Simms v. Zucco, 214 Conn. App. 525 (2022) (service by marshal via certified mail; waiver of bankruptcy stay; abuse of discretion in alimony modification)
Officially released August 23, 2022
In Short: (1) Service as ordered by the trial court by a marshal via certified mail to an out-of-state defendant was proper and supported a claim to retroactive modification where Husband’s stepdaughter signed the return receipt and Husband had actual notice. (2) The trial court property relied upon the bankruptcy court’s waiver of the automatic stay in modifying alimony. (3) The trial court did not abuse its discretion in opening the judgment and in modifying alimony.
The Background Facts: The parties were divorced in 2014 by separation agreement. Pursuant to the separation agreement, Husband was to pay $1/year alimony for 5.5 years from date of dissolution. The separation agreement provided that the term was to be non-modifiable and that “assets and income from assets” divided in the separation agreement “shall not be considered” in future modification proceedings and “[o]nly earned income from employment shall be considered in any future modification proceedings including, but not limited to W-2, 1099, K-1 or Schedule C income.”
In 2015 Wife filed a post-judgment motion to modify alimony upward. Wife alleged a substantial change in circumstances including an increase in Husband’s assets and income and decline in Wife’s financial circumstances. The trial court granted Wife’s request to serve Husband with notice by certified mail and a marshal did so on Wife’s behalf. Husband’s stepdaughter signed for the notice and Husband does not dispute that he received the documents.
In 2016 Wife filed a motion to open the judgment on the grounds of Husband’s fraud. Wife asserted that Husband, through his business entities, had concealed substantial assets and income at time of dissolution on his financial affidavit. Multiple years went by during which the parties sought to settle the pending motions and had numerous status conferences.
In 2019, Husband and his current wife filed a voluntary chapter 13 petition for bankruptcy. Wife filed in the bankruptcy court a motion for relief from the automatic stay imposed by 11 U.S.C. § 362 “so as to allow continued divorce proceedings…” The bankruptcy court granted Wife’s motion for relief and terminated the automatic stay to permit “all actions necessary to commence or continue an action to establish or modify an order for a domestic support obligation.”
The trial court held an evidentiary hearing on Wife’s motion to modify alimony at which only Wife and her counsel appealed (the record demonstrated that Husband’s failure to appear was not based on lack of notice). The trial court denied the motion on the basis that the motion was not served (it appears proof of service was not provided at that time) and that the term of alimony had expired.
Wife filed a motion to reconsider the decision denying alimony, attaching proof that the motion had been served via certified mail as proscribed by the trial court and arguing that the motion to open provided a basis for a new alimony order. The trial court held an evidentiary hearing on Wife’s motion to reconsider, which both parties attended.
The trial court issued a memorandum of decision finding that Husband had been adequately served, granting retroactive modification of alimony to the date of service to the amount of $2,000/month for an arrearage of $110,000, and opening the judgment based on fraud. The trial court concluded it could only modify the amount and term of alimony from the opening of the judgment, because that was the extent of the bankruptcy court’s waiver of stay. The trial court eliminated the separation agreement’s restrictions on consideration of income and assets for purposes of alimony and eliminated the 5.5 year restriction on the term.
Husband appealed, arguing that the trial court improperly (1) found that service of notice of the motion to modify alimony was legally sufficient, (2) violated the bankruptcy stay imposed by 11 U.S.C. § 362 as a result of Husband’s chapter 13 bankruptcy by opening the dissolution decree and modifying alimony, and (3) increased his alimony obligation and awarding a substantial retroactive arrearage.
Husband’s challenge to adequacy of service argued that C.G.S. §§ 52-50 and 52-52 do not expressly permit a state marshal to serve a non-residence by certified mail and that there was no evidence that Husband was served. The Appellate Court reviewed the issue of service as a question of statutory interpretation and exercised plenary review. C.G.S. § 46b-86 permits retroactivity only to date of service consistent with § 52-50. The Appellate Court found no mandate within § 52-50 prescribing the method by which a proper officer is to serve. The Appellate Court found that Husband had been properly served consistent with § 52-50 by a proper officer and that the service provided actual notice.
The interpretation of an order of a bankruptcy court terminating an automatic stay is a question of law over which the Appellate Court exercised plenary review. The Appellate Court easily found that the bankruptcy court unambiguously terminated the stay with respect to alimony.
Lastly, Husband’s final claim was that the modification was not warranted because Husband was bankrupt, and Wife was financially healthy. The Appellate Court reviewed this claim under the abuse of discretion standard. The Appellate Court found that the trial court properly considered the parties’ financial circumstances since date of Judgment and did not abuse its discretion. Wife’s assets had decreased by $1m from date of judgment, she no longer received Social Security payments, and she had lost a source of dividend income. Husband’s income had increased by $1,200/week and he shared a lower expense burden with his current wife than he had a time of Judgment. Further, the facts demonstrated that Husband concealed substantial assets and income at time of dissolution.
The Judgment was affirmed.