Officially released January 14, 2020.
In Short: (1) The trial court improperly found Plaintiff Wife in contempt because, inter alia, (A) the trial court held Wife in contempt based on violations that were not advanced by Husband as grounds for contempt, violating Wife’s due process rights, (B) the trial court improperly placed the burden regarding contempt on the alleged contemnor, and (C) the trial court erred in determining that a document was not in evidence, after taking judicial notice of the entire court file, which file included such document. (2) The trial court improperly made a finding of litigation misconduct without finding, with a high degree of specificity, a failure to advance any colorable claims and bad faith.
Background Facts: The background facts to this case are extremely lengthy, convoluted and as complex as can be found in any case. The following is a distillation of this writer’s view of the most salient facts.
The parties’ fourteen-year marriage was dissolved in 2002 by incorporation of a separation agreement. The agreement provided that Husband was to pay periodic alimony for ten years. In 2009, three years before the obligations were to terminate, Wife filed a motion to modify the alimony orders based on an alleged increase in Husband’s income and deterioration in Wife’s health. That motion was granted, increasing the alimony and extending the duration to February 2016, both amount and duration not subject to further modification. Weeks after that decision was issued, Wife filed a motion to open and vacate that judgment on the ground that Husband had failed to disclose an imminent offer of employment at higher compensation. The trial court opened the judgment for a new evidentiary hearing.
In February 2014, the parties and counsel appeared before the trial court requesting to put an oral stipulation on the record. The oral stipulation was to confirm the terms that had been already been agreed to by the parties. The stated intention was to reduce the agreement to writing after consulting an expert on certain mechanics of the agreement, and to bring any disputes about that writing to the court for resolution consistent with the oral stipulation. Counsel made clear that the parties intended the stipulation to be an enforceable order, not conditioned on the execution of a written instrument.
The terms were read to the court by Husband’s counsel while clarification was provided by Wife’s counsel. Per the agreement, inter alia, Husband was to pay alimony of $10,000 per month for ten years and Wife had the right to assign the payments to a special needs trust to which Husband would be a residual beneficiary in proportion to his payments to the trust. Wife was to immediately secure a legal opinion regarding the deductibility of alimony notwithstanding assignment to trust with Husband as residual beneficiary. Husband’s counsel stated that the deductibility provision is the reason the opinion letter would be necessary “before this can be done.”
Wife’s counsel thereafter withdrew. Husband filed a motion for order seeking to approve a written embodiment of the oral stipulation. Wife’s new counsel objected, claiming additions and omissions that were non-conforming to the oral stipulation, but primarily arguing that the oral stipulation itself was nonbinding or could not be enforced. Wife argued that it was impossible to create a legally valid special needs trust or to afford Husband a tax deduction under the terms of the stipulation. Wife argued the stipulation was too ambiguous and contained too many unknowns precluding knowing consent, that the terms were unconscionable, and the canvass had been insufficient. The trial court bifurcated the issues into two steps, first whether the stipulation accurately reflected the oral stipulation and second as to why the agreement could not be carried out.
Wife thereafter filed a motion to open and vacate the order approving the oral stipulation, citing mutual mistake and impossibility, but also citing the expectation regarding the expert opinion to be received and the advice contrary to that of the oral stipulation that was ultimately received. Husband objected citing Wife’s failure to accompany her motion with a memorandum of law in violation of the Practice Book and claimed that Husband could waive the alleged infirmity as to the special needs trust. Husband thereafter submitted a revised proposed written memorialization of the oral stipulation aimed at addressing Wife’s objections.
Both parties noticed experts and made various procedural filings in preparation for a hearing. At the hearing the Court presented a “Memorandum of Decision on Post-judgment Motions Resolved by Stipulation Approved and So Ordered …” distilling the oral stipulation into writing. Wife argued that this failed to reflect the condition precedent regarding the opinion on the special needs trust. The trial court stated that it was a binding agreement, had been approved and was not contingent in nature. There was further argument as to whether Wife as arguing mutual mistake of law, meaning the order was never effective, or that there was a condition precedent and the contract could not be performed at all. Wife sought to recast her motion to open as a motion to vacate the oral stipulation rather than a motion to vacate the judgment approving such stipulation. The trial court declined to hear from the parties’ expert witnesses and concluded the hearing.
Wife filed a motion to reconsider the Memorandum of Decision memorializing the oral stipulation, which was denied. Husband filed a motion for sanctions and contempt, arguing that Wife had failed to meet her obligation under the oral stipulation and contested her own settlement through improper procedural mechanisms. At the hearing on the motion for contempt and sanctions no testimony was presented, and the trial court only received financial affidavits and an affidavit from Husband’s counsel. The hearing was essentially a colloquy between counsel and the trial court, followed by a questioning of each party by the court as to each’s own understanding of the oral stipulation. The trial court issued an order finding Wife in contempt by clear and convincing evidence for violating the oral stipulation, ordering some $169,225 in legal and expert fees for all costs incurred after the date of the oral stipulation. Wife appealed. Husband filed a motion for articulation asserting that the court’s order could be considered based on contempt, litigation misconduct, or both. The trial court denied the request.
On Appeal, Wife challenged (1) the decision that the underlying oral stipulation was enforceable, and (2) the order of contempt as to its merits and reasonableness. The Appellate Court affirmed with respect to the enforcement and reversed as to the contempt order, assuming that the award of fees was based solely on the contempt finding and not on litigation misconduct.
The Supreme Court denied the request for certification regarding the enforcement of the oral stipulation and granted certification as to the contempt order. The Supreme Court ordered articulation as (1) whether the order for fees was based on contempt alone or also on litigation misconduct, (2) which parts of the order provided the bases of the contempt (3) what facts supported the finding of contempt, (4) what evidence those findings rested on, and (5) the basis of the award.
The trial court articulated that the fees were based both on contempt and litigation misconduct. The contempt finding was based on portions of the oral stipulation (1) prohibiting disparagement of the other party, (2) requiring the securing of a legal opinion letter, (3) limiting publication were the basis for the contempt and (4) requiring the parties to work together to reduce the oral agreement to a written agreement. The trial court set forth various facts without assigning them as support for any particular violation or designating them as contempt or litigation misconduct and made vague references to the record in support of those facts.
The Supreme Court upheld the Appellate Court’s decision to reverse the finding of contempt based on broader grounds but reaching the same conclusion.
The Supreme Court held that two of the grounds relied upon for the finding of contempt, non-disparagement and publication, were not advanced by Husband in his motion. To rely on such grounds to support a finding of contempt would violate Wife’s due process rights. Regarding the requirement to secure a legal opinion letter, the trial court both erred in finding there was no letter (which was in the file) and misallocated the burden of proof on this issue to Wife. Regarding the requirement that the parties work together to reduce the agreement to writing, inter alia, this ground was not advanced by Husband, no evidence was offered, and the pleadings did not support the trial court’s conclusion.
The Supreme Court further held that litigation misconduct could not stand as a purported basis for the fees award. The bad faith exception to the American Rule requires the court to find both “that the litigant’s claims were entirely without color and that the litigant acted in bad faith.” See Maris v. McGrath, 269 Conn. 834, 846-47 (2004) as a seminal case (albeit with a terribly named title, in this writer’s opinion) regarding the bad faith exception. The trial court failed to support its decision with a high degree of specificity and failed to make both critical findings to support its award. There is no exception to this rule when acting on a contempt finding for purposes of using the bad faith exception to award fees.
The Supreme Court remanded the case for further proceedings as to the motion for sanctions, with direction that the trial court may consider post-appeal matters, including the fact that, after oral argument, Husband successfully moved to open the judgement that enforced the oral stipulation based on mutual mistake (consistent with Wife’s claims all along!) which was the basis of the contempt in the first place. The Supreme Court affirmed the Appellate Court’s reversal of the trial court’s finding of contempt, remanding with direction to deny the contempt finding and affirmed the trial court’s rulings on postjudgment motions.
