MARY MCTIERNAN v. BARRY MCTIERNAN
(AC 37309)
DiPentima, C. J., and Gruendel and Mullins, Js.
April 14, 2016
Argued January 20—officially released April 14, 2016
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(Appeal from Superior Court, judicial district of Stamford-Norwalk, Tierney, J. [dissolution judgment]; S. Richards, J. [motion for contempt].)
Francis L. O‘Reilly, with whom was Jane Ford Shaw, for the appellant (defendant).
George J. Markley, for the appellee (plaintiff).
Opinion
GRUENDEL, J.
Our factual recitation is hampered by the fact that the trial court did not furnish a detailed memorandum of decision in this case, but rather awarded the plaintiff the sum of $370,440, plus attorney‘s fees and expert fees, in a one paragraph JDNO notice,2 and thereafter declined to articulate the substance of that judgment at the behest of the defendant. The following facts and procedural history are culled from the record and largely are undisputed.3 The parties married in 1989, and five children were born of the marriage. Following the subsequent breakdоwn of their marriage, the parties voluntarily entered into a comprehensive separation agreement dated October 23,
Pertinent to this appeal are the following provisions of the separation agreement. Paragraph 4.2 provides in relevant part that “[c]ommencing on January 1, 2004, the [defendant] shall pay to the [plaintiff] as unallocated alimony and child support a sum equal to forty-five (45%) percent of his Gross Annual Earned Income up to a maximum of $1,750,000, until the death of either party, the remarriage of the [plaintiff], or December 31, 2013, whichever occurs first.” Paragraph 4.3 provides: “‘Gross Annual Earned Income,’ as used in this Agreement, shall mean all cash compensation for personal services from current or future employment including, but not limited to, wages, salary, bonuses, commissions, consulting, directors and other fees, disability paymеnts, partnership distributions and other remuneration received by the [defendant] from employment or which the [defendant] shall be entitled to receive from employment, but has elected to defer or decline, including payments made by the [defendant] to [his] IRA, pension, profit sharing or like retirement plans and payments (but not including payments made by the [defendant] from income on which the [plaintiff] has already received her percentage share). It is the intention of the parties that the [defendant] shall take no action, the specific intention of which is to reduce or divert income or increase business expenses or deductions for the purpose of defeating or reducing his alimony and support obligations to the [plaintiff]. In the event the [defendant] changes the nature of his employment, the definition of ‘gross annual income’ shall be modified accordingly to reflect the [defendant‘s] new income, which may include, for example payment in stock, income from one or more businesses, rental income, royaltiеs and partnership distributions.” Paragraph 5.8 of the agreement provides in relevant part that “[t]he [defendant] shall retain the following assets and the [plaintiff] shall make no claim to them . . . 3. Cantor Fitzgerald, LP Capital Account and Grant Units worth approximately $325,000 . . . .” Lastly, paragraph 5.10 provides in relevant part that “[t]he following assets shall be divided equally between the parties . . . 6. Cantor Fitzgerald, LP Profit Sharing.”
On April 18, 2013, the plaintiff filed a postjudgment motion for contempt against the defendant. In that motion, she alleged in relevant part that “[t]he defendant has been continuously employed since the date of dissolution at Cantor Fitzgerald as a financial advisor and trader,” that he “has failed and/or refused to pay the plaintiff forty-five (45%) percent of the income he has earned over the last six years,” and that he “has not complied with the orders of the court.” She thus requested that the court find the defendant in contempt and order him to (1) immediately pay her “the unallocated child support and alimony owed for the past six years,” (2) pay “all of the fees and costs associated with the filing of this motion,” and (3) “be incarcerated.” The defendant thereafter filed an objection to that motion,4 as well as various motions unrelated to this appeal.
A three day hearing on the plaintiff‘s motion for contempt began on March 25, 2014. The first witness to testify was the plaintiff. In her testimony, the plaintiff
The second witness to testify was the defendant. He testified that he was employed by Cantor Fitzgerald Securities, as identified on his W-2 form that was admitted into evidence,6 and that he was not an employee of the limited partnership.7 Although the defendant testified that his employer, Cantor Fitzgerald Securities, and the limited partnership were distinct entities, he nevertheless acknowledged that the limited partnership held an ownership interest in Cantor Fitzgеrald Securities. The defendant noted that the limited partnership also owned “about fifteen different larger companies” including, inter alia, a diamond exchange, three “casino/gaming licenses,” and three companies in China, as well as an 11 percent stake in a commercial real estate venture.
The defendant testified that he does not receive either a paycheck or a W-2 form from the limited partnership, and that the distributions from the limited partnership
With respect to the correlation between those distributions and his employment at Cantor Fitzgerald Securities, the defendant explained, “I never got any K-1 income until I bought [the limited partnership interest]. It‘s not my personal use, my personal services . . . I bought this thing and it pays the same percentage each year. . . . [E]very year, no matter what the lim-ited partnership does, it pays me on how they did from like fifty different businesses. And it has nothing to do with my personal services.” Asked directly whether he performed personal services for the limited partnership, the defendant answered, “no.” As he put it, “I don‘t work for them. I don‘t do anything for them.” At the same time, paragraph 5.13 of the separation agreement expressly provides that the defendant “is entitled to reimbursement from [the limited partnership] for business expenses incurred . . . and he shall pay to the [plaintiff] one-half (1/2) of such reimbursement expenses as received.” Although the defendant was not asked specifically about that provision during the contempt hearing, he did confirm in his testimony that “Cantor Fitzgerald” reimbursed him for business expenses on a regular basis.12
Regarding his obligation under paragraph 4.2 of the separation agreement, the defendant presented testimonial and documentary evidence indicating that he had complied with the unallocated alimony and child support order with respect to his gross annual income, as documented on his W-2 forms provided by Cantor Fitzgerald Securities. That compliance is not contested in this appeal. Rather, this appeal pertains solely to the distributions the defendant received from the capital account of the limited partnership.
On the third day of the hearing, the plaintiff offered the expert testimony of Joseph DeCusati, a certified public accountant and forensic accountant. DeCusati was retained by the plaintiff “to perform various valuation and forensic accounting services.” Also admitted into evidence was DeCusati‘s March 25, 2014 report. That report contained “[a]n analysis of the personal income tax returns and other financial documents relating to [the defendant] for 2004 through 2012,” which detailed the precise amount of distributions received by the defendant from the capital account of the limited partnership, as reflected on his K-1 forms.13 DeCusati‘s report included those distributions in his analysis of the defendant‘s gross annual earned income.
At the contempt hearing, DeCusati testified that, in preparing his report, he requested copies of the defendant‘s K-1 forms after noticing that paragraph 4.3 of the separation agreement “specifically states that partnership distributions and other remunerations received by the [defendant] is to be considered in the calculation” of gross annual earned income.14 DeCusati then offered a comparison of the amount of alimony and child support reported on the defendant‘s tax returns with what his analysis concluded should have been paid, noting the shortfall for each
DeCusati offered conflicting testimony as to whether the distributions reflected on the K-1 forms were connected to the defendant‘s employment. DeCusati testified that the defendant‘s interest in the capital account of the limited partnership was an “asset” and repeatedly characterized the distributions therefrom as “a return on his investment.” On cross-examination, DeCusati testified unequivocally that those distributions were not from employment with the limited partnership.15 On redirect examination, DeCusati testified otherwise. He emphasized that the limited partnership and Cantor Fitzgerald Securities are affiliated entities and that, in the deposition testimony that he had reviewed, the defendant “testified that he would no longer be able to receive distributions if he were to separate from service with his emрloyer.” DeCusati also noted that the defendant, for a period of ten years, consistently reported the distributions from the capital account of the limited partnership as nonpassive income on his personal tax returns. By so doing, DeCusati testified that the defendant was “making the representation with his signed tax return that the income that he‘s generating . . . from this limited partnership investment is something he‘s actively participating in producing.”16 In light of the foregoing, DeCusati stated that the defendant‘s ownership interest in the limited partnership was connected to his employment at Cantor Fitzgerald Securities.
The final witness to testify at the hearing was the defendant‘s expert, Samuel L. Braunstein, an attorney with an LLM degree in taxation and approximately thirty-five years of experience as a certified public accountant. Braunstein testified that he had prepared or reviewed “thousands” of tax returns on behalf of limited partnerships over the years. In preparing for his testimony, Braunstein reviewed the income tax returns and K-1 forms at issue. Like the defendant, Braunstein acknowledged that the disbursements reflected on the defendant‘s K-1 forms constituted partnership distributions. When asked where those distributions would be reported on
Braunstein also was asked where, if the defendant had earned income from the limited partnership, such earned income would be designated on the K-1 form. Braunstein replied that “[i]t would be in one of two places. It would be under [line] four, guaranteed payments, or it would be reflected in [line] fourteen, self-employment earnings or losses.” Braunstein testified, and the K-1 form in evidence confirms, that no such earnings are included on the defendant‘s K-1 form. On that basis, Braunstein opined that “[t]here were no earnings attributed to [the defendant] from wоrk performed for the partnership.” Accordingly, Braunstein testified that, in his opinion, the partnership distributions included on the K-1 form from the capital account of the limited partnership did not qualify as gross annual earned income, as it is defined in paragraph 4.3 of the separation agreement. Like DeCusati, Braunstein offered no documentary or testimonial evidence regarding the intent of the parties in crafting the provisions of the separation agreement at issue.
The court decided the plaintiff‘s motion for contempt approximately four months later. By JDNO notice dated July 23, 2014, the court ruled as follows: “The court grants in part and denies in part the plaintiff‘s motion for contempt re: unallocated child support and alimony, postjudgment, only as follows: The court finds that the plaintiff‘s evidence of underreporting by the defendant of his ‘gross annual earned income’ including that of the testimony of her witness who prepared a forensic audit of the defendant‘s gross annual earned income. Although the defendant argues that limitеd partnership distributions he received are expressly excluded under [the] definition of ‘gross annual earned income’ as set forth in [paragraph 4.3] of the separation agreement and
In response, the defendant filed motions for articulation and reargument on August 7, 2014. His motion for articulation asked the court to articulate the basis of its determination that the distributions he received from the limited partnership qualified as gross annual earned income under the separation agreement. In his motion for reargument, the defendant submitted that the court‘s determination violated the terms of the separation agreement, as distributions from the limited partnership were “expressly excluded under the definition of ‘gross annual earned income’ as set forth in [paragraph 4.3] and were distributed to him to the exclusion of the plaintiff pursuant to [paragraph] 5.8 of the separation agreement.” The defendant further argued that the distributions at issue were not “income that was derived from ‘compensation for personal services from current employment,‘” as required by paragraph 4.3 of the separation agreement, but rather was “an asset which was purchased by the defendant while married to the plaintiff . . . .” The court summarily denied those motions on October 8, 2014. At a hearing held on December 9, 2014, the court awarded the plaintiff $44,285.93 in attorney‘s fees and $14,805.25 in expert fees. This appeal followed.19
I
The defendant‘s principal claim in this appeal is that the court improperly
“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 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 language in question does not necessitate a conclusion that the language is ambiguous. . . . In contrast, a contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself. . . . [A]ny ambiguity in a contract must emanate from the language used by the parties. . . . The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so. . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous.” (Internal quotation marks omitted.) Id., 191-92.
The record reveals that the court in the present case determined that the contractual language at issue unam-biguously provided that the distributions from the capital account of the limited partnership constituted part of the defendant‘s gross annual earned income. In its July 23, 2014 notice of decision, the court stated in relevant part that “[a]lthough the defendant argues that limited partnership distributions he received are expressly excluded under [the] definition of ‘gross annual earned income’ as set forth in [paragraph 4.3] of the separation agreement and was distributed to him to the exclusion of the plaintiff under [paragraph 5.8] of the separation agreement, the court is not persuaded. Following its review of both [paragraphs] and the entire separation agreement, the court observed that the term ‘partnership distributions,’ which is included in the definition of ‘gross annual earned income,’ is repeated twice in [paragraph] 4.3. The court interprets this language to mean that said distributions
In addition, when the defendant, toward the end of the three day contempt hearing, sought to admit into evidence certain federal tax regulations that provided a “definition of earned income under the
Accordingly, to resolve the claim presented in this appeal, we first must ascertain whether the court properly determined that paragraph 4.3 of the separation agreement unambiguously provides that distributions from the capital account of the limited partnership constitute gross annual earned income thereunder. That issue presents a question of law over which our review is plenary. Remillard v. Remillard, 297 Conn. 345, 355, 999 A.2d 713 (2010). “Contrаct language is unambiguous when it has a definite and precise meaning . . . concerning which there is no reasonable basis for a difference of opinion . . . . In contrast, an agreement is ambiguous when its language is reasonably susceptible of more than one interpretation.” (Citation omitted; internal quotation marks omitted.) Id.
The separation agreement in the present case provides that “[c]ommencing on January 1, 2004, the [defendant] shall pay to the [plaintiff] as unallocated alimony and child support a sum equal to forty-five (45%) percent of his Gross Annual Earned Income up to a maximum of $1,750,000, until the death of either party, the remarriage of the [plaintiff], or December 31, 2013, whichever occurs first.” Paragraph 4.3 of that agreement, in turn, furnishes a definition of gross annual earned income. It provides: “‘Gross Annual Earned Income,’ as used in this Agreement, shall mean all cash compensation for personal services from current or future employment including, but not limited to, wages, salary, bonuses, commissions, consulting, directors and other fees, disability payments, partnership distributions and other remuneration received by the [defendant] from employment or which the [defendant] shall be entitled to receive from employment, but has elected to defer or decline, including payments made by the [defendant] to [his] IRA, pension, profit sharing or like retirement plans and payments (but not including payments made by the [defendant] from income on which the [plaintiff] has already received her percentage share). It is the intention of the parties that the [defendant] shall take no action, the specific intention of which is to reduce or divert income or increase business expenses or deductions for the purpose of defeating or reducing his alimony and support obligations to the [plaintiff]. In the event the [defendant] changes the nature of his employment, the definition of ‘gross annual income’ shall be modified accordingly to reflect the [defendant‘s] new income, which may include, for example payment in stock, income from one or more businesses, rental incоme, royalties and partnership distributions.” (Emphasis added.)
The plaintiff submits that paragraph 4.3 expressly delineates certain forms of compensation that, per se, qualify as gross annual earned income. Because “partnership distributions” are included among those forms of compensation, the plaintiff argues—and the trial court agreed—that paragraph 4.3 mandates that the distributions from the capital account of the limited partnership constitute gross annual earned income.
The defendant advances a different interpretation. Although he acknowledges that “partnership distributions” specifically are included among the forms of compensation set forth in paragraph 4.3, he nevertheless maintains that the extent to which such distributions may constitute part of his gross annual earned income is qualified by the plain language thereof. He argues that, to be part of his gross annual earned
The proper interpretation of gross annual earned income under paragraph 4.3 is further complicated by the fact that the defendant‘s interest in the capital account of the limited partnership, from which the distributions in question originate, is designated as an asset in the separation agreement. Seе footnote 9 of this opinion. The separation agreement expressly prohibits the plaintiff from making any claim to that asset, as paragraph 5.8 provides in relevant part that “[t]he [defendant] shall retain the following assets and the [plaintiff] shall make no claim to them . . . 3. Cantor Fitzgerald, LP Capital Account and Grant Units worth approximately $325,000 . . . .”24 (Emphasis added.) It is a cardinal rule of contract interpretation that a contract is to be construed as a whole and all relevant provisions must be considered together, with the aim of giving operative effect to every provision. See, e.g., C & H Electric, Inc. v. Bethel, 312 Conn. 843, 853, 96 A.3d 477 (2014); Barnard v. Barnard, 214 Conn. 99, 109, 570 A.2d 690 (1990); Zahringer v. Zahringer, 124 Conn. App. 672, 684, 6 A.3d 141 (2010). Because the separation agreement specifically proscribes any claim by the plaintiff to the defendant‘s interest in the capital account of the limited partnership, that contractual provision must be considered in determining whether the parties intended such distributions to constitute gross annual earned income to which the plaintiff may lay claim.25
In her appellate brief, the plaintiff argues that becausе the limited partnership “was the only partnership in which the defendant had an interest when the marriage was dissolved, it is incomprehensible that the defendant can now suggest that [paragraph] 4.3 did not contemplate that he would pay a percentage of those very distributions as unallocated alimony and support.” (Emphasis omitted.) The separation agreement, however, plainly distinguishes among various accounts of the limited partnership, and assigns to the parties’ respective interests in those accounts. For example, paragraph 5.8 (3) of the separation agreement states that the defendant shall retain, and the plaintiff shall make no claim to, the capital account of the limited partnership. Paragraph 5.8 (4) likewise provides that the defendant shall retain the “Cantor Fitzgerald, LP High Distribution Units (no value).” By
In considering the plain language of the relevant provisions of the separation agreement, we conclude that the intent of the parties is not clear as to whether the distributions from the capital account of the limited partnership are to be included as part of the defendant‘s gross annual earned income. The language at issue is reasonably susceptible to more than one interpretation and, thus, is ambiguous. Accordingly, the trial court in the present case “abused its discretion by failing to undertake the factual inquiry necessary to clarify the meaning” of the gross annual earned income provision of the separation agreement. Parisi v. Parisi, 315 Conn. 370, 379, 107 A.3d 920 (2015).
This court reached a similar conclusion in Marshall v. Marshall, 151 Conn. App. 638, 97 A.3d 1 (2014). Much like the present case, the issue in Marshall was whether certain distributions reflected on the plaintiff‘s K-1 forms were to be considered “pre-tax income from employment” under the separation agreement between the parties. (Internal quotation marks omitted.) Id., 648. After first determining that the separation agreement was ambiguous on that issue, this court held that “to determine the extent to which K-1 income is to be included in the calculation of [the plaintiff‘s income], the trial court must engage in fact-finding as to the intent of the parties.” Id.
Proper regard for this court‘s role as an appellate tribunal precludes our consideration of that fact specific inquiry. To do so “would require us to find facts and make credibility determinations, which are not within the province of an appellate court.”27 Wheela-brator Bridgeport, L.P. v. Bridgeport, 320 Conn. 332, 361, 130 A.3d 241 (2016). As we have observed, “it is axiomatic that this appellate body does not engage in fact-finding. Connecticut‘s appellate courts cannot find facts; that function is, according to our constitution, our statute, and our cases, exclusively assigned to the trial courts.” (Internal quotation marks omitted.) Hogan v. Lagosz, 124 Conn. App. 602, 618, 6 A.3d 112 (2010), cert. denied, 299 Conn. 293, 11 A.3d 151 (2011). Similarly, “[q]uestions of whether to believe or to disbelievе a competent witness are beyond our review. As a reviewing court, we may not retry the case or pass on the credibility of witnesses. . . . [W]e must defer to the [finder] of fact‘s assessment of the credibility of the witnesses that is made on the basis of its firsthand observation of their conduct, demeanor and attitude.” (Internal quotation marks omitted.) State v. Altayeb, 126 Conn. App. 383, 387-88, 11 A.3d 1122, cert. denied, 300 Conn. 927, 15 A.3d 628 (2011); see also Schoenborn v. Schoenborn, 144 Conn. App. 846, 859, 74 A.3d 482 (2013) (“this court cannot pass on issues of credibility“). Thus, this case must be remanded to the trial court to resolve the ambiguity in the parties’ separation agreement as to whether the parties intended the distributions from the capital account of the limited partnership to be included in the defendant‘s gross annual earned income. See Parisi v. Parisi, supra, 315 Conn. 373, 386 (ambiguous provision in separation agreement required remand “for a hearing at which the intent of the parties and the meaning of the term in question must be determined” which entailed “consideration of all available extrinsic evidence and the circumstances surrounding the entering of the agreement“); Marshall v. Marshall, supra, 151 Conn. App. 648 (ambiguous provision in separation agreement required remand to trial court to determine intent of parties); Page v. Page, 77 Conn. App. 748, 748, 749, 825 A.2d 187 (2003) (ambiguous provision in separation agreement required remand for evidentiary hearing to establish intent of parties).
II
In light of our resolution of the defendant‘s principal claim, which necessitates a remand to the trial court for further proceedings, we need not consider the defendant‘s remaining claims; see footnote 1 of this opinion; save for his challenge to the award of attorney‘s fees and expert fees. Those fees were awarded, in the court‘s discretion, following the determination that the defendant had underpaid his unallocated alimony and child support by $370,440. On remand, it is entirely possible that the trial court, in resolving the ambiguity in the separation agreement as to whether distributions from the capital account of the limited partnership constitute gross annual earned income, may determine that the defendant has not underpaid his unallocated alimony and child support obligation. Accordingly, the predicate to an award of attorney‘s fees and expert fees is lacking in the present case. The court‘s December 9, 2014 award of $44,285.93 in attorney‘s fees and $14,805.25 in expert witness fees, therefore, must be set aside. See Roach v. Roach, 20 Conn. App. 500, 508, 568 A.2d 1037 (1990) (“since the financial awards must be retried, the issue of whether the defendant‘s [legal] fees should be paid must . . . also be left for a redetermination“). As always, the propriety of such an award is entrusted to the discretion of the trial court on remand. See Jewett v. Jewett, 265 Conn. 669, 694, 830 A.2d 193 (2003); Rozsa v. Rozsa, 117 Conn. App. 1, 18, 977 A.2d 722 (2009).
In this opinion the other judges concurred.