Renstrup v. Renstrup, 217 Conn. App. 252 (2023) (child support: presumptive award, apportionment of award, deviation from award, supplemental awards)
Officially released: January 17, 2023
In short: (1) Any change (even less than 15%) from the presumptive award of child support under the guidelines requires the findings necessary for a deviation, (2) a deviation must be based on one of the regulatory criteria and must be logically consistent with the purpose cited, so it was error to order Husband to pay more child support due to a finding that Wife had an earning capacity, (3) the trial court cannot ignore each parties pro rata share of the combined obligation when entering an award of child support, and (4) when issuing a supplemental child support award, the court must cite characteristics of the child or demonstrated need, particularly where there is a history of fluctuation for such awards.
The Renstrups emigrated from Denmark and were both educated in Europe. They were living together in the United States at the time that they married in 2008. They had two children and Wife ceased working outside the home in 2009. Wife filed for divorce in 2017, a mistrial was declared on various pendente lite motions which were then deferred to time of trial, and the case was tried before Judge Adelman over four days in 2019.
At the time of trial, Husband had a base salary of $403k, bonus based on a target of 30% of his salary (with discretion to the employer to increase such bonus) and received substantial vested and unvested stock options. Husband also had a 25% ownership in a real estate investment.
Judge Adelman’s orders included the following:
1. Child Support:
a. Basic obligation $1,000/week.
b. Supplemental support = 17.71% of net of any bonuses or other income earned by Husband.
2. Alimony for 10 years:
a. $1,750/week for the first 2 years, $1,500/week for the next two years, and $1,000/week for the remaining six years.
b. Supplemental = another 17.71% of net bonuses or other income earned during any year in which Husband had an alimony obligation.
a. Stock and stock options were marital property subject to distribution.
b. Wife was awarded 50% of the unvested stock options and 60% of certain vested stock options.
4. More on the options: There was a rebuttable presumption that if Husband accepted new employment included compensation for his existing stock options and they will be considered to have vested in full for purposes of paying Wife her interest.
Husband appealed. The Appellate Court set forth the abuse of discretion standard, but also noted that the “question of whether, and to what extent, the child support guidelines apply … is a question of law over which this court should exercise plenary review.” The Appellate Court noted that the trial court’s customarily broad discretion is “somewhat limited” by the factors set forth in the child support guidelines.
Husband’s first claim on appeal was that, in crafting child support orders, the trial court erred by improperly:
1. Failing to allocate the total presumptive award between the parties as required by the guidelines.
2. Deviating from the presumptive award without making the requisite findings.
3. Ordering an open-ended, uncapped percentage-based supplemental award.
The Appellate Court noted that, in order to deviate, the trial court must (1) make a finding of the presumptive child support amount pursuant to the guidelines, (2) make a specific finding that application of the guidelines would be inequitable and inappropriate, and (3) provide an explanation as to which deviation criteria it is relying upon.
The Appellate Court noted that the guidelines permit a supplemental order. “A supplemental order treats the unknown future lump sum payment separately from the basic current support order and is intended to account only for those instances in which the parties have knowledge of an anticipated future lump sum payment of unknown amount, such as a bonus.”
The trial court had first performed a basic support calculation using only Husband’s base income (and real estate investment income) and no income for Wife, because Wife was not employed. The trial court did not consider Husband’s bonus in this calculation, because it intended to issue a supplemental award (although, as will become critical later, it erroneously described Husband’s bonus as being “capped” at 30%). The trial court then considered the Maturo/Misthopolous range of presumptive awards based on the parties exceeding the maximum guideline amount of $4,000/week net income, resulting in a range of $708-$820/week for presumptive support.
From there, the trial court concluded it should deviate based on Wife’s earning capacity, which it found to be $40,000. Applying the same methodology, the trial court then found a range between $708-955/week. The trial court did not apportion any of the increased total support obligation to Wife despite her earning capacity, and instead of deviating downward based on the earning capacity of Wife, “in its discretion” it ordered Husband to pay $1,000/week, which it described as a deviation of less than 5%. The trial court further ordered the 17.71% of net supplemental award.
As to the first child support subclaim, the Appellate Court agreed with Husband that the trial court erred by not considering each party’s pro rata share of the total obligation, per the income shares model. In plain English, the trial court figured out the total support award, but then apportioned none of that amount to Wife even though it assigned her an earning capacity. The Appellate Court further opined that the application of an earning capacity in this instance was inconsistent with the cited reason for the deviation. Wife having an earning capacity assigned to her should not result in a higher obligation for Husband.
As to the second child support subclaim, the Appellate Court concluded that, despite being only a 5% increase over the presumptive award (erroneously) found by the trial court, the trial court further erred by going up 5% from the presumptive award without a finding that such deviation was justified by one of the regulatory criteria. The trial court relied on C.G.S. § 46b-86 in determining that it had discretion to move up to 15% from the presumptive award. However, the Appellate Court determined that C.G.S. § 46b-86 governs modification of child support, not initial orders. It has long been common practice in separation agreements to select a number that is within 15% of the presumptive award, and not consider such amount a deviation. This decision appears to invalidate that practice, as any change from the presumptive award requires the court to make the necessary findings to permit a deviation (or, even in the event of a settlement agreement, no showing of a substantial change will be necessary to modify the order in the future).
As to the third child support subclaim, the Appellate Court noted that “a supplemental award must be capped at a sum bearing some rational relation to the estate and needs of the child” (citing Maturo, internal quotation marks omitted). The Appellate Court determined that this 17.71% award was unlimited and the trial court’s finding as to a “cap” in Husband’s bonus was clearly erroneous. A supplemental award entered by the trial court always requires a finding as to how the supplemental order relates to the child’s needs.
The Appellate Court went on to further cite Maturo to distinguish between two types of bonuses: “When there is a proven, routine consistency in annual bonus income, as when a bonus is based on an established percentage of a party’s steady income, an additional award of child support that represents a percentage of the net cash bonus also may be appropriate if justified by the needs of the child. When there is a history of wildly fluctuating bonuses, however, or a reasonable expectation that future bonuses will vary substantially … an award based on a fixed percentage of the net cash bonus is impermissible unless it can be linked to the child’s characteristics and demonstrated needs.” (Emphasis added)
This emphasis seems to indicate that a trial court must be very careful in apportioning supplemental child support based on any income stream that wildly fluctuates, or at least must put serious emphasis (particularly for irregular supplemental income) on the “needs” of the child as relate to that income stream. This creates a very strange dichotomy: a payor whose salary is $200,000 per year will certainly pay child support on the entire amount of his/her salary without any showing of a specific “need” by the child or characteristics of a child, whereas a payor whose salary is $50,000 per year, but for whom a bonus ranges from $0 to $400,000/year requires a showing as to the child’s characteristics and needs, even if the average total income averages the same in both scenarios over time. This creates more work for the payee and the trial court wherever income fluctuates wildly.
In any event, in this case, the Appellate Court found the trial court abused its discretion by failing to make an explicit finding connecting the supplemental award to the characteristics or needs of the children. The trial court compounded its error by making a clearly erroneous factual finding that the bonus was capped, where the evidence contradicted that claim.
Husband’s second claim on appeal was that the trial court improperly ordered an open-ended, uncapped percentage-based supplemental alimony award, based on a clearly erroneous finding of fact that the bonus was “capped.” The Appellate Court found that the trial court’s alimony order was at least partially based on its finding of a cap on Husband’s annual bonus, and found that the alimony order must be reversed on that ground.
The Appellate Court then turned to the appropriate relief. It reiterated the mosaic doctrine and discussed severability as a very fact-based analysis. The Appellate Court found that, in this case, the child support and alimony awards were too significant to sever from the property distribution. It therefore reversed and remanded for a new trial without considering Husband’s claims on appeal as to the property distribution.
Husband had sought to challenge whether the stock options were compensation for future performance or past performance, arguing that they were not properly clarified as marital property pursuant to C.G.S. § 46b-81, Bornemann v. Bornemann, 245 Conn. 508, 525 (2000) and Hopfer v. Hopfer, 59 Conn. App. 452, 458 (2000). The Appellate Court did not reach this question, which is a shame from my perspective. A review of Bornemann and Hopfer is advisable in any case where alternative compensation has been awarded that could be attributed to past or future employment.
Thus, continues what is now a 6-year saga from unenforceable prenuptial agreement (not subject of this appeal) to 2017 divorce filing, to mistrial on pendente lite motions, to a 4-day trial, to a successful appeal, and now remand for a new trial, where the length of the parties’ marriage prior to filing had only been nine years. There are only three years to go before the length of the divorce exceeds the length of time that the parties were married prior to filing. With another trial and a second appeal, the Renstrups could easily exceed that.
The child support elements of this case set critical precedent regarding apportionment of the total presumptive amount and the findings necessary to deviate at all from the presumptive award.
Remanded for a new trial as to all financial issues.