Argued
April 18, 2019
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Laura
W. Ray, Hartford, for the appellant (plaintiff).
Campbell
D. Barrett, with whom were Jon T. Kukucka and, on the brief,
Johanna S. Katz, Hartford, for the appellee (defendant).
Alvord,
Moll and Pellegrino, Js.
OPINION
ALVORD,
J.
[192
Conn.App. 637] In this postjudgment dissolution matter, the
plaintiff, Jill Gilbert Callahan, appeals from the judgments
of the trial court, rendered on remand from this court,
granting a motion to modify alimony filed by the defendant,
James Callahan, and issuing additional [192 Conn.App. 638]
postjudgment orders. On appeal, the plaintiff claims that the
court (1) erred in granting the defendants motion to modify
alimony, (2) abused its discretion in modifying alimony
retroactively, (3) lacked the legal authority to suspend the
defendants alimony payments to her as a condition of
granting her motion for a continuance, (4) erred in
determining the effective date of financial orders that this
court mandated be reinstated, (5) erred in ordering her to
execute certain documents to transfer her interest in the
companies owned by the parties, and (6) improperly concluded
that it lacked subject matter jurisdiction to require the
defendant to endorse two insurance checks. We dismiss as moot
the plaintiffs third claim regarding the suspension of
alimony payments and affirm the judgments of the trial court
in all other respects.[1]
The
following facts and procedural history are relevant to our
resolution of the appeal. The parties were married in 1987
and raised three children, all adults at the time of the
dissolution trial. In 2009, the plaintiff filed a complaint
seeking dissolution of her marriage to the defendant. The
matter was tried to the court, Munro, J., in March,
2012. On May 8, 2012, the court issued a memorandum of
decision rendering judgment dissolving the parties marriage
on the ground of irretrievable breakdown, and entering
property division and alimony orders (May, 2012 dissolution
judgment). On June 15, 2012, the defendant filed a motion to
open the judgment of dissolution and attendant financial
orders, which was granted on November 6, 2012. The court then
held an evidentiary hearing and, in a February 27, 2014
memorandum of decision, issued substitute financial orders
(February, 2014 decision).
[192
Conn.App. 639] Both parties filed appeals. This court, on May
5, 2015, issued a decision reversing the trial courts
granting of the motion to open the judgment and remanded the
matter
Page 663
with direction to reinstate the May, 2012 financial orders.
Callahan v. Callahan, 157 Conn.App. 78, 101, 116
A.3d 317, cert. denied, 317 Conn. 913, 116 A.3d 812 (2015),
and cert. denied, 317 Conn. 914, 116 A.3d 813 (2015).
Following this courts resolution of the parties prior
appeals, the plaintiff filed, among several motions, a motion
for contempt dated July 6, 2015. In her motion, she argued,
inter alia, that the defendant had refused to comply with the
judgment in that he had failed to pay amounts set forth in
the May, 2012 financial orders, plus interest, which she
contended had begun accruing in 2012. On May 4, 2016, the
court, Hon. Michael E. Shay, judge trial referee,
issued a memorandum of decision declining to find the
defendant in contempt, in which it concluded that "the
effective date for the running of interest is September 8,
2015," the date that, the court determined, the
defendant had exhausted all the appellate avenues that had
been available to him.
In
November, 2016, the court, Hon. Michael E. Shay,
judge trial referee, began hearing evidence on a motion to
modify alimony originally filed by the defendant on May 19,
2014, and amended on October 15, 2015. In its memorandum of
decision filed August 1, 2017, the court found that the
defendant had established a substantial change in
circumstances and granted his motion to modify alimony. On
August 7, 2017, the plaintiff filed this appeal.
While
this appeal was pending, the court, Diana, J., heard
additional motions filed by the plaintiff. On April 3, 2018,
the court concluded that it lacked jurisdiction over the
plaintiffs motion requesting that the court order the
defendant to endorse two Chubb property [192 Conn.App. 640]
damage insurance checks.[2] On April 10, 2018, the court denied
the plaintiffs motion for contempt regarding the documents
necessary to transfer the plaintiffs interest in companies
owned by the parties and issued a remedial order. On April
20, 2018, the plaintiff filed an appeal challenging the April
3 and 10, 2018 orders, which this court treated as an
amendment to the original appeal filed on August 7, 2017.
Additional facts and procedural history will be set forth as
necessary.
I
The
plaintiffs first claim on appeal is that the trial court
erred in finding that the defendant had established a
substantial change in circumstances justifying a modification
in alimony. She argues that the trial court erroneously
considered evidence showing a change in the defendants
earnings only from the companies owned by the parties,
whereas the dissolution court based its original alimony
award on the defendants general earning capacity independent
of his earnings from the companies. Thus, she argues that the
trial court failed to compare "apples to apples
...."[3] We disagree.
Page 664
The
following additional facts and procedural history are
relevant to this claim. In 1995, the parties established
three companies together, Pentalpha Group, LLC, [192
Conn.App. 641] Pentalpha Funding, LLC, and Pentalpha Capital,
LLC. The plaintiff owned 51 percent of each of the three
entities and the defendant owned 49 percent. In 2005, a
fourth Pentalpha entity was created, Pentalpha Surveillance,
of which 100 percent was owned by the defendant
(collectively, the companies). The court found that the
companies "work in various fields: as an investment
advisor, as a trading and brokerage company, as a broker
dealer and as an oversight company, all ostensibly in the
loan market, particularly working with asset-backed
debt."
In its
May, 2012 dissolution judgment, the court ordered the
defendant to pay $60,000 per month in alimony, until the
death of either party, the remarriage of the plaintiff, or as
determined by the court, pursuant to General Statutes §
46b-86 (b). In so ordering, the court stated: "The
alimony order is predicated on earnings, including member
distributions to the defendant of up to $2,000,000 per year.
The court notes that the plaintiffs valuation expert, Barry
Sziklay, concluded that a comparable compensation for the
defendant, as a key person operating on Wall Street, would be
at least in the [$1 million to $2 million] range annually.
Ultimately, in the valuation model that he used, Sziklay
attributed 50 percent of the pretax profits to the defendant.
For 2010, that resulted in adjusted compensation of
$1,976,312. As of the second quarters completion for 2011,
that adjusted compensation attributed to the defendant was
$684,880. The defendant provided no contrary evidence. The
court finds this approach reasonable. No evidence was adduced
of any increase in liabilities. Accordingly, finding earnings
attributable to the defendant in the amount of $2,000,000
gross is conservative, the court adopts it as a finding of
fact as to the present earning capacity of the defendant at
Pentalpha."
On May
19, 2014, while the parties prior appeals remained pending,
the defendant filed a motion to modify his alimony. In that
motion, he represented that the [192 Conn.App. 642] companies
were "experiencing a cash flow crisis" and that the
defendants earning capacity at the companies was no longer
$2 million. The defendant argued that postjudgment misconduct
of the plaintiff, on which the trial court relied in opening
the dissolution judgment, had diminished the value of the
companies, thereby reducing the earnings from which he pays
alimony. The motion was not pursued while the parties prior
appeals were pending. On October 15, 2015, the defendant
filed an amended motion for modification of alimony, again
arguing that his income had decreased since the date of
dissolution.
The
court began hearing evidence on the defendants motion on
November 8, 2016. The defendant testified that, taking the
four companies together, the cash collected on an annual
basis had decreased substantially since the May, 2012
dissolution judgment. As to the potential for other
employment, the defendant testified that he did not believe
it would be possible for him to leave the companies and get a
new job. Specifically, he stated: "The market has taken
an invention that Ive devised— this surveillance, this
oversight, to investor confidence. Theyve made me an insider
on 140 deals. I cant go show up and work at some Wall Street
bank or some hedge
Page 665
fund; they would have to preclude me from the one thing that
I know about because Im the insider."
Both
parties presented expert testimony. The defendant presented
the testimony of Attorney Mark Harrison. Harrison testified
that he used the compensation methodology set forth in the
May, 2012 dissolution judgment, pursuant to which 50 percent
of the pretax profits of three of the companies (Pentalpha
Funding, LLC, Pentalpha Group, LLC, and Pentalpha Capital,
LLC) as shown in the companies audited financial statements,
was attributed to the defendant as reasonable compensation.
Harrison performed the same analysis for the [192 Conn.App.
643] years 2012-2015 to arrive at reasonable compensation
attributable to the defendant in the amount of $210,000. He
also performed the same analysis including profits from
Pentalpha Surveillance, which was omitted from the
calculations in the May, 2012 dissolution judgment, to arrive
at reasonable compensation attributable to the defendant in
the amount of $370,000. The audited financial statements for
each of the four companies, on which Harrison relied, also
were entered into evidence.
Harrison testified that the defendant was not earning
sufficient money to satisfy his alimony obligations.
Specifically, he testified that in order to satisfy the
defendants obligations pursuant to the May, 2012 dissolution
judgment, he would be "not only taking the 50 percent of
income out of the company, hes taking it all out as well as
withdrawing the excess capital that was valued in it to get
the cash flow to be able to pay his obligations pursuant to
the judgment and live his life."
The
plaintiff presented the expert testimony of Sziklay, whose
formula attributing 50 percent of the pretax profits of the
companies to the defendant was used by the court in the May,
2012 dissolution judgment to reach an earning capacity of $2
million. In his testimony during the hearing on the motion
for modification, Sziklay agreed with the numbers used by
Harrison to determine 50 percent of the pretax profits of the
companies. He disagreed, however, with Harrisons conclusion
that the defendant had an earning capacity of $210,000.
According to Sziklays December, 2016 testimony, the
defendants earning capacity of $2 million, which was found
by the dissolution court in May, 2012, remained reasonable.
In its
memorandum of decision filed August 1, 2017, the court
determined that the defendant had established a substantial
change in circumstances due to his lower [192 Conn.App. 644]
earning capacity. The court credited Harrisons testimony
that the defendant had been using his personal assets to meet
his marital obligations. Finding that Harrison had "used
the same basic format that ... Sziklay used at the time of
trial," the court relied on Harrisons calculations
using the profits of all four companies. The court found that
the defendant had an earning capacity of $370,000 per year,
as of January 1, 2016, and ordered the defendant to pay
$12,000 per month in alimony until "the death of either
party or the remarriage of the plaintiff, or the entry into a
civil union by her, whichever shall sooner occur." The
court found, with respect to the period of July 1, 2014
through December 31, 2015, that the defendant had an earning
capacity of $850,000 per annum and a net income of $489,692.
It determined the alimony due for that period to be $24,000
per month.
On
appeal, the plaintiff argues that the court was required to
find the defendants earning capacity independent of the
companies. We disagree.
"We review the courts judgment granting a motion to
modify alimony payments
Page 666
under an abuse of discretion standard. An appellate court
will not disturb a trial courts orders in domestic relations
cases unless the court has abused its discretion or it is
found that it could not reasonably conclude as it did, based
on the facts presented.... In determining whether a trial
court has abused its broad discretion in domestic relations
matters, we allow every reasonable presumption in favor of
the correctness of its action."[4] (Internal quotation
marks omitted.) McRae v. McRae, 139 Conn.App. 75,
80, 54 A.3d 1049 (2012). "[T]he trial courts findings
[of fact] are binding upon this court unless they are clearly
erroneous in light of the evidence and the pleadings in the
record as a whole.... A finding of fact is [192 Conn.App.
645] clearly erroneous when there is no evidence in the
record to support it ... or when although there is evidence
to support it, the reviewing court on the entire evidence is
left with the definite and firm conviction that a mistake has
been committed." (Internal quotation marks omitted.)
Steller v. Steller, 181 Conn.App. 581, 593, 187 A.3d
1184 (2018).
"[General Statutes § ] 46b-86 governs the modification
or termination of an alimony or support order after the date
of a dissolution judgment. When, as in this case, the
disputed issue is alimony ... the applicable provision of the
statute is § 46b-86 (a), which provides that a final order
for alimony 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 partys relief, it is pertinent for the trial
court to inquire as to what, if any, new circumstance
warrants a modification of the existing order."
(Citation omitted; footnote omitted; internal quotation marks
omitted.) Olson v. Mohammadu, 310 Conn. 665, 671-72,
81 A.3d 215 (2013). In determining whether the moving party
has established a substantial change in circumstances, the
trial court is "free to credit or reject all or part of
the testimony given .... On review, we do not reexamine the
courts credibility assessments." Zilkha v.
Zilkha, 167 Conn.App. 480, 489, 144 A.3d 447 (2016).
The
plaintiff argues that the court erred in calculating the
defendants earning capacity on the basis of the companies
profits alone, rather than on the defendants [192 Conn.App.
646] earning capacity independent of the
companies.[5] "While there is no fixed
Page 667
standard for the determination of an individuals earning
capacity ... it is well settled that earning capacity is not
an amount which a person can theoretically earn, nor is it
confined to actual income, but rather it is an amount which a
person can realistically be expected to earn considering such
things as his vocational skills, employability, age and
health." (Internal quotation marks omitted.) Fritz
v. Fritz, 127 Conn.App. 788, 796, 21 A.3d 466 (2011).
Bearing
in mind that a partys earning capacity is not calculated by
reference to amounts the party can theoretically earn, nor is
earning capacity fixed at any one moment in a career, we are
unpersuaded that the court abused its discretion in grounding
its finding of the defendants earning capacity on the
profits of the companies. The court had before it the
defendants testimony that he would not be able to obtain a
job with a Wall Street bank or hedge fund because the nature
of the companies business had made him an
"insider," and the court found significant that the
defendant had not worked on Wall Street in twenty years.
Moreover, the transfer of the plaintiffs interest in the
companies [192 Conn.App. 647] to the defendant, which had
been ordered by the court in the May, 2012 dissolution
judgment, had not yet occurred, which the defendant testified
prevented him from selling the companies. Thus, the court was
not required to make its finding of the defendants earning
capacity on the basis of what the defendant might
theoretically earn were he to sell the companies he founded
and ran for approximately twenty years to pursue limited
opportunities for employment in the marketplace.
We
conclude that the courts factual finding that the
defendants earning capacity had decreased from $2 million at
the time of dissolution to $370,000 at the time of the
modification was not clearly erroneous. The court expressly
credited Harrisons testimony and accompanying exhibits
showing 50 percent of the pretax profits of the companies as
set forth in the companies audited financial statements, and
the plaintiffs expert agreed with the numbers used in
Harrisons calculations. Moreover, the court found the
defendants earning capacity using the same formula that the
court used in its May, 2012 dissolution judgment to calculate
the defendants earning capacity. The courts findings
...