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CAROLINE HIRSCHFELD v. ROBERT B. MACHINIST

(AC 35096)

Bear, Sheldon and Flynn, Js.*

Argued March 6—officially released July 8, 2014

(Appeal from Superior Court, judicial district of

Stamford-Norwalk, Hon. Stanley Novack, judge trial

referee [judgment]; Shay, J. [motion for allocation].)

Kenneth A. Votre, for the appellant (plaintiff).

Dana M. Hrelic, with whom was Kenneth J. Bartschi,

for the appellee (defendant).
Opinion

BEAR, J. The plaintiff, Caroline Hirschfeld, appeals

from the judgment of the trial court, which, in relevant

part, held her responsible for payment of 55 percent of

the costs and fees incurred by the defendant, Robert

B. Machinist, in extending and providing security for a

line of credit from First Republic Bank. On appeal, the

plaintiff claims that the court committed error when,

in allocating an escrow fund in which both parties had

an interest, it added terms to the plain language of

the parties’ separation agreement, improperly held her

responsible for 55 percent of those costs and fees, and

authorized payment thereof from the escrowed proceeds. We reverse the judgment of the trial court.

The following facts are relevant to this appeal. As

explained by the trial court: ‘‘The marriage of the parties

was dissolved by decree . . . on February 2, 2007. At

that time, the parties filed with the court a Separation

Agreement . . . which the court approved and incorporated in its decree by reference. More than five years,

several appeals, and one hundred [and] fifty motions

later, the parties continue unabated their litigious

ways. . . .

‘‘At the time of the dissolution, the parties had two

outstanding lines of credit, one to [First] Republic Bank

in the amount of $990,400 and another to Citibank in

the amount of $595,000. Each line carried interest. The

parties agreed that the [plaintiff] would pay 55 [percent]

and the [defendant] 45 [percent] of the principal of each

loan from their respective shares of the proceeds from

the sales of the Greenwich and St. Barth[elemy] properties. In addition, while the [defendant] would continue

to pay the monthly interest on these loans until such

time as ‘the liabilities are extinguished,’ he would be

entitled to a credit from the [plaintiff] in the amount

of 55 [percent].’’

On October 26, 2010, the defendant filed a motion

for order with the trial court stating that the property

in Vermont and in Greenwich had been sold, but that

the property in St. Barthelemy still was for sale. The

motion provided that the proceeds from the sales had

been divided pursuant to the agreement, but that

$45,468.27 remained in escrow, and the defendant

requested that the court make a determination as to

the proper allocation of the escrow. On April 9, 2012,

the defendant amended his prayer for relief, requesting

that the court award attorney’s fees and any other equitable or legal relief that was warranted. The court held

a series of hearings on this motion and several other

motions that were pending before it. Specifically related

to this motion, the defendant presented evidence that

because of the delay in selling the properties, much of

which he attributed to the plaintiff’s behavior in ‘‘serially disrupt[ing] the sale of [the] property over a period
of three and a half years,’’ he incurred $26,774 in costs

and fees as a result of his need to enter into a secured

contract with First Republic Bank on the line of credit

he had with that bank. He explained that First Republic

Bank wanted some security for the line of credit, which

previously had been unsecured;that he secured the debt

with another of his homes, notrelated to the dissolution

action; and that he incurred costs and fees in doing

so. He contended that the plaintiff, pursuant to the

agreement, was responsible for 55 percent of those

costs and fees. In response, the plaintiff argued that

the defendant had entered into this new secured line

of credit with the bank on his own, that the agreement

did not contain any provision requiring her to pay additional costs and fees incurred by the defendant, and

that she was not responsible for those costs and fees.

The court issued its memorandum of decision on

August 3, 2012, finding in relevant part that there

remained a ‘‘home equity line balance’’ in the amount

of $26,774, together with interest, on the bank line of

credit, and that both parties were obligated to pay this

pursuant to paragraphs 6.8 and 6.9 of the agreement.

The court explained that pursuant to the agreement, the

defendant bore the sole responsibility of maintaining a

line of credit with First Republic Bank, with the understanding that he would be reimbursed for 55 percent

of his expenditures. The court further explained that

this balance was due to the costs and fees incurred by

the defendant when he was required to enter into a

secured line of credit with First Republic Bank to

extend the unsecured line of credit that he was required

to maintain under the parties’ agreement, and that the

need for this extension was due in large part to the

actions of the plaintiff, which resulted in substantial

delays in selling the properties. Accordingly, the court

ordered that the plaintiff was responsible for 55 percent

of the balance on the secured line of credit, along with

any interest and late fees that the plaintiff had paid on

the lines of credit. This appeal followed.

On appeal, the plaintiff claims that the court committed error when it added terms to the plain language of

the agreement and improperly held her responsible for

a portion of the costs and fees incurred by the defendant

when he entered into a secured line of credit with First

Republic Bank. We agree.

‘‘It is well established that a separation agreement,

incorporated by reference into a judgment of dissolution, is to be regarded and construed as a contract

. . . . Accordingly, our review of a trial court’s interpretation of a separation agreement is guided by the

general principles governing the construction of contracts. . . . A contract must be construed to effectuate

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. . . . If a contract is unambiguous

within its four corners, the determination of what the

parties intended by their contractual commitments is

a question of law. . . . When the language of a contract

is ambiguous, [however] the determination of the parties’ intent is a question of fact, and the trial court’s

interpretation is subject to reversal on appeal only if it

is clearly erroneous. . . . In interpreting contract

items, we have repeatedly stated that the intent of the

parties is to be ascertained by a fair and reasonable

construction of the written words and that 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.’’ (Citations omitted; internal quotation marks omitted.) Hirschfeld v.

Machinist, 137 Conn. App. 690, 694–95, 50 A.3d 324,

cert. denied, 307 Conn. 939, 56 A.3d 950 (2012).

For purposes of this appeal, three paragraphs of the

agreement are claimed to be relevant. Each of the paragraphs is contained within Article VI of the agreement,

which concerns the equitable division of assets. Paragraph 6.27 provides: ‘‘The parties shall each be responsible for the debts and liabilities shown on their

respective financial affidavits and they shall share the

balance of the First Republic [Bank] and Citibank loans,

with the Wife paying 55 [percent] and the Husband

paying 45 [percent]; except that the parties shall be

equally responsible for the first $430,000 of the amount

borrowed from Defendant’s mother by the Defendant.

The timing of payments of said liabilities shall be made

pursuant to Paragraphs 6.9 (b) and 6.9 (c).’’1

Paragraph 6.8 provides: ‘‘Upon the sale of any or

all of the properties, all closing costs shall be paid 55

[percent] by the Wife and 45 [percent] by the Husband,

including any mortgage balances, home equity line balances, real estate taxes, attorney fees, recording fees,

typical and customary expenses for sale as determined

in the jurisdiction where the property has been located.’’

Paragraphs 6.9 (a) and (b) provide: ‘‘(a) The net proceeds remaining shall be divided 55 [percent] to the

Wife and 45 [percent] to the Husband. Each of the

parties shall pay such federal, state and foreign taxes

as may be imposed by any appropriate taxing authority

in direct proportion to the percentage of the net proceeds received by the parties. The Wife shall be obligated to pay 55 [percent] of such taxes assessed and the

Husband shall be obligated to pay 45 [percent] thereof.

‘‘(b) From their respective net proceeds, the Wife

shall be obligated to pay 55 [percent] and the Husband

shall be obligated to pay 45 [percent] of the First Republic [Bank] liability ($990,400) and the Citibank liability

($595,000). Accordingly, simultaneously at the closing

of the Greenwich and St. Barth[elemy] property, whichever closing shall first occur, the Wife shall pay First

Republic [Bank] $544,720 and the Husband shall pay
First Republic [Bank] $445,680. In addition and at the

same time, the Wife shall pay Citibank $327,250 and

the Husband shall pay Citibank $267,750. The Wife shall

be obligated to pay 55 [percent] and the Husband shall

be obligated to pay 45 [percent] of the interest associated with these liabilities for the time period from January 1, 2007 and until such time as the liabilities are

extinguished. The Husband shall continue to pay the

interest monthly and he shall receive a credit for 55

[percent] of the amount he paid against the sum owed

to the Wife as described on the attached Schedule A.’’

The plaintiff contends that there is no obligation contained within the clear and unambiguous language of

the relevant portions of the agreement that requires

her to pay for the costs and fees associated with the

defendant’s new secured line of creditfrom FirstRepublic Bank. The defendant argues that ‘‘the principles of

contract interpretation demonstrate that the plaintiff is

responsible for a portion of the principal, interest and

remaining balance pursuant to the plain language of the

parties’ separation agreement.’’ Accordingly, he argues,

the court correctly determined that the agreement

required him to maintain a line of credit with First

Republic Bank and, read as a whole, the agreement

also required the parties to share, proportionally, the

expenses associated therewith, which remain as a ‘‘balance’’ on the line of credit. We agree with the plaintiff.2

The portions of the integrated agreement that the

defendant cites in support of his argument and in support of the court’s decision simply do not set forth the

requirement that the plaintiff pay the costs and fees

associated with the defendant’s unanticipated refinancing of the unsecured line of credit by obtaining a new

secured line of credit from First Republic Bank.3 Paragraph 6.27 of the agreement provides in relevant part

that the parties shall share the balance of the First

Republic Bank loan, with the plaintiff paying 55 percent

and the defendant paying 45 percent, and that the timing

of those payments be made in accordance with paragraph 6.9 (b). Paragraph 6.9 (a) provides in relevant

part that the remaining net proceeds remaining after

the property sales shall be divided 55 percent to the

plaintiff and 45 percent to the defendant and that the

parties are responsible for the payment of federal, state

and foreign taxes that may be imposed according to

theirrespective percentages. Paragraph 6.9 (b) provides

in relevant part that the plaintiff is obligated to pay 55

percent, and the 45 percent, of the interest associated

with the First Republic Bank liability ($990,400) for the

time period from January 1, 2007, and until such time

as that liability is extinguished. The defendant was

responsible for the payment of monthly interest, but

he was entitled to receive a credit for 55 percent of the

amount he paid against the sum owed to the plaintiff.

The relevant portion of paragraph 6.8 provides that,

from their respective shares of the property sales, each
party shall pay, proportionally, all closing costs, including any mortgage balances, home equity line balances,

real estate taxes, attorney fees, recording fees, and customary sale expenses.

Considering the plain language of the relevant terms

of the agreement, we conclude that the costs and fees

incurred in connection with the defendant’s refinancing

of the unsecured line of credit by obtaining a new

secured line of credit from First Republic Bank were

not included in the delineated closing costs set forth

in paragraph 6.8 related to the sales of the parties’

properties, nor were any closing costs and fees in connection with any subsequent refinancing provided for

in paragraphs 6.9 or 6.27 of the agreement. We also

conclude, therefore, that the court erred in holding the

plaintiff responsible, pursuant to either paragraph 6.8,

6.9 or 6.27 of the agreement, for 55 percent of the costs

and fees incurred by the defendant in refinancing the

unsecured line of credit by obtaining a new secured

line of credit from First Republic Bank, an event not

referred to in that agreement.

The judgment is reversed and the case is remanded

for further proceedings not inconsistent with this

opinion.

In this opinion SHELDON, J., concurred.

* The listing of judges reflects their seniority status on this court as of

the date of oral argument.

1 Paragraph 6.9 (c) concerns the amount borrowed from the defendant’s

mother by the defendant and is not relevant to this appeal.

2 Although our conclusion facially may appear to be inequitable because

the defendant’s alleged necessity to secure the First Republic Bank line of

credit was found by the court to have occurred, in part, as a result of the

delays caused by the plaintiff, the trial court’s decision and the defendant’s

arguments before the trial court in support of his motion were based on

their interpretations of what they separately have determined to be the

relevant terms of the agreement, and not on equitable considerations or on

whether the plaintiff’s actions violated the judgment or any other order of

the court, thus causing the defendant to incur additional or unnecessary

costs and fees. It is clear that the court found that the delay in the sale of

the properties, in part due to the actions of the plaintiff, resulted in the

defendant’s need to enterinto a new secured line of credit, orrisk default, and

that his actions were ‘‘reasonable.’’ The court’s decision and the defendant’s

motion and arguments related thereto were based on the language of the

agreement, which is subject to our plenary review on appeal.

Although the dissent raises the doctrine of good faith and fair dealing as

its reason for concluding that the trial court’s judgment should be affirmed,

this doctrine was not raised by the defendant during trial nor did the court

invoke the doctrine at any time. Accordingly, the plaintiff has never had an

opportunity to be heard on the relevance or irrelevance of the doctrine.

The dissent seeks to hold the plaintiff legally responsible under a theory

that was never pleaded, argued or addressed by the trial court and against

which the plaintiff never had an opportunity to defend. The defendant argued

at trial that the language of the agreement required the plaintiff to pay 55

percent of his costs and fees, and he maintained that argument on appeal.

Despite amending the prayer for relief in his motion for order to include

equity, the defendant never invoked the doctrine of good faith and fair

dealing and proceeded only on the basis that the plain language of the

agreement required the plaintiff to pay 55 percent of the costs and fees he

incurred in refinancing his home to provide for a secured line of credit.

In any event, the doctrine is inapplicable in this case because the defendant

did not allege the plaintiff’s bad faith: ‘‘To constitute a breach of [the implied

covenant of good faith and fair dealing], the acts by which a defendant

allegedly impedes the plaintiff’s right to receive benefits that he or she
reasonably expected to receive under the contract must have been taken

in bad faith. . . . Bad faith in general implies both actual or constructive

fraud, or a design to mislead or deceive another, or a neglect or refusal to

fulfill some duty or some contractual obligation, not prompted by an honest

mistake as to one’s rights or duties, but by some interested or sinister

motive. . . . Bad faith means more than mere negligence; it involves a

dishonest purpose. . . . De La Concha of Hartford, Inc. v. Aetna Life Ins.

Co., 269 Conn. 424, 432–33, 849 A.2d 382 (2004).’’ (Emphasis in original;

internal quotation marks omitted.) TD Bank, N.A. v. J & M Holdings, LLC,

143 Conn. App. 340, 348, 70 A.3d 156 (2013). ‘‘If the plaintiff fails to set forth

factual allegations that the defendant acted in bad faith, a claim for breach

of the implied covenant [of good faith and fair dealing] will not lie.’’ (Internal

quotation marks omitted.) Id., 349.

Additionally, we note that although the court may have found that the

defendant incurred costs and fees because he needed to secure the applicable line of credit due, in part, to the delays caused by the plaintiff, the

defendant also testified that he chose to refinance his home rather than

provide cash collateral as security for the line of credit and that he did so

without the knowledge of the plaintiff. He further testified that the equity

line of credit on his home was still in existence at the time of trial and that

the line continued to have an availability of one million dollars.

3 The plaintiff acknowledged attrialthat she was responsible for 55 percent

of the original $990,400 debt and the interest on the line of credit: ‘‘With

regard to [the plaintiff’s] responsibil[ity] for the interest, yes. Is she responsible for the interest on the unsecured debt and the secured debt, yes, she

is. You don’t have to decide that. We concede it. We’re not saying that

because the debt changed and became secured and it has a different account

number that we care, we don’t. It’s the same $990,000.’’