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Grogan v. Penza

Appellate Court of Connecticut

October 29, 2019

James K. GROGAN
v.
Jill PENZA

         Argued April 15, 2019

          Appeal from Superior Court, Nastri, J.

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[Copyrighted Material Omitted]

Page 149

          Steven L. Katz, Hartford, with whom was Melissa Gagne, for the appellant-cross appellee (defendant).

         Mark V. Connolly, Avon, for the appellee-cross appellant (plaintiff).

         Lavine, Bright and Bear, Js.

          OPINION

         BEAR, J.

         [194 Conn.App. 74] The defendant, Jill Penza, appeals from the judgment denying her postdissolution motion for contempt. On appeal, she claims that the trial court improperly concluded that the plaintiff, James K. Grogan, had not violated a "true up" alimony obligation contained in the parties’ separation agreement.[1] The plaintiff cross appeals, claiming that the trial court abused its discretion in denying his request for statutory attorney’s fees incurred in defending against the defendant’s motion for contempt. We disagree with the parties’ claims and, accordingly, affirm the judgment of the trial court.

         The following facts, as found by the trial court, and procedural history are relevant to our resolution of this appeal and cross

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appeal. On September 25, 2013, the parties, each of whom is an attorney, and each of whom was represented by an attorney, entered into a twenty-three page divorce settlement agreement (agreement). On September 27, 2013, the court, Olear, J., dissolved the parties’ marriage. At the time of the dissolution, the plaintiff was a partner at the law firm of McCormick, Paulding & Huber, LLP (MPH). In accordance with General Statutes § 46b-66, the judgment of dissolution incorporated by reference the agreement. Article I of the agreement addressed the plaintiff’s various alimony obligations and specified how to calculate such alimony.

         [194 Conn.App. 75] Section 1.1 of the agreement provided in relevant part: "The alimony payments detailed [herein] are based on an annual earned income/earning capacity attributed to [the defendant] of $35,000 and the [plaintiff’s] ‘annual income from employment’ (hereinafter ‘income’) which, for purposes of the alimony formula[s] herein, is presently defined as [l]ine 1 on [the plaintiff’s] annual [schedule] K-1[2] from [MPH]. The alimony paid by the [plaintiff] to the [defendant] shall be paid in three components (monthly ... and quarterly payments totaling $160,000 based on the first $550,000 of [the plaintiff’s] income, and a year-end ‘true up’ alimony payment based on gross income of the [plaintiff] between $550,000 and $750,000)." (Footnote added.)

          The true up alimony formula applicable in the present case was set forth in § 1.1 D of the agreement, which provided in relevant part: "For the tax year 2014 and thereafter, [the plaintiff] shall pay ‘true up’ alimony to [the defendant] of 25 [percent] of the amount of [the plaintiff’s] income between $550,000 and $700,000 as reflected on [l]ine 1 of [the plaintiff’s schedule] K-1 and 20 [percent] of any income between $700,000 and $750,000. For example, if [the plaintiff’s schedule] K-1 for 2014 shows [l]ine 1 income of $775,000, [the plaintiff] would owe [the defendant] additional ‘true up’ alimony in the amount of $47,500 ...."

         In June, 2015, the plaintiff sold his interest in MPH, where he had been a partner for over twenty years, and created a new law firm, Grogan, Tuccillo & Vanderleeden, LLP (GTV), located in Springfield, Massachusetts. GTV, like MPH, was structured as a partnership. As a result, the plaintiff received two schedule K-1s for [194 Conn.App. 76] the 2015 tax year, one from MPH covering the period between January 1 and May 31, 2015, and one from GTV covering the period between June 1 and December 31, 2015. The schedule K-1 issued by MPH listed negative $93,463 of "[o]rdinary business income (loss)" on line 1 and $605,000 of "[g]uaranteed payments" on line 4.[3] The schedule K-1 issued by GTV listed $103,017 on line 1 and $127,178 on line 4. In previous years, when he was employed by MPH, all of the income the plaintiff received from employment had been reported on line 1 of his schedule K-1s.

         On May 31, 2017, the defendant filed a motion for contempt alleging that the plaintiff wilfully had violated the parties’ agreement by failing to pay her true up alimony for the 2015 tax year. More specifically, the defendant claimed that the plaintiff’s 2015 "annual income from employment" was $741,732— the total of lines

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1 and 4 from both schedule K-1s— and that, consequently, she was entitled to $45,846 of true up alimony pursuant to § 1.1 D of the agreement. In his memorandum of law in opposition to the motion, the plaintiff countered that § 1.1 D clearly and unambiguously provided that his annual income from employment was to be determined solely by reference to line 1 of his schedule K-1s. Accordingly, the plaintiff argued that he owed no true up alimony for 2015 because his total line 1 income across both schedule K-1s amounted to only $9554— well below the $550,000 threshold required by the agreement. The plaintiff therefore requested that the court deny the defendant’s motion for contempt and award him costs and reasonable attorney’s fees pursuant to General Statutes § 46b-87.

          The trial court, Nastri, J., conducted an evidentiary hearing on the defendant’s motion for contempt on September 28 and October 13, 2017. On December 4, [194 Conn.App. 77] 2017, following posttrial briefing by the parties, the court issued a memorandum of decision holding that § 1.1 D of the agreement was clear and unambiguous and limited the plaintiff’s income from his employment for purposes of calculating true up alimony to the amount listed on line 1 of the plaintiff’s schedule K-1. The court rejected the defendant’s argument that it should look to lines 1 and 4 of the 2015 schedule K-1s to determine the total of the plaintiff’s income from his employment. It explained that the defendant’s argument, that the amounts listed on both lines 1 and 4 of the schedule K-1s should be considered income, required the court to ignore the language in § 1.1 C and D of the agreement. Accordingly, the court denied the defendant’s motion, but it declined to award attorney’s fees to the plaintiff. This appeal and cross appeal followed.

          I

          THE DEFENDANT’S APPEAL

         On appeal, the defendant claims that the trial court improperly concluded that the plaintiff had not violated the true up alimony provision contained in § 1.1 D of the agreement. Her principal argument is that the court erred in determining that only income listed on line 1 of a schedule K-1 may be considered for purposes of calculating true up alimony due to her under § 1.1 D of the agreement.[4] We disagree.

         [194 Conn.App. 78] We begin with general principles and the applicable standards of review. "It is well established that a separation agreement that has been incorporated into a dissolution decree and its resulting judgment must be regarded as a contract and construed in accordance with the general principles governing contracts .... When construing a contract, we seek to determine the intent of the parties from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction .... [T]he intent of the parties is to

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be ascertained by a fair and reasonable construction of the written words and ... the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract .... When only one interpretation of a contract is possible, the court need not look outside the four corners of the contract .... Extrinsic evidence is always admissible, however, to explain an ambiguity appearing in the instrument .... When the language of a contract is ambiguous, the determination of the parties’ intent is a question of fact .... When the language is clear and unambiguous, however, the contract must be given effect according to its terms, and the determination of the parties’ intent is a question of law ....

          "A contract is unambiguous when its language is clear and conveys a definite and precise intent .... The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity .... Moreover, the mere fact that the parties advance different interpretations of the ...


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