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HomeMy WebLinkAbout2006-2786 Civil ERICA GEROW, : IN THE COURT OF COMMON PLEAS OF PLAINTIFF : CUMBERLAND COUNTY, PENNSYLVANIA : V. : : CHARLES GEROW, : DEFENDANT : 06-2786 CIVIL TERM IN RE: PETITION OF WIFE FOR SPECIAL RELIEF OPINION AND ORDER OF COURT Bayley, J., December 4, 2007:-- Erica Gerow and Charles Gerow were married on December 27, 1997. They separated in July, 2006. They entered into a comprehensive marital settlement 1 agreement dated September 21, 2006. On January 23, 2007, wife filed a petition for special relief to enforce certain provisions of the agreement. Husband filed an answer. October 29November 29, 2007 Hearings were conducted on and . THE REAL ESTATE BUYOUT Paragraph 12 of the Agreement provides: REAL ESTATE. The parties are the owners of a house located at 4725 Charles Road, Mechanicsburg, Cumberland County, Pennsylvania. Husband shall retain said real estate as his sole and separate property. Husband agrees to pay to Wife $35,000.00 for her interest in said real $17,500.00 paid within 45 days of the signing of this estate with Agreement. Simultaneously with payment to Wife of the first $17,500.00, Wife shall execute a deed transferring her interest in said real estate to Husband and Husband shall execute a note in favor of Wife in the amount of $17,500.00. The note shall bear no interest and __________ 1 Wife signed the agreement on September 21, 2006. Husband signed it on September 27, 2006. 06-2786 CIVIL TERM require that the balance be paid in full at the time of sale of the real estate or within one year of the date that the note is executed, which first occurs . . . . (Emphasis added.) Husband placed the first $17,500 in escrow with his attorney on December 20, 2006, which was about a month beyond the 45 days required after he signed the marital settlement agreement on September 27, 2006. A disagreement then occurred as to who was going to prepare the deed. A deed was finally signed by wife on March 8, 2007, but she did not receive the $17,500 in escrow until August 31, 2007, because husband would not accept the deed, that although notarized, was not separately witnessed. Wife would not sign another deed. Husband finally accepted delivery of the deed dated March 8, 2007 and transferred the $17,500 on August 31, 2007. Wife should have received the $17,500 on March 8, 2007. We will award her interest on the $17,500 at the rate of six percent per annum from March 8, 2007, until August 31, 2007, for a total of $506.88 payable not later than December 31, 2007. Husband has refused to execute a non-interest bearing note for the second $17,500 which the agreement required to be paid when the real estate is sold or within one year of wife executing a deed. The real estate has not been sold. Husband testified that he did not sign the note because of a set-off he seeks from wife for one- half of their federal income tax for 2004. As set forth hereafter, there is no legal basis for the set-off. The note should have been signed on March 8, 2007 when wife executed the deed. We will order husband to sign a non-interest bearing note, within seven days of this order, for $17,500 payable to wife on March 7, 2008, or on the date -2- 06-2786 CIVIL TERM the marital property is sold if that occurs before March 7, 2008. THE CREDIT CARD DEBT Paragraph 16 provides: CURRENT LIABILITIES: The parties have accumulated various debts during the marriage. Husband shall be solely responsible for payment of Husband agrees to pay Wife any and all debt that is in his name. $13,500 or transfer into his own name $13,500 from debt owed on Wife’s MBNA credit cardwithin 90 days of the signing ending in 6991 of this agreement . During the period between the execution of this Agreement and Husband’s payment, husband agrees to make the minimum monthly payment on the Card with the greater balance, providing that such payment is not greater than $625. (Emphasis added.) Husband did not within 90 days of the signing of the agreement either pay wife $13,500 or transfer into his own name that debt owed on wife’s MBNA credit card. Rather, he has been making payments on the debt. At the hearing on October 29 the balance including interest and late charges was $11,661.79. Husband testified at the hearing on November 29 that he has now reduced the debt to approximately $10,000. Wife seeks an order requiring husband to pay her the amount owing on the card which is what the agreement required since husband has not transferred the debt into his own 2 name. Husband seeks to continue to make payments until the debt is extinguished. That however, is not what he agreed to do. Wife has a right to have the debt of the credit card extinguished. We will order husband to pay off the MBNA credit card in full __________ 2 It seems problematical that the credit cardholder provider would have allowed such a transfer although there is no evidence in the record either way. -3- 06-2786 CIVIL TERM not later than December 31, 2007. THE 2004 TAXES Paragraph 19 provides: TAX RETURNS. The parties agree to file a joint federal income tax return for 2005 and to file a joint federal income tax return for 2006. Thereafter Husband will claim the three children as dependents on his tax returns on odd numbered years beginning January 1, 2007, and Wife will claim the three children as dependents on her tax returns on even numbered years. The parties agree that in the event any deficiency in federal, state or local income tax is proposed or any assessment of any such tax is made against either party in connection with the filing of a joint federal, state or local income tax return for prior years, the parties shall equally share any loss or liability in connection with such tax deficiency, including counsel fees and such tax, interest, penalty or expense associated therewith, unless and onlyunless said tax, interest, penalty or expense is finally determined to be attributable to misrepresentations or failure to disclose the nature and extent of either party’s separate income or joint returns, in which case any and all liability, cost or expense shall be the sole responsibility of the party responsible for the misrepresentation or failure to disclose the nature and extent of separate income. (Emphasis added.) Husband and wife have always filed joint income tax returns, the last one for 2006. Their joint return for 2004 showed adjusted gross income of $314,364 of which $9,634.65 was earned by wife with the rest earned by husband. Federal income tax of $991.87 was withheld from wife’s earnings. The total tax owed was $69,613. A total of $9,901 was withheld on W-2s, and $15,000 was paid by husband when a filing extension was sought, for a total of $24,901. The return was filed at the end of an extension period on October 17, 2005. The amount of tax then owed of $44,782 was not paid. It was always the practice of husband to pay any amounts owed on tax -4- 06-2786 CIVIL TERM returns. The IRS sent husband and wife a notice for the period ending December 13, 2004, that they owed an assessed balance of $44,226.48, accrued interest $6,888.51, and a late payment of $1,993.86 for a total of $53,108.85. Under an agreement with the IRS husband has made payments totaling $40,000 toward that amount through the end of October, 2007. He has been paying $5,000 a month. Despite the fact that all the amount owing of tax due for the 2004 federal tax return is on money earned by husband, he maintains that since it is a joint return wife is responsible for $26,554.43 (one-half of the total of $53,108.85), and that he should have an off-set for that amount against what he owes wife under the marital settlement 3 agreement. Wife testified that she knew there was federal tax owed and not paid when the 2004 joint return was filed on October 17, 2005, but she did not know that husband had not paid it when the marital settlement agreement was entered into in September, 2006. The first time she learned that husband sought to hold her responsible for one- half of the taxes owed on the joint 2004 return was when she read the answer he filed on March 7, 2007, to her petition for special relief. Prior to her signing the marital settlement agreement she asked husband for a disclosure of any debts and he did not tell her there were any amounts owing for 2004 federal taxes. Under Paragraph 19 of the marital settlement agreement, the parties agreed “in deficiency in federal . . . income tax is proposed or any assessment the event any __________ 3 If wife had filed a separate federal return no federal tax would have been due on her limited earnings of $9,634.65. -5- 06-2786 CIVIL TERM of any such tax is made against either party in connection with the filing of a joint -6- 06-2786 CIVIL TERM the parties shall share equallyany liability federal . . . tax return for prior years, . . . in connection with such tax deficiency , unless and only unless the tax, interest, penalty . . . is finally determined to be attributable to misrepresentations or failure to disclose the nature and extent of either party’s separate income or joint returns, in which case any and all liability, cost or expense shall be the sole liability of the party responsible for the misrepresentation or failure to disclose the nature and extent of separate income.” The IRS Code at 26 U.S.C.A. Section 6211 provides that for purposes including income tax, the term deficiency “includes the amount by which the tax imposed exceeds the excess of the amount shown as the tax by the taxpayer upon his return.” Black’s Law Dictionary, Seventh Edition, 1999, defines “deficiency assessment” as: An assessment by the IRS – after administrative review and tax court – adjudication – of additional tax owed by the taxpayer who underpaid. No tax deficiency has been assessed by the IRS against husband and wife for their 2004 return. Rather, husband has failed to pay the amount of tax owed as reported on the joint return when it was filed. Paragraph 19 of the marital settlement agreement makes wife jointly responsible only if there is a deficiency and there is an assessment for any such tax owed as a result thereof, not for the remainder of the tax reported as owed and not fully paid by husband. Husband is not entitled to an off-set $26,554.43 against the amount he owes wife under the marital settlement agreement. -7- 06-2786 CIVIL TERM A DIVORCE Paragraph 26 of the agreement provides: MUTUAL CONSENT DIVORCE. The parties agree and acknowledge that their marriage is irretrievably broken, that they do not desire marital counseling, and that a complaint in divorce has been filed in Cumberland County. The parties agree to have the divorce decree entered in that case pursuant to Section 3301(c) of the Pennsylvania Divorce Code, Act 26 of 1980, as may be amended (herein referred to as the Code). To that Wife agrees to direct her counsel to withdraw the claims under end, Section 3301(a) within thirty (30) days of the execution of this Agreement. Further, both parties agree to execute such acceptance of service, stipulations, consents, affidavits, or other documents and to direct their respective attorneys to forthwith file such stipulations, consents, affidavits, or other documents as may be necessary to proceed to obtain a divorce pursuant to said Section 3301(c) of The Code. Husband agrees to have his counsel prepare and file all paperwork necessary to finalize the divorce. Upon request, to the extent permitted by law and the applicable Rules of Civil Procedure, the named defendant in such divorce action shall execute any waivers of notice or other waivers Husband agrees to have his necessary to expedite such divorce. counsel prepare for execution and file any necessary paperwork to finalize the divorce within thirty (30) days of the earliest date possible for entry of a decree of divorce. Further, each party agrees effectuate the divorce to execute any and all documents necessary to within the thirty (30) day period. (Emphasis added.) Wife’s complaint for divorce was filed on May 16, 2006. She withdrew her Section 3301(a) claim on April 17, 2007. Husband has not signed a Section 3301(c) affidavit and waiver so that wife can now complete the divorce. We will order him to deliver all documents to wife’s counsel, not later than seven days from the date of this order, that are necessary for wife to finalize a Section 3301(c) divorce. -8- 06-2786 CIVIL TERM LEGAL FEES AND COSTS Paragraph 35 of the agreement provides: ENFORCEMENT OF AGREEMENT. If either party breaches any provision of this Agreement, the other party shall have the right, at his or her election, to sue for damages for such breach or to require specific performance. The party breaching this Agreement shall be responsible for payment of legal fees and costs incurred by the other party in enforcing their rights under this Agreement or for seeking such other remedies of relief as may be available to him or her. Wife has had to file this petition for special relief and litigate it in order to secure an order for husband to comply with his obligations in paragraphs 12, 16 and 26 of the marital settlement agreement. She seeks counsel fees of $16,687.50 plus $1,625 for the cost of the expert testimony of a tax lawyer at the first hearing on October 29. We will award her $8,625 payable not later than December 31, 2007. ORDER OF COURT IT IS ORDERED: AND NOW, this day of December, 2007, (1) Within seven days of this date, husband shall sign a non-interest bearing note payable to wife in the amount of $17,500 on March 7, 2008 or at any time the marital residence may be sold before March 7, 2008. (2) Husband shall pay wife $506.88 interest not later than December 31, 2007. (3) Husband shall pay all amounts due on wife’s MBNA credit card not later than December 31, 2007, and provide wife proof of payment when it is made. (4) Within seven days of this date, husband shall provide wife’s attorney signed documents necessary for her to complete a Section 3301(c) divorce. -9- 06-2786 CIVIL TERM (5) Husband shall pay wife $8,625 toward her counsel fees and costs not later than December 31, 2007. By the Court, Edgar B. Bayley, J. David Tamanini, Esquire For Plaintiff Nora Blair, Esquire For Defendant :sal -10- ERICA GEROW, : IN THE COURT OF COMMON PLEAS OF PLAINTIFF : CUMBERLAND COUNTY, PENNSYLVANIA : V. : : CHARLES GEROW, : DEFENDANT : 06-2786 CIVIL TERM IN RE: PETITION OF WIFE FOR SPECIAL RELIEF ORDER OF COURT IT IS ORDERED: AND NOW, this day of December, 2007, (1) Within seven days of this date, husband shall sign a non-interest bearing note payable to wife in the amount of $17,500 on March 7, 2008 or at any time the marital residence may be sold before March 7, 2008. (2) Husband shall pay wife $506.88 interest not later than December 31, 2007. (3) Husband shall pay all amounts due on wife’s MBNA credit card not later than December 31, 2007, and provide wife proof of payment when it is made. (4) Within seven days of this date, husband shall provide wife’s attorney signed documents necessary for her to complete a Section 3301(c) divorce. (5) Husband shall pay wife $8,625 toward her counsel fees and costs not later than December 31, 2007. By the Court, Edgar B. Bayley, J. 06-2786 CIVIL TERM David Tamanini, Esquire For Plaintiff Nora Blair, Esquire For Defendant :sal -2-