Larabie v. Larabie

          CORRECTED MEMORANDUM OF DECISION

          Prestley, J.

         (Correction to Memorandum of Decision dated March 29, 2019. Correction made is re: Clarification of the parties' responsibilities for the 2018 summer camp fees and the 2018-19 private school fees.)

         The plaintiff wife initiated this action by way of a complaint filed on June 9, 2017, seeking the dissolution of the parties' marriage, based on irretrievable breakdown. A cross complaint was filed by the defendant on June 16, 2017. The matter was bifurcated on May 17, 2018, resolving the issues of custody of the minor children, temporary child support and an equal division of unreimbursed medical expenses. The parties' financial issues remained to be resolved. Updated financial affidavits were ordered to be submitted by both parties.

         A Motion to Modify Child Support was filed by the defendant on July 18, 2018. On October 9, 2018, the parties agreed that any modification to the child support order would be retroactive to the service date of the Defendant's Motion to Modify or August 15, 2018. Various other motions were filed by each party and it was agreed that all pending motions would be heard at trial. The parties also agreed that the defendant would be responsible for expert witness James Russell's fees subject to an adjustment at the time of trial.

         A fully contested trial was held before the undersigned on November 26, December 13, 2018, February 11 and March 4, 2019. Both parties testified as well as James Russell, an expert business valuator/income analyst who had been retained to analyze the defendant's income from his business.

         The court has fully considered the criteria of Connecticut General Statutes, including but not limited to, §§ 46b-81, 46b-82, and 46b-62 as well as the evidence, applicable case law, the demeanor and credibility of the parties and witnesses and arguments of counsel in finding the facts and in reaching the decisions reflected in the orders that issue in this decision.

         FINDINGS OF FACT

         The court finds that it has jurisdiction of this matter and that all statutory stays have expired. The parties have resided continuously in the State of Connecticut for at least one year prior to filing this action. Neither party has received state or local cash assistance during the marriage. The allegations in the complaint have been proven and are true. The marriage has broken down irretrievably with no hope of reconciliation. This court also finds the following by a fair preponderance of the evidence.

         Background

         The parties were married on April 16, 2011 in West Hartford, Connecticut. They are the parents of two minor children: Adrianne, born on January 25, 2011; and Domenic, born on December 6, 2013.

         The plaintiff is 36 years of age. She is in good physical health but claims that she has been diagnosed with a major depressive disorder and an anxiety disorder. In 2012, she earned her Master's Degree in clinical mental health counseling. After she earned her Master's Degree, the plaintiff was promoted at her job at ICAPS to adult outpatient. In 2013, she took a six month maternity leave. She worked part-time in a per diem position until she established her own private practice between 2014 and 2015.

         In 2014, the plaintiff established an LLC called Heart Matters. From events that occurred in her family, she developed an interest in trauma and sex addiction and its impact on partners. In this business, she counsels children and families who are facing these issues. At some point, the plaintiff became certified in Betrayal Trauma for Sex Addicted Partners. She claims to be one of four individuals in the State of Connecticut who specialize in this area. In this business, she meets face to face with clients, some for as long as eight continual hours in a day.

         In 2016, the plaintiff began to realize the importance of having passive income and she established another LLC called Integrated Wellness. This is a consulting business where she teaches others to provide the same therapy for people who have suffered similar traumatic experiences. She also rents out space to other professionals and receives rental income. She believes that this business will ultimately allow her to spend more time with the children. At this point, she works in excess of sixty hours during the week in both businesses, attends conferences, but claims to earn very little although the amount of her gross receipts seems to suggest otherwise. She comingles business and personal expenses and income, making it very difficult to track. She has also opened accounts with third parties and transferred money to those accounts, again making these sums difficult to access or track.

         The plaintiff earned $67, 899 in 2015. She claims that her income dropped drastically in 2016 to $6, 534, even though she established a second business that year. She also claims to earn little to no money even though she meets with clients 35-40 hours per week in Heart Matters and also manages that LLC for significant hours per week. She manages Integrated Wellness LLC for 15-20 hours per week and likens herself to “that Tasmanian Devil” - always moving. Currently she believes that she earns only $638 net income per week from Heart Matters and $114 net income per week from Integrated Wellness. She has hired billing staff whom she pays 7% per claim. When questioned, the plaintiff cited her “trauma experiences” that make her forget numbers. She claims she pays bills for one business out of the other's accounts and that it is all “gibberish” to her. She testified that she has never looked at the income and expense reports generated by her business software. Finally, she claims that she couldn't have received cash payments from any clients since they are not listed anywhere in her records.

         On cross-examination, the plaintiff conceded spending $900 on a recent birthday party for one of the children, but also opined that she is two months behind on her rent of $2, 750 per month. A review of her credit card expenditures indicate that she has visited the Red Door Spa, that she shops at Ethan Allen for office furniture, and that she has traveled out of state on many occasions, mostly for business. She claims to have invoices to back up her testimony and records, but she produced none. This court finds that the plaintiff's testimony with respect to her earnings is not particularly credible and finds that her earning capacity is $70, 000 gross income annually.

         The defendant is 43 years of age and in good health. He is originally from Canada and his status is a resident alien with a green card. He has a two year degree in resources drilling and blasting and has worked for many years in this field. From 1995 to 2016, he was employed by Aquafor Drilling and Testing where he earned approximately $140, 000 gross annually. In November 2015, the company was bought by Cascade and in July 2016, after an arrest, he was “let go” due to a claimed reduction in force. He was given a twelve week severance package.

         In September 2016, the defendant started a company called Ground H2O, naming the plaintiff as a partner. At times, he drills only a few days per month and at other times he drills many days per month. In 2015, he earned $81, 000 net from a bonus from his prior job and $110, 000 gross take home pay from his old job and his new business. In 2017, his self-employment business' annual gross income was $127, 910. His personal gross income for 2018 was $183, 000.

         James Russell, an expert in business valuations and analyzing income, was retained by the parties to conduct an income analysis of the defendant's company, Ground H2O. The defendant paid the initial retainer of $3000 for the expert witness and requested that the plaintiff pay the remaining amount of $2900.

         According to Mr. Russell, the defendant's company is a “one person shop” and the defendant acts primarily as a subcontractor. He does environmental work, monitors soil, and drills when necessary. He does not maintain a profit or loss statement. The company was originally a LLC but then was switched to an S Corporation in 2018. Mr. Russell reviewed extensive records, and based on his analysis, found that the defendant can reasonably be expected to draw $161, 616 gross annual income from his business. He also believes that the company could sustain a weekly draw of between $3000 and $3500 (between 152, 000 and $183, 000 gross income annually).

         The defendant argues that the expert's analysis does not account for his need to purchase certain expensive equipment to run and to grow his business. He cited some examples such as the need to purchase an air compressor rather than renting it and the need for certain other tools that will allow him to drill efficiently. He also cited a need to hire an employee at a cost of $20 per hour to assist him in the business, an expense that he has thus been unable to afford. He believes that the $120, 000 gross annual draw figure he proposes is a more realistic number that will allow him to keep money in the business for capital expenditures and to expand.

         This court agrees that the expert's $161, 616 income figure does not account for some of the items necessary for the defendant to purchase in order to maintain and grow the business. It is a lower figure, however, than that which the defendant actually earned in 2018. Also, taking into account the fact that the defendant has comingled personal and business expenses and has claimed that some clearly personal expenses are business expenses when they are not, this court finds Mr. Russell's testimony persuasive that the defendant can be reasonably expected to draw $161, 616 in gross personal income from the business.

         A series of events have occurred during this fairly short-term marriage, causing the breakdown of the parties' marriage. Without setting forth every detail, the defendant has a history of spending a significant amount of money patronizing many prostitutes. This history was unknown to the plaintiff at the time of the marriage and during its early years, between 2012 and 2015. While the plaintiff maintained the home, cared for the children and was employed part-time, the defendant engaged in these activities, exposed his family to STDs that he contracted and spent significant family resources. It was only after he was arrested for solicitation in July 2015 that the defendant disclosed to the plaintiff the full extent of what the plaintiff has called his “secret life.” At the time of disclosure, the defendant shared intimate and disturbing details of his activities, the plaintiff was understandably upset and, at one point, she was taken by ambulance to the hospital. She has been treated for adjustment disorder, PTSD, betrayal trauma, ADHD and Major Depressive Disorder. She has been prescribed various medications but has elected not to take them.

         The defendant has been diagnosed with sex addiction and has been treated for compulsive sexual behavior. Despite learning of these events in 2015, the plaintiff chose to stay with the defendant and to help him find treatment. She testified that she did so because she believes that “everyone has their brokenness and deserves an opportunity to heal.” At the same time, as a quid pro quo to her staying, she demanded complete control over the family finances. The defendant agreed.

         The defendant's activities, his disclosures and his arrest have had negative financial ramifications for the family. The defendant spent at least $100, 000 on his illegal activities, removing cash daily from the family's checking account or paying for services on credit cards. His employment suffered as well. His employer learned of his arrest and he was ostracized and disrespected by the people whom he supervised. This likely led to his job loss under the guise of a “reduction in workforce” in July 2016. This job loss occurred just after the parties had sold their family home; they then rented a home in Marlborough, CT. The defendant's sex offender treatment and the plaintiff's treatment for trauma and partner therapy cost the parties well over $100, 000.

         Once the plaintiff started to oversee the finances, she took complete control of all of the income coming into the joint checking account. This included unemployment income, an $81, 000 bonus check that the defendant had earned prior to his job loss, a twelve week severance package and the $58, 000 in proceeds from the sale of the marital home. Some of these monies were actually deposited in a separate account belonging jointly to the plaintiff and her father. If the defendant needed money, he had to ask the plaintiff for it.

         In September 2016, the defendant started a business called Ground H2O. In April 2017, the defendant told the plaintiff that he needed to withdraw $40, 000 to $50, 000 from his 401k retirement account to put into the business. The plaintiff would only allow the withdrawal if the defendant gave her a significant sum from that account. She argued that his paying her money from these and other sources was the only way that he could prove himself and make her trust him. She also threatened to leave him if he did not pay her.

         The defendant made two withdrawals from his 401k. The first withdrawal was in the amount of $149, 000. After the penalty was paid on the withdrawal, $139, 910 was deposited in the parties' joint account. Neither party paid distribution taxes on this withdrawal. The plaintiff took one half of the money. From the joint account, the defendant put $20, 000 into his business and paid $20, 000 on a credit card. The rest remained in the joint account. The plaintiff paid off a $23, 000 balance on her credit card, spent some and transferred the rest to a separate account.

         In May 2017, the defendant withdrew the remainder of his retirement money because he did not have enough money to run his business or pay the debt. Again, no distribution taxes were paid on that second $139, 910 withdrawal. When the money arrived in the parties' joint account, the defendant transferred it to a separate account in his name because he was afraid that the plaintiff would spend it all and that they would have nothing left. On May 24, 2017, the plaintiff learned of this withdrawal, she became angry, refused to let the defendant leave the house, and a domestic violence incident ensued where she was arrested for disorderly conduct and Assault 3. After the plaintiff's release, she removed all remaining money from the joint account left there by the defendant and deposited it into her Heart Matters Account. She then transferred money between her accounts, making it difficult for anyone to track.

         In October 2017, the parties received a joint $30, 000 tax refund which the plaintiff immediately deposited into her own account. It was only during this trial that the defendant learned that all of the money withdrawn from his bonus, the retirement 401k and the tax refund was gone.

         At some point, the parties separated. The plaintiff moved from the Marlborough rental house to a West Hartford home in October 2016, removed most of the personal items and furnishings and put some items in storage. The defendant rented an apartment or home in Simsbury, CT and filed the first dissolution action. He allowed the action to be dismissed due to what he believed to be a reconciliation between the parties. By February 2017, the defendant was staying at the plaintiff's residence in West Hartford. In June 2017, the plaintiff invited the defendant to a “family day”, then demanded $60, 000 from him which was the only remaining money from the 401k withdrawals held by the defendant in his separate account. She would not stop her demands until he wrote her out a check for that amount.

         That same month, the plaintiff filed for dissolution of marriage but the parties continued their relationship. By November 2017, the dissolution action had been dismissed and the parties were together as a couple. The plaintiff and the children moved near the defendant's apartment to be closer to him and when her brother passed away, the defendant stayed with her and supported her. The plaintiff suggested that the defendant could move in permanently and in March 2018, the defendant gave notice to his landlord. The plaintiff again demanded more money from the defendant. His zero balance on credit cards rose to $15, 000. She then refused to let him move in and without an apartment, he was forced to expend money to bring his children to hotels in order to exercise parenting time. In sum, between the months of July 2015 and April 2018, in addition to regular income, $368, 597 was expended from the defendant's retirement accounts, an $81, 000 bonus, the $58, 000 proceeds of the sale of the family home, and a $30, 000 income tax refund. Those amounts were spent or were transferred to unknown accounts, with the plaintiff benefiting substantially from those funds.

         In 2017, not only were distribution taxes not paid on account withdrawals, but income tax was not paid by the defendant either. This created a major tax shortfall for the defendant because the plaintiff then chose to file her income taxes separately from the defendant's. With respect to the 2017 taxes, the defendant owes $36, 000 to the State of Connecticut and $199, 000 to the Internal Revenue Service as of March 4, 2019. With respect to 2018 taxes, the defendant paid only $10, 000 in income taxes to the IRS for the first half of 2018. He changed his company's status midyear to an S Corporation and taxes were then automatically withdrawn from his payroll. As of March 4, 2019, the defendant owes an additional $30, 000 in income taxes.

         This court understands that the defendant's conduct during the early years of the marriage negatively impacted the family and may have set the stage for the plaintiff's conduct in the latter years. The defendant's treatment for this addiction cost the family more than $25, 000. The money that the defendant paid for solicitations between 2012 and 2015 was somewhere between $60, 000 and $100, 000. Hundreds of dollars were spent on both the plaintiff and the defendant being tested for STDs. Money was spent on mental health providers and sex therapists. After his arrest for solicitation in 2015, the defendant's actions became known to the plaintiff, became public and he eventually lost his job. He was paid twelve weeks of severance pay, then collected unemployment for a period of time. At the time he left the company, the defendant was earning a gross income of $140, 000 annually.

         Fortunately, the defendant's job situation has actually improved since his period of unemployment. He is earning more money than he did in 2015 and he works for himself. The plaintiff's job situation has improved as well. Both parties have successfully established their own businesses and those businesses appear to be doing well. They are both talented, creative and hard working. This court finds that each of the parties has sufficient resources and earning capacities to sustain their individual homes without assistance from the other.

         In sum, the plaintiff took charge of the family resources, the money was spent, the defendant's retirement accounts were depleted and, at least on sworn financial affidavits, the parties appear to have saved nothing. Responsibility for this lies with both parties as they now face a large tax bill owed to the IRS and to the State of Connecticut. In considering how this debt should be allocated, this court has taken in account the harm that was done to this family by the defendant's conduct in the first three years of the marriage as well as the harm caused by the plaintiff's spending, dissipation of assets and conditional commitment to the marriage once she became aware of the defendant's addiction. It also considers that the plaintiff's testimony was less than forthcoming regarding the disposition of these funds and not credible with respect to her actual net income.

         The plaintiff has continued to send mixed messages to the defendant regarding their relationship. She has made overtures to resume the relationship, then demanded money from him as the quid pro quo. She stated to the court multiple times that the defendant had violated the protective order but then complained that he would not exercise parenting time that would have placed him at risk of violating the order. In July 2018, the defendant was arrested for disorderly conduct outside the plaintiff's home, a protective order was issued and he was then charged with violating that protective order on July 23, 2018, August 2, 2018 and August 10, 2018. Those charges are still pending.

         Since the protective order was put in place, the defendant has had tremendous difficulty finding a 3^rd party facilitator acceptable to the plaintiff to exchange the children and the plaintiff has been unwilling to meet at a police station. As recently as December 2018, the plaintiff threatened to call the police on the defendant and the very next morning texted him how much she misses him and “misses us”. At no time has the plaintiff suggested that the defendant poses a danger to her or that she is in fear of him.

         School and Camp Expenses

         The defendant noted that he had paid or set up a payment plan for the school year 2018-2019 and 2018 summer tuition bills for the children, totaling $36, 522. The parties agreed that this court would allocate the percentage of responsibility for these expenses at the time of judgment.

         Personal Property issues

         The plaintiff has sold the defendant's personal property in violation of automatic orders. In particular, the plaintiff did not dispute that she had sold the defendant's camera and lenses. There was no evidence of the replacement costs for those items.

         Attorney' ...