Sternlicht v. Sternlicht

• Decision Date: 11 March 2003
• Citation: 822 A.2d 732
• Parties: Harold C. STERNLICHT, Appellee, v. Lauri Davidson STERNLICHT, Appellant.
• Court: Pennsylvania Superior Court

822 A.2d 732

Harold C. STERNLICHT, Appellee, v. Lauri Davidson STERNLICHT, Appellant.

Superior Court of Pennsylvania.

Argued October 22, 2002.

Filed March 11, 2003.

Reargument Denied May 21, 2003.

Joanne R. Wilder, Pittsburgh, for appellant.

Kerri L. Cappella, Pittsburgh, for appellee.

Before: MUSMANNO, LALLY-GREEN, and KLEIN, JJ.

LALLY-GREEN, J.:

¶ 1 Appellant, Lauri Davidson Sternlicht ("Mother"), appeals from the order dated August 24, 2001, denying Mother's Petition for Accounting and Petition for Removal of Custodian and denying Mother counsel fees. We reverse in part, affirm in part, and remand.

¶ 2 The trial court found the following facts:

Defendant, Lauri Davidson Sternlicht ("Mother"), appeals this Court's Order dated August 24, 2001, denying certain aspects of her Petition for Accounting and Petition for Removal of Plaintiff, Harold C. Sternlicht ("Father"), as Custodian and for Other Relief. The parties are the natural parents of one minor-child, Jamie K. Sternlicht, born September 12, 1993. They separated in March 1997, and divorced in May 1999.

On August 20, 2001, we held a hearing on Mother's petition. With regard to the issues on appeal only, the testimony and evidence established that in March 1997, an Ameritrade account in the name of Father, Custodian For The Benefit of Jamie K. Sternlicht, UGMA PA, existed with a balance of approximately $4,600. Between October 1997 and December 1998, Father made a series of stock purchases through this account totaling $46,500.¹ The funds to purchase the stocks were generated by Father through post-separation earnings and a $20,000 inheritance he received from his uncle. During the calendar year 1999, Father sold most, if not all of the stock he had purchased between October 1997 and December 1998. He used the funds to pay the private school tuition expenses of the minor-child and to purchase a home for himself. While Mother suggested at hearing that Father used the funds from the sale of the stock to make payments to her of certain obligations he incurred as the result of our decision on the economic claims of the parties, there was no evidence to support the claim.

Father testified credibly at trial that his sole purpose in making the stock purchases between October 1997 and December 1998 in his name as custodian, was to lessen the tax burden upon himself for capital gains he expected when he sold those stocks. In fact, the evidence established that there were capital gains in excess of $16,000 realized during 1999, and these were then identified on tax filings he made on behalf of the minor-child.

In addition to other relief, which we granted, Mother sought removal of Father as custodian, and that he restore the $59,759 he had removed from the account during the year 1999.

By Order dated August 24, 2001, we granted Mother certain relief, but with reference to the custodial account, we denied the relief requested. This appeal followed.

Trial Court Opinion, 3/6/02, at 1-2.

¶ 3 On January 23, 2001, Mother filed a Petition for Accounting requesting that Father produce records of all transactions relating to a custodial account Father established for daughter under the Pennsylvania Uniform Transfers to Minors Act (PUTMA), 20 Pa.C.S.A. §§ 5301-10.² Father produced some documents but did not produce any records demonstrating his use of the custodial funds.

¶ 4 On April 10, 2001, Mother filed a Petition for Removal of Custodian and Other Relief.³ On July 24, 2001, Mother filed a Petition for Enforcement.⁴ On August 20, 2001, the trial court held a hearing on Mother's petitions. Father testified as to transactions within the daughter's PUTMA account at the hearing. On August 24, 2001, the trial court entered an order denying Mother's Petition for Removal of Custodian and Other Relief. This appeal followed.

¶ 5 Mother raises two issues on appeal:

1) Did the trial court err in failing to require Father to repay amounts he removed from daughter's custodial account?

2) Did the trial court err [in] failing to require Father to pay Mother's legal expenses incurred in connection with her Petition for Accounting and Petition for Removal of Custodian and for Other Relief?

Mother's Brief at 4. These issues involve the parties' support of daughter and arose during the course of the parties' equitable distribution dispute that was pending before the trial court.

¶ 6 Our standard of review is well settled.

When evaluating a support order, this Court may only reverse the trial court's determination where the order cannot be sustained on any valid ground. We will not interfere with the broad discretion afforded the trial court absent an abuse of that discretion or insufficient evidence to sustain the support order. An abuse of discretion is not merely an error of judgment; if, in reaching a conclusion, the court overrides or misapplies the law, or the judgment exercised is shown by the record to be either manifestly unreasonable or the product of partiality, prejudice, bias or ill will, discretion has been abused. In addition, we note that the duty to support one's child is absolute, and the purpose of child support is to promote the child's best interests.

Laws v. Laws, 758 A.2d 1226, 1228 (Pa.Super.2000) (citations omitted).

¶ 7 Mother first complains that the trial court erred in failing to require Father to repay funds that Father removed from daughter's PUTMA account. Mother complains that all of the money that Father put into daughter's PUTMA account constituted an irrevocable gift to daughter and should be repaid, with interest. The trial court held that Father never intended to gift the funds to daughter when he used the PUTMA account as a depository for stock investments.

¶ 8 We will address Mother's first issue concerning Father's use of the funds in the PUTMA account in two parts. We address: 1) whether the funds Father deposited into the PUTMA account constitute property of the daughter; and 2) whether Father's use of a portion of the funds for two separate expenditures, down payment on a house and payment of daughter's private school tuition, were proper PUTMA expenditures. A proper analysis of these issues requires application of several sections of PUTMA.

¶ 9 We first address the issue of whether the funds that Father deposited into the PUTMA account constitute property of the daughter. When the language of a statute is clear and unambiguous, it is not to be disregarded under the pretext of pursuing the spirit of the statute. 1 Pa. C.S.A. § 1921(b); McKelvey v. McKelvey, 771 A.2d 63, 64 (Pa.Super.2001). Only when the language of the statute is ambiguous does statutory construction become necessary. Ramich v. Worker's Comp. Appeal Board (Schatz Electric, Inc.), 564 Pa.656, 770 A.2d 318 (2001).

¶ 10 The purpose of PUTMA is to provide an inexpensive, easy way for giving property to minors. Sutliff v. Sutliff, 515 Pa. 393, 528 A.2d 1318, 1323 (1987). Section 5304 of PUTMA addresses the irrevocable nature of transfers to PUTMA accounts and provides:

A person may make a transfer by irrevocable gift to, or the irrevocable exercise of a power of appointment in favor of, a custodian for the benefit of a minor pursuant to section 5309 (relating to manner of creating custodial property and effecting transfer).

20 Pa.C.S.A. § 5304. Whatever its source, custodial property that is held pursuant to Section 5304 is the property of the minor child. Sutliff, 528 A.2d at 1323.

¶ 11 Section 5309, which addresses the manner of creating custodial property and effecting transfer, provides in relevant part:

(a) Creation of custodial property.— Custodial property is created and a transfer is made whenever:

...

(2) Money is paid or delivered to a broker or financial institution for credit to an account in the name of the transferor, an adult other than the transferor or a trust company, followed in substance by the words: "as custodian for (name of minor) under the Pennsylvania Uniform Transfers to Minors Act."

20 Pa.C.S.A. § 5309. The plain meaning of Section 5309(a)(2) indicates that a transfer is made and "custodial property" is created when money is deposited into a brokerage account in the name of the parent as custodian for the minor under PUTMA.

¶ 12 Section 5311, which addresses the validity and effect of transfer, provides, in pertinent part:

(b) Irrevocability of transfer. - A transfer made pursuant to section 5309 is irrevocable, and the custodial property is indefeasibly vested in the minor, but the custodian has all the rights, powers, duties and authority provided in this chapter, and neither the minor nor the minor's legal representative has any right, power, duty or authority with respect to the custodial property except as provided in this chapter.

20 Pa.C.S.A. § 5311(b). The plain meaning of Section 5311(b) is that a transfer made into the PUTMA account of the minor is irrevocable and the vesting of the custodial property in the minor cannot be undone.

¶ 13 As the above reflects, the relevant PUTMA provisions are unambiguous on their face and they, therefore, must be given effect in accordance with their plain and common meaning. The plain and common meaning of the relevant provisions of PUTMA is that money transferred into a custodial brokerage account is irrevocably the property of the minor child. 20 Pa.C.S.A. §§ 5304, 5309, 5311(b).⁵

¶ 14 The trial court determined that the transfer by Father to the PUTMA account did not create property of the child. The trial court addressed this issue as follows:

In reaching our decision on August 24, 2001, we were certainly aware of the irrevocability of gifts made to minors under the Pennsylvania Uniform Gifts to Minors Act, and that such a gift conveyed to the minor indefeasibly vested legal title to the custodial property given. 20 Pa.C.S.A. § 5311(b). Nonetheless, we believed equity demanded a different result in this case. In a very real sense, there never was any donative intent on the

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