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HomeMy WebLinkAbout02-1073 CivilEDWIN C. MILLER, Plaintiff SUSIE V. MILLER, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 2002-1073 CIVIL TERM CIVIL ACTION - LAW IN DIVORCE IN RE: MOTION FOR CLARIFICATION OF THE MASTER'S Hoffer, P.J. RECOMMENDATIONS FINDINGS OF FACT On March 4, 2002, Plaintiff Edwin C. Miller filed a Complaint in Divorce. Plaintiff averred that he was entitled to divorce pursuant to § 3301(c) and § 3301(d) of the Divorce Code and raised an economic claim for equitable distribution. Defendant filed an Answer and Counterclaim on April 19, 2002, raising issues of equitable distribution, alimony, alimony pendent elite, and counsel fees, costs and expenses. Robert Elicker, II, Esquire, was appointed Master with respect to these issues on September 30, 2002. After each party filed a pretrial statement, pretrial conferences were conducted and a final hearing on the matter commenced on June 24, 2003. Following this hearing, the record closed. On July 10, 2003, Mr. Elicker filed a Master's Report based on the evidence and testimony presented in the June 24th hearing. In this report, the Master stated that the divorce can be concluded under § 3301(d) of the Divorce Code. He subsequently analyzed his findings of facts and stipulations using the factors set forth in § 3502(a) of the Domestic Relations Code. Using this analysis, Mr. Elicker concluded that the distribution of assets should be 40% to the Plaintiff/Husband and 60% to the Defendant/VVife. The Master proposed a list of divided marital assets contingent upon the aforementioned distribution scheme. Among the divided assets was the husband's Fidelity Destiny IRA ("the IRA"). The parties stipulated that as of December 31,2002, the IRA had a value of $91,884.00. Although distribution of the total value of the marital assets followed the 60%/40% scheme, the Master recommended specific monetary division of the IRA. Based on the stipulated value of $91,884.00, the Master proposed that the husband receive $48,993.60 and that the wife receive $42,950.40. These specific dollar amounts revealed a distribution of the IRA of 53.25% to the Plainitff/Husband and 46.75% to the Defendant/VVife. On August 22, 2003, the Defendant/VVife filed a Motion for Clarification of Master's Recommendations. In her motion, the Defendant/VVife stated that the IRA had increased in value since the filing of the Master's Report. At the close of market on August 21,2003, the IRA was worth $105,077.73, an increase in value of $13,193.73 from the original stipulated value of $91,884.00. In order to equitably divide this increased value, the Defendant/VVife requests that the Master's Report be 2 clarified to award the IRA by the 53.25%/46.75% scheme rather than by the specific dollar amounts proposed in the Master's Report. The Plaintiff/Husband opposes this motion and argues that the Defendant/VVife waived the requested relief by not filing exceptions to the Divorce Master's recommendations. He further contends that any increase in value of the IRA is non-marital from the date of distribution and is not subject to an award to Defendant/VVife. DISCUSSION 1. A trial court can modify an unappealed decree of equitable distribution. One of the purposes of the Divorce Code is to "[e]ffectuate economic justice between parties who are divorced or separated...and insure a fair and just determination and settlement of their property rights." 23 Pa.C.S. § 3102(a)(6). Accordingly, the Pennsylvania Supreme Court has held that a trial court has broad equitable powers and discretion in fashioning distribution awards and will be overturned only for an abuse of that discretion. Oaks v. Cooper, 536 Pa. 134, 140 (1994). In light of these broad equitable powers, the Superior Court of Pennsylvania concluded that a trial court could properly modify a final, unappealed decree of equitable distribution. Romeo v. Romeo, 417 Pa. Super. 180 (1992). The court acknowledged that while the Divorce Code made no specific provision for "modification" of a final decree of equitable 3 distribution, other provisions of the Code underscore the court's equitable powers and continuing jurisdiction in such matters. Id. at 183-84. The court noted that the granting of a petition for special relief is an exercise of the court's equitable powers and that a motion to modify the distribution decree constituted such relief. Id. at 184. Therefore, this court has the equitable power to modify the Master's recommendations of equitable distribution. 2. The increase in value of the Fidelity Destiny IRA is marital property subject to equitable distribution. Retirement benefits, vested and non-vested, are marital property subject to equitable distribution, but only the portion of the property attributable to the duration of the marriage is marital property. Brown v. Brown, 447 Pa. Super. 424, 430 (1995). Thus, when a retirement plan has vested and its value increases based on the contributions made during marriage, the increased value is marital property even if the increase occurs after the date of separation. Id. See also Schneeman v. Schneeman, 420 Pa. Super. 65, 79 (1992) ("While increases due to interest or returns on investment in the value of the amount contributed during the marriage are marital property, contributions by the employee or employer after the date of separation are not marital property.") The principal value of an IRA plus any interest from the initial contribution is considered a marital asset subject to equitable distribution. 4 Oaks v. Cooper, 536 Pa. 134, 143 (1994). In Oaks, the Pennsylvania Supreme Court found that contributions to the IRA made by the husband after the date of separation were not marital assets, but the money used to seed the account plus interest thereon to the date of distribution should be deemed marital property. Id. In the case at bar, the value of the IRA at the time the Master made his recommendations was $91,884.00. Over the course of several months, the IRA has appreciated in value to $105,077.73. The Plaintiff/Husband has not offered evidence that the increase in value stems from contributions he made to the IRA subsequent to the date of separation. Consequently, the increase in value is attributable to interest accruing on the principal amount of the IRA made during the parties' marriage. The entire value of the IRA, including the principal amount and any interest accrued on that amount, is marital property subject to equitable distribution by this court. 3. The proper date for valuing the Fidelity Destiny IRA for equitable distribution is the distribution date. Upon analyzing the Divorce Code's statutory provisions governing equitable distribution, the Pennsylvania Supreme Court concluded that a valuation date reasonably proximate to the date of distribution must be used whenever possible. Sutliff v. Sutliff, 518 Pa. 378,381 (1988). See also Na.qle v. Na,qle, 2002 Pa. Super. 155 (2002) ("In line with the Sutliff 5 decision, the date of distribution has been the preferred date for determining the value of marital assets.") As the Divorce Code does not expressly provide for the date of marital asset valuation, a trial court has the discretion to choose a valuation date that best effectuates economic justice between the parties. See Diamond v. Diamond, 360 Pa. Super. 101,107 (1987). Although a limited situation may exist where current valuation of marital assets is unfeasible or overly burdensome, it would be impossible in most cases for a court to devise a distribution scheme to "effectuate economic justice" and address the parties' current needs without utilizing the current values of the assets being distributed. Sutliff, 518 Pa. at 382. Applying these principals to the present case, the value of the IRA at the date of distribution should be used in the parties' equitable distribution scheme. At the time the Divorce Master compiled his recommendations, the value of the IRA was $91,884.00. By August 21,2003, the IRA increased in value by $13,193.73. Because the Divorce Master divided the IRA between the parties by specific monetary amounts, this increased value remains undivided. To "effectuate economic justice," this court must equitable divide the IRA based on its value at the date of distribution. Valuation at this date is neither impossible nor unduly burdensome. The Divorce Master proposed that the husband receive $48,993.60 and that the wife receive $42,950.40 6 of the $91,884.00 valued IRA, yielding a percentage of 53.25% to the Plainitff/Husband and 46.75% to the Defendant/Wife. Accordingly, the value of the IRA at the date of distribution shall be allotted to the parties based on those percentages. The Defendant/wife's Motion for Clarification of the Master's Recommendations is GRANTED and her proposed order will be incorporated into the Court's Order attached hereto. P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 For the Plaintiff Wayne F. Shade, Esquire 53 West Pomfret Street Carlisle, PA 17013 For the Defendant 7 EDWIN C. MILLER, Plaintiff vi. SUSIE V. MILLER, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 2002-1073 CIVIL TERM CIVIL ACTION - LAW IN DIVORCE IN RE: MOTION FOR CLARIFICATION OF THE MASTER'S RECOMMENDATIONS ORDER OF COURT AND NOW, this day of 2004, in accordance with the Recommendations of the Divorce Master in the above-captioned matter, it is hereby ordered and decreed, as follows: EQUITABLE DISTRIBUTION MARITAL ASSETS AND VALUES ASSIGNED TO HUSBAND: Old Line Life Insurance Policy Cash Value Coverture Portion of Military Pension Husband's Member 1st Account Fidelity Destiny IRA $ 6,700 49,300 5OO 53.25% 8 MARITAL ASSETS AND VALUES ASSIGNED TO WIFE: Marital Real Estate situated at 515 E. Orange St., Shippensburg, Pennsylvania Wife's Members 1st Account Wife's Member's 1st IRA Liberty National Life Insurance Policy Cash Value Household Tangible Personal Property Fidelity Destiny IRA $64,900 41,000 4,600 3,700 1,000 46.75% Husband shall transfer to Wife within thirty (30) of a Final Order in these proceedings by a special warranty deed all his right, title, an interest to the real estate situated at 515 E. Orange St., Shippensburg, Cumberland County, Pennsylvania. Wife shall take the property subject to the existing mortgage and shall indemnify and hold Husband harmless on account of any claims which may be made by the mortgagee against Husband on account of the outstanding mortgage balance. Further, Wife shall make a good faith effort within ninety (90) days of a Final Order in these proceedings to refinance the existing mortgage which will reduce her monthly payment and remove Husband as an obligor on the existing mortgage. 9 The parties will sign all titles and documents necessary to transfer ownership of assets assigned to each of the parties as herein provided in the distribution of assets as set forth above so that all transfers are accomplished within thirty (30) days of the Final Order. Wife waives all her right, title, and interest in Husband's military pension; however, Husband shall make appropriate election and sign the necessary documents preserving Wife's right to the survivor's benefit in the pension. Husband shall pay to Wife as his share of the real estate and pension appraisals the sum of $392.50 within thirty (30) days of the Final Order. ALIMONY Husband shall pay to Wife the sum of $850.00 per month through the Cumberland County Domestic Relations Office to begin upon entry of a divorce decree in these proceedings. The amount and duration of alimony shall be subject to modification and termination on petition of either party as allowed under Section 3701(e) of the Domestic Relations Code. Specific termination provisions in the Domestic Relations Code will also apply. Should Wife choose to reduce her weekly hours worked, a reduction of hours by 20 to 25% of the 60 to 65 hours per week worked shall not be 10 construed as a change of circumstances of a substantial and continuing nature as to warrant a review of the alimony award. By the Court, George E. Hoffer, P.J. P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 For the Plaintiff Wayne F. Shade, Esquire 53 West Pomfret Street Carlisle, PA 17013 For the Defendant 11