S.M.D. v. D.A.

• Court: Superior Court of Pennsylvania
• Decided: January 16, 2019
• Docket: 183 WDA 2017
• Status: Unpublished

Opinion

J-A09009-18

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

S.M.D. : IN THE SUPERIOR COURT OF : PENNSYLVANIA v. : : D.A. : : Appellant : No. 183 WDA 2017

Appeal from the Order January 4, 2017 In the Court of Common Pleas of Butler County Domestic Relations at No(s): 37804

BEFORE: BOWES, J., DUBOW, J., and MURRAY, J.

MEMORANDUM BY BOWES, J.: FILED JANUARY 16, 2019

D.A. (Father) appeals from the January 4, 2017 order that vacated the

trial court’s earlier order granting reconsideration of the findings of fact that

informed its child support order. We affirm in part, reverse in part, and

remand for further proceedings consistent with this memorandum.

Father and S.M.D. (Mother) married in 2011 after having two children,

M.A. (born in 2008) and L.A. (born in 2010) (“Children,” collectively). Father

owned and operated a beauty salon in Wexford, Pennsylvania, where Mother

worked as a stylist and manager until the parties’ younger child was born. In

2013, Father sold the marital residence with little notice to Mother. Mother

and Children moved to California with the expectation that Father would

follow. Mother and Children remained in California for approximately one

year, Father did not relocate to California, and Mother and Children returned

to Pennsylvania in July 2014. Mother filed for divorce in February 2015. J-A09009-18

Father opened a second salon in California, travelling back and forth between

the two salons, but spending the majority of his time in California.

An initial support order was entered in April 2015. Father filed for a de

novo hearing. That hearing was continued multiple times at the request of

one party or the other, and was eventually conducted over three days:

February 29, 2016, May 23, 2016, and August 12, 2016. During the pendency

of the de novo hearing, Father closed his Wexford salon.

The trial court entered its findings of fact and support order on

November 23, 2016.1 Therein, the court determined that Father’s net monthly

income is $12,722 and Mother’s is $1,176. The court, accordingly, ordered

Father to pay $2,235 per month in child support and the majority of expenses

related to Children’s extracurricular activities.

Father presented a motion for reconsideration, which the trial court

granted by order filed on December 23, 2016. After determining that the

order was entered in error because it intended to deny the motion, the trial

court entered an order on January 4, 2017, vacating the grant of

reconsideration. Father filed a notice of appeal on January 25, 2017. The trial

court ordered Father to file a concise statement of errors complained of on

appeal, and Father timely complied. Therein, Father raised eight issues

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1The findings of fact are dated November 18, 2016, and the support order is dated November 21, 2016. Both documents were filed on November 23, 2016.

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concerning the trial court’s factual findings and support order of November

23, 2016. In its Pa.R.A.P. 1925(a) opinion, the trial court expressed its belief

that Father’s challenges to the November 23, 2016 determinations were

untimely.

On February 13, 2017, this Court issued a rule to show cause why the

appeal should not be quashed as untimely. Father filed a response suggesting

that the appeal was timely filed because he filed it within thirty days of the

trial court’s final resolution of the issues following its express grant of Father’s

motion for reconsideration. Mother responded with an argument that the

appeal was untimely, as the trial court’s order granting reconsideration

referenced only the findings of fact, and did not grant reconsideration of the

support order based upon those findings. This Court discharged the rule,

without making a final determination of the timeliness of the appeal. Mother

filed an application to quash the appeal, relying on the reasons detailed above.

The appeal was then stayed after Father filed for bankruptcy. After the stay

was lifted, this Court again declined to quash the appeal without prejudice for

the issue to be raised before this panel.

In her brief, Mother again advocates for quashal of Father’s appeal as

untimely because Father never requested reconsideration of the support

order. Mother’s brief at 7. Mother contends that, as a result, to challenge the

November 23, 2016 support order, Father was required to have appealed

within thirty days, i.e., by December 23, 2016. Id. As Father did not file his

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notice of appeal until January 25, 2017, Mother argues that it must be quashed

as untimely. Id.

Our review of the record reveals that the appeal is not untimely, as the

docket report certified to this Court does not contain a notation that the

support order was served upon the parties pursuant to Pa.R.C.P. 236. As we

have explained,

Rule of Appellate Procedure 108(b) designates the date of entry of an order as the day on which the clerk makes the notation in the docket that notice of entry of the order has been given as required by Pa.R.C.P. 236(b). Our Supreme Court has held that an order is not appealable until it is entered on the docket with the required notation that appropriate notice has been given. Where there is no indication on the docket that Rule 236(b) notice has been given, then the appeal period has not started to run. Our Supreme Court has expressly held that this is a bright-line rule, to be interpreted strictly. That the appealing party did indeed receive notice does not alter the rule that the 30–day appeal period is not triggered until the clerk makes a notation on the docket that notice of entry of the order has been given.

In re L.M., 923 A.2d 505, 508–09 (Pa.Super. 2007) (citations, internal

quotation marks, and emphases omitted).

Accordingly, we cannot quash Father’s appeal as untimely in the

absence of the proper docket notation. Rather, the appeal is technically

premature. However, we shall not waste judicial resources remanding the

case for a docket entry, but shall proceed to the merits of Father’s appeal.

Vertical Res., Inc. v. Bramlett, 837 A.2d 1193, 1199 (Pa.Super. 2003)

(considering appeal as timely despite the improper entry of the appealed-from

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order, where “it would be a waste of judicial resources to remand the matter

solely for the filing of a Pa.R.Civ.P. 236 notice”).

Father presents the following questions for this Court’s review, which

we have reordered for ease of disposition.

[1]. Whether the trial court erred in calculating Appellant’s income.

[2]. Whether the trial court erred in determining Appellee’s earning capacity.

[3]. Whether the trial court abused its discretion in calculating the costs of extracurricular activities.

Appellant’s brief at 5.

The following principles guide our consideration of Father’s first two

issues.

The amount of a support Order is within the sound discretion of the trial judge, whose judgment will not be disturbed on appeal absent a clear abuse of discretion. An abuse of discretion is not merely an error of judgment, but rather a misapplication of the law or an unreasonable exercise of judgment.

Calabrese v. Calabrese, 670 A.2d 1161, 1162 (Pa.Super. 1996) (citations

omitted).

Under our rules of civil procedure, “the amount of support to be awarded

is based upon the parties’ monthly net income.” Pa.R.C.P. 1910.16-2. The

calculation of income is guided by the following parameters.

(a) Monthly Gross Income. Monthly gross income is ordinarily based upon at least a six-month average of all of a party’s income. The term “income” is defined by the support law, 23 Pa.C.S.A. § 4302, and includes income from any source. The statute lists many types of income including, but not limited to:

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(1) wages, salaries, bonuses, fees and commissions;

(2) net income from business or dealings in property;

(3) interest, rents, royalties, and dividends;

(4) pensions and all forms of retirement;

(5) income from an interest in an estate or trust;

(6) Social Security disability benefits, Social Security retirement benefits, temporary and permanent disability benefits, workers’ compensation and unemployment compensation;

(7) alimony if, in the discretion of the trier of fact, inclusion of part or all of it is appropriate; and

(8) other entitlements to money or lump sum awards, without regard to source, including lottery winnings, income tax refunds, insurance compensation or settlements; awards and verdicts; and any form of payment due to and collectible by an individual regardless of source.

. . . .

(c) Monthly Net Income.

(1) Unless otherwise provided in these rules, the court shall deduct only the following items from monthly gross income to arrive at net income:

(A) federal, state, and local income taxes;

(B) unemployment compensation taxes and Local Services Taxes (LST);

(C) F.I.C.A. payments (Social Security, Medicare and Self- Employment taxes) and non-voluntary retirement payments;

(D) mandatory union dues; and

(E) alimony paid to the other party.

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(2) In computing a spousal support or alimony pendente lite obligation, the court shall deduct from the obligor’s monthly net income all of his or her child support obligations and any amounts of spousal support, alimony pendente lite or alimony being paid to former spouses.

(d) Reduced or Fluctuating Income.

(1) Voluntary Reduction of Income. When either party voluntarily assumes a lower paying job, quits a job, leaves employment, changes occupations or changes employment status to pursue an education, or is fired for cause, there generally will be no effect on the support obligation.

(2) Involuntary Reduction of, and Fluctuations in, Income. No adjustments in support payments will be made for normal fluctuations in earnings. However, appropriate adjustments will be made for substantial continuing involuntary decreases in income, including but not limited to the result of illness, lay-off, termination, job elimination or some other employment situation over which the party has no control unless the trier of fact finds that such a reduction in income was willfully undertaken in an attempt to avoid or reduce the support obligation.

(4) Earning Capacity. If the trier of fact determines that a party to a support action has willfully failed to obtain or maintain appropriate employment, the trier of fact may impute to that party an income equal to the party’s earning capacity. Age, education, training, health, work experience, earnings history and child care responsibilities are factors which shall be considered in determining earning capacity. In order for an earning capacity to be assessed, the trier of fact must state the reasons for the assessment in writing or on the record. Generally, the trier of fact should not impute an earning capacity that is greater than the amount the party would earn from one full-time position. Determination of what constitutes a reasonable work regimen depends upon all relevant circumstances including the choice of jobs available within a particular occupation, working hours, working conditions and whether a party has exerted substantial good faith efforts to find employment.

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Pa.R.C.P. 1910.16-2.

Father first contends that the trial court abused its discretion in

calculating his income. He argues that, rather than base it upon his prior tax

returns, the trial court should have utilized Father’s actual cash flow in

rendering its income calculation. Father’s brief at 20-21. He maintains that

his businesses “suffered a downturn,” resulting in the closure of the Wexford

salon, and rendering inapt an income determination based upon his earnings

while both business were operating. Id. at 26. Father suggests that he should

not be punished for the failure of his reasonable attempts at expanding his

businesses, and cites as evidence of the trial court’s abuse of discretion the

facts that he is saddled with significant arrearages and filed for bankruptcy

after the trial. Id. at 27. Finally, Father avers that the trial court’s calculation

of his income was incorrect based upon its failure to properly account for

Groupon sales, and its determinations that Father abandoned assets of the

Wexford salon and received unreported tip income. Id. at 27-29.

Father is correct that, “in determining the financial responsibilities of the

parties to a dissolving marriage, the court looks to the actual disposable

income of the parties.” Fennell v. Fennell, 753 A.2d 866, 868 (Pa.Super.

2000) (cleaned up). Thus, the court’s finding as to income “must reflect actual

available financial resources and not the oft-time fictional financial picture

created by the application of federal tax laws.” Id. (internal quotation marks

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However, as noted above, if a party’s actual income is the product of

voluntary underemployment, the court is to assign an income based upon the

party’s earning capacity rather than his or her disposable income. Pa.R.C.P.

1910.16-2(d). Additionally, where a party owns his or her own business,

the calculation of income for child support purposes must reflect the actual available financial resources of the payor spouse. Further, all benefits flowing from corporate ownership must be considered in determining income available to calculate a support obligation. Therefore[,] the owner of a closely-held corporation cannot avoid a support obligation by sheltering income that should be available for support by manipulating salary, perquisites, corporate expenditures, and/or corporate distribution amounts.

Spahr v. Spahr, 869 A.2d 548, 552 (Pa.Super. 2005) (cleaned up).

Both the Wexford and the California salons were Subchapter S

corporations wholly owned by Father, meaning that the net income of the

businesses passed through to Father and were attributable to Father for tax

purposes. N.T. De Novo Hearing, 2/29/16, at 33-34. Mother and Father each

offered experts who compared the 2014 and 2015 reported earnings of the

companies with the trading summary reports that showed the flow of money

into the companies. Id. at 22-25, 33. The experts analyzed the net profits

or losses of the companies, the amount of tip income attributable to Father,

and the income he received in the form of perquisites.

Specifically, Mother’s expert review of the materials led her to conclude

that the gross earnings attributable to services Father provided as a stylist in

Wexford in 2014 was $224,925, which is over $50,000 more than Father

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reported on his income tax return. Id. at 14-15, 24. The difference can be

explained by the cash and checks that records show were received by the

company, but which “did not appear to all make it to the bank.” Id. at 25.

Father reported $6,750 in tips that year, representing 3% of his gross

income.2 Id. at 17. Mother’s expert also included in disposable income

available to Father in 2014 the $28,273 that Father received from the Wexford

company as repayment of a shareholder loan, and the $51,257 that Father

advanced to the California company from the Wexford company. Id. at 21.

It was the opinion of Mother’s expert that, after consideration of all taxes,

Father’s 2014 net income was $144,060, or $12,005 per month. Id. at 27.

As for 2015, when Father split his time between both salons, his gross

income from stylist services was $146,341, approximately $87,000 of which

came from Wexford and $59,000 from California. 3 Id. at 15. Father

acknowledged $2,250 in tips in 2015, or 1.5% of his gross salon services. Id.

at 18. Father received $59,035 in “shareholder loan advances” from the

Wexford salon in 2015, and the salon also forwarded $39,276 to the California

2 Mother’s expert utilized only the amount of tips Father reported in making her calculations, although she opined that the industry average for cash tips is 10-15% of gross sales. N.T. De Novo Hearing, 2/29/16, at 19. Tips were only permitted to be given in cash at the salon, not though charge accounts. Id. at 17.

3The difference in 2015 between the trading summary and the bank deposits was only $4,425. Id. at 25. During this time someone other than Father was making the daily deposits. N.T. De Novo Hearing, 2/29/16, at 26.

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company. Id. at 22. A comparison of the trading summaries and

management reports also revealed an additional $20,625 of undistributed

corporate income. Id. at 26-27. From this, Mother’s expert opined that

Father’s after-tax income in 2015 was $98,273, or $8,189 per month.

Father’s expert testified only to Father’s 2015 income. She indicated

that the reported tip income should have been 15% of the gross services

Father provided,4 or approximately $22,000, as opposed to the $2,250 he

documented. Id. at 35. Father’s expert further detailed the value of

perquisites attributable as income to Father: $7,478 in travel, $4,875 for a

car lease, and approximately $20,000 in divorce attorney fees paid by the

salons. Id. at 38. She concluded, in marked contrast to Mother’s expert, that

there was a mere $2,513 income in 2015 between the two salons, given the

equipment purchases made by the California salon and its long-term

liabilities.5 Id. at 37. Father’s expert also expressed the opinion that Groupon

sales explained the difference noted by Mother’s expert between the gross

revenue figure reported in the trading summary and the figure indicated in

the profit/loss statement: “they book the Groupon sales at the gross amount

so that the individual stylists get paid on the gross tips,” but that “what they

actually realize may be” half of the gross amount or less. Id. at 39. Father’s

4 Father’s expert indicated that tip income is 15 to 20%; she utilized 15% in her calculations given that Father was the salon’s owner. Id. at 35. 5 Father’s expert did not testify to the repayment schedule regarding these

liabilities.

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expert ultimately concluded that Father’s 2015 disposable income was

$55,774, or $4,648 per month. Id. at 38.

The trial court made the following factual findings regarding Father’s

income. For 2014, the trial court adopted the value that Mother’s expert

offered as Father’s net income ($144,060), and added the 15% tip income

that Father’s expert opined should be attributed to his stylist services ($36,

739), arriving at total disposable income of $180,799, or $15,067 per month.

Findings of Fact, 11/23/16, at 6. Similarly, for 2015, the trial court accepted

the net salon income of $98,273 indicated by Mother’s expert, added $54,386

for 15% tip income and the perquisites identified by Father’s expert, and

arrived at a net disposable income of $152,659, or $12,722 per month. Id.

at 6-7. Clearly the trial court’s findings have support in the record, as it

adopted the portions of each expert’s opinions that it found credible. Such

was the prerogative of the trial court in its role as fact finder. See, e.g.,

Mackay v. Mackay, 984 A.2d 529, 533 (Pa.Super. 2009) (“When the trial

court sits as fact finder, the weight to be assigned the testimony of the

witnesses is within its exclusive province, as are credibility determinations,

and the court is free to choose to believe all, part, or none of the evidence

presented.”) (cleaned up).

Further, the trial court did not abuse its discretion in concluding that

Father was not entitled to a downward deviation. As the trial court noted,

Father resides with his sister in California rent-free. Findings of Fact,

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11/23/16, at 7. Father points to no record evidence that his income moving

forward operating only the California salon will, for reasons beyond his control,

be substantially less than his 2014 and 2015 income on a continuing basis

such that his support obligations should be reduced under Pa.R.C.P. 1910.16-

2(d)(2). His complaints about his financial woes that have arisen after the

conclusion of the de novo hearing, see Father’s brief at 27, are fodder for a

later motion for modification pursuant to Pa.R.C.P. 1910.19, not a basis for

this Court to find an abuse of discretion.6 Accordingly, Father has not

persuaded us that we have cause to disturb the trial court’s calculation of his

income.

6 Moreover, the evidence showed that the “downturn” suffered by his businesses was of his own creation rather than “substantial continuing involuntary decreases in income” not under his control. It was Father’s choice to invest his disposable income from the Wexford salon in a new, separate company; the Wexford salon had no obligation to pay the debts of the California salon. N.T. De Novo Hearing, 2/29/16, at 20. Father laments that “he was ultimately forced to close [the Wexford salon] in 2016 due to the financial burden both salons placed on him and the resulting dissatisfaction of his employees.” Father’s brief at 10. However, the evidence discussed above showed that the Wexford salon was profitable prior to Father’s decision to close it. Mother also offered evidence to show that the decision, predating his employees’ leaving for new employment, had different motivations. See, e.g., N.T. De Novo Hearing, 5/3/16, at 8 (Father’s Wexford landlord testifying that Father told him that he was closing the salon because “he was not getting along with his wife, they were going to get a divorce, he was going to close up and go to California”).

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Father next contends that the trial court abused its discretion in

imputing only a minimum wage income to Mother. On this issue, we agree

with Father.

The full extent of the trial court’s discussion of its calculation of Mother’s

income is as follows.

Mother operates a business called Shade Makeup Artistry offering special occasion beauty services. Mother last worked part-time in May 2013 as a hair stylist for [Father’s Wexford salon]. While Father initiated plans to open a second salon . . . in California, and due to his insistence, Mother relocated to California and thereby forfeited her employment in 2013. During that time, Father remained in . . . Pennsylvania, while Mother acted as [C]hildren’s full-time caregiver in California. In July 2014, Mother returned to . . . Pennsylvania with [C]hildren. Mother filed for divorce in February 2015. Soon after, Father relocated to California to operate his new salon . . . in late 2015. The [c]ourt does not impute Mother with an earning capacity for 2015 through June 30, 2016, because Mother’s involuntary relocations, and, consequently, expanded child-care responsibilities prohibited her from engaging in gainful employment. Further, effective July 1, 2016, the [c]ourt finds Mother has an imputed minimum wage annual earning capacity of $16,000 or $1,176.13 imputed monthly net income, offset by daycare expenses, in that the youngest child is not of full-time school age.

Findings of Fact, 11/23/16, at 3.

Father argues that the trial court did not consider all of the relevant

factors in arriving at its conclusion. Father observes that Mother was only

thirty-one years old at the time of the hearing and in good health, and the

children were ages six and eight. Father’s brief at 32. Father notes that the

trial court did not address Mother’s work history, and maintains that Mother

is qualified to earn more than minimum wage. Id. at 33. Father further

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protests that the court did not consider Mother’s increased ability to obtain

employment given that L.M. was soon to be in school for full days. Id. Finally,

Father argues that, while Mother was in California with Children, Father’s

family was available to provide child care at no cost, leaving Mother available

to obtain employment. Id.

Mother responds that the trial court justifiably declined to impute an

earning capacity until July 2016, in light of Mother’s involuntary relocations

and Father’s failure to follow the family to California. Mother’s brief at 14.

Regarding the imputation of minimum-wage earning capacity from July 2016

onward, Mother merely states that it was an appropriate assessment by the

trial court. Id. at 15.

Mother graduated from high school and completed one year of college.

N.T. De Novo Hearing, 5/23/16, at 125. She completed cosmetology school

and has a current cosmetology license. Id. at 80, 125. Mother worked as a

stylist at a salon with Father prior to becoming pregnant with their first child.

Id. at 80. She returned to work when the Wexford salon opened. Mother

worked as a stylist, doing hair, makeup, manicures, and pedicures. Id. at

110. Mother also served as manager, tending to the scheduling, retail orders,

payroll, and client interactions including handling complaints. Id. at 109-12.

Mother started her company in 2015, and markets her business through

a website, Instagram, and Facebook. Id. at 89-90. For each booking, usually

events such as weddings and senior portraits, Mother works for a few hours

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on location. Id. at 90-92. Mother’s gross receivables from 2015 amounted

to $3,140, and she grossed $3,875 in 2016 as of the end of May. Id. at 91.

Mother indicated that she would “do my best” to secure full-time employment

once both children were in school full-time, which would begin in the autumn

of 2016. Id. at 107, 123.

Although Mother knows many stylists from her prior employment, she

has not networked with any to learn of potential open positions commensurate

with her experience. Id. at 127-28. She contacted one salon that offered a

flexible schedule, but concluded that the $9 per hour wage was insufficient to

cover child care expenses. Id. at 128. Mother has not inquired at any other

salons. Id. She did look into employment at different makeup counters, “but

nothing really panned out.” Id. Mother belongs to “[d]ifferent websites for

Pittsburgh” to learn of openings, but has not posted her resume online, has

not considered customer service positions, and has not explored positions

using her experience in payroll management. Id. at 129-30.

From this, we do not see evidentiary support for the trial court’s

determination that Mother should be imputed with a minimum wage earning

capacity. Mother has the education, training, and experience to earn

substantially more than minimum wage, but she neglected to pursue any

opportunity that would allow her to satisfy her financial obligation to Children.

Without a basis in the record for imputing a minimum-wage income to Mother

in light of her age, education, training, health, work experience, earnings

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history and child care responsibilities, we must conclude that the ruling is

unreasonable. See Gephart v. Gephart, 764 A.2d 613, 616 (Pa.Super.

2000) (“[W]here there is insufficient evidence to support the trial court’s

order, the judgment is manifestly unreasonable.”) (internal quotation marks

omitted)). Accordingly, we remand for trial court to make an earning-capacity

determination for Mother pursuant to Pa.R.C.P. 1910.16-2(d)(4). “If the

results of this hearing yield a different conclusion regarding [Mother’s] earning

capacity, the trial court should modify the monthly support payments to [her]

accordingly.” Gephart, supra at 616.

Father’s final issue is that the trial court erred in calculating costs of

Children’s extracurricular activities. However, Father’s arguments relate not

to an error in calculating amounts, but rather claims that (1) he is paying too

high a percentage of the costs due to the income miscalculations discussed

above, and (2) since the hearing, Children have ceased participating in some

of the activities. Father’s brief at 30-31.

Addressing the latter contention first, this Court will not accept

averments of post-trial changes in circumstances as a basis for disturbing a

trial court’s order based upon the facts present at that time it was made. If

there has been a substantial change in circumstances since the hearings

concluded, Father may seek to have the trial court modify the resultant

support order pursuant to Pa.R.C.P. 1910.19. Issues not before the trial court

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at the time of its decision cannot provide a basis to hold that the decision was

an abuse of discretion.

Turning to Father’s claim that his share of extracurricular costs is

disproportionate, we are remanding for a recalculation of Mother’s earning

capacity for the reasons discussed above. The trial court should re-calculate

the parties’ shares of extracurricular costs based upon its new finding as to

Mother’s earning capacity, allocate the expenses between Mother and Father

in proportion to their incomes pursuant to Pa.R.C.P. 1910.16-6(d), and reflect

any changes in a new support order.

Order affirmed in part and reversed in part. Case remanded for further

proceedings consistent with this memorandum. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 1/16/2019

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