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HomeMy WebLinkAbout2008-5421 BERNARD C. FARRELL, : IN THE COURT OF COMMON PLEAS OF Plaintiff, : CUMBERLAND COUNTY, PENNSYLVANIA : v. : CIVIL ACTION- LAW : PATRICIA M. FARRELL, : NO. 08-5421 CIVIL TERM Defendant. : : IN DIVORCE IN RE: DEFENDANT’S EXCEPTIONS TO DIVORCE MASTER’S REPORT 1 BEFORE HESS AND PECK OPINION AND ORDER OF THE COURT For disposition in the present bifurcated divorce case are exceptions to the Divorce Master’s Report filed by the Defendant, Patricia M. Farrell. (Defendant’s Exceptions to Master’s Report, filed September 5, 2012). The Divorce Master filed his report recommending that the assets of the parties should be distributed fifty-fifty with adjustments made regarding some of the 2 assets. (Master’s Report, filed August 17, 2012). 1 Judge Masland has recused himself from this case. 2 The exceptions of the Defendant read as follows: 1. The Master made findings about the Plaintiff’s alleged medical condition, and the Plaintiff’s claim that those medical conditions limited his ability to work as a veterinary, without competent evidence and without expert evidence on the subject. 2. The Master erroneously concluded that Plaintiff’s decision to retire from the practice of veterinary medicine, announced on the eve of the final Master’s hearing, was a genuine decision based upon Plaintiff’s medical and physical condition and was not an effort to avoid his obligations to the Defendant. 3. The Master erroneously failed to assign Plaintiff an earning capacity based upon his ability to practice veterinary medicine. The Master erroneously concluded that the Plaintiff was not able to perform large animal veterinary work when the testimony made it clear that Plaintiff continued to do the type of work following his alleged “retirement” from Farrell Veterinary Associates. 4. The Master charged Defendant with the expense she incurred for surgery following the parties’ separation but overlooked the substantial cash withdrawals made by Plaintiff from various marital accounts, for his personal use and benefit, at approximately the same time. As a result, the Master overcharged Wife with the receipt of marital assets or the creation of martial debts. 5. The Master failed to take into account the monies Plaintiff removed from joint accounts shortly prior to and following separation and devoted to his personal use and benefit. 6. The Master failed to award Defendant monies she contributed to joint tax return deposits which were unilaterally taken by Plaintiff and used for his sole benefit. The deposits resulted in Plaintiff receiving tax benefits in the amount of $20,642.00 and Defendant is entitled to 50% of that benefit. 7. The Master failed to charge Plaintiff with receipt of approximately $158,000.00 which he received from a joint marital account. The master erroneously granted Plaintiff a credit for those funds, finding that Plaintiff used them to pay student loans incurred by two of the parties’ three children in graduate school, over the objection of Defendant, who did As directed during oral argument on April 5, 2013, and consistent with C.C.R.P. 1028(c)(6), the Defendant has waived or consolidated her exceptions so that there are but three remaining issues: (1) whether the Master erred in not accounting for the the cost of selling the Doubling Gap Road property when making equitable distribution; (2) whether the Master erred in allowing the Plaintiff to retain the entire benefit of the 2008 tax refund; and , (3) whether the Master erred in finding that the Plaintiff retired for health reasons. For the reasons stated in this opinion, Defendant’s exceptions will be denied. Plaintiff, Bernard C. Farrell, resides at 905 Center Road, Newville, Pennsylvania 17241. (Notes of Testimony, 54, In Re: Transcript of Proceedings Hearing, July 31. 2012 (hereinafter “N.T.__, July 8. 2012”)). Defendant, Patricia M. Farrell, resides at 44 Bevans Road, Layton, New Jersey 07851. (N.T. 151, July 31, 2012). Plaintiff and Defendant were married in 1973. (N.T. 32, Sept. 8, 2011). Plaintiff and Defendant both graduated from veterinary school in 1976. (N.T. 33, Sept. 8, 2011). In 1978, the two started a veterinary practice that was later incorporated, Farrell Veterinary Associates, Inc. (hereinafter “Corporation”). (N.T. 32-33, Sept. not consent to the expenditure of funds in that fashion. In fact, the evidence demonstrated that, to the contrary, those payments were made over Defendant’s objections. 8. The maser failed to take into account the substantial expenses incurred by Defendant in the sale of her farm property, as required by the statutory factors. 9. The Master erroneously allowed Plaintiff to submit an appraisal and offer testimony on the value of Farrell Veterinary Associates, Inc. after the Master conducted a hearing at which he took testimony on the value of the business from Defendant’s expert. The Master thus violated his own directives by permitting Plaintiff to introduce evidence as to the value of the corporation after the record was closed on that subject. 10. The Master erroneously failed to make proper disposition of the parties’ ownership interest in Farrell Veterinary Associates, Inc., a corporation which both of them own. In doing so, the Master erroneously failed to award to Plaintiff, Wife’s interest in the corporation. By doing so, the Master left the parties engaged in that business and left Defendant at the mercy of Plaintiff and the third shareholder, both of whom have interests adverse to those of the Defendant. 11. The Master’s final report is inconsistent with statements he made and guidance he made to the parties regarding the disposition of the corporation in prior conferences and proceedings before the Master. 12. The Master failed to charge the Plaintiff with receipt of a motor vehicle and a horse trailer which he received from the corporation, Farrell Veterinary Associates, Inc., in which he subsequently sold or traded in for his benefit. 13. The Master erroneously charged the Defendant with receipt of a motor vehicle from the corporation for which she paid by receiving less of the profit distributions from the corporation pursuant to an agreement that parties signed in September of 2008. 14. The Master’s findings that the parties’ standard of living during the marriage was “good” is inadequate given the undisputed testimony before the Master about the expensive vacations and other expenditures by the parties on their lifestyle (Defendant’s Exceptions to Masters Report and Recommendation, filed Sept. 5, 2012). 2 8, 2011). The Defendant focused her practice on small animals while the Plaintiff focused on large animals. (N.T. 61-62, July 31, 2012). Around 1986, the Defendant was treated for depression, and later, bi-polar disease; as a result, she reduced her appointments and managerial services to part-time. (N.T. 36-40, Sept. 8, 2011). The Corporation continued to grow, and a third partner was added, Dr. Hasco. (N.T. 71-72, July 31, 2012). The Farrells each owned 38% of the Corporation, and Dr. Hasco owned 24%. (N.T. 71, July 31, 2012). The Defendant found out that the Plaintiff was having a long-term affair in early 2008, and the parties separated soon after. (N.T. 42, Sept. 8, 2011). After that time, the Defendant’s mental state worsened and she spent less time in Pennsylvania; as a result, for all practical purposes, her work in the Corporation stopped. (N.T. 42-45, 56 Sept. 8, 2011). The Plaintiff filed a Divorce Complaint in September of 2008. The divorce did not move forward for some time. During that interim period, the Plaintiff and Defendant would both deposit funds into a joint checking account. (N.T. 100, July 31, 2012). Both parties used that account to pay for day-to-day expenses. (N.T. 100-01, July 31, 2012). The Defendant also paid for approximately $18,000 of plastic surgery through that account. (N.T. 99- 100, July 31, 2012). During the interim period, the Plaintiff and Defendant filed a 2008 joint tax return. (N.T. 165, July 31, 2012). The 2008 return resulted in a refund of $18,364 for federal tax and $2,278 for state tax that was to be applied to 2009 taxes. (N.T. 166, 2012). The Plaintiff and Defendant did not file a joint tax return in 2009, and the Plaintiff was credited with the entire 2008 refund. (N.T. 166, 2012). 3 In February of 2010, the Defendant filed a Petition for Economic Relief. The Master was appointed and a hearing was held on September 8, 2011. A final hearing was later held on July 31, 2012. The Plaintiff and Defendant were able to accumulate a substantial amount of assets; as such, the hearings before the Master generated a substantial record. However, the distribution process was somewhat simplified because, before the Defendant learned of the affair, the Plaintiff and Defendant met with an attorney for estate planning purposes and distributed various properties that they acquired. (N.T. 66, 133, 146, July 31, 2012). As a result, one of the properties that the Defendant maintained was the property referred to as the Doubling Gap Road residence. (N.T. 66, July 31, 2012). Initially, the Defendant used this property as a residence; however, the Defendant then rented the property since she was spending most of her time outside the area. (N.T. 104, July 21, 2012; N.T. 44, Sept. 8, 2011). During the proceedings with the Master, the parties stipulated to the values of their various properties, including a value of $721,000 for the Doubling Gap Road residence. (Joint Exhibit No. 1). Before the final hearing, the Defendant sold the Doubling Gap Road residence and cleared less than the stipulated value after taking repairs, commissions, and transfer taxes into consideration. (N.T. 163-65, July 21, 2012). The Defendant testified that she spent $55,102.38 liquidating the residence. (N.T. 164-65, July 31, 2012). Though the parties were still married at the time the property was sold, the husband was never involved in the transaction as the deed was only in the Defendant’s name.(N.T. 176-77, July 31, 2012). Additionally, before the final Divorce Master hearing, the Plaintiff retired. (N.T. 75, 82-83, July 31, 2012). At the final hearing, the Plaintiff testified that he had started the process to collect social security. (N.T. 56, July 31, 2012). The Plaintiff cited the physical demands of a large 4 animal practice as the reason for his retirement. (N.T. 82, July 31, 2012). The Plaintiff testified that five years beforehand, when he ruptured a disk in his back, he first considered retiring at the age of 62. He told Dr. Hasco of his retirement plans three years before the fact. (N.T. 84-85, July 31, 2012). The Plaintiff does continue to work part time for the Corporation, picking and choosing jobs that are not physically stressful; however, he cannot earn more than approximately $1,220 a month without offsetting his social security. (N.T. 56, July 31, 2012). The Defendant testified that she also planned on collecting social security in the months following the final hearing. (N.T. 177, July 31, 2012). When reviewing a divorce master’s report, the report and recommendations are advisory only. Rensch v. Rensch, 381 A.2d 925, 926 (Pa. Super. 1977). “[T]he trial court is required to make an independent review of the report and recommendations to determine whether they are appropriate.” Kohl v. Kohl, 564 A.2d 222, 224 (Pa. Super. 1989) (citing Goodman v. Goodman, However, “[t]he report of the master is entitled to great 544 A.2d 1033 (Pa. Super. 1988)). consideration in that he has heard and seen the witnesses, and it should not be lightly disregarded.” Rothrock v. Rothrock, 765 A.2d 400, 404 (Pa. Super. 2000). Pursuant to 23 Pa.C.S.A. § 3502(a) (10.2), the expense associated with liquidating an asset is a relevant factor in the equitable division of marital property. “Adjustment in the value of a residence for expenses associated with a contemplated sale may be an appropriate consideration in some equitable distribution cases. We neither forbid nor require the practice.” Zeigler v. Zeigler, 530 A.2d 445, 447 (Pa. Super. 1987). First, the Defendant contends that the Master should have subtracted the costs associated with selling the property at 530 Dublin Gap Road from the stipulated value in determining the figure used to distribute assets. We disagree. The parties had previously 5 stipulated to the value of the property. We recognize that adjusting the value of a property for liquidation expenses may be appropriate in some cases. Here, however, the Defendant chose to sell the property even though she could have kept it and collected rental income, just as she did with other properties. The Plaintiff should not be forced to absorb the cost of a financial decision not forced upon the Defendant. As stated above, the Plaintiff did not participate in the sale of the property even though the couple was still married at the time. Next, the Defendant takes issue with the Plaintiff retaining the entire benefit from the 2008 tax refund. There is no dispute that the Defendant was entitled to half of the refund. However, the Master did not ignore this issue. Instead, the Master offset the portion of the tax refund that the Defendant was due by the portion of the plastic surgery that the Plaintiff paid for under protest through the joint account. Both parties may have used the joint account for questionable expenditures; however, the plastic surgery is the most exceptional item supported by the record. We find no error in the Master’s offset of these amounts. Finally, we are not persuaded by the Defendant’s argument that the Master erred in finding that the Plaintiff retired based on health considerations. The Plaintiff testified that he first considered retirement five years beforehand when he ruptured a disc in his back. Further, he testified that he told the third partner of his retirement plans three years ago. The Master was in the best position to evaluate the credibility of such testimony. In any event, it is entirely reasonable that an individual with sufficient retirement funds would choose to retire from physically demanding work at the age of 62. 6 ORDER st AND NOW, this 21 day of June, 2013, the exceptions of the Defendant, Patricia Farrell, are dismissed and the recommendations of the Master, filed September 5, 2012, are herewith made a final order of Court. BY THE COURT, Kevin A. Hess, P.J. Bradley L. Griffie, Esquire For the Plaintiff Samuel L. Andes, Esquire For the Defendant E. Robert Elicker, II, Esquire Divorce Master :rlm 7 BERNARD C. FARRELL, : IN THE COURT OF COMMON PLEAS OF Plaintiff, : CUMBERLAND COUNTY, PENNSYLVANIA : v. : CIVIL ACTION- LAW : PATRICIA M. FARRELL, : NO. 08-5421 CIVIL TERM Defendant. : : IN DIVORCE IN RE: DEFENDANT’S EXCEPTIONS TO DIVORCE MASTER’S REPORT BEFORE HESS AND PECK ORDER st AND NOW, this 21 day of June, 2013, the exceptions of the Defendant, Patricia Farrell, are dismissed and the recommendations of the Master, filed September 5, 2012, are herewith made a final order of Court. BY THE COURT, Kevin A. Hess, P.J. Bradley L. Griffie, Esquire For the Plaintiff Samuel L. Andes, Esquire For the Defendant E. Robert Elicker, II, Esquire Divorce Master :rlm