Weinstein v. Weinstein

• Decision Date: 01 March 2005
• Docket Number: No. 24855.,24855.
• Citation: 867 A.2d 111,87 Conn.App. 699
• Court: Connecticut Court of Appeals
• Parties: Nancy WEINSTEIN v. Luke A. WEINSTEIN.

867 A.2d 111

87 Conn.App. 699

Nancy WEINSTEIN v. Luke A. WEINSTEIN.

No. 24855.

Appellate Court of Connecticut.

Argued October 13, 2004.

Decided March 1, 2005.

Luke A. Weinstein, pro se, the appellant (defendant).

Lori Welch-Rubin, with whom, on the brief, was Susan W. Wolfson, New Haven, for the appellee (plaintiff).

LAVERY, C.J., and FLYNN and BISHOP, Js.

BISHOP, J.

The defendant, Luke A. Weinstein, appeals from the judgment of the trial court denying his motion for a downward modification of child support and granting the motion filed by the plaintiff, Nancy Weinstein, for an upward modification of child support. The defendant asserts that in awarding an increase in child support, the court improperly (1) imputed greater income to his investments and bank accounts than he actually realized, (2) imputed an unsubstantiated earning capacity to him, (3) failed to deviate from the child support guidelines to account for the parties' joint physical custody arrangement and (4) made an award of child support to the plaintiff that was, in reality, disguised alimony. The defendant also claims that the court improperly awarded the plaintiff the right to claim the parties' minor child as a dependency exemption for federal income tax purposes. We reverse the judgment of the trial court.¹

The following facts and procedural history are relevant to our discussion of the issues on appeal. The court, Higgins, J., dissolved the parties' marriage on May 12, 1998. The judgment included an agreement that the parties would share joint physical custody of their minor child, who was born on January 27, 1996, and that the amount of child support the defendant then was paying would be recomputed "at the guideline amount in September, 1998." In November, 1998, pursuant to a September 26, 1998 agreement of the parties, the court, Arena, J., ordered the defendant to pay child support to the plaintiff in the amount of $125 per week and to pay the sum of $661 per month directly to the child's day care provider. In adopting the parties' agreement, the court noted that the amount of support to which the parties had agreed represented an acceptable deviation from the guidelines because the parties equally shared physical custody of their child. Subsequently, on April 30, 2001, the court, Parker, J., increased the defendant's child support obligation to $160 per week because of an increase in his income and in light of the parties' joint custody arrangement.²

On April 17, 2002, the defendant filed a motion for a downward modification of child support, claiming a decrease of his income due to the termination of his employment. In turn, on December 9, 2002, the plaintiff filed a motion for an upward modification of child support, claiming that the defendant's financial circumstances had improved since the previous modification in April, 2001. Following a hearing on December 9, 2002, the court, Jones, J., issued a preliminary memorandum of decision on April 3, 2003, in which it found that the defendant had an annual earning capacity of $125,000 and the plaintiff had an annual earning capacity of $25,000. Additionally, the court scheduled a supplemental hearing to consider the computation of child support under the guidelines based on the parties' earning capacities and their passive incomes. Specifically, the court gave the parties an opportunity to be heard on the question of whether the calculation of the defendant's income should include capital gains realized on certain assets he held and on the question of how to determine the appropriate amount of capital gains and investment income to be included in the calculation of the defendant's income for purposes of establishing a child support order. That hearing took place on April 21, 2003.

Subsequently, on July 3, 2003, the court denied the defendant's motion for a reduction in child support and granted the plaintiff's motion for an increase in child support, ordering the defendant to pay the sum of $285 per week. In reaching the amount of child support, the court considered its assessment of the parties' respective earning capacities and not their stated incomes from employment. Additionally, the court attributed the sum of $9724 as income to the plaintiff due to a distribution she received from a family partnership. As to the defendant, the court attributed to him an earning capacity based on his education and work history and also found that his annual income from investments and bank accounts amounted to $31,080. The court made its determination regarding the defendant's passive income, notwithstanding evidence that he actually received substantially less investment income and in the absence of any finding that the defendant wilfully had reduced his passive income to avoid a child support obligation or that the amount realized by the defendant on his investments was unreasonably low. Finally, the court awarded the plaintiff the right to claim the parties' child as a dependency exemption on her tax filing for 2003 and alternating years thereafter, apparently, on the basis of the court's conclusion that the plaintiff's stated earning capacity of $25,000 per year, combined with her actual passive income, entitled her to this right in accordance with the marital dissolution judgment. This appeal followed.

I

The defendant first claims that in making its child support order, the court improperly imputed an amount of investment income to him that was unsupported by the evidence and not legally warranted. We agree.

The following facts are relevant to this claim. At the April 21, 2003 hearing, the defendant produced his 2002 federal income tax return, which indicated that he had received $11,424 of income from an investment account valued at $1,025,000 and $1597 in interest from a money market account worth $25,000. Thus, this evidence showed that the defendant's total passive income in 2002 was $13,021.³ In its July, 2003 memorandum of decision, the court found, however, that the defendant had an imputed investment income of $31,080 per year. In reaching this figure, the court stated: "The income is imputed on the defendant's Schwab account ($1,025,000) and his checking account ($25,000) shown on his financial affidavit dated December 6, 2002. The interest rate is 2.96 percent, the five year [treasury] bill rate as of April 14, 2003." In utilizing the treasury bill rate, the court made no finding that the defendant wilfully had reduced his investment income to evade a reasonable child support order or that the amount of his investment income was unreasonably low. Rather, the court appears to have attributed the higher rate of return to the defendant solely on its determination that treasury bills offered a higher rate of interest than the defendant was realizing from his own investment strategies.

"The standard of review in family matters is well settled. An appellate court will not disturb a trial court's orders in domestic relations cases unless the court has abused its discretion or it is found that it could not reasonably conclude as it did, based on the facts presented.... In determining whether a trial court has abused its broad discretion in domestic relations matters, we allow every reasonable presumption in favor of the correctness of its action." (Internal quotation marks omitted.) Prial v. Prial, 67 Conn.App. 7, 9-10, 787 A.2d 50 (2001).

This issue presents the question of whether a court in a marital dissolution action may attribute a higher level of income to investment assets than proven by the evidence, in the absence of a finding that the investing party has wilfully depressed passive income to avoid a support obligation, solely on the basis that a higher return could be realized from alternative investment assets.

We know from our decisional law that in certain circumstances a court may base its support orders on a party's earning capacity. In Carasso v. Carasso, 80 Conn.App. 299, 834 A.2d 793 (2003), cert. denied, 267 Conn. 913, 840 A.2d 1174 (2004), this court summarized the relevant law: "In a marital dissolution proceeding, the court may base financial awards on earning capacity rather than actual earned income of the parties.... While there is no fixed standard for the determination of an individual's earning capacity ... it is well settled that earning capacity is not an amount which a person can theoretically earn, nor is it confined to actual income, but rather it is an amount which a person can realistically be expected to earn considering such things as his vocational skills, employability, age and health." (Internal quotation marks omitted.) Id., at 305, 834 A.2d 793. Additionally, in determining whether to fix an order on a party's earning capacity rather than reported actual earnings, this court has opined: "When determining earning capacity, it also is especially appropriate for the court to consider whether the defendant has wilfully restricted his earning capacity to avoid support obligations. See Miller v. Miller, [181 Conn. 610, 612, 436 A.2d 279 (1980)]; Schmidt v. Schmidt, 180 Conn. 184, 189-90, 429 A.2d 470 (1980); Whitney v. Whitney, 171 Conn. 23, 28, 368 A.2d 96 (1976); Tobey v. Tobey, 165 Conn. 742, 749, 345 A.2d 21 (1974); Yates v. Yates, [155 Conn. 544, 548-49, 235 A.2d 656 (1967)]; Schorsch v. Schorsch, [53 Conn.App. 378, 386, 731 A.2d 330 (1999)]; Carey v. Carey, 29 Conn.App. 436, 440, 615 A.2d 516 (1992); Hart v. Hart, 19 Conn.App. 91, 95, 561 A.2d 151, cert. denied, 212 Conn. 813, 565 A.2d 535 (1989)." Bleuer v. Bleuer, 59 Conn.App. 167, 170, 755 A.2d 946 (2000). Although a review of the cases cited in Bleuer reveals that they generally are focused on the issue of imputing earning capacity from employment, no language in any of those cases suggests a requirement that we read the term "earning capacity" narrowly to include only earnings from employment. Given the beneficial purpose of the state's scheme for awarding child support, ...