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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MARY ANN FERRIS, NOW MARY ANN IN THE SUPERIOR COURT OF
PETRI, PENNSYLVANIA
Appellant
v.
RALPH A. FERRIS,
Appellee No. 514 WDA 2015
Appeal from the Order Entered March 2, 2015
In the Court of Common Pleas of Erie County
Civil Division at No(s): 12741-2004
BEFORE: BOWES, OLSON AND STRASSBURGER,* JJ.
MEMORANDUM BY OLSON, J.: FILED MARCH 1, 2016
Appellant, Mary Ann Ferris (now Mary Ann Petri), appeals from an
order entered on March 2, 2015 that denied her motion to declare and
impose a constructive trust on undisclosed assets of Ralph A. Ferris
(Husband). We vacate and remand.
The trial court summarized the facts of this case as follows:
The parties were married on June 18, 1994 and divorced on
December 30, 2004. The [d]ivorce [d]ecree incorporated a
[m]arriage [s]ettlement [a]greement dated December 17, 2004
which provided for, among other things, distribution of marital
property in the form of retirement accounts. Marriage
Settlement Agreement, Article VII, paragraph D, Retirement
Funds.
Before the parties married, and for a period of time during the
marriage, Husband worked at Van Air Systems, Inc. Motion
Hearing Transcript, 3/2/15, at 15. He was eligible for a pension
by virtue of that employment. Sometime in 2012, well after the
[parties’] divorce was final, Husband collected a lump sum
*Retired Senior Judge assigned to the Superior Court.
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distribution of the pension in the amount of $16,000.00. Motion
Hearing Transcript, 3/2/15, at 12.
It is undisputed the existence of the pension was not listed in the
[m]arital [p]roperty [s]ettlement [a]greement, nor did Husband
file an inventory or any other document with the [Erie C]ounty
[p]rothonotary listing the pension as an asset subject to
equitable distribution.
There was also evidence [Appellant] had a pension or a 401k
retirement plan while she worked during the marriage as a nurse
at St. Vincent’s Hospital. Motion Hearing Transcript, 3/2/15, at
9. This asset was not specifically identified in the [m]arital
[s]ettlement [a]greement. It is therefore unclear whether
references made to [Appellant’s] brokerage or mutual fund
accounts in the agreement refer in fact to the 401k plan from
the hospital.
In support of her request for imposition of a constructive trust,
[Appellant] testified at the motion hearing she was not aware of
Husband’s Van Air Systems pension until she learned of it from
her sister-in-law, Darlene Nelson, in a [telephone] conversation
sometime in November, 2012. Nelson did not testify at the
hearing so there is nothing in the record to show how she knew
[of Husband’s pension], what motivated Nelson to do so, or if
the conversation even took place.
[Appellant] further testified she hired an attorney once she []
learned of the existence of the asset. Her attorney filed a
motion on January 30, 2013 requesting relief similar to the relief
requested in the motion at issue in this case. Husband filed a
response to the 2013 motion.
Shortly after receiving the response, the attorney for
[Appellant], with [Appellant’s] consent, withdrew her motion
before a hearing could be could be held on the merits. Of note is
that around the same time, the parties were engaged in a
custody dispute over their three minor children. See [Trial
Court] Docket Entries dated 11/21/12 [through] 8/27/13.
Husband’s testimony contradicted [Appellant’s] position. He said
the parties’ finances were not kept separate and apart during the
marriage. He also said during the marriage he received yearly
statements concerning the pension. He did not hide the
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existence of the pension or hide the statements from
[Appellant]. He recalled the statements, when received in the
mail, were available to [Appellant] and he had no reason to hide
their existence “from her during the marriage.” Motion Hearing
Transcript, 3/2/15, at [15-16 and 18].
In response to the court’s inquiries concerning his knowledge of
[Appellant’s] pension or 401k[, Husband] did not know the
specifics of it and did not pay attention to the type of investment
it was. He did know, however, there were several times during
the marriage she cashed in part of it to buy “a piano and things
like that.” Motion Hearing Transcript, 3/2/15, at 18-19.
Finally, Husband testified about the existence of an oral
agreement made between he and [Appellant] that was not
included in the [m]arital [s]ettlement [a]greement:
[Husband]: She had something from one of her employers,
I had the Van Air, neither one did we have a specific value
on, so we just agreed we’d each keep our own and then
move on.
* * *
[Counsel]: And it’s your testimony that there was an
agreement reached. … That she would walk with whatever
retirement funds she had and you would walk with yours?
[Husband]: Right. That’s correct.
Motion Hearing Transcript, 3/2/15, at 14, 16.
Trial Court Opinion, 5/19/15, at 2-4.
At the conclusion of the hearing, the trial court entered an order
denying Appellant’s request for imposition of a constructive trust over
Husband’s pension assets. Appellant filed a timely notice of appeal on March
25, 2015 and, pursuant to court order, a concise statement of errors
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complained of on appeal followed on April 16, 2015. See Pa.R.A.P. 1925(b).
The trial court issued its Rule 1925(a) opinion on May 19, 2015.
Appellant raises two questions for our review:
Whether the trial court erred in failing to follow the mandates of
23 Pa.C.S.A. § 3505(d) when [Husband] admitted he failed to
disclose information required by general rule of the Supreme
Court, resulting in an asset with a fair market [value] of more
than $1,000.00 being omitted from the final distribution of
property[?]
Whether the trial court erred in failing to follow the mandatory
language of 23 Pa.C.S.A. § 3505(d) which directs a trial court to
“grant the petition [to impose a constructive trust] upon finding
a failure to disclose the assets as required by general rule of the
Supreme Court[?]” [Husband] admitted he did not list the
pension in pleadings, contrary to the Pennsylvania Rules of Civil
Procedure.
Appellant’s Brief at 4.
Appellant’s issues are closely related; hence, we shall address them in
a single discussion. Appellant’s position is that the trial court erred or
abused its discretion in denying Appellant’s request to impose a constructive
trust on Husband’s pension assets that he omitted from the parties’ marital
settlement agreement. She argues that the provisions of 23 Pa.C.S.A.
§ 3505(d) are mandatory and that Husband’s failure to disclose the
existence of his pension met all of the statutory criteria for the imposition of
a constructive trust. She also argues that the trial court erred in denying
her motion to the extent it weighed certain factors against the imposition of
a constructive trust. Those factors include the passage of time between the
entry of the parties’ divorce decree and Appellant’s request for a
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constructive trust, the trustworthiness of the source of Appellant’s
information concerning Husband’s pension, and the alleged existence of
pension assets owned by Appellant.
Appellant’s claims rest on her contention that Husband failed to
disclose his pension in the marital settlement agreement executed by the
parties on December 17, 2004, which the court incorporated into the parties’
divorce decree issued on December 30, 2004. See Divorce Decree,
12/30/04. The recital provision of the marital settlement agreement states,
among other things, that “the parties acknowledge that they have reached a
satisfactory agreement between themselves and have entered into this
Agreement freely, with full disclosure of their respective assets[.]” Marital
Settlement Agreement, 12/30/04, at 2. Article V of the agreement, titled
“Full Disclosure,” reads as follows:
Each party represents and warrants that he or she has made
full and complete disclosure in the text of this Agreement
of all the real and personal property of whatsoever kind and
nature and wheresoever situate belonging in any way to each of
them, of all debts and encumbrances incurred in any manner
whatsoever by each of them, of all sources and amounts of
income received or receivable by each of them, including pension
benefits, and of such other facts relating to the subject matter of
this Agreement.
Marital Settlement Agreement, 12/30/04, at 5 (emphasis in original).
The trial court specifically found that Husband failed to disclose his
pension in the marital settlement agreement. Trial Court Opinion, 5/19/15,
at 3. The trial court, however, concluded that that it was not required to
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impose a constructive trust because Appellant knew of Husband’s pension
when the parties entered into their agreement and because the parties
agreed to retain their respective retirement assets upon dissolution of their
marriage. Trial Court Opinion, 5/19/15, at 1. As additional support for
declining to impose a constructive trust, the trial court also referred to the
passage of time between the entry of the parties’ divorce decree and
Appellant’s request for a constructive trust, the unreliability of the source of
Appellant’s information concerning Husband’s pension, and the alleged
existence of undisclosed pension assets owned by Appellant.
In a prior case in which we considered both the duty of a party to
make disclosure under an equitable distribution agreement, as well as the
consequences of nondisclosure, we stated as follows:
When construing agreements involving clear and unambiguous
terms, this Court need only examine the writing itself to give
effect to the parties understanding. McMahon v. McMahon,
612 A.2d 1360 (1992) (en banc). The court must construe the
contract only as written and may not modify the plain meaning
of the words under the guise of interpretation. Trumpp v.
Trumpp, 505 A.2d 601 (Pa. Super. 1985). When the terms of a
written contract are clear, this Court will not re-write it or give it
a construction in conflict with the accepted and plain meaning of
the language used. Litwack v. Litwack, 433 A.2d 514 (Pa.
Super. 1981). Conversely, when the language is ambiguous and
the intention of the parties cannot be reasonably ascertained
from the language of the writing alone, the parol evidence rule
does not apply to the admission of oral testimony to show both
the intent of the parties and the circumstances attending the
execution of the contract. DeWitt v. Kaiser, 484 A.2d 121 (Pa.
Super. 1984).
Creeks v. Creeks, 619 A.2d 754, 756 (Pa. Super. 1993).
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The language of the marital settlement agreement, which the court
incorporated into the parties’ divorce decree, required each party to make
complete and accurate disclosure of all assets, including retirement benefits.
The trial court found that Husband breached the clear terms of this duty.
Because Husband’s disclosure duties are expressly established by the
parties’ marital settlement agreement, the trial court’s decision to resort to
parol agreements and circumstances was improper. Husband’s obligation to
disclose his assets was not conditioned upon Appellant’s knowledge of those
assets or the parties’ intended distribution scheme. In addition, the court
should not have looked to the passage of time between entry of the parties’
divorce decree and Appellant’s request for a constructive trust, the reliability
of the source of Appellant’s information concerning Husband’s pension, and
the alleged existence of undisclosed pension assets owned by Appellant. We
therefore conclude that Husband's failure to disclose his pension assets
violated the plain language of the parties’ marital settlement agreement.
Since Husband failed to disclose all of his financial assets, we turn now
to determine whether Appellant is entitled to raise a constructive trust over
Husband’s pension account. Appellant sought a constructive trust based on
section 3505 of the Divorce Code, which provides in relevant part:
§ 3505. Disposition of property to defeat obligations
(d) Constructive trusts for undisclosed assets.—If a party fails to
disclose information required by general rule of the Supreme
Court and in consequence thereof an asset or assets with a fair
market value of $1,000[.00] or more is omitted from the final
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distribution of property, the party aggrieved by the
nondisclosure may at any time petition the court granting the
award to declare the creation of a constructive trust as to all
undisclosed assets for the benefit of the parties and their minor
or dependent children, if any. The party in whose name the
assets are held shall be declared the constructive trustee unless
the court designates a different trustee, and the trust may
include any terms and conditions the court may determine. The
court shall grant the petition upon a finding of a failure to
disclose the assets as required by general rule of the Supreme
Court.
23 Pa.C.S. § 3505(d).
“This section mandates the imposition of a constructive trust when a
party fails to disclose financial assets, and that failure results in the omission
of an asset with a fair market value of [$1,000.00] or more from the
equitable distribution scheme.” Creeks, 619 A.2d at 757. We also held, in
construing this provision, that the circumstances that support imposition of a
constructive trust “do not include a requirement that the failure to disclose
an asset be a deliberate or intentional effort to avoid subjecting funds to the
equitable distribution process.” Id. In fact, “[t]he intent of the party who
fails to disclose the assets is of no moment.” Id.
It is undisputed that Husband failed to disclose his pension account in
the parties’ marital settlement agreement. He argues, however, that there
are three reasons we should affirm the trial court’s refusal to impose a
constructive trust. First, Husband asserts that the trial court did not abuse
its discretion in finding that Appellant lacked credibility in denying her
awareness of Husband’s pension assets and in denying an agreement
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between the parties to retain their respective retirement assets following
dissolution of the marriage. Second, Husband asserts that section 3505
does not apply since neither party filed an inventory or appraisement under
Pa.R.C.P. 1920.33. Lastly, Husband claims that while there is proof of the
value of his pension at the time of distribution in 2012, there is no proof of
its value at the time it was omitted from the parties’ marital settlement
agreement.
As we stated above, Husband’s duty to disclose his pension was clear
and was not conditioned upon Appellant’s lack of knowledge of his property
or the parties’ intended distribution scheme. These parol circumstances are
irrelevant to the issues at hand. Hence, this factor is not grounds for
affirming the trial court’s ruling.
We also conclude that the lack of an inventory and appraisement
under Pa.R.C.P. 1920.33 does not preclude application of section 3505 in
this case. Here, the parties’ divorce decree incorporated their marital
settlement agreement, which made no mention of Husband’s pension
account despite a clear disclosure requirement. In a prior case, we said that
“the parties’ failure to submit an [i]nventory and [a]ppraisement or include
a disclosure clause in the [marital settlement a]greement undermines the
appellee’s reliance upon 23 Pa.C.S.A. § 3505.” Hassick v. Hassick, 695
A.2d 851 (Pa. Super. 1997) (emphasis added). Hassick suggests that a
financial omission in either an inventory and appraisement or a marital
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settlement agreement triggers the remedy found in 23 Pa.C.S.A. § 3505.
Hence, Husband’s second argument in support of the trial court’s order fails.
Finally, Husband argues that Appellant failed to establish the value of
his pension at the time the parties executed their marital settlement
agreement to confirm that it met the $1,000.00 threshold required under
section 3505(d). We agree that the record does not clearly establish the
value of Husband’s pension at the time it was omitted from the parties’
marital settlement agreement. Accordingly, we vacate the trial court’s order
and remand for further proceedings to ascertain the value of Husband’s Van
Air Systems pension as of the date it was excluded from the parties’ marital
settlement agreement.1
Order vacated. Case remanded for further proceedings. Jurisdiction
relinquished.
Judge Bowes joins this Memorandum.
Judge Strassburger files a Concurring Statement.
____________________________________________
1
We allow Appellant this opportunity to develop the record as it pertains to
the value of Husband’s pension in December 2004 since section 3505 affords
a remedy for the omission of assets “at any time.”
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/1/2016
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