Krafick v. Krafick

Decision Date08 August 1995
Docket NumberNo. 15043,15043
Citation234 Conn. 783,663 A.2d 365
CourtConnecticut Supreme Court
PartiesPatricia A. KRAFICK v. John H. KRAFICK.

David S. Maclay, for the appellant (plaintiff).

Daniel P. Weiner, with whom, on the brief, was Dan M. Schacht, for the appellee (defendant).

Maureen M. Murphy, Ruth L. Pulda, Janet M. Degnan, Nancy Engberg, Misty Farris, Lisa Levy and Jo Seavey filed a brief for the Connecticut Women's Education and Legal Fund et al. as amicus curiae.

Before PETERS, C.J., and BORDEN, BERDON, NORCOTT and PALMER, JJ.

NORCOTT, Justice.

The principal issues in this certified appeal are whether vested pension benefits constitute property for the purposes of equitable distribution pursuant to General Statutes § 46b-81; 1 and, if so, what methods are appropriate by which to value such benefits. The plaintiff, Patricia A. Krafick, appealed to the Appellate Court from the judgment of the trial court dissolving her thirty-three year marriage to the defendant, John H. Krafick, and distributing the parties' marital assets. The Appellate Court affirmed the judgment of the trial court without opinion. Krafick v. Krafick, 34 Conn.App. 930, 643 A.2d 314 (1994). 2 We granted certification 3 and now reverse the judgment of the Appellate Court.

The relevant procedural and factual background is as follows. The parties were married on December 27, 1958. During the first twenty years of their marriage, the plaintiff worked in the home, caring for the parties' seven children. She reentered the paid workforce in 1979 to work part-time in a bakery. In 1981, she obtained a full-time position with the Danbury welfare department as a case worker, where she subsequently was promoted to assistant director. The plaintiff's 1992 earnings from this position were approximately $36,000.

The defendant worked as a teacher, first in the Danbury school system and subsequently in the Bedford, New York, school system. He retired on February 1, 1994, shortly after the parties' marriage was dissolved, after thirty-four years of service. In addition, the defendant worked as a full-time seasonal night dispatcher at a fuel company and held a number of other short term summer jobs. The defendant's 1992 total earnings were approximately $79,000.

After several years of growing dissatisfaction with their relationship, the parties separated in February, 1991. In August, 1991, the plaintiff instituted this marriage dissolution action seeking a decree of dissolution, alimony and the assignment of certain property from the defendant's estate, including a 50 percent interest in the defendant's pension by way of a qualified domestic relations order (QDRO). 4

The parties' financial affidavits disclosed that, in addition to the family home, 5 the parties owned a retail liquor business, 6 a summer cottage in Old Saybrook 7 and several "individual assets," including personal vehicles and savings and checking accounts. 8 The parties also claimed as "deferred assets" their respective retirement plans. The plaintiff had two individual retirement accounts with a total value of $8374 and a pension from the city of Danbury. 9 The defendant had a 401k plan from his job as a dispatcher, valued at $30,500, an early retirement bonus in the amount of $16,200 and a pension from the New York state teachers' retirement system, which would pay him 61 percent of the average of his three highest years of salary upon retirement, but which he claimed had "no present cash value." 10

At trial, two documents addressing the nature and value of the defendant's teacher's pension were introduced as exhibits. The first was a letter from the teachers' retirement system benefits department that was addressed to the defendant. The letter explained that the pension fund was entirely employer funded and that contributions were not allocated to individual members in the form of an annuity savings account. Instead, benefits were calculated pursuant to a preset formula, based on the member's total years of service and the average of the member's three highest years of salary. 11 The pension vested at twenty years of credited service. 12

The plaintiff also introduced an expert appraisal of the defendant's pension performed by Law Data, Inc. The appraisal stated that the defendant was fully vested in the pension and it projected, on the basis of his retiring on the eve of trial, that his annual pension income would be $36,500. On the basis of the defendant's age and life expectancy, the appraisal further stated that the present value of the pension was $420,981. The defendant did not contest this appraisal nor did he introduce an alternative calculation of the pension's present value or its projected yearly payout. Instead, he stressed that he could not liquidate the pension nor receive any payments from it until he retired. The defendant indicated at trial that he was eligible to retire and that he intended to do so in June, 1994.

On November 19, 1992, the trial court rendered judgment dissolving the parties' marriage on the ground of irretrievable breakdown. 13 Pursuant to General Statutes §§ 46b-81 and 46b-82, 14 however, the trial court made the following division of the parties' property and award of support. The plaintiff was awarded the family home, most of the household furniture and furnishings, her interest in the Old Saybrook property, and the retail liquor business. Additionally, the defendant was ordered to pay to the plaintiff $300 per week in alimony, secured by a QDRO against his pension. 15 The defendant received $30,000 "as and for a property distribution." The parties retained their "respective bank accounts, securities, IRA plans and respective pension rights free and clear of any claims of the other, subject only to the [QDRO]." In addition, the parties were made equally responsible for payment of any existing debt, but were individually responsible for any other liabilities shown on the affidavits. Lastly, the parties were ordered to exchange life insurance policies, each worth approximately $50,000.

Thereafter, the plaintiff filed a motion to open and clarify the trial court's judgment. 16 General Statutes § 52-212(a); see Practice Book §§ 329, 4051 and 4061. She contended that the trial court's disposition of the marital assets was inequitable, in that, according to her calculations, it awarded the defendant 87 percent of the assets and the plaintiff only 13 percent. 17 The plaintiff sought clarification of the basis of the court's property distribution, particularly whether the trial court had found the plaintiff to be at fault. She also asked the trial court to address difficulties encountered in using a QDRO to reach the pension merely as security for alimony, rather than awarding her as a QDRO a percentage interest in the pension itself. See 29 U.S.C. § 1003(b)(1) (Employee Retirement Income Security Act [ERISA] does not apply to governmental employee benefit plans).

At the hearings on the plaintiff's motion, the trial court confirmed that it had intended to award the plaintiff no interest in the pension other than as security for the defendant's alimony obligation. Despite the plaintiff's repeated attempts, the trial court refused to state the basis of its property distribution or to articulate the value, if any, that it had ascribed to the defendant's pension. The trial court acknowledged that the pension was an asset, but indicated that because it did not have a liquidated value, it was not amenable to reliable valuation and, therefore, was not considered alongside other assets in distributing the marital property. 18 The Appellate Court, in a per curiam opinion, affirmed the judgment of the trial court.

On appeal to this court, the plaintiff claims that the trial court improperly failed to treat the pension as an asset, to assign it a value and to apportion it equitably. We agree.

I

The distribution of assets in a dissolution action is governed by § 46b-81, which provides in pertinent part that a trial court may "assign to either the husband or wife all or any part of the estate of the other.... In fixing the nature and value of the property, if any, to be assigned, the court, after hearing the witnesses, if any, of each party ... shall consider the length of the marriage, the causes for the ... dissolution of the marriage ... the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties and the opportunity of each for future acquisition of capital assets and income. The court shall also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates." (Emphasis added.) This approach to property division is commonly referred to as an "all-property" equitable distribution scheme. See 3 A. Rutkin, Family Law and Practice (1995) § 37.01[a][v], p. 37-19. It does not limit, either by timing or method of acquisition or by source of funds, the property subject to a trial court's broad allocative power. 7 A. Rutkin, E. Effron & K. Hogan, Connecticut Practice Series: Family Law and Practice with Forms (1991) § 27.1, pp. 398-400.

There are three stages of analysis regarding the equitable distribution of each resource: first, whether the resource is property within § 46b-81 to be equitably distributed (classification); second, what is the appropriate method for determining the value of the property (valuation); and third, what is the most equitable distribution of the property between the parties (distribution). The present case concerns the proper treatment of the defendant's vested pension under all three stages of our equitable distribution scheme. 19

A

We first consider whether pension benefits should be classified as property pursuant to § 46b-81. We conclude that they should.

We approach this question according to well established...

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