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TANYA J. DEMASI v. ROCCO J. DEMASI (08/10/87)

filed: August 10, 1987.

TANYA J. DEMASI,
v.
ROCCO J. DEMASI, APPELLANT. ROCCO J. DEMASI, APPELLANT, V. TANYA J. DEMASI (TWO CASES). ROCCO J. DEMASI, V. TANYA J. DEMASI, APPELLANT



Appeal from the Order Entered on July 9, 1985, in the Court of Common Pleas of York County, Civil Division, at No. 1401 S.A. 1982. Appeal from the Judgment Entered on September 5, 1985, in the Court of Common Pleas of York County, Civil Division, at No. 82-S-3712. Appeal from the Order Entered on September 5, 1985, in the Court of Common Pleas of York County, Civil Division, at No. 82-S-3712. Appeal from the Order Entered on March 4, 1986, in the Court of Common Pleas of York County, Civil Division, at No. 82-S-3712.

COUNSEL

Kenneth J. Sparler, York, for Rocco DeMasi.

Carolyn Lasky, York, for Tanya DeMasi.

Cirillo, President Judge, and Tamilia and Hester, JJ.

Author: Hester

[ 366 Pa. Super. Page 26]

These are four consolidated appeals: three filed by Rocco J. DeMasi, and one filed by Tanya J. DeMasi. As both parties are appellant and appellee, we shall refer to Rocco J. DeMasi as "husband" and to Tanya J. DeMasi as "wife." The orders under review concern child support, spousal support, alimony pendente lite, equitable distribution of marital property, counsel fees and litigation expenses.*fn1

[ 366 Pa. Super. Page 27]

Husband and wife were married on November 25, 1967. Two children were born of their marriage: Vincent M. DeMasi, born December 14, 1970, and John M. DeMasi, born November 23, 1974.

Husband is a medical doctor who graduated from Temple Medical School in 1969. Following an internship and residency, he earned board certification in internal medicine in 1972. He is a 50% shareholder in Associated Internists, Inc., where he primarily practices rheumatology. The owner of the remaining shares is his practicing colleague, William Lampe, M.D.

Wife is a registered nurse and worked in that capacity from 1967 to 1970. From 1970 to 1982, she raised the parties' children and served as a full-time homemaker. She returned to work as a registered nurse in 1982 when the parties separated.

Husband and wife separated on September 10, 1982, and wife filed a support complaint on September 17, 1982. On September 28, 1982, husband filed a complaint in divorce to which wife responded with an answer and claims for alimony pendente lite, counsel fees, costs, alimony and equitable distribution.

Following numerous and lengthy hearings, the trial court, on July 9, 1985, ordered husband to pay wife $130.00 per week as alimony pendente lite and $264.00 per week as support for sons Vincent and John. Vincent moved in with his father on October 26, 1984, and child support was reduced to $130.00 per week as of that date. Husband appealed from the July 9, 1985 order for alimony pendente lite and child support. The parties were divorced on August 6, 1984, while alimony and equitable distribution claims were pending.

On September 4, 1985, the court entered an order disposing of the remaining claims. Husband was awarded his

[ 366 Pa. Super. Page 28]

    entire interest in Associated Internists, Inc. Wife was awarded husband's entire pension interest, the net equity in the marital residence, all household goods in the marital residence, the personal property in her possession, an automobile, a private life insurance policy, alimony of $7,500.00, partial payment of counsel fees and full payment of expert fees and court costs. Both parties appealed from the order of September 4, 1985.

Finally, on March 4, 1986, after appeals were filed from the two orders outlined above, the trial court denied husband's petition to reduce or to terminate alimony pendente lite on grounds that wife had remarried. Husband appealed from the March 4 order.

Husband raises eight arguments in his appeals; wife raises three arguments in her appeal. Husband argues that 1) the trial court entered its order for spousal support, child support and alimony pendente lite without giving him the opportunity to testify concerning his income and earning capacity; 2) the trial court failed to consider the needs of the children and financial abilities of husband and wife in establishing support; 3) the trial court failed to consider wife's income and earning capacity in establishing support; 4) the trial court erred in viewing husband's business perquisites as income; 5) the trial court erred in ordering husband to pay mortgage installments and other expenses on the marital residence after wife moved from the premises; 6) the trial court erred by including good will in the value of husband's medical practice; 7) the trial court erred in continuing alimony pendente lite without considering wife's income, earning capacity and remarriage; and 8) the trial court erred in awarding spousal support and alimony pendente lite in excess of one-third of husband's income.

Wife argues in her cross appeal that 1) the trial court erred in not finding $19,800.00 in medical insurance proceeds to be marital property; 2) the trial court erred in valuing husband's pension interest at $26,960.00; 3) the trial court erred in holding that it lacked jurisdiction to distribute certificates of deposit which wife owned jointly

[ 366 Pa. Super. Page 29]

    with her children; and 4) wife remained entitled to lump sum alimony of $7,500.00 despite her remarriage.

HUSBAND'S APPEAL

Support and Alimony Pendente Lite

First, husband complains that during the hearing on child support, spousal support and alimony pendente lite, he was not permitted to testify concerning his income and earning capacity. According to husband, the support and alimony pendente lite orders were based on the master's report, not on the court's separate findings.

Pennsylvania Rule of Civil Procedure 1910.11 states that actions for support may begin by an office conference conducted by a hearing officer. Following a review of income tax returns, pay stubs and income and expense statements, the officer may make a recommendation. If an agreement is not reached at the conference, the court may enter an order on the recommendation. Thereafter, if the aggrieved party files a written demand, a hearing de novo shall be held before the court.

An office conference was conducted on December 2, 1982. A recommendation was made, an order was entered and both parties demanded a de novo hearing. The hearing was conducted on April 25, 1983. Wife was the only witness, and it is not clear whether husband elected to forgo testifying or was precluded from testifying.

The support and alimony pendente lite order under review is dated July 9, 1985. That order was not based solely on the hearing of April 25, 1983. Four hearings concerning reconsideration or modification of support and alimony pendente lite followed the April, 1983 hearing. Moreover, seven hearings concerning equitable distribution had been conducted by a master. During the subsequent hearings, husband had an opportunity to testify, call witnesses, offer documentary evidence and cross-examine witnesses. In fact, husband and other witnesses provided exhaustive information concerning his income and the income and expenses

[ 366 Pa. Super. Page 30]

    of his professional corporation. Among the corporate expenses examined were pension plan contributions, salaries, insurance premiums, travel and entertainment, seminars, automobiles, equipment, taxes, depreciation and general overhead expenses. This information sufficiently defined husband's income and earning capacity.

Husband incorrectly states that the court merely adopted the master's findings and report in establishing support and alimony pendente lite. Transcripts from the seven equitable distribution hearings were part of the record and available for the court's review. The court made its own findings after a review of testimony taken at the support hearings and the hearings before the master. The court did not adopt the master's findings and report. Moreover, the fact that husband had filed exceptions from the master's report, which were pending when the order for support and alimony pendente lite was entered, did not preclude the court from relying on the evidence elicited at the master's hearings.

Husband cites Groner v. Groner, 328 Pa. Super. 191, 476 A.2d 957 (1984), and Agosti v. Agosti, 319 Pa. Super. 426, 466 A.2d 233 (1983), to support his argument that he was entitled to present evidence of his income and earning capacity at the hearing de novo. In Agosti, supra, child support was ordered following a hearing on divorce, alimony, custody and equitable distribution. The court had not notified the parties that child support would be considered with these other claims; therefore, the parties did not present evidence relevant to child support. Accordingly, the Agosti court remanded for an evidentiary hearing on child support.

In Groner, supra, child support was determined without a hearing even though a de novo hearing had been requested by the father. We held that Pa.R.C.P. 1910.11(i) provided an absolute right to a de novo hearing on child support once properly requested. We also held that a trial court may not rely on the record of other claims in lieu of a hearing de novo on child support.

[ 366 Pa. Super. Page 31]

Here, husband requested a hearing de novo on child support and alimony pendente lite, and such a hearing was conducted on April 25, 1983. Husband was present at the hearing with counsel, but he complains that he was precluded from testifying. The record does not indicate that husband moved to provide testimony or that he was denied the opportunity. It appears that husband's strategy was not to testify.

Although the trial court relied upon evidence from hearings on claims other than child support, these hearings addressed income and earning capacity. In Agosti, child support issues were not addressed to any extent in the hearings. In Groner, the parties' son was mentally retarded, and there was no evidence regarding the extent of his retardation or the effect it had on the amount of support. The hearing on claims other than child support did not address the child's mental retardation; therefore, a de novo hearing was the last opportunity to do so. Here, all issues relevant to child support were addressed in numerous hearings. The court properly relied on evidence from those other hearings to determine child support because husband already had the opportunity to testify on his income and earning capacity at the de novo hearing on April 25, 1983.

Next, husband argues that the trial court failed to follow the guidelines enunciated in Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984), in determining child support. In Melzer, the supreme court summarized guidelines for calculating child support: 1) reasonable needs of the children which reflect the needs, custom and financial status of the parents; 2) respective abilities of the parents to provide support which are identified in part by reasonable living expenses; 3) use of a formula to calculate each parent's total support obligation; and 4) credit for support provided directly to the children.

Husband maintains that Melzer was not followed because the court allegedly based the support order on the master's equitable distribution report without conducting a comprehensive support hearing covering the Melzer guidelines.

[ 366 Pa. Super. Page 32]

As discussed above, the support and equitable distribution hearings were exhaustive; the needs of the children and the financial abilities of husband and wife were fully addressed. Wife testified concerning utilities, clothing, automobile maintenance, indebtedness, insurance, taxes, medical and dental treatment, food, entertainment, subscriptions and other typical and special living expenses for her and the children. Similarly, husband's expenses were fully covered. Finally, the parties' health, education, skills, actual and prospective incomes, and career plans and opportunities were addressed. This information was gleaned from the record. It was not, as husband maintains, taken from the master's report.

Third, husband argues that the trial court erred in not considering wife's income and earning capacity in determining child support and alimony pendente lite. According to husband, wife can earn in excess of $24,000.00 annually as a registered nurse.

Both parents are equally responsible for supporting their children, and the extent of their respective support obligations is determined by their capacity and ability. Fee v. Fee, 344 Pa. Super. 276, 496 A.2d 793 (1985). A parent's ability to pay support is determined primarily by financial resources and earning capacity. Hesidenz v. Carbin, 354 Pa. Super. 610, 512 A.2d 707 (1986); Commonwealth ex rel. Cochran v. Cochran, 339 Pa. Super. 602, 489 A.2d 804 (1985). The obligation of support, then, is measured more by earning capacity than by actual earnings. Hesidenz, supra.

Wife testified at length concerning her employment history and qualifications. She graduated from Temple University School of Nursing in 1967 as a registered nurse. From September, 1967, to October, 1970, she served several hospitals and one school district as a nurse. In October, 1970, she left the workforce in anticipation of Vincent's birth in December, 1970.

From October, 1970, to September, 1982, wife remained in the home to rear the parties' sons and to serve as full-time

[ 366 Pa. Super. Page 33]

    homemaker. Due to husband's substantial income, the parties had the opportunity to provide their children with fulltime parental care during the nurturing years. Also during this twelve-year period, wife entertained other physicians in her home and served the Women's Medical Auxiliary, Junior League, Young Women's Club and Parent Teacher Organization. Wife explained that she entertained house guests and joined these organizations to create and maintain good public relations for husband.

In 1983, her first full year back in the work force, wife earned $15,000.00. On May 1, 1984, she began employment as the director of nursing for a nursing home and rehabilitation center at $22,000.00 annually. Her director's position would continue provided she completed a bachelor's degree in behavioral science. As of June 1, 1984, wife had to complete thirty-five credits to earn this degree.

In Ritter v. Ritter, 359 Pa. Super. 12, 518 A.2d 319 (filed December 5, 1986, at 283 Philadelphia 1986), we iterated the scope of review in child support proceedings: a child support order will not be reversed unless the evidence was insufficient or the court abused its discretion in awarding that amount of support. An abuse of discretion is proven only by clear and convincing evidence. Koller v. Koller, 333 Pa. Super. 54, 481 A.2d 1218 (1984).

With this standard in mind, we find no abuse of discretion. Wife's earning capacity was thoroughly reviewed. It was established by three years of employment during the early years of marriage and by nearly three years of employment following the separation. She earned a customary salary, and her pursuit of a bachelor's degree indicated a willingness to earn maximum income. She cannot be penalized for having remained in the home for twelve years; the nurturing of young children may supersede the economic benefits of full-time employment. Hesidenz, supra; Butler v. Butler, 339 Pa. Super. 312, 488 A.2d 1141 (1985).

[ 366 Pa. Super. Page 34]

These same factors apply to a review of that portion of the order addressing alimony pendente lite. Earning capacity is relevant whether the proceedings concern child support or alimony pendente lite. Pacella v. Pacella, 342 Pa. Super. 178, 492 A.2d 707 (1985).

Fourth, husband argues that the trial court erred in adding the value of certain business perquisites to his actual income. In 1983, husband earned $45,189.00 in net income from his medical practice. The trial court added $15,000.00 to his net income because of the following perquisites provided by Associated Internists, Inc. on behalf of both shareholders: 1) contributions of $37,749.00 to a defined benefit pension plan; 2) $2,347.00 in prepaid rent; 3) $3,726.00 for automobile expenses; 4) $4,329.00 for travel and entertainment; 5) $5,903.00 for telephone expenses; 6) $4,032.00 for dues and subscriptions; and 7) $15,920.54 for premiums on health, disability, life, malpractice, liability, fire and accident insurance.

Husband maintains that only those perquisites which raised his standard of living can be attributed to income. He argues that all of these expenses either benefited the corporation solely or did not raise his standard of living.

When actual earnings do not reflect earning capacity, the trial court is free to investigate a variety of sources to determine a party's true wealth. In Pacella v. Pacella, supra, 342 Pa. Super. at 187, 492 A.2d at 712, we illustrated some factors in addition to actual earnings which determine income:

See e.g., Commonwealth ex rel. Maier v. Maier, 274 Pa. Super. 580, 418 A.2d 558 (1980) (where supporting spouse is sole stockholder of corporation and determines his own salary, court may pierce corporate veil and use corporate income as basis for determining earning capacity); Commonwealth v. Miller, 202 Pa. Super. 573, 198 A.2d 373 (1964) (where supporting spouse is self-employed, net income, as it appears on income tax forms, is not ...


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