Rich v. Rich, — A.2d – (Pa. Super. 2009)
In Rich v. Rich, the Superior Court (Orie Melvin, Bender and Fitzgerald, JJ.) addressed several hotly contested issues relating to a Schuylkill County matter involving a high income support case.
The parties were married on January 28, 1989. On the day of the wedding, the parties executed a prenuptial agreement. Father was employed as a CEO of two coal companies as well as many other cogeneration facilities earning between $9 and $10 million per year. His net worth was approximately $40 million. Four children were born to the marriage and one child reached majority. The parties were separated in 2001; however, Mother and the four children continued to live in a 10,000 square foot home on 150 acres until 2004. Father continued to pay all expenses during this time frame. It was not until Mother moved from the martial home in June 2004 that a support action was instituted. Mother received an interim support order of $32,490 per month for the support of the four children.
Following a delay of nearly two years and continued monthly payments of $32,490 from Father to Mother, three days of hearing were conducted before a Master and recommendations issued requiring Father to pay a sum of $9,337 per month which did incorrectly include a reduction in support for shared custody. Mother filed Exceptions and the Schuylkill County Judge entered an order on January 3, 2008 directing Father to pay $15,791 per month, effective June 7, 2004. As a result of this award, Father had overpaid support by $498,903.02. In an effort to reduce the accumulated overpayment, the court ordered that Father only pay $11,791.67 per month and allow the difference of $4,000.00 to be credited against the overpayment.
Interestingly, Mother presented testimony about her 2005 expenses, saying they totaled over $200,000. Mother estimated that 10% of these expenses were paid on her behalf but provided no concrete proof of her actual expenses. The trial court attributed all but 10% of Mother’s expenses to the children (with the exception of attorneys’ fees associated with another matter) and did not reduce the child support obligation of Father after one of the children was emancipated.
Cross appeals ensued, with Father challenging the trial court’s award on several bases including the trial court’s failure to reduce Father’s support obligation because Mother did not identify her own expenses. Father also believed he was entitled to a reduction in support on the account of one his children reaching the age of majority. Both parties challenged the method applied by the trial court to recover Father’s overpayment. Mother raised several issues as well, contending that the trial court’s award was only a fraction of Father’s income and net wealth and would not afford her the ability to provide a comparable standard of living while the children were in Mother’s care or the one enjoyed by the family during the parties’ marriage.
The Superior Court per Bender, J found that the trial court did not abuse its discretion in crafting the support award that it did. Although Mother did not provide a specific itemization as to her expenses and there was no reduction in Father’s support obligation on the account of Mother’s expenses, the Superior Court could glean from the record and the support award that the trial court accepted Mother’s testimony that only 10% of her total expenses were paid on her own behalf and further, that the trial court was attempting to afford Mother with amenities commensurate with the parent who has fewer assets and no income. See e.g., Saunders v. Saunders, 908 A.2d 356 (Pa. Super. 2006). In terms of the lifestyle issues raised by Mother, the Superior Court relied on Colonna v. Colonna, 855 A.2d 648 (Pa. 2004), wherein the Pennsylvania Supreme Court held that “the determination of appropriateness is left to the discretion of the trial court, upon consideration of all relevant circumstances.” See, Colonna, 855 A.2d at 652. The Court further opined in the instant matter that the mere fact that the children may not have the same amenities while in Mother’s custody as they do in Father’s custody does not matter. The amenities provided under the trial court’s award were appropriate and the Superior Court was not going to disturb the trial court’s award on that basis. Every expense that Mother submitted with the exception of her attorneys’ fees in an unrelated matter was accepted by the trial court. As such, the Superior Court found that the trial court’s award could be sustained on valid grounds. Sirio v. Sirio, 951 A.2d 1188 (Pa. Super 2008).
Mother also raised several mathematical comparisons to show that Father’s support obligation was only 1.895% of his monthly income. She also contrasted her support order with the highest support order provided pursuant to the Guidelines, stating that mathematically, Father was paying for support as if he had an income of $840,000 rather than $9-10 million. Further, Mother testified that during the marriage she received $10,000 per month in spending money and Father could afford a greater support obligation. The Superior Court was not convinced by this argument and found that no case law or statute supported this method of calculating support. Further, given the dictates of Melzer v. Witsberger, 480 A.2d 991 (Pa. 1994), monthly child support in high income cases is based primarily on the reasonable needs of the children. Support orders must be crafted based on the actual amount of money that is required to care for the children based on the evidence presented.
The Superior Court affirmed the trial court’s award reducing Father’s child support obligation by $4,000 in light of the substantial overpayment made over the course the litigation. Although a substantial balance would remain after the emancipation of the last child ($250,000), the Superior Court found that there was no abuse of discretion as the trial court did its best to create a balance while keeping in mind the most important interest: the best interests of the children. The Superior Court relied on the finding in Portugal v. Portugal, 798 A.2d 246 (Pa. Super. 2002) (affirming the trial court’s broad discretion to correct underpayments of support), noting that a trial court would have discretion to correct overpayments of support as well.
The Superior Court did remand the matter on the issue of the eldest child’s emancipation and its effect on Father’s support obligation. Since the record had not been developed as to how Mother’s expenses for the remaining three children stayed the same after the eldest child’s emancipation, the Superior Court remanded for either a recalculation or a clarification of the reasons the trial court refused to amend the order. Judge Bender did point out the emancipation of a child does not support a 25% reduction in child support as Father would suggest and further, certain fixed expenses do remain the same even with the emancipation of a child.
CASE NOTE AUTHOR’S EDITORIAL COMMENTS:
Although there is no discussion about the contents of the parties’ prenuptial agreement, it is clear that Mrs. Rich signed a comprehensive waiver of spousal support and maintenance and other economic claims on her wedding day and inevitably, the issue of child support had to be hotly contested after this marriage broke down. The creative arguments that Mrs. Rich sought to employ about the disparities in the parties’ lifestyles and the amenities were rejected by the Superior Court. Clearly, one must present actual expenses as opposed to projected expenses for the children. Just because one parent may be able afford a greater support obligation does not mean that the children and/or the obligee parent are entitled to greater support. The Rich case does reinforce the idea that the actual needs of the children must be proved when conducting a Melzer analysis. Interestingly, the case does open a door for a practitioner to skirt the issue of proving the parent’s actual expenses. If a practitioner can craft a well-reasoned argument that a parent’s expenses are a particular percentage of the total household expenses, a trial court could accept this analysis rather than compelling the practitioner to provide further evidence of actual expenses for the parent.
With the new Support Guidelines scheduled to be released, the outcome in this matter could have been dramatically different. The Melzer analysis will be replaced with a formulaic approach which would have benefited Mrs. Rich given the huge disparity in the parties’ incomes. While the needs of the children will still be explored under the new Guidelines, as promoted by Recommendation 91, employing a “preliminary” calculation using a formula could have been more desirable for Mrs. Rich.
Melissa M. Boyd
Melissa M. Boyd is a partner in the Norristown firm of High Swartz, LLP, and is a member of the Council of the PBA Family Law Section. She is an active member of the Doris Jonas Freed Inn of Court and currently serves as the chair of the Equitable Distribution/Alimony Subcommittee for the Family Law Section of the Montgomery County Bar Association.