Court Opinion

ID: 3164502
Source: CourtListenerOpinion
Date Created: 2015-12-21 21:07:44.95732+00
Date Added: 2024-06-11T11:55:45.375511
License: Public Domain

J-A25033-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

LESLIE M. CERF                                 IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                        Appellant

                   v.

HENRY S. MCNEIL, JR.

                        Appellee                     No. 348 EDA 2015

            Appeal from the Order Entered December 30, 2014
           In the Court of Common Pleas of Philadelphia County
                     Family Court at No(s): 00-01231
                                            PACSES NO: 765104114

BEFORE: PANELLA, J., DONOHUE, J., and MUNDY, J.

MEMORANDUM BY PANELLA, J.                      FILED DECEMBER 21, 2015

     Appellant, Leslie M. Cerf (“Mother”), appeals from the December 30,

2014 order entered by the Honorable Robert J. Matthews, in the Court of

Common Pleas of Philadelphia County. We affirm.

     We assume the parties’ familiarity with the facts and procedural

history of this case. For a recitation of the facts and procedural history of

this matter, we direct the reader to the opinion of the trial court. See Trial

Court Opinion, 3/24/15, at 1-4.

     Preliminarily, we must determine whether this appeal is properly

before this Court. Appellee, Henry S. McNeil, Jr. (“Father”), contends that

the December 30, 2014 order from which Mother appealed did not dispose of

all claims. Father argues that the order was not a final order. See Appellee’s

Brief, at 15. Mother disagrees, explaining that the January 22, 2015
J-A25033-15

administrative order did not make any changes to the original support order.

See Appellant’s Reply Brief, at 4.

      “The appealability of an order directly implicates the jurisdiction of the

court asked to review the order. This Court has the power to inquire at any

time, sua sponte, whether an order is appealable.” In re Estate of Cella,

12 A.3d 374, 377 (Pa. Super. 2010) (internal citations and italics omitted).

In Pennsylvania, an order is appealable if it is a final order, see Pa.R.A.P.

341, an interlocutory order that may be appealed as of right, see Pa.R.A.P.

311, an interlocutory order that may be appealed by permission, see

Pa.R.A.P. 312, or a collateral order, see Pa.R.A.P. 313.

      “A final order is any order that: (1) disposes of all claims and of all

parties; or (2) is expressed defined as a final order by statute; or (3) is

entered as a final order pursuant to subdivision (c) of this rule.” Pa.R.A.P.

341(b). We disagree with Father that the trial court’s order permitting

Mother to request a hearing on her exception regarding counsel fees

rendered the December 30 order not final. In the December 30 order, the

trial court closed the matter, but stated that it would reopen the record upon

request. See Order, 12/30/14, at 2. Mother did not request that the trial

court reopen the matter and instead instituted this appeal, effectively

foreclosing the trial court’s review of her exception pertaining to the award

of counsel fees. We agree, however, that because claims remained open

pending the resolution of the administrative remand, the order was not final

for appeal purposes.

                                     -2-
J-A25033-15

      We nonetheless conclude that the appeal is properly before us as an

interlocutory order that is appealable as of right. Rule 311(f) states, in

pertinent   part,   that   although   interlocutory,   an   order   requiring   an

“administrative remand” from the trial court to a hearing officer “for

execution of the adjudication of the reviewing tribunal in a manner that does

not require the exercise of administrative discretion” is appealable as of

right. Pa.R.A.P. 311(f)(10. The administrative remand required by the

December 30 order did not involve any exercise of discretion by the master

on remand. The master’s sole instruction was to compare the figures agreed

upon by both parties to the child support statute to ensure “the final figures

are consistent with the current support guidelines.” Order, 12/30/14, at 1.

As the administrative remand involved no exercise of discretion by the

master, we conclude that the order is properly before us on appeal as an

interlocutory order that was appealable as of right. We proceed to the

merits.

      With our standard of review in mind, see, e.g., Berry v. Berry, 898

A.2d 1100, 1103, 1104 (Pa. Super. 2006), we have reviewed the briefs of

the parties, the certified record, and the trial court opinion. The trial court,

the Honorable Robert J. Matthews, has authored an opinion that ably

disposes of the issues presented on appeal.            We affirm based on that

opinion. See Trial Court Opinion, 3/24/15, at at 5-10.

      Order affirmed.

      Judge Mundy joins the memorandum.

                                      -3-
J-A25033-15

     Judge Donohue files a dissenting memorandum.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/21/2015

                                -4-
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   IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNT~tcl:,veo
                     FAMILY COURT DIVISION
                  DOMESTIC RELATIONS BRANCH         MAR .2 4 2015

                                                                                          CLERK OF COURT
LESLIE MCNEIL CERF,                                        IN THE SUPERIOR COURT OF
               PETITIONER                                       PENNSYLVANIA

          vs.                                              (C.P. PHILADELPHIA COUNTY
                                                           No. 00·01231/PACSES765104114
HENRY SLACK MCNEIL, JR.,
              RESPONDENT                                    No. 348 EDA 261Rereb:,, cartiry tht1t Um foregoing
                                                                          fa a true copy of !'.'l:) ·~:;;J1,·:::1! as same
                                                                          ~-e~rn I!, tho r~.:Cln:t:~ of thls Court       ~1

    I.          Procedural History
                                             OPINION

                                                                                :'.9%J~:
    Petitioner (Mother) filed to modify a running support order on March'!QrKEi~ll:R
                                                                                       ,1..,dfttidr'FAMILY   COURT
July 8, 2013 Master's hearing was continued pending complex discovery. A record

hearing was held on May 12, 2014. Post-hearing Briefs were filed, by agreement of

counsel, on, or before July 30, 2014. The Master issued a report on August 26, 2014.

Exceptions were timely filed on September 15, 2014, and oral arguments were held on

November 24, 2014.       1

    II.         Facts

    On March 21, 2013 Petitioner sought an increase in support from a 2009 support

order based on the "Melzer" formula, (Master's Report at 2). The Melzer formula for

calculating support is no longer utilized in Pennsylvania. Id at 4. The parties have a

combined monthly income above $30,000. The Master calculated the support based on

the guidelines, pursuant to Rule 1910.16-3.1. Id. The parties have a 50/50 shared physical

1 The delay in oral arguments was due to scheduling difficulties arising from the physical move of the
entire Philadelphia Family Court from two separate locations to the new central location at 1501
Arch Street The record and the transcript of the Master's Hearing was not available to this court until

                                                  /~~,
after oral arguments. Counsel supplied the Judge with a copy of the Exceptions.

                                                  ~
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custody arrangement. The shared custody calculation was used for calculating the support

guidelines. Jdat 2.

    There were two primary issues before the Master. The first issue dealt with a windfall

capital gain from the sale of valuable personalty by the Respondent (Father) in 2011. The

gain was Respondent's personal gain. After considering the totality of the circumstances

and all relevant facts presented, the Master found in Petitioner's favor relying on Krebs v.

Krebs, 944 A.2d 768 (Pa. Super. 2008). Id. at 5-6. No Exceptions were filed. Exceptions

Hr'g, 16:5-16, 11/24/2014. The second issue was whether the principal distributions from

two trusts2 received by Respondent, should be considered income for the calculation of

child support. (Master's Report at 5). On this issue the Master relied on Humphreys v.

DeRoss, 567 Pa. 614; 790 A.2d 281 (2002), and included the interest income from the

trust distribution in the support calculation, but not the principal. (Master's Report at 6).

Exceptions were timely filed by Petitioner on the latter issue.

    A. Evidence Presented at Master's Hearing

    Petitioner, prior to the filing of any petition, inquired about Respondent's income and

tax returns by email and letter correspondence. (Ex. P-3, pgs. 4, 6, 13, 19, 20).

Respondent replied to Petitioner's queries. On January 25, 2012 Respondent's attorney

stated that the 2011 income total would not be available until K-ls from the trusts were

received. (Ex. P-3, pg. 8). Respondent replied, "sale and direct re-investment in other

holdings" (Ex. P-3, pg. 10). On June 14, 2012, draft K-ls were sent to Petitioner's

attorney, and said attorney was informed that final K-ls would not be available until the

2Throughout the records of testimony, from both the Master's hearing and the hearing on
Exceptions, the words trust and trusts are used interchangeably. These words have the same
meaning whether singular or plural, and reference the trusts titled "Henry S. McNeil 1959 Trust" and
Henry S. McNeil Resulting Subdivided Trust",

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middle of September, and that Respondent's 2012 income would be similar to 2011

income. (Ex. P-3, pg. 16). On March 19, 2013 a copy of Respondent's     2011 tax returns

was sent to Petitioner.   (Ex. P-3, pg. 22).

    Mother filed her Petition to Modify Support, and sought additional information

related to Respondent's   income. Petitioner sent Respondent a Notice to Attend and

Produce Documents, including documents from any trusts from which Respondent

received distributions. (Ex. P-6, P- 7). Respondent asserted that he was unable to produce

the documents related to the trust because he was no longer a trustee. Master's Hr'g,

111: 15-19, 05/12/2014. Petitioner Motioned for Allowance of Discovery; the parties

agreed to an Order authorizing discovery. (Ex. P-8, P~9). Petitioner requested production

of documents dated October 25, 2013, and Respondent replied on November 25, 2013.

(Ex. P-10, P-11 ). Petitioner filed a Motion to Compel Answers and to Request for

Production of Documents on December 20, 2013; asserting that Respondent's response to

the previous request was deficient. (Ex. P-12). Respondent filed an Answer to the Motion

on February 4, 2014. (Ex. P-13). On February 27, 2014, Petitioner subpoenaed Brett W.

Senior, Esquire, a trustee and financial advisor to Respondent. The subpoena ordered Mr.

Senior to attend and testify and to bring enumerated documents to a Master's hearing

scheduled March 6, 2014. (Ex. P-14). A review of the record shows Mr. Senior obtained

counsel who filed a Motion for Protective Order asserting confidentiality issues. The

Master's hearing was continued, by agreement of parties, until May 12, 2014. Trust

documents were given to Petitioner in early May after a Confidentiality Agreement was

signed. Master's Hr'g, 116:12"14; 119:1-2, 05/12/2014. Respondent stipulated to

everything in the documents sent to Petitioner. Master's Hr'g, at 118:21-22.

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   Following discovery a one-day Master's hearing was held on May 12, 2014. At that

hearing the Respondent was questioned about the trust distributions. Respondent testified

that in 2011 he received $2,000,000 (two-million dollars) from a trust, more specifically,

$500,000 (five hundred thousand dollars) was interest and $1,500,000 (one-million, five

hundred thousand dollars) was trust distributions. Master's Hr'g, 94:19-20. Respondent

testified that he believed this was evidenced by his 2011 and 2012 tax returns, Exhibits

D-1, D-2 respectively. Master's Hr'g, 95:14-18.

   At the close of the Master's hearing both parties agreed that the record may be

supplemented by documents from the trust regarding how much was/is given to the

Respondent from the trust. Master's Hr' g, 247: 10-22. Following the hearing, the Master

received post-hearing briefs from both parties filed by July 30, 2014. In addition, the

record was supplemented by Exhibits P-16, P-17, P-18, D-3, and D-4.

   III.    Petitioner's Exceptionsas Filed

             1. The Master erred by failing to include in Father's income the full amounts
                of his distributions from two trusts, which amounts were at least
                $2,500,000 in 2011, $2,000,000 in 2012, and $2,000,000 in 2013.
                (Movant' s supporting averments omitted).
             2. The Master erred in finding that Father's only income from the trusts for
                child support purposes was $500,000 in "interest income" when Father's
                2011 tax return shows that Father had $710,046 in interest income (most
                of which was tax exempt), dividend income and trustee fees and Father's
                2012 tax return showed that Father had $657,889 in interest income (most
                of which was tax exempt), dividend income and trust fees.
             3. The Master erred by including a reduction for equally shared custody for
                a period before Father was given shared physical custody by agreement
                in March 2013.
             4. The Master erred by omitting Exhibit P-18 from the list of Mother's
                exhibits.
             5. The Master erred by directing that the arrears should be paid at a rate of
                $1000 per month when the arrears should be paid in a lump sum or at least
                be paid at a much faster rate.
             6. The Master erred by not directing the Father pay towards Mother's legal
                fees.

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    IV.      Analysis

          The Parties resolved exception numbers 2, 3, 4, and 5 through an Agreed Order

dated December 4, 2014. In that Order the parties agreed that, "Father's 2011 income

shall include the $710,046 in interest income, dividend income, and trustee fees3 reported

on Father's 2011 federal income tax return, and Father's 2012 income shall include

$657,8894 in interest income, dividend income, and trustee fees." On this exception

alone, the Court administratively remanded to Master Bennett to evaluate and/or confirm

that the final figures contained in the Agreed Order were· appropriate. Master Bennett's

Recommendation as a result of the Remand was dated January 22, 2015. Exception

number 6 was not raised on this appeal. Exception number 1 is the focus of this Opinion

and is two-fold in analysis. One being whether the full amount of Respondent's trust

distributions should be considered income for support purposes, and two being who bears

the burden of proof when requesting the modification of a support order.

          A. The first prong of the analysis involves income as defined in 23 Pa. C.S. §
             4302:

                 "Income." Includes compensation for services, including, but not limited
                 to, wages, salaries, bonuses, fees, compensation in kind, commissions and
                 similar items; income derived from business; gains derived from dealings
                 in property; interest; rents; royalties; dividends; annuities; income from life
                 insurance and endowment contracts; all forms of retirement; pensions;
                 income from discharge of indebtedness; distributive share of partnership
                 gross income; income in respect of a decedent; income from an interest in
                 an estate or trust; military retirement benefits; railroad employment
                 retirement benefits; social security benefits; temporary and permanent
                 disability benefits; workers' compensation; unemployment compensation;
                 other entitlements to money or lump sum awards, without regard to source,
                 including lottery winnings; income tax refunds; insurance compensation or

3 Respondent had been a Trustee of the Henry S. McNeil, Jr. Trusts up until May 24, 2013, and as such
received a fee for services during the years in which he served.
4 Trust income plus income from other reportable sources.

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                settlements; awards or verdicts; and any form of payment due to and
                collectible by an individual regardless of source.
        For a resource to be considered income for support purposes it must reasonably fit

within one of the enumerated categories. Humphreys v. DeRoss. 567 Pa. 614, 619; 790

A.2d 281 (2002). In Humphreys, our Supreme Court reasoned that inheritance is a

common means of transferring wealth, so ifit were the intent of the legislature to include

it in the definition it would have listed inheritance among the categories of income. Id. at

620. Furthermore, if the legislature included "income from an interest in an estate or

trust" but did not list the principal of an estate or trust, it is reasonable "to assume that the

legislature did not intend to include the principal" of an estate or trust in the definition of

income for support purposes. Id. In Humphreys. the Supreme Court held that the trial

court had "abused its discretion" by including the inheritance received by Appellant as

income for support purposes and reversed and remanded.

        Here, as in Humphreys, the issue concerns an income resource. Petitioner asserts

that the Respondent has failed to show that the trust distributions contain principal or

come from the corpus. Respondent asserts that the division of trust interest and dividends

is reflected on his individual tax returns. The Master had to, and did rely on the testimony

and documental evidence presented at the hearing, and the supplemental briefs.

        Respondent receives distributions from trust accounts. Respondent gave

testimonial evidence, and produced tax returns to show the amount of interest and

dividend income distributed to him from those trusts in 2011 and 2012. Master's Hr'g,

94:19-20, 05/12/2014; Ex. D-1, D-2 respectively. The interest income and dividend

income of the distributions are reported on Respondent's timely filed, federal income tax

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returns. (Ex. D-1, D-2). The tax returns were entered into evidence at the Master's

hearing along with other documents regarding the trusts. (Master's Report at 1-2).

        Petitioner asserted at the Exceptions Hearing that the trusts increased in value

from January 1, 2011 to December 31, 2013. Exceptions Hr'g, 13:1-9, 11/24/2014.

Petitioner furthers that since the increase in the value of the trust in the specified years

amounts to more than the distributions made to the Respondent from the trust in the

specified years, the entire amount should be included as income for support purposes.

Exceptions Hr' g, 13: 14-19. Petitioner's exhibit, P-17, charts the cash flow of the trusts

from 2004 through 2013, and reflects losses during economic tumdowns as well as

distributions and the aforementioned gains. (Ex. P-17). The yearly portfolio shows a

balance of$45,727,207 in 2013, down from a closing balance of$59,704,220 in 2004.

(Ex. P-17). Thus, while the trust increased in value between 2011 and 2013, that fact

alone does not establish that Respondent's distributions came solely from the interest of

the trust, and should be included as income to the Respondent for child support purposes.

       A Master is required to base the report on the evidence presented at the hearing,

and supplemental briefs or documents if requested. Based on the totality of the

circumstance and all relevant factors the Master found that the income generated by the

trust, listed on Respondent's tax returns, should be included for support purposes, but the

principal should not.

       This Court finds that the learned Master made no error of fact or law based on the

totality of the all evidence submitted. The standard of review for support matters is

whether the trial court abused its discretion based on clear and convincing evidence.

Zullo v. Zullo. 531 Pa. 377, 380; 613 A.2d 544 (1992). An abuse of discretion is "Not

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merely an error of judgment, but if in reaching a conclusion the law is overridden or

misapplied or the judgment exercised is manifestly unreasonable, or the result of

partiality, prejudice, bias, or ill will, as shown by the evidence or the record, discretion is

abused." Id The Master correctly and properly, based the recommended Order, on the

law and the evidence before him, on the aforesaid dates.

       B. The second prong of the analysis concerns the burden of proof. On this matter
          the Court relied on 23 Pa. C.S. § 4352(a), and case law.

               23 Pa. C.S. § 4352(a):
               (a) General rule.--The court making an order of support shall at all times
               maintain jurisdiction of the matter for the purpose of enforcement of the
               order and for the purpose of increasing, decreasing, modifying or rescinding
               the order unless otherwise provided by Part VIII (relating to uniform
               interstate family support) or VIII-A (relating to intrastate family support)
               without limiting the right of the obligee, or the department if it has an
               assignment or other interest, to institute additional proceedings for support
               in any county in which the obligor resides or in which property of the
               obligor is situated. The Supreme Court shall by general rule establish
               procedures by which each interested party shall be notified of all
               proceedings in which support obligations might be established or modified
               and shall receive a copy of any order issued in a case within 14 days after
               issuance of such order. A petition for modification of a support order
               may be flied at any time and shall be granted if the requesting party
               demonstratesa substantial change in circumstances.
       "When modification of a child support order is sought, the moving party has the

burden of proving by competent evidence that a material and substantial change of

circumstance has occurred since the entry of the original or modified order. The lower

court must consider all pertinent circumstances and base its decision upon facts appearing

in the record which indicate that the moving party did or did not meet the burden of proof

as to changed circumstance." Samii v. Samii. 847 A.2d 691, 695 (Pa. Super. 2004).

   Petitioner's attorney stated on the record, at the Exceptions Hearing, that Respondent

receives a "fixed percentage of or a set amount from the trust without regard to whether it

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was principal or income. And the amount could include capital gains, interest and

dividends." Exceptions Hr'g, 12:1-5, 11/24/2014. Petitioner subpoenaed Brett W. Senior,

Esquire, a trustee, to testify and produce documents about the trust at the May 12th

Master's hearing. Exceptions Hr'g, 23:1-2. Documents were produced in early May, but

Mr. Senior was not present at the Master's hearing.5 Petitioner's counsel stated that they

did not pursue Mr. Senior because they did not feel Petitioner needed Mr. Senior's

testimony. Exceptions Hr'g, 23:6-19. Petitioner's counsel further asserted that it was their

position that the burden was on Respondent to "support this claim that somehow this was

principal to him, or the original corpus of the trust" Exceptions Hr'g, 23:19-23.

     Here again, the Master had to rely on the evidence and testimony presented at the

hearing. and supplemental documents. The Exhibits included letter and email

correspondence, tax returns, notices, motions, requests, responses, answers, a subpoena,

trust documents, and Respondent's portfolio review including cash flows and yearly

performance charts. (Master's Report, 1-2). Petitioner and Respondent gave testimony

and the Master found their testimony credible. The burden was on the Petitioner to prove

by competent evidence that the facts presented established that there was a material and

substantial change of circumstance. Petitioner failed to carry that burden in regard to

establishing whether the full trust should be included as income for support purposes as

oppose to only the interest and dividend income of the trust listed on the Respondent's

tax returns using information gained from the trust K-1 forms. Thus, Petitioner failed to

show a material and substantial change in circumstance.

5A review of the record shows Mr. Senior obtained counsel and filed a Motion for Protective Order.
The record is silent on any further proceedings in regard to this matter.

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   V.      Conclusion

   The Exceptions to the Master's report are denied, in part, and granted in part. The

Exceptions are granted only to the extent of the Agreed Order dated December 4, 2014.

Additionally, the administrative remand is ordered only to evaluate counsel's final figures

contained in the Agreed order to determine an accurate support obligation. The

Exception to the Master's report, for failing to include the full amount of the

Respondent's trust distributions as income for the calculation of support, and applicable

burden of proof is denied.

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