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HomeMy WebLinkAbout1996-4561 Civil ROXANNE BALKOVIC, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : vs. : 96-4561 CIVIL : KENNETH J. BALKOVIC, : IN DIVORCE Defendant : CIVIL ACTION – LAW IN RE: DEFENDANT’ PETITION TO TERMINATE OR REDUCE ALIMONY BEFORE HESS, P.J. OPINION AND ORDER The plaintiff, Roxanne Balkovic, and the defendant, Kenneth J. Balkovic, were married on June 26, 1976. They were divorced on June 27, 2000. At the time of the divorce, the defendant was ordered to pay $10,000 per month as alimony. This was commensurate with the considerable wealth of the defendant. During the marriage, he created and operated a company which installed television cable lines between customers and trunk lines. The company was enormously successful until 2005 when it went out of business. After the loss of the business, we reduced the defendant’s alimony obligation to $6,000 per month. This was based, in large measure, on the defendant’s income from annuity investment assets worth more than $6,000,000. The defendant has again requested a downward reduction in his alimony obligation, if not a total termination thereof. His request is based on the general decline in the stock and investment markets which occurred during the recent national economic downturn. The well-established standard for altering alimony payments involves a substantial change in circumstances that is continuous in nature. That standard has, in fact, been codified in Title 23 at Section 3701(e) of the Pennsylvania Statutes. 23 Pa.C.S.A. 3701(e). In seeking a modification of an alimony award, the burden of proof is on the petitioner to prove a change in NO. 96-4561 CIVIL circumstances. That burden has not been met in this case. We believe that the factual chronology of the defendant’s financial activities as set forth in the original brief filed by the plaintiff is generally accurate. Therein, the plaintiff notes that by 2005 Mr. Balkovic’s more significant assets were worth approximately $8,200,000. These include a mortgage-free Mechanicsburg home, a home in Tampa, Florida having a small mortgage, an office building in New Cumberland with no mortgage, and four annuities worth in excess of $7,325,000. In January of 2006, Mr. Balkovic sold his New Cumberland office building under an installment sales agreement for $365,167, payable over 14.25 years, for a substantial gain over its marital value. In the same year, the defendant took up residence in Florida, voluntarily terminating his employment with Guy Kleintop. In 2007, Mr. Balkovic received approximately $1,350,000 from Adelphia bankruptcy which was paid partially in cash and the balance of $703,918 in kind with Time-Warner Cable stock. Admittedly, this stock has since reduced substantially in value. Mr. Balkovic has tried twice to sell his Mechanicsburg home. These were unsuccessful attempts which resulted in his retaining a total $60,000 in earnest money. He eventually listed the Mechanicsburg home for sale at a price in excess of $900,000. In early November 2008, the defendant purchased a St. Petersburg, Florida luxury home with pool and private dock for $915,000. He utilized a bank mortgage and approximately $200,000 of his own funds to make settlement. This home had been on the market at an offering price of almost twice what Mr. Balkovic paid for it. Should he sell his Mechanicsburg home, Mr. Balkovic could own the St. Petersburg property free and clear. One of the several economic hardships of which the defendant complains is his lack of earned income. We agree with the plaintiff that, despite the defendant’s current situation, he 2 NO. 96-4561 CIVIL ought to be assigned an earning capacity. In 2005, Mr. Balkovic was working full time at a salary of $40,000 per year. He voluntarily left his position and has sought no equivalent employment. He is currently a commission/only boat salesman. In the five months he has been engaged in this enterprise, he has sold one boat. It is clear that Mr. Balkovic regards himself as retired and given his significant independent wealth, we do not criticize him. To point to this otherwise well-earned retirement as a reason to reduce his alimony obligation is, however, disingenuous at best. Similarly, we do not believe that the impact of the recent national economic downturn ought to result in the reduction of alimony in this case. We agree with the plaintiff’s observation that were the defendant to set aside a mere fraction of his assets and invest them in the safest and most ordinary of ways, he would have more than enough to pay the alimony obligation and would still be left with the lion’s share of his assets. It is also worth noting that the defendant had never withdrawn any funds from his annuities to meet his alimony obligation prior to February 2009. Even the more recent withdrawals have been for the purpose of purchasing a $915,000 home in St. Petersburg which, given the pending sale of his Mechanicsburg property, will be a temporary drain on his assets at best. Finally, and we will not belabor the point, we do not believe that the defendant has established that his recent economic setbacks will be continuing in nature. The annuities which Mr. Balkovic purchased were clearly for the long term. The ebb and flow of the stock market is simply a given in these sorts of investments. The increase in the annuity values in recent months verifies that the economy is showing clear signs of recovery on several fronts. In July of 2009, 3 NO. 96-4561 CIVIL for example, the annuity values showed an increase of some $300,000 over the prior month. While the annuities have decreased in value in the past couple of years, there is no evidence that they will continue to do so. In fact, there is every reason to believe that they will greatly increase. All the while, the amount of the alimony payment will remain the same because there will be no assurance that any upswing in the market will be any more continuing than the recent downswing. ORDER th AND NOW, this 13 day of January, 2010, the defendant’s petition to modify or terminate alimony is DENIED. BY THE COURT, _______________________________ Kevin A. Hess, J. Howard Krug, Esquire For the Plaintiff Samuel Andes, Esquire For the Defendant :rlm 4 ROXANNE BALKOVIC, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : vs. : 96-4561 CIVIL : KENNETH J. BALKOVIC, : IN DIVORCE Defendant : CIVIL ACTION – LAW IN RE: DEFENDANT’ PETITION TO TERMINATE OR REDUCE ALIMONY BEFORE HESS, P.J. ORDER th AND NOW, this 13 day of January, 2010, the defendant’s petition to modify or terminate alimony is DENIED. BY THE COURT, _______________________________ Kevin A. Hess, J. Howard Krug, Esquire For the Plaintiff Samuel Andes, Esquire For the Defendant :rlm