CLIFFORD A. CORDIAL
CHRISTINE M. OLSON, Appellant CLIFFORD A. CORDIAL, Appellant
CHRISTINE M. OLSON
Appeal from the Order Dated June 6, 2012, in the Court of Common Pleas of Allegheny County Family Court Division at No. FD 05-004737-006
Appeal from the Order Entered July 20, 2012, in the Court of Common Pleas of Allegheny County Family Court Division at No. FD-05-004737-006
BEFORE: FORD ELLIOTT, P.J.E., OTT AND MUSMANNO, JJ.
FORD ELLIOTT, P.J.E.
In this divorce matter, the parties have filed cross-appeals from orders addressing their economic claims and divorcing them.
We adopt the facts and procedural history as summarized by the trial court:
The parties were married on October 2, 1982 after living together for two years. It was the second marriage for both parties. No children were born to either party from either marriage. The parties separated on June 18, 2005 when Husband moved out of the marital residence to reside with Cindy Provencher ("Provencher"), a woman with whom he had been having a relationship since March of 2001. At time of trial, both parties were 56. During the marriage, the parties enjoyed a very high standard of living. Wife worked in the insurance business prior to the marriage, but was not gainfully employed outside of the home for the majority of the marriage. She worked briefly at a restaurant which the parties owned. The last year of the marriage, Wife opened a high end clothing business which closed in 2006. She has since obtained her real estate license.
Husband graduated from Transylvania University in 1974 with a bachelor of arts in theater. After a few years working in theater, he began a career in the exhibits industry designing and manufacturing trade show and corporate exhibits, booths and displays. In 1984, he went to work at Creative Productions, a family owned business, as an account executive/salesman. Husband enjoyed a high income, earning an average of $350, 000 per year and as much as $552, 342 in one year. Creative Productions was sold in 2000 to E/G. Husband received $1, 000, 000 and a three-year written employment contract which contained restrictive covenants. The parties used the $1, 000, 000 to fund their Individual Retirement Accounts and a Merrill Lynch CMA joint investment account.
Husband's job with E/G was in Chicago. He returned to Pittsburgh on weekends. The job did not go well and he predicted that his employment contract would not be extended at the end of the contractual period. In anticipation of that, Husband gave E/G notice that he was not interested in renewing the contract. In 2003, he formed Calan Communications, Inc. ("Calan") to develop and market specialized software programs to the exhibits industry. To start the company, Husband invested $708, 000, Provencher invested $78, 000, and his former partner at Creative Productions, Cliff Helberg (Helberg) invested $1, 200, 000. All three were equal shareholders.
E/G initiated litigation against Husband and Calan for alleged breach of Husband's employment contract. Between March 31, 2003 and December 31, 2005, Husband and Wife loaned Calan $845, 723 to cover legal fees, operating costs and for software development. The litigation caused Provencher to withdraw from the company in 2004, leaving Husband and Helberg as equal shareholders. Provencher accepted a job which paid her $150, 000 per year. In 2007, Husband and Helberg adjusted their respective shareholder loan positions to avoid paying 7.7% interest by reclassifying a portion of their loan as Additional Paid in Capital (APIC). Husband reclassified $470, 000 of the money the parties loaned to Calan as APIC. This reclassification occurred after the parties separated and without Wife's knowledge or consent. The reclassification left only $375, 623 of the $845, 723 loaned by the parties to Calan as actual, recorded shareholder loans, virtually wiping out Wife's interest in the rest. The value of the shareholder loans is a separate marital asset from Husband's 50% stock in the company.
When Husband left E/G and started Calan in 2003, the balance in the Merrill Lynch CMA account was approximately $1.6 million. The Merrill Lynch CMA account was used for the parties' support and to provide loans and capital contributions to Calan. When Husband left Wife in June of 2005, the balance in the Merrill Lynch CMA account was $7, 591. Of that, $6, 475 was used to pay marital debt. The Master found Wife credible when she testified that Husband deceived her into thinking the marriage was viable while he depleted this account. At separation, the IRA account was worth $705, 303. Since separation, $542, 000 has been taken out of the account.
The first Report and Recommendation dated June 18, 2010 contained a detailed discussion of each marital asset. The Master listed the marital assets subject to distribution and placed a value on all but the Merrill Lynch IRAs and Calan Communications. The proposed distribution award was for the parties to keep the assets currently in their possession with Husband making up for the shortfall in Wife's share with additional transfers of property to Wife. Wife was awarded 100% of the remaining IRA accounts by Qualified Domestic Relations Order. She was awarded the next $39, 119.50 in shareholder loan interest payments and 80% of all subsequent interest payments until she is repaid $138, 000, the agreed portion of the loan balance. Husband was to execute a promissory note in the amount of $93, 640 payable over eight years at 5% interest and pay Wife $3000 for certain artwork. The Master found that Calan was incapable of valuation, but awarded all of Husband's interest in Calan to him. The result was an award in Wife's favor of approximately 60% of the marital estate.
In addition to equitable distribution, Wife raised claims for alimony pendente lite ("APL"), alimony, counsel fees, costs and expenses. Both parties presented expert testimony regarding an earning capacity for Husband. Husband's expert opined that a fair earning capacity was between $30, 673 and $45, 010. Husband's expert was not aware that Husband testified at his deposition that his earning capacity was between $80, 000 and $100, 000. Wife's expert recommended an earning capacity between $250, 000 and $300, 000. The Master recommended an earning capacity for Husband of $150, 000, an amount more in line with his deposition testimony and one which took into consideration his age and his seven years out of the paid work force. The Master recommended an earning capacity for Wife based on full-time minimum wage position. Wife was awarded alimony of $2, 086 per month until age 62. Wife was awarded counsel fees of $30, 000 and expert fees of $12, 000.
Husband filed 130 exceptions to the report. A few were directed to the value, or failure to value, all marital assets. The vast majority objected to specific factual findings made by the Master based on credibility. Wife filed 17 cross exceptions. By Order dated October 7, 2011, the court remanded the case with instructions for the Master to place a valuation on all assets, including Calan. A remand hearing was held on January 5, 2012. The parties stipulated to everything except the value of Calan. The Master issued a second Report and Recommendation dated January 9, 2012 setting a value on Calan of $480, 489. Husband filed exceptions and Wife filed cross exceptions. By order dated June 6, 2012, the court granted Husband's exceptions in part. The court determined that Wife did not have a need for alimony under the equitable distribution award, but continued APL until the litigation is ended or by further order of court. Husband filed a motion for clarification regarding the characterization of his APL payment. In response, the court issued an order dated June 28, 2012, clarifying that Husband's obligation of $2, 000 per month is regarded as APL retroactive to October 5, 2011.
Husband filed notices of appeals [sic] from all orders and the entry of the divorce decree. Wife filed cross appeals. These six appeals are docketed at Nos. 1234, 1240, 1241, 1242, 1290 and 1291 WDA 2012. The appeals at Nos. 1234, 1242, 1290 and 1291 were filed from orders dealing with property distribution prior to the entry of a final decree in divorce and are interlocutory. Campbell v. Campbell, 516 A.2d 363 (Pa. Super. 1986). The divorce decree entered on July 20, 2012 was appealed at Nos. 1240 and 1241. By order dated September 5, 2012, the Superior Court dismissed the four premature appeals and consolidated all properly preserved issues sought to be raised in those appeals at Nos. 1240 and 1241. The Court consolidated Husband's appeal and Wife's cross appeal in accordance with Pa.R.A.P. 2136. Husband's application for stay/supersedeas was denied by order dated September 5, 2012.
Trial court opinion, 1/23/13 at 1-6.
Husband raises the following nine issues for our review, all of which concern the equitable distribution award:
[1.] Whether the trial court erred by lacking any mathematical basis for ordering Appellant/Husband to transfer to Appellee/Wife his entire IRA and pay over $270, 000 (to balance an alleged discrepancy in what the parties received from the marital estate)[?]
[2.] Whether the trial court erred by using the wrong figure for Husband's pretrial advances from his IRA, counting $197, 356 twice[?]
[3.] Whether the trial court erred by charging Husband with taxes and penalties of $45, 753 on one of Wife's pretrial advances from the IRA, ...