Court Opinion

ID: 2733350
Source: CourtListenerOpinion
Date Created: 2014-09-16 21:05:21.472191+00
Date Added: 2024-06-11T12:40:05.381561
License: Public Domain

J-S48033-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DALE E. SMITH,                                    IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                            Appellant

                       v.

BARBARA A. SMITH,

                            Appellee                   No. 181 MDA 2014

                    Appeal from the Order December 31, 2013
                in the Court of Common Pleas of Dauphin County
                        Civil Division at No.: 2002 CV 492

BEFORE: DONOHUE, J., JENKINS, J., and PLATT, J.*

MEMORANDUM BY PLATT, J.:                         FILED SEPTEMBER 16, 2014

order granting the petition for special relief filed by Appellee, Barbara A.

distribution of certain assets. We affirm.

        The trial court summarized the factual history of this case as follows:

             This divorce matter has been in constant litigation since its
        inception in 2002 [when Husband filed a divorce complaint]. . . .
        [T]he instant appeal only pertains to an equitable distribution

        ..

              The parties were married on August 2, 1980 and have two
        adult children. During the marriage, [Husband] and [Wife]
____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
J-S48033-14

       acquired interests in certain businesses, held along with other
       family members. The business which is presently at issue is
       called HSD Properties, Incorporated [(HSD)].[1] HSD . . . was
       created in 1993 with Harry Smith and his four children, Wade
       Smith, Steven Smith, [Appellant] and Juanita Hannold as equal
       20% shareholders.[2] While the divorce action was pending,
       HSD . . . entered into a lease contract with Chesapeake Energies
       for natural gas drilling rights on the Sullivan County property for
       the amount of $658,625.00, which resulted in a[n up-front
       bonus] monetary distribution of $131,725.00 to each
       shareholder. The share belonging to [the parties] was placed in
       escrow pending the resolution of the equitable distribution claim
       in the divorce action and has since been distributed.

(Trial Court Opinion, 4/10/14, at 1-2).

       The trial court appointed a divorce master (Master) on April 13, 2010,

who held five hearings from January 21, 2011 through October 11, 2012.

                                                                         stated

interest of 20% in HSD which includes the up-front bonus payment . . .

[and] a 20% interest in the corporation going forward, which would include

any money received as a result

____________________________________________

1
  HSD owns approximately 263 acres in Sullivan County, Pennsylvania.
(See

2
  HSD is an S corporation and has not issued stock certificates to represent
                                       See Trial Court Opinion, 4/10/14, at
5, 11); see also Krosnar v. Schmidt Krosnar McNaughton Garrett Co.,
423 A.2d 370, 375 (Pa. Super. 1980) (stating that corporation need not
issue stock certificates evidencing shareholder status unless issuance is
demanded by shareholder).

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percentage distribution should be applied to the escrowed funds and to the

                                   Id. at 11). The Master also recommended that

                                                                             See

id.

       On June 10, 2013, the trial court entered a divorce decree (Divorce

Decree) in which it approved and incorporated the equitable distribution

                                                                                s

lease bonus [and] 45% of the 20% interest in HSD going forward[.] . . .

[Wife] shall receive . . . 55% of escrowed funds from gas lease bonus [and]

6/10/13, at unnumbered pages 1-2).               Neither party appealed from the

Divorce Decree.

       On July 26, 2013, Wife filed a petition for special relief, seeking
                                                               3
                                                                   Wife requested

the court to order Husband to transfer eleven shares of HSD stock to her to
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3

               Johnson v. Johnson, 864 A.2d 1224, 1230 (Pa. Super. 2004),
appeal denied, 878 A.2d 865 (Pa. 2005) (citation omitted).
special relief are not limited to the period when an action is pending[,] since
[i]t is easily conceivable that, after the final disposition of all matters in the
divorce action, a party may need the assistance of the court in enforcing
                                Romeo v. Romeo, 611 A.2d 1325, 1328 (Pa.
Super. 1992) (citation and internal quotation marks omitted).

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memorialize her ownership interest in the company, allowing her to manage

and control her interest and to receive tax documents directly from the

company. (See Petition to Enforce Divorce Decree, 7/26/13, at unnumbered

pages 1-4). Husband filed an answer on August 26, 2013, contending that a

Divorce Decree directed the transfer of stock, and provided only that Wife

receive 55% of any future earnings and bear 55% of any liabilities. (See

Answer to Petition to Enforce Divorce Decree, 8/26/13, at 3-4).    The trial

court heard argument on the issue on September 25, 2013. On December

                     transfer 55% of his 20% interest in HSD Properties,

     The [c]ourt recognizes that HSD Properties, Inc. has not
     previously issued   stock  certificates to represent the

     a percentage interest in the corporation. In order for Wife to
     enjoy any of the benefits and privileges in the corporation,
     considering the complexities of this case and the strained
     relationships between the parties and other owners of the
     corporation, this [c]ourt finds that the equitable solution is to
     order shares of stocks to be issued. In essence, Husband owns

     comply with the distribution of assets contemplated by the
     Master.

     to amicably resolve any procedural issues with respect to the
     issuance of the stock certificates outlined above. However,
     should that not be the case, then each party shall submit to this
     court within the next thirty (30) days, a reasonable proposal as
     to how the transfer of assets can best be accomplished.

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(Order, 12/31/13, at 1-2) (emphasis original).

       On January 29, 2014, Husband filed a proposal in which he advocated,

in lieu of the stock transfer, that he continue to pay Wife 55% of any income

he received from the company, and that Wife continue to pay her share of

any expenses.4 (See                                          -2). On that same

date, Husband filed a timely notice of appeal from the December 31, 2013

order and a concise statement of errors complained of on appeal.            See

Pa.R.A.P. 1925(b). The trial court filed a Rule 1925(a) opinion on April 10,

2014. See Pa.R.A.P. 1925(a).

       Husband raises the following issues for our review:

       1.  The trial [c]ourt erred by ordering [Husband] to transfer
       55% of his 20% interest in HSD Properties, Inc. to . . . Wife

       20% interest in HSD goi
       receive 45% of the 20% interest in HSD going forward[?]

       2.  The trial [c]ourt erred in ordering . . . Husband to transfer
       55% of his 20% interest in HSD Properties, Inc. to . . . Wife
                                              ed May 15, 2013 did not

       Properties, Inc. be transferred to Wife and Wife failed to file an

       3.
       recommendation that

       transfer ownership of 55% of his 20% interest in HSD
____________________________________________

4
  Wife did not submit an alternative proposal because she wholly supports
                                                               See
Brief, at 5, 11).

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      Properties, Inc. to Wife, when no [e]xceptions were filed by Wife
                                                     shares have been
      previously issued by HSD Properties, Inc. to Husband[?]

      4.    The trial [c]ourt erred in ordering Husband to transfer 11
      of 20 shares of HSD stock to Wife when no shares have ever
      been issued to Husband[?]

      5.    The trial [c]ourt erred in ordering that shares of HSD
      Properties, Inc., a closely held family corporation, shall be
      transferred to Wife when HSD Properties, Inc. is not a party to
      the instant action[?]

      6.   The trial [c]ourt erred in ordering Husband to issue stock
      shares to Wife when no stock shares have been issued to
      Husband and Husband only has a minority interest of 20% in
      HSD Properties, Inc[?]

      7.    The trial [c]ourt erred in ordering Husband and Wife to

                                   e Husband has no shares of stock
      and HSD Properties, Inc. is not a party to this action[?]

      8.    The trial [c]ourt erred    in ordering non-issued shares of
      stock be transferred to Wife    by HSD Properties, Inc, a closely
      held family corporation, that   has no non blood relative owners
      when HSD Properties, Inc.       is not a party to this [d]ivorce
      action[?]

      9.    The trial [c]ourt erred in ordering a distribution to . . . Wife
      of an asset . . . Husband does not possess or have within his
      control[?]

                       -9).

      Preliminarily, we note that, while Husband purports to raise nine

separate issues in his statement of questions involved, the argument section

of his brief consists of only one section, in which he essentially argues that

the trial court abused its discretion in ordering the stock issuance and

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transfer.5   (See id. at 8-9, 18-

claims on appeal as one issue.

action under an abuse of discretion standard:

             Judicial discretion requires action in conformity with law on
       facts and circumstances before the trial court after hearing and
       consideration. Consequently, the court abuses its discretion if,
       in resolving the issue for decision, it misapplies the law or
       exercises its discretion in a manner lacking reason. Similarly,
       the trial court abuses its discretion if it does not follow legal
       procedure.

Prol v. Prol, 935 A.2d 547, 551 (Pa. Super. 2007) (citation omitted).

       On appeal, Husband argues that the trial court abused its discretion in

ordering him to transfer eleven shares of HSD stock to Wife.                 (See

                          -25). He contends that, although the Divorce Decree

awarded 55% of his 20% interest in HSD to Wife, it did not direct a stock

t

____________________________________________

5

                                       The argument shall be divided into as
many parts as there are questions to be argued; and shall have at the head
of each part in distinctive type or in type distinctively displayed the
particular point treated therein, followed by such discussion and citation of
au                                                        see also Pa.R.A.P.
2116. Because
appeal, we decline to find waiver. See Pa.R.A.P. 2101 (authorizing quashal
where briefing defects substantial); see also Cresswell v. End, 831 A.2d
673, 675 n.1 (Pa. Super. 2003) (declining to find waiver where gravamen of

                                           -7-
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Divorce Decree by requiring an actual stock transfer. (See id., at 16, 26).

He asserts that a stock transfer is not appropriate because, thus far, he has

fully complied with the equitable distribution scheme set forth in the Divorce

tender to Wife 55% of any of his 20% of interest in HSD Properties that he

             Id. at 20).   He also argues that the court does not have the

power to direct HSD to issue stock certificates, where the company is not a

party to this action. (See id. at 21). This issue does not merit relief.

of equitable distribution, and provides remedies available against one who

                                                                Prol, supra at

553 (citation omitted).    These powers include the ability for the court to

order and direct the transfer or sale of any property required in order to

                                   23 Pa.C.S.A. § 3502(e)(4).

      Section 3504 of the Divorce Code provides, in pertinent part:

 W]henever a decree of divorce or annulment is entered by a court of

competent jurisdiction, both parties whose marriage is terminated or

affected shall have complete freedom of disposition as to their separate

                                23 Pa.C.S.A. § 3504 (emphasis added).

      Here, the trial court determined a stock transfer from Husband to Wife

was necessary to implement the equitable distribution plan set forth in the

Divorce Decree, which specifically granted Wife fifty-five percent of the

                                                        (See Divorce Decree,

                                     -8-
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6/10/13, at unnumbered page 2;                                           -11). The

court also concluded that, under the facts of this case, given the protracted

litigation, strained relationship between the parties, and lax method by
                                                 6
                                                     , a stock transfer is the most

company and allowing her to control it. (See Trial Ct. Op., at 1, 5, 10-13);

see also 23 Pa.C.S.A. § 3504. The court found that Husband had the ability

to request that HSD issue shares of stock7, and it explained its rationale for

directing the stock transfer as follows:

       matter, [W]ife would be placed in a position where she would
       have to trust that [H]usband would honor his duty to distribute
       any proceeds and disseminate any necessary information to
       [W]ife going forward. Wife would be placed in the precarious
       position of trusting a former spouse after the breakdown of a
       twenty-two (22) year marriage and a conflict ridden divorce that
       lasted roughly a decade. . . .
                                      * *  *

____________________________________________

6

existence or terms of corporate by laws [sic], corporate meeting minutes,
any shareholder voting records on any issues relating to HSD, if any, or

Brief, at 25).
7
  See 15 Pa.C.S.A. § 1528(a),(b) (stating that shares of a business are
represented by share certificates and that
                                                                    see
also 15 Pa.C.S.A. § 1521(a) (                                       wer

                                           -9-
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        . . . [A] review of the record in this case provides even more

        in HSD Properties, Inc.

               The record fails to show any evidence of the establishment
        of corporate bylaws [including any bylaws indicating a restriction
        on corporate shares8], the compilation of corporate meeting
        minutes, the recordation of shareholder votes on any issue
        relating to HSD, Inc. or [that] the adherence to any corporate
        formalities exist.

                                       *       *    *

               In the instant case, the [H]usband has not presented
        evidence of exactly how he can comply with the mandates of the
        [D]ivorce [D]ecree regarding his ownership of his interest or
        share of HSD, Inc. other than [W]ife merely trusting [H]usband
        will preserve her rights.

(Trial Ct. Op., at 7, 10-11; see also id. at 12) (quotation marks omitted).

we discern no abuse of discretion in its exercise of power to enforce the

terms of the Divorce Decree by ordering transfer of HSD stock.          See 23

Pa.C.S.A. § 3502(e)(4); Prol, supra at 551-52.9 Accordingly, we affirm the

order of the trial court.

____________________________________________

8
    (See Trial Ct. Op., at 11).
9
  To the extent that Husband contends that the court specifically ordered
HSD, a non-party, to act in its December 31, 2013 order, and that it lacked
the power to do so, (see
the record reflects that the court directed Husband to take the actions
necessary to effectuate the stock transfer. (See Order, 12/31/13, at 1-2).

                                           - 10 -
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     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/16/2014

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