Opinion
J-A07020-18 No. 924 MDA 2017
06-26-2018
MARGARET STINAVAGE-KIPPS v. RONALD W. KIPPS Appellant
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered May 8, 2017
In the Court of Common Pleas of Susquehanna County Civil Division at No(s): 2012-2213 BEFORE: PANELLA, J., OLSON, J., and STEVENS, P.J.E. MEMORANDUM BY OLSON, J.:
Former Justice specially assigned to the Superior Court.
Appellant, Ronald W. Kipps (hereinafter "Husband"), appeals from the order of equitable distribution, and denial of Husband's request for alimony, entered on May 8, 2017. We affirm.
We briefly summarize the facts and procedural history of this case as follows. Husband and Margaret Stivage-Kipps (hereinafter "Wife") married in 1989. The parties never had children. Wife filed for divorce in 2012. The trial court appointed a Master who held four hearings regarding equitable distribution of the marital estate and Husband's claim for alimony. On November 16, 2016, the Master issued a recommendation and report. Both parties filed exceptions. On March 10, 2017, the trial court filed an order and opinion addressing each of the exceptions, slightly modifying the Master's distribution recommendations, and affirming the denial of alimony for Husband. The trial court entered a divorce decree on May 8, 2017. Husband appealed. Wife did not appeal; however, she has filed a brief in reply to Husband's appeal.
On June 7, 2017, Husband filed a notice of appeal. On June 15, 2017, the trial court filed an order directing Husband to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). After receiving an extension, Husband filed a timely Rule 1925(b) statement on July 18, 2017. On August 17, 2017, the trial court filed an opinion pursuant to Pa.R.A.P. 1925(a) "to supplement, to the extent necessary, the March 10, 2017 opinion." Trial Court Opinion, 8/17/2017, at 1.
On appeal, Husband presents the following issues for our review:
1. Whether the trial court erred in concluding that the proceeds from the sale of Husband's Mechanicsburg property (which Husband owned before marriage) w[as] marital property subject to equitable distribution[?]Husband's Brief at 9-10.
2. Whether the trial court erred in failing to include the value of Wife's veterinary practice in the marital estate for purposes of equitable distribution[?]
3. Whether the trial court erred in denying Husband alimony[?]
In his first issue presented, Husband claims that the trial court erred by concluding that proceeds from the sale of commercial property located in Mechanicsburg was marital property subject to equitable distribution. Id. at 32. The parties agree that Husband owned the commercial property worth approximately $1,000,000.00 prior to the marriage. Id. at 36. Husband correctly asserts that, "unless the proceeds of the sale were gifted to the marriage or commingled with marital property in a manner that made the funds untraceable, the proceeds of the sale remained premarital property not subject to equitable distribution." Id. at 36-37. Husband claims that when he sold the property in 2007, "he immediately deposited a portion of the proceeds from the sale into an account in his own name at [First National Community Bank (FNCB)]." Id. at 38. Thereafter, Husband alleges that, "he then purchased five certificates of deposit, each for $100,000.00" which "were also only in his name." Id. Because "the funds were maintained in separate accounts and certificates of deposit in Husband's name only[,]" he maintains "those funds remained non[-]marital property[.]" Id. at 42. Husband states that he used the balance of the proceeds to purchase farm equipment and pay taxes and marital debt. Id. at 38. Husband claims that, "FNCB records corroborate Husband's testimony and clearly show what happened to the money." Id. at 39. In the alternative, Husband argues that "even if [he] did deposit the proceeds of the sale of [the property in] Mechanicsburg into a joint account before purchasing the certificates of deposit - a conclusion not supported by the record - that action alone is insufficient to convert the proceeds into marital property." Id. at 43. He asserts that "because the proceeds from the sale of Mechanicsburg property can be traced, any such deposit would not have converted the funds from non[-]marital property to marital property." Id. at 44.
In reviewing an equitable distribution order, our standard of review is as follows:
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.Carney v. Carney , 167 A.3d 127, 131 (Pa. Super. 2017) (citation omitted).
Moreover, it is within the province of the trial court to weigh the evidence and decide credibility and this Court will not reverse those determinations so long as they are supported by the evidence. We are also aware that a master's report and recommendation, although only advisory, is to be given the fullest consideration, particularly on the question of credibility of witnesses, because the master has the opportunity to observe and assess the behavior and demeanor of the parties.
Further, we have previously held:
In determining the value of marital property, the court is free to accept all, part or none of the evidence as to the true and correct value of the property. Litmans v. Litmans , 673 A.2d 382, 395 (Pa. Super. 1996) (citing Aletto v . Aletto , 537 A.2d 1383 (Pa. Super. 1988)). "Where the evidence offered by one party is uncontradicted, the court may adopt this value even though the resulting valuation would have been different if more accurate and complete evidence had been presented." Id. (quoting Holland v . Holland , 588 A.2d 58, 60 (Pa. Super. 1991)), appeal denied, 596 A.2d 158 (Pa. 1991). Accord Smith v . Smith , 653 A.2d 1259, 1267 (Pa. Super. 1995), appeal denied, 663 A.2d 693 (Pa. 1995) (stating if one party disagrees with the other party's valuation, it is his burden to provide the court with an alternative valuation). A trial court does not abuse its discretion in adopting the only valuation submitted by the parties. Litmans , supra at 395. Absent a specific guideline in the divorce code, the trial courts are given discretion to choose the date of valuation of marital property
which best provides for 'economic justice' between parties. Smith , supra at 1270.Baker v. Baker , 861 A.2d 298, 302 (Pa. Super. 2004).
Pursuant to the Divorce Code, marital property is defined as "all property acquired by either party during the marriage." Yuhas v. Yuhas , 79 A.3d 700, 704 (Pa. Super. 2013), citing 23 Pa.C.S.A. § 3501(a). Generally, "property acquired prior to marriage or after separation is not considered marital property." Id. (citation omitted). "[O]nce non-marital property is combined and co-mingled with marital property, it loses its identity as non-marital property and takes on the status of marital property." Verholek v. Verholek , 741 A.2d 792, 797, (Pa. Super. 1999). Where non-marital funds are commingled with marital funds and therefore cannot be traced to a non-marital asset, those funds cease to be non-marital. Busse v. Busse , 921 A.2d 1248, 1257 (Pa. Super. 2007). Likewise, a gift to a spouse becomes marital property if "[The donor spouse] manifests an intent to donate it to the entireties entity." Campbell v. Campbell , 516 A.2d 363, (Pa. Super. 1986) (en banc).
Here, there is no dispute that Husband purchased the Mechanicsburg property prior to the marriage and that he subsequently purchased certificates of deposit, titled solely in his name, with some of the proceeds following its sale. However, at issue is whether the proceeds of the sale of the Mechanicsburg property were placed in a joint account prior to purchasing the certificates. In this case, the trial court determined that "it was undisputed that Husband placed those funds into a joint account." Trial Court Opinion, 3/10/2017, at 16 n.12. The trial court found that Husband admitted during his testimony before the Master that he deposited the disputed funds into a joint account with Wife at FNCB. Trial Court Opinion, 8/17/2017, at 14, citing N.T., 5/13/2016, at 70. Upon review of Husband's testimony, we agree with the trial court that Husband conceded he placed the funds from the sale of the Mechanicsburg property into an account held jointly with Wife.
On appeal, however, Husband relies upon FNCB records in an effort to show that he was the only person listed on the bank statements and deposit slips arguing, "there was no information on any of the bank documents supporting the trial court's conclusion that the account was a joint account." Husband's Brief at 39. Wife, however, contends that the FNCB documents were not presented to the trial court. See Wife's Brief at 17-18. Our rules of appellate procedure require that "[i]f reference is made to [] evidence [] appearing in the record[,]" appellant must make specific "reference to the place in the record where the matter referred to appears[.]" Pa.R.A.P. 2119(c). Husband failed to cite to the certified record regarding the FNCB documents and, upon review, we were unable to locate those documents in the certified record.
Instead, Husband cites to FNCB documents in the reproduced record. Husband's Brief at 39. However,
[t]he law of Pennsylvania is well settled that matters which are not of record cannot be considered on appeal. Thus, an appellate court is limited to considering only the materials in the certified record when resolving an issue. In this regard, our law is the same in both the civil and criminal context because,
under the Pennsylvania Rules of Appellate Procedure, any document which is not part of the officially certified record is deemed non-existent—a deficiency which cannot be remedied merely by including copies of the missing documents in a brief or in the reproduced record.Parr v. Ford Motor Co., 109 A.3d 682, 695 (Pa. Super. 2014) (internal citations omitted). As such, we may not consider the FNCB documents Husband relies upon on appeal.
The trial court further determined that Husband's intent to convert funds acquired from the sale of the Mechanicsburg property into marital property was evident by his partial use of proceeds to pay marital debt and taxes and to purchase farming equipment, a practice Husband also employed with the proceeds of a gas lease. Trial Court Opinion, 8/17/2017, at 14-15 n.10. Thus, the trial court concluded that, "Husband failed to present clear and convincing evidence that he never intended to make a gift to the entireties by placing those funds in a joint account." Id. at 14. Instead, the trial court stated that the evidence presented merely demonstrated that Husband was generally in control of the marital finances. Id. at 15 n.10.
We agree with the trial court's assessment. Upon review, the record supports the trial court's determinations that not only did Husband deposit the proceeds of the Mechanicsburg property into a joint account, but also that he manifested an intent that those funds become marital property. Husband testified that he placed the disputed funds in a joint bank account. Husband did not offer demonstrative evidence tracing the commingled funds back to a non-marital asset. Some of the proceeds from the Mechanicsburg property sale were used for marital debt, taxes, and farming equipment. Husband simply did not provide clear and convincing evidence that he never intended to make the remaining proceeds a gift to the entireties. Accordingly, for all of the foregoing reasons, we discern no abuse of discretion or error of law in considering the proceeds from the Mechanicsburg property as marital.
Next, Husband argues that the trial court "erred in holding that Wife's veterinary practice was non[-]marital property." Husband's Brief at 47. He claims, "the undisputed facts reveal that Wife's new veterinary practice, Acre Lake Veterinary Practice, was not a new entity but was a continuation of the veterinary practice that Wife maintained at Elk Trails Farm during the marriage." Id. at 46-47. Husband claims that prior to separation, "Wife began transferring the assets of her existing veterinary clinic, Elk Trails Farm, to her new entity, Acre Lake Veterinary Hospital, many months before the parties separated on December 12, 2012." Id. at 47. More specifically, Husband claims that Wife: (1) directed an employee to secure a new location for the new veterinary clinic; (2) transferred $74,000.00 from an account in her name to an account titled in the name of Acre Lakes Veterinary Clinic; (3) began construction of the new veterinary clinic; (4) rented a storage facility and transferred supplies and equipment, purchased during the marriage, into Wife's new practice. Id. at 47-49. He contends that Wife did not reimburse him for Wife's veterinary equipment purchased during the marriage. Id. at 52. Husband asserts that this Court may reconsider equitable distribution "where a party alleges that the divorcing party hid or used an artifice to shield a business from division in divorce[.]" Id. at 50. "Using the capitalization of earnings method of valuation, Husband's best estimate of the value of Wife's veterinary business is that the business is valued at between $202,000[.00] and $274,000[.00]." Id. at 52. Thus, Husband maintains, "[t]he trial court erred in not including that amount in the marital estate." Id.
On this issue, the trial court determined:
Husband filed an exception contending that the Master erred in not considering the value of the Wife's veterinary practice. First, Husband presented no evidence whatsoever as to the value of Wife's veterinary practice. It is difficult to comprehend how the Master could have erred in failing to ascribe a value to Wife's veterinary practice when there was no evidence that it had any value whatsoever. Second, given the nature of Wife's veterinary practice, which depends at this point solely on her individual efforts and the goodwill that she has generated with her clients, the Master did not err in failing to make a determination as to the veterinary practice itself. There was nothing presented on this record to suggest that the value of Wife's veterinary practice was independent of her personal work and efforts. Moreover, Wife's veterinary practice has no other professionals involved, there are no partners, members or other shareholders, and it operated essentially as a sole proprietorship. For these reasons, the Master did not err in failing to consider the value of the goodwill in the veterinary practice[] for purposes of equitable distribution.Trial Court Opinion, 3/10/2017, at 13-14 n.10 (case citations omitted).
Later, the trial court further clarified:
Husband presented no evidence concerning the value of Wife's veterinary practice at any time. There was no expert testimony that provided any business valuation to assign to the veterinary practice that existed at the time of the separation or the new veterinary business that commenced after separation. Even if Husband had presented such evidence, given that the veterinary practice itself relied solely upon her professional goodwill created by Wife, any value of the veterinary business was not subject to equitable distribution. There was limited testimony concerning
the veterinary equipment itself, which the court considered and assigned the value of $25,000[.00] for the used veterinary equipment that existed as of the date of separation.Trial Court Opinion, 8/17/2017, at 6 (original footnote incorporated).
* * *
As noted earlier, Wife's veterinary practice is solely the result of her personal efforts. There are no other veterinarians involved in providing any professional services. This is not a case where there was some kind of 'enterprise value' that existed in the absence of Wife's personal efforts because the business itself would cease to exist in the absence of Wife. There were no other professionals involved in her veterinary clinic which would continue to operate in her absence. There were no other partners or members that would have to buyout Wife's interest in the ongoing enterprise if Wife decided to leave it. Wife's veterinary practice was the equivalent of a sole proprietorship[.]
Finally, the trial court noted that "the building and its location" where Wife's original veterinary clinic was located "remained marital property" and "the commercial value of that building was considered in the equitable distribution scheme." Id. at 10. The trial court recognized that Wife commenced a separate business and only "relied upon her own professional goodwill that she had developed with her clients." Id. The trial court concluded that, "[i]f clients continued to utilize the new veterinary clinic under its new name and new location, then such decisions were based upon the professional goodwill of Wife[.]" Id.
Regarding goodwill, this Court has previously determined:
Goodwill is essentially the positive reputation that a particular business enjoys. Goodwill is the favor which the management of a business has won from the public, and probability that old customers will continue their patronage. Goodwill value which intrinsically ties to the attributes and skills of certain individuals is
not subject to equitable distribution because the value thereof does not survive the disassociation of those individuals from the business.Baker v. Baker , 861 A.2d 298, 302 (Pa. Super. 2004) (internal citations, quotations and original brackets omitted).
Here, the trial court held that certain assets of Wife's original veterinary practice were marital and subject to equitable distribution, but Wife's new business was not. The veterinary equipment purchased during the marriage, valued at $25,000.00, and the real property that originally housed Wife's first veterinary practice were considered marital property, subject to equitable distribution. Thus, we reject Husband's suggestion that Wife did not reimburse the marriage for the veterinary equipment at issue. Moreover, Husband does not challenge the trial court's determination that Wife's new business is a new entity, intrinsically dependent on her skill as the only veterinarian at her new clinic. Because this fact is undisputed, we discern no error of law in determining that Wife's professional goodwill was not subject to equitable distribution.
In his appellate brief, Husband claims that Wife's current veterinary clinic is not a new entity, but then admits that it is. See Husband's Brief at 46-47 ("In this case, the undisputed facts reveal that Wife's new veterinary practice, Acre Lake Veterinary Practice, was not a new entity but was a continuation of the veterinary practice that Wife maintained at Elk Trails Farm during the marriage.")(emphasis added); compare Husband's Brief at 47 ("Wife began transferring the assets of her existing veterinary clinic, Elk Trails Farm, to her new entity, Acre Lake Veterinary Hospital, many months before the parties separated on December 12, 2012.") (emphasis added).
Finally, Husband argues that the trial court erred in not granting his request for alimony. Husband's Brief at 53-59. In sum, he argues:
The [trial] court held that an alimony award was not warranted because Husband would receive sufficient funds through equitable distribution to support himself. The court's conclusion ignores several important facts, including the transaction costs and tax consequences of liquidating the assets, and the fact that Husband's livelihood as a farmer requires him to have land to farm. If Husband is forced to sell the farm, he will be without other means of employment. The court's conclusion that Husband can obtain employment as a truck driver was unrealistic because the court failed to give significant weight to Husband's age and health, both of which impair his ability to be employed in that capacity.Id. at 58-59.
Husband sought $1,000[.00 per] month in alimony for seven years, which is approximately 1/3 the length of the marriage, a reasonable request supported by the facts and circumstances of this case.
The court erred when it ignored the length of the marriage and abused its discretion by failing to give sufficient weight to the respective age of the parties, Husband's continuing health problems, and the vast disparity in income, all of which strongly support an alimony award to Husband.
We conduct our review of this issue according to the following standard:
The role of an appellate court in reviewing alimony orders is limited; we review only to determine whether there has been an error of law or abuse of discretion by the trial court. Absent an abuse of discretion or insufficient evidence to sustain the support order, this Court will not interfere with the broad discretion afforded the trial court.
The purpose of alimony is not to reward one party and to punish the other, but rather to ensure that the reasonable needs of the person who is unable to support himself or herself through appropriate employment, are met. In determining the nature, amount, duration and manner of payment of alimony, the court must consider all relevant factors, including those statutorily prescribed for at 23 Pa.C.S.A. § 3701. Alimony is based upon reasonable needs in accordance with the lifestyle and standard of
living established by the parties during the marriage, as well as the payor's ability to pay.Dalrymple v. Kilishek , 920 A.2d 1275, 1278-1279 (Pa. Super. 2007) (citations omitted). However, "the factors in Section 3701(b) do not create an exhaustive list." Schultz v. Schultz , 2018 WL 1724877, at *9 (Pa. Super. 2018) (citation omitted). "In fact, the trial court should also consider the assets the petitioning spouse received in equitable distribution." Id. (citation omitted).
Recognizing the disparity between the parties, including their respective ages, earning capacity, health, and capital brought to the marriage, the trial court "fashion[ed] an equitable distribution award that provides Husband with 67% of the marital assets ($2,000,906.76) and 33% of the marital debt ($16,151.85), and Wife [] receive[s] 33% of the marital assets ($985,521.24) and 70% of the marital debt ($32,793.15)." Trial Court Opinion, 3/10/2017, at 23. The trial court then considered all of the statutory factors at Section 3701, including the length of the marriage. Id. at 26-33. Ultimately, the trial court concluded:
In this case, Husband has a stream of income from social security and [a] family trust resulting in $14,000[.00] per month. Coupled with this monthly income, Husband has received [$2,000,000.00] in assets through the equitable distribution process. Plainly, the equitable distribution of the marital property adequately provides for Husband and provides him with sufficient assets to provide for his support and maintenance throughout the remainder of his life. For these reasons, the record does not support an alimony award.Id. at 33.
Based upon all of the foregoing, we conclude that the trial court did not err in denying Husband's request for alimony. The trial court considered the relevant statutory factors, but ultimately concluded that Husband's income and the assets Husband received in equitable distribution did not warrant the grant of alimony for Husband to continue living the lifestyle to which he had grown accustomed. We discern no abuse of discretion or error of law. Overall, the trial court achieved economic justice between the parties and justly determined their property rights.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 6/26/2018