184 Conn. App. 512
Conn. App. Ct.2018Background
- Parties married in 1987; both brought premarital and inherited assets into the marriage; two adult children. Plaintiff (Merk-Gould) was age 64 at trial and out of the workforce since age 48 for health reasons; defendant (Gould) was 65 and left full-time employment around 2003 and lived on investment income and pension distributions.
- Plaintiff filed for dissolution in 2013; trial lasted eight days; trial court found defendant at fault and entered financial/property orders in January 2017.
- Trial court found the defendant had a net earning capacity of $200,000 per year (based on investment income), awarded plaintiff $7,500/month alimony (tax-free to plaintiff and nondeductible to defendant), 60% of certain investment assets (bank accounts, securities, private equity, annuities), 60% of pretax pension payments, and attorney’s fees of $220,346.85.
- The court adopted the plaintiff’s proposed property division, which treated private equity interests at cost (purchase price) and gave the plaintiff corresponding cash adjustments.
- Defendant appealed, challenging the earning-capacity finding, tax treatment of alimony, pension division, valuation of private equity interests, attorney’s fees, and a denied mistrial.
Issues
| Issue | Merk-Gould's Argument | Gould's Argument | Held |
|---|---|---|---|
| Court’s $200,000 earning-capacity finding | Defendant has investment income and portfolio growth supporting imputing $200,000 net earning capacity | No evidence defendant could realistically earn $200,000 net: out of workforce since ~2003, no recent employability, and would retain only 40% of invested assets after division | Reversed: finding clearly erroneous. The court based earning capacity on investment income but record lacked evidence he could produce $200,000 net after losing 60% of investments; alimony order tied to this finding must be vacated and reconsidered on remand |
| Valuation of private equity interests (valued at cost) | Plaintiff urged cost basis as fair remedy (claimed dissipation rationale) | Valuation should be as of divorce date; no dissipation claim or findings to justify cost basis | Reversed: court abused discretion by valuing at purchase cost rather than as of decree date; property division must be redone |
| Tax treatment of alimony (ordered non-taxable to recipient and nondeductible to payor) | Plaintiff supported tax-free alimony as ordered | Defendant challenged tax treatment | Not reached on merits because earning-capacity error requires remand; trial court’s other financial orders reversed for reconsideration |
| Attorney’s fees award | Sought large fee award and the court found need despite plaintiff’s assets | Defendant argued plaintiff had ample liquid assets and no egregious misconduct; award improper | Trial court’s fee award not decided on appeal because remand ordered; appellate court summarized controlling principles from Hornung for remand consideration |
Key Cases Cited
- Sunbury v. Sunbury, 216 Conn. 673 (Conn. 1990) (use date of decree to value marital estate for distribution)
- Bruno v. Bruno, 132 Conn. App. 339 (Conn. App. 2011) (date of divorce generally the proper date for valuing assets)
- Steller v. Steller, 181 Conn. App. 581 (Conn. App. 2018) (standards for earning-capacity determinations in alimony analysis)
- Fox v. Fox, 152 Conn. App. 611 (Conn. App. 2014) (investment income may be treated under same earning-capacity analysis as employment income)
- Weinstein v. Weinstein, 280 Conn. 764 (Conn. 2006) (earning-capacity concept and factors to consider)
- Cleary v. Cleary, 103 Conn. App. 798 (Conn. App. 2007) (consideration of asset division impact on ability to support alimony award)
- Gershman v. Gershman, 286 Conn. 341 (Conn. 2008) (dissipation must be pleaded and found before affecting property division)
- Tuckman v. Tuckman, 308 Conn. 194 (Conn. 2013) (financial orders form an interwoven ‘mosaic’; severability standard)
- Hornung v. Hornung, 323 Conn. 144 (Conn. 2014) (standards for awarding attorney’s fees in dissolution proceedings)
- Wiegand v. Wiegand, 129 Conn. App. 526 (Conn. App. 2011) (remand of financial and property orders when alimony award is reversed)