Superior Court of Connecticut, Judicial District of Hartford, Hartford
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 3rd 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' ...