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Esse v. Esse

Superior Court of Connecticut, Judicial District of Fairfield, Bridgeport

August 19, 2015

Anne A. Esse
Todd W. Esse


Mary E. Sommer, J.

I. Introduction and Summary of Facts

The plaintiff and the defendant have each filed post judgment motions which were heard together by the court on the following dates: August 27, 2014, October 29, 2014, December 16, 2014, March 31, 2015 and April 1, 2015. The court heard closing argument on April 22, 2015. The plaintiff has filed a motion for contempt (295.00) in which she alleges that the defendant has violated the terms of the dissolution agreement and court orders resulting in an alimony and child support arrearage. She also seeks further orders requiring the defendant to pay the cost of college education for their college age children and other expenses. The defendant has filed a motion to modify child support orders (285.79). Although the court must apply different legal standards to decide the subject motions, the factual basis for the parties' respective positions overlap and many of the issues converge. The following is a summary of facts relevant to the court's consideration of the parties' motions.

The marriage of the plaintiff and the defendant was dissolved on July 8, 2004. There are three children issue of the marriage; James (to whom the parties refer as Jake), born January 1994, Genevieve, born February 1997 and Caitlin, born March 2001. The final judgment of dissolution provides, inter alia, that the defendant shall pay to the wife unallocated alimony and child support in graduated payments and the cost of private school for the children.

II. Defendant's Motion To Modify Child Support and Plaintiff's motion for Contempt

On July 5, 2014, the defendant filed a motion to modify court orders regarding his responsibility for payment of private primary and secondary schools and post-secondary education. As stated in paragraph 9 of the dissolution orders, the defendant is responsible for tuition, books and fees at the children's private primary and secondary schools to the extent that the expenses are not covered by scholarships. The terms of the agreement provide that the husband has the right to approve of each educational institution which approval shall not be unreasonably withheld. In his motion for modification and in defense of the plaintiff's motion for contempt, the defendant alleged that he has suffered a substantial deterioration of his financial circumstances since the last order concerning responsibility for educational expenses. The defendant asserts that he is not culpable for this change in his financial circumstances. The defendant seeks relief pursuant to Conn. Gen. Stat. § 46b-66(b) and 46b-86(a).

The plaintiff's motion for contempt is based on the arrearage owed to her for shortfalls in the amount of unallocated alimony and child support by the defendant from October 2012 through the date of expiration July 31, 2013.

At the time the parties' motions were filed, their oldest child Jake was a rising sophomore at Dartmouth College, Genevieve was entering her senior year at Greens Farms Academy and Caitlin was registered by the plaintiff to attend seventh grade admitted at a Montessori school. The defendant did not approve of Caitlin's enrollment in the Montessori school and has refused to pay for her tuition.

Jake remains enrolled at Dartmouth College and will be a junior in the 2015/16 academic year. The defendant has committed to continue to pay for Jake's expenses at Dartmouth to allow him to complete his college education there. In order to do so the defendant is relying on loans from his family in the approximate amount of $62, 000.00 annually.

Subsequent to the filing of the subject motion for contempt, the administration of the Montessori school as well as that of Greens Farms Academy determined that their curriculum programs were not an appropriate match for Caitlin's academic needs. Plaintiff enrolled Caitlin in the New Canaan public school system (Saxe Middle School) where she has completed eighth grade and will attend New Canaan High School in the fall 2015. Genevieve withdrew from Greens Farms Academy and enrolled in New Canaan High School where she completed her senior year in June 2015. As a result of these decisions, the issue regarding the defendant's obligation for private secondary school education for both Genevieve and Caitlin is moot.

Genevieve has been accepted for admission to Yale University, Brown University and the University of Virginia in the fall of 2015. As a member of her high school varsity crew team, Genevieve has received athletic scholarship assistance from both schools. The financial aid package from the University of Virginia is greater than that offered by Yale. Genevieve would prefer to attend Yale University. Defendant testified that he is unable to contribute any amount to Genevieve's post-secondary education expenses. He stated that he has depleted his resources to pay for living expenses and ongoing obligations, no longer has any savings and cannot access credit. His sole source of income at this time is from a hedge fund consulting contract and a commercial rental property. He maintains that he is not able to commit to paying for her college education due to his lack of employment and the resulting diminishment of his assets over the last four years.

IV. Defendant's Income History

Defendant has had a long, and until approximately 2012, successful career as a commodity investor specializing in the energy sector. Review of the defendant's financial status and earning history is relevant to both his motion for modification and the plaintiff's motion for contempt. Prior orders, including those entered at the time of dissolution, were based in large measure on the defendant's high earning history. The evidence before the court included a comparison of defendant's financial affidavits filed May 9, 2011 and February 24, 2014. This evidence reflects that as of May 9, 2011, the defendant listed average monthly net income of $61, 532.00 based on his share of profits from Sasco Energy Partners, LLC. His annual 2011 distributions from Sasco Energy Partners, LLC totaled $2, 073, 010 or $172, 750 per month. His 2011 passive income from various investments listed on his affidavit was ($724.99), resulting in an adjusted monthly income of $61, 107.01. During the same tax reporting period, the defendant's expenses which were related to debt service on real property were: Sasco Hill Road, Fairfield-$73, 746, Stratton Mountain in Winhall, VT-$7, 779 and Sasco Cape Cod LLC in North Truro, MA-$4664. The defendant's other monthly expenses which are not directly related to real estate holdings were $173, 197.30. His total monthly expenses were $259, 406.30.

In contrast, the defendant's February 24, 2014 financial affidavit disclosed that he had reduced the monthly expenses incurred for owning and maintaining the Sasco Hill Road property from $73, 746 to $28, 391. He sold the Stratton Mountain property in 2014, with his share netting approximately $100, 000. Following completion of construction of the house in North Truro, MA, monthly mortgage fees and operating expenses increased to $14, 348. Defendant reduced his other monthly expenses to $30, 790. His total monthly expenses as of February 2014 were $73, 529. In addition, the defendant remained responsible for payment of unallocated alimony and child support, all medical expenses and private school tuition during this period. Roughly estimated, including an adjustment to reflect the change in unallocated alimony and child support and the change to public school for Genevieve and Caitlin, the defendant's monthly expenses in 2014 were one-third of what they had been in 2011.

During this same period, the defendant's income decreased far more drastically. The defendant reported income of 9.5 million dollars on his 2010 tax return. In stark contrast, his 2012 1040 tax return reflects ordinary income of $239, 556 and adjusted gross income of $166, 793 and his 2013 1040 tax return reflects adjusted gross income of $157, 574.

The defendant remains engaged in the same energy trading business as he was at the time of Judge Fisher's original dissolution orders in 2004 and when Judge Winslow issued orders in this case on May 9, 2011. Although the energy trading hedge fund business is extremely volatile, defendant had been very successful for many years. He appeared to have successfully made the transition from his position at Sempra Energy Partners to managing an energy trading hedge fund in which he had a controlling interest. The income which he earned prior to 2012 enabled him and his family to enjoy what by many standards would be considered a luxurious lifestyle. He was able to afford to pay for primary and secondary education in private school for the parties' three minor children and the three children he has in his present marriage. He also was able to accumulate assets which included ski vacation homes, interests in a boat and airplane, fine wine and watch collections, valuable art, numerous expensive motor vehicles. With his wife he jointly owns a home with an estimated value of six million dollars on a 5.6-acre estate located on Sasco Hill Road in Fairfield and a custom built vacation home in North Truro, Massachusetts. Unfortunately, these assets, which are heavily leveraged, are financial albatrosses burdening the defendant and do not provide any resources for the defendant to meet his financial obligations.

In April 2013, the defendant lost substantially all of his interest in Sasco Energy Partners LLC hedge fund due to a real estate transfer by the defendant which was determined to be fraudulent. Although the defendant filed a malpractice action against the attorney upon whose advice he relied in that transaction, the defendant's actions were responsible for a precipitous, unanticipated decrease in the value of the hedge fund and its ability to maintain clients and attract funds. As the party responsible for the decision, not only did the defendant have to reduce his share of the hedge fund business from a controlling interest of 56% to a nominal interest of 10%, he has become in essence, a persona non grata, in the field of energy investing. Established clients were no longer unwilling to entrust their money with him and the fund ultimately failed. Despite his efforts to rebrand and reestablish himself professionally, he has not been able to attract high level investors who will pay him to manage energy investments. In addition to defendant's personal misfortune as a hedge fund manager, energy as a traded commodity has a volatile history which has been exacerbated by recent market events globally and domestically. As noted previously, during the period when he had multi-million dollar annual income, defendant accrued luxury assets, many of which were heavily leveraged and expensive to maintain. These same assets are largely illiquid and or " under water." They thus became financial liabilities once his fortunes diminished.

At the same time that defendant's hedge fund began to fail in 2012 defendant overdrew from his partner account to satisfy the debt obligation for the Cape Cod property which had exceeded its budget. In addition to a first mortgage of 1.9 million dollars, the Cape Cod property is also encumbered by a 3.1 million dollars lien in favor of the trust for Jack Esse. This lien secures compensation for which Jack was entitled as a result of funds ordered for his 'benefit from the 9/11 victim's compensation fund.

In April or May 2014 the defendant entered into a consulting agreement with a commodity hedge fund known as Harbor Square Capital LLC for a monthly fee of $15 or 20, 000, which then increased to $25, 000 per month as of July or August 2014. He does not have an equity interest in Harbor Square Capital LLC and does not receive any employee benefits or reimbursement for his business expenses which are approximately $6, 000.00 per month. This consulting fee and rental revenues described below are his sole source of income now.

V. Real Property

Defendant's primary residence is located at 405/21 Sasco Hill Road. As noted above, although it is valued at six million dollars, it is heavily leveraged. As of March 2015, the Chase Home Finance mortgage was eighteen months in arrears and the caliber Home Loan mortgage was eight months in arrears. These encumbrances exceed the estimated value of the property by approximately $1, 068, 208. There was no specific evidence introduced at trial as to the position of any mortgagors of the property at this time or the exact amount of any arrearages. In addition to the debt on the property, the expense of maintaining a property such as this further burdens it financially despite defendant's efforts in recent years to reduce maintenance costs.

Under the auspices of Sasco Farms, Cape Cod, LLC, the defendant owns a vacation home which he built in North Truro, MA with an estimated fair market value of $3, 331, 000. In the defendant's words, the construction costs went " wildly over budget." This property first rented in the summer of 2014 and shows a monthly loss of $5, 000.00 from 16-20 weeks of seasonal rentals due to mortgage debt, taxes and maintenance costs. It is heavily encumbered by a 1.9 million dollar mortgage and a 3.1 million dollar lien in favor of the defendant's adopted son Jack. Due to its location, it can only be expected to produce rental income during the warmer New England months. As of the ...

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