GRECO v. GRECO, 275 Conn. 348 (2005)

880 A.2d 872

(SC 17220)Supreme Court of Connecticut

Norcott, Katz, Palmer, Vertefeuille and Zarella, Js.

Syllabus
The defendant appealed to the Appellate Court from the judgment of the trial court dissolving his marriage to the plaintiff and making certain financial orders. The trial court had awarded the plaintiff more than 98 percent of the marital property plus alimony and attorney’s fees that exceeded the defendant’s income. The Appellate Court concluded that the trial court improperly applied the law by basing its financial orders on the parties’ gross incomes rather than on their available net incomes, and abused its discretion by ordering the defendant to pay alimony and other expenses that far exceeded his available net income. The Appellate Court set aside that judgment solely as to the financial orders and remanded the case for a new hearing on those issues only, from which the plaintiff, on the granting of certification, appealed to this court. Held:

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1. The trial court’s award of more than 98 percent of the marital estate to the defendant was an abuse of discretion, that court having failed to consider the statutory (§ 46b-81) criteria applicable to the distribution of marital property upon the dissolution of a marriage; the trial court’s award divested the defendant of any assets with which he could satisfy the court’s financial orders, it left him destitute and gave the plaintiff all significant marital assets, and, contrary to the plaintiff’s claim, the court explicitly found that the defendant’s prior conveyance of stock in his company to his children was not fraudulent.

2. The trial court abused its discretion in failing to consider the applicable statutory (§ 46b-82) criteria in its award of alimony and attorneys fees to thee plaintiff; in light of the defendant’s age, poor health and compromised ability to work, the court’s order, which forced the defendant to the brink of poverty by his obligations to pay the required alimony and insurance premiums and then stripped him of the means with which to pay them by the disproportionate division of the marital assets, constituted an abuse of discretion.

Argued April 18, 2005

Officially released September 6, 2005

Procedural History
Action for the dissolution of a marriage, and for other relief, brought to thee Superior Court in the judicial district of Ansonia-Milford, where the named defendant filed a counterclaim and where the defendant Linda Greco et al. filed a counterclaim; thereafter, the matter was tried to the court, Cutsumpas, J.; judgment dissolving the marriage and granting certain other relief, from which the named defendant appealed to the Appellate Court, Lavery, C.J., and DiPentima, and Stougton, Js., which reversed in part the judgment of the trial court and remanded the case for further proceedings, from which the plaintiff, on the granting of certification, appealed to this court. Affirmed.

William F. Gallagher, with whom, on the brief, was Barbara L. Cox, for the appellant (plaintiff).

James R. Greenfield, with whom was Kelly P. Mai, for the appellee (named defendant).

Opinion
NORCOTT, J.

The sole issue in this certified appeal is whether the Appellate Court properly concluded that

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the trial court abused its discretion in awarding the plaintiff in a dissolution of marriage action 98.5 percent of the marital property plus alimony and attorney’s fees exceeding the defendant’s income. The plaintiff, Eileen N. Greco, appeals following our grant of certification[1] from the judgment of the Appellate Court reversing the trial court’s judgment as to all financial orders imposed on the named defendant, George Greco.[2] Greco v Greco, 82 Conn. App. 768, 777, 847 A.2d 1017 (2004). We conclude that the trial court abused its discretion by failing to consider adequately the parties’ current financial circumstances in forming its judgment. Accordingly, we affirm the judgment of the Appellate Court.

The following background facts and procedural history are set forth in the Appellate Court opinion. “The plaintiff and the defendant were married on September 28, 1974. It was the second marriage for both parties. At the time of the marriage, the defendant had custody of his five children from his prior marriage and the plaintiff had custody of a child born during her prior marriage. In 1997, DNA testing revealed that the defendant is that child’s biological father. The parties also had a child together born during their marriage.

“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

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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 returned to the marital estate.[3] The third count essentially was identical to the second count.

“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

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four count counterclaim. They also filed a claim for a jury trial. On that same date, the LDGG Limited Partnership and the trustee of the two trusts filed their answers and special defenses. On November 8, 2001, the plaintiff filed an answer and special defenses to the counterclaims of the defendant’s five children from his prior marriage.

“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. The court, however, stated that although it would not set aside the transfers or include the assets involved in the marital estate, it would consider the defendant’s removal of those assets from the marital estate in fashioning its financial orders.

“In its orders, the court ordered the defendant to pay to the plaintiff $710 per week in alimony until the death of either party, the plaintiff’s remarriage or her cohabitation. It also ordered the defendant to maintain his life insurance for the plaintiff’s benefit and to provide health insurance for her for three years.[4] The court further ordered the defendant to transfer to the plaintiff his interest in the marital residence at 24 Sunbrook Road in Woodbridge. In addition, the court ordered the defendant to transfer to the plaintiff his stock in Greco’s Auto Parts, Inc., or, alternatively, the value of that stock, which the court found to be $250,000.[5] Finally, the court ordered the defendant to transfer to the plaintiff his individual retirement account, which was valued at approximately $9900, and to pay to the plaintiff $100,000

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in attorney’s fees.” (Internal quotation marks omitted.) Id., 769-72.

The defendant appealed from the trial court’s judgment to the Appellate Court, claiming the trial court improperly: “(1) overvalued the defendant’s stock in Greco’s Auto Parts, Inc., (2) improperly awarded the plaintiff 98 percent of the parties’ marital assets, (3) improperly relied on gross income, rather than net income, in determining the defendant’s alimony obligation, (4) improperly ordered the defendant to pay alimony and other expenses that exceed his available income, and (5) abused its discretion in awarding the plaintiff $100,000 in attorney’s fees.” Id., 769. The Appellate Court agreed with the defendant’s third and fourth claims and reversed the trial court’s judgment as to all financial orders, declining to reach the defendant’s other claims. Id., 776-77.

On appeal, the plaintiff makes three claims. Specifically, she claims that the Appellate Court improperly: (1) disregarded the trial court’s finding that the defendant was not a credible witness and placed the burden on the plaintiff to disprove the defendant’s allegedly unsubstantiated allegation that the trial court’s award of alimony was based on gross income rather than earning capacity; (2) held the trial court’s financial awards unreasonable in light of the evidence presented at trial; and (3) reversed the trial court’s $100,000 award of attorney’s fees.

The defendant, in response, argues that the Appellate Court properly concluded that the trial court’s alimony award was based on gross income rather than net income and properly disregarded the plaintiff’s claim that the award reflected earning capacity. He further contends that the Appellate Court properly reversed the trial court’s financial awards as unreasonable and contrary to law and held the award of attorney’s fees

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to be an abuse of the trial court’s discretion.[6] We agree with the defendant’s contention that the Appellate Court properly reversed the trial court’s judgment, but we affirm the Appellate Court’s judgment for different reasons.

At the outset, we note that “[t]he issues involving financial orders are entirely interwoven. The rendering of a judgment in a complicated dissolution case is a carefully crafted mosaic, each element of which may be dependent on the other.” (Internal quotation marks omitted.) Sunbury
v. Sunbury, 210 Conn. 170, 175, 553 A.2d 612 (1989). Furthermore, trial courts are endowed with broad discretion to distribute property in connection with a dissolution of marriage. Bornemann v. Bornemann, 245 Conn. 508, 531-32, 752 A.2d 978 (1998). With those caveats in mind, we address in turn the three parts of the trial court’s financial award.

I DISTRIBUTION OF MARITAL PROPERTY
Although a trial court is afforded broad discretion when distributing marital property, it must take into account several statutory factors Lopiano v. Lopiano, 247 Conn. 356, 374-75, 752 A.2d 1000 (1998). These

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factors, enumerated in General Statutes § 46b-81,[7] include “the age, health, station, occupation, amount and sources of income, vocational skills, employability . . . and needs of each of the parties. . . .” (Internal quotation marks omitted.) Lopiano v. Lopiano, supra, 375. Although the trial court “need not give each factor equal weight . . . or recite the statutory criteria that it considered in making its decision or make express findings as to each statutory factor,” it must take each into account. (Internal quotation marks omitted.) Id.

It is true that “trial courts are empowered to deal broadly with property and its equitable division incident to dissolution proceedings.” (Internal quotation marks omitted.) Jewett v. Jewett, 265 Conn. 669, 682, 830 A.2d 193 (2003). Generally, we will not overturn a trial court’s division of marital property unless it “misapplies, overlooks, or gives a wrong or improper effect to any test or consideration which it was [its] duty to regard.” (Internal quotation marks omitted.) Bornemann v Bornemann, supra, 245 Conn. 532. We must, however, consider, the paramount “purpose of a property division pursuant to a dissolution proceeding [which] is to unscramble existing marital property in order to give each spouse his or her equitable share at the time of dissolution.” Smith v Smith, 249 Conn. 265, 275,

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752 A.2d 1023 (1999). Under the circumstances of this case, an award of 98.5 percent of the marital estate, or $720,936.56 of the $731,870.21 estate, fails to capture this maxim.

Although the trial court stated that it had considered all of the statutory criteria when it fashioned the financial award, its final judgment indicates otherwise. As the trial court acknowledged, the defendant had only an eighth grade education, suffered from angina and other health problems, required several surgeries, underwent ongoing treatment from several physicians, and took nine different medications. The trial court also noted that the defendant’s ability to work was severely compromised and indeed, he worked only a few hours per day. The defendant’s primary source of income was from his automotive parts business, which paid him a gross salary of $73,840 per year. He apparently enjoyed some gambling winnings as well, although in varying amounts from year to year. Nothing in the trial court’s judgment or memorandum of decision indicates that it considered the defendant’s gambling winnings a viable source of income.

The term “station,” as used in § 46b-81, refers to the parties’ standard of living, which the courts carefully must consider when dividing marital property. Blake v. Blake, 207 Conn. 217, 232, 541 A.2d 1201
(1988); Graham v. Graham, 25 Conn. App. 41, 47, 592 A.2d 424, cert. denied, 220 Conn. 903, 593 A.2d 969 (1991). The purpose of dividing marital property is to preserve, as much as possible, the parties’ existing standard of living, not to award property to one spouse to the complete exclusion of the other. Although an award of such magnitude might be permissible under some circumstances, the trial court’s other financial orders render the current distribution impracticable. Indeed, the trial court’s order that the defendant pay considerable alimony as well as maintain two insurance policies for the plaintiff’s

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benefit exhausted his income. See also part II of this opinion. Given the court’s order that he relinquish his stock in Greco’s Auto Parts, Inc., which assured him a regular paycheck despite working only a few hours a day, the defendant’s future employment prospects are uncertain at best.[8] The defendant’s already diminished ability to generate income due to his age, health, lack of education, and other infirmities also militates against divesting him of any assets with which he could satisfy the trial court’s other orders. See Bartlett v Bartlett, 220 Conn. 372, 378
n. 8, 599 A.2d 14 (1991) (“[i]n assigning marital property, the trial court must also consider the opportunity for each party to acquire future capital assets and income, as well as the contribution of each of the parties toward the value of their respective estates”). Thus, the trial court’s orders leave the defendant destitute, while giving to the plaintiff all significant marital assets as well as the defendant’s entire salary.

The plaintiff attempts to justify the disproportionate award by relying on allegations of fraud. Specifically, she relies on Watson v. Watson, 221 Conn. 698, 709, 607 A.2d 383 (1992), in which we stated that “the trial court in a dissolution action may properly consider as part of the marital estate property that has been

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fraudulently transferred even though for some reason the trial court has chosen not to set aside the transfer.”[9] In Watson, the trial court applied then General Statutes § 52-552, which required that “[t]he party seeking to set aside a conveyance as fraudulent bears the burden of proving . . . that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations. . . .” (Emphasis added.) Watson v. Watson, supra, 707. After making a formal finding that the defendant had transferred property with fraudulent intent and without substantial consideration, the trial court in Watson declined to set aside the conveyance or include the value of the property in the marital estate because the conveyance had not rendered him unable to meet his obligations. Id., 706-707. This court reversed the trial court’s order, concluding that, although the conveyance was not set aside because the second statutory element was unsatisfied, the trial court should have included the value of the property in the marital estate because the defendant had transferred it with the intent to defraud the plaintiff. Id., 708-709.

Although the plaintiff in the present case is correct in stating that a fraudulent conveyance not set aside may still be considered in the value of the estate, Watson does not support her claim that “the court could properly

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consider the value of the transferred stock and real estate as part of the marital [property],” in light of the fact that the trial court explicitly found that the conveyance at issue herein was not fraudulent. The determination of whether a fraudulent transfer took place is a question of fact and it is axiomatic that “[t]he trial court’s [factual] findings are binding upon this court unless they are clearly erroneous in light of the evidence and the pleadings in the record as a whole. . . . We cannot retry the facts or pass on the credibility of the witnesses. . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” (Internal quotation marks omitted.) Melillo v. New Haven, 249 Conn. 138, 151, 732 A.2d 133 (1999); see also National Loan Investors, L.P. v. World Properties, LLC, 79 Conn. App. 725, 731, 830 A.2d 1178 (2003) (“`The question of whether a fraudulent conveyance took place is solely a question of fact to be determined by the trier. . . . We will not disturb the trial court’s factual findings unless they are clearly erroneous and unsupported by the record.'”), cert. denied, 267 Conn. 910, 840 A.2d 1173
(2004).

The trial court enumerated in detail the reasons supporting its finding that the plaintiff had not proven the existence of a fraudulent conveyance and we will not disturb that finding on appeal.[10] The plaintiff cannot

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justify the vastly disproportionate property distribution by pointing to mere allegations of fraud, which the trial court itself explicitly found insufficient to meet her burden of proof. Accordingly, we conclude that the Appellate Court correctly concluded that the trial court abused its discretion in making its distribution of the marital property.

II ALIMONY AND RELATED PAYMENTS
Trial courts also are afforded wide discretion in awarding alimony, provided that they consider all of the criteria enumerated in General Statutes § 46b-82.[11] Sunbury v. Sunbury, supra, 210 Conn. 174. These criteria are essentially identical to those set forth in § 46b-81, which applies to the distribution of marital property.

Here, in addition to awarding the defendant less than 2 percent of the total marital assets, the trial court also ordered him to pay the plaintiff $710 per week in alimony and to maintain for her benefit two substantial insurance policies.[12] Should the defendant elect to turn over his stock to the plaintiff, he still will be liable for more than $1000 per week in alimony payments and

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insurance premiums, plus $100,000, payable in $20,000 installments over a period of five years, in attorney’s fees. On the other hand, if the defendant exercises his option to retain the stock in his company, he faces the daunting task of paying the plaintiff either an additional $250,000, or delivering to her a promissory note with adequate security through which he promises to pay to her $250,000 over a period of ten years at 7 percent interest per annum.

The defendant’s annual salary of $73,840, reduced by $36,920 per year for alimony payments, $12,480 per year for life insurance premiums, $5972.16 per year for health insurance premiums, and $20,000 per year in attorney’s fees, results in an annual gross income deficit of $1532.16 per year. Greco v. Greco, supra, 82 Conn. App. 774. If the defendant’s net income, which he reported to be $53,872 per year, is correct, the payment of alimony and insurance premiums alone leave the defendant with an annual net income deficit of $1500.16. Id. Additionally, if the defendant were to choose to retain his stock in Greco’s Auto Parts, Inc., he would be required to pay the plaintiff an additional lump sum of $250,000 or $34,832.52 per year for ten years. Id., 776 n. 15.

The trial court’s order is irreconcilable with the principle that alimony is not designed to punish, but to ensure that the former spouse receives adequate support. See Fattibene v. Fattibene, 183 Conn. 433, 441, 441 A.2d 3 (1981). Requiring that the defendant pay alimony that consumes his income and distributing the marital property in this manner offends the long settled principle that the defendant’s ability to pay is a material consideration in formulating financial awards. Casanova v Casanova, 166 Conn. 304, 304-305, 348 A.2d 668 (1974); see als Panganiban v. Panganiban, 54 Conn. App. 634, 642-43, 736 A.2d 190
(“[i]t is hornbook law that what a spouse can afford to pay for support

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and alimony is a material consideration in the court’s determination as to what is a proper order” [internal quotation marks omitted]), cert. denied, 251 Conn. 920, 742 A.2d 359 (1999).

The plaintiff contends that the trial court was entitled to consider the defendant’s “unreported [income]” in fashioning its alimony award. Although there was some testimony supporting the existence of such income, the trial court’s memorandum of decision does not refer to the defendant’s alleged practice of deleting invoices and pocketing money from cash sales or otherwise “skimming” from his business, and the trial court apparently did not consider these alleged practices in formulating its award. The only sources of income mentioned by the trial court, aside from the defendant’s salary and occasional gambling winnings, were “periodic cash gifts” from one of the defendant’s children and some weekly cash amounts that the defendant brought home for incidentals. These small, inconsistent and largely unsubstantiated cash sums cannot justify the otherwise excessive award of alimony that the trial court ordered in this case. See Schmidt v. Schmidt, 180 Conn. 184, 190, 429 A.2d 470 (1980) (alimony award factoring in unsubstantiated claim that husband made substantial money as commodities broker was improper where no concrete evidence existed as to specific amounts of such income).

We are acutely aware that trial courts have wide discretion to formulate remedies in domestic relations cases, and we reiterate that “[t]he power to act equitably is the keystone to the court’s ability to fashion relief in the infinite variety of circumstances which arise out of the dissolution of a marriage. Without this wide discretion and broad equitable power, the courts in some cases might be unable fairly to resolve the parties’ dispute. . . .” (Internal quotation marks omitted.)Sunbury v. Sunbury, supra, 210 Conn. 174. Nevertheless,

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when invoking principles of equity, a court must examine both the public policy implicated and the basic elements of fairness. DiLullo v. Joseph, 259 Conn. 847, 853, 729 A.2d 819 (2002).

Under the trial court’s order, the defendant was forced to the brink of abject poverty by his obligations to pay the required alimony and insurance premiums, and then stripped of any means with which to pay them by the disproportionate division of the marital assets. Such an order constitutes an abuse of discretion in light of the defendant’s age, poor health and compromised ability to work.[13] See General Statutes §§ 46b-81
and 46b-82.

The judgment of the Appellate Court is affirmed.

In this opinion the other justices concurred.