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HomeMy WebLinkAbout91-1200 civil // 91-223 supportJOSEPH A. RILLO, : PLAINTIFF : : V. : : SUSAN M. RILLO, : DEFENDANT : IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 1200-1991 (CIVIL-DIVORCE) 233-1991 (SUPPORT) OPINION AND ORDER OF COURT BAYLEY, J., February 12, 1999:-- Joseph A. Rillo, age 43, and Susan M. Rillo, age 40, were married on December 18, 1976. They have three children, Julie, age 16, Jennifer, age 15, and Amanda, age 11. The parties separated on January 9, 1991. Wife and the three children remained in the marital home in Camp Hill. The home was sold on September 29, 1998, and wife moved to Onley, Virginia, where she purchased a home in which she lives with her fiancb and with Amanda. Husband now lives in the home of his mother in Carlisle with his girlfriend and with Julie and Jennifer. The parties entered into a comprehensive property settlement agreement on March 1, 1995. Of their primary assets, husband received his substantial business interests, a retirement account and an IRA. Wife received the marital residence with husband obligated to pay a second mortgagel an IRA, a vehicle and alimony. The parties were divorced on March 17, 19957 The property settlement agreement was incorporated into the divorce decree but not merged. Wife has filed a petition to enforce the property settlement agreement seeking an order (1) requiring husband to make a $1,000 payment each month on account of arrearages on his alimony, (2) 1. For ease of reference we will continue to refer to the parties as husband and wife. 1200 CIVIL 1991 233 S 1991 entering a judgment against husband for the amount she paid on an HFC second mortgage on the former marital home of the parties plus 5% attorney's fees, and (3) requiring husband to pay her counsel fees. Husband has filed a petition to (1) terminate his alimony which is subject to an order administered by the Domestic Relations Office, and (2) modify his child support which is subject to a separate order administered by the Domestic Relations Office. I. ALIMONY Paragraph 11 (G) of the parties' marital settlement agreement provides: Alimony: Husband shall pay to wife alimony pendente lite/alimony in the amount of One Thousand Dollars ($1,000.00) per month for six years. Said alimony payments shall begin on March 1, 1994. The parties acknowledge that husband's arrearage through February 28, 1995 is $3,000.00 and shall be so noted in the records of the Cumberland County Domestic Relations Office. These payments shall be non-modifiable and shall terminate at the death of either of the parties. It is specifically agreed that these payments shall continue despite wife's cohabitation or remarriage. Furthermore, the parties agree that these payments shall be incorporated into a support order docketed to 233 Support 1991 .... The parties agree that in bargaining for this payment of alimony, wife has agreed that she shall live within a 50 mile radius of her current house, and if she should move farther than 50 miles from her current residence, she shall forfeit and end all right to alimony payments from the husband. (Emphasis added.)2 Husband maintains that wife, by moving to Virginia at the end of September, 1998, has '1orfeited her right to any and all alimony payments" and must repay him 2. The property settlement agreement dated March 1, 1995, made retroactive the $1,000 per month alimony to begin on March 1, 1994. -2- 1200 CIVIL 1991 233 S 1991 the $22,310 alimony that he claims he paid her pursuant to paragraph 11(G) of their marital settlement agreement? Alternatively, husband maintains that his $1,000 per month alimony must be terminated as of October 1, 1998. Husband argues that Little v. Little, 441 Pa. Super. 185 (1995), supports his position. In Little, the parties entered into an agreement for the payment of $1,600 per month alimony between January 1, 1991 and December of 1994. The agreement provided that the "alimony shall cease" with the occurrence of either the death of either spouse, the remarriage of wife, wife's cohabitation with an unrelated adult male person, or husband's disability or unemployment. The agreement further provided that if wife did not continue to be enrolled as a full-time college student, "the obligation for alimony shall be immediately terminated and shall not be subject to reinstatement." The trial court terminated husband's alimony as of June 8, 1992, after finding that wife was not enrolled as a full-time college student. The Superior Court of Pennsylvania affirmed the trial court, stating: Husband agreed to pay Wife alimony only for so long as she remained a full-time student. Husband moved for termination when Wife was not in compliance with this requirement. The court below was correct in terminating the alimony payments since the circumstances that the parties agreed would trigger a termination of alimony had occurred. While paragraph 11 (G) in the property settlement agreement in the case sub judice uses the word "terminate" as to the death of either party, and the words fforfeit 3. Wife entered judgment against husband on June 5, 1998, for arrearages in alimony of $34,590. -3- 1200 CIVIL 1991 233 S 1991 and end all right to alimony payments" with respect to the wife moving more than fifty miles from the home in Camp Hill, we conclude that the reasonable interpretation of the latter provision is that if wife so moves she no longer has a right to alimony even if she moves back within that fifty miles radius of Camp Hill before February 29, 2000, which was the end of the maximum six year period of alimony. The agreement does not say that if wife moves it ends all her right to alimony and that she shall repay all alimony previously received. In Little, the wife was not required to pay back to husband the alimony she received before it was terminated by the trial court. Black's Law Dictionary, Revised 4th Edition, defines "forfeit" as, 'q'o lose or lose the right to, by some error, fault, offense or crime or to subject as property, to forfeiture or confiscation." (Emphasis added.) The word 'terminate" was used by the Rillos as to the contingency of the death of either party since, with one exception, no one has been known to rise from the grave. The words "shall forfeit" were used as to the contingency of wife moving more than fifty miles from Camp Hill so that the right to the alimony would be lost through the remainder of the six year contractual term. It would permanently cease and could not be reinstated even if she moved back. Accordingly, we find that husband's claim that wife owes him all of the alimony he paid her before she moved to Virginia on October 1, 1998, is without legal merit. Husband is obligated to wife for alimony at the rate of $1,000 per month from March 1, 1994, through September 30, 1998. When wife moved to Virginia on October 1, 1998, she forfeited $16,000 in alimony at $1,000 per month through February 29, -4- 1200 CIVIL 1991 233 S 1991 2000. Therefore, we will enter an order terminating alimony to wife effective October 1, 1998." II, HF(~ SECOND MORTGAGE Husband who was one of the family owners of a restaurant, Casa Rillo, fell behind in his $1,000 per month alimony payments when that business was having financial difficulties in the early part of 1995. At an enforcement proceeding on September 21, 1995, an order was entered reducing the payment to $200 per month but continuing the charge at $1,000 per month. Husband was also one of the owners of another business, the Rillo Ballroom. That business suffered severe financial difficulties. On February 15, 1996, an order was entered continuing the $200 per month payment schedule on the $1,000 alimony until July 1, 1996, and if the Ballroom was sold prior to that date, husband would bring the alimony current. The Ballroom was lost when a deed in lieu of foreclosure was given to the first mortgagee. The reduced payment order of September 21, 1995, was continued by orders of July 3, 1997 and October 16, 1997. An order was entered on December 11, 1997, that "[a]s long as Mr. Rillo will on or before the tenth (10th) day of each month pay the One Thousand and 00/100 Dollars ($1,000.00) child support order and the Two Hundred and 00/100 Dollars ($200.00) on account of the alimony order, no further 4. The record in the Domestic Relations Office shows a current alimony arrearage of $42,690 as of a $1,000 charge for February, 1999. The record must be adjudged to reflect a $5,000 decrease in the charges for the months of October, 1998 through February, 1999. -5- 1200 CIVIL 1991 233 S 1991 action will be taken on account of the [alimony] order." The parties' property settlement agreement provides that husband shall pay $264 per month on a second mortgage against their marital residence to Household Finance Corporation, and if the property is sold prior to the satisfaction of the mortgage husband will pay wife any amount deducted from the proceeds of the sale to satisfy the mortgage.5 When the marital home was sold on September 29, 1998, the payoff on the second mortgage to HFC was $17,816.13. Prior to the sale wife had paid $1,848 on the second mortgage. Wife seeks a judgment against husband for the total of $19,664.13 that she paid on the HFC second mortgage plus attorney fees under a clause in the property settlement agreement that provides, "should the husband fail to make three consecutive monthly payments to wife, then in that case, husband agrees that a judgment may be entered against him for the outstanding balance of the principal amount, and he further agrees that attorney's fees of 5% of that amount can be added." Husband maintains that prior to the enforcement hearing for alimony conducted on July 3, 1997, he and wife agreed that if he (1) would bring the HFC second mortgage current, (2) continue to pay her $200 per month toward his alimony obligation, and (3) not seek a reduction in a $1,000 per month child support order, she would be responsible for the second mortgage to HFC. Husband maintains that 5. Wife was obligated to pay the first mortgage to the Mellon Mortgage Company which was approximately $1,000 per month. -6- 1200 CIVIL 1991 233 S 1991 in reliance upon his wife's representations he brought the HFC mortgage current by making payments on July 2, 1997, of $1,072 and in August, 1997, of $516. He argues that in reliance upon this agreement, and to his detriment, he did not seek a reduction in his child support payments which, given his financial difficulties, he could have obtained. He maintains that "after the August, 1997 payment, [he] made no further payments on the HFC mortgage in accordance with his understanding of the agreement reached with [wife]," and pursuant to that agreement he does not owe her the $19,664.13 she claims should be entered as a judgment against him. The parties' property settlement agreement provides: MODIFICATION AND WAIVER: A modification or waiver of any of the provisions of this Agreement shall be effective only if made in writing and executed with the same formality as this Agreement. The failure of either party to insist upon strict performance of any of the provisions of this Agreement shall not be construed as a waiver of any subsequent default of the same or similar nature. In Empire Properties, Inc. v. Equireal, Inc., 449 Pa. Super. 476 (1996), the Superior Court of Pennsylvania stated: [t]he parties to a written agreement, which contains provisions making time of the essence and prohibiting oral modifications, may waive either or both provisions .... The law is also clear that '[a]n agreement prohibiting non-written modification may be modified by a subsequent oral agreement if the parties' conduct clearly shows an intent to waive the requirement that amendments be in writing.' (Citations Omitted.) Wife acknowledges that she made an oral agreement with husband prior to the enforcement hearing on July 3, 1997, but she maintains that the agreement was that she would make the monthly HFC payment only if he paid her the $1,000 per month -7- 1200 CIVIL 1991 233 S 1991 child support and the $1,000 per month alimony as provided for in their property settlement agreement, and for which there were substantial arrearages at the time. Notwithstanding this agreement, after the hearing on July 3, 1997, husband only paid wife a total of $1,800 alimony over the next seven months. He has made no payments since July 31, 1998. Wife testified that she made seven payments of $264 to HFC from December of 1997 through June 1998, totalling $1,848. When she fell behind on the $1,000 per month payments on the first mortgage to the Mellon Mortgage Company she made no further payments on the second mortgage after June, 1998, and sold the home for $179,900 on September 29, 1998, in order to avoid foreclosure.6 We find that wife's testimony is credible regarding the parties' dispute over the HFC second mortgage payments. Wife only worked part-time. At best, at one point she was working 20 to 30 hours per week for $6.50 per hour. She needed both the $1,000 per month child support and the $1,000 per month alimony to afford to maintain her home in which she lived with the three children and on which she had to pay the first mortgage of approximately $1,000 per month. She was willing to pay the $264 per month HFC payment if husband would pay the $1,000 per month child support and the full $1,000 per month alimony instead of the $200 per month that he 6. The payoff of the first mortgage to the Mellon Mortgage Company was $88,268.78. Wife netted $57,557.94 from the sale of the marital home. She used $45,000 as a down payment on the purchase of her new home for $109,000. She testified that after other expenses she has about $3,500 left. -8- 1200 CIVIL 1991 233 S 1991 was paying. She never agreed to waive husband's obligation to pay the balance of the HFC mortgage if the home was sold. Husband may have naively failed to seek a reduction in his child support when he was having business difficulties, which he could conceivable have done as early as the spring of 1995, or he may have thought that his child support would not be significantly reduced based on his earning capacity, or he may have not wanted to seek a reduction in child support out of concern that his wife would move away with the children. In any event, we find that wife did not make a binding oral amendment to the property settlement agreement that she would be responsible for the HFC second mortgage if husband did not petition to reduce the $1,000 per month child support. Wife is entitled to a judgment against husband for $19,664.13 with 5% added for attorney fees for the amount she paid on the HFC second mortgage that husband was contractually obligated himself to pay. The attorney fee is $983.21. III, DATE OF MODIFICATION OF CHILD SUPPORT The parties' property settlement agreement provides that husband pay child support for three minor children in the amount of $1,000 per month beginning March 1, 1994.7 The child support was incorporated into a support order. Husband filed a petition on March 20, 1998, to reduce his child support, claiming that Julie moved in with him on March 10, 1998. An order was entered on June 2, 1998, with an effective 7. The agreement, dated March 1, 1995, made retroactive the $1,000 per month child support to March 1, 1994. -9- 1200 CIVIL 1991 233 S 1991 date of March 10, 1998, reducing the support to $670 per month. Wife filed an appeal from that order. Husband filed a second petition to modify the child support on September 4, 1998, claiming that Jennifer lived with him "since August 15, 1998 ... but definitely as of September 3, 1998." Wife agrees that the child support order must be modified as of October 1, 1998, which is the date she claims that Julie and Jennifer started living with husband. Wife kept track of when Julie stayed with her father. In March, 1998, it was thirteen days with husband and eighteen days with her. In April it was fifteen days with each. In May it was twenty days with husband and eleven days with her. In June it was seventeen days with husband and thirteen days with her. In July it was fifteen days with husband, nine days with her and five days with friends. In August and September it was an equal amount of time with each. In Anzalone v. Anzalone, 449 Pa. Super. 201 (1996), the Pennsylvania Superior Court held that it was error to deviate from the child support guidelines in favor of a parent who had custody of the children forty percent of the time, in the absence of a finding that the amount of time spent with the children was unusual or that unique expenses were involved. Quoting from Connor v. Connor, 434 Pa. Super. 288 (1994), the Court stated: [Al parent should not be allowed to use the amount of time which he or she spends with the children as a method of reducing his or her support obligation at the expense of the children: '[A] parent's support obligation as determined by the guidelines will not be reduced by allocating the time that each parent spends with the children as this is a misapplication of the guidelines.' -10- 1200 CIVIL 1991 233 S 1991 Wife was the primary custodian of the three children from the parties' separation on January 9, 1991, until she moved to Virginia on October 1, 1998. The fact that Julie spent more time with her father during the last six and a half months prior to October 1, 1998, than she did in the preceding seven years and two months during the parties' separation, and that Jennifer spent more time with him in September, 1998, does not in this case warrant a reduction in the husband's child support before Julie and Jennifer moved in with him on October 1, 1998.8 Accordingly, we will vacate the order of June 2, 1998, that reduced husband's monthly child support from $1,000 to $670. We will grant husband's petition to modify the child support order as of October 1, 1998. IV. MODIFICATION OF CHILD SUPPORT Although wife did not work full-time when she lived in Camp Hill, she established that she can make $6.50 per hour which is a little over minimum wage? She could work full-time.TM Based on a forty hour work week we find that her gross annual earning capacity is $13,520 or $1,1 25 per month. Her net earning capacity is $975 per month. 8. Husband produced no evidence that he had any unique expenses during these periods. 9. She made $6.50 per hour working at the West Shore Market. Wife is a high school graduate. Over the years she has done some work in husband's restaurants doing "a little bit of everything." 10. Wife testified that she is going to go to school in 1999. -11- 1200 CIVIL 1991 233 S 1991 Husband, his brother and his mother each own one-third of the stock of Rillo's Restaurant, Inc. The corporation operates the Rillo's restaurant in Carlisle on property which is owned by husband and his brother?1 The severe financial losses that occurred when the Ballroom failed impacted the operation of Casa Rillo and Rillo's restaurant in Carlisle. All of the stock of Rillo's Restaurant, Inc., is pledged to a bank as collateral for a loan with a balance of approximately $550,000. There is a $100,000 tax lien against husband and his brother. Casa Rillo, which was opened in 1980 went out of business in 1995. Rillo's restaurant in Carlisle was started in 1960 by husband's mother and father. Husband testified that he is now involved in all aspects of the Carlisle restaurant and works between 80 and 90 hours a week. He draws a salary of $200 a week, net $177. The business pays $4,450 per year for the private schooling of Julie and Jennifer.12 The business also makes husband's child support payments. Husband has use of an insured company vehicle. He eats ninety percent of the time at the restaurant. The business has paid some of his personal attorney fees and some other miscellaneous expenses. Husband maintains that his income from all of 11. The brother now lives in Illinois. He and husband had operated Casa 12. Wife pays for Amanda to go to private school in Virginia. -12- 1200 CIVIL 1991 233 S 1991 these sources is $1,500 per month?3 Determining the value of all of husband's personal perquisites is difficult because neither party called an accountant to testify. Husband is an experienced chef, and the financial aspects of the restaurant business are not his strong suit. The value of his personal expenses paid by the business and his perquisites are income for the purposes of calculating support. Calabrese v. Calabrese, 452 Pa. Super. 497 (1996).. Wife maintains that husband's income from all sources is at least $4,500 per month. Husband has no experience working outside of the family businesses. It is his intent to lower the debt to reestablish the financial viability of the otherwise successful Rillo's restaurant in Carlisle. Weighing the credibility of the witnesses, and based on all of the evidence, we find that husband's current annual net income and current net earning capacity is $30,000 per year or $2,500 per month,i" Because wife forfeited alimony as of October 1, 1998, there is no longer any order of alimony. Therefore, pursuant to the Pennsylvania Support Guidelines we will calculate child support as of October 1, 1998, without the inclusion of the payment of 13. Husband's financial difficulties arose from the failures of the Ballroom and Casa Rillo. He did not intentionally reduce his income. The parties would have the same financial problems even if their marriage had not failed. 14. Wife suggests that husband has a greater earning capacity if he would work as a chef in another restaurant. There is no credible evidence that if husband worked as a non-owner chef in this area that he has a greater annual net earning capacity than $30,000. Furthermore, husband's goal of reestablishing the financial viability of Rillo's restaurant in Carlisle is a reasonable business decision. Husband cannot, however, avoid paying child support by staying forever with a losing enterprise. Newcomer v. Newcomer, 325 Pa. Super. 536 (1984). -13- 1200 CIVIL 1991 233 S 1991 alimony arrearages that we will order husband to make.15 The Pennsylvania Support Guideline calculation with two children in the custody of husband and one child in the custody of wife is as follows:TM FATHER MOTHER Monthly net income Combined monthly net income Proportionate expenditure Combined monthly support obligation Income ratio Each parent's guideline obligation Minus split custody counterclaim Total monthly child support owed by father to mother 2500.00 974.53 3474.53 14.5% 503.81 71.95% 28.05% 362.49 141.32 232.93 129.56 V. ENFORCEMENT OF ALIMONY ARREARAGES We will order husband to pay $600 a month on account of his arrearages on alimony and enforce that order through the entry of a wage attachment,i? This is consistent with his current net income. We will not accept the convoluted way in which husband is being paid for his 80 to 90 hours of work a week as a means of avoiding the monthly payment of arrearages and the child support by way of the attachment of his wages. We view this arrangement as an effort to avoid the 15. If there was a current order of alimony, the alimony would be added to wife's income and subtracted from husband's income when applying the support guidelines. Pa. Rule of Civil Procedure 1910.16-5(b). 16. Pa. Rule of Civil Procedure 1910.16-5(h). 17. Husband's child support order of $129.56 will also be enforced by a wage attachment. -14- 1200 CIVIL 1991 233 S 1991 attachment of his real income. We will direct the Domestic Relations Office file a petition to hold husband in contempt upon the failure to make any payment following this date. VI. COUNSEL FEES Wife seeks counsel fees of $3,742.50 pursuant to the parties' property settlement agreement that provides: BREACH: If either party breaches any provision of this Agreement, the other party shall have the right, at his or her election, to sue for damages for such breach or seek such other remedies or relief as may be available to him or her, and the party breaching this contract shall be responsible for payment of legal fees and costs incurred by the other in enforcing their rights under this Agreement. Hearings in this case were conducted on October 19th and November 5, 1998. The issues were briefed and argued on November 20th. A majority of the work involved the issues of the proper modification of the child support order and obtaining the judgment for $19,664.13 that wife paid on the HFC second mortgage. On the latter issue we are awarding counsel fees to wife of five percent of the judgment pursuant to the separate attorney fee provision in the marital settlement agreement pertaining to the HFC mortgage. Wife is not legally entitled to counsel fees for the work regarding the modification of the child support order. She is entitled to reasonable attorney fees under the general "Breach" provision of the marital settlement agreement for the work involving the issue of alimony and for the enforcement of the payment of alimony. We will award wife $750 in attorney fees. -15- 1200 CIVIL 1991 233 S 1991 For the foregoing reasons, the following order is entered. ORDER OF COURT AND NOW, this ~'~ day of February, 1999, IT IS ORDERED: (1) At 1200 Civil 1991, the $1,000 per month alimony is terminated as of October 1, 1998. The record of the Domestic Relations Office shall be adjusted to delete $5,000 in alimony charged for the months of October, 1998 through February, 1999. Husband's wages shall be attached for the payment of alimony arrearages at the rate of $600 a month. (2) At 1200 Civil 1991, judgment is entered in favor of Susan M. Rillo against Joseph A. Rillo for $19,664.13 plus an attorney fee of $983.21. (3) At 1200 Civil 1991, attorney fees are awarded to Susan M. Rillo against Joseph A. Rillo in the amount of $750. (4) At 233 Support 1991, the support order entered on June 2, 1998, that reduced husband's child support from $1,000 per month to $670 per month effective March 10, 1998, is vacated. (5) At 233 Support 1991, the $1,000 per month child support order is vacated as of October 1, 1998. As of October 1, 1998, Joseph A. Rillo shall pay Susan M. Rillo child support through the Domestic Relations Office, on a wage attachment, in the amount of $129.56 a month. The child support record of the Domestic Relations Office shall be adjusted to reflect paragraphs 4 and 5 herein. -16- 1200 CIVIL 1991 233 S 1991 (6) If husband fails to make any monthly payment of alimony arrearage or child support as directed by this order, the Domestic Relations Office shall file a petition to hold him in contempt. Jordan D. Cunningham, Esquire For Joseph A. Rillo Carol J. Lindsay, Esquire For Susan M. Rillo Lucinda Sheaffer, Domestic Relations Officer :saa ~By th Edgar B Bayley, J -17-