL and the conduct of the plaintiff as well as the history of the plaintiff.
On January 12, 2016 after failing to supply requests for documents and information to FINRA the plaintiff was barred from associating with any FINRA member in any capacity. The plaintiff filed a notice of appeal within the statutory period allowed for same.
Due to his termination the plaintiff can no longer work for LPL Financial. It should be pointed out that plaintiff his recently filed an appeal relating to his discharge. Based on the evidence presented and the pending adjudicating rights there is little likelihood of his reinstatement with LPL. Even if he were to be reinstated any remaining book of business would be essentially a substantially depleted. Plaintiff since his discharge pursues debatable economic ventures.
At the time of the modification hearing plaintiff was receiving $868 in dividends and income. His weekly expenses from the time of dissolution to February 2016 increased by $370.00. There was a substantial diminution in his assets from October 29, 2013 from $9,102,340.00 to $6,350,216.00 while there was an increase in defendant's assets during this time frame.
At the time of dissolution the plaintiff's gross cash income was $1,920.00 and defendant's cash income was zero. The child support guidelines presumptive support order was $272.00 per week but the parties deviated upwards to $481.00 based on assets, liabilities and the best interests of the children. Defendant's net worth was $3,466, 3 82.00 at the time of dissolution. Pursuant to defendant's LPL account statement she received $152,986.00 in dividend and interest income for the year 2015.
The burden is on the plaintiff to prove that there has been a substantial change in circumstances.
Connecticut General Statutes (" C.G.S.") § 46b-86 governs the modification of an alimony or support order after the date of a dissolution judgment. When, as in this case, the disputed issue is alimony or child support, the applicable provision of the statute is § 46b-86(a), which provides that:
. . . a final order for alimony [or child support] may be modified by the trial court upon a showing of a substantial change in the circumstances of either party . . . Under that statutory provision, the party seeking the modification bears the burden of demonstrating that such a change has occurred . . . To obtain a modification, the moving party must demonstrate that circumstances have changed since the last court order such that it would be unjust or inequitable to hold either party to it. Because the establishment of changed circumstances is a condition precedent to a party's relief it is pertinent for the trial court to inquire as to what, if any, new circumstance warrants a modification of the existing order . . . Fox v. Fox, 152 Conn.App. 611, 620, 99 A.3d 1206 (2014) .
There are a number of cases in which a motion for modification of support has been denied, despite a substantial change in circumstances, when the moving party's culpable conduct formed the sole basis of the substantial change in circumstances.
In Sanchione v. Sanchione, 173 Conn. 397, 407, 378 A.2d 522 (1977), the court held that culpable conduct precludes a threshold showing of a substantial change in circumstances. " Nearly every human action is voluntary, but not every voluntary action is fault worthy. The words used by this court in Sanchione-" fault . . . extravagance, neglect, misconduct or other unacceptable reason" -underscore that the crux of the inquiry is culpability and not voluntariness.
" An analysis that begins and ends with voluntariness renders meaningless the critical distinction enunciated in Sanchione between acceptable and unacceptable reasons for an alleged substantial change in circumstances." Olson v. Mohammadu, 310 Conn. 665, 679, 81 A.3d 215, (2013).
The nationale in Sanchione was recently affirmed in Olson . The court held that if: " a party's voluntary action gives rise to the alleged substantial change in circumstances warranting modification, the court must assess the motivations underlying the voluntary conduct in order to determine whether there is culpable conduct foreclosing a threshold determination of a substantial change in circumstances." Olson at 684.
Both parties testified that the plaintiff is no longer working at LPL was " not by choice." In Schade v. Schade, 110 Conn.App. 57, 954 A.2d 846 (2008), our Appellate Court upheld the trial courts effective denial of Mr. Schade's Motion for modification. Schade had a $2,308 per week support order. At the time of the dissolution. Mr. Schade earned $325,000 per year as the cofounder, shareholder, vice president and employee of the Stone Insurance Agency. In July 2005, the president of the agency hired an attorney to investigate the possibility of improprieties in certain financing agreements and insurance contracts involving Mr. Schade. On September 9, 2005, Mr. Schade was discharged from his employment. In November 2005 Schade filed a Motion for modification and in December 2005 Ms. Schade filed a Motion for contempt regarding nonpayment of support. In February 2006, Schade began consulting for a Massachusetts based insurance agency, earning $50,000 per year. The court specifically found that " there was only one reason for the change in the employment status of the defendant-his own actions in making inaccurate representations in financing agreements . . . His very own affirmative actions placed him in that situation." Id. at 60. The court found that Schade " was licensed to sell various forms of insurance and could have regained his securities license but had not made any effort to do so. It also found that [Mr. Schade] had not met with any employment recruiters, despite his talent and experience."
The court found Schade in contempt and ordered him to pay all alimony due.
The plaintiff was terminated because of his own actions of violating his employer's policy regarding outside business activities.
The plaintiff has yet to secure any employment income in more than a full year since being discharged from employment.
In Thiede v. Thiede, No. FA094110365, 2012 WL 5476889 (Conn.Super.Ct. Oct. 18, 2012), the court found that no modification of Mr. Thiede's support order was warranted. Mr. Thiede based his claim upon the fact that since the entry of the last support order he was laid off from his employment and he was only collecting unemployment compensation. Mr. Thiede testified that he had: (a) applied for only six positions since leaving his employment, (b) not applied for any positions outside the state of Connecticut, (c) not applied for employment outside his field of expertise. Rather, than continue to seek employment Thiede chose to open a business instead.
The court found that Thiede's termination of employment was involuntary, however it found that he voluntarily chose not to use his best efforts to seek re-employment, instead, he has elected to pursue his long time desire of being a business owner, despite Theide being laid off, the court still denied his Motion for modification in part because he elected to pursue his long time desire of being a business owner. In this case the plaintiff had elected to pursue his long time desire of being a business owner instead of using his best efforts to seek other employment.
In, Bauer v. Bauer, No. FA084041506S, 2015 WL 2260831 (Conn.Super.Ct. Apr. 16, 2015), the court found that Mr. Bauer's loss of employment and resultant drop in income constituted a substantial changes in circumstances that warranted a modification. The court distinguished the case from Olsen, on the grounds that Bauer's long-time employer restructured his department and he was laid off. His separation from employment was not brought about by his culpable conduct.
In Mundell v. Mundell, 110 Conn.App. 466, 955 A.2d 99 (2008), Mr. Mundell filed a Motion to modify his support obligations because he had been fired from his job and denied unemployment compensation. Mr. Mundell had lost his source of income when the state terminated his employment for violating its policies. The court found the fact that Mr. Mundell brought his financial predicament on himself foreclosed him from legitimately escaping his relatively moderate financial obligations.
Continuation of plaintiff's relatively moderate financial obligation is not unfair and improper, and his Motion to modify is denied. A substantial change in circumstances alone does not compel a modification of child support; a party moving for a modification of a child support order must clearly and definitely establish the occurrence of a substantial change in the circumstances of either party that makes the continuation of the prior order unfair and improper. Weinstein v. Weinstein, 104 Conn.App. 482, 492, 934 A.2d 306 (2007). Plaintiff has not clearly and definitively established that it is unfair and improper for him to continue to pay $12,500 per child per year in child support when he has $6,350,216 in assets.
In Schade, the court found that Mr. Schade had not made any alimony payments to the Mother since mid-November 2005. Mr. Schade had perpetuated all of his other personal expenses, including $65,000 in attorneys fees. He purchased a gift of diamond earrings for his girlfriend and a $16,000 car for his daughter. The court found that " despite his assertion of being unable to keep up his alimony payments, he was looking into buying a more expensive home for himself." Schade at 60-61.
The plaintiff failed to make any support payments since November 2015, yet he maintained, his other personal expenses. Despite the plaintiff being unemployed for less than Fifty (50) days in 2015, his spending increased from $175,032.78 in 2014 to $187,912.69 in 2015. Pursuant to the plaintiff's 2013 and 2016 Financial Affidavit & his expenses increased from $158,228 in 2013 to $177,528 in 2016. This includes approximately $30,000 per year to maintain his share of a vacation home in Cape Cod. The plaintiff has increased his personal travel and vacation expenses from $115 per week at the time of divorce to $577 per week. This does not include the $53 per week in business related travel as listed on his February 2, 2016 Financial Affidavit. The increase in travel and vacation expenses is nearly the same amount as plaintiff's current child support obligation. If the plaintiff is able to spend approximately $60,000 per year on travel and vacation as well as maintaining his Cape Cod vacation home, he must continue his $12,500 per child per year child support obligation.
The July 1, 2015 Connecticut Child Support and Arrearage Guideline Regulations states Connecticut General Statutes § 46b-215a-1(11): " 'Gross income' means the average weekly earned and unearned income from all sources before deductions, including but not limited to the items listed in subparagraph (A) of this subdivision, but excluding the items listed in subparagraph (B) of this subdivision." Subdivision (A) states: " The gross income inclusions are: (xvii) interest, dividends and annuities."
" The role of both earning capacity and investment income are governed by General Statutes § 46b-84, which is entitled, '[p]arents' obligation for maintenance of minor child' and provides that, '(d) [i]n determining whether a child is in need of maintenance and . . . the amount thereof, the court shall consider the . . . earning capacity, amount and sources of income [and] estate . . . of each of the parents . . .' There is no indication in § 46b-84(d) that the trial court should calculate the 'earning capacity' and 'amount and sources of income' of each parent in a different manner." Weinstein v. Weinstein, 280 Conn. 764, 772-73, 911 A.2d 1077 (2007).
While " it also is especially appropriate for the court to consider whether the [party] has wilfully restricted his earning capacity to avoid support obligations"; we never have required a finding of bad faith before imputing income based on earning capacity. We can perceive no reason to adopt a different standard for the ascertainment of investment income than the one we employ for the ascertainment of earning capacity. Id.
In Weinstein, our Supreme Court extended the earning capacity analysis to income derived from investments, and concluded that in calculating a parent's income for purposes of a support obligation, a court may impute an ordinary rate of return to an asset that yields less than an ordinary rate of return. An ordinary rate of return is the prevailing rate of return for secure investments.
Given that both income earned through employment and investment income may be considered in a court's calculation of an alimony award, it follows that there is no functional difference between imputing income to the supporting spouse earned from employment versus that earned from investment. In both instances, the supporting spouse is required to earn more from an 'asset, ' either his or her human capital in the form of employment or his or her investment capital, or risk having more income imputed to him or her . Id. at 771.
Based on that reasoning, the Weinstein Court imputed a 2.96% interest rate on the Father's investment income, which was based on the five-year treasury rate on the date of the hearing, while the Father's actual annual rate of return was 1.24%. Further, the Court stated the burden is " on the party holding the investment to show why the imputation of income is improper in the given circumstance." Id. at 773.
In Fox v. Fox, F5TFA030197091S, 2011 WL 1565891 (Conn.Super.Ct. Mar. 29, 2011), the Court found that the Husband's actual rate of return was .00786%. The Court imputed an annual rate of return of 2.23% which was the actual rate of return of the Wife's investment income during the relevant time period. There, neither party disputed the court's ability to take judicial notice of the various historical rates of return listed on the then operative version of Federal Reserve Statistical Release H-15. Our Appellate Court stated in Footnote 14, Fox v Fox, 152 Conn.App. 611, 99 A.3d 1206, (2014): " Like the court in Weinstein, we express no opinion as to whether any of the rates of return found in 'Federal Reserve Statistical Release H-15' is a proper ordinary rate of return to impute to a party's investment income for the purpose of calculating that party's child support obligations."
In O'Toole v. O'Toole, FSTFA010187057S, 2007 WL 1246970 (Conn.Super.Ct. Apr. 12, 2007), the Court presumed an ordinary rate of return of 4%, where the Husband listed zero investment income. It reasoned that: " The recent case, Weinstein v. Weinstein, 280 Conn. 764, 911 A.2d 1077 (2007), approves the imputation of an ordinary rate of return to an asset that yields less than an ordinary rate of return, i.e., the prevailing rate of return for secure investments."
Pursuant to the plaintiff's February 2, 2016 Financial Affidavit his actual rate of return on only his bank and investment accounts is only 1.16%, which is below the prevailing rate of return for secure investments. This Court has the clear authority to impute an ordinary rate of return on the plaintiff's assets that yield less than an ordinary rate of return.
The July 1, 2015 Connecticut Child Support and Arrearage Guideline Regulations states Connecticut General Statutes § 46b-215a-5c(b)(1): Criteria for deviation from presumptive support amounts. In some cases, a parent may have financial resources that are not included in the definition of net income, but could be used by such parent for the benefit of the child or for meeting the needs of the parent. The resources that may justify a deviation from presumptive support amounts under this subdivision are limited to the following: (A) substantial assets, including both income-producing and non-income-producing property.
At the time of dissolution, the parties deviated from the presumptive amount of child support $272 to $481 per week, based in part on the division of assets/liabilities and best interests of the child. The percentage of the upward deviation was 56.5%. Pursuant to the terms of the Separation Agreement, the plaintiff's net worth at the time of dissolution was $5,757,187, and the Mother's net worth was $3,466,382.
The plaintiff's current net worth, pursuant to his February 2, 2016 Financial Affidavit is $5,736,989. These substantial assets includes both income producing and non-income producing property that are not included in the definition of net income. The defendant's current net worth, pursuant to her February 2, 2016 Financial Affidavit is $3,170,159. The division of assets and liabilities is nearly the same percentage as it was at the time of dissolution. There was no evidence presented during the hearing that it was no longer in the children's best interest to continue with the deviation. The 56.5% upward deviation to the presumptive amount of child support is ordered.
A. #131.79-Father's Motion to Modify.
The plaintiff's Motion for Modification and/or Order is denied in consideration of Olson, Sanchione, Schade, Thiede, and Mundell .
B. #134.00-Defendant's Amended Motion for Contempt re: Insurance is denied.
C. #135.00-Mother's Motion for Contempt re: Child Support.
The Father is in contempt of this Court's orders dated October 29, 2013. Pursuant to Stipulated Exhibit E, from March 2015 through January 2016, the Father has a child support arrearage in the amount of $11,460.17. Pursuant to Stipulated Exhibit D, from October 29, 2013 through January 31, 2016, the defendant owes the plaintiff $921.03. The plaintiff shall immediately pay to the defendant $10,539.14.
D. #138.00-Mother's Motion for Contempt re: Discovery is denied.
E. #156.00-Plaintiff's Motion for Contempt re: Medical is denied.
The plaintiff's Motion is denied as it was resolved by Exhibit D.
F. Legal Fees.
Pursuant to (i) § 46b-87, (ii) Paragraph 13.4 of the Separation Agreement, and/or the plaintiff's misconduct, including but not limited to: (a) violating LPL and FINRA rules and regulations causing him to be fired, (b) allowing the children's medical and hospitalization insurance to lapse twice, (c) failing to have any life insurance in violation of Paragraph 6.1 of the Separation Agreement, (d) unilaterally deciding to modify his child support downward, and then terminating child support all together after November 2015, (e) failing to provide his Financial Affidavit in accordance with court order, (f) failing to provide documents in accordance with court order, (g) filing incorrect tax returns, and (h) not appealing his suspension until the middle of trial, the plaintiff shall pay $12,500 to the defendant towards her attorneys fees and costs within 30 days from the date of this judgment.
" In the event that it shall be determined by a Court of competent jurisdiction that either party shall have breached any of the provisions of this Agreement or of any Court decree incorporating by reference or otherwise his Agreement or portions hereof and regardless of whether the party is adjudicated in contempt, the Court shall have discretion to order the offending party to pay the other party reasonable attorneys fees, court costs and other expenses incurred in the enforcement of the provisions of this Agreement and/or judgment or decree incorporating any and all of the provisions hereof."