Birkhold v. Birkhold

• Decision Date: 28 June 2022
• Docket Number: SC 20593
• Parties: Stephen BIRKHOLD v. Susan BIRKHOLD
• Court: Connecticut Supreme Court

343 Conn. 786

276 A.3d 414

Stephen BIRKHOLD

v.Susan BIRKHOLD

SC 20593

Supreme Court of Connecticut.

Argued February 16, 2022

Officially released June 28, 2022

Charles D. Ray, Hartford, with whom, on the brief, were Brittany A. Killian and Angela M. Healey, for the appellant (plaintiff).

Alexander Copp, Danbury, with whom was Rachel A. Pencu, Bridgeport, for the appellee (defendant).

Robinson, C. J., and D'Auria, Mullins, Ecker and Keller, Js.

D'AURIA, J.

In this appeal, we are called on to interpret a separation agreement to determine whether draws or advance payments on commissions are loans, and thus do not constitute income for the purposes of awarding alimony. The plaintiff, Stephen Birkhold, appeals from the trial court's decision granting both his motion for modification of alimony and a postjudgment motion for contempt filed by the defendant, Susan Birkhold, which the trial court resolved by finding the plaintiff in contempt and awarding the defendant past due alimony and attorney's fees. On appeal, the plaintiff claims that the trial court incorrectly (1) interpreted the parties’ separation agreement to conclude that the draws from his employment as a real estate broker were income subject to alimony, (2) interpreted the parties’ agreement to conclude that money paid to his limited liability company (LLC) was income subject to alimony, (3) modified his future alimony obligation, (4) found him in contempt for his failure to pay alimony, and (5) awarded the defendant attorney's fees as the prevailing party under the separation agreement.¹ We affirm the trial court's decision in full.

The record reveals the following procedural history and facts found by the trial court. The court dissolved the parties’ marriage in 2009. The court's dissolution judgment incorporates a separation agreement the parties had negotiated that requires the plaintiff to pay alimony to the defendant in an amount equal to "30 percent of his ‘gross annual base income from employment’ as defined herein ... and 25 percent of his gross cash bonus ...." The separation agreement defines "gross annual base income from employment" as "income actually received by the [plaintiff] from employment ... from any and all sources derived. Without limiting the generality of the foregoing, ‘gross annual base income from employment’ shall include income from wages, salaries, consulting or other fees, commissions, director's fees and compensation for or by reason of past, present or future employment, in whatever form received." The separation agreement further provides that, in the event a court determines that either party has breached any of the provisions of the agreement, "the offending party shall pay to the other party reasonable [attorney's] fees, court costs and other expenses incurred in the enforcement of the provisions of this [a]greement and/or judgment or decree incorporating any or all of the provisions hereof."

At the time of dissolution, the plaintiff was the chief executive officer of a major corporation. He was paid an annual salary and a bonus, and received a W-2 form for tax purposes. Although the plaintiff changed jobs after the divorce, he remained a highly compensated corporate executive, earning more than $2 million a year in 2013 and 2014. Pursuant to the parties’ agreement, the defendant received 30 percent of his earnings, all of which was paid as base income during those years. The plaintiff was then unemployed for almost one year.

In 2015, the plaintiff informed the defendant that he had begun working for Cushman & Wakefield as a commercial real estate broker. He would receive annual draws on future commissions, initially in the amount of $35,000 a year, which he claimed he did not earn until he realized sales that resulted in commissions. The plaintiff stated that the purpose of the draw was to provide him with medical insurance. If the plaintiff did not earn commissions sufficient to cover the draw, his employment agreement obligated him to pay the difference back to Cushman & Wakefield. Two weeks after beginning at Cushman & Wakefield, the plaintiff offered to pay the defendant $875 a month (30 percent of the $35,000 draw) in alimony as long as the defendant agreed that she would pay him back if he did not earn his draw. The defendant agreed to accept the $875 a month alimony payment because she was "in a very difficult financial predicament [at that time], and even that small amount [would] aid in paying utilities."

In subsequent years, the plaintiff's annual draw rate increased. The plaintiff's total compensation from Cushman & Wakefield was $175,900 in 2016, $315,777 in 2017, $216,105 in 2018, and $138,534 in 2019. The plaintiff also received other payments as a business consultant to other entities during this time, totaling $630,930. Despite the increase in the draw rate and his other consulting income, the plaintiff continued to pay the defendant only $875 a month in alimony.

In 2017, the defendant filed a postjudgment motion for contempt and, later, in 2018, an amended motion for contempt for the plaintiff's failure to pay alimony consistent with the separation agreement. In addition to a finding of contempt, the defendant sought an order compelling the plaintiff to pay her the accrued unpaid alimony that she claimed was owed under the separation agreement. Thereafter, the plaintiff filed a motion to modify his alimony obligation due to a substantial change of circumstances in the nature of his employment. Specifically, the plaintiff contended that the definition of "gross income" was no longer equitable because his "income through Cushman & Wakefield is subject to ‘claw-back’ provisions," and he is required to make business expenditures to generate income that are not accounted for in the current definition of gross annual base income from employment.

Following a multiday evidentiary hearing, the trial court issued a memorandum of decision and awarded the defendant past due alimony as of October 1, 2019, in the amount of $249,570 to be paid in $3500 monthly installments,² and attorney's fees and costs in the amount of $80,000, to be paid in $4000 monthly installments. The trial court also granted the plaintiff's motion to modify his alimony obligation by eliminating the 30 percent of gross annual base income from employment formula and replacing it with a fixed monthly alimony obligation of $6500 per month.³ The trial court also found the plaintiff in contempt for wilfully violating the "clear and unambiguous" separation agreement.

The plaintiff appealed to the Appellate Court, and the appeal was transferred to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1.⁴ Additional facts and procedural history will be provided as needed.

I

On appeal, the plaintiff claims that the trial court premised its decision awarding the defendant past due alimony on an incorrect reading of the separation agreement and a clearly erroneous finding that money he received from his work as a real estate broker for Cushman & Wakefield in the form of a draw constituted income subject to alimony under that agreement. The plaintiff argues that, because the agreement does not state or imply that gross annual base income from employment includes money received but subject to repayment, the draws are not "income actually received," as contemplated by the separation agreement, until he earns the commission. The money, the plaintiff contends, is a loan requiring repayment and therefore cannot properly be considered income for the purposes of determining alimony. The defendant responds that the trial court's finding that the draws were income and not a series of loans was not clearly erroneous. We agree with the defendant.

The interpretation of a separation agreement "incorporated into a dissolution decree is guided by the general principles governing the construction of contracts." (Internal quotation marks omitted.) Eckert v. Eckert , 285 Conn. 687, 692, 941 A.2d 301 (2008). When the language of a contract is clear and unambiguous, the contract "must be given effect according to its terms, and the determination of the parties’ intent is a question of law." (Internal quotation marks omitted.) Nation-Bailey v. Bailey , 316 Conn. 182, 192, 112 A.3d 144 (2015). "When the language of a contract is ambiguous, the determination of the parties’ intent is a question of fact." (Internal quotation marks omitted.) Id.

"When construing a contract, we seek to determine the intent of the parties from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction .... [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ... the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract." (Emphasis in original; internal quotation marks omitted.) Isham v. Isham , 292 Conn. 170, 180, 972 A.2d 228 (2009).

We agree with the trial court's conclusion that the clear and unambiguous definition of gross annual base income from employment included income from self-employment or as an independent contractor. The definition of gross annual base income from employment provided by the separation agreement "is expressly stated to be without limitation" and includes income "actually received" by the plaintiff from employment as "compensation for or by reason of past, present or future employment, in whatever form received," and from "any and all sources derived." Some examples of gross annual base income from employment, like consulting fees, commissions, and director's fees, "might be reported as either W-2 wages or 1099s." No language in the separation agreement "suggests the form of reporting income should control which income is recognized for the purpose of alimony computation," and, therefore, the trial court correctly rejected...