Paroly v. Paroly

• Decision Date: 10 June 2005
• Citation: 876 A.2d 1061
• Parties: Ted W. PAROLY, Appellee v. Sandra J. PAROLY, Appellant.
• Court: Pennsylvania Superior Court

876 A.2d 1061

Ted W. PAROLY, Appellee v. Sandra J. PAROLY, Appellant.

Superior Court of Pennsylvania.

Argued December 7, 2005.

Filed June 10, 2005.

John D. Conroy, Doylestown, for appellant.

Marcel L. Groen, Philadelphia, for appellee.

Before: BOWES and McCAFFERY, JJ., and McEWEN, P.J.E.

OPINION BY BOWES, J.

¶ 1 Sandra J. Paroly ("Wife") has appealed the trial court's decision to uphold a marital settlement agreement that failed to delineate the value of a business owned by Ted W. Paroly ("Husband"), but did recite that disclosure of its value had been made. The record does not sustain a finding that the trial court abused its discretion in upholding the agreement; therefore, we affirm.

¶ 2 The record indicates the following. Wife and Husband married on April 4, 1981, and although separated in 1988, the parties reconciled. Husband instituted the present divorce action on January 4, 1999, and on February 23, 2001, the court granted a divorce; the terms of an October 16, 2000 divorce settlement agreement were incorporated into the decree. On April 3, 2002, Wife filed a petition to set aside the October 16, 2001 agreement. The trial court conducted three hearings on the petition, and on February 13, 2004, denied Wife's petition. This appeal followed.

¶ 3 Wife contends that the trial court erred in upholding the agreement. Her central allegation is that the agreement did not contain full and fair disclosure of the parties' assets because the value of the marital estate was not specifically delineated. She claims that Husband misinformed her that the value of his business, Rampart Security Systems, Inc. t/a Paroly-Rampart Security Systems ("Rampart"), was $145,000; however, six months after the agreement was executed, he purportedly sold that business for $560,000.

¶ 4 We first outline our standard of review:

"The determination of marital property rights through prenuptial, postnuptial and settlement agreements has long been permitted, and even encouraged." Sabad [v. Fessenden], 825 A.2d [682,] 686 [(Pa.Super.2003)] (quoting Laudig v. Laudig, 425 Pa.Super. 228, 624 A.2d 651, 653 (1993)). Both prenuptial and post-nuptial agreements are contracts and are governed by contract law. Laudig, supra.

Moreover, a court's order upholding the agreement in divorce proceedings is subject to an abuse of discretion or error of law standard of review. See Busch v. Busch, 732 A.2d 1274, 1276 (Pa.Super.1999),

appeal denied, 563 Pa. 681, 760 A.2d 850 (2000) (citing Laudig, supra). An abuse of discretion is not lightly found, as it requires clear and convincing evidence that the trial court misapplied the law or failed to follow proper legal procedures. Paulone v. Paulone, 437 Pa.Super. 130, 649 A.2d 691 (1994). We will not usurp the trial court's factfinding function. Laudig, supra.

Holz v. Holz, 850 A.2d 751, 757 (Pa.Super.2004). Furthermore, the principles applicable to prenuptial agreements are "equally applicable" to postnuptial agreements. Stoner v. Stoner, 572 Pa. 665, 672 n. 5, 819 A.2d 529, 533 n. 5 (2003).

¶ 5 The relevant portions of the agreement, which were drafted by Attorney Edward R. Sutton on behalf of both parties, are as follows:

Each party agrees and believes that this Agreement is under all circumstances fair and equitable and that it is being entered into freely and voluntarily and that the execution of this Agreement is not the result of any duress or undue influence and it is not the result of any collusion or improper of illegal Agreement or Agreements. The parties do hereby warrant, represent, declare and do acknowledge and agree that each is and has been fully and completely informed of and is familiar with and cognizant of the wealth, real and/or personal property, estate and assets, earnings and income, income tax circumstances and situation of the other and that each has made a full and complete disclosure to the other of his or her entire assets and liabilities, and further enumeration or statement thereof in this Agreement is hereby specifically waived, and the parties do not wish to make or append hereto any further covenants or details of assets or liabilities and agree for themselves and their heirs, executors, administrators and assigns in any action or contention, direct or indirect, absence or lack of full disclosure or that there was any absence or lack of full, opportunity to engage in independent representation.

Agreement, 10/16/00, at III(C) (emphasis added). The agreement also comprehensively dealt with the parties' assets, including bank accounts, cars, home, retirement accounts, personal property, and the stock of Rampart. Under the agreement, Wife received $70,000, and Husband received the home and Rampart. Wife acknowledged that Husband had to refinance the house in order to make the $70,000 payment. Wife, a participant in the Princeton University TIAA/CREF Retirement Plan, received her interest in that account as well as any other retirement benefits that she owned. The savings account was divided equally, and Wife received a car titled in Rampart's name.

¶ 6 The documentary evidence produced at trial substantiated that Mr. Sutton prepared the agreement at the direction of the parties, who affirmatively informed him that they did not want separate legal representation and who had negotiated the financial arrangements themselves. In addition, Mr. Sutton was assured by Wife that she was aware of the parties' financial situation, including the value of Rampart.

¶ 7 The trial court made various factual findings and credibility determinations in rendering its ruling, which we summarize as follows. In 1977, Husband purchased Rampart, a security alarm company, where Wife was an employee. Wife continued her employment at Rampart after the parties' 1981 marriage and left in 1988, after their first separation, when she took a full time job in Princeton, New Jersey. While working at Rampart, Wife essentially was the office manager and "was responsible for [a]ccounts payable, accounts receivable, she wrote all checks, did all deposits, did billing, did customer service work." N.T., 6/16/03, at 23. In 1988, after Wife left Rampart's employment, she continued to execute Rampart's tax returns in her capacity as its corporate secretary. When the parties divorced, the estimated lump sum cash value of the business was between $125,000 and $150,000. Husband testified that he told Wife of the business's value during the divorce process in 2000. When the agreement was executed, Wife was earning $38,000 and Husband was earning $70,000 from Rampart.

¶ 8 Approximately six months after the divorce, on August 27, 2001, Husband entered into an asset purchase agreement with Franklin Security System, Inc. ("Franklin") to sell Rampart for $560,000. This amount, rather than being paid directly in a lump sum, was paid in installments which were the subject of negotiation. Under this installment agreement, Husband, rather than separate immediately from Rampart, agreed to serve as a consultant to Franklin for eight years, when he would reach sixty-five years of age, for an annual salary of $70,000. The $70,000 yearly figure for eight years resulted in a purchase price of $560,000.

¶ 9 At the hearings, Mr. Sutton testified that he made it very clear to the parties that his only involvement in drafting their property settlement agreement was limited to functioning as a scrivener. Mr. Sutton stated that he sent correspondence to the parties requesting that they carefully review and mark changes to the agreement and informing the parties that they had the "absolute right to secure independent legal counsel." Id. at 109.

¶ 10 Wife acknowledged during her testimony that she was employed by Rampart prior to her husband's purchase of this company in 1977, and after they married, she continued to work at that business. With regard to her responsibilities, she stated that her duties involved "[a]nswering the phone, filing, scheduling appointments for service, ma[king] deposits, help[ing] with monthly billing." N.T., 7/23/03, at 8. She admittedly "ran the office" and characterized her employment responsibilities on her subsequent resume as follows:

Acted on behalf of the President [Husband] with regard to customer contracts, public relations, and correspondence. Handled all aspects of bookkeeping, which included accounts payable, accounts receivable, payroll and expense accounts. Duties included the handling of confidential information in the uploading, downloading of security system program data. Was responsible for the computerization and administration of accounts payable, accounts receivable, control systems and the complete customer database and service order system. Became familiar with . . . industry-specific software.

Id. at 45. Wife acknowledged that she executed the annual tax returns for Rampart from 1988 to 2000, and stated that, prior to the divorce, she handled the parties' personal finances. While Wife testified that she was unaware of Rampart's value between 1988 and 2000, the trial court specifically found this "testimony less than credible and inconsistent with the evidentiary record." Trial Court Opinion, 5/25/04, at 9. Wife also maintained that she had no input into the terms of the October 16, 2000 property settlement agreement. The trial court observed that this testimony was refuted both by Mr. Sutton's testimony and by a draft of the agreement to which Wife had made changes.

¶ 11 At the July 23, 2003 hearing, Husband testified that Wife was aware of Rampart's value and that she participated in the drafting process of property settlement agreement. The trial court specifically credited his testimony, stating "This Court found this testimony to be especially credible, consistent with the record, and corroborated by the testimony of Edward Sutton, Esquire, and the documents and exhibits introduced into evidence." Id. at 10.

¶ 12 We begin our analysis with the seminal decision of ...