Beasley v. Beasley

• Decision Date: 20 November 1986
• Parties: , 55 USLW 2327 Helen M. BEASLEY, Appellant at 1772, v. James E. BEASLEY, Appellant at 2256.
• Court: Pennsylvania Superior Court

Page 545

518 A.2d 545

359 Pa.Super. 20, 55 USLW 2327

Helen M. BEASLEY, Appellant at 1772, v. James E. BEASLEY, Appellant at 2256.

Superior Court of Pennsylvania.

Argued Feb. 24, 1986.

Filed Nov. 20, 1986.

Larry I. Haft, Philadelphia, for appellant Helen M. Beasley.

Richard Sprague, Philadelphia, for appellant James E. Beasley.

BEFORE: CIRILLO, President Judge, and WICKERSHAM, BROSKY, WIEAND, OLSZEWSKI, DEL SOLE, MONTEMURO, TAMILIA and JOHNSON, JJ.

TAMILIA, Judge:

This matter was appealed by Helen M. Beasley, plaintiff in the court below, and a cross-appeal was filed by the defendant, James E. Beasley.

In her complaint for divorce, the appellant/wife made a claim for equitable distribution and as part of that claim requested that the good will aspect of the husband's law practice be determined to be marital property and subject to equitable distribution. The court denied this request and held that good will is future earnings and that the Divorce Code of 1980 permitted distribution only of present property, the value of which could be ascertained. Thus, the issue raised by appellant/wife is whether or not, under the equitable distribution proceedings of the Divorce Code, good will is a component of the value of a professional practice and to be considered marital property.

In the alternative, appellant/wife asks, if the law practice, conducted as a sole proprietorship, is not marital property must it not nonetheless be appraised for purposes of equitable distribution and alimony as the separate estate of its owner and as an income-generating asset. The court responded affirmatively to this, but to the degree that the files of a professional practice are confidential, it was subject to a non-disclosure order, and only to the extent that it is necessary to ascertain present value of work in progress can there be an appraisal. In doing so, the court limited the extent of intrusion into the personal files of the cross-appellant, James Beasley.

In the cross-appeal, James Beasley alleged that the trial court was without jurisdiction to consider or decide the petition filed by appellant/wife to permit appraisal pursuant to Pa.R.A.P. 1701 because an appeal in the same action was pending in the Superior Court from an Order by Brody, J. granting appraisal fees. The lower court rejected this objection on the basis that the matter was ancillary and incidental to the main suit and found that the main suit could go forward.

Secondly, on cross-appeal, the husband contends good will of his sole proprietorship is not subject to equitable distribution under the Divorce Code of 1980, which position was sustained by the trial court. In counterstatement, cross-appellant/husband also alleged that good will, pertaining to sole proprietorship of a law practice, could not be appraised for the purpose of setting alimony under section 501 of the Pennsylvania Divorce Code. The alimony issue was not raised or addressed in the lower court but Mr. Beasley's position was actually sustained by the trial court when it held that appraisal was permitted for the purpose of determining present value only. It permitted appraisal of work in progress to ascertain the present value of the proprietorship, while rejecting appraisal of good will.

The next issue on cross-appeal is whether or not work in progress of a law practice could be appraised by requiring the examination of case files and financial information relating to cases which could lead to the disclosure of confidences and secrets of the attorney's clients. The lower court rejected the cross-appellant's position even though appellant's expert attributed no value to work in progress. For reasons discussed below, we believe the finding by the trial court is correct.

Lastly, cross-appellant alleges that it would be a denial of due process and an abuse of discretion to order appraisal fees when in fact there had been no determination on the record that the property to be appraised was in fact marital property. The court determined that simply setting an appraisal fee would not be an abuse of discretion and that there would be no prejudice or harm resulting from the appraisal of property even if it later should not be determined to be marital property.

The issues are clearly stated, but prior to analysis of the legal issues, a brief discussion of the facts is warranted.

James and Helen Beasley were married in 1958, at which time Mr. Beasley was employed as an associate of a Philadelphia law firm in which he had no proprietary interest. In January of 1959, he acquired a minority partnership interest in the law firm of Cohen, Ornsteen and Beasley. Later that year, in December 1959, that firm was dissolved and Mr. Beasley became an equal partner in the firm of Beasley and Ornsteen. Dissolution of Beasley and Ornsteen occurred at the end of 1963 and from early 1964 until the present time Mr. Beasley has continued his law practice as a sole proprietorship.

The record establishes that of the last twenty of the twenty-six years of Mr. Beasley's marriage to Mrs. Beasley, his practice has remained in the form of a sole proprietorship. As a sole proprietor, Mr. Beasley employs fourteen to fifteen attorneys, primarily, in the field of "negligence" or "tort" practice, focusing on medical malpractice, product liability, defamation, a few automobile cases and some incidental matters. At the time of their marriage, Mr. Beasley's annual salary was approximately $6,000, whereas his annual earnings now exceed that amount substantially, as established by the parties' 1982 joint federal income tax returns. All of the physical assets of his practice are owned by him. Mr. Beasley alone determines the compensation of his employees and they have no control over the operation of the law practice. He pays them no compensation over and above their salaries for any revenue they generate for the firm or any cases they may attract to the firm. The practice is, however, conducted under the name of Beasley, Hewson, Casey, Colleran, Thistle and Erbstein.

Some of the attorneys associated with Mr. Beasley have dual professions. Hewson is a physician and Thistle is an engineer. Clients frequently come to the practice because of one of the other attorneys and not because of Mr. Beasley. Many of the cases in the office are handled entirely by attorneys other than Mr. Beasley, who may himself have no knowledge of the files and may never have discussed the client with the other attorney. Each of the attorneys associated with Mr. Beasley may leave at any time and each client would, in the event his attorney left, determine whether he wished to take his case and follow the departing attorney or remain with Mr. Beasley's office. The cases handled by the attorneys associated in the practice are conducted on a contingent fee basis. Among the cases are disciplinary cases, malpractice cases and defamation cases. Some, as with the disciplinary matters, are matters of sensitivity, which have received no public exposure and may not entail litigation. Even where litigation has started and the matters are of public record, the files contain extremely sensitive, confidential information regarding the parties, witnesses, the conduct of the cases or confidences and secrets of the clients.

The attorneys in this law practice keep no time records and Mr. Beasley does not know nor can he estimate the percentage of his time spent on the office operation as opposed to the practice of law. Each year, during the course of this marriage, the balance of monies generated by Mr. Beasley's practice of law, which were not returned to the proprietorship as business expenses, were drawn out and used jointly by Mr. and Mrs. Beasley.

Mrs. Beasley in no way contributed to Mr. Beasley's education, creation of the business or operation of the law practice, and aside from her employment as a secretary during the first year of marriage, she has not been employed outside of the home.

We will consider the issues as they developed in this case, but it appears necessary to first determine whether the issue raised on cross-appeal, that the lower court was prohibited from exercising jurisdiction in this matter by reason of Pa.R.A.P. 1701, stays any proceeding in the court below, during the pendency of that appeal. That appeal resulted from an Order by Judge Brody in the lower court granting $3,500 in appraisal fees when Mr. Beasley and his counsel of record were not present at a hearing. We need not go into the merits of that Order as it was decided by this Court by Opinion Per Curiam filed September 28, 1984, that the appeal must be quashed as there were no exceptions filed and final judgment was not entered on the docket. In that Opinion, it was, however, stated that this was an appealable issue citing Sutliff v. Sutliff, 326 Pa.Super. 496, 474 A.2d 599 (1984). However, Sutliff has been overruled by the Pennsylvania Supreme Court in Fried v. Fried, 509 Pa. 89, 501 A.2d 211 (1985), which holds that ancillary matters in a divorce proceeding must await a final decree of divorce before being appealed.

The present contention of lack of jurisdiction, based on the matter being on appeal, is that the Order of the Superior Court is presently subject to review by the Supreme Court which has before it a petition for allowance of appeal upon which it has not yet acted. In light of Fried and the findings of the Superior Court in quashing that appeal, we may not assume that Mr. Beasley will prevail. However, aside from that, we believe there is no question that this case can proceed to the merits despite an appeal on the issue of the appraisal fee.

In Beasley v. Beasley, 348 Pa.Super. 124, 501 A.2d 679 (1985), an earlier appeal in this case on the issue of whether or not bifurcation was an appealable matter, (as an Order which is separable from and collateral to a cause of action, appealable under certain circumstances), Judge Wieand, author of that Opinion,...