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HomeMy WebLinkAbout96-4561 civil]. A14018/01 ROXANNE BALKOVIC, : IN THE SUPERIOR COURT OF Appellee : PENNSYLVANIA V. : KENNETH 3. BALKOVIC, Appellant : No. 1600 MDA 2000 Appeal from the Order Entered August 9, 2000, in the Court of Common Pleas of CUMBERLAND County, CIVIL, at No. 96-4561 CIVIL TERM. ROXANNE BALKOVIC, : IN THE SUPERIOR COURT OF Appellant : PENNSYLVANIA : V, : KENNETH 3. BALKOVIC, : Appellee : No. 1680 MDA 2000 Appeal from the Order Entered August 9, 2000, in the Court of Common Pleas of CUMBERLAND County, DOMESTIC RELATIONS, at No. 96-4561. BEFORE: TODD, OLSZEWSKI, and MONTEMURO,* 33. MEMORANDUM' Im I I,, ~. D MAY e ~ 2001 Roxanne Balkovic ("Wife") appeals from the court's order equitably distributing marital property. Kenneth Balkovic ("Husband") cross-appeals. We affirm. The trial court found: [Wife] filed [a] complaint in divorce against [Husband] on August 14, 1996. A Divorce Master filed a report and supplemental report on the parties' economic dispute. A plethora of cross-exceptions * Retired 3ustice assigned to Superior Court. 3. A14018/01 The parties raise two issues regarding the court's valuation of Bal- Com. Wife's expert valued Bal-Com at $2,750,000 in 1996, which was the date of separation of the parties, and $3,500,000 in 1997, the date of the Master's hearing. See Trial Court Opinion, 8/9/00, at 5. Husband's expert valued it at $1,508,000 in 1996 and $1,900,000 in 1997. See id. The trial court used the date of separation as the appropriate date, but valued Bal- Com at $2,300,000. See id. at 8. "'When reviewing an order of equitable distribution, our standard of review is limited, and we will not disturb the trial court's decision absent an abuse of discretion or error of law which is demonstrated by clear and convincing evidence.'" Brody v. Brody, 758 A.2d 1274, 1279 (Pa.Super. 2000) (citations omitted). Wife first disputes the trial court's use of the date of separation to value Bal-Com. "There is no set date for the valuation of property; rather the lower court has it within its discretion to adopt a date for valuation which best works economic justice between the parties." McNaughton v. I~lcNaughton, 603 A.2d 646, 649 (Pa.Super. 1992). While there is certainly "a preference for valuing marital assets at or near the time or distribution, there may be circumstances where it is more appropriate to value marital assets as of the date of separation." Smith v. Smith, 653 A.2d 1259, 1270 (Pa. Super. 1995). For example, "when valuing a closely held business which is largely controlled by one spouse during the period of separation, it may be appropriate to value the business as of the date of separation." Zd. This is -6- 3. A14018/01 were filed to the report and [H]usband filed exceptions to the supplemental report. [Wife], age 47, and [Husband], age 50, were married on June 26, 1976. It is [W]ife's second marriage and [H]usband's first marriage. They separated on December 3, :[996. They have two children, [a daughter], age 19, born November 1, 1980, who is a freshman at Elizabethtown College, and [a son], age :[4, born January 26, :[986, who is a student at St. Joseph's School in Mechanicsburg. Both children lived with [H]usband after their parents' separation. Wife lives alone in a condominium in Mechanicsburg, Cumberland County. Husband now lives with his son in the marital residence, 3 Cona Road, Mechanicsburg, which the parties have stipulated shall be distributed to [H]usband. Wife completed the eleventh grade. She graduated from beauty school and was licensed cosmetologist. She worked in that capacity until she became pregnant with [their daughter]. She is currently unemployed but looking for work. Her earning capacity is approximately $1,500 a month. Wife received alimony pendente lite until August 1, 1999, in the amount of $:[0,300 per month. While [W]ife suffers from some anxiety and takes medication for a reflux condition, she is capable of full employment. Husband is the owner of Bal Com, Inc.,[hereinafter "Bal-Com"] a subchapter S Corporation. [Bal-Com], is a broker of cable installation services. Husband has a Bachelor of Science degree. In 1998, his monthly net income was approximately $36,000. In 1999, his monthly net income was between $42,000 and $44,000. He is in good health. Trial Court Opinion, 8/9/00, at 1-2 (footnotes omitted). The trial court then awarded: -2- ]. A14018/01 MARITAL PROPERTY ASSIGNED TO WIFF Apartment buildings on 11th Street, New Cumberland, Pennsylvania $ 54,541 Merrill Lynch IRA (Husband) $ 161,654 Merrill Lynch IRA (Wife) $ 31,628 Prudential Securities IRA (Husband) $ 12,252 Prudential Securities IRA (Wife) $ 11,339 Husband's profit sharing trust with Fidelity Investments $ 644,358 401(k) with Avis $ 300 Teletech Installations, Inc. $ 665,000 Proceeds from sale of the Yorktown Road tracts .$ 170,331 TOTAL $1~ 751~403 MARITAL ASSETS ASSIGNED TO HUSBAND 3 Cona Road, Mechanicsburg, Pennsylvania $ 509,183 Building at 704 Bridge Street New Cumberland, Pennsylvania $ 83,560 [BaI-Com] $ 2,300,000 Mellon Bank checking account $ 1,970 Mutual Properties bank account $ 10,873 TOTAL $2,905,,586 -3- 3. A14018/01 Total to [H]usband and [W]ife $4,656,989 The marital assets to be distributed to [H]usband total $:1.,:154,~.83 more than the marital assets to be distributed to Wife. ($2,905,586 minus $1,751,403). The Master found that [H]usband is entitled to a credit of $20,705.85 toward a payment he made on the note on the lot where the marital home is located. Because we are assigning the total net proceeds of $170,3331 from the sale of the Yorktown Road tracts to [W]ife, she will have to declare the gain on the sales on her tax returns and pay a total tax of $12,094. She is therefore entitled to a credit from [H]usband of fifty-five percent of the amount of the tax which is $6,651. Accordingly, the computations are: Wife is awarded marital property totaling:S2,561,344 Wife is assigned marital property valued at: $2,095,645 Husband is awarded marital property ''': $2,905,645 Husband is assigned marital property valued at: $2,905,586 Shortfall of [W]ife's share of the marital marital property owed to her by [H]usband $ 809,941 Minus credit to [H]usband for payment on note: -$20,706 Amount owed by [H]usband to [W]ife: $ 789,235 Plus credit to [W]ife for tax she will pay on the Yorktown Road tracts: + $6,651 Shortfall owed by [H]usband to [W]ife: $ 795,886 -4- 3. A14018/01 We will require [H]usband to pay [W]ife $500,000 within sixty days of a final order with a balance of $295,886 in monthly installments starting thirty days after the date of a final order, amortized over five years at simple interest of six percent per annum. _rd. at 13-15 (footnotes omitted). Wife raises five issues on appeal: A. Did the Trial Court err in its valuation of [Bal- Com]? B. Did the Trial Court err in its failure to assign the total value of Teletech, Inc. to Husband, who was primarily responsible for the demise of the marital corporation? C. Did the Trial Court err in its disregard of Husband's fraudulent withdrawal of $100,000 from Teletech, Inc.? D. Did the Trial Court err in its failure to include the parties' 1996 Federal Income Tax Refund as a marital asset, subject to equitable distribution? E. Did the Trial Court err in its imposition of an unreasonably Iow interest rate when it fashioned Husband's payment schedule in the equitable distribution award? Wife's Brief at 5. Husband raises the following issues: I. DID THE TRIAL COURT ABUSE ITS DISCRETION BY AWARDING ALIMONY TO WIFE IN THE AMOUNT OF $10,000 PER MONTH? II. DID THE TRIAL COURT ABUSE ITS DISCRETION IN DETERMINING THE VALUE OF BAL- COM...? Husband's Brief at 4. -5- ]. A14018/01 particularly appropriate where, as here, "the corporation has appreciated in value since the separation . in large measure because of the post- separation efforts of [H]usband .... To these post-separation efforts, [Wife] has made no contribution." Adelstein v. Adelstein, 553 A.2d 436, 439 (Pa.Super. 1989). ]:n the present case, the trial court adopted the Master's factual finding that, "[t]he business is largely dependent on the efforts of [H]usband and a few key personnel; therefore, the Master believes that any work product and effort following the date of separation should accrue to the benefit of [H]usband, not [W]ife." Trial Court Opinion, 8/9/00, at 5-6. We agree that the date of separation was the appropriate date to use for valuation. Both Wife and Husband appeal the court's valuation of Bal-Com, see Wife's Brief at 5, Husband's Brief at 4, so we address their issues together. Both parties claim that the trial court erred by valuing Bal-Com at $2,300,000. Wife thinks Bal-Com was worth more, while Husband contends that it was worth less. ]:n explaining his reasoning, the trial court said: [H]usband's expert[']s use of the unusually Iow 1993 earnings in arriving at weighted average earnings was not appropriate. On the other hand, we believe that [W]ife's appraiser did not adequately consider a marketability discount in reaching his value of the corporation. Considering the qualifications of the expert witnesses, the strengths and weaknesses of their opinions, and weighing all of the conflicting testimony, we find that the value of [Bal-Com] on the date of the parties' separation was $2,300,000. -7- 3. A14018/01 Trial Court Opinion, 8/9/00, at 7-8. The trial court made a well-reasoned decision based on all of the facts at hand. We will not disturb that decision. Next, Wife contends that the trial court erred in assigning the total value of Teletech, Inc. to her. See Wife's Brief at 18. In 1995, before the parties' [sic] separated, [Bal-Com] had extensive work in the Baltimore- Washington area. However, the formation of a minority-owned corporation was necessary to maintain this business and secure new business in that geographical area. Husband, therefore had [W]ife (a minority) form a new corporation Teletech Installations, Inc., in April 1995. Wife was sole stockholder, director, and officer of the corporation. Notwithstanding, she served as a figurehead of Teletech, which [H]usband operated until the parties separated in August, 1996. After their separation, [W]ife took an active role in the operation of Teletech, but the corporation unfortunately went out of business. Trial Court Opinion, 8/9/00, at 8. The Master found, and the trial court agreed, that Wife was to blame for this: [T]his asset could have been of substantial value but that [W]ife, through her conduct, her attitude and her failure to cooperate with [H]usband on a business level to continue the successful operation of the business, caused the business to fail .... Wife's attitude went from indifference to being vindictive. The marriage issues overwhelmed good judgment in trying to preserve this asset. Id. at 8. Wife now argues that because she "never operated or took an 'active' role in Teletech," the trial court should have assigned the entire amount to Husband. Wife's Brief at 20. She does not dispute that it is proper to consider the "dissipation of each party in the acquisition, -8- 3. A14018/01 preservation, depreciation or appreciation of the marital property," 23 Pa.C.S.A. § 3502(a)(7), but instead voices her dissatisfaction with the trial court's factual findings. It is well settled that "[w]e will not usurp the trial court's role as fact-finder." Verholek v. Verholek, 741 A.2d 792, 795 (Pa. Super. 1999), appeal denied, 759 A.2d 388 (Pa. 2000). We decline to do so here. Next, Wife claims that the trial court erred in disregarding Husband's withdrawal of $100,000 from Teletech, Inc. See Wife's Brief at 26. The trial court found: Wife still maintains that $100,000 removed by [H]usband from Teletech and placed in a custodial account for the children's education should be subtracted from the value of the corporation. The fallacy in this argument is that the $100,000 was removed well before the parties' separation and thus prior to the value assigned to Teletech by [W]ife's own expert as of the date of separation. Trial Court Opinion, 8/9/00, at 10. Again, Wife's entire argument consists of a factual dispute with the trial court. See Brief for Wife at 26-29. She contends that Husband did not really remove the money to put in the children's accounts but instead as "a preemptive strike" because he knew she was considering divorce. Id. at 27. After hearing her testimony on the issue, the trial court found otherwise, though, as did the Master. Again, "[w]e will not usurp the trial court's role as fact-finder." Verholek, 741 A.2d at 795. We therefore will not address Wife's claim any further. -9- ]. A14018/01 Wife next argues that the trial court erred in failing to include the parties' 1996 income tax refund as a marital asset for purposes of equitable distribution. See Wife's Brief at 30. Review of the parties' 1996 tax return shows that the parties had overpaid by $65,176. See 1996 Tax Return, Plaintiff's Exhibit 15, Line 59. The parties applied $65,115 of that to their 1997 estimated 1997 tax. See id. at Line 61. The parties then put the remaining $61 on Line 63 under "[e]stimated tax penalty." Consequently, it appears that the entire tax refund went to 1997's tax liability. Because the parties filed a joint return in 1997 as well, applying 1996's refund benefited both parties. As it was spent already, it was no longer a marital asset. Finally, Wife claims that the trial court erred in imposing "an unreasonably Iow interest rate" of six percent for Husband's repayment schedule. See Wife's Brief at 31. She cites no authority for her claim that the interest rate should be higher; she is merely dissatisfied with six percent. We uncovered one case where this Court held that the trial court's distribution scheme, which included an interest rate of the prime rate plus one percent, did not constitute an abuse of discretion. See Fonzi v. Fonzi, 633 A.2d 634, 639 (Pa.Super. 1993). There is nothing in Fonzi dictating that the rate must be the prime rate plus one percent, however. Further, the Commonwealth has set a statutory interest rate of six percent for those cases where the parties enact a document and fail to set an interest rate. See 41 P.S. § 202. While the trial court certainly could have set the interest - 10- 3. A14018/01 rate higher, it was under no obligation to do so. We therefore find no abuse of discretion. As we addressed Husband's second issue on appeal above, he has just one remaining argument. He claims that the trial court abused its discretion in awarding $10,000 per month in alimony to Wife. See Husband's Brief at 8. In spousal support matters, our scope of review is limited. "We may reverse a support order only where the order cannot be sustained on any valid ground. Absent an abuse of discretion or insufficient evidence to sustain the support order, this [C]ourt will not interfere with the broad discretion afforded the trial court." An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion the law is overridden or misapplied, or the judgment exercised is manifestly unreasonable, or [the judgment is] the result of partiality, prejudice, bias or ill-will, as shown by the evidence of record, discretion is abused. We emphasize that an abuse of discretion may not be found merely because the appellate court might have reached a different conclusion, but requires a showing of manifest unreasonableness, or partiality, prejudice, bias, or ill-will, or such lack of support as to be clearly erroneous. Hoffman v. Hoffman, 762 A.2d 766, 769-70 (Pa. Super. 2000) (citations omitted). The trial court may only award alimony "if it finds that such alimony is necessary." 23 Pa.C.$.A. §3507(a). To determine whether alimony is necessary, the court must consider all factors, including: -11- 3. A14018/01 (1) The relative earnings and earning capacities of the parties. (2) The ages and the physical, mental and emotional conditions of the parties. (3) The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits. (4) The expectancies and inheritances of the parties. (5) The duration of the marriage. (6) The contribution by one party to the education, training or increased earning power of the other party. (7) The extent to which the earning power, expenses or financial obligations of a party will be affected by reason of serving as the custodian of a minor child. (8) The standard of living of the parties established during the marriage. (9) The relative education of the parties and the time necessary to acquire sufficient education or training to enable the party seeking alimony to find appropriate employment. (10) The relative assets and liabilities of the parties. (11) The property brought to the marriage by either party. (12) The contribution of a spouse as homemaker. (13) The relative needs of the parties. (14) The marital misconduct of either of the parties during the marriage. The marital misconduct of either of the parties from the date of final separation shall not be considered by the court in its determinations relative to alimony except that the court shall consider the abuse of one party by the other party .... (15) The Federal, State and local tax ramifications of the alimony award. (16) Whether the party seeking alimony lacks sufficient property .... (17) Whether the party seeking alimony is incapable of self-support though appropriate employment. - 12- 3. A14018/01 23 Pa.C.S.A. §3507(b). Despite Husband's assertion otherwise, the trial court discussed the above factors in detail. See Trial Court Opinion, 8/9/00, at 16-18. Further, the trial court specifically noted that it had considered the Master's Supplemental Report, which contained an "extensive" review of the parties' situation. See id. at 18. Lastly, the trial court found that $10,000 per month was "necessary and reasonable." /'d. Husband's arguments are unconvincing in light of the court's in-depth discussion of that topic. Order affirmed. Pr~onota~y ~ Date:., 2 2001 - 13-