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HomeMy WebLinkAbout354 S 2002 JOHN M. ORTENZIO, Plaintiff : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. : DOMESTIC RELATIONS SECTION KIMBERLYN. ORTENZIO, Defendant : PASCES NO. 618104453 : NO. 354 SUPPORT 2002 IN RE: PLAINTIFF'S and DEFENDANT'S EXCEPTIONS TO SUPPORT MASTER'S REPORT BEFORE OLER, J. OPINION and ORDER OF COURT OLER, 1., October 19,2004. F or disposition in this child support case, which the Cumberland County Support Master has aptly characterized as "extremely complex,,,1 are exceptions filed by both parties to the Master's Report? Three children, who are subject to a shared custody arrangement, are involved;3 the mother has not worked outside the home since 1987;4 and the father has assets worth several million dollars. 5 The father's current child support obligation was determined by the master, utilizing a Melzer6 analysis, to be $8,557.00 per month, with credits for direct payments reducing the amount payable to the mother to $3,931.00 per month.7 1 Support Master's Report and Recommendation, filed March 2, 2004, at 4 (hereinafter Master's Report, at ~. 2 Defendant, John M. Ortenzio's Exceptions to the Support Master's Report and Recommendations and Interim Order Entered by the Court, filed March 8, 2004; Kimberly N. Ortenzio's Exceptions to the Support Master's Report and Recommendations, filed March 17, 2004. 3 N. T. 3, Support Master's Hearing, January 15-16,2004 (hereinafter NT.~. 4 NT. 211. 5 JNO Ex. 7, Support Master's Hearing, January 15-16, 2004 (hereinafter JNO/KNO Ex. ~. The father's exhibits were mislabeled JNO rather than JMO. 6 Melzer v. Witsberger, 505 Pa. 462,480 A.2d 991 (1984). 7 See Master's Report, Ex. "F." NO. 354 SUPPORT 2002 The father has filed four pages of exceptions to the Report, and the mother has filed seven pages of exceptions. The exceptions were argued on June 21, 2004. The father's exceptions to the support master's report have been summarized at the conclusion of a brief in support of them as follows: It is submitted that the Support Master erred in his report in setting a monthly net income for Mr. Ortenzio as the amount is contrary to the concepts set forth in Miller v. Miller, [2001 P A Super. 274, 783 A.2d 832 (general rule that proceeds from sale of asset received in equitable distribution not income for support purposes)]; erred in failing to set a reasonable earnings capacity for Ms. Ortenzio, erred in over-calculating the reasonable monthly expenses for Ms. Ortenzio which are not mathematically supported by the record; erred in failing to establish the reasonable expenses of the children in accordance with Melzer [v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984);] and erred in failing to recognize a reduction to Mr. Ortenzio for the shared custody of the children which is recognized by Pa.R.C.P. 191O(c)(1)&(2).8 The mother's exceptions have been summarized in a brief in support of them as follows: The support master erred in calculating father's income because he failed to impute a reasonable rate of return to father's low and non-income producing assets, he failed to attribute a wage earning capacity to father commensurate with father's experience and ability, and he failed to include all of father's income in his calculation[;]. .. the support master erred in finding that mother's reasonable expenses for 2002, 2003 and 2004 should be based on mother's reasonable expenses in 2002 minus her state college condominium expenses because those expenses are commensurate with the parties' standard of living prior to separation[;] . . . the support master erred in calculating the reasonable needs of the children by failing to find that the reasonable needs of the children were represented by the children's expenses in 2001 and by failing to find that the parties always had shared custody of the children and, therefore, father's support obligation under the 8 Father's brief on exceptions, at 42. 2 NO. 354 SUPPORT 2002 agreements was for mother's share of the support only[;] . . . the support master erred in calculating the parties' child support obligation under the [Melzer] analysis because he: . .. failed to correctly calculate mother's reasonable expenses, and therefore, her net income available for support[,] . . . [and] failed to correctly calculate the parties' child support obligation. . . .9 F or the reasons stated in this opinion, the parties' exceptions will be sustained in part and denied in part. STATEMENT OF FACTS On a review of a support master's report, a trial court is to employ the same standard of review as is applicable to a divorce master's report. See Goodman v. Goodman, 375 Pa. Super. 504, 507, 544 A.2d 1033, 1035 (1988). The report should be accorded the "fullest consideration," particularly with respect to the credibility of witnesses. Id However, the report is advisory only, and, when exceptions are filed, the court must conduct its own review of the evidence to determine whether the master's recommendations to which exceptions are taken are proper. Id; Gomez v. Gomez, 11 Phila. Co. Rptr. 211,226-27 (1984). With respect to issues raised by exceptions filed by a party to a master's report, "[i]t is the sole province and the responsibility of the [trial] court to set an award of support, however much it may choose to utilize a master's report." Goodman v. Goodman, 375 Pa. Super. at 507-08, 544 A.2d at 1035. In accordance with this standard, and after a thorough review of the evidentiary record created at the support master's hearing, the facts of this case will be summarized as follows: A complaint for child support was filed in this case on April 23, 2002.10 The support master's hearing on the complaint was held on January 15-16,2004. 9 Mother's brief on exceptions, at i-iv. 10 Complaint for Support, filed April 23, 2002. The procedural history of this matter is, unfortunately, confused. The mother filed a complaint for child support at No. 667 Support 1997 on July 16, 1997, which was dismissed for lack of activity on March 24,2000. Notwithstanding the dismissal, filings and other activity have continued on this docket. 3 NO. 354 SUPPORT 2002 The parties are John M. Ortenzio, who resides at 510 Orchard Lane, Lemoyne, Cumberland County, Pennsylvania,l1 and Kimberly N. Ortenzio, who resides at 1756 Marlin Ridge, Camp Hill, Cumberland County, Pennsylvania.12 They were married on November 15, 1986.13 Three children were born of the marriage: Lauren M. Ortenzio (d.o.b. August 14, 1987); Michael Ortenzio (d.o.b. November 28, 1989); and Andrew Ortenzio (d.o.b. April 28, 1994).14 The parties separated in June of 1994,15 and were divorced on November 29, 1995.16 Physical custody of the children is equally shared. 17 The father, John M. Ortenzio, has remarried, and he and his spouse have one child.18 The mother, Kimberly N. Ortenzio, is engaged to be remarried. 19 The father has commercial net assets, including partnership interests, valued by his expert at $8,497,573.00?0 He is employed on a less than full-time basis21 as a property manager for one of the corporate businesses in which he has The father filed a complaint for child support (i.e., for a determination of his obligation to pay child support) at No. 354 Support 2002 on April 23, 2002, which was dismissed for reasons not here relevant on July 8, 2002. Notwithstanding the dismissal, filings and other activity have continued on this docket also. The Master's Report addresses this complaint and carries its caption. F or purposes of conforming the record to practice, by separate order of court, the order dismissing the father's complaint at No. 354 Support 2002 will be vacated, and the two actions will be consolidated at No. 354 Support 2002. 11 NT. 6. 12 NT. 203. 13 NT. 203. 14 NT. 203. 15 NT. 204. 16 NT. 4. 17 NT. 6, 12. 18 NT. 6. 19 NT. 215,299. 20 JNO Ex. 7. 21 NT. 52. 4 NO. 354 SUPPORT 2002 an interest22 at a gross salary of $3,000.00 per month;23 a full-time predecessor in the position had received a gross salary of $6,000.00 per month?4 In addition, the father manages his investment portfolio, which includes "cash and other assets, investments which consist of real estate partnerships, investment partnerships, corporations and other investments[, and l]oans receivable. . . .,,25 The accounting complexities associated with an assessment of the father's income available for child support are evidenced by the disparity of the opinions of the parties' experts on the subject. According to the father's expert, the father's income available for child support is currently $11,247.00 per month,26 and according to the mother's expert the figure is over $140,000.00 per month?7 The dependence of a trier-of-fact upon expert opinion, properly weighed as to credibility, on an issue of this technical complexity is indicated by a brief excerpt from testimony of one of the experts on a minor point: Q Going to the 2002 return, line 21, where it says See Statement 1, and it says other income and has a number of a- 24,879,094. Could you explain? A Again, I don't have all the returns. It's conceivable that there may have been some of this loss that was carried back in prior years. I would assume that with such a significant variance-what the basic law says, and it's fairly technical, but if you kind of look through it, it's fairly simple- what the law says if you look on this return, 2002-let's go to 2001, it would be better if we look at that one. If you look at 2002, if you look on line- Q 200lor2002? 22 NT. 31-33. The father owns over 400,000 shares of this corporation, the value of which interest as of January 15,2004, was $7,062,000.00. NT. 34, 53, 95. 23 NT. 7-8, 33. 24 NT. 53. 25 NT. 81. 26 NT. 90, 107. 27 NT. 184. 5 NO. 354 SUPPORT 2002 A 2001, excuse me. If you look at that return, line 37, there is a number of 31,844,754. That's basically the starting point to calculate your NOL. The law basically, and it says more than this but this is basically the summary, it says in this particular case there is 321,411 itemized deductions. That is line 36. To the extent there is earned income from interest and dividends, you get that as a deduction. If you go back to page, to line 8A and 9, there is about 309,000, 310,000 of dividend income. So it would appear to me, if my memory of the form is right, they would lose about $20,000.00 of the NOL. The rest of it would be available to be carried forward. N ow there is a provision also to carry it back. So I would assume that somewhere there was either some dollars carried back. I can say this, the draft if you look at the exhibits I have attached did not have anywhere near a 29 million dollar loss on it which was the original draft we were provided in October on the prior testimony, on our prior testimony in this case. But it would appear as though that 30, basically 5 million dollar figure ultimately ended up at 24,879,094 carry-over to the 2002 return. 28 The approach of the mother's expert in arriving at an opinion as to the father's net income included an attribution of a rate of return to various low-yield investments of the father in accordance with 20-year and 76-year histories of certain types of real estate investments29 and securities investments. 30 This position has been explained by the expert as follows: It seemed to me if we didn't [attribute a normal rate of return to the investments], every father that had significant wealth could select to make long-term investments that would be non- income producing, non-dividend and interest paying, and accrue to the benefit and appreciation of those securities.31 The father's expert utilized a more contemporaneous, investment-specific and receipt-oriented analysis, but excluded receipts of $100,800.00 for the year 28 NT. 173-75. 29 NT. 158. 30 NT. 90-91, 101, 158. 31NT. 181. 6 NO. 354 SUPPORT 2002 2002 on the theory that they represented a return of original investment,32 and for the years following 2002 did not base his report upon tax return information because it was unavailable. 33 Contrary to the position of the father's expert, the excluded receipts were, In the master's view, more properly considered representative of cash flow classifiable as income for purposes of support.34 This position coincided with that of the mother's expert, who testified as follows: Q Do you think it's appropriate to include those numbers? A Clearly it was, based on the federal tax returns, a distribution that John Ortenzio had available to him to meet his personal needs. It was distributed out of the partnership [ s]. I don't believe there is any question he physically got the cash or equivalent securities or whatever was distributed, but I think it's probably cash, I would assume, and had that available for his use. And therefore there is about $100,000.00 difference between the amount that we determine was allocable from the real estate from the partnership investments over what the [father's] expert testified to.35 In addition, to the extent that the opinion of the father's expert as to the father's unearned income depended upon information less reliable than tax returns, it was, in the master's view, not compelling.36 Finally, the master elected to assess the father's present net earned income/earning capacity at $3,000.00 per month, which was more than his actual net earned income, but less than the salary of his full-time predecessor.37 The court, after a thorough review of the record, finds itself in agreement with the master's views on these subjects. Thus, while the more 32 N.T. 119-22; JNO Ex. 7, Sched. 2A. 33 NT. 84-85. 34 Master's Report, at 4-5. 35 NT. 176. 36 Master's Report, at 5. 7 NO. 354 SUPPORT 2002 contemporaneous, investment-specific and receipt-oriented approach of the father's expert to a determination of the father's income for purposes of child support will be adopted, the proven income for the year 2002 will be utilized as representative of the following year( s) as well, the calculation of that income will not exclude the aforesaid $100,800.00 figure, and the father's earned income/earning capacity will be set at $3,000.00 per month. The resultant monthly income/earning capacity figure for the father is $35,258.00?8 With respect to the reasonable expenses of the father, the evidence supported the master's recommended findings that they were $4,781.25 per month in 200239 and $4,340.00 per month in 2002,40 and would be $4,340.00 per month thereafter.41 In addition, the father paid alimony to the mother in the amount of $5,635.00 per month in 2002,42 and an average of $6,190.00 per month in 2003,43 and would be paying alimony of $6,768.00 there after, 44 as postulated by the master. 45 N either party has excepted to these recommended findings, and they will be adopted by the court. In accordance with these figures, the father's income/earning capacity available for child support is found to have been $24,841.75 per month in 2002 and $24,728.00 per month in 2003, and to be $24,150.00 per month thereafter. To 37 Master's Report, at 5. 38 This figure is derived from an annual figure of $423,099.00, which in turn is comprised of the 2002 investment income figure of $286,299.00 opined by father's expert (see JNO Ex. 7, Sched. 1), the sum of $100,800.00 excluded from his calculation, and the earned income/earning capacity figure of $36,000.00 per year. 39 JNO Ex. 4. This figure is one-half of the father's household expenses as shown on the exhibit. 40 JNO Ex. 5. This figure is one-half of the father's household expenses as shown on the exhibit. 41 Id.; Master's Report, at 5-6. 42 JNO Ex. 4. 43 KNO Ex. 41. 44 NT. 24. 45 Master's Report, at 5-6. 8 NO. 354 SUPPORT 2002 the extent that the parties' exceptions dispute these amounts, the exceptions will be denied. The mother earned a B.S. degree in Human Development46 from Penn State University and a physician's assistant associate's degree from Penn State University (Hershey Medical Center).47 However, she has not worked as a physician's assistant since 1985,48 has not been gainfully employed since 1987 when she taught two classes at the Thompson Institute,49 and has not had a license to practice as a physician's assistant since 1990.50 She has also served as an unpaid administrator for a charitable organization known as the Second Mile.51 At the time of the master's hearing, the mother anticipated employment as a clerk in the medical office of her fiance at an hourly rate of $8.50 for twenty-five hours per week.52 In contrast to the resultant figure of $11,050.00 per year, a vocational expert testifying on behalf of the father estimated the mother's earning capacity at $44,240.00 from full-time employment as a physician's assistant or as a paid administrator of a non-profit agency. 53 In view of the mother's child-rearing duties, the lack of currency of her credentials and experience in the physician's assistant field, and the absence of any history as a salaried employee of a charity, the assessment of the father's vocational expert as to her earning capacity was not entirely realistic in the court's opinion. The master's conclusion that she was capable of earning more than expected from her anticipated employment, but less than assessed by the father's 46 NT. 141. 47 NT. 211. 48 NT. 213. 49 NT. 211. 50 NT. 143. 51 NT. 141. 52 NT. 215-16. 53 NT. 146-47. 9 NO. 354 SUPPORT 2002 expert-i.e., the master's conclusion that an attributed earned annual income of $13,000.00 on the basis of a 25-hour week was consistent with her availability for work and employment history at this time 54-was a reasonable one. To the extent that this recommended conclusion is excepted to, the exception will be denied. Thus analyzed, the mother's gross earning capacity per month is $1,083.00. When her receipts of alimony are added to this figure, her gross income/earning capacity per month is shown to have been $6,718.00 in 2002 and $7,273.00 in 2003, and to be $7,851.00 thereafter. Based upon an income tax filing status of head of household, her practice of taking the parties' children as dependency exemptions, 55 and application of a standard tax computer program utilized by the Cumberland County Domestic Relations Office for a determination of net income, 56 the mother's net income/earning capacity for 2002 was $5,823.00 per month, her net income/earning capacity for 2003 was $6,339.00 per month, and her net income/earning capacity thereafter is $6,773.00 per month.57 The mother's expenses for 2002, as supported by an exhibit, included substantial amounts related to a condominium in State College, Pennsylvania, 58 used to some extent as a substitute for vacation sites by the mother and sold by her in 2003.59 While not approving expenses related to the condominium (which was, in effect, a second residence for the mother in relatively close proximity to her primary residence) as reasonable under the circumstances,60 the master, it would appear, offset a portion of these disapproved expenses with an allowance of 54 Master's Report, at 6. 55 NT. 311-12. 56 See Seeley-Burnham v. Burnham, 52 Cumberland LJ. 48, 52 (2002); Master's Report, Exs. "A"-"C" (tax detail reports). 57 See Master's Report, Exs. "A"-"F." 58 KNO Ex. 47. 59 NT. 245. 60 See Master's Report, at 7. 10 NO. 354 SUPPORT 2002 vacation expenses.61 Accordingly, expenses of $3,630.00 per month on the part of the mother were deemed reasonable by the master. 62 The father complains that the entire amount of these condominium expenses, without offset, should have been disallowed,63 and that the mother's claimed expenses were extravagant in areas in addition to those related to the condominium, such as a portion of an endowment in her daughter's name to Penn State. 64 The mother argues that the condominium expenses should have been regarded as reasonable,65 and that the master's report failed to recognize the reasonableness of vacation expenses following the sale of the condominium. 66 The court is of the view that neither party's position is persuasive on the issue of the mother's reasonable expenses. Both parties had a higher standard of living than average during their marriage, and expenses of the mother which would not normally be incurred by a person of average means must be understood in that context. On the other hand, the mother's second residence in relatively close proximity to her primary residence seems to the court to be an extravagance which can not be justified when viewed in connection with a child support obligation. Finally, the computation of the master does, in the court's opinion, accommodate the mother's expectation of reasonable vacation expenses, although this element of the approved expenses might have been more clearly denominated in the report. For these reasons, the exceptions of the parties to the master's recommendations as to the mother's reasonable expenses, and thus her income 61 This is the mathematical effect of the master's rejection of $7,200.00 of the mother's claimed expenses for 2002 rather than the higher figure of over $15,000.00 which she attributed to the condominium. See Master's Report, at 7; KNO Ex. 47. 62 Master's Report, at 7. 63 See brief of father in response to mother's exceptions, at 21-22. 64 See brief of father in response to mother's exceptions, at 21-22. 65 Brief of mother on parties' exceptions, at 23 -25. 66 Brief of mother on parties' exceptions, at 25. 11 NO. 354 SUPPORT 2002 available for support, will not be sustained. The mother's income/earning capacity available for child support is accordingly found to have been $2,193.00 per month in 2002 and $2,709.00 in 2003, and to be $3,143.00 thereafter.67 With respect to the reasonable needs of the children, the support master wrote as follows: There is no dispute that the parties had a high standard of living prior to the marital breakup. The Father is a wealthy man, although he will be quick to point out that his wealth has decreased dramatically since the divorce in 1995. The reasonable needs of children to wealthy parents clearly exceed those of children whose parents have a lower income. Branch v. Jackson, [427 Pa. Super. 417, 629 A.2d 170 (1993)]. Despite the expenditures which the Mother allocates as being for the children, it is the opinion of this Master that the parties themselves determined the reasonable needs of the children when they divorced and that the Father was paying those needs. In March, 2001, when the custody order changed to one providing for equal shared custody, the Father was paying $6,762.00 per month to the Mother for the support of the children. This figure did not, however, include the housing or educational expenses of the children. This Master will attribute 75% of the housing expenses associated with [the] former marital residence to the children as well as all educational expenses. In 2002 the reasonable needs of the children are calculated to be $10,125.00 per month. In 2003 and 2004 those needs are $9,668.50.68 Neither party is satisfied with the master's adoption of the father's agreed- upon child support obligation in 2001, supplemented, inter alia, by a percentage of the mother's residential expenses being paid by the father, as the figure best indicative of the reasonable needs of the children. 69 Although the master's approach represents a practical solution to a multitude of factual issues presented 67 See Master's Report, Exs. "D"-"F." 68 Master's Report, at 7 (footnotes omitted). 12 NO. 354 SUPPORT 2002 by the disparate figures of the parties as to the children's proper expenses,70 in the absence of the parties' consensus on this approach, the court will conduct a more conventional analysis of the children's reasonable needs based upon the expense figures provided by the parties. Expenditures set forth by the father for the children while in his household totaled $3,567.13 per month for 2002,71 and $2,697.67 per month for 2003.72 However, these figures grossly underestimated the children's fair share of 73 . 74 1 75 b.l mortgage payments, mamtenance payments, rea estate taxes, automo I e 76 d h ' . 77 Wh h fi d. d payments, an orne owner s msurance. en t ese Igures are a ~uste to reflect the percentage which the parties' children comprise of the father's 69 See brief of mother on parties' exceptions, at 25-33; brief of father on father's exceptions, at 24-30. 70 For example, for the year 2002 the father's figure for the expenses of the children in his home was $3,567.13 per month. JNO Ex. 4. The mother's figure for the year 2002 was $6,126.69 per month. KNO Ex. 48. 71 JNO Ex. 4. 72 JNO Ex. 4. 73 For the year 2002, $30.00 of a monthly mortgage payment of $4,705.00 is attributed to the three children who are the subject of this action. JNO Ex. 4. A more mathematically plausible figure is $1,176.25 (50% of one half of$4,705.00). The same amount is attributed to the children for 2003 for a monthly mortgage payment of $4,435.00. JNO Ex. 5. A more mathematically plausible figure is $1,108.75 (50% of one half of$I,108.75). 74 For the years 2002 and 2003, $6.00 of monthly maintenance payments of $285.00 is attributed to the children. JNO Exs. 4-5. A more mathematically plausible figure is $71.25 (50%) of one half of$285.00). 75 For the year 2002, $12.00 of monthly real estate taxes of $850.75 is attributed to the children. JNO Ex. 4. A more mathematically plausible figure is $212.69 (50% of one half of $850.75). The same amount is attributed to the children for 2003 for monthly real estate taxes of $889.00. JNO Ex. 5. A more mathematically plausible figure is $222.25 (50% of one half of$889.00). 76 For the years 2002 and 2003, $30.00 of a monthly automobile payment of $440.96 is attributed to the children. JNO Exs. 4-5. A more mathematically plausible figure is $110.24 (50% of one half of $440.96). 77 For the year 2002, $6.00 of a monthly homeowner's insurance payment of$196.00 is attributed to the children. JNO Ex. 4. A more mathematically plausible figure is $49.00 (50% of one half of $196.00). The same amount is attributed to the children for 2003 for a monthly homeowner's insurance payment of $220.00. JNO Ex. 5. A more mathematically plausible figure is $55.00 (50% of one half of$220.00). 13 NO. 354 SUPPORT 2002 household (50%), in conjunction with the amount of time spent in the household by the children (50%), reasonable expenses of the children in the father's household total $5,102.56 per month for 2002, and $4,181.16 per month for 2003 and thereafter. Expenditures set forth by the mother for the children while in her household totaled $6,208.36 per month for 200278 and $5,422.82 per month for 2003.79 These figures were flawed, however, by inclusion of condominium-related expenses,80 premiums on life insurance policies on the father's life of which the mother is the beneficiary, 81 and a portion of an endowment to Penn State. 82 In addition, the mother has attributed 75% of many of her household expenses to the three children, even though they are in the four-person household only 50% of the . 83 I h. f 1.. 84. 85 tIme. n t IS category 0 expenses are app lance repairs, car msurance, car 78 KNO Ex. 48. It is noted that the mother incorrectly added the children's expenses on this exhibit. 79 KNO Ex. 53. It is noted that the mother incorrectly added the children's expenses on this exhibit. 80 For the year 2002, $451.20 per month of the condominium-related expenses (condo fees, condo mortgage, utilities, property taxes, and security company expenses) is attributed to the children. KNO Ex. 48. For the year in which the condominium was sold, 2003, $340.09 per month of these expenses (condo dues, condo mortgage, utilities, property taxes, and security company expenses) is attributed to the children. KNO Ex. 53. As previously noted, the court does not regard the condominium as a reasonable expense under the circumstances. 81 NT. 287. For the year 2002, $245.00 per month of the insurance premiums is attributed to the children. KNO Ex. 48. For the year 2003, $437.90 per month of the insurance premiums is attributed to the children. KNO Ex. 53. 82 For the years 2002 and 2003, $312.50 per month of the endowment is attributed to the children. KNO Exs. 48, 53. 83 See, e.g., NT. 292. 84 For the year 2002, $55.65 per month of the mother's appliance repair expenses of $74.20 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $27.83 (75% of one half of $74.20). For the year 2003, the mother did not claim appliance repairs as an expense. See KNO Exs. 51, 53. 85 For the year 2002, $87.50 per month of the mother's car insurance premium of $116.67 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $43.75 (75% of one half of $116.67). For the year 2003, the mother did not claim car insurance premiums as an expense. See KNO Exs. 51, 53. 14 NO. 354 SUPPORT 2002 . d. 86 87 1. . 88 d. . mamtenance an repairs, car payments, c eamng serVIces, mmg-out 89 1 . . / 1 90 ~ . 91 expenses, e ectromcs repair rep acement costs, ~umIture costs, gas 92 . 93 h . d. 94 h ' expenses, grocenes, orne mamtenance an repair expenses, orne owner s 86 For the year 2002, $37.11 per month of the mother's car maintenance and repair expenses of $49.48 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $18.56 (75% of one half of $49.48). For the year 2003, $73.77 per month of the mother's car maintenance and repair expenses of $97.66 is attributed to the children. KNO Exs. 51,53. A more mathematically plausible figure would be $36.62 (75% of one half of$97.66). 87 For the year 2002, $644.62 per month of the mother's car payments of $859.51 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $322.32 (75% of one half of $859.51). For the year 2003, $547.92 per month of the mother's car payments of $730.56 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $273.96 (75% of one half of$730.56). 88 For the year 2002, $45.32 per month of the mother's cleaning service expenses of $60.42 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $22.66 (75% of one half of $60.42). For the year 2003, the mother did not claim cleaning services as an expense. See KNO Exs. 51, 53. 89 For the year 2002, $501.07 per month of the mother's dining-out expenses of $689.97 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $258.74 (75% of one half of $689.97). For the year 2003, $434.00 per month of the mother's dining-out expenses of $579.36 is attributed to the children. KNO Exs. 51-53. A more mathematically plausible figure would be $217.26 (75% of one half of $579.36). 90 For the year 2002, $9.78 per month of the mother's electronics repair/replacement expenses of $13.04 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $4.89 (75% of one half of $13.04). For the year 2003, the mother did not claim expenses related to electronic repair/replacement. See KNO Exs. 51, 53. 91 For the year 2002, $238.56 per month of the mother's furniture expenses of $313.08 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $117.41 (75% of one half of $313.08). For the year 2003, $33.06 per month of the mother's furniture expenses of $44.08 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $16.53 (75% of one half of$44.08). 92 For the year 2002, $201.66 per month of the mother's gas expenses of $272.76 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $102.29 (75% of one half of $272.76). For the year 2003, $129.91 per month of the mother's gas expenses of $173.36 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $65.01 (75% of one half of$173.36). 93 For the year 2002, $1,110.84 per month of the mother's groceries expenses of $1,497.78 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $561.67 (75% of one half of $1,497.78). For the year 2003, $935.35 per month of the mother's groceries expenses of $1,243.08 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $466.16 (75% of one half of$I,243.08). 94 For the year 2002, $111.39 per month of the mother's home maintenance and repair expenses of $173.93 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible 15 NO. 354 SUPPORT 2002 insurance premiums,95 household goods,96 internet service,97 pet expenses,98 the "Cliff s" dues,99 and toiletries and medicine costs. 100 On the other hand, the expenses attributed to the children in the mother's schedule do not include certain expenses related to the mother's household being paid by the father by agreement of the parties. Specifically, $2,569.87 per month is being paid by the father to cover the mortgage, insurance and certain figure would be $65.22 (75% of one half of $173.93). For the year 2003, $106.26 per month of the mother's home maintenance and repair expenses of $141.68 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $53.13 (75% of one half of $141.68). 95 For the year 2002, $11.13 per month of the mother's homeowner's insurance premium expenses of $14.83 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $5.56 (75% of one half of $14.83). For the year 2003, $38.88 per month of the mother's homeowner's insurance expenses of $51.83 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $19.44 (75% of one half of $51.83). 96 For the year 2002, $97.95 per month of the mother's household goods expenses of $133.37 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $49.98 (75% of one half of $133.27). For the year 2003, $75.75 per month of the mother's household goods expenses of $101.00 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $37.87 (75% of one half of$101.00). 97 For the year 2003, $35.66 per month of the mother's internet service expenses of $39.63 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $14.86 (75% of one half of $39.63). KNO Exs. 51,53. Because the amounts attributed to the children for internet services ($45.42) are significantly less than those amounts attributed to the mother ($199.11), an adjustment for 2002 is not required. See KNO Exs. 47-48. 98 For the year 2002, $14.25 per month of the mother's pet expenses of $19.00 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $7.13 (75% of one half of $19.00). For the year 2003, $57.65 per month of the mother's pet expenses of $76.87 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $28.82 (75% of one half of$76.87). 99 For the year 2002, $31.25 per month of the mother's "Cliffs" membership dues of $37.88 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $14.20 (75% of one half of $37.88). For the year 2003, $63.50 per month of the mother's "Cliffs" membership dues of $83.33 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $31.25 (75% of one half of $83 .33). 100 For the year 2002, $34.29 per month of the mother's toiletries and medicine expenses of $42.86 is attributed to the children. KNO Exs. 47-48. A more mathematically plausible figure would be $16.07 (75% of one half of $42.86). For the year 2003, $69.24 per month of the mother's toiletries and medicine expenses of $92.32 is attributed to the children. KNO Exs. 51, 53. A more mathematically plausible figure would be $34.62 (75% of one half of$92.32). 16 NO. 354 SUPPORT 2002 maintenance costs applicable to the residence in which the mother lives.lOl With the children residing with the mother in a four-person household one half of the time, a fair attribution of this amount to expenses of the children is $963.70 per month (75% of one half of the total monthly expense). Based on the foregoing, reasonable expenses of the children in the mother's household are found to be $4,569.33 per month for 2002,102 $4,012.14 per month for 2003,103 and $4,012.14 per month thereafter. 104 When the reasonable expenses of the children in both households are added together, the total reasonable expenses of the children are $9,671.89 per month for 2002,105 $8,193.30 per month for 2003,106 and $8,193.30 per month thereafter. 107 Finally, as noted by the support master, under the terms of a prior written agreement of the parties: The Father has made payments of support for the children directly to the Mother since the commencement of this action. He will be given credit towards arrearages as follows: In 2002 from April through December, a credit of $27,966.78; for the year 2003, a credit of $15,360.00. Additionally the Father shall be given a credit for all child support payments made directly to the Mother in 2004 upon proof of such payments 101 JNO Ex. 6. 102 This figure results from adding the revised monthly children's expense figure from the mother's schedule (KNO Ex. 48) ($3,605.63) to the figure representing the children's share of the mother's household expenses being paid directly by the father ($963.70). 103 This figure results from adding the revised monthly children's expense figure from the mother's schedule (KNO Ex. 53) ($3,048.44) to the figure representing the children's share of the mother's household expenses being paid directly by the father ($963.70). 104 This figure results from adding the revised monthly children's expense figure from the mother's schedule (KNO Ex. 53) ($3,048.44) to the figure representing the children's share of the mother's household expenses being paid directly by the father ($963.70). 105 As noted, this figure results from adding the children's reasonable expenses in the mother's household ($4,569.33) and in the father's household ($5,162.56) together. 106 As noted, this figure results from adding the children's reasonable expenses in the mother's household ($4,012.14) and in the father's household ($4,181.16) together. 107 As noted, this figure results from adding the children's reasonable expenses in the mother's household ($4,012.14) and in the father's household ($4,181.16) together. 17 NO. 354 SUPPORT 2002 being provided by him to his Domestic Relations Conference Officer. 108 DISCUSSION Pennsylvania Rule of Civil Procedure 191O.l6-2(e)(2) provides as follows: When the parties' combined net income exceeds $15,000.00 per month, child support shall be calculated pursuant to Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984). The presumptive minimum amount of child support shall be obligor's percentage share of the highest amount of support which can be derived from the schedule for the appropriate number of children and using the parties' actual combined income to determine obligor's percentage share of this amount. The court may award an additional amount of child support based on the parties' combined income and the factors set forth in Melzer. The Melzer analysis in high income child support cases shall be applied to all of the parties' income, not just to the amount of income exceeding $15,000 per month. In a Melzer analysis case, the presumptive minimum remains applicable. In Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984), the Pennsylvania Supreme Court provided a formula whereby the total child support obligation of a parent was determined by applying the ratio of his or her income available for support to the parents' total income available for support to the reasonable needs of the children. Id at 472,480 A.2d 996. Once each parent's total support obligation has been defined, the court must determine what portion of that obligation may be offset by support provided directly to the children, and what portion of the support obligation must be satisfied by way of support payments to the other parent. It is clear that at least some portion of both parents' total support obligations may be fulfilled by the provision of support directly to the children. Id at 473,480 A.2d at 996. 108 Master's Report, at 8-9. 18 NO. 354 SUPPORT 2002 Under Pennsylvania Rule of Civil Procedure 191O.l6-4(c)(1), the matter of the direct provision of support by an obligor in a shared custody situation is dealt with for purposes of the guidelines in a more formulaic manner: When. . . the children spend 40% or more of their time during the year with obligor, a rebuttable presumption exists that the obligor is entitled to a reduction in the basic support obligation to reflect this additional time. [In general,] the reduction shall be calculated pursuant to the formula set forth in Part II of subdivision (a) of this Rule. . . . Under Part II of subdivision (a) of the Rule, in a 50/50 shared custody situation, the obligor's share of the support obligation is reduced by 20 percentage points. However, the reduction provided for in Rule 191O.l6-4(c) does not apply when "the obligor's income is 10% or less of the parties' combined income.,,109 An application of the Melzer formula to this case results in a total child support obligation for 2002 of $8,887.50 per month on the part of the father and $784.39 on the part of the mother. For 2003, it yields a result of $7,474.75 per month on the part of the father and $818.55 per month on the part of the mother. For succeeding years, it produces a result of $7,337.91 per month on the part of the father and $955.39 per month on the part of the mother. With respect to the credit to be given in accordance with Melzer for the provision of support directly to the children, the evidence showed that the father spent $6,066.26 per month for the reasonable needs of the children in 2002110 and $5,144.86 per month in 2003, III and would spend $5,144.86 per month 109 Pa. RC.P. 1910.16-4(c)(3). 110 This figure represents the father's monthly expenses, including educational expenses, for the children within his household ($5,102.56) plus his mortgage, insurance and maintenance payments to the mother and attributed to the children herein ($963.70). III This figure represents the father's monthly expenses, including educational expenses, for the children within his household ($4,181.16) plus his mortgage, insurance and maintenance payments to the mother and attributed to the children herein ($963.70). 19 NO. 354 SUPPORT 2002 thereafter. 112 The evidence further showed that the mother spent $3,605.63 per month for the reasonable needs of the children in 2002113 and $3,048.44 per month in 2003,114 and would spend $3,048.44 per month thereafter. 115 In the absence of any payments, the father's obligation would be underpaid, and the mother's obligation would be overpaid, by $2,821.24 per month in 2002,116 $2,239.76 in 2003,117 and $2,104.57 thereafter. 118 The minimum amounts under the guidelines would be $2,958.00 per month for 2002,119 $2,958.00 per month for 2003,120 and $2,923.00 per month thereafter. 121 112 This figure represents the father's monthly expenses, including educational expenses, for the children within his household ($4,181.16) plus his mortgage, insurance and maintenance payments to the mother and attributed to the children herein ($963.70). 113 This figure represents monthly expenses of the children in the mother's household ($4,569.33) less the mortgage, insurance and maintenance payments from the father ($963.70). 114 This figure represents monthly expenses of the children in the mother's household ($4,012.14) less the mortgage, insurance and maintenance payments from the father ($963.70). 115 This figure represents monthly expenses of the children in the mother's household ($4,012.44) less the mortgage, insurance and maintenance payments from the father ($963.70). 116 This figure represents the father's support obligation of $8,887.50 less credit for direct provision of support in the amount of $6,066.26; and it represents the mother's support obligation of$784.39 with credit for direct provision of support in the amount of$3,605.63. 117 This figure represents the father's support obligation of $7,384.62 less credit for direct provision of support in the amount of$5,144.86; and it represents the mother's support obligation of $808.68 with credit for direct provision of support in the amount of $3,048.44. 118 This figure represents the father's support obligation of $7,249.43 less credit for direct provision of support in the amount of$5,144.86; and it represents the mother's support obligation of$943.87 with credit for direct provision of support in the amount of $3,048.44. 119 This figure results from an application of the ratio of the father's monthly income/earning capacity ($35,258.00) to the parties' combined monthly income/earning capacity ($35,258.00 plus $5,823.00 or $41,081.00) to the highest guideline combined support obligation figure for three children ($3,480.00). 120 This figure results from an application of the ratio of the father's monthly income/earning capacity ($35,258.00) to the parties' combined monthly income/earning capacity ($35,258.00 plus $6,339.00 or $41,597.00) to the highest guideline combined support obligation figure for three children ($3,480.00). 121 This figure results from an application of the ratio of the father's monthly income/earning capacity ($35,258.00) to the parties' combined monthly income/earning capacity ($35,258.00 plus $6,773.00 or $42,031.00) to the highest guideline combined support obligation figure for three children ($3,480.00). Although an argument can be made that the reduction provided for in Rule 1910 .16-4( c) should be applied in this presumptive minimum figure, the enormous disparity 20 NO. 354 SUPPORT 2002 The father's position that Pennsylvania Rule of Civil Procedure 1910.16- 4( c) should be applied in a Melzer case to reduce the obligor's share of the basic support obligation due to a shared custody arrangement is not, in the court's view, persuasive, where the direct provision of support by the parties has already been incorporated into the computation. To the extent that the parties' exceptions are compatible with the foregoing findings and analysis, they will be sustained and otherwise they will be denied. The following order will be entered: ORDER OF COURT AND NOW, this day of October, 2004, upon consideration of the exceptions filed by the parties to the support master's report, and for the reasons stated in the accompanying opinion, the exceptions are sustained in part and denied in part, the interim order of court dated February 27, 2004, is vacated, and it is ordered and decreed as follows: 1. For the period from April, 2002, through December 31, 2002, the father's child support obligation is determined to be $8,887.50 per month, and premised upon his direct provision of support as determined in the accompanying opinion the father shall pay to the State Collection and Disbursement Unit for transmission to the mother as support for his children, Lauren Ortenzio, born August 14, 1987, Michael Ortenzio, born November 28, 1989, and Andrew Ortenzio, born April 28, 1994, the sum of $2,958.00 per month. 2. For the period January 1, 2003, through December 31, 2003, the father's child support obligation is determined to be $7,384.62 per month, and premised upon his direct provision of support as determined in the accompanying opinion the father shall pay to the State Collection and Disbursement Unit for support of said children the sum of $2,958.00 per month. in the parties' resources and the very minimal amount by which the mother's proportionate responsibility for support exceeds 10% has militated against the court's acceptance of such an argument. 21 NO. 354 SUPPORT 2002 3. Commencing January 1, 2004, the father's child support obligation is determined to be $7,337.91, and premised upon his direct provision of support as determined in the accompanying opinion the father shall pay to the State Collection and Disbursement Unit for support of said children the sum of $2,923.00 per month. 4. The father shall provide health insurance coverage for the benefit of said children. 5. The father shall pay 92% of the umeimbursed medical expenses incurred by said children in 2002 as that term is defined in Pa. RC.P. 191O.l6-6(c), 90% of said expenses incurred in 2003, and 88.5% of said expenses incurred thereafter. 6. The father shall be given credit on arrearages of $43,326.78 for direct payments of child support made to the mother through December, 2003; and he shall be given a further credit for all direct payments made to the mother on and after January 1, 2004, upon his providing proof of said payments to his Domestic Relations Conference Officer; provided, that nothing herein is intended to provide for double credit for any payments made by the father. 7. The father shall pay to the State Collection and Disbursement Unit for transmission to the mother all arrearages, less credits, that have accrued since the commencement of this action within 60 days of the date of this order. BY THE COURT, /s/1. Wesley Oler, Jr. 1. Wesley Oler, Jr., 1. Michael R Rundle, Esq., Support Master Jordan D. Cunningham, Esq. 2320 North Second Street P.O. Box 60457 Harrisburg, PA 17106-0457 Attorney for John M. Ortenzio 22 NO. 354 SUPPORT 2002 Delano M. Lantz, Esq. Pamela L. Purdy, Esq. McNees, Wallace & Nurick, LLC P.O. Box 1166 Harrisburg, P A 17108-1166 Attorneys for Kimberly N. Ortenzio 23 JOHN M. ORTENZIO, Plaintiff : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. : DOMESTIC RELATIONS SECTION KIMBERLYN. ORTENZIO, Defendant : PASCES NO. 618104453 : NO. 354 SUPPORT 2002 IN RE: PLAINTIFF'S and DEFENDANT'S EXCEPTIONS TO SUPPORT MASTER'S REPORT BEFORE OLER, J. ORDER OF COURT AND NOW, this 19th day of October, 2004, upon consideration of the exceptions filed by the parties to the support master's report, and for the reasons stated in the accompanying opinion, the exceptions are sustained in part and denied in part, the interim order of court dated February 27, 2004, is vacated, and it is ordered and decreed as follows: 1. For the period from April, 2002, through December 31, 2002, the father's child support obligation is determined to be $8,887.50 per month, and premised upon his direct provision of support as determined in the accompanying opinion the father shall pay to the State Collection and Disbursement Unit for transmission to the mother as support for his children, Lauren Ortenzio, born August 14, 1987, Michael Ortenzio, born November 28, 1989, and Andrew Ortenzio, born April 28, 1994, the sum of $2,958.00 per month. 2. For the period January 1, 2003, through December 31, 2003, the father's child support obligation is determined to be $7,384.62 per month, and premised upon his direct provision of support as determined in the accompanying opinion the father shall pay to the State Collection and Disbursement Unit for support of said children the sum of $2,958.00 per month. 3. Commencing January 1, 2004, the father's child support obligation is determined to be $7,337.91, and premised upon his direct provision of support as determined in the accompanying opinion the father shall pay to the State Collection and Disbursement Unit for support of said children the sum of $2,923.00 per month. 4. The father shall provide health insurance coverage for the benefit of said children. 5. The father shall pay 92% of the umeimbursed medical expenses incurred by said children in 2002 as that term is defined in Pa. RC.P. 191O.l6-6(c), 90% of said expenses incurred in 2003, and 88.5% of said expenses incurred thereafter. 6. The father shall be given credit on arrearages of $43,326.78 for direct payments of child support made to the mother through December, 2003; and he shall be given a further credit for all direct payments made to the mother on and after January 1, 2004, upon his providing proof of said payments to his Domestic Relations Conference Officer; provided, that nothing herein is intended to provide for double credit for any payments made by the father. 7. The father shall pay to the State Collection and Disbursement Unit for transmission to the mother all arrearages, less credits, that have accrued since the commencement of this action within 60 days of the date of this order. BY THE COURT, 1. Wesley Oler, Jr., 1. Michael R Rundle, Esq., Support Master Jordan D. Cunningham, Esq. 2320 North Second Street P.O. Box 60457 Harrisburg, PA 17106-0457 Attorney for John M. Ortenzio Delano M. Lantz, Esq. Pamela L. Purdy, Esq. McNees, Wallace & Nurick, LLC P.O. Box 1166 Harrisburg, P A 17108-1166 Attorneys for Kimberly N. Ortenzio NO. 354 SUPPORT 2002 26