Ludwig v. Lamee-Ludwig
AC 15-P-1177
| Mass. App. Ct. | Feb 7, 2017Background
- Parties married ~20 years; separated April 2012; husband filed for divorce; separation agreement executed Aug 19, 2014 and incorporated into divorce nisi; two issues reserved for judge.
- Husband was awarded unvested employee performance options from Fidelity; parties applied Baccanti time rule to determine divisible portion; wife received 50% of divisible portion.
- Disputed shares: unvested options deemed not subject to equitable division under the time rule and retained solely by husband.
- Parties submitted, by stipulation and without testimony, two legal questions to the judge: (1) whether income the husband realizes from the nondivided (postmarital) unvested options may be included in calculating alimony; and (2) which valuation date under the time rule should apply.
- Judge held that income from the nondivided unvested options may be included in alimony calculations and selected June 30, 2014 as the valuation date (closest to the original divorce judgment).
Issues
| Issue | Plaintiff's Argument (Husband) | Defendant's Argument (Wife) | Held |
|---|---|---|---|
| May income from unvested options not equitably divided under Baccanti be included in alimony calculation? | Including that income would be improper "double dipping" and contrary to Baccanti's statement that such options "belong solely to the employee spouse." | Because those shares were not part of the marital division, they can be treated as the husband’s income for alimony; Baccanti addressed property division, not alimony. | Court: Include such income in alimony; not double dipping because shares were not equitably divided and income is compensation (W-2), not excluded capital gains/dividends. |
| Does inclusion violate the Alimony Reform Act exclusion of income from assets equitably divided? | Argues the Act bars counting proceeds from options awarded in the divorce context. | The contested shares were not equitably divided; income would be compensation, not capital gains/dividends, so the Act's exclusion does not apply. | Court: No violation; the Act excludes income from assets equitably divided, which does not describe these nondivided options. |
| Is counting income from these options an impermissible instance of double counting as a matter of law? | Claims it is inequitable double counting to count the same asset in both property division and alimony. | The asset here was not divided; even if double counting arguable, judge may consider separate portions and equities. | Court: Double counting is disfavored but not per se prohibited; here sources of property assignment and alimony are distinct, so judge did not abuse discretion. |
| Proper valuation date under the Baccanti time rule for unvested options? | Argues valuation should be December 31, 2013 (closer to separation) and judge erred by using June 30, 2014 without §34 findings about post-separation contributions. | Judge may select date closest to divorce judgment; parties presented no evidence; wife continued homemaking/childcare post-separation. | Court: Affirmed June 30, 2014 valuation; judge did not abuse discretion and was not required to make specific §34 findings without evidence. |
Key Cases Cited
- Baccanti v. Morton, 434 Mass. 787 (2001) (establishes the time rule to apportion unvested employee stock options between marital and postmarital periods)
- Wooters v. Wooters, 74 Mass. App. Ct. 839 (2009) (income from exercise of stock options can count as gross employment income for alimony/support)
- Heins v. Ledis, 422 Mass. 477 (1996) (trial judge has broad discretion in awarding alimony and dividing marital assets)
- Champion v. Champion, 54 Mass. App. Ct. 215 (2002) (discusses the double-dipping concern when the same asset factors into both property division and support calculations)
- Adams v. Adams, 459 Mass. 361 (2011) (court may assign present value of an asset to the marital estate and still include future compensation in support calculations)
- Dalessio v. Dalessio, 409 Mass. 821 (1991) (addresses identifying separate bases of an asset for property assignment and support)
- Hoegen v. Hoegen, 89 Mass. App. Ct. 6 (2016) (confirms that income from exercise of options is commonly reported on W-2 and treated as compensation)
- deCastro v. deCastro, 415 Mass. 787 (1993) (discusses §34 contributory factors, including nonfinancial homemaking contributions)