Yanavich v. Yanavich ( 2024 )

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2 ,0 0 Conn. App. 1Yanavich v. Yanavich
JENNIFER M. YANAVICH v. JOSEPH YANAVICH
(AC 46656)
Elgo, Seeley and Bishop, Js.
Syllabus
The defendant appealed from the trial court’s denial of his motion to modify
alimony and child support and its grant of his motion for contempt, claiming,
inter alia, that the court improperly failed to impose sanctions on the plaintiff
after finding her in contempt for violating the terms of the dissolution
judgment. Held:
The trial court properly denied the defendant’s motion to modify alimony
and child support, as its finding that the distributions the defendant took
from the retained earnings of the S corporation in which he was the sole
shareholder constituted income for purposes of his alimony and child sup-
port obligations was not clearly erroneous, and it correctly determined
that there had been no substantial change in circumstances to warrant a
modification.
The trial court did not abuse its discretion when it failed to impose sanctions
on the plaintiff for her contemptuous behavior because its remedial response
was well within the scope of its discretionary authority.
Argued May 23—officially released October 8, 2024
Procedural History
Action for the dissolution of a marriage, and for other
relief, brought to the Superior Court in the judicial dis-
trict of Litchfield, where the court, Bentivegna, J., ren-
dered judgment dissolving the parties’ marriage and
granting certain other relief in accordance with a settle-
ment agreement; thereafter, the court, Lobo, J., granted
in part the defendant’s motions for contempt and for
modification of alimony and child support and rendered
judgment thereon, from which the defendant appealed
to this court. Affirmed.
Steven H. Levy, for the appellant (defendant).
Opinion
BISHOP, J. The defendant, Joseph Yanavich, has pre-
sented two issues for our review in this postmarital
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Yanavich v. Yanavich
dissolution appeal. First, he claims that the trial court
improperly denied his motion to modify alimony and
child support. Second, he claims that the court improp-
erly failed to impose sanctions on the plaintiff, his for-
mer wife, Jennifer M. Yanavich,1 after finding her in
contempt for violating the terms of the dissolution judg-
ment. More specifically, as to his first claim, he seeks
our determination as to whether the retained earnings
of a subchapter S corporation derived from past years’
earnings and distributed to its sole shareholder in a
later year or years can be considered present income
to the shareholder for purposes of setting his or her
alimony and child support obligations. As to his second
claim, he argues that the court abused its discretion by
not imposing sanctions on the plaintiff after finding that
she wilfully failed to prevent the minor children from
being inappropriately exposed to the parties’ disputes
over financial issues in violation of the explicit terms
of their marital separation agreement. We affirm the
judgment of the trial court.
The following undisputed facts and procedural his-
tory are pertinent to our resolution of the issues pre-
sented. The parties’ marriage was dissolved on May
30, 2018, with orders based on their ‘‘separation and
property settlement agreement’’ (agreement). At that
time, the parties’ seven children ranged in age from
nineteen to three. The agreement required the defen-
dant to pay the plaintiff the sum of $14,585 per month
as alimony for a period of twelve years with the normal
caveats regarding modifiability and termination upon
death or remarriage. Additionally, the agreement required
the defendant to pay the sum of $6250 per month as
child support. The aggregate total of the defendant’s
alimony and child support obligation was, therefore,
approximately $250,000 per year.
1
The record reflects filings by the plaintiff in which she also refers to
herself as ‘‘Jennifer Codey, f/k/a Jennifer Yanavich.’’
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The agreement also included several provisions
regarding the postdissolution care of the children. The
parties agreed to share joint legal custody of the chil-
dren, who would reside primarily with the plaintiff.
There was also a fulsome access schedule and detailed
language about the parties’ parenting responsibilities.
Notably, section 6.1 (c) of the agreement stated in rele-
vant part: ‘‘Neither parent will engage in any conversa-
tion with the minor children concerning the other par-
ent as to any disputes as between the parents existing
in the past, present or future, specifically including
financial matters. Neither parent will make any dispar-
aging remark about the other parent to the minor chil-
dren, in the presence of the minor children or in a
circumstance in which the minor children can reason-
ably be expected to overhear such remarks, including
the parents’ telephone calls made while a child is under
the care of the parent. . . .’’
At all relevant times, the defendant has been the
president and sole shareholder of Performance Plumb-
ing & Heating, LLC (Performance), a subchapter S cor-
poration based in Connecticut.2 At the time of the mari-
tal dissolution, the defendant filed a financial affidavit
2
A subchapter S corporation is a closely held business entity organized
under the law of the state in which it is incorporated. One feature of such
an entity is that it does not pay income taxes on its net earnings; rather,
its income is attributed to its shareholders and must be reported by them
to the taxing authorities as income to them, regardless of whether the
income, in part or entirely, is actually distributed to the corporation’s share-
holders. See 26 U.S.C § 1361 et seq. (2018); Birkhold v. Birkhold, 343 Conn.
786, 804 n.8, 276 A.3d 414 (2022). Each year, an S corporation provides a
Schedule K-1 form to its shareholders that indicates the net income attributed
to that shareholder. See Bishop v. Freitas, 90 Conn. App. 517, 522 n.3, 877
A.2d 922, cert. denied, 275 Conn. 931, 883 A.2d 1241 (2005). The defendant’s
expert witness, Lawrence Hallisey, a certified public accountant who has
worked for the defendant and Performance, and the plaintiff’s expert wit-
ness, James Nowell, also a certified public accountant, testified at trial.
Hallisey explained that, if any of the corporation’s net income is not actually
paid to its shareholders, the corporation retains that income and it is charac-
terized as retained earnings, which, generally, are then available to provide
liquidity to the corporation as needed for its operations. Moreover, both
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Yanavich v. Yanavich
in which he stated that he earned, as gross income,
$15,279 per week from self-employment with Perfor-
mance. After deductions for federal and state taxes,
Social Security and Medicare, he claimed a weekly net
income of $8508. As to Performance, while he indicated
that he owned 100 percent of the company, he posited
on his 2018 financial affidavit that its value was
‘‘unknown.’’
The record reveals that, following the dissolution of
the parties’ marriage, and despite their comprehensive
separation agreement, the parties filed a steady stream
of motions in which each charged the other with various
violations of the marital dissolution judgment. Of note,
in the early summer of 2021, the plaintiff sought permis-
sion from the court to relocate with the children to
South Carolina and the matter was referred to the Judi-
cial Branch’s Family Services Office to conduct a com-
prehensive evaluation. The defendant, in turn, filed an
objection and, when he learned that the move was immi-
nent, he sought and obtained an ex parte order forbid-
ding the removal of the minor children from Connecti-
cut, but the order was subsequently vacated, as the
plaintiff had already moved to South Carolina even
though Family Services had not completed its assigned
task. Subsequently, the parties entered into an agree-
ment that the plaintiff and the children could remain
in South Carolina, with the defendant’s parenting time
adjusted to reflect the new reality that the children
had already begun school in South Carolina and were
settling into their new home and environment.
Notwithstanding this agreement, the flood of post-
judgment motions continued unabated. Thereafter, the
Hallisey and Nowell agreed that if a shareholder takes a distribution from
retained earnings in any year after the earnings were realized by the corpora-
tion and taxed to its shareholders, those subsequent distributions are not
considered income for tax purposes, as the distributed amount has already
been subject to taxation in the year earned.
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court scheduled an omnibus remote hearing to decide
the motions then pending. That hearing took place over
three days in 2023—January 25 and April 12 and 27—
during which time the court considered the following
motions: the defendant’s motion to modify alimony and
child support dated December 6, 2021; the defendant’s
motion for an order pertaining to educational support
dated March 24, 2022; the defendant’s motion for con-
tempt dated March 24, 2022, alleging, in relevant part,
that the plaintiff ‘‘[i]nvolves the minor children in adult
issues in violation of article 6.1 (c) of the [agreement],’’
and requesting that she be found in contempt and ‘‘pun-
ished therefor’’3; and, finally, the plaintiff’s motions for
contempt and for counsel fees dated February 23, 2022,
and her motion for modification of alimony and child
support dated July 21, 2022. On June 16, 2023, the court
issued a written decision in which it partially granted
the defendant’s motion to modify alimony and child
support on the basis that one of the children, Joseph,
was shortly going to reach his eighteenth birthday.
Accordingly, the court modified the child support order,
which the court equated to $1040 per month per child,
to $5210 per month.4 The court denied the balance of
3
The defendant’s motion for contempt also alleged that the plaintiff had
failed to pay her share of the children’s unreimbursed health expenses,
refused to pay her portion of higher education expenses, refused to provide
the defendant with information about ‘‘the children’s school and surgery,’’
refused to ensure telephone contact with the children, attempted to alienate
the children from him, and failed to send the children to him for winter
parenting time. These claims are not included in the issues the defendant
has raised on appeal.
4
Immediately following the court’s June 16, 2023 decision, the defendant
filed a pre-appeal ‘‘motion for rectification’’ in the trial court, which pointed
out that one of the bases for his motion for modification of alimony and
child support was that the parties’ daughter, Alexa, had become eighteen
years old in September, 2020. He requested, therefore, a further reduction
in the order of support to reflect Alexa’s attainment of the age of majority
and that the order be made retroactive to December 7, 2021, the date on
which he filed his motion for modification of alimony and child support.
Additionally, he alleged in this motion that he had overpaid support by more
than $18,000 and he sought an order permitting him to further decrease his
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Yanavich v. Yanavich
the motion to modify alimony and child support upon
finding that the defendant had failed to prove that there
had been a substantial change in his financial circum-
stances. The court granted the defendant’s motion for
contempt on the basis of its finding that the plaintiff
wilfully failed to prevent the minor children from inap-
propriate exposure to ‘‘disputes as between the parents
existing in the past, present or future, specifically
including financial matters’’ in violation of the dissolu-
tion judgment. The court did not, however, issue puni-
tive sanctions against the plaintiff for doing so. The
court denied the balance of the motions filed by the
parties. This appeal followed.5
We begin our analysis by setting forth the standard
that governs our review. ‘‘[T]he 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.
. . . Appellate review of a trial court’s findings of fact
is governed by the clearly erroneous standard of review.
. . . A finding of fact is clearly erroneous when there
is no evidence in the record to support it . . . or when
support payments by $1040 per month until the entirety of the overpayment
could be recouped by him. By order dated June 26, 2023, the court granted
the defendant’s motion for rectification on the papers.
5
The plaintiff did not appeal from the court’s denial of the motions she
filed or from the court’s orders regarding the reduction of child support or
its order permitting the defendant to recoup overpayments he made after
Alexa’s eighteenth birthday. See footnote 4 of this opinion. Indeed, the
plaintiff has not participated in any way in this appeal. Because she did not
file a brief in this court, she was not permitted to present oral argument.
See Practice Book § 70-4 (‘‘[n]o argument shall be allowed by any party who
has not filed a brief’’).
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although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite
and firm conviction that a mistake has been committed.
. . . Our deferential standard of review, however, does
not extend to the court’s interpretation of and applica-
tion of the law to the facts. It is axiomatic that a matter
of law is entitled to plenary review on appeal.’’ (Internal
quotation marks omitted.) Coleman v. Bembridge, 207
Conn. App. 28, 33–34, 263 A.3d 403 (2021). ‘‘As has often
been explained, the foundation for [our deferential]
standard is that the trial court is in a clearly advanta-
geous position to assess the personal factors significant
to a domestic relations case . . . .’’ (Internal quotation
marks omitted.) Buxenbaum v. Jones, 189 Conn. App.
790, 794, 209 A.3d 664 (2019).
I
We turn first to the defendant’s claim that the court
improperly considered distributions he took from Per-
formance’s retained earnings as present income when
it denied his motion to modify his alimony and child
support obligations because the amounts distributed
were earned and taxed in previous years. We are not
persuaded.
The following legal principles inform our analysis.
‘‘[General Statutes §] 46b-86 governs the modification
or termination of an alimony or support order after the
date of a dissolution judgment. When, as in this case,
the disputed issue is alimony [or child support], the
applicable provision of the statute is § 46b-86 (a), which
provides that a final order for alimony [or child support]
may be modified by the trial court upon a showing of
a substantial change in the circumstances of either
party. . . . Under that statutory provision, the party
seeking the modification bears the burden of demon-
strating that such a change has occurred. . . . To
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Yanavich v. Yanavich
obtain a modification, the moving party must demon-
strate that circumstances have changed since the last
court order such that it would be unjust or inequitable
to hold either party to it. Because the establishment of
changed circumstances is a condition precedent to a
party’s relief, it is pertinent for the trial court to inquire
as to what, if any, new circumstance warrants a modifi-
cation of the existing order. . . . A finding of a substan-
tial change in circumstances is subject to the clearly
erroneous standard of review.’’ (Citation omitted; inter-
nal quotation marks omitted.) De Almeida-Kennedy v.
Kennedy, 224 Conn. App. 19, 30–31, 312 A.3d 150 (2024).
‘‘Whether money should be characterized as income
. . . is a question of fact for the trial court.’’ Keller v.
Keller, 167 Conn. App. 138, 152, 142 A.3d 1197, cert.
denied, 323 Conn. 922, 150 A.3d 1151 (2016).
In concluding that there had not been a substantial
change in the defendant’s finances since the marital
dissolution, the court noted: ‘‘As recently as 2022 the
[defendant] collected against his accountant’s advice
between his salary and draw gross earnings/income
[from Performance] a total of $710,000. Comparatively,
in 2018, the [defendant’s] salary and draws totaled
$718,207. Although the [defendant’s] company is
nowhere near as healthy as it was in 2018, his own
earnings have nonetheless, other than 2021, remained
the same. As such, this court does not presently find a
substantial change in his individual financial circum-
stances to warrant a modification of alimony.’’ Indeed,
our review of the record supports the court’s conclusion
that the amounts reported as income by the defendant
in 2018 and the flow of funds to him in 2022 are not
meaningfully different.
It is the nature of those funds that presents the issue
for our determination. The defendant argues that the
court’s characterization of his draws as income in both
2018 and 2022 is erroneous because the components
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of each are significantly different. The record reflects
that the 2018 financial affidavit filed by the defendant
in conjunction with the marital dissolution reflected
his then current income because it identified the net
income of the S corporation for that calendar year as
well as a salary Performance paid to him. Exhibits intro-
duced during the hearing reveal that the federal Form
1120S filed by Performance for the calendar year 2018
stated that $145,100 was paid to the defendant as com-
pensation. Additionally, the company reported ordinary
net business income of $573,107. The aggregate of those
two figures is $718,207. In accordance with the pertinent
provisions of the Internal Revenue Code, the defendant
was required to report that total amount as personal
income on his Form 1040 for the 2018 tax year. See
Tuckman v. Tuckman, 308 Conn. 194, 209, 61 A.3d 449(2013) (explaining that in S corporation, ‘‘all of its capi-
tal gains and losses, for federal income tax purposes,
pass through . . . to the individual shareholders, and
any federal income tax liability on capital gains is the
responsibility of the individual shareholder’’). Indeed,
the defendant’s 2018 financial affidavit reflected the
income reported on the corporation’s tax filing for the
same time period.6
In concluding that the defendant’s receipt of salary
and distributions from the corporation between 2018
and 2022 was all income for purposes of assessing
whether there had been a substantial change in the
defendant’s financial circumstances, the court expressly
relied on our Supreme Court’s opinion in Birkhold v.
Birkhold, 343 Conn. 786, 276 A.3d 414 (2022), in which
the court stated: ‘‘We agree with the trial court’s conclu-
sion that the clear and unambiguous definition of gross
6
At the hearing on this matter, Hallisey explained that the relatively small
difference between the amounts shown on the defendant’s 2018 financial
affidavit for total income and the amounts shown on the corporation’s tax
return for income paid to the defendant were due to depreciation, meals,
travel, and rental income received by the defendant.
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Yanavich v. Yanavich
annual base income from employment included income
from self-employment or as an independent contractor.
The definition of gross annual base income from
employment provided by the separation agreement ‘is
expressly stated to be without limitation’ and includes
income ‘actually received’ by the plaintiff from employ-
ment as ‘compensation for or by reason of past, present
or future employment, in whatever form received,’ and
from ‘any and all sources derived.’ ’’ (Emphasis added.)
Id., 796. Birkhold, however, though otherwise instruc-
tive, involved a separation agreement in which the term
‘‘income’’ was amplified by a definition of ‘‘ ‘gross annual
base income from employment’ ’’; id., 791; whereas the
parties’ agreement in this case offers no such defini-
tional assistance. Accordingly, we note that, unlike those
circumstances, the court’s task in the matter at hand
was not to interpret the language used by parties to
a separation agreement but rather to determine the
meaning of the term ‘‘income,’’ from its general usage
and as applied in the marital dissolution context. We
therefore look to the general definition of income in
the marital dissolution context as an aid to our consider-
ation of whether the court’s finding that the draws taken
by the defendant were income for purposes of its analy-
sis was clearly erroneous.
At the outset, we note that our Supreme Court has
instructed us that in dissolution of marriage proceed-
ings, the concept of income is defined ‘‘broadly so as
to include in income items that increase the amount of
resources available for support purposes.’’ Unkelbach
v. McNary, 244 Conn. 350, 360, 710 A.2d 717 (1998).
‘‘Adopting a flexible definition of income, the court has
explained, ensures that each spouse fulfills his or her
continuing duty to support one another and each
receives his or her equitable share of the marital assets.’’
Bartel v. Bartel, 98 Conn. App. 706, 712, 911 A.2d 1134(2006), citing McPhee v. McPhee, 186 Conn. 167, 170,
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440 A.2d 274 (1982). Indeed, ‘‘even gifts, if received
regularly and consistently, ‘whether in the form of con-
tributions to expenses or otherwise, are properly con-
sidered in determining alimony awards to the extent
that they increase the amount of income available for
support purposes.’ [Unkelbach v. McNary, supra], 360–
61.
‘‘For example, Black’s Law Dictionary defines ‘income’
as ‘[t]he money or other form of payment that one
receives, usu[ally] periodically, from employment, busi-
ness, investments, royalties, gifts, and the like.’ Black’s
Law Dictionary (11th Ed. 2019) p. 912. Another diction-
ary defines ‘income’ as ‘something that comes in as an
increment or addition usu[ally] by chance . . . a gain
or recurrent benefit that is usu[ally] measured in money
and for a given period of time, derives from capital,
labor, or a combination of both, includes gains from
transactions in capital assets, but excludes unrealized
advances in value: commercial revenue or receipts of
any kind except receipts or returns of capital . . . .’
Webster’s Third New International Dictionary (2002) p.
1143; see also Gay v. Gay, 70 Conn. App. 772, 778, 800
A.2d 1231 (2002) (quoting definition in Webster’s Third
New International Dictionary to determine meaning of
‘income,’ as used in General Statutes § 46b-82), aff’d,
266 Conn. 641, 835 A.2d 1 (2003).’’ Birkhold v. Birkhold,
supra, 343 Conn. 796–97.
Applying this reasoning and defining ‘‘income’’ broadly,
as we must, in accordance with these definitions, we
are convinced that the court correctly characterized
the distributions the defendant received from retained
earnings realized by the corporation in prior years as
income to him for purposes of assessing his alimony and
child support obligation.7 Indeed, the plaintiff’s expert,
7
We recognize the anomaly in our conclusion that, if the defendant had
not taken distributions from past years’ retained earnings but, instead, had
moved to modify alimony and support on the basis that the corporation
could not afford to distribute its retained earnings to him while its net
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Yanavich v. Yanavich
Nowell, testified that the distributions constituted ‘‘cash
flow to [the defendant] personally.’’ In other words,
‘‘they increase[d] the amount of income available for
support purposes’’; (internal quotation marks omitted)
Birkhold v. Birkhold, supra, 343 Conn. 796; which but-
tresses the court’s finding of no substantial change in
the defendant’s financial circumstances. We conclude,
therefore, that the court’s finding that the ‘‘draws taken
by the [defendant]’’ constituted income for purposes of
setting his alimony and child support obligations was
not clearly erroneous and that the court correctly deter-
mined that there had been no substantial change in
circumstances to warrant a modification.
II
We turn next to the defendant’s claim that the court
improperly failed to impose sanctions on the plaintiff
for her contemptuous behavior. We review this claim
pursuant to the abuse of discretion standard. See
Edmond v. Foisey, 111 Conn. App. 760, 773–74, 961
A.2d 441 (2008). In doing so, we observe that ‘‘[c]ourts
have in general the power to fashion a remedy appro-
priate to the vindication of a prior . . . judgment. . . .
Having found noncompliance, the court, in the exercise
of its equitable powers, necessarily ha[s] the authority
to fashion whatever orders [are] required to protect the
integrity of [its original] judgment. . . . 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.’’
(Citation omitted; internal quotation marks omitted.)
Scott v. Scott, 215 Conn. App. 24, 51, 282 A.3d 470 (2022).
earnings were faltering, the question before the court would have been the
reasonableness of the defendant’s choice in light of the corporation’s need
to retain its earnings for its business purposes. Here, however, this inquiry
was not possible because the defendant did, in fact, take distributions during
a period of lesser net earnings by the corporation and increased his own
‘‘cash flow’’ by doing so. See, e.g., Tuckman v. Tuckman, supra, 308
Conn. 208–14.
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In its memorandum of decision, although the court
denied that portion of the defendant’s motion for con-
tempt that dealt with financial matters, the court did
find the plaintiff in contempt for inappropriately involv-
ing two of the parties’ children in their parents’ disagree-
ments. The court stated: ‘‘Of most concern to this court
is the evidence of the minor children Abigail’s and
Zach’s awareness of what is occurring pertaining to the
financial issues being addressed by this court. The first
sentence of article 6.1 (c) indicates that neither parent
will engage in any conversation with the minor children
concerning the other parent as to any disputes as
between the parents existing in the past, present or
future, specifically including financial matters. The text
communications indicate that Abigail and Zach are
unfortunately aware of the financial matters, and this
court has no reason to believe that the [defendant]
would be proffering information of his intent to reduce
alimony or child support. The order in the original disso-
lution is clear and exhaustive in its terms in the preven-
tion of said exposure occurring, and the [plaintiff] was
aware of said order. Nevertheless, these two children
are again in the middle of their parents’ dysfunctional
relationship. The court finds that [the failure to prevent]
said inappropriate exposure was wilful on behalf of the
[plaintiff] and finds her in contempt of said order.
‘‘[It is] grossly apparent that neither of the parties is
capable or mature enough to have healthy communica-
tions with the other whether it pertains to finances, the
children’s needs, or attempts to co-parent with each
other. Each party presents as more interested in making
the life of the other more difficult, and accomplishing
individual objectives on their own individual terms,
than prioritizing the needs of the children. As such, this
court orders that the parties reestablish the platform
AppClose for all communications between them.8 Said
8
We take judicial notice that AppClose is a co-parenting software program
designed for a mobile device that is, at times, recommended by the court
to parents who have shared custody of their children.
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Yanavich v. Yanavich
app shall be utilized to include, but not be limited to,
submission of unreimbursed medical expenses, notifi-
cation of payments addressing the same, visitation with
the children either by the [plaintiff] in Connecticut or
the [defendant] in South Carolina, as well as notable
school and health related events.’’ (Footnote added.)
Although the court’s response to the plaintiff’s con-
temptuous behavior may not have been punitive and
directed solely to the plaintiff as desired by the defen-
dant, it appears to this court on review to have been
intended as remedial and to lessen the burden on the
children of being involved in the parties’ ongoing and
dysfunctional manner of dealing with each other. The
court’s child-centered remedial response was well
within the scope of its discretionary authority. See Scott
v. Scott, supra, 215 Conn. App. 51. In sum, we do not
find that the court abused its discretion in formulating
this response to the plaintiff’s contemptuous behavior.
The judgment is affirmed.
In this opinion the other judges concurred.