O'Brien v. O'Brien

• Decision Date: 27 June 2017
• Docket Number: SC 19635
• Citation: 161 A.3d 1236,326 Conn. 81
• Parties: Michael J. O'BRIEN v. Kathleen E. O'BRIEN
• Court: Connecticut Supreme Court

326 Conn. 81

161 A.3d 1236

Michael J. O'BRIEN

v.Kathleen E. O'BRIEN

SC 19635

Supreme Court of Connecticut.

Argued December 14, 2016

officially released June 27, 2017

Daniel J. Krisch, with whom was Aidan R. Welsh, for the appellant (defendant).

Daniel J. Klau, for the appellee (plaintiff).

Rogers, C.J., and Palmer, McDonald, Espinosa, Robinson and Vertefeuille, Js.

PALMER, J.

In this certified appeal arising from a marital dissolution action, we must determine whether a trial court properly may consider a party's violation of a court order when distributing marital property, even if the trial court finds that the violation is not contemptuous. The plaintiff, Michael J. O'Brien, filed this action to dissolve his marriage to the defendant, Kathleen E. O'Brien. During the pendency of the action, the plaintiff sold shares of stock and exercised certain stock options without first receiving permission from either the defendant or the trial court, as required by Practice Book § 25–5,¹ which also provides that a party who fails to obey the orders automatically entered thereunder may be held in contempt of court. The trial court found that the plaintiff's transactions violated those orders but did not hold the plaintiff in contempt because the court concluded the violations were not wilful. Nevertheless, because the transactions had caused a significant loss to the marital estate, the court considered that loss when it distributed the marital property between the parties, awarding a greater than even distribution to the defendant. On appeal, the Appellate Court concluded that, in the absence of a finding of contempt, the trial court lacked the authority to afford the defendant a remedy for the plaintiff's violation of the automatic orders. See O'Brien v. O'Brien , 161 Conn.App. 575, 591, 128 A.3d 595 (2015). We thereafter granted the defendant's petition for certification to appeal, limited to the following issue: "Did the Appellate Court correctly determine that the trial court abused its discretion when it considered the plaintiff's purported violations of the automatic orders in its decision dividing marital assets [even though the court did not hold the plaintiff in contempt of court for those violations]?"

O'Brien v. O'Brien , 320 Conn. 916, 131 A.3d 751 (2016). We agree with the defendant that the trial court properly exercised its discretion in considering the plaintiff's violations of the automatic orders in its division of the marital assets, and, therefore, we reverse the judgment of the Appellate Court.

The Appellate Court's opinion and the record contain the following undisputed facts and procedural history relevant to this appeal. The parties were married in 1985 and had three children together, all of whom were under the age of eighteen when the trial court rendered the dissolution judgment. See O'Brien v. O'Brien , supra, 161 Conn.App. at 578, 128 A.3d 595. The parties are each well educated and have had lucrative careers. See id. The plaintiff holds a law degree and is employed as senior vice president, general counsel, and secretary of Omnicom Group, Inc. (Omnicom). Id. His base salary is $700,000 per year, and his compensation has also included a cash bonus of varying amounts and noncash compensation, usually in the form of stock or stock options. Id. In the years leading up to the dissolution, the plaintiff's annual cash compensation averaged at least $1.2 million, along with additional noncash compensation. See id. The defendant holds a college degree and was previously employed as a managing director for Credit Suisse, earning more than $1 million annually. Id. She left her employment in 2003 to devote her time to raising the parties' children. Id. The defendant later participated in a "returnship" program with JP Morgan Chase, earning about $143,000 annually. Id.

At the time of the dissolution action, the parties' assets consisted principally of numerous bank and investment accounts, their principal residence in the town of Greenwich, a second home, and personal property.

The plaintiff also held vested shares of Omnicom stock and unvested Omnicom stock options.

The plaintiff filed the present action in 2008, alleging that the marriage had irretrievably broken down. See id., at 579, 128 A.3d 595 and n.3. He sought a judgment dissolving the marriage, an equitable division of the marital estate, and orders regarding child custody and support.

Attached to the plaintiff's complaint was a copy of the automatic orders required by Practice Book § 25–5 (d). In accordance with the requirement of § 25–5 (b) (1), that attachment included the admonition that the parties were not permitted to "sell, transfer, exchange, assign, remove, or in any way dispose of ... any property" while the dissolution action was pending without the prior consent of the other party or the court.

The trial court rendered judgment dissolving the parties' marriage in September, 2009. The court also entered custody orders regarding the minor children and financial orders distributing the marital property between the parties. In its financial orders, the trial court effectively awarded 55 percent of the marital assets to the defendant and 45 percent to the plaintiff. O'Brien v. O'Brien , supra, 161 Conn.App. at 580, 128 A.3d 595. These marital assets included all of the plaintiff's vested and unvested Omnicom stock shares and options. See id., at 580 n.4, 128 A.3d 595. The trial court also ordered the plaintiff to pay unallocated alimony and child support to the defendant. See O'Brien v. O'Brien , 138 Conn.App. 544, 545–46, 53 A.3d 1039 (2012), cert. denied, 308 Conn. 937, 938, 66 A.3d 500 (2013).

The plaintiff appealed from the trial court's financial orders, challenging, inter alia, its unallocated alimony and child support award. Id., at 545, 53 A.3d 1039. The Appellate Court agreed with the plaintiff's claim concerning the alimony and child support award and reversed the trial court's judgment as to its financial orders, but did not disturb the decree dissolving the marriage. See id., at 546, 557, 53 A.3d 1039. The Appellate Court remanded the case to the trial court for a new trial on all financial issues. Id., at 557, 53 A.3d 1039. The parties do not dispute that the appeal stayed the trial court's financial orders and that the automatic orders remained in effect during the pendency of the appeal.

While the dissolution action or the appeal from the judgment of dissolution was pending—and while the automatic orders thus remained in effect—the plaintiff executed three stock transactions that are the subject of the present appeal. See O'Brien v. O'Brien , supra, 161 Conn.App. at 579, 581, 128 A.3d 595. The plaintiff made the first transaction in February, 2009, one year after filing the dissolution action but before the dissolution decree entered in September, 2009. See id., at 579, 128 A.3d 595. In the first transaction, the plaintiff sold all of his 28,127 vested Omnicom shares. Id. He did so without first seeking the consent of the defendant or the approval of the trial court. Id. According to the plaintiff, he was concerned about volatility in the stock market following a market decline in 2008 and thought that preserving the current value of the shares through a sale was in the parties' best, immediate interest. See id. The plaintiff placed the proceeds from the sale into a bank account and disclosed the sale to the defendant approximately two months later when he submitted an updated financial affidavit.

The plaintiff executed the second and third transactions in 2010 and 2012, respectively, after the original trial and while the first appeal was pending. See id., at 581, 128 A.3d 595. In these two transactions, the plaintiff exercised a total of 75,000 Omnicom stock options that he had received as part of his noncash compensation while the dissolution action was still pending and before the trial court rendered judgment dissolving the marriage. Id. The options had vested after the trial court's dissolution judgment was rendered but before the Appellate Court reversed the trial court's financial orders. See id., at 581–82, 128 A.3d 595. He exercised 22,500 options in the first transaction and 52,500 options in the second transaction. Each time, the plaintiff immediately converted the options to cash and retained the cash proceeds in a bank account. As with his earlier stock sale, the plaintiff did not seek consent from the defendant or approval from any judicial authority before exercising the options. Id.

On remand, the defendant filed a motion for contempt with respect to the plaintiff's transactions. Id., at 582, 128 A.3d 595. The defendant asserted that the plaintiff's transactions violated the automatic orders because he had sold, exchanged or disposed of property without prior permission, as required by Practice Book § 25–5 (b) (1). See id. In her motion, the defendant requested that the court find the plaintiff in contempt, order the plaintiff to pay legal fees and costs in connection with the contempt motion, and award any other relief that the court deemed appropriate. Id.

At the remand trial in February, 2014, the defendant presented expert testimony to establish the economic loss resulting from the plaintiff's transactions. See id. The defendant's expert testified that the stock shares and options were worth approximately $2.5 million at the time the plaintiff sold and exercised them, respectively. The expert further testified that, if the plaintiff had not sold or exercised the shares and options but instead had retained them, they would have had a value, as of the date of the retrial, of about $6 million. See id. Thus, according to the defendant's expert, the plaintiff's decision to sell the shares of stock and exercise his stock options had caused a net loss to the marital estate of about $3.5 million. Id.

For his part, the plaintiff admitted that he had not sought permission to engage in the transactions. He nevertheless...