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HomeMy WebLinkAbout2006-3145 Civil CATHY R. THOMPSON : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : V. : : DONALD L. THOMPSON : 06-3145 CIVIL TERM IN RE: EQUITABLE DISTRIBUTION OF MARITAL PROPERTY OPINION AND ORDER OF COURT Bayley, J., November 7, 2008:-- This is a divorce case in which the issue for which a hearing was conducted on 1 October 8, 2008, is the equitable distribution of marital property. Cathy Thompson, age 61, and Donald Thompson, age 63, were married on June 7, 1969. They separated in June, 2005. They have two adult children born in 1971 and 1972. At age 58, husband retired from the Commonwealth of Pennsylvania in March, 2003, having last worked as an educator in a municipal police training agency. Wife is a registered nurse who retired at age 60 in November, 2007, after working for the last twenty years in the emergency room at the Pinnacle Health Center. The parties lived in Mechanicsburg, Cumberland County. They then purchased a farm at which they lived in Perry County. Their plan was to build a home in Montana in which to spend their retirement. To that end, they purchased 43.3 acres for $60,000 in 2001. The property is a few miles from the small community of Townsend and 105 miles from the city of Helena. A two bedroom house was constructed on the property 2 between January and April, 2005. It was the project from hell. Counting the land, the __________ 1 The case was heard by the court without going before a Divorce Master. 2 They closed on the sale of their farm in Perry County on March 30, 2005. The price 06-3145 CIVIL TERM total investment in the property, which included a $220,000 construction mortgage, is approximately $400,000. However, the fair market value of the property is only $275,000. With a mortgage balance of $163,747, the net value is $111,254. Husband has lived in the house and maintained it since April, 2005. He has made all of the mortgage payments of $2,655 a month. The mortgage runs until October, 2015. Husband intends to live in the Montana property indefinitely. He expected wife to join him there in retirement. She chose not to. The present value of the marital portion of wife’s pension, $79,250, is subject to equitable distribution. There is an irrevocable survivor benefit to husband with a value of $4,454. The present value of the marital portion of husband’s pension is $402,599. There is a survivor benefit with a value of $22,196 that this court can order assigned to wife. Husband maintains that the marital portion of his pension is not subject to equitable distribution because he made a claim against wife for alimony pendente lite which was denied. The court entered an order denying the APL following receipt of a Master’s report which included the following statement: Despite his retirement, the Husband has sufficient cash flow to put him on $3,000.00 an equal financial footing with his wife. The cash flow includes per month in retirement income, $10,850.00 annually in tax except [sic] interest, $2,700.00 in annual IRA distributions from his deceased father’s IRA, and approximately $700.00 in taxable interest. His average gross monthly cash flow is approximately $4,133.00. In 2005 he paid federal income tax of $1,424.00, Pennsylvania state income tax of $89.00, and Montana state income tax of $355.00. Total taxes were $1,868.00, or $156.00 per month. His average monthly net cash flow was $3,977.00. was $257,000 from which they netted $182,000. -2- 06-3145 CIVIL TERM (Emphasis added.) Berry v. Berry, Husband cites cases such as 898 A.2d 1100 (Pa. Super. 2006), which stand for the proposition that in determining income for support purposes, a court may not include income that constitutes marital property where such an action would sub judice, foreclose the equitable distribution of such assets. In the case husband unsuccessfully sought APL from wife. “APL focuses on the ability of the individual who receives the APL during the course of the litigation to defend her/himself, and the only issue is whether the amount is reasonable for the purpose, which turns on the Schenk v. Schenk, economic resources available to the spouse.” 880 A.2d 633 (Pa. Super. 2005). The present value of the marital portion of husband’s pension, $402,599, is subject to equitable distribution and his unsuccessful claim against wife for APL does not change that. There was a marital Smith Barney account with $97,377 at separation. Husband has drawn this account down to $4,239 at the time of the equitable distribution hearing. He testified that he used these funds, rather than other assets that he had, for living expenses which included maintaining the Montana property. Therefore, he maintains that the only amount that should be subject to equitable distribution is the $4,239. There is no legal merit in his position. Prior to separation, a Beachcraft airplane was purchased for $45,000. The airplane is in Montana but husband no longer flies it because of its “emotional attachment to his marriage.” About two years after separation he purchased a -3- 06-3145 CIVIL TERM Grumman airplane for $29,500, which he is flying. Wife does not want the Beachcraft which is marital property. In order to fly the Beachcraft again, it needs to be inspected and will likely require some repairs and maintenance. The airplane has not been appraised. Husband has had it for sale for $56,000, but there have been no takers. Husband believes that it is more likely that a buyer can be found in Pennsylvania than in Montana. He wants the airplane to be sold. Wife wants the airplane valued at $50,000 and distributed to husband. Because of the uncertainly as to the current value we will order that the airplane be sold for a minimum price of $45,000, or a lesser price agreed to by the parties, or if a buyer is found at a lesser price and any one party wants to have the airplane sold at that price, with court approval. The marital property subject to equitable distribution is as follows. Equity in jointly owned Montana property $111,253 Husband’s SERS pension $402,599 Survivor benefit value $22,196 Wife’s Pinnacle Health defined pension $79,250 Survivor benefit value $4,454 Smith Barney account No. 6176611 $97,377 Smith Barney account No. 02034-11 $40,465 Smith Barney account No. 195 $9,100 -4- 06-3145 CIVIL TERM Lincoln Financial Group Account $46,638 Mortgage escrow $4,598 Mortgage escrow refund $2,637 Burial plot $1,700 PSECU checking account $3,000 PSECU saving account $11,000 PSECU checking account $600 PSECU saving account $683 1995 Camaro $3,615 2003 Jeep $9,230 2001 Silverado $7,750 1994 Cavalier $350 Tractor $9,900 Beachcraft airplane estimated $45,000 TOTAL $913,395 Pursuant to the Divorce Code at 23 Pa.C.S. Section 3502(a), the following factors are relevant to the equitable distribution of the parties’ marital property: (1) This is a lengthy marriage of thirty-nine years, thirty-six years at separation. (2) Neither party has been previously married. (3) Husband is 63 and wife 61. They are generally in good health. Both retired early and could have continued working. Wife’s income from her pension is $591 a -5- 06-3145 CIVIL TERM month. Husband’s income from his pension is $3,002 per month. As long as husband remains in Montana he has little opportunity for meaningful employment. Wife is still 3 employable in her field. The estate of the parties consists of their assets subject to equitable distribution, although husband has significant separate property. Neither party has unusual liabilities although wife took a $22,000 loan for living expenses against a $46,638 Lincoln Group account. Husband has been making the $2,655 mortgage payments on the jointly owned Montana property. Each party needs income to sustain their lifestyle. (4) Neither party contributed significantly to the education, training or increased earning power of the other party. (5) Neither party has a significant opportunity for future acquisitions of capital assets. There is little likelihood of husband being able to secure significant future income in his field while wife could return to her profession. (6) The sources of income for the parties are their pensions and any income they are able to earn on their investment. (7) Husband has dissipated a marital Smith Barney account from $97,377.16 to $4,239. Husband’s management of the construction of the home on the marital property in Montana did not go well. Approximately $400,000 was invested in a __________ 3 Under their original plan wife would have retired and moved to Montana with husband. Husband testified that they both thought she would do some part-time nursing work if available in Montana. -6- 06-3145 CIVIL TERM 4 property that has a fair market value of $275,000. (8) Husband has separate non-marital property consisting of a Grumman airplane that he bought in the spring of 2007 for $29,500, a hanger he purchased for 5 $8,500 and the balance of an inheritance of $206,000. (9) The parties had a comfortable standard of living. (10) All the pension money distributed pursuant to an order of equitable distribution will be taxable to each party based on the share of the pension each party receives. (10.1) It is conceivable that there will be a taxable gain when the airplane is sold. (10.2) Husband testified that he intends to live in the Montana residence and that it would be financially counterproductive to sell it. If he did sell it, realtor’s fees run from four to six percent of the sales price. There is no transfer tax in Montana. (11) Neither party will be serving as a custodian of any dependent minor children. Weighting all of these factors and considering all of the evidence, we are satisfied that the marital estate should be evenly divided. We will assign the following marital assets to each party, with the Beachcraft airplane being sold and the net __________ 4 Almost all of that money came from the net proceeds of the marital farm and the construction mortgage. 5 Husband, after separation, received about $250,000 from his father’s estate. Marinello v. Marinello, Separate property is subsection (a)(8) property. See 354 Pa. Super. 471 (1986). -7- 06-3145 CIVIL TERM proceeds divided equally. -8- 06-3145 CIVIL TERM HUSBAND WIFE Equity in jointly owned Montana property $111,253 Pension $79,250 Survivor benefit $4,454 $22,196 Smith Barney accounts $97,377 $40,465 $9,100 Lincoln Financial Group account $46,638 Mortgage escrow $4,598 Mortgage escrow refund $2,637 Burial plot $1,700 PSECU checking $3,000 PSECU savings $11,000 PSECU checking $600 PSECU savings $683 1995 Camaro $3,615 2003 Jeep $9,230 2001 Silverado $7,750 1994 Cavalier $350 Tractor $9,900 TOTAL $245,084 $220,712 TOTAL $465,796 ÷ 2 = $232,898 -9- 06-3145 CIVIL TERM Since wife is assigned $220,712 and husband $245,084, there is a $12,186 shortfall to her. This shortfall to be paid to wife from husband’s proceeds from the sale of the Beachcraft airplane. Husband’s pension, which is in pay status, shall be distributed fifty percent to each party pursuant to a QDRO prepared by counsel and submitted to the court for approval. Not counting the equitable distribution hearing on October 8, 2008, wife’s legal fees in this case are $12,407.50, and husband’s are $46,732. We are satisfied that each party should pay their own counsel fees. ORDER OF COURT IT IS ORDERED: AND NOW, this day of November, 2008, (1) A decree in divorce will be entered concurrently with this order of equitable distribution. (2) Within thirty days of this date, husband shall affirm and assign to wife the SERS DBP survivor component of his pension. (3) Within thirty days of this date, the parties shall submit to this court for approval a QDRO distributing to each party fifty percent of husband’s SERS pension benefit. (4) Within fifteen days of this date, any assets assigned to either party but under the control of the other party or in escrow shall be transferred to the party so assigned. (5) Within fifteen days of this date, wife shall sign all necessary papers to -10- 06-3145 CIVIL TERM transfer to husband all her interest in the marital property in Montana. Husband shall indemnify wife and hold wife harmless for any debt, including the debt of the mortgage, against that property. (6) The Beachcraft airplane shall be sold for a minimum price of $45,000, or a lesser price agreed to by the parties, or if a buyer is found at a lesser price and only one party wants to have the airplane sold at that price, with court approval. Each party shall receive fifty percent of the proceeds of sale. Within thirty days of this date husband shall arrange for all inspections, repairs and maintenance necessary to make the plane legal to fly. At his option, he may return it to Pennsylvania to be sold. All costs of inspection, repair, maintenance, and the direct out-of-pocket costs of returning the plane to Pennsylvania, if that is done, shall be borne equally by the parties. Wife’s one-half share of these expenses shall be paid to husband at the time she receives her half of the proceeds from the sale. The cash shortfall of $12,186 owed by husband to wife in equitable distribution shall be paid to wife out of husband’s half of the proceeds from the sale. (7) Except as otherwise provided in this order, each party shall execute all documents necessary to implement this distribution of the marital assets within fifteen days of this date. ARE DENIED. (8) All other claims of record raised by either party, By the Court, -11- 06-3145 CIVIL TERM Edgar B. Bayley, J. -12- 06-3145 CIVIL TERM Bernard S. Cantorna, Esquire For Cathy R. Thompson Theresa Barrett Male, Esquire Andrea H. Duffy, Esquire For Donald L. Thompson :sal -13- CATHY R. THOMPSON : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : V. : : DONALD L. THOMPSON : 06-3145 CIVIL TERM IN RE: EQUITABLE DISTRIBUTION OF MARITAL PROPERTY ORDER OF COURT IT IS ORDERED: AND NOW, this day of November, 2008, (1) A decree in divorce will be entered concurrently with this order of equitable distribution. (2) Within thirty days of this date, husband shall affirm and assign to wife the SERS DBP survivor component of his pension. (3) Within thirty days of this date, the parties shall submit to this court for approval a QDRO distributing to each party fifty percent of husband’s SERS pension benefit. (4) Within fifteen days of this date, any assets assigned to either party but under the control of the other party or in escrow shall be transferred to the party so assigned. (5) Within fifteen days of this date, wife shall sign all necessary papers to transfer to husband all her interest in the marital property in Montana. Husband shall indemnify wife and hold wife harmless for any debt, including the debt of the mortgage, against that property. (6) The Beachcraft airplane shall be sold for a minimum price of $45,000, or a lesser price agreed to by the parties, or if a buyer is found at a lesser price and only 06-3145 CIVIL TERM one party wants to have the airplane sold at that price, with court approval. Each party shall receive fifty percent of the proceeds of sale. Within thirty days of this date husband shall arrange for all inspections, repairs and maintenance necessary to make the plane legal to fly. At his option, he may return it to Pennsylvania to be sold. All costs of inspection, repair, maintenance, and the direct out-of-pocket costs of returning the plane to Pennsylvania, if that is done, shall be borne equally by the parties. Wife’s one-half share of these expenses shall be paid to husband at the time she receives her half of the proceeds from the sale. The cash shortfall of $12,186 owed by husband to wife in equitable distribution shall be paid to wife out of husband’s half of the proceeds from the sale. (7) Except as otherwise provided in this order, each party shall execute all documents necessary to implement this distribution of the marital assets within fifteen days of this date. ARE DENIED. (8) All other claims of record raised by either party, By the Court, Edgar B. Bayley, J. Bernard S. Cantorna, Esquire For Cathy R. Thompson Theresa Barrett Male, Esquire Andrea H. Duffy, Esquire For Donald L. Thompson :sal -2-