82 Conn. App. 768 | Conn. App. Ct. | 2004
Opinion
The defendant George Greco
The following facts and procedural history are relevant to our resolution of the defendant’s claims. The
Before the parties were married, the defendant owned and operated a gasoline service station. After they were married, the defendant sold the service station and opened an auto parts business. The defendant’s five children from his prior marriage were all involved in operating the auto parts business, Greco’s Auto Parts, Inc., as was the parties’ first child. The defendant also formed and controlled a partnership called LDGG Limited Partnership. Throughout the marriage, the plaintiff was a full-time homemaker, caring for the children and managing the household.
In February, 2000, the plaintiff brought this dissolution action by a one count complaint, claiming an irretrievable breakdown in the marital relationship. She sought the dissolution of the parties’ marriage, an equitable distribution of the parties’ property, alimony and attorney’s fees. On September 25, 2001, the plaintiff filed a three count third amended complaint. The first count was directed against the defendant and was identical to the one count in the original complaint. The second count was directed against the defendant, the defendant’s five adult children from his prior marriage, two “spray trusts” established for the parties’ two children and the LDGG Limited Partnership. That count alleged that the defendant’s transfers of certain assets were fraudulent in violation of the Uniform Fraudulent Transfer Act, General Statutes § 52-552a et seq., and, therefore, they should be set aside and the assets
On October 11, 2001, the defendant filed an answer and a counterclaim for dissolution of marriage. On October 30, 2001, the defendant’s five children from his prior marriage filed an answer, special defenses and a four count counterclaim.
After a lengthy trial, the court dissolved the parties’ marriage on January 11, 2002, on the basis of irretrievable breakdown. The court also determined that the plaintiff failed to prove her “fraudulent transfer claims by the requisite clear and convincing evidence.”
We address the defendant’s third and fourth claims together because they are interrelated. The defendant claims that the court improperly relied on gross income, rather than net income, in determining the defendant’s alimony obligation. The defendant also claims that the court improperly ordered him to pay alimony and other expenses that far exceeded his available net income. We agree with both claims.
Initially, we set forth our standard of review. “We review financial awards in dissolution actions under an abuse of discretion standard. ... In order to conclude that the trial court abused its discretion, we must find that the court either incorrectly applied the law or could not reasonably conclude as it did.” (Internal quotation marks omitted.) Evans v. Taylor, 67 Conn. App. 108, 111, 786 A.2d 525 (2001). “In making those determinations, we allow every reasonable presumption ... in favor of the correctness of [the trial court’s] action.” (Internal quotation marks omitted.) DiVito v. DiVito, 77 Conn. App. 124, 130, 822 A.2d 294, cert. denied,
“It is well settled that a court must base . . . alimony orders on the available net income of the parties, not gross income.” Morris v. Morris, 262 Conn. 299, 306, 811 A.2d 1283 (2003); see also Ludgin v. McGowan, 64 Conn. App. 355, 358, 780 A.2d 198 (2001).
In the present case, although the court, in its memorandum of decision, did not “affirmatively and expressly” state that it relied on the parties’ gross incomes in determining its alimony order; see Morris v. Morris, supra, 262 Conn. 306; it did find that the defendant had “a $73,840 annual income from the auto parts business . . . .” That amount is equal to the defendant’s gross income as stated in his financial affidavit. In addition, in its financial orders, the court ordered the defendant to pay to the plaintiff $710 per week in alimony, which is precisely 50 percent of the defendant’s gross income. Both parties submitted financial affidavits in which they stated their net income. The court, therefore, had before it evidence of the parties’ net incomes, but failed to mention such income and, instead, focused on the defendant’s gross income.
The court’s reliance on the gross incomes of the parties in fashioning its financial orders is further evinced by the fact that the court ordered the defendant to pay alimony and other expenses that far exceeded his available net income.
In addition, in light of the court’s findings with respect to the defendant’s age, health and ability to work,
The court’s order, therefore, in effect, requires the defendant to transfer control of the closely held corporation to the plaintiff, which gives her control over the defendant’s employment and his only significant source of income. Accordingly, the court’s taking the corporation into account in both the property division and in the award of alimony and other payments is, in essence, “double dipping” and inequitable because the corporation provides the only significant stream of income by which the defendant can meet his alimony and other court ordered payment obligations. See Dunleavy v. Dunleavy, Superior Court, judicial district of Danbury, Docket No. 334546 (September 11, 2000); Cardillo v. Cardillo, Superior Court, judicial district of Stamford Norwalk, Docket No. 114248 (June 10, 1992); see also Krafick v. Krafick, 234 Conn. 783, 804-805 n.26, 663 A.2d 365 (1995).
We conclude that the court incorrectly applied the law by basing its financial orders on the parties’ gross incomes and that it abused its discretion by ordering the defendant to pay alimony and other expenses that far exceed his available net income.
The judgment is reversed as to the financial orders only and the case is remanded for a new hearing on all financial issues in accordance with law.
Also named as defendants were George Greco’s five children from a previous marriage, two trusts George Greco established for two children he lathered with the plaintiff and the LDGG Limited Partnership in which he has an ownership interest. Because only George Greco has appealed, we refer to him as the defendant.
On the basis of our disposition of the defendant’s third and fourth claims, we need not address the defendant’s other claims on appeal.
Between 1998 and 1999, the defendant transferred to his children, either directly or via trust, the majority of his stock in Greco’s Auto Parts, Inc., and title to various parcels of real estate related to that business. Those assets were worth more than $1 million.
One of the defendant’s children, George Greco, Jr., subsequently passed away and the administratrix of his estate was substituted as a party. On November 27, 2001, the administratrix filed an answer to the plaintiffs third amended complaint.
On May 14, 2001, the court ordered that “the issues of the dissolution of marriage, property and alimony and other claims together with the counts on fraudulent conveyances and the special defenses of the defendant children will be tried to the court. After the court decides these issues and enters judgment, the court will address the issues relative to the defendant children’s counterclaims.”
We note that the court’s finding that the transfers were not fraudulent is not an issue in this appeal.
The court found that “[djespite testimony about some income from [the plaintiffs] porcelain doll hobby or business, no income capacity is assigned to the [plaintiff] . . . .”
We note that our jurisprudence requires the court to consider the statutory criteria set forth in General Statutes § 46b-82 in determining whether alimony shall be awarded, and the duration and amount of the award. Those criteria are “the length of the marriage, the causes for the . . . dissolution of the marriage . . . the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate and needs of each
Because the court did not make any finding with respect to the defendant’s net income, there is no evidence as to what the defendant’s after tax net income would be after making the alimony, life insurance and health insurance payments; however, it certainly would not be more than and likely would be less than his gross amount. In his financial affidavit, the defendant stated that his net income is $53,872 per year. If that figure is used, the defendant already is left with a deficit after making only those payments to the plaintiff.
Specifically, the court ordered the defendant to pay to the plaintiff $100,000 in attorney’s fees at a rate of $20,000 per year.
We note that although the court made no specific findings with respect to the defendant’s unpaid attorney’s fees, if factored in, that expense would certainly increase the defendant’s deficit. Also, although the court found that the defendant gambles extensively, it did not find that the defendant’s winnings exceeded his losses, thereby, serving as an additional source of income for the defendant.
In it memorandum of decision, the court stated in relevant part: “[The defendant] is sixty-four years of age, completed the eighth grade . . . and has been engaged in the auto repair and parts business throughout his life. His health is very poor. He suffers from angina and other related health problems which commenced in 1988. After numerous surgical procedures, he remains under the care of various physicians, takes nine different medications and is depressed. It would appear that his ability to work has been seriously compromised.”
Although the court found that the defendant “receives regular cash gifts of up to $500 from at least one of his children,” it is doubtful that those contributions will continue if the defendant no longer controls Greco’s Auto Parts, Inc. Indeed, in its articulation, the court stated: “The inescapable conclusion in the instant, case is that reserving voting control [in Greco’s Auto Parts, Inc.] was the [defendant’s] way of preserving control over his children in the event they did not do things his way.” Furthermore, in his closing argument, the plaintiffs counsel stated in relevant part: “[The defendant’s] income dramatically increased. . . . Your Honor, that doesn’t happen because you’re doing nothing, it happens because you have control, and it happens because you can impose your will on those around you to pay you those moneys.
“[W]hen [the defendant] transferred his interest in the corporation [to his children], he didn’t give them a controlling interest, he didn’t give them all of it. I asked him why. He doesn’t know. . . . But, I think I can draw a reasonable inference why he didn’t, Your Honor. I think the reason he didn’t was because he had to have that control. You don’t get a $20,000 raise over two years when you’re doing nothing because your children are being generous to you.” (Emphasis added.)
In its articulation, the court stated in relevant part: “It became abundantly clear to the court that while the [defendant] transferred virtually the entire equity in the business, he cunningly retained voting control. In the court’s estimation, voting control of a small corporation is often more important than equity interest — such is the case in Greco’s Auto Parts, Inc. Voting control has the ultimate power to elect directors, in effect elect officers, determine policy, set compensation, hire and fire employees, and in numerous other ways dictate the direction of the company. The inescapable conclusion in the instant case is that reserving voting control was the [defendant’s] way of preserving control over his children in the event they did not do things his way.”
The terms of the promissory note would require the defendant to pay to the plaintiff approximately an additional $34,832.52 per year for ten years.
The plaintiff contends that the court’s “award of alimony and insurance was reasonable in light of the [defendant’s] underreported income” and that the court could have based its award on the defendant’s earning capacity rather than on his actual net income. Although the court stated that the defendant’s testimony frequently lacked credibility and his financial affidavit had to be amended several times during the trial to conform to the testimony, its memorandum of decision is devoid of any specific finding with respect to the defendant’s alleged unreported income or his earning capacity. “This