Credit Suisse Group AG chief executive Brady Dougan should not have to pay his ex-wife more than $750,000 in interest for being 12 days late with a $7.5 million divorce-related payment, his lawyer told the Connecticut Supreme Court on Tuesday.
But justices appeared skeptical of Dougan's claims and asked his lawyer why Dougan was challenging a clause in his June 2005 divorce settlement. The high court didn't immediately rule Tuesday.
Dougan, of Greenwich, agreed to pay his ex-wife, Tomoko Hamada Dougan, $15.3 million in two installments under the divorce settlement. He paid the $7.5 million second installment 12 days late in June 2006 and gave her an extra $25,000, representing interest for the 12 days at the 10 percent annual rate set by the settlement.
But Tomoko Dougan's attorney, Gaetano Ferro, said the divorce settlement called for interest to be paid back to the date of the settlement, not to the second payment's due date.
Ferro said he was shocked that case was before the Supreme Court, and said Brady Dougan was reneging on the deal he signed.
"You can't go to court and tell the judge it's fair and equitable, then turn around a year later and say, 'Only kidding,'" Ferro told the court.
Neither Brady Dougan nor Tomoko Dougan attended Tuesday's court hearing.
Brady and Tomoko Dougan, who also still lives in Greenwich, got married in November 1988 in Japan and had two children, born in 1992 and 1997, court records show. At the time of their divorce, he was making nearly $385,000 a week at Credit Suisse and their estate was valued at $80 million, the records show.
Dougan, 51, was named chief executive officer of the Zurich-based financial services giant in May 2007, after having served as CEO of the Credit Suisse Investment Bank and its predecessor, Credit Suisse Boston.
In addition to the $15.3 million, Tomoko Dougan also received one of the couple's homes that was worth $9.6 million, accounts totaling about $143,000 and a 2000 BMW X5, documents show.
Stamford Superior Court Judge Stanley Novack approved the divorce settlement, but he ruled against Tomoko Dougan when she sought the year's worth of interest on the late payment. Novack cited an established state legal principle that says any contract term that calls for a penalty for a breach of the contract is invalid and "contrary to public policy."
But the state Appellate Court overruled Novack in 2009, saying the state Supreme Court has recognized that the government has interests in both encouraging private agreements in divorce cases and in enforcing those agreements. Brady Dougan appealed the Appellate Court ruling to the Supreme Court.
Justice Dennis Eveleigh on Tuesday asked Brady Dougan's lawyer, Gary Cohen, whether he had a problem arguing against the divorce deal's late payment interest clause after having agreed to it. Cohen responded that it didn't occur to him when the settlement was approved that the interest clause would be invalid.
"It never occurred to me that there would be a breach," Cohen said. "Hindsight is always 20/20. I think it's my obligation to my client to advance appropriate arguments on his behalf."