Gioia v. Gioia

• Decision Date: 15 March 1989
• Citation: 382 Pa.Super. 538,555 A.2d 1330
• Parties: Bonnie L. GIOIA, Appellant v. Bernard J. GIOIA.
• Court: Pennsylvania Superior Court

Page 1330

555 A.2d 1330

382 Pa.Super. 538

Bonnie L. GIOIA, Appellant v. Bernard J. GIOIA.

Superior Court of Pennsylvania.

Submitted Dec. 12, 1988.

Filed March 15, 1989.

Jan Ira Medoff, Pittsburgh, for appellant.

Ernest P. DeHaas, III, Uniontown, for appellee.

Before MELINSON, HOFFMAN and CERCONE, JJ.

CERCONE, Judge:

This is an appeal from a final order entered July 8, 1988 in the Court of Common Pleas of Fayette County, Civil Division. The order provided for the equitable distribution of the parties' marital property pursuant to a special master's recommendations. For the following reasons we affirm in part and reverse in part the court's order, and remand for further proceedings consistent with this opinion.

The parties to the instant appeal were married in 1971. There are two children of the marriage who reside with wife/appellant. On February 26, 1980, appellant filed an action in divorce alleging both fault and no-fault grounds. The Fayette County Court of Common Pleas bifurcated the divorce from the economic issues, and entered a decree of divorce on August 29, 1985. Eventually a special master was appointed, who conducted hearings regarding the economic issues on August 17, August 31, and November 9 of 1987. The master filed his report on January 6, 1988 and appellant timely filed exceptions. The lower court issued its opinion and order granting certain exceptions and denying others on July 8, 1988. This timely appeal followed.

Appellant asks us to consider the following issues: (1) whether the lower court erred in its selection of a valuation date for husband/appellee's business interest; (2) whether the lower court erred in reducing the net value of appellee's assets by the amount of a judgment levied against a predecessor entity to the closely held corporation in which appellee currently owns 50% of the stock; (3) whether the lower court erred in failing to assign a monetary value to a mineral lease held as an asset by the business entity in which appellee owned a 50% interest on the relevant date; (4) whether the lower court inappropriately apportioned the marital assets pursuant to the relevant factors in the Pennsylvania Divorce Code;¹ (5) whether the lower court improperly refused to grant counsel fees in the amount requested by wife/appellant; (6) whether appellant was improperly denied discovery; and finally, (7) whether the special master erred in refusing to admit into evidence the valuation report prepared by appellant's expert regarding appellee's business interest. We will consider these issues seriatim.

Initially, we note that the trial court has "full equity power" to resolve issues concerned with equitable distribution of marital property pursuant to section 401(c) of the Divorce Code, supra.² Our appellate role is not to nullify the fact-finding function of either the special master or the lower court. King v. King, 332 Pa.Super. 526, 481 A.2d 913 (1984). We review judgments and orders pertaining to equitable distribution of marital property under an abuse of discretion standard. Cunningham v. Cunningham, 378 Pa.Super. 280, 548 A.2d 611 (1988). We will not disturb the decision of the trial court absent abuse of discretion. Vajda v. Vajda, 337 Pa.Super. 573, 579-560, 487 A.2d 409, 412 (1985). We will, however, find an abuse of discretion where the trial court has misapplied the law. Buckl v. Buckl, 373 Pa.Super. 521, 526, 542 A.2d 65, 67 (1988) (en banc ).

We begin our analysis with a consideration of appellant's allegation that the selection of December 31, 1986 as the valuation date for appellee's business interest was an abuse of discretion under the circumstances of the instant case. Appellant argues that the date of separation, November 29, 1981, is the most appropriate valuation date. We cannot agree. Our Supreme Court has recently stated that marital property must be distributed with reference to its value as close as is practicable to the date of distribution. Sutliff v. Sutliff, 518 Pa. 378, 383, 543 A.2d 534, 537 (1988). As the court explained,

[T]here may be situations where marital assets have been consumed or disposed of by one of the parties, thus rendering a current valuation impossible and making it necessary to rely on data that would otherwise be considered stale.... In the usual case, however, given that the parties' present needs and circumstances are to be a major factor in distributing marital assets, it would be impossible to construct a distribution scheme that would be fully responsive to those needs and circumstances if the court were to act without taking cognizance of the current values of the assets being distributed.

....

If, as has been suggested, marital property values were to be fixed as of the date of the parties' separation, or as of the date of filing a complaint in divorce, severe injustices would at times be inflicted upon the parties concerned.

Id. at 383-85, 543 A.2d 536-537 (citations omitted).

Our inspection of the record has disclosed no indication that the valuation date was selected in order to unfairly favor one party over the other. The special master conducted the first two fact-finding hearings in August of 1987. December 31, 1986 was the most recent date for which complete financial data, including year-end statements, were available for appellee's business interests. In light of this fact, we cannot conclude that it was unreasonable for the master to choose December 31, 1986 as the valuation date. Nor can we find that the lower court abused its discretion in following the master's recommendation on the selection of a valuation date. We therefore uphold the action of the trial court in this regard.

The next two issues for our review concern the effect of a judgment against Gioia Coal Company on the value of appellee's interest in G & B Coal, Inc. and whether the lower court erred in failing to assign a monetary value to a leasehold interest held as an asset by the partnership. As an en banc panel of this court recently noted, "[w]hile the general principle that an interest in a partnership is marital property presents no particular difficulty, the valuation of such interest is fraught with problems." Buckl v. Buckl, supra 373 Pa.Super. at 527, 542 A.2d at 67. Our inspection of the record indicates that in 1981, appellee and his brother founded the Gioia Coal Company (hereinafter "the partnership")³ as an equal partnership to which appellee contributed $40,000 in marital property. Appellee thus owned a 50% interest in the partnership which was at least partially purchased with marital assets.

At the beginning of January, 1987, the assets of this partnership were transferred to G & B Coal, Inc. (hereinafter "the corporation"). Appellee owns 50% of the capital stock in this corporate successor to the original partnership. The trial court properly held that appellee's interest in both the partnership and in its corporate successor was marital property subject to equitable distribution. See Buckl v. Buckl, supra; and McCabe v. McCabe, 374 Pa.Super. 451, 543 A.2d 558 (1988) (holding value of partnership interest was marital property subject to equitable distribution in a divorce proceeding). See also Sutliff v. Sutliff, 361 Pa.Super. 504, 522 A.2d 1144 (1987) (permitting tracing of marital assets), rev'd on other grounds, 518 Pa. 378, 543 A.2d 534 (1988).

The business of both the partnership and the corporation was the same: the mining of coal. To that end, in 1981 the partnership entered into an agreement with Mt. Thor Minerals, Inc. (hereinafter "Mt. Thor"). Following a dispute with the partnership, Mt. Thor filed suit in the Court of Common Pleas of Westmoreland County and obtained a judgment in the amount of $163,304.05 against Bernard J. Gioia and Gary A. Gioia, trading and doing business as Gioia Coal Company. This judgment was entered in Westmoreland County in mid-December, 1986 but was not entered in Fayette County until January 16, 1987. On January 1, 1987, after the initial entry of judgment in its favor, but before Mt. Thor had levied against Gioia Coal Company, all the partnership assets were transferred into the new corporate entity, G & B Coal, Inc.

In his report and recommendation, the special master found that the fair market value of the partnership was $21,913.95 and that appellee's one-half share of this was $10,956.98. The special master arrived at this figure by adopting a net asset value of $185,218.00 for the business as of December 31, 1986 and reducing this amount by the $163,304.05 judgment in favor of Mt. Thor. The lower court adopted the master's findings and recommendations as to valuation of appellee's business interest in the partnership, and by implication, in the corporation.

Appellant argues that the special master has improperly valued husband's business interest in the corporate successor to the partnership. Appellant contends that it was abuse of discretion to reduce the net value of the corporation by the amount of a liability pertinent to the partnership, particularly where the liability was not carried on the partnership's books or reflected in the pertinent year-end statement. Further, appellant asks us to consider the fact that the judgment entered against the partnership may well be uncollectible because the partnership assets were transferred to the corporation before Mt. Thor could levy. We find appellant's arguments to be unpersuasive.

As the lower court correctly stated, the task before it was to set a value on husband's business interests as of a particular date so that equitable distribution of the marital property could be effectuated. Our inspection of the record indicates that on the date chosen for valuation, December 31, 1986, no assets which could be characterized as "marital property" had been transferred from the partnership to the corporation. Therefore, our only relevant inquiry concerns the value of appellee's interest in the partnership.

We agree...