Smith v. Smith

• Citation: 904 A.2d 15
• Parties: Dianna L. SMITH, Appellant v. Richard L. SMITH, Appellee. Dianna L. Smith, Appellee v. Richard L. Smith, Appellant.
• Decision Date: 14 July 2006
• Court: Pennsylvania Superior Court

904 A.2d 15

Dianna L. SMITH, Appellant v. Richard L. SMITH, Appellee.

Dianna L. Smith, Appellee v. Richard L. Smith, Appellant.

Superior Court of Pennsylvania.

Argued April 18, 2006.

Filed July 14, 2006.

COPYRIGHT MATERIAL OMITTED

William J. Leonard, Greensburg, for Diane L. Smith.

William C. Stillwagon, Greensburg, for Richard L. Smith.

BEFORE: DEL SOLE, P.J.E., ORIE MELVIN and TAMILIA, JJ.

OPINION BY ORIE MELVIN, J.:

¶ 1 In this consolidated appeal, Dianna L. Smith (Wife) and Richard L. Smith (Husband) both appeal from the order entered June 30, 2005, which granted the parties' divorce, equitably divided the marital property 55/45 and awarded Wife permanent alimony. In her appeal, Wife contends the trial court abused its discretion in choosing the date of distribution in determining the value of Husband's business, the amount of alimony, and in denying her counsel fees. In Husband's appeal, he challenges the valuation of his business. We affirm in part, reverse in part, and remand for further proceedings.

¶ 2 The facts and procedural history of this appeal may be summarized as follows. Husband and Wife were married on August 7, 1965 and separated on or about October 16, 2000. Wife filed for divorce and sought equitable distribution, alimony and counsel fees. The parties have three adult children. Husband is 60 years old and has owned and operated a trucking business since 1969. Wife is 62 years old and only finished the tenth grade. Her primary work history consisted of handling the accounting work for Husband's trucking business. After the separation Wife worked part-time as a cashier at K-Mart earning $6.50/hr. Wife's employment ceased as a result of injuries she received in an automobile accident on December 19, 2001.

¶ 3 Hearings were held before a Master on January 14, 28, 30 and February 6, 2004. The Master's report was filed on March 30, 2004, and both parties filed exceptions. On July 26, 2004, the trial court entered an order granting both parties' exceptions and subsequently scheduled the matter for a hearing before the trial court. The entire Master's Record was reviewed and considered by the trial court, and a "supplemental" trial was held before the Honorable Carol Hanna of the Court of Common Pleas of Indiana County on March 9, 2005 and March 10, 2005. Prior to trial the court directed the parties to prepare Business Valuations for both the date of separation and the date of distribution. With agreement of counsel the court decided that the distribution date would be June 30, 2004. On June 30, 2005, the trial court entered an Opinion and Order of Court granting the parties' divorce, equitably dividing the property and awarding Wife $1,000/month in alimony until she becomes eligible to draw upon Husband's social security. Husband filed a Motion for Reconsideration, which was denied. These timely appeals followed and were consolidated sua sponte.

¶ 4 Our role in reviewing equitable distribution awards is well-settled.

Our standard of review in assessing the propriety of a marital property distribution is whether the trial court abused its discretion by a misapplication of the law or failure to follow proper legal procedure. An abuse of discretion is not found lightly, but only upon a showing of clear and convincing evidence.

McCoy v. McCoy, 888 A.2d 906, 908 (Pa.Super.2005) (internal quotations omitted). When reviewing an award of equitable distribution, "we measure the circumstances of the case against the objective of effectuating economic justice between the parties and achieving a just determination of their property rights." Hayward v. Hayward, 868 A.2d 554, 559 (Pa.Super.2005).

¶ 5 Wife first submits that since the family business is controlled by Husband, any date of valuation other than the date of separation is improper under the holdings in the cases of Benson v. Benson, 425 Pa.Super. 215, 624 A.2d 644 (1993) and McNaughton v. McNaughton, 412 Pa.Super. 409, 603 A.2d 646 (1992). We disagree.

¶ 6 In determining the value of marital assets, a court must choose a date of valuation which best works economic justice between the parties. McNaughton, supra at 649. The same date need not be used for all assets. Id. Since a business' value may be subject to great fluctuation the date selected is generally close to the date of distribution, rather than the date of separation. Sutliff v. Sutliff, 518 Pa. 378, 543 A.2d 534 (1988). Despite Sutliff's stated preference for the date of distribution,

there are limited circumstances where it is more appropriate to value marital assets as of the date of separation. Litmans [v. Litmans, 449 Pa.Super. 209, 673 A.2d 382 (1996)]. However, those circumstances are confined to situations where one spouse consumes or disposes of marital assets or there are other conditions that make current valuation difficult. See Benson, [supra] [] ([holding] closely held family business properly valued as of separation date; value of business, which was under husband's control, would be difficult to value after separation because husband could influence value of business); McNaughton, [supra] [] (same).

Nagle v. Nagle, 799 A.2d 812, 820-21 (Pa.Super.2002). "We will only reverse the decision of the lower court in regard to the setting of the date for the valuation of the marital assets on the basis of an abuse of discretion." McNaughton, supra at 649 (citing Miller v. Miller, 395 Pa.Super. 255, 577 A.2d 205 (1990)).

¶ 7 In Benson, the trial court deviated from the general rule that assets should be valued as of the date of distribution because the business was largely under the control of husband to the exclusion of wife, and husband had great influence and control over the business assets. On appeal to this Court, we reversed and ordered valuation of the property closer to the time of distribution. Benson v. Benson, 405 Pa.Super. 621, 581 A.2d 967 (1990) (unpublished memorandum)(Benson I). On remand, the trial court reinstated its original order in defiance of our remand order, relying instead on the subsequent decision by this Court in McNaughton. On subsequent appeal to this Court, we affirmed the reinstatement of the original order because the parties failed to comply with the trial court's order to submit current valuations for the business. Thus, the trial court was not in a position where it could comply with our remand order.

¶ 8 Instantly, we have no such problem; the business clearly was capable of being valued as of the date of distribution, thus there was no need for that preference to be disregarded. As the trial court explained:

After closely reading Sutliff, it is apparent that the justifications that the [S]upreme [C]ourt had for setting the date of valuation at the date of distribution are analogous to the present case. First, there has been a significant passage of time between the parties' separation and the stipulated date of distribution. Furthermore, the volatility of the assets involved is great. Specifically, the trucks used in the rental business depreciate each day as they are used continuously to haul loads for the business. To accurately determine the true value of these assets, the date of distribution will be used.

The [c]ourt is aware that there are limited circumstances that dictate the date of separation to be used. One such instance is where the assets are consumed or disposed of because of the exclusive control by one party. In the present case, Wife contends that Husband has either dissipated or diverted business from D & D Truck Lines to his paramour's trucking company, HMS Trucking. The [c]ourt does not find that the record supports this conclusion. Testimony and evidence presented shows that the husband's paramour is the sole owner of HMS Trucking and that the two businesses are separate entities, albeit performing similar services. While it is clear to the [c]ourt that Husband has guided his paramour in the startup and operation of her trucking business, the [c]ourt is not convinced that Husband influenced, impeded, or dissipated the marital business to affect its value during the pendency of the parties' divorce. Since D & D Trucking is clearly capable of being valued as of the date of distribution, there is no need for that preference to be disregarded.

Trial Court Order and Opinion, 6/30/05, at 6-7. Accordingly, we find that the trial court had legitimate reasons for preferring the date of distribution as the date which best works economic justice between the parties and find no abuse of discretion.

¶ 9 Wife next contends that the trial court failed to acknowledge or factor in Husband's income he was receiving from his paramour's trucking business in determining the amount of her alimony award. Additionally, she argues that the trial court erred when it failed to consider the tax implications of the equitable distribution and alimony awards when determining her reasonable needs and the amount of alimony to be paid.

¶ 10 Our standard of review in this regard is well settled.

The role of an appellate court in reviewing alimony orders is limited; we review only to determine whether there has been an error of law or abuse of discretion by the trial court. Absent an abuse of discretion or insufficient evidence to sustain the support order, this Court will not interfere with the broad discretion afforded the trial court.

Willoughby v. Willoughby, 862 A.2d 654, 656 (Pa.Super.2004) (citations and quotation marks omitted). "We have previously explained that the purpose of alimony is to ensure that the reasonable needs of the person who is unable to support himself or herself through appropriate employment, are met." Teodorski v. Teodorski, 857 A.2d 194, 200 (Pa.Super.2004) (citation omitted). "Alimony is based upon reasonable needs in accordance with the lifestyle and standard of living established by the parties during the marriage, as well as the payor's ability to pay." Id. The Divorce Code dictates that "[i]n...