Moran v. MoranMoran v. Moran
Lead Opinion
¶ 1 Joseph F. Moran (“Husband”) and Joan M. Moran (“Wife”) cross-appeal the order entered November 21, 2002 by the Chester County Court of Common Pleas with respect to their cross-exceptions to the Report and Recommendations of the special master entered on April 19, 2002 following an equitable distribution hearing. For the reasons that follow, we affirm in part and vacate in part.
¶ 2 Husband and Wife were married on February 3, 1973. During the marriage, they had two children, both of whom are now adults. At the time they were marriеd, Husband worked as a director of engineering for Upland Industries, Inc. He also worked as an industrial engineer' for A.P. DeSanno & Sons, Inc. In June 1980, Husband started a company, Pacer Industries, which manufactures specialty grinding wheels for the paper and steel industry. Husbánd owns 100% of the stock of the corporation and he presently manages the company’s operations. Wife worked as a secretary for the Commonwealth of Pennsylvania when she married Husband. Later, Wife worked at a department store, but stopped working after the birth of the parties’ first child. In 1988 or 1989, Wife began working part-time selling jewelry. Wife stopped working, however, in 1993 or 1994 and has not worked outside of the home since that time.
¶ 3 In July 1993, Husband and Wife purchased a house in Stone Harbor, New Jersey for $275,000. The Stone Harbor property presently is valued at $725,000, and, as of November 14, 2002, there was a balance of $279,189.14 on the mortgage. The Stone Harbor property also is encumbered by a home equity loan which, as of September 27, 2001, had a balancе of $35,359.41. In addition to the Stone Harbor property, Husband and Wife own a residence in Exton, Pennsylvania, which they purchased in 1998 for $175,000. Since the parties’ separation, Husband has resided in the Exton house, and has paid the mortgage payments and the taxes and insurance on the residence. The balance on the mortgage of the Exton house as of November 14, 2001 was $173,208.93.
¶ 4 Husband initiated divorce proceedings against Wife on October 19,1999. On December 3, 2001, Wife filed an Answer and Counterclaim for Alimony. Lynn A. Snyder, Esquire, was appointed as special master, and conducted hearings on December 4, 5, 6, and 12, 2001. On April 19, 2002, Snyder issued a Report and Recommendation, wherein she recommended that Wife receive 63% of the marital property, valued at $1,134,127, and that Husband receive 37% of the marital property. The proposed distribution would allow Husband to keep the Stone Harbor property, but required him to pay Wife $560,937 in equitable distribution, including a lump sum payment of $250,000. The master recommended that Husband refinance the Stone Hаrbor house and/or Pacer Industries in order to obtain the funds to make the lump sum payment to Wife, and that Wife be listed as a secondary hen holder on the Stone Harbor property once the refinancing is complete. In the event Husband is unable to make the lump sum payment, the master recommended that the Stone Harbor property be sold. Finally, the master recommended that the Husband pay the remaining $310,937 to Wife by making 120 consecutive monthly payments which include 6% interest, and that Husband maintain a lifе insurance policy on himself listing Wife as the beneficiary
¶ 5 Husband and Wife both filed exceptions to the master’s report. Wife’s exceptions included, inter alia, the following:
3. As to the Master’s award of the Stone Harbor property to Husband, the Master erred in first recognizing that Husband would like to retain the Stone Harbor property, determining that it was not clear that his desire was a feasible option, following which the Master then inconsistently determined that “Husband will be afforded the opportunity to [purchase the property.]” Thе specific error averred is the Master’s failure to reconcile her concern over the feasibility of Husband’s retaining the property as earlier expressed and her award of same to Husband when clearly the latter is not practical and is, in fact, prejudicial to Wife.
4. The Master erred in awarding to Husband the Stone Harbor property, subject to the condition that he pay an offset amount to. Wife. The consequence of the Master’s award is that Wife will in essence have to loan Husband the sum of $310,936.91 necessary to complete the offset payment at below market interest rates and without sufficient security.
5. The Master erred in accommodating Husband’s desire to retain the Stone Harbor property in the face of her own concerns about his feasibility to do so; rather the Master should have ordered the sale of same to assure delivery of a larger portion of Wife’s distribution to her in cash, which would reduce the offset payment to her and lessen her risk.
(Wife’s Exceptions, 4/29/02, at 2 (citations to record omitted).) Wife also alleged that the master erred in finding that Wife was barred from receiving alimony pursuant to 23 Pa.C.S.A. § 3706 and in failing to find that she was entitled to receive equitable reimbursement in lieu of alimony.
¶ 6 Husband argued in his exceptions that the master erred in recommending that he be required to execute in favor of Wife a note secured by the Stone Harbor property; that the master erred in not allowing Husband to apportion the liens between the Stone Harbor property and the Pacer Industries real estate, where such apportionment would give greater protection to Wife; and that the master erred in not amortizing the equitable distribution payout to Wife in the amount of $310,936,91 over a period of 120 months.
¶ 7 On November 22, 2002, the Honorable Katherine B.L. Platt entered an opinion and order granting Wife’s exceptions with respect to the Stone Harbor property, stating that “I find that in order to effectuate economic justice, the parties must sell the Stonе Harbor property with the net proceeds awarded to Wife.” (Trial Court Opinion, 11/22/02, at 17 (footnote omitted).) The trial court denied, however, Wife’s exceptions to the master’s recommendations regarding the award of alimony.
¶ 8 Subsequently, Husband and Wife filed cross-appeals to this Court. Husband asks us to consider the following questions:
I. Whether the lower court erred in not allowing Husband to retain the Stone Harbor property when retention of same would have furthered the policies of the Divorce Cоde.
II. Whether the lower court erred in finding that it would prejudice Wife to have Husband pay her over time for her interest in the Stone Harbor property.
III. Whether the lower court erred in finding that distribution would begreater if the shore house were sold.
IV. Whether Husband, if awarded the Stone Harbor property, should be allowed the option of refinancing the Stone Harbor property and/or Pacer Industries in order to allow him more flexibility in securing financing and also to provide more security for Wife in terms of the liens which she would have against the respеctive properties.
V. [Whether] the lower court erred in not continuing the master’s recommendation that Wife pay to Husband from her share of the marital assets the sum of $9,703.65, which represented her payment to Husband for her share of the marital liabilities.
(Husband’s Brief at 7.) Wife raises the following issues on appeal:
I. Whether the trial court erred in its interpretation of 23 Pa.C.S.A. § 3706, when it ruled that said statute can bar an award of alimony prior to the entry of a final decree in divorce.
II. Whether the trial court еrred in failing to award equitable reimbursement to [Wife] in lieu of alimony.
(Wife’s Brief at 1.)
¶ 9 Husband’s assertions of trial court error pertain to the equitable distribution of the parties’ marital property. 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 convincing evidence.” Gilliland v. Gilliland,
¶ 10 We now address Husband’s arguments on appeal. This Court has recognized that
[t]he methods by which divorcing parties effectuate economic justice are familiar and well settled. The process of equitable distribution is an exercise in mar-shalling, valuing and dividing the marital pot in а fair manner. Not every piece of property can or should be split in half. Sometimes one spouse is entitled to more property than is the other. In some instances, the sale of property must occur so that each spouse can receive his or her rightful amount. In other instances, a spouse may be allocated a specific item of property and the other spouse will receive cash or a credit for his or her share in that same item.
Miller v. Miller,
¶ 11 The trial court acknowledged that Husband desires to keep the Stone Harbor property so that his children and grandchildren can enjoy it. (Trial Court Opinion, 11/22/02, at 16.) The trial court also noted that the house was used by the family and not rented out. (Id.) There is also no dispute as to the appraised or net value of the house. Nevertheless, the trial couii; ordered that the house be sold. Husband contends that the trial court’s order failed to comply with the policy of the Divorce Code to “[mjitigate the harm to the spouses and their children caused by the dissolution of the marriage”, (Husband’s Brief at 15), and indeed prejudiced both Husband and Wife by potentially re-
¶ 12 In setting forth its reasons for ordering that the Stone Harbor property be sold, the trial court stated only that “I find that in order to effectuate economic justice, the parties must sell the Stone Harbor property with the net proceeds awarded to Wife.” (Trial Court Opinion, 11/22/02, at 17.) The trial court did not, however, explain why economic justice could not be served under the master’s recommendations, which would allow Husband an opportunity to refinance the property so that he could retain the property as desired, but would also compensate Wife for her interest in the property. As noted above, under the master’s recommendation, Wife would receive a lump sum payment of $250,000, as well as $310,937 in scheduled payments, including a 6% rate оf interest, over the next ten years.
¶ 13 Husband lastly argues that the trial court erred in not including in its final order a credit to Husband in the amount of $9,703.65, which represents Wife’s portion of the marital debt as determined by the master. Husband points out that neither party raised an objection to this issue in their exceptions to the master’s report, and, further, that the trial court recognized this amount as part of the master’s recommendation in its opinion (Trial Court Opinion, 11/22/02, at 6), but neglected to account for it in the final decree of equitable distribution. As it appears that this may have been an oversight by the trial court, we instruct the court to address the issue on remand.
¶ 14 We now turn to Wife’s claims on appeal wherein she first alleges that the trial court failed to award alimony to her. Our standard of review regarding questions pertaining to the award of alimony is whether the trial court abused its discrеtion. Isralsky v. Isralsky,
¶ 15 The trial court determined that Wife was precluded from receiving alimony under 23 Pa.C.S.A. § 3706, which provides:
No petitioner is entitled to receive an award of alimony where the petitioner, subsequent to the divorce pursuant to which alimony is being sought, has entered intо cohabitation with a person of the opposite sex who is not a member of the family of the petitioner within the degrees of consanguinity.
23 Pa.C.S.A. § 3706. The trial court, relying on Twilla, supra, concluded that Wife was precluded from receiving alimony as a result of her cohabitation with Joseph Martinkovic that occurred prior to Husband and Wife’s divorce. Wife contends that the trial court misinterpreted Twilla, a case in which the wife admitted cohabitation. Wife herein asserts that she is not precluded from receiving alimony because shе ended her relationship with Martinko-vic, after concluding that he was interested in her only for her money. (Wife’s Brief at 8.) Wife further argues that her relationship with Martinkovic did not meet the definition of cohabitation because Husband failed to establish that there was an economic bond between Wife and Martinko-vic.
¶ 16 We note that in Twilla, this Court held that the wife was not entitled to receive alimony because she admitted to co-habitating with a person of the opposite sex before the entry of the final decree in divorce and the equitable distribution of the marital property.
¶ 17 Furthermore, to the extent Wife argues that the trial court erred in determining that her relationship with Martinkovic met the definition of cohabitation, we stated in Miller v. Miller,
Husband presented the testimony of two private investigators, one in Stonе Harbor, the other in Lansford. The evidence, which was overwhelming, was that Wife was not residing in Stone Harbor, but rather in Lansford, PA. with her boyfriend and had been doing so since early 2000. This was further corroborated by the Stone Harbor utility usage as well as Wife’s check cashing pattern and MAC usage.
It should be noted that Wife denied living with Joseph Martinkovic but rather testified that she was just visiting. She also denied keeping her clothes at Martinkovic’s residence. Wife’s testimony in this regard is not found to be credible. Clearly Wife was not residingin Stone Hаrbor and she only testified to a couple of occasions when she was with her mother or visiting her brother. The majority of Wife’s time over a two year time span was spent with Martinkovic. Wife accompanied Martinkovic almost everywhere including business related trips, weekend outings and vacations.
While there may have been no comin-gling of funds, such as joint accounts, there was a financial interdependence with respect to Wife and Martinkovic. Wife was residing with Martinkovic yet she was not pаying rent or utilities. She testified that she would only occasionally pay for food and that if they went out to eat the expenses would be shared.
Wife acknowledged a sexual relationship with Martinkovic not only in the Answer and Counterclaim but also [in] her testimony. That Wife was living with Martinkovic for approximately two years demonstrates a commitment on the part of Wife and Martinkovic to the relationship. Present are the qualities of stability, permanence and mutual interdependence.
(Master’s Report and Recommendation, 4/19/02, at 31-32 (citations to record omitted).) The trial court determined that the master’s findings were reasonable and supported by the record. As previously noted, a master’s report and recommendation are to be given the fullest consideration, especially on the issue of the credibility of witnesses. See Simeone,
¶ 18 Wife nеxt argues that the trial court erred in failing to properly consider her claim for equitable reimbursement in lieu of alimony. Equitable reimbursement is designed to compensate a spouse for his or her contribution to the marriage where the marital assets are insufficient to do so. Twilla,
¶ 19 For all of the foregoing reasons, we vacate the portion of the trial court’s equitable distribution order requiring the immediate sale of the Stone Harbor property and remand for entry of a new order consistent with this memorandum.
¶ 20 Order AFFIRMED in part and VACATED in part. Case REMANDED. Jurisdiction RELINQUISHED.
Notes
. As support for his argument that 6% is a fair rate of interest, Husband notes that the trial court ordered that Wife receive the difference between 37% of the recalculated marital assets and the amount she realizes from the proceeds of the sale of the shore house in amortized payments оver a five-year term at 6% interest.
. In view of our disposition, we need not address Husband's next three issues on appeal, which pertain to the Stone Harbor properly.
Concurrence Opinion
CONCURRING AND DISSENTING OPINION BY
¶ 1 I am always most reluctant to disagree with my learned colleagues and, to the extent that I am able, I hasten to join them in matters brought before us for disposition. In the present case, I am in full agreement with the majority to the extent it affirms the trial court order of November 21, 2002. I also agree that a remand is necessary in order for the trial court to address what appears to be an oversight in not including in its final order
¶2 I am unable, however, to join my colleagues in the majority to the extent that they vacate the trial court’s order as it relates to the Stone Harbor property. It is clear to me that the learned trial court gave the master’s repоrt the “fullest consideration” on this as well as all of the matters concerning equitable distribution, which as the majority observes, is obligatory. Opinion, at 1095. While, as the majority observes, the trial court did not explain “why economic justice could not be served under the master’s recommendations” relating to the Stone Harbor property, Opinion, at 1096, I am aware of no authority which requires such an explanation and the majority cites none. On the other hand, it seems, at least, implicit that in rejecting the mastеr’s recommendations in this regard and devising her own distribution scheme, the learned trial court explained why economic justice was being served (although, again, I am not sure that such an explanation is mandated). Given our limited standard of review which the majority recognizes, Opinion, at 1095, I cannot agree that the learned trial court abused her discretion in directing that the Stone Harbor property immediately be sold or that such an abuse was “demonstrated by clear and convincing evidence” as the majority recites that our precedent requires. Id. (citation omitted).
¶ 3 As the trial court explained: “ ‘Although the master’s report is entitled to great weight, that final responsibility for making the [equitable] distribution [of property] rests with the Court.’ Tagnani v. Tagnani,
¶ 4 “An abuse of discretion is not merely an error of judgment, but rather a misаpplication of the law or an unreasonable exercise of judgment.” Isralsky v. Isralsky,
[a]n abuse of discretion “is synonymous with a failure to exercise a sound, reasonable, and legal discretion. It is a strict legal term indicating that [an] appellate court is of [the] opinion that there was commission of an error of law by the trial court. It does not imply intentional wrong or bad faith, or misconduct, nor any rеflection on the judge but means the clearly erroneous conclusion and judgment — one that is clearly against logic and [the] effect of such facts as are presented in support of the application or against the reasonable and probable deductions to be drawn from the facts disclosed upon the hearing; an improvident exercise of discretion; an error of law.” Myers v. Myers,405 Pa.Super. 290 ,592 A.2d 339 (1991), citing Commonwealth v. Powell,527 Pa. 288 n. 8,590 A.2d 1240 n. 8 (1991), quoting Black’s Law Dictionary, 5th Ed. (1979).
Berrington v. Berrington,
¶ 5 In my view, the evidence clearly supports the trial court’s order of equitable distribution in its entirety. The learned trial court exercised her discretion
¶ 6 Moreover, as the trial court recognized, “[ajlthough the master’s report is entitled to great weight, the final responsibility of making the distribution rests with the court. Our review is thus based on the court’s distribution of property.” McNaughton v. McNaughton,
¶ 7 Here, the trial court considered all of the factors which the legislature has directed in arriving at her equitable distribution scheme. Opinion, 11/24/02, at 26-29. Though I may have reached a different conclusion if I were the one exercising my discretion in the first instance, I cannot say on this record that the learned trial court abused her’s. Accordingly, I would resolve all of those issues which relate to the sale of the Stone Harbor proрerty (including those which the majority did not address because of its resolution of Husband’s first issue) on the basis of the trial court’s opinion.
¶ 8 Moreover, I agree with the trial court that Wife waived the claim that she should have been awarded equitable reimbursement. Nevertheless, as the trial court indicated, even if the merits of this issue were to be addressed, Wife would not be afforded any relief, for the proceeds from the sale of the Stone Harbor property are sufficient to compensate Wife fоr her contribution to the marriage. Accordingly, I would also resolve this issue on the basis of the trial court’s opinion.
¶ 9 Based on the foregoing, therefore, I dissent from that portion of the Opinion which vacates the equitable distribution order to the extent that it requires that the Stone Harbor property be sold immediately. I further dissent from the Opinion to the extent that it does not address Wife’s claim that she should have been awarded equitable reimbursement and instructs the trial court to consider that claim upon remand. I would, instead, affirm the order of equitable distribution in its entirety.