Dougan v. Dougan, No. 28711.

• Citation: 970 A.2d 131,114 Conn.App. 379
• Decision Date: 19 May 2009
• Docket Number: No. 28711.
• Court: Appellate Court of Connecticut
• Parties: Brady DOUGAN v. Tomoko Hamada DOUGAN.

970 A.2d 131

114 Conn.App. 379

Brady DOUGAN v. Tomoko Hamada DOUGAN.

No. 28711.

Appellate Court of Connecticut.

Argued November 12, 2008.

Decided May 19, 2009.

Gaetano Ferro, New Canaan, with whom were Sarah E. Murray and, on the brief,

Livia D. Barndollar, for the appellant (defendant).

Gary I. Cohen, Greenwich, with whom were Annmarie P. Briones, Fairfield and, on the brief, Marci Finkelstein, Greenwich, for the appellee (plaintiff).

McLACHLAN, GRUENDEL and BORDEN, Js.

McLACHLAN, J.

The question raised by this appeal is whether the provision of a stipulated judgment requiring the payment of interest, upon default, from the date of the stipulated judgment to the date of default is enforceable. The defendant, Tomoko Hamada Dougan, claims that the court improperly (1) held such a provision of her stipulated dissolution judgment unenforceable and (2) refused to enforce the provision that it previously had found fair and equitable.¹ We agree and reverse the judgment of the trial court.

The parties married in November, 1988, in Tokyo, Japan. The parties had two children, born in 1992 and 1997, respectively. At the time of the dissolution, the plaintiff, Brady Dougan, was employed as a senior executive of one of the world's largest investment banks and financial institutions. He had a gross weekly income of $384,615.

Following more than one year of proceedings, the parties entered into a stipulation for judgment on June 16, 2005. Both parties were represented by experienced counsel during the proceedings and negotiations leading to the stipulation. The parties were assisted in reaching an agreement by an agreed upon attorney mediator.

The stipulation included a complete distribution of the nearly $80 million in assets held by the parties. As part of that property division, the plaintiff agreed to pay the defendant $15,325,000 by cash, check or the equivalent thereof in two installments.² The agreement provided that the plaintiff pay $7,825,000 within thirty days of the dissolution decree and the remaining $7.5 million "on or before June 16, 2006. That amount shall be fully secured. The [plaintiff] shall provide security within thirty days of the time of the decree dissolving the marriage of the parties. If the [defendant] believes the security to be unreasonable as to amount, terms or otherwise, the Stamford Court shall determine reasonable security and the decree of dissolution shall reserve jurisdiction for that purpose. In the event payment is not made when due, interest at ten [percent] per annum shall accrue from the date hereof until fully paid and the [plaintiff] shall be responsible for all of the [defendant's] costs of collection." (Emphasis added.)

At the dissolution hearing on June 17, 2005, the plaintiff testified that he was satisfied that he had had an ample opportunity to consider all of the issues implicated by the stipulated judgment and that taken as a whole and recognizing that every agreement is by its nature a compromise, the agreement was fair and reasonable. The plaintiff also testified that the parties had agreed on the property division including the transfer of cash as set forth in the agreement, and he acknowledged that "time was of the essence" and that if the payment was not made on time, interest could be imposed.

The parties negotiated the terms of the stipulation thoroughly. When questioned by the plaintiff's attorney, the defendant testified that during negotiations, she suggested that changes be made to paragraphs and sections of the agreement.³ The court also asked the defendant if she was comfortable with the stipulation, and she confirmed that she was. The court then stated, "I think it's fair, by the way, if it means anything to you."

On June 17, 2005, the court found the stipulation for judgment "fair and equitable," rendered judgment of dissolution of the marriage and incorporated the stipulation for judgment by reference.

On June 28, 2006, the plaintiff paid the defendant $7.5 million.⁴ Subsequently, the plaintiff paid the defendant $24,999.96, representing 10 percent interest from June 16 to June 28, 2006. The defendant moved for enforcement of the stipulation and requested that the court order the plaintiff to pay her interest in accordance with the terms of the judgment. The defendant argued that if the payment was not made on or before June 16, 2006, the agreement provided for interest at the rate of 10 percent from the date of the stipulation to the date the payment was made to the defendant. The court heard argument by the parties on the issue of whether the interest provision of the agreement was void as against public policy. On March 15, 2007, in its memorandum of decision, the court held that the provision for interest from the date of the stipulation was invalid and unenforceable because it was not a valid liquidated damages clause but "a provision, which has as its prime purpose the deterrence of a breach by the [plaintiff], which is an invalid purpose and is against public policy."⁵ The defendant timely appealed.

I

The defendant first claims that the court improperly held unenforceable a provision of the parties' stipulated dissolution of marriage judgment requiring the payment of interest, upon default, from the date of the stipulated judgment to the date of default. Specifically, the defendant claims that such a provision is not invalid as against public policy. We agree.

The stipulation for judgment is an agreement by the parties that the court incorporated into the judgment and is a contract of the parties.⁶ Sachs v. Sachs, 60 Conn.App. 337, 341-42, 759 A.2d 510 (2000). "[T]he construction of a written contract is a question of law for the court.... The scope of review in such cases is plenary.... Because our review is plenary, involving a question of law, our standard for review is not the clearly erroneous standard used to review questions of fact found by a trial court. Our review of the parties' agreement is plenary." (Citations omitted; internal quotation marks omitted.) Id., at 342, 759 A.2d 510. Additionally, because the parties agree as to the underlying facts, whether the challenged provision violates public policy is a question of law requiring our plenary review.⁷ See Sandford v. Metcalfe, 110 Conn.App. 162, 168, 954 A.2d 188, cert. denied, 289 Conn. 931, 958 A.2d 160 (2008); see also Gurski v. Rosenblum & Filan, LLC, 276 Conn. 257, 266, 885 A.2d 163 (2005).

"Although it is well established that parties are free to contract for whatever terms on which they may agree ... it is equally well established that contracts that violate public policy are unenforceable.... [T]he question [of] whether a contract is against public policy is [a] question of law dependent on the circumstances of the particular case, over which an appellate court has unlimited review." (Citations omitted; internal quotation marks omitted.) Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 326-27, 885 A.2d 734 (2005), quoting Gibson v. Capano, 241 Conn. 725, 730, 699 A.2d 68 (1997); Solomon v. Gilmore, 248 Conn. 769, 774, 731 A.2d 280 (1999); Parente v. Pirozzoli, 87 Conn.App. 235, 245, 866 A.2d 629 (2005), citing 17A Am.Jur.2d 312, Contracts § 327 (2004). Our Supreme Court has noted that "[t]he ultimate determination of what constitutes the public interest must be made considering the totality of the circumstances of any given case against the backdrop of current societal expectations."⁸ (Internal quotation marks omitted.) Hanks v. Powder Ridge Restaurant Corp., supra, at 330, 885 A.2d 734.

It is well established that "a term in a contract calling for the imposition of a penalty for the breach of the contract is contrary to public policy and invalid...." (Internal quotation marks omitted.) Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 203, 931 A.2d 916 (2007). Our Supreme Court has also recognized, however, that the government has an interest in encouraging private agreements that have been incorporated into decrees for dissolution, separation or annulment. See Billington v. Billington, 220 Conn. 212, 221, 595 A.2d 1377 (1991) ("strong policy that the `private settlement of the financial affairs of estranged marital partners is a goal that courts should support rather than undermine'"). Negotiated settlement of these affairs conserves judicial resources and encourages private resolution of family issues. Additionally, the government has an interest in preserving and enforcing orders that were entered by the courts in dissolution proceedings after a determination that the judgment is fair and equitable. See General Statutes § 46b-66(a) (court may accept stipulation for judgment only after inquiry and finding that it is fair and equitable under all circumstances). This conserves judicial resources because the courts are not forced to rework decrees to account for newly raised postjudgment arguments that are based on public policy. Otherwise, the public would have no confidence in the judiciary to resolve disputes in a conclusive manner.⁹

Additionally, in Connecticut, parties to a contract may bargain for a discount to ensure prompt performance. General Statutes § 36a-771(d) acknowledges this practice in retail installment contracts and approves of it, as long as the contract contains language sufficient to apprise the parties of their rights and obligations. That statute provides: "Each retail installment contract ... on a deferred payment schedule shall also contain an explanation of the consequences of the failure ... to make ... deferred installment payments under the contract in a timely manner, including a clear statement of whether or not interest would be charged for the entire period of deferment under the contract and, if so, the rate of such interest...." (Emphasis added.) General Statutes § 36a-771(d). Our legislature has not found it necessary to protect consumers from entering into such contracts but has protected them only from ...