Nadel v. Luttinger ( 2016 )

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SUE NADEL v. STEVEN LUTTINGER
(AC 37763)
Beach, Sheldon and Mullins, Js.
Argued April 11—officially released October 4, 2016
(Appeal from Superior Court, judicial district of
Stamford-Norwalk, Hon. Stanley Novack, judge trial
referee [dissolution judgment]; Heller, J. [motion for
contempt].)
Samuel V. Schoonmaker IV, with whom, on the brief,
was Wendy Dunne DiChristina, for the appellant
(defendant).
Steven R. Dembo, with whom were Caitlin E. Koz-
loski and, on the brief, P. Jo Anne Burgh, for the appel-
lee (plaintiff).
Opinion
BEACH, J. In this postdissolution action, the defen-
dant, Steven Luttinger, appeals from the judgment of
the trial court granting in part the motion for contempt
filed by the plaintiff, Sue Nadel. He claims that the court
erred in (1) categorizing a cash performance award
received by the defendant as an asset to be distributed
as property pursuant to the separation agreement,
rather than as earned income to be distributed pursuant
to provisions regarding alimony, and (2) finding the
amount owed to the plaintiff. We disagree with the
defendant’s first claim, but agree with the second.
The following facts and procedural history are rele-
vant. The parties were married in November, 1991. The
plaintiff filed for dissolution and, on December 17, 2013,
a hearing was held. At that time, the parties presented
a separation agreement to the court, Hon. Stanley
Novack, judge trial referee. The dissolution judgment,
which was rendered on January 8, 2014, incorporated
by reference the parties’ December, 2013 separation
agreement.
The agreement provided for alimony and for the divi-
sion of property. Alimony was addressed in paragraph
2 of the agreement. Paragraph 2B provided that alimony
was to be calculated with reference to the defendant’s
‘‘earned income.’’ The amount of the obligation was
determined by a sliding scale: ‘‘(1) On the first $250,000
of [the defendant’s] earned income, both cash and non-
cash, [the plaintiff] will receive 25%; (2) On $250,001
to $500,000 of [the defendant’s] earned income, both
cash and non-cash, [the plaintiff] will receive 20%; (3)
On $500,001 to $750,000 of [the defendant’s] earned
income, both cash and non-cash, [the plaintiff] will
receive 15%; (4) On $750,001 to $1,000,000 of [the defen-
dant’s] earned income, both cash and non-cash, [the
plaintiff] will receive 10%; (5) Over $1,000,000, [the
plaintiff] will not share. (6) Connecticut General Stat-
utes § [46b-86 (b)] shall apply.’’ Paragraph 2C defined
the defendant’s ‘‘earned income’’ as ‘‘all amounts paid
to him for his personal services, including: wages, com-
missions, bonuses, consulting fees, finder’s fees, or any
other type of compensation both cash and non-cash he
has the right to receive for his personal services.’’
Paragraph 2D provided that the defendant’s ‘‘earned
income will include both cash and non-cash compensa-
tion; provided, however, that [the plaintiff’s] entitle-
ment to a percentage of [the defendant’s] earned income
will be satisfied first out of all cash paid to [the defen-
dant] during a calendar year . . . . If [the defendant]
should voluntarily defer any cash compensation, or
shall voluntarily elect non-cash compensation in lieu
of cash, then in that event, he shall be deemed to have
received the voluntary deferral in cash.’’
The agreement contained other provisions regarding
alimony that are not directly relevant here. It is clear
from the agreement, then, that the plaintiff was entitled
to a decreasing percentage share of the defendant’s
earned income as the amount of his income rose, and
the agreement contemplated that both cash and non-
cash remuneration would be subject to alimony.
Obligations as to property division were addressed in
paragraph 5. Paragraph 5A provided that ten specifically
listed financial assets, not including the award in issue
in this case, were to be divided equally at the time
of dissolution.
Paragraph 5B is critical to the analysis of this case.
The heading of the paragraph is ‘‘AMC1 Restricted Stock
Awards and Units (husband).’’ The paragraph provides:
‘‘The division of assets as equitable distribution shall
include all restricted stock units and options that have
been awarded to [the defendant] through the date of
the dissolution of the marriage, including non-vested
RSU’s2 and options. If and when non-vested awards
of any kind become vested, then the [plaintiff] shall
forthwith be entitled to her share thereof net of all
applicable taxes based on the tax rate from the year in
which the applicable taxes are imposed. Within 7 days
after RSU’s vest, the [plaintiff] shall receive her share,
taking into account any appreciation or depreciation
of said shares. Within 30 days after the filing of the
[defendant’s] tax return in which the receipt of the
restricted stock units are reflected, the parties shall
‘true-up’ in order to share equitably the tax burden on
the vesting of the RSU’s.’’ Although paragraph 5B does
not expressly state how the parties were to divide the
net proceeds of assets subject to the paragraph, the
parties agreed that such assets were to be divided
evenly between them.
During the relevant times, the defendant was
employed by AMC. He participated in two incentive
programs. One, the ‘‘AMC Networks Restricted Share
Awards,’’ though not directly in issue in this appeal,
has been referred to by the parties, and facts concerning
the program appear in the record. Pursuant to that
program, the defendant received in 2011 a total of 4250
shares of restricted AMC stock, which did not vest
until March, 2014. The defendant considered this stock
award to be property pursuant to paragraph 5B and
paid the plaintiff accordingly. There is no dispute
regarding this transaction.
The second incentive program forms the context of
the present appeal. In March, 2011, AMC notified the
defendant that he had been selected to receive a contin-
gent cash award.3 The fundamental term of the
agreement was stated in paragraph one of the ‘‘Perfor-
mance Award Agreement.’’ The ‘‘target’’ amount of the
award was $165,000; the exact amount was to be deter-
mined by the company after it determined the extent
to which certain performance objectives were attained
in the 2013 calendar year.
The defendant received the cash proceeds of the
award in March, 2014. The gross amount of the award
was $222,915. After taxes were deducted, the net
amount received by the defendant was $140,503.33.
Although there are some misleading characterizations
on several brokerage statements, it was agreed that the
‘‘Restricted Share Awards,’’ referred to previously, were
transactions in shares of company stock, while the ‘‘Per-
formance Awards,’’ the subject of this appeal, were
entirely cash transactions. The defendant treated the
AMC cash performance award as earned income and,
accordingly, paid the plaintiff a percentage of that
award pursuant to paragraph 2B of the separation
agreement, which concerns alimony.4
In April, 2014, the plaintiff filed a postjudgment
motion for contempt. The plaintiff sought to have the
defendant held in contempt for treating the cash perfor-
mance award as earned income and paying her a per-
centage of the award as alimony pursuant to paragraph
2B of the separation agreement. She argued at the con-
tempt hearing that the cash award was an asset granted
to the defendant prior to the entry of the judgment of
dissolution and, thus, that the defendant should have
paid her 50 percent of the cash performance award
according to paragraph 5 of the separation agreement.
Following a hearing on the plaintiff’s motion for con-
tempt, the court, Heller, J., determined that the cash
performance awards had been granted to the defendant
during the marriage, were ‘‘non-vested awards’’ within
the meaning of paragraph 5B and, upon vesting, the
defendant was obligated to pay the plaintiff her share.
The court noted that, according to the testimony of the
parties, they had agreed to divide property assets within
paragraph 5 equally, although paragraph 5 did not
expressly so state. The court found that the separation
agreement did not clearly provide for the equal division
of such assets; thus, the court did not find the defendant
in contempt. The court concluded that the plaintiff was
entitled to 50 percent of the cash award and granted
the plaintiff’s motion for contempt to the extent that
it sought an order directing the defendant to pay the
difference between 50 percent of the cash performance
award, net of applicable taxes, and the amount that he
already had paid to her. The court ordered the defen-
dant to pay the plaintiff $55,728.75 and did not find the
defendant in contempt.
Pursuant to a June, 2015 order by this court, the
trial court issued an articulation. The court clarified its
finding that the cash performance award was not an
award of a restricted stock unit, but rather was a non-
vested award pursuant to paragraph 5B of the separa-
tion agreement. It further stated that the amount of its
award of $55,728.75, made after finding that the plaintiff
was entitled to one half of the net cash performance
award, was reached because the court credited the
plaintiff’s conclusion in her testimony that that’s what
she was owed.
I
The defendant’s principal claim is that the court erred
in categorizing his postjudgment performance cash
award as property to be distributed according to the
provisions of paragraph 5B of the separation agreement,
rather than as earned income subject to paragraph 2C.
The defendant argues that the plain and unambiguous
language of the separation agreement compels the con-
clusion that the cash award was a form of income under
paragraph 2C, which expressly included ‘‘bonuses’’
within its definition of earned income. Earned income,
of course, was subject to distribution as alimony rather
than as property. We disagree, and hold that, although
the language of the separation agreement is clear and
unambiguous, it compels the conclusion that the cash
performance award was properly considered to be an
asset subject to distribution pursuant to paragraph 5.
Both parties argue that paragraphs 2C and 5B are
clear and unambiguous. The court agreed, and so do
we. ‘‘Our interpretation of a separation agreement that
is incorporated into a dissolution decree is guided by
the general principles governing the construction of
contracts. . . . A contract must be construed to effec-
tuate the intent of the parties, which is determined from
the language used interpreted in the light of the situation
of the parties and the circumstances connected with
the transaction. . . . [T]he intent of the parties is to
be ascertained by a fair and reasonable construction
of the written words and . . . the language used must
be accorded its common, natural, and ordinary meaning
and usage where it can be sensibly applied to the subject
matter of the contract. . . . Where the language of the
contract is clear and unambiguous, the contract is to
be given effect according to its terms. A court will not
torture words to import ambiguity where the ordinary
meaning leaves no room for ambiguity . . . . Similarly,
any ambiguity in a contract must emanate from the
language used in the contract rather than from one
party’s subjective perception of the terms. . . . More-
over, the mere fact that the parties advance different
interpretations of the language in question does not
necessitate a conclusion that the language is ambigu-
ous. . . . If the language of a contract is clear and
unambiguous, the intent of the parties is a question
of law, subject to plenary review.’’ (Citations omitted;
internal quotation marks omitted.) Eckert v. Eckert, 285
Conn. 687, 692, 941 A.2d 301 (2008).
As stated previously, paragraph 2C defined the defen-
dant’s ‘‘earned income’’ as ‘‘all amounts paid to him for
his personal services, including: wages, commissions,
bonuses, consulting fees, finder’s fees, or any other type
of compensation both cash and non-cash he has the
right to receive for his personal services.’’ The defen-
dant argues that the payment in issue was clearly a
‘‘cash bonus,’’ because it was a payment in cash, rather
than shares of stock, the money was actually paid after
the date of dissolution, and the cash performance award
was not clearly within the definitions of property assets
as provided in paragraph 5. The defendant also alludes
to the description of the award as it appears in various
financial statements.5
Paragraph 5B, which concerns property division, pro-
vides that ‘‘[t]he division of assets as equitable distribu-
tion shall include all restricted stock units and options
that have been awarded to the [defendant] through the
date of the dissolution of the marriage, including non-
vested RSU’s and options. If and when non-vested
awards of any kind become vested, then the [plaintiff]
shall forthwith be entitled to her share thereof net of
all applicable taxes based on the tax rate from the year
in which the applicable taxes are imposed. Within 7
days after RSU’s vest, the [plaintiff] shall receive her
share, taking into account any appreciation or deprecia-
tion of said shares.’’
The defendant argues that paragraph 5B applies only
to distributions of stock, such as restricted stock
options. He contends that the phrase ‘‘non-vested
awards of any kind,’’ in the context of paragraph 5B,
refers to and applies only to those assets particularly
described in the first sentence of the paragraph, which
specifically mentions only nonvested restricted stock
units and nonvested options.6 He further argues that
the heading of paragraph 5B, ‘‘AMC Restricted Stock
Awards and Units,’’ has some significance, despite the
boilerplate language of paragraph 23.7 The plaintiff con-
tends that the language of paragraph 5B does not neces-
sarily exclude nonstock transactions from the category
of financial assets subject to distribution according to
paragraph 5, because the phrase ‘‘non-vested awards
of any kind,’’ contemplates a broader scope. We agree
with the plaintiff.
The first sentence of paragraph 5B states that the
category of assets subject to division ‘‘shall include’’
certain restricted stock units. ‘‘[T]he word ‘include’ may
be considered a word of limitation as well as a word
of enlargement. . . . In Hartford Electric Light Co. v.
Sullivan, [161 Conn. 145, 150, 285 A.2d 352 (1971)], we
recognized that the most likely common use of the term
‘shall include’ is one of limitation. . . . In that case,
however, we could not conclude with certainty that it
was so employed.’’ (Citations omitted.) State v. White,
204 Conn. 410, 422–23, 528 A.2d 811 (1987). In the pre-
sent case, the context of the term ‘‘shall include’’ com-
pels the conclusion that the term is not one of limitation.
The first sentence mentions restricted stock units, but
the term ‘‘non-vested awards of any kind,’’ which
appears in the next sentence, is very broadly phrased.
The use of the enlarging phrase indicates that the term
‘‘shall include’’ does not limit the applicability of para-
graph 5B to only restricted stock units, but rather it
apples to ‘‘non-vested awards of any kind,’’ which were
awarded, but not paid, during the marriage. A construc-
tion limiting the application of paragraph 5B to
restricted stock units and options would render the
words ‘‘of any kind’’ superfluous. Wesley v. Schaller
Subaru, Inc., 277 Conn. 526, 546, 893 A.2d 389 (2006)
(‘‘the law of contract interpretation . . . militates
against interpreting a contract in a way that renders a
provision superfluous’’ [internal quotation marks omit-
ted]). If the plaintiff was entitled under the agreement
to the appropriate share of ‘‘non-vested awards of any
kind,’’ and if the cash performance award was a non-
vested award, then the cash performance award was
subject to distribution under paragraph 5.
The second sentence also indicated that the plaintiff
‘‘shall forthwith’’ be entitled to her share of the ‘‘non-
vested awards of any kind’’ upon the vesting of such
awards. This provision sets forth a timetable different
from that applicable to restricted stock units. According
to the third sentence, the plaintiff shall receive her share
within seven days of vesting, and, according to the
fourth sentence, the parties were subject to a ‘‘true-up’’
provision. The parties, represented by counsel, easily
could have specifically stated, for example, that para-
graph 5 applied only to stock transactions, but they
did not.
The performance award agreement, dated March 29,
2011, authoritatively explained the award and was intro-
duced by the defendant at the contempt hearing. The
agreement referred to the transaction as an ‘‘[a]ward’’
rather than a bonus. Paragraph 21 of the agreement
stated that the award ‘‘shall be considered special incen-
tive compensation and will be exempt from inclusion
as ‘wages’ or ‘salary’ in pension, retirement, life insur-
ance and other employee benefits arrangements of the
Company and its Affiliates, except as determined other-
wise by the Company.’’ The language of the award itself
supports the conclusion that the award is properly
deemed to be something other than ordinary salary or
a bonus.
The critical distinction, on a reading of the agreement
as a whole, is not between cash and stock or between
performance cash awards and restricted stock units.
Rather, it is clear that nonvested awards made prior to
dissolution, presumably recognizing service during the
course of the marriage, were considered to be property,
to be distributed accordingly. When the award vested,
the net proceeds were, then, to be distributed equally
between the parties. On the basis of the evidence pre-
sented at the contempt hearing, we do not conclude
that the court’s finding that the cash award was a ‘‘non-
vested asset of any kind’’ under paragraph 5B was
clearly erroneous.8 The evidence presented at trial
makes clear that the cash award was granted during
the marriage and vested after dissolution. Paragraph 5B
pertains to assets that were granted during the marriage
and vested after, and makes clear that when ‘‘non-
vested awards of any kind’’ become vested, the plaintiff
shall be entitled to her share net of all applicable taxes.
We recognize, finally, the defendant’s argument that
the court violated the rules of contract interpretation
by examining extrinsic sources, such as footnotes on
financial affidavits and a Fidelity report, to support
its interpretation without first finding the separation
agreement to be ambiguous. The court did reference
such sources, but nothing prevents a court from consid-
ering evidence that tends to explain into what category
a payment belongs. Although the agreement itself was
properly determined to be clear and unambiguous, it
was nonetheless incumbent on the court to determine
the nature of the award in issue.
II
The defendant next claims that even if this court
affirms the trial court as to the first issue, the court’s
determination that the defendant owed $55,728.75 was
clearly erroneous. He argues that the court erred in
crediting the plaintiff’s conclusory testimony that the
amount due to her was $55,728.75, when that amount
was 25 percent of the total bonus of $222,915 and did
not account for taxes as required under paragraph 5B.9
We agree.
‘‘A court’s determination is clearly erroneous only
in cases in which the record contains no evidence to
support it, or in cases in which there is evidence, but
the reviewing court is left with the definite and firm
conviction that a mistake has been made.’’ (Internal
quotation marks omitted.) Considine v. Waterbury, 279
Conn. 830, 858, 905 A.2d 70 (2006).
In its articulation, the court explained the method
used for calculating the money owed as follows: ‘‘Hav-
ing found that the [plaintiff] was entitled to half of the
cash performance award payment that the [defendant]
received on March 13, 2014, net of applicable taxes,
the court credited the [plaintiff’s] testimony that the
balance due her was $55,728.75, and it ordered the
[defendant] to pay that amount to the [plaintiff].’’
The only evidence supporting the court’s finding was
the plaintiff’s own conclusion, admitted into evidence
without objection, that the defendant owed her
$55,728.75. We have been directed to no evidence as
to the amount of the award that the defendant paid to
the plaintiff as alimony. The sparse evidence before the
court in this regard did show, however, that the gross
amount of the cash award was $222,915, and the net
amount was $140,503. Under paragraph 2B, the amount
of the defendant’s obligation to pay alimony was vari-
able, depending on overall income.10 The amount
awarded, $55,728.75, is clearly 25 percent of $222,915,
which was the gross amount of the cash award. Under
paragraph 5B the plaintiff was entitled to her share of
a nonvested award of any kind ‘‘net of all applicable
taxes based on the tax rate from the year in which the
applicable taxes are imposed.’’ (Emphasis added.) We
are left with a firm conviction that a mistake has been
committed. The record shows that the net amount of the
cash performance award was $140,503.33. The plaintiff,
then, was entitled to one half of that amount, $70,251.67,
less whatever the defendant previously paid as alimony.
The judgment is reversed only as to the amount of
the award owed to the plaintiff and the case is remanded
for further proceedings in accordance with this opinion.
The judgment is affirmed in all other respects.
In this opinion the other judges concurred.
1
The defendant was employed by American Movie Classics, LLC, which
hereinafter is referred to as AMC.
2
The references in the agreement to RSU’s are to restricted stock units.
3
The defendant received similar performance awards in 2012 and 2013.
This appeal specifically concerns only the 2011 award.
4
It is not entirely clear from the record precisely what amount was paid.
5
We note that documents other than the separation agreement are not
properly to be referenced, for the purpose of construing the words of the
agreement, unless the agreement is ambiguous. See Isham v. Isham, 292
Conn. 170, 180, 972 A.2d 228 (2009) (‘‘[w]hen only one interpretation of a
contract is possible, the court need not look outside the four corners of the
contract’’ [internal quotation marks omitted]). The court of course properly
may rely on extrinsic evidence to determine the factual characteristics of
the actual payment, so that it can determine how and whether the distribution
of the payment is regulated by the agreement.
6
The court’s finding that the cash performance award was not a stock
transaction is not contested.
7
Paragraph 23 of the settlement agreement provides: ‘‘HEADINGS The
paragraph headings herein are for convenience only and shall not be con-
strued to limit or in any way affect any provisions of this Agreement.’’
8
The defendant also argues that an examination of the agreement as a
whole, and in particular paragraphs 2D and 2E, supports his interpretation
of the separation agreement. He notes that paragraph 2D indicates that
voluntarily deferred cash compensation is part of the alimony calculation.
He argues that involuntary cash bonus deferrals were not addressed in
paragraph 2D because they were addressed in paragraph 2C. He notes that
paragraph 2E, which provided that deferred noncash compensation granted
within the alimony term was to be paid to the plaintiff according to the
portion owed to her upon the defendant receiving the deferred payments,
and includes noncash compensation granted in one year but paid in later
years, as alimony not property. These provisions discuss cash and noncash
compensation and how they fit into the alimony calculations. Significantly,
the first sentence of paragraph 2E indicates that it refers to ‘‘non-cash
compensation received by [the defendant] going forward from the date of
the decree . . . .’’ (Emphasis added.) Both paragraphs 2D and 2E refer to
events in the future. The court’s findings, which were supported by evidence,
that the cash award was a ‘‘non-vested [award] of any kind’’ under paragraph
5B and that the award was made prior to the dissolution, were not inconsis-
tent with these provisions.
9
The defendant also argues that the amount awarded is incorrect because
the court failed to follow the ‘‘true-up’’ procedure in paragraph 5B. This
argument assumes that paragraph 5B pertained only to restricted stock units
and that the cash award was subject to the ‘‘true-up’’ provision. As stated
in part I of this opinion, paragraph 5B did not pertain only to restricted
stock units, but rather, pertained to restricted stock units and ‘‘non-vested
awards of any kind.’’ The final sentence of paragraph 5B required the parties
to ‘‘true-up’’: ‘‘Within 30 days after the filing of the [defendant’s] tax return
in which the receipt of the restricted stock units are reflected, the parties
shall ‘true-up’ in order to share equitably the tax burden on the vesting of
the RSUs.’’ This sentence concerns restricted stock units. The court properly
found that the performance cash award was not a restricted stock unit;
thus, the sentence regarding truing up does not apply.
10
Paragraph 2B also provides that if the defendant’s earned income is
over $1 million, the plaintiff’s share of that as alimony is zero percent. Both
parties testified at the contempt hearing that a certain percentage of the
cash award was paid to the plaintiff as alimony; that specific amount, how-
ever, was not in evidence.