The Massachusetts’s Appeals Court upheld the lower court’s equitable distribution of Nonvoting Common Shares (NVCs), Investor Entity Units (IEUs) and an award of alimony.
The parties married in 2006 and had one minor child together. The Husband filed a Complaint for Divorce (irretrievable breakdown) on September 24, 2020.
Three months after the Husband filed his Complaint for divorce, he became eligible, through his employer, Fidelity, to purchase nonvoting common shares (“NVCs”). The NVCs convey an ownership interest in Fidelity, but not the right to vote on the company’s business decisions. Fidelity only allows small groups of “highly valued” employees to purchase NVCs. The NVCs remain unvested for three years, and they vest at a rate of twenty percent per year, over a period of five years. The Husband purchased 20,000 NVCs (2020 NVCs) around December 2020 and an additional 20,000 in December of 2022.
The Husband was also able to purchase Investor Entity Units (“IEUs”). The IEUs are stocks in companies owned or party owned by Fidelity which are fully vested when issued and can be transferred only to authorized holders or assignees after a low-interest loan from Fidelity is paid. The Husband purchased 575,000 Investor Entity Units (“IEUs”) in 2020 and more in 2022.
The Judgment of Divorce assigned the Wife 50% interest in the 2020 NVCs and 2020 IEUs, as well as a 50% responsibility for the outstanding loan balances to Fidelity. If the Husband was unable to assign the Wife’s interests, he was ordered to hold them for her benefit until he left Fidelity or until Wife directed him to sell the shares on her behalf (“if and when received” basis). The Husband was also required to pay the Wife any dividends or distributions, on the NVCs and IEUs held for her benefit. Lastly, the Judgment required the Husband to pay the Wife weekly general term alimony in the amount of $10,673.
On appeal, the Husband first challenged the Judge’s equitable distribution of the 2020 NVCs. The Appeals Court found ample support in the Judge’s decision to assign the Wife a 50% interest in the 2020 NVCs but not the 2022 NVCs. The Court noted that the Husband received the opportunity to purchase the 2020 NVCs due to his employment at Fidelity during the marriage.
The Appeals Court further found that the Judge did not err by declining to apply the modified time rule formula outlines in Baccanti, to determine which portion of the 2020 NVCs belong to the marital estate. The Court found the Judge did not abuse her discretion and noted that the party challenging the inclusion of assets in the martial estate must show that the assets were given for future services to be performance after dissolution of the marriage and that the non-employee spouse did not contribute to the employee spouse’s ability to acquire the assets.
The Husband also argued that the judge erred in dividing the 2020 IEUs on an “if and when received” basis. The Appeals Court found that a present division was not feasible because neither party offered a net present value calculation of the assets that would have allowed the judge to determine an appropriate lumpsum to use as an offset.
Lastly, the Husband argued that the alimony award should be reduced based on the judge attributing annual income to the Wife in the amount of $100,000. The Appeals Court disagreed, found no abuse of discretion, and noted that it was proper for the judge to consider the Wife’s limited experience, low earning history, resume gaps, the age of the children and their needs, and the testimony of the Husband’s expert on vocational consulting.