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HomeMy WebLinkAbout98-7322 CivilRICHARD L. WINGFIELD, III, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ELIZABETH B. WINGFIELD, Defendant NO. 98-7322 CIVIL TERM IN RE: DEFENDANT'S EXCEPTIONS TO DIVORCE MASTER'S REPORT BEFORE HOFFER, P.J., HESS and OLER, JJ. OPINION and ORDER OF COURT OLER, J., December 5, 2003. In this divorce action, Defendant wife has filed exceptions to several aspects of a divorce master's report dealing with equitable distribution.~ As expressed in Defendant's brief, the issues being pursued are focused as follows: A. Is the master's recommendation that wife pay to husband one half of the rental value of the family residence during the separation of the parties appropriate under the law of Pennsylvania and the facts of this case? B. Does the master's recommendation that two investment accounts controlled, and mismanaged, by husband after the date of separation be valued at the time of distribution rather than at the date husband took exclusive control of them? C. Is the master's oversight of wife's payment of a joint credit card bill after the date of separation appropriate under the facts of this case?2 ~ Defendant's Exceptions to Report and Recommendation of Master, filed June 5, 2003. By order of court dated May 28, 2002, Michael R. Rundle, Esq., was appointed special divorce master. Order of Court, May 28, 2002 (Hoffer, P.J.). : Defendant's Brief in Support of Exceptions to Master's Report and Recommendation, submitted Aug. 19, 2003, at 2. The exceptions were argued on August 27, 2003. For the reasons stated in this opinion, Defendant's exceptions will be dismissed and final decrees will be entered in accordance with the recommendations of the divorce master. STATEMENT OF FACTS In a divorce action, a divorce master's report and recommendations, while entitled to great consideration, are advisory only and not binding on the court. Morschhauser v. Morschhauser, 357 Pa. Super. 339, 349, 516 A.2d 10, 15 (1986). However, on issues of credibility the master's report will be given full consideration, because it is the master who had the opportunity to observe the parties' demeanor. Margolis v. Margolis, 201 Pa. Super. 129, 192 A.2d 228 (1963). The procedural history of the case was summarized by the divorce master as follows: A divorce complaint was filed by the Husband on December 31, 1998, raising grounds for divorce of irretrievable breakdown of the marriage under Section 3301(c) of the Divorce Code. On February 9, 1999, the Wife filed a Petition for Economic Relief requesting alimony, alimony pendente lite, and counsel fees and expenses. On May 15, 2000, an amended complaint was filed raising grounds for divorce under both Section 3301(c) and 3301(d) and also raising a claim for equitable distribution of property. On August 24, 2000, E. Robert Elicker, II, Esquire, was appointed Master to hear the case. On April 2, 2001, Mr. Elicker held a pre-hearing conference. After several continuances, a Master's Hearing was scheduled for December 27, 2001, at which time no testimony was taken but a stipulation was placed on the record. On December 27, 2001, both parties executed and filed Affidavits of Consent and Waivers of Notice. Mr. Elicker's appointment as Master was vacated. On May 28, 2002, Michael R. Rundle was appointed Special Master to hear the case. On June 25, 2002, a pre- hearing conference was conducted by Mr. Rundle. 2 On March 28, 2003, a hearing was conducted [before the special divorce master] .... 3 The evidence at the master's hearing supports the following statement of facts, pertinent to the issues raised: Plaintiff is Richard Lafayette Wingfield, lll, 50, a resident of Pinehurst, North Carolina.4 Defendant is Elizabeth Ballard Wingfield, 49, a resident of Carlisle, Cumberland County, Pennsylvania.5 The parties were married on June 12, 1976.6 Three children were born of the parties' marriage: Mia Wingfield, 24; Brandon Wingfield, 22; and Wesley Thomas Wingfield, 18, a high school student.7 The parties separated in December, 1998.8 Upon separation, Defendant wife remained in the marital residence at 1300 Stratford Drive, Carlisle, Pennsylvania,9 where she continues to reside with the parties' son and adult daughter,l° There is no evidence in the record to indicate that Plaintiff husband has utilized the property since the parties' separation. The marital residence, worth $261,500.00,~ is unencumbered by a mortgage as a result of the generosity of the father of Defendant wife, who forgave, prior to the parties' separation, a $35,384.37 balance on a construction 3 Master's Report, filed May 29, 2003, at 1. 4 N.T. 5, Master's Hearing, March 28, 2003 (hereinafter N.T. ~. 5 N.T. 100-01. 6 N.T. 8, 102. 7 N.T. 36. 8N.T. 18. 9 N.T. 101. l0 N.T. 8. ~ This figure was stipulated to by the parties and is memorialized in an attachment to a letter to counsel from a prior divorce master in the case dated December 28, 2001. The letter and attachment (a transcript) unfortunately do not appear to have been made part of the record. However, this finding as to valuation of the marital residence in the master's report is not the subject of an exception. See Master's Report, filed May 29, 2003, at 4. 3 loan which he had made to them. ~2 Since the separation, Defendant wife has paid bills related to the marital residence for insurance, taxes, and repairs, in the amount of $17,552.34.13 The fair rental value of the property is $1,250.00 per month.~4 There is no evidence in the record to indicate that Defendant wife has paid rent to Plaintiff husband since the parties' separation. Among the marital assets of the parties at the time of separation were an individual Retirement Account ORA) of Plaintiff husband at the investment firm of Quick & Reilly~5 and a joint investment account at Quick & Reilly. Both accounts were comprised of publicly-traded stocks. At the time of the parties' separation in December of 1998, the stocks in the IRA had a value of 83,390.29.16 No changes in the investments comprising the account were recommended by Quick & Reilly,~7 and none was made by Plaintiff husband.~8 The vicissitudes of the stock market, however, resulted in values of the iRA of $39,139.72 in September, 2001,19 $50,060.00 in December, 2001,2° and $28,478.52 in December, 2002.2~ Similarly, the joint investment account at Quick ~2 N.T. 19, 51-52, 55, 60, 83, 86, 92, 144-46; Defendant's Ex. 5, Master's Hearing, March 28, 2003 (hereinafter Defendant's/Plaintiff's Ex. ~. ~ N.T. 111; Defendant's Ex. 6. ~4 This figure was stipulated to by the parties and is memorialized in an attachment to a letter to counsel from a prior divorce master in the case dated December 28, 2001. The letter and attachment (a transcript) unfortunately do not appear to have been made part of the record. However, this finding as to rental value of the marital residence in the master's report is not the subject of an exception. See Master's Report, filed May 29, 2003, at 4. ~5 N.T. 14-15; Defendant's Ex. 3. This account is memorialized in an attachment to a letter to counsel from a prior divorce master in the case dated December 28, 2001. The letter and attachment (a transcript) unfortunately do not appear to have been made part of the record. However, findings of the master as to the existence of this account and its value at certain dates are not the subject of an exception. See Master's Report, filed May 29, 2003, at 4. 16 N.T. 15. ~7 N.T. 49-50. ~8 N.T. 16, 48-49. 19 N.T. 15. 20 N.T. 15-16. 2~ N.T. 15. 4 & Reilly had a value of $29,288.28 at the time of the parties' separation, and a value of $15,216.84 in September, 2001.22 No more recent valuation for this account appears in the record. No expert testimony was presented at the hearing to indicate that either account had been mismanaged. Finally, Defendant wife, following separation, paid a joint Visa card bill in the amount of $1,294.10.23 Following the hearing, the special divorce master filed a report in which he valued the assets of the marital estate at $388,940.00,24 and recommended a distribution of 60% to Defendant wife and 40% to Plaintiff husband.25 In this recommended valuation and distribution, the master declined to accept Defendant wife's argument that the IRA account and joint investment account, to be distributed to Plaintiff husband, should be assigned date-of- separation values as opposed to more recent values on the theory that Plaintiff had mismanaged the accounts following separation.26 In addition, the master was not persuaded by Defendant wife's argument that, notwithstanding her occupancy of the marital residence in Plaintiff's absence since their separation in 1998, no portion of the rental value of the residence should be credited to Plaintiff.27 Finally, the distribution recommended by the master contained a credit to 22 This account is memorialized in an attachment to a letter to counsel from a prior divorce master in the case dated December 28, 2001. The letter and attachment (a transcript) unfortunately do not appear to have been made part of the record. However, findings of the master as to the existence of this account and its value at certain dates are not the subject of an exception. See Master's Report, filed May 29, 2003, at 4. 23 N.T. 112; Defendant's Ex. 7. 24 Master's Report, filed May 29, 2003, at 7. 25 Master's Report, filed May 29, 2003, at 6. 26 Master's Report, filed May 29, 2003, at 7-9. 27 Master's Report, filed May 29, 2003, at 9-10. With respect to the residence, the master in effect assessed Defendant wife with half the rental value of the property during her occupancy in Plaintiffs absence ($31,875.00), and assessed Plaintiff husband with half the payments made by Defendant for insurance, taxes and repairs during that period ($8,775.00). The result was a credit to husband of $23,100.00. Master's Report, filed May 29, 2003, at 9-10. Defendant wife for one-half of the payment she made on the aforesaid joint Visa card debt.28 Following the filing of the report by the special divorce master, Defendant wife filed the exceptions which are being pursued herein and which are summarized at the beginning of this opinion. As noted, these exceptions relate to (a) the assessment of rent to Defendant wife, (b) the dates-of-valuation of the IRA and joint investment account, and (c) the purported failure of the master to credit Defendant wife with respect to her payment of the joint Visa card debt. DISCUSSION With respect to the assessment of rent to Defendant wife, the master's report contains the following analysis: The Husband argues that he should be given credit for fair rental value of the marital residence while the Wife occupied it since separation. While it is true that a party out of possession of the marital home must be compensated in some manner for his or her rights in the property, provided that there are no equitable defenses to the credit, Gee vs. Gee, 460 A. 2d 358 (Pa. Super. 1983), it is within the discretion of the trial court to grant rental value as part of equitable distribution. Trembach v. Trembach, 615 A.2d 33 (Pa. Super. 1992). The parties had stipulated that the marital residence has a fair rental value of $1,250.00 per month. The rental value from date of separation to date of the Master's hearing would be approximately $63,750.00. The Wife has paid approximately $17,550.00 towards homeowner's insurance, taxes and miscellaneous repairs on the home. The Husband has requested credit for one-half of the difference, or $23,100.00. The Wife raises three reasons why no credit should be given. First, she argues that the Husband was not forced from his home, rather he voluntarily departed. Secondly, at least one of the parties' children has occupied the residence at all times since separation, and lastly, the Wife has occupied the home mortgage free solely because of the generosity of her father in 28 See Master's Report, filed May 29, 2003, at 12 n.2. In reciting the facts and recommendations of the special divorce master in this complex and difficult case, the court has omitted numerous issues and factual matters unrelated to the exceptions sub judice. 6 making gifts to the parties which paid off the mortgage. The record will support the fact that the Wife's father made loans to or paid off loans for the parties, and subsequently forgave obligations total[ing] approximately $82,000.00.[29] What the Wife ignores, however, is the fact that her father forgave the debts as a gift to the marital estate. He does not have a lien against the home, and the Wife has no legal obligation to pay him any sum of money. Consequently, this argument must fail. As long as the total distributory scheme is equitable, it is not mandatory that an equitable distribution award include an award of rental value to a spouse not in possession of the marital home. Middleton vs. Brown Middleton, 812 A.2d 1241 (Pa. Super. 2002). However, in this case, with the distribution scheme as proposed in this report and recommendation, this Master feels an award of $23,100.00 as rental reimbursement is appropriate. This sum will be added to the cash payment to be made by Wife as part of the equitable distribution scheme.3° As noted by the master, the issue of whether Defendant wife should be assessed a portion of the rental value of the marital home for the period of her possession of the premises following the parties' separation is largely addressed to the sound discretion of the court and is related to the overall distribution scheme adopted by the court. Gee v. Gee, 314 Pa. Super. 31, 35, 460 A.2d 358, 360 (1983). The record supports the master's observation that the forgiveness of the joint debt related to construction of the residence by the father of Defendant wife was a donation to the marital estate as opposed to a gift to Defendant alone. Under the circumstances of the case, including the prospective distribution of marital assets to Defendant wife of a value exceeding $232,000.00 and Defendant's possession of the premises without interference by Plaintiff since the parties' separation in 1998, the court finds itself in agreement with the master's assessment of a portion of the rental value of the marital residence to Defendant. 29 In addition to the forgiveness of the balance of the construction loan related to the marital residence referred to in the text of this opinion, Defendant's father apparently forgave other loans to the parties. The testimony on this point, however, is extremely confusing. See N.T. 51, 54-55, 58, 60-61, 68-95, 145. ~0 Master's Report, filed May 29, 2003, at 9-10. 7 With respect to the valuation dates of the IRA and joint investment account, the master's report contains the following analysis: The Wife has argued that the Husband's IRA with Quick and Reilly be valued as of the date of separation. Said IRA had a value of $83,390.00 in December 1998 at the time of separation, but the value as of December 31, 2002, was approximately $28,479.00. There were no additions to or withdrawals from the account since separation. The significant decrease in the account is a result of the general decrease in the stock market. She makes the same argument with respect to the joint investment account with Quick and Reilly. Generally where a considerable period of time has elapsed between the separation and the distribution, the court should set the valuation as close to distribution as possible. Sutliff vs. Sutliff, 543 A. 2d 534 (Pa. 1988); McNaughton vs. McNaughton, 603 A. 2d 646 (Pa. Super. 1992). However, as the court stated in McNaughton, "[t]he lower court's objective in selecting a date for the valuation of marital assets is to select a date which works economic justice between the parties." McNaughton, supra, at 649. There is no dispute that the Husband had control over the two accounts from the date of separation forward. The Wife complains not of any action the Husband took with respect to the accounts, but rather to his lack of action. As the stock market, and the value of the accounts, fell since the separation, the Husband did nothing to mitigate the losses. The Wife points to the case of Beemer vs. Beemer, 619 A.2d 713 (Pa. Super. 1993) for support of her argument. In Beemer, however, the Husband took positive steps to lower the value of stock in which the Wife had a marital interest. Such is not the case presently being heard. While it is true that the Husband here did nothing while the value of both Quick and Reilly accounts fell, he did nothing to cause the fall. While there are limited circumstances where assets should be valued at date of separation, those circumstances are generally confined to situations "where one spouse consumes or disposes of marital assets or there are other conditions that make current valuation difficult." Nagle vs. Nagle, 799 A.2d 812, 821 (Pa. Super. 2002). Such is not the case here .... 3~ 3~ Master's Report, filed May 29, 2003, at 7-9. The master's analysis appears to the court to be correct under the circumstances of this case. In this regard, cases cited in the brief of Defendant wife in which a party participated in "looting" a corporation following separation, or otherwise was directly responsible for the value of a business, do not appear apposite,32 particularly in the absence of expert testimony that the course of management of the accounts was fiscally irresponsible in light of market conditions and expectations. Finally, with respect to a credit to Defendant wife arising out of her payment, following separation, of a joint Visa card debt in the amount of $1,294.10, it appears to the court, as noted above, that credit for one half of the payment was, in fact, given to Defendant in the order proposed by the special divorce master. For the foregoing reasons, Defendant's exceptions to the report of the special divorce master will be dismissed, a divorce decree will be issued, and supplemental decrees regarding economic claims will be entered in accordance with the recommendations of the master. ORDER OF COURT AND NOW, this 5th day of December, 2003, after careful consideration of Defendant's Exceptions to Report and Recommendation of Master, and for the reasons stated in the accompanying Opinion, the exceptions are dismissed. OF EVEN DATE herewith, a divorce decree and supplemental decrees respecting equitable distribution, alimony, and counsel fees and expenses are being entered in accordance with this Order and the accompanying Opinion. 32 See, e.g. Benson v. Benson, 425 Pa. Super. 215, 624 A.2d 644 (1993); Beener v. Beener, 422 Pa. Super. 351,619 A.2d 713 (1993);McNaughton v. McNaughton, 412 Pa. Super. 409, 603 A.2d 646 (1992); Defendant's Brief in Support of Exceptions to Master's Report and Recommendation, at 7-8. 9 BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Michael R. Rundle, Esq. Special Divorce Master P. Richard Wagner, Esq. Attorney for Plaintiff Samuel L. Andes, Esq. Attorney for Defendant 10 11 RICHARD L. WINGFIELD, III, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Vo CIVIL ACTION - LAW ELIZABETH B. WINGFIELD, Defendant NO. 98-7322 CIVIL TERM IN RE: DEFENDANT'S EXCEPTIONS TO DIVORCE MASTER'S REPORT BEFORE HOFFER, P.J., HESS and OLER, JJ. ORDER OF COURT AND NOW, this 5th day of December, 2003, after careful consideration of Defendant's Exceptions to Report and Recommendation of Master, and for the reasons stated in the accompanying Opinion, the exceptions are dismissed. OF EVEN DATE herewith, a divorce decree and supplemental decrees respecting equitable distribution, alimony, and counsel fees and expenses are being entered in accordance with this Order and the accompanying Opinion. BY THE COURT, Michael R. Rundle, Esq. Special Divorce Master P. Richard Wagner, Esq. Attorney for Plaintiff Samuel L. Andes, Esq. Attorney for Defendant J. Wesley Oler, Jr., J.