Sergi v. Sergi

• Decision Date: 12 March 1986
• Citation: 506 A.2d 928,351 Pa.Super. 588
• Parties: Alita K. SERGI v. Edward SERGI, Appellant.
• Court: Pennsylvania Superior Court

Page 928

506 A.2d 928

351 Pa.Super. 588

Alita K. SERGI v. Edward SERGI, Appellant.

Superior Court of Pennsylvania.

Argued Oct. 29, 1985.

Filed March 12, 1986.

Henry A. Hudson, Jr., Greensburg, for appellant.

Paula Hopkins, Pittsburgh, for appellee.

Before WIEAND, DEL SOLE and HESTER, JJ.

DEL SOLE, Judge:

Appellant and Appellee were married on December 19, 1974 and a divorce granted on September 21, 1983. The present matter came before the Honorable Lawrence W. Kaplan for hearing on the issue of equitable distribution, being the only remaining claim in the parties' divorce action. A hearing was held on January 9, 1985 at which time the court set down in narrative form findings and recommendations for distribution and indicated a decree nisi would be entered. The decree nisi was filed January 30, 1985. Following arguments on Appellant's exceptions and Appellee's petition for post-trial relief, the court entered a final order dismissing Appellant's exceptions, granting in part and denying in part Appellee's petition for post-trial relief and thereby amending the decree nisi. The decree nisi as amended and made final by the trial court's order was subsequently reduced to the judgment from which this appeal is taken.

Appellant questions: 1) whether the trial court used the proper value of the parties' real estate in decreeing equitable distribution; 2) whether the trial court properly considered the Appellant's age, income and financial station in life when dividing the marital property; and 3) whether the trial court was procedurally correct in entering its final decree.

Initially, we note that "(a)n appellate court will reverse an order determining equitable distribution of marital property only for an abuse of discretion by the trial court." Baraff v. Baraff, 338 Pa.Super. 203, 210, 487 A.2d 925, 929 (1985). "Under this standard, we do not usurp the hearing court's duty as fact finder. Rather, we apply the legislative guidelines of the Divorce Code to the record to determine whether or not the hearing court has abused its discretion." Barnhart v. Barnhart, 343 Pa.Super. 234, 237, 494 A.2d 443, 444 (1985); Semasek v. Semasek, 331 Pa.Super. 1, 6, 479 A.2d 1047, 1050 (1984). "An abuse of discretion is not found lightly, but only upon a showing of clear and convincing evidence ... However, an abuse of discretion will be found by this Court if the trial court failed to follow proper legal procedure or misapplied the law." Braderman v. Braderman, 339 Pa.Super. 185, 190, 488 A.2d 613, 615 (1985). Considering this standard of review, we shall address the issues seriatim.

The thrust of Appellant's first claim is that the trial court erred in selecting the date of trial value for the jointly owned marital residence as opposed to the date of separation for purposes of equitable distribution. The importance to the parties as to which valuation date is ultimately selected becomes apparent when it is realized that the home was acquired for $36,000, valued at the date of separation at $50,000 and at the date of the equitable distribution hearing at $63,000 (R.R.4).

We begin our analysis by turning to the Divorce Code of 1980 for guidance. ¹ Section 403(b) states "(b)oth parties shall submit to the court an inventory and appraisement of all property owned or possessed at the time action was commenced." ² This direction to the parties does not however dictate a specific date for valuation to be used by the court when finally dividing the property. Appellant directs our attention to § 401(e)(4) in support of the proposition that valuation should occur as of the date of separation. Section 401(e)(4) reads:

(e) For purposes of this chapter only, "marital property" means all property acquired by either party during the marriage except:

(4) Property acquired after separation until the date of divorce ...

Reliance on this section of the Divorce Code in support of Appellant's position is ill-founded. This language indicates the date at which property is no longer to be included for purposes of equitable distribution. This is distinct from the date which a court could use for valuation purposes of property that is determined to be marital and thus subject to equitable distribution.

In support of their respective positions, both parties rely upon this Court's decision in King v. King, 332 Pa.Super. 526, 481 A.2d 913 (1984). In King, we reviewed the valuation of a pension for purposes of equitable distribution. More recently, we addressed the related issue of the valuation of retirement benefits in Braderman supra. We recommended in King and Braderman that such plans should be valued as of the date of the hearing. Braderman supra, 488 A.2d at 619. After the present value is determined it was pointed out that it is then necessary to calculate that portion of the present value that was earned during the marriage. Braderman supra.

As has already been mentioned, the drafters of the Divorce Code have provided that the parties are to submit to the court an initial valuation of their property at the time the action is commenced. To mandate that a trial court be limited to effecting an equitable distribution based only on this valuation information could result in a distribution based on stale financial data. This would hardly be in keeping with the overall declared policy of the Commonwealth which is to:

(e)ffectuate economic justice between parties who are divorced or separated and grant or withhold alimony according to the actual need and ability of the parties and insure a fair and just determination and settlement of their property rights.

23 P.S. § 102(a)(6) emphasis added.

Likewise, to require a trial court to value property as of the date of separation may also result in the use of stale financial data and subsequent inequitable distribution of marital property. An excellent example of the inequality that could result from such a requirement has been provided by the Honorable Eugene B. Strassburger, III, Court of Common Pleas of Allegheny County, Family Division. Judge Strassburger suggests:

Suppose at separation in 1975, Husband and Wife own both Blackacre and Whiteacre, each worth $100,000.00. At the date of trial in 1982, Whiteacre is worth $50,000.00 but Blackacre has increased in value to $300,000.00. If date of separation values were used, I could award Blackacre to one party and Whiteacre to the other on a 50-50 split. Yet Blackacre is today worth six times what Whiteacre is worth. ³

It is similarly possible to imagine a situation in which it would be inequitable to value marital property either at the date the action is commenced, or the date of hearing. This Court recently encountered such a factual situation in Barnhart supra wherein we found the trial court erred in failing to include the value of husband's pension as marital property even though it was no longer in existence at the time the divorce complaint was filed. Id., 494 A.2d at 446. If the valuation date were restricted to either the date the action was commenced or the date of hearing, our determination that the pension is subject to equitable distribution as marital property would be meaningless. In such a situation, the date of separation would obviously be an appropriate valuation date. We noted that failure to include the pension "would completely nullify the protection of the marital property distribution provisions of the code since it would mean that any property acquired during marriage and subject to equitable distribution could be removed from such distribution by a spouse merely consuming it after separation and before the divorce." Id. Failure to permit a trial court to value marital property at the time of separation could result in allowing a spouse to reduce the value of marital property through unbridled consumption.

Since equitable results will most likely flow from providing the court with the most recent information available, it is persuasively argued that this would occur by valuing marital property as of the date of the equitable distribution hearing. However, as the above discussion indicates, such is not always the case. Therefore, we do not attempt at this time to establish a valuation to be used in every situation. To recognize a specific valuation date as a matter of law would deprive the trial court of the necessary discretion required to effectuate economic justice.

In the present case, the marital residence was valued at the date of separation at $50,000 and at the date of the equitable distribution hearing at $63,000. (R.R.) The parties net equity was found to be $22,765 at the time of separation and $39,500 (rounded off) as of the date of the hearing. For purposes of distribution, the trial court valued the marital property of the parties in the residence to be $39,500 (R.R. 235). The court was fully cognizant that in utilizing the date of trial value, the value represented an increase that was due to both general market factors and expenditures by the husband since separation. Such considerations led to the court refusing to grant the Appellee a rental value for the husbands occupancy between separation and trial. With respect to this concern the court stated:

Wife has requested a rental value in regard to the premises which have been occupied by husband for the past four and a half years. Generally we would give considerable thought to this but for the fact that we are considering the day of trial value of this property and that the resulting appreciation also inures to her benefit.

The husband has been under the obligation to pay the mortgage, which has been paid down approximately $3,700 since separation, upon which the taxes, upkeep and general maintenance have been his responsibility.

It has been our general approach not to grant a fair rental for the reasons indicated, although I will admit that on occasion, where there has been a long period of separation and a long continuous use of the...