Hanrahan, M., Aplt. v. Bakker, J.
186 A.3d 958
Pa.2018Background
- Parties: Father (Michael Hanrahan) and Mother (Jeanne Bakker), divorced; two children; parties are attorneys. Father’s income surged (≈$15.5M in 2012); Father deposited $2.5M into an irrevocable non-grantor trust for the children and continued paying a prior, lower monthly support amount while disputing recalculation under high‑income guidelines.
- Pre‑existing Property Settlement Agreement (PSA) required annual support recalculation under Pennsylvania guidelines and provided fee shifting to the party successful in enforcing the PSA.
- Trial court (after hearing) applied the high‑income child support rule (Pa.R.C.P. 1910.16‑3.1) without an independent reasonable‑needs analysis, granted a modest downward deviation partly because of Father’s $2.5M trust contribution, and denied attorney’s fees to Mother.
- Superior Court (split panel) affirmed no duty to conduct an independent reasonable‑needs analysis under the high‑income rule, reversed the trial court’s credit for the trust contribution (holding voluntary trust contributions are not a proper basis for deviation), and awarded Mother attorney’s fees under the PSA.
- Supreme Court granted allowance of appeal and addressed three main questions: (1) whether Rule 1910.16‑3.1 eliminates a discrete reasonable‑needs inquiry in high‑income cases; (2) whether voluntary contributions to an irrevocable non‑grantor trust may justify deviation under Rule 1910.16‑5(b); and (3) whether Mother was entitled to attorney’s fees under the PSA.
Issues
| Issue | Father’s Argument | Mother’s Argument | Held |
|---|---|---|---|
| Whether Rule 1910.16‑3.1 precludes a discrete reasonable‑needs analysis in high‑income cases | The three‑step rule’s first (preliminary) calculation is not dispositive; the third step requires discrete consideration of the children’s reasonable needs (using detailed expense statements and deviation factors) | The high‑income rule brings cases under the guidelines and the preliminary formula inherently accounts for reasonable needs; separate reasonable‑needs analysis was eliminated | Court held: Rule 1910.16‑3.1 does NOT eliminate a separate reasonable‑needs inquiry; courts must perform a discrete reasonable‑needs analysis in step 3 via Rule 1910.16‑5(b) factors and the required expense/income statements. |
| Whether Father’s voluntary $2.5M contribution to an irrevocable non‑grantor trust is a proper basis for downward deviation | The trust contribution was appropriately considered as a relevant factor under Rule 1910.16‑5(b)(9); trial court properly gave limited credit | Voluntary transfers cannot reduce statutory child support; using such transfers to lower support frustrates children’s immediate needs and permits unilateral income manipulation | Court held: Voluntary contributions to a trust are NOT an appropriate ground for downward deviation; trial court erred in crediting the trust. |
| Whether Mother is entitled to attorney’s fees under the PSA for enforcing guideline‑based support | Father argued he did not breach the PSA—he disputed calculation in good faith and continued paying prior amount; also Superior Court’s fee award is premised on an interpretation of the guidelines that this Court overturned | Mother argued Father breached the PSA by refusing to pay guideline amounts and she prevailed in enforcing the PSA | Court held: Superior Court erred — Father was not properly characterized as the breaching party and, given this Court’s holding that a reasonable‑needs analysis is required, Mother cannot be deemed the successful enforcer at this juncture; fee award was improper now. |
Key Cases Cited
- Melzer v. Witsberger, 480 A.2d 991 (Pa. 1984) (formulated pre‑guidelines high‑income Melzer analysis for reasonable needs)
- Ball v. Minnick, 648 A.2d 1192 (Pa. 1994) (in standard‑income cases guidelines create strong presumption; cannot deviate simply because a judge finds a child needs less)
- Sutliff v. Sutliff, 528 A.2d 1318 (Pa. 1987) (parental obligation to support is independent of child’s assets; children’s assets generally should not satisfy parent’s support duty)
- Portugal v. Portugal, 798 A.2d 246 (Pa. Super. 2002) (voluntary retirement contributions treated as income for support purposes; forbids deferring income to evade support)
- MacKinley v. Messerschmidt, 814 A.2d 680 (Pa. Super. 2002) (vested stock options constitute income for support; prevents income deferral to defeat support)
- Mascaro v. Mascaro, 803 A.2d 1186 (Pa. 2002) (addresses high‑income APL/spousal support analysis under guidelines; not controlling here for child‑support high‑income rule)