Carney, K. v. Carney, D.
167 A.3d 127
| Pa. Super. Ct. | 2017Background
- Married in 1986; separated in 2010; no children. Husband founded Brothers Auto Transport during the marriage; at separation it had ~40 trucks and ~$9M annual gross sales.
- Wife formerly worked in the business but later stopped due to health issues; she cared for disabled family members and received APL (alimony pendente lite) of $4,942/month pre-remand.
- Major dispute in equitable distribution: valuation of Brothers. Husband’s experts used an income-based approach (valuing the business at $1,000,000); Wife’s experts used an asset-based approach (valuing Brothers at $1,978,328; fleet valued separately at ~$3.376M before liabilities).
- Initial master favored Wife’s experts; trial court later used an unsupported figure ($3,336,134) and the Superior Court remanded because that specific number was not a proper business valuation in the record.
- On remand, trial court adopted Wife’s $1,978,328 valuation, awarded the business to Husband (to avoid liquidation), gave Wife the house and 401(k), and ordered Husband to pay Wife $6,761.95/month for 10 years; it also increased APL to $12,000/month.
- Superior Court affirmed most of the remand decision but reversed insofar as the trial court failed to account for tax ramifications and sale/liquidation expenses when assigning the business solely to Husband; remanded for a hearing on those costs and reevaluation of equitable distribution.
Issues
| Issue | Plaintiff's Argument (Wife) | Defendant's Argument (Carney/Husband) | Held |
|---|---|---|---|
| Proper valuation method for Brothers | Asset-based valuation (fleet value) is reliable and reflects market comparables | Income-based valuation is the generally accepted method and more accurate | Court upheld trial court/master credibility determinations and allowed asset-based valuation; no abuse of discretion in adopting Wife’s method |
| Whether trial court should account for tax/sale/liquidation costs when assigning business | No explicit argument recorded that costs were irrelevant; court must consider statutory factors | Trial court erred by failing to "tax effect" value; assignment gave Husband illusory equity without sale costs | Reversed: trial court must consider tax ramifications and expense of sale/liquidation under 23 Pa.C.S. §3502(a) and hold a hearing on those costs |
| Whether equitable distribution based on business value was improper | Asset valuation produced equitable split when equalized with other assets/payments | Husband contends the original valuation and distribution were based on improper figures and should be recalculated | Affirmed generally, but remanded for adjustment after considering tax/sale costs affecting Husband’s practical value of the business |
| Modification of APL (increase to $12,000/month) | APL should enable Wife to maintain standard of living and litigate; need supported by expenses and Husband’s large income | Husband contends APL award exceeded Wife’s needs and produced a windfall | Affirmed: trial court’s increase to $12,000/month was supported by evidence of Wife’s needs and Husband’s income; not an abuse of discretion |
Key Cases Cited
- Mundy v. Mundy, 151 A.3d 230 (Pa. Super. 2016) (trial court has broad discretion in equitable distribution and may accept all, part, or none of valuation evidence)
- Smith v. Smith, 904 A.2d 15 (Pa. Super. 2006) (trial court must rely on submitted estimates, inventories, purchase records, and appraisals when valuing marital assets)
- Morgante v. Morgante, 119 A.3d 382 (Pa. Super. 2015) (masters’ credibility findings are entitled to great weight because masters observe demeanor)
- Balicki v. Balicki, 4 A.3d 654 (Pa. Super. 2010) (tax ramifications and expense of sale/liquidation are relevant to asset valuation and may be deducted even if sale is not imminent)