Verholek v. Verholek

• Decision Date: 19 November 1999
• Parties: Sharon Ruth VERHOLEK, Appellee, v. Carl Lee VERHOLEK, Appellant. (Four cases).
• Court: Pennsylvania Superior Court

741 A.2d 792

1999 Pa. Super. 282

Sharon Ruth VERHOLEK, Appellee, v. Carl Lee VERHOLEK, Appellant. (Four cases).

Superior Court of Pennsylvania.

Submitted September 8, 1999.

Filed November 19, 1999.

Anna Belle Jones, Mercer, for appellant.

Kenneth J. Horoho, Jr., Pittsburgh, for appellee. Before McEWEN, President Judge, and DEL SOLE, KELLY, POPOVICH, JOHNSON, FORD ELLIOTT, EAKIN, JOYCE and STEVENS, JJ.

STEVENS, J.:

¶ 1 Appellant Carl Lee Verholek (Husband) appeals from a Final Decree in divorce and Order of alimony and equitable distribution entered on August 20, 1997, and from an Order entered on October 15, 1997, which reinstated Husband's obligation to pay alimony pendente lite to Appellee Sharon Ruth Verholek (Wife).¹ We affirm.

¶ 2 The relevant facts and procedural history are as follows: On September 10, 1992, Wife filed a Complaint in divorce. Husband and Wife separated on January 1, 1993, and, on January 3, 1994, the trial court ordered Husband to pay Wife alimony pendente lite in the amount of $4,700.00 per month and referred the parties' remaining equitable distribution, alimony, and counsel fee claims to a Master, who held a hearing and filed a Report, to which both parties filed timely Exceptions. The trial court's Final Decree and Order, entered on August 20, 1997, adopted in part and rejected in part the Master's Findings of Fact and Conclusions of Law. The Final Decree granted a divorce and the Order directed that the marital estate be divided equally, ordered Husband to pay $4,700.00 per month to Wife for six months as alimony, determined that alimony pendente lite arrearages amounted to $8,400.00, terminated Wife's alimony pendente lite, and determined that Wife was entitled to an award of $50,000.00 for attorney's fees.²

¶ 3 On September 19, 1997, Husband filed a Chapter 11 Bankruptcy Petition in the Western District of Pennsylvania, which Petition triggered the automatic stay provisions under the federal Bankruptcy Code. See 11 U.S.C. § 362(a). The automatic stay applied to the August 20, 1997 Final Decree and Order and to the January 3, 1994 Order regarding alimony pendente lite. Wife filed an Emergency Motion requesting relief from the automatic stay. The Bankruptcy Court granted Wife's request, allowing Wife to pursue the collection of alimony, alimony pendente lite, and alimony pendente lite arrears from Husband's earnings. Consequently, on October 15, 1997, the trial court entered an Order reinstating Husband's obligation to pay Wife alimony pendente lite according to the terms of the January 3, 1994 Order. On November 20, 1997, the Bankruptcy Court granted both parties relief to pursue any appeals from Orders arising out of the divorce proceedings.

¶ 4 Husband filed a timely direct appeal with this Court. Following appellate argument, a three-judge panel of this Court filed a memorandum on July 28, 1998; Judge Cavanaugh filed a dissent. Thereafter, Husband filed a Petition for Reargument/Reconsideration en banc, which was granted by this Court, and the original panel memorandum and dissent were withdrawn.

¶ 5 Husband raises seven issues on appeal, alleging the following:

(1) The trial court erred in finding that the 310 shares of Cattron, Inc. (Cattron) stock were marital property and that Husband was estopped from asserting that the stock was non-marital property;

(2) The trial court erred in valuing 310 shares of Cattron stock because it failed to apply discounts for lack of marketability and minority interest in determining its fair market value;

(3) The trial court erred in permitting Wife's expert to testify regarding a second business valuation report, which was only one-page and was used in valuing the 310 shares of Cattron stock;

(4) The trial court erred in finding that Husband's $54,000.00 inheritance was marital property;

(5) The trial court erred in reinstating Wife's alimony pendente lite since the court lacked jurisdiction and Wife failed to appeal from the Final Decree and Order terminating alimony pendente lite;

(6) The trial court lacked the authority to enter a Divorce Decree and equitable distribution order since an affidavit was never filed;

(7) The trial court erred in awarding Wife excessive attorney's fees without any basis.³

¶ 6 Our standard of review of awards of equitable distribution, counsel fees, and alimony pendente lite is well settled: we will not disturb a trial court's determinations absent an abuse of discretion. See Ruth v. Ruth, 316 Pa.Super. 282, 462 A.2d 1351 (1983) (equitable distribution); Remick v. Remick, 310 Pa.Super. 23, 456 A.2d 163 (1983) (en banc) (alimony pendente lite, award of counsel fees). A trial court has abused its discretion if the trial court "failed to follow proper legal procedures or misapplied the law." Braderman v. Braderman, 339 Pa.Super. 185, 488 A.2d 613, 615 (1985). We will not usurp the trial court's role as fact-finder. Ruth, supra. In reviewing allegations concerning the validity of the entry of a divorce decree, we evaluate the record de novo and decide independently whether a legal cause of action in divorce exists. See Jayne v. Jayne, 443 Pa.Super. 664, 663 A.2d 169 (1995).

¶ 7 Husband's first contention is that the trial court erred in concluding that the 310 shares of Cattron stock were marital property and that Husband was estopped from asserting that the shares were non-marital property. During the beginning of this litigation, Husband asserted that the 310 shares of Cattron stock were jointly owned by him and Wife as tenants in the entirety. During the course of the Master's hearing, however, Husband sought to reclassify the 310 shares of Cattron Stock as non-marital property. When the Master gave Husband the opportunity to show good cause why he should be allowed to change his position regarding ownership of the Cattron stock, Husband asserted that he had good cause because his prior representations regarding the joint ownership of the stock allegedly were the result of the following: (1) his memory lapses stemming from his treatment for depression, (2) his reliance on a prior attorney's incorrect recollections, and (3) his current attorney's reliance on Cattron's corporate attorney's incorrect recollections. The Master concluded that Husband's reasons did not constitute good cause and that Husband, therefore, was estopped by Pennsylvania Rule of Civil Procedure 1920.33⁴ from asserting that the stock shares were non-marital property. The trial court adopted that conclusion and we conclude that the trial court committed no error of law, complied with proper legal procedures, and did not abuse its discretion in concluding that Husband was estopped from asserting that the 310 shares of Cattron stock were non-marital property.

¶ 8 Husband's second and third arguments relate to the trial court's valuation of the 310 shares of Cattron stock. The Divorce Code does not contain a specific method for valuing assets. The trial court must exercise its discretion and rely on the estimates, inventories, records of purchase prices, and appraisals submitted by the parties. See Smith v. Smith, 439 Pa.Super. 283, 653 A.2d 1259 (1995). The court is free to accept all, none, or portions of the testimony regarding the true and correct value of property. See Aletto v. Aletto, 371 Pa.Super. 230, 537 A.2d 1383 (1988). Additionally, the court may reject evidence offered by both parties in favor of its own valuation method. See Fitzpatrick v. Fitzpatrick, 377 Pa.Super. 268, 547 A.2d 362 (1988).

¶ 9 In this case, Wife's expert submitted a report basing his valuation of Cattron on a comparable sales method. The Master rejected the analysis and requested that Wife's expert submit a new report using the capitalization of earnings method used in Husband's expert's report. Wife's expert submitted a second report. The Master, however, performed his own calculation of the capitalization rate, using Wife's expert's calculation as a starting point but eliminating a certain factor included by Wife's expert. Further, in determining the value of the stock, the Master accepted Wife's expert's computation of Cattron's projected future income. The trial court adopted the Master's findings and conclusions relating to the valuation of the Cattron stock.

¶ 10 On appeal, Husband argues that the trial court should have discounted the stock's value because of its lack of marketability and because the stock represented a minority interest. Husband, however, has not demonstrated that the trial court applied improper legal procedures or misapplied the relevant law. Wife's expert's second report⁵ indicated that a discount for marketability was not needed under the valuation method adopted by Husband and the expert testified that a minority discount was not needed because the company was not valued as a whole. N.T. 1/10/96 at 259. The trial court had the discretion, as fact-finder, to accept Wife's expert's evidence. Thus, we conclude that the trial court did not abuse its discretion in accepting Wife's expert's calculation of Cattron's future income or in refusing to discount the stock's value.

¶ 11 We also find meritless Husband's contention that the trial court erred in permitting Wife's expert to testify regarding a second report valuing the Cattron stock because the report contained material beyond the scope of Wife's expert's first report.

¶ 12 In deciding whether an expert's testimony is within the fair scope of his report, we are mindful of the following principles:

It is impossible to formulate a hard and fast rule for determining when a particular expert's testimony exceeds the fair scope of his or her pretrial report.... The controlling principle which must guide is whether the purpose of [Pennsylvania Rule of Civil Procedure] 4003.5 is being served[, which purpose] is to avoid unfair surprise by enabling the adversary to prepare a response to the expert testimony.

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