HomeMy WebLinkAbout258 S 2020
JOYCE A. NORRIS, : THE COURT OF COMMON PLEAS
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
: DOMESTIC RELATIONS SECTION
v. :
:
TIMOTHY R. NORRIS, : DOCKET NO. 258 S 2020
Defendant : PACSES NO. 203300258
OPINION
IN RE: PLAINTIFF/WIFE’S EXCEPTIONS TO THE SUPPORT MASTER’S REPORT
AND
DEFENDANT/HUSBAND’S EXCEPTIONS TO THE SUPPORT MASTER’S REPORT
Smith, J., June 29, 2021
FACTS
Plaintiff, Joyce A. Norris (“Wife”) and Defendant, Timothy R. Norris (“Husband”)
1
were married in September of 1989. Husband filed for divorce on May 24, 2017, but
Wife’s pleadings state that separation occurred December 21, 2018. On May 14, 2020,
Wife filed a Complaint seeking spousal support, which was withdrawn by agreement of
the parties. Wife then filed a Complaint seeking alimony pendente lite (“APL”) on June
2
9, 2020, and the parties agree that the effective date of APL payments is June 1, 2020.
When the parties appeared for a hearing before the Support Master, Jeffrey R.
Lawrence, Esquire, (“the Master”) on September 22, 2020, both parties asserted
economic hardship due to the COVID-19 pandemic. Wife is currently unemployed, but
owns a massage kiosk in the Harrisburg International Airport. Despite pandemic
regulations being lifted, Wife has not been able to secure any appointments for
3
massages since March 2020. Wife applied for unemployment benefits, but was denied
1
See Complaint in Divorce, Norris v. Norris, No. 2017-05979 (May 24, 2017). Upon review of the docket,
it appears as though neither party took action on the divorce matter between July 24, 2017 and March 5,
2019. The parties have also commenced divorce proceedings three other times. See Complaint in
Divorce, Norris v. Norris, No. 2001-03422 (June 4, 2001); Complaint in Divorce, Norris v. Norris, No.
2009-02180 (April 7, 2009); and Complaint in Divorce, Norris v. Norris, No. 2009-04545 (July 8, 2009).
2
Transcript of Proceedings, 5, Norris v. Norris, No. 258 S 2020 (September 22, 2020)(hereinafter
“Transcript”).
3
Transcript at 18.
Page 1 of 11
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because she did not file taxes in 2018 or 2019. Wife has not sought other
5
employment.
Husband, likewise, asserted that the COVID-19 Pandemic has affected his
6
income. Husband owns a 98% share of a daycare facility. Husband draws a salary
from the daycare, but the majority of Husband’s income comes as shareholder
7
distributions. To further complicate matters, Husband does not receive his salary
8
directly, but rather uses his business accounts to pay his personal expenses. In March
2020, the daycare facility was closed under the pandemic regulations, and remained
9
shuttered through mid-May 2020. During that time, Husband collected unemployment
10
compensation at $954 per week for 15 weeks. Husband also stated that continuing
pandemic regulations have required additional expenses on the part of the daycare, and
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that Husband has not drawn a salary because of that. Husband also collects income
12
through rents garnered on the daycare properties.
The Master issued his Report and Recommendation (“Report”) on October 19,
2020. The Master assessed Wife’s potential income by using her income generated in
2019, and dividing it by 30% to take into account the 70% decrease in traffic at HIA.
This calculation resulted in a finding of $818.01 monthly net income available for
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support.
The Master then turned to Husband’s finances. The Master posited that there
were three possible ways to evaluate Husband’s income, (1) through his 2019 tax
4
Wife asserted that Husband had always completed their tax returns, so she had assumed that he had
done so for 2018 and 2019. Upon receipt of the letter of denial of benefits, Wife filed her 2018 and 2019
tax returns. See Transcript at 9. See also, Plaintiff’s exhibits 4 and 5.
5
Support Master’s Report and Recommendation, 4, Norris, No. 258 S 2020 (October 19,
2020)(hereinafter “Report”).
6
The other 2% is held by the parties’ adult children. See Report at 5.
7
Report at 6.
8
Id.
9
Transcript at 71-72.
10
Transcript at 90.
11
Report at 8.
12
It was also noted that Husband receives a stipend of $350 a year as public address announcer for
West Shore School District. See Report at 6.
13
Report at 5.
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return, (2) through analyzing Husband’s year-to-date expense account, and (3) through
analyzing Husband’s bank statements. The Master elected to evaluate Husband’s bank
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statements for January 2020 and May 2020. In doing so, he examined both payments
made to Husband’s personal credit card, deposits into Husband’s personal bank
account, and expenses paid directly by Husband’s business on Husband’s behalf. The
Master noticed a large discrepancy in Husband’s income between the January
statements and the May statements, with the income assessed in May being
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significantly higher than the income assessed in January (prior to COVID-19). “To
strike a balance,” the Master averaged the incomes of January and May, arriving at
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$16,455 gross income per month. He then used Husband’s tax liability from 2019 to
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arrive a Husband’s monthly net income of $13,827. Husband’s base APL obligation
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was assessed at $4,235.71 per month.
The Master then examined Husband’s requested adjustments for expenses that
he pays on behalf of Wife, namely, her health insurance, the mortgage on the marital
home, in which Wife still resides, Wife’s car payment, and monthly payments on Wife’s
personal credit card. As to Wife’s car payment, the Master assessed that Husband was
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entitled to a dollar-for-dollar credit toward that payment. As to Wife’s credit card
payments, the Master determined that because Husband’s name was also on the credit
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card account, he was simply paying marital debt and not entitled to a credit.
As to the health insurance, the Master stated initially that, under the guidelines,
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the Court may deduct part or all of the health insurance. The Master then stated that
in this matter, such a deduction would not be appropriate because the health insurance
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payments “do not have much actual effect on Husband’s monthly cash flow.” He then,
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The January 2020 and May 2020 bank statements were the only bank statements submitted as
evidence at trial.
15
The Master aptly pointed out that “for all of Husband’s testimony about the financial difficulties Best
Friends has experience\[d\] as a result of COVID-19, it is clear that those difficulties have not affected
Husband’s cash flow at all.” Report at 9.
16
Report at 13.
17
Id.
18
Id.
19
Id. at 15.
20
Id.
21
Id. at 13-14.
22
Id. at 14.
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however, recommended apportioning the expense, which ultimately led to him
deducting $890.70 from Husband’s APL obligation, reflecting Wife’s portion of the health
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insurance.
The Master then turned to an analysis on the payments of the mortgage on the
marital home. Wife is residing in the marital home, but the parties agree that Husband
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is paying the mortgage payments of $1570 per month. The Master used the formula
suggested by Pa.R.C.P. No. 1910.16-6(e), as one would use if the obligor was residing
in the marital home and paying the mortgage, to determine if Husband was entitled to
25
an adjustment for the mortgage payments. The formula resulted in a finding that 25%
of Husband’s income after the payment of APL is $2,398, higher than the $1570
mortgage payment, and therefore, the Master concluded that Husband was not entitled
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to an adjustment.
The Master’s final recommendation was that Husband pay Wife $2,693.01 per
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month in APL, effective June 1, 2020.
Both Husband and Wife filed exceptions. Wife filed her exceptions on November
2, 2020, that
1. The Support Master erred by excluding $55,000 from Defendant’s
income, which Defendant gifted to two adult children who are not
shareholders in Defendant’s business.
2. The Support Master erred by excluding from Defendant’s income
payments Defendant made from a business account to personal credit
cards.
3. The Support Master erred by excluding from Defendant’s income
deposits made into Defendant’s personal checking account.
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The Master did not equally divide the cost of the health insurance between Husband and Wife even
though, presumably, their premiums would be equal. Instead, he established that Wife’s share of the
parties’ income, after her receipt of APL, is 34.51%. He then used that percentage to calculate Wife’s
share of the parties’ health insurance. Report at 14.
24
Transcript at 5.
25
Report at 14.
26
Id.
27
The Master’s original recommendation was $2,398 per month, but in the Court’s Amended Order date
October 21, 2020, the Master acknowledged a typographical error, and the amount was adjusted to
$2,693.01 per month. See Amended Support Master’s Report and Recommendation, Norris, No. 258 S
2020 (October 21, 2020).
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Husband filed his exceptions on November 10, 2021, that
1. The Support Master errored in calculation Defendant’s monthly
gross income of $16,455 per month, when there was no evidence to
support the same, and doing so involved conjecture. Effectively,
Husband’s income is assessed higher in 2020 than in 2019, despite the
fact that the daycare business was shut down for a portion of 2020.
2. The method employed by the Master of reviewing two months of
bank statements (January and May) to determine Defendant’s income for
support was erroneous, and it resulted in the Master speculating,
averaging and adjusting numbers. If that Master wanted to employ a
review of bank statements as a means of determining the Defendant’s
income for support purposes, then all of the bank statements through
August 31, 2020 should have been review for 2020, rather than just two
months.
3. To avoid conjecture, the Master should have used the August 31,
2020 Statement of Assets, Equities, and Liabilities, submitted by the
Defendant, which documented all of Defendant’s personal expenses paid
by the business for eight months out of the year, and did not require the
Master to speculate.
4. The Master errored in not finding Defendant’s income consists of
the following:
a. Defendant is no longer taking a salary due to COVID-19 and
received unemployment compensation for 14 weeks in 2020 at
approximately $954/month.
b. Defendant takes a draw to pay his personal expenses, which
gets included into his 284 and 284.1 account, which he picks up as
income on his personal income tax return. Through August 31,
2020, the totaled of his 284 and 284.1 accounts was $81,479.87.
c. Defendant’s company pays the health insurance benefits of
$2,581 per month, which is income to him.
5. The Support Master errored in Defendant’s net income of $13,827
when he assumed the same tax consequences as 2019 in determining net
income, but Defendant’s taxable income was lower in 2019, than what the
Master assessed.
6. The Master also erred in noting that the parties stipulated that Best
Friends pays $1570 per month towards the mortgage on the marital home.
Rather, the check is paid from Best Friends, but Husband picks this up as
taxable income to him, and it is reflected on his 284 account.
Page 5 of 11
7. The Master errored in failing to give Husband any credit for
payment of the mortgage to the marital residence when Wife resides in the
home, when he effectively pays it on Wife’s behalf while she continues to
reside in the home. At the very least, Husband should be given a credit
for payments of the mortgage from June 1, 2020 towards the arrears.
The parties appeared via Zoom video conference for argument on their
respective exceptions on April 8, 2021, at which time the matter was taken under
advisement.
DISCUSSION
A report of the Support Master is to be given the fullest consideration, especially
with regard to credibility of witnesses. However, the trial court is required to review the
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report to determine if the recommendations are appropriate. Additionally, the
credibility issue is not to be resolved entirely by the Master as the reviewing court has
the duty to make a complete and independent review of all the evidence, including a
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review of the weight and credibility to be accorded to the testimony of the witnesses.
Generally, the purpose of APL is to put the parties on equal footing to litigate the
divorce proceedings, and an award of APL is within the sole discretion of the trial court.
Alimony pendente lite is an order for temporary support granted to a
spouse during the pendencey of a divorce to help the dependent spouse
maintain the standard of living enjoyed while living with the dependent
spouse…based on the need of one party to have equal financial resources
to pursue a divorce proceeding when, in theory, the other party has major
assets which are the financial sinews of domestic warfare…The amount
awarded as alimony pendente lite is within the sound discretion of the trial
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court…
The parties raise two main issues on exception, (1) the calculation of Husband’s
income, and (2) the credit Husband should receive for paying the mortgage on the
marital home.
28
Goodman v. Goodman, 544 A.2d 1033, 1035 (Pa. Super. 1988).
29
Rollman v. Rollman, 421 A.2d 755, 758 (Pa. Super 1980).
30
Cook v. Cook, 186 A.3d 1015, 1022-1023 (Pa. Super. 2018)(quoting Schenk v. Schenk, 880 A.2d 633,
644-645 (Pa. Super. 2005)).
Page 6 of 11
HUSBAND’S INCOME
Both Wife and Husband have objected to the calculation of Husband’s income.
Wife objects to the classification of certain items as non-income, while Husband objects
to the method employed by the Master to calculate the income.
Title 23 defines “income” for the purposes of support as follows:
Includes compensation for services, including, but not limited to, wages,
salaries, bonuses, fees, compensation in kind, commissions and similar
items; income derived from business; gains derived from dealings in
property; interest; rents; royalties; dividends; annuities; income from life
insurance and endowment contracts; all forms of retirement; pensions;
income from discharge of indebtedness; distributive share of partnership
gross income; income in respect of a decedent; income from an interest in
an estate or trust; military retirement benefits; railroad employment
retirement benefits; social security benefits; temporary and permanent
disability benefits; workers' compensation; unemployment compensation;
other entitlements to money or lump sum awards, without regard to
source, including lottery winnings; income tax refunds; insurance
compensation or settlements; awards or verdicts; and any form of
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payment due to and collectible by an individual regardless of source.
Pa.R.C.P. No. 1910.16-2(a) further indicates that “monthly gross income is
ordinarily based on at least a six-month average of a party’s income.” As Husband is
paid in a non-traditional manner, where most of his earnings do not come in the form of
a traditional paycheck, the Master examined Husband’s income utilizing three sets of
documents, (1) his 2019 tax return, (2) his yearly expense report through August 2020
(at Husband’s suggestion), and (2) his bank statements for January 2020 and May 2020
(at Wife’s suggestion). The Master ultimately chose to utilize Wife’s suggested method,
analyzing the January 2020 and May 2020 bank statements.
Husband takes exception to the Master’s utilization of only 2 months of bank
statements because the law typically favors the averaging of at least 6 months of
records. We agree. While Pa.R.C.P. No. 1910-16-2(a) appears to have permissive
language (i.e. monthly gross income is “ordinarily” based on 6 months of records), the
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Superior Court has held that to deviate from 1910.16-2(a) is abuse of discretion. Such
31
23 Pa.C.S. § 4302.
32
Cook, 186 A.3d at 1024.
Page 7 of 11
was the case in Cook, where the trial court utilized 5 months of Husband’s records and
4 months of Wife’s records. The Superior Court stated that
This method is in contradiction with Pa.R.C.P. 1910.16-2(a), which
instructs that ‘monthly gross income is ordinarily based upon at least a six-
month average of all of a party’s income.’ Therefore we are constrained to
conclude that the trial court abused its discretion in failing to employ the
33
method of calculation set forth in Rule 1910.16-2(a).
Therefore, the Master erred in the calculation of Husband’s income by only
examining 2 months-worth of bank records.
Our quandary is now how best to evaluate Husband’s income. In theory, the
bank statements, as Wife suggests, could provide an exact picture of the cash flow in
and out of Husband’s business and personal accounts. The problem is that, without
receipts for every transaction (and perhaps even with receipts), we would be relying on
Husband’s recollection for every expenditure and deposit into both accounts for at least
6 months. This has the potential to be rife with errors and a true picture of Husband’s
income may not be gleaned from the resulting evaluation. Wife must recognize this
pitfall given that all three of her exceptions are based on the Master’s failure to classify
certain items as income.
Husband suggests that the best way to evaluate his income is by looking at the
statements of assets and liabilities he submitted as Defendant’s Exhibits 5 and 5.1,
specifically looking at the 284 and 284.01 accounts. On the report, the 284 account is
described as “Shareholder Distribution – T. Norris,” and the 284.01 account is described
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as “Tim Norris Alimony Payments.” These reports purport to account for all of
Husband’s personal expenses (via the 284 account), as well as the money paid to Wife
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for the above referenced expenses (via the 284.01 account). Husband testified that
he does a daily accounting of all of the personal and business expenses utilized for that
36
day and sends it by email to his bookkeeper. At the end of the year, he does a “line-
37
by-line internal audit to make sure nothing has been missed or mischaracterized.”
Husband did not submit as evidence either the emails to his bookkeeper or a line-by-
line audit.
33
Cook, 186 A.3d at 1024.
34
Defendant’s Exhibits 5 and 5.1.
35
Transcript at 82.
36
Id at 100.
37
Id.
Page 8 of 11
If we took Husband’s numbers as accurate, and used only the totals from the 284
and 284.01 accounts, the total “income” of Husband for January 2020 through August
2020 is $81,479.87, or $10,184.98 gross monthly income. Comparatively, Husband’s
adjusted gross income for 2019 was $171,088, or $14,257.33 monthly gross income.
Presumably, the difference in the two incomes can be explained by Husband not
38
drawing a salary during the COVID-19 pandemic. The statement of assets and
liabilities does not take into account Husband’s unemployment compensation of $954
per month.
While we certainly understand the effect that the COVID-19 pandemic has had
on both parties, the pandemic is temporary in nature. In the wake of temporary
financial hardship, the law permits us, and in fact, requires us, to examine “income,
39
potential earning capacity and other property and financial resources.” In Goodman,
the Superior Court addressed wife’s temporary unemployment by examining her
earning potential and stated that
We find no abuse of discretion in fixing Ms. Goodman’s earning capacity
at a level which she had so very recently demonstrated, and was
continuing to demonstrate, was attainable by her, and which, by her own
testimony, was the minimum she could expect in her next full-time
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position.
Similarly, in this matter, the Master evaluated Wife’s potential earning capacity to
determine her income available for support, which was not objected to by either party.
We agree with the Master that, despite Husband not drawing a salary from the
daycare, his expense draws taken on the 284 account seem to have compensated for
41
that. Additionally, Husband’s fiancé pays for their household expenses, so Husband’s
personal expenses, truly, are personal expenses. We also find that, while examining
either bank statements or asset and liability reports may give a more recent picture of
Husband’s finances, those are nebulous methods of valuation that rely on Husband’s
memory and classification of expenses, without more, and require us to do a great deal
of speculation. Husband’s tax return was prepared by an accountant and, by
38
Husband’s W-2 wages from Best Friends Daycare was $56,663 for 2019, or $4721.91 per month. See
Defendant’s Exhibit 1.
39
Goodman, 544 A.2d at 1035 (emphasis added).
40
Id. at 1036 (emphasis added).
41
Transcript at 83.
Page 9 of 11
Husband’s own admission, is done after a line-by-line audit. It is therefore more reliable
than any other method of valuation.
The Support Master erred in only using 2 months of bank statements to evaluate
Husband’s income, and therefore, Husband’s exceptions 1 and 2 are SUSTAINED. We
find that the most appropriate means of calculating Husband’s income is his 2019 tax
return. Husband’s exceptions 3, 4 and 5, and Wife’s objections are deemed moot as
they require us to examine certain expenses that are not at issue when using the 2019
tax return, and therefore those exceptions are OVERRULED.
MORTGAGE PAYMENTS ON THE MARITAL HOME
Husband’s remaining exceptions involve the mortgage payments on the marital
home. As discussed, supra, the Master used the formula suggested by Pa.R.C.P. No.
1910.16-6(e), as one would use if the obligor was residing in the marital home and
paying the mortgage, to determine if Husband was entitled to an adjustment for the
mortgage payments, which resulted in a finding that Husband was not entitled to an
adjustment.
Pa.R.C.P. No 1910.16-6(e) states that “the guidelines assume that the spouse
occupying the marital residence will be solely responsible for the mortgage payment,
real estate taxes, and homeowners’ insurance. Similarly the trier-of-fact will assume
that the party occupying the marital residence will be paying the items listed unless the
recommendation specifically provides otherwise.” The Rule then provides the
calculations for the mortgage deviation depending upon which party resides in the
marital home. In this matter, Husband was voluntarily paying the mortgage on the
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marital home, despite Wife continuing to live in the marital residence.
There is very little case law on the mortgage deviation under Rule 1910.16-6. In
fact, the Superior Court noted in Woskob v. Woskob, 843 A.2d 1247, 1258 (Pa. Super.
2004) that, after independent research, it could find no case law dispositive of the
43
issue. Woskob concerned child support, where Mother, the obligee, was in
possession of the marital home and paid the mortgage. Mother requested, and was
granted, an upward adjustment in child support based on her payment of the mortgage.
Father sought to overturn the deviation based on the fact that he had primary custody of
three of the parties’ four children. The Superior Court upheld the deviation noting that
42
Husband has since been Ordered to pay the mortgage. See Order of Court In Re: Mortgage, Norris,
No. 2017-05979 (January 30, 2021).
43
The Superior Court again declined to create an exception to Rule 1910.16 in an unreported opinion in
2018. Berthold v Berthold, 489 WDA 2017 (January 3, 2018).
Page 10 of 11
“the trial court may apply the enhancement where a support obligee resides in the
martial home and the mortgage on that property exceeds one-quarter of the obligee’s
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net income.” The Court found the custody arrangement irrelevant under Rule
1910.16.
The facts of Woskob are not analogous to the facts of this matter. We highlight
Woskob merely to show that the application of Rule 1910.16-6 is within the sole
discretion of the trial court, and that the Rule is meant to compensate the spouse living
in the marital home for the expenses incurred therewith, regardless of other
circumstances in the case. The Rule itself notes that the trier-of-fact may apply the
deviation, leaving it within the trial court’s discretion.
We agree with Husband that Pa.R.C.P. No. 1910.16-6(e) does not contemplate
the adjustment allotted when the spouse paying the mortgage does not reside in the
marital home. We also agree that the Master erred in using Husband’s income, as
opposed to Wife’s income, to determine if a deviation should apply. Husband requests
this Court to impose a dollar-for-dollar credit towards the support arrears. We agree.
The Rule anticipates that the party living in the marital home will at least be paying
some of the mortgage and expenses associated with owning a home. Here, Wife is
reaping all the benefits of owning a home (i.e. improved credit score, home equity)
without paying any of the expenses.
Therefore, Husband’s exceptions 6 and 7 are SUSTAINED, and Husband shall
be entitled to a dollar-for-dollar credit for any payments made on the mortgage since
June 1, 2020.
By the Court,
Matthew P. Smith, J.
Karen L. DeMarco, Esquire
3901 Market Street
Camp Hill, PA 17011
Courtney K. Powell, Esquire
11 East Chocolate Avenue, Suite 300
Hershey, PA 17033
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Woskob. 843 A.2d at 1257-1258.
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