Smith, D. v. Smith, B. ( 2014 )

J-S48033-14
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
DALE E. SMITH, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
BARBARA A. SMITH,
Appellee No. 181 MDA 2014
Appeal from the Order December 31, 2013
in the Court of Common Pleas of Dauphin County
Civil Division at No.: 2002 CV 492
BEFORE: DONOHUE, J., JENKINS, J., and PLATT, J.*
MEMORANDUM BY PLATT, J.: FILED SEPTEMBER 16, 2014
order granting the petition for special relief filed by Appellee, Barbara A.
distribution of certain assets. We affirm.
The trial court summarized the factual history of this case as follows:
This divorce matter has been in constant litigation since its
inception in 2002 [when Husband filed a divorce complaint]. . . .
[T]he instant appeal only pertains to an equitable distribution
..
The parties were married on August 2, 1980 and have two
adult children. During the marriage, [Husband] and [Wife]
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*
Retired Senior Judge assigned to the Superior Court.
J-S48033-14
acquired interests in certain businesses, held along with other
family members. The business which is presently at issue is
called HSD Properties, Incorporated [(HSD)].[1] HSD . . . was
created in 1993 with Harry Smith and his four children, Wade
Smith, Steven Smith, [Appellant] and Juanita Hannold as equal
20% shareholders.[2] While the divorce action was pending,
HSD . . . entered into a lease contract with Chesapeake Energies
for natural gas drilling rights on the Sullivan County property for
the amount of $658,625.00, which resulted in a[n up-front
bonus] monetary distribution of $131,725.00 to each
shareholder. The share belonging to [the parties] was placed in
escrow pending the resolution of the equitable distribution claim
in the divorce action and has since been distributed.
(Trial Court Opinion, 4/10/14, at 1-2).
The trial court appointed a divorce master (Master) on April 13, 2010,
who held five hearings from January 21, 2011 through October 11, 2012.
stated
interest of 20% in HSD which includes the up-front bonus payment . . .
[and] a 20% interest in the corporation going forward, which would include
any money received as a result
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1
HSD owns approximately 263 acres in Sullivan County, Pennsylvania.
(See
2
HSD is an S corporation and has not issued stock certificates to represent
See Trial Court Opinion, 4/10/14, at
5, 11); see also Krosnar v. Schmidt Krosnar McNaughton Garrett Co.,
423 A.2d 370, 375 (Pa. Super. 1980) (stating that corporation need not
issue stock certificates evidencing shareholder status unless issuance is
demanded by shareholder).
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percentage distribution should be applied to the escrowed funds and to the
Id. at 11). The Master also recommended that
See
id.
On June 10, 2013, the trial court entered a divorce decree (Divorce
Decree) in which it approved and incorporated the equitable distribution
s
lease bonus [and] 45% of the 20% interest in HSD going forward[.] . . .
[Wife] shall receive . . . 55% of escrowed funds from gas lease bonus [and]
6/10/13, at unnumbered pages 1-2). Neither party appealed from the
Divorce Decree.
On July 26, 2013, Wife filed a petition for special relief, seeking
3
Wife requested
the court to order Husband to transfer eleven shares of HSD stock to her to
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3
Johnson v. Johnson, 864 A.2d 1224, 1230 (Pa. Super. 2004),
appeal denied, 878 A.2d 865 (Pa. 2005) (citation omitted).
special relief are not limited to the period when an action is pending[,] since
[i]t is easily conceivable that, after the final disposition of all matters in the
divorce action, a party may need the assistance of the court in enforcing
Romeo v. Romeo, 611 A.2d 1325, 1328 (Pa.
Super. 1992) (citation and internal quotation marks omitted).
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memorialize her ownership interest in the company, allowing her to manage
and control her interest and to receive tax documents directly from the
company. (See Petition to Enforce Divorce Decree, 7/26/13, at unnumbered
pages 1-4). Husband filed an answer on August 26, 2013, contending that a
Divorce Decree directed the transfer of stock, and provided only that Wife
receive 55% of any future earnings and bear 55% of any liabilities. (See
Answer to Petition to Enforce Divorce Decree, 8/26/13, at 3-4). The trial
court heard argument on the issue on September 25, 2013. On December
transfer 55% of his 20% interest in HSD Properties,
The [c]ourt recognizes that HSD Properties, Inc. has not
previously issued stock certificates to represent the
a percentage interest in the corporation. In order for Wife to
enjoy any of the benefits and privileges in the corporation,
considering the complexities of this case and the strained
relationships between the parties and other owners of the
corporation, this [c]ourt finds that the equitable solution is to
order shares of stocks to be issued. In essence, Husband owns
comply with the distribution of assets contemplated by the
Master.
to amicably resolve any procedural issues with respect to the
issuance of the stock certificates outlined above. However,
should that not be the case, then each party shall submit to this
court within the next thirty (30) days, a reasonable proposal as
to how the transfer of assets can best be accomplished.
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(Order, 12/31/13, at 1-2) (emphasis original).
On January 29, 2014, Husband filed a proposal in which he advocated,
in lieu of the stock transfer, that he continue to pay Wife 55% of any income
he received from the company, and that Wife continue to pay her share of
any expenses.4 (See -2). On that same
date, Husband filed a timely notice of appeal from the December 31, 2013
order and a concise statement of errors complained of on appeal. See
Pa.R.A.P. 1925(b). The trial court filed a Rule 1925(a) opinion on April 10,
2014. See Pa.R.A.P. 1925(a).
Husband raises the following issues for our review:
1. The trial [c]ourt erred by ordering [Husband] to transfer
55% of his 20% interest in HSD Properties, Inc. to . . . Wife
20% interest in HSD goi
receive 45% of the 20% interest in HSD going forward[?]
2. The trial [c]ourt erred in ordering . . . Husband to transfer
55% of his 20% interest in HSD Properties, Inc. to . . . Wife
ed May 15, 2013 did not
Properties, Inc. be transferred to Wife and Wife failed to file an
3.
recommendation that
transfer ownership of 55% of his 20% interest in HSD
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4
Wife did not submit an alternative proposal because she wholly supports
See
Brief, at 5, 11).
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Properties, Inc. to Wife, when no [e]xceptions were filed by Wife
shares have been
previously issued by HSD Properties, Inc. to Husband[?]
4. The trial [c]ourt erred in ordering Husband to transfer 11
of 20 shares of HSD stock to Wife when no shares have ever
been issued to Husband[?]
5. The trial [c]ourt erred in ordering that shares of HSD
Properties, Inc., a closely held family corporation, shall be
transferred to Wife when HSD Properties, Inc. is not a party to
the instant action[?]
6. The trial [c]ourt erred in ordering Husband to issue stock
shares to Wife when no stock shares have been issued to
Husband and Husband only has a minority interest of 20% in
HSD Properties, Inc[?]
7. The trial [c]ourt erred in ordering Husband and Wife to
e Husband has no shares of stock
and HSD Properties, Inc. is not a party to this action[?]
8. The trial [c]ourt erred in ordering non-issued shares of
stock be transferred to Wife by HSD Properties, Inc, a closely
held family corporation, that has no non blood relative owners
when HSD Properties, Inc. is not a party to this [d]ivorce
action[?]
9. The trial [c]ourt erred in ordering a distribution to . . . Wife
of an asset . . . Husband does not possess or have within his
control[?]
-9).
Preliminarily, we note that, while Husband purports to raise nine
separate issues in his statement of questions involved, the argument section
of his brief consists of only one section, in which he essentially argues that
the trial court abused its discretion in ordering the stock issuance and
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transfer.5 (See id. at 8-9, 18-
claims on appeal as one issue.
action under an abuse of discretion standard:
Judicial discretion requires action in conformity with law on
facts and circumstances before the trial court after hearing and
consideration. Consequently, the court abuses its discretion if,
in resolving the issue for decision, it misapplies the law or
exercises its discretion in a manner lacking reason. Similarly,
the trial court abuses its discretion if it does not follow legal
procedure.
Prol v. Prol, 935 A.2d 547, 551 (Pa. Super. 2007) (citation omitted).
On appeal, Husband argues that the trial court abused its discretion in
ordering him to transfer eleven shares of HSD stock to Wife. (See
-25). He contends that, although the Divorce Decree
awarded 55% of his 20% interest in HSD to Wife, it did not direct a stock
t
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5
The argument shall be divided into as
many parts as there are questions to be argued; and shall have at the head
of each part in distinctive type or in type distinctively displayed the
particular point treated therein, followed by such discussion and citation of
au see also Pa.R.A.P.
2116. Because
appeal, we decline to find waiver. See Pa.R.A.P. 2101 (authorizing quashal
where briefing defects substantial); see also Cresswell v. End, 831 A.2d
673, 675 n.1 (Pa. Super. 2003) (declining to find waiver where gravamen of
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Divorce Decree by requiring an actual stock transfer. (See id., at 16, 26).
He asserts that a stock transfer is not appropriate because, thus far, he has
fully complied with the equitable distribution scheme set forth in the Divorce
tender to Wife 55% of any of his 20% of interest in HSD Properties that he
Id. at 20). He also argues that the court does not have the
power to direct HSD to issue stock certificates, where the company is not a
party to this action. (See id. at 21). This issue does not merit relief.
of equitable distribution, and provides remedies available against one who
Prol, supra at
553 (citation omitted). These powers include the ability for the court to
order and direct the transfer or sale of any property required in order to
23 Pa.C.S.A. § 3502(e)(4).
Section 3504 of the Divorce Code provides, in pertinent part:
W]henever a decree of divorce or annulment is entered by a court of
competent jurisdiction, both parties whose marriage is terminated or
affected shall have complete freedom of disposition as to their separate
23 Pa.C.S.A. § 3504 (emphasis added).
Here, the trial court determined a stock transfer from Husband to Wife
was necessary to implement the equitable distribution plan set forth in the
Divorce Decree, which specifically granted Wife fifty-five percent of the
(See Divorce Decree,
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6/10/13, at unnumbered page 2; -11). The
court also concluded that, under the facts of this case, given the protracted
litigation, strained relationship between the parties, and lax method by
6
, a stock transfer is the most
company and allowing her to control it. (See Trial Ct. Op., at 1, 5, 10-13);
see also 23 Pa.C.S.A. § 3504. The court found that Husband had the ability
to request that HSD issue shares of stock7, and it explained its rationale for
directing the stock transfer as follows:
matter, [W]ife would be placed in a position where she would
have to trust that [H]usband would honor his duty to distribute
any proceeds and disseminate any necessary information to
[W]ife going forward. Wife would be placed in the precarious
position of trusting a former spouse after the breakdown of a
twenty-two (22) year marriage and a conflict ridden divorce that
lasted roughly a decade. . . .
* * *
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6
existence or terms of corporate by laws [sic], corporate meeting minutes,
any shareholder voting records on any issues relating to HSD, if any, or
Brief, at 25).
7
See 15 Pa.C.S.A. § 1528(a),(b) (stating that shares of a business are
represented by share certificates and that
see
also 15 Pa.C.S.A. § 1521(a) ( wer
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. . . [A] review of the record in this case provides even more
in HSD Properties, Inc.
The record fails to show any evidence of the establishment
of corporate bylaws [including any bylaws indicating a restriction
on corporate shares8], the compilation of corporate meeting
minutes, the recordation of shareholder votes on any issue
relating to HSD, Inc. or [that] the adherence to any corporate
formalities exist.
* * *
In the instant case, the [H]usband has not presented
evidence of exactly how he can comply with the mandates of the
[D]ivorce [D]ecree regarding his ownership of his interest or
share of HSD, Inc. other than [W]ife merely trusting [H]usband
will preserve her rights.
(Trial Ct. Op., at 7, 10-11; see also id. at 12) (quotation marks omitted).
we discern no abuse of discretion in its exercise of power to enforce the
terms of the Divorce Decree by ordering transfer of HSD stock. See 23
Pa.C.S.A. § 3502(e)(4); Prol, supra at 551-52.9 Accordingly, we affirm the
order of the trial court.
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8
(See Trial Ct. Op., at 11).
9
To the extent that Husband contends that the court specifically ordered
HSD, a non-party, to act in its December 31, 2013 order, and that it lacked
the power to do so, (see
the record reflects that the court directed Husband to take the actions
necessary to effectuate the stock transfer. (See Order, 12/31/13, at 1-2).
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Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/16/2014
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