J-A20004-16

2016 PA Super 256

TODD W. MUNDY, SR. IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellee

v.

AMY E. MUNDY

Appellant No. 1529 WDA 2015

Appeal from the Order September 11, 2015

In the Court of Common Pleas of Armstrong County

Civil Division at No(s): 2011-0113-CIVIL

BEFORE: BOWES, STABILE AND MUSMANNO, JJ.

OPINION BY BOWES, J.: FILED NOVEMBER 18, 2016

Amy E. Mundy (“Wife”) appeals from the September 11, 2015 order 

granting her divorce from Todd W. Mundy, Sr. (“Husband”) and the 

concomitant equitable distribution that divided the marital estate.1 We 

vacate the order and remand for further proceedings. 

____________________________________________

1 While the order of divorce is not listed on the trial court docket, the 

certified record contains a copy of the order that is emblazoned with a date 

stamp from the Prothonotary of Armstrong County that reads, “left for entry 

or filing [on September 11, 2015].” As neither party nor the trial court 

dispute the validity of the order that was included in the certified record, in 

the interests of judicial economy, we “regard as done that which ought to 

have been done” and consider the order to have been entered on the date 

indicated. McCormick v. Northeastern Bank of Pa., 561 A.2d 328, 329 

n.1 (Pa. 1989). Upon remand, the trial court is directed to ensure that the 

docket is updated accordingly.
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Husband and Wife married on May 10, 2003, and separated on 

November 1, 2010. The parties have one child who was born prior to the 

marriage. Wife has two older children from previous relationships.

The parties courted for several years before getting married, and 

Husband resided at Wife’s apartment for most of that period. On September 

19, 2001, approximately twenty months before the marriage, Husband 

purchased a home for $65,000. He secured a mortgage for $63,050, and 

contributed between $5,000 and $10,000 toward the down payment and 

closing costs. Both the deed and the mortgage were in Husband’s name 

alone. Immediately after the May 2003 marriage, Husband refinanced the 

mortgage for $69,000 and added Wife’s name to the mortgage loan 

obligation but not the deed. In conjunction with the 2003 refinancing, the 

home was appraised at $98,000. Husband, Wife, and all three children 

resided in the house until separation. Throughout the time of cohabitation, 

Husband paid the mortgage of approximately $773 per month and 

contributed to expenses while Wife paid the utility bills, food, and the 

majority of household expenses.

Husband and Wife separated on November 1, 2010. From the date of 

separation until the middle of May 2014, Wife remained in sole possession of 

the home. She paid the mortgage, utilities, and property taxes for the 

residence while Husband rented an apartment. Within the last two months 

of Wife’s residence in the home, she neglected to pay the mortgage, and the 
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water bill also became delinquent in the amount of $222. Wife repaid 

Husband for the water bill; however, the delinquent mortgage severely 

impacted Husband’s credit score and his ability to refinance the mortgage or 

buy another home. Husband and Wife filed separate tax returns from 2010 

to the present.

Husband took sole possession of the property in May of 2014. The 

house was unsanitary and in disrepair when he returned. Wife testified that 

she did not have time to clean the house because Husband took possession 

earlier than expected. Currently, Husband resides in the home and has paid 

the mortgage and all bills since Wife moved. 

During the marriage, Wife attended nursing school. Pursuant to an 

agreement with the nursing school and University of Pittsburgh Medical 

Center (“UPMC”), UPMC paid Wife’s tuition in consideration of her working 

for it upon graduation. Nevertheless, Wife acquired two student loans which 

she claims paid for household bills and expenses while she was in school. 

The first loan came from American Education Service (“AES”). Husband 

cosigned the AES loan. The second loan came from American Collegiate 

Service (“ACS”). Husband did not cosign the ACS loan. Wife made sporadic 

payments on both loans resulting in default on each. The AES loan is no 

longer outstanding due to the garnishment of Wife’s 2014 income tax 

refund. A collection company is in control of the ACS loan and Wife claimed 
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that the balance was approximately $20,000. Since 2006, Wife has been 

employed as a registered nurse at Armstrong County Memorial Hospital. 

On January 20, 2011, Husband filed for a no-fault divorce under § 

3301(c) and (d) of the Divorce Code, 23 Pa.C.S. §§ 3101-3904. Husband 

requested equitable distribution of the marital property, temporary custody 

of the party’s child, and alimony.2 Following a conciliation conference, the 

trial court issued a consent order granting Husband and Wife shared custody 

of their child. On February 10, 2014, Husband filed a motion for 

appointment of a master to address the divorce and equitable distribution. 

On February 25, 2014, the trial court appointed James A. Favero, Esquire, as 

the master. The master’s hearing was subsequently held on April 7 and May 

18, 2015.

During the hearings, Husband testified on his own behalf and 

introduced a number of exhibits including, inter alia, photos of the squalid 

conditions in the home when he returned, mortgage statements, and two 

Experian credit reports listing the AES loan and mortgage as potential 

negative items due to late payments in 2012 and 2013. He also submitted a 

January 12, 2014 document informing him that his mortgage application had 

been denied because of delinquent obligations and collection actions. See

____________________________________________

2 Husband dropped his claim for alimony and it is not at issue in this appeal.
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Plaintiff’s Exhibit 7. That document indicated that, as compiled by 

TransUnion, his credit score was 575. Id. 

Wife testified on her own behalf and introduced evidence including the 

refinanced mortgage, her 2014 tax return, and a computer printout 

indicating that the AES loan was satisfied on January 9, 2015. While Wife 

stated her belief that she owed ACS approximately $20,000, she did not 

document the balance of that debt or establish the balance of the AES loan 

on the date of separation. Husband testified that Wife knew she would be 

responsible for the mortgage while she stayed in the home following 

separation. Wife acknowledged that she and Husband came to an 

“arrangement” wherein she paid the mortgage, utilities, and property taxes 

while she remained in the home. N.T., 5/18/15, at 152. 

The master’s report and recommendation was filed on July 9, 2015. 

The report included a detailed factual summary. The master proceeded to 

recommend a decree in divorce and a 50%-50% division of the marital 

estate after applying the equitable distribution factors outlined in 23 Pa.C.S. 

§ 3502(a).3 The master also determined the home to be a non-marital asset 

____________________________________________

3

 The § 3502(a) considerations include: 

(1) The length of the marriage. 

(2) Any prior marriage of either party. 

(Footnote Continued Next Page)
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(Footnote Continued) _______________________

(3) The age, health, station, amount and sources of income, 

vocational skills, employability, estate, liabilities and needs of 

each of the parties. 

(4) The contribution by one party to the education, training or 

increased earning power of the other party. 

(5) The opportunity of each party for future acquisitions of 

capital assets and income. 

(6) The sources of income of both parties, including, but not 

limited to, medical, retirement, insurance or other benefits. 

(7) The contribution or dissipation of each party in the 

acquisition, preservation, depreciation or appreciation of the 

marital property, including the contribution of a party as 

homemaker.

(8) The value of the property set apart to each party. 

(9) The standard of living of the parties established during the 

marriage. 

(10) The economic circumstances of each party at the time the 

division of property is to become effective. 

(10.1) The Federal, State and local tax ramifications associated 

with each asset to be divided, distributed or assigned, which 

ramifications need not be immediate and certain. 

(10.2) The expense of sale, transfer or liquidation associated 

with a particular asset, which expense need not be immediate 

and certain. 

(11) Whether the party will be serving as the custodian of any 

dependent minor children. 

23 Pa.C.S. § 3502(a), (1)-(11).
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because Husband acquired it prior to the marriage. Thus, the master only 

considered the increase in the property’s value to be marital. The master’s 

calculation of that value consisted of the difference between the purchase 

price of $65,000 and the $98,0004appraisal at the time of refinancing, for 

an increase in value of $33,000. Then, the master subtracted the $21,010 

mortgage balance outstanding as of February 2014, as well as the two 

delinquent mortgage payments that Wife failed to submit while she resided 

in the home during separation ($1,628.70), to find a net marital value of 

$10,361.30. 

The master distributed the marital assets and determined that 

Husband owed Wife $4,821.38, minus $1,500 for the condition in which Wife 

left the property. Thus, Husband retained sole ownership of his home and 

owed Wife $3,321.38. Both parties retained certain personal property and 

their respective retirement plans. The master did not recommend that 

Husband be responsible for the ACS loan because Wife failed to provide any 

documentation as to the loan’s balance or use. Furthermore, the master did 

not consider the AES loan because Wife satisfied it in 2014 using her postseparation income. 

____________________________________________

4 This appraisal amount was the only evidence presented as to the 

property’s value at the time of the master’s hearing. Wife testified that she 

believed the home was still worth that amount. N.T., 5/18/15, at 158.
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Wife filed timely exceptions to the master’s report and 

recommendation. She challenged the master’s determinations regarding the 

value of the home and allocation of the student loans. Following oral 

argument, the trial court entered an opinion and order which overruled 

Wife’s exceptions in their entirety. Thereafter, on September 11, 2015, the 

trial court issued a final order that granted the divorce and applied the 

master’s recommendations in equitable distribution. Wife filed this timely 

appeal.

On appeal, Wife presents the same issues she raised in her exceptions 

to the master’s report:

1. For a complete and accurate analysis of marital property, and 

for an appropriate division of the marital estate, must the trial 

court consider the substantial marital equity acquired in a 

non-marital asset?

2. For a complete and accurate analysis of marital property, and 

for an appropriate division of the marital estate, must the trial 

court make an analysis of whether school loans are marital, 

how the funds were used, which party benefitted from the 

funds, which party guaranteed payment, and the best date of 

valuation?

Wife’s brief at 6.

We are guided by the following principles in our review.

Our standard of review in assessing the propriety of a 

marital property distribution is whether the trial court 

abused its discretion by a misapplication of the law or 

failure to follow proper legal procedure. An abuse of 

discretion is not found lightly, but only upon a showing of 

clear and convincing evidence.
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McCoy v. McCoy, 888 A.2d 906, 908 (Pa.Super. 2005) (internal 

quotations omitted). When reviewing an award of equitable 

distribution, “we measure the circumstances of the case against 

the objective of effectuating economic justice between the 

parties and achieving a just determination of their property 

rights.” Hayward v. Hayward, 868 A.2d 554, 559 (Pa.Super. 

2005).

Smith v. Smith, 904 A.2d 15, 18 (Pa.Super. 2006). In determining the 

propriety of an equitable distribution award, courts must consider the 

distribution scheme as a whole. Morgante v. Morgante, 119 A.3d 382, 387 

(Pa.Super. 2015). 

In her first issue, Wife asserts that the trial court erred in determining 

the net increase in the value of Husband’s residence during the marriage.5 

Typically, the value of property in the marital estate is calculated by 

determining its current value and then subtracting encumbrances. However, 

when separate property is brought into a marriage, only the increase in 

value of the property during the marriage is considered marital property. 

Thus, the typical calculation of value subject to equitable distribution is 

insufficient in this situation because it does not account for the value of the 

separately held property at the time of the marriage. 

____________________________________________

5 Wife does not challenge the determination that the property was nonmarital or assert that her inclusion on the refinanced mortgage created an 

ownership interest.
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The Divorce Code does not set forth a specific method for valuing 

assets, and consistent with our standard of review, the trial court is afforded 

great discretion in fashioning an equitable distribution order which achieves 

“economic justice.” Smith, supra at 18, 21. Similarly, “[i]n determining 

the value of marital property, the court is free to accept all, part or none of 

the evidence as to the true and correct value of the property.” Id. at 22. 

However, § 3501(a.1) of the Divorce Code, concerning the determination of 

the increase in value of nonmarital property, instructs,

The increase in value of any nonmarital property acquired [prior 

to marriage] shall be measured from the date of marriage or 

later acquisition date to either the date of final separation or the 

date as close to the hearing on equitable distribution as possible, 

whichever date results in a lesser increase. Any decrease in 

value of the nonmarital property of a party shall be offset 

against any increase in value of the nonmarital property of that 

party. However, a decrease in value of the nonmarital property 

of a party shall not be offset against any increase in value of the 

nonmarital property of the other party or against any other 

marital property subject to equitable division.

23 Pa.C.S. § 3501(a.1).

Herein, the parties effectively stipulated to the appraised value of the 

real estate of $98,000, even though that amount was determined seven and 

one-half years prior to the final separation and twelve years prior to the 

hearing on equitable distribution. While this figure is patently out of date, 

neither party presented a current valuation during the hearing nor objected 

to the divorce master’s reliance upon the stale appraisal. Thus, we do not 

disturb it. 
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Wife does dispute, however, the trial court’s decision to adopt the 

divorce master’s use of the 2001 purchase price as a baseline to determine 

the increase in the value of Husband’s home. It is her position that, “both 

the increase in equity and the increase in market value should be included in 

an analysis of the net portion designated as marital for inclusion in equitable 

distribution by the court.” Wife’s brief at 11. She continues that the trial 

court’s calculation only accounted for the increase in the home’s market 

value but ignored the concomitant increase in equity that accrued between 

the May 2003 marriage and November 2010 separation. Wife also highlights 

that she continued to pay down the mortgage while she resided in the home 

following the date of separation and asserts that she should be credited with 

her post-separation contribution to the nonmarital property. 

In Biese v. Biese, 979 A.2d 892 (Pa.Super. 2009), which Wife cites in 

support of her position, we addressed whether the trial court erred in failing 

to follow the dictates of 23 Pa.C.S. § 3501(a.1) to use the lesser of the 

values vis-à-vis the separation date and the date of the evidentiary hearing 

in determining the marital portion of the increase in value of non-marital 

property. Our precise holding in Biese is not relevant herein. However, in 

reaching our conclusion that the court utilized the incorrect sum as the 

current value, we accepted the court’s use of “the net home equity at the 

time of marriage” as the baseline amount for its computation. Id. at 898. 
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While the Divorce Code does not require a specific methodology for 

assessing an asset’s value, it is beyond peradventure that the chosen 

methodology must represent an accounting of the asset’s total value. 

Instantly, by focusing on the 2001 purchase price, the trial court’s valuation 

methodology omitted from consideration the increase in equity accrued 

during the marriage. Stated plainly, while Husband is entitled to the 

premarital value of his home, Wife also is entitled to her share of any 

increase in equity that accumulated during the seven-year marriage. 

While Wife argues accurately that both increased market value and 

increased equity must be assessed in the equitable distribution scheme, she 

neglected to provide in her brief an alternative calculation that would 

account separately for the increases. We observe, however, that Wife 

proffered a formula in her exceptions to the divorce master’s 

recommendation. That calculation utilized Husband’s equity in the home at 

the time of marriage, which she claimed was $1,950, rather than the 

purchase price of $65,000. The computation of those figures resulted in a 

net marital increase in the value of the home totaling $75,050—her share 

being $37,525. Although the certified record does not sustain Wife’s 

assertion that Husband’s net equity in the home at the date of the marriage 

was merely $1,950, we agree with the crux of her argument, which is that 

the trial court abused its discretion in failing to utilize Husband’s equity in 
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the property at the time of the marriage as a baseline for its computation of 

the net marital equity. 

Having found that the trial court erred in failing to employ an accepted 

methodology to determine the net marital value of Husband’s premarital 

property, we remand this matter for the court to utilize an accurate 

calculation using the net home equity at the time of marriage. For purposes 

of explanation, we outline the correct formula.

As noted, supra, the first step in determining the marital portion of the 

increase in value is to determine Husband’s equity in the property at the 

time of the marriage. See Biese, supra. Instantly, the most accurate 

representation of the pre-marital value of Husband’s property is the 2003 

appraisal that was conducted two-weeks after the marriage.6 Recall that 

during May 2003, the same month as the parties’ marriage, the home was 

appraised at $98,000 and Husband refinanced the mortgage for $69,000. 

Thus, at the time of the marriage, Husband’s equity in the home was 

____________________________________________

6 Contrary to Wife’s assessment of Husband’s pre-marital equity, the 

baseline equity in the home was significantly greater than $1,950. Wife’s 

rudimentary calculation was limited to the difference between the home’s 

$65,000 purchase price and the $63,050 mortgage that Father secured to 

finance the purchase. That calculation ignores the drastic appreciation in 

premarital value that accrued between the September 2001 purchase and 

the May 2003 marriage. 
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$29,000, i.e. the difference between the fair market value ($98,000) and the 

encumbrance ($69,000). 

Having determined Husband’s net equity in the home at the time of 

marriage, we next calculate the equity in the property as of the date of 

separation. See Biese, supra. Wife contends that the fair market value of 

the real estate remains $98,000 and the record confirms that the mortgage 

was $21,010 as of February 2014.7 Using these figures, the net equity at 

the time of separation equals $76,990 and after subtracting Husband’s 

premarital equity in the home totaling $29,000, the marital portion of the 

increased equity is $47,990. Wife’s equal share of that amount is $23,995. 

The second component of Wife’s argument regarding this issue is that 

the trial court erred in deducting from her share of the net increase in equity 

an amount equal to the mortgage delinquency that resulted from Wife’s 

nonpayment of the post-separation mortgage. Wife contends that, rather 

than being penalized for the two missed payments, she should be credited 

for all of the post-separation payments that she made between November 

____________________________________________

7

In presenting their respective cases, the parties referenced only the 

mortgage balance as of February 2014. While we utilize this amount in 

explaining the correct methodology, we recognize that this figure is a poor 

representation of the mortgage balance as of the November 1, 2010 

separation. If the trial court finds that additional evidence is required to 

fashion a comprehensive equitable distribution order upon remand, it may 

direct the parties to supplement the record in order to ensure that the figure 

actually used in the calculation is an accurate representation of the 

encumbrance as of the date of separation. 
J-A20004-16

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2010 and May 2014. For the reasons that follow, we find that the trial 

court’s adjustments to Wife’s marital share of the increased equity is not 

tantamount to an abuse of discretion. 

This Court has repeatedly held that a dispossessed spouse is entitled 

to a credit against the spouse in exclusive possession for the fair rental value 

of the marital residence. See e.g., Lee v. Lee, 978 A.2d 380 (Pa.Super. 

2009) (quoting Trembach v. Trembach, 615 A.2d 33 (Pa.Super. 1992) 

(“the general rule is that the dispossessed party is entitled to a credit for the 

fair rental value of jointly held marital property against a party in possession 

of that property, provided there are no equitable defenses to the credit.”)). 

As we reiterated in Lee, supra, “The basis of the award of rental value is 

that the party out of possession of jointly owned property . . . is entitled to 

compensation for her/his interest in the property.” Id. (citation omitted). 

This rationale is even more convincing where, as here, the couple did not 

jointly own the property at issue. 

In the case sub judice, Husband owned the property separately and 

was entitled to 100 percent of the post-separation value. Moreover, Wife 

agreed to pay the monthly mortgage obligation as well as taxes and utilities 

as part of the “agreement” that permitted her to stay in the home postseparation. See N.T., 5/18/15, at 152. Hence, Wife’s post-separation 

mortgage payments, including the two payments that were not submitted to 

the mortgage company, were tantamount to rent owed to Husband for her 
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exclusive use of his property. Having agreed to satisfy the mortgage while 

she lived in the home, it would be inequitable to reward Wife for allowing the 

mortgage to become delinquent, causing harm to Husband’s credit, and 

impacting his ability to purchase another home. Accordingly, the trial court 

did not err in declining to credit her for those payments in its equitable 

distribution of the marital estate. For these reasons, this aspect of Wife’s 

claim fails. 

Thus, in light of the trial court’s failure to properly calculate the net 

marital increase in equity as of the date of separation, we remand the case 

for an accurate calculation of the marital portion of the increased home 

equity consistent with our discussion herein. However, we affirm the trial 

court’s adjustments to Wife’s share of the increased equity and its decision 

to forego giving Wife a credit for her post-separation mortgage payments. 

Wife’s second issue pertains to the student loans that she acquired 

during the marriage. Essentially, Wife contends that the trial court erred in 

burdening her with the entire amount of the student loan debt. Hicks v. 

Kubit, 758 A.2d 202 (Pa.Super. 2000) is the seminal case involving the 

assignment of student loan debt in equitable distribution. To be clear, the 

salient principles in Hicks are that student loan debt incurred during a 

marriage is a marital debt regardless of the purposes for which the money is 

actually expended; however, in assigning responsibility to repay the debt 

following divorce, the fact finder must look to which party benefited from the 
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education the loan facilitated. Id. at 205. In Hicks, we explained, 

“[W]hether the . . . debt is marital or not is of significance, but not 

ultimately determinative of who shall be responsible for its repayment.” Id. 

Rather, “the ultimate distribution of either assets or liabilities . . . is to be 

based on the circumstances surrounding the acquisition of the debt or asset, 

along with all other factors relevant to fashioning a just distribution.” Id. In 

essence, we reasoned that the spouse who received the exclusive benefit of 

the education is ultimately responsible for the portion of the student loan 

applied to education expenses. Hence, the Hicks Court held that, since the 

wife was the exclusive beneficiary of the education she received, she was 

responsible for the portion of the loan that went to that purpose. 

Accordingly, we did not disturb the trial court’s equitable distribution scheme 

allocating to wife 100 percent responsibility for the balance of her student 

loan proceeds. 

Instantly, both of Wife’s loans are marital debt. However, consistent 

with Hicks, supra, the responsibility for repayment depends upon which 

party benefited from the education the loan facilitated and the circumstances 

surrounding the debt. Wife matriculated through a multi-year nursing 

program, attained the credentials of a registered nurse, and secured a 

position where she has worked since 2006. Thus, she clearly benefited from 

the education she received. Highlighting the fact that UPMC paid her tuition 

for nursing school, Wife asserts that the proceeds of both loans were used 
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for general household expenses rather than education. Thus, she argues, at 

least implicitly, that the UPMC tuition program, rather than her student 

loans, facilitated her education. For the following reasons, we disagree. 

First, although the UPMC tuition program paid for the cost of Wife’s 

coursework, the student loans that Wife obtained from AES and ACS 

undeniably helped facilitate her education. Even to the extent that the 

student loans were not applied to Wife’s tuition, the loans permitted her to 

remain a fulltime student over the several years and to focus on her studies 

without having to engage in outside employment to help support the family. 

Wife confirmed this reality during the equitable distribution hearing. She 

testified, “[the loans] were offered to us through school and since I couldn’t

work fulltime and go to school fulltime, we needed to have a way to still 

support the household.” N.T. 5/18/15, at 156-157. Second, and more 

importantly, it is unclear from the certified record whether UPMC paid all

education-related expenses or simply Wife’s tuition. As the trial court 

accurately observed, Wife neglected to provide any evidence to document 

how the proceeds of either loan was consumed. Wife testified that she used 

the loans to cover household expenses, but she did not state whether the 

loans were used for that purpose exclusively. 

Wife’s failure to present a scintilla of evidence to document the use of 

the loan proceeds, or even establish the remaining balance on the ACS loan 

or the balance of the AES loan at the time of separation, is fatal. As the 
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fact-finder, the master was free to believe some, all, or none of the 

assertions made by Wife pertaining to the loans, and we “will not disturb the 

credibility determinations of the court below.” Smith, 904 A.2d at 20. 

Here, the trial court determined that Wife did not provide the requisite 

evidence to support her claim regarding the use of the loan proceeds or the 

amount of the student-loan debt owed. As the certified record confirms the 

trial court’s determination regarding the lack of documentation, we will not 

disturb it.8 See Anderson v. Anderson, 822 A.2d 824, 830 (Pa.Super. 

2003) (declining to take an alleged debt into consideration in equitable 

distribution scheme where “record failed to establish documentation of the 

debt...”). 

Order vacated. Matter remanded for further proceedings. 

Jurisdiction relinquished.

____________________________________________

8

The trial court concluded, in part, that, since Wife paid off one of the loans 

in 2014, she was not entitled to receive credit for this debt during equitable 

distribution. In light of our discussion in Hicks, supra, we disagree with the 

court’s statement of the law. Nevertheless, we sustain the trial court’s 

denial of this aspect of Wife’s exceptions on the grounds that Wife failed to 

document that the loan proceeds went to pay for household expenses 

exclusively or establish the balance of the loans at the time of separation.
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Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 11/18/2016