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Ayres v. Ayres

Appellate Court of Connecticut

October 1, 2019

Barbara AYRES
v.
George AYRES

         Argued May 15, 2019

          Appeal from the Superior Court, Judicial District of Litchfield, Bentivegna, J.

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[Copyrighted Material Omitted]

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          Jeffrey D. Ginzberg, Seymour, for the appellant (defendant).

         Stephanie M. Weaver, for the appellee (plaintiff).

         DiPentima, C. J., and Alvord and Lavery, Js.

          OPINION

         ALVORD, J.

         [193 Conn.App. 226] In this marital dissolution action, the defendant, George Ayres, appeals from the trial court’s postdissolution order resolving the motion for contempt filed by the plaintiff, Barbara Ayres. On appeal, the defendant claims that the court erred in interpreting the provision of the parties’ separation agreement governing alimony to conclude that (1) the payment of long-term incentives, including restricted stock units and performance stock units, received from his employer were included within the alimony calculation and (2) a severance payment was included within the alimony calculation. We agree with the defendant’s claims as to the restricted stock units and severance pay and, accordingly,

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reverse in part the judgment of the trial court.

          The record reveals the following facts and procedural history. The parties were divorced on November 9, 2010. The dissolution judgment incorporated by reference a separation agreement executed by the parties on that date (separation agreement). Section 3.2 of the separation agreement governs alimony and provides in relevant part: "At the earlier of such time as the marital residence is sold, or beginning December 1, 2010, the [defendant] shall pay periodic alimony to the [plaintiff] for the duration set forth in paragraph 3.1, and which shall be calculated to be an amount which equals thirty percent of the [defendant’s] gross income minus twenty percent of the [plaintiff’s] gross income. Should the [defendant] be self-employed his income for the purposes of this calculation shall be based upon a minimum gross self-employment income of $80,000 to reflect his earning capacity and the [plaintiff’s] income shall be not less than $25,000 to reflect her earning capacity; so that alimony under this calculation will be $19,000 annually.

         [193 Conn.App. 227] "Each party’s gross income for the purpose of this calculation shall be the party’s gross income from their base pay and any performance based bonuses received. Income shall not include moving expenses, any car allowance, sign on stock options or stock which may be awarded to either party." Section 3.4 of the separation agreement provides, in relevant part: "The parties shall exchange income tax returns each year by May 1 for the purpose of establishing the actual gross income for the previous calendar year, which the parties understand will include any additional bonus income which was received by either party in the previous calendar year. Thereafter they shall determine if an adjustment in the support payment between the parties is necessary so as to meet the formula established. Any additional payments by the [defendant] or reimbursements by the [plaintiff] shall be made by the parties by June 1 of that year unless otherwise agreed."

          At the time of the dissolution, the defendant was self-employed as a consultant. He worked for a number of companies, including Hughes Telematics, Inc., which hired him as an employee in August, 2011. Verizon Communications (Verizon) subsequently acquired Hughes Telematics, Inc., and the defendant was hired as a Verizon employee. When Verizon offered him the position, it also offered him a nonnegotiable retention plan, which included short-term incentives (STI), long-term incentives (LTI), including both restricted stock units (RSUs) that would be payable in the form of stock and performance stock units (PSUs) that would be payable in the form of cash, and a severance package. The defendant’s employment with Verizon was terminated effective August 14, 2015, and he received a severance payment in the amount of $159,250, which represented twenty-six weeks of base pay ($227,500 annually), plus twenty-six weeks of STI ($91,000 annually). He was unemployed for seven weeks before obtaining employment with IBM on October 5, 2015. The defendant paid alimony at the Verizon rate through September, 2015, [193 Conn.App. 228] while he was unemployed and after receiving his severance payment. Beginning in October, 2015, the defendant paid alimony at the IBM rate, which was higher than the Verizon rate.

          On July 30, 2014, the plaintiff filed a motion for contempt, alleging, in relevant part, that despite the separation agreement provision that requires the parties to amend spousal support for each year by exchanging income tax returns with proof of income, "the defendant has refused to

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amend support based upon the total reported for his income." The motion for contempt and the interpretation of the alimony provision have been the subject of three court rulings, only the third of which is challenged in the present appeal.

          The first decision was issued by the court, Moore, J., on May 15, 2015 (Ayres I ). At issue were two STI payments, a 2013 payment in the amount of $72,800 in 2013 and a 2014 payment in the amount of $100,100, both of which were paid in cash. In its ruling, the court found that the STI payments constituted "performance based bonuses" within the meaning of the alimony provision and, thus, ordered that the STI payments be included in the calculation of spousal support paid by the defendant. In reaching this decision, the court found the term "performance based bonuses" within the alimony provision clear and unambiguous. Rejecting the defendant’s argument that "performance based bonuses," within the context of the separation agreement, referred only to bonuses paid by the employer on the basis of the defendant’s individual performance, the court found that the term included amounts paid on the basis of the company’s performance. Noting testimony that STI payments were cash payments, the court stated that "no issues are raised as to whether an STI payment might be excluded from the definition of ‘performance based bonus’ as stock."

         [193 Conn.App. 229] On December 23, 2016, the court, Dooley, J., issued a second ruling (Ayres II ) regarding the alimony provision, which addressed the portion of the provision (alimony exclusion) that states that "[i]ncome shall not include moving expenses, any car allowance, sign on stock options or stock which may be awarded to either party." The court found the alimony provision clear and unambiguous and addressed only the issue of whether the separation "agreement excludes all stock or only sign on stock from the definition of gross income." It specifically did not decide whether RSUs or PSUs were, in fact, stock, nor did it decide the issue of whether "the [LTI] proceeds should be treated identically to the [STI] proceeds because they are ‘bonuses based upon the longer employment of the defendant.’ " In its ruling, the court agreed with the defendant that " ‘sign on’ applies only to stock options and that ‘stock which may be awarded to either party,’ regardless of when it is awarded, is excluded from the definition of gross income." The court directed the parties to contact the caseflow coordinator to schedule a hearing on the issue of whether the LTIs are stock.

         That hearing was held on September 26 and 27, 2017. The court, Bentivegna, J., also heard the issue of whether the defendant’s severance payment received following the 2015 termination of his employment with Verizon should be included in the alimony calculation.[1] [193 Conn.App. 230] In addition to

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the testimony of the plaintiff and the defendant, the defendant presented the testimony of an expert in executive compensation, Attorney Bruce Barth.

         After receiving posttrial briefs from both parties, the court issued its memorandum of decision on February 28, 2018. The court indicated that it would treat Ayres I and Ayres II as the law of the case.[2] Like the two prior decisions, the court also concluded that the language of the alimony provision is clear and unambiguous. The court determined that the RSUs and PSUs were "performance based bonuses" and, therefore, were included in the alimony calculation set forth in the alimony provision. It further concluded that the RSUs and PSUs were not stock under the alimony exclusion. Lastly, the court concluded that the defendant’s severance payment also must be included in the alimony calculation.

         Finding that the defendant’s conduct was not wilful, the court declined to hold the defendant in contempt. It issued remedial orders requiring the defendant to "include all past LTI payments and the 2015 severance payment in the calculation of ‘gross income’ under [the alimony provision] and to recalculate past alimony owed to the plaintiff pursuant to the alimony formula set forth in the [separation] agreement." The court also ordered "the defendant to include all future LTI payments from Verizon in the definition of gross income under [the alimony provision] so as to ascertain the amount of alimony owed by the defendant to the plaintiff for the duration of his alimony obligation under the [separation] agreement." This appeal followed.[3]

         [193 Conn.App. 231] The defendant’s claims on appeal involve questions of law and fact. Our standards of review are well settled. "In a marriage dissolution action, an agreement of the parties executed at the time of the dissolution and incorporated into the judgment is a contract of the parties.... The construction of a contract to ascertain the intent of the parties presents a question of law when the contract or agreement is unambiguous within the four corners of the instrument.... The scope of review in such cases is plenary ... [rather than] the clearly erroneous standard used to review questions of fact found by a trial court." (Internal quotation marks omitted.) Steller v. Steller,181 Conn.App. 581, 588-89, 187 A.3d 1184 (2018). Both parties maintain that the alimony provision is clear and unambiguous. Each of the trial courts that has considered the provision has agreed, and so do we. Because the language of the alimony provision in the present case is clear and unambiguous, our review is plenary. See Dejana v. Dejana,176 Conn.App. 104, 117-18, 168 A.3d 595 ...


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