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HomeMy WebLinkAbout96-0790 SUPPORTELKE A. LIGHT, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA DOMESTIC RELATIONS SECTION Vo CIVIL ACTION - SUPPORT ALLEN J. LIGHT, Defendant PACSES NO. 540000023 NO. 96-0790 SUPPORT IN RE: DEFENDANT'S EXCEPTIONS TO MASTER'S REPORT AND RECOMMENDATION BEFORE OLER~ J. OPINION and ORDER OF COURT OLER, J., July 5, 2002. In this child support case, Plaintiff mother has filed a petition for modification of a support order, on grounds of changed circumstances based on Defendant father's acquisition of full-time employment and a concomitant termination of social security derivative benefits for the parties' children. Following a hearing, the Cumberland County Support Master recommended an increase in Defendant father's monthly support obligation and the share of the children's medical expenses for which Defendant father was responsible. The master also recommended that Defendant father be obligated to pay a portion of orthodontic expenses incurred by Plaintiff mother on behalf of one of the children. For disposition at this time are exceptions to the master's report and recommendations filed by Defendant father. For the reasons stated in this opinion, Defendant father's exceptions to the master's report and recommendation will be dismissed. STATEMENT OF FACTS Plaintiff mother is Elke A. Light, 38.~ Defendant father is Allen J. Light, 49.2 The parties were divorced in 1996 and both presently live in Carlisle, Cumberland County, ~ N.T. 45, Hr'g, Mar. 13, 2002 (hereinafter N.T. ~. 2 N.T. 48. Pennsylvania.3 Three children were born of the marriage: Andrea Light, born July 21, 1985; Michelle Light, born August 11, 1991; and Kimberly Light, born September 12, 1994.4 All three children reside with their mother.5 On July 29, 1996, Plaintiff mother filed a complaint for support with the Domestic Relations section of this court.6 On September 17, 1996, an order was entered by the court premised upon respective monthly net income/earning capacities of Plaintiff mother and Defendant father of $866.00 and $4,780.00.7 Under the order, Defendant father was obligated to pay child support of $1,328.00 per month, to provide medical insurance for the children, and to pay 85% of the children's annual unreimbursed medical expenses, "including necessary orthodontia expenses.''8 On March 30, 1998, Defendant father filed a petition for modification based on Defendant father's discharge from the United States Army because of disability.9 On May 5, 1998, an order was entered by the court premised upon respective monthly net income/earning capacities of Plaintiff mother and Defendant father of $867.00 and $2,302.00.1° Under the order, Defendant father's monthly support obligation was lowered to $721.00 and the share of annual unreimbursed medical expenses for which he was responsible was lowered to 73%. Defendant father was still responsible for providing medical insurance coverage for the children. ~ 3 N.T. 2-3, 48, 55. The dates of the marriage and divorce do not appear of record. Neither party has remarried since the divorce. Supp. Master's Report and Recommendation, filed Mar. 26, 2002, paras. 24, 27. 4 N.T. 3. 6 P1.'s Compl. for Supp., filed July 29, 1996. 7 Order of Ct., Sept. 17, 1996. aid. 9 Def.'s Pet. for Modification of an Existing Supp. Order, filed Mar. 30, 1998. l0 Order of Ct., May 5, 1998. ~ ld. 2 On August 11, 1999, Defendant father filed a petition for modification.~2 On September 23, 1999, an order was entered by the court premised upon respective monthly net income/earning capacities of Plaintiff mother and Defendant father of $955.90 and $4,095.65.~3 Defendant father's monthly support obligation was lowered to $571.00 "based upon the fact that the children receive [social security derivative] benefits in the amount of $233.00 per month per child.''~4 Under the order, Plaintiff mother was responsible for paying the first $250.00 of annual unreimbursed medical expenses, and 19% of all such expenses thereafter. Defendant father was responsible for paying 81% of annual unreimbursed medical expenses over $250.00 and for providing medical insurance coverage for the children.~S On October 30, 2001, Plaintiff mother filed the petition for modification at issue in this case based on Defendant father's acquisition of full-time employment and a concomitant termination of social security derivative benefits for the children.~6 On December 17, 2001, following a Domestic Relations Office conference, an interim order of court was entered premised upon respective monthly net income/earning capacities of Plaintiff mother and Defendant father of $1,728.54 and $3,996.35.~7 Defendant father's monthly support obligation was increased to $1,212.00 "based upon the fact that [Defendant] is no longer receiving social security derivative benefits and neither are the children.''~8 Under the order, and in accordance with the Child Support Guidelines,~9 Plaintiff mother was responsible for paying the first $250.00 of annual unreimbursed ~2 Def.'s Pet. for Modification of an Existing Supp. Order, filed Aug. grounds for the petition do not appear of record. ~3 Order of Ct., Sept. 23, 1999. ~4 Id. ~S ld' ~6 Pl.'s Pet. for Modification of an Existing Supp. Order, filed Oct. 30, 2001. ~? Order of Ct., Dec. 17, 2001. ~8 ld' ~9 See Pa. R.C.P. 1910.16-5. 11, 1999. The 3 medical expenses per child, and 30% of all such expenses thereafter.2° Defendant father was responsible for paying 70% of annual unreimbursed medical expenses over $250.00 per child and for providing medical insurance coverage for the children.2~ Defendant father made a timely request for a hearing before the Cumberland County Support Master.22 On March 13, 2002, a hearing was held before the master on the issues presented by Plaintiff mother's petition for modification. With respect to Plaintiff mother's income, Plaintiff mother testified that, in order to care for the children,23 she had chosen to be self-employed and operated a business located in a building adjoining her home. Plaintiff mother testified that the business was open for approximately twenty-six hours per week.24 According to Plaintiff mother's testimony and tax returns from her business, her business incurred a loss in the years 20 Order of Ct., Dec. 17, 2001. This percentage represents Plaintiff mother's net monthly income, $1,806.42, as a percentage of the parties' combined net monthly income, $5,981.74. See Supp. Master's Report and Recommendation, filed Mar. 26, 2002 (attached Support Guideline Worksheet). 2~ Order of Ct., Dec. 17, 2001. This percentage represents Defendant father's net monthly income, $4,175.32, as a percentage of the parties' combined net monthly income, $5,981.74. See Supp. Master's Report and Recommendation, filed Mar. 26, 2002 (attached Support Guideline Worksheet). 22 N.T. 2; see also C.C.R.P. 1910.12 note ("In Cumberland County the 'Hearing Officer' referred to in Rule 1910.12 Pa.R.C.P. is designated as the Support Master.") 23 Plaintiff mother testified that she had no physical or mental problems that would limit her ability to handle full-time employment. N.T. 45. 24 N.T. 4, 17. Plaintiff mother described her business, named "El Wood," as a "wood toy retail and manufacturing of custom wood furniture" that was open from 11 a.m. to 6 p.m. on Wednesdays, Thursdays and Fridays, and from 11 a.m. to 4 p.m. on Saturdays. Plaintiff mother also testified that she worked additional hours handling internet sales, which Plaintiff mother described as "one of [her] biggest sources of income." N.T. 4, 17, 33. Plaintiff mother testified that she worked with another individual who manufactures items for sale and who receives a commission from the sale of those items (but no wages from Plaintiff mother). N.T. 18-19. 4 1999 and 2000.25 Although no tax return for the year 2001 was available at the time of the hearing, Plaintiff mother testified that she anticipated a loss for that year as well.26 Plaintiff mother also testified that, for three months in 1995,27 she had worked about twenty hours per week as the part-time manager of a restaurant and had earned approximately $10.00 per hour.28 According to Plaintiff mother's testimony, she received $1,000.00 per month in the form of alimony payments from Defendant husband.29 For tax purposes, she filed as head of household and claimed all three children as dependents.3° With respect to Defendant father's income, Defendant father testified that he had begun full-time employment with the Commonwealth in June 2001 and that his average monthly wage, at the time of the hearing, was approximately $3,066.37.3~ According to his testimony, prior to obtaining full-time employment, Defendant father had received social security disability payments,32 a portion of which went to the parties' children, but that these payments had ceased when he started working full-time.33 Defendant father 25 N.T. 25-27; Pl.'s Ex. 1, 2, Hr'g, Mar. 13, 2002 (hereinafter Pl.'s / Def.'s Ex. ~. In 1999, Plaintiff mother's business experienced a loss of $6,000.00, see Pl.'s Ex. 1, and, in 2000, the business experienced a loss of $7,700.00, see Pl.'s Ex. 2. 26 N.T. 6, 27-28. 27 Plaintiff mother testified that she quit because Defendant father was relocated. N.T. 8. 2a N.T. 8, 46-47. 29 N.T. 10. 30 N.T. 45; Pl.'s Ex. 3. 3~ N.T. 50-52; Def.'s Ex. 1. Defendant father's hourly rate was $18.87. N.T. 50. 32 Defendant father testified that he was "rated 100 percent permanently totally disabled by the Veteran's Administration." N.T. 49. 33 N.T. 48-49. Although the disability payments stopped in December 2001, by stipulation, the parties agreed that the effective date of modification of the support order would be November 1, 2001. See Supp. Master's Report and Recommendation, filed Mar. 26, 2002, para. 18. 5 testified that he continued to receive a military pension in the amount of $3,373.00 per month, of which $2,315.00 was tax-free.34 According to Defendant father's testimony, medical insurance coverage for the children was provided through his employment at no cost.35 Defendant father paid $1,000.00 per month to Plaintiff mother in the form of alimony payments,36 $427.00 per month toward life insurance under which the parties' children were named as beneficiaries,37 $39.81 per month toward a "Survivor's Benefit Plan" for the children,38 $203.60 per month toward a retirement plan,39 and $42.46 per month as mandatory union dues.4° For tax purposes, he filed as a single adult.41 With respect to the orthodontia expenses incurred by Plaintiff mother on behalf of the parties' daughter, Michelle Light, Plaintiff mother testified that she was advised by an orthodontist in January 2001 that the child required orthodontic treatment and that the estimated cost would be $2,535.00.42 Plaintiff mother sought a second opinion from a dentist, who concurred with the recommendation.43 In February 2001, Plaintiff mother advised Defendant father of the necessity of such treatment. According to Plaintiff mother's testimony, Defendant father refused to contribute to the costs of treatment until 34 N.T. 61-62. The portion of the pension that was not entirely tax-free was subject only to federal tax liability. N.T. 71. 35 N.T. 69-70. 36 N.T. 10, 56. 37 N.T. 53, 68-69; Def.'s Ex. 2, 4. 38 N.T. 53; Def.'s Ex. 2. 39 N.T. 69; Def.'s Ex. 1. The deductions for the retirement plan are mandatory. N.T. 69. 4o Def.'s Ex. 1. 41 N.T. 71. 42 N.T. 11-13. The child's orthodontist was identified as Dr. Apicella, of Conner-Apicella Orthodontic Associates. N.T. 12. 43 N.T. 12-13, 60-61. 6 he could obtain an opinion from another orthodontist and told her that she "should go see an attorney.''44 According to Plaintiff mother's testimony, in January 2002, she finalized plans for the child's orthodontic treatment. In that month, Plaintiff mother agreed to pay the estimated $2,535.00 charge for the treatment and entered into a payment agreement with the orthodontist under which she would make an immediate down payment of $1,035.00, followed by fifteen installments of $100.00 per month commencing in February 2002 and continuing through April 2003.4s The treatment began in February 2002.46 On March 26, 2002, the master filed a report and recommendation.47 The master determined that Plaintiff mother's net monthly income was $1,806.42 based on the master's findings that Plaintiff mother had an earning capacity of $1,040.00 per month, that she received $1,000.00 per month in the form of alimony payments, and that she had a tax liability of $233.58 per month.4a The master determined that Defendant father's net monthly income was $4,175.32 based on the master's findings that Defendant father had an earning capacity of $3,066.37 per month, that he received $3,077.00 per month in the form of pension payments,49 that he had a tax liability of $721.99 per month, and that he paid $1,000.00 per month as alimony, $203.60 per month as part of a mandatory retirement plan, and $42.46 per month as mandatory union dues.so 44 N.T. 12. Plaintiff mother did not provide Defendant father with permission to take the parties' daughter, Michelle Light, out of school to see another orthodontist. N.T. 15-16. 4s N.T. 13. Plaintiff mother had made the down payment and the first monthly installment at the time of the hearing. Id 46 N.T. 12-14. 47 Supp. Master's Report and Recommendation, filed Mar. 26, 2002. 48 See id. 49 Of Defendant father's total pension payments of $3,373.00 per month, $2,315.00 was tax-free but the remaining $1,058.00 was subject to 28% federal tax liability, that is, $296.00, resulting in net monthly pension payments of $3,077.00. See id. 50 See id. 7 On March 26, 2002, an interim order of court was entered implementing the recommendations of the Support Master, which were as follows: A. The Defendant shall pay support for his children, Andrea Light, bom July 21, 1985; Michelle Light, bom August 11, 1991; and Kimberly Light, bom September 12, 1994, in the amount of $1,212.00 per month. B. The Defendant shall pay $38.00 per month towards arrearages,tS~1 C. The Defendant shall pay the sum of $1,300.00 towards the orthodontic expenses incurred on behalf of his daughter, Michelle, payable at the rate of $100.00 per month commencing with the month of April, 2002, and a like amount each month through April, 2003. Said payments shall be made directly to the child's orthodontist, Conner-Apicella Orthodontic Associates. D. The Defendant shall pay 70% of unreimbursed medical expenses incurred by said children which exceed $250.00 per year per child. The Plaintiff shall pay the remaining 30% of said expenses. E. The effective date of this order is November 1,2001. F. Except as amended herein, the order of December 17, 2001, shall remain in full force and effect.52 The recommended monthly child support obligation represented a downward deviation of $40.00 from the guideline amount, $1,252.00. In the report, the master explained that this deviation was based on the $39.81 that Defendant father contributed each month toward the "Survivor's Benefit Plan" for the benefit of the children.53 On April 5, 2002, Defendant filed exceptions to the master's report and recommendation, in which Defendant made the following contentions: [1.-2.] The Master erred in failing to require that Plaintiff submit her 2001 federal income tax return for consideration... [of] Plaintiff's income. 5~ Plaintiff mother testified that arrearages amounted to approximately $1,500.00. N.T. 10. Defendant father does not challenge the recommendation with respect to the payment toward arrearages. See Pa. R.C.P. 1910.12(0 ("Matters not covered by exceptions are deemed waived .... "). 52 Order of Ct., Mar. 26, 2002. 53 See Supp. Master's Report and Recommendation, filed Mar. 26, 2002. 3. The Master erred when he failed to determine that Plaintiff's information relative to her self-employed income lacked credibility based upon Plaintiff's four years of claimed losses in that business. [4.-5.] The Master erred in determining that Plaintiff's business has generated very little cash flow... [and] in failing to note in his Findings of Fact that Plaintiff has operated her own business and, thus, has experience in operating a small business .... [6.-9.] The Master erred in failing to determine that the Plaintiff, whose last employment outside of her self-employment was at a rate of $10.00 per hour [had], at least, an earning capacity of $10.00 per hour... [in light of the Master's findings that,] "[i]f the Plaintiff worked full time, it is believed that her income would be considerably in excess of $240.00 per week,".., that Plaintiff chooses to work approximately three and one-half days per week[,]... [and that] Plaintiff has no medical or physical impediments to employment .... 10. The Master erred in failing to give Defendant the opportunity to claim the parties' children as federal income tax dependents as permitted by the Pennsylvania Rules of Civil Procedure under circumstances in which [Defendant] is providing 70% of unreimbursed medical expenses and 70% of the support to provide for all of the children's needs. 11. The Master erred in failing to give consideration to the fact that Defendant maintains life insurance on himself with his children as beneficiaries under circumstances where he is 100% disabled as per the United States Veterans Administration and was considered disabled by the Social Security Administration, all of which will make it impossible for Defendant to otherwise maintain life insurance for the benefit of his children if he does not maintain his current life insurance. [12.-14.] The Master erred.., in determining that a second opinion that Plaintiff secured from a "dentist" was sufficient to bind Defendant for the costs of the orthodontic treatment when [Defendant] was not afforded the opportunity to secure a second opinion from another orthodontist .... 15. The percentage of uninsured medical expenses and payment for orthodontic expenses is in err in that the parties' incomes should be modified as suggested above. 16. The Master erred in failing to create an obligation upon the Plaintiff to pay the first $250.00 in orthodontic treatment each year over the 9 period of time that the treatment will be occurring and over the period of time when payments will be made; such that, rather than obligating Plaintiff for the first $250.00 of orthodontic treatment, [Plaintiff] should have been given the obligation of $250.00 per year for each year that the treatment will be received and the payments are due for a total of $750.00 as [Plaintiff's] responsibility toward the costs of the orthodontic treatment.54 Briefs were submitted by both parties on the issues presented by the exceptions. DISCUSSION Statement of Law Review of Exceptions to Support Master's Report. In child support cases, although the trial court should give a report issued by a support master the "fullest consideration," particularly with respect to the credibility of witnesses, the court still must conduct its own review of the evidence to determine whether the master's recommendations are proper. Goodman v. Goodman, 375 Pa. Super. 504, 507, 544 A.2d 1033, 1035 (1988); Gomez v. Gomez, 11 Phila. Co. Rptr. 211, 226-27 (1984). With respect to the issues raised by exceptions filed by a party to a master's report, "[i]t is the sole province and the responsibility of the [trial] court to set an award of support, however much it may choose to utilize a master's report." Goodman, 375 Pa. Super. at 507-08, 544 A.2d at 1035; see also Pa. R.C.P. 1910.12(f)-(h) (stating that, if no exceptions are filed to certain issues in master's report and interim order, those issues are not presented for review). Determination of Income. Both parents share a responsibility to provide support to their children to the extent that their respective incomes and earning capacities allow them to do so. Mooney v. Doutt, 766 A.2d 1271, 1273 (Pa. Super. Ct. 2001). Pennsylvania Rule of Civil Procedure 1910.16-2, which deals with the calculation of income for purposes of determining a party's support obligation, provides, in pertinent part, as follows: (a) Monthly Gross Income. Monthly gross income is ordinarily based upon at least a six-month average of all of a party's income. The term 54 Def.'s Exceptions to Master's Report and Recommendations Dated Mar. 26, 2002, filed Apr. 5, 2002. 10 "income"... limited to: [encompasses] many types of income including, but not (1) wages, salaries, bonuses, fees and commissions; (2) net income from business or dealings in property; (6) social security disability benefits, social security retirement benefits, temporary and permanent disability benefits, workers' compensation and unemployment compensation; (7) alimony .... Pa. R.C.P. 1910.16-2(a). With respect to the determination of net monthly income, the Rule provides, in pertinent part, as follows: Unless otherwise provided in these rules, the court shall deduct only the following items from monthly gross income to arrive at net income: (A) federal, state, and local income taxes; (B) F.I.C.A. payments and non-voluntary retirement payment s; (C) union dues; and (D) alimony paid to the other party. Pa. R.C.P. 1910.16-2 (c)(1). When a party has forgone available employment or has accepted a lower-paying position than others for which the party is qualified, the court has discretion to impute an earning capacity to the party that exceeds the party's actual income. Mooney, 766 A.2d at 1273; DeMasi v. DeMasi, 366 Pa. Super. 19, 33, 530 A.2d 871, 878 (1987). In such cases, the focus of the inquiry is not on the "actual earnings" of the party in a given year, but on the amount that the party could earn in light of all considerations relevant to the party's ability to work, such as training, health and child care needs. Id.; see also Mooney, 766 A.2d at 1273. Although the court should not assign a lower earning capacity to a parent who has intentionally reduced income in an effort to avoid support obligations, when a parent has chosen to work fewer hours in order to care for his or her children, that parent should not be "penalized for having remained in the home." DeMasi, 11 366 Pa. Super. at 33, 530 A.2d at 878 (stating that the "nurturing of [children] may supersede the economic benefits of full-time employment"); accord Perlberger v. Perlberger, 426 Pa. Super. 245, 279-80, 626 A.2d 1186, 1204-05 (1993). In determining the earning capacity of a parent, the court may accept any evidence, whether documentary or testimonial, as conclusive proof of income, and need not require the production of additional supporting evidence. See Smith v. Smith, 439 Pa. Super. 283,299-300, 653 A.2d 1259, 1267 (1995) (stating that court may accept estimate of valuation even if it "would have been different if more accurate and complete evidence had been presented"); Grandovic v. Grandovic, 387 Pa. Super. 619, 623-24, 564 A.2d 960, 962 (1989) (stating that "supporting documentation" is not necessary to support trial court's determination of income made on basis of witness testimony). Accordingly, the trial court has the discretion to determine the income of either party solely on the basis of testimony and without supporting documentation. Id. "The trial court [is] free to accept all of [a party's] testimony, portions of [the] testimony, or none of [the] testimony regarding the true and correct value of the [party's] income." Smith, 439 Pa. Super. at 300, 653 A.2d at 1267; accord Grandovic, 387 Pa. Super. at 623-24, 564 A.2d at 962. Dependency Tax Exemption. Pennsylvania Rule of Civil Procedure 1910.16-2 provides, in pertinent part, as follows: In order to maximize the total income available to the parties and children, the court may, as justice and fairness require, award the federal child dependency tax exemption to the non-custodial parent, or to either parent in cases of equally shared custody .... The tax consequences resulting from an award of the child dependency exemption must be considered in calculating each party's income available for support. Pa. R.C.P. 1910.16-2(f). Medical Expenses. Pennsylvania Rule of Civil Procedure 1910.16-6 provides, in pertinent part, as follows: (c) Unreimbursed Medical Expenses. Unreimbursed medical expenses of the obligee or the children shall be allocated between the parties in proportion to their respective net incomes and obligor's share added to his or her basic support obligation. 12 (1) For purposes of this subdivision, medical expenses are annual unreimbursed medical expenses in excess of $250 per person which are recurring and can be reasonably predicted by the court at the time of establishment or modification of the support order. Medical expenses include.., all expenses incurred for reasonably necessary medical services and supplies, including.., orthodontia. (2) If there are annual medical expenses in excess of $250 per person which are unpredictable or non-recurring, the court may order that such expenses, if incurred, be allocated in proportion to the parties' net incomes. The court may direct obligor to pay his or her share either to the obligee or directly to the health care provider. (3) An annual limitation may be imposed when the burden on the obligor would otherwise be excessive. (4) Annual expenses pursuant to this subdivision (c), shall be calculated on a calendar year basis. Pa. R.C.P. 1910.16-6(c) (emphasis added); see alamo Act of Dec. 4, 1992, P.L. 757, No. 114, § 2, as amended, 23 Pa. C.S.A. § 4326(e) (West 1998 & Supp. 2001) ("[T]he court may require that either parent or both parents pay a designated percentage of the reasonable and necessary uncovered health care expenses of the parties' children .... "). Application of Law to Facts Determination of Income. In the present case, it is believed that Plaintiff mother's income should be determined on the basis of her earning capacity rather than her actual earnings. Because she wished to be home for her children, Plaintiff mother has forgone outside employment for which she was qualified, such as manager of a restaurant or other business, and, instead, has opted for self-employment, which has resulted in a decrease in her earnings. In this situation, it was appropriate for the master to assign to Plaintiff mother an earning capacity based on the amount she could earn annually, rather than on the actual profits or losses from her business. According to Plaintiff mother's testimony, which was found to be credible, Plaintiff mother worked at her business twenty-six hours per week. Plaintiff mother also testified that she, in her previous position as a part-time manager of a restaurant, had earned approximately $10.00 per hour. In the court's opinion, based on Plaintiff mother's ability to earn $10.00 per hour and to work twenty- 13 six hours per week, it was appropriate to assign to Plaintiff mother a monthly earning capacity of $1,040.00.55 Although Defendant father contends that Plaintiff mother's earning capacity should be higher because, if she worked full time, her income would be "considerably in excess of $240.00 per week,''56 the court is not bound to assign an earning capacity to Plaintiff mother based on full-time employment. Rather, the court has discretion to determine earning capacity on a part-time work schedule in light of a party' s commitment to care for his or her children -- the reason, in the case, that Plaintiff mother chose part- time self-employment. Because it would be inappropriate to "punish" Plaintiff mother for this decision, it was proper to assign to Plaintiff mother an earning capacity that reflects her part-time work schedule. With respect to Defendant father's contention that the master undervalued Plaintiff mother's annual income from her business, it is believed that the findings indicated in the master's report represent a reasonable estimation of the business's profitability (or lack thereof). Income may be proven by either testimonial or documentary evidence, and the trial court is entitled to believe all, some or none of the evidence presented on the issue. Here, Plaintiff mother presented federal income tax returns from 1999 and 2000, both of which showed that her business had incurred a loss in those years. According to Plaintiff mother's testimony, which was found to be credible, she would incur a similar loss for 2001. Although the court was not presented with the tax return for 2001, Plaintiff mother's testimony provided a sufficient basis to conclude that the business would incur ss As is clear from this discussion, the court has considered both the losses Plaintiff mother has incurred in her business and the employment experience Plaintiff mother has gained through the operation of the business. See also Supp. Master's Report and Recommendation, filed Mar. 26, 2002 ("[Plaintiff mother] has gained experience in running her own business, albeit at a loss for over three years."). Contra Def.'s Exceptions to Master's Report and Recommendations Dated Mar. 26, 2002, filed Apr. 5, 2002, paras. 4-5 ("The Master erred in determining that Plaintiff's business has generated very little cash flow... [and] in failing to note in his Findings of Fact that Plaintiff has operated her own business and, thus, has experience in operating a small business .... "). 56 Supp. Master's Report and Recommendation, filed Mar. 26, 2002. 14 another loss in 2001. Particularly in light of the fact that Plaintiff mother's earning capacity was determined on the basis of the wages from her prior employment, and not of the income from her business, it is believed that this finding does not represent an abuse of discretion.57 With respect to Defendant father's contention that the master "fail[ed] to give consideration to the fact that Defendant maintains life insurance on himself with his children as beneficiaries,''58 it is believed that the master properly computed Defendant father's net monthly income. Pennsylvania Rule of Civil Procedure 1910.16-2 limits the deductions from gross monthly income that should be used to compute net monthly income. Specifically, the Rule does not provide for a deduction for expenses associated with life insurance payments. In this case, the master deducted tax payments, non- voluntary retirement payments, union dues and alimony from the Defendant's gross monthly income, all of which are enumerated as proper deductions in Rule 1910.16-2.59 Thus, it is believed that the determination of Defendant's net monthly income was correct. Cf. Seawalt v. Muldoon, 406 Pa. Super. 94, 593 A.2d 886 (1991) (upholding, 57 Although Defendant father, in the brief in support of the exceptions, urged that "the evidence presented [in this case] reflects.., the fact that Plaintiff [mother] maintains expenses substantially greater than the income that she claims," see Defendant's Brief in Support of Exceptions to Master's Report, filed June 28, 2002, Defendant father has identified no evidence to dispute the challenged determination of Plaintiff mother's income. As discussed previously, this calculation was based on the wages that Plaintiff mother earned in her prior employment, and, as such, Plaintiff mother's testimony regarding the losses incurred in her current business was not material to the finding that Plaintiff mother has a monthly earning capacity of $1,040.00. When this earning capacity is considered with the $1,000.00 per month in alimony payments and the $1,212.00 per month in child support payments that Plaintiff mother receives from Defendant father, Plaintiff mother has an imputed annual income of at least $39,024, which is sufficient to meet Plaintiff mother's claimed annual expenses of $34,688.02. See Pl.'s Ex. 4; see also N.T. 9-10 (Testimony of Plaintiff mother) (stating that she uses credit cards and money from savings to cover annual expenses). 5a Def.'s Exceptions to Master's Report and Recommendations Dated Mar. 26, 2002, filed Apr. 5, 2002, para. 11. 59 Defendant father did not challenge the accuracy of these deductions. 15 over challenge that trial court did not reduce party's income in accordance with life insurance expenses incurred on behalf of children, determination of child support obligation). In light of the determination that both parties' earning capacities were correctly determined by the master, and because neither party has raised exceptions to other aspects of the computation of the parties' net monthly incomes, Plaintiff mother will be assigned a net monthly income of $1,806.42, and Defendant father will be assigned a net monthly income of $4,175.32. Although the recommended level of support under the Child Support Guidelines is $1,242.00 per month,® the court is of the opinion that Defendant father's monthly support obligation should be $1,212.00. This represents a $40.00 deviation from the guideline amount intended to offset Defendant father's contribution to the "Survivor's Benefit Plan," which was for the exclusive benefit of the parties' children. Neither party has challenged this recommendation, and the court is of the view that it represents a proper deviation in the best interests of the children. See Pa. R.C.P. 1910.16-5 (stating that court, in deciding whether deviation from guideline amount is proper, may consider "relevant and appropriate factors, including the best interests of the child or children").6~ Thus, in accordance with the master's recommendation, Defendant father's monthly support obligation will be found to be $1,212.00. To the extent that Defendant father's contention that the master failed to consider his payments for life insurance could be construed as a challenge to the master's determination of Defendant father's support obligation, rather than his net monthly income, the court is of the opinion that these payments did not represent an expense that would justify a deviation based on the best interests of the children. See Pa. R.C.P. 1910.16-5 (enumerating list, in which life insurance payments are not included, of 60 See Pa. R.C.P. 1910.16-4. The calculations are listed in the Support Master's Report and Recommendation, filed Mar. 26, 2002. 61 See also Supp. Master's Report and Recommendation, filed Mar. 26, 2002 (stating that payments for "Survivor's Benefit Plan" were "in the best interest of the children"). 16 appropriate reasons for deviation from amount of support recommended by application of guidelines). Although the children were listed as beneficiaries of the policies, life insurance also provides substantial benefits to the holder in terms of financing and credit transactions. Thus, because these payments were not exclusively for the benefit of the children, the court's decision not to deviate from the recommended guideline amount of support on this basis could not be considered an abuse of discretion. Cf. Searva/t, 406 Pa. Super. 94, 593 A.2d 886 (upholding, over challenge that trial court did not reduce party's income in accordance with life insurance expenses incurred on behalf of children, determination of child support obligation). Dependency Tax Exemption. The court is of the view that the evidence presented in this case does not support the contention that the master erred in failing to recommend that Defendant father should be awarded the federal child dependency tax exemption for the parties' children. Under Pennsylvania Rule of Civil Procedure 1910.16-2, the court has discretion to make such an award, "as justice and fairness require," for the purpose of "maximiz[ing] the total income available to the parties and children." Pa. R.C.P. 1910.16- 2(0. In this case, no evidence was presented that transferring the exemption from Plaintiff mother, the custodial parent, to Defendant father would significantly increase the income available for the support of the children. Further, because Plaintiff mother has previously claimed the exemption for the parties' children, "justice and fairness" seem to suggest that Plaintiff mother should retain this status. Thus, it is believed that the decision not to award to Defendant father the federal child dependency tax exemption for the parties' children could not be considered an abuse of discretion. Medical Expenses. In the present case, it is believed that Defendant father should be obligated to contribute his pro rata share of the orthodontic expenses incurred by Plaintiff mother on behalf of the parties' daughter, Michelle Light. Pennsylvania Rule of Civil Procedure 1910.16-6 provides that reasonable orthodontic expenses "shall be allocated between the parties in proportion to their respective net incomes." Pa. R.C.P. 1910.16-6(c). In this case, Plaintiff mother presented evidence that she received two recommendations, from an orthodontist and a dentist, that the child required orthodontic 17 treatment. In the court's opinion, these recommendations were adequate to show that both the procedure and the expenses associated with it were reasonably necessary. Pennsylvania Rule of Civil Procedure 1910.16-6 provides that the cost of treatment should be allocated between the parties according to their respective net incomes. Thus, in this case, Defendant father should be required to contribute 70% of annual unreimbursed medical expenses over $250.00,62 meaning that, with respect to the orthodontic treatments at issue, Defendant father should be obligated to pay $1,599.50 of the $2,535.00 charges. However, neither party has taken exception to the Support Master recommendation that Defendant father's obligation for this treatment should be lowered to $1,300.00, and, therefore, Defendant father will be obligated to contribute $1,300.00 toward the orthodontic expense incurred by Plaintiff mother on behalf of the parties' daughter, Michelle Light. See Pa. R.C.P. 1910.12(f) ("Matters not covered by exceptions are deemed waived ...."). Plaintiff mother will be required to contribute the remaining amount of these expenses. Because Plaintiff mother has entered into an agreement under which she will pay for a portion of the orthodontic expenses through monthly installment payments extending over two calendar years, Defendant father contends that Plaintiff mother should be required to contribute $250.00 for each of these calendar years in addition to her pro rata share of the expenses. However, in the court's view, Defendant father's argument is not supported by Pennsylvania Rule of Civil Procedure 1910.16-6, which provides that the Rule's allocation scheme applies to "all expenses incurred [during a calendar year] for reasonably necessary medical services." Pa. R.C.P. 1910.16-6(c) (emphasis added). Under this provision, the court should consider only when the 62 This percentage represents Defendant father's net monthly income, $4,175.32, as a percentage of the parties' combined net monthly income, $5,981.74. See Supp. Master's Report and Recommendation, filed Mar. 26, 2002. Contra Def.'s Exceptions to Master's Report and Recommendations Dated Mar. 26, 2002, filed Apr. 5, 2002, para. 15 ("The percentage of uninsured medical expenses and payment for orthodontic expenses is in err in that the parties' incomes should be modified as suggested [in Defendant's exceptions]."). 18 obligation to pay for medical treatments was accepted,63 regardless of whether financing methods extend payments over two or more calendar years.64 In the present case, although under the payment agreement part of Plaintiff mother's payments for the orthodontic treatment will be deferred until the year 2003, the expenses were incurred wholly in January 2002, when Plaintiff mother agreed to pay the $2,535.00 charge for the treatment. Plaintiff mother's arrangement to satisfy the obligation through installment payments did not alter the fact that the obligation to pay the expenses was accepted in January 2002. As such, Plaintiff mother will be responsible for the first $250.00 of these expenses, and, thereafter, both parties will be responsible for their respective shares of these expenses, as determined by the Support Master. The master also recommended, apparently based on the payment agreement between Plaintiff mother and the orthodontist's office, that Defendant father should satisfy this obligation by paying $100.00 per month directly to the orthodontist's office commencing in April 2002 and continuing through April 2003. In the court's view, it was proper to require Defendant father to assume the portion of the orthodontic expenses as yet unpaid by Plaintiff mother. Therefore, Defendant father will be required to make installment payments directly to the child's orthodontist at the rate of $100.00 per month commencing in April 2002 and continuing through April 2003.65 For the foregoing the reasons, the following order will be entered: 63 See Black's Law Dictionary 771 (7th ed. 1999) (defining "incur" as "to... bring on oneself (a liability or expense)"). 64 Otherwise, a custodial parent who paid for a child's medical procedures by use of a credit card would need to repay the debt within one calendar year or face the penalty of being required to contribute an additional $250.00 toward those expenses. 65 Pennsylvania Rule of Civil Procedure 1910.16-6 contemplates such expenses being paid directly to the medical service provider. Pa. R.C.P. 1910.16-6(c)(2) ("If there are annual medical expenses in excess of $250 per person which are unpredictable or non- recurring, the court.., may direct obligor to pay his or her share either to the obligee or directly to the health care provider."). 19 ORDER OF COURT AND NOW, this 5th day of July, 2002, after careful consideration of "Defendant's Exceptions to Master's Report and Recommendations Dated March 26, 2002," and the briefs submitted by the parties on the issues presented therein, and for the reasons stated in the accompanying opinion, the exceptions are dismissed and it is ordered and directed as follows: 1. Defendant father shall pay support for his children, Andrea Light, born July 21, 1985; Michelle Light, born August 11, 1991; and Kimberly Light, born September 12, 1994, in the amount of $1,212.00 per month. 2. Defendant father shall pay $38.00 per month towards arrearages. 3. Defendant father shall pay the sum of $1,300.00 toward the orthodontic expenses incurred on behalf of the parties' daughter, Michelle Light. In satisfaction of this obligation, Defendant father shall pay directly to the child's orthodontist, Conner-Apicella Orthodontic Associates, $100.00 per month commencing with the month of April 2002 and continuing through April 2003. 4. Defendant father shall pay 70% of unreimbursed medical expenses incurred on behalf of the parties' children that exceed $250.00 per year per child. The Plaintiff shall pay the remaining 30% of said expenses. 5. The effective date of this order is November 1,2001. 6. Except as amended herein, the generic and other terms of the order of court dated December 17, 2001, shall remain in full force and effect. BY THE COURT, /s/J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. 20 Samuel L. Andes, Esq. 525 North 12th Street P.O. Box 168 Lemoyne, PA 17043 Attorney for Plaintiff Bradley L. Griffie, Esq. 200 North Hanover Street Carlisle, PA 17013 Attorney for Defendant 21 22 ELKE A. LIGHT, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA DOMESTIC RELATIONS SECTION Vo CIVIL ACTION - SUPPORT ALLEN J. LIGHT, Defendant PACSES NO. 540000023 NO. 96-0790 SUPPORT IN RE: DEFENDANT'S EXCEPTIONS TO MASTER'S REPORT AND RECOMMENDATION BEFORE OLER, J. ORDER OF COURT AND NOW, this 5th day of July, 2002, after careful consideration of "Defendant's Exceptions to Master's Report and Recommendations Dated March 26, 2002," and the briefs submitted by the parties on the issues presented therein, and for the reasons stated in the accompanying opinion, the exceptions are dismissed and it is ordered and directed as follows: 1. Defendant father shall pay support for his children, Andrea Light, born July 21, 1985; Michelle Light, born August 11, 1991; and Kimberly Light, born September 12, 1994, in the amount of $1,212.00 per month. 2. Defendant father shall pay $38.00 per month towards arrearages. 3. Defendant father shall pay the sum of $1,300.00 toward the orthodontic expenses incurred on behalf of the parties' daughter, Michelle Light. In satisfaction of this obligation, Defendant father shall pay directly to the child's orthodontist, Conner-Apicella Orthodontic Associates, $100.00 per month commencing with the month of April 2002 and continuing through April 2003. 4. Defendant father shall pay 70% of unreimbursed medical expenses incurred on behalf of the parties' children that exceed $250.00 per year per child. The Plaintiff shall pay the remaining 30% of said expenses. 5. The effective date of this order is November 1,2001. 6. Except as amended herein, the generic and other terms of the order of court dated December 17, 2001, shall remain in full force and effect. BY THE COURT, Samuel L. Andes, Esq. 525 North 12th Street P.O. Box 168 Lemoyne, PA 17043 Attorney for Plaintiff Bradley L. Griffie, Esq. 200 North Hanover Street Carlisle, PA 17013 Attorney for Defendant J. Wesley Oler, Jr., J.