Dupre, L. v. Dupre, K.
740 WDA 2015
| Pa. Super. Ct. | Aug 5, 2016Background
- Mother appealed a child support order determining Father’s income for support of two minor children.
- Father is managing partner and 45.5% owner of Dupre Capital, a partnership whose sole asset is a Charles Schwab investment account.
- For 2013, Father’s partnership share increased in value by $244,344; Father took no distributions and has not withdrawn funds since formation.
- Trial court excluded the undistributed earnings from Father’s income, accepting Father's testimony that retaining earnings was a business decision necessary to preserve the long-term investment and to avoid setting a precedent with other partners.
- Trial court found no evidence the retention was intended to shield income from support obligations and relied on Father’s claimed lack of control by others.
- Superior Court reviewed whether retained partnership earnings controlled by Father should be included in income for support calculations.
Issues
| Issue | Dupre (Mother)'s Argument | Dupre (Father)'s Argument | Held |
|---|---|---|---|
| Whether undistributed partnership earnings are income available for child support | Father’s proportional share of retained earnings ($244,344) should be included as income because Father controls distributions | Retained earnings were a bona fide business decision necessary to maintain/preserve the long-term investment; distributions would set a bad precedent and weren’t necessary | Court held retained earnings are includable because Father, as managing partner with control, failed to prove retention was necessary to preserve the business; trial court abused discretion |
| Burden of proof when owner controls distributions | Court should treat retained earnings as available when owner controls distributions unless owner proves necessity | Father bears burden to prove necessity of retention to maintain/preserve business | Held that Father had burden and failed to meet it |
Key Cases Cited
- Kimock v. Jones, 47 A.3d 850 (Pa. Super. 2012) (standard of review and child support purpose)
- Fennell v. Fennell, 753 A.2d 866 (Pa. Super. 2000) (retained corporate earnings excluded only where owner lacks control; owner must prove necessity when controlling)
- Fitzgerald v. Kempf, 805 A.2d 529 (Pa. Super. 2002) (income calculation must reflect actual available financial resources of business owner)
- Berry v. Berry, 898 A.2d 1100 (Pa. Super. 2006) (court must consider all forms of income for support)
- Rohrer v. Rohrer, 715 A.2d 463 (Pa. Super. 1998) (definition/explanation of retained earnings)