Darby v. Darby

• Decision Date: 30 December 1996
• Citation: 455 Pa.Super. 63,686 A.2d 1346
• Parties: Gracie Mae DARBY v. Richard Lee DARBY, Appellant.
• Court: Pennsylvania Superior Court

Page 1346

686 A.2d 1346

455 Pa.Super. 63

Gracie Mae DARBY v. Richard Lee DARBY, Appellant.

Superior Court of Pennsylvania.

Argued Oct. 8, 1996.

Filed Dec. 30, 1996.

Kenneth W. Wargo, Erie, for appellant.

Larry D. Meredith, Erie, for appellee.

Before POPOVICH, FORD ELLIOTT and HESTER, JJ.

HESTER, Judge:

Richard Lee Darby ("Father") appeals from the March 14, 1996 order entered by the Court of Common Pleas of Erie County in this child support action. ¹ Father argues the trial court erred in treating the entire lump sum he received in settlement of a personal injury claim as income available for child support. We affirm.

The record reveals the following. Father and Gracie Mae Darby ("Mother") are the parents of a daughter born March 24, 1983. The parents separated on April 19, 1993. Mother instituted this support action. On June 10, 1993, the parties reached an agreement pursuant to which Father would pay $200 monthly in support and twenty-one dollars per month toward arrearages. Father, a laborer for a paper company, had been injured in a work-related accident and was receiving only workmen's compensation.

Later, during Father's treatment at Pennbriar Rehabilitation Center, an exercise machine malfunctioned and severely injured his knee. As a result, Father requires knee replacement surgery and is unable to return to his former employment. He presently works with the Pennsylvania Office of Vocational Rehabilitation and will continue to do so until he undergoes his planned knee operation. However, he does not anticipate returning to his former employment or to equivalent employment following his knee replacement. Father instituted a tort action against the rehabilitation center. In November, 1995, Father settled this claim for $300,000. Mother shortly thereafter filed a petition wherein she sought an increase in support based on Father's settlement.

At the support hearing, Father argued that much of the settlement is not immediately available to him. His former employer had filed a workmen's compensation subrogation lien against the funds of appellant's settlement with Pennbriar. Father also asserted he had expended some of the funds to purchase two used automobiles and to pay Mother the balance she was owed for equitable distribution. The hearing officer rejected these arguments. Instead, he subtracted only attorney's fees of $110,000 from the $300,000 settlement, and determined that Father had immediate access to the balance of $190,000 for child support.

The hearing officer divided the $190,000 balance by twelve to arrive at $15,833 in disposable monthly net income for Father. Mother earned $833 net per month. Because Mother earned less than $2,000, the hearing officer imputed $2,000 to her as income and treated the parties' combined net income as less than $10,000. See Pa.R.C.P. 1910.16-5(a)(1). Pursuant to that rule, the hearing officer therefore subtracted Mother's income of $833.61 from $10,000 and calculated $9,166.39 as the presumptive minimum available for support. The trial court multiplied $10,000 by 11.5% for support of one child, thereby arriving at a presumptive support figure of $1,150. ² This amount was multiplied by ninety-two percent, representing the ratio for Father's income to Mother's income, to arrive at a figure of $1,058 per month. Consequently, the hearing officer recommended increasing Father's support obligation to $1,058 per month, plus $106 toward arrears. Later, following a de novo hearing, the trial court adopted the hearing officer's recommendations. This appeal followed.

Our standard of review is clear. In Frankenfield v. Feeser, 449 Pa.Super. 47, 50-51, 672 A.2d 1347, 1349 (1996) (citations omitted), we stated:

In reviewing a child support order, our standard of review is narrow: we will not interfere with the trial court's order absent a clear abuse of discretion, shown by clear and convincing evidence. "An abuse of discretion is more than an error of judgment. It must be a misapplication of the law or an unreasonable exercise of judgment."

Father readily concedes that interest and dividend income earned by the settlement money may be considered for support. However, Father insists that treating the entire lump-sum payment, which is an asset, as income is contrary to the statutory intent of the legislature. In support of his argument, Father first argues that 23 Pa.C.S. § 4302 defines twenty-one separate categories of income but none of them include a lump-sum payment received in settlement of a tort claim. 23 Pa.C.S. § 4302, in pertinent part, defines "income" to include:

[C]ompensation for services, including, but not limited to, wages, salaries, fees, compensation in kind, commissions and similar items; income derived from business; gains derived from dealings in property; interest; rent; royalties; dividends; annuities; income from life insurance and endowment contracts; all forms of retirement; pensions; income from discharge of indebtedness; distributive share of partnership gross income; income in respect of a decedent; income from an interest in an estate or trust; military retirement benefits, railroad employment retirement benefits; social security benefits; temporary and permanent disability benefits; workmen's compensation and unemployment compensation.

We reject this argument. We note that section 4302 specifically states, "Compensation for services, including, but not limited to ...." (emphasis added). Statutory interpretation requires that words and phrases be accorded their plain meaning. See 1 Pa.C.S. § 1903. Thus, the types of income listed in 23 Pa.C.S. § 4302 are examples of income available for support; the list plainly is not intended to be all-inclusive. Moreover, actual earnings are not necessarily utilized; courts are required to determine ability to pay from all financial resources in determining earning capacity. See Blaisure v. Blaisure, 395 Pa.Super. 473, 577 A.2d 640 (1990) (earning capacity includes money from all sources, not just actual earnings).

Next, appellant argues that federal tax laws exclude personal injury awards from treatment as income for federal tax purposes. See 26 U.S.C.A. § 104(a)(2). He also contends Pennsylvania does not include damage awards within its definitions of classes of income. See 72 P.S. § 7303. He contends this suggest his tort award should not be considered income for support.

We are not persuaded that the tax definitions of income are controlling with regard to defining income for purposes of support. Tax law contains many preferences and definitions for fiscal and other purposes which have no relationship to support. We specifically have held that taxable income is not the same as net income used to determine support obligations. See Flory v. Flory, 364 Pa.Super. 67, 527 A.2d 155 (1987) (it is actual income and not taxable income which constitutes the basis for calculating support). Moreover, the support law contains no reference to tax law. Accordingly, we reject appellant's assertion that federal or Pennsylvania tax treatment of personal injury awards is persuasive with respect to classifying money for support purposes.

Appellant next argues the trial court erroneously relied upon Butler v. Butler, 339 Pa.Super. 312, 488 A.2d 1141 (1985), in determining that his tort settlement was available for support. In Butler, we addressed whether all the annuity income from a tort award could be considered as income for support. We concluded that all the annuity income was available for support even though part of it represented compensation for pain and suffering as well as for lost income. Id. Appellant nevertheless asserts Butler is not controlling herein since Butler was decided before the implementation of the current support guidelines and before the enactment of 23 Pa.C.S. § 4302. We disagree....