Opinion
J-A33014-16 No. 537 WDA 2016 No. 624 WDA 2016
04-11-2017
FRANCES K. GAYLER Appellee v. JOHN E. GAYLER Appellant
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered April 5, 2016
In the Court of Common Pleas of Allegheny County
Family Court at No(s): FD-13-7148-008 Appeal from the Order April 5, 2016
In the Court of Common Pleas of Allegheny County
Family Court at No(s): FD-13-7148-008 BEFORE: LAZARUS, J., SOLANO, J., and STRASSBURGER, J. MEMORANDUM BY LAZARUS, J.:
Retired Senior Judge assigned to the Superior Court.
John E. Gayler ("Husband") and Frances K. Gayler ("Wife") were married on September 23, 1989, and divorced on April 22, 2016. The parties are parents to two adult sons. Following a hearing, the master issued a report and recommendation for the equitable distribution of the marital estate. Both parties filed exceptions. The trial court ruled on the exceptions and entered a final order on April 5, 2016. Husband appealed. He raises the following issues for our review:
Husband filed a notice of appeal on April 18, 2016, from the trial court's April 5, 2016 order; he also filed an appeal on May 4, 2016 from the divorce decree entered on April 22, 2016. This Court, on May 17, 2016, sua sponte consolidated the two separate appeals. See Pa.R.A.P. 513. --------
1. Whether the trial court erred in finding that the premarital value of Compix, Inc. ("Husband's Business") of $204,027.00 was commingled with marital property when Husband's Business was sold - the sale proceeds of Husband's Business were deposited in certain certificates of deposit, which did not contain other funding sources, marital or non-marital; and the certificates of deposit existed at the date of separation.
2. Whether, assuming arguendo that the proceeds from the sale of Husband's business were commingled with marital property, the Trial Court erred by not finding that Husband is entitled to a full credit of $204,027.00 for the premarital value of Husband's Business, which was traceable to the sale proceeds pursuant to Pennsylvania law. See Mackalica v. Mackalica , 716 A.2d 653, 655-56 (Pa. Super. 1988).
3. Whether the Trial Court erred in failing to affirm the Master's award to Husband of one-half of the total increase in value of [Wife's] premarital Hobart Assets and whether the Trial Court improperly reduced the increase in value of the Hobart Assets by the amount of
college expenses paid by the Wife. Payment of college expenses is voluntary pursuant to Pennsylvania law and the expenses are not marital liabilities.
4. Whether the Trial Court erred in reducing the amount owed from Wife to Husband in equitable distribution to $168,615.00, which amount does not account for the full premarital credit of Husband's Business and the one-half of the increase in value of Wife's Hobart Assets due Husband.
Our standard of review is well settled:
A trial court has broad discretion when fashioning an award of equitable distribution. Our standard of review when assessing the propriety of an order effectuating the equitable distribution of marital property is whether the trial court abused its discretion by a misapplication of the law or failure to follow proper legal procedure. We do not lightly find an abuse of discretion, which requires a showing of clear and convincing evidence. This Court will not find an abuse of discretion unless the law has been overridden or misapplied or the judgment exercised was manifestly unreasonable, or the result of partiality, prejudice, bias, or ill will, as shown by the evidence in the certified record. In determining the propriety of an equitable distribution award, courts must consider the distribution scheme as a whole. We measure the circumstances of the case against the objective of effectuating economic justice between the parties and achieving a just determination of their property rights.Biese v. Biese , 979 A.2d 892, 895 (Pa. Super. 2009) (internal citations and quotation marks omitted).
Husband's claims challenge two rulings: (1) the court's determination that Husband was not entitled to a credit for the value of Husband's Business prior to the marriage; and (2) the court's determination that Husband was not entitled to a share of the increase in value of Wife's premarital property.
On January 1, 1988, about twenty months before the parties married, Husband began operating Compix, Inc., in which he owned a 50% interest. In 2003, Husband and his partner sold Compix for $5,900,000.00; Husband's share of the sale proceeds was $2,950,000.00. The majority of the proceeds from the sale of Husband's Business were placed into the parties' joint holding accounts and then transferred to CDs - twelve with BNY Mellon, and seventeen with PNC (collectively, the "Compix CDs").
Prior to trial, the parties entered into a consent order and split the Compix CDs, with each party receiving $1,339,807.00. See Consent Order, 1/26/15. Husband, however, sought a premarital credit for the value of Compix.
At the master's hearing, both parties presented experts for purposes of valuing Husband's premarital interest in Compix. Husband acknowledged the Compix CDs are marital property, but claimed he was entitled to a credit for the value of Compix as of the date of the marriage. Following the hearing, the master found Husband's expert's valuation more accurate than the valuation put forth by Wife's expert, and determined that Husband was entitled to a premarital credit of $204,027.00. In ruling on the parties' exceptions, the trial court found Husband was not entitled to a premarital credit, and determined instead that that the "premarital value" of Husband's Business became a "gift to the entireties" because the proceeds from the sale were deposited in joint holding accounts. See Lowry v. Lowry , 544 A.2d 973, 978 (Pa. Super. 1988). "Where a spouse places separate property in joint names, a gift to the entireties is presumed absent clear and convincing evidence to the contrary." Id. See also Verholek v. Verholek , 741 A.2d 792, 797 (Pa. Super. 1999) (husband's inheritance was marital property since inherited funds were comingled with marital funds and husband did not consider inherited funds to be separate, non-marital property); Gruver v. Gruver , 539 A.2d 395 (Pa. Super. 1988) (once non-marital property is combined and comingled with marital property, it loses its identity as non-marital property and takes on status of marital property).
That Husband intended this to be a gift to the entireties is reinforced by the fact that the parties placed the proceeds of the sale of Husband's Business into a joint holding fund. Wife was then exclusively responsible for investing those funds, and later managing those investments, the Compix CDs. The parties essentially lived off the interest generated from the Compix CDs. Accordingly, we find that the court did not abuse its discretion when it concluded that the premarital value of Husband's Business was transformed into marital assets.
Additionally, the parties disputed the increase in value of Wife's separate property, the Hobart Assets. The parties stipulated that the Hobart Assets included the net proceeds from the sale of Wife's pre-marital Hobart Street house/rental unit, proceeds from Wife's sale of non-marital gifts of DIIG/Flextronics stock, and Wife's inheritances from her father and aunt. Husband claimed the increase in value of these assets, from the date of marriage to the date of separation, was $190,949.00, which is the amount the master determined to be the marital portion.
The master also determined that neither party had an obligation to pay for their adult children's college expenses, but recommended that Husband's share of the marital portion of the Hobart Assets be used to offset the amount Wife had paid, and then recommended that Wife pay half of the remaining college expenses that Husband would pay. The trial court, in disposing of the parties' exceptions, determined that the parties had agreed to pay college expenses out of Wife's non-marital assets, and both parties, despite the wording in Husband's issue #3, had agreed that the college expenses were a marital debt. See N.T. Equitable Distribution Trial, 8/4/15, at 154 ("It was my responsibility to pay [college expenses out of marital funds and share the cost."). As the trial court notes, Husband ultimately agreed to pay for college from Wife's non-marital assets. The court points out that Husband benefited from this, as it increased the size and distribution of the marital estate.
We have reviewed the trial court opinion authored by the Honorable Cathleen Bubash, the applicable law, the parties' briefs, and the record. We conclude that Judge Bubash properly applied the law, considered the distribution scheme as a whole, and effectuated economic justice. We, therefore, conclude that Judge Bubash did not abuse her broad discretion. Biese , supra. We, therefore, reject Husband's assertions of error, and affirm on the basis of the trial court's opinion. We direct the parties to attach a copy of that opinion in the event of further proceedings.
Order affirmed.
Judge Solano joins this Memorandum; Judge Strassburger files a Concurring Memorandum. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 4/11/2017
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