Court Opinion

ID: 2804755
Source: CourtListenerOpinion
Date Created: 2015-06-01 19:09:17.997151+00
Date Added: 2024-06-11T11:29:53.564571
License: Public Domain

J-A08002-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

SUSAN T. DEAVER, A/K/A SUSAN                          IN THE SUPERIOR COURT OF
TAYLOR LEMON, A/K/A SUSAN TAYLOR                            PENNSYLVANIA
DEAVER-LEMON,

                            Appellee

                       v.

MARCUS J. LEMON,

                            Appellant                     No. 1244 MDA 2014

                 Appeal from the Decree Entered July 15, 2014
               In the Court of Common Pleas of Lancaster County
                       Civil Division at No(s): CI-10-08775

BEFORE: SHOGAN, WECHT, and STRASSBURGER,* JJ.

MEMORANDUM BY SHOGAN, J.:                                   FILED JUNE 01, 2015

       Marcus J. Lemon (“Husband”) appeals from the final decree entered on

July 15, 2014, in this divorce action.         After careful review, we reverse and

remand with instructions.

       The relevant facts of this case were set forth by the trial court as

follows:

              The parties were married August 30, 1996 in Lancaster
       County, Pennsylvania. Susan T. Deaver (“Wife”) is now 44 years
       old residing at 121 Windover Turn, Lancaster, PA. Marcus J.
       Lemon (“Husband”) is 43 years old residing at 2700 Virginia
       Avenue NW, Washington, DC. There were two (2) children born
       of this marriage[.]

____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
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           Wife filed a complaint of divorce under Section 330[1](c)
     on July 27, 2010. Husband filed an affidavit of consent on
     December 22, 2010. There are no defense[s] and no counter-
     claims. Penn Glazier, Esq. was appointed Divorce Master on July
     18, 2011. Hearings were held December 7, 2011 and March 23,
     2012. Briefs were filed on February 15, 2013 and the Divorce
     Master’s report was filed on May 30, 2013. Husband filed
     exceptions on June 17, 2013. Wife did not file exceptions.

            The Divorce Master recommended that a divorce be
     granted as both parties consent and the marriage is irretrievably
     broken. Pursuant to section 3701[(a)] of the divorce code, the
     Divorce Master also recommend[ed] alimony be paid to [W]ife in
     the amount of $2,000 per month for a period of 8 years. As
     justification for this recommendation, the Divorce Master found
     that Wife is a stay-at-home mother of two (2) children, a part-
     time artist and works part-time for the Manheim Township
     School District. Nevertheless, she was assessed an earning
     capacity, by this Court of $30,000 per year. On the other hand,
     Husband is employed with McKenna, Long & Aldridge, a law firm
     in Washington, DC, and his income is approximately $230,000
     per year. Currently, Wife receives $3,200 per month in spousal
     and child support. The parties were married for 14 years. Prior to
     the children being born, Wife worked full-time and provided
     health insurance for the parties. Although Husband completed
     law school before the parties married, marital funds were used
     to pay down his school loan debt. The most significant findings
     made by the Divorce Master were in regards to Husband’s
     misconduct. During the marriage, Husband had several
     relationships. While buying a new home for his family in
     Lancaster, Husband had purchased a BMW, co-signed for an
     apartment for his paramour in Washington, DC, bought a dog
     with him and furnished the apartment with new furniture and a
     plasma TV. In addition, Husband spent over $10,000 in
     additional gifts not including trips and dinners. The Divorce
     Master noted that marital misconduct is only one factor to
     consider; however, he felt the misconduct was so egregious that
     i[t] warranted significant weight.

           The Divorce Master also found that, although the parties
     enjoyed an upper middle class living, they possess very little in
     the way of marital assets, and concluded that the total value of
     the marital estate of $14,160.58 should be apportioned as
     follows:

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     Item                               Value         To Wife     To Husband
     Marital Residence []
     Appraised value:                   $626,000
     Less:
     Cost of sale (7%):                 -$43,820
     Balance of Mortgages:              $629,276.66               $0

     Contents of Marital Residence      Amicably Divided

     Rent Received by Husband for
     Lease of jointly owned residence   $0                        $0

     Husband’s 401(k)[]                 $9,460.58     $9,460.58

     Western Reserve Life Insurance
     Policy cashed in by Husband    $4,700.00            $4,700.00
     ______________________________________________________________
                                    $14,160.58 $9,460.58 $4,700.00

            Given these meager assets, the Divorce Master concluded
     that Wife clearly does not possess sufficient property to provide
     for her reasonable needs. This fact, coupled with the equally
     correct observation that Wife is unable to support herself in
     anything remotely resembling the manner in which both
     Husband and Wife had become accustomed to during the
     marriage, leading him to the conclusion that Alimony was
     justified in this case in the amount of $2,000 per month for a
     period of eight (8) years.

            The Divorce Master also recommended that Husband pay
     all of Wife’s counsel fees totaling, $28,368.00 due to the
     disparity in their incomes; however, he also pointed to the
     vexatious manner in which [H]usband has prosecuted this
     divorce as justification for such an award. In addition, the
     Divorce Master recommended that Husband be ordered to obtain
     and maintain a life insurance policy in the amount of $100,000,
     naming [W]ife and children as beneficiaries, and that such policy
     shall remain in effect until his youngest child is eighteen (18)
     years of age. The Divorce Master recommended that Husband be
     required to maintain health [i]nsurance for Wife through COBRA
     for a period of not less than three (3) years.

           Finally, what appears to be the crux of the issues is Wife’s
     Trust Fund which the Divorce Master found to be non-marital
     property, as it was established as a “verbal trust” more than 40
     years ago which was later memorialized in a written document.

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     The Divorce Master also noted that all contributions came solely
     from Wife’s parents or inheritance from Wife’s grandparents,
     that neither Husband nor Wife ever withdrew funds from the
     account(s), and that Wife has no access to the trust and no
     ability to withdraw income or principal. The value of the trust, at
     the date of Argument Court, was approximately $516,000.

                                    ***
           The trial court carefully considered the Exceptions raised
     by Husband, as well as the factors set forth in 23 Pa. C.S.A.
     §3502, and determined that economic justice was achievable in
     this case by making a few minor modifications to the
     recommendations of the Divorce Master. With regard to
     Husband’s Exceptions 1 & 2, the trial court concluded that the
     Master erred in finding that Husband, at the date of separation,
     was the owner of a life insurance policy with a cash value. Based
     upon the arguments of counsel presented in their respective
     briefs and in Argument Court, the trial court concluded that
     Husband’s Life Insurance Policy was cashed out prior to
     separation and used to pay off marital debt. As such, it had no
     value for purposes of equitable distribution. Moreover, Wife’s Life
     Insurance Policy, which the trial court concluded was marital
     property, had a cash value of $5,223.00 at the time of the
     Master’s Hearing.

           Further, the trial court was persuaded that the Divorce
     Master correctly concluded that Wife’s Trust Fund was non-
     marital in nature and that she has no present ability to control or
     derive income from the asset. Consequently, given the meager
     marital    assets   in   this   case,   the   Divorce     Master’s
     recommendation, that Husband pay Alimony in the amount of
     $2,000 per month to Wife for a period of eight (8) years, was
     equally justified. Wife clearly does not possess sufficient
     property to provide for her reasonable needs, and, given her
     current earning capacity assessed by this Court, she is unable to
     support herself in anything remotely resembling the manner in
     which both Husband and Wife had become accustomed to during
     the marriage.

           The trial court is equally persuaded that circumstances
     dictate that Husband be required to maintain a $100,000 life
     insurance policy naming Wife and children as beneficiaries, and
     that such policy shall remain in effect until his youngest child is
     eighteen (18) years of age. However, this Court also established,

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     in an ancillary proceeding, that Wife has an earning capacity of
     $30,000.00 per year, and, currently, she is under employed by
     choice. Consequently, this Court concluded that she is capable of
     obtaining and maintaining health insurance for herself, and,
     therefore, the trial court did not require Husband to maintain
     COBRA benefits for her at his expense despite the
     recommendation of the Divorce Master.

           Based upon these findings and conclusions, and given the
     fact that Husband has substantial student debt, is shouldering
     the majority of the marital debt all while being obligated to pay
     Alimony and Child Support, the trial court determined the total
     value of the marital estate to be $14,683.58, and that it should
     be apportioned as follows:

     Item                               Value         To Wife   To Husband
     Marital Residence []
     Appraised value:                   $626,000
     Less:
     Cost of sale (7%):                 -$43,820
     Balance of Mortgages:              $629,276.66             $0

     Contents of Marital Residence      Amicably Divided

     Rent Received by Husband for
     Lease of jointly owned residence   $0                      $0

     Husband’s 401(k)[]                 $9,460.58               $9,460.58

     Western Reserve Life Insurance
     Policy owned by Wife           $5,223.00  $5,223.00
     ______________________________________________________________
                                    $14,683.58 $5,223.00 $9,460.58

           Finally, for the reasons stated in the Master’s Report, the
     Court affirmed the Master’s recommendation that Husband
     assume full responsibility for Wife’s attorney fees and costs
     incurred during this divorce proceeding.

Trial Court Opinion, 9/18/14, at 3-8. A final divorce decree was entered on

July 15, 2014, and on July 23, 2014, Husband filed a timely appeal.

     On appeal, Husband raises the following issues for this Court’s

consideration:

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      A. Whether the Court below erred in finding that the accounts in
      the individual name of [Wife], in Trust for her mother and
      accounts in the joint names of [Wife] and her mother were held
      in an oral trust to which [Wife] had no ability to control and
      receive either principal or income?

      B. Whether the Court below erred in finding that [Wife], as
      settlor, could create the Susan Deaver-Lemon Family Trust
      without being in possession and control of the funds she
      contributed to it?

      C. Whether the Court below erred in finding that [Wife] had no
      separate property from which income and gain was received
      during marriage, which income and gain constituted marital
      property?

      D. Whether the Court below erred in ordering [Husband] to pay
      alimony to [Wife]?

      E. Whether the Court below erred in Ordering [Husband] to pay
      attorneys[’] fees to [Wife]?

      F. Whether the Court below erred in Ordering Appellant to obtain
      and maintain a life insurance policy on his life in the face amount
      of $100,000 naming [Wife] and their children as beneficiaries?

Husband’s Brief at 7.

      As noted by the trial court, the crux of this appeal is its determination

that Wife established an oral trust and that her trust funds were entirely

non-marital property. Because Husband’s first three issues assail the status

of the trust funds as non-marital property and income source, we shall

address those issues concurrently.

      “When reviewing an order of equitable distribution, our standard of

review is limited, and we will not disturb the trial court’s decision absent an

abuse of discretion or error of law which is demonstrated by clear and

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convincing evidence.”              Gilliland v. Gilliland, 751 A.2d 1169, 1171 (Pa.

Super. 2000) (citation omitted). “The determination of whether an asset is

part of the marital estate is a matter within the sound discretion of the trial

court.” Id. (citation omitted). Additionally, “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.”        Childress v. Bogosian, 12 A.3d 448, 455 (Pa. Super. 2011)

(citation       omitted).          We   also   note    that    “a   master’s    report   and

recommendation, although only advisory, is to be given the fullest

consideration, particularly on the question of credibility of witnesses,

because the master has the opportunity to observe and assess the behavior

and demeanor of the parties.” Id. at 455-456 (citation omitted).

      The overarching issue in this matter is Husband’s claim that Wife failed

to establish an “oral trust” over which she had no control, and he claims that

Wife had access to the trust funds. Husband’s Brief at 19. Pursuant to 20

Pa.C.S.     §    7737,      oral    trusts   created   after   November    6,    2006,   are

unenforceable in this Commonwealth. However, prior to the effective date

of section 7737, oral trusts, also termed parol trusts, were permitted in

Pennsylvania.        In re Trbovich’s Estate, 413 A.2d 379, 380 (Pa. 1980)

(citation omitted).           In order to establish a parol inter vivos trust of

personalty, the proponent of such a trust has the burden to establish its

existence. Id. (citation omitted). The acts and words of those involved in

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creating the trust must admit to no other interpretation than the creation of

a trust, and the proof must be clear, precise, and unambiguous.                Id.

(citations omitted). No part of a parol trust can be left to inference, and the

proof must be clear and specific in all particulars. Id. (citation omitted).

      Contrary to Husband’s argument, Wife has maintained that while a

written trust document was created in May 2010, the trust itself was

established forty years earlier, before the effective date of section 7737.

Wife’s Brief at 6. The trial court accepted the Master’s recommendation and

concluded that the testimony from Wife and Wife’s father was credible

concerning the creation of the oral trust. Wife has maintained she had no

access to the funds in the oral trust, and thus it was never her property.

Trial Court Opinion, 9/18/14, at 10-11.         After careful review, we are

constrained to disagree.

      The record reveals that prior to the marriage, Wife received an

inheritance following the death of her paternal grandmother, and those

funds, combined with gifts from Wife’s parents, totaled approximately

$140,000.00.     N.T., 2/24/12, at 111-115.        During the marriage, Wife

received another inheritance in the amount of $125,000.00 following the

death of her maternal grandmother.       Id. at 115.    Wife claims that these

funds were held in the oral trust which was later converted to a written trust

that was memorialized on May 5, 2010. However, Husband claims that the

May 5, 2010 written trust is, in fact, evidence that Wife had access to and

                                      -8-
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control over the oral trust funds. This control and access to the trust funds

defeats the trial court’s finding of an oral trust over which Wife had no

control. Husband’s Brief at 20-21. Husbands points out:

      By its express terms, Wife placed her property into the trust.
      Evidence of deposits into the trust further verify that Wife
      deposited her money into the trust. Therefore, the Susan
      Deaver-Lemon Trust, by its express terms and coupled with the
      evidence of the deposits into the trust, are further proof that the
      funds in the Fulton Bank account, Vanguard Group funds and
      Fidelity Investments were the funds of Wife and no oral trust
      ever existed. Clearly, if the funds in question had been held for
      the benefit of Wife and, as the Master and the Court below
      determined, she had no ability to obtain or control principal or
      income, she could not have contributed the very same money,
      as settlor, to her trust.

Husband’s Brief at 23.

      We agree with Husband.      The language from the written trust lists

Wife as the settlor. Susan Deaver-Lemon Family Trust, 5/5/10, at ¶ 1. The

written trust document reveals that Wife as settlor also funded the trust and

made herself beneficiary. Id. Clearly, if Wife was able to fund the written

trust with monies from the alleged oral trust, it is axiomatic that she had

access and control over those funds. Therefore, we conclude that the trial

court erred and abused its discretion in concluding that an oral trust existed.

The corpus of the alleged oral trust, which is now the corpus of the Susan

Deaver-Lemon Family Trust, is the separate property of Wife.

      Having concluded that the trust was Wife’s separate property, we now

address Husband’s claim concerning the income received from those funds.

During the time the parties were married, the trust funds earned interest

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and dividend income and increased in value to approximately $400,000 at

the time the parties separated. N.T., 2/12/14, at 120. Husband argues that

while the money that Wife inherited constitutes Wife’s separate property and

a non-marital asset, the interest earned on those funds during the marriage

was a marital asset.    Husband’s Brief at 18.      We agree with Husband.

Because income was earned on Wife’s property during the marriage, that

income should have been deemed marital property and subject to equitable

distribution. 23 Pa.C.S. § 3501(a).

      In Husband’s remaining issues, he challenges the order directing him

to pay alimony, pay Wife’s attorney’s fees, and maintain life insurance listing

Wife and the parties’ children as beneficiaries.    The trial court’s order in

regard to those issues was prefaced on its finding that an oral trust existed

and that Wife had no control over those funds. As discussed above, we have

determined that the trial court erred in that conclusion; therefore, because

Wife had access to those funds and the increase in value of those funds

should have been deemed marital property, the basis for the alimony award,

payment of attorney’s fees, and maintenance of life insurance has changed

substantially.

      For these reasons, we are constrained to conclude that the trial court’s

findings were not supported by the evidence, and therefore, we reverse the

trial court’s determination that an oral trust existed. Because the existence

of the oral trust was the basis for the balance of the trial court’s order

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concerning      equitable   distribution,   alimony,   attorney’s   fees,   and   life

insurance, we remand those determinations to the trial court for further

consideration in light of our decision.          On remand, the trial court shall

determine what income the trust funds accrued during the marriage, and

consider that income as marital property.          The court shall then determine

the amounts due as equitable distribution, and the necessity of alimony,

attorney’s fees, and life insurance.

      Decree reversed.        Case remanded with instructions.          Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 6/1/2015

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