Reville v. Reville

• Decision Date: 08 July 2014
• Docket Number: No. 18452.,18452.
• Citation: 93 A.3d 1076,312 Conn. 428
• Court: Connecticut Supreme Court
• Parties: Catherine REVILLE v. John REVILLE.

312 Conn. 428

93 A.3d 1076

Catherine REVILLE

v.John REVILLE.

No. 18452.

Supreme Court of Connecticut.

Argued Feb. 19, 2013.

Decided July 8, 2014.

Steven D. Ecker, Hartford, with whom was M. Caitlin S. Anderson, for the appellant (plaintiff).

Samuel V. Schoonmaker IV, Greenwich, with whom were Allen Gary Palmer and, on the brief, Wendy Dunne DiChristina and Anthony L. Cenatiempo, Westport, for the appellee (defendant).

ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, EVELEIGH and McDONALD, Js.^*

ROGERS, C.J.

This case concerns a spouse's duty to disclose an accrued but unvested pension during dissolution proceedings. The plaintiff, Catherine Reville, appeals ¹ from the judgment of the trial court denying her motion to open a 2001 judgment dissolving her marriage to the defendant, John Reville, on the basis of fraud. The plaintiff alleged that the defendant committed fraud during predissolution settlement negotiations by failing to disclose an accrued but unvested pension benefit, either on his financial affidavits or otherwise. After finding, inter alia, that the defendant had disclosed the existence of the pension to the plaintiff orally, both during the parties' marriage and during settlement negotiations, the trial court denied the plaintiff's motion to open. The plaintiff claims on appeal that the trial court improperly: (1) held that the pension, at the time the parties' marriage was dissolved, definitively was not “property” subject to equitable distribution pursuant to General Statutes (Rev. to 2001) § 46b–81; ² (2) refused to consider evidence of the pension's value, which undercut the court's findings regarding disclosure; and (3) required the plaintiff to bear the burden of proving fraud under the circumstances. We agree with the plaintiff's first two claims and, accordingly, reverse the judgment of the trial court.

The following facts, which either are undisputed or were found by the trial court, and procedural history are relevant to the appeal. On May 25, 2001, the trial court, Hon. Dennis F. Harrigan, judge trial referee, rendered judgment dissolving the parties' fourteen year marriage, and it incorporated into the judgment orders of alimony, child support and an equitable distribution of the marital property consistent with the parties' written separation agreement. Pursuant to that agreement, the parties had endeavored to split their assets equally. The plaintiff filed an amended postjudgment motion to open and set aside the dissolution judgment, dated September 15, 2005, claiming that the court should revisit the issue of property distribution because the defendant, a partner with PricewaterhouseCoopers LLP, had failed to disclose on all four of his financial affidavits the existence of an accrued but unvested pension (pension).³ The plaintiff claimed further that she had relied on those affidavits and the representations contained therein as to the extent and scope of the defendant's assets, and that the pension that he had failed to disclose had a substantial value, likely in excess of $2 million. According to the plaintiff, had she known of the existence of the pension, she would not have entered into the separation agreement as it was written because it made no provision for her to receive an interest in the pension or some other compensation for waiving her right to such an interest. The plaintiff contended that interests in unvested pensions were, around the time of the parties' divorce, “property or assets” required to be disclosed on financial affidavits in dissolution actions and subject to distribution pursuant to § 46b–81. By her motion to open, the plaintiff also sought to enforce a penalty provision in the parties' separation agreement, which provided for a forfeiture of intentionally concealed property interests.

The trial court, Shay, J.,⁴ decided, sua sponte, to bifurcate the proceedings on the plaintiff's motion to open the judgment into two phases. In the first phase, the court endeavored to determine whether, pursuant to § 46b–81, the pension was marital property at the time of the dissolution. In the event that the pension was determined to be property, a second phase would be held to determine whether the defendant had failed to disclose it, whether any such nondisclosure was fraudulent and whether nondisclosure would have altered the underlying judgment.⁵

During the first phase of the proceedings on the plaintiff's motion to open, the trial court heard testimony about the pension from the defendant and William Miller, an actuarial and pension expert retained by the plaintiff. The deposition of Roger Hindman, a partner in PricewaterhouseCoopers LLP, who oversaw benefit programs nationally for staff and partners of that firm, was read into the record. The evidence presented established the existence and nature of the pension generally, and the defendant's specific interest therein.

At the time of the dissolution judgment, the defendant was forty-five years old and had been employed by PricewaterhouseCoopers LLP, or one if its predecessors, for approximately twenty years, and he had been a partner in the firm for nearly one decade.⁶ When the defendant became a partner, he was informed of the benefits associated with that position, which included the pension at issue among several other retirement savings vehicles.

The trial court found that the pension is unqualified, in the sense that it is not covered by the Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. It is not funded on an ongoing basis by contributions to a trust fund, but rather, is paid out of the firm's current profits at the time it is due to eligible retirees. Moreover, although benefits accrue during an individual's term of employment, they do not immediately vest. Normal retirement age at PricewaterhouseCoopers LLP, is age sixty but, under the terms of the pension, a partner is eligible for a reduced benefit at age fifty with twenty years of service or a full benefit at age fifty-five. At the time of the dissolution judgment, the defendant's pension was unvested, but it became partially vested five years later in 2006, and fully vested by 2010. The terms of the pension are subject to change and were modified somewhat during the 1998 merger; see footnote 6 of this opinion; but pursuant to the post-merger partnership agreement, preexisting partners' benefits, including the defendant's pension, were protected. The pension benefit is calculated using a formula that takes into account a partner's years of service and a figure representing 30 percent of the average pay in his or her five highest earning years, but it is subject to a cap pursuant to which total pension payments to retired partners cannot exceed 15 percent of the firm's current profits. In addition, the pension is subject to forfeiture if a retired partner violates certain conditions such as a noncompete requirement. The defendant testified that he was unaware of any retired partner not receiving the pension benefit, provided he or she complied with those conditions.

Although all partners were aware of the pension and its basic terms, there was no written document memorializing those terms until April, 2003. In April, 2000, however, a personalized, electronic projection report was made available to each partner, including the defendant, through his or her work computer. That report estimated the present and future values of the available benefit plans, including the pension, by employing certain assumptions as to the rate of return, life expectancy and earnings growth. If a partner chose, he or she could enter alternative assumptions and change the projections. Employing the default assumptions, which included a retirement age of sixty, the projection report, as of December 31, 1999, estimated the present value of the defendant's projected retirement income stream to be $3,839,117.

After the first phase of the proceedings, the trial court made findings that included the foregoing facts and concluded that, in May, 2001, at the time of the decree dissolving the parties' marriage, the defendant's pension was not property subject to distribution pursuant to § 46b–81. In so concluding, the court reasoned that this court's decision in Bender v. Bender, 258 Conn. 733, 785 A.2d 197 (2001), which held that a party's unvested pension benefits were distributable marital property pursuant to § 46b–81, was inapplicable to the analysis here because that decision postdated the dissolution judgment in this case by several months. Moreover, according to the trial court, the pension unquestionably was not property under the law in effect prior to Bender. The trial court held, nevertheless, that the defendant should have disclosed the pension on his financial affidavits because nondisclosure prevented Judge Harrigan from performing his duty, mandated by General Statutes § 46b–66,⁷ to find the parties' settlement agreement fair and equitable under the circumstances, and/or from giving consideration to the pension when fashioning his award of alimony. See General Statutes (Rev. to 2001) § 46b–82.⁸

The trial court then proceeded to the second phase of the proceedings on the motion to open the judgment. During that phase, the trial court ruled that, in light of its earlier determination that the pension was not property, any evidence as to its value was not relevant or material. Accordingly, the trial court refused to admit such evidence when it was offered by the plaintiff.

During the second phase, there was substantial testimony from both parties as well as individuals who had represented or assisted them during the dissolution proceedings. The plaintiff testified that she was unaware of the pension during the parties' marriage, and further, that it was not disclosed to her during the extensive settlement negotiations attendant to the dissolution proceedings. The plaintiff's counsel during the dissolution proceedings, Anthony...