Busse v. Busse

• Citation: 921 A.2d 1248
• Decision Date: 11 April 2007
• Docket Number: No. 385 WDA 2006.,No. 445 WDA 2006.,385 WDA 2006.,445 WDA 2006.
• Parties: Craig Frederick BUSSE, Appellant v. Kimberly S. BUSSE, Appellee. Craig Frederick Busse, Appellee v. Kimberly S. Busse, Appellant.
• Court: Superior Court of Pennsylvania

921 A.2d 1248

Craig Frederick BUSSE, Appellant v. Kimberly S. BUSSE, Appellee.

Craig Frederick Busse, Appellee v. Kimberly S. Busse, Appellant.

No. 385 WDA 2006.

No. 445 WDA 2006.

Superior Court of Pennsylvania.

Argued January 31, 2007.

Filed April 11, 2007.

Robert L. Garber, Pittsburgh, for Busse, C.

Margie Hammer, Pittsburgh, for Busse, K.

BEFORE: FORD ELLIOTT, P.J., ORIE MELVIN and TAMILIA, JJ.

OPINION BY TAMILIA, J.:

¶ 1 Husband, Craig Busse, and wife, Kimberly Busse, have filed cross appeals from the Order filed January 24, 2006, granting in part and denying in part the parties' objections to three master's reports, filed August 24, 2004, May 26, 2005, and July 5, 2005, respectively.

¶ 2 The following is a summary of the pertinent facts and procedural history. The parties to this divorce action, which the court characterized as "particularly contentious in every aspect," Trial Court Opinion, Marsili, J., 1/24/06, at 1, married on August 28, 1981, had two sons, now adults, and separated in October 2001. Husband filed this action on December 18, 2001. Wife thereafter filed a petition requesting, inter alia, support, alimony pendente lite (APL), and equitable distribution.

¶ 3 During their marriage, the parties formed a successful business, Craig Trading Corporation, which imported and traded meat products. The parties were the sole, joint shareholders of the corporation. Husband was a commodities trader and operated the business, while wife, who has little employment history, performed secretarial-type tasks for the business.

¶ 4 Due to the fluctuations in his actual earnings, husband's earning capacity was determined based upon a three-year average of his actual income. Over the course of these proceedings his earning capacity was calculated multiple times and ranged from a low of $24,000 per month to just over $30,000 per month. Record, No. 10 at 8 ¶ 1; Record, No. 48 at 7-8 ¶ 9; Record, No. 70 at 9-10 ¶ 3; Record, No. 79 at 9 ¶ 1. Wife's earning capacity was determined to be $800 per month. Record, No. 10 at 8 ¶ 2; Record, No. 70 at 9-10 ¶ 3.

¶ 5 Husband's APL obligation was calculated based upon his earning capacity and was initially set at $7,026, later raised as high as $10,880 per month, and ultimately modified to $9,280, which was the current Order at the time the parties filed their appeals. See Record, No. 10 at 9 ¶ 1; Record, No. 23, Trial Court Order, Marsili, J., 10/1/02, ¶ 4; Record, No. 48 at 8 and Trial Court Order, Marsili, J., 7/14/03; Record, No. 70 at 9-10 ¶ 3. Husband filed three petitions to modify APL, each time alleging his circumstances had dramatically changed.¹ Record, No. 21; Record, No. 73; Record, No. 100. With one exception, his petitions were denied. Record, No. 48; Record, No. 79; Record, No. 103 at 3 ¶ 1-2. In each proceeding husband's credibility was questioned. See Record, No. 10 at 3 ¶ 17; Record, No. 48 at 6-7; Record, No. 79 at 9 ¶ 4; Record, No. 103 at 3 ¶ 1.

¶ 6 Wife filed four petitions for contempt and counsel fees, alleging husband was not paying his APL obligation. Record, No. 24; Record, No. 71; Record, No. 99; Record, No. 128. Each time husband was found to be in willful non-compliance and each time wife's petition was granted. Record, No. 59 at 5-6; Record, No. 82 at 6; Record, No. 99, Trial Court Opinion, Marsili, J., 3/21/05, at 2 ¶ 3.

¶ 7 Ultimately, on July 5, 2005, a master who had been appointed to address the claims of divorce, equitable distribution, alimony, APL and requests to modify APL, counsel fees, and expenses, filed a lengthy report after a total of ten days of testimony on these issues. Record, No. 107. The master recommended, inter alia, a 50-50 split of the marital estate. Id. at 50-51. He examined the parties' pre-nuptial agreement and found it protected only specific assets, which assets were no longer in existence, and it did not protect any marital assets. Id. at 10-14, 46. He also awarded wife $25,000 in counsel fees. Id. at 44-45. He found husband to be incredible. Id. at 45. He also noted that $187,712 wife took from the parties' joint account was included in wife's share of the marital estate. Id. at 51. Both parties filed exceptions to the report. Record, Nos. 122, 123.

¶ 8 On January 24, 2006, the court entered the Opinion and Order from which the parties now timely appeal. Record, Nos. 133, 135. In it, the court approved all of the master's findings of fact, conclusions of law, recommendations, and proposed Order, except that it granted wife's exception as to counsel fees, thereby awarding her an additional $25,000 in counsel fees for a total of $50,000. Record, No. 130, at 61-62.

¶ 9 Husband asks us to review the following questions:

I. Whether the trial court committed an abuse of discretion, reversible errors of law, and a misapplication of law in repeatedly miscalculating the net monthly income of husband as the court's calculations and conclusions are against the weight of the evidence?

II. Whether the trial court committed an abuse of discretion and misapplied the law in awarding alimony pendente lite to wife as the weight of the evidence does not support wife's claim for alimony pendente lite, nor the amount that was awarded?

III. Whether the court committed an abuse of discretion, reversible errors of law, and a misapplication of the law in distributing to wife non-marital assets which were properly identified, traced, and excluded from equitable distribution as non-marital property in the parties' pre-nuptial agreement?

IV. Whether the trial court committed an abuse of discretion and reversible errors of law in awarding wife counsel fees?

Husband's brief at 6-7.

¶ 10 In wife's cross-appeal, she raises the following questions:

I. Whether the lower court properly applied the law or abused its discretion when it based husband's alimony pendente lite obligation on his earning capacity as opposed to his actual earnings based upon the circumstances and evidence of this case?

II. Whether the lower court properly applied the law or abused its discretion when it awarded alimony pendente lite to wife?

III. Whether the lower court properly applied the law and its findings were supported by substantial evidence in the record when it determined that Husband's Mellon IRA account and the $300,000.00 certificate of deposit were martial assets subject to equitable distribution?

IV. Whether the lower court properly applied the law in awarding counsel fees to Wife but should have awarded more counsel fees under the circumstances of this case?

V. Whether the lower court abused its discretion and misapplied the law under the circumstances by distributing only 50% of the marital assets to Wife?

VI. Whether the lower court abused its discretion and misapplied the law in its determination of the value of Craig Trading Corporation?

VII. Whether the lower court abused its discretion by failing to require Husband to reimburse Wife for taxes she incurred as a result of his issuing k-1's to her where there was no dispute she had never received any income or other distributions from the corporation?

Wife's brief at 1.²

¶ 11 The first two issues of both husband and wife relate to the award of alimony pendente lite to wife. In his first issue, husband argues for a disjointed 22 pages as to why the APL award was erroneous. His arguments can be summarized as follows:

¶ 12 The master erred in calculating husband's earning capacity based on a three-year average of his income, since included in the calculation was his 2001 income of $619,000, which was inaccurate and resulted in an inflated three-year average. He complains the 2001 income figure does not reflect the funds wife withdrew that year — $187,712.42 from the parties' joint Mellon Bank Money Market account and $44,090.50 from the corporation. Husband argues the gross amount of these withdrawals was $377,000, and that amount should be attributed to wife as gross income for 2001 and not attributed to him. Husband's brief at 13-15, 22-23, 33-34.³

¶ 13 Husband also complains that wife withdrew an additional $50,262.45, a gross amount of $85,000 according to him, from the corporation in January and February 2002. He acknowledges that the court, in its September 30, 2002, Order, credited husband $23,000 for APL arrearages which he alleges was to compensate for corporate funds withdrawn by wife. He contends, however, the full extent of wife's withdrawals was not realized until the final hearings in this matter in 2004-2005. Id. at 18-19, 23, 29.

¶ 14 In addition, in his 22-page argument on this issue, husband repeatedly contends the master erred in including in his income $215,720 for each of the years 2001 through 2004, based upon a change to the corporation's accounting method from the cash to the accrual method, a change he avers was not made for collusive reasons but was necessitated because for the first time, in December 2001, the corporation had inventory at year end. According to husband, the accounting change resulted in the current taxation of $862,879 of previously untaxed income generated from the creation of the business in 1989, through December 31, 2001, and represents the net difference between accounts receivable and accounts payable for that time. The impact of the accounting method change was spread out over four years for a total of $215,729 per year. He contends this was "phantom income" and "merely an accounting construct with no current economic benefit nor additional cash flow affect or benefit on the parties" and thus should not have been considered in calculations of his average income/earning capacity. Id. at 15-17, 19-24, 29-30, 34.

¶ 15 Husband, moreover, contends the master erred in including the corporation's retained earnings in the calculations that were not liquid and could not be liquidated without liquidating the company. He argues much of the retained earnings were not liquid because they were collateral for the corporate credit...