March 12, 2014
SUSAN M. BEALE Appellant
SAMUEL B. CLEMENT Appellee SUSAN M. BEALE Appellee
SAMUEL B. CLEMENT Appellant
Appeal from the Order Entered December 7, 2012 In the Court of Common Pleas of Chester County Domestic Relations at No.: 00514N2010 Pacses 404111573
BEFORE: FORD ELLIOTT, P.J.E., WECHT, J., and MUSMANNO, J.
Susan Beale ("Mother") and Samuel Clement ("Father") have filed cross-appeals from the trial court's December 7, 2012 child support order. We affirm.
The trial court summarized the factual and procedural history as follows:
The parties were married on June 11, 1997 and separated on January 30, 2006. They have one minor child, A.C. On April 10, 2006, Mother filed a complaint in divorce and requested equitable distribution and child support. Father filed a counterclaim and requested alimony, alimony pendente lite and attorney fees.
After a hearing before Master Carolyn Moran Zack, an interim order was issued on June 8, 2010. Both Mother and Father filed exceptions. The Honorable Katherine B.L. Platt denied the exceptions related to each party's earning capacity and Father's exceptions to alimony. A divorce decree was also entered at that time.
Father appealed to the Superior Court of Pennsylvania. The Superior Court affirmed the lower court's decision in full. Father requested allocator to the Supreme Court of Pennsylvania which was denied. Thus, as of the date of Master Zack's Report and Recommendations of June 8, 2010, as accepted by Judge Platt, the parties' earning were determined to be as follows:
Mother: $4, 326/month
Father: $4, 436/month
During this same period, Mother and Father filed cross support complaints. On April 6, 2010, Mother filed for child support . . . . On April 26, 2010, Father filed for spousal support . . . . An Interim Order for child support, dated April 27, 2010, awarded Mother the total sum of $144.00 per month; $131.00 for support and $13.00 for arrears beginning April 6, 2010.
Both petitions were heard simultaneously before Hearing Officer Donald A. Mancini on September 28, 2011, September 29, 2011 and October 26, 2011. Master Mancini issued his Report and Recommendation on July 2, 2012. Mother filed one sole exception claiming Master Mancini failed to order Father to pay immediately and in one lump sum all the past due child support.
Trial Court Opinion – Mother ("T.C.O.M."), 3/20/2013, at 1-3 (citations to record omitted; emphasis in original; footnotes omitted).
Father filed 19 exceptions [to the July 2, 2012 Report and Recommendation].
This Court denied Father's exceptions nos. 2 through 10, 12 and 17 through 19 but granted in part Father's exceptions nos. 11, and 13 through 16. Father's no. 1 exception was moot as he withdrew same during oral argument before this Court.
Trial Court Opinion – Father ("T.C.O.F."), 3/20/2013, at 3.
Following oral argument on the exceptions, on December 7, 2012, the trial court issued a thirty-two-page opinion and order disposing of both parties' exceptions. On January 3, 2013, Mother filed a notice of appeal. On January 16, 2013, Father filed a notice of appeal. The trial court ordered both parties to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). Both parties timely complied.
Mother presents one issue for our review:
I. Whether the trial court erred in ordering that Father pay only $96.32 per month on child support arrears dating back to April 27, 2010?
Mother's Brief at 3.
Father presents five issues independent of his response to Mother's issue:
I. Whether the trial court committed [an] error of law by treating this original petition for child support as a petition for modification and requiring proof of change of circumstances, thereby shifting the burden of proof from [Mother] to [Father]?
II. Whether the trial court erred by relying on findings as to income and earning capacity of Mother made by another judge who decided the issue of equitable distribution instead of making a determination on the evidence presented in the support hearing?
III. Whether the trial court erred in determining Mother's income at a net income of $4, 326 where the undisputed evidence showed that her net monthly income was at least over $15, 000?
IV. Whether the trial court erred in accepting and relying upon Mother's testimony as to statements made by her accountant relating to her income?
V. Whether the trial court erred in directing Father to pay boarding expenses for a horse for [A.C.] where Mother's residence has 23 stalls[, ] there is no evidence that Mother has any actual expenses that she incurs herself?
Father's Brief at 13.
Our standard of review of child support orders is well-settled:
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.
Krebs v. Krebs, 944 A.2d 768, 772 (Pa.Super. 2008).
In Mother's sole issue, she objects to the trial court's reduction of the monthly amount that Father is ordered to pay toward his arrearages. Mother argues that, at the rate set by the trial court, Father's arrearages will not be paid in full until A.C. is thirty years old. Mother also contends that Father has approximately $1.2 million from equitable distribution and from his separate assets. Given his assets and monthly income, Mother believes Father is able financially to pay more toward his arrears. Mother's Brief at 7-8.
The trial court explained that it set Father's arrearage payment at ten percent of his monthly child support payment. It did so because Father was paying an increased support amount due to A.C.'s riding expenses. T.C.O.M. at 4. The trial court found this to be a reasonable amount, especially considering that Father's income had stayed the same, but his child support payment had increased. Id. at 4 n.5.
We previously have held that:
The trial court has broad discretionary power to remit accrued support arrearages. Commonwealth v. Vogelsong, 457 A.2d 1297 (Pa.Super. 1983). Analogously, we find within the trial court's discretion the setting of the method of payment of arrearages.
Kessler v. Helmick, 672 A.2d 1380, 1384-85 (1996) (citation modified). In Kessler, the appellant asserted that the trial court erred in failing to order the support arrearages to be paid in a lump sum when there was evidence that the appellee could afford to make such a payment. Because the appellant offered no compelling reason why a lump sum payment should have been ordered, we found her argument without merit. Id. at 1385. Similarly, Mother has offered no reason why Father should have been ordered to pay his arrears as a lump sum, other than that Father could afford to do so. As in Kessler, without a more compelling reason or authority to support her contention, Mother's argument fails.
Turning to Father's issues, Father first argues that the trial court erroneously treated Mother's complaint for child support as a petition for modification, rather than as an initial complaint, and, as such, applied a standard that required a showing of a substantial change in circumstances. Father asserts that the child support complaint made no reference to the prior determination of the parties' incomes in their equitable distribution hearings. Father contends that no reference to those determinations was made at the child support hearing and that no party requested the court to take judicial notice of those prior findings. Instead, Mother first referenced the prior determination in her memorandum of law filed after the child support hearing. Father argues that the hearing officer improperly used those prior determinations as the basis for the child support obligation because there were no changes in circumstances since those initial determinations were made. Father contends that requiring him to prove a substantial change in circumstances shifted the burden from Mother to him. Father's Brief at 20-23.
Mother responds that the hearing officer could take notice of the prior decisions that were part of the judicial record. Mother also contends that the coordinate jurisdiction rule precluded the hearing officer from reconsidering the incomes of the parties. Mother's Reply Brief at 7-11.
The trial court explained that, in December 2010, a judicial determination of the parties' income had been reached after "an exhaustive inquiry." T.C.O.F. at 5. The trial court maintained that it was entirely appropriate for the hearing officer to consider the equitable distribution master's findings. The parties had the opportunity to present evidence of changes to income since the equitable distribution findings. Id.
We addressed a similar issue in DeMasi v. DeMasi, 530 A.2d 871 (Pa.Super. 1987). In that case, the father complained that the court could not determine his income for child support because he did not testify at the hearing. It was unclear from the record whether the father was precluded from testifying or chose not to do so. However, the parties, including the father, had testified extensively about income at equitable distribution proceedings, the transcripts of which were part of the court record and available for review. Id. at 876. Because income, earning capacity and all other issues relevant to child support were addressed therein, we held the trial court could rely upon those prior hearings. Id. at 877.
Similarly to DeMasi, income and earning capacity were extensively litigated during the equitable distribution hearing in order to resolve Father's claim for alimony. The trial court was permitted to rely upon the information from those hearings in making its income determination. The trial court gave the parties the opportunity to present evidence of any change in circumstances since the prior hearing. If there was proof that Mother or Father's income had changed, the trial court would have been able to adjust the parties' income accordingly. Because, as the trial court stated, there were only "minor changes to the parties' financial positions, " the court was justified in using prior income determinations as a starting point for child support purposes. T.C.O.F. at 5-6. The trial court adjusted Mother's income upward as of December 31, 2010 based upon the evidence presented. Trial Court Opinion and Order ("T.C.M."), 12/7/2012, at 26. This demonstrates that the trial court did not just accept blindly the prior income determinations, but rather considered those determinations, along with the evidence presented at the child support hearing. Thus, Father's first claim of error is meritless.
Next, Father argues that the trial court improperly relied upon the prior determination of Mother's income. Father contends that the evidence from the equitable distribution hearings were too distant in time to be relevant to child support and that an accurate determination of Mother's income was not required in the equitable distribution disposition because Mother was not seeking alimony. Father also argues that it was improper for the court to use the prior rulings as the court did not, and should not have, taken judicial notice of them. Father's Brief at 23-29.
Mother responds that the equitable distribution hearing looked at income through 2008 and that the hearing officer heard additional evidence for 2009 and 2010. In response, the hearing officer increased Mother's income from that found in the equitable distribution proceedings. Mother's Reply Brief at 11-12.
It is clear from the record that the hearing officer used the equitable distribution numbers, but also considered additional evidence concerning the time period after the equitable distribution hearing. The hearing officer examined Mother's income in 2009 and 2010, including tax returns, bank accounts, and other evidence. Report and Recommendation ("Report"), 7/7/2012, at 5-8. It is also clear that the trial court, in response to Father's exceptions, conducted a thorough review of the record, including evidence of 2009 and 2010 income and expenses. T.C.M. at 9-13. The record does not support Father's contention that the court blindly accepted the income determination from equitable distribution and applied it to child support. Instead, they reviewed the new evidence of Mother's more recent income and simply reached a different conclusion than Father. Thus, this issue is without merit.
In his third issue, Father argues that the court did not consider appropriately the evidence of Mother's income and expenses in determining her income for child support. Father maintains that Mother's expenses exceed her income, but she has accrued no additional debt, so her income must be higher than that found by the court. Father points to evidence of Mother's deposits, the monthly mortgage payment that exceeds what was found to be her monthly income, and other monthly expenses that exceed $9, 000 per month. Father argues that, even if these expenses are paid by Mother's corporation, they should be considered compensation in kind and charged as income for child support. Father contends that the court improperly considered that the business should pay a portion of some living expenses and that all living expenses paid by the business should be considered income to Mother. Father's Brief at 29-40.
Mother responds that Father is merely attacking the hearing officer's credibility determinations because he found Mother more credible about her income than Father. Mother contends that the hearing officer reviewed the financial records of the corporation and determined her income accordingly. Mother's Reply Brief at 13-15.
The hearing officer explained the large deposits into Mother's business accounts as being due to her brokering the sales of horses from which she kept only a ten percent commission. Thus, while Mother deposited $372, 306 from all of her sources of business revenue in 2009, she retained only $24, 939 and earned another $25, 414 in other business income. In 2010, one of the deposits reflected the sale of a marital asset that Mother had been awarded, which is not income for support. The hearing officer also found Mother to be credible in her testimony that many expenses are paid by the business because the business is located on the same property as her residence, but that her accountant apportions the business expenses from personal expenses when preparing income taxes. Mother testified that the personal expenses paid by the corporation are treated as income to her on her income taxes, and the hearing officer found Mother credible on this point. Report at 5-8. The trial court, in disposing of Father's exceptions, agreed that Mother was credible in her testimony and that there were no discrepancies between the records provided in either proceeding, indicating that the corporation is being run, and expenses handled, in the same manner that this Court affirmed in reviewing the equitable distribution award. The trial court found that the record supported the hearing officer's findings that Mother' income had changed little. T.C.M. at 10-13.
"[C]redibility to be assigned the parties' testimony and supporting exhibits lies initially with the hearing officer and the trial court." Sirio v. Sirio, 951 A.2d 1188, 1195 (Pa.Super. 2008). "[I]n 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. Personal perquisites, such as entertainment and personal automobile expenses paid by a party's business must be included in income." Mascaro v. Mascaro, 803 A.2d 1186, 1194 (Pa. 2002) (internal citations omitted).
Here, the hearing officer and the trial court considered that Mother's corporation paid many of her expenses. However, they also considered the fact that many of these expenses had both a business and personal component, such as the vehicles that Mother used personally and for her business. Mother testified that her accountant properly apportioned those components for her taxes and that she is charged with income for those portions that are personal. Notes of Testimony ("N.T."), 9/29/2011, at 51, 117. Mother's testimony also supported the conclusion that large deposits were made into her accounts, but large withdrawals also were made for expenses. Id. at 135. Both the hearing officer and the trial court found Mother to be credible. As such, we defer to that finding. Additionally, our review of the record reveals support for the court's findings and we discern no abuse of discretion.
In his fourth issue, Father argues that Mother's statements regarding her accountant's segregation of business and personal expenses was hearsay and improperly admitted. Father also contends that the hearing officer drew conclusions from the testimony that are not supported by the record. Father's Brief at 41-43.
Mother responds that her statements regarding allocation of business and personal expenses were not hearsay because she did not testify to what her accountant said, but to her understanding of the process by which income and expenses are handled. Mother argues that the hearing officer properly considered Mother's testimony and found Mother to be credible. Mother maintains that she is permitted to testify to her opinion that her expenses and accounts are maintained properly. Mother's Reply Brief at 15-16.
The statement to which Father now objects began when Father's counsel asked Mother if her mortgage payments were paid from a particular bank account. She answered that the mortgage was not paid from her personal account and that her accountant "has it structured." N.T., 9/29/2011, at 51. Father's counsel interjected, "Don't tell us what your accountant does." Then Mother's counsel objected, arguing that Mother should be allowed to elaborate. The hearing officer overruled Mother's counsel's objection and asked Mother, "How does the mortgage get paid?" Mother answered that the corporation paid the mortgage and the accountant allocated a portion of the mortgage as personal income. Id. Father's counsel did not object to that statement or to the hearing officer's question. When a timely objection is not made, the issue is waived. Pa.R.A.P. 302(a). Further, hearsay is defined as "a statement that (1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement." Pa.R.E. 801(c). Because nothing in Mother's testimony constituted a statement by her accountant, her testimony was not hearsay.
Father also argues that the conclusions that the hearing officer drew about how Mother's finances are handled were not supported by the record. We disagree. Mother testified that the mortgage is allocated as part business and part personal expense and the personal component is considered to be income. N.T., 9/29/2011, at 51. Mother also testified that she takes draws from the business for personal use and, when personal expenses are paid by the corporation, it is reported as income on her tax returns. Id. at 117. From this testimony, in addition to the bank statements and tax returns, the hearing officer's conclusions were supported by the record, which was sufficient to conclude that Mother's personal expenses, while paid from business accounts, were counted as income to her for tax purposes. Based upon the record, we find no abuse of discretion.
In his last issue, Father argues that he should not have been ordered to pay the boarding expenses for A.C.'s horse because he believes that there was no evidence to support the cost. Father contends that, because Mother has horse stalls at her residence as part of her business, there are, or should be, no boarding expenses. Father also appears to argue that the court erred in deviating above the guideline in determining his support payment. Father's Brief at 44-45.
Mother responds that the family, including A.C., have been very active in riding. Because riding is consistent with the family's standard of living, Mother believes that riding expenses properly were split between the parties for the purposes of child support. Mother contends that these expenses are not part of the guideline considerations and, therefore, were an appropriate upward deviation as "other needs" under the child support rules. Mother's Reply Brief at 16-17.
The hearing officer found that the family was committed to horses and that it was a significant part of the parties' and A.C.'s lives. The hearing officer found these to be justified expenses and provided for an upward deviation. Report at 10-11. The trial court concurred that the expenses were appropriate and that an upward deviation was warranted. However, the court reviewed the expenses and provided for a slightly higher deviation, including the costs of boarding and additional competition expenses. T.C.M. at 18-20.
The child support rules provide that, when a child is involved in activities or has a special consideration that is beyond the needs contemplated in the guidelines amounts, the child support obligation may be increased to cover these expenses.
The support schedule does not take into consideration expenditures for private school tuition or other needs of a child which are not specifically addressed by the guidelines. If the court determines that one or more such needs are reasonable, the expense thereof shall be allocated between the parties in proportion to their net incomes. The obligor's share may be added to his or her basic support obligation.
Pa.R.C.P. No. 1910.16-6(d). Here, the record is clear that these parties are involved heavily with horses and competitions, and that A.C. has been involved, as well, from a young age. There was no error in the hearing officer determining that the needs were reasonable in light of the family's involvement in riding and horse competitions.
The only remaining question is the apportionment of those costs. The trial court based its calculation upon Mother's testimony and the exhibits that she entered during the hearing. The trial court set the boarding expenses at less than what Mother requested. Mother testified that the boarding fee includes feeding the horses. N.T., 9/29/2011, at 10. That is an actual expense that Mother must pay for A.C.'s horse. Because the horse-related expenses are reasonable for this family, Father should pay his share of those expenses. The record is sufficient to support the deviation awarded by the trial court. We find no error in the trial court's apportionment.
Because the trial court has not abused its discretion, we affirm its order.