Court Opinion

ID: 2717964
Source: CourtListenerOpinion
Date Created: 2014-08-13 23:03:56.574938+00
Date Added: 2024-06-11T12:41:16.680009
License: Public Domain

J-A18016-14

                              2014 PA Super 169

THOMAS A. DEAN                                  IN THE SUPERIOR COURT OF
                                                      PENNSYLVANIA
                         Appellant

                    v.

JOAN A. DEAN

                         Appellee                   No. 2110 MDA 2013

                 Appeal from the Order of October 24, 2013
               In the Court of Common Pleas of Berks County
                       Civil Division at No.: 10-4283

BEFORE: LAZARUS, J., WECHT, J., and MUSMANNO, J.

OPINION BY WECHT, J.:                              FILED AUGUST 13, 2014

the trial court erred in denying one of

vacate the order in part, affirm in part, and remand with instructions.

separated in February 2010.     This was the third marriage for each party.

There were no children of the marriage, although both parties have children

from their prior marriages. On March 2, 2010, Husband filed a complaint in

divorce.

      On May 2, 2012, the court appointed a master to conduct a hearing

and issue a report to resolve the partie
J-A18016-14

because Godfrey was living in the marital residence and asserted that she

                                                                               ht to

over the economic issues.       On October 3, 2012, upon the consent of the

parties, the trial court permitted Godfrey to intervene.

      On March 14, 2013, the master conducted an equitable distribution

hearing.    On    April   15,   2013,   the   master   issued   his   report    and

recommendation and proposed order. In that report, the master concluded

that the parties had two main assets, a cabin that had been sold with the

proceeds being split equally, and the marital residence. As for the marital

residence, the master applied a seven percent cost of sale and determined

that the value available for distribution was $168,330.         The master gave

                                                                                   -

marital and that she used in the purchase of marital residence. The master

also found that Wife had arranged the loans for the marital residence and

used money from a long-term savings plan with her employer. The master

                                        -

subject to a coverture fracture as a portion was marital. However, that buy-

                                                was used to pay off the marital

                                        -2-
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residence.1     The master applied the coverture fraction to the remaining

equity in the marital residence to determine that $69,466 was the marital

portion of the residence. The master determined that a 75/25 split favoring

Wife was equitable.         Wife was awarded the marital residence and was

ordered to pay Husband $17,366.65.               Recognizing that Wife had limited

liquid assets and an outstanding home equity line of credit, the master

recommended that Wife be given options to pay Husband. Specifically, Wife

could execute a note for the total amount plus interest to act as a lien on the

property to be paid when Wife sold the property or upon her death; Wife

could pay the lump sum within ninety days; or Wife could make an initial

payment of $5,000 within ninety days and make installment payments on

the remainder plus interest over a period of three years.

       On April 30, 2013, Husband filed exceptions to the report.         Also on

April 30, 2013, Husband filed a motion for sanctions in which he argued that

Godfrey made representations in her petition to intervene that were

contradicted by her later deposition testimony and that Wife and Godfrey

should be ordered to pay his counsel fees for responding to the petition.

____________________________________________

1
     The master found that, around the same time Wife paid off the loans
on the marital residence, Wife indicated that she wanted her children to

that provided for the sale of the house upon her death from which her
children would receive the first $80,000 of the proceeds and Husband would
receive the remainder.

                                           -3-
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      Following oral argument, on October 24, 2013, the trial court denied

Husband filed a notice of appeal.           The trial court ordered, and Husband

timely filed, a concise statement of errors complained of on appeal pursuant

to Pa.R.A.P. 1925(b). Thereafter, the trial court filed its opinion.

      Husband presents three issues for our review:

      1. Whether the lower court abused its discretion and/or
         committed an error of law in its calculation/determination of
         the value of the marital residence for the purposes of the

      2. Whether the lower court abused its discretion and/or
         committed an error of law by allowing [Wife] to pay
                                                  death.

      3. Whether      the   lower   court    abused   its   discretion   and/or

         Sanctions.

                      -2.

      We review an equitable distribution order according to the following

standard:

      The equitable distribution of marital property is within the sound
      discretion of the trial court and its decision will not be disturbed
      on appeal absent an abuse of discretion. Under the abuse of

      the finder of fact. An abuse of discretion is not found lightly, but
      only upon a showing of clear and convincing evidence. . . .
      However, an abuse of discretion will be found by this Court if the
      trial court failed to follow proper procedure or misapplied the
      law.

                                        -4-
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Hunsinger v. Hunsinger, 554 A.2d 89, 92 (Pa. Super. 1989) (citations

omitted).

     Husband first argues that the trial court erred by affirming the

marital component of the marital resid                       -out. Husband

asserts that the master lacked authority to do so. Husband also argues that,

                                                             -marital, Wife

comingled the funds with a marital asset, rendering them marital assets.

Husband contends that the entire value of the marital residence should have

been considered marital property. In the alternative, Husband argues that,

if a coverture fraction could have been applied, it should have only applied

to the buy-out and not to the entire value of the marital residence.

                     -8.

     Wife owned a home prior to marriage. Approximately nine years into

the marriage, Wife sold that property and applied the proceeds to the

marital residence.   The master found that Wife was responsible for the

mortgage and swing loan that were used to finance the marital residence

and that Wife paid off those loans using the buy-out she received when her

employment ended and the retirement funds Wife withdrew.        The master

determined that Wife consumed the entirety of the buy-out by paying off the

loans and by having work completed on the marital residence. The master

concluded that the entirety of the funds to purchase and pay for the marital

residence derived from Wife.

                                   -5-
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      However,   the   mas

retirement funds and her buy-out were attributable to her years of

employment during the marriage, and thus, constituted marital property. To

determine the marital portion, the master divided the number of years that

Wife worked during the marriage by the total number of years that Wife

worked for her employer to determine a coverture fraction of 43.58 percent.

The master then applied that percentage to the amount Wife received from

her retirement and buy-out.

      The master also decided to apply the coverture fraction to the value of

the marital residence, because the funds Wife received were applied to the

residence. In so doing, the master found it to be equitable to credit Wife for

this non-marital property that had been co-mingled with a marital asset.

Applying the coverture fraction and the 75/25 distribution scheme to the

marital residence, the result was a higher amount to Husband than applying

                                                           -out.   The master

found it equitable to award Husband the larger sum based, in part, upon the

was appropriate under these circumstances. The trial court recognized that,

even though Husband deeded the marital residence to Wife, it remained

marital property. However, the trial court found that Wife did not gift non-

marital property to Husband when she paid off the marital residence, but

                                    -6-
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to her children, Wife was engaging in financial planning. When Wife applied

those funds to the house, she did so with the expectation that Husband

would not have an interest in the residence beyond the residuary clause of

her will.   Therefore, the trial court found it to be equitable that the funds

used for the marital residence were considered according to their original

marital or non-marital designation before they were applied to the residence.

                                                         -9.

       By statute, a coverture fraction2 shall be applied to a defined benefit

retirement plan when the court equitably divides such a plan.                   See 23

Pa.C.S.A. § 3501(c). Generally, a coverture fraction is not applied to other

types of marital assets.         Husband is correct that when a party co-mingles

non-marital     assets    with    marital      assets,   those   assets   generally   are

transformed into marital assets. See Verholek v. Verholek, 741 A.2d 792,

797 (Pa. Super. 1999).             However, in certain circumstances, we have

considered the value of pre-marital assets that were contributed to a marital

asset to determine distribution.

____________________________________________

2

coverture fraction shall be the number of months the employee spouse
worked to earn the total benefit [or the total accrued benefit as determined
as close as possible to the time of trial] and the numerator shall be the
number of such months during which the parties were married and not

distribution of the plan is chosen. 23 Pa.C.S.A. § 3501(c).

                                            -7-
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      For example, in Lee v. Lee, 978 A.2d 380 (Pa. Super. 2009), the wife

purchased the marital residence and had paid part of the mortgage prior to

the marriage.     The wife re-financed the residence and the husband was

included on the deed at that time, transforming the asset from pre-marital

to marital property. At the time of re-finance, the wife paid the costs and

part of the mortgage with funds from the sale of additional pre-marital

property she owned. After re-financing, the wife paid off the balance of the

mortgage with the remaining proceeds from her pre-marital property. The

husband admitted that he contributed nothing to the marital residence. The

court distributed the marital residence with 65 percent going to the wife.

Id. at 384.     Finding that the record did not support the distribution, we

remanded with instructions for the trial court to determine the percentage of

                                                                             -

                                                -marital assets, and from the

joint assets, and to distribute the residence accordingly. Id. at 385.

      This case is similar to Lee.     While Wife did not own the marital

residence prior to marriage, Wife paid for the mortgage from funds that

were partly non-marital.    Husband, by his own testimony, did not pay the

mortgage and knew that Wife was using her retirement funds to pay for the

                                                           -40. Wife testified

that she made every mortgage payment and paid all property taxes.

                                     -8-
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Deposition of Wife, 11/7/2012, at 8.3 As in Lee, the master attempted to

determine which percentage of the value of the marital residence was

                               -marital assets and to give Wife credit for that

percentage.      While application of a coverture fraction may have been

unorthodox, it accomplished that goal. Had the master deemed the entire

residence to be marital property and merely given Wife a larger percentage

of the marital residence, resulting in the exact same monetary distribution in

recognition of her greater contribution to the asset, that too would have

been an appropriate use of discretion. The use of a coverture fraction does

not invalidate that use of discretion.

       The master made, and trial court affirmed, conclusions regarding

                                                          ances, including their

separate assets, contribution to the marital estate, health and age, and

likelihood that each would acquire additional assets. Those conclusions are

distribution of assets.

       Husband next argues that the trial court abused its discretion in

allowing Wife the option not to pay Husband his share of the marital

residence until her death.         Husband contends that he contributed to the

expenses for the household yet may not see his share of the equity in the

____________________________________________

3

                                           -9-
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house if he does not outlive Wife. Husband also asserts that, because there

                                                            -9.

      The master and the trial court relied upon the determination that it

would be unfair to require Wife to sell the marital residence as justification

for the delay in providing Husband with his share of the marital estate.

Because Wife had invested the majority of the funds in the residence, the

master and trial court believed that it would be equitable for her to remain in

the house until her death or until she chose to sell it. T.C.O. at 14-15. The

trial court also cited the note that Wife would execute in favor of Husband as

evidence of the equity of the award. Id. at 15.

      One of the overarching purposes of the Divorce Code is to work

economic justice between the parties. 23 Pa.C.S.A. § 3102 (a)(6). While

the master and the trial court asserted that economic justice is achieved by

Wife remaining in the marital residence, neither discussed how economic

justice would be served through the indefinite delay of payment of

executing a note, the court permitted Wife to dictate when, if ever, Husband

receives his share of the estate. Wife could choose that option and decide

not to sell the marital residence with the knowledge that Husband has a

heart condition that is deteriorating.       See N.T. at 12-13 (describing

                                    - 10 -
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     We often have dealt with the issue of delayed receipt of equitable

distribution in the context of pension benefits.      We have compared

immediate receipt versus delayed distribution:

     The immediate offset method has the advantage of avoiding
     further entanglement between the parties.      Problems with
     continuing court supervision and enforcement are also avoided.

     final and immediate settlement of the distribution of the
     retirement benefits.   In contrast, the deferred distribution
     method equally divides the risk of forfeiture before maturity
     among the parties, but also prolongs the strife and hostility
     between the parties by extending the time for a final resolution

     . . . this method is impractical where the parties do not possess
     enough assets to offset the pension award. When the value of
     the employee-                             eeds the value of the
     other marital property, the deferred distribution method must be
     used.

                                  *   *   *

     [T]he trial courts . . . must balance the advantages and
     disadvantages of each alternative method as applied to the facts
     of each particular case to determine which method best
     effectuates a fair and equitable distribution

Hunsinger, 554 A.2d at 93 (quoting Braderman v. Braderman, 488 A.2d

613, 619-20 (Pa. Super. 1985)).

obvious. Husband and Wife would avoid further entanglement and the court

would avoid continued involvement and enforcement. While a payment plan

might be necessary, enforcement of such a method would be more clear-cut

than the untangling of possible competing claims fo

                                   - 11 -
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with none of its advantages. This arrangement would prolong the financial

involvement between Husband and Wife and allow neither to separate

completely from the other. Nor does this deferral divide any risk. All it does

is allow Wife complete control over when, or if, Husband receives his share.

      One benefit of deferred distribution is that it provides an option when

the estate does not have sufficient liquid assets.   However, while no one

disputes that Wife does not have the total amount at her disposal, the

record does not support a finding that Wife does not have the resources to

pay Husband at all. Wife testified that she could take another $15,000 from

her home equity line of credit.    N.T. at 67.   Godfrey paid Wife $400 per

month, but stopped doing so. Id.

Wife at the time of the hearing and was not contributing to the household

expenses.   Id. at 84.     Wife works part-time and receives social security

benefits. Id. at 83. Wife could use her line of credit or ask her mother or

son to contribute to enable her to pay the majority of what she owes

Husband. Wife could seek to increase her work hours. The record does not

support the conclusion that Wife has no option but to delay distribution to

Husband until her death.

making. Wife complains that Husband has $6,000 in savings, while Wife has

been left with no retirement fund and a line of credit debt.        However,

N.T. at 31. While Husband saved these proceeds, Wife used her share to

                                    - 12 -
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buy a camper for her children. Id. at 67. At the time of her deposition in

Wife, Exh. 3 at 2. At trial, approximately a year later, it was about $45,000.

N.T. at 55. Wife testified that part of the increase was due to counsel fees;

however, approximately $20,000 of that debt was used to purchase a car for

her son. Id. at 60-                  -separation financial decisions should not

be used to justify delaying or denying Husband his share of the marital

estate.

      Because there was no justification to delay, and perhaps deny,

discretion in allowing Wife to do so. However, the trial court did not abuse

its discretion in allowing Wife the option of a payment plan over a period of

time or of a lump sum payment to Husband. Those options provide Husband

financial situation.   Therefore, we vacate the part of the order that allows

Wife to execute a note in lieu of actual payment to Husband.

      We note that the trial court recognized that the master made a

calculation error and that, applying the coverture fraction correctly, Husband

should have received $17,398.55.      T.C.O. at 6-7, n.1 & 2.    However, the

trial court did not correct the order to reflect this error when Husband filed

exceptions.   Because we are remanding this case, the trial court also is

directed to enter an order reflecting the true amount and directing Wife to

pay Husband either in a lump sum or according to the payment plan.

                                     - 13 -
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       In his final issue, Husband asserts that the trial court erred in denying

his Motion for Sanctions. Husband pursued sanctions pursuant to Pa.R.C.P.

1023.1(d). That rule provides that the trial court has discretion in granting

or denying such a motion.      Id.

decision for an abuse of that discretion.

       Rule 1023.1 provides that, by signing a pleading, motion, or other

paper, the party or attorney is certifying that it is not being filed for an

improper purpose; that the claims are warranted by existing law, an

extension of existing law, or establishment of new law; that there is

evidence or evidence is likely to be found through discovery for any factual

allegations; and that denials are based upon evidence or a reasonable lack

of information or belief.   Pa.R.C.P. 1023.1(c).   The rule also provides that

the court may impose sanctions when the rule is violated.             Pa.R.C.P.

1023.1(d).

       Husband argues that Godfrey included allegations in her petition to

intervene that were contradicted by her deposition testimony.          Husband

inconsistencies and requesting that the petition be withdrawn or corrected.

petition, acted willfully in making false allegations. Husband also contends

that the petition increased his counsel fees because he had to defend the

peti                                                                   -14.

                                     - 14 -
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       The trial court determined that it was reasonable for Godfrey to

believe that she could be required to leave the marital residence when

Husband asserted a claim to it.     T.C.O. at 20.   The trial court also found

                            Id. at 21.     However, the court also determined

that the allegations were not unreasonable given the information Godfrey

had.   The

sanctions were not warranted.     Id. at 22.    Based upon our review of the

record, we cannot conclude that the trial court abused its discretion in

reaching its conclusions. Therefore, we affirm the denial of sanctions.

       Order affirmed in part and vacated in part.       Case remanded with

instructions. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/13/2014

                                     - 15 -