Cramer, S. v. Cramer, D.

J-S65030-19

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Stacy C. Cramer, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
Daniel A. Cramer : No. 1071 MDA 2019

Appeal from the Order Entered, May 30, 2019,
in the Court of Common Pleas of Lebanon County,
Domestic Relations at No(s): 2014-5-0491.

BEFORE: PANELLA, P.J., KUNSELMAN, J., and COLINS, J.*

MEMORANDUM BY KUNSELMAN, J.: FILED JANUARY 31, 2020

In this matter, Stacy Cramer (Mother) appeals the trial court order

setting forth the amount of child support owed to her by Daniel Cramer

(Father). Mother’s principal argument is that the court miscalculated the

award by deducting certain business expenses from Father’s income. After

careful review, we affirm.

The relevant factual and procedural history is as follows:

The parties are the divorced parents of three children. Father is

obligated to pay for the support of the two minor children, as the eldest child

has graduated high school and reached the age of majority. The impetus for

the instant appeal stemmed from a support review hearing held before a

domestic relations master in February 2019. Father is self-employed. He’s
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* Retired Senior Judge assigned to the Superior Court.
J-S65030-19

the sole owner and operator of a limited liability company (LLC) that services

lightly damaged vehicles, primarily working for companies that maintain used

car lots or fleets of trucks. At the time of the master’s hearing, Mother was

unemployed, having been laid off from a job as a bank teller.

The master determined that Father’s business grossed $114,276 in

2018, that the salary he paid himself for that year was $54,794 and that his

net business income was $30,419.47. The master further concluded that

Father’s monthly net income for purposes of child support was $4,788.93.

This figure included a deduction of $1,000 in alimony that Father pays per

month to Mother. The master recommended that Father pay Mother

$1,137.93 per month for the support of the two minor children.

Mother filed exceptions before the trial court. See Pa.R.C.P. 1910.12.

Her primary contention was that the master erroneously excluded Father’s

travel and meal expenses when calculating Father’s income. The trial court

granted this exception in part. While the trial court deemed some of these

expenses were legitimate, the court also ruled that some expenses were

inflated above Father’s actual out-of-pocket costs.

The court did not clarify which individual expenses were inflated, nor did

the court remand for the master to recalculate Father’s income. Instead, the

trial court explained that the net difference in the ultimate child support

obligation, when excluding versus including all of Father’s business expenses,

was approximately $250 per month. After reasoning that at least some the

deductions were proper, and that a remand to the master for exact

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determinations would not be worth the cost to the parties, the trial court

essentially split the difference and increased Father’s support obligation by

about $100 to $1,235 per month.

Mother timely filed this appeal, wherein she presents four issues:

1. Whether the trial court committed an error of law
and/or abused its discretion in failing to properly
calculate Father’s income for support purposes,
despite noting errors that were made by the [domestic
relations master], as it relates to deductions from
Father’s income for purposes of the [domestic
relations master’s] calculation of Father’s income for
support purposes[?]

2. Whether the trial court committed an error of law
and/or abused its discretion in failing to add back all
of Father’s deductions for meals/entertainment and
vehicle/mileage expense to his income for support
purposes, which should have resulted in a
recalculation of Father’s income for support
purposes[?]

3. Whether the trial court committed an error of law
and/or abused its discretion in failing to add any
amount to Father’s income for support purposes, as it
relates to his additional income he receives from
plowing snow, despite the acknowledgement from
Father that he receives this additional income, and the
fact that Father’s claimed monthly expenses exceeded
his claimed income by approximately $700 per
month[?]

4. Whether the trial court committed an error of law
and/or abused its discretion in failing to remand this
case to the [domestic relations master] in order to
determine the actual amount of profit that Father
received from his business in 2018, which would have
been reflected on his 2018 tax returns, as opposed to
using the amount set forth for profit on Father’s year-
end profit and loss statement, as the evidence of
record in this matter for 2017 demonstrated that the

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amount of profit set forth on Father’s 2017 tax return
was higher than the amount set forth on his year-end
profit and loss statement for 2017[?]

Mother’s Brief at 10 (some capitalization omitted).

While Mother presents several issues, many aspects are related. We

shall address the related claims together for ease of disposition. The first two

issues pertain to whether the master and trial court improperly calculated

Father’s income by allowing improper business expenses. The third claim

involves income Father earned from plowing snow, as well as the accuracy of

one of his exhibits. The fourth and final claim concerns whether the court

erred by not remanding the case to the master to consider Father’s 2018 tax

return, which was not finalized and thus not available at the time of the master

hearing.

Our well-settled standard of review in a child support case provides:

When evaluating a support order, this 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. In addition, we note that
the duty to support one's child is absolute, and the purpose
of child support is to promote the child's best interests.

Silver v. Pinskey, 981 A.2d 284, 291 (Pa.Super.2009) (en banc) (citation

omitted).

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In addressing child support issues, this court has stated the following:

Child and spousal support “shall be awarded pursuant to
statewide guidelines.” 23 Pa.C.S. § 4322(a). In determining
the ability of an obligor to provide support, the guidelines
“place primary emphasis on the net incomes and earning
capacities of the parties[.]” 23 Pa.C.S. § 4322(a). See
also Woskob v. Woskob, 843 A.2d 1247, 1251 (Pa. Super.
2004) (finding that “a person's support obligation is
determined primarily by the parties' actual financial
resources and their earning capacity”).

Mackay v. Mackay, 984 A.2d 529, 537 (Pa. Super. 2009), appeal

denied, 995 A.2d 354 (Pa. 2010).

In other words, when determining a husband-father's financial

obligation to his wife and children, “a court must make a thorough appraisal

of the husband-father's actual earnings and perquisites, and the true nature

and extent of his property and financial resources.” Labar v. Labar, 731 A.2d

1252, 1254 (Pa. 1999). A party cannot voluntarily reduce his earnings in an

attempt to circumvent a child support obligation. Grigoruk v. Grigoruk, 912

A.2d 311, 313 (Pa. Super. 2006).

As Father here is self-employed, the domestic relations master and trial

court were required to calculate Father’s net income from his business. When

determining income in a support matter, the Pennsylvania Rules of Civil

Procedures provide the following:

Rule 1910.16–2. Support Guidelines. Calculation of
Net Income

Generally, the amount of support to be awarded is based
upon the parties' monthly net income.

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(a) Monthly Gross Income. Monthly gross income is
ordinarily based upon at least a six-month average of all of
a party's income. The term “income” is defined by the
support law, 23 Pa.C.S.A. § 4302, and includes income from
any source. The statute lists many types of income
including, but not limited to:

(1) wages, salaries, bonuses, fees and commissions;

(2) net income from business or dealings in property[.]

Pa.R.C.P.1910.16–2(a)(1)-(2).

“[U]nreimbursed business expenses may be deducted in determining

monthly gross income if the expenses constitute bona fide expenses.” Berry

v. Berry, 898 A.2d 1100, 1107 (Pa.Super.2006), appeal denied, 918 A.2d

741 (Pa. 2007), and appeal denied 918 A.2d 741 (Pa. 2007).

Instantly, the master accepted Father’s evidence that he incurred

$14,276.22 in travel expenses, as he traveled throughout several counties in

the Commonwealth tending to his clients. Father stated that he calculated

this figure by using the standard IRS mileage guideline. The master further

accepted that Husband expended $4,074.23 in meals that Husband shared

with clients. These expenditures constituted annual figures.

Upon its review of Mother’s exceptions, the trial court agreed with

Mother, in part, as the court expressed in its Rule 1925(a) opinion:

With respect to Father’s meal and travel expenses, [the
court] disagreed with the [master’s] decision that the
entirety of Father’s claimed expenses should be deducted
from his revenue for purposes of determining income
available for support. In [its] court order, [the trial court]
agreed with the [master] that Father should be able to
legitimately deduct some meal and travel expenses because
said expenses were necessary due to the nature of Father’s

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business. However, [the court] looked at the numbers and
[it] concluded that Father’s business expense claims were in
fact inflated.

In [its] court order, [the trial court] expressly rejected the
option of remanding the case to the [master] for further
analysis of Father’s business expenses. [The court] looked
at what would occur if we were to adopt the totality of
Mother’s position, thereby including all of Father’s claimed
expenses as part of his income available for support. [The
trial court’s] calculations revealed that if we were to
eliminate all of Father’s claimed expenses, the net effect
would be an ongoing child support obligation of $1,385.
This was only $250 more than the [master] recommended.
Given our conclusion that some, but not all, of Father’s
claimed business expenses were legitimate, we quickly
came to the conclusion that a correct support amount would
rest somewhere between Mother’s request of $1,385 per
month and the [master’s] determination of $1,137.93 per
month.

Trial Court Opinion (T.C.O.), 7/11/2019, at 9.

We begin our discussion with Mother’s first two issues. On appeal,

Mother renews her argument that none of the business expenses should have

been deducted from Father’s income. See Mother’s Brief at 19. Mother is

partially correct.

That the Tax Code provides various opportunities for deductions and

expenses in order to offset income does not mean that such deductions apply

in the context of child support. Indeed, both this Court and our Supreme

Court have been very clear on that fact.

When determining a support obligor’s disposable income, it is the cash

flow that ought to be considered and not federally taxed income, which often

represents a fictional financial picture of a party’s available funds. See Labar,

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supra, 731 A.2d 1252, 1257 (Pa. 1999) (citing Commonwealth ex rel.

Hagerty v. Eyster, 429 A.2d 665, 669 (Pa. Super. 1981)); see also

Cunningham v. Cunningham, 548 A.2d 611, 613, alloc. denied, 559 A.2d

37 (Pa. 1989).

The issue of whether a deduction/loss is a valid reduction of support

income typically arises in cases like the instant matter, where the obligor is

self-employed or earns income through a closely-held corporation. We are

not without guidance:

We have held repeatedly that deductions or losses reflected
on corporate books or individual tax returns are irrelevant
to the calculation of available income unless they reflect an
actual reduction in available cash. For example, in Heisey
v. Heisey, 633 A.2d 211, 212 (Pa. Super. 1993), we
considered the calculation of the income of a sole owner of
an incorporated insurance business. We held that the trial
court had erred in deducting from income “a ‘loss’ shown on
the corporate federal income tax return that has no
relevance in determining actual cash available for
support.” Id. Accord McAuliffe v. McAuliffe, 613 A.2d 20,
22 (Pa. Super. 1992) (“Depreciation and depletion expenses
that are allowed under federal income tax law will not
automatically be deducted from gross income for the
purpose of determining support responsibilities.”); Flory v.
Flory, 527 A.2d 155, 157 (Pa. Super. 1987) (trial court
erred by calculating [h]usband’s income based on income
reported on tax return alone; “federal income tax law
permits deductions that may not reduce a parent's
disposable income”). We have held as well that all benefits
flowing from corporate ownership must be considered in
determining income available to calculate a support
obligation.

Fennell v. Fennell, 753 A.2d 866, 868–869 (Pa. Super. 2000).

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Put simply, a bona fide reduction in cash flow will constitute a valid

deduction in income for the purposes of child support calculation, but a mere

reduction of tax liability will not. Here, Father’s business expenses represent

both a legitimate reduction of cash flow and a mere reduction of tax liability.

To explain: Father acknowledged that his travel expense, totaling

$14,276.22, was based on the IRS-approved standard mileage rate deduction

for 2018 (54.5 cents per mile). While Father certainly incurred out-of-pocket

costs, the total figure did not necessarily reflect a total dollar-for-dollar

expense. Thus, some portion of this travel expense figure represented an

actual reduction in Father’s cash flow; but some other portion of this figure

represented a mere reduction of Father’s tax liability. The master was tasked

with the difficult job of deciphering the two. Therefore, the master erred by

excluding the entire travel expense from Father’s income.

On exceptions, the trial court caught this mistake, characterizing the

total expense as an “inflation” of the actual travel costs. The court explained:

Father’s claimed vehicle expense of $14,276 represents
approximately $280 per week. That amount is far more
than a small business owner would need to maintain one
vehicle for business use. Assuming Father’s truck gets 15
miles per gallon and gasoline costs an average of $3.00 per
gallon, Father could purchase enough gas to drive 1,400
miles each and every week. […] Moreover, if there were
expensive vehicle repairs that were needed during 2018, we
are sure that Father would have described the needed
repairs and provided documentation to corroborate the
amount expended. He did not. Instead, Father candidly
acknowledged that his vehicle expense as claimed was
based upon mileage allowance amounts permitted by the
Internal Revenue Service for tax purposes.

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T.C.O. at 14.

Although the court noted that the master included unallowable

expenses, the court did not determine the extent of the inflation, nor did the

court remand for the master to find out.

Regarding the meal expense, Father testified that the total figure

($4,074) only represents the meals where he entertained clients, but it was

unclear whether the expense covered the both his and the client’s meals or

just 50% of the meals’ cost. In other words, the record is unclear as to

whether Father calculated the meal expense by using an IRS deduction

guideline or whether they represented true out-of-pocket expenses spent only

on the clients’ meals.

In any event, the trial court determined that the total meal expense was

also inflated, surmising that even if Father expended one meal per business

day per year, the daily expense amounts to $16. Id. at 15. “Even if one

assumes Father expended that amount each and every day – and [the court]

finds that assumption to be highly unlikely – at least some of the funds

expended would have been for Father himself.”1 Id. But again, the trial court

did not specify the extent of the inflation, nor did the court remand for the

master to recalculate.

____________________________________________

1Father freely admitted that he did not take a client to lunch every day. See
N.T., 2/21/2019, at 30.

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In its Rule 1925(a) opinion, the trial court was forthright about why it

did not remand to determine which expenses were legitimate and which were

inflated:

Once [the court] determined that the parties were
essentially fighting over $250 per month, [the court] then
analyzed whether [it] should remand this case to the
[master] for another hearing to determine exactly how
much of Father’s claimed travel and meals expenses were
legitimate versus inflated. We did not do so for two reasons:

1. This case had been lingering for too long without a
final support order. For a multitude of reasons,
including the litigiousness of the parties and our
decision to grant leave for discovery to be conducted,
the support order recommended by the [master]
already had to be effective one year prior to the date
of [the] order. Orders retroactive by one year or more
are problematic because retroactive orders require
recalculation of support and that frequently results in
arrearages or credits that are difficult to administer
and can create cash flow problems for the parties.
Simply stated, [the court] wanted to avoid additional
delay that would be necessitated by a remand to the
[master].

2. The amount in controversy simply did not justify the
time, effort and expense of a remand hearing. [The
court does] not know the hourly rate of both attorneys
involved in this case, but we are aware of no Lebanon
County lawyers that charge less than $150 per hour.
Even using that conservative amount, the parties
would collectively pay $300 per hour for hearing
preparation and litigation. If counsel expended only
five hours each, that would equate to $1,500 in
counsel fees simply to argue about Father’s claimed
business expenses. Given that [the court] knew that
[it] would end up with a support amount separated by
less than $200 per month from the parties’ polarized
positions, we concluded that a remand would simply
not be cost effective.[FN]

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Footnote: [the court was] also very much aware
that this support case will be re-evaluated on
almost an annual basis given the fluctuation of
Father’s business income.

Having rejected remand as an option, we determined
viscerally that a little less than one-half of Father’s claimed
business expenses should be added back to Father’s income
for purposes of calculating his support obligation. With this
visceral conclusion having been rendered, we simply added
$100 per month to Father’s support obligation.

[The court] freely acknowledge[s] that [its] decision
represented an educated estimate of what Father should be
required to pay. [The court] also freely acknowledge[s] that
[its] imprecision is estimating Father’s legitimate business
expenses may be sub-optimal. However, [the court’s]
motives for employing an educated estimate instead of
precision were pure, [its] decision to estimate instead of
remand was a conscious decision, and [the court] stand[s]
by our decision.

T.C.O. at 16-17.

This Court appreciates the trial court’s honest account of its reasoning.

In reviewing whether a trial court abused its broad discretion, we have

explained that:

the term ‘discretion’ imports the exercise of judgment,
wisdom, and skill so as to reach a dispassionate conclusion
within the framework of the law, and is not exercised for the
purpose of giving effect to the will of the judge. Discretion
must be exercised on the foundation of reason, as opposed
to prejudice, personal motivations, caprice or arbitrary
actions.

See Commonwealth v. Goldman, 70 A.3d 874, 878-879 (Pa. Super.

2013) (quoting Commonwealth v. Widmer, 744 A.2d 745, 753 (Pa. 2000)).

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Here, we conclude that the trial court recognized the master’s mistake

and adjusted the support obligation by exercising appropriate judgment,

wisdom, and skill, all while staying within the framework of the law. Mother

does not disagree with the court’s arithmetic when it identified the $250 range

between the parties’ positions. From here, the court limited its room for error

by increasing Father’s obligation by another $100. Although the court

conceded that the increase was an educated estimate, we cannot say that the

calculation was arbitrary. Given the context, such a decision was still

supported by the record. Testimony revealed that Father relied on the IRS

deduction guideline, but that he also experienced a bona fide reduction of his

cash flow. At best, the court’s ultimate award was the exact and precise

figure. At worst, the court was approximately $100 off. The court’s decision

was not manifestly unreasonable.

After all, litigation on this matter had become protracted. The court had

already resorted to a three-tier support obligation, presumably to account for

retroactivity and Mother’s varying income as a bank teller, her severance

income, and her unemployment compensation. The case was also before the

master as a review of a prior support order; the parties have engaged in

regular support litigation, several times a year, since 2014. Because Father

had lost clients from 2017 to 2018, his gross revenue dropped by over

$20,000. This is to say that the court reasonably assumed such fluctuations

will cause the parties’ regular support litigation to continue.

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Of course, the trial court’s second enumerated reason behind its decision

leaves us some pause; a judge cannot lock the courthouse doors merely

because he or she deems the available relief to be not worth the litigants’

expense. But even on this point, we understand the court’s motivation was

not to chastise the litigants but remind them that the purpose of child support

was to promote the children’s best interests. See Silver, supra, 981 A.2d at

291; see also T.C.O. at 19.

We turn now to Mother’s third issue, where her contentions are twofold.

First, she claims that the court erred by not considering the proceeds Father

received from plowing snow. Father testified that he plowed snow several

times during the winter months in 2018. The total gross revenue from this

opportunity was $350, or $29.17 per month, before expenses or taxes. While

the trial court erred by not including this income in its support calculations,

we agree with Father that the effective impact this amount would have on his

support obligation would be de minimis. Thus, we conclude that the error is

harmless.

Second, Mother claims that Father’s income and expense statement

(entered as Exhibit 10) indicated that Father’s expenses exceed his net income

by approximately $700. Mother concludes that the exhibit constitutes

evidence that Father understated his income. See Mother’s Brief at 22.

Father responds by reminding this Court that a child support obligation is

determined not by expenditures, but by income. See Father’s Brief at 8; see

also Pa.R.C.P. 1910.16-2. We understand Mother’s point, but ultimately what

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she presents to us is a credibility argument: that Father must have been able

to afford these expenditures and thus evidence of his income was not

believable.

In determining a child support obligation, the trier of fact is entitled to

weigh the evidence presented and assess its credibility. McClain v. McClain,

872 A.2d 856, 862 n.1 (Pa. Super. 2005). Here, the support master found

credible Father’s evidence and testimony. As a reviewing court, we may not

disturb these credibility determinations. Doherty v. Doherty, 859 A.2d 811,

812 (Pa. Super. 2004).

We turn now to Mother’s fourth and final contention. She claims that

the court should have considered Father’s 2018 income tax return when

calculating his income. At the time of the master’s hearing in February 2019,

Father’s 2018 tax return was not yet completed and thus not a part of the

record. Instead, Father provided, among other evidence, a 2018 profit and

loss statement. Mother argues similar profit and loss statement from 2017

showed less income than what Father ultimately reported on his 2017 tax

return. The inference is that Father’s 2018 profit and loss statement was

similarly inaccurate, and that Father’s 2018 tax return would show more

income. Mother concludes that the court should have remanded to the master

to allow for consideration of the 2018 tax return.

We disagree. As Father points out, Mother did not request to keep the

record open to allow for the completion of the return. More importantly, even

if the master had the tax return, the issue is again one of weight and

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credibility. As stated above, those matters rest within the province of the trier

of fact. See McClain, supra; and see Doherty, supra.

For the aforementioned reasons, we conclude that the trial court’s child

support award did not constitute an abuse of discretion.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 01/31/2020

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