CORDY, J.
Nicholas C. Adams appeals from a judgment of divorce from his wife, Nancy W. Adams, issued by a Probate and Family Court judge.
1. Background. We recite the facts from the trial judge's findings, the report of a special master appointed to value the marital estate, and the evidence adduced from eighteen days of evidentiary hearings before the special master, nine days of trial, 492 exhibits, fourteen chalks and supplements, and a series of stipulations between the parties.
a. Home life. The husband and the wife were married in 1997. The husband was born in 1960; the wife in 1965. Due to the husband's career as a partner in the asset management and investment advisory firm, Wellington Management Company, LLP (Wellington), both the husband and the wife enjoyed an extremely upper-class lifestyle.
After their wedding, the husband and the wife moved into the husband's condominium unit in the Charlestown section of Boston. They eventually purchased a primary residence in Chestnut
The husband and the wife have four children together. At the time of trial, in 2008, they were all under eleven years of age. The wife was the primary caregiver. She scheduled various appointments and supervised the children's medical needs. The children all required strict oversight of their diets and other special attention for an assortment of allergies and other recurring medical issues. The wife made all meaningful contributions to the children's private school education and after-school tutoring, including walking the children to school daily, assisting with homework, and sitting on the school board. She arranged all extracurricular activities, such as swim, tennis, ballet, violin, and equestrian lessons. The husband was minimally involved in the medical, educational, and extracurricular life of the children.
The wife received an abundance of help with child and home care. When the children were infants, the husband and the wife hired nurses. At the time of trial, the wife employed two full-time nannies, although neither resided at the Chestnut Hill home. The nannies assisted the wife during the day, but not at night. Among the many other domestic staffers, the wife also hired an assistant to prepare hot meals for the family. The wife, either herself or in supervising the domestic staff, was responsible for purchasing the husband's clothing and toiletries, scheduling his medical appointments, obtaining his prescription medications, and various other domestic tasks. The wife paid the household staff through a private company.
The wife was also the financial manager of the marriage. See note 4, infra. She arranged and attended all meetings with the
In sum, the judge found that the wife was the primary caretaker for the four children, and was responsible for managing the couple's properties, and that the husband contributed little to homemaking and property management. These findings were fully supported in the record.
b. Career. After graduating from Princeton University in 1983, the husband began working for Wellington as a research analyst. He ascended through the ranks at Wellington quickly, receiving a promotion to manage a substantial portfolio in 1986, and then to oversee hedge funds. In 1993, the husband was made a partner in Wellington, at which time he contributed capital into the firm and entered into a partnership agreement that governs the rights and obligations of Wellington partners.
After their marriage, the wife supported the husband's career in a ministerial and administrative capacity for several years. Early on, before Wellington provided the husband with an administrative assistant, the wife scheduled his meetings, typed letters and reports, submitted travel receipts and business expense reports, organized his office, and compiled the husband's annual and quarterly reports in accord with Wellington's code of ethics.
c. Income and compensation. Wellington is a partnership defined by G. L. c. 108A, § 6. Wellington's articles of partnership, amended and restated as of October 25, 2001 (partnership agreement), control the rights and obligations of all Wellington
Under art. XII(b) of the partnership agreement, a three-member managing partners committee sets the first two components of the annual distribution (salary and incentive compensation) and disburses the same to partners specifically "for services rendered to the Partnership." The husband has earned an annual base salary ranging from a low of $105,000 in 1993 to $300,000 in 2008. Incentive compensation is determined by contract. For instance, for the hedge funds he manages, the husband receives a percentage of the base fees and a percentage of the performance fees paid to Wellington by fund investors. Performance fees are received only when the value of a given investment in a fund surpasses its "high water mark," the highest value the investment has previously attained. As such, incentive compensation is anchored not only to the husband's performance but also to the condition of the financial markets, and hence, is quite variable. During the sixteen years preceding the trial, the judge found that the husband's annual incentive compensation varied dramatically from year to year, ranging from a low of $45,262 in 2000 to a high of more than $20 million in 2008.
Article XII(f) of the partnership agreement governs payments of the last two components of the annual distribution, return on capital and merit distribution. Before distributing either, the managing partners committee first determines the annual net available income (NAI) of Wellington. This is the amount of income that exists after the managing partners committee credits the accounts of partners with their salary, incentive compensation earnings, and benefits (art. XII[b] payments); deducts the salaries of all other employees and all various operating expenses; distributes the amounts owed to withdrawn partners; and allocates other reserves required for partnership needs.
The husband and the wife's annual income was not limited to art. XII(b) compensation and art. XII(f) distributions from Wellington. The husband also received substantial income from numerous hedge funds, brokerage and bank accounts, and other investments.
d. Irretrievable breakdown. The husband and the wife, by all appearances, were in a loving relationship until the moment of separation. The husband and the wife communicated affectionately, and the husband demonstrated an apparently genuine acknowledgment and appreciation of the wife's contributions to the marriage. These bonds unraveled rapidly in late 2005. During the Thanksgiving holiday, the husband hosted his cousin as a houseguest at the husband and the wife's home in Florida, and thereafter, at least as early as January, 2006, began a romantic relationship with her. On December 31, 2005, he told his wife of his intent to leave her. In early January, 2006, the husband moved into his sister's home, but he continued communicating with his wife. The husband hired a lawyer for the purposes of obtaining a divorce. The judge found that by February, 2006, when the wife first learned of the husband's extramarital romantic relationship, an irretrievable breakdown of the marriage occurred. She filed her complaint for divorce on February 15, 2006.
On July 26, 2007, another judge issued an order stating, inter alia, as an "Uncontested Issue:" "Children will reside principally with" the wife. On December 19, 2007, that judge made several important evidentiary and procedural rulings, including (1) denial of the husband's motion in limine to exclude evidence of the value his Wellington partnership interest that he claimed was "not susceptible to any present value other than zero"; and (2) denial of the husband's motion to bifurcate the trial, and proceed immediately to a judgment of divorce, followed by a trial on the division of the marital estate.
On January 18, 2008, the husband and the wife entered into a stipulation regarding marital assets, which purports to reflect all of the assets comprising the marital estate. Most assets, such as investment accounts and furnishings, were given values as of the dates indicated, but some assets were denominated as "contested." Contested items included the husband's Wellington partnership interest.
On February 21, 2008, after nine days of trial, the trial judge issued an order of reference and appointed a special master to
In the months that followed the referral to the special master, the husband and the wife entered into several stipulations agreeing to the value and assignment (to one or the other of them) of all of their real property.
On April 8, 2009, the special master submitted his amended report that appraised the present value of the husband's Wellington partnership at $80,956,975. The husband filed a voluminous objection to nearly every one of the special master's findings, but the judge incorporated the entirety of the special master's report in his judgment of divorce.
f. Equitable distribution of the marital estate. The judge determined that this was a twelve-year, mid-length marriage. He found that both parties were in excellent health, and had significant opportunity to acquire future capital assets and income; the wife through investment of her equitable share of the sizeable marital estate, and the husband through his "upwardly mobile, successful track record which renders him exceptionally and lucratively employable for decades to come." In light of the length of the marriage, the husband's financial contribution, and the wife's homemaking contribution to the marital enterprise, and after consideration of all the statutory factors set forth in G. L. c. 208, § 34, including the wife's primary parenting responsibilities of the four young children for many years to come, the judge concluded "an equal distribution of marital assets is most equitable."
Naturally, in an estate as complex as this, determination of which assets constituted property assignable to the marital estate proved difficult. The judge concluded that "assets acquired prior to the marriage shall not be subject to division," but that the wife would take a one-half share of the marital assets acquired during the marriage, regardless of the means of acquisition. The judge required both the husband and the wife to provide a definite value as of the date of marriage to what they claimed to be their respective premarital property.
i. Marital estate. Pursuant to the order of reference, the special master prepared and submitted a schedule of marital assets and their values.
The judge approved the special master's use of the so-called direct capitalization of income method to calculate the value of the principal component of the husband's partnership interest, that is, the present value of the projected future receipt by the husband of a share of Wellington's profits as provided for in art. XII(f) (merit distribution and return on capital). To this value was added the present value of the withdrawal payments the husband was entitled to receive on leaving the partnership as provided in art. XIV of the partnership agreement.
ii. Child support and alimony. The judge awarded shared legal custody of the couple's four children to both the husband
The judge denied the wife's request for alimony, reasoning that "[i]n consideration of the income and assets she will receive, [the wife] will be able to maintain the lifestyle to which she had been accustomed during the marriage, and, therefore no alimony award ... is warranted."
The divorce judgment was entered on August 19, 2009. The husband timely appealed from the judgment of divorce and filed an application for direct appellate review in this court, which we granted.
2. Discussion. Our review of a judgment pursuant to the equitable distribution statute, G. L. c. 208, § 34, proceeds under a two-step analysis. "First, we examine the judge's findings to determine whether all relevant factors in § 34 were considered." Bowring v. Reid, 399 Mass. 265, 267 (1987). The second tier of our review requires us to determine whether the reasons for the judge's conclusions are "apparent in his findings and rulings." Redding v. Redding, 398 Mass. 102, 108 (1986). A judge's determinations as to equitable distribution will not be reversed unless "plainly wrong and excessive." Id. at 107. According broad discretion to the judge's division of property pursuant to the § 34 factors "is necessary in order that the courts can handle the myriad of different fact situations which surround divorces and arrive at a fair financial settlement in each case." Rice v. Rice, 372 Mass. 398, 401 (1977). The husband raises a multitude of
a. The Wellington partnership interest. First, we analyze the general propriety of the judge's assignment of the husband's Wellington partnership interest to the marital estate, and then we consider the specific valuation methodology employed by the special master, and by imputation the judge. We conclude that the Wellington partnership interest could permissively constitute a divisible marital asset under § 34; however, we discern clear error in the direct capitalization of income method the special master used to assess its present value.
i. Assignment to the marital estate. The husband argues that the Wellington partnership interest was erroneously classified as a divisible marital asset because it constitutes a mere expectancy of future earned income, and as such, is so speculative it resists reduction to a present value. Drapek v. Drapek, 399 Mass. 240, 244 (1987) (Drapek). The husband argues that his merit distributions, the great bulk of his art. XII(f) distributions, are properly characterized as future earned income because testimony adduced from Wellington managers demonstrated that the distributions are reciprocally contingent on his investment performance. Relying on our statement in Drapek, supra, that future earned income is not subject to equitable assignment under § 34, the husband argues that the judge committed a reversible error of law by holding otherwise. We disagree.
We begin by analyzing the question in light of the plain language of our equitable distribution statute. See Commonwealth v. Boe, 456 Mass. 337, 347 (2010), quoting James J. Welch & Co. v. Deputy Comm'r of Capital Planning & Operations, 387 Mass. 662, 666 (1982) ("It is elementary that the meaning of a statute must, in the first instance, be sought in the language in which the act is framed ..."). The statute grants judges the authority to exercise a broad degree of discretion in assigning
Similarly, as we have stressed, our jurisprudence "has not been bound by traditional concepts of title or property (even those not within the complete possession or control of their holders) to be part of a spouse's estate for purposes of § 34." Baccanti v. Morton, 434 Mass. 787, 794 (2001) (Baccanti), quoting Lauricella v. Lauricella, 409 Mass. 211, 214 (1991).
In the circumstances of this case, the husband's reliance on Drapek is misplaced. As articulated in art. XII(b) of the partnership agreement, Wellington pays the husband annual salary and incentive compensation, and that represents his future earned income. Here, the special master, and by extension the judge, expressly excluded the husband's future earned income, as provided in art. XII(b), from his computation of the present value of the Wellington partnership interest (see infra), and, consequently, did not contravene the rule against distribution of future earned income in Drapek, supra.
Nor is an interest in a partnership so ineffably speculative that it resists present valuation. The value of an interest in a partnership is distinguishable from the expectancies at issue in Drapek and its progeny. Expectancies, unlike partnership interests, do not embody either a present or future enforceable proprietary right or reflect a steady record of past distributions of income that facilitates a reliable assessment of the asset's present value. For instance, a medical degree, and concomitantly professional licensure, grants a putative doctor the simple right to practice medicine, not an entitlement to inclusion in a medical business organization and a
To that end, a partnership interest is akin to other inchoate or uncertain assets we have assigned to the marital estate consonant with § 34. In Bernier v. Bernier, 449 Mass. 774, 777 & 779 n.10 (2007) (Bernier), "[t]he engine of the parties' financial success" were two supermarkets, organized as close corporations, on Martha's Vineyard, and managed almost exclusively by the husband. We stated, in a context not dissimilar from this one, that "where valuation of assets occurs in the context of divorce, and where one of the parties will maintain, and the other be entirely divested of, ownership of a marital asset after divorce, the judge must take particular care to treat the parties not as arm's-length hypothetical buyers and sellers in a theoretical open market, but as fiduciaries entitled to equitable distribution of their marital assets." Id. at 775-776. Although we recognized that "valuation of any closely held corporation is fraught with uncertainties, and thus difficult to accomplish with precision and consistency," id. at 783 n. 16, we indorsed the general methodology adopted by the judge to achieve the goal of an equal division of the present value of the corporations. See id. at 778. Our courts have upheld the equitable distribution of the present value of other noncorporate business interests. See Adlakha v. Adlakha, 65 Mass.App.Ct. 860, 863 (2006) (wife's private practice as physician attributed to marital estate); Sampson v. Sampson, 62 Mass.App.Ct. 366, 367-368 (2004) (Sampson) (marital assets included $175,000 present fair market value of wife's insurance agency based on "capitalized income" [direct capitalization of income] method).
Further, in Baccanti, supra at 796-797, we held that the present value of nonvested stock options may be included in the divisible marital estate. We reasoned that neither the uncertainty of the stock options' value when ultimately realized nor the prospect that their value would fall below the minimum threshold at which options could be exercised precluded the judge's classification of the options as divisible marital assets under § 34. Id. at 795-796. We also ruled that the contingency of vesting on
These, and other cases, stand for the proposition that we are unwilling to deny one spouse, who contributed to the acquisition or appreciation of property during the marital enterprise, "the right to share in what `may be the most valuable asset between the spouses'" on the basis of the uncertainty or future contingencies bound up in that asset. Baccanti, supra at 796, quoting Curtis, Valuation of Stock Options in Dividing Marital Property Upon Dissolution, 15 J. Am. Academy of Matrimonial Law 411, 411-412 (1998). See Dalessio v. Dalessio, 409 Mass. 821, 825-826, 829 (1991) (annuity purchased by husband from proceeds of structured settlement in tort claim to be paid years beyond dissolution within assignable estate); Lauricella v. Lauricella, 409 Mass. 211, 216 (1991) (beneficial interest in real estate trust with spendthrift clause and contingency of survivorship is present, enforceable, and equitable right to use property, and as such, marital asset); Hanify v. Hanify, 403 Mass. 184, 187-188 (1988) (Hanify) (interest in pending lawsuit is "chose in action"
What emerges from an analysis of these cases is a fine distinction between an indivisible expectancy and a partnership interest
For all the foregoing reasons, we agree with the special master, who stated that a partnership interest, such as the husband's
We underscore some limiting principles to the future application of this proposition. First, § 34, in addition to enumerating mandatory factors that a judge must consider in dividing the estate,
Second, judges must take due note that property assignments, unlike alimony, cannot be modified. See G. L. c. 208, § 37; Drapek, supra at 244. There are many factors that might render it inequitable to assign the present value of a partnership interest to the marital estate. In consideration of the fact that the
Indeed, judges are permitted to exercise their discretion to order that future recovery or payment of a partnership interest, as we have allowed with stock options, pensions, and choses in action, be divided, "if and when received, according to a formula fixed in the property assignment" (emphasis supplied).
We briefly address another argument advanced by the husband on appeal. The husband contends that, even assuming the Wellington partnership interest "however defined, and whatever it may be worth," was legally assignable to the marital estate, the judge erred in including it in the marital estate under the "law of the case," because he expressly stated in his judgment: "assets acquired prior to the marriage shall not be subject to division." Because the husband became a partner in 1993, some four years prior to his marriage, he argues that the Wellington
ii. Valuation methodology. Having decided that G. L. c. 208, § 34, permitted the judge to assign the present value of the husband's partnership interest to the marital estate, we must turn to the thornier issue of what constitutes proper valuation methodology. Valuation of a business interest is a question of fact. Bernier, supra at 785, citing Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 541 n.47 (1997). The standard of review to be applied is whether the judge's findings were clearly erroneous. Mass. R. Civ. P. 52 (a), as amended, 423 Mass. 1402 (1996). When the opinions of valuation experts diverge, a judge may "accept one reasonable opinion and reject the other." Fechtor v. Fechtor, 26 Mass.App.Ct. 859, 863 (1989). The
The consensus approach to valuation deployed by appraisers and experts in marriage dissolutions has coalesced around some variation of what is known as the "income approach." S.P. Pratt, R.F. Reilly, & R.P. Schweihs, Valuing Small Businesses and Professional Practices 724-725 (3d ed. 1998). See Bernier, supra at 778 n.7. The income approach rests on the proposition that "[i]n theory, the value of a business or an interest in a business depends on the future economic benefits that will accrue to that business, with the value of those future benefits being discounted back to present value at some appropriate discount rate." S.P. Pratt & A.V. Niculita, Valuing a Business: The Analysis and Appraisal of Closely Held Companies 175 (5th ed. 2008). "In other words, the basic concept of the income approach is to project the future economic income associated with the investment and to discount this projected income stream to a present value at a discount rate appropriate for the expected risk of the prospective income stream." Id. In Bernier, supra at 778, both the husband's and the wife's experts used the direct capitalization methodology of the income approach.
(1) The wife's expert. At the special master hearings, the wife called Gregory Cowhey, managing director of the valuation services group at Wealth & Tax Advisory Services, Inc., a national financial firm, and he was qualified as an expert witness in business appraisal. Cowhey testified to the contents of reports that he prepared to appraise the present value of the husband's Wellington partnership interest. The reports were entered in evidence. Cowhey used the discounted cash flow methodology to value the stream of profits and withdrawal payments the husband would likely receive, and then applied the tax affecting formula we indorsed in Bernier, supra at 787-790. He wrote in his report that rather than applying a market rate approach, e.g., valuing Wellington as a commodity, and calculating the share of the theoretical sale price the husband would receive as a partner, the best methodology would fix the "present value of the expected future cashflow distributable" to the husband from the date of preparation of the expert report until the husband's retirement from the firm.
More precisely, Cowhey first applied labor and census statistics and various actuarial models to predict that the husband would retire in fourteen years at sixty-two years of age (a prognostication that the husband does not contest). Next, he projected annual cash distribution to the husband through age sixty-two, based solely on art. XII(f) distributions, that is, on the husband's
(2) The husband's expert. At the special master's hearings, the husband steadfastly maintained that his Wellington partnership interest had no present value other than his art. XIV withdrawal payment, or in the alternative, that any equitable distribution of the value attributed to the partnership be paid out "if and when received." The husband declined to offer expert testimony as to the present valuation of his Wellington partnership interest, aside from the value of his art. XIV withdrawal payment. His expert witness, David M. Gannett, assessed the present value of the ten-year withdrawal payment, commencing at the time of trial (and not fourteen years hence as the wife's expert had assumed) at between $28,453,000 and $39,713,000, after applying an income tax affecting rate of forty per cent.
(3) Special master's approach. The special master prefaced his report by noting that "[c]apitalization of profit distribution is an accepted method of valuing a business interest."
After concluding that he would incorporate the sixteen years of art. XII(f) distributions through 2008, the special master calculated that, since 1993, the merit portion of the husband's art. XII(f) distribution averaged three per cent of Wellington's annual NAI.
The special master then tax affected the $87,047,647 capitalized partnership value by combining and applying the current Federal capital gains tax rate (rather than the income tax rate) of fifteen per cent, and the Massachusetts capital gain tax rate of 5.3 per cent, for a total tax affected present value of $69,376,975. Finally, the special master accepted Cowhey's present value computation of the art. XIV withdrawal payments of $11,580,000. Adding the art. XIV withdrawal payment, to the tax affected present value of the annual art. XII(f) distributions, the special master appraised the husband's partnership interest at a present value of $80,956,975.
(4) Review of the special master's methodology. We acknowledge, as we did in Bernier, supra at 783 n.16, that valuation of a partnership interest is an inexact science. Because the process is "fraught with uncertainties," we only reverse a judge's findings for commission of clear error, or if the methods used "would clearly produce an arbitrary result." Id. at 783 n.16, 787. Mass. R. Civ. P. 52 (a). We do not discern clear error in the judge's adoption of the special master's seemingly conservative projections of the husband's future income stream.
First, as noted, supra, the special master decided to use the direct capitalization of income method. This method is the preferred accounting formula for valuing corporations, stocks, and other similar interests. It is appropriate for the valuation of interests in corporations, in particular, because the formula presumes the perpetuity of a future income stream, and corporations are defined, in part, by their infinite existence. S.P. Pratt, R.F. Reilly, & R.P. Schweihs, Valuing Small Businesses and Professional Practices 257 (3d ed. 1998). See Associated Indus. of Mass. v. Attorney Gen., 418 Mass. 279, 285 (1994) (noting corporations enjoy advantages under law such as limited liability and perpetual life). It was, however, error to use that method in this case because the husband's Wellington partnership interest was delimited by a finite period of cash flow. The Wellington partnership interest, as defined by the special master, had two components: the annual stream of art. XII(f) distributions for the fourteen years prior to his expected retirement in 2022, and the amount of his art. XIV withdrawal payment. With respect to the husband's art. XII(f) profit distribution, it effectively ceases when he leaves the partnership. See G. L. c. 108A, § 24. Because the use of the direct capitalization of income method presumes perpetuity of income, and does not account for the finite fourteen-year period of cash flow, the special master's formula, as adopted by the judge, may have overvalued the husband's Wellington partnership interest. See S.P. Pratt & A.V. Niculita, Valuing a Business: The Analysis and Appraisal of Closely Held Companies 177 (5th ed. 2008); S.P. Pratt, R.F. Reilly, & R.P. Schweihs, Valuing Small Businesses and Professional Practices, supra at 213, 257-258. The special master should have elected to employ some variant of the discounted cash flow method, which discounts each discrete year's income stream, and thereby more accurately reduces a finite period of future cash flow to present valuation.
As a final matter, we take note of the husband's argument that the special master incorrectly tax affected the Wellington partnership interest by deducting 20.3 per cent to reflect the combined Federal and Massachusetts capital gains tax rates. The special master was certainly correct to tax affect the transfer of the wife's portion of the present value of the partnership interest. See Bernier, supra at 790 (requiring fair mechanism "for
In his report, the wife's expert treated the art. XII(f) distributions and art. XIV withdrawal payments as separate classes of income for tax purposes. He tax affected the future art. XII(f) distributions at 31.5 per cent, the effective income tax rate for the three representative years in his model. For the art. XIV withdrawal payment, the wife's expert applied the highest marginal tax rate of 38.5 per cent, assuming the payout would be classified under the United States tax code as "guaranteed payments." The husband's expert, who only analyzed the tax effects of the art XIV withdrawal payment, applied a forty per cent deduction to approximate the combined Federal and Massachusetts income tax rates.
It is not necessarily error that the special master tax affected at a rate different from the rates advanced by both experts. See Fechtor v. Fechtor, supra at 863 (allowing judge to reject expert opinion altogether and arrive at a valuation on other evidence). However, in rejecting the opinion of both experts as to the applicable tax rates, the special master and the judge were still obligated to provide a reasonable explanation, and here, they "failed to offer a cogent explanation of [their] choice." Bernier, supra at 787. The husband's argument on this point is conclusory,
iii. Postseparation contribution. The husband argues that the wife made negligible, and negative, contributions to the marital enterprise after the cohabitation period ended and the parties separated in February, 2006. Here, the husband argues that the record "discloses no sacrifices or challenging circumstances during the litigation period that balances the burden on [the husband] of working every day." He claims his own wealth transformed the wife into a "suddenly rich woman," with a "full-time staff of nannies and servants." He further alleges that the wife's counsel attempted "to diminish [the husband] in the eyes of his employer's decision-makers" by asking questions about the husband's relationship with his cousin in depositions of Wellington managers. Therefore, he argues, because the judge exercised his discretion to consider the contributory factors listed in § 34, he must consider this "negative" postseparation conduct, and, in turn, reduce the wife's share of the estate. See Savides v. Savides, 400 Mass. 250, 253 (1987) ("In considering the increase in value of property after separation, it was not error for the judge to exclude the wife's participation in that increase where she made no contribution to the marriage after that time and the increase in value was solely attributable to the husband's efforts").
Here, the judge diligently made findings on each of the mandatory factors enumerated in § 34, as required. Rice v. Rice, 372 Mass. 398, 402-403 (1977). In addition, the judge's findings clearly stated the rationale for the equal property division. The judge found that the wife's "prolonged absence from the workforce would hinder her employability," and more importantly, although this was a mid-length marriage that could conceivably warrant less than equal division of property, the wife would "continue to have child-care and custodial parenting responsibilities of the four minor children for several years into the future." The judge also exercised his discretion to weigh spousal contributions to the marital enterprise, both financially and in homemaking, and recited many of the wife's significant contributions to child care, maintenance of property, financial management, and ministerial work, both during cohabitation and after separation. He specifically found that the deposition questions concerning the husband's affair with his cousin were relevant and calculated to lead toward discoverable evidence, as is, of course, correct. The husband's argument is without merit. The equal division of property is well supported, and by no means
iv. Bifurcation. The husband argues the denial of his motion to bifurcate the trial, which would have allowed an immediate judgment of divorce prior to resolution of the division of the marital estate, was a reversible error. He claims that denial of his motion cost him millions of dollars in income to which he would have solely been entitled had the marital partnership been dissolved in 2006, when he filed the motion to bifurcate, and the judge found the marriage irretrievably broken down. The decision to bifurcate is one within the sound discretion of the judge. Dobos v. Driscoll, 404 Mass. 634, 644-645, cert. denied sub nom. Kehoe v. Dobos, 493 U.S. 850 (1989) ("Driscoll points to no case in this Commonwealth in which the decision of a judge not to bifurcate a civil proceeding has been the ground for reversal. Furthermore, Driscoll has cited no such reversal by any other jurisdiction"). The husband points to no error of law or abuse of discretion, other than an outcome he disliked.
b. Tax burdens. The husband argues that the divorce judgment misallocated the tax burdens, and places all liability on him for deferred Federal and State taxes on income he received from Wellington, and then shared with the wife. He claims that the judge "ignored" the issue of taxes. This argument is advanced in one sentence and one footnote in his brief. It is not a reasoned legal argument, and the citations are inadequate to provide the required factual support in the record to elucidate how specifically he claims the judge erred. The bald assertion that the judge "ignored" the assignment of liability, as § 34 requires, is demonstrably incorrect. See G. L. c. 208, § 34 (judge "shall consider ... liabilities and needs of each of the parties"). The judge expressly provided: "Each party is responsible for his or her respective liabilities as reported on his and her Financial Statements." We conclude that the husband's abbreviated and conclusory claim does not rise to the level of an appellate argument as defined by Mass. R. A. P. 16 (a) (4), as amended, 367 Mass. 921 (1975). Therefore, we do not consider it.
c. Child custody and support. The husband claims that we must remand for the judge to reconsider the issue of child custody. The husband's pretrial motion for shared physical custody
In any proceeding involving custody of a child, "as matter of law and as matter of humanity," Hersey v. Hersey, 271 Mass. 545, 555 (1930), the governing principle guiding a judge's decision-making is to ensure custody rests with the parent who will promote the "child's best interests." Custody of Kali, 439 Mass. 834, 845 (2003), quoting Rosenberg v. Merida, 428 Mass. 182, 191 (1998). Here, the judge made numerous subsidiary findings that strongly supported his conclusion that awarding sole physical custody to the wife was in the best interests of the children.
The husband also attacks the propriety of the judge's imposition of $27,100 per week ($116,530 per month) in child support obligations. He argues that the judge should have required the wife to share in the costs of child support. Otherwise, he claims, the child support is "tax-free alimony in disguise." While the husband's argument lacks clarity or further support, our analysis reveals no error in the award of child support.
By statute, Massachusetts fixes child support guidelines. "Where a noncustodial parent's income level exceeds the children's basic needs, the minimum amount provided in the guidelines is presumptively correct, and the court may deviate upwards in the amount warranted by the circumstances." Pearson v. Pearson, 52 Mass.App.Ct. 156, 160 (2001), citing J.C. v. E.M., 36 Mass.App.Ct. 446, 450 & n.6 (1994). A child's "needs are to be defined, at least in part, by their parents' standard of living and ... children are entitled to participate in the noncustodial parent's higher standard of living when available resources permit." Brooks v. Piela, 61 Mass.App.Ct. 731, 737 (2004), citing Department of Revenue v. Mason M., 439 Mass. 665, 677 (2003). Thus, the large sum awarded by the judge was not unreasonable or an abuse of his discretion.
Here, it is possible for us to identify the separate sources of the husband's income being paid to equitable distribution and to child support. The judge, and derivatively the special master, excluded the husband's art. XII(b) salary and incentive compensation when capitalizing his projected share of the Wellington partnership profits for the purposes of present valuation (including only the art. XII(f) distribution and the art. XIV withdrawal payment). Thus, the source of the equitable distribution is distinct from the millions of dollars in expected art. XII(b) compensation payments attributable to the support obligations. Therefore, there was nothing improper in including the Wellington partnership interest in the marital estate, and then counting the remainder of its excluded income for child support purposes.
3. Conclusion. We vacate that portion of the judgment in the divorce action presently valuing the husband's Wellington partnership interest at $80,956,975, and remand for further proceedings directed solely at valuing that interest consistent with this opinion. In all other respects, the judgment of divorce is affirmed.
So ordered.
IRELAND, J. (concurring in part and dissenting in part, with
I concur in the result and agree fully with the reasons stated in the court's opinion for reaching the result. I share Justice Spina's concern, however, that the impoundment issue has not been resolved correctly.
When we released this opinion initially we did not address the impoundment issue. That was an oversight that was quickly brought to our attention by the partnership's counsel. We decided that the best course was to withdraw the opinion immediately and until we resolved the matter. We then solicited the parties' views and the partnership's view on whether the order of impoundment should remain intact. The court has now concluded that the impoundment order should be vacated to the extent of making public the financial details contained in the opinion, while leaving the rest of the record impounded. Ante at 362 n.1.
I would have left the impoundment order intact. The impoundment — which was preceded in the trial court by a comprehensive protective order agreed to by both sides and the partnership, covering much of the same material — was approved by a judge in the Probate and Family Court on motion of the partnership, supported by a lengthy and very detailed affidavit. The partnership made a strong case for the protection of its information. The partnership reasonably relied on the order. The case was tried as an impounded case. The clerk of this court then properly carried the impoundment forward on appeal, and the case file was closed from public inspection. See S.J.C. Rule 1:15, § 2 (b), as appearing in 401 Mass. 1301 (1988). The parties also treated the case as impounded on appeal: they clearly indicated on their briefs that this was an "Impounded Case"; and at oral argument their counsel were careful not to refer to the parties or the partnership by name. See id. at § 2 (c). The propriety of the impoundment was not an issue raised by either party on appeal. No one else was challenging the order or asking that it be vacated in whole or in part. I do not think it is fair to the partnership for the court in these circumstances to vacate the order on its own initiative.
I recognize that the impoundment order was not perfect. It appears to have been issued without express findings of good cause, and it was broader than strictly necessary to protect the partnership's information. Reasonable minds can differ as to the specific infirmities, but I do not think the order was so egregious
Given the court's ruling, it may make sense for our rules committee to reexamine the rule on impounded appeals, S.J.C. Rule 1:15. I am concerned that the rule as it is currently written may give parties and nonparties who have obtained impoundment orders in the trial court a false sense of assurance that the impoundment will be honored by the appellate court if it is not being challenged. Perhaps the rule should be changed to require one who has obtained an impoundment order in the trial court to apply anew to the appellate court for impoundment of the appeal. At a bare minimum, the existing rule should be amended to make it more clear that the appellate court can vacate an impoundment on its own initiative at any point during the appellate process, after giving those involved an opportunity to be heard, as was done here.
As for this particular case, the unfortunate timing of the initial release of the opinion was, as it turns out, inconsequential.
SPINA, J. (concurring in part and dissenting in part, with whom Ireland, J., joins).
The only aspect of the court's opinion with which I disagree is the question of impoundment. While the Probate and Family Court judge's order impounding the entire case was overbroad, I would not have disturbed that order because no party raised the issue on appeal, and no third person has sought leave to intervene seeking access to the record in this case. See Rule 10 of the Uniform Rules on Impoundment Procedure 875 (LexisNexis 2010-2011) ("A party or any interested third person ... may, by motion supported by affidavit, seek to modify or terminate an order of impoundment"). Impoundment is an interlocutory order. See Republican Co. v. Appeals Court, 442 Mass. 218, 223-224 (2004). As such, it is open to challenge at any time, whether that be here, when the case is on appeal, or in the trial court at any other time. There has been no challenge to the impoundment order.
The materials that originally were sought to be impounded were provided during the discovery phase of this case. Generally, such materials are not judicial records and may be impounded per se. See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 30 (1984). Massachusetts applies the factors set forth in Mass. R. Civ. P. 26 (c), as amended, 423 Mass. 1401 (1996), which include protection from "annoyance" or "embarrassment," to these materials. See Rule 1 of the Uniform Rules on Impoundment Procedure, supra at 872. If impounded materials are used at trial, they become judicial records to which the public has a strong common-law right of access. Such records may be impounded "for good cause." Rule 7 of the Uniform Rules on Impoundment Procedure, supra at 874.
Third parties who are not before the court and who are not responsible for the initiation of the underlying litigation may have privacy rights sufficiently compelling to justify impoundment of their financial records and their identity. See In re Knoxville News-Sentinel Co., 723 F.2d 470, 477-478 (6th Cir.
In this case, the husband's employer filed a motion for impoundment supported by affidavit.
The court's opinion in this case does not depend on a discussion of specific financial figures, or, for that matter, disclosure of specific details of the employer's partnership agreement. Much of this information could have been circumvented without affecting the quality of the opinion. The latter category is particularly troublesome because it is that information, namely, the method by which a partner's income is calculated, which lies at the heart of the employer's privacy interest. The order vacating the impoundment order not only has a profound impact on the employer's business model of keeping partner finances confidential, but it will likely have adverse effects on the employer's competitive advantage over publicly traded rivals, recruitment of new employees, and collegiality and meritocracy of the partnership. The court's discussion of specific valuation of the employer itself, for purposes of a divorce case, is unnecessary in this case, and it may pose serious consequences to the employer's business, as well as the security of its employees
The employer has, in my view, a significant privacy interest in this information that outweighs the public's interest in its inspection. It is, essentially, an innocent nonparty with a reputation to protect, and it is difficult to imagine a more compelling case. Through no fault of its own, it has been denied several options, including termination of the husband's interest in the company, in order to prevent disclosure. I would not have vacated the impoundment order, disclosed any financial figures, or disclosed terms of the partnership agreement (except generally), or disclosed the name of the husband's employer. I respectfully dissent from that aspect of the court's decision.
As provided by S.J.C. Rule 1:15 (2) (b), as appearing in 401 Mass. 1301 (1988), the order of impoundment remained in effect until otherwise ordered by an appellate court. When the opinion in this case was initially released, it did not explicitly address the continued efficacy of the impoundment order. Wellington's counsel alerted the court to that oversight and the opinion was withdrawn to give the parties an opportunity to file additional memoranda addressing the point, which they subsequently did.
While the impoundment order may have been appropriate when entered, at least with respect to financial and other personal materials produced during the discovery process, it carries no continuing presumption of validity, Republican Co. v. Appeals Court., 442 Mass. 218, 222-224 (2004), and is plainly not narrowly tailored "so that it does not exceed the need for impoundment," Boston Herald, Inc. v. Sharpe, 432 Mass. 593, 605 (2000), especially now that a full trial on the merits has been concluded, documents have been introduced in evidence, and important legal issues have been raised and litigated on appeal with respect to that evidence. See H.S. Gere & Sons v. Frey, 400 Mass. 326, 332 (1987) ("orders of impoundment must comply with the procedures and requirements set out in the [uniform] rules").
Because the information contained in the opinion is necessary to the resolution in the case, see infra at 372-390 (and was discussed with specificity by the parties in their appellate briefs), and there has not been a sufficient showing of good cause justifying its continuing impoundment, the order is lifted to the extent of that information. Republican Co. v. Appeals Court, supra at 223, quoting Commonwealth v. Blondin, 324 Mass. 564, 571 (1949), cert. denied, 339 U.S. 984 (1950) ("The exercise of the power to restrict access to judicial records is to be `strictly construed in favor of the general principle of publicity'"). See Globe Newspaper Co. v. Pokaski, 868 F.2d 497, 502, 509 (1st Cir. 1989) (public's right under First Amendment to United States Constitution to access traditionally open proceedings and records preserves its function as "effective check" on judiciary). It would be extraordinary in the circumstances for this court not to identify the parties or discuss the relevant evidence where, among other things, it does not appear that the Supreme Judicial Court has ever failed to do so in a publicly issued opinion reviewing the distribution of a marital estate in a judgment of divorce.
