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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
D.M.P., : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. : No. 668 EDA 2018
:
B.R.B. :
Appeal from the Order, January 31, 2018,
in the Court of Common Pleas of Bucks County
Domestic Relations Division at No. 2015DR00538,
pacses No. 014115221
BEFORE: LAZARUS, J., McLAUGHLIN, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED NOVEMBER 20, 2018
D.M.P. (“Mother”) appeals from the January 31, 2018 order entered in
the Court of Common Pleas of Bucks County that determined the child
support obligations of B.R.B. (“Father”) for the support of the parties’ minor
child, B.B., born out of wedlock in October 2014 (“Child”). We affirm.
The trial court set forth the following:
On March 27, 2015, Mother filed a Complaint for
Support. A hearing to address this matter was
scheduled and continued numerous times. The
support hearing was ultimately held on December 4,
2017 and December 5, 2017. We rendered our
decision on December 13, 2017 and entered an
Order of the Court on that same day. On
December 29, 2017, we amended that Order. Then,
in an abundance of caution, we subsequently created
a Final Order, dated January 31, 2018 that clarified
what was intended in the two prior Orders. The Final
Order included the following, verbatim:
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The Interim Order dated 05/06/15 is
rescinded. Effective 3/27/15,
Defendant/Father is to pay the sum of
$7,020.00 per month for the support of
one child. Arrears are to be liquidated at
$1,404.00 per month. Effective 11/2/15,
[Father] is to pay the sum of $7,408.00
per month for the support of one child.
Arrears are to be liquidated at $1,482
per month. Effective 04/01/16, [Father]
is to pay the sum of $6,709.00 per
month for the support of one child.
Arrears are to be liquidated at $1,342.00
per month. Health care coverage to be
provided by [Father]. Unreimbursed
medical expenses that exceed $250.00
annually per child are to be paid 100%
by [Father]. Order considers health
insurance coverage by the parties for the
child and also considers the parties[’]
overnights. Court further orders that
[Father] is to cover 100% of all special
needs expenses for the child. Court finds
[Father’s] income to be $75,000.00 net
per month and [Mother’s] income to be
$4,134.00 gross per month from 3/7/15
through 3/31/16 and then “zero” from
4/1/16 to present. [Father] is
responsible for a payment of a one-time
Judicial Computer System Fee of $35.50.
On January 11, 2018, Mother appealed the
December 13, 2017 and December 29, 2017 Orders
of the Court. Those appeals, which were docketed at
279 and 280 EDA 2018 have since been
discontinued.
The original Order of December 13, 2017 and the
Amended Order of December 29, 2017 were
subsequently clarified by a Final Order dated
January 31, 2018 and produced above verbatim.
Mother filed an appeal of that Order on March 19,
2018 and that appeal is docketed at 668 EDA 2018.
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Trial court opinion, 5/8/18 at 1-2.
The record reflects that the trial court ordered Mother to file a concise
statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(a).
Mother timely complied. The trial court then filed its Rule 1925(a) opinion.
Mother raises the following issues for our review:
A. Whether the Trial Court abused its discretion
when it failed to include all retained earnings of
[Father’s two business entities, X Corporation
and Y Management] in Father’s income when
clear findings were made on the record that
Father has a 100% controlling interest in
[Father’s two business entities], that the
retained earnings were actually available to
Father, that the retained earnings were
excessive, and that Father failed to meet his
burden of proof that such retention was
necessary to maintain or preserve his
business?
B. Whether the Trial Court abused its discretion
by failing to quantify what amount of the
retained earnings in [Father’s two business
entities] were included in Father’s income for
purposes of calculating Father’s child support
obligation?
C. Whether the Trial Court abused its discretion in
failing to consider or deviate the support Order
upward when Father only has custody of the
minor child 21 percent of the time, when the
Support Guidelines Pa.R.C.P. 1910.16.1,
presumes that children spend 30 percent of the
time with the obligor?
D. Whether the Trial Court abused its discretion
by failing to specify, in writing or on the
record, the guideline amount of support, and
the reasons for, and finding of fact justifying,
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the amount of the deviation pursuant to
Pa.R.C.P. 1910.16-5(a)?
Mother’s brief at 6.
When reviewing a child support order, we employ the following
standard of review:
[T]his Court may only reverse the trial court’s
determination where the order cannot be sustained
on any valid ground. We will not interfere with the
broad discretion afforded the trial court absent an
abuse of the discretion or insufficient evidence to
sustain the support order. An abuse of discretion is
not merely an error of judgment; if, in reaching a
conclusion, the court overrides or misapplies the law,
or the judgment exercised is shown by the record to
be either manifestly unreasonable or the product of
partiality, prejudice, bias or ill will, discretion has
been abused.
W.A.M. v. S.P.C., 95 A.3d 349, 352 (Pa.Super. 2014) (citations omitted). A
finding of an abuse of discretion must rest upon a showing by clear and
convincing evidence, and the trial court will be upheld on any valid ground.
Baehr v. Baehr, 889 A.2d 1240, 1243 (Pa.Super. 2005). Additionally, the
fact-finder, having heard the witnesses, is entitled to weigh the evidence and
assess its credibility. Id. at 1245. Moreover, support orders “must be fair,
non-confiscatory and attendant to the circumstances of the parties.”
Fennell v. Fennell, 753 A.2d 866, 868 (Pa.Super. 2000) (citation omitted).
Mother first complains that the trial court erred when it failed to
include all retained earnings of Father’s two business entities to determine
Father’s monthly net income after it found that Father controls 100 percent
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of those two business entities; that the retained earnings were actually
available to Father; that the retained earnings were excessive; and that
Father failed to demonstrate that retention of the earnings was necessary to
maintain or preserve his businesses.
The Domestic Relations Code defines “income” as follows.
“Income.” Includes compensation for services,
including, but not limited to, wages, salaries,
bonuses, fees, compensation in kind, commissions
and similar items; income derived from business;
gains derived from dealings in property; interest;
rents; royalties; dividends; annuities; income from
life insurance and endowment contracts; all forms of
retirement; pensions; income from discharge of
indebtedness; distributive share of partnership gross
income; income in respect of a decedent; income
from an interest in an estate or trust; military
retirement benefits; railroad employment retirement
benefits; social security benefits; temporary and
permanent disability benefits; workers’
compensation; unemployment compensation; other
entitlements to money or lump sum awards, without
regard to source, including lottery winnings; income
tax refunds; insurance compensation or settlements;
awards or verdicts; and any form of payment due to
and collectible by an individual regardless of source.
23 Pa.C.S.A. § 4302.
With respect to business income, this court has held that “[w]hen a
payor spouse owns his own business, the calculation of income for child
support purposes must reflect the actual available financial resources of the
payor spouse.” Fitzgerald v. Kempf, 805 A.2d 529, 532 (Pa.Super. 2002)
(internal quotation marks and citation omitted). Therefore, all benefits
flowing from business ownership must be considered in determining income
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available for a support obligation. See Fennell, 753 A.2d at 868. A
business owner “cannot avoid a support obligation by sheltering income that
should be available for support by manipulating . . . distribution amounts.”
Id. “By the same token, however, [this court] cannot attribute as income
funds not actually received by the party.” Id.
Here, the trial court held a two-day hearing to determine, among other
things, Father’s monthly available net income. Mother argued that the
average of Father’s monthly available net income for child support for the
years 2015, 2016, and 2017 was $126,833. Father argued that his monthly
available net income for child support for 2015 was $32,560 and $25,862 for
2016 and 2017. (See trial court opinion, 5/8/18 at 6.) At the hearing, the
trial court heard the testimony of Mother’s expert, Father’s expert, and
Mother. Additionally, the trial court received into evidence 44 of Mother’s
exhibits that largely consisted of Father’s personal and corporate tax
returns, bank statements, and cancelled checks, and totaled nearly
2,000 pages. “After reviewing all the relevant evidence in this case,” which
took “several days,” the trial court found that
Father had a cash income of at least one thousand
dollars a week, as no testimony or evidence was
presented to contradict the evidence presented by
Mother about Father’s cash income being somewhere
between $1,300 and $13,000 a month.
Further, we found that because no evidence was
presented regarding the cost of alleged planned
improvements that [X] Corporation was going to
have to move their business to another location,
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Father was in large part retaining earnings in his
wholly owned corporations not completely for
business purposes but instead in an attempt to
reduce his income for the purpose of also reducing
his support obligations.
Similarly, we found that the amount of retained
earnings was excessive. In addition, even though
we believed that due to the expansion of the
business, some increase in retained earnings was
justified, the amount of earnings that have been
retained in the corporation since the child was born
and the support issue was raised was excessive and
was being done at least in part to defer income to a
later point when Father would no longer be obligated
to pay child support. We also recognized that some
portion of the retained earnings were in fact income
that was recognized as income for tax purposes since
it was accounts receivable but in fact was not actual
money received by the company and therefore was
not actually available to be paid to Father, even if
Father wanted it paid to him.
Additionally, although we determined that a number
of items were double counted by Mother’s expert
(Sean O’Reilly) with regard to Father’s income, we
ultimately found that Father had a substantial
income capability and that he was choosing not to
exercise his ability to earn all of the income that he
has the potential to earn as he has one hundred
percent controlling interest in both of his
corporations. We credited the testimony of Father’s
expert (Gregory Cowhey) over that of Mother’s
expert in this regard to a large extent. Considering
everything we found that Father has a net income for
child support of $75,000 a month, and the Support
Order was entered based on that determination.
Trial court opinion, 5/8/18 at 4-5 (citation to notes of testimony omitted).
Mother complains that because the trial court found, as a matter of
fact, that Father controlled 100 percent of his two business entities, that
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retained earnings of those businesses were excessive, that the retained
earnings were available, and that Father failed to meet his burden of proving
that retention of those earnings was necessary to retain and preserve his
businesses, that the trial court was required, as a matter of law, to include
all of the retained business earnings in Father’s monthly available net
income. Mother cites no case law to support this contention. Additionally,
Mother ignores the trial court’s factual findings that justified retention of
some business earnings; specifically, the trial court concluded that Father
needed to retain capital to expand his businesses; Father’s retention of a
portion of the earnings was income for tax purposes, but not received as
cash; and Mother’s expert double counted a number of items when he
calculated Father’s net available income. (Trial court opinion, 5/8/18 at
4-5.) We find no abuse of discretion.
Mother next complains that the trial court erred by not quantifying the
amount of retained earnings it included in determining Father’s net available
income. Although we note that Mother cites no case law to support her
seeming position that the trial court was required to assign a precise number
to the retained earnings it included, the trial court explained that:
[Mother’s] complaint essentially is that we did not
calculate the support amount with mathematical
precision and we did not include all of the retained
earnings as income available for support. In this
case we did not feel that a precise mathematical
calculation was possible. Contrary to what Mother
advocated, Father presented evidence that justified
some increase in retained earnings for his businesses
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based on its increasing size. In particular we found
that the increasing size and the nature of his
business required additional capital for additional
equipment and to be able to get the necessary
performance bonds that were contractually required
by the nature of the business. Unfortunately, the
nature of equipment financing and the bonding
business is neither static nor governed by precise
formulas. As such the evidence convinced us that an
increased level of retained earnings was required by
his growing business. We therefore refused to
blindly determine that all retained earnings
constituted income available for support.
Mother advocated that if we did so Father would
have net income available for support of
$126,833.00 on average for the years in
questions [sic]. Father advocated that his net
income available for support was only $32,560.00 for
2015 and $25,862.00 for 2016 and 2017. As
indicated, Mother’s numbers were inaccurate both
because of the retained earnings issue and because
she double counted a number of items.
The fact that we could not precisely calculate exactly
what [Father’s] net monthly income for support did
not mean that we could not enter a support order.
Trial court opinion, 5/8/18 at 5-6.
We find no abuse of discretion.
Mother next complains that the trial court erred by failing to consider
or deviate the child support order upward when Father has custody of Child
21 percent of the time and the support guidelines presume that children
spend 30 percent of the time with the obligor. In support, Mother cites to
the following portion of a paragraph in the 2010 explanatory comment
contained in Pa.R.Civ.P. 1910.16-4:
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The basic support schedule incorporates an
assumption that the children spend 30 percent of the
time with the obligor and that the obligor makes
direct expenditures on their behalf during that time.
Variable expenditures, such as food and
entertainment, that fluctuate based upon parenting
time, were adjusted in the schedule to build in the
assumption of 30 percent parenting time. . . [.]
The calculation in Rule 1910.16-4(c) reduces an
obligor’s support obligation further if the obligor
spends significantly more time with the children. The
obligor will receive an additional 10 percent
reduction in the amount of support owed at
40 percent parenting time, increasing incrementally
to a 20 percent reduction at 50 percent parenting
time. . . [.]
Mother’s brief at 28, citing Pa.R.Civ.P. 1910.16-4, 2010 explanatory
comment (ellipses in Mother’s brief).
Mother also cites to the following portion of the explanatory comment
contained in Pa.R.Civ.P. 1910.16-1:
upward deviation should be considered in cases in
which the obligor has little or no contact with the
children. However, upward deviation may not be
appropriate where an obligor has infrequent
overnight contact with the child, but provides meals
and entertainment during daytime contact.
Mother’s brief at 29 citing Pa.R.Civ.P. 1910.16.4 (emphasis in Mother’s
brief).
As noted in the comment to Pa.R.Civ.P. 1910.16-4, “[u]pward
deviation should be considered in cases in which the obligor has little or
no contact” with the child. Pa.R.Civ.P. 1910.16-45, 2010 explanatory
comment (emphasis added).
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Here, at the child support hearing, the trial court stated that “it is
appropriate in this case to deviate from the Child Support Guidelines on a
couple of issues” and further acknowledged that it “collectively looked at the
factors for deviation and made . . . what deviation was necessary and
appropriate based on all of the circumstances.” (Notes of testimony,
12/5/17 at 7-8.) Therefore, the record supports the conclusion that the trial
court considered all deviation factors, including the amount of time Child
spends with Father. Consequently, the record belies Mother’s claim and it
necessarily fails.
Mother finally complains that the trial court “erred by failing to specify,
in writing or on the record, the guideline amount of support, and the reasons
for, and finding of fact justifying, the amount of the deviation pursuant to
Pa.R.C.P. 1910.16-5(a).” (Mother’s brief at 30.) In so arguing, Mother
ignores that part of Rule 1910.16-5 that requires the guideline amount and
reasons for deviation to be specified in writing or on the record only “if the
amount of support deviates from the amount of support determined by the
guidelines.” Pa.R.Civ.P. 1910.1605(a). Here, the amount of support
awarded did not deviate from the amount of support determined by the
guidelines. In fact, Mother makes no claim that it did. Therefore,
Rule 1910.16-5(a) did not require the trial court to place its reasons for
deviation in writing or on the record. Consequently, Mother’s claim fails.
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Nevertheless, we note that the trial court did set forth its deviations on
the record at the child support hearing, as well as in its Rule 1925(a)
opinion, which assigned Mother an income of zero and required Father to
provide Child’s health insurance coverage, pay 100 percent of any excess
medical costs, and pay 100 percent of Child’s special needs expenses.
(Notes of testimony, 12/5/17 at 7-9; trial court opinion, 5/8/18 at 5.)
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/20/18
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