McKeon v. Lennon , 321 Conn. 323 ( 2016 )


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    MARIA F. MCKEON v. WILLIAM P. LENNON
    (SC 19470)
    Rogers, C. J., and Palmer, Zarella, Eveleigh, Espinosa and Vertefeuille, Js.
    Argued January 27—officially released May 17, 2016
    Campbell D. Barrett, with whom were Jon T.
    Kukucka and, on the brief, Johanna S. Katz, for the
    appellant (plaintiff).
    Debra C. Ruel, with whom were Anne C. Dranginis
    and James M. Ruel, for the appellee (defendant).
    Giovanna Shay, Lucy Potter, Anne Louise Blanch-
    ard, Shelley White and Steve Dembo filed a brief for
    Greater Harford Legal Aid et al. as amici curiae.
    Louise Truax and Leslie Jennings-Lax filed a brief
    for the American Academy of Matrimonial Lawyers,
    Connecticut Chapter, as amicus curiae.
    Samuel V. Schoonmaker IV and Wendy Dunne
    DiChristina filed a brief for the Connecticut Bar Asso-
    ciation as amicus curiae.
    Opinion
    ZARELLA, J. In this certified appeal, we address two
    important issues relating to child support orders. The
    first issue is whether the Appellate Court properly con-
    cluded, based on this court’s reasoning with respect to
    the modification of alimony orders in Dan v. Dan, 
    315 Conn. 1
    , 10, 
    105 A.3d 118
    (2014), that the supported
    party must show circumstances beyond the increased
    income of the supporting party to establish the substan-
    tial change in circumstances required to justify the mod-
    ification of a child support order under General Statutes
    § 46b-86 (a). The second issue is whether the trial court
    should consider exercised stock options, restricted
    stock and employment perquisites in calculating the
    supporting party’s gross income to determine whether
    there has been a substantial change in circumstances
    under § 46b-86 (a). The plaintiff, Maria F. McKeon,
    claims that the Appellate Court, in affirming the trial
    court’s denial of her two separate motions to modify
    the original child support order, incorrectly concluded
    that alimony and child support orders are subject to
    the same modification requirements under § 46b-86 (a),
    and, therefore, the court improperly applied the reason-
    ing in Dan when denying her motions. See McKeon v.
    Lennon, 
    155 Conn. App. 423
    , 434, 
    109 A.3d 986
    (2015).
    The plaintiff also claims that the Appellate Court incor-
    rectly concluded that the trial court had not abused its
    discretion in declining to consider income from stock
    options, restricted stock and employment perquisites
    received by the defendant, William P. Lennon, as part
    of his executive compensation package when calculat-
    ing the defendant’s gross income for the purpose of
    determining whether there had been a substantial
    change in his financial circumstances following the dis-
    solution of the parties’ marriage. See 
    id., 440, 441.
    The
    plaintiff thus seeks reversal of the Appellate Court’s
    judgment and a remand to the trial court to consider
    these sources of income in deciding the plaintiff’s
    motions. The defendant agrees with the plaintiff that
    the Appellate Court’s reliance on the reasoning in Dan
    was improper but characterizes that reliance as dictum.
    He also argues that the trial court properly calculated
    his gross income without considering his stock benefits
    and employment perquisites, and, therefore, the Appel-
    late Court properly upheld the trial court’s conclusion
    that the plaintiff did not establish the substantial change
    in circumstances required for the granting of her
    motions. We reverse in part the judgment of the Appel-
    late Court.
    The following relevant facts are set forth in the Appel-
    late Court’s opinion. ‘‘[This appeal] arise[s] from a series
    of postjudgment motions related to the parties’ 2007
    dissolution of marriage. The plaintiff and [the] defen-
    dant were married on August 29, 1981. During their
    twenty-six year marriage, the parties had three children.
    In 2005, the plaintiff initiated an action for dissolution
    of marriage. On December 31, 2007, the court rendered
    judgment dissolving the marriage . . . and entered var-
    ious orders.
    ‘‘In the dissolution judgment, the court made several
    relevant factual findings. The court found that the
    defendant was a vice president at Electric Boat [Corpo-
    ration], earning a base salary of $225,420, an annual
    bonus, stock options, restricted stock awards, and a
    pension. The court found that the plaintiff was a highly
    skilled and capable corporate attorney, who in the past
    had sometimes earned in excess of the defendant’s sal-
    ary. In the years leading up to the divorce, the plaintiff
    had worked part-time in order to be the primary care-
    giver to their three children. Despite working part-time,
    she had been able to earn gross income of $78,500 from
    mid-July, 2007, through December 12, 2007.
    ‘‘The court issued various orders in connection with
    the dissolution judgment, including child custody, divi-
    sion of assets of the marriage, and alimony and child
    support. First, the dissolution judgment set out a parent-
    ing plan regarding the parties’ two minor children. The
    parties were to share joint legal custody of the children,
    but the plaintiff’s home would serve as the children’s
    primary residence. Next, the dissolution judgment
    ordered the defendant to pay the plaintiff $439 per week
    in child support for the parties’ two minor children.
    The dissolution judgment also ordered the parties to
    each pay 50 percent of the cost of the children’s child
    care, their after school care and transportation, and
    their private school tuition. The judgment ordered the
    parties to share all costs over $150 for the children’s
    extracurricular activities, while the plaintiff was
    ordered to pay for all costs under $150.
    ‘‘The dissolution judgment also awarded alimony to
    the plaintiff in the amount of $900 per week for a period
    of fourteen years. This order was modifiable, but not
    terminable, upon the plaintiff’s remarriage or cohabita-
    tion. [In addition] [t]he court awarded the plaintiff . . .
    [an irrevocable 50 percent interest in all stock options
    awarded, granted or otherwise credited to the defen-
    dant as of the date of dissolution and] an irrevocable
    interest in the defendant’s future annual employment
    bonuses, executive stock options, and awards of
    restricted stock. [Specifically] [t]he plaintiff was to
    receive 50 percent of the defendant’s bonuses, stock
    options, and restricted stock awarded in 2008, 2009,
    and 2010. The plaintiff was to then receive 40 percent
    of the defendant’s bonuses [future stock options, and
    restricted stock awarded] in 2011, 2012, and 2013, and
    . . . 30 percent [of the defendant’s bonuses, future
    stock options, and restricted stock] awarded to him in
    each year from 2014 through 2021. [The trial court
    added in its memorandum of decision issued in connec-
    tion with the dissolution judgment that ‘[a]ll stock
    options that have been awarded, granted or otherwise
    credited to the defendant prior to the dissolution of
    marriage shall be divided as part of the property settle-
    ment and shall not be alimony or child support.’]
    ‘‘In May, 2008, [less] than six months after the dissolu-
    tion judgment was rendered, the plaintiff filed a motion
    for modification in which she requested, inter alia, that
    child support be raised from $439 per week to $1700
    per week. On June 10, 2008, the court denied the motion
    without a hearing. From that [ruling], the plaintiff
    appealed to [the Appellate] [C]ourt, which heard argu-
    ment on the matter on November 18, 2010. [See]
    McKeon v. Lennon, 
    131 Conn. App. 585
    , 
    27 A.3d 436
    ,
    cert. denied, 
    303 Conn. 901
    , 
    31 A.3d 1178
    (2011). On
    appeal, [the Appellate] [C]ourt concluded that the trial
    court improperly [had] denied the plaintiff’s motion
    without first conducting a hearing, and, therefore . . .
    reversed the judgment and remanded the matter to the
    trial court for further proceedings. 
    Id., 599–600, [613–
    14]. . . .
    ‘‘While the appeal of the 2008 motion for modification
    was pending before [the Appellate] [C]ourt, the plaintiff
    filed another motion for modification of child support
    with the trial court on April 22, 2010. The plaintiff’s
    motion requested the court to increase the defendant’s
    child support obligation in light of the plaintiff’s
    increased expenses, her decreased net income, and the
    defendant’s increased income since the dissolution
    judgment. On July 14, 2010, the defendant filed his own
    motion for modification of child support on the basis
    that one of their two minor children had turned eighteen
    years old and had graduated [from] high school. The
    court scheduled a hearing on both motions in May, 2011.
    ‘‘On May 25, May 26, and June 1, 2011, the trial court
    held a contested hearing on the plaintiff’s and the defen-
    dant’s motions for modification. On October 20, 2011,
    the court . . . [granted] the defendant’s 2010 motion
    for modification and den[ied] the plaintiff’s 2010 motion
    for modification. The court ordered the defendant’s
    child support obligation to be reduced from $439 per
    week to $400 per week. This modification reflected the
    change from support for two minor children, to support
    for only one minor child. From [these rulings], the plain-
    tiff appealed . . . .
    ‘‘On April 25, 2012, pursuant to [the Appellate]
    [C]ourt’s remand, the trial court held a contested hear-
    ing on the plaintiff’s 2008 motion for modification. Prior
    to the hearing, the plaintiff had also filed a motion
    for attorney’s fees and a motion for contempt. At the
    hearing, the parties presented evidence on all three
    motions. As a result of the complicated procedural his-
    tory of this case, the court was required to determine
    whether it could consider all changes in circumstances
    since the 2007 dissolution judgment, or whether it was
    limited to looking back to only 2011, when the court
    ruled on the 2010 motions for modification.
    ‘‘In November, 2012, the court issued its memoran-
    dum of decision, denying the plaintiff’s motion for modi-
    fication of child support, motion for attorney’s fees,
    and motion for contempt. In doing so, the court consid-
    ered the circumstances of the parties going back to
    the 2007 dissolution judgment [through April 25, 2012].
    Further, the court found that the 2011 child support
    modification order was in accordance with the child
    support guidelines and remained equitable and appro-
    priate given the circumstances of the case. From these
    [rulings], the plaintiff also appealed . . . .’’ (Footnote
    omitted.) McKeon v. 
    Lennon, supra
    , 
    155 Conn. App. 425
    –29.
    On appeal to the Appellate Court, the plaintiff
    claimed, inter alia, that the trial court improperly had
    granted the defendant’s motion for modification of child
    support, denied her motions for modification of child
    support, modified the defendant’s child support obliga-
    tion by decreasing his weekly obligation and denied
    her motions for contempt and for attorney’s fees. 
    Id., 425. The
    Appellate Court disagreed and affirmed the
    trial court’s rulings on all issues. 
    Id., 425, 451.
    With
    respect to the plaintiff’s motions for an upward modifi-
    cation of the defendant’s child support obligation, the
    Appellate Court concluded that ‘‘both alimony and child
    support orders are subject to the same modification
    requirements under § 46b-86 (a),’’ and that, ‘‘under Dan,
    the plaintiff must show additional circumstances,
    beyond the defendant’s increased income, to establish
    a substantial change in circumstances justifying a modi-
    fication of child support.’’ 
    Id., 434. After
    considering
    the increase in the defendant’s income, the Appellate
    Court further concluded that the trial court had not
    abused its discretion in denying the plaintiff’s motions.
    
    Id. This certified
    appeal, relating only to the Appellate
    Court’s determination regarding the trial court’s rulings
    on the plaintiff’s motions for modification of the defen-
    dant’s child support obligation, followed.1
    I
    The plaintiff first claims that the Appellate Court
    incorrectly concluded that alimony and child support
    orders are subject to the same modification require-
    ments, and, therefore, the court improperly applied the
    reasoning in Dan concerning alimony orders in
    affirming the trial court’s denial of her motions for
    modification of child support. She claims that, by
    extending this court’s holding in Dan to child support
    orders, the Appellate Court has profoundly altered Con-
    necticut law in a manner that will have a negative impact
    on thousands of Connecticut families. The defendant
    agrees with the plaintiff that the Appellate Court
    improperly relied on Dan in affirming the trial court’s
    denial of her motions but characterizes that reliance as
    dictum. He also points out that the trial court never
    concluded that alimony and child support orders are
    subject to the same modification requirements when
    determining that the plaintiff had failed to establish a
    substantial change in circumstances at the hearing on
    her motions. We conclude that the reasoning in Dan
    regarding alimony orders does not apply to child sup-
    port orders.
    It is well established that interpretation of the statu-
    tory scheme governing child support orders in domestic
    relations cases constitutes a question of law. See, e.g.,
    Maturo v. Maturo, 
    296 Conn. 80
    , 88, 
    995 A.2d 1
    (2010);
    Unkelbach v. McNary, 
    244 Conn. 350
    , 357, 
    710 A.2d 717
    (1998). Accordingly, whether the Appellate Court
    properly interpreted the statutory scheme in the present
    case is subject to our plenary review. See, e.g., Maturo
    v. 
    Maturo, supra
    , 88.
    We begin with § 46b-86 (a), which addresses the mod-
    ification of alimony and child support orders.2 The stat-
    ute provides in relevant part: ‘‘[A]ny final order for the
    periodic payment of permanent alimony or support
    . . . may, at any time thereafter, be continued, set
    aside, altered or modified by the court upon a showing
    of a substantial change in the circumstances of either
    party . . . .’’ General Statutes § 46b-86 (a). In Dan, we
    concluded that ‘‘an increase in the supporting spouse’s
    income, standing alone, ordinarily will not justify the
    granting of a motion to modify an alimony award . . .
    [because] [t]here is little, if any, legal or logical support
    . . . for the proposition that a legitimate purpose of
    alimony is to allow the supported spouse’s standard of
    living to match the supporting spouse’s standard of
    living after the divorce, when the supported spouse is no
    longer contributing to the supporting spouse’s income
    earning efforts. Rather, the weight of authority is to the
    contrary. We are persuaded by the reasoning of these
    cases, namely, that, when the amount of the original
    alimony award was and continues to be sufficient to
    fulfill the purpose of the award, whether that purpose
    was to maintain permanently the standard of living of
    the supported spouse at the level that he or she enjoyed
    during the marriage or to provide temporary support
    in order to allow the supported spouse to become self-
    sufficient, an increase in the income of the supporting
    spouse, standing alone, is not a sufficient justification
    to modify an alimony award. In short, when the sole
    change in circumstances is an increase in the income
    of the supporting spouse, and when the initial award
    was and continues to be sufficient to fulfill the
    intended purpose of that award, we can conceive of
    no reason why the supported spouse, whose marriage
    to the supporting spouse has ended and who no longer
    contributes anything to the supporting spouse’s income
    earning efforts, should be entitled to share in an
    improved standard of living that is solely the result
    of the supporting spouse’s efforts.’’ (Citations omitted;
    emphasis altered; footnotes omitted.) Dan v. 
    Dan, supra
    , 
    315 Conn. 1
    0–15.
    In contrast, child support orders are calculated under
    the Connecticut child support guidelines and are based
    on the income shares model;3 Child Support and Arrear-
    age Guidelines (August 1, 2005) preamble, p. ii; which
    has a different purpose. The income shares model con-
    siders the income of both parents and ‘‘presumes that
    the child should receive the same proportion of parental
    income as he or she would have received if the parents
    lived together.’’ Id.; accord Maturo v. 
    Maturo, supra
    , 
    296 Conn. 93
    . Accordingly, ‘‘the determination of a parent’s
    child support obligation must account for all of the
    income that would have been available to support the
    children had the family remained together.’’ Jenkins v.
    Jenkins, 
    243 Conn. 584
    , 594, 
    704 A.2d 231
    (1998); see
    also Dowling v. Szymczak, 
    309 Conn. 390
    , 408, 
    72 A.3d 1
    (2013) (‘‘the calculation of child support is based on
    the income shares model and the parties’ combined net
    income rather than on the actual costs associated with
    raising a child’’). This means that, unlike when consider-
    ing a request for the modification of an alimony order,
    the trial court may consider a substantial increase in
    the supporting spouse’s income, standing alone, as suffi-
    cient justification for granting a motion to modify a
    child support order to ensure that the child receives
    the same proportion of parental income that he or she
    would have received if the parents had remained
    together.4
    We therefore conclude,5 in light of the different pur-
    poses of alimony and child support, that the Appellate
    Court improperly relied on Dan in determining that
    ‘‘both alimony and child support orders are subject
    to the same modification requirements under § 46b-86
    (a)’’; McKeon v. 
    Lennon, supra
    , 
    155 Conn. App. 434
    ;
    and that the court improperly concluded that the plain-
    tiff was required to show additional circumstances,
    beyond the increase in the defendant’s income, to justify
    modification of the child support award.6 See 
    id., 434–36. II
       The plaintiff next claims that the Appellate Court
    improperly upheld the trial court’s denial of her motions
    for modification because the trial court did not consider
    the defendant’s exercised stock options, restricted
    stock or employment perquisites for the years in ques-
    tion when calculating his gross annual income.7 The
    plaintiff thus argues that the conclusions of the trial
    court and the Appellate Court that the plaintiff failed
    to establish a substantial change in the defendant’s
    financial circumstances were not based on a correct
    understanding of the components of his income. The
    defendant responds that the trial court acted within its
    discretion in concluding that the plaintiff had failed to
    establish a substantial change in his financial circum-
    stances and that, even if the trial court had considered
    income from the defendant’s stock benefits and employ-
    ment perquisites, a review of the guidelines worksheet
    entered into evidence by the plaintiff herself demon-
    strates that the court would not have found a change
    in his circumstances sufficient to justify an increase in
    his child support obligation. The defendant also argues
    that the plaintiff has ignored the fact that he pays one
    half of their youngest son’s private secondary education
    expenses as child support. We agree in part with each
    of the parties.
    The following additional facts are relevant to our
    resolution of this claim. On January 18, 2008, less than
    three weeks after the judgment of dissolution was
    entered, the plaintiff filed a motion for reconsideration
    and/or reargument, in which she raised numerous
    issues pertaining to division of the parties’ pension
    plans, the children’s medical coverage, life insurance,
    child support, asset valuation, account transfers and
    taxes. With respect to child support, the plaintiff’s only
    claim relating to the trial court’s calculation of the
    defendant’s gross income was that the court had not
    included the monetary value of the defendant’s employ-
    ment perquisites and his in-kind compensation. Neither
    party appealed from the trial court’s denial of this
    motion.
    Thereafter, in May, 2008, and April, 2010, the plaintiff
    filed motions for modification of the child support
    order. In its memorandum of decision on the plaintiff’s
    2010 motion, which was the first motion decided, the
    trial court found that the defendant’s base salary in
    2011 was $260,000 and that his annual bonus was
    $175,000. The court also found that, although the defen-
    dant had exercised stock options in the amount of
    $190,361 after the judgment of dissolution was ren-
    dered, the options were subject to the dissolution
    court’s property distribution order that stock options
    and restricted stock awards granted to the defendant
    prior to the dissolution judgment be divided as property
    and not be considered as alimony or child support. The
    court thus concluded that any income the defendant
    received from the exercised stock options could not
    be counted because doing so would result in ‘‘double-
    dipping.’’ (Internal quotation marks omitted.) Maturo
    v. 
    Maturo, supra
    , 
    296 Conn. 97
    n.9. The court further
    found that the defendant’s annual bonus of $175,000
    had been considered by the court and divided between
    the parties at the time of the dissolution judgment, and,
    therefore, it also could not be considered a second time
    in determining whether there had been a change in
    the defendant’s circumstances. The court finally found,
    with respect to $59,484 in employment perquisites the
    defendant received in 2011, that the plaintiff’s failure
    to identify how much, if any, of that amount constituted
    basic maintenance or special needs, which are consid-
    ered a component of gross income as in-kind compensa-
    tion under the governing regulations; see Regs., Conn.
    State Agencies § 46b-215a-1 (11) (A) (vi); prevented the
    court from including any of this amount in its calcula-
    tion of the defendant’s gross income. The court thus
    concluded that, because the defendant’s base salary
    had increased only $35,000, from $225,000 on the date
    of the dissolution judgment to $260,000 in 2011, there
    had been no substantial increase in his income under
    the child support guidelines.
    The court conducted a similar analysis approximately
    one year later in its memorandum of decision on the
    plaintiff’s 2008 motion for modification. The court
    found that the defendant’s base salary as of April 25,
    2012, was $270,000 and that he had received a bonus
    in 2012 of $185,000. The court again noted the provision
    in the dissolution judgment order that stock options
    and restricted stock awards granted to the defendant
    prior to the dissolution judgment were to be divided
    as part of the property settlement and not considered
    as alimony or child support. The court thus concluded
    that, although the defendant continued to receive and
    exercise stock options as part of his executive compen-
    sation, his past and future options were subject to the
    court’s property distribution order and could not be
    counted as income, as doing so would result in double-
    dipping. The court added that it could not consider
    the $55,807 in employment perquisites the defendant
    received in 2012 because the plaintiff had failed to iden-
    tify which items satisfied the definition of eligible per-
    quisites in the statutory regulations. Although the court
    did not state, as it did in its memorandum of decision
    on the 2010 motion for modification, that it would not
    count the defendant’s bonus because the bonus had
    been considered and divided at the time of the dissolu-
    tion judgment, it ultimately concluded that the plaintiff
    had failed to show a substantial change in the defen-
    dant’s circumstances from the date of the dissolution
    judgment to the present.
    The plaintiff appealed from the trial court’s rulings
    on her motions for modification to the Appellate Court,
    which consolidated the appeals for review.8 See
    McKeon v. 
    Lennon, supra
    , 
    155 Conn. App. 427
    and n.1.
    The Appellate Court affirmed the rulings with little anal-
    ysis. The court briefly referred to the trial court’s find-
    ings regarding the increase in the defendant’s base
    salary and bonus in its decision on the plaintiff’s 2010
    motion. See 
    id., 433–34. It
    then concluded that the plain-
    tiff had not established that there had been a substantial
    change in the defendant’s circumstances because,
    under Dan, the plaintiff was required to show additional
    circumstances beyond the defendant’s increased
    income to justify an upward modification of his child
    support obligation.9 See 
    id., 434. With
    respect to the
    plaintiff’s 2008 motion, the Appellate Court also con-
    cluded, after an equally perfunctory reference to the
    trial court’s findings on the defendant’s base salary and
    bonuses during the years following the dissolution judg-
    ment, that the plaintiff had not established a substantial
    change in the defendant’s circumstances. 
    Id., 435–36. The
    Appellate Court did not address the trial court’s
    findings regarding the defendant’s employment perqui-
    sites in its discussion of the plaintiff’s motions. See
    generally 
    id., 434–36. The
    Appellate Court subsequently considered the
    trial court’s exclusion of the defendant’s exercised
    stock options and restricted stock from its income cal-
    culations when ruling on the defendant’s motion for a
    downward modification of his child support obligation.
    
    Id., 438. The
    court noted that the trial court’s exclusion
    of the stock benefits was based on its finding that the
    benefits previously had been considered and divided
    as part of the property settlement. See 
    id., 438–40. In
    response to the plaintiff’s argument that income from
    the stock options and restricted stock constituted
    deferred compensation, the Appellate Court stated that
    it was the plaintiff’s burden to distinguish between
    stock awarded before and after the dissolution, and
    that the plaintiff had failed to present evidence that the
    stock options the defendant had exercised during the
    period in question were awarded after the dissolution.
    See 
    id., 439–40. With
    respect to the restricted stock,
    the court explained that, in addition to the fact that
    there was evidence indicating that the stock at issue
    was part of the property distribution, the defendant’s
    testimony regarding when the stock vested indicated
    that it had not vested at the time of the plaintiff’s
    motions. See 
    id. The Appellate
    Court thus concluded
    that the trial court properly had excluded the exercised
    stock options and restricted stock from the defendant’s
    gross income. 
    Id., 440. The
    Appellate Court also con-
    cluded, with respect to the defendant’s employment
    perquisites, that there was ‘‘nothing in the record to
    undermine . . . confidence in the court’s factual find-
    ings, and [it thus] defer[red] to [the trial court’s] sound
    judgment in reaching its conclusions.’’ 
    Id., 443. We
    begin with the standard of review. ‘‘The well set-
    tled standard of review in domestic relations cases is
    that this court will not disturb trial court orders unless
    the trial court has abused its legal discretion or its
    findings have no reasonable basis in the facts. . . .
    [T]he foundation for this standard is that the trial court
    is in a clearly advantageous position to assess the per-
    sonal factors significant to a domestic relations case
    . . . . 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. . . . Notwithstanding the
    great deference accorded the trial court in dissolution
    proceedings, a trial court’s ruling . . . may be reversed
    if, in the exercise of its discretion, the trial court applies
    the wrong standard of law. . . . The question of
    whether, and to what extent, the child support guide-
    lines apply, however, is a question of law over which
    this court should exercise plenary review.’’ (Citations
    omitted; internal quotation marks omitted.) Tuckman
    v. Tuckman, 
    308 Conn. 194
    , 200, 
    61 A.3d 449
    (2013).
    A
    We turn first to the question of whether the Appellate
    Court properly upheld the trial court’s decision to
    exclude the defendant’s exercised stock options and
    restricted stock from its calculation of his gross income
    for the years in question. General Statutes § 46b-84 (a)
    provides in relevant part: ‘‘Upon or subsequent to the
    annulment or dissolution of any marriage or the entry
    of a decree of legal separation or divorce, the parents
    of a minor child of the marriage, shall maintain the
    child according to their respective abilities, if the child
    is in need of maintenance. . . .’’ The statute further
    provides: ‘‘In determining whether a child is in need of
    maintenance and, if in need, the respective abilities of
    the parents to provide such maintenance and the
    amount thereof, the court shall consider the age, health,
    station, occupation, earning capacity, amount and
    sources of income, estate, vocational skills and employ-
    ability of each of the parents, and the age, health, sta-
    tion, occupation, educational status and expectation,
    amount and sources of income, vocational skills,
    employability, estate and needs of the child.’’ General
    Statutes § 46b-84 (d).
    In addition to these provisions regarding the obliga-
    tion of parents to provide child support, the legislature
    has established a commission to issue child support
    guidelines ‘‘to ensure the appropriateness of criteria for
    the establishment of child support awards . . . . Such
    guidelines shall ensure . . . that current support . . .
    shall be based on the income of both parents and the
    obligor’s ability to pay.’’ General Statutes § 46b-215a (a).
    As previously discussed, the guidelines ‘‘are predicated
    upon the concept that children should receive the same
    proportion of parental income that they would have
    received had the family remained intact. Child Support
    and Arrearage Guidelines, [supra, preamble, p. ii].
    Toward that end, the guidelines are income driven,
    rather than expense driven. At each income level, the
    guidelines allocate a certain percentage of parental
    income to child support. The percentage allocations
    contained in the guidelines aim to reflect the average
    proportions of income spent on children in households
    of various income and family sizes, and contain a built-
    in self-support reserve for the obligor. [See 
    id., p. iii].
    The result is that the guidelines incorporate an alloca-
    tion of resources between parents and children that the
    legislature has decided is the appropriate allocation.
    Consequently, our interpretation of the guidelines must
    seek to preserve this allocation.’’ Unkelbach v. 
    McNary, supra
    , 
    244 Conn. 357
    –58. In order to achieve this goal,
    however, ‘‘the determination of a parent’s child support
    obligation must account for all of the income that would
    have been available to support the children had the
    family remained together.’’ (Emphasis added.) Jenkins
    v. 
    Jenkins, supra
    , 
    243 Conn. 594
    . ‘‘[T]he party seeking
    the modification bears the burden of demonstrating
    that such a change has occurred.’’ (Internal quotation
    marks omitted.) Olson v. Mohammadu, 
    310 Conn. 665
    ,
    672, 
    81 A.3d 215
    (2013).
    Section 46b-215a-1 (11) of the Regulations of Con-
    necticut State Agencies defines ‘‘gross income’’ as ‘‘the
    average weekly earned and unearned income from all
    sources before deductions, including but not limited to
    the items listed in subparagraph (A) of this subdivision,
    but excluding the items listed in subparagraph (B) of
    this subdivision.’’ Subparagraph (A) lists twenty-two
    sources of income,10 one of which is ‘‘profit sharing,
    [and] deferred and incentive-based compensation
    . . . .’’ Regs., Conn. State Agencies § 46b-215a-1 (11)
    (A) (iv). Subparagraph (B) lists six sources of excluded
    income,11 none of which is relevant in the present case.
    In considering these income inclusions and exclusions,
    the preamble to the child support guidelines instructs
    that ‘‘gross income includes all kinds of earned and
    unearned income not specifically excluded’’ and that
    the ‘‘list of inclusions is illustrative and not exhaustive.’’
    Child Support and Arrearage 
    Guidelines, supra
    , pream-
    ble, p. ix.
    Applying these guidelines, we conclude that exer-
    cised stock options and restricted stock that has
    vested12 ordinarily should be considered components
    of a party’s gross income for purposes of calculating
    child support because they constitute ‘‘deferred or
    incentive-based compensation’’; Regs., Conn. State
    Agencies § 46b-215a-1 (11) (A) (iv); and are not specifi-
    cally excluded under the guidelines. The fact that the
    applicable guidelines in 2005 did not define deferred or
    incentive-based compensation as including such bene-
    fits is irrelevant. Stock options always have been under-
    stood as a form of incentive-based compensation. See,
    e.g., Black’s Law Dictionary (6th Ed. 1990) (stock option
    is ‘‘often granted to management and key employees
    as a form of incentive compensation’’). Moreover, ‘‘[w]e
    have previously interpreted broadly the definition of
    gross income contained in the guidelines to include
    items that, in effect, increase the amount of a parent’s
    income that is available for child support purposes.’’13
    Unkelbach v. 
    McNary, supra
    , 
    244 Conn. 360
    , citing Jen-
    kins v. 
    Jenkins, supra
    , 
    243 Conn. 591
    –95.
    In the present case, the trial court explained in its
    memorandum of decision on the plaintiff’s 2010 motion
    for modification that it did not include $190,361 from
    the defendant’s exercised stock options as a component
    of his income because the options were subject to the
    dissolution court’s property distribution order that
    stock options and restricted stock awards granted to
    the defendant prior to the dissolution judgment be
    divided as property and not be considered as alimony
    or child support. Neither party took issue with this
    provision of the dissolution order when the plaintiff
    filed her motion for reconsideration and/or reargument,
    and neither party appealed from the dissolution judg-
    ment on that ground. Accordingly, given the parties’
    acceptance of this provision, the Appellate Court cor-
    rectly determined that the trial court had not abused
    its discretion in excluding the exercised stock options
    and restricted stock from the defendant’s gross income
    on the ground that they were part of the original prop-
    erty distribution order.
    The trial court’s reasoning when deciding the plain-
    tiff’s 2008 motion, in which the court considered the
    defendant’s income from the date of the dissolution
    judgment through April 25, 2012, was more ambiguous.
    Although the court again referred to the fact that the
    dissolution order provided that stock benefits awarded
    to the defendant prior to the dissolution judgment were
    to be divided as part of the property settlement and
    not considered as alimony or child support, the court
    did not state how much income the defendant had
    received from the exercised stock options or the
    restricted stock and did not make a finding as to
    whether this income was derived from stock benefits
    awarded prior to or following the dissolution judgment.
    The court merely stated that the defendant had contin-
    ued to receive and exercise stock options as part of his
    executive compensation and that, because his past and
    future stock options were subject to the court’s prop-
    erty distribution order, the funds received from their
    exercise could not be counted as income. For the rea-
    sons previously discussed, we disagree with the trial
    court that the defendant’s income from the exercised
    stock options and restricted stock awarded as compen-
    sation following the dissolution judgment is barred from
    inclusion in the defendant’s gross income by the dissolu-
    tion order. Thus, to the extent the defendant received
    income from those sources, such income should have
    been counted as part of his gross income for the years
    in question. For example, the record indicates that, in
    the year 2012, the defendant received more than $53,000
    from the vesting on January 3, 2012, of restricted stock
    that he was awarded on March 5, 2008, following the
    dissolution judgment. There may be additional evidence
    in the record that the defendant received income from
    other exercised stock options or restricted stock that
    vested following the dissolution judgment and thus was
    not part of the property distribution. Accordingly, in
    light of this ambiguity in the trial court’s decision, we
    conclude that the Appellate Court incorrectly deter-
    mined that the trial court, in its ruling on the plaintiff’s
    2008 motion for modification, had not abused its discre-
    tion in excluding the income derived from these sources
    when calculating the defendant’s gross income.14
    Rather, the case must be remanded to the trial court
    for the purpose of reconsidering the plaintiff’s 2008
    motion for an upward modification of the defendant’s
    child support obligation in light of our conclusion that
    Dan does not apply and that additional findings must
    be made as to whether any of the exercised stock
    options and restricted stock that vested during the time
    in question were awarded following the dissolution
    judgment, and, if so, the value of those benefits.
    B
    We next consider the trial court’s decision to omit
    the defendant’s alleged employment perquisites from
    its calculation of the defendant’s gross income when
    deciding the plaintiff’s motions for modification. Sec-
    tion 46b-215a-1 (11) (A) (vi) of the Regulations of Con-
    necticut State Agencies includes in its definition of
    gross income ‘‘employment perquisites and in-kind
    compensation (any basic maintenance or special need
    such as food, shelter or transportation provided on a
    recurrent basis in lieu of or in addition to salary or
    wages) . . . .’’
    The record indicates that the defendant received
    $59,484 in employment perquisites in 2011 and $55,807
    in 2012, which, according to the plaintiff’s exhibits, con-
    sisted almost entirely of employer contributions to the
    defendant’s retirement and health insurance plans.15
    The child support guidelines, however, provide that
    such contributions are to be deducted from a parent’s
    gross income in order to determine the net income
    available for child support. See Regs., Conn. State Agen-
    cies § 46b-215a-2b (c) (2) (C) and (F) (repealed July 1,
    2015) (providing for deductions from parent’s gross
    income of employer contributions to mandatory retire-
    ment plans and to medical, hospital, dental or health
    insurance premium payments for parent and parent’s
    legal dependents).
    In the present case, the trial court excluded the
    employment perquisites from its calculations of the
    defendant’s gross income when ruling on both motions
    because it concluded that the plaintiff had failed to
    meet her burden of identifying how much, if any, of the
    perquisites constituted food, shelter, transportation or
    other basic needs pursuant to § 46b-215a-1 (11) (A)
    (vi) of the Regulations of Connecticut State Agencies.
    Although this factual finding and the trial court’s ulti-
    mate decision to exclude the employment perquisites
    were correct, we also note that most of the perquisites
    would have been deducted in any event under § 46b-
    215a-2b (c) (2) (C) and (F) when calculating the parties’
    net income. We thus conclude that the Appellate Court
    properly determined that the trial court did not abuse
    its discretion in excluding the employment perquisites
    from its calculation of the defendant’s gross income in
    its rulings on the plaintiff’s motions for modification.16
    The judgment of the Appellate Court is reversed with
    respect to its determination that alimony and child sup-
    port orders are subject to the same modification
    requirements, and its determination that the trial court,
    in ruling on the plaintiff’s 2008 motion for modification
    of child support, did not abuse its discretion in exclud-
    ing income derived from stock options awarded and
    exercised and restricted stock awarded and vesting fol-
    lowing the dissolution judgment in its calculation of
    the defendant’s gross income, and the case is remanded
    to the Appellate Court with direction to remand the
    case to the trial court to make findings as to whether
    any of the exercised stock options and restricted stock
    that vested postdissolution were awarded as compensa-
    tion following the dissolution judgment, and, if so, how
    much income was derived from those sources, and to
    reconsider the plaintiff’s 2008 motion for modification
    in light of those findings and in accordance with our
    determination that child support orders are not subject
    to the same modification requirements as alimony
    orders; the judgment of the Appellate Court is affirmed
    in all other respects.
    In this opinion the other justices concurred.
    1
    This court granted the plaintiff’s petition for certification to appeal,
    limited to the following issue: ‘‘Did the Appellate Court properly determine,
    based upon this court’s decision in Dan v. Dan, [supra, 
    315 Conn. 1
    ], that
    the trial court correctly determined that the plaintiff had not established a
    substantial change in circumstances in regard to her 2008 and 2010 motions
    for modification [of child support]?’’ McKeon v. Lennon, 
    317 Conn. 901
    , 
    114 A.3d 166
    (2015).
    2
    Although alimony and child support orders are calculated on the basis
    of several overlapping factors, the court also considers several additional
    factors specific to spouses and children, respectively, in calculating such
    orders. For example, under General Statutes § 46b-82 (a), the court deter-
    mines whether alimony should be awarded, and the amount and duration
    of the award, after considering the length of the marriage, the causes for
    its termination, ‘‘the age, health, station, occupation, amount and sources
    of income, earning capacity, vocational skills, education, employability,
    estate and needs of each of the parties and the award, if any, which the
    court may make pursuant to section 46b-81, and, in the case of a parent to
    whom the custody of minor children has been awarded, the desirability and
    feasibility of such parent’s securing employment.’’ In comparison, the court
    calculates child support pursuant to the child support guidelines and the
    factors set forth in General Statutes § 46b-84 (d), which include ‘‘the respec-
    tive abilities of the parents to provide such maintenance and the amount
    thereof,’’ and ‘‘the age, health, station, occupation, earning capacity, amount
    and sources of income, estate, vocational skills and employability of each
    of the parents, and the age, health, station, occupation, educational status
    and expectation, amount and sources of income, vocational skills, employ-
    ability, estate and needs of the child.’’
    3
    ‘‘The guidelines are accompanied by a preamble that is not part of the
    regulations but is intended to assist in their interpretation.’’ Maturo v.
    
    Maturo, supra
    , 
    296 Conn. 92
    –93.
    4
    General Statutes § 46b-86 (a) clarifies that ‘‘[t]here shall be a rebuttable
    presumption that any deviation of less than fifteen per cent from the child
    support guidelines is not substantial and any deviation of fifteen per cent
    or more from the guidelines is substantial.’’ Accordingly, an increase or
    decrease in the supporting party’s income that satisfies this standard presum-
    ably would justify a request for modification of child support. The statute
    nonetheless provides that the court shall continue to consider other factors
    when evaluating such a request: ‘‘In determining whether to modify a child
    support order based on a substantial deviation from such child support
    guidelines the court shall consider the division of real and personal property
    between the parties set forth in the final decree and the benefits accruing
    to the child as the result of such division. After the date of judgment,
    modification of any child support order issued before, on or after July 1, 1990,
    may be made upon a showing of such substantial change of circumstances,
    whether or not such change of circumstances was contemplated at the time
    of dissolution.’’ General Statutes § 46b-86 (a).
    5
    We note that all of the amici curiae agree with our conclusion.
    6
    The Appellate Court initially observed that the plaintiff’s earning capacity
    had remained the same, the plaintiff had failed to establish a significant
    increase in her expenses and, even though the defendant’s base salary and
    bonuses had increased since the dissolution judgment, the increase was not
    substantial. McKeon v. 
    Lennon, supra
    , 
    155 Conn. App. 432
    –34. The court
    then cited Dan in concluding that the plaintiff must show additional circum-
    stances, beyond the defendant’s increased income, to establish the ‘‘substan-
    tial change in circumstances’’ required to justify modification of the child
    support order. 
    Id., 434. 7
         We address this issue because we view it as implicated in the certified
    question of whether the Appellate Court properly relied on the reasoning
    in Dan when concluding that the plaintiff had not established a substantial
    change in circumstances sufficient to support her 2008 and 2010 motions
    for modification of child support, and both parties have briefed the issue
    extensively. See footnote 1 of this opinion. In contrast, we do not consider
    the effect of the trial court’s exclusion of the defendant’s bonus from its
    calculation of his gross income because that issue was not directly briefed
    by the parties, although the plaintiff refers to the bonus as contributing to
    the increase in the defendant’s income following the dissolution.
    8
    As the Appellate Court noted, these appeals were consolidated with
    several other appeals by the plaintiff from various rulings by the trial court.
    See McKeon v. 
    Lennon, supra
    , 
    155 Conn. App. 427
    n.1.
    9
    Despite this assertion, the Appellate Court appeared to agree with the
    trial court’s analysis, which was conducted prior to the issuance of this
    court’s decision in Dan, and concluded that there had not been a substantial
    increase in the defendant’s income under the guidelines. See McKeon v.
    
    Lennon, supra
    , 
    155 Conn. App. 434
    .
    10
    These are: ‘‘(i) salary; (ii) hourly wages for regular, overtime and addi-
    tional employment not to exceed 45 total paid hours per week; (iii) commis-
    sions, bonuses and tips; (iv) profit sharing, deferred and incentive-based
    compensation and severance pay; (v) tribal stipends and incentives; (vi)
    employment perquisites and in-kind compensation (any basic maintenance
    or special need such as food, shelter or transportation provided on a recur-
    rent basis in lieu of or in addition to salary or wages); (vii) military personnel
    fringe benefit payments; (viii) benefits received in place of earned income
    including, but not limited to, workers’ compensation benefits, unemploy-
    ment insurance benefits, strike pay and disability insurance benefits; (ix)
    veterans’ benefits; (x) Social Security benefits paid to the parent for the
    parent’s own needs, provided when the parent whose income is being deter-
    mined receives both Supplemental Security Income (SSI) and Social Security
    disability or retirement benefits, the Social Security income inclusion shall
    not exceed $5 per week; (xi) Social Security dependency benefits paid on
    behalf of a child whose support is being determined, which are based on
    the earnings record of the parent whose income is being determined; (xii)
    net proceeds from contractual agreements; (xiii) pension and retirement
    income; (xiv) rental income after deduction of reasonable and necessary
    expenses; (xv) estate or trust income; (xvi) royalties; (xvii) interest, divi-
    dends and annuities; (xviii) self-employment earnings, after deduction of
    all reasonable and necessary business expenses; (xix) alimony being paid
    by an individual who is not a party to the support determination; (xx)
    adoption subsidy benefits received by the custodial parent for the child
    whose support is being determined; (xxi) lottery and gambling winnings,
    prizes and regularly recurring gifts (except as provided in subparagraph [B]
    [vi] of this subdivision); and (xxii) education grants (including fellowships
    or subsidies, to the extent taxable as income under the Internal Revenue
    Code).’’ Regs., Conn. State Agencies § 46b-215a-1 (11) (A).
    11
    These are: ‘‘(i) support received on behalf of a child who is living in
    the home of the parent whose income is being determined; (ii) Supplemental
    Security Income (SSI) payments, including those received on behalf of a
    child who is living in the home of the parent whose income is being deter-
    mined; (iii) Social Security disability or Social Security retirement benefits
    in excess of $5 per week, when the parent also receives SSI; (iv) federal,
    state and local public assistance grants; (v) earned income tax credit; and
    (vi) the income and regularly recurring contributions or gifts of a spouse
    or domestic partner.’’ Regs., Conn. State Agencies § 46b-215a-1 (11) (B).
    12
    Restricted stock is considered income in the year that it vests rather
    than the year in which it is exercised. See Maturo v. 
    Maturo, supra
    , 
    296 Conn. 97
    –98 n.9.
    13
    To the extent any ambiguity remains, the amended 2015 child support
    guidelines have settled the point by clarifying that incentive-based income
    includes ‘‘stock options, restricted stock, restricted stock units, phantom
    stock, stock appreciation rights and other forms of delayed or deferred
    compensation.’’ Child Support and Arrearage Guidelines (July 1, 2015) pre-
    amble, p. xvi.
    14
    In light of the parties’ acceptance of the provision in the present dissolu-
    tion decree that the defendant’s stock options and restricted stock ‘‘shall
    be divided as part of the property settlement and shall not be alimony or
    child support’’; (emphasis added); we reject as irrelevant the plaintiff’s
    arguments that (1) the Appellate Court misapplied our case law on the trial
    court’s loss of jurisdiction over property distributed in accordance with a
    dissolution decree, (2) the trial court erroneously determined that to include
    income from stock options and restricted stock awarded prior to the dissolu-
    tion judgment would be double-dipping, and (3) the plaintiff was deprived
    of the fairness and consistency required by the child support guidelines
    because the erroneous calculation of the defendant’s income resulted in a
    child support order based on an incorrect presumptive range. If the plaintiff
    did not agree with one or more provisions in the dissolution decree, she
    should have sought to preclude them from the decree or filed an appeal
    from the dissolution judgment on that ground. Additionally, to the extent
    the plaintiff relies on Maturo for the proposition that income from stock
    options and restricted stock distributed as property should be included in
    the defendant’s gross income, that reliance was improper because the court
    in Maturo did not directly discuss that issue, and there is no indication in
    Maturo whether the dissolution decree in that case included a provision
    similar to the provision at issue in the present case, which provided that
    the stock benefits were part of the property settlement and not to be consid-
    ered as alimony or child support. See Maturo v. 
    Maturo, supra
    , 
    296 Conn. 97
    –98 n.9.
    15
    For example, the record indicates that, in 2012, the defendant received
    $55,807 in employment perquisites consisting of $39,344 in contributions to
    his retirement plans and $16,463 in contributions to his health and other
    insurance premiums. Of that $16,463, $2219 was allocated to various life,
    accident and disability insurance premiums.
    16
    Because they are outside the scope of the certified question, we do not
    address the defendant’s arguments that his child support obligation includes
    payment of one half of his youngest child’s secondary private school
    expenses or that the plaintiff’s income worksheet indicates that, even if the
    trial court had considered the stock benefits, his support obligation would
    have remained within the proper range.
    

Document Info

Docket Number: SC19470

Citation Numbers: 138 A.3d 242, 321 Conn. 323, 2016 Conn. LEXIS 118

Judges: Rogers, Palmer, Zarella, Eveleigh, Espinosa, Vertefeuille

Filed Date: 5/17/2016

Precedential Status: Precedential

Modified Date: 10/19/2024