Wells v. Wells

Connecticut Appellate Court · 2020 · Family Law
196 Conn. App. 309 (2020)
Updated
famlawseparation agreement interpretationunallocated supportcontract interpretationfamily lawdissolutionseparation agreementalimony

Facts

The parties' dissolution judgment incorporated a separation agreement requiring the defendant to pay the plaintiff unallocated support under a three-tier formula based on his income. The agreement defined annual income as total gross income earned from employment plus any distributions deferred for income tax purposes, and capped the plaintiff's share at income up to $600,000 per year. In 2018, the defendant received a $480,000 bonus and paid the plaintiff about $82,000, calculating the second and third tiers using only the bonus rather than his total gross income. The plaintiff claimed the agreement required using the defendant's full gross income for the year, including both salary and bonus, and that he underpaid her by $35,972.

Issue

When a separation agreement provides tiered percentages of the husband's gross income and defines annual income as total gross income earned from employment, do the second and third tiers apply to the husband's total gross income or only to a bonus payment received during the year?

Rule

Separation agreements incorporated into dissolution judgments are construed under ordinary contract principles. If the language is clear and unambiguous, courts must give effect to its terms according to their common meaning and may not rewrite the agreement; where an agreement defines annual income as total gross income earned from employment and provides tiered percentages of that income, the tiers apply to gross income as defined, absent language limiting them to a particular component such as a bonus.

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In a dissolution judgment entered in Hartford, Connecticut, Lena Ortiz and Daniel Ortiz incorporated a separation agreement. It states that Lena will receive unallocated support equal to 50% of Daniel’s gross income from $0 to $200,000, 35% from $200,001 to $400,000, and 25% from $400,001 to $550,000, and defines annual income as "total gross income earned from employment plus any compensation deferred for tax purposes." Daniel later argues that the second and third tiers apply only to his year-end commission because his salary is already paid through the first tier.

If the agreement is otherwise clear and unambiguous, how should a court interpret the second and third tiers?

Explanation. A separation agreement incorporated into a dissolution decree is construed under ordinary contract principles. When the agreement clearly defines annual income as total gross income earned from employment and sets tiered percentages of that income, a court must enforce that definition as written. It may not insert a bonus-only or commission-only limitation that the parties did not include.