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HomeMy WebLinkAbout93-980 civil i'FER M. ECKMAN, III, · IN THE COURT OF COMMON PLEAS OF Plaintiff · CUMBERLAND COUNTY, PENNSYLVANIA vs. · NO. 980 CIVIL 1993 VONNY E. ECKMAN, · IN DIVORCE Defendant ' 1N RE' EXCEPTIONS TO MASTER'S REPORT BEFORE BAYLEY AND HESS, JJ. DECREE AND NOW, this ~* day of January, 2000, the exceptions of the parties to the report filed by the Master in this case are DENIED. Upon review of the Master's recommendations, it is ordered and directed that the marital property of the parties be eqUitably divided as follows' 1. The following marital assets and values shall be assigned'to the husband' One-half of Merrill Lynch stock account (Carlisle Corporation Stock) $ 5,750.00 Husband's life insurance policy (cash value) $16,500.00 Antiques/personal property (previously distributed to husband) $ 54,395.00 Portion of IRA with Kemper Fund $ 97,643.00 TOTAL $174,288.00 2. The following marital assets and values shall be assigned to the wife' One-half of Merrill Lynch stock account (Carlisle Corporation stock) $ 5,750.00 Marital residence at 2269 Newville Road, Carlisle, Pennsylvania $159,000.00 Wife's life insurance policy $ 10,600.00 Antiques/personal property (previously distributed to wife) $ 80,725.00 Portion of IRA with Kemper Fund (to be rolled over to wife) $ 5.357.00 TOTAL $261,43'2.00 3. Husband shall transfer to wife within sixty (60) days of a final order in. these proceedings by special warranty deed all his right, title and interest to the real estate situated at 2269 Newville Road, Carlisle, Cumberland County, Pennsylvania. Wife shall take the property subject to the existing mortgage and home equity loan and shall indemnify and hold husband harmless on account of any claims which may be made by either of the lienholders against husband on account of the outstanding balances. 4. The parties shall sign all titles and documents necessary to transfer ownership of assets assigned to each of the parties as herein provided in the distribution of assets as set forth above so that all transfer are accomplished within sixty (60) days of a final order in these proceedings. Husband shall pay to wife the sum of $2,000.00 per month through the Cumberland County Domestic Relations Office upon the entry of a final order in this matter. The amount and duration shall be subject to the modification and termination provisions of the Domestic Relations Code. The plaintif.t' shall pay to the defendant the sum of $3,191.50 towards her expert witness B Y THE COURT, Kev~A. Hess, J. Samuel L. Andes, Esquire For the Plaintiff / - Wayne F. Shade, Esquire For the Defendant :rim WALTER M. ECKMAN, III, · IN THE COURT OF COMMON PkEA$ Plaintiff · CUMBERLAND COUNTY, vs. · NO. 980 CIVIL 1993 VONNY E. ECKMAN, · IN DIVORCE Defendant ' IN RE: EXCEPTIONS TO MASTER'S REPORT BEFORE BAYLEY AND .HESS, JJ.. OPINION AND DECREE The parties hereto were married in 1965 when both were twenty years of age. They separated on April 1, 1990. By the time of the Master's Hearing, both were fifty-four years of age. The Eckmans have two children, Amy born in 1976, and Ian born in 1979, both of whom have gone on to receive college educations. Vonny Eckman completed college and became certified to teach. She holds a Master's Degree. Mrs. Eckman taught elementary school for eleven years before leaving to become a full- time homemaker. Walter Eckman worked at both Carlisle Tire and Rubber and Baker Rubber Inc. He left Baker in 1994 to become president of Recycling Technologies Inc. (RTI), in whiCh corporation he holds a twenty-percent interest. In his report, the Master recommended that the wife receive a sixty-percent distribution of the marital property, including the marital home. In addition, an award was made of $2,000 per month in alimony and $3,191.50 as a contribution to the wife's expert witness fees. It was recommended that both parties pay their own attorney's fees. In his report, the Master carefully outlines the factual background of the case. Satisfied that they are supported by the record, we reiterate them as follows' 980 CIVIL 1993 1. The parties were ;narried on June 5, 1965, and separated April t. 1990. This is the first marriage for boO:: pa:ties. 2. The parties are the natural parents of two children, Amy Katherine, who is completing her senior year at Syracuse University and Ian, who is completing his freshman year at Virginia Tech. The parties also had taken in two Vietnamese children who continued to live with wife after the parties separated and who are not emancipated. 3. Husband is 54 years of age and resides at 52 East North Street, Carlisle, Pennsylvania, with a female friend. Husband was involved in a relationship with the female friend, with whom he is now living, prior to the separation of the parties. 4. Husband graduated from Big Spring High School and attended college for approximately a year and a half. His work history includes employment at Carlisle Tire and Rubber and Baker Rubber as a plant manager, which position he held until 1990 when he was promoted to vice president. In April 1992, husband was then demoted from vice president to plant manager because he refused to leave the South Central Pennsylvania area; consequently his income was modified downward. Because Baker Rubber was having financial problems, husband left about a year later and became involved in the ownership of a corporation known as Recycling . Technologies, Inc. Baker Rubber went bankrupt in 1996, so fortunately for the parties, husband had moved onto Recycling Technologies, Inc. in 1993-1994. 5. Articles of Incorporation for Recycling Technologies, Inc. were filed on July 12, 1993; production began at Recycling Technologies, Inc. in August 1994. Husband has a 20% o.wnership interest in the company by owning stock and his income, net of taxes, monthly as shown on Plaintiff s Exhibit No. 2 (hearing 10/13/98) is $4,948.80. This figure includes a consulting fee of $325.04 monthly. Husband testified, however, that the consulting 2 980 CIVIL 1993 fee would not continue after 1998. Husband's title with the corporation is "president." 6. Husband's shares of stock in the corporation are nonmarital and he testified that he thought the value of his shares would be at least $70,000.00. He also testified that he believes the stock has increased in value but he had no opinion as to current value. 7. On January 14, 1998, an alimony pendente lite order was entered in favor of wife in the amount of $2,320.00 per month.~ Husband previously had been making contributions to the household and giving wife money for expenses so that no formal order had been entered. 8. Husband testified that he takes medication for kidney stones and Prozac for depression. Husband also takes medication for blood pressure, cholesterol, and diabetes. He has medical insurance coverage through his employment for the family which husband's company pays at a cost of $420.00 per month. 9. Although husband is under no legal obligation to do so, he contributes the following to the children for their education and for expenses in college: $450.00 a month to cover rent and provide spending money for Amy; Payment of maintenance and insurance for a 1988 S- 10 Blazer used by Amy; $2,693.50 per semester for Ian's education, plus $85.00 a month for a leased computer; $100.00 a month allowance to Ian. 1 The alimony pendente lite order was entered on January 14, 1998, with the Court determining that the wife's monthly net income was $472.00 and husband's monthly net income was $5,433.00. The record in the divorce proceedings, which was made subsequent to the entry of the alimony pendente lite order on January 14, 1998, shows incomes for the parties in 'different amounts than the findings of the Court on January 14, 1998, following the alimony pendente lite proceedings, 3 980 CIVIL 1993 Wife testified that she wants the childr~n to have a college education and does not qu~:s,:'c.,:~ husband's contributions for thc benefit of the Children in pursuing that education. Because of xvife's financial circumstances, she is unable to make contributions of any substantial nature for the children's benefit toward tuition and expenses, instead assisting in whatever ways she can by providing a place for them to live during holidays and vacation and providing incidental items that they may need from time to time. 10. Wife is 54 years of age and resides at 2269 Ne~vville Road, Carlisle, Pennsylvania, in the marital residence where she has lived continuously since 1970. Wife had lived with the children of the marriage and the tbster children but currently the natural children, as indicated, are at college; one of the foster children may return to live in the home following a recent trip to the Far East. 11. Wife has a Bachelor of Science Decree in Education from Shippensburg University which she obtained in 1965; in 1969 she obtained a Master's Degree in Education from Shippensburg University. She is certified to teach in Pennsylvania in elementary school. 12. After the parties' children were bom, wife remained in the home as a homemaker and mother testifying that she did not have to work prior to the separation, although she did hold a job at the Cumberland County historical Society as an educational coordinator for about two years. After separation, she has worked at a temporary job with Directory Distributing distributing telephone books, as a teacher's aide at Big Spring School District, as an instructor at Messiah College, for the Welcome Wagon, and currently at the Carlisle Barracks as a desk clerk at Army Lodging, which is a part-time position. Wife makes $6.00 an hour and takes home around $180.00 per week. Wife has no benefits with the job. 13. Wife's net monthly income computes to $780.00. 14. Wife does not have any physical health problems 4 · 980 CIVIL 1993 inhibiting her ability to work; however, she testified that the fact that he husband left her for another woman was devastating and that since the separation she has had emotional, economic, and social problems. 15. Wife will be entitled to continue medical insurance through a COBRA program, the cost being $985.35 a quarter for coverage comparable to what she currently has at the present time. 16. The Master finds that the net equity in the marital residence at 2269 Newville Road, Carlisle, Pennsylvania, is $159,000.00. 17. The Master finds that the 5000 shares of Common stock, which husband owns in Recycling Technologies, Inc., are nonmarital. 18. After hearing the testimony of Dr. Paul A. Anderson on wife's earning capacity, and after considering wife's testimony regarding her efforts to find employment and her employment history, the Master finds that wife has an earning capacity of $20,000.00 per year gross. 19. Consistent with Judge Hess's findings after the hearing on August 6, 1998, regarding husband's earnings and earning potential, the Master's findings are consistent with Judge Hess's statement that he is satisfied that "Mr. Eckman's earnings or earnings potential does not exceed his current salary." 20. Husband currently has credit card debt on credit cards totaling around $15,000.00. 21. Husband maintains life insurance policies on the two children costing $100.00 per month for the two policies. Husband plans to give the policies to the children when they graduate from college. 22. Wife incurred expert witness fees to Smith, Elliott, Kearns in the amount of $8,000.00, and through October 1998 owed approximately $31,000.00 for counsel fees. 5 980 CIVIL 1993 Wife withdrew $4,000.00 from the home equity line o~' credit to make payment on account of the fees due and owing to Smith, Elliott, Kearns. 23. From August 1994 through August 1995, husband made total payments of principal and interest on the home equity loan of $10,436.64. 24. No objection has been made by either party in these proceedings to the method and adequacy of service of any of the pleadings in the divorce action nor has either party or counsel objected to the jurisdiction of this Court to act in these proceedings. Both parties in this case have filed exceptions. We will deal first with those fileq by the defendant. The defendant complains that the above factual findings of the Master omit approximately 130 of the defendant's requests for factual findings. Almost half of these requested findings have to do with Mr. Eckman's business acumen and the circumstances under which his current business was acquired and is being conducted. Most are not in dispute. This is all in the defendant's continuing attempt to establish that Mr. Eckman's current income is understated and that the company for which he works has an obligation to pay him a higher salary than it does. This issue was dealt with at a three-hour long proceeding conducted before this court on May 28, 1998. The issue was the appropriate amount of alimony pendente lite. Recycling Technologies Inc., of which plaintiff is president, markets recycled rubber products. The plaintiff agrees that the company is extremely profitable and is growing. At our May 1998 hearing, it was established that Mr. Eckman's salary for 1997 (N.T. 23) had been $75,000.00. His salary had been in this range since the founding of the company in 1994. The 980 CIVIL 1993 average annual increase in gross sales is approximately $500,000.00. At the May 1998 hearing, the defendant took the position that Mr. Eckman should be paid approximately $180,000.00 per year and that his earning potential should be adjusted accordingly. We continue to disagree. A factor which reduces the income of the corporation is that it is repaying loans from investors. The defendant's expert contends that these loans should not exist because the money should have been paid in as capital. In addition, the defendant contends that the corporation should pay more to its officers rather than invest its income in the growth of the company. Both o'f these matters involve business decisions over which Mr. Eckman did and does not have the ultimate control. He is, after all, a minority shareholder. We are more persuaded by the testimony of the plaintiff s expert, Craig A. Kern, C.P.A. Mr. Kern opines that the salary potential attributed to Mr. Eckman by the defendant is not realistic and, in a nutshell, there is nothing suspect about the way in which this corporation is managed. The Divorce Master, after reviewing the record, properly reached the conclusion that Mr. Eckman's earning potential does nOt exceed his current salary. In another exception to the Master's Report, the defendant claims that "economic justice" requires that the court protect the defendant's reasonable economic expectations "flowing from twenty-five years of marriage." She contends that the Master should have considered the emotional and economic impact of the plaintiff leaving the defendant for a younger woman. She believes that she should be permitted to continue to reside in an historic farmhouse furnished with antiques and that she should not be forced to work, having been out of the labor market for so many years. The argument, eSsentially, is that the plaintiff, because he is at fault in the 980 CIVIL 1993 dissolution of the marriage, should bear each and every economic detriment associated x.:'it!~ the divorce. In defendant's brief, counsel quotes commentator Andy Rooney an,:t .:ompares President Clinton to former Speaker Gingrich. There is, however, no law cited/hr the proposition advanced nor have we been able to find any. Nor can we find support for the defendant's third exception; namely, that "economic justice" requires an award of alimony that will enable Mrs. Eckman to maintain the standard of living which she enjoyed prior to Walter's desertion. This exception involves, in large measure, a rehash of the first exception involving the contention that Mr. Eckman's salary is understated. Next, the defendant contends that her former husband's stock in RTI ought to be divided between the parties in kind. In order for this argument to succeed, the wife must be able to demonstrate that Mr. Eckman's stock is marital property. The stock involved was acquired after separation. Nonetheless, assets acquired after separation through the use of marital assets are marital property. It is the function of the court to determine whether a property right has been acquired during the marriage and whether equity warrants the inclusion of the property in the marital estate. Sutliff v. Sutliff, 361 Pa. Super. 504, 522 A.2d 1144 (Pa. Super. 1987). The wife's contention is that the plaintiff paid for his stock with expertise. The expertise was, in turn, acquired prior to separation. The husband's brief acknowledges that the plaintiff exchanged his services (rather than money) for a twenty-percent interest in RTl. He stresses, however, that the stock was compensation for a future commitment to work and not for any past achievements. In Hodge v. Hodge, 513 Pa. 264, 520 A.2d 15 (1986), the Pennsylvania Supreme Court found that an advanced educational decree was not marital property that could be divided 980 CIVIL 1993 it~ cq~.:itable distribution. Clearly, if knowledge obtained through formal education is not property, then knowledge obtained through work experience is also not property. Finally, the defendant contends that she has been denied adequate legal and expert witness fees in this case to the extent that there has been a denial of due process. We are more than satisfied that the defendant had a meaningful opportunity to be heard in this case. The hearing before tl~e Master occurred over a period of three days. In addition, this court took testimony on two days on the issue of alimony pendente lite. The purpose for awarding counsel fees is to assure that a financially dependent spouse will be able to defend a divorce action. Wiegand v. Wiegand, 242 Pa. Super. 170, 363 A.2d 1215 (Pa. Super. 1976). A spouse seeking an award of counsel fees must show actual need. Kohl v. Kohl., 387 Pa. Super. 367, 564 A.2d 222 (Pa. Super. 1989). In this case, the alimony pendente lite award which the wife received gave the parties nearly equal incomes throughout the litigation. In addition, the wife received more than $10,000 in 1998 when she cashed in a life insurance policy. The plaintiff has also filed exceptions to the Master's recommendation. These have to do with alimony, equitable distribution, and expert witness fees. As in part we have previously noted, the Master recommended that the wife receive sixty percent of the marital property, $2,000 per month in alimony and that the husband pay the wife $3,191.50 as a contribution to her expert witness fees. The husband proposes a division of the marital estate closer to fifty-six percent/forty-four percent. He would have us reduce the alimony to $800 per month. For the reasons which follow, we are satisfied to adopt the recommendations of the Master. In equitably dividing marital property, it is incumbent upon the court to analyze, at a , 98O CIVIL 1993 minimum, the relevant factors set forth in the Divorce Code. These are set forth at 23 Pa.C.S.A. 3502. An analysis of those factors leads us to the following conclusions. This is a relatively lengthy marriage. The parties were married and living together for approximately twenty-five years and have been separated for almost nine years, neither party was previously married. The husband is fifty-four years of age and is employed as president of Recycling Technologies, Inc. His average annual salary is between $75,000 and $80,000. He has medical insurance benefits which also cover his wife. He briefly attended Dickinson College but his business skills are basically self-taught. The wife is employed part-time asa desk clerk at the guest house at Carlisle Barracks. She takes home approximately $780 per month. She has a Master's Degree from Shippensburg University and a permanent teaching certificate. She has been unable to find a permanent teaching position but there is no evidence that she could not substitute teach and we agree with the Master that she should be assigned an earning capacity of at least $20,000 gross per year. The husband has some health problems for which he takes medication, including diabetes, high blood pressure, cholesterol, kidney stones, and depression. The wife is generally in good physical health but continues to suffer depression and emotional problems arising out of the break-up of the marriage. The wife's opportunity to acquire assets in the future is limited. The husband, however, has a greater opportunity for acquisition of assets in the future through his continuing involvement in Recycling Technologies Inc. The financial future of this corporation is, by all 10 980 CIVIL 1993 indications. "',_:th parties contributed to the acquisition of the marital estate, the wife as a homemaker 1) and part-time worker and the husband as a full-time employee in companies related to the rubber industry. Following separation, the husband continued to contribute to the expenses and maintenance of the marital residence, where the wife was living, in a effort to preserve that asset. The standard of living of tl:e parties established during the marriage was comfortable and middle class. It permitted them to acquire considerable personal property including antiques. Much of this personalty has already been divided to their mutual satisfaction. While the Master declined to consider tax ramifications with respect to the distribution of assets, it is important to note that alimony is taxable to the wife and deductible to the husband. Neither party is serving as the custodian of any dependent minor child. The husband is contributing towards the education of the two chil. dren of the parties who are in college. The wife is supportive of their continuing education. Considering all of the foregoing factors, we agree with the Master that an appropriate distribution of the assets of the parties should be forty percent to the husband and sixty percent to the wife and we agree with the Master, for reasons stated above, that the plaintiff's stock in RTI is not marital property. Apparently, both parties have an interest in pensions; the husband with Carlisle Corporation and the wife from teaching. The parties were unable to agree as to the values of the pensions and, according to the Master, chose not to adduce any evidence of valuation. The Master concluded that there was a conscious decision on the part of the parties and counsel not to 11 98O CIVIL 1993 insert pension issues into this litigation. Accordingly, the Master made no decision regarding this issue and neither will we. We agree with the Master in his proposed award of alimony in this case. In determining whether alimony is necessary, as well as the amount and duration of it, the court is required to consider, inter alia, the relevant factors set forth in 23 Pa.C.S.A. 3701. These involve consideration of the various matters which follow. Neither party brought any property of significant nature into the marriage. Neither party indicated any expectation of inheritance nor have they indicated any expectation of receiving funds of assets from sources other than earnings. The earnings and ability to acquire assets in the future is substantially different as between the parties. The husband has earnings nearly four times the earning potential assessed to the wife. He also has a considerable future potential, unlike the defendant. It is unlikely that the needs of the wife will be met through her earnings. The husband's ability to support himself, on the other hand, is unimpaired. The wife finds herself in her current condition because the husband left the marriage for another woman. It is clear that the husband's continued contribution to the wife is necessary in order that she be able to maintain at least a passable standard of living. As previously noted, and as observed by the Master, alimony is treated as income to the wife and as a deduction to the husband. We have wrestled with the amount of alimony recommended in this case. There is no question that $2,000 per month involves a major financial undertaking for Mr. Eckman. Given the widely disparate positions of the parties, however, we are satisfied, in the final analysis, that 12 980 CIVIL 1993 the amount is fair. We would not anticipate, however, an upward modification of this amount in the absence of a substantial i~crease in Mr. Eckman's income. For all of the foregoing reasons, we enter the following decree. DECREE AND NOW, this ~ ' day of January, 2000, the exceptions of the parties to the report filed by the Master in this case are DENIED. Upon review of the Master's recommendations, it is ordered and directed that the marital property of the parties be equitably divided as follows: 1. The following marital assets and values shall be assigned to the husband' One-half of Merrill Lynch stock account (Carlisle Corporation Stock) $ 5,750.00 Husband's life insurance policy (cash value) $16,500.00 Antiques/personal property (previously distributed to husband) $ 54,395.00 Portion of IRA with Kemper Fund $ 97,643.00 TOTAL $174,288.00 2. The following marital assets and values shall be assigned to the wife: One-half of Merrill Lynch stock account (Carlisle Corporation stock) $ 5,750.00 Marital residence at 2269 Newville Road, Carlisle, Pennsylvania $159,000.00 Wife's life insurance policy $ 10,600.00 Antiques/personal property (previously distributed to wife) $ 80,725.00 13 980 CIVIL 1993 Portion of IRA with Kemper Fund (to be rolled over to wife) $ 5,357.00 TOTAL $261,432.00 3. Husband shall transfer to wife within sixty (60) days of a final order in these proceedings by special warranty deed all his right, title, and interest to the real estate situated at 2269 Nex~'ille Road, Carlisle, Cumberland County, Pennsylvania. Wife shall take the property subject to the existing mortgage and home equity loan and shall indemnify and hold husband harmless on account of any claims which may be made by either of the lienholders against husband on account of the outstanding balances. 4. The parties shall sign all titles and documents necessary to transfer ownership of assets assigned to each of the parties as herein provided in the distribution of assets as set forth above so that all transfer are accomplished within sixty (60) days of a final order in these proceedings. Husband shall pay to wife the sum of $2,000.00 per month through the Cumberland County Domestic Relations Office upon the entry of a final order in this matter. The amount and duration shall be subject to the modification and termination provisions of the Domestic Relations Code. The plaintiff shall pay to the defendant the sum of $3,191.50 towards her expert witness fees. BY THE COURT, Keyt~ A. Hess, J. /14 98O CIVIL 1993 . Samuel L. Andes, Esquire For the Plaintiff Wayne F. Shade, Esquire For the Defendant :rlm 15