Bray v. Bray, 206 Conn. App. 46 (2021) (contempt, remedial orders, calculation of net income under separation agreement)
Officially released July 20, 2021
In Short: When a prior order had previously entered which definitively resolved an ambiguity which is the subject of a motion for contempt, someone should probably mention that order to the trial court over the course of a four-day hearing on that issue.
The parties were divorced in 2014 pursuant to a separation agreement which required Husband to pay portions of the income he received form his employer in the form of cash bonuses and stock awards as child support, alimony and/or property distributions. Husband was to pay, as alimony, 15% of cash bonuses and 15% of future stock earned from Disney once liquidated as cash, from the liquidated net amount. Husband was to pay, as property division, 50% of the net value of certain restricted stock units upon vesting. Husband was to pay, as child support, 15 percent of his net yearly bonus.
In 2015, addressing a prior motion for contempt, a post-judgment stipulation was entered as an order of the court specifically directing how the “net” amounts of Husband’s bonus and stock income were to be calculated, specifically using Husband’s effective tax rate from the prior year, not his marginal tax rate, subject to true-up at the end of each tax year.
In 2018 Wife filed another motion for contempt arguing that Husband improperly deducted from his payments. The parties held a four-day hearing on the motion for contempt during which neither party nor the trial court mentioned the 2015 order which provided a procedure to calculate and true-up the net payment.
The trial court denied Wife’s motion. The trial court concluded that, because the separation agreement failed to provide any mechanism for true-up or reconciliation after filing of taxes, the judgment was clear and unambiguous that no additional taxes should be deducted from the proceeds. The trial court found that Husband’s deductions were not willful violations, but entered remedial orders requiring Husband to reimburse Wife certain funds based on the trial court’s conclusion that the term “net,” as used in the separation agreement, clearly and unambiguously did not contemplate true-up of the net amount of the distribution based on actual tax effects.
Husband appealed, claiming that the trial court (1) incorrectly determined that the term “net” was clear and unambiguous as used in the separation agreement, and (2) erred in interpreting the term “net” to exclude only the amounts withheld by the employer, rather than actual tax obligations, despite evidence that the parties intended to consider actual marginal tax obligations.
The Appellate Court held that the trial court’s finding that the separation agreement was clear and unambiguous that no true-up was to take place was inconsistent with the 2015 order that directed the parties to employ that exact procedure. The remedial order was vacated.