Loading...
HomeMy WebLinkAbout441 S 2008 REBECCA L. MEYER, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : DOMESTIC RELATIONS SECTIONS v. : : PACSES NO. 380110060 CHARLES E. WARDLE, : Defendant : No. 441 SUPPORT 2008 IN RE: DEFENDANT’S EXCEPTIONS TO SUPPORT MASTER’S REPORT BEFORE OLER, J. OPINION and ORDER OF COURT OLER, J., March 18, 2009. In this child support case, Defendant father, a personal fitness trainer, has filed exceptions to a support master’s report recommending a support obligation on his part for two children of $828.00 per month, based upon a net monthly 1 income of $3,576.00. The exceptions being pursued by Defendant are summarized in Defendant’s brief in support thereof as follows: A. The master erred in using [Defendant’s] 2007 expenses but a 2008 2 income. B. The master erred in reducing the Defendant’s [business] expenses 3 because of his participating in body building competitions. For the reasons stated in this opinion, Defendant’s exceptions will be denied and the interim order of court entered pursuant to the support master’s recommendations will be entered as a final order. STATEMENT OF FACTS Plaintiff is Rebecca L. Meyer, a resident of Carlisle, Cumberland County, 4 Pennsylvania. Defendant is Charles E. Wardle, a resident of Mechanicsburg, 1 Defendant’s Exceptions to the Order of Court, filed January 20, 2009. 2 Brief in Support of Defendant’s Exceptions to the Master’s Report, at 4. 3 Brief in Support of Defendant’s Exceptions to the Master’s Report, at 6. 4 N.T. 3-4, Support Master’s Hearing, December 18, 2008 (hereinafter N.T. __). 5 Cumberland County, Pennsylvania. The parties have two children together: David R. Wardle (d.o.b. January 11, 2003) and Alexander R. Wardle (d.o.b. January 11, 67 2003), physical custody of whom they share. Plaintiff filed a complaint for 8 support with respect to the children on May 29, 2008. A hearing on the complaint was conducted by the Cumberland County Support Master, Michael R. Rundle, Esq., on December 18, 2008. The evidence at the hearing, pertinent to the issues regarding Defendant’s income being pursued by Defendant, may be summarized as follows: At the age of 19, long before becoming a personal trainer, Defendant began 9 to compete in body-building shows. These shows are held at various locations in various states and involve thousands of miles of travel each year, according to his 10 testimony. Although Defendant testified that being a bodybuilder enhanced his 1112 reputation as a personal trainer and that “[his] body [was his] advertisement,” no evidence was presented at the hearing as to any record amassed at the bodybuilding contests by Defendant, any publicity generated by them for him, any acquisition of particular clients as a result of these public exhibitions, or any other income produced by them. He conceded that being a bodybuilder was not a 13 prerequisite to being a personal trainer. 14 Defendant became a personal trainer about 11 years ago, and presently is self-employed training private clients at Gold’s Gym in Camp Hill, Cumberland 5 N.T. 20. 6 N.T. 3-4. 7 N.T. 5. 8 Complaint for Support, filed May 29, 2008. 9 N.T. 33. 10 N.T. 41, 51. 11 N.T. 60, 66. 12 N.T. 41. 13 N.T. 60. 14 N.T. 31. 2 1516 County, Pennsylvania, or in their homes. Defendant’s fee per session is $25.00, and a document was supplied by Defendant covering the months of January through September, 2008, indicating (a) a total during that period of 2471 paid sessions, (b) a monthly average of about 275 paid sessions, (c) a monthly high of 17 355 sessions (April) and a monthly low of 204 sessions (June). Based upon this exhibit, Defendant’s monthly gross income can be calculated to be $6,864.00. Although Defendant testified that his business had suffered due to poor economic 18 conditions prior to the December, 2008, hearing, no documentary equivalent of the data provided by Defendant for the first nine months of 2008 was presented on this point. For the privilege of using the facilities at Gold’s Gym for purposes of his 19 business, Defendant pays Gold’s $750.00 per month. Other 2008 expenses associated with Defendant’s business were not presented at the hearing, but his 2007 federal income tax return as it related to the same business claimed total 20 expenses for the year of $36,739.00 on a gross income of $62,076.00. However, a substantial, if not precisely defined, percent of those expenses related to his own bodybuilding activities. For instance, Defendant claimed vehicle expenses of $6,439.00, indicating a business mileage figure of 13,277: Q You show 13,277 business miles. Commuting miles you said was 1,780. That’s going from your house to Gold’s Gym I take it? A Correct. Q But the 13,277, where are all those miles if you[‘re] doing most of your work at Gold’s Gym? 15 N.T. 26, 32, 44. 16 N.T. 44. 17 Plaintiff’s Ex. 6, Support Master’s Hearing, December 18, 2008 (hereinafter Plaintiff’s/Defendant’s Ex. __). 18 N.T. 25. 19 N.T. 43. 20 Defendant’s Ex. 1. 3 A To all the shows, the traveling of the shows. And like I said most of the work, a lot of the traveling is to New Jersey, New York, Ohio. And it puts a lot of miles on the car which is why we lost the transmission 21 before. * * * * A Some of them [the miles] are clients. Like I said, there were some clients in the home . . . . Q But I think you said most of your work is at Gold’s Gym. Is that right? 22 A Yes, plus the commuting miles. When asked to account for a claimed expense of $2,400.00 for “contract labor,” Defendant testified as follows: Q Let’s go back to the first page of Schedule C that you were looking at before. We are going back to that first page. You have contract labor. Who is that please? A I pay a fee to—I pay my wife $100.00 a month to do all the data entry for the spreadsheets, and then the rest is just—I don’t know. I guess that’s the receipts that I turned into [my accountant]. He decides what the rest of the contract labor is. Q Do you hire anybody else besides [your wife]? That would be about $1,200—who else, or maybe you pay her $200 a month to enter the things on your spreadsheet? A No. It is about $1,200.00 a year . . . . Q . . . And is there—you don’t pay anybody else? A Not that I am aware of. Q So that might be a problem there. That might be a little over— A I would have to ask [my accountant] what that is for. He may have used that for the people that have to spray paint me. I have to pay people to get spray painted for the shows. So that might be where that 23 comes into play. With respect to a claimed expense of $3,681.00 for supplies, Defendant testified as follows: Q . . . Then you have supplies that are down there on line 22, $3,681.00 in supplies. 21 N.T. 51. 22 N.T. 52. 23 N.T. 52-53. 4 A Yes. Q Would you take a look down—I hope I can help you find how many pages back—there is a federal statement. I think it might be easier to go from the back and say it is the fifth page in from the back. A What is the heading? Q Federal statements. A Okay. Q Those are supplements? A Okay. Q And those are your bodybuilding supplements. Is that correct? A They are supplements that I hand out to clients that I try to get them to try certain supplements or protein powders and vitamins and multi-vitamins and things like that. Q How much of that do you use for yourself? A I have my own set-up for myself. That’s not included. I don’t think it would be included into that. It goes along the lines of training journals or—I don’t know. I hand the receipts to [my accountant]. A lot of it is nutritional guidance as well. I am trying to teach people how to eat right and take their vitamins. Q If I were to tell you that from your bank account statements for 2007 you had about $1,400.00 marked as supplements, would that sound correct to you? A If that’s what’s listed down. That might be my personal stuff. Q That might be your personal stuff? A I don’t know. Q But we don’t know really whether that got mixed in with your business stuff? 24 A No. You would have to, I guess, ask [my accountant]. With respect to travel, meals and entertainment, expenses which were claimed in the amount of $1,140.00, Defendant testified as follows: Q You show travel, meals and entertainment of $1,140.00. Is that show-related stuff? I am back on Schedule C, line 24a. A Travel, meals—well, probably if I had to get a room for one of the shows or two of the shows, or if I did—I try to do a seminar once a month. I invite people out to talk about health and nutrition. Q Would that be at a show? 24 N.T. 54-56. 5 A Sometimes no. There is a couple of them in Camp Hill. I am trying to work with one of the Camp Hill chiropractors right now to set 25 something up. An additional business expense claimed by Defendant in his 2007 federal 26 income tax return was $1,938.00 for “contest expenses.” This figure, according to Defendant, comprised “the costs of entering [the bodybuilding] shows, et cetera, 27 whatever else is not in the mileage or in the food and the hotel spending.” Following the hearing, the Cumberland County Support Master filed a report containing, inter alia, this paragraph of relevance to the issues being pursued by Defendant in his exceptions to the report: The Defendant is a self-employed personal trainer. He charges $25.00 per session to his clients. Through September, 2008 he gave 2,471 training sessions which has resulted in gross income of $61,775.00, or an average gross monthly income of $6,864.00. As a self-employed individual he claims expenses to operate his business which are then deducted from his gross receipts. In tax year 2007 the Defendant claimed business expenses of $36,739.00. However, the testimony revealed that approximately one- third of these expenses were incurred in the Defendant’s participation in bodybuilding competitions throughout the mid-Atlantic area. The Defendant has been actively engaged in bodybuilding competition since he was a teenager. He is now 35. He has been self-employed for the past three years. In the opinion of this Master, the Defendant’s involvement in bodybuilding competitions is and has been a hobby. Expenses in this activity will not be utilized to reduce his income for child support purposes. Business expenses in the amount of $24,493.00 will be deducted from his gross annual income for support purposes thereby resulting in 28 average gross monthly income of $4,823.00. . . . The recommendations of the master were incorporated into an interim support order of court dated December 29, 2008. With regard to the calculation of Defendant’s income for child support purposes, Defendant maintains that the master should have (a) reduced the gross, and therefore net, income figure to reflect a recent downturn in revenue associated 25 N.T. 56. 26 Defendant’s Ex. 1. 27 N.T. 58. 28 Support Master’s Report and Recommendation, filed December 29, 2008. 6 29 with Defendants’ business, (b) reduced the net income figure by assuming that 30 expenses in 2008 bore the same ratio to overall revenue as they did in 2007, (c) reduced the net income figure by including bodybuilding competition expenses in 31 the calculation, and (d) refrained from “artificially reduc[ing]” Defendant’s 32 expenses in that regard “by one-third.” DISCUSSION The standard of review of a support master’s report and recommendation is well settled. While the report “is to be given the fullest consideration, especially with regard to the credibility of witnesses,” the findings and conclusions are advisory rather than binding. Goodman v. Goodman, 375 Pa. Super. 504, 507, 544 A.2d 1033, 1035 (1988); see Mellinger v. Mellinger, 58 Cumberland L.J. 1 (2008). Thus, with respect to the issues raised by exceptions to a master’s report, “[i]t is the sole province and responsibility of the [trial] court to set an award of support, however much it may choose to utilize the master’s report.” Goodman v. Goodman, 375 Pa. Super. 504, 507-0-8, 544 A.2d 1033, 1035 (1988). With specific reference to the credibility of witnesses, it must be remembered that in such cases it is the master who had “the opportunity to observe and assess the behavior and demeanor of the [witnesses].” Moran v. Moran, 2003 PA Super 455, ¶9, 839 A.2d 1091, 1095. In this sense, the master was “in a better position than th[e] court to pass upon the credibility of [the] witnesses.” Wiegand v. Wiegand, 259 Pa. Super. 72, 74, 393 A.2d 722, 723 (1978). “In attempting to determine the net income and earning capacity of a sole owner of a business, a court is faced with special difficulties.” Weitzel v. Shilling, 52 Cumberland L.J. 211 (2003); Olafsson v. Olafsson, 44 Cumberland L.J. 252, 259 (1965), aff’d, 451 Pa. Super. 612, 678 A.2d 840 (1996); see Murphy v. 29 Brief in Support of Defendant’s Exceptions to the Master’s Report, at 4. 30 Brief in Support of Defendant’s Exceptions to the Master’s Report, at 5. 31 Brief in Support of Defendant’s Exceptions to the Master’s Report, at 6-8. 32 Brief in Support of Defendant’s Exceptions to the Master’s Report, at 7. 7 Murphy, 410 Pa. Super. 146, 154, 599 A.2d 647, 651 (1991); cf. Pacella v. Pacella, 342 Pa. Super. 178, 492 A.2d 707 (1985). These difficulties are evident in the present case. After a careful review of the testimony and exhibits in this case, the court finds itself in agreement with the support master’s calculation of Defendant’s net income for purposes of child support. First, with regard to the contention that the master erred in utilizing an average monthly gross income based on the first nine months of 2008, notwithstanding Defendant’s testimony at the December, 2008, hearing that the economy had recently affected the business adversely, it may be noted that (a) Defendant’s business reflected significant fluctuations in sessions- per-month throughout the year, (b) the only documentary evidence supplied by Defendant from which a monthly average could be calculated consisted of the months utilized by the master for the calculation, and (c) the figure arrived at by the master served, partially, a retrospective function in that it covered a period commencing in the spring of the year, when the complaint was filed. To the extent that the future monthly income of Defendant drops materially below the master’s calculation, such a change of circumstance may form a basis for a modification of the order. Second, with regard to the contention that the master erred in utilizing Defendant’s 2007 expenses for purposes of computing his 2008 net income, it may be noted that (a) with the exception of the monthly $750.00 fee paid to Gold’s Gym Defendant did not provide the master with any actual 2008 expense figures and (b) an assumption that expenses for Defendant’s one-person business would increase in direct proportion to an increase in gross income would have been entirely speculative on the part of the master, given the record produced at the hearing. Third, with regard to the contention that Defendant’s bodybuilding competition expenses should have been taken into account by the master in arriving at a net income figure, several factors support the master’s conclusion that 8 this activity was more collateral than incidental to Defendant’s occupation as a personal trainer. These include the fact that (a) Defendant’s engagement in the activity preceded and developed independently of the occupation, (b) the activity is not a prerequisite to the occupation, (c) no evidence was presented as to Defendant’s record in the competitions, acquisition of any particular client as a result of the competitions, or any other financial gain from the competitions, and (d) the development of a physique which will serve as an “advertisement” is obviously not dependent upon participation in competitions. Finally, with regard to the contention that the master erred in “artificially reduc[ing]” Defendant’s bodybuilding expenses by one-third, it may be noted that (a) Defendant’s testimony as to which expenses belonged in which category, while in no sense evasive, was less than precise and (b) the evidence as recited above supported the rough approximation arrived at by the master. Such conclusions can rarely be drawn to a mathematical certainty on the records produced in cases of the present type, which reflect the “special difficulties” faced by courts in determining the net income and earning capacity of a sole owner of a business. For the foregoing reasons, the following order will be entered: ORDER OF COURT th AND NOW, this 18 day of March, 2009, upon consideration of Defendant’s exceptions to the support master’s report, and for the reasons stated in the accompanying opinion, the exceptions are denied and the interim order of court dated December 29, 2008, is entered as a final order. BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Michael R. Rundle, Esq. Support Master 9 Carol J. Lindsay, Esq. 26 West High Street Carlisle, PA 17013 Attorney for Plaintiff P. Richard Wagner, Esq. 2233 North Front Street Harrisburg, PA 17110 Attorney for Defendant 10 11 REBECCA L. MEYER, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : DOMESTIC RELATIONS SECTIONS v. : : PACSES NO. 380110060 CHARLES E. WARDLE, : Defendant : No. 441 SUPPORT 2008 IN RE: DEFENDANT’S EXCEPTIONS TO SUPPORT MASTER’S REPORT BEFORE OLER, J. ORDER OF COURT th AND NOW, this 18day of March, 2009, upon consideration of Defendant’s exceptions to the support master’s report, and for the reasons stated in the accompanying opinion, the exceptions are denied and the interim order of court dated December 29, 2008, is entered as a final order. BY THE COURT, _________________ J. Wesley Oler, Jr., J. Michael R. Rundle, Esq. Support Master Carol J. Lindsay, Esq. 26 West High Street Carlisle, PA 17013 Attorney for Plaintiff P. Richard Wagner, Esq. 2233 North Front Street Harrisburg, PA 17110 Attorney for Defendant