CourtListener opinion 2808372

Evidence quotes

Clean opinion text

J-A04011-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DONALD S. LUCAS, IN THE SUPERIOR COURT OF
 PENNSYLVANIA
 Appellee

 v.

JENNIFER R. DAUM,

 Appellant No. 598 WDA 2014

 Appeal from the Order March 20, 2014
 In the Court of Common Pleas of Fayette County
 Civil Division at No(s): 1913 OF 2011, G.D.

BEFORE: BOWES, OLSON, and STRASSBURGER,* JJ.

MEMORANDUM BY BOWES, J.: FILED JUNE 15, 2015

 Jennifer R. Daum ("Wife") appeals from the March 20, 2014 equitable

distribution order. After thorough review, we reverse and remand with

instructions.

 Wife and Donald S. Lucas ("Husband") married on June 19, 1993,

separated on April 11, 2011, and were divorced on June 3, 2014. It was the

first marriage for both parties. Husband and Wife share physical custody of

two minor children who were born of the marriage.

 At the time of the divorce litigation, Husband was a Pennsylvania State

Trooper assigned to the Bureau of Investigation, Computer Crime Unit with

nineteen years of service. He also performed services as a forensics
____________________________________________

*
 Retired Senior Judge assigned to the Superior Court.
 J-A04011-15

specialist with the Public Agency Training Council ("PATC") and his duties

involved the training of individuals in computer forensics all over the United

States. In addition to his $85,000 per year salary from the Pennsylvania

State Police, Husband earned an additional $8,000 to $18,000 per year at

this secondary employment.

 Wife is a teacher with approximately fourteen years' experience,

twelve and one-half years of which counts toward her twenty-five year

eligibility for the Public School Employees Retirement System. For nine

years, she has been employed as a secondary level history teacher in the

Charleroi School District. At the time of the hearing, Wife was earning

$45,718 per year. She explained that this included a $400 per month credit

she received for opting out of the School District's health insurance

coverage. Since she would no longer be covered under Husband's plan as of

the date of the divorce, she would lose that credit and incur a monthly

deduction from her paycheck for coverage through her employer. Wife

testified that, pursuant to the teachers' contract, she would be entitled to a

substantial bump in salary in August 2018 that would increase her earnings

to $70,000 per year.

 The parties purchased two homes during the marriage. Their first

home was located on Franklin Street in Uniontown. After they purchased

their second home on Smock Street in 2003, they rented out the Franklin

Street house. Following separation, the Franklin Street property was sold at

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short sale. The marital home on Smock was sold after the master's hearing

and yielded net proceeds of $54,572.97. It was undisputed that Wife

contributed $47,500 from an $80,000 inheritance as the down payment for

the purchase of that home.

 A hearing was held before Master John Zeglen on July 29 and 30,

2013. He issued his report and recommendations on November 20, 2013.

The master recommended that the trial court grant a divorce under Section

3301(c) of the Divorce Code; that Wife receive alimony of $435 per month

until August 2018; that the parties pay their own fees and costs not

otherwise addressed, including their respective shares of the Special

Master's fee; that the parties retain ownership of any current life insurance;

and that the proceeds of the marital home be distributed $30,000 to Wife

and $24,572.97 to Husband. The master also awarded the parties specific

marital assets and assigned responsibility for the marital debts.

 Exceptions were filed by both parties, together with briefs, and oral

argument was held on March 13, 2013. While exceptions were pending,

Wife sought injunctive relief from the trial court. She represented that

Husband submitted a letter of resignation dated March 5, 2014, to the

Pennsylvania State Police. Based upon her belief that Husband could elect

to receive a substantial lump sum distribution from his pension and fearing

that the pension proceeds would be dissipated, Wife asked the trial court to

enjoin disbursement of the pension to Husband until the exceptions had

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been finally decided. On March 17, 2014, the trial court entered an order

that neither party could sell, alienate, or transfer any asset of the marital

estate until further order of court. On March 20, 2014, the trial court

overruled all exceptions and adopted the master's recommendation. Wife

timely appealed and she presents ten issues for our review:

 I) Whether the Court erred in its treatment, division and
 assignment of Husband's pension since the contributions to
 the pension and the defined benefit plan portion were not
 in any manner properly evaluated, analyzed or divided
 notwithstanding that the separate pensions were the two
 most valuable marital assets.

 II) Whether the Court erred by failing to address the patent
 error of the Master's report which only examined the
 contributions of the parties to their pension and did not
 divide, assign or distribute the much larger component of
 the defined benefit part of the pension which will pay
 Husband considerably more than Wife.

 III) Whether the Court erred by failing to Order that the
 defined benefits portion of the parties' pensions should be
 subject to a Qualified Domestic Relations Order upon
 retirement of the parties with an equitable division
 between the parties.

 IV) Whether the court erred by failing to equitably divide the
 Husband's contributions to his pension, said contributions
 constituting an entirely separate asset than the monthly
 benefits Husband will receive as part of his defined pension
 plan.

 V) Whether in affirming the Master's report, the Honorable
 Court failed to consider all relevant factors and
 circumstances, including, but not limited to, the eleven
 factors outlined in section 3502 of the Divorce Code and
 Pa.R.C.P. 1920.54.

 VI) Whether the Court erred and failed to apportion the
 marital debt based upon income and the ability to pay,

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 and, in the process, the Wife was assigned almost three
 times the amount of marital debt than that assigned to
 Husband.

 VII) Whether the Court erred by failing to equitably divide the
 proceeds from the sale of the marital home after finding
 that the Wife made a substantial contribution of
 $47,500.00 from an inheritance as a down payment on the
 marital home.

 VIII) Whether the Court erred by placing erroneous or inflated
 values on the personal property of the parties, such as the
 value of firearms.

 IX) Whether the Court erred in affirming a very nominal
 payment of alimony to [Wife] where the record supported
 a finding that a greater award of alimony was necessary as
 per the relevant factors set forth in 23 Pa.C.S.A. §3701
 and Pa.R.C.P. 1920.54(b).

 X) Whether the Court erred by failing to award Wife any
 portion of counsel fees whenever the Master found a huge
 disparity in income and marital fault attributed to
 Husband.

Appellant's brief at 4-5. The Argument portion of Wife's brief is divided into

six sections: Pension, Alimony, Division of Proceeds from Sale of the Marital

Home, Assignment of Marital Debt, Personal Property, and Counsel Fees.

We will address Wife's arguments in that order.

 In certain counties, as is the case herein, a master conducts a hearing

and there is no new hearing before the trial court. Thus, "the trial court is

limited to the evidence presented before the master." Cunningham v.

Cunningham, 548 A.2d 611, 613-14 (Pa.Super. 1988). "While the trial

court is obliged to conduct a complete and independent review of the

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evidence when ruling on exceptions, its scope of review . . . is limited to the

evidence received by the master. Id.

 "Our standard of review in assessing the propriety of a marital

property distribution is whether the trial court abused its discretion by a

misapplication of the law or failure to follow proper legal procedure. An

abuse of discretion is not found lightly, but only upon a showing of clear and

convincing evidence." Busse v. Busse, 921 A.2d 1248, 1257 (Pa.Super.

2007). Where the alleged error or abuse of discretion implicates a legal

question, our standard of review is de novo and our scope of review is

plenary. Smith v. Smith, 938 A.2d 246, 253 (Pa. 2007).

 The purpose of equitable distribution is to "equitably divide, distribute

or assign, in kind or otherwise, the marital property between the parties

without regard to marital misconduct in such proportions and in such

manner as the court deems just after considering all relevant factors." 23

Pa.C.S. § 3502(a). The objective is to effectuate economic justice between

the parties who are divorced and insure a fair and just determination and

settlement of their property rights. Isralsky v. Isralsky, 824 A.2d 1178,

1185 (Pa.Super. 2003).

 The relevant factors when fashioning equitable distribution awards are

set forth in 23 Pa.C.S. § 3502(a):

 [T]he trial court must consider the length of the marriage; any
 prior marriages; age, health, skills, and employability of the
 parties; sources of income and needs of the parties;
 contributions of one party to the increased earning power of the

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 other party; opportunity of each party for future acquisitions of
 assets or income; contribution or dissipation of each party to the
 acquisition, depreciation or appreciation or marital property,
 value of each party's separate property; standard of living
 established during the marriage; economic circumstances of
 each party and whether the party will be serving as custodian of
 any dependent children.

Mercatell v. Mercatell, 854 A.2d 609, 611 (Pa.Super. 2004). "The weight

accorded the various factors is dependent on the circumstances and is a

matter within the court's discretion." Id. (citing Gaydos v. Gaydos, 693

A.2d 1368, 1376 (Pa.Super. 1997) (en banc)).

 We observe preliminarily that the master maintained that he used the

immediate offset method to compensate Wife for her marital share of

Husband's higher pension contributions. However, in assigning assets and

liabilities to the parties, he did not explain or document how his allocations

achieved the desired offset and equitable distribution. Thus, it is difficult for

this Court to correct any errors without upsetting the entire scheme.

 Wife first alleges error in the valuation and treatment of the parties'

pensions. She faults the master for simply considering the parties'

contributions to their respective pensions rather than identifying the

percentage of the split in the marital assets and ordering the parties to

prepare Qualified Domestic Relations Orders ("QDROs").1 Wife represents

____________________________________________

1
 "A QDRO is an order which creates or recognizes the rights of an alternate
payee to receive all or a portion of the benefits payable to a participant
under the plan. To be ‘qualified,' the order must contain certain required
(Footnote Continued Next Page)

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that she was seeking sixty percent of the marital portion of Husband's

pension, but that the Master merely considered Husband's contributions and

never determined the percentage of the defined benefit to which she was

entitled. Defendant's Exhibit F, the statement of Husband's pension as of

December 31, 2011, revealed a present value of his retirement under Option

I of $355,841.57 and under Option II, $287,571.91. These values were

estimated to increase in approximately five to six years to $710,222.91 and

$584,592.29 respectively. According to Wife, both parties anticipated that

the Master would order the pensions to be valued pursuant to QDROs.

 Husband takes issue with Wife's characterization of the defined benefit

as a separate component of a state employee pension. He disputes that

there should be both a division of the employee/spouse's contributions and a

second division of the employer's contributions. Husband acknowledges,

however, that both employee and employer contributions are "utilized to

determine the monthly defined pension benefit an employee spouse is

entitled to collect upon his or her retirement." Appellee's brief at 14. He

agrees that in case of divorce, the court can enter a QDRO which divides the

monthly pension benefit among the parties using a coverture fraction, and

 _______________________
(Footnote Continued)

information and may not alter the amount or form of plan benefits." Smith
v. Smith, 938 A.2d 246, 248 n.3 (Pa. 2007). Our High Court also pointed
out that the actual qualifying of the order is done by the employer's pension
administrator.

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that the value can be determined either by the immediate offset method or

by the deferred distribution method. Husband accuses Wife of valuing her

own pension based solely on her employee contributions, but seeking to

value Husband's plan based on both employee and employer contributions, a

comparison of apples and oranges. Id. at 16. He claims that no significant

disparity exists in the present value of their respective plans. Furthermore,

he claims the master had no choice but to use the contributions since Wife

did not supply a value for her defined benefit.

 When determining what assets comprise the marital estate for

purposes of equitable distribution, retirement pension benefits are marital

property subject to division. Marshall v. State Employees' Retirement

System, 887 A.2d 351 (Pa.Cmwlth. 2005). Both parties herein have

defined benefit plans through the state that they acquired during the

marriage. In divorce situations, where marital assets are sufficient to cover

the nonemployee spouse's share of the pension, immediate offset is the

preferred method of distribution of those pensions. See Dean v. Dean, 98

A.3d 637, 643 (Pa.Super. 2014) (recognizing that immediate offset method

avoids ongoing entanglement, court supervision, enforcement, and finalizes

settlement). In many instances, however, such as where the pension

constitutes the bulk of the marital estate and the nonemployee spouse's

share cannot be covered by other marital assets, distribution of the marital

portion must be deferred until retirement, with the defined benefit plan

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being allocated between its marital and non-marital portions by use of a

coverture fraction.

 We find merit in Wife's position. In the instant case, the master erred

in valuing only the parties' contributions to their respective plans and then

using the immediate offset method to award Wife marital assets equivalent

to her share of Husband's contributions. The trial court, in overruling Wife's

exceptions, mistakenly believed that the pensions had not vested, and cited

Miller v. Miller, 577 A.2d 205 (Pa.Super. 1990), for the proposition that in

valuing unvested pensions, the court considers only contributions made up

to the date of final separation. Trial Court Opinion, 3/20/14, at 7. The court

then concluded that since the master valued Husband's pension from the

closest available time to the date of separation, the value was correct, and

the use of the immediate offset method was proper. Id. at 8. It is

undisputed that both Husband's and Wife's pensions had vested, and thus,

this was reversible error.

 The record indicates that if Husband were to retire as of December 31,

2010, under Option I his pension had a present value of $308,615.95. See

Plaintiff's Exhibit 8. Defense Exhibit F contained a present value calculation

of $355,881.57 for a December 31, 2011 retirement date. If Husband

waited until April 15, 2019 to retire, the present value of Option I was

$698,072.50.

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 Husband attempts to justify the master's method of valuation by

pointing to the fact that Wife did not value her defined benefits plan. He

argues that Wife is seeking to obtain sixty percent of the present value of

Husband's defined benefit plan but limit Husband's share of her pension to a

percentage of her contributions. We do not believe that is a fair

characterization of Wife's position. Wife has maintained throughout that the

master incorrectly evaluated both pensions. She acknowledges that the

present value of her defined benefit plan was not on the statement. The

absence of that calculation may be due to the fact that Wife was twenty-two

years away from retirement when the statement issued. Nonetheless, the

present value of Wife's defined benefit plan is not required if the distribution

of the retirement benefits is to be deferred. A finding as to present value is

necessary only if the retirement benefits are to be awarded to one spouse

with an offset to the other. Gordon v. Gordon, 681 A.2d 732, 733 (Pa.

1996) (noting that in a deferred distribution, one identifies the marital share

of the benefit but does not value it).

 The trial court erroneously treated the vested pensions as unvested

and valued only the parties' contributions, not the significantly higher

present value of the defined benefit portions. Husband's defined benefit is

probably the largest marital asset. Moreover, the record suggests that

Wife's portion of the marital assets, including the present value of her

defined benefit plan, would not be sufficient to offset its value. Thus, it was

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error not to identify the marital portion of the respective pensions, and we

reverse and remand for such a determination.

 Furthermore, it is unclear from the record whether Husband's pension

is in payment status, which must be verified.2 Moreover, if distribution is to

be deferred, the trial court is directed to order the parties to draft and

submit proposed QDROs as to the other's pension. Since in all likelihood this

will disturb the prior equitable distribution scheme, the court is authorized to

reallocate the marital assets and debts based upon the correct valuation to

achieve economic justice. Thus, we reverse and remand the matter to the

court of common pleas for an equitable distribution determination of the

marital portion of both Husband's and Wife's pensions, which includes the

defined benefit plans.

 Next, Wife challenges the amount of the alimony award. She contends

that the trial court erred in affirming a very nominal alimony payment where

the record supported a reasonable need for a greater award. The court

awarded Wife $435 per month until August 2018, the date when Wife is

scheduled to receive a substantial increase in salary. She has no objection

to the duration of the alimony, but argues that in arriving at that amount,

the master and the trial court failed to consider other relevant 23 Pa.C.S. §

3701 factors such as the disparity in the parties' income. Wife points out
____________________________________________

2
 It is unconfirmed in the certified record whether Husband did in fact submit
his resignation to the Pennsylvania State Police.

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that Husband's gross earnings were approximately double Wife's gross

income, and that Husband will receive a thirteen percent increase in his

State Police salary over the next four years. Wife testified that she faced a

substantial deficit each month. Although she no longer has to pay the

$1,360 mortgage on the marital home each month, she represents that a

reasonable rental that would accommodate the couple's two sons would cost

at least $800 per month. She estimated a shortfall of approximately $1,100

per month. In contrast, according to Wife, Husband had few expenses

because he lived with his girlfriend in her home.

 As set forth in 23 Pa.C.S. § 3701(b), in determining whether to award

alimony, and if so, the amount, duration, and manner of payment, the

relevant factors are:

 (1) The relative earnings and earning capacities of the
 parties.

 (2) The ages and the physical, mental and emotional
 conditions of the parties.

 (3) The sources of income of both parties, including, but
 not limited to, medical, retirement, insurance or
 other benefits.

 (4) The expectancies and inheritances of the parties.

 (5) The duration of the marriage.
 (6) The contribution by one party to the education,
 training or increased earning power of the other
 party.

 (7) The extent to which the earning power, expenses or
 financial obligations of a party will be affected by
 reason of serving as the custodian of a minor child.

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 (8) The standard of living of the parties established
 during the marriage.

 (9) The relative education of the parties and the time
 necessary to acquire sufficient education or training
 to enable the party seeking alimony to find
 appropriate employment.

 (10) The relative assets and liabilities of the parties.

 (11) The property brought to the marriage by either
 party.

 (12) The contribution of a spouse as homemaker.

 (13) The relative needs of the parties.

 (14) The marital misconduct of either of the parties
 during the marriage. The marital misconduct of
 either of the parties from the date of final separation
 shall not be considered by the court in its
 determinations relative to alimony, except that the
 court shall consider the5 abuse of one party by the
 other party. As used in this paragraph, \abuse\" shall