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Cirrito v. Cirrito11/23/2004
Karen Cirrito, wife, appeals from a final decree of divorce from Thomas Cirrito, husband, contending the trial court erred in: (1) finding a payment to husband pursuant to a non-competition clause was separate property; (2) determining wife had the burden to prove husband's significant personal efforts were the "proximate cause" of a substantial increase in the value of certain assets; (3) failing to classify certain increases in separate property as marital property, including a failure to determine whether husband's salary adequately compensated the marital estate; (4) reducing an earlier award of attorney's fees and costs; (5) finding that jointly titled property was not gifted to wife; (6) refusing to award child support retroactive to the date the divorce was filed; and (7) ordering wife to produce reports from her experts and in limiting and excluding certain testimony of wife's experts. For the reasons stated, we affirm in part and reverse in part.
ANALYSIS
I. NON-COMPETE PAYMENT
Prior to the marriage, the husband owned LDWC, a long distance telephone service. On April 1, 1996 the husband sold his interest in LDWC to Telco Communications Group. In exchange for his shares in LDWC, husband received Telco shares and became President of Telco's Consumer Division with an annual salary of $375,000. As part of the sales agreement, he agreed to a non-compete provision where he would receive one million dollars within one year after his termination of employment with Telco, provided he would not engage in any competing business. The employment agreement provided in relevant part:
6. Covenants and Confidential Information
(a) The Executive acknowledges the Company's reliance on and expectation of the Executive's continued commitment to performance of his duties and responsibilities during the Term. In light of such reliance and expectation on the part of the Company, during the periods hereafter specified in Section 6(b), the Executive shall not, directly or indirectly, do or suffer either of the following:
(i) Own, manage, control or participate in the ownership, management or control of, or be employed or engaged by or otherwise affiliated or associated as a consultant, independent contractor or otherwise with, any other corporation, partnership, proprietorship, firm, association or other business entity directly or indirectly engaged in the business or, or otherwise directly or indirectly engage in the business of, marketing or providing telecommunication services within the United States; . . .
(ii) Disclose, divulge, discuss, copy of otherwise use or suffer to be used in any manner. . . any confidential or proprietary information relating to the company's business . . . .
(b) The applicable periods shall be: as to clause (i) of Section 6(a) so long as the Executive is an employee of the Company and for a period of one year after termination of employment; and as to clause (ii) of Section 6(a), during the term and at any time after the Executive is no longer an employee of the Company.
As additional consideration for Executive's non-competition obligation pursuant to Section 6(a)(i) during the one year period after termination of employment for Cause, without Cause, for Permanent Disability, or because of the expiration of the Term, the Company shall make an additional payment of $1,000,000 to Executive within ninety (90) days after such termination.
The parties married April 13, 1996, twelve days after husband executed the agreement. During the marriage, husband upheld his obligation to not compete and in 1997 Telco paid husband one million dollars. The wife argued belo
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