D.S. v. D.S., 217 Conn. App. 530 (2023) (retirement plan as a mere expectancy rather than asset; limitations on modifiability of alimony)
Officially released: February 7, 2023
In short: (1) An unfunded, mutable and non-guaranteed retirement plan constituted a mere expectancy, (2) the trial court did not impermissibly delegate judicial authority by setting alimony to modify automatically when Wife left her employment, and (3) the trial court did not abuse its discretion by precluding upward modification of alimony.
The parties were married in 1990 in New York and had two children. Husband filed for divorce in November 2017.
At time of dissolution Husband was fifty-seven and in fair health, with multiple prestigious advanced degrees. He had a history of earning, in some years, several hundred thousand dollars, but had not been employed since 2001, excepting his own failed private equity firm between 2002 and 2008. The trial court found that Husband’s reasons for unemployment since then were without merit.
Wife was fifty-seven, educated in Canada with an MBA and J.D. She was a partner at a large international law firm earning $8m/year and netting approximately half that. Wife’s partnership agreement would entitle her to a future stream of retirement income.
Trial was held remotely over several days between January and March of 2021. Husband’s own expert witness testified that he was unable to characterize Wife’s potential retirement income as an asset. Wife’s expert pointed out that the retirement plan was unfunded, not carried on the books as a liability, disbursed from future earnings, and can be reduced at any time by vote of the firm’s partners. There were also terms for reducing or suspending payments under certain circumstances. Wife’s expert characterized the plan as “the epitome of a mere expectancy.”
The trial court found Husband solely responsible for the breakdown of the marriage due to “his abusive and intimidating treatment of the defendant, by his excessive wasteful pattern of spending placing this family in financial distress, along with his failure to contribute financially to the household in-kind and in fact, in addition to his baseless jealousy and suspicious nature of the defendant’s fidelity.” Husband’s simultaneous leasing of a Lamborghini, Maserati, Alpha Romeo and Porsche did not help his case.
The trial court concluded that Wife’s prospective stream of income in retirement pursuant to her partnership agreement was not property subject to equitable division pursuant to C.G.S. § 46b-81, stating that it was a mere expectancy.
The trial court awarded alimony to Husband in two parts, initially in $35,000/month for the first year and $30,000/month thereafter, which would terminate (in addition to upon death or remarriage of Husband) when Wife was no longer employed as an active partner in her law firm. At such time as Wife ceased to be employed at her law firm, she would pay alimony equal to 25% of net income actually received by her from her law firm’s retirement (again until death or remarriage). The alimony was to be non-modifiable as to any increase in amount or duration. Husband was assigned an earning capacity of $150,000 and a safe harbor of an additional $200,000 before downward modification could be permitted.
Husband appealed, claiming that the trial court improperly (1) concluded that Wife’s interest in the retirement program through her law firm’s partnership agreement did not constitute marital property subject to equitable distribution under C.G.S. § 46b-81, and (2) issued an alimony order that represented an improper delegation of judicial authority or abuse of discretion because it terminated based on actions by Wife.
As to Husband’s first claim on appeal, the Appellate Court noted that Husband did not challenge any of the trial court’s factual findings, only the legal conclusion that the retirement program was not a marital asset. The Appellate Court noted the standard for property from Bender v. Bender, 258 Conn. 733 (2001), that (1) the holder has an enforceable right akin to a valid contract claim, or (2) the holder’s expectation to receive property is not too speculative, that it is sufficiently concrete, reasonable and justifiable as to constitute a presently existing property interest for equitable division. Husband argued that the retirement plan met the second prong of the test. The Appellate Court engaged in a useful analysis of subsequent cases defining property, summarizing the history on the subject since Bender.
The Appellate Court ultimately agreed with the trial court, that the retirement plan constituted a mere expectancy, which could not meet wither prong of the Bender test. The Appellate Court would not overturn the trial court’s legal conclusion that it may produce a stream of income if circumstances line up, but that this was mere expectancy. Fundamentally, the difference between Wife’s retirement plan and those pension assets that are defined as property (which is most) appears to this writer to turn most heavily on the fact that the law firm could simply change or eliminate the retirement plan on a whim at any time by vote of the partners.
As to Husband’s Second claim on appeal, the Appellate Court addressed the improper delegation argument under the plenary standard of review as a question of law. The trial court cannot delegate its judicial authority to a person serving in a non-judicial function, although it may seek and heed recommendations by persons engaged to assist it. Improper delegation occurs when a non-judicial person is given authority to issue orders that affect the parties or the children. The Appellate Court reviewed a history of cases in this regard, mostly pertaining to custody and parenting. The Appellate Court found them inapplicable to the circumstances of this order, and held that this was a self-executing order, not an impermissible delegation of authority.
The Appellate Court applied the abuse of discretion standard to Husband’s claim that the preclusion of upward modification was improper. The Appellate Court noted the factual findings that Husband had earned more than $1m in 2000 and $800k in 2001, that Husband’s claim about being too busy to secure employment were not credible, that Husband’s spending was excessive and wasteful, and that he was solely responsible for the breakdown of the marriage. The Appellate Court found no abuse of discretion in the “thoughtful and just alimony orders tailored to the parties’ specific circumstances and abilities.”
The Judgment was affirmed.
In a footnote, the Appellate Court noted that the trial court had sealed certain documents and the courtroom without appropriate notice as required by P.B. § 25-59A (e), and reviewed such sealing orders under P.B. § 77-2.
