Maturo v. Maturo

Facts

MATURO V. MATURO

995 A.2d 1 (2010)

NATURE OF THE CASE: Frank (H), a high-income father, appealed from the judgment dissolving his marriage to Laura (W), mother, and entering certain financial orders obligating H to pay W $636 per week in child support, a fixed percentage of his annual net cash bonus as child support, and a fixed percentage of his annual state and federal income tax refunds as additional child support. 

FACTS: H and W were married on May 21, 1988, and are the parents of twin boys born on July 22, 1993. W is forty-nine years old and holds a bachelor's degree in psychology from Boston College. Since the couple became parents in 1993, W has been a stay-at-home mother. H is fifty-one years old and holds an undergraduate degree from Yale University and a master's degree in business administration from the Wharton School of Business. H has been employed at the Manhattan office of Merrill Lynch since 1999, working in the area of global equity markets. H was earning a yearly base salary of approximately $200,000. He also received an annual cash bonus and an annual stock bonus, the latter comprised of both stock options and restricted Merrill Lynch stock. H's net cash bonus for his performance in the years 2005, 2004, and 2003 were $ 489,449.50, $ 597,137.67, and $ 500,000, respectively. H states that his annual bonus historically has been much higher and reached approximately $3.8 million in the years 2000 and 2001. he trial court also valued H's unexercised stock options at the time of the dissolution at $3,529,000, and his restricted stock at $1,850,000. Total marital assets were almost $18 million, of which approximately $10.65 million was awarded to W and approximately $7.1 million to H. The court awarded alimony in the amount of $1215 per week plus 20 percent of H's annual net cash bonus and 20 percent of any future tax refund. H was ordered to maintain comprehensive medical insurance benefits and to obtain a life insurance policy in favor of W in the amount of $2 million, authorizing him, however, to reduce the amount of the policy so long as it remained sufficient to meet his payment obligations for alimony and child support. W was the sole custodian of the parties' two minor children. H was granted regular visitation rights. The court awarded W child support of $636 per week, plus 20 percent of H's annual net cash bonus and 20 percent of any future tax refund. H was ordered to pay 100 percent of the children's private school tuition until they complete high school and to pay for 'all work-related day care expenses and summer day camp and extracurricular activities.' H was to 'maintain and pay for all medical and dental insurance or the benefit of the children . . . [and] 100 percent of all unreimbursed medical, dental, orthodontia, optical and psychological expenses.' The court acknowledged that the child support award departed from the schedule contained in the guidelines, which does not address circumstances in which the combined net weekly income of the parties exceeds $4000. The court noted that it had not considered H's yearly noncash compensation, consisting of $530,000 in stock options and restricted stock for the year 2005, in making the alimony and child support awards. H appealed.

ISSUE: Must all child support awards be made in accordance with the principles established to ensure that such awards promote 'equity,' 'uniformity' and 'consistency' for children 'at all income levels?' Do the guidelines cease to apply and permit trial courts unlimited discretion in setting child support awards merely because the income of a particular family exceeds some talismanic number on a chart?

RULE OF LAW: All child support awards must be made in accordance with the principles established to ensure that such awards promote 'equity,' 'uniformity' and 'consistency' for children 'at all income levels.' The guidelines do not cease to apply and permit trial courts unlimited discretion in setting child support awards merely because the income of a particular family exceeds some talismanic number on a chart.

HOLDING AND DECISION: (Zarella, J.) Must all child support awards be made in accordance with the principles established to ensure that such awards promote 'equity,' 'uniformity' and 'consistency' for children 'at all income levels?' Yes. Do the guidelines cease to apply and permit trial courts unlimited discretion in setting child support awards merely because the income of a particular family exceeds some talismanic number on a chart? No. The guidelines include a schedule for calculating 'the basic child support obligation' for families that have two minor children and a combined net weekly income ranging from $ 310 to $ 4000. If the net weekly income exceeds $ 4000, child support awards are to be determined on a case-by-case basis. The guidelines permit 'the entry of a supplemental order . . . to pay a percentage of a future lump sum payment, such as a bonus. Such supplemental orders may be entered only when . . . the percentage is generally consistent with the schedule . . . .' The primary purpose of the guidelines is 'to provide uniform procedures for establishing an adequate level of support for children' and 'to make awards more equitable by ensuring the consistent treatment of persons in similar circumstances.' The guidelines are based on the income shares model, which considers 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.' The income shares model reflects the principle that spending on children as a percentage of household income actually declines as family income rises. Outside of unusually extravagant lifestyles, only a limited sum can be spent on a standard of living. At some point, income is directed less and less towards 'needs' and more and more towards savings or investments and thus becomes part of an individual's estate. The guidelines 'incorporate declining percentages at all levels of combined net weekly income . . . consistent with the income shares model . . . .' Awards should follow the principle expressly acknowledged in the preamble and reflected in the schedule that the child support obligation as a percentage of the combined net weekly income should decline as the income level rises. The trial court first awarded W $636 per week, the amount designated in the schedule when there are two children, and the combined net weekly income of the family is $4000 per week. It then awarded 20 percent of H's annual net cash bonus. Child support would be $1882 to $5261 per week or three to eight times more than the base award. An open-ended child support award of 20 percent, rather than 15.89 percent or less, of H's variable bonus violates the guideline principles that a declining percentage of the combined net family income should be awarded as the income level rises and that the percentage of any future bonus allocated for child support should be 'generally consistent.' The trial court did not understand and apply the criteria correctly, thus failing to preserve the allocation of resources between parents and children authorized by the legislature. The deviation criteria are narrowly defined. The court is to make a finding on the record as to why the guidelines are inequitable or inappropriate. The court did not make such a finding. The court's consideration of income disparity under the sixth deviation criteria was improper. An award made to satisfy the 'essential needs of the [plaintiff]' is improper, however, because child support awards, by definition, must benefit the children or foster their relationship with their parents. The court failed to consider that, because H was awarded physical custody of the children approximately 40 percent of the time, W's needs with respect to providing a home for the children would be correspondingly diminished. There is no evidence that the court considered anything other than the defendant's income and earning capacity in making the child support award. We are at a loss to explain how approximately $360 to $840 every single day of the year can seriously be justified, especially when the costs of the children's education, health care, and extracurricular activities will be paid solely by H and not by W out of the child support award. The guideline principles must be considered in 'all determinations of child support amounts . . . .' Accordingly, the trial court should not have unfettered discretion in high-income cases to make lavish child support awards that appear to be unrelated both to the needs of the children, even after considering their station, and to the principles articulated in the guidelines, including the principle that an award based on bonus income should be generally consistent with the schedule. The effect of unrestrained child support awards in high-income cases is a potential windfall that transfers wealth from one spouse to another or from one spouse to the children under the guise of child support. When a family's combined net weekly income exceeds $4000, the court should treat the percentage set forth in the schedule at the highest income level as the presumptive ceiling on the child support obligation, subject to rebuttal by application of the deviation criteria enumerated in the guidelines, as well as the statutory factors described in § 46b-84 (d). When there is a proven, routine consistency in annual bonus income, as when a bonus is based on an established percentage of a party's steady income, an additional award of child support that represents a percentage of the net cash bonus also may be appropriate if justified by the needs of the child. When there is a history of wildly fluctuating bonuses, however, or a reasonable expectation that future bonuses will vary substantially, as in the present case, an award based on a fixed percentage of the net cash bonus is impermissible unless it can be linked to the child's characteristics and demonstrated needs. This court entered separate orders requiring H to pay all of the children's medical and health-related expenses as well as all expenses relating to the children's 'summer day camp and extracurricular activities,' which presumably would cover many of the luxuries to which children of affluent families are accustomed and would expect to be maintained following a divorce. The guidelines do not cease to apply and permit trial courts unlimited discretion in setting child support awards merely because the income of a particular family exceeds some talismanic number on a chart. Reversed and remanded. 

Concurring: (Schaller, J.) The plurality's approach, by elevating the guidelines--which were created by a commission for child support guidelines (commission) set up by the legislature--to controlling authority, infringes upon the statutory authority of trial courts to determine support. My approach accords the trial courts their full statutory authority to exercise their discretion, unfettered by the strict 'principles' of the guidelines, except as a factor that must be considered. As a result of my statutory analysis, I conclude that the award was improper, and, accordingly, I would reverse the trial court's financial orders in their entirety and remand the case for further proceedings.

Concurring: (McLachlan, J.) I believe this case well demonstrates the problems inherent in using net income to determine alimony and child support payments. The statutes authorizing such payments specify neither gross nor net income. Gross income rather than net income apparently has been used in fashioning support awards in numerous cases, and these orders have been upheld. The most significant problem with using net income is calculating the true net income. Net income requires a determination of the correct amount of deductions, including federal, state, and local income taxes, which can be difficult to calculate and even more difficult to verify without knowing all of an individual's deductions. In contrast, gross income from all sources is much more easily and accurately determined. Gross income generally includes income from all sources earned and unearned, taxable and nontaxable.

Dissenting: (Tertefeuille, J.) '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 employability of each of the parents, and the age, health, station, occupation, educational status and expectation, amount and sources of income, vocational skills, employability, estate and needs of the child.' Section 46b-56 (c) provides in relevant part that, 'in making or modifying any order [regarding the custody, care, education, visitation, and support of the children], the court shall consider the best interests of the child . . . .' It is well established that in determining child support awards, courts should consider 'the standard of living that the child or children would have enjoyed if the family had continued to live together.' The guidelines themselves provide evidence that this state has explicitly rejected the notion that child support determinations should be based solely on the costs associated with meeting the physical needs of the child. The preamble to the guidelines explicitly explains that the [guidelines] are based on the income shares model. The income shares model presumes that the child should receive the same proportion of parental income as he or she would have received if the parents lived together. Underlying the income shares model, therefore, is the policy that the parents should bear any additional expenses resulting from the maintenance of two separate households instead of one since it is not the child's decision that the parents divorce, separate, or otherwise live separately. About two-thirds of the states follow the income shares model. There has been an increasing recognition that a child is entitled to share in the increasing good fortune and wealth of his/her parents. This new wave of cases started with the recognition that the appropriate standard of living for a child of affluent parents is affluence matching that of the parents, regardless of the 'wishes' of the parent to direct the upbringing of the child.

LEGAL ANALYSIS: We strongly disagree with everything about this case. There is a certain level beyond which the state has no business at all in what happens. 

The ability of the courts and the legislature to deal fairly with everyone involved is nonexistent. H got royally screwed on the tax side of everything. H was already paying for an elevated standard of living with private schools and high levels of weekly support such that other than food and some clothes what was W paying for with the child support?

An excerpt from Dean’s Law Dictionary (www.deanslawdictionary.com): Oklahoma law is instructive. At least two Oklahoma cases have addressed deviating from the child support guidelines as a result of the parents' combined gross monthly income exceeding the guidelines cap. Archer v. Archer, 1991 OK CIV APP 28, 813 P.2d 1059, involved an appeal from the original decree of divorce. The evidence in Archer was that the husband's income was at least $18,500 per month. Id. at 1060. The trial court determined that the high income was an extraordinary circumstance that excused compliance with the child support guidelines. Id. The trial court ordered the husband to pay $900 per month per child, for a total monthly obligation of $2,700. In his appeal, the husband argued that the trial court could only exceed the maximum amount provided by the guidelines if 'exceptional needs' were shown. Id. The Archer court explained that child support in high-income cases must be determined on a case-by-case basis, with the minimum support award being the capped amount under the guidelines. Id. at 1061. The court explained that the trial court is not limited to considering the child's bare-bone needs, but may also consider the payor parent's affluent lifestyle in determining the proper amount of support. Id. The court noted that the husband's share of the total child support would be 80% and that, based on the amount the husband was ordered to pay, the total child support amount would have been $3,375. Id. at 1062. The court noted that the evidence presented showed that the children had a monthly need of $3,669, and therefore concluded that the amount awarded was not against the clear weight of the evidence. Id.

A year later the Oklahoma Supreme Court addressed this issue in the case of Mocnik v. Mocnik, 1992 OK 99, 838 P.2d 500. In Mocnik, the trial court ordered the husband to pay child support of $2,000 per month, while the wife presented evidence that the children's expenses were over $4,700 per month. Id. at 507. On appeal, the court noted that the parties' joint monthly income was $19,543. Id. The court noted that the top amount of child support in the guidelines equaled 13.52% of income and the court multiplied that percentage by $19,543 and concluded that a proper child support amount would be $2,642.21 and that the husband owed 91% of that amount, or $2,404.41. Id. The court approved the trial court's reduced award of $2,000 per month based on the extensive visitation awarded to the husband. Id. The court affirmed the amount awarded as child support. Id.

However, the Mocnik court's method of multiplying the parties' monthly income by the percentage of income used at the top bracket of the guidelines fails to consider the methodology of the guidelines. As explained above, as income increases, the percentage of income directed to child support decreases. A more accurate method of calculating child support for income amounts beyond the guidelines chart is to consider the decreasing percentage of income for each bracket as income rises. At some point, child support for each additional $1000 in income approaches zero. 

The sole criterion for determining the support amount for above-guideline-income cases is the need of the child. The children are entitled to share in family income if it grows after the parents separate. See C.D., 160 Vt. at 500, 631 A.2d at 851 (amount of child support should be based on policy of meeting needs of children and having them share family income). Thus, the children are entitled to a part of the 'fruits of one parent's good fortune after a divorce.' In re Marriage of Nimmo, 891 P.2d 1002, 1007 (Colo. 1995); see also Galbis v. Nadal, 626 A.2d 26, 31 (D.C. Ct. App. 1993) (children are 'entitled to a level of support commensurate with the income and lifestyle of the parents'); Miller v. Schou, 616 So. 2d 436, 437 (Fla. 1993) (child has a right to share in the good fortune of his or her parent). 

The term 'need' must be used broadly to reflect the general standard of living of the family. Children are not expected to live at a minimal level of comfort while one or more parents enjoy a luxury lifestyle. In re Marriage of Lee, 246 Ill. App. 3d 628, 615 N.E.2d 1314, 1326, 186 Ill. Dec. 257 (Ill. Ct. App. 1993). A child's needs 'increase proportionally with their opportunity to participate in educational, cultural, and recreational activities.' Bagley v. Bagley, 98 Md. App. 18, 632 A.2d 229, 239 (Md. Ct. Spec. App. 1993); see also Branch v. Jackson, 427 Pa. Super. 417, 629 A.2d 170, 171 (Pa. Super. Ct. 1993) (reasonable needs of affluent child may include items that would be frivolous for children of less well-off parents). The fact that the basic needs of defendant's children are met does not mean that they do not have needs that should be addressed by a further increase in child support. 

Some courts prohibit mathematical extrapolation from the published guidelines under the applicable statutory scheme. See, e.g., In re Marriage of Van Inwegen, 757 P.2d 1118, 1120 (Colo. Ct. App. 1988); Battersby v. Battersby, 218 Conn. 467, 590 A.2d 427, 430 (Conn. 1991); Preis v. Preis, 631 So. 2d 1349, 1356 (La. Ct. App. 1994); Mehra v. Mehra, 819 S.W.2d 351, 354 (Mo. 1991). Other courts have given trial courts more discretion in computing support obligations for high-income parents without prohibiting any particular methodology. See Galbis, 626 A.2d at 31-32 (statute does not prohibit use of guideline percentage of income for parents with incomes above guideline maxima); White v. Allen, 667 A.2d 112, 115 (Me. 1995) (court has discretion 'absent a violation of a positive rule of law'); Voishan v. Palma, 327 Md. 318, 609 A.2d 319, 324 (Md. 1992); In re Marriage of Wackler, 258 Mont. 12, 850 P.2d 963, 966 (Mont. 1993) (court has 'broad discretion' in fashioning support order for income above the guidelines); Archer, 813 P.2d at 1061 (support obligation for parents with income above the guidelines within the discretion of the court considering 'the overall scheme of the Guidelines'); Nash, 846 S.W.2d at 806 (court had discretion to award support at guideline maximum percentage without a showing of need for more support than guideline maximum). 

In Galbis v. Nadal, the District of Columbia Court of Appeals upheld a support order that was based on extrapolation from the guidelines to determine the percentage of income to be ordered as support from a high-income parent. The court reasoned that the statutory scheme gave no presumptive effect of the guidelines for upper-income parents, but did not prohibit extrapolation from them. Galbis, 626 A.2d at 32. It held: '[the statute] allows the trial court greater discretion in determining an appropriate award amount when the noncustodial parent is relatively wealthy; it does not exempt that parent from the general principle that underlies the guidelines as a whole: that support payments shall be commensurate with parental income.' Id. 

The Maryland Court of Appeals reasoned similarly in Voishan v. Palma, giving discretion to the trial court to use the guidelines as a 'guide' but also to exercise independent judgment in assessing the children's need and tile parental ability to pay. Voishan, 609 A.2d at 324-25. It noted that the income percentage at the top of the guidelines might be too high or too low ill any individual case. Id. at 324. It concluded that the statute gave the trial court discretion in determining support levels for parents with incomes above the guidelines, but 'the principles from which the schedule was derived should [not] be ignored when a judge exercises discretion.' Id. at 326. 

In Ainsworth, the court held that when a court deviates from the guidelines pursuant to 15 V.S.A. § 659(a), because application of the guidelines would be unfair to a party or to the child, 'the trial court's findings and conclusions must show it considered the factors specified in § 659(a) as well as other relevant factors and must show the reasons for the deviation from the guidelines and the amount of support ordered.' Ainsworth, 154 Vt. at 114, 574 A.2d at 779. These requirements apply when a court is determining the level of support pursuant to § 656(d) for a noncustodial parent with income above the guidelines. See C.D., 160 Vt. at 500, 631 A.2d at 851. As long as the court considers the statutory factors, makes adequate findings, and explains its reasoning in determining the support obligation, its discretion is not limited to adopt or avoid a particular methodology. The only additional requirement is that its decision must reflect the principles behind the guidelines. 

In Maturo v. Maturo, 296 Conn. at 89-90, 995 A.2d 1, the court considered the impact of the child support statutes, regulations, and guidelines on high-income families. In doing so, this court recognized that '[t]he legislature has enacted several statutes to assist courts in fashioning child support orders. Section 46b-84 provides in relevant part: `(a) 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. Any post-judgment procedure afforded by chapter 906 shall be available to secure the present and future financial interests of a party in connection with a final order for the periodic payment of child support....

'`(d) 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 employability of each of the parents, and the age, health, station, occupation, educational status and expectation, amount and sources of income, vocational skills, employability, estate and needs of the child.'' Id.

This court also recognized that '[t]he legislature also has provided for a commission to oversee the establishment of child support guidelines, which must be updated every four years, `to ensure the appropriateness of child support awards....' General Statutes § 46b-215a.... Moreover, the legislature has thrown its full support behind the guidelines, expressly declaring that `[t]he ... guidelines established pursuant to section 46b-215a and in effect on the date of the support determination shall be considered in all determinations of child support amounts.... In all such determinations, there shall be a rebuttable presumption that the amount of such awards which resulted from the application of such guidelines is the amount of support.... A specific finding on the record that the application of the guidelines would be inequitable or inappropriate in a particular case, as determined under criteria established by the [commission] under section 46b-215a, shall be required in order to rebut the presumption in such case.' ... General Statutes § 46b-215b (a).' (Emphasis in original.) Maturo v. Maturo, supra, 296 Conn. at 90-91, 995 A.2d 1. 

The guidelines provide in relevant part that, `[w]hen the parents' combined net weekly income exceeds [$4000], child support awards shall be determined on a case-by-case basis, and the current support prescribed at the [$4000] net weekly income level shall be the minimum presumptive amount.' 

Other jurisdictions have addressed this important distinction between needs commensurate with lifestyle and overindulgence. For example, in Miller v. Schou, 616 So. 2d 436, 437-38 (Fla. 1993), the Florida Supreme Court recognized that a child has every right to share in the good fortune of his or her parents, however, this entitlement is tempered by the needs of the child in determining an appropriate amount of support. The Court noted 'we do not mean to imply that the child of a multimillionaire should be awarded enough support to be driven to school each day in a chauffeured limousine. . . . The child is only entitled to share in the good fortune of his parent consistent with an appropriate lifestyle.' Id. at 438-439; see also Branch v. Jackson, 427 Pa. Super. 417, 629 A.2d 170, 171 (1993) (noting that while a child is entitled to the lifestyle commensurate with a supporting parent's income, the child was not entitled to all the luxuries available; the supporting parent still has the right to participate in the upbringing of the child and limit expenses to the reasonable needs of the child of a wealthy parent); Hanley M. Gurwin, Child Support in High Income Cases, How Much is Too Much?, 79 Mich. B.J. 186, 187 (2000).

These financial circumstances do not relieve the judge of the obligation to balance needs and opportunity to satisfy those needs. Sharing good fortune does not absolve the parties or a judge of determining the needs of a child in a sensible manner consistent with the best interests of the child. What has been eliminated from the equation is the ability to pay and the opportunity to satisfy needs and values without the specter and concern of worrying about where the funds will come from. 

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