161 Conn.App. 575
Conn. App. Ct.2015Background
- Michael O’Brien (high-earning corporate lawyer) and Kathleen O’Brien divorced; dissolution judgment entered September 18, 2009, with a 45/55 property split in favor of the defendant and awards for alimony/child support.
- Before the 2009 trial, Michael sold 28,127 vested Omnicom shares for cash ($772,140) without the defendant’s written consent or a court order; proceeds were disclosed and placed in a Merrill Lynch account.
- While an earlier appeal of the dissolution judgment was pending, Michael exercised 75,000 Omnicom stock options in two tranches (2010 and 2012), converting them to cash and preserving proceeds in a Fidelity account.
- On remand the trial court (Pinkus, J.) found the transactions violated the automatic orders (Practice Book § 25-5), declined to find contempt because Michael acted on counsel’s advice, but stated it had “taken into account” those transactions and adjusted awards (home, pension, overall division) in favor of Kathleen.
- The Appellate Court reversed: even assuming technical violation of the automatic orders, absent a finding of contumacious conduct or intent to hide/dissipate assets, the trial court could not penalize Michael by reducing his property share; remanded for a new trial on all financial issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court could factor plaintiff’s stock sales/exercises (alleged automatic-order violations) into property division without finding contempt or dissipation | O’Brien: Transactions were undertaken in good faith to preserve marital assets, proceeds were disclosed and preserved; any technical violation should not penalize him | Kathleen: Transactions violated automatic orders and caused significant loss to the marital estate; court may account for that loss in dividing assets | Held: Court erred — without finding wilful contempt or dissipation (intentional waste/hide), it could not reduce plaintiff’s share based on technical violations alone; remand for new financial trial |
| Whether plaintiff waived complaint about pre-dissolution stock sale | O’Brien: Defendant waived challenge by raising it only on remand | Kathleen: Timely raised on remand; court may address | Held: Court did not rely on waiver; decision rests on merits of sanctionability, not waiver (waiver argument noted but not resolved as dispositive) |
| Whether exercised postdissolution stock options were marital property and thus subject to automatic orders | O’Brien: Options granted after divorce filing weren’t marital, so exercise didn’t implicate automatic orders | Kathleen: Options were treated as marital property in the original property division and could be redistributed | Held: O’Brien waived challenge to treatment of options as marital property by not raising it on earlier appeal; court may treat them as subject to distribution |
| Whether ‘‘usual course of business’’ exception applied to sale/exercise of publicly traded stock | O’Brien: Trades of publicly traded securities should be per se ‘‘usual course of business’’ (no need for prior approval) | Kathleen: No bright-line rule; expedited court relief exists and a per se rule would encourage self-help | Held: Court declined to create a bright-line rule; unnecessary to decide in this case |
Key Cases Cited
- O’Brien v. O’Brien, 138 Conn. App. 544 (2012) (prior appellate decision reversing financial orders and remanding for new trial on financial issues)
- Maturo v. Maturo, 296 Conn. 80 (2010) (standard of review and deference to trial court in domestic relations cases)
- Smith v. Smith, 249 Conn. 265 (1999) (statutory authority for property assignment under § 46b-81 and principle of equitable division)
- Sunbury v. Sunbury, 216 Conn. 673 (1990) (property values for division are generally fixed as of the date of dissolution absent exceptional intervening circumstances)
- Finan v. Finan, 287 Conn. 491 (2008) (trial court may consider dissipation of marital assets when assigning property under § 46b-81)
- Gershman v. Gershman, 286 Conn. 341 (2008) (dissipation requires improper conduct such as intentional waste or selfish impropriety; mere poor investments do not constitute dissipation)