McTiernan v. McTiernan

164 Conn.App. 805

138 A.3d 935

Mary McTIERNAN

v.Mary McTIERNAN.

No. 37309.

Appellate Court of Connecticut.

Argued Jan. 20, 2016.

Decided April 14, 2016.^*

Francis L. O'Reilly, with whom was Jane Ford Shaw, for the appellant (defendant).

George J. Markley, Fairfield, for the appellee (plaintiff).

DiPENTIMA, C.J., and GRUENDEL and MULLINS, Js.^**

GRUENDEL, J.

The defendant, Barry McTiernan, appeals from the July 23, 2014 judgment of the trial court granting, in part, the postjudgment motion for contempt filed by the plaintiff, Mary McTiernan, regarding the defendant's alleged noncompliance with an unallocated alimony and child support order. The defendant also appeals from the court's December 9, 2014 judgment, in which the court awarded the plaintiff $44,285.93 in attorney's fees and $14,805.25 in expert witness fees in connection with that motion for contempt. His principal claim is that the court, in concluding that he had not complied with the unallocated alimony and child support order, improperly interpreted “gross annual earned income,” as that terminology is used in the separation agreement between the parties, to include distributions from a limited partnership interest. In addition, the defendant challenges the propriety of the award of attorney's fees and expert fees to the plaintiff.¹ We reverse the judgment of the trial court.

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 breakdown of their marriage, the parties voluntarily entered into a comprehensive separation agreement dated October 23, 2003, that the court incorporated into its judgment of dissolution. On February 9, 2004, the court dissolved the marriage, finding that it had broken down irretrievably without attributing fault to either party as to the cause.

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 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 income, royalties 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 acknowledged that the defendant had provided her with earning statements at the end of each year, which she utilized in preparing her tax returns. She also testified that she received monthly payments from the defendant for unallocated alimony and child support. The plaintiff testified that she did not “know anything ... financially about ... the workings of how [the defendant's] income” was computed, and for that reason hired a forensic accountant. After consulting with that accountant, the plaintiff came to “believe that there is income ... that I am owed through distributions that I have not received according to our divorce agreement.” In short, she was advised that the distributions the defendant received from the “Capital Account and Grant Units” (capital account) of “Cantor Fitzgerald, LP” (limited partnership),⁵ qualified as gross annual earned income under the separation agreement. When asked specifically what she was claiming with respect to the partnership distributions, the plaintiff answered, “whatever the forensic accountant testifies to.” The plaintiff later was asked to specify the basis for her claim that the defendant had not paid her 45 percent of his gross annual earned income. She testified that the basis for her claim “[i]s because once the documents were given to the forensic accountant, he—from what I understand, 45 percent of [the defendant's] income has not been paid to me.”

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 Fitzgerald 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 were “not from any personal use of my services or anything like that.... [The plaintiff] and I purchased the asset. We purchased the asset together.... At the divorce, she wanted none of it. She took the Florida [property]⁸ and the cash. She wanted none of it. It was an asset. It's a limited partnership asset.”⁹ (Footnotes added.) The defendant also testified that he and the plaintiff “signed a loan to buy” their interest in the limited partnership. He thereafter received disbursements from the capital account of the limited partnership, which are reflected on the schedule K–1 forms that he filed annually with the Internal Revenue Service.¹⁰ In his testimony, the defendant acknowledged that those disbursements constituted partnership distributions.¹¹

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 limited 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

The defendant's 2012 schedule K–1 (K–1 form) indicates that the defendant owned a five-hundredths of 1 percent interest in...