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Carney v. Carney

Superior Court of Pennsylvania

May 31, 2017

KATHY M. CARNEY
v.
DONALD R. CARNEY Appellant

         Appeal from the Decree July 1, 2016 In the Court of Common Pleas of Monroe County Domestic Relations at No(s): No. 793DR10 7123CV10

          BEFORE: PANELLA, J., LAZARUS, J., and STEVENS, P.J.E. [*]

          OPINION

          STEVENS, P.J.E.

         This is the second appeal to this Court in the divorce proceedings of Appellant Donald R. Carney ("Husband") and Appellee Kathy M. Carney ("Wife"). After remand, Husband again appeals the trial court's order of equitable distribution, arguing inter alia, that the trial court abused its discretion in valuing the business Husband established during the parties' marriage and in modifying Wife's alimony pendente lite ("APL") award. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

         The parties married on April 3, 1986; after twenty-three years of marriage, the parties separated on February 5, 2010. No children were born of the marriage. During the marriage, Husband founded Brothers Auto Transport ("Brothers"), a company that picks up new and used vehicles and transports them throughout the country. As of the date of the parties' separation, Brothers was a thriving business with average gross sales of approximately $9 million each year and a fleet of forty trucks.

         At one point, Wife worked at Brothers, assisting with administrative tasks. Wife's highest level of education was finishing eleventh grade. Wife no longer works due to health problems, including rheumatoid arthritis, lupus, and Raynaud's Syndrome, which affects her hands. Wife is responsible for the care of her elderly mother and her intellectually disabled brother. Following the parties' separation, Husband was required to pay Wife $4, 942.00 each month in APL and also pay for her health insurance.

         In the equitable distribution proceedings of the divorce litigation, the key disputed issue was the valuation of the trucking business. Each party retained two separate experts: 1) an asset valuation expert to value Brothers' trucks, trailers, and other tangible property, and 2) a business valuation expert to calculate the overall value of the business itself. We note the parties also offered revised valuations of Brothers' assets and its overall value.[1] Husband's experts employed an income-based approach and valued Brothers at $1, 000, 000.00. Wife's experts employed an asset-based approach and valued Brothers at $1, 978, 328.00. On June 20, 2012, the Divorce Master issued a report and recommendation, finding Wife's valuation experts to be credible and Wife's proposed valuation for Brothers to be most reliable. However, the Master never explicitly stated in his report the specific value he adopted for Brothers.

         Husband filed exceptions to the Master's determination regarding the valuation of Brothers. The trial court adopted the Master's recommendation to use Wife's proposed value for Brothers, but did not explicitly value the business in its discussion of this specific issue. However, in its decision, the trial court later indicates that it valued Brothers at $3, 336, 134. On February 15, 2013, the trial court entered a final divorce decree that incorporated the property division.

         On appeal, this Court found the trial court's valuation of Brothers was "wholly unsupported by the record" as that specific figure was never offered by Wife's expert as a proposed value for Brothers, but instead was a proposed valuation of the truck fleet that did not account for the company's liabilities and obligations. Carney v. Carney, 843 EDA 2013, at *6 (Pa.Super. November 19, 2013) (unpublished memorandum). Moreover, Wife had withdrawn that figure from consideration after retaining her asset valuation expert and submitting revised valuations. As a result, this Court found that the trial court had abused its discretion in valuing Brothers, which in turn, affected the overall equitable distribution award. Thus, this Court remanded the case, directing the trial court to revisit the issue of Brothers' valuation and reconsider the entire equitable distribution award in light of this new value.

         After remand, the parties stipulated that the trial court could evaluate all equitable distribution issues based upon testimony and evidence presented at the previous evidentiary hearings. In addition, Wife filed a petition to modify her APL award. On January 25, 2016, the trial court held a hearing to allow the parties to introduce additional evidence to supplement the record.

         On July 1, 2016, the trial court entered an order and opinion setting forth its equitable distribution award that divided the marital estate in a 50/50 ratio. The trial court found Wife's valuation experts most credible and adopted their valuation of Brothers at $1, 978, 328.00. To avoid the liquidation of Brothers, the trial court distributed the auto carrier business solely to Husband. To equalize this distribution, the trial court awarded the marital residence (valued at $100, 400.00)[2] and the marital 401(k) account (valued at $331, 620.00) to Wife and ordered Husband to pay Wife $6, 761.95 each month, interest free, for ten years. The trial court also divided less valuable assets among the parties. Moreover, the trial court granted Wife's petition to modify APL and increased her award to $12, 000 each month. Husband filed a timely appeal and a concise statement of errors complained of on appeal.

Husband raises the following issues for our review:
1. Did the lower court commit an error of law and/or abuse its discretion by accepting Wife's expert's "calculated value" of the marital business which relied upon an adjusted asset approach rather than a fair market value which considers the ongoing concern of the marital business?
2. Did the trial court commit an error of law and/or abuse its discretion in failing to tax effect the value of the marital business?
3. Did the trial court commit an error of law and/or abuse its discretion by entering an equitable distribution award calculated upon an improper value of the marital business?
4. Did the trial court commit an error of law and/or abuse its discretion by awarding alimony pendente lite to Wife based upon Husband's post-separation income ...

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