De Felipe v. Suwwan: Placing the Emphasis on Equity in the Division of Equity Compensation
By Lindsay V. Mason
In the 25 years since the Supreme Judicial Court issued its decision in Baccanti v. Morton, 434 Mass. 787 (2001), many family law practitioners have routinely applied its “time rule” to ascertain what portion, if any, of a party’s unvested equity compensation is subject to division in a divorce matter. See id. at 801. Family law practitioners have had little disagreement that the Baccanti time rule should apply to these unvested equity compensation interests issued by an employer, particularly where the unvested equity compensation will realize value only due to the employee’s post-divorce efforts.
The Massachusetts Appeals Court’s recent decision in De Felipe v. Suwwan, 106 Mass. App. Ct. 158 (Oct. 14, 2025), upheld the terms of a judgment of divorce that divided a portion of the husband’s equity compensation equally, and on an “if, as, and when received” basis, instead of applying the Baccanti time rule. The decision emphasized that the application of the time rule established in Baccanti has never been a mandate. Rather, it is one option among others in service of the ultimate objective in every divorce: to fashion an equitable division of property incident to divorce.
Factual Background
Karim Suwwan de Felipe (the husband) and Leila El-Youssef Suwwan (the wife) had been married for approximately 14 years at the time the divorce action commenced. The parties had one minor child and the wife was a fulltime stay-at-home parent after having worked as an associate dentist. The husband began working as an investment and portfolio manager for Fidelity nine years after the parties married. He had been working in that same capacity for approximately five years when he filed for divorce in 2020.
Within three months of filing the complaint, the husband had developed sufficient seniority and qualifications to be eligible to purchase two different types of equity holdings internal to Fidelity: Nonvoting Common Shares (NVCs) and Investor Entity Units (IEUs). The husband acquired NVCs and IEUs in both 2020 and 2022. NVCs remain unvested for three years post-purchase, thereafter vesting over a five-year period at an annual 20% rate (becoming fully vested eight years after acquisition). IEUs vest fully upon acquisition, but their transferability/assignability is significantly restricted. Fidelity also pays many NVC owners dividends in the form of IEUs rather than in cash. The husband acquired his interests in the NVCs and the IEUs with low-interest loans from Fidelity.
The trial judge assigned the wife a 50% interest in the husband’s 2020 NVCs and IEUs (and an attendant 50% responsibility for the corresponding loans) and no interest in those same types of assets purchased in 2022. The trial judge credited the testimony of the wife’s expert that the net asset value for these assets, as established by Fidelity, was not reflective of their actual underlying value and accordingly ordered the husband to pay the wife her 50% interest in the 2020 assets on an if, as, and when received basis, which the trial court concluded was the more equitable outcome, and which the Appeals Court upheld.
The decision also upheld the trial court’s alimony award, which the husband asserted was an abuse of discretion violative of Young v. Young, 478 Mass. 1 (2017), because it based the order on the wife’s stated needs as of the end of the trial in 2023, rather than her needs as of 2020 when the parties’ divorce began. The husband argued that, because the amount exceeded the wife’s needs set forth on her financial statement filed at the beginning of the case, the alimony award should be overturned. The Appeals Court was not persuaded.
Analysis
Division of Equity Compensation
Important to the lower court’s judgment and the Appeals Court’s decision upholding it was the principle that, even though the 2020 NVCs were unvested at the time of the divorce, the husband’s opportunity to be eligible to purchase these asset interests had developed during and “as a result of the marital partnership.” De Felipe, 106 Mass. App. Ct. at 161. The Appeals Court’s decision highlighted the trial court’s findings that Fidelity only provides the opportunity to purchase NVCs (and thereby IEUs) to employees “who have demonstrated value to Fidelity and who have sufficient assets to be considered accredited investors”—conditions that the husband had established with Fidelity during the marriage and prior to the filing of the complaint for divorce. Id. Additionally, unlike the unvested stock options that were the subject of discussion in Baccanti, the NVCs generated an immediate economic benefit to the husband in the form of dividend payments, despite being unvested.
While sanctioning the trial court’s approach of differential treatment of the 2020 assets (opportunities that were the product of the marriage) and 2022 assets (opportunities that were too attenuated from the marital partnership to be the product of a then clearly dissolved marital partnership), the Appeals Court clarified in a footnote that its decision in this particular case was not meant “to suggest that judges have freedom to avoid a Baccanti apportionment based only on a conclusion as to ‘the equities.’” Id. at 163 n.3. Rather, the decision emphasizes that each case presents unique facts and unique assets, both of which need to be closely examined in context, especially when current valuation may be speculative.
This dictadictum in the footnote echoed the justices’ comments and questions during the oral argument held before the Appeals Court in June 2025; namely, that Baccanti itself has never required the application of the time rule it established. During oral argument, the justices highlighted footnotes 6 and 7 of the Baccanti decision as supporting the judge’s findings and judgment. Footnote 6 states, “[a]lthough in some cases stock options may be given to an employee for future services that will be performed after dissolution of the marriage, the value of the employee to the employer, which caused the employer to reward the employee with stock options, may have come about as a result of the marital partnership.” Baccanti, 434 Mass. at 799 n.6. Baccanti also states in the body of the decision: “A time rule can be an effective and straightforward means for apportioning issued but unvested stock options. We recognize, however, that one formula will not necessarily work in every case and emphasize that trial judges have broad discretion to modify the time rule or adopt another method that will achieve the most equitable apportionment in a particular case.” Id. at 801–02 (emphasis added). Consequently, and particularly because of the detailed findings that she made, the trial court’s decision was actually consistent with Baccanti.
Amount of Alimony
The portion of the decision on alimony is far shorter, because the affirmation of the trial court’s judgment rested substantially on the judge’s credibility determinations regarding certain (but not all) portions of the wife’s testimony about her anticipated costs post-divorce. In determining whether and to what extent to accept a party’s representation of needs post-divorce (as those needs relate to lifestyle during the marriage), the Appeals Court held that “on this record those issues involve[d] credibility determinations within ‘the domain of the trial judge, in which the judge’s assessment is close to immune from reversal on appeal except on the most compelling of showings.’” De Felipe, 106 Mass. App. Ct. at 168 (citation omitted). Where the trial judge made detailed findings regarding her assessment of the wife’s stated needs (including that in some cases those needs were understated) and issued an alimony order that was less than the total of the wife’s stated expenses, the husband failed to establish sufficiently compelling circumstances that demonstrated an error or an abuse of discretion warranting overturning the trial court’s alimony order. Of note, the decision does not mention any assertion by the husband of an inability to pay the amount that was ordered.
Practice Tips
De Felipe should caution practitioners to approach every case that involves unvested equity compensation as a fresh fact-finding mission. Practitioners should examine why each award of compensation was made, including whether it was for prior services rendered or future work yet to be performed. One should also examine what circumstances led to a party’s eligibility for participation in the equity compensation program and the degree to which post-divorce employment affects the value of the unvested asset.
With respect to the alimony component of the decision, De Felipe should function as a cautionary tale to practitioners to closely review the opposing party’s financial statements that are part of the evidentiary record and to examine thoroughly all financial statements prior to a trial ending. Good advocacy may require objecting to the filing of an updated financial statement by an opposing party after their testimony has concluded or requesting to reexamine the opposing party if the submission of the updated financial statement after the conclusion of that party’s examination is allowed. Second appellate bites at the credibility apple are few and far between.
Lindsay V. Mason is a partner at Lee & Rivers LLP, where she concentrates on all aspects of family law. Prior to entering private practice in 2005, she served as a law clerk to the Justices of the Probate & Family Court.
