Case Information
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MICHAEL J. O’BRIEN KATHLEEN E. O’BRIEN (AC 36694) Beaсh, Prescott and Bear, Js.
Argued September 25—officially released December 1, 2015 (Appeal from Superior Court, judicial district Fairfield,
Hon. Howard T. Owens, Jr., judge trial referee [dissolution judgment]; Pinkus, J. [financial orders].)
Daniel J. Klau , for the appellant (plaintiff). George J. Markley , with whom was Aidan R. Welsh , for the appellee (defendant).
Opinion
PRESCOTT, J. The plaintiff, Michael J. O’Brien,
whose marriage to the defendant, Kathleen E. O’Brien,
was dissolved in September, 2009, appeals, challenging
the new financial orders rendered by the trial court on
remand following his prior appeal from the judgment
of dissolution. See
O’Brien O’Brien
, 138 Conn. App.
544, 557,
The following facts, which either were found by the court in its memorandum of decision or are undisputed in the record, and procedural history are relevant to our consideration of the issues raised on appeal. The plaintiff and the defendant were married in 1985. They had three children born of the marriage. At the time of the dissolution judgment in 2009, the children were nine, thirteen, and fifteen years old. Both parties are well educated, each having graduated with a degree from Cornell University. After the parties were married, the plaintiff also earned a law degree.
The plaintiff currently is employed as senior vice president, general counsel, and secretary of Omnicom Group, Inc. (Omnicom), a Fortune 200 company. Prior to that position, he worked as an attorney for several New York law firms. The plaintiff’s base salary with Omnicom is $700,000 a year, but his compensation pack- age also includes a variable annual cash bonus as well as a noncash component, which, in the past, has con- sisted of some form of company stock or stock options. Since 2004, the plaintiff’s total yearly cash earnings averaged more than $1.2 million.
Prior to 2003, the defendant had a successful career *4 in banking; her last position was as a managing director for Credit Suisse, where she earned more than $1 mil- lion a year. She left that career, however, in 2003, to devote her time to raising the parties’ children. She returned to work in 2007, as an executive recruiter, but left that position in 2008. Later, in 2013, the defendant participated in a three month returnship program offered by JP Morgan Chase. On the basis of her earn- ings from the returnship program, the defendant has a present annual earning capacity of $143,000.
Money was never an issue for the parties until the dissolution action was commenced. Since 2001, they lived in a large home in Greenwich, where they often entertained. They frequently traveled with the children, who have attended private schools.
The plaintiff commenced the present action seeking dissolution of the parties’ marriage in January, 2008. [3] Service of the complaint included service of notice of the automatic orders in accordance with Practice Book §§ 25-2 and 25-5.
On February 12, 2009, several months prior to the dissolution trial, the plaintiff sold 28,127 shares of Omni- com stoсk, which represented all of the vested shares he held as of that date. The plaintiff was worried about the volatility of the stock market at that time in light of the stock market crash of October, 2008, and the ongoing global financial crisis, and believed it was in the best interest of the parties’ financial well-being to sell the stock immediately to preserve assets. The sale price was $27.451 per share and resulted in cash pro- ceeds of $772,140. All proceeds from the stock sale were placed in a Merrill Lynch account. The plaintiff disclosed the stock sale to the defendant by reflecting the change on his financial affidavit dated April 21, 2009. The plaintiff did not obtain the defendant’s written consent prior to selling the stock, nor did he seek per- mission to do so from a judicial authority. Prior to the dissolution trial, the defendant did not file a motion for contempt claiming that the stock sale violated the automatic orders.
Several months later, the dissolution action was tried to the court, Hon. Howard T. Owens, Jr ., judge trial referee. On September 18, 2009, the court rendered judgment dissolving the parties’ marriage. As part of the orders issued in conjunction with the dissolution judgment, the court effectively awarded 45 percent of all marital assets to the plaintiff and 55 percent to the defendant, which included future proceeds from the court’s ordered sale of the parties’ marital home and lake house as well as ‘‘all vested and unvested stock and stock options . . . .’’ The court made no mention of the plaintiff’s predissolution sale of stock in its dеci- sion; the Merrill Lynch account containing the proceeds from that sale of stock was subject to the overall 45/ 55 percent split. During the pendency of the first appeal, *5 the court lifted the appellate stay with respect to the Merrill Lynch account containing the proceeds from the stock sale, and funds were disbursed to the parties in accordance with a stipulated agreement.
The plaintiff appealed from the judgment of dissolu- tion, challenging the court’s unallocated alimony and child support award, as well as certain other aspects of the court’s financial orders. The plaintiff did not challenge the property division orders. While that appeal was pending, the plaintiff, on two separate occa- sions, exercised a total of 75,000 stock options that had vested during the pendency of the appeal, immediately converting the resulting shares of stock into cash. The plaintiff had received the 75,000 unvested Omnicom stock options in March, 2009, during the pendency of the dissolution action, as part of his noncash compensation; 22,500 of those shares vested in October, 2010, and resulted in cash proceeds of $445,000. The remaining 52,500 shares vested in October, 2012, generating $1,345,050 in cash. On neither occasion did the plaintiff obtain the consent of the defendant or seek permission from any judicial authority prior to initiating the stock option transactions. The plaintiff fully preserved all pro- ceeds from each of the stock option transactions in a Fidelity account.
This court issued its decision in the first appeal on
October 16, 2012, reversing the judgment of dissolution
only as to the trial court’s financial orders. See
O’Brien
O’Brien
, supra,
On remand, the matter was tried before the court, Pinkus , J ., over five days between February 10 and 19, 2014. On February 10, 2014, the defendant filed a motion for contempt in which she argued that the plaintiff’s predissolution sale of stock and his postdissolution exercise of stock options violated the automatic orders. The defendant asked the court to adjudicate the plaintiff in contempt, to order the plaintiff to pay all legal fеes and costs incurred in connection with the motion, and to award any other relief that the court deemed appro- priate.
During the trial before Judge Pinkus, the defendant elicited testimony from an accounting expert, Mark Har- rison, who opined that, had the plaintiff not sold the 28,127 shares of stock for $772,140 prior to the first dissolution trial, those same shares of stock would have been worth $2,140,465 on February 18, 2014, the date the expert testified at the retrial. The expert also testi- fied that had the plaintiff not exercised his stock options in the manner that he did, netting a combined $1,790,050, those stock options would have been valued *6 at $3,952,500 on February 18, 2014. Thus, the defendant sought to establish through her expert that the plaintiff’s financial transactions, which the defendant asserted were mаde in violation of the automatic orders, resulted in a net loss to the marital estate of more than $3.5 million if valued at the date of the retrial.
In a written memorandum of decision, the court stated that, in crafting its financial orders, it had consid- ered all relevant statutory criteria and that it had valued all marital assets as of the date of dissolution. [7] The court noted that the parties had filed a stipulation dated February 18, 2014, in which the parties had assigned values for most of the marital assets as of the date of dissolution, and the court incorporated that stipulation by reference. The court further indicated that if any asset had no current value but had a value at the time of dissolution, the court took that fact ‘‘into account’’ in rendering its financial orders.
Turning specifically to the issue of the plaintiff’s pre- dissolution sale of stock and his postdissolution exer- cise of stock options, the court first indicated that those transactions resulted in ‘‘a significant loss to the marital estate.’’ The court next found that the transactions ‘‘did in fact violate the automatic orders.’’ The court, how- ever, continued: ‘‘The plaintiff testified that he was act- ing on advice of counsel. As a result, he is not found to be in contempt ; however, the court has taken into account these transactions in making its awards .’’ (Emphasis added.)
Following that statement, the court set forth its finan- cial orders. With respect to alimony and child support, the court ordered the plaintiff to pay the defendant $1248 per week in child support, retroactive to Septem- ber 18, 2009, and subject to adjustment once the plaintiff became obligated to pay child support for only one child. The court also made alimony retroactive to Sep- tember 18, 2009, ordering the plaintiff to pay the defen- dant $45,000 per month for the first seven years, at which time payments would reduce to $37,500 per month for the next seven years, followed by an addi- tional seven year period at $25,000 per month. Finally, the court issued orders dividing the marital assets, including all assets identified and valued by the parties in their February 18, 2004 stipulation. This appeal followed.
On May 6, 2014, the plaintiff filed a motion for articu- lation pursuant to Practice Book § 66-5. In his motion, the plaintiff asked the court, inter alia, to state ‘‘[t]he manner in which the court ‘took into account’ the sales of shares and exercise of stock options which it believed violated the [automatic orders], i.e., how did thesе trans- actions affect the court’s final order.’’ The trial court denied the motion for articulation, following which, the plaintiff sought review of that decision from this court. We granted the plaintiff’s motion for review in part and *7 ordered the court to explain how it ‘‘took into account’’ the stock and stock option transactions in distributing the marital assets. With regard to our articulation order, the trial court stated: ‘‘As the Appellate Court frequently writes, financial orders in dissolution proceedings often have been described as a mosaic, in which all of the various financial components are carefully interwoven with one another. . . . Therefore, it is impossible to say with great specificity exactly how the court ‘took into account’ the sales of the shares and the exercise of the stock options by the plaintiff. However, these transactions by the plaintiff were taken into account when the defendant was awarded the family home and her pension from Credit Suisse, as well as the equitable division of all of the other assets of the parties.’’ (Cita- tion omitted.)
Before turning to the plaintiff’s claim, we first set
forth the relevant standard of review and general princi-
ples of law that guide our decision. ‘‘The well settled
standard of review in domestic relations cases is that
this court will not disturb trial court orders unless the
trial court has abused its legal discretion or its findings
have no reasonable basis in the facts. . . . As has often
been explained, the foundation for this standard is that
the trial court is in a clearly advantageous position to
assess the personal factors significant to a domestic
relations case . . . . In determining whether a trial
court has abused its broad discretion in domestic rela-
tions matters, we allow every reasonable presumption
in favor of the correctness of its action. . . . Notwith-
standing the great deference accorded the trial court
in dissolution proceedings, a trial court’s ruling . . .
may be reversed if, in the exercise of its discretion, the
trial court applies the wrong standard of law.’’ (Cita-
tions omitted;
internal quotation marks omitted.)
Maturo Maturo
,
General Statutes § 46b-81 is the sole source of author-
ity for a trial court to distribute marital assets in a
dissolution action. ‘‘Although it is well established that
trial courts have broad equitable remedial powers
regarding marital dissolutions . . . it is equally well
settled that [c]ourts have no inherent power to transfer
property from one spouse to another; instead, that
power must rest upon an enabling statute.’’ (Citation
omitted; internal quotation marks omitted.)
Smith
v.
Smith
,
Section 46b-81 provides in relevant part: ‘‘(a) At the
time of entering a decree . . . dissolving a marriage
. . . pursuant to a complaint under section 46b-45, the
Superior Court may assign to either spouse all or any
part of the estate of the other spouse. . . . (c) In fixing
the nature and value of the property, if any, to be
assigned, the court, after considering all the evidence
presented by each party, shall consider the length of
*8
the marriage, the causes for the . . . dissolution of the
marriage .
.
. the age, health, station, occupаtion,
amount and sources of income, earning capacity, voca-
tional skills, education, employability, estate, liabilities
and needs of each of the parties and the opportunity of
each for future acquisition of capital assets and income.
The court shall also consider the contribution of each
of the parties in the acquisition, preservation or appreci-
ation in value of their respective estates.’’ Although ‘‘a
trial court must consider all the statutory criteria in
determining the financial awards and division of prop-
erty in a dissolution action, the court is not required
to recite the statutory criteria it considered in making
its awards, nor is it required to make express findings
as to each factor listed in the relevаnt statutes.’’
Zern
v.
Zern
,
‘‘The purpose of a property division pursuant to a
dissolution proceeding is to unscramble existing marital
property in order to give each spouse his or her equita-
ble share
at the time of dissolution
.’’ (Emphasis added.)
Smith
v.
Smith
, supra,
The plaintiff claims that the court improperly deter- mined that he violated the automatic orders set forth in Practice Book § 25-5 by sеlling stocks and exercising stock options during the pendency of the dissolution action without first obtaining the written consent of the defendant or an order of the judicial authority. [11] According to the plaintiff, it was inequitable, and, there- fore, an abuse of discretion, for the court to have penal- *9 ized him for those financial transactions when it distributed the marital assets because his clear intent had been to protect marital assets in the face of a declining stock market and global financial crisis, and because he had preserved all of the cash proceeds from those transactions for distribution by the court.
In support of his claim, the plaintiff makes the follow- ing four arguments. First, the plaintiff argues that the defendant waived any claim regarding the impropriety of the predissolution stock sale because she raised the issue to the court for the first time on remand. Second, he argues that the 75,000 stock options that he exercised postdissolution were never marital property because they were awarded to him fourteen months after he filed for divorce, and, thus, his exercise of those options postdissolution did not implicate the automatic orders. Third, the plaintiff relies on the exception in the language of the automatic orders permitting transac- tions that are carried out in ‘‘the usual course of busi- ness,’’ arguing that this exception is applicable to the transactions at issue in the present case. Fourth, the plaintiff argues that even if his actions technically vio- lated the automatic orders, they did not amount to a dissipation of the marital assets or otherwise cause any legally cognizable harm that should have affected the distribution of assets. We find this fourth argument per- suasive. [13]
Specifically, for the following reasons, we agree that, even if the plaintiff technically violated the automatic orders when he sold stock and exercised options during the pendency of the dissolution action without permis- sion from the defendant or the court, the resulting sanc- tion imposed on the plaintiff by the court—namely, some unspecified reduction in the plaintiff’s share of the marital estate—was not legally justified and, thus, an abuse of discretion. First, the court expressly found that the plaintiff’s actions were not contumacious, and, thus, we conclude that it lacked any authority to punish the plaintiff pursuant to its civil contempt powers. Sec- ond, although in exercising its statutory authority under § 46b-81, the court certainly could take into account, when dividing the parties’ assets, whether a party had engaged in a dissipation of those assets, there is nothing in the present record that would support a finding that the plaintiff intended to hide or to dissipate assets, nor did the court make such a finding.
Although, as we have indicated, our resolution of this appeal does not turn on whether the court properly found that the defendant had violated the automatic orders, we nevertheless find it helpful to begin our discussion with the automatic orders. The court’s auto- matic orders, applicable during the pendenсy of all mar- ital dissolution actions, are set forth in Practice Book § 25-5 (b) and provide in relevant part: ‘‘(1) Neither party shall sell, transfer, exchange, assign, remove, or *10 in any way dispose of, without the consent of the other party in writing, or an order of a judicial authority, any property, except in the usual course of business or for customary and usual household expenses or for reasonable attorney’s fees in connection with this action. . . .’’ The orders further provide that ‘‘[n]either party shall conceal any property. . . .’’ Practice Book § 25-5 (b) (2).
The purpose of the automatic orders in marital disso-
lution actions is to maintain the status quo of the assets
within the marital estate so that they may be distributed
by the court at the time of dissolution. See
Ferri
v.
Powell-Ferri
,
In the present case, however, the court rejected the defendant’s argument that the plaintiff should be found in contempt for violating the automatic orders. Although the court found that the plaintiff’s financial transactions had violated the automatic orders, it never- theless concluded that he was not in wilful contempt because he had acted on the advice of counsel. The court made no finding that the plaintiff had attempted to circumvent the beneficial purposes underlying the automatic orders by intentionally disposing of or wast- ing marital assets. Having determined that the plaintiff’s transactions were not contumacious but rather, at least to somе degree, were justified or made in good faith, the court lost its authority pursuant to its contempt powers to take any remedial action against the plaintiff simply because, with the luxury of hindsight, those transactions had proven unprofitable or even unwise. In other words, if the court had found the plaintiff in contempt of the automatic orders, that conclusion might have justified its further consideration of the effect those violations had on the assets available for distribution. In such circumstances, the court could have taken remedial action, perhaps reducing the plain- tiff’s distribution in an amount necessary to compensate the defendant. Nevertheless, having effectively denied *11 the defendant’s motion for contempt, the court was required to dispose of the marital assets in accordance with its authority under § 46b-81, which did not include the power to punish in the absence of dissipation.
Our Supreme Court has stated that, pursuant to § 46b-
81, trial courts have the statutory authority to consider
if a spouse has dissipated marital assets when determin-
ing the nature and value of property to be assigned to
each respective spouse. See
Finan
v.
Finan
, 287 Conn.
491, 500–501,
‘‘Generally, dissipation is intended to address the situ-
ation in which one spouse conceals, conveys or wastes
maritаl assets in anticipation of a divorce. See 2 B.
Turner, Equitable Distribution of Property (3d Ed. 2005)
§ 6:102, p. 539. Most courts have concluded that some
type of improper conduct is required before a finding of
dissipation can be made. Thus, courts have traditionally
recognized dissipation in the following paradigmatic
contexts: gambling, support of a paramour, or the trans-
fer of an asset to a third party for little or no consider-
ation.’’ (Footnotes omitted.)
Gershman
v.
Gershman
,
In the present case, however, there was no express
finding by the court that the plaintiff had dissipated
marital assets, nor would an implicit finding be sup-
ported by the record. Nothing in the record indicates
that the plaintiff, by selling stock or exercising stock
options, intended to waste marital assets or to hide
assets from the defendant or the court. Indeed, the
plaintiff was also harmed by any resulting loss to the
marital estate from his transactions, as his share of
any property distribution was similarly affected. The
plaintiff’s uncontested testimony at trial was that he
was concerned in the face of the ongoing financial crisis
that the stock and stock options would likely lose value
given market conditions and, thеrefore, he decided it
would be wise to convert those assets into cash. The
fact that his noncontumacious financial decisions now
appear, with the virtue of hindsight, to be imprudent
does not mean that he dissipated assets. See id., 348;
Quasius Quasius
,
Furthermore, the defendant has not alleged that the plaintiff engaged in any financial misconduct involving the proceeds of the stock sale or the exercise of the stock options, nor is any such conduct apparent from the record. Rather, the plaintiff placed all proceeds into bank accounts that he fully disclosed on his financial affidavits.
In sum, because the defendant was not in wilful con-
tempt of the automatic orders and made no attempt to
dissipate marital assets, it was an abuse оf the court’s
legal discretion to take his purported violations of the
automatic orders into account in dividing the marital
assets. Because, as we have explained on numerous
occasions, financial orders appurtenant to a dissolution
of marriage are ‘‘a carefully crafted mosaic, each ele-
ment of which may be dependent on the other’’;
Ehrenk-
ranz
v.
Ehrenkranz
,
The judgment is reversed and the case is remanded for a new trial on all financial issues.
In this opinion the other judges concurred.
[1]
Practice Book § 25-5 (b) provides in relevant part: ‘‘In all cases involving
a marriage or civil union, whether or not there are children:
‘‘(1) Neither party shall sell, transfer, exchange, assign, remove, or in any
way dispose of, without the consent of the other party in writing, or an
order of a judicial authority, any property, except in the usual course of
business or for customary and usual household expenses or for reasonable
attorney’s fees in connection with this action. . . .’’
Practice Book § 61-11 (c) makes clear that ‘‘[t]he automatic orders set
forth in Section 25-5 (b) (1), (2), (3), (5) and (7) shall remain in effect during
any appeal period and, if an appeal is taken, until the final determination
of the cause unless terminated, modified or amended further by order of a
judicial authority upon motion of either party. . . .’’ Accord Practice Book
§ 25-5 (automatic orders to remain in place ‘‘during the pendency of the
action’’).
[2]
In addition to сhallenging the propriety of the court’s financial orders
with respect to the plaintiff’s purported violations of the automatic orders,
the plaintiff also raises a number of other claims. In particular, the plaintiff
claims that the court abused its discretion by ordering excessive alimony and
child support payments, and by ordering an excessive lump sum retroactive
alimony payment. The plaintiff also claims that the court improperly found
that the defendant had been unaware of a pension account that she disclosed
only a few days prior to the trial on remand. Because we reverse the court’s
financial orders on other grounds, and ‘‘the entirety of the [financial] mosaic
must be refashioned’’ on remand;
Gershman Gershman
,
claim on appeal, it is unnecessary for us to consider the plaintiff’s remaining [13] Because we agree with the plaintiff’s final argument in support of his arguments, including whether, in light of the facts presented in the present case, the plaintiff’s decision to convert stock and stock options into cash actually violated the automatic orders. Although we recognize that the court was unable or unwilling to articu- late precisely how it had accounted for the plaintiff’s violations of the automatic orders, we nevertheless construe the court’s statement that those violations affected its decision to award the defendant ‘‘the family home and her pension from Credit Suisse, as well as the equitable division of all of the other assets of the parties’’ as an indication that the court skewed the distribution in favor of the defendant in a materially significant, although unquantifiable, amount. plaintiff was not in contempt of court. Accordingly, we take no position on The defendant does not challenge on appeal the court’s finding that the whether a party may shield himself or herself from a finding of wilful contempt by showing that he or she relied on the advice of legal counsel.