Court Opinion

ID: 9928820
Source: CourtListenerOpinion
Date Created: 2024-01-31 22:11:00.329693+00
Date Added: 2024-06-11T09:54:44.514619
License: Public Domain

J-S41018-23

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

  HEATHER J. MOODY                               :    IN THE SUPERIOR COURT OF
                                                 :         PENNSYLVANIA
                                                 :
                v.                               :
                                                 :
                                                 :
  ANTHONY M. MOODY                               :
                                                 :
                       Appellant                 :    No. 224 WDA 2023

              Appeal from the Order Entered January 18, 2023
  In the Court of Common Pleas of Washington County Domestic Relations
                          at No(s): 145 DR 2022

BEFORE:      PANELLA, P.J., OLSON, J., and STEVENS, P.J.E.*

MEMORANDUM BY OLSON, J.:                                FILED: January 24, 2024

       Appellant, Anthony M. Moody, (“Father”) appeals from the January 18,

2023 order entered in the Court of Common Pleas of Washington County that

denied    Father’s    exceptions     to,   and       deemed   as   final,   the   support

recommendation order, obligating Father to pay child support to Heather J.

Moody (“Mother”) for their two minor children.1 We vacate the support order
____________________________________________

* Former Justice specially assigned to the Superior Court.

1 The final support order stated, in pertinent part, as follows:

       [B]ased upon the [trial] court’s determination[, Mother’s] net
       monthly income is $8,283.49[,] and [Father’s] net monthly
       income is $7,624.01.

       It is ordered that from March 22, 2022[,] through May 15, 2022[,]
       when [Mother] had primary custody of the minor children,
       [Father] shall pay to the Pennsylvania State Collection and
       Disbursement Unit the sum of $1,855.00 per month allocated as
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and remand this case for further proceedings in accordance with this

memorandum.

       The trial court summarized the procedural history as follows:

       [Mother] filed a complaint for child support on March 22, 2022[,]
       against [Father]. The parties participated in a conference on May
       5, 2022[,] and an interim order was entered on May 10, 2022.[2]
____________________________________________

       $1,687.00 per month for current support and $168.00 per month
       for arrears.

       It is ordered that from May 16, 2022[,] forward, when the parties
       obtained [a] shared custody order, [Father] shall pay to the
       Pennsylvania State Collection and Disbursement Unit the sum of
       $119.00 per month allocated as $109.00 per month for [Father’s]
       share of minor children’s health care coverage and $10.00 per
       month for arrears.

       ...

       Arrears are set at $1,414.17 as of September 14, 2022, and are
       due in full.

       ...

       The monthly support obligation includes cash medical support in
       the amount of $250.00 annually for unreimbursed medical
       expenses incurred for each child and/or spouse. Unreimbursed
       medical expenses of the obligee and/or children that exceed
       $250.00 annually shall be allocated between the parties. . . . The
       unreimbursed medical expenses are to be paid as follows: 48
       percent by [Father] and 52 percent by [Mother. Mother] shall
       continue to maintain health care coverage on the minor children.

Final Support Order, 1/18/23 (extraneous capitalization and emphasis
omitted); see also Trial Court Order, 1/18/23 (adopting as the final support
order, the recommendation of the hearing officer).

2 In the interim order, the trial court, having determined that Mother’s monthly

net income was $8,208.56 and Father’s monthly net income was $2,687.29,
ordered Father to pay $731.00 per month in child support and set the [amount
due in] arrears at $1,548.64. Trial Court Interim Order, 5/12/22.

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       Subsequently, Mother and Father [requested a] de novo hearing
       on May 19, 2022[,] and a hearing was held on August 8, 2022[,]
       before [a] hearing officer[.] On September 23, 2022, the hearing
       officer filed a report and findings[.] Father filed exceptions to the
       hearing officer’s report and findings on October 3, 2022[,] and
       each party filed briefs in support of their respective positions. Oral
       argument was heard before [the trial] court on January 9, 2023.
       Subsequently, on January 1[8], 2023, [the trial] court entered an
       order finding that the hearing officer did not abuse her discretion
       and made no error of law when making her recommendation. The
       recommended order was adopted by [the trial] court on January
       1[8], 2023[, as the final support order.]

Trial Court Opinion, 4/13/23, at 1 (extraneous capitalization omitted).3 This

appeal followed.4

       Father raises the following issues for our review:

       1.     Did the trial court abuse its discretion by concluding that
              [Father] has an earning capacity of over $128,000[.00] per
              year despite there being no factual support for that
              conclusion?

       2.     Did the trial court commit an error of law by concluding that
              [Father] has an earning capacity of over $128,000[.00] per
              year because the [trial] court failed to follow [Pennsylvania
              Rule of Civil Procedure] 1910.16-2(d)(4)[,] which states
              that age, education, training, health, work experience,
              earnings history[,] and child care responsibilities shall be
              considered in determining earning capacity?

       3.     Did the trial court abuse its discretion by failing to weigh the
              evidence and assess the credibility of [Father’s] witnesses?

____________________________________________

3 For ease of identification, we have assigned page numbers to the trial court’s

unpaginated opinion.

4 Both Father and the trial court complied with Pennsylvania Rule of Appellate

Procedure 1925.

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      4.    Did the trial court, as a finder of fact, commit an error of law
            by failing to consider the testimony of [Father’s] witnesses,
            weighing the evidence, and assessing their credibility?

Father’s Brief at 4-5.

      Father’s issues, in toto, challenge the trial court’s child support order for

which our standard of review is well established.

      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 [trial] 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.

Silver v. Pinskey, 981 A.2d 284, 291 (Pa. Super. 2009) (en banc) (citation

omitted).

      Moreover, it is within the province of the trial court to weigh the
      evidence and decide credibility[,] and this Court will not reverse
      those determinations so long as they are supported by the
      evidence. We are also aware that a [hearing officer’s] report and
      recommendation, although only advisory, is to be given the fullest
      consideration, particularly on the question of credibility of
      witnesses, because the [hearing officer] has the opportunity to
      observe and assess the behavior and demeanor of the parties.

Brubaker v. Brubaker, 201 A.3d 180, 184-185 (Pa. Super. 2018), appeal

denied, 216 A.3d 225 (Pa. 2019).              “Support orders must be fair,

non-confiscatory[,] and attendant to the circumstances of the parties.” Spahr

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v. Spahr, 869 A.2d 548, 552 (Pa. Super. 2005) (citation and original

quotation marks omitted).

     Pursuant to Section 4322(a) of the Domestic Relations Code,

     Child and spousal support shall be awarded pursuant to a
     Statewide guideline as established by general rule by [our]
     Supreme Court, so that persons similarly situated shall be treated
     similarly. The guideline shall be based upon the reasonable needs
     of the child or spouse seeking support and the ability of the obligor
     to provide support. In determining the reasonable needs of the
     child or spouse seeking support and the ability of the obligor to
     provide support, the guideline shall place primary emphasis
     on the net incomes and earning capacities of the parties,
     with allowable deviations for unusual needs, extraordinary
     expenses[,] and other factors, such as the parties' assets, as
     warrant special attention. The guideline so developed shall be
     reviewed at least once every four years.

23 Pa.C.S.A. § 4322(a) (emphasis added).

     Pursuant to the support guidelines, an obligation to pay child support is,

generally, based on the parties’ monthly net incomes, which are calculated

using at least a six-month average of each party’s income, including, inter

alia, wages, bonuses, net income from a business, rents, pension plan

distributions, and income from a trust. Pa.R.Civ.P. 1910.16-2(a) (emphasis

added).   In arriving at a party’s “monthly net income,” the following

withholdings and payments are deducted from the party’s monthly gross

income: federal, state, and local income taxes; unemployment compensation

taxes and local services taxes; Federal Insurance Contributions Act payments

(Social Security, Medicare, and Self-Employment taxes) and non-voluntary

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retirement payments; mandatory union dues; and alimony paid to the other

party. Rule 1910.16-2(c)(1).

      A party’s net income will not be downwardly adjusted if the trier-of-fact

finds that “the party voluntarily assumed a lower paying job, quit a job, left

employment, changed occupations, changed employment status to pursue an

education, or employment is terminated due to willful misconduct.”        Rule

1910.16-2(d)(1)(ii).   “When a party willfully fails to obtain or maintain

appropriate employment, the trier-of-fact may impute to the party an income

equal to the party's earning capacity.”    Rule 1910.16-2(d)(4)(i); see also

Dennis v. Whitney, 844 A.2d 1267, 1269 (Pa. Super. 2004) (stating,

“[w]here a party willfully fails to obtain appropriate employment, his or her

income will be considered to be equal to his or her earning capacity”);

Woskob v. Woskob, 843 A.2d 1247, 1254 (Pa. Super. 2004) (stating,

“[w]here a party assumes a lower paying job or willfully fails to obtain

appropriate employment, the support obligation is determined by his, or her,

assessed earning capacity”). When calculating a party’s earning capacity, the

trier-of-fact “shall not impute to the party an earning capacity that exceeds

the amount the party could earn from one full-time position[ and ] shall

determine a reasonable work regimen based upon the party's relevant

circumstances, including the jobs available within a particular occupation,

working hours and conditions, and whether a party has exerted substantial

good faith efforts to find employment.” Rule 1910.16-2(d)(4)(i)(A)(I and II).

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      In determining a party's earning capacity, the trier-of-fact shall
      consider the party's: (A) child care responsibilities and expenses;
      (B) assets; (C) residence; (D) employment and earnings history;
      (E) job skills; (F) educational attainment; (G) literacy; (H) age;
      (I) health; (J) criminal record and other employment barriers; (K)
      record of seeking work; (L) local job market, including the
      availability of employers who are willing to hire the party; (M)
      local community prevailing earnings level; and (N) other relevant
      factors.

Rule 1910.16-2(d)(4)(ii)(A-N) (formatting modified).      “A person's earning

capacity is defined not as an amount which the person could theoretically earn,

but as that amount which the person could realistically earn under the

circumstances, considering his or her age, health, mental and physical

condition[,] and training.”    Gephart v. Gephart, 764 A.2d 613, 615

(Pa. Super. 2000) (citation and original quotation marks omitted).

      “When a [parent] owns his[, or her,] own business, the calculation of

income for child support purposes must reflect the actual available financial

resources of the [parent].” Spahr, 869 A.2d at 552, quoting Fitzgerald v.

Kempf, 805 A.2d 529, 532 (Pa. Super. 2002). “Further, all benefits flowing

from corporate ownership[, or self-employment,] must be considered in

determining income available to calculate a support obligation.” Spahr, 869

A.2d at 552 (citation, original quotation marks, and emphasis omitted).

Monthly net income for a self-employed party “must reflect actual available

financial resources and not the oft-time fictional financial picture created by

the application of federal tax laws.” Fennell v. Fennell, 753 A.2d 866, 868

(Pa. Super. 2000) (citation and original quotation marks omitted), relying on

Labar v. Labar, 731 A.2d 1252 (Pa. 1999); see also Fitzgerald, 805 A.2d

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at 532. In calculating a self-employed party’s available monthly net income,

deductions or losses reflected on an individual or business tax return, such as

depreciation, amortization, and certain other allowable expense deductions,

are irrelevant unless the deductions reflect an actual reduction in available

cash. Fennell, 753 A.2d at 868; see also Commonwealth v. Miller, 198

A.2d 373, 375 (Pa. Super. 1964) (en banc) (stating, “depreciation should not

enter into a computation of a [parent’s] income upon which a support order

may be based” because “[d]epreciation involves no cash expenditure at the

time it is taken as a deduction”); Cramer v. Cramer, 2020 WL 525335, at *4

(Pa. Super. filed Jan. 31, 2020) (unpublished memorandum) (stating, the fact

“[t]hat [the federal tax code] provides various opportunities for deductions

and expenses in order to offset [taxable] income does not mean that such

deductions apply in the context of child support”); but see Berry v. Berry,

898 A.2d 1100, 1107 (Pa. Super. 2006) (stating, “unreimbursed business

expenses may be deducted in determining monthly [net] income if the

expenses constitute bona fide expenses”), appeal denied, 918 A.2d 741 (Pa.

2006). Thus, by way of example, meal and entertainment expenses, personal

automobile expenses, and depreciation and amortization expenses, while

typically permitted as allowable deductions for federal income tax purposes

for a self-employed person, may be included, under certain circumstances, in

the self-employed party’s net income for purposes of calculating child support.

      In the case sub judice, the hearing officer determined, and the trial court

agreed, that Father had an earning capacity of $128,065.00.          Report and

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Findings of Hearing Officer, 9/23/22, at 3;5 see also Trial Court Opinion,

4/13/23, at 3 (stating, “[t]here is sufficient evidence to support the [h]earing

[o]fficer’s conclusion that Father has an earning capacity of $128,065[.00]”).

In reaching her conclusion as to Father’s earning capacity, the hearing officer

found that Father “has been a licensed, self-employed consumer bankruptcy

attorney for the past 22 years” and has a “Bachelor of Arts degree in

economics and business obtained from [the University of Pittsburgh] in 1995,

[a Master of Business Administration post-graduate degree from Robert Morris

University] in 1996, a Master of Laws degree from the University of Hong Kong

in 1998[,] and a Juris Doctorate degree from Duquesne University [School of

Law] in 1999.”6        Report and Findings of Hearing Officer, 9/23/22, at 2

(emphasis added); see also N.T., 8/8/22, at 53 (stating, “I [(Father) have

been] self-employed for the last 22 years as a consumer, meaning debtor’s

side, [attorney] helping individuals, not companies, file Chapter 7 and Chapter

13 bankruptcies”).      The hearing officer relied upon the vocational expert’s

report to impute Father’s earning capacity to be $128,065.00 based upon the

average salary of attorneys practicing in Allegheny County, Pennsylvania, and

Washington County, Pennsylvania. Report and Findings of Hearing Officer,

9/23/22, at 2; see also Trial Court Opinion, 4/13/23, at 4; Mother’s Exhibit
____________________________________________

5 For ease of identification, we have assigned page numbers to the hearing

officer’s unpaginated report and findings.

6 Father is also fluent in Chinese.        Report and Findings of Hearing Officer,
9/23/22, at 2.

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5, at 8 (stating, “[b]ased upon his vocational profile and the labor market

research, it is the opinion of this evaluator that [Father’s] earning capacity is

$128,065[.00], which is the average of the wages for attorneys in Allegheny

and Washington counties” (emphasis omitted)).

       Upon review, we discern that the trial court erred in imputing an

earnings capacity to Father in the amount of $128,065.00 based upon the

report proffered by Mother’s vocational expert without first examining whether

Father’s self-employment net income fell below an appropriate earning

capability for a person of Father’s education and work experience.7            As

determined by the hearing officer, Father has been self-employed as a

____________________________________________

7 We further find that the trial court’s reliance on the $128,065.00 figure to

be an abuse of discretion in that this figure merely represents “the average”
salary of attorneys practicing in all areas of the law, i.e., criminal, civil,
litigation, mergers, finance, real estate, estates and trusts, domestic relations,
etc. within Allegheny County and Washington County.

Pennsylvania Rule of Professional Conduct 1.1 requires attorneys to “render
competent representation to clients” by possessing and exercising “the legal
knowledge, skill, thoroughness[,] and preparation reasonably necessary” to
effectuate the representation of his or her client in a given legal matter. Off.
Of Disciplinary Counsel v. Baldwin, 225 A.3d 817, 837 (Pa. 2020); see
also Pa.R.P.C. 1.1.

As found by the hearing officer, Father, in the case sub judice, has an
extensive educational resume, but in his 22 years of practice, Father
concentrated on consumer bankruptcy matters. As such, if it is necessary to
impute an earning capacity on Father, as discussed infra, then the trial court,
in addition to the factors for consideration as outlined in the support guidelines
(see Rule 1910.16-2(4)(ii)), should consider Father’s earning capacity in light
of his specific skill set and his chosen area of practice without consideration of
an ”average” attorney salary.

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consumer bankruptcy attorney for the past 22 years.            Because Father is

self-employed, it was incumbent upon the trial court to first assess whether

Father’s monthly net income was reasonable and appropriate by applying the

support guidelines as set forth in Rule 1910.16-2(a–c). The determination of

Father’s monthly net income, i.e., available cash flow for meeting child support

obligations, would, as discussed supra, necessitate a calculation of Father’s

wages, as well as his monthly net income from his business enterprise without

taking into consideration certain allowable deductions provided by the Federal

Income Tax Code, i.e., depreciation expenses.8 See Miller, 198 A.2d at 375

(stating, “[t]he net income of a [parent] as shown on income tax returns is

not to be accepted in a support case as the infallible test of his[, or her,]

earning capacity”). It is only after the trial court applies the support guidelines

to determine Father’s “true” monthly net income as a self-employed parent,

that the trial court may then turn to a determination of whether Father’s

monthly net income fails to give rise to an appropriate earning capacity for a

person with Father’s education and work experience. See Amato v. Amato,

284 A.3d 893, 2022 WL 3088530, at *3 (Pa. Super. filed Aug. 3, 2022)

(unpublished memorandum) (stating, “[i]f a [parent] owns a business, the

calculation of income for child support purposes must reflect the actual
____________________________________________

8 For example, Father testified that, in 2020, his business’s gross revenue was

$124,000.00 “before [bankruptcy] filing fees, advertising, salaries, court
costs, [] mileage[,] and all the other allowable deductions.” N.T., 8/8/22, at
78. Father further stated that his gross revenue for 2021, was $85,683.01.
Id. at 86-87.

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available financial resources of the [parent, and] all benefits flowing from

corporate ownership must be considered in determining income available to

calculate a support obligation” (citations and original quotation marks

omitted)); see also Woskob, 843 A.2d at 1255 (reiterating that, “earning

capacity is measured as of the date of the support hearing”). Put differently,

before fixing a support obligation based upon an assessed or imputed earnings

capacity, the trial court needed first to consider whether Father’s current

self-employment    income   was   inappropriate,   either   because   of   willful

misconduct or a refusal to accept or attain appropriate employment.

      It is only after a trial court determines that a parent’s monthly net

income as a self-employed individual is inappropriate given, inter alia, the

parent’s education and work experience, that the trial court may turn to

examining whether the parent willfully failed to obtain or maintain appropriate

employment. Rule 1910.16-2(4)(i). If the parent willfully failed to obtain or

maintain appropriate employment, then the trial court may impute a monthly

net income to the parent that is equal to the parent’s reasonable earning

capacity. A parent willfully fails to obtain or maintain appropriate employment

when the parent engages in a course of conduct designed to reduce his or her

earning capacity for the purpose of minimizing his or her child support

obligation. Isralsky v. Isralsky, 824 A.2d 1178, 1188 (Pa. Super. 2003)

(explaining that, father willfully failed to obtain or maintain appropriate

employment when he terminated employment, started his own business for

the 28-month period following the parties separation, and sought minimal

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outside employment opportunities); see also Woskob, 843 A.2d at 1254

(stating, “[i]t is settled law that a party cannot voluntarily reduce his[, or her,]

earnings in an attempt to circumvent [a child] support obligation”); but see

Dennis, 844 A.2d at 1270 (explaining that, a parent did not willfully fail to

obtain or maintain appropriate employment where the parent worked in his

present employment position approximately nine years prior to the birth of

the child and is “quite simply doing the best that he can”); Mackay v.

Mackay, 984 A.2d 529, 538 (Pa. Super. 2009) (finding that, father did not

willfully fail to obtain or maintain appropriate employment where father was

using his best efforts to maximize his income), appeal denied, 995 A.2d 354

(Pa. 2010).

       Consequently, we vacate the January 18, 2023 final child support order

and remand this case in for further proceedings in accordance with this

memorandum.9

       Order vacated. Case remanded. Jurisdiction relinquished.

____________________________________________

9 In light of our disposition herein, we do not address Father’s third and fourth

issues pertaining to, inter alia, weight of the evidence and credibility of
witnesses.

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DATE: 01/24/2024

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